SF 1662

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to taxation; exempting certain personal 
  1.3             property of electric generation and gas from property 
  1.4             taxation; providing for state-aid payments to local 
  1.5             governments; requiring rate reductions for customers 
  1.6             of rate regulated utilities; providing for state 
  1.7             guarantee of certain local bond obligations; 
  1.8             appropriating money; amending Minnesota Statutes 1998, 
  1.9             sections 126C.14; 272.02, subdivision 1, and by adding 
  1.10            a subdivision; 273.13, subdivision 31; and 273.1398, 
  1.11            subdivision 6, and by adding subdivisions; proposing 
  1.12            coding for new law in Minnesota Statutes, chapters 
  1.13            216B; and 475A. 
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15     Section 1.  Minnesota Statutes 1998, section 126C.14, is 
  1.16  amended to read: 
  1.17     126C.14 [GENERAL EDUCATION LEVY EQUITY.] 
  1.18     Subdivision 1.  [OFF-FORMULA DISTRICTS.] If a district's 
  1.19  general education levy is determined according to section 
  1.20  126C.13, subdivision 3, an amount must be deducted from state 
  1.21  aid authorized in this chapter and chapters 120B, 122A, 123A, 
  1.22  123B, 124B, 124D, 125A, and 127A, receivable for the same school 
  1.23  year, and from other state payments receivable for the same 
  1.24  school year authorized in chapter 273.  The aid in section 
  1.25  124D.111 must not be reduced. 
  1.26     The amount of the deduction equals the difference between: 
  1.27     (1) the general education tax rate, according to section 
  1.28  126C.13, times the district's adjusted net tax capacity used to 
  1.29  determine the general education aid for the same school year; 
  2.1   and 
  2.2      (2) the district's general education revenue, excluding 
  2.3   transition revenue and supplemental revenue, for the same school 
  2.4   year, according to section 126C.10. 
  2.5      Subd. 2.  [UTILITY REPLACEMENT AID.] Any amount received by 
  2.6   a district under section 273.1398, subdivision 4a, must be 
  2.7   deducted from state aid authorized in this chapter and chapter 
  2.8   127A, receivable for the same school year, and from other state 
  2.9   payments receivable for the same school year authorized in 
  2.10  chapter 273.  The aid in section 124D.111 must not be reduced. 
  2.11     Sec. 2.  [216B.169] [ASSURED RATE REDUCTIONS FOR CUSTOMERS 
  2.12  OF RATE REGULATED INDUSTRIES.] 
  2.13     Subdivision 1.  [RATE REDUCTIONS.] The public utilities 
  2.14  commission shall reduce regulated electric rates, which include 
  2.15  electric generation service, and regulated gas rates, which 
  2.16  include gas supply service, of a utility subject to rate 
  2.17  regulation by the commission to reflect reductions in the 
  2.18  utility's ad valorem tax obligation pursuant to section 272.02, 
  2.19  subdivision 10.  Rate adjustments under this section shall not 
  2.20  be subject to the requirements of section 216B.16.  Reductions 
  2.21  in rates under this subdivision shall be distributed among 
  2.22  customer classes in proportion to the share of the utility's 
  2.23  electric utility generation or natural gas peak shaving storage 
  2.24  and production equipment ad valorem tax obligation paid by each 
  2.25  customer class prior to exemption under section 272.02, 
  2.26  subdivision 10. 
  2.27     Subd. 2.  [SCHEDULE SUBMITTED.] Within 60 days after 
  2.28  certification by the commission pursuant to section 216B.1691, 
  2.29  each electric utility and each gas utility subject to rate 
  2.30  regulation must submit a schedule of rate reductions to the 
  2.31  commission that complies with subdivision 1.  Each utility shall 
  2.32  include a statement of facts, substantiating documents, 
  2.33  exhibits, and any other necessary information supporting the 
  2.34  proposed schedule.  The commission shall have 60 days to accept 
  2.35  or modify by order the schedule. 
  2.36     Subd. 3.  [RATE REDUCTION IMPLEMENTATION.] A rate reduction 
  3.1   required pursuant to this subdivision and approved by the 
  3.2   commission becomes effective beginning with the start of the 
  3.3   utility replacement aid under section 273.1398, subdivision 4a. 
  3.4      Sec. 3.  [216B.1691] [CERTIFICATION OF IMPLEMENTATION OF 
  3.5   CUSTOMER CHOICE.] 
  3.6      Subdivision 1.  [CERTIFICATION.] The public utilities 
  3.7   commission shall certify to the commissioner of revenue the date 
  3.8   of implementation of customer choice upon motion by (1) a 
  3.9   utility which pays property tax on tools, implements, and 
  3.10  machinery integral to an electric generation system or a natural 
  3.11  gas peak shaving storage and production system; or, (2) a 
  3.12  customer of such a utility.  The "date of implementation of 
  3.13  customer choice" means the date upon which a retail customer of 
  3.14  electricity is authorized by law, other than by section 216B.42 
  3.15  or 216B.421, to purchase at retail electric generation services 
  3.16  from a provider other than an electric utility with an exclusive 
  3.17  service territory under section 216B.40 in the customer's 
  3.18  service area. 
