SF 2191

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; exempting current 
  1.3             value of utility generation personal property from the 
  1.4             general education levy; reducing the class rate on 
  1.5             utility generation personal property; exempting 
  1.6             certain new increased capacity and increased 
  1.7             efficiency utility personal property from property 
  1.8             tax; requiring the public utilities commissioner to 
  1.9             adjust utility rates for reduced utility property 
  1.10            taxes; establishing an electric utility generation 
  1.11            attached machinery personal property tax replacement 
  1.12            trust fund; providing for a rebate if an electric 
  1.13            generation facility shuts down; authorizing the 
  1.14            issuance of bonds; providing a state guarantee on 
  1.15            certain local bonds; appropriating money; amending 
  1.16            Minnesota Statutes 2000, sections 16A.67, subdivision 
  1.17            1; 126C.01, subdivision 2; 126C.13, subdivision 1; 
  1.18            127A.48, by adding a subdivision; 272.02, subdivision 
  1.19            9; 273.13, subdivision 24; 275.08, subdivision 1b; 
  1.20            276A.01, subdivision 3; 473F.02, subdivision 3; 
  1.21            473F.05; 473F.06; 477A.011, subdivision 20; proposing 
  1.22            coding for new law in Minnesota Statutes, chapters 
  1.23            16A; 216B; 272; 475A. 
  1.24  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.25     Section 1.  Minnesota Statutes 2000, section 16A.67, 
  1.26  subdivision 1, is amended to read: 
  1.27     Subdivision 1.  [AUTHORIZATION.] (a) The commissioner of 
  1.28  finance is authorized to sell and issue state bonds to fund the 
  1.29  judgment rendered against the state by the Minnesota supreme 
  1.30  court in Cambridge State Bank et al. v. James, 514 N.W. 2d 565, 
  1.31  on April 1, 1994, and related claims, and interest accrued on 
  1.32  the judgment and related claims, to fund any bond reserve 
  1.33  determined to be necessary, and to pay costs of issuance of the 
  1.34  bonds.  The proceeds of the bonds are appropriated for these 
  2.1   purposes.  The principal amount of the bonds shall not exceed 
  2.2   $400,000,000.  The bonds shall be sold and issued upon such 
  2.3   terms and in such manner as the commissioner shall determine to 
  2.4   be in the best interests of the state.  The final maturity of 
  2.5   the bonds shall be not later than June 30, 2005. 
  2.6      (b) The commissioner of finance is authorized to sell and 
  2.7   issue bonds to pay to each eligible local government unit the 
  2.8   amount necessary to establish its electric utility generation 
  2.9   attached machinery personal property tax replacement trust fund 
  2.10  as provided in section 16A.6702, to fund any bond reserve 
  2.11  determined to be necessary, and to pay costs of issuance of the 
  2.12  bonds.  The proceeds of the bonds are appropriated for these 
  2.13  purposes.  The principal amount of the bonds must not exceed 
  2.14  $.......  The bonds must be sold and issued upon such terms and 
  2.15  in such manner as the commissioner shall determine to be in the 
  2.16  best interests of the state.  The final maturity of the bonds 
  2.17  must be no later than June 30, 2011. 
  2.18     [EFFECTIVE DATE.] This section is effective the day 
  2.19  following final enactment. 
  2.20     Sec. 2.  [16A.6702] [ELECTRIC UTILITY GENERATION ATTACHED 
  2.21  MACHINERY PERSONAL PROPERTY TAX REPLACEMENT TRUST FUND.] 
  2.22     Subdivision 1.  [DEFINITIONS.] For purposes of this section:
  2.23     (1) "facility" means a single generating unit at a site 
  2.24  which can run independently of other units at the site; 
  2.25     (2) "site" means an area of land used for a facility and 
  2.26  includes any contiguous or adjacent areas of land, including 
  2.27  buffer areas, used for facilities in the same system for the 
  2.28  generation of electricity; 
  2.29     (3) "retirement" of a facility means rendering the facility 
  2.30  permanently, legally, and physically incapable of generating 
  2.31  electricity and all electric utility generation attached 
  2.32  machinery and personal property, including transmission and 
  2.33  substation equipment, has been dismantled and removed from the 
  2.34  site or has been permanently closed in place if removal is 
  2.35  impracticable. 
  2.36     Subd. 2.  [ELIGIBLE LOCAL GOVERNMENTS.] A statutory or home 
  3.1   rule charter city, county, town, or special taxing district that 
  3.2   received personal property tax revenue from electric utility 
  3.3   generation attached machinery personal property for taxes levied 
  3.4   in 2000, payable in 2001, is eligible to receive an 
  3.5   appropriation under this section. 
  3.6      Subd. 3.  [TRUSTS ESTABLISHED; JOINT POWERS INVESTMENT 
  3.7   TRUSTS.] In order to receive an appropriation from proceeds of 
  3.8   the bonds sold under section 16A.67, subdivision 1, paragraph 
  3.9   (b), each eligible local government unit shall establish by 
  3.10  resolution an electric utility generation attached machinery 
  3.11  personal property tax replacement trust fund.  Each eligible 
  3.12  local government unit may enter into agreements or contracts 
  3.13  with other eligible local government units for shares of a 
  3.14  Minnesota joint powers investment trust in accordance with 
  3.15  section 118A.05, subdivision 4, or 471.59.  If the principal 
  3.16  amount of the trust fund for any eligible local government, as 
  3.17  calculated under subdivision 4, does not equal or exceed the sum 
  3.18  of $1,000,000, the eligible local government unit shall enter 
  3.19  into agreements or contracts with other eligible local 
  3.20  government units within the same county or, if necessary to 
  3.21  reach the $1,000,000 threshold, with other neighboring eligible 
  3.22  local government units, so that the combined funds to be managed 
  3.23  in their collective joint powers investment trust equals or 
  3.24  exceeds the sum of $1,000,000.  Each eligible local government 
  3.25  shall notify the department of finance, the department of 
  3.26  revenue, the public utilities commission, and the generation 
  3.27  facility taxpayers of the trust arrangements. 
