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SF 1701

as introduced - 87th Legislature (2011 - 2012) Posted on 02/22/2012 03:57pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to restaurants; providing for the Restaurant Recovery and Jobs Creation
Act; expanding the sales tax exemption for certain meals and drinks; expanding
the capital equipment exemption; providing for the application of gratuities in
calculating the minimum wage; modifying the calculation of unemployment
taxes; modifying license fees; amending Minnesota Statutes 2010, sections
157.16; 177.24, subdivisions 1, 2; 268.035, subdivision 24; 297A.68, subdivision
5, by adding subdivisions.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 157.16, is amended to read:


157.16 LICENSES REQUIRED; FEES.

Subdivision 1.

License required annually.

A license is required annually for every
person, firm, or corporation engaged in the business of conducting a food and beverage
service establishment, youth camp, hotel, motel, lodging establishment, public pool, or
resort. Any person wishing to operate a place of business licensed in this section shall
first make application, pay the required fee specified in this section, and receive approval
for operation, including plan review approval. new text begin Seasonal and temporary food stands and
new text end special event food stands are not required to submit plans. Nonprofit organizations
operating a special event food stand with multiple locations at an annual one-day event
shall be issued only one license. Application shall be made on forms provided by the
commissioner and shall require the applicant to state the full name and address of the
owner of the building, structure, or enclosure, the lessee and manager of the food and
beverage service establishment, hotel, motel, lodging establishment, public pool, or resort;
the name under which the business is to be conducted; and any other information as may
be required by the commissioner to complete the application for license.

Subd. 2.

License renewal.

Initial and renewal licenses for all food and beverage
service establishments, youth camps, hotels, motels, lodging establishments, public pools,
and resorts shall be issued on an annual basis. Any person who operates a place of
business after the expiration date of a license or without having submitted an application
and paid the fee shall be deemed to have violated the provisions of this chapter and shall
be subject to enforcement action, as provided in the Health Enforcement Consolidation
Act, sections 144.989 to 144.993. In addition, a penalty of deleted text begin $60deleted text end new text begin $50new text end shall be added to the
total of the license fee for any food and beverage service establishment operating without
a license as a mobile food unit, a seasonal temporary or seasonal permanent food stand, or
a special event food stand, and a penalty of deleted text begin $120deleted text end new text begin $100new text end shall be added to the total of the
license fee for all restaurants, food carts, hotels, motels, lodging establishments, youth
camps, public pools, and resorts operating without a license for a period of up to 30 days.
A late fee of deleted text begin $360deleted text end new text begin $300new text end shall be added to the license fee for establishments operating more
than 30 days without a license.

Subd. 2a.

Food manager certification.

An applicant for certification or certification
renewal as a food manager must submit to the commissioner a deleted text begin $35deleted text end new text begin $28new text end nonrefundable
certification fee payable to the Department of Health. The commissioner shall issue a
duplicate certificate to replace a lost, destroyed, or mutilated certificate if the applicant
submits a completed application on a form provided by the commissioner for a duplicate
certificate and pays $20 to the department for the cost of duplication.

Subd. 3.

Establishment fees; definitions.

(a) The following fees are required
for food and beverage service establishments, youth camps, hotels, motels, lodging
establishments, public pools, and resorts licensed under this chapter. Food and beverage
service establishments must pay the highest applicable fee under paragraph (d), clause
(1), (2), (3), or (4), and establishments serving alcohol must pay the highest applicable
fee under paragraph (d), clause (6) or (7). The license fee for new operators previously
licensed under this chapter for the same calendar year is one-half of the appropriate annual
license fee, plus any penalty that may be required. The license fee for operators opening
on or after October 1 is one-half of the appropriate annual license fee, plus any penalty
that may be required.

(b) All food and beverage service establishments, except special event food stands,
and all hotels, motels, lodging establishments, public pools, and resorts shall pay an
annual base fee of $150.

(c) A special event food stand shall pay a flat fee of deleted text begin $50deleted text end new text begin $40new text end annually. "Special event
food stand" means a fee category where food is prepared or served in conjunction with
celebrations, county fairs, or special events from a special event food stand as defined
in section 157.15.

