1st Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to financing and operation of state and local 1.3 government; making policy, technical, administrative, 1.4 enforcement, collection, refund, and other changes to 1.5 income, franchise, property, sales and use, estate, 1.6 health care provider, cigarette and tobacco products, 1.7 insurance premiums, aggregate removal, mortgage 1.8 registry, occupation, net proceeds, and production 1.9 taxes, and other taxes and tax-related provisions; 1.10 establishing a regional investment credit; 1.11 establishing a credit for carsharing; providing a 1.12 refund for transit passes; changing the rent credit 1.13 calculation; authorizing sales tax exemptions; 1.14 authorizing local government sales taxes; repealing 1.15 the sunset of sales tax on alcoholic beverages and 1.16 rental cars; authorizing distributions of tax 1.17 proceeds; changing provisions relating to fiscal 1.18 disparities, education financing, state debt 1.19 collection procedures, sustainable forest incentives 1.20 programs, business subsidy, and tax data provisions; 1.21 conforming provisions to certain changes in federal 1.22 law; changing powers and duties of certain local 1.23 governments and authorities and state departments or 1.24 agencies; providing for payments of certain aids and 1.25 reimbursements to local units of government; providing 1.26 for issuance of obligations by local governments, and 1.27 use of the proceeds of the debt; authorizing certain 1.28 joint ventures to provide utility services; 1.29 authorizing use of nonprofit organizations to manage 1.30 certain enterprises; requiring transfer of a parking 1.31 facility; changing tax increment financing provisions, 1.32 and providing authorities to certain districts; 1.33 requiring a state aviation plan; authorizing 1.34 establishment of an International Economic Development 1.35 Zone and providing for tax incentives; regulating tax 1.36 preparers; imposing requirement on vendors that 1.37 contract with the state to collect sales taxes; 1.38 changing electronic filing provisions; prohibiting 1.39 misrepresentation of employment; providing for filling 1.40 of vacancies on the Tax Court; establishing 1.41 biotechnology and health science industry grants; 1.42 imposing requirements related to JOBZ; providing for 1.43 studies and reports; providing penalties; creating an 1.44 education reserve account; providing for allocation 1.45 and transfers of funds; appropriating money; amending 1.46 Minnesota Statutes 2002, sections 15.06, subdivision 2.1 6; 16D.10; 116J.993, subdivision 3, by adding a 2.2 subdivision; 116J.994, subdivision 5, by adding a 2.3 subdivision; 126C.17, subdivision 6, by adding 2.4 subdivisions; 161.1231, by adding a subdivision; 2.5 174.03, by adding a subdivision; 270.02, subdivision 2.6 3; 270.65; 270.69, subdivision 4; 270B.01, subdivision 2.7 8; 270B.12, subdivision 9; 272.01, subdivision 2; 2.8 272.02, subdivisions 1a, 7, 22, by adding 2.9 subdivisions; 272.029, subdivisions 4, 6; 273.11, by 2.10 adding subdivisions; 273.112, subdivision 3; 273.124, 2.11 subdivision 8; 273.1384, subdivision 3; 273.19, 2.12 subdivision 1a; 274.14; 275.065, subdivision 1a; 2.13 275.07, subdivisions 1, 4; 276.04, subdivision 2; 2.14 278.03, subdivision 1; 279.01, subdivision 1, by 2.15 adding a subdivision; 282.016; 282.21; 282.224; 2.16 282.301; 287.04; 289A.08, subdivision 1; 289A.12, 2.17 subdivision 3; 289A.20, subdivision 2; 289A.31, 2.18 subdivision 2; 289A.37, subdivision 5; 289A.38, 2.19 subdivision 6; 289A.39, subdivision 1; 289A.56, by 2.20 adding a subdivision; 289A.60, subdivision 6; 290.05, 2.21 subdivision 1; 290.06, subdivisions 22, 28, by adding 2.22 subdivisions; 290.0674, subdivision 2; 290.091, 2.23 subdivision 3; 290.10; 290.17, subdivision 4; 290.191, 2.24 subdivisions 1, 2, 3, 5, by adding a subdivision; 2.25 290.92, subdivisions 1, 4b; 290.9705, subdivision 1; 2.26 290A.03, subdivision 11, by adding a subdivision; 2.27 290A.19; 290C.05; 295.50, subdivision 4; 296A.22, by 2.28 adding a subdivision; 297A.61, by adding a 2.29 subdivision; 297A.67, by adding subdivisions; 297A.68, 2.30 subdivisions 4, 19, by adding subdivisions; 297A.70, 2.31 by adding a subdivision; 297A.71, by adding 2.32 subdivisions; 297A.75, subdivisions 1, 2; 297A.87, 2.33 subdivisions 2, 3; 297F.01, by adding a subdivision; 2.34 297F.09, by adding a subdivision; 297I.01, by adding 2.35 subdivisions; 297I.05, subdivisions 4, 5, by adding a 2.36 subdivision; 298.001, by adding subdivisions; 298.01, 2.37 subdivisions 3, 3a, 4; 298.015, subdivisions 1, 2; 2.38 298.016, subdivision 4; 298.018, as amended; 298.24, 2.39 subdivision 1; 298.28, subdivisions 9a, 9b, 10; 2.40 298.2961, by adding a subdivision; 298.75, subdivision 2.41 2; 325D.33, subdivision 6; 428A.101; 428A.21; 452.25, 2.42 subdivision 3; 462A.071, subdivision 6; 469.034, 2.43 subdivision 2; 469.1734, subdivision 6; 469.174, by 2.44 adding a subdivision; 469.176, by adding subdivisions; 2.45 469.1761, by adding a subdivision; 469.1792, as 2.46 amended; 471.342, subdivisions 3, 5, by adding a 2.47 subdivision; 473.39, by adding a subdivision; 473.843, 2.48 subdivisions 3, 5; 473F.02, subdivision 7; 473F.08, by 2.49 adding subdivisions; 474A.131, subdivision 1; 475.52, 2.50 subdivisions 1, 3, 4; 477A.011, subdivision 3; 2.51 477A.11, subdivision 4, by adding a subdivision; 2.52 477A.12, subdivisions 1, 2; 477A.14, subdivision 1; 2.53 480B.01, subdivisions 1, 10; 504B.215, by adding a 2.54 subdivision; Minnesota Statutes 2003 Supplement, 2.55 sections 116J.994, subdivisions 4, 9; 126C.17, 2.56 subdivisions 7, 9; 168A.05, subdivision 1a; 270.30, 2.57 subdivision 8; 270B.12, subdivision 13; 272.02, 2.58 subdivisions 47, 56; 273.11, subdivision 1a; 273.124, 2.59 subdivision 1; 273.13, subdivisions 23, 25; 274.014, 2.60 subdivision 3; 275.025, subdivision 1; 275.065, 2.61 subdivision 3; 276.112; 289A.02, subdivision 7; 2.62 289A.08, subdivision 16; 289A.19, subdivision 4; 2.63 289A.20, subdivision 4; 289A.40, subdivision 2; 2.64 290.01, subdivisions 7, 19, 19a, 19b, 19c, 19d, 31; 2.65 290.06, subdivision 2c; 290.0674, subdivision 1; 2.66 290.091, subdivision 2; 290A.03, subdivision 15; 2.67 290C.10; 291.005, subdivision 1; 297A.668, 2.68 subdivisions 1, 3, 5; 297A.669, subdivision 16; 2.69 297A.68, subdivisions 2, 5, 39; 297A.70, subdivision 2.70 8; 297B.03; 297F.08, subdivision 12; 297F.09, 2.71 subdivisions 1, 2; 298.223, subdivision 1; 298.27; 3.1 298.75, subdivision 1; 373.01, subdivision 3; 373.40, 3.2 subdivision 1; 403.21, subdivision 8; 403.27, 3.3 subdivisions 1, 3; 403.31, subdivision 6; 410.32; 3.4 412.301; 469.174, subdivision 10; 469.175, 3.5 subdivisions 1, 4, 6; 469.176, subdivision 1c; 3.6 469.310, subdivision 11; 469.330, subdivision 11; 3.7 469.335; 469.337; 475.521, subdivision 4; 475.58, 3.8 subdivision 3b; 477A.011, subdivisions 34, 36; 3.9 477A.013, subdivisions 8, 9; 477A.03, subdivisions 2a, 3.10 2b; Laws 1986, chapter 379, section 1; Laws 1986, 3.11 chapter 379, section 2, subdivision 1; Laws 1991, 3.12 chapter 291, article 8, section 27, subdivision 4; 3.13 Laws 1991, chapter 291, article 8, section 27, 3.14 subdivision 5; Laws 1996, chapter 471, article 2, 3.15 section 29; Laws 1998, chapter 389, article 3, section 3.16 41; Laws 1998, chapter 389, article 3, section 42, 3.17 subdivision 2, as amended; Laws 1998, chapter 389, 3.18 article 8, section 43, subdivision 3; Laws 1998, 3.19 chapter 389, article 8, section 43, subdivision 4; 3.20 Laws 1998, chapter 389, article 11, section 19, 3.21 subdivision 3; Laws 1998, chapter 389, article 11, 3.22 section 24, subdivision 1; Laws 1998, chapter 389, 3.23 article 11, section 24, subdivision 2; Laws 1999, 3.24 chapter 243, article 4, section 18, subdivision 1; 3.25 Laws 1999, chapter 243, article 4, section 18, 3.26 subdivision 3; Laws 1999, chapter 243, article 4, 3.27 section 18, subdivision 4; Laws 2001, First Special 3.28 Session chapter 5, article 12, section 67; Laws 2001, 3.29 First Special Session chapter 5, article 12, section 3.30 95; Laws 2002, chapter 377, article 12, section 16, 3.31 subdivision 1; Laws 2003, chapter 127, article 12, 3.32 section 38; Laws 2003, First Special Session chapter 3.33 21, article 4, section 12, subdivision 11; Laws 2003, 3.34 First Special Session chapter 21, article 5, section 3.35 13; Laws 2003, First Special Session chapter 21, 3.36 article 6, section 9; proposing coding for new law in 3.37 Minnesota Statutes, chapters 174; 270; 273; 278; 290; 3.38 290C; 297F; 298; 325D; 325F; 469; 473; repealing 3.39 Minnesota Statutes 2002, sections 273.19, subdivision 3.40 5; 274.05; 275.15; 283.07; 289A.26, subdivision 2a; 3.41 289A.60, subdivision 21; 290.191, subdivision 4; 3.42 295.55, subdivision 4; 295.60, subdivision 4; 297E.12, 3.43 subdivision 10; 297F.09, subdivision 7; 297G.09, 3.44 subdivision 6; 297I.35, subdivision 2; 297I.85, 3.45 subdivision 7; 298.01, subdivisions 3c, 3d, 4d, 4e; 3.46 298.017; Minnesota Statutes 2003 Supplement, sections 3.47 270.30, subdivision 1; 298.227; Laws 1975, chapter 3.48 287, section 5; Laws 2003, chapter 127, article 9, 3.49 section 9, subdivision 4; Minnesota Rules, parts 3.50 8093.2000; 8093.3000; 8130.0110, subpart 4; 8130.0200, 3.51 subparts 5, 6; 8130.0400, subpart 9; 8130.1200, 3.52 subparts 5, 6; 8130.2900; 8130.3100, subpart 1; 3.53 8130.4000, subparts 1, 2; 8130.4200, subpart 1; 3.54 8130.4400, subpart 3; 8130.5200; 8130.5600, subpart 3; 3.55 8130.5800, subpart 5; 8130.7300, subpart 5; 8130.8800, 3.56 subpart 4. 3.57 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 3.58 ARTICLE 1 3.59 INCOME TAX 3.60 Section 1. Minnesota Statutes 2003 Supplement, section 3.61 289A.02, subdivision 7, is amended to read: 3.62 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 3.63 defined otherwise, "Internal Revenue Code" means the Internal 4.1 Revenue Code of 1986, as amended throughJune 15, 2003November 4.2 11, 2003. 4.3 [EFFECTIVE DATE.] This section is effective for actions 4.4 required on or after November 11, 2003. 4.5 Sec. 2. Minnesota Statutes 2002, section 289A.08, 4.6 subdivision 1, is amended to read: 4.7 Subdivision 1. [GENERALLY; INDIVIDUALS.] (a) A taxpayer 4.8 must file a return for each taxable year the taxpayer is 4.9 required to file a return under section 6012 of the Internal 4.10 Revenue Code, except that: 4.11 (1) an individual who is not a Minnesota resident for any 4.12 part of the year is not required to file a Minnesota income tax 4.13 return if the individual's gross income derived from Minnesota 4.14 sources as determined under sections 290.081, paragraph (a), and 4.15 290.17, is less than the filing requirements for a single 4.16 individual who is a full year resident of Minnesota; and 4.17 (2) an individual who is a Minnesota resident is not 4.18 required to file a Minnesota income tax return if the 4.19 individual's gross income derived from Minnesota sources as 4.20 determined under section 290.17, less the amount of the 4.21 individual's gross income that consists of compensation paid to 4.22 members of the armed forces of the United States or United 4.23 Nations for active duty performed outside Minnesota, is less 4.24 than the filing requirements for a single individual who is a 4.25 full-year resident of Minnesota. 4.26 (b) The decedent's final income tax return, and other 4.27 income tax returns for prior years where the decedent had gross 4.28 income in excess of the minimum amount at which an individual is 4.29 required to file and did not file, must be filed by the 4.30 decedent's personal representative, if any. If there is no 4.31 personal representative, the return or returns must be filed by 4.32 the transferees, as defined in section 289A.38, subdivision 13, 4.33 who receive property of the decedent. 4.34 (c) The term "gross income," as it is used in this section, 4.35 has the same meaning given it in section 290.01, subdivision 20. 4.36 [EFFECTIVE DATE.] This section is effective for taxable 5.1 years beginning after December 31, 2003. 5.2 Sec. 3. Minnesota Statutes 2002, section 289A.39, 5.3 subdivision 1, is amended to read: 5.4 Subdivision 1. [EXTENSIONS FOR SERVICE MEMBERS.] (a) The 5.5 limitations of time provided by this chapter, chapter 290 5.6 relating to income taxes, chapter 271 relating to the Tax Court 5.7 for filing returns, paying taxes, claiming refunds, commencing 5.8 action thereon, appealing to the Tax Court from orders relating 5.9 to income taxes, and the filing of petitions under chapter 278 5.10 that would otherwise be dueMay 15, 1996May 1, 2004, and 5.11 appealing to the Supreme Court from decisions of the Tax Court 5.12 relating to income taxes are extended, as provided in section 5.13 7508 of the Internal Revenue Code. 5.14 (b) If a member of the National Guard or reserves is called 5.15 to active duty in the armed forces, the limitations of time 5.16 provided by this chapter and chapters 290 and 290A relating to 5.17 income taxes and claims for property tax refunds are extended by 5.18 the following period of time: 5.19 (1) in the case of an individual whose active service is in 5.20 the United States, six months; or 5.21 (2) in the case of an individual whose active service 5.22 includes service abroad, the period of initial service plus six 5.23 months. 5.24 Nothing in this paragraph reduces the time within which an 5.25 act is required or permitted under paragraph (a). 5.26 (c) If an individual entitled to the benefit of paragraph 5.27 (a) files a return during the period disregarded under paragraph 5.28 (a), interest must be paid on an overpayment or refundable 5.29 credit from the due date of the return, notwithstanding section 5.30 289A.56, subdivision 2. 5.31 (d) The provisions of this subdivision apply to the spouse 5.32 of an individual entitled to the benefits of this subdivision 5.33 with respect to a joint return filed by the spouses. 5.34 [EFFECTIVE DATE.] This section is effective for taxable 5.35 years beginning after December 31, 2002, and for property taxes 5.36 payable after 2003. 6.1 Sec. 4. Minnesota Statutes 2003 Supplement, section 6.2 290.01, subdivision 7, is amended to read: 6.3 Subd. 7. [RESIDENT.] (a) The term "resident" means any 6.4 individual domiciled in Minnesota, except that an individual is 6.5 not a "resident" for the period of time that the individual is 6.6either:6.7(1) on active duty stationed outside of Minnesota while in6.8the armed forces of the United States or the United Nations; or6.9(2)a "qualified individual" as defined in section 6.10 911(d)(1) of the Internal Revenue Code, if the qualified 6.11 individual notifies the county within three months of moving out 6.12 of the country that homestead status be revoked for the 6.13 Minnesota residence of the qualified individual, and the 6.14 property is not classified as a homestead while the individual 6.15 remains a qualified individual. 6.16 (b) "Resident" also means any individual domiciled outside 6.17 the state who maintains a place of abode in the state and spends 6.18 in the aggregate more than one-half of the tax year in 6.19 Minnesota, unless: 6.20 (1) the individual or the spouse of the individual is in 6.21 the armed forces of the United States; or 6.22 (2) the individual is covered under the reciprocity 6.23 provisions in section 290.081. 6.24 For purposes of this subdivision, presence within the state 6.25 for any part of a calendar day constitutes a day spent in the 6.26 state. Individuals shall keep adequate records to substantiate 6.27 the days spent outside the state. 6.28 The term "abode" means a dwelling maintained by an 6.29 individual, whether or not owned by the individual and whether 6.30 or not occupied by the individual, and includes a dwelling place 6.31 owned or leased by the individual's spouse. 6.32 (c) Neither the commissioner nor any court shall consider 6.33 charitable contributions made by an individual within or without 6.34 the state in determining if the individual is domiciled in 6.35 Minnesota. 6.36 [EFFECTIVE DATE.] This section is effective for taxable 7.1 years beginning after December 31, 2003. 7.2 Sec. 5. Minnesota Statutes 2003 Supplement, section 7.3 290.01, subdivision 19, is amended to read: 7.4 Subd. 19. [NET INCOME.] The term "net income" means the 7.5 federal taxable income, as defined in section 63 of the Internal 7.6 Revenue Code of 1986, as amended through the date named in this 7.7 subdivision, incorporating any elections made by the taxpayer in 7.8 accordance with the Internal Revenue Code in determining federal 7.9 taxable income for federal income tax purposes, and with the 7.10 modifications provided in subdivisions 19a to 19f. 7.11 In the case of a regulated investment company or a fund 7.12 thereof, as defined in section 851(a) or 851(g) of the Internal 7.13 Revenue Code, federal taxable income means investment company 7.14 taxable income as defined in section 852(b)(2) of the Internal 7.15 Revenue Code, except that: 7.16 (1) the exclusion of net capital gain provided in section 7.17 852(b)(2)(A) of the Internal Revenue Code does not apply; 7.18 (2) the deduction for dividends paid under section 7.19 852(b)(2)(D) of the Internal Revenue Code must be applied by 7.20 allowing a deduction for capital gain dividends and 7.21 exempt-interest dividends as defined in sections 852(b)(3)(C) 7.22 and 852(b)(5) of the Internal Revenue Code; and 7.23 (3) the deduction for dividends paid must also be applied 7.24 in the amount of any undistributed capital gains which the 7.25 regulated investment company elects to have treated as provided 7.26 in section 852(b)(3)(D) of the Internal Revenue Code. 7.27 The net income of a real estate investment trust as defined 7.28 and limited by section 856(a), (b), and (c) of the Internal 7.29 Revenue Code means the real estate investment trust taxable 7.30 income as defined in section 857(b)(2) of the Internal Revenue 7.31 Code. 7.32 The net income of a designated settlement fund as defined 7.33 in section 468B(d) of the Internal Revenue Code means the gross 7.34 income as defined in section 468B(b) of the Internal Revenue 7.35 Code. 7.36 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 8.1 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 8.2 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 8.3 Protection Act, Public Law 104-188, the provisions of Public Law 8.4 104-117, the provisions of sections 313(a) and (b)(1), 602(a), 8.5 913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 8.6 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 8.7 and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 8.8 1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 8.9 105-34, the provisions of section 6010 of the Internal Revenue 8.10 Service Restructuring and Reform Act of 1998, Public Law 8.11 105-206, the provisions of section 4003 of the Omnibus 8.12 Consolidated and Emergency Supplemental Appropriations Act, 8.13 1999, Public Law 105-277, and the provisions of section 318 of 8.14 the Consolidated Appropriation Act of 2001, Public Law 106-554, 8.15 shall become effective at the time they become effective for 8.16 federal purposes. 8.17 The Internal Revenue Code of 1986, as amended through 8.18 December 31, 1996, shall be in effect for taxable years 8.19 beginning after December 31, 1996. 8.20 The provisions of sections 202(a) and (b), 221(a), 225, 8.21 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 8.22 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 8.23 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 8.24 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 8.25 of the Taxpayer Relief Act of 1997, Public Law 105-34, the 8.26 provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 8.27 and 7003 of the Internal Revenue Service Restructuring and 8.28 Reform Act of 1998, Public Law 105-206, the provisions of 8.29 section 3001 of the Omnibus Consolidated and Emergency 8.30 Supplemental Appropriations Act, 1999, Public Law 105-277, the 8.31 provisions of section 3001 of the Miscellaneous Trade and 8.32 Technical Corrections Act of 1999, Public Law 106-36,andthe 8.33 provisions of section 316 of the Consolidated Appropriation Act 8.34 of 2001, Public Law 106-554, and the provision of section 101 of 8.35 the Military Family Tax Relief Act of 2003, Public Law 108-121, 8.36 shall become effective at the time they become effective for 9.1 federal purposes. 9.2 The Internal Revenue Code of 1986, as amended through 9.3 December 31, 1997, shall be in effect for taxable years 9.4 beginning after December 31, 1997. 9.5 The provisions of sections 5002, 6009, 6011, and 7001 of 9.6 the Internal Revenue Service Restructuring and Reform Act of 9.7 1998, Public Law 105-206, the provisions of section 9010 of the 9.8 Transportation Equity Act for the 21st Century, Public Law 9.9 105-178, the provisions of sections 1004, 4002, and 5301 of the 9.10 Omnibus Consolidation and Emergency Supplemental Appropriations 9.11 Act, 1999, Public Law 105-277, the provision of section 303 of 9.12 the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 9.13 105-369, the provisions of sections 532, 534, 536, 537, and 538 9.14 of the Ticket to Work and Work Incentives Improvement Act of 9.15 1999, Public Law 106-170, the provisions of the Installment Tax 9.16 Correction Act of 2000, Public Law 106-573, and the provisions 9.17 of section 309 of the Consolidated Appropriation Act of 2001, 9.18 Public Law 106-554, shall become effective at the time they 9.19 become effective for federal purposes. 9.20 The Internal Revenue Code of 1986, as amended through 9.21 December 31, 1998, shall be in effect for taxable years 9.22 beginning after December 31, 1998. 9.23 The provisions of the FSC Repeal and Extraterritorial 9.24 Income Exclusion Act of 2000, Public Law 106-519, and the 9.25 provision of section 412 of the Job Creation and Worker 9.26 Assistance Act of 2002, Public Law 107-147, shall become 9.27 effective at the time it became effective for federal purposes. 9.28 The Internal Revenue Code of 1986, as amended through 9.29 December 31, 1999, shall be in effect for taxable years 9.30 beginning after December 31, 1999. The provisions of sections 9.31 306 and 401 of the Consolidated Appropriation Act of 2001, 9.32 Public Law 106-554, and the provision of section 632(b)(2)(A) of 9.33 the Economic Growth and Tax Relief Reconciliation Act of 2001, 9.34 Public Law 107-16, and provisions of sections 101 and 402 of the 9.35 Job Creation and Worker Assistance Act of 2002, Public Law 9.36 107-147, shall become effective at the same time it became 10.1 effective for federal purposes. 10.2 The Internal Revenue Code of 1986, as amended through 10.3 December 31, 2000, shall be in effect for taxable years 10.4 beginning after December 31, 2000. The provisions of sections 10.5 659a and 671 of the Economic Growth and Tax Relief 10.6 Reconciliation Act of 2001, Public Law 107-16, the provisions of 10.7 sections 104, 105, and 111 of the Victims of Terrorism Tax 10.8 Relief Act of 2001, Public Law 107-134,andthe provisions of 10.9 sections 201, 403, 413, and 606 of the Job Creation and Worker 10.10 Assistance Act of 2002, Public Law 107-147, and the provision of 10.11 section 102 of the Military Family Tax Relief Act of 2003, 10.12 Public Law 108-121, shall become effective at the same time it 10.13 became effective for federal purposes. 10.14 The Internal Revenue Code of 1986, as amended through March 10.15 15, 2002, shall be in effect for taxable years beginning after 10.16 December 31, 2001. 10.17 The provisions of sections 101 and 102 of the Victims of 10.18 Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 10.19 become effective at the same time it becomes effective for 10.20 federal purposes. 10.21 The Internal Revenue Code of 1986, as amended through June 10.22 15, 2003, shall be in effect for taxable years beginning after 10.23 December 31, 2002. The provisions of section 201 of the Jobs 10.24 and Growth Tax Relief and Reconciliation Act of 2003,H.R. 2, if10.25it is enacted into lawPublic Law 108-27, and the provisions of 10.26 sections 103, 106, 108, 109, and 110 of the Military Family Tax 10.27 Relief Act of 2003, Public Law 108-121, are effective at the 10.28 same time it became effective for federal purposes. 10.29 The Internal Revenue Code of 1986, as amended through 10.30 November 11, 2003, shall be in effect for taxable years 10.31 beginning after December 31, 2003. 10.32 Except as otherwise provided, references to the Internal 10.33 Revenue Code in subdivisions 19a to 19g mean the code in effect 10.34 for purposes of determining net income for the applicable year. 10.35 [EFFECTIVE DATE.] This section is effective the day 10.36 following final enactment. 11.1 Sec. 6. Minnesota Statutes 2003 Supplement, section 11.2 290.01, subdivision 19a, is amended to read: 11.3 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 11.4 individuals, estates, and trusts, there shall be added to 11.5 federal taxable income: 11.6 (1)(i) interest income on obligations of any state other 11.7 than Minnesota or a political or governmental subdivision, 11.8 municipality, or governmental agency or instrumentality of any 11.9 state other than Minnesota exempt from federal income taxes 11.10 under the Internal Revenue Code or any other federal statute; 11.11 and 11.12 (ii) exempt-interest dividends as defined in section 11.13 852(b)(5) of the Internal Revenue Code, except the portion of 11.14 the exempt-interest dividends derived from interest income on 11.15 obligations of the state of Minnesota or its political or 11.16 governmental subdivisions, municipalities, governmental agencies 11.17 or instrumentalities, but only if the portion of the 11.18 exempt-interest dividends from such Minnesota sources paid to 11.19 all shareholders represents 95 percent or more of the 11.20 exempt-interest dividends that are paid by the regulated 11.21 investment company as defined in section 851(a) of the Internal 11.22 Revenue Code, or the fund of the regulated investment company as 11.23 defined in section 851(g) of the Internal Revenue Code, making 11.24 the payment; and 11.25 (iii) for the purposes of items (i) and (ii), interest on 11.26 obligations of an Indian tribal government described in section 11.27 7871(c) of the Internal Revenue Code shall be treated as 11.28 interest income on obligations of the state in which the tribe 11.29 is located; 11.30 (2) the amount of income taxes paid or accrued within the 11.31 taxable year under this chapter and income taxes paid to any 11.32 other state or to any province or territory of Canada, to the 11.33 extent allowed as a deduction under section 63(d) of the 11.34 Internal Revenue Code, but the addition may not be more than the 11.35 amount by which the itemized deductions as allowed under section 11.36 63(d) of the Internal Revenue Code exceeds the amount of the 12.1 standard deduction as defined in section 63(c) of the Internal 12.2 Revenue Code. For the purpose of this paragraph, the 12.3 disallowance of itemized deductions under section 68 of the 12.4 Internal Revenue Code of 1986, income tax is the last itemized 12.5 deduction disallowed; 12.6 (3) the capital gain amount of a lump sum distribution to 12.7 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 12.8 Reform Act of 1986, Public Law 99-514, applies; 12.9 (4) the amount of income taxes paid or accrued within the 12.10 taxable year under this chapter and income taxes paid to any 12.11 other state or any province or territory of Canada, to the 12.12 extent allowed as a deduction in determining federal adjusted 12.13 gross income. For the purpose of this paragraph, income taxes 12.14 do not include the taxes imposed by sections 290.0922, 12.15 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 12.16 (5) the amount of expense, interest, or taxes disallowed 12.17 pursuant to section 290.10; 12.18 (6) the amount of a partner's pro rata share of net income 12.19 which does not flow through to the partner because the 12.20 partnership elected to pay the tax on the income under section 12.21 6242(a)(2) of the Internal Revenue Code;and12.22 (7) 80 percent of the depreciation deduction allowed under 12.23 section 168(k) of the Internal Revenue Code. For purposes of 12.24 this clause, if the taxpayer has an activity that in the taxable 12.25 year generates a deduction for depreciation under section 168(k) 12.26 and the activity generates a loss for the taxable year that the 12.27 taxpayer is not allowed to claim for the taxable year, "the 12.28 depreciation allowed under section 168(k)" for the taxable year 12.29 is limited to excess of the depreciation claimed by the activity 12.30 under section 168(k) over the amount of the loss from the 12.31 activity that is not allowed in the taxable year. In succeeding 12.32 taxable years when the losses not allowed in the taxable year 12.33 are allowed, the depreciation under section 168(k) is allowed; 12.34 (8) the amount of mortgage interest paid on a residential 12.35 home with a market value greater than $500,000 as determined 12.36 under section 273.11, that exceeds $25,000 to the extent 13.1 deducted from federal taxable income; and 13.2 (9) the amount of expenses disallowed under section 290.10, 13.3 subdivision 2. 13.4 [EFFECTIVE DATE.] This section is effective for taxable 13.5 years beginning after December 31, 2003. 13.6 Sec. 7. Minnesota Statutes 2003 Supplement, section 13.7 290.01, subdivision 19b, is amended to read: 13.8 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 13.9 individuals, estates, and trusts, there shall be subtracted from 13.10 federal taxable income: 13.11 (1) interest income on obligations of any authority, 13.12 commission, or instrumentality of the United States to the 13.13 extent includable in taxable income for federal income tax 13.14 purposes but exempt from state income tax under the laws of the 13.15 United States; 13.16 (2) if included in federal taxable income, the amount of 13.17 any overpayment of income tax to Minnesota or to any other 13.18 state, for any previous taxable year, whether the amount is 13.19 received as a refund or as a credit to another taxable year's 13.20 income tax liability; 13.21 (3) the amount paid to others, less the amount used to 13.22 claim the credit allowed under section 290.0674, not to exceed 13.23 $1,625 for each qualifying child in grades kindergarten to 6 and 13.24 $2,500 for each qualifying child in grades 7 to 12, for tuition, 13.25 textbooks, and transportation of each qualifying child in 13.26 attending an elementary or secondary school situated in 13.27 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 13.28 wherein a resident of this state may legally fulfill the state's 13.29 compulsory attendance laws, which is not operated for profit, 13.30 and which adheres to the provisions of the Civil Rights Act of 13.31 1964 and chapter 363A. For the purposes of this clause, 13.32 "tuition" includes fees or tuition as defined in section 13.33 290.0674, subdivision 1, clause (1). As used in this clause, 13.34 "textbooks" includes books and other instructional materials and 13.35 equipment purchased or leased for use in elementary and 13.36 secondary schools in teaching only those subjects legally and 14.1 commonly taught in public elementary and secondary schools in 14.2 this state. Equipment expenses qualifying for deduction 14.3 includes expenses as defined and limited in section 290.0674, 14.4 subdivision 1, clause (3). "Textbooks" does not include 14.5 instructional books and materials used in the teaching of 14.6 religious tenets, doctrines, or worship, the purpose of which is 14.7 to instill such tenets, doctrines, or worship, nor does it 14.8 include books or materials for, or transportation to, 14.9 extracurricular activities including sporting events, musical or 14.10 dramatic events, speech activities, driver's education, or 14.11 similar programs. For purposes of the subtraction provided by 14.12 this clause, "qualifying child" has the meaning given in section 14.13 32(c)(3) of the Internal Revenue Code; 14.14 (4) income as provided under section 290.0802; 14.15 (5) to the extent included in federal adjusted gross 14.16 income, income realized on disposition of property exempt from 14.17 tax under section 290.491; 14.18 (6) to the extent included in federal taxable income, 14.19 postservice benefits for youth community service under section 14.20 124D.42 for volunteer service under United States Code, title 14.21 42, sections 12601 to 12604; 14.22 (7) to the extent not deducted in determining federal 14.23 taxable income by an individual who does not itemize deductions 14.24 for federal income tax purposes for the taxable year, an amount 14.25 equal to 50 percent of the excess of charitable contributions 14.26 allowable as a deduction for the taxable year under section 14.27 170(a) of the Internal Revenue Code over $500; 14.28 (8) for taxable years beginning before January 1, 2008, the 14.29 amount of the federal small ethanol producer credit allowed 14.30 under section 40(a)(3) of the Internal Revenue Code which is 14.31 included in gross income under section 87 of the Internal 14.32 Revenue Code; 14.33 (9) for individuals who are allowed a federal foreign tax 14.34 credit for taxes that do not qualify for a credit under section 14.35 290.06, subdivision 22, an amount equal to the carryover of 14.36 subnational foreign taxes for the taxable year, but not to 15.1 exceed the total subnational foreign taxes reported in claiming 15.2 the foreign tax credit. For purposes of this clause, "federal 15.3 foreign tax credit" means the credit allowed under section 27 of 15.4 the Internal Revenue Code, and "carryover of subnational foreign 15.5 taxes" equals the carryover allowed under section 904(c) of the 15.6 Internal Revenue Code minus national level foreign taxes to the 15.7 extent they exceed the federal foreign tax credit; 15.8 (10) in each of the five tax years immediately following 15.9 the tax year in which an addition is required under subdivision 15.10 19a, clause (7), an amount equal to one-fifth of the delayed 15.11 depreciation. For purposes of this clause, "delayed 15.12 depreciation" means the amount of the addition made by the 15.13 taxpayer under subdivision 19a, clause (7), minus the positive 15.14 value of any net operating loss under section 172 of the 15.15 Internal Revenue Code generated for the tax year of the 15.16 addition. The resulting delayed depreciation cannot be less 15.17 than zero;and15.18 (11) job opportunity building zone income as provided under 15.19 section 469.316; 15.20 (12) to the extent included in federal taxable income, an 15.21 amount, not to exceed $10,000, equal to an individual's 15.22 unreimbursed expenses for travel, lodging, and lost wages net of 15.23 sick pay related to the individual's donation of one or more of 15.24 the individual's organs to another person for human organ 15.25 transplantation. For purposes of determining the extent to 15.26 which expenses are included in federal taxable income, expenses 15.27 qualifying under this paragraph are the first expenses 15.28 considered in determining the medical expense deduction allowed 15.29 under section 213 of the Internal Revenue Code. For purposes of 15.30 this clause, "organ" means all or part of an individual's liver, 15.31 pancreas, kidney, intestine, lung, or bone marrow, and "human 15.32 organ transplantation" means the medical procedure by which 15.33 transfer of a human organ is made from the body of one person to 15.34 the body of another person. An individual may claim the 15.35 subtraction in this clause for each instance of organ donation 15.36 for transplantation, during the taxable year in which the 16.1 expenses or lost wages occur; 16.2 (13) the amount of compensation paid to members of the 16.3 Minnesota National Guard or other reserve components of the 16.4 United States military for active service performed in 16.5 Minnesota, excluding compensation for services performed under 16.6 the Active Guard Reserve (AGR) program. For purposes of this 16.7 clause, "active service" means (i) state active service as 16.8 defined in section 190.05, subdivision 5a, clause (1); (ii) 16.9 federally funded state active service as defined in section 16.10 190.05, subdivision 5b; or (iii) federal active service as 16.11 defined in section 190.05, subdivision 5c, but "active service" 16.12 excludes services performed exclusively for purposes of basic 16.13 combat training, advanced individual training, annual training, 16.14 and periodic inactive duty training; special training 16.15 periodically made available to reserve members; and service 16.16 performed in accordance with section 190.08, subdivision 3; and 16.17 (14) the amount of compensation paid to members of the 16.18 armed forces of the United States or United Nations for active 16.19 duty performed outside Minnesota. 16.20 [EFFECTIVE DATE.] This section is effective for taxable 16.21 years beginning after December 31, 2003. 16.22 Sec. 8. Minnesota Statutes 2003 Supplement, section 16.23 290.01, subdivision 19c, is amended to read: 16.24 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 16.25 INCOME.] For corporations, there shall be added to federal 16.26 taxable income: 16.27 (1) the amount of any deduction taken for federal income 16.28 tax purposes for income, excise, or franchise taxes based on net 16.29 income or related minimum taxes, including but not limited to 16.30 the tax imposed under section 290.0922, paid by the corporation 16.31 to Minnesota, another state, a political subdivision of another 16.32 state, the District of Columbia, or any foreign country or 16.33 possession of the United States; 16.34 (2) interest not subject to federal tax upon obligations 16.35 of: the United States, its possessions, its agencies, or its 16.36 instrumentalities; the state of Minnesota or any other state, 17.1 any of its political or governmental subdivisions, any of its 17.2 municipalities, or any of its governmental agencies or 17.3 instrumentalities; the District of Columbia; or Indian tribal 17.4 governments; 17.5 (3) exempt-interest dividends received as defined in 17.6 section 852(b)(5) of the Internal Revenue Code; 17.7 (4) the amount of any net operating loss deduction taken 17.8 for federal income tax purposes under section 172 or 832(c)(10) 17.9 of the Internal Revenue Code or operations loss deduction under 17.10 section 810 of the Internal Revenue Code; 17.11 (5) the amount of any special deductions taken for federal 17.12 income tax purposes under sections 241 to 247 of the Internal 17.13 Revenue Code; 17.14 (6) losses from the business of mining, as defined in 17.15 section 290.05, subdivision 1, clause (a), that are not subject 17.16 to Minnesota income tax; 17.17 (7) the amount of any capital losses deducted for federal 17.18 income tax purposes under sections 1211 and 1212 of the Internal 17.19 Revenue Code; 17.20 (8) the exempt foreign trade income of a foreign sales 17.21 corporation under sections 921(a) and 291 of the Internal 17.22 Revenue Code; 17.23 (9) the amount of percentage depletion deducted under 17.24 sections 611 through 614 and 291 of the Internal Revenue Code; 17.25 (10) for certified pollution control facilities placed in 17.26 service in a taxable year beginning before December 31, 1986, 17.27 and for which amortization deductions were elected under section 17.28 169 of the Internal Revenue Code of 1954, as amended through 17.29 December 31, 1985, the amount of the amortization deduction 17.30 allowed in computing federal taxable income for those 17.31 facilities; 17.32 (11) the amount of any deemed dividend from a foreign 17.33 operating corporation determined pursuant to section 290.17, 17.34 subdivision 4, paragraph (g); 17.35 (12) the amount of any environmental tax paid under section 17.36 59(a) of the Internal Revenue Code; 18.1 (13) the amount of a partner's pro rata share of net income 18.2 which does not flow through to the partner because the 18.3 partnership elected to pay the tax on the income under section 18.4 6242(a)(2) of the Internal Revenue Code; 18.5 (14) the amount of net income excluded under section 114 of 18.6 the Internal Revenue Code; 18.7 (15) any increase in subpart F income, as defined in 18.8 section 952(a) of the Internal Revenue Code, for the taxable 18.9 year when subpart F income is calculated without regard to the 18.10 provisions of section 614 of Public Law 107-147;and18.11 (16) 80 percent of the depreciation deduction allowed under 18.12 section 168(k) of the Internal Revenue Code. For purposes of 18.13 this clause, if the taxpayer has an activity that in the taxable 18.14 year generates a deduction for depreciation under section 168(k) 18.15 and the activity generates a loss for the taxable year that the 18.16 taxpayer is not allowed to claim for the taxable year, "the 18.17 depreciation allowed under section 168(k)" for the taxable year 18.18 is limited to excess of the depreciation claimed by the activity 18.19 under section 168(k) over the amount of the loss from the 18.20 activity that is not allowed in the taxable year. In succeeding 18.21 taxable years when the losses not allowed in the taxable year 18.22 are allowed, the depreciation under section 168(k) is allowed; 18.23 and 18.24 (17) the amount of expenses disallowed under section 18.25 290.10, subdivision 2. 18.26 [EFFECTIVE DATE.] This section is effective for taxable 18.27 years beginning after December 31, 2003. 18.28 Sec. 9. Minnesota Statutes 2003 Supplement, section 18.29 290.01, subdivision 31, is amended to read: 18.30 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 18.31 defined otherwise, "Internal Revenue Code" means the Internal 18.32 Revenue Code of 1986, as amended throughJune 15, 2003December 18.33 31, 2003. 18.34 [EFFECTIVE DATE.] This section is effective the day 18.35 following final enactment except the changes incorporated by 18.36 federal changes are effective at the same times as the changes 19.1 were effective for federal purposes. 19.2 Sec. 10. Minnesota Statutes 2002, section 290.05, 19.3 subdivision 1, is amended to read: 19.4 Subdivision 1. [EXEMPT ENTITIES.] The following 19.5 corporations, individuals, estates, trusts, and organizations 19.6 shall be exempted from taxation under this chapter, provided 19.7 that every such person or corporation claiming exemption under 19.8 this chapter, in whole or in part, must establish to the 19.9 satisfaction of the commissioner the taxable status of any 19.10 income or activity: 19.11 (a) corporations, individuals, estates, and trusts engaged 19.12 in the business of mining or producing iron ore and other ores 19.13 the mining or production of which is subject to the occupation 19.14 tax imposed by section 298.01; but if any such corporation, 19.15 individual, estate, or trust engages in any other business or 19.16 activity or has income from any property not used in such 19.17 business it shall be subject to this tax computed on the net 19.18 income from such property or such other business or activity. 19.19 Royalty shall not be considered as income from the business of 19.20 mining or producing iron ore within the meaning of this section; 19.21 (b) the United States of America, the state of Minnesota or 19.22 any political subdivision of either agencies or 19.23 instrumentalities, whether engaged in the discharge of 19.24 governmental or proprietary functions;and19.25 (c) any insurance company; and 19.26 (d) a corporation engaged in the business of operating a 19.27 personal rapid transit system, as defined in section 297A.61, 19.28 subdivision 37, in this state, independent of any government 19.29 subsidies, but if the corporation engages in any other business 19.30 or activity or has income from any property not used in the 19.31 business of operating a personal rapid transit system, it is 19.32 subject to this tax computed on the net income from the property 19.33 or business or activity. 19.34 [EFFECTIVE DATE.] This section is effective for taxable 19.35 years beginning after December 31, 2008. 19.36 Sec. 11. Minnesota Statutes 2003 Supplement, section 20.1 290.06, subdivision 2c, is amended to read: 20.2 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 20.3 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 20.4 married individuals filing joint returns and surviving spouses 20.5 as defined in section 2(a) of the Internal Revenue Code must be 20.6 computed by applying to their taxable net income the following 20.7 schedule of rates: 20.8 (1) On the first $25,680, 5.35 percent; 20.9 (2) On all over $25,680, but not over $102,030, 7.05 20.10 percent; 20.11 (3) On all over $102,030,7.858.0 percent. 20.12 Married individuals filing separate returns, estates, and 20.13 trusts must compute their income tax by applying the above rates 20.14 to their taxable income, except that the income brackets will be 20.15 one-half of the above amounts. 20.16 (b) The income taxes imposed by this chapter upon unmarried 20.17 individuals must be computed by applying to taxable net income 20.18 the following schedule of rates: 20.19 (1) On the first $17,570, 5.35 percent; 20.20 (2) On all over $17,570, but not over $57,710, 7.05 20.21 percent; 20.22 (3) On all over $57,710,7.858.0 percent. 20.23 (c) The income taxes imposed by this chapter upon unmarried 20.24 individuals qualifying as a head of household as defined in 20.25 section 2(b) of the Internal Revenue Code must be computed by 20.26 applying to taxable net income the following schedule of rates: 20.27 (1) On the first $21,630, 5.35 percent; 20.28 (2) On all over $21,630, but not over $86,910, 7.05 20.29 percent; 20.30 (3) On all over $86,910,7.858.0 percent. 20.31 (d) In lieu of a tax computed according to the rates set 20.32 forth in this subdivision, the tax of any individual taxpayer 20.33 whose taxable net income for the taxable year is less than an 20.34 amount determined by the commissioner must be computed in 20.35 accordance with tables prepared and issued by the commissioner 20.36 of revenue based on income brackets of not more than $100. The 21.1 amount of tax for each bracket shall be computed at the rates 21.2 set forth in this subdivision, provided that the commissioner 21.3 may disregard a fractional part of a dollar unless it amounts to 21.4 50 cents or more, in which case it may be increased to $1. 21.5 (e) An individual who is not a Minnesota resident for the 21.6 entire year must compute the individual's Minnesota income tax 21.7 as provided in this subdivision. After the application of the 21.8 nonrefundable credits provided in this chapter, the tax 21.9 liability must then be multiplied by a fraction in which: 21.10 (1) the numerator is the individual's Minnesota source 21.11 federal adjusted gross income as defined in section 62 of the 21.12 Internal Revenue Code and increased by the additions required 21.13 under section 290.01, subdivision 19a, clauses (1), (5), and 21.14 (6), and reduced by the subtraction under section 290.01, 21.15 subdivision 19b, clause (11), and the Minnesota assignable 21.16 portion of the subtraction for United States government interest 21.17 under section 290.01, subdivision 19b, clause (1), after 21.18 applying the allocation and assignability provisions of section 21.19 290.081, clause (a), or 290.17; and 21.20 (2) the denominator is the individual's federal adjusted 21.21 gross income as defined in section 62 of the Internal Revenue 21.22 Code of 1986, increased by the amounts specified in section 21.23 290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 21.24 by the amounts specified in section 290.01, subdivision 19b, 21.25 clauses (1) and (11). 21.26 [EFFECTIVE DATE.] This section is effective only if 21.27 sections 16 and 17 of this article are enacted for taxable years 21.28 beginning after December 31, 2004. 21.29 Sec. 12. Minnesota Statutes 2002, section 290.06, 21.30 subdivision 28, is amended to read: 21.31 Subd. 28. [CREDITREFUNDS FOR TRANSIT PASSES.]A taxpayer21.32 (a) An employer maytake a credit against the tax due under this21.33chapterclaim a refund equal to 30 percent of the expense 21.34 incurred by thetaxpayeremployer to provide transit passes, for 21.35 use in Minnesota, to employees of the taxpayer. 21.36 (b) As used in this subdivision, the following terms have 22.1 the meanings given: 22.2 (1) "employer" means an individual or entity subject to tax 22.3 under this chapter or an entity that is exempt from taxation 22.4 under section 290.05, but excluding entities enumerated in 22.5 section 290.05, subdivision 1, paragraph (b); and 22.6 (2) "transit pass" has the meaning given in section 22.7 132(f)(5)(A) of the Internal Revenue Code. 22.8 (c) If thetaxpayeremployer purchases the transit passes 22.9 from the transit system operator, and resells them to the 22.10 employees, thecreditrefund is based on the amount of the 22.11 difference between the price paid for the passes by the employer 22.12 and the amount charged to employees. 22.13 (d) The commissioner shall prescribe the forms for and the 22.14 manner in which the refund may be claimed. The commissioner 22.15 must provide for paying refunds at least quarterly. The 22.16 commissioner may set a minimum amount of qualifying expenses 22.17 that must be incurred before a refund may be claimed. 22.18 (e) An amount sufficient to pay the refunds required by 22.19 this subdivision is appropriated to the commissioner of revenue. 22.20 [EFFECTIVE DATE.] This section is effective for transit 22.21 passes purchased after December 31, 2004. 22.22 Sec. 13. Minnesota Statutes 2002, section 290.06, is 22.23 amended by adding a subdivision to read: 22.24 Subd. 32. [REGIONAL INVESTMENT CREDIT.] (a) A credit is 22.25 allowed against the tax imposed by this chapter for investment 22.26 in a qualifying regional angel investment network fund. The 22.27 credit equals 25 percent of the taxpayer's investment made in 22.28 the fund for the taxable year, but not to exceed the lesser of: 22.29 (1) the liability for tax under this chapter; or 22.30 (2) the amount of the certificate under paragraph (c) 22.31 provided to the taxpayer by the fund. 22.32 (b) For purposes of this subdivision, a regional angel 22.33 investment network fund means a pool investment fund that: 22.34 (1) is organized as a limited liability company and 22.35 consists of members who are accredited investors within the 22.36 meaning of Regulation D of the Securities and Exchange 23.1 Commission, Code of Federal Regulations, title 17, section 23.2 230.501(a); and 23.3 (2) primarily makes equity investments in emerging and 23.4 expanding small businesses as defined by the Small Business 23.5 Administration, or cooperative associations as defined in 23.6 chapter 308B, that are located in local communities in Minnesota 23.7 outside of the metropolitan area as defined in section 473.121, 23.8 subdivision 2, and does not make investments in residential real 23.9 estate. 23.10 (c) Regional angel investment network funds may apply to 23.11 the commissioner of employment and economic development for 23.12 certification as a qualifying regional angel investment network 23.13 fund. The application must be in the form and made under 23.14 procedures specified by the commissioner of employment and 23.15 economic development. The commissioner of employment and 23.16 economic development may certify up to ten qualifying funds and 23.17 provide certificates entitling investors in the funds to credits 23.18 under this subdivision of up to $250,000 for each fund. The 23.19 commissioner of employment and economic development must not 23.20 issue a total amount of certificates for all funds of more than 23.21 $2,500,000. In awarding certificates under this paragraph, the 23.22 commissioner of employment and economic development shall 23.23 generally award them to qualified applicants in the order in 23.24 which the applications are received, but shall also seek to 23.25 certify funds that are broadly dispersed across the entire state 23.26 outside of the metropolitan area, as defined in section 473.121, 23.27 subdivision 2. 23.28 (d) The commissioner of revenue may require a taxpayer to 23.29 provide a copy of the credit certificate under paragraph (c) to 23.30 verify the taxpayer's entitlement to a credit under this 23.31 subdivision. 23.32 (e) If the amount of the credit under this subdivision for 23.33 any taxable year exceeds the limitation under paragraph (a), 23.34 clause (1), the excess is a credit carryover to each of the 15 23.35 succeeding taxable years. The entire amount of the excess 23.36 unused credit for the taxable year must be carried first to the 24.1 earliest of the taxable years to which the credit may be carried 24.2 and then to each successive year to which the credit may be 24.3 carried. The amount of the unused credit which may be added 24.4 under this paragraph may not exceed the taxpayer's liability for 24.5 tax for the taxable year. 24.6 [EFFECTIVE DATE.] This section is effective the day 24.7 following final enactment, for taxable years beginning after 24.8 December 31, 2004. It applies to investments made after the 24.9 fund has been certified by the commissioner of employment and 24.10 economic development. 24.11 Sec. 14. Minnesota Statutes 2002, section 290.06, is 24.12 amended by adding a subdivision to read: 24.13 Subd. 33. [CARSHARING CREDIT.] (a) For purposes of this 24.14 subdivision, a "carsharing organization" means an organization 24.15 that: 24.16 (1) is described in section 501(c) of the Internal Revenue 24.17 Code; 24.18 (2) is comprised of members who purchase the use of a motor 24.19 vehicle from the organization; 24.20 (3) owns or leases a fleet of motor vehicles that are 24.21 available to members of the organization to pay for the use of a 24.22 vehicle on an hourly or per trip basis; and 24.23 (4) does not assign exclusive rights of use of specific 24.24 vehicles to individual members or allow individual members to 24.25 keep a vehicle in the member's sole possession. 24.26 (b) A taxpayer may take a credit against the tax due under 24.27 this chapter for the expenses incurred by the taxpayer to 24.28 purchase a membership and pay monthly dues to a carsharing 24.29 organization or to provide memberships and pay monthly dues to a 24.30 carsharing organization to employees of the taxpayer. The 24.31 amount of the credit is equal to the lesser of the actual cost 24.32 of the membership fee and the monthly dues, or $390. If an 24.33 employer purchases the membership or pays the monthly dues to 24.34 the nonprofit carsharing organization and resells the membership 24.35 to its employees or charges the monthly dues to its employees, 24.36 the credit allowed to the employer is the amount of the 25.1 difference between the amount paid by the employer and the 25.2 amount charged to the employee. 25.3 (c) A taxpayer who owns a parking facility that charges 25.4 customers an amount to park vehicles at the facility and 25.5 provides dedicated parking space at no charge to a nonprofit 25.6 carsharing organization to park the motor vehicles that are used 25.7 by the members of the organization on an hourly or per-trip 25.8 basis, may take a credit against the tax due under this chapter 25.9 for the value of the dedicated parking space provided to the 25.10 nonprofit carsharing organization. The value of the dedicated 25.11 parking space is equal to the lowest amount charged to customers 25.12 who pay to park at the facility calculated on an hourly, daily, 25.13 or other long-term rate that results in the lowest total cost. 25.14 [EFFECTIVE DATE.] This section is effective for taxable 25.15 years beginning after December 31, 2004. 25.16 Sec. 15. Minnesota Statutes 2002, section 290.0674, 25.17 subdivision 2, is amended to read: 25.18 Subd. 2. [LIMITATIONS.] (a) For claimants with income not 25.19 greater than $33,500, the maximum credit allowed is $1,000per25.20 multiplied by the number of claimant's qualifyingchild and25.21$2,000 per familychildren in grades kindergarten through grade 25.22 12. No credit is allowed for education-related expenses for 25.23 claimants with income greater than $37,500. The maximum credit 25.24 perchildclaimant is reduced by $1 for each $4 of household 25.25 income over $33,500,and the maximum credit per family is25.26reduced by $2 for each $4 of household income over $33,500,but 25.27 in no case is the credit less than zero. 25.28 For purposes of this section "income" has the meaning given 25.29 in section 290.067, subdivision 2a. In the case of a married 25.30 claimant, a credit is not allowed unless a joint income tax 25.31 return is filed. 25.32 (b) For a nonresident or part-year resident, the credit 25.33 determined under subdivision 1 and the maximum credit amount in 25.34 paragraph (a) must be allocated using the percentage calculated 25.35 in section 290.06, subdivision 2c, paragraph (e). 25.36 [EFFECTIVE DATE.] This section is effective for tax years 26.1 beginning after December 31, 2004. 26.2 Sec. 16. Minnesota Statutes 2003 Supplement, section 26.3 290.091, subdivision 2, is amended to read: 26.4 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 26.5 this section, the following terms have the meanings given: 26.6 (a) "Alternative minimum taxable income" means the sum of 26.7 the following for the taxable year: 26.8 (1) the taxpayer's federal alternative minimum taxable 26.9 income as defined in section 55(b)(2) of the Internal Revenue 26.10 Code; 26.11 (2) the taxpayer's itemized deductions allowed in computing 26.12 federal alternative minimum taxable income, but excluding: 26.13 (i) the charitable contribution deduction under section 170 26.14 of the Internal Revenue Codeto the extent that the deduction26.15exceeds 1.0 percent of adjusted gross income, as defined in26.16section 62 of the Internal Revenue Code; 26.17 (ii) the medical expense deduction; 26.18 (iii) the casualty, theft, and disaster loss deduction;and26.19 (iv) the impairment-related work expenses of a disabled 26.20 person; and 26.21 (v) the amount of the exemption allowed the taxpayer under 26.22 section 151(c) of the Internal Revenue Code; 26.23 (3) for depletion allowances computed under section 613A(c) 26.24 of the Internal Revenue Code, with respect to each property (as 26.25 defined in section 614 of the Internal Revenue Code), to the 26.26 extent not included in federal alternative minimum taxable 26.27 income, the excess of the deduction for depletion allowable 26.28 under section 611 of the Internal Revenue Code for the taxable 26.29 year over the adjusted basis of the property at the end of the 26.30 taxable year (determined without regard to the depletion 26.31 deduction for the taxable year); 26.32 (4) to the extent not included in federal alternative 26.33 minimum taxable income, the amount of the tax preference for 26.34 intangible drilling cost under section 57(a)(2) of the Internal 26.35 Revenue Code determined without regard to subparagraph (E); 26.36 (5) to the extent not included in federal alternative 27.1 minimum taxable income, the amount of interest income as 27.2 provided by section 290.01, subdivision 19a, clause (1); and 27.3 (6) the amount of addition required by section 290.01, 27.4 subdivision 19a, clause (7); 27.5 less the sum of the amounts determined under the following: 27.6 (1) interest income as defined in section 290.01, 27.7 subdivision 19b, clause (1); 27.8 (2) an overpayment of state income tax as provided by 27.9 section 290.01, subdivision 19b, clause (2), to the extent 27.10 included in federal alternative minimum taxable income; 27.11 (3) the amount of investment interest paid or accrued 27.12 within the taxable year on indebtedness to the extent that the 27.13 amount does not exceed net investment income, as defined in 27.14 section 163(d)(4) of the Internal Revenue Code. Interest does 27.15 not include amounts deducted in computing federal adjusted gross 27.16 income; and 27.17 (4) amounts subtracted from federal taxable income as 27.18 provided by section 290.01, subdivision 19b, clauses (10)and27.19(11)to (12). 27.20 In the case of an estate or trust, alternative minimum 27.21 taxable income must be computed as provided in section 59(c) of 27.22 the Internal Revenue Code. 27.23 (b) "Investment interest" means investment interest as 27.24 defined in section 163(d)(3) of the Internal Revenue Code. 27.25 (c) "Tentative minimum tax" equals 6.4 percent of 27.26 alternative minimum taxable income after subtracting the 27.27 exemption amount determined under subdivision 3. 27.28 (d) "Regular tax" means the tax that would be imposed under 27.29 this chapter (without regard to this section and section 27.30 290.032), reduced by the sum of the nonrefundable credits 27.31 allowed under this chapter. 27.32 (e) "Net minimum tax" means the minimum tax imposed by this 27.33 section. 27.34 [EFFECTIVE DATE.] This section is effective only if 27.35 sections 11 and 17 of this article are enacted for taxable years 27.36 beginning after December 31, 2004. 28.1 Sec. 17. Minnesota Statutes 2002, section 290.091, 28.2 subdivision 3, is amended to read: 28.3 Subd. 3. [EXEMPTION AMOUNT.] (a) For purposes of computing 28.4 the alternative minimum tax, the exemption amount isthe28.5exemption determined under section 55(d) of the Internal Revenue28.6Code, as amended through December 31, 1992, except that28.7alternative minimum taxable income as determined under this28.8section must be substituted in the computation of the phase out28.9under section 55(d)(3)$66,300 for married individuals filing 28.10 joint returns; and $33,150 for married individuals filing 28.11 separate returns, single individuals, and head of household 28.12 filers. 28.13 (b) The exemption amount determined under this subdivision 28.14 is reduced by an amount equal to 25 percent of the amount by 28.15 which the alternative minimum income exceeds $248,600 for 28.16 married individuals filing joint returns; and $124,300 for 28.17 married individuals filing separate returns, single individuals, 28.18 and head of household filers. 28.19 (c) For taxable years beginning after December 31, 2005, 28.20 the exemption amounts under paragraph (a), and the income 28.21 amounts in paragraph (b), must be adjusted for inflation. The 28.22 commissioner shall make the inflation adjustments in accordance 28.23 with section 1(f) of the Internal Revenue Code except that for 28.24 the purposes of this subdivision the percentage increase must be 28.25 determined from the year starting September 1, 2004, and ending 28.26 August 31, 2005, as the base year for adjusting for inflation 28.27 for the tax year beginning after December 31, 2005. The 28.28 determination of the commissioner under this subdivision is not 28.29 a rule under the Administrative Procedure Act. 28.30 [EFFECTIVE DATE.] This section is effective only if 28.31 sections 11 and 16 of this article are enacted for taxable years 28.32 beginning after December 31, 2004. 28.33 Sec. 18. Minnesota Statutes 2002, section 290.10, is 28.34 amended to read: 28.35 290.10 [NONDEDUCTIBLE ITEMS.] 28.36 Subdivision 1. [EXPENSES, INTEREST, AND TAXES.] Except as 29.1 provided in section 290.17, subdivision 4, paragraph (i), in 29.2 computing the net income of a taxpayer no deduction shall in any 29.3 case be allowed for expenses, interest and taxes connected with 29.4 or allocable against the production or receipt of all income not 29.5 included in the measure of the tax imposed by this chapter, 29.6 except that for corporations engaged in the business of mining 29.7 or producing iron ore, the mining of which is subject to the 29.8 occupation tax imposed by section 298.01, subdivision 4, this 29.9 shall not prevent the deduction of expenses and other items to 29.10 the extent that the expenses and other items are allowable under 29.11 this chapter and are not deductible, capitalizable, retainable 29.12 in basis, or taken into account by allowance or otherwise in 29.13 computing the occupation tax and do not exceed the amounts taken 29.14 for federal income tax purposes for that year. Occupation taxes 29.15 imposed under chapter 298, royalty taxes imposed under chapter 29.16 299, or depletion expenses may not be deducted under this clause. 29.17 Subd. 2. [FINES, PENALTIES, DAMAGES, AND EXPENSES.] (a) No 29.18 deduction from taxable income for a trade or business expense 29.19 under section 162(a) of the Internal Revenue Code shall be 29.20 allowed for any fine, penalty, damages, or expenses paid to: 29.21 (1) the government of the United States, a state, a 29.22 territory or possession of the United States, the District of 29.23 Columbia, or the Commonwealth of Puerto Rico; 29.24 (2) the government of a foreign country; or 29.25 (3) a political subdivision of, or corporation or other 29.26 entity serving as an agency or instrumentality of, any 29.27 government described in clause (1) or (2). 29.28 (b) For purposes of this subdivision, "fine, penalty, 29.29 damages, or expenses" include, but are not limited to, any 29.30 amount: 29.31 (1) paid pursuant to a conviction or a plea of guilty or 29.32 nolo contendere for any crime in a criminal proceeding; 29.33 (2) paid as a civil penalty imposed by federal, state, or 29.34 local law, including tax penalties and interest; 29.35 (3) paid in settlement of the taxpayer's actual or 29.36 potential liability for a civil or criminal fine or penalty; 30.1 (4) forfeited as collateral posted in connection with a 30.2 proceeding that could result in imposition of a fine or penalty; 30.3 or 30.4 (5) legal fees and related expenses paid or incurred in the 30.5 prosecution or civil action arising from a violation of the law 30.6 imposing the fine or civil penalty, court costs assessed against 30.7 the taxpayer, or stenographic and printing charges, compensatory 30.8 damages, punitive damages, or restitution. 30.9 [EFFECTIVE DATE.] This section is effective for taxable 30.10 years beginning after December 31, 2003. 30.11 Sec. 19. Minnesota Statutes 2002, section 290.191, 30.12 subdivision 2, is amended to read: 30.13 Subd. 2. [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 30.14 Except for those trades or businesses required to use a 30.15 different formula under subdivision 3 or section 290.36, and for 30.16 those trades or businesses that receive permission to use some 30.17 other method under section 290.20or under subdivision 4, a 30.18 trade or business required to apportion its net income must 30.19 apportion its income to this state on the basis ofthe30.20percentage obtained by taking the sum of:30.21(1) 75 percent ofthe percentage which the sales made 30.22 within this state in connection with the trade or business 30.23 during the tax period are of the total sales wherever made in 30.24 connection with the trade or business during the tax period;. 30.25(2) 12.5 percent of the percentage which the total tangible30.26property used by the taxpayer in this state in connection with30.27the trade or business during the tax period is of the total30.28tangible property, wherever located, used by the taxpayer in30.29connection with the trade or business during the tax period; and30.30(3) 12.5 percent of the percentage which the taxpayer's30.31total payrolls paid or incurred in this state or paid in respect30.32to labor performed in this state in connection with the trade or30.33business during the tax period are of the taxpayer's total30.34payrolls paid or incurred in connection with the trade or30.35business during the tax period.30.36 [EFFECTIVE DATE.] This section is effective for taxable 31.1 years beginning after December 31, 2004, only if section 21 of 31.2 this article is enacted. 31.3 Sec. 20. Minnesota Statutes 2002, section 290.191, 31.4 subdivision 3, is amended to read: 31.5 Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL 31.6 INSTITUTIONS.] Except for an investment company required to 31.7 apportion its income under section 290.36, a financial 31.8 institution that is required to apportion its net income must 31.9 apportion its net income to this state on the basis of the 31.10 percentageobtained by taking the sum of:31.11(1) 75 percent of the percentagewhich the receipts from 31.12 within this state in connection with the trade or business 31.13 during the tax period are of the total receipts in connection 31.14 with the trade or business during the tax period, from wherever 31.15 derived;. 31.16(2) 12.5 percent of the percentage which the sum of the31.17total tangible property used by the taxpayer in this state and31.18the intangible property owned by the taxpayer and attributed to31.19this state in connection with the trade or business during the31.20tax period is of the sum of the total tangible property,31.21wherever located, used by the taxpayer and the intangible31.22property owned by the taxpayer and attributed to all states in31.23connection with the trade or business during the tax period; and31.24(3) 12.5 percent of the percentage which the taxpayer's31.25total payrolls paid or incurred in this state or paid in respect31.26to labor performed in this state in connection with the trade or31.27business during the tax period are of the taxpayer's total31.28payrolls paid or incurred in connection with the trade or31.29business during the tax period.31.30 [EFFECTIVE DATE.] This section is effective for taxable 31.31 years beginning after December 31, 2004, only if section 21 of 31.32 this article is enacted. 31.33 Sec. 21. Minnesota Statutes 2002, section 290.191, 31.34 subdivision 5, is amended to read: 31.35 Subd. 5. [DETERMINATION OF SALES FACTOR.] For purposes of 31.36 this section, the following rules apply in determining the sales 32.1 factor. 32.2 (a) The sales factor includes all sales, gross earnings, or 32.3 receipts received in the ordinary course of the business, except 32.4 that the following types of income are not included in the sales 32.5 factor: 32.6 (1) interest; 32.7 (2) dividends; 32.8 (3) sales of capital assets as defined in section 1221 of 32.9 the Internal Revenue Code; 32.10 (4) sales of property used in the trade or business, except 32.11 sales of leased property of a type which is regularly sold as 32.12 well as leased; 32.13 (5) sales of debt instruments as defined in section 32.14 1275(a)(1) of the Internal Revenue Code or sales of stock; and 32.15 (6) royalties, fees, or other like income of a type which 32.16 qualify for a subtraction from federal taxable income under 32.17 section 290.01, subdivision 19(d)(11). 32.18 (b) Sales of tangible personal property are made within 32.19 this state if the property is received by a purchaser at a point 32.20 within this state, and the taxpayer is taxable in this state, 32.21 regardless of the f.o.b. point, other conditions of the sale, or 32.22 the ultimate destination of the property. 32.23 (c) Tangible personal property delivered to a common or 32.24 contract carrier or foreign vessel for delivery to a purchaser 32.25 in another state or nation is a sale in that state or nation, 32.26 regardless of f.o.b. point or other conditions of the sale. If 32.27 the taxpayer is not taxable in the state of the delivery and the 32.28 property is shipped from an office, factory, warehouse, or other 32.29 place of storage in this state, sales of tangible personal 32.30 property outside this state are attributed to this state 32.31 regardless of the terms of shipping, delivery, or other 32.32 conditions of sale. 32.33 (d) Notwithstanding paragraphs (b) and (c), when 32.34 intoxicating liquor, wine, fermented malt beverages, cigarettes, 32.35 or tobacco products are sold to a purchaser who is licensed by a 32.36 state or political subdivision to resell this property only 33.1 within the state of ultimate destination, the sale is made in 33.2 that state. 33.3 (e) Sales made by or through a corporation that is 33.4 qualified as a domestic international sales corporation under 33.5 section 992 of the Internal Revenue Code are not considered to 33.6 have been made within this state. 33.7 (f) Sales, rents, royalties, and other income in connection 33.8 with real property is attributed to the state in which the 33.9 property is located. 33.10 (g) Receipts from the lease or rental of tangible personal 33.11 property, including finance leases and true leases, must be 33.12 attributed to this state if the property is located in this 33.13 state and to other states if the property is not located in this 33.14 state. Receipts from the lease or rental of moving property 33.15 including, but not limited to, motor vehicles, rolling stock, 33.16 aircraft, vessels, or mobile equipment are included in the 33.17 numerator of the receipts factor to the extent that the property 33.18 is used in this state. The extent of the use of moving property 33.19 is determined as follows: 33.20 (1) A motor vehicle is used wholly in the state in which it 33.21 is registered. 33.22 (2) The extent that rolling stock is used in this state is 33.23 determined by multiplying the receipts from the lease or rental 33.24 of the rolling stock by a fraction, the numerator of which is 33.25 the miles traveled within this state by the leased or rented 33.26 rolling stock and the denominator of which is the total miles 33.27 traveled by the leased or rented rolling stock. 33.28 (3) The extent that an aircraft is used in this state is 33.29 determined by multiplying the receipts from the lease or rental 33.30 of the aircraft by a fraction, the numerator of which is the 33.31 number of landings of the aircraft in this state and the 33.32 denominator of which is the total number of landings of the 33.33 aircraft. 33.34 (4) The extent that a vessel, mobile equipment, or other 33.35 mobile property is used in the state is determined by 33.36 multiplying the receipts from the lease or rental of the 34.1 property by a fraction, the numerator of which is the number of 34.2 days during the taxable year the property was in this state and 34.3 the denominator of which is the total days in the taxable year. 34.4 (h) Royalties and other income not described in paragraph 34.5 (a), clause (6), received for the use of or for the privilege of 34.6 using intangible property, including patents, know-how, 34.7 formulas, designs, processes, patterns, copyrights, trade names, 34.8 service names, franchises, licenses, contracts, customer lists, 34.9 or similar items, must be attributed to the state in which the 34.10 property is used by the purchaser. If the property is used in 34.11 more than one state, the royalties or other income must be 34.12 apportioned to this state pro rata according to the portion of 34.13 use in this state. If the portion of use in this state cannot 34.14 be determined, the royalties or other income must be excluded 34.15 from both the numerator and the denominator. Intangible 34.16 property is used in this state if the purchaser uses the 34.17 intangible property or the rights therein in the regular course 34.18 of its business operations in this state, regardless of the 34.19 location of the purchaser's customers. 34.20 (i) Sales of intangible property are made within the state 34.21 in which the property is used by the purchaser. If the property 34.22 is used in more than one state, the sales must be apportioned to 34.23 this state pro rata according to the portion of use in this 34.24 state. If the portion of use in this state cannot be 34.25 determined, the sale must be excluded from both the numerator 34.26 and the denominator of the sales factor. Intangible property is 34.27 used in this state if the purchaser used the intangible property 34.28 in the regular course of its business operations in this state. 34.29 (j) Receipts from the performance of services must be 34.30 attributed to the state where the services are received. For 34.31 the purposes of this section, receipts from the performance of 34.32 services provided to a corporation, partnership, or trust may 34.33 only be attributed to a state where it has a fixed place of 34.34 doing business. If the state where the services are received is 34.35 not readily determinable or is a state where the corporation, 34.36 partnership, or trust receiving the service does not have a 35.1 fixed place of doing business, the services shall be deemed to 35.2 be received at the location of the office of the customer from 35.3 which the services were ordered in the regular course of the 35.4 customer's trade or business. If the ordering office cannot be 35.5 determined, the services shall be deemed to be received at the 35.6 office of the customer to which the services are billed. If the 35.7 taxpayer is not taxable in the state of the purchaser, the sale 35.8 is attributed to this state if the greater proportion of the 35.9 service is performed in this state. 35.10 [EFFECTIVE DATE.] This section is effective for taxable 35.11 years beginning after December 31, 2003, only if sections 19 and 35.12 20 of this article are enacted. 35.13 Sec. 22. Minnesota Statutes 2002, section 290.92, 35.14 subdivision 4b, is amended to read: 35.15 Subd. 4b. [WITHHOLDING BY PARTNERSHIPS.] (a) A partnership 35.16 shall deduct and withhold a tax as provided in paragraph (b) for 35.17 nonresident individual partners based on their distributive 35.18 shares of partnership income for a taxable year of the 35.19 partnership. 35.20 (b) The amount of tax withheld is determined by multiplying 35.21 the partner's distributive share allocable to Minnesota under 35.22 section 290.17, paid or credited during the taxable year by the 35.23 highest rate used to determine the income tax liability for an 35.24 individual under section 290.06, subdivision 2c, except that the 35.25 amount of tax withheld may be determined by the commissioner if 35.26 the partner submits a withholding exemption certificate under 35.27 subdivision 5. 35.28 (c) The commissioner may reduce or abate the tax withheld 35.29 under this subdivision if the partnership had reasonable cause 35.30 to believe that no tax was due under this section. 35.31 (d) Notwithstanding paragraph (a), a partnership is not 35.32 required to deduct and withhold tax for a nonresident partner if: 35.33 (1) the partner elects to have the tax due paid as part of 35.34 the partnership's composite return under section 289A.08, 35.35 subdivision 7; 35.36 (2) the partner has Minnesota assignable federal adjusted 36.1 gross income from the partnership of less than $1,000; or 36.2 (3) the partnership is liquidated or terminated, the income 36.3 was generated by a transaction related to the termination or 36.4 liquidation, and no cash or other property was distributed in 36.5 the current or prior taxable year;or36.6 (4) the distributive shares of partnership income are 36.7 attributable to: 36.8 (i) income required to be recognized because of discharge 36.9 of indebtedness; 36.10 (ii) income recognized because of a sale, exchange, or 36.11 other disposition of real estate, depreciable property, or 36.12 property described in section 179 of the Internal Revenue Code; 36.13 or 36.14 (iii) income recognized on the sale, exchange, or other 36.15 disposition of any property that has been the subject of a basis 36.16 reduction pursuant to section 108, 734, 743, 754, or 1017 of the 36.17 Internal Revenue Code 36.18 to the extent that the income does not include cash received or 36.19 receivable or, if there is cash received or receivable, to the 36.20 extent that the cash is required to be used to pay indebtedness 36.21 by the partnership or a secured debt on partnership property; or 36.22 (5) the partnership is a publicly traded partnership, as 36.23 defined in section 7704(b) of the Internal Revenue Code. 36.24 (e) For purposes of subdivision 6a, and sections 289A.09, 36.25 subdivision 2, 289A.20, subdivision 2, paragraph (c), 289A.50, 36.26 289A.56, 289A.60, and 289A.63, a partnership is considered an 36.27 employer. 36.28 (f) To the extent that income is exempt from withholding 36.29 under paragraph (d), clause (4), the commissioner has a lien in 36.30 an amount up to the amount that would be required to be withheld 36.31 with respect to the income of the partner attributable to the 36.32 partnership interest, but for the application of paragraph (d), 36.33 clause (4). The lien arises under section 270.69 from the date 36.34 of assessment of the tax against the partner, and attaches to 36.35 that partner's share of the profits and any other money due or 36.36 to become due to that partner in respect of the partnership. 37.1 Notice of the lien may be sent by mail to the partnership, 37.2 without the necessity for recording the lien. The notice has 37.3 the force and effect of a levy under section 270.70, and is 37.4 enforceable against the partnership in the manner provided by 37.5 that section. Upon payment in full of the liability subsequent 37.6 to the notice of lien, the partnership must be notified that the 37.7 lien has been satisfied. 37.8 [EFFECTIVE DATE.] This section is effective for taxable 37.9 years beginning after December 31, 2003. 37.10 Sec. 23. Minnesota Statutes 2002, section 290A.03, 37.11 subdivision 11, is amended to read: 37.12 Subd. 11. [RENT CONSTITUTING PROPERTY TAXES.] "Rent 37.13 constituting property taxes" means1917 percent of the gross 37.14 rent actually paid in cash, or its equivalent, or the portion of 37.15 rent paid in lieu of property taxes, in any calendar year by a 37.16 claimant for the right of occupancy of the claimant's Minnesota 37.17 homestead in the calendar year, and which rent constitutes the 37.18 basis, in the succeeding calendar year of a claim for relief 37.19 under this chapter by the claimant. 37.20 If the amount of rent paid by the claimant for actual 37.21 property taxes paid on the unit exceeds 17 percent of rent paid, 37.22 the amount of rent constituting property taxes shall be 37.23 determined by multiplying the gross rent paid by the claimant 37.24 for the calendar year for the unit by a fraction, the numerator 37.25 of which is the net tax on the property where the unit is 37.26 located and the denominator of which is the total scheduled 37.27 rent. In no case may the rent constituting property taxes 37.28 exceed 50 percent of the gross rent paid by the claimant during 37.29 that calendar year. 37.30 [EFFECTIVE DATE.] This section is effective for property 37.31 taxes payable in 2004 and thereafter, and for refund claims 37.32 based on property taxes payable in 2004 and thereafter. 37.33 Sec. 24. Minnesota Statutes 2002, section 290A.03, is 37.34 amended by adding a subdivision to read: 37.35 Subd. 11a. [TOTAL SCHEDULED RENT.] "Total scheduled rent" 37.36 means the sum of the monthly rents assigned to the residential 38.1 rental units in the property multiplied by 12. The assigned 38.2 rents are the rents effective on April 15 for taxes payable in 38.3 2004 and thereafter. In determining total scheduled rent, no 38.4 deduction is allowed for vacant units, uncollected rent, or 38.5 reduced cash rents in units occupied by employees or agents of 38.6 the property owner. 38.7 [EFFECTIVE DATE.] This section is effective for rent paid 38.8 on and after January 1, 2004. 38.9 Sec. 25. Minnesota Statutes 2003 Supplement, section 38.10 290A.03, subdivision 15, is amended to read: 38.11 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 38.12 means the Internal Revenue Code of 1986, as amended throughJune38.1315, 2003November 11, 2003. 38.14 [EFFECTIVE DATE.] This section is effective the day 38.15 following final enactment except the changes to household income 38.16 generated by federal changes to federal adjusted gross income 38.17 are effective at the same time federal changes are effective. 38.18 Sec. 26. Minnesota Statutes 2002, section 290A.19, is 38.19 amended to read: 38.20 290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 38.21 CERTIFICATE.] 38.22 The owner or managing agent of any property for which rent 38.23 is paid for occupancy as a homestead must furnish a certificate 38.24 of rent paid to a person who is a renter on December 31, in the 38.25 form prescribed by the commissioner. The certificate of rent 38.26 paid must show the calculation of rent constituting property 38.27 taxes as provided in section 290A.03, subdivisions 11 and 11a. 38.28 If the renter moves before December 31, the owner or managing 38.29 agent may give the certificate to the renter at the time of 38.30 moving, or mail the certificate to the forwarding address if an 38.31 address has been provided by the renter. The certificate must 38.32 be made available to the renter before February 1 of the year 38.33 following the year in which the rent was paid. The owner or 38.34 managing agent must retain a duplicate of each certificate or an 38.35 equivalent record showing the same information for a period of 38.36 three years. The duplicate or other record must be made 39.1 available to the commissioner upon request. For the purposes of 39.2 this section, "owner" includes a park owner as defined under 39.3 section 327C.01, subdivision 6, and "property" includes a lot as 39.4 defined under section 327C.01, subdivision 3. 