as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to taxation; extending eligibility for 1.3 classification as 4c property to certain community 1.4 service organizations; amending Minnesota Statutes 1.5 1996, section 273.13, subdivision 25. 1.6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.7 Section 1. Minnesota Statutes 1996, section 273.13, 1.8 subdivision 25, is amended to read: 1.9 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 1.10 estate containing four or more units and used or held for use by 1.11 the owner or by the tenants or lessees of the owner as a 1.12 residence for rental periods of 30 days or more. Class 4a also 1.13 includes hospitals licensed under sections 144.50 to 144.56, 1.14 other than hospitals exempt under section 272.02, and contiguous 1.15 property used for hospital purposes, without regard to whether 1.16 the property has been platted or subdivided. Class 4a property 1.17 in a city with a population of 5,000 or less, that is (1) 1.18 located outside of the metropolitan area, as defined in section 1.19 473.121, subdivision 2, or outside any county contiguous to the 1.20 metropolitan area, and (2) whose city boundary is at least 15 1.21 miles from the boundary of any city with a population greater 1.22 than 5,000 has a class rate of 2.3 percent of market value for 1.23 taxes payable in 1996 and thereafter. All other class 4a 1.24 property has a class rate of 3.4 percent of market value for 1.25 taxes payable in 1996 and thereafter. For purposes of this 2.1 paragraph, population has the same meaning given in section 2.2 477A.011, subdivision 3. 2.3 (b) Class 4b includes: 2.4 (1) residential real estate containing less than four 2.5 units, other than seasonal residential, and recreational; 2.6 (2) manufactured homes not classified under any other 2.7 provision; 2.8 (3) a dwelling, garage, and surrounding one acre of 2.9 property on a nonhomestead farm classified under subdivision 23, 2.10 paragraph (b). 2.11 Class 4b property has a class rate of 2.8 percent of market 2.12 value for taxes payable in 1992, 2.5 percent of market value for 2.13 taxes payable in 1993, and 2.3 percent of market value for taxes 2.14 payable in 1994 and thereafter. 2.15 (c) Class 4c property includes: 2.16 (1) a structure that is: 2.17 (i) situated on real property that is used for housing for 2.18 the elderly or for low- and moderate-income families as defined 2.19 in Title II, as amended through December 31, 1990, of the 2.20 National Housing Act or the Minnesota housing finance agency law 2.21 of 1971, as amended, or rules promulgated by the agency and 2.22 financed by a direct federal loan or federally insured loan made 2.23 pursuant to Title II of the Act; or 2.24 (ii) situated on real property that is used for housing the 2.25 elderly or for low- and moderate-income families as defined by 2.26 the Minnesota housing finance agency law of 1971, as amended, or 2.27 rules adopted by the agency pursuant thereto and financed by a 2.28 loan made by the Minnesota housing finance agency pursuant to 2.29 the provisions of the act. 2.30 This clause applies only to property of a nonprofit or 2.31 limited dividend entity. Property is classified as class 4c 2.32 under this clause for 15 years from the date of the completion 2.33 of the original construction or substantial rehabilitation, or 2.34 for the original term of the loan. 2.35 (2) a structure that is: 2.36 (i) situated upon real property that is used for housing 3.1 lower income families or elderly or handicapped persons, as 3.2 defined in section 8 of the United States Housing Act of 1937, 3.3 as amended; and 3.4 (ii) owned by an entity which has entered into a housing 3.5 assistance payments contract under section 8 which provides 3.6 assistance for 100 percent of the dwelling units in the 3.7 structure, other than dwelling units intended for management or 3.8 maintenance personnel. Property is classified as class 4c under 3.9 this clause for the term of the housing assistance payments 3.10 contract, including all renewals, or for the term of its 3.11 permanent financing, whichever is shorter; and 3.12 (3) a qualified low-income building as defined in section 3.13 42(c)(2) of the Internal Revenue Code of 1986, as amended 3.14 through December 31, 1990, that (i) receives a low-income 3.15 housing credit under section 42 of the Internal Revenue Code of 3.16 1986, as amended through December 31, 1990; or (ii) meets the 3.17 requirements of that section and receives public financing, 3.18 except financing provided under sections 469.174 to 469.179, 3.19 which contains terms restricting the rents; or (iii) meets the 3.20 requirements of section 273.1317. Classification pursuant to 3.21 this clause is limited to a term of 15 years. The public 3.22 financing received must be from at least one of the following 3.23 sources: government issued bonds exempt from taxes under 3.24 section 103 of the Internal Revenue Code of 1986, as amended 3.25 through December 31, 1993, the proceeds of which are used for 3.26 the acquisition or rehabilitation of