Minnesota Legislature
SF 1683
1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to financing and operation of state and local 1.3 government; making policy, technical, administrative, 1.4 enforcement, collection, refund, and other changes to 1.5 income, franchise, property, sales and use, health 1.6 care provider, cigarette and tobacco products, 1.7 insurance premiums, aggregate removal, occupation, net 1.8 proceeds, and production taxes, and other taxes and 1.9 tax-related provisions; establishing a regional 1.10 investment credit; establishing credits for carsharing 1.11 and historic preservation; providing an income tax 1.12 checkoff; providing a refund for transit passes; 1.13 authorizing sales tax exemptions; authorizing local 1.14 government sales taxes; authorizing distributions of 1.15 tax proceeds; changing provisions relating to fiscal 1.16 disparities, education financing, state debt 1.17 collection procedures, sustainable forest incentives 1.18 programs, and business subsidy provisions; conforming 1.19 provisions to certain changes in federal law; changing 1.20 powers and duties of certain local governments and 1.21 authorities and state departments or agencies; 1.22 providing for payments of certain aids to local units 1.23 of government; providing for certain school levies; 1.24 providing for issuance of obligations by local 1.25 governments, and use of the proceeds of the debt; 1.26 requiring transfer of a parking facility; changing tax 1.27 increment financing and abatement provisions, and 1.28 providing authorities to certain districts; changing 1.29 provisions relating to certificates of title of motor 1.30 vehicles and manufactured homes; changing electronic 1.31 filing provisions; prohibiting misrepresentation of 1.32 employment; imposing requirements related to JOBZ; 1.33 providing for studies and reports; providing 1.34 penalties; creating an education reserve account; 1.35 providing for allocation and transfers of funds; 1.36 appropriating money; amending Minnesota Statutes 2004, 1.37 sections 4A.02; 15.06, subdivision 6; 16D.10; 1.38 103C.331, subdivision 16; 116J.993, subdivision 3, by 1.39 adding a subdivision; 116J.994, subdivisions 4, 5, 9, 1.40 by adding a subdivision; 118A.05, subdivision 5; 1.41 123B.53, subdivision 4, by adding a subdivision; 1.42 123B.55; 123B.71, subdivision 9; 126C.17, subdivisions 1.43 6, 7, 9, by adding subdivisions; 161.1231, by adding a 1.44 subdivision; 168A.05, subdivisions 1a, 1b; 270.11, 1.45 subdivision 2; 270.16, subdivision 2; 270.65; 270.67, 1.46 subdivision 4; 270.69, subdivision 4; 270A.03, 2.1 subdivision 5; 272.01, subdivision 2; 272.02, 2.2 subdivisions 1a, 7, 22, 47, 56, by adding 2.3 subdivisions; 272.0212, subdivisions 1, 2; 272.029, 2.4 subdivisions 4, 6; 273.11, subdivisions 1a, 8, by 2.5 adding subdivisions; 273.112, subdivision 3; 273.123, 2.6 by adding a subdivision; 273.124, subdivisions 1, 3, 2.7 6, 8, 13, 14, 21; 273.13, subdivisions 22, 23, 25; 2.8 273.1315; 273.1384, subdivision 3; 273.19, subdivision 2.9 1a; 273.372; 274.014, subdivisions 2, 3; 274.14; 2.10 275.065, subdivisions 1a, 3, by adding subdivisions; 2.11 275.066; 275.07, subdivisions 1, 4; 275.70, 2.12 subdivision 5; 276.04, subdivision 2; 276.112; 2.13 276A.01, subdivision 7; 278.03, subdivision 1; 279.01, 2.14 subdivision 1, by adding a subdivision; 282.016; 2.15 282.08; 282.15; 282.21; 282.224; 282.301; 287.04; 2.16 289A.02, subdivision 7; 289A.08, subdivisions 3, 7, 2.17 16; 289A.11, subdivision 1; 289A.18, subdivisions 1, 2.18 4, by adding a subdivision; 289A.19, subdivision 4; 2.19 289A.20, subdivisions 2, 4; 289A.31, subdivision 2; 2.20 289A.37, subdivision 5; 289A.38, subdivisions 6, 7, by 2.21 adding a subdivision; 289A.39, subdivision 1; 289A.40, 2.22 subdivision 2, by adding subdivisions; 289A.50, 2.23 subdivision 1a; 289A.60, subdivisions 2a, 6, 11, 12, 2.24 13; 290.01, subdivisions 7, 19, 19a, 19b, 19c, 19d, 2.25 31; 290.032, subdivisions 1, 2; 290.05, subdivision 1; 2.26 290.06, subdivisions 2c, 22, 28, by adding 2.27 subdivisions; 290.067, subdivisions 1, 2a; 290.0671, 2.28 subdivision 1; 290.0674, subdivisions 1, 2; 290.0675, 2.29 subdivision 1; 290.091, subdivisions 2, 3; 290.0922, 2.30 subdivision 2; 290.10; 290.17, subdivision 4; 290.191, 2.31 subdivision 1; 290.92, subdivisions 1, 4b; 290A.03, 2.32 subdivisions 3, 15; 290A.07, by adding a subdivision; 2.33 290A.19; 290B.05, subdivision 3; 290C.05; 290C.10; 2.34 291.005, subdivision 1; 291.03, subdivision 1; 295.50, 2.35 subdivision 3, by adding a subdivision; 295.53, 2.36 subdivision 1; 295.60, subdivision 3; 296A.09, by 2.37 adding a subdivision; 296A.22, by adding a 2.38 subdivision; 297A.61, subdivisions 3, 4, by adding a 2.39 subdivision; 297A.64, subdivision 4; 297A.668, 2.40 subdivisions 1, 5; 297A.67, subdivision 2, by adding 2.41 subdivisions; 297A.68, subdivisions 2, 4, 5, 19, 35, 2.42 39, by adding subdivisions; 297A.70, subdivision 8, by 2.43 adding a subdivision; 297A.71, by adding subdivisions; 2.44 297A.75, subdivisions 1, 2, 3; 297A.83, subdivision 1; 2.45 297A.87, subdivisions 2, 3; 297A.99, subdivisions 4, 2.46 7; 297B.03; 297E.01, subdivisions 5, 7, by adding 2.47 subdivisions; 297E.02, subdivision 4; 297E.06, 2.48 subdivision 2; 297E.07; 297F.01, by adding a 2.49 subdivision; 297F.08, subdivision 12, by adding a 2.50 subdivision; 297F.09, subdivisions 1, 2, by adding a 2.51 subdivision; 297F.14, subdivision 4; 297G.09, by 2.52 adding a subdivision; 297I.01, by adding a 2.53 subdivision; 297I.05, subdivisions 4, 5, by adding a 2.54 subdivision; 298.001, by adding subdivisions; 298.01, 2.55 subdivisions 3, 3a, 4; 298.015, subdivisions 1, 2; 2.56 298.016, subdivision 4; 298.018; 298.223, subdivision 2.57 1; 298.24, subdivision 1; 298.28, subdivisions 9b, 10; 2.58 298.2961, by adding a subdivision; 298.75, 2.59 subdivisions 1, 2; 325D.33, subdivision 6; 343.11; 2.60 366.011; 366.012; 373.01, subdivision 3; 373.40, 2.61 subdivision 1; 373.45, subdivision 7; 400.04, by 2.62 adding a subdivision; 410.32; 412.301; 428A.101; 2.63 428A.21; 429.031, by adding a subdivision; 429.051; 2.64 469.034, subdivision 2; 469.158; 469.169, by adding a 2.65 subdivision; 469.1735, subdivision 3; 469.174, by 2.66 adding a subdivision; 469.175, subdivisions 1, 4, 6; 2.67 469.176, subdivision 1c, by adding subdivisions; 2.68 469.1761, by adding a subdivision; 469.1763, 2.69 subdivision 2; 469.1792; 469.310, subdivision 11; 2.70 473.39, by adding a subdivision; 473.843, subdivisions 2.71 3, 5; 473F.02, subdivision 7; 473F.08, by adding 3.1 subdivisions; 474A.061, subdivision 2c; 474A.131, 3.2 subdivision 1; 475.51, subdivision 4; 475.52, 3.3 subdivisions 1, 3, 4; 475.521, subdivisions 1, 2, 3, 3.4 4; 475.58, subdivision 3b; 477A.011, subdivisions 3, 3.5 36, 38; 477A.0124, subdivision 2; 477A.016; 477A.11, 3.6 subdivision 4, by adding a subdivision; 477A.12, 3.7 subdivisions 1, 2; 477A.14, subdivision 1; Laws 1991, 3.8 chapter 291, article 8, section 27, subdivision 4; 3.9 Laws 1994, chapter 587, article 9, section 20, 3.10 subdivision 1; Laws 1994, chapter 587, article 9, 3.11 section 20, subdivision 2; Laws 1996, chapter 471, 3.12 article 2, section 29; Laws 1998, chapter 389, article 3.13 3, section 41; Laws 1998, chapter 389, article 3, 3.14 section 42, subdivision 2, as amended; Laws 1998, 3.15 chapter 389, article 8, section 43, subdivision 3; 3.16 Laws 1998, chapter 389, article 8, section 43, 3.17 subdivision 4; Laws 1998, chapter 389, article 11, 3.18 section 19, subdivision 3; Laws 1999, chapter 243, 3.19 article 4, section 18, subdivision 1; Laws 1999, 3.20 chapter 243, article 4, section 18, subdivision 3; 3.21 Laws 1999, chapter 243, article 4, section 18, 3.22 subdivision 4; Laws 2001, First Special Session 3.23 chapter 5, article 3, section 8; Laws 2001, First 3.24 Special Session chapter 5, article 12, section 67; 3.25 Laws 2001, First Special Session chapter 5, article 3.26 12, section 82, as amended; Laws 2001, First Special 3.27 Session chapter 5, article 12, section 95, as amended; 3.28 Laws 2002, chapter 377, article 3, section 4; Laws 3.29 2002, chapter 377, article 12, section 16, subdivision 3.30 1; Laws 2003, chapter 127, article 5, section 27; Laws 3.31 2003, chapter 127, article 5, section 28; Laws 2003, 3.32 chapter 127, article 12, section 38; Laws 2003, First 3.33 Special Session chapter 21, article 4, section 12, 3.34 subdivision 11; Laws 2003, First Special Session 3.35 chapter 21, article 5, section 13; Laws 2003, First 3.36 Special Session chapter 21, article 6, section 9; 3.37 proposing coding for new law in Minnesota Statutes, 3.38 chapters 103C; 174; 270; 273; 278; 290; 290C; 297A; 3.39 297F; 298; 325D; 325F; 462A; 473; repealing Minnesota 3.40 Statutes 2004, sections 273.19, subdivision 5; 274.05; 3.41 275.15; 275.61, subdivision 2; 283.07; 289A.26, 3.42 subdivision 2a; 289A.60, subdivision 21; 295.55, 3.43 subdivision 4; 295.60, subdivision 4; 297A.99, 3.44 subdivision 13; 297E.12, subdivision 10; 297F.09, 3.45 subdivision 7; 297G.09, subdivision 6; 297I.35, 3.46 subdivision 2; 297I.85, subdivision 7; 298.01, 3.47 subdivisions 3c, 3d, 4d, 4e; 298.017; 473.39, 3.48 subdivision 1f; Laws 1975, chapter 287, section 5; 3.49 Laws 1994, chapter 587, article 9, section 20, 3.50 subdivision 4; Laws 2003, chapter 127, article 9, 3.51 section 9, subdivision 4; repealing Minnesota Rules, 3.52 parts 8093.2000; 8093.3000; 8130.0110, subpart 4; 3.53 8130.0200, subparts 5, 6; 8130.0400, subpart 9; 3.54 8130.1200, subparts 5, 6; 8130.2900; 8130.3100, 3.55 subpart 1; 8130.4000, subparts 1, 2; 8130.4200, 3.56 subpart 1; 8130.4400, subpart 3; 8130.5200; 8130.5600, 3.57 subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 5; 3.58 8130.8800, subpart 4. 3.59 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.60 ARTICLE 1 3.61 INCOME TAX 3.62 Section 1. Minnesota Statutes 2004, section 289A.39, 3.63 subdivision 1, is amended to read: 3.64 Subdivision 1. [EXTENSIONS FOR SERVICE MEMBERS.] (a) The 4.1 limitations of time provided by this chapter, chapter 290 4.2 relating to income taxes, chapter 271 relating to the Tax Court 4.3 for filing returns, paying taxes, claiming refunds, commencing 4.4 action thereon, appealing to the Tax Court from orders relating 4.5 to income taxes, and the filing of petitions under chapter 278 4.6 that would otherwise be dueMay 15, 1996May 1, 2004, and 4.7 appealing to the Supreme Court from decisions of the Tax Court 4.8 relating to income taxes are extended, as provided in section 4.9 7508 of the Internal Revenue Code. 4.10 (b) If a member of the National Guard or reserves is called 4.11 to active duty in the armed forces, the limitations of time 4.12 provided by this chapter and chapters 290 and 290A relating to 4.13 income taxes and claims for property tax refunds are extended by 4.14 the following period of time: 4.15 (1) in the case of an individual whose active service is in 4.16 the United States, six months; or 4.17 (2) in the case of an individual whose active service 4.18 includes service abroad, the period of initial service plus six 4.19 months. 4.20 Nothing in this paragraph reduces the time within which an 4.21 act is required or permitted under paragraph (a). 4.22 (c) If an individual entitled to the benefit of paragraph 4.23 (a) files a return during the period disregarded under paragraph 4.24 (a), interest must be paid on an overpayment or refundable 4.25 credit from the due date of the return, notwithstanding section 4.26 289A.56, subdivision 2. 4.27 (d) The provisions of this subdivision apply to the spouse 4.28 of an individual entitled to the benefits of this subdivision 4.29 with respect to a joint return filed by the spouses. 4.30 [EFFECTIVE DATE.] This section is effective for taxable 4.31 years beginning after December 31, 2002, and for property taxes 4.32 payable after 2003. 4.33 Sec. 2. Minnesota Statutes 2004, section 290.01, 4.34 subdivision 7, is amended to read: 4.35 Subd. 7. [RESIDENT.] (a) The term "resident" means any 4.36 individual domiciled in Minnesota, except that an individual is 5.1 not a "resident" for the period of time that the individual is 5.2either:5.3(1) on active duty stationed outside of Minnesota while in5.4the armed forces of the United States or the United Nations; or5.5(2)a "qualified individual" as defined in section 5.6 911(d)(1) of the Internal Revenue Code, if the qualified 5.7 individual notifies the county within three months of moving out 5.8 of the country that homestead status be revoked for the 5.9 Minnesota residence of the qualified individual, and the 5.10 property is not classified as a homestead while the individual 5.11 remains a qualified individual. 5.12 (b) "Resident" also means any individual domiciled outside 5.13 the state who maintains a place of abode in the state and spends 5.14 in the aggregate more than one-half of the tax year in 5.15 Minnesota, unless: 5.16 (1) the individual or the spouse of the individual is in 5.17 the armed forces of the United States; or 5.18 (2) the individual is covered under the reciprocity 5.19 provisions in section 290.081. 5.20 For purposes of this subdivision, presence within the state 5.21 for any part of a calendar day constitutes a day spent in the 5.22 state. Individuals shall keep adequate records to substantiate 5.23 the days spent outside the state. 5.24 The term "abode" means a dwelling maintained by an 5.25 individual, whether or not owned by the individual and whether 5.26 or not occupied by the individual, and includes a dwelling place 5.27 owned or leased by the individual's spouse. 5.28 (c) Neither the commissioner nor any court shall consider 5.29 charitable contributions made by an individual within or without 5.30 the state in determining if the individual is domiciled in 5.31 Minnesota. 5.32 [EFFECTIVE DATE.] This section is effective for taxable 5.33 years beginning after December 31, 2004. 5.34 Sec. 3. Minnesota Statutes 2004, section 290.01, 5.35 subdivision 19a, is amended to read: 5.36 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 6.1 individuals, estates, and trusts, there shall be added to 6.2 federal taxable income: 6.3 (1)(i) interest income on obligations of any state other 6.4 than Minnesota or a political or governmental subdivision, 6.5 municipality, or governmental agency or instrumentality of any 6.6 state other than Minnesota exempt from federal income taxes 6.7 under the Internal Revenue Code or any other federal statute; 6.8 and 6.9 (ii) exempt-interest dividends as defined in section 6.10 852(b)(5) of the Internal Revenue Code, except the portion of 6.11 the exempt-interest dividends derived from interest income on 6.12 obligations of the state of Minnesota or its political or 6.13 governmental subdivisions, municipalities, governmental agencies 6.14 or instrumentalities, but only if the portion of the 6.15 exempt-interest dividends from such Minnesota sources paid to 6.16 all shareholders represents 95 percent or more of the 6.17 exempt-interest dividends that are paid by the regulated 6.18 investment company as defined in section 851(a) of the Internal 6.19 Revenue Code, or the fund of the regulated investment company as 6.20 defined in section 851(g) of the Internal Revenue Code, making 6.21 the payment; and 6.22 (iii) for the purposes of items (i) and (ii), interest on 6.23 obligations of an Indian tribal government described in section 6.24 7871(c) of the Internal Revenue Code shall be treated as 6.25 interest income on obligations of the state in which the tribe 6.26 is located; 6.27 (2) the amount of income taxes paid or accrued within the 6.28 taxable year under this chapter and income taxes paid to any 6.29 other state or to any province or territory of Canada, to the 6.30 extent allowed as a deduction under section 63(d) of the 6.31 Internal Revenue Code, but the addition may not be more than the 6.32 amount by which the itemized deductions as allowed under section 6.33 63(d) of the Internal Revenue Code exceeds the amount of the 6.34 standard deduction as defined in section 63(c) of the Internal 6.35 Revenue Code. For the purpose of this paragraph, the 6.36 disallowance of itemized deductions under section 68 of the 7.1 Internal Revenue Code of 1986, income tax is the last itemized 7.2 deduction disallowed; 7.3 (3) the capital gain amount of a lump sum distribution to 7.4 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 7.5 Reform Act of 1986, Public Law 99-514, applies; 7.6 (4) the amount of income taxes paid or accrued within the 7.7 taxable year under this chapter and income taxes paid to any 7.8 other state or any province or territory of Canada, to the 7.9 extent allowed as a deduction in determining federal adjusted 7.10 gross income. For the purpose of this paragraph, income taxes 7.11 do not include the taxes imposed by sections 290.0922, 7.12 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 7.13 (5) the amount of expense, interest, or taxes disallowed 7.14 pursuant to section 290.10; 7.15 (6) the amount of a partner's pro rata share of net income 7.16 which does not flow through to the partner because the 7.17 partnership elected to pay the tax on the income under section 7.18 6242(a)(2) of the Internal Revenue Code;and7.19 (7) 80 percent of the depreciation deduction allowed under 7.20 section 168(k) of the Internal Revenue Code. For purposes of 7.21 this clause, if the taxpayer has an activity that in the taxable 7.22 year generates a deduction for depreciation under section 168(k) 7.23 and the activity generates a loss for the taxable year that the 7.24 taxpayer is not allowed to claim for the taxable year, "the 7.25 depreciation allowed under section 168(k)" for the taxable year 7.26 is limited to excess of the depreciation claimed by the activity 7.27 under section 168(k) over the amount of the loss from the 7.28 activity that is not allowed in the taxable year. In succeeding 7.29 taxable years when the losses not allowed in the taxable year 7.30 are allowed, the depreciation under section 168(k) is allowed; 7.31 and 7.32 (8) the amount of expenses disallowed under section 290.10, 7.33 subdivision 2. 7.34 [EFFECTIVE DATE.] This section is effective for taxable 7.35 years beginning after December 31, 2004. 7.36 Sec. 4. Minnesota Statutes 2004, section 290.01, 8.1 subdivision 19b, is amended to read: 8.2 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 8.3 individuals, estates, and trusts, there shall be subtracted from 8.4 federal taxable income: 8.5 (1) interest income on obligations of any authority, 8.6 commission, or instrumentality of the United States to the 8.7 extent includable in taxable income for federal income tax 8.8 purposes but exempt from state income tax under the laws of the 8.9 United States; 8.10 (2) if included in federal taxable income, the amount of 8.11 any overpayment of income tax to Minnesota or to any other 8.12 state, for any previous taxable year, whether the amount is 8.13 received as a refund or as a credit to another taxable year's 8.14 income tax liability; 8.15 (3) the amount paid to others, less the amount used to 8.16 claim the credit allowed under section 290.0674, not to exceed 8.17 $1,625 for each qualifying child in grades kindergarten to 6 and 8.18 $2,500 for each qualifying child in grades 7 to 12, for tuition, 8.19 textbooks, and transportation of each qualifying child in 8.20 attending an elementary or secondary school situated in 8.21 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 8.22 wherein a resident of this state may legally fulfill the state's 8.23 compulsory attendance laws, which is not operated for profit, 8.24 and which adheres to the provisions of the Civil Rights Act of 8.25 1964 and chapter 363A. For the purposes of this clause, 8.26 "tuition" includes fees or tuition as defined in section 8.27 290.0674, subdivision 1, clause (1). As used in this clause, 8.28 "textbooks" includes books and other instructional materials and 8.29 equipment purchased or leased for use in elementary and 8.30 secondary schools in teaching only those subjects legally and 8.31 commonly taught in public elementary and secondary schools in 8.32 this state. Equipment expenses qualifying for deduction 8.33 includes expenses as defined and limited in section 290.0674, 8.34 subdivision 1, clause (3). "Textbooks" does not include 8.35 instructional books and materials used in the teaching of 8.36 religious tenets, doctrines, or worship, the purpose of which is 9.1 to instill such tenets, doctrines, or worship, nor does it 9.2 include books or materials for, or transportation to, 9.3 extracurricular activities including sporting events, musical or 9.4 dramatic events, speech activities, driver's education, or 9.5 similar programs. For purposes of the subtraction provided by 9.6 this clause, "qualifying child" has the meaning given in section 9.7 32(c)(3) of the Internal Revenue Code; 9.8 (4) income as provided under section 290.0802; 9.9 (5) to the extent included in federal adjusted gross 9.10 income, income realized on disposition of property exempt from 9.11 tax under section 290.491; 9.12 (6) to the extent included in federal taxable income, 9.13 postservice benefits for youth community service under section 9.14 124D.42 for volunteer service under United States Code, title 9.15 42, sections 12601 to 12604; 9.16 (7) to the extent not deducted in determining federal 9.17 taxable income by an individual who does not itemize deductions 9.18 for federal income tax purposes for the taxable year, an amount 9.19 equal to 50 percent of the excess of charitable contributions 9.20 allowable as a deduction for the taxable year under section 9.21 170(a) of the Internal Revenue Code over $500; 9.22 (8) for taxable years beginning before January 1, 2008, the 9.23 amount of the federal small ethanol producer credit allowed 9.24 under section 40(a)(3) of the Internal Revenue Code which is 9.25 included in gross income under section 87 of the Internal 9.26 Revenue Code; 9.27 (9) for individuals who are allowed a federal foreign tax 9.28 credit for taxes that do not qualify for a credit under section 9.29 290.06, subdivision 22, an amount equal to the carryover of 9.30 subnational foreign taxes for the taxable year, but not to 9.31 exceed the total subnational foreign taxes reported in claiming 9.32 the foreign tax credit. For purposes of this clause, "federal 9.33 foreign tax credit" means the credit allowed under section 27 of 9.34 the Internal Revenue Code, and "carryover of subnational foreign 9.35 taxes" equals the carryover allowed under section 904(c) of the 9.36 Internal Revenue Code minus national level foreign taxes to the 10.1 extent they exceed the federal foreign tax credit; 10.2 (10) in each of the five tax years immediately following 10.3 the tax year in which an addition is required under subdivision 10.4 19a, clause (7), an amount equal to one-fifth of the delayed 10.5 depreciation. For purposes of this clause, "delayed 10.6 depreciation" means the amount of the addition made by the 10.7 taxpayer under subdivision 19a, clause (7), minus the positive 10.8 value of any net operating loss under section 172 of the 10.9 Internal Revenue Code generated for the tax year of the 10.10 addition. The resulting delayed depreciation cannot be less 10.11 than zero;and10.12 (11) job opportunity building zone income as provided under 10.13 section 469.316; 10.14 (12) to the extent included in federal taxable income, an 10.15 amount, not to exceed $10,000, equal to an individual's 10.16 unreimbursed expenses for travel, lodging, and lost wages net of 10.17 sick pay related to the individual's donation of one or more of 10.18 the individual's organs to another person for human organ 10.19 transplantation. For purposes of determining the extent to 10.20 which expenses are included in federal taxable income, expenses 10.21 qualifying under this paragraph are the first expenses 10.22 considered in determining the medical expense deduction allowed 10.23 under section 213 of the Internal Revenue Code. For purposes of 10.24 this clause, "organ" means all or part of an individual's liver, 10.25 pancreas, kidney, intestine, lung, or bone marrow, and "human 10.26 organ transplantation" means the medical procedure by which 10.27 transfer of a human organ is made from the body of one person to 10.28 the body of another person. An individual may claim the 10.29 subtraction in this clause for each instance of organ donation 10.30 for transplantation, during the taxable year in which the 10.31 expenses or lost wages occur; 10.32 (13) the amount of compensation paid to members of the 10.33 Minnesota National Guard or other reserve components of the 10.34 United States military for active service performed in 10.35 Minnesota, excluding compensation for services performed under 10.36 the Active Guard Reserve (AGR) program. For purposes of this 11.1 clause, "active service" means (i) state active service as 11.2 defined in section 190.05, subdivision 5a, clause (1); (ii) 11.3 federally funded state active service as defined in section 11.4 190.05, subdivision 5b; or (iii) federal active service as 11.5 defined in section 190.05, subdivision 5c, but "active service" 11.6 excludes services performed exclusively for purposes of basic 11.7 combat training, advanced individual training, annual training, 11.8 and periodic inactive duty training; special training 11.9 periodically made available to reserve members; and service 11.10 performed in accordance with section 190.08, subdivision 3; and 11.11 (14) the amount of compensation paid to members of the 11.12 armed forces of the United States or United Nations for active 11.13 duty performed outside Minnesota. 11.14 [EFFECTIVE DATE.] This section is effective for taxable 11.15 years beginning after December 31, 2004. 11.16 Sec. 5. Minnesota Statutes 2004, section 290.01, 11.17 subdivision 19c, is amended to read: 11.18 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 11.19 INCOME.] For corporations, there shall be added to federal 11.20 taxable income: 11.21 (1) the amount of any deduction taken for federal income 11.22 tax purposes for income, excise, or franchise taxes based on net 11.23 income or related minimum taxes, including but not limited to 11.24 the tax imposed under section 290.0922, paid by the corporation 11.25 to Minnesota, another state, a political subdivision of another 11.26 state, the District of Columbia, or any foreign country or 11.27 possession of the United States; 11.28 (2) interest not subject to federal tax upon obligations 11.29 of: the United States, its possessions, its agencies, or its 11.30 instrumentalities; the state of Minnesota or any other state, 11.31 any of its political or governmental subdivisions, any of its 11.32 municipalities, or any of its governmental agencies or 11.33 instrumentalities; the District of Columbia; or Indian tribal 11.34 governments; 11.35 (3) exempt-interest dividends received as defined in 11.36 section 852(b)(5) of the Internal Revenue Code; 12.1 (4) the amount of any net operating loss deduction taken 12.2 for federal income tax purposes under section 172 or 832(c)(10) 12.3 of the Internal Revenue Code or operations loss deduction under 12.4 section 810 of the Internal Revenue Code; 12.5 (5) the amount of any special deductions taken for federal 12.6 income tax purposes under sections 241 to 247 of the Internal 12.7 Revenue Code; 12.8 (6) losses from the business of mining, as defined in 12.9 section 290.05, subdivision 1, clause (a), that are not subject 12.10 to Minnesota income tax; 12.11 (7) the amount of any capital losses deducted for federal 12.12 income tax purposes under sections 1211 and 1212 of the Internal 12.13 Revenue Code; 12.14 (8) the exempt foreign trade income of a foreign sales 12.15 corporation under sections 921(a) and 291 of the Internal 12.16 Revenue Code; 12.17 (9) the amount of percentage depletion deducted under 12.18 sections 611 through 614 and 291 of the Internal Revenue Code; 12.19 (10) for certified pollution control facilities placed in 12.20 service in a taxable year beginning before December 31, 1986, 12.21 and for which amortization deductions were elected under section 12.22 169 of the Internal Revenue Code of 1954, as amended through 12.23 December 31, 1985, the amount of the amortization deduction 12.24 allowed in computing federal taxable income for those 12.25 facilities; 12.26 (11) the amount of any deemed dividend from a foreign 12.27 operating corporation determined pursuant to section 290.17, 12.28 subdivision 4, paragraph (g); 12.29 (12) the amount of any environmental tax paid under section 12.30 59(a) of the Internal Revenue Code; 12.31 (13) the amount of a partner's pro rata share of net income 12.32 which does not flow through to the partner because the 12.33 partnership elected to pay the tax on the income under section 12.34 6242(a)(2) of the Internal Revenue Code; 12.35 (14) the amount of net income excluded under section 114 of 12.36 the Internal Revenue Code; 13.1 (15) any increase in subpart F income, as defined in 13.2 section 952(a) of the Internal Revenue Code, for the taxable 13.3 year when subpart F income is calculated without regard to the 13.4 provisions of section 614 of Public Law 107-147;and13.5 (16) 80 percent of the depreciation deduction allowed under 13.6 section 168(k) of the Internal Revenue Code. For purposes of 13.7 this clause, if the taxpayer has an activity that in the taxable 13.8 year generates a deduction for depreciation under section 168(k) 13.9 and the activity generates a loss for the taxable year that the 13.10 taxpayer is not allowed to claim for the taxable year, "the 13.11 depreciation allowed under section 168(k)" for the taxable year 13.12 is limited to excess of the depreciation claimed by the activity 13.13 under section 168(k) over the amount of the loss from the 13.14 activity that is not allowed in the taxable year. In succeeding 13.15 taxable years when the losses not allowed in the taxable year 13.16 are allowed, the depreciation under section 168(k) is allowed; 13.17 and 13.18 (17) the amount of expenses disallowed under section 13.19 290.10, subdivision 2. 13.20 [EFFECTIVE DATE.] This section is effective for taxable 13.21 years beginning after December 31, 2004. 13.22 Sec. 6. Minnesota Statutes 2004, section 290.05, 13.23 subdivision 1, is amended to read: 13.24 Subdivision 1. [EXEMPT ENTITIES.] The following 13.25 corporations, individuals, estates, trusts, and organizations 13.26 shall be exempted from taxation under this chapter, provided 13.27 that every such person or corporation claiming exemption under 13.28 this chapter, in whole or in part, must establish to the 13.29 satisfaction of the commissioner the taxable status of any 13.30 income or activity: 13.31 (a) corporations, individuals, estates, and trusts engaged 13.32 in the business of mining or producing iron ore and other ores 13.33 the mining or production of which is subject to the occupation 13.34 tax imposed by section 298.01; but if any such corporation, 13.35 individual, estate, or trust engages in any other business or 13.36 activity or has income from any property not used in such 14.1 business it shall be subject to this tax computed on the net 14.2 income from such property or such other business or activity. 14.3 Royalty shall not be considered as income from the business of 14.4 mining or producing iron ore within the meaning of this section; 14.5 (b) the United States of America, the state of Minnesota or 14.6 any political subdivision of either agencies or 14.7 instrumentalities, whether engaged in the discharge of 14.8 governmental or proprietary functions;and14.9 (c) any insurance company; and 14.10 (d) a corporation engaged in the business of operating a 14.11 personal rapid transit system, as defined in section 297A.61, 14.12 subdivision 37, in this state, independent of any government 14.13 subsidies, but if the corporation engages in any other business 14.14 or activity or has income from any property not used in the 14.15 business of operating a personal rapid transit system, it is 14.16 subject to this tax computed on the net income from the property 14.17 or business or activity. 14.18 [EFFECTIVE DATE.] This section is effective for taxable 14.19 years beginning after December 31, 2008. 14.20 Sec. 7. Minnesota Statutes 2004, section 290.06, 14.21 subdivision 2c, is amended to read: 14.22 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 14.23 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 14.24 married individuals filing joint returns and surviving spouses 14.25 as defined in section 2(a) of the Internal Revenue Code must be 14.26 computed by applying to their taxable net income the following 14.27 schedule of rates: 14.28 (1) On the first $25,680, 5.35 percent; 14.29 (2) On all over $25,680, but not over $102,030, 7.05 14.30 percent; 14.31 (3) On all over $102,030,7.858.0 percent. 14.32 Married individuals filing separate returns, estates, and 14.33 trusts must compute their income tax by applying the above rates 14.34 to their taxable income, except that the income brackets will be 14.35 one-half of the above amounts. 14.36 (b) The income taxes imposed by this chapter upon unmarried 15.1 individuals must be computed by applying to taxable net income 15.2 the following schedule of rates: 15.3 (1) On the first $17,570, 5.35 percent; 15.4 (2) On all over $17,570, but not over $57,710, 7.05 15.5 percent; 15.6 (3) On all over $57,710,7.858.0 percent. 15.7 (c) The income taxes imposed by this chapter upon unmarried 15.8 individuals qualifying as a head of household as defined in 15.9 section 2(b) of the Internal Revenue Code must be computed by 15.10 applying to taxable net income the following schedule of rates: 15.11 (1) On the first $21,630, 5.35 percent; 15.12 (2) On all over $21,630, but not over $86,910, 7.05 15.13 percent; 15.14 (3) On all over $86,910,7.858.0 percent. 15.15 (d) In lieu of a tax computed according to the rates set 15.16 forth in this subdivision, the tax of any individual taxpayer 15.17 whose taxable net income for the taxable year is less than an 15.18 amount determined by the commissioner must be computed in 15.19 accordance with tables prepared and issued by the commissioner 15.20 of revenue based on income brackets of not more than $100. The 15.21 amount of tax for each bracket shall be computed at the rates 15.22 set forth in this subdivision, provided that the commissioner 15.23 may disregard a fractional part of a dollar unless it amounts to 15.24 50 cents or more, in which case it may be increased to $1. 15.25 (e) An individual who is not a Minnesota resident for the 15.26 entire year must compute the individual's Minnesota income tax 15.27 as provided in this subdivision. After the application of the 15.28 nonrefundable credits provided in this chapter, the tax 15.29 liability must then be multiplied by a fraction in which: 15.30 (1) the numerator is the individual's Minnesota source 15.31 federal adjusted gross income as defined in section 62 of the 15.32 Internal Revenue Code and increased by the additions required 15.33 under section 290.01, subdivision 19a, clauses (1), (5), and 15.34 (6), and reduced by the subtraction under section 290.01, 15.35 subdivision 19b, clause (11), and the Minnesota assignable 15.36 portion of the subtraction for United States government interest 16.1 under section 290.01, subdivision 19b, clause (1), after 16.2 applying the allocation and assignability provisions of section 16.3 290.081, clause (a), or 290.17; and 16.4 (2) the denominator is the individual's federal adjusted 16.5 gross income as defined in section 62 of the Internal Revenue 16.6 Code of 1986, increased by the amounts specified in section 16.7 290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 16.8 by the amounts specified in section 290.01, subdivision 19b, 16.9 clauses (1) and (11). 16.10 [EFFECTIVE DATE.] This section is effective only if 16.11 sections 13 and 14 of this article are enacted for taxable years 16.12 beginning after December 31, 2004. 16.13 Sec. 8. Minnesota Statutes 2004, section 290.06, 16.14 subdivision 28, is amended to read: 16.15 Subd. 28. [CREDITREFUNDS FOR TRANSIT PASSES.]A taxpayer16.16 (a) An employer maytake a credit against the tax due under this16.17chapterclaim a refund equal to 30 percent of the expense 16.18 incurred by thetaxpayeremployer to provide transit passes, for 16.19 use in Minnesota, to employees of the taxpayer. 16.20 (b) As used in this subdivision, the following terms have 16.21 the meanings given: 16.22 (1) "employer" means an individual or entity subject to tax 16.23 under this chapter or an entity that is exempt from taxation 16.24 under section 290.05, but excluding entities enumerated in 16.25 section 290.05, subdivision 1, paragraph (b); and 16.26 (2) "transit pass" has the meaning given in section 16.27 132(f)(5)(A) of the Internal Revenue Code. 16.28 (c) If thetaxpayeremployer purchases the transit passes 16.29 from the transit system operator, and resells them to the 16.30 employees, thecreditrefund is based on the amount of the 16.31 difference between the price paid for the passes by the employer 16.32 and the amount charged to employees. 16.33 (d) The commissioner shall prescribe the forms for and the 16.34 manner in which the refund may be claimed. The commissioner 16.35 must provide for paying refunds at least quarterly. The 16.36 commissioner may set a minimum amount of qualifying expenses 17.1 that must be incurred before a refund may be claimed. 17.2 (e) An amount sufficient to pay the refunds required by 17.3 this subdivision is appropriated to the commissioner of revenue. 17.4 [EFFECTIVE DATE.] This section is effective for transit 17.5 passes purchased after December 31, 2005. 17.6 Sec. 9. Minnesota Statutes 2004, section 290.06, is 17.7 amended by adding a subdivision to read: 17.8 Subd. 32. [CARSHARING CREDIT.] (a) For purposes of this 17.9 subdivision, a "carsharing organization" means an organization 17.10 that: 17.11 (1) is described in section 501(c) of the Internal Revenue 17.12 Code; 17.13 (2) is comprised of members who purchase the use of a motor 17.14 vehicle from the organization; 17.15 (3) owns or leases a fleet of motor vehicles that are 17.16 available to members of the organization to pay for the use of a 17.17 vehicle on an hourly or per trip basis; and 17.18 (4) does not assign exclusive rights of use of specific 17.19 vehicles to individual members or allow individual members to 17.20 keep a vehicle in the member's sole possession. 17.21 (b) A taxpayer may take a credit against the tax due under 17.22 this chapter for the expenses incurred by the taxpayer to 17.23 purchase a membership and pay monthly dues to a carsharing 17.24 organization or to provide memberships and pay monthly dues to a 17.25 carsharing organization for employees of the taxpayer. The 17.26 amount of the credit is equal to the lesser of the actual cost 17.27 of the membership fee and the monthly dues, or $390. If an 17.28 employer purchases the membership or pays the monthly dues to 17.29 the nonprofit carsharing organization and resells the membership 17.30 to its employees or charges the monthly dues to its employees, 17.31 the credit allowed to the employer is the amount of the 17.32 difference between the amount paid by the employer and the 17.33 amount charged to the employee. 17.34 (c) A taxpayer who owns a parking facility that charges 17.35 customers an amount to park vehicles at the facility and 17.36 provides dedicated parking space at no charge to a nonprofit 18.1 carsharing organization to park the motor vehicles that are used 18.2 by the members of the organization on an hourly or per-trip 18.3 basis, may take a credit against the tax due under this chapter 18.4 for the value of the dedicated parking space provided to the 18.5 nonprofit carsharing organization. The value of the dedicated 18.6 parking space is equal to the lowest amount charged to customers 18.7 who pay to park at the facility calculated on an hourly, daily, 18.8 or other long-term rate that results in the lowest total cost. 18.9 [EFFECTIVE DATE.] This section is effective for taxable 18.10 years beginning after December 31, 2005. 18.11 Sec. 10. Minnesota Statutes 2004, section 290.06, is 18.12 amended by adding a subdivision to read: 18.13 Subd. 33. [REGIONAL INVESTMENT CREDIT.] (a) A credit is 18.14 allowed against the tax imposed by this chapter for investment 18.15 in a qualifying regional angel investment network fund. The 18.16 credit equals 25 percent of the taxpayer's investment made in 18.17 the fund for the taxable year, but not to exceed the lesser of: 18.18 (1) the liability for tax under this chapter; or 18.19 (2) the amount of the certificate under paragraph (c) 18.20 provided to the taxpayer by the fund. 18.21 (b) For purposes of this subdivision, a regional angel 18.22 investment network fund means a pool investment fund that: 18.23 (1) is organized as a limited liability company and 18.24 consists of members who are accredited investors within the 18.25 meaning of Regulation D of the Securities and Exchange 18.26 Commission, Code of Federal Regulations, title 17, section 18.27 230.501(a); and 18.28 (2) primarily makes equity investments in emerging and 18.29 expanding small businesses as defined by the Small Business 18.30 Administration, or cooperative associations as defined in 18.31 chapter 308B, that are located in local communities in Minnesota 18.32 outside of the metropolitan area as defined in section 473.121, 18.33 subdivision 2, and does not make investments in residential real 18.34 estate. 18.35 (c) Regional angel investment network funds may apply to 18.36 the commissioner of employment and economic development for 19.1 certification as a qualifying regional angel investment network 19.2 fund. The application must be in the form and made under 19.3 procedures specified by the commissioner of employment and 19.4 economic development. The commissioner of employment and 19.5 economic development may certify up to ten qualifying funds and 19.6 provide certificates entitling investors in the funds to credits 19.7 under this subdivision of up to $250,000 for each fund. The 19.8 commissioner of employment and economic development must not 19.9 issue a total amount of certificates for all funds of more than 19.10 $10,000,000. In awarding certificates under this paragraph, the 19.11 commissioner of employment and economic development shall 19.12 generally award them to qualified applicants in the order in 19.13 which the applications are received, but shall also seek to 19.14 certify funds that are broadly dispersed across the entire state 19.15 outside of the metropolitan area, as defined in section 473.121, 19.16 subdivision 2. 19.17 (d) The commissioner of revenue may require a taxpayer to 19.18 provide a copy of the credit certificate under paragraph (c) to 19.19 verify the taxpayer's entitlement to a credit under this 19.20 subdivision. 19.21 (e) If the amount of the credit under this subdivision for 19.22 any taxable year exceeds the limitation under paragraph (a), 19.23 clause (1), the excess is a credit carryover to each of the 15 19.24 succeeding taxable years. The entire amount of the excess 19.25 unused credit for the taxable year must be carried first to the 19.26 earliest of the taxable years to which the credit may be carried 19.27 and then to each successive year to which the credit may be 19.28 carried. The amount of the unused credit which may be added 19.29 under this paragraph may not exceed the taxpayer's liability for 19.30 tax for the taxable year. 19.31 [EFFECTIVE DATE.] This section is effective the day 19.32 following final enactment, for taxable years beginning after 19.33 December 31, 2005. It applies to investments made after the 19.34 fund has been certified by the commissioner of employment and 19.35 economic development. 19.36 Sec. 11. Minnesota Statutes 2004, section 290.0674, 20.1 subdivision 2, is amended to read: 20.2 Subd. 2. [LIMITATIONS.] (a) For claimants with income not 20.3 greater than $33,500, the maximum credit allowed is $1,000per20.4 multiplied by the number of claimant's qualifyingchild and20.5$2,000 per familychildren in grades kindergarten through grade 20.6 12. No credit is allowed for education-related expenses for 20.7 claimants with income greater than $37,500. The maximum credit 20.8 perchildclaimant is reduced by $1 for each $4 of household 20.9 income over $33,500,and the maximum credit per family is20.10reduced by $2 for each $4 of household income over $33,500,but 20.11 in no case is the credit less than zero. 20.12 For purposes of this section "income" has the meaning given 20.13 in section 290.067, subdivision 2a. In the case of a married 20.14 claimant, a credit is not allowed unless a joint income tax 20.15 return is filed. 20.16 (b) For a nonresident or part-year resident, the credit 20.17 determined under subdivision 1 and the maximum credit amount in 20.18 paragraph (a) must be allocated using the percentage calculated 20.19 in section 290.06, subdivision 2c, paragraph (e). 20.20 [EFFECTIVE DATE.] This section is effective for tax years 20.21 beginning after December 31, 2005. 20.22 Sec. 12. [290.0676] [CREDIT FOR HISTORIC STRUCTURE 20.23 REHABILITATION.] 20.24 Subdivision 1. [DEFINITIONS.] (a) As used in this section, 20.25 the terms defined in this subdivision have the meanings given. 20.26 (b) "Certified historic structure" means a property located 20.27 in Minnesota and listed individually on the National Register of 20.28 Historic Places or a historic property designated by either a 20.29 certified local government or a heritage preservation commission 20.30 created under the National Historic Preservation Act of 1966 and 20.31 whose designation is approved by the state historic preservation 20.32 officer. 20.33 (c) "Eligible property" means a certified historic 20.34 structure or a structure in a certified historic district that 20.35 is offered or used for residential or business purposes. 20.36 (d) "Structure in a certified historic district" means a 21.1 structure located in Minnesota that is certified by the State 21.2 Historic Preservation Office as contributing to the historic 21.3 significance of a certified historic district listed on the 21.4 National Register of Historic Places or a local district that 21.5 has been certified by the United States Department of the 21.6 Interior. 21.7 Subd. 2. [CREDIT ALLOWED.] A taxpayer who incurs costs for 21.8 the rehabilitation of eligible property may take a credit 21.9 against the tax imposed under this chapter in an amount equal to 21.10 ten percent of the total costs of rehabilitation. Costs of 21.11 rehabilitation include, but are not limited to, qualified 21.12 rehabilitation expenditures as defined under section 47(c)(2)(A) 21.13 of the Internal Revenue Code, provided that the costs of 21.14 rehabilitation must exceed 50 percent of the total basis in the 21.15 property at the time the rehabilitation activity begins and the 21.16 rehabilitation must meet standards consistent with the standards 21.17 of the Secretary of the Interior for rehabilitation as 21.18 determined by the State Historic Preservation Office of the 21.19 Minnesota Historical Society. 21.20 Subd. 3. [CARRYBACK AND CARRYFORWARD.] If the amount of 21.21 the credit under subdivision 2 exceeds the tax liability under 21.22 this chapter for the year in which the cost is incurred, the 21.23 amount that exceeds the tax liability may be carried back to any 21.24 of the three preceding taxable years or carried forward to each 21.25 of the ten taxable years succeeding the taxable year in which 21.26 the expense was incurred. The entire amount of the credit must 21.27 be carried to the earliest taxable year to which the amount may 21.28 be carried. The unused portion of the credit must be carried to 21.29 the following taxable year. 21.30 Subd. 4. [PARTNERSHIPS; MULTIPLE OWNERS; TRANSFERS.] (a) 21.31 Credits granted to a partnership, a limited liability company 21.32 taxed as a partnership, or multiple owners of property shall be 21.33 passed through to the partners, members, or owners, 21.34 respectively, pro rata or pursuant to an executed agreement 21.35 among the partners, members, or owners documenting an alternate 21.36 distribution method. 22.1 (b) Taxpayers eligible for credits may transfer, sell, or 22.2 assign the credits in whole or part. Any assignee may use 22.3 acquired credits to offset up to 100 percent of the taxes 22.4 otherwise imposed by this chapter. The assignee shall perfect 22.5 such transfer by notifying the Department of Revenue in writing 22.6 within 30 calendar days following the effective date of the 22.7 transfer in such form and manner as shall be prescribed by the 22.8 Department of Revenue. The proceeds of any sale or assignment 22.9 of a credit shall be exempt from taxation under this chapter. 22.10 Subd. 5. [PROCESS.] To claim the credit, the taxpayer must 22.11 apply to the State Historic Preservation Office of the Minnesota 22.12 Historical Society before a historic rehabilitation project 22.13 begins. The State Historic Preservation Office shall determine 22.14 the amount of eligible rehabilitation costs and whether the 22.15 rehabilitation meets the standards of the United States 22.16 Department of the Interior. The State Historic Preservation 22.17 Office shall issue certificates verifying eligibility for and 22.18 the amount of credit. The taxpayer shall attach the certificate 22.19 to any income tax return on which the credit is claimed. The 22.20 State Historic Preservation Office of the Minnesota Historical 22.21 Society may collect fees for applications for the historic 22.22 preservation tax credit. Fees shall be set at an amount that 22.23 does not exceed the costs of administering the tax credit 22.24 program. 22.25 Subd. 6. [MORTGAGE CERTIFICATES; CREDIT FOR LENDING 22.26 INSTITUTIONS.] (a) The taxpayer may elect, in lieu of the credit 22.27 otherwise allowed under this section, to receive a historic 22.28 rehabilitation mortgage credit certificate. 22.29 (b) For purposes of this subdivision, a historic 22.30 rehabilitation mortgage credit is a certificate that is issued 22.31 to the taxpayer according to procedures prescribed by the State 22.32 Historic Preservation Office with respect to the certified 22.33 rehabilitation and which meets the requirements of this 22.34 paragraph. The face amount of the certificate must be equal to 22.35 the credit that would be allowable under subdivision 2 to the 22.36 taxpayer with respect to the rehabilitation. The certificate 23.1 may only be transferred by the taxpayer to a lending 23.2 institution, including a nondepository home mortgage lending 23.3 institution, in connection with a loan: 23.4 (1) that is secured by the building with respect to which 23.5 the credit is issued; and 23.6 (2) the proceeds of which may not be used for any purpose 23.7 other than the acquisition or rehabilitation of the building. 23.8 (c) In exchange for the certificate, the lending 23.9 institution must provide to the taxpayer an amount equal to the 23.10 face amount of the certificate discounted by the amount by which 23.11 the federal income tax liability of the lending institution is 23.12 increased due to its use of the certificate in the manner 23.13 provided in this section. That amount must be applied, as 23.14 directed by the taxpayer, in whole or in part, to reduce: 23.15 (1) the principal amount of the loan; 23.16 (2) the rate of interest on the loan; or 23.17 (3) the taxpayer's cost of purchasing the building, but 23.18 only in the case of a qualified historic home that is located in 23.19 a poverty-impacted area as designated by the State Historic 23.20 Preservation Office. 23.21 The lending institution may take as a credit against the 23.22 tax due under this chapter an amount equal to the amount 23.23 specified in the certificate. If the amount of the discount 23.24 retained by the lender exceeds the amount by which the lending 23.25 institution's federal income tax liability is increased due to 23.26 the use of a mortgage credit certificate, the excess shall be 23.27 refunded to the borrower with interest at the rate prescribed by 23.28 the State Historic Preservation Office. The lending institution 23.29 may carry forward all unused credits under this subdivision 23.30 until exhausted. Nothing in this subdivision requires a lending 23.31 institution to accept a historic rehabilitation certificate from 23.32 any person. 23.33 [EFFECTIVE DATE.] This section is effective for taxable 23.34 years beginning after December 31, 2004. 23.35 Sec. 13. Minnesota Statutes 2004, section 290.091, 23.36 subdivision 2, is amended to read: 24.1 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 24.2 this section, the following terms have the meanings given: 24.3 (a) "Alternative minimum taxable income" means the sum of 24.4 the following for the taxable year: 24.5 (1) the taxpayer's federal alternative minimum taxable 24.6 income as defined in section 55(b)(2) of the Internal Revenue 24.7 Code; 24.8 (2) the taxpayer's itemized deductions allowed in computing 24.9 federal alternative minimum taxable income, but excluding: 24.10 (i) the charitable contribution deduction under section 170 24.11 of the Internal Revenue Codeto the extent that the deduction24.12exceeds 1.0 percent of adjusted gross income, as defined in24.13section 62 of the Internal Revenue Code; 24.14 (ii) the medical expense deduction; 24.15 (iii) the casualty, theft, and disaster loss deduction;and24.16 (iv) the impairment-related work expenses of a disabled 24.17 person; and 24.18 (v) the amount of the exemption allowed the taxpayer under 24.19 section 151(c) of the Internal Revenue Code; 24.20 (3) for depletion allowances computed under section 613A(c) 24.21 of the Internal Revenue Code, with respect to each property (as 24.22 defined in section 614 of the Internal Revenue Code), to the 24.23 extent not included in federal alternative minimum taxable 24.24 income, the excess of the deduction for depletion allowable 24.25 under section 611 of the Internal Revenue Code for the taxable 24.26 year over the adjusted basis of the property at the end of the 24.27 taxable year (determined without regard to the depletion 24.28 deduction for the taxable year); 24.29 (4) to the extent not included in federal alternative 24.30 minimum taxable income, the amount of the tax preference for 24.31 intangible drilling cost under section 57(a)(2) of the Internal 24.32 Revenue Code determined without regard to subparagraph (E); 24.33 (5) to the extent not included in federal alternative 24.34 minimum taxable income, the amount of interest income as 24.35 provided by section 290.01, subdivision 19a, clause (1); and 24.36 (6) the amount of addition required by section 290.01, 25.1 subdivision 19a, clause (7); 25.2 less the sum of the amounts determined under the following: 25.3 (1) interest income as defined in section 290.01, 25.4 subdivision 19b, clause (1); 25.5 (2) an overpayment of state income tax as provided by 25.6 section 290.01, subdivision 19b, clause (2), to the extent 25.7 included in federal alternative minimum taxable income; 25.8 (3) the amount of investment interest paid or accrued 25.9 within the taxable year on indebtedness to the extent that the 25.10 amount does not exceed net investment income, as defined in 25.11 section 163(d)(4) of the Internal Revenue Code. Interest does 25.12 not include amounts deducted in computing federal adjusted gross 25.13 income; and 25.14 (4) amounts subtracted from federal taxable income as 25.15 provided by section 290.01, subdivision 19b, clauses (10)and25.16(11)to (12). 25.17 In the case of an estate or trust, alternative minimum 25.18 taxable income must be computed as provided in section 59(c) of 25.19 the Internal Revenue Code. 25.20 (b) "Investment interest" means investment interest as 25.21 defined in section 163(d)(3) of the Internal Revenue Code. 25.22 (c) "Tentative minimum tax" equals 6.4 percent of 25.23 alternative minimum taxable income after subtracting the 25.24 exemption amount determined under subdivision 3. 25.25 (d) "Regular tax" means the tax that would be imposed under 25.26 this chapter (without regard to this section and section 25.27 290.032), reduced by the sum of the nonrefundable credits 25.28 allowed under this chapter. 25.29 (e) "Net minimum tax" means the minimum tax imposed by this 25.30 section. 25.31 [EFFECTIVE DATE.] This section is effective only if section 25.32 7 of this article is enacted for taxable years beginning after 25.33 December 31, 2004. 25.34 Sec. 14. Minnesota Statutes 2004, section 290.091, 25.35 subdivision 3, is amended to read: 25.36 Subd. 3. [EXEMPTION AMOUNT.] (a) For purposes of computing 26.1 the alternative minimum tax, the exemption amount isthe26.2exemption determined under section 55(d) of the Internal Revenue26.3Code, as amended through December 31, 1992, except that26.4alternative minimum taxable income as determined under this26.5section must be substituted in the computation of the phase out26.6under section 55(d)(3)$66,300 for married individuals filing 26.7 joint returns; and $33,150 for married individuals filing 26.8 separate returns, single individuals, and head of household 26.9 filers. 26.10 (b) The exemption amount determined under this subdivision 26.11 is reduced by an amount equal to 25 percent of the amount by 26.12 which the alternative minimum income exceeds $248,600 for 26.13 married individuals filing joint returns; and $124,300 for 26.14 married individuals filing separate returns, single individuals, 26.15 and head of household filers. 26.16 (c) For taxable years beginning after December 31, 2006, 26.17 the exemption amounts under paragraph (a), and the income 26.18 amounts in paragraph (b), must be adjusted for inflation. The 26.19 commissioner shall make the inflation adjustments in accordance 26.20 with section 1(f) of the Internal Revenue Code except that for 26.21 the purposes of this subdivision the percentage increase must be 26.22 determined from the year starting September 1, 2005, and ending 26.23 August 31, 2006, as the base year for adjusting for inflation 26.24 for the tax year beginning after December 31, 2006. The 26.25 determination of the commissioner under this subdivision is not 26.26 a rule under the Administrative Procedure Act. 26.27 [EFFECTIVE DATE.] This section is effective only if section 26.28 7 of this article is enacted for taxable years beginning after 26.29 December 31, 2004. 26.30 Sec. 15. Minnesota Statutes 2004, section 290.10, is 26.31 amended to read: 26.32 290.10 [NONDEDUCTIBLE ITEMS.] 26.33 Subdivision 1. [EXPENSES, INTEREST, AND TAXES.] Except as 26.34 provided in section 290.17, subdivision 4, paragraph (i), in 26.35 computing the net income of a taxpayer no deduction shall in any 26.36 case be allowed for expenses, interest and taxes connected with 27.1 or allocable against the production or receipt of all income not 27.2 included in the measure of the tax imposed by this chapter, 27.3 except that for corporations engaged in the business of mining 27.4 or producing iron ore, the mining of which is subject to the 27.5 occupation tax imposed by section 298.01, subdivision 4, this 27.6 shall not prevent the deduction of expenses and other items to 27.7 the extent that the expenses and other items are allowable under 27.8 this chapter and are not deductible, capitalizable, retainable 27.9 in basis, or taken into account by allowance or otherwise in 27.10 computing the occupation tax and do not exceed the amounts taken 27.11 for federal income tax purposes for that year. Occupation taxes 27.12 imposed under chapter 298, royalty taxes imposed under chapter 27.13 299, or depletion expenses may not be deducted under this clause. 27.14 Subd. 2. [FINES, PENALTIES, DAMAGES, AND EXPENSES.] (a) No 27.15 deduction from taxable income for a trade or business expense 27.16 under section 162(a) of the Internal Revenue Code shall be 27.17 allowed for any fine, penalty, damages, or expenses paid to: 27.18 (1) the government of the United States, a state, a 27.19 territory or possession of the United States, the District of 27.20 Columbia, or the Commonwealth of Puerto Rico; 27.21 (2) the government of a foreign country; or 27.22 (3) a political subdivision of, or corporation or other 27.23 entity serving as an agency or instrumentality of, any 27.24 government described in clause (1) or (2). 27.25 (b) For purposes of this subdivision, "fine, penalty, 27.26 damages, or expenses" include, but are not limited to, any 27.27 amount: 27.28 (1) paid pursuant to a conviction or a plea of guilty or 27.29 nolo contendere for any crime in a criminal proceeding; 27.30 (2) paid as a civil penalty imposed by federal, state, or 27.31 local law, including tax penalties and interest; 27.32 (3) paid in settlement of the taxpayer's actual or 27.33 potential liability for a civil or criminal fine or penalty; 27.34 (4) forfeited as collateral posted in connection with a 27.35 proceeding that could result in imposition of a fine or penalty; 27.36 or 28.1 (5) legal fees and related expenses paid or incurred in the 28.2 prosecution or civil action arising from a violation of the law 28.3 imposing the fine or civil penalty, court costs assessed against 28.4 the taxpayer, or stenographic and printing charges, compensatory 28.5 damages, punitive damages, or restitution. 28.6 [EFFECTIVE DATE.] This section is effective for taxable 28.7 years beginning after December 31, 2004. 28.8 Sec. 16. [290.433] [GLOBAL WAR ON TERRORISM CHECKOFF.] 28.9 Every individual who files an income tax return or property 28.10 tax refund claim, and every corporation that files an income tax 28.11 return, may designate on their return that $1 or more shall be 28.12 added to the tax or deducted from the refund that would 28.13 otherwise be payable by or to that individual or corporation and 28.14 paid into an account to be established for the purpose of paying 28.15 bonuses to residents of this state who are veterans of the 28.16 global war on terrorism. The commissioner shall, on the income 28.17 tax returns and the property tax refund claim form, notify 28.18 filers of their right to designate that a portion of their tax 28.19 or refund shall be paid into the account for veterans of the 28.20 global war on terrorism. The amounts designated under this 28.21 section shall be annually appropriated to the commissioner of 28.22 the Department of Veterans Affairs to pay bonuses to veterans of 28.23 the global war on terrorism as determined by law. All interest 28.24 earned on money accrued shall be credited to the account by the 28.25 commissioner of finance. 28.26 [EFFECTIVE DATE.] This section is effective for taxable 28.27 years beginning after December 31, 2004, and for property tax 28.28 refund claims for property taxes payable after December 31, 2004. 28.29 Sec. 17. Minnesota Statutes 2004, section 290.92, 28.30 subdivision 4b, is amended to read: 28.31 Subd. 4b. [WITHHOLDING BY PARTNERSHIPS.] (a) A partnership 28.32 shall deduct and withhold a tax as provided in paragraph (b) for 28.33 nonresident individual partners based on their distributive 28.34 shares of partnership income for a taxable year of the 28.35 partnership. 28.36 (b) The amount of tax withheld is determined by multiplying 29.1 the partner's distributive share allocable to Minnesota under 29.2 section 290.17, paid or credited during the taxable year by the 29.3 highest rate used to determine the income tax liability for an 29.4 individual under section 290.06, subdivision 2c, except that the 29.5 amount of tax withheld may be determined by the commissioner if 29.6 the partner submits a withholding exemption certificate under 29.7 subdivision 5. 29.8 (c) The commissioner may reduce or abate the tax withheld 29.9 under this subdivision if the partnership had reasonable cause 29.10 to believe that no tax was due under this section. 29.11 (d) Notwithstanding paragraph (a), a partnership is not 29.12 required to deduct and withhold tax for a nonresident partner if: 29.13 (1) the partner elects to have the tax due paid as part of 29.14 the partnership's composite return under section 289A.08, 29.15 subdivision 7; 29.16 (2) the partner has Minnesota assignable federal adjusted 29.17 gross income from the partnership of less than $1,000; or 29.18 (3) the partnership is liquidated or terminated, the income 29.19 was generated by a transaction related to the termination or 29.20 liquidation, and no cash or other property was distributed in 29.21 the current or prior taxable year;or29.22 (4) the distributive shares of partnership income are 29.23 attributable to: 29.24 (i) income required to be recognized because of discharge 29.25 of indebtedness; 29.26 (ii) income recognized because of a sale, exchange, or 29.27 other disposition of real estate, depreciable property, or 29.28 property described in section 179 of the Internal Revenue Code; 29.29 or 29.30 (iii) income recognized on the sale, exchange, or other 29.31 disposition of any property that has been the subject of a basis 29.32 reduction pursuant to section 108, 734, 743, 754, or 1017 of the 29.33 Internal Revenue Code 29.34 to the extent that the income does not include cash received or 29.35 receivable or, if there is cash received or receivable, to the 29.36 extent that the cash is required to be used to pay indebtedness 30.1 by the partnership or a secured debt on partnership property; or 30.2 (5) the partnership is a publicly traded partnership, as 30.3 defined in section 7704(b) of the Internal Revenue Code. 30.4 (e) For purposes of subdivision 6a, and sections 289A.09, 30.5 subdivision 2, 289A.20, subdivision 2, paragraph (c), 289A.50, 30.6 289A.56, 289A.60, and 289A.63, a partnership is considered an 30.7 employer. 30.8 (f) To the extent that income is exempt from withholding 30.9 under paragraph (d), clause (4), the commissioner has a lien in 30.10 an amount up to the amount that would be required to be withheld 30.11 with respect to the income of the partner attributable to the 30.12 partnership interest, but for the application of paragraph (d), 30.13 clause (4). The lien arises under section 270.69 from the date 30.14 of assessment of the tax against the partner, and attaches to 30.15 that partner's share of the profits and any other money due or 30.16 to become due to that partner in respect of the partnership. 30.17 Notice of the lien may be sent by mail to the partnership, 30.18 without the necessity for recording the lien. The notice has 30.19 the force and effect of a levy under section 270.70, and is 30.20 enforceable against the partnership in the manner provided by 30.21 that section. Upon payment in full of the liability subsequent 30.22 to the notice of lien, the partnership must be notified that the 30.23 lien has been satisfied. 30.24 [EFFECTIVE DATE.] This section is effective for taxable 30.25 years beginning after December 31, 2004. 30.26 Sec. 18. [DETERMINATION OF ECONOMIC IMPACT.] 30.27 The Minnesota Historical Society shall annually determine 30.28 the economic impact to the state from the rehabilitation of 30.29 eligible property for which credits are provided under section 30.30 12 and report on the impact to the committees on taxes of the 30.31 senate and house of representatives. 30.32 Sec. 19. [STUDY; CORPORATE FRANCHISE TAX.] 30.33 The commissioners of the Departments of Finance and Revenue 30.34 shall conduct a comprehensive study to identify the reasons for 30.35 the decline in corporate tax receipts. The study shall include 30.36 an analysis of the current and future effect of existing 31.1 corporate tax provisions, both independently and interactively 31.2 with other provisions; how tax provisions are changing business 31.3 practices; and the impact of outsourcing or relocation of 31.4 business operations and jobs. On or before February 1, 2006, 31.5 the commissioners shall report to the chairpersons of the house 31.6 and senate tax committees the results of the study and shall 31.7 include recommendations for changes to the tax laws that would 31.8 reduce tax incentives for businesses to outsource or relocate 31.9 business operations or jobs. 31.10 ARTICLE 2 31.11 FEDERAL UPDATE 31.12 Section 1. Minnesota Statutes 2004, section 289A.02, 31.13 subdivision 7, is amended to read: 31.14 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 31.15 defined otherwise, "Internal Revenue Code" means the Internal 31.16 Revenue Code of 1986, as amended throughJune 15, 2003December 31.17 31, 2004. 31.18 [EFFECTIVE DATE.] This section is effective the day 31.19 following final enactment. 31.20 Sec. 2. Minnesota Statutes 2004, section 290.01, 31.21 subdivision 19, is amended to read: 31.22 Subd. 19. [NET INCOME.] The term "net income" means the 31.23 federal taxable income, as defined in section 63 of the Internal 31.24 Revenue Code of 1986, as amended through the date named in this 31.25 subdivision, incorporating the federal effective dates of 31.26 changes to the Internal Revenue Code and any elections made by 31.27 the taxpayer in accordance with the Internal Revenue Code in 31.28 determining federal taxable income for federal income tax 31.29 purposes, and with the modifications provided in subdivisions 31.30 19a to 19f. 31.31 In the case of a regulated investment company or a fund 31.32 thereof, as defined in section 851(a) or 851(g) of the Internal 31.33 Revenue Code, federal taxable income means investment company 31.34 taxable income as defined in section 852(b)(2) of the Internal 31.35 Revenue Code, except that: 31.36 (1) the exclusion of net capital gain provided in section 32.1 852(b)(2)(A) of the Internal Revenue Code does not apply; 32.2 (2) the deduction for dividends paid under section 32.3 852(b)(2)(D) of the Internal Revenue Code must be applied by 32.4 allowing a deduction for capital gain dividends and 32.5 exempt-interest dividends as defined in sections 852(b)(3)(C) 32.6 and 852(b)(5) of the Internal Revenue Code; and 32.7 (3) the deduction for dividends paid must also be applied 32.8 in the amount of any undistributed capital gains which the 32.9 regulated investment company elects to have treated as provided 32.10 in section 852(b)(3)(D) of the Internal Revenue Code. 32.11 The net income of a real estate investment trust as defined 32.12 and limited by section 856(a), (b), and (c) of the Internal 32.13 Revenue Code means the real estate investment trust taxable 32.14 income as defined in section 857(b)(2) of the Internal Revenue 32.15 Code. 32.16 The net income of a designated settlement fund as defined 32.17 in section 468B(d) of the Internal Revenue Code means the gross 32.18 income as defined in section 468B(b) of the Internal Revenue 32.19 Code. 32.20The provisions of sections 1113(a), 1117, 1206(a), 1313(a),32.211402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612,32.221616, 1617, 1704(l), and 1704(m) of the Small Business Job32.23Protection Act, Public Law 104-188, the provisions of Public Law32.24104-117, the provisions of sections 313(a) and (b)(1), 602(a),32.25913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013,32.261014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b)32.27and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and32.281604(d)(1) of the Taxpayer Relief Act of 1997, Public Law32.29105-34, the provisions of section 6010 of the Internal Revenue32.30Service Restructuring and Reform Act of 1998, Public Law32.31105-206, the provisions of section 4003 of the Omnibus32.32Consolidated and Emergency Supplemental Appropriations Act,32.331999, Public Law 105-277, and the provisions of section 318 of32.34the Consolidated Appropriation Act of 2001, Public Law 106-554,32.35shall become effective at the time they become effective for32.36federal purposes.33.1 The Internal Revenue Code of 1986, as amended through 33.2 December 31,19962004, shall be in effect for taxable years 33.3 beginning after December 31, 1996. The provisions of Public Law 33.4 109-1, shall be effective for tax years beginning after December 33.5 31, 2003. 33.6The provisions of sections 202(a) and (b), 221(a), 225,33.7312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and33.8(c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306,33.91307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528,33.101530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e)33.11of the Taxpayer Relief Act of 1997, Public Law 105-34, the33.12provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002,33.13and 7003 of the Internal Revenue Service Restructuring and33.14Reform Act of 1998, Public Law 105-206, the provisions of33.15section 3001 of the Omnibus Consolidated and Emergency33.16Supplemental Appropriations Act, 1999, Public Law 105-277, the33.17provisions of section 3001 of the Miscellaneous Trade and33.18Technical Corrections Act of 1999, Public Law 106-36, and the33.19provisions of section 316 of the Consolidated Appropriation Act33.20of 2001, Public Law 106-554, shall become effective at the time33.21they become effective for federal purposes.33.22The Internal Revenue Code of 1986, as amended through33.23December 31, 1997, shall be in effect for taxable years33.24beginning after December 31, 1997.33.25The provisions of sections 5002, 6009, 6011, and 7001 of33.26the Internal Revenue Service Restructuring and Reform Act of33.271998, Public Law 105-206, the provisions of section 9010 of the33.28Transportation Equity Act for the 21st Century, Public Law33.29105-178, the provisions of sections 1004, 4002, and 5301 of the33.30Omnibus Consolidation and Emergency Supplemental Appropriations33.31Act, 1999, Public Law 105-277, the provision of section 303 of33.32the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law33.33105-369, the provisions of sections 532, 534, 536, 537, and 53833.34of the Ticket to Work and Work Incentives Improvement Act of33.351999, Public Law 106-170, the provisions of the Installment Tax33.36Correction Act of 2000, Public Law 106-573, and the provisions34.1of section 309 of the Consolidated Appropriation Act of 2001,34.2Public Law 106-554, shall become effective at the time they34.3become effective for federal purposes.34.4The Internal Revenue Code of 1986, as amended through34.5December 31, 1998, shall be in effect for taxable years34.6beginning after December 31, 1998.34.7The provisions of the FSC Repeal and Extraterritorial34.8Income Exclusion Act of 2000, Public Law 106-519, and the34.9provision of section 412 of the Job Creation and Worker34.10Assistance Act of 2002, Public Law 107-147, shall become34.11effective at the time it became effective for federal purposes.34.12The Internal Revenue Code of 1986, as amended through34.13December 31, 1999, shall be in effect for taxable years34.14beginning after December 31, 1999. The provisions of sections34.15306 and 401 of the Consolidated Appropriation Act of 2001,34.16Public Law 106-554, and the provision of section 632(b)(2)(A) of34.17the Economic Growth and Tax Relief Reconciliation Act of 2001,34.18Public Law 107-16, and provisions of sections 101 and 402 of the34.19Job Creation and Worker Assistance Act of 2002, Public Law34.20107-147, shall become effective at the same time it became34.21effective for federal purposes.34.22The Internal Revenue Code of 1986, as amended through34.23December 31, 2000, shall be in effect for taxable years34.24beginning after December 31, 2000. The provisions of sections34.25659a and 671 of the Economic Growth and Tax Relief34.26Reconciliation Act of 2001, Public Law 107-16, the provisions of34.27sections 104, 105, and 111 of the Victims of Terrorism Tax34.28Relief Act of 2001, Public Law 107-134, and the provisions of34.29sections 201, 403, 413, and 606 of the Job Creation and Worker34.30Assistance Act of 2002, Public Law 107-147, shall become34.31effective at the same time it became effective for federal34.32purposes.34.33The Internal Revenue Code of 1986, as amended through March34.3415, 2002, shall be in effect for taxable years beginning after34.35December 31, 2001.34.36The provisions of sections 101 and 102 of the Victims of35.1Terrorism Tax Relief Act of 2001, Public Law 107-134, shall35.2become effective at the same time it becomes effective for35.3federal purposes.35.4The Internal Revenue Code of 1986, as amended through June35.515, 2003, shall be in effect for taxable years beginning after35.6December 31, 2002. The provisions of section 201 of the Jobs35.7and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if35.8it is enacted into law, are effective at the same time it became35.9effective for federal purposes.35.10 Except as otherwise provided, references to the Internal 35.11 Revenue Code in subdivisions19a19 to19g19f mean the code in 35.12 effect for purposes of determining net income for the applicable 35.13 year. 35.14 [EFFECTIVE DATE.] This section is effective the day 35.15 following final enactment. 35.16 Sec. 3. Minnesota Statutes 2004, section 290.01, 35.17 subdivision 19a, is amended to read: 35.18 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 35.19 individuals, estates, and trusts, there shall be added to 35.20 federal taxable income: 35.21 (1)(i) interest income on obligations of any state other 35.22 than Minnesota or a political or governmental subdivision, 35.23 municipality, or governmental agency or instrumentality of any 35.24 state other than Minnesota exempt from federal income taxes 35.25 under the Internal Revenue Code or any other federal statute; 35.26 and 35.27 (ii) exempt-interest dividends as defined in section 35.28 852(b)(5) of the Internal Revenue Code, except the portion of 35.29 the exempt-interest dividends derived from interest income on 35.30 obligations of the state of Minnesota or its political or 35.31 governmental subdivisions, municipalities, governmental agencies 35.32 or instrumentalities, but only if the portion of the 35.33 exempt-interest dividends from such Minnesota sources paid to 35.34 all shareholders represents 95 percent or more of the 35.35 exempt-interest dividends that are paid by the regulated 35.36 investment company as defined in section 851(a) of the Internal 36.1 Revenue Code, or the fund of the regulated investment company as 36.2 defined in section 851(g) of the Internal Revenue Code, making 36.3 the payment; and 36.4 (iii) for the purposes of items (i) and (ii), interest on 36.5 obligations of an Indian tribal government described in section 36.6 7871(c) of the Internal Revenue Code shall be treated as 36.7 interest income on obligations of the state in which the tribe 36.8 is located; 36.9 (2) the amount of income or sales and use taxes paid or 36.10 accrued within the taxable year under this chapter and income or 36.11 sales and use taxes paid to any other state or to any province 36.12 or territory of Canada, to the extent allowed as a deduction 36.13 under section 63(d) of the Internal Revenue Code, but the 36.14 addition may not be more than the amount by which the itemized 36.15 deductions as allowed under section 63(d) of the Internal 36.16 Revenue Code exceeds the amount of the standard deduction as 36.17 defined in section 63(c) of the Internal Revenue Code of 1986, 36.18 as amended through June 15, 2003. For the purpose of this 36.19 paragraph, the disallowance of itemized deductions under section 36.20 68 of the Internal Revenue Code of 1986, income or sales and use 36.21 tax is the last itemized deduction disallowed; 36.22 (3) the capital gain amount of a lump sum distribution to 36.23 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 36.24 Reform Act of 1986, Public Law 99-514, applies; 36.25 (4) the amount of income taxes paid or accrued within the 36.26 taxable year under this chapter and income taxes paid to any 36.27 other state or any province or territory of Canada, to the 36.28 extent allowed as a deduction in determining federal adjusted 36.29 gross income. For the purpose of this paragraph, income taxes 36.30 do not include the taxes imposed by sections 290.0922, 36.31 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 36.32 (5) the amount of expense, interest, or taxes disallowed 36.33 pursuant to section 290.10; 36.34 (6) the amount of a partner's pro rata share of net income 36.35 which does not flow through to the partner because the 36.36 partnership elected to pay the tax on the income under section 37.1 6242(a)(2) of the Internal Revenue Code;and37.2 (7) 80 percent of the depreciation deduction allowed under 37.3 section 168(k) of the Internal Revenue Code. For purposes of 37.4 this clause, if the taxpayer has an activity that in the taxable 37.5 year generates a deduction for depreciation under section 168(k) 37.6 and the activity generates a loss for the taxable year that the 37.7 taxpayer is not allowed to claim for the taxable year, "the 37.8 depreciation allowed under section 168(k)" for the taxable year 37.9 is limited to excess of the depreciation claimed by the activity 37.10 under section 168(k) over the amount of the loss from the 37.11 activity that is not allowed in the taxable year. In succeeding 37.12 taxable years when the losses not allowed in the taxable year 37.13 are allowed, the depreciation under section 168(k) is allowed; 37.14 (8) 80 percent of the amount by which the deduction allowed 37.15 by section 179 of the Internal Revenue Code exceeds the 37.16 deduction allowable by section 179 of the Internal Revenue Code 37.17 of 1986, as amended through December 31, 2003; 37.18 (9) to the extent deducted in computing federal taxable 37.19 income, the amount of the deduction allowable under section 199 37.20 of the Internal Revenue Code; 37.21 (10) to the extent deducted in computing federal taxable 37.22 income, the amount by which the standard deduction allowed under 37.23 section 63(c) of the Internal Revenue Code exceeds the standard 37.24 deduction allowable under section 63(c) of the Internal Revenue 37.25 Code of 1986, as amended through December 31, 2003; 37.26 (11) the exclusion allowed under section 139A of the 37.27 Internal Revenue Code for federal subsidies for prescription 37.28 drug plans; and 37.29 (12) the deduction or exclusion allowed under section 223 37.30 of the Internal Revenue Code for contributions to health savings 37.31 accounts. 37.32 [EFFECTIVE DATE.] This section is effective for tax years 37.33 beginning after December 31, 2004, except the changes in clause 37.34 (2) are effective for tax years beginning after December 31, 37.35 2003. 37.36 Sec. 4. Minnesota Statutes 2004, section 290.01, 38.1 subdivision 19b, is amended to read: 38.2 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 38.3 individuals, estates, and trusts, there shall be subtracted from 38.4 federal taxable income: 38.5 (1) interest income on obligations of any authority, 38.6 commission, or instrumentality of the United States to the 38.7 extent includable in taxable income for federal income tax 38.8 purposes but exempt from state income tax under the laws of the 38.9 United States; 38.10 (2) if included in federal taxable income, the amount of 38.11 any overpayment of income tax to Minnesota or to any other 38.12 state, for any previous taxable year, whether the amount is 38.13 received as a refund or as a credit to another taxable year's 38.14 income tax liability; 38.15 (3) the amount paid to others, less the amount used to 38.16 claim the credit allowed under section 290.0674, not to exceed 38.17 $1,625 for each qualifying child in grades kindergarten to 6 and 38.18 $2,500 for each qualifying child in grades 7 to 12, for tuition, 38.19 textbooks, and transportation of each qualifying child in 38.20 attending an elementary or secondary school situated in 38.21 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 38.22 wherein a resident of this state may legally fulfill the state's 38.23 compulsory attendance laws, which is not operated for profit, 38.24 and which adheres to the provisions of the Civil Rights Act of 38.25 1964 and chapter 363A. For the purposes of this clause, 38.26 "tuition" includes fees or tuition as defined in section 38.27 290.0674, subdivision 1, clause (1). As used in this clause, 38.28 "textbooks" includes books and other instructional materials and 38.29 equipment purchased or leased for use in elementary and 38.30 secondary schools in teaching only those subjects legally and 38.31 commonly taught in public elementary and secondary schools in 38.32 this state. Equipment expenses qualifying for deduction 38.33 includes expenses as defined and limited in section 290.0674, 38.34 subdivision 1, clause (3). "Textbooks" does not include 38.35 instructional books and materials used in the teaching of 38.36 religious tenets, doctrines, or worship, the purpose of which is 39.1 to instill such tenets, doctrines, or worship, nor does it 39.2 include books or materials for, or transportation to, 39.3 extracurricular activities including sporting events, musical or 39.4 dramatic events, speech activities, driver's education, or 39.5 similar programs. For purposes of the subtraction provided by 39.6 this clause, "qualifying child" has the meaning given in section 39.7 32(c)(3) of the Internal Revenue Code; 39.8 (4) income as provided under section 290.0802; 39.9 (5) to the extent included in federal adjusted gross 39.10 income, income realized on disposition of property exempt from 39.11 tax under section 290.491; 39.12 (6) to the extent included in federal taxable income, 39.13 postservice benefits for youth community service under section 39.14 124D.42 for volunteer service under United States Code, title 39.15 42, sections 12601 to 12604; 39.16 (7) to the extent not deducted in determining federal 39.17 taxable income by an individual who does not itemize deductions 39.18 for federal income tax purposes for the taxable year, an amount 39.19 equal to 50 percent of the excess of charitable contributions 39.20 over $500 allowable as a deduction for the taxable year under 39.21 section 170(a) of the Internal Revenue Codeover $500and under 39.22 the provisions of Public Law 109-1; 39.23 (8) for taxable years beginning before January 1, 2008, the 39.24 amount of the federal small ethanol producer credit allowed 39.25 under section 40(a)(3) of the Internal Revenue Code which is 39.26 included in gross income under section 87 of the Internal 39.27 Revenue Code; 39.28 (9) for individuals who are allowed a federal foreign tax 39.29 credit for taxes that do not qualify for a credit under section 39.30 290.06, subdivision 22, an amount equal to the carryover of 39.31 subnational foreign taxes for the taxable year, but not to 39.32 exceed the total subnational foreign taxes reported in claiming 39.33 the foreign tax credit. For purposes of this clause, "federal 39.34 foreign tax credit" means the credit allowed under section 27 of 39.35 the Internal Revenue Code, and "carryover of subnational foreign 39.36 taxes" equals the carryover allowed under section 904(c) of the 40.1 Internal Revenue Code minus national level foreign taxes to the 40.2 extent they exceed the federal foreign tax credit; 40.3 (10) in each of the five tax years immediately following 40.4 the tax year in which an addition is required under subdivision 40.5 19a, clause (7), an amount equal to one-fifth of the delayed 40.6 depreciation. For purposes of this clause, "delayed 40.7 depreciation" means the amount of the addition made by the 40.8 taxpayer under subdivision 19a, clause (7), minus the positive 40.9 value of any net operating loss under section 172 of the 40.10 Internal Revenue Code generated for the tax year of the 40.11 addition. The resulting delayed depreciation cannot be less 40.12 than zero;and40.13 (11) job opportunity building zone income as provided under 40.14 section 469.316.; 40.15 (12) in each of the five tax years immediately following 40.16 the tax year in which an addition is required under subdivision 40.17 19a, clause (8), or 19c, clause (17), in the case of a 40.18 shareholder of a corporation that is an S corporation, an amount 40.19 equal to one-fifth of the addition made by the taxpayer under 40.20 subdivision 19a, clause (8), or 19c, clause (17), in the case of 40.21 a shareholder of a corporation that is an S corporation, minus 40.22 the positive value of any net operating loss under section 172 40.23 of the Internal Revenue Code generated for the tax year of the 40.24 addition. If the net operating loss exceeds the addition for 40.25 the tax year, a subtraction is not allowed under this clause; 40.26 (13) to the extent included in federal taxable income, 40.27 compensation paid to a service member as defined in United 40.28 States Code, title 10, section 101(a)(5), for military service 40.29 as defined in the Service Member Civil Relief Act, Public Law 40.30 108-189, section 101(2), and compensation paid for state active 40.31 service as defined in section 190.05, subdivision 5a, clauses 40.32 (1) and (3), or federally funded state active service as defined 40.33 in section 190.05, subdivision 5b. This subtraction does not 40.34 apply to retirement income as defined in section 290.17, 40.35 subdivision 2, paragraph (a), clause (3); and 40.36 (14) distributions from a health savings account to the 41.1 extent the distributions are for the return of amounts added 41.2 back under subdivision 19a, clause (12), but only to the extent 41.3 that the amount of the distribution would have been deductible 41.4 under section 213 of the Internal Revenue Code for that taxable 41.5 year. For the purposes of this clause, distributions are 41.6 considered to be made from contributions subject to the add-back. 41.7 [EFFECTIVE DATE.] This section is effective for tax years 41.8 beginning after December 31, 2004, except the change to clause 41.9 (7) is effective for tax years beginning after December 31, 2003. 41.10 Sec. 5. Minnesota Statutes 2004, section 290.01, 41.11 subdivision 19c, is amended to read: 41.12 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 41.13 INCOME.] For corporations, there shall be added to federal 41.14 taxable income: 41.15 (1) the amount of any deduction taken for federal income 41.16 tax purposes for income, excise, or franchise taxes based on net 41.17 income or related minimum taxes, including but not limited to 41.18 the tax imposed under section 290.0922, paid by the corporation 41.19 to Minnesota, another state, a political subdivision of another 41.20 state, the District of Columbia, or any foreign country or 41.21 possession of the United States; 41.22 (2) interest not subject to federal tax upon obligations 41.23 of: the United States, its possessions, its agencies, or its 41.24 instrumentalities; the state of Minnesota or any other state, 41.25 any of its political or governmental subdivisions, any of its 41.26 municipalities, or any of its governmental agencies or 41.27 instrumentalities; the District of Columbia; or Indian tribal 41.28 governments; 41.29 (3) exempt-interest dividends received as defined in 41.30 section 852(b)(5) of the Internal Revenue Code; 41.31 (4) the amount of any net operating loss deduction taken 41.32 for federal income tax purposes under section 172 or 832(c)(10) 41.33 of the Internal Revenue Code or operations loss deduction under 41.34 section 810 of the Internal Revenue Code; 41.35 (5) the amount of any special deductions taken for federal 41.36 income tax purposes under sections 241 to 247 of the Internal 42.1 Revenue Code; 42.2 (6) losses from the business of mining, as defined in 42.3 section 290.05, subdivision 1, clause (a), that are not subject 42.4 to Minnesota income tax; 42.5 (7) the amount of any capital losses deducted for federal 42.6 income tax purposes under sections 1211 and 1212 of the Internal 42.7 Revenue Code; 42.8 (8) the exempt foreign trade income of a foreign sales 42.9 corporation under sections 921(a) and 291 of the Internal 42.10 Revenue Code; 42.11 (9) the amount of percentage depletion deducted under 42.12 sections 611 through 614 and 291 of the Internal Revenue Code; 42.13 (10) for certified pollution control facilities placed in 42.14 service in a taxable year beginning before December 31, 1986, 42.15 and for which amortization deductions were elected under section 42.16 169 of the Internal Revenue Code of 1954, as amended through 42.17 December 31, 1985, the amount of the amortization deduction 42.18 allowed in computing federal taxable income for those 42.19 facilities; 42.20 (11) the amount of any deemed dividend from a foreign 42.21 operating corporation determined pursuant to section 290.17, 42.22 subdivision 4, paragraph (g); 42.23 (12) the amount of any environmental tax paid under section 42.24 59(a) of the Internal Revenue Code; 42.25 (13) the amount of a partner's pro rata share of net income 42.26 which does not flow through to the partner because the 42.27 partnership elected to pay the tax on the income under section 42.28 6242(a)(2) of the Internal Revenue Code; 42.29 (14) the amount of net income excluded under section 114 of 42.30 the Internal Revenue Code; 42.31 (15) any increase in subpart F income, as defined in 42.32 section 952(a) of the Internal Revenue Code, for the taxable 42.33 year when subpart F income is calculated without regard to the 42.34 provisions of section 614 of Public Law 107-147;and42.35 (16) 80 percent of the depreciation deduction allowed under 42.36 section 168(k) of the Internal Revenue Code. For purposes of 43.1 this clause, if the taxpayer has an activity that in the taxable 43.2 year generates a deduction for depreciation under section 168(k) 43.3 and the activity generates a loss for the taxable year that the 43.4 taxpayer is not allowed to claim for the taxable year, "the 43.5 depreciation allowed under section 168(k)" for the taxable year 43.6 is limited to excess of the depreciation claimed by the activity 43.7 under section 168(k) over the amount of the loss from the 43.8 activity that is not allowed in the taxable year. In succeeding 43.9 taxable years when the losses not allowed in the taxable year 43.10 are allowed, the depreciation under section 168(k) is allowed; 43.11 (17) 80 percent of the amount by which the deduction 43.12 allowed by section 179 of the Internal Revenue Code exceeds the 43.13 deduction allowable by section 179 of the Internal Revenue Code 43.14 of 1986, as amended through December 31, 2003; and 43.15 (18) to the extent deducted in computing federal taxable 43.16 income, the amount of the deduction allowable under section 199 43.17 of the Internal Revenue Code. 43.18 [EFFECTIVE DATE.] This section is effective for tax years 43.19 beginning after December 31, 2004. 43.20 Sec. 6. Minnesota Statutes 2004, section 290.01, 43.21 subdivision 19d, is amended to read: 43.22 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 43.23 TAXABLE INCOME.] For corporations, there shall be subtracted 43.24 from federal taxable income after the increases provided in 43.25 subdivision 19c: 43.26 (1) the amount of foreign dividend gross-up added to gross 43.27 income for federal income tax purposes under section 78 of the 43.28 Internal Revenue Code; 43.29 (2) the amount of salary expense not allowed for federal 43.30 income tax purposes due to claiming the federal jobs credit 43.31 under section 51 of the Internal Revenue Code; 43.32 (3) any dividend (not including any distribution in 43.33 liquidation) paid within the taxable year by a national or state 43.34 bank to the United States, or to any instrumentality of the 43.35 United States exempt from federal income taxes, on the preferred 43.36 stock of the bank owned by the United States or the 44.1 instrumentality; 44.2 (4) amounts disallowed for intangible drilling costs due to 44.3 differences between this chapter and the Internal Revenue Code 44.4 in taxable years beginning before January 1, 1987, as follows: 44.5 (i) to the extent the disallowed costs are represented by 44.6 physical property, an amount equal to the allowance for 44.7 depreciation under Minnesota Statutes 1986, section 290.09, 44.8 subdivision 7, subject to the modifications contained in 44.9 subdivision 19e; and 44.10 (ii) to the extent the disallowed costs are not represented 44.11 by physical property, an amount equal to the allowance for cost 44.12 depletion under Minnesota Statutes 1986, section 290.09, 44.13 subdivision 8; 44.14 (5) the deduction for capital losses pursuant to sections 44.15 1211 and 1212 of the Internal Revenue Code, except that: 44.16 (i) for capital losses incurred in taxable years beginning 44.17 after December 31, 1986, capital loss carrybacks shall not be 44.18 allowed; 44.19 (ii) for capital losses incurred in taxable years beginning 44.20 after December 31, 1986, a capital loss carryover to each of the 44.21 15 taxable years succeeding the loss year shall be allowed; 44.22 (iii) for capital losses incurred in taxable years 44.23 beginning before January 1, 1987, a capital loss carryback to 44.24 each of the three taxable years preceding the loss year, subject 44.25 to the provisions of Minnesota Statutes 1986, section 290.16, 44.26 shall be allowed; and 44.27 (iv) for capital losses incurred in taxable years beginning 44.28 before January 1, 1987, a capital loss carryover to each of the 44.29 five taxable years succeeding the loss year to the extent such 44.30 loss was not used in a prior taxable year and subject to the 44.31 provisions of Minnesota Statutes 1986, section 290.16, shall be 44.32 allowed; 44.33 (6) an amount for interest and expenses relating to income 44.34 not taxable for federal income tax purposes, if (i) the income 44.35 is taxable under this chapter and (ii) the interest and expenses 44.36 were disallowed as deductions under the provisions of section 45.1 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 45.2 federal taxable income; 45.3 (7) in the case of mines, oil and gas wells, other natural 45.4 deposits, and timber for which percentage depletion was 45.5 disallowed pursuant to subdivision 19c, clause (11), a 45.6 reasonable allowance for depletion based on actual cost. In the 45.7 case of leases the deduction must be apportioned between the 45.8 lessor and lessee in accordance with rules prescribed by the 45.9 commissioner. In the case of property held in trust, the 45.10 allowable deduction must be apportioned between the income 45.11 beneficiaries and the trustee in accordance with the pertinent 45.12 provisions of the trust, or if there is no provision in the 45.13 instrument, on the basis of the trust's income allocable to 45.14 each; 45.15 (8) for certified pollution control facilities placed in 45.16 service in a taxable year beginning before December 31, 1986, 45.17 and for which amortization deductions were elected under section 45.18 169 of the Internal Revenue Code of 1954, as amended through 45.19 December 31, 1985, an amount equal to the allowance for 45.20 depreciation under Minnesota Statutes 1986, section 290.09, 45.21 subdivision 7; 45.22 (9) amounts included in federal taxable income that are due 45.23 to refunds of income, excise, or franchise taxes based on net 45.24 income or related minimum taxes paid by the corporation to 45.25 Minnesota, another state, a political subdivision of another 45.26 state, the District of Columbia, or a foreign country or 45.27 possession of the United States to the extent that the taxes 45.28 were added to federal taxable income under section 290.01, 45.29 subdivision 19c, clause (1), in a prior taxable year; 45.30 (10) 80 percent of royalties, fees, or other like income 45.31 accrued or received from a foreign operating corporation or a 45.32 foreign corporation which is part of the same unitary business 45.33 as the receiving corporation; 45.34 (11) income or gains from the business of mining as defined 45.35 in section 290.05, subdivision 1, clause (a), that are not 45.36 subject to Minnesota franchise tax; 46.1 (12) the amount of handicap access expenditures in the 46.2 taxable year which are not allowed to be deducted or capitalized 46.3 under section 44(d)(7) of the Internal Revenue Code; 46.4 (13) the amount of qualified research expenses not allowed 46.5 for federal income tax purposes under section 280C(c) of the 46.6 Internal Revenue Code, but only to the extent that the amount 46.7 exceeds the amount of the credit allowed under section 290.068; 46.8 (14) the amount of salary expenses not allowed for federal 46.9 income tax purposes due to claiming the Indian employment credit 46.10 under section 45A(a) of the Internal Revenue Code; 46.11 (15) the amount of any refund of environmental taxes paid 46.12 under section 59A of the Internal Revenue Code; 46.13 (16) for taxable years beginning before January 1, 2008, 46.14 the amount of the federal small ethanol producer credit allowed 46.15 under section 40(a)(3) of the Internal Revenue Code which is 46.16 included in gross income under section 87 of the Internal 46.17 Revenue Code; 46.18 (17) for a corporation whose foreign sales corporation, as 46.19 defined in section 922 of the Internal Revenue Code, constituted 46.20 a foreign operating corporation during any taxable year ending 46.21 before January 1, 1995, and a return was filed by August 15, 46.22 1996, claiming the deduction under section 290.21, subdivision 46.23 4, for income received from the foreign operating corporation, 46.24 an amount equal to 1.23 multiplied by the amount of income 46.25 excluded under section 114 of the Internal Revenue Code, 46.26 provided the income is not income of a foreign operating 46.27 company; 46.28 (18) any decrease in subpart F income, as defined in 46.29 section 952(a) of the Internal Revenue Code, for the taxable 46.30 year when subpart F income is calculated without regard to the 46.31 provisions of section 614 of Public Law 107-147;and46.32 (19) in each of the five tax years immediately following 46.33 the tax year in which an addition is required under subdivision 46.34 19c, clause (16), an amount equal to one-fifth of the delayed 46.35 depreciation. For purposes of this clause, "delayed 46.36 depreciation" means the amount of the addition made by the 47.1 taxpayer under subdivision 19c, clause (16). The resulting 47.2 delayed depreciation cannot be less than zero; and 47.3 (20) in each of the five tax years immediately following 47.4 the tax year in which an addition is required under subdivision 47.5 19c, clause (17), an amount equal to one-fifth of the amount of 47.6 the addition. 47.7 [EFFECTIVE DATE.] This section is effective for tax years 47.8 beginning after December 31, 2004. 47.9 Sec. 7. Minnesota Statutes 2004, section 290.01, 47.10 subdivision 31, is amended to read: 47.11 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 47.12 defined otherwise, "Internal Revenue Code" means the Internal 47.13 Revenue Code of 1986, as amended throughJune 15, 2003December 47.14 31, 2004. 47.15 [EFFECTIVE DATE.] This section is effective the day 47.16 following final enactment except the changes incorporated by 47.17 federal changes are effective at the same times as the changes 47.18 were effective for federal purposes. 47.19 Sec. 8. Minnesota Statutes 2004, section 290.032, 47.20 subdivision 1, is amended to read: 47.21 Subdivision 1. [IMPOSITION.] There is hereby imposed as an 47.22 addition to the annual income tax for a taxable year of a 47.23 taxpayer in the classes described in section 290.03 a tax with 47.24 respect to any distribution received by such taxpayer that is 47.25 treated as a lump sum distribution under section402(d) of the47.26Internal Revenue Code1401(c)(2) of the Small Business Job 47.27 Protection Act, Public Law 104-188 and that is subject to tax 47.28 for such taxable year under section402(d) of the Internal47.29Revenue Code1401(c)(2) of the Small Business Job Protection 47.30 Act, Public Law 104-188. 47.31 [EFFECTIVE DATE.] This section is effective for tax years 47.32 beginning after December 31, 1999. 47.33 Sec. 9. Minnesota Statutes 2004, section 290.032, 47.34 subdivision 2, is amended to read: 47.35 Subd. 2. [COMPUTATION.] The amount of tax imposed by 47.36 subdivision 1 shall be computed in the same way as the tax 48.1 imposed under section 402(d) of the Internal Revenue Code of 48.2 1986, as amended through December 31, 1995, except that the 48.3 initial separate tax shall be an amount equal to five times the 48.4 tax which would be imposed by section 290.06, subdivision 2c, if 48.5 the recipient was an unmarried individual, and the taxable net 48.6 income was an amount equal to one-fifth of the excess of 48.7 (i) the total taxable amount of the lump sum distribution 48.8 for the year, over 48.9 (ii) the minimum distribution allowance, and except that 48.10 references in section 402(d) of the Internal Revenue Code of 48.11 1986, as amended through December 31, 1995, to paragraph (1)(A) 48.12 thereof shall instead be references to subdivision 1, and the 48.13 excess, if any, of the subtraction base amount over federal 48.14 taxable income for a qualified individual as provided under 48.15 section 290.0802, subdivision 2. 48.16 [EFFECTIVE DATE.] This section is effective for tax years 48.17 beginning after December 31, 1999. 48.18 Sec. 10. Minnesota Statutes 2004, section 290.06, 48.19 subdivision 2c, is amended to read: 48.20 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 48.21 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 48.22 married individuals filing joint returns and surviving spouses 48.23 as defined in section 2(a) of the Internal Revenue Code must be 48.24 computed by applying to their taxable net income the following 48.25 schedule of rates: 48.26 (1) On the first $25,680, 5.35 percent; 48.27 (2) On all over $25,680, but not over $102,030, 7.05 48.28 percent; 48.29 (3) On all over $102,030, 7.85 percent. 48.30 Married individuals filing separate returns, estates, and 48.31 trusts must compute their income tax by applying the above rates 48.32 to their taxable income, except that the income brackets will be 48.33 one-half of the above amounts. 48.34 (b) The income taxes imposed by this chapter upon unmarried 48.35 individuals must be computed by applying to taxable net income 48.36 the following schedule of rates: 49.1 (1) On the first $17,570, 5.35 percent; 49.2 (2) On all over $17,570, but not over $57,710, 7.05 49.3 percent; 49.4 (3) On all over $57,710, 7.85 percent. 49.5 (c) The income taxes imposed by this chapter upon unmarried 49.6 individuals qualifying as a head of household as defined in 49.7 section 2(b) of the Internal Revenue Code must be computed by 49.8 applying to taxable net income the following schedule of rates: 49.9 (1) On the first $21,630, 5.35 percent; 49.10 (2) On all over $21,630, but not over $86,910, 7.05 49.11 percent; 49.12 (3) On all over $86,910, 7.85 percent. 49.13 (d) In lieu of a tax computed according to the rates set 49.14 forth in this subdivision, the tax of any individual taxpayer 49.15 whose taxable net income for the taxable year is less than an 49.16 amount determined by the commissioner must be computed in 49.17 accordance with tables prepared and issued by the commissioner 49.18 of revenue based on income brackets of not more than $100. The 49.19 amount of tax for each bracket shall be computed at the rates 49.20 set forth in this subdivision, provided that the commissioner 49.21 may disregard a fractional part of a dollar unless it amounts to 49.22 50 cents or more, in which case it may be increased to $1. 49.23 (e) An individual who is not a Minnesota resident for the 49.24 entire year must compute the individual's Minnesota income tax 49.25 as provided in this subdivision. After the application of the 49.26 nonrefundable credits provided in this chapter, the tax 49.27 liability must then be multiplied by a fraction in which: 49.28 (1) the numerator is the individual's Minnesota source 49.29 federal adjusted gross income as defined in section 62 of the 49.30 Internal Revenue Code and increased by the additions required 49.31 under section 290.01, subdivision 19a, clauses (1), (5),and49.32 (6), (7), (8), and (9), and reduced by the subtraction under 49.33 section 290.01, subdivision 19b, clause (11), and the Minnesota 49.34 assignable portion of the subtraction for United States 49.35 government interest under section 290.01, subdivision 19b, 49.36 clause (1), and the subtractions under clauses (10), (11), (12), 50.1 and (13), after applying the allocation and assignability 50.2 provisions of section 290.081, clause (a), or 290.17; and 50.3 (2) the denominator is the individual's federal adjusted 50.4 gross income as defined in section 62 of the Internal Revenue 50.5 Code of 1986, increased by the amounts specified in section 50.6 290.01, subdivision 19a, clauses (1), (5),and(6), (7), (8), 50.7 and (9), and reduced by the amounts specified in section 290.01, 50.8 subdivision 19b, clauses (1)and, (10), (11), (12), and (13). 50.9 [EFFECTIVE DATE.] This section is effective for tax years 50.10 beginning after December 31, 2004. 50.11 Sec. 11. Minnesota Statutes 2004, section 290.067, 50.12 subdivision 1, is amended to read: 50.13 Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take 50.14 as a credit against the tax due from the taxpayer and a spouse, 50.15 if any, under this chapter an amount equal to the dependent care 50.16 credit for which the taxpayer is eligible pursuant to the 50.17 provisions of section 21 of the Internal Revenue Code subject to 50.18 the limitations provided in subdivision 2 except that in 50.19 determining whether the child qualified as a dependent, income 50.20 received as a Minnesota family investment program grant or 50.21 allowance to or on behalf of the child must not be taken into 50.22 account in determining whether the child received more than half 50.23 of the child's support from the taxpayer, and the provisions of 50.24 section 32(b)(1)(D) of the Internal Revenue Code do not apply. 50.25 (b) If a child who has not attained the age of six years at 50.26 the close of the taxable year is cared for at a licensed family 50.27 day care home operated by the child's parent, the taxpayer is 50.28 deemed to have paid employment-related expenses. If the child 50.29 is 16 months old or younger at the close of the taxable year, 50.30 the amount of expenses deemed to have been paid equals the 50.31 maximum limit for one qualified individual under section 21(c) 50.32 and (d) of the Internal Revenue Code. If the child is older 50.33 than 16 months of age but has not attained the age of six years 50.34 at the close of the taxable year, the amount of expenses deemed 50.35 to have been paid equals the amount the licensee would charge 50.36 for the care of a child of the same age for the same number of 51.1 hours of care. 51.2 (c) If a married couple: 51.3 (1) has a child who has not attained the age of one year at 51.4 the close of the taxable year; 51.5 (2) files a joint tax return for the taxable year; and 51.6 (3) does not participate in a dependent care assistance 51.7 program as defined in section 129 of the Internal Revenue Code, 51.8 in lieu of the actual employment related expenses paid for that 51.9 child under paragraph (a) or the deemed amount under paragraph 51.10 (b), the lesser of (i) the combined earned income of the couple 51.11 or (ii) the amount of the maximum limit for one qualified 51.12 individual under section 21(c) and (d) of the Internal Revenue 51.13 Code will be deemed to be the employment related expense paid 51.14 for that child. The earned income limitation of section 21(d) 51.15 of the Internal Revenue Code shall not apply to this deemed 51.16 amount. These deemed amounts apply regardless of whether any 51.17 employment-related expenses have been paid. 51.18 (d) If the taxpayer is not required and does not file a 51.19 federal individual income tax return for the tax year, no credit 51.20 is allowed for any amount paid to any person unless: 51.21 (1) the name, address, and taxpayer identification number 51.22 of the person are included on the return claiming the credit; or 51.23 (2) if the person is an organization described in section 51.24 501(c)(3) of the Internal Revenue Code and exempt from tax under 51.25 section 501(a) of the Internal Revenue Code, the name and 51.26 address of the person are included on the return claiming the 51.27 credit. 51.28 In the case of a failure to provide the information required 51.29 under the preceding sentence, the preceding sentence does not 51.30 apply if it is shown that the taxpayer exercised due diligence 51.31 in attempting to provide the information required. 51.32 In the case of a nonresident, part-year resident, or a 51.33 person who has earned income not subject to tax under this 51.34 chapter including earned income excluded pursuant to section 51.35 290.01, subdivision 19b, clause (11), the credit determined 51.36 under section 21 of the Internal Revenue Code must be allocated 52.1 based on the ratio by which the earned income of the claimant 52.2 and the claimant's spouse from Minnesota sources bears to the 52.3 total earned income of the claimant and the claimant's spouse. 52.4 For residents of Minnesota, the exclusion of combat pay 52.5 under section 112 of the Internal Revenue Code and the 52.6 subtraction for military pay under section 290.01, subdivision 52.7 19b, clause (13), are not considered "earned income not subject 52.8 to tax under this chapter." 52.9 [EFFECTIVE DATE.] This section is effective for tax years 52.10 beginning after December 31, 2004. 52.11 Sec. 12. Minnesota Statutes 2004, section 290.067, 52.12 subdivision 2a, is amended to read: 52.13 Subd. 2a. [INCOME.] (a) For purposes of this section, 52.14 "income" means the sum of the following: 52.15 (1) federal adjusted gross income as defined in section 62 52.16 of the Internal Revenue Code; and 52.17 (2) the sum of the following amounts to the extent not 52.18 included in clause (1): 52.19 (i) all nontaxable income; 52.20 (ii) the amount of a passive activity loss that is not 52.21 disallowed as a result of section 469, paragraph (i) or (m) of 52.22 the Internal Revenue Code and the amount of passive activity 52.23 loss carryover allowed under section 469(b) of the Internal 52.24 Revenue Code; 52.25 (iii) an amount equal to the total of any discharge of 52.26 qualified farm indebtedness of a solvent individual excluded 52.27 from gross income under section 108(g) of the Internal Revenue 52.28 Code; 52.29 (iv) cash public assistance and relief; 52.30 (v) any pension or annuity (including railroad retirement 52.31 benefits, all payments received under the federal Social 52.32 Security Act, supplemental security income, and veterans 52.33 benefits), which was not exclusively funded by the claimant or 52.34 spouse, or which was funded exclusively by the claimant or 52.35 spouse and which funding payments were excluded from federal 52.36 adjusted gross income in the years when the payments were made; 53.1 (vi) interest received from the federal or a state 53.2 government or any instrumentality or political subdivision 53.3 thereof; 53.4 (vii) workers' compensation; 53.5 (viii) nontaxable strike benefits; 53.6 (ix) the gross amounts of payments received in the nature 53.7 of disability income or sick pay as a result of accident, 53.8 sickness, or other disability, whether funded through insurance 53.9 or otherwise; 53.10 (x) a lump sum distribution under section 402(e)(3) of the 53.11 Internal Revenue Code of 1986, as amended through December 31, 53.12 1995; 53.13 (xi) contributions made by the claimant to an individual 53.14 retirement account, including a qualified voluntary employee 53.15 contribution; simplified employee pension plan; self-employed 53.16 retirement plan; cash or deferred arrangement plan under section 53.17 401(k) of the Internal Revenue Code; or deferred compensation 53.18 plan under section 457 of the Internal Revenue Code;and53.19 (xii) nontaxable scholarship or fellowship grants; 53.20 (xiii) the amount of deduction allowed under section 199 of 53.21 the Internal Revenue Code; and 53.22 (xiv) the amount of deduction allowed under section 220 or 53.23 223 of the Internal Revenue Code. 53.24 In the case of an individual who files an income tax return 53.25 on a fiscal year basis, the term "federal adjusted gross income" 53.26 means federal adjusted gross income reflected in the fiscal year 53.27 ending in the next calendar year. Federal adjusted gross income 53.28 may not be reduced by the amount of a net operating loss 53.29 carryback or carryforward or a capital loss carryback or 53.30 carryforward allowed for the year. 53.31 (b) "Income" does not include: 53.32 (1) amounts excluded pursuant to the Internal Revenue Code, 53.33 sections 101(a) and 102; 53.34 (2) amounts of any pension or annuity that were exclusively 53.35 funded by the claimant or spouse if the funding payments were 53.36 not excluded from federal adjusted gross income in the years 54.1 when the payments were made; 54.2 (3) surplus food or other relief in kind supplied by a 54.3 governmental agency; 54.4 (4) relief granted under chapter 290A; 54.5 (5) child support payments received under a temporary or 54.6 final decree of dissolution or legal separation; and 54.7 (6) restitution payments received by eligible individuals 54.8 and excludable interest as defined in section 803 of the 54.9 Economic Growth and Tax Relief Reconciliation Act of 2001, 54.10 Public Law 107-16. 54.11 [EFFECTIVE DATE.] This section is effective for tax years 54.12 beginning after December 31, 2003. 54.13 Sec. 13. Minnesota Statutes 2004, section 290.0671, 54.14 subdivision 1, is amended to read: 54.15 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 54.16 allowed a credit against the tax imposed by this chapter equal 54.17 to a percentage of earned income. To receive a credit, a 54.18 taxpayer must be eligible for a credit under section 32 of the 54.19 Internal Revenue Code. 54.20 (b) For individuals with no qualifying children, the credit 54.21 equals 1.9125 percent of the first $4,620 of earned income. The 54.22 credit is reduced by 1.9125 percent of earned income or modified 54.23 adjusted gross income, whichever is greater, in excess of 54.24 $5,770, but in no case is the credit less than zero. 54.25 (c) For individuals with one qualifying child, the credit 54.26 equals 8.5 percent of the first $6,920 of earned income and 8.5 54.27 percent of earned income over $12,080 but less than $13,450. 54.28 The credit is reduced by 5.73 percent of earned income or 54.29 modified adjusted gross income, whichever is greater, in excess 54.30 of $15,080, but in no case is the credit less than zero. 54.31 (d) For individuals with two or more qualifying children, 54.32 the credit equals ten percent of the first $9,720 of earned 54.33 income and 20 percent of earned income over $14,860 but less 54.34 than $16,800. The credit is reduced by 10.3 percent of earned 54.35 income or modified adjusted gross income, whichever is greater, 54.36 in excess of $17,890, but in no case is the credit less than 55.1 zero. 55.2 (e) For a nonresident or part-year resident, the credit 55.3 must be allocated based on the percentage calculated under 55.4 section 290.06, subdivision 2c, paragraph (e). 