  3.19     Subd. 2.  [YEAR OF CUSTOMER CHOICE.] If certification under 
  3.20  subdivision 1 occurs before August 1 of a calendar year, the 
  3.21  following calendar year is deemed to be the "year of customer 
  3.22  choice."  If certification occurs after July 31 of a calendar 
  3.23  year, the second subsequent calendar year is deemed to be the 
  3.24  "year of customer choice." 
  3.25     Sec. 4.  Minnesota Statutes 1998, section 272.02, 
  3.26  subdivision 1, is amended to read: 
  3.27     Subdivision 1.  [EXEMPT PROPERTY DESCRIBED.] All property 
  3.28  described in this section to the extent herein limited shall be 
  3.29  exempt from taxation: 
  3.30     (1) All public burying grounds. 
  3.31     (2) All public schoolhouses. 
  3.32     (3) All public hospitals. 
  3.33     (4) All academies, colleges, and universities, and all 
  3.34  seminaries of learning. 
  3.35     (5) All churches, church property, and houses of worship. 
  3.36     (6) Institutions of purely public charity except parcels of 
  4.1   property containing structures and the structures described in 
  4.2   section 273.13, subdivision 25, paragraph (e), other than those 
  4.3   that qualify for exemption under clause (25). 
  4.4      (7) All public property exclusively used for any public 
  4.5   purpose. 
  4.6      (8) Except for the taxable personal property enumerated 
  4.7   below, all personal property and the property described in 
  4.8   section 272.03, subdivision 1, paragraphs (c) and (d), shall be 
  4.9   exempt.  
  4.10     The following personal property shall be taxable:  
  4.11     (a) except as provided in subdivision 10, personal property 
  4.12  which is part of an electric generating, transmission, or 
  4.13  distribution system or a pipeline system transporting or 
  4.14  distributing water, gas, crude oil, or petroleum products or 
  4.15  mains and pipes used in the distribution of steam or hot or 
  4.16  chilled water for heating or cooling buildings and structures; 
  4.17     (b) railroad docks and wharves which are part of the 
  4.18  operating property of a railroad company as defined in section 
  4.19  270.80; 
  4.20     (c) personal property defined in section 272.03, 
  4.21  subdivision 2, clause (3); 
  4.22     (d) leasehold or other personal property interests which 
  4.23  are taxed pursuant to section 272.01, subdivision 2; 273.124, 
  4.24  subdivision 7; or 273.19, subdivision 1; or any other law 
  4.25  providing the property is taxable as if the lessee or user were 
  4.26  the fee owner; 
  4.27     (e) manufactured homes and sectional structures, including 
  4.28  storage sheds, decks, and similar removable improvements 
  4.29  constructed on the site of a manufactured home, sectional 
  4.30  structure, park trailer or travel trailer as provided in section 
  4.31  273.125, subdivision 8, paragraph (f); and 
  4.32     (f) flight property as defined in section 270.071.  
  4.33     (9) Personal property used primarily for the abatement and 
  4.34  control of air, water, or land pollution to the extent that it 
  4.35  is so used, and real property which is used primarily for 
  4.36  abatement and control of air, water, or land pollution as part 
  5.1   of an agricultural operation, as a part of a centralized 
  5.2   treatment and recovery facility operating under a permit issued 
  5.3   by the Minnesota pollution control agency pursuant to chapters 
  5.4   115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
  5.5   and 7045.0020 to 7045.1260, as a wastewater treatment facility 
  5.6   and for the treatment, recovery, and stabilization of metals, 
  5.7   oils, chemicals, water, sludges, or inorganic materials from 
  5.8   hazardous industrial wastes, or as part of an electric 
  5.9   generation system.  For purposes of this clause, personal 
  5.10  property includes ponderous machinery and equipment used in a 
  5.11  business or production activity that at common law is considered 
  5.12  real property. 
  5.13     Any taxpayer requesting exemption of all or a portion of 
  5.14  any real property or any equipment or device, or part thereof, 
  5.15  operated primarily for the control or abatement of air or water 
  5.16  pollution shall file an application with the commissioner of 
  5.17  revenue.  The equipment or device shall meet standards, rules, 
  5.18  or criteria prescribed by the Minnesota pollution control 
  5.19  agency, and must be installed or operated in accordance with a 
  5.20  permit or order issued by that agency.  The Minnesota pollution 
  5.21  control agency shall upon request of the commissioner furnish 
  5.22  information or advice to the commissioner.  On determining that 
  5.23  property qualifies for exemption, the commissioner shall issue 
  5.24  an order exempting the property from taxation.  The equipment or 
  5.25  device shall continue to be exempt from taxation as long as the 
  5.26  permit issued by the Minnesota pollution control agency remains 
  5.27  in effect. 