the building; programs 3.27 under section 221(d)(3), 202, or 236, of Title II of the 3.28 National Housing Act; rental housing program funds under Section 3.29 8 of the United States Housing Act of 1937 or the market rate 3.30 family graduated payment mortgage program funds administered by 3.31 the Minnesota housing finance agency that are used for the 3.32 acquisition or rehabilitation of the building; public financing 3.33 provided by a local government used for the acquisition or 3.34 rehabilitation of the building, including grants or loans from 3.35 federal community development block grants, HOME block grants, 3.36 or residential rental bonds issued under chapter 474A; or other 4.1 rental housing program funds provided by the Minnesota housing 4.2 finance agency for the acquisition or rehabilitation of the 4.3 building. 4.4 For all properties described in clauses (1), (2), and (3) 4.5 and in paragraph (d), the market value determined by the 4.6 assessor must be based on the normal approach to value using 4.7 normal unrestricted rents unless the owner of the property 4.8 elects to have the property assessed under Laws 1991, chapter 4.9 291, article 1, section 55. If the owner of the property elects 4.10 to have the market value determined on the basis of the actual 4.11 restricted rents, as provided in Laws 1991, chapter 291, article 4.12 1, section 55, the property will be assessed at the rate 4.13 provided for class 4a or class 4b property, as appropriate. 4.14 Properties described in clauses (1)(ii), (3), and (4) may apply 4.15 to the assessor for valuation under Laws 1991, chapter 291, 4.16 article 1, section 55. The land on which these structures are 4.17 situated has the class rate given in paragraph (b) if the 4.18 structure contains fewer than four units, and the class rate 4.19 given in paragraph (a) if the structure contains four or more 4.20 units. This clause applies only to the property of a nonprofit 4.21 or limited dividend entity. 4.22 (4) a parcel of land, not to exceed one acre, and its 4.23 improvements or a parcel of unimproved land, not to exceed one 4.24 acre, if it is owned by a neighborhood real estate trust and at 4.25 least 60 percent of the dwelling units, if any, on all land 4.26 owned by the trust are leased to or occupied by lower income 4.27 families or individuals. This clause does not apply to any 4.28 portion of the land or improvements used for nonresidential 4.29 purposes. For purposes of this clause, a lower income family is 4.30 a family with an income that does not exceed 65 percent of the 4.31 median family income for the area, and a lower income individual 4.32 is an individual whose income does not exceed 65 percent of the 4.33 median individual income for the area, as determined by the 4.34 United States Secretary of Housing and Urban Development. For 4.35 purposes of this clause, "neighborhood real estate trust" means 4.36 an entity which is certified by the governing body of the 5.1 municipality in which it is located to have the following 5.2 characteristics: 5.3 (a) it is a nonprofit corporation organized under chapter 5.4 317A; 5.5 (b) it has as its principal purpose providing housing for 5.6 lower income families in a specific geographic community 5.7 designated in its articles or bylaws; 5.8 (c) it limits membership with voting rights to residents of 5.9 the designated community; and 5.10 (d) it has a board of directors consisting of at least 5.11 seven directors, 60 percent of whom are members with voting 5.12 rights and, to the extent feasible, 25 percent of whom are 5.13 elected by resident members of buildings owned by the trust; and 5.14 (5) except as provided in subdivision 22, paragraph (c), 5.15 real property devoted to temporary and seasonal residential 5.16 occupancy for recreation purposes, including real property 5.17 devoted to temporary and seasonal residential occupancy for 5.18 recreation purposes and not devoted to commercial purposes for 5.19 more than 250 days in the year preceding the year of 5.20 assessment. For purposes of this clause, property is devoted to 5.21 a commercial purpose on a specific day if any portion of the 5.22 property is used for residential occupancy, and a fee is charged 5.23 for residential occupancy. Class 4c also includes commercial 5.24 use real property used exclusively for recreational purposes in 5.25 conjunction with class 4c property devoted to temporary and 5.26 seasonal residential occupancy for recreational purposes, up to 5.27 a total of two acres, provided the property is not devoted to 5.28 commercial recreational use for more than 250 days in the year 5.29 preceding the year of assessment and is located within two miles 5.30 of the class 4c property with which it is used. Class 4c 5.31 property classified in this clause also includes the remainder 5.32 of class 1c resorts. Owners of real property devoted to 5.33 temporary and seasonal residential occupancy for recreation 5.34 purposes and all or a portion of which was devoted to commercial 5.35 purposes for not more than 250 days in the year