39.5 [EFFECTIVE DATE.] This section is effective for 39.6 certificates of rent paid furnished for rent paid on and after 39.7 January 1, 2004. 39.8 Sec. 27. Minnesota Statutes 2003 Supplement, section 39.9 291.005, subdivision 1, is amended to read: 39.10 Subdivision 1. Unless the context otherwise clearly 39.11 requires, the following terms used in this chapter shall have 39.12 the following meanings: 39.13 (1) "Federal gross estate" means the gross estate of a 39.14 decedent as valued and otherwise determined for federal estate 39.15 tax purposes by federal taxing authorities pursuant to the 39.16 provisions of the Internal Revenue Code. 39.17 (2) "Minnesota gross estate" means the federal gross estate 39.18 of a decedent after (a) excluding therefrom any property 39.19 included therein which has its situs outside Minnesota, and (b) 39.20 including therein any property omitted from the federal gross 39.21 estate which is includable therein, has its situs in Minnesota, 39.22 and was not disclosed to federal taxing authorities. 39.23 (3) "Personal representative" means the executor, 39.24 administrator or other person appointed by the court to 39.25 administer and dispose of the property of the decedent. If 39.26 there is no executor, administrator or other person appointed, 39.27 qualified, and acting within this state, then any person in 39.28 actual or constructive possession of any property having a situs 39.29 in this state which is included in the federal gross estate of 39.30 the decedent shall be deemed to be a personal representative to 39.31 the extent of the property and the Minnesota estate tax due with 39.32 respect to the property. 39.33 (4) "Resident decedent" means an individual whose domicile 39.34 at the time of death was in Minnesota. 39.35 (5) "Nonresident decedent" means an individual whose 39.36 domicile at the time of death was not in Minnesota. 40.1 (6) "Situs of property" means, with respect to real 40.2 property, the state or country in which it is located; with 40.3 respect to tangible personal property, the state or country in 40.4 which it was normally kept or located at the time of the 40.5 decedent's death; and with respect to intangible personal 40.6 property, the state or country in which the decedent was 40.7 domiciled at death. 40.8 (7) "Commissioner" means the commissioner of revenue or any 40.9 person to whom the commissioner has delegated functions under 40.10 this chapter. 40.11 (8) "Internal Revenue Code" means the United States 40.12 Internal Revenue Code of 1986, as amended throughDecember 31,40.132002November 11, 2003. 40.14 [EFFECTIVE DATE.] This section is effective for estates of 40.15 decedents dying after January 31, 2003. 40.16 Sec. 28. [DISTRIBUTION.] 40.17 For the fiscal year beginning July 1, 2005, the revenue 40.18 collected under Minnesota Statutes, section 290.01, subdivision 40.19 19a, clause (8), for taxable years beginning after December 31, 40.20 2003, and before January 1, 2005, is appropriated to each of the 40.21 listed agencies in the designated percentages and must be used 40.22 only for the following programs: (a) Department of Human 40.23 Services, (1) emergencies service programs under Laws 1997, 40.24 chapter 162, article 3, five percent; (2) transitional housing 40.25 operations under Minnesota Statutes, section 119A.43, 25 40.26 percent; (3) transitional housing operations targeted to 40.27 unaccompanied youth under Minnesota Statutes, section 119A.43, 40.28 five percent; (b) Minnesota Housing Finance Agency, (1) 40.29 Minnesota housing trust fund, under Minnesota Statutes, section 40.30 462A.201, 30 percent; (2) rental housing under Minnesota 40.31 Statutes, section 462A.2097, ten percent; (3) family homeless 40.32 prevention and assistance program, under Minnesota Statutes, 40.33 section 462A.204, 25 percent. 40.34 Sec. 29. [STUDY; CORPORATE FRANCHISE TAX.] 40.35 The commissioners of the Departments of Finance and Revenue 40.36 shall conduct a comprehensive study to identify the reasons for 41.1 the decline in corporate tax receipts. The study shall include 41.2 an analysis of the current and future effect of existing 41.3 corporate tax provisions, both independently and interactively 41.4 with other provisions; how tax provisions are changing business 41.5 practices; and the impact of outsourcing or relocation of 41.6 business operations and jobs. On or before February 1, 2005, 41.7 the commissioners shall report to the chairpersons of the house 41.8 and senate tax committees the results of the study and shall 41.9 include recommendations for changes to the tax laws that would 41.10 reduce tax incentives for businesses to outsource or relocate 41.11 business operations or jobs. 41.12 Sec. 30. [REPEALER.] 41.13 Minnesota Statutes 2002, section 290.191, subdivision 4, is 41.14 repealed. 41.15 [EFFECTIVE DATE.] This section is effective for taxable 41.16 years beginning after December 31, 2003. 41.17 ARTICLE 2 41.18 SALES TAX 41.19 Section 1. Minnesota Statutes 2002, section 297A.61, is 41.20 amended by adding a subdivision to read: 41.21 Subd. 37. [PERSONAL RAPID TRANSIT SYSTEM.] "Personal rapid 41.22 transit system" means a transportation system of small, 41.23 computer-controlled vehicles, transporting one to three 41.24 passengers on elevated guideways in a transportation network 41.25 operating on demand and nonstop directly to any stations in the 41.26 network. The system shall provide service on a regular and 41.27 continuing basis and operate independent of any government 41.28 subsidies. 41.29 [EFFECTIVE DATE.] This section is effective for sales and 41.30 purchases made after June 30, 2008. 41.31 Sec. 2. Minnesota Statutes 2002, section 297A.67, is 41.32 amended by adding a subdivision to read: 41.33 Subd. 32. [GEOTHERMAL EQUIPMENT.] The loop field 41.34 collection system and the heat pump of a geothermal heating and 41.35 cooling system is exempt. 41.36 [EFFECTIVE DATE.] This section is effective for sales and 42.1 purchases occurring on and after July 1, 2004. 42.2 Sec. 3. Minnesota Statutes 2002, section 297A.67, is 42.3 amended by adding a subdivision to read: 42.4 Subd. 33. [BIOMASS FUEL STOVES.] Stoves designed to burn 42.5 fuel pellets made from biomass materials are exempt. 42.6 [EFFECTIVE DATE.] This section is effective for sales and 42.7 purchases made after June 30, 2004. 42.8 Sec. 4. Minnesota Statutes 2003 Supplement, section 42.9 297A.68, subdivision 5, is amended to read: 42.10 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 42.11 exempt. The tax must be imposed and collected as if the rate 42.12 under section 297A.62, subdivision 1, applied, and then refunded 42.13 in the manner provided in section 297A.75. 42.14 "Capital equipment" means machinery and equipment purchased 42.15 or leased, and used in this state by the purchaser or lessee 42.16 primarily for manufacturing, fabricating, mining, or refining 42.17 tangible personal property to be sold ultimately at retail if 42.18 the machinery and equipment are essential to the integrated 42.19 production process of manufacturing, fabricating, mining, or 42.20 refining. Capital equipment also includes machinery and 42.21 equipment used to electronically transmit results retrieved by a 42.22 customer of an on-line computerized data retrieval system. 42.23 (b) Capital equipment includes, but is not limited to: 42.24 (1) machinery and equipment used to operate, control, or 42.25 regulate the production equipment; 42.26 (2) machinery and equipment used for research and 42.27 development, design, quality control, and testing activities; 42.28 (3) environmental control devices that are used to maintain 42.29 conditions such as temperature, humidity, light, or air pressure 42.30 when those conditions are essential to and are part of the 42.31 production process; 42.32 (4) materials and supplies used to construct and install 42.33 machinery or equipment; 42.34 (5) repair and replacement parts, including accessories, 42.35 whether purchased as spare parts, repair parts, or as upgrades 42.36 or modifications to machinery or equipment; 43.1 (6) materials used for foundations that support machinery 43.2 or equipment; 43.3 (7) materials used to construct and install special purpose 43.4 buildings used in the production process; 43.5 (8) ready-mixed concrete equipment in which the ready-mixed 43.6 concrete is mixed as part of the delivery process regardless if 43.7 mounted on a chassis and leases of ready-mixed concrete trucks; 43.8 and 43.9 (9) machinery or equipment used for research, development, 43.10 design, or production of computer software. 43.11 (c) Capital equipment does not include the following: 43.12 (1) motor vehicles taxed under chapter 297B; 43.13 (2) machinery or equipment used to receive or store raw 43.14 materials; 43.15 (3) building materials, except for materials included in 43.16 paragraph (b), clauses (6) and (7); 43.17 (4) machinery or equipment used for nonproduction purposes, 43.18 including, but not limited to, the following: plant security, 43.19 fire prevention, first aid, and hospital stations; support 43.20 operations or administration; pollution control; and plant 43.21 cleaning, disposal of scrap and waste, plant communications, 43.22 space heating, cooling, lighting, or safety; 43.23 (5) farm machinery and aquaculture production equipment as 43.24 defined by section 297A.61, subdivisions 12 and 13; 43.25 (6) machinery or equipment purchased and installed by a 43.26 contractor as part of an improvement to real property; or 43.27 (7) any other item that is not essential to the integrated 43.28 process of manufacturing, fabricating, mining, or refining. 43.29 (d) For purposes of this subdivision: 43.30 (1) "Equipment" means independent devices or tools separate 43.31 from machinery but essential to an integrated production 43.32 process, including computers and computer software, used in 43.33 operating, controlling, or regulating machinery and equipment; 43.34 and any subunit or assembly comprising a component of any 43.35 machinery or accessory or attachment parts of machinery, such as 43.36 tools, dies, jigs, patterns, and molds. 44.1 (2) "Fabricating" means to make, build, create, produce, or 44.2 assemble components or property to work in a new or different 44.3 manner. 44.4 (3) "Integrated production process" means a process or 44.5 series of operations through which tangible personal property is 44.6 manufactured, fabricated, mined, or refined. For purposes of 44.7 this clause, (i) manufacturing begins with the removal of raw 44.8 materials from inventory and ends when the last process prior to 44.9 loading for shipment has been completed; (ii) fabricating begins 44.10 with the removal from storage or inventory of the property to be 44.11 assembled, processed, altered, or modified and ends with the 44.12 creation or production of the new or changed product; (iii) 44.13 mining begins with the removal of overburden from the site of 44.14 the ores, minerals, stone, peat deposit, or surface materials 44.15 and ends when the last process before stockpiling is completed; 44.16 and (iv) refining begins with the removal from inventory or 44.17 storage of a natural resource and ends with the conversion of 44.18 the item to its completed form. 44.19 (4) "Machinery" means mechanical, electronic, or electrical 44.20 devices, including computers and computer software, that are 44.21 purchased or constructed to be used for the activities set forth 44.22 in paragraph (a), beginning with the removal of raw materials 44.23 from inventory through completion of the product, including 44.24 packaging of the product. 44.25 (5) "Machinery and equipment used for pollution control" 44.26 means machinery and equipment used solely to eliminate, prevent, 44.27 or reduce pollution resulting from an activity described in 44.28 paragraph (a). 44.29 (6) "Manufacturing" means an operation or series of 44.30 operations where raw materials are changed in form, composition, 44.31 or condition by machinery and equipment and which results in the 44.32 production of a new article of tangible personal property. For 44.33 purposes of this subdivision, "manufacturing" includes the 44.34 generation of electricity or steam to be sold at retail. 44.35 (7) "Mining" means the extraction of minerals, ores, stone, 44.36 or peat. 45.1 (8) "On-line data retrieval system" means a system whose 45.2 cumulation of information is equally available and accessible to 45.3 all its customers. 45.4 (9) "Primarily" means machinery and equipment used 50 45.5 percent or more of the time in an activity described in 45.6 paragraph (a). 45.7 (10) "Refining" means the process of converting a natural 45.8 resource to an intermediate or finished product, including the 45.9 treatment of water to be sold at retail. 45.10 (11) This subdivision does not apply to telecommunications 45.11 equipment as provided in subdivision 35, and does not apply to 45.12 wire, cable, fiber, poles, or conduit for telecommunications 45.13 services. 45.14 [EFFECTIVE DATE.] This section is effective for purchases 45.15 made after July 31, 2001. 45.16 Sec. 5. Minnesota Statutes 2002, section 297A.68, 45.17 subdivision 19, is amended to read: 45.18 Subd. 19. [PETROLEUM PRODUCTS.] The following petroleum 45.19 products are exempt: 45.20 (1) products upon which a tax has been imposed and paid 45.21 under chapter 296A, and for which no refund has been or will be 45.22 allowed because the buyer used the fuel for nonhighway use; 45.23 (2) products that are used in the improvement of 45.24 agricultural land by constructing, maintaining, and repairing 45.25 drainage ditches, tile drainage systems, grass waterways, water 45.26 impoundment, and other erosion control structures; 45.27 (3) products purchased by a transit system receiving 45.28 financial assistance under section 174.24, 256B.0625, 45.29 subdivision 17, or 473.384; 45.30 (4) products purchased by an ambulance service licensed 45.31 under chapter 144E; 45.32 (5) products used in a passenger snowmobile, as defined in 45.33 section 296A.01, subdivision 39, for off-highway business use as 45.34 part of the operations of a resort as provided under section 45.35 296A.16, subdivision 2, clause (2);or45.36 (6) products purchased by a state or a political 46.1 subdivision of a state for use in motor vehicles exempt from 46.2 registration under section 168.012, subdivision 1, paragraph 46.3 (b); or 46.4 (7) products purchased for use as fuel for a commuter rail 46.5 system operating under sections 174.80 to 174.90. The tax must 46.6 be imposed and collected as if the rate under section 297A.62, 46.7 subdivision 1, applied, and then refunded in the manner provided 46.8 in section 297A.75. 46.9 [EFFECTIVE DATE.] This section is effective for purchases 46.10 made after June 30, 2004. 46.11 Sec. 6. Minnesota Statutes 2002, section 297A.68, is 46.12 amended by adding a subdivision to read: 46.13 Subd. 40. [MOVIES AND TELEVISION; INPUTS TO PRODUCTION.] 46.14 The sale of tangible personal property primarily used or 46.15 consumed directly in the preproduction, production, and 46.16 postproduction of movies and television shows that are produced 46.17 for domestic and international commercial distribution are 46.18 exempt. "Preproduction" and "production" include all the 46.19 activities related to the preparation of shooting and the 46.20 shooting of movies and television shows, including film 46.21 processing. Equipment rented for preproduction and production 46.22 activities are exempt. "Postproduction" includes all activities 46.23 related to editing and finishing of the movie or television 46.24 show. This exemption does not apply to tangible personal 46.25 property or services used primarily in administration, general 46.26 management, or marketing. Machinery and equipment purchased for 46.27 use in producing movies and television shows, fuel, electricity, 46.28 gas, or steam used for space heating and lighting, food, 46.29 lodging, and any property or service for the personal use of any 46.30 individual are not exempt under this subdivision. 46.31 [EFFECTIVE DATE.] This section is effective for sales and 46.32 purchases made after June 30, 2004. 46.33 Sec. 7. Minnesota Statutes 2002, section 297A.68, is 46.34 amended by adding a subdivision to read: 46.35 Subd. 41. [PERSONAL RAPID TRANSIT SYSTEM.] (a) Machinery, 46.36 equipment, and supplies purchased or leased, and used by the 47.1 purchaser or lessee in this state directly in the provision of a 47.2 personal rapid transit system as defined in section 297A.61, 47.3 subdivision 37, are exempt. Machinery, equipment, and supplies 47.4 that qualify for this exemption include, but are not limited to, 47.5 the following: 47.6 (1) vehicles, guideways, and related parts used directly in 47.7 the transit system; 47.8 (2) computers and equipment used primarily for operating, 47.9 controlling, and regulating the system; 47.10 (3) machinery, equipment, furniture, and fixtures necessary 47.11 for the functioning of system stations; 47.12 (4) machinery, equipment, implements, tools, and supplies 47.13 used to maintain vehicles, guideways, and stations; and 47.14 (5) electricity and other fuels used in the provision of 47.15 the transit service, including heating, cooling, and lighting of 47.16 system stations. 47.17 (b) This exemption does not include machinery, equipment, 47.18 and supplies used for support and administration operations. 47.19 [EFFECTIVE DATE.] This section is effective for sales and 47.20 purchases made after June 30, 2008. 47.21 Sec. 8. Minnesota Statutes 2003 Supplement, section 47.22 297A.70, subdivision 8, is amended to read: 47.23 Subd. 8. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 47.24 SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 47.25 but not limited to, end user equipment used for construction, 47.26 ownership, operation, maintenance, and enhancement ofthe47.27backbone system of thea regionwide or statewide public safety 47.28 radio communication system established under sections 403.21 to 47.29 403.34, are exempt.For purposes of this subdivision, backbone47.30system is defined in section 403.21, subdivision 9. This47.31subdivision is effective for purchases, sales, storage, use, or47.32consumption occurring before August 1, 2005, in the counties of47.33Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.47.34 [EFFECTIVE DATE.] This section is effective for sales and 47.35 purchases made on and after July 1, 2004. 47.36 Sec. 9. Minnesota Statutes 2002, section 297A.70, is 48.1 amended by adding a subdivision to read: 48.2 Subd. 17. [DONATED MEALS.] Meals that are normally sold at 48.3 retail in the ordinary business activities of the taxpayer are 48.4 exempt if the meals are donated to a nonprofit group as defined 48.5 in subdivision 4 for fund-raising purposes. 48.6 [EFFECTIVE DATE.] This section is effective for donations 48.7 made after June 30, 2004. 48.8 Sec. 10. Minnesota Statutes 2002, section 297A.71, is 48.9 amended by adding a subdivision to read: 48.10 Subd. 33. [COMMUTER RAIL MATERIAL, SUPPLIES, AND 48.11 EQUIPMENT.] Materials and supplies consumed in, and equipment 48.12 incorporated in the construction, equipment, or improvement of a 48.13 commuter rail transportation system operated under sections 48.14 174.80 and 174.90 are exempt. This exemption includes railroad 48.15 cars and engines and related equipment. 48.16 [EFFECTIVE DATE.] This section is effective for purchases 48.17 made after June 30, 2004. 48.18 Sec. 11. Minnesota Statutes 2002, section 297A.71, is 48.19 amended by adding a subdivision to read: 48.20 Subd. 34. [WASTE RECOVERY FACILITY.] Materials and 48.21 supplies used or consumed in, and equipment incorporated into, 48.22 the construction, improvement, or expansion of a waste-to-energy 48.23 resource recovery facility are exempt if the facility uses 48.24 biomass or mixed municipal solid waste as a primary fuel to 48.25 generate steam or electricity. 48.26 [EFFECTIVE DATE.] This section is effective for sales and 48.27 purchases made after June 30, 2004. 48.28 Sec. 12. Minnesota Statutes 2002, section 297A.71, is 48.29 amended by adding a subdivision to read: 48.30 Subd. 35. [PERSONAL RAPID TRANSIT SYSTEM.] Materials and 48.31 supplies used or consumed in, and equipment incorporated into 48.32 the construction, expansion, or improvement of a personal rapid 48.33 transit system as defined in section 297A.61, subdivision 37, 48.34 are exempt. 48.35 [EFFECTIVE DATE.] This section is effective for sales and 48.36 purchases made after June 30, 2008. 49.1 Sec. 13. Minnesota Statutes 2002, section 297A.71, is 49.2 amended by adding a subdivision to read: 49.3 Subd. 36. [ST. MARY'S DULUTH CLINIC HEALTH 49.4 SYSTEM.] Materials and supplies used or consumed in and 49.5 equipment incorporated into the construction of the hospital 49.6 portion of the St. Mary's Duluth Clinic Health System are exempt. 49.7 [EFFECTIVE DATE.] This section is effective for purchases 49.8 made on or after July 1, 2004, and on or before December 31, 49.9 2006. 49.10 Sec. 14. Minnesota Statutes 2002, section 297A.75, 49.11 subdivision 1, is amended to read: 49.12 Subdivision 1. [TAX COLLECTED.] The tax on the gross 49.13 receipts from the sale of the following exempt items must be 49.14 imposed and collected as if the sale were taxable and the rate 49.15 under section 297A.62, subdivision 1, applied. The exempt items 49.16 include: 49.17 (1) capital equipment exempt under section 297A.68, 49.18 subdivision 5; 49.19 (2) building materials for an agricultural processing 49.20 facility exempt under section 297A.71, subdivision 13; 49.21 (3) building materials for mineral production facilities 49.22 exempt under section 297A.71, subdivision 14; 49.23 (4) building materials for correctional facilities under 49.24 section 297A.71, subdivision 3; 49.25 (5) building materials used in a residence for disabled 49.26 veterans exempt under section 297A.71, subdivision 11; 49.27 (6) chair lifts, ramps, elevators, and associated building 49.28 materials exempt under section 297A.71, subdivision 12; 49.29 (7) building materials for the Long Lake Conservation 49.30 Center exempt under section 297A.71, subdivision 17; 49.31 (8) materials, supplies, fixtures, furnishings, and 49.32 equipment for a county law enforcement and family service center 49.33 under section 297A.71, subdivision 26;and49.34 (9) materials and supplies for qualified low-income housing 49.35 under section 297A.71, subdivision 23; and 49.36 (10) fuel purchased for commuter rail systems under section 50.1 297A.68, subdivision 19, clause (7). 50.2 [EFFECTIVE DATE.] This section is effective for purchases 50.3 made after June 30, 2004. 50.4 Sec. 15. Minnesota Statutes 2002, section 297A.75, 50.5 subdivision 2, is amended to read: 50.6 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 50.7 forms prescribed by the commissioner, a refund equal to the tax 50.8 paid on the gross receipts of the exempt items must be paid to 50.9 the applicant. Only the following persons may apply for the 50.10 refund: 50.11 (1) for subdivision 1, clauses (1) to (3), the applicant 50.12 must be the purchaser; 50.13 (2) for subdivision 1, clauses (4), (7), and (8), the 50.14 applicant must be the governmental subdivision; 50.15 (3) for subdivision 1, clause (5), the applicant must be 50.16 the recipient of the benefits provided in United States Code, 50.17 title 38, chapter 21; 50.18 (4) for subdivision 1, clause (6), the applicant must be 50.19 the owner of the homestead property;and50.20 (5) for subdivision 1, clause (9), the owner of the 50.21 qualified low-income housing project; and 50.22 (6) for subdivision 1, clause (10), the operator of the 50.23 commuter rail system. 50.24 [EFFECTIVE DATE.] This section is effective for purchases 50.25 made after June 30, 2004. 50.26 Sec. 16. Minnesota Statutes 2002, section 297A.87, 50.27 subdivision 2, is amended to read: 50.28 Subd. 2. [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The 50.29 operator of an event under subdivision 1 shall obtain one of the 50.30 following from a person who wishes to do business as a seller at 50.31 the event: 50.32 (1) evidence that the person holds a valid seller's permit 50.33 under section 297A.84;or50.34 (2) a written statement that the person is not offering for 50.35 sale any item that is taxable under this chapter; or 50.36 (3) a written statement that this is the only selling event 51.1 that the person will be participating in for that calendar year, 51.2 that the person will be participating for three or fewer days, 51.3 and that the person will make $500 or less in total sales in the 51.4 calendar year. The written statement shall include the person's 51.5 name, address, and telephone number. 51.6 (b) The operator shall require the evidence or statement as 51.7 a prerequisite to participating in the event as a seller. 51.8 [EFFECTIVE DATE.] This section is effective for selling 51.9 events occurring after June 15, 2004. 51.10 Sec. 17. Minnesota Statutes 2002, section 297A.87, 51.11 subdivision 3, is amended to read: 51.12 Subd. 3. [OCCASIONAL SALE PROVISIONSNOTAPPLICABLE UNDER 51.13 LIMITED CIRCUMSTANCES.] The isolated and occasional 51.14 saleprovisionsprovision under section 297A.67, subdivision 23, 51.15orapplies, provided that the seller only participates for three 51.16 or fewer days in one event per calendar year, makes $500 or less 51.17 in sales in the calendar year, and provides the written 51.18 statement required in subdivision 2, paragraph (a), clause (3). 51.19 The isolated and occasional sales provision under section 51.20 297A.68, subdivision 25,dodoes not apply to a seller at an 51.21 event under this section. 51.22 [EFFECTIVE DATE.] This section is effective for selling 51.23 events occurring after June 15, 2004. 51.24 Sec. 18. Minnesota Statutes 2003 Supplement, section 51.25 297B.03, is amended to read: 51.26 297B.03 [EXEMPTIONS.] 51.27 There is specifically exempted from the provisions of this 51.28 chapter and from computation of the amount of tax imposed by it 51.29 the following: 51.30 (1) purchase or use, including use under a lease purchase 51.31 agreement or installment sales contract made pursuant to section 51.32 465.71, of any motor vehicle by the United States and its 51.33 agencies and instrumentalities and by any person described in 51.34 and subject to the conditions provided in section 297A.67, 51.35 subdivision 11; 51.36 (2) purchase or use of any motor vehicle by any person who 52.1 was a resident of another state or country at the time of the 52.2 purchase and who subsequently becomes a resident of Minnesota, 52.3 provided the purchase occurred more than 60 days prior to the 52.4 date such person began residing in the state of Minnesota and 52.5 the motor vehicle was registered in the person's name in the 52.6 other state or country; 52.7 (3) purchase or use of any motor vehicle by any person 52.8 making a valid election to be taxed under the provisions of 52.9 section 297A.90; 52.10 (4) purchase or use of any motor vehicle previously 52.11 registered in the state of Minnesota when such transfer 52.12 constitutes a transfer within the meaning of section 118, 331, 52.13 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 52.14 1563(a) of the Internal Revenue Code of 1986, as amended through 52.15 December 31, 1999; 52.16 (5) purchase or use of any vehicle owned by a resident of 52.17 another state and leased to a Minnesota based private or for 52.18 hire carrier for regular use in the transportation of persons or 52.19 property in interstate commerce provided the vehicle is titled 52.20 in the state of the owner or secured party, and that state does 52.21 not impose a sales tax or sales tax on motor vehicles used in 52.22 interstate commerce; 52.23 (6) purchase or use of a motor vehicle by a private 52.24 nonprofit or public educational institution for use as an 52.25 instructional aid in automotive training programs operated by 52.26 the institution. "Automotive training programs" includes motor 52.27 vehicle body and mechanical repair courses but does not include 52.28 driver education programs; 52.29 (7) purchase of a motor vehicle for use as an ambulance by 52.30 an ambulance service licensed under section 144E.10; 52.31 (8) purchase of a motor vehicle by or for a public library, 52.32 as defined in section 134.001, subdivision 2, as a bookmobile or 52.33 library delivery vehicle; 52.34 (9) purchase of a ready-mixed concrete truck; 52.35 (10) purchase or use of a motor vehicle by a town for use 52.36 exclusively for road maintenance, including snowplows and dump 53.1 trucks, but not including automobiles, vans, or pickup trucks; 53.2 (11) purchase or use of a motor vehicle by a corporation, 53.3 society, association, foundation, or institution organized and 53.4 operated exclusively for charitable, religious, or educational 53.5 purposes, except a public school, university, or library, but 53.6 only if the vehicle is: 53.7 (i) a truck, as defined in section 168.011, a bus, as 53.8 defined in section 168.011, or a passenger automobile, as 53.9 defined in section 168.011, if the automobile is designed and 53.10 used for carrying more than nine persons including the driver; 53.11 and 53.12 (ii) intended to be used primarily to transport tangible 53.13 personal property or individuals, other than employees, to whom 53.14 the organization provides service in performing its charitable, 53.15 religious, or educational purpose; 53.16 (12) purchase of a motor vehicle for use by a transit 53.17 provider exclusively to provide transit service is exempt if the 53.18 transit provider is either (i) receiving financial assistance or 53.19 reimbursement under section 174.24 or 473.384, or (ii) operating 53.20 under section 174.29, 473.388, or 473.405; 53.21 (13) purchase or use of a motor vehicle by a qualified 53.22 business, as defined in section 469.310, located in a job 53.23 opportunity building zone, if the motor vehicle is principally 53.24 garaged in the job opportunity building zone and is primarily 53.25 used as part of or in direct support of the person's operations 53.26 carried on in the job opportunity building zone. The exemption 53.27 under this clause applies to sales, if the purchase was made and 53.28 delivery received during the duration of the job opportunity 53.29 building zone. The exemption under this clause also applies to 53.30 any local sales and use tax; 53.31 (14) purchase or use after June 30, 2004, and before July 53.32 1, 2007, of a motor vehicle by a state agency or political 53.33 subdivision, provided that the motor vehicle has a fuel 53.34 efficiency greater than 45 miles per gallon in highway use, and 53.35 greater than 35 miles per gallon in city use, as certified by 53.36 the United States Environmental Protection Agency. 54.1 [EFFECTIVE DATE.] This section is effective for sales and 54.2 transfers made after June 30, 2004, and before July 1, 2007. 54.3 Sec. 19. Laws 1986, chapter 379, section 1, is amended to 54.4 read: 54.5 Section 1. [CITY OF ST. CLOUD; LIQUOR AND FOOD TAX.] 54.6 Subdivision 1. [LIQUOR AND FOOD TAX AUTHORIZED.] 54.7 Notwithstanding Minnesota Statutes, section 477A.016, or any 54.8 ordinance, city charter, or other provision of law, the city of 54.9 St. Cloud may, by ordinance, impose a sales tax supplemental to 54.10 the general sales tax imposed in Minnesota Statutes, chapter 54.11 297A, the proceeds of which shall be used in accordance with 54.12 subdivision 2. The tax imposed by the city maybenotmore than54.13oneexceed two percent on the gross receipts from all retail 54.14 on-sales of intoxicating liquor and fermented malt beverages 54.15 sold at licensed on-sale liquor establishments located within 54.16 its geographic boundaries, or not more thanonetwo percent on 54.17 the gross receipts from the retail sale of food and beverages 54.18 not subject to the liquor tax by a restaurant or place of 54.19 refreshment located within its geographic boundaries, or both. 54.20 For purposes of this act, the city shall define the terms 54.21 "restaurant" and "place of refreshment" by resolution. The 54.22 governing body of the city may adopt an ordinance establishing a 54.23 convention center taxing district. The ordinance shall describe 54.24 with particularity the area within the city to be included in 54.25 the district. If the city establishes a convention center 54.26 taxing district, the sales taxes authorized under this 54.27 subdivision may be imposed only upon the sales occurring at 54.28 on-sale liquor establishments, restaurants, or other places of 54.29 refreshment located within the district. The city may impose a 54.30 tax at a rate that is greater than one percent, not to exceed 54.31 two percent, only after the approval of the voters of the city 54.32 at the next general election. 54.33 Subd. 2. [USE OF PROCEEDS OF LIQUOR AND FOOD TAX.] The 54.34 proceeds of any tax imposed under subdivision 1 shall be used by 54.35 the city to pay all or a portion of the expenses of constructing 54.36 a convention center facilityorand related facilities, and the 55.1 municipal athletic complex. Authorized expenses include, but 55.2 are not limited to, securing or paying debt service on bonds or 55.3 other obligations issued to finance the construction of a 55.4 convention center facilityorand related facilities, and the 55.5 municipal athletic complex. For the purposes of this act, 55.6 "related facilities" means all publicly owned real or personal 55.7 property that the governing body of the city determines will be 55.8 necessary to facilitate the use of theconvention center55.9 facilities including, but not limited to, parking, skyways, 55.10 lighting, and landscaping. 55.11 Subd. 3. [EXPIRATION OF TAXING AUTHORITY.] The authority 55.12 granted by subdivision 1 to the city to impose a liquor and food 55.13 tax shall expire when the principal and interest on any bonds or 55.14 other obligations issued to finance construction of a convention 55.15 center facilityorand related facilities, and municipal 55.16 athletic complex have been paid or at an earlier time as the 55.17 city shall, by ordinance, determine. 55.18 [EFFECTIVE DATE.] This section is effective the day after 55.19 compliance by the city of St. Cloud with Minnesota Statutes, 55.20 section 645.021, subdivision 3. 55.21 Sec. 20. Laws 1986, chapter 379, section 2, subdivision 1, 55.22 is amended to read: 55.23 Subdivision 1. [ADDITIONAL TAX AUTHORIZED.] 55.24 Notwithstanding Minnesota Statutes, section 477A.016, or any 55.25 ordinance, city charter, or other provision of law, the city of 55.26 St. Cloud may, by ordinance, impose a tax at a rate not to 55.27 exceedtwothree percent in addition to the tax authorized under 55.28 Laws 1979, chapter 197, on the gross receipts from the 55.29 furnishing for consideration of lodging at a hotel, motel, 55.30 rooming house, tourist court, or resort other than the renting 55.31 or leasing of it for a continuous period of 30 days or 55.32 more. The city may impose a tax at a rate that is greater than 55.33 two percent, not to exceed three percent, only after the 55.34 approval of the voters of the city at the next general election. 55.35 [EFFECTIVE DATE.] This section is effective the day after 55.36 compliance by the city of St. Cloud with Minnesota Statutes, 56.1 section 645.021, subdivision 3. 56.2 Sec. 21. Laws 1991, chapter 291, article 8, section 27, 56.3 subdivision 4, is amended to read: 56.4 Subd. 4. [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 56.5 LIMITATION.] The authority granted by subdivisions 1 and 2 to 56.6 the city to impose a sales tax and an excise tax shall expire 56.7 when the principal and interest on any bonds or obligations 56.8 issued to finance construction of Riverfront 2000 and related 56.9 facilities have been paid or at an earlier time as the city 56.10 shall, by ordinance, determine.The total capital,56.11administrative, and operating expenditures payable from bond56.12proceeds and revenues received from the taxes authorized by56.13subdivisions 1 and 2, excluding investment earnings on bond56.14proceeds and revenues, shall not exceed $25,000,000 for56.15Riverfront 2000 and related facilities.56.16 [EFFECTIVE DATE.] This section is effective upon compliance 56.17 by the city of Mankato with Minnesota Statutes, section 645.021, 56.18 subdivision 3. 56.19 Sec. 22. Laws 1991, chapter 291, article 8, section 27, 56.20 subdivision 5, is amended to read: 56.21 Subd. 5. [BONDS.] The city of Mankato may issue general 56.22 obligation bonds of the city in an aggregate amount not to 56.23 exceed $25,000,000 for Riverfront 2000 and related facilities, 56.24 without election under Minnesota Statutes, chapter 475, on the 56.25 question of issuance of the bonds or a tax to pay them. The 56.26 debt represented by bonds issued for Riverfront 2000 and related 56.27 facilities shall not be included in computing any debt 56.28 limitations applicable to the city of Mankato, and the levy of 56.29 taxes required by section 475.61 to pay principal of and 56.30 interest on the bonds shall not be subject to any levy 56.31 limitation or be included in computing or applying any levy 56.32 limitation applicable to the city. 56.33 [EFFECTIVE DATE.] This section is effective upon compliance 56.34 by the city of Mankato with Minnesota Statutes, section 645.021, 56.35 subdivision 3. 56.36 Sec. 23. Laws 1996, chapter 471, article 2, section 29, is 57.1 amended to read: 57.2 Sec. 29. [CITY OF HERMANTOWN; SALES AND USE TAX.] 57.3 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] (a) 57.4 Notwithstanding Minnesota Statutes, section 477A.016, or any 57.5 other contrary provision of law, ordinance, or city charter, the 57.6 city of Hermantown may, by ordinance, impose an additional sales 57.7 and use tax of up to one percent on salestransactions, storage, 57.8 and use taxable pursuant to Minnesota Statutes, chapter 297A, 57.9 that occur within the city. 57.10 (b) The proceeds of the first one-half of one percent of 57.11 tax imposed under this section must be usedto meet the costs of57.12 by the city for the following projects: 57.13 (1) extending a sewer interceptor line; 57.14 (2) construction of a booster pump station, reservoirs, and 57.15 related improvements to the water system; and 57.16 (3) construction of a police and fire station. 57.17 (c) Revenues received from the remaining one-half of one 57.18 percent of the tax authorized under this section must be used by 57.19 the city to pay all or part of the capital and administrative 57.20 costs of developing, acquiring, constructing, and initially 57.21 furnishing and equipping for the following projects: 57.22 (1) construction of a community recreation center; 57.23 (2) completion of a civic center services complex; 57.24 (3) construction and relocation of a new public works 57.25 facility; 57.26 (4) construction of roads, street improvements, and other 57.27 traffic control measures within the city; and 57.28 (5) acquisition, construction, and improvement of parks and 57.29 trails within the city. 57.30 (d) Authorized expenses include, but are not limited to, 57.31 acquiring property, paying construction, administrative, and 57.32 operating expenses related to the development of the projects 57.33 listed in paragraph (c), paying debt service on bonds or other 57.34 obligations, including lease obligations, issued to finance 57.35 construction, expansion, or improvement of the projects listed 57.36 in paragraph (c), and other compatible uses, including but not 58.1 limited to, parking, lighting, and landscaping. 58.2 Subd. 2. [REFERENDUM.] (a) If the Hermantown city council 58.3 proposes to impose the sales tax authorized by this section, it 58.4 shall conduct a referendum on the issue. 58.5 (b) If the Hermantown city council initially imposes the 58.6 tax at a rate that is less than one percent and proposes 58.7 increasing the tax rate at a later date up to the full one 58.8 percent, it shall conduct a referendum on the increase. 58.9 (c) The question of imposing or increasing the tax must be 58.10 submitted to the voters at a special or general election. The 58.11 tax may not be imposed unless a majority of votes cast on the 58.12 question of imposing the tax are in the affirmative. The 58.13 commissioner of revenue shall prepare a suggested form of 58.14 question to be presented at the election. This subdivision 58.15 applies notwithstanding any city charter provision to the 58.16 contrary. 58.17 Subd. 3. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION OF 58.18 TAXES.] A sales tax imposed under this section must be reported 58.19 and paid to the commissioner of revenue with the state sales 58.20 taxes, and be subject to the same penalties, interest, and 58.21 enforcement provisions. The proceeds of the tax, less refunds 58.22 and a proportionate share of the cost of collection, shall be 58.23 remitted at least quarterly to the city. The commissioner shall 58.24 deduct from the proceeds remitted an amount that equals the 58.25 indirect statewide cost as well as the direct and indirect 58.26 department costs necessary to administer, audit, and collect the 58.27 tax. The amount deducted shall be deposited in the state 58.28 general fund. 58.29 Subd. 3a. [BONDING AUTHORITY.] (a) The city may issue 58.30 general obligation bonds under Minnesota Statutes, chapter 475, 58.31 to finance the costs in subdivision 1, paragraph (c). The total 58.32 amount of bonds issued for the projects under subdivision 1, 58.33 paragraph (c), may not exceed $12,900,000 in the aggregate. An 58.34 election to approve the bonds is not required. 58.35 (b) The bonds are not included in computing any debt 58.36 limitation applicable to the city and the levy of taxes under 59.1 Minnesota Statutes, section 475.61, to pay principal of and 59.2 interest on the bonds is not subject to any levy limitation. 59.3 (c) The taxes authorized under this section may be pledged 59.4 to and used for the payment of the bonds and any bonds issued to 59.5 refund them. 59.6 Subd. 4. [TERMINATION.] The portion of the tax authorized 59.7under this sectionto finance the improvements described in 59.8 subdivision 1, paragraph (b), terminates at the later of (1) ten 59.9 years after the date of initial imposition of the tax, or (2) on 59.10 the first day of the second month next succeeding a 59.11 determination by the city council that sufficient funds have 59.12 been received from that portion of the tax dedicated to finance 59.13thethose improvementsdescribed in subdivision 1, clauses (1)59.14to (3),and to prepay or retire at maturity the principal, 59.15 interest, and premium due on any bonds issued for the 59.16 improvements. The portion of the tax authorized to finance the 59.17 improvements described in subdivision 1, paragraph (c), 59.18 terminates when the revenues raised are sufficient to finance 59.19 those improvements, up to an amount equal to $12,900,000 plus 59.20 any interest, premium, and other costs associated with the bonds 59.21 issued under subdivision 3a. The city council may terminate 59.22 this portion of the tax earlier. Any funds remaining after 59.23 completion of the improvements and retirement or redemption of 59.24 the bonds may be placed in the general fund of the city. 59.25Subd. 5. [LOCAL APPROVAL; EFFECTIVE DATE.] This section is59.26effective the day after final enactment, upon compliance with59.27Minnesota Statutes, section 645.021, subdivision 3, by the city59.28of Hermantown.59.29 [EFFECTIVE DATE.] This section is effective the day after 59.30 the governing body of the city of Hermantown and its chief 59.31 clerical officer comply with Minnesota Statutes, section 59.32 645.021, subdivisions 2 and 3. 59.33 Sec. 24. Laws 1998, chapter 389, article 8, section 43, 59.34 subdivision 3, is amended to read: 59.35 Subd. 3. [USE OF REVENUES.] Revenues received from the 59.36 taxes authorized by subdivisions 1 and 2 must be used by the 60.1 city to pay for the cost of collecting and administering the 60.2 taxes and to pay for the following projects: 60.3 (1) transportation infrastructure improvements including 60.4bothregional highway and airport improvements; 60.5 (2) improvements to the civic center complex; 60.6 (3) a municipal water, sewer, and storm sewer project 60.7 necessary to improve regional ground water quality; and 60.8 (4) construction of a regional recreation and sports center 60.9 andassociatedother higher education facilities available for 60.10 both community and student use, located at or adjacent to the60.11Rochester center. 60.12 The total amount of capital expenditures or bonds for these 60.13 projects that may be paid from the revenues raised from the 60.14 taxes authorized in this section may not exceed 60.15$71,500,000$111,500,000. The total amount of capital 60.16 expenditures or bonds for the project in clause (4) that may be 60.17 paid from the revenues raised from the taxes authorized in this 60.18 section may not exceed$20,000,000$28,000,000. 60.19 Sec. 25. Laws 1998, chapter 389, article 8, section 43, 60.20 subdivision 4, is amended to read: 60.21 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 60.22 under Minnesota Statutes, chapter 475, to finance the capital 60.23 expenditure and improvement projects. An election to approve 60.24 the bonds under Minnesota Statutes, section 475.58, may be held 60.25 in combination with the election to authorize imposition of the 60.26 tax under subdivision 1. Whether to permit imposition of the 60.27 tax and issuance of bonds may be posed to the voters as a single 60.28 question. The question must state that the sales tax revenues 60.29 are pledged to pay the bonds, but that the bonds are general 60.30 obligations and will be guaranteed by the city's property taxes. 60.31 (b) The issuance of bonds under this subdivision is not 60.32 subject to Minnesota Statutes, section 275.60. 60.33 (c) The bonds are not included in computing any debt 60.34 limitation applicable to the city, and the levy of taxes under 60.35 Minnesota Statutes, section 475.61, to pay principal of and 60.36 interest on the bonds is not subject to any levy limitation. 61.1 The aggregate principal amount of bonds, plus the aggregate of 61.2 the taxes used directly to pay eligible capital expenditures and 61.3 improvements may not exceed$71,500,000$111,500,000, plus an 61.4 amount equal to the costs related to issuance of the bonds. 61.5 (d) The taxes may be pledged to and used for the payment of 61.6 the bonds and any bonds issued to refund them, only if the bonds 61.7 and any refunding bonds are general obligations of the city. 61.8 Sec. 26. Laws 1999, chapter 243, article 4, section 18, 61.9 subdivision 1, is amended to read: 61.10 Subdivision 1. [SALES AND USE TAX.] (a) Notwithstanding 61.11 Minnesota Statutes, section297A.48, subdivision 1a,477A.016, 61.12 or any other provision of law, ordinance, or city charter, if 61.13 approved by the city voters at the first municipal general 61.14 election held after the date of final enactment of this act or 61.15 at a special election held November 2, 1999, the city of Proctor 61.16 may impose by ordinance a sales and use tax of up to one-half of 61.17 one percent for the purposes specified in subdivision 3, 61.18 paragraph (a). The provisions of Minnesota Statutes, 61.19 section297A.48297A.99, govern the imposition, administration, 61.20 collection, and enforcement of the tax authorized under this 61.21 subdivision. 61.22 (b) The city of Proctor may impose by ordinance an 61.23 additional sales and use tax of up to one-half of one percent if 61.24 approved by the city voters at a general election or at a 61.25 special election held for this purpose. The revenues received 61.26 from this additional tax must be used for the purposes specified 61.27 in subdivision 3, paragraph (b). 61.28 [EFFECTIVE DATE.] This section is effective the day 61.29 following final enactment, upon compliance by the city of 61.30 Proctor with Minnesota Statutes, section 645.021, subdivision 3. 61.31 Sec. 27. Laws 1999, chapter 243, article 4, section 18, 61.32 subdivision 3, is amended to read: 61.33 Subd. 3. [USE OF REVENUES.] (a) Revenues received from 61.34 taxes authorized by subdivisions 1, paragraph (a), and 2 must be 61.35 used by the city to pay the cost of collecting the taxes and to 61.36 pay for construction and improvement of the following city 62.1 facilities: 62.2 (1) streets; and 62.3 (2) constructing and equipping the Proctor community 62.4 activity center. 62.5 Authorized expenses include, but are not limited to, 62.6 acquiring property, paying construction and operating expenses 62.7 related to the development of an authorized facility, and paying 62.8 debt service on bonds or other obligations, including lease 62.9 obligations, issued to finance the construction, expansion, or 62.10 improvement of an authorized facility. The capital expenses for 62.11 all projects authorized under this paragraph that may be paid 62.12 with these taxes is limited to $3,600,000, plus an amount equal 62.13 to the costs related to issuance of the bonds. 62.14 (b) Revenues received from taxes authorized by subdivision 62.15 1, paragraph (b), must be used by the city to pay the cost of 62.16 collecting the taxes and for construction and improvements of 62.17 city streets, public utilities, sidewalks, bikeways, and trails. 62.18 [EFFECTIVE DATE.] This section is effective the day 62.19 following final enactment, upon compliance by the city of 62.20 Proctor with Minnesota Statutes, section 645.021, subdivision 3. 62.21 Sec. 28. Laws 1999, chapter 243, article 4, section 18, 62.22 subdivision 4, is amended to read: 62.23 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 62.24 under Minnesota Statutes, chapter 475, to finance the capital 62.25 expenditure and improvement projects described in subdivision 62.26 3. An election to approve the bonds under Minnesota Statutes, 62.27 section 475.58, is not required. 62.28 (b) The issuance of bonds under this subdivision is not 62.29 subject to Minnesota Statutes, sections 275.60 and279.61275.61. 62.30 (c) The bonds are not included in computing any debt 62.31 limitation applicable to the city, and the levy of taxes under 62.32 Minnesota Statutes, section 475.61, to pay principal of and 62.33 interest on the bonds is not subject to any levy limitation. 62.34 (d) For projects described in subdivision 3, paragraph (a), 62.35 the aggregate principal amount of bonds, plus the aggregate of 62.36 the taxes used directly to pay eligible capital expenditures and 63.1 improvements, may not exceed $3,600,000, plus an amount equal to 63.2 the costs related to issuance of the bonds, including interest 63.3 on the bonds. For projects described in subdivision 3, 63.4 paragraph (b), the aggregate principal amount of bonds may not 63.5 exceed $7,200,000, plus an amount equal to the costs related to 63.6 issuance of the bonds, including interest on the bonds. 63.7 (e) The sales and use and excise taxes authorized in this 63.8 section may be pledged to and used for the payment of the bonds 63.9 and any bonds issued to refund them only if the bonds and any 63.10 refunding bonds are general obligations of the city. 63.11 [EFFECTIVE DATE.] This section is effective the day 63.12 following final enactment, upon compliance by the city of 63.13 Proctor with Minnesota Statutes, section 645.021, subdivision 3. 63.14 Sec. 29. Laws 2001, First Special Session chapter 5, 63.15 article 12, section 67, the effective date, is amended to read: 63.16 [EFFECTIVE DATE.] This section is effective for purchases 63.17 and sales made after June 30, 2001, and beforeJanuary 1, 200363.18 July 1, 2006. 63.19 [EFFECTIVE DATE.] This section is effective the day 63.20 following final enactment. 63.21 Sec. 30. Laws 2001, First Special Session chapter 5, 63.22 article 12, section 95, is amended to read: 63.23 Sec. 95. [REPEALER.] 63.24 (a) Minnesota Statutes 2000, sections 297A.61, subdivision 63.25 16; 297A.68, subdivision 21; and 297A.71, subdivisions 2 and 16, 63.26 are repealed effective for sales and purchases occurring after 63.27 June 30, 2001, except that the repeal of section 297A.61, 63.28 subdivision 16, paragraph (d), is effective for sales and 63.29 purchases occurring after July 31, 2001. 63.30(b) Minnesota Statutes 2000, sections 297A.62, subdivision63.312, and 297A.64, subdivision 1, are repealed effective for sales63.32and purchases made after December 31, 2005.63.33(c)(b) Minnesota Statutes 2000, section 297A.71, 63.34 subdivision 15, is repealed effective for sales and purchases 63.35 made after June 30, 2002. 63.36(d)(c) Minnesota Statutes 2000, section 289A.60, 64.1 subdivision 15, is repealed effective for liabilities after 64.2 January 1, 2003. 64.3 [EFFECTIVE DATE.] This section is effective the day 64.4 following final enactment. 64.5 Sec. 31. Laws 2002, chapter 377, article 12, section 16, 64.6 subdivision 1, is amended to read: 64.7 Subdivision 1. [NONPROFIT CORPORATION MAY BE ESTABLISHED.] 64.8 The city of Thief River Falls may incorporate or authorize the 64.9 incorporation of a nonprofit corporation to operate a community 64.10 or regional center in the city. A nonprofit corporation 64.11 incorporated under this section is exempt from payment of sales 64.12 and use tax on materials, equipment, and supplies consumed or 64.13 incorporated into the construction of the community or regional 64.14 center. The exemption under this section applies to purchases 64.15 by the nonprofit corporation, a contractor, subcontractor, or 64.16 builder. 64.17 [EFFECTIVE DATE.] This section is effective retroactively 64.18 for purchases made on and after July 1, 2002. 64.19 Sec. 32. [CITY OF ALBERT LEA; SALES AND USE TAX.] 64.20 Subdivision 1. [SALES AND USE TAX 64.21 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 64.22 477A.016, or any other provision of law, ordinance, or city 64.23 charter, the city of Albert Lea may, by ordinance, impose a 64.24 sales and use tax of one-half of one percent for the purposes 64.25 specified in subdivision 2. The provisions of Minnesota 64.26 Statutes, section 297A.99, govern the imposition, 64.27 administration, collection, and enforcement of the tax 64.28 authorized under this subdivision. 64.29 Subd. 2. [USE OF REVENUES.] The proceeds of the tax 64.30 imposed under this section shall be used to pay for lake 64.31 improvement projects as detailed in the Shell Rock River 64.32 watershed plan. 64.33 Subd. 3. [REFERENDUM.] If the Albert Lea City Council 64.34 proposes to impose the tax authorized by this section, the 64.35 question of imposing the tax must be submitted to the voters at 64.36 the next general election. 65.1 Subd. 4. [TERMINATION OF TAXES.] The taxes imposed under 65.2 this section expire at the earlier of (1) ten years after the 65.3 taxes are first imposed, or (2) when the city council first 65.4 determines that the amount of revenues raised to pay for the 65.5 projects under subdivision 2, shall meet or exceed the sum of 65.6 $15,000,000. Any funds remaining after completion of the 65.7 projects may be placed in the general fund of the city. 65.8 [EFFECTIVE DATE.] This section is effective the day after 65.9 compliance by the governing body of the city of Albert Lea with 65.10 Minnesota Statutes, section 645.021, subdivision 3. 65.11 Sec. 33. [CITY OF BEAVER BAY; TAXES AUTHORIZED.] 65.12 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 65.13 Minnesota Statutes, section 477A.016, or any other provision of 65.14 law or ordinance, if approved by the voters of the city at the 65.15 next general election held after the date of final enactment of 65.16 this act, the city of Beaver Bay may impose by ordinance a sales 65.17 and use tax at a rate of up to one percent for the purposes 65.18 specified in subdivision 2. The provisions of Minnesota 65.19 Statutes, section 297A.99, govern the imposition, 65.20 administration, collection, and enforcement of the tax 65.21 authorized under this subdivision. 65.22 Subd. 2. [USE OF REVENUES.] The revenues received from 65.23 taxes authorized by subdivision 1 must be used to pay the bonded 65.24 indebtedness on the city community building and to provide 65.25 funding for recreational facilities, the upgrading of the water 65.26 and sewer system, upgrading and replacement of fire equipment, 65.27 and improvement of streets. 65.28 Subd. 3. [TERMINATION OF TAXES.] The authority granted 65.29 under subdivision 1 to the city of Beaver Bay to impose sales 65.30 and use taxes expires when the city council determines that the 65.31 amount of revenue received to pay the costs of the projects 65.32 described in subdivision 2 shall meet or exceed $1,500,000. Any 65.33 funds remaining after completion of the projects may be placed 65.34 in the general fund of the city. The tax imposed under 65.35 subdivision 1 may expire at an earlier time if the city so 65.36 determines by ordinance. 66.1 [EFFECTIVE DATE.] This section is effective the day after 66.2 the governing body of the city of Beaver Bay and its chief 66.3 clerical officer timely comply with Minnesota Statutes, section 66.4 645.021, subdivisions 2 and 3. 66.5 Sec. 34. [CITY OF BEMIDJI.] 66.6 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 66.7 Notwithstanding Minnesota Statutes, section 477A.016, or any 66.8 other provision of law, ordinance, or city charter, pursuant to 66.9 the approval of the city voters at the general election held on 66.10 November 5, 2002, the city of Bemidji may impose by ordinance a 66.11 sales and use tax of one-half of one percent for the purposes 66.12 specified in subdivision 2. The provisions of Minnesota 66.13 Statutes, section 297A.99, govern the imposition, 66.14 administration, collection, and enforcement of the tax 66.15 authorized under this subdivision. 66.16 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 66.17 authorized by subdivision 1 must be used for the cost of 66.18 collecting and administering the tax and to pay all or part of 66.19 the capital or administrative costs of the acquisition, 66.20 construction, and improvement of parks and trails within the 66.21 city, as provided for in the city of Bemidji's parks, open 66.22 space, and trail system plan, adopted by the Bemidji City 66.23 Council on November 21, 2001. Authorized expenses include, but 66.24 are not limited to, acquiring property, paying construction 66.25 expenses related to the development of these facilities and 66.26 improvements, and securing and paying debt service on bonds or 66.27 other obligations issued to finance acquisition, construction, 66.28 improvement, or development of parks and trails within the city 66.29 of Bemidji. 66.30 Subd. 3. [BONDS.] Pursuant to the approval of the city 66.31 voters at the general election held on November 5, 2002, the 66.32 city of Bemidji may issue, without an additional election, 66.33 general obligation bonds of the city in an amount not to exceed 66.34 $9,826,000 to pay capital and administrative expenses for the 66.35 acquisition, construction, improvement, and development of parks 66.36 and trails as specified in subdivision 2. The debt represented 67.1 by the bonds must not be included in computing any debt 67.2 limitations applicable to the city, and the levy of taxes 67.3 required by Minnesota Statutes, section 475.61, to pay the 67.4 principal of any interest on the bonds must not be subject to 67.5 any levy limitations or be included in computing or applying any 67.6 levy limitation applicable to the city. 67.7 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 67.8 subdivision 1 expires when the Bemidji City Council determines 67.9 that the amount described in subdivision 3 has been received 67.10 from the tax to finance the capital and administrative costs for 67.11 acquisition, construction, improvement, and development of parks 67.12 and trails and to repay or retire at maturity the principal, 67.13 interest, and premium due on any bonds issued for the park and 67.14 trail improvements under subdivision 3. Any funds remaining 67.15 after completion of the park and trail improvements and 67.16 retirement or redemption of the bonds may be placed in the 67.17 general fund of the city. The tax imposed under subdivision 1 67.18 may expire at an earlier time if the city so determines by 67.19 ordinance. 67.20 [EFFECTIVE DATE.] This section is effective the day after 67.21 compliance by the governing body of the city of Bemidji with 67.22 Minnesota Statutes, section 645.021, subdivision 3. 67.23 Sec. 35. [CITY OF CLOQUET; TAXES AUTHORIZED.] 67.24 Subdivision 1. [SALES AND USE TAX.] Notwithstanding 67.25 Minnesota Statutes, section 477A.016, or any other provision of 67.26 law, ordinance, or city charter, if approved by the voters 67.27 pursuant to Minnesota Statutes, section 297A.99, the city of 67.28 Cloquet may impose by ordinance a sales and use tax of up to 67.29 one-half of one percent for the purpose specified in subdivision 67.30 3. The provisions of Minnesota Statutes, section 297A.99, 67.31 govern the imposition, administration, collection, and 67.32 enforcement of the tax authorized under this subdivision. 67.33 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 67.34 Minnesota Statutes, section 477A.016, or any other provision of 67.35 law, ordinance, or city charter, the city of Cloquet may impose 67.36 by ordinance, for the purposes specified in subdivision 3, an 68.1 excise tax of up to $20 per motor vehicle, as defined by 68.2 ordinance, purchased or acquired from any person engaged within 68.3 the city in the business of selling motor vehicles at retail. 68.4 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 68.5 authorized by subdivisions 1 and 2 must be used by the city to 68.6 pay the cost of collecting the taxes and to pay for the 68.7 following projects: 68.8 (1) construction and implementation of riverfront task 68.9 force park improvements including Veteran's Park; 68.10 (2) extension of water and sewer lines and other 68.11 improvements to city infrastructure necessary for construction 68.12 of a city industrial park; and 68.13 (3) costs associated with the closure of the Cloquet 68.14 Municipal Landfill. 68.15 Authorized expenses include, but are not limited to, 68.16 acquiring property and paying construction expenses related to 68.17 these improvements, and paying debt service on bonds or other 68.18 obligations issued to finance acquisition and construction of 68.19 these improvements. 68.20 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 68.21 under Minnesota Statutes, chapter 475, to pay capital and 68.22 administrative expenses for the improvements described in 68.23 subdivision 3 in an amount that does not exceed $7,000,000. An 68.24 election to approve the bonds under Minnesota Statutes, section 68.25 475.58, is not required. 68.26 (b) The issuance of bonds under this subdivision is not 68.27 subject to Minnesota Statutes, sections 275.60 and 275.61. 68.28 (c) The debt represented by the bonds is not included in 68.29 computing any debt limitation applicable to the city, and any 68.30 levy of taxes under Minnesota Statutes, section 475.61, to pay 68.31 principal of and interest on the bonds is not subject to any 68.32 levy limitation. 68.33 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 68.34 subdivisions 1 and 2 expire at the earlier of (1) 14 years, or 68.35 (2) when the city council determines that sufficient funds have 68.36 been received from the taxes to finance the capital and 69.1 administrative costs of the improvements described in 69.2 subdivision 3, plus the additional amount needed to pay the 69.3 costs related to issuance of bonds under subdivision 4, 69.4 including interest on the bonds. Any funds remaining after 69.5 completion of the project and retirement or redemption of the 69.6 bonds may be placed in the general fund of the city. The taxes 69.7 imposed under subdivisions 1 and 2 may expire at an earlier time 69.8 if the city so determines by ordinance. 69.9 [EFFECTIVE DATE.] This section is effective the day after 69.10 the governing body of the city of Cloquet and its chief clerical 69.11 officer timely comply with Minnesota Statutes, section 645.021, 69.12 subdivisions 2 and 3. 69.13 Sec. 36. [CITY OF CLEARWATER.] 69.14 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 69.15 Notwithstanding Minnesota Statutes, section 477A.016, or any 69.16 other provision of law, ordinance, or city charter, pursuant to 69.17 the approval of the city voters at the next general election or 69.18 at a special election held for this purpose, the city of 69.19 Clearwater may impose by ordinance a sales and use tax of 69.20 one-half of one percent for the purposes specified in 69.21 subdivision 2. The provisions of Minnesota Statutes, section 69.22 297A.99, govern the imposition, administration, collection, and 69.23 enforcement of the tax authorized under this subdivision. 69.24 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 69.25 authorized by subdivision 1 must be used for the cost of 69.26 collecting and administering the tax and to pay all or part of 69.27 the capital or administrative costs of the development, 69.28 acquisition, construction, and improvement of parks, trails, 69.29 parkland, open space, and land and buildings for a regional 69.30 community and recreation center. Authorized expenses include, 69.31 but are not limited to, acquiring property, paying construction 69.32 expenses related to the development of these facilities and 69.33 improvements, and securing and paying debt service on bonds or 69.34 other obligations issued to finance acquisition, construction, 69.35 improvement, or development. 69.36 Subd. 3. [BONDS.] Pursuant to the approval of the city 70.1 voters to impose the tax authorized in subdivision 1, the city 70.2 of Clearwater may issue without an additional election general 70.3 obligation bonds of the city in an amount not to exceed 70.4 $3,000,000 to pay capital and administrative expenses for the 70.5 acquisition, construction, improvement, and development of the 70.6 projects specified in subdivision 2. The debt represented by 70.7 the bonds must not be included in computing any debt limitations 70.8 applicable to the city, and the levy of taxes required by 70.9 Minnesota Statutes, section 475.61, to pay the principal or any 70.10 interest on the bonds must not be subject to any levy 70.11 limitations or be included in computing or applying any levy 70.12 limitation applicable to the city. 70.13 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 70.14 subdivision 1 expires when the Clearwater City Council 70.15 determines that the amount described in subdivision 3 has been 70.16 received from the tax to finance the capital and administrative 70.17 costs for acquisition, construction, improvement, and 70.18 development of the projects specified in subdivision 2 and to 70.19 repay or retire at maturity the principal, interest, and premium 70.20 due on any bonds issued for the projects under subdivision 3. 70.21 Any funds remaining after completion of the projects specified 70.22 in subdivision 2 and retirement or redemption of the bonds may 70.23 be placed in the general fund of the city. The tax imposed 70.24 under subdivision 1 may expire at an earlier time if the city so 70.25 determines by ordinance. 70.26 [EFFECTIVE DATE.] This section is effective the day after 70.27 compliance by the governing body of the city of Clearwater with 70.28 Minnesota Statutes, section 645.021, subdivision 3. 70.29 Sec. 37. [CITY OF MEDFORD; SALES AND USE TAX.] 70.30 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 70.31 Notwithstanding Minnesota Statutes, section 477A.016, or any 70.32 other provision of law, ordinance, or city charter, the city of 70.33 Medford may, by ordinance, impose a sales and use tax of 70.34 one-half of one percent for the purposes specified in 70.35 subdivision 2. Except as otherwise specifically provided, the 70.36 provisions of Minnesota Statutes, section 297A.99, govern the 71.1 imposition, administration, collection, and enforcement of the 71.2 tax authorized under this subdivision. 71.3 Subd. 2. [USE OF REVENUES.] The proceeds of the tax 71.4 imposed under this section must be used to pay up to $5,000,000 71.5 in costs related to improving the city's wastewater system and 71.6 wastewater treatment plant. 71.7 Subd. 3. [REFERENDUM.] If the Medford City Council 71.8 proposes to impose the tax authorized by this section, the 71.9 question of imposing the tax must be submitted to the voters at 71.10 the next general election. The tax may not be imposed unless 71.11 the majority of votes cast on the question of imposing the tax 71.12 are in the affirmative. The commissioner of revenue shall 71.13 prepare a suggested form of the question to be presented at the 71.14 election. The question must state that the sales tax revenues 71.15 would be pledged to pay any bonds issued under subdivision 4 and 71.16 that these bonds are guaranteed by the city's property taxes. 71.17 Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds 71.18 under Minnesota Statutes, chapter 475, to finance the capital 71.19 expenditure and improvement projects authorized under 71.20 subdivision 2. The total amount of bonds issued for the 71.21 projects listed in subdivision 2 may not exceed $5,000,000 in 71.22 aggregate. An election to approve the bonds, as required under 71.23 Minnesota Statutes, section 475.58, is not required. 71.24 (b) The issuance of the bonds under this subdivision is not 71.25 subject to Minnesota Statutes, sections 275.60 and 275.61. 71.26 (c) The bonds are not included in computing any debt 71.27 limitation applicable to the city, and the levy of taxes under 71.28 Minnesota Statutes, section 475.61, to pay the principal of and 71.29 interest on the bonds is not subject to any levy limitation. 71.30 (d) The taxes authorized under this section may be pledged 71.31 to and used for the payment of the bonds and any bonds issued to 71.32 refund them only if the bonds and any refunding bonds are 71.33 general obligations of the city. 71.34 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 71.35 this section expire at the earlier of (1) 20 years after the 71.36 taxes are first imposed, or (2) when the city council first 72.1 determines that the amount of revenues raised to pay for the 72.2 projects under subdivision 2 shall meet or exceed the sum of 72.3 $5,000,000, plus an amount equal to the costs related to the 72.4 issuance of bonds under subdivision 4. Any funds remaining 72.5 after completion of the projects and retirement or redemption of 72.6 the bonds may be placed in the general funds of the city. 72.7 [EFFECTIVE DATE.] This section is effective the day after 72.8 compliance with the governing body of the city of Medford with 72.9 Minnesota Statutes, section 645.021, subdivision 3. 72.10 Sec. 38. [CITY OF PARK RAPIDS.] 72.11 Subdivision 1. [SALES AND USE TAX AUTHORIZED.] 72.12 Notwithstanding Minnesota Statutes, section 477A.016, or any 72.13 other provision of law, ordinance, or city charter, pursuant to 72.14 the approval of the city voters at the next general election or 72.15 at a special election held for this purpose, the city of Park 72.16 Rapids may impose by ordinance a sales and use tax of one 72.17 percent for the purposes specified in subdivision 2. The 72.18 provisions of Minnesota Statutes, section 297A.99, govern the 72.19 imposition, administration, collection, and enforcement of the 72.20 tax authorized under this subdivision. 72.21 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 72.22 authorized by subdivision 1 must be used for the cost of 72.23 collecting and administering the tax and to pay all or part of 72.24 the capital or administrative costs of the development, 72.25 acquisition, construction, and improvement of the following 72.26 projects: 72.27 (1) two-thirds of the cost of construction and operation of 72.28 a community center that may include a senior citizen center, 72.29 fitness center, swimming pool, meeting rooms, indoor track, and 72.30 racquetball, basketball, and tennis courts, provided that an 72.31 amount equal to one-third of the cost of construction is 72.32 received from private sources; 72.33 (2) capital improvement projects including, but not limited 72.34 to, installation of water, sewer, storm sewer, street 72.35 improvements, new city water tower and well, costs related to 72.36 improvements to marked trunk highway 34; and 73.1 (3) park improvements. 73.2 Authorized expenses include, but are not limited to, 73.3 acquiring property, paying construction expenses related to the 73.4 development of these facilities and improvements, and securing 73.5 and paying debt service on bonds or other obligations issued to 73.6 finance acquisition, construction, improvement, or development. 73.7 Subd. 3. [BONDS.] Pursuant to the approval of the city 73.8 voters to impose the tax authorized in subdivision 1, the city 73.9 of Park Rapids may issue without an additional election general 73.10 obligation bonds of the city to pay capital and administrative 73.11 expenses for the acquisition, construction, improvement, and 73.12 development of the projects specified in subdivision 2. The 73.13 debt represented by the bonds must not be included in computing 73.14 any debt limitations applicable to the city, and the levy of 73.15 taxes required by Minnesota Statutes, section 475.61, to pay the 73.16 principal or any interest on the bonds must not be subject to 73.17 any levy limitations or be included in computing or applying any 73.18 levy limitation applicable to the city. 73.19 Subd. 4. [TERMINATION OF TAX.] The tax imposed under 73.20 subdivision 1 expires the earlier of July 1, 2023, or when the 73.21 city council determines that sufficient revenues have been 73.22 received to retire the bonds in subdivision 3. Any funds 73.23 remaining after completion of the projects specified in 73.24 subdivision 2 and retirement or redemption of the bonds may be 73.25 placed in the general fund of the city. The tax imposed under 73.26 subdivision 1 may expire at an earlier time if the city so 73.27 determines by ordinance. 73.28 [EFFECTIVE DATE.] This section is effective the day after 73.29 compliance by the governing body of the city of Park Rapids with 73.30 Minnesota Statutes, section 645.021, subdivision 3. 73.31 Sec. 39. [CITY OF PROCTOR; LODGING TAX.] 73.32 The city of Proctor may use up to ten percent of the 73.33 revenues received from the lodging tax imposed by the city under 73.34 Minnesota Statutes, section 469.190, for preservation of the 73.35 Caboose and the Baldwin Locomotive, Class M3 Mallet, Number 225, 73.36 donated to the city by the Duluth, Missabe and Iron Range 74.1 Railway Company, and the F-101F aircraft, serial number 59-0407, 74.2 donated to the city by the Department of the Air Force. 74.3 [EFFECTIVE DATE.] This section is effective the day 74.4 following final enactment. 74.5 Sec. 40. [ST. CLOUD AREA CITIES; SALES AND USE TAX 74.6 AUTHORIZED.] 74.7 Subdivision 1. [SALES AND USE TAX 74.8 AUTHORIZED.] Notwithstanding Minnesota Statutes, sections 74.9 297A.99, subdivision 3, paragraph (d), and 477A.016, or any 74.10 other provision of law, ordinance, or city charter, each of the 74.11 cities of St. Cloud, Sartell, Sauk Rapids, St. Augusta, St. 74.12 Joseph, and Waite Park may impose by ordinance a sales and use 74.13 tax at the rate of one-half of one percent for the purposes 74.14 specified in subdivision 2, pursuant to the approval of the 74.15 voters of that city at the next general election. The 74.16 provisions of Minnesota Statutes, section 297A.99, except 74.17 subdivision 3, paragraph (d), govern the imposition, 74.18 administration, collection, and enforcement of the tax 74.19 authorized under this subdivision. 74.20 Subd. 2. [USE OF REVENUES.] (a) Revenues received from the 74.21 tax authorized by subdivision 1 must be used for the cost of 74.22 collecting and administering the tax and to pay all or part of 74.23 the capital or administrative costs of the development, 74.24 acquisition, construction, improvement, and securing and paying 74.25 debt service on bonds or other obligations issued to finance the 74.26 following regional projects: 74.27 (1) St. Cloud Regional Airport; 74.28 (2) major transportation improvements; 74.29 (3) arts, libraries, and community centers; 74.30 (4) acquisition and improvement of park land and open 74.31 space; and 74.32 (5) St. Cloud Civic Center remodeling and expansion, not to 74.33 exceed $20,000,000 from the amount allocated to St. Cloud under 74.34 subdivision 3, clause (2). 74.35 (b) The revenues returned to each city under subdivision 3 74.36 may only be used to fund projects that have been approved by 75.1 voters at the referendum authorizing this tax. 75.2 Subd. 3. [ALLOCATION OF SALES AND USE TAX REVENUES TO 75.3 CITIES.] Revenues collected from the taxes authorized by 75.4 subdivision 1, after paying the cost of collecting and 75.5 administering the tax, shall be allocated to cities imposing the 75.6 tax as follows: 75.7 (1) the first $900,000 of revenues collected annually, 75.8 indexed annually to the Consumer Price Index, to the city of St. 75.9 Cloud for expansion of the St. Cloud Civic Center or the 75.10 construction and relocation of the Great River Regional Library; 75.11 and 75.12 (2) the revenues collected from the taxes imposed under 75.13 subdivision 1 that exceed the amount needed to meet the 75.14 obligations under clause (1) in any year shall be returned to 75.15 the cities pursuant to a joint powers agreement allocating sales 75.16 tax revenues among the cities. 75.17 Subd. 4. [ST. CLOUD BONDING AUTHORIZED.] Pursuant to the 75.18 approval of the city voters to impose the tax authorized in 75.19 subdivision 1, the city of St. Cloud may issue without an 75.20 additional election, general obligation bonds of the city not to 75.21 exceed $80,000,000 to pay the costs of the projects specified in 75.22 subdivision 2. The debt represented by the bonds must not be 75.23 included in computing any debt limitations applicable to the 75.24 city, and the levy of taxes required by Minnesota Statutes, 75.25 section 475.61, to pay the principal or any interest on the 75.26 bonds must not be subject to any levy limitations or be included 75.27 in computing or applying any levy limitation applicable to the 75.28 city. 75.29 Subd. 5. [TERMINATION OF TAX.] The tax imposed in the city 75.30 of St. Cloud under subdivision 1 expires when the city council 75.31 determines that sufficient funds have been collected from the 75.32 tax to retire or redeem the bonds authorized under subdivision 75.33 3. The taxes imposed in the cities of Sartell, Sauk Rapids, St. 75.34 Augusta, St. Joseph, and Waite Park expire when the projects 75.35 authorized under subdivision 2 have been completed, but no later 75.36 than 20 years after the date the tax is first imposed. Any 76.1 funds remaining after completion of the projects specified in 76.2 subdivision 2 and retirement or redemption of the bonds may be 76.3 placed in the general fund of the city. The tax imposed under 76.4 subdivision 1 may expire at an earlier time if the city so 76.5 determines by ordinance. 76.6 [EFFECTIVE DATE.] This section is effective the day after 76.7 compliance by the governing body of the city with Minnesota 76.8 Statutes, section 645.021, subdivision 3, for sales and 76.9 purchases on and after January 1, 2006. 76.10 Sec. 41. [SALES AND USE TAX COMPLIANCE GAP.] 76.11 The commissioner must reduce the amount of the compliance 76.12 gap in the payment of sales and use tax by 25 percent before 76.13 December 31, 2006; and must reduce the compliance gap in the 76.14 payment of sales and use tax by an additional 25 percent before 76.15 December 31, 2008. The commissioner must establish an effective 76.16 method to allow individuals who purchase taxable products or 76.17 services and have not paid the tax at the time of the purchase 76.18 to pay the tax. The commissioner must advise residents of this 76.19 state how to pay sales and use tax. 76.20 [EFFECTIVE DATE.] This section is effective the day 76.21 following final enactment. 76.22 Sec. 42. [WAITE PARK; LOCAL SALES TAX AUTHORIZED.] 76.23 Notwithstanding Minnesota Statutes, section 477A.016, or 76.24 any other provision of law, ordinance, or charter, the city of 76.25 Waite Park may impose a sales and use tax of one-half of one 76.26 percent pursuant to approval of the city voters at an election 76.27 held in November 2003. 76.28 Revenues from the tax imposed under this section must be 76.29 used for the purposes listed in Laws 2002, chapter 377, article 76.30 11, section 2, subdivision 2, and approved by the voters in the 76.31 November 2003 referendum. The amount of revenues collected from 76.32 this tax which may be spent for airport costs under Laws 2002, 76.33 chapter 377, article 11, section 2, subdivision 2, paragraph 76.34 (a), is limited to $25,000 for each quarter in which the tax is 76.35 imposed with the remainder returned to the city to be spent on 76.36 the other allowed uses. 77.1 The tax under this section shall be imposed beginning July 77.2 1, 2004, and shall expire at the same time as the taxes imposed 77.3 under Laws 2002, chapter 377, article 11, section 2. 77.4 [EFFECTIVE DATE.] This section is effective the day 77.5 following final enactment, upon compliance of the governing body 77.6 of the city of Waite Park with Minnesota Statutes, section 77.7 645.021, subdivision 3. 77.8 Sec. 43. [CITY OF WASECA; SALES AND USE TAX.] 77.9 Subdivision 1. [SALES AND USE TAX 77.10 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 77.11 477A.016, or any other provision of law, ordinance, or city 77.12 charter, the city of Waseca may, by ordinance, impose a sales 77.13 and use tax of one-half of one percent for the purposes 77.14 specified in subdivision 2. The provisions of Minnesota 77.15 Statutes, section 297A.99, govern the imposition, 77.16 administration, collection, and enforcement of the tax 77.17 authorized under this subdivision. 77.18 Subd. 2. [USE OF REVENUES.] The proceeds of the tax 77.19 imposed under this section must be used to pay for up to 77.20 $1,820,000 in costs related to one or more of the following 77.21 capital projects as described in the referendum in subdivision 3: 77.22 (1) water quality and lake improvements; 77.23 (2) community center improvements; 77.24 (3) an industrial incubator; and 77.25 (4) downtown improvements, including a theatre and blighted 77.26 property acquisition. 77.27 Subd. 3. [REFERENDUM.] If the Waseca city council proposes 77.28 to impose the tax authorized by this section, the question of 77.29 imposing the tax must be submitted to the voters at the next 77.30 general election. The tax may not be imposed unless the 77.31 majority of votes cast on the question of imposing the tax are 77.32 in the affirmative. The specific projects to be funded by the 77.33 tax must be identified at least 90 days before the referendum is 77.34 held and included in the question presented at the election. 77.35 The question must state that the sales tax revenues would be 77.36 pledged to pay any bonds issued under subdivision 4 and that 78.1 these bonds are guaranteed by the city's property taxes. 78.2 Subd. 4. [BONDING AUTHORITY.] The city may issue bonds 78.3 under Minnesota Statutes, chapter 475, to finance the capital 78.4 expenditure and improvement projects authorized under 78.5 subdivision 2 and approved under subdivision 3. The total 78.6 amount of bonds issued for the projects approved in subdivision 78.7 3 may not exceed $1,820,000 in aggregate. An election to 78.8 approve the bonds, as required under Minnesota Statutes, section 78.9 475.58, is not required. 78.10 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 78.11 this section expire at the earlier of (1) ten years after the 78.12 taxes are first imposed, or (2) when the city council first 78.13 determines that the amount of revenues raised is sufficient to 78.14 finance the capital projects approved under subdivision 3 and to 78.15 prepay or retire at maturity the principal, interest, and 78.16 premium due on any bonds issued under subdivision 4. Any funds 78.17 remaining after completion of the projects may be placed in the 78.18 general funds of the city. 78.19 [EFFECTIVE DATE.] This section is effective the day after 78.20 compliance with the governing body of the city of Waseca with 78.21 Minnesota Statutes, section 645.021, subdivision 3. 