Minnesota Legislature
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 held4.12for sale, even though incidentally moved on the highway or used4.13pursuant to section 168.27 or 168.28, or a vehicle used by a4.14manufacturer 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 the7.10taxpayer's federal income tax return is timely filed claiming7.11the 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 undersectionsections 297A.75, subdivision 8.27 1,clauses (1), (2), (3), and (5), interest is computed from the8.28date the refund claim is filed with the commissioner. For8.29refunds payable under sectionand 289A.50, subdivision 2a, 8.30 interest is computed fromthe 20th day of the month following8.31the month of the invoice date for the purchase which is the8.32subject of the refund, if the refund claim includes a detailed8.33schedule of purchases made during each of the periods in the8.34claim. If the refund claim submitted does not contain a8.35schedule reflecting purchases made in each period, interest is8.36computed from the date the claim was filed90 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 lawif those services:. 12.22(1) either (i) originate and terminate in this state; or12.23(ii) originate in this state and terminate outside the state and12.24the service is charged to a telephone number customer located in12.25this state or to the account of any transmission instrument in12.26this state; or (iii) originate outside this state and terminate12.27in this state and the service is charged to a telephone number12.28customer located in this state or to the account of any12.29transmission instrument in this state; or12.30(2) are rendered by providing a private communications12.31service for which the customer has one or more locations within12.32Minnesota connected to the service and the service is charged to12.33a telephone number customer located in this state or to the12.34account of any transmission instrument in this state.12.35All charges for mobile telecommunications services, as12.36defined in United States Code, title 4, section 124, are deemed13.1to be provided by the customer's home service provider and13.2sourced to the customer's place of primary use and are subject13.3to tax based upon the customer's place of primary use in13.4accordance with the Mobile Telecommunications Sourcing Act,13.5United States Code, title 4, sections 116 to 126. All other13.6definitions and provisions of the Mobile Telecommunications13.7Sourcing Act as provided in United States Code, title 4, are13.8hereby 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" meanscorporeal personal property of any14.25kind, including property that is to become real property as a14.26result of incorporation, attachment, or installation following14.27its acquisition.14.28(b) Tangible personal property includes, but is not limited14.29to:14.30(1) computer software, whether contained on tape, discs,14.31cards, or other devices; and14.32(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" meansa computer program, either in the form16.15of written procedures or contained on tapes, discs, cards, or16.16another device, or any required documentation or manuals16.17designed 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 automatic17.5drilling, milling, or other manufacturing machinery or equipment17.6 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;and17.9 (2)"computer program" means information and directions17.10that dictate the function performed by data processing17.11equipment. It includes the complete plan for the solution of a17.12problem, such as the complete sequence of automatic data17.13processing equipment instructions necessary to solve a problem17.14and includes both systems and application programs and17.15subdivisions, such as assemblers, compilers, routines,17.16generators, and utility programs. Computer program includes a17.17"canned" or prewritten computer program that is held or existing17.18for general or repeated sale or lease, even if the prewritten or17.19"canned" program was initially developed on a custom basis or17.20for 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 RULESAPPLICABILITY.](a)The 20.10followingprovisions 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 ofsubdivision 1subdivisions 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. 24.12Subd. 3. [DEFINITION OF TERMS.] For purposes of this24.13section, the terms "receive" and "receipt" mean taking24.14possession of tangible personal property, making first use of24.15services, or taking possession or making first use of digital24.16goods, whichever occurs first. The terms receive and receipt do24.17not include possession by a carrier for hire on behalf of the24.18purchaser.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 electricityand, 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;and33.26 (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;PRINTED35.19MATERIALSDIRECT MAIL.] Charges for the delivery or distribution 35.20 ofprinted materials, including individual account35.21information,direct mail are exempt if(1)the charges are 35.22 separately stated, (2) the delivery or distribution is to a mass35.23audience or to a mailing list provided at the direction of the35.24customer, and (3) the cost of the materials is not billed35.25directly to the recipientson 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 fromthe date the refund claim is35.33filed for taxes paid under subdivision 1, clauses (1) to (3),35.34and (5), and from 60 days after the date the refund claim is35.35filed with the commissioner for claims filed under subdivision35.361, 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 rateless than or more than the37.15state 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, the37.28retailer may use zip codes if the zip code area is entirely37.29within the political subdivision. When a zip code area is not37.30entirely within a political subdivision, the retailer shall not37.31collect the local tax if the purchaser notifies the retailer37.32that the purchaser's delivery address is outside of the37.33political subdivision, unless the retailer verifies that the37.34delivery address is in the political subdivision using a means37.35other 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 unitthat are due fromin the name of the 42.20 current owner at the time of transferfor which the application42.21applies,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 musthave the capacity required44.9by this clause operationalbe under construction by December 31, 44.1020022005. 