(d) In addition to the base fee in paragraph (b), each food and beverage service
establishment, other than a special event food stand and a school concession stand, and
each hotel, motel, lodging establishment, public pool, and resort shall pay an additional
annual fee for each fee category, additional food service, or required additional inspection
specified in this paragraph:

(1) Limited food menu selection, deleted text begin $60deleted text end new text begin $50new text end . "Limited food menu selection" means a
fee category that provides one or more of the following:

(i) prepackaged food that receives heat treatment and is served in the package;

(ii) frozen pizza that is heated and served;

(iii) a continental breakfast such as rolls, coffee, juice, milk, and cold cereal;

(iv) soft drinks, coffee, or nonalcoholic beverages; or

(v) cleaning for eating, drinking, or cooking utensils, when the only food served
is prepared off site.

(2) Small establishment, including boarding establishments, deleted text begin $120deleted text end new text begin $100new text end . "Small
establishment" means a fee category that has no salad bar and meets one or more of
the following:

(i) possesses food service equipment that consists of no more than a deep fat fryer, a
grill, two hot holding containers, and one or more microwave ovens;

(ii) serves dipped ice cream or soft serve frozen desserts;

(iii) serves breakfast in an owner-occupied bed and breakfast establishment;

(iv) is a boarding establishment; or

(v) meets the equipment criteria in clause (3), item (i) or (ii), and has a maximum
patron seating capacity of not more than 50.

(3) Medium establishment, deleted text begin $310deleted text end new text begin $260new text end . "Medium establishment" means a fee
category that meets one or more of the following:

(i) possesses food service equipment that includes a range, oven, steam table, salad
bar, or salad preparation area;

(ii) possesses food service equipment that includes more than one deep fat fryer,
one grill, or two hot holding containers; or

(iii) is an establishment where food is prepared at one location and served at one or
more separate locations.

Establishments meeting criteria in clause (2), item (v), are not included in this fee
category.

(4) Large establishment, deleted text begin $540deleted text end new text begin $460new text end . "Large establishment" means either:

(i) a fee category that (A) meets the criteria in clause (3), items (i) or (ii), for a
medium establishment, (B) seats more than 175 people, and (C) offers the full menu
selection an average of five or more days a week during the weeks of operation; or

(ii) a fee category that (A) meets the criteria in clause (3), item (iii), for a medium
establishment, and (B) prepares and serves 500 or more meals per day.

(5) Other food and beverage service, including food carts, mobile food units,
seasonal temporary food stands, and seasonal permanent food stands, deleted text begin $60deleted text end new text begin $50new text end .

(6) Beer or wine table service, deleted text begin $60deleted text end new text begin $50new text end . "Beer or wine table service" means a fee
category where the only alcoholic beverage service is beer or wine, served to customers
seated at tables.

(7) Alcoholic beverage service, other than beer or wine table service, deleted text begin $165deleted text end new text begin $135new text end .

"Alcohol beverage service, other than beer or wine table service" means a fee
category where alcoholic mixed drinks are served or where beer or wine are served from
a bar.

(8) Lodging per sleeping accommodation unit, deleted text begin $10deleted text end new text begin $8new text end , including hotels, motels,
lodging establishments, and resorts, up to a maximum of deleted text begin $1,000deleted text end new text begin $800new text end . "Lodging per
sleeping accommodation unit" means a fee category including the number of guest rooms,
cottages, or other rental units of a hotel, motel, lodging establishment, or resort; or the
number of beds in a dormitory.

(9) First public pool, deleted text begin $325deleted text end new text begin $180new text end ; each additional public pool, deleted text begin $175deleted text end new text begin $100new text end . "Public
pool" means a fee category that has the meaning given in section 144.1222, subdivision 4.

(10) First spa, deleted text begin $175deleted text end new text begin $110new text end ; each additional spa, deleted text begin $100deleted text end new text begin $50new text end . "Spa pool" means a fee
category that has the meaning given in Minnesota Rules, part 4717.0250, subpart 9.

(11) Private sewer or water, deleted text begin $60deleted text end new text begin $50new text end . "Individual private water" means a fee
category with a water supply other than a community public water supply as defined in
Minnesota Rules, chapter 4720. "Individual private sewer" means a fee category with an
individual sewage treatment system which uses subsurface treatment and disposal.

(12) Additional food service, deleted text begin $150deleted text end new text begin $130new text end . "Additional food service" means a location
at a food service establishment, other than the primary food preparation and service area,
used to prepare or serve food to the public. Additional food service does not apply to
school concession stands.