78.22 Sec. 44. [CITY OF WINONA.] 78.23 Subdivision 1. [SALES AND USE TAX 78.24 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 78.25 477A.016, or any other provision of law, ordinance, or city 78.26 charter, if approved by the voters pursuant to Minnesota 78.27 Statutes, section 297A.99, the city of Winona may impose by 78.28 ordinance a sales and use tax of one-half of one percent for the 78.29 purposes specified in subdivision 3. The provisions of 78.30 Minnesota Statutes, section 297A.99, govern the imposition, 78.31 administration, collection, and enforcement of the tax 78.32 authorized under this subdivision. 78.33 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 78.34 Minnesota Statutes, section 477A.016, or any other provision of 78.35 law, ordinance, or city charter, the city of Winona may impose 78.36 by ordinance, for the purposes specified in subdivision 3, an 79.1 excise tax of up to $20 per motor vehicle, as defined by 79.2 ordinance, purchased or acquired from any person engaged within 79.3 the city in the business of selling motor vehicles at retail. 79.4 Subd. 3. [USE OF REVENUES.] Revenues received from the 79.5 taxes authorized by subdivisions 1 and 2 must be dedicated to 79.6 pay all or part of the capital or administrative costs of 79.7 transportation projects or transportation improvements located 79.8 within the city, and to pay the cost of collecting and 79.9 administering the tax. Authorized expenses include, but are not 79.10 limited to, acquiring property and paying construction and 79.11 engineering expenses related to the improvements. 79.12 Subd. 4. [TERMINATION OF TAX.] The taxes imposed under 79.13 subdivisions 1 and 2 expire when the Winona City Council 79.14 determines that sufficient funds have been received from the tax 79.15 to pay the costs of the transportation projects or improvements 79.16 to which the tax was dedicated or ten years after imposition of 79.17 the tax, whichever is earlier. Any funds remaining after 79.18 completion of the transportation project or transportation 79.19 improvements may be placed in a capital project fund of the city. 79.20 The tax imposed under subdivisions 1 and 2 may expire at an 79.21 earlier time if the city so determines by ordinance. 79.22 [EFFECTIVE DATE.] This section is effective the day after 79.23 compliance by the governing body of the city of Winona with 79.24 Minnesota Statutes, section 645.021, subdivision 3. 79.25 Sec. 45. [DISTRIBUTION.] 79.26 For revenues from sales after December 31, 2005, and before 79.27 January 1, 2007, 95 percent of all revenues, including penalties 79.28 and interest, derived from the tax imposed under Minnesota 79.29 Statutes, section 297A.62, subdivision 2, are appropriated to 79.30 the commissioner of revenue for distribution to counties as 79.31 provided in this section. For sales after December 31, 2006, 79.32 the total amount distributed under this section for each year is 79.33 the same amount that was distributed for sales in 2006. Fifty 79.34 percent of the revenue must be allocated among all counties on a 79.35 per capita basis and 50 percent of the revenue must be allocated 79.36 to the county where the retail sale was made. The commissioner 80.1 shall determine the county in which a retail sale was made by 80.2 using zip codes. The commissioner shall distribute the revenue 80.3 to counties on or before the last day of each calendar quarter. 80.4 The revenue distributed to counties must be used to reduce 80.5 property taxes. To qualify for this distribution, a county must 80.6 certify to the commissioner of revenue that it has increased its 80.7 funding for chemical dependency treatment programs that tend to 80.8 reduce the burden of property taxation caused by individuals who 80.9 are chemically dependent. The amount of the increase must be at 80.10 least ten percent of the amount to be distributed. 80.11 [EFFECTIVE DATE.] This section is effective for sales made 80.12 after December 31, 2005. 80.13 ARTICLE 3 80.14 PROPERTY TAXES 80.15 Section 1. Minnesota Statutes 2002, section 126C.17, 80.16 subdivision 6, is amended to read: 80.17 Subd. 6. [REFERENDUM EQUALIZATION LEVY.] (a) For fiscal 80.18 year 2003and laterthrough 2006, a district's referendum 80.19 equalization levy equals the sum of the first tier referendum 80.20 equalization levy and the second tier referendum equalization 80.21 levy. 80.22 (b) A district's first tier referendum equalization levy 80.23 equals the district's first tier referendum equalization revenue 80.24 times the lesser of one or the ratio of the district's 80.25 referendum market value per resident marginal cost pupil unit to 80.26 $476,000. 80.27 (c) A district's second tier referendum equalization levy 80.28 equals the district's second tier referendum equalization 80.29 revenue times the lesser of one or the ratio of the district's 80.30 referendum market value per resident marginal cost pupil unit to 80.31 $270,000. 80.32 Sec. 2. Minnesota Statutes 2002, section 126C.17, is 80.33 amended by adding a subdivision to read: 80.34 Subd. 6a. [LOCAL EFFORT LEVEL.] (a) For fiscal year 2007 80.35 and later, a district's local effort level equals the sum of the 80.36 first tier referendum equalization level and the second tier 81.1 referendum local effort level. 81.2 (b) A district's first tier referendum local effort level 81.3 equals the district's first tier referendum equalization revenue 81.4 times the lesser of one or the ratio of the district's 81.5 referendum market value per resident marginal cost pupil unit to 81.6 $476,000. 81.7 (c) A district's second tier referendum local effort level 81.8 equals the district's second tier referendum equalization 81.9 revenue times the lesser of one or the ratio of the district's 81.10 referendum market value per resident marginal cost pupil unit to 81.11 $270,000. 81.12 Sec. 3. Minnesota Statutes 2002, section 126C.17, is 81.13 amended by adding a subdivision to read: 81.14 Subd. 6b. [LOCAL EFFORT REVENUE.] (a) For fiscal years 81.15 2007 and later, a school district's local effort revenue is 81.16 equal to its local effort level for that year. 81.17 (b) For referenda authorized under subdivision 9 prior to 81.18 June 30, 2005, a school district's local effort revenue must be 81.19 levied against the district's referendum market value according 81.20 to subdivision 10. 81.21 (c) For referenda authorized or renewed under subdivision 9 81.22 after June 30, 2005, that have been approved to be levied 81.23 against referendum market value, the local effort revenue must 81.24 be levied against the district's referendum market value 81.25 according to subdivision 10. 81.26 (d) For referenda authorized or renewed under subdivision 9 81.27 after June 30, 2005, that have been approved to be imposed as a 81.28 school referendum tax according to section 290.0621, the local 81.29 effort revenue must be raised as a tax against income liability 81.30 according to section 290.0621. 81.31 Sec. 4. Minnesota Statutes 2003 Supplement, section 81.32 126C.17, subdivision 7, is amended to read: 81.33 Subd. 7. [REFERENDUM EQUALIZATION AID.] (a) For fiscal 81.34 years 2004 through 2006, a district's referendum equalization 81.35 aid equals the difference between its referendum equalization 81.36 revenue and levy. For fiscal years 2007 and later, a district's 82.1 referendum equalization aid equals the difference between its 82.2 referendum equalization revenue and its local effort revenue. 82.3 (b) If a district's actual levy for first or second tier 82.4 referendum equalization revenue in fiscal years 2004 through 82.5 2006 is less than its maximum levy limit for that tier, aid 82.6 shall be proportionately reduced. If a district's actual local 82.7 effort revenue for first or second tier referendum equalization 82.8 revenue in fiscal years 2007 and later is less than its maximum 82.9 local effort revenue limit for that tier, aid shall be 82.10 proportionately reduced. 82.11 (c) Notwithstanding paragraph (a), the referendum 82.12 equalization aid for a district, where the referendum 82.13 equalization aid under paragraph (a) exceeds 90 percent of the 82.14 referendum revenue, must not exceed 18.6 percent of the formula 82.15 allowance times the district's resident marginal cost pupil 82.16 units. For fiscal years 2004 through 2006, a district's 82.17 referendum levy is increased by the amount of any reduction in 82.18 referendum aid under this paragraph. For fiscal years 2007 and 82.19 later, a district's local effort level is increased by the 82.20 amount of any reduction in referendum aid under this paragraph. 82.21 Sec. 5. Minnesota Statutes 2003 Supplement, section 82.22 126C.17, subdivision 9, is amended to read: 82.23 Subd. 9. [REFERENDUM REVENUE.] (a) The revenue authorized 82.24 by section 126C.10, subdivision 1, may be increased in the 82.25 amount approved by the voters of the district at a referendum 82.26 called for the purpose. The referendum may be called by the 82.27 board or shall be called by the board upon written petition of 82.28 qualified voters of the district. The referendum must be 82.29 conducted one or two calendar years before the increased levy 82.30 authority, if approved, first becomes payable. Only one 82.31 election to approve an increase may be held in a calendar year. 82.32 Unless the referendum is conducted by mail under paragraph (g), 82.33 the referendum must be held on the first Tuesday after the first 82.34 Monday in November. The ballot must state the maximum amount of 82.35 the increased revenue per resident marginal cost pupil unit, the82.36estimated referendum tax rate as a percentage of referendum83.1market value in the first year it is to be levied, and that the83.2revenue must be used to finance school operations. The ballot 83.3 may state a schedule, determined by the board, of increased 83.4 revenue per resident marginal cost pupil unit that differs from 83.5 year to year over the number of years for which the increased 83.6 revenue is authorized.If the ballot contains a schedule83.7showing different amounts, it must also indicate the estimated83.8referendum tax rate as a percent of referendum market value for83.9the amount specified for the first year and for the maximum83.10amount specified in the schedule.The ballot, including a 83.11 ballot on the question to revoke or reduce the increased revenue 83.12 amount under paragraph (c), must abbreviate the term "per 83.13 resident marginal cost pupil unit" as "per pupil unit." The 83.14 ballot may state that existing referendumlevytaxing authority 83.15 is expiring. In this case, if the referendum authority is based 83.16 on a property tax levy, the ballot may also compare the proposed 83.17 levy authority to the existing expiring levy authority, and 83.18 express the proposed increase as the amount, if any, over the 83.19 expiring referendum levy authority. The ballot must designate 83.20 the specific number of years, not to exceed ten, for which the 83.21 referendum authorization applies. The notice required under 83.22 section 275.60 may be modified to read, in cases of renewing 83.23 existing levies: 83.24 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 83.25 FOR A PROPERTY TAX INCREASE." 83.26 If the referendum is on a proposed income tax under section 83.27 290.0621, the notice must read: 83.28 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 83.29 FOR AN INCOME TAX INCREASE." 83.30 The ballot may contain a textual portion with the 83.31 information required in this subdivision and a question stating 83.32 substantially the following: 83.33 "Shall the increase in the revenue proposed by (petition 83.34 to) the board of ........., School District No. .., be approved?" 83.35 If approved, an amount equal to the approved revenue per 83.36 resident marginal cost pupil unit times the resident marginal 84.1 cost pupil units for the school year beginning in the year after 84.2 the levy is certified or the income tax is imposed shall be 84.3 authorized for certification for the number of years approved, 84.4 if applicable, or until revoked or reduced by the voters of the 84.5 district at a subsequent referendum. A referendum may be 84.6 conducted on the question of converting an existing referendum 84.7 property tax levy to a school referendum income tax to be 84.8 imposed under section 290.0621. 84.9 (b) The board must prepare and deliver by first class mail 84.10 at least 15 days but no more than 30 days before the day of the 84.11 referendum to each taxpayer a notice of the referendum and the 84.12 proposed revenue increase. The board need not mail more than 84.13 one notice to any taxpayer. For the purpose of giving mailed 84.14 notice under this subdivision for a referendum based on a 84.15 property tax levy, owners must be those shown to be owners on 84.16 the records of the county auditor or, in any county where tax 84.17 statements are mailed by the county treasurer, on the records of 84.18 the county treasurer. Every property owner whose name does not 84.19 appear on the records of the county auditor or the county 84.20 treasurer is deemed to have waived this mailed notice unless the 84.21 owner has requested in writing that the county auditor or county 84.22 treasurer, as the case may be, include the name on the records 84.23 for this purpose. The notice for a referendum based on a 84.24 property tax levy must project the anticipated amount of tax 84.25 increase in annual dollarsand annual percentagefor typical 84.26 residential homesteads, agricultural homesteads, apartments, and 84.27 commercial-industrial property within the school district. For 84.28 the purpose of giving mailed notice under this subdivision, for 84.29 a referendum based on an income tax under section 290.0621, 84.30 taxpayers must be those shown to be domiciled in the school 84.31 district as indicated on the space which must be provided for 84.32 this information on the Minnesota individual income tax form for 84.33 the taxable year ending before the calendar year when the 84.34 referendum is conducted. Every individual whose domicile is in 84.35 the school district whose name does not appear on the income tax 84.36 return as having a domicile in the district is deemed to have 85.1 waived this mailed notice unless the individual has requested in 85.2 writing that the county auditor or county treasurer, as the case 85.3 may be, include the individual's name on the records for this 85.4 purpose. The notice must project the anticipated amount of tax 85.5 increase in annual dollars and annual percentage for typical 85.6 family incomes within the school district. 85.7 The notice for a referendum based on a property tax levy 85.8 may state that an existing referendum levy is expiring and 85.9 project the anticipated amount of increase over the existing 85.10 referendum levy in the first year, if any, in annual dollarsand85.11annual percentagefor typical residential homesteads, 85.12 agricultural homesteads, apartments, and commercial-industrial 85.13 property within the district. 85.14 The notice must include the following statement: "Passage 85.15 of this referendum will result in an increase in your property 85.16 taxes." However, in cases of renewing existing levies, the 85.17 notice may include the following statement: "Passage of this 85.18 referendum may result in an increase in your property taxes." 85.19 The notice for a referendum based on income tax may state 85.20 that an existing income tax referendum authority is expiring and 85.21 project the anticipated amount of increase over the existing 85.22 referendum levy in the first year, if any, in annual dollars and 85.23 annual percentage for typical family incomes within the district. 85.24 The notice must include the following statement: "Passage 85.25 of this referendum will result in an increase in your personal 85.26 income taxes." However, in cases of renewing existing income 85.27 tax referendum authorities, the notice may include the following 85.28 statement: "Passage of this referendum may result in an 85.29 increase in your personal income taxes." 85.30 (c) A referendum on the question of revoking or reducing 85.31 the increased revenue amount authorized pursuant to paragraph 85.32 (a) may be called by the board and shall be called by the board 85.33 upon the written petition of qualified voters of the district. 85.34 A referendum to revoke or reduce the revenue amount must state 85.35 the amount per resident marginal cost pupil unit by which the 85.36 authority is to be reduced. Revenue authority approved by the 86.1 voters of the district pursuant to paragraph (a) must be 86.2 available to the school district at least once before it is 86.3 subject to a referendum on its revocation or reduction for 86.4 subsequent years. Only one revocation or reduction referendum 86.5 may be held to revoke or reduce referendum revenue for any 86.6 specific year and for years thereafter. 86.7 (d) A petition authorized by paragraph (a) or (c) is 86.8 effective if signed by a number of qualified voters in excess of 86.9 15 percent of the registered voters of the district on the day 86.10 the petition is filed with the board. A referendum invoked by 86.11 petition must be held on the date specified in paragraph (a). 86.12 (e) The approval of 50 percent plus one of those voting on 86.13 the question is required to pass a referendum authorized by this 86.14 subdivision. 86.15 (f) At least 15 days before the day of the referendum, the 86.16 district must submit a copy of the notice required under 86.17 paragraph (b) to the commissioner and to the county auditor of 86.18 each county in which the district is located. Within 15 days 86.19 after the results of the referendum have been certified by the 86.20 board, or in the case of a recount, the certification of the 86.21 results of the recount by the canvassing board, the district 86.22 must notify the commissioner of the results of the referendum. 86.23 [EFFECTIVE DATE.] This section is effective for referenda 86.24 conducted on or after July 1, 2004. 86.25 Sec. 6. Minnesota Statutes 2002, section 272.02, 86.26 subdivision 22, is amended to read: 86.27 Subd. 22. [WIND ENERGY CONVERSION SYSTEMS.] All real and 86.28 personal property of a wind energy conversion system as defined 86.29 in section 272.029, subdivision 2, is exempt from property tax 86.30 except that the land on which the property is located remains 86.31 taxable. If approved by the county where the property is 86.32 located, the value of the land on which the wind energy 86.33 conversion system is located shall not be increased or 86.34 decreased, but shall be valued in the same manner as similar 86.35 land that has not been improved with a wind energy conversion 86.36 system. The land shall be classified based on the most probable 87.1 use of the property if it were not improved with a wind energy 87.2 conversion system. 87.3 [EFFECTIVE DATE.] This section is effective for assessment 87.4 year 2004 and thereafter, for taxes payable in 2005 and 87.5 thereafter. 87.6 Sec. 7. Minnesota Statutes 2003 Supplement, section 87.7 272.02, subdivision 47, is amended to read: 87.8 Subd. 47. [POULTRY LITTER BIOMASS GENERATION FACILITY; 87.9 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 87.10 attached machinery and other personal property which is part of 87.11 an electrical generating facility that meets the requirements of 87.12 this subdivision is exempt. At the time of construction, the 87.13 facility must: 87.14 (1) be designed to utilize poultry litter as a primary fuel 87.15 source; and 87.16 (2) be constructed for the purpose of generating power at 87.17 the facility that will be sold pursuant to a contract approved 87.18 by the Public Utilities Commission in accordance with the 87.19 biomass mandate imposed under section 216B.2424. 87.20 Construction of the facility must be commenced after 87.21 January 1, 2003, and before December 31,20032004. Property 87.22 eligible for this exemption does not include electric 87.23 transmission lines and interconnections or gas pipelines and 87.24 interconnections appurtenant to the property or the facility. 87.25 [EFFECTIVE DATE.] This section is effective for taxes 87.26 levied in 2004, payable in 2005, and thereafter. 87.27 Sec. 8. Minnesota Statutes 2003 Supplement, section 87.28 272.02, subdivision 56, is amended to read: 87.29 Subd. 56. [ELECTRIC GENERATION FACILITY; PERSONAL 87.30 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 87.31 attached machinery and other personal property which is part of 87.32 a combined-cycle combustion-turbine electric generation facility 87.33 that exceeds550300 megawatts of installed capacity and that 87.34 meets the requirements of this subdivision is exempt. At the 87.35 time of construction, the facility must: 87.36 (1) be designed to utilize natural gas as a primary fuel; 88.1 (2) not be owned by a public utility as defined in section 88.2 216B.02, subdivision 4; 88.3 (3) be located within five miles of an existing natural gas 88.4 pipeline and within four miles of an existing electrical 88.5 transmission substation; 88.6 (4) be located outside the metropolitan area as defined 88.7 under section 473.121, subdivision 2; and 88.8 (5) be designed to provide energy and ancillary services 88.9 and have received a certificate of need under section 216B.243. 88.10 (b) Construction of the facility must be commenced after 88.11 January 1, 2004, and before January 1, 2007, except that 88.12 property eligible for this exemption includes any expansion of 88.13 the facility that also meets the requirements of paragraph (a), 88.14 clauses (1) to (5), without regard to the date that construction 88.15 of the expansion commences. Property eligible for this 88.16 exemption does not include electric transmission lines and 88.17 interconnections or gas pipelines and interconnections 88.18 appurtenant to the property or the facility. 88.19 [EFFECTIVE DATE.] This section is effective for taxes 88.20 levied in 2005, payable in 2006, and thereafter. 88.21 Sec. 9. Minnesota Statutes 2002, section 272.02, is 88.22 amended by adding a subdivision to read: 88.23 Subd. 68. [ELECTRIC GENERATION FACILITY; PERSONAL 88.24 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 88.25 attached machinery and other personal property which is part of 88.26 a simple-cycle combustion-turbine electric generation facility 88.27 that exceeds 290 megawatts of installed capacity and that meets 88.28 the requirements of this subdivision is exempt. At the time of 88.29 construction, the facility must: 88.30 (1) be designed to utilize natural gas as a primary fuel; 88.31 (2) not be owned by a public utility as defined in section 88.32 216B.02, subdivision 4; 88.33 (3) be located within five miles of an existing natural gas 88.34 pipeline and within five miles of an existing electrical 88.35 transmission substation; 88.36 (4) be located outside the metropolitan area as defined 89.1 under section 473.121, subdivision 2; 89.2 (5) be designed to provide peaking capacity energy and 89.3 ancillary services and have satisfied all of the requirements 89.4 under section 216B.243; and 89.5 (6) have received, by resolution, the approval from the 89.6 governing body of the county, city, and school district in which 89.7 the proposed facility is to be located for the exemption of 89.8 personal property under this subdivision. 89.9 (b) Construction of the facility must be commenced after 89.10 January 1, 2005, and before January 1, 2009. Property eligible 89.11 for this exemption does not include electric transmission lines 89.12 and interconnections or gas pipelines and interconnections 89.13 appurtenant to the property or the facility. 89.14 [EFFECTIVE DATE.] This section is effective for assessment 89.15 year 2006, taxes payable in 2007, and thereafter. 89.16 Sec. 10. Minnesota Statutes 2002, section 272.02, is 89.17 amended by adding a subdivision to read: 89.18 Subd. 69. [ELECTRIC GENERATION FACILITY; PERSONAL 89.19 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 89.20 machinery and other personal property which is part of a 89.21 simple-cycle, combustion-turbine electric generation facility 89.22 that exceeds 300 megawatts of installed capacity and that meets 89.23 the requirements of this subdivision is exempt. At the time of 89.24 the construction, the facility must: 89.25 (1) be designed to utilize natural gas as a primary fuel; 89.26 (2) be owned by a public utility as defined in section 89.27 216B.02, subdivision 4, and be located at or interconnected with 89.28 an existing generating plant of the utility; 89.29 (3) be designed to provide peaking, emergency backup, or 89.30 contingency services; 89.31 (4) satisfy a resource need identified in an approved 89.32 integrated resource plan filed under section 216B.2422; and 89.33 (5) have received, by resolution, the approval from the 89.34 governing body of the county and the city for the exemption of 89.35 personal property under this subdivision. 89.36 Construction of the facility must be commenced after 90.1 January 1, 2004, and before January 1, 2006. Property eligible 90.2 for this exemption does not include electric transmission lines 90.3 and interconnections or gas pipelines and interconnections 90.4 appurtenant to the property or the facility. 90.5 [EFFECTIVE DATE.] This section is effective beginning with 90.6 assessment year 2005, for taxes payable in 2006, and thereafter. 90.7 Sec. 11. Minnesota Statutes 2002, section 272.02, is 90.8 amended by adding a subdivision to read: 90.9 Subd. 70. [ELECTRIC GENERATION FACILITY PERSONAL 90.10 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), and 90.11 section 453.54, subdivision 20, attached machinery and other 90.12 personal property which is part of an electric generation 90.13 facility that exceeds 150 megawatts of installed capacity and 90.14 meets the requirements of this subdivision is exempt. At the 90.15 time of construction, the facility must: 90.16 (1) be designed to utilize natural gas as a primary fuel; 90.17 (2) be owned and operated by a municipal power agency as 90.18 defined in section 453.52, subdivision 8; 90.19 (3) have received the certificate of need under section 90.20 216B.243; 90.21 (4) be located outside the metropolitan area as defined 90.22 under section 473.121, subdivision 2; and 90.23 (5) be designed to be a combined-cycle facility, although 90.24 initially the facility will be operated as a simple-cycle 90.25 combustion turbine. 90.26 (b) To qualify under this subdivision, an agreement must be 90.27 negotiated between the municipal power agency and the host city, 90.28 for a payment in lieu of property taxes to the host city. 90.29 (c) Construction of the facility must be commenced after 90.30 January 1, 2004, and before January 1, 2006. Property eligible 90.31 for this exemption does not include electric transmission lines 90.32 and interconnections or gas pipelines and interconnections 90.33 appurtenant to the property or the facility. 90.34 [EFFECTIVE DATE.] This section is effective for assessment 90.35 year 2005, taxes payable in 2006, and thereafter. 90.36 Sec. 12. Minnesota Statutes 2002, section 272.02, is 91.1 amended by adding a subdivision to read: 91.2 Subd. 71. [BIOMASS ELECTRIC GENERATION FACILITY; PERSONAL 91.3 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 91.4 attached machinery and other personal property which is a part 91.5 of an electric generation facility, including remote boilers 91.6 that comprise part of the district heating system, generating up 91.7 to 30 megawatts of installed capacity and that meets the 91.8 requirements of this subdivision is exempt. At the time of 91.9 construction, the facility must: 91.10 (1) be designed to utilize a minimum 90 percent waste 91.11 biomass as a fuel; 91.12 (2) not be owned by a public utility as defined in section 91.13 216B.02, subdivision 4; 91.14 (3) be located within a city of the first class and have 91.15 its primary location at a former garbage transfer station; and 91.16 (4) be designed to have capability to provide baseload 91.17 energy and district heating. 91.18 (b) Construction of the facility must be commenced after 91.19 January 1, 2004, and before January 1, 2008. Property eligible 91.20 for this exemption does not include electric transmission lines 91.21 and interconnections or gas pipelines and interconnections 91.22 appurtenant to the property or the facility. 91.23 [EFFECTIVE DATE.] This section is effective for assessment 91.24 year 2005, taxes payable in 2006, and thereafter. 91.25 Sec. 13. Minnesota Statutes 2002, section 272.02, is 91.26 amended by adding a subdivision to read: 91.27 Subd. 72. [ELECTRIC GENERATION FACILITY; PERSONAL 91.28 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 91.29 attached machinery and other personal property that is part of 91.30 either a simple-cycle, combustion-turbine electric generation 91.31 facility that equals or exceeds 150 megawatts of installed 91.32 capacity, or a combined-cycle, combustion-turbine electric 91.33 generation facility that equals or exceeds 225 megawatts of 91.34 installed capacity, and that in either case meets the 91.35 requirements of this subdivision, is exempt. At the time of 91.36 construction, the facility must: 92.1 (1) be designed to utilize natural gas as a primary fuel; 92.2 (2) not be owned by a public utility as defined in section 92.3 216B.02, subdivision 4; 92.4 (3) be located in a metropolitan county defined in section 92.5 473.121, subdivision 4, that has a population greater than 92.6 190,000 and less than 225,000 in the most recent federal 92.7 decennial census, within one mile of an existing natural gas 92.8 pipeline, and within one mile of an existing electrical 92.9 transmission substation; and 92.10 (4) be designed to provide energy and ancillary services 92.11 and have received a certificate of need under section 216B.243. 92.12 (b) Construction of the facility must be commenced after 92.13 January 1, 2005, and before January 1, 2008. Property eligible 92.14 for this exemption does not include electric transmission lines 92.15 and interconnections or gas pipelines and interconnections 92.16 appurtenant to the property or the facility. 92.17 [EFFECTIVE DATE.] This section is effective for taxes 92.18 levied in 2005, payable in 2006, and thereafter. 92.19 Sec. 14. Minnesota Statutes 2002, section 272.02, is 92.20 amended by adding a subdivision to read: 92.21 Subd. 73. [PERSONAL RAPID TRANSIT SYSTEM.] All property 92.22 used in the operation and support of a personal rapid transit 92.23 system as defined in section 297A.61, subdivision 37, that 92.24 provides service to the public on a regular and continuing 92.25 basis, is exempt, provided that it is operated independent of 92.26 any government subsidies. 92.27 [EFFECTIVE DATE.] This section is effective for taxes 92.28 payable in 2005 and subsequent years. 92.29 Sec. 15. Minnesota Statutes 2002, section 272.029, 92.30 subdivision 4, is amended to read: 92.31 Subd. 4. [REPORTS.] (a) An owner of a wind energy 92.32 conversion system subject to tax under subdivision 3 shall file 92.33 a report with the commissioner of revenue annually on or before 92.34March 1February 1 detailing the amount of electricity in 92.35 kilowatt-hours that was produced by the wind energy conversion 92.36 system for the previous calendar year. The commissioner shall 93.1 prescribe the form of the report. The report must contain the 93.2 information required by the commissioner to determine the tax 93.3 due to each county under this section for the current year. If 93.4 an owner of a wind energy conversion system subject to taxation 93.5 under this section fails to file the report by the due date, the 93.6 commissioner of revenue shall determine the tax based upon the 93.7 nameplate capacity of the system multiplied by a capacity factor 93.8 of 40 percent. 93.9 (b) On or beforeMarch 31February 28, the commissioner of 93.10 revenue shall notify the owner of the wind energy conversion 93.11 systems of the tax due to each county for the current year and 93.12 shall certify to the county auditor of each county in which the 93.13 systems are located the tax due from each owner for the current 93.14 year. 93.15 [EFFECTIVE DATE.] This section is effective for taxes 93.16 payable in 2005 and thereafter. 93.17 Sec. 16. Minnesota Statutes 2002, section 272.029, 93.18 subdivision 6, is amended to read: 93.19 Subd. 6. [DISTRIBUTION OF REVENUES.] Revenues from the 93.20 taxes imposed under subdivision 5 must be part of the settlement 93.21 between the county treasurer and the county auditor under 93.22 section 276.09. The revenue must be distributed by the county 93.23 auditor or the county treasurer to all local taxing 93.24 jurisdictions in which the wind energy conversion system is 93.25 located, in the same proportion that each of the taxing 93.26 jurisdiction'scurrentprevious year's net tax capacity based 93.27 tax rate is to thecurrentprevious year's total local net tax 93.28 capacity based rate. 93.29 [EFFECTIVE DATE.] This section is effective for taxes 93.30 payable in 2004 and thereafter. 93.31 Sec. 17. Minnesota Statutes 2003 Supplement, section 93.32 273.11, subdivision 1a, is amended to read: 93.33 Subd. 1a. [LIMITED MARKET VALUE.] In the case of: 93.34 (1) all property classified as agricultural homestead or 93.35 nonhomestead, residential homestead or nonhomestead, timber,or93.36 noncommercial seasonal residential recreational, or class 1c 94.1 resort property; and 94.2 (2) property classified as commercial-industrial that has a 94.3 total market value less than $500,000, the assessor shall 94.4 compare the value with the taxable portion of the value 94.5 determined in the preceding assessment except that for class 1c 94.6 resort property for assessment year 2004, the assessor shall 94.7 determine the limited market value as provided in subdivision 1b. 94.8For assessment year 2002, the amount of the increase shall94.9not exceed the greater of (1) ten percent of the value in the94.10preceding assessment, or (2) 15 percent of the difference94.11between the current assessment and the preceding assessment.94.12 For assessment year 2003 and thereafter, the amount of the 94.13 increase shall not exceed the greater of (1) 12 percent of the 94.14 value in the preceding assessment, or (2) 20 percent of the 94.15 difference between the current assessment and the preceding 94.16 assessment. 94.17For assessment year 2004, the amount of the increase shall94.18not exceed the greater of (1) 15 percent of the value in the94.19preceding assessment, or (2) 25 percent of the difference94.20between the current assessment and the preceding assessment.94.21For assessment year 2005, the amount of the increase shall94.22not exceed the greater of (1) 15 percent of the value in the94.23preceding assessment, or (2) 33 percent of the difference94.24between the current assessment and the preceding assessment.94.25For assessment year 2006, the amount of the increase shall94.26not exceed the greater of (1) 15 percent of the value in the94.27preceding assessment, or (2) 50 percent of the difference94.28between the current assessment and the preceding assessment.94.29 This limitation shall not apply to increases in value due 94.30 to improvements. For purposes of this subdivision, the term 94.31 "assessment" means the value prior to any exclusion under 94.32 subdivision 16. 94.33The provisions of this subdivision shall be in effect94.34through assessment year 2006 as provided in this subdivision.94.35 For purposes of this subdivision and subdivision 1b, "class 94.36 1c resort property" includes the portion of the property 95.1 classified class 1a or 1b homestead, the portion of the property 95.2 classified 1c, plus any remaining portion of the resort that is 95.3 classified 4c under section 273.13, subdivision 25, paragraph 95.4 (d), clause (1). 95.5 For purposes of the assessment/sales ratio study conducted 95.6 under section 127A.48, and the computation of state aids paid 95.7 under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 95.8 477A, market values and net tax capacities determined under this 95.9 subdivision and subdivision 16, shall be used. 95.10 In the case of commercial-industrial property that 95.11 qualifies under clause (2) of the first paragraph of this 95.12 subdivision, for the first assessment year when the total market 95.13 value of the property exceeds $500,000, 33 percent of the 95.14 difference between the current assessment and the preceding 95.15 assessment must be added to the limited market value. For the 95.16 next assessment year, 50 percent of the difference between the 95.17 current assessment and the preceding assessment must be added to 95.18 the limited market value. In the third assessment year after 95.19 the total market value of the property initially exceeds 95.20 $500,000, this subdivision will no longer apply to the property. 95.21 [EFFECTIVE DATE.] This section is effective the day 95.22 following final enactment for assessment year 2004, and 95.23 thereafter. 95.24 Sec. 18. Minnesota Statutes 2002, section 273.11, is 95.25 amended by adding a subdivision to read: 95.26 Subd. 1b. [CLASS 1C RESORTS; 2004 ASSESSMENT ONLY.] For 95.27 assessment year 2004, the valuation increase on class 1c resort 95.28 property shall not exceed the greater of (1) 15 percent of the 95.29 value of its 2002 assessment, or (2) 25 percent of the 95.30 difference in value between its 2004 assessment and its 2002 95.31 assessment. The valuation increase on class 1c resort property 95.32 for the 2005 and 2006 assessment years shall be determined based 95.33 upon the schedule contained in subdivision 1a. 95.34 [EFFECTIVE DATE.] This section is effective the day 95.35 following final enactment. 95.36 Sec. 19. Minnesota Statutes 2002, section 273.11, is 96.1 amended by adding a subdivision to read: 96.2 Subd. 21. [VALUATION EXCLUSION FOR SEWAGE TREATMENT SYSTEM 96.3 IMPROVEMENTS.] Owners of property classified as class 1a, 1b, 96.4 1c, 2a, 4b, 4bb, or noncommercial 4c under section 273.13 may 96.5 apply for a valuation exclusion under this subdivision, provided 96.6 that the property is located in a county which has authorized 96.7 valuation exclusions under this subdivision, and provided that 96.8 the following conditions are met: 96.9 (1) a notice of noncompliance has been issued by a licensed 96.10 compliance inspector with regard to the individual sewage 96.11 treatment system serving the property under section 115.55, 96.12 subdivision 5b; 96.13 (2) the owner of the property furnishes documentation to 96.14 the satisfaction of the assessor that the property's individual 96.15 sewage treatment system has been replaced or refurbished, 96.16 including replacement of the individual system with a community 96.17 or cluster system, between May 1, 2004, and December 31, 2006; 96.18 and 96.19 (3) a certificate of compliance has been issued for the new 96.20 or refurbished system under section 115.55, subdivision 5. 96.21 Application must be made to the assessor on a form 96.22 prescribed by the commissioner of revenue. Property meeting the 96.23 requirements of this subdivision is eligible for a valuation 96.24 exclusion equal to 50 percent of the actual costs incurred, to a 96.25 maximum exclusion of $7,500, for a period of five years, after 96.26 which the amount of the exclusion will be added to the estimated 96.27 market value of the property. The valuation exclusion 96.28 terminates upon the sale of the property. If a property owner 96.29 applies for exclusion under this subdivision between January 1 96.30 and June 30 of any year, the exclusion first applies for taxes 96.31 payable in the following year. If a property owner applies for 96.32 exclusion under this subdivision between July 1 and December 31 96.33 of any year, the exclusion first applies for taxes payable in 96.34 the second following year. 96.35 [EFFECTIVE DATE.] This section is effective for taxes 96.36 payable in 2005 and subsequent years. 97.1 Sec. 20. Minnesota Statutes 2002, section 273.11, is 97.2 amended by adding a subdivision to read: 97.3 Subd. 22. [VALUATION EXCLUSION FOR LEAD HAZARD REDUCTION.] 97.4 Owners of property classified as class 1a, 1b, 1c, 2a, 4b, or 97.5 4bb under section 273.13 may apply for a valuation exclusion for 97.6 lead hazard reduction, provided that the property is located in 97.7 a city which has authorized valuation exclusions under this 97.8 subdivision. A city which authorizes valuation exclusions under 97.9 this subdivision must establish guidelines for qualifying lead 97.10 hazard reduction projects and must designate an agency within 97.11 the city to issue certificates of completion of qualifying 97.12 projects. For purposes of this subdivision, "lead hazard 97.13 reduction" has the same meaning as in section 144.9501, 97.14 subdivision 17. 97.15 The property owner must obtain a certificate from the city 97.16 stating that the project has been completed and stating the cost 97.17 incurred by the owner in completing the project. Only projects 97.18 originating after April 30, 2004, may qualify for exclusion 97.19 under this subdivision. The property owner shall apply for a 97.20 valuation exclusion to the assessor on a form prescribed by the 97.21 commissioner of revenue. 97.22 A qualifying property is eligible for a valuation exclusion 97.23 equal to 50 percent of the actual costs incurred, to a maximum 97.24 exclusion of $15,000, for a period of five years, after which 97.25 the amount of the exclusion will be added to the estimated 97.26 market value of the property. The valuation exclusion shall 97.27 terminate upon the sale of the property. If a property owner 97.28 applies for exclusion under this subdivision between January 1 97.29 and June 30 of any year, the exclusion shall first apply for 97.30 taxes payable in the following year. If a property owner 97.31 applies for exclusion under this subdivision between July 1 and 97.32 December 31 of any year, the exclusion shall first apply for 97.33 taxes payable in the second following year. 97.34 [EFFECTIVE DATE.] This section is effective for taxes 97.35 payable in 2005 and subsequent years. 97.36 Sec. 21. [273.1115] [AGGREGATE RESOURCE PRESERVATION 98.1 PROPERTY TAX LAW.] 98.2 Subdivision 1. [REQUIREMENTS.] Real estate is entitled to 98.3 valuation under this section only if all of the following 98.4 requirements are met: 98.5 (1) the property is classified 1a, 1b, 2a, or 2b property 98.6 under section 273.13, subdivisions 22 and 23; 98.7 (2) the property is at least ten contiguous acres, when the 98.8 application is filed under subdivision 2; 98.9 (3) the owner has filed a completed application for 98.10 deferment as specified in subdivision 2 with the county assessor 98.11 in the county in which the property is located; 98.12 (4) there are no delinquent taxes on the property; and 98.13 (5) a covenant on the land restricts its use as provided in 98.14 subdivision 2, clause (4). 98.15 Subd. 2. [APPLICATION.] Application for valuation 98.16 deferment under this section must be filed by May 1 of the 98.17 assessment year. Any application filed and granted continues in 98.18 effect for subsequent years until the property no longer 98.19 qualifies, provided that supplemental affidavits under 98.20 subdivision 6 are timely filed. The application must be filed 98.21 with the assessor of the county in which the real property is 98.22 located on such form as may be prescribed by the commissioner of 98.23 revenue. The application must be executed and acknowledged in 98.24 the manner required by law to execute and acknowledge a deed and 98.25 must contain at least the following information and any other 98.26 information the commissioner deems necessary: 98.27 (1) the legal description of the area; 98.28 (2) the name and address of owner; 98.29 (3) a copy of the affidavit filed under section 273.13, 98.30 subdivision 23, paragraph (h), in the case of property 98.31 classified class 2b, clause (5); or in the case of property 98.32 classified 1a, 1b, 2a, and 2b, clauses (1) to (3), the 98.33 application must include a similar document with the same 98.34 information as contained in the affidavit under section 273.13, 98.35 subdivision 23, paragraph (h); and 98.36 (4) a statement of proof from the owner that the land 99.1 contains a restrictive covenant limiting its use for the 99.2 property's surface to that which exists on the date of the 99.3 application and limiting its future use to the preparation and 99.4 removal of the aggregate commercial deposit under its surface. 99.5 To qualify under this clause, the covenant must be binding 99.6 on the owner or the owner's successor or assignee, and run with 99.7 the land, except as provided in subdivision 4 allowing for the 99.8 cancellation of the covenant under certain conditions. 99.9 Subd. 3. [DETERMINATION OF VALUE.] Upon timely application 99.10 by the owner as provided in subdivision 2, notwithstanding 99.11 sections 272.03, subdivision 8, and 273.11, the value of any 99.12 qualifying land described in subdivision 2 must be valued as if 99.13 it were agricultural property, using a per acre valuation equal 99.14 to the current year's per acre valuation of agricultural land in 99.15 the county. The assessor shall not consider any additional 99.16 value resulting from potential alternative and future uses of 99.17 the property. The buildings located on the land shall be valued 99.18 by the assessor in the normal manner. 99.19 Subd. 4. [CANCELLATION OF COVENANT.] The covenant required 99.20 under subdivision 2 may be canceled in two ways: 99.21 (1) by the owner beginning with the next subsequent 99.22 assessment year provided that the additional taxes as determined 99.23 under subdivision 5 are paid by the owner at the time of 99.24 cancellation; and 99.25 (2) by the city or town in which the property is located 99.26 beginning with the next subsequent assessment year, if the city 99.27 council or town board: 99.28 (i) changes the conditional use of the property; 99.29 (ii) revokes the mining permit; or 99.30 (iii) changes the zoning to disallow mining. 99.31 No additional taxes are imposed on the property under this 99.32 clause. 99.33 Subd. 4a. [COUNTY TERMINATION.] Within two years of the 99.34 effective date of this section, a county may, following notice 99.35 and public hearing, terminate application of this section in the 99.36 county. The termination is effective upon adoption of a 100.1 resolution of the county board. A termination applies 100.2 prospectively and does not affect property enrolled under this 100.3 section prior to the termination date. A county may reauthorize 100.4 application of this section by a resolution of the county board 100.5 revoking the termination. 100.6 Subd. 5. [ADDITIONAL TAXES.] When real property which has 100.7 been valued and assessed under this section no longer qualifies, 100.8 the portion of the land classified under subdivision 1, clause 100.9 (1), is subject to additional taxes. The additional tax amount 100.10 is determined by: 100.11 (1) computing the difference between (i) the current year's 100.12 taxes determined in accordance with subdivision 5, and (ii) an 100.13 amount as determined by the assessor based upon the property's 100.14 current year's estimated market value of like real estate at its 100.15 highest and best use and the appropriate local tax rate; and 100.16 (2) multiplying the amount determined in clause (1) by the 100.17 number of years the land was in the program under this section, 100.18 whichever is less. 100.19 The current year's estimated market value as determined by 100.20 the assessor must not exceed the market value that would result 100.21 if the property was sold in an arms-length transaction and must 100.22 not be greater than it would have been had the actual bona fide 100.23 sale price of the property been used in lieu of that market 100.24 value. The additional taxes must be extended against the 100.25 property on the tax list for the current year, except that 100.26 interest or penalties must not be levied on such additional 100.27 taxes if timely paid. 100.28 The additional tax under this subdivision must not be 100.29 imposed on that portion of the property which has actively been 100.30 mined and has been removed from the program based upon the 100.31 supplemental affidavits filed under subdivision 6. 100.32 Subd. 6. [SUPPLEMENTAL AFFIDAVITS; MINING ACTIVITY ON 100.33 LAND.] When any portion of the property begins to be actively 100.34 mined, the owner must file a supplemental affidavit within 60 100.35 days from the day any aggregate is removed stating the number of 100.36 acres of the property that is actively being mined. The acres 101.1 actively being mined shall be (1) valued and classified under 101.2 section 273.13, subdivision 24, in the next subsequent 101.3 assessment year, and (2) removed from the aggregate resource 101.4 preservation property tax program under this section. The 101.5 additional taxes under subdivision 5 must not be imposed on the 101.6 acres that are actively being mined and have been removed from 101.7 the program under this section. 101.8 Copies of the original affidavit and all supplemental 101.9 affidavits must be filed with the county assessor, the local 101.10 zoning administrator, and the Department of Natural Resources, 101.11 Division of Land and Minerals. A supplemental affidavit must be 101.12 filed each time a subsequent portion of the property is actively 101.13 mined, provided that the minimum acreage change is five acres, 101.14 even if the actual mining activity constitutes less than five 101.15 acres. Failure to file the affidavits timely shall result in 101.16 the property losing its valuation deferment under this section, 101.17 and additional taxes must be imposed as calculated under 101.18 subdivision 5. 101.19 Subd. 7. [LIEN.] The additional tax imposed by this 101.20 section is a lien upon the property assessed to the same extent 101.21 and for the same duration as other taxes imposed upon property 101.22 within this state and, when collected, must be distributed in 101.23 the manner provided by law for the collection and distribution 101.24 of other property taxes. 101.25 Subd. 8. [CONTINUATION OF TAX TREATMENT UPON SALE.] When 101.26 real property qualifying under subdivision 1 is sold, additional 101.27 taxes must not be extended against the property if the property 101.28 continues to qualify under subdivision 1, and the new owner 101.29 files an application with the assessor for continued deferment 101.30 within 30 days after the sale. 101.31 Subd. 9. [DEFINITIONS.] For purposes of this section, 101.32 "commercial aggregate deposit" and "actively mined" have the 101.33 meanings given them in section 273.13, subdivision 23, paragraph 101.34 (h). 101.35 [EFFECTIVE DATE.] This section is effective for taxes 101.36 levied in 2004, payable in 2005, and thereafter, except that for 102.1 the 2004 assessment year, the application date under subdivision 102.2 4 shall be September 1, 2004, and subdivision 4a is effective 102.3 the day following final enactment. 102.4 Sec. 22. [273.1116] [HOMESTEAD RESORTS; VALUATION AND 102.5 DEFERMENT.] 102.6 Subdivision 1. [REQUIREMENTS.] Real property qualifying 102.7 for classification as class 1c under section 273.13, subdivision 102.8 22, paragraph (c), is entitled to valuation and tax deferment 102.9 under this section, provided that if part of a resort is not 102.10 classified as class 1c, only that portion of the value of the 102.11 property that is classified as class 1c property qualifies under 102.12 this section. 102.13 Subd. 2. [DETERMINATION OF VALUE.] Upon timely application 102.14 by the owner, as provided in subdivision 4, the value of real 102.15 property described in subdivision 1 must be determined by the 102.16 assessor solely with reference to its classification value as 102.17 class 1c property, notwithstanding sections 272.03, subdivision 102.18 8, and 273.11. The owner must furnish information on the income 102.19 generated by the property and other information required by the 102.20 assessor to determine the value of the property. The assessor 102.21 shall not consider any added values resulting from other factors. 102.22 Subd. 3. [SEPARATE DETERMINATION OF MARKET VALUE AND TAX.] 102.23 The assessor shall, however, make a separate determination of 102.24 the market value of the real estate. The assessor shall record 102.25 on the property assessment records the tax based upon the 102.26 appropriate local tax rate applicable to the property in the 102.27 taxing district. 102.28 Subd. 4. [APPLICATION.] Application for deferment of taxes 102.29 and assessment under this section must be filed by May 1 of the 102.30 year prior to the year in which the taxes are payable. The 102.31 application must be filed with the assessor of the taxing 102.32 district in which the real property is located on a form 102.33 prescribed by the commissioner of revenue. The assessor may 102.34 require proof by affidavit or otherwise that the property 102.35 qualifies under subdivision 1. An application approved by the 102.36 assessor continues in effect for subsequent years until the 103.1 property no longer qualifies under subdivision 1. 103.2 Subd. 5. [ADDITIONAL TAXES.] When real property valued and 103.3 assessed under this section no longer qualifies under 103.4 subdivision 1, the portion no longer qualifying is subject to 103.5 additional taxes, in the amount equal to the difference between 103.6 the taxes determined in accordance with subdivision 2, and the 103.7 amount determined under subdivision 3, provided, however, that 103.8 the amount determined under subdivision 3 must not be greater 103.9 than it would have been had the actual bona fide sale price of 103.10 the real property at an arms-length transaction been used in 103.11 lieu of the market value determined under subdivision 3. The 103.12 additional taxes must be extended against the property on the 103.13 tax list for the current year, except that no interest or 103.14 penalties may be levied on the additional taxes if timely paid, 103.15 and except that the additional taxes must only be levied with 103.16 respect to the last seven years that the property has been 103.17 valued and assessed under this section. 103.18 Subd. 6. [LIEN.] The tax imposed by this section is a lien 103.19 on the property assessed to the same extent and for the same 103.20 duration as other taxes imposed on property within this state. 103.21 The tax must be annually extended by the county auditor and when 103.22 payable must be collected and distributed in the manner provided 103.23 by law for the collection and distribution of other property 103.24 taxes. 103.25 Subd. 7. [SPECIAL LOCAL ASSESSMENTS.] The payment of 103.26 special local assessments levied after June 30, 2004, for 103.27 improvements made to any real property described in subdivision 103.28 2, together with the interest thereon must, on timely 103.29 application under subdivision 4, be deferred as long as the 103.30 property qualifies under subdivision 1. If special assessments 103.31 against the property have been deferred under this subdivision, 103.32 the governmental unit shall file with the county recorder in the 103.33 county in which the property is located a certificate containing 103.34 the legal description of the affected property and of the amount 103.35 deferred. When the property no longer qualifies under 103.36 subdivision 1, all deferred special assessments plus interest 104.1 are payable in equal installments spread over the time remaining 104.2 until the last maturity date of the bonds issued to finance the 104.3 improvement for which the assessments were levied. If the bonds 104.4 have matured, the deferred special assessments plus interest are 104.5 payable within 90 days. The provisions of section 429.061, 104.6 subdivision 2, apply to the collection of these installments. 104.7 Penalty must not be levied on the special assessments if timely 104.8 paid. 104.9 Subd. 8. [CONTINUATION OF TAX TREATMENT UPON SALE.] When 104.10 real property qualifying under subdivision 1 is sold, no 104.11 additional taxes or deferred special assessments plus interest 104.12 may be extended against the property if: 104.13 (1) the property continues to qualify pursuant to 104.14 subdivision 1; and 104.15 (2) the new owner files an application for continued 104.16 deferment within 30 days after the sale. 104.17 Subd. 9. [APPLICABILITY OF SPECIAL ASSESSMENT PROVISIONS.] 104.18 This section applies to special local assessments levied after 104.19 June 30, 2004, and payable in the years thereafter, but shall 104.20 not apply to any special assessments levied at any time by a 104.21 county or district court under the provisions of chapter 116A. 104.22 [EFFECTIVE DATE.] This section is effective for taxes 104.23 levied in 2004, payable in 2005, and thereafter. For 104.24 applications for taxes payable in 2005 only, the application 104.25 deadline in subdivision 4 is extended to August 1, 2004. 104.26 Sec. 23. Minnesota Statutes 2002, section 273.112, 104.27 subdivision 3, is amended to read: 104.28 Subd. 3. [REQUIREMENTS.] Real estate shall be entitled to 104.29 valuation and tax deferment under this section only if it is: 104.30 (a) actively and exclusively devoted to golf, skiing, lawn 104.31 bowling, croquet, polo, or archery or firearms range 104.32 recreational use or other recreational uses carried on at the 104.33 establishment; 104.34 (b) five acres in size or more, except in the case of a 104.35 lawn bowling or croquet green or an archery or firearms range; 104.36 (c)(1) operated by private individuals or, in the case of a 105.1 lawn bowling or croquet green, by private individuals or 105.2 corporations, and open to the public; or 105.3 (2) operated by firms or corporations for the benefit of 105.4 employees or guests; or 105.5 (3) operated by private clubs having a membership of 50 or 105.6 more or open to the public, provided that the club does not 105.7 discriminate in membership requirements or selection on the 105.8 basis of sex or marital status; and 105.9 (d) made available for use in the case of real estate 105.10 devoted to golf without discrimination on the basis of sex 105.11 during the time when the facility is open to use by the public 105.12 or by members, except that use for golf may be restricted on the 105.13 basis of sex no more frequently than one, or part of one, 105.14 weekend each calendar month for each sex and no more than two, 105.15 or part of two, weekdays each week for each sex. 105.16 If a golf club membership allows use of golf course 105.17 facilities by more than one adult per membership, the use must 105.18 be equally available to all adults entitled to use of the golf 105.19 course under the membership, except that use may be restricted 105.20 on the basis of sex as permitted in this section. Memberships 105.21 that permit play during restricted times may be allowed only if 105.22 the restricted times apply to all adults using the membership. 105.23 A golf club may not offer a membership or golfing privileges to 105.24 a spouse of a member that provides greater or less access to the 105.25 golf course than is provided to that person's spouse under the 105.26 same or a separate membership in that club, except that the 105.27 terms of a membership may provide that one spouse may have no 105.28 right to use the golf course at any time while the other spouse 105.29 may have either limited or unlimited access to the golf course. 105.30 A golf club may have or create an individual membership 105.31 category which entitles a member for a reduced rate to play 105.32 during restricted hours as established by the club. The club 105.33 must have on record a written request by the member for such 105.34 membership. 105.35 A golf club that has food or beverage facilities or 105.36 services must allow equal access to those facilities and 106.1 services for both men and women members in all membership 106.2 categories at all times. Nothing in this paragraph shall be 106.3 construed to require service or access to facilities to persons 106.4 under the age of 21 years or require any act that would violate 106.5 law or ordinance regarding sale, consumption, or regulation of 106.6 alcoholic beverages. 106.7 For purposes of this subdivision and subdivision 7a, 106.8 discrimination means a pattern or course of conduct and not 106.9 linked to an isolated incident. 106.10 [EFFECTIVE DATE.] This section is effective for taxes 106.11 levied in 2004, payable in 2005, and thereafter. 106.12 Sec. 24. Minnesota Statutes 2003 Supplement, section 106.13 273.124, subdivision 1, is amended to read: 106.14 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 106.15 that is occupied and used for the purposes of a homestead by its 106.16 owner, who must be a Minnesota resident, is a residential 106.17 homestead. 106.18 Agricultural land, as defined in section 273.13, 106.19 subdivision 23, that is occupied and used as a homestead by its 106.20 owner, who must be a Minnesota resident, is an agricultural 106.21 homestead. 106.22 Dates for establishment of a homestead and homestead 106.23 treatment provided to particular types of property are as 106.24 provided in this section. 106.25 Property held by a trustee under a trust is eligible for 106.26 homestead classification if the requirements under this chapter 106.27 are satisfied. 106.28 The assessor shall require proof, as provided in 106.29 subdivision 13, of the facts upon which classification as a 106.30 homestead may be determined. Notwithstanding any other law, the 106.31 assessor may at any time require a homestead application to be 106.32 filed in order to verify that any property classified as a 106.33 homestead continues to be eligible for homestead status. 106.34 Notwithstanding any other law to the contrary, the Department of 106.35 Revenue may, upon request from an assessor, verify whether an 106.36 individual who is requesting or receiving homestead 107.1 classification has filed a Minnesota income tax return as a 107.2 resident for the most recent taxable year for which the 107.3 information is available. 107.4 When there is a name change or a transfer of homestead 107.5 property, the assessor may reclassify the property in the next 107.6 assessment unless a homestead application is filed to verify 107.7 that the property continues to qualify for homestead 107.8 classification. 107.9 (b) For purposes of this section, homestead property shall 107.10 include property which is used for purposes of the homestead but 107.11 is separated from the homestead by a road, street, lot, 107.12 waterway, or other similar intervening property. The term "used 107.13 for purposes of the homestead" shall include but not be limited 107.14 to uses for gardens, garages, or other outbuildings commonly 107.15 associated with a homestead, but shall not include vacant land 107.16 held primarily for future development. In order to receive 107.17 homestead treatment for the noncontiguous property, the owner 107.18 must use the property for the purposes of the homestead, and 107.19 must apply to the assessor, both by the deadlines given in 107.20 subdivision 9. After initial qualification for the homestead 107.21 treatment, additional applications for subsequent years are not 107.22 required. 107.23 (c) Residential real estate that is occupied and used for 107.24 purposes of a homestead by a relative of the owner is a 107.25 homestead but only to the extent of the homestead treatment that 107.26 would be provided if the related owner occupied the property. 107.27 For purposes of this paragraph and paragraph (g), "relative" 107.28 means a parent, stepparent, child, stepchild, grandparent, 107.29 grandchild, brother, sister, uncle, aunt, nephew, or niece. 107.30 This relationship may be by blood or marriage. Property that 107.31 has been classified as seasonal residential recreational 107.32 property at any time during which it has been owned by the 107.33 current owner or spouse of the current owner will not be 107.34 reclassified as a homestead unless it is occupied as a homestead 107.35 by the owner; this prohibition also applies to property that, in 107.36 the absence of this paragraph, would have been classified as 108.1 seasonal residential recreational property at the time when the 108.2 residence was constructed. Neither the related occupant nor the 108.3 owner of the property may claim a property tax refund under 108.4 chapter 290A for a homestead occupied by a relative. In the 108.5 case of a residence located on agricultural land, only the 108.6 house, garage, and immediately surrounding one acre of land 108.7 shall be classified as a homestead under this paragraph, except 108.8 as provided in paragraph (d). 108.9 (d) Agricultural property that is occupied and used for 108.10 purposes of a homestead by a relative of the owner, is a 108.11 homestead, only to the extent of the homestead treatment that 108.12 would be provided if the related owner occupied the property, 108.13 and only if all of the following criteria are met: 108.14 (1) the relative who is occupying the agricultural property 108.15 is a son, daughter, grandson, granddaughter, father, or mother 108.16 of the owner of the agricultural property or a son, daughter, 108.17 grandson, or granddaughter of the spouse of the owner of the 108.18 agricultural property; 108.19 (2) the owner of the agricultural property must be a 108.20 Minnesota resident; 108.21 (3) the owner of the agricultural property must not receive 108.22 homestead treatment on any other agricultural property in 108.23 Minnesota; and 108.24 (4) the owner of the agricultural property is limited to 108.25 only one agricultural homestead per family under this paragraph. 108.26 Neither the related occupant nor the owner of the property 108.27 may claim a property tax refund under chapter 290A for a 108.28 homestead occupied by a relative qualifying under this 108.29 paragraph. For purposes of this paragraph, "agricultural 108.30 property" means the house, garage, other farm buildings and 108.31 structures, and agricultural land. 108.32 Application must be made to the assessor by the owner of 108.33 the agricultural property to receive homestead benefits under 108.34 this paragraph. The assessor may require the necessary proof 108.35 that the requirements under this paragraph have been met. 108.36 (e) In the case of property owned by a property owner who 109.1 is married, the assessor must not deny homestead treatment in 109.2 whole or in part if only one of the spouses occupies the 109.3 property and the other spouse is absent due to: (1) marriage 109.4 dissolution proceedings, (2) legal separation, (3) employment or 109.5 self-employment in another location, or (4) other personal 109.6 circumstances causing the spouses to live separately, not 109.7 including an intent to obtain two homestead classifications for 109.8 property tax purposes. To qualify under clause (3), the 109.9 spouse's place of employment or self-employment must be at least 109.10 50 miles distant from the other spouse's place of employment, 109.11 and the homesteads must be at least 50 miles distant from each 109.12 other. Homestead treatment, in whole or in part, shall not be 109.13 denied to the owner's spouse who previously occupied the 109.14 residence with the owner if the absence of the owner is due to 109.15 one of the exceptions provided in this paragraph. 109.16 (f) The assessor must not deny homestead treatment in whole 109.17 or in part if: 109.18 (1) in the case of a property owner who is not married, the 109.19 owner is absent due to residence in a nursing home, boarding 109.20 care facility, or an elderly assisted living facility property 109.21 as defined in section 273.13, subdivision 25a, and the property 109.22 is not otherwise occupied; or 109.23 (2) in the case of a property owner who is married, the 109.24 owner or the owner's spouse or both are absent due to residence 109.25 in a nursing home, boarding care facility, or an elderly 109.26 assisted living facility property as defined in section 273.13, 109.27 subdivision 25a, and the property is not occupied or is occupied 109.28 only by the owner's spouse. 109.29 (g) If an individual is purchasing property with the intent 109.30 of claiming it as a homestead and is required by the terms of 109.31 the financing agreement to have a relative shown on the deed as 109.32 a co-owner, the assessor shall allow a full homestead 109.33 classification. This provision only applies to first-time 109.34 purchasers, whether married or single, or to a person who had 109.35 previously been married and is purchasing as a single individual 109.36 for the first time. The application for homestead benefits must 110.1 be on a form prescribed by the commissioner and must contain the 110.2 data necessary for the assessor to determine if full homestead 110.3 benefits are warranted. 110.4 (h) If residential or agricultural real estate is occupied 110.5 and used for purposes of a homestead by a child of a deceased 110.6 owner and the property is subject to jurisdiction of probate 110.7 court, the child shall receive relative homestead classification 110.8 under paragraph (c) or (d) to the same extent they would be 110.9 entitled to it if the owner was still living, until the probate 110.10 is completed. For purposes of this paragraph, "child" includes 110.11 a relationship by blood or by marriage. 110.12 (i) If a single family home, duplex, or triplex classified 110.13 as either residential homestead or agricultural homestead is 110.14 also used to provide licensed child care, the portion of the 110.15 property used for licensed child care must be classified as 110.16 homestead property. 110.17 [EFFECTIVE DATE.] This section is effective in assessment 110.18 year 2004 and thereafter, for taxes payable in 2005, and 110.19 thereafter. 110.20 Sec. 25. Minnesota Statutes 2003 Supplement, section 110.21 273.13, subdivision 23, is amended to read: 110.22 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 110.23 land including any improvements that is homesteaded. The market 110.24 value of the house and garage and immediately surrounding one 110.25 acre of land has the same class rates as class 1a property under 110.26 subdivision 22. The value of the remaining land including 110.27 improvements up to and including $600,000 market value has a net 110.28 class rate of 0.55 percent of market value. The remaining 110.29 property over $600,000 market value has a class rate of one 110.30 percent of market value. 110.31 (b) Class 2b property is (1) real estate, rural in 110.32 character and used exclusively for growing trees for timber, 110.33 lumber, and wood and wood products; (2) real estate that is not 110.34 improved with a structure and is used exclusively for growing 110.35 trees for timber, lumber, and wood and wood products, if the 110.36 owner has participated or is participating in a cost-sharing 111.1 program for afforestation, reforestation, or timber stand 111.2 improvement on that particular property, administered or 111.3 coordinated by the commissioner of natural resources; (3) real 111.4 estate that is nonhomestead agricultural land;or(4) a landing 111.5 area or public access area of a privately owned public use 111.6 airport; or (5) land with a commercial aggregate deposit that is 111.7 not actively being mined and is not otherwise classified as 111.8 class 2a or 2b, clauses (1) to (3). Class 2b property has a net 111.9 class rate of one percent of market value. 111.10 (c) Agricultural land as used in this section means 111.11 contiguous acreage of ten acres or more, used during the 111.12 preceding year for agricultural purposes. "Agricultural 111.13 purposes" as used in this section means the raising or 111.14 cultivation of agricultural products. "Agricultural purposes" 111.15 also includes enrollment in the Reinvest in Minnesota program 111.16 under sections 103F.501 to 103F.535 or the federal Conservation 111.17 Reserve Program as contained in Public Law 99-198 if the 111.18 property was classified as agricultural (i) under this 111.19 subdivision for the assessment year 2002 or (ii) in the year 111.20 prior to its enrollment. Contiguous acreage on the same parcel, 111.21 or contiguous acreage on an immediately adjacent parcel under 111.22 the same ownership, may also qualify as agricultural land, but 111.23 only if it is pasture, timber, waste, unusable wild land, or 111.24 land included in state or federal farm programs. Agricultural 111.25 classification for property shall be determined excluding the 111.26 house, garage, and immediately surrounding one acre of land, and 111.27 shall not be based upon the market value of any residential 111.28 structures on the parcel or contiguous parcels under the same 111.29 ownership. 111.30 (d) Real estate, excluding the house, garage, and 111.31 immediately surrounding one acre of land, of less than ten acres 111.32 which is exclusively and intensively used for raising or 111.33 cultivating agricultural products, shall be considered as 111.34 agricultural land. 111.35 Land shall be classified as agricultural even if all or a 111.36 portion of the agricultural use of that property is the leasing 112.1 to, or use by another person for agricultural purposes. 112.2 Classification under this subdivision is not determinative 112.3 for qualifying under section 273.111. 112.4 The property classification under this section supersedes, 112.5 for property tax purposes only, any locally administered 112.6 agricultural policies or land use restrictions that define 112.7 minimum or maximum farm acreage. 112.8 (e) The term "agricultural products" as used in this 112.9 subdivision includes production for sale of: 112.10 (1) livestock, dairy animals, dairy products, poultry and 112.11 poultry products, fur-bearing animals, horticultural and nursery 112.12 stock, fruit of all kinds, vegetables, forage, grains, bees, and 112.13 apiary products by the owner; 112.14 (2) fish bred for sale and consumption if the fish breeding 112.15 occurs on land zoned for agricultural use; 112.16 (3) the commercial boarding of horses if the boarding is 112.17 done in conjunction with raising or cultivating agricultural 112.18 products as defined in clause (1); 112.19 (4) property which is owned and operated by nonprofit 112.20 organizations used for equestrian activities, excluding racing; 112.21 (5) game birds and waterfowl bred and raised for use on a 112.22 shooting preserve licensed under section 97A.115; 112.23 (6) insects primarily bred to be used as food for animals; 112.24 (7) trees, grown for sale as a crop, and not sold for 112.25 timber, lumber, wood, or wood products; and 112.26 (8) maple syrup taken from trees grown by a person licensed 112.27 by the Minnesota Department of Agriculture under chapter 28A as 112.28 a food processor. 112.29 (f) If a parcel used for agricultural purposes is also used 112.30 for commercial or industrial purposes, including but not limited 112.31 to: 112.32 (1) wholesale and retail sales; 112.33 (2) processing of raw agricultural products or other goods; 112.34 (3) warehousing or storage of processed goods; and 112.35 (4) office facilities for the support of the activities 112.36 enumerated in clauses (1), (2), and (3), 113.1 the assessor shall classify the part of the parcel used for 113.2 agricultural purposes as class 1b, 2a, or 2b, whichever is 113.3 appropriate, and the remainder in the class appropriate to its 113.4 use. The grading, sorting, and packaging of raw agricultural 113.5 products for first sale is considered an agricultural purpose. 113.6 A greenhouse or other building where horticultural or nursery 113.7 products are grown that is also used for the conduct of retail 113.8 sales must be classified as agricultural if it is primarily used 113.9 for the growing of horticultural or nursery products from seed, 113.10 cuttings, or roots and occasionally as a showroom for the retail 113.11 sale of those products. Use of a greenhouse or building only 113.12 for the display of already grown horticultural or nursery 113.13 products does not qualify as an agricultural purpose. 113.14 The assessor shall determine and list separately on the 113.15 records the market value of the homestead dwelling and the one 113.16 acre of land on which that dwelling is located. If any farm 113.17 buildings or structures are located on this homesteaded acre of 113.18 land, their market value shall not be included in this separate 113.19 determination. 113.20 (g) To qualify for classification under paragraph (b), 113.21 clause (4), a privately owned public use airport must be 113.22 licensed as a public airport under section 360.018. For 113.23 purposes of paragraph (b), clause (4), "landing area" means that 113.24 part of a privately owned public use airport properly cleared, 113.25 regularly maintained, and made available to the public for use 113.26 by aircraft and includes runways, taxiways, aprons, and sites 113.27 upon which are situated landing or navigational aids. A landing 113.28 area also includes land underlying both the primary surface and 113.29 the approach surfaces that comply with all of the following: 113.30 (i) the land is properly cleared and regularly maintained 113.31 for the primary purposes of the landing, taking off, and taxiing 113.32 of aircraft; but that portion of the land that contains 113.33 facilities for servicing, repair, or maintenance of aircraft is 113.34 not included as a landing area; 113.35 (ii) the land is part of the airport property; and 113.36 (iii) the land is not used for commercial or residential 114.1 purposes. 114.2 The land contained in a landing area under paragraph (b), clause 114.3 (4), must be described and certified by the commissioner of 114.4 transportation. The certification is effective until it is 114.5 modified, or until the airport or landing area no longer meets 114.6 the requirements of paragraph (b), clause (4). For purposes of 114.7 paragraph (b), clause (4), "public access area" means property 114.8 used as an aircraft parking ramp, apron, or storage hangar, or 114.9 an arrival and departure building in connection with the airport. 114.10 (h) To qualify for classification under paragraph (b), 114.11 clause (5), the property must be at least ten contiguous acres 114.12 in size and the owner of the property must record with the 114.13 county recorder of the county in which the property is located 114.14 an affidavit containing: 114.15 (1) a legal description of the property; 114.16 (2) a disclosure that the property contains a commercial 114.17 aggregate deposit that is not actively being mined; 114.18 (3) documentation that the conditional use under the county 114.19 or local zoning ordinance of this property is for mining; and 114.20 (4) documentation that a permit has been issued by the 114.21 local unit of government or the mining activity is allowed under 114.22 local ordinance. The disclosure must include a statement from a 114.23 registered professional geologist, engineer, or soil scientist 114.24 delineating the deposit and certifying that it is a commercial 114.25 aggregate deposit. 114.26 For purposes of this section and section 273.1115, 114.27 "commercial aggregate deposit" means a deposit that will yield 114.28 crushed stone or sand and gravel that is suitable for use as a 114.29 construction aggregate; and "actively mined" means the removal 114.30 of top soil and overburden in preparation for excavation or 114.31 excavation of a commercial deposit. 114.32 (i) When any portion of the property under this subdivision 114.33 or section 273.13, subdivision 22, begins to be actively mined, 114.34 the owner must file a supplemental affidavit within 60 days from 114.35 the day any aggregate is removed stating the number of acres of 114.36 the property that is actively being mined. The acres actively 115.1 being mined must be (1) valued and classified under section 115.2 273.13, subdivision 24, in the next subsequent assessment year, 115.3 and (2) removed from the aggregate resource preservation 115.4 property tax program under section 273.1115, if the land was 115.5 enrolled in that program. Copies of the original affidavit and 115.6 all supplemental affidavits must be filed with the county 115.7 assessor, the local zoning administrator, and the Department of 115.8 Natural Resources, Division of Land and Minerals. A 115.9 supplemental affidavit must be filed each time a subsequent 115.10 portion of the property is actively mined, provided that the 115.11 minimum acreage change is five acres, even if the actual mining 115.12 activity constitutes less than five acres. 115.13 [EFFECTIVE DATE.] This section is effective for taxes 115.14 levied in 2004, payable in 2005, and thereafter. 115.15 Sec. 26. Minnesota Statutes 2003 Supplement, section 115.16 273.13, subdivision 25, is amended to read: 115.17 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 115.18 estate containing four or more units and used or held for use by 115.19 the owner or by the tenants or lessees of the owner as a 115.20 residence for rental periods of 30 days or more. Class 4a also 115.21 includes hospitals licensed under sections 144.50 to 144.56, 115.22 other than hospitals exempt under section 272.02, and contiguous 115.23 property used for hospital purposes, without regard to whether 115.24 the property has been platted or subdivided. The market value 115.25 of class 4a property has a class rate of 1.8 percent for taxes 115.26 payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 115.27 percent for taxes payable in 2004 and thereafter, except that 115.28 class 4a property consisting of a structure for which 115.29 construction commenced after June 30, 2001, has a class rate of 115.30 1.25 percent of market value for taxes payable in 2003 and 115.31 subsequent years. 115.32 (b) Class 4b includes: 115.33 (1) residential real estate containing less than four units 115.34 that does not qualify as class 4bb, other than seasonal 115.35 residential recreational property; 115.36 (2) manufactured homes not classified under any other 116.1 provision; 116.2 (3) a dwelling, garage, and surrounding one acre of 116.3 property on a nonhomestead farm classified under subdivision 23, 116.4 paragraph (b) containing two or three units; and 116.5 (4) unimproved property that is classified residential as 116.6 determined under subdivision 33. 116.7 The market value of class 4b property has a class rate of 116.8 1.5 percent for taxes payable in 2002, and 1.25 percent for 116.9 taxes payable in 2003 and thereafter. 116.10 (c) Class 4bb includes: 116.11 (1) nonhomestead residential real estate containing one 116.12 unit, other than seasonal residential recreational property; and 116.13 (2) a single family dwelling, garage, and surrounding one 116.14 acre of property on a nonhomestead farm classified under 116.15 subdivision 23, paragraph (b). 116.16 Class 4bb property has the same class rates as class 1a 116.17 property under subdivision 22. 