55.5 (f) For a person who was a resident for the entire tax year 55.6 and has earned income not subject to tax under this chapter, 55.7 including income excluded under section 290.01, subdivision 19b, 55.8 clause (11), the credit must be allocated based on the ratio of 55.9 federal adjusted gross income reduced by the earned income not 55.10 subject to tax under this chapter over federal adjusted gross 55.11 income. For the purposes of this paragraph, the exclusion of 55.12 combat pay under section 112 of the Internal Revenue Code and 55.13 the subtraction for military pay under section 290.01, 55.14 subdivision 19b, clause (13), are not considered "earned income 55.15 not subject to tax under this chapter." 55.16 (g) For tax years beginning after December 31, 2001, and 55.17 before December 31, 2004, the $5,770 in paragraph (b), the 55.18 $15,080 in paragraph (c), and the $17,890 in paragraph (d), 55.19 after being adjusted for inflation under subdivision 7, are each 55.20 increased by $1,000 for married taxpayers filing joint returns. 55.21 (h) For tax years beginning after December 31, 2004, and 55.22 before December 31, 2007, the $5,770 in paragraph (b), the 55.23 $15,080 in paragraph (c), and the $17,890 in paragraph (d), 55.24 after being adjusted for inflation under subdivision 7, are each 55.25 increased by $2,000 for married taxpayers filing joint returns. 55.26 (i) For tax years beginning after December 31, 2007, and 55.27 before December 31, 2010, the $5,770 in paragraph (b), the 55.28 $15,080 in paragraph (c), and the $17,890 in paragraph (d), 55.29 after being adjusted for inflation under subdivision 7, are each 55.30 increased by $3,000 for married taxpayers filing joint returns. 55.31 For tax years beginning after December 31, 2008, the $3,000 is 55.32 adjusted annually for inflation under subdivision 7. 55.33 (j) The commissioner shall construct tables showing the 55.34 amount of the credit at various income levels and make them 55.35 available to taxpayers. The tables shall follow the schedule 55.36 contained in this subdivision, except that the commissioner may 56.1 graduate the transition between income brackets. 56.2 [EFFECTIVE DATE.] This section is effective for tax years 56.3 beginning after December 31, 2004. 56.4 Sec. 14. Minnesota Statutes 2004, section 290.0675, 56.5 subdivision 1, is amended to read: 56.6 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 56.7 section the following terms have the meanings given. 56.8 (b) "Earned income" means the sum of the following, to the 56.9 extent included in Minnesota taxable income: 56.10 (1) earned income as defined in section 32(c)(2) of the 56.11 Internal Revenue Code; 56.12 (2) income received from a retirement pension, 56.13 profit-sharing, stock bonus, or annuity plan; and 56.14 (3) Social Security benefits as defined in section 86(d)(1) 56.15 of the Internal Revenue Code. 56.16 (c) "Taxable income" means net income as defined in section 56.17 290.01, subdivision 19. 56.18 (d) "Earned income of lesser-earning spouse" means the 56.19 earned income of the spouse with the lesser amount of earned 56.20 income as defined in paragraph (b) for the taxable year minus 56.21 the sum of (i) the amount for one exemption under section 151(d) 56.22 of the Internal Revenue Code and (ii) one-half the amount of the 56.23 standard deduction under section 63(c)(2)(A) and (4) of the 56.24 Internal Revenue Code of 1986, as amended through December 31, 56.25 2003. 56.26 [EFFECTIVE DATE.] This section is effective for tax years 56.27 beginning after December 31, 2004. 56.28 Sec. 15. Minnesota Statutes 2004, section 290.091, 56.29 subdivision 2, is amended to read: 56.30 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 56.31 this section, the following terms have the meanings given: 56.32 (a) "Alternative minimum taxable income" means the sum of 56.33 the following for the taxable year: 56.34 (1) the taxpayer's federal alternative minimum taxable 56.35 income as defined in section 55(b)(2) of the Internal Revenue 56.36 Code; 57.1 (2) the taxpayer's itemized deductions allowed in computing 57.2 federal alternative minimum taxable income, but excluding: 57.3 (i) the charitable contribution deduction under section 170 57.4 of the Internal Revenue Code to the extent that the deduction 57.5 exceeds 1.0 percent of adjusted gross income, as defined in 57.6 section 62 of the Internal Revenue Code; 57.7 (ii) the medical expense deduction; 57.8 (iii) the casualty, theft, and disaster loss deduction; and 57.9 (iv) the impairment-related work expenses of a disabled 57.10 person; 57.11 (3) for depletion allowances computed under section 613A(c) 57.12 of the Internal Revenue Code, with respect to each property (as 57.13 defined in section 614 of the Internal Revenue Code), to the 57.14 extent not included in federal alternative minimum taxable 57.15 income, the excess of the deduction for depletion allowable 57.16 under section 611 of the Internal Revenue Code for the taxable 57.17 year over the adjusted basis of the property at the end of the 57.18 taxable year (determined without regard to the depletion 57.19 deduction for the taxable year); 57.20 (4) to the extent not included in federal alternative 57.21 minimum taxable income, the amount of the tax preference for 57.22 intangible drilling cost under section 57(a)(2) of the Internal 57.23 Revenue Code determined without regard to subparagraph (E); 57.24 (5) to the extent not included in federal alternative 57.25 minimum taxable income, the amount of interest income as 57.26 provided by section 290.01, subdivision 19a, clause (1); and 57.27 (6) the amount of addition required by section 290.01, 57.28 subdivision 19a,clauseclauses (7), (8), and (9); 57.29 less the sum of the amounts determined under the following: 57.30 (1) interest income as defined in section 290.01, 57.31 subdivision 19b, clause (1); 57.32 (2) an overpayment of state income tax as provided by 57.33 section 290.01, subdivision 19b, clause (2), to the extent 57.34 included in federal alternative minimum taxable income; 57.35 (3) the amount of investment interest paid or accrued 57.36 within the taxable year on indebtedness to the extent that the 58.1 amount does not exceed net investment income, as defined in 58.2 section 163(d)(4) of the Internal Revenue Code. Interest does 58.3 not include amounts deducted in computing federal adjusted gross 58.4 income; and 58.5 (4) amounts subtracted from federal taxable income as 58.6 provided by section 290.01, subdivision 19b, clauses (10)and, 58.7 (11), (12), and (13). 58.8 In the case of an estate or trust, alternative minimum 58.9 taxable income must be computed as provided in section 59(c) of 58.10 the Internal Revenue Code. 58.11 (b) "Investment interest" means investment interest as 58.12 defined in section 163(d)(3) of the Internal Revenue Code. 58.13 (c) "Tentative minimum tax" equals 6.4 percent of 58.14 alternative minimum taxable income after subtracting the 58.15 exemption amount determined under subdivision 3. 58.16 (d) "Regular tax" means the tax that would be imposed under 58.17 this chapter (without regard to this section and section 58.18 290.032), reduced by the sum of the nonrefundable credits 58.19 allowed under this chapter. 58.20 (e) "Net minimum tax" means the minimum tax imposed by this 58.21 section. 58.22 [EFFECTIVE DATE.] This section is effective for tax years 58.23 beginning after December 31, 2004. 58.24 Sec. 16. Minnesota Statutes 2004, section 290A.03, 58.25 subdivision 3, is amended to read: 58.26 Subd. 3. [INCOME.] (1) "Income" means the sum of the 58.27 following: 58.28 (a) federal adjusted gross income as defined in the 58.29 Internal Revenue Code; and 58.30 (b) the sum of the following amounts to the extent not 58.31 included in clause (a): 58.32 (i) all nontaxable income; 58.33 (ii) the amount of a passive activity loss that is not 58.34 disallowed as a result of section 469, paragraph (i) or (m) of 58.35 the Internal Revenue Code and the amount of passive activity 58.36 loss carryover allowed under section 469(b) of the Internal 59.1 Revenue Code; 59.2 (iii) an amount equal to the total of any discharge of 59.3 qualified farm indebtedness of a solvent individual excluded 59.4 from gross income under section 108(g) of the Internal Revenue 59.5 Code; 59.6 (iv) cash public assistance and relief; 59.7 (v) any pension or annuity (including railroad retirement 59.8 benefits, all payments received under the federal Social 59.9 Security Act, supplemental security income, and veterans 59.10 benefits), which was not exclusively funded by the claimant or 59.11 spouse, or which was funded exclusively by the claimant or 59.12 spouse and which funding payments were excluded from federal 59.13 adjusted gross income in the years when the payments were made; 59.14 (vi) interest received from the federal or a state 59.15 government or any instrumentality or political subdivision 59.16 thereof; 59.17 (vii) workers' compensation; 59.18 (viii) nontaxable strike benefits; 59.19 (ix) the gross amounts of payments received in the nature 59.20 of disability income or sick pay as a result of accident, 59.21 sickness, or other disability, whether funded through insurance 59.22 or otherwise; 59.23 (x) a lump sum distribution under section 402(e)(3) of the 59.24 Internal Revenue Code of 1986, as amended through December 31, 59.25 1995; 59.26 (xi) contributions made by the claimant to an individual 59.27 retirement account, including a qualified voluntary employee 59.28 contribution; simplified employee pension plan; self-employed 59.29 retirement plan; cash or deferred arrangement plan under section 59.30 401(k) of the Internal Revenue Code; or deferred compensation 59.31 plan under section 457 of the Internal Revenue Code;and59.32 (xii) nontaxable scholarship or fellowship grants; 59.33 (xiii) the amount of deduction allowed under section 199 of 59.34 the Internal Revenue Code; and 59.35 (xiv) the amount of deduction allowed under section 220 or 59.36 223 of the Internal Revenue Code. 60.1 In the case of an individual who files an income tax return 60.2 on a fiscal year basis, the term "federal adjusted gross income" 60.3 shall mean federal adjusted gross income reflected in the fiscal 60.4 year ending in the calendar year. Federal adjusted gross income 60.5 shall not be reduced by the amount of a net operating loss 60.6 carryback or carryforward or a capital loss carryback or 60.7 carryforward allowed for the year. 60.8 (2) "Income" does not include: 60.9 (a) amounts excluded pursuant to the Internal Revenue Code, 60.10 sections 101(a) and 102; 60.11 (b) amounts of any pension or annuity which was exclusively 60.12 funded by the claimant or spouse and which funding payments were 60.13 not excluded from federal adjusted gross income in the years 60.14 when the payments were made; 60.15 (c) surplus food or other relief in kind supplied by a 60.16 governmental agency; 60.17 (d) relief granted under this chapter; 60.18 (e) child support payments received under a temporary or 60.19 final decree of dissolution or legal separation; or 60.20 (f) restitution payments received by eligible individuals 60.21 and excludable interest as defined in section 803 of the 60.22 Economic Growth and Tax Relief Reconciliation Act of 2001, 60.23 Public Law 107-16. 60.24 (3) The sum of the following amounts may be subtracted from 60.25 income: 60.26 (a) for the claimant's first dependent, the exemption 60.27 amount multiplied by 1.4; 60.28 (b) for the claimant's second dependent, the exemption 60.29 amount multiplied by 1.3; 60.30 (c) for the claimant's third dependent, the exemption 60.31 amount multiplied by 1.2; 60.32 (d) for the claimant's fourth dependent, the exemption 60.33 amount multiplied by 1.1; 60.34 (e) for the claimant's fifth dependent, the exemption 60.35 amount; and 60.36 (f) if the claimant or claimant's spouse was disabled or 61.1 attained the age of 65 on or before December 31 of the year for 61.2 which the taxes were levied or rent paid, the exemption amount. 61.3 For purposes of this subdivision, the "exemption amount" 61.4 means the exemption amount under section 151(d) of the Internal 61.5 Revenue Code for the taxable year for which the income is 61.6 reported. 61.7 [EFFECTIVE DATE.] This section is effective for property 61.8 tax refunds based on household income for 2004 and thereafter. 61.9 Sec. 17. Minnesota Statutes 2004, section 290A.03, 61.10 subdivision 15, is amended to read: 61.11 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 61.12 means the Internal Revenue Code of 1986, as amended throughJune61.1315, 2003December 31, 2004. 61.14 [EFFECTIVE DATE.] This section is effective for property 61.15 tax refunds based on property taxes payable on or after December 61.16 31, 2004, and rent paid on or after December 31, 2003. 61.17 Sec. 18. [PREEMPTION.] 61.18 If a bill styled as S.F. No. 1209 is enacted during the 61.19 2005 legislative session, and includes federal update 61.20 provisions, the provisions of that act relating to federal 61.21 updates are repealed. 61.22 ARTICLE 3 61.23 SALES TAX 61.24 Section 1. Minnesota Statutes 2004, section 289A.11, 61.25 subdivision 1, is amended to read: 61.26 Subdivision 1. [RETURN REQUIRED.] Except as provided in 61.27 section 289A.18,subdivisionsubdivisions 4 and 4a, for the 61.28 month in which taxes imposed by chapter 297A are payable, or for 61.29 which a return is due, a return for the preceding reporting 61.30 period must be filed with the commissioner in the form and 61.31 manner the commissioner prescribes. A person making sales at 61.32 retail at two or more places of business may file a consolidated 61.33 return subject to rules prescribed by the commissioner. In 61.34 computing the dollar amount of items on the return, the amounts 61.35 are rounded off to the nearest whole dollar, disregarding 61.36 amounts less than 50 cents and increasing amounts of 50 cents to 62.1 99 cents to the next highest dollar. 62.2Notwithstanding this subdivision, a person who is not62.3required to hold a sales tax permit under chapter 297A and who62.4makes annual purchases of less than $18,500 that are subject to62.5the use tax imposed by section 297A.63, may file an annual use62.6tax return on a form prescribed by the commissioner. If a62.7person who qualifies for an annual use tax reporting period is62.8required to obtain a sales tax permit or makes use tax purchases62.9in excess of $18,500 during the calendar year, the reporting62.10period must be considered ended at the end of the month in which62.11the permit is applied for or the purchase in excess of $18,50062.12is made and a return must be filed for the preceding reporting62.13period.62.14 [EFFECTIVE DATE.] This section is effective for purchases 62.15 made on and after July 1, 2005. 62.16 Sec. 2. Minnesota Statutes 2004, section 289A.18, 62.17 subdivision 4, is amended to read: 62.18 Subd. 4. [SALES AND USE TAX RETURNS.] (a) Sales and use 62.19 tax returns must be filed on or before the 20th day of the month 62.20 following the close of the preceding reporting period, 62.21 exceptthat annual use taxreturns provided for undersection62.22289A.11, subdivision 1, must be filed by April 15 following the62.23close of the calendar yearsubdivision 4a, in the case of 62.24 individuals. Annual use tax returns of businesses, including 62.25 sole proprietorships, and annual sales tax returns must be filed 62.26 by February 5 following the close of the calendar year. 62.27 (b) Returns for the June reporting period filed by 62.28 retailers required to remit their June liability under section 62.29 289A.20, subdivision 4, paragraph (b), are due on or before 62.30 August 20. 62.31 (c) If a retailer has an average sales and use tax 62.32 liability, including local sales and use taxes administered by 62.33 the commissioner, equal to or less than $500 per month in any 62.34 quarter of a calendar year, and has substantially complied with 62.35 the tax laws during the preceding four calendar quarters, the 62.36 retailer may request authorization to file and pay the taxes 63.1 quarterly in subsequent calendar quarters. The authorization 63.2 remains in effect during the period in which the retailer's 63.3 quarterly returns reflect sales and use tax liabilities of less 63.4 than $1,500 and there is continued compliance with state tax 63.5 laws. 63.6 (d) If a retailer has an average sales and use tax 63.7 liability, including local sales and use taxes administered by 63.8 the commissioner, equal to or less than $100 per month during a 63.9 calendar year, and has substantially complied with the tax laws 63.10 during that period, the retailer may request authorization to 63.11 file and pay the taxes annually in subsequent years. The 63.12 authorization remains in effect during the period in which the 63.13 retailer's annual returns reflect sales and use tax liabilities 63.14 of less than $1,200 and there is continued compliance with state 63.15 tax laws. 63.16 (e) The commissioner may also grant quarterly or annual 63.17 filing and payment authorizations to retailers if the 63.18 commissioner concludes that the retailers' future tax 63.19 liabilities will be less than the monthly totals identified in 63.20 paragraphs (c) and (d). An authorization granted under this 63.21 paragraph is subject to the same conditions as an authorization 63.22 granted under paragraphs (c) and (d). 63.23 (f) A taxpayer who is a materials supplier may report gross 63.24 receipts either on: 63.25 (1) the cash basis as the consideration is received; or 63.26 (2) the accrual basis as sales are made. 63.27 As used in this paragraph, "materials supplier" means a person 63.28 who provides materials for the improvement of real property; who 63.29 is primarily engaged in the sale of lumber and building 63.30 materials-related products to owners, contractors, 63.31 subcontractors, repairers, or consumers; who is authorized to 63.32 file a mechanics lien upon real property and improvements under 63.33 chapter 514; and who files with the commissioner an election to 63.34 file sales and use tax returns on the basis of this paragraph. 63.35 (g) Notwithstanding paragraphs (a) to (f), a seller that is 63.36 not a Model 1, 2, or 3 seller, as those terms are used in the 64.1 Streamlined Sales and Use Tax Agreement, that does not have a 64.2 legal requirement to register in Minnesota, and that is 64.3 registered under the agreement, must file a return by February 5 64.4 following the close of the calendar year in which the seller 64.5 initially registers, and must file subsequent returns on 64.6 February 5 on an annual basis in succeeding years. 64.7 Additionally, a return must be submitted on or before the 20th 64.8 day of the month following any month by which sellers have 64.9 accumulated state and local tax funds for the state in the 64.10 amount of $1,000 or more. 64.11 [EFFECTIVE DATE.] This section is effective for purchases 64.12 on and after July 1, 2005. 64.13 Sec. 3. Minnesota Statutes 2004, section 289A.18, is 64.14 amended by adding a subdivision to read: 64.15 Subd. 4a. [USE TAX RETURNS FOR INDIVIDUALS.] Individuals 64.16 who are subject to the use tax imposed under section 297A.63 may 64.17 file and pay use tax owed on purchases for personal use under 64.18 their Social Security number as follows: 64.19 (1) on the individual income tax return for the calendar 64.20 year in which the purchases are made; 64.21 (2) on the form for making payments of the individual 64.22 income tax estimated payments under section 289A.25 for the 64.23 calendar quarter in which the purchases are made; or 64.24 (3) on the individual use tax return, in the form 64.25 prescribed by the commissioner, for purchases made in a calendar 64.26 quarter, to be filed on or before the 20th day of the month 64.27 following the close of the preceding quarter. 64.28 [EFFECTIVE DATE.] This section is effective for purchases 64.29 made on and after July 1, 2005, and for income tax returns 64.30 required to be filed for tax years beginning after December 31, 64.31 2004. 64.32 Sec. 4. Minnesota Statutes 2004, section 297A.61, is 64.33 amended by adding a subdivision to read: 64.34 Subd. 37. [PERSONAL RAPID TRANSIT SYSTEM.] "Personal rapid 64.35 transit system" means a transportation system of small, 64.36 computer-controlled vehicles, transporting one to three 65.1 passengers on elevated guideways in a transportation network 65.2 operating on demand and nonstop directly to any stations in the 65.3 network. The system shall provide service on a regular and 65.4 continuing basis and operate independent of any government 65.5 subsidies. 65.6 [EFFECTIVE DATE.] This section is effective for sales and 65.7 purchases made after June 30, 2008. 65.8 Sec. 5. Minnesota Statutes 2004, section 297A.67, is 65.9 amended by adding a subdivision to read: 65.10 Subd. 32. [GEOTHERMAL EQUIPMENT.] The loop field 65.11 collection system and the heat pump of a geothermal heating and 65.12 cooling system is exempt. 65.13 [EFFECTIVE DATE.] This section is effective for sales and 65.14 purchases occurring after June 30, 2005. 65.15 Sec. 6. Minnesota Statutes 2004, section 297A.67, is 65.16 amended by adding a subdivision to read: 65.17 Subd. 33. [BIOMASS FUEL STOVES.] Stoves designed to burn 65.18 fuel pellets made from biomass materials are exempt. 65.19 [EFFECTIVE DATE.] This section is effective for sales and 65.20 purchases made after June 30, 2005. 65.21 Sec. 7. Minnesota Statutes 2004, section 297A.68, 65.22 subdivision 5, is amended to read: 65.23 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 65.24 exempt. The tax must be imposed and collected as if the rate 65.25 under section 297A.62, subdivision 1, applied, and then refunded 65.26 in the manner provided in section 297A.75. 65.27 "Capital equipment" means machinery and equipment purchased 65.28 or leased, and used in this state by the purchaser or lessee 65.29 primarily for manufacturing, fabricating, mining, or refining 65.30 tangible personal property to be sold ultimately at retail if 65.31 the machinery and equipment are essential to the integrated 65.32 production process of manufacturing, fabricating, mining, or 65.33 refining. Capital equipment also includes machinery and 65.34 equipment used to electronically transmit results retrieved by a 65.35 customer of an on-line computerized data retrieval system. 65.36 (b) Capital equipment includes, but is not limited to: 66.1 (1) machinery and equipment used to operate, control, or 66.2 regulate the production equipment; 66.3 (2) machinery and equipment used for research and 66.4 development, design, quality control, and testing activities; 66.5 (3) environmental control devices that are used to maintain 66.6 conditions such as temperature, humidity, light, or air pressure 66.7 when those conditions are essential to and are part of the 66.8 production process; 66.9 (4) materials and supplies used to construct and install 66.10 machinery or equipment; 66.11 (5) repair and replacement parts, including accessories, 66.12 whether purchased as spare parts, repair parts, or as upgrades 66.13 or modifications to machinery or equipment; 66.14 (6) materials used for foundations that support machinery 66.15 or equipment; 66.16 (7) materials used to construct and install special purpose 66.17 buildings used in the production process; 66.18 (8) ready-mixed concrete equipment in which the ready-mixed 66.19 concrete is mixed as part of the delivery process regardless if 66.20 mounted on a chassis and leases of ready-mixed concrete trucks; 66.21 and 66.22 (9) machinery or equipment used for research, development, 66.23 design, or production of computer software. 66.24 (c) Capital equipment does not include the following: 66.25 (1) motor vehicles taxed under chapter 297B; 66.26 (2) machinery or equipment used to receive or store raw 66.27 materials; 66.28 (3) building materials, except for materials included in 66.29 paragraph (b), clauses (6) and (7); 66.30 (4) machinery or equipment used for nonproduction purposes, 66.31 including, but not limited to, the following: plant security, 66.32 fire prevention, first aid, and hospital stations; support 66.33 operations or administration; pollution control; and plant 66.34 cleaning, disposal of scrap and waste, plant communications, 66.35 space heating, cooling, lighting, or safety; 66.36 (5) farm machinery and aquaculture production equipment as 67.1 defined by section 297A.61, subdivisions 12 and 13; 67.2 (6) machinery or equipment purchased and installed by a 67.3 contractor as part of an improvement to real property; or 67.4 (7) any other item that is not essential to the integrated 67.5 process of manufacturing, fabricating, mining, or refining. 67.6 (d) For purposes of this subdivision: 67.7 (1) "Equipment" means independent devices or tools separate 67.8 from machinery but essential to an integrated production 67.9 process, including computers and computer software, used in 67.10 operating, controlling, or regulating machinery and equipment; 67.11 and any subunit or assembly comprising a component of any 67.12 machinery or accessory or attachment parts of machinery, such as 67.13 tools, dies, jigs, patterns, and molds. 67.14 (2) "Fabricating" means to make, build, create, produce, or 67.15 assemble components or property to work in a new or different 67.16 manner. 67.17 (3) "Integrated production process" means a process or 67.18 series of operations through which tangible personal property is 67.19 manufactured, fabricated, mined, or refined. For purposes of 67.20 this clause, (i) manufacturing begins with the removal of raw 67.21 materials from inventory and ends when the last process prior to 67.22 loading for shipment has been completed; (ii) fabricating begins 67.23 with the removal from storage or inventory of the property to be 67.24 assembled, processed, altered, or modified and ends with the 67.25 creation or production of the new or changed product; (iii) 67.26 mining begins with the removal of overburden from the site of 67.27 the ores, minerals, stone, peat deposit, or surface materials 67.28 and ends when the last process before stockpiling is completed; 67.29 and (iv) refining begins with the removal from inventory or 67.30 storage of a natural resource and ends with the conversion of 67.31 the item to its completed form. 67.32 (4) "Machinery" means mechanical, electronic, or electrical 67.33 devices, including computers and computer software, that are 67.34 purchased or constructed to be used for the activities set forth 67.35 in paragraph (a), beginning with the removal of raw materials 67.36 from inventory through completion of the product, including 68.1 packaging of the product. 68.2 (5) "Machinery and equipment used for pollution control" 68.3 means machinery and equipment used solely to eliminate, prevent, 68.4 or reduce pollution resulting from an activity described in 68.5 paragraph (a). 68.6 (6) "Manufacturing" means an operation or series of 68.7 operations where raw materials are changed in form, composition, 68.8 or condition by machinery and equipment and which results in the 68.9 production of a new article of tangible personal property. For 68.10 purposes of this subdivision, "manufacturing" includes the 68.11 generation of electricity or steam to be sold at retail. 68.12 (7) "Mining" means the extraction of minerals, ores, stone, 68.13 or peat. 68.14 (8) "On-line data retrieval system" means a system whose 68.15 cumulation of information is equally available and accessible to 68.16 all its customers. 68.17 (9) "Primarily" means machinery and equipment used 50 68.18 percent or more of the time in an activity described in 68.19 paragraph (a). 68.20 (10) "Refining" means the process of converting a natural 68.21 resource to an intermediate or finished product, including the 68.22 treatment of water to be sold at retail. 68.23 (11) This subdivision does not apply to telecommunications 68.24 equipment as provided in subdivision 35, and does not apply to 68.25 wire, cable, fiber, poles, or conduit for telecommunications 68.26 services. 68.27 [EFFECTIVE DATE.] This section is effective for purchases 68.28 made after July 31, 2005, and before July 1, 2008. 68.29 Sec. 8. Minnesota Statutes 2004, section 297A.68, 68.30 subdivision 19, is amended to read: 68.31 Subd. 19. [PETROLEUM PRODUCTS.] The following petroleum 68.32 products are exempt: 68.33 (1) products upon which a tax has been imposed and paid 68.34 under chapter 296A, and for which no refund has been or will be 68.35 allowed because the buyer used the fuel for nonhighway use; 68.36 (2) products that are used in the improvement of 69.1 agricultural land by constructing, maintaining, and repairing 69.2 drainage ditches, tile drainage systems, grass waterways, water 69.3 impoundment, and other erosion control structures; 69.4 (3) products purchased by a transit system receiving 69.5 financial assistance under section 174.24, 256B.0625, 69.6 subdivision 17, or 473.384; 69.7 (4) products purchased by an ambulance service licensed 69.8 under chapter 144E; 69.9 (5) products used in a passenger snowmobile, as defined in 69.10 section 296A.01, subdivision 39, for off-highway business use as 69.11 part of the operations of a resort as provided under section 69.12 296A.16, subdivision 2, clause (2);or69.13 (6) products purchased by a state or a political 69.14 subdivision of a state for use in motor vehicles exempt from 69.15 registration under section 168.012, subdivision 1, paragraph 69.16 (b); or 69.17 (7) products purchased for use as fuel for a commuter rail 69.18 system operating under sections 174.80 to 174.90. The tax must 69.19 be imposed and collected as if the rate under section 297A.62, 69.20 subdivision 1, applied, and then refunded in the manner provided 69.21 in section 297A.75. 69.22 [EFFECTIVE DATE.] This section is effective for purchases 69.23 made after June 30, 2005, and terminates when the commissioner 69.24 of revenue determines that the cost of the exemption under this 69.25 subdivision to that point in time totals $20,000. 69.26 Sec. 9. Minnesota Statutes 2004, section 297A.68, is 69.27 amended by adding a subdivision to read: 69.28 Subd. 40. [MOVIES AND TELEVISION; INPUTS TO PRODUCTION.] 69.29 The sale of tangible personal property primarily used or 69.30 consumed directly in the preproduction, production, and 69.31 postproduction of movies and television shows that are produced 69.32 for domestic and international commercial distribution are 69.33 exempt. "Preproduction" and "production" include all the 69.34 activities related to the preparation of shooting and the 69.35 shooting of movies and television shows, including film 69.36 processing. Equipment rented for preproduction and production 70.1 activities are exempt. "Postproduction" includes all activities 70.2 related to editing and finishing of the movie or television 70.3 show. This exemption does not apply to tangible personal 70.4 property or services used primarily in administration, general 70.5 management, or marketing. Machinery and equipment purchased for 70.6 use in producing movies and television shows, fuel, electricity, 70.7 gas, or steam used for space heating and lighting, food, 70.8 lodging, and any property or service for the personal use of any 70.9 individual are not exempt under this subdivision. 70.10 [EFFECTIVE DATE.] This section is effective for sales and 70.11 purchases made after June 30, 2005. 70.12 Sec. 10. Minnesota Statutes 2004, section 297A.68, is 70.13 amended by adding a subdivision to read: 70.14 Subd. 41. [PERSONAL RAPID TRANSIT SYSTEM.] (a) Machinery, 70.15 equipment, and supplies purchased or leased, and used by the 70.16 purchaser or lessee in this state directly in the provision of a 70.17 personal rapid transit system as defined in section 297A.61, 70.18 subdivision 37, are exempt. Machinery, equipment, and supplies 70.19 that qualify for this exemption include, but are not limited to, 70.20 the following: 70.21 (1) vehicles, guideways, and related parts used directly in 70.22 the transit system; 70.23 (2) computers and equipment used primarily for operating, 70.24 controlling, and regulating the system; 70.25 (3) machinery, equipment, furniture, and fixtures necessary 70.26 for the functioning of system stations; 70.27 (4) machinery, equipment, implements, tools, and supplies 70.28 used to maintain vehicles, guideways, and stations; and 70.29 (5) electricity and other fuels used in the provision of 70.30 the transit service, including heating, cooling, and lighting of 70.31 system stations. 70.32 (b) This exemption does not include machinery, equipment, 70.33 and supplies used for support and administration operations. 70.34 [EFFECTIVE DATE.] This section is effective for sales and 70.35 purchases made after June 30, 2008. 70.36 Sec. 11. Minnesota Statutes 2004, section 297A.70, 71.1 subdivision 8, is amended to read: 71.2 Subd. 8. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 71.3 SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 71.4 but not limited to, end user equipment used for construction, 71.5 ownership, operation, maintenance, and enhancement of the 71.6 backbone system of the regionwide public safety radio 71.7 communication system established under sections 403.21 to 71.8 403.34, are exempt. For purposes of this subdivision, backbone 71.9 system is defined in section 403.21, subdivision 9. This 71.10 subdivision is effective for purchases, sales, storage, use, or 71.11 consumptionoccurring before August 1, 2005, in the counties of71.12Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and71.13Washingtonfor use in the first and second phases of the system, 71.14 as defined in section 403.21, subdivisions 3, 10, and 11, and 71.15 that portion of the third phase of the system that is located in 71.16 the southeast district of the State Patrol and the counties of 71.17 Benton, Sherburne, Stearns, and Wright. 71.18 [EFFECTIVE DATE.] This section is effective for sales after 71.19 June 30, 2005, and terminates when the commissioner of revenue 71.20 determines that the cost of the exemption under this subdivision 71.21 to that point in time totals $5,470,000. 71.22 Sec. 12. Minnesota Statutes 2004, section 297A.70, is 71.23 amended by adding a subdivision to read: 71.24 Subd. 17. [DONATED MEALS.] Meals that are normally sold at 71.25 retail in the ordinary business activities of the taxpayer are 71.26 exempt if the meals are donated to a nonprofit group as defined 71.27 in subdivision 4 for fund-raising purposes. 71.28 [EFFECTIVE DATE.] This section is effective for donations 71.29 made after June 30, 2005. 71.30 Sec. 13. Minnesota Statutes 2004, section 297A.71, is 71.31 amended by adding a subdivision to read: 71.32 Subd. 33. [COMMUTER RAIL MATERIAL, SUPPLIES, AND 71.33 EQUIPMENT.] Materials and supplies consumed in, and equipment 71.34 incorporated in the construction, equipment, or improvement of a 71.35 commuter rail transportation system operated under sections 71.36 174.80 and 174.90 are exempt. This exemption includes railroad 72.1 cars and engines and related equipment. 72.2 [EFFECTIVE DATE.] This section is effective for purchases 72.3 made after June 30, 2005, and terminates when the commissioner 72.4 of revenue determines that the cost of the exemption for sales 72.5 to that point in time totals $8,600,000. 72.6 Sec. 14. Minnesota Statutes 2004, section 297A.71, is 72.7 amended by adding a subdivision to read: 72.8 Subd. 34. [WASTE RECOVERY FACILITY.] Materials and 72.9 supplies used or consumed in, and equipment incorporated into, 72.10 the construction, improvement, or expansion of a waste-to-energy 72.11 resource recovery facility are exempt if the facility uses 72.12 biomass or mixed municipal solid waste as a primary fuel to 72.13 generate steam or electricity. 72.14 [EFFECTIVE DATE.] This section is effective for sales and 72.15 purchases made after June 30, 2005. 72.16 Sec. 15. Minnesota Statutes 2004, section 297A.71, is 72.17 amended by adding a subdivision to read: 72.18 Subd. 35. [PERSONAL RAPID TRANSIT SYSTEM.] Materials and 72.19 supplies used or consumed in, and equipment incorporated into 72.20 the construction, expansion, or improvement of a personal rapid 72.21 transit system as defined in section 297A.61, subdivision 37, 72.22 are exempt. 72.23 [EFFECTIVE DATE.] This section is effective for sales and 72.24 purchases made after June 30, 2005, and terminates when the 72.25 commissioner of revenue determines that the cost of the 72.26 exemption under this subdivision to that point in time totals 72.27 $200,000. 72.28 Sec. 16. Minnesota Statutes 2004, section 297A.71, is 72.29 amended by adding a subdivision to read: 72.30 Subd. 36. [ST. MARY'S DULUTH CLINIC HEALTH 72.31 SYSTEM.] Materials and supplies used or consumed in and 72.32 equipment incorporated into the construction of the hospital 72.33 portion of the St. Mary's Duluth Clinic Health System are exempt. 72.34 [EFFECTIVE DATE.] This section is effective for purchases 72.35 made on or after March 1, 2004, and on or before December 31, 72.36 2006. For purchases made on or after March 1, 2004, and before 73.1 the day following final enactment of this act, for which the 73.2 sales tax was paid, the commissioner of revenue shall refund the 73.3 tax. Except as otherwise provided in this paragraph, the 73.4 provisions of section 297A.75, subdivisions 2, 3, 4, and 5, 73.5 apply to a refund under this paragraph. The applicant must be 73.6 the owner of the St. Mary's Duluth Clinic Health System. If the 73.7 tax was paid by the contractor, subcontractor, or builder, the 73.8 contractor, subcontractor, or builder must furnish to the owner 73.9 a statement indicating the cost of the exempt items and the 73.10 taxes paid on the items. 73.11 Sec. 17. Minnesota Statutes 2004, section 297A.71, is 73.12 amended by adding a subdivision to read: 73.13 Subd. 37. [MUNICIPAL UTILITIES.] Materials and supplies 73.14 used or consumed in, and equipment incorporated into, the 73.15 construction, improvement, or expansion of electric generation 73.16 and related facilities used pursuant to a joint power purchase 73.17 agreement to meet the biomass energy mandate in section 73.18 216B.2424 are exempt if the owner or owners of the facilities 73.19 are a municipal electric utility or utilities or a joint venture 73.20 of municipal electric utilities. The tax must be imposed and 73.21 collected as if the rate under section 297A.62, subdivision 1, 73.22 applied and then refunded under section 297A.75. 73.23 [EFFECTIVE DATE.] This section is effective for sales and 73.24 purchases made after January 1, 2005. 73.25 Sec. 18. Minnesota Statutes 2004, section 297A.71, is 73.26 amended by adding a subdivision to read: 73.27 Subd. 38. [CHATFIELD WASTEWATER TREATMENT 73.28 FACILITY.] Materials and supplies used in and equipment 73.29 incorporated into the construction, improvement, or expansion of 73.30 a wastewater treatment facility owned by the city of Chatfield 73.31 are exempt. This exemption is effective for purchases made 73.32 before December 31, 2007. 73.33 [EFFECTIVE DATE.] This section is effective for sales and 73.34 purchases made on or after June 1, 2005. 73.35 Sec. 19. Minnesota Statutes 2004, section 297A.75, 73.36 subdivision 1, is amended to read: 74.1 Subdivision 1. [TAX COLLECTED.] The tax on the gross 74.2 receipts from the sale of the following exempt items must be 74.3 imposed and collected as if the sale were taxable and the rate 74.4 under section 297A.62, subdivision 1, applied. The exempt items 74.5 include: 74.6 (1) capital equipment exempt under section 297A.68, 74.7 subdivision 5; 74.8 (2) building materials for an agricultural processing 74.9 facility exempt under section 297A.71, subdivision 13; 74.10 (3) building materials for mineral production facilities 74.11 exempt under section 297A.71, subdivision 14; 74.12 (4) building materials for correctional facilities under 74.13 section 297A.71, subdivision 3; 74.14 (5) building materials used in a residence for disabled 74.15 veterans exempt under section 297A.71, subdivision 11; 74.16 (6) chair lifts, ramps, elevators, and associated building 74.17 materials exempt under section 297A.71, subdivision 12; 74.18 (7) building materials for the Long Lake Conservation 74.19 Center exempt under section 297A.71, subdivision 17; 74.20 (8) materials, supplies, fixtures, furnishings, and 74.21 equipment for a county law enforcement and family service center 74.22 under section 297A.71, subdivision 26;and74.23 (9) materials and supplies for qualified low-income housing 74.24 under section 297A.71, subdivision 23; 74.25 (10) fuel purchased for commuter rail systems under section 74.26 297A.68, subdivision 19, clause (7); and 74.27 (11) materials, supplies, and equipment for municipal 74.28 electric utility facilities under section 297A.71, subdivision 74.29 37. 74.30 [EFFECTIVE DATE.] Clause (10) is effective for purchases 74.31 made after June 30, 2005, and clause (11) is effective for 74.32 purchases made after December 31, 2004. 74.33 Sec. 20. Minnesota Statutes 2004, section 297A.75, 74.34 subdivision 2, is amended to read: 74.35 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 74.36 forms prescribed by the commissioner, a refund equal to the tax 75.1 paid on the gross receipts of the exempt items must be paid to 75.2 the applicant. Only the following persons may apply for the 75.3 refund: 75.4 (1) for subdivision 1, clauses (1) to (3), the applicant 75.5 must be the purchaser; 75.6 (2) for subdivision 1, clauses (4), (7), and (8), the 75.7 applicant must be the governmental subdivision; 75.8 (3) for subdivision 1, clause (5), the applicant must be 75.9 the recipient of the benefits provided in United States Code, 75.10 title 38, chapter 21; 75.11 (4) for subdivision 1, clause (6), the applicant must be 75.12 the owner of the homestead property;and75.13 (5) for subdivision 1, clause (9), the owner of the 75.14 qualified low-income housing project; 75.15 (6) for subdivision 1, clause (10), the operator of the 75.16 commuter rail system; and 75.17 (7) for subdivision 1, clause (11), the applicant must be a 75.18 municipal electric utility or a joint venture of municipal 75.19 electric utilities. 75.20 [EFFECTIVE DATE.] Clause (6) is effective for purchases 75.21 made after June 30, 2005. Clause (7) is effective for purchases 75.22 made after December 31, 2004. 75.23 Sec. 21. Minnesota Statutes 2004, section 297A.75, 75.24 subdivision 3, is amended to read: 75.25 Subd. 3. [APPLICATION.] (a) The application must include 75.26 sufficient information to permit the commissioner to verify the 75.27 tax paid. If the tax was paid by a contractor, subcontractor, 75.28 or builder, under subdivision 1, clause (4), (5), (6), (7), (8), 75.29or(9), or (11), the contractor, subcontractor, or builder must 75.30 furnish to the refund applicant a statement including the cost 75.31 of the exempt items and the taxes paid on the items unless 75.32 otherwise specifically provided by this subdivision. The 75.33 provisions of sections 289A.40 and 289A.50 apply to refunds 75.34 under this section. 75.35 (b) An applicant may not file more than two applications 75.36 per calendar year for refunds for taxes paid on capital 76.1 equipment exempt under section 297A.68, subdivision 5. 76.2 [EFFECTIVE DATE.] This section is effective for sales and 76.3 purchases made after December 31, 2004. 76.4 Sec. 22. Minnesota Statutes 2004, section 297A.83, 76.5 subdivision 1, is amended to read: 76.6 Subdivision 1. [PERSONS APPLYING.] (a) A retailer required 76.7 to collect and remit sales taxes under section 297A.66 shall 76.8 file with the commissioner an application for a permit. 76.9 (b) A retailer making retail sales from outside this state 76.10 to a destination within this state who is not required to obtain 76.11 a permit under paragraph (a) may nevertheless voluntarily file 76.12 an application for a permit. 76.13 (c) The commissioner may require any person or class of 76.14 persons obligated to file a use tax return under section 76.15 289A.11, subdivision 3, to file an application for a permit, 76.16 except an individual allowed to file and pay use tax under 76.17 section 289A.18, subdivision 4a, is not required to obtain a 76.18 permit. 76.19 [EFFECTIVE DATE.] This section is effective for purchases 76.20 on and after July 1, 2005. 76.21 Sec. 23. Minnesota Statutes 2004, section 297A.87, 76.22 subdivision 2, is amended to read: 76.23 Subd. 2. [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The 76.24 operator of an event under subdivision 1 shall obtain one of the 76.25 following from a person who wishes to do business as a seller at 76.26 the event: 76.27 (1) evidence that the person holds a valid seller's permit 76.28 under section 297A.84;or76.29 (2) a written statement that the person is not offering for 76.30 sale any item that is taxable under this chapter; or 76.31 (3) a written statement that this is the only selling event 76.32 that the person will be participating in for that calendar year, 76.33 that the person will be participating for three or fewer days, 76.34 and that the person will make $500 or less in total sales in the 76.35 calendar year. The written statement shall include the person's 76.36 name, address, and telephone number. 77.1 (b) The operator shall require the evidence or statement as 77.2 a prerequisite to participating in the event as a seller. 77.3 [EFFECTIVE DATE.] This section is effective for selling 77.4 events occurring after June 30, 2005. 77.5 Sec. 24. Minnesota Statutes 2004, section 297A.87, 77.6 subdivision 3, is amended to read: 77.7 Subd. 3. [OCCASIONAL SALE PROVISIONSNOTAPPLICABLE UNDER 77.8 LIMITED CIRCUMSTANCES.] The isolated and occasional 77.9 saleprovisionsprovision under section 297A.67, subdivision 23, 77.10orapplies, provided that the seller only participates for three 77.11 or fewer days in one event per calendar year, makes $500 or less 77.12 in sales in the calendar year, and provides the written 77.13 statement required in subdivision 2, paragraph (a), clause (3). 77.14 The isolated and occasional sales provision under section 77.15 297A.68, subdivision 25,dodoes not apply to a seller at an 77.16 event under this section. 77.17 [EFFECTIVE DATE.] This section is effective for selling 77.18 events occurring after June 30, 2005. 77.19 Sec. 25. Minnesota Statutes 2004, section 297B.03, is 77.20 amended to read: 77.21 297B.03 [EXEMPTIONS.] 77.22 There is specifically exempted from the provisions of this 77.23 chapter and from computation of the amount of tax imposed by it 77.24 the following: 77.25 (1) purchase or use, including use under a lease purchase 77.26 agreement or installment sales contract made pursuant to section 77.27 465.71, of any motor vehicle by the United States and its 77.28 agencies and instrumentalities and by any person described in 77.29 and subject to the conditions provided in section 297A.67, 77.30 subdivision 11; 77.31 (2) purchase or use of any motor vehicle by any person who 77.32 was a resident of another state or country at the time of the 77.33 purchase and who subsequently becomes a resident of Minnesota, 77.34 provided the purchase occurred more than 60 days prior to the 77.35 date such person began residing in the state of Minnesota and 77.36 the motor vehicle was registered in the person's name in the 78.1 other state or country; 78.2 (3) purchase or use of any motor vehicle by any person 78.3 making a valid election to be taxed under the provisions of 78.4 section 297A.90; 78.5 (4) purchase or use of any motor vehicle previously 78.6 registered in the state of Minnesota when such transfer 78.7 constitutes a transfer within the meaning of section 118, 331, 78.8 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 78.9 1563(a) of the Internal Revenue Code of 1986, as amended through 78.10 December 31, 1999; 78.11 (5) purchase or use of any vehicle owned by a resident of 78.12 another state and leased to a Minnesota-based private or 78.13 for-hire carrier for regular use in the transportation of 78.14 persons or property in interstate commerce provided the vehicle 78.15 is titled in the state of the owner or secured party, and that 78.16 state does not impose a sales tax or sales tax on motor vehicles 78.17 used in interstate commerce; 78.18 (6) purchase or use of a motor vehicle by a private 78.19 nonprofit or public educational institution for use as an 78.20 instructional aid in automotive training programs operated by 78.21 the institution. "Automotive training programs" includes motor 78.22 vehicle body and mechanical repair courses but does not include 78.23 driver education programs; 78.24 (7) purchase of a motor vehicle for use as an ambulance by 78.25 an ambulance service licensed under section 144E.10; 78.26 (8) purchase of a motor vehicle by or for a public library, 78.27 as defined in section 134.001, subdivision 2, as a bookmobile or 78.28 library delivery vehicle; 78.29 (9) purchase of a ready-mixed concrete truck; 78.30 (10) purchase or use of a motor vehicle by a town for use 78.31 exclusively for road maintenance, including snowplows and dump 78.32 trucks, but not including automobiles, vans, or pickup trucks; 78.33 (11) purchase or use of a motor vehicle by a corporation, 78.34 society, association, foundation, or institution organized and 78.35 operated exclusively for charitable, religious, or educational 78.36 purposes, except a public school, university, or library, but 79.1 only if the vehicle is: 79.2 (i) a truck, as defined in section 168.011, a bus, as 79.3 defined in section 168.011, or a passenger automobile, as 79.4 defined in section 168.011, if the automobile is designed and 79.5 used for carrying more than nine persons including the driver; 79.6 and 79.7 (ii) intended to be used primarily to transport tangible 79.8 personal property or individuals, other than employees, to whom 79.9 the organization provides service in performing its charitable, 79.10 religious, or educational purpose; 79.11 (12) purchase of a motor vehicle for use by a transit 79.12 provider exclusively to provide transit service is exempt if the 79.13 transit provider is either (i) receiving financial assistance or 79.14 reimbursement under section 174.24 or 473.384, or (ii) operating 79.15 under section 174.29, 473.388, or 473.405; 79.16 (13) purchase or use of a motor vehicle by a qualified 79.17 business, as defined in section 469.310, located in a job 79.18 opportunity building zone, if the motor vehicle is principally 79.19 garaged in the job opportunity building zone and is primarily 79.20 used as part of or in direct support of the person's operations 79.21 carried on in the job opportunity building zone. The exemption 79.22 under this clause applies to sales, if the purchase was made and 79.23 delivery received during the duration of the job opportunity 79.24 building zone. The exemption under this clause also applies to 79.25 any local sales and use tax; 79.26 (14) purchase or use after June 30, 2005, and before July 79.27 1, 2008, of a motor vehicle by a state agency or political 79.28 subdivision, provided that the motor vehicle has a fuel 79.29 efficiency greater than 45 miles per gallon in highway use, and 79.30 greater than 35 miles per gallon in city use, as certified by 79.31 the United States Environmental Protection Agency. 79.32 [EFFECTIVE DATE.] This section is effective for sales and 79.33 transfers made after June 30, 2005, and before July 1, 2008. 79.34 Sec. 26. Minnesota Statutes 2004, section 477A.016, is 79.35 amended to read: 79.36 477A.016 [NEW TAXES PROHIBITED.] 80.1 No county, city, town or other taxing authority shall 80.2increase a present tax orimpose anewtax onsales orincome. 80.3 [EFFECTIVE DATE.] This section is effective on and after 80.4 July 1, 2005. 80.5 Sec. 27. Laws 1991, chapter 291, article 8, section 27, 80.6 subdivision 4, is amended to read: 80.7 Subd. 4. [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 80.8 LIMITATION.] The authority granted by subdivisions 1 and 2 to 80.9 the city to impose a sales tax and an excise tax shall expire on 80.10 the earlier of (1) December 31, 2018; (2) when the principal and 80.11 interest on any bonds or obligations issued to finance 80.12 construction of Riverfront 2000 and related facilities have been 80.13 paid; or (3) at an earlier time as the city shall, by ordinance, 80.14 determine.The total capital, administrative, and operating80.15expenditures payable from bond proceeds and revenues received80.16from the taxes authorized by subdivisions 1 and 2, excluding80.17investment earnings on bond proceeds and revenues, shall not80.18exceed $25,000,000 for Riverfront 2000 and related facilities.80.19 [EFFECTIVE DATE.] This section is effective upon compliance 80.20 by the Mankato City Council with the provisions in section 45 80.21 and, if required under section 45, approval of the voters at a 80.22 general or special election. 80.23 Sec. 28. Laws 1996, chapter 471, article 2, section 29, is 80.24 amended to read: 80.25 Sec. 29. [CITY OF HERMANTOWN; SALES AND USE TAX.] 80.26 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] (a) 80.27 Notwithstanding Minnesota Statutes, section 477A.016, or any 80.28 other contrary provision of law, ordinance, or city charter, the 80.29 city of Hermantown may, by ordinance, impose an additional sales 80.30 and use tax of up to one percent on salestransactions, storage, 80.31 and use taxable pursuant to Minnesota Statutes, chapter 297A, 80.32 that occur within the city. 80.33 (b) The proceeds of the first one-half of one percent of 80.34 tax imposed under this section must be usedto meet the costs of80.35 by the city for the following projects: 80.36 (1) extending a sewer interceptor line; 81.1 (2) construction of a booster pump station, reservoirs, and 81.2 related improvements to the water system; and 81.3 (3) construction of a police and fire station. 81.4 (c) Revenues received from the remaining one-half of one 81.5 percent of the tax authorized under this section must be used by 81.6 the city to pay all or part of the capital and administrative 81.7 costs of developing, acquiring, constructing, and initially 81.8 furnishing and equipping for the following projects: 81.9 (1) construction of a city hall to be connected to the 81.10 existing public safety facility; 81.11 (2) construction of a new facility or purchase of an 81.12 existing facility to be used as a public works facility; 81.13 (3) construction, signalization, and rehabilitation of 81.14 primary collector roads and commercial frontage roads, within 81.15 the city; and 81.16 (4) extension of a sewer interceptor line. 81.17 (d) Authorized expenses include, but are not limited to, 81.18 acquiring property; paying construction, administrative, and 81.19 operating expenses related to the development of the projects 81.20 listed in paragraph (c); paying debt service on bonds or other 81.21 obligations, including lease obligations, issued to finance 81.22 construction, expansion, or improvement of the projects listed 81.23 in paragraph (c); and other compatible uses, including but not 81.24 limited to, parking, lighting, and landscaping. 81.25 Subd. 2. [REFERENDUM.] (a) If the Hermantown city council 81.26 proposes to impose the sales tax authorized by this section, it 81.27 shall conduct a referendum on the issue. 81.28 (b) If the Hermantown city council initially imposes the 81.29 tax at a rate that is less than one percent and proposes 81.30 increasing the tax rate at a later date up to the full one 81.31 percent, it shall conduct a referendum on the increase. 81.32 (c) The question of imposing or increasing the tax must be 81.33 submitted to the voters at a special or general election. The 81.34 tax may not be imposed unless a majority of votes cast on the 81.35 question of imposing the tax are in the affirmative. The 81.36 commissioner of revenue shall prepare a suggested form of 82.1 question to be presented at the election. This subdivision 82.2 applies notwithstanding any city charter provision to the 82.3 contrary. 82.4 Subd. 3. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION OF 82.5 TAXES.] A sales tax imposed under this section must be reported 82.6 and paid to the commissioner of revenue with the state sales 82.7 taxes, and be subject to the same penalties, interest, and 82.8 enforcement provisions. The proceeds of the tax, less refunds 82.9 and a proportionate share of the cost of collection, shall be 82.10 remitted at least quarterly to the city. The commissioner shall 82.11 deduct from the proceeds remitted an amount that equals the 82.12 indirect statewide cost as well as the direct and indirect 82.13 department costs necessary to administer, audit, and collect the 82.14 tax. The amount deducted shall be deposited in the state 82.15 general fund. 82.16 Subd. 3a. [BONDING AUTHORITY.] (a) The city may issue 82.17 general obligation bonds under Minnesota Statutes, chapter 475, 82.18 to finance the costs in subdivision 1, paragraph (c). The total 82.19 amount of bonds issued for the projects under subdivision 1, 82.20 paragraph (c), may not exceed $13,000,000 in the aggregate. An 82.21 election to approve the bonds is not required. 82.22 (b) The bonds are not included in computing any debt 82.23 limitation applicable to the city and the levy of taxes under 82.24 Minnesota Statutes, section 475.61, to pay principal of and 82.25 interest on the bonds is not subject to any levy limitation. 82.26 (c) The taxes authorized under this section may be pledged 82.27 to and used for the payment of the bonds and any bonds issued to 82.28 refund them. 82.29 Subd. 4. [TERMINATION.] The portion of the tax authorized 82.30under this sectionto finance the improvements described in 82.31 subdivision 1, paragraph (b), terminates at the later of (1) ten 82.32 years after the date of initial imposition of the tax, or (2) on 82.33 the first day of the second month next succeeding a 82.34 determination by the city council that sufficient funds have 82.35 been received from that portion of the tax dedicated to finance 82.36thethose improvementsdescribed in subdivision 1, clauses (1)83.1to (3),and to prepay or retire at maturity the principal, 83.2 interest, and premium due on any bonds issued for the 83.3 improvements. The portion of the tax authorized to finance the 83.4 improvements described in subdivision 1, paragraph (c), 83.5 terminates when the revenues raised are sufficient to finance 83.6 those improvements, up to an amount equal to $13,000,000 plus 83.7 any interest, premium, and other costs associated with the bonds 83.8 issued under subdivision 3a. The city council may terminate 83.9 this portion of the tax earlier. Any funds remaining after 83.10 completion of the improvements and retirement or redemption of 83.11 the bonds may be placed in the general fund of the city. 83.12Subd. 5. [LOCAL APPROVAL; EFFECTIVE DATE.] This section is83.13effective the day after final enactment, upon compliance with83.14Minnesota Statutes, section 645.021, subdivision 3, by the city83.15of Hermantown.83.16 [EFFECTIVE DATE.] This section is effective the day after 83.17 the governing body of the city of Hermantown and its chief 83.18 clerical officer comply with Minnesota Statutes, section 83.19 645.021, subdivisions 2 and 3. 83.20 Sec. 29. Laws 1998, chapter 389, article 8, section 43, 83.21 subdivision 3, is amended to read: 83.22 Subd. 3. [USE OF REVENUES.] Revenues received from the 83.23 taxes authorized by subdivisions 1 and 2 must be used by the 83.24 city to pay for the cost of collecting and administering the 83.25 taxes and to pay for the following projects: 83.26 (1) transportation infrastructure improvements including 83.27bothregional highway and airport improvements; 83.28 (2) improvements to the civic center complex; 83.29 (3) a municipal water, sewer, and storm sewer project 83.30 necessary to improve regional ground water quality; and 83.31 (4) construction of a regional recreation and sports center 83.32 andassociatedother higher education facilities available for 83.33 both community and student use, located at or adjacent to the83.34Rochester center. 83.35 The total amount of capital expenditures or bonds for these 83.36 projects that may be paid from the revenues raised from the 84.1 taxes authorized in this section may not exceed 84.2$71,500,000$111,500,000. The total amount of capital 84.3 expenditures or bonds for the project in clause (4) that may be 84.4 paid from the revenues raised from the taxes authorized in this 84.5 section may not exceed$20,000,000$28,000,000. 84.6 [EFFECTIVE DATE.] This section is effective the day 84.7 following final enactment. 84.8 Sec. 30. Laws 1998, chapter 389, article 8, section 43, 84.9 subdivision 4, is amended to read: 84.10 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 84.11 under Minnesota Statutes, chapter 475, to finance the capital 84.12 expenditure and improvement projects. An election to approve 84.13 the bonds under Minnesota Statutes, section 475.58, may be held 84.14 in combination with the election to authorize imposition of the 84.15 tax under subdivision 1. Whether to permit imposition of the 84.16 tax and issuance of bonds may be posed to the voters as a single 84.17 question. The question must state that the sales tax revenues 84.18 are pledged to pay the bonds, but that the bonds are general 84.19 obligations and will be guaranteed by the city's property taxes. 84.20 (b) The issuance of bonds under this subdivision is not 84.21 subject to Minnesota Statutes, section 275.60. 84.22 (c) The bonds are not included in computing any debt 84.23 limitation applicable to the city, and the levy of taxes under 84.24 Minnesota Statutes, section 475.61, to pay principal of and 84.25 interest on the bonds is not subject to any levy limitation. 84.26 The aggregate principal amount of bonds, plus the aggregate of 84.27 the taxes used directly to pay eligible capital expenditures and 84.28 improvements may not exceed$71,500,000$111,500,000, plus an 84.29 amount equal to the costs related to issuance of the bonds. 84.30 (d) The taxes may be pledged to and used for the payment of 84.31 the bonds and any bonds issued to refund them, only if the bonds 84.32 and any refunding bonds are general obligations of the city. 84.33 [EFFECTIVE DATE.] This section is effective the day 84.34 following final enactment. 84.35 Sec. 31. Laws 1999, chapter 243, article 4, section 18, 84.36 subdivision 1, is amended to read: 85.1 Subdivision 1. [SALES AND USE TAX.] (a) Notwithstanding 85.2 Minnesota Statutes, section297A.48, subdivision 1a,477A.016, 85.3 or any other provision of law, ordinance, or city charter, if 85.4 approved by the city voters at the first municipal general 85.5 election held after the date of final enactment of this act or 85.6 at a special election held November 2, 1999, the city of Proctor 85.7 may impose by ordinance a sales and use tax of up to one-half of 85.8 one percent for the purposes specified in subdivision 3, 85.9 paragraph (a). The provisions of Minnesota Statutes, 85.10 section297A.48297A.99, govern the imposition, administration, 85.11 collection, and enforcement of the tax authorized under this 85.12 subdivision. 85.13 (b) The city of Proctor may impose by ordinance an 85.14 additional sales and use tax of up to one-half of one percent if 85.15 approved by the city voters at a general election or at a 85.16 special election held for this purpose. The revenues received 85.17 from this additional tax must be used for the purposes specified 85.18 in subdivision 3, paragraph (b). 85.19 [EFFECTIVE DATE.] This section is effective the day 85.20 following final enactment, upon compliance by the city of 85.21 Proctor with Minnesota Statutes, section 645.021, subdivision 3. 85.22 Sec. 32. Laws 1999, chapter 243, article 4, section 18, 85.23 subdivision 3, is amended to read: 85.24 Subd. 3. [USE OF REVENUES.] (a) Revenues received from 85.25 taxes authorized by subdivisions 1, paragraph (a), and 2 must be 85.26 used by the city to pay the cost of collecting the taxes and to 85.27 pay for construction and improvement of the following city 85.28 facilities: 85.29 (1) streets; and 85.30 (2) constructing and equipping the Proctor community 85.31 activity center. 85.32 Authorized expenses include, but are not limited to, 85.33 acquiring property, paying construction and operating expenses 85.34 related to the development of an authorized facility, and paying 85.35 debt service on bonds or other obligations, including lease 85.36 obligations, issued to finance the construction, expansion, or 86.1 improvement of an authorized facility. The capital expenses for 86.2 all projects authorized under this paragraph that may be paid 86.3 with these taxes is limited to $3,600,000, plus an amount equal 86.4 to the costs related to issuance of the bonds. 86.5 (b) Revenues received from taxes authorized by subdivision 86.6 1, paragraph (b), must be used by the city to pay the cost of 86.7 collecting the taxes and for construction and improvements of 86.8 city streets, public utilities, sidewalks, bikeways, and trails. 86.9 [EFFECTIVE DATE.] This section is effective the day 86.10 following final enactment, upon compliance by the city of 86.11 Proctor with Minnesota Statutes, section 645.021, subdivision 3. 86.12 Sec. 33. Laws 1999, chapter 243, article 4, section 18, 86.13 subdivision 4, is amended to read: 86.14 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 86.15 under Minnesota Statutes, chapter 475, to finance the capital 86.16 expenditure and improvement projects described in subdivision 86.17 3. An election to approve the bonds under Minnesota Statutes, 86.18 section 475.58, is not required. 86.19 (b) The issuance of bonds under this subdivision is not 86.20 subject to Minnesota Statutes, sections 275.60 and279.61275.61. 86.21 (c) The bonds are not included in computing any debt 86.22 limitation applicable to the city, and the levy of taxes under 86.23 Minnesota Statutes, section 475.61, to pay principal of and 86.24 interest on the bonds is not subject to any levy limitation. 86.25 (d) For projects described in subdivision 3, paragraph (a), 86.26 the aggregate principal amount of bonds, plus the aggregate of 86.27 the taxes used directly to pay eligible capital expenditures and 86.28 improvements, may not exceed $3,600,000, plus an amount equal to 86.29 the costs related to issuance of the bonds, including interest 86.30 on the bonds. For projects described in subdivision 3, 86.31 paragraph (b), the aggregate principal amount of bonds may not 86.32 exceed $7,200,000, plus an amount equal to the costs related to 86.33 issuance of the bonds, including interest on the bonds. 86.34 (e) The sales and use and excise taxes authorized in this 86.35 section may be pledged to and used for the payment of the bonds 86.36 and any bonds issued to refund them only if the bonds and any 87.1 refunding bonds are general obligations of the city. 87.2 [EFFECTIVE DATE.] This section is effective the day 87.3 following final enactment, upon compliance by the city of 87.4 Proctor with Minnesota Statutes, section 645.021, subdivision 3. 87.5 Sec. 34. Laws 2001, First Special Session chapter 5, 87.6 article 12, section 67, the effective date, is amended to read: 87.7 [EFFECTIVE DATE.] This section is effective for purchases 87.8 and sales made after June 30, 2001, and beforeJanuary 1, 200387.9 July 1, 2007. 87.10 [EFFECTIVE DATE.] This section is effective the day 87.11 following final enactment. 87.12 Sec. 35. Laws 2001, First Special Session chapter 5, 87.13 article 12, section 82, the effective date, as amended by Laws 87.14 2002, chapter 377, article 3, section 23, is amended to read: 87.15 [EFFECTIVE DATE.] This section is effective for sales and 87.16 purchases made after December 31,20052007, or until the State 87.17 of Minnesota is found to be out of compliance with the 87.18 streamlined sales tax project only to the extent of the change 87.19 in this act and for no other reason, if that finding is made 87.20 before December 31, 2007. 87.21 Sec. 36. Laws 2001, First Special Session chapter 5, 87.22 article 12, section 95, as amended by Laws 2002, chapter 377, 87.23 article 3, section 24, and Laws 2003, First Special Session 87.24 chapter 21, article 8, section 15, is amended to read: 87.25 Sec. 95. [REPEALER.] 87.26 (a) Minnesota Statutes 2000, sections 297A.61, subdivision 87.27 16; 297A.68, subdivision 21; and 297A.71, subdivision 2, are 87.28 repealed effective for sales and purchases occurring after June 87.29 30, 2001, except that the repeal of section 297A.61, subdivision 87.30 16, paragraph (d), is effective for sales and purchases 87.31 occurring after July 31, 2001. 87.32(b) Minnesota Statutes 2000, sections 297A.62, subdivision87.332, and 297A.64, subdivision 1, are repealed effective for sales87.34and purchases made after December 31, 2005.87.35(c)(b) Minnesota Statutes 2000, section 297A.71, 87.36 subdivision 15, is repealed effective for sales and purchases 88.1 made after June 30, 2002. 88.2(d)(c) Minnesota Statutes 2000, section 289A.71, 88.3 subdivision 16, is repealed effective for sales and purchases 88.4 occurring after December 31, 2002. 88.5 [EFFECTIVE DATE.] This section is effective the day 88.6 following final enactment. 88.7 Sec. 37. Laws 2002, chapter 377, article 3, section 4, the 88.8 effective date, is amended to read: 88.9 [EFFECTIVE DATE.]With the exception of clause (2), item88.10(ii),This section is effective for sales and purchases made 88.11 after June 30, 2002.Clause (2), item (ii), is effective for88.12sales and purchases made after June 30, 2002, and before January88.131, 2006.88.14 Sec. 38. Laws 2002, chapter 377, article 12, section 16, 88.15 subdivision 1, is amended to read: 88.16 Subdivision 1. [NONPROFIT CORPORATION MAY BE ESTABLISHED.] 88.17 The city of Thief River Falls may incorporate or authorize the 88.18 incorporation of a nonprofit corporation to operate a community 88.19 or regional center in the city. A nonprofit corporation 88.20 incorporated under this section is exempt from payment of sales 88.21 and use tax on materials, equipment, and supplies consumed or 88.22 incorporated into the construction of the community or regional 88.23 center. The exemption under this section applies to purchases 88.24 by the nonprofit corporation, a contractor, subcontractor, or 88.25 builder. A contractor, subcontractor, or builder that does not 88.26 pay sales tax on purchases for construction of the community or 88.27 regional center shall not charge sales or use tax to the 88.28 nonprofit corporation. The nonprofit corporation may file a 88.29 claim for refund for any sales taxes paid on the construction 88.30 costs of the community or regional center, and the commissioner 88.31 of revenue shall pay the refunded amount directly to the 88.32 nonprofit corporation. 88.33 [EFFECTIVE DATE.] This section is effective retroactively 88.34 for purchases made on and after July 1, 2002. 88.35 Sec. 39. [CITY OF ALBERT LEA; SALES AND USE TAX.] 88.36 Subdivision 1. [SALES AND USE TAX 89.1 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 89.2 477A.016, or any other provision of law, ordinance, or city 89.3 charter, the city of Albert Lea may, by ordinance, impose a 89.4 sales and use tax of one-half of one percent for the purposes 89.5 specified in subdivision 2. The provisions of Minnesota 89.6 Statutes, section 297A.99, govern the imposition, 89.7 administration, collection, and enforcement of the tax 89.8 authorized under this subdivision. 89.9 Subd. 2. [USE OF REVENUES.] The proceeds of the tax 89.10 imposed under this section shall be used to pay for lake 89.11 improvement projects as detailed in the Shell Rock River 89.12 watershed plan. 89.13 Subd. 3. [REFERENDUM.] If the Albert Lea City Council 89.14 proposes to impose the tax authorized by this section, the 89.15 question of imposing the tax must be submitted to the voters at 89.16 the next general election. 89.17 Subd. 4. [TERMINATION OF TAXES.] The taxes imposed under 89.18 this section expire at the earlier of (1) ten years after the 89.19 taxes are first imposed, or (2) when the city council first 89.20 determines that the amount of revenues raised to pay for the 89.21 projects under subdivision 2, shall meet or exceed the sum of 89.22 $15,000,000. Any funds remaining after completion of the 89.23 projects may be placed in the general fund of the city. 89.24 [EFFECTIVE DATE.] This section is effective the day after 89.25 compliance by the governing body of the city of Albert Lea with 89.26 Minnesota Statutes, section 645.021, subdivision 3. 89.27 Sec. 40. [CITY OF BAXTER; TAXES AUTHORIZED.] 89.28 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 89.29 Notwithstanding Minnesota Statutes, section 477A.016, or any 89.30 other provision of law, ordinance, or city charter, pursuant to 89.31 the approval of the voters on November 2, 2004, and pursuant to 89.32 Minnesota Statutes, section 297A.99, the city of Baxter may 89.33 impose by ordinance a sales and use tax of one-half of one 89.34 percent for the purposes specified in subdivision 3. The 89.35 provisions of Minnesota Statutes, section 297A.99, govern the 89.36 imposition, administration, collection, and enforcement of the 90.1 tax authorized under this subdivision. 90.2 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 90.3 Minnesota Statutes, section 477A.016, or any other contrary 90.4 provision of law, ordinance, or city charter, the city of Baxter 90.5 may impose by ordinance, for the purposes specified in 90.6 subdivision 3, an excise tax of up to $20 per motor vehicle, as 90.7 defined by ordinance, purchased or acquired from any person 90.8 engaged within the city in the business of selling motor 90.9 vehicles at retail. 90.10 Subd. 3. [USE OF REVENUES.] Revenues received from the 90.11 taxes authorized by subdivisions 1 and 2 must be used to pay the 90.12 cost of collecting and administering the tax and to finance the 90.13 acquisition and betterment of water and waste water facilities, 90.14 a fire substation, and the Paul Bunyan Bridge over Excelsior 90.15 Road, as approved by the voters at the referendum authorizing 90.16 the tax. Authorized costs include, but are not limited to, 90.17 acquiring property and paying construction, legal, and 90.18 engineering costs related to the projects. 90.19 Subd. 4. [BONDS.] The city of Baxter, pursuant to the 90.20 approval of the voters at the referendum authorizing the 90.21 imposition of the taxes in this section, may issue general 90.22 obligation bonds of the city, in one or more series, in the 90.23 aggregate principal amount not to exceed $15,000,000 to finance 90.24 the projects listed in subdivision 3. The debt represented by 90.25 the bonds is not included in computing any debt limitations 90.26 applicable to the city, and the levy of taxes required by 90.27 Minnesota Statutes, section 475.61, to pay the principal of and 90.28 interest on the bonds is not subject to any levy limitation or 90.29 included in computing or applying any levy limitation applicable 90.30 to the city. 90.31 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 90.32 subdivisions 1 and 2 expire at the earlier of 12 years after the 90.33 imposition of the tax or when the city council first determines 90.34 that the amount of revenues raised from the taxes to pay for the 90.35 projects equals or exceeds $15,000,000 plus any interest on 90.36 bonds issued for the projects under subdivision 4. Any funds 91.1 remaining after expiration of the taxes and retirement of the 91.2 bonds shall be placed in a capital project fund of the city. 91.3 The taxes imposed under subdivisions 1 and 2 may expire at an 91.4 earlier time if the city so determines by ordinance. 91.5 [EFFECTIVE DATE.] This section is effective the day after 91.6 compliance by the governing body of the city of Baxter with 91.7 Minnesota Statutes, section 645.021, subdivision 3. 91.8 Sec. 41. [CITY OF BEAVER BAY; TAXES AUTHORIZED.] 91.9 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 91.10 Minnesota Statutes, section 477A.016, or any other provision of 91.11 law or ordinance, if approved by the voters of the city at the 91.12 next general election held after the date of final enactment of 91.13 this act, the city of Beaver Bay may impose by ordinance a sales 91.14 and use tax at a rate of up to one percent for the purposes 91.15 specified in subdivision 2. The provisions of Minnesota 91.16 Statutes, section 297A.99, govern the imposition, 91.17 administration, collection, and enforcement of the tax 91.18 authorized under this subdivision. 91.19 Subd. 2. [USE OF REVENUES.] The revenues received from 91.20 taxes authorized by subdivision 1 must be used to pay the bonded 91.21 indebtedness on the city community building and to provide 91.22 funding for recreational facilities, the upgrading of the water 91.23 and sewer system, upgrading and replacement of fire equipment, 91.24 and improvement of streets. 91.25 Subd. 3. [TERMINATION OF TAXES.] The authority granted 91.26 under subdivision 1 to the city of Beaver Bay to impose sales 91.27 and use taxes expires when the city council determines that the 91.28 amount of revenue received to pay the costs of the projects 91.29 described in subdivision 2 shall meet or exceed $1,500,000. Any 91.30 funds remaining after completion of the projects may be placed 91.31 in the general fund of the city. The tax imposed under 91.32 subdivision 1 may expire at an earlier time if the city so 91.33 determines by ordinance. 91.34 [EFFECTIVE DATE.] This section is effective the day after 91.35 the governing body of the city of Beaver Bay and its chief 91.36 clerical officer timely comply with Minnesota Statutes, section 92.1 645.021, subdivisions 2 and 3. 92.2 Sec. 42. [CITY OF BEMIDJI.] 92.3 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 92.4 Notwithstanding Minnesota Statutes, section 477A.016, or any 92.5 other provision of law, ordinance, or city charter, pursuant to 92.6 the approval of the city voters at the general election held on 92.7 November 5, 2002, the city of Bemidji may impose by ordinance a 92.8 sales and use tax of one-half of one percent for the purposes 92.9 specified in subdivision 2. The provisions of Minnesota 92.10 Statutes, section 297A.99, govern the imposition, 92.11 administration, collection, and enforcement of the tax 92.12 authorized under this subdivision. 92.13 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 92.14 authorized by subdivision 1 must be used for the cost of 92.15 collecting and administering the tax and to pay all or part of 92.16 the capital or administrative costs of the acquisition, 92.17 construction, and improvement of parks and trails within the 92.18 city, as provided for in the city of Bemidji's parks, open 92.19 space, and trail system plan, adopted by the Bemidji City 92.20 Council on November 21, 2001. Authorized expenses include, but 92.21 are not limited to, acquiring property, paying construction 92.22 expenses related to the development of these facilities and 92.23 improvements, and securing and paying debt service on bonds or 92.24 other obligations issued to finance acquisition, construction, 92.25 improvement, or development of parks and trails within the city 92.26 of Bemidji. 92.27 Subd. 3. [BONDS.] Pursuant to the approval of the city 92.28 voters at the general election held on November 5, 2002, the 92.29 city of Bemidji may issue, without an additional election, 92.30 general obligation bonds of the city in an amount not to exceed 92.31 $9,826,000 to pay capital and administrative expenses for the 92.32 acquisition, construction, improvement, and development of parks 92.33 and trails as specified in subdivision 2. The debt represented 92.34 by the bonds must not be included in computing any debt 92.35 limitations applicable to the city, and the levy of taxes 92.36 required by Minnesota Statutes, section 475.61, to pay the 93.1 principal of any interest on the bonds must not be subject to 93.2 any levy limitations or be included in computing or applying any 93.3 levy limitation applicable to the city. 93.4 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 93.5 subdivision 1 expires when the Bemidji City Council determines 93.6 that the amount described in subdivision 3 has been received 93.7 from the tax to finance the capital and administrative costs for 93.8 acquisition, construction, improvement, and development of parks 93.9 and trails and to repay or retire at maturity the principal, 93.10 interest, and premium due on any bonds issued for the park and 93.11 trail improvements under subdivision 3. Any funds remaining 93.12 after completion of the park and trail improvements and 93.13 retirement or redemption of the bonds may be placed in the 93.14 general fund of the city. The tax imposed under subdivision 1 93.15 may expire at an earlier time if the city so determines by 93.16 ordinance. 93.17 [EFFECTIVE DATE.] This section is effective the day after 93.18 compliance by the governing body of the city of Bemidji with 93.19 Minnesota Statutes, section 645.021, subdivision 3. 93.20 Sec. 43. [CITY OF CLOQUET; TAXES AUTHORIZED.] 93.21 Subdivision 1. [SALES AND USE TAX.] Notwithstanding 93.22 Minnesota Statutes, section 477A.016, or any other provision of 93.23 law, ordinance, or city charter, if approved by the voters 93.24 pursuant to Minnesota Statutes, section 297A.99, the city of 93.25 Cloquet may impose by ordinance a sales and use tax of up to 93.26 one-half of one percent for the purpose specified in subdivision 93.27 3. The provisions of Minnesota Statutes, section 297A.99, 93.28 govern the imposition, administration, collection, and 93.29 enforcement of the tax authorized under this subdivision. 93.30 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 93.31 Minnesota Statutes, section 477A.016, or any other provision of 93.32 law, ordinance, or city charter, the city of Cloquet may impose 93.33 by ordinance, for the purposes specified in subdivision 3, an 93.34 excise tax of up to $20 per motor vehicle, as defined by 93.35 ordinance, purchased or acquired from any person engaged within 93.36 the city in the business of selling motor vehicles at retail. 94.1 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 94.2 authorized by subdivisions 1 and 2 must be used by the city to 94.3 pay the cost of collecting the taxes and to pay for the 94.4 following projects: 94.5 (1) construction and implementation of riverfront task 94.6 force park improvements including Veteran's Park; 94.7 (2) extension of water and sewer lines and other 94.8 improvements to city infrastructure necessary for construction 94.9 of a city industrial park; and 94.10 (3) costs associated with the closure of the Cloquet 94.11 Municipal Landfill. 94.12 Authorized expenses include, but are not limited to, 94.13 acquiring property and paying construction expenses related to 94.14 these improvements, and paying debt service on bonds or other 94.15 obligations issued to finance acquisition and construction of 94.16 these improvements. 94.17 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 94.18 under Minnesota Statutes, chapter 475, to pay capital and 94.19 administrative expenses for the improvements described in 94.20 subdivision 3 in an amount that does not exceed $7,000,000. An 94.21 election to approve the bonds under Minnesota Statutes, section 94.22 475.58, is not required. 94.23 (b) The issuance of bonds under this subdivision is not 94.24 subject to Minnesota Statutes, sections 275.60 and 275.61. 94.25 (c) The debt represented by the bonds is not included in 94.26 computing any debt limitation applicable to the city, and any 94.27 levy of taxes under Minnesota Statutes, section 475.61, to pay 94.28 principal of and interest on the bonds is not subject to any 94.29 levy limitation. 94.30 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 94.31 subdivisions 1 and 2 expire at the earlier of (1) 14 years, or 94.32 (2) when the city council determines that sufficient funds have 94.33 been received from the taxes to finance the capital and 94.34 administrative costs of the improvements described in 94.35 subdivision 3, plus the additional amount needed to pay the 94.36 costs related to issuance of bonds under subdivision 4, 95.1 including interest on the bonds. Any funds remaining after 95.2 completion of the project and retirement or redemption of the 95.3 bonds may be placed in the general fund of the city. The taxes 95.4 imposed under subdivisions 1 and 2 may expire at an earlier time 95.5 if the city so determines by ordinance. 95.6 [EFFECTIVE DATE.] This section is effective the day after 95.7 the governing body of the city of Cloquet and its chief clerical 95.8 officer timely comply with Minnesota Statutes, section 645.021, 95.9 subdivisions 2 and 3. 95.10 Sec. 44. [CITY OF CLEARWATER.] 95.11 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 95.12 Notwithstanding Minnesota Statutes, section 477A.016, or any 95.13 other provision of law, ordinance, or city charter, pursuant to 95.14 the approval of the city voters at the next general election or 95.15 at a special election held for this purpose, the city of 95.16 Clearwater may impose by ordinance a sales and use tax of 95.17 one-half of one percent for the purposes specified in 95.18 subdivision 2. The provisions of Minnesota Statutes, section 95.19 297A.99, govern the imposition, administration, collection, and 95.20 enforcement of the tax authorized under this subdivision. 95.21 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 95.22 authorized by subdivision 1 must be used for the cost of 95.23 collecting and administering the tax and to pay all or part of 95.24 the capital or administrative costs of the development, 95.25 acquisition, construction, and improvement of parks, trails, 95.26 parkland, open space, and land and buildings for a regional 95.27 community and recreation center. Authorized expenses include, 95.28 but are not limited to, acquiring property, paying construction 95.29 expenses related to the development of these facilities and 95.30 improvements, and securing and paying debt service on bonds or 95.31 other obligations issued to finance acquisition, construction, 95.32 improvement, or development. 95.33 Subd. 3. [BONDS.] Pursuant to the approval of the city 95.34 voters to impose the tax authorized in subdivision 1, the city 95.35 of Clearwater may issue without an additional election general 95.36 obligation bonds of the city in an amount not to exceed 96.1 $3,000,000 to pay capital and administrative expenses for the 96.2 acquisition, construction, improvement, and development of the 96.3 projects specified in subdivision 2. The debt represented by 96.4 the bonds must not be included in computing any debt limitations 96.5 applicable to the city, and the levy of taxes required by 96.6 Minnesota Statutes, section 475.61, to pay the principal or any 96.7 interest on the bonds must not be subject to any levy 96.8 limitations or be included in computing or applying any levy 96.9 limitation applicable to the city. 96.10 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 96.11 subdivision 1 expires when the Clearwater City Council 96.12 determines that the amount described in subdivision 3 has been 96.13 received from the tax to finance the capital and administrative 96.14 costs for acquisition, construction, improvement, and 96.15 development of the projects specified in subdivision 2 and to 96.16 repay or retire at maturity the principal, interest, and premium 96.17 due on any bonds issued for the projects under subdivision 3. 96.18 Any funds remaining after completion of the projects specified 96.19 in subdivision 2 and retirement or redemption of the bonds may 96.20 be placed in the general fund of the city. The tax imposed 96.21 under subdivision 1 may expire at an earlier time if the city so 96.22 determines by ordinance. 96.23 [EFFECTIVE DATE.] This section is effective the day after 96.24 compliance by the governing body of the city of Clearwater with 96.25 Minnesota Statutes, section 645.021, subdivision 3. 96.26 Sec. 45. [REVERSE REFERENDUM; CHANGE IN MANKATO SALES TAX 96.27 EXPIRATION DATE.] 96.28 For the change in section 27 to be effective, the Mankato 96.29 City Council must pass a resolution stating that they intend to 96.30 implement the change in the expiration date of the local sales 96.31 tax authorized under section 27. The resolution must indicate 96.32 when the sales tax would expire under the law before any change, 96.33 and when it will expire under the authorized change in the law. 96.34 The resolution must be published for two successive weeks in the 96.35 official newspaper of the city or, if there is no official 96.36 newspaper, in a newspaper of general circulation in the city, 97.1 together with a notice fixing a date for a public hearing on the 97.2 matter. The hearing must be held at least two weeks but no more 97.3 than four weeks after the first publication of the resolution. 97.4 Following the public hearing, the city may determine to take no 97.5 further action or adopt a resolution confirming its intention to 97.6 extend the expiration date of the sales tax. That resolution 97.7 must also be published in the official newspaper of the city or, 97.8 if there is no official newspaper, in a newspaper of general 97.9 circulation in the city. If within 30 days of publication of 97.10 the resolution a petition signed by voters equal in number to at 97.11 least ten percent of the votes cast in the city in the last 97.12 general election requesting a vote on the resolution is filed 97.13 with the county, the resolution is not effective until it has 97.14 been submitted to the voters at a general or special election 97.15 and a majority of votes cast on the question of approving the 97.16 resolution are in the affirmative. The commissioner of revenue 97.17 shall prepare a suggested form of question to be presented at 97.18 the election. The notices, hearing, and any required referendum 97.19 must be held before December 31, 2005. 97.20 Notwithstanding any other law or charter provision, the 97.21 taxes imposed under Laws 1991, chapter 291, article 8, section 97.22 27, shall not expire before December 31, 2005. However, if the 97.23 city has not met the requirements in this section for adopting 97.24 the change in the effective date allowed in section 1, the tax 97.25 shall expire after December 31, 2005, as soon as is feasible 97.26 under Minnesota Statutes, section 297A.99, subdivision 12. 97.27 [EFFECTIVE DATE.] This section is effective the day after 97.28 compliance by the city of Mankato with Minnesota Statutes, 97.29 section 645.021, subdivision 3. 97.30 Sec. 46. [CITY OF MEDFORD; SALES AND USE TAX.] 97.31 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 97.32 Notwithstanding Minnesota Statutes, section 477A.016, or any 97.33 other provision of law, ordinance, or city charter, the city of 97.34 Medford may, by ordinance, impose a sales and use tax of 97.35 one-half of one percent for the purposes specified in 97.36 subdivision 2. Except as otherwise specifically provided, the 98.1 provisions of Minnesota Statutes, section 297A.99, govern the 98.2 imposition, administration, collection, and enforcement of the 98.3 tax authorized under this subdivision. 98.4 Subd. 2. [USE OF REVENUES.] The proceeds of the tax 98.5 imposed under this section must be used to pay up to $5,000,000 98.6 in costs related to improving the city's wastewater system and 98.7 wastewater treatment plant. 98.8 Subd. 3. [REFERENDUM.] If the Medford City Council 98.9 proposes to impose the tax authorized by this section, the 98.10 question of imposing the tax must be submitted to the voters at 98.11 the next general election. The tax may not be imposed unless 98.12 the majority of votes cast on the question of imposing the tax 98.13 are in the affirmative. The commissioner of revenue shall 98.14 prepare a suggested form of the question to be presented at the 98.15 election. The question must state that the sales tax revenues 98.16 would be pledged to pay any bonds issued under subdivision 4 and 98.17 that these bonds are guaranteed by the city's property taxes. 98.18 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 98.19 under Minnesota Statutes, chapter 475, to finance the capital 98.20 expenditure and improvement projects authorized under 98.21 subdivision 2. The total amount of bonds issued for the 98.22 projects listed in subdivision 2 may not exceed $5,000,000 in 98.23 aggregate. An election to approve the bonds, as required under 98.24 Minnesota Statutes, section 475.58, is not required. 98.25 (b) The issuance of the bonds under this subdivision is not 98.26 subject to Minnesota Statutes, sections 275.60 and 275.61. 98.27 (c) The bonds are not included in computing any debt 98.28 limitation applicable to the city, and the levy of taxes under 98.29 Minnesota Statutes, section 475.61, to pay the principal of and 98.30 interest on the bonds is not subject to any levy limitation. 98.31 (d) The taxes authorized under this section may be pledged 98.32 to and used for the payment of the bonds and any bonds issued to 98.33 refund them only if the bonds and any refunding bonds are 98.34 general obligations of the city. 98.35 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 98.36 this section expire at the earlier of (1) 20 years after the 99.1 taxes are first imposed, or (2) when the city council first 99.2 determines that the amount of revenues raised to pay for the 99.3 projects under subdivision 2 shall meet or exceed the sum of 99.4 $5,000,000, plus an amount equal to the costs related to the 99.5 issuance of bonds under subdivision 4. Any funds remaining 99.6 after completion of the projects and retirement or redemption of 99.7 the bonds may be placed in the general funds of the city. 99.8 [EFFECTIVE DATE.] This section is effective the day after 99.9 compliance with the governing body of the city of Medford with 99.10 Minnesota Statutes, section 645.021, subdivision 3. 99.11 Sec. 47. [CITY OF PARK RAPIDS.] 99.12 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 99.13 Notwithstanding Minnesota Statutes, section 477A.016, or any 99.14 other provision of law, ordinance, or city charter, pursuant to 99.15 the approval of the city voters at the next general election or 99.16 at a special election held for this purpose, the city of Park 99.17 Rapids may impose by ordinance a sales and use tax of one 99.18 percent for the purposes specified in subdivision 2. The 99.19 provisions of Minnesota Statutes, section 297A.99, govern the 99.20 imposition, administration, collection, and enforcement of the 99.21 tax authorized under this subdivision. 99.22 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 99.23 authorized by subdivision 1 must be used for the cost of 99.24 collecting and administering the tax and to pay all or part of 99.25 the capital or administrative costs of the development, 99.26 acquisition, construction, and improvement of the following 99.27 projects: 99.28 (1) two-thirds of the cost of construction and operation of 99.29 a community center that may include a senior citizen center, 99.30 fitness center, swimming pool, meeting rooms, indoor track, and 99.31 racquetball, basketball, and tennis courts, provided that an 99.32 amount equal to one-third of the cost of construction is 99.33 received from private sources; 99.34 (2) capital improvement projects including, but not limited 99.35 to, installation of water, sewer, storm sewer, street 99.36 improvements, new city water tower and well, costs related to 100.1 improvements to marked trunk highway 34; and 100.2 (3) park improvements. 100.3 Authorized expenses include, but are not limited to, 100.4 acquiring property, paying construction expenses related to the 100.5 development of these facilities and improvements, and securing 100.6 and paying debt service on bonds or other obligations issued to 100.7 finance acquisition, construction, improvement, or development. 100.8 Subd. 3. [BONDS.] Pursuant to the approval of the city 100.9 voters to impose the tax authorized in subdivision 1, the city 100.10 of Park Rapids may issue without an additional election general 100.11 obligation bonds of the city to pay capital and administrative 100.12 expenses for the acquisition, construction, improvement, and 100.13 development of the projects specified in subdivision 2. The 100.14 debt represented by the bonds must not be included in computing 100.15 any debt limitations applicable to the city, and the levy of 100.16 taxes required by Minnesota Statutes, section 475.61, to pay the 100.17 principal or any interest on the bonds must not be subject to 100.18 any levy limitations or be included in computing or applying any 100.19 levy limitation applicable to the city. 100.20 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 100.21 subdivision 1 expires the earlier of July 1, 2023, or when the 100.22 city council determines that sufficient revenues have been 100.23 received to retire the bonds in subdivision 3. Any funds 100.24 remaining after completion of the projects specified in 100.25 subdivision 2 and retirement or redemption of the bonds may be 100.26 placed in the general fund of the city. The tax imposed under 100.27 subdivision 1 may expire at an earlier time if the city so 100.28 determines by ordinance. 100.29 [EFFECTIVE DATE.] This section is effective the day after 100.30 compliance by the governing body of the city of Park Rapids with 100.31 Minnesota Statutes, section 645.021, subdivision 3. 100.32 Sec. 48. [CITY OF PROCTOR; LODGING TAX.] 100.33 The city of Proctor may use up to ten percent of the 100.34 revenues received from the lodging tax imposed by the city under 100.35 Minnesota Statutes, section 469.190, for preservation of the 100.36 Caboose and the Baldwin Locomotive, Class M3 Mallet, Number 225, 101.1 donated to the city by the Duluth, Missabe and Iron Range 101.2 Railway Company, and the F-101F aircraft, serial number 59-0407, 101.3 donated to the city by the Department of the Air Force. 101.4 [EFFECTIVE DATE.] This section is effective the day 101.5 following final enactment. 101.6 Sec. 49. [ST. CLOUD AREA CITIES; SALES AND USE TAX 101.7 AUTHORIZED.] 101.8 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] (a) 101.9 Notwithstanding Minnesota Statutes, sections 297A.99, 101.10 subdivision 3, paragraph (d), and 477A.016, or any other 101.11 provision of law, ordinance, or city charter, the following 101.12 cities may, by ordinance, impose a sales and use tax of one half 101.13 of one percent for the purposes specified in subdivision 2: 101.14 (1) the city of St. Cloud, pursuant to the approval of the 101.15 city voters at the general election held on November 2, 2004: 101.16 (2) the city of St. Joseph, pursuant to the approval of the 101.17 city voters at the general election on November 2, 2004; 101.18 (3) the city of Waite Park, pursuant to the approval of the 101.19 city voters at the general election held on November 4, 2003, 101.20 and any additional approval by the voters of that city at the 101.21 next general election; 101.22 (4) the city of Sartell, pursuant to the approval of the 101.23 city voters at the general election held on November 2, 1999, 101.24 and any additional approval at the next general election; and 101.25 (5) the cities of Sauk Rapids and St. Augusta, pursuant to 101.26 the approval of the voters of that city at the next general 101.27 election. 101.28 (b) The provisions of Minnesota Statutes, section 297A.99, 101.29 except subdivision 3, paragraph (d), govern the imposition, 101.30 administration, collection, and enforcement of the tax 101.31 authorized under this subdivision. 101.32 Subd. 2. [USE OF REVENUES.] (a) Revenues received from the 101.33 tax authorized under subdivision 1 must be used for collecting 101.34 and administering the taxes and to pay all or part of the 101.35 capital and administrative costs of the acquisition, 101.36 construction, and improvement of a new regional library located 102.1 in the city of St. Cloud. Authorized expenses include, but are 102.2 not limited to, acquiring property, paying construction expenses 102.3 related to the development of the library, and securing and 102.4 paying debt service issued to finance construction or 102.5 improvement of the authorized facility. The total amount that 102.6 may be spent on this project may not exceed $30,000,000 plus any 102.7 debt service costs. 102.8 (b) If revenues collected from the taxes imposed under 102.9 subdivision 1 are greater than the amount needed to meet 102.10 obligations under paragraph (a) in any year, the surplus may be 102.11 returned to the cities in a manner agreed upon by the 102.12 participating cities under an applicable joint powers 102.13 agreement. Cities must use revenues received under this 102.14 paragraph to fund projects that have been approved by the voters 102.15 at the referendum authorizing the tax. Authorized expenses 102.16 include, but are not limited to, acquiring property, paying 102.17 construction expenses related to the development of the 102.18 authorized facility, and securing and paying debt service issued 102.19 to finance construction or improvement of the authorized 102.20 facility. 102.21 (c) Notwithstanding any provisions to the contrary 102.22 contained in a referendum authorizing the imposition of the tax, 102.23 projects that may be funded from revenues distributed under 102.24 paragraph (b) are limited to the following: 102.25 (1) the St. Cloud Regional Airport; 102.26 (2) regional transportation improvements; 102.27 (3) community and aquatics centers; 102.28 (4) regional public libraries; and 102.29 (5) acquisition and improvement of regional park land, 102.30 trails, and open space. 102.31 (d) The cities of Waite Park and Sartell may use revenues 102.32 from the tax imposed in subdivision 1 to fund the library under 102.33 paragraph (a) without additional approval by city voters; 102.34 however, each city must seek approval of its voters to fund any 102.35 other project not approved by the voters at the referendum held 102.36 on November 4, 2003, and November 2, 1999, respectively. 103.1 Subd. 3. [ALLOCATION OF SALES AND USE TAX REVENUES TO 103.2 CITIES.] Revenues collected from the taxes authorized by 103.3 subdivision 1, after paying the cost of collecting and 103.4 administering the tax, shall be allocated to cities imposing the 103.5 tax as follows: 103.6 (1) the first $900,000 of revenues collected annually, 103.7 indexed annually to the Consumer Price Index, to the city of St. 103.8 Cloud for the construction and relocation of a regional library 103.9 located in the city; and 103.10 (2) the revenues collected from the taxes imposed under 103.11 subdivision 1 that exceed the amount needed to meet the 103.12 obligations under clause (1) in any year shall be returned to 103.13 the cities pursuant to a joint powers agreement allocating sales 103.14 tax revenues among the cities. 103.15 Subd. 4. [CITY BONDING AUTHORIZED.] The city imposing a 103.16 tax under subdivision 1 may issue general obligation bonds to 103.17 pay the costs of the projects specified in subdivision 2, 103.18 pursuant to the approval of the projects by the city voters at 103.19 the election authorizing the imposition of the tax. The bonds 103.20 issued for each project are limited to the amount authorized to 103.21 be spent on the project in the referendum. The debt represented 103.22 by the bonds must not be included in computing any debt 103.23 limitations applicable to the city, and the levy of taxes 103.24 required by Minnesota Statutes, section 475.61, to pay the 103.25 principal or any interest on the bonds must not be subject to 103.26 any levy limitations or be included in computing or applying any 103.27 levy limitation applicable to the city. 103.28 Subd. 5. [TERMINATION OF TAX.] The tax imposed in a city 103.29 under subdivision 1 expires when the city council determines 103.30 that sufficient funds have been collected from the tax to retire 103.31 or redeem the bonds and obligations authorized under subdivision 103.32 2, but no later than 17 years after the date the tax is first 103.33 imposed. Any funds remaining after completion of the projects 103.34 specified in subdivision 2 and retirement or redemption of the 103.35 bonds may be placed in the general fund of the city. The tax 103.36 imposed under subdivision 1 may expire at an earlier time if the 104.1 city so determines by ordinance. 104.2 [EFFECTIVE DATE.] This section is effective the day after 104.3 compliance by the governing body of the city with Minnesota 104.4 Statutes, section 645.021, subdivision 3, for sales and 104.5 purchases made on and after January 1, 2006. 104.6 Sec. 50. [SALES AND USE TAX COMPLIANCE GAP.] 104.7 The commissioner must reduce the amount of the compliance 104.8 gap in the payment of sales and use tax by 25 percent before 104.9 December 31, 2007; and must reduce the compliance gap in the 104.10 payment of sales and use tax by an additional 25 percent before 104.11 December 31, 2009. The commissioner must establish an effective 104.12 method to allow individuals who purchase taxable products or 104.13 services and have not paid the tax at the time of the purchase 104.14 to pay the tax. The commissioner must advise residents of this 104.15 state how to pay sales and use tax. 104.16 [EFFECTIVE DATE.] This section is effective the day 104.17 following final enactment. 104.18 Sec. 51. [CITY OF WASECA; SALES AND USE TAX.] 104.19 Subdivision 1. [SALES AND USE TAX 104.20 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 104.21 477A.016, or any other provision of law, ordinance, or city 104.22 charter, the city of Waseca may, by ordinance, impose a sales 104.23 and use tax of one-half of one percent for the purposes 104.24 specified in subdivision 2. The provisions of Minnesota 104.25 Statutes, section 297A.99, govern the imposition, 104.26 administration, collection, and enforcement of the tax 104.27 authorized under this subdivision. 104.28 Subd. 2. [USE OF REVENUES.] The proceeds of the tax 104.29 imposed under this section must be used to pay for up to 104.30 $1,820,000 in costs related to one or more of the following 104.31 capital projects as described in the referendum in subdivision 3: 104.32 (1) water quality and lake improvements; 104.33 (2) community center improvements; 104.34 (3) an industrial incubator; and 104.35 (4) downtown improvements, including a theatre and blighted 104.36 property acquisition. 105.1 Subd. 3. [REFERENDUM.] If the Waseca city council proposes 105.2 to impose the tax authorized by this section, the question of 105.3 imposing the tax must be submitted to the voters at the next 105.4 general election. The tax may not be imposed unless the 105.5 majority of votes cast on the question of imposing the tax are 105.6 in the affirmative. The specific projects to be funded by the 105.7 tax must be identified at least 90 days before the referendum is 105.8 held and included in the question presented at the election. 105.9 The question must state that the sales tax revenues would be 105.10 pledged to pay any bonds issued under subdivision 4 and that 105.11 these bonds are guaranteed by the city's property taxes. 105.12 Subd. 4. [BONDING AUTHORITY.] The city may issue bonds 105.13 under Minnesota Statutes, chapter 475, to finance the capital 105.14 expenditure and improvement projects authorized under 105.15 subdivision 2 and approved under subdivision 3. The total 105.16 amount of bonds issued for the projects approved in subdivision 105.17 3 may not exceed $1,820,000 in aggregate. An election to 105.18 approve the bonds, as required under Minnesota Statutes, section 105.19 475.58, is not required. 105.20 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 105.21 this section expire at the earlier of (1) ten years after the 105.22 taxes are first imposed, or (2) when the city council first 105.23 determines that the amount of revenues raised is sufficient to 105.24 finance the capital projects approved under subdivision 3 and to 105.25 prepay or retire at maturity the principal, interest, and 105.26 premium due on any bonds issued under subdivision 4. Any funds 105.27 remaining after completion of the projects may be placed in the 105.28 general funds of the city. 105.29 [EFFECTIVE DATE.] This section is effective the day after 105.30 compliance with the governing body of the city of Waseca with 105.31 Minnesota Statutes, section 645.021, subdivision 3. 105.32 Sec. 52. [CITY OF WILLMAR.] 105.33 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 105.34 Notwithstanding Minnesota Statutes, section 477A.016, or any 105.35 other provision of law, ordinance, or city charter, pursuant to 105.36 the approval of the city voters at the general election held on 106.1 November 2, 2004, the city of Willmar may impose by ordinance a 106.2 sales and use tax of one-half of one percent for the purposes 106.3 specified in subdivision 2. The provisions of Minnesota 106.4 Statutes, section 297A.99, govern the imposition, 106.5 administration, collection, and enforcement of the tax 106.6 authorized under this subdivision. 106.7 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 106.8 authorized by subdivision 1 must be used for the cost of 106.9 collecting and administering the tax and to pay all or part of 106.10 the capital or administrative costs of the development, 106.11 acquisition, construction, and improvement of the following 106.12 projects: 106.13 (1) completion and expansion of the airport/industrial 106.14 park; 106.15 (2) hiking and biking trails; 106.16 (3) connection of the Blue Line and Civic Center buildings; 106.17 and 106.18 (4) purchase of that portion of the Willmar Regional 106.19 Treatment Center campus located west of Marked Trunk Highway 71. 106.20 Authorized expenses include, but are not limited to, 106.21 acquiring property, paying construction expenses related to the 106.22 development of these facilities and improvements, and securing 106.23 and paying debt service on bonds or other obligations issued to 106.24 finance acquisition, construction, improvement, or development 106.25 of these projects. 106.26 Subd. 3. [BONDS.] The city of Willmar may issue without an 106.27 additional election general obligation bonds of the city in an 106.28 amount not to exceed $8,000,000 to pay capital and 106.29 administrative expenses for the acquisition, construction, 106.30 improvement, and development of the projects listed in 106.31 subdivision 2. The debt represented by the bonds must not be 106.32 included in computing any debt limitations applicable to the 106.33 city, and the levy of taxes required by Minnesota Statutes, 106.34 section 475.61, to pay the principal or any interest on the 106.35 bonds, and must not be subject to any levy limitations or be 106.36 included in computing or applying any levy limitation applicable 107.1 to the city. 107.2 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 107.3 subdivision 1 expires at the later of (1) seven years after the 107.4 date the tax is first imposed, or (2) when the Willmar City 107.5 Council determines that the amount described in subdivision 3 107.6 has been received from the tax to finance the capital and 107.7 administrative costs, and to repay or retire at maturity the 107.8 principal, interest, and premium due on any bonds issued under 107.9 subdivision 3. Any funds remaining after completion of the 107.10 projects listed in subdivision 2 and retirement or redemption of 107.11 the bonds may be placed in the general fund of the city. The 107.12 tax imposed under subdivision 1 may expire at an earlier time if 107.13 the city so determines by ordinance. 107.14 [EFFECTIVE DATE.] This section is effective the day after 107.15 compliance by the governing body of the city of Willmar with 107.16 Minnesota Statutes, section 645.021, subdivision 3. 107.17 Sec. 53. [CITY OF WINONA; TAXES AUTHORIZED.] 107.18 Subdivision 1. [SALES AND USE TAX 107.19 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 107.20 477A.016, or any other provision of law, ordinance, or city 107.21 charter, if approved by the voters pursuant to Minnesota 107.22 Statutes, section 297A.99, the city of Winona may impose by 107.23 ordinance a sales and use tax of one-half of one percent for the 107.24 purposes specified in subdivision 3. The provisions of 107.25 Minnesota Statutes, section 297A.99, govern the imposition, 107.26 administration, collection, and enforcement of the tax 107.27 authorized under this subdivision. 107.28 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 107.29 Minnesota Statutes, section 477A.016, or any other contrary 107.30 provision of law, ordinance, or city charter, the city of Winona 107.31 may impose by ordinance, for the purposes specified in 107.32 subdivision 3, an excise tax of up to $20 per motor vehicle, as 107.33 defined by ordinance, purchased or acquired from any person 107.34 engaged within the city in the business of selling motor 107.35 vehicles at retail. 107.36 Subd. 3. [USE OF REVENUES.] Revenues received from the 108.1 taxes authorized by subdivisions 1 and 2 must be used to pay all 108.2 or part of the capital costs of transportation, cultural, or 108.3 library projects located within the city, including securing or 108.4 paying debt service on bonds issued under subdivision 4, for the 108.5 transportation, cultural, or library projects and to pay the 108.6 cost of collecting and administering the tax. Authorized costs 108.7 include, but are not limited to, acquiring property and paying 108.8 construction and engineering costs related to the projects. 108.9 Subd. 4. [BONDS.] The city of Winona, if approved by 108.10 voters pursuant to Minnesota Statutes, section 297A.99, may 108.11 issue general obligation bonds of the city, in one or more 108.12 series, in the aggregate principal amount not to exceed 108.13 $20,000,000 to pay capital and administrative costs of the 108.14 transportation, cultural, or library projects. The debt 108.15 represented by the bonds is not included in computing any debt 108.16 limitations applicable to the city, and the levy of taxes 108.17 required by Minnesota Statutes, section 475.61, to pay the 108.18 principal of and interest on the bonds is not subject to any 108.19 levy limitation or included in computing or applying any levy 108.20 limitation applicable to the city. 108.21 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 108.22 subdivisions 1 and 2 expire at the later of 15 years after the 108.23 imposition of the tax or when the Winona city council determines 108.24 that sufficient funds have been received from the taxes to 108.25 prepay or retire at maturity the principal, interest, and 108.26 premium due on any bonds issued for the projects under 108.27 subdivision 4. Any funds remaining after expiration of the 108.28 taxes and retirement of the bonds may be placed in a capital 108.29 project fund of the city. The taxes imposed under subdivisions 108.30 1 and 2 may expire at an earlier time if the city so determines 108.31 by ordinance. 108.32 [EFFECTIVE DATE.] This section is effective the day after 108.33 compliance by the governing body of the city of Winona with 108.34 Minnesota Statutes, section 645.021, subdivision 3. 108.35 Sec. 54. [USE TAX ENFORCEMENT.] 108.36 The commissioner shall establish a use tax enforcement unit 109.1 within the Department of Revenue to conduct direct compliance 109.2 activities that will increase payment of use tax. The 109.3 commissioner shall inform and educate taxpayers about the 109.4 requirement to pay use tax. The commissioner shall also conduct 109.5 an information campaign targeted to higher income individuals, 109.6 attorneys, accountants, and tax preparers to advise individuals 109.7 and tax professionals of the obligation to report and pay use 109.8 tax. 109.9 [EFFECTIVE DATE.] This section is effective July 1, 2005. 109.10 Sec. 55. [REPEALER.] 109.11 Minnesota Statutes 2004, section 297A.99, subdivision 13, 109.12 is repealed effective July 1, 2005. 109.13 ARTICLE 4 109.14 PROPERTY TAXES 109.15 Section 1. Minnesota Statutes 2004, section 103C.331, 109.16 subdivision 16, is amended to read: 109.17 Subd. 16. [BUDGET.] The district board shall annually 109.18 present a budget consisting of an itemized statement of district 109.19 expenses for the ensuing calendar year to the boards of county 109.20 commissioners of the counties in which the district is located. 109.21 The county boards may levy an annual tax on all taxable real 109.22 property in the district or annually authorize district levies, 109.23 as provided in section 103C.332, for the amount that the boards 109.24 determine is necessary to meet the requirements of the 109.25 district. The amount levied shall be collected and distributed 109.26 to the district as prescribed by chapter 276. The amount may be 109.27 spent by the district board for a district purpose authorized by 109.28 law. 109.29 Sec. 2. [103C.332] [DISTRICT FUNDS AND LEVIES.] 109.30 Subdivision 1. [GENERAL FUND.] (a) A district shall create 109.31 a general fund consisting of: 109.32 (1) an ad valorem tax levy, authorized by a county board 109.33 under section 103C.331, subdivision 16, that may not exceed 109.34 0.048 percent of taxable market value, or $750,000, whichever is 109.35 less; and 109.36 (2) revenue received from the county for administration of 110.1 the district under section 103C.331, subdivision 16. 110.2 (b) The money in the fund shall be used for general 110.3 administrative expenses. The supervisors may make an annual 110.4 levy for the general fund as provided in subdivision 6. 110.5 Subd. 2. [IMPLEMENTATION AND PROJECT MATCH FUND.] A 110.6 district shall create an implementation fund to supply funds for 110.7 the implementation of the projects of the district or to match 110.8 grants from outside sources consisting of: 110.9 (1) ad valorem tax levies or fees levied or to be levied 110.10 for the implementation of projects of the district or to match 110.11 grants, authorized by the county board under section 103C.331, 110.12 subdivision 16; and 110.13 (2) revenue received from the county under section 110.14 103C.331, subdivision 16, for the implementation of projects of 110.15 the district or to match grants. 