  3.28     Subd. 4.  [APPROPRIATION AMOUNT.] Not later than February 
  3.29  1, 2002, the commissioner of finance shall convey to each 
  3.30  eligible local government unit that has established a qualifying 
  3.31  trust under subdivision 3 an appropriation, in an amount 
  3.32  calculated so that income from the principal amount, if invested 
  3.33  with a six percent simple interest annualized rate of return, 
  3.34  would, after covering reasonable expenses for the administration 
  3.35  of the trust, replace the reduction in taxes that result from 
  3.36  the 75 percent reduction in the electric utility generation 
  4.1   attached machinery personal property class rate that applies to 
  4.2   personal property of an electric generation system upon the 
  4.3   enactment of section 273.13, subdivision 24, paragraph (a), 
  4.4   clause (4), calculated on the basis of the payable 2001 property 
  4.5   taxes for electric generation attached machinery personal 
  4.6   property.  Each eligible local government unit shall place the 
  4.7   given appropriation into the trust established under subdivision 
  4.8   3.  Prior to September 30, 2001, the department of revenue, with 
  4.9   advice and comment from staff in the eligible local taxing 
  4.10  jurisdictions and from the utilities which own the facilities, 
  4.11  shall calculate the applicable tax on electric generation 
  4.12  machinery and personal property for each facility in each 
  4.13  eligible local taxing jurisdiction as a basis for calculating 
  4.14  and allocating the appropriation. 
  4.15     Subd. 5.  [TRUST FUND MANAGEMENT.] The trust established 
  4.16  under subdivision 3 must be maintained as a separate account and 
  4.17  trust funds must not be commingled with other accounts of the 
  4.18  local government unit.  The trust funds received under 
  4.19  subdivision 4 must be invested in accordance with section 
  4.20  118A.04.  Any and all income generated from each trust fund, 
  4.21  after payment of appropriate expenses, must be available to the 
  4.22  responsible eligible local government unit for use as general 
  4.23  revenues.  The income after expenses from each trust are 
  4.24  intended to replace lost revenues resulting from the 75 percent 
  4.25  reduction in the electric utility generation attached machinery 
  4.26  personal property class rate that applies to personal property 
  4.27  of an electric generation system upon the enactment of section 
  4.28  273.13, subdivision 24, paragraph (a), clause (4).  The 
  4.29  principal of the trust must be preserved and must be repaid to 
  4.30  the department of finance at the termination of the trust in 
  4.31  accordance with subdivision 7.  The trust principal must not be 
  4.32  drawn down to provide general revenue to the local government 
  4.33  unit.  The trust must be subject to audit on at least a biannual 
  4.34  basis by the local government unit's auditor or, upon the 
  4.35  request of the local government unit, by the state auditor. 
  4.36     Subd. 6.  [GENERATION FACILITY RETIREMENT.] If the owner of 
  5.1   an electric utility generation facility determines to retire the 
  5.2   facility, the owner shall give written notice of the retirement 
  5.3   to each local government unit that has received an appropriation 
  5.4   for deposit in a trust established under subdivision 3, to the 
  5.5   public utilities commission, to the commissioner of finance and, 
  5.6   if the distribution utility or utilities are not the same entity 
  5.7   as the owner, to the distribution utility or utilities.  Any 
  5.8   retirement of a facility is effective with respect to the trust 
  5.9   as of January 2 in the second year following the retirement, 
  5.10  except that, if a facility with 50 percent or more of the 
  5.11  nameplate capacity of the retired facility replaces the facility 
  5.12  at the site, or if application has been made for such a 
  5.13  replacement facility before the effective date of the 
  5.14  retirement, the new facility is considered to be a like-kind 
  5.15  replacement, such that the facility at the site is not deemed 
  5.16  retired for purposes of terminating the trust. 
  5.17     Subd. 7.  [DISPOSITION OF TRUST PRINCIPAL UPON RETIREMENT 
  5.18  OF FACILITY.] The local government unit may use income from the 
  5.19  trust as general revenues through the calendar year of the 
  5.20  effective date of retirement.  The principal remaining in the 
  5.21  trust associated with the retired facility must be repaid to the 
  5.22  department of finance immediately upon the beginning of the next 
  5.23  calendar year following the effective date of retirement of the 
  5.24  facility, except as otherwise provided in subdivisions 8 and 9.  
  5.25  Within 60 days after the owner of a retired facility has given 
  5.26  notice that a particular facility is to be retired, the 
  5.27  distribution utility or utilities operating in the service 
  5.28  territory from which a surcharge was collected under section 
  5.29  216B.1646 to repay the bonds associated with the retired 
  5.30  facility shall file a plan for the allocation of the trust 
  5.31  principal with the public utilities commission.  Any such plan 
  5.32  must make reasonable arrangements for the rebate of the trust 
  5.33  principal to customers in the service territory who have paid 
  5.34  the surcharges collected to repay the bonds used to establish 
  5.35  the trust principal, if reasonably possible.  Any portion of the 
  5.36  trust principal funded from the general fund must be repaid to 
  6.1   the general fund.  The commission shall be responsible to 
  6.2   approve or modify the plan.  Upon approval of the plan, the 
  6.3   department of finance shall transfer the trust principal to be 
  6.4   distributed according to the plan. 
  6.5      Subd. 8.  [ALLOCATION OF TRUST PRINCIPAL FOR A SITE WITH 
  6.6   MULTIPLE FACILITIES.] For a site with more than one facility, if 
  6.7   one facility is retired and one or more facilities at the same 
  6.8   site remain available for generation of electricity, 67 percent 
  6.9   of the trust funds associated with the particular retired 
  6.10  facility shall be repaid to the department of finance.  The 
  6.11  remaining 33 percent of the trust funds associated with the 
  6.12  retired facility shall remain in the trust, and income from 
  6.13  those funds remaining in the trust may be used by the local 
  6.14  government unit, until the last facility at the site has been 
  6.15  retired. 
  6.16     Subd. 9.  [LIMITATION ON TRUST TERMINATION FOR CERTAIN 
  6.17  FACILITIES.] Notwithstanding subdivision 7, if an existing 
  6.18  electric generating facility is sited within one mile of the St. 