116.18 Property that has been classified as seasonal residential 116.19 recreational property at any time during which it has been owned 116.20 by the current owner or spouse of the current owner does not 116.21 qualify for class 4bb. 116.22 (d) Class 4c property includes: 116.23 (1) except as provided in subdivision 22, paragraph (c), 116.24 real property devoted to temporary and seasonal residential 116.25 occupancy for recreation purposes, including real property 116.26 devoted to temporary and seasonal residential occupancy for 116.27 recreation purposes and not devoted to commercial purposes for 116.28 more than 250 days in the year preceding the year of 116.29 assessment. For purposes of this clause, property is devoted to 116.30 a commercial purpose on a specific day if any portion of the 116.31 property is used for residential occupancy, and a fee is charged 116.32 for residential occupancy. In order for a property to be 116.33 classified as class 4c, seasonal residential recreational for 116.34 commercial purposes, at least 40 percent of the annual gross 116.35 lodging receipts related to the property must be from business 116.36 conducted during 90 consecutive days and either (i) at least 60 117.1 percent of all paid bookings by lodging guests during the year 117.2 must be for periods of at least two consecutive nights; or (ii) 117.3 at least 20 percent of the annual gross receipts must be from 117.4 charges for rental of fish houses, boats and motors, 117.5 snowmobiles, downhill or cross-country ski equipment, or charges 117.6 for marina services, launch services, and guide services, or the 117.7 sale of bait and fishing tackle. For purposes of this 117.8 determination, a paid booking of five or more nights shall be 117.9 counted as two bookings. Class 4c also includes commercial use 117.10 real property used exclusively for recreational purposes in 117.11 conjunction with class 4c property devoted to temporary and 117.12 seasonal residential occupancy for recreational purposes, up to 117.13 a total of two acres, provided the property is not devoted to 117.14 commercial recreational use for more than 250 days in the year 117.15 preceding the year of assessment and is located within two miles 117.16 of the class 4c property with which it is used. Class 4c 117.17 property classified in this clause also includes the remainder 117.18 of class 1c resorts provided that the entire property including 117.19 that portion of the property classified as class 1c also meets 117.20 the requirements for class 4c under this clause; otherwise the 117.21 entire property is classified as class 3. Owners of real 117.22 property devoted to temporary and seasonal residential occupancy 117.23 for recreation purposes and all or a portion of which was 117.24 devoted to commercial purposes for not more than 250 days in the 117.25 year preceding the year of assessment desiring classification as 117.26 class 1c or 4c, must submit a declaration to the assessor 117.27 designating the cabins or units occupied for 250 days or less in 117.28 the year preceding the year of assessment by January 15 of the 117.29 assessment year. Those cabins or units and a proportionate 117.30 share of the land on which they are located will be designated 117.31 class 1c or 4c as otherwise provided. The remainder of the 117.32 cabins or units and a proportionate share of the land on which 117.33 they are located will be designated as class 3a. The owner of 117.34 property desiring designation as class 1c or 4c property must 117.35 provide guest registers or other records demonstrating that the 117.36 units for which class 1c or 4c designation is sought were not 118.1 occupied for more than 250 days in the year preceding the 118.2 assessment if so requested. The portion of a property operated 118.3 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 118.4 nonresidential facility operated on a commercial basis not 118.5 directly related to temporary and seasonal residential occupancy 118.6 for recreation purposes shall not qualify for class 1c or 4c; 118.7 (2) qualified property used as a golf course if: 118.8 (i) it is open to the public on a daily fee basis. It may 118.9 charge membership fees or dues, but a membership fee may not be 118.10 required in order to use the property for golfing, and its green 118.11 fees for golfing must be comparable to green fees typically 118.12 charged by municipal courses; and 118.13 (ii) it meets the requirements of section 273.112, 118.14 subdivision 3, paragraph (d). 118.15 A structure used as a clubhouse, restaurant, or place of 118.16 refreshment in conjunction with the golf course is classified as 118.17 class 3a property; 118.18 (3) real property up to a maximum of one acre of land owned 118.19 by a nonprofit community service oriented organization; provided 118.20 that the property is not used for a revenue-producing activity 118.21 for more than six days in the calendar year preceding the year 118.22 of assessment and the property is not used for residential 118.23 purposes on either a temporary or permanent basis. For purposes 118.24 of this clause, a "nonprofit community service oriented 118.25 organization" means any corporation, society, association, 118.26 foundation, or institution organized and operated exclusively 118.27 for charitable, religious, fraternal, civic, or educational 118.28 purposes, and which is exempt from federal income taxation 118.29 pursuant to section 501(c)(3), (10), or (19) of the Internal 118.30 Revenue Code of 1986, as amended through December 31, 1990. For 118.31 purposes of this clause, "revenue-producing activities" shall 118.32 include but not be limited to property or that portion of the 118.33 property that is used as an on-sale intoxicating liquor or 3.2 118.34 percent malt liquor establishment licensed under chapter 340A, a 118.35 restaurant open to the public, bowling alley, a retail store, 118.36 gambling conducted by organizations licensed under chapter 349, 119.1 an insurance business, or office or other space leased or rented 119.2 to a lessee who conducts a for-profit enterprise on the 119.3 premises. Any portion of the property which is used for 119.4 revenue-producing activities for more than six days in the 119.5 calendar year preceding the year of assessment shall be assessed 119.6 as class 3a. The use of the property for social events open 119.7 exclusively to members and their guests for periods of less than 119.8 24 hours, when an admission is not charged nor any revenues are 119.9 received by the organization shall not be considered a 119.10 revenue-producing activity; 119.11 (4) postsecondary student housing of not more than one acre 119.12 of land that is owned by a nonprofit corporation organized under 119.13 chapter 317A and is used exclusively by a student cooperative, 119.14 sorority, or fraternity for on-campus housing or housing located 119.15 within two miles of the border of a college campus; 119.16 (5) manufactured home parks as defined in section 327.14, 119.17 subdivision 3; 119.18 (6) real property that is actively and exclusively devoted 119.19 to indoor fitness, health, social, recreational, and related 119.20 uses, is owned and operated by a not-for-profit corporation, and 119.21 is located within the metropolitan area as defined in section 119.22 473.121, subdivision 2; 119.23 (7) a leased or privately owned noncommercial aircraft 119.24 storage hangar not exempt under section 272.01, subdivision 2, 119.25 and the land on which it is located, provided that: 119.26 (i) the land is on an airport owned or operated by a city, 119.27 town, county, Metropolitan Airports Commission, or group 119.28 thereof; and 119.29 (ii) the land lease, or any ordinance or signed agreement 119.30 restricting the use of the leased premise, prohibits commercial 119.31 activity performed at the hangar. 119.32 If a hangar classified under this clause is sold after June 119.33 30, 2000, a bill of sale must be filed by the new owner with the 119.34 assessor of the county where the property is located within 60 119.35 days of the sale; and 119.36 (8) residential real estate, a portion of which is used by 120.1 the owner for homestead purposes, and that is also a place of 120.2 lodging, if all of the following criteria are met: 120.3 (i) rooms are provided for rent to transient guests that 120.4 generally stay for periods of 14 or fewer days; 120.5 (ii) meals are provided to persons who rent rooms, the cost 120.6 of which is incorporated in the basic room rate; 120.7 (iii) meals are not provided to the general public except 120.8 for special events on fewer than seven days in the calendar year 120.9 preceding the year of the assessment; and 120.10 (iv) the owner is the operator of the property. 120.11 The market value subject to the 4c classification under this 120.12 clause is limited to five rental units. Any rental units on the 120.13 property in excess of five, must be valued and assessed as class 120.14 3a. The portion of the property used for purposes of a 120.15 homestead by the owner must be classified as class 1a property 120.16 under subdivision 22. 120.17 Class 4c property has a class rate of 1.5 percent of market 120.18 value, except that (i) each parcel of seasonal residential 120.19 recreational property not used for commercial purposes has the 120.20 same class rates as class 4bb property, (ii) manufactured home 120.21 parks assessed under clause (5) have the same class rate as 120.22 class 4b property, (iii) commercial-use seasonal residential 120.23 recreational property has a class rate of one percent for the 120.24 first $500,000 of market value, which includes any market value 120.25 receiving the one percent rate under subdivision 22, and 1.25 120.26 percent for the remaining market value, (iv) the market value of 120.27 property described in clause (4) has a class rate of one 120.28 percent, (v) the market value of property described in clauses 120.29 (2) and (6) has a class rate of 1.25 percent, and (vi) that 120.30 portion of the market value of property in clause (8) qualifying 120.31 for class 4c property has a class rate of 1.25 percent. 120.32 (e) Class 4d property is qualifying low-income rental 120.33 housing certified to the assessor by the Housing Finance Agency 120.34 under sections 273.126 and 462A.071. Class 4d includes land in 120.35 proportion to the total market value of the building that is 120.36 qualifying low-income rental housing. 121.1 Class 4d property has a class rate of 0.55 percent for 121.2 taxes payable in 2005 and thereafter. 121.3 Sec. 27. [273.1321] [VALUATION OF LOW-INCOME RENTAL 121.4 PROPERTY; CAPITALIZED VALUE OF NET OPERATING INCOME.] 121.5 Subdivision 1. [REQUIREMENT.] Low-income rental property 121.6 classified as class 4d under section 273.13, subdivision 25, is 121.7 entitled to valuation under this section if at least 75 percent 121.8 of the units in the rental housing property meet any of the 121.9 following qualifications: 121.10 (1) the units are subject to a housing assistance payments 121.11 contract under section 8 of the United States Housing Act of 121.12 1937, as amended; 121.13 (2) the units are rent-restricted and income-restricted 121.14 units of a qualified low-income housing project receiving tax 121.15 credits under section 42(g) of the Internal Revenue Code of 121.16 1986, as amended; 121.17 (3) the units are financed by the Rural Housing Service of 121.18 the United States Department of Agriculture and receive payments 121.19 under the rental assistance program pursuant to section 521(a) 121.20 of the Housing Act of 1949, as amended; or 121.21 (4) the units are subject to rent and income restrictions 121.22 under the terms of financial assistance provided to the rental 121.23 housing property by a federal, state, or local unit of 121.24 government as evidenced by a document recorded against the 121.25 property. 121.26 The restrictions must require assisted units to be occupied 121.27 by residents whose household income at the time of initial 121.28 occupancy does not exceed 60 percent of the greater of area or 121.29 state median income, adjusted for family size, as determined by 121.30 the United States Department of Housing and Urban Development. 121.31 The restriction must also require the rents for assisted units 121.32 to not exceed 30 percent of 60 percent of the greater of area or 121.33 state median income, adjusted for family size, as determined by 121.34 the United States Department of Housing and Urban Development. 121.35 Subd. 2. [DETERMINATION OF VALUE.] (a) The value of any 121.36 rental housing property meeting the qualifications of 122.1 subdivision 1 shall be determined, upon timely application by 122.2 the owner in the manner provided in subdivision 3, on the basis 122.3 of the restricted use of the property, notwithstanding sections 122.4 272.03, subdivision 8, and 273.11, by capitalizing the net 122.5 operating income prior to the payment of debt service. 122.6 (b) Net operating income prior to payment of debt service 122.7 must be the amounts shown in a financial statement prepared by 122.8 an independent certified public accountant or firm. The 122.9 financial statement must show the revenues, expenses, cash 122.10 flows, assets, liabilities, and net assets for the property for 122.11 which an application is made under this section. 122.12 (c) The capitalization rate applied to net operating income 122.13 shall be established jointly by the commissioner and the Housing 122.14 Finance Agency based on market data and industry standards. The 122.15 commissioner and the Housing Finance Agency shall jointly 122.16 establish separate rates based on types of rental housing 122.17 properties and their locations. 122.18 Subd. 3. [APPLICATION.] (a) Application for assessment 122.19 under this section must be filed by February 28 of the levy 122.20 year, or at a later date the Housing Finance Agency deems 122.21 practicable. The application must be filed with the Housing 122.22 Finance Agency, on a form prescribed by the agency, and must 122.23 contain the information required by the Housing Finance Agency. 122.24 (b) Each application must include: 122.25 (1) the property tax identification number; 122.26 (2) evidence that the property meets the requirements of 122.27 subdivision 1; and 122.28 (3) a true and correct copy of the financial statement 122.29 related to the property. 122.30 (c) The applicant must pay an application fee to be set by 122.31 the Housing Finance Agency. The application fee charged by the 122.32 agency must approximately equal the costs of processing and 122.33 reviewing the applications. The fee must be deposited in the 122.34 housing development fund. 122.35 Subd. 4. [CERTIFICATION.] By June 1 of each levy year, the 122.36 Housing Finance Agency must certify to local assessors the 123.1 valuation, as determined under this section, of rental 123.2 properties that apply and are qualified for valuation under this 123.3 section. In making the certification, the Housing Finance 123.4 Agency may rely on the application and supporting information 123.5 supplied by the property owner. 123.6 [EFFECTIVE DATE.] This section is effective for taxes 123.7 levied in 2005, payable in 2006, and thereafter. 123.8 Sec. 28. Minnesota Statutes 2002, section 273.1384, 123.9 subdivision 3, is amended to read: 123.10 Subd. 3. [CREDIT REIMBURSEMENTS.] (a) The county auditor 123.11 shall determine the tax reductions allowed under this section 123.12 within the county for each taxes payable year and shall certify 123.13 that amount to the commissioner of revenue as a part of the 123.14 abstracts of tax lists submitted by the county auditors under 123.15 section 275.29. 123.16 (b) In the case of class 1a, class lc, or class 2a 123.17 homestead property which is located within a city, the county 123.18 auditor shall determine whether the net tax on each parcel is 123.19 less than the applicable percentage of its taxable market value 123.20 provided in this paragraph for the year. For taxes payable in 123.21 2006 and 2007, if the net tax on the property is less than 0.7 123.22 percent of its taxable market value, the county auditor shall 123.23 reduce the reimbursement to the county and the city for the 123.24 credit allowed under subdivision 1 by the amount of the 123.25 difference. For taxes payable in 2008 and 2009, if the net tax 123.26 on the property is less than 0.8 percent of its taxable market 123.27 value, the county auditor shall reduce the reimbursement to the 123.28 county and the city for the credit allowed under subdivision 1 123.29 by the amount of the difference. For taxes payable in 2010 and 123.30 2011, if the net tax on the property is less than 0.9 percent of 123.31 its taxable market value, the county auditor shall reduce the 123.32 reimbursement to the county and the city for the credit allowed 123.33 under subdivision 1 by the amount of the difference. For taxes 123.34 payable in 2012 and thereafter, if the net tax on the property 123.35 is less than one percent of its taxable market value, the county 123.36 auditor shall reduce the reimbursement to the county and the 124.1 city for the credit allowed under subdivision 1 by the amount of 124.2 the difference. The market value credit reimbursement cannot be 124.3 less than zero. 124.4 (c) Any prior year adjustments shall also be certified on 124.5 the abstracts of tax lists. The commissioner shall review the 124.6 certifications for accuracy, and may make such changes as are 124.7 deemed necessary, or return the certification to the county 124.8 auditor for correction. If there is no reduction of the 124.9 reimbursements under paragraph (b), the credits under this 124.10 section must be used to proportionately reduce the net tax 124.11 capacity-based property tax payable to each local taxing 124.12 jurisdiction as provided in section 273.1393. If there is a 124.13 reduction under paragraph (b), the reimbursements paid to the 124.14 city and county must be reduced in proportion to the amount of 124.15 their levies. 124.16 [EFFECTIVE DATE.] This section is effective for taxes 124.17 levied in 2005, payable in 2006, and thereafter. 124.18 Sec. 29. [273.323] [EFFECTIVE DATE FOR RULES FOR VALUATION 124.19 OF ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.] 124.20 Rules adopted by the commissioner that prescribe the method 124.21 of valuing property of electric and transmission pipeline 124.22 utilities may not take effect before the end of the regular 124.23 legislative session in the calendar year following adoption of 124.24 the rules. 124.25 [EFFECTIVE DATE.] This section is effective the day 124.26 following final enactment. 124.27 Sec. 30. Minnesota Statutes 2003 Supplement, section 124.28 275.025, subdivision 1, is amended to read: 124.29 Subdivision 1. [LEVY AMOUNT.] (a) The state general levy 124.30 is levied against commercial-industrial property and seasonal 124.31 residential recreational property, as defined in this section. 124.32 The state general levy base amount is $592,000,000 for taxes 124.33 payable in 2002. For taxes payable in subsequent years on 124.34 seasonal residential recreational property, the levy base amount 124.35 is increased each year by multiplying the levy base amount 124.36 for that class of property for the prior year by the sum of one 125.1 plus the rate of increase, if any, in the implicit price 125.2 deflator for government consumption expenditures and gross 125.3 investment for state and local governments prepared by the 125.4 Bureau of Economic Analysts of the United States Department of 125.5 Commerce for the 12-month period ending March 31 of the year 125.6 prior to the year the taxes are payable. For taxes payable in 125.7 2005 and subsequent years on commercial-industrial property, the 125.8 tax is imposed under this subdivision at the rate of the tax 125.9 imposed under this subdivision for taxes payable in 2002. The 125.10 tax under this section is not treated as a local tax rate under 125.11 section 469.177 and is not the levy of a governmental unit under 125.12 chapters 276A and 473F. 125.13 (b) Beginning with taxes payable in 2007, and in each year 125.14 thereafter, the commissioner of finance shall deposit in the 125.15 education reserve account established in section 45, the 125.16 increased amount of the state general levy for that year over 125.17 the state general levy base amount for taxes payable in 2002. 125.18 (c) The commissioner shall increase or decrease the 125.19 preliminary or final rate for a year as necessary to account for 125.20 errors and tax base changes that affected a preliminary or final 125.21 rate for either of the two preceding years. Adjustments are 125.22 allowed to the extent that the necessary information is 125.23 available to the commissioner at the time the rates for a year 125.24 must be certified, and for the following reasons: 125.25 (1) an erroneous report of taxable value by a local 125.26 official; 125.27 (2) an erroneous calculation by the commissioner; and 125.28 (3) an increase or decrease in taxable value for 125.29 commercial-industrial or seasonal residential recreational 125.30 property reported on the abstracts of tax lists submitted under 125.31 section 275.29 that was not reported on the abstracts of 125.32 assessment submitted under section 270.11, subdivision 2, for 125.33 the same year. 125.34 The commissioner may, but need not, make adjustments if the 125.35 total difference in the tax levied for the year would be less 125.36 than $100,000. 126.1 [EFFECTIVE DATE.] This section is effective for taxes 126.2 payable in 2004 and subsequent years. 126.3 Sec. 31. Minnesota Statutes 2003 Supplement, section 126.4 275.065, subdivision 3, is amended to read: 126.5 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 126.6 county auditor shall prepare and the county treasurer shall 126.7 deliver after November 10 and on or before November 24 each 126.8 year, by first class mail to each taxpayer at the address listed 126.9 on the county's current year's assessment roll, a notice of 126.10 proposed property taxes. 126.11 (b) The commissioner of revenue shall prescribe the form of 126.12 the notice. 126.13 (c) The notice must inform taxpayers that it contains the 126.14 amount of property taxes each taxing authority proposes to 126.15 collect for taxes payable the following year. In the case of a 126.16 town, or in the case of the state general tax, the final tax 126.17 amount will be its proposed tax. In the case of taxing 126.18 authorities required to hold a public meeting under subdivision 126.19 6, the notice must clearly state that each taxing authority, 126.20 including regional library districts established under section 126.21 134.201, and including the metropolitan taxing districts as 126.22 defined in paragraph (i), but excluding all other special taxing 126.23 districts and towns, will hold a public meeting to receive 126.24 public testimony on the proposed budget and proposed or final 126.25 property tax levy, or, in case of a school district, on the 126.26 current budget and proposed property tax levy. It must clearly 126.27 state the time and place of each taxing authority's meeting, a 126.28 telephone number for the taxing authority that taxpayers may 126.29 call if they have questions related to the notice, and an 126.30 address where comments will be received by mail. 126.31 (d) The notice must state for each parcel: 126.32 (1) the market value of the property as determined under 126.33 section 273.11, and used for computing property taxes payable in 126.34 the following year and for taxes payable in the current year as 126.35 each appears in the records of the county assessor on November 1 126.36 of the current year; and, in the case of residential property, 127.1 whether the property is classified as homestead or 127.2 nonhomestead. The notice must clearly inform taxpayers of the 127.3 years to which the market values apply and that the values are 127.4 final values; 127.5 (2) the items listed below, shown separately by county, 127.6 city or town, and state general tax, net of the residential and 127.7 agricultural homestead credit under section 273.1384, voter 127.8 approved school levy, other local school levy, and the sum of 127.9 the special taxing districts, and as a total of all taxing 127.10 authorities: 127.11 (i) the actual tax for taxes payable in the current year; 127.12 and 127.13 (ii) the proposed tax amount. 127.14 If the county levy under clause (2) includes an amount for 127.15 a lake improvement district as defined under sections 103B.501 127.16 to 103B.581, the amount attributable for that purpose must be 127.17 separately stated from the remaining county levy amount. 127.18 In the case of a town or the state general tax, the final 127.19 tax shall also be its proposed tax unless the town changes its 127.20 levy at a special town meeting under section 365.52. If a 127.21 school district has certified under section 126C.17, subdivision 127.22 9, that a referendum will be held in the school district at the 127.23 November general election, the county auditor must note next to 127.24 the school district's proposed amount that a referendum is 127.25 pending and that, if approved by the voters, the tax amount may 127.26 be higher than shown on the notice. In the case of the city of 127.27 Minneapolis, the levy for the Minneapolis Library Board and the 127.28 levy for Minneapolis Park and Recreation shall be listed 127.29 separately from the remaining amount of the city's levy. In the 127.30 case of the city of St. Paul, the levy for the St. Paul Library 127.31 Agency must be listed separately from the remaining amount of 127.32 the city's levy. In the case of Ramsey County, any amount 127.33 levied under section 134.07 may be listed separately from the 127.34 remaining amount of the county's levy. In the case of a parcel 127.35 where tax increment or the fiscal disparities areawide tax under 127.36 chapter 276A or 473F applies, the proposed tax levy on the 128.1 captured value or the proposed tax levy on the tax capacity 128.2 subject to the areawide tax must each be stated separately and 128.3 not included in the sum of the special taxing districts; and 128.4 (3) the increase or decrease between the total taxes 128.5 payable in the current year and the total proposed taxes, 128.6 expressed as a percentage. 128.7 For purposes of this section, the amount of the tax on 128.8 homesteads qualifying under the senior citizens' property tax 128.9 deferral program under chapter 290B is the total amount of 128.10 property tax before subtraction of the deferred property tax 128.11 amount. 128.12 (e) The notice must clearly state that the proposed or 128.13 final taxes do not include the following: 128.14 (1) special assessments; 128.15 (2) levies approved by the voters after the date the 128.16 proposed taxes are certified, including bond referenda and 128.17 school district levy referenda; 128.18 (3) a levy limit increase approved by the voters by the 128.19 first Tuesday after the first Monday in November of the levy 128.20 year as provided under section 275.73; 128.21 (4) amounts necessary to pay cleanup or other costs due to 128.22 a natural disaster occurring after the date the proposed taxes 128.23 are certified; 128.24 (5) amounts necessary to pay tort judgments against the 128.25 taxing authority that become final after the date the proposed 128.26 taxes are certified; and 128.27 (6) the contamination tax imposed on properties which 128.28 received market value reductions for contamination. 128.29 (f) Except as provided in subdivision 7, failure of the 128.30 county auditor to prepare or the county treasurer to deliver the 128.31 notice as required in this section does not invalidate the 128.32 proposed or final tax levy or the taxes payable pursuant to the 128.33 tax levy. 128.34 (g) If the notice the taxpayer receives under this section 128.35 lists the property as nonhomestead, and satisfactory 128.36 documentation is provided to the county assessor by the 129.1 applicable deadline, and the property qualifies for the 129.2 homestead classification in that assessment year, the assessor 129.3 shall reclassify the property to homestead for taxes payable in 129.4 the following year. 129.5 (h) In the case of class 4 residential property used as a 129.6 residence for lease or rental periods of 30 days or more, the 129.7 taxpayer must either: 129.8 (1) mail or deliver a copy of the notice of proposed 129.9 property taxes to each tenant, renter, or lessee; or 129.10 (2) post a copy of the notice in a conspicuous place on the 129.11 premises of the property. 129.12 The notice must be mailed or posted by the taxpayer by 129.13 November 27 or within three days of receipt of the notice, 129.14 whichever is later. A taxpayer may notify the county treasurer 129.15 of the address of the taxpayer, agent, caretaker, or manager of 129.16 the premises to which the notice must be mailed in order to 129.17 fulfill the requirements of this paragraph. 129.18 (i) For purposes of this subdivision, subdivisions 5a and 129.19 6, "metropolitan special taxing districts" means the following 129.20 taxing districts in the seven-county metropolitan area that levy 129.21 a property tax for any of the specified purposes listed below: 129.22 (1) Metropolitan Council under section 473.132, 473.167, 129.23 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 129.24 (2) Metropolitan Airports Commission under section 473.667, 129.25 473.671, or 473.672; and 129.26 (3) Metropolitan Mosquito Control Commission under section 129.27 473.711. 129.28 For purposes of this section, any levies made by the 129.29 regional rail authorities in the county of Anoka, Carver, 129.30 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 129.31 398A shall be included with the appropriate county's levy and 129.32 shall be discussed at that county's public hearing. 129.33 [EFFECTIVE DATE.] This section is effective for notices for 129.34 property taxes levied in 2004, payable in 2005, and thereafter. 129.35 Sec. 32. Minnesota Statutes 2002, section 276.04, 129.36 subdivision 2, is amended to read: 130.1 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 130.2 shall provide for the printing of the tax statements. The 130.3 commissioner of revenue shall prescribe the form of the property 130.4 tax statement and its contents. The statement must contain a 130.5 tabulated statement of the dollar amount due to each taxing 130.6 authority and the amount of the state tax from the parcel of 130.7 real property for which a particular tax statement is prepared. 130.8 The dollar amounts attributable to the county, the state tax, 130.9 the voter approved school tax, the other local school tax, the 130.10 township or municipality, and the total of the metropolitan 130.11 special taxing districts as defined in section 275.065, 130.12 subdivision 3, paragraph (i), must be separately stated. The 130.13 amounts due all other special taxing districts, if any, may be 130.14 aggregated. If the county levy under this paragraph includes an 130.15 amount for a lake improvement district as defined under sections 130.16 103B.501 to 103B.581, the amount attributable for that purpose 130.17 must be separately stated from the remaining county levy 130.18 amount. In the case of Ramsey County, if the county levy under 130.19 this paragraph includes an amount for public library service 130.20 under section 134.07, the amount attributable for that purpose 130.21 may be separately stated from the remaining county levy amount. 130.22 The amount of the tax on homesteads qualifying under the senior 130.23 citizens' property tax deferral program under chapter 290B is 130.24 the total amount of property tax before subtraction of the 130.25 deferred property tax amount. The amount of the tax on 130.26 contamination value imposed under sections 270.91 to 270.98, if 130.27 any, must also be separately stated. The dollar amounts, 130.28 including the dollar amount of any special assessments, may be 130.29 rounded to the nearest even whole dollar. For purposes of this 130.30 section whole odd-numbered dollars may be adjusted to the next 130.31 higher even-numbered dollar. The amount of market value 130.32 excluded under section 273.11, subdivision 16, if any, must also 130.33 be listed on the tax statement. 130.34 (b) The property tax statements for manufactured homes and 130.35 sectional structures taxed as personal property shall contain 130.36 the same information that is required on the tax statements for 131.1 real property. 131.2 (c) Real and personal property tax statements must contain 131.3 the following information in the order given in this paragraph. 131.4 The information must contain the current year tax information in 131.5 the right column with the corresponding information for the 131.6 previous year in a column on the left: 131.7 (1) the property's estimated market value under section 131.8 273.11, subdivision 1; 131.9 (2) the property's taxable market value after reductions 131.10 under section 273.11, subdivisions 1a and 16; 131.11 (3) the property's gross tax, calculated by adding the 131.12 property's total property tax to the sum of the aids enumerated 131.13 in clause (4); 131.14 (4) a total of the following aids: 131.15 (i) education aids payable under chapters 122A, 123A, 123B, 131.16 124D, 125A, 126C, and 127A; 131.17 (ii) local government aids for cities, towns, and counties 131.18 under chapter 477A; 131.19 (iii) disparity reduction aid under section 273.1398; and 131.20 (iv) homestead and agricultural credit aid under section 131.21 273.1398; 131.22 (5) for homestead residential and agricultural properties, 131.23 the credits under section 273.1384; 131.24 (6) any credits received under sections 273.119; 273.123; 131.25 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 131.26 473H.10, except that the amount of credit received under section 131.27 273.135 must be separately stated and identified as "taconite 131.28 tax relief"; and 131.29 (7) the net tax payable in the manner required in paragraph 131.30 (a). 131.31 (d) If the county uses envelopes for mailing property tax 131.32 statements and if the county agrees, a taxing district may 131.33 include a notice with the property tax statement notifying 131.34 taxpayers when the taxing district will begin its budget 131.35 deliberations for the current year, and encouraging taxpayers to 131.36 attend the hearings. If the county allows notices to be 132.1 included in the envelope containing the property tax statement, 132.2 and if more than one taxing district relative to a given 132.3 property decides to include a notice with the tax statement, the 132.4 county treasurer or auditor must coordinate the process and may 132.5 combine the information on a single announcement. 132.6 The commissioner of revenue shall certify to the county 132.7 auditor the actual or estimated aids enumerated in clause (4) 132.8 that local governments will receive in the following year. The 132.9 commissioner must certify this amount by January 1 of each year. 132.10 [EFFECTIVE DATE.] This section is effective for property 132.11 tax statements for taxes payable in 2005 and thereafter. 132.12 Sec. 33. [278.021] [PETITIONS INVOLVING LOW-INCOME RENTAL 132.13 HOUSING PROPERTY.] 132.14 Notwithstanding section 278.02, in the case of real 132.15 property that meets the definition of qualifying low-income 132.16 housing rental property established in section 273.126, the 132.17 petition may include any and all such parcels of real property 132.18 in which the petitioner has an estate, right, title, interest, 132.19 or lien, except that all such parcels included in the petition 132.20 must be located in the same county. Contiguous qualifying 132.21 low-income rental housing property overlapping county boundaries 132.22 may be included in the same petition. 132.23 Sec. 34. Minnesota Statutes 2002, section 278.03, 132.24 subdivision 1, is amended to read: 132.25 Subdivision 1. [REAL PROPERTY.]In the case of real132.26property,If the proceedings instituted by the filing of the 132.27 petition have not been completed before the 16th day of May next 132.28 following the filing or, in the case of class 1c property or 132.29 class 4c resort property before the 16th day of June for taxes 132.30 payable in 2005 and 2006 only, the petitioner shall pay to the 132.31 county treasurer 50 percent of the tax levied for such year 132.32 against the property involved, unless permission to continue 132.33 prosecution of the petition without such payment is obtained as 132.34 herein provided. If the proceedings instituted by the filing of 132.35 the petition have not been completed by the next October 16, or, 132.36 in the case of class 1b agricultural homestead, class 2a 133.1 agricultural homestead, and class 2b(2) agricultural 133.2 nonhomestead property, November 16, the petitioner shall pay to 133.3 the county treasurer 50 percent of the unpaid balance of the 133.4 taxes levied for the year against the property involved if the 133.5 unpaid balance is $2,000 or less and 80 percent of the unpaid 133.6 balance if the unpaid balance is over $2,000, unless permission 133.7 to continue prosecution of the petition without payment is 133.8 obtained as herein provided. The petitioner, upon ten days' 133.9 notice to the county attorney and to the county auditor, given 133.10 at least ten days prior to the 16th day of May or, in the case 133.11 of class 1c or class 4c resort property, the 16th day of June 133.12 for taxes payable in 2005 and 2006 only, or the 16th day of 133.13 October, or, in the case of class 1b agricultural homestead, 133.14 class 2a agricultural homestead, and class 2b(2) agricultural 133.15 nonhomestead property, the 16th day of November, may apply to 133.16 the court for permission to continue prosecution of the petition 133.17 without payment; and, if it is made to appear 133.18 (1) that the proposed review is to be taken in good faith; 133.19 (2) that there is probable cause to believe that the 133.20 property may be held exempt from the tax levied or that the tax 133.21 may be determined to be less than 50 percent of the amount 133.22 levied; and 133.23 (3) that it would work a hardship upon petitioner to pay 133.24 the taxes due, 133.25 the court may permit the petitioner to continue prosecution 133.26 of the petition without payment, or may fix a lesser amount to 133.27 be paid as a condition of continuing the prosecution of the 133.28 petition. 133.29 Failure to make payment of the amount required when due 133.30 shall operate automatically to dismiss the petition and all 133.31 proceedings thereunder unless the payment is waived by an order 133.32 of the court permitting the petitioner to continue prosecution 133.33 of the petition without payment. The petition shall be 133.34 automatically reinstated upon payment of the entire tax plus 133.35 interest and penalty if the payment is made within one year of 133.36 the dismissal. The county treasurer shall, upon request of the 134.1 petitioner, issue duplicate receipts for the tax payment, one of 134.2 which shall be filed by the petitioner in the proceeding. 134.3 Sec. 35. Minnesota Statutes 2002, section 279.01, 134.4 subdivision 1, is amended to read: 134.5 Subdivision 1. [DUE DATES; PENALTIES.] Except as provided 134.6 insubdivision 3 or 4this section, on May 16 or 21 days after 134.7 the postmark date on the envelope containing the property tax 134.8 statement, whichever is later, a penalty shall accrue and 134.9 thereafter be charged upon all unpaid taxes on real estate on 134.10 the current lists in the hands of the county treasurer. The 134.11 penalty shall be at a rate of two percent on homestead property 134.12 until May 31 and four percent on June 1. The penalty on 134.13 nonhomestead property shall be at a rate of four percent until 134.14 May 31 and eight percent on June 1. This penalty shall not 134.15 accrue until June 1 of each year, or 21 days after the postmark 134.16 date on the envelope containing the property tax statements, 134.17 whichever is later, on commercial use real property used for 134.18 seasonal residential recreational purposes and classified as 134.19 class 1c or 4c, and on other commercial use real property 134.20 classified as class 3a, provided that over 60 percent of the 134.21 gross income earned by the enterprise on the class 3a property 134.22 is earned during the months of May, June, July, and August. Any 134.23 property owner of such class 3a property who pays the first half 134.24 of the tax due on the property after May 15 and before June 1, 134.25 or 21 days after the postmark date on the envelope containing 134.26 the property tax statement, whichever is later, shall attach an 134.27 affidavit to the payment attesting to compliance with the income 134.28 provision of this subdivision. Thereafter, for both homestead 134.29 and nonhomestead property, on the first day of each month 134.30 beginning July 1, up to and including October 1 following, an 134.31 additional penalty of one percent for each month shall accrue 134.32 and be charged on all such unpaid taxes provided that if the due 134.33 date was extended beyond May 15 as the result of any delay in 134.34 mailing property tax statements no additional penalty shall 134.35 accrue if the tax is paid by the extended due date. If the tax 134.36 is not paid by the extended due date, then all penalties that 135.1 would have accrued if the due date had been May 15 shall be 135.2 charged. When the taxes against any tract or lot exceed $50, 135.3 one-half thereof may be paid prior to May 16 or 21 days after 135.4 the postmark date on the envelope containing the property tax 135.5 statement, whichever is later; and, if so paid, no penalty shall 135.6 attach; the remaining one-half shall be paid at any time prior 135.7 to October 16 following, without penalty; but, if not so paid, 135.8 then a penalty of two percent shall accrue thereon for homestead 135.9 property and a penalty of four percent on nonhomestead 135.10 property. Thereafter, for homestead property, on the first day 135.11 of November an additional penalty of four percent shall accrue 135.12 and on the first day of December following, an additional 135.13 penalty of two percent shall accrue and be charged on all such 135.14 unpaid taxes. Thereafter, for nonhomestead property, on the 135.15 first day of November and December following, an additional 135.16 penalty of four percent for each month shall accrue and be 135.17 charged on all such unpaid taxes. If one-half of such taxes 135.18 shall not be paid prior to May 16 or 21 days after the postmark 135.19 date on the envelope containing the property tax statement, 135.20 whichever is later, the same may be paid at any time prior to 135.21 October 16, with accrued penalties to the date of payment added, 135.22 and thereupon no penalty shall attach to the remaining one-half 135.23 until October 16 following. 135.24 This section applies to payment of personal property taxes 135.25 assessed against improvements to leased property, except as 135.26 provided by section 277.01, subdivision 3. 135.27 A county may provide by resolution that in the case of a 135.28 property owner that has multiple tracts or parcels with 135.29 aggregate taxes exceeding $50, payments may be made in 135.30 installments as provided in this subdivision. 135.31 The county treasurer may accept payments of more or less 135.32 than the exact amount of a tax installment due. If the accepted 135.33 payment is less than the amount due, payments must be applied 135.34 first to the penalty accrued for the year the payment is made. 135.35 Acceptance of partial payment of tax does not constitute a 135.36 waiver of the minimum payment required as a condition for filing 136.1 an appeal under section 278.03 or any other law, nor does it 136.2 affect the order of payment of delinquent taxes under section 136.3 280.39. 136.4 Sec. 36. Minnesota Statutes 2002, section 279.01, is 136.5 amended by adding a subdivision to read: 136.6 Subd. 5. [SEASONAL RESIDENTIAL RECREATIONAL PROPERTY USED 136.7 FOR COMMERCIAL PURPOSES.] For taxes payable in 2005 and 2006 136.8 only, in the case of class 1c property and class 4c seasonal 136.9 residential recreational property used for commercial purposes, 136.10 no penalties shall accrue to the first one-half property tax 136.11 payment as provided in this section if paid by June 15. On June 136.12 16, a penalty shall accrue and thereafter be charged upon all 136.13 unpaid taxes. On class 1c property the penalty is at a rate of 136.14 two percent until June 31, and four percent on July 1. On class 136.15 4c seasonal residential recreational property used for 136.16 commercial purposes, the penalty is four percent until June 31 136.17 and eight percent on July 1. Thereafter, for both class 1c and 136.18 class 4c seasonal residential recreational property used for 136.19 commercial purposes, on the first day of September and on the 136.20 first day of October, an additional penalty of one percent shall 136.21 accrue and be charged on unpaid taxes. The remaining one-half 136.22 property taxes must be paid and penalties accrue as provided in 136.23 subdivision 1. 136.24 Sec. 37. [290.0621] [SCHOOL REFERENDUM TAX.] 136.25 Subdivision 1. [IMPOSITION.] In addition to all other 136.26 taxes imposed by this chapter, a tax is imposed on individuals 136.27 who are domiciled on the last day of the taxable year within the 136.28 territory of a school district in which the voters approved an 136.29 income tax increase at a referendum conducted under section 136.30 126C.17, subdivision 9, for that purpose in 2005 or a subsequent 136.31 year. This tax does not apply to referendums on bond issues. 136.32 Individuals domiciled in the district on the last day of the 136.33 taxable year are subject to the tax. 136.34 Subd. 2. [RATE.] The commissioner of revenue shall 136.35 annually determine the rate of the tax imposed under this 136.36 section as a percentage of the state income tax liability of 137.1 individuals subject to the tax by each district. The school 137.2 referendum tax rate is equal to the ratio of (i) the district's 137.3 local effort revenue under section 126C.17, subdivision 6b, to 137.4 (ii) the state income tax liability of all individuals domiciled 137.5 in the district on the last day of the previous taxable year. 137.6 Subd. 3. [REVENUE DISTRIBUTION.] Revenue raised in 137.7 subdivision 1 must be placed in a special account in the general 137.8 fund. The amount necessary to make payments to school districts 137.9 under this section is annually appropriated from the general 137.10 fund to the commissioner of education and must be paid to school 137.11 districts according to section 127A.45. 137.12 Sec. 38. Minnesota Statutes 2002, section 462A.071, 137.13 subdivision 6, is amended to read: 137.14 Subd. 6. [SECTION 8, TAX CREDIT, AND RURAL HOUSING SERVICE 137.15 UNITS.] (a) The agency may deem units as meeting the 137.16 requirements of section 273.126 and this section, if the units:137.17(1) are subject to a housing assistance payments contract137.18under section 8 of the United States Housing Act of 1937, as137.19amended;137.20(2) are rent and income restricted units of a qualified137.21low-income housing project receiving tax credits under section137.2242(g) of the Internal Revenue Code of 1986, as amended; or137.23(3) are financed by the Rural Housing Service of the United137.24States Department of Agriculture and receive payments under the137.25rental assistance program pursuant to section 521(a) of the137.26Housing Act of 1949, as amendedmeet the requirements provided 137.27 in section 273.1321, subdivision 1. 137.28 (b) The agency may certify these deemed units under 137.29 subdivision 1 based on a simplified application procedure that 137.30 verifies the unit's qualifications under paragraph (a). 137.31 Sec. 39. Minnesota Statutes 2002, section 473F.08, is 137.32 amended by adding a subdivision to read: 137.33 Subd. 3c. [UNCOMPENSATED CARE REIMBURSEMENT.] (a) As used 137.34 in this subdivision, the following terms have the meanings given 137.35 in this paragraph. 137.36 (1) "Uncompensated care" means the sum of (i) the amount 138.1 that would have been charged by a facility for rendering free or 138.2 discounted care to persons who cannot afford to pay and for 138.3 which the facility did not expect payment and (ii) the amount 138.4 that had been charged by a facility for rendering care to 138.5 persons and billed to that person or a third-party payer for 138.6 which the facility expected but did not receive payment. 138.7 Uncompensated care does not include contractual write-offs. 138.8 (2) A "qualifying hospital" means a hospital in the area 138.9 that is: 138.10 (i) owned or operated by a local unit of government, or 138.11 formerly owned by a university or is a private nonprofit 138.12 hospital that leases its building from the county in which it is 138.13 located; and 138.14 (ii) has a licensed bed capacity greater than 400. 138.15 (b) A county that contains a qualifying hospital is 138.16 eligible for reimbursement of that portion of gross charges for 138.17 uncompensated care determined by multiplying the hospital's 138.18 gross charges during the base year by the percentage of 138.19 uncompensated care provided by the hospital during the base year 138.20 minus one-half of one percent of those gross charges, dividing 138.21 the result by two, and adjusting to cost by multiplying that 138.22 result by the hospital's cost-to-charge ratio during the base 138.23 year. By July 15, 2005, and each subsequent year, the county 138.24 shall notify its county auditor, as well as the administrative 138.25 auditor, of the amount of qualifying uncompensated care 138.26 provided, adjusted to cost using the hospital's cost-to-charge 138.27 ratio, during the 12-month period ending on June 30 of the 138.28 current year. 138.29 (c) The amount certified under paragraph (b) shall be 138.30 certified annually by the county auditor to the administrative 138.31 auditor as an addition to the county's areawide levy under 138.32 subdivision 5. 138.33 (d) The administrative auditor shall pay one-half of the 138.34 reimbursement to the county auditor of the county that contains 138.35 the qualifying hospital on or before June 15 and the remaining 138.36 one-half of the reimbursement on or before November 15. The 139.1 county auditor receiving the payment shall disburse the 139.2 reimbursement to the qualifying hospital within 15 days of 139.3 receipt of the reimbursement. 139.4 (e) Prior to the reporting specified in paragraph (b) 139.5 above, all qualifying hospitals that participate in this program 139.6 shall agree upon and implement a common standard for reporting 139.7 uncompensated care, and a common standard for determining 139.8 eligibility for uncompensated care for all participating 139.9 hospitals. 139.10 [EFFECTIVE DATE.] This section is effective for fiscal 139.11 disparities contribution and distribution tax capacities for 139.12 taxes payable in 2006 and 2007 only. 139.13 Sec. 40. Minnesota Statutes 2002, section 473F.08, is 139.14 amended by adding a subdivision to read: 139.15 Subd. 3d. [HENNEPIN COUNTY PUBLIC DEFENDER COST 139.16 REIMBURSEMENT.] (a) Hennepin County is eligible for 139.17 reimbursement of costs incurred by the county under section 139.18 611.26, subdivision 3a, paragraph (c). By July 15, 2005, and 139.19 each subsequent year, the county shall notify the county auditor 139.20 and the administrative auditor, of the amount of that cost 139.21 incurred by the county during the 12-month period ending on June 139.22 30 of the current year. 139.23 (b) The reimbursement under this subdivision for costs 139.24 incurred during the 12-month period ending June 30, 2005, is 139.25 equal to 25 percent of those costs. The reimbursement under 139.26 this subdivision for costs incurred during the 12-month period 139.27 ending June 30, 2006, is equal to 50 percent of those costs. 139.28 The reimbursement under this subdivision for costs incurred 139.29 during the 12-month period ending June 30, 2007, is equal to 75 139.30 percent of those costs. The reimbursement under this 139.31 subdivision for costs incurred during the 12-month period ending 139.32 June 30, 2008, and subsequent years, is equal to 100 percent of 139.33 those costs. 139.34 (c) The amount certified under paragraph (b) shall be 139.35 certified annually by the Hennepin County auditor to the 139.36 administrative auditor as an addition to the county's areawide 140.1 levy under subdivision 5. 140.2 (d) The administrative auditor shall pay one-half of the 140.3 reimbursement to the Hennepin County auditor on or before June 140.4 15 and the remaining one-half of the reimbursement on or before 140.5 November 15. 140.6 [EFFECTIVE DATE.] This section is effective for fiscal 140.7 disparities contribution and distribution tax capacities for 140.8 taxes payable in 2006 and 2007 only. 140.9 Sec. 41. Laws 1998, chapter 389, article 3, section 41, is 140.10 amended to read: 140.11 Sec. 41. [SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.] 140.12 Notwithstanding Minnesota Statutes, chapter 429, a city may 140.13 defer the payment of any special assessment levied against a 140.14 property qualifying under section 38 as determined by the city. 140.15 Any special assessment, the payment of which has been deferred 140.16 by the city, must be paid in full or a payment agreement may be 140.17 approved by the city if the ownership of property is transferred 140.18 to anyone or any entity. Payment or a payment agreement must be 140.19 made within 60 days of the transfer of ownership. 140.20 [EFFECTIVE DATE.] This section is effective the day 140.21 following final enactment. 140.22 Sec. 42. Laws 1998, chapter 389, article 3, section 42, 140.23 subdivision 2, as amended by Laws 2002, chapter 377, article 4, 140.24 section 24, is amended to read: 140.25 Subd. 2. [RECAPTURE.] (a) Property or any portion thereof 140.26 qualifying under section 38 is subject to additional taxes if: 140.27 (1) ownership of the property is transferred to anyone 140.28 other than the spouse or child of the current owner; 140.29 (2) the current owner or the spouse or child of the current 140.30 owner has not conveyed or entered into a contract before July 1, 140.31 2007, to convey for ownership or public easement rights, (i) a 140.32 portion of the property toaone or more nonprofitfoundation140.33 foundations orcorporation operatingcorporations; and (ii) a 140.34 portion of the property to one or more local governments; and 140.35 those entities shall separately or jointly operate the property 140.36 as an art park providing the services included in section 38, 141.1 clauses (2) to (5), and may also use some of the property for 141.2 other public purposes as determined by the local governments; or 141.3 (3) the nonprofit foundation or corporation to which a 141.4 portion of the property was transferred ceases to provide the 141.5 services included in section 38, clauses (2) to (5), earlier 141.6 than ten years following the effective date of theconveyance141.7 conveyances or of the execution of thecontractcontracts to 141.8 convey. 141.9 (b) The additional taxes are imposed at the earlier of (1) 141.10 the year following transfer of ownership to anyone other than 141.11 the spouse or child of the current owner or a nonprofit 141.12 foundation or corporation or local government operating the 141.13 property as an art park and used for other public purposes, or 141.14 (2) for taxes payable in 2008, or (3) in the event the nonprofit 141.15 foundation or corporation to which a portion of the property was 141.16 conveyed ceases to provide the required services within ten 141.17 years after the conveyance, for taxes payable in the year 141.18 following the year when it ceased to do so. 141.19 The county board, with the approval of the city council, 141.20 shall determine the amount of the additional taxes due on the 141.21 portion of property which is no longer utilized as an art park; 141.22 provided, however, that the additional taxesare equal tomust 141.23 not be greater than the difference between the taxes determined 141.24 on that portion of the property utilized as an art park under 141.25 sections 39 and 40 and the amount determined under subdivision 1 141.26 for all years that the property qualified under section 38.The141.27additional taxes must be extended against the property on the141.28tax list for the current year; provided, however, thatNo 141.29 interest or penalties may be levied on the additionaltaxes if141.30timely paidamount provided that it is paid within 30 days of 141.31 the county's notice. 141.32 [EFFECTIVE DATE.] This section is effective the day 141.33 following final enactment. 141.34 Sec. 43. Laws 2003, chapter 127, article 12, section 38, 141.35 is amended to read: 141.36 Sec. 38. [MEMBERS MUSTAUTHORITY TO LEVY TAXESFOR142.1AUTHORITY.] 142.2(a) A member shall, at the request of the authority, levy a142.3tax in any year for the benefit of the authority.The authority 142.4 is a special taxing district as defined in Minnesota Statutes, 142.5 section 275.066, clause (13), with the power to adopt and 142.6 certify a property tax levy to the county auditor. The 142.7 authority may levy a tax in any year for the benefit of the 142.8 authority. The taxis,for each member,is a pro rata portion 142.9 of the total amount of tax requested by the authority based on 142.10 the taxable market value withinathe member's jurisdiction, but 142.11 in no event may the tax in any year exceed 0.01813 percent of 142.12 taxable market value. For purposes of this section, "taxable 142.13 market value" has the meaning as given in Minnesota Statutes, 142.14 section 273.032. 142.15(b) The treasurer of each member city or town shall, within142.1615 days after receiving the property tax settlements from the142.17county treasurer, pay to the treasurer of the authority the142.18amount collected for this purpose. The money must be used by142.19the authority for the purposes provided by sections 35 to 41.142.20 [EFFECTIVE DATE.] This section is effective for taxes 142.21 levied in 2004, payable in 2005, and thereafter. 142.22 Sec. 44. Laws 2003, First Special Session chapter 21, 142.23 article 4, section 12, subdivision 11, is amended to read: 142.24 Subd. 11. [EFFECTIVE DATE; LOCAL APPROVAL.] This section 142.25 is effective the day after the governing body of St. Louis 142.26 county and its chief clerical officer timely complete their 142.27 compliance with Minnesota Statutes, section 645.021, 142.28 subdivisions 2 and 3, provided that the certificate of approval 142.29 is filed with the secretary of state before January 1, 2006. 142.30If effective before September 1, 2003, the first levy is142.31the payable 2004 levy;If effectivebetween September 1, 2003,142.32andbefore September 1, 2004, the first levy is the payable 2005 142.33 levy; if effective after August 31, 2004, and before September 142.34 1, 2005, the first levy is the payable 2006 levy; and if 142.35 effective after August 31, 2005, the first levy is the payable 142.36 2007 levy. 143.1 Sec. 45. [EDUCATION RESERVE ACCOUNT; APPROPRIATION.] 143.2 (a) There is created in the state treasury an education 143.3 reserve account as a special revenue fund for deposit of 143.4 appropriations and other receipts as provided by law. 143.5 (b) $24,655,000 is appropriated from the general fund to 143.6 the education reserve account in fiscal year 2005. This is a 143.7 onetime appropriation. Of this amount, the following amounts 143.8 are appropriated to the commissioner of education in the fiscal 143.9 years indicated to supplement the general education aid program 143.10 under Minnesota Statutes, section 126C.13, subdivision 4: 143.11 (1) $5,366,000 in fiscal year 2005; 143.12 (2) $48,000 in fiscal year 2006; and 143.13 (3) $45,000 in fiscal year 2007. 143.14 (c) As provided in Minnesota Statutes, section 275.025, 143.15 subdivision 1, beginning with taxes payable in 2007, the 143.16 commissioner of finance shall deposit in the education reserve 143.17 account the increased amount of the state general levy for that 143.18 year over the state general levy base amount for taxes payable 143.19 in 2002. 143.20 (d) Each year, one-half of the annual amount will be 143.21 deposited in the education reserve account in the state fiscal 143.22 year corresponding to the first six months of the calendar year, 143.23 and the other half will be deposited in the state fiscal year 143.24 corresponding to the last six months of the calendar year. The 143.25 amounts in the education reserve account do not lapse or cancel 143.26 each year, but remain until appropriated by law for education 143.27 aid or higher education funding. 143.28 Sec. 46. [STUDY OF POLLUTION CONTROL EXEMPTION.] 143.29 The commissioner of revenue must study the application of 143.30 the property tax exemption provided under Minnesota Statutes, 143.31 section 272.02, subdivision 10, to personal property used for 143.32 pollution control as part of an electric generation system. The 143.33 commissioner must present a recommendation to the legislature by 143.34 January 15, 2005, that would limit the exemption to property 143.35 that is directly and exclusively used for pollution control 143.36 purposes. 144.1 Sec. 47. [SUPPLEMENTARY AID.] 144.2 (a) If a bill styled as H.F. No. 2028 is enacted at the 144.3 2004 legislative session and includes provisions authorizing 144.4 supplementary levy authority for school districts for deferred 144.5 maintenance and capital projects, that section is repealed. 144.6 (b) For fiscal years 2006, 2007, and 2008 only, each school 144.7 district is eligible to receive $12 times the adjusted marginal 144.8 cost pupil units annually for one or more of the following uses: 144.9 (1) outstanding disability access projects; 144.10 (2) onetime health- and safety-related projects that are 144.11 not eligible for health and safety revenue under Minnesota 144.12 Statutes, section 123B.57; 144.13 (3) outstanding construction deficit costs of school 144.14 facilities shared with the community; 144.15 (4) utility and other costs of operating a district-owned 144.16 community center where the district colocates services with 144.17 other local units of government, in proportion to the amount of 144.18 time the district uses the facility; 144.19 (5) the district's share of the costs of building 144.20 noninstructional facilities that will be operated in cooperation 144.21 with other local units of government; 144.22 (6) the cost of leasing school-related storage facilities; 144.23 (7) the costs associated with leases of administrative and 144.24 classroom space shared with other school districts or higher 144.25 education institutions; 144.26 (8) outstanding building lease levy amounts under Minnesota 144.27 Statutes, section 126C.40, subdivision 1; outstanding 144.28 unemployment insurance amount under Minnesota Statutes, section 144.29 126C.43, subdivision 2; outstanding amount necessary for 144.30 judgments against the district under Minnesota Statutes, section 144.31 126C.43, subdivision 3; and additional costs under the safe 144.32 schools levy under Minnesota Statutes, section 126C.44; 144.33 (9) a school district whose total concentration of free and 144.34 reduced price lunch students increased between fiscal year 2003 144.35 and 2004 may utilize the revenue under this section, according 144.36 to Minnesota Statutes, section 126C.13, subdivision 5; 145.1 (10) retired employee health benefits; or 145.2 (11) other district deferred maintenance projects or 145.3 capital projects eligible under Minnesota Statutes, section 145.4 126C.10, subdivision 14. 145.5 (c) In a form and manner determined by the Department of 145.6 Education, each district shall submit to the department the aid 145.7 received under this section for each category in paragraph (a). 145.8 (d) For each year in which payments to school districts are 145.9 made under this section, the Department of Education shall make 145.10 payments to districts using the estimated adjusted marginal cost 145.11 pupil unit count contained in the preceding year's February 145.12 forecast for the corresponding fiscal year. 145.13 (e) In fiscal years 2006, 2007, and 2008, if insufficient 145.14 aid is appropriated to fund the provisions of this section, each 145.15 school district may levy an amount equal to the amount by which 145.16 the appropriation is deficient: 145.17 (i) for taxes payable in 2006 only, if insufficient aid is 145.18 provided during the 2005 legislative session for fiscal year 145.19 2006, each school district may levy an amount equal to the 145.20 amount by which the appropriation is deficient and may recognize 145.21 that revenue for fiscal year 2006; 145.22 (ii) for taxes payable in 2007 only, if insufficient aid is 145.23 provided during the 2005 or 2006 legislative session for fiscal 145.24 year 2007, each school district may levy an amount equal to the 145.25 amount by which the appropriation is deficient and may recognize 145.26 that revenue for fiscal year 2007; and 145.27 (iii) for taxes payable in 2008 only, if insufficient aid 145.28 is provided during the 2007 legislative session for fiscal year 145.29 2008, each school district may levy an amount equal to the 145.30 amount by which the appropriation is deficient and may recognize 145.31 that revenue for fiscal year 2008. 145.32 [EFFECTIVE DATE.] This section is effective for revenue for 145.33 fiscal years 2006, 2007, and 2008. 145.34 Sec. 48. [PRINSBURG; SPECIAL LEVY AUTHORITY.] 145.35 Subdivision 1. [BOARD APPROVAL.] Notwithstanding any law 145.36 to the contrary, the board of Common School District No. 815, 146.1 Prinsburg, may continue to operate as a common school district 146.2 provided that: 146.3 (1) the district adopts an annual resolution by May 1 of 146.4 each year declaring that it will be operating for the following 146.5 school year; 146.6 (2) for fiscal years 2006 and later, the district's 146.7 proposed budget for the following year shows that the district 146.8 will not return to statutory operating debt under Minnesota 146.9 Statutes, section 123B.81; and 146.10 (3) the district has passed a referendum under subdivision 146.11 4 authorizing levy authority for the coming school year. 146.12 Subd. 2. [DETERMINATION OF OUTSTANDING OBLIGATIONS.] Prior 146.13 to exercising the authority to levy under this section, the 146.14 boards of Common School District No. 815 and Independent School 146.15 District No. 2180, MACCRAY, must mutually agree to the amount of 146.16 the outstanding tuition owed by the Prinsburg School District to 146.17 the MACCRAY School District. If the districts cannot agree to 146.18 the amount of the tuition owed, the districts may submit all 146.19 relevant information to the commissioner of education who shall 146.20 determine the amount of the obligation owed to the MACCRAY 146.21 School District. 146.22 Subd. 3. [STATUTORY OPERATING DEBT.] For taxes payable in 146.23 2005, 2006, and 2007, Common School District No. 815, Prinsburg, 146.24 may levy the amount necessary to eliminate a deficit in the net 146.25 unappropriated balance in the operating funds of the district, 146.26 determined as of June 30, 2004, and certified and adjusted by 146.27 the commissioner. This levy may also include the amount 146.28 necessary to eliminate the estimated deficit for fiscal year 146.29 2005. 146.30 Subd. 4. [ANNUAL LEVY AUTHORITY.] (a) Common School 146.31 District No. 815, Prinsburg, may levy the amount necessary to 146.32 eliminate any projected deficit in the district's operating 146.33 budget for the preceding school year, excluding the amounts 146.34 raised by this subdivision, if the district's voters approve a 146.35 referendum according to the provisions of this subdivision. 146.36 (b) The referendum shall be called by the school board. 147.1 The ballot must state that the annual levy will be the estimated 147.2 amount necessary to eliminate the previous year's estimated 147.3 operating deficit. The ballot must designate the specific 147.4 number of years, not to exceed five, for which the referendum 147.5 authorization applies. The ballot shall state substantially the 147.6 following: 147.7 "Shall the increase in the levy proposed by the Board of 147.8 Prinsburg, Common School District No. 815, be approved?" 147.9 If approved, the amount necessary to eliminate the previous 147.10 year's estimated operating deficit may be authorized for 147.11 certification for the number of years approved. 147.12 (c) The board must follow the notice provisions of 147.13 Minnesota Statutes, section 126C.17. 147.14 (d) This levy is not subject to the property tax 147.15 recognition shift under Minnesota Statutes, sections 123B.75, 147.16 subdivision 5, and 127A.441. 147.17 Subd. 5. [FISCAL YEAR 2005 ONLY.] Notwithstanding the 147.18 provisions of this section, for fiscal year 2005 only, Common 147.19 School District No. 815, Prinsburg, may continue to operate as a 147.20 common school district upon approval of a referendum under 147.21 subdivision 4. 147.22 [EFFECTIVE DATE.] This section is effective the day 147.23 following final enactment. 147.24 Sec. 49. [SAUK RIVER WATERSHED DISTRICT.] 147.25 Notwithstanding Minnesota Statutes, section 103D.905, 147.26 subdivision 3, the Sauk River Watershed District may annually 147.27 levy up to 0.01 percent of taxable market value for its 147.28 administrative fund. 147.29 [EFFECTIVE DATE.] This section is effective, without local 147.30 approval, beginning with the taxes levied in 2004, payable in 147.31 2005. 147.32 Sec. 50. [COMMERCIAL-INDUSTRIAL LAND VALUE TAXATION; LOCAL 147.33 OPTION.] 147.34 The governing body of any municipality that has a 147.35 population in excess of 70,000, or any municipality located in 147.36 the taconite tax relief area defined in Minnesota Statutes, 148.1 section 273.134, may by resolution adopt a system of valuing 148.2 commercial-industrial property in its jurisdiction that is based 148.3 on the value of the land, not including improvements. The 148.4 governing body may make the election under this section if it 148.5 finds that implementation of the land value system will enhance 148.6 economic development in the city. An election under this 148.7 section must be made by December 31, 2004. If any municipality 148.8 makes the election, it must notify the commissioner of revenue 148.9 of the election and the legislature must enact during the 2005 148.10 legislative session the legislation necessary to implement the 148.11 system for taxes levied in 2005, payable in 2006, and thereafter. 148.12 Sec. 51. [STUDY REQUIRED.] 148.13 By February 1, 2005, the fiscal staff of the house of 148.14 representatives and senate shall conduct a study of the 148.15 metropolitan revenue distribution program contained in Minnesota 148.16 Statutes, chapter 473F, commonly known as the fiscal disparities 148.17 program, and shall make a report by March 1, 2005, to the chairs 148.18 of the house and senate tax committees consisting of the 148.19 findings of the study and any recommendations resulting from the 148.20 study. 148.21 The study shall primarily address the question of whether 148.22 the program is achieving the purposes for which it was created. 148.23 Additionally, the study shall address the following questions: 148.24 (1) How has the program affected property tax disparities 148.25 across the Twin Cities metropolitan area? 148.26 (2) Is the formula for contributing tax base to the 148.27 areawide pool reasonable? Should certain commercial-industrial 148.28 tax base continue to be exempt from contribution to the areawide 148.29 pool, such as tax base in existence prior to 1979, tax base in 148.30 tax increment financing districts established before 1979, and 148.31 tax base located at the Minneapolis-St. Paul International 148.32 Airport? Should contribution amounts be adjusted for 148.33 differences in sales ratios between communities? 148.34 (3) Is the formula for distributing tax base from the 148.35 areawide pool reasonable? Should the formula reflect measures 148.36 of need in addition to population? Should the distribution 149.1 formula be based on tax capacity rather than market value? 149.2 (4) Does the program help promote orderly growth and 149.3 encourage environmentally sound land use? 149.4 (5) Does the program reduce competition for 149.5 commercial-industrial tax base between communities? Is reduced 149.6 competition for commercial-industrial tax base desirable? 149.7 (6) Do local governments derive sufficient tax revenues 149.8 from commercial-industrial property to cover the costs of 149.9 providing services to the property, considering the tax base 149.10 that must be contributed to the areawide pool? 149.11 (7) Could improvements be made in the administration of the 149.12 program? 149.13 [EFFECTIVE DATE.] This section is effective July 1, 2004. 149.14 Sec. 52. [TOWNSHIP LEVY ADJUSTMENT FOR WIND ENERGY 149.15 PRODUCTION TAX; PAYABLE 2004 ONLY.] 149.16 Notwithstanding the deadlines in Minnesota Statutes, 149.17 section 275.07, towns located in Lincoln or Pipestone County are 149.18 authorized to adjust their payable 2004 levy for all or a 149.19 portion of their estimated wind energy production tax amounts 149.20 for 2004, as computed by the commissioner of revenue from 149.21 reports filed under Minnesota Statutes, section 272.029, 149.22 subdivision 4. The Lincoln and Pipestone county auditors may 149.23 adjust the payable 2004 levy certifications under Minnesota 149.24 Statutes, section 275.07, subdivision 1, based upon the towns 149.25 that have recertified their levies under this section by March 149.26 15, 2004. 149.27 [EFFECTIVE DATE.] This section is effective for taxes 149.28 levied in 2003, payable in 2004 only. 149.29 Sec. 53. [FEE STUDIES.] 149.30 Subdivision 1. [STATE AGENCY FEES.] The commissioner of 149.31 each state agency that imposes any fee on individuals or 149.32 businesses in this state must report to the commissioner of 149.33 revenue by January 15, 2005, on the type and amount of fees 149.34 imposed, amount and type of fee increases since January 1, 2003, 149.35 the revenues derived from each fee for each of the most recent 149.36 four fiscal years, and the use of the revenues from the fees. 150.1 The commissioner of revenue shall compile this information and 150.2 provide a comprehensive report on all state agency fees to the 150.3 finance and tax committees of the senate and the appropriations 150.4 and tax committees of the house of representatives by February 150.5 15, 2005. 150.6 Subd. 2. [SCHOOL FEES.] By January 15, 2005, the 150.7 Department of Education shall provide the house and senate 150.8 education finance divisions and tax committees with a report 150.9 that examines the total annual fees collected under Minnesota 150.10 Public School Fee Law, Minnesota Statutes, sections 123B.34 to 150.11 123B.39, in fiscal years 2002 to 2004. The report must detail 150.12 all different types of fees charged to Minnesota students under 150.13 the law. The report must report total fees statewide as well as 150.14 by school district and charter school. 150.15 ARTICLE 4 150.16 AIDS TO LOCAL GOVERNMENTS 150.17 Section 1. Minnesota Statutes 2003 Supplement, section 150.18 477A.011, subdivision 34, is amended to read: 150.19 Subd. 34. [CITY REVENUE NEED.] (a) For a city with a 150.20 population equal to or greater than 2,500, "city revenue need" 150.21 is the sum of (1) 5.0734098 times the pre-1940 housing 150.22 percentage; plus (2) 19.141678 times the population decline 150.23 percentage; plus (3) 2504.06334 times the road accidents factor; 150.24 plus (4) 355.0547; minus (5) the metropolitan area factor; minus 150.25 (6) 49.10638 times the household size. 150.26 (b) For a city with a population less than 2,500, "city 150.27 revenue need" is the sum of (1) 2.387 times the pre-1940 housing 150.28 percentage; plus (2) 2.67591 times the commercial industrial 150.29 percentage; plus (3) 3.16042 times the population decline 150.30 percentage; plus (4) 1.206 times the transformed population; 150.31 minus (5) 62.772. 150.32 (c) The city revenue need cannot be less than zero. 150.33 (d) For calendar year 2005 and subsequent years, the city 150.34 revenue need for a city, as determined in paragraphs (a) to (c), 150.35 is multiplied by the ratio of theannualmost recently available 150.36 first quarter implicit price deflator for government consumption 151.1 expenditures and gross investment for state and local 151.2 governments as prepared by the United States Department of 151.3 Commerce,for the most recently available yearto the2003first 151.4 quarter 2000 implicit price deflator for state and local 151.5 government purchases. 151.6 Sec. 2. Minnesota Statutes 2003 Supplement, section 151.7 477A.011, subdivision 36, is amended to read: 151.8 Subd. 36. [CITY AID BASE.] (a) Except as otherwise 151.9 provided in this subdivision, "city aid base" is zero. 151.10 (b) The city aid base for any city with a population less 151.11 than 500 is increased by $40,000 for aids payable in calendar 151.12 year 1995 and thereafter, and the maximum amount of total aid it 151.13 may receive under section 477A.013, subdivision 9, paragraph 151.14 (c), is also increased by $40,000 for aids payable in calendar 151.15 year 1995 only, provided that: 151.16 (i) the average total tax capacity rate for taxes payable 151.17 in 1995 exceeds 200 percent; 151.18 (ii) the city portion of the tax capacity rate exceeds 100 151.19 percent; and 151.20 (iii) its city aid base is less than $60 per capita. 151.21 (c) The city aid base for a city is increased by $20,000 in 151.22 1998 and thereafter and the maximum amount of total aid it may 151.23 receive under section 477A.013, subdivision 9, paragraph (c), is 151.24 also increased by $20,000 in calendar year 1998 only, provided 151.25 that: 151.26 (i) the city has a population in 1994 of 2,500 or more; 151.27 (ii) the city is located in a county, outside of the 151.28 metropolitan area, which contains a city of the first class; 151.29 (iii) the city's net tax capacity used in calculating its 151.30 1996 aid under section 477A.013 is less than $400 per capita; 151.31 and 151.32 (iv) at least four percent of the total net tax capacity, 151.33 for taxes payable in 1996, of property located in the city is 151.34 classified as railroad property. 151.35 (d) The city aid base for a city is increased by $200,000 151.36 in 1999 and thereafter and the maximum amount of total aid it 152.1 may receive under section 477A.013, subdivision 9, paragraph 152.2 (c), is also increased by $200,000 in calendar year 1999 only, 152.3 provided that: 152.4 (i) the city was incorporated as a statutory city after 152.5 December 1, 1993; 152.6 (ii) its city aid base does not exceed $5,600; and 152.7 (iii) the city had a population in 1996 of 5,000 or more. 152.8 (e) The city aid base for a city is increased by $450,000 152.9 in 1999 to 2008 and the maximum amount of total aid it may 152.10 receive under section 477A.013, subdivision 9, paragraph (c), is 152.11 also increased by $450,000 in calendar year 1999 only, provided 152.12 that: 152.13 (i) the city had a population in 1996 of at least 50,000; 152.14 (ii) its population had increased by at least 40 percent in 152.15 the ten-year period ending in 1996; and 152.16 (iii) its city's net tax capacity for aids payable in 1998 152.17 is less than $700 per capita. 152.18 (f)Beginning in 2004, the city aid base for a city is152.19equal to the sum of its city aid base in 2003 and the amount of152.20additional aid it was certified to receive under section 477A.06152.21in 2003. For 2004 only, the maximum amount of total aid a city152.22may receive under section 477A.013, subdivision 9, paragraph152.23(c), is also increased by the amount it was certified to receive152.24under section 477A.06 in 2003.152.25(g)The city aid base for a city is increased by $150,000 152.26 for aids payable in 2000 and thereafter, and the maximum amount 152.27 of total aid it may receive under section 477A.013, subdivision 152.28 9, paragraph (c), is also increased by $150,000 in calendar year 152.29 2000 only, provided that: 152.30 (1) the city has a population that is greater than 1,000 152.31 and less than 2,500; 152.32 (2) its commercial and industrial percentage for aids 152.33 payable in 1999 is greater than 45 percent; and 152.34 (3) the total market value of all commercial and industrial 152.35 property in the city for assessment year 1999 is at least 15 152.36 percent less than the total market value of all commercial and 153.1 industrial property in the city for assessment year 1998. 153.2(h)(g) The city aid base for a city is increased by 153.3 $200,000 in 2000 and thereafter, and the maximum amount of total 153.4 aid it may receive under section 477A.013, subdivision 9, 153.5 paragraph (c), is also increased by $200,000 in calendar year 153.6 2000 only, provided that: 153.7 (1) the city had a population in 1997 of 2,500 or more; 153.8 (2) the net tax capacity of the city used in calculating 153.9 its 1999 aid under section 477A.013 is less than $650 per 153.10 capita; 153.11 (3) the pre-1940 housing percentage of the city used in 153.12 calculating 1999 aid under section 477A.013 is greater than 12 153.13 percent; 153.14 (4) the 1999 local government aid of the city under section 153.15 477A.013 is less than 20 percent of the amount that the formula 153.16 aid of the city would have been if the need increase percentage 153.17 was 100 percent; and 153.18 (5) the city aid base of the city used in calculating aid 153.19 under section 477A.013 is less than $7 per capita. 153.20(i)(h) The city aid base for a city is increased by 153.21 $102,000 in 2000 and thereafter, and the maximum amount of total 153.22 aid it may receive under section 477A.013, subdivision 9, 153.23 paragraph (c), is also increased by $102,000 in calendar year 153.24 2000 only, provided that: 153.25 (1) the city has a population in 1997 of 2,000 or more; 153.26 (2) the net tax capacity of the city used in calculating 153.27 its 1999 aid under section 477A.013 is less than $455 per 153.28 capita; 153.29 (3) the net levy of the city used in calculating 1999 aid 153.30 under section 477A.013 is greater than $195 per capita; and 153.31 (4) the 1999 local government aid of the city under section 153.32 477A.013 is less than 38 percent of the amount that the formula 153.33 aid of the city would have been if the need increase percentage 153.34 was 100 percent. 153.35(j)(i) The city aid base for a city is increased by 153.36 $32,000 in 2001 and thereafter, and the maximum amount of total 154.1 aid it may receive under section 477A.013, subdivision 9, 154.2 paragraph (c), is also increased by $32,000 in calendar year 154.3 2001 only, provided that: 154.4 (1) the city has a population in 1998 that is greater than 154.5 200 but less than 500; 154.6 (2) the city's revenue need used in calculating aids 154.7 payable in 2000 was greater than $200 per capita; 154.8 (3) the city net tax capacity for the city used in 154.9 calculating aids available in 2000 was equal to or less than 154.10 $200 per capita; 154.11 (4) the city aid base of the city used in calculating aid 154.12 under section 477A.013 is less than $65 per capita; and 154.13 (5) the city's formula aid for aids payable in 2000 was 154.14 greater than zero. 154.15(k)(j) The city aid base for a city is increased by $7,200 154.16 in 2001 and thereafter, and the maximum amount of total aid it 154.17 may receive under section 477A.013, subdivision 9, paragraph 154.18 (c), is also increased by $7,200 in calendar year 2001 only, 154.19 provided that: 154.20 (1) the city had a population in 1998 that is greater than 154.21 200 but less than 500; 154.22 (2) the city's commercial industrial percentage used in 154.23 calculating aids payable in 2000 was less than ten percent; 154.24 (3) more than 25 percent of the city's population was 60 154.25 years old or older according to the 1990 census; 154.26 (4) the city aid base of the city used in calculating aid 154.27 under section 477A.013 is less than $15 per capita; and 154.28 (5) the city's formula aid for aids payable in 2000 was 154.29 greater than zero. 154.30(l)(k) The city aid base for a city is increased by 154.31 $45,000 in 2001 and thereafter and by an additional $50,000 in 154.32 calendar years 2002 to 2011, and the maximum amount of total aid 154.33 it may receive under section 477A.013, subdivision 9, paragraph 154.34 (c), is also increased by $45,000 in calendar year 2001 only, 154.35 and by $50,000 in calendar year 2002 only, provided that: 154.36 (1) the net tax capacity of the city used in calculating 155.1 its 2000 aid under section 477A.013 is less than $810 per 155.2 capita; 155.3 (2) the population of the city declined more than two 155.4 percent between 1988 and 1998; 155.5 (3) the net levy of the city used in calculating 2000 aid 155.6 under section 477A.013 is greater than $240 per capita; and 155.7 (4) the city received less than $36 per capita in aid under 155.8 section 477A.013, subdivision 9, for aids payable in 2000. 155.9 The city aid base for a city described in this paragraph is also 155.10 increased by $250,000 in calendar years 2005 to 2014, and the 155.11 maximum amount of total aid it may receive under section 155.12 477A.013, subdivision 9, paragraph (c), is also increased by 155.13 $250,000 in calendar year 2005 only. 155.14(m)(l) The city aid base for a city with a population of 155.15 10,000 or more which is located outside of the seven-county 155.16 metropolitan area is increased in 2002 and thereafter, and the 155.17 maximum amount of total aid it may receive under section 155.18 477A.013, subdivision 9, paragraph (b) or (c), is also increased 155.19 in calendar year 2002 only, by an amount equal to the lesser of: 155.20 (1)(i) the total population of the city,as determined by155.21the United States Bureau of the Census, in the 2000 census,(ii) 155.22 minus 5,000, (iii) times 60; or 155.23 (2) $2,500,000. 