  5.28     (10) Wetlands.  For purposes of this subdivision, 
  5.29  "wetlands" means:  (i) land described in section 103G.005, 
  5.30  subdivision 15a; (ii) land which is mostly under water, produces 
  5.31  little if any income, and has no use except for wildlife or 
  5.32  water conservation purposes, provided it is preserved in its 
  5.33  natural condition and drainage of it would be legal, feasible, 
  5.34  and economically practical for the production of livestock, 
  5.35  dairy animals, poultry, fruit, vegetables, forage and grains, 
  5.36  except wild rice; or (iii) land in a wetland preservation area 
  6.1   under sections 103F.612 to 103F.616.  "Wetlands" under items (i) 
  6.2   and (ii) include adjacent land which is not suitable for 
  6.3   agricultural purposes due to the presence of the wetlands, but 
  6.4   do not include woody swamps containing shrubs or trees, wet 
  6.5   meadows, meandered water, streams, rivers, and floodplains or 
  6.6   river bottoms.  Exemption of wetlands from taxation pursuant to 
  6.7   this section shall not grant the public any additional or 
  6.8   greater right of access to the wetlands or diminish any right of 
  6.9   ownership to the wetlands. 
  6.10     (11) Native prairie.  The commissioner of the department of 
  6.11  natural resources shall determine lands in the state which are 
  6.12  native prairie and shall notify the county assessor of each 
  6.13  county in which the lands are located.  Pasture land used for 
  6.14  livestock grazing purposes shall not be considered native 
  6.15  prairie for the purposes of this clause.  Upon receipt of an 
  6.16  application for the exemption provided in this clause for lands 
  6.17  for which the assessor has no determination from the 
  6.18  commissioner of natural resources, the assessor shall refer the 
  6.19  application to the commissioner of natural resources who shall 
  6.20  determine within 30 days whether the land is native prairie and 
  6.21  notify the county assessor of the decision.  Exemption of native 
  6.22  prairie pursuant to this clause shall not grant the public any 
  6.23  additional or greater right of access to the native prairie or 
  6.24  diminish any right of ownership to it. 
  6.25     (12) Property used in a continuous program to provide 
  6.26  emergency shelter for victims of domestic abuse, provided the 
  6.27  organization that owns and sponsors the shelter is exempt from 
  6.28  federal income taxation pursuant to section 501(c)(3) of the 
  6.29  Internal Revenue Code of 1986, as amended through December 31, 
  6.30  1992, notwithstanding the fact that the sponsoring organization 
  6.31  receives funding under section 8 of the United States Housing 
  6.32  Act of 1937, as amended. 
  6.33     (13) If approved by the governing body of the municipality 
  6.34  in which the property is located, property not exceeding one 
  6.35  acre which is owned and operated by any senior citizen group or 
  6.36  association of groups that in general limits membership to 
  7.1   persons age 55 or older and is organized and operated 
  7.2   exclusively for pleasure, recreation, and other nonprofit 
  7.3   purposes, no part of the net earnings of which inures to the 
  7.4   benefit of any private shareholders; provided the property is 
  7.5   used primarily as a clubhouse, meeting facility, or recreational 
  7.6   facility by the group or association and the property is not 
  7.7   used for residential purposes on either a temporary or permanent 
  7.8   basis. 
  7.9      (14) To the extent provided by section 295.44, real and 
  7.10  personal property used or to be used primarily for the 
  7.11  production of hydroelectric or hydromechanical power on a site 
  7.12  owned by the federal government, the state, or a local 
  7.13  governmental unit which is developed and operated pursuant to 
  7.14  the provisions of section 103G.535. 
  7.15     (15) If approved by the governing body of the municipality 
  7.16  in which the property is located, and if construction is 
  7.17  commenced after June 30, 1983:  
  7.18     (a) a "direct satellite broadcasting facility" operated by 
  7.19  a corporation licensed by the federal communications commission 
  7.20  to provide direct satellite broadcasting services using direct 
  7.21  broadcast satellites operating in the 12-ghz. band; and 
  7.22     (b) a "fixed satellite regional or national program service 
  7.23  facility" operated by a corporation licensed by the federal 
  7.24  communications commission to provide fixed satellite-transmitted 
  7.25  regularly scheduled broadcasting services using satellites 
  7.26  operating in the 6-ghz. band. 