  6.19  Croix river, and if the electric generating facility has been 
  6.20  retired as provided in subdivision 6, the electric utility 
  6.21  generation attached machinery personal property tax replacement 
  6.22  trust fund does not terminate and its principal shall not be 
  6.23  repaid until the owner of the electric generation facility and 
  6.24  the city government unit within whose jurisdiction the electric 
  6.25  generation facility is sited have entered into an agreement for 
  6.26  the remediation, rehabilitation, or redevelopment of the 
  6.27  electric generation facility site.  The parties may agree to use 
  6.28  part or all of the principal of the electric utility generation 
  6.29  attached machinery personal property tax replacement trust fund 
  6.30  for the remediation, rehabilitation, or redevelopment of the 
  6.31  electric generation facility site. 
  6.32     [EFFECTIVE DATE.] This section is effective the day 
  6.33  following final enactment. 
  6.34     Sec. 3.  Minnesota Statutes 2000, section 126C.01, 
  6.35  subdivision 2, is amended to read: 
  6.36     Subd. 2.  [ADJUSTED NET TAX CAPACITY.] "Adjusted net tax 
  7.1   capacity" means the net tax capacity of the taxable property of 
  7.2   the district as adjusted by the commissioner of revenue under 
  7.3   section 127A.48.  The adjusted net tax capacity for any given 
  7.4   calendar year must be used to compute levy limitations for 
  7.5   levies certified in the succeeding calendar year and aid for the 
  7.6   school year beginning in the second succeeding calendar year.  
  7.7   However, this formula must be adjusted for districts in which 
  7.8   electric generation personal property and machinery has been 
  7.9   exempted.  In these districts, the department of revenue shall 
  7.10  be allowed to modify any applicable prior year's adjusted net 
  7.11  tax capacity to reflect the loss of the electric generation 
  7.12  personal property for both levy limitations and for school aids 
  7.13  in the year the exemption is first implemented. 
  7.14     [EFFECTIVE DATE.] This section is effective for taxes 
  7.15  payable in 2002 and thereafter. 
  7.16     Sec. 4.  Minnesota Statutes 2000, section 126C.13, 
  7.17  subdivision 1, is amended to read: 
  7.18     Subdivision 1.  [GENERAL EDUCATION TAX RATE.] The 
  7.19  commissioner must establish the general education tax rate by 
  7.20  July 1 of each year for levies payable in the following year.  
  7.21  The general education tax capacity rate must be a rate, rounded 
  7.22  up to the nearest hundredth of a percent, that, when applied to 
  7.23  the adjusted net tax capacity for all districts, raises the 
  7.24  amount specified in this subdivision.  The general education tax 
  7.25  rate must be the rate that raises $1,330,000,000 for fiscal year 
  7.26  2001 2003, and later fiscal years.  The general education tax 
  7.27  rate may not be changed due to changes or corrections made to a 
  7.28  district's adjusted net tax capacity after the tax rate has been 
  7.29  established.  
  7.30     [EFFECTIVE DATE.] This section is effective for taxes 
  7.31  payable in 2002 and thereafter. 
  7.32     Sec. 5.  Minnesota Statutes 2000, section 127A.48, is 
  7.33  amended by adding a subdivision to read: 
  7.34     Subd. 17.  [EXEMPTION OF ELECTRIC GENERATION 
  7.35  MACHINERY.] For the purposes of determining the statewide 
  7.36  general education tax rate and each district's general education 
  8.1   levy amount under section 126C.13 only, tools, implements, and 
  8.2   machinery of an electric generation system as defined under 
  8.3   section 273.13, subdivision 24, paragraph (a), clause (4), must 
  8.4   be excluded from the computation of a school district's adjusted 
  8.5   net tax capacity. 
  8.6      [EFFECTIVE DATE.] This section is effective for the 2001 
  8.7   assessment, for taxes payable in 2002, and thereafter. 
  8.8      Sec. 6.  [216B.1646] [RATE REDUCTION AND DISTRIBUTION 
  8.9   SURCHARGE.] 
  8.10     (a) Within 30 days of the enactment date of this section, 
  8.11  any electric utility subject to rate regulation by the public 
  8.12  utilities commission shall file with the commission an amendment 
  8.13  to the tariffed rates of the utility, to reflect the reduced 
  8.14  amount of the utility's property tax obligation resulting from 
  8.15  the exemption of tools, implements, and machinery under section 
  8.16  127A.48, and from the reduction in taxes that result from the 
  8.17  enactment of section 273.13, subdivision 24, paragraph (a), 
  8.18  clause (4).  To the extent feasible, each dollar of tax 
  8.19  reduction should result in a dollar of savings to the utility's 
  8.20  customers. 
  8.21     (b) When the utility files the rate amendment under 
  8.22  paragraph (a), the utility shall also file a tariff for a 
  8.23  surcharge to collect funds for the repayment of the state 
  8.24  revenue bonds issued on behalf of the utility under section 
  8.25  16A.67, subdivision 1, paragraph (b).  The commission may not 
  8.26  approve the surcharge tariff unless the commissioner finds the 
  8.27  surcharge is: 
  8.28     (1) imposed on distribution customers; 
  8.29     (2) nonbypassable and competitively neutral; 
  8.30     (3) scheduled to end on the date the state revenue bonds 
  8.31  issued on behalf of the utility under section 16A.67, 
  8.32  subdivision 1, paragraph (b), are repaid; and 
  8.33     (4) calculated so as to: 
  8.34     (i) not charge any customer class a rate greater than 
  8.35  charged to that class prior to the enactment date of this 
  8.36  section; and 
  9.1      (ii) collect only an amount no greater than the reduction 
  9.2   of the utility's generation attached machinery personal property 
  9.3   tax resulting from the exemption of tools, implements, and 
  9.4   machinery under section 127A.48, and from the reduction in taxes 
  9.5   that results from the enactment of section 273.13, subdivision 
  9.6   24, paragraph (a), clause (4). 
  9.7      (c) The commission shall ensure that the tariff amendment 
  9.8   and the surcharge tariff have effective dates consistent with: 
  9.9      (1) the utility's obligation to pay the taxes until the 
  9.10  trusts have generated sufficient income to replace the reduction 
  9.11  in taxes that results from the enactment of section 273.13, 
  9.12  subdivision 24, paragraph (a), clause (4), calculated on the 
  9.13  basis of the payable 2001 property taxes paid by the electric 
  9.14  utility for electric generation attached machinery personal 
  9.15  property; 
  9.16     (2) the utility's obligation to pay for the bonds issued 
  9.17  under section 16A.67, subdivision 1, paragraph (b), with the 
  9.18  corresponding entitlement to collect funds for such payments as 
  9.19  provided in paragraph (b); and 
  9.20     (3) the implementation of the tariff rate reduction to 
  9.21  coincide with the commencement of the surcharge collection. 