155.24(n)(m) The city aid base is increased by $50,000 in 2002 155.25 and thereafter, and the maximum amount of total aid it may 155.26 receive under section 477A.013, subdivision 9, paragraph (c), is 155.27 also increased by $50,000 in calendar year 2002 only, provided 155.28 that: 155.29 (1) the city is located in the seven-county metropolitan 155.30 area; 155.31 (2) its population in 2000 is between 10,000 and 20,000; 155.32 and 155.33 (3) its commercial industrial percentage, as calculated for 155.34 city aid payable in 2001, was greater than 25 percent. 155.35(o)(n) The city aid base for a city is increased by 155.36 $150,000 in calendar years 2002 to 2011 and the maximum amount 156.1 of total aid it may receive under section 477A.013, subdivision 156.2 9, paragraph (c), is also increased by $150,000 in calendar year 156.3 2002 only, provided that: 156.4 (1) the city had a population of at least 3,000 but no more 156.5 than 4,000 in 1999; 156.6 (2) its home county is located within the seven-county 156.7 metropolitan area; 156.8 (3) its pre-1940 housing percentage is less than 15 156.9 percent; and 156.10 (4) its city net tax capacity per capita for taxes payable 156.11 in 2000 is less than $900 per capita. 156.12(p)(o) The city aid base for a city is increased by 156.13 $200,000 beginning in calendar year 2003 and the maximum amount 156.14 of total aid it may receive under section 477A.013, subdivision 156.15 9, paragraph (c), is also increased by $200,000 in calendar year 156.16 2003 only, provided that the city qualified for an increase in 156.17 homestead and agricultural credit aid under Laws 1995, chapter 156.18 264, article 8, section 18. 156.19(q)(p) The city aid base for a city is increased by 156.20 $200,000 in 2004 only and the maximum amount of total aid it may 156.21 receive under section 477A.013, subdivision 9, is also increased 156.22 by $200,000 in calendar year 2004 only, if the city is the site 156.23 of a nuclear dry cask storage facility. 156.24(r)(q) The city aid base for a city is increased by 156.25 $10,000 in 2004 and thereafter and the maximum total aid it may 156.26 receive under section 477A.013, subdivision 9, is also increased 156.27 by $10,000 in calendar year 2004 only, if the city was included 156.28 in a federal major disaster designation issued on April 1, 1998, 156.29 and its pre-1940 housing stock was decreased by more than 40 156.30 percent between 1990 and 2000. 156.31 (r) The city aid base for a city is increased by $25,000 in 156.32 2005 only and the maximum total aid it may receive under section 156.33 477A.013, subdivision 9, is also increased by $25,000 in 2005 156.34 only, if the city (1) received no aid under section 477A.013 in 156.35 2004; (2) had a population in 2002 greater than 20,000 and less 156.36 than 50,000; and (3) had an adjusted net tax capacity of less 157.1 than $750 per capita for aids payable in 2004. 157.2 [EFFECTIVE DATE.] This section is effective beginning with 157.3 aids payable in 2004. 157.4 Sec. 3. Minnesota Statutes 2003 Supplement, section 157.5 477A.013, subdivision 8, is amended to read: 157.6 Subd. 8. [CITY FORMULA AID.] In calendar year 2004 and 157.7 subsequent years, the formula aid for a city is equal to the 157.8 need increase percentage multiplied by the difference between 157.9 (1) the city's revenue need multiplied by its population, and 157.10 (2)the sum ofthe city's net tax capacity multiplied by the tax 157.11 effort rate, and the taconite aids under sections 298.28 and157.12298.282, multiplied by the following percentages:157.13(i) zero percent for aids payable in 2004;157.14(ii) 25 percent for aids payable in 2005;157.15(iii) 50 percent for aids payable in 2006;157.16(iv) 75 percent for aids payable in 2007; and157.17(v) 100 percent for aids payable in 2008 and thereafter. 157.18 No city may have a formula aid amount less than zero. The need 157.19 increase percentage must be the same for all cities. 157.20 The applicable need increase percentage must be calculated 157.21 by the Department of Revenue so that the total of the aid under 157.22 subdivision 9 equals the total amount available for aid under 157.23 section 477A.03 after the subtraction under section 477A.014, 157.24 subdivisions 4 and 5. 157.25 Sec. 4. Minnesota Statutes 2003 Supplement, section 157.26 477A.013, subdivision 9, is amended to read: 157.27 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 157.28 2002 and thereafter, each city shall receive an aid distribution 157.29 equal to the sum of (1) the city formula aid under subdivision 157.30 8, and (2) its city aid base. 157.31 (b)The aid for a city in calendar year 2004 shall not157.32exceed the amount of its aid in calendar year 2003 after the157.33reductions under Laws 2003, First Special Session chapter 21,157.34article 5.157.35(c) For aids payable in 2005 and thereafter, the total aid157.36for any city shall not exceed the sum of (1) ten percent of the158.1city's net levy for the year prior to the aid distribution plus158.2(2) its total aid in the previous year.For aids payable in 158.3 2005 and thereafter, the total aid for any city with a 158.4 population of 2,500 or more may not decrease from its total aid 158.5 under this section in the previous year by an amount greater 158.6 than ten percent of its net levy in the year prior to the aid 158.7 distribution. 158.8(d) For aids payable in 2004 only, the total aid for a city158.9with a population less than 2,500 may not be less than the158.10amount it was certified to receive in 2003 minus the greater of158.11(1) the reduction to this aid payment in 2003 under Laws 2003,158.12First Special Session chapter 21, article 5, or (2) five percent158.13of its 2003 aid amount.(c) For aids payable in 2005 and 158.14 thereafter, the total aid for a city with a population less than 158.15 2,500 must not be less than the amount it was certified to 158.16 receive in the previous year minus five percent of its 2003 158.17 certified aid amount. 158.18 [EFFECTIVE DATE.] This section is effective for aids 158.19 payable in 2005 and thereafter. 158.20 Sec. 5. Minnesota Statutes 2003 Supplement, section 158.21 477A.03, subdivision 2a, is amended to read: 158.22 Subd. 2a. [CITIES.]For aids payable in 2004, the total158.23aids paid under section 477A.013, subdivision 9, are limited to158.24$429,000,000.For aids payable in 2005 and thereafter, the 158.25 total aids paid under section 477A.013, subdivision 9, are 158.26 increased to$437,052,000$497,052,000. For aids payable in 158.27 2006, the total aids paid under section 477A.013, subdivision 9, 158.28 are increased to $503,052,000. For aids payable in 2007 and 158.29 thereafter, the amount necessary to make the payments provided 158.30 under section 477A.013, subdivision 9, is appropriated. 158.31 [EFFECTIVE DATE.] This section is effective for aids 158.32 payable in 2005 and thereafter. 158.33 Sec. 6. Minnesota Statutes 2002, section 477A.11, 158.34 subdivision 4, is amended to read: 158.35 Subd. 4. [OTHER NATURAL RESOURCES LAND.] "Other natural 158.36 resources land" means:159.1(1)any other land presently owned in fee title by the 159.2 state and administered by the commissioner, or any tax-forfeited 159.3 land, other than platted lots within a city or those lands 159.4 described under subdivision 3, clause (2), which is owned by the 159.5 state and administered by the commissioner or by the county in 159.6 which it is located; and159.7(2) land leased by the state from the United States of159.8America through the United States Secretary of Agriculture159.9pursuant to Title III of the Bankhead Jones Farm Tenant Act,159.10which land is commonly referred to as land utilization project159.11land that is administered by the commissioner. 159.12 [EFFECTIVE DATE.] This section is effective for aids 159.13 payable in 2005 and thereafter. 159.14 Sec. 7. Minnesota Statutes 2002, section 477A.11, is 159.15 amended by adding a subdivision to read: 159.16 Subd. 5. [LAND UTILIZATION PROJECT LAND.] "Land 159.17 utilization project land" means land that is leased by the state 159.18 from the United States through the United States Secretary of 159.19 Agriculture according to Title III of the Bankhead Jones Farm 159.20 Tenant Act and that is administered by the commissioner. 159.21 Sec. 8. Minnesota Statutes 2002, section 477A.12, 159.22 subdivision 1, is amended to read: 159.23 Subdivision 1. [TYPES OF LAND; PAYMENTS.] (a) As an offset 159.24 for expenses incurred by counties and towns in support of 159.25 natural resources lands, the following amounts are annually 159.26 appropriated to the commissioner of natural resources from the 159.27 general fund for transfer to the commissioner of revenue. The 159.28 commissioner of revenue shall pay the transferred funds to 159.29 counties as required by sections 477A.11 to 477A.145. The 159.30 amounts are: 159.31 (1) for acquired natural resources land, $3, as adjusted 159.32 for inflation under section 477A.145, multiplied by the total 159.33 number of acres of acquired natural resources land or, at the 159.34 county's option three-fourths of one percent of the appraised 159.35 value of all acquired natural resources land in the county, 159.36 whichever is greater; 160.1 (2) $3, as adjusted for inflation under section 477A.145, 160.2 multiplied by the total number of acres of land utilization 160.3 project land; 160.4 (3) 75 cents, as adjusted for inflation under section 160.5 477A.145, multiplied by the number of acres of 160.6 county-administered other natural resources land; and 160.7(3)(4) 37.5 cents, as adjusted for inflation under section 160.8 477A.145, multiplied by the number of acres of 160.9 commissioner-administered other natural resources land located 160.10 in each county as of July 1 of each year prior to the payment 160.11 year. 160.12 (b) The amount determined under paragraph (a), clause (1), 160.13 is payable for land that is acquired from a private owner and 160.14 owned by the Department of Transportation for the purpose of 160.15 replacing wetland losses caused by transportation projects, but 160.16 only if the county contains more than 500 acres of such land at 160.17 the time the certification is made under subdivision 2. 160.18 [EFFECTIVE DATE.] This section is effective for aids 160.19 payable in 2005 and thereafter. 160.20 Sec. 9. Minnesota Statutes 2002, section 477A.12, 160.21 subdivision 2, is amended to read: 160.22 Subd. 2. [PROCEDURE.] Lands for which payments in lieu are 160.23 made pursuant to section 97A.061, subdivision 3, and Laws 1973, 160.24 chapter 567, shall not be eligible for payments under this 160.25 section. Each county auditor shall certify to the Department of 160.26 Natural Resources during July of each year prior to the payment 160.27 year the number of acres of county-administered other natural 160.28 resources land within the county. The Department of Natural 160.29 resources may, in addition to the certification of acreage, 160.30 require descriptive lists of land so certified. The 160.31 commissioner of natural resources shall determine and certify to 160.32 the commissioner of revenue by March 1 of the payment year: 160.33 (1) the number of acres and most recent appraised value of 160.34 acquired natural resources land within each county; 160.35 (2) the number of acres of commissioner-administered 160.36 natural resources land within each county;and161.1 (3) the number of acres of county-administered other 161.2 natural resources land within each county, based on the reports 161.3 filed by each county auditor with the commissioner of natural 161.4 resources; and 161.5 (4) the number of acres of land utilization project land 161.6 within each county and the net proceeds from timber sales on 161.7 land utilization project lands in each county. 161.8 The commissioner of transportation shall determine and 161.9 certify to the commissioner of revenue by March 1 of the payment 161.10 year the number of acres of land and the appraised value of the 161.11 land described in subdivision 1, paragraph (b), but only if it 161.12 exceeds 500 acres. 161.13 The commissioner of revenue shall determine the 161.14 distributions provided for in this section using the number of 161.15 acres and appraised values certified by the commissioner of 161.16 natural resources and the commissioner of transportation by 161.17 March 1 of the payment year. 161.18 [EFFECTIVE DATE.] This section is effective for aids 161.19 payable in 2005 and thereafter. 161.20 Sec. 10. Minnesota Statutes 2002, section 477A.14, 161.21 subdivision 1, is amended to read: 161.22 Subdivision 1. [GENERAL DISTRIBUTION.] Except as provided 161.23 in subdivision 2 or in section 97A.061, subdivision 5, 40 161.24 percent of the total payment to the county shall be deposited in 161.25 the county general revenue fund to be used to provide property 161.26 tax levy reduction. The remainder shall be distributed by the 161.27 county in the following priority: 161.28 (a) 37.5 cents, as adjusted for inflation under section 161.29 477A.145, for each acre of county-administered other natural 161.30 resources land shall be deposited in a resource development fund 161.31 to be created within the county treasury for use in resource 161.32 development, forest management, game and fish habitat 161.33 improvement, and recreational development and maintenance of 161.34 county-administered other natural resources land. Any county 161.35 receiving less than $5,000 annually for the resource development 161.36 fund may elect to deposit that amount in the county general 162.1 revenue fund; 162.2 (b) From the funds remaining, within 30 days of receipt of 162.3 the payment to the county, the county treasurer shall pay each 162.4 organized township 30 cents, as adjusted for inflation under 162.5 section 477A.145, for each acre of acquired natural resources 162.6 land, each acre of land utilization project land, and each acre 162.7 of land described in section 477A.12, subdivision 1, paragraph 162.8 (b), and 7.5 cents, as adjusted for inflation under section 162.9 477A.145, for each acre of other natural resources land located 162.10 within its boundaries. Payments for natural resources lands not 162.11 located in an organized township shall be deposited in the 162.12 county general revenue fund. Payments to counties and townships 162.13 pursuant to this paragraph shall be used to provide property tax 162.14 levy reduction, except that of the payments for natural 162.15 resources lands not located in an organized township, the county 162.16 may allocate the amount determined to be necessary for 162.17 maintenance of roads in unorganized townships. Provided that, 162.18 if the total payment to the county pursuant to section 477A.12 162.19 is not sufficient to fully fund the distribution provided for in 162.20 this clause, the amount available shall be distributed to each 162.21 township and the county general revenue fund on a pro rata 162.22 basis; and 162.23 (c) Any remaining funds shall be deposited in the county 162.24 general revenue fund. Provided that, if the distribution to the 162.25 county general revenue fund exceeds $35,000, the excess shall be 162.26 used to provide property tax levy reduction. 162.27 [EFFECTIVE DATE.] This section is effective for aids 162.28 payable in 2005 and thereafter. 162.29 Sec. 11. Laws 2003, First Special Session chapter 21, 162.30 article 5, section 13, is amended to read: 162.31 Sec. 13. [2004 CITY AID REDUCTIONS.] 162.32 The commissioner of revenue shall compute an aid reduction 162.33 amount for 2004 for each city as provided in this section. 162.34 The initial aid reduction amount for each city is the 162.35 amount by which the city's aid distribution under Minnesota 162.36 Statutes, section 477A.013, and related provisions payable in 163.1 2003 exceeds the city's 2004 distribution under those provisions. 163.2 The minimum aid reduction amount for a city is the amount 163.3 of its reduction in 2003 under section 12. If a city receives 163.4 an increase to its city aid base under Minnesota Statutes, 163.5 section 477A.011, subdivision 36, its minimum aid reduction is 163.6 reduced by an equal amount. 163.7 The maximum aid reduction amount for a city is an amount 163.8 equal to 14 percent of the city's total 2004 levy plus aid 163.9 revenue base, except that if the city has a city net tax 163.10 capacity for aids payable in 2004, as defined in Minnesota 163.11 Statutes, section 477A.011, subdivision 20, of $700 per capita 163.12 or less, the maximum aid reduction shall not exceed an amount 163.13 equal to 13 percent of the city's total 2004 levy plus aid 163.14 revenue base. 163.15 If the initial aid reduction amount for a city is less than 163.16 the minimum aid reduction amount for that city, the final aid 163.17 reduction amount for the city is the sum of the initial aid 163.18 reduction amount and the lesser of the amount of the city's 163.19 payable 2004 reimbursement under Minnesota Statutes, section 163.20 273.1384, or the difference between the minimum and initial aid 163.21 reduction amounts for the city, and the amount of the final aid 163.22 reduction in excess of the initial aid reduction is deducted 163.23 from the city's reimbursements pursuant to Minnesota Statutes, 163.24 section 273.1384. 163.25 If the initial aid reduction amount for a city is greater 163.26 than the maximum aid reduction amount for the city, the city 163.27 receives an additional distribution under this section equal to 163.28 the result of subtracting the maximum aid reduction amount from 163.29 the initial aid reduction amount. This distribution shall be 163.30 paid in equal installments in 2004 on the dates specified in 163.31 Minnesota Statutes, section 477A.015. The amount necessary for 163.32 these additional distributions is appropriated to the 163.33 commissioner of revenue from the general fund in fiscal year 163.34 2005. 163.35The initial aid reduction is applied to the city's163.36distribution pursuant to Minnesota Statutes, section 477A.013,164.1and any aid reduction in excess of the initial aid reduction is164.2applied to the city's reimbursements pursuant to Minnesota164.3Statutes, section 273.1384.164.4 To the extent that sufficient information is available on 164.5 each payment date in 2004, the commissioner of revenue shall pay 164.6 the reimbursements reduced under this section in equal 164.7 installments on the payment dates provided in law. 164.8 [EFFECTIVE DATE.] This section is effective for aids 164.9 payable in 2004. 164.10 ARTICLE 5 164.11 LOCAL DEVELOPMENT 164.12 Section 1. Minnesota Statutes 2002, section 116J.993, 164.13 subdivision 3, is amended to read: 164.14 Subd. 3. [BUSINESS SUBSIDY.] "Business subsidy" or 164.15 "subsidy" means a state or local government agency grant, 164.16 contribution of personal property, real property, 164.17 infrastructure, the principal amount of a loan at rates below 164.18 those commercially available to the recipient, any reduction or 164.19 deferral of any tax or any fee, any guarantee of any payment 164.20 under any loan, lease, or other obligation, or any preferential 164.21 use of government facilities given to a business. 164.22 The following forms of financial assistance are not a 164.23 business subsidy: 164.24 (1) a business subsidy of less than $25,000; 164.25 (2) assistance that is generally available to all 164.26 businesses or to a general class of similar businesses, such as 164.27 a line of business, size, location, or similar general criteria; 164.28 (3) public improvements to buildings or lands owned by the 164.29 state or local government that serve a public purpose and do not 164.30 principally benefit a single business or defined group of 164.31 businesses at the time the improvements are made; 164.32 (4) redevelopment property polluted by contaminants as 164.33 defined in section 116J.552, subdivision 3; 164.34 (5) assistance provided for the sole purpose of renovating 164.35 old or decaying building stock or bringing it up to code and 164.36 assistance provided for designated historic preservation 165.1 districts, provided that the assistance is equal to or less than 165.2 50 percent of the total cost; 165.3 (6) assistance to provide job readiness and training 165.4 services if the sole purpose of the assistance is to provide 165.5 those services, except when such assistance is paid for by 165.6 expenditures of tax increments under section 469.176, 165.7 subdivision 4m; 165.8 (7) assistance for housing; 165.9 (8) assistance for pollution control or abatement, 165.10 including assistance for a tax increment financing hazardous 165.11 substance subdistrict as defined under section 469.174, 165.12 subdivision 23; 165.13 (9) assistance for energy conservation; 165.14 (10) tax reductions resulting from conformity with federal 165.15 tax law; 165.16 (11) workers' compensation and unemployment compensation; 165.17 (12) benefits derived from regulation; 165.18 (13) indirect benefits derived from assistance to 165.19 educational institutions; 165.20 (14) funds from bonds allocated under chapter 474A, bonds 165.21 issued to refund outstanding bonds, and bonds issued for the 165.22 benefit of an organization described in section 501(c)(3) of the 165.23 Internal Revenue Code of 1986, as amended through December 31, 165.24 1999; 165.25 (15) assistance for a collaboration between a Minnesota 165.26 higher education institution and a business; 165.27 (16) assistance for a tax increment financing soils 165.28 condition district as defined under section 469.174, subdivision 165.29 19; 165.30 (17) redevelopment when the recipient's investment in the 165.31 purchase of the site and in site preparation is 70 percent or 165.32 more of the assessor's current year's estimated market value; 165.33 (18) general changes in tax increment financing law and 165.34 other general tax law changes of a principally technical nature; 165.35 (19) federal assistance until the assistance has been 165.36 repaid to, and reinvested by, the state or local government 166.1 agency; 166.2 (20) funds from dock and wharf bonds issued by a seaway 166.3 port authority; 166.4 (21) business loans and loan guarantees of $75,000 or less; 166.5 and 166.6 (22) federal loan funds provided through the United States 166.7 Department of Commerce, Economic Development Administration. 166.8 Sec. 2. Minnesota Statutes 2002, section 116J.993, is 166.9 amended by adding a subdivision to read: 166.10 Subd. 8. [RESIDENCE.] "Residence" means the place where an 166.11 individual has established a permanent home from which the 166.12 individual has no present intention of moving. 166.13 Sec. 3. Minnesota Statutes 2003 Supplement, section 166.14 116J.994, subdivision 4, is amended to read: 166.15 Subd. 4. [WAGE AND JOB GOALS.] The subsidy agreement, in 166.16 addition to any other goals, must include: (1) goals for the 166.17 number of jobs created, which may include separate goals for the 166.18 number of part-time or full-time jobs, or, in cases where job 166.19 loss is specific and demonstrable, goals for the number of jobs 166.20 retained; (2) wage goals for any jobs created or retained; and 166.21 (3) wage goals for any jobs to be enhanced through increased 166.22 wages. After a public hearing, if the creation or retention of 166.23 jobs is determined not to be a goal, the wage and job goals may 166.24 be set at zero. The goals for the number of jobs to be created 166.25 or retained must result in job creation or retention by the 166.26 recipient within the granting jurisdiction overall. 166.27 In addition to other specific goal time frames, the wage 166.28 and job goals must contain specific goals to be attained within 166.29 two years of the benefit date. 166.30 [EFFECTIVE DATE.] This section is effective August 1, 2004, 166.31 and applies to subsidy agreements entered into on or after that 166.32 date. 166.33 Sec. 4. Minnesota Statutes 2002, section 116J.994, 166.34 subdivision 5, is amended to read: 166.35 Subd. 5. [PUBLIC NOTICE AND HEARING.] (a) Before granting 166.36 a business subsidy that exceeds $500,000 for a state government 167.1 grantor and $100,000 for a local government grantor, the grantor 167.2 must provide public notice and a hearing on the subsidy. A 167.3 public hearing and notice under this subdivision is not required 167.4 if a hearing and notice on the subsidy is otherwise required by 167.5 law. 167.6 (b) Public notice of a proposed business subsidy under this 167.7 subdivision by a state government grantor, other than the Iron 167.8 Range Resources and Rehabilitation Board, must be published in 167.9 the State Register. Public notice of a proposed business 167.10 subsidy under this subdivision by a local government grantor or 167.11 the Iron Range Resources and Rehabilitation Board must be 167.12 published in a local newspaper of general circulation. The 167.13 public notice must identify the location at which information 167.14 about the business subsidy, including a summary of the terms of 167.15 the subsidy, is available. Published notice should be 167.16 sufficiently conspicuous in size and placement to distinguish 167.17 the notice from the surrounding text. The grantor must make the 167.18 information available in printed paper copies and, if possible, 167.19 on the Internet. The government agency must provide at least a 167.20 ten-day notice for the public hearing. 167.21 (c) The public notice must include the date, time, and 167.22 place of the hearing. 167.23 (d) The public hearing by a state government grantor other 167.24 than the Iron Range Resources and Rehabilitation Board must be 167.25 held in St. Paul. 167.26 (e) If more than one nonstate grantor provides a business 167.27 subsidy to the same recipient, the nonstate grantors may 167.28 designate one nonstate grantor to hold a single public hearing 167.29 regarding the business subsidies provided by all nonstate 167.30 grantors. For the purposes of this paragraph, "nonstate 167.31 grantor" includes the iron range resources and rehabilitation 167.32 board. 167.33 (f) The public notice of any public meeting about a 167.34 business subsidy agreement, including those required by this 167.35 subdivision and by subdivision 4, must include notice that a 167.36 person with residence in or the owner of taxable property in the 168.1 granting jurisdiction may file a written complaint with the 168.2 grantor if the grantor fails to comply with sections 116J.993 to 168.3 116J.995, and that no action may be filed against the grantor 168.4 for such failure to comply unless a written complaint is filed. 168.5 Sec. 5. Minnesota Statutes 2003 Supplement, section 168.6 116J.994, subdivision 9, is amended to read: 168.7 Subd. 9. [COMPILATION AND SUMMARY REPORT.] The Department 168.8 of Employment and Economic Development must publish a 168.9 compilation and summary of the results of the reports for the 168.10 previous calendar year by August 1 of 2004 and every other year 168.11 thereafter. The reports of the government agencies to the 168.12 department and the compilation and summary report of the 168.13 department must be made available to the public. The 168.14 commissioner must make copies of all business subsidy reports 168.15 submitted by local and state granting agencies available on the 168.16 department's Web site by October 1 of the year in which they 168.17 were submitted. 168.18 The commissioner must coordinate the production of reports 168.19 so that useful comparisons across time periods and across 168.20 grantors can be made. The commissioner may add other 168.21 information to the report as the commissioner deems necessary to 168.22 evaluate business subsidies. Among the information in the 168.23 summary and compilation report, the commissioner must include: 168.24 (1) total amount of subsidies awarded in each development 168.25 region of the state; 168.26 (2) distribution of business subsidy amounts by size of the 168.27 business subsidy; 168.28 (3) distribution of business subsidy amounts by time 168.29 category; 168.30 (4) distribution of subsidies by type and by public 168.31 purpose; 168.32 (5) percent of all business subsidies that reached their 168.33 goals; 168.34 (6) percent of business subsidies that did not reach their 168.35 goals by two years from the benefit date; 168.36 (7) total dollar amount of business subsidies that did not 169.1 meet their goals after two years from the benefit date; 169.2 (8) percent of subsidies that did not meet their goals and 169.3 that did not receive repayment; 169.4 (9) list of recipients that have failed to meet the terms 169.5 of a subsidy agreement in the past five years and have not 169.6 satisfied their repayment obligations; 169.7 (10) number of part-time and full-time jobs within separate 169.8 bands of wages; and 169.9 (11) benefits paid within separate bands of wages. 169.10 Sec. 6. Minnesota Statutes 2002, section 116J.994, is 169.11 amended by adding a subdivision to read: 169.12 Subd. 11. [ENFORCEMENT.] (a) A person with residence in or 169.13 an owner of taxable property located in the jurisdiction of the 169.14 grantor may bring an action for equitable relief arising out of 169.15 the failure of the grantor to comply with sections 116J.993 to 169.16 116J.995. The court may award a prevailing party in an action 169.17 under this subdivision costs and reasonable attorney fees. 169.18 (b) Prior to bringing an action, the party must file a 169.19 written complaint with the grantor stating the alleged violation 169.20 and proposing a remedy. The grantor has up to 30 days to reply 169.21 to the complaint in writing and may take action to comply with 169.22 sections 116J.993 to 116J.995. 169.23 (c) The written complaint under this subdivision for 169.24 failure to comply with subdivisions 1 to 5, must be filed with 169.25 the grantor within 180 days after approval of the subsidy 169.26 agreement under subdivision 3, paragraph (d). An action under 169.27 this subdivision must be commenced within 30 days following 169.28 receipt of the grantor's reply, or within 180 days after 169.29 approval of the subsidy agreement under subdivision 3, paragraph 169.30 (d), whichever is later. 169.31 [EFFECTIVE DATE.] This section is effective August 1, 2004, 169.32 and applies to subsidy agreements entered into on or after that 169.33 date. 169.34 Sec. 7. Minnesota Statutes 2002, section 161.1231, is 169.35 amended by adding a subdivision to read: 169.36 Subd. 11. [TRANSFER OF OWNERSHIP.] The commissioner shall, 170.1 at the earliest feasible date after receiving payment, transfer 170.2 ownership of the parking facilities to the city of Minneapolis. 170.3 The payment must be equal to the amount of state funds spent by 170.4 the commissioner for construction of the facilities. Upon 170.5 assuming ownership of the facilities, the city shall operate the 170.6 facilities in accordance with the rules adopted by the 170.7 commissioner under subdivision 2. Upon assumption of ownership, 170.8 the city shall assume the authority to collect fees for use of 170.9 the facilities under subdivision 5. The commissioner shall take 170.10 no action under this section that would result in federal 170.11 sanctions against Minnesota or require the repayment of any 170.12 state funds to the federal government. The commissioner shall 170.13 deposit all money received under this subdivision in the trunk 170.14 highway fund. 170.15 [EFFECTIVE DATE.] This section is effective the day after 170.16 the governing body of the city of Minneapolis and its chief 170.17 clerical officer comply with Minnesota Statutes, section 170.18 645.021, subdivisions 2 and 3. 170.19 Sec. 8. Minnesota Statutes 2002, section 469.034, 170.20 subdivision 2, is amended to read: 170.21 Subd. 2. [GENERAL OBLIGATION REVENUE BONDS.] (a) An 170.22 authority may pledge the general obligation of the general 170.23 jurisdiction governmental unit as additional security for bonds 170.24 payable from income or revenues of the project or the 170.25 authority. The authority must find that the pledged revenues 170.26 will equal or exceed 110 percent of the principal and interest 170.27 due on the bonds for each year. The proceeds of the bonds must 170.28 be used for a qualified housing development project or 170.29 projects. The obligations must be issued and sold in the manner 170.30 and following the procedures provided by chapter 475, except the 170.31 obligations are not subject to approval by the electors and the 170.32 maturities may extend to not more than 30 years from the 170.33 estimated date of completion of the project. The authority is 170.34 the municipality for purposes of chapter 475. 170.35 (b) The principal amount of the issue must be approved by 170.36 the governing body of the general jurisdiction governmental unit 171.1 whose general obligation is pledged. Public hearings must be 171.2 held on issuance of the obligations by both the authority and 171.3 the general jurisdiction governmental unit. The hearings must 171.4 be held at least 15 days, but not more than 120 days, before the 171.5 sale of the obligations. 171.6 (c) The maximum amount of general obligation bonds that may 171.7 be issued and outstanding under this section equals the greater 171.8 of (1) one-half of one percent of the taxable market value of 171.9 the general jurisdiction governmental unit whose general 171.10 obligation which includes a tax on property is pledged, or (2) 171.11 $3,000,000. In the case of county or multicounty general 171.12 obligation bonds, the outstanding general obligation bonds of 171.13 all cities in the county or counties issued under this 171.14 subdivision must be added in calculating the limit under clause 171.15 (1). 171.16 (d) "General jurisdiction governmental unit" means the city 171.17 in which the housing development project is located. In the 171.18 case of a county or multicounty authority, the county or 171.19 counties may act as the general jurisdiction governmental unit. 171.20 In the case of a multicounty authority, the pledge of the 171.21 general obligation is a pledge of a tax on the taxable property 171.22 in each of the counties. 171.23 (e) "Qualified housing development project" means a housing 171.24 development project providing housing either for the elderly or 171.25 for individuals and families with incomes not greater than 80 171.26 percent of the median family income as estimated by the United 171.27 States Department of Housing and Urban Development for the 171.28 standard metropolitan statistical area or the nonmetropolitan 171.29 county in which the project is located, and will. The project 171.30 must be owned for the term of the bonds either by the authority 171.31for the term of the bondsor by a limited partnership or other 171.32 entity in which the authority or another entity under the sole 171.33 control of the authority is the sole general partner. The 171.34 partnership or other entity must receive either: (1) an 171.35 allocation from the Department of Finance or an entitlement 171.36 issuer of tax-exempt bonding authority for the project and a 172.1 preliminary determination by the Minnesota Housing Finance 172.2 Agency or the applicable suballocator of tax credits that the 172.3 project will qualify for four percent low-income housing tax 172.4 credits; or (2) a reservation of nine percent low-income housing 172.5 tax credits from the Minnesota Housing Finance Agency or a 172.6 suballocator of tax credits for the project. A qualified 172.7 housing development project may admit nonelderly individuals and 172.8 families with higher incomes if: 172.9 (1) three years have passed since initial occupancy; 172.10 (2) the authority finds the project is experiencing 172.11 unanticipated vacancies resulting in insufficient revenues, 172.12 because of changes in population or other unforeseen 172.13 circumstances that occurred after the initial finding of 172.14 adequate revenues; and 172.15 (3) the authority finds a tax levy or payment from general 172.16 assets of the general jurisdiction governmental unit will be 172.17 necessary to pay debt service on the bonds if higher income 172.18 individuals or families are not admitted. 172.19 [EFFECTIVE DATE.] This section is effective for bonds 172.20 issued after the day following final enactment. 172.21 Sec. 9. Minnesota Statutes 2003 Supplement, section 172.22 469.174, subdivision 10, is amended to read: 172.23 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 172.24 district" means a type of tax increment financing district 172.25 consisting of a project, or portions of a project, within which 172.26 the authority finds by resolution that one or more of the 172.27 following conditions, reasonably distributed throughout the 172.28 district, exists: 172.29 (1) parcels consisting of 70 percent of the area of the 172.30 district are occupied by buildings, streets, utilities, paved or 172.31 gravel parking lots, or other similar structures and more than 172.32 50 percent of the buildings, not including outbuildings, are 172.33 structurally substandard to a degree requiring substantial 172.34 renovation or clearance; 172.35 (2) the property consists of vacant, unused, underused, 172.36 inappropriately used, or infrequently used railyards, rail 173.1 storage facilities, or excessive or vacated railroad 173.2 rights-of-way; 173.3 (3) tank facilities, or property whose immediately previous 173.4 use was for tank facilities, as defined in section 115C.02, 173.5 subdivision 15, if the tank facilities: 173.6 (i) have or had a capacity of more than 1,000,000 gallons; 173.7 (ii) are located adjacent to rail facilities; and 173.8 (iii) have been removed or are unused, underused, 173.9 inappropriately used, or infrequently used; or 173.10 (4) a qualifying disaster area, as defined in subdivision 173.11 10b. 173.12 (b) For purposes of this subdivision, "structurally 173.13 substandard" shall mean containing defects in structural 173.14 elements or a combination of deficiencies in essential utilities 173.15 and facilities, light and ventilation, fire protection including 173.16 adequate egress, layout and condition of interior partitions, or 173.17 similar factors, which defects or deficiencies are of sufficient 173.18 total significance to justify substantial renovation or 173.19 clearance. A building originally constructed for use as a 173.20 public or private school, 50 percent or more of the square 173.21 footage of which was constructed 30 or more years before 173.22 approval of the plan, is deemed to be structurally substandard 173.23 for purposes of this subdivision, notwithstanding paragraph (c), 173.24 if the tax increment financing plan provides for demolition or 173.25 substantial renovation of the building. 173.26 (c) A building is not structurally substandard if it is in 173.27 compliance with the building code applicable to new buildings or 173.28 could be modified to (1) satisfy the building code, plus (2) if 173.29 the tax increment financing plan provides for demolition or 173.30 substantial renovation of the building, abate or remove asbestos 173.31 and lead, at a cost of less than 15 percent of the cost of 173.32 constructing a new structure of the same square footage and type 173.33 on the site. The municipality may find that a building is not 173.34 disqualified as structurally substandard under the preceding 173.35 sentence on the basis of reasonably available evidence, such as 173.36 the size, type, and age of the building, the average cost of 174.1 plumbing, electrical, or structural repairs, or other similar 174.2 reliable evidence. The municipality may not make such a 174.3 determination without an interior inspection of the property, 174.4 but need not have an independent, expert appraisal prepared of 174.5 the cost of repair and rehabilitation of the building. An 174.6 interior inspection of the property is not required, if the 174.7 municipality finds that (1) the municipality or authority is 174.8 unable to gain access to the property after using its best 174.9 efforts to obtain permission from the party that owns or 174.10 controls the property; and (2) the evidence otherwise supports a 174.11 reasonable conclusion that the building is structurally 174.12 substandard. Items of evidence that support such a conclusion 174.13 include recent fire or police inspections, on-site property tax 174.14 appraisals or housing inspections, exterior evidence of 174.15 deterioration, or other similar reliable evidence. Written 174.16 documentation of the findings and reasons why an interior 174.17 inspection was not conducted must be made and retained under 174.18 section 469.175, subdivision 3, clause (1). Failure of a 174.19 building to be disqualified under the provisions of this 174.20 paragraph is a necessary, but not a sufficient, condition to 174.21 determining that the building is substandard. 174.22 (d) A parcel is deemed to be occupied by a structurally 174.23 substandard building for purposes of the finding under paragraph 174.24 (a) if all of the following conditions are met: 174.25 (1) the parcel was occupied by a substandard building 174.26 within three years of the filing of the request for 174.27 certification of the parcel as part of the district with the 174.28 county auditor; 174.29 (2) the substandard building was demolished or removed by 174.30 the authority or the demolition or removal was financed by the 174.31 authority or was done by a developer under a development 174.32 agreement with the authority; 174.33 (3) the authority found by resolution before the demolition 174.34 or removal that the parcel was occupied by a structurally 174.35 substandard building and that after demolition and clearance the 174.36 authority intended to include the parcel within a district; and 175.1 (4) upon filing the request for certification of the tax 175.2 capacity of the parcel as part of a district, the authority 175.3 notifies the county auditor that the original tax capacity of 175.4 the parcel must be adjusted as provided by section 469.177, 175.5 subdivision 1, paragraph (f). 175.6 (e) For purposes of this subdivision, a parcel is not 175.7 occupied by buildings, streets, utilities, paved or gravel 175.8 parking lots, or other similar structures unless 15 percent of 175.9 the area of the parcel contains buildings, streets, utilities, 175.10 paved or gravel parking lots, or other similar structures. 175.11 (f) For districts consisting of two or more noncontiguous 175.12 areas, each area must qualify as a redevelopment district under 175.13 paragraph (a) to be included in the district, and the entire 175.14 area of the district must satisfy paragraph (a). 175.15 [EFFECTIVE DATE.] This section is effective for districts 175.16 for which the request for certification was made after June 30, 175.17 2004. 175.18 Sec. 10. Minnesota Statutes 2002, section 469.174, is 175.19 amended by adding a subdivision to read: 175.20 Subd. 30. [URBAN RENEWAL AREA.] "Urban renewal area" means 175.21 a contiguous geographic area designated within a project and 175.22 within which all parcels must be eligible for inclusion in a 175.23 redevelopment, renewal and renovation, or soils condition 175.24 district or are currently located within a redevelopment, 175.25 renewal and renovation, or soils condition district certified 175.26 within ten years before or after the date of approval of the 175.27 urban renewal area by the city or county, whichever is later. 175.28 In determining eligibility for inclusion in a district, each 175.29 parcel may only be considered as a part of one district. 175.30 [EFFECTIVE DATE.] This section is effective for urban 175.31 renewal areas established on or after the date of final 175.32 enactment. 175.33 Sec. 11. Minnesota Statutes 2003 Supplement, section 175.34 469.175, subdivision 1, is amended to read: 175.35 Subdivision 1. [TAX INCREMENT FINANCING PLAN.] A tax 175.36 increment financing plan shall contain: 176.1 (1) a statement of objectives of an authority for the 176.2 improvement of a project; 176.3 (2) a statement as to the development program for the 176.4 project, including the property within the project, if any, that 176.5 the authority intends to acquire; 176.6 (3) a list of any development activities that the plan 176.7 proposes to take place within the project, for which contracts 176.8 have been entered into at the time of the preparation of the 176.9 plan, including the names of the parties to the contract, the 176.10 activity governed by the contract, the cost stated in the 176.11 contract, and the expected date of completion of that activity; 176.12 (4) identification or description of the type of any other 176.13 specific development reasonably expected to take place within 176.14 the project, and the date when the development is likely to 176.15 occur; 176.16 (5) estimates of the following: 176.17 (i) cost of the project, including administrative expenses, 176.18 except that if part of the cost of the project is paid or 176.19 financed with increment from the tax increment financing 176.20 district, the tax increment financing plan for the district must 176.21 contain an estimate of the amount of the cost of the project, 176.22 including administrative expenses, that will be paid or financed 176.23 with tax increments from the district; 176.24 (ii) amount of bonded indebtedness to be incurred; 176.25 (iii) sources of revenue to finance or otherwise pay public 176.26 costs; 176.27 (iv) the most recent net tax capacity of taxable real 176.28 property within the tax increment financing district and within 176.29 any subdistrict; 176.30 (v) the estimated captured net tax capacity of the tax 176.31 increment financing district at completion; and 176.32 (vi) the duration of the tax increment financing district's 176.33 and any subdistrict's existence; 176.34 (6) statements of the authority's alternate estimates of 176.35 the impact of tax increment financing on the net tax capacities 176.36 of all taxing jurisdictions in which the tax increment financing 177.1 district is located in whole or in part. For purposes of one 177.2 statement, the authority shall assume that the estimated 177.3 captured net tax capacity would be available to the taxing 177.4 jurisdictions without creation of the district, and for purposes 177.5 of the second statement, the authority shall assume that none of 177.6 the estimated captured net tax capacity would be available to 177.7 the taxing jurisdictions without creation of the district or 177.8 subdistrict; 177.9 (7) identification and description of studies and analyses 177.10 used to make the determination set forth in subdivision 3, 177.11 clause (2);and177.12 (8) identification of all parcels to be included in the 177.13 district or any subdistrict; and 177.14 (9) identification of any job training costs intended to be 177.15 paid by use of tax increments, including the name of the 177.16 employer whose employees will be trained and the nature and cost 177.17 of the training. The plan is not required to identify the 177.18 provider of the job training. 177.19 [EFFECTIVE DATE.] This section applies to districts for 177.20 which the request for certification was made after July 31, 177.21 1979, and is effective for tax increment financing plans 177.22 approved after June 30, 2004. 177.23 Sec. 12. Minnesota Statutes 2003 Supplement, section 177.24 469.175, subdivision 4, is amended to read: 177.25 Subd. 4. [MODIFICATION OF PLAN.] (a) A tax increment 177.26 financing plan may be modified by an authority. 177.27 (b) The authority may make the following modifications only 177.28 upon the notice and after the discussion, public hearing, and 177.29 findings required for approval of the original plan: 177.30 (1) any reduction or enlargement of geographic area of the 177.31 project or tax increment financing district that does not meet 177.32 the requirements of paragraph (e); 177.33 (2) increase in amount of bonded indebtedness to be 177.34 incurred; 177.35 (3) a determination to capitalize interest on the debt if 177.36 that determination was not a part of the original plan, or to 178.1 increase or decrease the amount of interest on the debt to be 178.2 capitalized; 178.3 (4) increase in the portion of the captured net tax 178.4 capacity to be retained by the authority; 178.5 (5) increase in the estimate of the cost of the project, 178.6 including administrative expenses, that will be paid or financed 178.7 with tax increment from the district;or178.8 (6) designation of additional property to be acquired by 178.9 the authority; or 178.10 (7) a decision to pay for job training for employees of a 178.11 business located in the district that was not a part of the 178.12 original plan. 178.13 (c) If an authority changes the type of district to another 178.14 type of district, this change is not a modification but requires 178.15 the authority to follow the procedure set forth in sections 178.16 469.174 to 469.179 for adoption of a new plan, including 178.17 certification of the net tax capacity of the district by the 178.18 county auditor. 178.19 (d) If a redevelopment district or a renewal and renovation 178.20 district is enlarged, the reasons and supporting facts for the 178.21 determination that the addition to the district meets the 178.22 criteria of section 469.174, subdivision 10, paragraph (a), 178.23 clauses (1) and (2), or subdivision 10a, must be documented. 178.24 (e) The requirements of paragraph (b) do not apply if (1) 178.25 the only modification is elimination of parcels from the project 178.26 or district and (2)(A) the current net tax capacity of the 178.27 parcels eliminated from the district equals or exceeds the net 178.28 tax capacity of those parcels in the district's original net tax 178.29 capacity or (B) the authority agrees that, notwithstanding 178.30 section 469.177, subdivision 1, the original net tax capacity 178.31 will be reduced by no more than the current net tax capacity of 178.32 the parcels eliminated from the district. The authority must 178.33 notify the county auditor of any modification that reduces or 178.34 enlarges the geographic area of a district or a project area. 178.35 (f) The geographic area of a tax increment financing 178.36 district may be reduced, but shall not be enlarged after five 179.1 years following the date of certification of the original net 179.2 tax capacity by the county auditor or after August 1, 1984, for 179.3 tax increment financing districts authorized prior to August 1, 179.4 1979. 179.5 [EFFECTIVE DATE.] This section is effective for districts 179.6 for which the request for certification was made after July 31, 179.7 1979, and is effective for modifications made after June 30, 179.8 2004. 179.9 Sec. 13. Minnesota Statutes 2003 Supplement, section 179.10 469.175, subdivision 6, is amended to read: 179.11 Subd. 6. [ANNUAL FINANCIAL REPORTING.] (a) The state 179.12 auditor shall develop a uniform system of accounting and 179.13 financial reporting for tax increment financing districts. The 179.14 system of accounting and financial reporting shall, as nearly as 179.15 possible: 179.16 (1) provide for full disclosure of the sources and uses of 179.17 public funds in the district; 179.18 (2) permit comparison and reconciliation with the affected 179.19 local government's accounts and financial reports; 179.20 (3) permit auditing of the funds expended on behalf of a 179.21 district, including a single district that is part of a 179.22 multidistrict project or that is funded in part or whole through 179.23 the use of a development account funded with tax increments from 179.24 other districts or with other public money; 179.25 (4) be consistent with generally accepted accounting 179.26 principles. 179.27 (b) The authority must annually submit to the state auditor 179.28 a financial report in compliance with paragraph (a). Copies of 179.29 the report must also be provided to the county auditor and to 179.30 the governing body of the municipality, if the authority is not 179.31 the municipality. To the extent necessary to permit compliance 179.32 with the requirement of financial reporting, the county and any 179.33 other appropriate local government unit or private entity must 179.34 provide the necessary records or information to the authority or 179.35 the state auditor as provided by the system of accounting and 179.36 financial reporting developed pursuant to paragraph (a). The 180.1 authority must submit the annual report for a year on or before 180.2 August 1 of the next year. 180.3 (c) The annual financial report must also include the 180.4 following items: 180.5 (1) the original net tax capacity of the district and any 180.6 subdistrict under section 469.177, subdivision 1; 180.7 (2) the net tax capacity for the reporting period of the 180.8 district and any subdistrict; 180.9 (3) the captured net tax capacity of the district; 180.10 (4) any fiscal disparity deduction from the captured net 180.11 tax capacity under section 469.177, subdivision 3; 180.12 (5) the captured net tax capacity retained for tax 180.13 increment financing under section 469.177, subdivision 2, 180.14 paragraph (a), clause (1); 180.15 (6) any captured net tax capacity distributed among 180.16 affected taxing districts under section 469.177, subdivision 2, 180.17 paragraph (a), clause (2); 180.18 (7) the type of district; 180.19 (8) the date the municipality approved the tax increment 180.20 financing plan and the date of approval of any modification of 180.21 the tax increment financing plan, the approval of which requires 180.22 notice, discussion, a public hearing, and findings under 180.23 subdivision 4, paragraph (a); 180.24 (9) the date the authority first requested certification of 180.25 the original net tax capacity of the district and the date of 180.26 the request for certification regarding any parcel added to the 180.27 district; 180.28 (10) the date the county auditor first certified the 180.29 original net tax capacity of the district and the date of 180.30 certification of the original net tax capacity of any parcel 180.31 added to the district; 180.32 (11) the month and year in which the authority has received 180.33 or anticipates it will receive the first increment from the 180.34 district; 180.35 (12) the date the district must be decertified; 180.36 (13) for the reporting period and prior years of the 181.1 district, the actual amount received from, at least, the 181.2 following categories: 181.3 (i) tax increments paid by the captured net tax capacity 181.4 retained for tax increment financing under section 469.177, 181.5 subdivision 2, paragraph (a), clause (1), but excluding any 181.6 excess taxes; 181.7 (ii) tax increments that are interest or other investment 181.8 earnings on or from tax increments; 181.9 (iii) tax increments that are proceeds from the sale or 181.10 lease of property, tangible or intangible, purchased by the 181.11 authority with tax increments; 181.12 (iv) tax increments that are repayments of loans or other 181.13 advances made by the authority with tax increments; 181.14 (v) bond or loan proceeds; 181.15 (vi) special assessments; 181.16 (vii) grants; and 181.17 (viii) transfers from funds not exclusively associated with 181.18 the district; 181.19 (14) for the reporting period and for the prior years of 181.20 the district, the actual amount expended for, at least, the 181.21 following categories: 181.22 (i) acquisition of land and buildings through condemnation 181.23 or purchase; 181.24 (ii) site improvements or preparation costs; 181.25 (iii) installation of public utilities, parking facilities, 181.26 streets, roads, sidewalks, or other similar public improvements; 181.27 (iv) administrative costs, including the allocated cost of 181.28 the authority; 181.29 (v) public park facilities, facilities for social, 181.30 recreational, or conference purposes, or other similar public 181.31 improvements;and181.32 (vi) transfers to funds not exclusively associated with the 181.33 district; and 181.34 (vii) job training as permitted under section 469.176, 181.35 subdivision 4m; 181.36 (15) for properties sold to developers, the total cost of 182.1 the property to the authority and the price paid by the 182.2 developer; 182.3 (16) the amount of any payments and the value of any 182.4 in-kind benefits, such as physical improvements and the use of 182.5 building space, that are paid or financed with tax increments 182.6 and are provided to another governmental unit other than the 182.7 municipality during the reporting period; 182.8 (17) the amount of any payments for activities and 182.9 improvements located outside of the district that are paid for 182.10 or financed with tax increments; 182.11 (18) the amount of payments of principal and interest that 182.12 are made during the reporting period on any nondefeased: 182.13 (i) general obligation tax increment financing bonds; 182.14 (ii) other tax increment financing bonds; and 182.15 (iii) notes and pay-as-you-go contracts; 182.16 (19) the principal amount, at the end of the reporting 182.17 period, of any nondefeased: 182.18 (i) general obligation tax increment financing bonds; 182.19 (ii) other tax increment financing bonds; and 182.20 (iii) notes and pay-as-you-go contracts; 182.21 (20) the amount of principal and interest payments that are 182.22 due for the current calendar year on any nondefeased: 182.23 (i) general obligation tax increment financing bonds; 182.24 (ii) other tax increment financing bonds; and 182.25 (iii) notes and pay-as-you-go contracts; 182.26 (21) if the fiscal disparities contribution under chapter 182.27 276A or 473F for the district is computed under section 469.177, 182.28 subdivision 3, paragraph (a), the amount of increased property 182.29 taxes imposed on other properties in the municipality that 182.30 approved the tax increment financing plan as a result of the 182.31 fiscal disparities contribution; 182.32 (22) whether the tax increment financing plan or other 182.33 governing document permits increment revenues to be expended: 182.34 (i) to pay bonds, the proceeds of which were or may be 182.35 expended on activities outside of the district; 182.36 (ii) for deposit into a common bond fund from which money 183.1 may be expended on activities located outside of the district; 183.2 or 183.3 (iii) to otherwise finance activities located outside of 183.4 the tax increment financing district; 183.5 (23) the estimate, if any, contained in the tax increment 183.6 financing plan of the amount of the cost of the project, 183.7 including administrative expenses, that will be paid or financed 183.8 with tax increment; and 183.9 (24) any additional information the state auditor may 183.10 require. 183.11 (d) The commissioner of revenue shall prescribe the method 183.12 of calculating the increased property taxes under paragraph (c), 183.13 clause (21), and the form of the statement disclosing this 183.14 information on the annual statement under subdivision 5. 183.15 (e) The reporting requirements imposed by this subdivision 183.16 apply to districts certified before, on, and after August 1, 183.17 1979. 183.18 [EFFECTIVE DATE.] This section is effective for reports 183.19 filed in 2005 and thereafter. 183.20 Sec. 14. Minnesota Statutes 2003 Supplement, section 183.21 469.176, subdivision 1c, is amended to read: 183.22 Subd. 1c. [DURATION LIMITS; PRE-1979 DISTRICTS.] (a) For 183.23 tax increment financing districts created prior to August 1, 183.24 1979, no tax increment shall be paid to the authority after 183.25 April 1, 2001, or the term of a nondefeased bond or obligation 183.26 outstanding on April 1, 1990, secured by increments from the 183.27 district or project area, whichever time is greater, provided 183.28 that in no case will a tax increment be paid to an authority 183.29 after August 1, 2009, from such a district. If a district's 183.30 termination date is extended beyond April 1, 2001, because bonds 183.31 were outstanding on April 1, 1990, with maturities extending 183.32 beyond April 1, 2001, the following restrictions apply. No 183.33 increment collected from the district may be expended after 183.34 April 1, 2001, except to pay or repay: 183.35 (1) bonds issued before April 1, 1990; 183.36 (2) bonds issued to refund the principal of the outstanding 184.1 bonds and pay associated issuance costs; 184.2 (3) administrative expenses of the district required to be 184.3 paid under section 469.176, subdivision 4h, paragraph (a); 184.4 (4) transfers of increment permitted under section 184.5 469.1763, subdivision 6;and184.6 (5) any advance or payment made by the municipality or the 184.7 authority after June 1, 2002, to pay any bonds listed in clause 184.8 (1) or (2); and 184.9 (6) amounts authorized under paragraph (d). 184.10 (b) Each year, any increments from a district subject to 184.11 this subdivision must be first applied to pay obligations listed 184.12 under paragraph (a), clauses (1) and (2), and administrative 184.13 expenses under paragraph (a), clause (3). Any remaining 184.14 increments may be used for transfers of increments permitted 184.15 under section 469.1763, subdivision 6, and to make payments 184.16 underparagraphparagraphs (a), clause (5), and (d). 184.17 (c) When sufficient money has been received to pay in full 184.18 or defease obligations under paragraph (a), clauses (1), (2), 184.19 and (5), and no spending is permitted by paragraph (d) for the 184.20 year, the tax increment project or district must be decertified. 184.21 (d) In addition to the expenditures authorized under 184.22 paragraph (a), clauses (1) to (5), a city may expend increments 184.23 from a tax increment financing district subject to this 184.24 subdivision after April 1, 2001, if all of the following 184.25 conditions are met: 184.26 (1) the captured tax capacity for all tax increment 184.27 financing districts constituted less than six percent of the 184.28 city's total tax capacity for taxes payable in 2003; and 184.29 (2) the population of the city exceeds 50,000. 184.30 [EFFECTIVE DATE.] This section is effective for tax 184.31 increment financing districts for which the request for 184.32 certification was made before August 1, 1979. 184.33 Sec. 15. Minnesota Statutes 2002, section 469.176, is 184.34 amended by adding a subdivision to read: 184.35 Subd. 4m. [USE OF INCREMENTS FOR JOB 184.36 TRAINING.] Notwithstanding the limits on use of increments in 185.1 subdivision 4, 4b, 4c, or 4j, increments may be expended for job 185.2 training that is intended to result in new job growth within a 185.3 tax increment financing district. The authority may expend 185.4 increments directly for the cost of the job training or may 185.5 reimburse an employer located within the district or a 185.6 municipality in which the district is located for job training 185.7 expenditures. Increments may be expended only for job training 185.8 programs that are approved for this purpose by the local 185.9 workforce council established under section 268.666 that has 185.10 jurisdiction over the workforce service area that includes the 185.11 tax increment financing district. For purposes of section 185.12 469.1763, increments expended under this subdivision are 185.13 considered to be expended on activities in the district. 185.14 [EFFECTIVE DATE.] This section is effective for districts 185.15 for which the request for certification was made after July 31, 185.16 1979, provided that districts for which the request for 185.17 certification was made before the effective date of this act 185.18 must modify their plans to provide for this expenditure. 185.19 Sec. 16. Minnesota Statutes 2002, section 469.176, is 185.20 amended by adding a subdivision to read: 185.21 Subd. 8. [URBAN RENEWAL AREA.] (a) An authority may create 185.22 an urban renewal area only upon the notice and after the 185.23 discussion, public hearing, and findings required for approval 185.24 of the original project. In addition, the authority must obtain 185.25 written approval from the county in which the urban renewal area 185.26 is to be located. After approval by the city and county, the 185.27 authority shall notify the commissioner of revenue of the 185.28 approved urban renewal area. 185.29 (b) All provisions of sections 469.174 through 469.1799 185.30 apply except: 185.31 (1) the five-year rule under section 469.1763, subdivision 185.32 3, is extended to ten years; 185.33 (2) the limitation on spending increment outside of the 185.34 district under section 469.1763, subdivision 2, does not apply, 185.35 provided that increments may only be expended on improvements or 185.36 activities within the urban renewal area, and increments from a 186.1 soils condition district must be expended as provided under 186.2 subdivision 4b; and 186.3 (3) the local tax rate certification required under section 186.4 469.177, subdivision 1a, does not apply. 186.5 [EFFECTIVE DATE.] This section is effective for urban 186.6 renewal areas established on or after the date of final 186.7 enactment. 186.8 Sec. 17. Minnesota Statutes 2002, section 469.1761, is 186.9 amended by adding a subdivision to read: 186.10 Subd. 3a. [MIXED-INCOME OCCUPANCY PROJECTS.] (a) 186.11 Notwithstanding the income requirements in subdivisions 2 and 3, 186.12 or section 469.174, subdivision 11, an authority may create 186.13 housing districts for developments that contain both 186.14 owner-occupied and residential rental units for mixed-income 186.15 occupancy. Such a district consists of a project, or a portion 186.16 of a project, intended for occupancy, in part, by persons of low 186.17 and moderate income as defined in chapter 462A, title II, of the 186.18 National Housing Act of 1934; the National Housing Act of 1959; 186.19 the United States Housing Act of 1937, as amended; title V of 186.20 the Housing Act of 1949, as amended; any other similar present 186.21 or future federal, state, or municipal legislation, or the 186.22 regulations promulgated under any of those acts, as further 186.23 specified in this section. Twenty percent of the units in the 186.24 development in the housing district must be occupied by 186.25 individuals whose family income is equal to or less than 50 186.26 percent of area median gross income, and an additional 60 186.27 percent of the units in the development in the housing district 186.28 must be occupied by individuals whose family income is equal to 186.29 or less than 115 percent of area median gross income. Twenty 186.30 percent of the units in the development in the housing district 186.31 are not required to be subject to any income limitations. 186.32 (b) For purposes of this subdivision, "family income" means 186.33 the median gross income for the area as determined under section 186.34 42 of the Internal Revenue Code of 1986, as amended. The income 186.35 requirements of this subdivision are satisfied if the sum of 186.36 qualified owner-occupied units and qualified residential rental 187.1 units equals the required total number of qualified units. 187.2 Owner-occupied units must be initially purchased and occupied by 187.3 individuals whose family income satisfies the income 187.4 requirements of this subdivision. For residential rental 187.5 property, the income requirements of this subdivision apply for 187.6 the duration of the tax increment district. 187.7 (c) The development in the housing district, but not the 187.8 project, does not qualify under this subdivision if the fair 187.9 market value of the improvements that are constructed for 187.10 commercial uses or for uses other than owner-occupied and rental 187.11 mixed-income housing consists of more than 20 percent of the 187.12 total fair market value of the planned improvements in the 187.13 development plan or agreement. The fair market value of the 187.14 improvements may be determined using the cost of construction, 187.15 capitalized income, or other appropriate method of estimating 187.16 market value. 187.17 [EFFECTIVE DATE.] This section is effective for districts 187.18 for which certification is requested after July 31, 2004. 187.19 Sec. 18. Minnesota Statutes 2002, section 469.1792, as 187.20 amended by Laws 2003, chapter 127, is amended to read: 187.21 469.1792 [SPECIAL DEFICIT AUTHORITY.] 187.22 Subdivision 1. [SCOPE.] This section applies only to an 187.23 authority with a preexisting district for which: 187.24 (1) the increments from the district were insufficient to 187.25 pay preexisting obligations as a result of the class rate 187.26 changes or the elimination of the state-determined general 187.27 education property tax levy under this act, or both;or187.28 (2)(i) the development authority has a binding contract, 187.29 entered into before August 1, 2001, with a person requiring the 187.30 authority to pay to the person an amount that may not exceed the 187.31 increment from the district or a specific development within the 187.32 district; and 187.33 (ii) the authority is unable to pay the full amount under 187.34 the contract from the pledged increments or other increments 187.35 from the district that would have been due if the class rate 187.36 changes or elimination of the state-determined general education 188.1 property tax levy or both had not been made under Laws 2001, 188.2 First Special Session chapter 5; 188.3 (3) the authority amends its tax increment financing plan 188.4 to establish an affordable housing account to which increments 188.5 are pledged; or 188.6 (4) the authority amends its tax increment financing plan 188.7 to establish a hazardous substance, pollutant, or contaminant 188.8 remediation account to which increments are pledged. 188.9 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 188.10 the following terms have the meanings given. 188.11 (b) "Affordable housing account" means an account in which 188.12 increment is deposited solely for affordable housing activities 188.13 as defined in section 469.174, subdivision 11. 188.14 (c) "Hazardous substance, pollutant, or contaminant 188.15 remediation account" means an account in which increment is 188.16 deposited solely for removal or remediation activities described 188.17 in section 469.174, subdivisions 16 to 19. 188.18(b)(d) "Preexisting district" means a tax increment 188.19 financing district for which the request for certification was 188.20 made before August 1, 2001. 188.21(c)(e) "Preexisting obligation" means a bond or binding 188.22 contract that: 188.23 (1)(i) was issued or approved before August 1, 2001, or was 188.24 issued pursuant to a binding contract entered into before July 188.25 1, 2001; or 188.26 (ii) was issued to refinance an obligation under item (i), 188.27 if the refinancing does not increase the present value of the 188.28 debt service; and 188.29 (2) is secured by increments from a preexisting district. 188.30 Subd. 3. [ACTIONS AUTHORIZED.] (a) An authority with a 188.31 district qualifying under this section may takeeither or both188.32 any or all of the following actions for any or all of its 188.33 preexisting districts: 188.34 (1) the authority may elect that the original local tax 188.35 rate under section 469.177, subdivision 1a, does not apply to 188.36 the district;and189.1 (2) the authority may elect the fiscal disparities 189.2 contribution will be computed under section 469.177, subdivision 189.3 3, paragraph (a), regardless of the election that was made for 189.4 the district or if the district is an economic development 189.5 district for which the request for certification was made after 189.6 June 30, 1997; or 189.7 (3) the authority may elect to extend the duration of the 189.8 district by up to eight additional years beyond the duration 189.9 limit on the collection of increment under section 469.176, 189.10 subdivision 1b or 1e, or a special law applicable to the 189.11 district. 189.12 (b) The authority may take action under this subdivision 189.13 only after the municipality approves the action, by resolution, 189.14 after notice and public hearing in the manner provided under 189.15 section 469.175, subdivision 3. To be effective for taxes 189.16 payable in the following year, the resolution must be adopted 189.17 and the county auditor must be notified of the adoption on or 189.18 before July 1. 189.19 (c) The additional increment that may be collected as a 189.20 result of actions taken under this section and any increments 189.21 transferred to the district under section 469.1763, subdivision 189.22 6, is limited to the lesser of: 189.23 (1) the amount the authority is obligated to pay under 189.24 preexisting obligations out of the increments from the district 189.25 that result in application of this section under subdivision 1; 189.26 or 189.27 (2) an amount estimated to represent the difference between 189.28 the increment that would have been collected if the class rate 189.29 changes and elimination of the state-determined general 189.30 education property tax levy had not been made under Laws 2001, 189.31 First Special Session chapter 5, for the term of the district 189.32 under general law, and the actual increments collected for the 189.33 term of the district. 189.34 Subd. 4. [EXPENDITURES FROM AFFORDABLE HOUSING 189.35 ACCOUNTS.] Increment from an affordable housing account may be 189.36 spent by an authority anywhere within its area of operation. 190.1 Notwithstanding the definition of a project under section 190.2 469.174, increments may be spent to assist housing that meets 190.3 the requirements under section 469.1761. The limitation imposed 190.4 by section 469.1763, subdivision 2, does not apply to any 190.5 transfers of increment to the affordable housing account to the 190.6 extent that the amount transferred to the account under this 190.7 subdivision does not exceed ten percent of the revenue derived 190.8 from tax increments paid by properties in the district in the 190.9 year. 190.10 Subd. 5. [EXPENDITURES FROM HAZARDOUS SUBSTANCE, 190.11 POLLUTANT, OR CONTAMINANT REMEDIATION ACCOUNT.] Increment from a 190.12 hazardous substance, pollutant, or contaminant remediation 190.13 account may be spent by an authority anywhere within its area of 190.14 operation. Notwithstanding the definition of a project under 190.15 section 469.174, increments may be expended to remediation and 190.16 removal activities that meet the requirements of section 190.17 469.176, subdivision 4b or 4e. The limitation imposed by 190.18 section 469.1763, subdivision 2, does not apply to any transfers 190.19 of increment to the hazardous substance, pollutant, or 190.20 contaminant remediation account to the extent that the amount 190.21 transferred to the account under this subdivision does not 190.22 exceed ten percent of the revenue derived from tax increments 190.23 paid by properties in the district in the year. 190.24 [EFFECTIVE DATE.] This section is effective for actions 190.25 taken and resolutions approved after June 30, 2004. 190.26 Sec. 19. Minnesota Statutes 2003 Supplement, section 190.27 469.310, subdivision 11, is amended to read: 190.28 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 190.29 means a person carrying on a trade or business at a place of 190.30 business located within a job opportunity building zone. 190.31 (b) A person that relocates a trade or business from 190.32 outside a job opportunity building zone into a zone is not a 190.33 qualified business, unless the business: 190.34 (1)(i) increases full-time employment in the first full 190.35 year of operation within the job opportunity building zone by at 190.36 least 20 percent measured relative to the operations that were 191.1 relocated and maintains the required level of employment for 191.2 each year the zone designation applies; or 191.3 (ii) makes a capital investment in the property located 191.4 within a zone equivalent to ten percent of the gross revenues of 191.5 operation that were relocated in the immediately preceding 191.6 taxable year; and 191.7 (2) enters a binding written agreement with the 191.8 commissioner that: 191.9 (i) pledges the business will meet the requirements of 191.10 clause (1); 191.11 (ii) provides for repayment of all tax benefits enumerated 191.12 under section 469.315 to the business under the procedures in 191.13 section 469.319, if the requirements of clause (1) are not met 191.14 for the taxable year or for taxes payable during the year in 191.15 which the requirements were not met; and 191.16 (iii) contains any other terms the commissioner determines 191.17 appropriate. 191.18 (c) A business is not a qualified business if at its 191.19 location or locations in the zone, the business is primarily 191.20 engaged in making retail sales to purchasers who are physically 191.21 present at the business's zone location. 191.22 [EFFECTIVE DATE.] This section is effective the day 191.23 following final enactment and applies to any business entering a 191.24 business subsidy agreement for a job opportunity development 191.25 zone after that date. 191.26 Sec. 20. Laws 1998, chapter 389, article 11, section 19, 191.27 subdivision 3, is amended to read: 191.28 Subd. 3. [DURATION OF DISTRICT.] Notwithstanding the 191.29 provisions of Minnesota Statutes, section 469.176, subdivision 191.30 1b, no tax increment may be paid to the authority or the city 191.31 after18 years from the date of receipt by the authority of the191.32first increment generated from the final phase of191.33redevelopment. In no case may increments be paid to the191.34authority after30 years from approval of the tax increment 191.35 plan."Final phase of redevelopment" means that phase of191.36redevelopment activity which completes the rehabilitation of the192.1Lake Street site.192.2 [EFFECTIVE DATE.] This section is effective upon compliance 192.3 with Minnesota Statutes, sections 469.1782, subdivision 2, and 192.4 645.021, subdivision 2. 192.5 Sec. 21. Laws 1998, chapter 389, article 11, section 24, 192.6 subdivision 1, is amended to read: 192.7 Subdivision 1. [SPECIAL RULES.] (a) If the city elects 192.8 upon the adoption of the tax increment financing plan for the 192.9 district, the rules under this section apply to one or more 192.10 redevelopmentor soils conditiontax increment financing 192.11 districts established by the city of New Brighton or a 192.12 development authority of the city in the area bounded on the 192.13 north by the south boundary line of tax increment district 192.14 number 8 extended to Long Lake regional park, on the east by 192.15 interstate highway 35W, on the south by interstate highway 694, 192.16 and on the west by Long Lake regional park. 192.17 (b)The five-year rule under Minnesota Statutes, section192.18469.1763, subdivision 3, is extended to nine years for the192.19district.192.20(c)The limitations on spending increment outside of the 192.21 district under Minnesota Statutes, section 469.1763, subdivision 192.22 2, do not apply, but the following limitations apply: 192.23 (1) increments may only be expended on improvements or 192.24 activities within the area defined in paragraph (a); and 192.25 (2) increment from the area described in paragraph (d) must 192.26 be expended within the area or for administrative expenses, 192.27 sanitary sewer relocation, and the cost of road improvements 192.28 that are a direct result of development occurring within that 192.29 area. 192.30 (c) The certified original local tax rate for the district 192.31 under Minnesota Statutes, section 469.177, subdivision 1a, does 192.32 not apply. 192.33 (d) The requirements for qualifying a redevelopment 192.34 district under Minnesota Statutes, section 469.174, subdivision 192.35 10, do not apply to the parcels identified as 20-30-23-14-0004, 192.36 20-30-23-14-0003, 20-30-23-41-0001, 21-30-23-32-0009, 193.1 21-30-23-32-0010, 20-30-23-41-0015, 20-30-23-41-0003, 193.2 21-30-23-32-0013, 20-30-23-41-0004, 20-30-23-41-0016, 193.3 20-30-23-41-0005, 20-30-23-41-0006, 20-30-23-41-0007, 193.4 20-30-23-41-0014, 20-30-23-41-0010, and 20-30-23-44-0002, or to 193.5 railroad property in the district. The area of each parcel and 193.6 the railroad property shall be deemed eligible for the purpose 193.7 of qualifying for inclusion in a redevelopment district. 193.8 Sec. 22. Laws 1998, chapter 389, article 11, section 24, 193.9 subdivision 2, is amended to read: 193.10 Subd. 2. [EXPIRATION.](a) The exception from the193.11limitations of Minnesota Statutes, section 469.1763, subdivision193.122, expires 18 years after the receipt of the first increment193.13from a district to which the city has elected that this section193.14applies.193.15(b)The authority to approve tax increment financing plans 193.16 to establish a tax increment financing district or districts 193.17 under this section expires on December 31,20082013. 193.18 [EFFECTIVE DATE.] This section is effective upon approval 193.19 by the governing bodies of the city of New Brighton and Ramsey 193.20 County and upon compliance by the city with Minnesota Statutes, 193.21 section 645.021, subdivision 3. 193.22 Sec. 23. [ANOKA COUNTY REGIONAL RAILROAD AUTHORITY 193.23 POWERS.] 193.24 Subdivision 1. [ECONOMIC DEVELOPMENT POWERS AND 193.25 DUTIES.] The Anoka County Regional Railroad Authority may 193.26 exercise any of the powers and duties of an economic development 193.27 authority under Minnesota Statutes, sections 469.090, 469.098, 193.28 and 469.101 to 469.106. The Anoka County Regional Railroad 193.29 Authority may exercise the powers under Minnesota Statutes, 193.30 sections 469.001 to 469.047, for the purpose of transit-oriented 193.31 development, except that the Anoka County Regional Railroad 193.32 Authority must not exercise the power to tax under Minnesota 193.33 Statutes, section 469.033, subdivision 6. In applying Minnesota 193.34 Statutes, sections 469.001 to 469.047, 469.090, 469.098, and 193.35 469.101 to 469.106, to the Anoka County Regional Railroad 193.36 Authority, the county is considered to be the city and the 194.1 county board is considered to be the city council. 194.2 Subd. 2. [RELATION TO LOCAL AUTHORITIES.] Nothing in 194.3 subdivision 1 shall change or impair the powers or duties of a 194.4 city, town, municipal housing and redevelopment authority, or 194.5 municipal economic development authority. 194.6 Subd. 3. [LOCAL APPROVAL.] If any economic development 194.7 project is constructed in the county pursuant to the 194.8 authorization in this section, the project must be approved by 194.9 the governing body of each city or town within which the project 194.10 will be constructed. 194.11 [EFFECTIVE DATE.] This section is effective the day after 194.12 the governing body of the Anoka County Regional Railroad 194.13 Authority and its chief clerical officer timely complete their 194.14 compliance with Minnesota Statutes, section 645.021, 194.15 subdivisions 2 and 3. 194.16 Sec. 24. [CITY OF DETROIT LAKES; REDEVELOPMENT TAX 194.17 INCREMENT FINANCING DISTRICT.] 194.18 Subdivision 1. [AUTHORIZATION.] At the election of the 194.19 governing body of the city of Detroit Lakes, upon adoption of 194.20 the tax increment financing plan for the district described in 194.21 this section, the rules provided under this section apply to 194.22 each such district. 194.23 Subd. 2. [DEFINITION.] In this section, "district" means a 194.24 redevelopment district established by the city of Detroit Lakes 194.25 or the Detroit Lakes Development Authority within the following 194.26 area: 194.27 Beginning at the intersection of Washington Avenue and the 194.28 Burlington Northern Santa Fe Railroad then east to the 194.29 intersection of Roosevelt Avenue then south to the intersection 194.30 of Highway 10/Frazee Street then west to the intersection of 194.31 Frazee Street and the alley that parallels Washington Avenue 194.32 then north to the point of beginning. 194.33 More than one district may be created under this act. 194.34 Subd. 3. [QUALIFICATION AS REDEVELOPMENT DISTRICT; SPECIAL 194.35 RULES.] The district shall be a redevelopment district under 194.36 Minnesota Statutes, section 469.174, subdivision 10. All 195.1 buildings that are removed to facilitate the Highway 10 195.2 Realignment Project are deemed to be "structurally 195.3 substandard." The three-year limit after demolition of the 195.4 buildings to request tax increment financing certification 195.5 provided in Minnesota Statutes, section 469.174, subdivision 10, 195.6 paragraph (d), clause (1), does not apply. 