  7.27  An exemption provided by clause (15) shall apply for a period 
  7.28  not to exceed five years.  When the facility no longer qualifies 
  7.29  for exemption, it shall be placed on the assessment rolls as 
  7.30  provided in subdivision 4.  Before approving a tax exemption 
  7.31  pursuant to this paragraph, the governing body of the 
  7.32  municipality shall provide an opportunity to the members of the 
  7.33  county board of commissioners of the county in which the 
  7.34  facility is proposed to be located and the members of the school 
  7.35  board of the school district in which the facility is proposed 
  7.36  to be located to meet with the governing body.  The governing 
  8.1   body shall present to the members of those boards its estimate 
  8.2   of the fiscal impact of the proposed property tax exemption.  
  8.3   The tax exemption shall not be approved by the governing body 
  8.4   until the county board of commissioners has presented its 
  8.5   written comment on the proposal to the governing body or 30 days 
  8.6   have passed from the date of the transmittal by the governing 
  8.7   body to the board of the information on the fiscal impact, 
  8.8   whichever occurs first. 
  8.9      (16) Real and personal property owned and operated by a 
  8.10  private, nonprofit corporation exempt from federal income 
  8.11  taxation pursuant to United States Code, title 26, section 
  8.12  501(c)(3), primarily used in the generation and distribution of 
  8.13  hot water for heating buildings and structures.  
  8.14     (17) Notwithstanding section 273.19, state lands that are
  8.15  leased from the department of natural resources under section 
  8.16  92.46. 
  8.17     (18) Electric power distribution lines and their 
  8.18  attachments and appurtenances, that are used primarily for 
  8.19  supplying electricity to farmers at retail.  
  8.20     (19) Transitional housing facilities.  "Transitional 
  8.21  housing facility" means a facility that meets the following 
  8.22  requirements.  (i) It provides temporary housing to individuals, 
  8.23  couples, or families.  (ii) It has the purpose of reuniting 
  8.24  families and enabling parents or individuals to obtain 
  8.25  self-sufficiency, advance their education, get job training, or 
  8.26  become employed in jobs that provide a living wage.  (iii) It 
  8.27  provides support services such as child care, work readiness 
  8.28  training, and career development counseling; and a 
  8.29  self-sufficiency program with periodic monitoring of each 
  8.30  resident's progress in completing the program's goals.  (iv) It 
  8.31  provides services to a resident of the facility for at least 
  8.32  three months but no longer than three years, except residents 
  8.33  enrolled in an educational or vocational institution or job 
  8.34  training program.  These residents may receive services during 
  8.35  the time they are enrolled but in no event longer than four 
  8.36  years.  (v) It is owned and operated or under lease from a unit 
  9.1   of government or governmental agency under a property 
  9.2   disposition program and operated by one or more organizations 
  9.3   exempt from federal income tax under section 501(c)(3) of the 
  9.4   Internal Revenue Code of 1986, as amended through December 31, 
  9.5   1992.  This exemption applies notwithstanding the fact that the 
  9.6   sponsoring organization receives financing by a direct federal 
  9.7   loan or federally insured loan or a loan made by the Minnesota 
  9.8   housing finance agency under the provisions of either Title II 
  9.9   of the National Housing Act or the Minnesota Housing Finance 
  9.10  Agency Law of 1971 or rules promulgated by the agency pursuant 
  9.11  to it, and notwithstanding the fact that the sponsoring 
  9.12  organization receives funding under Section 8 of the United 
  9.13  States Housing Act of 1937, as amended. 
  9.14     (20) Real and personal property, including leasehold or 
  9.15  other personal property interests, owned and operated by a 
  9.16  corporation if more than 50 percent of the total voting power of 
  9.17  the stock of the corporation is owned collectively by:  (i) the 
  9.18  board of regents of the University of Minnesota, (ii) the 
  9.19  University of Minnesota Foundation, an organization exempt from 
  9.20  federal income taxation under section 501(c)(3) of the Internal 
  9.21  Revenue Code of 1986, as amended through December 31, 1992, and 
  9.22  (iii) a corporation organized under chapter 317A, which by its 
  9.23  articles of incorporation is prohibited from providing pecuniary 
  9.24  gain to any person or entity other than the regents of the 
  9.25  University of Minnesota; which property is used primarily to 
  9.26  manage or provide goods, services, or facilities utilizing or 
  9.27  relating to large-scale advanced scientific computing resources 
  9.28  to the regents of the University of Minnesota and others. 
  9.29     (21)(a) Small scale wind energy conversion systems 
  9.30  installed after January 1, 1991, and used as an electric power 
  9.31  source are exempt. 
  9.32     "Small scale wind energy conversion systems" are wind 
  9.33  energy conversion systems, as defined in section 216C.06, 
  9.34  subdivision 12, including the foundation or support pad, which 
  9.35  are (i) used as an electric power source; (ii) located within 
  9.36  one county and owned by the same owner; and (iii) produce two 
 10.1   megawatts or less of electricity as measured by nameplate 
 10.2   ratings. 