  9.22     [EFFECTIVE DATE.] This section is effective the day 
  9.23  following final enactment. 
  9.24     Sec. 7.  Minnesota Statutes 2000, section 272.02, 
  9.25  subdivision 9, is amended to read: 
  9.26     Subd. 9.  [PERSONAL PROPERTY; EXCEPTIONS.] Except for the 
  9.27  taxable personal property enumerated below, all personal 
  9.28  property and the property described in section sections 272.03, 
  9.29  subdivision 1, paragraphs (c) and (d), and 272.028 shall be 
  9.30  exempt.  
  9.31     The following personal property shall be taxable:  
  9.32     (a) except as provided in section 272.028, personal 
  9.33  property which is part of an electric generating, transmission, 
  9.34  or distribution system or a pipeline system transporting or 
  9.35  distributing water, gas, crude oil, or petroleum products or 
  9.36  mains and pipes used in the distribution of steam or hot or 
 10.1   chilled water for heating or cooling buildings and structures; 
 10.2      (b) railroad docks and wharves which are part of the 
 10.3   operating property of a railroad company as defined in section 
 10.4   270.80; 
 10.5      (c) personal property defined in section 272.03, 
 10.6   subdivision 2, clause (3); 
 10.7      (d) leasehold or other personal property interests which 
 10.8   are taxed pursuant to section 272.01, subdivision 2; 273.124, 
 10.9   subdivision 7; or 273.19, subdivision 1; or any other law 
 10.10  providing the property is taxable as if the lessee or user were 
 10.11  the fee owner; 
 10.12     (e) manufactured homes and sectional structures, including 
 10.13  storage sheds, decks, and similar removable improvements 
 10.14  constructed on the site of a manufactured home, sectional 
 10.15  structure, park trailer or travel trailer as provided in section 
 10.16  273.125, subdivision 8, paragraph (f); and 
 10.17     (f) flight property as defined in section 270.071.  
 10.18     [EFFECTIVE DATE.] This section is effective for the 2001 
 10.19  assessment, for taxes payable in 2002, and thereafter. 
 10.20     Sec. 8.  [272.028] [PERSONAL PROPERTY USED TO GENERATE 
 10.21  ELECTRICITY; NEW PLANT CONSTRUCTION AFTER JANUARY 1, 2001.] 
 10.22     (a) For a new generating plant built and placed in service 
 10.23  after January 1, 2001, personal property used to generate 
 10.24  electric power is exempt if an exemption of generation personal 
 10.25  property form, with an attached siting agreement, signed by the 
 10.26  utility and the host taxing authorities is filed with the 
 10.27  department of revenue.  The siting agreement may include a plan 
 10.28  to provide fees or compensation to the host jurisdictions.  For 
 10.29  purposes of this section, "personal property" means tools, 
 10.30  implements, and machinery of the generating plant.  This 
 10.31  exemption does not apply to transformers, transmission lines, 
 10.32  distribution lines, or any other tools, implements, and 
 10.33  machinery that are part of an electric substation, wherever 
 10.34  located. 
 10.35     (b) For a plant existing or under construction on the day 
 10.36  of final enactment of this act, a partial exemption applies if 
 11.1   an exemption of generation personal property form, with an 
 11.2   attached siting agreement, signed by the utility and the host 
 11.3   taxing authorities is filed with the department of revenue, and 
 11.4   if the nameplate capacity of the plant is increased from that 
 11.5   existing on the day of final enactment of this act.  The siting 
 11.6   agreement may include a plan to provide fees or compensation to 
 11.7   the host jurisdictions.  This partial exemption must be computed 
 11.8   by taking the increase in megawatts over the total megawatt 
 11.9   nameplate capacity after construction is complete, multiplied by 
 11.10  the market value of all taxable tools, implements, and machinery 
 11.11  of the generating plant as determined by the commissioner of 
 11.12  revenue.  The resulting exemption is effective beginning in the 
 11.13  next assessment year. 
 11.14     [EFFECTIVE DATE.] This section is effective the day 
 11.15  following final enactment. 
 11.16     Sec. 9.  Minnesota Statutes 2000, section 273.13, 
 11.17  subdivision 24, is amended to read: 
 11.18     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 11.19  property and utility real and personal property is class 3a.  
 11.20     (1) Except as otherwise provided, each parcel of 
 11.21  commercial, industrial, or utility real property has a class 
 11.22  rate of 2.4 percent of the first tier of market value, and 3.4 
 11.23  percent of the remaining market value.  In the case of 
 11.24  contiguous parcels of property owned by the same person or 
 11.25  entity, only the value equal to the first-tier value of the 
 11.26  contiguous parcels qualifies for the reduced class rate, except 
 11.27  that contiguous parcels owned by the same person or entity shall 
 11.28  be eligible for the first-tier value class rate on each separate 
 11.29  business operated by the owner of the property, provided the 
 11.30  business is housed in a separate structure.  For the purposes of 
 11.31  this subdivision, the first tier means the first $150,000 of 
 11.32  market value.  Real property owned in fee by a utility for 
 11.33  transmission line right-of-way shall be classified at the class 
 11.34  rate for the higher tier.  
 11.35     For purposes of this subdivision, parcels are considered to 
 11.36  be contiguous even if they are separated from each other by a 
 12.1   road, street, waterway, or other similar intervening type of 
 12.2   property.  Connections between parcels that consist of power 
 12.3   lines or pipelines do not cause the parcels to be contiguous.  
 12.4   Property owners who have contiguous parcels of property that 
 12.5   constitute separate businesses that may qualify for the 
 12.6   first-tier class rate shall notify the assessor by July 1, for 
 12.7   treatment beginning in the following taxes payable year.  
 12.8      (2) Personal property that is:  (i) part of an electric 
 12.9   generation, transmission, or distribution system; or (ii) part 
 12.10  of a pipeline system transporting or distributing water, gas, 
 12.11  crude oil, or petroleum products; and (iii) not described in 
 12.12  clause (3) or (4), has a class rate as provided under clause (1) 
 12.13  for the first tier of market value and the remaining market 
 12.14  value.  In the case of multiple parcels in one county that are 
 12.15  owned by one person or entity, only one first tier amount is 
 12.16  eligible for the reduced rate.  