195.7 Subd. 4. [EXPIRATION.] The authority to approve tax 195.8 increment financing plans to establish a tax increment financing 195.9 redevelopment district subject to this section expires on 195.10 December 31, 2014. 195.11 Subd. 5. [EFFECTIVE DATE.] This section is effective upon 195.12 approval of the governing body of the city of Detroit Lakes and 195.13 compliance with Minnesota Statutes, section 645.021, subdivision 195.14 3. 195.15 Sec. 25. [CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX 195.16 INCREMENT FINANCING DISTRICTS.] 195.17 Subdivision 1. [AUTHORIZATION.] Notwithstanding the 195.18 mileage limitation in Minnesota Statutes, section 469.174, 195.19 subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco 195.20 are deemed to be small cities for purposes of Minnesota 195.21 Statutes, sections 469.174 to 469.1799, as long as they do not 195.22 exceed the population limit in that section. 195.23 Subd. 2. [LOCAL APPROVAL.] This section is effective for 195.24 each of the cities of Elgin, Eyota, Byron, and Oronoco upon 195.25 approval of that city's governing body and compliance with 195.26 Minnesota Statutes, section 645.021, subdivisions 2 and 3. 195.27 Sec. 26. [CITY OF BROOKLYN CENTER; EXTENSION OF TIME TO 195.28 EXPEND TAX INCREMENT.] 195.29 For tax increment financing district number 3, established 195.30 on December 19, 1994, by Brooklyn Center Resolution No. 94-273, 195.31 Minnesota Statutes, section 469.1763, subdivision 3, applies to 195.32 the district by permitting a period of 13 years for commencement 195.33 of activities within the district. 195.34 [EFFECTIVE DATE.] This section is effective upon approval 195.35 by the governing body of the city of Brooklyn Center and 195.36 compliance with Minnesota Statutes, section 645.021, subdivision 196.1 3. 196.2 Sec. 27. [CITY OF FAIRMONT; TAX INCREMENT FINANCING 196.3 DISTRICT.] 196.4 Subdivision 1. [AUTHORITY TO REDUCE ORIGINAL VALUE.] The 196.5 city of Fairmont may elect to reduce the original tax capacity 196.6 of a previously tax-exempt parcel, consisting of property 196.7 formerly owned by the United States Post Office, in tax 196.8 increment financing district No. 20, to the value of the land. 196.9 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 196.10 compliance by the city of Fairmont with the requirements of 196.11 Minnesota Statutes, section 645.021. 196.12 Sec. 28. [CITY OF FERGUS FALLS; ECONOMIC DEVELOPMENT 196.13 PROPERTY.] 196.14 The provisions of Minnesota Statutes, section 272.02, 196.15 subdivision 39, apply to property located in the city of Fergus 196.16 Falls as if the city had a population of 5,000 or less. 196.17 [EFFECTIVE DATE.] This section is effective for taxes 196.18 levied in 2004, payable in 2005, and thereafter. 196.19 Sec. 29. [CITY OF MINNEAPOLIS; SPECIAL SERVICE DISTRICTS; 196.20 MANAGEMENT BY NONPROFIT CORPORATIONS.] 196.21 The city of Minneapolis may elect, in the establishment of 196.22 a special service district, to provide that the activities of 196.23 the special service district may be managed by a nonprofit 196.24 corporation created to assist and act on behalf of the city in 196.25 implementing and providing services as authorized by Minnesota 196.26 Statutes, section 428A.02. The ordinance establishing the 196.27 district may not be adopted until the city certifies that no 196.28 current city employee is able and available to perform the 196.29 services called for by the contract and until that certification 196.30 is verified at the public hearing on the ordinance. 196.31 If the city intends to contract with a nonprofit 196.32 corporation to manage a special service district, the notice of 196.33 the hearing on the ordinance relating to creation of the 196.34 district must include a statement of that intent, and 196.35 certification that no city employee is able and available to 196.36 perform the service that would be provided within the special 197.1 service district. 197.2 [EFFECTIVE DATE.] This section is effective for public 197.3 hearings on ordinances conducted after June 30, 2004, but only 197.4 after approval by the governing body of the city of Minneapolis 197.5 and compliance with Minnesota Statutes, section 645.021, 197.6 subdivision 3. 197.7 Sec. 30. [CITY OF RICHFIELD; TAX INCREMENT FINANCING 197.8 DISTRICT.] 197.9 Subdivision 1. [AUTHORIZATION.] The city of Richfield may 197.10 create a tax increment financing district consisting of an area 197.11 bordered by Crosstown Highway 62 on the north, 66th Street on 197.12 the south, Trunk Highway 77 on the east, and the east side of 197.13 16th Avenue to the west. The city or its housing and 197.14 redevelopment authority may be the authority for the purposes of 197.15 Minnesota Statutes, sections 469.174 to 469.179. 197.16 Subd. 2. [DISTRICT IS REDEVELOPMENT DISTRICT.] The 197.17 redevelopment tax increment district created pursuant to 197.18 subdivision 1 is deemed to be a redevelopment district and is 197.19 subject to Minnesota Statutes, sections 469.174 to 469.179, 197.20 except that expenditures for activities as defined in Minnesota 197.21 Statutes, section 469.1763, subdivision 1, paragraph (b), 197.22 anywhere in the district are deemed to be the costs of 197.23 correcting conditions that allow the designation of 197.24 redevelopment districts pursuant to Minnesota Statutes, section 197.25 469.174, subdivision 10. 197.26 [EFFECTIVE DATE.] This section is effective upon local 197.27 approval by the city of Richfield in compliance with Minnesota 197.28 Statutes, section 645.021. 197.29 Sec. 31. [CITY OF ST. MICHAEL; TAX INCREMENT FINANCING 197.30 DISTRICT.] 197.31 Subdivision 1. [ESTABLISHMENT OF DISTRICT.] The city of St. 197.32 Michael may establish a redevelopment tax increment financing 197.33 district subject to Minnesota Statutes, sections 469.174 to 197.34 469.179, except as provided in this section. The district must 197.35 be established within an area that includes the downtown and 197.36 town center areas as designated by the city as well as all 198.1 parcels adjacent to marked Trunk Highway 241 within the city. 198.2 Subd. 2. [SPECIAL RULES.] (a) Notwithstanding the 198.3 requirements of Minnesota Statutes, section 469.174, subdivision 198.4 10, the district may be established and operated as a 198.5 redevelopment district. 198.6 (b) Notwithstanding the restrictions of Minnesota Statutes, 198.7 sections 469.176, subdivisions 4 and 4j, and 469.1763, 198.8 subdivision 2, revenues derived from tax increments from the 198.9 district created under this section may be used to meet the cost 198.10 of land acquisition, removal of buildings in the right-of-way 198.11 acquisition area, and other costs incurred by the city of St. 198.12 Michael in the expansion and improvement of marked Trunk Highway 198.13 241 within the city. 198.14 (c) Minnesota Statutes, section 469.176, subdivision 5, 198.15 does not apply to the district. 198.16 [EFFECTIVE DATE.] This section is effective the day after 198.17 the governing body of the city of St. Michael complies with 198.18 Minnesota Statutes, section 645.021, subdivision 3. 198.19 Sec. 32. [WABASHA TAX INCREMENT FINANCING DISTRICT.] 198.20 Subdivision 1. [DISTRICT EXTENSION.] The governing body of 198.21 the city of Wabasha may elect to extend the duration of its 198.22 redevelopment tax increment financing district number 3 by up to 198.23 five additional years. 198.24 Subd. 2. [FIVE-YEAR RULE.] The requirements of Minnesota 198.25 Statutes, section 469.1763, subdivision 3, that activities must 198.26 be undertaken within a five-year period from the date of 198.27 certification of a tax increment financing district must be 198.28 considered to be met for the city of Wabasha redevelopment tax 198.29 increment district number 3, if the activities are undertaken 198.30 within ten years from the date of certification of the district. 198.31 Subd. 3. [NATIONAL EAGLE CENTER.] Notwithstanding the 198.32 provisions of Minnesota Statutes, section 469.176, subdivision 198.33 4l, or any other law, the city of Wabasha may spend the proceeds 198.34 of tax increment bonds issued prior to January 1, 2000, to pay 198.35 the costs of acquiring and constructing a National Eagle Center 198.36 in the city. The city of Wabasha may also use tax increment 199.1 from its tax increment districts to pay the debt service on such 199.2 bonds, or any bonds issued to refund such bonds, subject to 199.3 legal restrictions on the pooling of tax increment. 199.4 [EFFECTIVE DATE.] Subdivision 1 is effective upon 199.5 compliance with the provisions of Minnesota Statutes, sections 199.6 469.1782, subdivision 2, and 645.021. Subdivisions 2 and 3 are 199.7 effective upon compliance by the governing body of the city of 199.8 Wabasha with the provisions of Minnesota Statutes, section 199.9 645.021. 199.10 Sec. 33. [JOBZ EXPENDITURE LIMITATIONS; AUDITS.] 199.11 Subdivision 1. [DETERMINATION OF TAX EXPENDITURES.] By 199.12 September 1, 2004, the commissioner of revenue, with the 199.13 assistance of the commissioner of employment and economic 199.14 development, must estimate the total amount of tax expenditures 199.15 projected to have been obligated for all job opportunity 199.16 building zone projects that have been approved before June 1, 199.17 2004. If the commissioner of revenue determines that the 199.18 estimated amount of tax expenditures for fiscal years 2005-2007 199.19 exceeds $13,780,000, the commissioner of revenue must inform the 199.20 commissioner of employment and economic development of that 199.21 fact, and the commissioner of trade and economic development 199.22 must notify all the job opportunity building zone and subzone 199.23 administrators that no additional business subsidy agreements 199.24 may be completed after September 1, 2004. 199.25 Subd. 2. [AUDITS.] The Tax Increment Financing, Investment 199.26 and Finance Division of the Office of the State Auditor must 199.27 annually audit the creation and operation of all job opportunity 199.28 building zones and business subsidy agreements entered into 199.29 under Minnesota Statutes, sections 469.310 to 469.320. 199.30 ARTICLE 6 199.31 PUBLIC FINANCE 199.32 Section 1. Minnesota Statutes 2003 Supplement, section 199.33 373.01, subdivision 3, is amended to read: 199.34 Subd. 3. [CAPITAL NOTES.] (a) A county board may, by 199.35 resolution and without referendum, issue capital notes subject 199.36 to the county debt limit to purchase capital equipment useful 200.1 for county purposes that has an expected useful life at least 200.2 equal to the term of the notes. The notes shall be payable in 200.3 not more than five years and shall be issued on terms and in a 200.4 manner the board determines. A tax levy shall be made for 200.5 payment of the principal and interest on the notes, in 200.6 accordance with section 475.61, as in the case of bonds. 200.7 (b) For purposes of this subdivision, "capital equipment" 200.8 means: 200.9 (1) public safety, ambulance, road construction or 200.10 maintenance, and medical equipment,; and 200.11 (2) computer hardware andoriginal operating system200.12 software, whether bundled with machinery or equipment or 200.13 unbundled, together with application development services and 200.14 training related to the use of the computer. 200.15 (c) The authority to issue capital notes fororiginal200.16operating systemscomputer software and related services expires 200.17 on July 1, 2005. 200.18 Sec. 2. Minnesota Statutes 2003 Supplement, section 200.19 373.40, subdivision 1, is amended to read: 200.20 Subdivision 1. [DEFINITIONS.] For purposes of this 200.21 section, the following terms have the meanings given. 200.22 (a) "Bonds" means an obligation as defined under section 200.23 475.51. 200.24 (b) "Capital improvement" means acquisition or betterment 200.25 of public lands,development rights in the form of conservation200.26easements under chapter 84C,buildings, or other improvements 200.27 within the county for the purpose of a county courthouse, 200.28 administrative building, health or social service facility, 200.29 correctional facility, jail, law enforcement center, hospital, 200.30 morgue, library, park, qualified indoor ice arena, and roads and 200.31 bridges, and the acquisition of development rights in the form 200.32 of conservation easements under chapter 84C. An improvement 200.33 must have an expected useful life of five years or more to 200.34 qualify. "Capital improvement" does not include light rail 200.35 transit or any activity related to it or a recreation or sports 200.36 facility building (such as, but not limited to, a gymnasium, ice 201.1 arena, racquet sports facility, swimming pool, exercise room or 201.2 health spa), unless the building is part of an outdoor park 201.3 facility and is incidental to the primary purpose of outdoor 201.4 recreation. 201.5 (c) "Commissioner" means the commissioner of employment and 201.6 economic development. 201.7 (d) "Metropolitan county" means a county located in the 201.8 seven-county metropolitan area as defined in section 473.121 or 201.9 a county with a population of 90,000 or more. 201.10 (e) "Population" means the population established by the 201.11 most recent of the following (determined as of the date the 201.12 resolution authorizing the bonds was adopted): 201.13 (1) the federal decennial census, 201.14 (2) a special census conducted under contract by the United 201.15 States Bureau of the Census, or 201.16 (3) a population estimate made either by the metropolitan 201.17 council or by the state demographer under section 4A.02. 201.18 (f) "Qualified indoor ice arena" means a facility that 201.19 meets the requirements of section 373.43. 201.20 (g) "Tax capacity" means total taxable market value, but 201.21 does not include captured market value. 201.22 Sec. 3. Minnesota Statutes 2003 Supplement, section 201.23 403.21, subdivision 8, is amended to read: 201.24 Subd. 8. [SUBSYSTEMS.] "Subsystems" or "public safety 201.25 radio subsystems" means systems identified in the plan or a plan 201.26 developed under section 403.36 as subsystems interconnected by 201.27 the first and third phase backbonein subsequent phasesand 201.28 operated by local government units for their own internal 201.29 operations. 201.30 Sec. 4. Minnesota Statutes 2003 Supplement, section 201.31 403.27, subdivision 1, is amended to read: 201.32 Subdivision 1. [AUTHORIZATION.] After consulting with the 201.33 commissioner of finance, the council, if requested by a vote of 201.34 at least two-thirds of all of the members of the Public Safety 201.35 Radio Communication System Planning Committee established under 201.36 section 403.36, may, by resolution, authorize the issuance of 202.1 its revenue bonds for any of the following purposes to: 202.2 (1) provide funds for regionwide mutual aid and emergency 202.3 medical services communications; 202.4 (2) provide funds for the elements of the first phase of 202.5 the regionwide public safety radio communications system that 202.6 the board determines are of regionwide benefit and support 202.7 mutual aid and emergency medical services communication 202.8 including, but not limited to, costs of master controllers of 202.9 the backbone; 202.10 (3) provide money for the second phase of the public safety 202.11 radio communication system; 202.12 (4) provide money for the third phase of the public safety 202.13 radio communication system; 202.14 (5) to the extent money is available after meeting the 202.15 needs described in clauses (1) to (3), provide money to 202.16 reimburse local units of government for amounts expended for 202.17 capital improvements to the first phase system previously paid 202.18 for by the local government units;or202.19 (6) to the extent money is available after meeting the 202.20 needs described in clauses (1) to (5), provide money for 202.21 assistance to a local government unit for up to 50 percent of 202.22 the cost of building a subsystem in the southeast or central 202.23 districts of the State Patrol; or 202.24 (7) refund bonds issued under this section. 202.25 Sec. 5. Minnesota Statutes 2003 Supplement, section 202.26 403.27, subdivision 3, is amended to read: 202.27 Subd. 3. [LIMITATIONS.] (a) The principal amount of the 202.28 bonds issued pursuant to subdivision 1, exclusive of any 202.29 original issue discount, shall not exceed the amount of 202.30 $10,000,000 plus the amount the council determines necessary to 202.31 pay the costs of issuance, fund reserves, debt service, and pay 202.32 for any bond insurance or other credit enhancement. 202.33 (b) In addition to the amount authorized under paragraph 202.34 (a), the council may issue bonds under subdivision 1 in a 202.35 principal amount of $3,306,300, plus the amount the council 202.36 determines necessary to pay the cost of issuance, fund reserves, 203.1 debt service, and any bond insurance or other credit 203.2 enhancement. The proceeds of bonds issued under this paragraph 203.3 may not be used to finance portable or subscriber radio sets. 203.4 (c) In addition to the amount authorized under paragraphs 203.5 (a) and (b), the council may issue bonds under subdivision 1 in 203.6 a principal amount of $18,000,000, plus the amount the council 203.7 determines necessary to pay the costs of issuance, fund 203.8 reserves, debt service, and any bond insurance or other credit 203.9 enhancement. The proceeds of bonds issued under this paragraph 203.10 must be used to pay up to 50 percent of the cost to a local 203.11 government unit of building a subsystem identified in the plan 203.12 adopted under section 403.23, subdivision 2, and may not be used 203.13 to finance portable or subscriber radio sets. The bond proceeds 203.14 may be used to make improvements to an existing 800 MHz radio 203.15 system that will interoperate with the regionwide public safety 203.16 radio communication system, provided that the improvements 203.17 conform to the board's plan and technical standards. The 203.18 council must time the sale and issuance of the bonds so that the 203.19 debt service on the bonds can be covered by the additional 203.20 revenue that will become available in the fiscal year ending 203.21 June 30, 2005, generated under section 403.11 and appropriated 203.22 under section 403.30. 203.23 (d) In addition to the amount authorized under paragraphs 203.24 (a) to (c), the council may issue bonds under subdivision 1 in a 203.25 principal amount of up to $27,000,000, plus the amount the 203.26 council determines necessary to pay the costs of issuance, fund 203.27 reserves, debt service, and any bond insurance or other credit 203.28 enhancement. The proceeds of bonds issued under this paragraph 203.29 are appropriated to the commissioner of public safety for phase 203.30 three of the public safety radio communication system. In 203.31 anticipation of the receipt by the commissioner of public safety 203.32 of the bond proceeds, the Metropolitan Radio Board may advance 203.33 money from its operating appropriation to the commissioner of 203.34 public safety to pay for design and preliminary engineering for 203.35 phase three. The commissioner of public safety must return 203.36 these amounts to the Metropolitan Radio Board when the bond 204.1 proceeds are received. 204.2 (e) In addition to the amount authorized under paragraphs 204.3 (a) to (d), the council may issue bonds under subdivision 1 in a 204.4 principal amount of up to $9,500,000, plus the amount the 204.5 council determines necessary to pay the costs of issuance, fund 204.6 reserves, debt service, and any bond insurance or other credit 204.7 enhancement. The proceeds of bonds issued under this paragraph 204.8 are appropriated to the commissioner of public safety for the 204.9 purpose of subdivision 1, clause (6), provided that the proceeds 204.10 may not be used to finance portable or subscriber radio sets. 204.11 Sec. 6. Minnesota Statutes 2003 Supplement, section 204.12 403.31, subdivision 6, is amended to read: 204.13 Subd. 6. [OPERATING COSTS OF PHASES THREE TO SIX.] (a) The 204.14 ongoing costs of the commissioner in operating phases three to 204.15 six of the statewide public safety radio communication system 204.16 shall be allocated among and paid by the following users, all in 204.17 accordance with the statewide public safety radio communication 204.18 system plan developed by the planning committee under section 204.19 403.36: 204.20 (1) the state of Minnesota for its operations using the 204.21 system; 204.22 (2) all local government units using the system; and 204.23 (3) other eligible users of the system. 204.24 (b) Each local government and other eligible users of 204.25 phases three to six of the system shall pay to the commissioner 204.26 all sums charged under this section, at the times and in the 204.27 manner determined by the commissioner. The governing body of 204.28 each local government shall take all action that may be 204.29 necessary to provide the funds required for these payments and 204.30 to make the payments when due. 204.31 (c) If the governing body of any local government using 204.32 phase three, four, five, or six of the system fails to meet any 204.33 payment to the commissioner under this subdivision when due, the 204.34 commissioner may certify to the auditor of the county in which 204.35 the government unit is located the amount required for payment 204.36 of the amount due with interest at six percent per year. The 205.1 auditor shall levy and extend the amount due, with interest, as 205.2 a tax upon all taxable property in the government unit for the 205.3 next calendar year, free from any existing limitations imposed 205.4 by law or charter. This tax shall be collected in the same 205.5 manner as the general taxes of the government unit, and the 205.6 proceeds of the tax, when collected, shall be paid by the county 205.7 treasurer to the commissioner and credited to the government 205.8 unit for which the tax was levied. 205.9 Sec. 7. Minnesota Statutes 2003 Supplement, section 205.10 410.32, is amended to read: 205.11 410.32 [CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL 205.12 EQUIPMENT.] 205.13 (a) Notwithstanding any contrary provision of other law or 205.14 charter, a home rule charter city may, by resolution and without 205.15 public referendum, issue capital notes subject to the city debt 205.16 limit to purchase capital equipment. 205.17 (b) For purposes of this section, "capital equipment" means: 205.18 (1) public safety equipment, ambulance and other medical 205.19 equipment, road construction and maintenance equipment, and 205.20 other capital equipment; and 205.21 (2) computer hardware andoriginal operating system205.22 software,providedwhether bundled with machinery or equipment 205.23 or unbundled, together with application development services and 205.24 training related to the use of the computer. 205.25 (c) The equipment or softwarehasmust have an expected 205.26 useful life at least as long as the term of the notes. 205.27 (d) The authority to issue capital notes fororiginal205.28operating systemcomputer software and related services expires 205.29 on July 1, 2005. 205.30 (e) The notes shall be payable in not more than five years 205.31 and be issued on terms and in the manner the city determines. 205.32 The total principal amount of the capital notes issued in a 205.33 fiscal year shall not exceed 0.03 percent of the market value of 205.34 taxable property in the city for that year. 205.35 (f) A tax levy shall be made for the payment of the 205.36 principal and interest on the notes, in accordance with section 206.1 475.61, as in the case of bonds. 206.2 (g) Notes issued under this section shall require an 206.3 affirmative vote of two-thirds of the governing body of the city. 206.4 (h) Notwithstanding a contrary provision of other law or 206.5 charter, a home rule charter city may also issue capital notes 206.6 subject to its debt limit in the manner and subject to the 206.7 limitations applicable to statutory cities pursuant to section 206.8 412.301. 206.9 Sec. 8. Minnesota Statutes 2003 Supplement, section 206.10 412.301, is amended to read: 206.11 412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 206.12 (a) The council may issue certificates of indebtedness or 206.13 capital notes subject to the city debt limits to 206.14 purchase capital equipment. 206.15 (b) For purposes of this section, "capital equipment" means: 206.16 (1) public safety equipment, ambulance and other medical 206.17 equipment, road constructionorand maintenance equipment, and 206.18 other capital equipment; and 206.19 (2) computer hardware andoriginal operating system206.20 software,providedwhether bundled with machinery or equipment 206.21 or unbundled, together with application development services and 206.22 training related to the use of the computer. 206.23 (c) The equipment or softwarehasmust have an expected 206.24 useful life at least as long as the terms of the certificates or 206.25 notes. 206.26 (d) The authority to issue capital notes fororiginal206.27operating systemcomputer software and related services expires 206.28 on July 1, 2005. 206.29 (e) Such certificates or notes shall be payable in not more 206.30 thanfiveten years and shall be issued on such terms and in 206.31 such manner as the council may determine. 206.32 (f) If the amount of the certificates or notes to be issued 206.33 to finance any such purchase exceeds 0.25 percent of the market 206.34 value of taxable property in the city, they shall not be issued 206.35 for at least ten days after publication in the official 206.36 newspaper of a council resolution determining to issue them; and 207.1 if before the end of that time, a petition asking for an 207.2 election on the proposition signed by voters equal to ten 207.3 percent of the number of voters at the last regular municipal 207.4 election is filed with the clerk, such certificates or notes 207.5 shall not be issued until the proposition of their issuance has 207.6 been approved by a majority of the votes cast on the question at 207.7 a regular or special election. 207.8 (g) A tax levy shall be made for the payment of the 207.9 principal and interest on such certificates or notes, in 207.10 accordance with section 475.61, as in the case of bonds. 207.11 Sec. 9. Minnesota Statutes 2002, section 428A.101, is 207.12 amended to read: 207.13 428A.101 [SPECIAL SERVICE DISTRICT; SUNSET OF 207.14 SELF-EXECUTING PROVISIONS.] 207.15 The establishment of a new special service district after 207.16 June 30,20052009, requires enactment of a special law 207.17 authorizing the establishment. 207.18 Sec. 10. Minnesota Statutes 2002, section 428A.21, is 207.19 amended to read: 207.20 428A.21 [SUNSET.] 207.21 No new housing improvement areas may be established under 207.22 sections 428A.11 to 428A.20 after June 30,20052009. After 207.23 June 30,20052009, a city may establish a housing improvement 207.24 area, provided that it receives enabling legislation authorizing 207.25 the establishment of the area. 207.26 Sec. 11. Minnesota Statutes 2002, section 452.25, 207.27 subdivision 3, is amended to read: 207.28 Subd. 3. [AUTHORITY.] (a) Upon the approval of its elected 207.29 utilities commission or, if there be none, its city council, a 207.30 municipal utility may enter into a joint venture with other 207.31 municipal utilities, municipal power agencies, cooperative 207.32 associations,orinvestor-owned utilities, or other private 207.33 investors to provide utility services. Retail electric utility 207.34 services provided by a joint venture must be within the 207.35 boundaries of each utility's exclusive electric service 207.36 territory as shown on the map of service territories maintained 208.1 by the department of commerce. The terms and conditions of the 208.2 joint venture are subject to ratification by the governing 208.3 bodies of the respective utilities and may include the formation 208.4 of a corporate or other separate legal entity with an 208.5 administrative and governance structure independent of the 208.6 respective utilities. 208.7 (b) A corporate or other separate legal entity, if formed: 208.8 (1) has the authority and legal capacity and, in the 208.9 exercise of the joint venture, the powers, privileges, 208.10 responsibilities, and duties authorized by this section; 208.11 (2) is subject to the laws and rules applicable to the 208.12 organization, internal governance, and activities of the entity; 208.13 (3) in connection with its property and affairs and in 208.14 connection with property within its control, may exercise any 208.15 and all powers that may be exercised by a natural person or a 208.16 private corporation or other private legal entity in connection 208.17 with similar property and affairs; 208.18 (4) a joint venture that does not include an investor-owned 208.19 utility may elect to be deemed a municipal utility or a 208.20 cooperative association for purposes of chapter 216B or other 208.21 federal or state law regulating utility operations; and 208.22 (5) for a joint venture that includes an investor-owned 208.23 utility, the commission has authority over the activities, 208.24 services, and rates of the joint venture, and may exercise that 208.25 authority, to the same extent the commission has authority over 208.26 the activities, services, and rates of the investor-owned 208.27 utility itself. 208.28 (c) Any corporation, if formed, must comply with section 208.29 465.719, subdivisions 9, 10, 11, 12, 13, and 14. The term 208.30 "political subdivision," as it is used in section 465.719, shall 208.31 refer to the city council of a city. In this paragraph, 208.32 "corporation" means a corporation organized under chapters 302A 208.33 and 317A. 208.34 Sec. 12. Minnesota Statutes 2002, section 469.034, 208.35 subdivision 2, is amended to read: 208.36 Subd. 2. [GENERAL OBLIGATION REVENUE BONDS.] (a) An 209.1 authority may pledge the general obligation of the general 209.2 jurisdiction governmental unit as additional security for bonds 209.3 payable from income or revenues of the project or the 209.4 authority. The authority must find that the pledged revenues 209.5 will equal or exceed 110 percent of the principal and interest 209.6 due on the bonds for each year. The proceeds of the bonds must 209.7 be used for a qualified housing development project or 209.8 projects. The obligations must be issued and sold in the manner 209.9 and following the procedures provided by chapter 475, except the 209.10 obligations are not subject to approval by the electors, and the 209.11 maturities may extend to not more than 30 yearsfrom the209.12estimated date of completion of the projectfor obligations sold 209.13 to finance housing for the elderly and 40 years from the 209.14 estimated date of completion of the project for other 209.15 obligations issued under this subdivision. The authority is the 209.16 municipality for purposes of chapter 475. 209.17 (b) The principal amount of the issue must be approved by 209.18 the governing body of the general jurisdiction governmental unit 209.19 whose general obligation is pledged. Public hearings must be 209.20 held on issuance of the obligations by both the authority and 209.21 the general jurisdiction governmental unit. The hearings must 209.22 be held at least 15 days, but not more than 120 days, before the 209.23 sale of the obligations. 209.24 (c) The maximum amount of general obligation bonds that may 209.25 be issued and outstanding under this section equals the greater 209.26 of (1) one-half of one percent of the taxable market value of 209.27 the general jurisdiction governmental unit whose general 209.28 obligation which includes a tax on property is pledged, or (2) 209.29 $3,000,000. In the case of county or multicounty general 209.30 obligation bonds, the outstanding general obligation bonds of 209.31 all cities in the county or counties issued under this 209.32 subdivision must be added in calculating the limit under clause 209.33 (1). 209.34 (d) "General jurisdiction governmental unit" means the city 209.35 in which the housing development project is located. In the 209.36 case of a county or multicounty authority, the county or 210.1 counties may act as the general jurisdiction governmental unit. 210.2 In the case of a multicounty authority, the pledge of the 210.3 general obligation is a pledge of a tax on the taxable property 210.4 in each of the counties. 210.5 (e) "Qualified housing development project" means a housing 210.6 development project providing housing either for the elderly or 210.7 for individuals and families with incomes not greater than 80 210.8 percent of the median family income as estimated by the United 210.9 States Department of Housing and Urban Development for the 210.10 standard metropolitan statistical area or the nonmetropolitan 210.11 county in which the project is located, and will be owned by the 210.12 authority for the term of the bonds. A qualified housing 210.13 development project may admit nonelderly individuals and 210.14 families with higher incomes if: 210.15 (1) three years have passed since initial occupancy; 210.16 (2) the authority finds the project is experiencing 210.17 unanticipated vacancies resulting in insufficient revenues, 210.18 because of changes in population or other unforeseen 210.19 circumstances that occurred after the initial finding of 210.20 adequate revenues; and 210.21 (3) the authority finds a tax levy or payment from general 210.22 assets of the general jurisdiction governmental unit will be 210.23 necessary to pay debt service on the bonds if higher income 210.24 individuals or families are not admitted. 210.25 Sec. 13. Minnesota Statutes 2002, section 471.342, is 210.26 amended by adding a subdivision to read: 210.27 Subd. 2a. [WATER SUBMETERING.] In this section, "water 210.28 submetering" means metering devices in multifamily dwellings and 210.29 related services, which detect water leaks and monitor water 210.30 usage of specific units or areas. 210.31 Sec. 14. Minnesota Statutes 2002, section 471.342, 210.32 subdivision 3, is amended to read: 210.33 Subd. 3. [PROGRAM AUTHORITY.] A city may establish an 210.34 inflow and infiltration prevention program and a water 210.35 submetering program and provide loans and grants to property 210.36 owners to assist the owners in financing the cost of abating 211.1 inflow and infiltration and water conservation and leak 211.2 detection on their property. 211.3 Sec. 15. Minnesota Statutes 2002, section 471.342, 211.4 subdivision 5, is amended to read: 211.5 Subd. 5. [PROGRAM FINANCING.] The city may finance the 211.6programprograms with federal, state, private, or city funds. 211.7 City funds include, but are not limited to, general fund 211.8 appropriations, sanitary or storm sewer utility funds, and fees 211.9 or charges. A city may also issue revenue obligations payable 211.10 solely from fees and charges imposed for program costs and loan 211.11 repayments to finance the programs. 211.12 Sec. 16. Minnesota Statutes 2002, section 473.39, is 211.13 amended by adding a subdivision to read: 211.14 Subd. 1k. [OBLIGATIONS.] After July 1, 2004, in addition 211.15 to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 211.16 and 1j, the council may issue certificates of indebtedness, 211.17 bonds, or other obligations under this section in an amount not 211.18 exceeding $32,000,000 for capital expenditures as prescribed in 211.19 the council's regional transit master plan and transit capital 211.20 improvement program and for related costs, including the costs 211.21 of issuance and sale of the obligations. 211.22 Sec. 17. Minnesota Statutes 2002, section 474A.131, 211.23 subdivision 1, is amended to read: 211.24 Subdivision 1. [NOTICE OF ISSUE.] Each issuer that issues 211.25 bonds with an allocation received under this chapter shall 211.26 provide a notice of issue to the department on forms provided by 211.27 the department stating: 211.28 (1) the date of issuance of the bonds; 211.29 (2) the title of the issue; 211.30 (3) the principal amount of the bonds; 211.31 (4) the type of qualified bonds under federal tax law; 211.32 (5) the dollar amount of the bonds issued that were subject 211.33 to the annual volume cap; and 211.34 (6) for entitlement issuers, whether the allocation is from 211.35 current year entitlement authority or is from carryforward 211.36 authority. 212.1 For obligations that are issued as a part of a series of 212.2 obligations, a notice must be provided for each series. A 212.3 penalty of one-half of the amount of the application deposit not 212.4 to exceed $5,000 shall apply to any issue of obligations for 212.5 which a notice of issue is not provided to the department within 212.6 five business days after issuance or beforethe last Monday4:30 212.7 p.m. on the last business day in December, whichever occurs 212.8 first. Within 30 days after receipt of a notice of issue the 212.9 department shall refund a portion of the application deposit 212.10 equal to one percent of the amount of the bonding authority 212.11 actually issued if a one percent application deposit was made, 212.12 or equal to two percent of the amount of the bonding authority 212.13 actually issued if a two percent application deposit was made, 212.14 less any penalty amount. 212.15 Sec. 18. Minnesota Statutes 2002, section 475.52, 212.16 subdivision 1, is amended to read: 212.17 Subdivision 1. [STATUTORY CITIES.] Any statutory city may 212.18 issue bonds or other obligations for the acquisition or 212.19 betterment of public buildings, means of garbage disposal, 212.20 hospitals, nursing homes, homes for the aged, schools, 212.21 libraries, museums, art galleries, parks, playgrounds, stadia, 212.22 sewers, sewage disposal plants, subways, streets, sidewalks, 212.23 warning systems; for any utility or other public convenience 212.24 from which a revenue is or may be derived; for a permanent 212.25 improvement revolving fund; for changing, controlling or 212.26 bridging streams and other waterways; for the acquisition and 212.27 betterment of bridges and roads within two miles of the 212.28 corporate limits; for the acquisition of development rights in 212.29 the form of conservation easements under chapter 84C; and for 212.30 acquisition of equipment for snow removal, street construction 212.31 and maintenance, or fire fighting. Without limitation by the 212.32 foregoing the city may issue bonds to provide money for any 212.33 authorized corporate purpose except current expenses. 212.34 Sec. 19. Minnesota Statutes 2002, section 475.52, 212.35 subdivision 3, is amended to read: 212.36 Subd. 3. [COUNTIES.] Any county may issue bonds for the 213.1 acquisition or betterment of courthouses, county administrative 213.2 buildings, health or social service facilities, correctional 213.3 facilities, law enforcement centers, jails, morgues, libraries, 213.4 parks, and hospitals, for roads and bridges within the county or 213.5 bordering thereon and for road equipment and machinery and for 213.6 ambulances and related equipment, for the acquisition of 213.7 development rights in the form of conservation easements under 213.8 chapter 84C, and for capital equipment for the administration 213.9 and conduct of elections providing the equipment is uniform 213.10 countywide, except that the power of counties to issue bonds in 213.11 connection with a library shall not exist in Hennepin County. 213.12 Sec. 20. Minnesota Statutes 2002, section 475.52, 213.13 subdivision 4, is amended to read: 213.14 Subd. 4. [TOWNS.] Any town may issue bonds for the 213.15 acquisition and betterment of town halls, town roads and 213.16 bridges, nursing homes and homes for the aged, and for 213.17 acquisition of equipment for snow removal, road construction or 213.18 maintenance, and fire fighting, for the acquisition of 213.19 development rights in the form of conservation easements under 213.20 chapter 84C, and for the acquisition and betterment of any 213.21 buildings to house and maintain town equipment. 213.22 Sec. 21. Minnesota Statutes 2003 Supplement, section 213.23 475.521, subdivision 4, is amended to read: 213.24 Subd. 4. [LIMITATIONS ON AMOUNT.] A city may not issue 213.25 bonds under this section if the maximum amount of principal and 213.26 interest to become due in any year on all the outstanding bonds 213.27 issued under this section, including the bonds to be issued, 213.28 will equal or exceed0.053670.16 percent of the taxable market 213.29 value of property in thecountycity for a city that has a 213.30 population less than 2,500 and 0.05367 percent of the taxable 213.31 market value of property in the city for a city that has a 213.32 population of 2,500 or more. Calculation of the limit must be 213.33 made using the taxable market value for the taxes payable year 213.34 in which the obligations are issued and sold. This section does 213.35 not limit the authority to issue bonds under any other special 213.36 or general law. 214.1 Sec. 22. Minnesota Statutes 2003 Supplement, section 214.2 475.58, subdivision 3b, is amended to read: 214.3 Subd. 3b. [STREET RECONSTRUCTION.] (a) A municipality may, 214.4 without regard to the election requirement under subdivision 1, 214.5 issue and sell obligations for street reconstruction, if the 214.6 following conditions are met: 214.7 (1) the streets are reconstructed under a street 214.8 reconstruction plan that describes the streets to be 214.9 reconstructed, the estimated costs, and any planned 214.10 reconstruction of other streets in the municipality over the 214.11 next five years, and the plan and issuance of the obligations 214.12 has been approved by a vote of all of the members of the 214.13 governing body following a public hearing for which notice has 214.14 been published in the official newspaper at least ten days but 214.15 not more than 28 days prior to the hearing; and 214.16 (2) if a petition requesting a vote on the issuance is 214.17 signed by voters equal to five percent of the votes cast in the 214.18 last municipal general election and is filed with the municipal 214.19 clerk within 30 days of the public hearing, the municipality may 214.20 issue the bonds only after obtaining the approval of a majority 214.21 of the voters voting on the question of the issuance of the 214.22 obligations. 214.23 (b) Obligations issued under this subdivision are subject 214.24 to the debt limit of the municipality and are not excluded from 214.25 net debt under section 475.51, subdivision 4. 214.26 (c) For purposes of this subdivision, street reconstruction 214.27 includes utility replacement and relocation and other activities 214.28 incidental to the street reconstruction,butturn lanes, and 214.29 other improvements having a substantial public safety function 214.30 and realignments, other modifications to intersect with state 214.31 and county roads, and the local share of state and county road 214.32 projects. 214.33 (d) Except in the case of turn lanes, safety improvements, 214.34 intersection modifications, and the local share of state and 214.35 county road projects, street reconstruction does not include the 214.36 portion of project cost allocable to widening a street or adding 215.1 curbs and gutters where none previously existed. 215.2 Sec. 23. Minnesota Statutes 2002, section 504B.215, is 215.3 amended by adding a subdivision to read: 215.4 Subd. 5. [UTILITY CHARGES.] (a) Where submetering, as 215.5 defined in section 471.342, subdivision 2a, is installed, 215.6 metering equipment must comply with safety and technical 215.7 standards established by the American Water Works Association, 215.8 and must be installed in accordance with manufacturer's 215.9 instructions and applicable code. 215.10 (b) Where tenants are billed separately from rent for 215.11 utilities, the person or entity billing the tenants may not 215.12 collect in the aggregate more than the amount billed by the 215.13 utility for the utility service provided. The person or entity 215.14 may not collect from tenants as part of utility charges, 215.15 administrative, capital, or other expenses related to the 215.16 provision of utility service. Such expenses include, but are 215.17 not limited to, purchase and installation of submeters, 215.18 connection, disconnection, reconnection, billing, or other 215.19 servicing charges and late payment charges. 215.20 (c) The rate for utility service charged to tenants must be 215.21 the same rate that the bill payer of record is charged by the 215.22 utility. Recovery by the bill payer of record from the tenants 215.23 of any fixed monthly or periodic charges shall be made on a pro 215.24 rata basis. 215.25 (d) Upon a resident's request, an owner must provide a copy 215.26 of any bills received from the utility showing the billed rate 215.27 and total consumption and any bills, statements, or other 215.28 documentation of rates and consumption provided by any third 215.29 party to an owner during the prior 12 months. 215.30 (e) Any violation of this subdivision shall be considered a 215.31 violation of sections 325F.69 and 325D.44. 215.32 Sec. 24. [CITY OF ST. PAUL; RIVERCENTRE COMPLEX 215.33 OPERATION.] 215.34 Subdivision 1. [DEFINITIONS.] (a) For the purposes of this 215.35 section, the terms defined in this subdivision have the meanings 215.36 given them. 216.1 (b) "City" means the city of St. Paul, its mayor, city 216.2 council, and any other board, authority, commission, or officer 216.3 authorized by law, charter, or ordinance to exercise city powers 216.4 of the nature referred to in this section. 216.5 (c) "RiverCentre complex" means collectively the 216.6 auditorium, convention, conference and education center, arena, 216.7 and parking ramp facilities presently and commonly known as the 216.8 Roy Wilkins Auditorium, St. Paul RiverCentre, Xcel Energy 216.9 Center, and RiverCentre Parking Ramp, including all property, 216.10 real or personal, tangible or intangible, located in the city, 216.11 intended to be used as part of the RiverCentre complex or 216.12 additions to or extensions of it. 216.13 Subd. 2. [CREATION OF NONPROFIT ORGANIZATION.] As required 216.14 under Minnesota Statutes, section 465.717, and notwithstanding 216.15 any other law, city charter provision, or ordinance to the 216.16 contrary, the city of St. Paul may participate in the creation 216.17 of a nonprofit organization for the purposes provided in this 216.18 section. 216.19 Subd. 3. [GOVERNING BOARD.] (a) The mayor of the city, 216.20 subject to approval by the city council, shall appoint a 216.21 majority of the members of the governing board of the nonprofit 216.22 organization performing all or a part of the activities 216.23 necessary to carry out the purposes specified in this section. 216.24 The mayor may designate any officer or employee of the city to 216.25 serve as a member of the governing board of any nonprofit 216.26 organization. 216.27 (b) In addition to the appointments made by the mayor under 216.28 paragraph (a), the mayor shall designate two members of the city 216.29 council to serve on the governing board of the nonprofit 216.30 organization. 216.31 (c) Notwithstanding any provision contained in the articles 216.32 of incorporation and bylaws of the nonprofit organization, any 216.33 member of the governing board appointed by the mayor may be 216.34 removed only by the mayor. 216.35 (d) The governing board of the nonprofit organization shall 216.36 select, subject to the approval of the mayor, a president to 217.1 serve as chief executive officer and general manager of the 217.2 nonprofit organization. 217.3 (e) The procedures in Minnesota Statutes, section 317A.255, 217.4 subdivision 1, paragraph (b), relating to director conflicts of 217.5 interest, are not required if the contract or other transaction 217.6 is between the city and the nonprofit organization. 217.7 Subd. 4. [RIVERCENTRE MANAGEMENT; AUTHORITY TO CONTRACT 217.8 WITH NONPROFIT ORGANIZATION.] The city may enter into an 217.9 agreement with the nonprofit organization created in subdivision 217.10 2 to equip, maintain, manage, and operate all or a portion of 217.11 the RiverCentre complex and to manage and operate a convention 217.12 bureau to market and promote the city as a tourist or convention 217.13 center. Except as otherwise provided in this section, the 217.14 nonprofit organization may only contract and utilize and expend 217.15 funds for these purposes under the direction of its governing 217.16 board, subject to the accounting, financial reporting, and other 217.17 conditions that the city may prescribe in a contract made under 217.18 this section between the city and the nonprofit organization. 217.19 The nonprofit organization may use the services of the office of 217.20 the city attorney and the city's purchasing department. All 217.21 activities performed to carry out these purposes are deemed to 217.22 be for a public purpose. 217.23 Subd. 5. [BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX 217.24 EXEMPTIONS PRESERVED.] (a) The city must protect the rights of 217.25 holders of bonds issued for the RiverCentre complex, including 217.26 preserving the tax-exempt status of the bonds. 217.27 (b) The use and operation of the RiverCentre complex by the 217.28 nonprofit organization with which the city contracts under this 217.29 act is a use, lease, or occupancy for public, governmental, and 217.30 municipal purposes, and the complex is exempt from taxation by 217.31 the state or any political subdivision of the state during such 217.32 use, to the extent it would be exempt if the complex was 217.33 equipped, maintained, managed, and operated by the city. 217.34 (c) Gross receipts of tickets and admissions to events at 217.35 the RiverCentre complex sponsored by the nonprofit organization 217.36 created in section 2 do not qualify for the sales tax exemption 218.1 under Minnesota Statutes, section 297A.70, subdivision 10. 218.2 Subd. 6. [APPLICABLE GENERAL LAWS.] The following statutes 218.3 apply to the nonprofit organization with which the city 218.4 contracts under this section the same as they apply to the city, 218.5 to the extent practicable: 218.6 (1) Minnesota Statutes, chapter 13D, the Minnesota Open 218.7 Meeting Law; and 218.8 (2) Minnesota Statutes, chapter 13, the Government Data 218.9 Practices Act. 218.10 Subd. 7. [SUCCESSION.] The nonprofit organization with 218.11 which the city contracts under this section is the successor to 218.12 all powers, rights, assets, privileges, and interests held and 218.13 enjoyed by the RiverCentre authority on the effective date of 218.14 this section, and established by the provisions of Laws 1967, 218.15 chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and 3, 218.16 clause (3), as amended; Laws 1982, chapter 523, article 25, 218.17 sections 4 and 5, as amended; Laws 1998, chapter 404, sections 218.18 81 and 82; and Minnesota Statutes, section 297A.98. On the 218.19 effective date of the contract between the city and the 218.20 nonprofit organization authorized by this section, the 218.21 RiverCentre authority ceases to exist for only so long as the 218.22 contract is in effect, and all other laws or provisions 218.23 specifically relating to the RiverCentre authority and the 218.24 RiverCentre complex that are not otherwise referenced in this 218.25 section, do not apply to the nonprofit organization. 218.26 Subd. 8. [LIABILITY.] The nonprofit organization with 218.27 which the city contracts under this section is a "municipality," 218.28 and the officers, directors, employees, and agents of the 218.29 nonprofit organization are "employees, officers, or agents," 218.30 under Minnesota Statutes, chapter 466, relating to tort 218.31 liability. The city must defend, save harmless, and indemnify 218.32 the nonprofit organization, including the nonprofit's officers, 218.33 directors, employees, and agents, against any claim or demand 218.34 arising out of the nonprofit organization's performance under 218.35 the contract. 218.36 [EFFECTIVE DATE.] This section is effective the day after 219.1 the city council and the chief clerical officer of the city of 219.2 St. Paul have timely completed their compliance with Minnesota 219.3 Statutes, section 645.023, subdivisions 2 and 3. 219.4 Sec. 25. [TRANSFER OF MHFA BONDING AUTHORITY TO HESO.] 219.5 Notwithstanding Minnesota Statutes, section 474A.03, 219.6 subdivision 2a, clause (b), the Minnesota Housing Finance Agency 219.7 may enter into an agreement with the Higher Education Services 219.8 Office under which the Higher Education Services Office issues 219.9 qualified student loan bonds, up to $50,000,000 of which are 219.10 issued pursuant to bonding authority allocated to the Minnesota 219.11 Housing Finance Agency in 2004 under Minnesota Statutes, section 219.12 474A.03, subdivision 2a, clause (a). This amount is in addition 219.13 to the bonding authority otherwise allocated to the Higher 219.14 Education Services Office under Minnesota Statutes, chapter 219.15 474A. Notwithstanding Minnesota Statutes, section 474A.04, 219.16 subdivision 1a, 474A.061, or 474A.091, subdivision 2, bonding 219.17 authority carried forward by the Minnesota Housing Financing 219.18 Agency from its allocation for 2004 under Minnesota Statutes, 219.19 section 474A.03, subdivision 2a, clause (b), are exempt from the 219.20 requirement that the bonding authority be permanently issued by 219.21 December 31 of the next succeeding calendar year. 219.22 Sec. 26. [APPLICATION.] 219.23 Section 16 applies in the counties of Anoka, Carver, 219.24 Dakota, Hennepin, Ramsey, Scott, and Washington. 219.25 Sec. 27. [EFFECTIVE DATE.] 219.26 Except as provided in section 24, this article is effective 219.27 the day following final enactment. 219.28 ARTICLE 7 219.29 INTERNATIONAL ECONOMIC DEVELOPMENT ZONE 219.30 Section 1. Minnesota Statutes 2002, section 174.03, is 219.31 amended by adding a subdivision to read: 219.32 Subd. 2a. [STATE AVIATION PLAN.] (a) Each revision of the 219.33 state transportation plan must include a chapter setting out a 219.34 state aviation plan. The plan must include the following: 219.35 (1) an analysis of the projected commercial aviation needs 219.36 of the state over the next 20 years; 220.1 (2) a description of the present capacity, function, and 220.2 levels of activity at each commercial service airport as 220.3 designated by the Federal Aviation Administration, each airport 220.4 that the commissioner determines is likely to become a 220.5 commercial service airport in the next 20 years, and any other 220.6 airport that the commissioner determines should be included by 220.7 reason of commercial passenger or cargo service levels; and 220.8 (3) a description of the capacity, function, and levels of 220.9 activity that each airport identified in clause (2) must have in 220.10 order to carry out the plan's goal and objectives and meet the 220.11 needs described under clause (1). 220.12 (b) In assessing aviation needs and the capacity, function, 220.13 and level of activity at any airport, the plan must consider 220.14 both commercial passenger service and cargo service. 220.15 Sec. 2. [174.032] [ADVISORY COUNCIL ON AVIATION PLANNING.] 220.16 Subdivision 1. [ADVISORY COUNCIL CREATED.] (a) The 220.17 commissioner shall create an Advisory Council on Aviation 220.18 Planning to advise the commissioner on the aviation chapter of 220.19 the state transportation plan. The council consists of the 220.20 following members appointed by the commissioner: 220.21 (1) one member of the Metropolitan Airports Commission; 220.22 (2) one representative of major commercial airlines; 220.23 (3) one representative of independent pilots who fly for 220.24 small business; 220.25 (4) one representative of the air cargo industry; 220.26 (5) two representatives of the business community unrelated 220.27 to aviation, one of whom must reside within the seven-county 220.28 metropolitan area and one of whom must reside outside that area; 220.29 (6) one representative of environmental interests; 220.30 (7) one employee of the Department of Transportation's 220.31 Office of Aeronautics; 220.32 (8) two representatives of neighborhoods that are 220.33 significantly affected by airplane noise; and 220.34 (9) one representative of tier-two airports (St. Cloud, 220.35 Duluth, Willmar, and Rochester). 220.36 (b) Members of the advisory council serve at the pleasure 221.1 of the appointing authority. Members shall serve without 221.2 compensation. 221.3 Subd. 2. [ADVISORY COUNCIL DUTIES.] (a) The Advisory 221.4 Council on Aviation Planning shall advise the commissioner on 221.5 the aviation planning chapter of the state transportation plan 221.6 required under section 174.03, subdivision 2a. In carrying out 221.7 these duties the advisory council shall prepare an initial draft 221.8 of the chapter and submit it to the commissioner, revise the 221.9 draft if so requested by the commissioner, and comment to the 221.10 commissioner on any revisions to the draft the commissioner 221.11 makes. In drafting the chapter the council shall consider: 221.12 (1) present and anticipated capacity needs of commercial 221.13 service airports, including limitations on expanding the 221.14 capacity of individual commercial service airports imposed by 221.15 state or local regulations, safety or environmental concerns, 221.16 and land uses near the airport that are incompatible with 221.17 airport operations; 221.18 (2) the needs of Minnesota residents and businesses for 221.19 passenger and cargo service, from both a statewide and regional 221.20 perspective; 221.21 (3) anticipated changes in commercial aircraft types and 221.22 characteristics; 221.23 (4) noise and other environmental impacts of aviation at 221.24 commercial service airports; 221.25 (5) trends in the aviation and airline industries; and 221.26 (6) relationship between aviation and other forms of 221.27 transportation covered by the state transportation plan. 221.28 (b) The advisory council may also make recommendations to 221.29 the commissioner, the Metropolitan Airports Commission, and the 221.30 legislature concerning the policy steps needed to implement the 221.31 chapter. 221.32 Subd. 3. [TERM OF COUNCIL; EXPIRATION; RECONVENING.] (a) 221.33 The commissioner shall appoint the first advisory council by 221.34 July 1, 2004. The council shall submit any recommendations it 221.35 makes to the legislature by January 15, 2005. The terms of all 221.36 members of the advisory council serving on July 1, 2004, expire 222.1 on January 1, 2006. 222.2 (b) The commissioner shall appoint and convene a new 222.3 advisory council not less than two years before the date on 222.4 which each revision of the state transportation plan is required 222.5 under section 174.03, subdivision 1a. Each such advisory 222.6 council must consist of members as prescribed in subdivision 1, 222.7 who shall serve on the same terms as set forth under subdivision 222.8 1. Each such advisory council expires on the date on which the 222.9 revision of the state transportation plan becomes final. 222.10 Sec. 3. Minnesota Statutes 2002, section 290.06, is 222.11 amended by adding a subdivision to read: 222.12 Subd. 32. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE JOB 222.13 CREDIT.] A taxpayer that is a qualified business, as defined in 222.14 section 469.321, subdivision 6, is allowed a credit as 222.15 determined under section 469.327 against the tax imposed by this 222.16 chapter. 222.17 [EFFECTIVE DATE.] This section is effective for taxable 222.18 years beginning after December 31, 2004. 222.19 Sec. 4. [290.0681] [INTERNATIONAL ECONOMIC DEVELOPMENT 222.20 ZONE INVESTMENT CREDIT.] 222.21 A person is allowed a credit against the taxes imposed 222.22 under this chapter in an amount equal to 50 percent of the 222.23 amount of qualifying investment. A qualifying investment is an 222.24 amount invested in a regional distribution center, as developed 222.25 pursuant to section 469.322. Unused portions of the credit may 222.26 be carried over for five years. 222.27 [EFFECTIVE DATE.] This section is effective for taxable 222.28 years beginning after December 31, 2004. 222.29 Sec. 5. Minnesota Statutes 2002, section 290.191, is 222.30 amended by adding a subdivision to read: 222.31 Subd. 4a. [APPORTIONMENT FORMULA FOR CERTAIN QUALIFIED 222.32 BUSINESSES.] (a) If the business of a corporation, partnership, 222.33 or proprietorship is a qualified business under section 469.321, 222.34 and has operations only within the international economic 222.35 development zone, then the taxpayer may apportion net income to 222.36 Minnesota based solely upon the percentage that the sales made 223.1 within this state in connection with its trade or business 223.2 during the tax period are of the total sales wherever made in 223.3 connection with the trade or business during the tax period. 223.4 Property and payroll factors are disregarded. 223.5 (b) If the taxpayer has operations both within the 223.6 international economic development zone and outside of the 223.7 international economic development zone, income will be 223.8 apportioned to Minnesota under the formula in subdivision 2, 223.9 except that only the Minnesota sales of the facility or 223.10 facilities located in the international economic development 223.11 zone will be included in the taxpayer's factors. Property and 223.12 payroll factors of the facility or facilities located in the 223.13 international economic development zone are disregarded. 223.14 [EFFECTIVE DATE.] This section is effective for taxable 223.15 years beginning after December 31, 2004. 223.16 Sec. 6. Minnesota Statutes 2002, section 297A.68, is 223.17 amended by adding a subdivision to read: 223.18 Subd. 40. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONES.] (a) 223.19 Purchases of tangible personal property or taxable services by a 223.20 qualified business, as defined in section 469.321, are exempt if 223.21 the property or services are primarily used or consumed in an 223.22 international economic development zone designated under section 223.23 469.322. 223.24 (b) Purchase and use of construction materials and supplies 223.25 for construction of improvements to real property in an 223.26 international economic development zone are exempt if the 223.27 improvements after completion of construction are to be used in 223.28 the conduct of a qualified business, as defined in section 223.29 469.321. This exemption applies regardless of whether the 223.30 purchases are made by the business or a contractor. 223.31 (c) The exemptions under this subdivision apply to a local 223.32 sales and use tax, regardless of whether the local tax is 223.33 imposed on sales taxable under this chapter or in another law, 223.34 ordinance, or charter provision. 223.35 (d) This subdivision applies to sales, if the purchase was 223.36 made and delivery received during the period provided under 224.1 section 469.324, subdivision 2. 224.2 [EFFECTIVE DATE.] This section is effective for sales made 224.3 on or after the day following final enactment. 224.4 Sec. 7. [469.321] [DEFINITIONS.] 224.5 Subdivision 1. [SCOPE.] For purposes of sections 469.321 224.6 to 469.328, the following terms have the meanings given. 224.7 Subd. 2. [FOREIGN TRADE ZONE.] "Foreign trade zone" means 224.8 a foreign trade zone designated pursuant to United States Code, 224.9 title 19, section 81b, for the right to use the powers provided 224.10 in United States Code, title 19, sections 81a to 81u, or a 224.11 subzone authorized by the foreign trade zone. 224.12 Subd. 3. [FOREIGN TRADE ZONE AUTHORITY.] "Foreign trade 224.13 zone authority" means the Greater Metropolitan Foreign Trade 224.14 Zone Commission number 119, a joint powers authority created by 224.15 the county of Hennepin, the cities of Minneapolis and 224.16 Bloomington, and the Metropolitan Airports Commission, under the 224.17 authority of section 469.059, 469.101, or 471.59, which includes 224.18 any other political subdivisions that enter into the authority 224.19 after its creation. 224.20 Subd. 4. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE.] An 224.21 "international economic development zone" or "zone" is a zone so 224.22 designated under section 469.322. 224.23 Subd. 5. [PERSON.] "Person" includes an individual, 224.24 corporation, partnership, limited liability company, 224.25 association, or any other entity. 224.26 Subd. 6. [QUALIFIED BUSINESS.] (a) "Qualified business" 224.27 means a person carrying on a trade or business at a place of 224.28 business located within an international economic development 224.29 zone that is: 224.30 (1) engaged in the furtherance of international export or 224.31 import of goods; and 224.32 (2) certified by the foreign trade zone authority as a 224.33 trade or business that furthers the purpose of developing 224.34 international distribution capacity and capability. 224.35 (b) A person that relocates a trade or business from within 224.36 Minnesota but outside an international economic development zone 225.1 into an international economic development zone is not a 225.2 qualified business, unless the business: 225.3 (1)(i) increases full-time employment in the first full 225.4 year of operation within the international economic development 225.5 zone by at least 20 percent measured relative to the operations 225.6 that were relocated and maintains the required level of 225.7 employment for each year that tax incentives under section 225.8 469.324 are claimed; or 225.9 (ii) makes a capital investment in the property located 225.10 within a zone equal to at least ten percent of the gross 225.11 revenues of the operations that were relocated in the 225.12 immediately proceeding taxable year; and 225.13 (2) enters a binding written agreement with the foreign 225.14 trade zone authority that: 225.15 (i) pledges that the business will meet the requirements of 225.16 clause (1); 225.17 (ii) provides for repayment of all tax benefits enumerated 225.18 under section 469.324 to the business under the procedures in 225.19 section 469.328, if the requirements of clause (1) are not met 225.20 for the taxable year or for taxes payable during a year in which 225.21 the requirements were not met; and 225.22 (iii) contains any other terms the foreign trade zone 225.23 authority determines appropriate. 225.24 Clause (1) of this paragraph does not apply to a freight 225.25 forwarder. 225.26 (c) A qualified business must pay each employee total 225.27 compensation, including benefits not mandated by law, that on an 225.28 annualized basis is equal to at least 110 percent of the federal 225.29 poverty guidelines for a family of four. 225.30 Subd. 7. [REGIONAL DISTRIBUTION CENTER.] A "regional 225.31 distribution center" is a distribution center developed within a 225.32 foreign trade zone. The regional distribution center must have 225.33 as its primary purpose to facilitate gathering of freight for 225.34 the purpose of centralizing the functions necessary for the 225.35 shipment of freight in international commerce, including, but 225.36 not limited to, security and customs functions. 226.1 Subd. 8. [RELOCATE.] (a) "Relocate" means that a trade or 226.2 business: 226.3 (1) ceases one or more operations or functions at another 226.4 location in Minnesota and begins performing substantially the 226.5 same operations or functions at a location in an international 226.6 economic development zone; or 226.7 (2) reduces employment at another location in Minnesota 226.8 during a period starting one year before and ending one year 226.9 after it begins operations in an international economic 226.10 development zone and its employees in the international economic 226.11 development zone are engaged in the same line of business as the 226.12 employees at the location where it reduced employment. 226.13 (b) "Relocate" does not include an expansion by a business 226.14 that establishes a new facility that does not replace or 226.15 supplant an existing operation or employment, in whole or in 226.16 part. 226.17 (c) "Trade or business" includes any business entity that 226.18 is substantially similar in operation or ownership to the 226.19 business entity seeking to be a qualified business under this 226.20 section. 226.21 Subd. 9. [FREIGHT FORWARDER.] "Freight forwarder" is a 226.22 business that, for compensation, ensures that goods produced or 226.23 sold by another business move from point of origin to point of 226.24 destination. 226.25 [EFFECTIVE DATE.] This section is effective the day 226.26 following final enactment. 226.27 Sec. 8. [469.322] [DESIGNATION OF INTERNATIONAL ECONOMIC 226.28 DEVELOPMENT ZONE.] 226.29 (a) An area designated as a foreign trade zone may be 226.30 designated by the foreign trade zone authority as an 226.31 international economic development zone if within the zone a 226.32 regional distribution center is being developed pursuant to 226.33 section 469.323. The zone must be not less than 500 acres and 226.34 not more than 1,000 acres in size. 226.35 (b) In making the designation, the foreign trade zone 226.36 authority, in consultation with the Minnesota Department of 227.1 Transportation and the Metropolitan Council, shall consider 227.2 access to major transportation routes, consistency with current 227.3 state transportation and air cargo planning, adequacy of the 227.4 size of the site, access to airport facilities, present and 227.5 future capacity at the designated airport, the capability to 227.6 meet integrated present and future air cargo, security, and 227.7 inspection services, and access to other infrastructure and 227.8 financial incentives. The border of the international economic 227.9 development zone must be no more than 60 miles distant or 90 227.10 minutes drive time from the border of the Minneapolis-St. Paul 227.11 International Airport. The county in which the zone is located 227.12 must be a member of the foreign trade zone authority. 227.13 [EFFECTIVE DATE.] This section is effective the day 227.14 following final enactment. 227.15 Sec. 9. [469.323] [FOREIGN TRADE ZONE AUTHORITY POWERS.] 227.16 Subdivision 1. [DEVELOPMENT OF REGIONAL DISTRIBUTION 227.17 CENTER.] The foreign trade zone authority is responsible for 227.18 creating a development plan for the regional distribution 227.19 center. The regional distribution center must be developed with 227.20 the purpose of expanding, on a regional basis, international 227.21 distribution capacity and capability. The foreign trade zone 227.22 authority shall consult with municipalities that have indicated 227.23 to the authority an interest in locating the international 227.24 economic development zone within their boundaries and a 227.25 willingness to establish a tax increment financing district 227.26 coterminous with the boundaries of the zone, as well as 227.27 interested businesses, potential financiers, and appropriate 227.28 state and federal agencies. 227.29 Subd. 2. [BUSINESS PLAN.] Before designation of an 227.30 international economic development zone under section 469.322, 227.31 the governing body of the foreign trade zone authority shall 227.32 prepare a business plan. The plan must include an analysis of 227.33 the economic feasibility of the regional distribution center 227.34 once it becomes operational and of the operations of freight 227.35 forwarders and other businesses that choose to locate within the 227.36 boundaries of the zone. The analysis must provide profitability 228.1 models that: 228.2 (1) include the benefits of the incentives; 228.3 (2) estimate the amount of time needed to achieve 228.4 profitability; and 228.5 (3) analyze the length of time incentives will be necessary 228.6 to the economic viability of the regional distribution center. 228.7 If the governing body of the foreign trade authority 228.8 determines that the models do not establish the economic 228.9 feasibility of the project, the regional distribution center 228.10 does not meet the development requirements of this section and 228.11 section 469.322. 228.12 Subd. 3. [PORT AUTHORITY POWERS.] The governing body of 228.13 the foreign trade zone authority may establish a port authority 228.14 that has the same powers as a port authority established under 228.15 section 469.049. If the foreign trade zone authority 228.16 establishes a port authority, the governing body of the foreign 228.17 trade zone authority may exercise all powers granted to a city 228.18 by sections 469.048 to 469.068 within the area of the 228.19 international economic development zone, except it may not 228.20 impose or request imposition of a property tax levy under 228.21 section 469.053 by any city. 228.22 Subd. 4. [BUSINESS SUBSIDY LAW.] Tax exemptions, job 228.23 credits, and tax increment financing provided under this section 228.24 are business subsidies for the purpose of sections 116J.993 to 228.25 116J.995. 228.26 [EFFECTIVE DATE.] This section is effective the day 228.27 following final enactment. 228.28 Sec. 10. [469.324] [TAX INCENTIVES IN INTERNATIONAL 228.29 ECONOMIC DEVELOPMENT ZONE.] 228.30 Subdivision 1. [AVAILABILITY.] Qualified businesses that 228.31 operate in an international economic development zone, 228.32 individuals who invest in a regional distribution center, or 228.33 qualified businesses that operate in an international economic 228.34 development zone qualify for: 228.35 (1) investment tax credits as provided under section 228.36 290.0681; 229.1 (2) special apportionment formula for corporate franchise 229.2 taxes as provided under section 290.191, subdivision 4a; 229.3 (3) exemption from the state sales and use tax and any 229.4 local sales and use taxes on qualifying purchases as provided in 229.5 section 297A.68, subdivision 40; 229.6 (4) the jobs credit allowed under section 469.327; and 229.7 (5) tax increment financing as provided in this chapter. 229.8 Subd. 2. [DURATION.] (a) Except as provided in paragraph 229.9 (b), the tax incentives described in subdivision 1, clauses (1), 229.10 (2), and (4), are available for no more than 12 consecutive 229.11 taxable years for any taxpayer that claims them. The tax 229.12 incentives described in subdivision 1, clause (3), are available 229.13 for each taxpayer that claims them for taxes otherwise payable 229.14 on transactions during a period of 12 years from the date when 229.15 the first exemption is claimed by that taxpayer under each 229.16 exemption. No exemptions described in subdivision 1, clauses 229.17 (1) to (4), are available after December 31, 2020. 229.18 (b) For taxpayers that are freight forwarders, the 229.19 durations provided under paragraph (a) are reduced to six years. 229.20 Subd. 3. [QUALIFICATION.] To receive the tax incentives 229.21 under this section, a qualified business must, by December 31 of 229.22 each year, certify to the commissioner of revenue the percentage 229.23 of its business activity within the zone that constitutes 229.24 international business activity for the year, measured by value 229.25 or volume of activity. If the percentage is less than 100 229.26 percent, the amount of the tax benefits provided under sections 229.27 290.06, subdivision 32, 290.0681, and 469.327 are reduced in 229.28 proportion to the percentage of business activity that is not 229.29 international business activity. The commissioner of revenue 229.30 may audit the business activities of a qualifying business to 229.31 determine its eligibility for tax benefits under this section. 229.32 Sec. 11. [469.327] [JOBS CREDIT.] 229.33 Subdivision 1. [CREDIT ALLOWED.] A qualified business is 229.34 allowed a credit against the taxes imposed under chapter 290. 229.35 The credit equals seven percent of the: 229.36 (1) lesser of: 230.1 (i) zone payroll for the taxable year, less the zone 230.2 payroll for the base year; or 230.3 (ii) total Minnesota payroll for the taxable year, less 230.4 total Minnesota payroll for the base year; minus 230.5 (2) $30,000 multiplied by the number of full-time 230.6 equivalent employees that the qualified business employs in the 230.7 international economic development zone for the taxable year, 230.8 minus the number of full-time equivalent employees the business 230.9 employed in the zone in the base year, but not less than zero. 230.10 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 230.11 the following terms have the meanings given. 230.12 (b) "Base year" means the taxable year beginning during the 230.13 calendar year prior to the calendar year in which the zone 230.14 designation took effect. 230.15 (c) "Full-time equivalent employees" means the equivalent 230.16 of annualized expected hours of work equal to 2,080 hours. 230.17 (d) "Minnesota payroll" means the wages or salaries 230.18 attributed to Minnesota under section 290.191, subdivision 12, 230.19 for the qualified business or the unitary business of which the 230.20 qualified business is a part, whichever is greater. 230.21 (e) "Zone payroll" means wages or salaries used to 230.22 determine the zone payroll factor for the qualified business, 230.23 less the amount of compensation attributable to any employee 230.24 that exceeds $70,000. 230.25 Subd. 3. [INFLATION ADJUSTMENT.] For taxable years 230.26 beginning after December 31, 2005, the dollar amounts in 230.27 subdivision 1, clause (2), and subdivision 2, paragraph (e), are 230.28 annually adjusted for inflation. The commissioner of revenue 230.29 shall adjust the amounts by the percentage determined under 230.30 section 290.06, subdivision 2d, for the taxable year. 230.31 Subd. 4. [REFUNDABLE.] If the amount of the credit exceeds 230.32 the liability for tax under chapter 290, the commissioner of 230.33 revenue shall refund the excess to the qualified business. 230.34 Subd. 5. [APPROPRIATION.] An amount sufficient to pay the 230.35 refunds authorized by this section is appropriated to the 230.36 commissioner of revenue from the general fund. 231.1 [EFFECTIVE DATE.] This section is effective for taxable 231.2 years beginning after December 31, 2004. 231.3 Sec. 12. [469.328] [REPAYMENT OF TAX BENEFITS.] 231.4 Subdivision 1. [REPAYMENT OBLIGATION.] A person must repay 231.5 the amount of the tax reduction received under section 469.324, 231.6 subdivision 1, clauses (1) to (4), and refund received under 231.7 section 469.327, during the two years immediately before it 231.8 ceased to operate in the zone, if the person ceased to operate 231.9 its facility located within the zone or otherwise ceases to be 231.10 or is not a qualified business. 231.11 Subd. 2. [DISPOSITION OF REPAYMENT.] The repayment must be 231.12 paid to the state to the extent it represents a state tax 231.13 reduction. Any amount repaid to the state must be deposited in 231.14 the general fund. Any repayment of local sales or use taxes 231.15 must be repaid to the jurisdiction imposing the local sales or 231.16 use tax. 231.17 Subd. 3. [REPAYMENT PROCEDURES.] (a) For the repayment of 231.18 taxes imposed under chapter 290 or 297A or local taxes collected 231.19 pursuant to section 297A.99, a person must file an amended 231.20 return with the commissioner of revenue and pay any taxes 231.21 required to be repaid within 30 days after ceasing to be a 231.22 qualified business. The amount required to be repaid is 231.23 determined by calculating the tax for the period for which 231.24 repayment is required without regard to the tax reductions 231.25 allowed under section 469.324. 231.26 (b) The provisions of chapters 270 and 289A relating to the 231.27 commissioner of revenue's authority to audit, assess, and 231.28 collect the tax and to hear appeals are applicable to the 231.29 repayment required under paragraph (a). The commissioner may 231.30 impose civil penalties as provided in chapter 289A, and the 231.31 additional tax and penalties are subject to interest at the rate 231.32 provided in section 270.75, from 30 days after ceasing to do 231.33 business in the zone until the date the tax is paid. 231.34 (c) For determining the tax required to be repaid, a tax 231.35 reduction is deemed to have been received on the date that the 231.36 tax would have been due if the person had not been entitled to 232.1 the tax reduction. 232.2 (d) The commissioner of revenue may assess the repayment of 232.3 taxes under paragraph (b) at any time within two years after the 232.4 person ceases to be a qualified business, or within any period 232.5 of limitations for the assessment of tax under section 289A.38, 232.6 whichever is later. 232.7 [EFFECTIVE DATE.] This section is effective the day 232.8 following final enactment. 232.9 Sec. 13. [DEPARTMENT OF EMPLOYMENT AND ECONOMIC 232.10 DEVELOPMENT STUDY; INTERNATIONAL AIR FREIGHT.] 232.11 The commissioner of employment and economic development 232.12 must study and analyze the issue of whether the state would 232.13 benefit from more than one international economic development 232.14 zone as defined in Minnesota Statutes, section 469.321. The 232.15 commissioner shall solicit input on the issue from businesses, 232.16 communities, and economic development organizations. The 232.17 commissioner must report the results of the study and analysis 232.18 to the committees of the legislature having jurisdiction over 232.19 economic development issues by December 1, 2004, along with any 232.20 legislative recommendations. 232.21 ARTICLE 8 232.22 MISCELLANEOUS 232.23 Section 1. Minnesota Statutes 2002, section 15.06, 232.24 subdivision 6, is amended to read: 232.25 Subd. 6. [GENERAL POWERS OF COMMISSIONERS.] Except as 232.26 otherwise expressly provided by law, a commissioner shall have 232.27 the following powers: 232.28 (1) to delegate to any subordinate employee the exercise of 232.29 specified statutory powers or duties as the commissioner may 232.30 deem advisable, subject to the commissioner's control; provided, 232.31 that every delegation shall be made by written order, filed with 232.32 the secretary of state; and further provided that only a deputy 232.33 commissioner may have all the powers or duties of the 232.34 commissioner. A commissioner who delegates the exercise of 232.35 identical powers or duties to ten or more subordinate employees, 232.36 may combine the delegation to these employees in one written 233.1 order. A delegation of authority granted by a commissioner 233.2 remains in effect until revoked by the commissioner, revoked by 233.3 a successor commissioner, or termination of the employees' 233.4 employment. A successor commissioner may continue to grant the 233.5 same delegations of authority that were granted by a previous 233.6 commissioner, by issuing a written order that is filed with the 233.7 secretary of state and lists the names of the subordinate 233.8 employees that have orders of delegations of authority, the date 233.9 the order was signed, and the date the order was filed with the 233.10 secretary of state; 233.11 (2) to appoint all subordinate employees and to prescribe 233.12 their duties; provided, that all departments and agencies shall 233.13 be subject to the provisions of chapter 43A; 233.14 (3) with the approval of the commissioner of 233.15 administration, to organize the department or agency as deemed 233.16 advisable in the interest of economy and efficiency; and 233.17 (4) to prescribe procedures for the internal management of 233.18 the department or agency to the extent that the procedures do 233.19 not directly affect the rights of or procedure available to the 233.20 public. 233.21 [EFFECTIVE DATE.] This section is effective the day 233.22 following final enactment. 233.23 Sec. 2. Minnesota Statutes 2003 Supplement, section 233.24 270.30, subdivision 8, is amended to read: 233.25 Subd. 8. [EXEMPTIONS; ENFORCEMENT PROVISIONS.] The 233.26 provisions ofsubdivisions 6 and 7this section, except for 233.27 subdivision 4, do not apply to: 233.28 (1) an attorney admitted to practice under section 481.01; 233.29 (2) a certified public accountant holding a certificate 233.30 under section 326A.04 or a person issued a permit to practice 233.31 under section 326A.05; 233.32 (3) a person designated as a registered accounting 233.33 practitioner under Minnesota Rules, part 1105.6600, or a 233.34 registered accounting practitioner firm issued a permit under 233.35 Minnesota Rules, part 1105.7100; 233.36 (4) an enrolled agent who has passed the special enrollment 234.1 examination administered by the Internal Revenue Service;and234.2 (5) any fiduciary, or the regular employees of a fiduciary, 234.3 while acting on behalf of the fiduciary estate, the testator, 234.4 trustor, grantor, or beneficiaries of them; 234.5 (6) a tax preparer who provides tax preparation services 234.6 for fewer than six clients in a calendar year; 234.7 (7) a person who provides tax preparation services to a 234.8 spouse, parent, grandparent, child, or sibling; and 234.9 (8) an employee who provides tax preparation services for 234.10 an employer. 