 10.3      (b) Medium scale wind energy conversion systems installed 
 10.4   after January 1, 1991, are treated as follows:  (i) the 
 10.5   foundation and support pad are taxable; (ii) the associated 
 10.6   supporting and protective structures are exempt for the first 
 10.7   five assessment years after they have been constructed, and 
 10.8   thereafter, 30 percent of the market value of the associated 
 10.9   supporting and protective structures are taxable; and (iii) the 
 10.10  turbines, blades, transformers, and its related equipment, are 
 10.11  exempt.  "Medium scale wind energy conversion systems" are wind 
 10.12  energy conversion systems as defined in section 216C.06, 
 10.13  subdivision 12, including the foundation or support pad, which 
 10.14  are:  (i) used as an electric power source; (ii) located within 
 10.15  one county and owned by the same owner; and (iii) produce more 
 10.16  than two but equal to or less than 12 megawatts of energy as 
 10.17  measured by nameplate ratings. 
 10.18     (c) Large scale wind energy conversion systems installed 
 10.19  after January 1, 1991, are treated as follows:  25 percent of 
 10.20  the market value of all property is taxable, including (i) the 
 10.21  foundation and support pad; (ii) the associated supporting and 
 10.22  protective structures; and (iii) the turbines, blades, 
 10.23  transformers, and its related equipment.  "Large scale wind 
 10.24  energy conversion systems" are wind energy conversion systems as 
 10.25  defined in section 216C.06, subdivision 12, including the 
 10.26  foundation or support pad, which are:  (i) used as an electric 
 10.27  power source; and (ii) produce more than 12 megawatts of energy 
 10.28  as measured by nameplate ratings. 
 10.29     (22) Containment tanks, cache basins, and that portion of 
 10.30  the structure needed for the containment facility used to 
 10.31  confine agricultural chemicals as defined in section 18D.01, 
 10.32  subdivision 3, as required by the commissioner of agriculture 
 10.33  under chapter 18B or 18C. 
 10.34     (23) Photovoltaic devices, as defined in section 216C.06, 
 10.35  subdivision 13, installed after January 1, 1992, and used to 
 10.36  produce or store electric power. 
 11.1      (24) Real and personal property owned and operated by a 
 11.2   private, nonprofit corporation exempt from federal income 
 11.3   taxation pursuant to United States Code, title 26, section 
 11.4   501(c)(3), primarily used for an ice arena or ice rink, and used 
 11.5   primarily for youth and high school programs. 
 11.6      (25) A structure that is situated on real property that is 
 11.7   used for: 
 11.8      (i) housing for the elderly or for low- and moderate-income 
 11.9   families as defined in Title II of the National Housing Act, as 
 11.10  amended through December 31, 1990, and funded by a direct 
 11.11  federal loan or federally insured loan made pursuant to Title II 
 11.12  of the act; or 
 11.13     (ii) housing lower income families or elderly or 
 11.14  handicapped persons, as defined in Section 8 of the United 
 11.15  States Housing Act of 1937, as amended. 
 11.16     In order for a structure to be exempt under item (i) or 
 11.17  (ii), it must also meet each of the following criteria: 
 11.18     (A) is owned by an entity which is operated as a nonprofit 
 11.19  corporation organized under chapter 317A; 
 11.20     (B) is owned by an entity which has not entered into a 
 11.21  housing assistance payments contract under Section 8 of the 
 11.22  United States Housing Act of 1937, or, if the entity which owns 
 11.23  the structure has entered into a housing assistance payments 
 11.24  contract under Section 8 of the United States Housing Act of 
 11.25  1937, the contract provides assistance for less than 90 percent 
 11.26  of the dwelling units in the structure, excluding dwelling units 
 11.27  intended for management or maintenance personnel; 
 11.28     (C) operates an on-site congregate dining program in which 
 11.29  participation by residents is mandatory, and provides assisted 
 11.30  living or similar social and physical support services for 
 11.31  residents; and 
 11.32     (D) was not assessed and did not pay tax under chapter 273 
 11.33  prior to the 1991 levy, while meeting the other conditions of 
 11.34  this clause. 
 11.35     An exemption under this clause remains in effect for taxes 
 11.36  levied in each year or partial year of the term of its permanent 
 12.1   financing. 
 12.2      (26) Real and personal property that is located in the 
 12.3   Superior National Forest, and owned or leased and operated by a 
 12.4   nonprofit organization that is exempt from federal income 
 12.5   taxation under section 501(c)(3) of the Internal Revenue Code of 
 12.6   1986, as amended through December 31, 1992, and primarily used 
 12.7   to provide recreational opportunities for disabled veterans and 
 12.8   their families. 
