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Minnesota Legislature

Office of the Revisor of Statutes

SF 1505

3rd Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 3rd Engrossment

  1.1                          A bill for an act 
  1.2             relating to financing and operation of government in 
  1.3             this state; making changes to income, corporate 
  1.4             franchise, estate, property, sales and use, motor 
  1.5             vehicle sales, gross earnings, hazardous waste 
  1.6             generator, solid waste management, aggregate 
  1.7             materials, insurance premiums, taconite production, 
  1.8             and cigarette and tobacco taxes, and tax provisions; 
  1.9             changing, providing, or abolishing tax exemptions and 
  1.10            credits; changing property tax valuation, appraisal, 
  1.11            homestead, assessment, classification, levy, notice, 
  1.12            review, appeal, apportionment, distribution, and aid 
  1.13            provisions; conforming to certain changes in the 
  1.14            internal revenue code; modifying sales tax provisions 
  1.15            to comply with Streamlined Sales Tax Project 
  1.16            Agreement; providing for tax administration, 
  1.17            collection, compromise, compliance, liens, liability, 
  1.18            and enforcement; changing tax return, refund, 
  1.19            interest, and payment provisions; changing or imposing 
  1.20            certain requirements on assessors; changing provisions 
  1.21            relating to property tax refunds, tax increment 
  1.22            financing, border city development zones, 
  1.23            tax-forfeited land sales, recording or registration of 
  1.24            documents, revenue recapture, and sustainable forest 
  1.25            management incentives; clarifying commissioner of 
  1.26            revenue's rulemaking authority; changing taconite 
  1.27            production tax distribution provisions; authorizing 
  1.28            certain certificates of motor vehicle title; 
  1.29            authorizing certain sales by limited use vehicle 
  1.30            dealers; providing for public finance 
  1.31            instrumentalities and instruments; authorizing, 
  1.32            validating, expanding, limiting, and clarifying public 
  1.33            financing and economic development structures, 
  1.34            instruments, and procedures for local public entities; 
  1.35            imposing certain requirements for cigarettes shipped 
  1.36            for sale in another state; imposing a fee on 
  1.37            cigarettes produced by certain manufacturers; 
  1.38            authorizing a Central Lakes Region Sanitary District; 
  1.39            changing provisions relating to Cook county hospital 
  1.40            district; giving certain powers to the Iron Range 
  1.41            Resources and Rehabilitation Agency; giving certain 
  1.42            authority and powers to certain cities, towns, and 
  1.43            counties; authorizing actions by the metropolitan 
  1.44            mosquito control district; authorizing disclosure of 
  1.45            data and requiring access to certain records; 
  1.46            changing, clarifying, and imposing penalties; amending 
  2.1             Minnesota Statutes 2002, sections 8.30; 18B.07, 
  2.2             subdivision 2; 115B.24, subdivision 8; 168.27, 
  2.3             subdivision 4a; 168A.03; 168A.05, subdivision 1a; 
  2.4             216B.2424, subdivision 5; 270.059; 270.06; 270.10, 
  2.5             subdivision 1a; 270.67, subdivision 4; 270.69, by 
  2.6             adding a subdivision; 270.701, subdivision 2, by 
  2.7             adding a subdivision; 270.72, subdivision 2; 270A.03, 
  2.8             subdivision 2; 270B.12, by adding a subdivision; 
  2.9             272.02, subdivisions 31, 47, 53, by adding 
  2.10            subdivisions; 272.12; 273.01; 273.05, subdivision 1; 
  2.11            273.061, by adding subdivisions; 273.08; 273.11, 
  2.12            subdivision 1a; 273.124, subdivisions 1, 14; 273.13, 
  2.13            subdivisions 22, 23, 25; 273.1315; 273.134; 273.135, 
  2.14            subdivisions 1, 2; 273.1391, subdivision 2; 273.1398, 
  2.15            subdivisions 4b, 4d; 273.372; 273.42, subdivision 2; 
  2.16            274.01, subdivision 1; 274.13, subdivision 1; 275.025, 
  2.17            subdivisions 1, 3, 4; 276.10; 276.11, subdivision 1; 
  2.18            277.20, subdivision 2; 278.01, subdivision 4; 278.05, 
  2.19            subdivision 6; 279.06, subdivision 1; 281.17; 282.01, 
  2.20            subdivision 7a; 282.08; 289A.02, subdivision 7; 
  2.21            289A.10, subdivision 1; 289A.18, subdivision 4; 
  2.22            289A.19, subdivision 4; 289A.31, subdivisions 3, 4, by 
  2.23            adding a subdivision; 289A.36, subdivision 7, by 
  2.24            adding subdivisions; 289A.40, subdivision 2; 289A.50, 
  2.25            subdivision 2a, by adding subdivisions; 289A.56, 
  2.26            subdivisions 3, 4; 289A.60, subdivisions 7, 15, by 
  2.27            adding a subdivision; 290.01, subdivisions 19, 19a, 
  2.28            19b, 19c, 19d, 31; 290.06, subdivisions 2c, 24; 
  2.29            290.0671, subdivision 1; 290.0675, subdivisions 2, 3; 
  2.30            290.0679, subdivision 2; 290.0802, subdivision 1; 
  2.31            290A.03, subdivisions 8, 15; 290C.02, subdivisions 3, 
  2.32            7; 290C.03; 290C.07; 290C.09; 290C.10; 290C.11; 
  2.33            291.005, subdivision 1; 291.03, subdivision 1; 295.50, 
  2.34            subdivision 9b; 295.53, subdivision 1; 297A.61, 
  2.35            subdivisions 3, 7, 10, 12, 17, 30, 34, by adding 
  2.36            subdivisions; 297A.66, by adding a subdivision; 
  2.37            297A.665; 297A.668; 297A.67, subdivisions 2, 8, by 
  2.38            adding a subdivision; 297A.68, subdivisions 2, 5, 36, 
  2.39            by adding a subdivision; 297A.69, subdivisions 2, 3, 
  2.40            4; 297A.75, subdivision 4; 297A.81; 297A.85; 297A.99, 
  2.41            subdivisions 5, 10, 12; 297A.995, by adding a 
  2.42            subdivision; 297B.025, subdivisions 1, 2; 297B.035, 
  2.43            subdivision 1, by adding a subdivision; 297F.01, 
  2.44            subdivisions 21a, 23; 297F.05, subdivision 1; 297F.06, 
  2.45            subdivision 4; 297F.08, subdivision 7, by adding a 
  2.46            subdivision; 297F.09, subdivision 2; 297F.20, 
  2.47            subdivisions 1, 2, 3, 6, 9; 297H.06, subdivision 1; 
  2.48            297I.01, subdivision 9; 297I.20; 298.2211, subdivision 
  2.49            1; 298.27; 298.28, subdivision 4; 298.292, subdivision 
  2.50            2; 298.296, subdivision 4; 298.2961, by adding a 
  2.51            subdivision; 298.75, subdivision 1; 352.15, 
  2.52            subdivision 1; 353.15, subdivision 1; 354.10, 
  2.53            subdivision 1; 354B.30; 354C.165; 373.01, subdivision 
  2.54            3; 373.45, subdivision 1; 373.47, subdivision 1; 
  2.55            376.009; 376.55, subdivision 3, by adding a 
  2.56            subdivision; 376.56, subdivision 3; 410.32; 412.301; 
  2.57            469.1731, subdivision 3; 469.174, subdivisions 3, 6, 
  2.58            10, 25, by adding a subdivision; 469.175, subdivisions 
  2.59            1, 3, 4, 6; 469.176, subdivisions 1c, 2, 3, 7; 
  2.60            469.1763, subdivisions 1, 3, 6; 469.177, subdivisions 
  2.61            1, 12; 469.1771, subdivision 4, by adding a 
  2.62            subdivision; 469.178, subdivision 7; 469.1791, 
  2.63            subdivision 3; 469.1792, subdivisions 1, 2, 3; 
  2.64            469.1813, subdivision 8; 469.1815, subdivision 1; 
  2.65            473.39, by adding a subdivision; 473.702; 473.703, 
  2.66            subdivision 1; 473.704, subdivision 17; 473.705; 
  2.67            473.711, subdivision 2a; 473.714, subdivision 1; 
  2.68            473.898, subdivision 3; 473F.07, subdivision 4; 
  2.69            474A.061, subdivision 1; 475.58, subdivision 3b; 
  2.70            515B.1-116; Laws 1967, chapter 558, section 1, 
  2.71            subdivision 5, as amended; Laws 1989, chapter 211, 
  3.1             section 8, subdivisions 2, as amended, 4, as amended; 
  3.2             Laws 1997, chapter 231, article 10, section 25; Laws 
  3.3             2001, First Special Session chapter 5, article 3, 
  3.4             section 61; Laws 2001, First Special Session chapter 
  3.5             5, article 3, section 63; Laws 2001, First Special 
  3.6             Session chapter 5, article 9, section 12; Laws 2002, 
  3.7             chapter 377, article 6, section 4; Laws 2002, chapter 
  3.8             377, article 7, section 3; Laws 2002, chapter 377, 
  3.9             article 11, section 1; Laws 2002, chapter 377, article 
  3.10            12, section 17; proposing coding for new law in 
  3.11            Minnesota Statutes, chapters 37; 123A; 270; 273; 274; 
  3.12            275; 276; 290C; 297A; 297F; 410; 469; repealing 
  3.13            Minnesota Statutes 2002, sections 270.691, subdivision 
  3.14            8; 274.04; 290.0671, subdivision 3; 290.0675, 
  3.15            subdivision 5; 294.01; 294.02; 294.021; 294.03; 
  3.16            294.06; 294.07; 294.08; 294.09; 294.10; 294.11; 
  3.17            294.12; 297A.61, subdivisions 14, 15; 297A.69, 
  3.18            subdivision 5; 297A.72, subdivision 1; 297A.97; 
  3.19            298.24, subdivision 3; 473.711, subdivision 2b; 
  3.20            473.714, subdivision 2; 477A.065; Laws 1984, chapter 
  3.21            652, section 2; Laws 2002, chapter 377, article 9, 
  3.22            section 12; Minnesota Rules, parts 8007.0300, subpart 
  3.23            3; 8009.7100; 8009.7200; 8009.7300; 8009.7400; 
  3.24            8092.1000; 8106.0100, subparts 11, 15, 16; 8106.0200; 
  3.25            8125.1000; 8125.1300, subpart 1; 8125.1400; 8130.0800, 
  3.26            subparts 5, 12; 8130.1300; 8130.1600, subpart 5; 
  3.27            8130.1700, subparts 3, 4; 8130.4800, subpart 2; 
  3.28            8130.7500, subpart 5; 8130.8000; 8130.8300. 
  3.29  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.30                             ARTICLE 1 
  3.31                             SALES TAX 
  3.32     Section 1.  Minnesota Statutes 2002, section 168.27, 
  3.33  subdivision 4a, is amended to read: 
  3.34     Subd. 4a.  [LIMITED USED VEHICLE LICENSE.] A limited used 
  3.35  vehicle license shall be provided to a nonprofit charitable 
  3.36  organization that qualifies for tax exemption under section 
  3.37  501(c)(3) of the Internal Revenue Code whose primary business in 
  3.38  the transfer of vehicles is to raise funds for the corporation, 
  3.39  who acquires vehicles for sale through donation, and who uses a 
  3.40  licensed motor vehicle auctioneer to sell vehicles to retail 
  3.41  customers.  This license does not apply to educational 
  3.42  institutions whose primary purpose is to train students in the 
  3.43  repair, maintenance, and sale of motor vehicles.  A limited used 
  3.44  vehicle license allows the organization to accept assignment of 
  3.45  vehicles without the requirement to transfer title as provided 
  3.46  in section 168A.10 until sold to a retail customer or licensed 
  3.47  motor vehicle dealer.  Limited used vehicle license holders are 
  3.48  not entitled to dealer plates, and shall report all vehicles 
  3.49  held for resale to the department of public safety in a manner 
  4.1   and time prescribed by the department. 
  4.2      [EFFECTIVE DATE.] This section is effective for sales made 
  4.3   
  4.4   after June 30, 2003. 
  4.5      Sec. 2.  Minnesota Statutes 2002, section 168A.03, is 
  4.6   amended to read: 
  4.7      168A.03 [EXEMPT VEHICLES.] 
  4.8      Subdivision 1.  The registrar shall not issue a certificate 
  4.9   of title for: 
  4.10     (1) a vehicle owned by the United States; 
  4.11     (2) a vehicle owned by a manufacturer or dealer and held 
  4.12  for sale, even though incidentally moved on the highway or used 
  4.13  pursuant to section 168.27 or 168.28, or a vehicle used by a 
  4.14  manufacturer solely for testing; 
  4.15     (3) a vehicle owned by a nonresident and not required by 
  4.16  law to be registered in this state; 
  4.17     (4) (3) a vehicle owned by a nonresident and regularly 
  4.18  engaged in the interstate transportation of persons or property 
  4.19  for which a currently effective certificate of title has been 
  4.20  issued in another state; 
  4.21     (5) (4) a vehicle moved solely by animal power; 
  4.22     (6) (5) an implement of husbandry; 
  4.23     (7) (6) special mobile equipment; 
  4.24     (8) (7) a self-propelled wheelchair or invalid tricycle; 
  4.25     (9) (8) a trailer (i) having a gross weight of 4,000 pounds 
  4.26  or less unless a secured party holds an interest in the trailer 
  4.27  or a certificate of title was previously issued by this state or 
  4.28  any other state or (ii) designed primarily for agricultural 
  4.29  purposes except recreational equipment or a manufactured home, 
  4.30  both as defined in section 168.011, subdivisions 8 and 25; 
  4.31     (10) (9) a snowmobile.  
  4.32     Subd. 2.  [DEALERS.] No certificate of title need be 
  4.33  obtained for a vehicle owned by a manufacturer or dealer and 
  4.34  held for sale, even though incidentally moved on the highway or 
  4.35  used pursuant to section 168.27 or 168.28, or a vehicle used by 
  4.36  a manufacturer solely for testing. 
  4.37     [EFFECTIVE DATE.] This section is effective for sales made 
  5.1   after June 30, 2003. 
  5.2      Sec. 3.  Minnesota Statutes 2002, section 289A.18, 
  5.3   subdivision 4, is amended to read: 
  5.4      Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
  5.5   tax returns must be filed on or before the 20th day of the month 
  5.6   following the close of the preceding reporting period, except 
  5.7   that annual use tax returns provided for under section 289A.11, 
  5.8   subdivision 1, must be filed by April 15 following the close of 
  5.9   the calendar year, in the case of individuals.  Annual use tax 
  5.10  returns of businesses, including sole proprietorships, and 
  5.11  annual sales tax returns must be filed by February 5 following 
  5.12  the close of the calendar year.  
  5.13     (b) Returns for the June reporting period filed by 
  5.14  retailers required to remit their June liability under section 
  5.15  289A.20, subdivision 4, paragraph (b), are due on or before 
  5.16  August 20.  
  5.17     (c) If a retailer has an average sales and use tax 
  5.18  liability, including local sales and use taxes administered by 
  5.19  the commissioner, equal to or less than $500 per month in any 
  5.20  quarter of a calendar year, and has substantially complied with 
  5.21  the tax laws during the preceding four calendar quarters, the 
  5.22  retailer may request authorization to file and pay the taxes 
  5.23  quarterly in subsequent calendar quarters.  The authorization 
  5.24  remains in effect during the period in which the retailer's 
  5.25  quarterly returns reflect sales and use tax liabilities of less 
  5.26  than $1,500 and there is continued compliance with state tax 
  5.27  laws. 
  5.28     (d) If a retailer has an average sales and use tax 
  5.29  liability, including local sales and use taxes administered by 
  5.30  the commissioner, equal to or less than $100 per month during a 
  5.31  calendar year, and has substantially complied with the tax laws 
  5.32  during that period, the retailer may request authorization to 
  5.33  file and pay the taxes annually in subsequent years.  The 
  5.34  authorization remains in effect during the period in which the 
  5.35  retailer's annual returns reflect sales and use tax liabilities 
  5.36  of less than $1,200 and there is continued compliance with state 
  6.1   tax laws. 
  6.2      (e) The commissioner may also grant quarterly or annual 
  6.3   filing and payment authorizations to retailers if the 
  6.4   commissioner concludes that the retailers' future tax 
  6.5   liabilities will be less than the monthly totals identified in 
  6.6   paragraphs (c) and (d).  An authorization granted under this 
  6.7   paragraph is subject to the same conditions as an authorization 
  6.8   granted under paragraphs (c) and (d). 
  6.9      (f) A taxpayer who is a materials supplier may report gross 
  6.10  receipts either on: 
  6.11     (1) the cash basis as the consideration is received; or 
  6.12     (2) the accrual basis as sales are made.  
  6.13  As used in this paragraph, "materials supplier" means a person 
  6.14  who provides materials for the improvement of real property; who 
  6.15  is primarily engaged in the sale of lumber and building 
  6.16  materials-related products to owners, contractors, 
  6.17  subcontractors, repairers, or consumers; who is authorized to 
  6.18  file a mechanics lien upon real property and improvements under 
  6.19  chapter 514; and who files with the commissioner an election to 
  6.20  file sales and use tax returns on the basis of this paragraph.  
  6.21     (g) Notwithstanding paragraphs (a) to (f), a seller that is 
  6.22  not a Model 1, 2, or 3 seller, as those terms are used in the 
  6.23  Streamlined Sales and Use Tax Agreement, that does not have a 
  6.24  legal requirement to register in Minnesota, and that is 
  6.25  registered under the agreement, must file a return by February 5 
  6.26  following the close of the calendar year in which the seller 
  6.27  initially registers, and must file subsequent returns on 
  6.28  February 5 on an annual basis in succeeding years.  
  6.29  Additionally, a return must be submitted on or before the 20th 
  6.30  day of the month following any month by which sellers have 
  6.31  accumulated state and local tax funds for the state in the 
  6.32  amount of $1,000 or more.  
  6.33     [EFFECTIVE DATE.] This section is effective for sales and 
  6.34  purchases made on or after January 1, 2004. 
  6.35     Sec. 4.  Minnesota Statutes 2002, section 289A.40, 
  6.36  subdivision 2, is amended to read: 
  7.1      Subd. 2.  [BAD DEBT LOSS.] If a claim relates to an 
  7.2   overpayment because of a failure to deduct a loss due to a bad 
  7.3   debt or to a security becoming worthless, the claim is 
  7.4   considered timely if filed within seven years from the date 
  7.5   prescribed for the filing of the return.  A claim relating to an 
  7.6   overpayment of taxes under chapter 297A must be filed within 
  7.7   3-1/2 years from the date prescribed for filing the return, plus 
  7.8   any extensions granted for filing the return, but only if filed 
  7.9   within the extended time, or within one year from the date the 
  7.10  taxpayer's federal income tax return is timely filed claiming 
  7.11  the bad debt deduction, whichever period expires later.  The 
  7.12  refund or credit is limited to the amount of overpayment 
  7.13  attributable to the loss.  "Bad debt" for purposes of this 
  7.14  subdivision, has the same meaning as that term is used in United 
  7.15  States Code, title 26, section 166, except that the following 
  7.16  are excluded from the calculation of bad debt:  financing 
  7.17  charges or interest; sales or use taxes charged on the purchase 
  7.18  price; uncollectible amounts on property that remain in the 
  7.19  possession of the seller until the full purchase price is paid; 
  7.20  expenses incurred in attempting to collect any debt; and 
  7.21  repossessed property. 
  7.22     [EFFECTIVE DATE.] This section is effective for sales and 
  7.23  purchases made on or after January 1, 2004. 
  7.24     Sec. 5.  Minnesota Statutes 2002, section 289A.50, is 
  7.25  amended by adding a subdivision to read: 
  7.26     Subd. 2b.  [CERTIFIED SERVICE PROVIDER; BAD DEBT CLAIM.] A 
  7.27  certified service provider, as defined in section 297A.995, 
  7.28  subdivision 2, may claim on behalf of a taxpayer that is its 
  7.29  client any bad debt allowance provided by section 297A.81.  The 
  7.30  certified service provider must credit or refund to its client 
  7.31  the full amount of any bad debt allowance or refund received. 
  7.32     [EFFECTIVE DATE.] This section is effective for sales and 
  7.33  purchases made on or after January 1, 2004. 
  7.34     Sec. 6.  Minnesota Statutes 2002, section 289A.50, is 
  7.35  amended by adding a subdivision to read: 
  7.36     Subd. 2c.  [NOTICE FROM PURCHASER TO VENDOR REQUESTING 
  8.1   REFUND.] (a) If a vendor has collected from a purchaser a tax on 
  8.2   a transaction that is not subject to the tax imposed by chapter 
  8.3   297A, the purchaser may seek from the vendor a return of 
  8.4   over-collected sales or use taxes as follows: 
  8.5      (1) the purchaser must provide written notice to the 
  8.6   vendor; 
  8.7      (2) the notice to the vendor must contain the information 
  8.8   necessary to determine the validity of the request; and 
  8.9      (3) no cause of action against the vendor accrues until the 
  8.10  vendor has had 60 days to respond to the written notice. 
  8.11     (b) In connection with a purchaser's request from a vendor 
  8.12  of over-collected sales or use taxes, a vendor is presumed to 
  8.13  have a reasonable business practice, if in the collection of 
  8.14  such sales or use taxes, the vendor:  (1) uses a certified 
  8.15  service provider as defined in section 297A.995, a certified 
  8.16  automated system, as defined in section 297A.995, or a 
  8.17  proprietary system that is certified by the state; and (2) has 
  8.18  remitted to the state all taxes collected less any deductions, 
  8.19  credits, or collection allowances. 
  8.20     [EFFECTIVE DATE.] This section is effective for sales and 
  8.21  purchases made on or after January 1, 2004. 
  8.22     Sec. 7.  Minnesota Statutes 2002, section 289A.56, 
  8.23  subdivision 4, is amended to read: 
  8.24     Subd. 4.  [CAPITAL EQUIPMENT AND CERTAIN BUILDING MATERIALS 
  8.25  REFUNDS; REFUNDS TO PURCHASERS.] Notwithstanding subdivision 3, 
  8.26  for refunds payable under section sections 297A.75, subdivision 
  8.27  1, clauses (1), (2), (3), and (5), interest is computed from the 
  8.28  date the refund claim is filed with the commissioner.  For 
  8.29  refunds payable under section and 289A.50, subdivision 2a, 
  8.30  interest is computed from the 20th day of the month following 
  8.31  the month of the invoice date for the purchase which is the 
  8.32  subject of the refund, if the refund claim includes a detailed 
  8.33  schedule of purchases made during each of the periods in the 
  8.34  claim.  If the refund claim submitted does not contain a 
  8.35  schedule reflecting purchases made in each period, interest is 
  8.36  computed from the date the claim was filed 90 days after the 
  9.1   refund claim is filed with the commissioner. 
  9.2      [EFFECTIVE DATE.] This section is effective for refund 
  9.3   claims filed on or after April 1, 2003. 
  9.4      Sec. 8.  Minnesota Statutes 2002, section 297A.61, 
  9.5   subdivision 3, is amended to read: 
  9.6      Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
  9.7   include, but are not limited to, each of the transactions listed 
  9.8   in this subdivision. 
  9.9      (b) Sale and purchase include: 
  9.10     (1) any transfer of title or possession, or both, of 
  9.11  tangible personal property, whether absolutely or conditionally, 
  9.12  for a consideration in money or by exchange or barter; and 
  9.13     (2) the leasing of or the granting of a license to use or 
  9.14  consume, for a consideration in money or by exchange or barter, 
  9.15  tangible personal property, other than a manufactured home used 
  9.16  for residential purposes for a continuous period of 30 days or 
  9.17  more. 
  9.18     (c) Sale and purchase include the production, fabrication, 
  9.19  printing, or processing of tangible personal property for a 
  9.20  consideration for consumers who furnish either directly or 
  9.21  indirectly the materials used in the production, fabrication, 
  9.22  printing, or processing. 
  9.23     (d) Sale and purchase include the preparing for a 
  9.24  consideration of food.  Notwithstanding section 297A.67, 
  9.25  subdivision 2, taxable food includes, but is not limited to, the 
  9.26  following: 
  9.27     (1) prepared food sold by the retailer; 
  9.28     (2) soft drinks; 
  9.29     (3) candy; and 
  9.30     (4) all food sold through vending machines. 
  9.31     (e) A sale and a purchase includes the furnishing for a 
  9.32  consideration of electricity, gas, water, or steam for use or 
  9.33  consumption within this state. 
  9.34     (f) A sale and a purchase includes the transfer for a 
  9.35  consideration of prewritten computer software whether delivered 
  9.36  electronically, by load and leave, or otherwise.  
 10.1      (g) A sale and a purchase includes the furnishing for a 
 10.2   consideration of the following services: 
 10.3      (1) the privilege of admission to places of amusement, 
 10.4   recreational areas, or athletic events, and the making available 
 10.5   of amusement devices, tanning facilities, reducing salons, steam 
 10.6   baths, turkish baths, health clubs, and spas or athletic 
 10.7   facilities; 
 10.8      (2) lodging and related services by a hotel, rooming house, 
 10.9   resort, campground, motel, or trailer camp and the granting of 
 10.10  any similar license to use real property other than the renting 
 10.11  or leasing of it for a continuous period of 30 days or more; 
 10.12     (3) parking services, whether on a contractual, hourly, or 
 10.13  other periodic basis, except for parking at a meter; 
 10.14     (4) the granting of membership in a club, association, or 
 10.15  other organization if: 
 10.16     (i) the club, association, or other organization makes 
 10.17  available for the use of its members sports and athletic 
 10.18  facilities, without regard to whether a separate charge is 
 10.19  assessed for use of the facilities; and 
 10.20     (ii) use of the sports and athletic facility is not made 
 10.21  available to the general public on the same basis as it is made 
 10.22  available to members.  
 10.23  Granting of membership means both onetime initiation fees and 
 10.24  periodic membership dues.  Sports and athletic facilities 
 10.25  include golf courses; tennis, racquetball, handball, and squash 
 10.26  courts; basketball and volleyball facilities; running tracks; 
 10.27  exercise equipment; swimming pools; and other similar athletic 
 10.28  or sports facilities; 
 10.29     (5) delivery of aggregate materials and concrete block by a 
 10.30  third party if the delivery would be subject to the sales tax if 
 10.31  provided by the seller of the aggregate material or concrete 
 10.32  block; and 
 10.33     (6) services as provided in this clause: 
 10.34     (i) laundry and dry cleaning services including cleaning, 
 10.35  pressing, repairing, altering, and storing clothes, linen 
 10.36  services and supply, cleaning and blocking hats, and carpet, 
 11.1   drapery, upholstery, and industrial cleaning.  Laundry and dry 
 11.2   cleaning services do not include services provided by coin 
 11.3   operated facilities operated by the customer; 
 11.4      (ii) motor vehicle washing, waxing, and cleaning services, 
 11.5   including services provided by coin operated facilities operated 
 11.6   by the customer, and rustproofing, undercoating, and towing of 
 11.7   motor vehicles; 
 11.8      (iii) building and residential cleaning, maintenance, and 
 11.9   disinfecting and exterminating services; 
 11.10     (iv) detective, security, burglar, fire alarm, and armored 
 11.11  car services; but not including services performed within the 
 11.12  jurisdiction they serve by off-duty licensed peace officers as 
 11.13  defined in section 626.84, subdivision 1, or services provided 
 11.14  by a nonprofit organization for monitoring and electronic 
 11.15  surveillance of persons placed on in-home detention pursuant to 
 11.16  court order or under the direction of the Minnesota department 
 11.17  of corrections; 
 11.18     (v) pet grooming services; 
 11.19     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
 11.20  services; garden planting and maintenance; tree, bush, and shrub 
 11.21  pruning, bracing, spraying, and surgery; indoor plant care; 
 11.22  tree, bush, shrub, and stump removal; and tree trimming for 
 11.23  public utility lines.  Services performed under a construction 
 11.24  contract for the installation of shrubbery, plants, sod, trees, 
 11.25  bushes, and similar items are not taxable; 
 11.26     (vii) massages, except when provided by a licensed health 
 11.27  care facility or professional or upon written referral from a 
 11.28  licensed health care facility or professional for treatment of 
 11.29  illness, injury, or disease; and 
 11.30     (viii) the furnishing of lodging, board, and care services 
 11.31  for animals in kennels and other similar arrangements, but 
 11.32  excluding veterinary and horse boarding services. 
 11.33     In applying the provisions of this chapter, the terms 
 11.34  "tangible personal property" and "sales at retail" include 
 11.35  taxable services and the provision of taxable services, unless 
 11.36  specifically provided otherwise.  Services performed by an 
 12.1   employee for an employer are not taxable.  Services performed by 
 12.2   a partnership or association for another partnership or 
 12.3   association are not taxable if one of the entities owns or 
 12.4   controls more than 80 percent of the voting power of the equity 
 12.5   interest in the other entity.  Services performed between 
 12.6   members of an affiliated group of corporations are not taxable.  
 12.7   For purposes of this section, "affiliated group of corporations" 
 12.8   includes those entities that would be classified as members of 
 12.9   an affiliated group under United States Code, title 26, section 
 12.10  1504, and that are eligible to file a consolidated tax return 
 12.11  for federal income tax purposes. 
 12.12     (h) A sale and a purchase includes the furnishing for a 
 12.13  consideration of tangible personal property or taxable services 
 12.14  by the United States or any of its agencies or 
 12.15  instrumentalities, or the state of Minnesota, its agencies, 
 12.16  instrumentalities, or political subdivisions. 
 12.17     (i) A sale and a purchase includes the furnishing for a 
 12.18  consideration of telecommunications services, including cable 
 12.19  television services and direct satellite services.  
 12.20  Telecommunications services are taxed to the extent allowed 
 12.21  under federal law if those services:.  
 12.22     (1) either (i) originate and terminate in this state; or 
 12.23  (ii) originate in this state and terminate outside the state and 
 12.24  the service is charged to a telephone number customer located in 
 12.25  this state or to the account of any transmission instrument in 
 12.26  this state; or (iii) originate outside this state and terminate 
 12.27  in this state and the service is charged to a telephone number 
 12.28  customer located in this state or to the account of any 
 12.29  transmission instrument in this state; or 
 12.30     (2) are rendered by providing a private communications 
 12.31  service for which the customer has one or more locations within 
 12.32  Minnesota connected to the service and the service is charged to 
 12.33  a telephone number customer located in this state or to the 
 12.34  account of any transmission instrument in this state. 
 12.35     All charges for mobile telecommunications services, as 
 12.36  defined in United States Code, title 4, section 124, are deemed 
 13.1   to be provided by the customer's home service provider and 
 13.2   sourced to the customer's place of primary use and are subject 
 13.3   to tax based upon the customer's place of primary use in 
 13.4   accordance with the Mobile Telecommunications Sourcing Act, 
 13.5   United States Code, title 4, sections 116 to 126.  All other 
 13.6   definitions and provisions of the Mobile Telecommunications 
 13.7   Sourcing Act as provided in United States Code, title 4, are 
 13.8   hereby adopted. 
 13.9      (j) A sale and a purchase includes the furnishing for a 
 13.10  consideration of installation if the installation charges would 
 13.11  be subject to the sales tax if the installation were provided by 
 13.12  the seller of the item being installed. 
 13.13     (k) A sale and a purchase includes the rental of a vehicle 
 13.14  by a motor vehicle dealer to a customer when (1) the vehicle is 
 13.15  rented by the customer for a consideration, or (2) the motor 
 13.16  vehicle dealer is reimbursed pursuant to a service contract as 
 13.17  defined in section 65B.29, subdivision 1, clause (1). 
 13.18     [EFFECTIVE DATE.] This section, paragraph (f), and the 
 13.19  changes made to paragraph (i) are effective for sales and 
 13.20  purchases made on or after January 1, 2004.  This section, 
 13.21  paragraph (k), is effective for sales and purchases made on or 
 13.22  after July 1, 2003. 
 13.23     Sec. 9.  Minnesota Statutes 2002, section 297A.61, 
 13.24  subdivision 7, is amended to read: 
 13.25     Subd. 7.  [SALES PRICE.] (a) "Sales price" means the 
 13.26  measure subject to sales tax, and means the total amount of 
 13.27  consideration, including cash, credit, personal property, and 
 13.28  services, for which personal property or services are sold, 
 13.29  leased, or rented, valued in money, whether received in money or 
 13.30  otherwise, without any deduction for the following: 
 13.31     (1) the seller's cost of the property sold; 
 13.32     (2) the cost of materials used, labor or service cost, 
 13.33  interest, losses, all costs of transportation to the seller, all 
 13.34  taxes imposed on the seller, and any other expenses of the 
 13.35  seller; 
 13.36     (3) charges by the seller for any services necessary to 
 14.1   complete the sale, other than delivery and installation charges; 
 14.2      (4) delivery charges; 
 14.3      (5) installation charges; and 
 14.4      (6) the value of exempt property given to the purchaser 
 14.5   when taxable and exempt personal property have been bundled 
 14.6   together and sold by the seller as a single product or piece of 
 14.7   merchandise. 
 14.8      (b) Sales price does not include: 
 14.9      (1) discounts, including cash, terms, or coupons, that are 
 14.10  not reimbursed by a third party and that are allowed by the 
 14.11  seller and taken by a purchaser on a sale; 
 14.12     (2) interest, financing, and carrying charges from credit 
 14.13  extended on the sale of personal property or services, if the 
 14.14  amount is separately stated on the invoice, bill of sale, or 
 14.15  similar document given to the purchaser; and 
 14.16     (3) any taxes legally imposed directly on the consumer that 
 14.17  are separately stated on the invoice, bill of sale, or similar 
 14.18  document given to the purchaser. 
 14.19     [EFFECTIVE DATE.] This section is effective for sales and 
 14.20  purchases made on or after January 1, 2004. 
 14.21     Sec. 10.  Minnesota Statutes 2002, section 297A.61, 
 14.22  subdivision 10, is amended to read: 
 14.23     Subd. 10.  [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 
 14.24  personal property" means corporeal personal property of any 
 14.25  kind, including property that is to become real property as a 
 14.26  result of incorporation, attachment, or installation following 
 14.27  its acquisition. 
 14.28     (b) Tangible personal property includes, but is not limited 
 14.29  to: 
 14.30     (1) computer software, whether contained on tape, discs, 
 14.31  cards, or other devices; and 
 14.32     (2) prepaid telephone calling cards.  
 14.33     (c) personal property that can be seen, weighed, measured, 
 14.34  felt, or touched, or that is in any other manner perceptible to 
 14.35  the senses.  "Tangible personal property" includes, but is not 
 14.36  limited to, electricity, water, gas, steam, prewritten computer 
 15.1   software, and prepaid calling cards. 
 15.2      (b) Tangible personal property does not include: 
 15.3      (1) large ponderous machinery and equipment used in a 
 15.4   business or production activity which at common law would be 
 15.5   considered to be real property; 
 15.6      (2) property which is subject to an ad valorem property 
 15.7   tax; 
 15.8      (3) property described in section 272.02, subdivision 9, 
 15.9   clauses (a) to (d); and 
 15.10     (4) property described in section 272.03, subdivision 2, 
 15.11  clauses (3) and (5). 
 15.12     [EFFECTIVE DATE.] This section is effective for sales and 
 15.13  purchases made on or after January 1, 2004. 
 15.14     Sec. 11.  Minnesota Statutes 2002, section 297A.61, is 
 15.15  amended by adding a subdivision to read: 
 15.16     Subd. 14a.  [LEASE OR RENTAL.] (a) "Lease or rental" means 
 15.17  any transfer of possession or control of tangible personal 
 15.18  property for a fixed or indeterminate term for consideration.  A 
 15.19  lease or rental may include future options to purchase or extend.
 15.20     (b) Lease or rental does not include: 
 15.21     (1) a transfer of possession or control of property under a 
 15.22  security agreement or deferred payment plan that requires the 
 15.23  transfer of title upon completion of the required payments; 
 15.24     (2) a transfer of possession or control of property under 
 15.25  an agreement that requires the transfer of title upon completion 
 15.26  of required payments and payment of an option price does not 
 15.27  exceed the greater of $100 or one percent of the total required 
 15.28  payments; or 
 15.29     (3) providing tangible personal property along with an 
 15.30  operator for a fixed or indeterminate period of time.  A 
 15.31  condition of this exclusion is that the operator is necessary 
 15.32  for the equipment to perform as designed.  For the purpose of 
 15.33  this subdivision, an operator must do more than maintain, 
 15.34  inspect, or set up the tangible personal property. 
 15.35     (c) Lease or rental does include agreements covering motor 
 15.36  vehicles and trailers where the amount of consideration may be 
 16.1   increased or decreased by reference to the amount realized upon 
 16.2   sale or disposition of the property as defined in United States 
 16.3   Code, title 26, section 7701(h)(l). 
 16.4      (d) This definition must be used for sales and use tax 
 16.5   purposes regardless if a transaction is characterized as a lease 
 16.6   or rental under generally accepted accounting principles, the 
 16.7   Internal Revenue Code, chapter 336, or other provisions of 
 16.8   federal, state, or local law. 
 16.9      [EFFECTIVE DATE.] This section is effective for leases and 
 16.10  rentals entered into on or after January 1, 2004. 
 16.11     Sec. 12.  Minnesota Statutes 2002, section 297A.61, 
 16.12  subdivision 17, is amended to read: 
 16.13     Subd. 17.  [PREWRITTEN COMPUTER SOFTWARE.] "Prewritten 
 16.14  computer software" means a computer program, either in the form 
 16.15  of written procedures or contained on tapes, discs, cards, or 
 16.16  another device, or any required documentation or manuals 
 16.17  designed to facilitate the use of the computer program. computer 
 16.18  software, including prewritten upgrades, that is not designed 
 16.19  and developed by the author or other creator to the 
 16.20  specifications of a specific purchaser.  The combining of two or 
 16.21  more "prewritten computer software" programs or prewritten 
 16.22  portions of the programs does not cause the combination to be 
 16.23  other than "prewritten computer software."  "Prewritten computer 
 16.24  software" includes software designed and developed by the author 
 16.25  or other creator to the specifications of a specific purchaser 
 16.26  when it is sold to a person other than the purchaser.  If a 
 16.27  person modifies or enhances computer software of which the 
 16.28  person is not the author or creator, the person is deemed to be 
 16.29  the author or creator only of such person's modifications or 
 16.30  enhancements.  "Prewritten computer software" or a prewritten 
 16.31  portion of it that is modified or enhanced to any degree, if the 
 16.32  modification or enhancement is designed and developed to the 
 16.33  specifications of a specific purchaser, remains "prewritten 
 16.34  computer software"; provided, however, that if there is a 
 16.35  reasonable, separately stated charge or an invoice or other 
 16.36  statement of the price given to the purchaser for such 
 17.1   modification or enhancement, the modification or enhancement 
 17.2   does not constitute "prewritten computer software."  For 
 17.3   purposes of this subdivision: 
 17.4      (1) "computer" does not include tape-controlled automatic 
 17.5   drilling, milling, or other manufacturing machinery or equipment 
 17.6   means an electronic device that accepts information in digital 
 17.7   or similar form and manipulates it for a result based on a 
 17.8   sequence of instructions; and 
 17.9      (2) "computer program" means information and directions 
 17.10  that dictate the function performed by data processing 
 17.11  equipment.  It includes the complete plan for the solution of a 
 17.12  problem, such as the complete sequence of automatic data 
 17.13  processing equipment instructions necessary to solve a problem 
 17.14  and includes both systems and application programs and 
 17.15  subdivisions, such as assemblers, compilers, routines, 
 17.16  generators, and utility programs.  Computer program includes a 
 17.17  "canned" or prewritten computer program that is held or existing 
 17.18  for general or repeated sale or lease, even if the prewritten or 
 17.19  "canned" program was initially developed on a custom basis or 
 17.20  for in-house use. "electronic" means relating to technology 
 17.21  having electrical, digital, magnetic, wireless, optical, 
 17.22  electromagnetic, or similar capabilities; and 
 17.23     (3) "computer software" means a set of coded instructions 
 17.24  designed to cause a "computer" or automatic data processing 
 17.25  equipment to perform a task. 
 17.26     [EFFECTIVE DATE.] This section is effective for sales and 
 17.27  purchases made on or after January 1, 2004. 
 17.28     Sec. 13.  Minnesota Statutes 2002, section 297A.61, is 
 17.29  amended by adding a subdivision to read: 
 17.30     Subd. 17a.  [DELIVERED ELECTRONICALLY.] "Delivered 
 17.31  electronically" means delivered to the purchaser by means other 
 17.32  than tangible storage media. 
 17.33     [EFFECTIVE DATE.] This section is effective for sales and 
 17.34  purchases made on or after January 1, 2004. 
 17.35     Sec. 14.  Minnesota Statutes 2002, section 297A.61, is 
 17.36  amended by adding a subdivision to read: 
 18.1      Subd. 17b.  [LOAD AND LEAVE.] "Load and leave" means 
 18.2   delivered to the purchaser by use of a tangible storage media 
 18.3   where the tangible storage media is not physically transferred 
 18.4   to the purchaser. 
 18.5      [EFFECTIVE DATE.] This section is effective for sales and 
 18.6   purchases made on or after January 1, 2004. 
 18.7      Sec. 15.  Minnesota Statutes 2002, section 297A.61, 
 18.8   subdivision 30, is amended to read: 
 18.9      Subd. 30.  [DELIVERY CHARGES.] "Delivery charges" means 
 18.10  charges by the seller of personal property or services for 
 18.11  preparation and delivery to a location designated by the 
 18.12  purchaser of personal property or services including, but not 
 18.13  limited to, transportation, shipping, postage, handling, 
 18.14  crating, and packing. 
 18.15     [EFFECTIVE DATE.] This section is effective for sales and 
 18.16  purchases made on or after January 1, 2004. 
 18.17     Sec. 16.  Minnesota Statutes 2002, section 297A.61, is 
 18.18  amended by adding a subdivision to read: 
 18.19     Subd. 35.  [DIRECT MAIL.] "Direct mail" means printed 
 18.20  material delivered or distributed by United States Mail or other 
 18.21  delivery service to a mass audience or to addressees on a 
 18.22  mailing list provided by the purchaser or at the direction of 
 18.23  the purchaser when the cost of the items is not billed directly 
 18.24  to the recipients.  "Direct mail" includes tangible personal 
 18.25  property supplied directly or indirectly by the purchaser to the 
 18.26  direct mail seller for inclusion in the package containing the 
 18.27  printed material.  "Direct mail" does not include multiple items 
 18.28  of printed material delivered to a single address. 
 18.29     [EFFECTIVE DATE.] This section is effective for sales and 
 18.30  purchases made on or after January 1, 2004. 
 18.31     Sec. 17.  Minnesota Statutes 2002, section 297A.66, is 
 18.32  amended by adding a subdivision to read: 
 18.33     Subd. 5.  [WITHDRAWAL FROM STREAMLINED SALES AND USE TAX 
 18.34  AGREEMENT.] If the state has withdrawn its membership or been 
 18.35  expelled from the streamlined sales and use tax agreement, it 
 18.36  shall not use a seller's registration with the central 
 19.1   registration system and the collection of sales and use taxes in 
 19.2   the state as a factor in determining whether the seller has 
 19.3   nexus with that state for any tax at any time. 
 19.4      [EFFECTIVE DATE.] This section is effective for sales and 
 19.5   purchases made on or after January 1, 2004. 
 19.6      Sec. 18.  [297A.666] [AMNESTY FOR REGISTRATION.] 
 19.7      Subdivision 1.  [AMNESTY PROVISIONS.] Subject to the 
 19.8   limitations of subdivision 2: 
 19.9      (1) this state shall provide amnesty for uncollected or 
 19.10  unpaid sales or use tax to a seller who registers to pay or to 
 19.11  collect and remit applicable sales or use tax on sales made to 
 19.12  purchasers in this state in accordance with the terms of the 
 19.13  streamlined sales and use tax agreement, provided that the 
 19.14  seller was not so registered in this state in the 12-month 
 19.15  period preceding the effective date of the state's participation 
 19.16  in the agreement; and 
 19.17     (2) the amnesty shall preclude assessment for uncollected 
 19.18  or unpaid sales or use tax together with penalty or interest for 
 19.19  sales made during the period the seller was not registered in 
 19.20  this state, provided registration occurs within 12 months of the 
 19.21  effective date of the state's participation in the agreement. 
 19.22     Subd. 2.  [LIMITATIONS.] (a) The amnesty is not available 
 19.23  to a seller with respect to any matter or matters for which the 
 19.24  seller received notice of the commencement of an audit and the 
 19.25  audit is not yet finally resolved, including any related 
 19.26  administrative and judicial processes. 
 19.27     (b) The amnesty is not available for sales or use taxes 
 19.28  already paid or remitted to this state or to taxes collected by 
 19.29  the seller. 
 19.30     (c) The amnesty is fully effective, absent the seller's 
 19.31  fraud or intentional misrepresentation of a material fact, as 
 19.32  long as the seller continues registration and continues payment 
 19.33  or collection and remittance of applicable sales or use taxes 
 19.34  for a period of at least 36 months.  The statute of limitations 
 19.35  provisions of chapter 289A applicable to asserting a sales or 
 19.36  use tax liability must be tolled during this 36-month period. 
 20.1      (d) The amnesty is applicable only to sales or use taxes 
 20.2   due from a seller in its capacity as a seller and not to sales 
 20.3   or use taxes due from a seller in its capacity as a buyer. 
 20.4      [EFFECTIVE DATE.] This section is effective for sales and 
 20.5   purchases made on or after January 1, 2004. 
 20.6      Sec. 19.  Minnesota Statutes 2002, section 297A.668, is 
 20.7   amended to read: 
 20.8      297A.668 [SOURCING OF SALE; SITUS IN THIS STATE.] 
 20.9      Subdivision 1.  [SOURCING RULES APPLICABILITY.] (a) The 
 20.10  following provisions of this section apply regardless of the 
 20.11  characterization of a product as tangible personal property, a 
 20.12  digital good, or a service; but do not apply to 
 20.13  telecommunications services, or the sales of motor vehicles, 
 20.14  watercraft, aircraft, modular homes, manufactured homes, or 
 20.15  mobile homes.  These provisions only apply to determine a 
 20.16  seller's obligation to pay or collect and remit a sales or use 
 20.17  tax with respect to the seller's sale of a product.  These 
 20.18  provisions do not affect the obligation of a seller as purchaser 
 20.19  to remit tax on the use of the product. 
 20.20     Subd. 2.  [SOURCING RULES.] (a) The retail sale, excluding 
 20.21  lease or rental, of a product shall be sourced as required in 
 20.22  paragraphs (b) through (f). 
 20.23     (b) When the product is received by the purchaser at a 
 20.24  business location of the seller, the sale is sourced to that 
 20.25  business location. 
 20.26     (c) When the product is not received by the purchaser at a 
 20.27  business location of the seller, the sale is sourced to the 
 20.28  location where receipt by the purchaser or the donee designated 
 20.29  by the purchaser occurs, including the location indicated by 
 20.30  instructions for delivery to the purchasers or the purchaser's 
 20.31  donee, known to the seller. 
 20.32     (d) When paragraphs (b) and (c) do not apply, the sale is 
 20.33  sourced to the location indicated by an address for the 
 20.34  purchaser that is available from the business records of the 
 20.35  seller that are maintained in the ordinary course of the 
 20.36  seller's business, when use of this address does not constitute 
 21.1   bad faith. 
 21.2      (e) When paragraphs (b), (c), and (d) do not apply, the 
 21.3   sale is sourced to the location indicated by an address for the 
 21.4   purchaser obtained during the consummation of the sale, 
 21.5   including the address of a purchaser's payment instrument if no 
 21.6   other address is available, when use of this address does not 
 21.7   constitute bad faith. 
 21.8      (f) When paragraphs (b), (c), (d), and (e) do not apply, 
 21.9   including the circumstance where the seller is without 
 21.10  sufficient information to apply the previous paragraphs, then 
 21.11  the location is determined by the address from which tangible 
 21.12  personal property was shipped, from which the digital good or 
 21.13  the computer software delivered electronically was first 
 21.14  available for transmission by the seller, or from which the 
 21.15  service was provided.  For purposes of this paragraph, the 
 21.16  seller must disregard any location that merely provided the 
 21.17  digital transfer of the product sold. 
 21.18     (g) For purposes of this subdivision, the terms "receive" 
 21.19  and "receipt" mean taking possession of tangible personal 
 21.20  property, making first use of services, or taking possession or 
 21.21  making first use of digital goods or the computer software 
 21.22  delivered electronically, whichever occurs first.  The terms 
 21.23  receive and receipt do not include possession by a carrier for 
 21.24  hire on behalf of the purchaser. 
 21.25     Subd. 3.  [LEASE OR RENTAL OF TANGIBLE PERSONAL 
 21.26  PROPERTY.] The lease or rental of tangible personal property, 
 21.27  other than property identified in subdivision 4 or 5, shall be 
 21.28  sourced as required in paragraphs (a) to (c). 
 21.29     (a) For a lease or rental that requires recurring periodic 
 21.30  payments, the first periodic payment is sourced the same as a 
 21.31  retail sale in accordance with the provisions of subdivision 6.  
 21.32  Periodic payments made subsequent to the first payment are 
 21.33  sourced to the primary property location for each period covered 
 21.34  by the payment.  The primary property location must be as 
 21.35  indicated by an address for the property provided by the lessee 
 21.36  that is available to the lessor from its records maintained in 
 22.1   the ordinary course of business, when use of this address does 
 22.2   not constitute bad faith.  The property location must not be 
 22.3   altered by intermittent use at different locations, such as use 
 22.4   of business property that accompanies employees on business 
 22.5   trips and service calls. 
 22.6      (b) For a lease or rental that does not require recurring 
 22.7   periodic payments, the payment is sourced the same as a retail 
 22.8   sale in accordance with the provisions of subdivision 2. 
 22.9      (c) This subdivision does not affect the imposition or 
 22.10  computation of sales or use tax on leases or rentals based on a 
 22.11  lump sum or accelerated basis, or on the acquisition of property 
 22.12  for lease. 
 22.13     Subd. 4.  [LEASE OR RENTAL OF MOTOR VEHICLES, TRAILERS, 
 22.14  SEMITRAILERS, OR AIRCRAFT THAT DO NOT QUALIFY AS TRANSPORTATION 
 22.15  EQUIPMENT.] The lease or rental of motor vehicles, trailers, 
 22.16  semitrailers, or aircraft that do not qualify as transportation 
 22.17  equipment, as defined in subdivision 5, shall be sourced as 
 22.18  required in paragraphs (a) to (c). 
 22.19     (a) For a lease or rental that requires recurring periodic 
 22.20  payments, each periodic payment is sourced to the primary 
 22.21  property location.  The primary property location must be as 
 22.22  indicated by an address for the property provided by the lessee 
 22.23  that is available to the lessor from its records maintained in 
 22.24  the ordinary course of business, when use of this address does 
 22.25  not constitute bad faith.  This location must not be altered by 
 22.26  intermittent use at different locations. 
 22.27     (b) For a lease or rental that does not require recurring 
 22.28  periodic payments, the payment is sourced the same as a retail 
 22.29  sale in accordance with the provisions of subdivision 2. 
 22.30     (c) This subdivision does not affect the imposition or 
 22.31  computation of sales or use tax on leases or rentals based on a 
 22.32  lump sum or accelerated basis, or on the acquisition of property 
 22.33  for lease. 
 22.34     Subd. 5.  [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 
 22.35  including lease or rental, of transportation equipment shall be 
 22.36  sourced the same as a retail sale in accordance with the 
 23.1   provisions of subdivision 2, notwithstanding the exclusion of 
 23.2   lease or rental in subdivision 2. 
 23.3      (b) "Transportation equipment" means any of the following: 
 23.4      (1) locomotives and railcars that are utilized for the 
 23.5   carriage of persons or property in interstate commerce; and/or 
 23.6      (2) trucks and truck-tractors with a gross vehicle weight 
 23.7   rating (GVWR) of 10,001 pounds or greater, trailers, 
 23.8   semitrailers, or passenger buses that are: 
 23.9      (i) registered through the international registration plan; 
 23.10  and 
 23.11     (ii) operated under authority of a carrier authorized and 
 23.12  certified by the United States Department of Transportation or 
 23.13  another federal authority to engage in the carriage of persons 
 23.14  or property in interstate commerce.  
 23.15     Subd. 2. 6.  [MULTIPLE POINTS OF USE.] (a) Notwithstanding 
 23.16  the provisions of subdivision 1 subdivisions 2 to 5, a business 
 23.17  purchaser that is not a holder of a direct pay permit that knows 
 23.18  at the time of its purchase of a digital good, computer software 
 23.19  delivered electronically, or a service that the digital good, 
 23.20  computer software delivered electronically, or service will be 
 23.21  concurrently available for use in more than one taxing 
 23.22  jurisdiction shall deliver to the seller in conjunction with its 
 23.23  purchase a multiple points of use exemption certificate 
 23.24  disclosing this fact.  
 23.25     (b) Upon receipt of the multiple points of use exemption 
 23.26  certificate, the seller is relieved of the obligation to 
 23.27  collect, pay, or remit the applicable tax and the purchaser is 
 23.28  obligated to collect, pay, or remit the applicable tax on a 
 23.29  direct pay basis. 
 23.30     (c) A purchaser delivering the multiple points of use 
 23.31  exemption certificate may use any reasonable, but consistent and 
 23.32  uniform, method of apportionment that is supported by the 
 23.33  purchaser's business records as they exist at the time of the 
 23.34  consummation of the sale. 
 23.35     (d) The multiple points of use exemption certificate 
 23.36  remains in effect for all future sales by the seller to the 
 24.1   purchaser until it is revoked in writing, except as to the 
 24.2   subsequent sale's specific apportionment that is governed by the 
 24.3   principle of paragraph (c) and the facts existing at the time of 
 24.4   the sale. 
 24.5      (e) A holder of a direct pay permit is not required to 
 24.6   deliver a multiple points or use exemption certificate to the 
 24.7   seller.  A direct pay permit holder shall follow the provisions 
 24.8   of paragraph (c) in apportioning the tax due on a digital good, 
 24.9   computer software delivered electronically, or a service that 
 24.10  will be concurrently available for use in more than one taxing 
 24.11  jurisdiction. 
 24.12     Subd. 3.  [DEFINITION OF TERMS.] For purposes of this 
 24.13  section, the terms "receive" and "receipt" mean taking 
 24.14  possession of tangible personal property, making first use of 
 24.15  services, or taking possession or making first use of digital 
 24.16  goods, whichever occurs first.  The terms receive and receipt do 
 24.17  not include possession by a carrier for hire on behalf of the 
 24.18  purchaser. 
 24.19     Subd. 7.  [DIRECT MAIL.] (a) Notwithstanding other 
 24.20  subdivisions of this section, a purchaser of direct mail that is 
 24.21  not a holder of a direct pay permit shall provide to the seller, 
 24.22  in conjunction with the purchase, either a direct mail form or 
 24.23  information to show the jurisdictions to which the direct mail 
 24.24  is delivered to recipients. 
 24.25     (1) Upon receipt of the direct mail form, the seller is 
 24.26  relieved of all obligations to collect, pay, or remit the 
 24.27  applicable tax and the purchaser is obligated to pay or remit 
 24.28  the applicable tax on a direct pay basis.  A direct mail form 
 24.29  remains in effect for all future sales of direct mail by the 
 24.30  seller to the purchaser until it is revoked in writing.  
 24.31     (2) Upon receipt of information from the purchaser showing 
 24.32  the jurisdictions to which the direct mail is delivered to 
 24.33  recipients, the seller shall collect the tax according to the 
 24.34  delivery information provided by the purchaser.  In the absence 
 24.35  of bad faith, the seller is relieved of any further obligation 
 24.36  to collect tax on any transaction for which the seller has 
 25.1   collected tax pursuant to the delivery information provided by 
 25.2   the purchaser. 
 25.3      (b) If the purchaser of direct mail does not have a direct 
 25.4   pay permit and does not provide the seller with either a direct 
 25.5   mail form or delivery information, as required by paragraph (a), 
 25.6   the seller shall collect the tax according to subdivision 2, 
 25.7   paragraph (f).  Nothing in this paragraph limits a purchaser's 
 25.8   obligation for sales or use tax to any state to which the direct 
 25.9   mail is delivered. 
 25.10     (c) If a purchaser of direct mail provides the seller with 
 25.11  documentation of direct pay authority, the purchaser is not 
 25.12  required to provide a direct mail form or delivery information 
 25.13  to the seller. 
 25.14     [EFFECTIVE DATE.] This section is effective for sales and 
 25.15  purchases made on or after January 1, 2004. 
 25.16     Sec. 20.  [297A.669] [TELECOMMUNICATION SOURCING.] 
 25.17     Subdivision 1.  [CALL-BY-CALL BASIS SOURCING.] Except for 
 25.18  the defined telecommunication services in subdivision 3, the 
 25.19  sale of telecommunication service sold on a call-by-call basis 
 25.20  shall be sourced to (1) each level of taxing jurisdiction where 
 25.21  the call originates and terminates in that jurisdiction; or (2) 
 25.22  each level of taxing jurisdiction where the call either 
 25.23  originates or terminates and in which the service address is 
 25.24  also located. 
 25.25     Subd. 2.  [OTHER THAN CALL-BY-CALL BASIS SOURCING.] Except 
 25.26  for the defined telecommunication services in subdivision 3, a 
 25.27  sale of telecommunications services sold on a basis other than a 
 25.28  call-by-call basis is sourced to the customer's place of primary 
 25.29  use. 
 25.30     Subd. 3.  [DEFINED TELECOMMUNICATIONS SERVICES 
 25.31  SOURCING.] The sale of the following telecommunication services 
 25.32  shall be sourced to each level of taxing jurisdiction in 
 25.33  paragraphs (a) to (d). 
 25.34     (a) A sale of mobile telecommunications services, other 
 25.35  than air-to-ground radiotelephone service and prepaid calling 
 25.36  service, is sourced to the customer's place of primary use as 
 26.1   required by the Mobile Telecommunications Sourcing Act. 
 26.2      (b) A sale of postpaid calling service is sourced to the 
 26.3   origination point of the telecommunications signal as first 
 26.4   identified by either: 
 26.5      (1) the seller's telecommunications system; or 
 26.6      (2) information received by the seller from its service 
 26.7   provider, where the system used to transport such signals is not 
 26.8   that of the seller. 
 26.9      (c) A sale of prepaid calling service is sourced in 
 26.10  accordance with section 297A.668, subdivision 2.  However, in 
 26.11  the case of a sale of mobile telecommunications service that is 
 26.12  a prepaid telecommunications service, the rule provided in 
 26.13  section 297A.668, subdivision 2, paragraph (f), shall include as 
 26.14  an option the location associated with the mobile telephone 
 26.15  number. 
 26.16     (d) A sale of a private communication service is sourced as 
 26.17  follows: 
 26.18     (1) service for a separate charge related to a customer 
 26.19  channel termination point is sourced to each level of 
 26.20  jurisdiction in which the customer channel termination point is 
 26.21  located; 
 26.22     (2) service where all customer termination points are 
 26.23  located entirely within one jurisdiction or levels of 
 26.24  jurisdiction is sourced in such jurisdiction in which the 
 26.25  customer channel termination points are located; 
 26.26     (3) service for segments of a channel between two customer 
 26.27  channel termination points located in different jurisdictions 
 26.28  and which segment of channel are separately charged is sourced 
 26.29  50 percent in each level of jurisdiction in which the customer 
 26.30  channel termination points are located; and 
 26.31     (4) service for segments of a channel located in more than 
 26.32  one jurisdiction or levels of jurisdiction and which segments 
 26.33  are not separately billed is sourced in each jurisdiction based 
 26.34  on the percentage determined by dividing the number of customer 
 26.35  channel termination points in the jurisdiction by the total 
 26.36  number of customer channel termination points. 
 27.1      Subd. 4.  [AIR-TO-GROUND RADIOTELEPHONE 
 27.2   SERVICE.] "Air-to-ground radiotelephone service," for purposes 
 27.3   of this section, means a radio service, as that term is defined 
 27.4   in Code of Federal Regulations, title 47, section 22.99, in 
 27.5   which common carriers are authorized to offer and provide radio 
 27.6   telecommunications service for hire to subscribers in aircraft. 
 27.7      Subd. 5.  [CALL-BY-CALL BASIS.] "Call-by-call basis," for 
 27.8   purposes of this section, means any method of charging for 
 27.9   telecommunications services where the price is measured by 
 27.10  individual calls. 
 27.11     Subd. 6.  [COMMUNICATIONS CHANNEL.] "Communications 
 27.12  channel," for purposes of this section, means a physical or 
 27.13  virtual path of communications over which signals are 
 27.14  transmitted between or among customer channel termination points.
 27.15     Subd. 7.  [CUSTOMER.] "Customer," for purposes of this 
 27.16  section, means the person or entity that contracts with the 
 27.17  seller of telecommunications services.  If the end user of 
 27.18  telecommunications services is not the contracting party, the 
 27.19  end user of the telecommunications service is the customer of 
 27.20  the telecommunication service, but this sentence applies only 
 27.21  for the purpose of sourcing sales of telecommunications services 
 27.22  under this section.  Customer does not include a reseller of 
 27.23  telecommunications service or for mobile telecommunications 
 27.24  service of a serving carrier under an agreement to serve the 
 27.25  customer outside the home service provider's licensed service 
 27.26  area. 
 27.27     Subd. 8.  [CUSTOMER CHANNEL TERMINATION POINT.] "Customer 
 27.28  channel termination point," for purposes of this section, means 
 27.29  the location where the customer either inputs or receives the 
 27.30  communications. 
 27.31     Subd. 9.  [END USER.] "End user," for purposes of this 
 27.32  section, means the person who utilizes the telecommunication 
 27.33  service.  In the case of an entity, end user means the 
 27.34  individual who utilizes the service on behalf of the entity. 
 27.35     Subd. 10.  [HOME SERVICE PROVIDER.] "Home service provider,"
 27.36  for purposes of this section, means the same as that term is 
 28.1   defined in Section 124(5) of Public Law 106-252 (Mobile 
 28.2   Telecommunications Sourcing Act). 
 28.3      Subd. 11.  [MOBILE TELECOMMUNICATIONS SERVICE.] "Mobile 
 28.4   telecommunications service," for purposes of this section, means 
 28.5   the same as that term is defined in Section 124(1) of Public Law 
 28.6   106-252 (Mobile Telecommunications Sourcing Act). 
 28.7      Subd. 12.  [PLACE OF PRIMARY USE.] "Place of primary use," 
 28.8   for purposes of this section, means the street address 
 28.9   representative of where the customer's use of the 
 28.10  telecommunications service primarily occurs, which must be the 
 28.11  residential street address or the primary business street 
 28.12  address of the customer.  In the case of mobile 
 28.13  telecommunications services, place of primary use must be within 
 28.14  the licensed service area of the home service provider. 
 28.15     Subd. 13.  [POSTPAID CALLING SERVICE.] "Postpaid calling 
 28.16  service," for purposes of this section, means the 
 28.17  telecommunications service obtained by making a payment on a 
 28.18  call-by-call basis either through the use of a credit card or 
 28.19  payment mechanism such as a bank card, travel card, credit card, 
 28.20  or debit card, or by a charge made to a telephone number that is 
 28.21  not associated with the origination or termination of the 
 28.22  telecommunications service.  A postpaid calling service includes 
 28.23  a telecommunications service that would be a prepaid calling 
 28.24  service except it is not exclusively a telecommunication service.
 28.25     Subd. 14.  [PREPAID CALLING SERVICE.] "Prepaid calling 
 28.26  service," for purposes of this section, means the right to 
 28.27  access exclusively telecommunications services, which must be 
 28.28  paid for in advance and which enables the origination of calls 
 28.29  using an access number or authorization code, whether manually 
 28.30  or electronically dialed, and that is sold in predetermined 
 28.31  units or dollars of which the number declines with use in a 
 28.32  known amount. 
 28.33     Subd. 15.  [PRIVATE COMMUNICATION SERVICES.] "Private 
 28.34  communication services," for purposes of this section, means the 
 28.35  same as that term is defined in section 297A.61, subdivision 26. 
 28.36     Subd. 16.  [SERVICE ADDRESS.] "Service address," for 
 29.1   purposes of this section, means: 
 29.2      (1) the location of the telecommunications equipment to 
 29.3   which a customer's call is charged and from which the call 
 29.4   originates or terminates, regardless of where the call is billed 
 29.5   or paid; 
 29.6      (2) if the location in paragraph (a) is not known, service 
 29.7   address means the origination point of the signal of the 
 29.8   telecommunications services first identified by either the 
 29.9   seller's telecommunications system or in information received by 
 29.10  the seller from its service provider, where the system used to 
 29.11  transport the signals is not that of the seller; or 
 29.12     (3) if the location in paragraphs (a) and (b) is not known, 
 29.13  the service address means the location of the customer's place 
 29.14  of primary use. 
 29.15     [EFFECTIVE DATE.] This section is effective for sales and 
 29.16  purchases made on or after January 1, 2004. 
 29.17     Sec. 21.  Minnesota Statutes 2002, section 297A.67, 
 29.18  subdivision 8, is amended to read: 
 29.19     Subd. 8.  [CLOTHING.] (a) Clothing is exempt.  For purposes 
 29.20  of this subdivision, "clothing" means all human wearing apparel 
 29.21  suitable for general use. 
 29.22     (b) Clothing includes, but is not limited to, aprons, 
 29.23  household and shop; athletic supporters; baby receiving 
 29.24  blankets; bathing suits and caps; beach capes and coats; belts 
 29.25  and suspenders; boots; coats and jackets; costumes; children and 
 29.26  adult diapers, including disposable; ear muffs; footlets; formal 
 29.27  wear; garters and garter belts; girdles; gloves and mittens for 
 29.28  general use; hats and caps; hosiery; insoles for shoes; lab 
 29.29  coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 
 29.30  sandals; scarves; shoes and shoe laces; slippers; sneakers; 
 29.31  socks and stockings; steel-toed boots; underwear; uniforms, 
 29.32  athletic and nonathletic; and wedding apparel. 
 29.33     (c) Clothing does not include the following: 
 29.34     (1) belt buckles sold separately; 
 29.35     (2) costume masks sold separately; 
 29.36     (3) patches and emblems sold separately; 
 30.1      (4) sewing equipment and supplies, including but not 
 30.2   limited to, knitting needles, patterns, pins, scissors, sewing 
 30.3   machines, sewing needles, tape measures, and thimbles; 
 30.4      (5) sewing materials that become part of clothing, 
 30.5   including but not limited to, buttons, fabric, lace, thread, 
 30.6   yarn, and zippers; 
 30.7      (6) clothing accessories or equipment; 
 30.8      (7) sports or recreational equipment; and 
 30.9      (8) protective equipment. 
 30.10  Clothing also does not include apparel made from fur if a 
 30.11  uniform definition of "apparel made from fur" is developed by 
 30.12  the member states of the Streamlined Sales and Use Tax Agreement.
 30.13     For purposes of this subdivision, "clothing accessories or 
 30.14  equipment" means incidental items worn on the person or in 
 30.15  conjunction with clothing.  Clothing accessories and equipment 
 30.16  include, but are not limited to, briefcases; cosmetics; hair 
 30.17  notions, including barrettes, hair bows, and hairnets; handbags; 
 30.18  handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 
 30.19  wallets; watches; and wigs and hairpieces.  "Sports or 
 30.20  recreational equipment" means items designed for human use and 
 30.21  worn in conjunction with an athletic or recreational activity 
 30.22  that are not suitable for general use.  Sports and recreational 
 30.23  equipment includes, but is not limited to, ballet and tap shoes; 
 30.24  cleated or spiked athletic shoes; gloves, including, but not 
 30.25  limited to, baseball, bowling, boxing, hockey, and golf gloves; 
 30.26  goggles; hand and elbow guards; life preservers and vests; mouth 
 30.27  guards; roller and ice skates; shin guards; shoulder pads; ski 
 30.28  boots; waders; and wetsuits and fins.  "Protective equipment" 
 30.29  means items for human wear and designed as protection of the 
 30.30  wearer against injury or disease or as protection against damage 
 30.31  or injury of other persons or property but not suitable for 
 30.32  general use.  Protective equipment includes, but is not limited 
 30.33  to, breathing masks; clean room apparel and equipment; ear and 
 30.34  hearing protectors; face shields; finger guards; hard hats; 
 30.35  helmets; paint or dust respirators; protective gloves; safety 
 30.36  glasses and goggles; safety belts; tool belts; and welders 
 31.1   gloves and masks. 
 31.2      [EFFECTIVE DATE.] This section is effective for sales and 
 31.3   purchases made on or after January 1, 2004. 
 31.4      Sec. 22.  Minnesota Statutes 2002, section 297A.67, is 
 31.5   amended by adding a subdivision to read: 
 31.6      Subd. 31.  [SERVICE LOANER VEHICLE COVERED BY 
 31.7   WARRANTY.] The loan of a vehicle by a motor vehicle dealer to a 
 31.8   customer as a replacement for a vehicle being serviced or 
 31.9   repaired is exempt if the vehicle is loaned pursuant to a 
 31.10  warranty included in the original purchase price of the vehicle 
 31.11  being serviced or repaired. 
 31.12     [EFFECTIVE DATE.] This section is effective for vehicle 
 31.13  loans made after June 30, 2003. 
 31.14     Sec. 23.  Minnesota Statutes 2002, section 297A.68, 
 31.15  subdivision 2, is amended to read: 
 31.16     Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
 31.17  (a) Materials stored, used, or consumed in industrial production 
 31.18  of personal property intended to be sold ultimately at retail 
 31.19  are exempt, whether or not the item so used becomes an 
 31.20  ingredient or constituent part of the property produced.  
 31.21  Materials that qualify for this exemption include, but are not 
 31.22  limited to, the following: 
 31.23     (1) chemicals, including chemicals used for cleaning food 
 31.24  processing machinery and equipment; 
 31.25     (2) materials, including chemicals, fuels, and electricity 
 31.26  purchased by persons engaged in industrial production to treat 
 31.27  waste generated as a result of the production process; 
 31.28     (3) fuels, electricity, gas, and steam used or consumed in 
 31.29  the production process, except that electricity, gas, or steam 
 31.30  used for space heating, cooling, or lighting is exempt if (i) it 
 31.31  is in excess of the average climate control or lighting for the 
 31.32  production area, and (ii) it is necessary to produce that 
 31.33  particular product; 
 31.34     (4) petroleum products and lubricants; 
 31.35     (5) packaging materials, including returnable containers 
 31.36  used in packaging food and beverage products; 
 32.1      (6) accessory tools, equipment, and other items that are 
 32.2   separate detachable units with an ordinary useful life of less 
 32.3   than 12 months used in producing a direct effect upon the 
 32.4   product; and 
 32.5      (7) the following materials, tools, and equipment used in 
 32.6   metalcasting:  crucibles, thermocouple protection sheaths and 
 32.7   tubes, stalk tubes, refractory materials, molten metal filters 
 32.8   and filter boxes, degassing lances, and base blocks. 
 32.9      (b) This exemption does not include: 
 32.10     (1) machinery, equipment, implements, tools, accessories, 
 32.11  appliances, contrivances and furniture and fixtures, except 
 32.12  those listed in paragraph (a), clause (6); and 
 32.13     (2) petroleum and special fuels used in producing or 
 32.14  generating power for propelling ready-mixed concrete trucks on 
 32.15  the public highways of this state. 
 32.16     (c) Industrial production includes, but is not limited to, 
 32.17  research, development, design or production of any tangible 
 32.18  personal property, manufacturing, processing (other than by 
 32.19  restaurants and consumers) of agricultural products (whether 
 32.20  vegetable or animal), commercial fishing, refining, smelting, 
 32.21  reducing, brewing, distilling, printing, mining, quarrying, 
 32.22  lumbering, generating electricity and, the production of road 
 32.23  building materials, and the research, development, design, or 
 32.24  production of computer software.  Industrial production does not 
 32.25  include painting, cleaning, repairing or similar processing of 
 32.26  property except as part of the original manufacturing process.  
 32.27     [EFFECTIVE DATE.] This section is effective for sales and 
 32.28  purchases made on or after January 1, 2004. 
 32.29     Sec. 24.  Minnesota Statutes 2002, section 297A.68, 
 32.30  subdivision 5, is amended to read: 
 32.31     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
 32.32  exempt.  The tax must be imposed and collected as if the rate 
 32.33  under section 297A.62, subdivision 1, applied, and then refunded 
 32.34  in the manner provided in section 297A.75. 
 32.35     "Capital equipment" means machinery and equipment purchased 
 32.36  or leased, and used in this state by the purchaser or lessee 
 33.1   primarily for manufacturing, fabricating, mining, or refining 
 33.2   tangible personal property to be sold ultimately at retail if 
 33.3   the machinery and equipment are essential to the integrated 
 33.4   production process of manufacturing, fabricating, mining, or 
 33.5   refining.  Capital equipment also includes machinery and 
 33.6   equipment used to electronically transmit results retrieved by a 
 33.7   customer of an online computerized data retrieval system. 
 33.8      (b) Capital equipment includes, but is not limited to: 
 33.9      (1) machinery and equipment used to operate, control, or 
 33.10  regulate the production equipment; 
 33.11     (2) machinery and equipment used for research and 
 33.12  development, design, quality control, and testing activities; 
 33.13     (3) environmental control devices that are used to maintain 
 33.14  conditions such as temperature, humidity, light, or air pressure 
 33.15  when those conditions are essential to and are part of the 
 33.16  production process; 
 33.17     (4) materials and supplies used to construct and install 
 33.18  machinery or equipment; 
 33.19     (5) repair and replacement parts, including accessories, 
 33.20  whether purchased as spare parts, repair parts, or as upgrades 
 33.21  or modifications to machinery or equipment; 
 33.22     (6) materials used for foundations that support machinery 
 33.23  or equipment; 
 33.24     (7) materials used to construct and install special purpose 
 33.25  buildings used in the production process; and 
 33.26     (8) ready-mixed concrete trucks in which the ready-mixed 
 33.27  concrete is mixed as part of the delivery process; and 
 33.28     (9) machinery or equipment used for research, development, 
 33.29  design, or production of computer software.  
 33.30     (c) Capital equipment does not include the following: 
 33.31     (1) motor vehicles taxed under chapter 297B; 
 33.32     (2) machinery or equipment used to receive or store raw 
 33.33  materials; 
 33.34     (3) building materials, except for materials included in 
 33.35  paragraph (b), clauses (6) and (7); 
 33.36     (4) machinery or equipment used for nonproduction purposes, 
 34.1   including, but not limited to, the following:  plant security, 
 34.2   fire prevention, first aid, and hospital stations; support 
 34.3   operations or administration; pollution control; and plant 
 34.4   cleaning, disposal of scrap and waste, plant communications, 
 34.5   space heating, cooling, lighting, or safety; 
 34.6      (5) farm machinery and aquaculture production equipment as 
 34.7   defined by section 297A.61, subdivisions 12 and 13; 
 34.8      (6) machinery or equipment purchased and installed by a 
 34.9   contractor as part of an improvement to real property; or 
 34.10     (7) any other item that is not essential to the integrated 
 34.11  process of manufacturing, fabricating, mining, or refining. 
 34.12     (d) For purposes of this subdivision: 
 34.13     (1) "Equipment" means independent devices or tools separate 
 34.14  from machinery but essential to an integrated production 
 34.15  process, including computers and computer software, used in 
 34.16  operating, controlling, or regulating machinery and equipment; 
 34.17  and any subunit or assembly comprising a component of any 
 34.18  machinery or accessory or attachment parts of machinery, such as 
 34.19  tools, dies, jigs, patterns, and molds.  
 34.20     (2) "Fabricating" means to make, build, create, produce, or 
 34.21  assemble components or property to work in a new or different 
 34.22  manner. 
 34.23     (3) "Machinery" means mechanical, electronic, or electrical 
 34.24  devices, including computers and computer software, that are 
 34.25  purchased or constructed to be used for the activities set forth 
 34.26  in paragraph (a), beginning with the removal of raw materials 
 34.27  from inventory through completion of the product, including 
 34.28  packaging of the product. 
 34.29     (4) "Machinery and equipment used for pollution control" 
 34.30  means machinery and equipment used solely to eliminate, prevent, 
 34.31  or reduce pollution resulting from an activity described in 
 34.32  paragraph (a).  
 34.33     (5) "Manufacturing" means an operation or series of 
 34.34  operations where raw materials are changed in form, composition, 
 34.35  or condition by machinery and equipment and which results in the 
 34.36  production of a new article of tangible personal property.  For 
 35.1   purposes of this subdivision, "manufacturing" includes the 
 35.2   generation of electricity or steam to be sold at retail. 
 35.3      (6) "Mining" means the extraction of minerals, ores, stone, 
 35.4   or peat. 
 35.5      (7) "Online data retrieval system" means a system whose 
 35.6   cumulation of information is equally available and accessible to 
 35.7   all its customers. 
 35.8      (8) "Primarily" means machinery and equipment used 50 
 35.9   percent or more of the time in an activity described in 
 35.10  paragraph (a). 
 35.11     (9) "Refining" means the process of converting a natural 
 35.12  resource to a product, including the treatment of water to be 
 35.13  sold at retail. 
 35.14     [EFFECTIVE DATE.] This section is effective for sales and 
 35.15  purchases made on or after January 1, 2004. 
 35.16     Sec. 25.  Minnesota Statutes 2002, section 297A.68, 
 35.17  subdivision 36, is amended to read: 
 35.18     Subd. 36.  [DELIVERY OR DISTRIBUTION CHARGES; PRINTED 
 35.19  MATERIALS DIRECT MAIL.] Charges for the delivery or distribution 
 35.20  of printed materials, including individual account 
 35.21  information, direct mail are exempt if (1) the charges are 
 35.22  separately stated, (2) the delivery or distribution is to a mass 
 35.23  audience or to a mailing list provided at the direction of the 
 35.24  customer, and (3) the cost of the materials is not billed 
 35.25  directly to the recipients on an invoice or similar billing 
 35.26  document given to the purchaser. 
 35.27     [EFFECTIVE DATE.] This section is effective for purchases 
 35.28  and sales made on or after January 1, 2004. 
 35.29     Sec. 26.  Minnesota Statutes 2002, section 297A.75, 
 35.30  subdivision 4, is amended to read: 
 35.31     Subd. 4.  [INTEREST.] Interest must be paid on the refund 
 35.32  at the rate in section 270.76 from the date the refund claim is 
 35.33  filed for taxes paid under subdivision 1, clauses (1) to (3), 
 35.34  and (5), and from 60 days after the date the refund claim is 
 35.35  filed with the commissioner for claims filed under subdivision 
 35.36  1, clauses (4), (6), (7), (8), and (9) 90 days after the refund 
 36.1   claim is filed with the commissioner for taxes paid under 
 36.2   subdivision 1. 
 36.3      [EFFECTIVE DATE.] This section is effective for refund 
 36.4   claims filed on or after April 1, 2003. 
 36.5      Sec. 27.  Minnesota Statutes 2002, section 297A.81, is 
 36.6   amended to read: 
 36.7      297A.81 [UNCOLLECTIBLE DEBTS; OFFSET AGAINST OTHER TAXES.] 
 36.8      Subdivision 1.  [GENERAL.] The taxpayer may offset against 
 36.9   the taxes payable for any reporting period the amount of taxes 
 36.10  imposed by this chapter previously paid as a result of any 
 36.11  transaction the consideration for which became a debt owed to 
 36.12  the taxpayer that became uncollectible during the reporting 
 36.13  period, but only in proportion to the portion of the debt that 
 36.14  became uncollectible.  Section 289A.40, subdivision 2, applies 
 36.15  to an offset under this section. 
 36.16     Subd. 2.  [MANNER OF ALLOWING DEDUCTION FOR UNCOLLECTIBLE 
 36.17  DEBT.] (a) Uncollectible debt is allowed as a deduction in the 
 36.18  manner provided in this subdivision. 
 36.19     (b) If the uncollectible debt arose with respect to a sale 
 36.20  required to be included in gross receipts, subject to a tax 
 36.21  imposed under chapter 297A, the entire amount of the debt 
 36.22  remaining uncollected is allowed as a deduction. 
 36.23     (c) If the uncollectible debt arose with respect to a sale 
 36.24  partly subject to the tax imposed under chapter 297A and partly 
 36.25  exempt, the amount of the uncollectible debt allowed as a 
 36.26  deduction is the amount derived by multiplying the uncollectible 
 36.27  debt by the percentage that the taxable sale bears to the total 
 36.28  sales. 
 36.29     (d) If the uncollectible debt arose with respect to two or 
 36.30  more sales made at successive intervals, payments made before 
 36.31  the date the debt became uncollectible must be applied first to 
 36.32  the earliest sale upon which there is an unpaid balance, and to 
 36.33  following sales in successive order. 
 36.34     (e) If the books and records of the taxpayer claiming the 
 36.35  bad debt allowance support an allocation of the bad debts among 
 36.36  the member states of the streamlined sales and use tax 
 37.1   agreement, such an allocation shall be allowed. 
 37.2      Subd. 3.  [CERTIFIED SERVICE PROVIDER.] A certified service 
 37.3   provider, as defined in section 297A.995, subdivision 2, on 
 37.4   behalf of a taxpayer who is its client, may offset against taxes 
 37.5   as provided by this section. 
 37.6      [EFFECTIVE DATE.] This section is effective for sales and 
 37.7   purchases made on or after January 1, 2004. 
 37.8      Sec. 28.  Minnesota Statutes 2002, section 297A.99, 
 37.9   subdivision 5, is amended to read: 
 37.10     Subd. 5.  [TAX RATE.] (a) The tax rate is as specified in 
 37.11  the special law authorization and as imposed by the political 
 37.12  subdivision. 
 37.13     (b) The full political subdivision rate applies to any 
 37.14  sales that are taxed at a state rate less than or more than the 
 37.15  state general sales and use tax rate., and the political 
 37.16  subdivision must not have more than one local sales tax rate or 
 37.17  more than one local use tax rate.  This paragraph does not apply 
 37.18  to sales or use taxes imposed on electricity, piped natural or 
 37.19  artificial gas, or other heating fuels delivered by the seller, 
 37.20  or the retail sale or transfer of motor vehicles, aircraft, 
 37.21  watercraft, modular homes, manufactured homes, or mobile homes. 