 12.17     (3) The entire market value of personal property that is:  
 12.18  (i) tools, implements, and machinery of an electric generation, 
 12.19  transmission, or distribution system; (ii) tools, implements, 
 12.20  and machinery of a pipeline system transporting or distributing 
 12.21  water, gas, crude oil, or petroleum products; or (iii) the mains 
 12.22  and pipes used in the distribution of steam or hot or chilled 
 12.23  water for heating or cooling buildings, has a class rate as 
 12.24  provided under clause (1) for the remaining market value in 
 12.25  excess of the first tier. 
 12.26     (4) Except as provided in section 272.028, the entire 
 12.27  personal property market value of tools, implements, and 
 12.28  machinery of an electric generation system has a class rate 
 12.29  equal to 0.85 percent or, if the class rate is changed for other 
 12.30  personal property under clause (3), equal to 25 percent of the 
 12.31  class rate for other personal property under clause (3), for the 
 12.32  year in which payment is due for personal property taxes as a 
 12.33  result of assessments made in the year in which any law is 
 12.34  enacted changing the class rate under clause (3). 
 12.35     (b) Employment property defined in section 469.166, during 
 12.36  the period provided in section 469.170, shall constitute class 
 13.1   3b.  The class rates for class 3b property are determined under 
 13.2   paragraph (a). 
 13.3      (c)(1) Subject to the limitations of clause (2), structures 
 13.4   which are (i) located on property classified as class 3a, (ii) 
 13.5   constructed under an initial building permit issued after 
 13.6   January 2, 1996, (iii) located in a transit zone as defined 
 13.7   under section 473.3915, subdivision 3, (iv) located within the 
 13.8   boundaries of a school district, and (v) not primarily used for 
 13.9   retail or transient lodging purposes, shall have a class rate 
 13.10  equal to the lesser of 2.975 percent or the class rate of the 
 13.11  second tier of the commercial property rate under paragraph (a) 
 13.12  on any portion of the market value that does not qualify for the 
 13.13  first tier class rate under paragraph (a).  As used in item (v), 
 13.14  a structure is primarily used for retail or transient lodging 
 13.15  purposes if over 50 percent of its square footage is used for 
 13.16  those purposes.  A class rate equal to the lesser of 2.975 
 13.17  percent or the class rate of the second tier of the commercial 
 13.18  property class rate under paragraph (a) shall also apply to 
 13.19  improvements to existing structures that meet the requirements 
 13.20  of items (i) to (v) if the improvements are constructed under an 
 13.21  initial building permit issued after January 2, 1996, even if 
 13.22  the remainder of the structure was constructed prior to January 
 13.23  2, 1996.  For the purposes of this paragraph, a structure shall 
 13.24  be considered to be located in a transit zone if any portion of 
 13.25  the structure lies within the zone.  If any property once 
 13.26  eligible for treatment under this paragraph ceases to remain 
 13.27  eligible due to revisions in transit zone boundaries, the 
 13.28  property shall continue to receive treatment under this 
 13.29  paragraph for a period of three years. 
 13.30     (2) This clause applies to any structure qualifying for the 
 13.31  transit zone reduced class rate under clause (1) on January 2, 
 13.32  1999, or any structure meeting any of the qualification criteria 
 13.33  in item (i) and otherwise qualifying for the transit zone 
 13.34  reduced class rate under clause (1).  Such a structure continues 
 13.35  to receive the transit zone reduced class rate until the 
 13.36  occurrence of one of the events in item (ii).  Property 
 14.1   qualifying under item (i)(D), that is located outside of a city 
 14.2   of the first class, qualifies for the transit zone reduced class 
 14.3   rate as provided in that item.  Property qualifying under item 
 14.4   (i)(E) qualifies for the transit zone reduced class rate as 
 14.5   provided in that item. 
 14.6      (i) A structure qualifies for the rate in this clause if it 
 14.7   is: 
 14.8      (A) property for which a building permit was issued before 
 14.9   December 31, 1998; or 
 14.10     (B) property for which a building permit was issued before 
 14.11  June 30, 2001, if: 
 14.12     (I) at least 50 percent of the land on which the structure 
 14.13  is to be built has been acquired or is the subject of signed 
 14.14  purchase agreements or signed options as of March 15, 1998, by 
 14.15  the entity that proposes construction of the project or an 
 14.16  affiliate of the entity; 
 14.17     (II) signed agreements have been entered into with one 
 14.18  entity or with affiliated entities to lease for the account of 
 14.19  the entity or affiliated entities at least 50 percent of the 
 14.20  square footage of the structure or the owner of the structure 
 14.21  will occupy at least 50 percent of the square footage of the 
 14.22  structure; and 
 14.23     (III) one of the following requirements is met: 
 14.24     the project proposer has submitted the completed data 
 14.25  portions of an environmental assessment worksheet by December 
 14.26  31, 1998; or 
 14.27     a notice of determination of adequacy of an environmental 
 14.28  impact statement has been published by April 1, 1999; or 
 14.29     an alternative urban areawide review has been completed by 
 14.30  April 1, 1999; or 
 14.31     (C) property for which a building permit is issued before 
 14.32  July 30, 1999, if: 
 14.33     (I) at least 50 percent of the land on which the structure 
 14.34  is to be built has been acquired or is the subject of signed 
 14.35  purchase agreements as of March 31, 1998, by the entity that 
 14.36  proposes construction of the project or an affiliate of the 
 15.1   entity; 
 15.2      (II) a signed agreement has been entered into between the 
 15.3   building developer and a tenant to lease for its own account at 
 15.4   least 200,000 square feet of space in the building; 
 15.5      (III) a signed letter of intent is entered into by July 1, 
 15.6   1998, between the building developer and the tenant to lease the 
 15.7   space for its own account; and 
 15.8      (IV) the environmental review process required by state law 
 15.9   was commenced by December 31, 1998; 
 15.10     (D) property for which an irrevocable letter of credit with 
 15.11  a housing and redevelopment authority was signed before December 
 15.12  31, 1998.  The structure shall receive the transit zone reduced 
 15.13  class rate during construction and for the duration of time that 
 15.14  the original tenants remain in the building.  Any unoccupied net 
 15.15  leasable square footage that is not leased within 36 months 
 15.16  after the certificate of occupancy has been issued for the 
 15.17  building shall not be eligible to receive the reduced class 
 15.18  rate.  This reduced class rate applies only if a qualifying 
 15.19  entity continues to own the property; 
 15.20     (E) property, located in a city of the first class, and for 
 15.21  which the building permits for the excavation, the parking ramp, 
 15.22  and the office tower were issued prior to April 1, 1999, shall 
 15.23  receive the reduced class rate during construction and for the 
 15.24  first five assessment years immediately following its initial 
 15.25  occupancy provided that, when completed, at least 25 percent of 
 15.26  the net leasable square footage must be occupied by a qualifying 
 15.27  entity each year during this time period.  In order to receive 
 15.28  the reduced class rate on the structure in any subsequent 
 15.29  assessment years, at least 50 percent of the rentable square 
 15.30  footage must be occupied by a qualifying entity.  This reduced 
 15.31  class rate applies only if a qualifying entity continues to own 
 15.32  the property. 