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 in20052011. 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 1,20002003, and before December 31,20022003. 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 1,20042005. 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 leastone-fourthone-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 offourfive 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 offourfive 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) anyblindperson 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 disabledand56.11(ii) receives 90 percent or more of total household income,56.12as defined in section 290A.03, subdivision 5, from56.13(A) aid from any state as a result of that disability; or56.14(B) supplemental security income for the disabled; or56.15(C) workers' compensation based on a finding of total and56.16permanent disability; or56.17(D) social security disability, including the amount of a56.18disability insurance benefit which is converted to an old age56.19insurance benefit and any subsequent cost of living increases;56.20or56.21(E) aid under the federal Railroad Retirement Act of 1937,56.22United States Code Annotated, title 45, section 228b(a)5; or56.23(F) a pension from any local government retirement fund56.24located in the state of Minnesota as a result of that56.25disability; or56.26(G) pension, annuity, or other income paid as a result of56.27that disability from a private pension or disability plan,56.28including employer, employee, union, and insurance plans and56.29(iii) has household income as defined in section 290A.03,56.30subdivision 5, of $50,000 or less; or56.31(4) any person who is permanently and totally disabled and56.32whose household income as defined in section 290A.03,56.33subdivision 5, is 275 percent or less of the federal poverty56.34level. 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 ofeconomic securityrevenue 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 resortor, 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 corporationor, 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 includesorenrollment 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 LawNumber99-198 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 revenuefor each assessment yeara 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) or62.31(3),for 1b classification; and 62.32 (b)the property owner's household income, as defined in62.33section 290A.03, for the previous calendar year; and62.34(c)any additional information prescribed by the 62.35 commissioner. 62.36 The declarationshallmust be filed on or beforeMarch63.1 October 1of each yearto 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 63.16AprilNovember 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 theMarch 31April 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 afterJanuary 3165.12 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 assessorwithin 60 days after the petition has been filed65.27under this chapterno 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 atthatthe 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,orlong-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,orthe 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 facilityor, 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,orlong-term67.30residentialfacility 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 $300,000in any year,69.1and itsfor 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 estate71.3tax,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$500the 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 LawNumber99-514, 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 federal75.15taxable income or used to claim the long-term care insurance75.16credit under section 290.0672, the amount paid for health75.17insurance of self-employed individuals as determined under75.18section 162(l) of the Internal Revenue Code, except that the75.19percent limit does not apply. If the individual deducted75.20insurance payments under section 213 of the Internal Revenue75.21Code of 1986, the subtraction under this clause must be reduced75.22by the lesser of:75.23(i) the total itemized deductions allowed under section75.2463(d) of the Internal Revenue Code, less state, local, and75.25foreign income taxes deductible under section 164 of the75.26Internal Revenue Code and the standard deduction under section75.2763(c) of the Internal Revenue Code; or75.28(ii) the lesser of (A) the amount of insurance qualifying75.29as "medical care" under section 213(d) of the Internal Revenue75.30Code to the extent not deducted under section 162(1) of the75.31Internal Revenue Code or excluded from income or (B) the total75.32amount deductible for medical care under section 213(a);75.33(7) the exemption amount allowed under Laws 1995, chapter75.34255, 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 underthissection 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)is85.15increased to $6,770, the $15,080 in paragraph (c)is increased85.16to $16,080, and the $17,890 in paragraph (d)is increased to85.17$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)is85.22increased to $7,770, the $15,080 in paragraph (c)is increased85.23to $17,080, and the $17,890 in paragraph (d)is increased to85.24$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)is85.29increased to $8,770, the $15,080 in paragraph (c)is increased85.30to $18,080, and the $17,890 in paragraph (d)is increased to85.31$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. 86.11The minimum taxable income for the married couple to be86.12eligible for the credit is $25,680, and the minimum earned86.13income in order for the couple to be eligible for the credit is86.14$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 shallprovide a list of87.12categories of, upon request from a third-party vendor, certify 87.13 that the vendor's products and servicesthatqualify for the 87.14 education creditto financial institutions and qualifying87.15organizations. 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 vendorqualifieshas 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 taxationother than the subtraction allowed under section88.13290.01, 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 federal88.17threshold" means the amount of social security benefits included88.18in federal taxable income due to the provisions of section 1321588.19of the Omnibus Budget Reconciliation Act of 1993, Public Law88.20Number 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 Minnesotaand88.35pensions exempt from tax under this chapter pursuant to section88.36352.15, subdivision 1; 353.15, subdivision 1; 354.10,89.1subdivision 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, 89.3120002002. 