 12.9      (27) Manure pits and appurtenances, which may include 
 12.10  slatted floors and pipes, installed or operated in accordance 
 12.11  with a permit, order, or certificate of compliance issued by the 
 12.12  Minnesota pollution control agency.  The exemption shall 
 12.13  continue for as long as the permit, order, or certificate issued 
 12.14  by the Minnesota pollution control agency remains in effect. 
 12.15     (28) Notwithstanding clause (8), item (a), attached 
 12.16  machinery and other personal property which is part of a 
 12.17  facility containing a cogeneration system as described in 
 12.18  section 216B.166, subdivision 2, paragraph (a), if the 
 12.19  cogeneration system has met the following criteria:  (i) the 
 12.20  system utilizes natural gas as a primary fuel and the 
 12.21  cogenerated steam initially replaces steam generated from 
 12.22  existing thermal boilers utilizing coal; (ii) the facility 
 12.23  developer is selected as a result of a procurement process 
 12.24  ordered by the public utilities commission; and (iii) 
 12.25  construction of the facility is commenced after July 1, 1994, 
 12.26  and before July 1, 1997. 
 12.27     (29) Real property acquired by a home rule charter city, 
 12.28  statutory city, county, town, or school district under a lease 
 12.29  purchase agreement or an installment purchase contract during 
 12.30  the term of the lease purchase agreement as long as and to the 
 12.31  extent that the property is used by the city, county, town, or 
 12.32  school district and devoted to a public use and to the extent it 
 12.33  is not subleased to any private individual, entity, association, 
 12.34  or corporation in connection with a business or enterprise 
 12.35  operated for profit. 
 12.36     (30) Property owned by a nonprofit charitable organization 
 13.1   that qualifies for tax exemption under section 501(c)(3) of the 
 13.2   Internal Revenue Code of 1986, as amended through December 31, 
 13.3   1997, that is intended to be used as a business incubator in a 
 13.4   high-unemployment county but is not occupied on the assessment 
 13.5   date.  As used in this clause, a "business incubator" is a 
 13.6   facility used for the development of nonretail businesses, 
 13.7   offering access to equipment, space, services, and advice to the 
 13.8   tenant businesses, for the purpose of encouraging economic 
 13.9   development, diversification, and job creation in the area 
 13.10  served by the organization, and "high-unemployment county" is a 
 13.11  county that had an average annual unemployment rate of 7.9 
 13.12  percent or greater in 1997.  Property that qualifies for the 
 13.13  exemption under this clause is limited to no more than two 
 13.14  contiguous parcels and structures that do not exceed in the 
 13.15  aggregate 40,000 square feet.  This exemption expires after 
 13.16  taxes payable in 2005. 
 13.17     (31) Notwithstanding any other law to the contrary, real 
 13.18  property that meets the following criteria is exempt: 
 13.19     (i) constitutes a wastewater treatment system (a) 
 13.20  constructed by a municipality using public funds, (b) operates 
 13.21  under a State Disposal System Permit issued by the Minnesota 
 13.22  pollution control agency pursuant to chapters 115 and 116 and 
 13.23  Minnesota Rules, chapter 700l, and (c) applies its effluent to 
 13.24  land used as part of an agricultural operation; 
 13.25     (ii) is located within a municipality of a population of 
 13.26  less than 10,000; 
 13.27     (iii) is used for treatment of effluent from a private 
 13.28  potato processing facility; and 
 13.29     (iv) is owned by a municipality and operated by a private 
 13.30  entity under agreement with that municipality. 
 13.31     Sec. 5.  Minnesota Statutes 1998, section 272.02, is 
 13.32  amended by adding a subdivision to read: 
 13.33     Subd. 10.  [UTILITY GENERATION PERSONAL 
 13.34  PROPERTY.] Notwithstanding subdivision 1, clause (8), item (a), 
 13.35  tools, implements, and machinery integral to an electric 
 13.36  generation system or a natural gas peak shaving storage and 
 14.1   production system are exempted from property taxes beginning 
 14.2   with taxes payable in the year of customer choice as defined in 
 14.3   section 216B.1691, subdivision 2.  For purposes of this 
 14.4   subdivision, "natural gas peak shaving storage and production 
 14.5   system" is a system used to store and produce natural gas or its 
 14.6   equivalent during peak usage times including, but not limited 
 14.7   to, underground storage systems, liquification and storage 
 14.8   systems, and systems generating gas from a mix of propane and 
 14.9   air. 
 14.10     Sec. 6.  Minnesota Statutes 1998, section 273.13, 
 14.11  subdivision 31, is amended to read: 
 14.12     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 14.13     (1) except as provided in section 272.02, subdivision 10, 
 14.14  tools, implements, and machinery of an electric generating, 
 14.15  transmission, or distribution system or a pipeline system 
 14.16  transporting or distributing water, gas, crude oil, or petroleum 
 14.17  products or mains and pipes used in the distribution of steam or 
 14.18  hot or chilled water for heating or cooling buildings, which are 
 14.19  fixtures; 
 14.20     (2) unmined iron ore and low-grade iron-bearing formations 
 14.21  as defined in section 273.14; and 
 14.22     (3) all other property not otherwise classified. 
