SF 2086

as introduced - 89th Legislature (2015 - 2016) Posted on 04/17/2015 08:44am

A bill for an act
relating to taxation; property; making various changes in the taxation of
agricultural property; creating a valuation exclusion for homeowners over age
65; amending Minnesota Statutes 2014, sections 272.02, by adding a subdivision;
273.11, by adding a subdivision; 273.13, subdivision 23, by adding a subdivision;
proposing coding for new law in Minnesota Statutes, chapter 273.

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

Section 1.

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 Nonproductive rural vacant land. new text end

new text begin Real estate that is unplatted, rural in
character, not used for agricultural purposes, and not improved with a structure is exempt.
Land used for growing trees for timber, lumber, and wood and wood products is not
eligible for exemption under this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2016.
new text end

Sec. 2.

Minnesota Statutes 2014, section 273.11, is amended by adding a subdivision to
read:

new text begin Subd. 24. new text end

new text begin Limitation of agricultural land values. new text end

new text begin (a) The value of land classified
as homestead class 2a under section 273.13, subdivision 23, must not exceed 80 times
the rental rate for land of its type and location. The value of land owned by a Minnesota
resident and classified as nonhomestead class 2a under section 273.13, subdivision 23,
must not exceed 40 times the rental rate for land of its type and location. The value of
land not owned by a Minnesota resident and classified as nonhomestead class 2a under
section 273.13, subdivision 23, must not exceed 80 times the rental rate for land of its
type and location.
new text end

new text begin (b) For the purposes of this subdivision, "rental rate" means the median rent
published by the University of Minnesota extension service.
new text end

new text begin (c) For purposes of this subdivision, ownership by a resident is determined by the
mailing address of the person or entity to whom the property tax statement is sent.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2016.
new text end

Sec. 3.

new text begin [273.1112] PRESERVATION OF AGRICULTURAL LAND.
new text end

new text begin Subdivision 1. new text end

new text begin Additional taxes. new text end

new text begin (a) When all or a portion of real property that is
being or has been classified as class 2a under section 273.13 no longer qualifies for class
2a classification, the portion no longer qualifying shall be subject to additional taxes, in
an amount equal to the difference between the taxes that would have been levied against
the property if it were classified as class 3a property under section 273.13, and the taxes
actually levied upon the property.
new text end

new text begin (b) The additional taxes shall be extended against the property on the tax list for
the current year, provided that:
new text end

new text begin (1) no interest or penalties shall be levied on the additional taxes if timely paid; and
new text end

new text begin (2) the additional taxes shall only be levied with respect to the last three years that
the property has been classified as class 2a.
new text end

new text begin (c) For the purposes of this subdivision, taxes "levied against the property if it
were classified as class 3a property" means the tax determined by multiplying the net tax
capacity of the property as it would be determined under section 273.13, subdivision 24,
by the appropriate net tax capacity tax rates for the local taxing jurisdictions encompassing
the property, and the market value of the property by the appropriate referendum market
value tax rates for the local taxing jurisdictions encompassing the property.
new text end

new text begin Subd. 2. new text end

new text begin Lien. new text end

new text begin The tax imposed by this section shall be a lien upon the property
assessed to the same extent and for the same duration as other taxes imposed upon
property within this state. The tax shall be annually extended by the county auditor and if
and when payable shall be collected and distributed in the manner provided by law for the
collection and distribution of other property taxes.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2016.
new text end

Sec. 4.

Minnesota Statutes 2014, section 273.13, subdivision 23, is amended to read:

Subd. 23.

Class 2.

(a) An agricultural homestead consists of class 2a agricultural
land that is homesteaded, along with any class 2b rural vacant land that is contiguous to
the class 2a land under the same ownership. The market value of the house and garage
and immediately surrounding one acre of land has the same classification rates as class
1a or 1b property under subdivision 22. The value of the remaining land including
improvements up to the first tier valuation limit of agricultural homestead property has a
classification rate of 0.5 percent of market value. The remaining property over the first tier
has a classification rate of one percent of market value. For purposes of this subdivision,
the "first tier valuation limit of agricultural homestead property" and "first tier" means
the limit certified under section 273.11, subdivision 23.

(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that
are agricultural land and buildings. Class 2a property has a classification rate of one percent
of market value, unless it is part of an agricultural homestead under paragraph (a). Class
2a property must also include any property that would otherwise be classified as 2b, but is
interspersed with class 2a property, including but not limited to sloughs, wooded wind
shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement,
and other similar land that is impractical for the assessor to value separately from the rest of
the property or that is unlikely to be able to be sold separately from the rest of the property.

An assessor may classify the part of a parcel described in this subdivision that is used
for agricultural purposes as class 2a and the remainder in the class appropriate to its use.