234.11 Sec. 3. [270.772] [MINIMUM DOLLAR REQUIREMENT FOR 234.12 ELECTRONIC PAYMENT OF TAXES AND FEES.] 234.13 Unless a requirement to make payments electronically 234.14 regardless of dollar amount is provided for by law for a 234.15 specific type of tax, fee, or surcharge, or for a group of 234.16 taxpayers or payors, payments of every tax, fee, or surcharge 234.17 administered by and payable to the commissioner in a calendar 234.18 year, including deposits and estimated payments, must be 234.19 remitted electronically if the liability of the taxpayer or 234.20 payor for the tax, fee, or surcharge in the preceding fiscal 234.21 year ending June 30 is $20,000 or more. This section does not 234.22 apply to individual income, estate, and airflight property taxes. 234.23 [EFFECTIVE DATE.] This section is effective for payments 234.24 due in calendar year 2005, and in calendar years thereafter, 234.25 based on liabilities incurred in fiscal year ending June 30, 234.26 2004, and in fiscal years thereafter. 234.27 Sec. 4. Minnesota Statutes 2003 Supplement, section 234.28 289A.08, subdivision 16, is amended to read: 234.29 Subd. 16. [TAX REFUND OR RETURN PREPARERS; ELECTRONIC 234.30 FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return 234.31 preparer," as defined in section 289A.60, subdivision 13, 234.32 paragraph (g), who prepared more than 500 Minnesota individual 234.33 income tax returns for the prior calendar year must file all 234.34 Minnesota individual income tax returns prepared for the current 234.35 calendar year by electronic means. "Tax refund or return 234.36 preparer" does not include (i) an organization that meets the 235.1 requirements of section 501(c)(3) of the Internal Revenue Code 235.2 or (ii) an individual hired by such an organization for the 235.3 purpose of preparing tax returns. 235.4 (b) For tax returns prepared for the tax year beginning in 235.5 2001, the "500" in paragraph (a) is reduced to 250. 235.6 (c) For tax returns prepared for tax years beginning after 235.7 December 31, 2001, the "500" in paragraph (a) is reduced to 100. 235.8 (d) Paragraph (a) does not apply to a return if the 235.9 taxpayer has indicated on the return that the taxpayer did not 235.10 want the return filed by electronic means. 235.11 (e) For each return that is not filed electronically by a 235.12 tax refund or return preparer under this subdivision, including 235.13 returns filed under paragraph (d), a paper filing fee of $5 is 235.14 imposed upon the preparer. The fee is collected from the 235.15 preparer in the same manner as income tax. The fee does not 235.16 apply to returns that the commissioner requires to be filed in 235.17 paper form. 235.18 [EFFECTIVE DATE.] This section is effective for returns 235.19 filed for tax years beginning after December 31, 2003. 235.20 Sec. 5. Minnesota Statutes 2002, section 289A.12, 235.21 subdivision 3, is amended to read: 235.22 Subd. 3. [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 235.23 AND S CORPORATIONS.] (a) Partnerships must file a return with 235.24 the commissioner for each taxable year. The return must conform 235.25 to the requirements of section 290.311, and must include the 235.26 names and addresses of the partners entitled to a distributive 235.27 share in their taxable net income, gain, loss, or credit, and 235.28 the amount of the distributive share to which each is entitled. 235.29 A partnership required to file a return for a partnership 235.30 taxable year must furnish a copy of the information required to 235.31 be shown on the return to a person who is a partner at any time 235.32 during the taxable year, on or before the day on which the 235.33 return for the taxable year was filed. A partnership with more 235.34 than 100 partners that is required to file a federal partnership 235.35 return electronically under Code of Federal Regulations, title 235.36 26, section 301.6011-3 (2003), must also file the return due 236.1 under this section electronically. If a return required to be 236.2 filed electronically is filed on paper, the return is still 236.3 valid but a penalty of $50 for each partner over 100 partners is 236.4 imposed for failing to file electronically. The commissioner 236.5 may waive the penalty if the partnership can demonstrate that 236.6 filing the return electronically creates a hardship. 236.7 (b) The fiduciary of an estate or trust making the return 236.8 required to be filed under section 289A.08, subdivision 2, for a 236.9 taxable year must give a beneficiary who receives a distribution 236.10 from the estate or trust with respect to the taxable year or to 236.11 whom any item with respect to the taxable year is allocated, a 236.12 statement containing the information required to be shown on the 236.13 return, on or before the date on which the return was filed. 236.14 (c) An S corporation must file a return with the 236.15 commissioner for a taxable year during which an election under 236.16 section 290.9725 is in effect, stating specifically the names 236.17 and addresses of the persons owning stock in the corporation at 236.18 any time during the taxable year, the number of shares of stock 236.19 owned by a shareholder at all times during the taxable year, the 236.20 shareholder's pro rata share of each item of the corporation for 236.21 the taxable year, and other information the commissioner 236.22 requires. An S corporation required to file a return under this 236.23 paragraph for any taxable year must furnish a copy of the 236.24 information shown on the return to the person who is a 236.25 shareholder at any time during the taxable year, on or before 236.26 the day on which the return for the taxable year was filed. 236.27 (d) The partnership or S corporation return must be signed 236.28 by someone designated by the partnership or S corporation. 236.29 [EFFECTIVE DATE.] This section is effective for taxable 236.30 years beginning after December 31, 2003. 236.31 Sec. 6. Minnesota Statutes 2002, section 289A.20, 236.32 subdivision 2, is amended to read: 236.33 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 236.34 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 236.35 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 236.36 (a) A tax required to be deducted and withheld during the 237.1 quarterly period must be paid on or before the last day of the 237.2 month following the close of the quarterly period, unless an 237.3 earlier time for payment is provided. A tax required to be 237.4 deducted and withheld from compensation of an entertainer and 237.5 from a payment to an out-of-state contractor must be paid on or 237.6 before the date the return for such tax must be filed under 237.7 section 289A.18, subdivision 2. Taxes required to be deducted 237.8 and withheld by partnerships and S corporations must be paid on 237.9 or before the date the return must be filed under section 237.10 289A.18, subdivision 2. 237.11 (b) An employer who, during the previous quarter, withheld 237.12 more than $1,500 of tax under section 290.92, subdivision 2a or 237.13 3, or 290.923, subdivision 2, must deposit tax withheld under 237.14 those sections with the commissioner within the time allowed to 237.15 deposit the employer's federal withheld employment taxes under 237.16 Code of Federal Regulations, title 26, section 31.6302-1, as 237.17 amended through December 31, 2001, without regard to the safe 237.18 harbor or de minimis rules in subparagraph (f) or the one-day 237.19 rule in subsection (c), clause (3). Taxpayers must submit a 237.20 copy of their federal notice of deposit status to the 237.21 commissioner upon request by the commissioner. 237.22 (c) The commissioner may prescribe by rule other return 237.23 periods or deposit requirements. In prescribing the reporting 237.24 period, the commissioner may classify payors according to the 237.25 amount of their tax liability and may adopt an appropriate 237.26 reporting period for the class that the commissioner judges to 237.27 be consistent with efficient tax collection. In no event will 237.28 the duration of the reporting period be more than one year. 237.29 (d) If less than the correct amount of tax is paid to the 237.30 commissioner, proper adjustments with respect to both the tax 237.31 and the amount to be deducted must be made, without interest, in 237.32 the manner and at the times the commissioner prescribes. If the 237.33 underpayment cannot be adjusted, the amount of the underpayment 237.34 will be assessed and collected in the manner and at the times 237.35 the commissioner prescribes. 237.36 (e)If the aggregate amount of the tax withheld during a238.1fiscal year ending June 30 under section 290.92, subdivision 2a238.2or 3, is equal to or exceeds the amounts established for238.3remitting federal withheld taxes pursuant to the regulations238.4promulgated under section 6302(h) of the Internal Revenue Code,238.5the employer must remit each required deposit for wages paid in238.6the subsequent calendar year by electronic means.238.7(f)A third-party bulk filer as defined in section 290.92, 238.8 subdivision 30, paragraph (a), clause (2), who remits 238.9 withholding deposits must remit all deposits by electronic means 238.10as provided in paragraph (e), regardless of the aggregate amount 238.11 of tax withheld during a fiscal year for all of the employers. 238.12 [EFFECTIVE DATE.] This section is effective for payments 238.13 due in calendar year 2005, and in calendar years thereafter, 238.14 based upon liabilities incurred in fiscal year ending June 30, 238.15 2004, and in fiscal years thereafter. 238.16 Sec. 7. Minnesota Statutes 2003 Supplement, section 238.17 289A.20, subdivision 4, is amended to read: 238.18 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 238.19 chapter 297A are due and payable to the commissioner monthly on 238.20 or before the 20th day of the month following the month in which 238.21 the taxable event occurred, or following another reporting 238.22 period as the commissioner prescribes or as allowed under 238.23 section 289A.18, subdivision 4, paragraph (f) or (g), except 238.24 that use taxes due on an annual use tax return as provided under 238.25 section 289A.11, subdivision 1, are payable by April 15 238.26 following the close of the calendar year. 238.27 (b) A vendor having a liability of $120,000 or more during 238.28 a fiscal year ending June 30 must remit the June liability for 238.29 the next year in the following manner: 238.30 (1) Two business days before June 30 of the year, the 238.31 vendor must remit 85 percent of the estimated June liability to 238.32 the commissioner. 238.33 (2) On or before August 20 of the year, the vendor must pay 238.34 any additional amount of tax not remitted in June. 238.35(c) A vendor having a liability of $120,000 or more during238.36a fiscal year ending June 30 must remit all liabilities on239.1returns due for periods beginning in the subsequent calendar239.2year by electronic means on or before the 20th day of the month239.3following the month in which the taxable event occurred, or on239.4or before the 20th day of the month following the month in which239.5the sale is reported under section 289A.18, subdivision 4,239.6except for 85 percent of the estimated June liability, which is239.7due two business days before June 30. The remaining amount of239.8the June liability is due on August 20.239.9 [EFFECTIVE DATE.] This section is effective for payments 239.10 due in calendar year 2005, and in calendar years thereafter, 239.11 based upon liabilities incurred in fiscal year ending June 30, 239.12 2004, and in fiscal years thereafter. 239.13 Sec. 8. Minnesota Statutes 2002, section 297F.01, is 239.14 amended by adding a subdivision to read: 239.15 Subd. 10a. [OUT-OF-STATE RETAILER.] "Out-of-state retailer" 239.16 means a person engaged outside of this state in the business of 239.17 selling, or offering to sell, cigarettes or tobacco products to 239.18 consumers located in this state. 239.19 Sec. 9. [297F.031] [REGISTRATION REQUIREMENT.] 239.20 Prior to making delivery sales or shipping cigarettes or 239.21 tobacco products in connection with any sales, an out-of-state 239.22 retailer shall file with the Department of Revenue a statement 239.23 setting forth the out-of-state retailer's name, trade name, and 239.24 the address of the out-of-state retailer's principal place of 239.25 business and any other place of business. 239.26 Sec. 10. Minnesota Statutes 2002, section 297F.09, is 239.27 amended by adding a subdivision to read: 239.28 Subd. 4a. [REPORTING REQUIREMENTS.] No later than the 18th 239.29 day of each calendar month, an out-of-state retailer that has 239.30 made a delivery of cigarettes or tobacco products or shipped or 239.31 delivered cigarettes or tobacco products into the state in a 239.32 delivery sale in the previous calendar month shall file with the 239.33 Department of Revenue reports in the form and in the manner 239.34 prescribed by the commissioner of revenue that provides for each 239.35 delivery sale, the name and address of the purchaser and the 239.36 brand or brands and quantity of cigarettes or tobacco products 240.1 sold. A tobacco retailer that meets the requirements of United 240.2 States Code, title 15, section 375 et seq. satisfies the 240.3 requirements of this subdivision. 240.4 Sec. 11. Minnesota Statutes 2002, section 297I.01, is 240.5 amended by adding a subdivision to read: 240.6 Subd. 6a. [DIRECT BUSINESS.] (a) "Direct business" means 240.7 all insurance provided by an insurance company or its agents, 240.8 and specifically includes stop-loss insurance purchased in 240.9 connection with a self-insurance plan for employee health 240.10 benefits or for other purposes, but excludes: 240.11 (1) reinsurance in which an insurance company assumes the 240.12 liability of another insurance company; and 240.13 (2) self-insurance. 240.14 (b) For purposes of this subdivision, an insurance company 240.15 includes a nonprofit health service corporation, health 240.16 maintenance organization, and community integrated service 240.17 network. 240.18 [EFFECTIVE DATE.] This section is effective for insurance 240.19 premiums received after December 31, 2004. 240.20 Sec. 12. Minnesota Statutes 2002, section 297I.05, 240.21 subdivision 4, is amended to read: 240.22 Subd. 4. [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 240.23 TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 240.24 tax is imposed on mutual insurance companies that sell both 240.25 property and casualtycompaniesinsurance that had total assets 240.26 greater than $5,000,000 at the end of the calendar year but that 240.27 had total assets less than $1,600,000,000 on December 31, 1989. 240.28 The rate of tax is equal to:240.29(1) two percent of gross premiums less return premiums on240.30all direct business received by the insurer or agents of the240.31insurer in Minnesota for life insurance, in cash or otherwise,240.32during the year; and240.33(2)1.26 percent of gross premiums less return premiums on 240.34 allotherdirect business received by the insurer or agents of 240.35 the insurer in Minnesota, in cash or otherwise, during the year, 240.36 except for life insurance as provided in subdivision 14. 241.1 [EFFECTIVE DATE.] This section is effective for premiums 241.2 received after December 31, 2004. 241.3 Sec. 13. Minnesota Statutes 2002, section 297I.05, is 241.4 amended by adding a subdivision to read: 241.5 Subd. 14. [LIFE INSURANCE.] A tax is imposed on life 241.6 insurance. The rate of tax equals 1.50 percent of gross 241.7 premiums less return premiums on all direct business received by 241.8 the insurer or agents of the insurer in Minnesota for life 241.9 insurance, in cash or otherwise, during the year. 241.10 [EFFECTIVE DATE.] This section is effective for premiums 241.11 received after December 31, 2004. 241.12 Sec. 14. Minnesota Statutes 2002, section 298.01, 241.13 subdivision 3, is amended to read: 241.14 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 241.15 engaged in the business of mining or producing ores in this 241.16 state, except iron ore or taconite concentrates, shall pay an 241.17 occupation tax to the state of Minnesota as provided in this 241.18 subdivision. The tax is determined in the same manner as the 241.19 tax imposed by section 290.02, except that sections 290.05, 241.20 subdivision 1, clause (a),and290.17, subdivision 4, and 241.21 290.191, subdivision 2, do not apply. A person subject to 241.22 occupation tax under this section shall apportion its net income 241.23 on the basis of the percentage obtained by taking the sum of: 241.24 (1) 75 percent of the percentage which the sales made 241.25 within this state in connection with the trade or business 241.26 during the tax period are of the total sales wherever made in 241.27 connection with the trade or business during the tax period; 241.28 (2) 12.5 percent of the percentage which the total tangible 241.29 property used by the taxpayer in this state in connection with 241.30 the trade or business during the tax period is of the total 241.31 tangible property, wherever located, used by the taxpayer in 241.32 connection with the trade or business during the tax period; and 241.33 (3) 12.5 percent of the percentage which the taxpayer's 241.34 total payrolls paid or incurred in this state or paid in respect 241.35 to labor performed in this state in connection with the trade or 241.36 business during the tax period are of the taxpayer's total 242.1 payrolls paid or incurred in connection with the trade or 242.2 business during the tax period. 242.3 The tax is in addition to all other taxes. 242.4 [EFFECTIVE DATE.] This section is effective for tax years 242.5 beginning after December 31, 2004. 242.6 Sec. 15. Minnesota Statutes 2002, section 298.01, 242.7 subdivision 4, is amended to read: 242.8 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 242.9 CONCENTRATES.] A person engaged in the business of mining or 242.10 producing of iron ore, taconite concentrates or direct reduced 242.11 ore in this state shall pay an occupation tax to the state of 242.12 Minnesota. The tax is determined in the same manner as the tax 242.13 imposed by section 290.02, except that sections 290.05, 242.14 subdivision 1, clause (a),and290.17, subdivision 4, and 242.15 290.191, subdivision 2, do not apply. A person subject to 242.16 occupation tax under this section shall apportion its net income 242.17 on the basis of the percentage obtained by taking the sum of: 242.18 (1) 75 percent of the percentage which the sales made 242.19 within this state in connection with the trade or business 242.20 during the tax period are of the total sales wherever made in 242.21 connection with the trade or business during the tax period; 242.22 (2) 12.5 percent of the percentage which the total tangible 242.23 property used by the taxpayer in this state in connection with 242.24 the trade or business during the tax period is of the total 242.25 tangible property, wherever located, used by the taxpayer in 242.26 connection with the trade or business during the tax period; and 242.27 (3) 12.5 percent of the percentage which the taxpayer's 242.28 total payrolls paid or incurred in this state or paid in respect 242.29 to labor performed in this state in connection with the trade or 242.30 business during the tax period are of the taxpayer's total 242.31 payrolls paid or incurred in connection with the trade or 242.32 business during the tax period. 242.33 The tax is in addition to all other taxes. 242.34 [EFFECTIVE DATE.] This section is effective for tax years 242.35 beginning after December 31, 2004. 242.36 Sec. 16. [325D.125] [EMPLOYERS NOT TO MISREPRESENT STATUS 243.1 OF EMPLOYEES.] 243.2 Subdivision 1. [MISREPRESENTATION PROHIBITED.] No employer 243.3 shall misrepresent the nature of its employment relationship 243.4 with its employees to any federal, state, or local government 243.5 unit, to other employers or to its employees. An employer 243.6 misrepresents the nature of its employment relationship with its 243.7 employees if it makes any statement regarding the nature of the 243.8 relationship that the employer does not in good faith believe to 243.9 be true or if it fails to report individuals as employees when 243.10 legally required to do so. 243.11 Subd. 2. [EMPLOYEE COERCION PROHIBITED.] No employer shall 243.12 require or request any employee to enter into any agreement, or 243.13 sign any document, that results in misclassification of the 243.14 employee as an independent contractor or otherwise does not 243.15 accurately reflect the employment relationship with the employer. 243.16 Subd. 3. [VIOLATIONS.] Any court finding any person guilty 243.17 of violating this section shall transmit a copy of the 243.18 documentation of the finding of guilt to the commissioner of 243.19 labor and industry. The commissioner of labor and industry 243.20 shall report the finding of guilt to relevant state and federal 243.21 agencies, including at least the commissioner of commerce, the 243.22 commissioner of economic security, the commissioner of revenue, 243.23 the federal Internal Revenue Service, and the United States 243.24 Department of Labor. 243.25 Sec. 17. [325F.781] [REQUIREMENTS; TOBACCO PRODUCT 243.26 DELIVERY SALES.] 243.27 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 243.28 section, the following terms have the meanings given, unless the 243.29 language or context clearly provides otherwise. 243.30 (b) "Consumer" means an individual who purchases, receives, 243.31 or possesses tobacco products for personal consumption and not 243.32 for resale. 243.33 (c) "Delivery sale" means: 243.34 (1) a sale of tobacco products to a consumer in this state 243.35 when: 243.36 (i) the purchaser submits the order for the sale by means 244.1 of a telephonic or other method of voice transmission, the mail 244.2 or any other delivery service, or the Internet or other on-line 244.3 service; or 244.4 (ii) the tobacco products are delivered by use of the mail 244.5 or other delivery service; or 244.6 (2) a sale of tobacco products that satisfies the criteria 244.7 in clause (1), item (i), regardless of whether the seller is 244.8 located inside or outside of the state. 244.9 A sale of tobacco products to an individual in this state 244.10 must be treated as a sale to a consumer, unless the individual 244.11 is licensed as a distributor or retailer of tobacco products. 244.12 (d) "Delivery service" means a person, including the United 244.13 States Postal Service, that is engaged in the commercial 244.14 delivery of letters, packages, or other containers. 244.15 (e) "Distributor" means a person, whether located inside or 244.16 outside of this state, other than a retailer, who sells or 244.17 distributes tobacco products in the state. Distributor does not 244.18 include a tobacco products manufacturer, export warehouse 244.19 proprietor, or importer with a valid permit under United States 244.20 Code, title 26, section 5712 (1997), if the person sells or 244.21 distributes tobacco products in this state only to distributors 244.22 who hold valid and current licenses under the laws of a state, 244.23 or to an export warehouse proprietor or another manufacturer. 244.24 Distributor does not include a common or contract carrier that 244.25 is transporting tobacco products under a proper bill of lading 244.26 or freight bill that states the quantity, source, and 244.27 destination of tobacco products, or a person who ships tobacco 244.28 products through this state by common or contract carrier under 244.29 a bill of lading or freight bill. 244.30 (f) "Retailer" means a person, whether located inside or 244.31 outside this state, who sells or distributes tobacco products to 244.32 a consumer in this state. 244.33 (g) "Tobacco products" means: 244.34 (1) cigarettes, as defined in section 297F.01, subdivision 244.35 3; and 244.36 (2) smokeless tobacco as defined in section 325F.76. 245.1 Subd. 2. [REQUIREMENTS FOR ACCEPTING ORDER FOR DELIVERY 245.2 SALE.] (a) This subdivision applies to acceptance of an order 245.3 for a delivery sale of tobacco products. 245.4 (b) When accepting the first order for a delivery sale from 245.5 a consumer, the tobacco retailer shall obtain the following 245.6 information from the person placing the order: 245.7 (1) a copy of a valid government-issued document that 245.8 provides the person's name, current address, photograph, and 245.9 date of birth; and 245.10 (2) an original written statement signed by the person 245.11 documenting that the person: 245.12 (i) is of legal age to purchase tobacco products in the 245.13 state; 245.14 (ii) has made a choice whether to receive mailings from a 245.15 tobacco retailer; 245.16 (iii) understands that providing false information may be a 245.17 violation of law; and 245.18 (iv) understands that it is a violation of law to purchase 245.19 tobacco products for subsequent resale or for delivery to 245.20 persons who are under the legal age to purchase tobacco products. 245.21 (c) If an order is made as a result of advertisement over 245.22 the Internet, the tobacco retailer shall request the e-mail 245.23 address of the purchaser and shall receive payment by credit 245.24 card or check prior to shipping. 245.25 (d) Prior to shipping the tobacco products, the tobacco 245.26 retailer shall verify the information provided under paragraph 245.27 (b) against a commercially available database. Any such 245.28 database or databases may also include age and identity 245.29 information from other government or validated commercial 245.30 sources, if that additional information is regularly used by 245.31 government and businesses for the purpose of identity 245.32 verification and authentication, and if the additional 245.33 information is used only to supplement and not to replace the 245.34 government-issued identification data in the age and identity 245.35 verification process. 245.36 Subd. 3. [REQUIREMENTS FOR SHIPPING A DELIVERY SALE.] (a) 246.1 This subdivision applies to a tobacco retailer shipping tobacco 246.2 products pursuant to a delivery sale. 246.3 (b) The tobacco retailer shall clearly mark the outside of 246.4 the package of tobacco products to be shipped "tobacco products - 246.5 adult signature required" and to show the name of the tobacco 246.6 retailer. 246.7 (c) The tobacco retailer shall utilize a delivery service 246.8 that imposes the following requirements: 246.9 (1) an adult must sign for the delivery; and 246.10 (2) the person signing for the delivery must show valid 246.11 government-issued identification that contains a photograph of 246.12 the person signing for the delivery and indicates that the 246.13 person signing for the delivery is of legal age to purchase 246.14 tobacco products and resides at the delivery address. 246.15 (d) The retailer must provide delivery instructions that 246.16 clearly indicate the requirements of this subdivision and must 246.17 declare that state law requires compliance with the requirements. 246.18 (e) No criminal penalty may be imposed on a person for a 246.19 violation of this section other than a violation described in 246.20 paragraph (f) or (g). Whenever it appears to the commissioner 246.21 that any person has engaged in any act or practice constituting 246.22 a violation of this section, and the violation is not within two 246.23 years of any previous violation of this section, the 246.24 commissioner shall issue and cause to be served upon the person 246.25 an order requiring the person to cease and desist from violating 246.26 this section. The order must give reasonable notice of the 246.27 rights of the person to request a hearing and must state the 246.28 reason for the entry of the order. Unless otherwise agreed 246.29 between the parties, a hearing shall be held not later than 246.30 seven days after the request for the hearing is received by the 246.31 commissioner after which and within 20 days after the receipt of 246.32 the administrative law judge's report and subsequent exceptions 246.33 and argument, the commissioner shall issue an order vacating the 246.34 cease and desist order, modifying it, or making it permanent as 246.35 the facts require. If no hearing is requested within 30 days of 246.36 the service of the order, the order becomes final and remains in 247.1 effect until modified or vacated by the commissioner. All 247.2 hearings shall be conducted in accordance with the provisions of 247.3 chapter 14. If the person to whom a cease and desist order is 247.4 issued fails to appear at the hearing after being duly notified, 247.5 the person shall be deemed in default, and the proceeding may be 247.6 determined against the person upon consideration of the cease 247.7 and desist order, the allegations of which may be deemed to be 247.8 true. 247.9 (f) Any person who violates this section within two years 247.10 of a violation for which a cease and desist order was issued 247.11 under paragraph (e), is guilty of a misdemeanor. 247.12 (g) Any person who commits a third or subsequent violation 247.13 of this section, including a violation for which a cease and 247.14 desist order was issued under paragraph (c), within any 247.15 subsequent two-year period is guilty of a gross misdemeanor. 247.16 Subd. 4. [COMMON CARRIERS.] This section may not be 247.17 construed as imposing liability upon any common carrier, or 247.18 officers or employees of the common carrier, when acting within 247.19 the scope of business of the common carrier. 247.20 Subd. 5. [REGISTRATION REQUIREMENT.] Prior to making 247.21 delivery sales or shipping tobacco products in connection with 247.22 any sales, an out-of-state retailer must meet the requirements 247.23 of section 297F.031. 247.24 Subd. 6. [COLLECTION OF TAXES.] (a) Prior to shipping any 247.25 tobacco products to a purchaser in this state, the out of state 247.26 retailer shall comply with all requirements of chapter 297F and 247.27 shall ensure that all state excise taxes and fees that apply to 247.28 such tobacco products have been collected and paid to the state 247.29 and that all related state excise tax stamps or other indicators 247.30 of state excise tax payment have been properly affixed to those 247.31 tobacco products. 247.32 (b) In addition to any penalties under chapter 297F, a 247.33 distributor who fails to pay any tax due according to paragraph 247.34 (a) shall pay, in addition to any other penalty, a penalty of 50 247.35 percent of the tax due but unpaid. 247.36 Subd. 7. [APPLICATION OF STATE LAWS.] All state laws that 248.1 apply to in-state tobacco product retailers shall apply to 248.2 Internet and mail-order sellers that sell into this state. 248.3 Subd. 8. [FORFEITURE.] Any tobacco product sold or 248.4 attempted to be sold in a delivery sale that does not meet the 248.5 requirements of this section is deemed to be contraband and is 248.6 subject to forfeiture in the same manner as and in accordance 248.7 with the provisions of section 297F.21. 248.8 Subd. 9. [CIVIL PENALTIES.] A tobacco retailer or 248.9 distributor who violates this section or rules adopted under 248.10 this section is subject to the following fines: 248.11 (1) for the first violation, a fine of not more than 248.12 $1,000; and 248.13 (2) for the second and any subsequent violation, a fine of 248.14 not more than $5,000. 248.15 Subd. 10. [ENFORCEMENT.] The attorney general may bring an 248.16 action to enforce this section and may seek injunctive relief, 248.17 including a preliminary or final injunction, and fines, 248.18 penalties, and equitable relief and may seek to prevent or 248.19 restrain actions in violation of this section by any person or 248.20 any person controlling such person. In addition, a violation of 248.21 this section is a violation of the Unlawful Trade Practices Act, 248.22 sections 325D.09 to 325D.16. 248.23 [EFFECTIVE DATE.] This section is effective the day 248.24 following final enactment. 248.25 Sec. 18. Minnesota Statutes 2003 Supplement, section 248.26 469.335, is amended to read: 248.27 469.335 [APPLICATION FOR TAX BENEFITS.] 248.28 (a) To claim a tax credit or exemption against a state tax 248.29 under section 469.336, clauses (2) through (5), a business must 248.30 apply to the commissioner for a tax credit certificate. As a 248.31 condition of its application, the business must agree to furnish 248.32 information to the commissioner that is sufficient to verify the 248.33 eligibility for any credits or exemptions claimed. The total 248.34 amount of the state tax credits and exemptions allowed for the 248.35 specified period may not exceed the amount of the tax credit 248.36 certificates provided by the commissioner to the business. The 249.1 commissioner must verify to the commissioner of revenue the 249.2 amount of tax exemptions or credits for which each business is 249.3 eligible. 249.4 (b) A tax credit certificate issued under this section may 249.5 specify the particular tax exemptions or credits against a state 249.6 tax that the qualified business is eligible to claim under 249.7 section 469.336, clauses (2) through (5), and the amount of each 249.8 exemption or credit allowed. 249.9 (c) The commissioner may issue $1,000,000 of tax credits or 249.10 exemptions in fiscal year 2004.Any tax credits or exemptions249.11not awarded in fiscal year 2004 may be awarded in fiscal year249.122005.The commissioner may not award any additional tax credits 249.13 after June 30, 2004. 249.14 (d) A qualified business must use the tax credits or tax 249.15 exemptions granted under this section by the later of the end of 249.16 the state fiscal year or the taxpayer's tax year in which the 249.17 credits or exemptions are granted. 249.18 [EFFECTIVE DATE.] This section is effective the day 249.19 following final enactment. 249.20 Sec. 19. [469.342] [BIOTECHNOLOGY AND HEALTH SCIENCES 249.21 INDUSTRY GRANTS.] 249.22 Subdivision 1. [GRANT ELIGIBILITY.] The commissioner shall 249.23 make grants to eligible businesses in the biotechnology and 249.24 health sciences industry to support the startup and growth of 249.25 biotechnology and health sciences businesses. An eligible 249.26 business is a business that: 249.27 (1) is engaged primarily in: 249.28 (i) researching, developing, and/or manufacturing a 249.29 biotechnology product or service or a biotechnology-related 249.30 health sciences product or service; 249.31 (ii) researching, developing, and/or manufacturing a 249.32 biotechnology medical device product or service or a 249.33 biotechnology-related medical device product or service; or 249.34 (iii) promoting, supplying, or servicing businesses 249.35 involved in clause (1) or (2), if the business derives more than 249.36 50 percent of its gross receipts from those activities; 250.1 (2) pledges that the business will increase full-time 250.2 employment in high-paying jobs by at least 20 percent in the 250.3 first full year of operation after a grant is awarded; 250.4 (3) shows a viable link between a higher education/research 250.5 institution and the business activities of the biotechnology or 250.6 health sciences business; and 250.7 (4) agrees to treat a grant awarded under this section as a 250.8 business subsidy under sections 116J.993 to 116J.995, and to 250.9 comply with the requirements of that law. 250.10 Subd. 2. [AMOUNT AND LIMITATIONS OF GRANTS.] The 250.11 commissioner may award grants in fiscal year 2007. The total of 250.12 the grants in aggregate may not exceed $5,000,000. 250.13 Subd. 3. [APPLICATION AND AWARD OF GRANTS.] A 250.14 biotechnology and health sciences business must apply for grants 250.15 under this section following the procedures established by the 250.16 commissioner. To be eligible for a grant, a business must 250.17 demonstrate to the commissioner that it meets the requirements 250.18 under subdivision 1, and provide any information required by the 250.19 commissioner to determine eligibility. All applications must be 250.20 received on or before October 1 of each year that grants may be 250.21 awarded, and the commissioner must advise each applicant on or 250.22 before December 31 of that year that a grant is awarded or an 250.23 explanation why a grant is not awarded. 250.24 [EFFECTIVE DATE.] This section is effective July 1, 2004. 250.25 Sec. 20. [473.24] [POPULATION ESTIMATES.] 250.26 (a) The Metropolitan Council shall prepare an estimate of 250.27 population and of the number of households for each city and 250.28 town in the metropolitan area annually and convey the estimates 250.29 to the governing body of each city or town by June 1 of each 250.30 year. In the case of a city or town that is located partly 250.31 within and partly without the metropolitan area, the 250.32 Metropolitan Council shall estimate the proportion of the total 250.33 population and number of households that reside within the 250.34 area. The Metropolitan Council may prepare an estimate of the 250.35 population and of the number of households for any other 250.36 political subdivision located in the metropolitan area. 251.1 (b) A governing body of a city or town may challenge an 251.2 estimate made under this section by making its specific 251.3 objections to the Metropolitan Council by June 24. If the 251.4 challenge does not result in an acceptable estimate, the 251.5 governing body may have a special census conducted by the United 251.6 States Bureau of the Census. The Metropolitan Council shall 251.7 certify the population estimates to the commissioner of revenue 251.8 by July 15. The political subdivision must notify the 251.9 Metropolitan Council on or before July 1 of its intent to have 251.10 the special census conducted. The political subdivision must 251.11 bear all costs of the special census. Results of the special 251.12 census must be received by the Metropolitan Council by the next 251.13 May 15 to be used in that year's June 1 estimate under this 251.14 section. 251.15 [EFFECTIVE DATE.] This section is effective the day 251.16 following final enactment. 251.17 Sec. 21. Minnesota Statutes 2002, section 473.843, 251.18 subdivision 3, is amended to read: 251.19 Subd. 3. [PAYMENT OF FEE.] On or before the 20th day of 251.20 each month each operator shall pay the fee due under this 251.21 section for the previous month, using a form provided by the 251.22 commissioner of revenue. 251.23An operator having a fee of $120,000 or more during a251.24fiscal year ending June 30 must pay all fees in the subsequent251.25calendar year by electronic means.251.26 [EFFECTIVE DATE.] This section is effective for payments 251.27 due in calendar year 2005, and in calendar years thereafter, 251.28 based upon liabilities incurred in fiscal year ending June 30, 251.29 2004, and in fiscal years thereafter. 251.30 Sec. 22. Minnesota Statutes 2002, section 473F.02, 251.31 subdivision 7, is amended to read: 251.32 Subd. 7. [POPULATION.] "Population" means the most recent 251.33 estimate of the population of a municipality made by the 251.34 Metropolitan Council under section 473.24 and filed with the 251.35 commissioner of revenue as of July115 of the year in which a 251.36 municipality's distribution net tax capacity is calculated.The252.1council shall annually estimate the population of each252.2municipality as of a date which it determines and, in the case252.3of a municipality which is located partly within and partly252.4without the area, the proportion of the total which resides252.5within the area, and shall promptly thereafter file its252.6estimates with the commissioner of revenue.252.7 [EFFECTIVE DATE.] This section is effective the day 252.8 following final enactment. 252.9 Sec. 23. Minnesota Statutes 2002, section 477A.011, 252.10 subdivision 3, is amended to read: 252.11 Subd. 3. [POPULATION.] "Population" means the 252.12 population estimated or established as of July115 in an aid 252.13 calculation year by the most recent federal census, by a special 252.14 census conducted under contract with the United States Bureau of 252.15 the Census, by a population estimate made by the Metropolitan 252.16 Council, or by a population estimate of the state demographer 252.17 made pursuant to section 4A.02, whichever is the most recent as 252.18 to the stated date of the count or estimate for the preceding 252.19 calendar year, and which has been certified to the commissioner 252.20 of revenue on or before July 15 of the aid calculation year. 252.21 The term "per capita" refers to population as defined by this 252.22 subdivision. No changes in population will be recognized for 252.23 the purposes of sections 477A.011 to 477A.014 after July 15 of 252.24 the aid calculation year. Clerical errors in the certification 252.25 or use of the estimates and counts established as of July 15 in 252.26 the aid calculation year are subject to correction within the 252.27 time periods allowed under section 477A.014. 252.28 [EFFECTIVE DATE.] This section is effective the day 252.29 following final enactment. 252.30 Sec. 24. Minnesota Statutes 2002, section 480B.01, 252.31 subdivision 1, is amended to read: 252.32 Subdivision 1. [JUDICIAL VACANCIES.] If a judge of the 252.33 district courtor, Workers' Compensation Court of Appeals, or 252.34 Tax Court dies, resigns, retires, or is removed during the 252.35 judge's term of office, or if a new districtor, Workers' 252.36 Compensation Court of Appeals, or Tax Court judgeship is 253.1 created, the resulting vacancy must be filled by the governor as 253.2 provided in this section. 253.3 [EFFECTIVE DATE.] This section is effective the day 253.4 following final enactment. 253.5 Sec. 25. Minnesota Statutes 2002, section 480B.01, 253.6 subdivision 10, is amended to read: 253.7 Subd. 10. [NOTICE TO THE PUBLIC.] Upon receiving notice 253.8 from the governor that a judicial vacancy has occurred or will 253.9 occur on a specified date, the chair shall provide notice of the 253.10 following information: 253.11 (1) the office that is or will be vacant; 253.12 (2) that applications from qualified persons or on behalf 253.13 of qualified persons are being accepted by the commission; 253.14 (3) that application forms may be obtained from the 253.15 governor or the commission at a named address; and 253.16 (4) that application forms must be returned to the 253.17 commission by a named date. 253.18 For a district court vacancy, the notice must be made 253.19 available to attorney associations in the judicial district 253.20 where the vacancy has occurred or will occur and to at least one 253.21 newspaper of general circulation in each county in the 253.22 district. For a Workers' Compensation Court of Appeals or Tax 253.23 Court vacancy, the notice must be given to state attorney 253.24 associations and all forms of the public media. 253.25 [EFFECTIVE DATE.] This section is effective the day 253.26 following final enactment. 253.27 Sec. 26. [COMPACTS; RETALIATORY TAXES.] 253.28 The commissioner is authorized to enter into compact 253.29 agreements with other states for the purpose of eliminating 253.30 retaliatory insurance premiums tax provisions between this state 253.31 and other states. The commissioner shall report to the 253.32 chairpersons of the house and senate tax committees, on or 253.33 before February 1, 2005, on the actions the commissioner has 253.34 taken to enter into compact agreements with other states. 253.35 Sec. 27. [APPROPRIATION.] 253.36 (a) The amounts necessary to award grants as provided in 254.1 Minnesota Statutes, section 469.342, shall be appropriated to 254.2 the commissioner of employment and economic development from the 254.3 general fund. 254.4 (b) $3,000,000 is appropriated to the Department of Revenue 254.5 from fiscal year 2005 and each year thereafter, in addition to 254.6 any other appropriation provided under law. This money must be 254.7 used for operation of the department. 254.8 Sec. 28. [REPEALER.] 254.9 (a) Minnesota Statutes 2002, sections 289A.26, subdivision 254.10 2a; 289A.60, subdivision 21; 295.55, subdivision 4; 295.60, 254.11 subdivision 4; 297F.09, subdivision 7; 297G.09, subdivision 6; 254.12 297I.35, subdivision 2; and 297I.85, subdivision 7, are repealed. 254.13 (b) Minnesota Statutes 2003 Supplement, section 270.30, 254.14 subdivision 1, is repealed. 254.15 [EFFECTIVE DATE.] Paragraph (a) of this section is 254.16 effective for payments due in calendar year 2005, and in 254.17 calendar years thereafter, based upon liabilities incurred in 254.18 fiscal year ending June 30, 2004, and in fiscal years 254.19 thereafter. Paragraph (b) is effective the day following final 254.20 enactment. 254.21 ARTICLE 9 254.22 DEPARTMENT OF REVENUE POLICY PROVISIONS 254.23 Section 1. Minnesota Statutes 2002, section 16D.10, is 254.24 amended to read: 254.25 16D.10 [CASE REVIEWER.] 254.26 Subdivision 1. [DUTIES.] The commissioner shall make a 254.27 case reviewer available to debtors. The reviewer must be 254.28 available to answer a debtor's questions concerning the 254.29 collection process and to review the collection activity taken. 254.30 If the reviewer reasonably believes that the particular action 254.31 being taken is unreasonable or unfair, the reviewer may make 254.32 recommendations to the commissioner in regard to the collection 254.33 action. 254.34 Subd. 2. [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On 254.35 application filed by a debtor with the case reviewer, in the 254.36 form, manner, and in the time prescribed by the commissioner, 255.1 and after thorough investigation, the case reviewer may issue a 255.2 debtor assistance order if, in the determination of the case 255.3 reviewer, the manner in which the state debt collection laws are 255.4 being administered is creating or will create an unjust and 255.5 inequitable result for the debtor. Debtor assistance orders are 255.6 governed by the provisions relating to taxpayer assistance 255.7 orders under section 270.273. 255.8 Subd. 3. [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.] 255.9 All duties and authority of the case reviewer under subdivisions 255.10 1 and 2 are transferred to the taxpayer rights advocate. 255.11 [EFFECTIVE DATE.] This section is effective the day 255.12 following final enactment. 255.13 Sec. 2. Minnesota Statutes 2002, section 270.02, 255.14 subdivision 3, is amended to read: 255.15 Subd. 3. [POWERS, ORGANIZATION, ASSISTANTS.] Subject to 255.16 the provisions of this chapter and other applicable laws the 255.17 commissioner shall have power to organize the department with 255.18 such divisions and other agencies as the commissioner deems 255.19 necessary and to appoint one deputy commissioner, a department 255.20 secretary, directors of divisions, and such other officers, 255.21 employees, and agents as the commissioner may deem necessary to 255.22 discharge the functions of the department, define the duties of 255.23 such officers, employees, and agents, and delegate to them any 255.24 of the commissioner's powers or duties, subject to the 255.25 commissioner's control and under such conditions as the 255.26 commissioner may prescribe. Appointments to exercise delegated 255.27 power to sign documents which require the signature of the 255.28 commissioner or a delegate by law shall be by written order 255.29 filed with the secretary of state as provided under section 255.30 15.06, subdivision 6. The delegations of authority granted by 255.31 the commissioner remain in effect until revoked by the 255.32 commissioner or a successor commissioner. 255.33 [EFFECTIVE DATE.] This section is effective the day 255.34 following final enactment. 255.35 Sec. 3. [270.0611] [SUFFICIENCY OF NOTICE OF DETERMINATION 255.36 OR ACTION OF COMMISSIONER OF REVENUE.] 256.1 When a method of notification of a written determination or 256.2 action of the commissioner is not specifically provided for by 256.3 law, notice of the determination or action sent postage prepaid 256.4 by United States mail to the taxpayer or other person affected 256.5 by the determination or action at the taxpayer's or person's 256.6 last known address is sufficient. If the taxpayer or person 256.7 being notified is deceased or is under a legal disability, or if 256.8 a corporation being notified has terminated its existence, 256.9 notice to the last known address of the taxpayer, person, or 256.10 corporation is sufficient, unless the department has been 256.11 provided with a new address by a party authorized to receive 256.12 notices from the commissioner. 256.13 [EFFECTIVE DATE.] This section is effective for notices 256.14 sent on or after the day following final enactment. 256.15 Sec. 4. Minnesota Statutes 2002, section 270.69, 256.16 subdivision 4, is amended to read: 256.17 Subd. 4. [PERIOD OF LIMITATIONS.] The lien imposed by this 256.18 section shall, notwithstanding any other provision of law to the 256.19 contrary, be enforceable from the time the lien arises and for 256.20 ten years from the date of filing the notice of lien, which must 256.21 be filed by the commissioner within five years after the date of 256.22 assessment of the tax or final administrative or judicial 256.23 determination of the assessment. A notice of lien filed in one 256.24 county may be transcribed to the secretary of state or to any 256.25 other county within ten years after the date of its filing, but 256.26 the transcription shall not extend the period during which the 256.27 lien is enforceable. A notice of lien may be renewed by the 256.28 commissioner before the expiration of the ten-year period for an 256.29 additional ten years. The taxpayer must receive written notice 256.30 of the renewal. 256.31 [EFFECTIVE DATE.] This section is effective the day 256.32 following final enactment. 256.33 Sec. 5. Minnesota Statutes 2002, section 270B.01, 256.34 subdivision 8, is amended to read: 256.35 Subd. 8. [MINNESOTA TAX LAWS.] For purposes of this 256.36 chapter only, unless expressly stated otherwise, "Minnesota tax 257.1 laws" means: 257.2 (1) the taxes, refunds, and fees administered by or paid to 257.3 the commissioner under chapters 115B (except taxes imposed under 257.4 sections 115B.21 to 115B.24), 289A (except taxes imposed under 257.5 sections 298.01, 298.015, and 298.24), 290, 290A, 291, 295, 257.6 297A, and 297H, or any similar Indian tribal tax administered by 257.7 the commissioner pursuant to any tax agreement between the state 257.8 and the Indian tribal government, and includes any laws for the 257.9 assessment, collection, and enforcement of those taxes, refunds, 257.10 and fees; and 257.11 (2) section 273.1315. 257.12 [EFFECTIVE DATE.] This section is effective the day 257.13 following final enactment. 257.14 Sec. 6. Minnesota Statutes 2003 Supplement, section 257.15 270B.12, subdivision 13, is amended to read: 257.16 Subd. 13. [COUNTY ASSESSORS; CLASS 1B HOMESTEADS.] The 257.17 commissioner may disclose to a county assessor, and to the 257.18 assessor's designated agents or employees, a listing of parcels 257.19 of property qualifying for the class 1b property tax 257.20 classification under section 273.13, subdivision 22, and the 257.21 names and addresses of qualified applicants. 257.22 [EFFECTIVE DATE.] This section is effective the day 257.23 following final enactment. 257.24 Sec. 7. Minnesota Statutes 2002, section 289A.31, 257.25 subdivision 2, is amended to read: 257.26 Subd. 2. [JOINT INCOME TAX RETURNS.] (a) If a joint income 257.27 tax return is made by a husband and wife, the liability for the 257.28 tax is joint and several. A spouse who qualifies for relief 257.29 from a liability attributable to an underpayment under section 257.30 6015(b) of the Internal Revenue Code is relieved of the state 257.31 income tax liability on the underpayment. 257.32 (b) In the case of individuals who were a husband and wife 257.33 prior to the dissolution of their marriage or their legal 257.34 separation, or prior to the death of one of the individuals, for 257.35 tax liabilities reported on a joint or combined return, the 257.36 liability of each person is limited to the proportion of the tax 258.1 due on the return that equals that person's proportion of the 258.2 total tax due if the husband and wife filed separate returns for 258.3 the taxable year. This provision is effective only when the 258.4 commissioner receives written notice of the marriage 258.5 dissolution, legal separation, or death of a spouse from the 258.6 husband or wife. No refund may be claimed by an ex-spouse, 258.7 legally separated or widowed spouse for any taxes paid more than 258.8 60 days before receipt by the commissioner of the written notice. 258.9 (c) A request for calculation of separate liability 258.10 pursuant to paragraph (b) for taxes reported on a return must be 258.11 made within six years after the due date of the return. For 258.12 calculation of separate liability for taxes assessed by the 258.13 commissioner under section 289A.35 or 289A.37, the request must 258.14 be made within six years after the date of assessment. The 258.15 commissioner is not required to calculate separate liability if 258.16 the remaining unpaid liability for which recalculation is 258.17 requested is $100 or less. 258.18 [EFFECTIVE DATE.] This section is effective for requests 258.19 for relief made on or after the day following final enactment. 258.20 Sec. 8. Minnesota Statutes 2002, section 289A.56, is 258.21 amended by adding a subdivision to read: 258.22 Subd. 7. [BIOTECHNOLOGY AND BORDER CITY ZONE 258.23 REFUNDS.] Notwithstanding subdivision 3, for refunds payable 258.24 under sections 297A.68, subdivision 38, and 469.1734, 258.25 subdivision 6, interest is computed from 90 days after the 258.26 refund claim is filed with the commissioner. 258.27 [EFFECTIVE DATE.] This section is effective for refund 258.28 claims filed on or after July 1, 2004. 258.29 Sec. 9. Minnesota Statutes 2003 Supplement, section 258.30 290.01, subdivision 19d, is amended to read: 258.31 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 258.32 TAXABLE INCOME.] For corporations, there shall be subtracted 258.33 from federal taxable income after the increases provided in 258.34 subdivision 19c: 258.35 (1) the amount of foreign dividend gross-up added to gross 258.36 income for federal income tax purposes under section 78 of the 259.1 Internal Revenue Code; 259.2 (2) the amount of salary expense not allowed for federal 259.3 income tax purposes due to claiming the federal jobs credit 259.4 under section 51 of the Internal Revenue Code; 259.5 (3) any dividend (not including any distribution in 259.6 liquidation) paid within the taxable year by a national or state 259.7 bank to the United States, or to any instrumentality of the 259.8 United States exempt from federal income taxes, on the preferred 259.9 stock of the bank owned by the United States or the 259.10 instrumentality; 259.11 (4) amounts disallowed for intangible drilling costs due to 259.12 differences between this chapter and the Internal Revenue Code 259.13 in taxable years beginning before January 1, 1987, as follows: 259.14 (i) to the extent the disallowed costs are represented by 259.15 physical property, an amount equal to the allowance for 259.16 depreciation under Minnesota Statutes 1986, section 290.09, 259.17 subdivision 7, subject to the modifications contained in 259.18 subdivision 19e; and 259.19 (ii) to the extent the disallowed costs are not 259.20 represented by physical property, an amount equal to the 259.21 allowance for cost depletion under Minnesota Statutes 1986, 259.22 section 290.09, subdivision 8; 259.23 (5) the deduction for capital losses pursuant to sections 259.24 1211 and 1212 of the Internal Revenue Code, except that: 259.25 (i) for capital losses incurred in taxable years beginning 259.26 after December 31, 1986, capital loss carrybacks shall not be 259.27 allowed; 259.28 (ii) for capital losses incurred in taxable years beginning 259.29 after December 31, 1986, a capital loss carryover to each of the 259.30 15 taxable years succeeding the loss year shall be allowed; 259.31 (iii) for capital losses incurred in taxable years 259.32 beginning before January 1, 1987, a capital loss carryback to 259.33 each of the three taxable years preceding the loss year, subject 259.34 to the provisions of Minnesota Statutes 1986, section 290.16, 259.35 shall be allowed; and 259.36 (iv) for capital losses incurred in taxable years beginning 260.1 before January 1, 1987, a capital loss carryover to each of the 260.2 five taxable years succeeding the loss year to the extent such 260.3 loss was not used in a prior taxable year and subject to the 260.4 provisions of Minnesota Statutes 1986, section 290.16, shall be 260.5 allowed; 260.6 (6) an amount for interest and expenses relating to income 260.7 not taxable for federal income tax purposes, if (i) the income 260.8 is taxable under this chapter and (ii) the interest and expenses 260.9 were disallowed as deductions under the provisions of section 260.10 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 260.11 federal taxable income; 260.12 (7) in the case of mines, oil and gas wells, other natural 260.13 deposits, and timber for which percentage depletion was 260.14 disallowed pursuant to subdivision 19c, clause(11)(2), a 260.15 reasonable allowance for depletion based on actual cost. In the 260.16 case of leases the deduction must be apportioned between the 260.17 lessor and lessee in accordance with rules prescribed by the 260.18 commissioner. In the case of property held in trust, the 260.19 allowable deduction must be apportioned between the income 260.20 beneficiaries and the trustee in accordance with the pertinent 260.21 provisions of the trust, or if there is no provision in the 260.22 instrument, on the basis of the trust's income allocable to 260.23 each; 260.24 (8) for certified pollution control facilities placed in 260.25 service in a taxable year beginning before December 31, 1986, 260.26 and for which amortization deductions were elected under section 260.27 169 of the Internal Revenue Code of 1954, as amended through 260.28 December 31, 1985, an amount equal to the allowance for 260.29 depreciation under Minnesota Statutes 1986, section 290.09, 260.30 subdivision 7; 260.31 (9) amounts included in federal taxable income that are due 260.32 to refunds of income, excise, or franchise taxes based on net 260.33 income or related minimum taxes paid by the corporation to 260.34 Minnesota, another state, a political subdivision of another 260.35 state, the District of Columbia, or a foreign country or 260.36 possession of the United States to the extent that the taxes 261.1 were added to federal taxable income under section 290.01, 261.2 subdivision 19c, clause (1), in a prior taxable year; 261.3 (10) 80 percent of royalties, fees, or other like income 261.4 accrued or received from a foreign operating corporation or a 261.5 foreign corporation which is part of the same unitary business 261.6 as the receiving corporation; 261.7 (11) income or gains from the business of mining as defined 261.8 in section 290.05, subdivision 1, clause (a), that are not 261.9 subject to Minnesota franchise tax; 261.10 (12) the amount of handicap access expenditures in the 261.11 taxable year which are not allowed to be deducted or capitalized 261.12 under section 44(d)(7) of the Internal Revenue Code; 261.13 (13) the amount of qualified research expenses not allowed 261.14 for federal income tax purposes under section 280C(c) of the 261.15 Internal Revenue Code, but only to the extent that the amount 261.16 exceeds the amount of the credit allowed under section 261.17 290.068 or 469.339; 261.18 (14) the amount of salary expenses not allowed for federal 261.19 income tax purposes due to claiming the Indian employment credit 261.20 under section 45A(a) of the Internal Revenue Code; 261.21 (15) the amount of any refund of environmental taxes paid 261.22 under section 59A of the Internal Revenue Code; 261.23 (16) for taxable years beginning before January 1, 2008, 261.24 the amount of the federal small ethanol producer credit allowed 261.25 under section 40(a)(3) of the Internal Revenue Code which is 261.26 included in gross income under section 87 of the Internal 261.27 Revenue Code; 261.28 (17) for a corporation whose foreign sales corporation, as 261.29 defined in section 922 of the Internal Revenue Code, constituted 261.30 a foreign operating corporation during any taxable year ending 261.31 before January 1, 1995, and a return was filed by August 15, 261.32 1996, claiming the deduction under section 290.21, subdivision 261.33 4, for income received from the foreign operating corporation, 261.34 an amount equal to 1.23 multiplied by the amount of income 261.35 excluded under section 114 of the Internal Revenue Code, 261.36 provided the income is not income of a foreign operating 262.1 company; 262.2 (18) any decrease in subpart F income, as defined in 262.3 section 952(a) of the Internal Revenue Code, for the taxable 262.4 year when subpart F income is calculated without regard to the 262.5 provisions of section 614 of Public Law 107-147; and 262.6 (19) in each of the five tax years immediately following 262.7 the tax year in which an addition is required under subdivision 262.8 19c, clause (16), an amount equal to one-fifth of the delayed 262.9 depreciation. For purposes of this clause, "delayed 262.10 depreciation" means the amount of the addition made by the 262.11 taxpayer under subdivision 19c, clause (16). The resulting 262.12 delayed depreciation cannot be less than zero. 262.13 [EFFECTIVE DATE.] This section is effective for tax years 262.14 beginning after December 31, 2003. 262.15 Sec. 10. Minnesota Statutes 2002, section 290.9705, 262.16 subdivision 1, is amended to read: 262.17 Subdivision 1. [WITHHOLDING OF PAYMENTS TO OUT-OF-STATE 262.18 CONTRACTORS.] (a) In this section, "person" means a person, 262.19 corporation, or cooperative, the state of Minnesota and its 262.20 political subdivisions, and a city, county, and school district 262.21 in Minnesota. 262.22 (b) A person who in the regular course of business is 262.23 hiring, contracting, or having a contract with a nonresident 262.24 person or foreign corporation, as defined in Minnesota Statutes 262.25 1986, section 290.01, subdivision 5, to perform construction 262.26 work in Minnesota, shall deduct and withhold eight percent of 262.27every paymentcumulative calendar year payments to the 262.28 contractorif the contract exceeds or can reasonably be expected262.29to exceed $100,000which exceed $50,000. 262.30 [EFFECTIVE DATE.] This section is effective for payments 262.31 made after December 31, 2004. 262.32 Sec. 11. Minnesota Statutes 2003 Supplement, section 262.33 290C.10, is amended to read: 262.34 290C.10 [WITHDRAWAL PROCEDURES.] 262.35 An approved claimant under the sustainable forest incentive 262.36 program for a minimum of four years may notify the commissioner 263.1 of the intent to terminate enrollment. Within 90 days of 263.2 receipt of notice to terminate enrollment, the commissioner 263.3 shall inform the claimant in writing, acknowledging receipt of 263.4 this notice and indicating the effective date of termination 263.5 from the sustainable forest incentive program. Termination of 263.6 enrollment in the sustainable forest incentive program occurs on 263.7 January 1 of the fifth calendar year that begins after receipt 263.8 by the commissioner of the termination notice. After the 263.9 commissioner issues an effective date of termination, a claimant 263.10 wishing to continue the land's enrollment in the sustainable 263.11 forest incentive program beyond the termination date must apply 263.12 for enrollment as prescribed in section 290C.04. A claimant who 263.13 withdraws a parcel of land from this program may not reenroll 263.14 the parcel for a period of three years. Within 90 days after 263.15 the termination date, the commissioner shall execute and 263.16 acknowledge a document releasing the land from the covenant 263.17 required under this chapter. The document must be mailed to the 263.18 claimant and is entitled to be recorded. The commissioner may 263.19 allow early withdrawal from the Sustainable Forest Incentive Act 263.20 without penaltyin cases of condemnationwhen the state of 263.21 Minnesota, any local government unit, or any other entity which 263.22 has the right of eminent domain acquires title or possession to 263.23 the land for a public purpose notwithstanding the provisions of 263.24 this section. In the case of such acquisition, the commissioner 263.25 shall execute and acknowledge a document releasing the land 263.26 acquired by the state, local government unit, or other entity 263.27 from the covenant. All other enrolled land must remain in the 263.28 program. 263.29 [EFFECTIVE DATE.] This section is effective the day 263.30 following final enactment. 263.31 Sec. 12. Minnesota Statutes 2002, section 469.1734, 263.32 subdivision 6, is amended to read: 263.33 Subd. 6. [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 263.34 MATERIALS.] (a) The gross receipts from the sale of machinery 263.35 and equipment and repair parts are exempt from taxation under 263.36 chapter 297A, if the machinery and equipment: 264.1 (1) are used in connection with a trade or business; 264.2 (2) are placed in service in a city that is authorized to 264.3 designate a zone under section 469.1731, regardless of whether 264.4 the machinery and equipment are used in a zone; and 264.5 (3) have a useful life of 12 months or more. 264.6 (b) The gross receipts from the sale of construction 264.7 materials are exempt, if they are used to construct: 264.8 (1) a facility for use in a trade or business located in a 264.9 city that is authorized to designate a zone under section 264.10 469.1731, regardless of whether the facility is located in a 264.11 zone; or 264.12 (2) housing that is located in a zone. 264.13 The exemptions under this paragraph apply regardless of whether 264.14 the purchase is made by the owner, the user, or a contractor. 264.15 (c) A purchaser may claim an exemption under this 264.16 subdivision for tax on the purchases up to, but not exceeding: 264.17 (1) the amount of the tax credit certificates received from 264.18 the city, less 264.19 (2) any tax credit certificates used under the provisions 264.20 of subdivisions 4 and 5, and section 469.1732, subdivision 2. 264.21 (d) The tax on sales of items exempted under this 264.22 subdivision shall be imposed and collected as if the applicable 264.23 rate under section 297A.62 applied. Upon application by the 264.24 purchaser, on forms prescribed by the commissioner, a refund 264.25 equal to the tax paid shall be paid to the purchaser. The 264.26 application must include sufficient information to permit the 264.27 commissioner to verify the sales tax paid and the eligibility of 264.28 the claimant to receive the credit. No more than two 264.29 applications for refunds may be filed under this subdivision in 264.30 a calendar year. The provisions of section 289A.40 apply to the 264.31 refunds payable under this subdivision. There is annually 264.32 appropriated to the commissioner of revenue the amount required 264.33 to make the refunds, which must be deducted from the amount of 264.34 the city's allocation under section 469.169, subdivision 12, 264.35 that remains available and its limitation under section 469.1735. 264.36 The amount to be refunded shall bear interest at the rate in 265.1 section 270.76 from 90 days after the date the refund claim is 265.2 filed with the commissioner. 265.3 [EFFECTIVE DATE.] This section is effective for refund 265.4 claims filed on or after July 1, 2004. 265.5 Sec. 13. Minnesota Statutes 2003 Supplement, section 265.6 469.310, subdivision 11, is amended to read: 265.7 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 265.8 means a person carrying on a trade or business at a place of 265.9 business located within a job opportunity building zone. A 265.10 person is a qualified business only on those parcels of land for 265.11 which it has entered into a business subsidy agreement, as 265.12 required under section 469.313, with the appropriate local 265.13 government unit in which the parcels are located. 265.14 (b) A person that relocates a trade or business from 265.15 outside a job opportunity building zone into a zone is not a 265.16 qualified business, unless the business: 265.17 (1)(i) increases full-time employment in the first full 265.18 year of operation within the job opportunity building zone by at 265.19 least 20 percent measured relative to the operations that were 265.20 relocated and maintains the required level of employment for 265.21 each year the zone designation applies; or 265.22 (ii) makes a capital investment in the property located 265.23 within a zone equivalent to ten percent of the gross revenues of 265.24 operation that were relocated in the immediately preceding 265.25 taxable year; and 265.26 (2) enters a binding written agreement with the 265.27 commissioner that: 265.28 (i) pledges the business will meet the requirements of 265.29 clause (1); 265.30 (ii) provides for repayment of all tax benefits enumerated 265.31 under section 469.315 to the business under the procedures in 265.32 section 469.319, if the requirements of clause (1) are not met 265.33 for the taxable year or for taxes payable during the year in 265.34 which the requirements were not met; and 265.35 (iii) contains any other terms the commissioner determines 265.36 appropriate. 266.1 [EFFECTIVE DATE.] This section is effective retroactively 266.2 from June 9, 2003. 266.3 Sec. 14. Minnesota Statutes 2003 Supplement, section 266.4 469.330, subdivision 11, is amended to read: 266.5 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 266.6 means a person carrying on a trade or business at a 266.7 biotechnology and health sciences industry facility located 266.8 within a biotechnology and health sciences industry zone. A 266.9 person is a qualified business only on those parcels of land for 266.10 which it has entered into a business subsidy agreement, as 266.11 required under section 469.333, with the appropriate local 266.12 government unit in which the parcels are located. 266.13 (b) A person that relocates a biotechnology and health 266.14 sciences industry facility from outside a biotechnology and 266.15 health sciences industry zone into a zone is not a qualified 266.16 business, unless the business: 266.17 (1)(i) increases full-time employment in the first full 266.18 year of operation within the biotechnology and health sciences 266.19 industry zone by at least 20 percent measured relative to the 266.20 operations that were relocated and maintains the required level 266.21 of employment for each year the zone designation applies; or 266.22 (ii) makes a capital investment in the property located 266.23 within a zone equivalent to ten percent of the gross revenues of 266.24 operation that were relocated in the immediately preceding 266.25 taxable year; and 266.26 (2) enters a binding written agreement with the 266.27 commissioner that: 266.28 (i) pledges the business will meet the requirements of 266.29 clause (1); 266.30 (ii) provides for repayment of all tax benefits enumerated 266.31 under section 469.336 to the business under the procedures in 266.32 section 469.340, if the requirements of clause (1) are not met; 266.33 and 266.34 (iii) contains any other terms the commissioner determines 266.35 appropriate. 266.36 [EFFECTIVE DATE.] This section is effective retroactively 267.1 from June 9, 2003. 267.2 Sec. 15. Minnesota Statutes 2003 Supplement, section 267.3 469.337, is amended to read: 267.4 469.337 [CORPORATE FRANCHISE TAX EXEMPTION.] 267.5 (a) A qualified business is exempt from taxation under 267.6 section 290.02, the alternative minimum tax under section 267.7 290.0921, and the minimum fee under section 290.0922, on the 267.8 portion of its income attributable to operations of a qualified 267.9 business within the biotechnology and health sciences industry 267.10 zone. This exemption is determined as follows: 267.11 (1) for purposes of the tax imposed under section 290.02, 267.12 by multiplying its taxable net income by its zone percentage and 267.13 subtracting the result in determining taxable income; 267.14 (2) for purposes of the alternative minimum tax under 267.15 section 290.0921, by multiplying its alternative minimum taxable 267.16 income by its zone percentage and reducing alternative minimum 267.17 taxable income by this amount; and 267.18 (3) for purposes of the minimum fee under section 290.0922, 267.19 by excluding zone property and payrollin the zonefrom the 267.20 computations of the fee. The qualified business is exempt from 267.21 the minimum fee if all of its property is located in the zone 267.22 and all of its payroll is zone payroll. 267.23 (b) No subtraction is allowed under this section in excess 267.24 of 20 percent of the sum of the corporation's biotechnology and 267.25 health sciences industry zone payroll and the adjusted basis of 267.26 the property at the time that the property is first used in the 267.27 biotechnology and health sciences industry zone by the 267.28 corporation. 267.29 (c) No reduction in tax is allowed in excess of the amount 267.30 allocated under section 469.335. 267.31 [EFFECTIVE DATE.] This section is effective for tax years 267.32 beginning after December 31, 2003. 267.33 Sec. 16. [REPEALER.] 267.34 Laws 1975, chapter 287, section 5, and Laws 2003, chapter 267.35 127, article 9, section 9, subdivision 4, are repealed. 267.36 [EFFECTIVE DATE.] This section is effective without local 268.1 approval for taxes payable in 2005 and thereafter. 268.2 ARTICLE 10 268.3 MINERALS; AGGREGATE 268.4 Section 1. Minnesota Statutes 2002, section 272.02, is 268.5 amended by adding a subdivision to read: 268.6 Subd. 68. [PROPERTY USED IN THE BUSINESS OF MINING SUBJECT 268.7 TO THE NET PROCEEDS TAX.] The following property used in the 268.8 business of mining subject to the net proceeds tax under section 268.9 298.015 is exempt: 268.10 (1) deposits of ores, metals, and minerals and the lands in 268.11 which they are contained; 268.12 (2) all real and personal property used in mining, 268.13 quarrying, producing, or refining ores, minerals, or metals, 268.14 including lands occupied by or used in connection with the 268.15 mining, quarrying, production, or refining facilities; and 268.16 (3) concentrate or direct reduced ore. 268.17 This exemption applies for each year that a person subject to 268.18 tax under section 298.015 uses the property for mining, 268.19 quarrying, producing, or refining ores, metals, or minerals. 268.20 [EFFECTIVE DATE.] This section is effective for taxes 268.21 payable in 2005 and thereafter. 268.22 Sec. 2. Minnesota Statutes 2002, section 290.05, 268.23 subdivision 1, is amended to read: 268.24 Subdivision 1. [EXEMPT ENTITIES.] The following 268.25 corporations, individuals, estates, trusts, and organizations 268.26 shall be exempted from taxation under this chapter, provided 268.27 that every such person or corporation claiming exemption under 268.28 this chapter, in whole or in part, must establish to the 268.29 satisfaction of the commissioner the taxable status of any 268.30 income or activity: 268.31 (a) corporations, individuals, estates, and trusts engaged 268.32 in the business of mining or producing iron ore and mining, 268.33 producing, or refining other ores, metals, and minerals, the 268.34 miningor, production, or refining of which is subject to the 268.35 occupation tax imposed by section 298.01; but if any such 268.36 corporation, individual, estate, or trust engages in any other 269.1 business or activity or has income from any property not used in 269.2 such business it shall be subject to this tax computed on the 269.3 net income from such property or such other business or 269.4 activity. Royalty shall not be considered as income from the 269.5 business of mining or producing iron ore within the meaning of 269.6 this section; 269.7 (b) the United States of America, the state of Minnesota or 269.8 any political subdivision of either agencies or 269.9 instrumentalities, whether engaged in the discharge of 269.10 governmental or proprietary functions; and 269.11 (c) any insurance company. 269.12 [EFFECTIVE DATE.] This section is effective for taxable 269.13 years beginning after December 31, 2003. 269.14 Sec. 3. Minnesota Statutes 2002, section 290.17, 269.15 subdivision 4, is amended to read: 269.16 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 269.17 business conducted wholly within this state or partly within and 269.18 partly without this state is part of a unitary business, the 269.19 entire income of the unitary business is subject to 269.20 apportionment pursuant to section 290.191. Notwithstanding 269.21 subdivision 2, paragraph (c), none of the income of a unitary 269.22 business is considered to be derived from any particular source 269.23 and none may be allocated to a particular place except as 269.24 provided by the applicable apportionment formula. The 269.25 provisions of this subdivision do not apply to business income 269.26 subject to subdivision 5, income of an insurance company,or269.27 income of an investment company determined under section 290.36, 269.28 or income of a mine or mineral processing facility subject to 269.29 tax under section 298.01. 269.30 (b) The term "unitary business" means business activities 269.31 or operations which result in a flow of value between them. The 269.32 term may be applied within a single legal entity or between 269.33 multiple entities and without regard to whether each entity is a 269.34 sole proprietorship, a corporation, a partnership or a trust. 269.35 (c) Unity is presumed whenever there is unity of ownership, 269.36 operation, and use, evidenced by centralized management or 270.1 executive force, centralized purchasing, advertising, 270.2 accounting, or other controlled interaction, but the absence of 270.3 these centralized activities will not necessarily evidence a 270.4 nonunitary business. Unity is also presumed when business 270.5 activities or operations are of mutual benefit, dependent upon 270.6 or contributory to one another, either individually or as a 270.7 group. 270.8 (d) Where a business operation conducted in Minnesota is 270.9 owned by a business entity that carries on business activity 270.10 outside the state different in kind from that conducted within 270.11 this state, and the other business is conducted entirely outside 270.12 the state, it is presumed that the two business operations are 270.13 unitary in nature, interrelated, connected, and interdependent 270.14 unless it can be shown to the contrary. 270.15 (e) Unity of ownership is not deemed to exist when a 270.16 corporation is involved unless that corporation is a member of a 270.17 group of two or more business entities and more than 50 percent 270.18 of the voting stock of each member of the group is directly or 270.19 indirectly owned by a common owner or by common owners, either 270.20 corporate or noncorporate, or by one or more of the member 270.21 corporations of the group. For this purpose, the term "voting 270.22 stock" shall include membership interests of mutual insurance 270.23 holding companies formed under section 60A.077. 270.24 (f) The net income and apportionment factors under section 270.25 290.191 or 290.20 of foreign corporations and other foreign 270.26 entities which are part of a unitary business shall not be 270.27 included in the net income or the apportionment factors of the 270.28 unitary business. A foreign corporation or other foreign entity 270.29 which is required to file a return under this chapter shall file 270.30 on a separate return basis. The net income and apportionment 270.31 factors under section 290.191 or 290.20 of foreign operating 270.32 corporations shall not be included in the net income or the 270.33 apportionment factors of the unitary business except as provided 270.34 in paragraph (g). 270.35 (g) The adjusted net income of a foreign operating 270.36 corporation shall be deemed to be paid as a dividend on the last 271.1 day of its taxable year to each shareholder thereof, in 271.2 proportion to each shareholder's ownership, with which such 271.3 corporation is engaged in a unitary business. Such deemed 271.4 dividend shall be treated as a dividend under section 290.21, 271.5 subdivision 4. 271.6 Dividends actually paid by a foreign operating corporation 271.7 to a corporate shareholder which is a member of the same unitary 271.8 business as the foreign operating corporation shall be 271.9 eliminated from the net income of the unitary business in 271.10 preparing a combined report for the unitary business. The 271.11 adjusted net income of a foreign operating corporation shall be 271.12 its net income adjusted as follows: 271.13 (1) any taxes paid or accrued to a foreign country, the 271.14 commonwealth of Puerto Rico, or a United States possession or 271.15 political subdivision of any of the foregoing shall be a 271.16 deduction; and 271.17 (2) the subtraction from federal taxable income for 271.18 payments received from foreign corporations or foreign operating 271.19 corporations under section 290.01, subdivision 19d, clause (10), 271.20 shall not be allowed. 271.21 If a foreign operating corporation incurs a net loss, 271.22 neither income nor deduction from that corporation shall be 271.23 included in determining the net income of the unitary business. 271.24 (h) For purposes of determining the net income of a unitary 271.25 business and the factors to be used in the apportionment of net 271.26 income pursuant to section 290.191 or 290.20, there must be 271.27 included only the income and apportionment factors of domestic 271.28 corporations or other domestic entities other than foreign 271.29 operating corporations that are determined to be part of the 271.30 unitary business pursuant to this subdivision, notwithstanding 271.31 that foreign corporations or other foreign entities might be 271.32 included in the unitary business. 271.33 (i) Deductions for expenses, interest, or taxes otherwise 271.34 allowable under this chapter that are connected with or 271.35 allocable against dividends, deemed dividends described in 271.36 paragraph (g), or royalties, fees, or other like income 272.1 described in section 290.01, subdivision 19d, clause (10), shall 272.2 not be disallowed. 272.3 (j) Each corporation or other entity, except a sole 272.4 proprietorship, that is part of a unitary business must file 272.5 combined reports as the commissioner determines. On the 272.6 reports, all intercompany transactions between entities included 272.7 pursuant to paragraph (h) must be eliminated and the entire net 272.8 income of the unitary business determined in accordance with 272.9 this subdivision is apportioned among the entities by using each 272.10 entity's Minnesota factors for apportionment purposes in the 272.11 numerators of the apportionment formula and the total factors 272.12 for apportionment purposes of all entities included pursuant to 272.13 paragraph (h) in the denominators of the apportionment formula. 272.14 (k) If a corporation has been divested from a unitary 272.15 business and is included in a combined report for a fractional 272.16 part of the common accounting period of the combined report: 272.17 (1) its income includable in the combined report is its 272.18 income incurred for that part of the year determined by 272.19 proration or separate accounting; and 272.20 (2) its sales, property, and payroll included in the 272.21 apportionment formula must be prorated or accounted for 272.22 separately. 272.23 [EFFECTIVE DATE.] This section is effective for taxable 272.24 years beginning after December 31, 2003. 272.25 Sec. 4. Minnesota Statutes 2002, section 290.191, 272.26 subdivision 1, is amended to read: 272.27 Subdivision 1. [GENERAL RULE.] (a) Except as otherwise 272.28 provided in section 290.17, subdivision 5, the net income from a 272.29 trade or business carried on partly within and partly without 272.30 this state must be apportioned to this state as provided in this 272.31 section. To the extent that an entity is exempt from taxation 272.32 under this chapter as provided in section 290.05, the 272.33 apportionment factors associated with the entity's exempt 272.34 activities are excluded from the apportionment formula under 272.35 this section. 