110.16 Subd. 3. [BUDGET HEARING.] (a) Before adopting a budget 110.17 when levies are authorized by the county board under section 110.18 103C.331, subdivision 16, the supervisors shall hold a public 110.19 hearing on the proposed budget. 110.20 (b) The supervisors shall publish a notice of the hearing 110.21 with a summary of the proposed budget in one or more newspapers 110.22 of general circulation in each county consisting of part of the 110.23 district. The notice and summary shall be published once each 110.24 week for two successive weeks before the hearing. The last 110.25 publication shall be at least two days before the hearing. 110.26 Subd. 4. [BUDGET ADOPTION.] On or before September 1 of 110.27 each year, the supervisors shall adopt a budget for the next 110.28 year and decide on the total amount necessary to be raised from 110.29 ad valorem tax levies to meet the district's budget. 110.30 Subd. 5. [CERTIFICATION TO AUDITOR.] After adoption of the 110.31 budget and no later than September 1, the district shall certify 110.32 to the auditor of each county within the district, the county's 110.33 share of an authorized tax, which shall be an amount bearing the 110.34 same proportion to the total levy as the net tax capacity of the 110.35 area of the county within the district bears to the net tax 110.36 capacity of the entire district. The maximum amount of a levy 111.1 may not exceed the amount provided in subdivisions 1 and 2. 111.2 Subd. 6. [LEVY.] The auditor of each county in the 111.3 district shall add the amount of an authorized levy made by the 111.4 supervisors to the other tax levies on the property of the 111.5 county within the district for collection by the county 111.6 treasurer with other taxes. The county treasurer shall make 111.7 settlement of the taxes collected with the treasurer of the 111.8 district in the same manner as other taxes are distributed to 111.9 the other political subdivisions. The levy authorized by this 111.10 section is in addition to other county taxes authorized by law. 111.11 Sec. 3. Minnesota Statutes 2004, section 123B.53, is 111.12 amended by adding a subdivision to read: 111.13 Subd. 1a. [DEBT SERVICE LEVIES; CHOICE OF TAX BASE.] A 111.14 school board may by resolution elect to levy the debt service 111.15 for a bond issued after July 1, 2005, against the referendum 111.16 market value of the district, as defined under section 126C.01, 111.17 subdivision 3, rather than the net tax capacity of the district, 111.18 except that for purposes of this subdivision, noncommercial 4c(1) 111.19 property under section 273.13 is valued at its market value. A 111.20 resolution to levy against referendum market value must be 111.21 passed at an open meeting of the board, at least 60 days prior 111.22 to the referendum election. 111.23 [EFFECTIVE DATE.] This section is effective the day 111.24 following final enactment. 111.25 Sec. 4. Minnesota Statutes 2004, section 123B.53, 111.26 subdivision 4, is amended to read: 111.27 Subd. 4. [DEBT SERVICE EQUALIZATION REVENUE.] (a) The debt 111.28 service equalization revenue of a district equals the sum of the 111.29 first tier debt service equalization revenue and the second tier 111.30 debt service equalization revenue. 111.31 (b) The first tier debt service equalization revenue of a 111.32 district equals the greater of zero or the eligible debt service 111.33 revenue minus the amount raised by a levy of 15 percent times 111.34 the adjusted net tax capacity of the district minus the second 111.35 tier debt service equalization revenue of the district. 111.36 (c) The second tier debt service equalization revenue of a 112.1 district equals the greater of zero or the eligible debt service 112.2 revenue, excluding alternative facilities levies under section 112.3 123B.59, subdivision 5, minus the amount raised by a levy of 25 112.4 percent times the adjusted net tax capacity of the district. 112.5 (d) Debt service equalization revenue is determined as 112.6 provided under this subdivision regardless of whether the debt 112.7 service is being levied against net tax capacity or referendum 112.8 market value. 112.9 [EFFECTIVE DATE.] This section is effective July 1, 2005. 112.10 Sec. 5. Minnesota Statutes 2004, section 123B.55, is 112.11 amended to read: 112.12 123B.55 [DEBT SERVICE LEVY.] 112.13 Subdivision 1. [LEVY AMOUNT.] A district may levy the 112.14 amounts necessary to make payments for bonds issued and for 112.15 interest on them, including the bonds and interest on them, 112.16 issued as authorized by Minnesota Statutes 1974, section 112.17 275.125, subdivision 3, clause (7)(C); and the amounts necessary 112.18 for repayment of debt service loans and capital loans, minus the 112.19 amount of debt service equalization revenue of the district. 112.20 Subd. 2. [AID APPORTIONMENT.] A district's debt service 112.21 equalization aid shall be apportioned between the net tax 112.22 capacity debt service levy and the referendum market value debt 112.23 service levy in the same proportions as eligible debt service 112.24 revenues resulting from bonds issued against net tax capacity 112.25 are to eligible debt service revenues resulting from bonds 112.26 issued against referendum market value. 112.27 Subd. 3. [NET TAX CAPACITY DEBT SERVICE LEVY.] The levy 112.28 amount determined under subdivision 1, plus the eligible debt 112.29 service revenues resulting from bonds issued against net tax 112.30 capacity, minus the debt service equalization aid apportioned to 112.31 the net tax capacity debt service levy, must be levied against 112.32 the net tax capacity of the district as determined under section 112.33 273.13 and must be included with the other net tax capacity 112.34 levies certified to the county auditor under section 275.07. 112.35 Subd. 4. [REFERENDUM MARKET VALUE DEBT SERVICE LEVY.] The 112.36 eligible debt service revenues resulting from bonds issued 113.1 against referendum market value, minus the debt service 113.2 equalization aid apportioned to the referendum market value debt 113.3 service levy, must be levied against the referendum market value 113.4 of the district as defined in section 126C.01, subdivision 3, 113.5 and must be separately certified to the county auditor under 113.6 section 275.07. 113.7 [EFFECTIVE DATE.] This section is effective beginning with 113.8 taxes payable in 2006. 113.9 Sec. 6. Minnesota Statutes 2004, section 123B.71, 113.10 subdivision 9, is amended to read: 113.11 Subd. 9. [INFORMATION REQUIRED.] A school board proposing 113.12 to construct a facility described in subdivision 8 shall submit 113.13 to the commissioner a proposal containing information including 113.14 at least the following: 113.15 (1) the geographic area and population to be served, 113.16 preschool through grade 12 student enrollments for the past five 113.17 years, and student enrollment projections for the next five 113.18 years; 113.19 (2) a list of existing facilities by year constructed, 113.20 their uses, and an assessment of the extent to which alternate 113.21 facilities are available within the school district boundaries 113.22 and in adjacent school districts; 113.23 (3) a list of the specific deficiencies of the facility 113.24 that demonstrate the need for a new or renovated facility to be 113.25 provided, and a list of the specific benefits that the new or 113.26 renovated facility will provide to the students, teachers, and 113.27 community users served by the facility; 113.28 (4) the relationship of the project to any priorities 113.29 established by the school district, educational cooperatives 113.30 that provide support services, or other public bodies in the 113.31 service area; 113.32 (5) a specification of how the project will increase 113.33 community use of the facility and whether and how the project 113.34 will increase collaboration with other governmental or nonprofit 113.35 entities; 113.36 (6) a description of the project, including the 114.1 specification of site and outdoor space acreage and square 114.2 footage allocations for classrooms, laboratories, and support 114.3 spaces; estimated expenditures for the major portions of the 114.4 project; and the dates the project will begin and be completed; 114.5 (7) a specification of the source of financing the project; 114.6 the scheduled date for a bond issue or school board action; a 114.7 schedule of payments, including debt service equalization aid; 114.8 whether the debt service will be levied against net tax capacity 114.9 or referendum market value; and the effect of a bond issue on 114.10 local property taxes by the property class and valuation; 114.11 (8) an analysis of how the proposed new or remodeled 114.12 facility will affect school district operational or 114.13 administrative staffing costs, and how the district's operating 114.14 budget will cover any increased operational or administrative 114.15 staffing costs; 114.16 (9) a description of the consultation with local or state 114.17 road and transportation officials on school site access and 114.18 safety issues, and the ways that the project will address those 114.19 issues; 114.20 (10) a description of how indoor air quality issues have 114.21 been considered and a certification that the architects and 114.22 engineers designing the facility will have professional 114.23 liability insurance; 114.24 (11) as required under section 123B.72, for buildings 114.25 coming into service after July 1, 2002, a certification that the 114.26 plans and designs for the extensively renovated or new 114.27 facility's heating, ventilation, and air conditioning systems 114.28 will meet or exceed code standards; will provide for the 114.29 monitoring of outdoor airflow and total airflow of ventilation 114.30 systems; and will provide an indoor air quality filtration 114.31 system that meets ASHRAE standard 52.1; 114.32 (12) a specification of any desegregation requirements that 114.33 cannot be met by any other reasonable means; and 114.34 (13) a specification, if applicable, of how the facility 114.35 will utilize environmentally sustainable school facility design 114.36 concepts. 115.1 [EFFECTIVE DATE.] This section is effective July 1, 2005. 115.2 Sec. 7. Minnesota Statutes 2004, section 126C.17, 115.3 subdivision 6, is amended to read: 115.4 Subd. 6. [REFERENDUM EQUALIZATION LEVY.] (a) For fiscal 115.5 year 2003and laterthrough 2007, a district's referendum 115.6 equalization levy equals the sum of the first tier referendum 115.7 equalization levy and the second tier referendum equalization 115.8 levy. 115.9 (b) A district's first tier referendum equalization levy 115.10 equals the district's first tier referendum equalization revenue 115.11 times the lesser of one or the ratio of the district's 115.12 referendum market value per resident marginal cost pupil unit to 115.13 $476,000. 115.14 (c) A district's second tier referendum equalization levy 115.15 equals the district's second tier referendum equalization 115.16 revenue times the lesser of one or the ratio of the district's 115.17 referendum market value per resident marginal cost pupil unit to 115.18 $270,000. 115.19 Sec. 8. Minnesota Statutes 2004, section 126C.17, is 115.20 amended by adding a subdivision to read: 115.21 Subd. 6a. [LOCAL EFFORT LEVEL.] (a) For fiscal year 2008 115.22 and later, a district's local effort level equals the sum of the 115.23 first tier referendum equalization level and the second tier 115.24 referendum local effort level. 115.25 (b) A district's first tier referendum local effort level 115.26 equals the district's first tier referendum equalization revenue 115.27 times the lesser of one or the ratio of the district's 115.28 referendum market value per resident marginal cost pupil unit to 115.29 $476,000. 115.30 (c) A district's second tier referendum local effort level 115.31 equals the district's second tier referendum equalization 115.32 revenue times the lesser of one or the ratio of the district's 115.33 referendum market value per resident marginal cost pupil unit to 115.34 $270,000. 115.35 Sec. 9. Minnesota Statutes 2004, section 126C.17, is 115.36 amended by adding a subdivision to read: 116.1 Subd. 6b. [LOCAL EFFORT REVENUE.] (a) For fiscal years 116.2 2008 and later, a school district's local effort revenue is 116.3 equal to its local effort level for that year. 116.4 (b) For referenda authorized under subdivision 9 prior to 116.5 June 30, 2006, a school district's local effort revenue must be 116.6 levied against the district's referendum market value according 116.7 to subdivision 10. 116.8 (c) For referenda authorized or renewed under subdivision 9 116.9 after June 30, 2006, that have been approved to be levied 116.10 against referendum market value, the local effort revenue must 116.11 be levied against the district's referendum market value 116.12 according to subdivision 10. 116.13 (d) For referenda authorized or renewed under subdivision 9 116.14 after June 30, 2006, that have been approved to be imposed as a 116.15 school referendum tax according to section 290.0621, the local 116.16 effort revenue must be raised as a tax against income liability 116.17 according to section 290.0621. 116.18 Sec. 10. Minnesota Statutes 2004, section 126C.17, 116.19 subdivision 7, is amended to read: 116.20 Subd. 7. [REFERENDUM EQUALIZATION AID.] (a) For fiscal 116.21 years 2005 through 2007, a district's referendum equalization 116.22 aid equals the difference between its referendum equalization 116.23 revenue and levy. For fiscal years 2008 and later, a district's 116.24 referendum equalization aid equals the difference between its 116.25 referendum equalization revenue and its local effort revenue. 116.26 (b) If a district's actual levy for first or second tier 116.27 referendum equalization revenue in fiscal years 2005 through 116.28 2007 is less than its maximum levy limit for that tier, aid 116.29 shall be proportionately reduced. If a district's actual local 116.30 effort revenue for first or second tier referendum equalization 116.31 revenue in fiscal years 2008 and later is less than its maximum 116.32 local effort revenue limit for that tier, aid shall be 116.33 proportionately reduced. 116.34 (c) Notwithstanding paragraph (a), the referendum 116.35 equalization aid for a district, where the referendum 116.36 equalization aid under paragraph (a) exceeds 90 percent of the 117.1 referendum revenue, must not exceed 18.6 percent of the formula 117.2 allowance times the district's resident marginal cost pupil 117.3 units. For fiscal years 2005 through 2007, a district's 117.4 referendum levy is increased by the amount of any reduction in 117.5 referendum aid under this paragraph. For fiscal years 2008 and 117.6 later, a district's local effort level is increased by the 117.7 amount of any reduction in referendum aid under this paragraph. 117.8 Sec. 11. Minnesota Statutes 2004, section 126C.17, 117.9 subdivision 9, is amended to read: 117.10 Subd. 9. [REFERENDUM REVENUE.] (a) The revenue authorized 117.11 by section 126C.10, subdivision 1, may be increased in the 117.12 amount approved by the voters of the district at a referendum 117.13 called for the purpose. The referendum may be called by the 117.14 board or shall be called by the board upon written petition of 117.15 qualified voters of the district. The referendum must be 117.16 conducted one or two calendar years before the increased levy 117.17 authority, if approved, first becomes payable. Only one 117.18 election to approve an increase may be held in a calendar year. 117.19 Unless the referendum is conducted by mail under paragraph (g), 117.20 the referendum must be held on the first Tuesday after the first 117.21 Monday in November. The ballot must state the maximum amount of 117.22 the increased revenue per resident marginal cost pupil unit, the117.23estimated referendum tax rate as a percentage of referendum117.24market value in the first year it is to be levied, and that the117.25revenue must be used to finance school operations. The ballot 117.26 may state a schedule, determined by the board, of increased 117.27 revenue per resident marginal cost pupil unit that differs from 117.28 year to year over the number of years for which the increased 117.29 revenue is authorized.If the ballot contains a schedule117.30showing different amounts, it must also indicate the estimated117.31referendum tax rate as a percent of referendum market value for117.32the amount specified for the first year and for the maximum117.33amount specified in the schedule.The ballot, including a 117.34 ballot on the question to revoke or reduce the increased revenue 117.35 amount under paragraph (c), must abbreviate the term "per 117.36 resident marginal cost pupil unit" as "per pupil unit." The 118.1 ballot may state that existing referendumlevytaxing authority 118.2 is expiring. In this case, if the referendum authority is based 118.3 on a property tax levy, the ballot may also compare the proposed 118.4 levy authority to the existing expiring levy authority, and 118.5 express the proposed increase as the amount, if any, over the 118.6 expiring referendum levy authority. The ballot must designate 118.7 the specific number of years, not to exceed ten, for which the 118.8 referendum authorization applies. The notice required under 118.9 section 275.60 may be modified to read, in cases of renewing 118.10 existing levies: 118.11 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 118.12 FOR A PROPERTY TAX INCREASE." 118.13 If the referendum is on a proposed income tax under section 118.14 290.0621, the notice must read: 118.15 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 118.16 FOR AN INCOME TAX INCREASE." 118.17 The ballot may contain a textual portion with the 118.18 information required in this subdivision and a question stating 118.19 substantially the following: 118.20 "Shall the increase in the revenue proposed by (petition 118.21 to) the board of ........., School District No. .., be approved?" 118.22 If approved, an amount equal to the approved revenue per 118.23 resident marginal cost pupil unit times the resident marginal 118.24 cost pupil units for the school year beginning in the year after 118.25 the levy is certified or the income tax is imposed shall be 118.26 authorized for certification for the number of years approved, 118.27 if applicable, or until revoked or reduced by the voters of the 118.28 district at a subsequent referendum. A referendum may be 118.29 conducted on the question of converting an existing referendum 118.30 property tax levy to a school referendum income tax to be 118.31 imposed under section 290.0621. 118.32 (b) The board must prepare and deliver by first class mail 118.33 at least 15 days but no more than 30 days before the day of the 118.34 referendum to each taxpayer a notice of the referendum and the 118.35 proposed revenue increase. The board need not mail more than 118.36 one notice to any taxpayer. For the purpose of giving mailed 119.1 notice under this subdivision for a referendum based on a 119.2 property tax levy, owners must be those shown to be owners on 119.3 the records of the county auditor or, in any county where tax 119.4 statements are mailed by the county treasurer, on the records of 119.5 the county treasurer. Every property owner whose name does not 119.6 appear on the records of the county auditor or the county 119.7 treasurer is deemed to have waived this mailed notice unless the 119.8 owner has requested in writing that the county auditor or county 119.9 treasurer, as the case may be, include the name on the records 119.10 for this purpose. The notice for a referendum based on a 119.11 property tax levy must project the anticipated amount of tax 119.12 increase in annual dollarsand annual percentagefor typical 119.13 residential homesteads, agricultural homesteads, apartments, and 119.14 commercial-industrial property within the school district. For 119.15 the purpose of giving mailed notice under this subdivision, for 119.16 a referendum based on an income tax under section 290.0621, 119.17 taxpayers must be those shown to be domiciled in the school 119.18 district as indicated on the space which must be provided for 119.19 this information on the Minnesota individual income tax form for 119.20 the taxable year ending before the calendar year when the 119.21 referendum is conducted. Every individual whose domicile is in 119.22 the school district whose name does not appear on the income tax 119.23 return as having a domicile in the district is deemed to have 119.24 waived this mailed notice unless the individual has requested in 119.25 writing that the county auditor or county treasurer, as the case 119.26 may be, include the individual's name on the records for this 119.27 purpose. The notice must project the anticipated amount of tax 119.28 increase in annual dollars and annual percentage for typical 119.29 family incomes within the school district. 119.30 The notice for a referendum based on a property tax levy 119.31 may state that an existing referendum levy is expiring and 119.32 project the anticipated amount of increase over the existing 119.33 referendum levy in the first year, if any, in annual dollarsand119.34annual percentagefor typical residential homesteads, 119.35 agricultural homesteads, apartments, and commercial-industrial 119.36 property within the district. 120.1 The notice must include the following statement: "Passage 120.2 of this referendum will result in an increase in your property 120.3 taxes." However, in cases of renewing existing levies, the 120.4 notice may include the following statement: "Passage of this 120.5 referendum may result in an increase in your property taxes." 120.6 The notice for a referendum based on income tax may state 120.7 that an existing income tax referendum authority is expiring and 120.8 project the anticipated amount of increase over the existing 120.9 referendum levy in the first year, if any, in annual dollars and 120.10 annual percentage for typical family incomes within the district. 120.11 The notice must include the following statement: "Passage 120.12 of this referendum will result in an increase in your personal 120.13 income taxes." However, in cases of renewing existing income 120.14 tax referendum authorities, the notice may include the following 120.15 statement: "Passage of this referendum may result in an 120.16 increase in your personal income taxes." 120.17 (c) A referendum on the question of revoking or reducing 120.18 the increased revenue amount authorized pursuant to paragraph 120.19 (a) may be called by the board and shall be called by the board 120.20 upon the written petition of qualified voters of the district. 120.21 A referendum to revoke or reduce the revenue amount must state 120.22 the amount per resident marginal cost pupil unit by which the 120.23 authority is to be reduced. Revenue authority approved by the 120.24 voters of the district pursuant to paragraph (a) must be 120.25 available to the school district at least once before it is 120.26 subject to a referendum on its revocation or reduction for 120.27 subsequent years. Only one revocation or reduction referendum 120.28 may be held to revoke or reduce referendum revenue for any 120.29 specific year and for years thereafter. 120.30 (d) A petition authorized by paragraph (a) or (c) is 120.31 effective if signed by a number of qualified voters in excess of 120.32 15 percent of the registered voters of the district on the day 120.33 the petition is filed with the board. A referendum invoked by 120.34 petition must be held on the date specified in paragraph (a). 120.35 (e) The approval of 50 percent plus one of those voting on 120.36 the question is required to pass a referendum authorized by this 121.1 subdivision. 121.2 (f) At least 15 days before the day of the referendum, the 121.3 district must submit a copy of the notice required under 121.4 paragraph (b) to the commissioner and to the county auditor of 121.5 each county in which the district is located. Within 15 days 121.6 after the results of the referendum have been certified by the 121.7 board, or in the case of a recount, the certification of the 121.8 results of the recount by the canvassing board, the district 121.9 must notify the commissioner of the results of the referendum. 121.10 [EFFECTIVE DATE.] This section is effective for referenda 121.11 conducted on or after July 1, 2005. 121.12 Sec. 12. Minnesota Statutes 2004, section 168A.05, 121.13 subdivision 1b, is amended to read: 121.14 Subd. 1b. [MANUFACTURED HOME; EXEMPTION.] The provisions 121.15 of subdivision 1a shall not apply to (1) a manufactured home 121.16 which is sold or otherwise disposed of pursuant to section 121.17 504B.271 by the owner of a manufactured home park as defined in 121.18 section 327.14, subdivision 3, or (2) a manufactured home which 121.19 is sold pursuant to section 504B.265 by the owner of a 121.20 manufactured home park. The department shall not require a 121.21 manufactured home park owner to satisfy the delinquent or 121.22 current year's personal property taxes owed as condition of the 121.23 title transfer to the park owner. 121.24 [EFFECTIVE DATE.] This section is effective the day 121.25 following final enactment. 121.26 Sec. 13. [174.11] [COMMISSIONER TO NOTIFY COUNTY AUDITOR 121.27 OF PROPERTY ACQUISITIONS.] 121.28 Upon acquisition of any taxable real property, the 121.29 commissioner must notify the county auditor of the county where 121.30 the property is located that the property has been acquired. 121.31 Sec. 14. Minnesota Statutes 2004, section 272.02, 121.32 subdivision 22, is amended to read: 121.33 Subd. 22. [WIND ENERGY CONVERSION SYSTEMS.] All real and 121.34 personal property of a wind energy conversion system as defined 121.35 in section 272.029, subdivision 2, is exempt from property tax 121.36 except that the land on which the property is located remains 122.1 taxable. If approved by the county where the property is 122.2 located, the value of the land on which the wind energy 122.3 conversion system is located shall not be increased or 122.4 decreased, but shall be valued in the same manner as similar 122.5 land that has not been improved with a wind energy conversion 122.6 system. The land shall be classified based on the most probable 122.7 use of the property if it were not improved with a wind energy 122.8 conversion system. 122.9 [EFFECTIVE DATE.] This section is effective for assessment 122.10 year 2005 and thereafter, for taxes payable in 2006 and 122.11 thereafter. 122.12 Sec. 15. Minnesota Statutes 2004, section 272.02, 122.13 subdivision 47, is amended to read: 122.14 Subd. 47. [POULTRY LITTER BIOMASS GENERATION FACILITY; 122.15 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 122.16 attached machinery and other personal property which is part of 122.17 an electrical generating facility that meets the requirements of 122.18 this subdivision is exempt. At the time of construction, the 122.19 facility must: 122.20 (1) be designed to utilize poultry litter as a primary fuel 122.21 source; and 122.22 (2) be constructed for the purpose of generating power at 122.23 the facility that will be sold pursuant to a contract approved 122.24 by the Public Utilities Commission in accordance with the 122.25 biomass mandate imposed under section 216B.2424. 122.26 Construction of the facility must be commenced after 122.27 January 1, 2003, and before December 31,20032005. Property 122.28 eligible for this exemption does not include electric 122.29 transmission lines and interconnections or gas pipelines and 122.30 interconnections appurtenant to the property or the facility. 122.31 [EFFECTIVE DATE.] This section is effective for taxes 122.32 levied in 2005, payable in 2006, and thereafter. 122.33 Sec. 16. Minnesota Statutes 2004, section 272.02, 122.34 subdivision 56, is amended to read: 122.35 Subd. 56. [ELECTRIC GENERATION FACILITY; PERSONAL 122.36 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 123.1 attached machinery and other personal property which is part of 123.2 a combined-cycle combustion-turbine electric generation facility 123.3 that exceeds550300 megawatts of installed capacity and that 123.4 meets the requirements of this subdivision is exempt. At the 123.5 time of construction, the facility must: 123.6 (1) be designed to utilize natural gas as a primary fuel; 123.7 (2) not be owned by a public utility as defined in section 123.8 216B.02, subdivision 4; 123.9 (3) be located within five miles of an existing natural gas 123.10 pipeline and within four miles of an existing electrical 123.11 transmission substation; 123.12 (4) be located outside the metropolitan area as defined 123.13 under section 473.121, subdivision 2; and 123.14 (5) be designed to provide energy and ancillary services 123.15 and have received a certificate of need under section 216B.243. 123.16 (b) Construction of the facility must be commenced after 123.17 January 1, 2004, and before January 1, 2007, except that 123.18 property eligible for this exemption includes any expansion of 123.19 the facility that also meets the requirements of paragraph (a), 123.20 clauses (1) to (5), without regard to the date that construction 123.21 of the expansion commences. Property eligible for this 123.22 exemption does not include electric transmission lines and 123.23 interconnections or gas pipelines and interconnections 123.24 appurtenant to the property or the facility. 123.25 [EFFECTIVE DATE.] This section is effective for taxes 123.26 levied in 2005, payable in 2006, and thereafter. 123.27 Sec. 17. Minnesota Statutes 2004, section 272.02, is 123.28 amended by adding a subdivision to read: 123.29 Subd. 68. [ELECTRIC GENERATION FACILITY; PERSONAL 123.30 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 123.31 attached machinery and other personal property which is part of 123.32 a simple-cycle combustion-turbine electric generation facility 123.33 that exceeds 290 megawatts of installed capacity and that meets 123.34 the requirements of this subdivision is exempt. At the time of 123.35 construction, the facility must: 123.36 (1) be designed to utilize natural gas as a primary fuel; 124.1 (2) not be owned by a public utility as defined in section 124.2 216B.02, subdivision 4; 124.3 (3) be located within five miles of an existing natural gas 124.4 pipeline and within five miles of an existing electrical 124.5 transmission substation; 124.6 (4) be located outside the metropolitan area as defined 124.7 under section 473.121, subdivision 2; 124.8 (5) be designed to provide peaking capacity energy and 124.9 ancillary services and have satisfied all of the requirements 124.10 under section 216B.243; and 124.11 (6) have received, by resolution, the approval from the 124.12 governing body of the county, city, and school district in which 124.13 the proposed facility is to be located for the exemption of 124.14 personal property under this subdivision. 124.15 (b) Construction of the facility must be commenced after 124.16 January 1, 2005, and before January 1, 2009. Property eligible 124.17 for this exemption does not include electric transmission lines 124.18 and interconnections or gas pipelines and interconnections 124.19 appurtenant to the property or the facility. 124.20 [EFFECTIVE DATE.] This section is effective for assessment 124.21 year 2006, taxes payable in 2007, and thereafter. 124.22 Sec. 18. Minnesota Statutes 2004, section 272.02, is 124.23 amended by adding a subdivision to read: 124.24 Subd. 69. [ELECTRIC GENERATION FACILITY PERSONAL 124.25 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), and 124.26 section 453.54, subdivision 20, attached machinery and other 124.27 personal property which is part of an electric generation 124.28 facility that exceeds 150 megawatts of installed capacity and 124.29 meets the requirements of this subdivision is exempt. At the 124.30 time of construction, the facility must: 124.31 (1) be designed to utilize natural gas as a primary fuel; 124.32 (2) be owned and operated by a municipal power agency as 124.33 defined in section 453.52, subdivision 8; 124.34 (3) have received the certificate of need under section 124.35 216B.243; 124.36 (4) be located outside the metropolitan area as defined 125.1 under section 473.121, subdivision 2; and 125.2 (5) be designed to be a combined-cycle facility, although 125.3 initially the facility will be operated as a simple-cycle 125.4 combustion turbine. 125.5 (b) To qualify under this subdivision, an agreement must be 125.6 negotiated between the municipal power agency and the host city, 125.7 for a payment in lieu of property taxes to the host city. 125.8 (c) Construction of the facility must be commenced after 125.9 January 1, 2004, and before January 1, 2006. Property eligible 125.10 for this exemption does not include electric transmission lines 125.11 and interconnections or gas pipelines and interconnections 125.12 appurtenant to the property or the facility. 125.13 [EFFECTIVE DATE.] This section is effective for assessment 125.14 year 2005, taxes payable in 2006, and thereafter. 125.15 Sec. 19. Minnesota Statutes 2004, section 272.02, is 125.16 amended by adding a subdivision to read: 125.17 Subd. 70. [BIOMASS ELECTRIC GENERATION FACILITY; PERSONAL 125.18 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 125.19 attached machinery and other personal property which is a part 125.20 of an electric generation facility, including remote boilers 125.21 that comprise part of the district heating system, generating up 125.22 to 30 megawatts of installed capacity and that meets the 125.23 requirements of this subdivision is exempt. At the time of 125.24 construction, the facility must: 125.25 (1) be designed to utilize a minimum 90 percent waste 125.26 biomass as a fuel; 125.27 (2) not be owned by a public utility as defined in section 125.28 216B.02, subdivision 4; 125.29 (3) be located within a city of the first class and have 125.30 its primary location at a former garbage transfer station; and 125.31 (4) be designed to have capability to provide baseload 125.32 energy and district heating. 125.33 (b) Construction of the facility must be commenced after 125.34 January 1, 2004, and before January 1, 2008. Property eligible 125.35 for this exemption does not include electric transmission lines 125.36 and interconnections or gas pipelines and interconnections 126.1 appurtenant to the property or the facility. 126.2 [EFFECTIVE DATE.] This section is effective for assessment 126.3 year 2005, taxes payable in 2006, and thereafter. 126.4 Sec. 20. Minnesota Statutes 2004, section 272.02, is 126.5 amended by adding a subdivision to read: 126.6 Subd. 71. [ELECTRIC GENERATION FACILITY; PERSONAL 126.7 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 126.8 attached machinery and other personal property that is part of 126.9 either a simple-cycle, combustion-turbine electric generation 126.10 facility that equals or exceeds 150 megawatts of installed 126.11 capacity, or a combined-cycle, combustion-turbine electric 126.12 generation facility that equals or exceeds 225 megawatts of 126.13 installed capacity, and that in either case meets the 126.14 requirements of this subdivision, is exempt. At the time of 126.15 construction, the facility must: 126.16 (1) be designed to utilize natural gas as a primary fuel; 126.17 (2) not be owned by a public utility as defined in section 126.18 216B.02, subdivision 4; 126.19 (3) be located in a metropolitan county defined in section 126.20 473.121, subdivision 4, that has a population greater than 126.21 190,000 and less than 225,000 in the most recent federal 126.22 decennial census, within one mile of an existing natural gas 126.23 pipeline, and within one mile of an existing electrical 126.24 transmission substation; and 126.25 (4) be designed to provide energy and ancillary services 126.26 and have received a certificate of need under section 216B.243. 126.27 (b) Construction of the facility must be commenced after 126.28 January 1, 2005, and before January 1, 2008. Property eligible 126.29 for this exemption does not include electric transmission lines 126.30 and interconnections or gas pipelines and interconnections 126.31 appurtenant to the property or the facility. 126.32 [EFFECTIVE DATE.] This section is effective for taxes 126.33 levied in 2005, payable in 2006, and thereafter. 126.34 Sec. 21. Minnesota Statutes 2004, section 272.02, is 126.35 amended by adding a subdivision to read: 126.36 Subd. 72. [PERSONAL RAPID TRANSIT SYSTEM.] All property 127.1 used in the operation and support of a personal rapid transit 127.2 system as defined in section 297A.61, subdivision 37, that 127.3 provides service to the public on a regular and continuing 127.4 basis, is exempt, provided that it is operated independent of 127.5 any government subsidies. 127.6 [EFFECTIVE DATE.] This section is effective for taxes 127.7 levied in 2005, payable in 2006, and thereafter. 127.8 Sec. 22. Minnesota Statutes 2004, section 272.02, is 127.9 amended by adding a subdivision to read: 127.10 Subd. 73. [QUALIFIED ELDERLY LIVING FACILITY.] An elderly 127.11 living facility is exempt from taxation if it meets all of the 127.12 following requirements: 127.13 (1) the facility is located in a city of the first class 127.14 with a population of more than 350,000; 127.15 (2) the facility is owned and operated by a nonprofit 127.16 corporation organized under chapter 317A or by a limited 127.17 liability company formed under chapter 322B, the sole member of 127.18 which is a nonprofit corporation organized under chapter 317A; 127.19 (3) the facility consists of no more than 60 living units; 127.20 (4) the owner of the facility is an affiliate of entities 127.21 that own and operate assisted living and skilled nursing 127.22 facilities that: 127.23 (i) are located across a street from the facility; 127.24 (ii) are adjacent to a church that is exempt from taxation 127.25 under subdivision 6; 127.26 (iii) include a congregate dining program; and 127.27 (iv) provide assisted living or similar social and physical 127.28 support; 127.29 (5) the residents of the facility must be: 127.30 (i) at least 62 years of age; or 127.31 (ii) handicapped; and 127.32 (6) at least 20 percent of the units in the facility are 127.33 occupied by persons whose annual income does not exceed 50 127.34 percent of median family income for the area or, in the 127.35 alternative, 40 percent of the units in the facility are 127.36 occupied by persons whose annual income does not exceed 60 128.1 percent of median family income for the area. 128.2 For purposes of this subdivision, "affiliate" means any 128.3 entity directly or indirectly controlling or controlled by or 128.4 under direct or indirect common control with an entity. For 128.5 this purpose, "control" means the power to direct management and 128.6 policies through membership or ownership of voting securities. 128.7 The property is exempt under this subdivision for taxes 128.8 levied in each year or partial year of the term of the 128.9 facility's initial permanent financing or 25 years, whichever is 128.10 later. 128.11 [EFFECTIVE DATE.] This section is effective for taxes 128.12 levied in 2005, payable in 2006, and thereafter. 128.13 Sec. 23. Minnesota Statutes 2004, section 272.02, is 128.14 amended by adding a subdivision to read: 128.15 Subd. 74. [ELECTRIC GENERATION FACILITY; PERSONAL 128.16 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 128.17 attached machinery and other personal property which is part of 128.18 a simple-cycle combustion-turbine electric generation facility 128.19 that exceeds 150 megawatts of installed capacity and that meets 128.20 the requirements of this subdivision is exempt. At the time of 128.21 construction, the facility must: 128.22 (1) utilize natural gas as a primary fuel; 128.23 (2) be owned by an electric generation and transmission 128.24 cooperative; 128.25 (3) be located within five miles of parallel existing 128.26 12-inch and 16-inch natural gas pipelines and a 69-kilovolt 128.27 high-voltage electric transmission line; 128.28 (4) be designed to provide peaking, emergency backup, or 128.29 contingency services; 128.30 (5) have received a certificate of need under section 128.31 216B.243 demonstrating demand for its capacity; and 128.32 (6) have received by resolution the approval from the 128.33 governing body of the county and township in which the proposed 128.34 facility is to be located for the exemption of personal property 128.35 under this subdivision. 128.36 (b) Construction of the facility must be commenced after 129.1 July 1, 2005, and before January 1, 2009. Property eligible for 129.2 this exemption does not include electric transmission lines and 129.3 interconnections or gas pipelines and interconnections 129.4 appurtenant to the property or the facility. 129.5 [EFFECTIVE DATE.] This section is effective for assessment 129.6 year 2006 and thereafter, for taxes payable in 2007 and 129.7 thereafter. 129.8 Sec. 24. Minnesota Statutes 2004, section 272.02, is 129.9 amended by adding a subdivision to read: 129.10 Subd. 75. [ELECTRIC GENERATION FACILITY; PERSONAL 129.11 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 129.12 machinery and other personal property which is part of an 129.13 existing simple-cycle, combustion-turbine electric generation 129.14 facility that exceeds 300 megawatts of installed capacity and 129.15 that meets the requirements of this subdivision is exempt. At 129.16 the time of the construction, the facility must: 129.17 (1) be designed to utilize natural gas as a primary fuel; 129.18 (2) be owned by a public utility as defined in section 129.19 216B.02, subdivision 4, and be located at or interconnected with 129.20 an existing generating plant of the utility; 129.21 (3) be designed to provide peaking, emergency backup, or 129.22 contingency services; 129.23 (4) satisfy a resource need identified in an approved 129.24 integrated resource plan filed under section 216B.2422; and 129.25 (5) have received, by resolution, the approval from the 129.26 governing body of the county and the city for the exemption of 129.27 personal property under this subdivision. 129.28 Construction of the facility expansion must be commenced 129.29 after January 1, 2004, and before January 1, 2005. Property 129.30 eligible for this exemption does not include electric 129.31 transmission lines and interconnections or gas pipelines and 129.32 interconnections appurtenant to the property or the facility. 129.33 [EFFECTIVE DATE.] This section is effective beginning with 129.34 assessment year 2005, for taxes payable in 2006 and thereafter. 129.35 Sec. 25. Minnesota Statutes 2004, section 272.029, 129.36 subdivision 4, is amended to read: 130.1 Subd. 4. [REPORTS.] (a) An owner of a wind energy 130.2 conversion system subject to tax under subdivision 3 shall file 130.3 a report with the commissioner of revenue annually on or before 130.4March 1February 1 detailing the amount of electricity in 130.5 kilowatt-hours that was produced by the wind energy conversion 130.6 system for the previous calendar year. The commissioner shall 130.7 prescribe the form of the report. The report must contain the 130.8 information required by the commissioner to determine the tax 130.9 due to each county under this section for the current year. If 130.10 an owner of a wind energy conversion system subject to taxation 130.11 under this section fails to file the report by the due date, the 130.12 commissioner of revenue shall determine the tax based upon the 130.13 nameplate capacity of the system multiplied by a capacity factor 130.14 of 40 percent. 130.15 (b) On or beforeMarch 31February 28, the commissioner of 130.16 revenue shall notify the owner of the wind energy conversion 130.17 systems of the tax due to each county for the current year and 130.18 shall certify to the county auditor of each county in which the 130.19 systems are located the tax due from each owner for the current 130.20 year. 130.21 [EFFECTIVE DATE.] This section is effective for taxes 130.22 payable in 2006 and thereafter. 130.23 Sec. 26. Minnesota Statutes 2004, section 272.029, 130.24 subdivision 6, is amended to read: 130.25 Subd. 6. [DISTRIBUTION OF REVENUES.] Revenues from the 130.26 taxes imposed under subdivision 5 must be part of the settlement 130.27 between the county treasurer and the county auditor under 130.28 section 276.09. The revenue must be distributed by the county 130.29 auditor or the county treasurer to all local taxing 130.30 jurisdictions in which the wind energy conversion system is 130.31 located, in the same proportion that each of the taxing 130.32 jurisdiction'scurrentprevious year's net tax capacity based 130.33 tax rate is to thecurrentprevious year's total local net tax 130.34 capacity based rate. 130.35 [EFFECTIVE DATE.] This section is effective for taxes 130.36 payable in 2005 and thereafter. 131.1 Sec. 27. Minnesota Statutes 2004, section 273.11, 131.2 subdivision 1a, is amended to read: 131.3 Subd. 1a. [LIMITED MARKET VALUE.] In the case of all 131.4 property classified as agricultural homestead or nonhomestead, 131.5 residential homestead or nonhomestead, timber,ornoncommercial 131.6 seasonal residential recreational, or class 1c resort property, 131.7 the assessor shall compare the value with the taxable portion of 131.8 the value determined in the preceding assessment except that for 131.9 class 1c resort property for assessment year 2005, the assessor 131.10 shall determine the limited market value as provided in 131.11 subdivision 1b. 131.12For assessment year 2002, the amount of the increase shall131.13not exceed the greater of (1) ten percent of the value in the131.14preceding assessment, or (2) 15 percent of the difference131.15between the current assessment and the preceding assessment.131.16For assessment year 2003, the amount of the increase shall131.17not exceed the greater of (1) 12 percent of the value in the131.18preceding assessment, or (2) 20 percent of the difference131.19between the current assessment and the preceding assessment.131.20 For assessment year 2004 and thereafter, the amount of the 131.21 increase shall not exceed the greater of (1) 15 percent of the 131.22 value in the preceding assessment, or (2) 25 percent of the 131.23 difference between the current assessment and the preceding 131.24 assessment. 131.25For assessment year 2005, the amount of the increase shall131.26not exceed the greater of (1) 15 percent of the value in the131.27preceding assessment, or (2) 33 percent of the difference131.28between the current assessment and the preceding assessment.131.29For assessment year 2006, the amount of the increase shall131.30not exceed the greater of (1) 15 percent of the value in the131.31preceding assessment, or (2) 50 percent of the difference131.32between the current assessment and the preceding assessment.131.33 This limitation shall not apply to increases in value due 131.34 to improvements. For purposes of this subdivision, the term 131.35 "assessment" means the value prior to any exclusion under 131.36 subdivision 16. 132.1The provisions of this subdivision shall be in effect132.2through assessment year 2006 as provided in this subdivision.132.3 For purposes of this subdivision and subdivision 1b, "class 132.4 1c resort property" includes the portion of the property 132.5 classified class 1a or 1b homestead, the portion of the property 132.6 classified 1c, plus any remaining portion of the resort that is 132.7 classified 4c under section 273.13, subdivision 25, paragraph 132.8 (d), clause (1). 132.9 For purposes of the assessment/sales ratio study conducted 132.10 under section 127A.48, and the computation of state aids paid 132.11 under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 132.12 477A, market values and net tax capacities determined under this 132.13 subdivision and subdivision 16, shall be used. 132.14 [EFFECTIVE DATE.] This section is effective the day 132.15 following final enactment for assessment year 2005, and 132.16 thereafter. 132.17 Sec. 28. Minnesota Statutes 2004, section 273.11, is 132.18 amended by adding a subdivision to read: 132.19 Subd. 1b. [CLASS 1C RESORTS; 2005 ASSESSMENT ONLY.] For 132.20 assessment year 2005, the valuation increase on class 1c resort 132.21 property shall not exceed the greater of (1) 15 percent of the 132.22 value of its 2003 assessment, or (2) 25 percent of the 132.23 difference in value between its 2005 assessment and its 2003 132.24 assessment. The valuation increase on class 1c resort property 132.25 for the 2006 and subsequent assessment years shall be determined 132.26 based upon the schedule contained in subdivision 1a. 132.27 [EFFECTIVE DATE.] This section is effective the day 132.28 following final enactment. 132.29 Sec. 29. Minnesota Statutes 2004, section 273.11, is 132.30 amended by adding a subdivision to read: 132.31 Subd. 21. [VALUATION EXCLUSION FOR SEWAGE TREATMENT SYSTEM 132.32 IMPROVEMENTS.] Owners of property classified as class 1a, 1b, 132.33 1c, 2a, 4b, 4bb, or noncommercial 4c under section 273.13 may 132.34 apply for a valuation exclusion under this subdivision, provided 132.35 that the property is located in a county which has authorized 132.36 valuation exclusions under this subdivision, and provided that 133.1 the following conditions are met: 133.2 (1) a notice of noncompliance has been issued by a licensed 133.3 compliance inspector with regard to the individual sewage 133.4 treatment system serving the property under section 115.55, 133.5 subdivision 5b; 133.6 (2) the owner of the property furnishes documentation to 133.7 the satisfaction of the assessor that the property's individual 133.8 sewage treatment system has been replaced or refurbished, 133.9 including replacement of the individual system with a community 133.10 or cluster system, between May 1, 2005, and December 31, 2007; 133.11 and 133.12 (3) a certificate of compliance has been issued for the new 133.13 or refurbished system under section 115.55, subdivision 5. 133.14 Application must be made to the assessor on a form 133.15 prescribed by the commissioner of revenue. Property meeting the 133.16 requirements of this subdivision is eligible for a valuation 133.17 exclusion equal to 50 percent of the actual costs incurred, to a 133.18 maximum exclusion of $7,500, for a period of five years, after 133.19 which the amount of the exclusion will be added to the estimated 133.20 market value of the property. The valuation exclusion 133.21 terminates upon the sale of the property. If a property owner 133.22 applies for exclusion under this subdivision between January 1 133.23 and June 30 of any year, the exclusion first applies for taxes 133.24 payable in the following year. If a property owner applies for 133.25 exclusion under this subdivision between July 1 and December 31 133.26 of any year, the exclusion first applies for taxes payable in 133.27 the second following year. 133.28 [EFFECTIVE DATE.] This section is effective for taxes 133.29 payable in 2006 and subsequent years. 133.30 Sec. 30. Minnesota Statutes 2004, section 273.11, is 133.31 amended by adding a subdivision to read: 133.32 Subd. 22. [VALUATION EXCLUSION FOR LEAD HAZARD REDUCTION.] 133.33 Owners of property classified as class 1a, 1b, 1c, 2a, 4b, or 133.34 4bb under section 273.13 may apply for a valuation exclusion for 133.35 lead hazard reduction, provided that the property is located in 133.36 a city which has authorized valuation exclusions under this 134.1 subdivision. A city which authorizes valuation exclusions under 134.2 this subdivision must establish guidelines for qualifying lead 134.3 hazard reduction projects and must designate an agency within 134.4 the city to issue certificates of completion of qualifying 134.5 projects. For purposes of this subdivision, "lead hazard 134.6 reduction" has the same meaning as in section 144.9501, 134.7 subdivision 17. 134.8 The property owner must obtain a certificate from the city 134.9 stating that the project has been completed and stating the cost 134.10 incurred by the owner in completing the project. Only projects 134.11 originating after April 30, 2005, may qualify for exclusion 134.12 under this subdivision. The property owner shall apply for a 134.13 valuation exclusion to the assessor on a form prescribed by the 134.14 commissioner of revenue. 134.15 A qualifying property is eligible for a valuation exclusion 134.16 equal to 50 percent of the actual costs incurred, to a maximum 134.17 exclusion of $15,000, for a period of five years, after which 134.18 the amount of the exclusion will be added to the estimated 134.19 market value of the property. The valuation exclusion shall 134.20 terminate upon the sale of the property. If a property owner 134.21 applies for exclusion under this subdivision between January 1 134.22 and June 30 of any year, the exclusion shall first apply for 134.23 taxes payable in the following year. If a property owner 134.24 applies for exclusion under this subdivision between July 1 and 134.25 December 31 of any year, the exclusion shall first apply for 134.26 taxes payable in the second following year. 134.27 [EFFECTIVE DATE.] This section is effective for taxes 134.28 payable in 2006 and subsequent years. 134.29 Sec. 31. Minnesota Statutes 2004, section 273.11, is 134.30 amended by adding a subdivision to read: 134.31 Subd. 23. [VALUATION OF ENERGY-EFFICIENT COMMERCIAL 134.32 PROPERTIES.] (a) The market value of certain energy-efficient 134.33 property classified under section 273.13, subdivision 24, that 134.34 is used for commercial purposes, is reduced as provided in this 134.35 subdivision. 134.36 (b) To be eligible for a valuation reduction under this 135.1 subdivision, property must be certified by a qualified inspector 135.2 as having been constructed in a manner that will achieve a level 135.3 of energy consumption that is at least 20 percent lower than the 135.4 standard set in the state energy code rules. The percentage 135.5 reduction in the market value of a qualifying property is 135.6 determined as follows: 135.7 percentage of energy consumption percentage of 135.8 below energy code requirement market value reduction 135.9 20-30 5 135.10 31-50 10 135.11 over 50 15 135.12 The reductions will remain in effect for the first ten 135.13 assessment years after the property has been certified as 135.14 qualifying under this subdivision. 135.15 (c) The Department of Commerce must establish a process for 135.16 determining eligibility for the valuation reduction under this 135.17 subdivision, including certification of persons who are 135.18 qualified to perform this function. 135.19 (d) To claim a valuation reduction under this subdivision, 135.20 the owner of the commercial property must obtain a certification 135.21 of the level of qualification determined under paragraph (b), 135.22 which must be prepared by a person certified as provided in 135.23 paragraph (c). The property owner must furnish this 135.24 certification to the assessor by May 1 of the assessment year in 135.25 order to qualify for the valuation reduction for taxes payable 135.26 in the following year. 135.27 [EFFECTIVE DATE.] This section is effective for assessments 135.28 in 2006, taxes payable in 2007, and thereafter. 135.29 Sec. 32. [273.1115] [AGGREGATE RESOURCE PRESERVATION 135.30 PROPERTY TAX LAW.] 135.31 Subdivision 1. [REQUIREMENTS.] Real estate is entitled to 135.32 valuation under this section only if all of the following 135.33 requirements are met: 135.34 (1) the property is classified 1a, 1b, 2a, or 2b property 135.35 under section 273.13, subdivisions 22 and 23; 135.36 (2) the property is at least ten contiguous acres, when the 136.1 application is filed under subdivision 2; 136.2 (3) the owner has filed a completed application for 136.3 deferment as specified in subdivision 2 with the county assessor 136.4 in the county in which the property is located; 136.5 (4) there are no delinquent taxes on the property; and 136.6 (5) a covenant on the land restricts its use as provided in 136.7 subdivision 2, clause (4). 136.8 Subd. 2. [APPLICATION.] Application for valuation 136.9 deferment under this section must be filed by May 1 of the 136.10 assessment year. Any application filed and granted continues in 136.11 effect for subsequent years until the property no longer 136.12 qualifies, provided that supplemental affidavits under 136.13 subdivision 6 are timely filed. The application must be filed 136.14 with the assessor of the county in which the real property is 136.15 located on such form as may be prescribed by the commissioner of 136.16 revenue. The application must be executed and acknowledged in 136.17 the manner required by law to execute and acknowledge a deed and 136.18 must contain at least the following information and any other 136.19 information the commissioner deems necessary: 136.20 (1) the legal description of the area; 136.21 (2) the name and address of owner; 136.22 (3) a copy of the affidavit filed under section 273.13, 136.23 subdivision 23, paragraph (h), in the case of property 136.24 classified class 2b, clause (5); or in the case of property 136.25 classified 1a, 1b, 2a, and 2b, clauses (1) to (3), the 136.26 application must include a similar document with the same 136.27 information as contained in the affidavit under section 273.13, 136.28 subdivision 23, paragraph (h); and 136.29 (4) a statement of proof from the owner that the land 136.30 contains a restrictive covenant limiting its use for the 136.31 property's surface to that which exists on the date of the 136.32 application and limiting its future use to the preparation and 136.33 removal of the aggregate commercial deposit under its surface. 136.34 To qualify under this clause, the covenant must be binding 136.35 on the owner or the owner's successor or assignee, and run with 136.36 the land, except as provided in subdivision 4 allowing for the 137.1 cancellation of the covenant under certain conditions. 137.2 Subd. 3. [DETERMINATION OF VALUE.] Upon timely application 137.3 by the owner as provided in subdivision 2, notwithstanding 137.4 sections 272.03, subdivision 8, and 273.11, the value of any 137.5 qualifying land described in subdivision 2 must be valued as if 137.6 it were agricultural property, using a per acre valuation equal 137.7 to the current year's per acre valuation of agricultural land in 137.8 the county. The assessor shall not consider any additional 137.9 value resulting from potential alternative and future uses of 137.10 the property. The buildings located on the land shall be valued 137.11 by the assessor in the normal manner. 137.12 Subd. 4. [CANCELLATION OF COVENANT.] The covenant required 137.13 under subdivision 2 may be canceled in two ways: 137.14 (1) by the owner beginning with the next subsequent 137.15 assessment year provided that the additional taxes as determined 137.16 under subdivision 5 are paid by the owner at the time of 137.17 cancellation; and 137.18 (2) by the city or town in which the property is located 137.19 beginning with the next subsequent assessment year, if the city 137.20 council or town board: 137.21 (i) changes the conditional use of the property; 137.22 (ii) revokes the mining permit; or 137.23 (iii) changes the zoning to disallow mining. 137.24 No additional taxes are imposed on the property under this 137.25 clause. 137.26 Subd. 4a. [COUNTY TERMINATION.] Within two years of the 137.27 effective date of this section, a county may, following notice 137.28 and public hearing, terminate application of this section in the 137.29 county. The termination is effective upon adoption of a 137.30 resolution of the county board. A termination applies 137.31 prospectively and does not affect property enrolled under this 137.32 section prior to the termination date. A county may reauthorize 137.33 application of this section by a resolution of the county board 137.34 revoking the termination. 137.35 Subd. 5. [ADDITIONAL TAXES.] When real property which has 137.36 been valued and assessed under this section no longer qualifies, 138.1 the portion of the land classified under subdivision 1, clause 138.2 (1), is subject to additional taxes. The additional tax amount 138.3 is determined by: 138.4 (1) computing the difference between (i) the current year's 138.5 taxes determined in accordance with subdivision 5, and (ii) an 138.6 amount as determined by the assessor based upon the property's 138.7 current year's estimated market value of like real estate at its 138.8 highest and best use and the appropriate local tax rate; and 138.9 (2) multiplying the amount determined in clause (1) by the 138.10 number of years the land was in the program under this section. 138.11 The current year's estimated market value as determined by 138.12 the assessor must not exceed the market value that would result 138.13 if the property was sold in an arms-length transaction and must 138.14 not be greater than it would have been had the actual bona fide 138.15 sale price of the property been used in lieu of that market 138.16 value. The additional taxes must be extended against the 138.17 property on the tax list for the current year, except that 138.18 interest or penalties must not be levied on such additional 138.19 taxes if timely paid. 138.20 The additional tax under this subdivision must not be 138.21 imposed on that portion of the property which has actively been 138.22 mined and has been removed from the program based upon the 138.23 supplemental affidavits filed under subdivision 6. 138.24 Subd. 6. [SUPPLEMENTAL AFFIDAVITS; MINING ACTIVITY ON 138.25 LAND.] When any portion of the property begins to be actively 138.26 mined, the owner must file a supplemental affidavit within 60 138.27 days from the day any aggregate is removed stating the number of 138.28 acres of the property that is actively being mined. The acres 138.29 actively being mined shall be (1) valued and classified under 138.30 section 273.13, subdivision 24, in the next subsequent 138.31 assessment year, and (2) removed from the aggregate resource 138.32 preservation property tax program under this section. The 138.33 additional taxes under subdivision 5 must not be imposed on the 138.34 acres that are actively being mined and have been removed from 138.35 the program under this section. 138.36 Copies of the original affidavit and all supplemental 139.1 affidavits must be filed with the county assessor, the local 139.2 zoning administrator, and the Department of Natural Resources, 139.3 Division of Land and Minerals. A supplemental affidavit must be 139.4 filed each time a subsequent portion of the property is actively 139.5 mined, provided that the minimum acreage change is five acres, 139.6 even if the actual mining activity constitutes less than five 139.7 acres. Failure to file the affidavits timely shall result in 139.8 the property losing its valuation deferment under this section, 139.9 and additional taxes must be imposed as calculated under 139.10 subdivision 5. 139.11 Subd. 7. [LIEN.] The additional tax imposed by this 139.12 section is a lien upon the property assessed to the same extent 139.13 and for the same duration as other taxes imposed upon property 139.14 within this state and, when collected, must be distributed in 139.15 the manner provided by law for the collection and distribution 139.16 of other property taxes. 139.17 Subd. 8. [CONTINUATION OF TAX TREATMENT UPON SALE.] When 139.18 real property qualifying under subdivision 1 is sold, additional 139.19 taxes must not be extended against the property if the property 139.20 continues to qualify under subdivision 1, and the new owner 139.21 files an application with the assessor for continued deferment 139.22 within 30 days after the sale. 139.23 Subd. 9. [DEFINITIONS.] For purposes of this section, 139.24 "commercial aggregate deposit" and "actively mined" have the 139.25 meanings given them in section 273.13, subdivision 23, paragraph 139.26 (h). 139.27 [EFFECTIVE DATE.] This section is effective for taxes 139.28 levied in 2005, payable in 2006, and thereafter, except that for 139.29 the 2005 assessment year, the application date under subdivision 139.30 4 shall be September 1, 2005, and subdivision 4a is effective 139.31 the day following final enactment. 139.32 Sec. 33. [273.1116] [HOMESTEAD RESORTS; VALUATION AND 139.33 DEFERMENT.] 139.34 Subdivision 1. [REQUIREMENTS.] Real property qualifying 139.35 for classification as class 1c under section 273.13, subdivision 139.36 22, paragraph (c), is entitled to valuation and tax deferment 140.1 under this section, provided that if part of a resort is not 140.2 classified as class 1c, only that portion of the value of the 140.3 property that is classified as class 1c property qualifies under 140.4 this section. 140.5 Subd. 2. [DETERMINATION OF VALUE.] Upon timely application 140.6 by the owner, as provided in subdivision 4, the value of real 140.7 property described in subdivision 1 must be determined by the 140.8 assessor solely with reference to its classification value as 140.9 class 1c property, notwithstanding sections 272.03, subdivision 140.10 8, and 273.11. The owner must furnish information on the income 140.11 generated by the property and other information required by the 140.12 assessor to determine the value of the property. The assessor 140.13 shall not consider any added values resulting from other factors. 140.14 Subd. 3. [SEPARATE DETERMINATION OF MARKET VALUE AND TAX.] 140.15 The assessor shall, however, make a separate determination of 140.16 the market value of the real estate. The assessor shall record 140.17 on the property assessment records the tax based upon the 140.18 appropriate local tax rate applicable to the property in the 140.19 taxing district. 140.20 Subd. 4. [APPLICATION.] Application for deferment of taxes 140.21 and assessment under this section must be filed by May 1 of the 140.22 year prior to the year in which the taxes are payable. The 140.23 application must be filed with the assessor of the taxing 140.24 district in which the real property is located on a form 140.25 prescribed by the commissioner of revenue. The assessor may 140.26 require proof by affidavit or otherwise that the property 140.27 qualifies under subdivision 1. An application approved by the 140.28 assessor continues in effect for subsequent years until the 140.29 property no longer qualifies under subdivision 1. 140.30 Subd. 5. [ADDITIONAL TAXES.] When real property valued and 140.31 assessed under this section no longer qualifies under 140.32 subdivision 1, the portion no longer qualifying is subject to 140.33 additional taxes, in the amount equal to the difference between 140.34 the taxes determined in accordance with subdivision 2, and the 140.35 amount determined under subdivision 3, provided, however, that 140.36 the amount determined under subdivision 3 must not be greater 141.1 than it would have been had the actual bona fide sale price of 141.2 the real property at an arms-length transaction been used in 141.3 lieu of the market value determined under subdivision 3. The 141.4 additional taxes must be extended against the property on the 141.5 tax list for the current year, except that no interest or 141.6 penalties may be levied on the additional taxes if timely paid, 141.7 and except that the additional taxes must only be levied with 141.8 respect to the last seven years that the property has been 141.9 valued and assessed under this section. 141.10 Subd. 6. [LIEN.] The tax imposed by this section is a lien 141.11 on the property assessed to the same extent and for the same 141.12 duration as other taxes imposed on property within this state. 141.13 The tax must be annually extended by the county auditor and when 141.14 payable must be collected and distributed in the manner provided 141.15 by law for the collection and distribution of other property 141.16 taxes. 141.17 Subd. 7. [SPECIAL LOCAL ASSESSMENTS.] The payment of 141.18 special local assessments levied after June 30, 2005, for 141.19 improvements made to any real property described in subdivision 141.20 2, together with the interest thereon must, on timely 141.21 application under subdivision 4, be deferred as long as the 141.22 property qualifies under subdivision 1. If special assessments 141.23 against the property have been deferred under this subdivision, 141.24 the governmental unit shall file with the county recorder in the 141.25 county in which the property is located a certificate containing 141.26 the legal description of the affected property and of the amount 141.27 deferred. When the property no longer qualifies under 141.28 subdivision 1, all deferred special assessments plus interest 141.29 are payable in equal installments spread over the time remaining 141.30 until the last maturity date of the bonds issued to finance the 141.31 improvement for which the assessments were levied. If the bonds 141.32 have matured, the deferred special assessments plus interest are 141.33 payable within 90 days. The provisions of section 429.061, 141.34 subdivision 2, apply to the collection of these installments. 141.35 Penalty must not be levied on the special assessments if timely 141.36 paid. 142.1 Subd. 8. [CONTINUATION OF TAX TREATMENT UPON SALE.] When 142.2 real property qualifying under subdivision 1 is sold, no 142.3 additional taxes or deferred special assessments plus interest 142.4 may be extended against the property if: 142.5 (1) the property continues to qualify pursuant to 142.6 subdivision 1; and 142.7 (2) the new owner files an application for continued 142.8 deferment within 30 days after the sale. 142.9 Subd. 9. [APPLICABILITY OF SPECIAL ASSESSMENT PROVISIONS.] 142.10 This section applies to special local assessments levied after 142.11 June 30, 2005, and payable in the years thereafter, but shall 142.12 not apply to any special assessments levied at any time by a 142.13 county or district court under the provisions of chapter 116A. 142.14 [EFFECTIVE DATE.] This section is effective for taxes 142.15 levied in 2005, payable in 2006, and thereafter. For 142.16 applications for taxes payable in 2006 only, the application 142.17 deadline in subdivision 4 is extended to August 1, 2005. 142.18 Sec. 34. Minnesota Statutes 2004, section 273.112, 142.19 subdivision 3, is amended to read: 142.20 Subd. 3. [REQUIREMENTS.] Real estate shall be entitled to 142.21 valuation and tax deferment under this section only if it is: 142.22 (a) actively and exclusively devoted to golf, skiing, lawn 142.23 bowling, croquet, polo, or archery or firearms range 142.24 recreational use or other recreational uses carried on at the 142.25 establishment; 142.26 (b) five acres in size or more, except in the case of a 142.27 lawn bowling or croquet green or an archery or firearms range; 142.28 (c)(1) operated by private individuals or, in the case of a 142.29 lawn bowling or croquet green, by private individuals or 142.30 corporations, and open to the public; or 142.31 (2) operated by firms or corporations for the benefit of 142.32 employees or guests; or 142.33 (3) operated by private clubs having a membership of 50 or 142.34 more or open to the public, provided that the club does not 142.35 discriminate in membership requirements or selection on the 142.36 basis of sex or marital status; and 143.1 (d) made available for use in the case of real estate 143.2 devoted to golf without discrimination on the basis of sex 143.3 during the time when the facility is open to use by the public 143.4 or by members, except that use for golf may be restricted on the 143.5 basis of sex no more frequently than one, or part of one, 143.6 weekend each calendar month for each sex and no more than two, 143.7 or part of two, weekdays each week for each sex. 143.8 If a golf club membership allows use of golf course 143.9 facilities by more than one adult per membership, the use must 143.10 be equally available to all adults entitled to use of the golf 143.11 course under the membership, except that use may be restricted 143.12 on the basis of sex as permitted in this section. Memberships 143.13 that permit play during restricted times may be allowed only if 143.14 the restricted times apply to all adults using the membership. 143.15 A golf club may not offer a membership or golfing privileges to 143.16 a spouse of a member that provides greater or less access to the 143.17 golf course than is provided to that person's spouse under the 143.18 same or a separate membership in that club, except that the 143.19 terms of a membership may provide that one spouse may have no 143.20 right to use the golf course at any time while the other spouse 143.21 may have either limited or unlimited access to the golf course. 143.22 A golf club may have or create an individual membership 143.23 category which entitles a member for a reduced rate to play 143.24 during restricted hours as established by the club. The club 143.25 must have on record a written request by the member for such 143.26 membership. 143.27 A golf club that has food or beverage facilities or 143.28 services must allow equal access to those facilities and 143.29 services for both men and women members in all membership 143.30 categories at all times. Nothing in this paragraph shall be 143.31 construed to require service or access to facilities to persons 143.32 under the age of 21 years or require any act that would violate 143.33 law or ordinance regarding sale, consumption, or regulation of 143.34 alcoholic beverages. 143.35 For purposes of this subdivision and subdivision 7a, 143.36 discrimination means a pattern or course of conduct and not 144.1 linked to an isolated incident. 144.2 [EFFECTIVE DATE.] This section is effective for taxes 144.3 levied in 2005, payable in 2006, and thereafter. 144.4 Sec. 35. Minnesota Statutes 2004, section 273.123, is 144.5 amended by adding a subdivision to read: 144.6 Subd. 8. [HOMESTEAD PROPERTY DAMAGED BY MOLD.] (a) The 144.7 owner of homestead property not qualifying for an adjustment in 144.8 valuation under subdivisions 1 to 5 must receive a reduction in 144.9 the amount of taxes payable on the property if all of the 144.10 following conditions are met: 144.11 (1) the owner of the property makes written application to 144.12 the county assessor for tax treatment under this subdivision; 144.13 (2) the county assessor determines that the homestead 144.14 dwelling is uninhabitable because all or part of it has been 144.15 contaminated by mold; and 144.16 (3) the owner of the property makes written application to 144.17 the county board. 144.18 (b) If all of the conditions in paragraph (a) are met, the 144.19 county board must grant a reduction in the amount of property 144.20 tax payable on the homestead dwelling. The reduction must be 144.21 made for taxes payable in the year that the assessor determines 144.22 that the requirements in paragraph (a), clause (2), have been 144.23 met and in the following year. 144.24 (c) The reduction in the amount of tax payable must be 144.25 calculated based upon the number of months that the homestead is 144.26 uninhabitable. The amount of net tax due from the taxpayer 144.27 shall be multiplied by a fraction, the numerator of which is the 144.28 number of months the dwelling was occupied by that taxpayer, and 144.29 the denominator of which is 12. For purposes of this 144.30 subdivision, if a homestead dwelling is occupied or used for a 144.31 fraction of a month, it is considered a month. "Net tax" is 144.32 defined as the amount of tax after the subtraction of all of the 144.33 state paid property tax credits. If the reduction is granted 144.34 after all property taxes due for the year have been paid, the 144.35 amount of the reduction must be refunded to the taxpayer by the 144.36 county treasurer as soon as practical. 145.1 (d) Any reductions or refunds under this section are not 145.2 subject to approval by the commissioner of revenue. 145.3 (e) A denial of a reduction or refund under this section by 145.4 the county board may be appealed to the tax court. If the 145.5 county board takes no action on the application within 60 days 145.6 after its receipt, it is considered a denial. 145.7 [EFFECTIVE DATE.] This section is effective for property 145.8 taxes payable in 2005 and thereafter. 145.9 Sec. 36. Minnesota Statutes 2004, section 273.124, 145.10 subdivision 1, is amended to read: 145.11 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 145.12 that is occupied and used for the purposes of a homestead by its 145.13 owner, who must be a Minnesota resident, is a residential 145.14 homestead. 145.15 Agricultural land, as defined in section 273.13, 145.16 subdivision 23, that is occupied and used as a homestead by its 145.17 owner, who must be a Minnesota resident, is an agricultural 145.18 homestead. 145.19 Dates for establishment of a homestead and homestead 145.20 treatment provided to particular types of property are as 145.21 provided in this section. 145.22 Property held by a trustee under a trust is eligible for 145.23 homestead classification if the requirements under this chapter 145.24 are satisfied. 145.25 The assessor shall require proof, as provided in 145.26 subdivision 13, of the facts upon which classification as a 145.27 homestead may be determined. Notwithstanding any other law, the 145.28 assessor may at any time require a homestead application to be 145.29 filed in order to verify that any property classified as a 145.30 homestead continues to be eligible for homestead status. 145.31 Notwithstanding any other law to the contrary, the Department of 145.32 Revenue may, upon request from an assessor, verify whether an 145.33 individual who is requesting or receiving homestead 145.34 classification has filed a Minnesota income tax return as a 145.35 resident for the most recent taxable year for which the 145.36 information is available. 146.1 When there is a name change or a transfer of homestead 146.2 property, the assessor may reclassify the property in the next 146.3 assessment unless a homestead application is filed to verify 146.4 that the property continues to qualify for homestead 146.5 classification. 146.6 (b) For purposes of this section, homestead property shall 146.7 include property which is used for purposes of the homestead but 146.8 is separated from the homestead by a road, street, lot, 146.9 waterway, or other similar intervening property. The term "used 146.10 for purposes of the homestead" shall include but not be limited 146.11 to uses for gardens, garages, or other outbuildings commonly 146.12 associated with a homestead, but shall not include vacant land 146.13 held primarily for future development. In order to receive 146.14 homestead treatment for the noncontiguous property, the owner 146.15 must use the property for the purposes of the homestead, and 146.16 must apply to the assessor, both by the deadlines given in 146.17 subdivision 9. After initial qualification for the homestead 146.18 treatment, additional applications for subsequent years are not 146.19 required. 146.20 (c) Residential real estate that is occupied and used for 146.21 purposes of a homestead by a relative of the owner is a 146.22 homestead but only to the extent of the homestead treatment that 146.23 would be provided if the related owner occupied the property. 146.24 For purposes of this paragraph and paragraph (g), "relative" 146.25 means a parent, stepparent, child, stepchild, grandparent, 146.26 grandchild, brother, sister, uncle, aunt, nephew, or niece. 146.27 This relationship may be by blood or marriage. Property that 146.28 has been classified as seasonal residential recreational 146.29 property at any time during which it has been owned by the 146.30 current owner or spouse of the current owner will not be 146.31 reclassified as a homestead unless it is occupied as a homestead 146.32 by the owner; this prohibition also applies to property that, in 146.33 the absence of this paragraph, would have been classified as 146.34 seasonal residential recreational property at the time when the 146.35 residence was constructed. Neither the related occupant nor the 146.36 owner of the property may claim a property tax refund under 147.1 chapter 290A for a homestead occupied by a relative. In the 147.2 case of a residence located on agricultural land, only the 147.3 house, garage, and immediately surrounding one acre of land 147.4 shall be classified as a homestead under this paragraph, except 147.5 as provided in paragraph (d). 147.6 (d) Agricultural property that is occupied and used for 147.7 purposes of a homestead by a relative of the owner, is a 147.8 homestead, only to the extent of the homestead treatment that 147.9 would be provided if the related owner occupied the property, 147.10 and only if all of the following criteria are met: 147.11 (1) the relative who is occupying the agricultural property 147.12 is a son, daughter, grandson, granddaughter, father, or mother 147.13 of the owner of the agricultural property or a son, daughter, 147.14 grandson, or granddaughter of the spouse of the owner of the 147.15 agricultural property; 147.16 (2) the owner of the agricultural property must be a 147.17 Minnesota resident; 147.18 (3) the owner of the agricultural property must not receive 147.19 homestead treatment on any other agricultural property in 147.20 Minnesota; and 147.21 (4) the owner of the agricultural property is limited to 147.22 only one agricultural homestead per family under this paragraph. 147.23 Neither the related occupant nor the owner of the property 147.24 may claim a property tax refund under chapter 290A for a 147.25 homestead occupied by a relative qualifying under this 147.26 paragraph. For purposes of this paragraph, "agricultural 147.27 property" means the house, garage, other farm buildings and 147.28 structures, and agricultural land. 147.29 Application must be made to the assessor by the owner of 147.30 the agricultural property to receive homestead benefits under 147.31 this paragraph. The assessor may require the necessary proof 147.32 that the requirements under this paragraph have been met. 147.33 (e) In the case of property owned by a property owner who 147.34 is married, the assessor must not deny homestead treatment in 147.35 whole or in part if only one of the spouses occupies the 147.36 property and the other spouse is absent due to: (1) marriage 148.1 dissolution proceedings, (2) legal separation, (3) employment or 148.2 self-employment in another location, or (4) other personal 148.3 circumstances causing the spouses to live separately, not 148.4 including an intent to obtain two homestead classifications for 148.5 property tax purposes. To qualify under clause (3), the 148.6 spouse's place of employment or self-employment must be at least 148.7 50 miles distant from the other spouse's place of employment, 148.8 and the homesteads must be at least 50 miles distant from each 148.9 other. Homestead treatment, in whole or in part, shall not be 148.10 denied to the owner's spouse who previously occupied the 148.11 residence with the owner if the absence of the owner is due to 148.12 one of the exceptions provided in this paragraph. 148.13 (f) The assessor must not deny homestead treatment in whole 148.14 or in part if: 148.15 (1) in the case of a property owner who is not married, the 148.16 owner is absent due to residence in a nursing home, boarding 148.17 care facility, or an elderly assisted living facility property 148.18 as defined in section 273.13, subdivision 25a, and the property 148.19 is not otherwise occupied; or 148.20 (2) in the case of a property owner who is married, the 148.21 owner or the owner's spouse or both are absent due to residence 148.22 in a nursing home, boarding care facility, or an elderly 148.23 assisted living facility property as defined in section 273.13, 148.24 subdivision 25a, and the property is not occupied or is occupied 148.25 only by the owner's spouse. 148.26 (g) If an individual is purchasing property with the intent 148.27 of claiming it as a homestead and is required by the terms of 148.28 the financing agreement to have a relative shown on the deed as 148.29 a co-owner, the assessor shall allow a full homestead 148.30 classification. This provision only applies to first-time 148.31 purchasers, whether married or single, or to a person who had 148.32 previously been married and is purchasing as a single individual 148.33 for the first time. The application for homestead benefits must 148.34 be on a form prescribed by the commissioner and must contain the 148.35 data necessary for the assessor to determine if full homestead 148.36 benefits are warranted. 149.1 (h) If residential or agricultural real estate is occupied 149.2 and used for purposes of a homestead by a child of a deceased 149.3 owner and the property is subject to jurisdiction of probate 149.4 court, the child shall receive relative homestead classification 149.5 under paragraph (c) or (d) to the same extent they would be 149.6 entitled to it if the owner was still living, until the probate 149.7 is completed. For purposes of this paragraph, "child" includes 149.8 a relationship by blood or by marriage. 149.9 (i) If a single family home, duplex, or triplex classified 149.10 as either residential homestead or agricultural homestead is 149.11 also used to provide licensed child care, the portion of the 149.12 property used for licensed child care must be classified as 149.13 homestead property. 149.14 [EFFECTIVE DATE.] This section is effective in assessment 149.15 year 2005 and thereafter, for taxes payable in 2006, and 149.16 thereafter. 149.17 Sec. 37. Minnesota Statutes 2004, section 273.124, 149.18 subdivision 14, is amended to read: 149.19 Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 149.20 (a) Real estate of less than ten acres that is the homestead of 149.21 its owner must be classified as class 2a under section 273.13, 149.22 subdivision 23, paragraph (a), if: 149.23 (1) the parcel on which the house is located is contiguous 149.24 on at least two sides to (i) agricultural land, (ii) land owned 149.25 or administered by the United States Fish and Wildlife Service, 149.26 or (iii) land administered by the Department of Natural 149.27 Resources on which in lieu taxes are paid under sections 477A.11 149.28 to 477A.14; 149.29 (2) its owner also owns a noncontiguous parcel of 149.30 agricultural land that is at least 20 acres; 149.31 (3) the noncontiguous land is located not farther than four 149.32 townships or cities, or a combination of townships or cities 149.33 from the homestead; and 149.34 (4) the agricultural use value of the noncontiguous land 149.35 and farm buildings is equal to at least 50 percent of the market 149.36 value of the house, garage, and one acre of land. 150.1 Homesteads initially classified as class 2a under the 150.2 provisions of this paragraph shall remain classified as class 150.3 2a, irrespective of subsequent changes in the use of adjoining 150.4 properties, as long as the homestead remains under the same 150.5 ownership, the owner owns a noncontiguous parcel of agricultural 150.6 land that is at least 20 acres, and the agricultural use value 150.7 qualifies under clause (4). Homestead classification under this 150.8 paragraph is limited to property that qualified under this 150.9 paragraph for the 1998 assessment. 150.10 (b)(i) Agricultural property consisting of at least 40 150.11 acres shall be classified as the owner's homestead, to the same 150.12 extent as other agricultural homestead property, if all of the 150.13 following criteria are met: 150.14 (1) the owner, the owner's spouse,orthe son or daughter 150.15 of the owner or owner's spouse, or the grandson or granddaughter 150.16 of the owner or the owner's spouse, is actively farming the 150.17 agricultural property, either on the person's own behalf as an 150.18 individual or on behalf of a partnership operating a family 150.19 farm, family farm corporation, joint family farm venture, or 150.20 limited liability company of which the person is a partner, 150.21 shareholder, or member; 150.22 (2) both the owner of the agricultural property and the 150.23 person who is actively farming the agricultural property under 150.24 clause (1), are Minnesota residents; 150.25 (3) neither the owner nor the spouse of the owner claims 150.26 another agricultural homestead in Minnesota; and 150.27 (4) neither the owner nor the person actively farming the 150.28 property lives farther than four townships or cities, or a 150.29 combination of four townships or cities, from the agricultural 150.30 property, except that if the owner or the owner's spouse is 150.31 required to live in employer-provided housing, the owner or 150.32 owner's spouse, whichever is actively farming the agricultural 150.33 property, may live more than four townships or cities, or 150.34 combination of four townships or cities from the agricultural 150.35 property. 150.36 The relationship under this paragraph may be either by 151.1 blood or marriage. 151.2 (ii) Real property held by a trustee under a trust is 151.3 eligible for agricultural homestead classification under this 151.4 paragraph if the qualifications in clause (i) are met, except 151.5 that "owner" means the grantor of the trust. 151.6 (iii) Property containing the residence of an owner who 151.7 owns qualified property under clause (i) shall be classified as 151.8 part of the owner's agricultural homestead, if that property is 151.9 also used for noncommercial storage or drying of agricultural 151.10 crops. 151.11 (c) Noncontiguous land shall be included as part of a 151.12 homestead under section 273.13, subdivision 23, paragraph (a), 151.13 only if the homestead is classified as class 2a and the detached 151.14 land is located in the same township or city, or not farther 151.15 than four townships or cities or combination thereof from the 151.16 homestead. Any taxpayer of these noncontiguous lands must 151.17 notify the county assessor that the noncontiguous land is part 151.18 of the taxpayer's homestead, and, if the homestead is located in 151.19 another county, the taxpayer must also notify the assessor of 151.20 the other county. 151.21 (d) Agricultural land used for purposes of a homestead and 151.22 actively farmed by a person holding a vested remainder interest 151.23 in it must be classified as a homestead under section 273.13, 151.24 subdivision 23, paragraph (a). If agricultural land is 151.25 classified class 2a, any other dwellings on the land used for 151.26 purposes of a homestead by persons holding vested remainder 151.27 interests who are actively engaged in farming the property, and 151.28 up to one acre of the land surrounding each homestead and 151.29 reasonably necessary for the use of the dwelling as a home, must 151.30 also be assessed class 2a. 151.31 (e) Agricultural land and buildings that were class 2a 151.32 homestead property under section 273.13, subdivision 23, 151.33 paragraph (a), for the 1997 assessment shall remain classified 151.34 as agricultural homesteads for subsequent assessments if: 151.35 (1) the property owner abandoned the homestead dwelling 151.36 located on the agricultural homestead as a result of the April 152.1 1997 floods; 152.2 (2) the property is located in the county of Polk, Clay, 152.3 Kittson, Marshall, Norman, or Wilkin; 152.4 (3) the agricultural land and buildings remain under the 152.5 same ownership for the current assessment year as existed for 152.6 the 1997 assessment year and continue to be used for 152.7 agricultural purposes; 152.8 (4) the dwelling occupied by the owner is located in 152.9 Minnesota and is within 30 miles of one of the parcels of 152.10 agricultural land that is owned by the taxpayer; and 152.11 (5) the owner notifies the county assessor that the 152.12 relocation was due to the 1997 floods, and the owner furnishes 152.13 the assessor any information deemed necessary by the assessor in 152.14 verifying the change in dwelling. Further notifications to the 152.15 assessor are not required if the property continues to meet all 152.16 the requirements in this paragraph and any dwellings on the 152.17 agricultural land remain uninhabited. 152.18 (f) Agricultural land and buildings that were class 2a 152.19 homestead property under section 273.13, subdivision 23, 152.20 paragraph (a), for the 1998 assessment shall remain classified 152.21 agricultural homesteads for subsequent assessments if: 152.22 (1) the property owner abandoned the homestead dwelling 152.23 located on the agricultural homestead as a result of damage 152.24 caused by a March 29, 1998, tornado; 152.25 (2) the property is located in the county of Blue Earth, 152.26 Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 152.27 (3) the agricultural land and buildings remain under the 152.28 same ownership for the current assessment year as existed for 152.29 the 1998 assessment year; 152.30 (4) the dwelling occupied by the owner is located in this 152.31 state and is within 50 miles of one of the parcels of 152.32 agricultural land that is owned by the taxpayer; and 152.33 (5) the owner notifies the county assessor that the 152.34 relocation was due to a March 29, 1998, tornado, and the owner 152.35 furnishes the assessor any information deemed necessary by the 152.36 assessor in verifying the change in homestead dwelling. For 153.1 taxes payable in 1999, the owner must notify the assessor by 153.2 December 1, 1998. Further notifications to the assessor are not 153.3 required if the property continues to meet all the requirements 153.4 in this paragraph and any dwellings on the agricultural land 153.5 remain uninhabited. 153.6 (g) Agricultural property consisting of at least 40 acres 153.7 of a family farm corporation, joint family farm venture, family 153.8 farm limited liability company, or partnership operating a 153.9 family farm as described under subdivision 8 shall be classified 153.10 homestead, to the same extent as other agricultural homestead 153.11 property, if all of the following criteria are met: 153.12 (1) a shareholder, member, or partner of that entity is 153.13 actively farming the agricultural property; 153.14 (2) that shareholder, member, or partner who is actively 153.15 farming the agricultural property is a Minnesota resident; 153.16 (3) neither that shareholder, member, or partner, nor the 153.17 spouse of that shareholder, member, or partner claims another 153.18 agricultural homestead in Minnesota; and 153.19 (4) that shareholder, member, or partner does not live 153.20 farther than four townships or cities, or a combination of four 153.21 townships or cities, from the agricultural property. 153.22 Homestead treatment applies under this paragraph for 153.23 property leased to a family farm corporation, joint farm 153.24 venture, limited liability company, or partnership operating a 153.25 family farm if legal title to the property is in the name of an 153.26 individual who is a member, shareholder, or partner in the 153.27 entity. 153.28 (h) To be eligible for the special agricultural homestead 153.29 under this subdivision, an initial full application must be 153.30 submitted to the county assessor where the property is located. 153.31 Owners and the persons who are actively farming the property 153.32 shall be required to complete only a one-page abbreviated 153.33 version of the application in each subsequent year provided that 153.34 none of the following items have changed since the initial 153.35 application: 153.36 (1) the day-to-day operation, administration, and financial 154.1 risks remain the same; 154.2 (2) the owners and the persons actively farming the 154.3 property continue to live within the four townships or city 154.4 criteria and are Minnesota residents; 154.5 (3) the same operator of the agricultural property is 154.6 listed with the Farm Service Agency; 154.7 (4) a Schedule F or equivalent income tax form was filed 154.8 for the most recent year; 154.9 (5) the property's acreage is unchanged; and 154.10 (6) none of the property's acres have been enrolled in a 154.11 federal or state farm program since the initial application. 154.12 The owners and any persons who are actively farming the 154.13 property must include the appropriate Social Security numbers, 154.14 and sign and date the application. If any of the specified 154.15 information has changed since the full application was filed, 154.16 the owner must notify the assessor, and must complete a new 154.17 application to determine if the property continues to qualify 154.18 for the special agricultural homestead. The commissioner of 154.19 revenue shall prepare a standard reapplication form for use by 154.20 the assessors. 154.21 [EFFECTIVE DATE.] This section is effective for assessment 154.22 year 2004 and thereafter, for taxes payable in 2005 and 154.23 thereafter. 154.24 Sec. 38. Minnesota Statutes 2004, section 273.13, 154.25 subdivision 22, is amended to read: 154.26 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 154.27 23 and in paragraphs (b) and (c), real estate which is 154.28 residential and used for homestead purposes is class 1a. In the 154.29 case of a duplex or triplex in which one of the units is used 154.30 for homestead purposes, the entire property is deemed to be used 154.31 for homestead purposes. The market value of class 1a property 154.32 must be determined based upon the value of the house, garage, 154.33 and land. 154.34 The first $500,000 of market value of class 1a property has 154.35 a net class rate of one percent of its market value; and the 154.36 market value of class 1a property that exceeds $500,000 has a 155.1 class rate of 1.25 percent of its market value. 155.2 (b) Class 1b property includes homestead real estate or 155.3 homestead manufactured homes used for the purposes of a 155.4 homestead by 155.5 (1) any person who is blind as defined in section 256D.35, 155.6 or the blind person and the blind person's spouse; or 155.7 (2) any person, hereinafter referred to as "veteran," who: 155.8 (i) served in the active military or naval service of the 155.9 United States; and 155.10 (ii) is entitled to compensation under the laws and 155.11 regulations of the United States for permanent and total 155.12 service-connected disability due to the loss, or loss of use, by 155.13 reason of amputation, ankylosis, progressive muscular 155.14 dystrophies, or paralysis, of both lower extremities, such as to 155.15 preclude motion without the aid of braces, crutches, canes, or a 155.16 wheelchair; and 155.17 (iii) has acquired a special housing unit with special 155.18 fixtures or movable facilities made necessary by the nature of 155.19 the veteran's disability, or the surviving spouse of the 155.20 deceased veteran for as long as the surviving spouse retains the 155.21 special housing unit as a homestead; or 155.22 (3) any person who is permanently and totally disabled. 155.23 Property is classified and assessed under clause (3) only 155.24 if the government agency or income-providing source certifies, 155.25 upon the request of the homestead occupant, that the homestead 155.26 occupant satisfies the disability requirements of this paragraph. 155.27 Property is classified and assessed pursuant to clause (1) 155.28 only if the commissioner of revenue certifies to the assessor 155.29 that the homestead occupant satisfies the requirements of this 155.30 paragraph. 155.31 Permanently and totally disabled for the purpose of this 155.32 subdivision means a condition which is permanent in nature and 155.33 totally incapacitates the person from working at an occupation 155.34 which brings the person an income. The first $32,000 market 155.35 value of class 1b property has a net class rate of .45 percent 155.36 of its market value. The remaining market value of class 1b 156.1 property has a class rate using the rates for class 1a or class 156.2 2a property, whichever is appropriate, of similar market value. 156.3 (c) Class 1c property is commercial use real property that 156.4 abuts a lakeshore line and is devoted to temporary and seasonal 156.5 residential occupancy for recreational purposes but not devoted 156.6 to commercial purposes for more than 250 days in the year 156.7 preceding the year of assessment, and that includes a portion 156.8 used as a homestead by the owner, which includes a dwelling 156.9 occupied as a homestead by a shareholder of a corporation that 156.10 owns the resort, a partner in a partnership that owns the 156.11 resort, or a member of a limited liability company that owns the 156.12 resort even if the title to the homestead is held by the 156.13 corporation, partnership, or limited liability company. For 156.14 purposes of this clause, property is devoted to a commercial 156.15 purpose on a specific day if any portion of the property, 156.16 excluding the portion used exclusively as a homestead, is used 156.17 for residential occupancy and a fee is charged for residential 156.18 occupancy. The first$500,000$600,000 of market value of class 156.19 1c property has a class rate ofone0.55 percent, the market 156.20 value that exceeds $600,000 but does not exceed $1,600,000 has a 156.21 class rate of one percent, and the remaining market value of 156.22 class 1c property has a class rate ofone percent, with the156.23following limitation: the area of the property must not exceed156.24100 feet of lakeshore footage for each cabin or campsite located156.25on the property up to a total of 800 feet and 500 feet in depth,156.26measured away from the lakeshore. If any portion of the class156.271c resort property is classified as class 4c under subdivision156.2825, the entire property must meet the requirements of156.29subdivision 25, paragraph (d), clause (1), to qualify for class156.301c treatment under this paragraph1.25 percent. 156.31 (d) Class 1d property includes structures that meet all of 156.32 the following criteria: 156.33 (1) the structure is located on property that is classified 156.34 as agricultural property under section 273.13, subdivision 23; 156.35 (2) the structure is occupied exclusively by seasonal farm 156.36 workers during the time when they work on that farm, and the 157.1 occupants are not charged rent for the privilege of occupying 157.2 the property, provided that use of the structure for storage of 157.3 farm equipment and produce does not disqualify the property from 157.4 classification under this paragraph; 157.5 (3) the structure meets all applicable health and safety 157.6 requirements for the appropriate season; and 157.7 (4) the structure is not salable as residential property 157.8 because it does not comply with local ordinances relating to 157.9 location in relation to streets or roads. 157.10 The market value of class 1d property has the same class 157.11 rates as class 1a property under paragraph (a). 157.12 [EFFECTIVE DATE.] This section is effective for taxes 157.13 levied in 2005, payable in 2006, and thereafter. 157.14 Sec. 39. Minnesota Statutes 2004, section 273.13, 157.15 subdivision 23, is amended to read: 157.16 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 157.17 land including any improvements that is homesteaded. The market 157.18 value of the house and garage and immediately surrounding one 157.19 acre of land has the same class rates as class 1a property under 157.20 subdivision 22. The value of the remaining land including 157.21 improvements up to and including $600,000 market value has a net 157.22 class rate of 0.55 percent of market value. The remaining 157.23 property over $600,000 market value has a class rate of one 157.24 percent of market value. 157.25 (b) Class 2b property is (1) real estate, rural in 157.26 character and used exclusively for growing trees for timber, 157.27 lumber, and wood and wood products; (2) real estate that is not 157.28 improved with a structure and is used exclusively for growing 157.29 trees for timber, lumber, and wood and wood products, if the 157.30 owner has participated or is participating in a cost-sharing 157.31 program for afforestation, reforestation, or timber stand 157.32 improvement on that particular property, administered or 157.33 coordinated by the commissioner of natural resources; (3) real 157.34 estate that is nonhomestead agricultural land;or(4) a landing 157.35 area or public access area of a privately owned public use 157.36 airport; or (5) land with a commercial aggregate deposit that is 158.1 not actively being mined and is not otherwise classified as 158.2 class 2a or 2b, clauses (1) to (3). Class 2b property has a net 158.3 class rate of one percent of market value. 158.4 (c) Agricultural land as used in this section means 158.5 contiguous acreage of ten acres or more, used during the 158.6 preceding year for agricultural purposes. "Agricultural 158.7 purposes" as used in this section means the raising or 158.8 cultivation of agricultural products. "Agricultural purposes" 158.9 also includes enrollment in the Reinvest in Minnesota program 158.10 under sections 103F.501 to 103F.535 or the federal Conservation 158.11 Reserve Program as contained in Public Law 99-198 if the 158.12 property was classified as agricultural (i) under this 158.13 subdivision for the assessment year 2002 or (ii) in the year 158.14 prior to its enrollment. Contiguous acreage on the same parcel, 158.15 or contiguous acreage on an immediately adjacent parcel under 158.16 the same ownership, may also qualify as agricultural land, but 158.17 only if it is pasture, timber, waste, unusable wild land, or 158.18 land included in state or federal farm programs. Agricultural 158.19 classification for property shall be determined excluding the 158.20 house, garage, and immediately surrounding one acre of land, and 158.21 shall not be based upon the market value of any residential 158.22 structures on the parcel or contiguous parcels under the same 158.23 ownership. 158.24 (d) Real estate, excluding the house, garage, and 158.25 immediately surrounding one acre of land, of less than ten acres 158.26 which is exclusively and intensively used for raising or 158.27 cultivating agricultural products, shall be considered as 158.28 agricultural land. 158.29 Land shall be classified as agricultural even if all or a 158.30 portion of the agricultural use of that property is the leasing 158.31 to, or use by another person for agricultural purposes. 158.32 Classification under this subdivision is not determinative 158.33 for qualifying under section 273.111. 158.34 The property classification under this section supersedes, 158.35 for property tax purposes only, any locally administered 158.36 agricultural policies or land use restrictions that define 159.1 minimum or maximum farm acreage. 159.2 (e) The term "agricultural products" as used in this 159.3 subdivision includes production for sale of: 159.4 (1) livestock, dairy animals, dairy products, poultry and 159.5 poultry products, fur-bearing animals, horticultural and nursery 159.6 stock, fruit of all kinds, vegetables, forage, grains, bees, and 159.7 apiary products by the owner; 159.8 (2) fish bred for sale and consumption if the fish breeding 159.9 occurs on land zoned for agricultural use; 159.10 (3) the commercial boarding of horses if the boarding is 159.11 done in conjunction with raising or cultivating agricultural 159.12 products as defined in clause (1); 159.13 (4) property which is owned and operated by nonprofit 159.14 organizations used for equestrian activities, excluding racing; 159.15 (5) game birds and waterfowl bred and raised for use on a 159.16 shooting preserve licensed under section 97A.115; 159.17 (6) insects primarily bred to be used as food for animals; 159.18 (7) trees, grown for sale as a crop, and not sold for 159.19 timber, lumber, wood, or wood products, except that short 159.20 rotation woody crops that are cultivated using agricultural 159.21 practices on land that had previously been assessed as 159.22 agricultural land to produce timber or forest products are 159.23 agricultural products; and 159.24 (8) maple syrup taken from trees grown by a person licensed 159.25 by the Minnesota Department of Agriculture under chapter 28A as 159.26 a food processor. 159.27 (f) If a parcel used for agricultural purposes is also used 159.28 for commercial or industrial purposes, including but not limited 159.29 to: 159.30 (1) wholesale and retail sales; 159.31 (2) processing of raw agricultural products or other goods; 159.32 (3) warehousing or storage of processed goods; and 159.33 (4) office facilities for the support of the activities 159.34 enumerated in clauses (1), (2), and (3), 159.35 the assessor shall classify the part of the parcel used for 159.36 agricultural purposes as class 1b, 2a, or 2b, whichever is 160.1 appropriate, and the remainder in the class appropriate to its 160.2 use. The grading, sorting, and packaging of raw agricultural 160.3 products for first sale is considered an agricultural purpose. 160.4 A greenhouse or other building where horticultural or nursery 160.5 products are grown that is also used for the conduct of retail 160.6 sales must be classified as agricultural if it is primarily used 160.7 for the growing of horticultural or nursery products from seed, 160.8 cuttings, or roots and occasionally as a showroom for the retail 160.9 sale of those products. Use of a greenhouse or building only 160.10 for the display of already grown horticultural or nursery 160.11 products does not qualify as an agricultural purpose. 160.12 The assessor shall determine and list separately on the 160.13 records the market value of the homestead dwelling and the one 160.14 acre of land on which that dwelling is located. If any farm 160.15 buildings or structures are located on this homesteaded acre of 160.16 land, their market value shall not be included in this separate 160.17 determination. 160.18 (g) To qualify for classification under paragraph (b), 160.19 clause (4), a privately owned public use airport must be 160.20 licensed as a public airport under section 360.018. For 160.21 purposes of paragraph (b), clause (4), "landing area" means that 160.22 part of a privately owned public use airport properly cleared, 160.23 regularly maintained, and made available to the public for use 160.24 by aircraft and includes runways, taxiways, aprons, and sites 160.25 upon which are situated landing or navigational aids. A landing 160.26 area also includes land underlying both the primary surface and 160.27 the approach surfaces that comply with all of the following: 160.28 (i) the land is properly cleared and regularly maintained 160.29 for the primary purposes of the landing, taking off, and taxiing 160.30 of aircraft; but that portion of the land that contains 160.31 facilities for servicing, repair, or maintenance of aircraft is 160.32 not included as a landing area; 160.33 (ii) the land is part of the airport property; and 160.34 (iii) the land is not used for commercial or residential 160.35 purposes. 160.36 The land contained in a landing area under paragraph (b), clause 161.1 (4), must be described and certified by the commissioner of 161.2 transportation. The certification is effective until it is 161.3 modified, or until the airport or landing area no longer meets 161.4 the requirements of paragraph (b), clause (4). For purposes of 161.5 paragraph (b), clause (4), "public access area" means property 161.6 used as an aircraft parking ramp, apron, or storage hangar, or 161.7 an arrival and departure building in connection with the airport. 161.8 (h) To qualify for classification under paragraph (b), 161.9 clause (5), the property must be at least ten contiguous acres 161.10 in size and the owner of the property must record with the 161.11 county recorder of the county in which the property is located 161.12 an affidavit containing: 161.13 (1) a legal description of the property; 161.14 (2) a disclosure that the property contains a commercial 161.15 aggregate deposit that is not actively being mined; 161.16 (3) documentation that the conditional use under the county 161.17 or local zoning ordinance of this property is for mining; and 161.18 (4) documentation that a permit has been issued by the 161.19 local unit of government or the mining activity is allowed under 161.20 local ordinance. The disclosure must include a statement from a 161.21 registered professional geologist, engineer, or soil scientist 161.22 delineating the deposit and certifying that it is a commercial 161.23 aggregate deposit. 161.24 For purposes of this section and section 273.1115, 161.25 "commercial aggregate deposit" means a deposit that will yield 161.26 crushed stone or sand and gravel that is suitable for use as a 161.27 construction aggregate; and "actively mined" means the removal 161.28 of top soil and overburden in preparation for excavation or 161.29 excavation of a commercial deposit. 161.30 (i) When any portion of the property under this subdivision 161.31 or section 273.13, subdivision 22, begins to be actively mined, 161.32 the owner must file a supplemental affidavit within 60 days from 161.33 the day any aggregate is removed stating the number of acres of 161.34 the property that is actively being mined. The acres actively 161.35 being mined must be (1) valued and classified under section 161.36 273.13, subdivision 24, in the next subsequent assessment year, 162.1 and (2) removed from the aggregate resource preservation 162.2 property tax program under section 273.1115, if the land was 162.3 enrolled in that program. Copies of the original affidavit and 162.4 all supplemental affidavits must be filed with the county 162.5 assessor, the local zoning administrator, and the Department of 162.6 Natural Resources, Division of Land and Minerals. A 162.7 supplemental affidavit must be filed each time a subsequent 162.8 portion of the property is actively mined, provided that the 162.9 minimum acreage change is five acres, even if the actual mining 162.10 activity constitutes less than five acres. 162.11 [EFFECTIVE DATE.] This section is effective for taxes 162.12 levied in 2005, payable in 2006, and thereafter. 162.13 Sec. 40. Minnesota Statutes 2004, section 273.13, 162.14 subdivision 25, is amended to read: 162.15 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 162.16 estate containing four or more units and used or held for use by 162.17 the owner or by the tenants or lessees of the owner as a 162.18 residence for rental periods of 30 days or more. Class 4a also 162.19 includes hospitals licensed under sections 144.50 to 144.56, 162.20 other than hospitals exempt under section 272.02, and contiguous 162.21 property used for hospital purposes, without regard to whether 162.22 the property has been platted or subdivided. The market value 162.23 of class 4a property has a class rate of 1.8 percent for taxes 162.24 payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 162.25 percent for taxes payable in 2004 and thereafter, except that 162.26 class 4a property consisting of a structure for which 162.27 construction commenced after June 30, 2001, has a class rate of 162.28 1.25 percent of market value for taxes payable in 2003 and 162.29 subsequent years. 162.30 (b) Class 4b includes: 162.31 (1) residential real estate containing less than four units 162.32 that does not qualify as class 4bb, other than seasonal 162.33 residential recreational property; 162.34 (2) manufactured homes not classified under any other 162.35 provision; 162.36 (3) a dwelling, garage, and surrounding one acre of 163.1 property on a nonhomestead farm classified under subdivision 23, 163.2 paragraph (b) containing two or three units; and 163.3 (4) unimproved property that is classified residential as 163.4 determined under subdivision 33. 163.5 The market value of class 4b property has a class rate of 163.6 1.5 percent for taxes payable in 2002, and 1.25 percent for 163.7 taxes payable in 2003 and thereafter. 163.8 (c) Class 4bb includes: 163.9 (1) nonhomestead residential real estate containing one 163.10 unit, other than seasonal residential recreational property; and 163.11 (2) a single family dwelling, garage, and surrounding one 163.12 acre of property on a nonhomestead farm classified under 163.13 subdivision 23, paragraph (b). 163.14 Class 4bb property has the same class rates as class 1a 163.15 property under subdivision 22. 163.16 Property that has been classified as seasonal residential 163.17 recreational property at any time during which it has been owned 163.18 by the current owner or spouse of the current owner does not 163.19 qualify for class 4bb. 163.20 (d) Class 4c property includes: 163.21 (1) except as provided in subdivision 22, paragraph (c), 163.22 real property devoted to temporary and seasonal residential 163.23 occupancy for recreation purposes, including real property 163.24 devoted to temporary and seasonal residential occupancy for 163.25 recreation purposes and not devoted to commercial purposes for 163.26 more than 250 days in the year preceding the year of 163.27 assessment. For purposes of this clause, property is devoted to 163.28 a commercial purpose on a specific day if any portion of the 163.29 property is used for residential occupancy, and a fee is charged 163.30 for residential occupancy. In order for a property to be 163.31 classified as class 4c, seasonal residential recreational for 163.32 commercial purposes, at least 40 percent of the annual gross 163.33 lodging receipts related to the property must be from business 163.34 conducted during 90 consecutive days and either (i) at least 60 163.35 percent of all paid bookings by lodging guests during the year 163.36 must be for periods of at least two consecutive nights; or (ii) 164.1 at least 20 percent of the annual gross receipts must be from 164.2 charges for rental of fish houses, boats and motors, 164.3 snowmobiles, downhill or cross-country ski equipment, or charges 164.4 for marina services, launch services, and guide services, or the 164.5 sale of bait and fishing tackle. For purposes of this 164.6 determination, a paid booking of five or more nights shall be 164.7 counted as two bookings. Class 4c also includes commercial use 164.8 real property used exclusively for recreational purposes in 164.9 conjunction with class 4c property devoted to temporary and 164.10 seasonal residential occupancy for recreational purposes, up to 164.11 a total of two acres, provided the property is not devoted to 164.12 commercial recreational use for more than 250 days in the year 164.13 preceding the year of assessment and is located within two miles 164.14 of the class 4c property with which it is used.Class 4c164.15property classified in this clause also includes the remainder164.16of class 1c resorts provided that the entire property including164.17that portion of the property classified as class 1c also meets164.18the requirements for class 4c under this clause; otherwise the164.19entire property is classified as class 3.Owners of real 164.20 property devoted to temporary and seasonal residential occupancy 164.21 for recreation purposes and all or a portion of which was 164.22 devoted to commercial purposes for not more than 250 days in the 164.23 year preceding the year of assessment desiring classification as 164.24 class 1c or 4c, must submit a declaration to the assessor 164.25 designating the cabins or units occupied for 250 days or less in 164.26 the year preceding the year of assessment by January 15 of the 164.27 assessment year. Those cabins or units and a proportionate 164.28 share of the land on which they are located will be designated 164.29 class 1c or 4c as otherwise provided. The remainder of the 164.30 cabins or units and a proportionate share of the land on which 164.31 they are located will be designated as class 3a. The owner of 164.32 property desiring designation as class 1c or 4c property must 164.33 provide guest registers or other records demonstrating that the 164.34 units for which class 1c or 4c designation is sought were not 164.35 occupied for more than 250 days in the year preceding the 164.36 assessment if so requested. The portion of a property operated 165.1 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 165.2 nonresidential facility operated on a commercial basis not 165.3 directly related to temporary and seasonal residential occupancy 165.4 for recreation purposes shall not qualify for class 1c or 4c; 165.5 (2) qualified property used as a golf course if: 165.6 (i) it is open to the public on a daily fee basis. It may 165.7 charge membership fees or dues, but a membership fee may not be 165.8 required in order to use the property for golfing, and its green 165.9 fees for golfing must be comparable to green fees typically 165.10 charged by municipal courses; and 165.11 (ii) it meets the requirements of section 273.112, 165.12 subdivision 3, paragraph (d). 