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SF 1754

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 05/02/2012 10:54am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 1st Engrossment

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A bill for an act
relating to lawful gambling; increasing the allowable per diem reimbursement
from lawful gambling net profits for military marching, color guard, or honor
guard units; amending Minnesota Statutes 2010, section 349.12, subdivision 25.


Section 1.

Minnesota Statutes 2010, section 349.12, subdivision 25, is amended to read:

Subd. 25.

Lawful purpose.

(a) "Lawful purpose" means one or more of the

(1) any expenditure by or contribution to a 501(c)(3) or festival organization, as
defined in subdivision 15a, provided that the organization and expenditure or contribution
are in conformity with standards prescribed by the board under section 349.154, which
standards must apply to both types of organizations in the same manner and to the same

(2) a contribution to or expenditure for goods and services for an individual or
family suffering from poverty, homelessness, or disability, which is used to relieve the
effects of that suffering;

(3) a contribution to a program recognized by the Minnesota Department of Human
Services for the education, prevention, or treatment of problem gambling;

(4) a contribution to or expenditure on a public or private nonprofit educational
institution registered with or accredited by this state or any other state;

(5) a contribution to an individual, public or private nonprofit educational institution
registered with or accredited by this state or any other state, or to a scholarship fund of a
nonprofit organization whose primary mission is to award scholarships, for defraying the
cost of education to individuals where the funds are awarded through an open and fair
selection process;

(6) activities by an organization or a government entity which recognize military
service to the United States, the state of Minnesota, or a community, subject to rules
of the board, provided that the rules must not include mileage reimbursements in the
computation of the per diem reimbursement limit and must impose no aggregate annual
limit on the amount of reasonable and necessary expenditures made to support:

(i) members of a military marching or color guard unit for activities conducted
within the state;

(ii) members of an organization solely for services performed by the members at
funeral services;

(iii) members of military marching, color guard, or honor guard units may be
reimbursed for participating in color guard, honor guard, or marching unit events within
the state or states contiguous to Minnesota at a per participant rate of up to deleted text begin$35deleted text endnew text begin $50new text end per
diem; or

(iv) active military personnel and their immediate family members in need of
support services;

(7) recreational, community, and athletic facilities and activities intended primarily
for persons under age 21, provided that such facilities and activities do not discriminate on
the basis of gender and the organization complies with section 349.154, subdivision 3a;

(8) payment of local taxes authorized under this chapter, taxes imposed by the
United States on receipts from lawful gambling, the taxes imposed by section 297E.02,
subdivisions 1, 4, 5, and 6, and the tax imposed on unrelated business income by section
290.05, subdivision 3;

(9) payment of real estate taxes and assessments on permitted gambling premises
owned by the licensed organization paying the taxes, or wholly leased by a licensed
veterans organization under a national charter recognized under section 501(c)(19) of the
Internal Revenue Code;

(10) a contribution to the United States, this state or any of its political subdivisions,
or any agency or instrumentality thereof other than a direct contribution to a law
enforcement or prosecutorial agency;

(11) a contribution to or expenditure by a nonprofit organization which is a church
or body of communicants gathered in common membership for mutual support and
edification in piety, worship, or religious observances;

(12) an expenditure for citizen monitoring of surface water quality by individuals
or nongovernmental organizations that is consistent with section 115.06, subdivision 4,
and Minnesota Pollution Control Agency guidance on monitoring procedures, quality
assurance protocols, and data management, provided that the resulting data is submitted
to the Minnesota Pollution Control Agency for review and inclusion in the state water
quality database;

(13) a contribution to or expenditure on projects or activities approved by the
commissioner of natural resources for:

(i) wildlife management projects that benefit the public at large;

(ii) grant-in-aid trail maintenance and grooming established under sections 84.83
and 84.927, and other trails open to public use, including purchase or lease of equipment
for this purpose; and

(iii) supplies and materials for safety training and educational programs coordinated
by the Department of Natural Resources, including the Enforcement Division;

(14) conducting nutritional programs, food shelves, and congregate dining programs
primarily for persons who are age 62 or older or disabled;

(15) a contribution to a community arts organization, or an expenditure to sponsor
arts programs in the community, including but not limited to visual, literary, performing,
or musical arts;

(16) an expenditure by a licensed fraternal organization or a licensed veterans
organization for payment of water, fuel for heating, electricity, and sewer costs for:

