SF 1731

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; property; reducing class rates 
  1.3             on commercial and industrial property, utility 
  1.4             property, and apartments; increasing the education 
  1.5             homestead credit; amending Minnesota Statutes 2000, 
  1.6             sections 273.13, subdivisions 24 and 25; and 273.1382, 
  1.7             subdivision 1a. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 2000, section 273.13, 
  1.10  subdivision 24, is amended to read: 
  1.11     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
  1.12  property and utility real and personal property is class 3a.  
  1.13     (1) Except as otherwise provided, each parcel of 
  1.14  commercial, industrial, or utility real property has a class 
  1.15  rate of 2.4 two percent of the first tier of market value, and 
  1.16  3.4 three percent of the remaining market value.  In the case of 
  1.17  contiguous parcels of property owned by the same person or 
  1.18  entity, only the value equal to the first-tier value of the 
  1.19  contiguous parcels qualifies for the reduced class rate, except 
  1.20  that contiguous parcels owned by the same person or entity shall 
  1.21  be eligible for the first-tier value class rate on each separate 
  1.22  business operated by the owner of the property, provided the 
  1.23  business is housed in a separate structure.  For the purposes of 
  1.24  this subdivision, the first tier means the first $150,000 of 
  1.25  market value.  Real property owned in fee by a utility for 
  1.26  transmission line right-of-way shall be classified at the class 
  2.1   rate for the higher tier.  
  2.2      For purposes of this subdivision, parcels are considered to 
  2.3   be contiguous even if they are separated from each other by a 
  2.4   road, street, waterway, or other similar intervening type of 
  2.5   property.  Connections between parcels that consist of power 
  2.6   lines or pipelines do not cause the parcels to be contiguous.  
  2.7   Property owners who have contiguous parcels of property that 
  2.8   constitute separate businesses that may qualify for the 
  2.9   first-tier class rate shall notify the assessor by July 1, for 
  2.10  treatment beginning in the following taxes payable year.  
  2.11     (2) Personal property that is:  (i) part of an electric 
  2.12  generation, transmission, or distribution system; or (ii) part 
  2.13  of a pipeline system transporting or distributing water, gas, 
  2.14  crude oil, or petroleum products; and (iii) not described in 
  2.15  clause (3), has a class rate as provided under clause (1) for 
  2.16  the first tier of market value and the remaining market value.  
  2.17  In the case of multiple parcels in one county that are owned by 
  2.18  one person or entity, only one first tier amount is eligible for 
  2.19  the reduced rate.  
  2.20     (3) The entire market value of personal property that is:  
  2.21  (i) tools, implements, and machinery of an electric generation, 
  2.22  transmission, or distribution system; (ii) tools, implements, 
  2.23  and machinery of a pipeline system transporting or distributing 
  2.24  water, gas, crude oil, or petroleum products; or (iii) the mains 
  2.25  and pipes used in the distribution of steam or hot or chilled 
  2.26  water for heating or cooling buildings, has a class rate as 
  2.27  provided under clause (1) for the remaining market value in 
  2.28  excess of the first tier. 
  2.29     (b) Employment property defined in section 469.166, during 
  2.30  the period provided in section 469.170, shall constitute class 
  2.31  3b.  The class rates for class 3b property are determined under 
  2.32  paragraph (a). 