 37.22     [EFFECTIVE DATE.] This section is effective for sales and 
 37.23  purchases made on or after January 1, 2004. 
 37.24     Sec. 29.  Minnesota Statutes 2002, section 297A.99, 
 37.25  subdivision 10, is amended to read: 
 37.26     Subd. 10.  [USE OF ZIP CODE IN DETERMINING LOCATION OF 
 37.27  SALE.] To determine whether to impose the local tax, the 
 37.28  retailer may use zip codes if the zip code area is entirely 
 37.29  within the political subdivision.  When a zip code area is not 
 37.30  entirely within a political subdivision, the retailer shall not 
 37.31  collect the local tax if the purchaser notifies the retailer 
 37.32  that the purchaser's delivery address is outside of the 
 37.33  political subdivision, unless the retailer verifies that the 
 37.34  delivery address is in the political subdivision using a means 
 37.35  other than the zip code.  The lowest combined tax rate imposed 
 37.36  in the zip code area applies if the area includes more than one 
 38.1   tax rate in any level of taxing jurisdictions.  If a nine-digit 
 38.2   zip code designation is not available for a street address or if 
 38.3   a seller is unable to determine the nine-digit zip code 
 38.4   designation of a purchaser after exercising due diligence to 
 38.5   determine the designation, the seller may apply the rate for the 
 38.6   five-digit zip code area.  For the purposes of this subdivision, 
 38.7   there is a rebuttable presumption that a seller has exercised 
 38.8   due diligence if the seller has attempted to determine the 
 38.9   nine-digit zip code designation by utilizing software approved 
 38.10  by the governing board that makes this designation from the 
 38.11  street address and the five-digit zip code of the purchaser. 
 38.12  Notwithstanding subdivision 13, this subdivision applies to all 
 38.13  local sales taxes without regard to the date of 
 38.14  authorization.  This subdivision does not apply when the 
 38.15  purchased product is received by the purchaser at the business 
 38.16  location of the seller. 
 38.17     [EFFECTIVE DATE.] This section is effective for sales and 
 38.18  purchases made on or after January 1, 2004. 
 38.19     Sec. 30.  Minnesota Statutes 2002, section 297A.99, 
 38.20  subdivision 12, is amended to read: 
 38.21     Subd. 12.  [EFFECTIVE DATES; NOTIFICATION.] (a) A political 
 38.22  subdivision may impose a tax under this section starting only on 
 38.23  the first day of a calendar quarter.  A political subdivision 
 38.24  may repeal a tax under this section stopping only on the last 
 38.25  day of a calendar quarter. 
 38.26     (b) The political subdivision shall notify the commissioner 
 38.27  of revenue at least 90 days before imposing, changing the rate 
 38.28  of, or repealing a tax under this section. 
 38.29     (c) The political subdivision shall change the rate of tax 
 38.30  imposed under this section starting only on the first day of a 
 38.31  calendar quarter, and only after the commissioner has notified 
 38.32  sellers at least 60 days prior to the change. 
 38.33     (d) The political subdivision shall apply the rate change 
 38.34  for sales tax imposed under this section to purchases from 
 38.35  printed catalogs, wherein the purchaser computed the tax based 
 38.36  upon local tax rates published in the catalog, starting only on 
 39.1   the first day of a calendar quarter, and only after the 
 39.2   commissioner has notified sellers at least 120 days prior to the 
 39.3   change. 
 39.4      (e) The political subdivision shall apply local 
 39.5   jurisdiction boundary changes to taxes imposed under this 
 39.6   section starting only on the first day of a calendar quarter, 
 39.7   and only after the commissioner has notified sellers at least 60 
 39.8   days prior to the change. 
 39.9      [EFFECTIVE DATE.] This section is effective for sales and 
 39.10  purchases made on or after January 1, 2004. 
 39.11     Sec. 31.  Minnesota Statutes 2002, section 297A.995, is 
 39.12  amended by adding a subdivision to read: 
 39.13     Subd. 10.  [RELIEF FROM CERTAIN LIABILITY.] Notwithstanding 
 39.14  subdivision 9, sellers and certified service providers are 
 39.15  relieved from liability to the state for having charged and 
 39.16  collected the incorrect amount of sales or use tax resulting 
 39.17  from the seller or certified service provider (1) relying on 
 39.18  erroneous data provided by this state on tax rates, boundaries, 
 39.19  or taxing jurisdiction assignments, or (2) relying on erroneous 
 39.20  data provided by the state in its taxability matrix concerning 
 39.21  the taxability of products and services. 
 39.22     [EFFECTIVE DATE.] This section is effective for sales and 
 39.23  purchases made on or after January 1, 2004. 
 39.24     Sec. 32.  Minnesota Statutes 2002, section 297B.035, is 
 39.25  amended by adding a subdivision to read: 
 39.26     Subd. 5.  [USE BY DEALER.] If a motor vehicle dealer uses a 
 39.27  vehicle, purchased for resale in the ordinary course of 
 39.28  business, other than for demonstration purposes, the dealer may 
 39.29  elect to pay the motor vehicle sales tax under this chapter or 
 39.30  the use tax under chapter 297A based on the reasonable rental 
 39.31  value of the vehicle.  If the motor vehicle dealer fails to 
 39.32  report the use tax under chapter 297A, it is presumed that the 
 39.33  dealer elected to pay the motor vehicle sales tax under this 
 39.34  chapter. 
 39.35     [EFFECTIVE DATE.] This section is effective for sales made 
 39.36  after June 30, 2003. 
 40.1      Sec. 33.  [CITY OF NEWPORT; LODGING TAX.] 
 40.2      Subdivision 1.  [LODGING TAX.] Notwithstanding Minnesota 
 40.3   Statutes, section 477A.016, or any ordinance, city charter, or 
 40.4   other provision of law, the city of Newport may, by ordinance, 
 40.5   impose a tax of up to four percent upon the gross receipts from 
 40.6   the sale of lodging for periods of less than 30 days in hotels 
 40.7   and motels located in the city.  The tax does not apply to the 
 40.8   furnishing of lodging by a business having less than 25 lodging 
 40.9   rooms.  The total amount of taxes imposed under this section and 
 40.10  under Minnesota Statutes, section 469.190, shall not exceed four 
 40.11  percent. 
 40.12     Subd. 2.  [USE OF PROCEEDS.] The proceeds of any tax 
 40.13  imposed in subdivision 1 shall be used by the city to fund 
 40.14  economic development and redevelopment of the city.  Authorized 
 40.15  expenses include, but are not limited to, acquisition and 
 40.16  development costs of open space, parks, and trails. 
 40.17     Subd. 3.  [ENFORCEMENT, COLLECTION, AND 
 40.18  ADMINISTRATION.] The tax shall be collected and administered in 
 40.19  the same manner as local lodging taxes under Minnesota Statutes, 
 40.20  section 469.190. 
 40.21     [EFFECTIVE DATE.] This section is effective upon approval 
 40.22  by the Newport city council and compliance with Minnesota 
 40.23  Statutes, section 645.021, subdivision 3. 
 40.24     Sec. 34.  [REPEALER.] 
 40.25     (a) Minnesota Statutes 2002, section 297A.61, subdivisions 
 40.26  14 and 15, are repealed effective for sales and purchases made 
 40.27  on or after January 1, 2004. 
 40.28     (b) Minnesota Statutes 2002, section 297A.69, subdivision 
 40.29  5, is repealed effective January 1, 2006. 
 40.30     (c) Laws 2002, chapter 377, article 9, section 12, the 
 40.31  effective date, is repealed effective for sales and purchases 
 40.32  made on or after January 1, 2004. 
 40.33                             ARTICLE 2
 40.34                            PROPERTY TAX
 40.35     Section 1.  [123A.455] [REALIGNING SPLIT RESIDENTIAL 
 40.36  PARCELS.] 
 41.1      Subdivision 1.  [DEFINITIONS.] "Split residential property 
 41.2   parcel" means a parcel of real estate that is located within the 
 41.3   boundaries of more than one school district and that is 
 41.4   classified as residential property under: 
 41.5      (1) section 273.13, subdivision 22, paragraph (a) or (b); 
 41.6      (2) section 273.13, subdivision 25, paragraph (b), clause 
 41.7   (1); or 
 41.8      (3) section 273.13, subdivision 25, paragraph (c), clause 
 41.9   (1). 
 41.10     Subd. 2.  [PETITION.] The owner of a split residential 
 41.11  property parcel may petition the auditor of the county where the 
 41.12  split parcel is located to transfer that part into the adjoining 
 41.13  school district so the entire property will be located in the 
 41.14  same school district.  The petition must contain: 
 41.15     (1) a correct description of the split parcel to be 
 41.16  affected by the transfer including supporting data on location 
 41.17  and title to the land; 
 41.18     (2) a list of the school districts in which the split 
 41.19  parcels currently lie; 
 41.20     (3) the school district into which the petitioner desires 
 41.21  to have the whole split parcel transferred; and 
 41.22     (4) the district of attendance of any students currently 
 41.23  residing on the property. 
 41.24     Subd. 3.  [AUDITOR'S ORDER.] Within 60 days of receipt of 
 41.25  the petition, the auditor of the county in which the petition 
 41.26  was filed under subdivision 2 shall issue an order to transfer 
 41.27  the affected parcel to the district determined by the county 
 41.28  board.  Orders issued on or before July 1 will be effective for 
 41.29  taxes payable in the following year.  The auditor must notify 
 41.30  the affected school districts and the commissioner of the change 
 41.31  in school district boundaries. 
 41.32     Subd. 4.  [COMMISSIONER.] The commissioner shall modify the 
 41.33  records of school district boundaries to conform to the order. 
 41.34     Subd. 5.  [TAXABLE PROPERTY.] Upon the effective date of 
 41.35  the order, the whole split property parcel is transferred into a 
 41.36  single school district.  Beginning in the next subsequent taxes 
 42.1   payable year, all taxable property in the whole split parcel is: 
 42.2      (1) relieved of all school district taxes from the district 
 42.3   in which the parcel is no longer located; and 
 42.4      (2) subject to all school district taxes in the district in 
 42.5   which the whole split parcel is now located. 
 42.6      [EFFECTIVE DATE.] This section is effective for petitions 
 42.7   filed on or after the day following final enactment.  Orders 
 42.8   issued under subdivision 3 on or before September 15, 2003, are 
 42.9   effective for taxes payable in 2004.  
 42.10     Sec. 2.  Minnesota Statutes 2002, section 168A.05, 
 42.11  subdivision 1a, is amended to read: 
 42.12     Subd. 1a.  [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 
 42.13  PAYMENT.] In the case of a manufactured home as defined in 
 42.14  section 327.31, subdivision 6, the department shall not issue a 
 42.15  certificate of title unless the application under section 
 42.16  168A.04 is accompanied with a statement from the county auditor 
 42.17  or county treasurer where the manufactured home is presently 
 42.18  located, stating that all manufactured home personal property 
 42.19  taxes levied on the unit that are due from in the name of the 
 42.20  current owner at the time of transfer for which the application 
 42.21  applies, have been paid. 
 42.22     [EFFECTIVE DATE.] This section is effective for 
 42.23  certificates of title issued by the department on or after July 
 42.24  1, 2003. 
 42.25     Sec. 3.  Minnesota Statutes 2002, section 216B.2424, 
 42.26  subdivision 5, is amended to read: 
 42.27     Subd. 5.  [MANDATE.] (a) A public utility, as defined in 
 42.28  section 216B.02, subdivision 4, that operates a nuclear-powered 
 42.29  electric generating plant within this state must construct and 
 42.30  operate, purchase, or contract to construct and operate (1) by 
 42.31  December 31, 1998, 50 megawatts of electric energy installed 
 42.32  capacity generated by farm-grown closed-loop biomass scheduled 
 42.33  to be operational by December 31, 2001; and (2) by December 31, 
 42.34  1998, an additional 75 megawatts of installed capacity so 
 42.35  generated scheduled to be operational by December 31, 2002.  
 42.36     (b) Of the 125 megawatts of biomass electricity installed 
 43.1   capacity required under this subdivision, no more than 50 
 43.2   megawatts of this capacity may be provided by a facility that 
 43.3   uses poultry litter as its primary fuel source and any such 
 43.4   facility:  
 43.5      (1) need not use biomass that complies with the definition 
 43.6   in subdivision 1; 
 43.7      (2) must enter into a contract with the public utility for 
 43.8   such capacity, that has an average purchase price per megawatt 
 43.9   hour over the life of the contract that is equal to or less than 
 43.10  the average purchase price per megawatt hour over the life of 
 43.11  the contract in contracts approved by the public utilities 
 43.12  commission before April 1, 2000, to satisfy the mandate of this 
 43.13  section, and file that contract with the public utilities 
 43.14  commission prior to September 1, 2000; and 
 43.15     (3) must schedule such capacity to be operational by 
 43.16  December 31, 2002.  
 43.17     (c) Of the total 125 megawatts of biomass electric energy 
 43.18  installed capacity required under this section, no more than 75 
 43.19  megawatts may be provided by a single project.  
 43.20     (d) Of the 75 megawatts of biomass electric energy 
 43.21  installed capacity required under paragraph (a), clause (2), no 
 43.22  more than 25 megawatts of this capacity may be provided by a St. 
 43.23  Paul district heating and cooling system cogeneration facility 
 43.24  utilizing waste wood as a primary fuel source.  The St. Paul 
 43.25  district heating and cooling system cogeneration facility need 
 43.26  not use biomass that complies with the definition in subdivision 
 43.27  1.  
 43.28     (e) The public utility must accept and consider on an equal 
 43.29  basis with other biomass proposals: 
 43.30     (1) a proposal to satisfy the requirements of this section 
 43.31  that includes a project that exceeds the megawatt capacity 
 43.32  requirements of either paragraph (a), clause (1) or (2), and 
 43.33  that proposes to sell the excess capacity to the public utility 
 43.34  or to other purchasers; and 
 43.35     (2) a proposal for a new facility to satisfy more than ten 
 43.36  but not more than 20 megawatts of the electrical generation 
 44.1   requirements by a small business-sponsored independent power 
 44.2   producer facility to be located within the northern quarter of 
 44.3   the state, which means the area located north of Constitutional 
 44.4   Route No. 8 as described in section 161.114, subdivision 2, and 
 44.5   that utilizes biomass residue wood, sawdust, bark, chipped wood, 
 44.6   or brush to generate electricity.  A facility described in this 
 44.7   clause is not required to utilize biomass complying with the 
 44.8   definition in subdivision 1, but must have the capacity required 
 44.9   by this clause operational be under construction by December 31, 
 44.10  2002 2005. 
 44.11     (f) If a public utility files a contract with the 
 44.12  commission for electric energy installed capacity that uses 
 44.13  poultry litter as its primary fuel source, the commission must 
 44.14  do a preliminary review of the contract to determine if it meets 
 44.15  the purchase price criteria provided in paragraph (b), clause 
 44.16  (2), of this subdivision.  The commission shall perform its 
 44.17  review and advise the parties of its determination within 30 
 44.18  days of filing of such a contract by a public utility.  A public 
 44.19  utility may submit by September 1, 2000, a revised contract to 
 44.20  address the commission's preliminary determination.  
 44.21     (g) The commission shall finally approve, modify, or 
 44.22  disapprove no later than July 1, 2001, all contracts submitted 
 44.23  by a public utility as of September 1, 2000, to meet the mandate 
 44.24  set forth in this subdivision.  
 44.25     (h) If a public utility subject to this section exercises 
 44.26  an option to increase the generating capacity of a project in a 
 44.27  contract approved by the commission prior to April 25, 2000, to 
 44.28  satisfy the mandate in this subdivision, the public utility must 
 44.29  notify the commission by September 1, 2000, that it has 
 44.30  exercised the option and include in the notice the amount of 
 44.31  additional megawatts to be generated under the option 
 44.32  exercised.  Any review by the commission of the project after 
 44.33  exercise of such an option shall be based on the same criteria 
 44.34  used to review the existing contract. 
 44.35     (i) A facility specified in this subdivision qualifies for 
 44.36  exemption from property taxation under section 272.02, 
 45.1   subdivision 43. 
 45.2      [EFFECTIVE DATE.] This section is effective the day 
 45.3   following final enactment. 
 45.4      Sec. 4.  Minnesota Statutes 2002, section 270B.12, is 
 45.5   amended by adding a subdivision to read: 
 45.6      Subd. 13.  [COUNTY ASSESSORS; CLASS 1B HOMESTEADS.] The 
 45.7   commissioner may disclose to a county assessor, and to the 
 45.8   assessor's designated agents or employees, a listing of parcels 
 45.9   of property qualifying for the class 1b property tax 
 45.10  classification under section 273.13, subdivision 22. 
 45.11     [EFFECTIVE DATE.] This section is effective the day 
 45.12  following final enactment. 
 45.13     Sec. 5.  Minnesota Statutes 2002, section 272.02, 
 45.14  subdivision 31, is amended to read: 
 45.15     Subd. 31.  [BUSINESS INCUBATOR PROPERTY.] Property owned by 
 45.16  a nonprofit charitable organization that qualifies for tax 
 45.17  exemption under section 501(c)(3) of the Internal Revenue Code 
 45.18  of 1986, as amended through December 31, 1997, that is intended 
 45.19  to be used as a business incubator in a high-unemployment 
 45.20  county, is exempt.  As used in this subdivision, a "business 
 45.21  incubator" is a facility used for the development of nonretail 
 45.22  businesses, offering access to equipment, space, services, and 
 45.23  advice to the tenant businesses, for the purpose of encouraging 
 45.24  economic development, diversification, and job creation in the 
 45.25  area served by the organization, and "high-unemployment county" 
 45.26  is a county that had an average annual unemployment rate of 7.9 
 45.27  percent or greater in 1997.  Property that qualifies for the 
 45.28  exemption under this subdivision is limited to no more than two 
 45.29  contiguous parcels and structures that do not exceed in the 
 45.30  aggregate 40,000 square feet.  This exemption expires after 
 45.31  taxes payable in 2005 2011. 
 45.32     Sec. 6.  Minnesota Statutes 2002, section 272.02, 
 45.33  subdivision 47, is amended to read: 
 45.34     Subd. 47.  [POULTRY LITTER BIOMASS GENERATION FACILITY; 
 45.35  PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
 45.36  attached machinery and other personal property which is part of 
 46.1   an electrical generating facility that meets the requirements of 
 46.2   this subdivision is exempt.  At the time of construction, the 
 46.3   facility must: 
 46.4      (1) be designed to utilize poultry litter as a primary fuel 
 46.5   source; and 
 46.6      (2) be constructed for the purpose of generating power at 
 46.7   the facility that will be sold pursuant to a contract approved 
 46.8   by the public utilities commission in accordance with the 
 46.9   biomass mandate imposed under section 216B.2424. 
 46.10     Construction of the facility must be commenced after 
 46.11  January 1, 2000 2003, and before December 31, 2002 2003.  
 46.12  Property eligible for this exemption does not include electric 
 46.13  transmission lines and interconnections or gas pipelines and 
 46.14  interconnections appurtenant to the property or the facility. 
 46.15     [EFFECTIVE DATE.] This section is effective for taxes 
 46.16  levied in 2004, payable in 2005, and thereafter. 
 46.17     Sec. 7.  Minnesota Statutes 2002, section 272.02, 
 46.18  subdivision 53, is amended to read: 
 46.19     Subd. 53.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 46.20  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 46.21  machinery and other personal property which is part of a 3.2 
 46.22  megawatt run-of-the-river hydroelectric generation facility and 
 46.23  that meets the requirements of this subdivision is exempt.  At 
 46.24  the time of construction, the facility must: 
 46.25     (1) utilize two turbine generators at a dam site existing 
 46.26  on March 31, 1994; 
 46.27     (2) be located on publicly owned land and within 1,500 feet 
 46.28  of a 13.8 kilovolt distribution substation; and 
 46.29     (3) be eligible to receive a renewable energy production 
 46.30  incentive payment under section 216C.41. 
 46.31     Construction of the facility must be commenced after 
 46.32  January 1, 2002, and before January 1, 2004 2005.  Property 
 46.33  eligible for this exemption does not include electric 
 46.34  transmission lines and interconnections or gas pipelines and 
 46.35  interconnections appurtenant to the property or the facility. 
 46.36     Sec. 8.  Minnesota Statutes 2002, section 272.02, is 
 47.1   amended by adding a subdivision to read: 
 47.2      Subd. 56.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 47.3   PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
 47.4   attached machinery and other personal property which is part of 
 47.5   a combined-cycle combustion-turbine electric generation facility 
 47.6   that exceeds 550 megawatts of installed capacity and that meets 
 47.7   the requirements of this subdivision is exempt.  At the time of 
 47.8   construction, the facility must: 
 47.9      (1) be designed to utilize natural gas as a primary fuel; 
 47.10     (2) not be owned by a public utility as defined in section 
 47.11  216B.02, subdivision 4; 
 47.12     (3) be located within five miles of an existing natural gas 
 47.13  pipeline and within four miles of an existing electrical 
 47.14  transmission substation; 
 47.15     (4) be located outside the metropolitan area as defined 
 47.16  under section 473.121, subdivision 2; and 
 47.17     (5) be designed to provide energy and ancillary services 
 47.18  and have received a certificate of need under section 216B.243. 
 47.19     (b) Construction of the facility must be commenced after 
 47.20  January 1, 2004, and before January 1, 2007.  Property eligible 
 47.21  for this exemption does not include electric transmission lines 
 47.22  and interconnections or gas pipelines and interconnections 
 47.23  appurtenant to the property or the facility. 
 47.24     [EFFECTIVE DATE.] This section is effective for assessment 
 47.25  year 2005, taxes payable in 2006, and thereafter. 
 47.26     Sec. 9.  Minnesota Statutes 2002, section 272.02, is 
 47.27  amended by adding a subdivision to read: 
 47.28     Subd. 57.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 47.29  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
 47.30  attached machinery and other personal property which is part of 
 47.31  a combined-cycle combustion-turbine electric generation facility 
 47.32  that exceeds 150 megawatts of installed capacity and that meets 
 47.33  the requirements of this subdivision is exempt.  At the time of 
 47.34  construction, the facility must: 
 47.35     (1) utilize natural gas as a primary fuel; 
 47.36     (2) be owned by an electric generation and transmission 
 48.1   cooperative; 
 48.2      (3) be located within ten miles of parallel existing 
 48.3   24-inch and 30-inch natural gas pipelines and a 345-kilovolt 
 48.4   high-voltage electric transmission line; 
 48.5      (4) be designed to provide intermediate energy and 
 48.6   ancillary services, and have received a certificate of need 
 48.7   under section 216B.243, demonstrating demand for its capacity; 
 48.8   and 
 48.9      (5) have received by resolution, the approval from the 
 48.10  governing body of the county and city in which the proposed 
 48.11  facility is to be located for the exemption of personal property 
 48.12  under this subdivision. 
 48.13     (b) Construction of the facility must be commenced after 
 48.14  January 1, 2004, and before January 1, 2009.  Property eligible 
 48.15  for this exemption does not include electric transmission lines 
 48.16  and interconnections or gas pipelines and interconnections 
 48.17  appurtenant to the property or the facility. 
 48.18     (c) The exemption under this section will take effect only 
 48.19  if the owner of the facility enters into agreements with the 
 48.20  governing bodies of the county and the city in which the 
 48.21  facility is located.  The agreements may include a requirement 
 48.22  that the facility must pay a host fee to compensate the county 
 48.23  and city for hosting the facility. 
 48.24     [EFFECTIVE DATE.] This section is effective for assessment 
 48.25  year 2005, taxes payable in 2006, and thereafter. 
 48.26     Sec. 10.  Minnesota Statutes 2002, section 273.01, is 
 48.27  amended to read: 
 48.28     273.01 [LISTING AND ASSESSMENT, TIME.] 
 48.29     All real property subject to taxation shall be listed and 
 48.30  at least one-fourth one-fifth of the parcels listed shall be 
 48.31  appraised each year with reference to their value on January 2 
 48.32  preceding the assessment so that each parcel shall be 
 48.33  reappraised at maximum intervals of four five years.  All real 
 48.34  property becoming taxable in any year shall be listed with 
 48.35  reference to its value on January 2 of that year.  Except as 
 48.36  provided in this section and section 274.01, subdivision 1, all 
 49.1   real property assessments shall be completed two weeks prior to 
 49.2   the date scheduled for the local board of review or 
 49.3   equalization.  No changes in valuation or classification which 
 49.4   are intended to correct errors in judgment by the county 
 49.5   assessor may be made by the county assessor after the board of 
 49.6   review or the county board of equalization has adjourned; 
 49.7   however, corrections of errors that are merely clerical in 
 49.8   nature or changes that extend homestead treatment to property 
 49.9   are permitted after adjournment until the tax extension date for 
 49.10  that assessment year.  Any changes made by the assessor after 
 49.11  adjournment must be fully documented and maintained in a file in 
 49.12  the assessor's office and shall be available for review by any 
 49.13  person.  A copy of any changes made during this period shall be 
 49.14  sent to the county board no later than December 31 of the 
 49.15  assessment year.  In the event a valuation and classification is 
 49.16  not placed on any real property by the dates scheduled for the 
 49.17  local board of review or equalization the valuation and 
 49.18  classification determined in the preceding assessment shall be 
 49.19  continued in effect and the provisions of section 273.13 shall, 
 49.20  in such case, not be applicable, except with respect to real 
 49.21  estate which has been constructed since the previous 
 49.22  assessment.  Real property containing iron ore, the fee to which 
 49.23  is owned by the state of Minnesota, shall, if leased by the 
 49.24  state after January 2 in any year, be subject to assessment for 
 49.25  that year on the value of any iron ore removed under said lease 
 49.26  prior to January 2 of the following year.  Personal property 
 49.27  subject to taxation shall be listed and assessed annually with 
 49.28  reference to its value on January 2; and, if acquired on that 
 49.29  day, shall be listed by or for the person acquiring it.  
 49.30     [EFFECTIVE DATE.] This section is effective for assessments 
 49.31  on or after January 2, 2004. 
 49.32     Sec. 11.  Minnesota Statutes 2002, section 273.08, is 
 49.33  amended to read: 
 49.34     273.08 [ASSESSOR'S DUTIES.] 
 49.35     The assessor shall actually view, and determine the market 
 49.36  value of each tract or lot of real property listed for taxation, 
 50.1   including the value of all improvements and structures thereon, 
 50.2   at maximum intervals of four five years and shall enter the 
 50.3   value opposite each description. 
 50.4      [EFFECTIVE DATE.] This section is effective for assessments 
 50.5   on or after January 2, 2004. 
 50.6      Sec. 12.  Minnesota Statutes 2002, section 273.124, 
 50.7   subdivision 14, is amended to read: 
 50.8      Subd. 14.  [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 
 50.9   (a) Real estate of less than ten acres that is the homestead of 
 50.10  its owner must be classified as class 2a under section 273.13, 
 50.11  subdivision 23, paragraph (a), if:  
 50.12     (1) the parcel on which the house is located is contiguous 
 50.13  on at least two sides to (i) agricultural land, (ii) land owned 
 50.14  or administered by the United States Fish and Wildlife Service, 
 50.15  or (iii) land administered by the department of natural 
 50.16  resources on which in lieu taxes are paid under sections 477A.11 
 50.17  to 477A.14; 
 50.18     (2) its owner also owns a noncontiguous parcel of 
 50.19  agricultural land that is at least 20 acres; 
 50.20     (3) the noncontiguous land is located not farther than four 
 50.21  townships or cities, or a combination of townships or cities 
 50.22  from the homestead; and 
 50.23     (4) the agricultural use value of the noncontiguous land 
 50.24  and farm buildings is equal to at least 50 percent of the market 
 50.25  value of the house, garage, and one acre of land. 
 50.26     Homesteads initially classified as class 2a under the 
 50.27  provisions of this paragraph shall remain classified as class 
 50.28  2a, irrespective of subsequent changes in the use of adjoining 
 50.29  properties, as long as the homestead remains under the same 
 50.30  ownership, the owner owns a noncontiguous parcel of agricultural 
 50.31  land that is at least 20 acres, and the agricultural use value 
 50.32  qualifies under clause (4).  Homestead classification under this 
 50.33  paragraph is limited to property that qualified under this 
 50.34  paragraph for the 1998 assessment. 
 50.35     (b)(i) Agricultural property consisting of at least 40 
 50.36  acres shall be classified as the owner's homestead, to the same 
 51.1   extent as other agricultural homestead property, if all of the 
 51.2   following criteria are met: 
 51.3      (1) the owner, the owner's spouse, or the son or daughter 
 51.4   of the owner or owner's spouse, is actively farming the 
 51.5   agricultural property, either on the person's own behalf as an 
 51.6   individual or on behalf of a partnership operating a family 
 51.7   farm, family farm corporation, joint family farm venture, or 
 51.8   limited liability company of which the person is a partner, 
 51.9   shareholder, or member; 
 51.10     (2) both the owner of the agricultural property and the 
 51.11  person who is actively farming the agricultural property under 
 51.12  clause (1), are Minnesota residents; 
 51.13     (3) neither the owner nor the spouse of the owner claims 
 51.14  another agricultural homestead in Minnesota; and 
 51.15     (4) neither the owner nor the person actively farming the 
 51.16  property lives farther than four townships or cities, or a 
 51.17  combination of four townships or cities, from the agricultural 
 51.18  property, except that if the owner or the owner's spouse is 
 51.19  required to live in employer-provided housing, the owner or 
 51.20  owner's spouse, whichever is actively farming the agricultural 
 51.21  property, may live more than four townships or cities, or 
 51.22  combination of four townships or cities from the agricultural 
 51.23  property. 
 51.24     The relationship under this paragraph may be either by 
 51.25  blood or marriage. 
 51.26     (ii) Real property held by a trustee under a trust is 
 51.27  eligible for agricultural homestead classification under this 
 51.28  paragraph if the qualifications in clause (i) are met, except 
 51.29  that "owner" means the grantor of the trust. 
 51.30     (iii) Property containing the residence of an owner who 
 51.31  owns qualified property under clause (i) shall be classified as 
 51.32  part of the owner's agricultural homestead, if that property is 
 51.33  also used for noncommercial storage or drying of agricultural 
 51.34  crops. 
 51.35     (c) Noncontiguous land shall be included as part of a 
 51.36  homestead under section 273.13, subdivision 23, paragraph (a), 
 52.1   only if the homestead is classified as class 2a and the detached 
 52.2   land is located in the same township or city, or not farther 
 52.3   than four townships or cities or combination thereof from the 
 52.4   homestead.  Any taxpayer of these noncontiguous lands must 
 52.5   notify the county assessor that the noncontiguous land is part 
 52.6   of the taxpayer's homestead, and, if the homestead is located in 
 52.7   another county, the taxpayer must also notify the assessor of 
 52.8   the other county. 
 52.9      (d) Agricultural land used for purposes of a homestead and 
 52.10  actively farmed by a person holding a vested remainder interest 
 52.11  in it must be classified as a homestead under section 273.13, 
 52.12  subdivision 23, paragraph (a).  If agricultural land is 
 52.13  classified class 2a, any other dwellings on the land used for 
 52.14  purposes of a homestead by persons holding vested remainder 
 52.15  interests who are actively engaged in farming the property, and 
 52.16  up to one acre of the land surrounding each homestead and 
 52.17  reasonably necessary for the use of the dwelling as a home, must 
 52.18  also be assessed class 2a. 
 52.19     (e) Agricultural land and buildings that were class 2a 
 52.20  homestead property under section 273.13, subdivision 23, 
 52.21  paragraph (a), for the 1997 assessment shall remain classified 
 52.22  as agricultural homesteads for subsequent assessments if:  
 52.23     (1) the property owner abandoned the homestead dwelling 
 52.24  located on the agricultural homestead as a result of the April 
 52.25  1997 floods; 
 52.26     (2) the property is located in the county of Polk, Clay, 
 52.27  Kittson, Marshall, Norman, or Wilkin; 
 52.28     (3) the agricultural land and buildings remain under the 
 52.29  same ownership for the current assessment year as existed for 
 52.30  the 1997 assessment year and continue to be used for 
 52.31  agricultural purposes; 
 52.32     (4) the dwelling occupied by the owner is located in 
 52.33  Minnesota and is within 30 miles of one of the parcels of 
 52.34  agricultural land that is owned by the taxpayer; and 
 52.35     (5) the owner notifies the county assessor that the 
 52.36  relocation was due to the 1997 floods, and the owner furnishes 
 53.1   the assessor any information deemed necessary by the assessor in 
 53.2   verifying the change in dwelling.  Further notifications to the 
 53.3   assessor are not required if the property continues to meet all 
 53.4   the requirements in this paragraph and any dwellings on the 
 53.5   agricultural land remain uninhabited. 
 53.6      (f) Agricultural land and buildings that were class 2a 
 53.7   homestead property under section 273.13, subdivision 23, 
 53.8   paragraph (a), for the 1998 assessment shall remain classified 
 53.9   agricultural homesteads for subsequent assessments if: 
 53.10     (1) the property owner abandoned the homestead dwelling 
 53.11  located on the agricultural homestead as a result of damage 
 53.12  caused by a March 29, 1998, tornado; 
 53.13     (2) the property is located in the county of Blue Earth, 
 53.14  Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 
 53.15     (3) the agricultural land and buildings remain under the 
 53.16  same ownership for the current assessment year as existed for 
 53.17  the 1998 assessment year; 
 53.18     (4) the dwelling occupied by the owner is located in this 
 53.19  state and is within 50 miles of one of the parcels of 
 53.20  agricultural land that is owned by the taxpayer; and 
 53.21     (5) the owner notifies the county assessor that the 
 53.22  relocation was due to a March 29, 1998, tornado, and the owner 
 53.23  furnishes the assessor any information deemed necessary by the 
 53.24  assessor in verifying the change in homestead dwelling.  For 
 53.25  taxes payable in 1999, the owner must notify the assessor by 
 53.26  December 1, 1998.  Further notifications to the assessor are not 
 53.27  required if the property continues to meet all the requirements 
 53.28  in this paragraph and any dwellings on the agricultural land 
 53.29  remain uninhabited. 
 53.30     (g) Agricultural property consisting of at least 40 acres 
 53.31  of a family farm corporation, joint family farm venture, family 
 53.32  farm limited liability company, or partnership operating a 
 53.33  family farm as described under subdivision 8 shall be classified 
 53.34  homestead, to the same extent as other agricultural homestead 
 53.35  property, if all of the following criteria are met: 
 53.36     (1) a shareholder, member, or partner of that entity is 
 54.1   actively farming the agricultural property; 
 54.2      (2) that shareholder, member, or partner who is actively 
 54.3   farming the agricultural property is a Minnesota resident; 
 54.4      (3) neither that shareholder, member, or partner, nor the 
 54.5   spouse of that shareholder, member, or partner claims another 
 54.6   agricultural homestead in Minnesota; and 
 54.7      (4) that shareholder, member, or partner does not live 
 54.8   farther than four townships or cities, or a combination of four 
 54.9   townships or cities, from the agricultural property. 
 54.10     Homestead treatment applies under this paragraph for 
 54.11  property leased to a family farm corporation, joint farm 
 54.12  venture, limited liability company, or partnership operating a 
 54.13  family farm if legal title to the property is in the name of an 
 54.14  individual who is a member, shareholder, or partner in the 
 54.15  entity. 
 54.16     (h) To be eligible for the special agricultural homestead 
 54.17  under this subdivision, an initial full application must be 
 54.18  submitted to the county assessor where the property is located.  
 54.19  Owners and the persons who are actively farming the property 
 54.20  shall be required to complete only a one-page abbreviated 
 54.21  version of the application in each subsequent year provided that 
 54.22  none of the following items have changed since the initial 
 54.23  application: 
 54.24     (1) the day-to-day operation, administration, and financial 
 54.25  risks remain the same; 
 54.26     (2) the owners and the persons actively farming the 
 54.27  property continue to live within the four townships or city 
 54.28  criteria and are Minnesota residents; 
 54.29     (3) the same operator of the agricultural property is 
 54.30  listed with the farm service agency; 
 54.31     (4) a Schedule F or equivalent income tax form was filed 
 54.32  for the most recent year; 
 54.33     (5) the property's acreage is unchanged; and 
 54.34     (6) none of the property's acres have been enrolled in a 
 54.35  federal or state farm program since the initial application. 
 54.36     The owners and any persons who are actively farming the 
 55.1   property must include the appropriate social security numbers, 
 55.2   and sign and date the application.  If any of the specified 
 55.3   information has changed since the full application was filed, 
 55.4   the owner must notify the assessor, and must complete a new 
 55.5   application to determine if the property continues to qualify 
 55.6   for the special agricultural homestead.  The commissioner of 
 55.7   revenue shall prepare a standard reapplication form for use by 
 55.8   the assessors. 
 55.9      [EFFECTIVE DATE.] This section is effective for 
 55.10  applications filed for the 2004 assessment and thereafter. 
 55.11     Sec. 13.  Minnesota Statutes 2002, section 273.13, 
 55.12  subdivision 22, is amended to read: 
 55.13     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 55.14  23 and in paragraphs (b) and (c), real estate which is 
 55.15  residential and used for homestead purposes is class 1a.  In the 
 55.16  case of a duplex or triplex in which one of the units is used 
 55.17  for homestead purposes, the entire property is deemed to be used 
 55.18  for homestead purposes.  The market value of class 1a property 
 55.19  must be determined based upon the value of the house, garage, 
 55.20  and land.  
 55.21     The first $500,000 of market value of class 1a property has 
 55.22  a net class rate of one percent of its market value; and the 
 55.23  market value of class 1a property that exceeds $500,000 has a 
 55.24  class rate of 1.25 percent of its market value. 
 55.25     (b) Class 1b property includes homestead real estate or 
 55.26  homestead manufactured homes used for the purposes of a 
 55.27  homestead by 
 55.28     (1) any blind person who is blind as defined in section 
 55.29  256D.35, or the blind person and the blind person's spouse; or 
 55.30     (2) any person, hereinafter referred to as "veteran," who: 
 55.31     (i) served in the active military or naval service of the 
 55.32  United States; and 
 55.33     (ii) is entitled to compensation under the laws and 
 55.34  regulations of the United States for permanent and total 
 55.35  service-connected disability due to the loss, or loss of use, by 
 55.36  reason of amputation, ankylosis, progressive muscular 
 56.1   dystrophies, or paralysis, of both lower extremities, such as to 
 56.2   preclude motion without the aid of braces, crutches, canes, or a 
 56.3   wheelchair; and 
 56.4      (iii) has acquired a special housing unit with special 
 56.5   fixtures or movable facilities made necessary by the nature of 
 56.6   the veteran's disability, or the surviving spouse of the 
 56.7   deceased veteran for as long as the surviving spouse retains the 
 56.8   special housing unit as a homestead; or 
 56.9      (3) any person who: 
 56.10     (i) is permanently and totally disabled and 
 56.11     (ii) receives 90 percent or more of total household income, 
 56.12  as defined in section 290A.03, subdivision 5, from 
 56.13     (A) aid from any state as a result of that disability; or 
 56.14     (B) supplemental security income for the disabled; or 
 56.15     (C) workers' compensation based on a finding of total and 
 56.16  permanent disability; or 
 56.17     (D) social security disability, including the amount of a 
 56.18  disability insurance benefit which is converted to an old age 
 56.19  insurance benefit and any subsequent cost of living increases; 
 56.20  or 
 56.21     (E) aid under the federal Railroad Retirement Act of 1937, 
 56.22  United States Code Annotated, title 45, section 228b(a)5; or 
 56.23     (F) a pension from any local government retirement fund 
 56.24  located in the state of Minnesota as a result of that 
 56.25  disability; or 
 56.26     (G) pension, annuity, or other income paid as a result of 
 56.27  that disability from a private pension or disability plan, 
 56.28  including employer, employee, union, and insurance plans and 
 56.29     (iii) has household income as defined in section 290A.03, 
 56.30  subdivision 5, of $50,000 or less; or 
 56.31     (4) any person who is permanently and totally disabled and 
 56.32  whose household income as defined in section 290A.03, 
 56.33  subdivision 5, is 275 percent or less of the federal poverty 
 56.34  level. 
 56.35     Property is classified and assessed under clause (4) (3) 
 56.36  only if the government agency or income-providing source 
 57.1   certifies, upon the request of the homestead occupant, that the 
 57.2   homestead occupant satisfies the disability requirements of this 
 57.3   paragraph. 
 57.4      Property is classified and assessed pursuant to clause (1) 
 57.5   only if the commissioner of economic security revenue certifies 
 57.6   to the assessor that the homestead occupant satisfies the 
 57.7   requirements of this paragraph.  
 57.8      Permanently and totally disabled for the purpose of this 
 57.9   subdivision means a condition which is permanent in nature and 
 57.10  totally incapacitates the person from working at an occupation 
 57.11  which brings the person an income.  The first $32,000 market 
 57.12  value of class 1b property has a net class rate of .45 percent 
 57.13  of its market value.  The remaining market value of class 1b 
 57.14  property has a class rate using the rates for class 1a or class 
 57.15  2a property, whichever is appropriate, of similar market value.  
 57.16     (c) Class 1c property is commercial use real property that 
 57.17  abuts a lakeshore line and is devoted to temporary and seasonal 
 57.18  residential occupancy for recreational purposes but not devoted 
 57.19  to commercial purposes for more than 250 days in the year 
 57.20  preceding the year of assessment, and that includes a portion 
 57.21  used as a homestead by the owner, which includes a dwelling 
 57.22  occupied as a homestead by a shareholder of a corporation that 
 57.23  owns the resort or, a partner in a partnership that owns the 
 57.24  resort, or a member of a limited liability company that owns the 
 57.25  resort even if the title to the homestead is held by the 
 57.26  corporation or, partnership, or limited liability company.  For 
 57.27  purposes of this clause, property is devoted to a commercial 
 57.28  purpose on a specific day if any portion of the property, 
 57.29  excluding the portion used exclusively as a homestead, is used 
 57.30  for residential occupancy and a fee is charged for residential 
 57.31  occupancy.  The first $500,000 of market value of class 1c 
 57.32  property has a class rate of one percent, and the remaining 
 57.33  market value of class 1c property has a class rate of one 
 57.34  percent, with the following limitation:  the area of the 
 57.35  property must not exceed 100 feet of lakeshore footage for each 
 57.36  cabin or campsite located on the property up to a total of 800 
 58.1   feet and 500 feet in depth, measured away from the lakeshore.  
 58.2   If any portion of the class 1c resort property is classified as 
 58.3   class 4c under subdivision 25, the entire property must meet the 
 58.4   requirements of subdivision 25, paragraph (d), clause (1), to 
 58.5   qualify for class 1c treatment under this paragraph. 
 58.6      (d) Class 1d property includes structures that meet all of 
 58.7   the following criteria: 
 58.8      (1) the structure is located on property that is classified 
 58.9   as agricultural property under section 273.13, subdivision 23; 
 58.10     (2) the structure is occupied exclusively by seasonal farm 
 58.11  workers during the time when they work on that farm, and the 
 58.12  occupants are not charged rent for the privilege of occupying 
 58.13  the property, provided that use of the structure for storage of 
 58.14  farm equipment and produce does not disqualify the property from 
 58.15  classification under this paragraph; 
 58.16     (3) the structure meets all applicable health and safety 
 58.17  requirements for the appropriate season; and 
 58.18     (4) the structure is not salable as residential property 
 58.19  because it does not comply with local ordinances relating to 
 58.20  location in relation to streets or roads. 
 58.21     The market value of class 1d property has the same class 
 58.22  rates as class 1a property under paragraph (a). 
 58.23     [EFFECTIVE DATE.] This section is effective for property 
 58.24  taxes levied in 2003, payable in 2004, and thereafter, except 
 58.25  that the amendments to paragraph (b) are effective for taxes 
 58.26  payable in 2005 and thereafter. 
 58.27     Sec. 14.  Minnesota Statutes 2002, section 273.13, 
 58.28  subdivision 23, is amended to read: 
 58.29     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 58.30  land including any improvements that is homesteaded.  The market 
 58.31  value of the house and garage and immediately surrounding one 
 58.32  acre of land has the same class rates as class 1a property under 
 58.33  subdivision 22.  The value of the remaining land including 
 58.34  improvements up to and including $600,000 market value has a net 
 58.35  class rate of 0.55 percent of market value.  The remaining 
 58.36  property over $600,000 market value has a class rate of one 
 59.1   percent of market value. 
 59.2      (b) Class 2b property is (1) real estate, rural in 
 59.3   character and used exclusively for growing trees for timber, 
 59.4   lumber, and wood and wood products; (2) real estate that is not 
 59.5   improved with a structure and is used exclusively for growing 
 59.6   trees for timber, lumber, and wood and wood products, if the 
 59.7   owner has participated or is participating in a cost-sharing 
 59.8   program for afforestation, reforestation, or timber stand 
 59.9   improvement on that particular property, administered or 
 59.10  coordinated by the commissioner of natural resources; (3) real 
 59.11  estate that is nonhomestead agricultural land; or (4) a landing 
 59.12  area or public access area of a privately owned public use 
 59.13  airport.  Class 2b property has a net class rate of one percent 
 59.14  of market value. 
 59.15     (c) Agricultural land as used in this section means 
 59.16  contiguous acreage of ten acres or more, used during the 
 59.17  preceding year for agricultural purposes.  "Agricultural 
 59.18  purposes" as used in this section means the raising or 
 59.19  cultivation of agricultural products.  "Agricultural purposes" 
 59.20  also includes or enrollment in the Reinvest in Minnesota program 
 59.21  under sections 103F.501 to 103F.535 or the federal Conservation 
 59.22  Reserve Program as contained in Public Law Number 99-198 if the 
 59.23  property was classified as agricultural (i) under this 
 59.24  subdivision for the assessment year 2002 or (ii) in the year 
 59.25  prior to its enrollment.  Contiguous acreage on the same parcel, 
 59.26  or contiguous acreage on an immediately adjacent parcel under 
 59.27  the same ownership, may also qualify as agricultural land, but 
 59.28  only if it is pasture, timber, waste, unusable wild land, or 
 59.29  land included in state or federal farm programs.  Agricultural 
 59.30  classification for property shall be determined excluding the 
 59.31  house, garage, and immediately surrounding one acre of land, and 
 59.32  shall not be based upon the market value of any residential 
 59.33  structures on the parcel or contiguous parcels under the same 
 59.34  ownership. 
 59.35     (d) Real estate, excluding the house, garage, and 
 59.36  immediately surrounding one acre of land, of less than ten acres 
 60.1   which is exclusively and intensively used for raising or 
 60.2   cultivating agricultural products, shall be considered as 
 60.3   agricultural land.  
 60.4      Land shall be classified as agricultural even if all or a 
 60.5   portion of the agricultural use of that property is the leasing 
 60.6   to, or use by another person for agricultural purposes. 
 60.7      Classification under this subdivision is not determinative 
 60.8   for qualifying under section 273.111. 
 60.9      The property classification under this section supersedes, 
 60.10  for property tax purposes only, any locally administered 
 60.11  agricultural policies or land use restrictions that define 
 60.12  minimum or maximum farm acreage. 
 60.13     (e) The term "agricultural products" as used in this 
 60.14  subdivision includes production for sale of:  
 60.15     (1) livestock, dairy animals, dairy products, poultry and 
 60.16  poultry products, fur-bearing animals, horticultural and nursery 
 60.17  stock described in sections 18.44 to 18.61, fruit of all kinds, 
 60.18  vegetables, forage, grains, bees, and apiary products by the 
 60.19  owner; 
 60.20     (2) fish bred for sale and consumption if the fish breeding 
 60.21  occurs on land zoned for agricultural use; 
 60.22     (3) the commercial boarding of horses if the boarding is 
 60.23  done in conjunction with raising or cultivating agricultural 
 60.24  products as defined in clause (1); 
 60.25     (4) property which is owned and operated by nonprofit 
 60.26  organizations used for equestrian activities, excluding racing; 
 60.27     (5) game birds and waterfowl bred and raised for use on a 
 60.28  shooting preserve licensed under section 97A.115; 
 60.29     (6) insects primarily bred to be used as food for animals; 
 60.30     (7) trees, grown for sale as a crop, and not sold for 
 60.31  timber, lumber, wood, or wood products; and 
 60.32     (8) maple syrup taken from trees grown by a person licensed 
 60.33  by the Minnesota department of agriculture under chapter 28A as 
 60.34  a food processor. 
 60.35     (f) If a parcel used for agricultural purposes is also used 
 60.36  for commercial or industrial purposes, including but not limited 
 61.1   to:  
 61.2      (1) wholesale and retail sales; 
 61.3      (2) processing of raw agricultural products or other goods; 
 61.4      (3) warehousing or storage of processed goods; and 
 61.5      (4) office facilities for the support of the activities 
 61.6   enumerated in clauses (1), (2), and (3), 
 61.7   the assessor shall classify the part of the parcel used for 
 61.8   agricultural purposes as class 1b, 2a, or 2b, whichever is 
 61.9   appropriate, and the remainder in the class appropriate to its 
 61.10  use.  The grading, sorting, and packaging of raw agricultural 
 61.11  products for first sale is considered an agricultural purpose.  
 61.12  A greenhouse or other building where horticultural or nursery 
 61.13  products are grown that is also used for the conduct of retail 
 61.14  sales must be classified as agricultural if it is primarily used 
 61.15  for the growing of horticultural or nursery products from seed, 
 61.16  cuttings, or roots and occasionally as a showroom for the retail 
 61.17  sale of those products.  Use of a greenhouse or building only 
 61.18  for the display of already grown horticultural or nursery 
 61.19  products does not qualify as an agricultural purpose.  
 61.20     The assessor shall determine and list separately on the 
 61.21  records the market value of the homestead dwelling and the one 
 61.22  acre of land on which that dwelling is located.  If any farm 
 61.23  buildings or structures are located on this homesteaded acre of 
 61.24  land, their market value shall not be included in this separate 
 61.25  determination.  
 61.26     (g) To qualify for classification under paragraph (b), 
 61.27  clause (4), a privately owned public use airport must be 
 61.28  licensed as a public airport under section 360.018.  For 
 61.29  purposes of paragraph (b), clause (4), "landing area" means that 
 61.30  part of a privately owned public use airport properly cleared, 
 61.31  regularly maintained, and made available to the public for use 
 61.32  by aircraft and includes runways, taxiways, aprons, and sites 
 61.33  upon which are situated landing or navigational aids.  A landing 
 61.34  area also includes land underlying both the primary surface and 
 61.35  the approach surfaces that comply with all of the following:  
 61.36     (i) the land is properly cleared and regularly maintained 
 62.1   for the primary purposes of the landing, taking off, and taxiing 
 62.2   of aircraft; but that portion of the land that contains 
 62.3   facilities for servicing, repair, or maintenance of aircraft is 
 62.4   not included as a landing area; 
 62.5      (ii) the land is part of the airport property; and 
 62.6      (iii) the land is not used for commercial or residential 
 62.7   purposes. 
 62.8   The land contained in a landing area under paragraph (b), clause 
 62.9   (4), must be described and certified by the commissioner of 
 62.10  transportation.  The certification is effective until it is 
 62.11  modified, or until the airport or landing area no longer meets 
 62.12  the requirements of paragraph (b), clause (4).  For purposes of 
 62.13  paragraph (b), clause (4), "public access area" means property 
 62.14  used as an aircraft parking ramp, apron, or storage hangar, or 
 62.15  an arrival and departure building in connection with the airport.
 62.16     [EFFECTIVE DATE.] This section is effective for taxes 
 62.17  payable in 2004 and thereafter. 
 62.18     Sec. 15.  Minnesota Statutes 2002, section 273.1315, is 
 62.19  amended to read: 
 62.20     273.1315 [CERTIFICATION OF 1B PROPERTY.] 
 62.21     Any property owner seeking classification and assessment of 
 62.22  the owner's homestead as class 1b property pursuant to section 
 62.23  273.13, subdivision 22, paragraph (b), clause (2) or (3), shall 
 62.24  file with the commissioner of revenue for each assessment year a 
 62.25  1b homestead declaration, on a form prescribed by the 
 62.26  commissioner.  The declaration shall contain the following 
 62.27  information:  
 62.28     (a) the information necessary to verify that the property 
 62.29  owner or the owner's spouse satisfies the requirements of 
 62.30  section 273.13, subdivision 22, paragraph (b), clause (2) or 
 62.31  (3), for 1b classification; and 
 62.32     (b) the property owner's household income, as defined in 
 62.33  section 290A.03, for the previous calendar year; and 
 62.34     (c) any additional information prescribed by the 
 62.35  commissioner.  
 62.36     The declaration shall must be filed on or before March 
 63.1   October 1 of each year to be effective for property taxes 
 63.2   payable during the succeeding calendar year.  The declaration 
 63.3   and any supplementary information received from the property 
 63.4   owner pursuant to this section shall be subject to chapter 
 63.5   270B.  If approved by the commissioner, the declaration remains 
 63.6   in effect until the property no longer qualifies under section 
 63.7   273.13, subdivision 22, paragraph (b).  Failure to notify the 
 63.8   commissioner within 30 days that the property no longer 
 63.9   qualifies under that paragraph because of a sale, change in 
 63.10  occupancy, or change in the status or condition of an occupant 
 63.11  shall result in the penalty provided in section 273.124, 
 63.12  subdivision 13, computed on the basis of the class 1b benefits 
 63.13  for the property, and the property shall lose its current class 
 63.14  1b classification. 
 63.15     The commissioner shall provide to the assessor on or before 
 63.16  April November 1 a listing of the parcels of property qualifying 
 63.17  for 1b classification.  
 63.18     [EFFECTIVE DATE.] This section is effective for taxes 
 63.19  payable in 2005 and thereafter. 
 63.20     Sec. 16.  [274.014] [LOCAL BOARDS; APPEALS AND EQUALIZATION 
 63.21  COURSE AND MEETING REQUIREMENTS.] 
 63.22     Subdivision 1.  [HANDBOOK FOR LOCAL BOARDS.] By no later 
 63.23  than January 1, 2005, the commissioner of revenue must develop a 
 63.24  handbook detailing procedures, responsibilities, and 
 63.25  requirements for local boards of appeal and equalization.  The 
 63.26  handbook must include, but need not be limited to, the role of 
 63.27  the local board in the assessment process, the legal and policy 
 63.28  reasons for fair and impartial appeal and equalization hearings, 
 63.29  local board meeting procedures that foster fair and impartial 
 63.30  assessment reviews and other best practices recommendations, 
 63.31  quorum requirements for local boards, and explanations of 
 63.32  alternate methods of appeal. 
 63.33     Subd. 2.  [APPEALS AND EQUALIZATION COURSE.] By no later 
 63.34  than January 1, 2006, and each year thereafter, there must be at 
 63.35  least one member at each meeting of a local board of appeal and 
 63.36  equalization who has attended an appeals and equalization course 
 64.1   developed or approved by the commissioner within the last four 
 64.2   years, as certified by the commissioner.  The course may be 
 64.3   offered in conjunction with a meeting of the Minnesota League of 
 64.4   Cities or the Minnesota Association of Townships.  The course 
 64.5   content must include, but need not be limited to, a review of 
 64.6   the handbook developed by the commissioner under subdivision 1. 
 64.7      Subd. 3.  [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] Any 
 64.8   city or town that does not provide proof to the county assessor 
 64.9   by December 1, 2006, and each year thereafter, that it is in 
 64.10  compliance with the requirements of subdivision 2, and that it 
 64.11  had a quorum at each meeting of the board of appeal and 
 64.12  equalization in the prior year, is deemed to have transferred 
 64.13  its board of appeal and equalization powers to the county under 
 64.14  section 274.01, subdivision 3, for the following year's 
 64.15  assessment. 
 64.16     The county shall notify the taxpayers when the board of 
 64.17  appeal and equalization for a city or town has been transferred 
 64.18  to the county under this subdivision and, prior to the meeting 
 64.19  time of the county board of equalization, the county shall make 
 64.20  available to those taxpayers a procedure for a review of the 
 64.21  assessments, including, but not limited to, open book meetings.  
 64.22  This alternate review process shall take place in April and May. 
 64.23     A local board whose powers are transferred to the county 
 64.24  under this subdivision may be reinstated by resolution of the 
 64.25  governing body of the city or town and upon proof of compliance 
 64.26  with the requirements of subdivision 2.  The resolution and 
 64.27  proofs must be provided to the county assessor by December 1 in 
 64.28  order to be effective for the following year's assessment. 
 64.29     [EFFECTIVE DATE.] This section is effective the day 
 64.30  following final enactment. 
 64.31     Sec. 17.  [275.75] [CHARTER EXEMPTION FOR AID LOSS.] 
 64.32     Notwithstanding any other provision of a municipal charter 
 64.33  that limits ad valorem taxes to a lesser amount, or that would 
 64.34  require voter approval for any increase, the governing body of a 
 64.35  municipality may by resolution increase its levy for taxes 
 64.36  payable in 2004 and 2005 only by an amount equal to the 
 65.1   reduction in the amount of aid it is certified to receive under 
 65.2   sections 477A.011 to 477A.03 for that same payable year compared 
 65.3   to the amount certified for payment in 2003. 
 65.4      Sec. 18.  Minnesota Statutes 2002, section 278.01, 
 65.5   subdivision 4, is amended to read: 
 65.6      Subd. 4.  [FILING OF APPEAL DEADLINE; EXCEPTION.] 
 65.7   Notwithstanding the March 31 April 30 date in subdivision 1, 
 65.8   whenever the exempt status, valuation, or classification of real 
 65.9   or personal property is changed other than by an abatement or a 
 65.10  court decision, and the owner responsible for payment of the tax 
 65.11  is not given notice of the change until after January 31 
 65.12  February 28 of the year the tax is payable or after July 1 in 
 65.13  the case of property subject to section 273.125, subdivision 4, 
 65.14  an eligible petitioner, as defined and limited in subdivision 1, 
 65.15  has 60 days from the date of mailing of the notice to initiate 
 65.16  an appeal of the property's exempt status, classification, or 
 65.17  valuation change under this chapter. 
 65.18     [EFFECTIVE DATE.] This section is effective for taxes 
 65.19  payable in 2003 and thereafter. 
 65.20     Sec. 19.  Minnesota Statutes 2002, section 278.05, 
 65.21  subdivision 6, is amended to read: 
 65.22     Subd. 6.  [DISMISSAL OF PETITION; EXCLUSION OF CERTAIN 
 65.23  EVIDENCE.] (a) Information, including income and expense 
 65.24  figures, verified net rentable areas, and anticipated income and 
 65.25  expenses, for income-producing property must be provided to the 
 65.26  county assessor within 60 days after the petition has been filed 
 65.27  under this chapter no later than 60 days after the applicable 
 65.28  filing deadline contained in section 278.01, subdivision 1 or 
 65.29  4.  Failure to provide the information required in this 
 65.30  paragraph shall result in the dismissal of the petition, 
 65.31  unless (1) the failure to provide it was due to the 
 65.32  unavailability of the evidence at that the time that the 
 65.33  information was due, or (2) the petitioner was not aware of or 
 65.34  informed of the requirement to provide the information. 
 65.35  If the petitioner proves that the requirements under clause (2) 
 65.36  are met, the petitioner has an additional 30 days to provide the 
 66.1   information from the time the petitioner became aware of or was 
 66.2   informed of the requirement to provide the information, 
 66.3   otherwise the petition shall be dismissed.  
 66.4      (b) Provided that the information as contained in paragraph 
 66.5   (a) is timely submitted to the county assessor, the county 
 66.6   assessor shall furnish the petitioner at least five days before 
 66.7   the hearing under this chapter with the property's appraisal, if 
 66.8   any, which will be presented to the court at the hearing.  The 
 66.9   petitioner shall furnish to the county assessor at least five 
 66.10  days before the hearing under this chapter with the property's 
 66.11  appraisal, if any, which will be presented to the court at the 
 66.12  hearing.  An appraisal of the petitioner's property done by or 
 66.13  for the county shall not be admissible as evidence if the county 
 66.14  assessor does not comply with the provisions in this paragraph.  
 66.15  The petition shall be dismissed if the petitioner does not 
 66.16  comply with the provisions in this paragraph. 
 66.17     [EFFECTIVE DATE.] This section is effective for petitions 
 66.18  filed on or after July 1, 2003. 
 66.19     Sec. 20.  Minnesota Statutes 2002, section 290A.03, 
 66.20  subdivision 8, is amended to read: 
 66.21     Subd. 8.  [CLAIMANT.] (a) "Claimant" means a person, other 
 66.22  than a dependent, as defined under sections 151 and 152 of the 
 66.23  Internal Revenue Code disregarding section 152(b)(3) of the 
 66.24  Internal Revenue Code, who filed a claim authorized by this 
 66.25  chapter and who was a resident of this state as provided in 
 66.26  chapter 290 during the calendar year for which the claim for 
 66.27  relief was filed. 
 66.28     (b) In the case of a claim relating to rent constituting 
 66.29  property taxes, the claimant shall have resided in a rented or 
 66.30  leased unit on which ad valorem taxes or payments made in lieu 
 66.31  of ad valorem taxes, including payments of special assessments 
 66.32  imposed in lieu of ad valorem taxes, are payable at some time 
 66.33  during the calendar year covered by the claim.  
 66.34     (c) "Claimant" shall not include a resident of a nursing 
 66.35  home, intermediate care facility, or long-term residential 
 66.36  facility, or a facility that accepts group residential housing 
 67.1   payments whose rent constituting property taxes is paid pursuant 
 67.2   to the supplemental security income program under title XVI of 
 67.3   the Social Security Act, the Minnesota supplemental aid program 
 67.4   under sections 256D.35 to 256D.54, the medical assistance 
 67.5   program pursuant to title XIX of the Social Security Act, or the 
 67.6   general assistance medical care program pursuant to section 
 67.7   256D.03, subdivision 3, or the group residential housing program 
 67.8   under chapter 256I. 
 67.9   If only a portion of the rent constituting property taxes is 
 67.10  paid by these programs, the resident shall be a claimant for 
 67.11  purposes of this chapter, but the refund calculated pursuant to 
 67.12  section 290A.04 shall be multiplied by a fraction, the numerator 
 67.13  of which is income as defined in subdivision 3, paragraphs (1) 
 67.14  and (2), reduced by the total amount of income from the above 
 67.15  sources other than vendor payments under the medical assistance 
 67.16  program or the general assistance medical care program and the 
 67.17  denominator of which is income as defined in subdivision 3, 
 67.18  paragraphs (1) and (2), plus vendor payments under the medical 
 67.19  assistance program or the general assistance medical care 
 67.20  program, to determine the allowable refund pursuant to this 
 67.21  chapter. 
 67.22     (d) Notwithstanding paragraph (c), if the claimant was a 
 67.23  resident of the nursing home, intermediate care facility or, 
 67.24  long-term residential facility, or facility for which the rent 
 67.25  was paid for the claimant by the group residential housing 
 67.26  program for only a portion of the calendar year covered by the 
 67.27  claim, the claimant may compute rent constituting property taxes 
 67.28  by disregarding the rent constituting property taxes from the 
 67.29  nursing home, intermediate care facility, or long-term 
 67.30  residential facility and use only that amount of rent 
 67.31  constituting property taxes or property taxes payable relating 
 67.32  to that portion of the year when the claimant was not in the 
 67.33  facility.  The claimant's household income is the income for the 
 67.34  entire calendar year covered by the claim.  
 67.35     (e) In the case of a claim for rent constituting property 
 67.36  taxes of a part-year Minnesota resident, the income and rental 
 68.1   reflected in this computation shall be for the period of 
 68.2   Minnesota residency only.  Any rental expenses paid which may be 
 68.3   reflected in arriving at federal adjusted gross income cannot be 
 68.4   utilized for this computation.  When two individuals of a 
 68.5   household are able to meet the qualifications for a claimant, 
 68.6   they may determine among them as to who the claimant shall be. 
 68.7   If they are unable to agree, the matter shall be referred to the 
 68.8   commissioner of revenue whose decision shall be final.  If a 
 68.9   homestead property owner was a part-year Minnesota resident, the 
 68.10  income reflected in the computation made pursuant to section 
 68.11  290A.04 shall be for the entire calendar year, including income 
 68.12  not assignable to Minnesota. 
 68.13     (f) If a homestead is occupied by two or more renters, who 
 68.14  are not husband and wife, the rent shall be deemed to be paid 
 68.15  equally by each, and separate claims shall be filed by each.  
 68.16  The income of each shall be each renter's household income for 
 68.17  purposes of computing the amount of credit to be allowed. 
 68.18     [EFFECTIVE DATE.] This section is effective for claims 
 68.19  based on rent paid in 2003 and thereafter. 
 68.20     Sec. 21.  Laws 1989, chapter 211, section 8, subdivision 2, 
 68.21  as amended by Laws 2002, chapter 390, section 24, is amended to 
 68.22  read: 
 68.23     Subd. 2.  [OPERATION OF DISTRICT.] (a) A hospital district 
 68.24  created under this section shall be subject to Minnesota 
 68.25  Statutes, sections 447.32, except subdivision 1, to 447.41, and 
 68.26  except as provided otherwise in this act.  
 68.27     (b) A hospital district created under this section is a 
 68.28  municipal corporation and a political subdivision of the state. 
 68.29     [EFFECTIVE DATE.] This section is effective upon compliance 
 68.30  with Minnesota Statutes, section 645.021, subdivision 3, by the 
 68.31  governing body of the Cook county hospital district. 
 68.32     Sec. 22.  Laws 1989, chapter 211, section 8, subdivision 4, 
 68.33  as amended by Laws 2002, chapter 390, section 24, is amended to 
 68.34  read: 
 68.35     Subd. 4.  [TAX LEVY.] The tax levied under Minnesota 
 68.36  Statutes, section 447.34, shall not exceed $300,000 in any year, 
 69.1   and its for taxes levied in 2002.  For taxes levied in 2003 and 
 69.2   subsequent years, the tax must not exceed the lesser of: 
 69.3      (1) the product of the hospital district's property tax 
 69.4   levy limitation for the previous year determined under this 
 69.5   subdivision, multiplied by 103 percent; or 
 69.6      (2) the product of the hospital district's property tax 
 69.7   levy limitation for the previous year determined under this 
 69.8   subdivision multiplied by the ratio of the most recent available 
 69.9   annual medical care expenditure category of the revised Consumer 
 69.10  Price Index, U.S. citywide average, for all urban consumers 
 69.11  prepared by the United States Department of Labor to the same 
 69.12  annual index for the previous year. 
 69.13     The proceeds of the tax may be used for all purposes of the 
 69.14  hospital district. 
 69.15     [EFFECTIVE DATE.] This section is effective upon compliance 
 69.16  with Minnesota Statutes, section 645.021, subdivision 3, by the 
 69.17  governing body of the Cook county hospital district. 
 69.18                             ARTICLE 3 
 69.19            DEPARTMENT INCOME, CORPORATE FRANCHISE, AND 
 69.20                       ESTATE TAX INITIATIVES 
 69.21     Section 1.  Minnesota Statutes 2002, section 289A.10, 
 69.22  subdivision 1, is amended to read: 
 69.23     Subdivision 1.  [RETURN REQUIRED.] In the case of a 
 69.24  decedent who has an interest in property with a situs in 
 69.25  Minnesota, the personal representative must submit a Minnesota 
 69.26  estate tax return to the commissioner, on a form prescribed by 
 69.27  the commissioner, if: 
 69.28     (1) a federal estate tax return is required to be filed; or 
 69.29     (2) the federal gross estate exceeds $700,000 for estates 
 69.30  of decedents dying after December 31, 2001, and before January 
 69.31  1, 2004; $850,000 for estates of decedents dying after December 
 69.32  31, 2003, and before January 1, 2005; $950,000 for estates of 
 69.33  decedents dying after December 31, 2004, and before January 1, 
 69.34  2006; and $1,000,000 for estates of decedents dying after 
 69.35  December 31, 2005. 
 69.36     The return must contain a computation of the Minnesota 
 70.1   estate tax due.  The return must be signed by the personal 
 70.2   representative. 
 70.3      [EFFECTIVE DATE.] This section is effective for estates of 
 70.4   decedents dying after December 31, 2002. 
 70.5      Sec. 2.  Minnesota Statutes 2002, section 289A.19, 
 70.6   subdivision 4, is amended to read: 
 70.7      Subd. 4.  [ESTATE TAX RETURNS.] When in the commissioner's 
 70.8   judgment good cause exists, the commissioner may extend the time 
 70.9   for filing an estate tax return for not more than six months.  
 70.10  When an extension to file the federal estate tax return has been 
 70.11  granted under section 6081 of the Internal Revenue Code, the 
 70.12  time for filing the estate tax return is extended for that 
 70.13  period.  
 70.14     [EFFECTIVE DATE.] This section is effective for estates of 
 70.15  decedents dying after December 31, 2001. 
 70.16     Sec. 3.  Minnesota Statutes 2002, section 289A.31, is 
 70.17  amended by adding a subdivision to read: 
 70.18     Subd. 8.  [LIABILITY OF VENDOR FOR REPAYMENT OF REFUND.] If 
 70.19  an individual income tax refund resulting from claiming an 
 70.20  education credit under section 290.0674 is paid by means of 
 70.21  directly depositing the proceeds of the refund into a bank 
 70.22  account controlled by the vendor of the product or service upon 
 70.23  which the education credit is based, and the commissioner 
 70.24  subsequently disallows the credit, the commissioner may seek 
 70.25  repayment of the refund from the vendor.  The amount of the 
 70.26  repayment must be assessed and collected in the same time and 
 70.27  manner as an erroneous refund under section 289A.37, subdivision 
 70.28  2. 
 70.29     [EFFECTIVE DATE.] This section is effective for refunds 
 70.30  paid to accounts controlled by a vendor on or after the day 
 70.31  following final enactment. 
 70.32     Sec. 4.  Minnesota Statutes 2002, section 289A.56, 
 70.33  subdivision 3, is amended to read: 
 70.34     Subd. 3.  [WITHHOLDING TAX, ENTERTAINER WITHHOLDING TAX, 
 70.35  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, ESTATE 
 70.36  TAX, AND SALES TAX OVERPAYMENTS.] When a refund is due for 
 71.1   overpayments of withholding tax, entertainer withholding tax, or 
 71.2   withholding from payments to out-of-state contractors, or estate 
 71.3   tax, interest is computed from the date of payment to the date 
 71.4   the refund is paid or credited.  For purposes of this 
 71.5   subdivision, the date of payment is the later of the date the 
 71.6   tax was finally due or was paid. 
 71.7      For the purposes of computing interest on estate tax 
 71.8   refunds, interest is paid from the later of the date of 
 71.9   overpayment, the date the estate tax return is due, or the date 
 71.10  the original estate tax return is filed to the date the refund 
 71.11  is paid. 
 71.12     For purposes of computing interest on sales and use tax 
 71.13  refunds, interest is paid from the date of payment to the date 
 71.14  the refund is paid or credited, if the refund claim includes a 
 71.15  detailed schedule reflecting the tax periods covered in the 
 71.16  claim.  If the refund claim submitted does not include a 
 71.17  detailed schedule reflecting the tax periods covered in the 
 71.18  claim, interest is computed from the date the claim was filed. 
 71.19     [EFFECTIVE DATE.] This section is effective for estates of 
 71.20  decedents dying after December 31, 2003. 
 71.21     Sec. 5.  Minnesota Statutes 2002, section 289A.60, 
 71.22  subdivision 7, is amended to read: 
 71.23     Subd. 7.  [PENALTY FOR FRIVOLOUS RETURN.] If a taxpayer 
 71.24  files what purports to be a tax return or a claim for refund but 
 71.25  which does not contain information on which the substantial 
 71.26  correctness of the purported return or claim for refund may be 
 71.27  judged or contains information that on its face shows that the 
 71.28  purported return or claim for refund is substantially incorrect 
 71.29  and the conduct is due to a position that is frivolous or a 
 71.30  desire that appears on the purported return or claim for refund 
 71.31  to delay or impede the administration of Minnesota tax laws, 
 71.32  then the individual shall pay a penalty of $500 the greater of 
 71.33  $1,000 or 25 percent of the amount of tax required to be shown 
 71.34  on the return.  In a proceeding involving the issue of whether 
 71.35  or not a person is liable for this penalty, the burden of proof 
 71.36  is on the commissioner.  
 72.1      [EFFECTIVE DATE.] This section is effective for returns 
 72.2   filed after December 31, 2003. 
 72.3      Sec. 6.  Minnesota Statutes 2002, section 290.01, 
 72.4   subdivision 19a, is amended to read: 
 72.5      Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 72.6   individuals, estates, and trusts, there shall be added to 
 72.7   federal taxable income: 
 72.8      (1)(i) interest income on obligations of any state other 
 72.9   than Minnesota or a political or governmental subdivision, 
 72.10  municipality, or governmental agency or instrumentality of any 
 72.11  state other than Minnesota exempt from federal income taxes 
 72.12  under the Internal Revenue Code or any other federal statute; 
 72.13  and 
 72.14     (ii) exempt-interest dividends as defined in section 
 72.15  852(b)(5) of the Internal Revenue Code, except the portion of 
 72.16  the exempt-interest dividends derived from interest income on 
 72.17  obligations of the state of Minnesota or its political or 
 72.18  governmental subdivisions, municipalities, governmental agencies 
 72.19  or instrumentalities, but only if the portion of the 
 72.20  exempt-interest dividends from such Minnesota sources paid to 
 72.21  all shareholders represents 95 percent or more of the 
 72.22  exempt-interest dividends that are paid by the regulated 
 72.23  investment company as defined in section 851(a) of the Internal 
 72.24  Revenue Code, or the fund of the regulated investment company as 
 72.25  defined in section 851(g) of the Internal Revenue Code, making 
 72.26  the payment; and 
 72.27     (iii) for the purposes of items (i) and (ii), interest on 
 72.28  obligations of an Indian tribal government described in section 
 72.29  7871(c) of the Internal Revenue Code shall be treated as 
 72.30  interest income on obligations of the state in which the tribe 
 72.31  is located; 
 72.32     (2) the amount of income taxes paid or accrued within the 
 72.33  taxable year under this chapter and income taxes paid to any 
 72.34  other state or to any province or territory of Canada, to the 
 72.35  extent allowed as a deduction under section 63(d) of the 
 72.36  Internal Revenue Code, but the addition may not be more than the 
 73.1   amount by which the itemized deductions as allowed under section 
 73.2   63(d) of the Internal Revenue Code exceeds the amount of the 
 73.3   standard deduction as defined in section 63(c) of the Internal 
 73.4   Revenue Code.  For the purpose of this paragraph, the 
 73.5   disallowance of itemized deductions under section 68 of the 
 73.6   Internal Revenue Code of 1986, income tax is the last itemized 
 73.7   deduction disallowed; 
 73.8      (3) the capital gain amount of a lump sum distribution to 
 73.9   which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 73.10  Reform Act of 1986, Public Law Number 99-514, applies; 
 73.11     (4) the amount of income taxes paid or accrued within the 
 73.12  taxable year under this chapter and income taxes paid to any 
 73.13  other state or any province or territory of Canada, to the 
 73.14  extent allowed as a deduction in determining federal adjusted 
 73.15  gross income.  For the purpose of this paragraph, income taxes 
 73.16  do not include the taxes imposed by sections 290.0922, 
 73.17  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 73.18     (5) the amount of expense, interest, or taxes disallowed 
 73.19  pursuant to section 290.10; 
 73.20     (6) the amount of a partner's pro rata share of net income 
 73.21  which does not flow through to the partner because the 
 73.22  partnership elected to pay the tax on the income under section 
 73.23  6242(a)(2) of the Internal Revenue Code; and 
 73.24     (7) 80 percent of the depreciation deduction allowed under 
 73.25  section 168(k) of the Internal Revenue Code.  For purposes of 
 73.26  this clause, if the taxpayer has an activity that in the taxable 
 73.27  year generates a deduction for depreciation under section 168(k) 
 73.28  and the activity generates a loss for the taxable year that the 
 73.29  taxpayer is not allowed to claim for the taxable year, "the 
 73.30  depreciation allowed under section 168(k)" for the taxable year 
 73.31  is limited to excess of the depreciation claimed by the activity 
 73.32  under section 168(k) over the amount of the loss from the 
 73.33  activity that is not allowed in the taxable year.  In succeeding 
 73.34  taxable years when the losses not allowed in the taxable year 
 73.35  are allowed, the depreciation under section 168(k) is allowed. 
 73.36     [EFFECTIVE DATE.] This section is effective for taxable 
 74.1   years ending after September 10, 2001. 
 74.2      Sec. 7.  Minnesota Statutes 2002, section 290.01, 
 74.3   subdivision 19b, is amended to read: 
 74.4      Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 74.5   individuals, estates, and trusts, there shall be subtracted from 
 74.6   federal taxable income: 
 74.7      (1) interest income on obligations of any authority, 
 74.8   commission, or instrumentality of the United States to the 
 74.9   extent includable in taxable income for federal income tax 
 74.10  purposes but exempt from state income tax under the laws of the 
 74.11  United States; 
 74.12     (2) if included in federal taxable income, the amount of 
 74.13  any overpayment of income tax to Minnesota or to any other 
 74.14  state, for any previous taxable year, whether the amount is 
 74.15  received as a refund or as a credit to another taxable year's 
 74.16  income tax liability; 
 74.17     (3) the amount paid to others, less the amount used to 
 74.18  claim the credit allowed under section 290.0674, not to exceed 
 74.19  $1,625 for each qualifying child in grades kindergarten to 6 and 
 74.20  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 74.21  textbooks, and transportation of each qualifying child in 
 74.22  attending an elementary or secondary school situated in 
 74.23  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 74.24  wherein a resident of this state may legally fulfill the state's 
 74.25  compulsory attendance laws, which is not operated for profit, 
 74.26  and which adheres to the provisions of the Civil Rights Act of 
 74.27  1964 and chapter 363.  For the purposes of this clause, 
 74.28  "tuition" includes fees or tuition as defined in section 
 74.29  290.0674, subdivision 1, clause (1).  As used in this clause, 
 74.30  "textbooks" includes books and other instructional materials and 
 74.31  equipment purchased or leased for use in elementary and 
 74.32  secondary schools in teaching only those subjects legally and 
 74.33  commonly taught in public elementary and secondary schools in 
 74.34  this state.  Equipment expenses qualifying for deduction 
 74.35  includes expenses as defined and limited in section 290.0674, 
 74.36  subdivision 1, clause (3).  "Textbooks" does not include 
 75.1   instructional books and materials used in the teaching of 
 75.2   religious tenets, doctrines, or worship, the purpose of which is 
 75.3   to instill such tenets, doctrines, or worship, nor does it 
 75.4   include books or materials for, or transportation to, 
 75.5   extracurricular activities including sporting events, musical or 
 75.6   dramatic events, speech activities, driver's education, or 
 75.7   similar programs.  For purposes of the subtraction provided by 
 75.8   this clause, "qualifying child" has the meaning given in section 
 75.9   32(c)(3) of the Internal Revenue Code; 
 75.10     (4) income as provided under section 290.0802; 
 75.11     (5) to the extent included in federal adjusted gross 
 75.12  income, income realized on disposition of property exempt from 
 75.13  tax under section 290.491; 
 75.14     (6) to the extent not deducted in determining federal 
 75.15  taxable income or used to claim the long-term care insurance 
 75.16  credit under section 290.0672, the amount paid for health 
 75.17  insurance of self-employed individuals as determined under 
 75.18  section 162(l) of the Internal Revenue Code, except that the 
 75.19  percent limit does not apply.  If the individual deducted 
 75.20  insurance payments under section 213 of the Internal Revenue 
 75.21  Code of 1986, the subtraction under this clause must be reduced 
 75.22  by the lesser of: 
 75.23     (i) the total itemized deductions allowed under section 
 75.24  63(d) of the Internal Revenue Code, less state, local, and 
 75.25  foreign income taxes deductible under section 164 of the 
 75.26  Internal Revenue Code and the standard deduction under section 
 75.27  63(c) of the Internal Revenue Code; or 
 75.28     (ii) the lesser of (A) the amount of insurance qualifying 
 75.29  as "medical care" under section 213(d) of the Internal Revenue 
 75.30  Code to the extent not deducted under section 162(1) of the 
 75.31  Internal Revenue Code or excluded from income or (B) the total 
 75.32  amount deductible for medical care under section 213(a); 
 75.33     (7) the exemption amount allowed under Laws 1995, chapter 
 75.34  255, article 3, section 2, subdivision 3; 
 75.35     (8) to the extent included in federal taxable income, 
 75.36  postservice benefits for youth community service under section 
 76.1   124D.42 for volunteer service under United States Code, title 
 76.2   42, sections 12601 to 12604; 
 76.3      (9) (7) to the extent not deducted in determining federal 
 76.4   taxable income by an individual who does not itemize deductions 
 76.5   for federal income tax purposes for the taxable year, an amount 
 76.6   equal to 50 percent of the excess of charitable contributions 
 76.7   allowable as a deduction for the taxable year under section 
 76.8   170(a) of the Internal Revenue Code over $500; 
 76.9      (10) (8) for taxable years beginning before January 1, 
 76.10  2008, the amount of the federal small ethanol producer credit 
 76.11  allowed under section 40(a)(3) of the Internal Revenue Code 
 76.12  which is included in gross income under section 87 of the 
 76.13  Internal Revenue Code; 
 76.14     (11) (9) for individuals who are allowed a federal foreign 
 76.15  tax credit for taxes that do not qualify for a credit under 
 76.16  section 290.06, subdivision 22, an amount equal to the carryover 
 76.17  of subnational foreign taxes for the taxable year, but not to 
 76.18  exceed the total subnational foreign taxes reported in claiming 
 76.19  the foreign tax credit.  For purposes of this clause, "federal 
 76.20  foreign tax credit" means the credit allowed under section 27 of 
 76.21  the Internal Revenue Code, and "carryover of subnational foreign 
 76.22  taxes" equals the carryover allowed under section 904(c) of the 
 76.23  Internal Revenue Code minus national level foreign taxes to the 
 76.24  extent they exceed the federal foreign tax credit; and 
 76.25     (12) (10) in each of the five tax years immediately 
 76.26  following the tax year in which an addition is required under 
 76.27  subdivision 19a, clause (7), an amount equal to one-fifth of the 
 76.28  delayed depreciation.  For purposes of this clause, "delayed 
 76.29  depreciation" means the amount of the addition made by the 
 76.30  taxpayer under subdivision 19a, clause (7), minus the positive 
 76.31  value of any net operating loss under section 172 of the 
 76.32  Internal Revenue Code generated for the tax year of the 
 76.33  addition.  The resulting delayed depreciation cannot be less 
 76.34  than zero. 