 15.33     (ii) A structure specified by this clause, other than a 
 15.34  structure qualifying under clause (i)(D) or (E), shall continue 
 15.35  to receive the transit zone reduced class rate until the 
 15.36  occurrence of one of the following events: 
 16.1      (A) if the structure upon initial occupancy will be owner 
 16.2   occupied by the entity initially constructing the structure or 
 16.3   an affiliated entity, the structure receives the reduced class 
 16.4   rate until the structure ceases to be at least 50 percent 
 16.5   occupied by the entity or an affiliated entity, provided, if the 
 16.6   portion of the structure occupied by that entity or an affiliate 
 16.7   of the entity is less than 85 percent, the transit zone class 
 16.8   rate reduction for the portion of structure not so occupied 
 16.9   terminates upon the leasing of such space to any nonaffiliated 
 16.10  entity; or 
 16.11     (B) if the structure is leased by a single entity or 
 16.12  affiliated entity at the time of initial occupancy, the 
 16.13  structure shall receive the reduced class rate until the 
 16.14  structure ceases to be at least 50 percent occupied by the 
 16.15  entity or an affiliated entity, provided, if the portion of the 
 16.16  structure occupied by that entity or an affiliate of the entity 
 16.17  is less than 85 percent, the transit zone class rate reduction 
 16.18  for the portion of structure not so occupied shall terminate 
 16.19  upon the leasing of such space to any nonaffiliated entity; or 
 16.20     (C) if the structure meets the criteria in item (i)(C), the 
 16.21  structure shall receive the reduced class rate until the 
 16.22  expiration of the initial lease term of the applicable tenants. 
 16.23     Percentages occupied or leased shall be determined based 
 16.24  upon net leasable square footage in the structure.  The assessor 
 16.25  shall allocate the value of the structure in the same fashion as 
 16.26  provided in the general law for portions of any structure 
 16.27  receiving and not receiving the transit tax class reduction as a 
 16.28  result of this clause. 
 16.29     (3) For purposes of paragraph (c), "qualifying entity" 
 16.30  means the entity owning the property on September 1, 2000, or an 
 16.31  affiliate of an entity that owned the property on September 1, 
 16.32  2000. 
 16.33     [EFFECTIVE DATE.] This section is effective for assessment 
 16.34  year 2001, for taxes payable in 2002, and thereafter. 
 16.35     Sec. 10.  Minnesota Statutes 2000, section 275.08, 
 16.36  subdivision 1b, is amended to read: 
 17.1      Subd. 1b.  [COMPUTATION OF TAX RATES.] (a) The amounts 
 17.2   certified to be levied against net tax capacity under section 
 17.3   275.07 by an individual local government unit shall be divided 
 17.4   by the total net tax capacity of all taxable properties within 
 17.5   the local government unit's taxing jurisdiction, except as 
 17.6   provided in paragraph (b).  The resulting ratio, the local 
 17.7   government's local tax rate, multiplied by each property's net 
 17.8   tax capacity shall be each property's net tax capacity tax for 
 17.9   that local government unit before reduction by any credits.  
 17.10     (b) The general education levy under section 126C.13 
 17.11  certified by a school district shall be divided by the total net 
 17.12  tax capacity of all taxable properties within the district's 
 17.13  taxing jurisdiction, excluding the net tax capacity of tools, 
 17.14  implements, and machinery of an electric generation system under 
 17.15  section 273.13, subdivision 24, paragraph (a), clause (4).  The 
 17.16  resulting ratio, the school district's general education tax 
 17.17  rate, multiplied by each property's net tax capacity shall be 
 17.18  each property's general education tax before reduction by any 
 17.19  credits.  The general education tax shall not be levied on 
 17.20  tools, implements, and machinery of an electric generation 
 17.21  system under section 273.13, subdivision 24, paragraph (a), 
 17.22  clause (4). 
 17.23     (c) Any amount certified to the county auditor to be levied 
 17.24  against market value shall be divided by the total referendum 
 17.25  market value of all taxable properties within the taxing 
 17.26  district.  The resulting ratio, the taxing district's new 
 17.27  referendum tax rate, multiplied by each property's referendum 
 17.28  market value shall be each property's new referendum tax before 
 17.29  reduction by any credits.  For the purposes of this subdivision, 
 17.30  "referendum market value" means the market value as defined in 
 17.31  section 126C.01, subdivision 3. 
 17.32     [EFFECTIVE DATE.] This section is effective for taxes 
 17.33  payable in 2002 and thereafter. 
