SF 1814

as introduced - 89th Legislature (2015 - 2016) Posted on 03/17/2015 09:25am

A bill for an act
relating to agriculture; providing tax incentives for value-added on-farm
agricultural processing; providing for a loan program for value-added on-farm
agricultural processing facilities; authorizing rulemaking; amending Minnesota
Statutes 2014, sections 272.02, by adding a subdivision; 297A.69, by adding a
subdivision; proposing coding for new law in Minnesota Statutes, chapters 17;
41B.

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

Section 1.

new text begin [17.119] TAX INCENTIVES; VALUE-ADDED ON-FARM
PROCESSING FACILITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Tax incentives provided. new text end

new text begin A qualified farm is allowed the tax
exemptions provided under sections 272.02, subdivision 100, and 297A.69, subdivision
8, for a qualified agricultural processing facility certified by the commissioner under
subdivision 3. The tax incentives are available for a 12-year period beginning with the
first calendar year following certification.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, sections 41B.058; 272.02,
subdivision 100; and 297A.69, subdivision 8, the following terms have the meanings
given them, unless the context clearly indicates otherwise.
new text end

new text begin (b) "Agricultural commodity" has the meaning given in section 17.90.
new text end

new text begin (c) "Agricultural processing facility" or "facility" means buildings, structures,
fixtures, and improvements used or operated primarily for the processing or production of
marketable commodities from agricultural commodities.
new text end

new text begin (d) "Person" means an individual or an entity permitted to engage in farming and to
own agricultural land under section 500.24.
new text end

new text begin (e) "Qualified agricultural processing facility" means an agricultural processing
facility that is certified by the commissioner under subdivision 3.
new text end

new text begin (f) "Qualified farm" means a person actively engaged in farming that invests in a
qualified agricultural processing facility.
new text end

new text begin Subd. 3. new text end

new text begin Application and certification. new text end

new text begin (a) A person that operates a qualified farm
may apply to the commissioner for designation of a facility as a qualified agricultural
processing facility under this section. The application must be in the form prescribed by
the commissioner, contain the information required by the commissioner, and include an
agreement and certifications by the applicant that satisfies the requirements of paragraph
(b), clauses (2), (3), and (5).
new text end

new text begin (b) The commissioner shall certify as a qualified agricultural processing facility each
facility that the commissioner determines, based on the information provided by the
applicant and other reliable information available to the commissioner, that the facility
satisfies each of the following requirements:
new text end

new text begin (1) the facility is located on a qualified farm and ... percent of the agricultural
commodities the facility processes are produced by the qualified farm;
new text end

new text begin (2) the qualified farm's investment in the facility will increase employment on the
qualified farm by a minimum of 25 percent of full-time equivalent employees in the first
full year of operation. Employees exclude family members, as defined in section 267(c)(4)
of the Internal Revenue Code of 1986, as amended;
new text end

new text begin (3) the qualified farm agrees to make an investment equal to at least ten percent of
the previous year's gross revenue from the agricultural processing facility, if any;
new text end

new text begin (4) the facility is located outside the metropolitan area, as defined in section 473.121,
subdivision 2; and
new text end

new text begin (5) the qualified farm enters into a binding written agreement with the commissioner
that:
new text end

new text begin (i) pledges the agricultural processing facility will meet the requirements of clauses
(2) and (3);
new text end

new text begin (ii) agrees to repay the tax benefits received under sections 272.02, subdivision 100,
and 297A.69, subdivision 8, under the procedures in section 469.319, if the requirements
of clauses (2) and (3) are not met for the taxable year or for taxes payable during the year
in which the requirements are not met; and
new text end

new text begin (iii) contains any other terms the commissioner deems appropriate.
new text end

new text begin Subd. 4. new text end

new text begin Repayment obligation. new text end

new text begin If a qualified farm and qualified agricultural
processing facility fail to satisfy the requirements of subdivision 3, paragraph (b), clause
(2) or (3), the tax incentives received must be repaid under the procedures provided for
the JOBZ program under section 469.319.
new text end