 76.35     [EFFECTIVE DATE.] This section is effective for tax years 
 76.36  beginning after December 31, 2003. 
 77.1      Sec. 8.  Minnesota Statutes 2002, section 290.01, 
 77.2   subdivision 19c, is amended to read: 
 77.3      Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 77.4   INCOME.] For corporations, there shall be added to federal 
 77.5   taxable income: 
 77.6      (1) the amount of any deduction taken for federal income 
 77.7   tax purposes for income, excise, or franchise taxes based on net 
 77.8   income or related minimum taxes, including but not limited to 
 77.9   the tax imposed under section 290.0922, paid by the corporation 
 77.10  to Minnesota, another state, a political subdivision of another 
 77.11  state, the District of Columbia, or any foreign country or 
 77.12  possession of the United States; 
 77.13     (2) interest not subject to federal tax upon obligations 
 77.14  of:  the United States, its possessions, its agencies, or its 
 77.15  instrumentalities; the state of Minnesota or any other state, 
 77.16  any of its political or governmental subdivisions, any of its 
 77.17  municipalities, or any of its governmental agencies or 
 77.18  instrumentalities; the District of Columbia; or Indian tribal 
 77.19  governments; 
 77.20     (3) exempt-interest dividends received as defined in 
 77.21  section 852(b)(5) of the Internal Revenue Code; 
 77.22     (4) the amount of any net operating loss deduction taken 
 77.23  for federal income tax purposes under section 172 or 832(c)(10) 
 77.24  of the Internal Revenue Code or operations loss deduction under 
 77.25  section 810 of the Internal Revenue Code; 
 77.26     (5) the amount of any special deductions taken for federal 
 77.27  income tax purposes under sections 241 to 247 of the Internal 
 77.28  Revenue Code; 
 77.29     (6) losses from the business of mining, as defined in 
 77.30  section 290.05, subdivision 1, clause (a), that are not subject 
 77.31  to Minnesota income tax; 
 77.32     (7) the amount of any capital losses deducted for federal 
 77.33  income tax purposes under sections 1211 and 1212 of the Internal 
 77.34  Revenue Code; 
 77.35     (8) the exempt foreign trade income of a foreign sales 
 77.36  corporation under sections 921(a) and 291 of the Internal 
 78.1   Revenue Code; 
 78.2      (9) the amount of percentage depletion deducted under 
 78.3   sections 611 through 614 and 291 of the Internal Revenue Code; 
 78.4      (10) for certified pollution control facilities placed in 
 78.5   service in a taxable year beginning before December 31, 1986, 
 78.6   and for which amortization deductions were elected under section 
 78.7   169 of the Internal Revenue Code of 1954, as amended through 
 78.8   December 31, 1985, the amount of the amortization deduction 
 78.9   allowed in computing federal taxable income for those 
 78.10  facilities; 
 78.11     (11) the amount of any deemed dividend from a foreign 
 78.12  operating corporation determined pursuant to section 290.17, 
 78.13  subdivision 4, paragraph (g); 
 78.14     (12) the amount of any environmental tax paid under section 
 78.15  59(a) of the Internal Revenue Code; 
 78.16     (13) the amount of a partner's pro rata share of net income 
 78.17  which does not flow through to the partner because the 
 78.18  partnership elected to pay the tax on the income under section 
 78.19  6242(a)(2) of the Internal Revenue Code; 
 78.20     (14) the amount of net income excluded under section 114 of 
 78.21  the Internal Revenue Code; 
 78.22     (15) any increase in subpart F income, as defined in 
 78.23  section 952(a) of the Internal Revenue Code, for the taxable 
 78.24  year when subpart F income is calculated without regard to the 
 78.25  provisions of section 614 of Public Law Number 107-147; and 
 78.26     (16) 80 percent of the depreciation deduction allowed under 
 78.27  section 168(k) of the Internal Revenue Code.  For purposes of 
 78.28  this clause, if the taxpayer has an activity that in the taxable 
 78.29  year generates a deduction for depreciation under section 168(k) 
 78.30  and the activity generates a loss for the taxable year that the 
 78.31  taxpayer is not allowed to claim for the taxable year, "the 
 78.32  depreciation allowed under section 168(k)" for the taxable year 
 78.33  is limited to excess of the depreciation claimed by the activity 
 78.34  under section 168(k) over the amount of the loss from the 
 78.35  activity that is not allowed in the taxable year.  In succeeding 
 78.36  taxable years when the losses not allowed in the taxable year 
 79.1   are allowed, the depreciation under section 168(k) is allowed. 
 79.2      [EFFECTIVE DATE.] This section is effective for taxable 
 79.3   years ending after September 10, 2001. 
 79.4      Sec. 9.  Minnesota Statutes 2002, section 290.01, 
 79.5   subdivision 19d, is amended to read: 
 79.6      Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 79.7   TAXABLE INCOME.] For corporations, there shall be subtracted 
 79.8   from federal taxable income after the increases provided in 
 79.9   subdivision 19c:  
 79.10     (1) the amount of foreign dividend gross-up added to gross 
 79.11  income for federal income tax purposes under section 78 of the 
 79.12  Internal Revenue Code; 
 79.13     (2) the amount of salary expense not allowed for federal 
 79.14  income tax purposes due to claiming the federal jobs credit 
 79.15  under section 51 of the Internal Revenue Code; 
 79.16     (3) any dividend (not including any distribution in 
 79.17  liquidation) paid within the taxable year by a national or state 
 79.18  bank to the United States, or to any instrumentality of the 
 79.19  United States exempt from federal income taxes, on the preferred 
 79.20  stock of the bank owned by the United States or the 
 79.21  instrumentality; 
 79.22     (4) amounts disallowed for intangible drilling costs due to 
 79.23  differences between this chapter and the Internal Revenue Code 
 79.24  in taxable years beginning before January 1, 1987, as follows: 
 79.25     (i) to the extent the disallowed costs are represented by 
 79.26  physical property, an amount equal to the allowance for 
 79.27  depreciation under Minnesota Statutes 1986, section 290.09, 
 79.28  subdivision 7, subject to the modifications contained in 
 79.29  subdivision 19e; and 
 79.30     (ii) to the extent the disallowed costs are not represented
 79.31  by physical property, an amount equal to the allowance for cost 
 79.32  depletion under Minnesota Statutes 1986, section 290.09, 
 79.33  subdivision 8; 
 79.34     (5) the deduction for capital losses pursuant to sections 
 79.35  1211 and 1212 of the Internal Revenue Code, except that: 
 79.36     (i) for capital losses incurred in taxable years beginning 
 80.1   after December 31, 1986, capital loss carrybacks shall not be 
 80.2   allowed; 
 80.3      (ii) for capital losses incurred in taxable years beginning 
 80.4   after December 31, 1986, a capital loss carryover to each of the 
 80.5   15 taxable years succeeding the loss year shall be allowed; 
 80.6      (iii) for capital losses incurred in taxable years 
 80.7   beginning before January 1, 1987, a capital loss carryback to 
 80.8   each of the three taxable years preceding the loss year, subject 
 80.9   to the provisions of Minnesota Statutes 1986, section 290.16, 
 80.10  shall be allowed; and 
 80.11     (iv) for capital losses incurred in taxable years beginning 
 80.12  before January 1, 1987, a capital loss carryover to each of the 
 80.13  five taxable years succeeding the loss year to the extent such 
 80.14  loss was not used in a prior taxable year and subject to the 
 80.15  provisions of Minnesota Statutes 1986, section 290.16, shall be 
 80.16  allowed; 
 80.17     (6) an amount for interest and expenses relating to income 
 80.18  not taxable for federal income tax purposes, if (i) the income 
 80.19  is taxable under this chapter and (ii) the interest and expenses 
 80.20  were disallowed as deductions under the provisions of section 
 80.21  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 80.22  federal taxable income; 
 80.23     (7) in the case of mines, oil and gas wells, other natural 
 80.24  deposits, and timber for which percentage depletion was 
 80.25  disallowed pursuant to subdivision 19c, clause (11), a 
 80.26  reasonable allowance for depletion based on actual cost.  In the 
 80.27  case of leases the deduction must be apportioned between the 
 80.28  lessor and lessee in accordance with rules prescribed by the 
 80.29  commissioner.  In the case of property held in trust, the 
 80.30  allowable deduction must be apportioned between the income 
 80.31  beneficiaries and the trustee in accordance with the pertinent 
 80.32  provisions of the trust, or if there is no provision in the 
 80.33  instrument, on the basis of the trust's income allocable to 
 80.34  each; 
 80.35     (8) for certified pollution control facilities placed in 
 80.36  service in a taxable year beginning before December 31, 1986, 
 81.1   and for which amortization deductions were elected under section 
 81.2   169 of the Internal Revenue Code of 1954, as amended through 
 81.3   December 31, 1985, an amount equal to the allowance for 
 81.4   depreciation under Minnesota Statutes 1986, section 290.09, 
 81.5   subdivision 7; 
 81.6      (9) amounts included in federal taxable income that are due 
 81.7   to refunds of income, excise, or franchise taxes based on net 
 81.8   income or related minimum taxes paid by the corporation to 
 81.9   Minnesota, another state, a political subdivision of another 
 81.10  state, the District of Columbia, or a foreign country or 
 81.11  possession of the United States to the extent that the taxes 
 81.12  were added to federal taxable income under section 290.01, 
 81.13  subdivision 19c, clause (1), in a prior taxable year; 
 81.14     (10) 80 percent of royalties, fees, or other like income 
 81.15  accrued or received from a foreign operating corporation or a 
 81.16  foreign corporation which is part of the same unitary business 
 81.17  as the receiving corporation; 
 81.18     (11) income or gains from the business of mining as defined 
 81.19  in section 290.05, subdivision 1, clause (a), that are not 
 81.20  subject to Minnesota franchise tax; 
 81.21     (12) the amount of handicap access expenditures in the 
 81.22  taxable year which are not allowed to be deducted or capitalized 
 81.23  under section 44(d)(7) of the Internal Revenue Code; 
 81.24     (13) the amount of qualified research expenses not allowed 
 81.25  for federal income tax purposes under section 280C(c) of the 
 81.26  Internal Revenue Code, but only to the extent that the amount 
 81.27  exceeds the amount of the credit allowed under section 290.068; 
 81.28     (14) the amount of salary expenses not allowed for federal 
 81.29  income tax purposes due to claiming the Indian employment credit 
 81.30  under section 45A(a) of the Internal Revenue Code; 
 81.31     (15) the amount of any refund of environmental taxes paid 
 81.32  under section 59A of the Internal Revenue Code; 
 81.33     (16) for taxable years beginning before January 1, 2008, 
 81.34  the amount of the federal small ethanol producer credit allowed 
 81.35  under section 40(a)(3) of the Internal Revenue Code which is 
 81.36  included in gross income under section 87 of the Internal 
 82.1   Revenue Code; 
 82.2      (17) for a corporation whose foreign sales corporation, as 
 82.3   defined in section 922 of the Internal Revenue Code, constituted 
 82.4   a foreign operating corporation during any taxable year ending 
 82.5   before January 1, 1995, and a return was filed by August 15, 
 82.6   1996, claiming the deduction under this section 290.21, 
 82.7   subdivision 4, for income received from the foreign operating 
 82.8   corporation, an amount equal to 1.23 multiplied by the amount of 
 82.9   income excluded under section 114 of the Internal Revenue Code, 
 82.10  provided the income is not income of a foreign operating 
 82.11  company; 
 82.12     (18) any decrease in subpart F income, as defined in 
 82.13  section 952(a) of the Internal Revenue Code, for the taxable 
 82.14  year when subpart F income is calculated without regard to the 
 82.15  provisions of section 614 of Public Law Number 107-147; and 
 82.16     (19) in each of the five tax years immediately following 
 82.17  the tax year in which an addition is required under subdivision 
 82.18  19c, clause (16), an amount equal to one-fifth of the delayed 
 82.19  depreciation.  For purposes of this clause, "delayed 
 82.20  depreciation" means the amount of the addition made by the 
 82.21  taxpayer under subdivision 19c, clause (16).  The resulting 
 82.22  delayed depreciation cannot be less than zero. 
 82.23     [EFFECTIVE DATE.] This section is effective the day 
 82.24  following final enactment. 
 82.25     Sec. 10.  Minnesota Statutes 2002, section 290.06, 
 82.26  subdivision 2c, is amended to read: 
 82.27     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 82.28  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 82.29  married individuals filing joint returns and surviving spouses 
 82.30  as defined in section 2(a) of the Internal Revenue Code must be 
 82.31  computed by applying to their taxable net income the following 
 82.32  schedule of rates: 
 82.33     (1) On the first $25,680, 5.35 percent; 
 82.34     (2) On all over $25,680, but not over $102,030, 7.05 
 82.35  percent; 
 82.36     (3) On all over $102,030, 7.85 percent. 
 83.1      Married individuals filing separate returns, estates, and 
 83.2   trusts must compute their income tax by applying the above rates 
 83.3   to their taxable income, except that the income brackets will be 
 83.4   one-half of the above amounts.  
 83.5      (b) The income taxes imposed by this chapter upon unmarried 
 83.6   individuals must be computed by applying to taxable net income 
 83.7   the following schedule of rates: 
 83.8      (1) On the first $17,570, 5.35 percent; 
 83.9      (2) On all over $17,570, but not over $57,710, 7.05 
 83.10  percent; 
 83.11     (3) On all over $57,710, 7.85 percent. 
 83.12     (c) The income taxes imposed by this chapter upon unmarried 
 83.13  individuals qualifying as a head of household as defined in 
 83.14  section 2(b) of the Internal Revenue Code must be computed by 
 83.15  applying to taxable net income the following schedule of rates: 
 83.16     (1) On the first $21,630, 5.35 percent; 
 83.17     (2) On all over $21,630, but not over $86,910, 7.05 
 83.18  percent; 
 83.19     (3) On all over $86,910, 7.85 percent. 
 83.20     (d) In lieu of a tax computed according to the rates set 
 83.21  forth in this subdivision, the tax of any individual taxpayer 
 83.22  whose taxable net income for the taxable year is less than an 
 83.23  amount determined by the commissioner must be computed in 
 83.24  accordance with tables prepared and issued by the commissioner 
 83.25  of revenue based on income brackets of not more than $100.  The 
 83.26  amount of tax for each bracket shall be computed at the rates 
 83.27  set forth in this subdivision, provided that the commissioner 
 83.28  may disregard a fractional part of a dollar unless it amounts to 
 83.29  50 cents or more, in which case it may be increased to $1. 
 83.30     (e) An individual who is not a Minnesota resident for the 
 83.31  entire year must compute the individual's Minnesota income tax 
 83.32  as provided in this subdivision.  After the application of the 
 83.33  nonrefundable credits provided in this chapter, the tax 
 83.34  liability must then be multiplied by a fraction in which:  
 83.35     (1) the numerator is the individual's Minnesota source 
 83.36  federal adjusted gross income as defined in section 62 of the 
 84.1   Internal Revenue Code and increased by the additions required 
 84.2   under section 290.01, subdivision 19a, clauses (1), (5), and 
 84.3   (6), and reduced by the Minnesota assignable portion of the 
 84.4   subtraction for United States government interest under section 
 84.5   290.01, subdivision 19b, clause (1), after applying the 
 84.6   allocation and assignability provisions of section 290.081, 
 84.7   clause (a), or 290.17; and 
 84.8      (2) the denominator is the individual's federal adjusted 
 84.9   gross income as defined in section 62 of the Internal Revenue 
 84.10  Code of 1986, increased by the amounts specified in section 
 84.11  290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 
 84.12  by the amounts specified in section 290.01, subdivision 19b, 
 84.13  clause (1). 
 84.14     [EFFECTIVE DATE.] This section is effective for tax years 
 84.15  beginning after December 31, 2002. 
 84.16     Sec. 11.  Minnesota Statutes 2002, section 290.0671, 
 84.17  subdivision 1, is amended to read: 
 84.18     Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
 84.19  allowed a credit against the tax imposed by this chapter equal 
 84.20  to a percentage of earned income.  To receive a credit, a 
 84.21  taxpayer must be eligible for a credit under section 32 of the 
 84.22  Internal Revenue Code.  
 84.23     (b) For individuals with no qualifying children, the credit 
 84.24  equals 1.9125 percent of the first $4,620 of earned income.  The 
 84.25  credit is reduced by 1.9125 percent of earned income or modified 
 84.26  adjusted gross income, whichever is greater, in excess of 
 84.27  $5,770, but in no case is the credit less than zero. 
 84.28     (c) For individuals with one qualifying child, the credit 
 84.29  equals 8.5 percent of the first $6,920 of earned income and 8.5 
 84.30  percent of earned income over $12,080 but less than $13,450.  
 84.31  The credit is reduced by 5.73 percent of earned income or 
 84.32  modified adjusted gross income, whichever is greater, in excess 
 84.33  of $15,080, but in no case is the credit less than zero. 
 84.34     (d) For individuals with two or more qualifying children, 
 84.35  the credit equals ten percent of the first $9,720 of earned 
 84.36  income and 20 percent of earned income over $14,860 but less 
 85.1   than $16,800.  The credit is reduced by 10.3 percent of earned 
 85.2   income or modified adjusted gross income, whichever is greater, 
 85.3   in excess of $17,890, but in no case is the credit less than 
 85.4   zero. 
 85.5      (e) For a nonresident or part-year resident, the credit 
 85.6   must be allocated based on the percentage calculated under 
 85.7   section 290.06, subdivision 2c, paragraph (e). 
 85.8      (f) For a person who was a resident for the entire tax year 
 85.9   and has earned income not subject to tax under this chapter, the 
 85.10  credit must be allocated based on the ratio of federal adjusted 
 85.11  gross income reduced by the earned income not subject to tax 
 85.12  under this chapter over federal adjusted gross income. 
 85.13     (g) For tax years beginning after December 31, 2001, and 
 85.14  before December 31, 2004, the $5,770 in paragraph (b) is 
 85.15  increased to $6,770, the $15,080 in paragraph (c) is increased 
 85.16  to $16,080, and the $17,890 in paragraph (d) is increased to 
 85.17  $18,890, after being adjusted for inflation under subdivision 7, 
 85.18  are each increased by $1,000 for married taxpayers filing joint 
 85.19  returns. 
 85.20     (h) For tax years beginning after December 31, 2004, and 
 85.21  before December 31, 2007, the $5,770 in paragraph (b) is 
 85.22  increased to $7,770, the $15,080 in paragraph (c) is increased 
 85.23  to $17,080, and the $17,890 in paragraph (d) is increased to 
 85.24  $19,890, after being adjusted for inflation under subdivision 7, 
 85.25  are each increased by $2,000 for married taxpayers filing joint 
 85.26  returns. 
 85.27     (i) For tax years beginning after December 31, 2007, and 
 85.28  before December 31, 2010, the $5,770 in paragraph (b) is 
 85.29  increased to $8,770, the $15,080 in paragraph (c) is increased 
 85.30  to $18,080, and the $17,890 in paragraph (d) is increased to 
 85.31  $20,890, after being adjusted for inflation under subdivision 7, 
 85.32  are each increased by $3,000 for married taxpayers filing joint 
 85.33  returns.  For tax years beginning after December 31, 2008, the 
 85.34  $3,000 is adjusted annually for inflation under subdivision 7. 
 85.35     (j) The commissioner shall construct tables showing the 
 85.36  amount of the credit at various income levels and make them 
 86.1   available to taxpayers.  The tables shall follow the schedule 
 86.2   contained in this subdivision, except that the commissioner may 
 86.3   graduate the transition between income brackets. 
 86.4      [EFFECTIVE DATE.] This section is effective for tax years 
 86.5   beginning after December 31, 2002. 
 86.6      Sec. 12.  Minnesota Statutes 2002, section 290.0675, 
 86.7   subdivision 2, is amended to read: 
 86.8      Subd. 2.  [CREDIT ALLOWED.] A married couple filing a joint 
 86.9   return is allowed a credit against the tax imposed under section 
 86.10  290.06.  
 86.11     The minimum taxable income for the married couple to be 
 86.12  eligible for the credit is $25,680, and the minimum earned 
 86.13  income in order for the couple to be eligible for the credit is 
 86.14  $14,250 for each spouse. 
 86.15     [EFFECTIVE DATE.] This section is effective for tax years 
 86.16  beginning after December 31, 2002. 
 86.17     Sec. 13.  Minnesota Statutes 2002, section 290.0675, 
 86.18  subdivision 3, is amended to read: 
 86.19     Subd. 3.  [CREDIT AMOUNT.] The credit amount is the 
 86.20  difference between the tax on the couple's joint Minnesota 
 86.21  taxable income under the rates and income levels in section 
 86.22  290.06, subdivision 2c, paragraph (a), as adjusted for the 
 86.23  taxable year by section 290.06, subdivision 2d, and the sum of 
 86.24  the tax under the rates and income levels of section 290.06, 
 86.25  subdivision 2c, paragraph (b), as adjusted for the taxable year 
 86.26  by section 290.06, subdivision 2d, on the earned income of the 
 86.27  lesser-earning spouse, and the tax under the rates and income 
 86.28  levels of section 290.06, subdivision 2c, paragraph (b), as 
 86.29  adjusted for the taxable year by section 290.06, subdivision 2d, 
 86.30  on the couple's joint Minnesota taxable income, minus the earned 
 86.31  income of the lesser-earning spouse. 
 86.32     The commissioner of revenue shall prepare and make 
 86.33  available to taxpayers a comprehensive table showing the credit 
 86.34  under this section at brackets of earnings of the lesser-earning 
 86.35  spouse and joint taxable income.  The brackets of earnings shall 
 86.36  not be more than $2,000. 
 87.1      [EFFECTIVE DATE.] This section is effective for tax years 
 87.2   beginning after December 31, 2002. 
 87.3      Sec. 14.  Minnesota Statutes 2002, section 290.0679, 
 87.4   subdivision 2, is amended to read: 
 87.5      Subd. 2.  [CONDITIONS FOR ASSIGNMENT.] A qualifying 
 87.6   taxpayer may assign all or part of an anticipated refund for the 
 87.7   current and future taxable years to a financial institution or a 
 87.8   qualifying organization.  A financial institution or qualifying 
 87.9   organization accepting assignment must pay the amount secured by 
 87.10  the assignment to a third-party vendor.  The commissioner of 
 87.11  children, families, and learning shall provide a list of 
 87.12  categories of, upon request from a third-party vendor, certify 
 87.13  that the vendor's products and services that qualify for the 
 87.14  education credit to financial institutions and qualifying 
 87.15  organizations.  A denial of a certification is subject to the 
 87.16  contested case procedure under chapter 14.  A financial 
 87.17  institution or qualifying organization that accepts assignments 
 87.18  under this section must verify as part of the assignment 
 87.19  documentation that the product or service to be provided by the 
 87.20  third-party vendor qualifies has been certified by the 
 87.21  commissioner of children, families, and learning as qualifying 
 87.22  for the education credit.  The amount assigned for the current 
 87.23  and future taxable years may not exceed the maximum allowable 
 87.24  education credit for the current taxable year.  Both the 
 87.25  taxpayer and spouse must consent to the assignment of a refund 
 87.26  from a joint return. 
 87.27     [EFFECTIVE DATE.] This section is effective for assignments 
 87.28  made on or after the day following final enactment. 
 87.29     Sec. 15.  Minnesota Statutes 2002, section 290.0802, 
 87.30  subdivision 1, is amended to read: 
 87.31     Subdivision 1.  [DEFINITIONS.] For purposes of this 
 87.32  section, the following terms have the meanings given. 
 87.33     (a) "Adjusted gross income" means federal adjusted gross 
 87.34  income as used in section 22(d) of the Internal Revenue Code for 
 87.35  the taxable year, plus a lump sum distribution as defined in 
 87.36  section 402(e)(3) of the Internal Revenue Code, and less any 
 88.1   pension, annuity, or disability benefits included in federal 
 88.2   gross income but not subject to state taxation other than the 
 88.3   subtraction allowed under section 290.01, subdivision 19b, 
 88.4   clause (4). 
 88.5      (b) "Disability income" means disability income as defined 
 88.6   in section 22(c)(2)(B)(iii) of the Internal Revenue Code. 
 88.7      (c) "Nontaxable retirement and disability benefits" means 
 88.8   the amount of pension, annuity, or disability benefits that 
 88.9   would be included in the reduction under section 22(c)(3) of the 
 88.10  Internal Revenue Code and pension, annuity, or disability 
 88.11  benefits included in federal gross income but not subject to 
 88.12  state taxation other than the subtraction allowed under section 
 88.13  290.01, subdivision 19b, clause (4). 
 88.14     (d) "Qualified individual" means a qualified individual as 
 88.15  defined in section 22(b) of the Internal Revenue Code. 
 88.16     (e) "Social security benefits above the second federal 
 88.17  threshold" means the amount of social security benefits included 
 88.18  in federal taxable income due to the provisions of section 13215 
 88.19  of the Omnibus Budget Reconciliation Act of 1993, Public Law 
 88.20  Number 103-66. 
 88.21     [EFFECTIVE DATE.] This section is effective for tax years 
 88.22  beginning after December 31, 2002. 
 88.23     Sec. 16.  Minnesota Statutes 2002, section 291.005, 
 88.24  subdivision 1, is amended to read: 
 88.25     Subdivision 1.  Unless the context otherwise clearly 
 88.26  requires, the following terms used in this chapter shall have 
 88.27  the following meanings: 
 88.28     (1) "Federal gross estate" means the gross estate of a 
 88.29  decedent as valued and otherwise determined for federal estate 
 88.30  tax purposes by federal taxing authorities pursuant to the 
 88.31  provisions of the Internal Revenue Code. 
 88.32     (2) "Minnesota gross estate" means the federal gross estate 
 88.33  of a decedent after (a) excluding therefrom any property 
 88.34  included therein which has its situs outside Minnesota and 
 88.35  pensions exempt from tax under this chapter pursuant to section 
 88.36  352.15, subdivision 1; 353.15, subdivision 1; 354.10, 
 89.1   subdivision 1; 354B.30; or 354C.165, and (b) including therein 
 89.2   any property omitted from the federal gross estate which is 
 89.3   includable therein, has its situs in Minnesota, and was not 
 89.4   disclosed to federal taxing authorities.  
 89.5      (3) "Personal representative" means the executor, 
 89.6   administrator or other person appointed by the court to 
 89.7   administer and dispose of the property of the decedent.  If 
 89.8   there is no executor, administrator or other person appointed, 
 89.9   qualified, and acting within this state, then any person in 
 89.10  actual or constructive possession of any property having a situs 
 89.11  in this state which is included in the federal gross estate of 
 89.12  the decedent shall be deemed to be a personal representative to 
 89.13  the extent of the property and the Minnesota estate tax due with 
 89.14  respect to the property. 
 89.15     (4) "Resident decedent" means an individual whose domicile 
 89.16  at the time of death was in Minnesota. 
 89.17     (5) "Nonresident decedent" means an individual whose 
 89.18  domicile at the time of death was not in Minnesota. 
 89.19     (6) "Situs of property" means, with respect to real 
 89.20  property, the state or country in which it is located; with 
 89.21  respect to tangible personal property, the state or country in 
 89.22  which it was normally kept or located at the time of the 
 89.23  decedent's death; and with respect to intangible personal 
 89.24  property, the state or country in which the decedent was 
 89.25  domiciled at death. 
 89.26     (7) "Commissioner" means the commissioner of revenue or any 
 89.27  person to whom the commissioner has delegated functions under 
 89.28  this chapter. 
 89.29     (8) "Internal Revenue Code" means the United States 
 89.30  Internal Revenue Code of 1986, as amended through December 31, 
 89.31  2000 2002. 
 89.32     [EFFECTIVE DATE.] This section is effective for estates of 
 89.33  decedents dying after December 31, 2002. 
 89.34     Sec. 17.  Minnesota Statutes 2002, section 291.03, 
 89.35  subdivision 1, is amended to read: 
 89.36     Subdivision 1.  [TAX AMOUNT.] The tax imposed shall be an 
 90.1   amount equal to the proportion of the maximum credit computed 
 90.2   under section 2011 of the Internal Revenue Code, as amended 
 90.3   through December 31, 2000, for state death taxes as the 
 90.4   Minnesota gross estate bears to the value of the federal gross 
 90.5   estate.  For a resident decedent, the tax shall be the maximum 
 90.6   credit computed under section 2011 of the Internal Revenue Code 
 90.7   reduced by the amount of the death tax paid the other state and 
 90.8   credited against the federal estate tax if this results in a 
 90.9   larger amount of tax than the proportionate amount of the 
 90.10  credit.  The tax determined under this paragraph shall not be 
 90.11  greater than the federal estate tax computed under section 2001 
 90.12  of the Internal Revenue Code after the allowance of the federal 
 90.13  credits allowed under section 2010 of the Internal Revenue Code 
 90.14  of 1986, as amended through December 31, 2000.  For the purposes 
 90.15  of this section, expenses which are deducted for federal income 
 90.16  tax purposes under section 642(g) of the Internal Revenue Code 
 90.17  as amended through December 31, 2002, are not allowable in 
 90.18  computing the tax under this chapter. 
 90.19     [EFFECTIVE DATE.] This section is effective for estates of 
 90.20  decedents dying after December 31, 2002. 
 90.21     Sec. 18.  Minnesota Statutes 2002, section 352.15, 
 90.22  subdivision 1, is amended to read: 
 90.23     Subdivision 1.  [EXEMPTION; EXCEPTIONS.] None of the money, 
 90.24  annuities, or other benefits mentioned in this chapter is 
 90.25  assignable either in law or in equity or subject to state estate 
 90.26  tax, or to execution, levy, attachment, garnishment, or other 
 90.27  legal process, except as provided in subdivision 1a or section 
 90.28  518.58, 518.581, or 518.6111.  
 90.29     [EFFECTIVE DATE.] This section is effective for estates of 
 90.30  decedents dying after December 31, 2002. 
 90.31     Sec. 19.  Minnesota Statutes 2002, section 353.15, 
 90.32  subdivision 1, is amended to read: 
 90.33     Subdivision 1.  [EXEMPTION; EXCEPTIONS.] No money, annuity, 
 90.34  or benefit provided for in this chapter is assignable or subject 
 90.35  to any state estate tax, or to execution, levy, attachment, 
 90.36  garnishment, or legal process, except as provided in subdivision 
 91.1   2 or section 518.58, 518.581, or 518.6111.  
 91.2      [EFFECTIVE DATE.] This section is effective for estates of 
 91.3   decedents dying after December 31, 2002. 
 91.4      Sec. 20.  Minnesota Statutes 2002, section 354.10, 
 91.5   subdivision 1, is amended to read: 
 91.6      Subdivision 1.  [EXEMPTION; EXCEPTIONS.] The right of a 
 91.7   teacher to take advantage of the benefits provided by this 
 91.8   chapter, is a personal right only and is not assignable.  All 
 91.9   money to the credit of a teacher's account in the fund or any 
 91.10  money payable to the teacher from the fund belongs to the state 
 91.11  of Minnesota until actually paid to the teacher or a beneficiary 
 91.12  under this chapter.  The association may acknowledge a properly 
 91.13  completed power of attorney form.  An assignment or attempted 
 91.14  assignment of a teacher's interest in the fund, or of the 
 91.15  beneficiary's interest in the fund, by a teacher or a 
 91.16  beneficiary is void and exempt from taxation under chapter 291 
 91.17  and from garnishment or levy under attachment or execution, 
 91.18  except as provided in subdivision 2 or 3, or section 518.58, 
 91.19  518.581, or 518.6111.  
 91.20     [EFFECTIVE DATE.] This section is effective for estates of 
 91.21  decedents dying after December 31, 2002. 
 91.22     Sec. 21.  Minnesota Statutes 2002, section 354B.30, is 
 91.23  amended to read: 
 91.24     354B.30 [PROHIBITION ON LOANS OR PRETERMINATION 
 91.25  DISTRIBUTIONS.] 
 91.26     (a) No participant may obtain a loan from the plan or 
 91.27  obtain any distribution from the plan at a time before the 
 91.28  participant terminates the employment that gave rise to plan 
 91.29  coverage. 
 91.30     (b) No amounts to the credit of the plan are assignable 
 91.31  either in law or in equity, are subject to state estate tax, or 
 91.32  are subject to execution, levy, attachment, garnishment, or 
 91.33  other legal process, except as provided in section 518.58, 
 91.34  518.581, or 518.6111.  
 91.35     [EFFECTIVE DATE.] This section is effective for estates of 
 91.36  decedents dying after December 31, 2002. 
 92.1      Sec. 22.  Minnesota Statutes 2002, section 354C.165, is 
 92.2   amended to read: 
 92.3      354C.165 [PROHIBITION ON LOANS OR PRETERMINATION 
 92.4   DISTRIBUTIONS.] 
 92.5      (a) Except as provided in paragraph (c), no participant may 
 92.6   obtain a loan or any distribution from the plan before the 
 92.7   participant terminates the employment that gave rise to plan 
 92.8   coverage. 
 92.9      (b) No amounts to the credit of the plan are assignable 
 92.10  either in law or in equity, are subject to state estate tax, or 
 92.11  are subject to execution, levy, attachment, garnishment, or 
 92.12  other legal process, except as provided in section 518.58, 
 92.13  518.581, or 518.6111.  
 92.14     (c) Unless prohibited by or subject to a penalty under 
 92.15  federal law, a teacher who is a participant in the supplemental 
 92.16  retirement plan may request, in writing, a transfer of all or a 
 92.17  portion of the funds accumulated in the person's supplemental 
 92.18  plan account to the teachers retirement association to purchase 
 92.19  service credit under sections 354.53, 354.533, 354.534, 354.535, 
 92.20  354.536, 354.537, and 354.538 or to the teachers retirement fund 
 92.21  association to purchase service credit under sections 354A.097, 
 92.22  354A.098, 354A.099, 354A.101, 354A.102, 354A.103, and 354A.104.  
 92.23  Upon receipt of a valid request, the board shall execute the 
 92.24  transfer.  The transfer must be a fund-to-fund transfer, and in 
 92.25  no event shall the participant directly receive any of the funds 
 92.26  while still employed by the board.  In no event may the board 
 92.27  transfer more than the participant's account balance.  The 
 92.28  board, in cooperation with the executive director of the 
 92.29  teachers retirement association, shall develop the forms for 
 92.30  requesting a transfer and the procedures for executing the 
 92.31  requested transfers. 
 92.32     [EFFECTIVE DATE.] This section is effective for estates of 
 92.33  decedents dying after December 31, 2002. 
 92.34     Sec. 23.  Laws 2001, First Special Session chapter 5, 
 92.35  article 9, section 12, the effective date, is amended to read: 
 92.36     [EFFECTIVE DATE.] This section is effective for assignment 
 93.1   of refunds filed with the commissioner after December 31, 2001.  
 93.2   The time period for filing assignments expires December 31, 
 93.3   2003, but assignments filed on or before that date remain in 
 93.4   effect until satisfied or canceled. 
 93.5      Sec. 24.  [REPEALER.] 
 93.6      (a) Minnesota Statutes 2002, sections 290.0671, subdivision 
 93.7   3; and 290.0675, subdivision 5, are repealed effective for tax 
 93.8   years beginning after December 31, 2002. 
 93.9      (b) Minnesota Rules, parts 8007.0300, subpart 3; 8009.7100; 
 93.10  8009.7200; 8009.7300; 8009.7400; and 8092.1000, are repealed 
 93.11  effective the day following final enactment.  
 93.12                             ARTICLE 4 
 93.13                           FEDERAL UPDATE 
 93.14     Section 1.  Minnesota Statutes 2002, section 289A.02, 
 93.15  subdivision 7, is amended to read: 
 93.16     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
 93.17  defined otherwise, "Internal Revenue Code" means the Internal 
 93.18  Revenue Code of 1986, as amended through March 15 December 31, 
 93.19  2002. 
 93.20     [EFFECTIVE DATE.] This section is effective the day 
 93.21  following final enactment. 
 93.22     Sec. 2.  Minnesota Statutes 2002, section 290.01, 
 93.23  subdivision 19, is amended to read: 
 93.24     Subd. 19.  [NET INCOME.] The term "net income" means the 
 93.25  federal taxable income, as defined in section 63 of the Internal 
 93.26  Revenue Code of 1986, as amended through the date named in this 
 93.27  subdivision, incorporating any elections made by the taxpayer in 
 93.28  accordance with the Internal Revenue Code in determining federal 
 93.29  taxable income for federal income tax purposes, and with the 
 93.30  modifications provided in subdivisions 19a to 19f. 
 93.31     In the case of a regulated investment company or a fund 
 93.32  thereof, as defined in section 851(a) or 851(g) of the Internal 
 93.33  Revenue Code, federal taxable income means investment company 
 93.34  taxable income as defined in section 852(b)(2) of the Internal 
 93.35  Revenue Code, except that:  
 93.36     (1) the exclusion of net capital gain provided in section 
 94.1   852(b)(2)(A) of the Internal Revenue Code does not apply; 
 94.2      (2) the deduction for dividends paid under section 
 94.3   852(b)(2)(D) of the Internal Revenue Code must be applied by 
 94.4   allowing a deduction for capital gain dividends and 
 94.5   exempt-interest dividends as defined in sections 852(b)(3)(C) 
 94.6   and 852(b)(5) of the Internal Revenue Code; and 
 94.7      (3) the deduction for dividends paid must also be applied 
 94.8   in the amount of any undistributed capital gains which the 
 94.9   regulated investment company elects to have treated as provided 
 94.10  in section 852(b)(3)(D) of the Internal Revenue Code.  
 94.11     The net income of a real estate investment trust as defined 
 94.12  and limited by section 856(a), (b), and (c) of the Internal 
 94.13  Revenue Code means the real estate investment trust taxable 
 94.14  income as defined in section 857(b)(2) of the Internal Revenue 
 94.15  Code.  
 94.16     The net income of a designated settlement fund as defined 
 94.17  in section 468B(d) of the Internal Revenue Code means the gross 
 94.18  income as defined in section 468B(b) of the Internal Revenue 
 94.19  Code. 
 94.20     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
 94.21  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
 94.22  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
 94.23  Protection Act, Public Law Number 104-188, the provisions of 
 94.24  Public Law Number 104-117, the provisions of sections 313(a) and 
 94.25  (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
 94.26  1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
 94.27  1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
 94.28  and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
 94.29  Public Law Number 105-34, the provisions of section 6010 of the 
 94.30  Internal Revenue Service Restructuring and Reform Act of 1998, 
 94.31  Public Law Number 105-206, the provisions of section 4003 of the 
 94.32  Omnibus Consolidated and Emergency Supplemental Appropriations 
 94.33  Act, 1999, Public Law Number 105-277, and the provisions of 
 94.34  section 318 of the Consolidated Appropriation Act of 2001, 
 94.35  Public Law Number 106-554, shall become effective at the time 
 94.36  they become effective for federal purposes. 
 95.1      The Internal Revenue Code of 1986, as amended through 
 95.2   December 31, 1996, shall be in effect for taxable years 
 95.3   beginning after December 31, 1996. 
 95.4      The provisions of sections 202(a) and (b), 221(a), 225, 
 95.5   312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
 95.6   (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
 95.7   1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
 95.8   1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
 95.9   of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
 95.10  the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
 95.11  7002, and 7003 of the Internal Revenue Service Restructuring and 
 95.12  Reform Act of 1998, Public Law Number 105-206, the provisions of 
 95.13  section 3001 of the Omnibus Consolidated and Emergency 
 95.14  Supplemental Appropriations Act, 1999, Public Law Number 
 95.15  105-277, the provisions of section 3001 of the Miscellaneous 
 95.16  Trade and Technical Corrections Act of 1999, Public Law Number 
 95.17  106-36, and the provisions of section 316 of the Consolidated 
 95.18  Appropriation Act of 2001, Public Law Number 106-554, shall 
 95.19  become effective at the time they become effective for federal 
 95.20  purposes. 
 95.21     The Internal Revenue Code of 1986, as amended through 
 95.22  December 31, 1997, shall be in effect for taxable years 
 95.23  beginning after December 31, 1997. 
 95.24     The provisions of sections 5002, 6009, 6011, and 7001 of 
 95.25  the Internal Revenue Service Restructuring and Reform Act of 
 95.26  1998, Public Law Number 105-206, the provisions of section 9010 
 95.27  of the Transportation Equity Act for the 21st Century, Public 
 95.28  Law Number 105-178, the provisions of sections 1004, 4002, and 
 95.29  5301 of the Omnibus Consolidation and Emergency Supplemental 
 95.30  Appropriations Act, 1999, Public Law Number 105-277, the 
 95.31  provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
 95.32  Act of 1998, Public Law Number 105-369, the provisions of 
 95.33  sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
 95.34  Work Incentives Improvement Act of 1999, Public Law Number 
 95.35  106-170, the provisions of the Installment Tax Correction Act of 
 95.36  2000, Public Law Number 106-573, and the provisions of section 
 96.1   309 of the Consolidated Appropriation Act of 2001, Public Law 
 96.2   Number 106-554, shall become effective at the time they become 
 96.3   effective for federal purposes. 
 96.4      The Internal Revenue Code of 1986, as amended through 
 96.5   December 31, 1998, shall be in effect for taxable years 
 96.6   beginning after December 31, 1998.  
 96.7      The provisions of the FSC Repeal and Extraterritorial 
 96.8   Income Exclusion Act of 2000, Public Law Number 106-519, and the 
 96.9   provision of section 412 of the Job Creation and Worker 
 96.10  Assistance Act of 2002, Public Law Number 107-147, shall become 
 96.11  effective at the time it became effective for federal purposes. 
 96.12     The Internal Revenue Code of 1986, as amended through 
 96.13  December 31, 1999, shall be in effect for taxable years 
 96.14  beginning after December 31, 1999.  The provisions of sections 
 96.15  306 and 401 of the Consolidated Appropriation Act of 2001, 
 96.16  Public Law Number 106-554, and the provision of section 
 96.17  632(b)(2)(A) of the Economic Growth and Tax Relief 
 96.18  Reconciliation Act of 2001, Public Law Number 107-16, and 
 96.19  provisions of sections 101 and 402 of the Job Creation and 
 96.20  Worker Assistance Act of 2002, Public Law Number 107-147, shall 
 96.21  become effective at the same time it became effective for 
 96.22  federal purposes. 
 96.23     The Internal Revenue Code of 1986, as amended through 
 96.24  December 31, 2000, shall be in effect for taxable years 
 96.25  beginning after December 31, 2000.  The provisions of sections 
 96.26  659a and 671 of the Economic Growth and Tax Relief 
 96.27  Reconciliation Act of 2001, Public Law Number 107-16, the 
 96.28  provisions of sections 104, 105, and 111 of the Victims of 
 96.29  Terrorism Tax Relief Act of 2001, Public Law Number 107-134, and 
 96.30  the provisions of sections 201, 403, 413, and 606 of the Job 
 96.31  Creation and Worker Assistance Act of 2002, Public Law Number 
 96.32  107-147, shall become effective at the same time it became 
 96.33  effective for federal purposes. 
 96.34     The Internal Revenue Code of 1986, as amended through March 
 96.35  15, 2002, shall be in effect for taxable years beginning after 
 96.36  December 31, 2001. 
 97.1      The provisions of sections 101 and 102 of the Victims of 
 97.2   Terrorism Tax Relief Act of 2001, Public Law Number 107-134, 
 97.3   shall become effective at the same time it becomes effective for 
 97.4   federal purposes. 
 97.5      The Internal Revenue Code of 1986, as amended through 
 97.6   December 31, 2002, shall be in effect for taxable years 
 97.7   beginning after December 31, 2002. 
 97.8      Except as otherwise provided, references to the Internal 
 97.9   Revenue Code in subdivisions 19a to 19g mean the code in effect 
 97.10  for purposes of determining net income for the applicable year. 
 97.11     [EFFECTIVE DATE.] This section is effective the day 
 97.12  following final enactment. 
 97.13     Sec. 3.  Minnesota Statutes 2002, section 290.01, 
 97.14  subdivision 31, is amended to read: 
 97.15     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 97.16  defined otherwise, "Internal Revenue Code" means the Internal 
 97.17  Revenue Code of 1986, as amended through March 15 December 31, 
 97.18  2002. 
 97.19     [EFFECTIVE DATE.] This section is effective the day 
 97.20  following final enactment. 
 97.21     Sec. 4.  Minnesota Statutes 2002, section 290A.03, 
 97.22  subdivision 15, is amended to read: 
 97.23     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 97.24  means the Internal Revenue Code of 1986, as amended 
 97.25  through March 15 December 31, 2002. 
 97.26     [EFFECTIVE DATE.] This section is effective for refunds 
 97.27  payable for rents paid in 2003 and thereafter and property taxes 
 97.28  payable in 2004 and thereafter. 
 97.29                             ARTICLE 5 
 97.30                DEPARTMENT PROPERTY TAX INITIATIVES 
 97.31     Section 1.  Minnesota Statutes 2002, section 270.06, is 
 97.32  amended to read: 
 97.33     270.06 [POWERS AND DUTIES.] 
 97.34     The commissioner of revenue shall: 
 97.35     (1) have and exercise general supervision over the 
 97.36  administration of the assessment and taxation laws of the state, 
 98.1   over assessors, town, county, and city boards of review and 
 98.2   equalization, and all other assessing officers in the 
 98.3   performance of their duties, to the end that all assessments of 
 98.4   property be made relatively just and equal in compliance with 
 98.5   the laws of the state; 
 98.6      (2) confer with, advise, and give the necessary 
 98.7   instructions and directions to local assessors and local boards 
 98.8   of review throughout the state as to their duties under the laws 
 98.9   of the state; 
 98.10     (3) direct proceedings, actions, and prosecutions to be 
 98.11  instituted to enforce the laws relating to the liability and 
 98.12  punishment of public officers and officers and agents of 
 98.13  corporations for failure or negligence to comply with the 
 98.14  provisions of the laws of this state governing returns of 
 98.15  assessment and taxation of property, and cause complaints to be 
 98.16  made against local assessors, members of boards of equalization, 
 98.17  members of boards of review, or any other assessing or taxing 
 98.18  officer, to the proper authority, for their removal from office 
 98.19  for misconduct or negligence of duty; 
 98.20     (4) require county attorneys to assist in the commencement 
 98.21  of prosecutions in actions or proceedings for removal, 
 98.22  forfeiture and punishment for violation of the laws of this 
 98.23  state in respect to the assessment and taxation of property in 
 98.24  their respective districts or counties; 
 98.25     (5) require town, city, county, and other public officers 
 98.26  to report information as to the assessment of property, 
 98.27  collection of taxes received from licenses and other sources, 
 98.28  and such other information as may be needful in the work of the 
 98.29  department of revenue, in such form and upon such blanks as the 
 98.30  commissioner may prescribe; 
 98.31     (6) require individuals, copartnerships, companies, 
 98.32  associations, and corporations to furnish information concerning 
 98.33  their capital, funded or other debt, current assets and 
 98.34  liabilities, earnings, operating expenses, taxes, as well as all 
 98.35  other statements now required by law for taxation purposes; 
 98.36     (7) subpoena witnesses, at a time and place reasonable 
 99.1   under the circumstances, to appear and give testimony, and to 
 99.2   produce books, records, papers and documents for inspection and 
 99.3   copying relating to any matter which the commissioner may have 
 99.4   authority to investigate or determine; 
 99.5      (8) issue a subpoena which does not identify the person or 
 99.6   persons with respect to whose liability the subpoena is issued, 
 99.7   but only if (a) the subpoena relates to the investigation of a 
 99.8   particular person or ascertainable group or class of persons, 
 99.9   (b) there is a reasonable basis for believing that such person 
 99.10  or group or class of persons may fail or may have failed to 
 99.11  comply with any law administered by the commissioner, (c) the 
 99.12  information sought to be obtained from the examination of the 
 99.13  records (and the identity of the person or persons with respect 
 99.14  to whose liability the subpoena is issued) is not readily 
 99.15  available from other sources, (d) the subpoena is clear and 
 99.16  specific as to the information sought to be obtained, and (e) 
 99.17  the information sought to be obtained is limited solely to the 
 99.18  scope of the investigation.  Provided further that the party 
 99.19  served with a subpoena which does not identify the person or 
 99.20  persons with respect to whose tax liability the subpoena is 
 99.21  issued shall have the right, within 20 days after service of the 
 99.22  subpoena, to petition the district court for the judicial 
 99.23  district in which lies the county in which that party is located 
 99.24  for a determination as to whether the commissioner of revenue 
 99.25  has complied with all the requirements in (a) to (e), and thus, 
 99.26  whether the subpoena is enforceable.  If no such petition is 
 99.27  made by the party served within the time prescribed, the 
 99.28  subpoena shall have the force and effect of a court order; 
 99.29     (9) cause the deposition of witnesses residing within or 
 99.30  without the state, or absent therefrom, to be taken, upon notice 
 99.31  to the interested party, if any, in like manner that depositions 
 99.32  of witnesses are taken in civil actions in the district court, 
 99.33  in any matter which the commissioner may have authority to 
 99.34  investigate or determine; 
 99.35     (10) investigate the tax laws of other states and countries 
 99.36  and to formulate and submit to the legislature such legislation 
100.1   as the commissioner may deem expedient to prevent evasions of 
100.2   assessment and taxing laws, and secure just and equal taxation 
100.3   and improvement in the system of assessment and taxation in this 
100.4   state; 
100.5      (11) consult and confer with the governor upon the subject 
100.6   of taxation, the administration of the laws in regard thereto, 
100.7   and the progress of the work of the department of revenue, and 
100.8   furnish the governor, from time to time, such assistance and 
100.9   information as the governor may require relating to tax matters; 
100.10     (12) transmit to the governor, on or before the third 
100.11  Monday in December of each even-numbered year, and to each 
100.12  member of the legislature, on or before November 15 of each 
100.13  even-numbered year, the report of the department of revenue for 
100.14  the preceding years, showing all the taxable property in the 
100.15  state and the value of the same, in tabulated form; 
100.16     (13) inquire into the methods of assessment and taxation 
100.17  and ascertain whether the assessors faithfully discharge their 
100.18  duties, particularly as to their compliance with the laws 
100.19  requiring the assessment of all property not exempt from 
100.20  taxation; 
100.21     (14) administer and enforce the assessment and collection 
100.22  of state taxes and fees, including the use of any remedy 
100.23  available to nongovernmental creditors, and, from time to time, 
100.24  make, publish, and distribute rules for the administration and 
100.25  enforcement of assessments and fees laws administered by the 
100.26  commissioner and state tax laws.  The rules have the force of 
100.27  law; 
100.28     (15) prepare blank forms for the returns required by state 
100.29  tax law and distribute them throughout the state, furnishing 
100.30  them subject to charge on application; 
100.31     (16) prescribe rules governing the qualification and 
100.32  practice of agents, attorneys, or other persons representing 
100.33  taxpayers before the commissioner.  The rules may require that 
100.34  those persons, agents, and attorneys show that they are of good 
100.35  character and in good repute, have the necessary qualifications 
100.36  to give taxpayers valuable services, and are otherwise competent 
101.1   to advise and assist taxpayers in the presentation of their case 
101.2   before being recognized as representatives of taxpayers.  After 
101.3   due notice and opportunity for hearing, the commissioner may 
101.4   suspend and bar from further practice before the commissioner 
101.5   any person, agent, or attorney who is shown to be incompetent or 
101.6   disreputable, who refuses to comply with the rules, or who with 
101.7   intent to defraud, willfully or knowingly deceives, misleads, or 
101.8   threatens a taxpayer or prospective taxpayer, by words, 
101.9   circular, letter, or by advertisement.  This clause does not 
101.10  curtail the rights of individuals to appear in their own behalf 
101.11  or partners or corporations' officers to appear in behalf of 
101.12  their respective partnerships or corporations; 
101.13     (17) appoint agents as the commissioner considers necessary 
101.14  to make examinations and determinations.  The agents have the 
101.15  rights and powers conferred on the commissioner to subpoena, 
101.16  examine, and copy books, records, papers, or memoranda, subpoena 
101.17  witnesses, administer oaths and affirmations, and take 
101.18  testimony.  In addition to administrative subpoenas of the 
101.19  commissioner and the agents, upon demand of the commissioner or 
101.20  an agent, the court administrator of any district court shall 
101.21  issue a subpoena for the attendance of a witness or the 
101.22  production of books, papers, records, or memoranda before the 
101.23  agent for inspection and copying.  Disobedience of a court 
101.24  administrator's subpoena shall be punished by the district court 
101.25  of the district in which the subpoena is issued, or in the case 
101.26  of a subpoena issued by the commissioner or an agent, by the 
101.27  district court of the district in which the party served with 
101.28  the subpoena is located, in the same manner as contempt of the 
101.29  district court; 
101.30     (18) appoint and employ additional help, purchase supplies 
101.31  or materials, or incur other expenditures in the enforcement of 
101.32  state tax laws as considered necessary.  The salaries of all 
101.33  agents and employees provided for in this chapter shall be fixed 
101.34  by the appointing authority, subject to the approval of the 
101.35  commissioner of administration; 
101.36     (19) execute and administer any agreement with the 
102.1   secretary of the treasury of the United States or a 
102.2   representative of another state regarding the exchange of 
102.3   information and administration of the tax laws; 
102.4      (20) authorize the use of unmarked motor vehicles to 
102.5   conduct seizures or criminal investigations pursuant to the 
102.6   commissioner's authority; and 
102.7      (21) exercise other powers and perform other duties 
102.8   required of or imposed upon the commissioner of revenue by law.  
102.9      [EFFECTIVE DATE.] This section is effective the day 
102.10  following final enactment. 
102.11     Sec. 2.  Minnesota Statutes 2002, section 270.10, 
102.12  subdivision 1a, is amended to read: 
102.13     Subd. 1a.  [NOTIFICATION TO TAXPAYER.] At the same time 
102.14  that notice of the assessment, determination, or order of the 
102.15  commissioner is given to a taxpayer, the taxpayer must be 
102.16  notified in writing of the right to appeal to the tax court, and 
102.17  if applicable, to the small claims division.  Except in the case 
102.18  of mathematical or clerical errors, the notice must contain a 
102.19  description of the basis for, including applicable law and other 
102.20  factors considered in the determination, and a listing of the 
102.21  amounts of tax due, interest, additions to tax, and penalties.  
102.22  Failure to provide all the required information does not 
102.23  invalidate the notice for purposes of satisfying statutory 
102.24  notice requirements if the notice contains sufficient 
102.25  information to advise the taxpayer that an assessment, order, or 
102.26  other determination has been made.  The taxpayer may request 
102.27  further clarification within the time provided for appealing the 
102.28  determination.  In any notice of assessment, determination, or 
102.29  order dealing with property valuation or assessment for property 
102.30  tax purposes by the commissioner of revenue or a local unit of 
102.31  government, the taxpayer must be notified in writing that a 
102.32  taxpayer must appeal to the town or city board of equalization 
102.33  and to the county board of equalization before appealing to the 
102.34  small claims division of the tax court, except for those 
102.35  taxpayers whose original assessments are determined by the 
102.36  commissioner of revenue.  
103.1      [EFFECTIVE DATE.] This section is effective the day 
103.2   following final enactment. 
103.3      Sec. 3.  Minnesota Statutes 2002, section 272.02, is 
103.4   amended by adding a subdivision to read: 
103.5      Subd. 56.  [COMPREHENSIVE HEALTH ASSOCIATION.] All property 
103.6   owned by the comprehensive health association is exempt to the 
103.7   extent provided in section 62E.10, subdivision 1. 
103.8      [EFFECTIVE DATE.] This section is effective the day 
103.9   following final enactment. 
103.10     Sec. 4.  Minnesota Statutes 2002, section 272.02, is 
103.11  amended by adding a subdivision to read: 
103.12     Subd. 57.  [PRIVATE CEMETERIES.] All property owned by 
103.13  private cemeteries is exempt to the extent provided in section 
103.14  307.09. 
103.15     [EFFECTIVE DATE.] This section is effective the day 
103.16  following final enactment. 
103.17     Sec. 5.  Minnesota Statutes 2002, section 272.02, is 
103.18  amended by adding a subdivision to read: 
103.19     Subd. 58.  [WESTERN LAKE SUPERIOR SANITARY BOARD.] All 
103.20  property owned, leased, controlled, used, or occupied for 
103.21  public, governmental, and municipal purposes by the Western Lake 
103.22  Superior Sanitary Board is exempt to the extent provided in 
103.23  section 458D.23. 
103.24     [EFFECTIVE DATE.] This section is effective the day 
103.25  following final enactment. 
103.26     Sec. 6.  Minnesota Statutes 2002, section 272.02, is 
103.27  amended by adding a subdivision to read: 
103.28     Subd. 59.  [UNFINISHED SALE OR RENTAL PROJECTS.] Unfinished 
103.29  sale or rental projects are exempt to the extent provided in 
103.30  section 469.155, subdivision 17. 
103.31     [EFFECTIVE DATE.] This section is effective the day 
103.32  following final enactment. 
103.33     Sec. 7.  Minnesota Statutes 2002, section 272.02, is 
103.34  amended by adding a subdivision to read: 
103.35     Subd. 60.  [SKYWAYS.] The pedestrian skyway system, 
103.36  underground pedestrian concourse, the people mover system, and 
104.1   publicly owned parking structures are exempt to the extent 
104.2   provided in section 469.127. 
104.3      [EFFECTIVE DATE.] This section is effective the day 
104.4   following final enactment. 
104.5      Sec. 8.  Minnesota Statutes 2002, section 272.02, is 
104.6   amended by adding a subdivision to read: 
104.7      Subd. 61.  [MUNICIPAL RECREATION FACILITIES.] All property 
104.8   acquired and used by a city is exempt to the extent provided in 
104.9   section 471.191, subdivision 4. 
104.10     [EFFECTIVE DATE.] This section is effective the day 
104.11  following final enactment. 
104.12     Sec. 9.  Minnesota Statutes 2002, section 272.02, is 
104.13  amended by adding a subdivision to read: 
104.14     Subd. 62.  [WATER AND WASTEWATER TREATMENT 
104.15  FACILITIES.] Related facilities owned by water and wastewater 
104.16  treatment providers who have contracted with a municipality to 
104.17  provide capital intensive public services to the municipality 
104.18  are exempt to the extent provided in section 471A.05. 
104.19     [EFFECTIVE DATE.] This section is effective the day 
104.20  following final enactment. 
104.21     Sec. 10.  Minnesota Statutes 2002, section 272.12, is 
104.22  amended to read: 
104.23     272.12 [CONVEYANCES, TAXES PAID BEFORE RECORDING.] 
104.24     When: 
104.25     (a) a deed or other instrument conveying land, 
104.26     (b) a plat of any town site or addition thereto, 
104.27     (c) a survey required pursuant to section 508.47, 
104.28     (d) a condominium plat subject to chapter 515 or 515A or a 
104.29  declaration that contains such a plat, or 
104.30     (e) a common interest community plat subject to chapter 
104.31  515B or a declaration that contains such a plat, 
104.32  is presented to the county auditor for transfer, the auditor 
104.33  shall ascertain from the records if there be taxes delinquent 
104.34  upon the land described therein, or if it has been sold for 
104.35  taxes.  An assignment of a sheriff's or referee's certificate of 
104.36  sale, when the certificate of sale describes real estate, and 
105.1   certificates of redemption from mortgage or lien foreclosure 
105.2   sales, when the certificate of redemption encompasses real 
105.3   estate and is issued to a junior creditor, are considered 
105.4   instruments conveying land for the purposes of this section and 
105.5   section 272.121.  If there are taxes delinquent, the auditor 
105.6   shall certify to the same; and upon payment of such taxes, or in 
105.7   case no taxes are delinquent, shall transfer the land upon the 
105.8   books of the auditor's office, and note upon the instrument, 
105.9   over official signature, the words, "no delinquent taxes and 
105.10  transfer entered," or, if the land described has been sold or 
105.11  assigned to an actual purchaser for taxes, the words "paid by 
105.12  sale of land described within;" and, unless such statement is 
105.13  made upon such instrument, the county recorder or the registrar 
105.14  of titles shall refuse to receive or record the same; provided, 
105.15  that sheriff's or referees' certificates of sale on execution or 
105.16  foreclosure of a lien or mortgage, certificates of redemption 
105.17  from mortgage or lien foreclosure sales issued to the redeeming 
105.18  mortgagor or lienee, deeds of distribution made by a personal 
105.19  representative in probate proceedings, decrees and judgments, 
105.20  receivers receipts, patents, and copies of town or statutory 
105.21  city plats, in case the original plat filed in the office of the 
105.22  county recorder has been lost or destroyed, and the instruments 
105.23  releasing, removing and discharging reversionary and forfeiture 
105.24  provisions affecting title to land and instruments releasing, 
105.25  removing or discharging easement rights in land or building or 
105.26  other restrictions, may be recorded without such certificate; 
105.27  and, provided that instruments conveying land and, as 
105.28  appurtenant thereto an easement over adjacent tract or tracts of 
105.29  land, may be recorded without such certificate as to the land 
105.30  covered by such easement; and provided further, that any 
105.31  instrument granting an easement made in favor of any public 
105.32  utility or pipe line for conveying gas, liquids or solids in 
105.33  suspension, in the nature of a right-of-way over, along, across 
105.34  or under a tract of land may be recorded without such 
105.35  certificate as to the land covered by such easement.  Any 
105.36  instrument amending or restating the declarations, bylaws, 
106.1   plats, or other enabling Documents governing homeowners 
106.2   associations of condominiums, townhouses, common interest 
106.3   ownership communities, and other planned unit developments may 
106.4   be recorded without the auditor's certificate to the extent 
106.5   provided in section 515B.1-116(f). 
106.6      A deed of distribution made by a personal representative in 
106.7   a probate proceeding, a decree, or a judgment that conveys land 
106.8   shall be presented to the county auditor, who shall transfer the 
106.9   land upon the books of the auditor's office and note upon the 
106.10  instrument, over official signature, the words, "transfer 
106.11  entered", and the instrument may then be recorded.  A decree or 
106.12  judgment that affects title to land but does not convey land may 
106.13  be recorded without presentation to the auditor. 
106.14     A violation of this section by the county recorder or the 
106.15  registrar of titles shall be a gross misdemeanor, and, in 
106.16  addition to the punishment therefor, the recorder or registrar 
106.17  shall be liable to the grantee of any instrument so recorded for 
106.18  the amount of any damages sustained. 
106.19     When, as a condition to permitting the recording of deed or 
106.20  other instrument affecting the title to real estate previously 
106.21  forfeited to the state under the provisions of sections 281.16 
106.22  to 281.25, county officials, after such real estate has been 
106.23  purchased or repurchased, have required the payment of taxes 
106.24  erroneously assumed to have accrued against such real estate 
106.25  after forfeiture and before the date of purchase or repurchase, 
106.26  the sum required to be so paid shall be refunded to the persons 
106.27  entitled thereto out of moneys in the funds in which the sum so 
106.28  paid was placed.  Delinquent taxes are those taxes deemed 
106.29  delinquent under section 279.02. 
106.30     [EFFECTIVE DATE.] This section is effective for deeds or 
106.31  instruments accepted for recording or registration on or after 
106.32  July 1, 2003. 
106.33     Sec. 11.  Minnesota Statutes 2002, section 273.05, 
106.34  subdivision 1, is amended to read: 
106.35     Subdivision 1.  [APPOINTMENT OF TOWN AND CITY ASSESSORS.] 
106.36  Notwithstanding any other provision of law all town assessors 
107.1   shall be appointed by the town board, and notwithstanding any 
107.2   charter provisions to the contrary, all city assessors shall be 
107.3   appointed by the city council or other appointing authority as 
107.4   provided by law or charter.  Such assessors shall be residents 
107.5   of the state but need not be a resident of the town or city for 
107.6   which they are appointed.  They shall be selected and appointed 
107.7   because of their knowledge and training in the field of property 
107.8   taxation.  All town and statutory city assessors shall be 
107.9   appointed for indefinite terms.  A town or statutory city 
107.10  assessor who is an employee may be dismissed by the appointing 
107.11  authority for cause.  The term of the town or city assessors may 
107.12  be terminated at any time by the town board or city council on 
107.13  charges by the commissioner of revenue of inefficiency or 
107.14  neglect of duty.  Vacancies in the office of town or city 
107.15  assessor shall be filled within 90 days by appointment of the 
107.16  respective appointing authority indicated above.  If the vacancy 
107.17  is not filled within 90 days, the office shall be terminated.  
107.18  When a vacancy in the office of town or city assessor is not 
107.19  filled by appointment, and it is imperative that the office of 
107.20  assessor be filled, the county auditor shall appoint some 
107.21  resident of the county as assessor for such town or city.  The 
107.22  county auditor may appoint the county assessor as assessor for 
107.23  such town or city, in which case the town or city shall pay to 
107.24  the county treasurer the amount determined by the county auditor 
107.25  to be due for the services performed and expenses incurred by 
107.26  the county assessor in acting as assessor for such town or 
107.27  city.  The term of any town or statutory city assessor in a 
107.28  county electing in accordance with section 273.052 shall be 
107.29  terminated as provided in section 273.055. 
107.30     The commissioner of revenue may recommend to the state 
107.31  board of assessors the nonrenewal, suspension, or revocation of 
107.32  an assessor's license as provided in sections 270.41 to 270.53. 
107.33     [EFFECTIVE DATE.] This section is effective the day 
107.34  following final enactment and applies to every town or city 
107.35  assessor whether that assessor was appointed before, on, or 
107.36  after the effective date. 
108.1      Sec. 12.  Minnesota Statutes 2002, section 273.061, is 
108.2   amended by adding a subdivision to read: 
108.3      Subd. 1a.  [COMPATIBLE OFFICES.] A person appointed as the 
108.4   county assessor also may serve as the county auditor, county 
108.5   treasurer, or county auditor-treasurer if those offices are 
108.6   appointive, provided that the person in the combined appointed 
108.7   office must not serve on the county board of appeal and 
108.8   equalization under section 274.13.  In a county in which the 
108.9   functions of the county assessor are combined with those of the 
108.10  county auditor or county auditor-treasurer, the county board may 
108.11  not delegate any authority, power, or responsibility under 
108.12  section 375.192, subdivision 4. 
108.13     [EFFECTIVE DATE.] This section is effective January 2, 2004.
108.14     Sec. 13.  Minnesota Statutes 2002, section 273.061, is 
108.15  amended by adding a subdivision to read: 
108.16     Subd. 1b.  [COMPATIBLE OFFICES IN COUNTIES CHANGING TO 
108.17  APPOINTED AUDITOR.] In a county in which the office of auditor, 
108.18  treasurer, or auditor-treasurer is an elective position, a 
108.19  person appointed as the county assessor also may serve as the 
108.20  county auditor, county treasurer, or county auditor-treasurer if 
108.21  a proposal to make the affected office appointive has been 
108.22  approved as required by other law and will be effective within 
108.23  five years. 
108.24     [EFFECTIVE DATE.] This section is effective January 2, 2004.
108.25     Sec. 14.  Minnesota Statutes 2002, section 273.061, is 
108.26  amended by adding a subdivision to read: 
108.27     Subd. 1c.  [INCOMPATIBLE OFFICES.] The person appointed as 
108.28  the county assessor must not also be the county attorney, a 
108.29  county board member, an elected county auditor, an elected 
108.30  county treasurer, an elected county auditor-treasurer, a town 
108.31  board supervisor for a town in the same county, or a city mayor 
108.32  or council member for a city in the same county.  The person 
108.33  appointed as the city assessor must not also be a city council 
108.34  member or mayor for the same city.  A person appointed as the 
108.35  town assessor must not also be a town board supervisor for the 
108.36  same town.  Except as provided in subdivision 1b, an assessor 
109.1   who accepts a position that is incompatible with the office of 
109.2   assessor is deemed to have resigned from the assessor position. 
109.3      [EFFECTIVE DATE.] This section is effective January 2, 2004.
109.4      Sec. 15.  Minnesota Statutes 2002, section 273.11, 
109.5   subdivision 1a, is amended to read: 
109.6      Subd. 1a.  [LIMITED MARKET VALUE.] In the case of all 
109.7   property classified as agricultural homestead or nonhomestead, 
109.8   residential homestead or nonhomestead, timber, or noncommercial 
109.9   seasonal residential recreational residential, the assessor 
109.10  shall compare the value with the taxable portion of the value 
109.11  determined in the preceding assessment.  
109.12     For assessment year 2002, the amount of the increase shall 
109.13  not exceed the greater of (1) ten percent of the value in the 
109.14  preceding assessment, or (2) 15 percent of the difference 
109.15  between the current assessment and the preceding assessment. 
109.16     For assessment year 2003, the amount of the increase shall 
109.17  not exceed the greater of (1) 12 percent of the value in the 
109.18  preceding assessment, or (2) 20 percent of the difference 
109.19  between the current assessment and the preceding assessment. 
109.20     For assessment year 2004, the amount of the increase shall 
109.21  not exceed the greater of (1) 15 percent of the value in the 
109.22  preceding assessment, or (2) 25 percent of the difference 
109.23  between the current assessment and the preceding assessment. 
109.24     For assessment year 2005, the amount of the increase shall 
109.25  not exceed the greater of (1) 15 percent of the value in the 
109.26  preceding assessment, or (2) 33 percent of the difference 
109.27  between the current assessment and the preceding assessment.  
109.28     For assessment year 2006, the amount of the increase shall 
109.29  not exceed the greater of (1) 15 percent of the value in the 
109.30  preceding assessment, or (2) 50 percent of the difference 
109.31  between the current assessment and the preceding assessment. 
109.32     This limitation shall not apply to increases in value due 
109.33  to improvements.  For purposes of this subdivision, the term 
109.34  "assessment" means the value prior to any exclusion under 
109.35  subdivision 16. 
109.36     The provisions of this subdivision shall be in effect 
110.1   through assessment year 2006 as provided in this subdivision. 
110.2      For purposes of the assessment/sales ratio study conducted 
110.3   under section 127A.48, and the computation of state aids paid 
110.4   under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 
110.5   477A, market values and net tax capacities determined under this 
110.6   subdivision and subdivision 16, shall be used. 
110.7      [EFFECTIVE DATE.] This section is effective the day 
110.8   following final enactment. 
110.9      Sec. 16.  Minnesota Statutes 2002, section 273.124, 
110.10  subdivision 1, is amended to read: 
110.11     Subdivision 1.  [GENERAL RULE.] (a) Residential real estate 
110.12  that is occupied and used for the purposes of a homestead by its 
110.13  owner, who must be a Minnesota resident, is a residential 
110.14  homestead.  
110.15     Agricultural land, as defined in section 273.13, 
110.16  subdivision 23, that is occupied and used as a homestead by its 
110.17  owner, who must be a Minnesota resident, is an agricultural 
110.18  homestead. 
110.19     Dates for establishment of a homestead and homestead 
110.20  treatment provided to particular types of property are as 
110.21  provided in this section.  
110.22     Property held by a trustee under a trust is eligible for 
110.23  homestead classification if the requirements under this chapter 
110.24  are satisfied. 
110.25     The assessor shall require proof, as provided in 
110.26  subdivision 13, of the facts upon which classification as a 
110.27  homestead may be determined.  Notwithstanding any other law, the 
110.28  assessor may at any time require a homestead application to be 
110.29  filed in order to verify that any property classified as a 
110.30  homestead continues to be eligible for homestead status.  
110.31  Notwithstanding any other law to the contrary, the department of 
110.32  revenue may, upon request from an assessor, verify whether an 
110.33  individual who is requesting or receiving homestead 
110.34  classification has filed a Minnesota income tax return as a 
110.35  resident for the most recent taxable year for which the 
110.36  information is available. 
111.1      When there is a name change or a transfer of homestead 
111.2   property, the assessor may reclassify the property in the next 
111.3   assessment unless a homestead application is filed to verify 
111.4   that the property continues to qualify for homestead 
111.5   classification. 
111.6      (b) For purposes of this section, homestead property shall 
111.7   include property which is used for purposes of the homestead but 
111.8   is separated from the homestead by a road, street, lot, 
111.9   waterway, or other similar intervening property.  The term "used 
111.10  for purposes of the homestead" shall include but not be limited 
111.11  to uses for gardens, garages, or other outbuildings commonly 
111.12  associated with a homestead, but shall not include vacant land 
111.13  held primarily for future development.  In order to receive 
111.14  homestead treatment for the noncontiguous property, the owner 
111.15  must use the property for the purposes of the homestead, and 
111.16  must apply to the assessor, both by the deadlines given in 
111.17  subdivision 9.  After initial qualification for the homestead 
111.18  treatment, additional applications for subsequent years are not 
111.19  required. 
111.20     (c) Residential real estate that is occupied and used for 
111.21  purposes of a homestead by a relative of the owner is a 
111.22  homestead but only to the extent of the homestead treatment that 
111.23  would be provided if the related owner occupied the property.  
111.24  For purposes of this paragraph and paragraph (g), "relative" 
111.25  means a parent, stepparent, child, stepchild, grandparent, 
111.26  grandchild, brother, sister, uncle, aunt, nephew, or niece.  
111.27  This relationship may be by blood or marriage.  Property that 
111.28  has been classified as seasonal residential recreational 
111.29  residential property at any time during which it has been owned 
111.30  by the current owner or spouse of the current owner will not be 
111.31  reclassified as a homestead unless it is occupied as a homestead 
111.32  by the owner; this prohibition also applies to property that, in 
111.33  the absence of this paragraph, would have been classified as 
111.34  seasonal residential recreational residential property at the 
111.35  time when the residence was constructed.  Neither the related 
111.36  occupant nor the owner of the property may claim a property tax 
112.1   refund under chapter 290A for a homestead occupied by a 
112.2   relative.  In the case of a residence located on agricultural 
112.3   land, only the house, garage, and immediately surrounding one 
112.4   acre of land shall be classified as a homestead under this 
112.5   paragraph, except as provided in paragraph (d). 
112.6      (d) Agricultural property that is occupied and used for 
112.7   purposes of a homestead by a relative of the owner, is a 
112.8   homestead, only to the extent of the homestead treatment that 
112.9   would be provided if the related owner occupied the property, 
112.10  and only if all of the following criteria are met: 
112.11     (1) the relative who is occupying the agricultural property 
112.12  is a son, daughter, grandson, granddaughter, father, or mother 
112.13  of the owner of the agricultural property or a son, daughter, 
112.14  grandson, or granddaughter of the spouse of the owner of the 
112.15  agricultural property; 
112.16     (2) the owner of the agricultural property must be a 
112.17  Minnesota resident; 
112.18     (3) the owner of the agricultural property must not receive 
112.19  homestead treatment on any other agricultural property in 
112.20  Minnesota; and 
112.21     (4) the owner of the agricultural property is limited to 
112.22  only one agricultural homestead per family under this paragraph. 
112.23     Neither the related occupant nor the owner of the property 
112.24  may claim a property tax refund under chapter 290A for a 
112.25  homestead occupied by a relative qualifying under this 
112.26  paragraph.  For purposes of this paragraph, "agricultural 
112.27  property" means the house, garage, other farm buildings and 
112.28  structures, and agricultural land. 
112.29     Application must be made to the assessor by the owner of 
112.30  the agricultural property to receive homestead benefits under 
112.31  this paragraph.  The assessor may require the necessary proof 
112.32  that the requirements under this paragraph have been met. 
112.33     (e) In the case of property owned by a property owner who 
112.34  is married, the assessor must not deny homestead treatment in 
112.35  whole or in part if only one of the spouses occupies the 
112.36  property and the other spouse is absent due to:  (1) marriage 
113.1   dissolution proceedings, (2) legal separation, (3) employment or 
113.2   self-employment in another location, or (4) other personal 
113.3   circumstances causing the spouses to live separately, not 
113.4   including an intent to obtain two homestead classifications for 
113.5   property tax purposes.  To qualify under clause (3), the 
113.6   spouse's place of employment or self-employment must be at least 
113.7   50 miles distant from the other spouse's place of employment, 
113.8   and the homesteads must be at least 50 miles distant from each 
113.9   other.  Homestead treatment, in whole or in part, shall not be 
113.10  denied to the owner's spouse who previously occupied the 
113.11  residence with the owner if the absence of the owner is due to 
113.12  one of the exceptions provided in this paragraph. 
113.13     (f) The assessor must not deny homestead treatment in whole 
113.14  or in part if: 
113.15     (1) in the case of a property owner who is not married, the 
113.16  owner is absent due to residence in a nursing home, boarding 
113.17  care facility, or an elderly assisted living facility property 
113.18  as defined in section 273.13, subdivision 25a, and the property 
113.19  is not otherwise occupied; or 
113.20     (2) in the case of a property owner who is married, the 
113.21  owner or the owner's spouse or both are absent due to residence 
113.22  in a nursing home, boarding care facility, or an elderly 
113.23  assisted living facility property as defined in section 273.13, 
113.24  subdivision 25a, and the property is not occupied or is occupied 
113.25  only by the owner's spouse. 
113.26     (g) If an individual is purchasing property with the intent 
113.27  of claiming it as a homestead and is required by the terms of 
113.28  the financing agreement to have a relative shown on the deed as 
113.29  a coowner, the assessor shall allow a full homestead 
113.30  classification.  This provision only applies to first-time 
113.31  purchasers, whether married or single, or to a person who had 
113.32  previously been married and is purchasing as a single individual 
113.33  for the first time.  The application for homestead benefits must 
113.34  be on a form prescribed by the commissioner and must contain the 
113.35  data necessary for the assessor to determine if full homestead 
113.36  benefits are warranted. 
114.1      (h) If residential or agricultural real estate is occupied 
114.2   and used for purposes of a homestead by a child of a deceased 
114.3   owner and the property is subject to jurisdiction of probate 
114.4   court, the child shall receive relative homestead classification 
114.5   under paragraph (c) or (d) to the same extent they would be 
114.6   entitled to it if the owner was still living, until the probate 
114.7   is completed.  For purposes of this paragraph, "child" includes 
114.8   a relationship by blood or by marriage. 
114.9      [EFFECTIVE DATE.] This section is effective the day 
114.10  following final enactment. 
114.11     Sec. 17.  Minnesota Statutes 2002, section 273.13, 
114.12  subdivision 25, is amended to read: 
114.13     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
114.14  estate containing four or more units and used or held for use by 
114.15  the owner or by the tenants or lessees of the owner as a 
114.16  residence for rental periods of 30 days or more.  Class 4a also 
114.17  includes hospitals licensed under sections 144.50 to 144.56, 
114.18  other than hospitals exempt under section 272.02, and contiguous 
114.19  property used for hospital purposes, without regard to whether 
114.20  the property has been platted or subdivided.  The market value 
114.21  of class 4a property has a class rate of 1.8 percent for taxes 
114.22  payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 
114.23  percent for taxes payable in 2004 and thereafter, except that 
114.24  class 4a property consisting of a structure for which 
114.25  construction commenced after June 30, 2001, has a class rate of 
114.26  1.25 percent of market value for taxes payable in 2003 and 
114.27  subsequent years. 
114.28     (b) Class 4b includes: 
114.29     (1) residential real estate containing less than four units 
114.30  that does not qualify as class 4bb, other than seasonal 
114.31  residential, and recreational property; 
114.32     (2) manufactured homes not classified under any other 
114.33  provision; 
114.34     (3) a dwelling, garage, and surrounding one acre of 
114.35  property on a nonhomestead farm classified under subdivision 23, 
114.36  paragraph (b) containing two or three units; and 
115.1      (4) unimproved property that is classified residential as 
115.2   determined under subdivision 33.  
115.3      The market value of class 4b property has a class rate of 
115.4   1.5 percent for taxes payable in 2002, and 1.25 percent for 
115.5   taxes payable in 2003 and thereafter. 
115.6      (c) Class 4bb includes: 
115.7      (1) nonhomestead residential real estate containing one 
115.8   unit, other than seasonal residential, and recreational 
115.9   property; and 
115.10     (2) a single family dwelling, garage, and surrounding one 
115.11  acre of property on a nonhomestead farm classified under 
115.12  subdivision 23, paragraph (b). 
115.13     Class 4bb property has the same class rates as class 1a 
115.14  property under subdivision 22. 
115.15     Property that has been classified as seasonal recreational 
115.16  residential recreational property at any time during which it 
115.17  has been owned by the current owner or spouse of the current 
115.18  owner does not qualify for class 4bb. 
115.19     (d) Class 4c property includes: 
115.20     (1) except as provided in subdivision 22, paragraph (c), 
115.21  real property devoted to temporary and seasonal residential 
115.22  occupancy for recreation purposes, including real property 
115.23  devoted to temporary and seasonal residential occupancy for 
115.24  recreation purposes and not devoted to commercial purposes for 
115.25  more than 250 days in the year preceding the year of 
115.26  assessment.  For purposes of this clause, property is devoted to 
115.27  a commercial purpose on a specific day if any portion of the 
115.28  property is used for residential occupancy, and a fee is charged 
115.29  for residential occupancy.  In order for a property to be 
115.30  classified as class 4c, seasonal residential recreational 
115.31  residential for commercial purposes, at least 40 percent of the 
115.32  annual gross lodging receipts related to the property must be 
115.33  from business conducted during 90 consecutive days and either 
115.34  (i) at least 60 percent of all paid bookings by lodging guests 
115.35  during the year must be for periods of at least two consecutive 
115.36  nights; or (ii) at least 20 percent of the annual gross receipts 
116.1   must be from charges for rental of fish houses, boats and 
116.2   motors, snowmobiles, downhill or cross-country ski equipment, or 
116.3   charges for marina services, launch services, and guide 
116.4   services, or the sale of bait and fishing tackle.  For purposes 
116.5   of this determination, a paid booking of five or more nights 
116.6   shall be counted as two bookings.  Class 4c also includes 
116.7   commercial use real property used exclusively for recreational 
116.8   purposes in conjunction with class 4c property devoted to 
116.9   temporary and seasonal residential occupancy for recreational 
116.10  purposes, up to a total of two acres, provided the property is 
116.11  not devoted to commercial recreational use for more than 250 
116.12  days in the year preceding the year of assessment and is located 
116.13  within two miles of the class 4c property with which it is 
116.14  used.  Class 4c property classified in this clause also includes 
116.15  the remainder of class 1c resorts provided that the entire 
116.16  property including that portion of the property classified as 
116.17  class 1c also meets the requirements for class 4c under this 
116.18  clause; otherwise the entire property is classified as class 3.  