 14.23     Class 5 property has a class rate of 3.5 percent of market 
 14.24  value. 
 14.25     Sec. 7.  Minnesota Statutes 1998, section 273.1398, is 
 14.26  amended by adding a subdivision to read: 
 14.27     Subd. 4a.  [UTILITY REPLACEMENT AID.] (a) For property 
 14.28  taxes payable in the year of customer choice under section 
 14.29  216B.1691, subdivision 2, each local taxing jurisdiction shall 
 14.30  receive utility replacement aid in an amount equal to the sum of:
 14.31     (1)(i) the net tax capacity of tools, implements, and 
 14.32  machinery integral to electric generation systems and natural 
 14.33  gas peak shaving storage and production systems located in the 
 14.34  taxing jurisdiction for taxes payable in the previous year, 
 14.35  multiplied by (ii) the taxing jurisdiction's average net tax 
 14.36  capacity local tax rate for taxes payable in the previous year, 
 15.1   excluding the portion of the local tax rate attributable to 
 15.2   equalized school levies, plus 
 15.3      (2)(i) the market value of tools, implements, and machinery 
 15.4   integral to electric generation systems and natural gas peak 
 15.5   shaving storage and production systems located in the taxing 
 15.6   jurisdiction for taxes payable in the previous year, multiplied 
 15.7   by (ii) the taxing jurisdiction's average referendum market 
 15.8   value local tax rate for taxes payable in the previous year.  
 15.9   For a taxing jurisdiction eligible to receive debt replacement 
 15.10  aid under subdivision 4b, the tax rate used in the calculations 
 15.11  required by this paragraph must exclude the portion of the 
 15.12  property taxes required to be levied for bonded debt under 
 15.13  section 475.61. 
 15.14     (b) Utility replacement aid must continue to be paid for 
 15.15  property taxes payable in the nine years following the year of 
 15.16  customer choice, with the aid in each year being reduced by ten 
 15.17  percent of the aid amount in the year of customer choice. 
 15.18     For property taxes payable in the tenth and subsequent 
 15.19  years following the year of customer choice, there shall be no 
 15.20  utility replacement aid paid. 
 15.21     (c) If an electric generation facility or natural gas peak 
 15.22  shaving storage and production system containing tools, 
 15.23  implements, and machinery that was subject to property taxation 
 15.24  in the year preceding the year of customer choice ceases to 
 15.25  generate electricity or producing natural gas for sale to the 
 15.26  consumer, that portion of the local taxing jurisdiction's 
 15.27  utility replacement aid attributable to that facility shall 
 15.28  cease to be paid beginning in the following year. 
 15.29     Sec. 8.  Minnesota Statutes 1998, section 273.1398, is 
 15.30  amended by adding a subdivision to read: 
 15.31     Subd. 4b.  [DEBT REPLACEMENT AID.] (a) For each local 
 15.32  taxing jurisdiction containing property exempted from property 
 15.33  taxes under section 272.02, subdivision 10, the commissioner of 
 15.34  revenue shall determine the ratio of (1) the net tax capacity of 
 15.35  property exempted from property taxes under section 272.02, 
 15.36  subdivision 10, for taxes payable in the year preceding the year 
 16.1   of customer choice, to (2) the total net tax capacity of the 
 16.2   taxing jurisdiction for the same taxes payable year.  The 
 16.3   commissioner shall certify the resulting ratio to the auditor of 
 16.4   each county containing a jurisdiction having a ratio of at least 
 16.5   ten percent. 
 16.6      (b) Each local taxing jurisdiction having a ratio computed 
 16.7   under paragraph (a) of at least ten percent shall be eligible 
 16.8   for debt replacement aid each year, beginning in the year of 
 16.9   customer choice.  The amount of aid is equal to the ratio 
 16.10  determined under paragraph (a) multiplied by the levy required 
 16.11  under section 475.61 to pay principal and interest for bonds 
 16.12  issued prior to the date of certification of customer choice for 
 16.13  the year in which the aid is payable.  Each county auditor shall 
 16.14  report the aid amounts determined under this subdivision to the 
 16.15  commissioner of revenue by April 1 of the year in which the aid 
 16.16  is payable, in a form prescribed by the commissioner. 