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 maximum90.6credit computed under section 2011 of the Internal Revenue Code90.7reduced by the amount of the death tax paid the other state and90.8credited against the federal estate tax if this results in a90.9larger amount of tax than the proportionate amount of the90.10credit.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 tostate estate90.26tax, or toexecution, 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 90.35to any state estate tax, orto 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 exemptfrom taxation under chapter 29191.17andfrom 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. 93.2The time period for filing assignments expires December 31,93.32003, but assignments filed on or before that date remain in93.4effect 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 throughMarch 15December 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 throughMarch 15December 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 throughMarch 15December 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 ofassessments and feeslaws 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, or102.29order dealing with property valuation or assessment for property102.30tax purposes by the commissioner of revenue or a local unit of102.31government, the taxpayer must be notified in writing that a102.32taxpayer must appeal to the town or city board of equalization102.33and to the county board of equalization before appealing to the102.34small claims division of the tax court, except for those102.35taxpayers whose original assessments are determined by the102.36commissioner 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.Any105.36instrument amending or restating the declarations, bylaws,106.1plats, or other enablingDocuments 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 residents107.5of the state but need not be a resident of the town or city for107.6which 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 recreationalresidential, 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 111.29residentialproperty 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 recreationalresidentialproperty 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, andrecreational 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, andrecreational 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 seasonalrecreational115.16 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 115.31residentialfor 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 paragraphplus the temporary aid120.21amount under subdivision 4c for maintenance of effort of120.22administrative 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 July15, 2004121.15 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 classificationonof property for which 121.29 the commissioner of revenue has provided the city or county 121.30 assessor withcommissioner's ordersvaluations 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 toacourt isoffrom 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 theproceduresprovisions 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 propertycontained122.8underdescribed 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 forbringing an actionfiling 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 lineas defined in section 116C.52,123.6subdivision 3with 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.By130.18NovemberOn or before October 1 each year, the commissioner of 130.19 revenue shall certifythea 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 thestate,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 thestate,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 tothe state treasurer orthe 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 collectedto the state before June 30, orto 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 propertybelonging to an individual who is not a resident of133.26this state, or that is a corporation, partnership, or other133.27organization, 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 142.18propertyland; (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 thepropertyland 142.22 clearly indicating the boundaries of thepropertyland and of 142.23 the forest land; (v) the proposed future conditions of the 142.24propertyland; (vi) prescriptions to meet proposed future 142.25 conditions of thepropertyland; (vii) a recommended timetable 142.26 for implementing the prescribed activities; and (viii) a legal 142.27 description of theparcelsland 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)PropertyLand 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)propertythe 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 thepropertyland 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) thepropertyland must be enrolled for a minimum of 143.17 eight years; 143.18 (5) there are no delinquent property taxes on theproperty143.19 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 thepropertyland 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 thepropertyland 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 anypropertyland 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 theproperty'sland'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 thatpropertyland 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 thepropertyland 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,148.7provided that if the distribution net tax capacity for a148.8municipality is less than 95 percent of the municipality's148.9previous year distribution net tax capacity, and more than ten148.10percent of the municipality's fiscal capacity consists of148.11manufactured home property, the municipality's distribution net148.12tax capacity will be increased to 95 percent of the previous148.13year net tax capacity and the distribution net tax capacity of148.14other 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 forthe149.34instrumentsan instrument to be accepted and recorded under the 149.35 preceding sentence, theassessor must certify or otherwise149.36inform the recording officer that, for taxes payable in the150.1current year, the assessor has allocated taxable values to each150.2unit or has separately assessed each unitinstrument 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 effectivefor aids150.20payable in 2004May 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 