116.19  Owners of real property devoted to temporary and seasonal 
116.20  residential occupancy for recreation purposes and all or a 
116.21  portion of which was devoted to commercial purposes for not more 
116.22  than 250 days in the year preceding the year of assessment 
116.23  desiring classification as class 1c or 4c, must submit a 
116.24  declaration to the assessor designating the cabins or units 
116.25  occupied for 250 days or less in the year preceding the year of 
116.26  assessment by January 15 of the assessment year.  Those cabins 
116.27  or units and a proportionate share of the land on which they are 
116.28  located will be designated class 1c or 4c as otherwise 
116.29  provided.  The remainder of the cabins or units and a 
116.30  proportionate share of the land on which they are located will 
116.31  be designated as class 3a.  The owner of property desiring 
116.32  designation as class 1c or 4c property must provide guest 
116.33  registers or other records demonstrating that the units for 
116.34  which class 1c or 4c designation is sought were not occupied for 
116.35  more than 250 days in the year preceding the assessment if so 
116.36  requested.  The portion of a property operated as a (1) 
117.1   restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
117.2   facility operated on a commercial basis not directly related to 
117.3   temporary and seasonal residential occupancy for recreation 
117.4   purposes shall not qualify for class 1c or 4c; 
117.5      (2) qualified property used as a golf course if: 
117.6      (i) it is open to the public on a daily fee basis.  It may 
117.7   charge membership fees or dues, but a membership fee may not be 
117.8   required in order to use the property for golfing, and its green 
117.9   fees for golfing must be comparable to green fees typically 
117.10  charged by municipal courses; and 
117.11     (ii) it meets the requirements of section 273.112, 
117.12  subdivision 3, paragraph (d). 
117.13     A structure used as a clubhouse, restaurant, or place of 
117.14  refreshment in conjunction with the golf course is classified as 
117.15  class 3a property; 
117.16     (3) real property up to a maximum of one acre of land owned 
117.17  by a nonprofit community service oriented organization; provided 
117.18  that the property is not used for a revenue-producing activity 
117.19  for more than six days in the calendar year preceding the year 
117.20  of assessment and the property is not used for residential 
117.21  purposes on either a temporary or permanent basis.  For purposes 
117.22  of this clause, a "nonprofit community service oriented 
117.23  organization" means any corporation, society, association, 
117.24  foundation, or institution organized and operated exclusively 
117.25  for charitable, religious, fraternal, civic, or educational 
117.26  purposes, and which is exempt from federal income taxation 
117.27  pursuant to section 501(c)(3), (10), or (19) of the Internal 
117.28  Revenue Code of 1986, as amended through December 31, 1990.  For 
117.29  purposes of this clause, "revenue-producing activities" shall 
117.30  include but not be limited to property or that portion of the 
117.31  property that is used as an on-sale intoxicating liquor or 3.2 
117.32  percent malt liquor establishment licensed under chapter 340A, a 
117.33  restaurant open to the public, bowling alley, a retail store, 
117.34  gambling conducted by organizations licensed under chapter 349, 
117.35  an insurance business, or office or other space leased or rented 
117.36  to a lessee who conducts a for-profit enterprise on the 
118.1   premises.  Any portion of the property which is used for 
118.2   revenue-producing activities for more than six days in the 
118.3   calendar year preceding the year of assessment shall be assessed 
118.4   as class 3a.  The use of the property for social events open 
118.5   exclusively to members and their guests for periods of less than 
118.6   24 hours, when an admission is not charged nor any revenues are 
118.7   received by the organization shall not be considered a 
118.8   revenue-producing activity; 
118.9      (4) post-secondary student housing of not more than one 
118.10  acre of land that is owned by a nonprofit corporation organized 
118.11  under chapter 317A and is used exclusively by a student 
118.12  cooperative, sorority, or fraternity for on-campus housing or 
118.13  housing located within two miles of the border of a college 
118.14  campus; 
118.15     (5) manufactured home parks as defined in section 327.14, 
118.16  subdivision 3; 
118.17     (6) real property that is actively and exclusively devoted 
118.18  to indoor fitness, health, social, recreational, and related 
118.19  uses, is owned and operated by a not-for-profit corporation, and 
118.20  is located within the metropolitan area as defined in section 
118.21  473.121, subdivision 2; 
118.22     (7) a leased or privately owned noncommercial aircraft 
118.23  storage hangar not exempt under section 272.01, subdivision 2, 
118.24  and the land on which it is located, provided that: 
118.25     (i) the land is on an airport owned or operated by a city, 
118.26  town, county, metropolitan airports commission, or group 
118.27  thereof; and 
118.28     (ii) the land lease, or any ordinance or signed agreement 
118.29  restricting the use of the leased premise, prohibits commercial 
118.30  activity performed at the hangar. 
118.31     If a hangar classified under this clause is sold after June 
118.32  30, 2000, a bill of sale must be filed by the new owner with the 
118.33  assessor of the county where the property is located within 60 
118.34  days of the sale; and 
118.35     (8) residential real estate, a portion of which is used by 
118.36  the owner for homestead purposes, and that is also a place of 
119.1   lodging, if all of the following criteria are met: 
119.2      (i) rooms are provided for rent to transient guests that 
119.3   generally stay for periods of 14 or fewer days; 
119.4      (ii) meals are provided to persons who rent rooms, the cost 
119.5   of which is incorporated in the basic room rate; 
119.6      (iii) meals are not provided to the general public except 
119.7   for special events on fewer than seven days in the calendar year 
119.8   preceding the year of the assessment; and 
119.9      (iv) the owner is the operator of the property. 
119.10  The market value subject to the 4c classification under this 
119.11  clause is limited to five rental units.  Any rental units on the 
119.12  property in excess of five, must be valued and assessed as class 
119.13  3a.  The portion of the property used for purposes of a 
119.14  homestead by the owner must be classified as class 1a property 
119.15  under subdivision 22. 
119.16     Class 4c property has a class rate of 1.5 percent of market 
119.17  value, except that (i) each parcel of seasonal residential 
119.18  recreational property not used for commercial purposes has the 
119.19  same class rates as class 4bb property, (ii) manufactured home 
119.20  parks assessed under clause (5) have the same class rate as 
119.21  class 4b property, (iii) commercial-use seasonal residential 
119.22  recreational property has a class rate of one percent for the 
119.23  first $500,000 of market value, which includes any market value 
119.24  receiving the one percent rate under subdivision 22, and 1.25 
119.25  percent for the remaining market value, (iv) the market value of 
119.26  property described in clause (4) has a class rate of one 
119.27  percent, (v) the market value of property described in clauses 
119.28  (2) and (6) has a class rate of 1.25 percent, and (vi) that 
119.29  portion of the market value of property in clause (8) qualifying 
119.30  for class 4c property has a class rate of 1.25 percent.  
119.31     (e) Class 4d property is qualifying low-income rental 
119.32  housing certified to the assessor by the housing finance agency 
119.33  under sections 273.126 and 462A.071.  Class 4d includes land in 
119.34  proportion to the total market value of the building that is 
119.35  qualifying low-income rental housing.  For all properties 
119.36  qualifying as class 4d, the market value determined by the 
120.1   assessor must be based on the normal approach to value using 
120.2   normal unrestricted rents. 
120.3      Class 4d property has a class rate of 0.9 percent for taxes 
120.4   payable in 2002, and one percent for taxes payable in 2003 and 
120.5   1.25 percent for taxes payable in 2004 and thereafter.  
120.6      [EFFECTIVE DATE.] This section is effective the day 
120.7   following final enactment. 
120.8      Sec. 18.  Minnesota Statutes 2002, section 273.1398, 
120.9   subdivision 4b, is amended to read: 
120.10     Subd. 4b.  [COURT EXPENDITURES; MAINTENANCE OF EFFORT.] (a) 
120.11  Until the costs of court administration as defined under section 
120.12  480.183, subdivision 3, in a county have been transferred to the 
120.13  state, each county in a judicial district transferring court 
120.14  administration costs to state funding after July 1, 2001, shall 
120.15  budget for the funding of these costs an amount at least equal 
120.16  to the certified budget amount for calendar year 2001, increased 
120.17  by six percent for each year from 2001 to 2003 and by eight 
120.18  percent from 2004 to the year of the transfer.  The county shall 
120.19  budget, fund, and authorize expenditures not less than the 
120.20  amount calculated under this paragraph plus the temporary aid 
120.21  amount under subdivision 4c for maintenance of effort of 
120.22  administrative costs. 
120.23     (b) By July 15, 2001, the court shall certify to each 
120.24  county in the judicial district its cost of court administration 
120.25  as defined under section 480.183, subdivision 3, based on 2001 
120.26  budgets.  In making that determination, the court shall exclude 
120.27  the budget costs of the county for the following categories: 
120.28     (1) rent; 
120.29     (2) examiner of titles; 
120.30     (3) civil court appointed attorneys for civil matters; 
120.31     (4) hospitalization costs; and 
120.32     (5) cost of maintaining vital statistics. 
120.33     The amount of funding provided by a county for courts that 
120.34  is increased by the maintenance of effort requirement may not be 
120.35  used by a county to pay the costs described in clauses (1) to 
120.36  (5). 
121.1      [EFFECTIVE DATE.] This section is effective the day 
121.2   following final enactment. 
121.3      Sec. 19.  Minnesota Statutes 2002, section 273.1398, 
121.4   subdivision 4d, is amended to read: 
121.5      Subd. 4d.  [AID OFFSET FOR OUT-OF-HOME PLACEMENT COSTS.] 
121.6   For aid payable in 2004, each county's aid under subdivision 2 
121.7   shall be permanently reduced by an amount equal to the county's 
121.8   2004 reimbursement for nonfederal expenditures for out-of-home 
121.9   placements, as provided in section 245.775, provided that 
121.10  payments will be made under section 477A.0123 in calendar year 
121.11  2004.  The counties shall provide all information requested by 
121.12  the commissioner of human services necessary to allow the 
121.13  commissioner to certify the previous three years' average 
121.14  nonfederal costs to the commissioner of revenue by July 15, 2004 
121.15  1, 2003.  The aid reduction under this subdivision must not 
121.16  exceed the difference between (1) the amount of aid calculated 
121.17  for the county for calendar year 2004 under subdivision 2, 
121.18  including any addition under section 477A.07, and (2) the amount 
121.19  of any aid reductions for the state takeover of courts contained 
121.20  in Laws 2001, First Special Session chapter 5, article 5. 
121.21     [EFFECTIVE DATE.] This section is effective for aids 
121.22  payable in 2004 and thereafter. 
121.23     Sec. 20.  Minnesota Statutes 2002, section 273.372, is 
121.24  amended to read: 
121.25     273.372 [PROCEEDINGS AND APPEALS; UTILITY OR RAILROAD 
121.26  VALUATIONS.] 
121.27     An appeal by a utility or railroad company concerning the 
121.28  exemption, valuation, or classification on of property for which 
121.29  the commissioner of revenue has provided the city or county 
121.30  assessor with commissioner's orders valuations by order, or for 
121.31  which the commissioner has recommended values to the city or 
121.32  county assessor, must be brought against the commissioner in tax 
121.33  court or in district court of the county where the property is 
121.34  located, and not against the county or taxing district where the 
121.35  property is located.  If the appeal to a court is of from an 
121.36  order of the commissioner, it must be brought under chapter 
122.1   271.  If the appeal is from the exemption, valuation, 
122.2   classification, or tax that results from implementation of the 
122.3   commissioner's order or recommendation, it must be brought under 
122.4   chapter 278, and the procedures provisions in that chapter 
122.5   apply, except that service shall be on the commissioner only and 
122.6   not on the county officials specified in section 278.01, 
122.7   subdivision 1.  This provision applies to the property contained 
122.8   under described in sections 273.33, 273.35, 273.36, and 273.37, 
122.9   but only if the appealed values have remained unchanged from 
122.10  those provided to the city or county by the commissioner.  If 
122.11  the exemption, valuation, or classification being appealed has 
122.12  been changed by the city or county, then the action must be 
122.13  brought under chapter 278 in the county where the property is 
122.14  located and proper service must be made upon the county 
122.15  officials as specified in section 278.01, subdivision 1. 
122.16     Upon filing of any appeal by a utility company or railroad 
122.17  against the commissioner, the commissioner shall give notice by 
122.18  first class mail to each county which would be affected by the 
122.19  appeal. 
122.20     Companies that submit the reports under section 270.82 or 
122.21  273.371 by the date specified in that section, or by the date 
122.22  specified by the commissioner in an extension, may appeal 
122.23  administratively to the commissioner under the procedures in 
122.24  section 270.11, subdivision 6, prior to bringing an action in 
122.25  tax court or in district court, however, instituting an 
122.26  administrative appeal with the commissioner does not change or 
122.27  modify the deadline in section 271.06 for appealing an order of 
122.28  the commissioner in tax court or the deadline in section 278.01 
122.29  for bringing an action filing a property tax claim or objection 
122.30  in tax court or district court. 
122.31     [EFFECTIVE DATE.] This section is effective the day 
122.32  following final enactment. 
122.33     Sec. 21.  Minnesota Statutes 2002, section 273.42, 
122.34  subdivision 2, is amended to read: 
122.35     Subd. 2.  Owners of land that is an agricultural or 
122.36  nonagricultural homestead, nonhomestead agricultural land, 
123.1   rental residential property, and both commercial and 
123.2   noncommercial seasonal residential recreational property, as 
123.3   those terms are defined in section 273.13 listed on records of 
123.4   the county auditor or county treasurer over which runs a high 
123.5   voltage transmission line as defined in section 116C.52, 
123.6   subdivision 3 with a capacity of 200 kilovolts or more, except a 
123.7   high voltage transmission line the construction of which was 
123.8   commenced prior to July 1, 1974, shall receive a property tax 
123.9   credit in an amount determined by multiplying a fraction, the 
123.10  numerator of which is the length of high voltage transmission 
123.11  line which runs over that parcel and the denominator of which is 
123.12  the total length of that particular line running over all 
123.13  property within the city or township by ten percent of the 
123.14  transmission line tax revenue derived from the tax on that 
123.15  portion of the line within the city or township pursuant to 
123.16  section 273.36.  In the case of property owners in unorganized 
123.17  townships, the property tax credit shall be determined by 
123.18  multiplying a fraction, the numerator of which is the length of 
123.19  the qualifying high voltage transmission line which runs over 
123.20  the parcel and the denominator of which is the total length of 
123.21  the qualifying high voltage transmission line running over all 
123.22  property within all the unorganized townships within the county, 
123.23  by the total utility property tax credit fund amount available 
123.24  within the county for that year pursuant to subdivision 1.  
123.25  Where a right-of-way width is shared by more than one property 
123.26  owner, the numerator shall be adjusted by multiplying the length 
123.27  of line on the parcel by the proportion of the total width on 
123.28  the parcel owned by that property owner.  The amount of credit 
123.29  for which the property qualifies shall not exceed 20 percent of 
123.30  the total gross tax on the parcel prior to deduction of the 
123.31  state paid agricultural credit and the state paid homestead 
123.32  credit, provided that, if the property containing the 
123.33  right-of-way is included in a parcel which exceeds 40 acres, the 
123.34  total gross tax on the parcel shall be multiplied by a fraction, 
123.35  the numerator of which is the sum of the number of acres in each 
123.36  quarter-quarter section or portion thereof which contains a 
124.1   right-of-way and the denominator of which is the total number of 
124.2   acres in the parcel set forth on the tax statement, and the 
124.3   maximum credit shall be 20 percent of the product of that 
124.4   computation, prior to deduction of those credits.  The auditor 
124.5   of the county in which the affected parcel is located shall 
124.6   calculate the amount of the credit due for each parcel and 
124.7   transmit that information to the county treasurer.  The county 
124.8   auditor, in computing the credit received pursuant to section 
124.9   273.135, shall reduce the gross tax by the amount of the credit 
124.10  received pursuant to this section, unless the amount of the 
124.11  credit would be less than $10. 
124.12     If, after the county auditor has computed the credit to 
124.13  those qualifying property owners in unorganized townships, there 
124.14  is money remaining in the utility property tax credit fund, then 
124.15  that excess amount in the fund shall be returned to the general 
124.16  school fund of the county. 
124.17     [EFFECTIVE DATE.] This section is effective the day 
124.18  following final enactment. 
124.19     Sec. 22.  Minnesota Statutes 2002, section 274.01, 
124.20  subdivision 1, is amended to read: 
124.21     Subdivision 1.  [ORDINARY BOARD; MEETINGS, DEADLINES, 
124.22  GRIEVANCES.] (a) The town board of a town, or the council or 
124.23  other governing body of a city, is the board of appeal and 
124.24  equalization except (1) in cities whose charters provide for a 
124.25  board of equalization or (2) in any city or town that has 
124.26  transferred its local board of review power and duties to the 
124.27  county board as provided in subdivision 3.  The county assessor 
124.28  shall fix a day and time when the board or the board of 
124.29  equalization shall meet in the assessment districts of the 
124.30  county.  Notwithstanding any law or city charter to the 
124.31  contrary, a city board of equalization shall be referred to as a 
124.32  board of appeal and equalization.  On or before February 15 of 
124.33  each year the assessor shall give written notice of the time to 
124.34  the city or town clerk.  Notwithstanding the provisions of any 
124.35  charter to the contrary, the meetings must be held between April 
124.36  1 and May 31 each year.  The clerk shall give published and 
125.1   posted notice of the meeting at least ten days before the date 
125.2   of the meeting.  
125.3      The board shall meet at the office of the clerk to review 
125.4   the assessment and classification of property in the town or 
125.5   city.  No changes in valuation or classification which are 
125.6   intended to correct errors in judgment by the county assessor 
125.7   may be made by the county assessor after the board has adjourned 
125.8   in those cities or towns that hold a local board of review; 
125.9   however, corrections of errors that are merely clerical in 
125.10  nature or changes that extend homestead treatment to property 
125.11  are permitted after adjournment until the tax extension date for 
125.12  that assessment year.  The changes must be fully documented and 
125.13  maintained in the assessor's office and must be available for 
125.14  review by any person.  A copy of the changes made during this 
125.15  period in those cities or towns that hold a local board of 
125.16  review must be sent to the county board no later than December 
125.17  31 of the assessment year.  
125.18     (b) The board shall determine whether the taxable property 
125.19  in the town or city has been properly placed on the list and 
125.20  properly valued by the assessor.  If real or personal property 
125.21  has been omitted, the board shall place it on the list with its 
125.22  market value, and correct the assessment so that each tract or 
125.23  lot of real property, and each article, parcel, or class of 
125.24  personal property, is entered on the assessment list at its 
125.25  market value.  No assessment of the property of any person may 
125.26  be raised unless the person has been duly notified of the intent 
125.27  of the board to do so.  On application of any person feeling 
125.28  aggrieved, the board shall review the assessment or 
125.29  classification, or both, and correct it as appears just.  The 
125.30  board may not make an individual market value adjustment or 
125.31  classification change that would benefit the property in cases 
125.32  where the owner or other person having control over the property 
125.33  will not permit the assessor to inspect the property and the 
125.34  interior of any buildings or structures.  
125.35     (c) A local board may reduce assessments upon petition of 
125.36  the taxpayer but the total reductions must not reduce the 
126.1   aggregate assessment made by the county assessor by more than 
126.2   one percent.  If the total reductions would lower the aggregate 
126.3   assessments made by the county assessor by more than one 
126.4   percent, none of the adjustments may be made.  The assessor 
126.5   shall correct any clerical errors or double assessments 
126.6   discovered by the board without regard to the one percent 
126.7   limitation.  
126.8      (d) A local board does not have authority to grant an 
126.9   exemption or to order property removed from the tax rolls. 
126.10     (e) A majority of the members may act at the meeting, and 
126.11  adjourn from day to day until they finish hearing the cases 
126.12  presented.  The assessor shall attend, with the assessment books 
126.13  and papers, and take part in the proceedings, but must not 
126.14  vote.  The county assessor, or an assistant delegated by the 
126.15  county assessor shall attend the meetings.  The board shall list 
126.16  separately, on a form appended to the assessment book, all 
126.17  omitted property added to the list by the board and all items of 
126.18  property increased or decreased, with the market value of each 
126.19  item of property, added or changed by the board, placed opposite 
126.20  the item.  The county assessor shall enter all changes made by 
126.21  the board in the assessment book.  
126.22     (e) (f) Except as provided in subdivision 3, if a person 
126.23  fails to appear in person, by counsel, or by written 
126.24  communication before the board after being duly notified of the 
126.25  board's intent to raise the assessment of the property, or if a 
126.26  person feeling aggrieved by an assessment or classification 
126.27  fails to apply for a review of the assessment or classification, 
126.28  the person may not appear before the county board of appeal and 
126.29  equalization for a review of the assessment or classification.  
126.30  This paragraph does not apply if an assessment was made after 
126.31  the local board meeting, as provided in section 273.01, or if 
126.32  the person can establish not having received notice of market 
126.33  value at least five days before the local board meeting.  
126.34     (f) (g) The local board must complete its work and adjourn 
126.35  within 20 days from the time of convening stated in the notice 
126.36  of the clerk, unless a longer period is approved by the 
127.1   commissioner of revenue.  No action taken after that date is 
127.2   valid.  All complaints about an assessment or classification 
127.3   made after the meeting of the board must be heard and determined 
127.4   by the county board of equalization.  A nonresident may, at any 
127.5   time, before the meeting of the board file written objections to 
127.6   an assessment or classification with the county assessor.  The 
127.7   objections must be presented to the board at its meeting by the 
127.8   county assessor for its consideration. 
127.9      [EFFECTIVE DATE.] This section is effective the day 
127.10  following final enactment. 
127.11     Sec. 23.  Minnesota Statutes 2002, section 274.13, 
127.12  subdivision 1, is amended to read: 
127.13     Subdivision 1.  [MEMBERS; MEETINGS; RULES FOR EQUALIZING 
127.14  ASSESSMENTS.] The county commissioners, or a majority of them, 
127.15  with the county auditor, or, if the auditor cannot be present, 
127.16  the deputy county auditor, or, if there is no deputy, the court 
127.17  administrator of the district court, shall form a board for the 
127.18  equalization of the assessment of the property of the county, 
127.19  including the property of all cities whose charters provide for 
127.20  a board of equalization.  This board shall be referred to as the 
127.21  county board of appeal and equalization.  The board shall meet 
127.22  annually, on the date specified in section 274.14, at the office 
127.23  of the auditor.  Each member shall take an oath to fairly and 
127.24  impartially perform duties as a member.  The board shall examine 
127.25  and compare the returns of the assessment of property of the 
127.26  towns or districts, and equalize them so that each tract or lot 
127.27  of real property and each article or class of personal property 
127.28  is entered on the assessment list at its market value, subject 
127.29  to the following rules: 
127.30     (1) The board shall raise the valuation of each tract or 
127.31  lot of real property which in its opinion is returned below its 
127.32  market value to the sum believed to be its market value.  The 
127.33  board must first give notice of intention to raise the valuation 
127.34  to the person in whose name it is assessed, if the person is a 
127.35  resident of the county.  The notice must fix a time and place 
127.36  for a hearing.  
128.1      (2) The board shall reduce the valuation of each tract or 
128.2   lot which in its opinion is returned above its market value to 
128.3   the sum believed to be its market value. 
128.4      (3) The board shall raise the valuation of each class of 
128.5   personal property which in its opinion is returned below its 
128.6   market value to the sum believed to be its market value.  It 
128.7   shall raise the aggregate value of the personal property of 
128.8   individuals, firms, or corporations, when it believes that the 
128.9   aggregate valuation, as returned, is less than the market value 
128.10  of the taxable personal property possessed by the individuals, 
128.11  firms, or corporations, to the sum it believes to be the market 
128.12  value.  The board must first give notice to the persons of 
128.13  intention to do so.  The notice must set a time and place for a 
128.14  hearing. 
128.15     (4) The board shall reduce the valuation of each class of 
128.16  personal property that is returned above its market value to the 
128.17  sum it believes to be its market value.  Upon complaint of a 
128.18  party aggrieved, the board shall reduce the aggregate valuation 
128.19  of the individual's personal property, or of any class of 
128.20  personal property for which the individual is assessed, which in 
128.21  its opinion has been assessed at too large a sum, to the sum it 
128.22  believes was the market value of the individual's personal 
128.23  property of that class.  
128.24     (5) The board must not reduce the aggregate value of all 
128.25  the property of its county, as submitted to the county board of 
128.26  equalization, with the additions made by the auditor under this 
128.27  chapter, by more than one percent of its whole valuation.  The 
128.28  board may raise the aggregate valuation of real property, and of 
128.29  each class of personal property, of the county, or of any town 
128.30  or district of the county, when it believes it is below the 
128.31  market value of the property, or class of property, to the 
128.32  aggregate amount it believes to be its market value. 
128.33     (6) The board shall change the classification of any 
128.34  property which in its opinion is not properly classified. 
128.35     (7) The board does not have the authority to grant an 
128.36  exemption or to order property removed from the tax rolls. 
129.1      [EFFECTIVE DATE.] This section is effective the day 
129.2   following final enactment. 
129.3      Sec. 24.  Minnesota Statutes 2002, section 275.025, 
129.4   subdivision 1, is amended to read: 
129.5      Subdivision 1.  [LEVY AMOUNT.] The state general levy is 
129.6   levied against commercial-industrial property and 
129.7   seasonal residential recreational property, as defined in this 
129.8   section.  The state general levy base amount is $592,000,000 for 
129.9   taxes payable in 2002.  For taxes payable in subsequent years, 
129.10  the levy base amount is increased each year by multiplying the 
129.11  levy base amount for the prior year by the sum of one plus the 
129.12  rate of increase, if any, in the implicit price deflator for 
129.13  government consumption expenditures and gross investment for 
129.14  state and local governments prepared by the Bureau of Economic 
129.15  Analysts of the United States Department of Commerce for the 
129.16  12-month period ending March 31 of the year prior to the year 
129.17  the taxes are payable.  The tax under this section is not 
129.18  treated as a local tax rate under section 469.177 and is not the 
129.19  levy of a governmental unit under chapters 276A and 473F.  
129.20  Beginning in fiscal year 2004, and in each year thereafter, the 
129.21  commissioner of finance shall deposit in an education reserve 
129.22  account, which account is hereby established, the increased 
129.23  amount of the state general levy received for deposit in the 
129.24  general fund for that year over the amount of the state general 
129.25  levy received for deposit in the general fund in fiscal year 
129.26  2003.  The amounts in the education reserve account do not lapse 
129.27  or cancel each year, but remain until appropriated by law for 
129.28  education aid or higher education funding. 
129.29     [EFFECTIVE DATE.] This section is effective for taxes 
129.30  payable in 2004 and thereafter, except that the change from 
129.31  "seasonal recreational property" to "seasonal residential 
129.32  recreational property" is effective the day following final 
129.33  enactment. 
129.34     Sec. 25.  Minnesota Statutes 2002, section 275.025, 
129.35  subdivision 3, is amended to read: 
129.36     Subd. 3.  [SEASONAL RESIDENTIAL RECREATIONAL TAX CAPACITY.] 
130.1   For the purposes of this section, "seasonal residential 
130.2   recreational tax capacity" means the tax capacity of all class 
130.3   4c(1) property under section 273.13, subdivision 25, except that 
130.4   the first $76,000 of market value of each noncommercial class 
130.5   4c(1) property has a tax capacity for this purpose equal to 40 
130.6   percent of its tax capacity under section 273.13. 
130.7      [EFFECTIVE DATE.] This section is effective the day 
130.8   following final enactment. 
130.9      Sec. 26.  Minnesota Statutes 2002, section 275.025, 
130.10  subdivision 4, is amended to read: 
130.11     Subd. 4.  [APPORTIONMENT AND LEVY OF STATE GENERAL TAX.] 
130.12  The state general tax must be distributed among the counties by 
130.13  applying a uniform rate to each county's commercial-industrial 
130.14  tax capacity and its seasonal residential recreational tax 
130.15  capacity.  Within each county, the tax must be levied by 
130.16  applying a uniform rate against commercial-industrial tax 
130.17  capacity and seasonal residential recreational tax capacity.  By 
130.18  November On or before October 1 each year, the commissioner of 
130.19  revenue shall certify the a preliminary state general levy rate 
130.20  to each county auditor that must be used to prepare the notices 
130.21  of proposed property taxes for taxes payable in the following 
130.22  year.  By January 1 of each year, the commissioner shall certify 
130.23  the final state general levy rate to each county auditor that 
130.24  shall be used in spreading taxes.  
130.25     [EFFECTIVE DATE.] This section is effective for taxes 
130.26  payable in 2004 and thereafter, except that the change from 
130.27  "seasonal recreational tax capacity" to "seasonal residential 
130.28  recreational tax capacity" is effective the day following final 
130.29  enactment. 
130.30     Sec. 27.  Minnesota Statutes 2002, section 276.10, is 
130.31  amended to read: 
130.32     276.10 [APPORTIONMENT AND DISTRIBUTION OF FUNDS.] 
130.33     On the settlement day determined in section 276.09 for each 
130.34  year, the county auditor and county treasurer shall distribute 
130.35  all undistributed funds in the treasury.  The funds must be 
130.36  apportioned as provided by law, and credited to the state, town, 
131.1   city, school district, special district and each county fund.  
131.2   Within 20 days after the distribution is completed, the county 
131.3   auditor shall report to the state auditor in the form prescribed 
131.4   by the state auditor.  The county auditor shall issue a warrant 
131.5   for the payment of money in the county treasury to the credit of 
131.6   the state, town, city, school district, or special districts on 
131.7   application of the persons entitled to receive the payment.  The 
131.8   county auditor may apply the local tax rate from the year before 
131.9   the year of distribution when apportioning and distributing 
131.10  delinquent tax proceeds, if the composition of the previous 
131.11  year's local tax rate between taxing districts is not 
131.12  significantly different from the local tax rate that existed for 
131.13  the year of the delinquency.  
131.14     [EFFECTIVE DATE.] This section is effective for taxes 
131.15  payable in 2004 and thereafter. 
131.16     Sec. 28.  Minnesota Statutes 2002, section 276.11, 
131.17  subdivision 1, is amended to read: 
131.18     Subdivision 1.  [GENERALLY.] As soon as practical after the 
131.19  settlement day determined in section 276.09, the county 
131.20  treasurer shall pay to the state treasurer or the treasurer of a 
131.21  town, city, school district, or special district, on the warrant 
131.22  of the county auditor, all receipts of taxes levied by the 
131.23  taxing district and deliver up all orders and other evidences of 
131.24  indebtedness of the taxing district, taking triplicate receipts 
131.25  for them.  The treasurer shall file one of the receipts with the 
131.26  county auditor, and shall return one by mail on the day of its 
131.27  receipt to the clerk of the town, city, school district, or 
131.28  special district to which payment was made.  The clerk shall 
131.29  keep the receipt in the clerk's office.  Upon written request of 
131.30  the taxing district, to the extent practicable, the county 
131.31  treasurer shall make partial payments of amounts collected 
131.32  periodically in advance of the next settlement and 
131.33  distribution.  A statement prepared by the county treasurer must 
131.34  accompany each payment.  It must state the years for which taxes 
131.35  included in the payment were collected and, for each year, the 
131.36  amount of the taxes and any penalties on the tax.  Upon written 
132.1   request of a taxing district, except school districts, the 
132.2   county treasurer shall pay at least 70 percent of the estimated 
132.3   collection within 30 days after the settlement date determined 
132.4   in section 276.09.  Within seven business days after the due 
132.5   date, or 28 calendar days after the postmark date on the 
132.6   envelopes containing real or personal property tax statements, 
132.7   whichever is latest, the county treasurer shall pay to the 
132.8   treasurer of the school districts 50 percent of the estimated 
132.9   collections arising from taxes levied by and belonging to the 
132.10  school district, unless the school district elects to receive 50 
132.11  percent of the estimated collections arising from taxes levied 
132.12  by and belonging to the school district after making a 
132.13  proportionate reduction to reflect any loss in collections as 
132.14  the result of any delay in mailing tax statements.  In that 
132.15  case, 50 percent of those adjusted, estimated collections shall 
132.16  be paid by the county treasurer to the treasurer of the school 
132.17  district within seven business days of the due date.  The 
132.18  remaining 50 percent of the estimated collections must be paid 
132.19  to the treasurer of the school district within the next seven 
132.20  business days of the later of the dates in the preceding 
132.21  sentence, unless the school district elects to receive the 
132.22  remainder of its estimated collections after a proportionate 
132.23  reduction has been made to reflect any loss in collections as 
132.24  the result of any delay in mailing tax statements.  In that 
132.25  case, the remaining 50 percent of those adjusted, estimated 
132.26  collections shall be paid by the county treasurer to the 
132.27  treasurer of the school district within 14 days of the due 
132.28  date.  The treasurer shall pay the balance of the amounts 
132.29  collected to the state before June 30, or to a municipal 
132.30  corporation or other body within 60 days after the settlement 
132.31  date determined in section 276.09.  After 45 days interest at an 
132.32  annual rate of eight percent accrues and must be paid to the 
132.33  taxing district.  Interest must be paid upon appropriation from 
132.34  the general revenue fund of the county.  If not paid, it may be 
132.35  recovered by the taxing district, in a civil action. 
132.36     [EFFECTIVE DATE.] This section is effective for taxes 
133.1   payable in 2004 and thereafter. 
133.2      Sec. 29.  [276.112] [STATE PROPERTY TAXES; COUNTY 
133.3   TREASURER.] 
133.4      On or before January 25 each year, for the period ending 
133.5   December 31 of the prior year, and on or before June 29 each 
133.6   year, for the period ending on the most recent settlement day 
133.7   determined in section 276.09, and on or before December 2 each 
133.8   year, for the period ending November 20, the county treasurer 
133.9   must make full settlement with the county auditor according to 
133.10  sections 276.09, 276.10, and 276.111 for all receipts of state 
133.11  property taxes levied under section 275.025, and must transmit 
133.12  those receipts to the commissioner of revenue by electronic 
133.13  means. 
133.14     [EFFECTIVE DATE.] This section is effective the day 
133.15  following final enactment. 
133.16     Sec. 30.  Minnesota Statutes 2002, section 277.20, 
133.17  subdivision 2, is amended to read: 
133.18     Subd. 2.  [FILING OF LIEN FOR ENFORCEABILITY.] The lien 
133.19  imposed by subdivision 1 is not enforceable against any 
133.20  purchaser, mortgagee, pledgee, holder of a Uniform Commercial 
133.21  Code security interest, mechanic's lienor, or judgment lien 
133.22  creditor until a notice of lien has been filed by the county 
133.23  treasurer in the office of the county recorder of the county in 
133.24  which the property is situated, or, in the case of personal 
133.25  property belonging to an individual who is not a resident of 
133.26  this state, or that is a corporation, partnership, or other 
133.27  organization, in the office of the secretary of state.  Priority 
133.28  of a lien created under Laws 1991, chapter 291, article 15, 
133.29  shall be determined in accordance with the provisions of section 
133.30  507.34.  Liens filed in the office of the county recorder shall 
133.31  be filed with the state tax liens filed pursuant to section 
133.32  270.69, and the index shall indicate the name of the county for 
133.33  which the lien was filed.  If the land is registered, the notice 
133.34  of lien shall be filed in the office of the registrar of titles 
133.35  of the county in which the property is registered.  
133.36  Notwithstanding any other law to the contrary, the county 
134.1   treasurer is exempt from the payment of fees when the lien is 
134.2   offered for filing or recording; the fee for filing or recording 
134.3   the lien must be paid at the time the release of lien is offered 
134.4   for filing or recording.  Notwithstanding any law to the 
134.5   contrary, the fee for filing or recording the lien or the 
134.6   release of lien is $15.  
134.7      [EFFECTIVE DATE.] This section is effective for liens filed 
134.8   on or after the day following final enactment. 
134.9      Sec. 31.  Minnesota Statutes 2002, section 279.06, 
134.10  subdivision 1, is amended to read: 
134.11     Subdivision 1.  [LIST AND NOTICE.] Within five days after 
134.12  the filing of such list, the court administrator shall return a 
134.13  copy thereof to the county auditor, with a notice prepared and 
134.14  signed by the court administrator, and attached thereto, which 
134.15  may be substantially in the following form: 
134.16     State of Minnesota        )                            
134.17                               ) ss.                        
134.18     County of ............... )                            
134.19                                              District Court
134.20                               .......... Judicial District.
134.21     The state of Minnesota, to all persons, companies, or 
134.22  corporations who have or claim any estate, right, title, or 
134.23  interest in, claim to, or lien upon, any of the several parcels 
134.24  of land described in the list hereto attached: 
134.25     The list of taxes and penalties on real property for the 
134.26  county of ............................... remaining delinquent 
134.27  on the first Monday in January, ......., has been filed in the 
134.28  office of the court administrator of the district court of said 
134.29  county, of which that hereto attached is a copy.  Therefore, 
134.30  you, and each of you, are hereby required to file in the office 
134.31  of said court administrator, on or before the 20th day after the 
134.32  publication of this notice and list, your answer, in writing, 
134.33  setting forth any objection or defense you may have to the 
134.34  taxes, or any part thereof, upon any parcel of land described in 
134.35  the list, in, to, or on which you have or claim any estate, 
134.36  right, title, interest, claim, or lien, and, in default thereof, 
135.1   judgment will be entered against such parcel of land for the 
135.2   taxes on such list appearing against it, and for all penalties, 
135.3   interest, and costs.  Based upon said judgment, the land shall 
135.4   be sold to the state of Minnesota on the second Monday in May, 
135.5   .......  The period of redemption for all lands sold to the 
135.6   state at a tax judgment sale shall be three years from the date 
135.7   of sale to the state of Minnesota if the land is within an 
135.8   incorporated area unless it is: 
135.9      (a) nonagricultural homesteaded land as defined in section 
135.10  273.13, subdivision 22; 
135.11     (b) homesteaded agricultural land as defined in section 
135.12  273.13, subdivision 23, paragraph (a); 
135.13     (c) seasonal residential recreational land as defined in 
135.14  section 273.13, subdivisions 22, paragraph (c), and 25, 
135.15  paragraph (c) (d), clause (5) (1), in which event the period of 
135.16  redemption is five years from the date of sale to the state of 
135.17  Minnesota; 
135.18     (d) abandoned property and pursuant to section 281.173 a 
135.19  court order has been entered shortening the redemption period to 
135.20  five weeks; or 
135.21     (e) vacant property as described under section 281.174, 
135.22  subdivision 2, and for which a court order is entered shortening 
135.23  the redemption period under section 281.174. 
135.24     The period of redemption for all other lands sold to the 
135.25  state at a tax judgment sale shall be five years from the date 
135.26  of sale.  
135.27     Inquiries as to the proceedings set forth above can be made 
135.28  to the county auditor of ..... county whose address is ..... .  
135.29      (Signed) ............................................., 
135.30      Court Administrator of the District Court of the County 
135.31      of .................................................... 
135.32      (Here insert list.) 
135.33     The list referred to in the notice shall be substantially 
135.34  in the following form: 
135.35     List of real property for the county of 
135.36  ......................., on which taxes remain delinquent on the 
136.1   first Monday in January, .......: 
136.2                         Town of (Fairfield), 
136.3                      Township (40), Range (20), 
136.4    Names (and 
136.5    Current Filed 
136.6    Addresses) for 
136.7    the Taxpayers 
136.8    and Fee Owners 
136.9    and in Addition 
136.10   Those Parties 
136.11   Who Have Filed 
136.12   Their Addresses                            Tax 
136.13   Pursuant to     Subdivision of            Parcel   Total Tax 
136.14   section 276.041    Section       Section  Number  and Penalty
136.15                                                       $ cts.
136.16   John Jones  S.E. 1/4 of S.W. 1/4    10    23101       2.20  
136.17   (825 Fremont  
136.18   Fairfield, MN 
136.19   55000) 
136.20   Bruce Smith  That part of N.E. 1/4 
136.21   (2059 Hand   of S.W. 1/4 desc. as 
136.22   Fairfield,   follows:  Beg. at the 
136.23   MN 55000)    S.E. corner of said 
136.24   and          N.E. 1/4 of S.W. 1/4;  
136.25   Fairfield    thence N. along the E.  
136.26   State Bank   line of said N.E. 1/4 
136.27   (100 Main    of S.W. 1/4 a distance 
136.28   Street       of 600 ft.; thence W. 
136.29   Fairfield,   parallel with the S. 
136.30   MN 55000)    line of said N.E. 1/4 
136.31                of S.W. 1/4 a distance 
136.32                of 600 ft.; thence S. 
136.33                parallel with said E. 
136.34                line a distance of 600 
136.35                ft. to S. line of said 
136.36                N.E. 1/4 of S.W. 1/4;
137.1                 thence E. along said S. 
137.2                 line a distance of 600 
137.3                 ft. to the point of 
137.4                 beg. ...............    21    33211       3.15  
137.5      As to platted property, the form of heading shall conform 
137.6   to circumstances and be substantially in the following form:  
137.7                         City of (Smithtown) 
137.8                   Brown's Addition, or Subdivision 
137.9    Names (and 
137.10   Current Filed 
137.11   Addresses) for 
137.12   the Taxpayers 
137.13   and Fee Owners 
137.14   and in Addition 
137.15   Those Parties 
137.16   Who have Filed 
137.17   Their Addresses                         Tax 
137.18   Pursuant to                            Parcel      Total Tax 
137.19   section 276.041     Lot     Block      Number     and Penalty
137.20                                                       $ cts.
137.21   John Jones           15         9      58243          2.20 
137.22   (825 Fremont 
137.23   Fairfield, 
137.24   MN 55000) 
137.25   Bruce Smith          16         9      58244          3.15 
137.26   (2059 Hand 
137.27   Fairfield, 
137.28   MN 55000) 
137.29   and 
137.30   Fairfield 
137.31   State Bank 
137.32   (100 Main Street 
137.33   Fairfield, 
137.34   MN 55000) 
137.35     The names, descriptions, and figures employed in 
137.36  parentheses in the above forms are merely for purposes of 
138.1   illustration. 
138.2      The name of the town, township, range or city, and addition 
138.3   or subdivision, as the case may be, shall be repeated at the 
138.4   head of each column of the printed lists as brought forward from 
138.5   the preceding column.  
138.6      Errors in the list shall not be deemed to be a material 
138.7   defect to affect the validity of the judgment and sale. 
138.8      [EFFECTIVE DATE.] This section is effective the day 
138.9   following final enactment. 
138.10     Sec. 32.  Minnesota Statutes 2002, section 281.17, is 
138.11  amended to read: 
138.12     281.17 [PERIOD FOR REDEMPTION.] 
138.13     Except for properties for which the period of redemption 
138.14  has been limited under sections 281.173 and 281.174, the 
138.15  following periods for redemption apply. 
138.16     The period of redemption for all lands sold to the state at 
138.17  a tax judgment sale shall be three years from the date of sale 
138.18  to the state of Minnesota if the land is within an incorporated 
138.19  area unless it is:  (a) nonagricultural homesteaded land as 
138.20  defined in section 273.13, subdivision 22; (b) homesteaded 
138.21  agricultural land as defined in section 273.13, subdivision 23, 
138.22  paragraph (a); or (c) seasonal residential recreational land as 
138.23  defined in section 273.13, subdivision 22, paragraph (c), or 25, 
138.24  paragraph (d), clause (1), for which the period of redemption is 
138.25  five years from the date of sale to the state of Minnesota. 
138.26     The period of redemption for homesteaded lands as defined 
138.27  in section 273.13, subdivision 22, located in a targeted 
138.28  neighborhood as defined in Laws 1987, chapter 386, article 6, 
138.29  section 4, and sold to the state at a tax judgment sale is three 
138.30  years from the date of sale.  The period of redemption for all 
138.31  lands located in a targeted neighborhood as defined in Laws 
138.32  1987, chapter 386, article 6, section 4, except (1) homesteaded 
138.33  lands as defined in section 273.13, subdivision 22, and (2) for 
138.34  periods of redemption beginning after June 30, 1991, but before 
138.35  July 1, 1996, lands located in the Loring Park targeted 
138.36  neighborhood on which a notice of lis pendens has been served, 
139.1   and sold to the state at a tax judgment sale is one year from 
139.2   the date of sale. 
139.3      The period of redemption for all real property constituting 
139.4   a mixed municipal solid waste disposal facility that is a 
139.5   qualified facility under section 115B.39, subdivision 1, is one 
139.6   year from the date of the sale to the state of Minnesota. 
139.7      The period of redemption for all other lands sold to the 
139.8   state at a tax judgment sale shall be five years from the date 
139.9   of sale, except that the period of redemption for nonhomesteaded 
139.10  agricultural land as defined in section 273.13, subdivision 23, 
139.11  paragraph (b), shall be two years from the date of sale if at 
139.12  that time that property is owned by a person who owns one or 
139.13  more parcels of property on which taxes are delinquent, and the 
139.14  delinquent taxes are more than 25 percent of the prior year's 
139.15  school district levy. 
139.16     [EFFECTIVE DATE.] This section is effective the day 
139.17  following final enactment. 
139.18     Sec. 33.  Minnesota Statutes 2002, section 282.01, 
139.19  subdivision 7a, is amended to read: 
139.20     Subd. 7a.  [CITY SALES; ALTERNATE PROCEDURES.] Land located 
139.21  in a home rule charter or statutory city, or in a town which 
139.22  cannot be improved because of noncompliance with local 
139.23  ordinances regarding minimum area, shape, frontage or access may 
139.24  be sold by the county auditor pursuant to this subdivision if 
139.25  the auditor determines that a nonpublic sale will encourage the 
139.26  approval of sale of the land by the city or town and promote its 
139.27  return to the tax rolls.  If the physical characteristics of the 
139.28  land indicate that its highest and best use will be achieved by 
139.29  combining it with an adjoining parcel and the city or town has 
139.30  not adopted a local ordinance governing minimum area, shape, 
139.31  frontage, or access, the land may also be sold pursuant to this 
139.32  subdivision.  If the property consists of an undivided interest 
139.33  in land or land and improvements, the property may also be sold 
139.34  to the other owners under this subdivision.  The sale of land 
139.35  pursuant to this subdivision shall be subject to any conditions 
139.36  imposed by the county board pursuant to section 282.03.  The 
140.1   governing body of the city or town may recommend to the county 
140.2   board conditions to be imposed on the sale.  The county auditor 
140.3   may restrict the sale to owners of lands adjoining the land to 
140.4   be sold.  The county auditor shall conduct the sale by sealed 
140.5   bid or may select another means of sale.  The land shall be sold 
140.6   to the highest bidder but in no event shall the land be sold for 
140.7   less than its appraised value.  All owners of land adjoining the 
140.8   land to be sold shall be given a written notice at least 30 days 
140.9   prior to the sale.  
140.10     This subdivision shall be liberally construed to encourage 
140.11  the sale and utilization of tax-forfeited land, to eliminate 
140.12  nuisances and dangerous conditions and to increase compliance 
140.13  with land use ordinances. 
140.14     [EFFECTIVE DATE.] This section is effective for sales 
140.15  occurring on or after the day following final enactment. 
140.16     Sec. 34.  Minnesota Statutes 2002, section 282.08, is 
140.17  amended to read: 
140.18     282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.] 
140.19     The net proceeds from the sale or rental of any parcel of 
140.20  forfeited land, or from the sale of products from the forfeited 
140.21  land, must be apportioned by the county auditor to the taxing 
140.22  districts interested in the land, as follows: 
140.23     (1) the amounts necessary to pay the state general tax levy 
140.24  against the parcel for taxes payable in the year for which the 
140.25  tax judgment was entered, and for each subsequent payable year 
140.26  up to and including the year of forfeiture, must be apportioned 
140.27  to the state; 
140.28     (2) the portion required to pay any amounts included in the 
140.29  appraised value under section 282.01, subdivision 3, as 
140.30  representing increased value due to any public improvement made 
140.31  after forfeiture of the parcel to the state, but not exceeding 
140.32  the amount certified by the clerk of the municipality must be 
140.33  apportioned to the municipal subdivision entitled to it; 
140.34     (2) (3) the portion required to pay any amount included in 
140.35  the appraised value under section 282.019, subdivision 5, 
140.36  representing increased value due to response actions taken after 
141.1   forfeiture of the parcel to the state, but not exceeding the 
141.2   amount of expenses certified by the pollution control agency or 
141.3   the commissioner of agriculture, must be apportioned to the 
141.4   agency or the commissioner of agriculture and deposited in the 
141.5   fund from which the expenses were paid; 
141.6      (3) (4) the portion of the remainder required to discharge 
141.7   any special assessment chargeable against the parcel for 
141.8   drainage or other purpose whether due or deferred at the time of 
141.9   forfeiture, must be apportioned to the municipal subdivision 
141.10  entitled to it; and 
141.11     (4) (5) any balance must be apportioned as follows: 
141.12     (i) The county board may annually by resolution set aside 
141.13  no more than 30 percent of the receipts remaining to be used for 
141.14  timber development on tax-forfeited land and dedicated memorial 
141.15  forests, to be expended under the supervision of the county 
141.16  board.  It must be expended only on projects approved by the 
141.17  commissioner of natural resources. 
141.18     (ii) The county board may annually by resolution set aside 
141.19  no more than 20 percent of the receipts remaining to be used for 
141.20  the acquisition and maintenance of county parks or recreational 
141.21  areas as defined in sections 398.31 to 398.36, to be expended 
141.22  under the supervision of the county board. 
141.23     (iii) Any balance remaining must be apportioned as 
141.24  follows:  county, 40 percent; town or city, 20 percent; and 
141.25  school district, 40 percent, provided, however, that in 
141.26  unorganized territory that portion which would have accrued to 
141.27  the township must be administered by the county board of 
141.28  commissioners. 
141.29     [EFFECTIVE DATE.] This section is effective for taxes 
141.30  payable in 2004 and thereafter. 
141.31     Sec. 35.  Minnesota Statutes 2002, section 290C.02, 
141.32  subdivision 3, is amended to read: 
141.33     Subd. 3.  [CLAIMANT.] "Claimant" means a person, as that 
141.34  term is defined in section 290.01, subdivision 2, who owns 
141.35  forest land in Minnesota and files an application authorized by 
141.36  the Sustainable Forest Incentive Act.  For purposes of section 
142.1   290C.11, claimant also includes any person bound by the covenant 
142.2   required in section 290C.04.  No more than one claimant is 
142.3   entitled to a payment under this chapter with respect to any 
142.4   tract, parcel, or piece of land enrolled under this chapter that 
142.5   has been assigned the same parcel identification number.  When 
142.6   enrolled forest land is owned by two or more persons, the owners 
142.7   must determine between them which person may claim the payments 
142.8   provided under sections 290C.01 to 290C.11. 
142.9      [EFFECTIVE DATE.] This section is effective the day 
142.10  following final enactment. 
142.11     Sec. 36.  Minnesota Statutes 2002, section 290C.02, 
142.12  subdivision 7, is amended to read: 
142.13     Subd. 7.  [FOREST MANAGEMENT PLAN.] "Forest management 
142.14  plan" means a written document providing a framework for 
142.15  site-specific healthy, productive, and sustainable forest 
142.16  resources.  A forest management plan must include at least the 
142.17  following:  (i) owner-specific forest management goals for the 
142.18  property land; (ii) a reliable field inventory of the individual 
142.19  forest cover types, their age, and density; (iii) a description 
142.20  of the soil type and quality; (iv) an aerial photo and/or map of 
142.21  the vegetation and other natural features of the property land 
142.22  clearly indicating the boundaries of the property land and of 
142.23  the forest land; (v) the proposed future conditions of the 
142.24  property land; (vi) prescriptions to meet proposed future 
142.25  conditions of the property land; (vii) a recommended timetable 
142.26  for implementing the prescribed activities; and (viii) a legal 
142.27  description of the parcels land encompassing the parcels 
142.28  included in the plan.  All management activities prescribed in a 
142.29  plan must be in accordance with the recommended timber 
142.30  harvesting and forest management guidelines.  The commissioner 
142.31  of natural resources shall provide a framework for plan content 
142.32  and updating and revising plans. 
142.33     [EFFECTIVE DATE.] This section is effective the day 
142.34  following final enactment. 
142.35     Sec. 37.  Minnesota Statutes 2002, section 290C.03, is 
142.36  amended to read: 
143.1      290C.03 [ELIGIBILITY REQUIREMENTS.] 
143.2      (a) Property Land may be enrolled in the sustainable forest 
143.3   incentive program under this chapter if all of the following 
143.4   conditions are met: 
143.5      (1) property the land consists of at least 20 contiguous 
143.6   acres and at least 50 percent of the land must meet the 
143.7   definition of forest land in section 88.01, subdivision 7, 
143.8   during the enrollment; 
143.9      (2) a forest management plan for the property land must be 
143.10  prepared by an approved plan writer and implemented during the 
143.11  period in which the land is enrolled; 
143.12     (3) timber harvesting and forest management guidelines must 
143.13  be used in conjunction with any timber harvesting or forest 
143.14  management activities conducted on the land during the period in 
143.15  which the land is enrolled; 
143.16     (4) the property land must be enrolled for a minimum of 
143.17  eight years; 
143.18     (5) there are no delinquent property taxes on the property 
143.19  land; and 
143.20     (6) claimants enrolling more than 1,920 acres in the 
143.21  sustainable forest incentive program must allow year-round, 
143.22  nonmotorized access to fish and wildlife resources on enrolled 
143.23  land except within one-fourth mile of a permanent dwelling or 
143.24  during periods of high fire hazard as determined by the 
143.25  commissioner of natural resources. 
143.26     (b) Claimants required to allow access under paragraph (a), 
143.27  clause (6), do not by that action: 
143.28     (1) extend any assurance that the land is safe for any 
143.29  purpose; 
143.30     (2) confer upon the person the legal status of an invitee 
143.31  or licensee to whom a duty of care is owed; or 
143.32     (3) assume responsibility for or incur liability for any 
143.33  injury to the person or property caused by an act or omission of 
143.34  the person. 
143.35     [EFFECTIVE DATE.] This section is effective the day 
143.36  following final enactment. 
144.1      Sec. 38.  Minnesota Statutes 2002, section 290C.07, is 
144.2   amended to read: 
144.3      290C.07 [CALCULATION OF INCENTIVE PAYMENT.] 
144.4      An approved claimant under the sustainable forest incentive 
144.5   program is eligible to receive an annual payment.  The payment 
144.6   shall equal the greater of: 
144.7      (1) the difference between the property tax that would be 
144.8   paid on the property land using the previous year's statewide 
144.9   average total township tax rate and the class rate for class 2b 
144.10  timberland under section 273.13, subdivision 23, paragraph (b), 
144.11  if the property land were valued at (i) the average statewide 
144.12  timberland market value per acre calculated under section 
144.13  290C.06, and (ii) the average statewide timberland current use 
144.14  value per acre calculated under section 290C.02, subdivision 5; 
144.15     (2) two-thirds of the property tax amount determined by 
144.16  using the previous year's statewide average total township tax 
144.17  rate, the estimated market value per acre as calculated in 
144.18  section 290C.06, and the class rate for 2b timberland under 
144.19  section 273.13, subdivision 23, paragraph (b); or 
144.20     (3) $1.50 per acre for each acre enrolled in the 
144.21  sustainable forest incentive program. 
144.22     [EFFECTIVE DATE.] This section is effective the day 
144.23  following final enactment. 
144.24     Sec. 39.  Minnesota Statutes 2002, section 290C.09, is 
144.25  amended to read: 
144.26     290C.09 [REMOVAL FOR PROPERTY TAX DELINQUENCY.] 
144.27     The commissioner shall immediately remove any property land 
144.28  enrolled in the sustainable forest incentive program for which 
144.29  taxes are determined to be delinquent as provided in chapter 279 
144.30  and shall notify the claimant of such action.  Lands terminated 
144.31  from the sustainable forest incentive program under this section 
144.32  are not entitled to any payments provided in this chapter and 
144.33  are subject to removal penalties prescribed in section 290C.11.  
144.34  The claimant has 60 days from the receipt of notice from the 
144.35  commissioner under this section to pay the delinquent taxes.  If 
144.36  the delinquent taxes are paid within this 60-day period, the 
145.1   lands shall be reinstated in the program as if they had not been 
145.2   withdrawn and without the payment of a penalty. 
145.3      [EFFECTIVE DATE.] This section is effective the day 
145.4   following final enactment. 
145.5      Sec. 40.  Minnesota Statutes 2002, section 290C.10, is 
145.6   amended to read: 
145.7      290C.10 [WITHDRAWAL PROCEDURES.] 
145.8      An approved claimant under the sustainable forest incentive 
145.9   program for a minimum of four years may notify the commissioner 
145.10  of the intent to terminate enrollment.  Within 90 days of 
145.11  receipt of notice to terminate enrollment, the commissioner 
145.12  shall inform the claimant in writing, acknowledging receipt of 
145.13  this notice and indicating the effective date of termination 
145.14  from the sustainable forest incentive program.  Termination of 
145.15  enrollment in the sustainable forest incentive program occurs on 
145.16  January 1 of the fifth calendar year that begins after receipt 
145.17  by the commissioner of the termination notice.  After the 
145.18  commissioner issues an effective date of termination, a claimant 
145.19  wishing to continue the property's land's enrollment in the 
145.20  sustainable forest incentive program beyond the termination date 
145.21  must apply for enrollment as prescribed in section 290C.04.  A 
145.22  claimant who withdraws a parcel of land from this program may 
145.23  not reenroll the parcel for a period of three years.  Within 90 
145.24  days after the termination date, the commissioner shall execute 
145.25  and acknowledge a document releasing the land from the covenant 
145.26  required under this chapter.  The document must be mailed to the 
145.27  claimant and is entitled to be recorded.  The commissioner may 
145.28  allow early withdrawal from the Sustainable Forest Incentive Act 
145.29  without penalty in cases of condemnation for a public purpose 
145.30  notwithstanding the provisions of this section. 
145.31     [EFFECTIVE DATE.] This section is effective the day 
145.32  following final enactment. 
145.33     Sec. 41.  Minnesota Statutes 2002, section 290C.11, is 
145.34  amended to read: 
145.35     290C.11 [PENALTIES FOR REMOVAL.] 
145.36     (a) If the commissioner determines that property land 
146.1   enrolled in the sustainable forest incentive program is in 
146.2   violation of the conditions for enrollment as specified in 
146.3   section 290C.03, the commissioner shall notify the claimant of 
146.4   the intent to remove all enrolled land from the sustainable 
146.5   forest incentive program.  The claimant has 60 days to appeal 
146.6   this determination. The appeal must be made in writing to the 
146.7   commissioner, who shall, within 60 days, notify the claimant as 
146.8   to the outcome of the appeal.  Within 60 days after the 
146.9   commissioner denies an appeal, or within 120 days after the 
146.10  commissioner received a written appeal if the commissioner has 
146.11  not made a determination in that time, the owner may appeal to 
146.12  tax court under chapter 271 as if the appeal is from an order of 
146.13  the commissioner. 
146.14     (b) If the commissioner determines the property land is to 
146.15  be removed from the sustainable forest incentive program, the 
146.16  claimant is liable for payment to the commissioner in the amount 
146.17  equal to the payments received under this chapter for the 
146.18  previous four-year period, plus interest.  The claimant has 90 
146.19  days to satisfy the payment for removal of land from the 
146.20  sustainable forest incentive program under this section.  If the 
146.21  penalty is not paid within the 90-day period under this 
146.22  paragraph, the commissioner shall certify the amount to the 
146.23  county auditor for collection as a part of the general ad 
146.24  valorem real property taxes on the land in the following taxes 
146.25  payable year.  
146.26     [EFFECTIVE DATE.] This section is effective the day 
146.27  following final enactment. 
146.28     Sec. 42.  [290C.12] [DEATH OF CLAIMANT.] 
146.29     Within one year after the death of the claimant, the 
146.30  claimant's heir, devisee, or estate must either: 
146.31     (1) notify the commissioner of election to terminate 
146.32  enrollment in the sustainable forest incentive program; or 
146.33     (2) make an application under this chapter to continue 
146.34  enrollment of the land in the program.  
146.35     Upon notification under clause (1), the commissioner shall 
146.36  terminate the enrollment and issue a document releasing the land 
147.1   from the covenant as provided in section 290C.04, paragraph 
147.2   (c).  Penalties under section 290C.11 shall not apply.  If the 
147.3   application under clause (2) is approved, the land is enrolled 
147.4   in the program without a break.  If the commissioner does not 
147.5   receive notification within one year after the date of death, 
147.6   enrollment in the program shall be terminated and penalties 
147.7   under section 290C.11 shall not apply. 
147.8      [EFFECTIVE DATE.] This section is effective the day 
147.9   following final enactment, except in the case of claimants dying 
147.10  prior to the day following final enactment, heirs, devisees, or 
147.11  estates may make the election either six months after the 
147.12  effective date of this provision or one year after the death of 
147.13  the claimant, whichever is later. 
147.14     Sec. 43.  Minnesota Statutes 2002, section 469.1792, 
147.15  subdivision 3, is amended to read: 
147.16     Subd. 3.  [ACTIONS AUTHORIZED.] (a) An authority with a 
147.17  district qualifying under this section may take either or both 
147.18  of the following actions for any or all of its preexisting 
147.19  districts: 
147.20     (1) the authority may elect that the original local tax 
147.21  rate under section 469.177, subdivision 1a, does not apply to 
147.22  the district; and 
147.23     (2) the authority may elect the fiscal disparities 
147.24  contribution will be computed under section 469.177, subdivision 
147.25  3, paragraph (a), regardless of the election that was made for 
147.26  the district. 
147.27     (b) The authority may take action under this subdivision 
147.28  only after the municipality approves the action, by resolution, 
147.29  after notice and public hearing in the manner provided under 
147.30  section 469.175, subdivision 2.  To be effective for taxes 
147.31  payable in the following year, the resolution must be adopted 
147.32  and the county auditor must be notified of the adoption on or 
147.33  before July 1. 
147.34     [EFFECTIVE DATE.] This section is effective for taxes 
147.35  payable in 2004 and thereafter. 
147.36     Sec. 44.  Minnesota Statutes 2002, section 473F.07, 
148.1   subdivision 4, is amended to read: 
148.2      Subd. 4.  [DISTRIBUTION NET TAX CAPACITY.] The 
148.3   administrative auditor shall determine the proportion which the 
148.4   index of each municipality bears to the sum of the indices of 
148.5   all municipalities and shall then multiply this proportion in 
148.6   the case of each municipality, by the areawide net tax capacity, 
148.7   provided that if the distribution net tax capacity for a 
148.8   municipality is less than 95 percent of the municipality's 
148.9   previous year distribution net tax capacity, and more than ten 
148.10  percent of the municipality's fiscal capacity consists of 
148.11  manufactured home property, the municipality's distribution net 
148.12  tax capacity will be increased to 95 percent of the previous 
148.13  year net tax capacity and the distribution net tax capacity of 
148.14  other municipalities in the area will be proportionately reduced.
148.15     [EFFECTIVE DATE.] This section is effective for taxes 
148.16  payable in 2004 and subsequent years. 
148.17     Sec. 45.  Minnesota Statutes 2002, section 515B.1-116, is 
148.18  amended to read: 
148.19     515B.1-116 [RECORDING.] 
148.20     (a) A declaration, bylaws, any amendment to a declaration 
148.21  or bylaws, and any other instrument affecting a common interest 
148.22  community shall be entitled to be recorded.  In those counties 
148.23  which have a tract index, the county recorder shall enter the 
148.24  declaration in the tract index for each unit affected.  The 
148.25  registrar of titles shall file the declaration in accordance 
148.26  with section 508.351 or 508A.351. 
148.27     (b) The recording officer shall upon request promptly 
148.28  assign a number (CIC number) to a common interest community to 
148.29  be formed or to a common interest community resulting from the 
148.30  merger of two or more common interest communities. 
148.31     (c) Documents recorded pursuant to this chapter shall in 
148.32  the case of registered land be filed, and references to the 
148.33  recording of documents shall mean filed in the case of 
148.34  registered land. 
148.35     (d) Subject to any specific requirements of this chapter, 
148.36  if a recorded document relating to a common interest community 
149.1   purports to require a certain vote or signatures approving any 
149.2   restatement or amendment of the document by a certain number or 
149.3   percentage of unit owners or secured parties, and if the 
149.4   amendment or restatement is to be recorded pursuant to this 
149.5   chapter, an affidavit of the president or secretary of the 
149.6   association stating that the required vote or signatures have 
149.7   been obtained shall be attached to the document to be recorded 
149.8   and shall constitute prima facie evidence of the representations 
149.9   contained therein. 
149.10     (e) If a common interest community is located on registered 
149.11  land, the recording fee for any document affecting two or more 
149.12  units shall be the then-current fee for registering the document 
149.13  on the certificates of title for the first ten affected 
149.14  certificates and one-third of the then-current fee for each 
149.15  additional affected certificate.  This provision shall not apply 
149.16  to recording fees for deeds of conveyance, with the exception of 
149.17  deeds given pursuant to sections 515B.2-119 and 515B.3-112. 
149.18     (f) Except as permitted under this subsection, a recording 
149.19  officer shall not file or record a declaration creating a new 
149.20  common interest community, unless the county treasurer has 
149.21  certified that the property taxes payable in the current year 
149.22  for the real estate included in the proposed common interest 
149.23  community have been paid.  This certification is in addition to 
149.24  the certification for delinquent taxes required by section 
149.25  272.12.  In the case of preexisting common interest communities, 
149.26  the recording officer shall accept, file, and record the 
149.27  following instruments, without requiring a certification as to 
149.28  the current or delinquent taxes on any of the units in the 
149.29  common interest community:  (i) a declaration subjecting the 
149.30  common interest community to this chapter; (ii) a declaration 
149.31  changing the form of a common interest community pursuant to 
149.32  section 515B.2-123; or (iii) an amendment to or restatement of 
149.33  the declaration, bylaws, or CIC plat.  In order for the 
149.34  instruments an instrument to be accepted and recorded under the 
149.35  preceding sentence, the assessor must certify or otherwise 
149.36  inform the recording officer that, for taxes payable in the 
150.1   current year, the assessor has allocated taxable values to each 
150.2   unit or has separately assessed each unit instrument must not 
150.3   create or change unit or common area boundaries. 
150.4      [EFFECTIVE DATE.] This section is effective for deeds or 
150.5   instruments accepted for recording or registration on or after 
150.6   July 1, 2003. 
150.7      Sec. 46.  Laws 2001, First Special Session chapter 5, 
150.8   article 3, section 61, the effective date, is amended to read: 
150.9      [EFFECTIVE DATE.] This section is effective August 1, 2001, 
150.10  for deeds issued on or after August 1, 2001.  This section is 
150.11  effective August 1, 2006, for deeds issued before August 1, 2001.
150.12     Sec. 47.  Laws 2001, First Special Session chapter 5, 
150.13  article 3, section 63, the effective date, is amended to read: 
150.14     [EFFECTIVE DATE.] This section is effective August 1, 2001, 
150.15  for deeds issued on or after August 1, 2001.  This section is 
150.16  effective August 1, 2006, for deeds issued before August 1, 2001.
150.17     Sec. 48.  Laws 2002, chapter 377, article 6, section 4, the 
150.18  effective date, is amended to read: 
150.19     [EFFECTIVE DATE.] This section is effective for aids 
150.20  payable in 2004 May 16, 2002, and thereafter. 
150.21     Sec. 49.  [PRE-1940 HOUSING PERCENTAGE.] 
150.22     For the purposes of determining local government aid 
150.23  payment amounts for aids payable in 2003, the "pre-1940 housing 
150.24  percentage" factor shall be based upon the 1990 federal census, 
150.25  notwithstanding Minnesota Statutes 2002, section 477A.011, 
150.26  subdivision 30. 
150.27     [EFFECTIVE DATE.] This section is effective for aids 
150.28  payable in 2003 only. 
150.29     Sec. 50.  [REPEALER.] 
150.30     (a) Minnesota Statutes 2002, section 274.04, is repealed. 
150.31     (b) Minnesota Statutes 2002, section 477A.065, is repealed 
150.32  effective for aid payable in 2004 and thereafter. 
150.33     (c) Minnesota Rules, parts 8106.0100, subparts 11, 15, and 
150.34  16; and 8106.0200, are repealed effective the day following 
150.35  final enactment. 
150.36                             ARTICLE 6 
151.1               DEPARTMENT SALES AND USE TAX INITIATIVES 
151.2      Section 1.  Minnesota Statutes 2002, section 289A.50, 
151.3   subdivision 2a, is amended to read: 
151.4      Subd. 2a.  [REFUND OF SALES TAX TO PURCHASERS.] (a) If a 
151.5   vendor has collected from a purchaser a tax on a transaction 
151.6   that is not subject to the tax imposed by chapter 297A, the 
151.7   purchaser may apply directly to the commissioner for a refund 
151.8   under this section if: 
151.9      (a) (1) the purchaser is currently registered or was 
151.10  registered during the period of the claim, to collect and remit 
151.11  the sales tax or to remit the use tax; and 
151.12     (2) either 
151.13     (b) (i) the amount of the refund to be applied for exceeds 
151.14  $500, or 
151.15     (ii) the amount of the refund to be applied for does not 
151.16  exceed $500, but the purchaser also applies for a capital 
151.17  equipment claim at the same time, and the total of the two 
151.18  refunds exceeds $500. 
151.19     (b) The purchaser may not file more than two applications 
151.20  for refund under this subdivision in a calendar year. 
151.21     [EFFECTIVE DATE.] This section is effective for claims 
151.22  filed on or after the day following final enactment. 
151.23     Sec. 2.  Minnesota Statutes 2002, section 289A.60, 
151.24  subdivision 15, is amended to read: 
151.25     Subd. 15.  [ACCELERATED PAYMENT OF JUNE SALES TAX 
151.26  LIABILITY; PENALTY FOR UNDERPAYMENT.] If a vendor is required by 
151.27  law to submit an estimation of June sales tax liabilities and 62 
151.28  75 percent payment by a certain date, the vendor shall pay a 
151.29  penalty equal to ten percent of the amount of actual June 
151.30  liability required to be paid in June less the amount remitted 
151.31  in June.  The penalty must not be imposed, however, if the 
151.32  amount remitted in June equals the lesser of 62 75 percent of 
151.33  the preceding May's liability or 62 75 percent of the average 
151.34  monthly liability for the previous calendar year. 
151.35     [EFFECTIVE DATE.] This section is effective for payments 
151.36  due after December 31, 2002. 
152.1      Sec. 3.  Minnesota Statutes 2002, section 289A.60, is 
152.2   amended by adding a subdivision to read: 
152.3      Subd. 25.  [PENALTY FOR FAILURE TO PROPERLY COMPLETE SALES 
152.4   TAX RETURN.] A person who fails to report local sales tax on a 
152.5   sales tax return or who fails to report local sales tax on 
152.6   separate tax lines on the sales tax return is subject to a 
152.7   penalty of five percent of the amount of tax not properly 
152.8   reported on the return.  A person who files a consolidated tax 
152.9   return but fails to report location information is subject to a 
152.10  $500 penalty for each return not containing location 
152.11  information.  In addition, the commissioner may revoke the 
152.12  privilege for a taxpayer to file consolidated returns and may 
152.13  require the taxpayer to separately register each location and to 
152.14  file a tax return for each location. 
152.15     [EFFECTIVE DATE.] This section is effective for returns 
152.16  filed after June 30, 2003. 
152.17     Sec. 4.  Minnesota Statutes 2002, section 297A.61, 
152.18  subdivision 3, is amended to read: 
152.19     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
152.20  include, but are not limited to, each of the transactions listed 
152.21  in this subdivision. 
152.22     (b) Sale and purchase include: 
152.23     (1) any transfer of title or possession, or both, of 
152.24  tangible personal property, whether absolutely or conditionally, 
152.25  for a consideration in money or by exchange or barter; and 
152.26     (2) the leasing of or the granting of a license to use or 
152.27  consume, for a consideration in money or by exchange or barter, 
152.28  tangible personal property, other than a manufactured home used 
152.29  for residential purposes for a continuous period of 30 days or 
152.30  more. 
152.31     (c) Sale and purchase include the production, fabrication, 
152.32  printing, or processing of tangible personal property for a 
152.33  consideration for consumers who furnish either directly or 
152.34  indirectly the materials used in the production, fabrication, 
152.35  printing, or processing. 
152.36     (d) Sale and purchase include the preparing for a 
153.1   consideration of food.  Notwithstanding section 297A.67, 
153.2   subdivision 2, taxable food includes, but is not limited to, the 
153.3   following: 
153.4      (1) prepared food sold by the retailer; 
153.5      (2) soft drinks; 
153.6      (3) candy; and 
153.7      (4) all food sold through vending machines. 
153.8      (e) A sale and a purchase includes the furnishing for a 
153.9   consideration of electricity, gas, water, or steam for use or 
153.10  consumption within this state. 
153.11     (f) A sale and a purchase includes the transfer for a 
153.12  consideration of computer software.  
153.13     (g) A sale and a purchase includes the furnishing for a 
153.14  consideration of the following services: 
153.15     (1) the privilege of admission to places of amusement, 
153.16  recreational areas, or athletic events, and the making available 
153.17  of amusement devices, tanning facilities, reducing salons, steam 
153.18  baths, turkish baths, health clubs, and spas or athletic 
153.19  facilities; 
153.20     (2) lodging and related services by a hotel, rooming house, 
153.21  resort, campground, motel, or trailer camp and the granting of 
153.22  any similar license to use real property other than the renting 
153.23  or leasing of it for a continuous period of 30 days or more; 
153.24     (3) nonresidential parking services, whether on a 
153.25  contractual, hourly, or other periodic basis, except for parking 
153.26  at a meter; 
153.27     (4) the granting of membership in a club, association, or 
153.28  other organization if: 
153.29     (i) the club, association, or other organization makes 
153.30  available for the use of its members sports and athletic 
153.31  facilities, without regard to whether a separate charge is 
153.32  assessed for use of the facilities; and 
153.33     (ii) use of the sports and athletic facility is not made 
153.34  available to the general public on the same basis as it is made 
153.35  available to members.  
153.36  Granting of membership means both onetime initiation fees and 
154.1   periodic membership dues.  Sports and athletic facilities 
154.2   include golf courses; tennis, racquetball, handball, and squash 
154.3   courts; basketball and volleyball facilities; running tracks; 
154.4   exercise equipment; swimming pools; and other similar athletic 
154.5   or sports facilities; 
154.6      (5) delivery of aggregate materials and concrete block by a 
154.7   third party if the delivery would be subject to the sales tax if 
154.8   provided by the seller of the aggregate material or concrete 
154.9   block; and 
154.10     (6) services as provided in this clause: 
154.11     (i) laundry and dry cleaning services including cleaning, 
154.12  pressing, repairing, altering, and storing clothes, linen 
154.13  services and supply, cleaning and blocking hats, and carpet, 
154.14  drapery, upholstery, and industrial cleaning.  Laundry and dry 
154.15  cleaning services do not include services provided by coin 
154.16  operated facilities operated by the customer; 
154.17     (ii) motor vehicle washing, waxing, and cleaning services, 
154.18  including services provided by coin operated facilities operated 
154.19  by the customer, and rustproofing, undercoating, and towing of 
154.20  motor vehicles; 
154.21     (iii) building and residential cleaning, maintenance, and 
154.22  disinfecting and exterminating services; 
154.23     (iv) detective, security, burglar, fire alarm, and armored 
154.24  car services; but not including services performed within the 
154.25  jurisdiction they serve by off-duty licensed peace officers as 
154.26  defined in section 626.84, subdivision 1, or services provided 
154.27  by a nonprofit organization for monitoring and electronic 
154.28  surveillance of persons placed on in-home detention pursuant to 
154.29  court order or under the direction of the Minnesota department 
154.30  of corrections; 
154.31     (v) pet grooming services; 
154.32     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
154.33  services; garden planting and maintenance; tree, bush, and shrub 
154.34  pruning, bracing, spraying, and surgery; indoor plant care; 
154.35  tree, bush, shrub, and stump removal; and tree trimming for 
154.36  public utility lines.  Services performed under a construction 
155.1   contract for the installation of shrubbery, plants, sod, trees, 
155.2   bushes, and similar items are not taxable; 
155.3      (vii) massages, except when provided by a licensed health 
155.4   care facility or professional or upon written referral from a 
155.5   licensed health care facility or professional for treatment of 
155.6   illness, injury, or disease; and 
155.7      (viii) the furnishing of lodging, board, and care services 
155.8   for animals in kennels and other similar arrangements, but 
155.9   excluding veterinary and horse boarding services. 
155.10     In applying the provisions of this chapter, the terms 
155.11  "tangible personal property" and "sales at retail" include 
155.12  taxable services listed in clause (6), items (i) to (vi) and 
155.13  (viii) and the provision of these taxable services, unless 
155.14  specifically provided otherwise.  Services performed by an 
155.15  employee for an employer are not taxable.  Services performed by 
155.16  a partnership or association for another partnership or 
155.17  association are not taxable if one of the entities owns or 
155.18  controls more than 80 percent of the voting power of the equity 
155.19  interest in the other entity.  Services performed between 
155.20  members of an affiliated group of corporations are not taxable.  
155.21  For purposes of this section the preceding sentence, "affiliated 
155.22  group of corporations" includes those entities that would be 
155.23  classified as members of an affiliated group under United States 
155.24  Code, title 26, section 1504, and that are eligible to file a 
155.25  consolidated tax return for federal income tax purposes. 
155.26     (h) A sale and a purchase includes the furnishing for a 
155.27  consideration of tangible personal property or taxable services 
155.28  by the United States or any of its agencies or 
155.29  instrumentalities, or the state of Minnesota, its agencies, 
155.30  instrumentalities, or political subdivisions. 
155.31     (i) A sale and a purchase includes the furnishing for a 
155.32  consideration of telecommunications services, including cable 
155.33  television services and direct satellite services.  
155.34  Telecommunications services are taxed to the extent allowed 
155.35  under federal law if those services: 
155.36     (1) either (i) originate and terminate in this state; or 
156.1   (ii) originate in this state and terminate outside the state and 
156.2   the service is charged to a telephone number telecommunications 
156.3   customer located in this state or to the account of any 
156.4   transmission instrument in this state; or (iii) originate 
156.5   outside this state and terminate in this state and the service 
156.6   is charged to a telephone number telecommunications customer 
156.7   located in this state or to the account of any transmission 
156.8   instrument in this state; or 
156.9      (2) are rendered by providing a private communications 
156.10  service for which the customer has one or more locations within 
156.11  Minnesota connected to the service and the service is charged to 
156.12  a telephone number telecommunications customer located in this 
156.13  state or to the account of any transmission instrument in this 
156.14  state. 
156.15     All charges for mobile telecommunications services, as 
156.16  defined in United States Code, title 4, section 124, are deemed 
156.17  to be provided by the customer's home service provider and 
156.18  sourced to the customer's place of primary use and are subject 
156.19  to tax based upon the customer's place of primary use in 
156.20  accordance with the Mobile Telecommunications Sourcing Act, 
156.21  United States Code, title 4, sections 116 to 126.  All other 
156.22  definitions and provisions of the Mobile Telecommunications 
156.23  Sourcing Act as provided in United States Code, title 4, are 
156.24  hereby adopted. 
156.25     (j) A sale and a purchase includes the furnishing for a 
156.26  consideration of installation if the installation charges would 
156.27  be subject to the sales tax if the installation were provided by 
156.28  the seller of the item being installed. 
156.29     [EFFECTIVE DATE.] This section is effective the day 
156.30  following final enactment. 
156.31     Sec. 5.  Minnesota Statutes 2002, section 297A.61, 
156.32  subdivision 12, is amended to read: 
156.33     Subd. 12.  [FARM MACHINERY.] (a) "Farm machinery" means new 
156.34  or used machinery, equipment, implements, accessories, and 
156.35  contrivances used directly and principally in the agricultural 
156.36  production for sale, but not including the processing, of 
157.1   livestock, dairy animals, dairy products, poultry and poultry 
157.2   products, fruits, vegetables, trees and shrubs, plants, forage, 
157.3   grains, and bees and apiary products.  
157.4      (b) Farm machinery includes including, but not limited to: 
157.5      (1) machinery for the preparation, seeding, or cultivation 
157.6   of soil for growing agricultural crops and sod, for the 
157.7   harvesting and threshing of agricultural products, or for the 
157.8   harvesting or mowing of sod; 
157.9      (2) barn cleaners, milking systems, grain dryers, feeding 
157.10  systems including stationary feed bunks, and similar 
157.11  installations, whether or not the equipment is installed by the 
157.12  seller and becomes part of the real property; and 
157.13     (3) irrigation equipment sold for exclusively agricultural 
157.14  use, including pumps, pipe fittings, valves, sprinklers, and 
157.15  other equipment necessary to the operation of an irrigation 
157.16  system when sold as part of an irrigation system, whether or not 
157.17  the equipment is installed by the seller and becomes part of the 
157.18  real property;. 
157.19     (4) logging equipment, including chain saws used for 
157.20  commercial logging; 
157.21     (5) fencing used for the containment of farmed cervidae, as 
157.22  defined in section 17.451, subdivision 2; 
157.23     (6) primary and backup generator units used to generate 
157.24  electricity for the purpose of operating farm machinery, as 
157.25  defined in this subdivision, or providing light or space heating 
157.26  necessary for the production of livestock, dairy animals, dairy 
157.27  products, or poultry and poultry products; 
157.28     (7) aquaculture production equipment as defined in 
157.29  subdivision 13; and 
157.30     (8) equipment used for maple syrup harvesting.  