preceding the 5.36 year of assessment desiring classification as class 1c or 4c, 6.1 must submit a declaration to the assessor designating the cabins 6.2 or units occupied for 250 days or less in the year preceding the 6.3 year of assessment by January 15 of the assessment year. Those 6.4 cabins or units and a proportionate share of the land on which 6.5 they are located will be designated class 1c or 4c as otherwise 6.6 provided. The remainder of the cabins or units and a 6.7 proportionate share of the land on which they are located will 6.8 be designated as class 3a. The first $100,000 of the market 6.9 value of the remainder of the cabins or units and a 6.10 proportionate share of the land on which they are located shall 6.11 have a class rate of three percent. The owner of property 6.12 desiring designation as class 1c or 4c property must provide 6.13 guest registers or other records demonstrating that the units 6.14 for which class 1c or 4c designation is sought were not occupied 6.15 for more than 250 days in the year preceding the assessment if 6.16 so requested. The portion of a property operated as a (1) 6.17 restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 6.18 facility operated on a commercial basis not directly related to 6.19 temporary and seasonal residential occupancy for recreation 6.20 purposes shall not qualify for class 1c or 4c; 6.21 (6) real property up to a maximum of one acre of land owned 6.22 by a nonprofit community service oriented organization; provided 6.23 that the property is not used for a revenue-producing activity 6.24 for more than six days in the calendar year preceding the year 6.25 of assessment and the property is not used for residential 6.26 purposes on either a temporary or permanent basis. If the 6.27 property is located in a first class or home rule charter city 6.28 or town that has a population of 1,000 or fewer, the maximum 6.29 number of days in the calendar year the property may be used for 6.30 revenue-producing activities is 80. For purposes of this 6.31 clause, a "nonprofit community service oriented organization" 6.32 means any corporation, society, association, foundation, or 6.33 institution organized and operated exclusively for charitable, 6.34 religious, fraternal, civic, or educational purposes, and which 6.35 is exempt from federal income taxation pursuant to section 6.36 501(c)(3), (10), or (19) of the Internal Revenue Code of 1986, 7.1 as amended through December 31, 1990. For purposes of this 7.2 clause, "revenue-producing activities" shall include but not be 7.3 limited to property or that portion of the property that is used 7.4 as an on-sale intoxicating liquor or 3.2 percent malt liquor 7.5 establishment licensed under chapter 340A, a restaurant open to 7.6 the public, bowling alley, a retail store, gambling conducted by 7.7 organizations licensed under chapter 349, an insurance business, 7.8 or office or other space leased or rented to a lessee who 7.9 conducts a for-profit enterprise on the premises. Any portion 7.10 of the property which is used for revenue-producing activities 7.11 for more than
sixthe applicable number of days in the calendar 7.12 year preceding the year of assessment shall be assessed as class 7.13 3a. The use of the property for social events open exclusively 7.14 to members and their guests for periods of less than 24 hours, 7.15 when an admission is not charged nor any revenues are received 7.16 by the organization shall not be considered a revenue-producing 7.17 activity; 7.18 (7) post-secondary student housing of not more than one 7.19 acre of land that is owned by a nonprofit corporation organized 7.20 under chapter 317A and is used exclusively by a student 7.21 cooperative, sorority, or fraternity for on-campus housing or 7.22 housing located within two miles of the border of a college 7.23 campus; and 7.24 (8) manufactured home parks as defined in section 327.14, 7.25 subdivision 3. 7.26 Class 4c property has a class rate of 2.3 percent of market 7.27 value, except that (i) for each parcel of seasonal residential 7.28 recreational property not used for commercial purposes under 7.29 clause (5) the first $72,000 of market value on each parcel has 7.30 a class rate of 1.75 percent for taxes payable in 1997 and 1.5 7.31 percent for taxes payable in 1998 and thereafter, and the market 7.32 value of each parcel that exceeds $72,000 has a class rate of 7.33 2.5 percent, and (ii) manufactured home parks assessed under 7.34 clause (8) have a class rate of two percent for taxes payable in 7.35 1996, and thereafter. 