and62151.28 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 of6275 percent of 151.33 the preceding May's liability or6275 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 ofthis sectionthe 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 atelephone numbertelecommunications 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 atelephone numbertelecommunications 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 atelephone numbertelecommunications 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 intheagricultural 156.36 productionfor sale, but not including the processing, of157.1livestock, dairy animals, dairy products, poultry and poultry157.2products, fruits, vegetables, trees and shrubs, plants, forage,157.3grains, and bees and apiary products.157.4(b) Farm machinery includesincluding, but not limited to: 157.5 (1) machinery for the preparation, seeding, or cultivation 157.6 of soil for growing agricultural cropsand sod, for the157.7harvesting and threshing of agricultural products, or for the157.8harvesting 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 for157.20commercial logging;157.21(5) fencing used for the containment of farmed cervidae, as157.22defined in section 17.451, subdivision 2;157.23(6) primary and backup generator units used to generate157.24electricity for the purpose of operating farm machinery, as157.25defined in this subdivision, or providing light or space heating157.26necessary for the production of livestock, dairy animals, dairy157.27products, or poultry and poultry products;157.28(7) aquaculture production equipment as defined in157.29subdivision 13; and157.30(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 157.34except 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;or158.2 (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 othermechanicaldevice 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 saleana fully completed 159.4 exemption certificateclaiming that the property purchased is159.5for resale or that the sale is otherwise exempt from the tax159.6imposed by this chapterwhich 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 doesis notpossessin possession 159.12 of the required exemption certificates, must acquire the159.13certificateswithin 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 arenot159.17obtaineddelivered to the commissioner within the 60-day period, 159.18 thesales are considered taxable sales under this159.19chapter.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 concretetrucksequipment 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 toaan 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, "agricultural166.1production" includes, but is not limited to, horticulture,166.2floriculture, maple syrup harvesting, and the raising of pets,166.3fur-bearing animals, research animals, horses, farmed cervidae166.4as defined in section 17.451, subdivision 2, llamas as defined166.5in section 17.455, subdivision 2, and ratitae as defined in166.6section 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 MACHINERYREPAIR 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 afarm166.15 machinery part assigned a specific or generic part number by the 166.16 manufacturer of thefarmmachinery. 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. [FARMMACHINERY, EQUIPMENT, AND FENCING.] The 166.22 following machinery, equipment, and fencing is exempt: 166.23 (1) farm machineryis 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 automobileis(1) is in the 167.7 tenth or subsequent year of vehicle life, and (2)is not an167.8above-market automobile as designated by the registrar of motor167.9vehiclesdoes 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. 167.13The registrar of motor vehicles shall prepare, and167.14distribute to all deputy motor vehicle registrars by July 15,167.151985, a listing by make, model, and year of above-market167.16automobiles. Except as provided by subdivision 2, the registrar167.17must include in the list all automobiles with a resale value of167.18$3,000 or more, as determined using nationally recognized167.19sources of information on automobile resale values. The167.20registrar shall revise the list by February 1 of each year. The167.21initial list and all subsequent revisions must include only167.22those automobiles which are in the tenth or subsequent year of167.23vehicle 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 an167.33above-market automobile a passenger automobile or a fire truck167.34registered 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 businessor usedby 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;and169.27 (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 to295.57295.59: 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 community171.29residential mental health facilities licensed under Minnesota171.30Rules, parts 9520.0500 to 9520.0690, community support programs171.31and family community support programs approved under Minnesota171.32Rules, parts 9535.1700 to 9535.1760, and community mental health171.33centers 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: assisted172.10living programs and congregate housing programs; and172.11(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.03or 461.12to 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 theestablishedprice 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 productsin 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 or173.12any 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 transportsmore than 200 butfewer 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, orup to $500more 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 consumerwho purchases 175.12 from an unlicensed sellermore than 200 butfewer 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 consumerwho 175.16 purchases from an unlicensed seller 5,000 or more, but fewer 175.17 than 20,001 cigarettes orup to $500more than $350 but less 175.18 than $1,400 worth ofuntaxedtobacco products is guilty of a 175.19 gross misdemeanor. 