(13) Additional inspection fee, deleted text begin $360deleted text end new text begin $300new text end . "Additional inspection fee" means a
fee to conduct the second inspection each year for elementary and secondary education
facility school lunch programs when required by the Richard B. Russell National School
Lunch Act.

(e) A fee new text begin of $350 new text end for review of construction plans must accompany the initial license
application for restaurants, hotels, motels, lodging establishments, new text begin or new text end resortsdeleted text begin , seasonal
food stands, and mobile food units. The fee for this construction plan review is as follows:
deleted text end new text begin
with five or more sleeping units.
new text end

deleted text begin Service Area
deleted text end
deleted text begin Type
deleted text end
deleted text begin Fee
deleted text end
deleted text begin Food
deleted text end
deleted text begin limited food menu
deleted text end
deleted text begin $275
deleted text end
deleted text begin small establishment
deleted text end
deleted text begin $400
deleted text end
deleted text begin medium establishment
deleted text end
deleted text begin $450
deleted text end
deleted text begin large food establishment
deleted text end
deleted text begin $500
deleted text end
deleted text begin additional food service
deleted text end
deleted text begin $150
deleted text end
deleted text begin Transient food service
deleted text end
deleted text begin food cart
deleted text end
deleted text begin $250
deleted text end
deleted text begin seasonal permanent food stand
deleted text end
deleted text begin $250
deleted text end
deleted text begin seasonal temporary food stand
deleted text end
deleted text begin $250
deleted text end
deleted text begin mobile food unit
deleted text end
deleted text begin $350
deleted text end
deleted text begin Alcohol
deleted text end
deleted text begin beer or wine table service
deleted text end
deleted text begin $150
deleted text end
deleted text begin alcohol service from bar
deleted text end
deleted text begin $250
deleted text end
deleted text begin Lodging
deleted text end
deleted text begin less than 25 rooms
deleted text end
deleted text begin $375
deleted text end
deleted text begin 25 to less than 100 rooms
deleted text end
deleted text begin $400
deleted text end
deleted text begin 100 rooms or more
deleted text end
deleted text begin $500
deleted text end
deleted text begin less than five cabins
deleted text end
deleted text begin $350
deleted text end
deleted text begin five to less than ten cabins
deleted text end
deleted text begin $400
deleted text end
deleted text begin ten cabins or more
deleted text end
deleted text begin $450
deleted text end

(f) When existing food and beverage service establishments, hotels, motels, lodging
establishments, new text begin or new text end resortsdeleted text begin , seasonal food stands, and mobile food unitsdeleted text end are extensively
remodeled, a fee new text begin of $250 new text end must be submitted with the remodeling plans. deleted text begin The fee for
this construction plan review is as follows:
deleted text end new text begin A fee of $250 must be submitted for new
construction or remodeling for a restaurant with a limited food menu selection, a seasonal
permanent food stand, a mobile food unit, or a food cart, or for a hotel, motel, resort, or
lodging establishment addition of less than five sleeping units.
new text end

deleted text begin Service Area
deleted text end
deleted text begin Type
deleted text end
deleted text begin Fee
deleted text end
deleted text begin Food
deleted text end
deleted text begin limited food menu
deleted text end
deleted text begin $250
deleted text end
deleted text begin small establishment
deleted text end
deleted text begin $300
deleted text end
deleted text begin medium establishment
deleted text end
deleted text begin $350
deleted text end
deleted text begin large food establishment
deleted text end
deleted text begin $400
deleted text end
deleted text begin additional food service
deleted text end
deleted text begin $150
deleted text end
deleted text begin Transient food service
deleted text end
deleted text begin food cart
deleted text end
deleted text begin $250
deleted text end
deleted text begin seasonal permanent food stand
deleted text end
deleted text begin $250
deleted text end
deleted text begin seasonal temporary food stand
deleted text end
deleted text begin $250
deleted text end
deleted text begin mobile food unit
deleted text end
deleted text begin $250
deleted text end
deleted text begin Alcohol
deleted text end
deleted text begin beer or wine table service
deleted text end
deleted text begin $150
deleted text end
deleted text begin alcohol service from bar
deleted text end
deleted text begin $250
deleted text end
deleted text begin Lodging
deleted text end
deleted text begin less than 25 rooms
deleted text end
deleted text begin $250
deleted text end
deleted text begin 25 to less than 100 rooms
deleted text end
deleted text begin $300
deleted text end
deleted text begin 100 rooms or more
deleted text end
deleted text begin $450
deleted text end
deleted text begin less than five cabins
deleted text end
deleted text begin $250
deleted text end
deleted text begin five to less than ten cabins
deleted text end
deleted text begin $350
deleted text end
deleted text begin ten cabins or more
deleted text end
deleted text begin $400
deleted text end

(g) new text begin Seasonal temporary food stands and new text end special event food stands are not required to
submit construction or remodeling plans for review.