  2.33     (c)(1) Subject to the limitations of clause (2), structures 
  2.34  which are (i) located on property classified as class 3a, (ii) 
  2.35  constructed under an initial building permit issued after 
  2.36  January 2, 1996, (iii) located in a transit zone as defined 
  3.1   under section 473.3915, subdivision 3, (iv) located within the 
  3.2   boundaries of a school district, and (v) not primarily used for 
  3.3   retail or transient lodging purposes, shall have a class rate 
  3.4   equal to the lesser of 2.975 percent or the class rate of the 
  3.5   second tier of the commercial property rate under paragraph (a) 
  3.6   on any portion of the market value that does not qualify for the 
  3.7   first tier class rate under paragraph (a).  As used in item (v), 
  3.8   a structure is primarily used for retail or transient lodging 
  3.9   purposes if over 50 percent of its square footage is used for 
  3.10  those purposes.  A class rate equal to the lesser of 2.975 
  3.11  percent or the class rate of the second tier of the commercial 
  3.12  property class rate under paragraph (a) shall also apply to 
  3.13  improvements to existing structures that meet the requirements 
  3.14  of items (i) to (v) if the improvements are constructed under an 
  3.15  initial building permit issued after January 2, 1996, even if 
  3.16  the remainder of the structure was constructed prior to January 
  3.17  2, 1996.  For the purposes of this paragraph, a structure shall 
  3.18  be considered to be located in a transit zone if any portion of 
  3.19  the structure lies within the zone.  If any property once 
  3.20  eligible for treatment under this paragraph ceases to remain 
  3.21  eligible due to revisions in transit zone boundaries, the 
  3.22  property shall continue to receive treatment under this 
  3.23  paragraph for a period of three years. 
  3.24     (2) This clause applies to any structure qualifying for the 
  3.25  transit zone reduced class rate under clause (1) on January 2, 
  3.26  1999, or any structure meeting any of the qualification criteria 
  3.27  in item (i) and otherwise qualifying for the transit zone 
  3.28  reduced class rate under clause (1).  Such a structure continues 
  3.29  to receive the transit zone reduced class rate until the 
  3.30  occurrence of one of the events in item (ii).  Property 
  3.31  qualifying under item (i)(D), that is located outside of a city 
  3.32  of the first class, qualifies for the transit zone reduced class 
  3.33  rate as provided in that item.  Property qualifying under item 
  3.34  (i)(E) qualifies for the transit zone reduced class rate as 
  3.35  provided in that item. 
  3.36     (i) A structure qualifies for the rate in this clause if it 
  4.1   is: 
  4.2      (A) property for which a building permit was issued before 
  4.3   December 31, 1998; or 
  4.4      (B) property for which a building permit was issued before 
  4.5   June 30, 2001, if: 
  4.6      (I) at least 50 percent of the land on which the structure 
  4.7   is to be built has been acquired or is the subject of signed 
  4.8   purchase agreements or signed options as of March 15, 1998, by 
  4.9   the entity that proposes construction of the project or an 
  4.10  affiliate of the entity; 
  4.11     (II) signed agreements have been entered into with one 
  4.12  entity or with affiliated entities to lease for the account of 
  4.13  the entity or affiliated entities at least 50 percent of the 
  4.14  square footage of the structure or the owner of the structure 
  4.15  will occupy at least 50 percent of the square footage of the 
  4.16  structure; and 
  4.17     (III) one of the following requirements is met: 
  4.18     the project proposer has submitted the completed data 
  4.19  portions of an environmental assessment worksheet by December 
  4.20  31, 1998; or 
  4.21     a notice of determination of adequacy of an environmental 
  4.22  impact statement has been published by April 1, 1999; or 
  4.23     an alternative urban areawide review has been completed by 
  4.24  April 1, 1999; or 
  4.25     (C) property for which a building permit is issued before 
  4.26  July 30, 1999, if: 
  4.27     (I) at least 50 percent of the land on which the structure 
  4.28  is to be built has been acquired or is the subject of signed 
  4.29  purchase agreements as of March 31, 1998, by the entity that 
  4.30  proposes construction of the project or an affiliate of the 
  4.31  entity; 