175.20(c)(d) A retailer,or subjobber, or consumerwho 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 OFFSETOFFSETS 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"aremean 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"includesmeans 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.]TheA 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; 186.13or186.14 (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, including222.2refunding bonds, notes, interim certificates, debentures,222.3interfund loans or advances,or other obligations issued: 222.4 (1) by an authority under section 469.178; orwhich were222.5issued222.6 (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" meansanythe 222.22 city, however organized,and with respect toin 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"also222.30includes anymeans 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 ofprincipal 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, includingadministration227.21 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) thatthe 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; andthat229.27 (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 thisclauseitem do not apply if the 229.34 district is a qualified housing district, as defined in section229.35273.1399, 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 intotal estimated tax increment231.24expendituresthe 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 authorityshall be approved upon the notice and after the231.29discussion, public hearing, and findings required for approval231.30of the original plan; provided that. 231.31 (c) If an authority changes the type of districtfrom231.32housing, redevelopment, or economic developmentto another type 231.33 of district, this changeshallis notbe considereda 231.34 modification butshall requirerequires 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 ofthisparagraph (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 increment235.26financing plan, andthe 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;and237.9 (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 ordefease (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 average238.6maturity of the refunding bonds does not exceed the bonds238.7refunded; 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. [EXCESSTAXINCREMENTS.]In any year in which the238.33tax increment exceeds the amount necessary to pay the costs238.34authorized by the tax increment financing plan, including the238.35amount necessary to cancel any tax levy as provided in section238.36475.61, 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 usethe excess amount to do any239.24ofexcess 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 incrementtherefor,for any 239.27 outstanding bonds; 239.28 (3) pay into an escrow account dedicated to the payment of 239.29such 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 themunicipalitycity 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 districtas defined in section241.15273.1399, 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;or243.13 (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 the245.23use of the increments, in writing, by the commissioner of245.24revenue;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 469.175,246.30subdivision 3, or parcels added to existing districts after May246.311, 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 469.175,247.31subdivision 3, or parcels added to existing districts after May247.321, 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 beapprovedauthorized, 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 beforeAugust253.9 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, subdivision23. 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,clausesclause (1)andis 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),areis 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 forincrements255.28payable in 2002deficits 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 31,20052010. 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 andsectionsections 257.11 273.135 and 273.1391, "municipality" means any city, however 257.12 organized, or town,andwhich 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 districton January 2, 2000, which contains a257.26municipalitywhich meets the following qualifications: 257.27 (1) it is amunicipalityschool 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 amunicipalityschool 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. 258.1For purposes of this paragraph, a "tax relief area" does258.2not include a school district whose boundaries are more than 20258.3miles from a taconite mine or plant or in which the assessed258.4valuation of unmined iron ore on May 1, 1941, was less than 40258.5percent of the assessed valuation of all real property.258.6(b) For purposes of section 273.1391, subdivision 2,258.7paragraph (c), and chapter 298, "tax relief area" means the258.8geographic area contained within the boundaries of a school258.9district which contains a municipality that meets the following258.10qualifications:258.11(1) it is a municipality in which the assessed valuation of258.12unmined iron ore on May 1, 1941, was not less than 40 percent of258.13the assessed valuation of all real property; or258.14(2) it is a municipality in which, on January 1, 1977, or258.15the applicable assessment date, there is a taconite258.16concentrating plant or where taconite is mined or quarried or258.17where there is located an electric generating plant which258.18qualifies 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 atax relief259.9areamunicipality as defined under section 273.134, paragraph 259.10 (a),that is within the boundaries of a municipality which meets259.11the 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 aqualifyingmunicipality 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 aqualifyingmunicipality 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 atax relieftaconite 260.28 assistance area under section273.134, 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 hereunderin 2003 and 100 percent262.23of the total tax required to be paid hereunder in 2004 and262.24thereaftershall be paid on or before February 24. A remittance 262.25 equal to the remaining total tax required to be paid hereunder 262.26in 2003shall be paid on or before August 24. On or before 262.27 February 25,andin 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 districtsinwhich 264.15the taconite was mined or quarried or the concentrate264.16producedqualify 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 distributionfrom a fund that receives a distribution265.11in 1998of 21.3 cents per ton.On July 15 of 1999, and each265.12year thereafter, the increase over the amount established for265.13the prior year shall be determined according to the increase in265.14the implicit price deflator as provided in section 298.24,265.15subdivision 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 thenortheast MinnesotaDouglas 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 foradditionalgrants, 