165.13 A structure used as a clubhouse, restaurant, or place of 165.14 refreshment in conjunction with the golf course is classified as 165.15 class 3a property; 165.16 (3) real property up to a maximum of one acre of land owned 165.17 by a nonprofit community service oriented organization; provided 165.18 that the property is not used for a revenue-producing activity 165.19 for more than six days in the calendar year preceding the year 165.20 of assessment and the property is not used for residential 165.21 purposes on either a temporary or permanent basis. For purposes 165.22 of this clause, a "nonprofit community service oriented 165.23 organization" means any corporation, society, association, 165.24 foundation, or institution organized and operated exclusively 165.25 for charitable, religious, fraternal, civic, or educational 165.26 purposes, and which is exempt from federal income taxation 165.27 pursuant to section 501(c)(3), (10), or (19) of the Internal 165.28 Revenue Code of 1986, as amended through December 31, 1990. For 165.29 purposes of this clause, "revenue-producing activities" shall 165.30 include but not be limited to property or that portion of the 165.31 property that is used as an on-sale intoxicating liquor or 3.2 165.32 percent malt liquor establishment licensed under chapter 340A, a 165.33 restaurant open to the public, bowling alley, a retail store, 165.34 gambling conducted by organizations licensed under chapter 349, 165.35 an insurance business, or office or other space leased or rented 165.36 to a lessee who conducts a for-profit enterprise on the 166.1 premises. Any portion of the property which is used for 166.2 revenue-producing activities for more than six days in the 166.3 calendar year preceding the year of assessment shall be assessed 166.4 as class 3a. The use of the property for social events open 166.5 exclusively to members and their guests for periods of less than 166.6 24 hours, when an admission is not charged nor any revenues are 166.7 received by the organization shall not be considered a 166.8 revenue-producing activity; 166.9 (4) postsecondary student housing of not more than one acre 166.10 of land that is owned by a nonprofit corporation organized under 166.11 chapter 317A and is used exclusively by a student cooperative, 166.12 sorority, or fraternity for on-campus housing or housing located 166.13 within two miles of the border of a college campus; 166.14 (5) manufactured home parks as defined in section 327.14, 166.15 subdivision 3; 166.16 (6) real property that is actively and exclusively devoted 166.17 to indoor fitness, health, social, recreational, and related 166.18 uses, is owned and operated by a not-for-profit corporation, and 166.19 is located within the metropolitan area as defined in section 166.20 473.121, subdivision 2; 166.21 (7) a leased or privately owned noncommercial aircraft 166.22 storage hangar not exempt under section 272.01, subdivision 2, 166.23 and the land on which it is located, provided that: 166.24 (i) the land is on an airport owned or operated by a city, 166.25 town, county, Metropolitan Airports Commission, or group 166.26 thereof; and 166.27 (ii) the land lease, or any ordinance or signed agreement 166.28 restricting the use of the leased premise, prohibits commercial 166.29 activity performed at the hangar. 166.30 If a hangar classified under this clause is sold after June 166.31 30, 2000, a bill of sale must be filed by the new owner with the 166.32 assessor of the county where the property is located within 60 166.33 days of the sale;and166.34 (8) a privately owned noncommercial aircraft storage hangar 166.35 not exempt under section 272.01, subdivision 2, and the land on 166.36 which it is located, provided that: 167.1 (i) the land abuts a public airport; and 167.2 (ii) the owner of the aircraft storage hangar provides the 167.3 assessor with a signed agreement restricting the use of the 167.4 premises, prohibiting commercial use or activity performed at 167.5 the hangar; and 167.6 (9) residential real estate, a portion of which is used by 167.7 the owner for homestead purposes, and that is also a place of 167.8 lodging, if all of the following criteria are met: 167.9 (i) rooms are provided for rent to transient guests that 167.10 generally stay for periods of 14 or fewer days; 167.11 (ii) meals are provided to persons who rent rooms, the cost 167.12 of which is incorporated in the basic room rate; 167.13 (iii) meals are not provided to the general public except 167.14 for special events on fewer than seven days in the calendar year 167.15 preceding the year of the assessment; and 167.16 (iv) the owner is the operator of the property. 167.17 The market value subject to the 4c classification under this 167.18 clause is limited to five rental units. Any rental units on the 167.19 property in excess of five, must be valued and assessed as class 167.20 3a. The portion of the property used for purposes of a 167.21 homestead by the owner must be classified as class 1a property 167.22 under subdivision 22. 167.23 Class 4c property has a class rate of 1.5 percent of market 167.24 value, except that (i) each parcel of seasonal residential 167.25 recreational property not used for commercial purposes has the 167.26 same class rates as class 4bb property, (ii) manufactured home 167.27 parks assessed under clause (5) have the same class rate as 167.28 class 4b property, (iii) commercial-use seasonal residential 167.29 recreational property has a class rate of one percent for the 167.30 first $500,000 of market value, which includes any market value 167.31 receiving the one percent rate under subdivision 22, and 1.25 167.32 percent for the remaining market value, (iv) the market value of 167.33 property described in clause (4) has a class rate of one 167.34 percent, (v) the market value of property described in clauses 167.35 (2) and (6) has a class rate of 1.25 percent, and (vi) that 167.36 portion of the market value of property in clause (8) qualifying 168.1 for class 4c property has a class rate of 1.25 percent. 168.2 (e) Class 4d property is qualifying low-income rental 168.3 housing certified to the assessor by the Housing Finance Agency 168.4 under sections 273.126 and 462A.0715. Class 4d includes land in 168.5 proportion to the total market value of the building that is 168.6 qualifying low-income rental housing. 168.7 Class 4d property has a class rate of 0.55 percent for 168.8 taxes payable in 2007 and thereafter. 168.9 Sec. 41. [273.1321] [VALUATION OF LOW-INCOME RENTAL 168.10 PROPERTY; CAPITALIZED VALUE OF NET OPERATING INCOME.] 168.11 Subdivision 1. [REQUIREMENT.] Low-income rental property 168.12 classified as class 4d under Minnesota Statutes 2000, section 168.13 273.13, subdivision 25, is entitled to valuation under this 168.14 section if at least 75 percent of the units in the rental 168.15 housing property meet any of the following qualifications: 168.16 (1) the units are subject to a housing assistance payments 168.17 contract under section 8 of the United States Housing Act of 168.18 1937, as amended; 168.19 (2) the units are rent-restricted and income-restricted 168.20 units of a qualified low-income housing project receiving tax 168.21 credits under section 42(g) of the Internal Revenue Code of 168.22 1986, as amended; 168.23 (3) the units are financed by the Rural Housing Service of 168.24 the United States Department of Agriculture and receive payments 168.25 under the rental assistance program pursuant to section 521(a) 168.26 of the Housing Act of 1949, as amended; or 168.27 (4) the units are subject to rent and income restrictions 168.28 under the terms of financial assistance provided to the rental 168.29 housing property by a federal, state, or local unit of 168.30 government as evidenced by a document recorded against the 168.31 property. 168.32 The restrictions must require assisted units to be occupied 168.33 by residents whose household income at the time of initial 168.34 occupancy does not exceed 60 percent of the greater of area or 168.35 state median income, adjusted for family size, as determined by 168.36 the United States Department of Housing and Urban Development. 169.1 The restriction must also require the rents for assisted units 169.2 to not exceed 30 percent of 60 percent of the greater of area or 169.3 state median income, adjusted for family size, as determined by 169.4 the United States Department of Housing and Urban Development. 169.5 Subd. 2. [DETERMINATION OF VALUE.] (a) The value of any 169.6 rental housing property meeting the qualifications of 169.7 subdivision 1 shall be determined, upon timely application by 169.8 the owner in the manner provided in subdivision 3, on the basis 169.9 of the restricted use of the property, notwithstanding sections 169.10 272.03, subdivision 8, and 273.11, by capitalizing the net 169.11 operating income prior to the payment of debt service. 169.12 (b) Net operating income prior to payment of debt service 169.13 must be the amounts shown in a financial statement prepared by 169.14 an independent certified public accountant or firm. The 169.15 financial statement must show the revenues, expenses, cash 169.16 flows, assets, liabilities, and net assets for the property for 169.17 which an application is made under this section. 169.18 (c) The capitalization rate applied to net operating income 169.19 shall be established jointly by the commissioner and the Housing 169.20 Finance Agency based on market data and industry standards. The 169.21 commissioner and the Housing Finance Agency shall jointly 169.22 establish separate rates based on types of rental housing 169.23 properties and their locations. 169.24 Subd. 3. [APPLICATION.] (a) Application for assessment 169.25 under this section must be filed by February 28 of the levy 169.26 year, or at a later date the Housing Finance Agency deems 169.27 practicable. The application must be filed with the Housing 169.28 Finance Agency, on a form prescribed by the agency, and must 169.29 contain the information required by the Housing Finance Agency. 169.30 (b) Each application must include: 169.31 (1) the property tax identification number; 169.32 (2) evidence that the property meets the requirements of 169.33 subdivision 1; and 169.34 (3) a true and correct copy of the financial statement 169.35 related to the property. 169.36 (c) The applicant must pay an application fee to be set by 170.1 the Housing Finance Agency. The application fee charged by the 170.2 agency must approximately equal the costs of processing and 170.3 reviewing the applications. The fee must be deposited in the 170.4 housing development fund. 170.5 Subd. 4. [CERTIFICATION.] By June 1 of each levy year, the 170.6 Housing Finance Agency must certify to local assessors the 170.7 valuation, as determined under this section, of rental 170.8 properties that apply and are qualified for valuation under this 170.9 section. In making the certification, the Housing Finance 170.10 Agency may rely on the application and supporting information 170.11 supplied by the property owner. 170.12 [EFFECTIVE DATE.] This section is effective for taxes 170.13 levied in 2006, payable in 2007, and thereafter. 170.14 Sec. 42. [273.1322] [VACANT COMMERCIAL-INDUSTRIAL 170.15 PROPERTIES.] 170.16 Subdivision 1. [AUTHORITY.] A city may establish, by 170.17 ordinance, a program to encourage redevelopment, provide for 170.18 better utilization of commercial-industrial property, and 170.19 eliminate blighting influences by revoking the eligibility of 170.20 individual commercial-industrial properties to receive the 170.21 credit authorized under section 273.1398, subdivision 4. The 170.22 program may revoke eligibility only if the property has been 170.23 vacant, as defined in subdivision 3, clauses (1) to (3), for 170.24 three or more consecutive years prior to the current assessment 170.25 year, or under subdivision 3, clause (4), for five or more 170.26 consecutive years prior to the current assessment year. 170.27 Subd. 2. [MINIMUM REQUIREMENTS.] The program must provide: 170.28 (1) standards for determining whether a property is vacant; 170.29 (2) written assessment notice by the city or county to the 170.30 property owner informing the owner that the property's 170.31 eligibility will be revoked; 170.32 (3) opportunity for the property owner to appeal the 170.33 revocation at the board of equalization; 170.34 (4) timely notice to the county assessor of the property's 170.35 eligibility revocation, if the city has a city assessor and the 170.36 city assessor has revoked the property's eligibility; and 171.1 (5) any other provisions the city determines are necessary 171.2 or appropriate to the operation of the program to achieve its 171.3 purposes. 171.4 Subd. 3. [DEFINITION OF VACANT.] A program established 171.5 under this section may provide that a property is vacant if the 171.6 property is: 171.7 (1) condemned, dangerous, or having multiple building code 171.8 violations; 171.9 (2) condemned and illegally occupied; 171.10 (3) either occupied or unoccupied, during which time the 171.11 enforcement officer for the municipality has issued multiple 171.12 orders to correct nuisance conditions; or 171.13 (4) unoccupied and not utilized for a commercial or 171.14 industrial purpose. 171.15 Subd. 4. [NOTICE TO PROPERTY OWNER.] The municipality 171.16 shall give notice to the property owner requiring that any 171.17 conditions in subdivision 3, clauses (1) to (3), be remedied, 171.18 and that the property be occupied and used for a commercial or 171.19 industrial purpose for at least 180 days during the next 171.20 12-month period, or else the property may cease to be eligible 171.21 for the credit under section 273.1398, subdivision 4. 171.22 [EFFECTIVE DATE.] This section is effective for taxes 171.23 payable in 2007 and thereafter. 171.24 Sec. 43. Minnesota Statutes 2004, section 273.1384, 171.25 subdivision 3, is amended to read: 171.26 Subd. 3. [CREDIT REIMBURSEMENTS.] (a) The county auditor 171.27 shall determine the tax reductions allowed under this section 171.28 within the county for each taxes payable year and shall certify 171.29 that amount to the commissioner of revenue as a part of the 171.30 abstracts of tax lists submitted by the county auditors under 171.31 section 275.29. 171.32 (b) In the case of class 1a, class lc, or class 2a 171.33 homestead property which is located within a city, the county 171.34 auditor shall determine whether the net tax on each parcel is 171.35 less than the applicable percentage of its taxable market value 171.36 provided in this paragraph for the year. For taxes payable in 172.1 2007 and 2008, if the net tax on the property is less than 0.7 172.2 percent of its taxable market value, the county auditor shall 172.3 reduce the reimbursement to the county and the city for the 172.4 credit allowed under subdivision 1 by the amount of the 172.5 difference. For taxes payable in 2009 and 2010, if the net tax 172.6 on the property is less than 0.8 percent of its taxable market 172.7 value, the county auditor shall reduce the reimbursement to the 172.8 county and the city for the credit allowed under subdivision 1 172.9 by the amount of the difference. For taxes payable in 2011 and 172.10 2012, if the net tax on the property is less than 0.9 percent of 172.11 its taxable market value, the county auditor shall reduce the 172.12 reimbursement to the county and the city for the credit allowed 172.13 under subdivision 1 by the amount of the difference. For taxes 172.14 payable in 2013 and thereafter, if the net tax on the property 172.15 is less than one percent of its taxable market value, the county 172.16 auditor shall reduce the reimbursement to the county and the 172.17 city for the credit allowed under subdivision 1 by the amount of 172.18 the difference. The market value credit reimbursement cannot be 172.19 less than zero. 172.20 (c) Any prior year adjustments shall also be certified on 172.21 the abstracts of tax lists. The commissioner shall review the 172.22 certifications for accuracy, and may make such changes as are 172.23 deemed necessary, or return the certification to the county 172.24 auditor for correction. If there is no reduction of the 172.25 reimbursements under paragraph (b), the credits under this 172.26 section must be used to proportionately reduce the net tax 172.27 capacity-based property tax payable to each local taxing 172.28 jurisdiction as provided in section 273.1393. If there is a 172.29 reduction under paragraph (b), the reimbursements paid to the 172.30 city and county must be reduced in proportion to the amount of 172.31 their levies. 172.32 [EFFECTIVE DATE.] This section is effective for taxes 172.33 levied in 2006, payable in 2007, and thereafter. 172.34 Sec. 44. [273.323] [EFFECTIVE DATE FOR RULES FOR VALUATION 172.35 OF ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.] 172.36 Rules adopted by the commissioner that prescribe the method 173.1 of valuing property of electric and transmission pipeline 173.2 utilities may not take effect before the end of the regular 173.3 legislative session in the calendar year following adoption of 173.4 the rules. 173.5 [EFFECTIVE DATE.] This section is effective the day 173.6 following final enactment. 173.7 Sec. 45. Minnesota Statutes 2004, section 275.065, 173.8 subdivision 3, is amended to read: 173.9 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 173.10 county auditor shall prepare and the county treasurer shall 173.11 deliver after November 10 and on or before November 24 each 173.12 year, by first class mail to each taxpayer at the address listed 173.13 on the county's current year's assessment roll, a notice of 173.14 proposed property taxes. 173.15 (b) The commissioner of revenue shall prescribe the form of 173.16 the notice. 173.17 (c) The notice must inform taxpayers that it contains the 173.18 amount of property taxes each taxing authority proposes to 173.19 collect for taxes payable the following year. In the case of a 173.20 town, or in the case of the state general tax, the final tax 173.21 amount will be its proposed tax. In the case of taxing 173.22 authorities required to hold a public meeting under subdivision 173.23 6, the notice must clearly state that each taxing authority, 173.24 including regional library districts established under section 173.25 134.201, and including the metropolitan taxing districts as 173.26 defined in paragraph (i), but excluding all other special taxing 173.27 districts and towns, will hold a public meeting to receive 173.28 public testimony on the proposed budget and proposed or final 173.29 property tax levy, or, in case of a school district, on the 173.30 current budget and proposed property tax levy. It must clearly 173.31 state the time and place of each taxing authority's meeting, a 173.32 telephone number for the taxing authority that taxpayers may 173.33 call if they have questions related to the notice, and an 173.34 address where comments will be received by mail. 173.35 (d) The notice must state for each parcel: 173.36 (1) the market value of the property as determined under 174.1 section 273.11, and used for computing property taxes payable in 174.2 the following year and for taxes payable in the current year as 174.3 each appears in the records of the county assessor on November 1 174.4 of the current year; and, in the case of residential property, 174.5 whether the property is classified as homestead or 174.6 nonhomestead. The notice must clearly inform taxpayers of the 174.7 years to which the market values apply and that the values are 174.8 final values; 174.9 (2) the items listed below, shown separately by county, 174.10 city or town, and state general tax, net of the residential and 174.11 agricultural homestead credit under section 273.1384, voter 174.12 approved school levy, other local school levy, and the sum of 174.13 the special taxing districts, and as a total of all taxing 174.14 authorities: 174.15 (i) the actual tax for taxes payable in the current year; 174.16 and 174.17 (ii) the proposed tax amount. 174.18 If the county levy under clause (2) includes an amount for 174.19 a lake improvement district as defined under sections 103B.501 174.20 to 103B.581, the amount attributable for that purpose must be 174.21 separately stated from the remaining county levy amount. 174.22 In the case of a town or the state general tax, the final 174.23 tax shall also be its proposed tax unless the town changes its 174.24 levy at a special town meeting under section 365.52. If a 174.25 school district has certified under section 126C.17, subdivision 174.26 9, that a referendum will be held in the school district at the 174.27 November general election, the county auditor must note next to 174.28 the school district's proposed amount that a referendum is 174.29 pending and that, if approved by the voters, the tax amount may 174.30 be higher than shown on the notice. In the case of the city of 174.31 Minneapolis, the levy for the Minneapolis Library Board and the 174.32 levy for Minneapolis Park and Recreation shall be listed 174.33 separately from the remaining amount of the city's levy. In the 174.34 case of the city of St. Paul, the levy for the St. Paul Library 174.35 Agency must be listed separately from the remaining amount of 174.36 the city's levy. In the case of Ramsey County, any amount 175.1 levied under section 134.07 may be listed separately from the 175.2 remaining amount of the county's levy. In the case of a parcel 175.3 where tax increment or the fiscal disparities areawide tax under 175.4 chapter 276A or 473F applies, the proposed tax levy on the 175.5 captured value or the proposed tax levy on the tax capacity 175.6 subject to the areawide tax must each be stated separately and 175.7 not included in the sum of the special taxing districts; and 175.8 (3) the increase or decrease between the total taxes 175.9 payable in the current year and the total proposed taxes, 175.10 expressed as a percentage. 175.11 For purposes of this section, the amount of the tax on 175.12 homesteads qualifying under the senior citizens' property tax 175.13 deferral program under chapter 290B is the total amount of 175.14 property tax before subtraction of the deferred property tax 175.15 amount. 175.16 (e) The notice must clearly state that the proposed or 175.17 final taxes do not include the following: 175.18 (1) special assessments; 175.19 (2) levies approved by the voters after the date the 175.20 proposed taxes are certified, including bond referenda and 175.21 school district levy referenda; 175.22 (3) a levy limit increase approved by the voters by the 175.23 first Tuesday after the first Monday in November of the levy 175.24 year as provided under section 275.73; 175.25 (4) amounts necessary to pay cleanup or other costs due to 175.26 a natural disaster occurring after the date the proposed taxes 175.27 are certified; 175.28 (5) amounts necessary to pay tort judgments against the 175.29 taxing authority that become final after the date the proposed 175.30 taxes are certified; and 175.31 (6) the contamination tax imposed on properties which 175.32 received market value reductions for contamination. 175.33 (f) Except as provided in subdivision 7, failure of the 175.34 county auditor to prepare or the county treasurer to deliver the 175.35 notice as required in this section does not invalidate the 175.36 proposed or final tax levy or the taxes payable pursuant to the 176.1 tax levy. 176.2 (g) If the notice the taxpayer receives under this section 176.3 lists the property as nonhomestead, and satisfactory 176.4 documentation is provided to the county assessor by the 176.5 applicable deadline, and the property qualifies for the 176.6 homestead classification in that assessment year, the assessor 176.7 shall reclassify the property to homestead for taxes payable in 176.8 the following year. 176.9 (h) In the case of class 4 residential property used as a 176.10 residence for lease or rental periods of 30 days or more, the 176.11 taxpayer must either: 176.12 (1) mail or deliver a copy of the notice of proposed 176.13 property taxes to each tenant, renter, or lessee; or 176.14 (2) post a copy of the notice in a conspicuous place on the 176.15 premises of the property. 176.16 The notice must be mailed or posted by the taxpayer by 176.17 November 27 or within three days of receipt of the notice, 176.18 whichever is later. A taxpayer may notify the county treasurer 176.19 of the address of the taxpayer, agent, caretaker, or manager of 176.20 the premises to which the notice must be mailed in order to 176.21 fulfill the requirements of this paragraph. 176.22 (i) For purposes of this subdivision, subdivisions 5a and 176.23 6, "metropolitan special taxing districts" means the following 176.24 taxing districts in the seven-county metropolitan area that levy 176.25 a property tax for any of the specified purposes listed below: 176.26 (1) Metropolitan Council under section 473.132, 473.167, 176.27 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 176.28 (2) Metropolitan Airports Commission under section 473.667, 176.29 473.671, or 473.672; and 176.30 (3) Metropolitan Mosquito Control Commission under section 176.31 473.711. 176.32 For purposes of this section, any levies made by the 176.33 regional rail authorities in the county of Anoka, Carver, 176.34 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 176.35 398A shall be included with the appropriate county's levy and 176.36 shall be discussed at that county's public hearing. 177.1 [EFFECTIVE DATE.] This section is effective for notices for 177.2 property taxes levied in 2005, payable in 2006, and thereafter. 177.3 Sec. 46. Minnesota Statutes 2004, section 275.065, is 177.4 amended by adding a subdivision to read: 177.5 Subd. 9. [AITKIN COUNTY AND SCHOOL DISTRICT 177.6 HEARING.] Notwithstanding any other law, Aitkin County and 177.7 Independent School District No. 1, and the city of Aitkin, or 177.8 any two of them, may hold their initial public hearing jointly. 177.9 The hearing must be held on the second Tuesday of December each 177.10 year. The advertisement required in subdivision 5a may be a 177.11 joint advertisement. The hearing is otherwise subject to the 177.12 requirements of this section. 177.13 [EFFECTIVE DATE.] This section is effective for hearings 177.14 conducted in 2005 and subsequent years. 177.15 Sec. 47. Minnesota Statutes 2004, section 275.065, is 177.16 amended by adding a subdivision to read: 177.17 Subd. 10. [NOBLES COUNTY; JOINT INITIAL PUBLIC 177.18 HEARING.] Notwithstanding any other law, Nobles County, the city 177.19 of Worthington, and Independent School District No. 518, 177.20 Worthington, or any two of them, may hold their initial public 177.21 hearing jointly. The hearing must be held on the second Tuesday 177.22 of December each year. The advertisement required in 177.23 subdivision 5a may be a joint advertisement. The hearing is 177.24 otherwise subject to the requirements of this section. 177.25 [EFFECTIVE DATE.] This section is effective for hearings 177.26 conducted in 2005 and subsequent years. 177.27 Sec. 48. Minnesota Statutes 2004, section 275.066, is 177.28 amended to read: 177.29 275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 177.30 For the purposes of property taxation and property tax 177.31 state aids, the term "special taxing districts" includes the 177.32 following entities: 177.33 (1) watershed districts under chapter 103D; 177.34 (2) sanitary districts under sections 115.18 to 115.37; 177.35 (3) regional sanitary sewer districts under sections 115.61 177.36 to 115.67; 178.1 (4) regional public library districts under section 178.2 134.201; 178.3 (5) park districts under chapter 398; 178.4 (6) regional railroad authorities under chapter 398A; 178.5 (7) hospital districts under sections 447.31 to 447.38; 178.6 (8) St. Cloud Metropolitan Transit Commission under 178.7 sections 458A.01 to 458A.15; 178.8 (9) Duluth Transit Authority under sections 458A.21 to 178.9 458A.37; 178.10 (10) regional development commissions under sections 178.11 462.381 to 462.398; 178.12 (11) housing and redevelopment authorities under sections 178.13 469.001 to 469.047; 178.14 (12) port authorities under sections 469.048 to 469.068; 178.15 (13) economic development authorities under sections 178.16 469.090 to 469.1081; 178.17 (14) Metropolitan Council under sections 473.123 to 178.18 473.549; 178.19 (15) Metropolitan Airports Commission under sections 178.20 473.601 to 473.680; 178.21 (16) Metropolitan Mosquito Control Commission under 178.22 sections 473.701 to 473.716; 178.23 (17) Morrison County Rural Development Financing Authority 178.24 under Laws 1982, chapter 437, section 1; 178.25 (18) Croft Historical Park District under Laws 1984, 178.26 chapter 502, article 13, section 6; 178.27 (19) East Lake County Medical Clinic District under Laws 178.28 1989, chapter 211, sections 1 to 6; 178.29 (20) Floodwood Area Ambulance District under Laws 1993, 178.30 chapter 375, article 5, section 39; 178.31 (21) Middle Mississippi River Watershed Management 178.32 Organization under sections 103B.211 and 103B.241; 178.33 (22) emergency medical services special taxing districts 178.34 under section 144F.01; 178.35 (23) a county levying under the authority of section 178.36 103B.241, 103B.245, or 103B.251; 179.1 (24) Southern St. Louis County Special Taxing District; 179.2 Chris Jensen Nursing Home under Laws 2003, First Special Session 179.3 chapter 21, article 4, section 12;and179.4 (25) soil and water conservation districts under chapter 179.5 103C; and 179.6 (26) any other political subdivision of the state of 179.7 Minnesota, excluding counties, school districts, cities, and 179.8 towns, that has the power to adopt and certify a property tax 179.9 levy to the county auditor, as determined by the commissioner of 179.10 revenue. 179.11 Sec. 49. Minnesota Statutes 2004, section 275.70, 179.12 subdivision 5, is amended to read: 179.13 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 179.14 portions of ad valorem taxes levied by a local governmental unit 179.15 for the following purposes or in the following manner: 179.16 (1) to pay the costs of the principal and interest on 179.17 bonded indebtedness or to reimburse for the amount of liquor 179.18 store revenues used to pay the principal and interest due on 179.19 municipal liquor store bonds in the year preceding the year for 179.20 which the levy limit is calculated; 179.21 (2) to pay the costs of principal and interest on 179.22 certificates of indebtedness issued for any corporate purpose 179.23 except for the following: 179.24 (i) tax anticipation or aid anticipation certificates of 179.25 indebtedness; 179.26 (ii) certificates of indebtedness issued under sections 179.27 298.28 and 298.282; 179.28 (iii) certificates of indebtedness used to fund current 179.29 expenses or to pay the costs of extraordinary expenditures that 179.30 result from a public emergency; or 179.31 (iv) certificates of indebtedness used to fund an 179.32 insufficiency in tax receipts or an insufficiency in other 179.33 revenue sources; 179.34 (3) to provide for the bonded indebtedness portion of 179.35 payments made to another political subdivision of the state of 179.36 Minnesota; 180.1 (4) to fund payments made to the Minnesota State Armory 180.2 Building Commission under section 193.145, subdivision 2, to 180.3 retire the principal and interest on armory construction bonds; 180.4 (5) property taxes approved by voters which are levied 180.5 against the referendum market value as provided under section 180.6 275.61; 180.7 (6) to fund matching requirements needed to qualify for 180.8 federal or state grants or programs to the extent that either 180.9 (i) the matching requirement exceeds the matching requirement in 180.10 calendar year 2001, or (ii) it is a new matching requirement 180.11 that did not exist prior to 2002; 180.12 (7) to pay the expenses reasonably and necessarily incurred 180.13 in preparing for or repairing the effects of natural disaster 180.14 including the occurrence or threat of widespread or severe 180.15 damage, injury, or loss of life or property resulting from 180.16 natural causes, in accordance with standards formulated by the 180.17 Emergency Services Division of the state Department of Public 180.18 Safety, as allowed by the commissioner of revenue under section 180.19 275.74, subdivision 2; 180.20 (8) pay amounts required to correct an error in the levy 180.21 certified to the county auditor by a city or county in a levy 180.22 year, but only to the extent that when added to the preceding 180.23 year's levy it is not in excess of an applicable statutory, 180.24 special law or charter limitation, or the limitation imposed on 180.25 the governmental subdivision by sections 275.70 to 275.74 in the 180.26 preceding levy year; 180.27 (9) to pay an abatement under section 469.1815; 180.28 (10) to pay any costs attributable to increases in the 180.29 employer contribution rates under chapter 353 that are effective 180.30 after June 30, 2001; 180.31 (11) to pay the operating or maintenance costs of a county 180.32 jail as authorized in section 641.01 or 641.262, or of a 180.33 correctional facility as defined in section 241.021, subdivision 180.34 1, paragraph (f), to the extent that the county can demonstrate 180.35 to the commissioner of revenue that the amount has been included 180.36 in the county budget as a direct result of a rule, minimum 181.1 requirement, minimum standard, or directive of the Department of 181.2 Corrections, or to pay the operating or maintenance costs of a 181.3 regional jail as authorized in section 641.262. For purposes of 181.4 this clause, a district court order is not a rule, minimum 181.5 requirement, minimum standard, or directive of the Department of 181.6 Corrections. If the county utilizes this special levy, except 181.7 to pay operating or maintenance costs of a new regional jail 181.8 facility under sections 641.262 to 641.264 which will not 181.9 replace an existing jail facility, any amount levied by the 181.10 county in the previous levy year for the purposes specified 181.11 under this clause and included in the county's previous year's 181.12 levy limitation computed under section 275.71, shall be deducted 181.13 from the levy limit base under section 275.71, subdivision 2, 181.14 when determining the county's current year levy limitation. The 181.15 county shall provide the necessary information to the 181.16 commissioner of revenue for making this determination; 181.17 (12) to pay for operation of a lake improvement district, 181.18 as authorized under section 103B.555. If the county utilizes 181.19 this special levy, any amount levied by the county in the 181.20 previous levy year for the purposes specified under this clause 181.21 and included in the county's previous year's levy limitation 181.22 computed under section 275.71 shall be deducted from the levy 181.23 limit base under section 275.71, subdivision 2, when determining 181.24 the county's current year levy limitation. The county shall 181.25 provide the necessary information to the commissioner of revenue 181.26 for making this determination; 181.27 (13) to repay a state or federal loan used to fund the 181.28 direct or indirect required spending by the local government due 181.29 to a state or federal transportation project or other state or 181.30 federal capital project. This authority may only be used if the 181.31 project is not a local government initiative; 181.32 (14) to pay for court administration costs as required 181.33 under section 273.1398, subdivision 4b, less the (i) county's 181.34 share of transferred fines and fees collected by the district 181.35 courts in the county for calendar year 2001 and (ii) the aid 181.36 amount certified to be paid to the county in 2004 under section 182.1 273.1398, subdivision 4c; however, for taxes levied to pay for 182.2 these costs in the year in which the court financing is 182.3 transferred to the state, the amount under this clause is 182.4 limited to the amount of aid the county is certified to receive 182.5 under section 273.1398, subdivision 4a;and182.6 (15) to fund a police or firefighters relief association as 182.7 required under section 69.77 to the extent that the required 182.8 amount exceeds the amount levied for this purpose in 2001; and 182.9 (16) to pay for the maintenance and support of a city or 182.10 county society for the prevention of cruelty to animals under 182.11 section 343.11. If the city or county uses this special levy, 182.12 any amount levied by the city or county in the previous levy 182.13 year for the purposes specified in this clause and included in 182.14 the city's or county's previous year's levy limit computed under 182.15 section 275.71, must be deducted from the levy limit base under 182.16 section 275.71, subdivision 2, in determining the city's or 182.17 county's current year levy limit. 182.18 [EFFECTIVE DATE.] This section is effective for taxes 182.19 levied in 2005, payable in 2006, and thereafter. 182.20 Sec. 50. Minnesota Statutes 2004, section 276.04, 182.21 subdivision 2, is amended to read: 182.22 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 182.23 shall provide for the printing of the tax statements. The 182.24 commissioner of revenue shall prescribe the form of the property 182.25 tax statement and its contents. The statement must contain a 182.26 tabulated statement of the dollar amount due to each taxing 182.27 authority and the amount of the state tax from the parcel of 182.28 real property for which a particular tax statement is prepared. 182.29 The dollar amounts attributable to the county, the state tax, 182.30 the voter approved school tax, the other local school tax, the 182.31 township or municipality, and the total of the metropolitan 182.32 special taxing districts as defined in section 275.065, 182.33 subdivision 3, paragraph (i), must be separately stated. The 182.34 amounts due all other special taxing districts, if any, may be 182.35 aggregated. If the county levy under this paragraph includes an 182.36 amount for a lake improvement district as defined under sections 183.1 103B.501 to 103B.581, the amount attributable for that purpose 183.2 must be separately stated from the remaining county levy 183.3 amount. In the case of Ramsey County, if the county levy under 183.4 this paragraph includes an amount for public library service 183.5 under section 134.07, the amount attributable for that purpose 183.6 may be separately stated from the remaining county levy amount. 183.7 The amount of the tax on homesteads qualifying under the senior 183.8 citizens' property tax deferral program under chapter 290B is 183.9 the total amount of property tax before subtraction of the 183.10 deferred property tax amount. The amount of the tax on 183.11 contamination value imposed under sections 270.91 to 270.98, if 183.12 any, must also be separately stated. The dollar amounts, 183.13 including the dollar amount of any special assessments, may be 183.14 rounded to the nearest even whole dollar. For purposes of this 183.15 section whole odd-numbered dollars may be adjusted to the next 183.16 higher even-numbered dollar. The amount of market value 183.17 excluded under section 273.11, subdivision 16, if any, must also 183.18 be listed on the tax statement. 183.19 (b) The property tax statements for manufactured homes and 183.20 sectional structures taxed as personal property shall contain 183.21 the same information that is required on the tax statements for 183.22 real property. 183.23 (c) Real and personal property tax statements must contain 183.24 the following information in the order given in this paragraph. 183.25 The information must contain the current year tax information in 183.26 the right column with the corresponding information for the 183.27 previous year in a column on the left: 183.28 (1) the property's estimated market value under section 183.29 273.11, subdivision 1; 183.30 (2) the property's taxable market value after reductions 183.31 under section 273.11, subdivisions 1a and 16; 183.32 (3) the property's gross tax, calculated by adding the 183.33 property's total property tax to the sum of the aids enumerated 183.34 in clause (4); 183.35 (4) a total of the following aids: 183.36 (i) education aids payable under chapters 122A, 123A, 123B, 184.1 124D, 125A, 126C, and 127A; 184.2 (ii) local government aids for cities, towns, and counties 184.3 under chapter 477A; and 184.4 (iii) disparity reduction aid under section 273.1398; 184.5 (5) for homestead residential and agricultural properties, 184.6 the credits under section 273.1384; 184.7 (6) any credits received under sections 273.119; 273.123; 184.8 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 184.9 473H.10, except that the amount of credit received under section 184.10 273.135 must be separately stated and identified as "taconite 184.11 tax relief"; and 184.12 (7) the net tax payable in the manner required in paragraph 184.13 (a). 184.14 (d) If the county uses envelopes for mailing property tax 184.15 statements and if the county agrees, a taxing district may 184.16 include a notice with the property tax statement notifying 184.17 taxpayers when the taxing district will begin its budget 184.18 deliberations for the current year, and encouraging taxpayers to 184.19 attend the hearings. If the county allows notices to be 184.20 included in the envelope containing the property tax statement, 184.21 and if more than one taxing district relative to a given 184.22 property decides to include a notice with the tax statement, the 184.23 county treasurer or auditor must coordinate the process and may 184.24 combine the information on a single announcement. 184.25 The commissioner of revenue shall certify to the county 184.26 auditor the actual or estimated aids enumerated in clause (4) 184.27 that local governments will receive in the following year. The 184.28 commissioner must certify this amount by January 1 of each year. 184.29 [EFFECTIVE DATE.] This section is effective for property 184.30 tax statements for taxes payable in 2006 and thereafter. 184.31 Sec. 51. [278.021] [PETITIONS INVOLVING LOW-INCOME RENTAL 184.32 HOUSING PROPERTY.] 184.33 Notwithstanding section 278.02, in the case of real 184.34 property that meets the definition of qualifying low-income 184.35 housing rental property established in Minnesota Statutes 2000, 184.36 section 273.126, the petition may include any and all such 185.1 parcels of real property in which the petitioner has an estate, 185.2 right, title, interest, or lien, except that all such parcels 185.3 included in the petition must be located in the same county. 185.4 Contiguous qualifying low-income rental housing property 185.5 overlapping county boundaries may be included in the same 185.6 petition. 185.7 Sec. 52. Minnesota Statutes 2004, section 278.03, 185.8 subdivision 1, is amended to read: 185.9 Subdivision 1. [REAL PROPERTY.]In the case of real185.10property,If the proceedings instituted by the filing of the 185.11 petition have not been completed before the 16th day of May next 185.12 following the filing or, in the case of class 1c property or 185.13 class 4c resort property before the 16th day of June for taxes 185.14 payable in 2006 and 2007 only, the petitioner shall pay to the 185.15 county treasurer 50 percent of the tax levied for such year 185.16 against the property involved, unless permission to continue 185.17 prosecution of the petition without such payment is obtained as 185.18 herein provided. If the proceedings instituted by the filing of 185.19 the petition have not been completed by the next October 16, or, 185.20 in the case of class 1b agricultural homestead, class 2a 185.21 agricultural homestead, and class 2b(2) agricultural 185.22 nonhomestead property, November 16, the petitioner shall pay to 185.23 the county treasurer 50 percent of the unpaid balance of the 185.24 taxes levied for the year against the property involved if the 185.25 unpaid balance is $2,000 or less and 80 percent of the unpaid 185.26 balance if the unpaid balance is over $2,000, unless permission 185.27 to continue prosecution of the petition without payment is 185.28 obtained as herein provided. The petitioner, upon ten days' 185.29 notice to the county attorney and to the county auditor, given 185.30 at least ten days prior to the 16th day of May or, in the case 185.31 of class 1c or class 4c resort property, the 16th day of June 185.32 for taxes payable in 2006 and 2007 only, or the 16th day of 185.33 October, or, in the case of class 1b agricultural homestead, 185.34 class 2a agricultural homestead, and class 2b(2) agricultural 185.35 nonhomestead property, the 16th day of November, may apply to 185.36 the court for permission to continue prosecution of the petition 186.1 without payment; and, if it is made to appear 186.2 (1) that the proposed review is to be taken in good faith; 186.3 (2) that there is probable cause to believe that the 186.4 property may be held exempt from the tax levied or that the tax 186.5 may be determined to be less than 50 percent of the amount 186.6 levied; and 186.7 (3) that it would work a hardship upon petitioner to pay 186.8 the taxes due, 186.9 the court may permit the petitioner to continue prosecution 186.10 of the petition without payment, or may fix a lesser amount to 186.11 be paid as a condition of continuing the prosecution of the 186.12 petition. 186.13 Failure to make payment of the amount required when due 186.14 shall operate automatically to dismiss the petition and all 186.15 proceedings thereunder unless the payment is waived by an order 186.16 of the court permitting the petitioner to continue prosecution 186.17 of the petition without payment. The petition shall be 186.18 automatically reinstated upon payment of the entire tax plus 186.19 interest and penalty if the payment is made within one year of 186.20 the dismissal. The county treasurer shall, upon request of the 186.21 petitioner, issue duplicate receipts for the tax payment, one of 186.22 which shall be filed by the petitioner in the proceeding. 186.23 Sec. 53. Minnesota Statutes 2004, section 279.01, 186.24 subdivision 1, is amended to read: 186.25 Subdivision 1. [DUE DATES; PENALTIES.] Except as provided 186.26 insubdivision 3 or 4this section, on May 16 or 21 days after 186.27 the postmark date on the envelope containing the property tax 186.28 statement, whichever is later, a penalty shall accrue and 186.29 thereafter be charged upon all unpaid taxes on real estate on 186.30 the current lists in the hands of the county treasurer. The 186.31 penalty shall be at a rate of two percent on homestead property 186.32 until May 31 and four percent on June 1. The penalty on 186.33 nonhomestead property shall be at a rate of four percent until 186.34 May 31 and eight percent on June 1. This penalty shall not 186.35 accrue until June 1 of each year, or 21 days after the postmark 186.36 date on the envelope containing the property tax statements, 187.1 whichever is later, on commercial use real property used for 187.2 seasonal residential recreational purposes and classified as 187.3 class 1c or 4c, and on other commercial use real property 187.4 classified as class 3a, provided that over 60 percent of the 187.5 gross income earned by the enterprise on the class 3a property 187.6 is earned during the months of May, June, July, and August. Any 187.7 property owner of such class 3a property who pays the first half 187.8 of the tax due on the property after May 15 and before June 1, 187.9 or 21 days after the postmark date on the envelope containing 187.10 the property tax statement, whichever is later, shall attach an 187.11 affidavit to the payment attesting to compliance with the income 187.12 provision of this subdivision. Thereafter, for both homestead 187.13 and nonhomestead property, on the first day of each month 187.14 beginning July 1, up to and including October 1 following, an 187.15 additional penalty of one percent for each month shall accrue 187.16 and be charged on all such unpaid taxes provided that if the due 187.17 date was extended beyond May 15 as the result of any delay in 187.18 mailing property tax statements no additional penalty shall 187.19 accrue if the tax is paid by the extended due date. If the tax 187.20 is not paid by the extended due date, then all penalties that 187.21 would have accrued if the due date had been May 15 shall be 187.22 charged. When the taxes against any tract or lot exceed $50, 187.23 one-half thereof may be paid prior to May 16 or 21 days after 187.24 the postmark date on the envelope containing the property tax 187.25 statement, whichever is later; and, if so paid, no penalty shall 187.26 attach; the remaining one-half shall be paid at any time prior 187.27 to October 16 following, without penalty; but, if not so paid, 187.28 then a penalty of two percent shall accrue thereon for homestead 187.29 property and a penalty of four percent on nonhomestead 187.30 property. Thereafter, for homestead property, on the first day 187.31 of November an additional penalty of four percent shall accrue 187.32 and on the first day of December following, an additional 187.33 penalty of two percent shall accrue and be charged on all such 187.34 unpaid taxes. Thereafter, for nonhomestead property, on the 187.35 first day of November and December following, an additional 187.36 penalty of four percent for each month shall accrue and be 188.1 charged on all such unpaid taxes. If one-half of such taxes 188.2 shall not be paid prior to May 16 or 21 days after the postmark 188.3 date on the envelope containing the property tax statement, 188.4 whichever is later, the same may be paid at any time prior to 188.5 October 16, with accrued penalties to the date of payment added, 188.6 and thereupon no penalty shall attach to the remaining one-half 188.7 until October 16 following. 188.8 This section applies to payment of personal property taxes 188.9 assessed against improvements to leased property, except as 188.10 provided by section 277.01, subdivision 3. 188.11 A county may provide by resolution that in the case of a 188.12 property owner that has multiple tracts or parcels with 188.13 aggregate taxes exceeding $50, payments may be made in 188.14 installments as provided in this subdivision. 188.15 The county treasurer may accept payments of more or less 188.16 than the exact amount of a tax installment due. If the accepted 188.17 payment is less than the amount due, payments must be applied 188.18 first to the penalty accrued for the year the payment is made. 188.19 Acceptance of partial payment of tax does not constitute a 188.20 waiver of the minimum payment required as a condition for filing 188.21 an appeal under section 278.03 or any other law, nor does it 188.22 affect the order of payment of delinquent taxes under section 188.23 280.39. 188.24 Sec. 54. Minnesota Statutes 2004, section 279.01, is 188.25 amended by adding a subdivision to read: 188.26 Subd. 5. [SEASONAL RESIDENTIAL RECREATIONAL PROPERTY USED 188.27 FOR COMMERCIAL PURPOSES.] For taxes payable in 2006 and 2007 188.28 only, in the case of class 1c property and class 4c seasonal 188.29 residential recreational property used for commercial purposes, 188.30 no penalties shall accrue to the first one-half property tax 188.31 payment as provided in this section if paid by June 15. On June 188.32 16, a penalty shall accrue and thereafter be charged upon all 188.33 unpaid taxes. On class 1c property the penalty is at a rate of 188.34 two percent until June 31, and four percent on July 1. On class 188.35 4c seasonal residential recreational property used for 188.36 commercial purposes, the penalty is four percent until June 31 189.1 and eight percent on July 1. Thereafter, for both class 1c and 189.2 class 4c seasonal residential recreational property used for 189.3 commercial purposes, on the first day of September and on the 189.4 first day of October, an additional penalty of one percent shall 189.5 accrue and be charged on unpaid taxes. The remaining one-half 189.6 property taxes must be paid and penalties accrue as provided in 189.7 subdivision 1. 189.8 Sec. 55. [290.0621] [SCHOOL REFERENDUM TAX.] 189.9 Subdivision 1. [IMPOSITION.] In addition to all other 189.10 taxes imposed by this chapter, a tax is imposed on individuals 189.11 who are domiciled on the last day of the taxable year within the 189.12 territory of a school district in which the voters approved an 189.13 income tax increase at a referendum conducted under section 189.14 126C.17, subdivision 9, for that purpose in 2006 or a subsequent 189.15 year. This tax does not apply to referendums on bond issues. 189.16 Individuals domiciled in the district on the last day of the 189.17 taxable year are subject to the tax. 189.18 Subd. 2. [RATE.] The commissioner of revenue shall 189.19 annually determine the rate of the tax imposed under this 189.20 section as a percentage of the state income tax liability of 189.21 individuals subject to the tax by each district. The school 189.22 referendum tax rate is equal to the ratio of (i) the district's 189.23 local effort revenue under section 126C.17, subdivision 6b, to 189.24 (ii) the state income tax liability of all individuals domiciled 189.25 in the district on the last day of the previous taxable year. 189.26 Subd. 3. [REVENUE DISTRIBUTION.] Revenue raised in 189.27 subdivision 1 must be placed in a special account in the general 189.28 fund. The amount necessary to make payments to school districts 189.29 under this section is annually appropriated from the general 189.30 fund to the commissioner of education and must be paid to school 189.31 districts according to section 127A.45. 189.32 Sec. 56. Minnesota Statutes 2004, section 343.11, is 189.33 amended to read: 189.34 343.11 [ACQUISITION OF PROPERTY, APPROPRIATIONS.] 189.35 Every county and district society for the prevention of 189.36 cruelty to animals may acquire, by purchase, gift, grant, or 190.1 devise, and hold, use, or convey, real estate and personal 190.2 property, and lease, mortgage, sell, or use the same in any 190.3 manner conducive to its interest, to the same extent as natural 190.4 persons. The county board of any county, or the council of any 190.5 city, in which such societies exist, may, in its discretion, 190.6 appropriate for the maintenance and support of such societies in 190.7 the transaction of the work for which they are organized, any 190.8 sums of money not otherwise appropriated, not to exceed in any 190.9 one year the sum of $4,800 or the sum of50 cents$1 per capita 190.10 based upon the county's or city's population as of the most 190.11 recent federal census, whichever is greater; provided, that no 190.12 part of the appropriation shall be expended for the payment of 190.13 the salary of any officer of the society. 190.14 [EFFECTIVE DATE.] This section is effective January 1, 2006. 190.15 Sec. 57. [462A.0715] [SECTION 8, TAX CREDIT, AND RURAL 190.16 HOUSING SERVICE UNITS.] 190.17 (a) The agency may deem units as meeting the requirements 190.18 of section 273.126 and this section, if the units meet the 190.19 requirements provided in section 273.1321, subdivision 1. 190.20 (b) The agency may certify these deemed units under 190.21 subdivision 1 based on a simplified application procedure that 190.22 verifies the unit's qualifications under paragraph (a). 190.23 Sec. 58. Minnesota Statutes 2004, section 473F.08, is 190.24 amended by adding a subdivision to read: 190.25 Subd. 3c. [UNCOMPENSATED CARE REIMBURSEMENT.] (a) As used 190.26 in this subdivision, the following terms have the meanings given 190.27 in this paragraph. 190.28 (1) "Uncompensated care" means the sum of (i) the amount 190.29 that would have been charged by a facility for rendering free or 190.30 discounted care to persons who cannot afford to pay and for 190.31 which the facility did not expect payment and (ii) the amount 190.32 that had been charged by a facility for rendering care to 190.33 persons and billed to that person or a third-party payer for 190.34 which the facility expected but did not receive payment. 190.35 Uncompensated care does not include contractual write-offs. 190.36 (2) A "qualifying hospital" means a hospital in the area 191.1 that is: 191.2 (i) owned or operated by a local unit of government, or 191.3 formerly owned by a university or is a private nonprofit 191.4 hospital that leases its building from the county in which it is 191.5 located; and 191.6 (ii) has a licensed bed capacity greater than 400. 191.7 (b) A county that contains a qualifying hospital is 191.8 eligible for reimbursement of that portion of gross charges for 191.9 uncompensated care determined by multiplying the hospital's 191.10 gross charges during the base year by the percentage of 191.11 uncompensated care provided by the hospital during the base year 191.12 minus one-half of one percent of those gross charges, dividing 191.13 the result by two, and adjusting to cost by multiplying that 191.14 result by the hospital's cost-to-charge ratio during the base 191.15 year. By July 15, 2006, and each subsequent year, the county 191.16 shall notify its county auditor, as well as the administrative 191.17 auditor, of the amount of qualifying uncompensated care 191.18 provided, adjusted to cost using the hospital's cost-to-charge 191.19 ratio, during the 12-month period ending on June 30 of the 191.20 current year. 191.21 (c) The amount certified under paragraph (b) shall be 191.22 certified annually by the county auditor to the administrative 191.23 auditor as an addition to the county's areawide levy under 191.24 subdivision 5. 191.25 (d) The administrative auditor shall pay one-half of the 191.26 reimbursement to the county auditor of the county that contains 191.27 the qualifying hospital on or before June 15 and the remaining 191.28 one-half of the reimbursement on or before November 15. The 191.29 county auditor receiving the payment shall disburse the 191.30 reimbursement to the qualifying hospital within 15 days of 191.31 receipt of the reimbursement. 191.32 (e) Prior to the reporting specified in paragraph (b) 191.33 above, all qualifying hospitals that participate in this program 191.34 shall agree upon and implement a common standard for reporting 191.35 uncompensated care, and a common standard for determining 191.36 eligibility for uncompensated care for all participating 192.1 hospitals. 192.2 [EFFECTIVE DATE.] This section is effective for fiscal 192.3 disparities contribution and distribution tax capacities for 192.4 taxes payable in 2007 and 2008 only. 192.5 Sec. 59. Minnesota Statutes 2004, section 473F.08, is 192.6 amended by adding a subdivision to read: 192.7 Subd. 3d. [HENNEPIN COUNTY PUBLIC DEFENDER COST 192.8 REIMBURSEMENT.] (a) Hennepin County is eligible for 192.9 reimbursement of costs incurred by the county under section 192.10 611.26, subdivision 3a, paragraph (c). By July 15, 2006, and 192.11 each subsequent year, the county shall notify the county auditor 192.12 and the administrative auditor, of the amount of that cost 192.13 incurred by the county during the 12-month period ending on June 192.14 30 of the current year. 192.15 (b) The reimbursement under this subdivision for costs 192.16 incurred during the 12-month period ending June 30, 2006, is 192.17 equal to 25 percent of those costs. The reimbursement under 192.18 this subdivision for costs incurred during the 12-month period 192.19 ending June 30, 2007, is equal to 50 percent of those costs. 192.20 (c) The amount certified under paragraph (b) shall be 192.21 certified annually by the Hennepin County auditor to the 192.22 administrative auditor as an addition to the county's areawide 192.23 levy under subdivision 5. 192.24 (d) The administrative auditor shall pay one-half of the 192.25 reimbursement to the Hennepin County auditor on or before June 192.26 15 and the remaining one-half of the reimbursement on or before 192.27 November 15. 192.28 [EFFECTIVE DATE.] This section is effective for fiscal 192.29 disparities contribution and distribution tax capacities for 192.30 taxes payable in 2007 and 2008 only. 192.31 Sec. 60. Minnesota Statutes 2004, section 477A.011, 192.32 subdivision 36, is amended to read: 192.33 Subd. 36. [CITY AID BASE.] (a) Except as otherwise 192.34 provided in this subdivision, "city aid base" is zero. 192.35 (b) The city aid base for any city with a population less 192.36 than 500 is increased by $40,000 for aids payable in calendar 193.1 year 1995 and thereafter, and the maximum amount of total aid it 193.2 may receive under section 477A.013, subdivision 9, paragraph 193.3 (c), is also increased by $40,000 for aids payable in calendar 193.4 year 1995 only, provided that: 193.5 (i) the average total tax capacity rate for taxes payable 193.6 in 1995 exceeds 200 percent; 193.7 (ii) the city portion of the tax capacity rate exceeds 100 193.8 percent; and 193.9 (iii) its city aid base is less than $60 per capita. 193.10 (c) The city aid base for a city is increased by $20,000 in 193.11 1998 and thereafter and the maximum amount of total aid it may 193.12 receive under section 477A.013, subdivision 9, paragraph (c), is 193.13 also increased by $20,000 in calendar year 1998 only, provided 193.14 that: 193.15 (i) the city has a population in 1994 of 2,500 or more; 193.16 (ii) the city is located in a county, outside of the 193.17 metropolitan area, which contains a city of the first class; 193.18 (iii) the city's net tax capacity used in calculating its 193.19 1996 aid under section 477A.013 is less than $400 per capita; 193.20 and 193.21 (iv) at least four percent of the total net tax capacity, 193.22 for taxes payable in 1996, of property located in the city is 193.23 classified as railroad property. 193.24 (d) The city aid base for a city is increased by $200,000 193.25 in 1999 and thereafter and the maximum amount of total aid it 193.26 may receive under section 477A.013, subdivision 9, paragraph 193.27 (c), is also increased by $200,000 in calendar year 1999 only, 193.28 provided that: 193.29 (i) the city was incorporated as a statutory city after 193.30 December 1, 1993; 193.31 (ii) its city aid base does not exceed $5,600; and 193.32 (iii) the city had a population in 1996 of 5,000 or more. 193.33 (e) The city aid base for a city is increased by $450,000 193.34 in 1999 to 2008 and the maximum amount of total aid it may 193.35 receive under section 477A.013, subdivision 9, paragraph (c), is 193.36 also increased by $450,000 in calendar year 1999 only, provided 194.1 that: 194.2 (i) the city had a population in 1996 of at least 50,000; 194.3 (ii) its population had increased by at least 40 percent in 194.4 the ten-year period ending in 1996; and 194.5 (iii) its city's net tax capacity for aids payable in 1998 194.6 is less than $700 per capita. 194.7 (f) Beginning in 2004, the city aid base for a city is 194.8 equal to the sum of its city aid base in 2003 and the amount of 194.9 additional aid it was certified to receive under section 477A.06 194.10 in 2003. For 2004 only, the maximum amount of total aid a city 194.11 may receive under section 477A.013, subdivision 9, paragraph 194.12 (c), is also increased by the amount it was certified to receive 194.13 under section 477A.06 in 2003. 194.14 (g) The city aid base for a city is increased by $150,000 194.15 for aids payable in 2000 and thereafter, and the maximum amount 194.16 of total aid it may receive under section 477A.013, subdivision 194.17 9, paragraph (c), is also increased by $150,000 in calendar year 194.18 2000 only, provided that: 194.19 (1) the city has a population that is greater than 1,000 194.20 and less than 2,500; 194.21 (2) its commercial and industrial percentage for aids 194.22 payable in 1999 is greater than 45 percent; and 194.23 (3) the total market value of all commercial and industrial 194.24 property in the city for assessment year 1999 is at least 15 194.25 percent less than the total market value of all commercial and 194.26 industrial property in the city for assessment year 1998. 194.27 (h) The city aid base for a city is increased by $200,000 194.28 in 2000 and thereafter, and the maximum amount of total aid it 194.29 may receive under section 477A.013, subdivision 9, paragraph 194.30 (c), is also increased by $200,000 in calendar year 2000 only, 194.31 provided that: 194.32 (1) the city had a population in 1997 of 2,500 or more; 194.33 (2) the net tax capacity of the city used in calculating 194.34 its 1999 aid under section 477A.013 is less than $650 per 194.35 capita; 194.36 (3) the pre-1940 housing percentage of the city used in 195.1 calculating 1999 aid under section 477A.013 is greater than 12 195.2 percent; 195.3 (4) the 1999 local government aid of the city under section 195.4 477A.013 is less than 20 percent of the amount that the formula 195.5 aid of the city would have been if the need increase percentage 195.6 was 100 percent; and 195.7 (5) the city aid base of the city used in calculating aid 195.8 under section 477A.013 is less than $7 per capita. 195.9 (i) The city aid base for a city is increased by $102,000 195.10 in 2000 and thereafter, and the maximum amount of total aid it 195.11 may receive under section 477A.013, subdivision 9, paragraph 195.12 (c), is also increased by $102,000 in calendar year 2000 only, 195.13 provided that: 195.14 (1) the city has a population in 1997 of 2,000 or more; 195.15 (2) the net tax capacity of the city used in calculating 195.16 its 1999 aid under section 477A.013 is less than $455 per 195.17 capita; 195.18 (3) the net levy of the city used in calculating 1999 aid 195.19 under section 477A.013 is greater than $195 per capita; and 195.20 (4) the 1999 local government aid of the city under section 195.21 477A.013 is less than 38 percent of the amount that the formula 195.22 aid of the city would have been if the need increase percentage 195.23 was 100 percent. 195.24 (j) The city aid base for a city is increased by $32,000 in 195.25 2001 and thereafter, and the maximum amount of total aid it may 195.26 receive under section 477A.013, subdivision 9, paragraph (c), is 195.27 also increased by $32,000 in calendar year 2001 only, provided 195.28 that: 195.29 (1) the city has a population in 1998 that is greater than 195.30 200 but less than 500; 195.31 (2) the city's revenue need used in calculating aids 195.32 payable in 2000 was greater than $200 per capita; 195.33 (3) the city net tax capacity for the city used in 195.34 calculating aids available in 2000 was equal to or less than 195.35 $200 per capita; 195.36 (4) the city aid base of the city used in calculating aid 196.1 under section 477A.013 is less than $65 per capita; and 196.2 (5) the city's formula aid for aids payable in 2000 was 196.3 greater than zero. 196.4 (k) The city aid base for a city is increased by $7,200 in 196.5 2001 and thereafter, and the maximum amount of total aid it may 196.6 receive under section 477A.013, subdivision 9, paragraph (c), is 196.7 also increased by $7,200 in calendar year 2001 only, provided 196.8 that: 196.9 (1) the city had a population in 1998 that is greater than 196.10 200 but less than 500; 196.11 (2) the city's commercial industrial percentage used in 196.12 calculating aids payable in 2000 was less than ten percent; 196.13 (3) more than 25 percent of the city's population was 60 196.14 years old or older according to the 1990 census; 196.15 (4) the city aid base of the city used in calculating aid 196.16 under section 477A.013 is less than $15 per capita; and 196.17 (5) the city's formula aid for aids payable in 2000 was 196.18 greater than zero. 196.19 (l) The city aid base for a city is increased by $45,000 in 196.20 2001 and thereafter and by an additional $50,000 in calendar 196.21 years 2002 to 2011, and the maximum amount of total aid it may 196.22 receive under section 477A.013, subdivision 9, paragraph (c), is 196.23 also increased by $45,000 in calendar year 2001 only, and by 196.24 $50,000 in calendar year 2002 only, provided that: 196.25 (1) the net tax capacity of the city used in calculating 196.26 its 2000 aid under section 477A.013 is less than $810 per 196.27 capita; 196.28 (2) the population of the city declined more than two 196.29 percent between 1988 and 1998; 196.30 (3) the net levy of the city used in calculating 2000 aid 196.31 under section 477A.013 is greater than $240 per capita; and 196.32 (4) the city received less than $36 per capita in aid under 196.33 section 477A.013, subdivision 9, for aids payable in 2000. 196.34 The city aid base for a city described in this paragraph is 196.35 also increased by $250,000 in calendar years 2006 to 2015, and 196.36 the maximum amount of total aid it may receive under section 197.1 477A.013, subdivision 9, paragraph (c), is also increased by 197.2 $250,000 in calendar year 2006 only. 197.3 (m) The city aid base for a city with a population of 197.4 10,000 or more which is located outside of the seven-county 197.5 metropolitan area is increased in 2002 and thereafter, and the 197.6 maximum amount of total aid it may receive under section 197.7 477A.013, subdivision 9, paragraph (b) or (c), is also increased 197.8 in calendar year 2002 only, by an amount equal to the lesser of: 197.9 (1)(i) the total population of the city, as determined by 197.10 the United States Bureau of the Census, in the 2000 census, (ii) 197.11 minus 5,000, (iii) times 60; or 197.12 (2) $2,500,000. 197.13 (n) The city aid base is increased by $50,000 in 2002 and 197.14 thereafter, and the maximum amount of total aid it may receive 197.15 under section 477A.013, subdivision 9, paragraph (c), is also 197.16 increased by $50,000 in calendar year 2002 only, provided that: 197.17 (1) the city is located in the seven-county metropolitan 197.18 area; 197.19 (2) its population in 2000 is between 10,000 and 20,000; 197.20 and 197.21 (3) its commercial industrial percentage, as calculated for 197.22 city aid payable in 2001, was greater than 25 percent. 197.23 (o) The city aid base for a city is increased by $150,000 197.24 in calendar years 2002 to 2011 and the maximum amount of total 197.25 aid it may receive under section 477A.013, subdivision 9, 197.26 paragraph (c), is also increased by $150,000 in calendar year 197.27 2002 only, provided that: 197.28 (1) the city had a population of at least 3,000 but no more 197.29 than 4,000 in 1999; 197.30 (2) its home county is located within the seven-county 197.31 metropolitan area; 197.32 (3) its pre-1940 housing percentage is less than 15 197.33 percent; and 197.34 (4) its city net tax capacity per capita for taxes payable 197.35 in 2000 is less than $900 per capita. 197.36 (p) The city aid base for a city is increased by $200,000 198.1 beginning in calendar year 2003 and the maximum amount of total 198.2 aid it may receive under section 477A.013, subdivision 9, 198.3 paragraph (c), is also increased by $200,000 in calendar year 198.4 2003 only, provided that the city qualified for an increase in 198.5 homestead and agricultural credit aid under Laws 1995, chapter 198.6 264, article 8, section 18. 198.7 (q) The city aid base for a city is increased by $200,000 198.8 in 2004 only and the maximum amount of total aid it may receive 198.9 under section 477A.013, subdivision 9, is also increased by 198.10 $200,000 in calendar year 2004 only, if the city is the site of 198.11 a nuclear dry cask storage facility. 198.12 (r) The city aid base for a city is increased by $10,000 in 198.13 2004 and thereafter and the maximum total aid it may receive 198.14 under section 477A.013, subdivision 9, is also increased by 198.15 $10,000 in calendar year 2004 only, if the city was included in 198.16 a federal major disaster designation issued on April 1, 1998, 198.17 and its pre-1940 housing stock was decreased by more than 40 198.18 percent between 1990 and 2000. 198.19 Sec. 61. Minnesota Statutes 2004, section 477A.11, 198.20 subdivision 4, is amended to read: 198.21 Subd. 4. [OTHER NATURAL RESOURCES LAND.] "Other natural 198.22 resources land" means:198.23(1)any other land presently owned in fee title by the 198.24 state and administered by the commissioner, or any tax-forfeited 198.25 land, other than platted lots within a city or those lands 198.26 described under subdivision 3, clause (2), which is owned by the 198.27 state and administered by the commissioner or by the county in 198.28 which it is located; and198.29(2) land leased by the state from the United States of198.30America through the United States Secretary of Agriculture198.31pursuant to Title III of the Bankhead Jones Farm Tenant Act,198.32which land is commonly referred to as land utilization project198.33land that is administered by the commissioner. 198.34 [EFFECTIVE DATE.] This section is effective for aids 198.35 payable in 2006 and thereafter. 198.36 Sec. 62. Minnesota Statutes 2004, section 477A.11, is 199.1 amended by adding a subdivision to read: 199.2 Subd. 5. [LAND UTILIZATION PROJECT LAND.] "Land 199.3 utilization project land" means land that is leased by the state 199.4 from the United States through the United States Secretary of 199.5 Agriculture according to Title III of the Bankhead Jones Farm 199.6 Tenant Act and that is administered by the commissioner. 199.7 Sec. 63. Minnesota Statutes 2004, section 477A.12, 199.8 subdivision 1, is amended to read: 199.9 Subdivision 1. [TYPES OF LAND; PAYMENTS.] (a) As an offset 199.10 for expenses incurred by counties and towns in support of 199.11 natural resources lands, the following amounts are annually 199.12 appropriated to the commissioner of natural resources from the 199.13 general fund for transfer to the commissioner of revenue. The 199.14 commissioner of revenue shall pay the transferred funds to 199.15 counties as required by sections 477A.11 to 477A.145. The 199.16 amounts are: 199.17 (1) for acquired natural resources land, $3, as adjusted 199.18 for inflation under section 477A.145, multiplied by the total 199.19 number of acres of acquired natural resources land or, at the 199.20 county's option three-fourths of one percent of the appraised 199.21 value of all acquired natural resources land in the county, 199.22 whichever is greater; 199.23 (2) $3, as adjusted for inflation under section 477A.145, 199.24 multiplied by the total number of acres of land utilization 199.25 project land; 199.26 (3) 75 cents, as adjusted for inflation under section 199.27 477A.145, multiplied by the number of acres of 199.28 county-administered other natural resources land; and 199.29(3)(4) 37.5 cents, as adjusted for inflation under section 199.30 477A.145, multiplied by the number of acres of 199.31 commissioner-administered other natural resources land located 199.32 in each county as of July 1 of each year prior to the payment 199.33 year. 199.34 (b) The amount determined under paragraph (a), clause (1), 199.35 is payable for land that is acquired from a private owner and 199.36 owned by the Department of Transportation for the purpose of 200.1 replacing wetland losses caused by transportation projects, but 200.2 only if the county contains more than 500 acres of such land at 200.3 the time the certification is made under subdivision 2. 200.4 [EFFECTIVE DATE.] This section is effective for aids 200.5 payable in 2006 and thereafter. 200.6 Sec. 64. Minnesota Statutes 2004, section 477A.12, 200.7 subdivision 2, is amended to read: 200.8 Subd. 2. [PROCEDURE.] Lands for which payments in lieu are 200.9 made pursuant to section 97A.061, subdivision 3, and Laws 1973, 200.10 chapter 567, shall not be eligible for payments under this 200.11 section. Each county auditor shall certify to the Department of 200.12 Natural Resources during July of each year prior to the payment 200.13 year the number of acres of county-administered other natural 200.14 resources land within the county. The Department of Natural 200.15 resources may, in addition to the certification of acreage, 200.16 require descriptive lists of land so certified. The 200.17 commissioner of natural resources shall determine and certify to 200.18 the commissioner of revenue by March 1 of the payment year: 200.19 (1) the number of acres and most recent appraised value of 200.20 acquired natural resources land within each county; 200.21 (2) the number of acres of commissioner-administered 200.22 natural resources land within each county;and200.23 (3) the number of acres of county-administered other 200.24 natural resources land within each county, based on the reports 200.25 filed by each county auditor with the commissioner of natural 200.26 resources; and 200.27 (4) the number of acres of land utilization project land 200.28 within each county and the net proceeds from timber sales on 200.29 land utilization project lands in each county. 200.30 The commissioner of transportation shall determine and 200.31 certify to the commissioner of revenue by March 1 of the payment 200.32 year the number of acres of land and the appraised value of the 200.33 land described in subdivision 1, paragraph (b), but only if it 200.34 exceeds 500 acres. 200.35 The commissioner of revenue shall determine the 200.36 distributions provided for in this section using the number of 201.1 acres and appraised values certified by the commissioner of 201.2 natural resources and the commissioner of transportation by 201.3 March 1 of the payment year. 201.4 [EFFECTIVE DATE.] This section is effective for aids 201.5 payable in 2006 and thereafter. 201.6 Sec. 65. Minnesota Statutes 2004, section 477A.14, 201.7 subdivision 1, is amended to read: 201.8 Subdivision 1. [GENERAL DISTRIBUTION.] Except as provided 201.9 in subdivision 2 or in section 97A.061, subdivision 5, 40 201.10 percent of the total payment to the county shall be deposited in 201.11 the county general revenue fund to be used to provide property 201.12 tax levy reduction. The remainder shall be distributed by the 201.13 county in the following priority: 201.14 (a) 37.5 cents, as adjusted for inflation under section 201.15 477A.145, for each acre of county-administered other natural 201.16 resources land shall be deposited in a resource development fund 201.17 to be created within the county treasury for use in resource 201.18 development, forest management, game and fish habitat 201.19 improvement, and recreational development and maintenance of 201.20 county-administered other natural resources land. Any county 201.21 receiving less than $5,000 annually for the resource development 201.22 fund may elect to deposit that amount in the county general 201.23 revenue fund; 201.24 (b) From the funds remaining, within 30 days of receipt of 201.25 the payment to the county, the county treasurer shall pay each 201.26 organized township 30 cents, as adjusted for inflation under 201.27 section 477A.145, for each acre of acquired natural resources 201.28 land, each acre of land utilization project land, and each acre 201.29 of land described in section 477A.12, subdivision 1, paragraph 201.30 (b), and 7.5 cents, as adjusted for inflation under section 201.31 477A.145, for each acre of other natural resources land located 201.32 within its boundaries. Payments for natural resources lands not 201.33 located in an organized township shall be deposited in the 201.34 county general revenue fund. Payments to counties and townships 201.35 pursuant to this paragraph shall be used to provide property tax 201.36 levy reduction, except that of the payments for natural 202.1 resources lands not located in an organized township, the county 202.2 may allocate the amount determined to be necessary for 202.3 maintenance of roads in unorganized townships. Provided that, 202.4 if the total payment to the county pursuant to section 477A.12 202.5 is not sufficient to fully fund the distribution provided for in 202.6 this clause, the amount available shall be distributed to each 202.7 township and the county general revenue fund on a pro rata 202.8 basis; and 202.9 (c) Any remaining funds shall be deposited in the county 202.10 general revenue fund. Provided that, if the distribution to the 202.11 county general revenue fund exceeds $35,000, the excess shall be 202.12 used to provide property tax levy reduction. 202.13 [EFFECTIVE DATE.] This section is effective for aids 202.14 payable in 2006 and thereafter. 202.15 Sec. 66. Laws 1998, chapter 389, article 3, section 41, is 202.16 amended to read: 202.17 Sec. 41. [SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.] 202.18 Notwithstanding Minnesota Statutes, chapter 429, a city may 202.19 defer the payment of any special assessment levied against a 202.20 property qualifying under section 38 as determined by the city. 202.21 Any special assessment, the payment of which has been deferred 202.22 by the city, must be paid in full or a payment agreement may be 202.23 approved by the city if the ownership of property is transferred 202.24 to anyone or any entity. Payment or a payment agreement must be 202.25 made within 60 days of the transfer of ownership. 202.26 [EFFECTIVE DATE.] This section is effective the day 202.27 following final enactment. 202.28 Sec. 67. Laws 1998, chapter 389, article 3, section 42, 202.29 subdivision 2, as amended by Laws 2002, chapter 377, article 4, 202.30 section 24, is amended to read: 202.31 Subd. 2. [RECAPTURE.] (a) Property or any portion thereof 202.32 qualifying under section 38 is subject to additional taxes if: 202.33 (1) ownership of the property is transferred to anyone 202.34 other than the spouse or child of the current owner; 202.35 (2) the current owner or the spouse or child of the current 202.36 owner has not conveyed or entered into a contract before July 1, 203.1 2007, to convey for ownership or public easement rights, (i) a 203.2 portion of the property toaone or more nonprofitfoundation203.3 foundations orcorporation operatingcorporations; and (ii) a 203.4 portion of the property to one or more local governments; and 203.5 those entities shall separately or jointly operate the property 203.6 as an art park providing the services included in section 38, 203.7 clauses (2) to (5), and may also use some of the property for 203.8 other public purposes as determined by the local governments; or 203.9 (3) the nonprofit foundation or corporation to which a 203.10 portion of the property was transferred ceases to provide the 203.11 services included in section 38, clauses (2) to (5), earlier 203.12 than ten years following the effective date of theconveyance203.13 conveyances or of the execution of thecontractcontracts to 203.14 convey. 203.15 (b) The additional taxes are imposed at the earlier of (1) 203.16 the year following transfer of ownership to anyone other than 203.17 the spouse or child of the current owner or a nonprofit 203.18 foundation or corporation or local government operating the 203.19 property as an art park and used for other public purposes, or 203.20 (2) for taxes payable in 2008, or (3) in the event the nonprofit 203.21 foundation or corporation to which a portion of the property was 203.22 conveyed ceases to provide the required services within ten 203.23 years after the conveyance, for taxes payable in the year 203.24 following the year when it ceased to do so. 203.25 The county board, with the approval of the city council, 203.26 shall determine the amount of the additional taxes due on the 203.27 portion of property which is no longer utilized as an art park; 203.28 provided, however, that the additional taxesare equal tomust 203.29 not be greater than the difference between the taxes determined 203.30 on that portion of the property utilized as an art park under 203.31 sections 39 and 40 and the amount determined under subdivision 1 203.32 for all years that the property qualified under section 38.The203.33additional taxes must be extended against the property on the203.34tax list for the current year; provided, however, thatNo 203.35 interest or penalties may be levied on the additionaltaxes if203.36timely paidamount provided that it is paid within 30 days of 204.1 the county's notice. 204.2 [EFFECTIVE DATE.] This section is effective the day 204.3 following final enactment. 204.4 Sec. 68. Laws 2001, First Special Session chapter 5, 204.5 article 3, section 8, the effective date, is amended to read: 204.6 [EFFECTIVE DATE.] This section is effective for taxes 204.7 levied in 2002, payable in 2003, through taxes levied in2007204.8 2009, payable in20082010. 204.9 Sec. 69. Laws 2003, chapter 127, article 12, section 38, 204.10 is amended to read: 204.11 Sec. 38. [MEMBERS MUSTAUTHORITY TO LEVY TAXESFOR204.12AUTHORITY.] 204.13(a) A member shall, at the request of the authority, levy a204.14tax in any year for the benefit of the authority.The authority 204.15 is a special taxing district as defined in Minnesota Statutes, 204.16 section 275.066, clause (13), with the power to adopt and 204.17 certify a property tax levy to the county auditor. The 204.18 authority may levy a tax in any year for the benefit of the 204.19 authority. The taxis,for each member,is a pro rata portion 204.20 of the total amount of tax requested by the authority based on 204.21 the taxable market value withinathe member's jurisdiction, but 204.22 in no event may the tax in any year exceed 0.01813 percent of 204.23 taxable market value. For purposes of this section, "taxable 204.24 market value" has the meaning as given in Minnesota Statutes, 204.25 section 273.032. 204.26(b) The treasurer of each member city or town shall, within204.2715 days after receiving the property tax settlements from the204.28county treasurer, pay to the treasurer of the authority the204.29amount collected for this purpose. The money must be used by204.30the authority for the purposes provided by sections 35 to 41.204.31 [EFFECTIVE DATE.] This section is effective for taxes 204.32 levied in 2005, payable in 2006, and thereafter. 204.33 Sec. 70. Laws 2003, First Special Session chapter 21, 204.34 article 4, section 12, subdivision 11, is amended to read: 204.35 Subd. 11. [EFFECTIVE DATE; LOCAL APPROVAL.] This section 204.36 is effective the day after the governing body of St. Louis 205.1 county and its chief clerical officer timely complete their 205.2 compliance with Minnesota Statutes, section 645.021, 205.3 subdivisions 2 and 3, provided that the certificate of approval 205.4 is filed with the secretary of state before January 1, 2006. 205.5If effective before September 1, 2003, the first levy is205.6the payable 2004 levy; If effective between September 1, 2003,205.7and September 1, 2004, the first levy is the payable 2005 levy;205.8 If effectiveafter August 31, 2004,before September 1, 2005, 205.9 the first levy is the payable 2006 levy; and if effective after 205.10 August 31, 2005, the first levy is the payable 2007 levy. 205.11 Sec. 71. [PROPERTY USED FOR EDUCATIONAL INSTRUCTION.] 205.12 Notwithstanding Minnesota Statutes, section 272.02, 205.13 subdivision 38, paragraph (b), the following property is exempt 205.14 from taxation for assessment year 2004, for taxes payable in 205.15 2005, if it meets all the following criteria: 205.16 (1) is used to provide direct educational instruction for 205.17 grades 7 through 10; 205.18 (2) is located in a city of the first class that has a 205.19 population greater than 250,000 and less than 350,000; 205.20 (3) was purchased after July 1, 2004, by a nonprofit that 205.21 is exempt from federal income tax under section 501(c)(3) of the 205.22 Internal Revenue Code; and 205.23 (4) is leased and operated by two nonprofit corporations 205.24 organized under Minnesota Statutes, chapter 317A. 205.25 [EFFECTIVE DATE.] This section is effective the day 205.26 following final enactment. 205.27 Sec. 72. [EDUCATION RESERVE ACCOUNT; APPROPRIATION.] 205.28 (a) There is created in the state treasury an education 205.29 reserve account as a special revenue fund for deposit of 205.30 appropriations and other receipts as provided by law. 205.31 (b) $24,961,000 is appropriated from the general fund to 205.32 the education reserve account in fiscal year 2006. Beginning 205.33 with taxes payable in 2008, the commissioner of finance shall 205.34 deposit in the education reserve account the increased amount of 205.35 the state general levy for that year over the state general levy 205.36 base amount for taxes payable in 2002, under Minnesota Statutes, 206.1 section 275.025. 206.2 (c) Each year, one-half of the annual amount will be 206.3 deposited in the education reserve account in the state fiscal 206.4 year corresponding to the first six months of the calendar year, 206.5 and the other half will be deposited in the state fiscal year 206.6 corresponding to the last six months of the calendar year. The 206.7 amounts in the education reserve account do not lapse or cancel 206.8 each year, but remain until appropriated by law for education 206.9 aid or higher education funding. 206.10 Sec. 73. [STUDY OF POLLUTION CONTROL EXEMPTION.] 206.11 The commissioner of revenue must study the application of 206.12 the property tax exemption provided under Minnesota Statutes, 206.13 section 272.02, subdivision 10, to personal property used for 206.14 pollution control as part of an electric generation system. The 206.15 commissioner must present a recommendation to the legislature by 206.16 January 15, 2006, that would limit the exemption to property 206.17 that is directly and exclusively used for pollution control 206.18 purposes. 206.19 Sec. 74. [SAUK RIVER WATERSHED DISTRICT.] 206.20 Notwithstanding Minnesota Statutes, section 103D.905, 206.21 subdivision 3, the Sauk River Watershed District may annually 206.22 levy up to 0.01 percent of taxable market value for its 206.23 administrative fund. 206.24 [EFFECTIVE DATE.] This section is effective, without local 206.25 approval, for taxes levied in 2005, payable in 2006, and 206.26 thereafter. 206.27 Sec. 75. [COMMERCIAL-INDUSTRIAL LAND VALUE TAXATION; LOCAL 206.28 OPTION.] 206.29 The governing body of any municipality that has a 206.30 population in excess of 70,000, or any municipality located in 206.31 the taconite tax relief area defined in Minnesota Statutes, 206.32 section 273.134, may by resolution adopt a system of valuing 206.33 commercial-industrial property in its jurisdiction that is based 206.34 on the value of the land, not including improvements. The 206.35 governing body may make the election under this section if it 206.36 finds that implementation of the land value system will enhance 207.1 economic development in the city. An election under this 207.2 section must be made by December 31, 2005. If any municipality 207.3 makes the election, it must notify the commissioner of revenue 207.4 of the election and the legislature must enact during the 2006 207.5 legislative session the legislation necessary to implement the 207.6 system for taxes levied in 2006, payable in 2007, and thereafter. 207.7 Sec. 76. [STUDY REQUIRED.] 207.8 By February 1, 2006, the fiscal staff of the house of 207.9 representatives and senate shall conduct a study of the 207.10 metropolitan revenue distribution program contained in Minnesota 207.11 Statutes, chapter 473F, commonly known as the fiscal disparities 207.12 program, and shall make a report by March 1, 2006, to the chairs 207.13 of the house and senate tax committees consisting of the 207.14 findings of the study and any recommendations resulting from the 207.15 study. 207.16 The study shall primarily address the question of whether 207.17 the program is achieving the purposes for which it was created. 207.18 Additionally, the study shall address the following questions: 207.19 (1) How has the program affected property tax disparities 207.20 across the Twin Cities metropolitan area? 207.21 (2) Is the formula for contributing tax base to the 207.22 areawide pool reasonable? Should certain commercial-industrial 207.23 tax base continue to be exempt from contribution to the areawide 207.24 pool, such as tax base in existence prior to 1979, tax base in 207.25 tax increment financing districts established before 1979, and 207.26 tax base located at the Minneapolis-St. Paul International 207.27 Airport? Should contribution amounts be adjusted for 207.28 differences in sales ratios between communities? 207.29 (3) Is the formula for distributing tax base from the 207.30 areawide pool reasonable? Should the formula reflect measures 207.31 of need in addition to population? Should the distribution 207.32 formula be based on tax capacity rather than market value? 207.33 (4) Does the program help promote orderly growth and 207.34 encourage environmentally sound land use? 207.35 (5) Does the program reduce competition for 207.36 commercial-industrial tax base between communities? Is reduced 208.1 competition for commercial-industrial tax base desirable? 208.2 (6) Do local governments derive sufficient tax revenues 208.3 from commercial-industrial property to cover the costs of 208.4 providing services to the property, considering the tax base 208.5 that must be contributed to the areawide pool? 208.6 (7) Could improvements be made in the administration of the 208.7 program? 208.8 [EFFECTIVE DATE.] This section is effective July 1, 2005. 208.9 Sec. 77. [FEE STUDIES.] 208.10 Subdivision 1. [STATE AGENCY FEES.] The commissioner of 208.11 each state agency that imposes any fee on individuals or 208.12 businesses in this state must report to the commissioner of 208.13 revenue by January 15, 2006, on the type and amount of fees 208.14 imposed, amount and type of fee increases since January 1, 2003, 208.15 the revenues derived from each fee for each of the most recent 208.16 four fiscal years, and the use of the revenues from the fees. 208.17 The commissioner of revenue shall compile this information and 208.18 provide a comprehensive report on all state agency fees to the 208.19 finance and tax committees of the senate and the appropriations 208.20 and tax committees of the house of representatives by February 208.21 15, 2006. 208.22 Subd. 2. [SCHOOL FEES.] By January 15, 2006, the 208.23 Department of Education shall provide the house and senate 208.24 education finance divisions and tax committees with a report 208.25 that examines the total annual fees collected under Minnesota 208.26 Public School Fee Law, Minnesota Statutes, sections 123B.34 to 208.27 123B.39, in fiscal years 2002 to 2005. The report must detail 208.28 all different types of fees charged to Minnesota students under 208.29 the law. The report must report total fees statewide as well as 208.30 by school district and charter school. 208.31 Subd. 3. [CITY FEES.] Each home rule charter or statutory 208.32 city must report to the commissioner of revenue by January 15, 208.33 2006, on the type and amount of fees it imposes, amount and type 208.34 of fee increases since January 1, 2003, the revenues derived 208.35 from each fee for each of the most recent four calendar years, 208.36 and the use of the revenues from the fees. The commissioner of 209.1 revenue shall compile this information and provide a 209.2 comprehensive report on all city fees to the finance and tax 209.3 committees of the senate and the appropriations and tax 209.4 committees of the house of representatives by February 15, 2006. 209.5 ARTICLE 5 209.6 LOCAL DEVELOPMENT 209.7 Section 1. Minnesota Statutes 2004, section 116J.993, 209.8 subdivision 3, is amended to read: 209.9 Subd. 3. [BUSINESS SUBSIDY.] "Business subsidy" or 209.10 "subsidy" means a state or local government agency grant, 209.11 contribution of personal property, real property, 209.12 infrastructure, the principal amount of a loan at rates below 209.13 those commercially available to the recipient, any reduction or 209.14 deferral of any tax or any fee, any guarantee of any payment 209.15 under any loan, lease, or other obligation, or any preferential 209.16 use of government facilities given to a business. 209.17 The following forms of financial assistance are not a 209.18 business subsidy: 209.19 (1) a business subsidy of less than $25,000; 209.20 (2) assistance that is generally available to all 209.21 businesses or to a general class of similar businesses, such as 209.22 a line of business, size, location, or similar general criteria; 209.23 (3) public improvements to buildings or lands owned by the 209.24 state or local government that serve a public purpose and do not 209.25 principally benefit a single business or defined group of 209.26 businesses at the time the improvements are made; 209.27 (4) redevelopment property polluted by contaminants as 209.28 defined in section 116J.552, subdivision 3; 209.29 (5) assistance provided for the sole purpose of renovating 209.30 old or decaying building stock or bringing it up to code and 209.31 assistance provided for designated historic preservation 209.32 districts, provided that the assistance is equal to or less than 209.33 50 percent of the total cost; 209.34 (6) assistance to provide job readiness and training 209.35 services if the sole purpose of the assistance is to provide 209.36 those services, except when such assistance is paid for by 210.1 expenditures of tax increments under section 469.176, 210.2 subdivision 4m; 210.3 (7) assistance for housing; 210.4 (8) assistance for pollution control or abatement, 210.5 including assistance for a tax increment financing hazardous 210.6 substance subdistrict as defined under section 469.174, 210.7 subdivision 23; 210.8 (9) assistance for energy conservation; 210.9 (10) tax reductions resulting from conformity with federal 210.10 tax law; 210.11 (11) workers' compensation and unemployment insurance; 210.12 (12) benefits derived from regulation; 210.13 (13) indirect benefits derived from assistance to 210.14 educational institutions; 210.15 (14) funds from bonds allocated under chapter 474A, bonds 210.16 issued to refund outstanding bonds, and bonds issued for the 210.17 benefit of an organization described in section 501(c)(3) of the 210.18 Internal Revenue Code of 1986, as amended through December 31, 210.19 1999; 210.20 (15) assistance for a collaboration between a Minnesota 210.21 higher education institution and a business; 210.22 (16) assistance for a tax increment financing soils 210.23 condition district as defined under section 469.174, subdivision 210.24 19; 210.25 (17) redevelopment when the recipient's investment in the 210.26 purchase of the site and in site preparation is 70 percent or 210.27 more of the assessor's current year's estimated market value; 210.28 (18) general changes in tax increment financing law and 210.29 other general tax law changes of a principally technical nature; 210.30 (19) federal assistance until the assistance has been 210.31 repaid to, and reinvested by, the state or local government 210.32 agency; 210.33 (20) funds from dock and wharf bonds issued by a seaway 210.34 port authority; 210.35 (21) business loans and loan guarantees of $75,000 or less; 210.36 and 211.1 (22) federal loan funds provided through the United States 211.2 Department of Commerce, Economic Development Administration. 211.3 Sec. 2. Minnesota Statutes 2004, section 116J.993, is 211.4 amended by adding a subdivision to read: 211.5 Subd. 8. [RESIDENCE.] "Residence" means the place where an 211.6 individual has established a permanent home from which the 211.7 individual has no present intention of moving. 211.8 Sec. 3. Minnesota Statutes 2004, section 116J.994, 211.9 subdivision 4, is amended to read: 211.10 Subd. 4. [WAGE AND JOB GOALS.] The subsidy agreement, in 211.11 addition to any other goals, must include: (1) goals for the 211.12 number of jobs created, which may include separate goals for the 211.13 number of part-time or full-time jobs, or, in cases where job 211.14 loss is specific and demonstrable, goals for the number of jobs 211.15 retained; (2) wage goals for any jobs created or retained; and 211.16 (3) wage goals for any jobs to be enhanced through increased 211.17 wages. After a public hearing, if the creation or retention of 211.18 jobs is determined not to be a goal, the wage and job goals may 211.19 be set at zero. The goals for the number of jobs to be created 211.20 or retained must result in job creation or retention by the 211.21 recipient within the granting jurisdiction overall. 211.22 In addition to other specific goal time frames, the wage 211.23 and job goals must contain specific goals to be attained within 211.24 two years of the benefit date. 211.25 [EFFECTIVE DATE.] This section is effective August 1, 2005, 211.26 and applies to subsidy agreements entered into on or after that 211.27 date. 211.28 Sec. 4. Minnesota Statutes 2004, section 116J.994, 211.29 subdivision 5, is amended to read: 211.30 Subd. 5. [PUBLIC NOTICE AND HEARING.] (a) Before granting 211.31 a business subsidy that exceeds $500,000 for a state government 211.32 grantor and $100,000 for a local government grantor, the grantor 211.33 must provide public notice and a hearing on the subsidy. A 211.34 public hearing and notice under this subdivision is not required 211.35 if a hearing and notice on the subsidy is otherwise required by 211.36 law. 212.1 (b) Public notice of a proposed business subsidy under this 212.2 subdivision by a state government grantor, other than the Iron 212.3 Range Resources and Rehabilitation Board, must be published in 212.4 the State Register. Public notice of a proposed business 212.5 subsidy under this subdivision by a local government grantor or 212.6 the Iron Range Resources and Rehabilitation Board must be 212.7 published in a local newspaper of general circulation. The 212.8 public notice must identify the location at which information 212.9 about the business subsidy, including a summary of the terms of 212.10 the subsidy, is available. Published notice should be 212.11 sufficiently conspicuous in size and placement to distinguish 212.12 the notice from the surrounding text. The grantor must make the 212.13 information available in printed paper copies and, if possible, 212.14 on the Internet. The government agency must provide at least a 212.15 ten-day notice for the public hearing. 212.16 (c) The public notice must include the date, time, and 212.17 place of the hearing. 212.18 (d) The public hearing by a state government grantor other 212.19 than the Iron Range Resources and Rehabilitation Board must be 212.20 held in St. Paul. 212.21 (e) If more than one nonstate grantor provides a business 212.22 subsidy to the same recipient, the nonstate grantors may 212.23 designate one nonstate grantor to hold a single public hearing 212.24 regarding the business subsidies provided by all nonstate 212.25 grantors. For the purposes of this paragraph, "nonstate 212.26 grantor" includes the iron range resources and rehabilitation 212.27 board. 212.28 (f) The public notice of any public meeting about a 212.29 business subsidy agreement, including those required by this 212.30 subdivision and by subdivision 4, must include notice that a 212.31 person with residence in or the owner of taxable property in the 212.32 granting jurisdiction may file a written complaint with the 212.33 grantor if the grantor fails to comply with sections 116J.993 to 212.34 116J.995, and that no action may be filed against the grantor 212.35 for such failure to comply unless a written complaint is filed. 212.36 Sec. 5. Minnesota Statutes 2004, section 116J.994, 213.1 subdivision 9, is amended to read: 213.2 Subd. 9. [COMPILATION AND SUMMARY REPORT.] The Department 213.3 of Employment and Economic Development must publish a 213.4 compilation and summary of the results of the reports for the 213.5 previous two calendar years by December 1 of 2004 and every 213.6 other year thereafter. The reports of the government agencies 213.7 to the department and the compilation and summary report of the 213.8 department must be made available to the public. The 213.9 commissioner must make copies of all business subsidy reports 213.10 submitted by local and state granting agencies available on the 213.11 department's Web site by October 1 of the year in which they 213.12 were submitted. 213.13 The commissioner must coordinate the production of reports 213.14 so that useful comparisons across time periods and across 213.15 grantors can be made. The commissioner may add other 213.16 information to the report as the commissioner deems necessary to 213.17 evaluate business subsidies. Among the information in the 213.18 summary and compilation report, the commissioner must include: 213.19 (1) total amount of subsidies awarded in each development 213.20 region of the state; 213.21 (2) distribution of business subsidy amounts by size of the 213.22 business subsidy; 213.23 (3) distribution of business subsidy amounts by time 213.24 category; 213.25 (4) distribution of subsidies by type and by public 213.26 purpose; 213.27 (5) percent of all business subsidies that reached their 213.28 goals; 213.29 (6) percent of business subsidies that did not reach their 213.30 goals by two years from the benefit date; 213.31 (7) total dollar amount of business subsidies that did not 213.32 meet their goals after two years from the benefit date; 213.33 (8) percent of subsidies that did not meet their goals and 213.34 that did not receive repayment; 213.35 (9) list of recipients that have failed to meet the terms 213.36 of a subsidy agreement in the past five years and have not 214.1 satisfied their repayment obligations; 214.2 (10) number of part-time and full-time jobs within separate 214.3 bands of wages; and 214.4 (11) benefits paid within separate bands of wages. 214.5 Sec. 6. Minnesota Statutes 2004, section 116J.994, is 214.6 amended by adding a subdivision to read: 214.7 Subd. 11. [ENFORCEMENT.] (a) A person with residence in or 214.8 an owner of taxable property located in the jurisdiction of the 214.9 grantor may bring an action for equitable relief arising out of 214.10 the failure of the grantor to comply with sections 116J.993 to 214.11 116J.995. The court may award a prevailing party in an action 214.12 under this subdivision costs and reasonable attorney fees. 214.13 (b) Prior to bringing an action, the party must file a 214.14 written complaint with the grantor stating the alleged violation 214.15 and proposing a remedy. The grantor has up to 30 days to reply 214.16 to the complaint in writing and may take action to comply with 214.17 sections 116J.993 to 116J.995. 214.18 (c) The written complaint under this subdivision for 214.19 failure to comply with subdivisions 1 to 5, must be filed with 214.20 the grantor within 180 days after approval of the subsidy 214.21 agreement under subdivision 3, paragraph (d). An action under 214.22 this subdivision must be commenced within 30 days following 214.23 receipt of the grantor's reply, or within 180 days after 214.24 approval of the subsidy agreement under subdivision 3, paragraph 214.25 (d), whichever is later. 214.26 [EFFECTIVE DATE.] This section is effective August 1, 2005, 214.27 and applies to subsidy agreements entered into on or after that 214.28 date. 214.29 Sec. 7. Minnesota Statutes 2004, section 161.1231, is 214.30 amended by adding a subdivision to read: 214.31 Subd. 11. [TRANSFER OF OWNERSHIP.] The commissioner shall, 214.32 at the earliest feasible date after receiving payment, transfer 214.33 ownership of the parking facilities to the city of Minneapolis. 214.34 The payment must be equal to the amount of state funds spent by 214.35 the commissioner for construction of the facilities. Upon 214.36 assuming ownership of the facilities, the city shall operate the 215.1 facilities in accordance with the rules adopted by the 215.2 commissioner under subdivision 2. Upon assumption of ownership, 215.3 the city shall assume the authority to collect fees for use of 215.4 the facilities under subdivision 5. The commissioner shall take 215.5 no action under this section that would result in federal 215.6 sanctions against Minnesota or require the repayment of any 215.7 state funds to the federal government. The commissioner shall 215.8 deposit all money received under this subdivision in the trunk 215.9 highway fund. 215.10 [EFFECTIVE DATE.] This section is effective the day after 215.11 the governing body of the city of Minneapolis and its chief 215.12 clerical officer comply with Minnesota Statutes, section 215.13 645.021, subdivisions 2 and 3. 215.14 Sec. 8. Minnesota Statutes 2004, section 272.0212, 215.15 subdivision 1, is amended to read: 215.16 Subdivision 1. [EXEMPTION.] All qualified property in a 215.17 zone is exempt to the extent and for a period up to the duration 215.18 provided by the zone designation and under sections 469.1731 to 215.19 469.1735. 215.20 [EFFECTIVE DATE.] This section is effective for development 215.21 agreements approved after the day following final enactment and 215.22 beginning for property taxes payable in 2006. 215.23 Sec. 9. Minnesota Statutes 2004, section 272.0212, 215.24 subdivision 2, is amended to read: 215.25 Subd. 2. [LIMITS ON EXEMPTION.] (a) Property in a zone is 215.26 not exempt under this section from the following: 215.27 (1) special assessments; 215.28 (2) ad valorem property taxes specifically levied for the 215.29 payment of principal and interest on debt obligations; and 215.30 (3) all taxes levied by a school district, except school 215.31 referendum levies as defined in section 126C.17. 215.32 (b) The city may limit the property tax exemption to a 215.33 shorter period than the duration of the zone or to a percentage 215.34 of the property taxes payable or both. 215.35 [EFFECTIVE DATE.] This section is effective for development 215.36 agreements approved after the day following final enactment and 216.1 beginning for property taxes payable in 2006. 216.2 Sec. 10. Minnesota Statutes 2004, section 469.034, 216.3 subdivision 2, is amended to read: 216.4 Subd. 2. [GENERAL OBLIGATION REVENUE BONDS.] (a) An 216.5 authority may pledge the general obligation of the general 216.6 jurisdiction governmental unit as additional security for bonds 216.7 payable from income or revenues of the project or the 216.8 authority. The authority must find that the pledged revenues 216.9 will equal or exceed 110 percent of the principal and interest 216.10 due on the bonds for each year. The proceeds of the bonds must 216.11 be used for a qualified housing development project or 216.12 projects. The obligations must be issued and sold in the manner 216.13 and following the procedures provided by chapter 475, except the 216.14 obligations are not subject to approval by the electors and the 216.15 maturities may extend to not more than 30 years from the 216.16 estimated date of completion of the project. The authority is 216.17 the municipality for purposes of chapter 475. 216.18 (b) The principal amount of the issue must be approved by 216.19 the governing body of the general jurisdiction governmental unit 216.20 whose general obligation is pledged. Public hearings must be 216.21 held on issuance of the obligations by both the authority and 216.22 the general jurisdiction governmental unit. The hearings must 216.23 be held at least 15 days, but not more than 120 days, before the 216.24 sale of the obligations. 216.25 (c) The maximum amount of general obligation bonds that may 216.26 be issued and outstanding under this section equals the greater 216.27 of (1) one-half of one percent of the taxable market value of 216.28 the general jurisdiction governmental unit whose general 216.29 obligation which includes a tax on property is pledged, or (2) 216.30 $3,000,000. In the case of county or multicounty general 216.31 obligation bonds, the outstanding general obligation bonds of 216.32 all cities in the county or counties issued under this 216.33 subdivision must be added in calculating the limit under clause 216.34 (1). 216.35 (d) "General jurisdiction governmental unit" means the city 216.36 in which the housing development project is located. In the 217.1 case of a county or multicounty authority, the county or 217.2 counties may act as the general jurisdiction governmental unit. 217.3 In the case of a multicounty authority, the pledge of the 217.4 general obligation is a pledge of a tax on the taxable property 217.5 in each of the counties. 217.6 (e) "Qualified housing development project" means a housing 217.7 development project providing housing either for the elderly or 217.8 for individuals and families with incomes not greater than 80 217.9 percent of the median family income as estimated by the United 217.10 States Department of Housing and Urban Development for the 217.11 standard metropolitan statistical area or the nonmetropolitan 217.12 county in which the project is located, and will. The project 217.13 must be owned for the term of the bonds either by the authority 217.14for the term of the bondsor by a limited partnership or other 217.15 entity in which the authority or another entity under the sole 217.16 control of the authority is the sole general partner. The 217.17 partnership or other entity must receive either: (1) an 217.18 allocation from the Department of Finance or an entitlement 217.19 issuer of tax-exempt bonding authority for the project and a 217.20 preliminary determination by the Minnesota Housing Finance 217.21 Agency or the applicable suballocator of tax credits that the 217.22 project will qualify for four percent low-income housing tax 217.23 credits; or (2) a reservation of nine percent low-income housing 217.24 tax credits from the Minnesota Housing Finance Agency or a 217.25 suballocator of tax credits for the project. A qualified 217.26 housing development project may admit nonelderly individuals and 217.27 families with higher incomes if: 217.28 (1) three years have passed since initial occupancy; 217.29 (2) the authority finds the project is experiencing 217.30 unanticipated vacancies resulting in insufficient revenues, 217.31 because of changes in population or other unforeseen 217.32 circumstances that occurred after the initial finding of 217.33 adequate revenues; and 217.34 (3) the authority finds a tax levy or payment from general 217.35 assets of the general jurisdiction governmental unit will be 217.36 necessary to pay debt service on the bonds if higher income 218.1 individuals or families are not admitted. 218.2 [EFFECTIVE DATE.] This section is effective for bonds 218.3 issued after the day following final enactment. 218.4 Sec. 11. Minnesota Statutes 2004, section 469.169, is 218.5 amended by adding a subdivision to read: 218.6 Subd. 17. [ADDITIONAL BORDER CITY ALLOCATIONS.] (a) In 218.7 addition to tax reductions authorized in subdivisions 7 to 16, 218.8 the commissioner shall allocate $750,000 for tax reductions to 218.9 border city enterprise zones in cities located on the western 218.10 border of the state. The commissioner shall make allocations to 218.11 zones in cities on the western border on a per capita basis. 218.12 Allocations made under this subdivision may be used for tax 218.13 reductions as provided in section 469.171, or for other offsets 218.14 of taxes imposed on or remitted by businesses located in the 218.15 enterprise zone, but only if the municipality determines that 218.16 the granting of the tax reduction or offset is necessary in 218.17 order to retain a business within or attract a business to the 218.18 zone. Any portion of the allocation provided in this paragraph 218.19 may alternatively be used for tax reductions under section 218.20 469.1732 or 469.1734. 218.21 (b) The commissioner shall allocate $750,000 for tax 218.22 reductions under section 469.1732 or 469.1734 to cities with 218.23 border city enterprise zones located on the western border of 218.24 the state. The commissioner shall allocate this amount among 218.25 the cities on a per capita basis. Any portion of the allocation 218.26 provided in this paragraph may alternatively be used for tax 218.27 reductions as provided in section 469.171. 218.28 [EFFECTIVE DATE.] This section is effective the day 218.29 following final enactment. 218.30 Sec. 12. Minnesota Statutes 2004, section 469.174, is 218.31 amended by adding a subdivision to read: 218.32 Subd. 30. [URBAN RENEWAL AREA.] "Urban renewal area" means 218.33 a contiguous geographic area designated within a project and 218.34 within which all parcels must be eligible for inclusion in a 218.35 redevelopment, renewal and renovation, or soils condition 218.36 district or are currently located within a redevelopment, 219.1 renewal and renovation, or soils condition district certified 219.2 within ten years before or after the date of approval of the 219.3 urban renewal area by the city or county, whichever is later. 