 17.34     Sec. 11.  Minnesota Statutes 2000, section 276A.01, 
 17.35  subdivision 3, is amended to read: 
 17.36     Subd. 3.  [COMMERCIAL-INDUSTRIAL PROPERTY.] 
 18.1   "Commercial-industrial property" means the following categories 
 18.2   of property, as defined in section 273.13, excluding that 
 18.3   portion of the property (i) that may, by law, constitute the tax 
 18.4   base for a tax increment pledged pursuant to section 469.042 or 
 18.5   469.162, certification of which was requested prior to May 1, 
 18.6   1996, to the extent and while the tax increment is so pledged; 
 18.7   or (ii) that is exempt from taxation under section 272.02; or 
 18.8   (iii) that is included under section 273.13, subdivision 24, 
 18.9   paragraph (a), clause (4):  
 18.10     (1) that portion of class 5 property consisting of unmined 
 18.11  iron ore and low-grade iron-bearing formations as defined in 
 18.12  section 273.14, tools, implements, and machinery, except the 
 18.13  portion of high voltage transmission lines, the value of which 
 18.14  is deducted from net tax capacity under section 273.425; and 
 18.15     (2) that portion of class 3 and class 5 property which is 
 18.16  either used or zoned for use for any commercial or industrial 
 18.17  purpose, except for such property which is, or, in the case of 
 18.18  property under construction, will when completed be used 
 18.19  exclusively for residential occupancy and the provision of 
 18.20  services to residential occupants thereof.  Property must be 
 18.21  considered as used exclusively for residential occupancy only if 
 18.22  each of not less than 80 percent of its occupied residential 
 18.23  units is, or, in the case of property under construction, will 
 18.24  when completed be occupied under an oral or written agreement 
 18.25  for occupancy over a continuous period of not less than 30 days. 
 18.26     If the classification of property prescribed by section 
 18.27  273.13 is modified by legislative amendment, the references in 
 18.28  this subdivision are to the successor class or classes of 
 18.29  property, or portions thereof, that include the kinds of 
 18.30  property designated in this subdivision.  
 18.31     [EFFECTIVE DATE.] This section is effective for taxes 
 18.32  levied in 2001, payable in 2002, and thereafter. 
 18.33     Sec. 12.  Minnesota Statutes 2000, section 473F.02, 
 18.34  subdivision 3, is amended to read: 
 18.35     Subd. 3.  [COMMERCIAL-INDUSTRIAL PROPERTY.] 
 18.36  "Commercial-industrial property" means the following categories 
 19.1   of property, as defined in section 273.13, excluding that 
 19.2   portion of such property (1) which may, by law, constitute the 
 19.3   tax base for a tax increment pledged under section 469.042 or 
 19.4   469.162, certification of which was requested prior to August 1, 
 19.5   1979, to the extent and while such tax increment is so pledged; 
 19.6   or (2) which is exempt from taxation under section 272.02; or (3)
 19.7   that is included under section 273.13, subdivision 24, paragraph 
 19.8   (a), clause (4):  
 19.9      (a) That portion of class 3 property defined in Minnesota 
 19.10  Statutes 1971, section 273.13, consisting of stocks of 
 19.11  merchandise and furniture and fixtures used therewith; 
 19.12  manufacturers' materials and manufactured articles; and tools, 
 19.13  implements and machinery, whether fixtures or otherwise.  
 19.14     (b) That portion of class 4 property defined in Minnesota 
 19.15  Statutes 1971, section 273.13, which is either used or zoned for 
 19.16  use for any commercial or industrial purpose, except for such 
 19.17  property which is, or, in the case of property under 
 19.18  construction, will when completed be used exclusively for 
 19.19  residential occupancy and the provision of services to 
 19.20  residential occupants thereof.  Property shall be considered as 
 19.21  used exclusively for residential occupancy only if each of not 
 19.22  less than 80 percent of its occupied residential units is, or, 
 19.23  in the case of property under construction, will when completed 
 19.24  be occupied under an oral or written agreement for occupancy 
 19.25  over a continuous period of not less than 30 days.  
 19.26     If the classification of property prescribed by section 
 19.27  273.13 is modified by legislative amendment, the references in 
 19.28  this subdivision shall be to such successor class or classes of 
 19.29  property, or portions thereof, as embrace the kinds of property 
 19.30  designated in this subdivision.  
 19.31     [EFFECTIVE DATE.] This section is effective for taxes 
 19.32  levied in 2001, payable in 2002, and thereafter. 
 19.33     Sec. 13.  Minnesota Statutes 2000, section 473F.05, is 
 19.34  amended to read: 
 19.35     473F.05 [NET TAX CAPACITY.] 
 19.36     (a) On or before August 5 of each year, the assessors 
 20.1   within each county in the area shall determine and certify to 
 20.2   the county auditor the net tax capacity in that year of 
 20.3   commercial-industrial property subject to taxation within each 
 20.4   municipality in the county, determined without regard to section 
 20.5   469.177, subdivision 3.  
 20.6      (b) On or before July 1, 2001, the assessors within each 
 20.7   county in the area shall amend their previous certification 
 20.8   under this section by excluding 75 percent of the assessment 
 20.9   year 2000 net tax capacity of tools, implements, and machinery 
 20.10  of an electric generation system from their certification. 
 20.11     [EFFECTIVE DATE.] This section is effective the day 
 20.12  following final enactment. 
 20.13     Sec. 14.  Minnesota Statutes 2000, section 473F.06, is 
 20.14  amended to read: 
 20.15     473F.06 [INCREASE IN NET TAX CAPACITY.] 
 20.16     (a) On or before July 15 of each year, the auditor of each 
 20.17  county in the area shall determine the amount, if any, by which 
 20.18  the net tax capacity determined in the preceding year under 
 20.19  section 473F.05, of commercial-industrial property subject to 
 20.20  taxation within each municipality in the auditor's county 
 20.21  exceeds the net tax capacity in 1971 of commercial-industrial 
 20.22  property subject to taxation within that municipality.  If a 
 20.23  municipality is located in two or more counties within the area, 
 20.24  the auditors of those counties shall certify the data required 
 20.25  by section 473F.05 to the county auditor who is responsible 
 20.26  under other provisions of law for allocating the levies of that 
 20.27  municipality between or among the affected counties.  That 
 20.28  county auditor shall determine the amount of the net excess, if 
 20.29  any, for the municipality under this section, and certify that 
 20.30  amount under section 473F.07.  Notwithstanding any other 
 20.31  provision of sections 473F.01 to 473F.13 to the contrary, in the 
 20.32  case of a municipality which is designated on July 24, 1971, as 
 20.33  a redevelopment area under section 401(a)(4) of the Public Works 
 20.34  and Economic Development Act of 1965, Public Law Number 89-136, 
 20.35  the increase in its net tax capacity of commercial-industrial 
 20.36  property for purposes of this section shall be determined in 
 21.1   each year by using as a base the net tax capacity of 
 21.2   commercial-industrial property in that municipality in the 1989 
 21.3   assessment year, rather than the net tax capacity of such 
 21.4   property in 1971.  The increase in total net tax capacity 
 21.5   determined by this section shall be reduced by the amount of any 
 21.6   decreases in net tax capacity of commercial-industrial property 
 21.7   resulting from any court decisions, court related stipulation 
 21.8   agreements, or abatements for a prior year, and only in the 
 21.9   amount of such decreases made during the 12-month period ending 
 21.10  on May 1 of the current assessment year, where such decreases, 
 21.11  if originally reflected in the determination of a prior year's 
 21.12  net tax capacity under section 473F.05, would have resulted in a 
 21.13  smaller contribution from the municipality in that year.  An 
 21.14  adjustment for such decreases shall be made only if the 
 21.15  municipality made a contribution in a prior year based on the 
 21.16  higher net tax capacity of the commercial-industrial property. 