  4.32     (II) a signed agreement has been entered into between the 
  4.33  building developer and a tenant to lease for its own account at 
  4.34  least 200,000 square feet of space in the building; 
  4.35     (III) a signed letter of intent is entered into by July 1, 
  4.36  1998, between the building developer and the tenant to lease the 
  5.1   space for its own account; and 
  5.2      (IV) the environmental review process required by state law 
  5.3   was commenced by December 31, 1998; 
  5.4      (D) property for which an irrevocable letter of credit with 
  5.5   a housing and redevelopment authority was signed before December 
  5.6   31, 1998.  The structure shall receive the transit zone reduced 
  5.7   class rate during construction and for the duration of time that 
  5.8   the original tenants remain in the building.  Any unoccupied net 
  5.9   leasable square footage that is not leased within 36 months 
  5.10  after the certificate of occupancy has been issued for the 
  5.11  building shall not be eligible to receive the reduced class 
  5.12  rate.  This reduced class rate applies only if a qualifying 
  5.13  entity continues to own the property; 
  5.14     (E) property, located in a city of the first class, and for 
  5.15  which the building permits for the excavation, the parking ramp, 
  5.16  and the office tower were issued prior to April 1, 1999, shall 
  5.17  receive the reduced class rate during construction and for the 
  5.18  first five assessment years immediately following its initial 
  5.19  occupancy provided that, when completed, at least 25 percent of 
  5.20  the net leasable square footage must be occupied by a qualifying 
  5.21  entity each year during this time period.  In order to receive 
  5.22  the reduced class rate on the structure in any subsequent 
  5.23  assessment years, at least 50 percent of the rentable square 
  5.24  footage must be occupied by a qualifying entity.  This reduced 
  5.25  class rate applies only if a qualifying entity continues to own 
  5.26  the property. 
  5.27     (ii) A structure specified by this clause, other than a 
  5.28  structure qualifying under clause (i)(D) or (E), shall continue 
  5.29  to receive the transit zone reduced class rate until the 
  5.30  occurrence of one of the following events: 
  5.31     (A) if the structure upon initial occupancy will be owner 
  5.32  occupied by the entity initially constructing the structure or 
  5.33  an affiliated entity, the structure receives the reduced class 
  5.34  rate until the structure ceases to be at least 50 percent 
  5.35  occupied by the entity or an affiliated entity, provided, if the 
  5.36  portion of the structure occupied by that entity or an affiliate 
  6.1   of the entity is less than 85 percent, the transit zone class 
  6.2   rate reduction for the portion of structure not so occupied 
  6.3   terminates upon the leasing of such space to any nonaffiliated 
  6.4   entity; or 
  6.5      (B) if the structure is leased by a single entity or 
  6.6   affiliated entity at the time of initial occupancy, the 
  6.7   structure shall receive the reduced class rate until the 
  6.8   structure ceases to be at least 50 percent occupied by the 
  6.9   entity or an affiliated entity, provided, if the portion of the 
  6.10  structure occupied by that entity or an affiliate of the entity 
  6.11  is less than 85 percent, the transit zone class rate reduction 
  6.12  for the portion of structure not so occupied shall terminate 
  6.13  upon the leasing of such space to any nonaffiliated entity; or 
  6.14     (C) if the structure meets the criteria in item (i)(C), the 
  6.15  structure shall receive the reduced class rate until the 
  6.16  expiration of the initial lease term of the applicable tenants. 
  6.17     Percentages occupied or leased shall be determined based 
  6.18  upon net leasable square footage in the structure.  The assessor 
  6.19  shall allocate the value of the structure in the same fashion as 
  6.20  provided in the general law for portions of any structure 
  6.21  receiving and not receiving the transit tax class reduction as a 
  6.22  result of this clause. 
  6.23     (3) For purposes of paragraph (c), "qualifying entity" 
  6.24  means the entity owning the property on September 1, 2000, or an 
  6.25  affiliate of an entity that owned the property on September 1, 
  6.26  2000. 
  6.27     [EFFECTIVE DATE.] This section is effective for taxes 
  6.28  levied in 2001, payable in 2002, and thereafter. 