(h) Youth camps shall pay an annual single fee for food and lodging as follows:

(1) camps with up to 99 campers, $325;

(2) camps with 100 to 199 campers, $550; and

(3) camps with 200 or more campers, $750.

(i) A youth camp which pays fees under paragraph (d) is not required to pay fees
under paragraph (h).

Subd. 3a.

Statewide hospitality fee.

Every person, firm, or corporation that
operates a licensed boarding establishment, food and beverage service establishment,
seasonal temporary or permanent food stand, special event food stand, mobile food unit,
food cart, resort, hotel, motel, or lodging establishment in Minnesota must submit to the
commissioner a $35 annual statewide hospitality fee for each licensed activity. The fee
for establishments licensed by the Department of Health is required at the same time the
licensure fee is due. For establishments licensed by local governments, the fee is due by
July 1 of each year.

Subd. 4.

Posting requirements.

Every food and beverage service establishment,
for-profit youth camp, hotel, motel, lodging establishment, public pool, or resort must have
the license posted in a conspicuous place at the establishment. Mobile food units, food
carts, and seasonal temporary food stands shall be issued decals with the initial license and
each calendar year with license renewals. The current license year decal must be placed on
the unit or stand in a location determined by the commissioner. Decals are not transferable.

Sec. 2.

Minnesota Statutes 2010, section 177.24, subdivision 1, is amended to read:


Subdivision 1.

Amount.

(a) For purposes of this subdivision, the terms defined in
this paragraph have the meanings given them.

(1) "Large employer" means an enterprise whose annual gross volume of sales
made or business done is not less than $625,000 (exclusive of excise taxes at the retail
level that are separately stated) and covered by the Minnesota Fair Labor Standards Act,
sections 177.21 to 177.35.

(2) "Small employer" means an enterprise whose annual gross volume of sales made
or business done is less than $625,000 (exclusive of excise taxes at the retail level that
are separately stated) and covered by the Minnesota Fair Labor Standards Act, sections
177.21 to 177.35.

(b) Except as otherwise provided in sections 177.21 to 177.35, every large employer
must pay each employee wages at a rate of at least $5.15 an hour beginning September
1, 1997, and at a rate of at least $6.15 an hour beginning August 1, 2005. Every small
employer must pay each employee at a rate of at least $4.90 an hour beginning January 1,
1998, and at a rate of at least $5.25 an hour beginning August 1, 2005.

(c) Notwithstanding paragraph (b), during the first 90 consecutive days of
employment, an employer may pay an employee under the age of 20 years a wage of $4.90
an hour. No employer may take any action to displace any employee, including a partial
displacement through a reduction in hours, wages, or employment benefits, in order to
hire an employee at the wage authorized in this paragraph.

new text begin (d) Notwithstanding paragraph (b) and subdivision 2, every large employer must
pay an employee receiving gratuities at a rate that is the greater of: (i) at least $6.55 per
hour; or (ii) at least $7.25 per hour if the employee does not earn sufficient gratuities
during the pay period so that the sum of $6.55 per hour and gratuities received is at least
$12 per hour for the pay period.
new text end

Sec. 3.

Minnesota Statutes 2010, section 177.24, subdivision 2, is amended to read:


Subd. 2.

Gratuities not applied.

new text begin Except as provided in section 177.24, subdivision
1, paragraph (d),
new text end no employer may directly or indirectly credit, apply, or utilize gratuities
towards payment of the minimum wage set by this section or federal law.

Sec. 4.

Minnesota Statutes 2010, section 268.035, subdivision 24, is amended to read:


Subd. 24.

Taxable wages.