157.31     (c) (b) Farm machinery does not include: 
157.32     (1) repair or replacement parts; 
157.33     (2) tools, shop equipment, grain bins, fencing material 
157.34  except fencing material covered by paragraph (b), clause (5), 
157.35  communication equipment, and other farm supplies; 
157.36     (3) motor vehicles taxed under chapter 297B; 
158.1      (4) snowmobiles or snow blowers; or 
158.2      (5) lawn mowers except those used in the production of sod 
158.3   for sale, or garden-type tractors or garden tillers; or 
158.4      (6) machinery, equipment, implements, accessories, and 
158.5   contrivances used directly in the production of horses not 
158.6   raised for slaughter, fur-bearing animals, or research animals. 
158.7      [EFFECTIVE DATE.] This section is effective for sales and 
158.8   purchases made after June 30, 2003. 
158.9      Sec. 6.  Minnesota Statutes 2002, section 297A.61, 
158.10  subdivision 34, is amended to read: 
158.11     Subd. 34.  [FOOD SOLD THROUGH VENDING MACHINES.] "Food sold 
158.12  through vending machines" means food dispensed from a machine or 
158.13  other mechanical device that accepts payment including honor 
158.14  payments. 
158.15     [EFFECTIVE DATE.] This section is effective for sales and 
158.16  purchases made on or after the day following final enactment. 
158.17     Sec. 7.  Minnesota Statutes 2002, section 297A.61, is 
158.18  amended by adding a subdivision to read: 
158.19     Subd. 35.  [AGRICULTURAL PRODUCTION.] "Agricultural 
158.20  production" includes, but is not limited to, horticulture, 
158.21  silviculture, floriculture, maple syrup harvesting, and the 
158.22  raising of pets, livestock as defined in section 17A.03, 
158.23  subdivision 5, poultry, dairy and poultry products, bees and 
158.24  apiary products, the raising and harvesting of agricultural 
158.25  crops, sod, fur-bearing animals, research animals, and horses. 
158.26     [EFFECTIVE DATE.] This section is effective for sales and 
158.27  purchases made after June 30, 2003. 
158.28     Sec. 8.  Minnesota Statutes 2002, section 297A.665, is 
158.29  amended to read: 
158.30     297A.665 [PRESUMPTION OF TAX; BURDEN OF PROOF.] 
158.31     (a) For the purpose of the proper administration of this 
158.32  chapter and to prevent evasion of the tax, until the contrary is 
158.33  established, it is presumed that:  
158.34     (1) all gross receipts are subject to the tax; and 
158.35     (2) all retail sales for delivery in Minnesota are for 
158.36  storage, use, or other consumption in Minnesota.  
159.1      (b) The burden of proving that a sale is not a taxable 
159.2   retail sale is on the seller.  However, the seller may take from 
159.3   the purchaser at the time of the sale an a fully completed 
159.4   exemption certificate claiming that the property purchased is 
159.5   for resale or that the sale is otherwise exempt from the tax 
159.6   imposed by this chapter which conclusively relieves the seller 
159.7   from collecting and remitting the tax.  This relief from 
159.8   liability does not apply to a seller who fraudulently fails to 
159.9   collect the tax or solicits purchasers to participate in the 
159.10  unlawful claim of an exemption.  If a seller claiming that 
159.11  certain sales are exempt, who does is not possess in possession 
159.12  of the required exemption certificates, must acquire the 
159.13  certificates within 60 days after receiving written notice from 
159.14  the commissioner that the certificates are required, deductions 
159.15  claimed by the seller that required delivery of the certificates 
159.16  must be disallowed.  If the certificates are not 
159.17  obtained delivered to the commissioner within the 60-day period, 
159.18  the sales are considered taxable sales under this 
159.19  chapter. commissioner may verify the reason or basis for the 
159.20  exemption claimed in the certificates before allowing any 
159.21  deductions.  A deduction must not be granted on the basis of 
159.22  certificates delivered to the commissioner after the 60-day 
159.23  period. 
159.24     (c) A purchaser of tangible personal property or any items 
159.25  listed in section 297A.63 that are shipped or brought to 
159.26  Minnesota by the purchaser has the burden of proving that the 
159.27  property was not purchased from a retailer for storage, use, or 
159.28  consumption in Minnesota.  
159.29     [EFFECTIVE DATE.] This section is effective for exemption 
159.30  certificates received for sales occurring after June 30, 2003. 
159.31     Sec. 9.  Minnesota Statutes 2002, section 297A.67, 
159.32  subdivision 2, is amended to read: 
159.33     Subd. 2.  [FOOD AND FOOD INGREDIENTS.] Food and food 
159.34  ingredients are exempt.  For purposes of this subdivision, 
159.35  "food" and "food ingredients" mean substances, whether in 
159.36  liquid, concentrated, solid, frozen, dried, or dehydrated form, 
160.1   that are sold for ingestion or chewing by humans and are 
160.2   consumed for their taste or nutritional value.  Food and food 
160.3   ingredients exempt under this subdivision do not include candy, 
160.4   soft drinks, food sold through vending machines, and prepared 
160.5   foods.  Food and food ingredients do not include alcoholic 
160.6   beverages, dietary supplements, and tobacco.  For purposes of 
160.7   this subdivision, "alcoholic beverages" means beverages that are 
160.8   suitable for human consumption and contain one-half of one 
160.9   percent or more of alcohol by volume.  For purposes of this 
160.10  subdivision, "tobacco" means cigarettes, cigars, chewing or pipe 
160.11  tobacco, or any other item that contains tobacco.  For purposes 
160.12  of this subdivision, "dietary supplements" means any product, 
160.13  other than tobacco, intended to supplement the diet that: 
160.14     (1) contains one or more of the following dietary 
160.15  ingredients: 
160.16     (i) a vitamin; 
160.17     (ii) a mineral; 
160.18     (iii) an herb or other botanical; 
160.19     (iv) an amino acid; 
160.20     (v) a dietary substance for use by humans to supplement the 
160.21  diet by increasing the total dietary intake; and 
160.22     (vi) a concentrate, metabolite, constituent, extract, or 
160.23  combination of any ingredient described in items (i) to (v); 
160.24     (2) is intended for ingestion in tablet, capsule, powder, 
160.25  softgel, gelcap, or liquid form, or if not intended for 
160.26  ingestion in such form, is not represented as conventional food 
160.27  and is not represented for use as a sole item of a meal or of 
160.28  the diet; and 
160.29     (3) is required to be labeled as a dietary supplement, 
160.30  identifiable by the supplement facts box found on the label and 
160.31  as required pursuant to Code of Federal Regulations, title 21, 
160.32  section 101.36. 
160.33     [EFFECTIVE DATE.] This section is effective the day 
160.34  following final enactment. 
160.35     Sec. 10.  Minnesota Statutes 2002, section 297A.68, 
160.36  subdivision 5, is amended to read: 
161.1      Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
161.2   exempt.  The tax must be imposed and collected as if the rate 
161.3   under section 297A.62, subdivision 1, applied, and then refunded 
161.4   in the manner provided in section 297A.75. 
161.5      "Capital equipment" means machinery and equipment purchased 
161.6   or leased, and used in this state by the purchaser or lessee 
161.7   primarily for manufacturing, fabricating, mining, or refining 
161.8   tangible personal property to be sold ultimately at retail if 
161.9   the machinery and equipment are essential to the integrated 
161.10  production process of manufacturing, fabricating, mining, or 
161.11  refining.  Capital equipment also includes machinery and 
161.12  equipment used to electronically transmit results retrieved by a 
161.13  customer of an online computerized data retrieval system. 
161.14     (b) Capital equipment includes, but is not limited to: 
161.15     (1) machinery and equipment used to operate, control, or 
161.16  regulate the production equipment; 
161.17     (2) machinery and equipment used for research and 
161.18  development, design, quality control, and testing activities; 
161.19     (3) environmental control devices that are used to maintain 
161.20  conditions such as temperature, humidity, light, or air pressure 
161.21  when those conditions are essential to and are part of the 
161.22  production process; 
161.23     (4) materials and supplies used to construct and install 
161.24  machinery or equipment; 
161.25     (5) repair and replacement parts, including accessories, 
161.26  whether purchased as spare parts, repair parts, or as upgrades 
161.27  or modifications to machinery or equipment; 
161.28     (6) materials used for foundations that support machinery 
161.29  or equipment; 
161.30     (7) materials used to construct and install special purpose 
161.31  buildings used in the production process; and 
161.32     (8) ready-mixed concrete trucks equipment in which the 
161.33  ready-mixed concrete is mixed as part of the delivery 
161.34  process regardless if mounted on a chassis and leases of 
161.35  ready-mixed concrete trucks. 
161.36     (c) Capital equipment does not include the following: 
162.1      (1) motor vehicles taxed under chapter 297B; 
162.2      (2) machinery or equipment used to receive or store raw 
162.3   materials; 
162.4      (3) building materials, except for materials included in 
162.5   paragraph (b), clauses (6) and (7); 
162.6      (4) machinery or equipment used for nonproduction purposes, 
162.7   including, but not limited to, the following:  plant security, 
162.8   fire prevention, first aid, and hospital stations; support 
162.9   operations or administration; pollution control; and plant 
162.10  cleaning, disposal of scrap and waste, plant communications, 
162.11  space heating, cooling, lighting, or safety; 
162.12     (5) farm machinery and aquaculture production equipment as 
162.13  defined by section 297A.61, subdivisions 12 and 13; 
162.14     (6) machinery or equipment purchased and installed by a 
162.15  contractor as part of an improvement to real property; or 
162.16     (7) any other item that is not essential to the integrated 
162.17  process of manufacturing, fabricating, mining, or refining. 
162.18     (d) For purposes of this subdivision: 
162.19     (1) "Equipment" means independent devices or tools separate 
162.20  from machinery but essential to an integrated production 
162.21  process, including computers and computer software, used in 
162.22  operating, controlling, or regulating machinery and equipment; 
162.23  and any subunit or assembly comprising a component of any 
162.24  machinery or accessory or attachment parts of machinery, such as 
162.25  tools, dies, jigs, patterns, and molds.  
162.26     (2) "Fabricating" means to make, build, create, produce, or 
162.27  assemble components or property to work in a new or different 
162.28  manner. 
162.29     (3) "Integrated production process" means a process or 
162.30  series of operations through which tangible personal property is 
162.31  manufactured, fabricated, mined, or refined.  For purposes of 
162.32  this clause, (i) manufacturing begins with the removal of raw 
162.33  materials from inventory and ends when the last process prior to 
162.34  loading for shipment has been completed; (ii) fabricating begins 
162.35  with the removal from storage or inventory of the property to be 
162.36  assembled, processed, altered, or modified and ends with the 
163.1   creation or production of the new or changed product; (iii) 
163.2   mining begins with the removal of overburden from the site of 
163.3   the ores, minerals, stone, peat deposit, or surface materials 
163.4   and ends when the last process before stockpiling is completed; 
163.5   and (iv) refining begins with the removal from inventory or 
163.6   storage of a natural resource and ends with the conversion of 
163.7   the item to its completed form. 
163.8      (4) "Machinery" means mechanical, electronic, or electrical 
163.9   devices, including computers and computer software, that are 
163.10  purchased or constructed to be used for the activities set forth 
163.11  in paragraph (a), beginning with the removal of raw materials 
163.12  from inventory through completion of the product, including 
163.13  packaging of the product. 
163.14     (4) (5) "Machinery and equipment used for pollution control"
163.15  means machinery and equipment used solely to eliminate, prevent, 
163.16  or reduce pollution resulting from an activity described in 
163.17  paragraph (a).  
163.18     (5) (6) "Manufacturing" means an operation or series of 
163.19  operations where raw materials are changed in form, composition, 
163.20  or condition by machinery and equipment and which results in the 
163.21  production of a new article of tangible personal property.  For 
163.22  purposes of this subdivision, "manufacturing" includes the 
163.23  generation of electricity or steam to be sold at retail. 
163.24     (6) (7) "Mining" means the extraction of minerals, ores, 
163.25  stone, or peat. 
163.26     (7) (8) "Online data retrieval system" means a system whose 
163.27  cumulation of information is equally available and accessible to 
163.28  all its customers. 
163.29     (8) (9) "Primarily" means machinery and equipment used 50 
163.30  percent or more of the time in an activity described in 
163.31  paragraph (a). 
163.32     (9) (10) "Refining" means the process of converting a 
163.33  natural resource to a an intermediate or finished product, 
163.34  including the treatment of water to be sold at retail. 
163.35     [EFFECTIVE DATE.] This section is effective for sales and 
163.36  purchases made after December 31, 2003. 
164.1      Sec. 11.  Minnesota Statutes 2002, section 297A.68, is 
164.2   amended by adding a subdivision to read: 
164.3      Subd. 39.  [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 
164.4   tangible personal property or services is exempt from tax for a 
164.5   period of six months from the effective date of the law change 
164.6   that results in the imposition of the tax under this chapter if: 
164.7      (1) the act imposing the tax does not have transitional 
164.8   effective date language for existing construction contracts and 
164.9   construction bids; and 
164.10     (2) the requirements of paragraph (b) are met. 
164.11     (b) A sale is tax exempt under paragraph (a) if it meets 
164.12  the requirements of either clause (1) or (2): 
164.13     (1) For a construction contract: 
164.14     (i) the goods or services sold must be used for the 
164.15  performance of a bona fide written lump sum or fixed price 
164.16  construction contract; 
164.17     (ii) the contract must be entered into before the date the 
164.18  goods or services become subject to the sales tax; 
164.19     (iii) the contract must not provide for allocation of 
164.20  future taxes; and 
164.21     (iv) for each qualifying contract the contractor must give 
164.22  the seller documentation of the contract on which an exemption 
164.23  is to be claimed. 
164.24     (2) For a bid: 
164.25     (i) the goods or services sold must be used pursuant to an 
164.26  obligation of a bid or bids; 
164.27     (ii) the bid or bids must be submitted and accepted before 
164.28  the date the goods or services became subject to the sales tax; 
164.29     (iii) the bid or bids must not be able to be withdrawn, 
164.30  modified, or changed without forfeiting a bond; and 
164.31     (iv) for each qualifying bid, the contractor must give the 
164.32  seller documentation of the bid on which an exemption is to be 
164.33  claimed. 
164.34     [EFFECTIVE DATE.] This section is effective the day 
164.35  following final enactment. 
164.36     Sec. 12.  Minnesota Statutes 2002, section 297A.69, 
165.1   subdivision 2, is amended to read: 
165.2      Subd. 2.  [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 
165.3   (a) Materials stored, used, or consumed in agricultural 
165.4   production of personal property intended to be sold ultimately 
165.5   at retail are exempt, whether or not the item becomes an 
165.6   ingredient or constituent part of the property produced.  
165.7   Materials that qualify for this exemption include, but are not 
165.8   limited to, the following: 
165.9      (1) feeds, seeds, trees, fertilizers, and herbicides, 
165.10  including when purchased for use by farmers in a federal or 
165.11  state farm or conservation program; 
165.12     (2) materials sold to a veterinarian to be used or consumed 
165.13  in the care, medication, and treatment of agricultural 
165.14  production animals and horses; 
165.15     (3) chemicals, including chemicals used for cleaning food 
165.16  processing machinery and equipment; 
165.17     (4) materials, including chemicals, fuels, and electricity 
165.18  purchased by persons engaged in agricultural production to treat 
165.19  waste generated as a result of the production process; 
165.20     (5) fuels, electricity, gas, and steam used or consumed in 
165.21  the production process, except that electricity, gas, or steam 
165.22  used for space heating, cooling, or lighting is exempt if (i) it 
165.23  is in excess of the average climate control or lighting for the 
165.24  production area, and (ii) it is necessary to produce that 
165.25  particular product; 
165.26     (6) petroleum products and lubricants; 
165.27     (7) packaging materials, including returnable containers 
165.28  used in packaging food and beverage products; and 
165.29     (8) accessory tools and equipment that are separate 
165.30  detachable units with an ordinary useful life of less than 12 
165.31  months used in producing a direct effect upon the product. 
165.32  Machinery, equipment, implements, tools, accessories, 
165.33  appliances, contrivances, and furniture and fixtures, except 
165.34  those listed in this clause are not included within this 
165.35  exemption. 
165.36     (b) For purposes of this subdivision, "agricultural 
166.1   production" includes, but is not limited to, horticulture, 
166.2   floriculture, maple syrup harvesting, and the raising of pets, 
166.3   fur-bearing animals, research animals, horses, farmed cervidae 
166.4   as defined in section 17.451, subdivision 2, llamas as defined 
166.5   in section 17.455, subdivision 2, and ratitae as defined in 
166.6   section 17.453, subdivision 3. 
166.7      [EFFECTIVE DATE.] This section is effective for sales and 
166.8   purchases made after December 31, 2003. 
166.9      Sec. 13.  Minnesota Statutes 2002, section 297A.69, 
166.10  subdivision 3, is amended to read: 
166.11     Subd. 3.  [FARM MACHINERY REPAIR AND REPLACEMENT PARTS.] 
166.12  Repair and replacement parts, except tires, used for maintenance 
166.13  or repair of farm machinery, logging equipment, and aquaculture 
166.14  production equipment are exempt, if the part replaces a farm 
166.15  machinery part assigned a specific or generic part number by the 
166.16  manufacturer of the farm machinery.  
166.17     [EFFECTIVE DATE.] This section is effective for sales and 
166.18  purchases made after June 30, 2003. 
166.19     Sec. 14.  Minnesota Statutes 2002, section 297A.69, 
166.20  subdivision 4, is amended to read: 
166.21     Subd. 4.  [FARM MACHINERY, EQUIPMENT, AND FENCING.] The 
166.22  following machinery, equipment, and fencing is exempt: 
166.23     (1) farm machinery is exempt.; 
166.24     (2) logging equipment, including chain saws used for 
166.25  commercial logging; 
166.26     (3) fencing used for the containment of farmed cervidae, as 
166.27  defined in section 17.451, subdivision 2; 
166.28     (4) primary and backup generator units used to generate 
166.29  electricity for the purpose of operating farm machinery, 
166.30  aquacultural production equipment, or logging equipment, or 
166.31  providing light or space heating necessary for the production of 
166.32  livestock, dairy animals, dairy products, or poultry and poultry 
166.33  products; and 
166.34     (5) aquaculture production equipment.  
166.35     [EFFECTIVE DATE.] This section is effective for sales and 
166.36  purchases made after June 30, 2003. 
167.1      Sec. 15.  Minnesota Statutes 2002, section 297B.025, 
167.2   subdivision 1, is amended to read: 
167.3      Subdivision 1.  [NONCOLLECTOR VEHICLE.] Purchase or use of 
167.4   a passenger automobile as defined in section 168.011, 
167.5   subdivision 7, shall be taxed pursuant to section 297B.02, 
167.6   subdivision 2, if the passenger automobile is (1) is in the 
167.7   tenth or subsequent year of vehicle life, and (2) is not an 
167.8   above-market automobile as designated by the registrar of motor 
167.9   vehicles does not have a resale value of $3,000 or more, as 
167.10  determined using nationally recognized sources of information on 
167.11  automobile resale values, as designated by the registrar of 
167.12  motor vehicles. 
167.13     The registrar of motor vehicles shall prepare, and 
167.14  distribute to all deputy motor vehicle registrars by July 15, 
167.15  1985, a listing by make, model, and year of above-market 
167.16  automobiles.  Except as provided by subdivision 2, the registrar 
167.17  must include in the list all automobiles with a resale value of 
167.18  $3,000 or more, as determined using nationally recognized 
167.19  sources of information on automobile resale values.  The 
167.20  registrar shall revise the list by February 1 of each year.  The 
167.21  initial list and all subsequent revisions must include only 
167.22  those automobiles which are in the tenth or subsequent year of 
167.23  vehicle life.  
167.24     [EFFECTIVE DATE.] This section is effective for vehicles 
167.25  purchased after June 30, 2003. 
167.26     Sec. 16.  Minnesota Statutes 2002, section 297B.025, 
167.27  subdivision 2, is amended to read: 
167.28     Subd. 2.  [COLLECTOR VEHICLE.] A passenger automobile that 
167.29  is registered under section 168.10, subdivision 1a, 1b, 1c, 1d, 
167.30  or 1h, or a fire truck registered under section 168.10, 
167.31  subdivision 1c, shall be taxed under section 297B.02, 
167.32  subdivision 3, and the registrar shall not designate as an 
167.33  above-market automobile a passenger automobile or a fire truck 
167.34  registered under those subdivisions.  If the vehicle is 
167.35  subsequently registered in another class not under section 
167.36  168.10, subdivision 1a, 1b, 1c, 1d, or 1h, within one year of 
168.1   the date of registration under those subdivisions, it shall be 
168.2   subject to the full excise tax imposed under subdivision 1. 
168.3      [EFFECTIVE DATE.] This section is effective for vehicles 
168.4   purchased after December 31, 2003. 
168.5      Sec. 17.  Minnesota Statutes 2002, section 297B.035, 
168.6   subdivision 1, is amended to read: 
168.7      Subdivision 1.  [ORDINARY COURSE OF BUSINESS.] Except as 
168.8   provided in this section, motor vehicles purchased for resale in 
168.9   the ordinary course of business or used by any motor vehicle 
168.10  dealer, as defined in section 168.011, subdivision 21, who is 
168.11  licensed under section 168.27, subdivision 2 or 3, which bear 
168.12  dealer plates as authorized by section 168.27, subdivision 16, 
168.13  shall be exempt from the provisions of this chapter. 
168.14     [EFFECTIVE DATE.] This section is effective the day 
168.15  following final enactment. 
168.16     Sec. 18.  [REPEALER.] 
168.17     (a) Minnesota Statutes 2002, section 297A.72, subdivision 
168.18  1, is repealed effective for exemption certificates received for 
168.19  sales occurring after June 30, 2003. 
168.20     (b) Minnesota Statutes 2002, section 297A.97, is repealed 
168.21  effective for sales and purchases occurring after December 31, 
168.22  2003. 
168.23     (c) Minnesota Rules, parts 8130.0800, subparts 5 and 12; 
168.24  8130.1300; 8130.1600, subpart 5; 8130.1700, subparts 3 and 4; 
168.25  8130.4800, subpart 2; 8130.7500, subpart 5; 8130.8000; and 
168.26  8130.8300, are repealed effective the day following final 
168.27  enactment. 
168.28                             ARTICLE 7 
168.29                DEPARTMENT SPECIAL TAXES INITIATIVES 
168.30     Section 1.  Minnesota Statutes 2002, section 115B.24, 
168.31  subdivision 8, is amended to read: 
168.32     Subd. 8.  [PENALTIES; ENFORCEMENT.] The audit, penalty and 
168.33  enforcement provisions applicable to corporate franchise taxes 
168.34  imposed under chapter 290 apply to the taxes imposed under 
168.35  section 115B.22 and those provisions shall be administered by 
168.36  the commissioner.  
169.1      [EFFECTIVE DATE.] This section is effective the day 
169.2   following final enactment. 
169.3      Sec. 2.  Minnesota Statutes 2002, section 295.50, 
169.4   subdivision 9b, is amended to read: 
169.5      Subd. 9b.  [PATIENT SERVICES.] (a) "Patient services" means 
169.6   inpatient and outpatient services and other goods and services 
169.7   provided by hospitals, surgical centers, or health care 
169.8   providers.  They include the following health care goods and 
169.9   services provided to a patient or consumer: 
169.10     (1) bed and board; 
169.11     (2) nursing services and other related services; 
169.12     (3) use of hospitals, surgical centers, or health care 
169.13  provider facilities; 
169.14     (4) medical social services; 
169.15     (5) drugs, biologicals, supplies, appliances, and 
169.16  equipment; 
169.17     (6) other diagnostic or therapeutic items or services; 
169.18     (7) medical or surgical services; 
169.19     (8) items and services furnished to ambulatory patients not 
169.20  requiring emergency care; 
169.21     (9) emergency services; and 
169.22     (10) covered services listed in section 256B.0625 and in 
169.23  Minnesota Rules, parts 9505.0170 to 9505.0475. 
169.24     (b) "Patient services" does not include:  
169.25     (1) services provided to nursing homes licensed under 
169.26  chapter 144A; and 
169.27     (2) examinations for purposes of utilization reviews, 
169.28  insurance claims or eligibility, litigation, and employment, 
169.29  including reviews of medical records for those purposes; 
169.30     (3) services provided by community residential mental 
169.31  health facilities licensed under Minnesota Rules, parts 
169.32  9520.0500 to 9520.0690; 
169.33     (4) services provided by community support programs and 
169.34  family community support programs approved under Minnesota 
169.35  Rules, parts 9535.1700 to 9535.1760; 
169.36     (5) services provided by community mental health centers as 
170.1   defined in section 245.62, subdivision 2; 
170.2      (6) services provided by assisted living programs and 
170.3   congregate housing programs; and 
170.4      (7) hospice care services. 
170.5      [EFFECTIVE DATE.] This section is effective for gross 
170.6   revenues received after December 31, 2002. 
170.7      Sec. 3.  Minnesota Statutes 2002, section 295.53, 
170.8   subdivision 1, is amended to read: 
170.9      Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
170.10  are excluded from the gross revenues subject to the hospital, 
170.11  surgical center, or health care provider taxes under sections 
170.12  295.50 to 295.57 295.59: 
170.13     (1) payments received for services provided under the 
170.14  Medicare program, including payments received from the 
170.15  government, and organizations governed by sections 1833 and 1876 
170.16  of title XVIII of the federal Social Security Act, United States 
170.17  Code, title 42, section 1395, and enrollee deductibles, 
170.18  coinsurance, and copayments, whether paid by the Medicare 
170.19  enrollee or by a Medicare supplemental coverage as defined in 
170.20  section 62A.011, subdivision 3, clause (10).  Payments for 
170.21  services not covered by Medicare are taxable; 
170.22     (2) medical assistance payments including payments received 
170.23  directly from the government or from a prepaid plan; 
170.24     (3) payments received for home health care services; 
170.25     (4) payments received from hospitals or surgical centers 
170.26  for goods and services on which liability for tax is imposed 
170.27  under section 295.52 or the source of funds for the payment is 
170.28  exempt under clause (1), (2), (7), (8), (10), (13), 
170.29  or (20) (17); 
170.30     (5) payments received from health care providers for goods 
170.31  and services on which liability for tax is imposed under this 
170.32  chapter or the source of funds for the payment is exempt under 
170.33  clause (1), (2), (7), (8), (10), (13), or (20) (17); 
170.34     (6) amounts paid for legend drugs, other than nutritional 
170.35  products, to a wholesale drug distributor who is subject to tax 
170.36  under section 295.52, subdivision 3, reduced by reimbursements 
171.1   received for legend drugs otherwise exempt under this chapter; 
171.2      (7) payments received under the general assistance medical 
171.3   care program including payments received directly from the 
171.4   government or from a prepaid plan; 
171.5      (8) payments received for providing services under the 
171.6   MinnesotaCare program including payments received directly from 
171.7   the government or from a prepaid plan and enrollee deductibles, 
171.8   coinsurance, and copayments.  For purposes of this clause, 
171.9   coinsurance means the portion of payment that the enrollee is 
171.10  required to pay for the covered service; 
171.11     (9) payments received by a health care provider or the 
171.12  wholly owned subsidiary of a health care provider for care 
171.13  provided outside Minnesota; 
171.14     (10) payments received from the chemical dependency fund 
171.15  under chapter 254B; 
171.16     (11) payments received in the nature of charitable 
171.17  donations that are not designated for providing patient services 
171.18  to a specific individual or group; 
171.19     (12) payments received for providing patient services 
171.20  incurred through a formal program of health care research 
171.21  conducted in conformity with federal regulations governing 
171.22  research on human subjects.  Payments received from patients or 
171.23  from other persons paying on behalf of the patients are subject 
171.24  to tax; 
171.25     (13) payments received from any governmental agency for 
171.26  services benefiting the public, not including payments made by 
171.27  the government in its capacity as an employer or insurer; 
171.28     (14) payments received for services provided by community 
171.29  residential mental health facilities licensed under Minnesota 
171.30  Rules, parts 9520.0500 to 9520.0690, community support programs 
171.31  and family community support programs approved under Minnesota 
171.32  Rules, parts 9535.1700 to 9535.1760, and community mental health 
171.33  centers as defined in section 245.62, subdivision 2; 
171.34     (15) (14) government payments received by a regional 
171.35  treatment center; 
171.36     (16) payments received for hospice care services; 
172.1      (17) (15) payments received by a health care provider for 
172.2   hearing aids and related equipment or prescription eyewear 
172.3   delivered outside of Minnesota; 
172.4      (18) (16) payments received by an educational institution 
172.5   from student tuition, student activity fees, health care service 
172.6   fees, government appropriations, donations, or grants.  Fee for 
172.7   service payments and payments for extended coverage are taxable; 
172.8   and 
172.9      (19) payments received for services provided by:  assisted 
172.10  living programs and congregate housing programs; and 
172.11     (20) (17) payments received under the federal Employees 
172.12  Health Benefits Act, United States Code, title 5, section 
172.13  8909(f), as amended by the Omnibus Reconciliation Act of 1990. 
172.14     (b) Payments received by wholesale drug distributors for 
172.15  legend drugs sold directly to veterinarians or veterinary bulk 
172.16  purchasing organizations are excluded from the gross revenues 
172.17  subject to the wholesale drug distributor tax under sections 
172.18  295.50 to 295.59. 
172.19     [EFFECTIVE DATE.] This section is effective for gross 
172.20  revenues received after December 31, 2002. 
172.21     Sec. 4.  Minnesota Statutes 2002, section 297F.01, 
172.22  subdivision 21a, is amended to read: 
172.23     Subd. 21a.  [UNLICENSED SELLER.] "Unlicensed seller" means 
172.24  anyone who is not licensed under section 297F.03 or 461.12 to 
172.25  sell the particular product to the purchaser or possessor of the 
172.26  product. 
172.27     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
172.28     Sec. 5.  Minnesota Statutes 2002, section 297F.01, 
172.29  subdivision 23, is amended to read: 
172.30     Subd. 23.  [WHOLESALE SALES PRICE.] "Wholesale sales price" 
172.31  means the established price stated on the price list in effect 
172.32  at the time of sale for which a manufacturer or person sells a 
172.33  tobacco product to a distributor, exclusive of any discount, 
172.34  promotional offer, or other reduction.  For purposes of this 
172.35  subdivision, "price list" means the manufacturer's price at 
172.36  which tobacco products are made available for sale to all 
173.1   distributors on an ongoing basis. 
173.2      [EFFECTIVE DATE.] This section is effective July 1, 2003. 
173.3      Sec. 6.  Minnesota Statutes 2002, section 297F.06, 
173.4   subdivision 4, is amended to read: 
173.5      Subd. 4.  [TOBACCO PRODUCTS USE TAX.] The tobacco products 
173.6   use tax does not apply to the possession, use, or storage of 
173.7   tobacco products in quantities of: that have an aggregate cost 
173.8   in any calendar month to the consumer of $100 or less. 
173.9      (1) not more than 50 cigars; 
173.10     (2) not more than ten ounces snuff or snuff powder; 
173.11     (3) not more than one pound smoking or chewing tobacco or 
173.12  any other tobacco product in the possession of any one consumer. 
173.13     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
173.14     Sec. 7.  Minnesota Statutes 2002, section 297F.20, 
173.15  subdivision 1, is amended to read: 
173.16     Subdivision 1.  [PENALTIES FOR FAILURE TO FILE OR PAY.] (a) 
173.17  A person or consumer required to file a return, report, or other 
173.18  document with the commissioner who fails to do so is guilty of a 
173.19  misdemeanor. 
173.20     (b) A person or consumer required to pay or to collect and 
173.21  remit a tax under this chapter, who fails to do so when 
173.22  required, is guilty of a misdemeanor. 
173.23     [EFFECTIVE DATE.] This section is effective for acts 
173.24  committed on or after July 1, 2003. 
173.25     Sec. 8.  Minnesota Statutes 2002, section 297F.20, 
173.26  subdivision 2, is amended to read: 
173.27     Subd. 2.  [PENALTIES FOR KNOWING FAILURE TO FILE OR PAY.] 
173.28  (a) A person or consumer required to file a return, report, or 
173.29  other document with the commissioner, who knowingly, rather than 
173.30  accidentally, inadvertently, or negligently, fails to file it 
173.31  when required, is guilty of a gross misdemeanor.  
173.32     (b) A person or consumer required to pay or to collect and 
173.33  remit a tax under this chapter, who knowingly, rather than 
173.34  accidentally, inadvertently, or negligently, fails to file it 
173.35  when required, is guilty of a gross misdemeanor. 
173.36     [EFFECTIVE DATE.] This section is effective for acts 
174.1   committed on or after July 1, 2003. 
174.2      Sec. 9.  Minnesota Statutes 2002, section 297F.20, 
174.3   subdivision 3, is amended to read: 
174.4      Subd. 3.  [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 
174.5   person or consumer who files with the commissioner a return, 
174.6   report, or other document, or who maintains or provides invoices 
174.7   subject to review by the commissioner under this chapter, known 
174.8   by the person or consumer to be fraudulent or false concerning a 
174.9   material matter, is guilty of a felony. 
174.10     (b) A person or consumer who knowingly aids or assists in, 
174.11  or advises in the preparation or presentation of a return, 
174.12  report, invoice, or other document that is fraudulent or false 
174.13  concerning a material matter, whether or not the falsity or 
174.14  fraud is committed with the knowledge or consent of the 
174.15  person or consumer authorized or required to present the return, 
174.16  report, invoice, or other document, is guilty of a felony. 
174.17     [EFFECTIVE DATE.] This section is effective for acts 
174.18  committed on or after July 1, 2003. 
174.19     Sec. 10.  Minnesota Statutes 2002, section 297F.20, 
174.20  subdivision 6, is amended to read: 
174.21     Subd. 6.  [UNSTAMPED CIGARETTES; UNTAXED TOBACCO PRODUCTS.] 
174.22  (a) A person, other than a licensed distributor or a consumer, 
174.23  who possesses, receives, or transports more than 200 but fewer 
174.24  than 5,000 unstamped cigarettes, or up to $100 $350 worth of 
174.25  untaxed tobacco products is guilty of a misdemeanor. 
174.26     (b) A person, other than a licensed distributor or a 
174.27  consumer, who possesses, receives, or transports 5,000 or more, 
174.28  but fewer than 20,001 unstamped cigarettes, or up to $500 more 
174.29  than $350 but less than $1,400 worth of untaxed tobacco products 
174.30  is guilty of a gross misdemeanor. 
174.31     (c) A person, other than a licensed distributor or a 
174.32  consumer, who possesses, receives, or transports more than 
174.33  20,000 unstamped cigarettes, or $500 $1,400 or more worth of 
174.34  untaxed tobacco products is guilty of a felony. 
174.35     (d) For purposes of this subdivision, an individual in 
174.36  possession of more than 4,999 unstamped cigarettes, or more than 
175.1   $350 worth of untaxed tobacco products, is presumed not to be a 
175.2   consumer. 
175.3      [EFFECTIVE DATE.] This section is effective for acts 
175.4   committed on or after July 1, 2003. 
175.5      Sec. 11.  Minnesota Statutes 2002, section 297F.20, 
175.6   subdivision 9, is amended to read: 
175.7      Subd. 9.  [PURCHASES FROM UNLICENSED SELLERS.] (a) No 
175.8   retailer or subjobber shall purchase cigarettes or tobacco 
175.9   products from any person who is not licensed under section 
175.10  297F.03 as a licensed distributor or subjobber. 
175.11     (b) A retailer, or subjobber, or consumer who purchases 
175.12  from an unlicensed seller more than 200 but fewer than 5,000 
175.13  cigarettes or up to $100 $350 worth of tobacco products is 
175.14  guilty of a misdemeanor. 
175.15     (b) (c) A retailer, or subjobber, or consumer who 
175.16  purchases from an unlicensed seller 5,000 or more, but fewer 
175.17  than 20,001 cigarettes or up to $500 more than $350 but less 
175.18  than $1,400 worth of untaxed tobacco products is guilty of a 
175.19  gross misdemeanor. 
175.20     (c) (d) A retailer, or subjobber, or consumer who 
175.21  purchases from an unlicensed seller more than 20,000 cigarettes 
175.22  or $500 $1,400 or more worth of tobacco products is guilty of a 
175.23  felony. 
175.24     [EFFECTIVE DATE.] This section is effective for acts 
175.25  committed on or after July 1, 2003. 
175.26     Sec. 12.  Minnesota Statutes 2002, section 297I.01, 
175.27  subdivision 9, is amended to read: 
175.28     Subd. 9.  [GROSS PREMIUMS.] "Gross premiums" means total 
175.29  premiums paid by policyholders and applicants of policies, 
175.30  whether received in the form of money or other valuable 
175.31  consideration, on property, persons, lives, interests and other 
175.32  risks located, resident, or to be performed in this state, but 
175.33  excluding consideration and premiums for reinsurance assumed 
175.34  from other insurance companies.  The term "gross premiums" 
175.35  includes the total consideration paid to bail bond agents for 
175.36  bail bonds.  For title insurance companies, "gross premiums" 
176.1   means the charge for title insurance made by a title insurance 
176.2   company or its agents according to the company's rate filing 
176.3   approved by the commissioner of commerce without a deduction for 
176.4   commissions paid to or retained by the agent.  Gross premiums of 
176.5   a title insurance company does not include any other charge or 
176.6   fee for abstracting, searching, or examining the title, or 
176.7   escrow, closing, or other related services.  The term "gross 
176.8   premiums" includes any workers' compensation special 
176.9   compensation fund premium surcharge pursuant to section 176.129. 
176.10     [EFFECTIVE DATE.] This section is effective the day 
176.11  following final enactment. 
176.12     Sec. 13.  Minnesota Statutes 2002, section 297I.20, is 
176.13  amended to read: 
176.14     297I.20 [GUARANTY ASSOCIATION ASSESSMENT OFFSET OFFSETS 
176.15  AGAINST PREMIUM TAXES.] 
176.16     Subdivision 1.  [GUARANTY ASSOCIATION ASSESSMENT OFFSETS.] 
176.17  (a) An insurance company may offset against its premium tax 
176.18  liability to this state any amount paid for assessments made for 
176.19  insolvencies which occur after July 31, 1994, under sections 
176.20  60C.01 to 60C.22; and any amount paid for assessments made after 
176.21  July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 
176.22  61B.16, or under sections 61B.18 to 61B.32 as follows: 
176.23     (1) Each such assessment shall give rise to an amount of 
176.24  offset equal to 20 percent of the amount of the assessment for 
176.25  each of the five calendar years following the year in which the 
176.26  assessment was paid. 
176.27     (2) The amount of offset initially determined for each 
176.28  taxable year is the sum of the amounts determined under clause 
176.29  (1) for that taxable year. 
176.30     (b)(1) Each year the commissioner shall compare total 
176.31  guaranty association assessments levied over the preceding five 
176.32  calendar years to the sum of all premium tax and corporate 
176.33  franchise tax revenues collected from insurance companies, 
176.34  without reduction for any guaranty association assessment offset 
176.35  in the preceding calendar year, referred to in this subdivision 
176.36  as "preceding year insurance tax revenues." 
177.1      (2) If total guaranty association assessments levied over 
177.2   the preceding five years exceed the preceding year insurance tax 
177.3   revenues, insurance companies must be allowed only a 
177.4   proportionate part of the premium tax offset calculated under 
177.5   paragraph (a) for the current calendar year. 
177.6      (3) The proportionate part of the premium tax offset 
177.7   allowed in the current calendar year is determined by 
177.8   multiplying the amount calculated under paragraph (a) by a 
177.9   fraction.  The numerator of the fraction equals the preceding 
177.10  year insurance tax revenues, and its denominator equals total 
177.11  guaranty association assessments levied over the preceding 
177.12  five-year period. 
177.13     (4) The proportionate part of the premium tax offset that 
177.14  is not allowed must be carried forward to subsequent tax years 
177.15  and added to the amount of premium tax offset calculated under 
177.16  paragraph (a) prior to application of the limitation imposed by 
177.17  this paragraph. 
177.18     (5) Any amount carried forward from prior years must be 
177.19  allowed before allowance of the offset for the current year 
177.20  calculated under paragraph (a). 
177.21     (6) The premium tax offset limitation must be calculated 
177.22  separately for (i) insurance companies subject to assessment 
177.23  under sections 60C.01 to 60C.22, and (ii) insurance companies 
177.24  subject to assessment under Minnesota Statutes 1992, sections 
177.25  61B.01 to 61B.16, or 61B.18 to 61B.32. 
177.26     (7) When the premium tax offset is limited by this 
177.27  provision, the commissioner shall notify affected insurance 
177.28  companies on a timely basis for purposes of completing premium 
177.29  and corporate franchise tax returns.  
177.30     (8) The guaranty associations created under sections 60C.01 
177.31  to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 
177.32  and 61B.18 to 61B.32, shall provide the commissioner with the 
177.33  necessary information on guaranty association assessments. 
177.34     (c)(1) If the offset determined by the application of 
177.35  paragraphs (a) and (b) exceeds the insurance company's premium 
177.36  tax liability under this section prior to allowance of the 
178.1   credit for premium taxes, then the insurance company may carry 
178.2   forward the excess, referred to in this subdivision as the 
178.3   "carryforward credit" to subsequent taxable years. 
178.4      (2) The carryforward credit is allowed as an offset against 
178.5   premium tax liability for the first succeeding year to the 
178.6   extent that the premium tax liability for that year exceeds the 
178.7   amount of the allowable offset for the year determined under 
178.8   paragraphs (a) and (b). 
178.9      (3) The carryforward credit must be reduced, but not below 
178.10  zero, by the amount of the carryforward credit allowed as an 
178.11  offset against the premium tax under this paragraph.  The 
178.12  remainder, if any, of the carryforward credit must be carried 
178.13  forward to succeeding taxable years until the entire 
178.14  carryforward credit has been credited against the insurance 
178.15  company's liability for premium tax under this chapter if 
178.16  applicable for that taxable year. 
178.17     (d) When an insurer has offset against taxes its payment of 
178.18  an assessment of the Minnesota life and health guaranty 
178.19  association, and the association pays the insurer a refund with 
178.20  respect to the assessment under Minnesota Statutes 1992, section 
178.21  61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 
178.22  reduces the insurer's carryforward credit under paragraph (c).  
178.23  If the refund exceeds the amount of the carryforward credit, the 
178.24  excess amount must be repaid to the state by the insurers to the 
178.25  extent of the offset in the manner the commissioner requires. 
178.26     Subd. 2.  [JOINT UNDERWRITING ASSOCIATION OFFSET.] An 
178.27  assessment made pursuant to section 62I.06, subdivision 6, shall 
178.28  be deductible by the member from past or future premium taxes 
178.29  due the state. 
178.30     [EFFECTIVE DATE.] This section is effective the day 
178.31  following final enactment. 
178.32     Sec. 14.  [REVISOR'S INSTRUCTION.] 
178.33     In the next edition of Minnesota Rules, the revisor shall 
178.34  delete any references to the sections repealed in section 15, 
178.35  paragraph (a). 
178.36     Sec. 15.  [REPEALER.] 
179.1      (a) Minnesota Statutes 2002, sections 294.01; 294.02; 
179.2   294.021; 294.03; 294.06; 294.07; 294.08; 294.09; 294.10; 294.11; 
179.3   and 294.12, are repealed effective the day following final 
179.4   enactment. 
179.5      (b) Minnesota Rules, parts 8125.1000; 8125.1300, subpart 1; 
179.6   and 8125.1400, are repealed effective the day following final 
179.7   enactment. 
179.8                              ARTICLE 8 
179.9          DEPARTMENT COLLECTIONS AND COMPLIANCE INITIATIVES 
179.10     Section 1.  [270.278] [PENALTY FOR FILING CERTAIN DOCUMENTS 
179.11  AGAINST DEPARTMENT OF REVENUE EMPLOYEES.] 
179.12     Subdivision 1.  [DEFINITIONS.] (a) "Recording office" means 
179.13  a county recorder, registrar of titles, or secretary of state in 
179.14  this state or another state. 
179.15     (b) "Filing party" means the person or persons requesting 
179.16  or causing another person to request that the recording office 
179.17  accept documents or instruments for recording or filing. 
179.18     Subd. 2.  [INVALID DOCUMENTS NAMING THE COMMISSIONER OR 
179.19  DEPARTMENT OF REVENUE EMPLOYEES.] Filing a document, including a 
179.20  nonconsensual common law lien under section 514.99, that 
179.21  purports to create a claim against the commissioner of revenue 
179.22  or an employee of the department of revenue based on performance 
179.23  or nonperformance of duties by the commissioner or employee is 
179.24  invalid unless accompanied by a specific order from a court of 
179.25  competent jurisdiction authorizing the filing of the document or 
179.26  unless a specific statute authorizes the filing of the document. 
179.27     Subd. 3.  [CIVIL PENALTY.] If a filing party causes a 
179.28  document described in subdivision 2 to be recorded in a 
179.29  recording office, the commissioner may assess a penalty against 
179.30  the filing party of $1,000 per document filed, payable to the 
179.31  general fund.  An order assessing a penalty under this section 
179.32  is reviewable administratively under section 289A.65 and is 
179.33  appealable to tax court under chapter 271.  The penalty is 
179.34  collected and paid in the same manner as income tax.  The 
179.35  penalty is in addition to any other remedy available to the 
179.36  commissioner of revenue or to an employee of the department of 
180.1   revenue against whom the document has been filed.  
180.2      [EFFECTIVE DATE.] This section is effective for documents 
180.3   filed on or after July 1, 2003. 
180.4      Sec. 2.  Minnesota Statutes 2002, section 270.69, is 
180.5   amended by adding a subdivision to read: 
180.6      Subd. 16.  [ATTACHMENT TO PROCEEDS OF PROPERTY.] Any lien 
180.7   imposed under this section attaches to the proceeds of property 
180.8   with the same priority that the lien has with respect to the 
180.9   property itself.  "Proceeds of property" means proceeds from the 
180.10  sale, lease, license, exchange, or other disposition of the 
180.11  property, including insurance proceeds arising from the loss or 
180.12  destruction of the property. 
180.13     [EFFECTIVE DATE.] This section is effective for all liens, 
180.14  whether imposed prior to, on, or after the day following final 
180.15  enactment. 
180.16     Sec. 3.  Minnesota Statutes 2002, section 270.701, 
180.17  subdivision 2, is amended to read: 
180.18     Subd. 2.  [NOTICE OF SALE.] The commissioner shall as soon 
180.19  as practicable after the seizure of the property give notice of 
180.20  sale of the property to the owner, in the manner of service 
180.21  prescribed in subdivision 1.  In the case of personal property, 
180.22  the notice shall be served at least 10 days prior to the sale.  
180.23  In the case of real property, the notice shall be served at 
180.24  least four weeks prior to the sale.  The commissioner shall also 
180.25  cause public notice of each sale to be made.  In the case of 
180.26  personal property, notice shall be posted at least 10 days prior 
180.27  to the sale at the county courthouse for the county where the 
180.28  seizure is made, and in not less than two other public 
180.29  places.  For purposes of this requirement, the Internet is a 
180.30  public place for posting the information.  In the case of real 
180.31  property, six weeks' published notice shall be given prior to 
180.32  the sale, in a newspaper published or generally circulated in 
180.33  the county.  The notice of sale provided in this subdivision 
180.34  shall specify the property to be sold, and the time, place, 
180.35  manner and conditions of the sale.  Whenever levy is made 
180.36  without regard to the 30-day period provided in section 270.70, 
181.1   subdivision 2, public notice of sale of the property seized 
181.2   shall not be made within the 30-day period unless section 
181.3   270.702 (relating to sale of perishable goods) is applicable.  
181.4      [EFFECTIVE DATE.] This section is effective for notices of 
181.5   sales posted on or after the day following final enactment. 
181.6      Sec. 4.  Minnesota Statutes 2002, section 270.701, is 
181.7   amended by adding a subdivision to read: 
181.8      Subd. 7.  [SALE OF SEIZED SECURITIES.] (a) At the time of 
181.9   levy on securities, the commissioner shall provide notice to the 
181.10  taxpayer that the securities may be sold after ten days from the 
181.11  date of seizure.  
181.12     (b) If the commissioner levies upon nonexempt publicly 
181.13  traded securities and the value of the securities is less than 
181.14  or equal to the total obligation for which the levy is done, 
181.15  after ten days the person who possesses or controls the 
181.16  securities shall liquidate the securities in a commercially 
181.17  reasonable manner.  After liquidation, the person shall transfer 
181.18  the proceeds to the commissioner, less any applicable 
181.19  commissions or fees, or both, which are charged in the normal 
181.20  course of business.  
181.21     (c) If the commissioner levies upon nonexempt publicly 
181.22  traded securities and the value of the securities exceeds the 
181.23  total amount of the levy, the owner of the securities may, 
181.24  within seven days after receipt of the department's notice of 
181.25  levy given pursuant to subdivision 1, instruct the person who 
181.26  possesses or controls the securities which securities are to be 
181.27  sold to satisfy the obligation.  If the owner does not provide 
181.28  instructions for liquidation, the person who possesses or 
181.29  controls the securities shall liquidate the securities in an 
181.30  amount sufficient to pay the obligation, plus any applicable 
181.31  commissions or fees, or both, which are charged in the normal 
181.32  course of business, beginning with the nonexempt securities 
181.33  purchased most recently.  After liquidation, the person who 
181.34  possesses or controls the securities shall transfer to the 
181.35  commissioner the amount of money needed to satisfy the levy. 
181.36     [EFFECTIVE DATE.] This section is effective for sales of 
182.1   securities seized on or after the day following final enactment. 
182.2      Sec. 5.  Minnesota Statutes 2002, section 270.72, 
182.3   subdivision 2, is amended to read: 
182.4      Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
182.5   following terms have the meanings given.  
182.6      (a) "Taxes" are mean all taxes payable to the commissioner 
182.7   including penalties and interest due on the taxes. 
182.8      (b) "Delinquent taxes" do not include a tax liability if 
182.9   (i) an administrative or court action which contests the amount 
182.10  or validity of the liability has been filed or served, (ii) the 
182.11  appeal period to contest the tax liability has not expired, or 
182.12  (iii) the applicant has entered into a payment agreement and is 
182.13  current with the payments.  
182.14     (c) "Applicant" means an individual if the license is 
182.15  issued to or in the name of an individual or the corporation or 
182.16  partnership if the license is issued to or in the name of a 
182.17  corporation or partnership.  "Applicant" also means an officer 
182.18  of a corporation, a member of a partnership, or an individual 
182.19  who is liable for delinquent taxes, either for the entity for 
182.20  which the license is at issue or for another entity for which 
182.21  the liability was incurred, or personally as a licensee.  In the 
182.22  case of a license transfer, "applicant" also means both the 
182.23  transferor and the transferee of the license.  "Applicant" also 
182.24  means any holder of a license. 
182.25     (d) "License" includes means any permit, registration, 
182.26  certification, or other form of approval authorized by statute 
182.27  or rule to be issued by the state or a political subdivision of 
182.28  the state as a condition of doing business or conducting a 
182.29  trade, profession, or occupation in Minnesota, specifically 
182.30  including, but not limited to, a contract for space rental at 
182.31  the Minnesota state fair and authorization to operate 
182.32  concessions or rides at county and local fairs, festivals, or 
182.33  events. 
182.34     (e) "Licensing authority" includes the Minnesota state fair 
182.35  board and county and local boards or governing bodies. 
182.36     [EFFECTIVE DATE.] This section is effective the day 
183.1   following final enactment. 
183.2      Sec. 6.  Minnesota Statutes 2002, section 270A.03, 
183.3   subdivision 2, is amended to read: 
183.4      Subd. 2.  [CLAIMANT AGENCY.] "Claimant agency" means any 
183.5   state agency, as defined by section 14.02, subdivision 2, the 
183.6   regents of the University of Minnesota, any district court of 
183.7   the state, any county, any statutory or home rule charter city 
183.8   presenting a claim for a municipal hospital or a public library 
183.9   or a municipal ambulance service, a hospital district, a private 
183.10  nonprofit hospital that leases its building from the county in 
183.11  which it is located, any public agency responsible for child 
183.12  support enforcement, any public agency responsible for the 
183.13  collection of court-ordered restitution, and any public agency 
183.14  established by general or special law that is responsible for 
183.15  the administration of a low-income housing program, and the 
183.16  Minnesota collection enterprise as defined in section 16D.02, 
183.17  subdivision 8, for the purpose of collecting the costs imposed 
183.18  under section 16D.11. 
183.19     [EFFECTIVE DATE.] This section is effective the day 
183.20  following final enactment. 
183.21     Sec. 7.  Minnesota Statutes 2002, section 289A.31, 
183.22  subdivision 3, is amended to read: 
183.23     Subd. 3.  [TRANSFEREES AND FIDUCIARIES.] The amounts of the 
183.24  following liabilities are, except as otherwise provided in 
183.25  section 289A.38, subdivision 13, assessed, collected, and paid 
183.26  in the same manner and subject to the same provisions and 
183.27  limitations as a deficiency in a tax imposed by chapter 290, 
183.28  including any provisions of law for the collection of taxes: 
183.29     (1) the liability, at law or in equity, of a transferee of 
183.30  property of a taxpayer for tax or overpayment of a refund, 
183.31  including interest, additional amounts, and additions to the tax 
183.32  or overpayment provided by law, imposed upon the taxpayer by 
183.33  chapter 290 or provided for in chapter 290A; and 
183.34     (2) the liability of a fiduciary under subdivision 4 for 
183.35  the payment of tax from the estate of the taxpayer.  The 
183.36  liability may reflect the amount of tax shown on the return or 
184.1   any deficiency in tax.  
184.2      [EFFECTIVE DATE.] This section is effective for refunds 
184.3   paid on or after the day following final enactment. 
184.4      Sec. 8.  Minnesota Statutes 2002, section 289A.31, 
184.5   subdivision 4, is amended to read: 
184.6      Subd. 4.  [TAX AS A PERSONAL DEBT OF A FIDUCIARY.] The A 
184.7   tax imposed by chapter 290 and an overpayment of a refund 
184.8   provided for in chapter 290A, and interest and penalties, is a 
184.9   personal debt of the taxpayer from the time the liability 
184.10  arises, regardless of when the time for discharging the 
184.11  liability by payment occurs.  The debt is, in the case of the 
184.12  personal representative of the estate of a decedent and in the 
184.13  case of any fiduciary, that of the individual in the 
184.14  individual's official or fiduciary capacity only, unless the 
184.15  individual has voluntarily distributed the assets held in that 
184.16  capacity without reserving sufficient assets to pay the tax, 
184.17  interest, and penalties, in which event the individual is 
184.18  personally liable for the deficiency.  
184.19     [EFFECTIVE DATE.] This section is effective for taxes 
184.20  imposed and property tax refunds claimed on or after the day 
184.21  following final enactment. 
184.22     Sec. 9.  Minnesota Statutes 2002, section 289A.36, 
184.23  subdivision 7, is amended to read: 
184.24     Subd. 7.  [APPLICATION TO COURT FOR ENFORCEMENT OF 
184.25  SUBPOENA.] (a) Disobedience of subpoenas issued under this 
184.26  section shall be punished by the district court of the district 
184.27  in which the party served with the subpoena is located, in the 
184.28  same manner as contempt of the district court.  
184.29     (b) Disobedience of a subpoena issued under subdivision 9 
184.30  shall be punished by the district court for Ramsey county in the 
184.31  same manner as contempt of the district court.  In addition to 
184.32  contempt remedies, the court may issue any order the court deems 
184.33  reasonably necessary to enforce compliance with the subpoena. 
184.34     [EFFECTIVE DATE.] This section is effective the day 
184.35  following final enactment. 
184.36     Sec. 10.  Minnesota Statutes 2002, section 289A.36, is 
185.1   amended by adding a subdivision to read: 
185.2      Subd. 9.  [ACCESS TO RECORDS IN CONNECTION WITH EXAMINATION 
185.3   OF BUSINESSES LOCATED OUTSIDE THE STATE.] (a) In order to 
185.4   determine whether a business located outside the state of 
185.5   Minnesota is required to file a return under this chapter, the 
185.6   commissioner may examine the relevant records and files of the 
185.7   business. 
185.8      (b) To the full extent permitted by the Minnesota and 
185.9   United States constitutions, the commissioner may compel 
185.10  production of those relevant records and files by subpoena.  The 
185.11  subpoena may be served on the secretary of state along with the 
185.12  address to which service of the subpoena is to be sent and a fee 
185.13  of $50.  The secretary of state shall forward a copy of the 
185.14  subpoena to the business using the procedures for service of 
185.15  process in section 5.25, subdivision 6.  
185.16     (c) The commissioner shall pay the reasonable cost of 
185.17  producing records subject to subpoena under this subdivision if: 
185.18     (1) the subpoenaed party cannot produce the records without 
185.19  undue burden; and 
185.20     (2) the examination made pursuant to paragraph (a) shows 
185.21  that the subpoenaed party is not required to file a return under 
185.22  this chapter. 
185.23     [EFFECTIVE DATE.] This section is effective the day 
185.24  following final enactment. 
185.25     Sec. 11.  Minnesota Statutes 2002, section 289A.36, is 
185.26  amended by adding a subdivision to read: 
185.27     Subd. 10.  [PENALTY.] In addition to sanctions imposed 
185.28  under subdivision 7, a penalty of $250 per day is imposed on any 
185.29  business that is in violation of a court order to comply with a 
185.30  subpoena that is seeking information necessary for the 
185.31  commissioner to be able to determine whether the business is 
185.32  required to file a return or pay a tax.  The maximum penalty is 
185.33  $25,000.  Upon the request of the commissioner, the court shall 
185.34  determine the amount of the penalty and enter it as a judgment 
185.35  in favor of the commissioner.  The penalty is not payable until 
185.36  the judgment is entered. 
186.1      [EFFECTIVE DATE.] This section is effective for violations 
186.2   of court orders to enforce subpoenas issued on or after the day 
186.3   following final enactment. 
186.4      Sec. 12.  Minnesota Statutes 2002, section 297A.85, is 
186.5   amended to read: 
186.6      297A.85 [CANCELLATION OF PERMITS.] 
186.7      The commissioner may cancel a permit if one of the 
186.8   following conditions occurs: 
186.9      (1) the permit holder has not filed a sales or use tax 
186.10  return for at least one year; 
186.11     (2) the permit holder has not reported any sales or use tax 
186.12  liability on the permit holder's returns for at least two years; 
186.13  or 
186.14     (3) the permit holder requests cancellation of the permit; 
186.15  or 
186.16     (4) the permit is subject to cancellation pursuant to 
186.17  section 297A.86, subdivision 2, paragraph (a). 
186.18     [EFFECTIVE DATE.] This section is effective for 
186.19  cancellations of permits done on or after the day following 
186.20  final enactment. 
186.21     Sec. 13.  [REPEALER.] 
186.22     Minnesota Statutes 2002, section 270.691, subdivision 8, is 
186.23  repealed effective the day following final enactment. 
186.24                             ARTICLE 9 
186.25               CENTRAL LAKES REGION SANITARY DISTRICT 
186.26     Section 1.  [DEFINITIONS.] 
186.27     Subdivision 1.  [APPLICATION.] The terms defined in this 
186.28  section shall have the meaning given them unless otherwise 
186.29  provided or indicated by the context.  
186.30     Subd. 2.  [ACQUISITION AND BETTERMENT.] "Acquisition" and 
186.31  "betterment" shall have the meanings given them in Minnesota 
186.32  Statutes, section 475.51.  
186.33     Subd. 3.  [AGENCY.] "Agency" means the Minnesota pollution 
186.34  control agency created and established by Minnesota Statutes, 
186.35  chapter 116.  
186.36     Subd. 4.  [AGRICULTURAL PROPERTY.] "Agricultural property" 
187.1   means land as is classified agricultural land within the meaning 
187.2   of Minnesota Statutes, section 273.13, subdivision 23.  
187.3      Subd. 5.  [CURRENT COSTS OF ACQUISITION, BETTERMENT, AND 
187.4   DEBT SERVICE.] "Current costs of acquisition, betterment, and 
187.5   debt service" means interest and principal estimated to be due 
187.6   during the budget year on bonds issued to finance the 
187.7   acquisition and betterment and all other costs of acquisition 
187.8   and betterment estimated to be paid during the budget year from 
187.9   funds other than bond proceeds and federal or state grants. 
187.10     Subd. 6.  [DISTRICT DISPOSAL SYSTEM.] "District disposal 
187.11  system" means any and all of the interceptors or treatment works 
187.12  owned, constructed, or operated by the board unless designated 
187.13  by the board as local sanitary sewer facilities.  
187.14     Subd. 7.  [CENTRAL LAKES REGION SANITARY DISTRICT AND 
187.15  DISTRICT.] "Central Lakes Region Sanitary District" and 
187.16  "district" mean the area over which the sanitary sewer board has 
187.17  jurisdiction, including those parts of the Douglas county 
187.18  townships of Carlos, Brandon, La Grand, Leaf Valley, Miltona, 
187.19  and Moe, as more particularly described by metes and bounds in 
187.20  the comprehensive plan adopted under section 4.  
187.21     Subd. 8.  [INTERCEPTOR.] "Interceptor" means any sewer and 
187.22  necessary appurtenances to it, including but not limited to, 
187.23  mains, pumping stations, and sewage flow regulating and 
187.24  measuring stations, that is designed for or used to conduct 
187.25  sewage originating in more than one local government unit, or 
187.26  that is designed or used to conduct all or substantially all the 
187.27  sewage originating in a single local government unit from a 
187.28  point of collection in that unit to an interceptor or treatment 
187.29  works outside that unit, or that is determined by the board to 
187.30  be a major collector of sewage used or designed to serve a 
187.31  substantial area in the district.  
187.32     Subd. 9.  [LOCAL GOVERNMENT UNIT OR GOVERNMENT 
187.33  UNIT.] "Local government unit" or "government unit" means any 
187.34  municipal or public corporation or governmental or political 
187.35  subdivision or agency located in whole or in part in the 
187.36  district, authorized by law to provide for the collection and 
188.1   disposal of sewage. 
188.2      Subd. 10.  [LOCAL SANITARY SEWER FACILITIES.] "Local 
188.3   sanitary sewer facilities" means all or any part of any disposal 
188.4   system in the district other than the district disposal system.  
188.5      Subd. 11.  [MUNICIPALITY.] "Municipality" means any 
188.6   statutory or home rule charter city or town located in whole or 
188.7   in part in the district.  
188.8      Subd. 12.  [PERSON.] "Person" means any individual, 
188.9   partnership, corporation, limited liability company, 
188.10  cooperative, or other organization or entity, public or private. 
188.11     Subd. 13.  [POLLUTION AND SEWER SYSTEM.] "Pollution" and 
188.12  "sewer system" have the meanings given them in Minnesota 
188.13  Statutes, section 115.01.  
188.14     Subd. 14.  [SANITARY SEWER BOARD OR BOARD.] "Sanitary sewer 
188.15  board" or "board" means the sanitary sewer board established for 
188.16  the Central Lakes Region Sanitary District as provided in 
188.17  section 2.  
188.18     Subd. 15.  [SEWAGE.] "Sewage" means all liquid or 
188.19  water-carried waste products from whatever sources derived, 
188.20  together with the groundwater infiltration and surface water 
188.21  that may be present.  
188.22     Subd. 16.  [TOTAL COSTS OF ACQUISITION AND BETTERMENT AND 
188.23  COSTS OF ACQUISITION AND BETTERMENT.] "Total costs of 
188.24  acquisition and betterment" and "costs of acquisition and 
188.25  betterment" mean all acquisition and betterment expenses that 
188.26  are permitted to be financed out of bond proceeds issued in 
188.27  accordance with section 12, subdivision 4, whether or not the 
188.28  expenses are in fact financed out of the bond proceeds.  
188.29     Subd. 17.  [TREATMENT WORKS AND DISPOSAL 
188.30  SYSTEM.] "Treatment works" and "disposal system" have the 
188.31  meanings given them in Minnesota Statutes, section 115.01. 
188.32     Sec. 2.  [SANITARY SEWER BOARD.] 
188.33     Subdivision 1.  [ESTABLISHMENT.] A sanitary sewer board 
188.34  with jurisdiction in the Central Lakes Region Sanitary District 
188.35  is established as a public corporation and political subdivision 
188.36  of the state with perpetual succession and all the rights, 
189.1   powers, privileges, immunities, and duties that may be validly 
189.2   granted to or imposed upon a municipal corporation, as provided 
189.3   in this article.  
189.4      Subd. 2.  [MEMBERS AND SELECTION.] The number of board 
189.5   members and method by which they are selected is as follows:  
189.6   The governing body of any municipality located in whole or part 
189.7   within the district must each separately select one member.  
189.8   Upon the board's ordering of a project to construct a sanitary 
189.9   sewer, the governing body of any municipality must appoint one 
189.10  additional member for each full 800 special assessments included 
189.11  in the ordered project to be levied against property located in 
189.12  the municipality.  The term of each member is subject to the 
189.13  approval of the voting members of the city council or town board.
189.14     Subd. 3.  [TIME LIMIT; ALTERNATIVE APPOINTMENT.] The 
189.15  initial board members must be selected as provided in 
189.16  subdivision 2 within 60 days after this article is effective.  A 
189.17  successor must be selected at any time within 60 days before the 
189.18  expiration of the predecessor's term in the same manner as the 
189.19  predecessor was selected.  Any vacancy on the board must be 
189.20  filled within 60 days after it occurs.  If a selection is not 
189.21  made as provided within the time prescribed, the chief judge of 
189.22  the seventh judicial district of the Minnesota district court, 
189.23  on application by any interested person, shall appoint an 
189.24  eligible person to the board. 
189.25     Subd. 4.  [VACANCIES.] If the office of any board member 
189.26  becomes vacant, the vacancy shall be filled for the unexpired 
189.27  term in the manner as provided for selection of the member who 
189.28  vacated the office.  The office shall be deemed vacant under the 
189.29  conditions specified in Minnesota Statutes, section 351.02.  
189.30     Subd. 5.  [TERMS OF OFFICE.] The terms of all board members 
189.31  shall be for one, two, three, or four calendar years to be 
189.32  determined in accordance with subdivision 2 by the governing 
189.33  body selecting such member.  Terms shall expire on January 1 of 
189.34  a calendar year, except that each member shall serve until a 
189.35  successor has been duly selected and qualified.  
189.36     Subd. 6.  [REMOVAL.] A board member may be removed by the 
190.1   unanimous vote of the appointing governing body with or without 
190.2   cause.  
190.3      Subd. 7.  [QUALIFICATIONS.] Each board member may, but need 
190.4   not be a resident of the district and may, but need not be an 
190.5   elected public official.  
190.6      Subd. 8.  [CERTIFICATES OF SELECTION; OATH OF OFFICE.] A 
190.7   certificate of selection to a seat of every board member, 
190.8   stating the seat's term, must be made by the respective 
190.9   municipal clerk.  The certificate, with the approval attached by 
190.10  other authority, if required, must be filed with the secretary 
190.11  of state.  A copy must be furnished to the board member and the 
190.12  secretary of the board.  Each member must qualify by taking and 
190.13  subscribing to the oath of office prescribed by the Minnesota 
190.14  Constitution, article V, section 6.  The oath, duly certified by 
190.15  the official administering the same, must be filed with the 
190.16  secretary of state and the secretary of the board. 
190.17     Subd. 9.  [COMPENSATION OF BOARD MEMBERS.] Each board 
190.18  member may be paid a per diem compensation to attend meetings 
190.19  and for other services in an amount as may be specifically 
190.20  authorized by the board from time to time.  Per diem 
190.21  compensation must not exceed $4,000 for any member in any one 
190.22  year.  All members of the board may be reimbursed for all 
190.23  reasonable expenses incurred in the performance of their duties 
190.24  as determined by the board.  
190.25     Sec. 3.  [GENERAL PROVISION FOR ORGANIZATION AND OPERATION 
190.26  OF BOARD.] 
190.27     Subdivision 1.  [OFFICERS MEETINGS; SEAL.] A majority of 
190.28  the members is a quorum at all meetings of the board, but a 
190.29  lesser number may meet and adjourn from time to time and compel 
190.30  the attendance of absent members.  The board must meet regularly 
190.31  at the time and place as the board by resolution designates.  
190.32  Special meetings may be held at any time upon call of the chair 
190.33  or any two members, upon written notice sent by mail to each 
190.34  member at least three days before the meeting, or upon the 
190.35  notice as the board by resolution may provide, or without notice 
190.36  if each member is present or files with the secretary a written 
191.1   consent to the meeting either before or after the meeting.  
191.2   Except as otherwise provided in this article, any action within 
191.3   the authority of the board may be taken by the affirmative vote 
191.4   of a majority of the board at a regular or adjourned regular 
191.5   meeting or at a duly held special meeting, but in any case only 
191.6   if a quorum is present.  All meetings of the board must be open 
191.7   to the public as provided in Minnesota Statutes, chapter 13D.  
191.8      Subd. 2.  [CHAIR.] The board must elect a chair from its 
191.9   membership.  The term of the chair expires on January 1 of each 
191.10  year.  The chair presides at all meetings of the board, if 
191.11  present, and must perform all other duties and functions usually 
191.12  incumbent upon the officer, and all administrative functions 
191.13  assigned to the chair by the board.  The board must elect a 
191.14  vice-chair from its membership to act for the chair during a 
191.15  temporary absence or disability.  
191.16     Subd. 3.  [SECRETARY AND TREASURER.] The board must select 
191.17  one or more persons who may, but need not be a member of the 
191.18  board, to act as its secretary and treasurer.  The secretary and 
191.19  treasurer hold office at the pleasure of the board, subject to 
191.20  the terms of any contract of employment that the board may enter 
191.21  into with the secretary or treasurer.  The secretary must record 
191.22  the minutes of all meetings of the board, and is custodian of 
191.23  all books and records of the board except those the board 
191.24  entrusts to the custody of a designated employee.  The board may 
191.25  appoint a deputy to perform any and all functions of either the 
191.26  secretary or the treasurer.  A secretary or treasurer or a 
191.27  deputy of either who is not a member of the board shall not have 
191.28  any right to vote.  
191.29     Subd. 4.  [GENERAL MANAGER.] The board may appoint a 
191.30  general manager who shall be selected solely upon the basis of 
191.31  training, experience, and other qualifications.  The general 
191.32  manager serves at the pleasure of the board and at a 
191.33  compensation to be determined by the board.  The general manager 
191.34  need not be a resident of the district and may also be selected 
191.35  by the board to serve as either secretary or treasurer, or both, 
191.36  of the board.  The general manager must attend all meetings of 
192.1   the board but must not vote.  The general manager must:  
192.2      (1) see that all resolutions, rules, regulations, or orders 
192.3   of the board are enforced; 
192.4      (2) appoint and remove, upon the basis of merit and 
192.5   fitness, all subordinate officers and regular employees of the 
192.6   board except the secretary and the treasurer and their deputies; 
192.7      (3) present to the board plans, studies, and other reports 
192.8   prepared for board purposes and recommend to the board for 
192.9   adoption such measures as the general manager considers 
192.10  necessary to enforce or carry out the powers and duties of the 
192.11  board, or for the efficient administration of the affairs of the 
192.12  board; 
192.13     (4) keep the board fully advised as to its financial 
192.14  condition, and prepare and submit to the board, and to the 
192.15  governing bodies of the local government units, the board's 
192.16  annual budget and other financial information the board 
192.17  requests; 
192.18     (5) recommend to the board for adoption rules recommended 
192.19  as necessary for the efficient operation of a district disposal 
192.20  system and all local sanitary sewer facilities over which the 
192.21  board may assume responsibility as provided in section 17; and 
192.22     (6) perform other duties as may be prescribed by the board. 
192.23     Subd. 5.  [PUBLIC EMPLOYEES.] The general manager and all 
192.24  persons employed by the general manager and public employees, 
192.25  and have all the rights and duties conferred on public employees 
192.26  under the Minnesota Public Employment Labor Relations Act.  The 
192.27  compensation and conditions of employment of the employees is 
192.28  not governed by any rule applicable to state employees in the 
192.29  classified service or by Minnesota Statutes, chapter 15A, except 
192.30  as specifically authorized by law. 
192.31     Subd. 6.  [PROCEDURES.] The board must adopt resolutions or 
192.32  bylaws establishing procedures for board action, personnel 
192.33  administration, record keeping, investment policy, approving 
192.34  claims, authorizing or making disbursements, safekeeping funds, 
192.35  and audit of all financial operations of the board.  
192.36     Subd. 7.  [SURETY BONDS AND INSURANCE.] The board may 
193.1   procure surety bonds for its officers and employees in such 
193.2   amounts as are considered necessary to assure proper performance 
193.3   of their duties and proper accounting for funds in their custody.
193.4   It may buy insurance against risks to property and liability of 
193.5   the board and its officers, agents, and employees for personal 
193.6   injuries or death and property damage and destruction in the 
193.7   amounts as it considers necessary or desirable, with the force 
193.8   and effect stated in Minnesota Statutes, chapter 466.  
193.9      Sec. 4.  [COMPREHENSIVE PLAN.] 
193.10     Subdivision 1.  [BOARD PLAN AND PROGRAM.] The board shall 
193.11  adopt a comprehensive plan for the collection, treatment, and 
193.12  disposal of sewage in the district for designated periods that 
193.13  the board considers proper and reasonable.  The board must 
193.14  prepare and adopt subsequent comprehensive plans for the 
193.15  collection, treatment, and disposal of sewage in the district 
193.16  for each succeeding designated period as the board considers 
193.17  proper and reasonable.  The plan must take into account the 
193.18  preservation and best and most economic use of water and other 
193.19  natural resources in the area; the preservation, use, and 
193.20  potential for use of lands adjoining waters of the state to be 
193.21  used for the disposal of sewage; and the impact such a disposal 
193.22  system will have on present and future land use in the affected 
193.23  area.  The plans shall include the following: 
193.24     (1) the exact legal description of the boundaries of the 
193.25  district; 
193.26     (2) the general location of needed interceptors and 
193.27  treatment works; 
193.28     (3) a description of the area that is to be served by the 
193.29  various interceptors and treatment works; 
193.30     (4) a long-range capital improvements program; and 
193.31     (5) such other details as the board deems appropriate. 
193.32  In developing the plans, the board shall consult with persons 
193.33  designated by the governing bodies of any municipal or public 
193.34  corporation or governmental or political subdivision or agency 
193.35  within or without the district to represent such entities and 
193.36  shall consider the data, resources, and input offered to the 
194.1   board by such entities and any planning agency acting on behalf 
194.2   of one or more such entities.  Each plan, when adopted, must be 
194.3   followed in the district and may be revised as often as the 
194.4   board considers necessary.  
194.5      Subd. 2.  [REPORT TO DOUGLAS COUNTY.] Upon adoption of any 
194.6   comprehensive plan that establishes or reestablishes the 
194.7   boundaries of the district, the board must supply the 
194.8   appropriate Douglas county offices with the boundaries of the 
194.9   district.  
194.10     Subd. 3.  [COMPREHENSIVE PLANS; HEARING.] Before adopting 
194.11  any later comprehensive plan, the board must hold a public 
194.12  hearing on the proposed plan at the time and place in the 
194.13  district it determines.  The hearing may be continued from time 
194.14  to time.  Not less than 45 days before the hearing, the board 
194.15  must publish notice of it in a newspaper or newspapers having 
194.16  general circulation in the district stating the date, time, and 
194.17  place of the hearing, and the place where the proposed plan may 
194.18  be examined by any interested person.  At the hearing, all 
194.19  interested persons must be permitted to present their views on 
194.20  the plan.  
194.21     Subd. 4.  [MUNICIPAL PLANS AND PROGRAMS; COORDINATION WITH 
194.22  BOARD'S RESPONSIBILITIES.] Before undertaking the construction 
194.23  of new sewers or other disposal facilities or the substantial 
194.24  alteration or improvement of any existing sewers or other 
194.25  disposal facilities, each local government unit may, and must if 
194.26  the construction or alteration of any sewage disposal facilities 
194.27  is contemplated by the government unit, adopt a comprehensive 
194.28  plan and program for the collection, treatment, and disposal of 
194.29  sewage for which the local government unit is responsible, 
194.30  coordinated with the board's comprehensive plan, and may revise 
194.31  the plan as often as deemed necessary.  Each local plan or 
194.32  revision must be submitted to the board for review and is 
194.33  subject to the approval of the board as to those features of the 
194.34  plan affecting the board's responsibilities as determined by the 
194.35  board.  Any features disapproved by the board must be modified 
194.36  in accordance with the board's recommendations.  No construction 
195.1   project involving those features may be undertaken by the local 
195.2   government unit unless its governing body first finds the 
195.3   project to be in accordance with the government unit's 
195.4   comprehensive plan and program as approved by the board.  Before 
195.5   approval by the board of the comprehensive plan and program of 
195.6   any local government unit in the district, no construction 
195.7   project may be undertaken by the government unit unless approval 
195.8   of the project is first gotten from the board as to those 
195.9   features of the project affecting the board's responsibilities 
195.10  as determined by the board.  
195.11     Sec. 5.  [SEWER SERVICE FUNCTION.] 
195.12     Subdivision 1.  [DUTY OF BOARD; ACQUISITION OF EXISTING 
195.13  FACILITIES; NEW FACILITIES.] At any time after the board has 
195.14  become organized, it must assume ownership of all existing 
195.15  interceptors and treatment works that are needed to implement 
195.16  the board's comprehensive plan for the collection, treatment, 
195.17  and disposal of sewage in the district, in the manner and 
195.18  subject to the conditions prescribed in subdivision 2, and must 
195.19  design, acquire, construct, better, equip, operate, and maintain 
195.20  all additional interceptors and treatment works that will be 
195.21  needed for this purpose.  The board must assume ownership of all 
195.22  treatment works owned by a local government unit if any part of 
195.23  those treatment works are so needed. 
195.24     Subd. 2.  [METHOD OF ACQUISITION; EXISTING DEBT.] The board 
195.25  may require any local government unit to transfer to the board 
195.26  all of its right, title, and interest in any interceptors or 
195.27  treatment works and all necessary appurtenances to them owned by 
195.28  the local government unit that will be needed for the purpose 
195.29  stated in subdivision 1.  Appropriate instruments of conveyance 
195.30  for all the property must be executed and delivered to the board 
195.31  by the proper officers of each local government unit concerned.  
195.32  The board, upon assuming ownership of any of the interceptors or 
195.33  treatment works, is obligated to pay to the local government 
195.34  unit amounts sufficient to pay, when due, all remaining 
195.35  principal of and interest on bonds issued by the local 
195.36  government unit for the acquisition or betterment of the 
196.1   interceptors or treatment works.  The board must also assume the 
196.2   same obligation with respect to any other existing disposal 
196.3   system owned by a local government unit that the board 
196.4   determines to have been replaced or rendered useless by the 
196.5   district disposal system.  The amounts to be paid under this 
196.6   subdivision may be offset against any amount to be paid to the 
196.7   board by the local government unit as provided in section 8.  
196.8   The board is not obligated to pay the local government unit 
196.9   anything in addition to the assumption of debt provided for in 
196.10  this subdivision.  
196.11     Subd. 3.  [EXISTING JOINT POWERS BOARD.] Effective December 
196.12  31, 2004, or an earlier date as determined by the board, the 
196.13  corporate existence of the joint powers board created by 
196.14  agreement among local government units under Minnesota Statutes, 
196.15  section 471.59, to provide the financing, acquisition, 
196.16  construction, improvement, extension, operation, and maintenance 
196.17  of facilities for the collection, treatment, and disposal of 
196.18  sewage is terminated.  All persons regularly employed by the 
196.19  joint powers board on that date become employees of the board, 
196.20  and may at their option become members of the retirement system 
196.21  applicable to persons employed directly by the board or may 
196.22  continue as members of a public retirement association under any 
196.23  other law, to which they belonged before that date, and retain 
196.24  all pension rights that they may have the other law and all 
196.25  other rights to which they are entitled by contract or law.  The 
196.26  board must make the employer's contributions to pension funds of 
196.27  its employees.  The employees must perform duties as may be 
196.28  prescribed by the board.  On December 31, 2004, or the earlier 
196.29  date, all funds of the joint powers board and all later 
196.30  collections of taxes, special assessments, or service charges, 
196.31  or any other sums due the joint powers board, or levied or 
196.32  imposed by or for the joint powers board, must be transferred to 
196.33  or made payable to the sanitary sewer board and the county 
196.34  auditor must remit the sums to the board.  The local government 
196.35  units otherwise entitled to the cash, taxes, assessments, or 
196.36  service charges must be credited with the amounts, and the 
197.1   credits must be offset against any amounts to be paid by them to 
197.2   the board as provided in section 8.  On December 31, 2004, or 
197.3   the earlier chosen date, the board shall succeed to and become 
197.4   vested with all right, title, and interest in and to any 
197.5   property, real or personal, owned or operated by the joint 
197.6   powers board.  Before that date, the proper officers of the 
197.7   joint powers board must execute and deliver to the sanitary 
197.8   sewer board all deeds, conveyances, bills of sale, and other 
197.9   documents or instruments required to vest in the board good and 
197.10  marketable title to all the real or personal property, but this 
197.11  article operates as the transfer and conveyance to the board of 
197.12  the real or personal property, if not transferred, as may be 
197.13  required under the law or under the circumstances.  On December 
197.14  31, 2004, or the earlier chosen date, the board is obligated to 
197.15  pay or assume all outstanding bonds or other debt and all 
197.16  contracts or obligations incurred by the joint powers board, and 
197.17  all bonds, obligations, or debts of the joint powers board 
197.18  outstanding on the date this article is effective, are validated.