(i) up to 100 percent for a building wholly owned or wholly leased by and used as
the primary headquarters of the licensed veteran or fraternal organization; or

(ii) a proportional amount subject to approval by the director and based on the
portion of a building used as the primary headquarters of the licensed veteran or fraternal

(17) expenditure by a licensed veterans organization of up to $5,000 in a calendar
year in net costs to the organization for meals and other membership events, limited to
members and spouses, held in recognition of military service. No more than $5,000 can be
expended in total per calendar year under this clause by all licensed veterans organizations
sharing the same veterans post home;

(18) payment of fees authorized under this chapter imposed by the state of Minnesota
to conduct lawful gambling in Minnesota;

(19) a contribution or expenditure to honor an individual's humanitarian service
as demonstrated through philanthropy or volunteerism to the United States, this state,
or local community;

(20) a contribution by a licensed organization to another licensed organization with
prior board approval, with the contribution designated to be used for one or more of the
following lawful purposes under this section: clauses (1) to (7), (11) to (15), (19), and (25);

(21) an expenditure that is a contribution to a parent organization, if the parent
organization: (i) has not provided to the contributing organization within one year of the
contribution any money, grants, property, or other thing of value, and (ii) has received
prior board approval for the contribution that will be used for a program that meets one or
more of the lawful purposes under subdivision 7a;

(22) an expenditure for the repair, maintenance, or improvement of real property
and capital assets owned by an organization, or for the replacement of a capital asset that
can no longer be repaired, with a fiscal year limit of five percent of gross profits from
the previous fiscal year, with no carryforward of unused allowances. The fiscal year is
July 1 through June 30. Total expenditures for the fiscal year may not exceed the limit
unless the board has specifically approved the expenditures that exceed the limit due to
extenuating circumstances beyond the organization's control. An expansion of a building
or bar-related expenditures are not allowed under this provision.

(i) The expenditure must be related to the portion of the real property or capital asset
that must be made available for use free of any charge to other nonprofit organizations,
community groups, or service groups, deleted text beginordeleted text endnew text begin andnew text end is used for the organization's primary
mission or headquarters.

(ii) An expenditure may be made to bring an existing building that the organization
owns into compliance with the Americans with Disabilities Act.

(iii) An organization may apply the amount that is allowed under item (ii) to the
erection or acquisition of a replacement building that is in compliance with the Americans
with Disabilities Act if the board has specifically approved the amount. The cost of
the erection or acquisition of a replacement building may not be made from gambling
proceeds, except for the portion allowed under this item;

(23) an expenditure for the acquisition or improvement of a capital asset with a cost
greater than $2,000, excluding real property, that will be used exclusively for lawful
purposes under this section if the board has specifically approved the amount;

(24) an expenditure for the acquisition, erection, improvement, or expansion of real
property, if the board has first specifically authorized the expenditure after finding that the
real property will be used exclusively for lawful purpose under this section; or

(25) an expenditure, including a mortgage payment or other debt service payment,
for the erection or acquisition of a comparable building to replace an organization-owned
building that was destroyed or made uninhabitable by fire or catastrophe or to replace an
organization-owned building that was taken or sold under an eminent domain proceeding.
The expenditure may be only for that part of the replacement cost not reimbursed by
insurance for the fire or catastrophe or compensation not received from a governmental
unit under the eminent domain proceeding, if the board has first specifically authorized
the expenditure.

(b) Expenditures authorized by the board under clauses (24) and (25) must be
51 percent completed within two years of the date of board approval; otherwise the
organization must reapply to the board for approval of the project. "Fifty-one percent
completed" means that the work completed must represent at least 51 percent of the value
of the project as documented by the contractor or vendor.

(c) Notwithstanding paragraph (a), "lawful purpose" does not include:

(1) any expenditure made or incurred for the purpose of influencing the nomination
or election of a candidate for public office or for the purpose of promoting or defeating a
ballot question;

(2) any activity intended to influence an election or a governmental decision-making

(3) a contribution to a statutory or home rule charter city, county, or town by a
licensed organization with the knowledge that the governmental unit intends to use the
contribution for a pension or retirement fund; or

(4) a contribution to a 501(c)(3) organization or other entity with the intent or effect
of not complying with lawful purpose restrictions or requirements.