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 usedfor the grantsas 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 processingequipment, 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 the277.8following counties: Anoka, Benton, Carver, Chisago, Dakota,277.9Dodge, Fillmore, Freeborn, Goodhue, Hennepin, Houston, Isanti,277.10Mower, Olmsted, Ramsey, Rice, Scott, Sherburne, Steele, Wabasha,277.11Washington, Wright, and Winona.277.12(c) The authority to incur debt under this section is not277.13effective until July 1, 2003, for the following counties:277.14Benton, Dodge, Fillmore, Freeborn, Goodhue, Houston, Mower,277.15Olmsted, 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 equipmenthavingand 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 equipmenthavingand 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)fiveten 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 thehousing pool or from thepublic 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 exceedone dollarfive 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 operationsconducted before June 30, 2003, in compliance with299.28paragraph (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 area301.6of the district is the metropolitan area excluding the part of301.7Carver county west of the west line of township 116N, range 24W,301.8township 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 membertwo 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 ofdisease bearing mosquito302.10encephalitis outbreaksmosquito 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, approval302.20may, if the commissioner of natural resources considers it302.21necessary, be denied, modified, or revoked by the commissioner302.22of natural resources at any time upon written notice to the302.23commission.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.] 302.27No contractContracts for the purchase of materials, 302.28 supplies, and equipmentcosting more than $5,000 shall be made302.29 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 commission303.13by an affirmative vote of five-sixths of the voting power of the303.14commission shall declare that an emergency exists requiring the303.15immediate purchase of materials or supplies at a cost in excess303.16of $5,000 but not to exceed $10,000 in amount, or in making303.17emergency repairs, it shall not be necessary to advertise for303.18bids, but such material, equipment, and supplies may be303.19purchased in the open market at the lowest price available303.20without securing formal competitive bids. An emergency as used303.21in this section shall be an unforeseen circumstance or condition303.22which 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 exceedthe following amount for the304.15years specified:304.16(1) for taxes payable in 1996, the product of (i) the304.17commission's property tax levy limitation for taxes payable in304.181995 determined under this subdivision minus 50 percent of the304.19amount actually levied for taxes payable in 1995, multiplied by304.20(ii) an index for market valuation changes equal to the total304.21market valuation of all taxable property located within the304.22district for the current taxes payable year divided by the total304.23market valuation of all taxable property located within the304.24district 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 districtfor the current taxes304.31payable yearplus 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 in305.11subdivision 2,Each commissioner, including the officers of the 305.12 commissionshall, may be reimbursed for actual and necessary 305.13 expenses incurred in the performance of duties.The chair shall305.14be paid a per diem for attending meetings, monthly, executive,305.15and special, and each commissioner shall be paid a per diem for305.16attending meetings, monthly, executive, and special, which per305.17diem shall be established by the commission. A commissioner who305.18receives a per diem from the commissioner's county shall not be305.19paid a per diem for the same day by the commission for attending305.20meetings of the commission.The annual budget of the commission 305.21 shall provide as a separate account anticipated expenditures for 305.22per 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 inany case referred to the attorney general by the306.14commissioner of revenueall 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 insectionsections 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 309.29ten20 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 thanten20 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 the310.14discount 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 distributorat a discount of310.251.0 percent from the face amount of the stamps for the first310.26$1,500,000 of such stamps purchased in any fiscal year; and at a310.27discount of 0.6 percent on the remainder of such stamps310.28purchased 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,312.10less 1.5 percent of the liability as compensation to reimburse312.11the distributor for expenses incurred in the administration of312.12this 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 on313.27a property tax statement as a county charge for solid waste313.28management service or as a surcharge, fee, or charge established313.29pursuant to section 400.08, subdivision 3, or section 473.811,313.30subdivision 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 effectfor the315.14first calendar year that begins more than 9030 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 tax316.3compliance activities funded by Laws 2001, First Special Session316.4chapter 10, article 1, section 16, subdivision 2, paragraphs (a)316.5and (b), will not generate at least $52,000,000 in additional316.6general fund revenue for the biennium ending June 30, 2003; or316.7(2) actual revenue collections generated from new tax316.8compliance activities funded by the appropriation in this316.9section will not generate at least $7,600,000 in additional316.10general fund revenue for the biennium ending June 30, 2003;316.11then the commissioner of finance must cancel from the budget316.12reserve account to the general fund the difference between the316.13$52,000,000 or the $7,600,000 and the actual additional general316.14fund revenue. The legislative auditor's determination under316.15this paragraph must be made in the February 1, 2003, report to316.16the legislature required by Laws 2001, First Special Session316.17chapter 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.