197.19     Subd. 4.  [CONTRACTS BETWEEN LOCAL GOVERNMENT UNITS.] The 
197.20  board may terminate, upon 60 days' mailed notice to the 
197.21  contracting parties, any existing contract between or among 
197.22  local government units requiring payments by a local government 
197.23  unit to any other local government unit for the use of a 
197.24  disposal system, or as reimbursement of capital costs of a 
197.25  disposal system, all or part of which are needed to implement 
197.26  the board's comprehensive plan.  All contracts between or among 
197.27  local government units for use of a disposal system entered into 
197.28  after the date on which this article becomes effective must be 
197.29  submitted to the board for approval as to those features 
197.30  affecting the board's responsibilities as determined by the 
197.31  board and are not effective until the approval is given.  
197.32     Sec. 6.  [SEWAGE COLLECTION AND DISPOSAL; POWERS.] 
197.33     Subdivision 1.  [POWERS.] In addition to all other powers 
197.34  conferred upon the board in this article, the board has the 
197.35  powers specified in this section. 
197.36     Subd. 2.  [DISCHARGE OF TREATED SEWAGE.] The board may 
198.1   discharge the effluent from any treatment works operated by it 
198.2   into any waters of the state, subject to approval of the agency 
198.3   if required and in accordance with any effluent or water quality 
198.4   standards lawfully adopted by the agency, any interstate agency, 
198.5   or any federal agency having jurisdiction.  
198.6      Subd. 3.  [USE OF DISTRICT SYSTEM.] The board may require 
198.7   any person or local government unit to provide for the discharge 
198.8   of any sewage, directly or indirectly, into the district 
198.9   disposal system, or to connect any disposal system or a part of 
198.10  it with the district disposal system wherever reasonable 
198.11  opportunity is provided; may regulate the manner in which the 
198.12  connections are made; may require any person or local government 
198.13  unit discharging sewage into the disposal system to provide 
198.14  preliminary treatment for it; may prohibit the discharge into 
198.15  the district disposal system of any substance it determines will 
198.16  or may be harmful to the system or any persons operating it; may 
198.17  prohibit any extraneous flow into the system; and may require 
198.18  any local government unit to discontinue the acquisition, 
198.19  betterment, or operation of any facility for the unit's disposal 
198.20  system wherever and so far as adequate service is or will be 
198.21  provided by the district disposal system.  
198.22     Sec. 7.  [BUDGET.] 
198.23     Except as otherwise specifically provided in this article, 
198.24  the board is subject to Minnesota Statutes, section 275.065.  
198.25  The board shall prepare and adopt, on or before September 15 of 
198.26  each year, a budget showing for the following calendar year or 
198.27  other fiscal year determined by the board, sometimes referred to 
198.28  in this article as the budget year, estimated receipts of money 
198.29  from all sources, including but not limited to, payments by each 
198.30  local government unit, federal or state grants, taxes on 
198.31  property, and funds on hand at the beginning of the year, and 
198.32  estimated expenditures for:  
198.33     (1) costs of operation, administration, and maintenance of 
198.34  the district disposal system; 
198.35     (2) cost acquisition and betterment of the district 
198.36  disposal system; and 
199.1      (3) debt service, including principal and interest, on 
199.2   general obligation bonds and certificates issued under section 
199.3   12, obligations and debts assumed under section 5, subdivisions 
199.4   2 and 3, and any money judgments entered by a court of competent 
199.5   jurisdiction.  Expenditures within these general categories, and 
199.6   others that the board may from time to time determine, must be 
199.7   itemized in the detail the board prescribes.  The board and its 
199.8   officers, agents, and employees must not spend money for any 
199.9   purpose other than debt service without having set forth the 
199.10  expense in the budget, nor may they spend in excess of the 
199.11  amount in the budget, and an excess expenditure or one for an 
199.12  unauthorized purpose is enforceable except as the obligation of 
199.13  the person incurring it; but the board may amend the budget at 
199.14  any time by transferring from one budgetary purpose to another 
199.15  any sums, except money for debt service and bond proceeds, or by 
199.16  increasing expenditures in any amount by which cash receipts 
199.17  during the budget year actually exceed the total amounts 
199.18  designated in the original budget.  The creation of any 
199.19  obligation pursuant to section 12 or the receipts of any federal 
199.20  or state grant is a sufficient budget designation of the 
199.21  proceeds for the purpose for which it is authorized, and of the 
199.22  tax or other revenue pledged to pay the obligation and interest 
199.23  on it, whether or not specifically included in any annual budget.
199.24     Sec. 8.  [ALLOCATION OF COSTS.] 
199.25     Subdivision 1.  [DEFINITION OF CURRENT COSTS.] The 
199.26  estimated cost of administration, operation, maintenance, and 
199.27  debt service of the district disposal system to be paid by the 
199.28  board in each fiscal year and the estimated costs of acquisition 
199.29  and betterment of the system that are to be paid during the year 
199.30  from funds other than state or federal grants and bond proceeds 
199.31  and all other previously unallocated payments made by the board 
199.32  under this article in the fiscal year are referred to as current 
199.33  costs.  
199.34     Subd. 2.  [COLLECTION OF CURRENT COSTS.] Current costs 
199.35  shall be collected as described in paragraphs (a) and (b).  
199.36     (a) Current costs may be allocated to local government 
200.1   units in the district on an equitable basis as the board may 
200.2   from time to time determine by resolution to be fair and 
200.3   reasonable and in the best interests of the district.  In making 
200.4   the allocation, the board may provide for the deferment of 
200.5   payment of all or part of current costs, the reallocation of 
200.6   deferred costs, and the reimbursement of reallocated deferred 
200.7   costs on an equitable basis as the board may from time to time 
200.8   determine by resolution to be fair and reasonable and in the 
200.9   best interests of the district.  The adoption or revision of a 
200.10  method of allocation, deferment, reallocation, or reimbursement 
200.11  used by the board shall be made by the affirmative vote of at 
200.12  least two-thirds of the members of the board.  
200.13     (b) Upon approval of at least two-thirds of the members of 
200.14  the board, the board may provide for direct collection of 
200.15  current costs by monthly or other periodic billing of sewer 
200.16  users.  
200.17     Sec. 9.  [GOVERNMENT UNITS; PAYMENTS TO BOARD.] 
200.18     Subdivision 1.  [OBLIGATIONS OF GOVERNMENT UNITS TO THE 
200.19  BOARD.] Each government unit must pay to the board all sums 
200.20  charged to it as provided in section 8, at the times and in the 
200.21  manner determined by the board.  The governing body of each 
200.22  government unit must take all action necessary to provide the 
200.23  funds required for the payments and to make the payments when 
200.24  due.  
200.25     Subd. 2.  [AMOUNTS DUE BOARD; WHEN PAYABLE.] Charges 
200.26  payable to the board by local government units may be made 
200.27  payable at the times during each year as the board determines, 
200.28  after it has taken into account the dates on which taxes, 
200.29  assessments, revenue collections, and other funds become 
200.30  available to the government unit required to pay such charges.  
200.31     Subd. 3.  [GENERAL POWERS OF GOVERNMENT UNITS; LOCAL TAX 
200.32  LEVIES.] To accomplish any duty imposed on it by the board, the 
200.33  governing body of every government unit may, in addition to the 
200.34  powers granted in this article and in any other law or charter, 
200.35  exercise the powers granted any municipality by Minnesota 
200.36  Statutes, chapters 117, 412, 429, and 475, and sections 115.46, 
201.1   444.075, and 471.59, with respect to the area of the government 
201.2   unit located in the district.  In addition, the governing body 
201.3   of every government unit located in whole or in part within the 
201.4   district may levy taxes upon all taxable property in that part 
201.5   of the government unit located in this district for all or a 
201.6   part of the amount payable to the board.  If the levy is for 
201.7   only part of the amount payable to the board, the governing body 
201.8   of the government unit may levy additional taxes on the entire 
201.9   net tax capacity of all taxable property of the government unit 
201.10  for all or a part of the balance remaining payable.  The taxes 
201.11  levied under this subdivision must be assessed and extended as a 
201.12  tax upon the taxable property by the county auditor for the next 
201.13  calendar year, free from any limit of rate or amount imposed by 
201.14  law or charter.  The tax must be collected and remitted in the 
201.15  same manner as other general taxes of the government unit. 
201.16     Subd. 4.  [ALTERNATE LEVY.] Instead of levying taxes on all 
201.17  taxable property under subdivision 3, the governing body of the 
201.18  government unit may elect to levy taxes upon the net tax 
201.19  capacity of all taxable property, except agricultural property, 
201.20  and upon only 25 percent of the net tax capacity of all 
201.21  agricultural property, in that part of the government unit 
201.22  located in the district for all or a part of the amount payable 
201.23  to the board.  If the levy is for only part of the amount 
201.24  payable to the board, the governing body may levy additional 
201.25  taxes on the entire net tax capacity of all the property, 
201.26  including agricultural property, for all or a part of the 
201.27  balance.  The taxes must be assessed and extended as a tax upon 
201.28  the taxable property by the county auditor for the next calendar 
201.29  year, free from any limit of rate or amount imposed by law or 
201.30  charter, and must be collected and remitted in the same manner 
201.31  as other general taxes of the government unit.  In computing the 
201.32  tax capacity under this subdivision, the county auditor must 
201.33  include only 25 percent of the net tax capacity of all taxable 
201.34  agricultural property and 100 percent of the net tax capacity of 
201.35  all other taxable property in that part of the government unit 
201.36  located within the district and, in spreading the levy, the 
202.1   auditor must apply the tax rate upon the same percentages of 
202.2   agricultural and nonagricultural taxable property.  If the 
202.3   government unit elects to levy taxes under this subdivision and 
202.4   any of the taxable agricultural property is reclassified so as 
202.5   to no longer qualify as agricultural property, it is subject to 
202.6   additional taxes.  The additional taxes must be in an amount 
202.7   which, together with any additional taxes previously levied and 
202.8   the estimated collection of additional taxes subsequently levied 
202.9   on any other reclassified property, is determined by the 
202.10  governing body of the government unit to be at least sufficient 
202.11  to reimburse each other government unit for any excess current 
202.12  costs reallocated to it as a result of the board deferring any 
202.13  current cost under section 8 on account of the difference 
202.14  between the amount of the current costs initially allocated to 
202.15  each government unit based on the total net tax capacity of all 
202.16  taxable property in the district and the amount of the current 
202.17  costs reallocated to each government unit based on 25 percent of 
202.18  the net tax capacity of agricultural property and 100 percent of 
202.19  the net tax capacity of all other taxable property in the 
202.20  district.  Any reimbursement must be made on terms which the 
202.21  board determines to be just and reasonable.  These additional 
202.22  taxes may be levied in any greater amount as the governing body 
202.23  of the government unit determines to be appropriate, but the 
202.24  total amount of the additional taxes must not exceed the 
202.25  difference between: 
202.26     (1) the total amount of taxes that would have been levied 
202.27  upon the reclassified property to help pay current costs charged 
202.28  in each year to the government unit by the board if that part of 
202.29  the costs, if any, initially allocated by the board solely on 
202.30  the basis of 100 percent of the net tax capacity of all taxable 
202.31  property in the district and then reallocated on the basis of 
202.32  inclusion of only 25 percent of the net tax capacity of 
202.33  agricultural property in the district was not reallocated and if 
202.34  the amount of taxes levied by the government unit each year 
202.35  under this subdivision to pay current costs had been based on 
202.36  the initial allocation and had been imposed upon 100 percent of 
203.1   the net tax capacity of all taxable property, including 
203.2   agricultural property, in that part of the government unit 
203.3   located in the district; and 
203.4      (2) the amount of taxes levied each year under this 
203.5   subdivision upon reclassified property, plus interest on the 
203.6   cumulative amount of the difference accruing each year at the 
203.7   approximate average annual rate borne by bonds issued by the 
203.8   board and outstanding at the beginning of the year or, if no 
203.9   bonds are then outstanding, at a rate of interest which may be 
203.10  determined by the board, but not exceeding the maximum rate of 
203.11  interest that may then be paid on bonds issued by the board.  
203.12  The additional taxes are a lien upon the reclassified property 
203.13  assessed in the same manner and for the same duration as all 
203.14  other ad valorem taxes levied upon the property.  The additional 
203.15  taxes must be extended against the reclassified property on the 
203.16  tax list for the current year and must be collected and remitted 
203.17  in the same manner as other general taxes of the government 
203.18  unit.  No penalties or additional interest may be levied on the 
203.19  additional taxes if timely paid. 
203.20     Subd. 5.  [DEBT LIMIT.] Any ad valorem taxes levied under 
203.21  subdivision 3, by the governing body of a government unit to pay 
203.22  any sums charged to it by the board pursuant to this article are 
203.23  not subject to, or counted toward, any limit imposed by law on 
203.24  the levy of taxes upon taxable property within any governmental 
203.25  unit. 
203.26     Subd. 6.  [DEFICIENCY TAX LEVIES.] If the local government 
203.27  unit fails to make a payment to the board when due, the board 
203.28  may certify to the Douglas county auditor the amount required 
203.29  for payment, with interest at not more than the maximum rate per 
203.30  year authorized at that time on assessments under Minnesota 
203.31  Statutes, section 429.061, subdivision 2.  The auditor must levy 
203.32  and extend the amount as a tax upon all taxable property in that 
203.33  part of the government unit located in the district, for the 
203.34  next calendar year, free from any limits imposed by law or 
203.35  charter.  The tax must be collected in the same manner as other 
203.36  general taxes of the government unit, and the proceeds, when 
204.1   collected, shall be paid by the county treasurer to the 
204.2   treasurer of the board and credited to the government unit for 
204.3   which the tax was levied. 
204.4      Sec. 10.  [PUBLIC HEARING AND SPECIAL ASSESSMENTS.] 
204.5      Subdivision 1.  [PUBLIC HEARING REQUIREMENT ON SPECIFIC 
204.6   PROJECT.] Before the board orders any project involving the 
204.7   acquisition or betterment of any interceptor or treatment works, 
204.8   all or a part of the cost of which will be allocated to local 
204.9   government units under section 8 as current costs, the board 
204.10  must hold a public hearing on the proposed project following two 
204.11  publications in a newspaper or newspapers having general 
204.12  circulation in the district, stating the time and place of the 
204.13  hearing, the general nature and location of the project, the 
204.14  estimated total cost of acquisition and betterment, that portion 
204.15  of costs estimated to be paid out of federal and state grants, 
204.16  and that portion of costs estimated to be allocated to each 
204.17  local government unit affected.  The two publications must be a 
204.18  week apart and the hearing must be at least three days after the 
204.19  last publication.  Not less than 45 days before the hearing, 
204.20  notice must also be mailed to each clerk of all local government 
204.21  units in the district, but failure to give mailed notice of any 
204.22  defects in the notice does not invalidate the proceedings.  The 
204.23  project may include all or part of one or more interceptors or 
204.24  treatment works.  A hearing is not required with respect to a 
204.25  project, no part of the costs of which are to be allocated to 
204.26  local government units as the current cost of acquisition, 
204.27  betterment, and debt service.  
204.28     Subd. 2.  [NOTICE TO BENEFITED PROPERTY OWNERS.] If the 
204.29  governing body of a local government unit in the district 
204.30  proposes to assess against benefited property within units, all 
204.31  or any part of the allocable costs of the project as provided in 
204.32  subdivision 5, the governing body must, not less than ten days 
204.33  before the hearing provided for in subdivision 1 mail a notice 
204.34  of the hearing to the owner of each parcel within the area 
204.35  proposed to be specially assessed and must also give one week's 
204.36  published notice of the hearing.  The notice of hearing must 
205.1   contain the same information provided in the notice published by 
205.2   the board under subdivision 1, and in addition, a description of 
205.3   the area proposed to be assessed by the local government unit.  
205.4   To give mailed notice, owners must be those shown to be on the 
205.5   records of the county auditor or, in a county where tax 
205.6   statements are mailed by the county treasurer, on the records of 
205.7   the county treasurer; but other appropriate records may be used 
205.8   for this purpose.  However, for properties that are tax exempt 
205.9   or subject to taxation on a gross earnings basis and are not 
205.10  listed on the records of the county auditor or the county 
205.11  treasurer, the owners may be ascertained by any practicable 
205.12  means and mailed notice must be given to them.  Failure to give 
205.13  mailed notice or any defects in the notice does not invalidate 
205.14  the proceedings of the board or the local governing body.  
205.15     Subd. 3.  [BOARD PROCEEDINGS PERTAINING TO HEARING.] Before 
205.16  adoption of the resolution calling for the hearing, the board 
205.17  shall get from the district engineer, or other competent person 
205.18  of the board's selection, a preliminary report advising whether 
205.19  the proposed project is feasible, necessary, and cost-effective, 
205.20  and whether it should best be made as proposed or in connection 
205.21  with another project, and the estimated costs of the project as 
205.22  recommended.  No error or omission in the report invalidates the 
205.23  proceeding.  The board may also take steps before the hearing 
205.24  that will, in its judgment, provide helpful information in 
205.25  determining the desirability and feasibility of the project 
205.26  including, but not limited to, preparation of plans and 
205.27  specifications and advertisement for bids.  The hearing may be 
205.28  adjourned from time to time and a resolution ordering the 
205.29  project may be adopted at any time within six months after the 
205.30  date of hearing.  In ordering the project, the board may reduce 
205.31  but not increase the extent of the project as stated in the 
205.32  notice of hearing, unless another hearing is held, and must find 
205.33  that the project as ordered is in accordance with the 
205.34  comprehensive plan and program adopted by the board under 
205.35  section 4.  
205.36     Subd. 4.  [EMERGENCY ACTION.] If the board by resolution 
206.1   adopted by the affirmative vote of not less than two-thirds of 
206.2   its members determines that an emergency exists requiring the 
206.3   immediate purchase of materials or supplies or the making of 
206.4   emergency repairs, it may order the purchase of the supplies and 
206.5   materials and the making of the repairs before any hearing 
206.6   required under this section.  But the board must set as early a 
206.7   date as practicable for that hearing at the time it declares the 
206.8   emergency.  All other provisions of this section must be 
206.9   followed in giving notice of and conducting a hearing.  This 
206.10  subdivision does not prevent the board or its agents from 
206.11  purchasing maintenance supplies or incurring maintenance costs 
206.12  without regard to the requirements of this section.  
206.13     Subd. 5.  [POWER OF GOVERNMENT UNIT TO SPECIALLY ASSESS.] A 
206.14  local government unit may specially assess all or part of the 
206.15  costs of acquisition and betterment of any project ordered by 
206.16  the board under this section.  A special assessment must be 
206.17  levied in accordance with Minnesota Statutes, sections 429.051 
206.18  to 429.081, except as otherwise provided in this subdivision.  
206.19  No other provisions of Minnesota Statutes, chapter 429, apply.  
206.20  For purposes of levying special assessments, the hearing on the 
206.21  project required in subdivision 1 must serve as the hearing on 
206.22  the making of the original improvement provided for by Minnesota 
206.23  Statutes, section 429.051.  The area assessed may be less than 
206.24  but must not exceed the area proposed to be assessed as stated 
206.25  in the notice of hearing on the project provided for in 
206.26  subdivision 2.  To determine the allocable cost of the project 
206.27  to the local government units, the government unit may adopt one 
206.28  of the procedures in paragraph (a) or (b).  
206.29     (a) At any time after a contract is let for the project, 
206.30  the local government unit may get from the board a current 
206.31  written estimate, on the basis of historical and reasonably 
206.32  projected data, of that part of the total cost of acquisition 
206.33  and betterment of the project or of some part of the project 
206.34  that will be allocated to the local government unit and the 
206.35  number of years over which such costs will be allocated as 
206.36  current costs of acquisition, betterment, and debt service under 
207.1   section 8.  The board is not bound by this estimate for 
207.2   allocating the costs of the project to local government units. 
207.3      (b) The governing body may get from the board a written 
207.4   statement showing, for the prior period that the governing body 
207.5   designates, that part of the costs previously allocated to the 
207.6   local government unit as current costs of acquisition, 
207.7   betterment, and debt service only, of all or any part of the 
207.8   project designated by the governing body.  In addition to the 
207.9   allocable costs, the local government unit may include in the 
207.10  total expense, as a basis for levying assessments, all other 
207.11  expenses incurred directly by the local government unit in 
207.12  connection with the project.  Special assessments levied by the 
207.13  government unit with respect to previously allocated costs 
207.14  ascertained under this paragraph are payable in equal annual 
207.15  installments extending over a period not exceeding by more than 
207.16  one year the number of years that the costs have been allocated 
207.17  to the local government unit or the estimated useful life of the 
207.18  project, or part of the project, whichever number of years is 
207.19  the lesser.  No limit is placed on the number of times the 
207.20  governing body of a local government unit may assess the 
207.21  previously allocated costs not previously assessed by the 
207.22  government unit.  The power to specially assess provided for in 
207.23  this section is in addition and supplemental to all other powers 
207.24  of local government units to levy special assessments. 
207.25     Sec. 11.  [INITIAL COSTS.] 
207.26     Subdivision 1.  [CONTRIBUTIONS OR ADVANCES FROM LOCAL 
207.27  GOVERNMENT UNITS.] The board may, at the time it considers 
207.28  necessary and proper, request from a local government unit 
207.29  necessary money to defray the costs of any obligations assumed 
207.30  under section 5 and the costs of administration, operation, and 
207.31  maintenance.  Before making a request, the board must, by formal 
207.32  resolution, determine the necessity for the money, setting forth 
207.33  the purposes for which the money is needed and the estimated 
207.34  amount for each purpose.  Upon receiving a request, the 
207.35  governing body of each local government unit may provide for 
207.36  payment of the amount requested as it considers fair and 
208.1   reasonable.  The money may be paid out of general revenue funds 
208.2   or any other available funds of any local government unit and 
208.3   its governing body thereof may levy taxes to provide funds, free 
208.4   from any existing limit imposed by law or charter.  Money may be 
208.5   provided by government units with or without interest, but if 
208.6   interest is charged it must not exceed five percent per year.  
208.7   The board must credit the local government unit for the payments 
208.8   in allocating current costs under section 8, on the terms and at 
208.9   the times as are agreed to with the local government unit. 
208.10     Subd. 2.  [LIMITED TAX LEVY.] The board may levy ad valorem 
208.11  taxes on all taxable property in the district to defray any of 
208.12  the costs described in subdivision 1, provided the costs have 
208.13  not been defrayed by contribution under subdivision 1.  Before 
208.14  certifying a levy to the county auditor, the board must 
208.15  determine the need for the money to be derived from the levy by 
208.16  formal resolution setting forth the purposes for which the tax 
208.17  money will be used and the amount proposed to be used for each 
208.18  purpose.  In allocating current costs under section 8, the board 
208.19  must credit the government units for taxes collected under the 
208.20  levy made under this subdivision on the terms and at the time 
208.21  the board considers fair and reasonable and on terms consistent 
208.22  with section 8, subdivision 2. 
208.23     Sec. 12.  [BONDS CERTIFICATES AND OTHER OBLIGATIONS.] 
208.24     Subdivision 1.  [BUDGET ANTICIPATION CERTIFICATES OF 
208.25  INDEBTEDNESS.] (a) Before adopting its annual budget and in 
208.26  anticipation of the collection of tax and other revenues 
208.27  estimated and set forth by the board in the budget, the board 
208.28  may by resolution, authorize the issuance, negotiation, and sale 
208.29  in accordance with subdivision 5 in such form and manner and 
208.30  upon such terms as it may determine of its negotiable general 
208.31  obligation certificates of indebtedness in aggregate principal 
208.32  amounts not exceeding 50 percent of the total amount of such tax 
208.33  collections and other revenues and maturing not later than three 
208.34  months after the close of the budget year in which issued.  
208.35  Revenues listed in clauses (1) to (3) must not be anticipated 
208.36  for this purpose: 
209.1      (1) taxes already anticipated by the issuance of 
209.2   certificates under subdivision 2; 
209.3      (2) deficiency taxes levied pursuant to this subdivision; 
209.4   and 
209.5      (3) taxes levied for the payment of certificates issued 
209.6   pursuant to subdivision 3. 
209.7      (b) The proceeds of the sale of the certificates must be 
209.8   used only for the purposes for which tax collections and other 
209.9   revenues are to be expended under the budget. 
209.10     (c) All tax collections and other revenues included in the 
209.11  budget for the budget year, after the expenditures of tax 
209.12  collections and other revenues in accordance with the budget, 
209.13  must be irrevocably pledged and appropriated to a special fund 
209.14  to pay the principal and interest on the certificates when due.  
209.15     (d) If for any reason the tax collections and other 
209.16  revenues are insufficient to pay the certificates and interest 
209.17  when due, the board must levy a tax in the amount of the 
209.18  deficiency on all taxable property in the district and must 
209.19  appropriate this amount when received to the special fund.  
209.20     Subd. 2.  [TAX LEVY ANTICIPATION CERTIFICATES OF 
209.21  INDEBTEDNESS.] After a tax is levied by the board under section 
209.22  11, subdivision 2, and certified to the county auditors in 
209.23  anticipation of the collection of the tax, if the tax has not 
209.24  been anticipated by the issuance of certificates under 
209.25  subdivision 1, the board may, by resolution, authorize the 
209.26  issuance, negotiation, and sale in accordance with subdivision 5 
209.27  in the form and manner and on the terms and conditions as it 
209.28  determines its negotiable general obligation tax levy 
209.29  anticipation certificates of indebtedness in aggregate principal 
209.30  amounts not exceeding 50 percent of the uncollected tax for 
209.31  which no penalty for nonpayment or delinquency has been 
209.32  attached.  The certificates must mature not later than April 1 
209.33  in the year after the year in which the tax is collectible.  The 
209.34  proceeds of the tax in anticipation of which the certificates 
209.35  were issued and other funds that may become available must be 
209.36  applied to the extent necessary to repay the certificates.  
210.1      Subd. 3.  [EMERGENCY CERTIFICATES OF INDEBTEDNESS.] If in 
210.2   any budget year the receipts of tax and other revenues for some 
210.3   unforeseen cause become insufficient to pay the board's current 
210.4   expenses, or if any calamity or other public emergency subjects 
210.5   it to the necessity of making extraordinary expenditures, the 
210.6   board may by resolution authorize the issuance, negotiation, and 
210.7   sale in accordance with subdivision 5 in the form and manner and 
210.8   on the terms and conditions as it may determine of its 
210.9   negotiable general obligation certificates of indebtedness in an 
210.10  amount sufficient to meet the deficiency, and the board must 
210.11  levy on all taxable property in the district a tax sufficient to 
210.12  pay the certificates and interest and shall appropriate all 
210.13  collections of the tax to a special fund created for the payment 
210.14  of the certificates and interest. 
210.15     Subd. 4.  [GENERAL OBLIGATION BONDS.] The board may by 
210.16  resolution authorize the issuance of general obligation bonds 
210.17  maturing serially in one or more annual or semiannual 
210.18  installments for the acquisition or betterment of any part of 
210.19  the district disposal system, including but not limited to, the 
210.20  payment of interest during construction and for a reasonable 
210.21  period thereafter, or for the refunding of outstanding bonds, 
210.22  certificates of indebtedness, or judgments.  The board must 
210.23  pledge its full faith and credit and taxing power for the 
210.24  payment of the bonds and shall provide for the issuance and sale 
210.25  and for the security of the bonds in the manner provided in 
210.26  Minnesota Statutes, chapter 475, and must have the same powers 
210.27  and duties as a municipality issuing bonds under that law.  An 
210.28  election is not required to authorize the issuance of bonds and 
210.29  the debt limit of Minnesota Statutes, chapter 475, do not apply 
210.30  to the bonds.  The board may also pledge for the payment of the 
210.31  bonds and deduct from the amount of any tax levy required under 
210.32  Minnesota Statutes, section 475.61, subdivision 1, any sums 
210.33  receivable under section 9 or any state and federal grants 
210.34  anticipated by the board and may covenant to refund the bonds if 
210.35  and when and to the extent that for any reason the revenues, 
210.36  together with other funds properly available and appropriated 
211.1   for the purpose, are not sufficient to pay all principal and 
211.2   interest due or about to become due; if the revenues have not 
211.3   been anticipated by the issuance of certificates under 
211.4   subdivision 1.  All bonds that have been or shall hereafter be 
211.5   issued and sold in conformity with the provisions of this 
211.6   subdivision, and otherwise in conformity with law, are hereby 
211.7   authorized, legalized, and validated. 
211.8      Subd. 5.  [MANNER OF SALE AND ISSUANCE OF 
211.9   CERTIFICATES.] Certificates issued under subdivisions 1, 2, and 
211.10  3 may be issued and sold by negotiation, without public sale, 
211.11  and may be sold at a price equal to the percentage of their par 
211.12  value, plus accrued interest, and bearing interest at the rate 
211.13  or rates as may be determined by the board.  No election is 
211.14  required to authorize the issuance of certificates.  
211.15  Certificates must bear the same rate of interest after maturity 
211.16  as before and the full faith and credit and taxing power of the 
211.17  board must be pledged to the payment of the certificates.  
211.18     Sec. 13.  [TAX LEVIES.] 
211.19     The board may levy taxes to pay the bonds or other 
211.20  obligations assumed by the district under section 5 and for debt 
211.21  service of the district disposal system authorized in section 12 
211.22  upon all taxable property within the district without limit of 
211.23  rate or amount and without affecting the amount or rate of taxes 
211.24  that may be levied by the board for other purposes or by any 
211.25  local government unit in the district.  No other provision of 
211.26  law relating to debt limit shall restrict or in any way limit 
211.27  the power of the board to issue the bonds and certificates 
211.28  authorized in section 12.  The board may also levy taxes as 
211.29  provided in sections 9 and 11.  The county auditor must annually 
211.30  assess and extend upon the tax rolls the part of the taxes 
211.31  levied by the board in each year that is certified to the 
211.32  auditor by the board.  The county treasurer must collect and 
211.33  make settlement of the taxes with the treasurer of the board. 
211.34     Sec. 14.  [DEPOSITORIES.] 
211.35     The board must from time to time designate one or more 
211.36  national or state banks or trust companies authorized to do a 
212.1   banking business as official depositories for money of the 
212.2   board, and must require the treasurer to deposit all or a part 
212.3   of the money in those institutions.  The designation must be in 
212.4   writing and must set forth all the terms and conditions on which 
212.5   the deposits are made, and must be signed by the chair and 
212.6   treasurer, and made a part of the minutes of the board.  A 
212.7   designated bank or trust company must qualify as a depository by 
212.8   furnishing a corporate surety bond or collateral in the amount 
212.9   required by Minnesota Statutes, section 118A.03.  But, no bond 
212.10  or collateral is required to secure any deposit insofar as it is 
212.11  insured under federal law. 
212.12     Sec. 15.  [MONEY; ACCOUNTS AND INVESTMENTS.] 
212.13     Subdivision 1.  [RECEIPT AND APPLICATION.] All money 
212.14  received by the board must be deposited or invested by the 
212.15  treasurer and disposed of as the board directs in accordance 
212.16  with its budget.  But any money that has been pledged or 
212.17  dedicated by the board to the payment of obligations or interest 
212.18  on them or expenses incident to them, or for any other specific 
212.19  purpose authorized by law, must be paid by the treasurer into 
212.20  the fund to which they have been pledged.  
212.21     Subd. 2.  [FUNDS AND ACCOUNTS.] The board's treasurer must 
212.22  establish funds and accounts as necessary or convenient to 
212.23  handle the receipts and disbursements of the board in an orderly 
212.24  fashion.  
212.25     Subd. 3.  [DEPOSIT AND INVESTMENT.] The money on hand in 
212.26  the board's funds and accounts may be deposited in the official 
212.27  depositories of the board or invested as provided in this 
212.28  subdivision.  The amount not currently needed or required by law 
212.29  to be kept in cash on deposit may be invested in obligations 
212.30  authorized by law for the investment of municipal sinking 
212.31  funds.  The money may also be held under certificates of deposit 
212.32  issued by any official depository of the board.  All investments 
212.33  by the board must conform to an investment policy adopted by the 
212.34  board as amended from time to time.  
212.35     Subd. 4.  [BOND PROCEEDS.] The use of proceeds of all bonds 
212.36  issued by the board for the acquisition and betterment of the 
213.1   district disposal system, and the use, other than investment, of 
213.2   all money on hand in any sinking fund or funds of the board must 
213.3   be governed by Minnesota Statutes, chapter 475, this article, 
213.4   and the resolutions authorizing the issuance of the bonds.  The 
213.5   bond proceeds, when received, must be transferred to the 
213.6   treasurer of the board for safekeeping, investment, and payment 
213.7   of the costs for which they were issued.  
213.8      Subd. 5.  [AUDIT.] The board must provide for and pay the 
213.9   cost of an independent annual audit of its official books and 
213.10  records by the state auditor or a certified public accountant.  
213.11     Sec. 16.  [GENERAL POWERS OF BOARD.] 
213.12     Subdivision 1.  [ALL NECESSARY OR CONVENIENT POWERS.] The 
213.13  board has powers necessary or convenient to discharge the duties 
213.14  imposed upon it by law.  The powers include those specified in 
213.15  this article, but the express grant or enumeration of powers 
213.16  does not limit the generality or scope of the grant of power in 
213.17  this subdivision. 
213.18     Subd. 2.  [LAWSUITS.] The board may sue or be sued.  
213.19     Subd. 3.  [CONTRACTS.] The board may enter into any 
213.20  contract necessary or proper for the exercise of its powers or 
213.21  the accomplishment of its purposes.  
213.22     Subd. 4.  [RULES.] The board may adopt rules relating to 
213.23  the board's responsibilities and may provide penalties not 
213.24  exceeding the maximum penalty specified for a misdemeanor, and 
213.25  the cost of prosecution may be added to the penalties imposed.  
213.26  Any rule prescribing a penalty for violation must be published 
213.27  at least once in a newspaper having general circulation in the 
213.28  district.  A violation may be prosecuted before any court in the 
213.29  district having jurisdiction of misdemeanor, and every court has 
213.30  jurisdiction of violations.  A peace officer of any municipality 
213.31  in the district may make arrests for violations committed 
213.32  anywhere in the district in the manner and with the effect as 
213.33  for violations of municipal ordinances or for statutory 
213.34  misdemeanors.  All fines collected must be deposited in the 
213.35  treasury of the board, or may be allocated between the board and 
213.36  the municipality in which the prosecution occurs on terms agreed 
214.1   to by the board and the municipality.  
214.2      Subd. 5.  [GIFTS; GRANTS.] The board may accept gifts, may 
214.3   apply for and accept grants or loans of money or other property 
214.4   from the United States, the state, or any person for any of its 
214.5   purposes, may enter into any agreement required to get the gift, 
214.6   grant, loan, or other property; and may hold, use, and dispose 
214.7   of money or property in accordance with the terms of the gift, 
214.8   grant, loan or agreement.  With respect to any loans or grants 
214.9   of funds or real or personal property or other assistance from 
214.10  any state or federal government or any agency or instrumentality 
214.11  of the government, the board may contract to do and perform all 
214.12  acts and things required as a condition or consideration under 
214.13  state or federal law or rule or regulation, whether or not 
214.14  included among the powers expressly granted to the board in this 
214.15  article.  
214.16     Subd. 6.  [JOINT POWERS.] The board may act under Minnesota 
214.17  Statutes, section 471.59, or any other appropriate law providing 
214.18  for joint or cooperative action between government units.  
214.19     Subd. 7.  [RESEARCH; HEARINGS; INVESTIGATIONS; ADVISE.] The 
214.20  board may conduct research studies and programs, collect and 
214.21  analyze data, prepare reports, maps, charts, and tables, and 
214.22  conduct all necessary hearings and investigations in connection 
214.23  with the design, construction, and operation of the district 
214.24  disposal system, and may advise and assist other government 
214.25  units on system planning matters within the scope of its powers, 
214.26  duties, and objectives, and may provide at the request of any 
214.27  governmental unit other technical and administrative assistance 
214.28  as the board considers appropriate for the government unit to 
214.29  carry out the powers and duties vested in the government unit 
214.30  under this article or imposed on or by the board.  
214.31     Subd. 8.  [EMPLOYEES; CONTRACTORS; INSURANCE.] The board 
214.32  may employ on the terms it considers advisable, persons or firms 
214.33  performing engineering, legal, or other services of a 
214.34  professional nature; require any employee to get and file with 
214.35  it an individual bond or fidelity insurance policy; and procure 
214.36  insurance in the amounts it considers necessary against 
215.1   liability of the board or its officers or both, for personal 
215.2   injury or death and property damage or destruction, with the 
215.3   force and effect stated in Minnesota Statutes, chapter 466, and 
215.4   against risks of damage to or destruction of any of its 
215.5   facilities, equipment, or other property as it considers 
215.6   necessary.  
215.7      Subd. 9.  [PROPERTY.] The board may acquire by purchase, 
215.8   lease, condemnation, gift, or grant, real or personal property 
215.9   including positive and negative easements and water and air 
215.10  rights, and it may construct, enlarge, improve, replace, repair, 
215.11  maintain, and operate any interceptor, treatment works, or water 
215.12  facility determined to be necessary or convenient for the 
215.13  collection and disposal of sewage in the district.  Any local 
215.14  government unit and the commissioners of transportation and 
215.15  natural resources may convey to or permit the use of these 
215.16  facilities owned or controlled by the board, subject to the 
215.17  rights of the holders of any bonds issued with respect to them 
215.18  with or without compensation and without an election or approval 
215.19  by any other government unit or agency.  All powers conferred by 
215.20  this subdivision may be exercised both within or outside the 
215.21  district as may be necessary for the exercise by the board of 
215.22  its powers or the accomplishment of its purposes.  The board may 
215.23  hold, lease, convey, or otherwise dispose of such property for 
215.24  its purposes, upon the terms and in the manner it deems 
215.25  advisable.  Unless otherwise provided, the right to acquire 
215.26  lands and property rights by condemnation must be exercised in 
215.27  accordance with Minnesota Statutes, chapter 117, and must apply 
215.28  to any property or interest in property owned by any local 
215.29  government unit.  Property devoted to an actual public use at 
215.30  the time, or held to be devoted to such use within a reasonable 
215.31  time, must not be so acquired unless a court of competent 
215.32  jurisdiction determines that the use proposed by the board is 
215.33  paramount.  In case of property in actual public use, the board 
215.34  may take possession of any property of which condemnation 
215.35  proceedings have begun at any time after the issuance of a court 
215.36  order appointing commissioners for its condemnation.  
216.1      Subd. 10.  [RIGHTS-OF-WAY.] The board may construct or 
216.2   maintain its systems or facilities in, along, on, under, over, 
216.3   or through public waters, streets, bridges, viaducts, and other 
216.4   public right-of-way without first getting a franchise from any 
216.5   county or local government unit having jurisdiction over them.  
216.6   The facilities must be constructed and maintained in accordance 
216.7   with the ordinances and resolutions of the county or government 
216.8   unit relating to construction, installation, and maintenance of 
216.9   similar facilities on public properties and must not 
216.10  unnecessarily obstruct the public use of the rights-of-way. 
216.11     Subd. 11.  [DISPOSAL OF PROPERTY.] The board may sell, 
216.12  lease, or otherwise dispose of any real or personal property 
216.13  acquired by it that is no longer required to accomplish its 
216.14  purposes.  The property may be sold in the manner provided by 
216.15  Minnesota Statutes, section 469.065, insofar as practical.  The 
216.16  board may give notice of sale it considers appropriate.  When 
216.17  the board determines that any property or any part of the 
216.18  district disposal system that has been acquired from a local 
216.19  government unit without compensation is no longer required, but 
216.20  is required as a local facility by the government unit from 
216.21  which is was acquired, the board may by resolution transfer it 
216.22  to the government unit.  
216.23     Subd. 12.  [JOINT OPERATIONS.] The board may contract with 
216.24  the United States or an agency of it, any state or agency of it, 
216.25  or any regional public planning body in the state with 
216.26  jurisdiction over any part of the district, or any other 
216.27  municipal or public corporation, or governmental subdivision in 
216.28  any state, for the joint use of any facility owned by the board 
216.29  or the entity, for the operation by the entity of any system or 
216.30  facility of the board, or for the performance on the board's 
216.31  behalf of any service including, but not limited to, planning, 
216.32  on the terms that may be agreed to by the contracting parties.  
216.33  Unless designated by the board as a local sanitary sewer 
216.34  facility, any treatment works or interceptor jointly used, or 
216.35  operated on behalf of the board, as provided in this 
216.36  subdivision, must be considered to be operated by the board to 
217.1   include the facilities in the district disposal system.  
217.2      Sec. 17.  [LOCAL FACILITIES.] 
217.3      Subdivision 1.  [SANITARY SEWER FACILITIES.] Except as 
217.4   otherwise provided in this article, local government units must 
217.5   retain responsibility for the planning, design, acquisition, 
217.6   betterment, operation, administration, and maintenance of all 
217.7   local sanitary sewer facilities as provided by law.  
217.8      Subd. 2.  [ASSUMPTION OF RESPONSIBILITY OVER LOCAL SANITARY 
217.9   SEWER FACILITIES.] The board must upon request of any government 
217.10  unit assume, either alone or jointly with the local government 
217.11  unit, all or any part of the responsibility of the local 
217.12  government unit described in subdivision 1.  Except as provided 
217.13  in subdivision 4 and to exercise the responsibility, the board 
217.14  has all the powers and duties elsewhere conferred in this 
217.15  article with the same force and effect as if the local sanitary 
217.16  sewer facilities were a part of the district disposal system.  
217.17     Subd. 3.  [WATER AND STREET FACILITIES.] The board may, on 
217.18  request of any governmental unit, enter into an agreement under 
217.19  which the board may assume, either alone or jointly with such 
217.20  unit, the responsibility to get and construct water and street 
217.21  facilities in conjunction with any project for the acquisition 
217.22  or betterment of the district disposal system or any project 
217.23  undertaken by the board under subdivision 2.  Except as provided 
217.24  in subdivision 4, and to exercise any responsibilities under 
217.25  this subdivision, the board has all the powers and duties 
217.26  elsewhere conferred in this article with the same force and 
217.27  effect as if the water or street facilities were a part of the 
217.28  district disposal system.  
217.29     Subd. 4.  [ALLOCATION OF CURRENT COSTS.] All current costs 
217.30  attributable to responsibilities assumed by the board over local 
217.31  sanitary sewer facilities and water and street facilities as 
217.32  provided in this section must be allocated solely to the local 
217.33  unit for or with whom the responsibilities are assumed on the 
217.34  terms and over a period as the board determines to be equitable 
217.35  and in the best interest of the district.  If two or more 
217.36  government units form a region in accordance with this section 
218.1   all or part of the current costs attributable to the region 
218.2   must, at the request of its joint board, be allocated to the 
218.3   region and provided in the agreement establishing the region.  
218.4      Subd. 5.  [PART OF DISTRICT SYSTEM.] This section or any 
218.5   other part of this article does not prevent the board from 
218.6   including, where appropriate, treatment works or interceptors, 
218.7   previously designated or treated as local sanitary sewer 
218.8   facilities, as a part of the district disposal system. 
218.9      Sec. 18.  [SERVICE CONTRACTS WITH GOVERNMENTS OUTSIDE 
218.10  DISTRICT.] 
218.11     The board may contract with the United States or any agency 
218.12  of it, any state or any agency of it, or any municipal or public 
218.13  corporation, governmental subdivision or agency, or political 
218.14  subdivision in any state, outside the jurisdiction of the board, 
218.15  for furnishing to the entities any services which the board may 
218.16  furnish to local government units in the district under this 
218.17  article including, but not limited to, planning for and the 
218.18  acquisition, betterment, operation, administration, and 
218.19  maintenance of any or all interceptors, treatment works, and 
218.20  local sanitary sewer facilities; if the board may further 
218.21  include as one of the terms of the contract that the entity also 
218.22  pay to the board an amount as may be agreed upon as a reasonable 
218.23  estimate of the proportionate share properly allocable to the 
218.24  entity of costs of acquisition, betterment, and debt service 
218.25  previously allocated to local government units in the district.  
218.26  When the payments are made by the entities to the board, they 
218.27  must be applied in reduction of the total amount of costs 
218.28  allocated after that to each local government unit in the 
218.29  district, on the equitable basis the board considers to be in 
218.30  the best interest of the district.  Any municipality in the 
218.31  state may enter into the contract and perform all acts and 
218.32  things required as a condition or consideration for it 
218.33  consistent with the purpose of this article, whether or not 
218.34  included among the powers otherwise granted to the municipality 
218.35  by law or charter. 
218.36     Sec. 19.  [CONSTRUCTION, MATERIALS, SUPPLIES, EQUIPMENT; 
219.1   CONTRACTS.] 
219.2      Subdivision 1.  [PLANS AND SPECIFICATIONS.] When the board 
219.3   orders a project involving the acquisition or betterment of a 
219.4   part of the district disposal system, it must cause plans and 
219.5   specifications of this project to be made, or if previously 
219.6   made, to be modified, if necessary, and to be approved by the 
219.7   agency if required, and after any required approval by the 
219.8   agency, one or more contracts for work and materials called for 
219.9   by the plans and specification may be awarded as provided in 
219.10  this section.  
219.11     Subd. 2.  [UNIFORM MUNICIPAL CONTRACTING LAW.] All 
219.12  contracts for work to be done or for purchases of materials, 
219.13  supplies, or equipment must be done in accordance with Minnesota 
219.14  Statutes, section 471.345.  
219.15     Sec. 20.  [ANNEXATION, WITHDRAWAL OF TERRITORY.] 
219.16     Subdivision 1.  [ANNEXATION.] Any municipality in Douglas 
219.17  county, upon resolution adopted by a four-fifths vote of its 
219.18  governing body, may petition the board for annexation to the 
219.19  district of the area then comprising the municipality or any 
219.20  part of it and, if accepted by the board, the area must be 
219.21  considered annexed to the district and subject to the 
219.22  jurisdiction of the board under the terms and provisions of this 
219.23  article.  The territory so annexed is subject to taxation and 
219.24  assessment under this article and is subject to taxation by the 
219.25  board like other property in the district for the payment of 
219.26  principal and interest thereafter becoming due on general 
219.27  obligations of the board, whether authorized or issued before or 
219.28  after the annexation.  The board may condition approval of the 
219.29  annexation upon the contribution, by or on behalf of the 
219.30  municipality petitioning for annexation, to the board of an 
219.31  amount as may be agreed upon as being a reasonable estimate of 
219.32  the proportionate share, properly allocable to the municipality, 
219.33  of cost or acquisition, betterment, and debt service previously 
219.34  allocated to local government units in the district, on the 
219.35  terms as may be agreed upon and in place of or in addition to 
219.36  further conditions as the board deems in the best interests of 
220.1   the district.  Notwithstanding any other provisions of this 
220.2   article to the contrary, the conditions established for 
220.3   annexation may include the requirement that the annexed 
220.4   municipality pay for, contract for, and oversee the construction 
220.5   of local sanitary sewer facilities and interceptor sewers.  To 
220.6   pay the contribution or satisfy any other condition established 
220.7   by the board, the municipality petitioning annexation may 
220.8   exercise the powers conferred in section 9.  When the 
220.9   contributions are made by the municipality to the board, they 
220.10  must be applied to reduce the total amount of costs thereafter 
220.11  allocated to each local government unit in the district, on the 
220.12  equitable basis as the board considers to be in the best 
220.13  interests of the district, applying so far as practicable and 
220.14  appropriate the criteria set forth in section 8, subdivision 2.  
220.15  On annexation of the territory, the secretary of the board must 
220.16  certify to the auditor and treasurer of the county in which the 
220.17  municipality is located the fact of the annexation and a legal 
220.18  description of the territory annexed.  
220.19     Subd. 2.  [WITHDRAWALS.] A municipality may withdraw from 
220.20  the district by resolution of its governing body.  The 
220.21  municipality must notify the board of the district of the 
220.22  withdrawal by providing a copy of the resolution at least two 
220.23  years in advance of the proposed withdrawal.  Unless the 
220.24  district and the withdrawing member agree otherwise by action of 
220.25  their governing bodies, the taxable property of the withdrawing 
220.26  member is subject to its required property tax levies under this 
220.27  article for two taxes payable years following the notification 
220.28  of the withdrawal and the withdrawing member retains any rights, 
220.29  obligations, and liabilities obtained or incurred during its 
220.30  participation. 
220.31     Sec. 21.  [PROPERTY EXEMPT FROM TAXATION.] 
220.32     Any properties, real or personal, owned, leased, 
220.33  controlled, used, or occupied by the sanitary sewer board for 
220.34  any purpose under this article are declared to be acquired, 
220.35  owned, leased, controlled, used, and occupied for public, 
220.36  governmental, and municipal purposes, and are exempt from 
221.1   taxation by the state or any political subdivision of the state; 
221.2   but the properties are subject to special assessments levied by 
221.3   a political subdivision for a local improvement in amounts 
221.4   proportionate to and not exceeding the special benefit received 
221.5   by the properties from the improvement.  No possible use of any 
221.6   of the properties in any manner different from their use as part 
221.7   of the disposal system at the time may be considered in 
221.8   determining the special benefit received by the properties.  All 
221.9   of the assessments are subject to final approval by the board, 
221.10  whose determination of the benefits is conclusive upon the 
221.11  political subdivision levying the assessment. 
221.12     Sec. 22.  [RELATION TO EXISTING LAWS.] 
221.13     This article prevails over any law or charter inconsistent 
221.14  with it.  The powers conferred on the board under this article 
221.15  do not diminish or supersede the powers conferred on the agency 
221.16  by Minnesota Statutes, chapters 115 and 116.  
221.17     Sec. 23.  [APPLICATION; EFFECTIVE DATE; LOCAL APPROVAL; OPT 
221.18  IN OR OUT.] 
221.19     Subdivision 1.  [APPLICATION.] This article applies to the 
221.20  townships of Brandon, Carlos, LaGrand, Leaf Valley, Miltona, and 
221.21  Moe, all in Douglas county. 
221.22     Subd. 2.  [EFFECTIVE DATE; LOCAL APPROVAL.] This article is 
221.23  effective the day after a fourth township of the six listed in 
221.24  subdivision 1 has timely completed compliance with Minnesota 
221.25  Statutes, section 645.021, subdivisions 2 and 3.  For any other 
221.26  township listed in subdivision 1, the article is effective the 
221.27  day after timely completing compliance with Minnesota Statutes, 
221.28  section 645.021, subdivisions 2 and 3.  A township listed in 
221.29  subdivision 1 that fails to timely complete compliance with 
221.30  Minnesota Statutes, section 645.021, subdivisions 2 and 3, may 
221.31  petition for annexation to the district at a later time, as 
221.32  provided in this article. 
221.33                             ARTICLE 10 
221.34                      TAX INCREMENT FINANCING 
221.35     Section 1.  Minnesota Statutes 2002, section 469.174, 
221.36  subdivision 3, is amended to read: 
222.1      Subd. 3.  [BONDS.] (a) "Bonds" means any bonds, including 
222.2   refunding bonds, notes, interim certificates, debentures, 
222.3   interfund loans or advances, or other obligations issued: 
222.4      (1) by an authority under section 469.178; or which were 
222.5   issued 
222.6      (2) in aid of a project under any other law, except revenue 
222.7   bonds issued pursuant to sections 469.152 to 469.165, prior to 
222.8   August 1, 1979. 
222.9      (b) Bonds or other obligations include: 
222.10     (1) refunding bonds; 
222.11     (2) notes; 
222.12     (3) interim certificates; 
222.13     (4) debentures; and 
222.14     (5) interfund loans or advances qualifying under section 
222.15  469.178, subdivision 7. 
222.16     [EFFECTIVE DATE.] This section is effective at the same 
222.17  time as provided by Laws 2001, First Special Session chapter 5, 
222.18  article 15, section 3. 
222.19     Sec. 2.  Minnesota Statutes 2002, section 469.174, 
222.20  subdivision 6, is amended to read: 
222.21     Subd. 6.  [MUNICIPALITY.] "Municipality" means any the 
222.22  city, however organized, and with respect to in which the 
222.23  district is located, with the following exceptions: 
222.24     (1) for a project undertaken pursuant to sections 469.152 
222.25  to 469.165, "municipality" has the meaning given in sections 
222.26  469.152 to 469.165, and with respect to; and 
222.27     (2) for a project undertaken pursuant to sections 469.142 
222.28  to 469.151, or a county or multicounty project undertaken 
222.29  pursuant to sections 469.004 to 469.008, "municipality" also 
222.30  includes any means the county in which the district is located. 
222.31     [EFFECTIVE DATE.] This section is effective for districts 
222.32  for which the request for certification was made after July 31, 
222.33  1979. 
222.34     Sec. 3.  Minnesota Statutes 2002, section 469.174, 
222.35  subdivision 10, is amended to read: 
222.36     Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
223.1   district" means a type of tax increment financing district 
223.2   consisting of a project, or portions of a project, within which 
223.3   the authority finds by resolution that one or more of the 
223.4   following conditions, reasonably distributed throughout the 
223.5   district, exists: 
223.6      (1) parcels consisting of 70 percent of the area of the 
223.7   district are occupied by buildings, streets, utilities, paved or 
223.8   gravel parking lots, or other similar structures and more than 
223.9   50 percent of the buildings, not including outbuildings, are 
223.10  structurally substandard to a degree requiring substantial 
223.11  renovation or clearance; or 
223.12     (2) the property consists of vacant, unused, underused, 
223.13  inappropriately used, or infrequently used railyards, rail 
223.14  storage facilities, or excessive or vacated railroad 
223.15  rights-of-way; or 
223.16     (3) tank facilities, or property whose immediately previous 
223.17  use was for tank facilities, as defined in section 115C.02, 
223.18  subdivision 15, if the tank facilities: 
223.19     (i) have or had a capacity of more than 1,000,000 gallons; 
223.20     (ii) are located adjacent to rail facilities; and 
223.21     (iii) have been removed or are unused, underused, 
223.22  inappropriately used, or infrequently used. 
223.23     (b) For purposes of this subdivision, "structurally 
223.24  substandard" shall mean containing defects in structural 
223.25  elements or a combination of deficiencies in essential utilities 
223.26  and facilities, light and ventilation, fire protection including 
223.27  adequate egress, layout and condition of interior partitions, or 
223.28  similar factors, which defects or deficiencies are of sufficient 
223.29  total significance to justify substantial renovation or 
223.30  clearance. 
223.31     (c) A building is not structurally substandard if it is in 
223.32  compliance with the building code applicable to new buildings or 
223.33  could be modified to satisfy the building code at a cost of less 
223.34  than 15 percent of the cost of constructing a new structure of 
223.35  the same square footage and type on the site.  The municipality 
223.36  may find that a building is not disqualified as structurally 
224.1   substandard under the preceding sentence on the basis of 
224.2   reasonably available evidence, such as the size, type, and age 
224.3   of the building, the average cost of plumbing, electrical, or 
224.4   structural repairs, or other similar reliable evidence.  The 
224.5   municipality may not make such a determination without an 
224.6   interior inspection of the property, but need not have an 
224.7   independent, expert appraisal prepared of the cost of repair and 
224.8   rehabilitation of the building.  An interior inspection of the 
224.9   property is not required, if the municipality finds that (1) the 
224.10  municipality or authority is unable to gain access to the 
224.11  property after using its best efforts to obtain permission from 
224.12  the party that owns or controls the property; and (2) the 
224.13  evidence otherwise supports a reasonable conclusion that the 
224.14  building is structurally substandard.  Items of evidence that 
224.15  support such a conclusion include recent fire or police 
224.16  inspections, on-site property tax appraisals or housing 
224.17  inspections, exterior evidence of deterioration, or other 
224.18  similar reliable evidence.  Written documentation of the 
224.19  findings and reasons why an interior inspection was not 
224.20  conducted must be made and retained under section 469.175, 
224.21  subdivision 3, clause (1).  Failure of a building to be 
224.22  disqualified under the provisions of this paragraph is a 
224.23  necessary, but not a sufficient, condition to determining that 
224.24  the building is substandard.  
224.25     (d) A parcel is deemed to be occupied by a structurally 
224.26  substandard building for purposes of the finding under paragraph 
224.27  (a) if all of the following conditions are met: 
224.28     (1) the parcel was occupied by a substandard building 
224.29  within three years of the filing of the request for 
224.30  certification of the parcel as part of the district with the 
224.31  county auditor; 
224.32     (2) the substandard building was demolished or removed by 
224.33  the authority or the demolition or removal was financed by the 
224.34  authority or was done by a developer under a development 
224.35  agreement with the authority; 
224.36     (3) the authority found by resolution before the demolition 
225.1   or removal that the parcel was occupied by a structurally 
225.2   substandard building and that after demolition and clearance the 
225.3   authority intended to include the parcel within a district; and 
225.4      (4) upon filing the request for certification of the tax 
225.5   capacity of the parcel as part of a district, the authority 
225.6   notifies the county auditor that the original tax capacity of 
225.7   the parcel must be adjusted as provided by section 469.177, 
225.8   subdivision 1, paragraph (h) (f). 
225.9      (e) For purposes of this subdivision, a parcel is not 
225.10  occupied by buildings, streets, utilities, paved or gravel 
225.11  parking lots, or other similar structures unless 15 percent of 
225.12  the area of the parcel contains buildings, streets, utilities, 
225.13  paved or gravel parking lots, or other similar structures. 
225.14     (f) For districts consisting of two or more noncontiguous 
225.15  areas, each area must qualify as a redevelopment district under 
225.16  paragraph (a) to be included in the district, and the entire 
225.17  area of the district must satisfy paragraph (a). 
225.18     [EFFECTIVE DATE.] The amendment to Minnesota Statutes, 
225.19  section 469.174, subdivision 10, paragraph (c), confirms the 
225.20  intent of the legislature with regard to the original provisions 
225.21  of the language contained in Minnesota Statutes 2002, section 
225.22  469.174, subdivision 10, paragraph (c), and is retroactive to 
225.23  the effective date of the original language.  The amendment to 
225.24  Minnesota Statutes, section 469.174, subdivision 10, paragraph 
225.25  (d), is effective for districts for which the request for 
225.26  certification was received by the county after June 30, 2002. 
225.27     Sec. 4.  Minnesota Statutes 2002, section 469.174, 
225.28  subdivision 25, is amended to read: 
225.29     Subd. 25.  [INCREMENT.] "Increment," "tax increment," "tax 
225.30  increment revenues," "revenues derived from tax increment," and 
225.31  other similar terms for a district include: 
225.32     (1) taxes paid by the captured net tax capacity, but 
225.33  excluding any excess taxes, as computed under section 469.177; 
225.34     (2) the proceeds from the sale or lease of property, 
225.35  tangible or intangible, purchased by the authority with tax 
225.36  increments; 
226.1      (3) repayments of principal and interest received on loans 
226.2   or other advances made by the authority with tax increments; and 
226.3      (4) interest or other investment earnings on or from tax 
226.4   increments. 
226.5      [EFFECTIVE DATE.] This section is effective for districts 
226.6   for which the request for certification was made after June 30, 
226.7   1982, and payments of principal and interest received on loans 
226.8   or other advances that were made after June 30, 1997. 
226.9      Sec. 5.  Minnesota Statutes 2002, section 469.174, is 
226.10  amended by adding a subdivision to read: 
226.11     Subd. 29.  [QUALIFIED HOUSING DISTRICT.] "Qualified housing 
226.12  district" means: 
226.13     (1) a housing district for a residential rental project or 
226.14  projects in which the only properties receiving assistance from 
226.15  revenues derived from tax increments from the district meet the 
226.16  rent restriction requirements and the low-income occupancy test 
226.17  for a qualified low-income housing project under section 42(g) 
226.18  of the Internal Revenue Code of 1986, as amended through 
226.19  December 31, 2002, regardless of whether the project actually 
226.20  receives a low-income housing credit; or 
226.21     (2) a housing district for a single-family homeownership 
226.22  project or projects, if 95 percent or more of the homes 
226.23  receiving assistance from tax increments from the district are 
226.24  purchased by qualified purchasers.  A qualified purchaser means 
226.25  the first purchaser of a home after the tax increment assistance 
226.26  is provided whose income is at or below 85 percent of the median 
226.27  gross income for a family of the same size as the purchaser.  
226.28  Median gross income is the greater of (i) area median gross 
226.29  income, or (ii) the statewide median gross income, as determined 
226.30  by the secretary of Housing and Urban Development. 
226.31     [EFFECTIVE DATE.] This section applies to all districts for 
226.32  which the request for certification was made on or after January 
226.33  1, 2002, and to all districts to which the definition of 
226.34  qualified housing districts under Minnesota Statutes 2000, 
226.35  section 273.1399, applied. 
226.36     Sec. 6.  Minnesota Statutes 2002, section 469.175, 
227.1   subdivision 1, is amended to read: 
227.2      Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] A tax 
227.3   increment financing plan shall contain:  
227.4      (1) a statement of objectives of an authority for the 
227.5   improvement of a project; 
227.6      (2) a statement as to the development program for the 
227.7   project, including the property within the project, if any, that 
227.8   the authority intends to acquire; 
227.9      (3) a list of any development activities that the plan 
227.10  proposes to take place within the project, for which contracts 
227.11  have been entered into at the time of the preparation of the 
227.12  plan, including the names of the parties to the contract, the 
227.13  activity governed by the contract, the cost stated in the 
227.14  contract, and the expected date of completion of that activity; 
227.15     (4) identification or description of the type of any other 
227.16  specific development reasonably expected to take place within 
227.17  the project, and the date when the development is likely to 
227.18  occur; 
227.19     (5) estimates of the following:  
227.20     (i) cost of the project, including administration 
227.21  administrative expenses, except that if part of the cost of the 
227.22  project is paid or financed with increment from the tax 
227.23  increment financing district, the tax increment financing plan 
227.24  for the district must contain an estimate of the amount of the 
227.25  cost of the project, including administrative expenses, that 
227.26  will be paid or financed with tax increments from the district; 
227.27     (ii) amount of bonded indebtedness to be incurred; 
227.28     (iii) sources of revenue to finance or otherwise pay public 
227.29  costs; 
227.30     (iv) the most recent net tax capacity of taxable real 
227.31  property within the tax increment financing district and within 
227.32  any subdistrict; 
227.33     (v) the estimated captured net tax capacity of the tax 
227.34  increment financing district at completion; and 
227.35     (vi) the duration of the tax increment financing district's 
227.36  and any subdistrict's existence; 
228.1      (6) statements of the authority's alternate estimates of 
228.2   the impact of tax increment financing on the net tax capacities 
228.3   of all taxing jurisdictions in which the tax increment financing 
228.4   district is located in whole or in part.  For purposes of one 
228.5   statement, the authority shall assume that the estimated 
228.6   captured net tax capacity would be available to the taxing 
228.7   jurisdictions without creation of the district, and for purposes 
228.8   of the second statement, the authority shall assume that none of 
228.9   the estimated captured net tax capacity would be available to 
228.10  the taxing jurisdictions without creation of the district or 
228.11  subdistrict; 
228.12     (7) identification and description of studies and analyses 
228.13  used to make the determination set forth in subdivision 3, 
228.14  clause (2); and 
228.15     (8) identification of all parcels to be included in the 
228.16  district or any subdistrict. 
228.17     [EFFECTIVE DATE.] This section applies to districts for 
228.18  which the request for certification was made after July 31, 
228.19  1979, and is effective for tax increment financing plans and 
228.20  modifications approved after June 30, 2003. 
228.21     Sec. 7.  Minnesota Statutes 2002, section 469.175, 
228.22  subdivision 3, is amended to read: 
228.23     Subd. 3.  [MUNICIPALITY APPROVAL.] (a) A county auditor 
228.24  shall not certify the original net tax capacity of a tax 
228.25  increment financing district until the tax increment financing 
228.26  plan proposed for that district has been approved by the 
228.27  municipality in which the district is located.  If an authority 
228.28  that proposes to establish a tax increment financing district 
228.29  and the municipality are not the same, the authority shall apply 
228.30  to the municipality in which the district is proposed to be 
228.31  located and shall obtain the approval of its tax increment 
228.32  financing plan by the municipality before the authority may use 
228.33  tax increment financing.  The municipality shall approve the tax 
228.34  increment financing plan only after a public hearing thereon 
228.35  after published notice in a newspaper of general circulation in 
228.36  the municipality at least once not less than ten days nor more 
229.1   than 30 days prior to the date of the hearing.  The published 
229.2   notice must include a map of the area of the district from which 
229.3   increments may be collected and, if the project area includes 
229.4   additional area, a map of the project area in which the 
229.5   increments may be expended.  The hearing may be held before or 
229.6   after the approval or creation of the project or it may be held 
229.7   in conjunction with a hearing to approve the project.  
229.8      (b) Before or at the time of approval of the tax increment 
229.9   financing plan, the municipality shall make the following 
229.10  findings, and shall set forth in writing the reasons and 
229.11  supporting facts for each determination: 
229.12     (1) that the proposed tax increment financing district is a 
229.13  redevelopment district, a renewal or renovation district, a 
229.14  housing district, a soils condition district, or an economic 
229.15  development district; if the proposed district is a 
229.16  redevelopment district or a renewal or renovation district, the 
229.17  reasons and supporting facts for the determination that the 
229.18  district meets the criteria of section 469.174, subdivision 10, 
229.19  paragraph (a), clauses (1) and (2), or subdivision 10a, must be 
229.20  documented in writing and retained and made available to the 
229.21  public by the authority until the district has been terminated; 
229.22     (2) that the proposed development or redevelopment, in the 
229.23  opinion of the municipality,: 
229.24     (i) the proposed development or redevelopment would not 
229.25  reasonably be expected to occur solely through private 
229.26  investment within the reasonably foreseeable future; and that 
229.27     (ii) the increased market value of the site that could 
229.28  reasonably be expected to occur without the use of tax increment 
229.29  financing would be less than the increase in the market value 
229.30  estimated to result from the proposed development after 
229.31  subtracting the present value of the projected tax increments 
229.32  for the maximum duration of the district permitted by the plan.  
229.33  The requirements of this clause item do not apply if the 
229.34  district is a qualified housing district, as defined in section 
229.35  273.1399, subdivision 1; 
229.36     (3) that the tax increment financing plan conforms to the 
230.1   general plan for the development or redevelopment of the 
230.2   municipality as a whole; 
230.3      (4) that the tax increment financing plan will afford 
230.4   maximum opportunity, consistent with the sound needs of the 
230.5   municipality as a whole, for the development or redevelopment of 
230.6   the project by private enterprise; 
230.7      (5) that the municipality elects the method of tax 
230.8   increment computation set forth in section 469.177, subdivision 
230.9   3, clause (b), if applicable. 
230.10     (c) When the municipality and the authority are not the 
230.11  same, the municipality shall approve or disapprove the tax 
230.12  increment financing plan within 60 days of submission by the 
230.13  authority.  When the municipality and the authority are not the 
230.14  same, the municipality may not amend or modify a tax increment 
230.15  financing plan except as proposed by the authority pursuant to 
230.16  subdivision 4.  Once approved, the determination of the 
230.17  authority to undertake the project through the use of tax 
230.18  increment financing and the resolution of the governing body 
230.19  shall be conclusive of the findings therein and of the public 
230.20  need for the financing. 
230.21     (d) For a district that is subject to the requirements of 
230.22  paragraph (b), clause (2), item (ii), the municipality's 
230.23  statement of reasons and supporting facts must include all of 
230.24  the following: 
230.25     (1) an estimate of the amount by which the market value of 
230.26  the site will increase without the use of tax increment 
230.27  financing; 
230.28     (2) an estimate of the increase in the market value that 
230.29  will result from the development or redevelopment to be assisted 
230.30  with tax increment financing; and 
230.31     (3) the present value of the projected tax increments for 
230.32  the maximum duration of the district permitted by the tax 
230.33  increment financing plan. 
230.34     (e) For purposes of this subdivision, "site" means the 
230.35  parcels on which the development or redevelopment to be assisted 
230.36  with tax increment financing will be located. 
231.1      [EFFECTIVE DATE.] This section is effective for 
231.2   determinations made after June 30, 2003, except the provisions 
231.3   of paragraph (e) apply to requests for certification of tax 
231.4   increment districts made after June 30, 1995. 
231.5      Sec. 8.  Minnesota Statutes 2002, section 469.175, 
231.6   subdivision 4, is amended to read: 
231.7      Subd. 4.  [MODIFICATION OF PLAN.] (a) A tax increment 
231.8   financing plan may be modified by an authority, provided that. 
231.9      (b) The authority may make the following modifications only 
231.10  upon the notice and after the discussion, public hearing, and 
231.11  findings required for approval of the original plan: 
231.12     (1) any reduction or enlargement of geographic area of the 
231.13  project or tax increment financing district, that does not meet 
231.14  the requirements of paragraph (e); 
231.15     (2) increase in amount of bonded indebtedness to be 
231.16  incurred, including; 
231.17     (3) a determination to capitalize interest on the debt if 
231.18  that determination was not a part of the original plan, or to 
231.19  increase or decrease the amount of interest on the debt to be 
231.20  capitalized,; 
231.21     (4) increase in the portion of the captured net tax 
231.22  capacity to be retained by the authority,; 
231.23     (5) increase in total estimated tax increment 
231.24  expenditures the estimate of the cost of the project, including 
231.25  administrative expenses, that will be paid or financed with tax 
231.26  increment from the district; or 
231.27     (6) designation of additional property to be acquired by 
231.28  the authority shall be approved upon the notice and after the 
231.29  discussion, public hearing, and findings required for approval 
231.30  of the original plan; provided that. 
231.31     (c) If an authority changes the type of district from 
231.32  housing, redevelopment, or economic development to another type 
231.33  of district, this change shall is not be considered a 
231.34  modification but shall require requires the authority to follow 
231.35  the procedure set forth in sections 469.174 to 469.179 for 
231.36  adoption of a new plan, including certification of the net tax 
232.1   capacity of the district by the county auditor.  
232.2      (d) If a redevelopment district or a renewal and renovation 
232.3   district is enlarged, the reasons and supporting facts for the 
232.4   determination that the addition to the district meets the 
232.5   criteria of section 469.174, subdivision 10, paragraph (a), 
232.6   clauses (1) and (2), or subdivision 10a, must be documented.  
232.7      (e) The requirements of this paragraph (b) do not apply if 
232.8   (1) the only modification is elimination of parcels from the 
232.9   project or district and (2)(A) the current net tax capacity of 
232.10  the parcels eliminated from the district equals or exceeds the 
232.11  net tax capacity of those parcels in the district's original net 
232.12  tax capacity or (B) the authority agrees that, notwithstanding 
232.13  section 469.177, subdivision 1, the original net tax capacity 
232.14  will be reduced by no more than the current net tax capacity of 
232.15  the parcels eliminated from the district.  The authority must 
232.16  notify the county auditor of any modification that reduces or 
232.17  enlarges the geographic area of a district or a project area.  
232.18     (b) (f) The geographic area of a tax increment financing 
232.19  district may be reduced, but shall not be enlarged after five 
232.20  years following the date of certification of the original net 
232.21  tax capacity by the county auditor or after August 1, 1984, for 
232.22  tax increment financing districts authorized prior to August 1, 
232.23  1979. 
232.24     [EFFECTIVE DATE.] This section applies to districts for 
232.25  which the request for certification was made after June 30, 
232.26  2003.  The development authority may elect to have this section 
232.27  apply to a tax increment financing plan or modification that was 
232.28  approved before July 1, 2003, by adopting before January 1, 
232.29  2004, a modification of the plan that states the amount of the 
232.30  cost of the project, including administrative expenses, that 
232.31  will be paid or financed with tax increments from the district.  
232.32  Section 469.175, subdivision 4, paragraph (b), does not apply to 
232.33  a modification adopted under this section if the modification is 
232.34  exclusively for the purpose of stating the amount of the cost of 
232.35  the project, including administrative expenses, that will be 
232.36  paid or financed with tax increment from the district.  For 
233.1   districts for which the request for certification was made after 
233.2   July 31, 1979, and for which this section is not effective, the 
233.3   total estimated tax increment expenditures are determined by 
233.4   considering all of the information in the tax increment 
233.5   financing plan and exhibits to the plan about estimated sources 
233.6   and uses of funds. 
233.7      For districts for which certification was requested after 
233.8   June 30, 1982, and before July 1, 2003, and for which the plan 
233.9   has not been amended after July 1, 2003, the limit on 
233.10  administrative expenses equals the greater of (1) nine percent 
233.11  of the increments for the district or (2) the amount determined 
233.12  under section 469.176, subdivision 3, and the tax increment 
233.13  financing plan. 
233.14     Sec. 9.  Minnesota Statutes 2002, section 469.175, 
233.15  subdivision 6, is amended to read: 
233.16     Subd. 6.  [ANNUAL FINANCIAL REPORTING.] (a) The state 
233.17  auditor shall develop a uniform system of accounting and 
233.18  financial reporting for tax increment financing districts.  The 
233.19  system of accounting and financial reporting shall, as nearly as 
233.20  possible: 
233.21     (1) provide for full disclosure of the sources and uses of 
233.22  public funds in the district; 
233.23     (2) permit comparison and reconciliation with the affected 
233.24  local government's accounts and financial reports; 
233.25     (3) permit auditing of the funds expended on behalf of a 
233.26  district, including a single district that is part of a 
233.27  multidistrict project or that is funded in part or whole through 
233.28  the use of a development account funded with tax increments from 
233.29  other districts or with other public money; 
233.30     (4) be consistent with generally accepted accounting 
233.31  principles. 
233.32     (b) The authority must annually submit to the state auditor 
233.33  a financial report in compliance with paragraph (a).  Copies of 
233.34  the report must also be provided to the county auditor and to 
233.35  the governing body of the municipality, if the authority is not 
233.36  the municipality.  To the extent necessary to permit compliance 
234.1   with the requirement of financial reporting, the county and any 
234.2   other appropriate local government unit or private entity must 
234.3   provide the necessary records or information to the authority or 
234.4   the state auditor as provided by the system of accounting and 
234.5   financial reporting developed pursuant to paragraph (a).  The 
234.6   authority must submit the annual report for a year on or before 
234.7   August 1 of the next year. 
234.8      (c) The annual financial report must also include the 
234.9   following items: 
234.10     (1) the original net tax capacity of the district and any 
234.11  subdistrict under section 469.177, subdivision 1; 
234.12     (2) the net tax capacity for the reporting period of the 
234.13  district and any subdistrict; 
234.14     (3) the captured net tax capacity of the district; 
234.15     (4) any fiscal disparity deduction from the captured net 
234.16  tax capacity under section 469.177, subdivision 3; 
234.17     (5) the captured net tax capacity retained for tax 
234.18  increment financing under section 469.177, subdivision 2, 
234.19  paragraph (a), clause (1); 
234.20     (6) any captured net tax capacity distributed among 
234.21  affected taxing districts under section 469.177, subdivision 2, 
234.22  paragraph (a), clause (2); 
234.23     (7) the type of district; 
234.24     (8) the date the municipality approved the tax increment 
234.25  financing plan and the date of approval of any modification of 
234.26  the tax increment financing plan, the approval of which requires 
234.27  notice, discussion, a public hearing, and findings under 
234.28  subdivision 4, paragraph (a); 
234.29     (9) the date the authority first requested certification of 
234.30  the original net tax capacity of the district and the date of 
234.31  the request for certification regarding any parcel added to the 
234.32  district; 
234.33     (10) the date the county auditor first certified the 
234.34  original net tax capacity of the district and the date of 
234.35  certification of the original net tax capacity of any parcel 
234.36  added to the district; 
235.1      (11) the month and year in which the authority has received 
235.2   or anticipates it will receive the first increment from the 
235.3   district; 
235.4      (12) the date the district must be decertified; 
235.5      (13) for the reporting period and prior years of the 
235.6   district, the actual amount received from, at least, the 
235.7   following categories: 
235.8      (i) tax increments paid by the captured net tax capacity 
235.9   retained for tax increment financing under section 469.177, 
235.10  subdivision 2, paragraph (a), clause (1), but excluding any 
235.11  excess taxes; 
235.12     (ii) tax increments that are interest or other investment 
235.13  earnings on or from tax increments; 
235.14     (iii) tax increments that are proceeds from the sale or 
235.15  lease of property, tangible or intangible, purchased by the 
235.16  authority with tax increments; 
235.17     (iv) tax increments that are repayments of loans or other 
235.18  advances made by the authority with tax increments; 
235.19     (v) bond or loan proceeds; 
235.20     (vi) special assessments; 
235.21     (vii) grants; and 
235.22     (viii) transfers from funds not exclusively associated with 
235.23  the district; 
235.24     (14) for the reporting period and for the prior years of 
235.25  the district, the amount budgeted under the tax increment 
235.26  financing plan, and the actual amount expended for, at least, 
235.27  the following categories: 
235.28     (i) acquisition of land and buildings through condemnation 
235.29  or purchase; 
235.30     (ii)  site improvements or preparation costs; 
235.31     (iii) installation of public utilities, parking facilities, 
235.32  streets, roads, sidewalks, or other similar public improvements; 
235.33     (iv) administrative costs, including the allocated cost of 
235.34  the authority; 
235.35     (v) public park facilities, facilities for social, 
235.36  recreational, or conference purposes, or other similar public 
236.1   improvements; and 
236.2      (vi) transfers to funds not exclusively associated with the 
236.3   district; 
236.4      (15) for properties sold to developers, the total cost of 
236.5   the property to the authority and the price paid by the 
236.6   developer; 
236.7      (16) the amount of any payments and the value of any 
236.8   in-kind benefits, such as physical improvements and the use of 
236.9   building space, that are paid or financed with tax increments 
236.10  and are provided to another governmental unit other than the 
236.11  municipality during the reporting period; 
236.12     (17) the amount of any payments for activities and 
236.13  improvements located outside of the district that are paid for 
236.14  or financed with tax increments; 
236.15     (18) the amount of payments of principal and interest that 
236.16  are made during the reporting period on any nondefeased: 
236.17     (i) general obligation tax increment financing bonds; 
236.18     (ii) other tax increment financing bonds; and 
236.19     (iii) notes and pay-as-you-go contracts; 
236.20     (19) the principal amount, at the end of the reporting 
236.21  period, of any nondefeased: 
236.22     (i) general obligation tax increment financing bonds; 
236.23     (ii) other tax increment financing bonds; and 
236.24     (iii) notes and pay-as-you-go contracts; 
236.25     (20) the amount of principal and interest payments that are 
236.26  due for the current calendar year on any nondefeased: 
236.27     (i) general obligation tax increment financing bonds; 
236.28     (ii) other tax increment financing bonds; and 
236.29     (iii) notes and pay-as-you-go contracts; 
236.30     (21) if the fiscal disparities contribution under chapter 
236.31  276A or 473F for the district is computed under section 469.177, 
236.32  subdivision 3, paragraph (a), the amount of increased property 
236.33  taxes imposed on other properties in the municipality that 
236.34  approved the tax increment financing plan as a result of the 
236.35  fiscal disparities contribution; 
236.36     (22) whether the tax increment financing plan or other 
237.1   governing document permits increment revenues to be expended: 
237.2      (i) to pay bonds, the proceeds of which were or may be 
237.3   expended on activities outside of the district; 
237.4      (ii) for deposit into a common bond fund from which money 
237.5   may be expended on activities located outside of the district; 
237.6   or 
237.7      (iii) to otherwise finance activities located outside of 
237.8   the tax increment financing district; and 
237.9      (23) the estimate, if any, contained in the tax increment 
237.10  financing plan of the amount of the cost of the project, 
237.11  including administrative expenses, that will be paid or financed 
237.12  with tax increment; and 
237.13     (24) any additional information the state auditor may 
237.14  require. 
237.15     (d) The commissioner of revenue shall prescribe the method 
237.16  of calculating the increased property taxes under paragraph (c), 
237.17  clause (21), and the form of the statement disclosing this 
237.18  information on the annual statement under subdivision 5. 
237.19     (e) The reporting requirements imposed by this subdivision 
237.20  apply to districts certified before, on, and after August 1, 
237.21  1979. 
237.22     [EFFECTIVE DATE.] This section is effective beginning with 
237.23  the reports due in calendar year 2004. 
237.24     Sec. 10.  Minnesota Statutes 2002, section 469.176, 
237.25  subdivision 1c, is amended to read: 
237.26     Subd. 1c.  [DURATION LIMITS; PRE-1979 DISTRICTS.] (a) For 
237.27  tax increment financing districts created prior to August 1, 
237.28  1979, no tax increment shall be paid to the authority after 
237.29  April 1, 2001, or the term of a nondefeased bond or obligation 
237.30  outstanding on April 1, 1990, secured by increments from the 
237.31  district or project area, whichever time is greater, provided 
237.32  that in no case will a tax increment be paid to an authority 
237.33  after August 1, 2009, from such a district.  If a district's 
237.34  termination date is extended beyond April 1, 2001, because bonds 
237.35  were outstanding on April 1, 1990, with maturities extending 
237.36  beyond April 1, 2001, the following restrictions apply.  No 
238.1   increment collected from the district may be expended after 
238.2   April 1, 2001, except to pay or defease (i) repay: 
238.3      (1) bonds issued before April 1, 1990, or (ii); 
238.4      (2) bonds issued to refund the principal of the outstanding 
238.5   bonds and pay associated issuance costs, provided the average 
238.6   maturity of the refunding bonds does not exceed the bonds 
238.7   refunded; 
238.8      (3) administrative expenses of the district required to be 
238.9   paid under section 469.176, subdivision 4h, paragraph (a); 
238.10     (4) transfers of increment permitted under section 
238.11  469.1763, subdivision 6; and 
238.12     (5) any advance or payment made by the municipality or the 
238.13  authority after June 1, 2002, to pay any bonds listed in clause 
238.14  (1) or (2). 
238.15     (b) Each year, any increments from a district subject to 
238.16  this subdivision must be first applied to pay obligations listed 
238.17  under paragraph (a), clauses (1) and (2), and administrative 
238.18  expenses under paragraph (a), clause (3).  Any remaining 
238.19  increments may be used for transfers of increments permitted 
238.20  under section 469.1763, subdivision 6, and to make payments 
238.21  under paragraph (a), clause (5). 
238.22     (c) When sufficient money has been received to pay in full 
238.23  or defease obligations under paragraph (a), clauses (1), (2), 
238.24  and (5), the tax increment project or district must be 
238.25  decertified. 
238.26     [EFFECTIVE DATE.] This section is effective the day 
238.27  following final enactment and applies to tax increment financing 
238.28  districts for which the request for certification was made 
238.29  before August 1, 1979. 