 21.17     (b) For the determinations made under paragraph (a) in 2001 
 21.18  only, the assessment year 2000 net tax capacity of 
 21.19  commercial-industrial property is the revised amount certified 
 21.20  under section 473F.05, paragraph (b). 
 21.21     [EFFECTIVE DATE.] This section is effective for taxes 
 21.22  levied in 2001, payable in 2002, and thereafter. 
 21.23     Sec. 15.  [475A.07] [LOCAL BONDS; STATE GUARANTY.] 
 21.24     Subdivision 1.  [APPLICATION.] This section applies to the 
 21.25  bonds of a local unit of government, if the following conditions 
 21.26  are met: 
 21.27     (1) for taxes payable in 2001, at least 20 percent of the 
 21.28  total net tax capacity of the local government consisted of 
 21.29  personal property that is tools, implements, and machinery of an 
 21.30  electric generation system; 
 21.31     (2) the bonds are general obligations to which the full 
 21.32  faith and credit of the local government unit is pledged, 
 21.33  including an unlimited pledge to levy the amount of property 
 21.34  taxes needed to pay the obligations; and 
 21.35     (3) the bonds were outstanding on the day following final 
 21.36  enactment of this act or were issued to refund bonds that were 
 22.1   outstanding on that date. 
 22.2      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 22.3   the following terms have the meanings given. 
 22.4      (b) "Bond" means any obligation, as defined in section 
 22.5   475.51, subdivision 3, regardless of whether the obligations 
 22.6   were issued under the authority of chapter 475. 
 22.7      (c) "Local government unit" means a statutory or home rule 
 22.8   charter city, county, school district, or special taxing 
 22.9   district with authority to issue general obligation bonds. 
 22.10     Subd. 3.  [STATE GUARANTY.] (a) The state guaranties the 
 22.11  payment of bonds covered by the provisions of this section.  If 
 22.12  a deficiency or a default occurs under any bond covered by this 
 22.13  section, the commissioner of finance shall pay any amount needed 
 22.14  to remedy and correct the deficiency or default.  This guaranty 
 22.15  is permanent and irrevocable. 
 22.16     (b) The guaranty, pledge, and any payment by the 
 22.17  commissioner under paragraph (a) does not relieve the local 
 22.18  governmental unit of its obligation to pay the bonds. 
 22.19     (c) If the commissioner makes a payment under paragraph 
 22.20  (a), the commissioner may recover the amount, plus any 
 22.21  additional costs incurred including interest at the rate 
 22.22  specified in section 279.03, subdivision 1, from the local 
 22.23  governmental unit by: 
 22.24     (1) deducting the amount from state-aid payments made to 
 22.25  the local governmental unit; 
 22.26     (2) compelling the levying of property taxes by the local 
 22.27  governmental unit to be paid to the commissioner of finance; 
 22.28     (3) bringing legal action to collect the amounts; or 
 22.29     (4) any combination of the actions in clauses (1) to (3). 
 22.30     Subd. 4.  [APPROPRIATION.] An amount sufficient to provide 
 22.31  any funds needed to pay and administer the guaranty under this 
 22.32  section is appropriated from the general fund to the 
 22.33  commissioner of finance. 
 22.34     [EFFECTIVE DATE.] This section is effective the day 
 22.35  following final enactment. 
 22.36     Sec. 16.  Minnesota Statutes 2000, section 477A.011, 
 23.1   subdivision 20, is amended to read: 
 23.2      Subd. 20.  [CITY NET TAX CAPACITY.] (a) "City net tax 
 23.3   capacity" means (1) the net tax capacity computed using the net 
 23.4   tax capacity rates in section 273.13, except as provided in 
 23.5   paragraph (b), and the market values for taxes payable in the 
 23.6   year prior to the aid distribution plus (2) a city's fiscal 
 23.7   disparities distribution tax capacity under section 276A.06, 
 23.8   subdivision 2, paragraph (b), or 473F.08, subdivision 2, 
 23.9   paragraph (b), for taxes payable in the year prior to that for 
 23.10  which aids are being calculated.  The market value utilized in 
 23.11  computing city net tax capacity shall be reduced by the sum of 
 23.12  (1) a city's market value of commercial industrial property as 
 23.13  defined in section 276A.01, subdivision 3, or 473F.02, 
 23.14  subdivision 3, multiplied by the ratio determined pursuant to 
 23.15  section 276A.06, subdivision 2, paragraph (a), or 473F.08, 
 23.16  subdivision 2, paragraph (a), (2) the market value of the 
 23.17  captured value of tax increment financing districts as defined 
 23.18  in section 469.177, subdivision 2, and (3) the market value of 
 23.19  transmission lines deducted from a city's total net tax capacity 
 23.20  under section 273.425.  The city net tax capacity will be 
 23.21  computed using equalized market values.  
 23.22     (b) For purposes of computing the city net tax capacity, 
 23.23  the net class rate applied to personal property used in an 
 23.24  electric generation system, as defined in section 273.13, 
 23.25  subdivision 24, paragraph (a), clause (4), is equal to the class 
 23.26  rate applied to the market value in excess of the first tier 
 23.27  under section 273.13, subdivision 24, paragraph (a), clause (1). 
 23.28     [EFFECTIVE DATE.] This section is effective for aids paid 
 23.29  in 2002 and thereafter.