(a) "Taxable wages" means those wages paid to an
employee in covered employment each calendar year up to an amount equal to 60 percent
of the state's average annual wage, rounded to the nearest $1,000.new text begin For the purpose of
this subdivision, taxable wages does not include income from tips or gratuities paid to
an employee by a customer of an employer that is greater than or equal to two times the
applicable minimum wage rate.
new text end

(b) Taxable wages includes the amount of wages paid for covered employment by
the employer's predecessor when there has been an experience rating history transfer
under section 268.051, subdivision 4.

Sec. 5.

Minnesota Statutes 2010, section 297A.68, is amended by adding a subdivision
to read:


new text begin Subd. 42. new text end

new text begin Complimentary meals and beverages. new text end

new text begin Meals, nonalcoholic beverages,
and alcoholic beverages provided by a restaurant as defined under section 157.15,
subdivision 12, to a customer at no cost to the customer are exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 6.

Minnesota Statutes 2010, section 297A.68, is amended by adding a subdivision
to read:


new text begin Subd. 43. new text end

new text begin Employee food and drink. new text end

new text begin Prepared food and drinks purchased for
and served to employees of restaurants defined under section 157.15, subdivision 12,
are exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 7.

Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to read:


Subd. 5.

Capital equipment.

(a) Capital equipment is exempt. The tax must be
imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and
then refunded in the manner provided in section 297A.75.

"Capital equipment" means machinery and equipment purchased or leased, and used
in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
or refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment
used primarily to electronically transmit results retrieved by a customer of an online
computerized data retrieval systemnew text begin and machinery and equipment used by restaurants in
the furnishing, preparing, or serving of prepared foods as defined in section 297A.61,
subdivision 31
new text end .

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or regulate the production
equipment;

(2) machinery and equipment used for research and development, design, quality
control, and testing activities;

(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;

(4) materials and supplies used to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment;

(7) materials used to construct and install special purpose buildings used in the
production process;

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
as part of the delivery process regardless if mounted on a chassis, repair parts for
ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development, design, or production
of computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials, except for materials included in paragraph (b), clauses (6)
and (7);

(4) machinery or equipment used for nonproduction purposes, including, but not
limited to, the following: plant security, fire prevention, first aid, and hospital stations;
support operations or administration; pollution control; and plant cleaning, disposal of
scrap and waste, plant communications, space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as defined by section
297A.61, subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;

(7) deleted text begin machinery and equipment used by restaurants in the furnishing, preparing, or
serving of prepared foods as defined in section 297A.61, subdivision 31;
deleted text end

deleted text begin (8)deleted text end machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3
, paragraph (g), clause (6), items (i) to (vi) and (viii);

deleted text begin (9)deleted text end new text begin (8)new text end machinery or equipment used in the transportation, transmission, or
distribution of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through
pipes, lines, tanks, mains, or other means of transporting those products. This clause
does not apply to machinery or equipment used to blend petroleum or biodiesel fuel
as defined in section 239.77; or

deleted text begin (10)deleted text end new text begin (9)new text end any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.

(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For
purposes of this clause, (i) manufacturing begins with the removal of raw materials
from inventory and ends when the last process prior to loading for shipment has been
completed; (ii) fabricating begins with the removal from storage or inventory of the
property to be assembled, processed, altered, or modified and ends with the creation
or production of the new or changed product; (iii) mining begins with the removal of
overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
ends when the last process before stockpiling is completed; and (iv) refining begins with
the removal from inventory or storage of a natural resource and ends with the conversion
of the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical devices, including
computers and computer software, that are purchased or constructed to be used for the
activities set forth in paragraph (a), beginning with the removal of raw materials from
inventory through completion of the product, including packaging of the product.

(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).

(6) "Manufacturing" means an operation or series of operations where raw materials
are changed in form, composition, or condition by machinery and equipment and which
results in the production of a new article of tangible personal property. For purposes of
this subdivision, "manufacturing" includes the generation of electricity or steam to be
sold at retail.

(7) "Mining" means the extraction of minerals, ores, stone, or peat.

(8) "Online data retrieval system" means a system whose cumulation of information
is equally available and accessible to all its customers.

(9) "Primarily" means machinery and equipment used 50 percent or more of the time
in an activity described in paragraph (a).

(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.

(11) This subdivision does not apply to telecommunications equipment as
provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
for telecommunications services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 8. new text begin RESTAURANT RECOVERY AND JOBS CREATION ACT.
new text end

new text begin This act shall be known as the Restaurant Recovery and Jobs Creation Act of 2011.
new text end