219.4 In determining eligibility for inclusion in a district, each 219.5 parcel may only be considered as a part of one district. 219.6 [EFFECTIVE DATE.] This section is effective for urban 219.7 renewal areas established on or after the date of final 219.8 enactment. 219.9 Sec. 13. Minnesota Statutes 2004, section 469.175, 219.10 subdivision 1, is amended to read: 219.11 Subdivision 1. [TAX INCREMENT FINANCING PLAN.] A tax 219.12 increment financing plan shall contain: 219.13 (1) a statement of objectives of an authority for the 219.14 improvement of a project; 219.15 (2) a statement as to the development program for the 219.16 project, including the property within the project, if any, that 219.17 the authority intends to acquire; 219.18 (3) a list of any development activities that the plan 219.19 proposes to take place within the project, for which contracts 219.20 have been entered into at the time of the preparation of the 219.21 plan, including the names of the parties to the contract, the 219.22 activity governed by the contract, the cost stated in the 219.23 contract, and the expected date of completion of that activity; 219.24 (4) identification or description of the type of any other 219.25 specific development reasonably expected to take place within 219.26 the project, and the date when the development is likely to 219.27 occur; 219.28 (5) estimates of the following: 219.29 (i) cost of the project, including administrative expenses, 219.30 except that if part of the cost of the project is paid or 219.31 financed with increment from the tax increment financing 219.32 district, the tax increment financing plan for the district must 219.33 contain an estimate of the amount of the cost of the project, 219.34 including administrative expenses, that will be paid or financed 219.35 with tax increments from the district; 219.36 (ii) amount of bonded indebtedness to be incurred; 220.1 (iii) sources of revenue to finance or otherwise pay public 220.2 costs; 220.3 (iv) the most recent net tax capacity of taxable real 220.4 property within the tax increment financing district and within 220.5 any subdistrict; 220.6 (v) the estimated captured net tax capacity of the tax 220.7 increment financing district at completion; and 220.8 (vi) the duration of the tax increment financing district's 220.9 and any subdistrict's existence; 220.10 (6) statements of the authority's alternate estimates of 220.11 the impact of tax increment financing on the net tax capacities 220.12 of all taxing jurisdictions in which the tax increment financing 220.13 district is located in whole or in part. For purposes of one 220.14 statement, the authority shall assume that the estimated 220.15 captured net tax capacity would be available to the taxing 220.16 jurisdictions without creation of the district, and for purposes 220.17 of the second statement, the authority shall assume that none of 220.18 the estimated captured net tax capacity would be available to 220.19 the taxing jurisdictions without creation of the district or 220.20 subdistrict; 220.21 (7) identification and description of studies and analyses 220.22 used to make the determination set forth in subdivision 3, 220.23 clause (2);and220.24 (8) identification of all parcels to be included in the 220.25 district or any subdistrict; and 220.26 (9) identification of any job training costs intended to be 220.27 paid by use of tax increments, including the name of the 220.28 employer whose employees will be trained and the nature and cost 220.29 of the training. The plan is not required to identify the 220.30 provider of the job training. 220.31 [EFFECTIVE DATE.] This section applies to districts for 220.32 which the request for certification was made after July 31, 220.33 1979, and is effective for tax increment financing plans 220.34 approved after June 30, 2005. 220.35 Sec. 14. Minnesota Statutes 2004, section 469.175, 220.36 subdivision 4, is amended to read: 221.1 Subd. 4. [MODIFICATION OF PLAN.] (a) A tax increment 221.2 financing plan may be modified by an authority. 221.3 (b) The authority may make the following modifications only 221.4 upon the notice and after the discussion, public hearing, and 221.5 findings required for approval of the original plan: 221.6 (1) any reduction or enlargement of geographic area of the 221.7 project or tax increment financing district that does not meet 221.8 the requirements of paragraph (e); 221.9 (2) increase in amount of bonded indebtedness to be 221.10 incurred; 221.11 (3) a determination to capitalize interest on the debt if 221.12 that determination was not a part of the original plan, or to 221.13 increase or decrease the amount of interest on the debt to be 221.14 capitalized; 221.15 (4) increase in the portion of the captured net tax 221.16 capacity to be retained by the authority; 221.17 (5) increase in the estimate of the cost of the project, 221.18 including administrative expenses, that will be paid or financed 221.19 with tax increment from the district;or221.20 (6) designation of additional property to be acquired by 221.21 the authority; or 221.22 (7) a decision to pay for job training for employees of a 221.23 business located in the district that was not a part of the 221.24 original plan. 221.25 (c) If an authority changes the type of district to another 221.26 type of district, this change is not a modification but requires 221.27 the authority to follow the procedure set forth in sections 221.28 469.174 to 469.179 for adoption of a new plan, including 221.29 certification of the net tax capacity of the district by the 221.30 county auditor. 221.31 (d) If a redevelopment district or a renewal and renovation 221.32 district is enlarged, the reasons and supporting facts for the 221.33 determination that the addition to the district meets the 221.34 criteria of section 469.174, subdivision 10, paragraph (a), 221.35 clauses (1) and (2), or subdivision 10a, must be documented. 221.36 (e) The requirements of paragraph (b) do not apply if (1) 222.1 the only modification is elimination of parcels from the project 222.2 or district and (2)(A) the current net tax capacity of the 222.3 parcels eliminated from the district equals or exceeds the net 222.4 tax capacity of those parcels in the district's original net tax 222.5 capacity or (B) the authority agrees that, notwithstanding 222.6 section 469.177, subdivision 1, the original net tax capacity 222.7 will be reduced by no more than the current net tax capacity of 222.8 the parcels eliminated from the district. The authority must 222.9 notify the county auditor of any modification that reduces or 222.10 enlarges the geographic area of a district or a project area. 222.11 (f) The geographic area of a tax increment financing 222.12 district may be reduced, but shall not be enlarged after five 222.13 years following the date of certification of the original net 222.14 tax capacity by the county auditor or after August 1, 1984, for 222.15 tax increment financing districts authorized prior to August 1, 222.16 1979. 222.17 [EFFECTIVE DATE.] This section is effective for districts 222.18 for which the request for certification was made after July 31, 222.19 1979, and is effective for modifications made after June 30, 222.20 2005. 222.21 Sec. 15. Minnesota Statutes 2004, section 469.175, 222.22 subdivision 6, is amended to read: 222.23 Subd. 6. [ANNUAL FINANCIAL REPORTING.] (a) The state 222.24 auditor shall develop a uniform system of accounting and 222.25 financial reporting for tax increment financing districts. The 222.26 system of accounting and financial reporting shall, as nearly as 222.27 possible: 222.28 (1) provide for full disclosure of the sources and uses of 222.29 public funds in the district; 222.30 (2) permit comparison and reconciliation with the affected 222.31 local government's accounts and financial reports; 222.32 (3) permit auditing of the funds expended on behalf of a 222.33 district, including a single district that is part of a 222.34 multidistrict project or that is funded in part or whole through 222.35 the use of a development account funded with tax increments from 222.36 other districts or with other public money; 223.1 (4) be consistent with generally accepted accounting 223.2 principles. 223.3 (b) The authority must annually submit to the state auditor 223.4 a financial report in compliance with paragraph (a). Copies of 223.5 the report must also be provided to the county auditor and to 223.6 the governing body of the municipality, if the authority is not 223.7 the municipality. To the extent necessary to permit compliance 223.8 with the requirement of financial reporting, the county and any 223.9 other appropriate local government unit or private entity must 223.10 provide the necessary records or information to the authority or 223.11 the state auditor as provided by the system of accounting and 223.12 financial reporting developed pursuant to paragraph (a). The 223.13 authority must submit the annual report for a year on or before 223.14 August 1 of the next year. 223.15 (c) The annual financial report must also include the 223.16 following items: 223.17 (1) the original net tax capacity of the district and any 223.18 subdistrict under section 469.177, subdivision 1; 223.19 (2) the net tax capacity for the reporting period of the 223.20 district and any subdistrict; 223.21 (3) the captured net tax capacity of the district; 223.22 (4) any fiscal disparity deduction from the captured net 223.23 tax capacity under section 469.177, subdivision 3; 223.24 (5) the captured net tax capacity retained for tax 223.25 increment financing under section 469.177, subdivision 2, 223.26 paragraph (a), clause (1); 223.27 (6) any captured net tax capacity distributed among 223.28 affected taxing districts under section 469.177, subdivision 2, 223.29 paragraph (a), clause (2); 223.30 (7) the type of district; 223.31 (8) the date the municipality approved the tax increment 223.32 financing plan and the date of approval of any modification of 223.33 the tax increment financing plan, the approval of which requires 223.34 notice, discussion, a public hearing, and findings under 223.35 subdivision 4, paragraph (a); 223.36 (9) the date the authority first requested certification of 224.1 the original net tax capacity of the district and the date of 224.2 the request for certification regarding any parcel added to the 224.3 district; 224.4 (10) the date the county auditor first certified the 224.5 original net tax capacity of the district and the date of 224.6 certification of the original net tax capacity of any parcel 224.7 added to the district; 224.8 (11) the month and year in which the authority has received 224.9 or anticipates it will receive the first increment from the 224.10 district; 224.11 (12) the date the district must be decertified; 224.12 (13) for the reporting period and prior years of the 224.13 district, the actual amount received from, at least, the 224.14 following categories: 224.15 (i) tax increments paid by the captured net tax capacity 224.16 retained for tax increment financing under section 469.177, 224.17 subdivision 2, paragraph (a), clause (1), but excluding any 224.18 excess taxes; 224.19 (ii) tax increments that are interest or other investment 224.20 earnings on or from tax increments; 224.21 (iii) tax increments that are proceeds from the sale or 224.22 lease of property, tangible or intangible, purchased by the 224.23 authority with tax increments; 224.24 (iv) tax increments that are repayments of loans or other 224.25 advances made by the authority with tax increments; 224.26 (v) bond or loan proceeds; 224.27 (vi) special assessments; 224.28 (vii) grants; and 224.29 (viii) transfers from funds not exclusively associated with 224.30 the district; 224.31 (14) for the reporting period and for the prior years of 224.32 the district, the actual amount expended for, at least, the 224.33 following categories: 224.34 (i) acquisition of land and buildings through condemnation 224.35 or purchase; 224.36 (ii) site improvements or preparation costs; 225.1 (iii) installation of public utilities, parking facilities, 225.2 streets, roads, sidewalks, or other similar public improvements; 225.3 (iv) administrative costs, including the allocated cost of 225.4 the authority; 225.5 (v) public park facilities, facilities for social, 225.6 recreational, or conference purposes, or other similar public 225.7 improvements;and225.8 (vi) transfers to funds not exclusively associated with the 225.9 district; and 225.10 (vii) job training as permitted under section 469.176, 225.11 subdivision 4m; 225.12 (15) for properties sold to developers, the total cost of 225.13 the property to the authority and the price paid by the 225.14 developer; 225.15 (16) the amount of any payments and the value of any 225.16 in-kind benefits, such as physical improvements and the use of 225.17 building space, that are paid or financed with tax increments 225.18 and are provided to another governmental unit other than the 225.19 municipality during the reporting period; 225.20 (17) the amount of any payments for activities and 225.21 improvements located outside of the district that are paid for 225.22 or financed with tax increments; 225.23 (18) the amount of payments of principal and interest that 225.24 are made during the reporting period on any nondefeased: 225.25 (i) general obligation tax increment financing bonds; 225.26 (ii) other tax increment financing bonds; and 225.27 (iii) notes and pay-as-you-go contracts; 225.28 (19) the principal amount, at the end of the reporting 225.29 period, of any nondefeased: 225.30 (i) general obligation tax increment financing bonds; 225.31 (ii) other tax increment financing bonds; and 225.32 (iii) notes and pay-as-you-go contracts; 225.33 (20) the amount of principal and interest payments that are 225.34 due for the current calendar year on any nondefeased: 225.35 (i) general obligation tax increment financing bonds; 225.36 (ii) other tax increment financing bonds; and 226.1 (iii) notes and pay-as-you-go contracts; 226.2 (21) if the fiscal disparities contribution under chapter 226.3 276A or 473F for the district is computed under section 469.177, 226.4 subdivision 3, paragraph (a), the amount of increased property 226.5 taxes imposed on other properties in the municipality that 226.6 approved the tax increment financing plan as a result of the 226.7 fiscal disparities contribution; 226.8 (22) whether the tax increment financing plan or other 226.9 governing document permits increment revenues to be expended: 226.10 (i) to pay bonds, the proceeds of which were or may be 226.11 expended on activities outside of the district; 226.12 (ii) for deposit into a common bond fund from which money 226.13 may be expended on activities located outside of the district; 226.14 or 226.15 (iii) to otherwise finance activities located outside of 226.16 the tax increment financing district; 226.17 (23) the estimate, if any, contained in the tax increment 226.18 financing plan of the amount of the cost of the project, 226.19 including administrative expenses, that will be paid or financed 226.20 with tax increment; and 226.21 (24) any additional information the state auditor may 226.22 require. 226.23 (d) The commissioner of revenue shall prescribe the method 226.24 of calculating the increased property taxes under paragraph (c), 226.25 clause (21), and the form of the statement disclosing this 226.26 information on the annual statement under subdivision 5. 226.27 (e) The reporting requirements imposed by this subdivision 226.28 apply to districts certified before, on, and after August 1, 226.29 1979. 226.30 [EFFECTIVE DATE.] This section is effective for reports 226.31 filed in 2006 and thereafter. 226.32 Sec. 16. Minnesota Statutes 2004, section 469.176, 226.33 subdivision 1c, is amended to read: 226.34 Subd. 1c. [DURATION LIMITS; PRE-1979 DISTRICTS.] (a) For 226.35 tax increment financing districts created prior to August 1, 226.36 1979, no tax increment shall be paid to the authority after 227.1 April 1, 2001, or the term of a nondefeased bond or obligation 227.2 outstanding on April 1, 1990, secured by increments from the 227.3 district or project area, whichever time is greater, provided 227.4 that in no case will a tax increment be paid to an authority 227.5 after August 1, 2009, from such a district. If a district's 227.6 termination date is extended beyond April 1, 2001, because bonds 227.7 were outstanding on April 1, 1990, with maturities extending 227.8 beyond April 1, 2001, the following restrictions apply. No 227.9 increment collected from the district may be expended after 227.10 April 1, 2001, except to pay or repay: 227.11 (1) bonds issued before April 1, 1990; 227.12 (2) bonds issued to refund the principal of the outstanding 227.13 bonds and pay associated issuance costs; 227.14 (3) administrative expenses of the district required to be 227.15 paid under section 469.176, subdivision 4h, paragraph (a); 227.16 (4) transfers of increment permitted under section 227.17 469.1763, subdivision 6;and227.18 (5) any advance or payment made by the municipality or the 227.19 authority after June 1, 2002, to pay any bonds listed in clause 227.20 (1) or (2); and 227.21 (6) amounts authorized under paragraph (d). 227.22 (b) Each year, any increments from a district subject to 227.23 this subdivision must be first applied to pay obligations listed 227.24 under paragraph (a), clauses (1) and (2), and administrative 227.25 expenses under paragraph (a), clause (3). Any remaining 227.26 increments may be used for transfers of increments permitted 227.27 under section 469.1763, subdivision 6, and to make payments 227.28 underparagraphparagraphs (a), clause (5), and (d). 227.29 (c) When sufficient money has been received to pay in full 227.30 or defease obligations under paragraph (a), clauses (1), (2), 227.31 and (5), and no spending is permitted by paragraph (d) for the 227.32 year, the tax increment project or district must be decertified. 227.33 (d) In addition to the expenditures authorized under 227.34 paragraph (a), clauses (1) to (5), a city may expend increments 227.35 from a tax increment financing district subject to this 227.36 subdivision after April 1, 2001, if all of the following 228.1 conditions are met: 228.2 (1) the captured tax capacity for all tax increment 228.3 financing districts constituted less than six percent of the 228.4 city's total tax capacity for taxes payable in 2003; and 228.5 (2) the population of the city exceeds 50,000. 228.6 [EFFECTIVE DATE.] This section is effective for tax 228.7 increment financing districts for which the request for 228.8 certification was made before August 1, 1979. 228.9 Sec. 17. Minnesota Statutes 2004, section 469.176, is 228.10 amended by adding a subdivision to read: 228.11 Subd. 4m. [USE OF INCREMENTS FOR JOB 228.12 TRAINING.] Notwithstanding the limits on use of increments in 228.13 subdivision 4, 4b, 4c, or 4j, increments may be expended for job 228.14 training that is intended to result in new job growth within a 228.15 tax increment financing district. The authority may expend 228.16 increments directly for the cost of the job training or may 228.17 reimburse an employer located within the district or a 228.18 municipality in which the district is located for job training 228.19 expenditures. Increments may be expended only for job training 228.20 programs that are approved for this purpose by the local 228.21 workforce council established under section 116L.666 that has 228.22 jurisdiction over the workforce service area that includes the 228.23 tax increment financing district. For purposes of section 228.24 469.1763, increments expended under this subdivision are 228.25 considered to be expended on activities in the district. 228.26 [EFFECTIVE DATE.] This section is effective for districts 228.27 for which the request for certification was made after July 31, 228.28 1979, provided that districts for which the request for 228.29 certification was made before the effective date of this act 228.30 must modify their plans to provide for this expenditure. 228.31 Sec. 18. Minnesota Statutes 2004, section 469.176, is 228.32 amended by adding a subdivision to read: 228.33 Subd. 8. [URBAN RENEWAL AREA.] (a) An authority may create 228.34 an urban renewal area only upon the notice and after the 228.35 discussion, public hearing, and findings required for approval 228.36 of the original project. In addition, the authority must obtain 229.1 written approval from the county in which the urban renewal area 229.2 is to be located. After approval by the city and county, the 229.3 authority shall notify the commissioner of revenue of the 229.4 approved urban renewal area. 229.5 (b) All provisions of sections 469.174 through 469.1799 229.6 apply except: 229.7 (1) the five-year rule under section 469.1763, subdivision 229.8 3, is extended to ten years; 229.9 (2) the limitation on spending increment outside of the 229.10 district under section 469.1763, subdivision 2, does not apply, 229.11 provided that increments may only be expended on improvements or 229.12 activities within the urban renewal area, and increments from a 229.13 soils condition district must be expended as provided under 229.14 subdivision 4b; and 229.15 (3) the local tax rate certification required under section 229.16 469.177, subdivision 1a, does not apply. 229.17 [EFFECTIVE DATE.] This section is effective for urban 229.18 renewal areas established on or after the date of final 229.19 enactment. 229.20 Sec. 19. Minnesota Statutes 2004, section 469.1761, is 229.21 amended by adding a subdivision to read: 229.22 Subd. 3a. [MIXED-INCOME OCCUPANCY PROJECTS.] (a) 229.23 Notwithstanding the income requirements in subdivisions 2 and 3, 229.24 or section 469.174, subdivision 11, an authority may create 229.25 housing districts for developments that contain both 229.26 owner-occupied and residential rental units for mixed-income 229.27 occupancy. Such a district consists of a project, or a portion 229.28 of a project, intended for occupancy, in part, by persons of low 229.29 and moderate income as defined in chapter 462A, title II, of the 229.30 National Housing Act of 1934; the National Housing Act of 1959; 229.31 the United States Housing Act of 1937, as amended; title V of 229.32 the Housing Act of 1949, as amended; any other similar present 229.33 or future federal, state, or municipal legislation, or the 229.34 regulations promulgated under any of those acts, as further 229.35 specified in this section. Twenty percent of the units in the 229.36 development in the housing district must be occupied by 230.1 individuals whose family income is equal to or less than 50 230.2 percent of area median gross income, and an additional 60 230.3 percent of the units in the development in the housing district 230.4 must be occupied by individuals whose family income is equal to 230.5 or less than 115 percent of area median gross income. Twenty 230.6 percent of the units in the development in the housing district 230.7 are not required to be subject to any income limitations. 230.8 (b) For purposes of this subdivision, "family income" means 230.9 the median gross income for the area as determined under section 230.10 42 of the Internal Revenue Code of 1986, as amended. The income 230.11 requirements of this subdivision are satisfied if the sum of 230.12 qualified owner-occupied units and qualified residential rental 230.13 units equals the required total number of qualified units. 230.14 Owner-occupied units must be initially purchased and occupied by 230.15 individuals whose family income satisfies the income 230.16 requirements of this subdivision. For residential rental 230.17 property, the income requirements of this subdivision apply for 230.18 the duration of the tax increment district. 230.19 (c) The development in the housing district, but not the 230.20 project, does not qualify under this subdivision if the fair 230.21 market value of the improvements that are constructed for 230.22 commercial uses or for uses other than owner-occupied and rental 230.23 mixed-income housing consists of more than 20 percent of the 230.24 total fair market value of the planned improvements in the 230.25 development plan or agreement. The fair market value of the 230.26 improvements may be determined using the cost of construction, 230.27 capitalized income, or other appropriate method of estimating 230.28 market value. 230.29 [EFFECTIVE DATE.] This section is effective for districts 230.30 for which certification is requested after July 31, 2005. 230.31 Sec. 20. Minnesota Statutes 2004, section 469.1763, 230.32 subdivision 2, is amended to read: 230.33 Subd. 2. [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 230.34 increment financing district, an amount equal to at least 75 230.35 percent of the total revenue derived from tax increments paid by 230.36 properties in the district must be expended on activities in the 231.1 district or to pay bonds, to the extent that the proceeds of the 231.2 bonds were used to finance activities in the district or to pay, 231.3 or secure payment of, debt service on credit enhanced bonds. 231.4 For districts, other than redevelopment districts for which the 231.5 request for certification was made after June 30, 1995, the 231.6 in-district percentage for purposes of the preceding sentence is 231.7 80 percent. Not more than 25 percent of the total revenue 231.8 derived from tax increments paid by properties in the district 231.9 may be expended, through a development fund or otherwise, on 231.10 activities outside of the district but within the defined 231.11 geographic area of the project except to pay, or secure payment 231.12 of, debt service on credit enhanced bonds. For districts, other 231.13 than redevelopment districts for which the request for 231.14 certification was made after June 30, 1995, the pooling 231.15 percentage for purposes of the preceding sentence is 20 231.16 percent. The revenue derived from tax increments for the 231.17 district that are expended on costs under section 469.176, 231.18 subdivision 4h, paragraph (b), may be deducted first before 231.19 calculating the percentages that must be expended within and 231.20 without the district. 231.21 (b) In the case of a housing district, a housing project, 231.22 as defined in section 469.174, subdivision 11, is an activity in 231.23 the district. 231.24 (c) All administrative expenses are for activities outside 231.25 of the district, except that if the only expenses for activities 231.26 outside of the district under this subdivision are for the 231.27 purposes described in paragraph (d), administrative expenses 231.28 will be considered as expenditures for activities in the 231.29 district. 231.30 (d) The authority may elect, in the tax increment financing 231.31 plan for the district, to increase by up to ten percentage 231.32 points the permitted amount of expenditures for activities 231.33 located outside the geographic area of the district under 231.34 paragraph (a). As permitted by section 469.176, subdivision 4k, 231.35 the expenditures, including the permitted expenditures under 231.36 paragraph (a), need not be made within the geographic area of 232.1 the project. Expenditures that meet the requirements of this 232.2 paragraph are legally permitted expenditures of the district, 232.3 notwithstanding section 469.176, subdivisions 4b, 4c, and 4j. 232.4 To qualify for the increase under this paragraph, the 232.5 expenditures must: 232.6 (1) be used exclusively to assist housing that meets the 232.7 requirement for a qualified low-income building, as that term is 232.8 used in section 42 of the Internal Revenue Code; 232.9 (2) not exceed the qualified basis of the housing, as 232.10 defined under section 42(c) of the Internal Revenue Code, less 232.11 the amount of any credit allowed under section 42 of the 232.12 Internal Revenue Code; and 232.13 (3) be used to: 232.14 (i) acquire and prepare the site of the housing; 232.15 (ii) acquire, construct, or rehabilitate the housing; or 232.16 (iii) make public improvements directly related to the 232.17 housing. 232.18 (e) For a district created within a biotechnology and 232.19 health sciences industry zone as defined in section 469.330, 232.20 subdivision 6, tax increment derived from such a district may be 232.21 expended outside of the district but within the zone only for 232.22 expenditures required for the construction of public 232.23 infrastructure necessary to support the activities of the zone. 232.24 Sec. 21. Minnesota Statutes 2004, section 469.1792, is 232.25 amended to read: 232.26 469.1792 [SPECIAL DEFICIT AUTHORITY.] 232.27 Subdivision 1. [SCOPE.] This section applies only to an 232.28 authority with a preexisting district for which: 232.29 (1) the increments from the district were insufficient to 232.30 pay preexisting obligations as a result of the class rate 232.31 changes or the elimination of the state-determined general 232.32 education property tax levy under this act, or both;or232.33 (2)(i) the development authority has a binding contract, 232.34 entered into before August 1, 2001, with a person requiring the 232.35 authority to pay to the person an amount that may not exceed the 232.36 increment from the district or a specific development within the 233.1 district; and 233.2 (ii) the authority is unable to pay the full amount under 233.3 the contract from the pledged increments or other increments 233.4 from the district that would have been due if the class rate 233.5 changes or elimination of the state-determined general education 233.6 property tax levy or both had not been made under Laws 2001, 233.7 First Special Session chapter 5; 233.8 (3) the authority amends its tax increment financing plan 233.9 to establish an affordable housing account to which increments 233.10 are pledged; or 233.11 (4) the authority amends its tax increment financing plan 233.12 to establish a hazardous substance, pollutant, or contaminant 233.13 remediation account to which increments are pledged. 233.14 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 233.15 the following terms have the meanings given. 233.16 (b) "Affordable housing account" means an account in which 233.17 increment is deposited solely for affordable housing activities 233.18 as defined in section 469.174, subdivision 11. 233.19 (c) "Hazardous substance, pollutant, or contaminant 233.20 remediation account" means an account in which increment is 233.21 deposited solely for removal or remediation activities described 233.22 in section 469.174, subdivisions 16 to 19. 233.23 (d) "Preexisting district" means a tax increment financing 233.24 district for which the request for certification was made before 233.25 August 1, 2001. 233.26(c)(e) "Preexisting obligation" means a bond or binding 233.27 contract that: 233.28 (1)(i) was issued or approved before August 1, 2001, or was 233.29 issued pursuant to a binding contract entered into before July 233.30 1, 2001; or 233.31 (ii) was issued to refinance an obligation under item (i), 233.32 if the refinancing does not increase the present value of the 233.33 debt service; and 233.34 (2) is secured by increments from a preexisting district. 233.35 Subd. 3. [ACTIONS AUTHORIZED.] (a) An authority with a 233.36 district qualifying under this section may take either or both 234.1 of the following actions for any or all of its preexisting 234.2 districts: 234.3 (1) the authority may elect that the original local tax 234.4 rate under section 469.177, subdivision 1a, does not apply to 234.5 the district; and 234.6 (2) the authority may elect the fiscal disparities 234.7 contribution will be computed under section 469.177, subdivision 234.8 3, paragraph (a), regardless of the election that was made for 234.9 the district or if the district is an economic development 234.10 district for which the request for certification was made after 234.11 June 30, 1997. 234.12 (b) The authority may take action under this subdivision 234.13 only after the municipality approves the action, by resolution, 234.14 after notice and public hearing in the manner provided under 234.15 section 469.175, subdivision 3. To be effective for taxes 234.16 payable in the following year, the resolution must be adopted 234.17 and the county auditor must be notified of the adoption on or 234.18 before July 1. 234.19 Subd. 4. [EXPENDITURES FROM AFFORDABLE HOUSING 234.20 ACCOUNTS.] Increment from an affordable housing account may be 234.21 spent by an authority anywhere within its area of operation. 234.22 Notwithstanding the definition of a project under section 234.23 469.174, increments may be spent to assist housing that meets 234.24 the requirements under section 469.1761. The limitation imposed 234.25 by section 469.1763, subdivision 2, does not apply to any 234.26 transfers of increment to the affordable housing account to the 234.27 extent that the amount transferred to the account under this 234.28 subdivision does not exceed ten percent of the revenue derived 234.29 from tax increments paid by properties in the district in the 234.30 year. 234.31 Subd. 5. [EXPENDITURES FROM HAZARDOUS SUBSTANCE, 234.32 POLLUTANT, OR CONTAMINANT REMEDIATION ACCOUNT.] Increment from a 234.33 hazardous substance, pollutant, or contaminant remediation 234.34 account may be spent by an authority anywhere within its area of 234.35 operation. Notwithstanding the definition of a project under 234.36 section 469.174, increments may be expended to remediation and 235.1 removal activities that meet the requirements of section 235.2 469.176, subdivision 4b or 4e. The limitation imposed by 235.3 section 469.1763, subdivision 2, does not apply to any transfers 235.4 of increment to the hazardous substance, pollutant, or 235.5 contaminant remediation account to the extent that the amount 235.6 transferred to the account under this subdivision does not 235.7 exceed ten percent of the revenue derived from tax increments 235.8 paid by properties in the district in the year. 235.9 [EFFECTIVE DATE.] This section is effective for actions 235.10 taken and resolutions approved after June 30, 2005. 235.11 Sec. 22. Minnesota Statutes 2004, section 469.310, 235.12 subdivision 11, is amended to read: 235.13 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 235.14 means a person carrying on a trade or business at a place of 235.15 business located within a job opportunity building zone. 235.16 (b) A person that relocates a trade or business from 235.17 outside a job opportunity building zone into a zone is not a 235.18 qualified business, unless the business: 235.19 (1)(i) increases full-time employment in the first full 235.20 year of operation within the job opportunity building zone by at 235.21 least 20 percent measured relative to the operations that were 235.22 relocated and maintains the required level of employment for 235.23 each year the zone designation applies; or 235.24 (ii) makes a capital investment in the property located 235.25 within a zone equivalent to ten percent of the gross revenues of 235.26 operation that were relocated in the immediately preceding 235.27 taxable year; and 235.28 (2) enters a binding written agreement with the 235.29 commissioner that: 235.30 (i) pledges the business will meet the requirements of 235.31 clause (1); 235.32 (ii) provides for repayment of all tax benefits enumerated 235.33 under section 469.315 to the business under the procedures in 235.34 section 469.319, if the requirements of clause (1) are not met 235.35 for the taxable year or for taxes payable during the year in 235.36 which the requirements were not met; and 236.1 (iii) contains any other terms the commissioner determines 236.2 appropriate. 236.3 (c) A business is not a qualified business if at its 236.4 location or locations in the zone, the business is primarily 236.5 engaged in making retail sales to purchasers who are physically 236.6 present at the business's zone location. 236.7 [EFFECTIVE DATE.] This section is effective the day 236.8 following final enactment and applies to any business entering a 236.9 business subsidy agreement for a job opportunity development 236.10 zone after that date. 236.11 Sec. 23. Laws 1994, chapter 587, article 9, section 20, 236.12 subdivision 1, is amended to read: 236.13 Subdivision 1. [ESTABLISHMENT.] The city of Brooklyn Park 236.14 may establish an economic development tax increment financing 236.15 district in which15 percentall of the revenue generated from 236.16 tax increment in any year that is not expended pursuant to a 236.17 pledge given or encumbrance created before January 1, 2005, is 236.18 deposited in the housing development account of the authority 236.19 and expended according to the tax increment financing plan. 236.20 Sec. 24. Laws 1994, chapter 587, article 9, section 20, 236.21 subdivision 2, is amended to read: 236.22 Subd. 2. [ELIGIBLE ACTIVITIES.] The authority must 236.23 identify in the plan the housing activities that will be 236.24 assisted by the housing development account. Housing activities 236.25 may include rehabilitation, acquisition, demolition, and 236.26 financing of new or existing single family or multifamily 236.27 housing. Housing activities listed in the plan need not be 236.28 located within the district or project area but must be 236.29 activities that meet the requirements of a qualified housing 236.30 district under Minnesota Statutes, section273.1399 or469.1761, 236.31 subdivision 2, for owner-occupied housing or section 469.174, 236.32 subdivision 29, clause (1), for rental housing. 236.33 Sec. 25. Laws 1998, chapter 389, article 11, section 19, 236.34 subdivision 3, is amended to read: 236.35 Subd. 3. [DURATION OF DISTRICT.] Notwithstanding the 236.36 provisions of Minnesota Statutes, section 469.176, subdivision 237.1 1b, no tax increment may be paid to the authority or the city 237.2 after18 years from the date of receipt by the authority of the237.3first increment generated from the final phase of237.4redevelopment. In no case may increments be paid to the237.5authority after30 years from approval of the tax increment 237.6 plan."Final phase of redevelopment" means that phase of237.7redevelopment activity which completes the rehabilitation of the237.8Lake Street site.237.9 [EFFECTIVE DATE.] This section is effective upon compliance 237.10 with Minnesota Statutes, sections 469.1782, subdivision 2, and 237.11 645.021, subdivision 2. 237.12 Sec. 26. [ANOKA COUNTY REGIONAL RAILROAD AUTHORITY 237.13 POWERS.] 237.14 Subdivision 1. [ECONOMIC DEVELOPMENT POWERS AND 237.15 DUTIES.] The Anoka County Regional Railroad Authority may 237.16 exercise any of the powers and duties of an economic development 237.17 authority under Minnesota Statutes, sections 469.090, 469.098, 237.18 and 469.101 to 469.106. The Anoka County Regional Railroad 237.19 Authority may exercise the powers under Minnesota Statutes, 237.20 sections 469.001 to 469.047, for the purpose of transit-oriented 237.21 development, except that the Anoka County Regional Railroad 237.22 Authority must not exercise the power to tax under Minnesota 237.23 Statutes, section 469.033, subdivision 6. In applying Minnesota 237.24 Statutes, sections 469.001 to 469.047, 469.090, 469.098, and 237.25 469.101 to 469.106, to the Anoka County Regional Railroad 237.26 Authority, the county is considered to be the city and the 237.27 county board is considered to be the city council. 237.28 Subd. 2. [RELATION TO LOCAL AUTHORITIES.] Nothing in 237.29 subdivision 1 shall change or impair the powers or duties of a 237.30 city, town, municipal housing and redevelopment authority, or 237.31 municipal economic development authority. 237.32 Subd. 3. [LOCAL APPROVAL.] If any economic development 237.33 project is constructed in the county pursuant to the 237.34 authorization in this section, the project must be approved by 237.35 the governing body of each city or town within which the project 237.36 will be constructed. 238.1 [EFFECTIVE DATE.] This section is effective the day after 238.2 the governing body of the Anoka County Regional Railroad 238.3 Authority and its chief clerical officer timely complete their 238.4 compliance with Minnesota Statutes, section 645.021, 238.5 subdivisions 2 and 3. 238.6 Sec. 27. [CITY OF BEMIDJI; DURATION EXTENSION FOR TAX 238.7 ABATEMENT.] 238.8 Notwithstanding the limitation in Minnesota Statutes, 238.9 section 469.1813, subdivision 6, the city of Bemidji may extend 238.10 the duration of the tax abatement given to support development 238.11 within the fairgrounds district of the city for an additional 238.12 four years beyond the duration permitted under that section. 238.13 Sec. 28. [CITY OF BROOKLYN CENTER; EXTENSION OF TIME TO 238.14 EXPEND TAX INCREMENT.] 238.15 For tax increment financing district number 3, established 238.16 on December 19, 1994, by Brooklyn Center Resolution No. 94-273, 238.17 Minnesota Statutes, section 469.1763, subdivision 3, applies to 238.18 the district by permitting a period of 13 years for commencement 238.19 of activities within the district. 238.20 [EFFECTIVE DATE.] This section is effective upon approval 238.21 by the governing body of the city of Brooklyn Center and 238.22 compliance with Minnesota Statutes, section 645.021, subdivision 238.23 3. 238.24 Sec. 29. [CITY OF BROOKLYN PARK TAX INCREMENT FINANCING 238.25 DISTRICT EXTENSION.] 238.26 Notwithstanding Minnesota Statutes, section 469.176, 238.27 subdivision 1b, or any other law to the contrary, the duration 238.28 limit that applies to the economic development tax increment 238.29 financing district established under Laws 1994, chapter 587, 238.30 article 9, section 20, is extended to December 31, 2020. 238.31 Sec. 30. [CITY OF DETROIT LAKES; REDEVELOPMENT TAX 238.32 INCREMENT FINANCING DISTRICT.] 238.33 Subdivision 1. [AUTHORIZATION.] At the election of the 238.34 governing body of the city of Detroit Lakes, upon adoption of 238.35 the tax increment financing plan for the district described in 238.36 this section, the rules provided under this section apply to 239.1 each such district. 239.2 Subd. 2. [DEFINITION.] In this section, "district" means a 239.3 redevelopment district established by the city of Detroit Lakes 239.4 or the Detroit Lakes Development Authority within the following 239.5 area: 239.6 Beginning at the intersection of Washington Avenue and the 239.7 Burlington Northern Santa Fe Railroad then east to the 239.8 intersection of Roosevelt Avenue then south to the intersection 239.9 of Highway 10/Frazee Street then west to the intersection of 239.10 Frazee Street and the alley that parallels Washington Avenue 239.11 then north to the point of beginning. 239.12 More than one district may be created under this act. 239.13 Subd. 3. [QUALIFICATION AS REDEVELOPMENT DISTRICT; SPECIAL 239.14 RULES.] The district shall be a redevelopment district under 239.15 Minnesota Statutes, section 469.174, subdivision 10. All 239.16 buildings that are removed to facilitate the Highway 10 239.17 Realignment Project are deemed to be "structurally 239.18 substandard." The three-year limit after demolition of the 239.19 buildings to request tax increment financing certification 239.20 provided in Minnesota Statutes, section 469.174, subdivision 10, 239.21 paragraph (d), clause (1), does not apply. 239.22 Subd. 4. [EXPIRATION.] The authority to approve tax 239.23 increment financing plans to establish a tax increment financing 239.24 redevelopment district subject to this section expires on 239.25 December 31, 2014. 239.26 Subd. 5. [EFFECTIVE DATE.] This section is effective upon 239.27 approval of the governing body of the city of Detroit Lakes and 239.28 compliance with Minnesota Statutes, section 645.021, subdivision 239.29 3. 239.30 Sec. 31. [CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX 239.31 INCREMENT FINANCING DISTRICTS.] 239.32 Subdivision 1. [AUTHORIZATION.] Notwithstanding the 239.33 mileage limitation in Minnesota Statutes, section 469.174, 239.34 subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco 239.35 are deemed to be small cities for purposes of Minnesota 239.36 Statutes, sections 469.174 to 469.1799, as long as they do not 240.1 exceed the population limit in that section. 240.2 Subd. 2. [LOCAL APPROVAL.] This section is effective for 240.3 each of the cities of Elgin, Eyota, Byron, and Oronoco upon 240.4 approval of that city's governing body and compliance with 240.5 Minnesota Statutes, section 645.021, subdivisions 2 and 3. 240.6 Sec. 32. [CITY OF FAIRMONT; TAX INCREMENT FINANCING 240.7 DISTRICT.] 240.8 Subdivision 1. [AUTHORITY TO REDUCE ORIGINAL VALUE.] The 240.9 city of Fairmont may elect to reduce the original tax capacity 240.10 of a previously tax-exempt parcel, consisting of property 240.11 formerly owned by the United States Post Office, in tax 240.12 increment financing district No. 20, to the value of the land. 240.13 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 240.14 compliance by the city of Fairmont with the requirements of 240.15 Minnesota Statutes, section 645.021. 240.16 Sec. 33. [CITY OF FERGUS FALLS; ECONOMIC DEVELOPMENT 240.17 PROPERTY.] 240.18 The provisions of Minnesota Statutes, section 272.02, 240.19 subdivision 39, apply to property located in the city of Fergus 240.20 Falls as if the city had a population of 5,000 or less. 240.21 [EFFECTIVE DATE.] This section is effective for taxes 240.22 levied in 2005, payable in 2006, and thereafter. 240.23 Sec. 34. [CITY OF RICHFIELD; TAX INCREMENT FINANCING 240.24 DISTRICT.] 240.25 Subdivision 1. [AUTHORIZATION.] The city of Richfield may 240.26 create a tax increment financing district consisting of an area 240.27 lying west of Trunk Highway 77 extending: to 16th Avenue 240.28 between Crosstown Highway 62 and 66th Street; to 17th Avenue 240.29 between 66th and 69th Streets; and to 18th Avenue between 69th 240.30 and 72nd Streets. The city or its housing and redevelopment 240.31 authority may be the authority for the purposes of Minnesota 240.32 Statutes, sections 469.174 to 469.179. 240.33 Subd. 2. [DISTRICT IS REDEVELOPMENT DISTRICT.] The 240.34 redevelopment tax increment district created pursuant to 240.35 subdivision 1, within which housing is not a compatible use due 240.36 to the presence of extraordinary low frequency noise and 241.1 vibration impacts, is deemed to be a redevelopment district and 241.2 is subject to Minnesota Statutes, sections 469.174 to 469.179, 241.3 except that: 241.4 (1) expenditures for activities as defined in Minnesota 241.5 Statutes, section 469.1763, subdivision 1, paragraph (b), 241.6 anywhere in the district are deemed to be the costs of 241.7 correcting conditions that allow the designation of 241.8 redevelopment districts pursuant to Minnesota Statutes, section 241.9 469.174, subdivision 10; and 241.10 (2) the five-year rule under Minnesota Statutes, section 241.11 469.1763, subdivision 3, does not apply. 241.12 [EFFECTIVE DATE.] This section is effective upon local 241.13 approval by the city of Richfield in compliance with Minnesota 241.14 Statutes, section 645.021. 241.15 Sec. 35. [CITY OF ST. MICHAEL; TAX INCREMENT FINANCING 241.16 DISTRICT.] 241.17 Subdivision 1. [ESTABLISHMENT OF DISTRICT.] The city of St. 241.18 Michael may establish a redevelopment tax increment financing 241.19 district subject to Minnesota Statutes, sections 469.174 to 241.20 469.179, except as provided in this section. The district must 241.21 be established within an area that includes the downtown and 241.22 town center areas as designated by the city as well as all 241.23 parcels adjacent to marked Trunk Highway 241 within the city. 241.24 Subd. 2. [SPECIAL RULES.] (a) Notwithstanding the 241.25 requirements of Minnesota Statutes, section 469.174, subdivision 241.26 10, the district may be established and operated as a 241.27 redevelopment district. 241.28 (b) Notwithstanding the restrictions of Minnesota Statutes, 241.29 sections 469.176, subdivisions 4 and 4j, and 469.1763, 241.30 subdivision 2, revenues derived from tax increments from the 241.31 district created under this section may be used to meet the cost 241.32 of land acquisition, removal of buildings in the right-of-way 241.33 acquisition area, and other costs incurred by the city of St. 241.34 Michael in the expansion and improvement of marked Trunk Highway 241.35 241 within the city. 241.36 (c) Minnesota Statutes, section 469.176, subdivision 5, 242.1 does not apply to the district. 242.2 [EFFECTIVE DATE.] This section is effective the day after 242.3 the governing body of the city of St. Michael complies with 242.4 Minnesota Statutes, section 645.021, subdivision 3. 242.5 Sec. 36. [ST. PAUL; HOUSING AND REDEVELOPMENT AUTHORITY.] 242.6 Subdivision 1. [HOUSING AND REDEVELOPMENT 242.7 SUBDISTRICTS.] For its tax increment financing districts 242.8 identified in subdivision 2, the Housing and Redevelopment 242.9 Authority of the city of St. Paul may establish subdistricts up 242.10 to the number set forth for each tax increment financing 242.11 district in subdivision 2. The subdistricts shall be treated as 242.12 set forth in subdivision 3, notwithstanding the provisions of 242.13 any other law to the contrary. 242.14 Subd. 2. [DIVISION INTO SUBDISTRICTS; AUTHORITY.] The tax 242.15 increment financing districts with the following Ramsey County 242.16 identification numbers may be divided into a number of 242.17 subdistricts not to exceed the number set forth as follows: No. 242.18 224/233, six subdistricts; No. 225, six subdistricts; No. 228, 242.19 three subdistricts; and No. 234, two subdistricts. 242.20 Subd. 3. [DESIGNATION OF PARCELS.] All parcels in a tax 242.21 increment financing district listed in subdivision 2 must be 242.22 assigned to a subdistrict. Each subdistrict established 242.23 pursuant to this section shall consist of those parcels in the 242.24 tax increment financing district which are designated by the 242.25 commissioners of the Housing and Redevelopment Authority of the 242.26 city of St. Paul by resolution, which parcels need not be 242.27 contiguous. For purposes of determining tax increments and the 242.28 parcels treated as paying tax increments, each subdistrict shall 242.29 be treated as a separate tax increment district. 242.30 [EFFECTIVE DATE.] This section is effective the day after 242.31 the governing body of St. Paul and its chief clerical officer 242.32 comply with Minnesota Statutes, section 645.021, subdivisions 2 242.33 and 3. 242.34 Sec. 37. [WABASHA TAX INCREMENT FINANCING DISTRICT.] 242.35 Subdivision 1. [DISTRICT EXTENSION.] The governing body of 242.36 the city of Wabasha may elect to extend the duration of its 243.1 redevelopment tax increment financing district number 3 by up to 243.2 five additional years. 243.3 Subd. 2. [FIVE-YEAR RULE.] The requirements of Minnesota 243.4 Statutes, section 469.1763, subdivision 3, that activities must 243.5 be undertaken within a five-year period from the date of 243.6 certification of a tax increment financing district must be 243.7 considered to be met for the city of Wabasha redevelopment tax 243.8 increment district number 3, if the activities are undertaken 243.9 within ten years from the date of certification of the district. 243.10 Subd. 3. [NATIONAL EAGLE CENTER.] Notwithstanding the 243.11 provisions of Minnesota Statutes, section 469.176, subdivision 243.12 4l, or any other law, the city of Wabasha may spend the proceeds 243.13 of tax increment bonds issued prior to January 1, 2000, to pay 243.14 the costs of acquiring and constructing a National Eagle Center 243.15 in the city. The city of Wabasha may also use tax increment 243.16 from its tax increment districts to pay the debt service on such 243.17 bonds, or any bonds issued to refund such bonds, subject to 243.18 legal restrictions on the pooling of tax increment. 243.19 [EFFECTIVE DATE.] Subdivision 1 is effective upon 243.20 compliance with the provisions of Minnesota Statutes, sections 243.21 469.1782, subdivision 2, and 645.021. Subdivisions 2 and 3 are 243.22 effective upon compliance by the governing body of the city of 243.23 Wabasha with the provisions of Minnesota Statutes, section 243.24 645.021. 243.25 Sec. 38. [WINONA; EXTENSION OF DURATION OF TAX INCREMENT 243.26 DISTRICT.] 243.27 Subdivision 1. [DURATION.] Notwithstanding the provisions 243.28 of Minnesota Statutes, section 469.176, subdivision 1b, the 243.29 duration of riverfront tax increment financing district number 243.30 2, approved by the port authority of Winona on July 15, 1980, is 243.31 extended to December 31, 2020. Any tax increment received after 243.32 December 31, 2005, must be used solely to pay capital and 243.33 administrative costs of transportation improvements related to 243.34 the Pelzer Street project. 243.35 Subd. 2. [EXCEPTION.] The provisions of Minnesota 243.36 Statutes, section 469.1782, subdivision 2, do not apply to this 244.1 section. 244.2 [EFFECTIVE DATE.] This section is effective upon approval 244.3 by the governing body of the port authority of Winona and 244.4 compliance with Minnesota Statutes, section 645.021. 244.5 Sec. 39. [JOBZ EXPENDITURE LIMITATIONS; AUDITS.] 244.6 Subdivision 1. [DETERMINATION OF TAX EXPENDITURES.] By 244.7 September 1, 2005, the commissioner of revenue, with the 244.8 assistance of the commissioner of employment and economic 244.9 development, must estimate the total amount of tax expenditures 244.10 projected to have been obligated for all job opportunity 244.11 building zone projects that have been approved before June 1, 244.12 2005. If the commissioner of revenue determines that the 244.13 estimated amount of tax expenditures for fiscal years 2005-2007 244.14 exceeds $13,780,000, the commissioner of revenue must inform the 244.15 chairs of the house of representatives and senate tax committees. 244.16 Subd. 2. [AUDITS.] The Tax Increment Financing, Investment 244.17 and Finance Division of the Office of the State Auditor must 244.18 annually audit the creation and operation of all job opportunity 244.19 building zones and business subsidy agreements entered into 244.20 under Minnesota Statutes, sections 469.310 to 469.320. 244.21 Sec. 40. [REPEALER.] 244.22 Laws 1994, chapter 587, article 9, section 20, subdivision 244.23 4, is repealed. 244.24 ARTICLE 6 244.25 PUBLIC FINANCE 244.26 Section 1. Minnesota Statutes 2004, section 118A.05, 244.27 subdivision 5, is amended to read: 244.28 Subd. 5. [GUARANTEED INVESTMENT CONTRACTS.] Agreements or 244.29 contracts for guaranteed investment contracts may be entered 244.30 into if they are issued or guaranteed by United States 244.31 commercial banks, domestic branches of foreign banks, United 244.32 States insurance companies, or their Canadian subsidiaries, or 244.33 the domestic affiliates of any of the foregoing. The credit 244.34 quality of the issuer's or guarantor's short- and long-term 244.35 unsecured debt must be rated in one of the two highest 244.36 categories by a nationally recognized rating agency. Should the 245.1 issuer's or guarantor's credit quality be downgraded below "A", 245.2 the government entity must have withdrawal rights. 245.3 Sec. 2. Minnesota Statutes 2004, section 275.70, 245.4 subdivision 5, is amended to read: 245.5 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 245.6 portions of ad valorem taxes levied by a local governmental unit 245.7 for the following purposes or in the following manner: 245.8 (1) to pay the costs of the principal and interest on 245.9 bonded indebtedness or to reimburse for the amount of liquor 245.10 store revenues used to pay the principal and interest due on 245.11 municipal liquor store bonds in the year preceding the year for 245.12 which the levy limit is calculated; 245.13 (2) to pay the costs of principal and interest on 245.14 certificates of indebtedness issued for any corporate purpose 245.15 except for the following: 245.16 (i) tax anticipation or aid anticipation certificates of 245.17 indebtedness; 245.18 (ii) certificates of indebtedness issued under sections 245.19 298.28 and 298.282; 245.20 (iii) certificates of indebtedness used to fund current 245.21 expenses or to pay the costs of extraordinary expenditures that 245.22 result from a public emergency; or 245.23 (iv) certificates of indebtedness used to fund an 245.24 insufficiency in tax receipts or an insufficiency in other 245.25 revenue sources; 245.26 (3) to provide for the bonded indebtedness portion of 245.27 payments made to another political subdivision of the state of 245.28 Minnesota; 245.29 (4) to fund payments made to the Minnesota State Armory 245.30 Building Commission under section 193.145, subdivision 2, to 245.31 retire the principal and interest on armory construction bonds; 245.32 (5) property taxes approved by voters which are levied 245.33 against the referendum market value as provided under section 245.34 275.61; 245.35 (6) to fund matching requirements needed to qualify for 245.36 federal or state grants or programs to the extent that either 246.1 (i) the matching requirement exceeds the matching requirement in 246.2 calendar year 2001, or (ii) it is a new matching requirement 246.3 that did not exist prior to 2002; 246.4 (7) to pay the expenses reasonably and necessarily incurred 246.5 in preparing for or repairing the effects of natural disaster 246.6 including the occurrence or threat of widespread or severe 246.7 damage, injury, or loss of life or property resulting from 246.8 natural causes, in accordance with standards formulated by the 246.9 Emergency Services Division of the state Department of Public 246.10 Safety, as allowed by the commissioner of revenue under section 246.11 275.74, subdivision 2; 246.12 (8) pay amounts required to correct an error in the levy 246.13 certified to the county auditor by a city or county in a levy 246.14 year, but only to the extent that when added to the preceding 246.15 year's levy it is not in excess of an applicable statutory, 246.16 special law or charter limitation, or the limitation imposed on 246.17 the governmental subdivision by sections 275.70 to 275.74 in the 246.18 preceding levy year; 246.19 (9) to pay an abatement under section 469.1815; 246.20 (10) to pay any costs attributable to increases in the 246.21 employer contribution rates under chapter 353 that are effective 246.22 after June 30, 2001; 246.23 (11) to pay the operating or maintenance costs of a county 246.24 jail as authorized in section 641.01 or 641.262, or of a 246.25 correctional facility as defined in section 241.021, subdivision 246.26 1, paragraph (f), to the extent that the county can demonstrate 246.27 to the commissioner of revenue that the amount has been included 246.28 in the county budget as a direct result of a rule, minimum 246.29 requirement, minimum standard, or directive of the Department of 246.30 Corrections, or to pay the operating or maintenance costs of a 246.31 regional jail as authorized in section 641.262. For purposes of 246.32 this clause, a district court order is not a rule, minimum 246.33 requirement, minimum standard, or directive of the Department of 246.34 Corrections. If the county utilizes this special levy, except 246.35 to pay operating or maintenance costs of a new regional jail 246.36 facility under sections 641.262 to 641.264 which will not 247.1 replace an existing jail facility, any amount levied by the 247.2 county in the previous levy year for the purposes specified 247.3 under this clause and included in the county's previous year's 247.4 levy limitation computed under section 275.71, shall be deducted 247.5 from the levy limit base under section 275.71, subdivision 2, 247.6 when determining the county's current year levy limitation. The 247.7 county shall provide the necessary information to the 247.8 commissioner of revenue for making this determination; 247.9 (12) to pay for operation of a lake improvement district, 247.10 as authorized under section 103B.555. If the county utilizes 247.11 this special levy, any amount levied by the county in the 247.12 previous levy year for the purposes specified under this clause 247.13 and included in the county's previous year's levy limitation 247.14 computed under section 275.71 shall be deducted from the levy 247.15 limit base under section 275.71, subdivision 2, when determining 247.16 the county's current year levy limitation. The county shall 247.17 provide the necessary information to the commissioner of revenue 247.18 for making this determination; 247.19 (13) to repay a state or federal loan used to fund the 247.20 direct or indirect required spending by the local government due 247.21 to a state or federal transportation project or other state or 247.22 federal capital project. This authority may only be used if the 247.23 project is not a local government initiative; 247.24 (14) to pay for court administration costs as required 247.25 under section 273.1398, subdivision 4b, less the (i) county's 247.26 share of transferred fines and fees collected by the district 247.27 courts in the county for calendar year 2001 and (ii) the aid 247.28 amount certified to be paid to the county in 2004 under section 247.29 273.1398, subdivision 4c; however, for taxes levied to pay for 247.30 these costs in the year in which the court financing is 247.31 transferred to the state, the amount under this clause is 247.32 limited to the amount of aid the county is certified to receive 247.33 under section 273.1398, subdivision 4a;and247.34 (15) to fund a police or firefighters relief association as 247.35 required under section 69.77 to the extent that the required 247.36 amount exceeds the amount levied for this purpose in 2001; and 248.1 (16) for purposes of a storm sewer improvement district, 248.2 pursuant to section 444.20. 248.3 Sec. 3. Minnesota Statutes 2004, section 373.01, 248.4 subdivision 3, is amended to read: 248.5 Subd. 3. [CAPITAL NOTES.] (a) A county board may, by 248.6 resolution and without referendum, issue capital notes subject 248.7 to the county debt limit to purchase capital equipment useful 248.8 for county purposes that has an expected useful life at least 248.9 equal to the term of the notes. The notes shall be payable in 248.10 not more thanfiveten years and shall be issued on terms and in 248.11 a manner the board determines. A tax levy shall be made for 248.12 payment of the principal and interest on the notes, in 248.13 accordance with section 475.61, as in the case of bonds. 248.14 (b) For purposes of this subdivision, "capital equipment" 248.15 means: 248.16 (1) public safety, ambulance, road construction or 248.17 maintenance, and medical equipment,; and 248.18 (2) computer hardware andoriginal operating system248.19 software, whether bundled with machinery or equipment or 248.20 unbundled, together with application development services and 248.21 training related to the use of the computer or software. The 248.22 authority to issue capital notes fororiginal operating systems248.23 computer software and related services expires on July 1,2005248.24 2007. 248.25 Sec. 4. Minnesota Statutes 2004, section 373.40, 248.26 subdivision 1, is amended to read: 248.27 Subdivision 1. [DEFINITIONS.] For purposes of this 248.28 section, the following terms have the meanings given. 248.29 (a) "Bonds" means an obligation as defined under section 248.30 475.51. 248.31 (b) "Capital improvement" means acquisition or betterment 248.32 of public lands,development rights in the form of conservation248.33easements under chapter 84C,buildings, or other improvements 248.34 within the county for the purpose of a county courthouse, 248.35 administrative building, health or social service facility, 248.36 correctional facility, jail, law enforcement center, hospital, 249.1 morgue, library, park, qualified indoor ice arena,androads and 249.2 bridges, and the acquisition of development rights in the form 249.3 of conservation easements under chapter 84C. An improvement 249.4 must have an expected useful life of five years or more to 249.5 qualify. "Capital improvement" does not include light rail 249.6 transit or any activity related to it or a recreation or sports 249.7 facility building (such as, but not limited to, a gymnasium, ice 249.8 arena, racquet sports facility, swimming pool, exercise room or 249.9 health spa), unless the building is part of an outdoor park 249.10 facility and is incidental to the primary purpose of outdoor 249.11 recreation. 249.12 (c) "Commissioner" means the commissioner of employment and 249.13 economic development. 249.14 (d) "Metropolitan county" means a county located in the 249.15 seven-county metropolitan area as defined in section 473.121 or 249.16 a county with a population of 90,000 or more. 249.17 (e) "Population" means the population established by the 249.18 most recent of the following (determined as of the date the 249.19 resolution authorizing the bonds was adopted): 249.20 (1) the federal decennial census, 249.21 (2) a special census conducted under contract by the United 249.22 States Bureau of the Census, or 249.23 (3) a population estimate made either by the Metropolitan 249.24 Council or by the state demographer under section 4A.02. 249.25 (f) "Qualified indoor ice arena" means a facility that 249.26 meets the requirements of section 373.43. 249.27 (g) "Tax capacity" means total taxable market value, but 249.28 does not include captured market value. 249.29 Sec. 5. Minnesota Statutes 2004, section 400.04, is 249.30 amended by adding a subdivision to read: 249.31 Subd. 4a. [PERFORMANCE BOND WAIVER OR 249.32 ALTERNATIVE.] Notwithstanding the requirements of section 574.26 249.33 or any other public works bond requirements for a solid waste 249.34 facilities project established under an agreement authorized 249.35 under chapter 115A or chapter 400, the county may waive the 249.36 requirement for performance bonds or accept another form of 250.1 financial guarantee in any amount acceptable to the county, if 250.2 the project is partially or fully funded by a county, and the 250.3 county is not liable for financial acceptance until performance 250.4 guarantees or other standards established under the agreement 250.5 have been satisfied. 250.6 Sec. 6. Minnesota Statutes 2004, section 410.32, is 250.7 amended to read: 250.8 410.32 [CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL 250.9 EQUIPMENT.] 250.10 (a) Notwithstanding any contrary provision of other law or 250.11 charter, a home rule charter city may, by resolution and without 250.12 public referendum, issue capital notes subject to the city debt 250.13 limit to purchase capital equipment. 250.14 (b) For purposes of this section, "capital equipment" means: 250.15 (1) public safety equipment, ambulance and other medical 250.16 equipment, road construction and maintenance equipment, and 250.17 other capital equipment; and 250.18 (2) computer hardware andoriginal operating system250.19 software,providedwhether bundled with machinery or equipment 250.20 or unbundled, together with application development services and 250.21 training related to the use of the computer or software. 250.22 (c) The equipment or softwarehasmust have an expected 250.23 useful life at least as long as the term of the notes. The 250.24 authority to issue capital notes fororiginal operating system250.25 computer software and related services expires on July 1,2005250.26 2007. 250.27 (d) The notes shall be payable in not more thanfiveten 250.28 years and be issued on terms and in the manner the city 250.29 determines. The total principal amount of the capital notes 250.30 issued in a fiscal year shall not exceed 0.03 percent of the 250.31 market value of taxable property in the city for that year. 250.32 (e) A tax levy shall be made for the payment of the 250.33 principal and interest on the notes, in accordance with section 250.34 475.61, as in the case of bonds. 250.35 (f) Notes issued under this section shall require an 250.36 affirmative vote of two-thirds of the governing body of the city. 251.1 (g) Notwithstanding a contrary provision of other law or 251.2 charter, a home rule charter city may also issue capital notes 251.3 subject to its debt limit in the manner and subject to the 251.4 limitations applicable to statutory cities pursuant to section 251.5 412.301. 251.6 Sec. 7. Minnesota Statutes 2004, section 412.301, is 251.7 amended to read: 251.8 412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 251.9 (a) The council may issue certificates of indebtedness or 251.10 capital notes subject to the city debt limits to 251.11 purchase capital equipment. 251.12 (b) For purposes of this section, "capital equipment" means: 251.13 (1) public safety equipment, ambulance and other medical 251.14 equipment, road constructionorand maintenance equipment, and 251.15 other capital equipment; and 251.16 (2) computer hardware andoriginal operating system251.17 software,providedwhether bundled with machinery or equipment 251.18 or unbundled, together with application development services and 251.19 training related to the use of the computer or software. 251.20 (c) The equipment or softwarehasmust have an expected 251.21 useful life at least as long as the terms of the certificates or 251.22 notes. The authority to issue capital notes for original 251.23 operating system software expires on July 1,20052007. 251.24 (d) Such certificates or notes shall be payable in not more 251.25 thanfiveten years and shall be issued on such terms and in 251.26 such manner as the council may determine. 251.27 (e) If the amount of the certificates or notes to be issued 251.28 to finance any such purchase exceeds 0.25 percent of the market 251.29 value of taxable property in the city, they shall not be issued 251.30 for at least ten days after publication in the official 251.31 newspaper of a council resolution determining to issue them; and 251.32 if before the end of that time, a petition asking for an 251.33 election on the proposition signed by voters equal to ten 251.34 percent of the number of voters at the last regular municipal 251.35 election is filed with the clerk, such certificates or notes 251.36 shall not be issued until the proposition of their issuance has 252.1 been approved by a majority of the votes cast on the question at 252.2 a regular or special election. 252.3 (f) A tax levy shall be made for the payment of the 252.4 principal and interest on such certificates or notes, in 252.5 accordance with section 475.61, as in the case of bonds. 252.6 Sec. 8. Minnesota Statutes 2004, section 428A.101, is 252.7 amended to read: 252.8 428A.101 [DEADLINE FOR SPECIAL SERVICEDISTRICTDISTRICTS 252.9 UNDER GENERAL LAW.] 252.10 The establishment of a new special service district after 252.11 June 30,20052009, requires enactment of a special law 252.12 authorizing the establishment of the area. 252.13 Sec. 9. Minnesota Statutes 2004, section 428A.21, is 252.14 amended to read: 252.15 428A.21 [SUNSETDEADLINE FOR HOUSING IMPROVEMENT DISTRICTS 252.16 UNDER GENERAL LAW.] 252.17NoThe establishment of a new housing improvementareas may252.18be established under sections 428A.11 to 428A.20area after June 252.19 30,2005. After June 30, 2005, a city may establish a housing252.20improvement area, provided that it receives enabling legislation252.21 2009, requires enactment of a special law authorizing the 252.22 establishment of the area. 252.23 Sec. 10. Minnesota Statutes 2004, section 429.031, is 252.24 amended by adding a subdivision to read: 252.25 Subd. 4. [IMPROVEMENTS; ORDERLY ANNEXATION.] An 252.26 improvement may be made by a municipality in an area that is the 252.27 subject of an orderly annexation agreement under section 252.28 414.0325 to which the municipality is a party. The municipality 252.29 may subsequently reimburse itself for all or any part of the 252.30 cost of such an improvement by levying assessments on the 252.31 property subject to the orderly annexation agreement, when 252.32 annexed, in the manner provided in section 429.051, but only if 252.33 the orderly annexation agreement includes a statement that the 252.34 municipality intends to do so and notice has been provided to 252.35 the property owner as provided in subdivision 1. 252.36 Sec. 11. Minnesota Statutes 2004, section 429.051, is 253.1 amended to read: 253.2 429.051 [APPORTIONMENT OF COST.] 253.3 The cost of any improvement, or any part thereof, may be 253.4 assessed upon property benefited by the improvement, based upon 253.5 the benefits received, whether or not the property abuts on the 253.6 improvement and whether or not any part of the cost of the 253.7 improvement is paid from the county state-aid highway fund, the 253.8 municipal state-aid street fund, or the trunk highway fund. The 253.9 area assessed may be less than but may not exceed the area 253.10 proposed to be assessed as stated in the notice of hearing on 253.11 the improvement, except as provided below. The municipality may 253.12 pay such portion of the cost of the improvement as the council 253.13 may determine from general ad valorem tax levies or from other 253.14 revenues or funds of the municipality available for the 253.15 purpose. The municipality may subsequently reimburse itself for 253.16 all or any of the portion of the cost ofa water, storm sewer,253.17or sanitary seweran improvement so paid by levying additional 253.18 assessments upon any properties abutting on but not previously 253.19 assessed for the improvement, on notice and hearing as provided 253.20 for the assessments initially made. To the extent that such an 253.21 improvement benefits nonabutting properties which may be served 253.22 by the improvement when one or more later extensions or 253.23 improvements are made but which are not initially assessed 253.24 therefor, the municipality may also reimburse itself by adding 253.25 all or any of the portion of the cost so paid to the assessments 253.26 levied for any of such later extensions or improvements, 253.27 provided that notice that such additional amount will be 253.28 assessed is included in the notice of hearing on the making of 253.29 such extensions or improvements. The additional assessments 253.30 herein authorized may be made whether or not the properties 253.31 assessed were included in the area described in the notice of 253.32 hearing on the making of the original improvement. 253.33 In any city of the fourth class electing to proceed under a 253.34 home rule charter as provided in this chapter, which charter 253.35 provides for a board of water commissioners and authorizes such 253.36 board to assess a water frontage tax to defray the cost of 254.1 construction of water mains, such board may assess the tax based 254.2 upon the benefits received and without regard to any charter 254.3 limitation on the amount that may be assessed for each lineal 254.4 foot of property abutting on the water main. The water frontage 254.5 tax shall be imposed according to the procedure and, except as 254.6 herein provided, subject to the limitations of the charter of 254.7 the city. 254.8 Sec. 12. Minnesota Statutes 2004, section 469.034, 254.9 subdivision 2, is amended to read: 254.10 Subd. 2. [GENERAL OBLIGATION REVENUE BONDS.] (a) An 254.11 authority may pledge the general obligation of the general 254.12 jurisdiction governmental unit as additional security for bonds 254.13 payable from income or revenues of the project or the 254.14 authority. The authority must find that the pledged revenues 254.15 will equal or exceed 110 percent of the principal and interest 254.16 due on the bonds for each year. The proceeds of the bonds must 254.17 be used for a qualified housing development project or 254.18 projects. The obligations must be issued and sold in the manner 254.19 and following the procedures provided by chapter 475, except the 254.20 obligations are not subject to approval by the electors, and the 254.21 maturities may extend to not more than3035 yearsfrom the254.22estimated date of completion of the projectfor obligations sold 254.23 to finance housing for the elderly and 40 years for other 254.24 obligations issued under this subdivision. The authority is the 254.25 municipality for purposes of chapter 475. 254.26 (b) The principal amount of the issue must be approved by 254.27 the governing body of the general jurisdiction governmental unit 254.28 whose general obligation is pledged. Public hearings must be 254.29 held on issuance of the obligations by both the authority and 254.30 the general jurisdiction governmental unit. The hearings must 254.31 be held at least 15 days, but not more than 120 days, before the 254.32 sale of the obligations. 254.33 (c) The maximum amount of general obligation bonds that may 254.34 be issued and outstanding under this section equals the greater 254.35 of (1) one-half of one percent of the taxable market value of 254.36 the general jurisdiction governmental unit whose general 255.1 obligationwhich includes a tax on propertyis pledged, or (2) 255.2 $3,000,000. In the case of county or multicounty general 255.3 obligation bonds, the outstanding general obligation bonds of 255.4 all cities in the county or counties issued under this 255.5 subdivision must be added in calculating the limit under clause 255.6 (1). 255.7 (d) "General jurisdiction governmental unit" means the city 255.8 in which the housing development project is located. In the 255.9 case of a county or multicounty authority, the county or 255.10 counties may act as the general jurisdiction governmental unit. 255.11 In the case of a multicounty authority, the pledge of the 255.12 general obligation is a pledge of a tax on the taxable property 255.13 in each of the counties. 255.14 (e) "Qualified housing development project" means a housing 255.15 development project providing housing either for the elderly or 255.16 for individuals and families with incomes not greater than 80 255.17 percent of the median family income as estimated by the United 255.18 States Department of Housing and Urban Development for the 255.19 standard metropolitan statistical area or the nonmetropolitan 255.20 county in which the project is located, and will be owned by the 255.21 authority for the term of the bonds. A qualified housing 255.22 development project may admit nonelderly individuals and 255.23 families with higher incomes if: 255.24 (1) three years have passed since initial occupancy; 255.25 (2) the authority finds the project is experiencing 255.26 unanticipated vacancies resulting in insufficient revenues, 255.27 because of changes in population or other unforeseen 255.28 circumstances that occurred after the initial finding of 255.29 adequate revenues; and 255.30 (3) the authority finds a tax levy or payment from general 255.31 assets of the general jurisdiction governmental unit will be 255.32 necessary to pay debt service on the bonds if higher income 255.33 individuals or families are not admitted. 255.34 Sec. 13. Minnesota Statutes 2004, section 469.158, is 255.35 amended to read: 255.36 469.158 [MANNER OF ISSUANCE OF BONDS; INTEREST RATE.] 256.1 Bonds authorized under sections 469.152 to 469.165 must be 256.2 issued in accordance with the provisions of chapter 475 relating 256.3 to bonds payable from income of revenue producing conveniences, 256.4 except that public sale is not required, the provisions of 256.5 sections 475.62 and 475.63 do not apply, and the bonds may 256.6 mature at the time or times, in the amount or amounts, within 30 256.7 years, or in the case of bonds issued to finance dormitories or 256.8 other types of student housing, 40 years from date of issue, and 256.9 may be sold at a price equal to the percentage of the par value 256.10 thereof, plus accrued interest, and bearing interest at the rate 256.11 or rates agreed by the contracting party, the purchaser, and the 256.12 municipality or redevelopment agency, notwithstanding any 256.13 limitation of interest rate or cost or of the amounts of annual 256.14 maturities contained in any other law. Bonds issued to refund 256.15 bonds previously issued pursuant to sections 469.152 to 469.165 256.16 may be issued in amounts determined by the municipality or 256.17 redevelopment agency notwithstanding the provisions of section 256.18 475.67, subdivision 3. 256.19 Sec. 14. Minnesota Statutes 2004, section 473.39, is 256.20 amended by adding a subdivision to read: 256.21 Subd. 1k. [OBLIGATIONS.] After July 1, 2005, in addition 256.22 to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 256.23 and 1j, the council may issue certificates of indebtedness, 256.24 bonds, or other obligations under this section in an amount not 256.25 exceeding $64,000,000 for capital expenditures as prescribed in 256.26 the council's regional transit master plan and transit capital 256.27 improvement program and for related costs, including the costs 256.28 of issuance and sale of the obligations. 256.29 Sec. 15. Minnesota Statutes 2004, section 474A.061, 256.30 subdivision 2c, is amended to read: 256.31 Subd. 2c. [PUBLIC FACILITIES POOL ALLOCATION.] From the 256.32 beginning of the calendar year and continuing for a period of 256.33 120 days, the commissioner shall reserve$3,000,000$5,000,000 256.34 of the available bonding authority from the public facilities 256.35 pool for applications for public facilities projects to be 256.36 financed by the Western Lake Superior Sanitary District. 257.1 Commencing on the second Tuesday in January and continuing on 257.2 each Monday through the last Monday in July, the commissioner 257.3 shall allocate available bonding authority from the public 257.4 facilities pool to applications for eligible public facilities 257.5 projects received on or before the Monday of the preceding 257.6 week. If there are two or more applications for public 257.7 facilities projects from the pool and there is insufficient 257.8 available bonding authority to provide allocations for all 257.9 projects in any one week, the available bonding authority shall 257.10 be awarded by lot unless otherwise agreed to by the respective 257.11 issuers. 257.12 Sec. 16. Minnesota Statutes 2004, section 474A.131, 257.13 subdivision 1, is amended to read: 257.14 Subdivision 1. [NOTICE OF ISSUE.] Each issuer that issues 257.15 bonds with an allocation received under this chapter shall 257.16 provide a notice of issue to the department on forms provided by 257.17 the department stating: 257.18 (1) the date of issuance of the bonds; 257.19 (2) the title of the issue; 257.20 (3) the principal amount of the bonds; 257.21 (4) the type of qualified bonds under federal tax law; 257.22 (5) the dollar amount of the bonds issued that were subject 257.23 to the annual volume cap; and 257.24 (6) for entitlement issuers, whether the allocation is from 257.25 current year entitlement authority or is from carryforward 257.26 authority. 257.27 For obligations that are issued as a part of a series of 257.28 obligations, a notice must be provided for each series. A 257.29 penalty of one-half of the amount of the application deposit not 257.30 to exceed $5,000 shall apply to any issue of obligations for 257.31 which a notice of issue is not provided to the department within 257.32 five business days after issuance or beforethe last Monday4:30 257.33 p.m. on the last business day in December, whichever occurs 257.34 first. Within 30 days after receipt of a notice of issue the 257.35 department shall refund a portion of the application deposit 257.36 equal to one percent of the amount of the bonding authority 258.1 actually issued if a one percent application deposit was made, 258.2 or equal to two percent of the amount of the bonding authority 258.3 actually issued if a two percent application deposit was made, 258.4 less any penalty amount. 258.5 Sec. 17. Minnesota Statutes 2004, section 475.51, 258.6 subdivision 4, is amended to read: 258.7 Subd. 4. [NET DEBT.] "Net debt" means the amount remaining 258.8 after deducting from its gross debt the amount of current 258.9 revenues which are applicable within the current fiscal year to 258.10 the payment of any debt and the aggregate of the principal of 258.11 the following: 258.12 (1) Obligations issued for improvements which are payable 258.13 wholly or partly from the proceeds of special assessments levied 258.14 upon property specially benefited thereby, including those which 258.15 are general obligations of the municipality issuing them, if the 258.16 municipality is entitled to reimbursement in whole or in part 258.17 from the proceeds of the special assessments. 258.18 (2) Warrants or orders having no definite or fixed maturity. 258.19 (3) Obligations payable wholly from the income from revenue 258.20 producing conveniences. 258.21 (4) Obligations issued to create or maintain a permanent 258.22 improvement revolving fund. 258.23 (5) Obligations issued for the acquisition, and betterment 258.24 of public waterworks systems, and public lighting, heating or 258.25 power systems, and of any combination thereof or for any other 258.26 public convenience from which a revenue is or may be derived. 258.27 (6) Debt service loans and capital loans made to a school 258.28 district under the provisions of sections 126C.68 and 126C.69. 258.29 (7) Amount of all money and the face value of all 258.30 securities held as a debt service fund for the extinguishment of 258.31 obligations other than those deductible under this subdivision. 258.32 (8) Obligations to repay loans made under section 216C.37. 258.33 (9) Obligations to repay loans made from money received 258.34 from litigation or settlement of alleged violations of federal 258.35 petroleum pricing regulations. 258.36 (10) Obligations issued to pay pension fund liabilities 259.1 under section 475.52, subdivision 6, or any charter authority. 259.2 (11) Obligations issued to pay judgments against the 259.3 municipality under section 475.52, subdivision 6, or any charter 259.4 authority. 259.5 (12) All other obligations which under the provisions of 259.6 law authorizing their issuance are not to be included in 259.7 computing the net debt of the municipality. 259.8 Sec. 18. Minnesota Statutes 2004, section 475.52, 259.9 subdivision 1, is amended to read: 259.10 Subdivision 1. [STATUTORY CITIES.] Any statutory city may 259.11 issue bonds or other obligations for the acquisition or 259.12 betterment of public buildings, means of garbage disposal, 259.13 hospitals, nursing homes, homes for the aged, schools, 259.14 libraries, museums, art galleries, parks, playgrounds, stadia, 259.15 sewers, sewage disposal plants, subways, streets, sidewalks, 259.16 warning systems; for any utility or other public convenience 259.17 from which a revenue is or may be derived; for a permanent 259.18 improvement revolving fund; for changing, controlling or 259.19 bridging streams and other waterways; for the acquisition and 259.20 betterment of bridges and roads within two miles of the 259.21 corporate limits; for the acquisition of development rights in 259.22 the form of conservation easements under chapter 84C; and for 259.23 acquisition of equipment for snow removal, street construction 259.24 and maintenance, or fire fighting. Without limitation by the 259.25 foregoing the city may issue bonds to provide money for any 259.26 authorized corporate purpose except current expenses. 259.27 Sec. 19. Minnesota Statutes 2004, section 475.52, 259.28 subdivision 3, is amended to read: 259.29 Subd. 3. [COUNTIES.] Any county may issue bonds for the 259.30 acquisition or betterment of courthouses, county administrative 259.31 buildings, health or social service facilities, correctional 259.32 facilities, law enforcement centers, jails, morgues, libraries, 259.33 parks, and hospitals, for roads and bridges within the county or 259.34 bordering thereon and for road equipment and machinery and for 259.35 ambulances and related equipment; for the acquisition of 259.36 development rights in the form of conservation easements under 260.1 chapter 84C, and for capital equipment for the administration 260.2 and conduct of elections providing the equipment is uniform 260.3 countywide, except that the power of counties to issue bonds in 260.4 connection with a library shall not exist in Hennepin County. 260.5 Sec. 20. Minnesota Statutes 2004, section 475.52, 260.6 subdivision 4, is amended to read: 260.7 Subd. 4. [TOWNS.] Any town may issue bonds for the 260.8 acquisition and betterment of town halls, town roads and 260.9 bridges, nursing homes and homes for the aged, and for 260.10 acquisition of equipment for snow removal, road construction or 260.11 maintenance, and fire fighting; for the acquisition of 260.12 development rights in the form of conservation easements under 260.13 chapter 84C; and for the acquisition and betterment of any 260.14 buildings to house and maintain town equipment. 260.15 Sec. 21. Minnesota Statutes 2004, section 475.521, 260.16 subdivision 1, is amended to read: 260.17 Subdivision 1. [DEFINITIONS.] For purposes of this 260.18 section, the following terms have the meanings given. 260.19 (a) "Bonds" mean an obligation defined under section 475.51. 260.20 (b) "Capital improvement" means acquisition or betterment 260.21 of public lands, buildings or other improvements for the purpose 260.22 of a city hall, town hall, library, public safety facility, and 260.23 public works facility. An improvement must have an expected 260.24 useful life of five years or more to qualify. Capital 260.25 improvement does not include light rail transit or any activity 260.26 related to it, or a park,library,road, bridge, administrative 260.27 building other than a city or town hall, or land for any of 260.28 those facilities. 260.29 (c)"City""Municipality" means a home rule charter or 260.30 statutory city or a town. 260.31 Sec. 22. Minnesota Statutes 2004, section 475.521, 260.32 subdivision 2, is amended to read: 260.33 Subd. 2. [ELECTION REQUIREMENT.] (a) Bonds issued by a 260.34citymunicipality to finance capital improvements under an 260.35 approved capital improvements plan are not subject to the 260.36 election requirements of section 475.58.The bonds are subject261.1to the net debt limits under section 475.53.The bonds must be 261.2 approved by an affirmative vote of three-fifths of the members 261.3 of a five-membercity councilgoverning body. In the case of 261.4 acity councilgoverning body having more or less than five 261.5 members, the bonds must be approved by a vote of at least 261.6 two-thirds of thecity councilmembers of the governing body. 261.7 (b) Before the issuance of bonds qualifying under this 261.8 section, thecitymunicipality must publish a notice of its 261.9 intention to issue the bonds and the date and time of the 261.10 hearing to obtain public comment on the matter. The notice must 261.11 be published in the official newspaper of thecitymunicipality 261.12 or in a newspaper of general circulation in thecity261.13 municipality. Additionally, the notice may be posted on the 261.14 official Web site, if any, of thecitymunicipality. The notice 261.15 must be published at least 14 but not more than 28 days before 261.16 the date of the hearing. 261.17 (c) Acitymunicipality may issue the bonds only after 261.18 obtaining the approval of a majority of the voters voting on the 261.19 question of issuing the obligations, if a petition requesting a 261.20 vote on the issuance is signed by voters equal to five percent 261.21 of the votes cast in thecitymunicipality in the last general 261.22 election and is filed with thecityclerk within 30 days after 261.23 the public hearing. The commissioner of revenue shall prepare a 261.24 suggested form of the question to be presented at the election. 261.25 Sec. 23. Minnesota Statutes 2004, section 475.521, 261.26 subdivision 3, is amended to read: 261.27 Subd. 3. [CAPITAL IMPROVEMENT PLAN.] (a) Acity261.28 municipality may adopt a capital improvement plan. The plan 261.29 must cover at least a five-year period beginning with the date 261.30 of its adoption. The plan must set forth the estimated 261.31 schedule, timing, and details of specific capital improvements 261.32 by year, together with the estimated cost, the need for the 261.33 improvement, and sources of revenue to pay for the improvement. 261.34 In preparing the capital improvement plan, thecity council261.35 governing body must consider for each project and for the 261.36 overall plan: 262.1 (1) the condition of thecity'smunicipality's existing 262.2 infrastructure, including the projected need for repair or 262.3 replacement; 262.4 (2) the likely demand for the improvement; 262.5 (3) the estimated cost of the improvement; 262.6 (4) the available public resources; 262.7 (5) the level of overlapping debt in thecitymunicipality; 262.8 (6) the relative benefits and costs of alternative uses of 262.9 the funds; 262.10 (7) operating costs of the proposed improvements; and 262.11 (8) alternatives for providing services most efficiently 262.12 through shared facilities with othercitiesmunicipalities or 262.13 local government units. 262.14 (b) The capital improvement plan and annual amendments to 262.15 it must be approved by thecity councilgoverning body after 262.16 public hearing. 262.17 Sec. 24. Minnesota Statutes 2004, section 475.521, 262.18 subdivision 4, is amended to read: 262.19 Subd. 4. [LIMITATIONS ON AMOUNT.] Acitymunicipality may 262.20 not issue bonds under this section if the maximum amount of 262.21 principal and interest to become due in any year on all the 262.22 outstanding bonds issued under this section, including the bonds 262.23 to be issued, will equal or exceed0.053670.16 percent of the 262.24 taxable market value of property in thecountymunicipality. 262.25 Calculation of the limit must be made using the taxable market 262.26 value for the taxes payable year in which the obligations are 262.27 issued and sold. In the case of a municipality with a 262.28 population of 2,500 or more, the bonds are subject to the net 262.29 debt limits under section 475.53. In the case of a shared 262.30 facility in which more than one municipality participates, upon 262.31 compliance by each participating municipality with the 262.32 requirements of subdivision 2, the limitations in this 262.33 subdivision and the net debt represented by the bonds shall be 262.34 allocated to each participating municipality in proportion to 262.35 its required financial contribution to the financing of the 262.36 shared facility, as set forth in the joint powers agreement 263.1 relating to the shared facility. This section does not limit 263.2 the authority to issue bonds under any other special or general 263.3 law. 263.4 Sec. 25. Minnesota Statutes 2004, section 475.58, 263.5 subdivision 3b, is amended to read: 263.6 Subd. 3b. [STREET RECONSTRUCTION.] (a) A municipality may, 263.7 without regard to the election requirement under subdivision 1, 263.8 issue and sell obligations for street reconstruction, if the 263.9 following conditions are met: 263.10 (1) the streets are reconstructed under a street 263.11 reconstruction plan that describes the streets to be 263.12 reconstructed, the estimated costs, and any planned 263.13 reconstruction of other streets in the municipality over the 263.14 next five years, and the plan and issuance of the obligations 263.15 has been approved by a vote of all of the members of the 263.16 governing body following a public hearing for which notice has 263.17 been published in the official newspaper at least ten days but 263.18 not more than 28 days prior to the hearing; and 263.19 (2) if a petition requesting a vote on the issuance is 263.20 signed by voters equal to five percent of the votes cast in the 263.21 last municipal general election and is filed with the municipal 263.22 clerk within 30 days of the public hearing, the municipality may 263.23 issue the bonds only after obtaining the approval of a majority 263.24 of the voters voting on the question of the issuance of the 263.25 obligations. 263.26 (b) Obligations issued under this subdivision are subject 263.27 to the debt limit of the municipality and are not excluded from 263.28 net debt under section 475.51, subdivision 4. 263.29 (c) For purposes of this subdivision, street reconstruction 263.30 includes utility replacement and relocation and other activities 263.31 incidental to the street reconstruction,butturn lanes and 263.32 other improvements having a substantial public safety function, 263.33 realignments, other modifications to intersect with state and 263.34 county roads, and the local share of state and county road 263.35 projects. 263.36 (d) Except in the case of turn lanes, safety improvements, 264.1 realignments, intersection modifications, and the local share of 264.2 state and county road projects, street reconstruction does not 264.3 include the portion of project cost allocable to widening a 264.4 street or adding curbs and gutters where none previously existed. 264.5 Sec. 26. [CITY OF ST. PAUL; RIVERCENTRE COMPLEX 264.6 OPERATION.] 264.7 Subdivision 1. [DEFINITIONS.] (a) For the purposes of this 264.8 section, the terms defined in this subdivision have the meanings 264.9 given them. 264.10 (b) "City" means the city of St. Paul, its mayor, city 264.11 council, and any other board, authority, commission, or officer 264.12 authorized by law, charter, or ordinance to exercise city powers 264.13 of the nature referred to in this section. 264.14 (c) "RiverCentre complex" means collectively the 264.15 auditorium, convention, conference and education center, arena, 264.16 and parking ramp facilities presently and commonly known as the 264.17 Roy Wilkins Auditorium, St. Paul RiverCentre, Xcel Energy 264.18 Center, and RiverCentre Parking Ramp, including all property, 264.19 real or personal, tangible or intangible, located in the city, 264.20 intended to be used as part of the RiverCentre complex or 264.21 additions to or extensions of it. 264.22 Subd. 2. [CREATION OF NONPROFIT ORGANIZATION.] As required 264.23 under Minnesota Statutes, section 465.717, and notwithstanding 264.24 any other law, city charter provision, or ordinance to the 264.25 contrary, the city of St. Paul may participate in the creation 264.26 of a nonprofit organization for the purposes provided in this 264.27 section. 264.28 Subd. 3. [GOVERNING BOARD.] (a) The mayor of the city, 264.29 subject to approval by the city council, shall appoint a 264.30 majority of the members of the governing board of the nonprofit 264.31 organization performing all or a part of the activities 264.32 necessary to carry out the purposes specified in this section. 264.33 The mayor may designate any officer or employee of the city to 264.34 serve as a member of the governing board of any nonprofit 264.35 organization. 264.36 (b) In addition to the appointments made by the mayor under 265.1 paragraph (a), the mayor shall designate three members of the 265.2 city council to serve on the governing board of the nonprofit 265.3 organization. 265.4 (c) Notwithstanding any provision contained in the articles 265.5 of incorporation and bylaws of the nonprofit organization, any 265.6 member of the governing board appointed by the mayor may be 265.7 removed only by the mayor for cause. 265.8 (d) The governing board of the nonprofit organization shall 265.9 select, subject to the approval of the mayor, a president to 265.10 serve as chief executive officer and general manager of the 265.11 nonprofit organization. 265.12 (e) The procedures in Minnesota Statutes, section 317A.255, 265.13 subdivision 1, paragraph (b), relating to director conflicts of 265.14 interest, are not required if the contract or other transaction 265.15 is between the city and the nonprofit organization. 265.16 Subd. 4. [RIVERCENTRE MANAGEMENT; AUTHORITY TO CONTRACT 265.17 WITH NONPROFIT ORGANIZATION.] The city may enter into an 265.18 agreement with the nonprofit organization created in subdivision 265.19 2 to equip, maintain, manage, and operate all or a portion of 265.20 the RiverCentre complex and to manage and operate a convention 265.21 bureau to market and promote the city as a tourist or convention 265.22 center. Except as otherwise provided in this section, the 265.23 nonprofit organization may only contract and utilize and expend 265.24 funds for these purposes under the direction of its governing 265.25 board, subject to the accounting, financial reporting, and other 265.26 conditions that the city may prescribe in a contract made under 265.27 this section between the city and the nonprofit organization. 265.28 The nonprofit organization may use the services of the office of 265.29 the city attorney and the city's purchasing department. All 265.30 activities performed to carry out these purposes are deemed to 265.31 be for a public purpose. 265.32 Subd. 5. [BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX 265.33 EXEMPTIONS PRESERVED.] (a) The city must protect the rights of 265.34 holders of bonds issued for the RiverCentre complex, including 265.35 preserving the tax-exempt status of the bonds. 265.36 (b) The use and operation of the RiverCentre complex by the 266.1 nonprofit organization with which the city contracts under this 266.2 act is a use, lease, or occupancy for public, governmental, and 266.3 municipal purposes, and the complex is exempt from taxation by 266.4 the state or any political subdivision of the state during such 266.5 use, to the extent it would be exempt if the complex was 266.6 equipped, maintained, managed, and operated by the city. 266.7 (c) Gross receipts of tickets and admissions to events at 266.8 the RiverCentre complex sponsored by the nonprofit organization 266.9 created in this section do not qualify for the sales tax 266.10 exemption under Minnesota Statutes, section 297A.70, subdivision 266.11 10. 266.12 Subd. 6. [APPLICABLE GENERAL LAWS.] The following statutes 266.13 apply to the nonprofit organization with which the city 266.14 contracts under this section the same as they apply to the city, 266.15 to the extent practicable: 266.16 (1) Minnesota Statutes, chapter 13D, the Minnesota Open 266.17 Meeting Law; and 266.18 (2) Minnesota Statutes, chapter 13, the Government Data 266.19 Practices Act. 266.20 Subd. 7. [SUCCESSION.] The nonprofit organization with 266.21 which the city contracts under this section is the successor to 266.22 all powers, rights, assets, privileges, and interests held and 266.23 enjoyed by the RiverCentre authority on the effective date of 266.24 this section, and established by the provisions of Laws 1967, 266.25 chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and 3, 266.26 clause (3), as amended; Laws 1982, chapter 523, article 25, 266.27 sections 4 and 5, as amended; Laws 1998, chapter 404, sections 266.28 81 and 82; and Minnesota Statutes, section 297A.98. On the 266.29 effective date of the contract between the city and the 266.30 nonprofit organization authorized by this section, the 266.31 RiverCentre authority ceases to exist for only so long as the 266.32 contract is in effect, and all other laws or provisions 266.33 specifically relating to the RiverCentre authority and the 266.34 RiverCentre complex that are not otherwise referenced in this 266.35 section, do not apply to the nonprofit organization. 266.36 Subd. 8. [LIABILITY.] The nonprofit organization with 267.1 which the city contracts under this section is a "municipality," 267.2 and the officers, directors, employees, and agents of the 267.3 nonprofit organization are "employees, officers, or agents," 267.4 under Minnesota Statutes, chapter 466, relating to tort 267.5 liability. The city must defend, save harmless, and indemnify 267.6 the nonprofit organization, including the nonprofit's officers, 267.7 directors, employees, and agents, against any claim or demand 267.8 arising out of the nonprofit organization's performance under 267.9 the contract. 267.10 [EFFECTIVE DATE.] This section is effective the day after 267.11 the city council and the chief clerical officer of the city of 267.12 St. Paul have timely completed their compliance with Minnesota 267.13 Statutes, section 645.023, subdivisions 2 and 3. 267.14 Sec. 27. [TRANSFER OF MHFA BONDING AUTHORITY TO HESO.] 267.15 Notwithstanding Minnesota Statutes, section 474A.03, 267.16 subdivision 2a, clause (b), the Minnesota Housing Finance Agency 267.17 may enter into an agreement with the Higher Education Services 267.18 Office under which the Higher Education Services Office issues 267.19 qualified student loan bonds, up to $50,000,000 of which are 267.20 issued pursuant to bonding authority allocated to the Minnesota 267.21 Housing Finance Agency in 2004 under Minnesota Statutes, section 267.22 474A.03, subdivision 2a, clause (a). This amount is in addition 267.23 to the bonding authority otherwise allocated to the Higher 267.24 Education Services Office under Minnesota Statutes, chapter 267.25 474A. Notwithstanding Minnesota Statutes, section 474A.04, 267.26 subdivision 1a, 474A.061, or 474A.091, subdivision 2, bonding 267.27 authority carried forward by the Minnesota Housing Financing 267.28 Agency from its allocation for 2004 under Minnesota Statutes, 267.29 section 474A.03, subdivision 2a, clause (b), are exempt from the 267.30 requirement that the bonding authority be permanently issued by 267.31 December 31 of the next succeeding calendar year. 267.32 Sec. 28. [APPLICATION.] 267.33 Section 14 applies in the counties of Anoka, Carver, 267.34 Dakota, Hennepin, Ramsey, Scott, and Washington. 267.35 Sec. 29. [REPEALER.] 267.36 Minnesota Statutes 2004, section 473.39, subdivision 1f, is 268.1 repealed. 268.2 Sec. 30. [EFFECTIVE DATE.] 268.3 This article is effective the day following final enactment. 268.4 ARTICLE 7 268.5 MINERALS; AGGREGATE 268.6 Section 1. Minnesota Statutes 2004, section 272.02, is 268.7 amended by adding a subdivision to read: 268.8 Subd. 68. [PROPERTY USED IN THE BUSINESS OF MINING SUBJECT 268.9 TO THE NET PROCEEDS TAX.] The following property used in the 268.10 business of mining subject to the net proceeds tax under section 268.11 298.015 is exempt: 268.12 (1) deposits of ores, metals, and minerals and the lands in 268.13 which they are contained; 268.14 (2) all real and personal property used in mining, 268.15 quarrying, producing, or refining ores, minerals, or metals, 268.16 including lands occupied by or used in connection with the 268.17 mining, quarrying, production, or refining facilities; and 268.18 (3) concentrate or direct reduced ore. 268.19 This exemption applies for each year that a person subject to 268.20 tax under section 298.015 uses the property for mining, 268.21 quarrying, producing, or refining ores, metals, or minerals. 268.22 [EFFECTIVE DATE.] This section is effective for taxes 268.23 payable in 2006 and thereafter. 268.24 Sec. 2. Minnesota Statutes 2004, section 290.05, 268.25 subdivision 1, is amended to read: 268.26 Subdivision 1. [EXEMPT ENTITIES.] The following 268.27 corporations, individuals, estates, trusts, and organizations 268.28 shall be exempted from taxation under this chapter, provided 268.29 that every such person or corporation claiming exemption under 268.30 this chapter, in whole or in part, must establish to the 268.31 satisfaction of the commissioner the taxable status of any 268.32 income or activity: 268.33 (a) corporations, individuals, estates, and trusts engaged 268.34 in the business of mining or producing iron ore and mining, 268.35 producing, or refining other ores, metals, and minerals, the 268.36 miningor, production, or refining of which is subject to the 269.1 occupation tax imposed by section 298.01; but if any such 269.2 corporation, individual, estate, or trust engages in any other 269.3 business or activity or has income from any property not used in 269.4 such business it shall be subject to this tax computed on the 269.5 net income from such property or such other business or 269.6 activity. Royalty shall not be considered as income from the 269.7 business of mining or producing iron ore within the meaning of 269.8 this section; 269.9 (b) the United States of America, the state of Minnesota or 269.10 any political subdivision of either agencies or 269.11 instrumentalities, whether engaged in the discharge of 269.12 governmental or proprietary functions; and 269.13 (c) any insurance company. 269.14 [EFFECTIVE DATE.] This section is effective for taxable 269.15 years beginning after December 31, 2004. 269.16 Sec. 3. Minnesota Statutes 2004, section 290.17, 269.17 subdivision 4, is amended to read: 269.18 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 269.19 business conducted wholly within this state or partly within and 269.20 partly without this state is part of a unitary business, the 269.21 entire income of the unitary business is subject to 269.22 apportionment pursuant to section 290.191. Notwithstanding 269.23 subdivision 2, paragraph (c), none of the income of a unitary 269.24 business is considered to be derived from any particular source 269.25 and none may be allocated to a particular place except as 269.26 provided by the applicable apportionment formula. The 269.27 provisions of this subdivision do not apply to business income 269.28 subject to subdivision 5, income of an insurance company,or269.29 income of an investment company determined under section 290.36, 269.30 or income of a mine or mineral processing facility subject to 269.31 tax under section 298.01. 269.32 (b) The term "unitary business" means business activities 269.33 or operations which result in a flow of value between them. The 269.34 term may be applied within a single legal entity or between 269.35 multiple entities and without regard to whether each entity is a 269.36 sole proprietorship, a corporation, a partnership or a trust. 270.1 (c) Unity is presumed whenever there is unity of ownership, 270.2 operation, and use, evidenced by centralized management or 270.3 executive force, centralized purchasing, advertising, 270.4 accounting, or other controlled interaction, but the absence of 270.5 these centralized activities will not necessarily evidence a 270.6 nonunitary business. Unity is also presumed when business 270.7 activities or operations are of mutual benefit, dependent upon 270.8 or contributory to one another, either individually or as a 270.9 group. 270.10 (d) Where a business operation conducted in Minnesota is 270.11 owned by a business entity that carries on business activity 270.12 outside the state different in kind from that conducted within 270.13 this state, and the other business is conducted entirely outside 270.14 the state, it is presumed that the two business operations are 270.15 unitary in nature, interrelated, connected, and interdependent 270.16 unless it can be shown to the contrary. 270.17 (e) Unity of ownership is not deemed to exist when a 270.18 corporation is involved unless that corporation is a member of a 270.19 group of two or more business entities and more than 50 percent 270.20 of the voting stock of each member of the group is directly or 270.21 indirectly owned by a common owner or by common owners, either 270.22 corporate or noncorporate, or by one or more of the member 270.23 corporations of the group. For this purpose, the term "voting 270.24 stock" shall include membership interests of mutual insurance 270.25 holding companies formed under section 60A.077. 270.26 (f) The net income and apportionment factors under section 270.27 290.191 or 290.20 of foreign corporations and other foreign 270.28 entities which are part of a unitary business shall not be 270.29 included in the net income or the apportionment factors of the 270.30 unitary business. A foreign corporation or other foreign entity 270.31 which is required to file a return under this chapter shall file 270.32 on a separate return basis. The net income and apportionment 270.33 factors under section 290.191 or 290.20 of foreign operating 270.34 corporations shall not be included in the net income or the 270.35 apportionment factors of the unitary business except as provided 270.36 in paragraph (g). 271.1 (g) The adjusted net income of a foreign operating 271.2 corporation shall be deemed to be paid as a dividend on the last 271.3 day of its taxable year to each shareholder thereof, in 271.4 proportion to each shareholder's ownership, with which such 271.5 corporation is engaged in a unitary business. Such deemed 271.6 dividend shall be treated as a dividend under section 290.21, 271.7 subdivision 4. 271.8 Dividends actually paid by a foreign operating corporation 271.9 to a corporate shareholder which is a member of the same unitary 271.10 business as the foreign operating corporation shall be 271.11 eliminated from the net income of the unitary business in 271.12 preparing a combined report for the unitary business. The 271.13 adjusted net income of a foreign operating corporation shall be 271.14 its net income adjusted as follows: 271.15 (1) any taxes paid or accrued to a foreign country, the 271.16 commonwealth of Puerto Rico, or a United States possession or 271.17 political subdivision of any of the foregoing shall be a 271.18 deduction; and 271.19 (2) the subtraction from federal taxable income for 271.20 payments received from foreign corporations or foreign operating 271.21 corporations under section 290.01, subdivision 19d, clause (10), 271.22 shall not be allowed. 271.23 If a foreign operating corporation incurs a net loss, 271.24 neither income nor deduction from that corporation shall be 271.25 included in determining the net income of the unitary business. 271.26 (h) For purposes of determining the net income of a unitary 271.27 business and the factors to be used in the apportionment of net 271.28 income pursuant to section 290.191 or 290.20, there must be 271.29 included only the income and apportionment factors of domestic 271.30 corporations or other domestic entities other than foreign 271.31 operating corporations that are determined to be part of the 271.32 unitary business pursuant to this subdivision, notwithstanding 271.33 that foreign corporations or other foreign entities might be 271.34 included in the unitary business. 271.35 (i) Deductions for expenses, interest, or taxes otherwise 271.36 allowable under this chapter that are connected with or 272.1 allocable against dividends, deemed dividends described in 272.2 paragraph (g), or royalties, fees, or other like income 272.3 described in section 290.01, subdivision 19d, clause (10), shall 272.4 not be disallowed. 272.5 (j) Each corporation or other entity, except a sole 272.6 proprietorship, that is part of a unitary business must file 272.7 combined reports as the commissioner determines. On the 272.8 reports, all intercompany transactions between entities included 272.9 pursuant to paragraph (h) must be eliminated and the entire net 272.10 income of the unitary business determined in accordance with 272.11 this subdivision is apportioned among the entities by using each 272.12 entity's Minnesota factors for apportionment purposes in the 272.13 numerators of the apportionment formula and the total factors 272.14 for apportionment purposes of all entities included pursuant to 272.15 paragraph (h) in the denominators of the apportionment formula. 272.16 (k) If a corporation has been divested from a unitary 272.17 business and is included in a combined report for a fractional 272.18 part of the common accounting period of the combined report: 272.19 (1) its income includable in the combined report is its 272.20 income incurred for that part of the year determined by 272.21 proration or separate accounting; and 272.22 (2) its sales, property, and payroll included in the 272.23 apportionment formula must be prorated or accounted for 272.24 separately. 272.25 [EFFECTIVE DATE.] This section is effective for taxable 272.26 years beginning after December 31, 2004. 272.27 Sec. 4. Minnesota Statutes 2004, section 290.191, 272.28 subdivision 1, is amended to read: 272.29 Subdivision 1. [GENERAL RULE.] (a) Except as otherwise 272.30 provided in section 290.17, subdivision 5, the net income from a 272.31 trade or business carried on partly within and partly without 272.32 this state must be apportioned to this state as provided in this 272.33 section. To the extent that an entity is exempt from taxation 272.34 under this chapter as provided in section 290.05, the 272.35 apportionment factors associated with the entity's exempt 272.36 activities are excluded from the apportionment formula under 273.1 this section. 273.2 (b) For purposes of this section, "state" means a state of 273.3 the United States, the District of Columbia, the commonwealth of 273.4 Puerto Rico, or any territory or possession of the United States 273.5 or any foreign country. 273.6 [EFFECTIVE DATE.] This section is effective for taxable 273.7 years beginning after December 31, 2004. 273.8 Sec. 5. Minnesota Statutes 2004, section 297A.68, 273.9 subdivision 4, is amended to read: 273.10 Subd. 4. [TACONITE, OTHER ORES, METALS, OR MINERALS; 273.11 PRODUCTION MATERIALS.] Mill liners, grinding rods, and grinding 273.12 balls that are substantially consumed in the production of 273.13 taconite or other ores, metals, or minerals are exempt when sold 273.14 to or stored, used, or consumed by persons taxed under the 273.15 in-lieu provisions of chapter 298. 273.16 [EFFECTIVE DATE.] This section is effective for sales and 273.17 purchases made after June 30, 2005. 273.18 Sec. 6. Minnesota Statutes 2004, section 298.001, is 273.19 amended by adding a subdivision to read: 273.20 Subd. 9. [REFINING.] "Refining" means and is limited to 273.21 refining: 273.22 (1) of ores, metals, or mineral products, the mining, 273.23 extraction, or quarrying of which were subject to tax under 273.24 section 298.015; and 273.25 (2) carried on by the entity, or an affiliated entity, that 273.26 mined, extracted, or quarried the metal or mineral products. 273.27 [EFFECTIVE DATE.] This section is effective for taxable 273.28 years beginning after December 31, 2004. 273.29 Sec. 7. Minnesota Statutes 2004, section 298.001, is 273.30 amended by adding a subdivision to read: 273.31 Subd. 10. [PRECIOUS MINERALS TAX RELIEF AREA.] The 273.32 "precious minerals tax relief area" means the area of the 273.33 following Independent School Districts: 273.34 (1) No. 166, Cook County; 273.35 (2) No. 316, Coleraine; 273.36 (3) No. 318, Grand Rapids; 274.1 (4) No. 319, Nashwauk-Keewatin; 274.2 (5) No. 381, Lake Superior; 274.3 (6) No. 695, Chisholm; 274.4 (7) No. 696, Ely; 274.5 (8) No. 701, Hibbing; 274.6 (9) No. 706, Virginia; 274.7 (10) No. 712, Mountain Iron-Buhl; 274.8 (11) No. 2711, Mesabi East; 274.9 (12) No. 2142, St. Louis County; and 274.10 (13) No. 2154, Eveleth-Gilbert. 