  6.29     Sec. 2.  Minnesota Statutes 2000, section 273.13, 
  6.30  subdivision 25, is amended to read: 
  6.31     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
  6.32  estate containing four or more units and used or held for use by 
  6.33  the owner or by the tenants or lessees of the owner as a 
  6.34  residence for rental periods of 30 days or more.  Class 4a also 
  6.35  includes hospitals licensed under sections 144.50 to 144.56, 
  6.36  other than hospitals exempt under section 272.02, and contiguous 
  7.1   property used for hospital purposes, without regard to whether 
  7.2   the property has been platted or subdivided.  Class 4a property 
  7.3   in a city with a population of 5,000 or less, that is (1) 
  7.4   located outside of the metropolitan area, as defined in section 
  7.5   473.121, subdivision 2, or outside any county contiguous to the 
  7.6   metropolitan area, and (2) whose city boundary is at least 15 
  7.7   miles from the boundary of any city with a population greater 
  7.8   than 5,000 has a class rate of 2.15 percent of market value.  
  7.9   All other Class 4a property has a class rate of 2.4 two percent 
  7.10  of market value.  For purposes of this paragraph, population has 
  7.11  the same meaning given in section 477A.011, subdivision 3. 
  7.12     (b) Class 4b includes: 
  7.13     (1) residential real estate containing less than four units 
  7.14  that does not qualify as class 4bb, other than seasonal 
  7.15  residential, and recreational; 
  7.16     (2) manufactured homes not classified under any other 
  7.17  provision; 
  7.18     (3) a dwelling, garage, and surrounding one acre of 
  7.19  property on a nonhomestead farm classified under subdivision 23, 
  7.20  paragraph (b) containing two or three units; 
  7.21     (4) unimproved property that is classified residential as 
  7.22  determined under subdivision 33.  
  7.23     Class 4b property has a class rate of 1.65 percent of 
  7.24  market value.  
  7.25     (c) Class 4bb includes: 
  7.26     (1) nonhomestead residential real estate containing one 
  7.27  unit, other than seasonal residential, and recreational; and 
  7.28     (2) a single family dwelling, garage, and surrounding one 
  7.29  acre of property on a nonhomestead farm classified under 
  7.30  subdivision 23, paragraph (b). 
  7.31     Class 4bb has a class rate of 1.2 percent on the first 
  7.32  $76,000 of market value and a class rate of 1.65 percent of its 
  7.33  market value that exceeds $76,000. 
  7.34     Property that has been classified as seasonal recreational 
  7.35  residential property at any time during which it has been owned 
  7.36  by the current owner or spouse of the current owner does not 
  8.1   qualify for class 4bb. 
  8.2      (d) Class 4c property includes: 
  8.3      (1) except as provided in subdivision 22, paragraph (c), 
  8.4   real property devoted to temporary and seasonal residential 
  8.5   occupancy for recreation purposes, including real property 
  8.6   devoted to temporary and seasonal residential occupancy for 
  8.7   recreation purposes and not devoted to commercial purposes for 
  8.8   more than 250 days in the year preceding the year of 
  8.9   assessment.  For purposes of this clause, property is devoted to 
  8.10  a commercial purpose on a specific day if any portion of the 
  8.11  property is used for residential occupancy, and a fee is charged 
  8.12  for residential occupancy.  In order for a property to be 
  8.13  classified as class 4c, seasonal recreational residential for 
  8.14  commercial purposes, at least 40 percent of the annual gross 
  8.15  lodging receipts related to the property must be from business 
  8.16  conducted during 90 consecutive days and either (i) at least 60 
  8.17  percent of all paid bookings by lodging guests during the year 
  8.18  must be for periods of at least two consecutive nights; or (ii) 
  8.19  at least 20 percent of the annual gross receipts must be from 
  8.20  charges for rental of fish houses, boats and motors, 
  8.21  snowmobiles, downhill or cross-country ski equipment, or charges 
  8.22  for marina services, launch services, and guide services, or the 
  8.23  sale of bait and fishing tackle.  For purposes of this 
  8.24  determination, a paid booking of five or more nights shall be 
  8.25  counted as two bookings.  Class 4c also includes commercial use 
  8.26  real property used exclusively for recreational purposes in 