7.36 (d) Class 4d property includes: 8.1 (1) a structure that is: 8.2 (i) situated on real property that is used for housing for 8.3 the elderly or for low and moderate income families as defined 8.4 by the Farmers Home Administration; 8.5 (ii) located in a municipality of less than 10,000 8.6 population; and 8.7 (iii) financed by a direct loan or insured loan from the 8.8 Farmers Home Administration. Property is classified under this 8.9 clause for 15 years from the date of the completion of the 8.10 original construction or for the original term of the loan. 8.11 The class rates in paragraph (c), clauses (1), (2), and (3) 8.12 and this clause apply to the properties described in them, only 8.13 in proportion to occupancy of the structure by elderly or 8.14 handicapped persons or low and moderate income families as 8.15 defined in the applicable laws unless construction of the 8.16 structure had been commenced prior to January 1, 1984; or the 8.17 project had been approved by the governing body of the 8.18 municipality in which it is located prior to June 30, 1983; or 8.19 financing of the project had been approved by a federal or state 8.20 agency prior to June 30, 1983. For those properties, 4c or 4d 8.21 classification is available only for those units meeting the 8.22 requirements of section 273.1318. 8.23 Classification under this clause is only available to 8.24 property of a nonprofit or limited dividend entity. 8.25 In the case of a structure financed or refinanced under any 8.26 federal or state mortgage insurance or direct loan program 8.27 exclusively for housing for the elderly or for housing for the 8.28 handicapped, a unit shall be considered occupied so long as it 8.29 is actually occupied by an elderly or handicapped person or, if 8.30 vacant, is held for rental to an elderly or handicapped person. 8.31 (2) For taxes payable in 1992, 1993, and 1994, only, 8.32 buildings and appurtenances, together with the land upon which 8.33 they are located, leased by the occupant under the community 8.34 lending model lease-purchase mortgage loan program administered 8.35 by the Federal National Mortgage Association, provided the 8.36 occupant's income is no greater than 60 percent of the county or 9.1 area median income, adjusted for family size and the building 9.2 consists of existing single family or duplex housing. The lease 9.3 agreement must provide for a portion of the lease payment to be 9.4 escrowed as a nonrefundable down payment on the housing. To 9.5 qualify under this clause, the taxpayer must apply to the county 9.6 assessor by May 30 of each year. The application must be 9.7 accompanied by an affidavit or other proof required by the 9.8 assessor to determine qualification under this clause. 9.9 (3) Qualifying buildings and appurtenances, together with 9.10 the land upon which they are located, leased for a period of up 9.11 to five years by the occupant under a lease-purchase program 9.12 administered by the Minnesota housing finance agency or a 9.13 housing and redevelopment authority authorized under sections 9.14 469.001 to 469.047, provided the occupant's income is no greater 9.15 than 80 percent of the county or area median income, adjusted 9.16 for family size, and the building consists of two or less 9.17 dwelling units. The lease agreement must provide for a portion 9.18 of the lease payment to be escrowed as a nonrefundable down 9.19 payment on the housing. The administering agency shall verify 9.20 the occupants income eligibility and certify to the county 9.21 assessor that the occupant meets the income criteria under this 9.22 paragraph. To qualify under this clause, the taxpayer must 9.23 apply to the county assessor by May 30 of each year. For 9.24 purposes of this section, "qualifying buildings and 9.25 appurtenances" shall be defined as one or two unit residential 9.26 buildings which are unoccupied and have been abandoned and 9.27 boarded for at least six months. 9.28 Class 4d property has a class rate of two percent of market 9.29 value except that property classified under clause (3), shall 9.30 have the same class rate as class 1a property. 9.31 (e) Residential rental property that would otherwise be 9.32 assessed as class 4 property under paragraph (a); paragraph (b), 9.33 clauses (1) and (3); paragraph (c), clause (1), (2), (3), or 9.34 (4), is assessed at the class rate applicable to it under 9.35 Minnesota Statutes 1988, section 273.13, if it is found to be a 9.36 substandard building under section 273.1316. Residential rental 10.1 property that would otherwise be assessed as class 4 property 10.2 under paragraph (d) is assessed at 2.3 percent of market value 10.3 if it is found to be a substandard building under section 10.4 273.1316. 10.5 (f) Class 4e property consists of the residential portion 10.6 of any structure located within a city that was converted from 10.7 nonresidential use to residential use, provided that: 10.8 (1) the structure had formerly been used as a warehouse; 10.9 (2) the structure was originally constructed prior to 1940; 10.10 (3) the conversion was done after December 31, 1995, but 10.11 before January 1, 2003; and 10.12 (4) the conversion involved an investment of at least 10.13 $25,000 per residential unit. 10.14 Class 4e property has a class rate of 2.3 percent, provided 10.15 that a structure is eligible for class 4e classification only in 10.16 the 12 assessment years immediately following the conversion. 10.17 Sec. 2. [EFFECTIVE DATE.] 10.18 Section 1 is effective for taxes levied in 1997, payable in 10.19 1998, and thereafter.