274.11 [EFFECTIVE DATE.] This section is effective for taxable 274.12 years beginning after December 31, 2004. 274.13 Sec. 8. Minnesota Statutes 2004, section 298.01, 274.14 subdivision 3, is amended to read: 274.15 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 274.16 engaged in the business of mining, refining, or producing ores, 274.17 metals, or minerals in this state, except iron ore or taconite 274.18 concentrates, shall pay an occupation tax to the state of 274.19 Minnesota as provided in this subdivision. For purposes of this 274.20 subdivision, mining includes the application of 274.21 hydrometallurgical processes. The tax is determined in the same 274.22 manner as the tax imposed by section 290.02, except that 274.23 sections 290.05, subdivision 1, clause (a), 290.0921, and 274.24 290.17, subdivision 4, do not apply. Except as provided in 274.25 section 290.05, subdivision 1, paragraph (a), the tax is in 274.26 addition to all other taxes. 274.27 [EFFECTIVE DATE.] This section is effective for taxable 274.28 years beginning after December 31, 2004. 274.29 Sec. 9. Minnesota Statutes 2004, section 298.01, 274.30 subdivision 3a, is amended to read: 274.31 Subd. 3a. [GROSS INCOME.] (a) For purposes of determining 274.32 a person's taxable income under subdivision 3, gross income is 274.33 determined by the amount of gross proceeds from mining in this 274.34 state under section 298.016 and includes any gain or loss 274.35 recognized from the sale or disposition of assets used in the 274.36 business in this state. 275.1 (b) In applying section 290.191, subdivision 5, transfers 275.2 of ores, metals, or minerals that are subject to tax under this 275.3 chapter are deemed to be sales outside this state if the ores, 275.4 metals, or minerals are transported out of this state for 275.5 further processing or refining by the person engaged in mining 275.6 after the ores, metals, or minerals have been converted to a 275.7 marketable quality. 275.8 (c) In applying section 290.191, subdivision 5, transfers 275.9 of ores, metals, or minerals that are subject to tax under this 275.10 chapter are deemed to be sales within this state if the ores, 275.11 metals, or minerals are received by a purchaser at a point 275.12 within this state, and the taxpayer is taxable in this state, 275.13 regardless of the f.o.b. point, or other conditions of the sale, 275.14 or the ultimate destination of the property. 275.15 [EFFECTIVE DATE.] This section is effective for taxable 275.16 years beginning after December 31, 2004. 275.17 Sec. 10. Minnesota Statutes 2004, section 298.01, 275.18 subdivision 4, is amended to read: 275.19 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 275.20 CONCENTRATES.] A person engaged in the business of mining or 275.21 producing of iron ore, taconite concentrates or direct reduced 275.22 ore in this state shall pay an occupation tax to the state of 275.23 Minnesota. The tax is determined in the same manner as the tax 275.24 imposed by section 290.02, except that sections 290.05, 275.25 subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 275.26 do not apply. The tax is in addition to all other taxes. 275.27 [EFFECTIVE DATE.] This section is effective for taxable 275.28 years beginning after December 31, 2004. 275.29 Sec. 11. Minnesota Statutes 2004, section 298.015, 275.30 subdivision 1, is amended to read: 275.31 Subdivision 1. [TAX IMPOSED.] A person engaged in the 275.32 business of mining shall pay to the state of Minnesota for 275.33 distribution as provided in section 298.018 a net proceeds tax 275.34 equal totwofour percent of the net proceeds from mining in 275.35 Minnesota. The tax applies to allmineral and energy resources275.36 ores, metals, and minerals minedor, extracted, produced, or 276.1 refined within the state of Minnesota except for sand, silica 276.2 sand, gravel, building stone, crushed rock, limestone, granite, 276.3 dimension granite, dimension stone, horticultural peat, clay, 276.4 soil, iron ore, and taconite concentrates. Except as provided 276.5 in section 272.02, subdivision 68, the tax is in addition to all 276.6 other taxes provided for by law. 276.7 [EFFECTIVE DATE.] This section is effective for taxes 276.8 payable in 2006 and thereafter. 276.9 Sec. 12. Minnesota Statutes 2004, section 298.015, 276.10 subdivision 2, is amended to read: 276.11 Subd. 2. [NET PROCEEDS.] For purposes of this section, the 276.12 term "net proceeds" means the gross proceeds from mining, as 276.13 defined in section 298.016, less the same deductions allowedin276.14section 298.017for purposes of determining taxable income under 276.15 section 298.01, subdivision 3b. No other credits or deductions 276.16 shall apply to this taxexcept for those provided in section276.17298.017. 276.18 [EFFECTIVE DATE.] This section is effective for taxes 276.19 payable in 2006 and thereafter. 276.20 Sec. 13. Minnesota Statutes 2004, section 298.016, 276.21 subdivision 4, is amended to read: 276.22 Subd. 4. [DEFINITIONS.] For the purposes of sections 276.23 298.015 and 298.017, the terms defined in this subdivision have 276.24 the meaning given them unless the context clearly indicates 276.25 otherwise. 276.26 (a) "Metal or mineral products" means all thosemineral and276.27energy resourcesores, metals, and minerals subject to the tax 276.28 provided in section 298.015. 276.29 (b) "Exploration" means activities designed and engaged in 276.30 to ascertain the existence, location, extent, or quality of any 276.31 deposit of metal or mineral products prior to the development of 276.32 a mining site. 276.33 (c) "Development" means activities designed and engaged in 276.34 to prepare or develop a potential mining site for mining after 276.35 the existence of metal or mineral products in commercially 276.36 marketable quantities has been disclosed including, but not 277.1 limited to, the clearing of forestation, the building of roads, 277.2 removal of overburden, or the sinking of shafts. 277.3 (d) "Research" means activities designed and engaged in to 277.4 create new or improved methods of mining, producing, processing, 277.5 beneficiating, smelting, or refining metal or mineral products. 277.6 [EFFECTIVE DATE.] This section is effective for taxable 277.7 years beginning after December 31, 2005. 277.8 Sec. 14. Minnesota Statutes 2004, section 298.018, is 277.9 amended to read: 277.10 298.018 [DISTRIBUTION OF PROCEEDS.] 277.11 Subdivision 1. [WITHIN THETACONITEPRECIOUS MINERALS 277.12 ASSISTANCE AREA.] The proceeds of the tax paid under sections 277.13 298.015 to 298.017 on ores, metals, and mineralsand energy277.14resourcesmined or extracted within thetaconiteprecious 277.15 minerals assistance areadefined in section 273.1341, shall be 277.16 allocated as follows: 277.17 (1) five percent to the city or town within which the ores, 277.18 metals, or mineralsor energy resourcesare mined or extracted; 277.19 (2) ten percent to the taconite municipal aid account to be 277.20 distributedas provided in section 298.282to qualifying 277.21 municipalities, as defined in section 298.282 and located in the 277.22 precious minerals assistance area; 277.23 (3) ten percent to the school district within which the 277.24 ores, metals, or mineralsor energy resourcesare mined or 277.25 extracted; 277.26 (4)2030 percent toa group of school districts comprised277.27of those school districts wherein the mineral or energy resource277.28was mined or extracted or in which there is a qualifying277.29municipality as defined by section 273.134, paragraph (b), in277.30direct proportion to school district indexes as follows: for277.31each school district, its pupil units determined under section277.32126C.05 for the prior school year shall be multiplied by the277.33ratio of the average adjusted net tax capacity per pupil unit277.34for school districts receiving aid under this clause as277.35calculated pursuant to chapters 122A, 126C, and 127A for the277.36school year ending prior to distribution to the adjusted net tax278.1capacity per pupil unit of the district. Each district shall278.2receive that portion of the distribution which its index bears278.3to the sum of the indices for all school districts that receive278.4the distributionsthe state general fund to represent the 278.5 portion of the tax that is in lieu of the state general tax 278.6 under section 275.025; 278.7 (5) 20 percent to the county within which the ores, metals, 278.8 or mineralsor energy resourcesare mined or extracted; 278.9 (6)20 percent to St. Louis County acting as the counties'278.10fiscal agent to be distributed as provided in sections 273.134278.11to 273.136;278.12(7)five percent to the Iron Range Resources and 278.13 Rehabilitation Board for the purposes of section 298.22; 278.14(8) five(7) ten percent to the Douglas J. Johnson economic 278.15 protection trust fund; and 278.16(9) five(8) ten percent to the taconite environmental 278.17 protection fund. 278.18 The proceeds of the tax shall be distributed on July 15 278.19 each year. 278.20 Subd. 2. [OUTSIDE THETACONITEPRECIOUS MINERALS 278.21 ASSISTANCE AREA.] The proceeds of the tax paid under sections 278.22 298.015 to 298.017 on ores, metals, or mineralsand energy278.23resourcesmined or extracted outside of thetaconiteprecious 278.24 minerals assistance areadefined in section 273.1341, shall be 278.25 deposited in the general fund. 278.26 Subd. 3. [SEGREGATION OF FUNDS.] The proceeds of the tax 278.27 allocated under subdivision 1, clauses (2), (6), (7), and (8), 278.28 including any investment earnings on them, must be segregated 278.29 and separately accounted for in the respective funds or account 278.30 to which they are allocated. These amounts must only be 278.31 distributed to municipalities within the precious minerals 278.32 assistance area or used for projects located in the precious 278.33 minerals assistance area. 278.34 [EFFECTIVE DATE.] This section is effective for 278.35 distribution of net proceeds tax revenues made after July 1, 278.36 2005. 279.1 Sec. 15. [298.021] [ROYALTY TAX.] 279.2 In addition to any other taxes imposed by law, a tax is 279.3 imposed on a royalty, as defined in section 290.923, subdivision 279.4 1, paid on ore, other than iron ore, taconite, iron sulphides, 279.5 or semitaconite. The tax equals 12 percent of the amount of the 279.6 royalty paid. The person paying the royalty shall withhold the 279.7 tax from the payment and remit the payment to the commissioner 279.8 at the times and under the procedures provided under section 279.9 290.923. The commissioner shall deposit proceeds in the general 279.10 fund and allocate the proceeds as provided under section 279.11 298.018, subdivision 1. 279.12 [EFFECTIVE DATE.] This section is effective for royalties 279.13 paid after June 30, 2005. 279.14 Sec. 16. Minnesota Statutes 2004, section 298.223, 279.15 subdivision 1, is amended to read: 279.16 Subdivision 1. [CREATION; PURPOSES.] A fund called the 279.17 taconite environmental protection fund is created for the 279.18 purpose of reclaiming, restoring and enhancing those areas of 279.19 northeast Minnesota located within the taconite assistance area 279.20 defined in section 273.1341, that are adversely affected by the 279.21 environmentally damaging operations involved in mining taconite 279.22 and iron ore and producing iron ore concentrate and for the 279.23 purpose of promoting the economic development of northeast 279.24 Minnesota. The taconite environmental protection fund shall be 279.25 used for the following purposes: 279.26 (a) to initiate investigations into matters the Iron Range 279.27 Resources and Rehabilitation Board determines are in need of 279.28 study and which will determine the environmental problems 279.29 requiring remedial action; 279.30 (b) reclamation, restoration, or reforestation of minelands 279.31 not otherwise provided for by state law; 279.32 (c) local economic development projectsincluding279.33construction of sewer and water systems, and otherbut only if 279.34 those projects are approved by the board, and public works, 279.35 including construction of sewer and water systems located within 279.36 the taconite assistance area defined in section 273.1341; 280.1 (d) monitoring of mineral industry related health problems 280.2 among mining employees. 280.3 [EFFECTIVE DATE.] This section is effective the day 280.4 following final enactment. 280.5 Sec. 17. Minnesota Statutes 2004, section 298.24, 280.6 subdivision 1, is amended to read: 280.7 Subdivision 1. (a) For concentrate produced in 2001, 2002, 280.8 and 2003, there is imposed upon taconite and iron sulphides, and 280.9 upon the mining and quarrying thereof, and upon the production 280.10 of iron ore concentrate therefrom, and upon the concentrate so 280.11 produced, a tax of $2.103 per gross ton of merchantable iron ore 280.12 concentrate produced therefrom. For concentrates produced in 280.13 2005 and 2006, the tax rate is the same rate imposed for 280.14 concentrates produced in 2004. 280.15 (b) For concentrates produced in 2004, 2007, and subsequent 280.16 years, the tax rate shall be equal to the preceding year's tax 280.17 rate plus an amount equal to the preceding year's tax rate 280.18 multiplied by the percentage increase in the implicit price 280.19 deflator from the fourth quarter of the second preceding year to 280.20 the fourth quarter of the preceding year. "Implicit price 280.21 deflator" means the implicit price deflator for the gross 280.22 domestic product prepared by the Bureau of Economic Analysis of 280.23 the United States Department of Commerce. 280.24 (c) On concentrates produced in 1997 and thereafter, an 280.25 additional tax is imposed equal to three cents per gross ton of 280.26 merchantable iron ore concentrate for each one percent that the 280.27 iron content of the product exceeds 72 percent, when dried at 280.28 212 degrees Fahrenheit. 280.29 (d) Except for taxes payable in 2006 through 2008, the tax 280.30 shall be imposed on the average of the production for the 280.31 current year and the previous two years. The rate of the tax 280.32 imposed will be the current year's tax rate. This clause shall 280.33 not apply in the case of the closing of a taconite facility if 280.34 the property taxes on the facility would be higher if this 280.35 clause and section 298.25 were not applicable. 280.36 (e) If the tax or any part of the tax imposed by this 281.1 subdivision is held to be unconstitutional, a tax of $2.103 per 281.2 gross ton of merchantable iron ore concentrate produced shall be 281.3 imposed. 281.4 (f) Consistent with the intent of this subdivision to 281.5 impose a tax based upon the weight of merchantable iron ore 281.6 concentrate, the commissioner of revenue may indirectly 281.7 determine the weight of merchantable iron ore concentrate 281.8 included in fluxed pellets by subtracting the weight of the 281.9 limestone, dolomite, or olivine derivatives or other basic flux 281.10 additives included in the pellets from the weight of the 281.11 pellets. For purposes of this paragraph, "fluxed pellets" are 281.12 pellets produced in a process in which limestone, dolomite, 281.13 olivine, or other basic flux additives are combined with 281.14 merchantable iron ore concentrate. No subtraction from the 281.15 weight of the pellets shall be allowed for binders, mineral and 281.16 chemical additives other than basic flux additives, or moisture. 281.17 (g)(1) Notwithstanding any other provision of this 281.18 subdivision, for the first two years of a plant's commercial 281.19 production of direct reduced ore, no tax is imposed under this 281.20 section. As used in this paragraph, "commercial production" is 281.21 production of more than 50,000 tons of direct reduced ore in the 281.22 current year or in any prior year, noncommercial production is 281.23 production of 50,000 tons or less of direct reduced ore in any 281.24 year, and "direct reduced ore" is ore that results in a product 281.25 that has an iron content of at least 75 percent. For the third 281.26 year of a plant's commercial production of direct reduced ore, 281.27 the rate to be applied to direct reduced ore is 25 percent of 281.28 the rate otherwise determined under this subdivision. For the 281.29 fourthsuchcommercial production year, the rate is 50 percent 281.30 of the rate otherwise determined under this subdivision; for the 281.31 fifthsuchcommercial production year, the rate is 75 percent of 281.32 the rate otherwise determined under this subdivision; and for 281.33 all subsequent commercial production years, the full rate is 281.34 imposed. 281.35 (2) Subject to clause (1), production of direct reduced ore 281.36 in this state is subject to the tax imposed by this section, but 282.1 if that production is not produced by a producer of taconite or 282.2 iron sulfides, the production of taconite or iron sulfides 282.3 consumed in the production of direct reduced iron in this state 282.4 is not subject to the tax imposed by this section on taconite or 282.5 iron sulfides. 282.6 (3) Notwithstanding any other provision of this 282.7 subdivision, no tax is imposed on direct reduced ore under this 282.8 section during the facility's noncommercial production of direct 282.9 reduced ore. The taconite or iron sulphides consumed in the 282.10 noncommercial production of direct reduced ore is subject to the 282.11 tax imposed by this section on taconite and iron sulphides. 282.12 Three-year average production of direct reduced ore does not 282.13 include production of direct reduced ore in any noncommercial 282.14 year. Three-year average production for a direct reduced ore 282.15 facility that has noncommercial production is the average of the 282.16 commercial production of direct reduced ore for the current year 282.17 and the previous two commercial years. 282.18 [EFFECTIVE DATE.] This section is effective for direct 282.19 reduced ore produced after the date of final enactment. 282.20 Sec. 18. Minnesota Statutes 2004, section 298.28, 282.21 subdivision 9b, is amended to read: 282.22 Subd. 9b. [TACONITE ENVIRONMENTAL FUND.] Five cents per 282.23 tonfor distributions in 1999, 2000, 2001, 2002, and 2003must 282.24 be paid to the taconite environmental fund for use under section 282.25 298.2961, subdivision 4. 282.26 [EFFECTIVE DATE.] This section is effective for 282.27 distributions in 2005 and later years. 282.28 Sec. 19. Minnesota Statutes 2004, section 298.28, 282.29 subdivision 10, is amended to read: 282.30 Subd. 10. [INCREASE.] (a) Except as provided in paragraph 282.31 (b), beginning with distributions in 2000, the amount determined 282.32 under subdivision 9 shall be increased in the same proportion as 282.33 the increase in the implicit price deflator as provided in 282.34 section 298.24, subdivision 1. Beginning with distributions in 282.35 2003, the amount determined under subdivision 6, paragraph (a), 282.36 shall be increased in the same proportion as the increase in the 283.1 implicit price deflator as provided in section 298.24, 283.2 subdivision 1. 283.3 (b) For distributions in 2005 and subsequent years, an 283.4 amount equal to the increased tax proceeds attributable to the 283.5 increase in the implicit price deflator as provided in section 283.6 298.24, subdivision 1, for taxes paid in 2005, except for the 283.7 amount of revenue increases provided in subdivision 4, paragraph 283.8 (d), is distributed to the grant and loan fund established in 283.9 section 298.2961, subdivision 4. 283.10 Sec. 20. Minnesota Statutes 2004, section 298.2961, is 283.11 amended by adding a subdivision to read: 283.12 Subd. 4. [GRANT AND LOAN FUND.] (a) A fund is established 283.13 to receive distributions under section 298.28, subdivision 9b, 283.14 and to make grants or loans as provided in this subdivision. 283.15 Any grant or loan made under this subdivision must be approved 283.16 by a majority of the members of the Iron Range Resources and 283.17 Rehabilitation Board, established under section 298.22. 283.18 (b) Distributions received in calendar year 2005 are 283.19 allocated to the city of Virginia for improvements and repairs 283.20 to the city's steam heating system. 283.21 (c) Distributions received in calendar year 2006 are 283.22 allocated to a project of the public utilities commissions of 283.23 the cities of Hibbing and Virginia to convert their electrical 283.24 generating plants to the use of biomass products, such as wood. 283.25 (d) Distributions received in calendar year 2007 must be 283.26 paid to the city of Tower to be used for the East Two Rivers 283.27 project in or near the city of Tower, including replacement of 283.28 the Marked Trunk Highway 169 bridge over East Two Rivers, 283.29 demolition of the present Marked Trunk Highway 135 bridge over 283.30 East Two Rivers, and rerouting of Marked Trunk Highway 135, 283.31 associated trunk highway construction and reconstruction, and 283.32 associated marina development. 283.33 (e) For distributions received in 2008 and later, amounts 283.34 may be allocated to joint ventures with mining companies for 283.35 reclamation of lands containing abandoned or worked out mines to 283.36 convert these lands to marketable properties for residential, 284.1 recreational, commercial, or other valuable uses. 284.2 [EFFECTIVE DATE.] This section is effective the day 284.3 following final enactment. 284.4 Sec. 21. Minnesota Statutes 2004, section 298.75, 284.5 subdivision 1, is amended to read: 284.6 Subdivision 1. [DEFINITIONS.] Except as may otherwise be 284.7 provided, the following words, when used in this section, shall 284.8 have the meanings herein ascribed to them. 284.9 (1) "Aggregate material" shall mean nonmetallic natural 284.10 mineral aggregate including, but not limited to sand, silica 284.11 sand, gravel, crushed rock, limestone, granite, and borrow, but 284.12 only if the borrow is transported on a public road, street, or 284.13 highway. Aggregate material shall not include dimension stone 284.14 and dimension granite. Aggregate material must be measured or 284.15 weighed after it has been extracted from the pit, quarry, or 284.16 deposit. 284.17 (2) "Person" shall mean any individual, firm, partnership, 284.18 corporation, organization, trustee, association, or other entity. 284.19 (3) "Operator" shall mean any person engaged in the 284.20 business of removing aggregate material from the surface or 284.21 subsurface of the soil, for the purpose of sale, either directly 284.22 or indirectly, through the use of the aggregate material in a 284.23 marketable product or service; except that operator does not 284.24 include persons engaged in a transaction in which the aggregate 284.25 is moved within a project's construction limits to other 284.26 locations within that same project's construction limits. 284.27 (4) "Extraction site" shall mean a pit, quarry, or deposit 284.28 containing aggregate material and any contiguous property to the 284.29 pit, quarry, or deposit which is used by the operator for 284.30 stockpiling the aggregate material. 284.31 (5) "Importer" shall mean any person who buys aggregate 284.32 material produced from a county not listed in paragraph (6) or 284.33 another state and causes the aggregate material to be imported 284.34 into a county in this state which imposes a tax on aggregate 284.35 material. 284.36 (6) "County" shall mean the counties of Pope, Stearns, 285.1 Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 285.2 Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 285.3 Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 285.4 Sibley, Hennepin, Washington, Chisago, and Ramsey. County also 285.5 means any other county whose board has voted after a public 285.6 hearing to impose the tax under this section and has notified 285.7 the commissioner of revenue of the imposition of the tax. 285.8 (7) "Borrow" shall mean granular borrow, consisting of 285.9 durable particles of gravel and sand, crushed quarry or mine 285.10 rock, crushed gravel or stone, or any combination thereof, the 285.11 ratio of the portion passing the (#200) sieve divided by the 285.12 portion passing the (1 inch) sieve may not exceed 20 percent by 285.13 mass. 285.14 [EFFECTIVE DATE.] This section is effective for aggregate 285.15 sold, imported, transported, or used from a stockpile after June 285.16 30, 2005. 285.17 Sec. 22. Minnesota Statutes 2004, section 298.75, 285.18 subdivision 2, is amended to read: 285.19 Subd. 2. [TAX IMPOSED.] A county shall impose upon every 285.20 importer and operator a production tax up to ten cents per cubic 285.21 yard or up to seven cents per ton of aggregate material removed 285.22 except that the county board may decide not to impose this tax 285.23 if it determines that in the previous year operators removed 285.24 less than 20,000 tons or 14,000 cubic yards of aggregate 285.25 material from that county. A county or town may exempt an 285.26 operator from the tax if the operator has removed less than 285.27 2,500 tons or 1,750 yards from the county in the year that the 285.28 tax is due and no other aggregate operator has removed material 285.29 from the same site in the same year. The tax shall be imposed 285.30 on aggregate material produced in the county when the aggregate 285.31 material is transported from the extraction site or sold. When 285.32 aggregate material is stored in a stockpile within the state of 285.33 Minnesota and a public highway, road or street is not used for 285.34 transporting the aggregate material, the tax shall be imposed 285.35 either when the aggregate material is sold, or when it is 285.36 transported from the stockpile site, or when it is used from the 286.1 stockpile, whichever occurs first. The tax shall be imposed on 286.2 an importer when the aggregate material is imported into the 286.3 county that imposes the tax. 286.4 If the aggregate material is transported directly from the 286.5 extraction site to a waterway, railway, or another mode of 286.6 transportation other than a highway, road or street, the tax 286.7 imposed by this section shall be apportioned equally between the 286.8 county where the aggregate material is extracted and the county 286.9 to which the aggregate material is originally transported. If 286.10 that destination is not located in Minnesota, then the county 286.11 where the aggregate material was extracted shall receive all of 286.12 the proceeds of the tax. 286.13 [EFFECTIVE DATE.] This section is effective the day 286.14 following final enactment. 286.15 Sec. 23. [IRON RANGE RESOURCES AND REHABILITATION 286.16 COMMISSIONER; BONDS AUTHORIZED.] 286.17 Subdivision 1. [ISSUANCE; PURPOSE.] Notwithstanding any 286.18 provision of Minnesota Statutes, chapter 298, to the contrary, 286.19 the commissioner of Iron Range resources and rehabilitation may 286.20 issue revenue bonds in a principal amount of $15,000,000 in one 286.21 or more series, and bonds to refund those bonds. The proceeds 286.22 of the bonds must be used to make grants to school districts 286.23 located in the taconite tax relief area defined in Minnesota 286.24 Statutes, section 273.134, or the taconite assistance area 286.25 defined in Minnesota Statutes, section 273.1341, to be used by 286.26 the school districts to pay for health, safety, and maintenance 286.27 improvements but only if the school district has levied the 286.28 maximum amount allowable under law for those purposes. 286.29 Subd. 2. [APPROPRIATION.] There is annually appropriated 286.30 from the distribution of taconite production tax revenues to the 286.31 taconite environmental protection fund pursuant to Minnesota 286.32 Statutes, section 298.28, subdivision 11, and to the Douglas J. 286.33 Johnson economic protection trust pursuant to Minnesota 286.34 Statutes, section 298.28, subdivisions 9 and 11, in equal 286.35 shares, an amount sufficient to pay when due the principal and 286.36 interest on the bonds issued pursuant to subdivision 1. If the 287.1 annual distribution to the Douglas J. Johnson economic 287.2 protection trust is insufficient to pay its share after 287.3 fulfilling any obligations of the trust under Minnesota 287.4 Statutes, section 298.225 or 298.293, the deficiency shall be 287.5 appropriated from the taconite environmental protection fund. 287.6 The appropriation under this subdivision terminates upon payment 287.7 or maturity of the last of the bonds issued under this section. 287.8 Subd. 3. [CREDIT ENHANCEMENT.] The bonds issued under this 287.9 section shall be "debt obligations" and the commissioner of Iron 287.10 Range resources and rehabilitation shall be a "district" for 287.11 purposes of Minnesota Statutes, section 126C.55, provided that 287.12 advances made under subdivision 2 of Minnesota Statutes, section 287.13 126C.55, shall not be subject to subdivisions 4 to 7 of 287.14 Minnesota Statutes, section 126C.55. 287.15 Sec. 24. [TRANSITION PROVISION.] 287.16 Each person with an alternative minimum tax credit on 287.17 December 31, 2004, pursuant to Minnesota Statutes 2004, section 287.18 298.01, may take that credit against occupation tax under the 287.19 provisions of Minnesota Statutes 2004, section 298.01, 287.20 subdivision 3d or 4e. 287.21 [EFFECTIVE DATE.] This section is effective the day 287.22 following final enactment. 287.23 Sec. 25. [REPEALER.] 287.24 (a) Minnesota Statutes 2004, section 298.01, subdivisions 287.25 3c, 3d, 4d, and 4e, are repealed effective for taxable years 287.26 beginning after December 31, 2004. 287.27 (b) Minnesota Statutes 2004, section 298.017, is repealed 287.28 effective for taxes payable in 2006 and thereafter. 287.29 ARTICLE 8 287.30 MISCELLANEOUS 287.31 Section 1. Minnesota Statutes 2004, section 270A.03, 287.32 subdivision 5, is amended to read: 287.33 Subd. 5. [DEBT.] "Debt" means a legal obligation of a 287.34 natural person to pay a fixed and certain amount of money, which 287.35 equals or exceeds $25 and which is due and payable to a claimant 287.36 agency. The term includes criminal fines imposed under section 288.1 609.10 or 609.125, fines imposed for petty misdemeanors as 288.2 defined in section 609.02, subdivision 4a, and restitution. The 288.3 term also includes the co-payment for the appointment of a 288.4 district public defender imposed under section 611.17, paragraph 288.5 (c). A debt may arise under a contractual or statutory 288.6 obligation, a court order, or other legal obligation, but need 288.7 not have been reduced to judgment. 288.8 A debt includes any legal obligation of a current recipient 288.9 of assistance which is based on overpayment of an assistance 288.10 grant where that payment is based on a client waiver or an 288.11 administrative or judicial finding of an intentional program 288.12 violation; or where the debt is owed to a program wherein the 288.13 debtor is not a client at the time notification is provided to 288.14 initiate recovery under this chapter and the debtor is not a 288.15 current recipient of food support, transitional child care, or 288.16 transitional medical assistance. 288.17 A debt does not include any legal obligation to pay a 288.18 claimant agency for medical care, including hospitalization if 288.19 the income of the debtor at the time when the medical care was 288.20 rendered does not exceed the following amount: 288.21 (1) for an unmarried debtor, an income of $8,800 or less; 288.22 (2) for a debtor with one dependent, an income of $11,270 288.23 or less; 288.24 (3) for a debtor with two dependents, an income of $13,330 288.25 or less; 288.26 (4) for a debtor with three dependents, an income of 288.27 $15,120 or less; 288.28 (5) for a debtor with four dependents, an income of $15,950 288.29 or less; and 288.30 (6) for a debtor with five or more dependents, an income of 288.31 $16,630 or less. 288.32 The income amounts in this subdivision shall be adjusted 288.33 for inflation for debts incurred in calendar years 2001 and 288.34 thereafter. The dollar amount of each income level that applied 288.35 to debts incurred in the prior year shall be increased in the 288.36 same manner as provided in section 1(f) of the Internal Revenue 289.1 Code of 1986, as amended through December 31, 2000, except that 289.2 for the purposes of this subdivision the percentage increase 289.3 shall be determined from the year starting September 1, 1999, 289.4 and ending August 31, 2000, as the base year for adjusting for 289.5 inflation for debts incurred after December 31, 2000. 289.6 Debt also includes an agreement to pay a MinnesotaCare 289.7 premium, regardless of the dollar amount of the premium 289.8 authorized under section 256L.15, subdivision 1a. 289.9 Sec. 2. Minnesota Statutes 2004, section 289A.08, 289.10 subdivision 16, is amended to read: 289.11 Subd. 16. [TAX REFUND OR RETURN PREPARERS; ELECTRONIC 289.12 FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return 289.13 preparer," as defined in section 289A.60, subdivision 13, 289.14 paragraph(g)(h), who prepared more than500100 Minnesota 289.15 individual income tax returns for the prior calendar year must 289.16 file all Minnesota individual income tax returns prepared for 289.17 the current calendar year by electronic means. 289.18 (b)For tax returns prepared for the tax year beginning in289.192001, the "500" in paragraph (a) is reduced to 250.289.20(c) For tax returns prepared for tax years beginning after289.21December 31, 2001, the "500" in paragraph (a) is reduced to 100.289.22(d)Paragraph (a) does not apply to a return if the 289.23 taxpayer has indicated on the return that the taxpayer did not 289.24 want the return filed by electronic means. 289.25(e)(c) For each return that is not filed electronically by 289.26 a tax refund or return preparer under this subdivision, 289.27 including returns filed under paragraph (d), a paper filing fee 289.28 of $5 is imposed upon the preparer. The fee is collected from 289.29 the preparer in the same manner as income tax. The fee does not 289.30 apply to returns that the commissioner requires to be filed in 289.31 paper form. 289.32 Sec. 3. Minnesota Statutes 2004, section 289A.60, 289.33 subdivision 13, is amended to read: 289.34 Subd. 13. [PENALTIES FOR TAX RETURN PREPARERS.] (a) If an 289.35 understatement of liability with respect to a return or claim 289.36 for refund is due to a willful attempt in any manner to 290.1 understate the liability for a tax by a person who is a tax 290.2 return preparer with respect to the return or claim, the person 290.3 shall pay to the commissioner a penalty of $500. If a part of a 290.4 property tax refund claim is excessive due to a willful attempt 290.5 in any manner to overstate the claim for relief allowed under 290.6 chapter 290A by a person who is a tax refund or return preparer, 290.7 the person shall pay to the commissioner a penalty of $500 with 290.8 respect to the claim. These penalties may not be assessed 290.9 against the employer of a tax return preparer unless the 290.10 employer was actively involved in the willful attempt to 290.11 understate the liability for a tax or to overstate the claim for 290.12 refund. These penalties are income tax liabilities and may be 290.13 assessed at any time as provided in section 289A.38, subdivision 290.14 5. 290.15 (b) A civil action in the name of the state of Minnesota 290.16 may be commenced to enjoin any person who is a tax return 290.17 preparer doing business in this state from further engaging in 290.18 any conduct described in paragraph (c). An action under this 290.19 paragraph must be brought by the attorney general in the 290.20 district court for the judicial district of the tax return 290.21 preparer's residence or principal place of business, or in which 290.22 the taxpayer with respect to whose tax return the action is 290.23 brought resides. The court may exercise its jurisdiction over 290.24 the action separate and apart from any other action brought by 290.25 the state of Minnesota against the tax return preparer or any 290.26 taxpayer. 290.27 (c) In an action under paragraph (b), if the court finds 290.28 that a tax return preparer has: 290.29 (1) engaged in any conduct subject to a civil penalty under 290.30 section 289A.60 or a criminal penalty under section 289A.63; 290.31 (2) misrepresented the preparer's eligibility to practice 290.32 before the Department of Revenue, or otherwise misrepresented 290.33 the preparer's experience or education as a tax return preparer; 290.34 (3) guaranteed the payment of any tax refund or the 290.35 allowance of any tax credit; or 290.36 (4) engaged in any other fraudulent or deceptive conduct 291.1 that substantially interferes with the proper administration of 291.2 state tax law, and injunctive relief is appropriate to prevent 291.3 the recurrence of that conduct, 291.4 the court may enjoin the person from further engaging in that 291.5 conduct. 291.6 (d) If the court finds that a tax return preparer has 291.7 continually or repeatedly engaged in conduct described in 291.8 paragraph (c), and that an injunction prohibiting that conduct 291.9 would not be sufficient to prevent the person's interference 291.10 with the proper administration of state tax laws, the court may 291.11 enjoin the person from acting as a tax return preparer. The 291.12 court may not enjoin the employer of a tax return preparer for 291.13 conduct described in paragraph (c) engaged in by one or more of 291.14 the employer's employees unless the employer was also actively 291.15 involved in that conduct. 291.16 (e) The commissioner may terminate or suspend a tax 291.17 preparer's authority to transmit returns electronically to the 291.18 state, if the commissioner determines that the tax preparer has 291.19 engaged in a pattern and practice of conduct in violation of 291.20 this subdivision or of section 289A.63. 291.21 (f) For purposes of this subdivision, the term 291.22 "understatement of liability" means an understatement of the net 291.23 amount payable with respect to a tax imposed by state tax law, 291.24 or an overstatement of the net amount creditable or refundable 291.25 with respect to a tax. The determination of whether or not 291.26 there is an understatement of liability must be made without 291.27 regard to any administrative or judicial action involving the 291.28 taxpayer. For purposes of this subdivision, the amount 291.29 determined for underpayment of estimated tax under either 291.30 section 289A.25 or 289A.26 is not considered an understatement 291.31 of liability. 291.32(f)(g) For purposes of this subdivision, the term 291.33 "overstatement of claim" means an overstatement of the net 291.34 amount refundable with respect to a claim for property tax 291.35 relief provided by chapter 290A. The determination of whether 291.36 or not there is an overstatement of a claim must be made without 292.1 regard to administrative or judicial action involving the 292.2 claimant. 292.3(g)(h) For purposes of this section, the term "tax refund 292.4 or return preparer" means an individual who prepares for 292.5 compensation, or who employs one or more individuals to prepare 292.6 for compensation, a return of tax, or a claim for refund of 292.7 tax. The preparation of a substantial part of a return or claim 292.8 for refund is treated as if it were the preparation of the 292.9 entire return or claim for refund. An individual is not 292.10 considered a tax return preparer merely because the individual: 292.11 (1) gives typing, reproducing, or other mechanical 292.12 assistance; 292.13 (2) prepares a return or claim for refund of the employer, 292.14 or an officer or employee of the employer, by whom the 292.15 individual is regularly and continuously employed; 292.16 (3) prepares a return or claim for refund of any person as 292.17 a fiduciary for that person; or 292.18 (4) prepares a claim for refund for a taxpayer in response 292.19 to a tax order issued to the taxpayer. 292.20 Sec. 4. Minnesota Statutes 2004, section 290A.07, is 292.21 amended by adding a subdivision to read: 292.22 Subd. 5. [EARLY PAYMENT; E-FILE CLAIMS.] The commissioner 292.23 may pay a claim up to 30 days earlier than the first permitted 292.24 date under subdivision 2a or 3 if the claim is submitted by 292.25 electronic means. 292.26 [EFFECTIVE DATE.] This section is effective the day 292.27 following final enactment. 292.28 Sec. 5. Minnesota Statutes 2004, section 297A.61, 292.29 subdivision 4, is amended to read: 292.30 Subd. 4. [RETAIL SALE.] (a) A "retail sale" means any 292.31 sale, lease, or rental for any purpose other than resale, 292.32 sublease, or subrent. 292.33 (b) A sale of property used by the owner only by leasing it 292.34 to others or by holding it in an effort to lease it, and put to 292.35 no use by the owner other than resale after the lease or effort 292.36 to lease, is a sale of property for resale. 293.1 (c) A sale of master computer software that is purchased 293.2 and used to make copies for sale or lease is a sale of property 293.3 for resale. 293.4 (d) A sale of building materials, supplies, and equipment 293.5 to owners, contractors, subcontractors, or builders for the 293.6 erection of buildings or the alteration, repair, or improvement 293.7 of real property is a retail sale in whatever quantity sold, 293.8 whether the sale is for purposes of resale in the form of real 293.9 property or otherwise. 293.10 (e) A sale of carpeting, linoleum, or similar floor 293.11 covering to a person who provides for installation of the floor 293.12 covering is a retail sale and not a sale for resale since a sale 293.13 of floor covering which includes installation is a contract for 293.14 the improvement of real property. 293.15 (f) A sale of shrubbery, plants, sod, trees, and similar 293.16 items to a person who provides for installation of the items is 293.17 a retail sale and not a sale for resale since a sale of 293.18 shrubbery, plants, sod, trees, and similar items that includes 293.19 installation is a contract for the improvement of real property. 293.20 (g) A sale of tangible personal property that is awarded as 293.21 prizes is a retail sale and is not considered a sale of property 293.22 for resale. 293.23 (h) A sale of tangible personal property utilized or 293.24 employed in the furnishing or providing of services under 293.25 subdivision 3, paragraph (g), clause (1), including, but not 293.26 limited to, property given as promotional items, is a retail 293.27 sale and is not considered a sale of property for resale. 293.28 (i) A sale of tangible personal property used in conducting 293.29 lawful gambling under chapter 349 or the state lottery under 293.30 chapter 349A, including, but not limited to, property given as 293.31 promotional items, is a retail sale and is not considered a sale 293.32 of property for resale. 293.33 (j) A sale of machines, equipment, or devices that are used 293.34 to furnish, provide, or dispense goods or services, including, 293.35 but not limited to, coin-operated devices, is a retail sale and 293.36 is not considered a sale of property for resale. 294.1 (k) In the case of a lease, a retail sale occurs (1) when 294.2 an obligation to make a lease payment becomes due under the 294.3 terms of the agreement or the trade practices of the lessor or 294.4 (2) in the case of a lease of a motor vehicle, as defined in 294.5 section 297B.01, subdivision 5, but excluding vehicles with a 294.6 manufacturer's gross vehicle weight rating greater than 10,000 294.7 pounds and rentals of vehicles for not more than 28 days, at the 294.8 time the lease is executed. 294.9 (l) In the case of a conditional sales contract, a retail 294.10 sale occurs upon the transfer of title or possession of the 294.11 tangible personal property. 294.12 [EFFECTIVE DATE.] This section is effective for leases 294.13 entered into after September 30, 2005. 294.14 Sec. 6. Minnesota Statutes 2004, section 297A.67, is 294.15 amended by adding a subdivision to read: 294.16 Subd. 32. [CIGARETTES.] Cigarettes upon which a tax has 294.17 been imposed under section 297F.25 are exempt. 294.18 [EFFECTIVE DATE.] This section is effective for sales and 294.19 purchases made after July 31, 2005. 294.20 Sec. 7. [297A.825] [MOTOR VEHICLE LEASES.] 294.21 Subdivision 1. [MOTOR VEHICLE LEASE PRICE; PAYMENT.] (a) 294.22 In the case of a lease of a motor vehicle as provided in section 294.23 297A.61, subdivision 4, paragraph (k), clause (2), the tax is 294.24 imposed on the total amount to be paid by the lessee under the 294.25 lease agreement. The lessor shall collect the tax in full at 294.26 the time the lease is executed or, if the tax is included in the 294.27 lease and the lease is assigned, the tax is due from the 294.28 original lessor at the time the lease is assigned. The total 294.29 amount to be paid by the lessee under the lease agreement equals 294.30 the agreed-upon value of the vehicle less manufacturer's 294.31 rebates, the stated residual value of the leased vehicle, and 294.32 the total value allowed for a vehicle owned by the lessee taken 294.33 in trade by the lessor, plus the price of any taxable goods and 294.34 services included in the lease and the rent charge as provided 294.35 by Code of Federal Regulations, title 12, section 213.4, 294.36 excluding any rent charge related to the capitalization of the 295.1 tax. 295.2 (b) If the total amount paid by the lessee for use of the 295.3 leased vehicle includes amounts that are not calculated at the 295.4 time the lease is executed, the tax is imposed and must be 295.5 collected by the lessor at the time the amounts are paid by the 295.6 lessee. In the case of a lease which by its terms may be 295.7 renewed, the sales tax is due and payable on the total amount to 295.8 be paid during the initial term of the lease, and then for each 295.9 subsequent renewal period on the total amount to be paid during 295.10 the renewal period. 295.11 (c) If a lease is canceled or rescinded on or before 90 295.12 days of its execution or if a vehicle is returned to the 295.13 manufacturer under section 325F.665, the lessor may file a claim 295.14 for a refund of the total tax paid minus the amount of tax due 295.15 for the period the vehicle is used by the lessee. 295.16 (d) If a lessee's obligation to make payments on a lease is 295.17 canceled more than 90 days after its execution, a credit is 295.18 allowed against sales tax or motor vehicle sales tax due on a 295.19 subsequent lease or purchase of a motor vehicle if that lease or 295.20 purchase is consummated within 30 days of the date the prior 295.21 lease was canceled. The amount of the credit shall be equal to 295.22 (1) the sales tax paid at the inception of the lease, multiplied 295.23 by (2) the ratio of the number of full months remaining in the 295.24 lease at the time of termination compared to the term of the 295.25 lease used in calculating sales tax paid at the inception of the 295.26 lease. 295.27 Subd. 2. [LEASE OF MOTOR VEHICLES.] When the lease of a 295.28 motor vehicle as defined in section 297A.61, subdivision 4, 295.29 paragraph (k), clause (2), originates in another state, the 295.30 sales tax under subdivision 1 shall be calculated by the lessor 295.31 on the total amount that is due under the lease agreement after 295.32 the vehicle is required to be registered in Minnesota. If the 295.33 total amount to be paid by the lessee under the lease agreement 295.34 has already been subjected to tax by another state, a credit for 295.35 taxes paid in the other state is allowed as provided in section 295.36 297A.80. 296.1 [EFFECTIVE DATE.] Subdivision 1 of this section is 296.2 effective for leases entered into after September 30, 2005. 296.3 Subdivision 2 of this section is effective for vehicles 296.4 registering in Minnesota after September 30, 2005. 296.5 Sec. 8. Minnesota Statutes 2004, section 297F.01, is 296.6 amended by adding a subdivision to read: 296.7 Subd. 10a. [OUT-OF-STATE RETAILER.] "Out-of-state retailer" 296.8 means a person engaged outside of this state in the business of 296.9 selling, or offering to sell, cigarettes or tobacco products to 296.10 consumers located in this state. 296.11 [EFFECTIVE DATE.] This section is effective the day 296.12 following final enactment. 296.13 Sec. 9. [297F.031] [REGISTRATION REQUIREMENT.] 296.14 Prior to making delivery sales or shipping cigarettes or 296.15 tobacco products in connection with any sales, an out-of-state 296.16 retailer shall file with the Department of Revenue a statement 296.17 setting forth the out-of-state retailer's name, trade name, and 296.18 the address of the out-of-state retailer's principal place of 296.19 business and any other place of business. 296.20 Sec. 10. Minnesota Statutes 2004, section 297F.09, is 296.21 amended by adding a subdivision to read: 296.22 Subd. 4a. [REPORTING REQUIREMENTS.] No later than the 18th 296.23 day of each calendar month, an out-of-state retailer that has 296.24 made a delivery of cigarettes or tobacco products or shipped or 296.25 delivered cigarettes or tobacco products into the state in a 296.26 delivery sale in the previous calendar month shall file with the 296.27 Department of Revenue reports in the form and in the manner 296.28 prescribed by the commissioner of revenue that provides for each 296.29 delivery sale, the name and address of the purchaser and the 296.30 brand or brands and quantity of cigarettes or tobacco products 296.31 sold. A tobacco retailer that meets the requirements of United 296.32 States Code, title 15, section 375 et seq. satisfies the 296.33 requirements of this subdivision. 296.34 Sec. 11. Minnesota Statutes 2004, section 297F.14, 296.35 subdivision 4, is amended to read: 296.36 Subd. 4. [BAD DEBT.]The commissioner may adopt rules297.1providing a refund of the tax paid under this chapter if the tax297.2paid qualifies as a bad debt under section 166(a) of the297.3Internal Revenue Code.For any reporting period, a taxpayer may 297.4 offset against taxes payable under this chapter the amount of 297.5 taxes previously paid under this chapter that is attributable to 297.6 a bad debt. The taxes must have been included in a transaction 297.7 the consideration for which was a debt owed to the taxpayer and 297.8 which became uncollectible, but only in proportion to the 297.9 portion of debt that became uncollectible. To qualify for 297.10 offset under this subdivision, the debt must have qualified as a 297.11 bad debt under section 166(a) of the Internal Revenue Code. The 297.12 taxpayer may claim the offset within the time period prescribed 297.13 in section 297F.17, subdivision 6. If the taxpayer is no longer 297.14 liable for taxes imposed under this chapter, the commissioner 297.15 shall refund to the taxpayer the amount of the taxes 297.16 attributable to the bad debt. Any recovery of the tax claimed 297.17 as a refund or credit must be reported to the commissioner on 297.18 the tax return for the month in which the recovery is made. If 297.19 the taxpayer is no longer required to file returns under this 297.20 chapter, the taxpayer must reimburse the commissioner for tax 297.21 recovered in the month following the recovery. 297.22 [EFFECTIVE DATE.] This section is effective for claims 297.23 filed on or after July 1, 2005. 297.24 Sec. 12. [297F.25] [CIGARETTE SALES TAX.] 297.25 Subdivision 1. [IMPOSITION.] A tax is imposed on 297.26 distributors on the sale of cigarettes by a cigarette 297.27 distributor to a retailer or cigarette subjobber for resale in 297.28 this state. The tax is equal to 6.5 percent of the weighted 297.29 average retail price. The weighted average retail price must be 297.30 expressed in cents per pack when rounded to the nearest 297.31 one-tenth of a cent. The weighted average retail price must be 297.32 determined annually, with new rates published by May 1, and 297.33 effective for sales on or after July 1. The weighted average 297.34 retail price must be established by surveying cigarette 297.35 retailers statewide in a manner and time determined by the 297.36 commissioner. The determination of the commissioner pursuant to 298.1 this subdivision is not a "rule" and is not subject to the 298.2 Administrative Procedure Act contained in chapter 14. As of 298.3 August 1, 2005, the tax is 21 cents per pack of 20 cigarettes. 298.4 For packs of cigarettes with other than 20 cigarettes, the tax 298.5 must be adjusted proportionally. 298.6 Subd. 2. [PAYMENT.] Each taxpayer must remit payments of 298.7 the taxes to the commissioner on the same dates prescribed under 298.8 section 297F.09, subdivision 1, for cigarette tax returns, 298.9 including the accelerated remittance of the June liability. 298.10 Subd. 3. [RETURN.] A taxpayer must file a return with the 298.11 commissioner on the same dates prescribed under section 297F.09, 298.12 subdivision 1, for cigarette tax returns. Notwithstanding any 298.13 other provisions of this chapter, the tax due on the return is 298.14 based upon actual stamps purchased during the reporting period. 298.15 Subd. 4. [FORM OF RETURN.] The return must contain the 298.16 information and be in the form prescribed by the commissioner. 298.17 Subd. 5. [TAX AS DEBT.] The tax that is required to be 298.18 paid by the distributor is a debt from the retailer or cigarette 298.19 subjobber to the distributor recoverable at law in the same 298.20 manner as other debts. A cigarette retailer or subjobber must 298.21 pay the tax imposed under subdivision 1 to the distributor 298.22 before the 12th day of the month following the month in which 298.23 the cigarettes were purchased from the distributor. 298.24 Subd. 6. [SALES TAX STAMP.] Payment of the tax imposed 298.25 under section 297F.05 and by this section must be evidenced by a 298.26 dual-purpose single stamp affixed to each package. 298.27 Subd. 7. [ADMINISTRATION.] The stamping, audit, 298.28 assessment, interest, penalty, appeal, refund, and collection 298.29 provisions applicable to the taxes imposed under this chapter 298.30 apply to taxes imposed under this section. 298.31 Subd. 8. [DEPOSIT OF REVENUES.] Notwithstanding the 298.32 provisions of section 297F.10, the commissioner shall deposit 298.33 all revenues, including penalties and interest, derived from the 298.34 tax imposed by this section, in the general fund. 298.35 [EFFECTIVE DATE.] This section is effective for all sales 298.36 made on or after August 1, 2005. 299.1 Sec. 13. Minnesota Statutes 2004, section 297I.05, 299.2 subdivision 4, is amended to read: 299.3 Subd. 4. [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 299.4 TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 299.5 tax is imposed on mutual insurance companies that sell both 299.6 property and casualtycompaniesinsurance that had total assets 299.7 greater than $5,000,000 at the end of the calendar year but that 299.8 had total assets less than $1,600,000,000 on December 31, 1989. 299.9 The rate of tax is equal to:299.10(1) two percent of gross premiums less return premiums on299.11all direct business received by the insurer or agents of the299.12insurer in Minnesota for life insurance, in cash or otherwise,299.13during the year; and299.14(2)1.26 percent of gross premiums less return premiums on 299.15 allotherdirect business received by the insurer or agents of 299.16 the insurer in Minnesota, in cash or otherwise, during the year, 299.17 except for life insurance as provided in subdivision 14. 299.18 [EFFECTIVE DATE.] This section is effective for premiums 299.19 received after December 31, 2005. 299.20 Sec. 14. Minnesota Statutes 2004, section 297I.05, is 299.21 amended by adding a subdivision to read: 299.22 Subd. 14. [LIFE INSURANCE.] A tax is imposed on life 299.23 insurance. The rate of tax equals 1.50 percent of gross 299.24 premiums less return premiums on all direct business received by 299.25 the insurer or agents of the insurer in Minnesota for life 299.26 insurance, in cash or otherwise, during the year. 299.27 [EFFECTIVE DATE.] This section is effective for premiums 299.28 received after December 31, 2005. 299.29 Sec. 15. [325D.125] [EMPLOYERS NOT TO MISREPRESENT STATUS 299.30 OF EMPLOYEES.] 299.31 Subdivision 1. [MISREPRESENTATION PROHIBITED.] No employer 299.32 shall misrepresent the nature of its employment relationship 299.33 with its employees to any federal, state, or local government 299.34 unit, to other employers or to its employees. An employer 299.35 misrepresents the nature of its employment relationship with its 299.36 employees if it makes any statement regarding the nature of the 300.1 relationship that the employer does not in good faith believe to 300.2 be true or if it fails to report individuals as employees when 300.3 legally required to do so. 300.4 Subd. 2. [EMPLOYEE COERCION PROHIBITED.] No employer shall 300.5 require or request any employee to enter into any agreement, or 300.6 sign any document, that results in misclassification of the 300.7 employee as an independent contractor or otherwise does not 300.8 accurately reflect the employment relationship with the employer. 300.9 Subd. 3. [VIOLATIONS.] Any court finding any person guilty 300.10 of violating this section shall transmit a copy of the 300.11 documentation of the finding of guilt to the commissioner of 300.12 labor and industry. The commissioner of labor and industry 300.13 shall report the finding of guilt to relevant state and federal 300.14 agencies, including at least the commissioner of commerce, the 300.15 commissioner of economic security, the commissioner of revenue, 300.16 the federal Internal Revenue Service, and the United States 300.17 Department of Labor. 300.18 [EFFECTIVE DATE.] This section is effective the day 300.19 following final enactment. 300.20 Sec. 16. [325F.781] [REQUIREMENTS; TOBACCO PRODUCT 300.21 DELIVERY SALES.] 300.22 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 300.23 section, the following terms have the meanings given, unless the 300.24 language or context clearly provides otherwise. 300.25 (b) "Consumer" means an individual who purchases, receives, 300.26 or possesses tobacco products for personal consumption and not 300.27 for resale. 300.28 (c) "Delivery sale" means: 300.29 (1) a sale of tobacco products to a consumer in this state 300.30 when: 300.31 (i) the purchaser submits the order for the sale by means 300.32 of a telephonic or other method of voice transmission, the mail 300.33 or any other delivery service, or the Internet or other on-line 300.34 service; or 300.35 (ii) the tobacco products are delivered by use of the mail 300.36 or other delivery service; or 301.1 (2) a sale of tobacco products that satisfies the criteria 301.2 in clause (1), item (i), regardless of whether the seller is 301.3 located inside or outside of the state. 301.4 A sale of tobacco products to an individual in this state 301.5 must be treated as a sale to a consumer, unless the individual 301.6 is licensed as a distributor or retailer of tobacco products. 301.7 (d) "Delivery service" means a person, including the United 301.8 States Postal Service, that is engaged in the commercial 301.9 delivery of letters, packages, or other containers. 301.10 (e) "Distributor" means a person, whether located inside or 301.11 outside of this state, other than a retailer, who sells or 301.12 distributes tobacco products in the state. Distributor does not 301.13 include a tobacco products manufacturer, export warehouse 301.14 proprietor, or importer with a valid permit under United States 301.15 Code, title 26, section 5712 (1997), if the person sells or 301.16 distributes tobacco products in this state only to distributors 301.17 who hold valid and current licenses under the laws of a state, 301.18 or to an export warehouse proprietor or another manufacturer. 301.19 Distributor does not include a common or contract carrier that 301.20 is transporting tobacco products under a proper bill of lading 301.21 or freight bill that states the quantity, source, and 301.22 destination of tobacco products, or a person who ships tobacco 301.23 products through this state by common or contract carrier under 301.24 a bill of lading or freight bill. 301.25 (f) "Retailer" means a person, whether located inside or 301.26 outside this state, who sells or distributes tobacco products to 301.27 a consumer in this state. 301.28 (g) "Tobacco products" means: 301.29 (1) cigarettes, as defined in section 297F.01, subdivision 301.30 3; and 301.31 (2) smokeless tobacco as defined in section 325F.76. 301.32 Subd. 2. [REQUIREMENTS FOR ACCEPTING ORDER FOR DELIVERY 301.33 SALE.] (a) This subdivision applies to acceptance of an order 301.34 for a delivery sale of tobacco products. 301.35 (b) When accepting the first order for a delivery sale from 301.36 a consumer, the tobacco retailer shall obtain the following 302.1 information from the person placing the order: 302.2 (1) a copy of a valid government-issued document that 302.3 provides the person's name, current address, photograph, and 302.4 date of birth; and 302.5 (2) an original written statement signed by the person 302.6 documenting that the person: 302.7 (i) is of legal age to purchase tobacco products in the 302.8 state; 302.9 (ii) has made a choice whether to receive mailings from a 302.10 tobacco retailer; 302.11 (iii) understands that providing false information may be a 302.12 violation of law; and 302.13 (iv) understands that it is a violation of law to purchase 302.14 tobacco products for subsequent resale or for delivery to 302.15 persons who are under the legal age to purchase tobacco products. 302.16 (c) If an order is made as a result of advertisement over 302.17 the Internet, the tobacco retailer shall request the e-mail 302.18 address of the purchaser and shall receive payment by credit 302.19 card or check prior to shipping. 302.20 (d) Prior to shipping the tobacco products, the tobacco 302.21 retailer shall verify the information provided under paragraph 302.22 (b) against a commercially available database. Any such 302.23 database or databases may also include age and identity 302.24 information from other government or validated commercial 302.25 sources, if that additional information is regularly used by 302.26 government and businesses for the purpose of identity 302.27 verification and authentication, and if the additional 302.28 information is used only to supplement and not to replace the 302.29 government-issued identification data in the age and identity 302.30 verification process. 302.31 Subd. 3. [REQUIREMENTS FOR SHIPPING A DELIVERY SALE.] (a) 302.32 This subdivision applies to a tobacco retailer shipping tobacco 302.33 products pursuant to a delivery sale. 302.34 (b) The tobacco retailer shall clearly mark the outside of 302.35 the package of tobacco products to be shipped "tobacco products - 302.36 adult signature required" and to show the name of the tobacco 303.1 retailer. 303.2 (c) The tobacco retailer shall utilize a delivery service 303.3 that imposes the following requirements: 303.4 (1) an adult must sign for the delivery; and 303.5 (2) the person signing for the delivery must show valid 303.6 government-issued identification that contains a photograph of 303.7 the person signing for the delivery and indicates that the 303.8 person signing for the delivery is of legal age to purchase 303.9 tobacco products and resides at the delivery address. 303.10 (d) The retailer must provide delivery instructions that 303.11 clearly indicate the requirements of this subdivision and must 303.12 declare that state law requires compliance with the requirements. 303.13 (e) No criminal penalty may be imposed on a person for a 303.14 violation of this section other than a violation described in 303.15 paragraph (f) or (g). Whenever it appears to the commissioner 303.16 that any person has engaged in any act or practice constituting 303.17 a violation of this section, and the violation is not within two 303.18 years of any previous violation of this section, the 303.19 commissioner shall issue and cause to be served upon the person 303.20 an order requiring the person to cease and desist from violating 303.21 this section. The order must give reasonable notice of the 303.22 rights of the person to request a hearing and must state the 303.23 reason for the entry of the order. Unless otherwise agreed 303.24 between the parties, a hearing shall be held not later than 303.25 seven days after the request for the hearing is received by the 303.26 commissioner after which and within 20 days after the receipt of 303.27 the administrative law judge's report and subsequent exceptions 303.28 and argument, the commissioner shall issue an order vacating the 303.29 cease and desist order, modifying it, or making it permanent as 303.30 the facts require. If no hearing is requested within 30 days of 303.31 the service of the order, the order becomes final and remains in 303.32 effect until modified or vacated by the commissioner. All 303.33 hearings shall be conducted in accordance with the provisions of 303.34 chapter 14. If the person to whom a cease and desist order is 303.35 issued fails to appear at the hearing after being duly notified, 303.36 the person shall be deemed in default, and the proceeding may be 304.1 determined against the person upon consideration of the cease 304.2 and desist order, the allegations of which may be deemed to be 304.3 true. 304.4 (f) Any person who violates this section within two years 304.5 of a violation for which a cease and desist order was issued 304.6 under paragraph (e), is guilty of a misdemeanor. 304.7 (g) Any person who commits a third or subsequent violation 304.8 of this section, including a violation for which a cease and 304.9 desist order was issued under paragraph (c), within any 304.10 subsequent two-year period is guilty of a gross misdemeanor. 304.11 Subd. 4. [COMMON CARRIERS.] This section may not be 304.12 construed as imposing liability upon any common carrier, or 304.13 officers or employees of the common carrier, when acting within 304.14 the scope of business of the common carrier. 304.15 Subd. 5. [REGISTRATION REQUIREMENT.] Prior to making 304.16 delivery sales or shipping tobacco products in connection with 304.17 any sales, an out-of-state retailer must meet the requirements 304.18 of section 297F.031. 304.19 Subd. 6. [COLLECTION OF TAXES.] (a) Prior to shipping any 304.20 tobacco products to a purchaser in this state, the out-of-state 304.21 retailer shall comply with all requirements of chapter 297F and 304.22 shall ensure that all state excise taxes and fees that apply to 304.23 such tobacco products have been collected and paid to the state 304.24 and that all related state excise tax stamps or other indicators 304.25 of state excise tax payment have been properly affixed to those 304.26 tobacco products. 304.27 (b) In addition to any penalties under chapter 297F, a 304.28 distributor who fails to pay any tax due according to paragraph 304.29 (a) shall pay, in addition to any other penalty, a penalty of 50 304.30 percent of the tax due but unpaid. 304.31 Subd. 7. [APPLICATION OF STATE LAWS.] All state laws that 304.32 apply to in-state tobacco product retailers shall apply to 304.33 Internet and mail-order sellers that sell into this state. 304.34 Subd. 8. [FORFEITURE.] Any tobacco product sold or 304.35 attempted to be sold in a delivery sale that does not meet the 304.36 requirements of this section is deemed to be contraband and is 305.1 subject to forfeiture in the same manner as and in accordance 305.2 with the provisions of section 297F.21. 305.3 Subd. 9. [CIVIL PENALTIES.] A tobacco retailer or 305.4 distributor who violates this section or rules adopted under 305.5 this section is subject to the following fines: 305.6 (1) for the first violation, a fine of not more than 305.7 $1,000; and 305.8 (2) for the second and any subsequent violation, a fine of 305.9 not more than $5,000. 305.10 Subd. 10. [ENFORCEMENT.] The attorney general may bring an 305.11 action to enforce this section and may seek injunctive relief, 305.12 including a preliminary or final injunction, and fines, 305.13 penalties, and equitable relief and may seek to prevent or 305.14 restrain actions in violation of this section by any person or 305.15 any person controlling such person. In addition, a violation of 305.16 this section is a violation of the Unlawful Trade Practices Act, 305.17 sections 325D.09 to 325D.16. 305.18 [EFFECTIVE DATE.] This section is effective the day 305.19 following final enactment. 305.20 Sec. 17. Minnesota Statutes 2004, section 366.011, is 305.21 amended to read: 305.22 366.011 [CHARGES FOR EMERGENCY SERVICES; COLLECTION.] 305.23 A town may impose a reasonable service charge for emergency 305.24 services, including fire, rescue, medical, and related services 305.25 provided by the town or contracted for by the town. If the 305.26 service charge remains unpaid 30 days after a notice of 305.27 delinquency is sent to the recipient of the service or the 305.28 recipient's representative or estate, the town or its contractor 305.29 on behalf of the town may use any lawful means allowed to a 305.30 private party for the collection of an unsecured delinquent 305.31 debt. The town may also use the authority of section 366.012 to 305.32 collect unpaid service charges of this kind from delinquent 305.33 recipients of services who are owners of taxable real property 305.34 in thetownstate. 305.35 The powers conferred by this section are in addition and 305.36 supplemental to the powers conferred by any other law for a town 306.1 to impose a service charge or assessment for a service provided 306.2 by the town or contracted for by the town. 306.3 Sec. 18. Minnesota Statutes 2004, section 366.012, is 306.4 amended to read: 306.5 366.012 [COLLECTION OF UNPAID SERVICE CHARGES.] 306.6 If a town is authorized to impose a service chargeon the306.7owner, lessee, or occupant of property, or any of them,for a 306.8 governmental service provided by the town, the town board may 306.9 certify to the county auditor of the county in which the 306.10 recipient of the services owns real property, on or before 306.11 October 15 for each year, any unpaid service charges which shall 306.12 then be collected together with property taxes levied against 306.13 the property. The county auditor shall remit to the town all 306.14 service charges collected by the auditor on behalf of the town. 306.15 A charge may be certified to the auditor only if, on or before 306.16 September 15, the town has given written notice to the property 306.17 owner of its intention to certify the charge to the auditor. 306.18 The service charges shall be subject to the same penalties, 306.19 interest, and other conditions provided for the collection of 306.20 property taxes. This section is in addition to other law 306.21 authorizing the collection of unpaid costs and service charges. 306.22 Sec. 19. [COMPACTS; RETALIATORY TAXES.] 306.23 The commissioner of revenue may enter into compact 306.24 agreements with other states for the purpose of eliminating 306.25 retaliatory insurance premiums tax provisions between this state 306.26 and other states. The commissioner shall report to the 306.27 chairpersons of the house and senate tax committees, on or 306.28 before February 1, 2006, on the actions the commissioner has 306.29 taken to enter into compact agreements with other states. 306.30 Sec. 20. [FLOOR STOCKS TAX.] 306.31 Subdivision 1. [CIGARETTES.] A floor stocks cigarette 306.32 sales tax is imposed on every person engaged in the business in 306.33 this state as a distributor, retailer, subjobber, vendor, 306.34 manufacturer, or manufacturer's representative of cigarettes, on 306.35 the stamped cigarettes and unaffixed stamps in the person's 306.36 possession or under the person's control at 12:01 a.m. on August 307.1 1, 2005. The tax is imposed at the rate of 21 cents per pack of 307.2 20 cigarettes. For packs of cigarettes with other than 20 307.3 cigarettes, the tax shall be adjusted proportionally. 307.4 Each distributor, by August 10, 2005, shall file a return 307.5 with the commissioner, in the form the commissioner prescribes, 307.6 showing the stamped cigarettes and unaffixed stamps on hand at 307.7 12:01 a.m. on August 1, 2005, and the amount of tax due on the 307.8 cigarettes and unaffixed stamps. The tax imposed by this 307.9 section is due and payable by September 7, 2005, and after that 307.10 date bears interest at the rate of one percent a month. 307.11 Each retailer, subjobber, vendor, manufacturer, or 307.12 manufacturer's representative, by August 10, 2005, shall file a 307.13 return with the commissioner, in the form the commissioner 307.14 prescribes, showing the cigarettes on hand at 12:01 a.m. on 307.15 August 1, 2005, and the amount of tax due on the cigarettes. 307.16 The tax imposed by this section is due and payable by September 307.17 7, 2005, and after that date bears interest at the rate of one 307.18 percent a month. 307.19 Subd. 2. [AUDIT AND ENFORCEMENT.] The tax imposed by this 307.20 section is subject to the audit, assessment, penalty, and 307.21 collection provisions applicable to the taxes imposed under 307.22 Minnesota Statutes, chapter 297F. The commissioner may require 307.23 a distributor to receive and maintain copies of floor stocks tax 307.24 returns filed by all persons requesting a credit for returned 307.25 cigarettes. 307.26 Subd. 3. [DEPOSIT OF PROCEEDS.] The revenue from the tax 307.27 imposed under this section shall be deposited by the 307.28 commissioner in the state treasury and credited to the general 307.29 fund. 307.30 [EFFECTIVE DATE.] This section is effective August 1, 2005. 307.31 ARTICLE 9 307.32 DEPARTMENT OF REVENUE 307.33 INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES 307.34 Section 1. Minnesota Statutes 2004, section 289A.08, 307.35 subdivision 3, is amended to read: 307.36 Subd. 3. [CORPORATIONS.] A corporation that is subject to 308.1 the state's jurisdiction to tax under section 290.014, 308.2 subdivision 5, must file a return, except that a foreign 308.3 operating corporation as defined in section 290.01, subdivision 308.4 6b, is not required to file a return. The commissioner shall 308.5 adopt rules for the filing of one return on behalf of the 308.6 members of an affiliated group of corporations that are required 308.7 to file a combined report. All members of an affiliated group 308.8 that are required to file a combined report must file one return 308.9 on behalf of the members of the group under rules adopted by the 308.10 commissioner. If a corporation claims on a return that it has 308.11 paid tax in excess of the amount of taxes lawfully due, that 308.12 corporation may include on that return information necessary for 308.13 payment of the tax in excess of the amount lawfully due by 308.14 electronic means. 308.15 [EFFECTIVE DATE.] This section is effective for returns 308.16 filed after December 31, 2005. 308.17 Sec. 2. Minnesota Statutes 2004, section 289A.08, 308.18 subdivision 7, is amended to read: 308.19 Subd. 7. [COMPOSITE INCOME TAX RETURNS FOR NONRESIDENT 308.20 PARTNERS, SHAREHOLDERS, AND BENEFICIARIES.] (a) The commissioner 308.21 may allow a partnership with nonresident partners to file a 308.22 composite return and to pay the tax on behalf of nonresident 308.23 partners who have no other Minnesota source income. This 308.24 composite return must include the names, addresses, Social 308.25 Security numbers, income allocation, and tax liability for the 308.26 nonresident partners electing to be covered by the composite 308.27 return. 308.28 (b) The computation of a partner's tax liability must be 308.29 determined by multiplying the income allocated to that partner 308.30 by the highest rate used to determine the tax liability for 308.31 individuals under section 290.06, subdivision 2c. Nonbusiness 308.32 deductions, standard deductions, or personal exemptions are not 308.33 allowed. 308.34 (c) The partnership must submit a request to use this 308.35 composite return filing method for nonresident partners. The 308.36 requesting partnership must file a composite return in the form 309.1 prescribed by the commissioner of revenue. The filing of a 309.2 composite return is considered a request to use the composite 309.3 return filing method. 309.4 (d) The electing partner must not have any Minnesota source 309.5 income other than the income from the partnership and other 309.6 electing partnerships. If it is determined that the electing 309.7 partner has other Minnesota source income, the inclusion of the 309.8 income and tax liability for that partner under this provision 309.9 will not constitute a return to satisfy the requirements of 309.10 subdivision 1. The tax paid for the individual as part of the 309.11 composite return is allowed as a payment of the tax by the 309.12 individual on the date on which the composite return payment was 309.13 made. If the electing nonresident partner has no other 309.14 Minnesota source income, filing of the composite return is a 309.15 return for purposes of subdivision 1. 309.16 (e) This subdivision does not negate the requirement that 309.17 an individual pay estimated tax if the individual's liability 309.18 would exceed the requirements set forth in section 289A.25. A 309.19 composite estimate may, however, be filed in a manner similar to 309.20 and containing the information required under paragraph (a). 309.21 (f) If an electing partner's share of the partnership's 309.22 gross income from Minnesota sources is less than the filing 309.23 requirements for a nonresident under this subdivision, the tax 309.24 liability is zero. However, a statement showing the partner's 309.25 share of gross income must be included as part of the composite 309.26 return. 309.27 (g) The election provided in this subdivision isnotonly 309.28 available toanya partnerother thanwho has no other Minnesota 309.29 source income and who is either (1) a full-year nonresident 309.30 individualwho has no other Minnesota source incomeor (2) a 309.31 trust or estate that does not claim a deduction under either 309.32 section 651 or 661 of the Internal Revenue Code. 309.33 (h) A corporation defined in section 290.9725 and its 309.34 nonresident shareholders may make an election under this 309.35 paragraph. The provisions covering the partnership apply to the 309.36 corporation and the provisions applying to the partner apply to 310.1 the shareholder. 310.2 (i) Estates and trusts distributing current income only and 310.3 the nonresident individual beneficiaries of the estates or 310.4 trusts may make an election under this paragraph. The 310.5 provisions covering the partnership apply to the estate or 310.6 trust. The provisions applying to the partner apply to the 310.7 beneficiary. 310.8 (j) For the purposes of this subdivision, "income" means 310.9 the partner's share of federal adjusted gross income from the 310.10 partnership modified by the additions provided in section 310.11 290.01, subdivision 19a, clauses (6) and (7), and the 310.12 subtractions provided in section 290.01, subdivision 19b, clause 310.13 (11), to the extent the amount is assignable or allocable to 310.14 Minnesota under section 290.17. The subtraction allowed under 310.15 section 290.01, subdivision 19b, clause (11), is only allowed on 310.16 the composite tax computation to the extent the electing partner 310.17 would have been allowed the subtraction. 310.18 [EFFECTIVE DATE.] This section is effective for tax years 310.19 beginning after December 31, 2004. 310.20 Sec. 3. Minnesota Statutes 2004, section 289A.18, 310.21 subdivision 1, is amended to read: 310.22 Subdivision 1. [INDIVIDUAL INCOME, FIDUCIARY INCOME, 310.23 CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES; PARTNERSHIP AND S 310.24 CORPORATION RETURNS; INFORMATION RETURNS; MINING COMPANY 310.25 RETURNS.] The returns required to be made under sections 289A.08 310.26 and 289A.12 must be filed at the following times: 310.27 (1) returns made on the basis of the calendar year must be 310.28 filed on April 15 following the close of the calendar year, 310.29 except that returns of corporations must be filed on March 15 310.30 following the close of the calendar year; 310.31 (2) returns made on the basis of the fiscal year must be 310.32 filed on the 15th day of the fourth month following the close of 310.33 the fiscal year, except that returns of corporations must be 310.34 filed on the 15th day of the third month following the close of 310.35 the fiscal year; 310.36 (3) returns for a fractional part of a year must be filed 311.1 on the 15th day of the fourth month following the end of the 311.2 month in which falls the last day of the period for which the 311.3 return is made, except that the returns of corporations must be 311.4 filed on the 15th day of the third month following the end of 311.5 themonthtax year of the unitary group in which falls the last 311.6 day of the period for which the return is made; 311.7 (4) in the case of a final return of a decedent for a 311.8 fractional part of a year, the return must be filed on the 15th 311.9 day of the fourth month following the close of the 12-month 311.10 period that began with the first day of that fractional part of 311.11 a year; 311.12 (5) in the case of the return of a cooperative association, 311.13 returns must be filed on or before the 15th day of the ninth 311.14 month following the close of the taxable year; 311.15 (6) if a corporation has been divested from a unitary group 311.16 and files a return for a fractional part of a year in which it 311.17 was a member of a unitary business that files a combined report 311.18 under section 290.34, subdivision 2, the divested corporation's 311.19 return must be filed on the 15th day of the third month 311.20 following the close of the common accounting period that 311.21 includes the fractional year; 311.22 (7) returns of entertainment entities must be filed on 311.23 April 15 following the close of the calendar year; 311.24 (8) returns required to be filed under section 289A.08, 311.25 subdivision 4, must be filed on the 15th day of the fifth month 311.26 following the close of the taxable year; 311.27 (9) returns of mining companies must be filed on May 1 311.28 following the close of the calendar year; and 311.29 (10) returns required to be filed with the commissioner 311.30 under section 289A.12, subdivision 2, 4 to 10, or 14, must be 311.31 filed within 30 days after being demanded by the commissioner. 311.32 [EFFECTIVE DATE.] This section is effective for fractional 311.33 years closing after December 31, 2004. 311.34 Sec. 4. Minnesota Statutes 2004, section 289A.38, 311.35 subdivision 7, is amended to read: 311.36 Subd. 7. [FEDERAL TAX CHANGES.] If the amount of income, 312.1 items of tax preference, deductions, or credits for any year of 312.2 a taxpayer as reported to the Internal Revenue Service is 312.3 changed or corrected by the commissioner of Internal Revenue or 312.4 other officer of the United States or other competent authority, 312.5 or where a renegotiation of a contract or subcontract with the 312.6 United States results in a change in income, items of tax 312.7 preference, deductions, credits, or withholding tax, or, in the 312.8 case of estate tax, where there are adjustments to the taxable 312.9 estate resulting in a change to the credit for state death 312.10 taxes, the taxpayer shall report the change or correction or 312.11 renegotiation results in writing to the commissioner. The 312.12 report must be submitted within 180 days after the final 312.13 determination and must be in the form of either an amended 312.14 Minnesota estate, withholding tax, corporate franchise tax, or 312.15 income tax return conceding the accuracy of the federal 312.16 determination or a letter detailing how the federal 312.17 determination is incorrect or does not change the Minnesota 312.18 tax. An amended Minnesota income tax return must be accompanied 312.19 by an amended property tax refund return, if necessary. A 312.20 taxpayer filing an amended federal tax return must also file a 312.21 copy of the amended return with the commissioner of revenue 312.22 within 180 days after filing the amended return. 312.23 [EFFECTIVE DATE.] This section is effective the day 312.24 following final enactment. 312.25 Sec. 5. Minnesota Statutes 2004, section 289A.50, 312.26 subdivision 1a, is amended to read: 312.27 Subd. 1a. [REFUND FORM.] On or before January 1, 2000, the 312.28 commissioner of revenue shall prepare and make available to 312.29 taxpayers a form for filing claims for refund of taxes paid in 312.30 excess of the amount due.If the commissioner fails to prepare312.31a form under this subdivision by January 1, 2000, any claims for312.32refund made after January 1, 2000, and up to ten days after the312.33form is made available to taxpayers are deemed to be made in312.34compliance with the requirement of the form.The commissioner 312.35 may request corporate franchise taxpayers claiming a refund of 312.36 corporate franchise taxes paid in excess of the amount lawfully 313.1 due to include on the claim for refund or amended return 313.2 information necessary for payment of the taxes paid in excess of 313.3 taxes lawfully due by electronic means. 313.4 [EFFECTIVE DATE.] This section is effective for claims for 313.5 refund filed after December 31, 2005. 313.6 Sec. 6. Minnesota Statutes 2004, section 289A.60, 313.7 subdivision 6, is amended to read: 313.8 Subd. 6. [PENALTY FOR FALSE OR FRAUDULENT RETURN, 313.9 EVASION.] If a person files a false or fraudulent return, or 313.10 claim for refund or attempts in any manner to evade or defeat a 313.11 tax or payment of tax, there is imposed on the person a penalty 313.12 equal to the sum of (1) 50 percent of the tax, less amounts paid 313.13 by the person on the basis of the false or fraudulent return, 313.14 due for the period to which the return related and (2) 50 313.15 percent of the portion of any refund claimed that is 313.16 attributable to fraud. 313.17 [EFFECTIVE DATE.] This section is effective for returns 313.18 filed after December 31, 2005. 313.19 Sec. 7. Minnesota Statutes 2004, section 289A.60, 313.20 subdivision 12, is amended to read: 313.21 Subd. 12. [PENALTIES RELATING TO PROPERTY TAX REFUNDS.] 313.22 (a)If the commissioner determines that a property tax refund313.23claim is or was excessive and was filed with fraudulent intent,313.24the claim must be disallowed in full. If the claim has been313.25paid, the amount disallowed may be recovered by assessment and313.26collection.313.27(b)If it is determined that a property tax refund claim is 313.28 excessive and was negligently prepared, ten percent of the 313.29 corrected claim must be disallowed. If the claim has been paid, 313.30 the amount disallowed must be recovered by assessment and 313.31 collection. 313.32(c)(b) An owner who without reasonable cause fails to give 313.33 a certificate of rent constituting property tax to a renter, as 313.34 required by section 290A.19, paragraph (a), is liable to the 313.35 commissioner for a penalty of $100 for each failure. 313.36(d)(c) If the owner or managing agent knowingly gives rent 314.1 certificates that report total rent constituting property taxes 314.2 in excess of the amount of actual rent constituting property 314.3 taxes paid on the rented part of a property, the owner or 314.4 managing agent is liable for a penalty equal to the greater of 314.5 (1) $100 or (2) 50 percent of the excess that is reported. An 314.6 overstatement of rent constituting property taxes is presumed to 314.7 be knowingly made if it exceeds by ten percent or more the 314.8 actual rent constituting property taxes. 314.9 [EFFECTIVE DATE.] This section is effective for returns 314.10 filed after December 31, 2005. 314.11 Sec. 8. Minnesota Statutes 2004, section 290.01, 314.12 subdivision 19a, is amended to read: 314.13 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 314.14 individuals, estates, and trusts, there shall be added to 314.15 federal taxable income: 314.16 (1)(i) interest income on obligations of any state other 314.17 than Minnesota or a political or governmental subdivision, 314.18 municipality, or governmental agency or instrumentality of any 314.19 state other than Minnesota exempt from federal income taxes 314.20 under the Internal Revenue Code or any other federal statute; 314.21 and 314.22 (ii) exempt-interest dividends as defined in section 314.23 852(b)(5) of the Internal Revenue Code, except the portion of 314.24 the exempt-interest dividends derived from interest income on 314.25 obligations of the state of Minnesota or its political or 314.26 governmental subdivisions, municipalities, governmental agencies 314.27 or instrumentalities, but only if the portion of the 314.28 exempt-interest dividends from such Minnesota sources paid to 314.29 all shareholders represents 95 percent or more of the 314.30 exempt-interest dividends that are paid by the regulated 314.31 investment company as defined in section 851(a) of the Internal 314.32 Revenue Code, or the fund of the regulated investment company as 314.33 defined in section 851(g) of the Internal Revenue Code, making 314.34 the payment; and 314.35 (iii) for the purposes of items (i) and (ii), interest on 314.36 obligations of an Indian tribal government described in section 315.1 7871(c) of the Internal Revenue Code shall be treated as 315.2 interest income on obligations of the state in which the tribe 315.3 is located; 315.4 (2) the amount of income taxes paid or accrued within the 315.5 taxable year under this chapter andincomethe amount of taxes 315.6 based on net income paid to any other state or to any province 315.7 or territory of Canada, to the extent allowed as a deduction 315.8 under section 63(d) of the Internal Revenue Code, but the 315.9 addition may not be more than the amount by which the itemized 315.10 deductions as allowed under section 63(d) of the Internal 315.11 Revenue Code exceeds the amount of the standard deduction as 315.12 defined in section 63(c) of the Internal Revenue Code. For the 315.13 purpose of this paragraph, the disallowance of itemized 315.14 deductions under section 68 of the Internal Revenue Code of 315.15 1986, income tax is the last itemized deduction disallowed; 315.16 (3) the capital gain amount of a lump sum distribution to 315.17 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 315.18 Reform Act of 1986, Public Law 99-514, applies; 315.19 (4) the amount of income taxes paid or accrued within the 315.20 taxable year under this chapter andincometaxes based on net 315.21 income paid to any other state or any province or territory of 315.22 Canada, to the extent allowed as a deduction in determining 315.23 federal adjusted gross income. For the purpose of this 315.24 paragraph, income taxes do not include the taxes imposed by 315.25 sections 290.0922, subdivision 1, paragraph (b), 290.9727, 315.26 290.9728, and 290.9729; 315.27 (5) the amount of expense, interest, or taxes disallowed 315.28 pursuant to section 290.10 other than expenses or interest used 315.29 in computing net interest income for the subtraction allowed 315.30 under subdivision 19b, clause (1); 315.31 (6) the amount of a partner's pro rata share of net income 315.32 which does not flow through to the partner because the 315.33 partnership elected to pay the tax on the income under section 315.34 6242(a)(2) of the Internal Revenue Code; and 315.35 (7) 80 percent of the depreciation deduction allowed under 315.36 section 168(k) of the Internal Revenue Code. For purposes of 316.1 this clause, if the taxpayer has an activity that in the taxable 316.2 year generates a deduction for depreciation under section 168(k) 316.3 and the activity generates a loss for the taxable year that the 316.4 taxpayer is not allowed to claim for the taxable year, "the 316.5 depreciation allowed under section 168(k)" for the taxable year 316.6 is limited to excess of the depreciation claimed by the activity 316.7 under section 168(k) over the amount of the loss from the 316.8 activity that is not allowed in the taxable year. In succeeding 316.9 taxable years when the losses not allowed in the taxable year 316.10 are allowed, the depreciation under section 168(k) is allowed. 316.11 [EFFECTIVE DATE.] This section is effective for tax years 316.12 beginning after December 31, 2004. 316.13 Sec. 9. Minnesota Statutes 2004, section 290.01, 316.14 subdivision 19b, is amended to read: 316.15 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 316.16 individuals, estates, and trusts, there shall be subtracted from 316.17 federal taxable income: 316.18 (1) net interest income on obligations of any authority, 316.19 commission, or instrumentality of the United States to the 316.20 extent includable in taxable income for federal income tax 316.21 purposes but exempt from state income tax under the laws of the 316.22 United States; 316.23 (2) if included in federal taxable income, the amount of 316.24 any overpayment of income tax to Minnesota or to any other 316.25 state, for any previous taxable year, whether the amount is 316.26 received as a refund or as a credit to another taxable year's 316.27 income tax liability; 316.28 (3) the amount paid to others, less the amount used to 316.29 claim the credit allowed under section 290.0674, not to exceed 316.30 $1,625 for each qualifying child in grades kindergarten to 6 and 316.31 $2,500 for each qualifying child in grades 7 to 12, for tuition, 316.32 textbooks, and transportation of each qualifying child in 316.33 attending an elementary or secondary school situated in 316.34 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 316.35 wherein a resident of this state may legally fulfill the state's 316.36 compulsory attendance laws, which is not operated for profit, 317.1 and which adheres to the provisions of the Civil Rights Act of 317.2 1964 and chapter 363A. For the purposes of this clause, 317.3 "tuition" includes fees or tuition as defined in section 317.4 290.0674, subdivision 1, clause (1). As used in this clause, 317.5 "textbooks" includes books and other instructional materials and 317.6 equipment purchased or leased for use in elementary and 317.7 secondary schools in teaching only those subjects legally and 317.8 commonly taught in public elementary and secondary schools in 317.9 this state. Equipment expenses qualifying for deduction 317.10 includes expenses as defined and limited in section 290.0674, 317.11 subdivision 1, clause (3). "Textbooks" does not include 317.12 instructional books and materials used in the teaching of 317.13 religious tenets, doctrines, or worship, the purpose of which is 317.14 to instill such tenets, doctrines, or worship, nor does it 317.15 include books or materials for, or transportation to, 317.16 extracurricular activities including sporting events, musical or 317.17 dramatic events, speech activities, driver's education, or 317.18 similar programs. For purposes of the subtraction provided by 317.19 this clause, "qualifying child" has the meaning given in section 317.20 32(c)(3) of the Internal Revenue Code; 317.21 (4) income as provided under section 290.0802; 317.22 (5) to the extent included in federal adjusted gross 317.23 income, income realized on disposition of property exempt from 317.24 tax under section 290.491; 317.25 (6)to the extent included in federal taxable income,317.26postservice benefits for youth community service under section317.27124D.42 for volunteer service under United States Code, title317.2842, sections 12601 to 12604;317.29(7)to the extent not deducted in determining federal 317.30 taxable income by an individual who does not itemize deductions 317.31 for federal income tax purposes for the taxable year, an amount 317.32 equal to 50 percent of the excess of charitable contributions 317.33 allowable as a deduction for the taxable year under section 317.34 170(a) of the Internal Revenue Code over $500; 317.35(8)(7) for taxable years beginning before January 1, 2008, 317.36 the amount of the federal small ethanol producer credit allowed 318.1 under section 40(a)(3) of the Internal Revenue Code which is 318.2 included in gross income under section 87 of the Internal 318.3 Revenue Code; 318.4(9)(8) for individuals who are allowed a federal foreign 318.5 tax credit for taxes that do not qualify for a credit under 318.6 section 290.06, subdivision 22, an amount equal to the carryover 318.7 of subnational foreign taxes for the taxable year, but not to 318.8 exceed the total subnational foreign taxes reported in claiming 318.9 the foreign tax credit. For purposes of this clause, "federal 318.10 foreign tax credit" means the credit allowed under section 27 of 318.11 the Internal Revenue Code, and "carryover of subnational foreign 318.12 taxes" equals the carryover allowed under section 904(c) of the 318.13 Internal Revenue Code minus national level foreign taxes to the 318.14 extent they exceed the federal foreign tax credit; 318.15(10)(9) in each of the five tax years immediately 318.16 following the tax year in which an addition is required under 318.17 subdivision 19a, clause (7), or 19c, clause (15), in the case of 318.18 a shareholder of a corporation that is an S corporation, an 318.19 amount equal to one-fifth of the delayed depreciation. For 318.20 purposes of this clause, "delayed depreciation" means the amount 318.21 of the addition made by the taxpayer under subdivision 19a, 318.22 clause (7), or subdivision 19c, clause (15), in the case of a 318.23 shareholder of an S corporation, minus the positive value of any 318.24 net operating loss under section 172 of the Internal Revenue 318.25 Code generated for the tax year of the addition. The resulting 318.26 delayed depreciation cannot be less than zero; and 318.27(11)(10) job opportunity building zone income as provided 318.28 under section 469.316. 318.29 [EFFECTIVE DATE.] The amendment to clause (9) is effective 318.30 retroactively for tax years beginning after December 31, 2001. 318.31 The rest of this section is effective for the tax years 318.32 beginning after December 31, 2004. 318.33 Sec. 10. Minnesota Statutes 2004, section 290.01, 318.34 subdivision 19c, is amended to read: 318.35 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 318.36 INCOME.] For corporations, there shall be added to federal 319.1 taxable income: 319.2 (1) the amount of any deduction taken for federal income 319.3 tax purposes for income, excise, or franchise taxes based on net 319.4 income or related minimum taxes, including but not limited to 319.5 the tax imposed under section 290.0922, paid by the corporation 319.6 to Minnesota, another state, a political subdivision of another 319.7 state, the District of Columbia, or any foreign country or 319.8 possession of the United States; 319.9 (2) interest not subject to federal tax upon obligations 319.10 of: the United States, its possessions, its agencies, or its 319.11 instrumentalities; the state of Minnesota or any other state, 319.12 any of its political or governmental subdivisions, any of its 319.13 municipalities, or any of its governmental agencies or 319.14 instrumentalities; the District of Columbia; or Indian tribal 319.15 governments; 319.16 (3) exempt-interest dividends received as defined in 319.17 section 852(b)(5) of the Internal Revenue Code; 319.18 (4) the amount of any net operating loss deduction taken 319.19 for federal income tax purposes under section 172 or 832(c)(10) 319.20 of the Internal Revenue Code or operations loss deduction under 319.21 section 810 of the Internal Revenue Code; 319.22 (5) the amount of any special deductions taken for federal 319.23 income tax purposes under sections 241 to 247 of the Internal 319.24 Revenue Code; 319.25 (6) losses from the business of mining, as defined in 319.26 section 290.05, subdivision 1, clause (a), that are not subject 319.27 to Minnesota income tax; 319.28 (7) the amount of any capital losses deducted for federal 319.29 income tax purposes under sections 1211 and 1212 of the Internal 319.30 Revenue Code; 319.31 (8) the exempt foreign trade income of a foreign sales 319.32 corporation under sections 921(a) and 291 of the Internal 319.33 Revenue Code; 319.34 (9) the amount of percentage depletion deducted under 319.35 sections 611 through 614 and 291 of the Internal Revenue Code; 319.36 (10) for certified pollution control facilities placed in 320.1 service in a taxable year beginning before December 31, 1986, 320.2 and for which amortization deductions were elected under section 320.3 169 of the Internal Revenue Code of 1954, as amended through 320.4 December 31, 1985, the amount of the amortization deduction 320.5 allowed in computing federal taxable income for those 320.6 facilities; 320.7 (11) the amount of any deemed dividend from a foreign 320.8 operating corporation determined pursuant to section 290.17, 320.9 subdivision 4, paragraph (g); 320.10 (12)the amount of any environmental tax paid under section320.1159(a) of the Internal Revenue Code;320.12(13)the amount of a partner's pro rata share of net income 320.13 which does not flow through to the partner because the 320.14 partnership elected to pay the tax on the income under section 320.15 6242(a)(2) of the Internal Revenue Code; 320.16(14)(13) the amount of net income excluded under section 320.17 114 of the Internal Revenue Code; 320.18(15)(14) any increase in subpart F income, as defined in 320.19 section 952(a) of the Internal Revenue Code, for the taxable 320.20 year when subpart F income is calculated without regard to the 320.21 provisions of section 614 of Public Law 107-147; and 320.22(16)(15) 80 percent of the depreciation deduction allowed 320.23 under section 168(k)(1)(A) and (k)(4)(A) of the Internal Revenue 320.24 Code. For purposes of this clause, if the taxpayer has an 320.25 activity that in the taxable year generates a deduction for 320.26 depreciation under section 168(k)(1)(A) and (k)(4)(A) and the 320.27 activity generates a loss for the taxable year that the taxpayer 320.28 is not allowed to claim for the taxable year, "the depreciation 320.29 allowed under section 168(k)(1)(A) and (k)(4)(A)" for the 320.30 taxable year is limited to excess of the depreciation claimed by 320.31 the activity under section 168(k)(1)(A) and (k)(4)(A) over the 320.32 amount of the loss from the activity that is not allowed in the 320.33 taxable year. In succeeding taxable years when the losses not 320.34 allowed in the taxable year are allowed, the depreciation under 320.35 section 168(k)(1)(A) and (k)(4)(A) is allowed. 320.36 [EFFECTIVE DATE.] This section is effective the day 321.1 following final enactment. 321.2 Sec. 11. Minnesota Statutes 2004, section 290.06, 321.3 subdivision 22, is amended to read: 321.4 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 321.5 taxpayer who is liable for taxes based onor measured bynet 321.6 income to another state, as provided in paragraphs (b) through 321.7 (f), upon income allocated or apportioned to Minnesota, is 321.8 entitled to a credit for the tax paid to another state if the 321.9 tax is actually paid in the taxable year or a subsequent taxable 321.10 year. A taxpayer who is a resident of this state pursuant to 321.11 section 290.01, subdivision 7,clause (2)paragraph (b), and who 321.12 is subject to income tax as a resident in the state of the 321.13 individual's domicile is not allowed this credit unless the 321.14 state of domicile does not allow a similar credit. 321.15 (b) For an individual, estate, or trust, the credit is 321.16 determined by multiplying the tax payable under this chapter by 321.17 the ratio derived by dividing the income subject to tax in the 321.18 other state that is also subject to tax in Minnesota while a 321.19 resident of Minnesota by the taxpayer's federal adjusted gross 321.20 income, as defined in section 62 of the Internal Revenue Code, 321.21 modified by the addition required by section 290.01, subdivision 321.22 19a, clause (1), and the subtraction allowed by section 290.01, 321.23 subdivision 19b, clause (1), to the extent the income is 321.24 allocated or assigned to Minnesota under sections 290.081 and 321.25 290.17. 321.26 (c) If the taxpayer is an athletic team that apportions all 321.27 of its income under section 290.17, subdivision 5, the credit is 321.28 determined by multiplying the tax payable under this chapter by 321.29 the ratio derived from dividing the total net income subject to 321.30 tax in the other state by the taxpayer's Minnesota taxable 321.31 income. 321.32 (d) The credit determined under paragraph (b) or (c) shall 321.33 not exceed the amount of tax so paid to the other state on the 321.34 gross income earned within the other state subject to tax under 321.35 this chapter, nor shall the allowance of the credit reduce the 321.36 taxes paid under this chapter to an amount less than what would 322.1 be assessed if such income amount was excluded from taxable net 322.2 income. 322.3 (e) In the case of the tax assessed on a lump sum 322.4 distribution under section 290.032, the credit allowed under 322.5 paragraph (a) is the tax assessed by the other state on the lump 322.6 sum distribution that is also subject to tax under section 322.7 290.032, and shall not exceed the tax assessed under section 322.8 290.032. To the extent the total lump sum distribution defined 322.9 in section 290.032, subdivision 1, includes lump sum 322.10 distributions received in prior years or is all or in part an 322.11 annuity contract, the reduction to the tax on the lump sum 322.12 distribution allowed under section 290.032, subdivision 2, 322.13 includes tax paid to another state that is properly apportioned 322.14 to that distribution. 322.15 (f) If a Minnesota resident reported an item of income to 322.16 Minnesota and is assessed tax in such other state on that same 322.17 income after the Minnesota statute of limitations has expired, 322.18 the taxpayer shall receive a credit for that year under 322.19 paragraph (a), notwithstanding any statute of limitations to the 322.20 contrary. The claim for the credit must be submitted within one 322.21 year from the date the taxes were paid to the other state. The 322.22 taxpayer must submit sufficient proof to show entitlement to a 322.23 credit. 322.24 (g) For the purposes of this subdivision, a resident 322.25 shareholder of a corporation treated as an "S" corporation under 322.26 section 290.9725, must be considered to have paid a tax imposed 322.27 on the shareholder in an amount equal to the shareholder's pro 322.28 rata share of any net income tax paid by the S corporation to 322.29 another state. For the purposes of the preceding sentence, the 322.30 term "net income tax" means any tax imposed on or measured by a 322.31 corporation's net income. 322.32 (h) For the purposes of this subdivision, a resident 322.33 partner of an entity taxed as a partnership under the Internal 322.34 Revenue Code must be considered to have paid a tax imposed on 322.35 the partner in an amount equal to the partner's pro rata share 322.36 of any net income tax paid by the partnership to another state. 323.1 For purposes of the preceding sentence, the term "net income" 323.2 tax means any tax imposed on or measured by a partnership's net 323.3 income. 323.4 (i) For the purposes of this subdivision, "another state": 323.5 (1) includes: 323.6 (i) the District of Columbia; and 323.7 (ii) a province or territory of Canada; but 323.8 (2) excludes Puerto Rico and the several territories 323.9 organized by Congress. 323.10 (j) The limitations on the credit in paragraphs (b), (c), 323.11 and (d), are imposed on a state by state basis. 323.12 (k) For a tax imposed by a province or territory of Canada, 323.13 the tax for purposes of this subdivision is the excess of the 323.14 tax over the amount of the foreign tax credit allowed under 323.15 section 27 of the Internal Revenue Code. In determining the 323.16 amount of the foreign tax credit allowed, the net income taxes 323.17 imposed by Canada on the income are deducted first. Any 323.18 remaining amount of the allowable foreign tax credit reduces the 323.19 provincial or territorial tax that qualifies for the credit 323.20 under this subdivision. 323.21 [EFFECTIVE DATE.] This section is effective for tax years 323.22 beginning after December 31, 2004. 323.23 Sec. 12. Minnesota Statutes 2004, section 290.0674, 323.24 subdivision 1, is amended to read: 323.25 Subdivision 1. [CREDIT ALLOWED.] An individual is allowed 323.26 a credit against the tax imposed by this chapter in an amount 323.27 equal to 75 percent of the amount paid for education-related 323.28 expenses for a qualifying child in kindergarten through grade 323.29 12. For purposes of this section, "education-related expenses" 323.30 means: 323.31 (1) fees or tuition for instruction by an instructor under 323.32 section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 323.33 (5), or a member of the Minnesota Music Teachers Association, 323.34 and who is not a lineal ancestor or sibling of the dependent for 323.35 instruction outside the regular school day or school year, 323.36 including tutoring, driver's education offered as part of school 324.1 curriculum, regardless of whether it is taken from a public or 324.2 private entity or summer camps, in grade or age appropriate 324.3 curricula that supplement curricula and instruction available 324.4 during the regular school year, that assists a dependent to 324.5 improve knowledge of core curriculum areas or to expand 324.6 knowledge and skills under thegraduation rule under section324.7120B.02, paragraph (e), clauses (1) to (7), (9), and (10)324.8 required academic standards under section 120B.021, subdivision 324.9 1, and the elective standard under section 120B.022, subdivision 324.10 1, clause (2), and that do not include the teaching of religious 324.11 tenets, doctrines, or worship, the purpose of which is to 324.12 instill such tenets, doctrines, or worship; 324.13 (2) expenses for textbooks, including books and other 324.14 instructional materials and equipment purchased or leased for 324.15 use in elementary and secondary schools in teaching only those 324.16 subjects legally and commonly taught in public elementary and 324.17 secondary schools in this state. "Textbooks" does not include 324.18 instructional books and materials used in the teaching of 324.19 religious tenets, doctrines, or worship, the purpose of which is 324.20 to instill such tenets, doctrines, or worship, nor does it 324.21 include books or materials for extracurricular activities 324.22 including sporting events, musical or dramatic events, speech 324.23 activities, driver's education, or similar programs; 324.24 (3) a maximum expense of $200 per family for personal 324.25 computer hardware, excluding single purpose processors, and 324.26 educational software that assists a dependent to improve 324.27 knowledge of core curriculum areas or to expand knowledge and 324.28 skills under thegraduation rule under section 120B.02required 324.29 academic standards under section 120B.021, subdivision 1, and 324.30 the elective standard under section 120B.022, subdivision 1, 324.31 clause (2), purchased for use in the taxpayer's home and not 324.32 used in a trade or business regardless of whether the computer 324.33 is required by the dependent's school; and 324.34 (4) the amount paid to others for transportation of a 324.35 qualifying child attending an elementary or secondary school 324.36 situated in Minnesota, North Dakota, South Dakota, Iowa, or 325.1 Wisconsin, wherein a resident of this state may legally fulfill 325.2 the state's compulsory attendance laws, which is not operated 325.3 for profit, and which adheres to the provisions of the Civil 325.4 Rights Act of 1964 and chapter 363A. 325.5 For purposes of this section, "qualifying child" has the 325.6 meaning given in section 32(c)(3) of the Internal Revenue Code. 325.7 [EFFECTIVE DATE.] This section is effective for tax years 325.8 beginning after December 31, 2004. 325.9 Sec. 13. Minnesota Statutes 2004, section 290.0922, 325.10 subdivision 2, is amended to read: 325.11 Subd. 2. [EXEMPTIONS.] The following entities are exempt 325.12 from the tax imposed by this section: 325.13 (1) corporations exempt from tax under section 290.05; 325.14 (2) real estate investment trusts; 325.15 (3) regulated investment companies or a fund thereof; and 325.16 (4) entities having a valid election in effect under 325.17 section 860D(b) of the Internal Revenue Code; 325.18 (5) town and farmers' mutual insurance companies; 325.19 (6) cooperatives organized under chapter 308A or 308B that 325.20 provide housing exclusively to persons age 55 and over and are 325.21 classified as homesteads under section 273.124, subdivision 3; 325.22 and 325.23 (7) an entity, if for the taxable year all of its property 325.24 is located in a job opportunity building zone designated under 325.25 section 469.314 and all of its payroll is a job opportunity 325.26 building zone payroll under section 469.310. 325.27 Entities not specifically exempted by this subdivision are 325.28 subject to tax under this section, notwithstanding section 325.29 290.05. 325.30 [EFFECTIVE DATE.] This section is effective for tax years 325.31 beginning after December 31, 2004. 325.32 Sec. 14. Minnesota Statutes 2004, section 291.005, 325.33 subdivision 1, is amended to read: 325.34 Subdivision 1. [SCOPE.] Unless the context otherwise 325.35 clearly requires, the following terms used in this chapter shall 325.36 have the following meanings: 326.1 (1) "Federal gross estate" means the gross estate of a 326.2 decedent as valued and otherwise determined for federal estate 326.3 tax purposes by federal taxing authorities pursuant to the 326.4 provisions of the Internal Revenue Code. 326.5 (2) "Minnesota gross estate" means the federal gross estate 326.6 of a decedent after (a) excluding therefrom any property 326.7 included therein which has its situs outside Minnesota, and (b) 326.8 including therein any property omitted from the federal gross 326.9 estate which is includable therein, has its situs in Minnesota, 326.10 and was not disclosed to federal taxing authorities. 326.11 (3) "Personal representative" means the executor, 326.12 administrator or other person appointed by the court to 326.13 administer and dispose of the property of the decedent. If 326.14 there is no executor, administrator or other person appointed, 326.15 qualified, and acting within this state, then any person in 326.16 actual or constructive possession of any property having a situs 326.17 in this state which is included in the federal gross estate of 326.18 the decedent shall be deemed to be a personal representative to 326.19 the extent of the property and the Minnesota estate tax due with 326.20 respect to the property. 326.21 (4) "Resident decedent" means an individual whose domicile 326.22 at the time of death was in Minnesota. 326.23 (5) "Nonresident decedent" means an individual whose 326.24 domicile at the time of death was not in Minnesota. 326.25 (6) "Situs of property" means, with respect to real 326.26 property, the state or country in which it is located; with 326.27 respect to tangible personal property, the state or country in 326.28 which it was normally kept or located at the time of the 326.29 decedent's death; and with respect to intangible personal 326.30 property, the state or country in which the decedent was 326.31 domiciled at death. 326.32 (7) "Commissioner" means the commissioner of revenue or any 326.33 person to whom the commissioner has delegated functions under 326.34 this chapter. 326.35 (8) "Internal Revenue Code" means the United States 326.36 Internal Revenue Code of 1986, as amended through December 31, 327.120022004. 327.2 (9) "Minnesota adjusted taxable estate" means federal 327.3 adjusted taxable estate as defined by section 2011(b)(3) of the 327.4 Internal Revenue Code, increased by the amount of deduction for 327.5 state death taxes allowed under section 2058 of the Internal 327.6 Revenue Code. 327.7 [EFFECTIVE DATE.] This section is effective for estates of 327.8 decedents dying after December 31, 2004. 327.9 Sec. 15. Minnesota Statutes 2004, section 291.03, 327.10 subdivision 1, is amended to read: 327.11 Subdivision 1. [TAX AMOUNT.] The tax imposed shall be an 327.12 amount equal to the proportion of the maximum credit for state 327.13 death taxes computed under section 2011 of the Internal Revenue 327.14 Code, as amended through December 31, 2000,for state death327.15taxesbut using Minnesota adjusted taxable estate instead of 327.16 federal adjusted taxable estate, as the Minnesota gross estate 327.17 bears to the value of the federal gross estate. The tax 327.18 determined under this paragraph shall not be greater than the 327.19federal estate taxamount computed by applying the rates and 327.20 brackets under section 2001(c) of the Internal Revenue Code 327.21after the allowance ofto the Minnesota adjusted gross estate 327.22 and subtracting the federalcreditscredit allowed under section 327.23 2010 of the Internal Revenue Code of 1986, as amended through 327.24 December 31, 2000. For the purposes of this section, expenses 327.25 which are deducted for federal income tax purposes under section 327.26 642(g) of the Internal Revenue Code as amended through December 327.27 31, 2002, are not allowable in computing the tax under this 327.28 chapter. 327.29 [EFFECTIVE DATE.] This section is effective for estates of 327.30 decedents dying after December 31, 2004. 327.31 Sec. 16. [REPEALER.] 327.32 Minnesota Rules, parts 8093.2000 and 8093.3000, are 327.33 repealed effective the day following final enactment. 327.34 ARTICLE 10 327.35 DEPARTMENT OF REVENUE 327.36 PROPERTY TAXES 328.1 Section 1. Minnesota Statutes 2004, section 4A.02, is 328.2 amended to read: 328.3 4A.02 [STATE DEMOGRAPHER.] 328.4 (a) The director shall appoint a state demographer. The 328.5 demographer must be professionally competent in demography and 328.6 must possess demonstrated ability based upon past performance. 