238.30     Sec. 11.  Minnesota Statutes 2002, section 469.176, 
238.31  subdivision 2, is amended to read: 
238.32     Subd. 2.  [EXCESS TAX INCREMENTS.] In any year in which the 
238.33  tax increment exceeds the amount necessary to pay the costs 
238.34  authorized by the tax increment financing plan, including the 
238.35  amount necessary to cancel any tax levy as provided in section 
238.36  475.61, subdivision 3, (a) The authority shall annually 
239.1   determine the amount of excess increments for a district, if 
239.2   any.  This determination must be based on the tax increment 
239.3   financing plan in effect on December 31 of the year and the 
239.4   increments and other revenues received as of December 31 of the 
239.5   year. 
239.6      (b) For purposes of this subdivision, "excess increments" 
239.7   equals the excess of: 
239.8      (1) total increments collected from the district since its 
239.9   certification, reduced by any excess increments paid under 
239.10  paragraph (c), clause (4), for a prior year, over 
239.11     (2) the total costs authorized by the tax increment 
239.12  financing plan to be paid with increments from the district, 
239.13  reduced, but not below zero, by the sum of: 
239.14     (i) the amounts of those authorized costs that have been 
239.15  paid from sources other than tax increments from the district; 
239.16     (ii) revenues, other than tax increments from the district, 
239.17  that are dedicated for or otherwise required to be used to pay 
239.18  those authorized costs and that the authority has received and 
239.19  that are not included in item (i); and 
239.20     (iii) the amount of principal and interest obligations due 
239.21  on outstanding bonds after December 31 of the year and not 
239.22  prepaid under paragraph (c) in a prior year. 
239.23     (c) The authority shall use the excess amount to do any 
239.24  of excess increment only to do one or more of the following:  
239.25     (1) prepay any outstanding bonds,; 
239.26     (2) discharge the pledge of tax increment therefor, for any 
239.27  outstanding bonds; 
239.28     (3) pay into an escrow account dedicated to the payment of 
239.29  such bond, any outstanding bonds; or 
239.30     (4) return the excess amount to the county auditor who 
239.31  shall distribute the excess amount to the municipality city or 
239.32  town, county, and school district in which the tax increment 
239.33  financing district is located in direct proportion to their 
239.34  respective local tax rates.  
239.35     (d) The county auditor must report to the commissioner of 
239.36  children, families, and learning the amount of any excess tax 
240.1   increment distributed to a school district within 30 days of the 
240.2   distribution. 
240.3      [EFFECTIVE DATE.] This section is effective for all tax 
240.4   increment financing districts, regardless of whether the request 
240.5   for certification was made before, on, or after August 1, 1979, 
240.6   and applies after August 1, 2003, except the amendment to 
240.7   paragraph (c), clause (4), applies retroactively to August 1, 
240.8   1979. 
240.9      Sec. 12.  Minnesota Statutes 2002, section 469.176, 
240.10  subdivision 3, is amended to read: 
240.11     Subd. 3.  [LIMITATION ON ADMINISTRATIVE EXPENSES.] (a) For 
240.12  districts for which certification was requested before August 1, 
240.13  1979, or after June 30, 1982 and before August 1, 2001, no tax 
240.14  increment shall be used to pay any administrative expenses for a 
240.15  project which exceed ten percent of the total estimated tax 
240.16  increment expenditures authorized by the tax increment financing 
240.17  plan or the total tax increment expenditures for the project, 
240.18  whichever is less.  
240.19     (b) For districts for which certification was requested 
240.20  after July 31, 1979, and before July 1, 1982, no tax increment 
240.21  shall be used to pay administrative expenses, as defined in 
240.22  Minnesota Statutes 1980, section 273.73, for a district which 
240.23  exceeds five percent of the total tax increment expenditures 
240.24  authorized by the tax increment financing plan or the 
240.25  total estimated tax increment expenditures for the district, 
240.26  whichever is less. 
240.27     (c) For districts for which certification was requested 
240.28  after July 31, 2001, no tax increment may be used to pay any 
240.29  administrative expenses for a project which exceed ten percent 
240.30  of total estimated tax increment expenditures authorized by the 
240.31  tax increment financing plan or the total tax increments, as 
240.32  defined in section 469.174, subdivision 25, clause (1), from the 
240.33  district, whichever is less. 
240.34     [EFFECTIVE DATE.] This section is effective for districts 
240.35  for which the request for certification was made before, on, or 
240.36  after August 1, 1979. 
241.1      Sec. 13.  Minnesota Statutes 2002, section 469.176, 
241.2   subdivision 7, is amended to read: 
241.3      Subd. 7.  [PARCELS NOT INCLUDABLE IN DISTRICTS.] (a) The 
241.4   authority may request inclusion in a tax increment financing 
241.5   district and the county auditor may certify the original tax 
241.6   capacity of a parcel or a part of a parcel that qualified under 
241.7   the provisions of section 273.111 or 273.112 or chapter 473H for 
241.8   taxes payable in any of the five calendar years before the 
241.9   filing of the request for certification only for: 
241.10     (1) a district in which 85 percent or more of the planned 
241.11  buildings and facilities (determined on the basis of square 
241.12  footage) are a qualified manufacturing facility or a qualified 
241.13  distribution facility or a combination of both; or 
241.14     (2) a qualified housing district as defined in section 
241.15  273.1399, subdivision 1. 
241.16     (b)(1) A distribution facility means buildings and other 
241.17  improvements to real property that are used to conduct 
241.18  activities in at least each of the following categories: 
241.19     (i) to store or warehouse tangible personal property; 
241.20     (ii) to take orders for shipment, mailing, or delivery; 
241.21     (iii) to prepare personal property for shipment, mailing, 
241.22  or delivery; and 
241.23     (iv) to ship, mail, or deliver property. 
241.24     (2) A manufacturing facility includes space used for 
241.25  manufacturing or producing tangible personal property, including 
241.26  processing resulting in the change in condition of the property, 
241.27  and space necessary for and related to the manufacturing 
241.28  activities. 
241.29     (3) To be a qualified facility, the owner or operator of a 
241.30  manufacturing or distribution facility must agree to pay and pay 
241.31  90 percent or more of the employees of the facility at a rate 
241.32  equal to or greater than 160 percent of the federal minimum wage 
241.33  for individuals over the age of 20. 
241.34     [EFFECTIVE DATE.] This section applies to all districts for 
241.35  which the request for certification was made on or after January 
241.36  1, 2002, and to all districts to which the definition of 
242.1   qualified housing districts under Minnesota Statutes 2000, 
242.2   section 273.1399, applied. 
242.3      Sec. 14.  Minnesota Statutes 2002, section 469.1763, 
242.4   subdivision 1, is amended to read: 
242.5      Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
242.6   section, the following terms have the meanings given. 
242.7      (b) "Activities" means acquisition of property, clearing of 
242.8   land, site preparation, soils correction, removal of hazardous 
242.9   waste or pollution, installation of utilities, construction of 
242.10  public or private improvements, and other similar activities, 
242.11  but only to the extent that tax increment revenues may be spent 
242.12  for such purposes under other law.  
242.13     (c) "Third party" means an entity other than (1) the person 
242.14  receiving the benefit of assistance financed with tax 
242.15  increments, or (2) the municipality or the development authority 
242.16  or other person substantially under the control of the 
242.17  municipality. 
242.18     (d) "Revenues derived from tax increments paid by 
242.19  properties in the district" means only tax increment as defined 
242.20  in section 469.174, subdivision 25, clause (1), and does not 
242.21  include tax increment as defined in section 469.174, subdivision 
242.22  25, clauses (2), (3), and (4). 
242.23     [EFFECTIVE DATE.] This section is effective for districts 
242.24  for which the request for certification was made after April 30, 
242.25  1990. 
242.26     Sec. 15.  Minnesota Statutes 2002, section 469.1763, 
242.27  subdivision 3, is amended to read: 
242.28     Subd. 3.  [FIVE-YEAR RULE.] (a) Revenues derived from tax 
242.29  increments are considered to have been expended on an activity 
242.30  within the district under subdivision 2 only if one of the 
242.31  following occurs: 
242.32     (1) before or within five years after certification of the 
242.33  district, the revenues are actually paid to a third party with 
242.34  respect to the activity; 
242.35     (2) bonds, the proceeds of which must be used to finance 
242.36  the activity, are issued and sold to a third party before or 
243.1   within five years after certification, the revenues are spent to 
243.2   repay the bonds, and the proceeds of the bonds either are, on 
243.3   the date of issuance, reasonably expected to be spent before the 
243.4   end of the later of (i) the five-year period, or (ii) a 
243.5   reasonable temporary period within the meaning of the use of 
243.6   that term under section 148(c)(1) of the Internal Revenue Code, 
243.7   or are deposited in a reasonably required reserve or replacement 
243.8   fund; 
243.9      (3) binding contracts with a third party are entered into 
243.10  for performance of the activity before or within five years 
243.11  after certification of the district and the revenues are spent 
243.12  under the contractual obligation; or 
243.13     (4) costs with respect to the activity are paid before or 
243.14  within five years after certification of the district and the 
243.15  revenues are spent to reimburse a party for payment of the 
243.16  costs, including interest on unreimbursed costs; or 
243.17     (5) expenditures are made for housing purposes as permitted 
243.18  by subdivision 2, paragraph (b). 
243.19     (b) For purposes of this subdivision, bonds include 
243.20  subsequent refunding bonds if the original refunded bonds meet 
243.21  the requirements of paragraph (a), clause (2). 
243.22     [EFFECTIVE DATE.] This section is effective for 
243.23  expenditures made after June 30, 2003. 
243.24     Sec. 16.  Minnesota Statutes 2002, section 469.1763, 
243.25  subdivision 6, is amended to read: 
243.26     Subd. 6.  [POOLING PERMITTED FOR DEFICITS.] (a) This 
243.27  subdivision applies only to districts for which the request for 
243.28  certification was made before August 1, 2001, and without regard 
243.29  to whether the request for certification was made prior to 
243.30  August 1, 1979. 
243.31     (b) The municipality for the district may transfer 
243.32  available increments from another tax increment financing 
243.33  district located in the municipality, if the transfer is 
243.34  necessary to eliminate a deficit in the district to which the 
243.35  increments are transferred.  A deficit in the district for 
243.36  purposes of this subdivision means the lesser of the following 
244.1   two amounts: 
244.2      (1)(i) the amount due during the calendar year to pay 
244.3   preexisting obligations of the district; minus 
244.4      (ii) the total increments collected or to be collected from 
244.5   properties located within the district that are available for 
244.6   the calendar year including amounts collected in prior years 
244.7   that are currently available; plus 
244.8      (iii) total increments from properties located in other 
244.9   districts in the municipality including amounts collected in 
244.10  prior years that are available to be used to meet the district's 
244.11  obligations under this section, excluding this subdivision, or 
244.12  other provisions of law (but excluding a special tax under 
244.13  section 469.1791 and the grant program under Laws 1997, chapter 
244.14  231, article 1, section 19, or Laws 2001, First Special Session 
244.15  chapter 5); or 
244.16     (2) the reduction in increments collected from properties 
244.17  located in the district for the calendar year as a result of the 
244.18  changes in class rates in Laws 1997, chapter 231, article 1; 
244.19  Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, 
244.20  and Laws 2001, First Special Session chapter 5, or the 
244.21  elimination of the general education tax levy under Laws 2001, 
244.22  First Special Session chapter 5. 
244.23     (c) A preexisting obligation means: 
244.24     (1) bonds issued and sold before August 1, 2001, or bonds 
244.25  issued pursuant to a binding contract requiring the issuance of 
244.26  bonds entered into before July 1, 2001, and bonds issued to 
244.27  refund such bonds or to reimburse expenditures made in 
244.28  conjunction with a signed contractual agreement entered into 
244.29  before August 1, 2001, to the extent that the bonds are secured 
244.30  by a pledge of increments from the tax increment financing 
244.31  district; and 
244.32     (2) binding contracts entered into before August 1, 2001, 
244.33  to the extent that the contracts require payments secured by a 
244.34  pledge of increments from the tax increment financing district. 
244.35     (d) The municipality may require a development authority, 
244.36  other than a seaway port authority, to transfer available 
245.1   increments including amounts collected in prior years that are 
245.2   currently available for any of its tax increment financing 
245.3   districts in the municipality to make up an insufficiency in 
245.4   another district in the municipality, regardless of whether the 
245.5   district was established by the development authority or another 
245.6   development authority.  This authority applies notwithstanding 
245.7   any law to the contrary, but applies only to a development 
245.8   authority that: 
245.9      (1) was established by the municipality; or 
245.10     (2) the governing body of which is appointed, in whole or 
245.11  part, by the municipality or an officer of the municipality or 
245.12  which consists, in whole or part, of members of the governing 
245.13  body of the municipality.  The municipality may use this 
245.14  authority only after it has first used all available increments 
245.15  of the receiving development authority to eliminate the 
245.16  insufficiency and exercised any permitted action under section 
245.17  469.1792, subdivision 3, for preexisting districts of the 
245.18  receiving development authority to eliminate the insufficiency. 
245.19     (e) The authority under this subdivision to spend tax 
245.20  increments outside of the area of the district from which the 
245.21  tax increments were collected: 
245.22     (1) may only be exercised after obtaining approval of the 
245.23  use of the increments, in writing, by the commissioner of 
245.24  revenue; 
245.25     (2) is an exception to the restrictions under section 
245.26  469.176, subdivision 4i, and the other provisions of this 
245.27  section, and the percentage restrictions under subdivision 2 
245.28  must be calculated after deducting increments spent under this 
245.29  subdivision from the total increments for the district; and 
245.30     (3) (2) applies notwithstanding the provisions of the Tax 
245.31  Increment Financing Act in effect for districts for which the 
245.32  request for certification was made before June 30, 1982, or any 
245.33  other law to the contrary. 
245.34     (f) If a preexisting obligation requires the development 
245.35  authority to pay an amount that is limited to the increment from 
245.36  the district or a specific development within the district and 
246.1   if the obligation requires paying a higher amount to the extent 
246.2   that increments are available, the municipality may determine 
246.3   that the amount due under the preexisting obligation equals the 
246.4   higher amount and may authorize the transfer of increments under 
246.5   this subdivision to pay up to the higher amount.  The existence 
246.6   of a guarantee of obligations by the individual or entity that 
246.7   would receive the payment under this paragraph is disregarded in 
246.8   the determination of eligibility to pool under this 
246.9   subdivision.  The authority to transfer increments under this 
246.10  paragraph may only be used to the extent that the payment of all 
246.11  other preexisting obligations in the municipality due during the 
246.12  calendar year have been satisfied. 
246.13     [EFFECTIVE DATE.] This section is effective retroactively 
246.14  to January 2, 2002, and thereafter. 
246.15     Sec. 17.  Minnesota Statutes 2002, section 469.177, 
246.16  subdivision 1, is amended to read: 
246.17     Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
246.18  after adoption of a tax increment financing plan, the auditor of 
246.19  any county in which the district is situated shall, upon request 
246.20  of the authority, certify the original net tax capacity of the 
246.21  tax increment financing district and that portion of the 
246.22  district overlying any subdistrict as described in the tax 
246.23  increment financing plan and shall certify in each year 
246.24  thereafter the amount by which the original net tax capacity has 
246.25  increased or decreased as a result of a change in tax exempt 
246.26  status of property within the district and any subdistrict, 
246.27  reduction or enlargement of the district or changes pursuant to 
246.28  subdivision 4.  
246.29     (b) For districts approved under section 469.175, 
246.30  subdivision 3, or parcels added to existing districts after May 
246.31  1, 1988, If the classification under section 273.13 of property 
246.32  located in a district changes to a classification that has a 
246.33  different assessment ratio, the original net tax capacity of 
246.34  that property must be redetermined at the time when its use is 
246.35  changed as if the property had originally been classified in the 
246.36  same class in which it is classified after its use is changed. 
247.1      (c) The amount to be added to the original net tax capacity 
247.2   of the district as a result of previously tax exempt real 
247.3   property within the district becoming taxable equals the net tax 
247.4   capacity of the real property as most recently assessed pursuant 
247.5   to section 273.18 or, if that assessment was made more than one 
247.6   year prior to the date of title transfer rendering the property 
247.7   taxable, the net tax capacity assessed by the assessor at the 
247.8   time of the transfer.  If improvements are made to tax exempt 
247.9   property after certification of the district and before the 
247.10  parcel becomes taxable, the assessor shall, at the request of 
247.11  the authority, separately assess the estimated market value of 
247.12  the improvements.  If the property becomes taxable, the county 
247.13  auditor shall add to original net tax capacity, the net tax 
247.14  capacity of the parcel, excluding the separately assessed 
247.15  improvements.  If substantial taxable improvements were made to 
247.16  a parcel after certification of the district and if the property 
247.17  later becomes tax exempt, in whole or part, as a result of the 
247.18  authority acquiring the property through foreclosure or exercise 
247.19  of remedies under a lease or other revenue agreement or as a 
247.20  result of tax forfeiture, the amount to be added to the original 
247.21  net tax capacity of the district as a result of the property 
247.22  again becoming taxable is the amount of the parcel's value that 
247.23  was included in original net tax capacity when the parcel was 
247.24  first certified.  The amount to be added to the original net tax 
247.25  capacity of the district as a result of enlargements equals the 
247.26  net tax capacity of the added real property as most recently 
247.27  certified by the commissioner of revenue as of the date of 
247.28  modification of the tax increment financing plan pursuant to 
247.29  section 469.175, subdivision 4. 
247.30     (d) For districts approved under section 469.175, 
247.31  subdivision 3, or parcels added to existing districts after May 
247.32  1, 1988, If the net tax capacity of a property increases because 
247.33  the property no longer qualifies under the Minnesota 
247.34  Agricultural Property Tax Law, section 273.111; the Minnesota 
247.35  Open Space Property Tax Law, section 273.112; or the 
247.36  Metropolitan Agricultural Preserves Act, chapter 473H, or 
248.1   because platted, unimproved property is improved or three years 
248.2   pass after approval of the plat under section 273.11, 
248.3   subdivision 1, the increase in net tax capacity must be added to 
248.4   the original net tax capacity.  
248.5      (e) The amount to be subtracted from the original net tax 
248.6   capacity of the district as a result of previously taxable real 
248.7   property within the district becoming tax exempt, or a reduction 
248.8   in the geographic area of the district, shall be the amount of 
248.9   original net tax capacity initially attributed to the property 
248.10  becoming tax exempt or being removed from the district.  If the 
248.11  net tax capacity of property located within the tax increment 
248.12  financing district is reduced by reason of a court-ordered 
248.13  abatement, stipulation agreement, voluntary abatement made by 
248.14  the assessor or auditor or by order of the commissioner of 
248.15  revenue, the reduction shall be applied to the original net tax 
248.16  capacity of the district when the property upon which the 
248.17  abatement is made has not been improved since the date of 
248.18  certification of the district and to the captured net tax 
248.19  capacity of the district in each year thereafter when the 
248.20  abatement relates to improvements made after the date of 
248.21  certification.  The county auditor may specify reasonable form 
248.22  and content of the request for certification of the authority 
248.23  and any modification thereof pursuant to section 469.175, 
248.24  subdivision 4.  
248.25     (f) If a parcel of property contained a substandard 
248.26  building that was demolished or removed and if the authority 
248.27  elects to treat the parcel as occupied by a substandard building 
248.28  under section 469.174, subdivision 10, paragraph (b), the 
248.29  auditor shall certify the original net tax capacity of the 
248.30  parcel using the greater of (1) the current net tax capacity of 
248.31  the parcel, or (2) the estimated market value of the parcel for 
248.32  the year in which the building was demolished or removed, but 
248.33  applying the class rates for the current year. 
248.34     [EFFECTIVE DATE.] This section applies to all districts, 
248.35  regardless of whether the request for certification was made 
248.36  before, on, or after August 1, 1979, beginning for taxes payable 
249.1   in 2004.  This section requires adjustment of the original tax 
249.2   capacity under Minnesota Statutes, section 469.177, subdivision 
249.3   7, of all parcels for class rate changes enacted after May 1, 
249.4   1988, regardless of whether the classification of the property 
249.5   has changed after the certification of the district.  This 
249.6   section requires adjustment of original tax capacity for changes 
249.7   in the classification of the property, only if the change in use 
249.8   occurs after December 31, 2002. 
249.9      Sec. 18.  Minnesota Statutes 2002, section 469.177, 
249.10  subdivision 12, is amended to read: 
249.11     Subd. 12.  [DECERTIFICATION OF TAX INCREMENT FINANCING 
249.12  DISTRICT.] The county auditor shall decertify a tax increment 
249.13  financing district when the earliest of the following times is 
249.14  reached: 
249.15     (1) the applicable maximum duration limit under section 
249.16  469.176, subdivisions 1a to 1g; 
249.17     (2) the maximum duration limit, if any, provided by the 
249.18  municipality pursuant to section 469.176, subdivision 1; 
249.19     (3) the time of decertification specified in section 
249.20  469.1761, subdivision 4, if the commissioner of revenue issues 
249.21  an order of noncompliance and the maximum duration limit for 
249.22  economic development districts has been exceeded; 
249.23     (4) upon completion of the required actions to allow 
249.24  decertification under section 469.1763, subdivision 4; or 
249.25     (5) upon the later of receipt by the county auditor of a 
249.26  written request for decertification from the authority that 
249.27  requested certification of the original net tax capacity of the 
249.28  district or its successor or the decertification date specified 
249.29  in the request. 
249.30     [EFFECTIVE DATE.] This section is effective for all 
249.31  districts regardless of whether the request for certification 
249.32  was made before, on, or after August 1, 1979. 
249.33     Sec. 19.  Minnesota Statutes 2002, section 469.1771, 
249.34  subdivision 4, is amended to read: 
249.35     Subd. 4.  [LIMITATIONS.] (a) If the increments are pledged 
249.36  to repay bonds that were issued before the lawsuit was filed 
250.1   under this section, the damages under this section may not 
250.2   exceed the greater of (1) ten percent of the expenditures or 
250.3   revenues derived from increment, or (2) the amount of available 
250.4   revenues after paying debt services due on the bonds.  
250.5      (b) The court may abate all or part of the amount if it 
250.6   determines the unauthorized action or failure to perform the 
250.7   required action was taken in good faith and the payment would 
250.8   work an undue hardship on the authority or municipality. 
250.9      [EFFECTIVE DATE.] This section is effective for violations 
250.10  occurring after December 31, 1990. 
250.11     Sec. 20.  Minnesota Statutes 2002, section 469.1771, is 
250.12  amended by adding a subdivision to read: 
250.13     Subd. 7.  [LIMITATIONS ON ACTIONS.] An action under 
250.14  subdivision 1, paragraph (a), contesting the validity of a 
250.15  determination by an authority under section 469.175, subdivision 
250.16  3, must be commenced within the later of: 
250.17     (1) 180 days after the municipality's approval under 
250.18  section 469.175, subdivision 3; or 
250.19     (2) 90 days after the request for certification of the 
250.20  district is filed with the county auditor under section 469.177, 
250.21  subdivision 1. 
250.22     [EFFECTIVE DATE.] This section is effective for actions 
250.23  filed after the day following final enactment. 
250.24     Sec. 21.  Minnesota Statutes 2002, section 469.178, 
250.25  subdivision 7, is amended to read: 
250.26     Subd. 7.  [INTERFUND LOANS.] The authority or municipality 
250.27  may advance or loan money to finance expenditures under section 
250.28  469.176, subdivision 4, from its general fund or any other fund 
250.29  under which it has legal authority to do so.  The loan or 
250.30  advance must be approved authorized, by resolution of the 
250.31  governing body, before money is transferred, advanced, or spent, 
250.32  whichever is earliest.  The resolution may generally grant to 
250.33  the authority the power to make interfund loans under one or 
250.34  more tax increment financing plans or for one or more 
250.35  districts.  The terms and conditions for repayment of the loan 
250.36  must be provided in writing and include, at a minimum, the 
251.1   principal amount, the interest rate, and maximum term.  The 
251.2   maximum rate of interest permitted to be charged is limited to 
251.3   the greater of the rates specified under section 270.75 or 
251.4   549.09 as of the date or advance is made, unless the written 
251.5   agreement states that the maximum interest rate will fluctuate 
251.6   as the interest rates specified under section 270.75 or 549.09 
251.7   are from time to time adjusted. 
251.8      [EFFECTIVE DATE.] This section is effective for loans and 
251.9   advances made after July 31, 2001, and for districts for which 
251.10  the request for certification was made after July 31, 1979. 
251.11     Sec. 22.  Minnesota Statutes 2002, section 469.1791, 
251.12  subdivision 3, is amended to read: 
251.13     Subd. 3.  [PRECONDITIONS TO ESTABLISH DISTRICT.] (a) A city 
251.14  may establish a special taxing district within a tax increment 
251.15  financing district under this section only if the conditions 
251.16  under paragraphs (b) and (c) are met or if the city elects to 
251.17  exercise the authority under paragraph (d). 
251.18     (b) The city has determined that: 
251.19     (1) total tax increments from the district, including 
251.20  unspent increments from previous years and increments 
251.21  transferred under paragraph (c), will be insufficient to pay the 
251.22  amounts due in a year on preexisting obligations; and 
251.23     (2) this insufficiency of increments resulted from the 
251.24  reduction in property tax class rates enacted in the 1997 and 
251.25  1998 legislative sessions. 
251.26     (c) The city has agreed to transfer any available 
251.27  increments from other tax increment financing districts in the 
251.28  city to pay the preexisting obligations of the district under 
251.29  section 469.1763, subdivision 6.  This requirement does not 
251.30  apply to any available increments of a qualified housing 
251.31  district, as defined in section 273.1399, subdivision 1.  
251.32     (d) If a tax increment financing district does not qualify 
251.33  under paragraphs (b) and (c), the governing body may elect to 
251.34  establish a special taxing district under this section.  If the 
251.35  city elects to exercise this authority, increments from the tax 
251.36  increment financing district and the proceeds of the tax imposed 
252.1   under this section may only be used to pay preexisting 
252.2   obligations and reasonable administrative expenses of the 
252.3   authority for the tax increment financing district.  The tax 
252.4   increment financing district must be decertified when all 
252.5   preexisting obligations have been paid.  
252.6      [EFFECTIVE DATE.] This section applies to all districts for 
252.7   which the request for certification was made on or after January 
252.8   1, 2002, and to all districts to which the definition of 
252.9   qualified housing districts under Minnesota Statutes 2000, 
252.10  section 273.1399, applied. 
252.11     Sec. 23.  Minnesota Statutes 2002, section 469.1792, 
252.12  subdivision 1, is amended to read: 
252.13     Subdivision 1.  [SCOPE.] This section applies only to an 
252.14  authority with a preexisting district for which: 
252.15     (1) the increments from the district were insufficient to 
252.16  pay preexisting obligations as a result of the class rate 
252.17  changes or the elimination of the state-determined general 
252.18  education property tax levy under this act, or both; or 
252.19     (2)(i) the development authority has a binding contract, 
252.20  entered into before August 1, 2001, with a person requiring the 
252.21  authority to pay to the person an amount that may not exceed the 
252.22  increment from the district or a specific development within the 
252.23  district; and 
252.24     (ii) the authority is unable to pay the full amount under 
252.25  the contract from the pledged increments or other increments 
252.26  from the district that would have been due if the class rate 
252.27  changes or elimination of the state-determined general education 
252.28  property tax levy or both had not been made under Laws 2001, 
252.29  First Special Session chapter 5. 
252.30     [EFFECTIVE DATE.] This section is effective retroactively 
252.31  to the effective date of the original enactment of section 
252.32  469.1792, subdivision 1, and applies to all districts for which 
252.33  the request for certification was made after July 1, 1979. 
252.34     Sec. 24.  Minnesota Statutes 2002, section 469.1792, 
252.35  subdivision 2, is amended to read: 
252.36     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
253.1   the following terms have the meanings given. 
253.2      (b) "Preexisting district" means a tax increment financing 
253.3   district for which the request for certification was made before 
253.4   August 1, 2001. 
253.5      (c) "Preexisting obligation" means a bond or binding 
253.6   contract that: 
253.7      (1)(i) was issued or approved before August 1, 2001, or was 
253.8   issued pursuant to a binding contract entered into before August 
253.9   July 1, 2001; or 
253.10     (ii) was issued to refinance an obligation under item (i), 
253.11  if the refinancing does not increase the present value of the 
253.12  debt service; and 
253.13     (2) is secured by increments from a preexisting district. 
253.14     [EFFECTIVE DATE.] This section is effective the day 
253.15  following final enactment and applies to districts for which the 
253.16  request for certification was made on, before, or after August 
253.17  1, 1979, and before August 1, 2001. 
253.18     Sec. 25.  Minnesota Statutes 2002, section 469.1792, 
253.19  subdivision 3, is amended to read: 
253.20     Subd. 3.  [ACTIONS AUTHORIZED.] (a) An authority with a 
253.21  district qualifying under this section may take either or both 
253.22  of the following actions for any or all of its preexisting 
253.23  districts: 
253.24     (1) the authority may elect that the original local tax 
253.25  rate under section 469.177, subdivision 1a, does not apply to 
253.26  the district; and 
253.27     (2) the authority may elect the fiscal disparities 
253.28  contribution will be computed under section 469.177, subdivision 
253.29  3, paragraph (a), regardless of the election that was made for 
253.30  the district or if the district is an economic development 
253.31  district for which the request for certification was made after 
253.32  June 30, 1997. 
253.33     (b) The authority may take action under this subdivision 
253.34  only after the municipality approves the action, by resolution, 
253.35  after notice and public hearing in the manner provided under 
253.36  section 469.175, subdivision 2 3. 
254.1      [EFFECTIVE DATE.] This section is effective the day 
254.2   following final enactment and applies to districts for which the 
254.3   request for certification was made on, before, or after August 
254.4   1, 1979, and before August 1, 2001. 
254.5      Sec. 26.  Minnesota Statutes 2002, section 469.1813, 
254.6   subdivision 8, is amended to read: 
254.7      Subd. 8.  [LIMITATION ON ABATEMENTS.] In any year, the 
254.8   total amount of property taxes abated by a political subdivision 
254.9   under this section may not exceed (1) five percent of the 
254.10  current levy, or (2) $100,000, whichever is greater.  The limit 
254.11  under this subdivision does not apply to an uncollected 
254.12  abatement from a prior year that is added to the abatement levy. 
254.13     [EFFECTIVE DATE.] This section is effective beginning with 
254.14  property taxes levied in 2003, payable in 2004. 
254.15     Sec. 27.  Minnesota Statutes 2002, section 469.1815, 
254.16  subdivision 1, is amended to read: 
254.17     Subdivision 1.  [INCLUSION IN PROPOSED AND FINAL LEVIES.] 
254.18  The political subdivision must add to its levy amount for the 
254.19  current year under sections 275.065 and 275.07 the total 
254.20  estimated amount of all current year abatements granted.  If all 
254.21  or a portion of an abatement levy for a prior year was 
254.22  uncollected, the political subdivision may add the uncollected 
254.23  amount to its abatement levy for the current year.  The tax 
254.24  amounts shown on the proposed notice under section 275.065, 
254.25  subdivision 3, and on the property tax statement under section 
254.26  276.04, subdivision 2, are the total amounts before the 
254.27  reduction of any abatements that will be granted on the property.
254.28     [EFFECTIVE DATE.] This section is effective beginning with 
254.29  property taxes levied in 2003, payable in 2004. 
254.30     Sec. 28.  Laws 1997, chapter 231, article 10, section 25, 
254.31  is amended to read: 
254.32     Sec. 25.  [EFFECTIVE DATE.] 
254.33     Sections 1, 3 to 6, 7, and 10, are effective for districts 
254.34  for which the requests for certification are made after June 30, 
254.35  1997. 
254.36     Section 2, clauses clause (1) and is effective for all 
255.1   districts, regardless of whether the request for certification 
255.2   was made before, on, or after August 1, 1979.  Section 2, 
255.3   clause (4), are is effective for districts for which the 
255.4   requests for certification were made after July 31, 1979, and 
255.5   for payments and investment earnings received after July 1, 
255.6   1997.  Section 2, clauses (2) and (3), are effective for 
255.7   districts for which the request for certification was made after 
255.8   June 30, 1982, and proceeds from sales and leases of properties 
255.9   purchased by the authority after June 30, 1997, and repayments 
255.10  of advances and loans that were made after June 30, 1997.  
255.11     Sections 8 and 9 apply to all tax increment districts, 
255.12  whenever certified, insofar as the underlying law applies to 
255.13  them, and any uses of tax increment expended prior to the date 
255.14  of enactment of this act which are in compliance with the 
255.15  provisions of those sections are deemed valid. 
255.16     Sections 12 and 13 are effective on the day the chief 
255.17  clerical officer of the city of Columbia Heights complies with 
255.18  Minnesota Statutes, sections 645.021, subdivision 3. 
255.19     Sections 17 to 20 are effective the day following final 
255.20  enactment and upon compliance by the governing body with 
255.21  Minnesota Statutes, section 645.021, subdivision 3. 
255.22     Section 24 is effective the day following final enactment. 
255.23     [EFFECTIVE DATE.] This section is effective the day 
255.24  following final enactment. 
255.25     Sec. 29.  Laws 2002, chapter 377, article 7, section 3, the 
255.26  effective date, is amended to read: 
255.27     [EFFECTIVE DATE.] This section is effective for increments 
255.28  payable in 2002 deficits occurring in calendar year 2000 and 
255.29  thereafter.  
255.30     Sec. 30.  Laws 2002, chapter 377, article 11, section 1, is 
255.31  amended to read: 
255.32     Section 1.  [CITY OF MOORHEAD; TAX LEVY AUTHORIZED.] 
255.33     (a) Each year the city of Moorhead may impose a tax on all 
255.34  class 3a and class 3b property located in the city in an amount 
255.35  which the city determines is equal to the reduction in revenues 
255.36  from increment from all tax increment financing districts in the 
256.1   city resulting from the class rate changes and the elimination 
256.2   of the state-determined general education property levy under 
256.3   Laws 2001, First Special Session chapter 5.  The proceeds of 
256.4   this tax and increments from the district may only be used to 
256.5   pay preexisting obligations as defined in Minnesota Statutes, 
256.6   section 469.1763, subdivision 6, whether general obligations or 
256.7   payable wholly from tax increments, and administrative 
256.8   expenses.  The tax must be levied and collected in the same 
256.9   manner and as part of the property tax levied by the city and is 
256.10  subject to the same administrative, penalty, and enforcement 
256.11  provisions.  A tax imposed under this section is a special levy 
256.12  and is not subject to levy limitations under Minnesota Statutes, 
256.13  section 275.71. 
256.14     (b) This section expires December 31, 2005 2010. 
256.15     [EFFECTIVE DATE.] This section is effective upon approval 
256.16  by and compliance with Minnesota Statutes, section 645.021, 
256.17  subdivision 3, by the governing body of the city of Moorhead. 
256.18     Sec. 31.  [HOPKINS TAX INCREMENT FINANCING DISTRICT.] 
256.19     Subdivision 1.  [DISTRICT EXTENSION.] (a) The governing 
256.20  body of the city of Hopkins may elect to extend the duration of 
256.21  its redevelopment tax increment financing district 2-11 by up to 
256.22  four additional years. 
256.23     (b) Notwithstanding any law to the contrary, effective upon 
256.24  approval of this subdivision, no increments may be spent on 
256.25  activities located outside of the area of the district, other 
256.26  than to pay administrative expenses. 
256.27     Subd. 2.  [FIVE-YEAR RULE.] The requirements of Minnesota 
256.28  Statutes, section 469.1763, subdivision 3, that activities must 
256.29  be undertaken within a five-year period from the date of 
256.30  certification of tax increment financing district must be 
256.31  considered to be met for the city of Hopkins redevelopment tax 
256.32  increment district 2-11, if the activities are undertaken within 
256.33  nine years from the date of certification of the district. 
256.34     [EFFECTIVE DATE.] Subdivision 1 is effective upon 
256.35  compliance with the provisions of Minnesota Statutes, sections 
256.36  469.1782, subdivision 2, and 645.021.  Subdivision 2 is 
257.1   effective upon compliance by the governing body of the city of 
257.2   Hopkins with the provisions of Minnesota Statutes, section 
257.3   645.021. 
257.4                              ARTICLE 11 
257.5                            MINERALS TAXES 
257.6      Section 1.  Minnesota Statutes 2002, section 273.134, is 
257.7   amended to read: 
257.8      273.134 [TACONITE AND IRON ORE AREAS; TAX RELIEF AREA; 
257.9   DEFINITIONS.] 
257.10     (a) For purposes of this section and section sections 
257.11  273.135 and 273.1391, "municipality" means any city, however 
257.12  organized, or town, and which meets the following qualifications:
257.13     (1) it is a municipality in which the assessed valuation of 
257.14  unmined iron ore on May 1, 1941, was not less than 40 percent of 
257.15  the assessed valuation of all real property; or 
257.16     (2) it is a municipality in which, on January 1, 1977, or 
257.17  the applicable assessment date, there is a taconite 
257.18  concentrating plant or where taconite is mined or quarried or 
257.19  where there is located an electric generating plant which 
257.20  qualifies as a taconite facility. 
257.21     "The applicable assessment date" is the date as of which 
257.22  property is listed and assessed for the tax in question. 
257.23     (b) For the purposes of section 273.135, "tax relief area" 
257.24  means the geographic area contained within the boundaries of a 
257.25  school district on January 2, 2000, which contains a 
257.26  municipality which meets the following qualifications: 
257.27     (1) it is a municipality school district in which the 
257.28  assessed valuation of unmined iron ore on May 1, 1941, was not 
257.29  less than 40 percent of the assessed valuation of all real 
257.30  property and whose boundaries are within 20 miles of a taconite 
257.31  mine or plant; or 
257.32     (2) it is a municipality school district in which, on 
257.33  January 1, 1977 or the applicable assessment date, there is a 
257.34  taconite concentrating plant or where taconite is mined or 
257.35  quarried or where there is located an electric generating plant 
257.36  which qualifies as a taconite facility. 
258.1      For purposes of this paragraph, a "tax relief area" does 
258.2   not include a school district whose boundaries are more than 20 
258.3   miles from a taconite mine or plant or in which the assessed 
258.4   valuation of unmined iron ore on May 1, 1941, was less than 40 
258.5   percent of the assessed valuation of all real property. 
258.6      (b) For purposes of section 273.1391, subdivision 2, 
258.7   paragraph (c), and chapter 298, "tax relief area" means the 
258.8   geographic area contained within the boundaries of a school 
258.9   district which contains a municipality that meets the following 
258.10  qualifications: 
258.11     (1) it is a municipality in which the assessed valuation of 
258.12  unmined iron ore on May 1, 1941, was not less than 40 percent of 
258.13  the assessed valuation of all real property; or 
258.14     (2) it is a municipality in which, on January 1, 1977, or 
258.15  the applicable assessment date, there is a taconite 
258.16  concentrating plant or where taconite is mined or quarried or 
258.17  where there is located an electric generating plant which 
258.18  qualifies as a taconite facility. 
258.19     [EFFECTIVE DATE.] This section is effective for taxes 
258.20  payable in 2004 and thereafter. 
258.21     Sec. 2.  [273.1341] [TACONITE ASSISTANCE AREA.] 
258.22     A "taconite assistance area" means the geographic area that 
258.23  falls within the boundaries of a school district that contains a 
258.24  municipality in which the assessed valuation of unmined iron ore 
258.25  on May 1, 1941, was not less than 40 percent of the assessed 
258.26  valuation of all real property. 
258.27     [EFFECTIVE DATE.] This section is effective for taxes 
258.28  payable in 2004 and thereafter. 
258.29     Sec. 3.  Minnesota Statutes 2002, section 273.135, 
258.30  subdivision 1, is amended to read: 
258.31     Subdivision 1.  The property tax to be paid in respect to 
258.32  property taxable within a tax relief area as defined in section 
258.33  273.134, paragraph (a) (b), on homestead property, as otherwise 
258.34  determined by law and regardless of the market value of the 
258.35  property, for all purposes shall be reduced in the amount 
258.36  prescribed by subdivision 2, subject to the limitations 
259.1   contained therein. 
259.2      [EFFECTIVE DATE.] This section is effective for taxes 
259.3   payable in 2004 and thereafter. 
259.4      Sec. 4.  Minnesota Statutes 2002, section 273.135, 
259.5   subdivision 2, is amended to read: 
259.6      Subd. 2.  The amount of the reduction authorized by 
259.7   subdivision 1 shall be: 
259.8      (a) In the case of property located within a tax relief 
259.9   area municipality as defined under section 273.134, paragraph 
259.10  (a), that is within the boundaries of a municipality which meets 
259.11  the qualifications prescribed in section 273.134, paragraph (a), 
259.12  66 percent of the tax, provided that the reduction shall not 
259.13  exceed the maximum amounts specified in paragraph (c).  
259.14     (b) In the case of property located within the boundaries 
259.15  of a school district which qualifies as a tax relief area under 
259.16  section 273.134, paragraph (a) (b), but which is outside the 
259.17  boundaries of a municipality which meets the qualifications 
259.18  prescribed in section 273.134, paragraph (a), 57 percent of the 
259.19  tax, provided that the reduction shall not exceed the maximum 
259.20  amounts specified in paragraph (c).  
259.21     (c) The maximum reduction of the tax is $315.10 on property 
259.22  described in paragraph (a) and $289.80 on property described in 
259.23  paragraph (b). 
259.24     [EFFECTIVE DATE.] This section is effective for taxes 
259.25  payable in 2004 and thereafter. 
259.26     Sec. 5.  Minnesota Statutes 2002, section 273.1391, 
259.27  subdivision 2, is amended to read: 
259.28     Subd. 2.  The amount of the reduction authorized by 
259.29  subdivision 1 shall be: 
259.30     (a) In the case of property located within a school 
259.31  district which does not meet the qualifications of section 
259.32  273.134, paragraph (b), as a tax relief area, but which is 
259.33  located in a county with a population of less than 100,000 in 
259.34  which taconite is mined or quarried and wherein a school 
259.35  district is located which does meet the qualifications of a tax 
259.36  relief area, and provided that at least 90 percent of the area 
260.1   of the school district which does not meet the qualifications of 
260.2   section 273.134, paragraph (b), lies within such county, 57 
260.3   percent of the tax on qualified property located in the school 
260.4   district that does not meet the qualifications of section 
260.5   273.134, paragraph (b), provided that the amount of said 
260.6   reduction shall not exceed the maximum amounts specified in 
260.7   paragraph (d).  The reduction provided by this paragraph shall 
260.8   only be applicable to property located within the boundaries of 
260.9   the county described therein.  
260.10     (b) In the case of property located within a school 
260.11  district which does not meet the qualifications of section 
260.12  273.134, paragraph (b), as a tax relief area, but which is 
260.13  located in a school district in a county containing a city of 
260.14  the first class and a qualifying municipality as defined in 
260.15  section 273.134, paragraph (a), but not in a school district 
260.16  containing a city of the first class or adjacent to a school 
260.17  district containing a city of the first class unless the school 
260.18  district so adjacent contains a qualifying municipality as 
260.19  defined in section 273.134, paragraph (a), 57 percent of the 
260.20  tax, but not to exceed the maximums specified in paragraph (d). 
260.21     (c) In the case of property located within the boundaries 
260.22  of a municipality that meets the qualifications in section 
260.23  273.134, paragraph (b) (a), but not the qualifications of a tax 
260.24  relief area in section 273.134, paragraph (a) (b), 66 percent of 
260.25  the tax, provided that the reduction shall not exceed $315.10.  
260.26  In the case of property located within the boundaries of a 
260.27  school district which qualifies as a tax relief taconite 
260.28  assistance area under section 273.134, paragraph (b) 273.1341, 
260.29  but does not qualify as a tax relief area under section 273.134, 
260.30  paragraph (a) (b), but which is outside the boundaries of a 
260.31  municipality which meets the qualifications of the preceding 
260.32  sentence, 57 percent of the tax, provided that the reduction 
260.33  shall not exceed the maximum amounts specified in paragraph (d). 
260.34     (d) Except as otherwise provided in this section, the 
260.35  maximum reduction of the tax is $289.80.  
260.36     [EFFECTIVE DATE.] This section is effective for taxes 
261.1   payable in 2004 and thereafter.  
261.2      Sec. 6.  Minnesota Statutes 2002, section 298.2211, 
261.3   subdivision 1, is amended to read: 
261.4      Subdivision 1.  [PURPOSE; GRANT OF AUTHORITY.] In order to 
261.5   accomplish the legislative purposes specified in sections 
261.6   469.142 to 469.165 and chapter 462C, within tax relief areas as 
261.7   defined in section 273.134, the commissioner of iron range 
261.8   resources and rehabilitation may exercise the following powers:  
261.9   (1) all powers conferred upon a rural development financing 
261.10  authority under sections 469.142 to 469.149; (2) all powers 
261.11  conferred upon a city under chapter 462C; (3) all powers 
261.12  conferred upon a municipality or a redevelopment agency under 
261.13  sections 469.152 to 469.165; (4) all powers provided by sections 
261.14  469.142 to 469.151 to further any of the purposes and objectives 
261.15  of chapter 462C and sections 469.152 to 469.165; and (5) apply 
261.16  for, borrow, receive, and expend grant and loan money made 
261.17  available from federal sources and from federally funded 
261.18  programs; and (6) all powers conferred upon a municipality or an 
261.19  authority under sections 469.174 to 469.177, 469.178, except 
261.20  subdivision 2 thereof, and 469.179, subject to compliance with 
261.21  the provisions of section 469.175, subdivisions 1, 2, and 3; 
261.22  provided that any tax increments derived by the commissioner 
261.23  from the exercise of this authority may be used only to finance 
261.24  or pay premiums or fees for insurance, letters of credit, or 
261.25  other contracts guaranteeing the payment when due of net rentals 
261.26  under a project lease or the payment of principal and interest 
261.27  due on or repurchase of bonds issued to finance a project or 
261.28  program, to accumulate and maintain reserves securing the 
261.29  payment when due on bonds issued to finance a project or 
261.30  program, or to provide an interest rate reduction program 
261.31  pursuant to section 469.012, subdivision 7.  Tax increments and 
261.32  earnings thereon remaining in any bond reserve account after 
261.33  payment or discharge of any bonds secured thereby shall be used 
261.34  within one year thereafter in furtherance of this section or 
261.35  returned to the county auditor of the county in which the tax 
261.36  increment financing district is located.  If returned to the 
262.1   county auditor, the county auditor shall immediately allocate 
262.2   the amount among all government units which would have shared 
262.3   therein had the amount been received as part of the other ad 
262.4   valorem taxes on property in the district most recently paid, in 
262.5   the same proportions as other taxes were distributed, and shall 
262.6   immediately distribute it to the government units in accordance 
262.7   with the allocation. 
262.8      [EFFECTIVE DATE.] This section is effective the day 
262.9   following final enactment. 
262.10     Sec. 7.  Minnesota Statutes 2002, section 298.27, is 
262.11  amended to read: 
262.12     298.27 [COLLECTION AND PAYMENT OF TAX.] 
262.13     The taxes provided by section 298.24 shall be paid directly 
262.14  to each eligible county and the iron range resources and 
262.15  rehabilitation board.  The commissioner of revenue shall notify 
262.16  each producer of the amount to be paid each recipient prior to 
262.17  February 15.  Every person subject to taxes imposed by section 
262.18  298.24 shall file a correct report covering the preceding year.  
262.19  The report must contain the information required by the 
262.20  commissioner.  The report shall be filed by each producer on or 
262.21  before February 1.  A remittance equal to 50 percent of the 
262.22  total tax required to be paid hereunder in 2003 and 100 percent 
262.23  of the total tax required to be paid hereunder in 2004 and 
262.24  thereafter shall be paid on or before February 24.  A remittance 
262.25  equal to the remaining total tax required to be paid hereunder 
262.26  in 2003 shall be paid on or before August 24.  On or before 
262.27  February 25, and in 2003, August 25, the county auditor shall 
262.28  make distribution of the payments previously received by the 
262.29  county in the manner provided by section 298.28.  Reports shall 
262.30  be made and hearings held upon the determination of the tax in 
262.31  accordance with procedures established by the commissioner of 
262.32  revenue.  The commissioner of revenue shall have authority to 
262.33  make reasonable rules as to the form and manner of filing 
262.34  reports necessary for the determination of the tax hereunder, 
262.35  and by such rules may require the production of such information 
262.36  as may be reasonably necessary or convenient for the 
263.1   determination and apportionment of the tax.  All the provisions 
263.2   of the occupation tax law with reference to the assessment and 
263.3   determination of the occupation tax, including all provisions 
263.4   for appeals from or review of the orders of the commissioner of 
263.5   revenue relative thereto, but not including provisions for 
263.6   refunds, are applicable to the taxes imposed by section 298.24 
263.7   except in so far as inconsistent herewith.  If any person 
263.8   subject to section 298.24 shall fail to make the report provided 
263.9   for in this section at the time and in the manner herein 
263.10  provided, the commissioner of revenue shall in such case, upon 
263.11  information possessed or obtained, ascertain the kind and amount 
263.12  of ore mined or produced and thereon find and determine the 
263.13  amount of the tax due from such person.  There shall be added to 
263.14  the amount of tax due a penalty for failure to report on or 
263.15  before February 1, which penalty shall equal ten percent of the 
263.16  tax imposed and be treated as a part thereof. 
263.17     If any person responsible for making a tax payment at the 
263.18  time and in the manner herein provided fails to do so, there 
263.19  shall be imposed a penalty equal to ten percent of the amount so 
263.20  due, which penalty shall be treated as part of the tax due. 
263.21     In the case of any underpayment of the tax payment required 
263.22  herein, there may be added and be treated as part of the tax due 
263.23  a penalty equal to ten percent of the amount so underpaid. 
263.24     A person having a liability of $120,000 or more during a 
263.25  calendar year must remit all liabilities by means of a funds 
263.26  transfer as defined in section 336.4A-104, paragraph (a).  The 
263.27  funds transfer payment date, as defined in section 336.4A-401, 
263.28  must be on or before the date the tax is due.  If the date the 
263.29  tax is due is not a funds transfer business day, as defined in 
263.30  section 336.4A-105, paragraph (a), clause (4), the payment date 
263.31  must be on or before the funds transfer business day next 
263.32  following the date the tax is due. 
263.33     [EFFECTIVE DATE.] This section is effective for taxes 
263.34  payable in 2004 and thereafter. 
263.35     Sec. 8.  Minnesota Statutes 2002, section 298.28, 
263.36  subdivision 4, is amended to read: 
264.1      Subd. 4.  [SCHOOL DISTRICTS.] (a) 17.15 cents per taxable 
264.2   ton plus the increase provided in paragraph (d) must be 
264.3   allocated to qualifying school districts to be distributed, 
264.4   based upon the certification of the commissioner of revenue, 
264.5   under paragraphs (b) and (c), except as otherwise provided in 
264.6   paragraph (f). 
264.7      (b) 3.43 cents per taxable ton must be distributed to the 
264.8   school districts in which the lands from which taconite was 
264.9   mined or quarried were located or within which the concentrate 
264.10  was produced.  The distribution must be based on the 
264.11  apportionment formula prescribed in subdivision 2. 
264.12     (c)(i) 13.72 cents per taxable ton, less any amount 
264.13  distributed under paragraph (e), shall be distributed to a group 
264.14  of school districts comprised of those school districts in which 
264.15  the taconite was mined or quarried or the concentrate 
264.16  produced qualify as a tax relief area under section 273.134, 
264.17  paragraph (b), or in which there is a qualifying municipality as 
264.18  defined by section 273.134, paragraph (b) (a), in direct 
264.19  proportion to school district indexes as follows:  for each 
264.20  school district, its pupil units determined under section 
264.21  126C.05 for the prior school year shall be multiplied by the 
264.22  ratio of the average adjusted net tax capacity per pupil unit 
264.23  for school districts receiving aid under this clause as 
264.24  calculated pursuant to chapters 122A, 126C, and 127A for the 
264.25  school year ending prior to distribution to the adjusted net tax 
264.26  capacity per pupil unit of the district.  Each district shall 
264.27  receive that portion of the distribution which its index bears 
264.28  to the sum of the indices for all school districts that receive 
264.29  the distributions.  
264.30     (ii) Notwithstanding clause (i), each school district that 
264.31  receives a distribution under sections 298.018; 298.23 to 
264.32  298.28, exclusive of any amount received under this clause; 
264.33  298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
264.34  imposing a tax on severed mineral values after reduction for any 
264.35  portion distributed to cities and towns under section 126C.48, 
264.36  subdivision 8, paragraph (5), that is less than the amount of 
265.1   its levy reduction under section 126C.48, subdivision 8, for the 
265.2   second year prior to the year of the distribution shall receive 
265.3   a distribution equal to the difference; the amount necessary to 
265.4   make this payment shall be derived from proportionate reductions 
265.5   in the initial distribution to other school districts under 
265.6   clause (i).  
265.7      (d) Any school district described in paragraph (c) where a 
265.8   levy increase pursuant to section 126C.17, subdivision 9, was 
265.9   authorized by referendum for taxes payable in 2001, shall 
265.10  receive a distribution from a fund that receives a distribution 
265.11  in 1998 of 21.3 cents per ton.  On July 15 of 1999, and each 
265.12  year thereafter, the increase over the amount established for 
265.13  the prior year shall be determined according to the increase in 
265.14  the implicit price deflator as provided in section 298.24, 
265.15  subdivision 1.  Each district shall receive $175 times the pupil 
265.16  units identified in section 126C.05, subdivision 1, enrolled in 
265.17  the second previous year or the 1983-1984 school year, whichever 
265.18  is greater, less the product of 1.8 percent times the district's 
265.19  taxable net tax capacity in the second previous year. 
265.20     If the total amount provided by paragraph (d) is 
265.21  insufficient to make the payments herein required then the 
265.22  entitlement of $175 per pupil unit shall be reduced uniformly so 
265.23  as not to exceed the funds available.  Any amounts received by a 
265.24  qualifying school district in any fiscal year pursuant to 
265.25  paragraph (d) shall not be applied to reduce general education 
265.26  aid which the district receives pursuant to section 126C.13 or 
265.27  the permissible levies of the district.  Any amount remaining 
265.28  after the payments provided in this paragraph shall be paid to 
265.29  the commissioner of iron range resources and rehabilitation who 
265.30  shall deposit the same in the taconite environmental protection 
265.31  fund and the northeast Minnesota economic protection trust fund 
265.32  as provided in subdivision 11. 
265.33     Each district receiving money according to this paragraph 
265.34  shall reserve $25 times the number of pupil units in the 
265.35  district.  It may use the money for early childhood programs or 
265.36  for outcome-based learning programs that enhance the academic 
266.1   quality of the district's curriculum.  The outcome-based 
266.2   learning programs must be approved by the commissioner of 
266.3   children, families, and learning. 
266.4      (e) There shall be distributed to any school district the 
266.5   amount which the school district was entitled to receive under 
266.6   section 298.32 in 1975. 
266.7      (f) Effective for the distribution in 2003 only, five 
266.8   percent of the distributions to school districts under 
266.9   paragraphs (b), (c), and (e); subdivision 6, paragraph (c); 
266.10  subdivision 11; and section 298.225, shall be distributed to the 
266.11  general fund.  The remainder less any portion distributed to 
266.12  cities and towns under section 126C.48, subdivision 8, paragraph 
266.13  (5), shall be distributed to the northeast Minnesota economic 
266.14  protection trust fund created in section 298.292.  Fifty percent 
266.15  of the amount distributed to the northeast Minnesota Douglas J. 
266.16  Johnson economic protection trust fund shall be made available 
266.17  for expenditure under section 298.293 as governed by section 
266.18  298.296.  Effective in 2003 only, 100 percent of the 
266.19  distributions to school districts under section 477A.15 less any 
266.20  portion distributed to cities and towns under section 126C.48, 
266.21  subdivision 8, paragraph (5), shall be distributed to the 
266.22  general fund. 
266.23     [EFFECTIVE DATE.] This section is effective for 
266.24  distributions in 2004 and thereafter.  
266.25     Sec. 9.  Minnesota Statutes 2002, section 298.292, 
266.26  subdivision 2, is amended to read: 
266.27     Subd. 2.  [USE OF MONEY.] Money in the northeast Minnesota 
266.28  economic protection trust fund may be used for the following 
266.29  purposes:  
266.30     (1) to provide loans, loan guarantees, interest buy-downs 
266.31  and other forms of participation with private sources of 
266.32  financing, but a loan to a private enterprise shall be for a 
266.33  principal amount not to exceed one-half of the cost of the 
266.34  project for which financing is sought, and the rate of interest 
266.35  on a loan to a private enterprise shall be no less than the 
266.36  lesser of eight percent or an interest rate three percentage 
267.1   points less than a full faith and credit obligation of the 
267.2   United States government of comparable maturity, at the time 
267.3   that the loan is approved; 
267.4      (2) to fund reserve accounts established to secure the 
267.5   payment when due of the principal of and interest on bonds 
267.6   issued pursuant to section 298.2211; 
267.7      (3) to pay in periodic payments or in a lump sum payment 
267.8   any or all of the interest on bonds issued pursuant to chapter 
267.9   474 for the purpose of constructing, converting, or retrofitting 
267.10  heating facilities in connection with district heating systems 
267.11  or systems utilizing alternative energy sources; and 
267.12     (4) to invest in a venture capital fund or enterprise that 
267.13  will provide capital to other entities that are engaging in, or 
267.14  that will engage in, projects or programs that have the purposes 
267.15  set forth in subdivision 1.  No investments may be made in a 
267.16  venture capital fund or enterprise unless at least two other 
267.17  unrelated investors make investments of at least $500,000 in the 
267.18  venture capital fund or enterprise, and the investment by the 
267.19  northeast Minnesota economic protection trust fund may not 
267.20  exceed the amount of the largest investment by an unrelated 
267.21  investor in the venture capital fund or enterprise.  For 
267.22  purposes of this subdivision, an "unrelated investor" is a 
267.23  person or entity that is not related to the entity in which the 
267.24  investment is made or to any individual who owns more than 40 
267.25  percent of the value of the entity, in any of the following 
267.26  relationships:  spouse, parent, child, sibling, employee, or 
267.27  owner of an interest in the entity that exceeds ten percent of 
267.28  the value of all interests in it.  For purposes of determining 
267.29  the limitations under this clause, the amount of investments 
267.30  made by an investor other than the northeast Minnesota economic 
267.31  protection trust fund is the sum of all investments made in the 
267.32  venture capital fund or enterprise during the period beginning 
267.33  one year before the date of the investment by the northeast 
267.34  Minnesota economic protection trust fund.  
267.35     Money from the trust fund shall be expended only in or for 
267.36  the benefit of the tax relief area defined in section 273.134, 
268.1   paragraph (b). 
268.2      [EFFECTIVE DATE.] This section is effective for loans 
268.3   executed on or after the day following final enactment. 
268.4      Sec. 10.  Minnesota Statutes 2002, section 298.296, 
268.5   subdivision 4, is amended to read: 
268.6      Subd. 4.  [TEMPORARY LOAN AUTHORITY.] (a) The board may 
268.7   recommend that up to $7,500,000 from the corpus of the trust may 
268.8   be used for loans, loan guarantees, grants, or equity 
268.9   investments as provided in this subdivision.  The money would be 
268.10  available for loans for construction and equipping of facilities 
268.11  constituting (1) a value added iron products plant, which may be 
268.12  either a new plant or a facility incorporated into an existing 
268.13  plant that produces iron upgraded to a minimum of 75 percent 
268.14  iron content or any iron alloy with a total minimum metallic 
268.15  content of 90 percent; or (2) a new mine or minerals processing 
268.16  plant for any mineral subject to the net proceeds tax imposed 
268.17  under section 298.015.  A loan or loan guarantee under this 
268.18  paragraph may not exceed $5,000,000 for any facility.  
268.19     (b) Additionally, the board must reserve the first 
268.20  $2,000,000 of the net interest, dividends, and earnings arising 
268.21  from the investment of the trust after June 30, 1996, to be used 
268.22  for additional grants, loans, loan guarantees, or equity 
268.23  investments for the purposes set forth in paragraph (a).  This 
268.24  amount must be reserved until it is used for the grants as 
268.25  described in this subdivision. 
268.26     (c) Additionally, the board may recommend that up to 
268.27  $5,500,000 from the corpus of the trust may be used for 
268.28  additional grants, loans, loan guarantees, or equity investments 
268.29  for the purposes set forth in paragraph (a). 
268.30     (d) The board may require that it receive an equity 
268.31  percentage in any project to which it contributes under this 
268.32  section. 
268.33     [EFFECTIVE DATE.] This section is effective the day 
268.34  following final enactment. 
268.35     Sec. 11.  Minnesota Statutes 2002, section 298.2961, is 
268.36  amended by adding a subdivision to read: 
269.1      Subd. 3.  [REDISTRIBUTION.] (a) If a taconite production 
269.2   facility is sold after operations at the facility had ceased, 
269.3   any money remaining in the taconite environmental fund for the 
269.4   former producer may be released to the purchaser of the facility 
269.5   on the terms otherwise applicable to the former producer under 
269.6   this section. 
269.7      (b) Any portion of the taconite environmental fund that is 
269.8   not released by the commissioner within three years of its 
269.9   deposit in the taconite environmental fund shall be divided 
269.10  between the taconite environmental protection fund created in 
269.11  section 298.223 and the Douglas J. Johnson economic protection 
269.12  trust fund created in section 298.292 for placement in their 
269.13  respective special accounts.  Two-thirds of the unreleased funds 
269.14  must be distributed to the taconite environmental protection 
269.15  fund and one-third to the Douglas J. Johnson economic protection 
269.16  trust fund. 
269.17     [EFFECTIVE DATE.] This section is effective the day 
269.18  following final enactment. 
269.19     Sec. 12.  [REVISOR INSTRUCTION.] 
269.20     The revisor of statutes shall change the phrase "Northeast 
269.21  Minnesota Economic Protection Trust Fund" or a similar phrase 
269.22  referring to the fund, to the "Douglas J. Johnson Economic 
269.23  Protection Trust Fund" wherever it appears in Minnesota Statutes.
269.24     Sec. 13.  [REPEALER.] 
269.25     Minnesota Statutes 2002, section 298.24, subdivision 3, is 
269.26  repealed effective for concentrates produced after January 1, 
269.27  2003. 
269.28                             ARTICLE 12 
269.29                           PUBLIC FINANCE 
269.30     Section 1.  [37.31] [ISSUANCE OF BONDS.] 
269.31     Subdivision 1.  [BONDING AUTHORITY.] The society may issue 
269.32  negotiable bonds in a principal amount that the society 
269.33  determines necessary to provide sufficient money for achieving 
269.34  its purposes, including the payment of interest on bonds of the 
269.35  society, the establishment of reserves to secure its bonds, the 
269.36  payment of fees to a third party providing credit enhancement, 
270.1   and the payment of all other expenditures of the society 
270.2   incident to and necessary or convenient to carry out its 
270.3   corporate purposes and powers.  Bonds of the society may be 
270.4   issued as bonds or notes or in any other form authorized by 
270.5   law.  The principal amount of bonds issued and outstanding under 
270.6   this section at any time may not exceed $20,000,000, excluding 
270.7   bonds for which refunding bonds or crossover refunding bonds 
270.8   have been issued.  
270.9      Subd. 2.  [REFUNDING OF BONDS.] The society may issue bonds 
270.10  to refund outstanding bonds of the society, to pay any 
270.11  redemption premiums on those bonds, and to pay interest accrued 
270.12  or to accrue to the redemption date next succeeding the date of 
270.13  delivery of the refunding bonds.  The society may apply the 
270.14  proceeds of any refunding bonds to the purchase or payment at 
270.15  maturity of the bonds to be refunded, or to the redemption of 
270.16  outstanding bonds on the redemption date next succeeding the 
270.17  date of delivery of the refunding bonds and may, pending the 
270.18  application, place the proceeds in escrow to be applied to the 
270.19  purchase, retirement, or redemption of the bonds.  Pending use, 
270.20  escrowed proceeds may be invested and reinvested in obligations 
270.21  issued or guaranteed by the state or the United States or by any 
270.22  agency or instrumentality of the state or the United States, or 
270.23  in certificates of deposit or time deposits secured in a manner 
270.24  determined by the society, maturing at a time appropriate to 
270.25  assure the prompt payment of the principal and interest and 
270.26  redemption premiums, if any, on the bonds to be refunded.  The 
270.27  income realized on any investment may also be applied to the 
270.28  payment of the bonds to be refunded.  After the terms of the 
270.29  escrow have been fully satisfied, any balance of the proceeds 
270.30  and any investment income may be returned to the society for use 
270.31  by it in any lawful manner.  All refunding bonds issued under 
270.32  this subdivision must be issued and secured in the manner 
270.33  provided by resolution of the society. 
270.34     Subd. 3.  [KIND OF BONDS.] Bonds issued under this section 
270.35  must be negotiable investment securities within the meaning and 
270.36  for all purposes of the Uniform Commercial Code, subject only to 
271.1   the provisions of the bonds for registration.  The bonds issued 
271.2   must be limited obligations of the society not secured by its 
271.3   full faith and credit and payable solely from specified sources 
271.4   or assets.  
271.5      Subd. 4.  [RESOLUTION AND TERMS OF SALE.] The bonds of the 
271.6   society must be authorized by a resolution or resolutions 
271.7   adopted by the society.  The bonds must bear the date or dates, 
271.8   mature at the time or times, bear interest at a fixed or 
271.9   variable rate, including a rate varying periodically at the time 
271.10  or times and on the terms determined by the society, or any 
271.11  combination of fixed and variable rates, be in the 
271.12  denominations, be in the form, carry the registration 
271.13  privileges, be executed in the manner, be payable in lawful 
271.14  money of the United States, at the place or places within or 
271.15  without the state, and be subject to the terms of redemption or 
271.16  purchase before maturity as the resolutions or certificates 
271.17  provide.  If, for any reason existing at the date of issue of 
271.18  the bonds or existing at the date of making or purchasing any 
271.19  loan or securities from the proceeds or after that date, the 
271.20  interest on the bonds is or becomes subject to federal income 
271.21  taxation, this fact does not affect the validity or the 
271.22  provisions made for the security of the bonds.  The society may 
271.23  make covenants and take or have taken actions that are in its 
271.24  judgment necessary or desirable to comply with conditions 
271.25  established by federal law or regulations for the exemption of 
271.26  interest on its obligations.  The society may refrain from 
271.27  compliance with those conditions if in its judgment this would 
271.28  serve the purposes and policies set forth in this chapter with 
271.29  respect to any particular issue of bonds, unless this would 
271.30  violate covenants made by the society.  The maximum maturity of 
271.31  a bond, whether or not issued for the purpose of refunding, must 
271.32  be 30 years from its date.  The bonds of the society may be sold 
271.33  at public or private sale, at a price or prices determined by 
271.34  the society; provided that: 
271.35     (1) the aggregate price at which an issue of bonds is 
271.36  initially offered by underwriters to investors, as stated in the 
272.1   authority's official statement with respect to the offering, 
272.2   must not exceed by more than three percent the aggregate price 
272.3   paid by the underwriters to the society at the time of delivery; 
272.4      (2) the commission paid by the society to an underwriter 
272.5   for placing an issue of bonds with investors must not exceed 
272.6   three percent of the aggregate price at which the issue is 
272.7   offered to investors as stated in the society's offering 
272.8   statement; and 
272.9      (3) the spread or commission must be an amount determined 
272.10  by the society to be reasonable in light of the risk assumed and 
272.11  the expenses of issuance, if any, required to be paid by the 
272.12  underwriters.  
272.13     Subd. 5.  [EXEMPTION.] The notes and bonds of the society 
272.14  are not subject to sections 16C.03, subdivision 4, and 16C.05. 
272.15     Subd. 6.  [RESERVES; FUNDS; ACCOUNTS.] The society may 
272.16  establish reserves, funds, or accounts necessary to carry out 
272.17  the purposes of the society or to comply with any agreement made 
272.18  by or any resolution passed by the society. 
272.19     Subd. 7.  [APPROVAL; COMMISSIONER OF FINANCE.] Before 
272.20  issuing bonds under this section, the society must obtain the 
272.21  approval, in writing, of the commissioner of finance. 
272.22     Subd. 8.  [EXPIRATION.] The authority to issue bonds, other 
272.23  than bonds to refund outstanding bonds, under this section 
272.24  expires July 1, 2009. 
272.25     Sec. 2.  [37.32] [TENDER OPTION.] 
272.26     An obligation may be issued giving its owner the right to 
272.27  tender or the society to demand tender of the obligation to the 
272.28  society or another person designated by it, for purchase at a 
272.29  specified time or times, if the society has first entered into 
272.30  an agreement with a suitable financial institution obligating 
272.31  the financial institution to provide funds on a timely basis for 
272.32  purchase of bonds tendered.  The obligation is not considered to 
272.33  mature on any tender date and the purchase of a tendered 
272.34  obligation is not considered a payment or discharge of the 
272.35  obligation by the society.  Obligations tendered for purchase 
272.36  may be remarketed by or on behalf of the society or another 
273.1   purchaser.  The society may enter into agreements it considers 
273.2   appropriate to provide for the purchase and remarketing of 
273.3   tendered obligations, including: 
273.4      (1) provisions under which undelivered obligations may be 
273.5   considered tendered for purchase and new obligations may be 
273.6   substituted for them; 
273.7      (2) provisions for the payment of charges of tender agents, 
273.8   remarketing agents, and financial institutions extending lines 
273.9   of credit or letters of credit assuring repurchase; and 
273.10     (3) provisions for reimbursement of advances under letters 
273.11  of credit that may be paid from the proceeds of the obligations 
273.12  or from tax and other revenues appropriated for the payment and 
273.13  security of the obligations and similar or related provisions. 
273.14     Sec. 3.  [37.33] [BOND FUND.] 
273.15     Subdivision 1.  [CREATION AND CONTENTS.] The society may 
273.16  establish a special fund or funds for the security of one or 
273.17  more or all series of its bonds.  The funds must be known as 
273.18  debt service reserve funds.  The society may pay into each debt 
273.19  service reserve fund: 
273.20     (1) the proceeds of sale of bonds to the extent provided in 
273.21  the resolution or indenture authorizing the issuance of them; 
273.22     (2) money directed to be transferred by the society to the 
273.23  debt service reserve fund; and 
273.24     (3) other money made available to the society from any 
273.25  other source only for the purpose of the fund. 
273.26     Subd. 2.  [USE OF FUNDS.] Except as provided in this 
273.27  section, the money credited to each debt service reserve fund 
273.28  must be used only for the payment of the principal of bonds of 
273.29  the society as they mature, the purchase of the bonds, the 
273.30  payment of interest on them, or the payment of any premium 
273.31  required when the bonds are redeemed before maturity.  Money in 
273.32  a debt service reserve fund must not be withdrawn at a time and 
273.33  in an amount that reduces the amount of the fund to less than 
273.34  the amount the society determines to be reasonably necessary for 
273.35  the purposes of the fund.  However, money may be withdrawn to 
273.36  pay principal or interest due on bonds secured by the fund if 
274.1   other money of the society is not available. 
274.2      Subd. 3.  [INVESTMENT.] Money in a debt service reserve 
274.3   fund not required for immediate use may be invested in 
274.4   accordance with section 37.07. 
274.5      Subd. 4.  [MINIMUM AMOUNT OF RESERVE AT ISSUANCE.] If the 
274.6   society establishes a debt service reserve fund for the security 
274.7   of any series of bonds, it shall not issue additional bonds that 
274.8   are similarly secured if the amount of any of the debt service 
274.9   reserve funds at the time of issuance does not equal or exceed 
274.10  the minimum amount required by the resolution creating the fund, 
274.11  unless the society deposits in each fund at the time of 
274.12  issuance, from the proceeds of the bonds, or otherwise, an 
274.13  amount that when added together with the amount then in the fund 
274.14  will be at least the minimum amount required. 
274.15     Subd. 5.  [TRANSFER OF EXCESS.] To the extent consistent 
274.16  with the resolutions and indentures securing outstanding bonds, 
274.17  the society may at the close of a fiscal year transfer to any 
274.18  other fund or account from any debt service reserve fund any 
274.19  excess in that reserve fund over the amount determined by the 
274.20  society to be reasonably necessary for the purpose of the 
274.21  reserve fund. 
274.22     Sec. 4.  [37.34] [MONEY OF THE SOCIETY.] 
274.23     The society may contract with the holders of any of its 
274.24  bonds as to the custody, collection, securing, investment, and 
274.25  payment of money of the society or money held in trust or 
274.26  otherwise for the payment of bonds, and to carry out the 
274.27  contract.  Money held in trust or otherwise for the payment of 
274.28  bonds or in any way to secure bonds and deposits of the money 
274.29  may be secured in the same manner as money of the society, and 
274.30  all banks and trust companies are authorized to give security 
274.31  for the deposits.  
274.32     Sec. 5.  [37.35] [NONLIABILITY.] 
274.33     Subdivision 1.  [NONLIABILITY OF INDIVIDUALS.] No member of 
274.34  the society or other person executing the bonds is liable 
274.35  personally on the bonds or is subject to any personal liability 
274.36  or accountability by reason of their issuance.  
275.1      Subd. 2.  [NONLIABILITY OF STATE.] The state is not liable 
275.2   on bonds of the society issued under section 37.31 and those 
275.3   bonds are not a debt of the state.  The bonds must contain on 
275.4   their face a statement to that effect. 
275.5      Sec. 6.  [37.36] [PURCHASE AND CANCELLATION BY SOCIETY.] 
275.6      Subject to agreements with bondholders that may then exist, 
275.7   the society may purchase out of money available for the purpose, 
275.8   bonds of the society which shall then be canceled, at a price 
275.9   not exceeding the following amounts: 
275.10     (1) if the bonds are then redeemable, the redemption price 
275.11  then applicable plus accrued interest to the next interest 
275.12  payment date of the bonds; or 
275.13     (2) if the bonds are not redeemable, the redemption price 
275.14  applicable on the first date after the purchase upon which the 
275.15  bonds become subject to redemption plus accrued interest to that 
275.16  date. 
275.17     Sec. 7.  [37.37] [STATE PLEDGE AGAINST IMPAIRMENT OF 
275.18  CONTRACTS.] 
275.19     The state pledges and agrees with the holders of bonds 
275.20  issued under section 37.31 that the state will not limit or 
275.21  alter the rights vested in the society to fulfill the terms of 
275.22  any agreements made with the bondholders or in any way impair 
275.23  the rights and remedies of the holders until the bonds, together 
275.24  with interest on them, with interest on any unpaid installments 
275.25  of interest, and all costs and expenses in connection with any 
275.26  action or proceeding by or on behalf of the bondholders, are 
275.27  fully met and discharged.  The society may include this pledge 
275.28  and agreement of the state in any agreement with the holders of 
275.29  bonds issued under section 37.31. 
275.30     Sec. 8.  Minnesota Statutes 2002, section 373.01, 
275.31  subdivision 3, is amended to read: 
275.32     Subd. 3.  [CAPITAL NOTES.] A county board may, by 
275.33  resolution and without referendum, issue capital notes subject 
275.34  to the county debt limit to purchase capital equipment useful 
275.35  for county purposes that has an expected useful life at least 
275.36  equal to the term of the notes.  The notes shall be payable in 
276.1   not more than five years and shall be issued on terms and in a 
276.2   manner the board determines.  A tax levy shall be made for 
276.3   payment of the principal and interest on the notes, in 
276.4   accordance with section 475.61, as in the case of bonds.  For 
276.5   purposes of this subdivision, "capital equipment" means public 
276.6   safety, ambulance, road construction or maintenance, and medical 
276.7   , and data processing equipment, and computer hardware and 
276.8   original operating system software.  The authority to issue 
276.9   capital notes for original operating systems software expires on 
276.10  July 1, 2005. 
276.11     Sec. 9.  Minnesota Statutes 2002, section 373.45, 
276.12  subdivision 1, is amended to read: 
276.13     Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
276.14  the following terms have the meanings given. 
276.15     (b) "Authority" means the Minnesota public facilities 
276.16  authority. 
276.17     (c) "Commissioner" means the commissioner of finance. 
276.18     (d) "Debt obligation" means a general obligation bond 
276.19  issued by a county, or a bond payable from a county lease 
276.20  obligation under section 641.24, to provide funds for the 
276.21  construction of: 
276.22     (1) jails; 
276.23     (2) correctional facilities; 
276.24     (3) law enforcement facilities; 
276.25     (4) social services and human services facilities; or 
276.26     (5) solid waste facilities. 
276.27     Sec. 10.  Minnesota Statutes 2002, section 373.47, 
276.28  subdivision 1, is amended to read: 
276.29     Subdivision 1.  [AUTHORITY TO INCUR DEBT.] (a) Subject to 
276.30  prior approval by the public safety radio system planning 
276.31  committee under section 473.907, the governing body of a county 
276.32  may finance the cost of designing, constructing, and acquiring 
276.33  public safety communication system infrastructure and equipment 
276.34  for use on the statewide, shared public safety radio system by 
276.35  issuing: 
276.36     (1) capital improvement bonds under section 373.40, as if 
277.1   the infrastructure and equipment qualified as a "capital 
277.2   improvement" within the meaning of section 373.40, subdivision 
277.3   1, paragraph (b); and 
277.4      (2) capital notes under the provisions of section 373.01, 
277.5   subdivision 3, as if the equipment qualified as "capital 
277.6   equipment" within the meaning of section 373.01, subdivision 3. 
277.7      (b) For purposes of this section, "county" means the 
277.8   following counties:  Anoka, Benton, Carver, Chisago, Dakota, 
277.9   Dodge, Fillmore, Freeborn, Goodhue, Hennepin, Houston, Isanti, 
277.10  Mower, Olmsted, Ramsey, Rice, Scott, Sherburne, Steele, Wabasha, 
277.11  Washington, Wright, and Winona. 
277.12     (c) The authority to incur debt under this section is not 
277.13  effective until July 1, 2003, for the following counties:  
277.14  Benton, Dodge, Fillmore, Freeborn, Goodhue, Houston, Mower, 
277.15  Olmsted, Rice, Sherburne, Steele, Wabasha, Wright, and Winona. 
277.16     Sec. 11.  Minnesota Statutes 2002, section 376.009, is 
277.17  amended to read: 
277.18     376.009 [COUNTY HOSPITAL DEFINED; MAY HAVE MANY BUILDINGS, 
277.19  SITES.] 
277.20     For the purposes of sections 376.01 to 376.06, "county 
277.21  hospital" means any hospital owned or operated by a county which 
277.22  may consist of any number of buildings at one location or any 
277.23  number of buildings at different locations within the 
277.24  county.  The county board of any county that has not established 
277.25  a county hospital may by resolution authorize a statutory or 
277.26  home rule charter city in the county and its city council to 
277.27  exercise the powers of a county and the county board under 
277.28  sections 376.01 to 376.07, in which case references in sections 
277.29  376.01 to 376.07 to "county" and "county board" refer to the 
277.30  city so designated and its governing body, respectively. 
277.31     Sec. 12.  Minnesota Statutes 2002, section 376.55, 
277.32  subdivision 3, is amended to read: 
277.33     Subd. 3.  [FINANCING.] The county board may transfer 
277.34  surplus funds from any fund except the road and bridge, sinking 
277.35  or drainage ditch funds for the purpose of 
277.36  establishing, acquiring, maintaining, enlarging, or adding to a 
278.1   county nursing home.  When surplus funds are not available for 
278.2   transfer, a county board may issue bonds to pay the cost of 
278.3   establishing, acquiring, equipping, furnishing, enlarging, or 
278.4   adding to a county nursing home, subject to section 376.56. 
278.5      Sec. 13.  Minnesota Statutes 2002, section 376.55, is 
278.6   amended by adding a subdivision to read: 
278.7      Subd. 7.  [CITY POWERS.] The county board of any county 
278.8   that has not established a nursing home may by resolution 
278.9   authorize a statutory or home rule charter city within the 
278.10  county to exercise the powers of a county under sections 376.55 
278.11  to 376.60.  A city so designated may exercise within its 
278.12  boundaries all the powers of a county under sections 376.55 to 
278.13  376.60. 
278.14     Sec. 14.  Minnesota Statutes 2002, section 376.56, 
278.15  subdivision 3, is amended to read: 
278.16     Subd. 3.  [CHAPTER 475 BONDS.] Bonds issued under section 
278.17  376.55, subdivision 3, may be general obligations of the county 
278.18  and may be issued and sold, and taxes levied for their payment 
278.19  as provided under chapter 475.  No election shall be required to 
278.20  authorize the bond issue for acquiring, improving, remodeling, 
278.21  or replacing an existing nursing home without increasing the 
278.22  total number of accommodations for residents in all nursing 
278.23  homes in the county.  The revenues of the nursing home shall 
278.24  also be pledged for the payment of the bonds and for any 
278.25  interest and premium.  Part of the proceeds may be deposited in 
278.26  the debt service fund for the issue, to capitalize interest and 
278.27  create a reserve to reduce or eliminate the tax otherwise 
278.28  required by section 475.61 to be levied before issuing the 
278.29  bonds.  The remaining proceeds from the sale of the bonds and 
278.30  any surplus funds transferred under section 376.55, subdivision 
278.31  3 must be credited to and deposited in the county nursing home 
278.32  building fund of the county in which the nursing home is located.
278.33     Sec. 15.  Minnesota Statutes 2002, section 410.32, is 
278.34  amended to read: 
278.35     410.32 [CITIES MAY ISSUE CAPITAL NOTES TO BUY CAPITAL 
278.36  EQUIPMENT.] 
279.1      Notwithstanding any contrary provision of other law or 
279.2   charter, a home rule charter city may, by resolution and without 
279.3   public referendum, issue capital notes subject to the city debt 
279.4   limit to purchase public safety equipment, ambulance and other 
279.5   medical equipment, road construction and maintenance equipment, 
279.6   and other capital equipment having and computer hardware and 
279.7   original operating system software, provided the equipment or 
279.8   software has an expected useful life at least as long as the 
279.9   term of the notes.  The authority to issue capital notes for 
279.10  original operating system software expires on July 1, 2005.  The 
279.11  notes shall be payable in not more than five years and be issued 
279.12  on terms and in the manner the city determines.  The total 
279.13  principal amount of the capital notes issued in a fiscal year 
279.14  shall not exceed 0.03 percent of the market value of taxable 
279.15  property in the city for that year.  A tax levy shall be made 
279.16  for the payment of the principal and interest on the notes, in 
279.17  accordance with section 475.61, as in the case of bonds.  Notes 
279.18  issued under this section shall require an affirmative vote of 
279.19  two-thirds of the governing body of the city.  Notwithstanding a 
279.20  contrary provision of other law or charter, a home rule charter 
279.21  city may also issue capital notes subject to its debt limit in 
279.22  the manner and subject to the limitations applicable to 
279.23  statutory cities pursuant to section 412.301. 