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof,
that are unplatted real estate, rural in character and not used for agricultural purposes,
including land used for growing trees for timber, lumber, and wood and wood products,
that is not improved with a structure new text begin , unless the land is exempt under section 272.02,
subdivision 100 new text end . The presence of a minor, ancillary nonresidential structure as defined by
the commissioner of revenue does not disqualify the property from classification under
this paragraph. Any parcel of 20 acres or more improved with a structure that is not a
minor, ancillary nonresidential structure must be split-classified, and ten acres must be
assigned to the split parcel containing the structure. Class 2b property has a classification
rate of one percent of market value unless it is part of an agricultural homestead under
paragraph (a), or qualifies as class 2c under paragraph (d).

(d) Class 2c managed forest land consists of no less than 20 and no more than
1,920 acres statewide per taxpayer that is being managed under a forest management
plan that meets the requirements of chapter 290C, but is not enrolled in the sustainable
forest resource management incentive program. It has a classification rate of .65 percent,
provided that the owner of the property must apply to the assessor in order for the
property to initially qualify for the reduced rate and provide the information required
by the assessor to verify that the property qualifies for the reduced rate. If the assessor
receives the application and information before May 1 in an assessment year, the property
qualifies beginning with that assessment year. If the assessor receives the application
and information after April 30 in an assessment year, the property may not qualify until
the next assessment year. The commissioner of natural resources must concur that the
land is qualified. The commissioner of natural resources shall annually provide county
assessors verification information on a timely basis. The presence of a minor, ancillary
nonresidential structure as defined by the commissioner of revenue does not disqualify the
property from classification under this paragraph.

(e) Agricultural land as used in this section means:

(1) contiguous acreage of ten acres or more, used during the preceding year for
agricultural purposes; or

(2) contiguous acreage used during the preceding year for an intensive livestock or
poultry confinement operation, provided that land used only for pasturing or grazing
does not qualify under this clause.

"Agricultural purposes" as used in this section means the raising, cultivation, drying,
or storage of agricultural products for sale, or the storage of machinery or equipment
used in support of agricultural production by the same farm entity. For a property to be
classified as agricultural based only on the drying or storage of agricultural products,
the products being dried or stored must have been produced by the same farm entity as
the entity operating the drying or storage facility. "Agricultural purposes" also includes
enrollment in the Reinvest in Minnesota program under sections 103F.501 to 103F.535
or the federal Conservation Reserve Program as contained in Public Law 99-198 or a
similar state or federal conservation program if the property was classified as agricultural
(i) under this subdivision for taxes payable in 2003 because of its enrollment in a
qualifying program and the land remains enrolled or (ii) in the year prior to its enrollment.
Agricultural classification shall not be based upon the market value of any residential
structures on the parcel or contiguous parcels under the same ownership.

"Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous
portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion
of, a set of contiguous tax parcels under that section that are owned by the same person.

(f) Agricultural land under this section also includes:

(1) contiguous acreage that is less than ten acres in size and exclusively used in the
preceding year for raising or cultivating agricultural products; or

(2) contiguous acreage that contains a residence and is less than 11 acres in size, if
the contiguous acreage exclusive of the house, garage, and surrounding one acre of land
was used in the preceding year for one or more of the following three uses:

(i) for an intensive grain drying or storage operation, or for intensive machinery or
equipment storage activities used to support agricultural activities on other parcels of
property operated by the same farming entity;

(ii) as a nursery, provided that only those acres used intensively to produce nursery
stock are considered agricultural land; or

(iii) for intensive market farming; for purposes of this paragraph, "market farming"
means the cultivation of one or more fruits or vegetables or production of animal or other
agricultural products for sale to local markets by the farmer or an organization with which
the farmer is affiliated.

"Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as
described in section 272.193, or all of a set of contiguous tax parcels under that section
that are owned by the same person.

(g) Land shall be classified as agricultural even if all or a portion of the agricultural
use of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under
section 273.111.

(h) The property classification under this section supersedes, for property tax
purposes only, any locally administered agricultural policies or land use restrictions that
define minimum or maximum farm acreage.

(i) The term "agricultural products" as used in this subdivision includes production
for sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
bees, and apiary products by the owner;

(2) fish bred for sale and consumption if the fish breeding occurs on land zoned
for agricultural use;

(3) the commercial boarding of horses, which may include related horse training and
riding instruction, if the boarding is done on property that is also used for raising pasture
to graze horses or raising or cultivating other agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for
equestrian activities, excluding racing;

(5) game birds and waterfowl bred and raised (i) on a game farm licensed under
section 97A.105, provided that the annual licensing report to the Department of Natural
Resources, which must be submitted annually by March 30 to the assessor, indicates
that at least 500 birds were raised or used for breeding stock on the property during the
preceding year and that the owner provides a copy of the owner's most recent schedule F;
or (ii) for use on a shooting preserve licensed under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, including short rotation woody crops, and not
sold for timber, lumber, wood, or wood products; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.

(j) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2),
and (3),

the assessor shall classify the part of the parcel used for agricultural purposes as class
1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
use. The grading, sorting, and packaging of raw agricultural products for first sale is
considered an agricultural purpose. A greenhouse or other building where horticultural
or nursery products are grown that is also used for the conduct of retail sales must be
classified as agricultural if it is primarily used for the growing of horticultural or nursery
products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
those products. Use of a greenhouse or building only for the display of already grown
horticultural or nursery products does not qualify as an agricultural purpose.