new text begin Subd. 5. new text end

new text begin Incentives not a business subsidy. new text end

new text begin The provisions of this section and
sections 272.02, subdivision 100, and 297A.69, subdivision 8, are not business subsidies
for purposes of sections 116J.993 and 116J.994. The provisions of subdivision 3,
paragraph (b), clauses (2) and (3), are imposed in lieu of the requirements of those sections.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [41B.058] VALUE-ADDED ON-FARM PROCESSING FACILITY LOAN
PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The authority must establish and implement a
value-added on-farm processing facility loan program to help eligible borrowers finance
the construction or expansion of an agricultural processing facility that is certified by the
commissioner of agriculture for up to 12 years of tax abatement.
new text end

new text begin Subd. 2. new text end

new text begin Eligibility. new text end

new text begin To be eligible for this program a borrower must:
new text end

new text begin (1) satisfy the general eligibility criteria under section 41B.03, subdivision 1;
new text end

new text begin (2) construct or expand an agricultural processing facility for which the borrower
has obtained preliminary or full certification for tax abatement under section 17.119;
new text end

new text begin (3) demonstrate an ability to repay the loan; and
new text end

new text begin (4) meet any other requirements which the authority may impose by rule.
new text end

new text begin Subd. 3. new text end

new text begin Loans; application fee. new text end

new text begin (a) The authority may participate in a loan
with an eligible lender to an eligible borrower. The loan must be secured by real estate
security. Participation is limited to 45 percent of the principal amount of the loan or
$300,000, whichever is less. The authority's portion of the loan must be protected during
the authority's participation by the first mortgage held by the eligible lender to the extent
of the authority's participation in the loan.
new text end

new text begin (b) The interest rates and repayment terms of the authority's participation interest may
differ from the interest rates and repayment terms of the lender's retained portion of the loan.
new text end

new text begin (c) The authority may impose a reasonable nonrefundable application fee for each
loan application. The authority may review the fee annually and make adjustments as
necessary. The application fee is initially $50.
new text end

new text begin Subd. 4. new text end

new text begin Rules. new text end

new text begin The authority may adopt rules necessary for the administration
of the program.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2014, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 100. new text end

new text begin Value-added on-farm agricultural processing facilities. new text end

new text begin (a)
Improvements to real property and personal property, classified under section 273.13,
subdivision 24, and consisting of qualified agricultural processing facilities under section
17.119, are exempt from ad valorem taxes levied under chapter 275.
new text end

new text begin (b) For property to qualify for exemption under paragraph (a), the facility must be
certified by the commissioner of agriculture as a qualified agricultural processing facility
under section 17.119.
new text end

new text begin (c) The exemption applies beginning for the first assessment year after certification
of the qualified agricultural processing facility by the commissioner of agriculture.
The exemption applies to each of the following 12 assessment years that begin after
the certification and notification is provided to the assessor by the commissioner of
agriculture. To be exempt, the property must be occupied by July 1 of the assessment year
by a qualified farm that has signed an agreement with the commissioner of agriculture,
satisfying the requirements of section 17.119, by July 1 of the assessment year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2016.
new text end

Sec. 4.

Minnesota Statutes 2014, section 297A.69, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Value-added on-farm agricultural processing facilities. new text end

new text begin (a) Purchases of
tangible personal property or taxable services by a qualified farm, as defined in section
17.119, are exempt if the property or services are primarily used or consumed in the
operation of a qualified agricultural processing facility.
new text end

new text begin (b) Purchase and use of construction materials and supplies used or consumed in,
and equipment incorporated into, the construction of improvements to real property
constituting a qualified agricultural processing facility, as defined in section 17.119, are
exempt if the improvements after completion of construction are to be used in the conduct
of the qualified agricultural processing facility. This exemption applies regardless of
whether the purchases are made by the business or a contractor.
new text end

new text begin (c) The exemptions under this subdivision apply to any local general or special
sales and use tax regardless of whether the local tax is imposed on the sales taxable as
defined under this chapter.
new text end

new text begin (d) This subdivision applies to sales, if the purchase was made and delivery received
during the 12-year period, under the designation of the facility as a qualified agricultural
processing facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2015.
new text end