  8.27  conjunction with class 4c property devoted to temporary and 
  8.28  seasonal residential occupancy for recreational purposes, up to 
  8.29  a total of two acres, provided the property is not devoted to 
  8.30  commercial recreational use for more than 250 days in the year 
  8.31  preceding the year of assessment and is located within two miles 
  8.32  of the class 4c property with which it is used.  Class 4c 
  8.33  property classified in this clause also includes the remainder 
  8.34  of class 1c resorts provided that the entire property including 
  8.35  that portion of the property classified as class 1c also meets 
  8.36  the requirements for class 4c under this clause; otherwise the 
  9.1   entire property is classified as class 3.  Owners of real 
  9.2   property devoted to temporary and seasonal residential occupancy 
  9.3   for recreation purposes and all or a portion of which was 
  9.4   devoted to commercial purposes for not more than 250 days in the 
  9.5   year preceding the year of assessment desiring classification as 
  9.6   class 1c or 4c, must submit a declaration to the assessor 
  9.7   designating the cabins or units occupied for 250 days or less in 
  9.8   the year preceding the year of assessment by January 15 of the 
  9.9   assessment year.  Those cabins or units and a proportionate 
  9.10  share of the land on which they are located will be designated 
  9.11  class 1c or 4c as otherwise provided.  The remainder of the 
  9.12  cabins or units and a proportionate share of the land on which 
  9.13  they are located will be designated as class 3a.  The owner of 
  9.14  property desiring designation as class 1c or 4c property must 
  9.15  provide guest registers or other records demonstrating that the 
  9.16  units for which class 1c or 4c designation is sought were not 
  9.17  occupied for more than 250 days in the year preceding the 
  9.18  assessment if so requested.  The portion of a property operated 
  9.19  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
  9.20  nonresidential facility operated on a commercial basis not 
  9.21  directly related to temporary and seasonal residential occupancy 
  9.22  for recreation purposes shall not qualify for class 1c or 4c; 
  9.23     (2) qualified property used as a golf course if: 
  9.24     (i) it is open to the public on a daily fee basis.  It may 
  9.25  charge membership fees or dues, but a membership fee may not be 
  9.26  required in order to use the property for golfing, and its green 
  9.27  fees for golfing must be comparable to green fees typically 
  9.28  charged by municipal courses; and 
  9.29     (ii) it meets the requirements of section 273.112, 
  9.30  subdivision 3, paragraph (d). 
  9.31     A structure used as a clubhouse, restaurant, or place of 
  9.32  refreshment in conjunction with the golf course is classified as 
  9.33  class 3a property; 
  9.34     (3) real property up to a maximum of one acre of land owned 
  9.35  by a nonprofit community service oriented organization; provided 
  9.36  that the property is not used for a revenue-producing activity 
 10.1   for more than six days in the calendar year preceding the year 
 10.2   of assessment and the property is not used for residential 
 10.3   purposes on either a temporary or permanent basis.  For purposes 
 10.4   of this clause, a "nonprofit community service oriented 
 10.5   organization" means any corporation, society, association, 
 10.6   foundation, or institution organized and operated exclusively 
 10.7   for charitable, religious, fraternal, civic, or educational 
 10.8   purposes, and which is exempt from federal income taxation 
 10.9   pursuant to section 501(c)(3), (10), or (19) of the Internal 
 10.10  Revenue Code of 1986, as amended through December 31, 1990.  For 
 10.11  purposes of this clause, "revenue-producing activities" shall 
 10.12  include but not be limited to property or that portion of the 
 10.13  property that is used as an on-sale intoxicating liquor or 3.2 
 10.14  percent malt liquor establishment licensed under chapter 340A, a 
 10.15  restaurant open to the public, bowling alley, a retail store, 
 10.16  gambling conducted by organizations licensed under chapter 349, 
 10.17  an insurance business, or office or other space leased or rented 
 10.18  to a lessee who conducts a for-profit enterprise on the 