(k) The assessor shall determine and list separately on the records the market value
of the homestead dwelling and the one acre of land on which that dwelling is located. If
any farm buildings or structures are located on this homesteaded acre of land, their market
value shall not be included in this separate determination.

(l) Class 2d airport landing area consists of a landing area or public access area of a
privately owned public use airport. It has a classification rate of one percent of market
value. To qualify for classification under this paragraph, a privately owned public use
airport must be licensed as a public airport under section 360.018. For purposes of
this paragraph, "landing area" means that part of a privately owned public use airport
properly cleared, regularly maintained, and made available to the public for use by aircraft
and includes runways, taxiways, aprons, and sites upon which are situated landing or
navigational aids. A landing area also includes land underlying both the primary surface
and the approach surfaces that comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of
the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under this paragraph must be described and certified
by the commissioner of transportation. The certification is effective until it is modified,
or until the airport or landing area no longer meets the requirements of this paragraph.
For purposes of this paragraph, "public access area" means property used as an aircraft
parking ramp, apron, or storage hangar, or an arrival and departure building in connection
with the airport.

(m) Class 2e consists of land with a commercial aggregate deposit that is not actively
being mined and is not otherwise classified as class 2a or 2b, provided that the land is not
located in a county that has elected to opt-out of the aggregate preservation program as
provided in section 273.1115, subdivision 6. It has a classification rate of one percent of
market value. To qualify for classification under this paragraph, the property must be at
least ten contiguous acres in size and the owner of the property must record with the
county recorder of the county in which the property is located an affidavit containing:

(1) a legal description of the property;

(2) a disclosure that the property contains a commercial aggregate deposit that is not
actively being mined but is present on the entire parcel enrolled;

(3) documentation that the conditional use under the county or local zoning
ordinance of this property is for mining; and

(4) documentation that a permit has been issued by the local unit of government
or the mining activity is allowed under local ordinance. The disclosure must include a
statement from a registered professional geologist, engineer, or soil scientist delineating
the deposit and certifying that it is a commercial aggregate deposit.

For purposes of this section and section 273.1115, "commercial aggregate deposit"
means a deposit that will yield crushed stone or sand and gravel that is suitable for use
as a construction aggregate; and "actively mined" means the removal of top soil and
overburden in preparation for excavation or excavation of a commercial deposit.

(n) When any portion of the property under this subdivision or subdivision 22 begins
to be actively mined, the owner must file a supplemental affidavit within 60 days from
the day any aggregate is removed stating the number of acres of the property that is
actively being mined. The acres actively being mined must be (1) valued and classified
under subdivision 24 in the next subsequent assessment year, and (2) removed from the
aggregate resource preservation property tax program under section 273.1115, if the
land was enrolled in that program. Copies of the original affidavit and all supplemental
affidavits must be filed with the county assessor, the local zoning administrator, and the
Department of Natural Resources, Division of Land and Minerals. A supplemental
affidavit must be filed each time a subsequent portion of the property is actively mined,
provided that the minimum acreage change is five acres, even if the actual mining activity
constitutes less than five acres.

(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are
not rules and are exempt from the rulemaking provisions of chapter 14, and the provisions
in section 14.386 concerning exempt rules do not apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2016.
new text end

Sec. 5.

Minnesota Statutes 2014, section 273.13, is amended by adding a subdivision
to read:

new text begin Subd. 36. new text end

new text begin Senior homestead market value exclusion. new text end

new text begin (a) The first $150,000 of
market value of a homestead owned by a person age 65 or older is excluded from market
value before determining property taxes due and payable upon the property. In order to
first qualify for this exclusion, the owner must reach the age of 65 on or before December
31 of the year preceding the year in which the taxes are payable.
new text end

new text begin (b) In the case of an agricultural homestead, only the portion of the property
consisting of the house, garage, and immediately surrounding one acre of land qualifies
for the valuation exclusion under this subdivision.
new text end

new text begin (c) In the case of a married couple, only one of the spouses must be 65 or older to
qualify for exclusion under this subdivision.
new text end

new text begin (d) The first year that a property becomes eligible for the exclusion under this
subdivision, an application must be filed with the assessor prior to December 1 of the year
preceding the year that the taxes are payable. Applications received after November 30
will not be eligible until the following year. An application may be filed by a person who
has not yet reached the age of 65, provided that the person will reach that age prior to
December 31 of the year the application is filed. Once a property qualifies for exclusion
under this subdivision, the property shall remain eligible until the eligible owner disposes
of the property, and no further applications are required.
new text end

new text begin (e) A property qualifying for a valuation exclusion under this subdivision is not
eligible for the market value exclusion under subdivision 35, or classification under
subdivision 22, paragraph (b).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with taxes payable in 2016.
new text end