 16.17     Sec. 9.  Minnesota Statutes 1998, section 273.1398, 
 16.18  subdivision 6, is amended to read: 
 16.19     Subd. 6.  [PAYMENT.] The commissioner shall certify the 
 16.20  aids provided in subdivisions 2, 2b, 3, and 5 4a, before 
 16.21  September 1 of the year preceding the distribution year to the 
 16.22  county auditor of the affected local government.  The aids 
 16.23  provided in subdivisions 2, 2b, 3, 4a, and 5 4b, must be paid to 
 16.24  local governments other than school districts at the times 
 16.25  provided in section 477A.015 for payment of local government aid 
 16.26  to taxing jurisdictions, except that the first one-half payment 
 16.27  of disparity reduction aid provided in subdivision 3 must be 
 16.28  paid on or before August 31.  The disparity reduction credit 
 16.29  provided in subdivision 4 must be paid to taxing jurisdictions 
 16.30  other than school districts at the time provided in section 
 16.31  473H.10, subdivision 3.  Aids and credit reimbursements to 
 16.32  school districts must be certified to the commissioner of 
 16.33  children, families, and learning and paid under section 
 16.34  273.1392.  Payment shall not be made to any taxing jurisdiction 
 16.35  that has ceased to levy a property tax.  
 16.36     Sec. 10.  [475A.07] [LOCAL BONDS; STATE GUARANTY.] 
 17.1      Subdivision 1.  [APPLICATION.] This section applies to the 
 17.2   bonds of a local unit of government, if the following conditions 
 17.3   are met: 
 17.4      (1) for taxes payable in the year preceding the year of 
 17.5   customer choice, at least 20 percent of the total net tax 
 17.6   capacity of the local government consisted of property exempted 
 17.7   from taxation under section 272.02, subdivision 10; 
 17.8      (2) the bonds are general obligations to which the full 
 17.9   faith and credit of the local government unit is pledged, 
 17.10  including an unlimited pledge to levy the amount of property 
 17.11  taxes needed to pay the obligations; and 
 17.12     (3) the bonds were outstanding on the date of certification 
 17.13  of customer choice, or were issued to refund bonds that were 
 17.14  outstanding on that date. 
 17.15     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 17.16  the following terms have the meanings given. 
 17.17     (b) "Bond" means any obligation, as defined in section 
 17.18  475.51, subdivision 3, regardless of whether the obligations 
 17.19  were issued under the authority of chapter 475. 
 17.20     (c) "Local government unit" means a statutory or home rule 
 17.21  charter city, county, school district, or special taxing 
 17.22  district with authority to issue general obligation bonds. 
 17.23     Subd. 3.  [STATE GUARANTY.] (a) The state guaranties the 
 17.24  payment of bonds covered by the provisions of this section.  If 
 17.25  a deficiency or a default occurs under any bond covered by this 
 17.26  section, the commissioner of finance shall pay any amount needed 
 17.27  to remedy and correct the deficiency or default.  This guaranty 
 17.28  is permanent and irrevocable. 
 17.29     (b) The guaranty, pledge, and any payment by the 
 17.30  commissioner under paragraph (a) does not relieve the local 
 17.31  governmental unit of its obligation to pay the bonds. 
 17.32     (c) If the commissioner makes a payment under paragraph 
 17.33  (a), the commissioner may recover the amount, plus any 
 17.34  additional costs incurred including interest at the rate 
 17.35  specified in section 279.03, subdivision 1, from the local 
 17.36  governmental unit by: 
 18.1      (1) deducting the amount from state-aid payments made to 
 18.2   the local governmental unit; 
 18.3      (2) compelling the levying of property taxes by the local 
 18.4   governmental unit to be paid to the commissioner of finance; 
 18.5      (3) bringing legal action to collect the amounts; or 
 18.6      (4) any combination of the actions in clauses (1) to (3). 
 18.7      Subd. 4.  [APPROPRIATION.] An amount sufficient to provide 
 18.8   any funds needed to pay and administer the guaranty under this 
 18.9   section is appropriated from the general fund to the 
 18.10  commissioner of finance. 
 18.11     Sec. 11.  [DETERMINATION OF ADJUSTED NET TAX CAPACITY.] 
 18.12     The exemption of the electric generation and natural gas 
 18.13  peak shaving storage and production attached machinery from the 
 18.14  property tax base shall be considered a change in the 
 18.15  classification system for the purposes of Minnesota Statutes, 
 18.16  section 127A.48. 
 18.17     Sec. 12.  [INSTRUCTION TO REVISOR.] 
 18.18     In the next edition of Minnesota Statutes published after 
 18.19  implementation of customer choice under section 3, the word 
 18.20  "generating" shall be stricken from Minnesota Statutes, section 
 18.21  272.02, subdivision 1, clause (8), item (a), and from Minnesota 
 18.22  Statutes, section 273.13, subdivision 31, clause (1).  The 
 18.23  public utilities commission shall notify the revisor of statutes 
 18.24  that consumer choice has been implemented within five days after 
 18.25  certification to the commissioner of revenue under section 3, 
 18.26  subdivision 1. 
 18.27     Sec. 13.  [EFFECTIVE DATE.] 
 18.28     This act is effective the day following final enactment.