328.7 (b) The demographer shall: 328.8 (1) continuously gather and develop demographic data 328.9 relevant to the state; 328.10 (2) design and test methods of research and data 328.11 collection; 328.12 (3) periodically prepare population projections for the 328.13 state and designated regions and periodically prepare 328.14 projections for each county or other political subdivision of 328.15 the state as necessary to carry out the purposes of this 328.16 section; 328.17 (4) review, comment on, and prepare analysis of population 328.18 estimates and projections made by state agencies, political 328.19 subdivisions, other states, federal agencies, or nongovernmental 328.20 persons, institutions, or commissions; 328.21 (5) serve as the state liaison with the United States 328.22 Bureau of the Census, coordinate state and federal demographic 328.23 activities to the fullest extent possible, and aid the 328.24 legislature in preparing a census data plan and form for each 328.25 decennial census; 328.26 (6) compile an annual study of population estimates on the 328.27 basis of county, regional, or other political or geographical 328.28 subdivisions as necessary to carry out the purposes of this 328.29 section and section 4A.03; 328.30 (7) by January 1 of each year, issue a report to the 328.31 legislature containing an analysis of the demographic 328.32 implications of the annual population study and population 328.33 projections; 328.34 (8) prepare maps for all counties in the state, all 328.35 municipalities with a population of 10,000 or more, and other 328.36 municipalities as needed for census purposes, according to scale 329.1 and detail recommended by the United States Bureau of the 329.2 Census, with the maps of cities showing precinct boundaries; 329.3 (9) prepare an estimate of population and of the number of 329.4 households for each governmental subdivision for which the 329.5 Metropolitan Council does not prepare an annual estimate, and an 329.6 estimate of population over age 65 for each county for which the 329.7 Metropolitan Council does not prepare an annual estimate, and 329.8 convey the estimates to the governing body of each political 329.9 subdivision byMayJune 1 of each year; 329.10 (10) direct, under section 414.01, subdivision 14, and 329.11 certify population and household estimates of annexed or 329.12 detached areas of municipalities or towns after being notified 329.13 of the order or letter of approval by the director; 329.14 (11) prepare, for any purpose for which a population 329.15 estimate is required by law or needed to implement a law, a 329.16 population estimate of a municipality or town whose population 329.17 is affected by action under section 379.02 or 414.01, 329.18 subdivision 14; and 329.19 (12) prepare an estimate of average household size for each 329.20 statutory or home rule charter city with a population of 2,500 329.21 or more for which the Metropolitan Council does not prepare an 329.22 annual estimate, and convey the estimate to the governing body 329.23 of each affected city byMayJune 1 of each year. 329.24 (c) A governing body may challenge an estimate made under 329.25 paragraph (b) by filing their specific objections in writing 329.26 with the state demographer by June1024. If the challenge does 329.27 not result in an acceptable estimateby June 24, the governing 329.28 body may have a special census conducted by the United States 329.29 Bureau of the Census. The political subdivision must notify the 329.30 state demographer by July 1 of its intent to have the special 329.31 census conducted. The political subdivision must bear all costs 329.32 of the special census. Results of the special census must be 329.33 received by the state demographer by the next April 15 to be 329.34 used in that year'sMayJune 1 estimate to the political 329.35 subdivision under paragraph (b). 329.36 (d) The state demographer shall certify the estimates of 330.1 population and household size to the commissioner of revenue by 330.2 July 15 each year, including any estimates still under objection. 330.3 [EFFECTIVE DATE.] This section is effective the day 330.4 following final enactment. 330.5 Sec. 2. Minnesota Statutes 2004, section 168A.05, 330.6 subdivision 1a, is amended to read: 330.7 Subd. 1a. [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 330.8 PAYMENT.] In the case of a manufactured home as defined in 330.9 section 327.31, subdivision 6, the department shall not issue a 330.10 certificate of title unless the application under section 330.11 168A.04 is accompanied with a statement from the county auditor 330.12 or county treasurer where the manufactured home is presently 330.13 located, stating that all manufactured home personal property 330.14 taxes levied on the unit in the name of the current owner at the 330.15 time of transfer have been paid. For this purpose, manufactured 330.16 home personal property taxes are treated as levied on January 1 330.17 of the payable year. 330.18 [EFFECTIVE DATE.] This section is effective the day 330.19 following final enactment. 330.20 Sec. 3. Minnesota Statutes 2004, section 270.11, 330.21 subdivision 2, is amended to read: 330.22 Subd. 2. [COUNTY ASSESSOR'S REPORTS OF ASSESSMENT FILED 330.23 WITH COMMISSIONER.] Each county assessor shall file by April 1 330.24 with the commissioner of revenue a copy of the abstract that 330.25 will be acted upon by the local and county boards of review. 330.26 The abstract must list the real and personal property in the 330.27 county itemized by assessment districts. The assessor of each 330.28 county in the state shall file with the commissioner, within ten 330.29 working days following final action of the local board of review 330.30 or equalization and within five days following final action of 330.31 the county board of equalization, any changes made by the local 330.32 or county board. The information must be filed in the manner 330.33 prescribed by the commissioner. It must be accompanied by a 330.34 printed or typewritten copy of the proceedings of the 330.35 appropriate board. 330.36 The final abstract of assessments after adjustments by the 331.1 State Board of Equalization and inclusion of any omitted 331.2 property shall be submitted to the commissioner of revenue on or 331.3 before September 1 of each calendar year. The final abstract 331.4 must separately report the captured tax capacity of tax 331.5 increment financing districts under section 469.177, subdivision 331.6 2, themetropolitan revenueareawide net tax capacity 331.7 contributionvaluevalues determined undersectionsections 331.8 276A.05, subdivision 1, and 473F.07, subdivision 1, and the 331.9 value subject to the power line credit under section 273.42. 331.10 [EFFECTIVE DATE.] This section is effective the day 331.11 following final enactment. 331.12 Sec. 4. Minnesota Statutes 2004, section 270.16, 331.13 subdivision 2, is amended to read: 331.14 Subd. 2. [FAILURE TO APPRAISE.] When an assessor has 331.15 failed to properly appraise at leastone-quarterone-fifth of 331.16 the parcels of property in a district or county as provided in 331.17 section 273.01, the commissioner of revenue shall appoint a 331.18 special assessor and deputy assessor as necessary and cause a 331.19 reappraisal to be made of the property due for reassessment in 331.20 accordance with law. 331.21 [EFFECTIVE DATE.] This section is effective the day 331.22 following final enactment. 331.23 Sec. 5. Minnesota Statutes 2004, section 272.01, 331.24 subdivision 2, is amended to read: 331.25 Subd. 2. [EXEMPT PROPERTY USED BY PRIVATE ENTITY FOR 331.26 PROFIT.] (a) When any real or personal property which is exempt 331.27 from ad valorem taxes, and taxes in lieu thereof, is leased, 331.28 loaned, or otherwise made available and used by a private 331.29 individual, association, or corporation in connection with a 331.30 business conducted for profit, there shall be imposed a tax, for 331.31 the privilege of so using or possessing such real or personal 331.32 property, in the same amount and to the same extent as though 331.33 the lessee or user was the owner of such property. 331.34 (b) The tax imposed by this subdivision shall not apply to: 331.35 (1) property leased or used as a concession in or relative 331.36 to the use in whole or part of a public park, market, 332.1 fairgrounds, port authority, economic development authority 332.2 established under chapter 469, municipal auditorium, municipal 332.3 parking facility, municipal museum, or municipal stadium; 332.4 (2) property of an airport owned by a city, town, county, 332.5 or group thereof which is: 332.6 (i) leased to or used by any person or entity including a 332.7 fixed base operator; and 332.8 (ii) used as a hangar for the storage or repair of aircraft 332.9 or to provide aviation goods, services, or facilities to the 332.10 airport or general public; 332.11 the exception from taxation provided in this clause does not 332.12 apply to: 332.13 (i) property located at an airport owned or operated by the 332.14 Metropolitan Airports Commission or by a city of over 50,000 332.15 population according to the most recent federal census or such a 332.16 city's airport authority; 332.17 (ii) hangars leased by a private individual, association, 332.18 or corporation in connection with a business conducted for 332.19 profit other than an aviation-related business; or 332.20 (iii) facilities leased by a private individual, 332.21 association, or corporation in connection with a business for 332.22 profit, that consists of a major jet engine repair facility 332.23 financed, in whole or part, with the proceeds of state bonds and 332.24 located in a tax increment financing district; 332.25 (3) property constituting or used as a public pedestrian 332.26 ramp or concourse in connection with a public airport;or332.27 (4) property constituting or used as a passenger check-in 332.28 area or ticket sale counter, boarding area, or luggage claim 332.29 area in connection with a public airport but not the airports 332.30 owned or operated by the Metropolitan Airports Commission or 332.31 cities of over 50,000 population or an airport authority 332.32 therein. Real estate owned by a municipality in connection with 332.33 the operation of a public airport and leased or used for 332.34 agricultural purposes is not exempt; 332.35 (5) property leased, loaned, or otherwise made available to 332.36 a private individual, corporation, or association under a 333.1 cooperative farming agreement made pursuant to section 97A.135; 333.2 or 333.3 (6) property leased, loaned, or otherwise made available to 333.4 a private individual, corporation, or association under section 333.5 272.68, subdivision 4. 333.6 (c) Taxes imposed by this subdivision are payable as in the 333.7 case of personal property taxes and shall be assessed to the 333.8 lessees or users of real or personal property in the same manner 333.9 as taxes assessed to owners of real or personal property, except 333.10 that such taxes shall not become a lien against the property. 333.11 When due, the taxes shall constitute a debt due from the lessee 333.12 or user to the state, township, city, county, and school 333.13 district for which the taxes were assessed and shall be 333.14 collected in the same manner as personal property taxes. If 333.15 property subject to the tax imposed by this subdivision is 333.16 leased or used jointly by two or more persons, each lessee or 333.17 user shall be jointly and severally liable for payment of the 333.18 tax. 333.19 (d) The tax on real property of the state or any of its 333.20 political subdivisions that is leased by a private individual, 333.21 association, or corporation and becomes taxable under this 333.22 subdivision or other provision of law must be assessed and 333.23 collected as a personal property assessment. The taxes do not 333.24 become a lien against the real property. 333.25 [EFFECTIVE DATE.] This section is effective the day 333.26 following final enactment. 333.27 Sec. 6. Minnesota Statutes 2004, section 272.02, 333.28 subdivision 1a, is amended to read: 333.29 Subd. 1a. [LIMITATIONS ON EXEMPTIONS.] The exemptions 333.30 granted by subdivision 1 are subject to the limits contained in 333.31 the other subdivisions of this section, section 272.025,or333.32273.13, subdivision 25, paragraph (c), clause (1) or (2), or333.33paragraph (d), clause (2)and all other provisions of applicable 333.34 law. 333.35 [EFFECTIVE DATE.] This section is effective the day 333.36 following final enactment. 334.1 Sec. 7. Minnesota Statutes 2004, section 272.02, 334.2 subdivision 7, is amended to read: 334.3 Subd. 7. [INSTITUTIONS OF PUBLIC CHARITY.] Institutions of 334.4 purely public charity are exemptexcept parcels of property334.5containing structures and the structures described in section334.6273.13, subdivision 25, paragraph (e), other than those that334.7qualify for exemption under subdivision 26. In determining 334.8 whether rental housing property qualifies for exemption under 334.9 this subdivision, the following are not gifts or donations to 334.10 the owner of the rental housing: 334.11 (1) rent assistance provided by the government to or on 334.12 behalf of tenants, and 334.13 (2) financing assistance or tax credits provided by the 334.14 government to the owner on condition that specific units or a 334.15 specific quantity of units be set aside for persons or families 334.16 with certain income characteristics. 334.17 The items described in clauses (1) and (2) may, however, be 334.18 considered when making other determinations related to an 334.19 exemption under this subdivision, including, without limitation, 334.20 for the purpose of determining whether the recipient of housing 334.21 or housing services is required to pay in whole or in part for 334.22 the housing. 334.23 [EFFECTIVE DATE.] This section is effective for taxes 334.24 payable in 2004 and thereafter. 334.25 Sec. 8. Minnesota Statutes 2004, section 272.02, is 334.26 amended by adding a subdivision to read: 334.27 Subd. 68. [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR 334.28 NET PROCEEDS TAX.] (a) Real and personal property described in 334.29 section 298.25 is exempt to the extent the tax on taconite and 334.30 iron sulphides under section 298.24 is described in section 334.31 298.25 as being in lieu of other taxes on such property. This 334.32 exemption applies for taxes payable in each year that the tax 334.33 under section 298.24 is payable with respect to such property. 334.34 (b) Deposits of mineral, metal, or energy resources the 334.35 mining of which is subject to taxation under section 298.015 are 334.36 exempt. This exemption applies for taxes payable in each year 335.1 that the tax under section 298.015 is payable with respect to 335.2 such property. 335.3 [EFFECTIVE DATE.] This section is effective the day 335.4 following final enactment. 335.5 Sec. 9. Minnesota Statutes 2004, section 272.02, is 335.6 amended by adding a subdivision to read: 335.7 Subd. 69. [RELIGIOUS CORPORATIONS.] Personal and real 335.8 property that a religious corporation, formed under section 335.9 317A.909, necessarily uses for a religious purpose is exempt to 335.10 the extent provided in section 317A.909, subdivision 3. 335.11 [EFFECTIVE DATE.] This section is effective the day 335.12 following final enactment. 335.13 Sec. 10. Minnesota Statutes 2004, section 272.02, is 335.14 amended by adding a subdivision to read: 335.15 Subd. 70. [CHILDREN'S HOMES.] Personal and real property 335.16 owned by a corporation formed under section 317A.907 is exempt 335.17 to the extent provided in section 317A.907, subdivision 7. 335.18 [EFFECTIVE DATE.] This section is effective the day 335.19 following final enactment. 335.20 Sec. 11. Minnesota Statutes 2004, section 272.02, is 335.21 amended by adding a subdivision to read: 335.22 Subd. 71. [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL 335.23 HOUSING AUTHORITY PROPERTY.] Property owned by a housing and 335.24 redevelopment authority described in chapter 469, or by a 335.25 designated housing authority described in section 469.040, 335.26 subdivision 5, is exempt to the extent provided in chapter 469. 335.27 [EFFECTIVE DATE.] This section is effective the day 335.28 following final enactment. 335.29 Sec. 12. Minnesota Statutes 2004, section 272.02, is 335.30 amended by adding a subdivision to read: 335.31 Subd. 72. [PROPERTY OF HOUSING AND REDEVELOPMENT 335.32 AUTHORITIES.] Property of projects of housing and redevelopment 335.33 authorities are exempt to the extent permitted by sections 335.34 469.042, subdivision 1, and 469.043, subdivisions 2 and 5. 335.35 [EFFECTIVE DATE.] This section is effective the day 335.36 following final enactment. 336.1 Sec. 13. Minnesota Statutes 2004, section 272.02, is 336.2 amended by adding a subdivision to read: 336.3 Subd. 73. [PROPERTY OF REGIONAL RAIL AUTHORITY.] Property 336.4 of a regional rail authority as defined in chapter 398A is 336.5 exempt to the extent permitted by section 398A.05. 336.6 [EFFECTIVE DATE.] This section is effective the day 336.7 following final enactment. 336.8 Sec. 14. Minnesota Statutes 2004, section 272.02, is 336.9 amended by adding a subdivision to read: 336.10 Subd. 74. [SPIRIT MOUNTAIN RECREATION AREA 336.11 AUTHORITY.] Property owned by the Spirit Mountain Recreation 336.12 Area Authority is exempt from taxation to the extent provided in 336.13 Laws 1973, chapter 327, section 6. 336.14 Sec. 15. Minnesota Statutes 2004, section 272.02, is 336.15 amended by adding a subdivision to read: 336.16 Subd. 75. [INSTALLED CAPACITY DEFINED.] For purposes of 336.17 this section, the term "installed capacity" means generator 336.18 nameplate capacity. 336.19 [EFFECTIVE DATE.] This section is effective the day 336.20 following final enactment. 336.21 Sec. 16. Minnesota Statutes 2004, section 272.029, 336.22 subdivision 4, is amended to read: 336.23 Subd. 4. [REPORTS.] (a) An owner of a wind energy 336.24 conversion system subject to tax under subdivision 3 shall file 336.25 a report with the commissioner of revenue annually on or before 336.26MarchFebruary 1 detailing the amount of electricity in 336.27 kilowatt-hours that was produced by the wind energy conversion 336.28 system for the previous calendar year. The commissioner shall 336.29 prescribe the form of the report. The report must contain the 336.30 information required by the commissioner to determine the tax 336.31 due to each county under this section for the current year. If 336.32 an owner of a wind energy conversion system subject to taxation 336.33 under this section fails to file the report by the due date, the 336.34 commissioner of revenue shall determine the tax based upon the 336.35 nameplate capacity of the system multiplied by a capacity factor 336.36 of 40 percent. 337.1 (b) On or beforeMarch 31February 28, the commissioner of 337.2 revenue shall notify the owner of the wind energy conversion 337.3 systems of the tax due to each county for the current year and 337.4 shall certify to the county auditor of each county in which the 337.5 systems are located the tax due from each owner for the current 337.6 year. 337.7 [EFFECTIVE DATE.] This section is effective for reports and 337.8 certifications due in 2006 and thereafter. 337.9 Sec. 17. Minnesota Statutes 2004, section 272.029, 337.10 subdivision 6, is amended to read: 337.11 Subd. 6. [DISTRIBUTION OF REVENUES.] Revenues from the 337.12 taxes imposed under subdivision 5 must be part of the settlement 337.13 between the county treasurer and the county auditor under 337.14 section 276.09. The revenue must be distributed by the county 337.15 auditor or the county treasurer toalllocal taxing 337.16 jurisdictions in which the wind energy conversion system is 337.17 located,as follows: beginning with distributions in 2006, 80 337.18 percent to counties; 14 percent to cities and townships; and six 337.19 percent to school districts; and for distributions occurring in 337.20 2004 and 2005 in the same proportion that each of the local 337.21 taxing jurisdiction's current year's net tax capacity based tax 337.22 rate is to the current year's total local net tax capacity based 337.23 rate. 337.24 [EFFECTIVE DATE.] This section is effective the day 337.25 following final enactment. 337.26 Sec. 18. Minnesota Statutes 2004, section 273.11, 337.27 subdivision 8, is amended to read: 337.28 Subd. 8. [LIMITED EQUITY COOPERATIVE APARTMENTS.] For the 337.29 purposes of this subdivision, the terms defined in this 337.30 subdivision have the meanings given them. 337.31 A "limited equity cooperative" is a corporation organized 337.32 under chapter 308A or 308B, which has as its primary purpose the 337.33 provision of housing and related services to its members which 337.34 meets one of the following criteria with respect to the income 337.35 of its members: (1) a minimum of 75 percent of members must 337.36 have incomes at or less than 90 percent of area median income, 338.1 (2) a minimum of 40 percent of members must have incomes at or 338.2 less than 60 percent of area median income, or (3) a minimum of 338.3 20 percent of members must have incomes at or less than 50 338.4 percent of area median income. For purposes of this clause, 338.5 "member income" shall mean the income of a member existing at 338.6 the time the member acquires cooperative membership, and median 338.7 income shall mean the St. Paul-Minneapolis metropolitan area 338.8 median income as determined by the United States Department of 338.9 Housing and Urban Development. It must also meet the following 338.10 requirements: 338.11 (a) The articles of incorporation set the sale price of 338.12 occupancy entitling cooperative shares or memberships at no more 338.13 than a transfer value determined as provided in the articles. 338.14 That value may not exceed the sum of the following: 338.15 (1) the consideration paid for the membership or shares by 338.16 the first occupant of the unit, as shown in the records of the 338.17 corporation; 338.18 (2) the fair market value, as shown in the records of the 338.19 corporation, of any improvements to the real property that were 338.20 installed at the sole expense of the member with the prior 338.21 approval of the board of directors; 338.22 (3) accumulated interest, or an inflation allowance not to 338.23 exceed the greater of a ten percent annual noncompounded 338.24 increase on the consideration paid for the membership or share 338.25 by the first occupant of the unit, or the amount that would have 338.26 been paid on that consideration if interest had been paid on it 338.27 at the rate of the percentage increase in the revised Consumer 338.28 Price Index for All Urban Consumers for the Minneapolis-St. Paul 338.29 metropolitan area prepared by the United States Department of 338.30 Labor, provided that the amount determined pursuant to this 338.31 clause may not exceed $500 for each year or fraction of a year 338.32 the membership or share was owned; plus 338.33 (4) real property capital contributions shown in the 338.34 records of the corporation to have been paid by the transferor 338.35 member and previous holders of the same membership, or of 338.36 separate memberships that had entitled occupancy to the unit of 339.1 the member involved. These contributions include contributions 339.2 to a corporate reserve account the use of which is restricted to 339.3 real property improvements or acquisitions, contributions to the 339.4 corporation which are used for real property improvements or 339.5 acquisitions, and the amount of principal amortized by the 339.6 corporation on its indebtedness due to the financing of real 339.7 property acquisition or improvement or the averaging of 339.8 principal paid by the corporation over the term of its real 339.9 property-related indebtedness. 339.10 (b) The articles of incorporation require that the board of 339.11 directors limit the purchase price of stock or membership 339.12 interests for new member-occupants or resident shareholders to 339.13 an amount which does not exceed the transfer value for the 339.14 membership or stock as defined in clause (a). 339.15 (c) The articles of incorporation require that the total 339.16 distribution out of capital to a member shall not exceed that 339.17 transfer value. 339.18 (d) The articles of incorporation require that upon 339.19 liquidation of the corporation any assets remaining after 339.20 retirement of corporate debts and distribution to members will 339.21 be conveyed to a charitable organization described in section 339.22 501(c)(3) of the Internal Revenue Code of 1986, as amended 339.23 through December 31, 1992, or a public agency. 339.24 A "limited equity cooperative apartment" is a dwelling unit 339.25 owned by a limited equity cooperative. 339.26 "Occupancy entitling cooperative share or membership" is 339.27 the ownership interest in a cooperative organization which 339.28 entitles the holder to an exclusive right to occupy a dwelling 339.29 unit owned or leased by the cooperative. 339.30 For purposes of taxation, the assessor shall value a unit 339.31 owned by a limited equity cooperative at the lesser of its 339.32 market value or the value determined by capitalizing the net 339.33 operating income of a comparable apartment operated on a rental 339.34 basis at the capitalization rate used in valuing comparable 339.35 buildings that are not limited equity cooperatives. If a 339.36 cooperative fails to operate in accordance with the provisions 340.1 of clauses (a) to (d), the property shall be subject to 340.2 additional property taxes in the amount of the difference 340.3 between the taxes determined in accordance with this subdivision 340.4 for the last ten years that the property had been assessed 340.5 pursuant to this subdivision and the amount that would have been 340.6 paid if the provisions of this subdivision had not applied to 340.7 it. The additional taxes, plus interest at the rate specified 340.8 in section 549.09, shall be extended against the property on the 340.9 tax list for the current year. 340.10 [EFFECTIVE DATE.] This section is effective for taxes 340.11 payable in 2004 and thereafter. 340.12 Sec. 19. Minnesota Statutes 2004, section 273.124, 340.13 subdivision 3, is amended to read: 340.14 Subd. 3. [COOPERATIVES AND CHARITABLE CORPORATIONS; 340.15 HOMESTEAD AND OTHER PROPERTY.] (a) When property is owned by a 340.16 corporation or association organized under chapter 308A or 308B, 340.17 and each person who owns a share or shares in the corporation or 340.18 association is entitled to occupy a building on the property, or 340.19 a unit within a building on the property, the corporation or 340.20 association may claim homestead treatment for each dwelling, or 340.21 for each unit in the case of a building containing several 340.22 dwelling units, or for the part of the value of the building 340.23 occupied by a shareholder. Each building or unit must be 340.24 designated by legal description or number. The net tax capacity 340.25 of each building or unit that qualifies for assessment as a 340.26 homestead under this subdivision must include not more than 340.27 one-half acre of land, if platted, nor more than 80 acres if 340.28 unplatted. The net tax capacity of the property is the sum of 340.29 the net tax capacities of each of the respective buildings or 340.30 units comprising the property, including the net tax capacity of 340.31 each unit's or building's proportionate share of the land and 340.32 any common buildings. To qualify for the treatment provided by 340.33 this subdivision, the corporation or association must be wholly 340.34 owned by persons having a right to occupy a building or unit 340.35 owned by the corporation or association. A charitable 340.36 corporation organized under the laws of Minnesota and not 341.1 otherwise exempt thereunder with no outstanding stock qualifies 341.2 for homestead treatment with respect to member residents of the 341.3 dwelling units who have purchased and hold residential 341.4 participation warrants entitling them to occupy the units. 341.5 (b) To the extent provided in paragraph (a), a cooperative 341.6 or corporation organized under chapter 308A may obtain separate 341.7 assessment and valuation, and separate property tax statements 341.8 for each residential homestead, residential nonhomestead, or for 341.9 each seasonal residential recreational building or unit not used 341.10 for commercial purposes. The appropriate class rates under 341.11 section 273.13 shall be applicable as if each building or unit 341.12 were a separate tax parcel; provided, however, that the tax 341.13 parcel which exists at the time the cooperative or corporation 341.14 makes application under this subdivision shall be a single 341.15 parcel for purposes of property taxes or the enforcement and 341.16 collection thereof, other than as provided in paragraph (a) or 341.17 this paragraph. 341.18 (c) A member of a corporation or association may initially 341.19 obtain the separate assessment and valuation and separate 341.20 property tax statements, as provided in paragraph (b), by 341.21 applying to the assessor by June 30 of the assessment year. 341.22 (d) When a building, or dwelling units within a building, 341.23 no longer qualify under paragraph (a) or (b), the current owner 341.24 must notify the assessor within 30 days. Failure to notify the 341.25 assessor within 30 days shall result in the loss of benefits 341.26 under paragraph (a) or (b) for taxes payable in the year that 341.27 the failure is discovered. For these purposes, "benefits under 341.28 paragraph (a) or (b)" means the difference in the net tax 341.29 capacity of the building or units which no longer qualify as 341.30 computed under paragraph (a) or (b) and as computed under the 341.31 otherwise applicable law, times the local tax rate applicable to 341.32 the building for that taxes payable year. Upon discovery of a 341.33 failure to notify, the assessor shall inform the auditor of the 341.34 difference in net tax capacity for the building or buildings in 341.35 which units no longer qualify, and the auditor shall calculate 341.36 the benefits under paragraph (a) or (b). Such amount, plus a 342.1 penalty equal to 100 percent of that amount, shall then be 342.2 demanded of the building's owner. The property owner may appeal 342.3 the county's determination by serving copies of a petition for 342.4 review with county officials as provided in section 278.01 and 342.5 filing a proof of service as provided in section 278.01 with the 342.6 Minnesota Tax Court within 60 days of the date of the notice 342.7 from the county. The appeal shall be governed by the Tax Court 342.8 procedures provided in chapter 271, for cases relating to the 342.9 tax laws as defined in section 271.01, subdivision 5; 342.10 disregarding sections 273.125, subdivision 5, and 278.03, but 342.11 including section 278.05, subdivision 2. If the amount of the 342.12 benefits under paragraph (a) or (b) and penalty are not paid 342.13 within 60 days, and if no appeal has been filed, the county 342.14 auditor shall certify the amount of the benefit and penalty to 342.15 the succeeding year's tax list to be collected as part of the 342.16 property taxes on the affected property. 342.17 [EFFECTIVE DATE.] This section is effective for taxes 342.18 payable in 2004 and thereafter. 342.19 Sec. 20. Minnesota Statutes 2004, section 273.124, 342.20 subdivision 6, is amended to read: 342.21 Subd. 6. [LEASEHOLD COOPERATIVES.] When one or more 342.22 dwellings or one or more buildings which each contain several 342.23 dwelling units is owned by a nonprofit corporation subject to 342.24 the provisions of chapter 317A and qualifying under section 342.25 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as 342.26 amended through December 31, 1990, or a limited partnership 342.27 which corporation or partnership operates the property in 342.28 conjunction with a cooperative association, and has received 342.29 public financing, homestead treatment may be claimed by the 342.30 cooperative association on behalf of the members of the 342.31 cooperative for each dwelling unit occupied by a member of the 342.32 cooperative. The cooperative association must provide the 342.33 assessor with the Social Security numbers of those members. To 342.34 qualify for the treatment provided by this subdivision, the 342.35 following conditions must be met: 342.36 (a) the cooperative association must be organized under 343.1 chapter 308A or 308B and all voting members of the board of 343.2 directors must be resident tenants of the cooperative and must 343.3 be elected by the resident tenants of the cooperative; 343.4 (b) the cooperative association must have a lease for 343.5 occupancy of the property for a term of at least 20 years, which 343.6 permits the cooperative association, while not in default on the 343.7 lease, to participate materially in the management of the 343.8 property, including material participation in establishing 343.9 budgets, setting rent levels, and hiring and supervising a 343.10 management agent; 343.11 (c) to the extent permitted under state or federal law, the 343.12 cooperative association must have a right under a written 343.13 agreement with the owner to purchase the property if the owner 343.14 proposes to sell it; if the cooperative association does not 343.15 purchase the property it is offered for sale, the owner may not 343.16 subsequently sell the property to another purchaser at a price 343.17 lower than the price at which it was offered for sale to the 343.18 cooperative association unless the cooperative association 343.19 approves the sale; 343.20 (d) a minimum of 40 percent of the cooperative 343.21 association's members must have incomes at or less than 60 343.22 percent of area median gross income as determined by the United 343.23 States Secretary of Housing and Urban Development under section 343.24 142(d)(2)(B) of the Internal Revenue Code of 1986, as amended 343.25 through December 31, 1991. For purposes of this clause, "member 343.26 income" means the income of a member existing at the time the 343.27 member acquires cooperative membership; 343.28 (e) if a limited partnership owns the property, it must 343.29 include as the managing general partner a nonprofit organization 343.30 operating under the provisions of chapter 317A and qualifying 343.31 under section 501(c)(3) or 501(c)(4) of the Internal Revenue 343.32 Code of 1986, as amended through December 31, 1990, and the 343.33 limited partnership agreement must provide that the managing 343.34 general partner have sufficient powers so that it materially 343.35 participates in the management and control of the limited 343.36 partnership; 344.1 (f) prior to becoming a member of a leasehold cooperative 344.2 described in this subdivision, a person must have received 344.3 notice that (1) describes leasehold cooperative property in 344.4 plain language, including but not limited to the effects of 344.5 classification under this subdivision on rents, property taxes 344.6 and tax credits or refunds, and operating expenses, and (2) 344.7 states that copies of the articles of incorporation and bylaws 344.8 of the cooperative association, the lease between the owner and 344.9 the cooperative association, a sample sublease between the 344.10 cooperative association and a tenant, and, if the owner is a 344.11 partnership, a copy of the limited partnership agreement, can be 344.12 obtained upon written request at no charge from the owner, and 344.13 the owner must send or deliver the materials within seven days 344.14 after receiving any request; 344.15 (g) if a dwelling unit of a building was occupied on the 344.16 60th day prior to the date on which the unit became leasehold 344.17 cooperative property described in this subdivision, the notice 344.18 described in paragraph (f) must have been sent by first class 344.19 mail to the occupant of the unit at least 60 days prior to the 344.20 date on which the unit became leasehold cooperative property. 344.21 For purposes of the notice under this paragraph, the copies of 344.22 the documents referred to in paragraph (f) may be in proposed 344.23 version, provided that any subsequent material alteration of 344.24 those documents made after the occupant has requested a copy 344.25 shall be disclosed to any occupant who has requested a copy of 344.26 the document. Copies of the articles of incorporation and 344.27 certificate of limited partnership shall be filed with the 344.28 secretary of state after the expiration of the 60-day period 344.29 unless the change to leasehold cooperative status does not 344.30 proceed; 344.31 (h) the county attorney of the county in which the property 344.32 is located must certify to the assessor that the property meets 344.33 the requirements of this subdivision; 344.34 (i) the public financing received must be from at least one 344.35 of the following sources: 344.36 (1) tax increment financing proceeds used for the 345.1 acquisition or rehabilitation of the building or interest rate 345.2 write-downs relating to the acquisition of the building; 345.3 (2) government issued bonds exempt from taxes under section 345.4 103 of the Internal Revenue Code of 1986, as amended through 345.5 December 31, 1991, the proceeds of which are used for the 345.6 acquisition or rehabilitation of the building; 345.7 (3) programs under section 221(d)(3), 202, or 236, of Title 345.8 II of the National Housing Act; 345.9 (4) rental housing program funds under Section 8 of the 345.10 United States Housing Act of 1937 or the market rate family 345.11 graduated payment mortgage program funds administered by the 345.12 Minnesota Housing Finance Agency that are used for the 345.13 acquisition or rehabilitation of the building; 345.14 (5) low-income housing credit under section 42 of the 345.15 Internal Revenue Code of 1986, as amended through December 31, 345.16 1991; 345.17 (6) public financing provided by a local government used 345.18 for the acquisition or rehabilitation of the building, including 345.19 grants or loans from (i) federal community development block 345.20 grants; (ii) HOME block grants; or (iii) residential rental 345.21 bonds issued under chapter 474A; or 345.22 (7) other rental housing program funds provided by the 345.23 Minnesota Housing Finance Agency for the acquisition or 345.24 rehabilitation of the building; 345.25 (j) at the time of the initial request for homestead 345.26 classification or of any transfer of ownership of the property, 345.27 the governing body of the municipality in which the property is 345.28 located must hold a public hearing and make the following 345.29 findings: 345.30 (1) that the granting of the homestead treatment of the 345.31 apartment's units will facilitate safe, clean, affordable 345.32 housing for the cooperative members that would otherwise not be 345.33 available absent the homestead designation; 345.34 (2) that the owner has presented information satisfactory 345.35 to the governing body showing that the savings garnered from the 345.36 homestead designation of the units will be used to reduce 346.1 tenant's rents or provide a level of furnishing or maintenance 346.2 not possible absent the designation; and 346.3 (3) that the requirements of paragraphs (b), (d), and (i) 346.4 have been met. 346.5 Homestead treatment must be afforded to units occupied by 346.6 members of the cooperative association and the units must be 346.7 assessed as provided in subdivision 3, provided that any unit 346.8 not so occupied shall be classified and assessed pursuant to the 346.9 appropriate class. No more than three acres of land may, for 346.10 assessment purposes, be included with each dwelling unit that 346.11 qualifies for homestead treatment under this subdivision. 346.12 When dwelling units no longer qualify under this 346.13 subdivision, the current owner must notify the assessor within 346.14 60 days. Failure to notify the assessor within 60 days shall 346.15 result in the loss of benefits under this subdivision for taxes 346.16 payable in the year that the failure is discovered. For these 346.17 purposes, "benefits under this subdivision" means the difference 346.18 in the net tax capacity of the units which no longer qualify as 346.19 computed under this subdivision and as computed under the 346.20 otherwise applicable law, times the local tax rate applicable to 346.21 the building for that taxes payable year. Upon discovery of a 346.22 failure to notify, the assessor shall inform the auditor of the 346.23 difference in net tax capacity for the building or buildings in 346.24 which units no longer qualify, and the auditor shall calculate 346.25 the benefits under this subdivision. Such amount, plus a 346.26 penalty equal to 100 percent of that amount, shall then be 346.27 demanded of the building's owner. The property owner may appeal 346.28 the county's determination by serving copies of a petition for 346.29 review with county officials as provided in section 278.01 and 346.30 filing a proof of service as provided in section 278.01 with the 346.31 Minnesota Tax Court within 60 days of the date of the notice 346.32 from the county. The appeal shall be governed by the Tax Court 346.33 procedures provided in chapter 271, for cases relating to the 346.34 tax laws as defined in section 271.01, subdivision 5; 346.35 disregarding sections 273.125, subdivision 5, and 278.03, but 346.36 including section 278.05, subdivision 2. If the amount of the 347.1 benefits under this subdivision and penalty are not paid within 347.2 60 days, and if no appeal has been filed, the county auditor 347.3 shall certify the amount of the benefit and penalty to the 347.4 succeeding year's tax list to be collected as part of the 347.5 property taxes on the affected buildings. 347.6 [EFFECTIVE DATE.] This section is effective for taxes 347.7 payable in 2004 and thereafter. 347.8 Sec. 21. Minnesota Statutes 2004, section 273.124, 347.9 subdivision 8, is amended to read: 347.10 Subd. 8. [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 347.11 CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 347.12 PARTNERSHIP.] (a) Each family farm corporation, each; each joint 347.13 family farm venture,; and each limited liability company, and347.14eachor partnershipoperatingwhich operates a family farm; is 347.15 entitled to class 1b under section 273.13, subdivision 22, 347.16 paragraph (b), or class 2a assessment for one homestead occupied 347.17 by a shareholder, member, or partner thereof who is residing on 347.18 the land, and actively engaged in farming of the land owned by 347.19 the family farm corporation, joint family farm venture, limited 347.20 liability company, or partnershipoperating a family farm. 347.21 Homestead treatment applies even if legal title to the property 347.22 is in the name of the family farm corporation, joint family farm 347.23 venture, limited liability company, or partnershipoperating the347.24family farm, and not in the name of the person residing on it. 347.25 "Family farm corporation," "family farm," and "partnership 347.26 operating a family farm" have the meanings given in section 347.27 500.24, except that the number of allowable shareholders, 347.28 members, or partners under this subdivision shall not exceed 347.29 12. "Limited liability company" has the meaning contained in 347.30 sections 322B.03, subdivision 28, and 500.24, subdivision 2, 347.31 paragraphs (l) and (m). "Joint family farm venture" means a 347.32 cooperative agreement among two or more farm enterprises 347.33 authorized to operate a family farm under section 500.24. 347.34 (b) In addition to property specified in paragraph (a), any 347.35 other residences owned by family farm corporations, joint family 347.36 farm ventures, limited liability companies, or partnerships 348.1operating a family farmdescribed in paragraph (a) which are 348.2 located on agricultural land and occupied as homesteads by its 348.3 shareholders, members, or partners who are actively engaged in 348.4 farming on behalf of that corporation, joint farm venture, 348.5 limited liability company, or partnership must also be assessed 348.6 as class 2a property or as class 1b property under section 348.7 273.13. 348.8 (c) Agricultural property that is owned by a member, 348.9 partner, or shareholder of a family farm corporation or joint 348.10 family farm venture, limited liability company operating a 348.11 family farm, or by a partnership operating a family farm and 348.12 leased to the family farm corporation, limited liability 348.13 company,orpartnershipoperating a family farm, or joint farm 348.14 venture, as defined in paragraph (a), is eligible for 348.15 classification as class 1b or class 2a under section 273.13, if 348.16 the owner is actually residing on the property, and is actually 348.17 engaged in farming the land on behalf of that corporation, joint 348.18 farm venture, limited liability company, or partnership. This 348.19 paragraph applies without regard to any legal possession rights 348.20 of the family farm corporation, joint family farm venture, 348.21 limited liability company, or partnershipoperating a family348.22farmunder the lease. 348.23 [EFFECTIVE DATE.] This section is effective the day 348.24 following final enactment. 348.25 Sec. 22. Minnesota Statutes 2004, section 273.124, 348.26 subdivision 13, is amended to read: 348.27 Subd. 13. [HOMESTEAD APPLICATION.] (a) A person who meets 348.28 the homestead requirements under subdivision 1 must file a 348.29 homestead application with the county assessor to initially 348.30 obtain homestead classification. 348.31 (b) On or before January 2, 1993, each county assessor 348.32 shall mail a homestead application to the owner of each parcel 348.33 of property within the county which was classified as homestead 348.34 for the 1992 assessment year. The format and contents of a 348.35 uniform homestead application shall be prescribed by the 348.36 commissioner of revenue. The commissioner shall consult with 349.1 the chairs of the house and senate tax committees on the 349.2 contents of the homestead application form. The application 349.3 must clearly inform the taxpayer that this application must be 349.4 signed by all owners who occupy the property or by the 349.5 qualifying relative and returned to the county assessor in order 349.6 for the property to continue receiving homestead treatment. The 349.7 envelope containing the homestead application shall clearly 349.8 identify its contents and alert the taxpayer of its necessary 349.9 immediate response. 349.10 (c) Every property owner applying for homestead 349.11 classification must furnish to the county assessor the Social 349.12 Security number of each occupant who is listed as an owner of 349.13 the property on the deed of record, the name and address of each 349.14 owner who does not occupy the property, and the name and Social 349.15 Security number of each owner's spouse who occupies the 349.16 property. The application must be signed by each owner who 349.17 occupies the property and by each owner's spouse who occupies 349.18 the property, or, in the case of property that qualifies as a 349.19 homestead under subdivision 1, paragraph (c), by the qualifying 349.20 relative. 349.21 If a property owner occupies a homestead, the property 349.22 owner's spouse may not claim another property as a homestead 349.23 unless the property owner and the property owner's spouse file 349.24 with the assessor an affidavit or other proof required by the 349.25 assessor stating that the property qualifies as a homestead 349.26 under subdivision 1, paragraph (e). 349.27 Owners or spouses occupying residences owned by their 349.28 spouses and previously occupied with the other spouse, either of 349.29 whom fail to include the other spouse's name and Social Security 349.30 number on the homestead application or provide the affidavits or 349.31 other proof requested, will be deemed to have elected to receive 349.32 only partial homestead treatment of their residence. The 349.33 remainder of the residence will be classified as nonhomestead 349.34 residential. When an owner or spouse's name and Social Security 349.35 number appear on homestead applications for two separate 349.36 residences and only one application is signed, the owner or 350.1 spouse will be deemed to have elected to homestead the residence 350.2 for which the application was signed. 350.3 The Social Security numbers or affidavits or other proofs 350.4 of the property owners and spouses are private data on 350.5 individuals as defined by section 13.02, subdivision 12, but, 350.6 notwithstanding that section, the private data may be disclosed 350.7 to the commissioner of revenue, or, for purposes of proceeding 350.8 under the Revenue Recapture Act to recover personal property 350.9 taxes owing, to the county treasurer. 350.10 (d) If residential real estate is occupied and used for 350.11 purposes of a homestead by a relative of the owner and qualifies 350.12 for a homestead under subdivision 1, paragraph (c), in order for 350.13 the property to receive homestead status, a homestead 350.14 application must be filed with the assessor. The Social 350.15 Security number of each relative occupying the property and the 350.16 Social Security number of each owner who is related to an 350.17 occupant of the property shall be required on the homestead 350.18 application filed under this subdivision. If a different 350.19 relative of the owner subsequently occupies the property, the 350.20 owner of the property must notify the assessor within 30 days of 350.21 the change in occupancy. The Social Security number of a 350.22 relative occupying the property is private data on individuals 350.23 as defined by section 13.02, subdivision 12, but may be 350.24 disclosed to the commissioner of revenue. 350.25 (e) The homestead application shall also notify the 350.26 property owners that the application filed under this section 350.27 will not be mailed annually and that if the property is granted 350.28 homestead status for the 1993 assessment, or any assessment year 350.29 thereafter, that same property shall remain classified as 350.30 homestead until the property is sold or transferred to another 350.31 person, or the owners, the spouse of the owner, or the relatives 350.32 no longer use the property as their homestead. Upon the sale or 350.33 transfer of the homestead property, a certificate of value must 350.34 be timely filed with the county auditor as provided under 350.35 section 272.115. Failure to notify the assessor within 30 days 350.36 that the property has been sold, transferred, or that the owner, 351.1 the spouse of the owner, or the relative is no longer occupying 351.2 the property as a homestead, shall result in (i) a requirement 351.3 to repay homestead benefits related to assessment dates after 351.4 the ownership or occupancy change, except for years for which a 351.5 new and valid homestead application was effective, and limited 351.6 to benefits for taxes payable in the current year and the five 351.7 prior years; (ii) the penalty provided underthis subdivision351.8 paragraph (h) for each of the same years, if applicable; and 351.9 (iii) the property will lose itscurrenthomestead status for 351.10 the current assessment year unless a new homestead application 351.11 is effective for that assessment. The provisions of section 351.12 273.02 with regard to property erroneously classified as a 351.13 homestead do not apply. The person to be notified of the 351.14 reimbursement requirement and of the penalty under the 351.15 procedures in paragraph (h) is the owner who sold or transferred 351.16 the property or whose relative is no longer occupying the 351.17 property as a homestead. 351.18 (f) If the homestead application is not returned within 30 351.19 days, the county will send a second application to the present 351.20 owners of record. The notice of proposed property taxes 351.21 prepared under section 275.065, subdivision 3, shall reflect the 351.22 property's classification. Beginning with assessment year 1993 351.23 for all properties, if a homestead application has not been 351.24 filed with the county by December 15, the assessor shall 351.25 classify the property as nonhomestead for the current assessment 351.26 year for taxes payable in the following year, provided that the 351.27 owner may be entitled to receive the homestead classification by 351.28 proper application under section 375.192. 351.29 (g) At the request of the commissioner, each county must 351.30 give the commissioner a list that includes the name and Social 351.31 Security number of each property owner and the property owner's 351.32 spouse occupying the property, or relative of a property owner, 351.33 applying for homestead classification under this subdivision. 351.34 The commissioner shall use the information provided on the lists 351.35 as appropriate under the law, including for the detection of 351.36 improper claims by owners, or relatives of owners, under chapter 352.1 290A. 352.2 (h) Ifthe commissionera city or county assessor finds 352.3 that a propertyowner may be claiming a fraudulentis receiving 352.4 homestead benefits that are not allowable under the law, 352.5 thecommissioner shall notify the appropriate counties. Within352.690 days of the notification, the county assessor shall352.7investigate to determine if the homestead classification was352.8properly claimed. If the property owner does not qualify, the352.9countyassessor shall notify the county auditor who will 352.10 determine the amount of homestead benefits that had been 352.11 improperly allowed for taxes payable in the current year and in 352.12 each of the five prior years. For the purpose of this section, 352.13 "homestead benefits" means the tax reduction resulting from the 352.14 classification as a homestead under section 273.13, the taconite 352.15 homestead credit under section 273.135, the residential 352.16 homestead and agricultural homestead credits under section 352.17 273.1384, and the supplemental homestead credit under section 352.18 273.1391. 352.19 The county auditor shall send a notice to the person who 352.20 owned the affected property at the time the homestead 352.21 application related to the improper homestead was filed, 352.22 demanding reimbursement of the homestead benefits not allowable 352.23 under the law for taxes payable in the current year and the five 352.24 prior years. The notice shall demand reimbursement of those 352.25 homestead benefits, plus a penalty equal to100either: 352.26 (i) ten percent of the homestead benefits if the owner 352.27 acted with negligent or intentional disregard of the applicable 352.28 tax laws and rules but without intent to defraud; or 352.29 (ii) 50 percent of the homestead benefits if the owner 352.30 fraudulently attempted in any manner to evade or defeat the 352.31 proper tax. 352.32 If the penalty provided in this paragraph is imposed and 352.33 the assessor becomes aware that the property is improperly 352.34 classified as a homestead for the current assessment year, the 352.35 assessor shall reclassify the property for that assessment, and 352.36 the provisions of section 273.02 with regard to property 353.1 erroneously classified as a homestead do not apply. 353.2 A penalty under this section shall be abated under section 353.3 375.192 upon a determination that the improper classification 353.4 was due to reasonable cause. The person notified may appeal the 353.5 county's determination by serving copies of a petition for 353.6 review with county officials as provided in section 278.01 and 353.7 filing proof of service as provided in section 278.01 with the 353.8 Minnesota Tax Court within 60 days of the date of the notice 353.9 from the county. Procedurally, the appeal is governed by the 353.10 provisions in chapter 271 which apply to the appeal of a 353.11 property tax assessment or levy, but without requiring any 353.12 prepayment of the amount in controversy. If the amount of 353.13 homestead benefits and penalty is not paid within 60 days, and 353.14 if no appeal has been filed, the county auditor shall certify 353.15 the amount of taxes and penalty to the county treasurer. The 353.16 county treasurer will add interest to the unpaid homestead 353.17 benefits and penalty amounts at the rate provided in section 353.18 279.03 for real property taxes becoming delinquent in the 353.19 calendar year during which the amount remains unpaid. Interest 353.20 may be assessed for the period beginning 60 days after demand 353.21 for payment was made. 353.22 If the person notified is the current owner of the 353.23 property, the treasurer may add the total amount of homestead 353.24 benefits, penalty, interest, and costs to the ad valorem taxes 353.25 otherwise payable on the property by including the amounts on 353.26 the property tax statements under section 276.04, subdivision 353.27 3. The amounts added under this paragraph to the ad valorem 353.28 taxes shall include interest accrued through December 31 of the 353.29 year preceding the taxes payable year for which the amounts are 353.30 first added. These amounts, when added to the property tax 353.31 statement, become subject to all the laws for the enforcement of 353.32 real or personal property taxes for that year, and for any 353.33 subsequent year. 353.34 If the person notified is not the current owner of the 353.35 property, the treasurer may collect the amounts due under the 353.36 Revenue Recapture Act in chapter 270A, or use any of the powers 354.1 granted in sections 277.20 and 277.21 without exclusion, to 354.2 enforce payment of the homestead benefits, penalty, interest, 354.3 and costs, as if those amounts were delinquent tax obligations 354.4 of the person who owned the property at the time the application 354.5 related to the improperly allowed homestead was filed. The 354.6 treasurer may relieve a prior owner of personal liability for 354.7 the homestead benefits, penalty, interest, and costs, and 354.8 instead extend those amounts on the tax lists against the 354.9 property as provided in this paragraph to the extent that the 354.10 current owner agrees in writing. On all demands, billings, 354.11 property tax statements, and related correspondence, the county 354.12 must list and state separately the amounts of homestead 354.13 benefits, penalty, interest and costs being demanded, billed or 354.14 assessed. 354.15 (i) Any amount of homestead benefits recovered by the 354.16 county from the property owner shall be distributed to the 354.17 county, city or town, and school district where the property is 354.18 located in the same proportion that each taxing district's levy 354.19 was to the total of the three taxing districts' levy for the 354.20 current year. Any amount recovered attributable to taconite 354.21 homestead credit shall be transmitted to the St. Louis County 354.22 auditor to be deposited in the taconite property tax relief 354.23 account. Any amount recovered that is attributable to 354.24 supplemental homestead credit is to be transmitted to the 354.25 commissioner of revenue for deposit in the general fund of the 354.26 state treasury. The total amount of penalty collected must be 354.27 deposited in the county general fund. 354.28 (j) If a property owner has applied for more than one 354.29 homestead and the county assessors cannot determine which 354.30 property should be classified as homestead, the county assessors 354.31 will refer the information to the commissioner. The 354.32 commissioner shall make the determination and notify the 354.33 counties within 60 days. 354.34 (k) In addition to lists of homestead properties, the 354.35 commissioner may ask the counties to furnish lists of all 354.36 properties and the record owners. The Social Security numbers 355.1 and federal identification numbers that are maintained by a 355.2 county or city assessor for property tax administration 355.3 purposes, and that may appear on the lists retain their 355.4 classification as private or nonpublic data; but may be viewed, 355.5 accessed, and used by the county auditor or treasurer of the 355.6 same county for the limited purpose of assisting the 355.7 commissioner in the preparation of microdata samples under 355.8 section 270.0681. 355.9 (l) On or before April 30 each year, each county must 355.10 provide the commissioner with the following data for each parcel 355.11 of homestead property by electronic means as defined in section 355.12 289A.02, subdivision 8: 355.13 (i) the property identification number assigned to the 355.14 parcel for purposes of taxes payable in the current year; 355.15 (ii) the name and Social Security number of each property 355.16 owner and property owner's spouse, as shown on the tax rolls for 355.17 the current and the prior assessment year; 355.18 (iii) the classification of the property under section 355.19 273.13 for taxes payable in the current year and in the prior 355.20 year; 355.21 (iv) an indication of whether the property was classified 355.22 as a homestead for taxes payable in the current year or for 355.23 taxes payable in the prior year because of occupancy by a 355.24 relative of the owner or by a spouse of a relative; 355.25 (v) the property taxes payable as defined in section 355.26 290A.03, subdivision 13, for the current year and the prior 355.27 year; 355.28 (vi) the market value of improvements to the property first 355.29 assessed for tax purposes for taxes payable in the current year; 355.30 (vii) the assessor's estimated market value assigned to the 355.31 property for taxes payable in the current year and the prior 355.32 year; 355.33 (viii) the taxable market value assigned to the property 355.34 for taxes payable in the current year and the prior year; 355.35 (ix) whether there are delinquent property taxes owing on 355.36 the homestead; 356.1 (x) the unique taxing district in which the property is 356.2 located; and 356.3 (xi) such other information as the commissioner decides is 356.4 necessary. 356.5 The commissioner shall use the information provided on the 356.6 lists as appropriate under the law, including for the detection 356.7 of improper claims by owners, or relatives of owners, under 356.8 chapter 290A. 356.9 [EFFECTIVE DATE.] This section is generally effective July 356.10 1, 2005, and thereafter, except the changes in paragraphs (e) 356.11 and (h) are effective only for notices initially sent out under 356.12 those paragraphs on or after July 1, 2005. 356.13 Sec. 23. Minnesota Statutes 2004, section 273.124, 356.14 subdivision 21, is amended to read: 356.15 Subd. 21. [TRUST PROPERTY; HOMESTEAD.] Real property held 356.16 by a trustee under a trust is eligible for classification as 356.17 homestead property if: 356.18 (1) the grantor or surviving spouse of the grantor of the 356.19 trust occupies and uses the property as a homestead; 356.20 (2) a relative or surviving relative of the grantor who 356.21 meets the requirements of subdivision 1, paragraph (c), in the 356.22 case of residential real estate; or subdivision 1, paragraph 356.23 (d), in the case of agricultural property, occupies and uses the 356.24 property as a homestead; 356.25 (3) a family farm corporation, joint farm venture, limited 356.26 liability company, or partnership operating a family farm rents 356.27 the property held by a trustee under a trust, and the grantor, 356.28 the spouse of the grantor, or the son or daughter of the 356.29 grantor, who is also a shareholder, member, or partner of the 356.30 corporation, joint farm venture, limited liability company, or 356.31 partnership occupies and uses the property as a homestead,and356.32 or is actively farming the property on behalf of the 356.33 corporation, joint farm venture, limited liability company, or 356.34 partnership; or 356.35 (4) a person who has received homestead classification for 356.36 property taxes payable in 2000 on the basis of an unqualified 357.1 legal right under the terms of the trust agreement to occupy the 357.2 property as that person's homestead and who continues to use the 357.3 property as a homestead or a person who received the homestead 357.4 classification for taxes payable in 2005 under clause (3) who 357.5 does not qualify under clause (3) for taxes payable in 2006 or 357.6 thereafter but who continues to qualify under clause (3) as it 357.7 existed for taxes payable in 2005. 357.8 For purposes of this subdivision, "grantor" is defined as 357.9 the person creating or establishing a testamentary, inter Vivos, 357.10 revocable or irrevocable trust by written instrument or through 357.11 the exercise of a power of appointment. 357.12 [EFFECTIVE DATE.] This section is effective for taxes 357.13 payable in 2006 and thereafter. 357.14 Sec. 24. Minnesota Statutes 2004, section 273.1315, is 357.15 amended to read: 357.16 273.1315 [CERTIFICATION OF 1B PROPERTY.] 357.17 Any property owner seeking classification and assessment of 357.18 the owner's homestead as class 1b property pursuant to section 357.19 273.13, subdivision 22, paragraph (b), shall file with the 357.20 commissioner of revenue a 1b homestead declaration, on a form 357.21 prescribed by the commissioner. The declaration shall contain 357.22 the following information: 357.23 (a) the information necessary to verify that on or before 357.24 June 30 of the filing year, the property owner or the owner's 357.25 spouse satisfies the requirements of section 273.13, subdivision 357.26 22, paragraph (b), for 1b classification; and 357.27 (b) any additional information prescribed by the 357.28 commissioner. 357.29 The declaration must be filed on or before October 1 to be 357.30 effective for property taxes payable during the succeeding 357.31 calendar year. The declaration and any supplementary 357.32 information received from the property owner pursuant to this 357.33 section shall be subject to chapter 270B. If approved by the 357.34 commissioner, the declaration remains in effect until the 357.35 property no longer qualifies under section 273.13, subdivision 357.36 22, paragraph (b). Failure to notify the commissioner within 30 358.1 days that the property no longer qualifies under that paragraph 358.2 because of a sale, change in occupancy, or change in the status 358.3 or condition of an occupant shall result in the penalty provided 358.4 in section 273.124, subdivision 13, computed on the basis of the 358.5 class 1b benefits for the property, and the property shall lose 358.6 its current class 1b classification. 358.7 The commissioner shall provide to the assessor on or before 358.8 November 1 a listing of the parcels of property qualifying for 358.9 1b classification. 358.10 [EFFECTIVE DATE.] This section is effective the day 358.11 following final enactment. 358.12 Sec. 25. Minnesota Statutes 2004, section 273.19, 358.13 subdivision 1a, is amended to read: 358.14 Subd. 1a. [LEASE DESCRIBED.] For purposes of this section, 358.15 a lease includes any agreement, except a cooperative farming 358.16 agreement pursuant to section 97A.135, subdivision 3, or a lease 358.17 executed pursuant to section 272.68, subdivision 4, permitting a 358.18 nonexempt person or entity to use the property, regardless of 358.19 whether the agreement is characterized as a lease. A lease has 358.20 a "term of at least one year" if the term is for a period of 358.21 less than one year and the lease permits the parties to renew 358.22 the lease without requiring that similar terms for leasing the 358.23 property will be offered to other applicants or bidders through 358.24 a competitive bidding or other form of offer to potential 358.25 lessees or users. 358.26 [EFFECTIVE DATE.] This section is effective the day 358.27 following final enactment. 358.28 Sec. 26. Minnesota Statutes 2004, section 273.372, is 358.29 amended to read: 358.30 273.372 [PROCEEDINGS AND APPEALS; UTILITY OR RAILROAD 358.31 VALUATIONS.] 358.32An appeal by a utility or railroad company concerning the358.33exemption, valuation, or classification of property for which358.34the commissioner of revenue has provided the city or county358.35assessor with valuations by order, or for which the commissioner358.36has recommended values to the city or county assessor, must be359.1brought against the commissioner in Tax Court or in district359.2court of the county where the property is located, and not359.3against the county or taxing district where the property is359.4located.Subdivision 1. [SCOPE.] This section governs judicial 359.5 review of a claim that public utility property or railroad 359.6 operating property has been partially, unfairly, or unequally 359.7 assessed, or assessed at a valuation greater than its real or 359.8 actual value, or that the property is exempt. However, this 359.9 section applies only to property described in sections 273.33, 359.10 273.35, and 273.37, and only if the net tax capacity has not 359.11 been changed from that provided to the city or a county by the 359.12 commissioner. If the net tax capacity being appealed is not the 359.13 net tax capacity established by the commissioner through order 359.14 or recommendation, or if the petition claims that the tax levied 359.15 against the parcel is illegal, in whole or in part, or if the 359.16 petition claims the tax has been paid, the action must be 359.17 brought under chapter 278 without regard to this section in each 359.18 county where the property is located and proper service must be 359.19 made upon the local officials specified in section 278.01, 359.20 subdivision 1. 359.21 Subd. 2. [CONTENTS AND FILING OF PETITION.] In all cases 359.22 under this section, the petition must be served on the 359.23 commissioner and must be filed with the Tax Court in Ramsey 359.24 County. In all cases under this section that directly challenge 359.25 an order of the commissioner, the petition must include all the 359.26 parcels encompassed by that order which the petitioner claims 359.27 have been partially, unfairly, or unequally assessed, assessed 359.28 at a valuation greater than their real or actual value, or are 359.29 exempt. In all cases under this section not directly 359.30 challenging a commissioner's order, the petition must include 359.31 either all the utility parcels or all the railroad parcels in 359.32 the state in which the petitioner claims an interest and which 359.33 the petitioner claims have been partially, unfairly, or 359.34 unequally assessed, assessed at a valuation greater than their 359.35 real or actual value, or are exempt. 359.36 Subd. 3. [APPLICABILITY OF OTHER LAWS.] If the appeal to 360.1 courtis fromgoverned by this section directly challenges an 360.2 order of the commissioner,itthe appeal must be brought under 360.3 chapter 271, except that when the provisions of this section 360.4 conflict with chapter 271, this section prevails. Ifthean 360.5 appeal governed by this section is from theexemption,360.6valuation, classification, ortax that results from 360.7 implementation ofthea commissioner's order or recommendation, 360.8 it must be brought under the provisions of chapter 278,and the360.9provisions in that chapter apply,except that service shall be 360.10 on the commissioner only and not on thecountylocal officials 360.11 specified in section 278.01, subdivision 1, and if any other 360.12 provision of this section conflicts with chapter 278, this 360.13 section prevails. 360.14This provision applies to the property described in360.15sections 273.33, 273.35, 273.36, and 273.37, but only if the360.16appealed values have remained unchanged from those provided to360.17the city or county by the commissioner. If the exemption,360.18valuation, or classification being appealed has been changed by360.19the city or county, then the action must be brought under360.20chapter 278 in the county where the property is located and360.21proper service must be made upon the county officials as360.22specified in section 278.01, subdivision 1.360.23 Subd. 4. [NOTICE.] Upon filing of any appeal by a utility 360.24 company or railroad against the commissioner under this section, 360.25 the commissioner shall give notice by first class mail to each 360.26 county which would be affected by the appeal. 360.27 Subd. 5. [ADMINISTRATIVE APPEALS.] Companies that submit 360.28 the reports under section 270.82 or 273.371 by the date 360.29 specified in that section, or by the date specified by the 360.30 commissioner in an extension, may appeal administratively to the 360.31 commissionerunder the procedures in section 270.11, subdivision360.326, prior to bringing an action in Tax Courtor in district360.33court, however, instituting an administrative appeal with the 360.34 commissioner does not change or modify the deadline in section 360.35 271.06 for appealing an order of the commissionerin Tax Court360.36 or the deadline in section 278.01 for filing a property tax 361.1 claim or objectionin Tax Court or district court. 361.2 [EFFECTIVE DATE.] This section is effective for petitions 361.3 served and filed on or after September 1, 2005. 361.4 Sec. 27. Minnesota Statutes 2004, section 274.014, 361.5 subdivision 2, is amended to read: 361.6 Subd. 2. [APPEALS AND EQUALIZATION COURSE.]By no later361.7than January 1,Beginning in 2006, and each year thereafter, 361.8 there must be at least one member at each meeting of a local 361.9 board of appeal and equalization who has attended an appeals and 361.10 equalization course developed or approved by the commissioner 361.11 within the last four years, as certified by the commissioner. 361.12 The course may be offered in conjunction with a meeting of the 361.13 Minnesota League of Cities or the Minnesota Association of 361.14 Townships. The course content must include, but need not be 361.15 limited to, a review of the handbook developed by the 361.16 commissioner under subdivision 1. 361.17 [EFFECTIVE DATE.] This section is effective the day 361.18 following final enactment. 361.19 Sec. 28. Minnesota Statutes 2004, section 274.014, 361.20 subdivision 3, is amended to read: 361.21 Subd. 3. [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] (a) 361.22 Any city or town thatdoes notconducts local boards of appeal 361.23 and equalization meetings must provide proof to the county 361.24 assessor by December 1, 2006, and each year thereafter, that it 361.25 is in compliance with the requirements of subdivision 2, and361.26that it had. Beginning in 2006, this notice must also verify 361.27 that there was a quorum of voting members at each meeting of the 361.28 board of appeal and equalization in thepriorcurrent year,. A 361.29 city or town that does not comply with these requirements is 361.30 deemed to have transferred its board of appeal and equalization 361.31 powers to the countyunder section 274.01, subdivision 3,361.32forbeginning with the following year's assessment and 361.33 continuing unless the powers are reinstated under paragraph (c). 361.34 (b) The county shall notify the taxpayers when the board of 361.35 appeal and equalization for a city or town has been transferred 361.36 to the county under this subdivision and, prior to the meeting 362.1 time of the county board of equalization, the county shall make 362.2 available to those taxpayers a procedure for a review of the 362.3 assessments, including, but not limited to, open book meetings. 362.4 This alternate review process shall take place in April and May. 362.5 (c) A local board whose powers are transferred to the 362.6 county under this subdivision may be reinstated by resolution of 362.7 the governing body of the city or town and upon proof of 362.8 compliance with the requirements of subdivision 2. The 362.9 resolution and proofs must be provided to the county assessor by 362.10 December 1 in order to be effective for the following year's 362.11 assessment. 362.12 [EFFECTIVE DATE.] This section is effective the day 362.13 following final enactment. 362.14 Sec. 29. Minnesota Statutes 2004, section 274.14, is 362.15 amended to read: 362.16 274.14 [LENGTH OF SESSION; RECORD.] 362.17The county board of equalization or the special board of362.18equalization appointed by it shall meet during the last ten362.19meeting days in June. For this purpose, "meeting days" are362.20defined as any day of the week excluding Saturday and Sunday.362.21 The board may meet on any ten consecutive meeting days in June, 362.22 after the second Friday in June, if. The actual meeting dates 362.23aremust be contained on the valuation notices mailed to each 362.24 property owner in the countyunderas provided in section 362.25 273.121. For this purpose, "meeting days" is defined as any day 362.26 of the week excluding Saturday and Sunday. No action taken by 362.27 the county board of review after June 30 is valid, except for 362.28 corrections permitted in sections 273.01 and 274.01. The county 362.29 auditor shall keep an accurate record of the proceedings and 362.30 orders of the board. The record must be published like other 362.31 proceedings of county commissioners. A copy of the published 362.32 record must be sent to the commissioner of revenue, with the 362.33 abstract of assessment required by section 274.16. 362.34 [EFFECTIVE DATE.] This section is effective the day 362.35 following final enactment. 362.36 Sec. 30. Minnesota Statutes 2004, section 275.065, 363.1 subdivision 1a, is amended to read: 363.2 Subd. 1a. [OVERLAPPING JURISDICTIONS.] In the case of a 363.3 taxing authority lying in two or more counties, the home county 363.4 auditor shall certify the proposed levy and the proposed local 363.5 tax rate to the other county auditor bySeptember 20October 5. 363.6 The home county auditor must estimate the levy or rate in 363.7 preparing the notices required in subdivision 3, if the other 363.8 county has not certified the appropriate information. If 363.9 requested by the home county auditor, the other county auditor 363.10 must furnish an estimate to the home county auditor. 363.11 [EFFECTIVE DATE.] This section is effective the day 363.12 following final enactment. 363.13 Sec. 31. Minnesota Statutes 2004, section 275.07, 363.14 subdivision 1, is amended to read: 363.15 Subdivision 1. [CERTIFICATION OF LEVY.] (a) Except as 363.16 provided under paragraph (b), the taxes voted by cities, 363.17 counties, school districts, and special districts shall be 363.18 certified by the proper authorities to the county auditor on or 363.19 before five working days after December 20 in each year. A town 363.20 must certify the levy adopted by the town board to the county 363.21 auditor by September 15 each year. If the town board modifies 363.22 the levy at a special town meeting after September 15, the town 363.23 board must recertify its levy to the county auditor on or before 363.24 five working days after December 20.The taxes certified shall363.25be reduced by the county auditor by the aid received under363.26section 273.1398, subdivision 3.If a city, town, county, 363.27 school district, or special district fails to certify its levy 363.28 by that date, its levy shall be the amount levied by it for the 363.29 preceding year. 363.30 (b)(i) The taxes voted by counties under sections 103B.241, 363.31 103B.245, and 103B.251 shall be separately certified by the 363.32 county to the county auditor on or before five working days 363.33 after December 20 in each year. The taxes certified shall not 363.34 be reduced by the county auditor by the aid received under 363.35 section 273.1398, subdivision 3. If a county fails to certify 363.36 its levy by that date, its levy shall be the amount levied by it 364.1 for the preceding year. 364.2 (ii) For purposes of the proposed property tax notice under 364.3 section 275.065 and the property tax statement under section 364.4 276.04, for the first year in which the county implements the 364.5 provisions of this paragraph, the county auditor shall reduce 364.6 the county's levy for the preceding year to reflect any amount 364.7 levied for water management purposes under clause (i) included 364.8 in the county's levy. 364.9 [EFFECTIVE DATE.] This section is effective the day 364.10 following final enactment. 364.11 Sec. 32. Minnesota Statutes 2004, section 275.07, 364.12 subdivision 4, is amended to read: 364.13 Subd. 4. [REPORT TO COMMISSIONER.] (a) On or before 364.14 October 8 of each year, the county auditor shall report to the 364.15 commissioner of revenue the proposed levy certified by local 364.16 units of government under section 275.065, subdivision 1. If 364.17 any taxing authorities have notified the county auditor that 364.18 they are in the process of negotiating an agreement for sharing, 364.19 merging, or consolidating services but that when the proposed 364.20 levy was certified under section 275.065, subdivision 1c, the 364.21 agreement was not yet finalized, the county auditor shall supply 364.22 that information to the commissioner when filing the report 364.23 under this section and shall recertify the affected levies as 364.24 soon as practical after October 10. 364.25 (b) On or before January 15 of each year, the county 364.26 auditor shall report to the commissioner of revenue the final 364.27 levy certified by local units of government under subdivision 1. 364.28 (c) The levies must be reported in the manner prescribed by 364.29 the commissioner.The reports must show a total levy and the364.30amount of each special levy.364.31 [EFFECTIVE DATE.] This section is effective the day 364.32 following final enactment. 364.33 Sec. 33. Minnesota Statutes 2004, section 276.04, 364.34 subdivision 2, is amended to read: 364.35 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 364.36 shall provide for the printing of the tax statements. The 365.1 commissioner of revenue shall prescribe the form of the property 365.2 tax statement and its contents. The statement must contain a 365.3 tabulated statement of the dollar amount due to each taxing 365.4 authority and the amount of the state tax from the parcel of 365.5 real property for which a particular tax statement is prepared. 365.6 The dollar amounts attributable to the county, the state tax, 365.7 the voter approved school tax, the other local school tax, the 365.8 township or municipality, and the total of the metropolitan 365.9 special taxing districts as defined in section 275.065, 365.10 subdivision 3, paragraph (i), must be separately stated. The 365.11 amounts due all other special taxing districts, if any, may be 365.12 aggregated. If the county levy under this paragraph includes an 365.13 amount for a lake improvement district as defined under sections 365.14 103B.501 to 103B.581, the amount attributable for that purpose 365.15 must be separately stated from the remaining county levy 365.16 amount. The amount of the tax on homesteads qualifying under 365.17 the senior citizens' property tax deferral program under chapter 365.18 290B is the total amount of property tax before subtraction of 365.19 the deferred property tax amount. The amount of the tax on 365.20 contamination value imposed under sections 270.91 to 270.98, if 365.21 any, must also be separately stated. The dollar amounts, 365.22 including the dollar amount of any special assessments, may be 365.23 rounded to the nearest even whole dollar. For purposes of this 365.24 section whole odd-numbered dollars may be adjusted to the next 365.25 higher even-numbered dollar. The amount of market value 365.26 excluded under section 273.11, subdivision 16, if any, must also 365.27 be listed on the tax statement. 365.28 (b) The property tax statements for manufactured homes and 365.29 sectional structures taxed as personal property shall contain 365.30 the same information that is required on the tax statements for 365.31 real property. 365.32 (c) Real and personal property tax statements must contain 365.33 the following information in the order given in this paragraph. 365.34 The information must contain the current year tax information in 365.35 the right column with the corresponding information for the 365.36 previous year in a column on the left: 366.1 (1) the property's estimated market value under section 366.2 273.11, subdivision 1; 366.3 (2) the property's taxable market value after reductions 366.4 under section 273.11, subdivisions 1a and 16; 366.5 (3) the property's gross tax, calculated by adding the 366.6 property's total property tax to the sum of the aids enumerated 366.7 in clause (4); 366.8 (4) a total of the following aids: 366.9 (i) education aids payable under chapters 122A, 123A, 123B, 366.10 124D, 125A, 126C, and 127A; 366.11 (ii) local government aids for cities, towns, and counties 366.12 underchapter 477Asections 477A.011 to 477A.014; and 366.13 (iii) disparity reduction aid under section 273.1398; 366.14 (5) for homestead residential and agricultural properties, 366.15 the credits under section 273.1384; 366.16 (6) any credits received under sections 273.119; 273.123; 366.17 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 366.18 473H.10, except that the amount of credit received under section 366.19 273.135 must be separately stated and identified as "taconite 366.20 tax relief"; and 366.21 (7) the net tax payable in the manner required in paragraph 366.22 (a). 366.23 (d) If the county uses envelopes for mailing property tax 366.24 statements and if the county agrees, a taxing district may 366.25 include a notice with the property tax statement notifying 366.26 taxpayers when the taxing district will begin its budget 366.27 deliberations for the current year, and encouraging taxpayers to 366.28 attend the hearings. If the county allows notices to be 366.29 included in the envelope containing the property tax statement, 366.30 and if more than one taxing district relative to a given 366.31 property decides to include a notice with the tax statement, the 366.32 county treasurer or auditor must coordinate the process and may 366.33 combine the information on a single announcement. 366.34 The commissioner of revenue shall certify to the county 366.35 auditor the actual or estimated aids enumerated in clause (4) 366.36 that local governments will receive in the following year. The 367.1 commissioner must certify this amount by January 1 of each year. 367.2 [EFFECTIVE DATE.] This section is effective the day 367.3 following final enactment. 367.4 Sec. 34. Minnesota Statutes 2004, section 276.112, is 367.5 amended to read: 367.6 276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.] 367.7 On or before January 25 each year, for the period ending 367.8 December 31 of the prior year, and on or before June2928 each 367.9 year, for the period ending on the most recent settlement day 367.10 determined in section 276.09, and on or before December 2 each 367.11 year, for the period ending November 20, the county treasurer 367.12 must make full settlement with the county auditor according to 367.13 sections 276.09, 276.10, and 276.111 for all receipts of state 367.14 property taxes levied under section 275.025, and must transmit 367.15 those receipts to the commissioner of revenue by electronic 367.16 means. 367.17 [EFFECTIVE DATE.] This section is effective the day 367.18 following final enactment. 367.19 Sec. 35. Minnesota Statutes 2004, section 276A.01, 367.20 subdivision 7, is amended to read: 367.21 Subd. 7. [POPULATION.] "Population" means the most recent 367.22 estimate of the population of a municipality made by the state 367.23 demographer and filed with the commissioner of revenue as of 367.24 July115 of the year in which a municipality's distribution net 367.25 tax capacity is calculated. The state demographer shall 367.26 annually estimate the population of each municipality and, in 367.27 the case of a municipality which is located partly within and 367.28 partly without the area, the proportion of the total which 367.29 resides within the area, and shall file the estimates with the 367.30 commissioner of revenue. 367.31 [EFFECTIVE DATE.] This section is effective the day 367.32 following final enactment. 367.33 Sec. 36. Minnesota Statutes 2004, section 282.016, is 367.34 amended to read: 367.35 282.016 [PROHIBITED PURCHASERS.] 367.36No(a) A county auditor, county treasurer, county attorney, 368.1 court administrator of the district court,orcounty assessor 368.2or, supervisor of assessments,ordeputy or clerk or an employee 368.3 of such officer,and noa commissioner for tax-forfeited lands 368.4 or an assistant to such commissionermay, must not become a 368.5 purchaser, either personally or as an agent or attorney for 368.6 another person, of the properties offered for sale under the 368.7 provisions of this chapter, either personally, or as agent or368.8attorney for any other person, except thatin the county for 368.9 which the person performs duties. 368.10 (b) Notwithstanding paragraph (a), such officer, deputy, 368.11court administratorclerk, or employee or commissioner for 368.12 tax-forfeited lands or assistant to such commissioner may (1) 368.13 purchase lands owned by that official at the time the state 368.14 became the absolute owner thereof or (2) bid upon and purchase 368.15 forfeited property offered for sale under the alternate sale 368.16 procedure described in section 282.01, subdivision 7a. 368.17 [EFFECTIVE DATE.] This section is effective the day 368.18 following final enactment. 368.19 Sec. 37. Minnesota Statutes 2004, section 282.08, is 368.20 amended to read: 368.21 282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.] 368.22 The net proceeds from the sale or rental of any parcel of 368.23 forfeited land, or from the sale of products from the forfeited 368.24 land, must be apportioned by the county auditor to the taxing 368.25 districts interested in the land, as follows: 368.26 (1)the amounts necessary to pay the state general tax levy368.27against the parcel for taxes payable in the year for which the368.28tax judgment was entered, and for each subsequent payable year368.29up to and including the year of forfeiture, must be apportioned368.30to the state;368.31(2)the portion required to pay any amounts included in the 368.32 appraised value under section 282.01, subdivision 3, as 368.33 representing increased value due to any public improvement made 368.34 after forfeiture of the parcel to the state, but not exceeding 368.35 the amount certified by the clerk of the municipality must be 368.36 apportioned to the municipal subdivision entitled to it; 369.1(3)(2) the portion required to pay any amount included in 369.2 the appraised value under section 282.019, subdivision 5, 369.3 representing increased value due to response actions taken after 369.4 forfeiture of the parcel to the state, but not exceeding the 369.5 amount of expenses certified by the Pollution Control Agency or 369.6 the commissioner of agriculture, must be apportioned to the 369.7 agency or the commissioner of agriculture and deposited in the 369.8 fund from which the expenses were paid; 369.9(4)(3) the portion of the remainder required to discharge 369.10 any special assessment chargeable against the parcel for 369.11 drainage or other purpose whether due or deferred at the time of 369.12 forfeiture, must be apportioned to the municipal subdivision 369.13 entitled to it; and 369.14(5)(4) any balance must be apportioned as follows: 369.15 (i) The county board may annually by resolution set aside 369.16 no more than 30 percent of the receipts remaining to be used for 369.17 timber development on tax-forfeited land and dedicated memorial 369.18 forests, to be expended under the supervision of the county 369.19 board. It must be expended only on projects approved by the 369.20 commissioner of natural resources. 369.21 (ii) The county board may annually by resolution set aside 369.22 no more than 20 percent of the receipts remaining to be used for 369.23 the acquisition and maintenance of county parks or recreational 369.24 areas as defined in sections 398.31 to 398.36, to be expended 369.25 under the supervision of the county board. 369.26 (iii) Any balance remaining must be apportioned as 369.27 follows: county, 40 percent; town or city, 20 percent; and 369.28 school district, 40 percent, provided, however, that in 369.29 unorganized territory that portion which would have accrued to 369.30 the township must be administered by the county board of 369.31 commissioners. 369.32 [EFFECTIVE DATE.] This section is effective the day 369.33 following final enactment for state general tax levy amounts 369.34 payable in 2004 and thereafter. 369.35 Sec. 38. Minnesota Statutes 2004, section 282.15, is 369.36 amended to read: 370.1 282.15 [SALES OF FORFEITED AGRICULTURAL LANDS.] 370.2 The sale shall be conducted by the auditor of the county in 370.3 which the parcels lie. The parcels shall be sold to the highest 370.4 bidder but not for less than the appraised value. The sales 370.5 shall be for cash or on the following terms: The appraised 370.6 value of all merchantable timber on agricultural lands shall be 370.7 paid for in full at the date of sale. At least 15 percent of 370.8 the purchase price of the land shall be paid in cash at the time 370.9 of purchase. The balance shall be paid in not more than 20 370.10 equal annual installments, with interest at a rate equal to the 370.11 rate in effect at the time under section 549.09 on the unpaid 370.12 balance each year. Both principal and interest are due and 370.13 payable on December 31 each year following that in which the 370.14 purchase was made. The purchaser may pay any number of 370.15 installments of principal and interest on or before their due 370.16 date. When the sale is on terms other than for cash in full, 370.17 the purchaser shall receive from the county auditor a contract 370.18 for deed, in a form prescribed by the attorney general. The 370.19 county auditor shall make a report to the commissioner of 370.20 natural resources not more than 30 days after each public sale 370.21 showing the lands sold at the sales, and submit a copy of each 370.22 contract of sale. 370.23 All lands sold pursuant to this sectionshall, on the370.24second day of January following the date of the sale,must be 370.25 restored to the tax rolls and become subject to taxation in the 370.26 same manner as they were assessed and taxed before becoming the 370.27 absolute property of the state for the assessment year 370.28 determined under section 272.02, subdivision 38, paragraph (c). 370.29 [EFFECTIVE DATE.] This section is effective for sales 370.30 occurring on or after July 1, 2005. 370.31 Sec. 39. Minnesota Statutes 2004, section 282.21, is 370.32 amended to read: 370.33 282.21 [FORM OF CONVEYANCE.] 370.34 When any sale has been made under sections 282.14 to 370.35 282.22, upon payment in full of the purchase price, appropriate 370.36 conveyance in fee in such form as may be prescribed by the 371.1 attorney general shall be issued by the commissioner offinance371.2 natural resources to the purchaser or the purchaser's assigns 371.3 and this conveyance shall have the force and effect of a patent 371.4 from the state. 371.5 [EFFECTIVE DATE.] This section is effective the day 371.6 following final enactment. 371.7 Sec. 40. Minnesota Statutes 2004, section 282.224, is 371.8 amended to read: 371.9 282.224 [FORM OF CONVEYANCE.] 371.10 When any sale has been made under sections 282.221 to 371.11 282.226, upon payment in full of the purchase price, appropriate 371.12 conveyance in fee, in such form as may be prescribed by the 371.13 attorney general, shall be issued by the commissioner of natural 371.14 resources to the purchaser or the purchaser's assignee, and the 371.15 conveyance shall have the force and effect of a patent from the 371.16 state. 371.17 [EFFECTIVE DATE.] This section is effective the day 371.18 following final enactment. 371.19 Sec. 41. Minnesota Statutes 2004, section 282.301, is 371.20 amended to read: 371.21 282.301 [RECEIPTS FOR PAYMENTS.] 371.22 When any sale has been made under sections 282.012 and 371.23 282.241 to 282.324, the purchaser shall receive from the county 371.24 auditor at the time of repurchase a receipt, in such form as may 371.25 be prescribed by the attorney general. When the purchase price 371.26 of a parcel of land shall be paid in full, the following facts 371.27 shall be certified by the county auditor to the commissioner of 371.28 revenue of the state of Minnesota: the description of land, the 371.29 date of sale, the name of the purchaser or the purchaser's 371.30 assignee, and the date when the final installment of the 371.31 purchase price was paid. Upon payment in full of the purchase 371.32 price, the purchaser or the assignee shall receive a quitclaim 371.33 deed from the state, to be executed by the commissioner of 371.34 revenue. The deed must be sent to the county auditor who shall 371.35 have it recorded before it is forwarded to the purchaser. 371.36 Failure to make any payment herein required shall constitute 372.1 default and upon such default and cancellation in accord with 372.2 section 282.40, the right, title and interest of the purchaser 372.3 or the purchaser's heirs, representatives, or assigns in such 372.4 parcel shall terminate. 372.5 [EFFECTIVE DATE.] This section is effective the day 372.6 following final enactment. 372.7 Sec. 42. Minnesota Statutes 2004, section 290A.19, is 372.8 amended to read: 372.9 290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 372.10 CERTIFICATE.] 372.11 (a) The owner or managing agent of any property for which 372.12 rent is paid for occupancy as a homestead must furnish a 372.13 certificate of rent paid to a person who is a renter on December 372.14 31, in the form prescribed by the commissioner. If the renter 372.15 moves before December 31, the owner or managing agent may give 372.16 the certificate to the renter at the time of moving, or mail the 372.17 certificate to the forwarding address if an address has been 372.18 provided by the renter. The certificate must be made available 372.19 to the renter before February 1 of the year following the year 372.20 in which the rent was paid. The owner or managing agent must 372.21 retain a duplicate of each certificate or an equivalent record 372.22 showing the same information for a period of three years. The 372.23 duplicate or other record must be made available to the 372.24 commissioner upon request. For the purposes of this section, 372.25 "owner" includes a park owner as defined under section 327C.01, 372.26 subdivision 6, and "property" includes a lot as defined under 372.27 section 327C.01, subdivision 3. 372.28 (b) The commissioner may require the owner or managing 372.29 agent to file a copy of the certificate of rent paid with the 372.30 commissioner by April 15 of the year following the year in which 372.31 the rent was paid. The copy must be submitted to the 372.32 commissioner by electronic means as that term is defined in 372.33 section 289A.02, subdivision 8. This paragraph does not apply to 372.34 any owner or managing agent that is required to issue 372.35 certificates to renters of fewer than 100 units. 372.36 [EFFECTIVE DATE.] This section is effective for 373.1 certificates of rent paid that are issued for rent paid after 373.2 December 31, 2005. 373.3 Sec. 43. Minnesota Statutes 2004, section 290B.05, 373.4 subdivision 3, is amended to read: 373.5 Subd. 3. [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 373.6 When final property tax amounts for the following year have been 373.7 determined, the county auditor shall calculate the "deferred 373.8 property tax amount." The deferred property tax amount is equal 373.9 to the lesser of (1) the maximum allowable deferral for the 373.10 year; or (2) the difference between (i) the total amount of 373.11 property taxes and special assessments levied upon the 373.12 qualifying homestead by all taxing jurisdictions and (ii) the 373.13 maximum property tax amount.Any special assessments levied by373.14any local unit of government must not be included in the total373.15tax used to calculate the deferred tax amount.For this purpose 373.16 "special assessments" includes any assessment, fee, or other 373.17 charge that may by law, and which does, appear on the property 373.18 tax statement for the property for collection under the laws 373.19 applicable to the enforcement of real estate taxes. Any tax 373.20 attributable to new improvements made to the property after the 373.21 initial application has been approved under section 290B.04, 373.22 subdivision 2, must be excluded when determining any subsequent 373.23 deferred property tax amount. The county auditor shall 373.24 annually, on or before April 15, certify to the commissioner of 373.25 revenue the property tax deferral amounts determined under this 373.26 subdivision by property and by owner. 373.27 [EFFECTIVE DATE.] This section is effective for amounts 373.28 deferred in 2006 and thereafter. 373.29 Sec. 44. Minnesota Statutes 2004, section 373.45, 373.30 subdivision 7, is amended to read: 373.31 Subd. 7. [AID REDUCTION FOR REPAYMENT.] (a) Except as 373.32 provided in paragraph (b), the commissioner may reduce, by the 373.33 amount paid by the state under this section on behalf of the 373.34 county, plus the interest due on the state payments, the 373.35following aids payable to the county:373.36(1) homestead and agricultural credit aid and disparity374.1reduction aid payable under section 273.1398;374.2(2) county criminal justice aid payable under section374.3477A.0121; and374.4(3) family preservation aid payable under section 477A.0122374.5 county program aid under section 477A.0124. 374.6 The amount of any aid reduction reverts from the appropriate 374.7 account to the state general fund. 374.8 (b) If, after review of the financial situation of the 374.9 county, the authority advises the commissioner that a total 374.10 reduction of the aids would cause an undue hardship on the 374.11 county, the authority, with the approval of the commissioner, 374.12 may establish a different schedule for reduction of aids to 374.13 repay the state. The amount of aids to be reduced are decreased 374.14 by any amounts repaid to the state by the county from other 374.15 revenue sources. 374.16 [EFFECTIVE DATE.] This section is effective for aid payable 374.17 in 2005 and thereafter. 374.18 Sec. 45. Minnesota Statutes 2004, section 469.1735, 374.19 subdivision 3, is amended to read: 374.20 Subd. 3. [TRANSFER AUTHORITY FOR PROPERTY TAX.] (a) A city 374.21 may elect to use all or part of its allocation under subdivision 374.22 2 to reimburse the city or county or both for property tax 374.23 reductions under section 272.0212. To elect this option, the 374.24 city must notify the commissioner of revenue by October 1 of 374.25 each calendar year of the amount of the property tax 374.26 reductions for which it seeks reimbursements for taxes payable 374.27 during thefollowingcurrent year and the governmental units to 374.28 which the amounts will be paid. The commissioner may require 374.29 the city to provide information substantiating the amount of the 374.30 reductions granted or any other information necessary to 374.31 administer this provision. The commissioner shall pay the 374.32 reimbursements by December 26 of the taxes payable year. Any 374.33 amount transferred under this authority reduces the amount of 374.34 tax credit certificates available under subdivisions 1 and 2. 374.35 (b) The amount elected by the city under paragraph (a) is 374.36 appropriated to the commissioner of revenue from the general 375.1 fund to reimburse the city or county for tax reductions under 375.2 section 272.0212. The amount appropriated may not exceed the 375.3 maximum amounts allocated to a city under subdivision 2, 375.4 paragraph (b), less the amount of certificates issued by the 375.5 city under subdivision 1, and is available until expended. 375.6 [EFFECTIVE DATE.] This section is effective for 375.7 reimbursements of taxes payable in 2005 and thereafter. 375.8 Sec. 46. [473.24] [POPULATION ESTIMATES.] 375.9 (a) The Metropolitan Council shall annually prepare an 375.10 estimate of population for each county, city, and town in the 375.11 metropolitan area and an estimate of the number of households 375.12 and average household size for each city in the metropolitan 375.13 area with a population of 2,500 or more, and an estimate of 375.14 population over age 65 for each county in the metropolitan area, 375.15 and convey the estimates to the governing body of each county, 375.16 city, or town by June 1 each year. In the case of a city or 375.17 town that is located partly within and partly without the 375.18 metropolitan area, the Metropolitan Council shall estimate the 375.19 proportion of the total population and the average size of 375.20 households that reside within the area. The Metropolitan 375.21 Council may prepare an estimate of the population and of the 375.22 average household size for any other political subdivision 375.23 located in the metropolitan area. 375.24 (b) A governing body may challenge an estimate made under 375.25 this section by filing its specific objections in writing with 375.26 the Metropolitan Council by June 24. If the challenge does not 375.27 result in an acceptable estimate, the governing body may have a 375.28 special census conducted by the United States Bureau of the 375.29 Census. The political subdivision must notify the Metropolitan 375.30 Council on or before July 1 of its intent to have the special 375.31 census conducted. The political subdivision must bear all costs 375.32 of the special census. Results of the special census must be 375.33 received by the Metropolitan Council by the next April 15 to be 375.34 used in that year's June 1 estimate under this section. The 375.35 Metropolitan Council shall certify the estimates of population 375.36 and the average household size to the state demographer and to 376.1 the commissioner of revenue by July 15 each year, including any 376.2 estimates still under objection. 376.3 [EFFECTIVE DATE.] This section is effective the day 376.4 following final enactment. 376.5 Sec. 47. Minnesota Statutes 2004, section 473F.02, 376.6 subdivision 7, is amended to read: 376.7 Subd. 7. [POPULATION.] "Population" means the most recent 376.8 estimate of the population of a municipality made by the 376.9 Metropolitan Council under section 473.24 and filed with the 376.10 commissioner of revenue as of July115 of the year in which a 376.11 municipality's distribution net tax capacity is calculated.The376.12council shall annually estimate the population of each376.13municipality as of a date which it determines and, in the case376.14of a municipality which is located partly within and partly376.15without the area, the proportion of the total which resides376.16within the area, and shall promptly thereafter file its376.17estimates with the commissioner of revenue.376.18 [EFFECTIVE DATE.] This section is effective the day 376.19 following final enactment. 376.20 Sec. 48. Minnesota Statutes 2004, section 477A.011, 376.21 subdivision 3, is amended to read: 376.22 Subd. 3. [POPULATION.] "Population" means the 376.23 population estimated or established as of July115 in an aid 376.24 calculation year by the most recent federal census, by a special 376.25 census conducted under contract with the United States Bureau of 376.26 the Census, by a population estimate made by the Metropolitan 376.27 Council pursuant to section 473.24, or by a population estimate 376.28 of the state demographer made pursuant to section 4A.02, 376.29 whichever is the most recent as to the stated date of the count 376.30 or estimate for the preceding calendar year, and which has been 376.31 certified to the commissioner of revenue on or before July 15 of 376.32 the aid calculation year. The term "per capita" refers to 376.33 population as defined by this subdivision. A revision of an 376.34 estimate or count is effective for these purposes only if it is 376.35 certified to the commissioner on or before July 15 of the aid 376.36 calculation year. Clerical errors in the certification or use 377.1 of the estimates and counts established as of July 15 in the aid 377.2 calculation year are subject to correction within the time 377.3 periods allowed under section 477A.014. 377.4 [EFFECTIVE DATE.] This section is effective the day 377.5 following final enactment. 377.6 Sec. 49. Minnesota Statutes 2004, section 477A.011, 377.7 subdivision 36, is amended to read: 377.8 Subd. 36. [CITY AID BASE.] (a) Except as otherwise 377.9 provided in this subdivision, "city aid base" is zero. 377.10 (b) The city aid base for any city with a population less 377.11 than 500 is increased by $40,000 for aids payable in calendar 377.12 year 1995 and thereafter, and the maximum amount of total aid it 377.13 may receive under section 477A.013, subdivision 9, paragraph 377.14 (c), is also increased by $40,000 for aids payable in calendar 377.15 year 1995 only, provided that: 377.16 (i) the average total tax capacity rate for taxes payable 377.17 in 1995 exceeds 200 percent; 377.18 (ii) the city portion of the tax capacity rate exceeds 100 377.19 percent; and 377.20 (iii) its city aid base is less than $60 per capita. 377.21 (c) The city aid base for a city is increased by $20,000 in 377.22 1998 and thereafter and the maximum amount of total aid it may 377.23 receive under section 477A.013, subdivision 9, paragraph (c), is 377.24 also increased by $20,000 in calendar year 1998 only, provided 377.25 that: 377.26 (i) the city has a population in 1994 of 2,500 or more; 377.27 (ii) the city is located in a county, outside of the 377.28 metropolitan area, which contains a city of the first class; 377.29 (iii) the city's net tax capacity used in calculating its 377.30 1996 aid under section 477A.013 is less than $400 per capita; 377.31 and 377.32 (iv) at least four percent of the total net tax capacity, 377.33 for taxes payable in 1996, of property located in the city is 377.34 classified as railroad property. 377.35 (d) The city aid base for a city is increased by $200,000 377.36 in 1999 and thereafter and the maximum amount of total aid it 378.1 may receive under section 477A.013, subdivision 9, paragraph 378.2 (c), is also increased by $200,000 in calendar year 1999 only, 378.3 provided that: 378.4 (i) the city was incorporated as a statutory city after 378.5 December 1, 1993; 378.6 (ii) its city aid base does not exceed $5,600; and 378.7 (iii) the city had a population in 1996 of 5,000 or more. 378.8 (e) The city aid base for a city is increased by $450,000 378.9 in 1999 to 2008 and the maximum amount of total aid it may 378.10 receive under section 477A.013, subdivision 9, paragraph (c), is 378.11 also increased by $450,000 in calendar year 1999 only, provided 378.12 that: 378.13 (i) the city had a population in 1996 of at least 50,000; 378.14 (ii) its population had increased by at least 40 percent in 378.15 the ten-year period ending in 1996; and 378.16 (iii) its city's net tax capacity for aids payable in 1998 378.17 is less than $700 per capita. 378.18 (f)Beginning in 2004, the city aid base for a city is378.19equal to the sum of its city aid base in 2003 and the amount of378.20additional aid it was certified to receive under section 477A.06378.21in 2003. For 2004 only, the maximum amount of total aid a city378.22may receive under section 477A.013, subdivision 9, paragraph378.23(c), is also increased by the amount it was certified to receive378.24under section 477A.06 in 2003.378.25(g)The city aid base for a city is increased by $150,000 378.26 for aids payable in 2000 and thereafter, and the maximum amount 378.27 of total aid it may receive under section 477A.013, subdivision 378.28 9, paragraph (c), is also increased by $150,000 in calendar year 378.29 2000 only, provided that: 378.30 (1) the city has a population that is greater than 1,000 378.31 and less than 2,500; 378.32 (2) its commercial and industrial percentage for aids 378.33 payable in 1999 is greater than 45 percent; and 378.34 (3) the total market value of all commercial and industrial 378.35 property in the city for assessment year 1999 is at least 15 378.36 percent less than the total market value of all commercial and 379.1 industrial property in the city for assessment year 1998. 379.2(h)(g) The city aid base for a city is increased by 379.3 $200,000 in 2000 and thereafter, and the maximum amount of total 379.4 aid it may receive under section 477A.013, subdivision 9, 379.5 paragraph (c), is also increased by $200,000 in calendar year 379.6 2000 only, provided that: 379.7 (1) the city had a population in 1997 of 2,500 or more; 379.8 (2) the net tax capacity of the city used in calculating 379.9 its 1999 aid under section 477A.013 is less than $650 per 379.10 capita; 379.11 (3) the pre-1940 housing percentage of the city used in 379.12 calculating 1999 aid under section 477A.013 is greater than 12 379.13 percent; 379.14 (4) the 1999 local government aid of the city under section 379.15 477A.013 is less than 20 percent of the amount that the formula 379.16 aid of the city would have been if the need increase percentage 379.17 was 100 percent; and 379.18 (5) the city aid base of the city used in calculating aid 379.19 under section 477A.013 is less than $7 per capita. 379.20(i)(h) The city aid base for a city is increased by 379.21 $102,000 in 2000 and thereafter, and the maximum amount of total 379.22 aid it may receive under section 477A.013, subdivision 9, 379.23 paragraph (c), is also increased by $102,000 in calendar year 379.24 2000 only, provided that: 379.25 (1) the city has a population in 1997 of 2,000 or more; 379.26 (2) the net tax capacity of the city used in calculating 379.27 its 1999 aid under section 477A.013 is less than $455 per 379.28 capita; 379.29 (3) the net levy of the city used in calculating 1999 aid 379.30 under section 477A.013 is greater than $195 per capita; and 379.31 (4) the 1999 local government aid of the city under section 379.32 477A.013 is less than 38 percent of the amount that the formula 379.33 aid of the city would have been if the need increase percentage 379.34 was 100 percent. 379.35(j)(i) The city aid base for a city is increased by 379.36 $32,000 in 2001 and thereafter, and the maximum amount of total 380.1 aid it may receive under section 477A.013, subdivision 9, 380.2 paragraph (c), is also increased by $32,000 in calendar year 380.3 2001 only, provided that: 380.4 (1) the city has a population in 1998 that is greater than 380.5 200 but less than 500; 380.6 (2) the city's revenue need used in calculating aids 380.7 payable in 2000 was greater than $200 per capita; 380.8 (3) the city net tax capacity for the city used in 380.9 calculating aids available in 2000 was equal to or less than 380.10 $200 per capita; 380.11 (4) the city aid base of the city used in calculating aid 380.12 under section 477A.013 is less than $65 per capita; and 380.13 (5) the city's formula aid for aids payable in 2000 was 380.14 greater than zero. 380.15(k)(j) The city aid base for a city is increased by $7,200 380.16 in 2001 and thereafter, and the maximum amount of total aid it 380.17 may receive under section 477A.013, subdivision 9, paragraph 380.18 (c), is also increased by $7,200 in calendar year 2001 only, 380.19 provided that: 380.20 (1) the city had a population in 1998 that is greater than 380.21 200 but less than 500; 380.22 (2) the city's commercial industrial percentage used in 380.23 calculating aids payable in 2000 was less than ten percent; 380.24 (3) more than 25 percent of the city's population was 60 380.25 years old or older according to the 1990 census; 380.26 (4) the city aid base of the city used in calculating aid 380.27 under section 477A.013 is less than $15 per capita; and 380.28 (5) the city's formula aid for aids payable in 2000 was 380.29 greater than zero. 380.30(l)(k) The city aid base for a city is increased by 380.31 $45,000 in 2001 and thereafter and by an additional $50,000 in 380.32 calendar years 2002 to 2011, and the maximum amount of total aid 380.33 it may receive under section 477A.013, subdivision 9, paragraph 380.34 (c), is also increased by $45,000 in calendar year 2001 only, 380.35 and by $50,000 in calendar year 2002 only, provided that: 380.36 (1) the net tax capacity of the city used in calculating 381.1 its 2000 aid under section 477A.013 is less than $810 per 381.2 capita; 381.3 (2) the population of the city declined more than two 381.4 percent between 1988 and 1998; 381.5 (3) the net levy of the city used in calculating 2000 aid 381.6 under section 477A.013 is greater than $240 per capita; and 381.7 (4) the city received less than $36 per capita in aid under 381.8 section 477A.013, subdivision 9, for aids payable in 2000. 381.9(m)(l) The city aid base for a city with a population of 381.10 10,000 or more which is located outside of the seven-county 381.11 metropolitan area is increased in 2002 and thereafter, and the 381.12 maximum amount of total aid it may receive under section 381.13 477A.013, subdivision 9, paragraph (b) or (c), is also increased 381.14 in calendar year 2002 only, by an amount equal to the lesser of: 381.15 (1)(i) the total population of the city, as determined by 381.16 the United States Bureau of the Census, in the 2000 census, (ii) 381.17 minus 5,000, (iii) times 60; or 381.18 (2) $2,500,000. 381.19(n)(m) The city aid base is increased by $50,000 in 2002 381.20 and thereafter, and the maximum amount of total aid it may 381.21 receive under section 477A.013, subdivision 9, paragraph (c), is 381.22 also increased by $50,000 in calendar year 2002 only, provided 381.23 that: 381.24 (1) the city is located in the seven-county metropolitan 381.25 area; 381.26 (2) its population in 2000 is between 10,000 and 20,000; 381.27 and 381.28 (3) its commercial industrial percentage, as calculated for 381.29 city aid payable in 2001, was greater than 25 percent. 381.30(o)(n) The city aid base for a city is increased by 381.31 $150,000 in calendar years 2002 to 2011 and the maximum amount 381.32 of total aid it may receive under section 477A.013, subdivision 381.33 9, paragraph (c), is also increased by $150,000 in calendar year 381.34 2002 only, provided that: 381.35 (1) the city had a population of at least 3,000 but no more 381.36 than 4,000 in 1999; 382.1 (2) its home county is located within the seven-county 382.2 metropolitan area; 382.3 (3) its pre-1940 housing percentage is less than 15 382.4 percent; and 382.5 (4) its city net tax capacity per capita for taxes payable 382.6 in 2000 is less than $900 per capita. 382.7(p)(o) The city aid base for a city is increased by 382.8 $200,000 beginning in calendar year 2003 and the maximum amount 382.9 of total aid it may receive under section 477A.013, subdivision 382.10 9, paragraph (c), is also increased by $200,000 in calendar year 382.11 2003 only, provided that the city qualified for an increase in 382.12 homestead and agricultural credit aid under Laws 1995, chapter 382.13 264, article 8, section 18. 382.14(q)(p) The city aid base for a city is increased by 382.15 $200,000 in 2004 only and the maximum amount of total aid it may 382.16 receive under section 477A.013, subdivision 9, is also increased 382.17 by $200,000 in calendar year 2004 only, if the city is the site 382.18 of a nuclear dry cask storage facility. 