 10.19  premises.  Any portion of the property which is used for 
 10.20  revenue-producing activities for more than six days in the 
 10.21  calendar year preceding the year of assessment shall be assessed 
 10.22  as class 3a.  The use of the property for social events open 
 10.23  exclusively to members and their guests for periods of less than 
 10.24  24 hours, when an admission is not charged nor any revenues are 
 10.25  received by the organization shall not be considered a 
 10.26  revenue-producing activity; 
 10.27     (4) post-secondary student housing of not more than one 
 10.28  acre of land that is owned by a nonprofit corporation organized 
 10.29  under chapter 317A and is used exclusively by a student 
 10.30  cooperative, sorority, or fraternity for on-campus housing or 
 10.31  housing located within two miles of the border of a college 
 10.32  campus; 
 10.33     (5) manufactured home parks as defined in section 327.14, 
 10.34  subdivision 3; 
 10.35     (6) real property that is actively and exclusively devoted 
 10.36  to indoor fitness, health, social, recreational, and related 
 11.1   uses, is owned and operated by a not-for-profit corporation, and 
 11.2   is located within the metropolitan area as defined in section 
 11.3   473.121, subdivision 2; and 
 11.4      (7) a leased or privately owned noncommercial aircraft 
 11.5   storage hangar not exempt under section 272.01, subdivision 2, 
 11.6   and the land on which it is located, provided that: 
 11.7      (i) the land is on an airport owned or operated by a city, 
 11.8   town, county, metropolitan airports commission, or group 
 11.9   thereof; and 
 11.10     (ii) the land lease, or any ordinance or signed agreement 
 11.11  restricting the use of the leased premise, prohibits commercial 
 11.12  activity performed at the hangar. 
 11.13     If a hangar classified under this clause is sold after June 
 11.14  30, 2000, a bill of sale must be filed by the new owner with the 
 11.15  assessor of the county where the property is located within 60 
 11.16  days of the sale. 
 11.17     Class 4c property has a class rate of 1.65 percent of 
 11.18  market value, except that (i) each parcel of seasonal 
 11.19  residential recreational property not used for commercial 
 11.20  purposes has the same class rates as class 4bb property, (ii) 
 11.21  manufactured home parks assessed under clause (5) have the same 
 11.22  class rate as class 4b property, and (iii) property described in 
 11.23  paragraph (d), clause (4), has the same class rate as the rate 
 11.24  applicable to the first tier of class 4bb nonhomestead 
 11.25  residential real estate under paragraph (c).  
 11.26     (e) Class 4d property is qualifying low-income rental 
 11.27  housing certified to the assessor by the housing finance agency 
 11.28  under sections 273.126 and 462A.071.  Class 4d includes land in 
 11.29  proportion to the total market value of the building that is 
 11.30  qualifying low-income rental housing.  For all properties 
 11.31  qualifying as class 4d, the market value determined by the 
 11.32  assessor must be based on the normal approach to value using 
 11.33  normal unrestricted rents. 
 11.34     Class 4d property has a class rate of one percent of market 
 11.35  value.  
 11.36     [EFFECTIVE DATE.] Section 2 is effective for taxes levied 
 12.1   in 2001, payable in 2002, and thereafter. 
 12.2      Sec. 3.  Minnesota Statutes 2000, section 273.1382, 
 12.3   subdivision 1a, is amended to read: 
 12.4      Subd. 1a.  [EDUCATION HOMESTEAD CREDIT.] Each county 
 12.5   auditor shall determine a general education homestead credit for 
 12.6   each homestead within the county equal to 66.2 percent for taxes 
 12.7   payable in 1999 and 83 ... percent for taxes payable in 2000 and 
 12.8   thereafter of the education credit tax rate times the net tax 
 12.9   capacity of the homestead for the taxes payable year.  The 
 12.10  amount of general education homestead credit for a homestead may 
 12.11  not exceed $320 for taxes payable in 1999 and $390 for taxes 
 12.12  payable in 2000 and thereafter $.........  In the case of an 
 12.13  agricultural homestead, only the net tax capacity of the house, 
 12.14  garage, and surrounding one acre of land shall be used in 
 12.15  determining the property's education homestead credit. 
 12.16     [EFFECTIVE DATE.] This section is effective for taxes 
 12.17  levied in 2001, payable in 2002, and thereafter.