279.24     Sec. 16.  [410.326] [CAPITAL IMPROVEMENT BONDS.] 
279.25     Subdivision 1.  [DEFINITIONS.] For purposes of this 
279.26  section, the following terms have the meanings given. 
279.27     (a) "Bonds" mean an obligation defined under section 475.51.
279.28     (b) "Capital improvement" means acquisition or betterment 
279.29  of public lands, buildings or other improvements for the purpose 
279.30  of a city hall, public safety facility, and public works 
279.31  facility.  An improvement must have an expected useful life of 
279.32  five years or more to qualify.  Capital improvement does not 
279.33  include light rail transit or any activity related to it, or a 
279.34  park, library, road, bridge, administrative building other than 
279.35  a city hall, or land for any of those facilities. 
279.36     (c) "City" means a home rule charter or statutory city. 
280.1      Subd. 2.  [ELECTION REQUIREMENT.] (a) Bonds issued by a 
280.2   city to finance capital improvements under an approved capital 
280.3   improvements plan are not subject to the election requirements 
280.4   of section 475.58.  The bonds are subject to the net debt limits 
280.5   under section 475.53.  The bonds must be approved by an 
280.6   affirmative vote of three-fifths of the members of a five-member 
280.7   city council.  In the case of a city council having more than 
280.8   five members, the bonds must be approved by a vote of at least 
280.9   two-thirds of the city council. 
280.10     (b) Before the issuance of bonds qualifying under this 
280.11  section, the city must publish a notice of its intention to 
280.12  issue the bonds and the date and time of the hearing to obtain 
280.13  public comment on the matter.  The notice must be published in 
280.14  the official newspaper of the city or in a newspaper of general 
280.15  circulation in the city.  Additionally, the notice may be posted 
280.16  on the official Web site, if any, of the city.  The notice must 
280.17  be published at least 14 but not more than 28 days before the 
280.18  date of the hearing. 
280.19     (c) A city may issue the bonds only after obtaining the 
280.20  approval of a majority of the voters voting on the question of 
280.21  issuing the obligations, if a petition requesting a vote on the 
280.22  issuance is signed by voters equal to five percent of the votes 
280.23  cast in the city in the last general election and is filed with 
280.24  the city clerk within 30 days after the public hearing.  The 
280.25  commissioner of revenue shall prepare a suggested form of the 
280.26  question to be presented at the election. 
280.27     Subd. 3.  [CAPITAL IMPROVEMENT PLAN.] (a) A city may adopt 
280.28  a capital improvement plan.  The plan must cover at least a 
280.29  five-year period beginning with the date of its adoption.  The 
280.30  plan must set forth the estimated schedule, timing, and details 
280.31  of specific capital improvements by year, together with the 
280.32  estimated cost, the need for the improvement, and sources of 
280.33  revenue to pay for the improvement.  In preparing the capital 
280.34  improvement plan, the city council must consider for each 
280.35  project and for the overall plan: 
280.36     (1) the condition of the city's existing infrastructure, 
281.1   including the projected need for repair or replacement; 
281.2      (2) the likely demand for the improvement; 
281.3      (3) the estimated cost of the improvement; 
281.4      (4) the available public resources; 
281.5      (5) the level of overlapping debt in the city; 
281.6      (6) the relative benefits and costs of alternative uses of 
281.7   the funds; 
281.8      (7) operating costs of the proposed improvements; and 
281.9      (8) alternatives for providing services most efficiently 
281.10  through shared facilities with other cities or local government 
281.11  units. 
281.12     (b) The capital improvement plan and annual amendments to 
281.13  it must be approved by the city council after public hearing. 
281.14     Subd. 4.  [LIMITATIONS ON AMOUNT.] A city may not issue 
281.15  bonds under this section if the maximum amount of principal and 
281.16  interest to become due in any year on all the outstanding bonds 
281.17  issued under this section, including the bonds to be issued, 
281.18  will equal or exceed 0.05367 percent of taxable market value of 
281.19  property in the county.  Calculation of the limit must be made 
281.20  using the taxable market value for the taxes payable year in 
281.21  which the obligations are issued and sold.  This section does 
281.22  not limit the authority to issue bonds under any other special 
281.23  or general law. 
281.24     Subd. 5.  [APPLICATION OF CHAPTER 475.] Bonds to finance 
281.25  capital improvements qualifying under this section must be 
281.26  issued under the issuance authority in chapter 475 and the 
281.27  provisions of chapter 475 apply, except as otherwise 
281.28  specifically provided in this section. 
281.29     Sec. 17.  Minnesota Statutes 2002, section 412.301, is 
281.30  amended to read: 
281.31     412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 
281.32     The council may issue certificates of indebtedness or 
281.33  capital notes subject to the city debt limits to purchase public 
281.34  safety equipment, ambulance equipment, road construction or 
281.35  maintenance equipment, and other capital equipment having and 
281.36  computer hardware and original operating system software, 
282.1   provided the equipment or software has an expected useful life 
282.2   at least as long as the terms of the certificates or notes.  The 
282.3   authority to issue capital notes for original operating system 
282.4   software expires on July 1, 2005.  Such certificates or notes 
282.5   shall be payable in not more than five years and shall be issued 
282.6   on such terms and in such manner as the council may determine.  
282.7   If the amount of the certificates or notes to be issued to 
282.8   finance any such purchase exceeds 0.25 percent of the market 
282.9   value of taxable property in the city, they shall not be issued 
282.10  for at least ten days after publication in the official 
282.11  newspaper of a council resolution determining to issue them; and 
282.12  if before the end of that time, a petition asking for an 
282.13  election on the proposition signed by voters equal to ten 
282.14  percent of the number of voters at the last regular municipal 
282.15  election is filed with the clerk, such certificates or notes 
282.16  shall not be issued until the proposition of their issuance has 
282.17  been approved by a majority of the votes cast on the question at 
282.18  a regular or special election.  A tax levy shall be made for the 
282.19  payment of the principal and interest on such certificates or 
282.20  notes, in accordance with section 475.61, as in the case of 
282.21  bonds.  
282.22     Sec. 18.  [469.0772] [KOOCHICHING COUNTY; PORT AUTHORITY.] 
282.23     Subdivision 1.  [AUTHORITY TO ESTABLISH.] The governing 
282.24  body of the county of Koochiching may establish a port authority 
282.25  that has the same powers as a port authority established under 
282.26  section 469.049.  If the county establishes a port authority, 
282.27  the governing body of the county shall exercise all powers 
282.28  granted to a city by sections 469.048 to 469.068 or other law.  
282.29  Any city in Koochiching county may participate in the activities 
282.30  of the county port authority under terms jointly agreed to by 
282.31  the city and county. 
282.32     Subd. 2.  [FOREIGN TRADE ZONE.] Koochiching county or any 
282.33  city, town, or other political subdivision located in 
282.34  Koochiching county may apply to the board defined in United 
282.35  States Code, title 19, section 81a, for the right to use the 
282.36  powers provided in United States Code, title 19, sections 81a 
283.1   and 81u.  If the right is granted the city, town, or other 
283.2   political subdivision may use the powers within or outside of a 
283.3   port district.  The county, a city, town, or other political 
283.4   subdivision may apply jointly with any other city, town, or 
283.5   political subdivision located in Koochiching county. 
283.6      Sec. 19.  Minnesota Statutes 2002, section 469.1813, 
283.7   subdivision 8, is amended to read: 
283.8      Subd. 8.  [LIMITATION ON ABATEMENTS.] In any year, the 
283.9   total amount of property taxes abated by a political subdivision 
283.10  under this section may not exceed (1) five ten percent of the 
283.11  current levy, or (2) $100,000 $200,000, whichever is greater. 
283.12     Sec. 20.  Minnesota Statutes 2002, section 473.39, is 
283.13  amended by adding a subdivision to read: 
283.14     Subd. 1j.  [OBLIGATIONS.] After July 1, 2003, in addition 
283.15  to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, and 
283.16  1i, the council may issue certificates of indebtedness, bonds, 
283.17  or other obligations under this section in an amount not 
283.18  exceeding $45,000,000 for capital expenditures as prescribed in 
283.19  the council's regional transit master plan and transit capital 
283.20  improvement program and for related costs, including the costs 
283.21  of issuance and sale of the obligations.  
283.22     [APPLICATION.] This section applies to the counties of 
283.23  Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
283.24     Sec. 21.  Minnesota Statutes 2002, section 473.898, 
283.25  subdivision 3, is amended to read: 
283.26     Subd. 3.  [LIMITATIONS.] (a) The principal amount of the 
283.27  bonds issued pursuant to subdivision 1, exclusive of any 
283.28  original issue discount, shall not exceed the amount of 
283.29  $10,000,000 plus the amount the council determines necessary to 
283.30  pay the costs of issuance, fund reserves, debt service, and pay 
283.31  for any bond insurance or other credit enhancement. 
283.32     (b) In addition to the amount authorized under paragraph 
283.33  (a), the council may issue bonds under subdivision 1 in a 
283.34  principal amount of $3,306,300, plus the amount the council 
283.35  determines necessary to pay the cost of issuance, fund reserves, 
283.36  debt service, and any bond insurance or other credit 
284.1   enhancement.  The proceeds of bonds issued under this paragraph 
284.2   may not be used to finance portable or subscriber radio sets. 
284.3      (c) In addition to the amount authorized under paragraphs 
284.4   (a) and (b), the council may issue bonds under subdivision 1 in 
284.5   a principal amount of $12,000,000, plus the amount the council 
284.6   determines necessary to pay the costs of issuance, fund 
284.7   reserves, debt service, and any bond insurance or other credit 
284.8   enhancement.  The proceeds of bonds issued under this paragraph 
284.9   must be used to pay up to 30 percent of the cost to a local 
284.10  government unit of building a subsystem and may not be used to 
284.11  finance portable or subscriber radio sets.  The bond proceeds 
284.12  may be used to make improvements to an existing 800 MHz radio 
284.13  system that will interoperate with the regionwide public safety 
284.14  radio communication system, provided that the improvements 
284.15  conform to the board's plan and technical standards.  The 
284.16  council must time the sale and issuance of the bonds so that the 
284.17  debt service on the bonds can be covered by the additional 
284.18  revenue that will become available in the fiscal year ending 
284.19  June 30, 2005, generated under section 403.11 and appropriated 
284.20  under section 473.901. 
284.21     Sec. 22.  Minnesota Statutes 2002, section 474A.061, 
284.22  subdivision 1, is amended to read: 
284.23     Subdivision 1.  [ALLOCATION APPLICATION.] (a) An issuer may 
284.24  apply for an allocation under this section by submitting to the 
284.25  department an application on forms provided by the department, 
284.26  accompanied by (1) a preliminary resolution, (2) a statement of 
284.27  bond counsel that the proposed issue of obligations requires an 
284.28  allocation under this chapter and the Internal Revenue Code, (3) 
284.29  the type of qualified bonds to be issued, (4) an application 
284.30  deposit in the amount of one percent of the requested allocation 
284.31  before the last Monday in July, or in the amount of two percent 
284.32  of the requested allocation on or after the last Monday in July, 
284.33  (5) a public purpose scoring worksheet for manufacturing project 
284.34  and enterprise zone facility project applications, and (6) for 
284.35  residential rental projects, a statement from the applicant or 
284.36  bond counsel as to whether the project preserves existing 
285.1   federally subsidized housing for residential rental project 
285.2   applications and whether the project is restricted to persons 
285.3   who are 55 years of age or older.  The issuer must pay the 
285.4   application deposit by a check made payable to the department of 
285.5   finance.  The Minnesota housing finance agency, the Minnesota 
285.6   rural finance authority, and the Minnesota higher education 
285.7   services office may apply for and receive an allocation under 
285.8   this section without submitting an application deposit. 
285.9      (b) An entitlement issuer may not apply for an allocation 
285.10  from the housing pool or from the public facilities pool unless 
285.11  it has either permanently issued bonds equal to the amount of 
285.12  its entitlement allocation for the current year plus any amount 
285.13  of bonding authority carried forward from previous years or 
285.14  returned for reallocation all of its unused entitlement 
285.15  allocation.  An entitlement issuer may not apply for an 
285.16  allocation from the housing pool unless it either has 
285.17  permanently issued bonds equal to any amount of bonding 
285.18  authority carried forward from a previous year or has returned 
285.19  for reallocation all of its unused entitlement allocation.  For 
285.20  purposes of this subdivision, its entitlement allocation 
285.21  includes an amount obtained under section 474A.04, subdivision 
285.22  6.  This paragraph does not apply to an application from the 
285.23  Minnesota housing finance agency for an allocation under 
285.24  subdivision 2a for cities who choose to have the agency issue 
285.25  bonds on their behalf.  
285.26     (c) If an application is rejected under this section, the 
285.27  commissioner must notify the applicant and return the 
285.28  application deposit to the applicant within 30 days unless the 
285.29  applicant requests in writing that the application be 
285.30  resubmitted.  The granting of an allocation of bonding authority 
285.31  under this section must be evidenced by a certificate of 
285.32  allocation.  
285.33     Sec. 23.  Minnesota Statutes 2002, section 475.58, 
285.34  subdivision 3b, is amended to read: 
285.35     Subd. 3b.  [STREET RECONSTRUCTION.] (a) A municipality may, 
285.36  without regard to the election requirement under subdivision 1, 
286.1   issue and sell obligations for street reconstruction, if the 
286.2   following conditions are met: 
286.3      (1) the streets are reconstructed under a street 
286.4   reconstruction plan that describes the streets to be 
286.5   reconstructed, the estimated costs, and any planned 
286.6   reconstruction of other streets in the municipality over the 
286.7   next five years, and the plan and issuance of the obligations 
286.8   has been approved by a vote of all of the members of the 
286.9   governing body following a public hearing for which notice has 
286.10  been published in the official newspaper at least ten days but 
286.11  not more than 28 days prior to the hearing; and 
286.12     (2) if a petition requesting a vote on the issuance is 
286.13  signed by voters equal to five percent of the votes cast in the 
286.14  last municipal general election and is filed with the municipal 
286.15  clerk within 30 days of the public hearing, the municipality may 
286.16  issue the bonds only after obtaining the approval of a majority 
286.17  of the voters voting on the question of the issuance of the 
286.18  obligations. 
286.19     (b) Obligations issued under this subdivision are subject 
286.20  to the debt limit of the municipality and are not excluded from 
286.21  net debt under section 475.51, subdivision 4. 
286.22  For purposes of this subdivision, street reconstruction includes 
286.23  utility replacement and relocation and other activities 
286.24  incidental to the street reconstruction, but does not include 
286.25  the portion of project cost allocable to widening a street or 
286.26  adding curbs and gutters where none previously existed. 
286.27     Sec. 24.  Laws 1967, chapter 558, section 1, subdivision 5, 
286.28  as amended by Laws 1979, chapter 135, section 1, and Laws 1985, 
286.29  chapter 98, section 2, is amended to read:  
286.30     Subd. 5.  Promotion of tourist, agricultural and industrial 
286.31  developments.  The amount to be spent annually for the purposes 
286.32  of this subdivision shall not exceed one dollar five dollars per 
286.33  capita of the county's population.  
286.34     [EFFECTIVE DATE; LOCAL APPROVAL.] This section is effective 
286.35  the day after the governing body of Beltrami county and its 
286.36  chief clerical officer timely complete their compliance with 
287.1   Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
287.2      Sec. 25.  [BONDS ISSUANCE VALIDATED.] 
287.3      The provisions of Minnesota Statutes, sections 373.47, 
287.4   subdivision 1, and 473.907, subdivision 3, requiring prior 
287.5   review and approval by the public radio safety planning 
287.6   committee do not apply to the general obligation bonds issued by 
287.7   Anoka county in a principal amount of $10,500,000 on November 
287.8   20, 2002. 
287.9      [EFFECTIVE DATE.] This section is effective upon compliance 
287.10  by the governing body of Anoka county with the provisions of 
287.11  Minnesota Statutes, section 645.021. 
287.12     Sec. 26.  [BUFFALO; CITY BONDS FOR HIGHWAY 55.] 
287.13     The city of Buffalo may issue up to $1,300,000 of its 
287.14  general obligation bonds to pay for the city's share of costs of 
287.15  reconstruction and upgrading of that part of Minnesota trunk 
287.16  highway marked 55 that lies within the city of Buffalo. 
287.17     The bonds must be issued and sold in accordance with 
287.18  Minnesota Statutes, chapter 475, except that the debt need not 
287.19  be included within any limit on net debt imposed by Minnesota 
287.20  Statutes, chapter 475, and no election is required to authorize 
287.21  the bond issue. 
287.22     Notwithstanding any other law, including any law enacted 
287.23  during the 2003 legislative session whether enacted before or 
287.24  after the enactment of this act, the debt or debt service on 
287.25  bonds issued under this section is excluded from any levy or 
287.26  other taxing limits and is not spending or revenue for purposes 
287.27  of calculating local government aids or local government aids 
287.28  reductions. 
287.29     [EFFECTIVE DATE.] This section is effective the day after 
287.30  the governing body of Buffalo and its chief clerical officer 
287.31  timely complete their compliance with Minnesota Statutes, 
287.32  section 645.021, subdivisions 2 and 3. 
287.33     Sec. 27.  [CORPORATE STATUS FOR CERTAIN FEDERAL TAX LAW.] 
287.34     For purposes of section 1.103-1 of the federal income tax 
287.35  regulations, Lewis and Clark Rural Water System, Inc. is hereby 
287.36  recognized as a corporation authorized to act on behalf of its 
288.1   members, including its Minnesota member governmental units, to 
288.2   provide drinking water to their communities and to issue debt 
288.3   obligations in its own name on behalf of some or all of its 
288.4   members, provided that Minnesota member governmental units are 
288.5   not liable for the payment of principal of or interest on such 
288.6   obligations. 
288.7      Sec. 28.  [NURSING HOME BONDS AUTHORIZED.] 
288.8      Itasca county may issue bonds under Minnesota Statutes, 
288.9   sections 376.55 and 376.56, to finance the construction of a 
288.10  35-bed nursing home facility to replace an existing 35-bed 
288.11  private facility located in the county.  The bonds issued under 
288.12  this section must be payable solely from revenues and may not be 
288.13  general obligations of the county. 
288.14     [EFFECTIVE DATE.] This section is effective the day after 
288.15  the governing body of Itasca county and its chief clerical 
288.16  officer timely complete their compliance with Minnesota 
288.17  Statutes, section 645.021, subdivisions 2 and 3. 
288.18     Sec. 29.  [VALIDATION OF APPROVAL.] 
288.19     Notwithstanding Minnesota Statutes, section 645.021, 
288.20  subdivision 3, Laws 1980, chapter 569, sections 2 through 8, 
288.21  approved by the board of directors of local government 
288.22  information systems by resolution adopted on July 30, 1980, are 
288.23  effective as of July 1, 1980, and apply to obligations issued by 
288.24  local government information systems after April 1, 2003. 
288.25     Sec. 30.  [KANDIYOHI COUNTY AND CITY OF WILLMAR.] 
288.26     Subdivision 1.  [POWERS.] Notwithstanding Minnesota 
288.27  Statutes, sections 469.090 and 469.1082, Kandiyohi county may 
288.28  exercise the powers of a city under Minnesota Statutes, sections 
288.29  469.090 to 469.107.  Kandiyohi county and the city of Willmar 
288.30  may enter into a joint powers agreement under Minnesota 
288.31  Statutes, section 471.59, to jointly or cooperatively exercise 
288.32  any of the powers common to both the county and the city under 
288.33  Minnesota Statutes, sections 469.090 to 469.107, in a manner to 
288.34  be determined by a majority of the Kandiyohi county board and 
288.35  the Willmar city council.  
288.36     Subd. 2.  [SPECIAL TAXING DISTRICT.] A joint powers entity 
289.1   created under subdivision 1 is a political subdivision of the 
289.2   state and a special taxing district as defined by Minnesota 
289.3   Statutes, section 275.066, clause (24), with the power to adopt 
289.4   and certify a property tax levy to the county auditor.  The 
289.5   maximum allowable levy limit for this special taxing district is 
289.6   the same levy limit as provided under Minnesota Statutes, 
289.7   section 469.107, subdivision 1, and, to the extent levied, shall 
289.8   replace the levy authorized under subdivision 1 for Kandiyohi 
289.9   county and the city of Willmar.  
289.10     Subd. 3.  [EFFECTIVE DATE; NO LOCAL APPROVAL REQUIRED.] 
289.11  This section is effective the day after final enactment. 
289.12     Sec. 31.  [MINNEAPOLIS COMMUNITY PLANNING AND ECONOMIC 
289.13  DEVELOPMENT DEPARTMENT.] 
289.14     Subdivision 1.  Notwithstanding a contrary provision of 
289.15  law, the charter of the city of Minneapolis, or its civil 
289.16  service rules, the city council of the city of Minneapolis may, 
289.17  by ordinance: 
289.18     (1) establish a department of the city to be designated as 
289.19  the community planning and economic development department, or 
289.20  another name as the city designates by ordinance.  The term "the 
289.21  department" as used in sections 31 to 33 means the community 
289.22  planning and economic development department established under 
289.23  this subdivision; 
289.24     (2) transfer to the department the community development 
289.25  and planning duties and functions of any other department or 
289.26  office of the city of Minneapolis, including the employees 
289.27  performing those duties and functions.  If the duties and 
289.28  functions of the city planning department are transferred to the 
289.29  department, the department must perform the administrative 
289.30  duties that were formerly performed by the city's planning 
289.31  department on behalf of or at the request of the city's planning 
289.32  commission; 
289.33     (3) transfer any positions of the Minneapolis community 
289.34  development agency to the city of Minneapolis.  The ordinance 
289.35  may provide the process for establishing, classifying, and 
289.36  describing the duties for the transferred positions.  Employees 
290.1   of the Minneapolis community development agency who are not in 
290.2   the classified service of the city of Minneapolis may be 
290.3   transferred to the city of Minneapolis, and the city council may 
290.4   transfer the employees into the classified service of the city 
290.5   of Minneapolis and into positions for which the employees are 
290.6   qualified, as determined by the city council; 
290.7      (4) establish the position of director of the department in 
290.8   the unclassified service of the city, and establish other 
290.9   unclassified positions as necessary.  Unclassified positions, 
290.10  other than the director, must meet the following criteria: 
290.11     (i) the person occupying the position must report to the 
290.12  director or a deputy director; 
290.13     (ii) the person occupying the position must be part of the 
290.14  director's management team; 
290.15     (iii) the duties of the position must involve significant 
290.16  discretion and substantial involvement in the development, 
290.17  interpretation, or implementation of city or department policy; 
290.18     (iv) the duties of the position must not primarily require 
290.19  technical expertise where continuity in the position would be 
290.20  significant; and 
290.21     (v) the person occupying the position must be accountable 
290.22  to, loyal to, and compatible with the mayor, the city council, 
290.23  and the director; and 
290.24     (5) establish the terms and conditions of employment for 
290.25  employees of the department. 
290.26     Subd. 2.  The employees of the department are employees of 
290.27  the city of Minneapolis for the purposes of membership in the 
290.28  public employees retirement association.  An employee 
290.29  transferred from the Minneapolis community development agency to 
290.30  the city of Minneapolis must elect within six months of the 
290.31  effective date of the transfer to either continue as a member of 
290.32  the retirement program in which the employee participated on the 
290.33  date of the employee's transfer to the city of Minneapolis or to 
290.34  become a member of the public employees retirement association.  
290.35  This election is irrevocable.  An employee who was a member of 
290.36  the Minneapolis employees retirement fund on the date of the 
291.1   employee's transfer to the city of Minneapolis may continue as a 
291.2   member of that fund retaining all vested rights, constructive 
291.3   time, and employee and employer contributions made on the 
291.4   employee's behalf to that fund. The city of Minneapolis must 
291.5   make the required employer contributions to the elected 
291.6   retirement program.  An employee electing to become a member of 
291.7   the public employees retirement association may enroll in the 
291.8   association with vested rights based upon the employee's current 
291.9   tenure as an employee of the Minneapolis community development 
291.10  agency, but that tenure does not constitute allowable service 
291.11  for purposes of determining benefits. 
291.12     Subd. 3.  The terms of a collective bargaining agreement 
291.13  that is in effect between the Minneapolis community development 
291.14  agency and its employees, some or all of whom may be transferred 
291.15  to the city of Minneapolis, are binding upon the city of 
291.16  Minneapolis and the employees for the term of the contract. 
291.17     Subd. 4.  An employee electing under subdivision 2 to 
291.18  become a member of the public employees retirement association 
291.19  may purchase allowable service credit from the association by 
291.20  paying to the association an amount calculated under Minnesota 
291.21  Statutes, section 356.55.  The service credit that is 
291.22  purchasable is a period or periods of employment by the 
291.23  Minneapolis community development agency that would have been 
291.24  eligible service for coverage by the general employees 
291.25  retirement plan of the public employees retirement association 
291.26  if the service had been rendered after the effective date of 
291.27  this article.  A person electing to purchase service credit 
291.28  under this subdivision must provide any documentation of prior 
291.29  service required by the executive director of the public 
291.30  employees retirement association.  Notwithstanding any provision 
291.31  of Minnesota Statutes, section 356.55, to the contrary, the 
291.32  prior service credit purchase payment may be made in whole or in 
291.33  part on an institution-to-institution basis from a plan 
291.34  qualified under the federal Internal Revenue Code, section 
291.35  401(a), 401(k), or 414(h), or from an annuity qualified under 
291.36  the federal Internal Revenue Code, section 403, or from a 
292.1   deferred compensation plan under the federal Internal Revenue 
292.2   Code, section 457, to the extent permitted by federal law.  In 
292.3   no event may a prior service credit purchase transfer be paid 
292.4   directly to the person purchasing the service. 
292.5      Sec. 32.  [AUTHORITY.] 
292.6      Subdivision 1.  Notwithstanding a contrary law or provision 
292.7   of the Minneapolis city charter, the city council may exercise 
292.8   the powers granted by Minnesota Statutes, sections 469.001 to 
292.9   469.134, and 469.152 to 469.1799, and any other powers granted 
292.10  to a city of the first class, except for powers relating to 
292.11  public housing.  In exercising the powers authorized by this 
292.12  section, the city of Minneapolis shall be the authority, agency, 
292.13  or redevelopment agency referred to in Minnesota Statutes, 
292.14  sections 469.001 to 469.134, and 469.152 to 469.1799, and the 
292.15  city council of the city of Minneapolis shall be the governing 
292.16  body or board of commissioners of the authority, agency, or 
292.17  redevelopment agency.  The city council may exercise the powers 
292.18  authorized by this subdivision; by Laws 1980, chapter 595, as 
292.19  amended; by Laws 1990, chapter 604, article 7, section 29, as 
292.20  amended by Laws 1991, chapter 291, article 10, section 20; and 
292.21  may exercise any other development or redevelopment powers 
292.22  authorized by law, independently, or in conjunction with each 
292.23  other, as though all of the authorized powers had been granted 
292.24  to a single entity.  But a program, project, or district 
292.25  authorized by the city under Minnesota Statutes, sections 
292.26  469.001 to 469.134, and 469.152 to 469.l799, is subject to the 
292.27  limitations of the program, project, or district imposed by 
292.28  Minnesota Statutes, sections 469.001 to 469.134, and 469.152 to 
292.29  469.1799. 
292.30     Subd. 2.  The city council may delegate to the department 
292.31  any of the powers granted to the city of Minneapolis under 
292.32  subdivision 1, except the power to tax and the power to issue 
292.33  bonds, notes, or other obligations of the city of Minneapolis. 
292.34     Subd. 3.  Notwithstanding a contrary law or provision of 
292.35  the Minneapolis city charter, money, investments, real property, 
292.36  personal property, assets, programs, projects, districts, 
293.1   developments, or obligations of the Minneapolis community 
293.2   development agency may be transferred by resolution of the city 
293.3   council to the city of Minneapolis and be made subject to the 
293.4   control, authority, and operation of the department.  If a 
293.5   transfer is made, the city of Minneapolis is bound by the 
293.6   contractual obligations of the Minneapolis community development 
293.7   agency with respect to the money, investments, real estate, 
293.8   personal property, assets, programs, projects, districts, 
293.9   developments, or obligations, including the obligations of any 
293.10  bonds, notes, or other debt obligations of the Minneapolis 
293.11  community development agency.  The pledge of the full faith and 
293.12  credit of the Minneapolis community development agency to any 
293.13  bonds, notes, or other debt obligations of the Minneapolis 
293.14  community development agency that are transferred to the city of 
293.15  Minneapolis shall not be secured by the full faith and credit of 
293.16  the city of Minneapolis and shall not be secured by the taxing 
293.17  powers of the city of Minneapolis but only by the assets pledged 
293.18  by the Minneapolis community development agency to the payment 
293.19  of the bonds, notes, or other debt obligations.  The city 
293.20  council is granted the powers necessary to perform the 
293.21  contractual obligations transferred to the city of Minneapolis. 
293.22     Subd. 4.  The city council may pledge to the payment of 
293.23  bonds, notes, or other obligations of the city of Minneapolis 
293.24  revenues, assets, reserves, or other property transferred to the 
293.25  city of Minneapolis under this section. 
293.26     Subd. 5.  The city council may pledge to the payment of 
293.27  bonds, notes, or other obligations of the city of Minneapolis 
293.28  the full faith and credit of the city of Minneapolis, or the 
293.29  taxing power of the city of Minneapolis, to finance programs, 
293.30  projects, districts, developments, facilities, or activities 
293.31  undertaken by the department. 
293.32     Subd. 6.  Unless prohibited by other law or a contractual 
293.33  obligation including a pledge to the owners of bonds, notes, or 
293.34  other indebtedness, the money and investments of the Minneapolis 
293.35  community development agency transferred to the city of 
293.36  Minneapolis under this section may be deposited in any fund or 
294.1   account of the city of Minneapolis. 
294.2      Subd. 7.  If all money, investments, real property, 
294.3   personal property, assets, programs, projects, districts, 
294.4   developments, or obligations of the Minneapolis community 
294.5   development agency are transferred to the city of Minneapolis, 
294.6   the city council may, by resolution, dissolve the Minneapolis 
294.7   community development agency.  Any rights, duties, claims, 
294.8   awards, grants, or liabilities that may arise after the 
294.9   dissolution of the Minneapolis community development agency 
294.10  shall constitute rights, duties, claims, awards, grants, or 
294.11  liabilities of the city of Minneapolis.  The pledge of the full 
294.12  faith and credit of the Minneapolis community development agency 
294.13  to any bonds, notes, or other debt obligations of the 
294.14  Minneapolis community development agency that are transferred to 
294.15  the city of Minneapolis shall not be secured by the full faith 
294.16  and credit or the taxing powers of the city of Minneapolis but 
294.17  shall be secured only by the assets pledged by the Minneapolis 
294.18  community development agency to the payment of the bonds, notes, 
294.19  or other debt obligations. 
294.20     Subd. 8.  If the city of Minneapolis exercises its powers 
294.21  for industrial development or establishes industrial development 
294.22  districts under Minnesota Statutes, sections 469.048 to 469.068, 
294.23  the term "industrial," when used in relation to industrial 
294.24  development, includes economic and economic development and 
294.25  housing and housing development. 
294.26     Sec. 33.  [LIMITATIONS.] 
294.27     Subdivision 1.  Bonds, notes, or other obligations issued 
294.28  to finance or refinance a program, project, district, 
294.29  development, facility, or activity of the department must be 
294.30  issued by the city council, or, at the request of the city 
294.31  council, by the board of estimate and taxation of the city of 
294.32  Minneapolis.  The limitations of this section must not be 
294.33  applied in a manner that impairs the security of bonds, notes, 
294.34  or other obligations issued before the imposition of the 
294.35  limitations. 
294.36     Subd. 2.  Unless otherwise provided in sections 31 to 33, 
295.1   all actions of the city council under sections 31 to 33 are 
295.2   actions within chapter 3, section 1, of the charter of the city 
295.3   of Minneapolis. 
295.4      Sec. 34.  [EFFECTIVE DATE; LOCAL APPROVAL.] 
295.5      Sections 31 to 33 are effective the day after the governing 
295.6   body of the city of Minneapolis and its chief clerical officer 
295.7   timely complete their compliance with Minnesota Statutes, 
295.8   section 645.021, subdivisions 2 and 3. 
295.9      Sec. 35.  [DEFINITIONS.] 
295.10     Subdivision 1.  [DEFINITIONS.] For the purposes of sections 
295.11  35 to 41, the terms defined in this section have the following 
295.12  meanings. 
295.13     Subd. 2.  [LAKES AREA ECONOMIC DEVELOPMENT 
295.14  AUTHORITY.] "Lakes area economic development authority" or 
295.15  "authority" means the lakes area economic authority established 
295.16  as provided in section 36. 
295.17     Subd. 3.  [PERSON.] "Person" means an individual, 
295.18  partnership, corporation, cooperative, or other organization or 
295.19  entity, public or private. 
295.20     Subd. 4.  [MEMBER.] "Member" means the city of Alexandria 
295.21  or Garfield or the township of Alexandria or La Grand, or any 
295.22  other municipality, the geographic area of which is included 
295.23  within the jurisdiction of the authority. 
295.24     Subd. 5.  [MUNICIPALITY.] "Municipality" means a statutory 
295.25  or home rule charter city or town located in Douglas county. 
295.26     Sec. 36.  [LAKES AREA ECONOMIC DEVELOPMENT AUTHORITY.] 
295.27     Subdivision 1.  [ESTABLISHMENT.] A lakes area economic 
295.28  development authority with jurisdiction over the geographic area 
295.29  of its members is established as a public corporation and 
295.30  political subdivision of the state with perpetual succession and 
295.31  all the rights, powers, privileges, immunities, and duties that 
295.32  may be validly granted to or imposed upon a municipal 
295.33  corporation, as provided in sections 35 to 41. 
295.34     Subd. 2.  [BOARD OF COMMISSIONERS.] The authority is 
295.35  governed by a board of commissioners to be selected as follows:  
295.36  the mayor of each member city, and the chair of the town board 
296.1   of each member town shall appoint one commissioner, subject to 
296.2   the approval of the respective city council or town board.  The 
296.3   terms of the commissioner are as provided in subdivision 5. 
296.4      Subd. 3.  [TIME LIMITS FOR SELECTION, ALTERNATIVE 
296.5   APPOINTMENT BY DISTRICT JUDGE.] The initial appointment of 
296.6   commissioners must be made no later than 60 days after sections 
296.7   35 to 41 become effective.  Subsequent appointments must be made 
296.8   within 60 days before the expiration of a term in the same 
296.9   manner as the predecessor was selected.  A vacancy on the board 
296.10  must be filled within 60 days after it occurs.  If a selection 
296.11  is not made within the prescribed time, the chief judge of the 
296.12  seventh judicial district of the Minnesota district court on 
296.13  application by an interested person shall appoint an eligible 
296.14  person to the board. 
296.15     Subd. 4.  [VACANCIES.] If a vacancy occurs in the office of 
296.16  commissioner, the vacancy must be filled for the unexpired term 
296.17  in a like manner as provided for selection of the commissioner 
296.18  who vacated the office.  The office must be considered vacant 
296.19  under the conditions specified in Minnesota Statutes, section 
296.20  351.02. 
296.21     Subd. 5.  [TERMS OF OFFICE.] The terms of the initial 
296.22  appointees to the board of commissioners are for three, four, 
296.23  five, and six years and must be established by lot among the 
296.24  initial four commissioners.  The mayor or town board chair of 
296.25  any new member added under section 39 shall designate the term, 
296.26  not to exceed six years, of the first commissioner selected to 
296.27  represent the member.  Succeeding terms of all commissioners are 
296.28  six years, except that each commissioner serves until a 
296.29  successor has been duly selected and qualified. 
296.30     Subd. 6.  [REMOVAL.] A commissioner may be removed by the 
296.31  unanimous vote of the appointing governing body, with or without 
296.32  cause. 
296.33     Subd. 7.  [QUALIFICATIONS.] A commissioner may, but need 
296.34  not, be a resident of the territory of the member appointing 
296.35  that commissioner. 
296.36     Subd. 8.  [COMPENSATION.] A commissioner must be paid a per 
297.1   diem compensation for attending a regular or special meeting in 
297.2   an amount determined by the board.  A commissioner must be 
297.3   reimbursed for all reasonable expenses incurred in the 
297.4   performance of the commissioner's duties as determined by the 
297.5   board. 
297.6      Sec. 37.  [POWERS; APPLICATION OF EDA LAW.] 
297.7      Subdivision 1.  [USE OF EDA POWERS.] Except as otherwise 
297.8   provided in sections 35 to 41, the authority may exercise any of 
297.9   the powers of an economic development authority (EDA) provided 
297.10  by Minnesota Statutes, sections 469.090 to 469.1082, and for 
297.11  this purpose the term "city" means a member.  Minnesota 
297.12  Statutes, sections 469.096 to 469.101, 469.103 to 469.106, and 
297.13  469.108 to 469.1081, apply to the authority, except that the 
297.14  authority's fiscal year is the calendar year.  
297.15     Subd. 2.  [LAW THAT IS NOT APPLICABLE.] The provisions in: 
297.16     (1) Minnesota Statutes, section 469.091, subdivision 1, 
297.17  expressly relating to: 
297.18     (i) the adoption of an enabling resolution; 
297.19     (ii) Minnesota Statutes, section 469.092; or 
297.20     (iii) housing and redevelopment authorities; and 
297.21     (2) Minnesota Statutes, sections 469.093, 469.095, 469.102, 
297.22  and 469.107; 
297.23  do not apply to the authority. 
297.24     Sec. 38.  [MEMBERS MUST LEVY TAXES FOR AUTHORITY.] 
297.25     (a) A member shall, at the request of the authority, levy a 
297.26  tax in any year for the benefit of the authority.  The tax is, 
297.27  for each member, a pro rata portion of the total amount of tax 
297.28  requested by the authority based on the taxable market value 
297.29  within a member's jurisdiction, but in no event may the tax in 
297.30  any year exceed 0.01813 percent of taxable market value.  For 
297.31  purposes of this section, "taxable market value" has the meaning 
297.32  as given in Minnesota Statutes, section 273.032. 
297.33     (b) The treasurer of each member city or town shall, within 
297.34  15 days after receiving the property tax settlements from the 
297.35  county treasurer, pay to the treasurer of the authority the 
297.36  amount collected for this purpose.  The money must be used by 
298.1   the authority for the purposes provided by sections 35 to 41. 
298.2      Sec. 39.  [ADDITION AND WITHDRAWAL OF MEMBERS.] 
298.3      Subdivision 1.  [ADDITIONS.] A municipality upon a 
298.4   resolution adopted by a four-fifths vote of all of its governing 
298.5   body may petition the authority to be included within the 
298.6   jurisdiction of the authority and, if approved by the authority, 
298.7   the geographic area of the municipality must be included within 
298.8   the jurisdiction of the authority and subject to the 
298.9   jurisdiction of the authority under sections 35 to 41. 
298.10     Subd. 2.  [WITHDRAWALS.] A municipality may withdraw from 
298.11  the authority by resolution of its governing body.  The 
298.12  municipality must notify the board of commissioners of the 
298.13  authority of the withdrawal by providing a copy of the 
298.14  resolution at least two years in advance of the proposed 
298.15  withdrawal.  Unless the authority and the withdrawing member 
298.16  agree otherwise by action of their governing bodies, the taxable 
298.17  property of the withdrawing member is subject to the property 
298.18  tax levy under section 38 for two taxes payable years following 
298.19  the notification of the withdrawal and the withdrawing member 
298.20  retains any rights, obligations, and liabilities obtained or 
298.21  incurred during its participation. 
298.22     Sec. 40.  [CONTRACTS WITH NONPROFIT CORPORATIONS.] 
298.23     The authority may enter into contracts with one or more 
298.24  nonprofit corporations to make, from funds of and under 
298.25  guidelines set by the authority, loans or grants for projects 
298.26  the authority may undertake under sections 35 to 41.  Minnesota 
298.27  Statutes, section 465.719, does not apply so long as the 
298.28  nonprofit corporation is not described in Minnesota Statutes, 
298.29  section 465.719, subdivision 1, paragraph (b), item (i), or (b), 
298.30  item (ii). 
298.31     Sec. 41.  [RELATION TO EXISTING LAWS.] 
298.32     Sections 35 to 41 must be given full effect notwithstanding 
298.33  any law or charter that is inconsistent with them. 
298.34     Sec. 42.  [LOCAL APPROVAL; EFFECTIVE DATE.] 
298.35     Sections 35 to 41 are only effective as to all affected 
298.36  governing bodies on the day after the last of the governing 
299.1   bodies or town boards of the cities of Alexandria and Garfield 
299.2   and the towns of Alexandria and La Grand in Douglas county and 
299.3   the chief clerical officer of each of them timely complete their 
299.4   compliance with Minnesota Statutes, section 645.021, 
299.5   subdivisions 2 and 3. 
299.6                              ARTICLE 13
299.7                      MOSQUITO CONTROL DISTRICT
299.8      Section 1.  Minnesota Statutes 2002, section 18B.07, 
299.9   subdivision 2, is amended to read: 
299.10     Subd. 2.  [PROHIBITED PESTICIDE USE.] (a) A person may not 
299.11  use, store, handle, distribute, or dispose of a pesticide, 
299.12  rinsate, pesticide container, or pesticide application equipment 
299.13  in a manner: 
299.14     (1) that is inconsistent with a label or labeling as 
299.15  defined by FIFRA; 
299.16     (2) that endangers humans, damages agricultural products, 
299.17  food, livestock, fish, or wildlife; or 
299.18     (3) that will cause unreasonable adverse effects on the 
299.19  environment.  
299.20     (b) A person may not direct a pesticide onto property 
299.21  beyond the boundaries of the target site.  A person may not 
299.22  apply a pesticide resulting in damage to adjacent property. 
299.23     (c) A person may not directly apply a pesticide on a human 
299.24  by overspray or target site spray, except when: 
299.25     (1) the pesticide is intended for use on a human; 
299.26     (2) the pesticide application is for mosquito control 
299.27  operations conducted before June 30, 2003, in compliance with 
299.28  paragraph (d), clauses (1) and (2); 
299.29     (3) the pesticide application is for control of gypsy moth, 
299.30  forest tent caterpillar, or other pest species, as determined by 
299.31  the commissioner, and the pesticide used is a biological agent; 
299.32  or 
299.33     (4) the pesticide application is for a public health risk, 
299.34  as determined by the commissioner of health, and the 
299.35  commissioner of health, in consultation with the commissioner of 
299.36  agriculture, determines that the application is warranted based 
300.1   on the commissioner's balancing of the public health risk with 
300.2   the risk that the pesticide application poses to the health of 
300.3   the general population, with special attention to the health of 
300.4   children. 
300.5      (d) For pesticide applications under paragraph (c), clause 
300.6   (2), the following conditions apply: 
300.7      (1) no practicable and effective alternative method of 
300.8   control exists; 
300.9      (2) the pesticide is among the least toxic available for 
300.10  control of the target pest; and 
300.11     (3) notification to residents in the area to be treated is 
300.12  provided at least 24 hours before application through direct 
300.13  notification, posting daily on the treating organization's Web 
300.14  site, and by sending a broadcast e-mail to those persons who 
300.15  request notification of such, of those areas to be treated by 
300.16  adult mosquito control techniques during the next calendar day.  
300.17  For control operations related to human disease, notice under 
300.18  this paragraph may be given less than 24 hours in advance. 
300.19     (e) For pesticide applications under paragraph (c), clauses 
300.20  (3) and (4), the following conditions apply: 
300.21     (1) no practicable and effective alternative method of 
300.22  control exists; 
300.23     (2) the pesticide is among the least toxic available for 
300.24  control of the target pest; and 
300.25     (3) notification of residents in the area to be treated is 
300.26  provided by direct notification and through publication in a 
300.27  newspaper of general circulation within the affected area. 
300.28     (e) (f) For purposes of this subdivision, "direct 
300.29  notification" may include mailings, public meetings, posted 
300.30  placards, neighborhood newsletters, or other means of contact 
300.31  designed to reach as many residents as possible. 
300.32     (f) (g) A person may not apply a pesticide in a manner so 
300.33  as to expose a worker in an immediately adjacent, open field. 
300.34     Sec. 2.  Minnesota Statutes 2002, section 473.702, is 
300.35  amended to read: 
300.36     473.702 [ESTABLISHMENT OF DISTRICT; PURPOSE; AREA; 
301.1   GOVERNING BODY.] 
301.2      A metropolitan mosquito control district is created to 
301.3   control mosquitoes, disease vectoring ticks, and black gnats 
301.4   (Simuliidae) in the metropolitan area.  The area of the district 
301.5   is the metropolitan area defined in section 473.121.  The area 
301.6   of the district is the metropolitan area excluding the part of 
301.7   Carver county west of the west line of township 116N, range 24W, 
301.8   township 115N, range 24W, and township 114N, range 24W.  The 
301.9   metropolitan mosquito control commission is created as the 
301.10  governing body of the district, composed and exercising the 
301.11  powers as prescribed in sections 473.701 to 473.716. 
301.12     Sec. 3.  Minnesota Statutes 2002, section 473.703, 
301.13  subdivision 1, is amended to read: 
301.14     Subdivision 1.  [METRO COUNTY COMMISSIONERS.] The district 
301.15  shall be operated by a commission which shall consist of three 
301.16  members from Anoka county, one member two members from Carver 
301.17  county, three members from Dakota county, three members from 
301.18  Hennepin county, three members from Ramsey county, two members 
301.19  from Scott county, and two members from Washington county.  
301.20  Commissioners shall be members of the board of county 
301.21  commissioners of their respective counties, and shall be 
301.22  appointed by their respective boards of county commissioners.  
301.23     Sec. 4.  Minnesota Statutes 2002, section 473.704, 
301.24  subdivision 17, is amended to read: 
301.25     Subd. 17.  [ENTRY TO PROPERTY.] (a) Members of the 
301.26  commission, its officers, and employees, while on the business 
301.27  of the commission, may enter upon any property within or outside 
301.28  the district at reasonable times to determine the need for 
301.29  control programs.  They may take all necessary and proper steps 
301.30  for the control programs on property within the district as the 
301.31  director of the commission may designate.  Subject to the 
301.32  paramount control of the county and state authorities, 
301.33  commission members and officers and employees of the commission 
301.34  may enter upon any property and clean up any stagnant pool of 
301.35  water, the shores of lakes and streams, and other breeding 
301.36  places for mosquitoes within the district.  The commission may 
302.1   apply insecticides approved by the director to any area within 
302.2   or outside the district that is found to be a breeding place for 
302.3   mosquitoes.  The commission shall give reasonable notification 
302.4   to the governing body of the local unit of government prior to 
302.5   applying insecticides outside of the district on land located 
302.6   within the jurisdiction of the local unit of government.  The 
302.7   commission shall not enter upon private property if the owner 
302.8   objects except to monitor for disease-bearing mosquitoes, ticks, 
302.9   or black gnats or for control of disease bearing mosquito 
302.10  encephalitis outbreaks mosquito species capable of carrying a 
302.11  human disease in the local area of a human disease outbreak 
302.12  regardless of whether there has been an occurrence of the 
302.13  disease in a human being. 
302.14     (b) The commissioner of natural resources must approve 
302.15  mosquito control plans or make modifications as the commissioner 
302.16  of natural resources deems necessary for the protection of 
302.17  public water, wild animals, and natural resources before control 
302.18  operations are started on state lands administered by the 
302.19  commissioner of natural resources.  Until July 1, 2002, approval 
302.20  may, if the commissioner of natural resources considers it 
302.21  necessary, be denied, modified, or revoked by the commissioner 
302.22  of natural resources at any time upon written notice to the 
302.23  commission. 
302.24     Sec. 5.  Minnesota Statutes 2002, section 473.705, is 
302.25  amended to read: 
302.26     473.705 [CONTRACTS FOR MATERIALS, SUPPLIES AND EQUIPMENT.] 
302.27     No contract Contracts for the purchase of materials, 
302.28  supplies, and equipment costing more than $5,000 shall be made 
302.29  must comply with and be governed by the Minnesota uniform 
302.30  municipal contracting law, section 471.345.  A sealed bid 
302.31  solicitation must not be done by the commission without 
302.32  publishing the notice once in the official newspaper of each of 
302.33  the counties in the district that bids or proposals will be 
302.34  received.  The notice shall be published at least ten days 
302.35  before bids are opened.  Such notice shall state the nature of 
302.36  the work or purchase and the terms and conditions upon which the 
303.1   contract is to be awarded, naming therein a time and place where 
303.2   such bids will be received, opened, and read publicly.  After 
303.3   such bids have been duly received, opened, read publicly, and 
303.4   recorded, the commission shall award such contract to the lowest 
303.5   responsible bidder or it may reject all bids.  Each contract 
303.6   shall be duly executed in writing and the party to whom the 
303.7   contract is awarded may be required to give sufficient bond to 
303.8   the commission for the faithful performance of the contract.  If 
303.9   no satisfactory bid is received the commission may readvertise.  
303.10  The commission shall have the right to set qualifications and 
303.11  specifications and to require bids to meet such qualifications 
303.12  and specifications before bids are accepted.  If the commission 
303.13  by an affirmative vote of five-sixths of the voting power of the 
303.14  commission shall declare that an emergency exists requiring the 
303.15  immediate purchase of materials or supplies at a cost in excess 
303.16  of $5,000 but not to exceed $10,000 in amount, or in making 
303.17  emergency repairs, it shall not be necessary to advertise for 
303.18  bids, but such material, equipment, and supplies may be 
303.19  purchased in the open market at the lowest price available 
303.20  without securing formal competitive bids.  An emergency as used 
303.21  in this section shall be an unforeseen circumstance or condition 
303.22  which results in placing life or property in jeopardy.  All 
303.23  contracts involving employment of labor shall stipulate terms 
303.24  thereof and such conditions as the commission deems reasonable 
303.25  as to hours and wages.  
303.26     Sec. 6.  Minnesota Statutes 2002, section 473.711, 
303.27  subdivision 2a, is amended to read: 
303.28     Subd. 2a.  [TAX LEVY.] (a) The commission may levy a tax on 
303.29  all taxable property in the district as defined in section 
303.30  473.702 to provide funds for the purposes of sections 473.701 to 
303.31  473.716.  The tax shall not exceed the property tax levy 
303.32  limitation determined in this subdivision.  A participating 
303.33  county may agree to levy an additional tax to be used by the 
303.34  commission for the purposes of sections 473.701 to 473.716 but 
303.35  the sum of the county's and commission's taxes may not exceed 
303.36  the county's proportionate share of the property tax levy 
304.1   limitation determined under this subdivision based on the ratio 
304.2   of its total net tax capacity to the total net tax capacity of 
304.3   the entire district as adjusted by section 270.12, subdivision 3.
304.4   The auditor of each county in the district shall add the amount 
304.5   of the levy made by the district to other taxes of the county 
304.6   for collection by the county treasurer with other taxes.  When 
304.7   collected, the county treasurer shall make settlement of the tax 
304.8   with the district in the same manner as other taxes are 
304.9   distributed to political subdivisions.  No county shall levy any 
304.10  tax for mosquito, disease vectoring tick, and black gnat 
304.11  (Simuliidae) control except under this section.  The levy shall 
304.12  be in addition to other taxes authorized by law. 
304.13     (b) The property tax levied by the metropolitan mosquito 
304.14  control commission shall not exceed the following amount for the 
304.15  years specified: 
304.16     (1) for taxes payable in 1996, the product of (i) the 
304.17  commission's property tax levy limitation for taxes payable in 
304.18  1995 determined under this subdivision minus 50 percent of the 
304.19  amount actually levied for taxes payable in 1995, multiplied by 
304.20  (ii) an index for market valuation changes equal to the total 
304.21  market valuation of all taxable property located within the 
304.22  district for the current taxes payable year divided by the total 
304.23  market valuation of all taxable property located within the 
304.24  district for the previous taxes payable year; 
304.25     (2) for taxes payable in 1997 and subsequent years, the 
304.26  product of (i) the commission's property tax levy limitation for 
304.27  the previous year determined under this subdivision multiplied 
304.28  by (ii) an index for market valuation changes equal to the total 
304.29  market valuation of all taxable property for the current tax 
304.30  payable year located within the district for the current taxes 
304.31  payable year plus any area that has been added to the district 
304.32  since the previous year, divided by the total market valuation 
304.33  of all taxable property located within the district for the 
304.34  previous taxes payable year; and. 
304.35     (3) (c) For the purpose of determining the commission's 
304.36  property tax levy limitation under this subdivision, "total 
305.1   market valuation" means the total market valuation of all 
305.2   taxable property within the district without valuation 
305.3   adjustments for fiscal disparities (chapter 473F), tax increment 
305.4   financing (sections 469.174 to 469.179), and high voltage 
305.5   transmission lines (section 273.425). 
305.6      [EFFECTIVE DATE.] This section is effective for taxes 
305.7   payable in 2004 and thereafter. 
305.8      Sec. 7.  Minnesota Statutes 2002, section 473.714, 
305.9   subdivision 1, is amended to read: 
305.10     Subdivision 1.  [COMPENSATION.] Except as provided in 
305.11  subdivision 2, Each commissioner, including the officers of the 
305.12  commission shall, may be reimbursed for actual and necessary 
305.13  expenses incurred in the performance of duties.  The chair shall 
305.14  be paid a per diem for attending meetings, monthly, executive, 
305.15  and special, and each commissioner shall be paid a per diem for 
305.16  attending meetings, monthly, executive, and special, which per 
305.17  diem shall be established by the commission.  A commissioner who 
305.18  receives a per diem from the commissioner's county shall not be 
305.19  paid a per diem for the same day by the commission for attending 
305.20  meetings of the commission.  The annual budget of the commission 
305.21  shall provide as a separate account anticipated expenditures for 
305.22  per diem, travel and associated expenses for the chair and 
305.23  members, and compensation or reimbursement shall be made to the 
305.24  chair or members only when budgeted.  No commissioner may be 
305.25  paid a per diem. 
305.26     Sec. 8.  [TRANSITIONAL AUTHORITY.] 
305.27     The metropolitan mosquito control district and the Carver 
305.28  county board of commissioners may enter into an agreement for 
305.29  the district to provide its services to the part of Carver 
305.30  county added to the district by this article until the proceeds 
305.31  of the levy from that part of Carver county are available for 
305.32  those services.  During this period the services may be provided 
305.33  on the terms and for fees that are mutually agreed to by the 
305.34  parties. 
305.35     Sec. 9.  [REPEALER.] 
305.36     Minnesota Statutes 2002, sections 473.711, subdivision 2b, 
306.1   and 473.714, subdivision 2, are repealed. 
306.2      Sec. 10.  [EFFECTIVE DATE.] 
306.3      Sections 1 to 9 are effective the day following final 
306.4   enactment. 
306.5                              ARTICLE 14
306.6                            MISCELLANEOUS
306.7      Section 1.  Minnesota Statutes 2002, section 8.30, is 
306.8   amended to read: 
306.9      8.30 [COMPROMISE OF TAX AND FEE CLAIMS.] 
306.10     Notwithstanding any other provisions of law to the 
306.11  contrary, the attorney general shall have authority to 
306.12  compromise taxes, fees, surcharges, assessments, penalties, and 
306.13  interest in any case referred to the attorney general by the 
306.14  commissioner of revenue all cases, whether reduced to judgment 
306.15  or not, where the debt is being reduced by an amount exceeding 
306.16  $50,000 and, in the attorney general's opinion, it shall be in 
306.17  the best interests of the state to do so.  Such a compromise 
306.18  must be in a form prescribed by the attorney general and shall 
306.19  be in writing signed by the attorney general, the taxpayer or 
306.20  taxpayer's representative, and the commissioner of 
306.21  revenue.  Compromises of such debts in cases where the debt is 
306.22  being reduced by an amount of $50,000 or less are governed by 
306.23  section 16D.15.  
306.24     [EFFECTIVE DATE.] This section is effective the day 
306.25  following final enactment. 
306.26     Sec. 2.  Minnesota Statutes 2002, section 270.059, is 
306.27  amended to read: 
306.28     270.059 [REVENUE DEPARTMENT SERVICE AND RECOVERY SPECIAL 
306.29  REVENUE FUND.] 
306.30     A revenue department service and recovery special revenue 
306.31  fund is created for the purpose of recovering the costs of 
306.32  furnishing public government data and related services or 
306.33  products, as well as recovering costs associated with collecting 
306.34  local taxes on sales.  All money collected under this section is 
306.35  deposited in the revenue department service and recovery special 
306.36  revenue fund.  Money in the fund is appropriated to the 
307.1   commissioner of revenue to reimburse the department of revenue 
307.2   for the costs incurred in administering the tax law or providing 
307.3   the data, service, or product.  Any monies paid to the 
307.4   department as a criminal fine for a tax law violation that are 
307.5   designated by the court to fund tax law enforcement are 
307.6   appropriated to this fund. 
307.7      [EFFECTIVE DATE.] This section is effective the day 
307.8   following final enactment. 
307.9      Sec. 3.  Minnesota Statutes 2002, section 270.67, 
307.10  subdivision 4, is amended to read: 
307.11     Subd. 4.  [OFFER-IN-COMPROMISE AND INSTALLMENT PAYMENT 
307.12  PROGRAM.] (a) In implementing the authority provided in 
307.13  subdivision 2 or in section sections 8.30 and 16D.15 to accept 
307.14  offers of installment payments or offers-in-compromise of tax 
307.15  liabilities, the commissioner of revenue shall prescribe 
307.16  guidelines for employees of the department of revenue to 
307.17  determine whether an offer-in-compromise or an offer to make 
307.18  installment payments is adequate and should be accepted to 
307.19  resolve a dispute.  In prescribing the guidelines, the 
307.20  commissioner shall develop and publish schedules of national and 
307.21  local allowances designed to provide that taxpayers entering 
307.22  into a compromise or payment agreement have an adequate means to 
307.23  provide for basic living expenses.  The guidelines must provide 
307.24  that the taxpayer's ownership interest in a motor vehicle, to 
307.25  the extent of the value allowed in section 550.37, will not be 
307.26  considered as an asset; in the case of an offer related to a 
307.27  joint tax liability of spouses, that value of two motor vehicles 
307.28  must be excluded.  The guidelines must provide that employees of 
307.29  the department shall determine, on the basis of the facts and 
307.30  circumstances of each taxpayer, whether the use of the schedules 
307.31  is appropriate and that employees must not use the schedules to 
307.32  the extent the use would result in the taxpayer not having 
307.33  adequate means to provide for basic living expenses.  The 
307.34  guidelines must provide that: 
307.35     (1) an employee of the department shall not reject an 
307.36  offer-in-compromise or an offer to make installment payments 
308.1   from a low-income taxpayer solely on the basis of the amount of 
308.2   the offer; and 
308.3      (2) in the case of an offer-in-compromise which relates 
308.4   only to issues of liability of the taxpayer: 
308.5      (i) the offer must not be rejected solely because the 
308.6   commissioner is unable to locate the taxpayer's return or return 
308.7   information for verification of the liability; and 
308.8      (ii) the taxpayer shall not be required to provide an 
308.9   audited, reviewed, or compiled financial statement. 
308.10     (b) The commissioner shall establish procedures: 
308.11     (1) that require presentation of a counteroffer or a 
308.12  written rejection of the offer by the commissioner if the amount 
308.13  offered by the taxpayer in an offer-in-compromise or an offer to 
308.14  make installment payments is not accepted by the commissioner; 
308.15     (2) for an administrative review of any written rejection 
308.16  of a proposed offer-in-compromise or installment agreement made 
308.17  by a taxpayer under this section before the rejection is 
308.18  communicated to the taxpayer; 
308.19     (3) that allow a taxpayer to request reconsideration of any 
308.20  written rejection of the offer or agreement to the commissioner 
308.21  of revenue to determine whether the rejection is reasonable and 
308.22  appropriate under the circumstances; and 
308.23     (4) that provide for notification to the taxpayer when an 
308.24  offer-in-compromise has been accepted, and issuance of 
308.25  certificates of release of any liens imposed under section 
308.26  270.69 related to the liability which is the subject of the 
308.27  compromise. 
308.28     [EFFECTIVE DATE.] This section is effective the day 
308.29  following final enactment. 
308.30     Sec. 4.  Minnesota Statutes 2002, section 290.06, 
308.31  subdivision 24, is amended to read: 
308.32     Subd. 24.  [CREDIT FOR JOB CREATION.] (a) A corporation 
308.33  that leases and operates a heavy maintenance base for aircraft 
308.34  that is owned by the state of Minnesota or one of its political 
308.35  subdivisions, or an engine repair facility described in section 
308.36  116R.02, subdivision 6, or both, may take a credit against the 
309.1   tax due under this chapter.  
309.2      (b) For the first taxable year when the facility has been 
309.3   in operation for at least three consecutive months, the credit 
309.4   is equal to $5,000 multiplied by the number of persons employed 
309.5   by the corporation on a full-time basis at the facility on the 
309.6   last day of the taxable year, not to exceed the number of 
309.7   persons employed by the corporation on a full-time basis at the 
309.8   facility on the date 90 days before the last day of the taxable 
309.9   year.  For each of the succeeding four taxable years, the credit 
309.10  is equal to $5,000 multiplied by the number of persons employed 
309.11  by the corporation on a full-time basis at the facility on the 
309.12  last day of the taxable year, not to exceed the number of 
309.13  persons employed by the corporation on a full-time basis at the 
309.14  facility on the date 90 days before the last day of the taxable 
309.15  year.  
309.16     (c) For the first taxable year in which the credit is 
309.17  allowed for the facility, the credit must not exceed 80 percent 
309.18  of the wages paid to or incurred for persons employed by the 
309.19  taxpayer at the facility during the taxable year.  For the 
309.20  succeeding four taxable years, the credit must not exceed 20 
309.21  percent of the wages paid to or incurred for persons employed by 
309.22  the taxpayer at the facility during the taxable year.  For 
309.23  purposes of this section, "wages" has the meaning given under 
309.24  section 3121(b) of the Internal Revenue Code, except the 
309.25  limitation to the contribution and benefit base does not apply. 
309.26     (d) If the credit provided under this subdivision exceeds 
309.27  the tax liability of the corporation for the taxable year, the 
309.28  excess amount of the credit may be carried over to each of the 
309.29  ten 20 taxable years succeeding the taxable year.  The entire 
309.30  amount of the credit must be carried to the earliest taxable 
309.31  year to which the amount may be carried.  The unused portion of 
309.32  the credit must be carried to the following taxable year.  No 
309.33  credit may be carried to a taxable year more than ten 20 years 
309.34  after the taxable year in which the credit was earned. 
309.35     (e) if an unused portion of the credit remains at the end 
309.36  of the carryover period under paragraph (d), the commissioner 
310.1   shall refund the unused portion to the taxpayer.  The provisions 
310.2   of this paragraph do not apply if the corporation that earned 
310.3   the credit under this subdivision or a successor in interest to 
310.4   the corporation filed for bankruptcy protection. 
310.5      [EFFECTIVE DATE.] This section is effective for taxable 
310.6   years beginning after December 31, 2003. 
310.7      Sec. 5.  Minnesota Statutes 2002, section 297F.05, 
310.8   subdivision 1, is amended to read: 
310.9      Subdivision 1.  [RATES; CIGARETTES.] A tax is imposed upon 
310.10  the sale of cigarettes in this state, upon having cigarettes in 
310.11  possession in this state with intent to sell, upon any person 
310.12  engaged in business as a distributor, and upon the use or 
310.13  storage by consumers, at the following rates, subject to the 
310.14  discount provided in this chapter: 
310.15     (1) on cigarettes weighing not more than three pounds per 
310.16  thousand, 24 mills on each such cigarette; and 
310.17     (2) on cigarettes weighing more than three pounds per 
310.18  thousand, 48 mills on each such cigarette. 
310.19     [EFFECTIVE DATE.] This section is effective for sales of 
310.20  stamps made after June 30, 2003. 
310.21     Sec. 6.  Minnesota Statutes 2002, section 297F.08, 
310.22  subdivision 7, is amended to read: 
310.23     Subd. 7.  [PRICE OF STAMPS.] The commissioner shall sell 
310.24  stamps to any person licensed as a distributor at a discount of 
310.25  1.0 percent from the face amount of the stamps for the first 
310.26  $1,500,000 of such stamps purchased in any fiscal year; and at a 
310.27  discount of 0.6 percent on the remainder of such stamps 
310.28  purchased in any fiscal year.  The commissioner shall not sell 
310.29  stamps to any other person.  The commissioner may prescribe the 
310.30  method of shipment of the stamps to the distributor as well as 
310.31  the quantities of stamps purchased. 
310.32     [EFFECTIVE DATE.] This section is effective for sales of 
310.33  stamps made after June 30, 2003. 
310.34     Sec. 7.  Minnesota Statutes 2002, section 297F.08, is 
310.35  amended by adding a subdivision to read: 
310.36     Subd. 12.  [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 
311.1   person may not transport or cause to be transported from this 
311.2   state cigarettes for sale in another state without first 
311.3   affixing to the cigarettes the stamp required by the state in 
311.4   which the cigarettes are to be sold or paying any other excise 
311.5   tax on the cigarettes imposed by the state in which the 
311.6   cigarettes are to be sold. 
311.7      (b) A person may not affix to cigarettes the stamp required 
311.8   by another state or pay any other excise tax on the cigarettes 
311.9   imposed by another state if the other state prohibits stamps 
311.10  from being affixed to the cigarettes, prohibits the payment of 
311.11  any other excise tax on the cigarettes, or prohibits the sale of 
311.12  the cigarettes. 
311.13     (c) Not later than 15 days after the end of each calendar 
311.14  quarter, a person who transports or causes to be transported 
311.15  from this state cigarettes for sale in another state shall 
311.16  submit to the commissioner a report identifying the quantity and 
311.17  style of each brand of the cigarettes transported or caused to 
311.18  be transported in the preceding calendar quarter, and the name 
311.19  and address of each recipient of the cigarettes. 
311.20     (d) For purposes of this section, "person" has the meaning 
311.21  given in section 297F.01, subdivision 12.  Person does not 
311.22  include any common or contract carrier, or public warehouse that 
311.23  is not owned, in whole or in part, directly or indirectly by 
311.24  such person. 
311.25     [EFFECTIVE DATE.] This section is effective the day 
311.26  following final enactment. 
311.27     Sec. 8.  Minnesota Statutes 2002, section 297F.09, 
311.28  subdivision 2, is amended to read: 
311.29     Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
311.30  On or before the 18th day of each calendar month, a distributor 
311.31  with a place of business in this state shall file a return with 
311.32  the commissioner showing the quantity and wholesale sales price 
311.33  of each tobacco product: 
311.34     (1) brought, or caused to be brought, into this state for 
311.35  sale; and 
311.36     (2) made, manufactured, or fabricated in this state for 
312.1   sale in this state, during the preceding calendar month.  
312.2   Every licensed distributor outside this state shall in like 
312.3   manner file a return showing the quantity and wholesale sales 
312.4   price of each tobacco product shipped or transported to 
312.5   retailers in this state to be sold by those retailers, during 
312.6   the preceding calendar month.  Returns must be made in the form 
312.7   and manner prescribed by the commissioner and must contain any 
312.8   other information required by the commissioner.  The return must 
312.9   be accompanied by a remittance for the full tax liability shown, 
312.10  less 1.5 percent of the liability as compensation to reimburse 
312.11  the distributor for expenses incurred in the administration of 
312.12  this chapter.  
312.13     [EFFECTIVE DATE.] This section is effective for sales made 
312.14  after June 30, 2003. 
312.15     Sec. 9.  [297F.24] [FEE IN LIEU OF SETTLEMENT.] 
312.16     Subdivision 1.  [FEE IMPOSED.] (a) A fee is imposed upon 
312.17  the sale of nonsettlement cigarettes in this state, upon having 
312.18  nonsettlement cigarettes in possession in this state with intent 
312.19  to sell, upon any person engaged in business as a distributor, 
312.20  and upon the use or storage by consumers of nonsettlement 
312.21  cigarettes.  The fee equals a rate of 1.75 cents per cigarette. 
312.22     (b) The purpose of this fee is to: 
312.23     (1) ensure that manufacturers of nonsettlement cigarettes 
312.24  pay fees to the state that are comparable to costs attributable 
312.25  to the use of the cigarettes; 
312.26     (2) prevent manufacturers of nonsettlement cigarettes from 
312.27  undermining the state's policy of discouraging underage smoking 
312.28  by offering nonsettlement cigarettes at prices substantially 
312.29  below the cigarettes of other manufacturers; and 
312.30     (3) fund such other purposes as the legislature determines 
312.31  appropriate. 
312.32     Subd. 2.  [NONSETTLEMENT CIGARETTES.] For purposes of this 
312.33  section, a "nonsettlement cigarette" means a cigarette 
312.34  manufactured by a person other than a manufacturer that: 
312.35     (1) is making annual payments to the state of Minnesota 
312.36  under a settlement of the lawsuit styled as State v. Philip 
313.1   Morris Inc., No. C1-94-8565 (Minnesota District Court, Second 
313.2   Judicial District), if the style of cigarettes is included in 
313.3   computation of the payments under the agreement; or 
313.4      (2) has voluntarily entered into an agreement with the 
313.5   state of Minnesota, approved by the attorney general, agreeing 
313.6   to terms similar to those contained in the settlement agreement, 
313.7   identified in clause (1) including making annual payments to the 
313.8   state, with respect to its national sales of the style of 
313.9   cigarettes, equal to at least 75 percent of the payments that 
313.10  would apply if the manufacturer was one of the four original 
313.11  parties to the settlement agreement required to make annual 
313.12  payments to the state. 
313.13     Subd. 3.  [COLLECTION AND ADMINISTRATION.] The commissioner 
313.14  shall administer the fee under this section in the same manner 
313.15  as the excise tax imposed under section 297F.05 and all of the 
313.16  provisions of this chapter apply as if the fee were a tax 
313.17  imposed under section 297F.05.  The commissioner shall deposit 
313.18  the proceeds of the fee in the general fund. 
313.19     [EFFECTIVE DATE.] This section is effective for sales of 
313.20  nonsettlement cigarettes made after June 30, 2003. 
313.21     Sec. 10.  Minnesota Statutes 2002, section 297H.06, 
313.22  subdivision 1, is amended to read: 
313.23     Subdivision 1.  [CERTAIN SURCHARGES OR FEES.] The amount of 
313.24  a surcharge, fee, or charge established pursuant to section 
313.25  115A.919, 115A.921, 115A.923, 400.08, 473.811, or 473.843 is 
313.26  exempt from the solid waste management tax.  The amount shown on 
313.27  a property tax statement as a county charge for solid waste 
313.28  management service or as a surcharge, fee, or charge established 
313.29  pursuant to section 400.08, subdivision 3, or section 473.811, 
313.30  subdivision 3a, is exempt from the solid waste management tax.  
313.31  The exemption does not apply to the tax imposed on market price 
313.32  under section 297H.02, subdivision 1, paragraphs (b) and (c), or 
313.33  section 297H.03, subdivision 1, paragraphs (b) and (c). 
313.34     [EFFECTIVE DATE.] This section is effective April 1, 2003. 
313.35     Sec. 11.  Minnesota Statutes 2002, section 298.75, 
313.36  subdivision 1, is amended to read: 
314.1      Subdivision 1.  [DEFINITIONS.] Except as may otherwise be 
314.2   provided, the following words, when used in this section, shall 
314.3   have the meanings herein ascribed to them.  
314.4      (1) "Aggregate material" shall mean nonmetallic natural 
314.5   mineral aggregate including, but not limited to sand, silica 
314.6   sand, gravel, crushed rock, limestone, granite, and borrow, but 
314.7   only if the borrow is transported on a public road, street, or 
314.8   highway.  Aggregate material shall not include dimension stone 
314.9   and dimension granite.  Aggregate material must be measured or 
314.10  weighed after it has been extracted from the pit, quarry, or 
314.11  deposit.  
314.12     (2) "Person" shall mean any individual, firm, partnership, 
314.13  corporation, organization, trustee, association, or other entity.
314.14     (3) "Operator" shall mean any person engaged in the 
314.15  business of removing aggregate material from the surface or 
314.16  subsurface of the soil, for the purpose of sale, either directly 
314.17  or indirectly, through the use of the aggregate material in a 
314.18  marketable product or service.  
314.19     (4) "Extraction site" shall mean a pit, quarry, or deposit 
314.20  containing aggregate material and any contiguous property to the 
314.21  pit, quarry, or deposit which is used by the operator for 
314.22  stockpiling the aggregate material.  
314.23     (5) "Importer" shall mean any person who buys aggregate 
314.24  material produced from a county not listed in paragraph (6) or 
314.25  another state and causes the aggregate material to be imported 
314.26  into a county in this state which imposes a tax on aggregate 
314.27  material.  
314.28     (6) "County" shall mean the counties of Pope, Stearns, 
314.29  Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 
314.30  Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 
314.31  Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 
314.32  Sibley, Hennepin, Washington, Chisago, and Ramsey.  County also 
314.33  means any other county whose board has voted after a public 
314.34  hearing to impose the tax under this section and has notified 
314.35  the commissioner of revenue of the imposition of the tax. 
314.36     (7) "Borrow" shall mean granular borrow, consisting of 
315.1   durable particles of gravel and sand, crushed quarry or mine 
315.2   rock, crushed gravel or stone, or any combination thereof, the 
315.3   ratio of the portion passing the (#200) sieve divided by the 
315.4   portion passing the (1 inch) sieve may not exceed 20 percent by 
315.5   mass. 
315.6      [EFFECTIVE DATE.] This section is effective for borrow 
315.7   removed and transported on a public road, street, or highway on 
315.8   or after July 1, 2003. 
315.9      Sec. 12.  Minnesota Statutes 2002, section 469.1731, 
315.10  subdivision 3, is amended to read: 
315.11     Subd. 3.  [FILING.] The city must file a copy of the 
315.12  resolution and development plan with the commissioner of trade 
315.13  and economic development.  The designation takes effect for the 
315.14  first calendar year that begins more than 90 30 days after the 
315.15  filing. 
315.16     [EFFECTIVE DATE.] This section is effective the day 
315.17  following final enactment. 
315.18     Sec. 13.  Laws 2002, chapter 377, article 12, section 17, 
315.19  is amended to read: 
315.20     Sec. 17.  [APPROPRIATION.] 
315.21     (a) $585,000 in fiscal year 2002 and $7,015,000 in fiscal 
315.22  year 2003 are appropriated to the commissioner of revenue from 
315.23  the general fund for tax compliance activities, including 
315.24  identification and collection of tax liabilities from 
315.25  individuals and businesses that currently do not pay all taxes 
315.26  owed, and audit and collection activity in the income tax, sales 
315.27  tax, lawful gambling, insurance, and corporate areas.  The base 
315.28  funding for these activities in fiscal years 2004 and 2005 is 
315.29  increased by $4,750,000 each year. 
315.30     (b) The commissioner must include these tax compliance 
315.31  activities in the report required by Laws 2001, First Special 
315.32  Session chapter 10, article 1, section 16, subdivision 2, 
315.33  paragraph (c). 
315.34     (c) Laws 2002, chapter 220, article 10, section 38, does 
315.35  not apply to the positions necessary to carry out the compliance 
315.36  activities identified in this section. 
316.1      (d) If the legislative auditor determines that: 
316.2      (1) actual revenue collections generated from tax 
316.3   compliance activities funded by Laws 2001, First Special Session 
316.4   chapter 10, article 1, section 16, subdivision 2, paragraphs (a) 
316.5   and (b), will not generate at least $52,000,000 in additional 
316.6   general fund revenue for the biennium ending June 30, 2003; or 
316.7      (2) actual revenue collections generated from new tax 
316.8   compliance activities funded by the appropriation in this 
316.9   section will not generate at least $7,600,000 in additional 
316.10  general fund revenue for the biennium ending June 30, 2003; 
316.11  then the commissioner of finance must cancel from the budget 
316.12  reserve account to the general fund the difference between the 
316.13  $52,000,000 or the $7,600,000 and the actual additional general 
316.14  fund revenue.  The legislative auditor's determination under 
316.15  this paragraph must be made in the February 1, 2003, report to 
316.16  the legislature required by Laws 2001, First Special Session 
316.17  chapter 10, article 1, section 16. 
316.18     [EFFECTIVE DATE.] This section is effective the day 
316.19  following final enactment. 
316.20     Sec. 14.  [ADVANCE COLLECTION PROGRAM.] 
316.21     Subdivision 1.  [PROGRAM ESTABLISHED.] The commissioner of 
316.22  revenue shall establish an advance collection program to collect 
316.23  tax, interest, and penalty obligations that otherwise would not 
316.24  be collected. 
316.25     Subd. 2.  [POLICIES.] The commissioner of revenue shall 
316.26  implement and operate the program in a manner that: 
316.27     (1) minimizes the impact of the program on the incentive 
316.28  for taxpayers to comply with Minnesota taxes; and 
316.29     (2) emphasizes collecting as large a portion of the 
316.30  department's account receivables that are unlikely otherwise to 
316.31  be collected. 
316.32     Subd. 3.  [AUTHORITY.] (a) The authority under this section 
316.33  applies only to obligations on the department of revenue's 
316.34  accounts receivable system for which the original debt was more 
316.35  than two years old on the date of enactment of this section.  
316.36  The commissioner of revenue shall select the debts on the 
317.1   accounts receivable system to which this program applies and may 
317.2   exclude any debt or debts as the commissioner deems appropriate, 
317.3   because inclusion, in the sole opinion of the commissioner, may: 
317.4      (1) adversely affect tax compliance; 
317.5      (2) reduce the amount the state likely will collect in the 
317.6   future; 
317.7      (3) delay resolution of an issue of the meaning or 
317.8   application of the tax or other law; 
317.9      (4) be inconsistent with tax administration and collection 
317.10  policies; 
317.11     (5) not be justified because of the taxpayer's conduct or 
317.12  past actions; or 
317.13     (6) not be in the interest of the state for any reason the 
317.14  commissioner solely determines. 
317.15     (b) To implement this program, the commissioner shall 
317.16  exercise authority under Minnesota Statutes, section 270.67, to 
317.17  accept as a partial or discounted payment of the obligation as 
317.18  full payment.  The commissioner shall set the discount rate for 
317.19  each debt at the level the commissioner determines appropriate, 
317.20  given the provisions of this section.  For obligations that are 
317.21  four or more years old on the date of enactment, the 
317.22  commissioner may offer a reduction or discount of up to 50 
317.23  percent; for obligations that are more than two years old upon 
317.24  the date of enactment, the commissioner may offer a reduction or 
317.25  discount of up to 35 percent.  The commissioner may apply the 
317.26  appropriate discount to all or part of an obligation, regardless 
317.27  of the age of the obligation, if the taxpayer has an obligation 
317.28  that meets the minimum age requirement on the date of 
317.29  enactment.  The commissioner shall notify taxpayers or other 
317.30  debtors qualifying under the program established under this 
317.31  section in any way the commissioner determines appropriate. 
317.32     (c) This section does not limit the commissioner's 
317.33  authority under Minnesota Statutes, section 270.67. 
317.34     Sec. 15.  [CITY OF DULUTH; TAX INCREMENT FINANCING 
317.35  DISTRICT.] 
317.36     Subdivision 1.  [AUTHORIZATION.] Upon approval of the 
318.1   governing body of the city of Duluth, the Duluth economic 
318.2   development authority may create an economic development tax 
318.3   increment financing district for aircraft related facilities.  
318.4   The authority may establish a district only after entering a 
318.5   development agreement, which provides for construction of an 
318.6   aircraft maintenance facility with a minimum square footage of 
318.7   150,000 and requires employment of a minimum of 200 individuals 
318.8   with average annual compensation in excess of $30,000.  Except 
318.9   as otherwise provided in this section, the provisions of 
318.10  Minnesota Statutes, sections 469.174 to 469.179 apply to the 
318.11  district. 
318.12     Subd. 2.  [SPECIAL RULES.] (a) Notwithstanding the 
318.13  provisions of Minnesota Statutes, section 469.176, subdivision 
318.14  1b, paragraph (a), clause (3), no tax increment shall be paid to 
318.15  the authority after 25 years after receipt by the authority of 
318.16  the first tax increment for the district authorized by this 
318.17  section. 
318.18     (b) The development in the district authorized by this 
318.19  section shall be deemed to be a purpose authorized under 
318.20  Minnesota Statutes, section 469.176, subdivision 4c, paragraph 
318.21  (a). 
318.22     (c) For purposes of Minnesota Statutes, section 469.177, 
318.23  subdivision 12, the applicable maximum duration limit of the 
318.24  district authorized by this section shall be as set forth in 
318.25  paragraph (a). 
318.26     [EFFECTIVE DATE.] This section is effective upon compliance 
318.27  with the requirements of Minnesota Statutes, sections 469.1782 
318.28  and 645.021. 
318.29     Sec. 16.  [REPEALER.] 
318.30     Laws 1984, chapter 652, section 2, is repealed. 
318.31     [EFFECTIVE DATE.] This section is effective for Benton 
318.32  county the day after the governing body of Benton county and its 
318.33  chief clerical officer timely complete their compliance with 
318.34  Minnesota Statutes, section 645.021, subdivisions 2 and 3.  
318.35     This section is effective for Stearns county the day after 
318.36  the governing body of Stearns county and its chief clerical 
319.1   officer timely complete their compliance with Minnesota 
319.2   Statutes, section 645.021, subdivisions 2 and 3.