382.19(r)(q) The city aid base for a city is increased by 382.20 $10,000 in 2004 and thereafter and the maximum total aid it may 382.21 receive under section 477A.013, subdivision 9, is also increased 382.22 by $10,000 in calendar year 2004 only, if the city was included 382.23 in a federal major disaster designation issued on April 1, 1998, 382.24 and its pre-1940 housing stock was decreased by more than 40 382.25 percent between 1990 and 2000. 382.26 [EFFECTIVE DATE.] This section is effective beginning with 382.27 aids payable in 2004. 382.28 Sec. 50. Minnesota Statutes 2004, section 477A.011, 382.29 subdivision 38, is amended to read: 382.30 Subd. 38. [HOUSEHOLD SIZE.] "Household size" means the 382.31 average number of persons per household in the jurisdiction as 382.32 most recently estimated and reported by the state 382.33 demographer and Metropolitan Council as of July115 of the aid 382.34 calculation year. A revision to an estimate or enumeration is 382.35 effective for these purposes only if it is certified to the 382.36 commissioner on or before July 15 of the aid calculation year. 383.1 Clerical errors in the certification or use of estimates and 383.2 counts established as of July 15 in the aid calculation year are 383.3 subject to correction within the time periods allowed under 383.4 section 477A.014. 383.5 [EFFECTIVE DATE.] This section is effective the day 383.6 following final enactment. 383.7 Sec. 51. Minnesota Statutes 2004, section 477A.0124, 383.8 subdivision 2, is amended to read: 383.9 Subd. 2. [DEFINITIONS.] (a) For the purposes of this 383.10 section, the following terms have the meanings given them. 383.11 (b) "County program aid" means the sum of "county need aid," 383.12 "county tax base equalization aid," and "county transition aid." 383.13 (c) "Age-adjusted population" means a county's population 383.14 multiplied by the county age index. 383.15 (d) "County age index" means the percentage of the 383.16 population over age 65 within the county divided by the 383.17 percentage of the population over age 65 within the state, 383.18 except that the age index for any county may not be greater than 383.19 1.8 nor less than 0.8. 383.20 (e) "Population over age 65" means the population over age 383.21 65 established as of July115 in an aid calculation year by the 383.22 most recent federal census, by a special census conducted under 383.23 contract with the United States Bureau of the Census, by a 383.24 population estimate made by the Metropolitan Council, or by a 383.25 population estimate of the state demographer made pursuant to 383.26 section 4A.02, whichever is the most recent as to the stated 383.27 date of the count or estimate for the preceding calendar 383.28 year and which has been certified to the commissioner of revenue 383.29 on or before July 15 of the aid calculation year. A revision to 383.30 an estimate or count is effective for these purposes only if 383.31 certified to the commissioner on or before July 15 of the aid 383.32 calculation year. Clerical errors in the certification or use 383.33 of estimates and counts established as of July 15 in the aid 383.34 calculation year are subject to correction within the time 383.35 periods allowed under section 477A.014. 383.36 (f) "Part I crimes" means the three-year average annual 384.1 number of Part I crimes reported for each county by the 384.2 Department of Public Safety for the most recent years available. 384.3 By July 1 of each year, the commissioner of public safety shall 384.4 certify to the commissioner of revenue the number of Part I 384.5 crimes reported for each county for the three most recent 384.6 calendar years available. 384.7 (g) "Households receiving food stamps" means the average 384.8 monthly number of households receiving food stamps for the three 384.9 most recent years for which data is available. By July 1 of 384.10 each year, the commissioner of human services must certify to 384.11 the commissioner of revenue the average monthly number of 384.12 households in the state and in each county that receive food 384.13 stamps, for the three most recent calendar years available. 384.14 (h) "County net tax capacity" means the net tax capacity of 384.15 the county, computed analogously to city net tax capacity under 384.16 section 477A.011, subdivision 20. 384.17 [EFFECTIVE DATE.] This section is effective the day 384.18 following final enactment. 384.19 Sec. 52. Laws 2003, chapter 127, article 5, section 27, 384.20 the effective date, is amended to read: 384.21 [EFFECTIVE DATE.] This section is effective fortaxes384.22payable in 2004 and thereafterdistributions occurring on or 384.23 after June 10, 2003. 384.24 Sec. 53. Laws 2003, chapter 127, article 5, section 28, 384.25 the effective date, is amended to read: 384.26 [EFFECTIVE DATE.] This section is effective fortaxes384.27payable in 2004 and thereafterdistributions occurring on or 384.28 after June 10, 2003. 384.29 Sec. 54. Laws 2003, First Special Session chapter 21, 384.30 article 5, section 13, is amended to read: 384.31 Sec. 13. [2004 CITY AID REDUCTIONS.] 384.32 The commissioner of revenue shall compute an aid reduction 384.33 amount for 2004 for each city as provided in this section. 384.34 The initial aid reduction amount for each city is the 384.35 amount by which the city's aid distribution under Minnesota 384.36 Statutes, section 477A.013, and related provisions payable in 385.1 2003 exceeds the city's 2004 distribution under those provisions. 385.2 The minimum aid reduction amount for a city is the amount 385.3 of its reduction in 2003 under section 12. If a city receives 385.4 an increase to its city aid base under Minnesota Statutes, 385.5 section 477A.011, subdivision 36, its minimum aid reduction is 385.6 reduced by an equal amount. 385.7 The maximum aid reduction amount for a city is an amount 385.8 equal to 14 percent of the city's total 2004 levy plus aid 385.9 revenue base, except that if the city has a city net tax 385.10 capacity for aids payable in 2004, as defined in Minnesota 385.11 Statutes, section 477A.011, subdivision 20, of $700 per capita 385.12 or less, the maximum aid reduction shall not exceed an amount 385.13 equal to 13 percent of the city's total 2004 levy plus aid 385.14 revenue base. 385.15 If the initial aid reduction amount for a city is less than 385.16 the minimum aid reduction amount for that city, the final aid 385.17 reduction amount for the city is the sum of the initial aid 385.18 reduction amount and the lesser of the amount of the city's 385.19 payable 2004 reimbursement under Minnesota Statutes, section 385.20 273.1384, or the difference between the minimum and initial aid 385.21 reduction amounts for the city, and the amount of the final aid 385.22 reduction in excess of the initial aid reduction is deducted 385.23 from the city's reimbursements pursuant to Minnesota Statutes, 385.24 section 273.1384. 385.25 If the initial aid reduction amount for a city is greater 385.26 than the maximum aid reduction amount for the city, the city 385.27 receives an additional distribution under this section equal to 385.28 the result of subtracting the maximum aid reduction amount from 385.29 the initial aid reduction amount. This distribution shall be 385.30 paid in equal installments in 2004 on the dates specified in 385.31 Minnesota Statutes, section 477A.015. The amount necessary for 385.32 these additional distributions is appropriated to the 385.33 commissioner of revenue from the general fund in fiscal year 385.34 2005. 385.35The initial aid reduction is applied to the city's385.36distribution pursuant to Minnesota Statutes, section 477A.013,386.1and any aid reduction in excess of the initial aid reduction is386.2applied to the city's reimbursements pursuant to Minnesota386.3Statutes, section 273.1384.386.4 To the extent that sufficient information is available on 386.5 each payment date in 2004, the commissioner of revenue shall pay 386.6 the reimbursements reduced under this section in equal 386.7 installments on the payment dates provided in law. 386.8 [EFFECTIVE DATE.] This section is effective for aids 386.9 payable in 2004. 386.10 Sec. 55. Laws 2003, First Special Session chapter 21, 386.11 article 6, section 9, is amended to read: 386.12 Sec. 9. [DEFINITIONS.] 386.13 (a) For purposes of sections 9 to 15, the following terms 386.14 have the meanings given them in this section. 386.15 (b) The 2003 and 2004 "levy plus aid revenue base" for a 386.16 county is the sum of that county's certified property tax levy 386.17 for taxes payable in 2003, plus the sum of the amounts the 386.18 county was certified to receive in the designated calendar year 386.19 as: 386.20 (1) homestead and agricultural credit aid under Minnesota 386.21 Statutes, section 273.1398, subdivision 2, plus any additional 386.22 aid under section 16, minus the amount calculated under section 386.23 273.1398, subdivision 4a, paragraph (b), for counties in 386.24 judicial districts one, three, six, and ten, and 25 percent of 386.25 the amount calculated under section 273.1398, subdivision 4a, 386.26 paragraph (b), for counties in judicial districts two and four; 386.27 (2) the amount of county manufactured home homestead and 386.28 agricultural credit aid computed for the county for payment in 386.29 2003 under section 273.166; 386.30 (3) criminal justice aid under Minnesota Statutes, section 386.31 477A.0121; 386.32 (4) family preservation aid under Minnesota Statutes, 386.33 section 477A.0122; 386.34 (5) taconite aids under Minnesota Statutes, sections 298.28 386.35 and 298.282, including any aid which was required to be placed 386.36 in a special fund for expenditure in the next succeeding year; 387.1 and 387.2 (6) county program aid under section 477A.0124, exclusive 387.3 of the attached machinery aid component. 387.4 [EFFECTIVE DATE.] This section is effective for aids 387.5 payable in 2004. 387.6 Sec. 56. [LINCOLN AND PIPESTONE COUNTIES; TOWN LEVY 387.7 ADJUSTMENT FOR WIND ENERGY PRODUCTION TAX.] 387.8 Notwithstanding the deadlines in Minnesota Statutes, 387.9 section 275.07, towns located in Lincoln or Pipestone County are 387.10 authorized to adjust their payable 2004 levy for all or a 387.11 portion of their estimated wind energy production tax amounts 387.12 for 2004, as computed by the commissioner of revenue from 387.13 reports filed under Minnesota Statutes, section 272.029, 387.14 subdivision 4. The Lincoln and Pipestone County auditors may 387.15 adjust the payable 2004 levy certifications under Minnesota 387.16 Statutes, section 275.07, subdivision 1, based upon the towns 387.17 that have recertified their levies under this section by March 387.18 15, 2004. 387.19 [EFFECTIVE DATE.] This section is effective for taxes 387.20 payable in 2004. 387.21 Sec. 57. [REPEALER.] 387.22 (a) Minnesota Statutes 2004, sections 273.19, subdivision 387.23 5; 274.05; 275.15; 275.61, subdivision 2; and 283.07, are 387.24 repealed effective the day following final enactment. 387.25 (b) Laws 1975, chapter 287, section 5, and Laws 2003, 387.26 chapter 127, article 9, section 9, subdivision 4, are repealed 387.27 effective without local approval for taxes payable in 2006 and 387.28 thereafter. 387.29 ARTICLE 11 387.30 DEPARTMENT OF REVENUE 387.31 SALES AND USE TAXES 387.32 Section 1. Minnesota Statutes 2004, section 289A.38, 387.33 subdivision 6, is amended to read: 387.34 Subd. 6. [OMISSION IN EXCESS OF 25 PERCENT.] Additional 387.35 taxes may be assessed within 6-1/2 years after the due date of 387.36 the return or the date the return was filed, whichever is later, 388.1 if: 388.2 (1) the taxpayer omits from gross income an amount properly 388.3 includable in it that is in excess of 25 percent of the amount 388.4 of gross income stated in the return; 388.5 (2) the taxpayer omits from a sales, use, or withholding 388.6 tax return an amount of taxes in excess of 25 percent of the 388.7 taxes reported in the return; or 388.8 (3) the taxpayer omits from the gross estate assets in 388.9 excess of 25 percent of the gross estate reported in the return. 388.10 [EFFECTIVE DATE.] This section is effective the day 388.11 following final enactment. 388.12 Sec. 2. Minnesota Statutes 2004, section 289A.38, is 388.13 amended by adding a subdivision to read: 388.14 Subd. 15. [PURCHASER FILED REFUND CLAIMS.] If a purchaser 388.15 refund claim is filed under section 289A.50, subdivision 2a, and 388.16 the basis for the claim is that the purchaser was improperly 388.17 charged tax on an improvement to real property or on the 388.18 purchase of nontaxable services, sales or use tax may be 388.19 assessed for the cost of materials used to make the real 388.20 property improvement or to perform the nontaxable service. The 388.21 assessment may be made against the person making the improvement 388.22 to real property or the sale of nontaxable services, within the 388.23 period prescribed in subdivision 1, or within one year after the 388.24 date of the refund order, whichever is later. 388.25 [EFFECTIVE DATE.] This section is effective for purchaser 388.26 refund claims filed on or after July 1, 2005. 388.27 Sec. 3. Minnesota Statutes 2004, section 289A.40, 388.28 subdivision 2, is amended to read: 388.29 Subd. 2. [BAD DEBT LOSS.] If a claim relates to an 388.30 overpayment because of a failure to deduct a loss due to a bad 388.31 debt or to a security becoming worthless, the claim is 388.32 considered timely if filed within seven years from the date 388.33 prescribed for the filing of the return. A claim relating to an 388.34 overpayment of taxes under chapter 297A must be filed within 388.35 3-1/2 years from the date prescribed for filing the return, plus 388.36 any extensions granted for filing the return, but only if filed 389.1 within the extended time. The refund or credit is limited to 389.2 the amount of overpayment attributable to the loss. "Bad debt" 389.3 for purposes of this subdivision, has the same meaning as that 389.4 term is used in United States Code, title 26, section 166, 389.5 except that for a claim relating to an overpayment of taxes 389.6 under chapter 297A the following are excluded from the 389.7 calculation of bad debt: financing charges or interest; sales 389.8 or use taxes charged on the purchase price; uncollectible 389.9 amounts on property that remain in the possession of the seller 389.10 until the full purchase price is paid; expenses incurred in 389.11 attempting to collect any debt; and repossessed property. 389.12 [EFFECTIVE DATE.] For claims relating to an overpayment of 389.13 taxes under chapter 297A, this section is effective for sales 389.14 and purchases made on or after January 1, 2004; for all other 389.15 bad debts or claims, this section is effective on or after July 389.16 1, 2003. 389.17 Sec. 4. Minnesota Statutes 2004, section 289A.40, is 389.18 amended by adding a subdivision to read: 389.19 Subd. 5. [PURCHASER FILED REFUND CLAIMS.] A claim for 389.20 refund of taxes paid on a transaction not subject to tax under 389.21 chapter 297A, where the purchaser may apply directly to the 389.22 commissioner under section 289A.50, subdivision 2a, must be 389.23 filed within 3-1/2 years from the 20th day of the month 389.24 following the month of the invoice date for the purchase. 389.25 [EFFECTIVE DATE.] This section is effective for claims 389.26 filed on or after the day following final enactment. 389.27 Sec. 5. Minnesota Statutes 2004, section 289A.40, is 389.28 amended by adding a subdivision to read: 389.29 Subd. 6. [CAPITAL EQUIPMENT REFUND CLAIMS.] A claim for 389.30 refund for taxes paid under chapter 297A on capital equipment 389.31 must be filed within 3-1/2 years from the 20th day of the month 389.32 following the month of the invoice date for the purchase of the 389.33 capital equipment. A claim for refund for taxes imposed on 389.34 capital equipment under section 297A.63 must be filed within 389.35 3-1/2 years from the date prescribed for filing the return, or 389.36 one year from the date of an order assessing tax under section 390.1 289A.37, subdivision 1, upon payment in full of the tax, 390.2 penalties, and interest shown on the order, whichever period 390.3 expires later. 390.4 [EFFECTIVE DATE.] This section is effective for claims 390.5 filed on or after the day following final enactment. 390.6 Sec. 6. Minnesota Statutes 2004, section 297A.61, 390.7 subdivision 3, is amended to read: 390.8 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 390.9 include, but are not limited to, each of the transactions listed 390.10 in this subdivision. 390.11 (b) Sale and purchase include: 390.12 (1) any transfer of title or possession, or both, of 390.13 tangible personal property, whether absolutely or conditionally, 390.14 for a consideration in money or by exchange or barter; and 390.15 (2) the leasing of or the granting of a license to use or 390.16 consume, for a consideration in money or by exchange or barter, 390.17 tangible personal property, other than a manufactured home used 390.18 for residential purposes for a continuous period of 30 days or 390.19 more. 390.20 (c) Sale and purchase include the production, fabrication, 390.21 printing, or processing of tangible personal property for a 390.22 consideration for consumers who furnish either directly or 390.23 indirectly the materials used in the production, fabrication, 390.24 printing, or processing. 390.25 (d) Sale and purchase include the preparing for a 390.26 consideration of food. Notwithstanding section 297A.67, 390.27 subdivision 2, taxable food includes, but is not limited to, the 390.28 following: 390.29 (1) prepared food sold by the retailer; 390.30 (2) soft drinks; 390.31 (3) candy;and390.32 (4) dietary supplements; and 390.33 (5) all food sold through vending machines. 390.34 (e) A sale and a purchase includes the furnishing for a 390.35 consideration of electricity, gas, water, or steam for use or 390.36 consumption within this state. 391.1 (f) A sale and a purchase includes the transfer for a 391.2 consideration of prewritten computer software whether delivered 391.3 electronically, by load and leave, or otherwise. 391.4 (g) A sale and a purchase includes the furnishing for a 391.5 consideration of the following services: 391.6 (1) the privilege of admission to places of amusement, 391.7 recreational areas, or athletic events, and the making available 391.8 of amusement devices, tanning facilities, reducing salons, steam 391.9 baths, turkish baths, health clubs, and spas or athletic 391.10 facilities; 391.11 (2) lodging and related services by a hotel, rooming house, 391.12 resort, campground, motel, or trailer camp and the granting of 391.13 any similar license to use real property in a specific facility, 391.14 other than the renting or leasing of it for a continuous period 391.15 of 30 days or more under an enforceable written agreement that 391.16 may not be terminated without prior notice; 391.17 (3) nonresidential parking services, whether on a 391.18 contractual, hourly, or other periodic basis, except for parking 391.19 at a meter; 391.20 (4) the granting of membership in a club, association, or 391.21 other organization if: 391.22 (i) the club, association, or other organization makes 391.23 available for the use of its members sports and athletic 391.24 facilities, without regard to whether a separate charge is 391.25 assessed for use of the facilities; and 391.26 (ii) use of the sports and athletic facility is not made 391.27 available to the general public on the same basis as it is made 391.28 available to members. 391.29 Granting of membership means both onetime initiation fees and 391.30 periodic membership dues. Sports and athletic facilities 391.31 include golf courses; tennis, racquetball, handball, and squash 391.32 courts; basketball and volleyball facilities; running tracks; 391.33 exercise equipment; swimming pools; and other similar athletic 391.34 or sports facilities; 391.35 (5) delivery of aggregate materials and concrete block by a 391.36 third party if the delivery would be subject to the sales tax if 392.1 provided by the seller of the aggregate material or concrete 392.2 block; and 392.3 (6) services as provided in this clause: 392.4 (i) laundry and dry cleaning services including cleaning, 392.5 pressing, repairing, altering, and storing clothes, linen 392.6 services and supply, cleaning and blocking hats, and carpet, 392.7 drapery, upholstery, and industrial cleaning. Laundry and dry 392.8 cleaning services do not include services provided by coin 392.9 operated facilities operated by the customer; 392.10 (ii) motor vehicle washing, waxing, and cleaning services, 392.11 including services provided by coin operated facilities operated 392.12 by the customer, and rustproofing, undercoating, and towing of 392.13 motor vehicles; 392.14 (iii) building and residential cleaning, maintenance, and 392.15 disinfecting and exterminating services; 392.16 (iv) detective, security, burglar, fire alarm, and armored 392.17 car services; but not including services performed within the 392.18 jurisdiction they serve by off-duty licensed peace officers as 392.19 defined in section 626.84, subdivision 1, or services provided 392.20 by a nonprofit organization for monitoring and electronic 392.21 surveillance of persons placed on in-home detention pursuant to 392.22 court order or under the direction of the Minnesota Department 392.23 of Corrections; 392.24 (v) pet grooming services; 392.25 (vi) lawn care, fertilizing, mowing, spraying and sprigging 392.26 services; garden planting and maintenance; tree, bush, and shrub 392.27 pruning, bracing, spraying, and surgery; indoor plant care; 392.28 tree, bush, shrub, and stump removal; and tree trimming for 392.29 public utility lines. Services performed under a construction 392.30 contract for the installation of shrubbery, plants, sod, trees, 392.31 bushes, and similar items are not taxable; 392.32 (vii) massages, except when provided by a licensed health 392.33 care facility or professional or upon written referral from a 392.34 licensed health care facility or professional for treatment of 392.35 illness, injury, or disease; and 392.36 (viii) the furnishing of lodging, board, and care services 393.1 for animals in kennels and other similar arrangements, but 393.2 excluding veterinary and horse boarding services. 393.3 In applying the provisions of this chapter, the terms 393.4 "tangible personal property" and "sales at retail" include 393.5 taxable services listed in clause (6), items (i) to (vi) and 393.6 (viii), and the provision of these taxable services, unless 393.7 specifically provided otherwise. Services performed by an 393.8 employee for an employer are not taxable. Services performed by 393.9 a partnership or association for another partnership or 393.10 association are not taxable if one of the entities owns or 393.11 controls more than 80 percent of the voting power of the equity 393.12 interest in the other entity. Services performed between 393.13 members of an affiliated group of corporations are not taxable. 393.14 For purposes of the preceding sentence, "affiliated group of 393.15 corporations" includes those entities that would be classified 393.16 as members of an affiliated group under United States Code, 393.17 title 26, section 1504, and that are eligible to file a 393.18 consolidated tax return for federal income tax purposes. 393.19 (h) A sale and a purchase includes the furnishing for a 393.20 consideration of tangible personal property or taxable services 393.21 by the United States or any of its agencies or 393.22 instrumentalities, or the state of Minnesota, its agencies, 393.23 instrumentalities, or political subdivisions. 393.24 (i) A sale and a purchase includes the furnishing for a 393.25 consideration of telecommunications services, including cable 393.26 television services and direct satellite services. 393.27 Telecommunications services are taxed to the extent allowed 393.28 under federal law. 393.29 (j) A sale and a purchase includes the furnishing for a 393.30 consideration of installation if the installation charges would 393.31 be subject to the sales tax if the installation were provided by 393.32 the seller of the item being installed. 393.33 (k) A sale and a purchase includes the rental of a vehicle 393.34 by a motor vehicle dealer to a customer when (1) the vehicle is 393.35 rented by the customer for a consideration, or (2) the motor 393.36 vehicle dealer is reimbursed pursuant to a service contract as 394.1 defined in section 65B.29, subdivision 1, clause (1). 394.2 [EFFECTIVE DATE.] This section is effective the day 394.3 following final enactment. 394.4 Sec. 7. Minnesota Statutes 2004, section 297A.61, 394.5 subdivision 4, is amended to read: 394.6 Subd. 4. [RETAIL SALE.] (a) A "retail sale" means any 394.7 sale, lease, or rental for any purpose, other than resale, 394.8 sublease, or subrent of items by the purchaser in the normal 394.9 course of business as defined in subdivision 21. 394.10 (b) A sale of property used by the owner only by leasing it 394.11 to others or by holding it in an effort to lease it, and put to 394.12 no use by the owner other than resale after the lease or effort 394.13 to lease, is a sale of property for resale. 394.14 (c) A sale of master computer software that is purchased 394.15 and used to make copies for sale or lease is a sale of property 394.16 for resale. 394.17 (d) A sale of building materials, supplies, and equipment 394.18 to owners, contractors, subcontractors, or builders for the 394.19 erection of buildings or the alteration, repair, or improvement 394.20 of real property is a retail sale in whatever quantity sold, 394.21 whether the sale is for purposes of resale in the form of real 394.22 property or otherwise. 394.23 (e) A sale of carpeting, linoleum, or similar floor 394.24 covering to a person who provides for installation of the floor 394.25 covering is a retail sale and not a sale for resale since a sale 394.26 of floor covering which includes installation is a contract for 394.27 the improvement of real property. 394.28 (f) A sale of shrubbery, plants, sod, trees, and similar 394.29 items to a person who provides for installation of the items is 394.30 a retail sale and not a sale for resale since a sale of 394.31 shrubbery, plants, sod, trees, and similar items that includes 394.32 installation is a contract for the improvement of real property. 394.33 (g) A sale of tangible personal property that is awarded as 394.34 prizes is a retail sale and is not considered a sale of property 394.35 for resale. 394.36 (h) A sale of tangible personal property utilized or 395.1 employed in the furnishing or providing of services under 395.2 subdivision 3, paragraph (g), clause (1), including, but not 395.3 limited to, property given as promotional items, is a retail 395.4 sale and is not considered a sale of property for resale. 395.5 (i) A sale of tangible personal property used in conducting 395.6 lawful gambling under chapter 349 or the state lottery under 395.7 chapter 349A, including, but not limited to, property given as 395.8 promotional items, is a retail sale and is not considered a sale 395.9 of property for resale. 395.10 (j) A sale of machines, equipment, or devices that are used 395.11 to furnish, provide, or dispense goods or services, including, 395.12 but not limited to, coin-operated devices, is a retail sale and 395.13 is not considered a sale of property for resale. 395.14 (k) In the case of a lease, a retail sale occurs when an 395.15 obligation to make a lease payment becomes due under the terms 395.16 of the agreement or the trade practices of the lessor. 395.17 (l) In the case of a conditional sales contract, a retail 395.18 sale occurs upon the transfer of title or possession of the 395.19 tangible personal property. 395.20 [EFFECTIVE DATE.] This section is effective the day 395.21 following final enactment. 395.22 Sec. 8. Minnesota Statutes 2004, section 297A.64, 395.23 subdivision 4, is amended to read: 395.24 Subd. 4. [EXEMPTIONS.] (a) The tax and the fee imposed by 395.25 this section do not apply to a lease or rental of (1) a vehicle 395.26 to be used by the lessee to provide a licensed taxi service; (2) 395.27 a hearse or limousine used in connection with a burial or 395.28 funeral service; or (3) a van designed or adapted primarily for 395.29 transporting property rather than passengers. The tax and the 395.30 fee imposed under this section do not apply when the lease or 395.31 rental of a vehicle is exempt from the tax imposed under section 395.32 297A.62, subdivision 1. 395.33 (b) The lessor may elect not to charge the fee imposed in 395.34 subdivision 2 if in the previous calendar year the lessor had no 395.35 more than 20 vehicles available for lease that would have been 395.36 subject to tax under this section, or no more than $50,000 in 396.1 gross receipts that would have been subject to tax under this 396.2 section. 396.3 [EFFECTIVE DATE.] This section is effective the day 396.4 following final enactment. 396.5 Sec. 9. Minnesota Statutes 2004, section 297A.668, 396.6 subdivision 1, is amended to read: 396.7 Subdivision 1. [ APPLICABILITY.] The provisions of this 396.8 section apply regardless of the characterization of a product as 396.9 tangible personal property, a digital good, or a service; but do 396.10 not apply to telecommunications services,or the sales of motor 396.11 vehicles, watercraft, aircraft, modular homes, manufactured396.12homes, or mobile homes. These provisions only apply to 396.13 determine a seller's obligation to pay or collect and remit a 396.14 sales or use tax with respect to the seller's sale of a 396.15 product. These provisions do not affect the obligation of a 396.16 seller as purchaser to remit tax on the use of the product. 396.17 [EFFECTIVE DATE.] This section is effective the day 396.18 following final enactment. 396.19 Sec. 10. Minnesota Statutes 2004, section 297A.668, 396.20 subdivision 5, is amended to read: 396.21 Subd. 5. [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 396.22 including lease or rental, of transportation equipment shall be 396.23 sourced the same as a retail sale in accordance with the 396.24 provisions of subdivision 2, notwithstanding the exclusion of 396.25 lease or rental in subdivision 2. 396.26 (b) "Transportation equipment" means any of the following: 396.27 (1) locomotives and railcars that are utilized for the 396.28 carriage of persons or property in interstate commerce;and/or396.29 (2) trucks and truck-tractors with a gross vehicle weight 396.30 rating (GVWR) of 10,001 pounds or greater, trailers, 396.31 semitrailers, or passenger buses that are: 396.32 (i) registered through the international registration plan; 396.33 and 396.34 (ii) operated under authority of a carrier authorized and 396.35 certified by the United States Department of Transportation or 396.36 another federal authority to engage in the carriage of persons 397.1 or property in interstate commerce; 397.2 (3) aircraft that are operated by air carriers authorized 397.3 and certificated by the United States Department of 397.4 Transportation or another federal or a foreign authority to 397.5 engage in the carriage of persons or property in interstate 397.6 commerce; or 397.7 (4) containers designed for use on and component parts 397.8 attached or secured on the transportation equipment described in 397.9 items (1) through (3). 397.10 [EFFECTIVE DATE.] This section is effective for sales and 397.11 purchases made on or after January 1, 2004. 397.12 Sec. 11. Minnesota Statutes 2004, section 297A.67, 397.13 subdivision 2, is amended to read: 397.14 Subd. 2. [FOOD AND FOOD INGREDIENTS.] Except as otherwise 397.15 provided in this subdivision, food and food ingredients are 397.16 exempt. For purposes of this subdivision, "food" and "food 397.17 ingredients" mean substances, whether in liquid, concentrated, 397.18 solid, frozen, dried, or dehydrated form, that are sold for 397.19 ingestion or chewing by humans and are consumed for their taste 397.20 or nutritional value. Food and food ingredients exempt under 397.21 this subdivision do not include candy, soft drinks, food sold 397.22 through vending machines, dietary supplements, and prepared 397.23 foods. Food and food ingredients do not include alcoholic 397.24 beverages, dietary supplements,and tobacco. For purposes of 397.25 this subdivision, "alcoholic beverages" means beverages that are 397.26 suitable for human consumption and contain one-half of one 397.27 percent or more of alcohol by volume. For purposes of this 397.28 subdivision, "tobacco" means cigarettes, cigars, chewing or pipe 397.29 tobacco, or any other item that contains tobacco. For purposes 397.30 of this subdivision, "dietary supplements" means any product, 397.31 other than tobacco, intended to supplement the diet that: 397.32 (1) contains one or more of the following dietary 397.33 ingredients: 397.34 (i) a vitamin; 397.35 (ii) a mineral; 397.36 (iii) an herb or other botanical; 398.1 (iv) an amino acid; 398.2 (v) a dietary substance for use by humans to supplement the 398.3 diet by increasing the total dietary intake; and 398.4 (vi) a concentrate, metabolite, constituent, extract, or 398.5 combination of any ingredient described in items (i) to (v); 398.6 (2) is intended for ingestion in tablet, capsule, powder, 398.7 softgel, gelcap, or liquid form, or if not intended for 398.8 ingestion in such form, is not represented as conventional food 398.9 and is not represented for use as a sole item of a meal or of 398.10 the diet; and 398.11 (3) is required to be labeled as a dietary supplement, 398.12 identifiable by the supplement facts box found on the label and 398.13 as required pursuant to Code of Federal Regulations, title 21, 398.14 section 101.36. 398.15 [EFFECTIVE DATE.] This section is effective for sales made 398.16 on or after the day following final enactment. 398.17 Sec. 12. Minnesota Statutes 2004, section 297A.68, 398.18 subdivision 2, is amended to read: 398.19 Subd. 2. [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 398.20 (a) Materials stored, used, or consumed in industrial production 398.21 of personal property intended to be sold ultimately at retail 398.22 are exempt, whether or not the item so used becomes an 398.23 ingredient or constituent part of the property produced. 398.24 Materials that qualify for this exemption include, but are not 398.25 limited to, the following: 398.26 (1) chemicals, including chemicals used for cleaning food 398.27 processing machinery and equipment; 398.28 (2) materials, including chemicals, fuels, and electricity 398.29 purchased by persons engaged in industrial production to treat 398.30 waste generated as a result of the production process; 398.31 (3) fuels, electricity, gas, and steam used or consumed in 398.32 the production process, except that electricity, gas, or steam 398.33 used for space heating, cooling, or lighting is exempt if (i) it 398.34 is in excess of the average climate control or lighting for the 398.35 production area, and (ii) it is necessary to produce that 398.36 particular product; 399.1 (4) petroleum products and lubricants; 399.2 (5) packaging materials, including returnable containers 399.3 used in packaging food and beverage products; 399.4 (6) accessory tools, equipment, and other items that are 399.5 separate detachable units with an ordinary useful life of less 399.6 than 12 months used in producing a direct effect upon the 399.7 product; and 399.8 (7) the following materials, tools, and equipment used in 399.9 metalcasting: crucibles, thermocouple protection sheaths and 399.10 tubes, stalk tubes, refractory materials, molten metal filters 399.11 and filter boxes, degassing lances, and base blocks. 399.12 (b) This exemption does not include: 399.13 (1) machinery, equipment, implements, tools, accessories, 399.14 appliances, contrivances and furniture and fixtures, except 399.15 those listed in paragraph (a), clause (6); and 399.16 (2) petroleum and special fuels used in producing or 399.17 generating power for propelling ready-mixed concrete trucks on 399.18 the public highways of this state. 399.19 (c) Industrial production includes, but is not limited to, 399.20 research, development, design or production of any tangible 399.21 personal property, manufacturing, processing (other than by 399.22 restaurants and consumers) of agricultural products (whether 399.23 vegetable or animal), commercial fishing, refining, smelting, 399.24 reducing, brewing, distilling, printing, mining, quarrying, 399.25 lumbering, generating electricity, the production of road 399.26 building materials, and the research, development, design, or 399.27 production of computer software. Industrial production does not 399.28 include painting, cleaning, repairing or similar processing of 399.29 property except as part of the original manufacturing process. 399.30 Industrial production does not include the furnishing of 399.31 services listed in section 297A.61, subdivision 3, paragraph 399.32 (g), clause (6), items (i) to (vi) and (viii). 399.33 [EFFECTIVE DATE.] This section is effective the day 399.34 following final enactment. 399.35 Sec. 13. Minnesota Statutes 2004, section 297A.68, 399.36 subdivision 5, is amended to read: 400.1 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 400.2 exempt. The tax must be imposed and collected as if the rate 400.3 under section 297A.62, subdivision 1, applied, and then refunded 400.4 in the manner provided in section 297A.75. 400.5 "Capital equipment" means machinery and equipment purchased 400.6 or leased, and used in this state by the purchaser or lessee 400.7 primarily for manufacturing, fabricating, mining, or refining 400.8 tangible personal property to be sold ultimately at retail if 400.9 the machinery and equipment are essential to the integrated 400.10 production process of manufacturing, fabricating, mining, or 400.11 refining. Capital equipment also includes machinery and 400.12 equipment used primarily to electronically transmit results 400.13 retrieved by a customer of an on-line computerized data 400.14 retrieval system. 400.15 (b) Capital equipment includes, but is not limited to: 400.16 (1) machinery and equipment used to operate, control, or 400.17 regulate the production equipment; 400.18 (2) machinery and equipment used for research and 400.19 development, design, quality control, and testing activities; 400.20 (3) environmental control devices that are used to maintain 400.21 conditions such as temperature, humidity, light, or air pressure 400.22 when those conditions are essential to and are part of the 400.23 production process; 400.24 (4) materials and supplies used to construct and install 400.25 machinery or equipment; 400.26 (5) repair and replacement parts, including accessories, 400.27 whether purchased as spare parts, repair parts, or as upgrades 400.28 or modifications to machinery or equipment; 400.29 (6) materials used for foundations that support machinery 400.30 or equipment; 400.31 (7) materials used to construct and install special purpose 400.32 buildings used in the production process; 400.33 (8) ready-mixed concrete equipment in which the ready-mixed 400.34 concrete is mixed as part of the delivery process regardless if 400.35 mounted on a chassis, repair parts for ready-mixed concrete 400.36 trucks, and leases of ready-mixed concrete trucks; and 401.1 (9) machinery or equipment used for research, development, 401.2 design, or production of computer software. 401.3 (c) Capital equipment does not include the following: 401.4 (1) motor vehicles taxed under chapter 297B; 401.5 (2) machinery or equipment used to receive or store raw 401.6 materials; 401.7 (3) building materials, except for materials included in 401.8 paragraph (b), clauses (6) and (7); 401.9 (4) machinery or equipment used for nonproduction purposes, 401.10 including, but not limited to, the following: plant security, 401.11 fire prevention, first aid, and hospital stations; support 401.12 operations or administration; pollution control; and plant 401.13 cleaning, disposal of scrap and waste, plant communications, 401.14 space heating, cooling, lighting, or safety; 401.15 (5) farm machinery and aquaculture production equipment as 401.16 defined by section 297A.61, subdivisions 12 and 13; 401.17 (6) machinery or equipment purchased and installed by a 401.18 contractor as part of an improvement to real property;or401.19 (7) machinery and equipment used by restaurants in the 401.20 furnishing, preparing, or serving of prepared foods as defined 401.21 in section 297A.61, subdivision 31; 401.22 (8) machinery and equipment used to furnish the services 401.23 listed in section 297A.61, subdivision 3, paragraph (g), clause 401.24 (6), items (i) to (vi) and (viii); or 401.25 (9) any other item that is not essential to the integrated 401.26 process of manufacturing, fabricating, mining, or refining. 401.27 (d) For purposes of this subdivision: 401.28 (1) "Equipment" means independent devices or tools separate 401.29 from machinery but essential to an integrated production 401.30 process, including computers and computer software, used in 401.31 operating, controlling, or regulating machinery and equipment; 401.32 and any subunit or assembly comprising a component of any 401.33 machinery or accessory or attachment parts of machinery, such as 401.34 tools, dies, jigs, patterns, and molds. 401.35 (2) "Fabricating" means to make, build, create, produce, or 401.36 assemble components or property to work in a new or different 402.1 manner. 402.2 (3) "Integrated production process" means a process or 402.3 series of operations through which tangible personal property is 402.4 manufactured, fabricated, mined, or refined. For purposes of 402.5 this clause, (i) manufacturing begins with the removal of raw 402.6 materials from inventory and ends when the last process prior to 402.7 loading for shipment has been completed; (ii) fabricating begins 402.8 with the removal from storage or inventory of the property to be 402.9 assembled, processed, altered, or modified and ends with the 402.10 creation or production of the new or changed product; (iii) 402.11 mining begins with the removal of overburden from the site of 402.12 the ores, minerals, stone, peat deposit, or surface materials 402.13 and ends when the last process before stockpiling is completed; 402.14 and (iv) refining begins with the removal from inventory or 402.15 storage of a natural resource and ends with the conversion of 402.16 the item to its completed form. 402.17 (4) "Machinery" means mechanical, electronic, or electrical 402.18 devices, including computers and computer software, that are 402.19 purchased or constructed to be used for the activities set forth 402.20 in paragraph (a), beginning with the removal of raw materials 402.21 from inventory through completion of the product, including 402.22 packaging of the product. 402.23 (5) "Machinery and equipment used for pollution control" 402.24 means machinery and equipment used solely to eliminate, prevent, 402.25 or reduce pollution resulting from an activity described in 402.26 paragraph (a). 402.27 (6) "Manufacturing" means an operation or series of 402.28 operations where raw materials are changed in form, composition, 402.29 or condition by machinery and equipment and which results in the 402.30 production of a new article of tangible personal property. For 402.31 purposes of this subdivision, "manufacturing" includes the 402.32 generation of electricity or steam to be sold at retail. 402.33 (7) "Mining" means the extraction of minerals, ores, stone, 402.34 or peat. 402.35 (8) "On-line data retrieval system" means a system whose 402.36 cumulation of information is equally available and accessible to 403.1 all its customers. 403.2 (9) "Primarily" means machinery and equipment used 50 403.3 percent or more of the time in an activity described in 403.4 paragraph (a). 403.5 (10) "Refining" means the process of converting a natural 403.6 resource to an intermediate or finished product, including the 403.7 treatment of water to be sold at retail. 403.8 [EFFECTIVE DATE.] This section is effective the day 403.9 following final enactment. 403.10 Sec. 14. Minnesota Statutes 2004, section 297A.68, 403.11 subdivision 35, is amended to read: 403.12 Subd. 35. [TELECOMMUNICATIONS EQUIPMENT.] (a) 403.13 Telecommunications machinery and equipment purchased or leased 403.14 for use directly by a telecommunications service provider 403.15 primarily in the provision of telecommunications services that 403.16 are ultimately to be sold at retail are exempt, regardless of 403.17 whether purchased by the owner, a contractor, or a subcontractor. 403.18 (b) For purposes of this subdivision, "telecommunications 403.19 machinery and equipment" includes, but is not limited to: 403.20 (1) machinery, equipment, and fixtures utilized in 403.21 receiving, initiating, amplifying, processing, transmitting, 403.22 retransmitting, recording, switching, or monitoring 403.23 telecommunications services, such as computers, transformers, 403.24 amplifiers, routers, bridges, repeaters, multiplexers, and other 403.25 items performing comparable functions; 403.26 (2) machinery, equipment, and fixtures used in the 403.27 transportation of telecommunications services, radio 403.28 transmitters and receivers, satellite equipment, microwave 403.29 equipment, and other transporting media, but not wire, cable, 403.30 fiber, poles, or conduit; 403.31 (3) ancillary machinery, equipment, and fixtures that 403.32 regulate, control, protect, or enable the machinery in clauses 403.33 (1) and (2) to accomplish its intended function, such as 403.34 auxiliary power supply, test equipment, towers, heating, 403.35 ventilating, and air conditioning equipment necessary to the 403.36 operation of the telecommunications equipment; and software 404.1 necessary to the operation of the telecommunications equipment; 404.2 and 404.3 (4) repair and replacement parts, including accessories, 404.4 whether purchased as spare parts, repair parts, or as upgrades 404.5 or modifications to qualified machinery or equipment. 404.6 (c) For purposes of this subdivision, "telecommunications 404.7 services" means telecommunications services as defined in 404.8 section 297A.61, subdivision 24,paragraphparagraphs (a),only404.9 (c), and (d). 404.10 [EFFECTIVE DATE.] This section is effective the day 404.11 following final enactment. 404.12 Sec. 15. Minnesota Statutes 2004, section 297A.68, 404.13 subdivision 39, is amended to read: 404.14 Subd. 39. [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 404.15 tangible personal property or services is exempt from tax or a 404.16 tax rate increase for a period of six months from the effective 404.17 date of the law change that results in the imposition of the tax 404.18 or the tax rate increase under this chapter if: 404.19 (1) the act imposing the tax or increasing the tax rate 404.20 does not have transitional effective date language for existing 404.21 construction contracts and construction bids; and 404.22 (2) the requirements of paragraph (b) are met. 404.23 (b) A sale is tax exempt under paragraph (a) if it meets 404.24 the requirements of either clause (1) or (2): 404.25 (1) For a construction contract: 404.26 (i) the goods or services sold must be used for the 404.27 performance of a bona fide written lump sum or fixed price 404.28 construction contract; 404.29 (ii) the contract must be entered into before the date the 404.30 goods or services become subject to the sales tax or the tax 404.31 rate was increased; 404.32 (iii) the contract must not provide for allocation of 404.33 future taxes; and 404.34 (iv) for each qualifying contract the contractor must give 404.35 the seller documentation of the contract on which an exemption 404.36 is to be claimed. 405.1 (2) For a construction bid: 405.2 (i) the goods or services sold must be used pursuant to an 405.3 obligation of a bid or bids; 405.4 (ii) the bid or bids must be submitted and accepted before 405.5 the date the goods or services became subject to the sales 405.6 tax or the tax rate was increased; 405.7 (iii) the bid or bids must not be able to be withdrawn, 405.8 modified, or changed without forfeiting a bond; and 405.9 (iv) for each qualifying bid, the contractor must give the 405.10 seller documentation of the bid on which an exemption is to be 405.11 claimed. 405.12 [EFFECTIVE DATE.] This section is effective the day 405.13 following final enactment. 405.14 Sec. 16. Minnesota Statutes 2004, section 297A.99, 405.15 subdivision 4, is amended to read: 405.16 Subd. 4. [TAX BASE.] (a) The tax applies to sales taxable 405.17 under this chapter that occur within the political subdivision. 405.18 (b) Taxable goods or services are subject to a political 405.19 subdivision's sales tax, if they areperformed either:405.20(1) within the political subdivision, or405.21(2) partly within and partly without the political405.22subdivision and more of the service is performed within the405.23political subdivision, based on the cost of performancesourced 405.24 to the political subdivision pursuant to section 297A.668. 405.25 [EFFECTIVE DATE.] This section is effective for sales made 405.26 on or after January 1, 2004. 405.27 Sec. 17. Minnesota Statutes 2004, section 297A.99, 405.28 subdivision 7, is amended to read: 405.29 Subd. 7. [EXEMPTIONS.] (a) All goods or services that are 405.30 otherwise exempt from taxation under this chapter are exempt 405.31 from a political subdivision's tax. 405.32 (b) The gross receipts from the sale of tangible personal 405.33 property that meets therequirementrequirements of section 405.34 297A.68,subdivisionsubdivisions 11, 15, and 16 are exempt, 405.35 except the qualification test applies based on the boundaries of 405.36 the political subdivision instead of the state of Minnesota. 406.1 (c) All mobile transportation equipment, and parts and 406.2 accessories attached to or to be attached to the equipment are 406.3 exempt, if purchased by a holder of a motor carrier direct pay 406.4 permit under section 297A.90. 406.5 [EFFECTIVE DATE.] This section is effective the day 406.6 following final enactment. 406.7 Sec. 18. [REPEALER.] 406.8 Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200, 406.9 subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5 406.10 and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1 406.11 and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200; 406.12 8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 406.13 5; and 8130.8800, subpart 4, are repealed. 406.14 [EFFECTIVE DATE.] This section is effective the day 406.15 following final enactment. 406.16 ARTICLE 12 406.17 DEPARTMENT OF REVENUE 406.18 SPECIAL TAXES 406.19 Section 1. Minnesota Statutes 2004, section 287.04, is 406.20 amended to read: 406.21 287.04 [EXEMPTIONS.] 406.22 The tax imposed by section 287.035 does not apply to: 406.23 (a) A decree of marriage dissolution or an instrument made 406.24 pursuant to it. 406.25 (b) A mortgage given to correct a misdescription of the 406.26 mortgaged property. 406.27 (c) A mortgage or other instrument that adds additional 406.28 security for the same debt for which mortgage registry tax has 406.29 been paid. 406.30 (d) A contract for the conveyance of any interest in real 406.31 property, including a contract for deed. 406.32 (e) A mortgage secured by real property subject to the 406.33 minerals production tax of sections 298.24 to 298.28. 406.34 (f) The principal amount of a mortgage loan made under a 406.35 low and moderate income or other affordable housing program, if 406.36 the mortgagee is a federal, state, or local government agency. 407.1 (g) Mortgages granted by fraternal benefit societies 407.2 subject to section 64B.24. 407.3 (h) A mortgage amendment or extension, as defined in 407.4 section 287.01. 407.5 (i) An agricultural mortgage if the proceeds of the loan 407.6 secured by the mortgage are used to acquire or improve real 407.7 property classified under section 273.13, subdivision 23, 407.8 paragraph (a), or (b), clause (1), (2), or (3). 407.9 (j) A mortgage on an armory building as set forth in 407.10 section 193.147. 407.11 [EFFECTIVE DATE.] This section is effective the day 407.12 following final enactment. 407.13 Sec. 2. Minnesota Statutes 2004, section 295.50, is 407.14 amended by adding a subdivision to read: 407.15 Subd. 1a. [BLOOD COMPONENTS.] "Blood components" means the 407.16 parts of the blood that are separated from blood by physical or 407.17 mechanical means and are intended for transfusion. Blood 407.18 components do not include blood derivatives. 407.19 [EFFECTIVE DATE.] This section is effective for gross 407.20 revenues received after December 31, 2004. 407.21 Sec. 3. Minnesota Statutes 2004, section 295.50, 407.22 subdivision 3, is amended to read: 407.23 Subd. 3. [GROSS REVENUES.] "Gross revenues" are total 407.24 amounts received in money or otherwise by: 407.25 (1) a hospital for patient services; 407.26 (2) a surgical center for patient services; 407.27 (3) a health care provider, other than a staff model health 407.28 carrier, for patient services; 407.29 (4) a wholesale drug distributor for sale or distribution 407.30 of legend drugs that are delivered in Minnesota by the wholesale 407.31 drug distributor, by common carrier, or by mail, unless the 407.32 legend drugs are delivered to another wholesale drug distributor 407.33 who sells legend drugs exclusively at wholesale. Legend drugs 407.34 do not include nutritional products as defined in Minnesota 407.35 Rules, part 9505.0325, and blood and blood components; and 407.36 (5) a staff model health plan company as gross premiums for 408.1 enrollees, co-payments, deductibles, coinsurance, and fees for 408.2 patient services. 408.3 [EFFECTIVE DATE.] This section is effective for gross 408.4 revenues received after December 31, 2004. 408.5 Sec. 4. Minnesota Statutes 2004, section 295.53, 408.6 subdivision 1, is amended to read: 408.7 Subdivision 1. [EXEMPTIONS.] (a) The following payments 408.8 are excluded from the gross revenues subject to the hospital, 408.9 surgical center, or health care provider taxes under sections 408.10 295.50 to 295.59: 408.11 (1) payments received for services provided under the 408.12 Medicare program, including payments received from the 408.13 government, and organizations governed by sections 1833 and 1876 408.14 of title XVIII of the federal Social Security Act, United States 408.15 Code, title 42, section 1395, and enrollee deductibles, 408.16 coinsurance, and co-payments, whether paid by the Medicare 408.17 enrollee or by a Medicare supplemental coverage as defined in 408.18 section 62A.011, subdivision 3, clause (10), or by Medicaid 408.19 payments under title XIX of the federal Social Security Act. 408.20 Payments for services not covered by Medicare are taxable; 408.21 (2) payments received for home health care services; 408.22 (3) payments received from hospitals or surgical centers 408.23 for goods and services on which liability for tax is imposed 408.24 under section 295.52 or the source of funds for the payment is 408.25 exempt under clause (1), (7), (10), or (14); 408.26 (4) payments received from health care providers for goods 408.27 and services on which liability for tax is imposed under this 408.28 chapter or the source of funds for the payment is exempt under 408.29 clause (1), (7), (10), or (14); 408.30 (5) amounts paid for legend drugs, other than nutritional 408.31 products and blood and blood components, to a wholesale drug 408.32 distributor who is subject to tax under section 295.52, 408.33 subdivision 3, reduced by reimbursements received for legend 408.34 drugs otherwise exempt under this chapter; 408.35 (6) payments received by a health care provider or the 408.36 wholly owned subsidiary of a health care provider for care 409.1 provided outside Minnesota; 409.2 (7) payments received from the chemical dependency fund 409.3 under chapter 254B; 409.4 (8) payments received in the nature of charitable donations 409.5 that are not designated for providing patient services to a 409.6 specific individual or group; 409.7 (9) payments received for providing patient services 409.8 incurred through a formal program of health care research 409.9 conducted in conformity with federal regulations governing 409.10 research on human subjects. Payments received from patients or 409.11 from other persons paying on behalf of the patients are subject 409.12 to tax; 409.13 (10) payments received from any governmental agency for 409.14 services benefiting the public, not including payments made by 409.15 the government in its capacity as an employer or insurer or 409.16 payments made by the government for services provided under 409.17 general assistance medical care, the MinnesotaCare program, or 409.18 the medical assistance program governed by title XIX of the 409.19 federal Social Security Act, United States Code, title 42, 409.20 sections 1396 to 1396v; 409.21 (11) government payments received by the commissioner of 409.22 human services for state-operated services; 409.23 (12) payments received by a health care provider for 409.24 hearing aids and related equipment or prescription eyewear 409.25 delivered outside of Minnesota; 409.26 (13) payments received by an educational institution from 409.27 student tuition, student activity fees, health care service 409.28 fees, government appropriations, donations, or grants, and for 409.29 services identified in and provided under an individualized 409.30 education plan as defined in section 256B.0625 or Code of 409.31 Federal Regulations, chapter 34, section 300.340(a). Fee for 409.32 service payments and payments for extended coverage are taxable; 409.33 and 409.34 (14) payments received under the federal Employees Health 409.35 Benefits Act, United States Code, title 5, section 8909(f), as 409.36 amended by the Omnibus Reconciliation Act of 1990. Enrollee 410.1 deductibles, coinsurance, and co-payments are subject to tax. 410.2 (b) Payments received by wholesale drug distributors for 410.3 legend drugs sold directly to veterinarians or veterinary bulk 410.4 purchasing organizations are excluded from the gross revenues 410.5 subject to the wholesale drug distributor tax under sections 410.6 295.50 to 295.59. 410.7 [EFFECTIVE DATE.] The change made to paragraph (a), clause 410.8 (5), of this section is effective for amounts paid for blood and 410.9 blood components after December 31, 2004. The change made to 410.10 paragraph (a), clause (14), of this section is effective for 410.11 enrollee deductibles, coinsurance, and co-payments received 410.12 under the federal Employees Health Benefits Act on or after the 410.13 day following final enactment. 410.14 Sec. 5. Minnesota Statutes 2004, section 295.60, 410.15 subdivision 3, is amended to read: 410.16 Subd. 3. [PAYMENT.] (a) Each furrier shall make estimated 410.17 payments of the taxes for the calendar year in quarterly 410.18 installments to the commissioner by April 15, July 15, October 410.19 15, and January 15 of the following calendar year. 410.20 (b) Estimated tax payments are not required if: 410.21 (1) the tax for the current calendar year is less than 410.22 $500; or 410.23 (2) the tax for the previous calendar year is less than 410.24 $500, if the taxpayer had a tax liability and was doing business 410.25 the entire year. 410.26 (c) Underpayment of estimated installments bear interest at 410.27 the rate specified in section 270.75, from the due date of the 410.28 payment until paid or until the due date of the annual return, 410.29 whichever comes first. An underpayment of an estimated 410.30 installment is the difference between the amount paid and the 410.31 lesser of (1)90 percent of one-quarter of the tax for the410.32calendar yearthe tax for the actual gross revenues received 410.33 during the quarter, or (2) one-quarter of the total tax for the 410.34 previous calendar year if the taxpayer had a tax liability and 410.35 was doing business the entire year. 410.36 [EFFECTIVE DATE.] This section is effective for gross 411.1 revenues received after December 31, 2005. 411.2 Sec. 6. Minnesota Statutes 2004, section 296A.09, is 411.3 amended by adding a subdivision to read: 411.4 Subd. 6. [EXEMPTIONS.] The provisions of subdivisions 1 411.5 and 2 do not apply to aviation gasoline or jet fuel purchased by 411.6 an ambulance service licensed under chapter 144E. 411.7 [EFFECTIVE DATE.] This section is effective for purchases 411.8 made on or after July 1, 2005. 411.9 Sec. 7. Minnesota Statutes 2004, section 296A.22, is 411.10 amended by adding a subdivision to read: 411.11 Subd. 9. [ABATEMENT OF PENALTY.] (a) The commissioner may 411.12 by written order abate any penalty imposed under this section, 411.13 if in the commissioner's opinion there is reasonable cause to do 411.14 so. 411.15 (b) A request for abatement of penalty must be filed with 411.16 the commissioner within 60 days of the date the notice stating 411.17 that a penalty has been imposed was mailed to the taxpayer's 411.18 last known address. 411.19 (c) If the commissioner issues an order denying a request 411.20 for abatement of penalty, the taxpayer may file an 411.21 administrative appeal as provided in section 296A.25 or appeal 411.22 to Tax Court as provided in section 271.06. If the commissioner 411.23 does not issue an order on the abatement request within 60 days 411.24 from the date the request is received, the taxpayer may appeal 411.25 to Tax Court as provided in section 271.06. 411.26 [EFFECTIVE DATE.] This section is effective for penalties 411.27 imposed on or after the day following final enactment. 411.28 Sec. 8. Minnesota Statutes 2004, section 297E.01, 411.29 subdivision 5, is amended to read: 411.30 Subd. 5. [DISTRIBUTOR.] "Distributor" means a distributor 411.31 as defined in section 349.12, subdivision 11, or a person or 411.32 linked bingo game provider who markets, sells, or provides 411.33 gambling product to a person or entity for resale or use at the 411.34 retail level. 411.35 [EFFECTIVE DATE.] This section is effective the day 411.36 following final enactment. 412.1 Sec. 9. Minnesota Statutes 2004, section 297E.01, 412.2 subdivision 7, is amended to read: 412.3 Subd. 7. [GAMBLING PRODUCT.] "Gambling product" means 412.4 bingo hard cards, bingo paper, orsheets, or linked bingo paper 412.5 sheets; pull-tabs; tipboards; paddletickets and paddleticket 412.6 cards; raffle tickets; or any other ticket, card, board, 412.7 placard, device, or token that represents a chance, for which 412.8 consideration is paid, to win a prize. 412.9 [EFFECTIVE DATE.] This section is effective the day 412.10 following final enactment. 412.11 Sec. 10. Minnesota Statutes 2004, section 297E.01, is 412.12 amended by adding a subdivision to read: 412.13 Subd. 9a. [LINKED BINGO GAME.] "Linked bingo game" means a 412.14 bingo game played at two or more locations where licensed 412.15 organizations are authorized to conduct bingo, when there is a 412.16 common prize pool and a common selection of numbers or symbols 412.17 conducted at one location, and when the results of the selection 412.18 are transmitted to all participating locations by satellite, 412.19 telephone, or other means by a linked bingo game provider. 412.20 [EFFECTIVE DATE.] This section is effective the day 412.21 following final enactment. 412.22 Sec. 11. Minnesota Statutes 2004, section 297E.01, is 412.23 amended by adding a subdivision to read: 412.24 Subd. 9b. [LINKED BINGO GAME PROVIDER.] "Linked bingo game 412.25 provider" means any person who provides the means to link bingo 412.26 prizes in a linked bingo game, who provides linked bingo paper 412.27 sheets to the participating organizations, who provides linked 412.28 bingo prize management, and who provides the linked bingo game 412.29 system. 412.30 [EFFECTIVE DATE.] This section is effective the day 412.31 following final enactment. 412.32 Sec. 12. Minnesota Statutes 2004, section 297E.06, 412.33 subdivision 2, is amended to read: 412.34 Subd. 2. [BUSINESS RECORDS.] An organization shall 412.35 maintain records supporting the gambling activity reported to 412.36 the commissioner. Records include, but are not limited to, the 413.1 following items: 413.2 (1) all winning and unsold tickets, cards, or stubs for 413.3 pull-tab, tipboard, paddlewheel, and raffle games; 413.4 (2) all reports and statements, including checker's 413.5 records, for each bingo occasion; 413.6 (3) all cash journals and ledgers, deposit slips, register 413.7 tapes, and bank statements supporting gambling activity 413.8 receipts; 413.9 (4) all invoices that represent purchases of gambling 413.10 product; 413.11 (5) all canceled checks or copies of substitute checks as 413.12 defined in Public Law 108-100, section 3, check recorders, 413.13 journals and ledgers, vouchers, invoices, bank statements, and 413.14 other documents supporting gambling activity expenditures; and 413.15 (6) all organizational meeting minutes. 413.16 All records required to be kept by this section must be 413.17 preserved by the organization for at least 3-1/2 years and may 413.18 be inspected by the commissioner of revenue at any reasonable 413.19 time without notice or a search warrant. 413.20 [EFFECTIVE DATE.] This section is effective July 1, 2005. 413.21 Sec. 13. Minnesota Statutes 2004, section 297E.07, is 413.22 amended to read: 413.23 297E.07 [INSPECTION RIGHTS.] 413.24 At any reasonable time, without notice and without a search 413.25 warrant, the commissioner may enter a place of business of a 413.26 manufacturer, distributor,ororganization, or linked bingo game 413.27 provider; any site from which pull-tabs or tipboards or other 413.28 gambling equipment or gambling product are being manufactured, 413.29 stored, or sold; or any site at which lawful gambling is being 413.30 conducted, and inspect the premises, books, records, and other 413.31 documents required to be kept under this chapter to determine 413.32 whether or not this chapter is being fully complied with. If 413.33 the commissioner is denied free access to or is hindered or 413.34 interfered with in making an inspection of the place of 413.35 business, books, or records, the permit of the distributor may 413.36 be revoked by the commissioner, and the license of the 414.1 manufacturer, the distributor,orthe organization, or linked 414.2 bingo game provider may be revoked by the board. 414.3 [EFFECTIVE DATE.] This section is effective the day 414.4 following final enactment. 414.5 Sec. 14. Minnesota Statutes 2004, section 297F.08, 414.6 subdivision 12, is amended to read: 414.7 Subd. 12. [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 414.8 person may not transport or cause to be transported from this 414.9 state cigarettes for sale in another state without first 414.10 affixing to the cigarettes the stamp required by the state in 414.11 which the cigarettes are to be sold or paying any other excise 414.12 tax on the cigarettes imposed by the state in which the 414.13 cigarettes are to be sold. 414.14 (b) A person may not affix to cigarettes the stamp required 414.15 by another state or pay any other excise tax on the cigarettes 414.16 imposed by another state if the other state prohibits stamps 414.17 from being affixed to the cigarettes, prohibits the payment of 414.18 any other excise tax on the cigarettes, or prohibits the sale of 414.19 the cigarettes. 414.20 (c) Not later than 15 days after the end of each calendar 414.21 quarter, a person who transports or causes to be transported 414.22 from this state cigarettes for sale in another state shall 414.23 submit to the commissioner a report identifying the quantity and 414.24 style of each brand of the cigarettes transported or caused to 414.25 be transported in the preceding calendar quarter, and the name 414.26 and address of each recipient of the cigarettes. This reporting 414.27 requirement only applies to cigarettes manufactured by companies 414.28 that are not original or subsequent participating manufacturers 414.29 in the Master Settlement Agreement with other states. 414.30 (d) For purposes of this section, "person" has the meaning 414.31 given in section 297F.01, subdivision 12. Person does not 414.32 include any common or contract carrier, or public warehouse that 414.33 is not owned, in whole or in part, directly or indirectly by 414.34 such person, and does not include a manufacturer thathas414.35entered intois an original or subsequent participating 414.36 manufacturer in the Master Settlement Agreement with other 415.1 states. 415.2 [EFFECTIVE DATE.] This section is effective the day 415.3 following final enactment. 415.4 Sec. 15. Minnesota Statutes 2004, section 297F.08, is 415.5 amended by adding a subdivision to read: 415.6 Subd. 13. [BOND.] The commissioner may require the 415.7 furnishing of a corporate surety bond or a certified check in an 415.8 amount suitable to guarantee payment of the tax stamps purchased 415.9 by a distributor. The bond or certified check may be required 415.10 when the commissioner determines that a distributor is (1) 415.11 delinquent in the filing of any return required under this 415.12 chapter, or (2) delinquent in the payment of any uncontested tax 415.13 liability under this chapter. The distributor shall furnish the 415.14 bond or certified check for a period of two years, after which, 415.15 if the distributor has not been delinquent in the filing of any 415.16 returns required under this chapter, or delinquent in the paying 415.17 of any tax under this chapter, a bond or certified check is no 415.18 longer required. The commissioner at any time may apply the 415.19 bond or certified check to any unpaid taxes or fees, including 415.20 interest and penalties, owed to the department by the 415.21 distributor. 415.22 [EFFECTIVE DATE.] This section is effective the day 415.23 following final enactment. 415.24 Sec. 16. Minnesota Statutes 2004, section 297F.09, 415.25 subdivision 1, is amended to read: 415.26 Subdivision 1. [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 415.27 or before the 18th day of each calendar month, a distributor 415.28 with a place of business in this state shall file a return with 415.29 the commissioner showing the quantity of cigarettes manufactured 415.30 or brought in from outside the state or purchased during the 415.31 preceding calendar month and the quantity of cigarettes sold or 415.32 otherwise disposed of in this state and outside this state 415.33 during that month. A licensed distributor outside this state 415.34 shall in like manner file a return showing the quantity of 415.35 cigarettes shipped or transported into this state during the 415.36 preceding calendar month. Returns must be made in the form and 416.1 manner prescribed by the commissioner and must contain any other 416.2 information required by the commissioner. The return must be 416.3 accompanied by a remittance for the full unpaid tax liability 416.4 shown by it.The return for the May liability and 85 percent of416.5the estimated June liability is due on the date payment of the416.6tax is due.For distributors subject to the accelerated tax 416.7 payment requirements in subdivision 10, the return for the May 416.8 liability is due two business days before June 30th of the year 416.9 and the return for the June liability is due on or before August 416.10 18th of the year. 416.11 [EFFECTIVE DATE.] This section is effective the day 416.12 following final enactment. 416.13 Sec. 17. Minnesota Statutes 2004, section 297F.09, 416.14 subdivision 2, is amended to read: 416.15 Subd. 2. [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 416.16 On or before the 18th day of each calendar month, a distributor 416.17 with a place of business in this state shall file a return with 416.18 the commissioner showing the quantity and wholesale sales price 416.19 of each tobacco product: 416.20 (1) brought, or caused to be brought, into this state for 416.21 sale; and 416.22 (2) made, manufactured, or fabricated in this state for 416.23 sale in this state, during the preceding calendar month. 416.24 Every licensed distributor outside this state shall in like 416.25 manner file a return showing the quantity and wholesale sales 416.26 price of each tobacco product shipped or transported to 416.27 retailers in this state to be sold by those retailers, during 416.28 the preceding calendar month. Returns must be made in the form 416.29 and manner prescribed by the commissioner and must contain any 416.30 other information required by the commissioner. The return must 416.31 be accompanied by a remittance for the full tax liability 416.32 shown.The return for the May liability and 85 percent of the416.33estimated June liability is due on the date payment of the tax416.34is due.For distributors subject to the accelerated tax payment 416.35 requirements in subdivision 10, the return for the May liability 416.36 is due two business days before June 30th of the year and the 417.1 return for the June liability is due on or before August 18th of 417.2 the year. 417.3 [EFFECTIVE DATE.] This section is effective the day 417.4 following final enactment. 417.5 Sec. 18. Minnesota Statutes 2004, section 297G.09, is 417.6 amended by adding a subdivision to read: 417.7 Subd. 10. [QUARTERLY AND ANNUAL PAYMENTS AND RETURNS.] (a) 417.8 If a manufacturer, wholesaler, brewer, or importer has an 417.9 average liquor tax liability equal to or less than $500 per 417.10 month in any quarter of a calendar year, and has substantially 417.11 complied with the state tax laws during the preceding four 417.12 calendar quarters, the manufacturer, wholesaler, brewer, or 417.13 importer may request authorization to file and pay the taxes 417.14 quarterly in subsequent calendar quarters. The authorization 417.15 remains in effect during the period in which the manufacturer's, 417.16 wholesaler's, brewer's, or importer's quarterly returns reflect 417.17 liquor tax liabilities of less than $1,500 and there is 417.18 continued compliance with state tax laws. 417.19 (b) If a manufacturer, wholesaler, brewer, or importer has 417.20 an average liquor tax liability equal to or less than $100 per 417.21 month during a calendar year, and has substantially complied 417.22 with the state tax laws during that period, the manufacturer, 417.23 wholesaler, brewer, or importer may request authorization to 417.24 file and pay the taxes annually in subsequent years. The 417.25 authorization remains in effect during the period in which the 417.26 manufacturer's, wholesaler's, brewer's, or importer's annual 417.27 returns reflect liquor tax liabilities of less than $1,200 and 417.28 there is continued compliance with state tax laws. 417.29 (c) The commissioner may also grant quarterly or annual 417.30 filing and payment authorizations to manufacturers, wholesalers, 417.31 brewers, or importers if the commissioner concludes that the 417.32 manufacturer's, wholesaler's, brewer's, or importer's future tax 417.33 liabilities will be less than the monthly totals identified in 417.34 paragraphs (a) and (b). An authorization granted under this 417.35 paragraph is subject to the same conditions as an authorization 417.36 granted under paragraphs (a) and (b). 418.1 (d) The annual tax return and payments must be filed and 418.2 paid on or before the 18th day of January following the calendar 418.3 year. The quarterly returns and payments must be filed and paid 418.4 on or before April 18 for the quarter ending March 31, on or 418.5 before July 18 for the quarter ending June 30, on or before 418.6 October 18 for the quarter ending September 30, and on or before 418.7 January 18 for the quarter ending December 31. 418.8 [EFFECTIVE DATE.] This section is effective for tax returns 418.9 and payments due on or after January 1, 2006. 418.10 Sec. 19. Minnesota Statutes 2004, section 297I.01, is 418.11 amended by adding a subdivision to read: 418.12 Subd. 13a. [REINSURANCE.] "Reinsurance" is insurance 418.13 whereby an insurance company, for a consideration, agrees to 418.14 indemnify another insurance company against all or part of the 418.15 loss which the latter may sustain under the policy or policies 418.16 which it has issued. 418.17 [EFFECTIVE DATE.] This section is effective the day 418.18 following final enactment. 418.19 Sec. 20. Minnesota Statutes 2004, section 297I.05, 418.20 subdivision 5, is amended to read: 418.21 Subd. 5. [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 418.22 HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 418.23 SERVICE NETWORKS.] (a)Health maintenance organizations,418.24community integrated service networks, and nonprofit health care418.25service plan corporations are exempt from the tax imposed under418.26this section for premiums received in calendar years 2001 to418.272003.418.28(b) For calendar years after 2003,A tax is imposed on 418.29 health maintenance organizations, community integrated service 418.30 networks, and nonprofit health care service plan corporations. 418.31 The rate of tax is equal to one percent of gross premiums less 418.32 return premiums on all direct business received by the 418.33 organization, network, or corporation or its agents in 418.34 Minnesota, in cash or otherwise, in the calendar year. 418.35(c) In approving the premium rates as required in sections418.3662L.08, subdivision 8, and 62A.65, subdivision 3, the419.1commissioners of health and commerce shall ensure that any419.2exemption from tax as described in paragraph (a) is reflected in419.3the premium rate.419.4(d)(b) The commissioner shall deposit all revenues, 419.5 including penalties and interest, collected under this chapter 419.6 from health maintenance organizations, community integrated 419.7 service networks, and nonprofit health service plan corporations 419.8 in the health care access fund. Refunds of overpayments of tax 419.9 imposed by this subdivision must be paid from the health care 419.10 access fund. There is annually appropriated from the health 419.11 care access fund to the commissioner the amount necessary to 419.12 make any refunds of the tax imposed under this subdivision. 419.13 [EFFECTIVE DATE.] This section is effective January 1, 2005. 419.14 Sec. 21. [REPEALER.] 419.15 Minnesota Statutes 2004, section 297E.12, subdivision 10, 419.16 is repealed effective the day following final enactment. 419.17 ARTICLE 13 419.18 DEPARTMENT OF REVENUE 419.19 ELECTRONIC PAYMENTS 419.20 Section 1. [270.772] [MINIMUM DOLLAR REQUIREMENT FOR 419.21 ELECTRONIC PAYMENT OF TAXES AND FEES.] 419.22 (a) Except as provided in paragraph (b), payments of every 419.23 tax, fee, or surcharge administered by and payable to the 419.24 commissioner in a calendar year, including deposits and 419.25 estimated payments, must be remitted electronically if the 419.26 liability of the taxpayer or payer for the tax, fee, or 419.27 surcharge is: 419.28 (1) $20,000 or more in the preceding fiscal year ending 419.29 June 30, 2005; and 419.30 (2) $10,000 or more in the preceding fiscal year ending 419.31 June 30, 2006, and preceding fiscal years thereafter. 419.32 (b) This section does not apply to individual income, 419.33 estate, fiduciary, and airflight property taxes, and it does not 419.34 apply to any law requiring all payments for a specific type of 419.35 tax, fee, or surcharge, or from a specific group of taxpayers or 419.36 payers, to be made electronically regardless of dollar amount. 420.1 Sec. 2. Minnesota Statutes 2004, section 289A.20, 420.2 subdivision 2, is amended to read: 420.3 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 420.4 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 420.5 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 420.6 (a) A tax required to be deducted and withheld during the 420.7 quarterly period must be paid on or before the last day of the 420.8 month following the close of the quarterly period, unless an 420.9 earlier time for payment is provided. A tax required to be 420.10 deducted and withheld from compensation of an entertainer and 420.11 from a payment to an out-of-state contractor must be paid on or 420.12 before the date the return for such tax must be filed under 420.13 section 289A.18, subdivision 2. Taxes required to be deducted 420.14 and withheld by partnerships and S corporations must be paid on 420.15 or before the date the return must be filed under section 420.16 289A.18, subdivision 2. 420.17 (b) An employer who, during the previous quarter, withheld 420.18 more than $1,500 of tax under section 290.92, subdivision 2a or 420.19 3, or 290.923, subdivision 2, must deposit tax withheld under 420.20 those sections with the commissioner within the time allowed to 420.21 deposit the employer's federal withheld employment taxes under 420.22 Code of Federal Regulations, title 26, section 31.6302-1, as 420.23 amended through December 31, 2001, without regard to the safe 420.24 harbor or de minimis rules in subparagraph (f) or the one-day 420.25 rule in subsection (c), clause (3). Taxpayers must submit a 420.26 copy of their federal notice of deposit status to the 420.27 commissioner upon request by the commissioner. 420.28 (c) The commissioner may prescribe by rule other return 420.29 periods or deposit requirements. In prescribing the reporting 420.30 period, the commissioner may classify payors according to the 420.31 amount of their tax liability and may adopt an appropriate 420.32 reporting period for the class that the commissioner judges to 420.33 be consistent with efficient tax collection. In no event will 420.34 the duration of the reporting period be more than one year. 420.35 (d) If less than the correct amount of tax is paid to the 420.36 commissioner, proper adjustments with respect to both the tax 421.1 and the amount to be deducted must be made, without interest, in 421.2 the manner and at the times the commissioner prescribes. If the 421.3 underpayment cannot be adjusted, the amount of the underpayment 421.4 will be assessed and collected in the manner and at the times 421.5 the commissioner prescribes. 421.6 (e)If the aggregate amount of the tax withheld during a421.7fiscal year ending June 30 under section 290.92, subdivision 2a421.8or 3, is equal to or exceeds the amounts established for421.9remitting federal withheld taxes pursuant to the regulations421.10promulgated under section 6302(h) of the Internal Revenue Code,421.11the employer must remit each required deposit for wages paid in421.12the subsequent calendar year by electronic means.421.13(f)A third-party bulk filer as defined in section 290.92, 421.14 subdivision 30, paragraph (a), clause (2), who remits 421.15 withholding deposits must remit all deposits by electronic means 421.16as provided in paragraph (e), regardless of the aggregate amount 421.17 of tax withheld during a fiscal year for all of the employers. 421.18 Sec. 3. Minnesota Statutes 2004, section 289A.20, 421.19 subdivision 4, is amended to read: 421.20 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 421.21 chapter 297A are due and payable to the commissioner monthly on 421.22 or before the 20th day of the month following the month in which 421.23 the taxable event occurred, or following another reporting 421.24 period as the commissioner prescribes or as allowed under 421.25 section 289A.18, subdivision 4, paragraph (f) or (g), except 421.26 that use taxes due on an annual use tax return as provided under 421.27 section 289A.11, subdivision 1, are payable by April 15 421.28 following the close of the calendar year. 421.29 (b) A vendor having a liability of $120,000 or more during 421.30 a fiscal year ending June 30 must remit the June liability for 421.31 the next year in the following manner: 421.32 (1) Two business days before June 30 of the year, the 421.33 vendor must remit 85 percent of the estimated June liability to 421.34 the commissioner. 421.35 (2) On or before August 20 of the year, the vendor must pay 421.36 any additional amount of tax not remitted in June. 422.1(c) A vendor having a liability of $120,000 or more during422.2a fiscal year ending June 30 must remit all liabilities on422.3returns due for periods beginning in the subsequent calendar422.4year by electronic means on or before the 20th day of the month422.5following the month in which the taxable event occurred, or on422.6or before the 20th day of the month following the month in which422.7the sale is reported under section 289A.18, subdivision 4,422.8except for 85 percent of the estimated June liability, which is422.9due two business days before June 30. The remaining amount of422.10the June liability is due on August 20.422.11 Sec. 4. Minnesota Statutes 2004, section 297E.02, 422.12 subdivision 4, is amended to read: 422.13 Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 422.14 on the sale of each deal of pull-tabs and tipboards sold by a 422.15 distributor. The rate of the tax is 1.7 percent of the ideal 422.16 gross of the pull-tab or tipboard deal. The sales tax imposed 422.17 by chapter 297A on the sale of the pull-tabs and tipboards by 422.18 the distributor is imposed on the retail sales price less the 422.19 tax imposed by this subdivision. The retail sale of pull-tabs 422.20 or tipboards by the organization is exempt from taxes imposed by 422.21 chapter 297A and is exempt from all local taxes and license fees 422.22 except a fee authorized under section 349.16, subdivision 8. 422.23 (b) The liability for the tax imposed by this section is 422.24 incurred when the pull-tabs and tipboards are delivered by the 422.25 distributor to the customer or to a common or contract carrier 422.26 for delivery to the customer, or when received by the customer's 422.27 authorized representative at the distributor's place of 422.28 business, regardless of the distributor's method of accounting 422.29 or the terms of the sale. 422.30 The tax imposed by this subdivision is imposed on all sales 422.31 of pull-tabs and tipboards, except the following: 422.32 (1) sales to the governing body of an Indian tribal 422.33 organization for use on an Indian reservation; 422.34 (2) sales to distributors licensed under the laws of 422.35 another state or of a province of Canada, as long as all 422.36 statutory and regulatory requirements are met in the other state 423.1 or province; 423.2 (3) sales of promotional tickets as defined in section 423.3 349.12; and 423.4 (4) pull-tabs and tipboards sold to an organization that 423.5 sells pull-tabs and tipboards under the exemption from licensing 423.6 in section 349.166, subdivision 2. A distributor shall require 423.7 an organization conducting exempt gambling to show proof of its 423.8 exempt status before making a tax-exempt sale of pull-tabs or 423.9 tipboards to the organization. A distributor shall identify, on 423.10 all reports submitted to the commissioner, all sales of 423.11 pull-tabs and tipboards that are exempt from tax under this 423.12 subdivision. 423.13 (c)A distributor having a liability of $120,000 or more423.14during a fiscal year ending June 30 must remit all liabilities423.15in the subsequent calendar year by electronic means.423.16(d)Any customer who purchases deals of pull-tabs or 423.17 tipboards from a distributor may file an annual claim for a 423.18 refund or credit of taxes paid pursuant to this subdivision for 423.19 unsold pull-tab and tipboard tickets. The claim must be filed 423.20 with the commissioner on a form prescribed by the commissioner 423.21 by March 20 of the year following the calendar year for which 423.22 the refund is claimed. The refund must be filed as part of the 423.23 customer's February monthly return. The refund or credit is 423.24 equal to 1.7 percent of the face value of the unsold pull-tab or 423.25 tipboard tickets, provided that the refund or credit will be 423.26 1.75 percent of the face value of the unsold pull-tab or 423.27 tipboard tickets for claims for a refund or credit of taxes 423.28 filed on the February 2001 monthly return. The refund claimed 423.29 will be applied as a credit against tax owing under this chapter 423.30 on the February monthly return. If the refund claimed exceeds 423.31 the tax owing on the February monthly return, that amount will 423.32 be refunded. The amount refunded will bear interest pursuant to 423.33 section 270.76 from 90 days after the claim is filed. 423.34 Sec. 5. Minnesota Statutes 2004, section 473.843, 423.35 subdivision 3, is amended to read: 423.36 Subd. 3. [PAYMENT OF FEE.] On or before the 20th day of 424.1 each month each operator shall pay the fee due under this 424.2 section for the previous month, using a form provided by the 424.3 commissioner of revenue. 424.4An operator having a fee of $120,000 or more during a424.5fiscal year ending June 30 must pay all fees in the subsequent424.6calendar year by electronic means.424.7 Sec. 6. [REPEALER.] 424.8 Minnesota Statutes 2004, sections 289A.26, subdivision 2a; 424.9 289A.60, subdivision 21; 295.55, subdivision 4; 295.60, 424.10 subdivision 4; 297F.09, subdivision 7; 297G.09, subdivision 6; 424.11 297I.35, subdivision 2; and 297I.85, subdivision 7, are repealed. 424.12 Sec. 7. [EFFECTIVE DATE.] 424.13 This article is effective for payments due in calendar year 424.14 2006, and in calendar years thereafter, based upon liabilities 424.15 incurred in the fiscal year ending June 30, 2005, and in fiscal 424.16 years thereafter. 424.17 ARTICLE 14 424.18 DEPARTMENT OF REVENUE 424.19 MISCELLANEOUS 424.20 Section 1. Minnesota Statutes 2004, section 15.06, 424.21 subdivision 6, is amended to read: 424.22 Subd. 6. [GENERAL POWERS OF COMMISSIONERS.] Except as 424.23 otherwise expressly provided by law, a commissioner shall have 424.24 the following powers: 424.25 (1) to delegate to any subordinate employee the exercise of 424.26 specified statutory powers or duties as the commissioner may 424.27 deem advisable, subject to the commissioner's control; provided, 424.28 that every delegation shall be made by written order, filed with 424.29 the secretary of state; and further provided that only a deputy 424.30 commissioner may have all the powers or duties of the 424.31 commissioner. A commissioner who delegates the exercise of 424.32 identical powers or duties to ten or more subordinate employees, 424.33 may combine the delegation to these employees in one written 424.34 order. A delegation of authority granted by a commissioner 424.35 remains in effect until revoked by the commissioner, revoked by 424.36 a successor commissioner, or termination of the employees' 425.1 employment. A successor commissioner may continue to grant the 425.2 same delegations of authority that were granted by a previous 425.3 commissioner, by issuing a written order that is filed with the 425.4 secretary of state and lists the names of the subordinate 425.5 employees that have orders of delegations of authority, the date 425.6 the order was signed, and the date the order was filed with the 425.7 secretary of state; 425.8 (2) to appoint all subordinate employees and to prescribe 425.9 their duties; provided, that all departments and agencies shall 425.10 be subject to the provisions of chapter 43A; 425.11 (3) with the approval of the commissioner of 425.12 administration, to organize the department or agency as deemed 425.13 advisable in the interest of economy and efficiency; and 425.14 (4) to prescribe procedures for the internal management of 425.15 the department or agency to the extent that the procedures do 425.16 not directly affect the rights of or procedure available to the 425.17 public. 425.18 [EFFECTIVE DATE.] This section is effective the day 425.19 following final enactment. 425.20 Sec. 2. Minnesota Statutes 2004, section 16D.10, is 425.21 amended to read: 425.22 16D.10 [CASE REVIEWER.] 425.23 Subdivision 1. [DUTIES.] The commissioner shall make a 425.24 case reviewer available to debtors. The reviewer must be 425.25 available to answer a debtor's questions concerning the 425.26 collection process and to review the collection activity taken. 425.27 If the reviewer reasonably believes that the particular action 425.28 being taken is unreasonable or unfair, the reviewer may make 425.29 recommendations to the commissioner in regard to the collection 425.30 action. 425.31 Subd. 2. [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On 425.32 application filed by a debtor with the case reviewer, in the 425.33 form, manner, and in the time prescribed by the commissioner, 425.34 and after thorough investigation, the case reviewer may issue a 425.35 debtor assistance order if, in the determination of the case 425.36 reviewer, the manner in which the state debt collection laws are 426.1 being administered is creating or will create an unjust and 426.2 inequitable result for the debtor. Debtor assistance orders are 426.3 governed by the provisions relating to taxpayer assistance 426.4 orders under section 270.273. 426.5 Subd. 3. [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.] 426.6 All duties and authority of the case reviewer under subdivisions 426.7 1 and 2 are transferred to the taxpayer rights advocate. 426.8 [EFFECTIVE DATE.] This section is effective the day 426.9 following final enactment. 426.10 Sec. 3. Minnesota Statutes 2004, section 270.65, is 426.11 amended to read: 426.12 270.65 [DATE OF ASSESSMENT; DEFINITION.] 426.13 For purposes of taxes administered by the commissioner, the 426.14 term "date of assessment" means the date a liability reported on 426.15 a return was entered into the records of the commissioner or the 426.16 date a return should have been filed, whichever is later; or, in 426.17 the case of taxes determined by the commissioner, "date of 426.18 assessment" means the date of the order assessing taxes or date 426.19 of the return made by the commissioner; or, in the case of an 426.20 amended return filed by the taxpayer, the assessment date is the 426.21 date additional liability reported on the return, if any, was 426.22 entered into the records of the commissioner; or, in the case of 426.23 a consent agreement signed by the taxpayer under section 270.67, 426.24 subdivision 3, the assessment date is the notice date shown on 426.25 the agreement; or, in the case of a check from a taxpayer that 426.26 is dishonored and results in an erroneous refund being given to 426.27 the taxpayer, remittance of the check is deemed to be an 426.28 assessment and the "date of assessment" is the date the check 426.29 was received by the commissioner. 426.30 [EFFECTIVE DATE.] This section is effective the day 426.31 following final enactment. 426.32 Sec. 4. Minnesota Statutes 2004, section 270.67, 426.33 subdivision 4, is amended to read: 426.34 Subd. 4. [OFFER-IN-COMPROMISE AND INSTALLMENT PAYMENT 426.35 PROGRAM.] (a) In implementing the authority provided in 426.36 subdivision 2 or in sections 8.30 and 16D.15 to accept offers of 427.1 installment payments or offers-in-compromise of tax liabilities, 427.2 the commissioner of revenue shall prescribe guidelines for 427.3 employees of the Department of Revenue to determine whether an 427.4 offer-in-compromise or an offer to make installment payments is 427.5 adequate and should be accepted to resolve a dispute. In 427.6 prescribing the guidelines, the commissioner shall develop and 427.7 publish schedules of national and local allowances designed to 427.8 provide that taxpayers entering into a compromise or payment 427.9 agreement have an adequate means to provide for basic living 427.10 expenses. The guidelines must provide that the taxpayer's 427.11 ownership interest in a motor vehicle, to the extent of the 427.12 value allowed in section 550.37, will not be considered as an 427.13 asset; in the case of an offer related to a joint tax liability 427.14 of spouses, that value of two motor vehicles must be excluded. 427.15 The guidelines must provide that employees of the department 427.16 shall determine, on the basis of the facts and circumstances of 427.17 each taxpayer, whether the use of the schedules is appropriate 427.18 and that employees must not use the schedules to the extent the 427.19 use would result in the taxpayer not having adequate means to 427.20 provide for basic living expenses. The guidelines must provide 427.21 that: 427.22 (1) an employee of the department shall not reject an 427.23 offer-in-compromise or an offer to make installment payments 427.24 from a low-income taxpayer solely on the basis of the amount of 427.25 the offer; and 427.26 (2) in the case of an offer-in-compromise which relates 427.27 only to issues of liability of the taxpayer: 427.28 (i) the offer must not be rejected solely because the 427.29 commissioner is unable to locate the taxpayer's return or return 427.30 information for verification of the liability; and 427.31 (ii) the taxpayer shall not be required to provide an 427.32 audited, reviewed, or compiled financial statement. 427.33 (b) The commissioner shall establish procedures: 427.34 (1) that require presentation of a counteroffer or a 427.35 written rejection of the offer by the commissioner if the amount 427.36 offered by the taxpayer in an offer-in-compromise or an offer to 428.1 make installment payments is not accepted by the commissioner; 428.2 (2) for an administrative review of any written rejection 428.3 of a proposed offer-in-compromise or installment agreement made 428.4 by a taxpayer under this section before the rejection is 428.5 communicated to the taxpayer; 428.6 (3) that allow a taxpayer to request reconsideration of any 428.7 written rejection of the offer or agreement to the commissioner 428.8 of revenue to determine whether the rejection is reasonable and 428.9 appropriate under the circumstances; and 428.10 (4) that provide for notification to the taxpayer when an 428.11 offer-in-compromise has been accepted, and issuance of 428.12 certificates of release of any liens imposed under section 428.13 270.69 related to the liability which is the subject of the 428.14 compromise. 428.15 (c) Each compromise proposal must be accompanied by a 428.16 nonrefundable payment of $250. If the compromise proposal is 428.17 accepted, the payment must be applied to the accepted compromise 428.18 amount. If the compromise is rejected, the payment must be 428.19 applied to the outstanding tax debts of the taxpayer pursuant to 428.20 section 270.652. In cases of financial hardship, upon 428.21 presentation of information establishing an inability to make 428.22 the $250 payment, the commissioner may waive this requirement. 428.23 [EFFECTIVE DATE.] This section is effective for offers in 428.24 compromise submitted after August 31, 2005. 428.25 Sec. 5. Minnesota Statutes 2004, section 270.69, 428.26 subdivision 4, is amended to read: 428.27 Subd. 4. [PERIOD OF LIMITATIONS.] The lien imposed by this 428.28 section shall, notwithstanding any other provision of law to the 428.29 contrary, be enforceable from the time the lien arises and for 428.30 ten years from the date of filing the notice of lien, which must 428.31 be filed by the commissioner within five years after the date of 428.32 assessment of the tax or final administrative or judicial 428.33 determination of the assessment. A notice of lien filed in one 428.34 county may be transcribed to the secretary of state or to any 428.35 other county within ten years after the date of its filing, but 428.36 the transcription shall not extend the period during which the 429.1 lien is enforceable. A notice of lien may be renewed by the 429.2 commissioner before the expiration of the ten-year period for an 429.3 additional ten years. The taxpayer must receive written notice 429.4 of the renewal. 429.5 [EFFECTIVE DATE.] This section is effective the day 429.6 following final enactment. 429.7 Sec. 6. Minnesota Statutes 2004, section 289A.19, 429.8 subdivision 4, is amended to read: 429.9 Subd. 4. [ESTATE TAX RETURNS.]When in the commissioner's429.10judgment good cause exists, the commissioner may extend the time429.11for filing an estate tax return for not more than six months.429.12 When an extension to file the federal estate tax return has been 429.13 granted under section 6081 of the Internal Revenue Code, the 429.14 time for filing the estate tax return is extended for that 429.15 period. If the estate requests an extension to file an estate 429.16 tax return within the time provided in section 289A.18, 429.17 subdivision 3, the commissioner shall extend the time for filing 429.18 the estate tax return for six months. 429.19 [EFFECTIVE DATE.] This section is effective for estates of 429.20 decedents dying after December 31, 2004. 429.21 Sec. 7. Minnesota Statutes 2004, section 289A.31, 429.22 subdivision 2, is amended to read: 429.23 Subd. 2. [JOINT INCOME TAX RETURNS.] (a) If a joint income 429.24 tax return is made by a husband and wife, the liability for the 429.25 tax is joint and several. A spouse who qualifies for relief 429.26 from a liability attributable to an underpayment under section 429.27 6015(b) of the Internal Revenue Code is relieved of the state 429.28 income tax liability on the underpayment. 429.29 (b) In the case of individuals who were a husband and wife 429.30 prior to the dissolution of their marriage or their legal 429.31 separation, or prior to the death of one of the individuals, for 429.32 tax liabilities reported on a joint or combined return, the 429.33 liability of each person is limited to the proportion of the tax 429.34 due on the return that equals that person's proportion of the 429.35 total tax due if the husband and wife filed separate returns for 429.36 the taxable year. This provision is effective only when the 430.1 commissioner receives written notice of the marriage 430.2 dissolution, legal separation, or death of a spouse from the 430.3 husband or wife. No refund may be claimed by an ex-spouse, 430.4 legally separated or widowed spouse for any taxes paid more than 430.5 60 days before receipt by the commissioner of the written notice. 430.6 (c) A request for calculation of separate liability 430.7 pursuant to paragraph (b) for taxes reported on a return must be 430.8 made within six years after the due date of the return. For 430.9 calculation of separate liability for taxes assessed by the 430.10 commissioner under section 289A.35 or 289A.37, the request must 430.11 be made within six years after the date of assessment. The 430.12 commissioner is not required to calculate separate liability if 430.13 the remaining unpaid liability for which recalculation is 430.14 requested is $100 or less. 430.15 [EFFECTIVE DATE.] This section is effective for requests 430.16 for relief made on or after the day following final enactment. 430.17 Sec. 8. Minnesota Statutes 2004, section 289A.37, 430.18 subdivision 5, is amended to read: 430.19 Subd. 5. [SUFFICIENCY OF NOTICE.] An order of assessment, 430.20 sent postage prepaid by United States mail to the taxpayer at 430.21 the taxpayer's last known address, or sent by electronic mail to 430.22 the taxpayer's last known electronic mailing address as provided 430.23 for in section 325L.08, is sufficient even if the taxpayer is 430.24 deceased or is under a legal disability, or, in the case of a 430.25 corporation, has terminated its existence, unless the department 430.26 has been provided with a new address by a party authorized to 430.27 receive notices of assessment. 430.28 [EFFECTIVE DATE.] This section is effective the day 430.29 following final enactment. 430.30 Sec. 9. Minnesota Statutes 2004, section 289A.60, 430.31 subdivision 2a, is amended to read: 430.32 Subd. 2a. [PENALTIES FOR EXTENDED DELINQUENCY.] (a) If an 430.33 individual income tax is not paid within 180 days after the date 430.34 of filing of a return or, in the case of taxes assessed by the 430.35 commissioner, within 180 days after the assessment date or, if 430.36 appealed, within 180 days after final resolution of the appeal, 431.1 an extended delinquency penalty of five percent of the tax 431.2 remaining unpaid is added to the amount due. 431.3 (b) If acorporate franchise, fiduciary income, mining431.4company, estate, partnership, S corporation, or nonresident431.5entertainertax return is not filed within 30 days after written 431.6 demand for the filing of a delinquent return, an extended 431.7 delinquency penalty of five percent of the tax not paid prior to 431.8 the demandis added to the tax,orin the case of an individual431.9income tax return, a minimum penalty of$100or the five percent431.10penaltyis imposed, whichever amount is greater. 431.11 [EFFECTIVE DATE.] This section is effective for returns 431.12 originally due on or after August 1, 2005. 431.13 Sec. 10. Minnesota Statutes 2004, section 289A.60, 431.14 subdivision 6, is amended to read: 431.15 Subd. 6. [PENALTY FOR FAILURE TO FILE, FALSE OR FRAUDULENT 431.16 RETURN, EVASION.] If a person, with intent to evade or defeat a 431.17 tax or payment of tax, fails to file a return, files a false or 431.18 fraudulent return, or attempts in any other manner to evade or 431.19 defeat a tax or payment of tax, there is imposed on the person a 431.20 penalty equal to 50 percent of the tax, less amounts paid by the 431.21 person on the basis of the false or fraudulent return, if any, 431.22 due for the period to which the return related. 431.23 [EFFECTIVE DATE.] This section is effective the day 431.24 following final enactment. 431.25 Sec. 11. Minnesota Statutes 2004, section 289A.60, 431.26 subdivision 11, is amended to read: 431.27 Subd. 11. [PENALTIES RELATING TO INFORMATION REPORTS, 431.28 WITHHOLDING.] (a) When a person required under section 289A.09, 431.29 subdivision 2, to give a statement to an employee or payee and a 431.30 duplicate statement to the commissioner, or to give a 431.31 reconciliation of the statements and quarterly returns to the 431.32 commissioner, gives a false or fraudulent statement to an 431.33 employee or payee or a false or fraudulent duplicate statement 431.34 or reconciliation of statements and quarterly returns to the 431.35 commissioner, or fails to give a statement or the reconciliation 431.36 in the manner, when due, and showing the information required by 432.1 section 289A.09, subdivision 2, or rules prescribed by the 432.2 commissioner under that section, that person is liable for a 432.3 penalty of $50 for an act or failure to act. The total amount 432.4 imposed on the delinquent person for failures during a calendar 432.5 year must not exceed $25,000. 432.6 (b) In addition to any other penalty provided by law, an 432.7 employee who gives a withholding exemption certificate or a 432.8 residency affidavit to an employer thatthe employee has reason432.9to know contains a materially incorrect statementdecreases the 432.10 amount withheld under section 290.92 and as of the time the 432.11 certificate or affidavit was given to the employer there was no 432.12 reasonable basis for the statements in the certificate or 432.13 affidavit is liable to the commissioner of revenue for a penalty 432.14 of $500 for each instance. 432.15 (c) In addition to any other penalty provided by law, an 432.16 employer who fails to submit a copy of a withholding exemption 432.17 certificate or a residency affidavit required by section 290.92, 432.18 subdivision 5a, clause (1)(a), (1)(b), or (2) is liable to the 432.19 commissioner of revenue for a penalty of $50 for each instance. 432.20 (d) An employer or payor who fails to file an application 432.21 for a withholding account number, as required by section 290.92, 432.22 subdivision 24, is liable to the commissioner for a penalty of 432.23 $100. 432.24 [EFFECTIVE DATE.] This section is effective for 432.25 certificates and affidavits given to employers after December 432.26 31, 2005. 432.27 Sec. 12. Minnesota Statutes 2004, section 290.92, 432.28 subdivision 1, is amended to read: 432.29 Subdivision 1. [DEFINITIONS.] (1) [WAGES.] For purposes 432.30 of this section, the term "wages" means the same as that term is 432.31 defined in section 3401(a) and (f) of the Internal Revenue Code. 432.32 (2) [PAYROLL PERIOD.] For purposes of this section the 432.33 term "payroll period" means a period for which a payment of 432.34 wages is ordinarily made to the employee by the employee's 432.35 employer, and the term "miscellaneous payroll period" means a 432.36 payroll period other than a daily, weekly, biweekly, 433.1 semimonthly, monthly, quarterly, semiannual, or annual payroll 433.2 period. 433.3 (3) [EMPLOYEE.] For purposes of this section the term 433.4 "employee" means any resident individual performing services for 433.5 an employer, either within or without, or both within and 433.6 without the state of Minnesota, and every nonresident individual 433.7 performing services within the state of Minnesota, the 433.8 performance of which services constitute, establish, and 433.9 determine the relationship between the parties as that of 433.10 employer and employee. As used in the preceding sentence, the 433.11 term "employee" includes an officer of a corporation, and an 433.12 officer, employee, or elected official of the United States, a 433.13 state, or any political subdivision thereof, or the District of 433.14 Columbia, or any agency or instrumentality of any one or more of 433.15 the foregoing. 433.16 (4) [EMPLOYER.] For purposes of this section the term 433.17 "employer" means any person, including individuals, fiduciaries, 433.18 estates, trusts, partnerships, limited liability companies, and 433.19 corporations transacting business in or deriving any income from 433.20 sources within the state of Minnesota for whom an individual 433.21 performs or performed any service, of whatever nature, as the 433.22 employee of such person, except that if the person for whom the 433.23 individual performs or performed the services does not have 433.24legalcontrol of the payment of the wages for such services, the 433.25 term "employer," except for purposes of paragraph (1), means the 433.26 person havinglegalcontrol of the payment of such wages. As 433.27 used in the preceding sentence, the term "employer" includes any 433.28 corporation, individual, estate, trust, or organization which is 433.29 exempt from taxation under section 290.05 and further includes, 433.30 but is not limited to, officers of corporations who havelegal433.31 control, either individually or jointly with another or others, 433.32 of the payment of the wages. 433.33 (5) [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 433.34 purposes of this section, the term "number of withholding 433.35 exemptions claimed" means the number of withholding exemptions 433.36 claimed in a withholding exemption certificate in effect under 434.1 subdivision 5, except that if no such certificate is in effect, 434.2 the number of withholding exemptions claimed shall be considered 434.3 to be zero. 434.4 [EFFECTIVE DATE.] This section is effective the day 434.5 following final enactment. 434.6 Sec. 13. Minnesota Statutes 2004, section 290C.05, is 434.7 amended to read: 434.8 290C.05 [ANNUAL CERTIFICATION.] 434.9 On or before July 1 of each year, beginning with the year 434.10 after the claimant has received an approved application, the 434.11 commissioner shall send each claimant enrolled under the 434.12 sustainable forest incentive program a certification form. The 434.13 claimant must sign the certification, attesting that the 434.14 requirements and conditions for continued enrollment in the 434.15 program are currently being met, and must return the signed 434.16 certification form to the commissioner by August 15 of that same 434.17 year.Failure toIf the claimant does not return an annual 434.18 certification form by the due dateshall result in removal of434.19the lands from the provisions of the sustainable forest434.20incentive program, and the imposition of any applicable removal434.21penalty, the provisions in section 290C.11 apply.The claimant434.22may appeal the removal and any associated penalty according to434.23the procedures and within the time allowed under this chapter.434.24 [EFFECTIVE DATE.] This section is effective the day 434.25 following final enactment. 434.26 Sec. 14. [290C.055] [LENGTH OF COVENANT.] 434.27 The covenant remains in effect for a minimum of eight 434.28 years. If land is removed from the program before it has been 434.29 enrolled for four years, the covenant remains in effect for 434.30 eight years from the date recorded. 434.31 If land that has been enrolled for four years or more is 434.32 removed from the program for any reason, there is a waiting 434.33 period before the covenant terminates. The covenant terminates 434.34 on January 1 of the fifth calendar year that begins after the 434.35 date that: 434.36 (1) the commissioner receives notification from the 435.1 claimant that the claimant wishes to remove the land from the 435.2 program under section 290C.10; or 435.3 (2) the date that the land is removed from the program 435.4 under section 290C.11. 435.5 Notwithstanding the other provisions of this section, the 435.6 covenant is terminated at the same time that the land is removed 435.7 from the program due to acquisition of title or possession for a 435.8 public purpose under section 290C.10. 435.9 [EFFECTIVE DATE.] This section is effective the day 435.10 following final enactment. 435.11 Sec. 15. Minnesota Statutes 2004, section 290C.10, is 435.12 amended to read: 435.13 290C.10 [WITHDRAWAL PROCEDURES.] 435.14 An approved claimant under the sustainable forest incentive 435.15 program for a minimum of four years may notify the commissioner 435.16 of the intent to terminate enrollment. Within 90 days of 435.17 receipt of notice to terminate enrollment, the commissioner 435.18 shall inform the claimant in writing, acknowledging receipt of 435.19 this notice and indicating the effective date of termination 435.20 from the sustainable forest incentive program. Termination of 435.21 enrollment in the sustainable forest incentive program occurs on 435.22 January 1 of the fifth calendar year that begins after receipt 435.23 by the commissioner of the termination notice. After the 435.24 commissioner issues an effective date of termination, a claimant 435.25 wishing to continue the land's enrollment in the sustainable 435.26 forest incentive program beyond the termination date must apply 435.27 for enrollment as prescribed in section 290C.04. A claimant who 435.28 withdraws a parcel of land from this program may not reenroll 435.29 the parcel for a period of three years. Within 90 days after 435.30 the termination date, the commissioner shall execute and 435.31 acknowledge a document releasing the land from the covenant 435.32 required under this chapter. The document must be mailed to the 435.33 claimant and is entitled to be recorded. The commissioner may 435.34 allow early withdrawal from the Sustainable Forest Incentive Act 435.35 without penaltyin cases of condemnationwhen the state of 435.36 Minnesota, any local government unit, or any other entity which 436.1 has the right of eminent domain acquires title or possession to 436.2 the land for a public purpose notwithstanding the provisions of 436.3 this section. In the case of such acquisition, the commissioner 436.4 shall execute and acknowledge a document releasing the land 436.5 acquired by the state, local government unit, or other entity 436.6 from the covenant. All other enrolled land must remain in the 436.7 program. 436.8 [EFFECTIVE DATE.] This section is effective the day 436.9 following final enactment. 436.10 Sec. 16. Minnesota Statutes 2004, section 325D.33, 436.11 subdivision 6, is amended to read: 436.12 Subd. 6. [VIOLATIONS.] If the commissioner determines that 436.13 a distributor is violating any provision of this chapter, the 436.14 commissioner must give the distributor a written warning 436.15 explaining the violation and an explanation of what must be done 436.16 to comply with this chapter. Within ten days of issuance of the 436.17 warning, the distributor must notify the commissioner that the 436.18 distributor has complied with the commissioner's recommendation 436.19 or request that the commissioner set the issue for a hearing 436.20 pursuant to chapter 14. If a hearing is requested, the hearing 436.21 shall be scheduled within 20 days of the request and the 436.22 recommendation of the administrative law judge shall be issued 436.23 within five working days of the close of the hearing. The 436.24 commissioner's final determination shall be issued within five 436.25 working days of the receipt of the administrative law judge's 436.26 recommendation. If the commissioner's final determination is 436.27 adverse to the distributor and the distributor does not comply 436.28 within ten days of receipt of the commissioner's final 436.29 determination, the commissioner may order the distributor to 436.30 immediately cease the stamping of cigarettes. As soon as 436.31 practicable after the order, the commissioner must remove the 436.32 meter and any unapplied cigarette stamps from the premises of 436.33 the distributor. 436.34 If within ten days of issuance of the written warning the 436.35 distributor has not complied with the commissioner's 436.36 recommendation or requested a hearing, the commissioner may 437.1 order the distributor to immediately cease the stamping of 437.2 cigarettes and remove the meter and unapplied stamps from the 437.3 distributor's premises. 437.4If, within any 12-month period, the commissioner has issued437.5three written warnings to any distributor, even if the437.6distributor has complied within ten days, the commissioner shall437.7notify the distributor of the commissioner's intent to revoke437.8the distributor's license for a continuing course of conduct437.9contrary to this chapter. For purposes of this paragraph, a437.10written warning that was ultimately resolved by removal of the437.11warning by the commissioner is not deemed to be a warning. The437.12commissioner must notify the distributor of the date and time of437.13a hearing pursuant to chapter 14 at least 20 days before the437.14hearing is held. The hearing must provide an opportunity for437.15the distributor to show cause why the license should not be437.16revoked. If the commissioner revokes a distributor's license,437.17the commissioner shall not issue a new license to that437.18distributor for 180 days.437.19 [EFFECTIVE DATE.] This section is effective the day 437.20 following final enactment. 437.21 Sec. 17. Minnesota Statutes 2004, section 473.843, 437.22 subdivision 5, is amended to read: 437.23 Subd. 5. [PENALTIES; ENFORCEMENT.] The audit, penalty, and 437.24 enforcement provisions applicable to corporate franchise taxes 437.25 imposed under chapter 290 apply to the fees imposed under this 437.26 section. The commissioner of revenue shall administer the 437.27 provisions. 437.28 [EFFECTIVE DATE.] This section is effective the day 437.29 following final enactment.