272.36 (b) For purposes of this section, "state" means a state of 273.1 the United States, the District of Columbia, the commonwealth of 273.2 Puerto Rico, or any territory or possession of the United States 273.3 or any foreign country. 273.4 [EFFECTIVE DATE.] This section is effective for taxable 273.5 years beginning after December 31, 2003. 273.6 Sec. 5. Minnesota Statutes 2002, section 297A.68, 273.7 subdivision 4, is amended to read: 273.8 Subd. 4. [TACONITE, OTHER ORES, METALS, OR MINERALS; 273.9 PRODUCTION MATERIALS.] Mill liners, grinding rods, and grinding 273.10 balls that are substantially consumed in the production of 273.11 taconite or other ores, metals, or minerals are exempt when sold 273.12 to or stored, used, or consumed by persons taxed under the 273.13 in-lieu provisions of chapter 298. 273.14 [EFFECTIVE DATE.] This section is effective for sales and 273.15 purchases made after June 30, 2005. 273.16 Sec. 6. Minnesota Statutes 2002, section 298.001, is 273.17 amended by adding a subdivision to read: 273.18 Subd. 9. [REFINING.] "Refining" means and is limited to 273.19 refining: 273.20 (1) of ores, metals, or mineral products, the mining, 273.21 extraction, or quarrying of which were subject to tax under 273.22 section 298.015; and 273.23 (2) carried on by the entity, or an affiliated entity, that 273.24 mined, extracted, or quarried the metal or mineral products. 273.25 [EFFECTIVE DATE.] This section is effective for taxable 273.26 years beginning after December 31, 2003. 273.27 Sec. 7. Minnesota Statutes 2002, section 298.001, is 273.28 amended by adding a subdivision to read: 273.29 Subd. 10. [PRECIOUS MINERALS TAX RELIEF AREA.] The 273.30 "precious minerals tax relief area" means the area of the 273.31 following Independent School Districts: 273.32 (1) No. 166, Cook County; 273.33 (2) No. 316, Coleraine; 273.34 (3) No. 318, Grand Rapids; 273.35 (4) No. 319, Nashwauk-Keewatin; 273.36 (5) No. 381, Lake Superior; 274.1 (6) No. 695, Chisholm; 274.2 (7) No. 696, Ely; 274.3 (8) No. 701, Hibbing; 274.4 (9) No. 706, Virginia; 274.5 (10) No. 712, Mountain Iron-Buhl; 274.6 (11) No. 2711, Mesabi East; 274.7 (12) No. 2142, St. Louis County; and 274.8 (13) No. 2154, Eveleth-Gilbert. 274.9 [EFFECTIVE DATE.] This section is effective for taxable 274.10 years beginning after December 31, 2003. 274.11 Sec. 8. Minnesota Statutes 2002, section 298.01, 274.12 subdivision 3, is amended to read: 274.13 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 274.14 engaged in the business of mining, refining, or producing ores, 274.15 metals, or minerals in this state, except iron ore or taconite 274.16 concentrates, shall pay an occupation tax to the state of 274.17 Minnesota as provided in this subdivision. For purposes of this 274.18 subdivision, mining includes the application of 274.19 hydrometallurgical processes. The tax is determined in the same 274.20 manner as the tax imposed by section 290.02, except that 274.21 sections 290.05, subdivision 1, clause (a), 290.0921, and 274.22 290.17, subdivision 4, do not apply. Except as provided in 274.23 section 290.05, subdivision 1, paragraph (a), the tax is in 274.24 addition to all other taxes. 274.25 [EFFECTIVE DATE.] This section is effective for taxable 274.26 years beginning after December 31, 2003. 274.27 Sec. 9. Minnesota Statutes 2002, section 298.01, 274.28 subdivision 3a, is amended to read: 274.29 Subd. 3a. [GROSS INCOME.] (a) For purposes of determining 274.30 a person's taxable income under subdivision 3, gross income is 274.31 determined by the amount of gross proceeds from mining in this 274.32 state under section 298.016 and includes any gain or loss 274.33 recognized from the sale or disposition of assets used in the 274.34 business in this state. 274.35 (b) In applying section 290.191, subdivision 5, transfers 274.36 of ores, metals, or minerals that are subject to tax under this 275.1 chapter are deemed to be sales outside this state if the ores, 275.2 metals, or minerals are transported out of this state for 275.3 further processing or refining by the person engaged in mining 275.4 after the ores, metals, or minerals have been converted to a 275.5 marketable quality. 275.6 (c) In applying section 290.191, subdivision 5, transfers 275.7 of ores, metals, or minerals that are subject to tax under this 275.8 chapter are deemed to be sales within this state if the ores, 275.9 metals, or minerals are received by a purchaser at a point 275.10 within this state, and the taxpayer is taxable in this state, 275.11 regardless of the f.o.b. point, or other conditions of the sale, 275.12 or the ultimate destination of the property. 275.13 [EFFECTIVE DATE.] This section is effective for taxable 275.14 years beginning after December 31, 2003. 275.15 Sec. 10. Minnesota Statutes 2002, section 298.01, 275.16 subdivision 4, is amended to read: 275.17 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 275.18 CONCENTRATES.] A person engaged in the business of mining or 275.19 producing of iron ore, taconite concentrates or direct reduced 275.20 ore in this state shall pay an occupation tax to the state of 275.21 Minnesota. The tax is determined in the same manner as the tax 275.22 imposed by section 290.02, except that sections 290.05, 275.23 subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 275.24 do not apply. The tax is in addition to all other taxes. 275.25 [EFFECTIVE DATE.] This section is effective for taxable 275.26 years beginning after December 31, 2003. 275.27 Sec. 11. Minnesota Statutes 2002, section 298.015, 275.28 subdivision 1, is amended to read: 275.29 Subdivision 1. [TAX IMPOSED.] A person engaged in the 275.30 business of mining shall pay to the state of Minnesota for 275.31 distribution as provided in section 298.018 a net proceeds tax 275.32 equal totwofour percent of the net proceeds from mining in 275.33 Minnesota. The tax applies to allmineral and energy resources275.34 ores, metals, and minerals minedor, extracted, produced, or 275.35 refined within the state of Minnesota except for sand, silica 275.36 sand, gravel, building stone, crushed rock, limestone, granite, 276.1 dimension granite, dimension stone, horticultural peat, clay, 276.2 soil, iron ore, and taconite concentrates. Except as provided 276.3 in section 272.02, subdivision 68, the tax is in addition to all 276.4 other taxes provided for by law. 276.5 [EFFECTIVE DATE.] This section is effective for taxes 276.6 payable in 2005 and thereafter. 276.7 Sec. 12. Minnesota Statutes 2002, section 298.015, 276.8 subdivision 2, is amended to read: 276.9 Subd. 2. [NET PROCEEDS.] For purposes of this section, the 276.10 term "net proceeds" means the gross proceeds from mining, as 276.11 defined in section 298.016, less the same deductions allowedin276.12section 298.017for purposes of determining taxable income under 276.13 section 298.01, subdivision 3b. No other credits or deductions 276.14 shall apply to this taxexcept for those provided in section276.15298.017. 276.16 [EFFECTIVE DATE.] This section is effective for taxes 276.17 payable in 2005 and thereafter. 276.18 Sec. 13. Minnesota Statutes 2002, section 298.016, 276.19 subdivision 4, is amended to read: 276.20 Subd. 4. [DEFINITIONS.] For the purposes of sections 276.21 298.015 and 298.017, the terms defined in this subdivision have 276.22 the meaning given them unless the context clearly indicates 276.23 otherwise. 276.24 (a) "Metal or mineral products" means all thosemineral and276.25energy resourcesores, metals, and minerals subject to the tax 276.26 provided in section 298.015. 276.27 (b) "Exploration" means activities designed and engaged in 276.28 to ascertain the existence, location, extent, or quality of any 276.29 deposit of metal or mineral products prior to the development of 276.30 a mining site. 276.31 (c) "Development" means activities designed and engaged in 276.32 to prepare or develop a potential mining site for mining after 276.33 the existence of metal or mineral products in commercially 276.34 marketable quantities has been disclosed including, but not 276.35 limited to, the clearing of forestation, the building of roads, 276.36 removal of overburden, or the sinking of shafts. 277.1 (d) "Research" means activities designed and engaged in to 277.2 create new or improved methods of mining, producing, processing, 277.3 beneficiating, smelting, or refining metal or mineral products. 277.4 [EFFECTIVE DATE.] This section is effective for taxable 277.5 years beginning after December 31, 2004. 277.6 Sec. 14. Minnesota Statutes 2002, section 298.018, as 277.7 amended by Laws 2003, First Special Session chapter 21, article 277.8 11, sections 14, 15, is amended to read: 277.9 298.018 [DISTRIBUTION OF PROCEEDS.] 277.10 Subdivision 1. [WITHIN THETACONITEPRECIOUS MINERALS 277.11 ASSISTANCE AREA.] The proceeds of the tax paid under sections 277.12 298.015 to 298.017 on ores, metals, and mineralsand energy277.13resourcesmined or extracted within thetaconiteprecious 277.14 minerals assistance areadefined in section 273.1341, shall be 277.15 allocated as follows: 277.16 (1) five percent to the city or town within which the ores, 277.17 metals, or mineralsor energy resourcesare mined or extracted; 277.18 (2) ten percent to the taconite municipal aid account to be 277.19 distributedas provided in section 298.282to qualifying 277.20 municipalities, as defined in section 298.282 and located in the 277.21 precious minerals assistance area; 277.22 (3) ten percent to the school district within which the 277.23 ores, metals, or mineralsor energy resourcesare mined or 277.24 extracted; 277.25 (4)2030 percent toa group of school districts comprised277.26of those school districts wherein the mineral or energy resource277.27was mined or extracted or in which there is a qualifying277.28municipality as defined by section 273.134, paragraph (b), in277.29direct proportion to school district indexes as follows: for277.30each school district, its pupil units determined under section277.31126C.05 for the prior school year shall be multiplied by the277.32ratio of the average adjusted net tax capacity per pupil unit277.33for school districts receiving aid under this clause as277.34calculated pursuant to chapters 122A, 126C, and 127A for the277.35school year ending prior to distribution to the adjusted net tax277.36capacity per pupil unit of the district. Each district shall278.1receive that portion of the distribution which its index bears278.2to the sum of the indices for all school districts that receive278.3the distributionsthe state general fund to represent the 278.4 portion of the tax that is in lieu of the state general tax 278.5 under section 275.025; 278.6 (5) 20 percent to the county within which the ores, metals, 278.7 or mineralsor energy resourcesare mined or extracted; 278.8 (6)20 percent to St. Louis County acting as the counties'278.9fiscal agent to be distributed as provided in sections 273.134278.10to 273.136;278.11(7)five percent to the Iron Range Resources and 278.12 Rehabilitation Board for the purposes of section 298.22; 278.13(8) five(7) ten percent to the Douglas J. Johnson economic 278.14 protection trust fund; and 278.15(9) five(8) ten percent to the taconite environmental 278.16 protection fund. 278.17 The proceeds of the tax shall be distributed on July 15 278.18 each year. 278.19 Subd. 2. [OUTSIDE THETACONITEPRECIOUS MINERALS 278.20 ASSISTANCE AREA.] The proceeds of the tax paid under sections 278.21 298.015 to 298.017 on ores, metals, or mineralsand energy278.22resourcesmined or extracted outside of thetaconiteprecious 278.23 minerals assistance areadefined in section 273.1341, shall be 278.24 deposited in the general fund. 278.25 Subd. 3. [SEGREGATION OF FUNDS.] The proceeds of the tax 278.26 allocated under subdivision 1, clauses (2), (6), (7), and (8), 278.27 including any investment earnings on them, must be segregated 278.28 and separately accounted for in the respective funds or account 278.29 to which they are allocated. These amounts must only be 278.30 distributed to municipalities within the precious minerals 278.31 assistance area or used for projects located in the precious 278.32 minerals assistance area. 278.33 [EFFECTIVE DATE.] This section is effective for 278.34 distribution of net proceeds tax revenues made after July 1, 278.35 2004. 278.36 Sec. 15. [298.021] [ROYALTY TAX.] 279.1 In addition to any other taxes imposed by law, a tax is 279.2 imposed on a royalty, as defined in section 290.923, subdivision 279.3 1, paid on ore, other than iron ore, taconite, iron sulphides, 279.4 or semitaconite. The tax equals 12 percent of the amount of the 279.5 royalty paid. The person paying the royalty shall withhold the 279.6 tax from the payment and remit the payment to the commissioner 279.7 at the times and under the procedures provided under section 279.8 290.923. The commissioner shall deposit proceeds in the general 279.9 fund and allocate the proceeds as provided under section 279.10 298.018, subdivision 1. 279.11 [EFFECTIVE DATE.] This section is effective for royalties 279.12 paid after June 30, 2004. 279.13 Sec. 16. Minnesota Statutes 2003 Supplement, section 279.14 298.223, subdivision 1, is amended to read: 279.15 Subdivision 1. [CREATION; PURPOSES.] A fund called the 279.16 taconite environmental protection fund is created for the 279.17 purpose of reclaiming, restoring and enhancing those areas of 279.18 northeast Minnesota located within the taconite assistance area 279.19 defined in section 273.1341, that are adversely affected by the 279.20 environmentally damaging operations involved in mining taconite 279.21 and iron ore and producing iron ore concentrate and for the 279.22 purpose of promoting the economic development of northeast 279.23 Minnesota. The taconite environmental protection fund shall be 279.24 used for the following purposes: 279.25 (a) to initiate investigations into matters the Iron Range 279.26 Resources and Rehabilitation Board determines are in need of 279.27 study and which will determine the environmental problems 279.28 requiring remedial action; 279.29 (b) reclamation, restoration, or reforestation of minelands 279.30 not otherwise provided for by state law; 279.31 (c)local economic development projects including279.32construction of sewer and water systems, and otherpublic works, 279.33 including construction of sewer and water systems located within 279.34 the taconite assistance area defined in section 273.1341; 279.35 (d) monitoring of mineral industry related health problems 279.36 among mining employees. 280.1 [EFFECTIVE DATE.] This section is effective the day 280.2 following final enactment. 280.3 Sec. 17. Minnesota Statutes 2002, section 298.24, 280.4 subdivision 1, is amended to read: 280.5 Subdivision 1. (a) For concentrate produced in 2001, 2002, 280.6 and 2003, there is imposed upon taconite and iron sulphides, and 280.7 upon the mining and quarrying thereof, and upon the production 280.8 of iron ore concentrate therefrom, and upon the concentrate so 280.9 produced, a tax of $2.103 per gross ton of merchantable iron ore 280.10 concentrate produced therefrom. 280.11 (b) For concentrates produced in 2004 and subsequent years, 280.12 the tax rate shall be equal to the preceding year's tax rate 280.13 plus an amount equal to the preceding year's tax rate multiplied 280.14 by the percentage increase in the implicit price deflator from 280.15 the fourth quarter of the second preceding year to the fourth 280.16 quarter of the preceding year. "Implicit price deflator" means 280.17 the implicit price deflator for the gross domestic product 280.18 prepared by the Bureau of Economic Analysis of the United States 280.19 Department of Commerce. 280.20 (c) On concentrates produced in 1997 and thereafter, an 280.21 additional tax is imposed equal to three cents per gross ton of 280.22 merchantable iron ore concentrate for each one percent that the 280.23 iron content of the product exceeds 72 percent, when dried at 280.24 212 degrees Fahrenheit. 280.25 (d) Except for taxes payable in 2004 through 2006, the tax 280.26 shall be imposed on the average of the production for the 280.27 current year and the previous two years. The rate of the tax 280.28 imposed will be the current year's tax rate. This clause shall 280.29 not apply in the case of the closing of a taconite facility if 280.30 the property taxes on the facility would be higher if this 280.31 clause and section 298.25 were not applicable. 280.32 (e) If the tax or any part of the tax imposed by this 280.33 subdivision is held to be unconstitutional, a tax of $2.103 per 280.34 gross ton of merchantable iron ore concentrate produced shall be 280.35 imposed. 280.36 (f) Consistent with the intent of this subdivision to 281.1 impose a tax based upon the weight of merchantable iron ore 281.2 concentrate, the commissioner of revenue may indirectly 281.3 determine the weight of merchantable iron ore concentrate 281.4 included in fluxed pellets by subtracting the weight of the 281.5 limestone, dolomite, or olivine derivatives or other basic flux 281.6 additives included in the pellets from the weight of the 281.7 pellets. For purposes of this paragraph, "fluxed pellets" are 281.8 pellets produced in a process in which limestone, dolomite, 281.9 olivine, or other basic flux additives are combined with 281.10 merchantable iron ore concentrate. No subtraction from the 281.11 weight of the pellets shall be allowed for binders, mineral and 281.12 chemical additives other than basic flux additives, or moisture. 281.13 (g)(1) Notwithstanding any other provision of this 281.14 subdivision, for any year before the plant reaches the level of 281.15 commercial production and for the first two years of a plant's 281.16 commercial production of direct reduced ore, no tax is imposed 281.17 under this section. As used in this paragraph, "commercial 281.18 production" is production of more than 50,000 tons of direct 281.19 reduced ore per year, and "direct reduced ore" is ore that 281.20 results in a product that has an iron content of at least 75 281.21 percent. For the third year of a plant's commercial production 281.22 of direct reduced ore, the rate to be applied to direct reduced 281.23 ore is 25 percent of the rate otherwise determined under this 281.24 subdivision. For the fourth such production year, the rate is 281.25 50 percent of the rate otherwise determined under this 281.26 subdivision; for the fifth such production year, the rate is 75 281.27 percent of the rate otherwise determined under this subdivision; 281.28 and for all subsequent production years, the full rate is 281.29 imposed. 281.30 (2) Subject to clause (1), production of direct reduced ore 281.31 in this state is subject to the tax imposed by this section, but 281.32 if that production is not produced by a producer of taconite or 281.33 iron sulfides, the production of taconite or iron sulfides 281.34 consumed in the production of direct reduced iron in this state 281.35 is not subject to the tax imposed by this section on taconite or 281.36 iron sulfides. 282.1 (3) Notwithstanding any other provision of this 282.2 subdivision, no tax is imposed under this section for the first 282.3 two years of noncommercial production of direct reduced ore. 282.4 [EFFECTIVE DATE.] This section is effective for direct 282.5 reduced ore produced after the date of final enactment. 282.6 Sec. 18. Minnesota Statutes 2003 Supplement, section 282.7 298.27, is amended to read: 282.8 298.27 [COLLECTION AND PAYMENT OF TAX.] 282.9 The taxes provided by section 298.24 shall be paid directly 282.10 to each eligible county and the Iron Range Resources and 282.11 Rehabilitation Board. The commissioner of revenue shall notify 282.12 each producer of the amount to be paid each recipient prior to 282.13 February 15. Every person subject to taxes imposed by section 282.14 298.24 shall file a correct report covering the preceding year. 282.15 The report must contain the information required by the 282.16 commissioner. The report shall be filed by each producer on or 282.17 before February 1. A remittance equal to 50 percent of the 282.18 total tax required to be paid hereunder shall be paid on or 282.19 before February 24. A remittance equal to 20 percent of the 282.20 remaining total tax required to be paid hereunder shall be paid 282.21 on or before the first days of April, May, June, July, and 282.22 August24. On or before February 25 and August 25, the county 282.23 auditor shall make distribution of the payments previously 282.24 received by the county in the manner provided by section 282.25 298.28. Reports shall be made and hearings held upon the 282.26 determination of the tax in accordance with procedures 282.27 established by the commissioner of revenue. The commissioner of 282.28 revenue shall have authority to make reasonable rules as to the 282.29 form and manner of filing reports necessary for the 282.30 determination of the tax hereunder, and by such rules may 282.31 require the production of such information as may be reasonably 282.32 necessary or convenient for the determination and apportionment 282.33 of the tax. All the provisions of the occupation tax law with 282.34 reference to the assessment and determination of the occupation 282.35 tax, including all provisions for appeals from or review of the 282.36 orders of the commissioner of revenue relative thereto, but not 283.1 including provisions for refunds, are applicable to the taxes 283.2 imposed by section 298.24 except in so far as inconsistent 283.3 herewith. If any person subject to section 298.24 shall fail to 283.4 make the report provided for in this section at the time and in 283.5 the manner herein provided, the commissioner of revenue shall in 283.6 such case, upon information possessed or obtained, ascertain the 283.7 kind and amount of ore mined or produced and thereon find and 283.8 determine the amount of the tax due from such person. There 283.9 shall be added to the amount of tax due a penalty for failure to 283.10 report on or before February 1, which penalty shall equal ten 283.11 percent of the tax imposed and be treated as a part thereof. 283.12 If any person responsible for making a tax payment at the 283.13 time and in the manner herein provided fails to do so, there 283.14 shall be imposed a penalty equal to ten percent of the amount so 283.15 due, which penalty shall be treated as part of the tax due. 283.16 In the case of any underpayment of the tax payment required 283.17 herein, there may be added and be treated as part of the tax due 283.18 a penalty equal to ten percent of the amount so underpaid. 283.19 A person having a liability of $120,000 or more during a 283.20 calendar year must remit all liabilities by means of a funds 283.21 transfer as defined in section 336.4A-104, paragraph (a). The 283.22 funds transfer payment date, as defined in section 336.4A-401, 283.23 must be on or before the date the tax is due. If the date the 283.24 tax is due is not a funds transfer business day, as defined in 283.25 section 336.4A-105, paragraph (a), clause (4), the payment date 283.26 must be on or before the funds transfer business day next 283.27 following the date the tax is due. 283.28 [EFFECTIVE DATE.] This section is effective for production 283.29 payable beginning calendar year 2005. 283.30 Sec. 19. Minnesota Statutes 2002, section 298.28, 283.31 subdivision 9a, is amended to read: 283.32 Subd. 9a. [TACONITE ECONOMIC DEVELOPMENTMINERAL 283.33 PROCESSING AND ENERGY DEVELOPMENT ASSISTANCE FUND.] (a) 30.1 283.34 cents per ton for distributions in20022005 and thereafter must 283.35 be paid to thetaconite economic development fundmineral 283.36 processing and energy development assistance fund under section 284.1 298.2962. No distribution shall be made under this paragraph in 284.2 2004 or any subsequent year in which total industry production 284.3 falls below 30 million tons.Distribution shall only be made to284.4a taconite producer's fund under section 298.227 if the producer284.5timely pays its tax under section 298.24 by the dates provided284.6under section 298.27, or pursuant to the due dates provided by284.7an administrative agreement with the commissioner.284.8 (b) An amount equal to 50 percent of the tax under section 284.9 298.24 for concentrate sold in the form of pellet chips and 284.10 fines not exceeding 5/16 inch in size and not including crushed 284.11 pellets shall be paid to thetaconite economicmineral 284.12 processing and energy development assistance fund under section 284.13 298.2962. The amount paid shall not exceed $700,000 annually 284.14 for all companies. If the initial amount to be paid to the fund 284.15 exceeds this amount, each company's payment shall be prorated so 284.16 the total does not exceed $700,000. 284.17 [EFFECTIVE DATE.] This section is effective the day 284.18 following final enactment. 284.19 Sec. 20. Minnesota Statutes 2002, section 298.28, 284.20 subdivision 9b, is amended to read: 284.21 Subd. 9b. [TACONITE ENVIRONMENTAL FUND.] Five cents per 284.22 tonfor distributions in 1999, 2000, 2001, 2002, and 2003must 284.23 be paid to the taconite environmental fund for use under section 284.24 298.2961, subdivision 4. 284.25 [EFFECTIVE DATE.] This section is effective for 284.26 distributions in 2004 and later years. 284.27 Sec. 21. Minnesota Statutes 2002, section 298.28, 284.28 subdivision 10, is amended to read: 284.29 Subd. 10. [INCREASE.] Beginning with distributions in2000284.30 2005, except for the amount of the revenue increases provided in 284.31 subdivision 4, paragraph (d), the amountdetermined under284.32subdivision 9 shall be increased in the same proportion asof 284.33 increased tax proceeds attributable to the increase in the 284.34 implicit price deflator as provided in section 298.24, 284.35 subdivision 1, is distributed to the taconite environmental 284.36 protection fund under section 298.223.Beginning with285.1distributions in 2003, the amount determined under subdivision285.26, paragraph (a), shall be increased in the same proportion as285.3the increase in the implicit price deflator as provided in285.4section 298.24, subdivision 1.285.5 Sec. 22. Minnesota Statutes 2002, section 298.2961, is 285.6 amended by adding a subdivision to read: 285.7 Subd. 4. [GRANT AND LOAN FUND.] (a) A fund is established 285.8 to receive distributions under section 298.28, subdivision 9b, 285.9 and to make grants or loans as provided in this subdivision. 285.10 Any grant or loan made under this subdivision must be approved 285.11 by a majority of the members of the Iron Range Resources and 285.12 Rehabilitation Board, established under section 298.22. 285.13 (b) Distributions received in calendar year 2004 are 285.14 allocated to the city of Virginia for improvements and repairs 285.15 to the city's steam heating system. 285.16 (c) Distributions received in calendar year 2005 are 285.17 allocated to a project of the public utilities commissions of 285.18 the cities of Hibbing and Virginia to convert their electrical 285.19 generating plants to the use of biomass products, such as wood. 285.20 (d) For distributions received in 2006 and later, amounts 285.21 are to be allocated to joint ventures with mining companies for 285.22 reclamation of lands containing abandoned or worked out mines to 285.23 convert these lands to marketable properties for residential, 285.24 recreational, commercial, or other valuable uses. 285.25 [EFFECTIVE DATE.] This section is effective the day 285.26 following final enactment. 285.27 Sec. 23. [298.2962] [MINERAL PROCESSING AND ENERGY 285.28 DEVELOPMENT ASSISTANCE FUND.] 285.29 Subdivision 1. [CREATION OF FUND; DEPOSITS.] The amount 285.30 distributed under section 298.28, subdivision 9a, must be 285.31 deposited by the commissioner of iron range resources and 285.32 rehabilitation in a mineral processing and energy development 285.33 assistance fund, which is created in this section. In this 285.34 section, "commissioner" means the commissioner of iron range 285.35 resources and rehabilitation. 285.36 Subd. 2. [USE OF FUND.] The commissioner shall use money 286.1 in the fund to make grants, loans, or equity investments in 286.2 mineral processing and energy generating facilities including, 286.3 but not limited to, taconite processing, direct reduction 286.4 processing, steel production, and energy generation facilities. 286.5 Money in the fund may also be used to pay for the costs of 286.6 carrying out the commissioner's due diligence duties under this 286.7 section. Any grant, loan, or equity investment made under this 286.8 subdivision must be approved by a majority of the members of the 286.9 Iron Range Resources and Rehabilitation Board. 286.10 Subd. 3. [REQUIREMENTS PRIOR TO COMMITTING FUNDS.] The 286.11 commissioner, prior to making a commitment for a grant, loan, or 286.12 equity investment must, at a minimum, conduct due diligence 286.13 research regarding the proposed loan or equity investment, 286.14 including contracting with professionals as needed to assist in 286.15 the due diligence. 286.16 Subd. 4. [REQUIREMENTS FOR FUND DISBURSEMENTS.] The 286.17 commissioner may make conditional commitments for grants, loans, 286.18 or equity investments but disbursements of funds pursuant to a 286.19 commitment may not be made until commitments for the remainder 286.20 of a project's funding are made that are satisfactory to the 286.21 commissioner and disbursements are made from the other 286.22 commitments sufficient to protect the interests of the state in 286.23 its loan or investment. 286.24 Subd. 5. [COMPANY CONTRIBUTION.] The commissioner may 286.25 provide grants, loans, or equity investments that match, in a 286.26 proportion determined by the commissioner, an investment made by 286.27 the owner of a facility. 286.28 Sec. 24. Minnesota Statutes 2003 Supplement, section 286.29 298.75, subdivision 1, is amended to read: 286.30 Subdivision 1. [DEFINITIONS.] Except as may otherwise be 286.31 provided, the following words, when used in this section, shall 286.32 have the meanings herein ascribed to them. 286.33 (1) "Aggregate material" shall mean nonmetallic natural 286.34 mineral aggregate including, but not limited to sand, silica 286.35 sand, gravel, crushed rock, limestone, granite, and borrow, but 286.36 only if the borrow is transported on a public road, street, or 287.1 highway. Aggregate material shall not include dimension stone 287.2 and dimension granite. Aggregate material must be measured or 287.3 weighed after it has been extracted from the pit, quarry, or 287.4 deposit. 287.5 (2) "Person" shall mean any individual, firm, partnership, 287.6 corporation, organization, trustee, association, or other entity. 287.7 (3) "Operator" shall mean any person engaged in the 287.8 business of removing aggregate material from the surface or 287.9 subsurface of the soil, for the purpose of sale, either directly 287.10 or indirectly, through the use of the aggregate material in a 287.11 marketable product or service; except that operator does not 287.12 include persons engaged in a transaction in which: (i) the 287.13 person is allowed to remove or produce aggregate without a 287.14 mining permit; or (ii) the aggregate is moved within a project's 287.15 construction limits to other locations within that same 287.16 project's construction limits. 287.17 (4) "Extraction site" shall mean a pit, quarry, or deposit 287.18 containing aggregate material and any contiguous property to the 287.19 pit, quarry, or deposit which is used by the operator for 287.20 stockpiling the aggregate material. 287.21 (5) "Importer" shall mean any person who buys aggregate 287.22 material produced from a county not listed in paragraph (6) or 287.23 another state and causes the aggregate material to be imported 287.24 into a county in this state which imposes a tax on aggregate 287.25 material. 287.26 (6) "County" shall mean the counties of Pope, Stearns, 287.27 Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 287.28 Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 287.29 Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 287.30 Sibley, Hennepin, Washington, Chisago, and Ramsey. County also 287.31 means any other county whose board has voted after a public 287.32 hearing to impose the tax under this section and has notified 287.33 the commissioner of revenue of the imposition of the tax. 287.34 (7) "Borrow" shall mean granular borrow, consisting of 287.35 durable particles of gravel and sand, crushed quarry or mine 287.36 rock, crushed gravel or stone, or any combination thereof, the 288.1 ratio of the portion passing the (#200) sieve divided by the 288.2 portion passing the (1 inch) sieve may not exceed 20 percent by 288.3 mass. 288.4 [EFFECTIVE DATE.] This section is effective for aggregate 288.5 sold, imported, transported, or used from a stockpile after June 288.6 30, 2004. 288.7 Sec. 25. Minnesota Statutes 2002, section 298.75, 288.8 subdivision 2, is amended to read: 288.9 Subd. 2. [TAX IMPOSED.] A county shall impose upon every 288.10 importer and operator a production tax up to ten cents per cubic 288.11 yard or up to seven cents per ton of aggregate material removed 288.12 except that the county board may decide not to impose this tax 288.13 if it determines that in the previous year operators removed 288.14 less than 20,000 tons or 14,000 cubic yards of aggregate 288.15 material from that county. A county or town may exempt an 288.16 operator from the tax if the operator has removed less than 288.17 2,500 tons or 1,750 yards from the county in the year that the 288.18 tax is due and no other aggregate operator has removed material 288.19 from the same site in the same year. The tax shall be imposed 288.20 on aggregate material produced in the county when the aggregate 288.21 material is transported from the extraction site or sold. When 288.22 aggregate material is stored in a stockpile within the state of 288.23 Minnesota and a public highway, road or street is not used for 288.24 transporting the aggregate material, the tax shall be imposed 288.25 either when the aggregate material is sold, or when it is 288.26 transported from the stockpile site, or when it is used from the 288.27 stockpile, whichever occurs first. The tax shall be imposed on 288.28 an importer when the aggregate material is imported into the 288.29 county that imposes the tax. 288.30 If the aggregate material is transported directly from the 288.31 extraction site to a waterway, railway, or another mode of 288.32 transportation other than a highway, road or street, the tax 288.33 imposed by this section shall be apportioned equally between the 288.34 county where the aggregate material is extracted and the county 288.35 to which the aggregate material is originally transported. If 288.36 that destination is not located in Minnesota, then the county 289.1 where the aggregate material was extracted shall receive all of 289.2 the proceeds of the tax. 289.3 [EFFECTIVE DATE.] This section is effective the day 289.4 following final enactment. 289.5 Sec. 26. [TRANSITION PROVISION.] 289.6 Each person with an alternative minimum tax credit on 289.7 December 31, 2003, pursuant to Minnesota Statutes 2002, section 289.8 298.01, may take that credit against occupation tax under the 289.9 provisions of Minnesota Statutes 2002, section 298.01, 289.10 subdivision 3d or 4e. 289.11 [EFFECTIVE DATE.] This section is effective the day 289.12 following final enactment. 289.13 Sec. 27. [REPEALER.] 289.14 (a) Minnesota Statutes 2002, section 298.01, subdivisions 289.15 3c, 3d, 4d, and 4e, are repealed effective for taxable years 289.16 beginning after December 31, 2003. 289.17 (b) Minnesota Statutes 2002, section 298.017, is repealed 289.18 effective for taxes payable in 2005 and thereafter. 289.19 (c) Minnesota Statutes 2003 Supplement, section 298.227, is 289.20 repealed July 1, 2004. The commissioner of iron range resources 289.21 and rehabilitation must transfer any unobligated money in the 289.22 taconite economic development fund on that date to the mineral 289.23 processing and energy development assistance fund established 289.24 under Minnesota Statutes, section 298.2962. 289.25 ARTICLE 11 289.26 SALES AND USE TAXES 289.27 DEPARTMENT OF REVENUE TECHNICAL CHANGES 289.28 Section 1. Minnesota Statutes 2002, section 289A.38, 289.29 subdivision 6, is amended to read: 289.30 Subd. 6. [OMISSION IN EXCESS OF 25 PERCENT.] Additional 289.31 taxes may be assessed within 6-1/2 years after the due date of 289.32 the return or the date the return was filed, whichever is later, 289.33 if: 289.34 (1) the taxpayer omits from gross income an amount properly 289.35 includable in it that is in excess of 25 percent of the amount 289.36 of gross income stated in the return; 290.1 (2) the taxpayer omits from a sales, use, or withholding 290.2 tax return an amount of taxes in excess of 25 percent of the 290.3 taxes reported in the return; or 290.4 (3) the taxpayer omits from the gross estate assets in 290.5 excess of 25 percent of the gross estate reported in the return. 290.6 [EFFECTIVE DATE.] This section is effective the day 290.7 following final enactment. 290.8 Sec. 2. Minnesota Statutes 2003 Supplement, section 290.9 289A.40, subdivision 2, is amended to read: 290.10 Subd. 2. [BAD DEBT LOSS.] If a claim relates to an 290.11 overpayment because of a failure to deduct a loss due to a bad 290.12 debt or to a security becoming worthless, the claim is 290.13 considered timely if filed within seven years from the date 290.14 prescribed for the filing of the return. A claim relating to an 290.15 overpayment of taxes under chapter 297A must be filed within 290.16 3-1/2 years from the date prescribed for filing the return, plus 290.17 any extensions granted for filing the return, but only if filed 290.18 within the extended time. The refund or credit is limited to 290.19 the amount of overpayment attributable to the loss. "Bad debt" 290.20 for purposes of this subdivision, has the same meaning as that 290.21 term is used in United States Code, title 26, section 166, 290.22 except that for a claim relating to an overpayment of taxes 290.23 under chapter 297A the following are excluded from the 290.24 calculation of bad debt: financing charges or interest; sales 290.25 or use taxes charged on the purchase price; uncollectible 290.26 amounts on property that remain in the possession of the seller 290.27 until the full purchase price is paid; expenses incurred in 290.28 attempting to collect any debt; and repossessed property. 290.29 [EFFECTIVE DATE.] For claims relating to an overpayment of 290.30 taxes under chapter 297A, this section is effective for sales 290.31 and purchases made on or after January 1, 2004; for all other 290.32 bad debts or claims, this section is effective on or after July 290.33 1, 2003. 290.34 Sec. 3. Minnesota Statutes 2003 Supplement, section 290.35 297A.668, subdivision 1, is amended to read: 290.36 Subdivision 1. [APPLICABILITY.] The provisions of this 291.1 section apply regardless of the characterization of a product as 291.2 tangible personal property, a digital good, or a service; but do 291.3 not apply to telecommunications services,or the sales of motor 291.4 vehicles, watercraft, aircraft, modular homes, manufactured291.5homes, or mobile homes. These provisions only apply to 291.6 determine a seller's obligation to pay or collect and remit a 291.7 sales or use tax with respect to the seller's sale of a 291.8 product. These provisions do not affect the obligation of a 291.9 seller as purchaser to remit tax on the use of the product. 291.10 [EFFECTIVE DATE.] This section is effective the day 291.11 following final enactment. 291.12 Sec. 4. Minnesota Statutes 2003 Supplement, section 291.13 297A.668, subdivision 3, is amended to read: 291.14 Subd. 3. [LEASE OR RENTAL OF TANGIBLE PERSONAL PROPERTY.] 291.15 The lease or rental of tangible personal property, other than 291.16 property identified in subdivision 4 or 5, shall be sourced as 291.17 required in paragraphs (a) to (c). 291.18 (a) For a lease or rental that requires recurring periodic 291.19 payments, the first periodic payment is sourced the same as a 291.20 retail sale in accordance with the provisions of subdivision62. 291.21 Periodic payments made subsequent to the first payment are 291.22 sourced to the primary property location for each period covered 291.23 by the payment. The primary property location must be as 291.24 indicated by an address for the property provided by the lessee 291.25 that is available to the lessor from its records maintained in 291.26 the ordinary course of business, when use of this address does 291.27 not constitute bad faith. The property location must not be 291.28 altered by intermittent use at different locations, such as use 291.29 of business property that accompanies employees on business 291.30 trips and service calls. 291.31 (b) For a lease or rental that does not require recurring 291.32 periodic payments, the payment is sourced the same as a retail 291.33 sale in accordance with the provisions of subdivision 2. 291.34 (c) This subdivision does not affect the imposition or 291.35 computation of sales or use tax on leases or rentals based on a 291.36 lump sum or accelerated basis, or on the acquisition of property 292.1 for lease. 292.2 [EFFECTIVE DATE.] This section is effective for sales and 292.3 purchases made on or after January 1, 2004. 292.4 Sec. 5. Minnesota Statutes 2003 Supplement, section 292.5 297A.668, subdivision 5, is amended to read: 292.6 Subd. 5. [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 292.7 including lease or rental, of transportation equipment shall be 292.8 sourced the same as a retail sale in accordance with the 292.9 provisions of subdivision 2, notwithstanding the exclusion of 292.10 lease or rental in subdivision 2. 292.11 (b) "Transportation equipment" means any of the following: 292.12 (1) locomotives and railcars that are utilized for the 292.13 carriage of persons or property in interstate commerce;and/or292.14 (2) trucks and truck-tractors with a gross vehicle weight 292.15 rating (GVWR) of 10,001 pounds or greater, trailers, 292.16 semitrailers, or passenger buses that are: 292.17 (i) registered through the international registration plan; 292.18 and 292.19 (ii) operated under authority of a carrier authorized and 292.20 certified by the United States Department of Transportation or 292.21 another federal authority to engage in the carriage of persons 292.22 or property in interstate commerce; 292.23 (3) aircraft that are operated by air carriers authorized 292.24 and certificated by the United States Department of 292.25 Transportation or another federal or a foreign authority to 292.26 engage in the carriage of persons or property in interstate 292.27 commerce; or 292.28 (4) containers designed for use on and component parts 292.29 attached or secured on the transportation equipment described in 292.30 items (1) through (3). 292.31 [EFFECTIVE DATE.] This section is effective for sales and 292.32 purchases made on or after January 1, 2004. 292.33 Sec. 6. Minnesota Statutes 2003 Supplement, section 292.34 297A.669, subdivision 16, is amended to read: 292.35 Subd. 16. [SERVICE ADDRESS.] "Service address," for 292.36 purposes of this section, means: 293.1 (1) the location of the telecommunications equipment to 293.2 which a customer's call is charged and from which the call 293.3 originates or terminates, regardless of where the call is billed 293.4 or paid; 293.5 (2) if the location inparagraph (a)clause (1) is not 293.6 known, service address means the origination point of the signal 293.7 of the telecommunications services first identified by either 293.8 the seller's telecommunications system or in information 293.9 received by the seller from its service provider, where the 293.10 system used to transport the signals is not that of the seller; 293.11 or 293.12 (3) if the location inparagraphs (a)clauses (1) and 293.13(b)(2) is not known, the service address means the location of 293.14 the customer's place of primary use. 293.15 [EFFECTIVE DATE.] This section is effective for sales and 293.16 purchases made on or after January 1, 2004. 293.17 Sec. 7. Minnesota Statutes 2003 Supplement, section 293.18 297A.68, subdivision 2, is amended to read: 293.19 Subd. 2. [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 293.20 (a) Materials stored, used, or consumed in industrial production 293.21 of personal property intended to be sold ultimately at retail 293.22 are exempt, whether or not the item so used becomes an 293.23 ingredient or constituent part of the property produced. 293.24 Materials that qualify for this exemption include, but are not 293.25 limited to, the following: 293.26 (1) chemicals, including chemicals used for cleaning food 293.27 processing machinery and equipment; 293.28 (2) materials, including chemicals, fuels, and electricity 293.29 purchased by persons engaged in industrial production to treat 293.30 waste generated as a result of the production process; 293.31 (3) fuels, electricity, gas, and steam used or consumed in 293.32 the production process, except that electricity, gas, or steam 293.33 used for space heating, cooling, or lighting is exempt if (i) it 293.34 is in excess of the average climate control or lighting for the 293.35 production area, and (ii) it is necessary to produce that 293.36 particular product; 294.1 (4) petroleum products and lubricants; 294.2 (5) packaging materials, including returnable containers 294.3 used in packaging food and beverage products; 294.4 (6) accessory tools, equipment, and other items that are 294.5 separate detachable units with an ordinary useful life of less 294.6 than 12 months used in producing a direct effect upon the 294.7 product; and 294.8 (7) the following materials, tools, and equipment used in 294.9 metalcasting: crucibles, thermocouple protection sheaths and 294.10 tubes, stalk tubes, refractory materials, molten metal filters 294.11 and filter boxes, degassing lances, and base blocks. 294.12 (b) This exemption does not include: 294.13 (1) machinery, equipment, implements, tools, accessories, 294.14 appliances, contrivances and furniture and fixtures, except 294.15 those listed in paragraph (a), clause (6); and 294.16 (2) petroleum and special fuels used in producing or 294.17 generating power for propelling ready-mixed concrete trucks on 294.18 the public highways of this state. 294.19 (c) Industrial production includes, but is not limited to, 294.20 research, development, design or production of any tangible 294.21 personal property, manufacturing, processing (other than by 294.22 restaurants and consumers) of agricultural products (whether 294.23 vegetable or animal), commercial fishing, refining, smelting, 294.24 reducing, brewing, distilling, printing, mining, quarrying, 294.25 lumbering, generating electricity, the production of road 294.26 building materials, and the research, development, design, or 294.27 production of computer software. Industrial production does not 294.28 include painting, cleaning, repairing or similar processing of 294.29 property except as part of the original manufacturing process. 294.30 Industrial production does not include the furnishing of 294.31 services listed in section 297A.61, subdivision 3, paragraph 294.32 (g), clause (6), items (i) to (vi) and (viii). 294.33 [EFFECTIVE DATE.] This section is effective the day 294.34 following final enactment. 294.35 Sec. 8. Minnesota Statutes 2003 Supplement, section 294.36 297A.68, subdivision 5, is amended to read: 295.1 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 295.2 exempt. The tax must be imposed and collected as if the rate 295.3 under section 297A.62, subdivision 1, applied, and then refunded 295.4 in the manner provided in section 297A.75. 295.5 "Capital equipment" means machinery and equipment purchased 295.6 or leased, and used in this state by the purchaser or lessee 295.7 primarily for manufacturing, fabricating, mining, or refining 295.8 tangible personal property to be sold ultimately at retail if 295.9 the machinery and equipment are essential to the integrated 295.10 production process of manufacturing, fabricating, mining, or 295.11 refining. Capital equipment also includes machinery and 295.12 equipment used primarily to electronically transmit results 295.13 retrieved by a customer of an on-line computerized data 295.14 retrieval system. 295.15 (b) Capital equipment includes, but is not limited to: 295.16 (1) machinery and equipment used to operate, control, or 295.17 regulate the production equipment; 295.18 (2) machinery and equipment used for research and 295.19 development, design, quality control, and testing activities; 295.20 (3) environmental control devices that are used to maintain 295.21 conditions such as temperature, humidity, light, or air pressure 295.22 when those conditions are essential to and are part of the 295.23 production process; 295.24 (4) materials and supplies used to construct and install 295.25 machinery or equipment; 295.26 (5) repair and replacement parts, including accessories, 295.27 whether purchased as spare parts, repair parts, or as upgrades 295.28 or modifications to machinery or equipment; 295.29 (6) materials used for foundations that support machinery 295.30 or equipment; 295.31 (7) materials used to construct and install special purpose 295.32 buildings used in the production process; 295.33 (8) ready-mixed concrete equipment in which the ready-mixed 295.34 concrete is mixed as part of the delivery process regardless if 295.35 mounted on a chassis and leases of ready-mixed concrete trucks; 295.36 and 296.1 (9) machinery or equipment used for research, development, 296.2 design, or production of computer software. 296.3 (c) Capital equipment does not include the following: 296.4 (1) motor vehicles taxed under chapter 297B; 296.5 (2) machinery or equipment used to receive or store raw 296.6 materials; 296.7 (3) building materials, except for materials included in 296.8 paragraph (b), clauses (6) and (7); 296.9 (4) machinery or equipment used for nonproduction purposes, 296.10 including, but not limited to, the following: plant security, 296.11 fire prevention, first aid, and hospital stations; support 296.12 operations or administration; pollution control; and plant 296.13 cleaning, disposal of scrap and waste, plant communications, 296.14 space heating, cooling, lighting, or safety; 296.15 (5) farm machinery and aquaculture production equipment as 296.16 defined by section 297A.61, subdivisions 12 and 13; 296.17 (6) machinery or equipment purchased and installed by a 296.18 contractor as part of an improvement to real property;or296.19 (7) machinery and equipment used by restaurants in the 296.20 furnishing, preparing, or serving of prepared foods as defined 296.21 in section 297A.61, subdivision 31; 296.22 (8) machinery and equipment used to furnish the services 296.23 listed in section 297A.61, subdivision 3, paragraph (g), clause 296.24 (6), items (i) to (vi) and (viii); or 296.25 (9) any other item that is not essential to the integrated 296.26 process of manufacturing, fabricating, mining, or refining. 296.27 (d) For purposes of this subdivision: 296.28 (1) "Equipment" means independent devices or tools separate 296.29 from machinery but essential to an integrated production 296.30 process, including computers and computer software, used in 296.31 operating, controlling, or regulating machinery and equipment; 296.32 and any subunit or assembly comprising a component of any 296.33 machinery or accessory or attachment parts of machinery, such as 296.34 tools, dies, jigs, patterns, and molds. 296.35 (2) "Fabricating" means to make, build, create, produce, or 296.36 assemble components or property to work in a new or different 297.1 manner. 297.2 (3) "Integrated production process" means a process or 297.3 series of operations through which tangible personal property is 297.4 manufactured, fabricated, mined, or refined. For purposes of 297.5 this clause, (i) manufacturing begins with the removal of raw 297.6 materials from inventory and ends when the last process prior to 297.7 loading for shipment has been completed; (ii) fabricating begins 297.8 with the removal from storage or inventory of the property to be 297.9 assembled, processed, altered, or modified and ends with the 297.10 creation or production of the new or changed product; (iii) 297.11 mining begins with the removal of overburden from the site of 297.12 the ores, minerals, stone, peat deposit, or surface materials 297.13 and ends when the last process before stockpiling is completed; 297.14 and (iv) refining begins with the removal from inventory or 297.15 storage of a natural resource and ends with the conversion of 297.16 the item to its completed form. 297.17 (4) "Machinery" means mechanical, electronic, or electrical 297.18 devices, including computers and computer software, that are 297.19 purchased or constructed to be used for the activities set forth 297.20 in paragraph (a), beginning with the removal of raw materials 297.21 from inventory through completion of the product, including 297.22 packaging of the product. 297.23 (5) "Machinery and equipment used for pollution control" 297.24 means machinery and equipment used solely to eliminate, prevent, 297.25 or reduce pollution resulting from an activity described in 297.26 paragraph (a). 297.27 (6) "Manufacturing" means an operation or series of 297.28 operations where raw materials are changed in form, composition, 297.29 or condition by machinery and equipment and which results in the 297.30 production of a new article of tangible personal property. For 297.31 purposes of this subdivision, "manufacturing" includes the 297.32 generation of electricity or steam to be sold at retail. 297.33 (7) "Mining" means the extraction of minerals, ores, stone, 297.34 or peat. 297.35 (8) "On-line data retrieval system" means a system whose 297.36 cumulation of information is equally available and accessible to 298.1 all its customers. 298.2 (9) "Primarily" means machinery and equipment used 50 298.3 percent or more of the time in an activity described in 298.4 paragraph (a). 298.5 (10) "Refining" means the process of converting a natural 298.6 resource to an intermediate or finished product, including the 298.7 treatment of water to be sold at retail. 298.8 [EFFECTIVE DATE.] This section is effective the day 298.9 following final enactment. 298.10 Sec. 9. Minnesota Statutes 2003 Supplement, section 298.11 297A.68, subdivision 39, is amended to read: 298.12 Subd. 39. [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 298.13 tangible personal property or services is exempt from tax or a 298.14 tax rate increase for a period of six months from the effective 298.15 date of the law change that results in the imposition of the tax 298.16 or the tax rate increase under this chapter if: 298.17 (1) the act imposing the tax or increasing the tax rate 298.18 does not have transitional effective date language for existing 298.19 construction contracts and construction bids; and 298.20 (2) the requirements of paragraph (b) are met. 298.21 (b) A sale is tax exempt under paragraph (a) if it meets 298.22 the requirements of either clause (1) or (2): 298.23 (1) For a construction contract: 298.24 (i) the goods or services sold must be used for the 298.25 performance of a bona fide written lump sum or fixed price 298.26 construction contract; 298.27 (ii) the contract must be entered into before the date the 298.28 goods or services become subject to the sales tax or the tax 298.29 rate was increased; 298.30 (iii) the contract must not provide for allocation of 298.31 future taxes; and 298.32 (iv) for each qualifying contract the contractor must give 298.33 the seller documentation of the contract on which an exemption 298.34 is to be claimed. 298.35 (2) For a construction bid: 298.36 (i) the goods or services sold must be used pursuant to an 299.1 obligation of a bid or bids; 299.2 (ii) the bid or bids must be submitted and accepted before 299.3 the date the goods or services became subject to the sales 299.4 tax or the tax rate was increased; 299.5 (iii) the bid or bids must not be able to be withdrawn, 299.6 modified, or changed without forfeiting a bond; and 299.7 (iv) for each qualifying bid, the contractor must give the 299.8 seller documentation of the bid on which an exemption is to be 299.9 claimed. 299.10 [EFFECTIVE DATE.] This section is effective the day 299.11 following final enactment. 299.12 Sec. 10. [REPEALER.] 299.13 Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200, 299.14 subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5 299.15 and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1 299.16 and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200; 299.17 8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 299.18 5; and 8130.8800, subpart 4, are repealed. 299.19 [EFFECTIVE DATE.] This section is effective the day 299.20 following final enactment. 299.21 ARTICLE 12 299.22 SPECIAL TAXES 299.23 DEPARTMENT OF REVENUE TECHNICAL CHANGES 299.24 Section 1. Minnesota Statutes 2002, section 287.04, is 299.25 amended to read: 299.26 287.04 [EXEMPTIONS.] 299.27 The tax imposed by section 287.035 does not apply to: 299.28 (a) A decree of marriage dissolution or an instrument made 299.29 pursuant to it. 299.30 (b) A mortgage given to correct a misdescription of the 299.31 mortgaged property. 299.32 (c) A mortgage or other instrument that adds additional 299.33 security for the same debt for which mortgage registry tax has 299.34 been paid. 299.35 (d) A contract for the conveyance of any interest in real 299.36 property, including a contract for deed. 300.1 (e) A mortgage secured by real property subject to the 300.2 minerals production tax of sections 298.24 to 298.28. 300.3 (f) The principal amount of a mortgage loan made under a 300.4 low and moderate income or other affordable housing program, if 300.5 the mortgagee is a federal, state, or local government agency. 300.6 (g) Mortgages granted by fraternal benefit societies 300.7 subject to section 64B.24. 300.8 (h) A mortgage amendment or extension, as defined in 300.9 section 287.01. 300.10 (i) An agricultural mortgage if the proceeds of the loan 300.11 secured by the mortgage are used to acquire or improve real 300.12 property classified under section 273.13, subdivision 23, 300.13 paragraph (a), or (b), clause (1), (2), or (3). 300.14 (j) A mortgage on an armory building as set forth in 300.15 section 193.147. 300.16 [EFFECTIVE DATE.] This section is effective the day 300.17 following final enactment. 300.18 Sec. 2. Minnesota Statutes 2002, section 295.50, 300.19 subdivision 4, is amended to read: 300.20 Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care 300.21 provider" means: 300.22 (1) a person whose health care occupation is regulated or 300.23 required to be regulated by the state of Minnesota furnishing 300.24 any or all of the following goods or services directly to a 300.25 patient or consumer: medical, surgical, optical, visual, 300.26 dental, hearing, nursing services, drugs, laboratory, diagnostic 300.27 or therapeutic services; 300.28 (2) a person who provides goods and services not listed in 300.29 clause (1) that qualify for reimbursement under the medical 300.30 assistance program provided under chapter 256B; 300.31 (3) a staff model health plan company; 300.32 (4) an ambulance service required to be licensed; or 300.33 (5) a person who sells or repairs hearing aids and related 300.34 equipment or prescription eyewear. 300.35 (b) Health care provider does not include: 300.36 (1) hospitals; medical supplies distributors, except as 301.1 specified under paragraph (a), clause (5); nursing homes 301.2 licensed under chapter 144A or licensed in any other 301.3 jurisdiction; pharmacies; surgical centers; bus and taxicab 301.4 transportation, or any other providers of transportation 301.5 services other than ambulance services required to be licensed; 301.6 supervised living facilities for persons with mental retardation 301.7 or related conditions, licensed under Minnesota Rules, parts 301.8 4665.0100 to 4665.9900;residential care homes licensed under301.9chapter 144Bhousing with services establishments required to be 301.10 registered under chapter 144D; board and lodging establishments 301.11 providing only custodial services that are licensed under 301.12 chapter 157 and registered under section 157.17 to provide 301.13 supportive services or health supervision services; adult foster 301.14 homes as defined in Minnesota Rules, part 9555.5105; day 301.15 training and habilitation services for adults with mental 301.16 retardation and related conditions as defined in section 252.41, 301.17 subdivision 3; boarding care homes, as defined in Minnesota 301.18 Rules, part 4655.0100; and adult day care centers as defined in 301.19 Minnesota Rules, part 9555.9600; 301.20 (2) home health agencies as defined in Minnesota Rules, 301.21 part 9505.0175, subpart 15; a person providing personal care 301.22 services and supervision of personal care services as defined in 301.23 Minnesota Rules, part 9505.0335; a person providing private duty 301.24 nursing services as defined in Minnesota Rules, part 9505.0360; 301.25 and home care providers required to be licensed under chapter 301.26 144A; 301.27 (3) a person who employs health care providers solely for 301.28 the purpose of providing patient services to its employees; and 301.29 (4) an educational institution that employs health care 301.30 providers solely for the purpose of providing patient services 301.31 to its students if the institution does not receive fee for 301.32 service payments or payments for extended coverage. 301.33 [EFFECTIVE DATE.] This section is effective the day 301.34 following final enactment. 301.35 Sec. 3. Minnesota Statutes 2002, section 296A.22, is 301.36 amended by adding a subdivision to read: 302.1 Subd. 9. [ABATEMENT OF PENALTY.] (a) The commissioner may 302.2 by written order abate any penalty imposed under this section, 302.3 if in the commissioner's opinion there is reasonable cause to do 302.4 so. 302.5 (b) A request for abatement of penalty must be filed with 302.6 the commissioner within 60 days of the date the notice stating 302.7 that a penalty has been imposed was mailed to the taxpayer's 302.8 last known address. 302.9 (c) If the commissioner issues an order denying a request 302.10 for abatement of penalty, the taxpayer may file an 302.11 administrative appeal as provided in section 296A.25 or appeal 302.12 to the Tax Court as provided in section 271.06. If the 302.13 commissioner does not issue an order on the abatement request 302.14 within 60 days from the date the request is received, the 302.15 taxpayer may appeal to the Tax Court as provided in section 302.16 271.06. 302.17 [EFFECTIVE DATE.] This section is effective for penalties 302.18 imposed on or after the day following final enactment. 302.19 Sec. 4. Minnesota Statutes 2003 Supplement, section 302.20 297F.08, subdivision 12, is amended to read: 302.21 Subd. 12. [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 302.22 person may not transport or cause to be transported from this 302.23 state cigarettes for sale in another state without first 302.24 affixing to the cigarettes the stamp required by the state in 302.25 which the cigarettes are to be sold or paying any other excise 302.26 tax on the cigarettes imposed by the state in which the 302.27 cigarettes are to be sold. 302.28 (b) A person may not affix to cigarettes the stamp required 302.29 by another state or pay any other excise tax on the cigarettes 302.30 imposed by another state if the other state prohibits stamps 302.31 from being affixed to the cigarettes, prohibits the payment of 302.32 any other excise tax on the cigarettes, or prohibits the sale of 302.33 the cigarettes. 302.34 (c) Not later than 15 days after the end of each calendar 302.35 quarter, a person who transports or causes to be transported 302.36 from this state cigarettes for sale in another state shall 303.1 submit to the commissioner a report identifying the quantity and 303.2 style of each brand of the cigarettes transported or caused to 303.3 be transported in the preceding calendar quarter, and the name 303.4 and address of each recipient of the cigarettes. This reporting 303.5 requirement only relates to cigarettes manufactured by companies 303.6 that are not original or subsequent participating manufacturers 303.7 in the Master Settlement Agreement with other states. 303.8 (d) For purposes of this section, "person" has the meaning 303.9 given in section 297F.01, subdivision 12. Person does not 303.10 include any common or contract carrier, or public warehouse that 303.11 is not owned, in whole or in part, directly or indirectly by 303.12 such person, and does not include a manufacturer thathas303.13entered intois an original or subsequent participating 303.14 manufacturer in the Master Settlement Agreement with other 303.15 states. 303.16 [EFFECTIVE DATE.] This section is effective the day 303.17 following final enactment. 303.18 Sec. 5. Minnesota Statutes 2003 Supplement, section 303.19 297F.09, subdivision 1, is amended to read: 303.20 Subdivision 1. [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 303.21 or before the 18th day of each calendar month, a distributor 303.22 with a place of business in this state shall file a return with 303.23 the commissioner showing the quantity of cigarettes manufactured 303.24 or brought in from outside the state or purchased during the 303.25 preceding calendar month and the quantity of cigarettes sold or 303.26 otherwise disposed of in this state and outside this state 303.27 during that month. A licensed distributor outside this state 303.28 shall in like manner file a return showing the quantity of 303.29 cigarettes shipped or transported into this state during the 303.30 preceding calendar month. Returns must be made in the form and 303.31 manner prescribed by the commissioner and must contain any other 303.32 information required by the commissioner. The return must be 303.33 accompanied by a remittance for the full unpaid tax liability 303.34 shown by it.The return for the May liability and 85 percent of303.35the estimated June liability is due on the date payment of the303.36tax is due.For distributors subject to the accelerated tax 304.1 payment requirements in subdivision 10, the return for the May 304.2 liability is due two business days before June 30th of the year 304.3 and the return for the June liability is due on or before August 304.4 18th of the year. 304.5 [EFFECTIVE DATE.] This section is effective the day 304.6 following final enactment. 304.7 Sec. 6. Minnesota Statutes 2003 Supplement, section 304.8 297F.09, subdivision 2, is amended to read: 304.9 Subd. 2. [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 304.10 On or before the 18th day of each calendar month, a distributor 304.11 with a place of business in this state shall file a return with 304.12 the commissioner showing the quantity and wholesale sales price 304.13 of each tobacco product: 304.14 (1) brought, or caused to be brought, into this state for 304.15 sale; and 304.16 (2) made, manufactured, or fabricated in this state for 304.17 sale in this state, during the preceding calendar month. 304.18 Every licensed distributor outside this state shall in like 304.19 manner file a return showing the quantity and wholesale sales 304.20 price of each tobacco product shipped or transported to 304.21 retailers in this state to be sold by those retailers, during 304.22 the preceding calendar month. Returns must be made in the form 304.23 and manner prescribed by the commissioner and must contain any 304.24 other information required by the commissioner. The return must 304.25 be accompanied by a remittance for the full tax liability 304.26 shown.The return for the May liability and 85 percent of the304.27estimated June liability is due on the date payment of the tax304.28is due.For distributors subject to the accelerated tax payment 304.29 requirements in subdivision 10, the return for the May liability 304.30 is due two business days before June 30th of the year and the 304.31 return for the June liability is due on or before August 18th of 304.32 the year. 304.33 [EFFECTIVE DATE.] This section is effective the day 304.34 following final enactment. 304.35 Sec. 7. Minnesota Statutes 2002, section 297I.01, is 304.36 amended by adding a subdivision to read: 305.1 Subd. 13a. [REINSURANCE.] "Reinsurance" is insurance 305.2 whereby an insurance company, for a consideration, agrees to 305.3 indemnify another insurance company against all or part of the 305.4 loss which the latter may sustain under the policy or policies 305.5 which it has issued. 305.6 [EFFECTIVE DATE.] This section is effective the day 305.7 following final enactment. 305.8 Sec. 8. Minnesota Statutes 2002, section 297I.05, 305.9 subdivision 5, is amended to read: 305.10 Subd. 5. [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 305.11 HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 305.12 SERVICE NETWORKS.] (a) Health maintenance organizations, 305.13 community integrated service networks, and nonprofit health care 305.14 service plan corporations are exempt from the tax imposed under 305.15 this section for premiums received in calendar years 2001 to 305.16 2003. 305.17 (b) For calendar years after 2003, a tax is imposed on 305.18 health maintenance organizations, community integrated service 305.19 networks, and nonprofit health care service plan corporations. 305.20 The rate of tax is equal to one percent of gross premiums less 305.21 return premiums on all direct business received by the 305.22 organization, network, or corporation or its agents in 305.23 Minnesota, in cash or otherwise, in the calendar year. 305.24 (c) In approving the premium rates as required in sections 305.25 62L.08, subdivision 8, and 62A.65, subdivision 3, the 305.26 commissioners of health and commerce shall ensure that any 305.27 exemption from tax as described in paragraph (a) is reflected in 305.28 the premium rate. 305.29 (d) The commissioner shall deposit all revenues, including 305.30 penalties and interest, collected under this chapter from health 305.31 maintenance organizations, community integrated service 305.32 networks, and nonprofit health service plan corporations in the 305.33 health care access fund. Refunds of overpayments of tax imposed 305.34 by this subdivision must be paid from the health care access 305.35 fund. There is annually appropriated from the health care 305.36 access fund to the commissioner the amount necessary to make any 306.1 refunds of the tax imposed under this subdivision. 306.2 [EFFECTIVE DATE.] This section is effective January 1, 2004. 306.3 Sec. 9. [REPEALER.] 306.4 Minnesota Statutes 2002, section 297E.12, subdivision 10, 306.5 is repealed effective the day following final enactment. 306.6 ARTICLE 13 306.7 PROPERTY TAXES AND AIDS 306.8 DEPARTMENT OF REVENUE TECHNICAL PROVISIONS 306.9 Section 1. Minnesota Statutes 2003 Supplement, section 306.10 168A.05, subdivision 1a, is amended to read: 306.11 Subd. 1a. [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 306.12 PAYMENT.] In the case of a manufactured home as defined in 306.13 section 327.31, subdivision 6, the department shall not issue a 306.14 certificate of title unless the application under section 306.15 168A.04 is accompanied with a statement from the county auditor 306.16 or county treasurer where the manufactured home is presently 306.17 located, stating that all manufactured home personal property 306.18 taxes levied on the unit in the name of the current owner at the 306.19 time of transfer have been paid. For this purpose, manufactured 306.20 home personal property taxes are treated as levied on January 1 306.21 of the payable year. 306.22 [EFFECTIVE DATE.] This section is effective the day 306.23 following final enactment. 306.24 Sec. 2. Minnesota Statutes 2002, section 270B.12, 306.25 subdivision 9, is amended to read: 306.26 Subd. 9. [COUNTY ASSESSORS; HOMESTEAD APPLICATION, 306.27 DETERMINATION, AND INCOME TAX STATUS.] (a) If, as a result of an 306.28 audit, the commissioner determines that a person is a Minnesota 306.29 nonresident or part-year resident for income tax purposes, the 306.30 commissioner may disclose the person's name, address, and Social 306.31 Security number to the assessor of any political subdivision in 306.32 the state, when there is reason to believe that the person may 306.33 have claimed or received homestead property tax benefits for a 306.34 corresponding assessment year in regard to property apparently 306.35 located in the assessor's jurisdiction. 306.36 (b) To the extent permitted by section 273.124, subdivision 307.1 1, paragraph (a), the Department of Revenue may verify to a 307.2 county assessor whether an individual who is requesting or 307.3 receiving a homestead classification has filed a Minnesota 307.4 income tax return as a resident for the most recent taxable year 307.5 for which the information is available. 307.6 [EFFECTIVE DATE.] This section is effective the day 307.7 following final enactment. 307.8 Sec. 3. Minnesota Statutes 2002, section 272.01, 307.9 subdivision 2, is amended to read: 307.10 Subd. 2. (a) When any real or personal property which is 307.11 exempt from ad valorem taxes, and taxes in lieu thereof, is 307.12 leased, loaned, or otherwise made available and used by a 307.13 private individual, association, or corporation in connection 307.14 with a business conducted for profit, there shall be imposed a 307.15 tax, for the privilege of so using or possessing such real or 307.16 personal property, in the same amount and to the same extent as 307.17 though the lessee or user was the owner of such property. 307.18 (b) The tax imposed by this subdivision shall not apply to: 307.19 (1) property leased or used as a concession in or relative 307.20 to the use in whole or part of a public park, market, 307.21 fairgrounds, port authority, economic development authority 307.22 established under chapter 469, municipal auditorium, municipal 307.23 parking facility, municipal museum, or municipal stadium; 307.24 (2) property of an airport owned by a city, town, county, 307.25 or group thereof which is: 307.26 (i) leased to or used by any person or entity including a 307.27 fixed base operator; and 307.28 (ii) used as a hangar for the storage or repair of aircraft 307.29 or to provide aviation goods, services, or facilities to the 307.30 airport or general public; 307.31 the exception from taxation provided in this clause does not 307.32 apply to: 307.33 (i) property located at an airport owned or operated by the 307.34 Metropolitan Airports Commission or by a city of over 50,000 307.35 population according to the most recent federal census or such a 307.36 city's airport authority; 308.1 (ii) hangars leased by a private individual, association, 308.2 or corporation in connection with a business conducted for 308.3 profit other than an aviation-related business; or 308.4 (iii) facilities leased by a private individual, 308.5 association, or corporation in connection with a business for 308.6 profit, that consists of a major jet engine repair facility 308.7 financed, in whole or part, with the proceeds of state bonds and 308.8 located in a tax increment financing district; 308.9 (3) property constituting or used as a public pedestrian 308.10 ramp or concourse in connection with a public airport;or308.11 (4) property constituting or used as a passenger check-in 308.12 area or ticket sale counter, boarding area, or luggage claim 308.13 area in connection with a public airport but not the airports 308.14 owned or operated by the Metropolitan Airports Commission or 308.15 cities of over 50,000 population or an airport authority 308.16 therein. Real estate owned by a municipality in connection with 308.17 the operation of a public airport and leased or used for 308.18 agricultural purposes is not exempt; 308.19 (5) property leased, loaned, or otherwise made available to 308.20 a private individual, corporation, or association under a 308.21 cooperative farming agreement made pursuant to section 97A.135; 308.22 or 308.23 (6) property leased, loaned, or otherwise made available to 308.24 a private individual, corporation, or association under section 308.25 272.68, subdivision 4. 308.26 (c) Taxes imposed by this subdivision are payable as in the 308.27 case of personal property taxes and shall be assessed to the 308.28 lessees or users of real or personal property in the same manner 308.29 as taxes assessed to owners of real or personal property, except 308.30 that such taxes shall not become a lien against the property. 308.31 When due, the taxes shall constitute a debt due from the lessee 308.32 or user to the state, township, city, county, and school 308.33 district for which the taxes were assessed and shall be 308.34 collected in the same manner as personal property taxes. If 308.35 property subject to the tax imposed by this subdivision is 308.36 leased or used jointly by two or more persons, each lessee or 309.1 user shall be jointly and severally liable for payment of the 309.2 tax. 309.3 (d) The tax on real property of the state or any of its 309.4 political subdivisions that is leased by a private individual, 309.5 association, or corporation and becomes taxable under this 309.6 subdivision or other provision of law must be assessed and 309.7 collected as a personal property assessment. The taxes do not 309.8 become a lien against the real property. 309.9 [EFFECTIVE DATE.] This section is effective the day 309.10 following final enactment. 309.11 Sec. 4. Minnesota Statutes 2002, section 272.02, 309.12 subdivision 1a, is amended to read: 309.13 Subd. 1a. [LIMITATIONS ON EXEMPTIONS.] The exemptions 309.14 granted by subdivision 1 are subject to the limits contained in 309.15 the other subdivisions of this section, section 272.025,or309.16273.13, subdivision 25, paragraph (c), clause (1) or (2), or309.17paragraph (d), clause (2)and all other provisions of applicable 309.18 law. 309.19 [EFFECTIVE DATE.] This section is effective the day 309.20 following final enactment. 309.21 Sec. 5. Minnesota Statutes 2002, section 272.02, 309.22 subdivision 7, is amended to read: 309.23 Subd. 7. [INSTITUTIONS OF PUBLIC CHARITY.] Institutions of 309.24 purely public charity are exemptexcept parcels of property309.25containing structures and the structures described in section309.26273.13, subdivision 25, paragraph (e), other than those that309.27qualify for exemption under subdivision 26. In determining 309.28 whether rental housing property qualifies for exemption under 309.29 this subdivision, the following are not gifts or donations to 309.30 the owner of the rental housing: 309.31 (1) rent assistance provided by the government to or on 309.32 behalf of tenants, and 309.33 (2) financing assistance or tax credits provided by the 309.34 government to the owner on condition that specific units or a 309.35 specific quantity of units be set aside for persons or families 309.36 with certain income characteristics. 310.1 [EFFECTIVE DATE.] This section is effective for taxes 310.2 payable in 2004 and thereafter. 310.3 Sec. 6. Minnesota Statutes 2002, section 272.02, is 310.4 amended by adding a subdivision to read: 310.5 Subd. 68. [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR 310.6 NET PROCEEDS TAX.] (a) Except for mineral interests taxed under 310.7 section 273.165, and except for lands taxed under section 310.8 298.26, real and personal property described in section 298.25 310.9 is exempt to the extent the tax on taconite and iron sulphides 310.10 under section 298.24 is described in section 298.25 as being in 310.11 lieu of other taxes on such property. This exemption applies 310.12 for taxes payable in each year that the tax under section 298.24 310.13 is payable with respect to such property. 310.14 (b) Except for mineral interests taxed under section 310.15 273.165, deposits of mineral, metal, or energy resources the 310.16 mining of which is subject to taxation under section 298.015 are 310.17 exempt. This exemption applies for taxes payable in each year 310.18 that the tax under section 298.015 is payable with respect to 310.19 such property. 310.20 [EFFECTIVE DATE.] This section is effective the day 310.21 following final enactment. 310.22 Sec. 7. Minnesota Statutes 2002, section 272.02, is 310.23 amended by adding a subdivision to read: 310.24 Subd. 69. [RELIGIOUS CORPORATIONS.] Personal and real 310.25 property that a religious corporation, formed under section 310.26 317A.909, necessarily uses for a religious purpose is exempt to 310.27 the extent provided in section 317A.909, subdivision 3. 310.28 [EFFECTIVE DATE.] This section is effective the day 310.29 following final enactment. 310.30 Sec. 8. Minnesota Statutes 2002, section 272.02, is 310.31 amended by adding a subdivision to read: 310.32 Subd. 70. [CHILDREN'S HOMES.] Personal and real property 310.33 owned by a corporation formed under section 317A.907 is exempt 310.34 to the extent provided in section 317A.907, subdivision 7. 310.35 [EFFECTIVE DATE.] This section is effective the day 310.36 following final enactment. 311.1 Sec. 9. Minnesota Statutes 2002, section 272.02, is 311.2 amended by adding a subdivision to read: 311.3 Subd. 71. [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL 311.4 HOUSING AUTHORITY PROPERTY.] Property owned by a housing and 311.5 redevelopment authority described in chapter 469, or by a 311.6 designated housing authority described in section 469.040, 311.7 subdivision 5, is exempt to the extent provided in chapter 469. 311.8 [EFFECTIVE DATE.] This section is effective the day 311.9 following final enactment. 311.10 Sec. 10. Minnesota Statutes 2002, section 273.124, 311.11 subdivision 8, is amended to read: 311.12 Subd. 8. [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 311.13 CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 311.14 PARTNERSHIP.] (a) Each family farm corporation, each; each joint 311.15 family farm venture,; and each limited liability company, and311.16eachor partnershipoperatingwhich operates a family farm; is 311.17 entitled to class 1b under section 273.13, subdivision 22, 311.18 paragraph (b), or class 2a assessment for one homestead occupied 311.19 by a shareholder, member, or partner thereof who is residing on 311.20 the land, and actively engaged in farming of the land owned by 311.21 the family farm corporation, joint family farm venture, limited 311.22 liability company, or partnershipoperating a family farm. 311.23 Homestead treatment applies even if legal title to the property 311.24 is in the name of the family farm corporation, joint family farm 311.25 venture, limited liability company, or partnershipoperating the311.26family farm, and not in the name of the person residing on it. 311.27 "Family farm corporation," "family farm," and "partnership 311.28 operating a family farm" have the meanings given in section 311.29 500.24, except that the number of allowable shareholders, 311.30 members, or partners under this subdivision shall not exceed 311.31 12. "Limited liability company" has the meaning contained in 311.32 sections 322B.03, subdivision 28, and 500.24, subdivision 2, 311.33 paragraphs (l) and (m). "Joint family farm venture" means a 311.34 cooperative agreement among two or more farm enterprises 311.35 authorized to operate a family farm under section 500.24. 311.36 (b) In addition to property specified in paragraph (a), any 312.1 other residences owned by family farm corporations, joint family 312.2 farm ventures, limited liability companies, or partnerships 312.3operating a family farmdescribed in paragraph (a) which are 312.4 located on agricultural land and occupied as homesteads by its 312.5 shareholders, members, or partners who are actively engaged in 312.6 farming on behalf of that corporation, joint farm venture, 312.7 limited liability company, or partnership must also be assessed 312.8 as class 2a property or as class 1b property under section 312.9 273.13. 312.10 (c) Agricultural property that is owned by a member, 312.11 partner, or shareholder of a family farm corporation or joint 312.12 family farm venture, limited liability company operating a 312.13 family farm, or by a partnership operating a family farm and 312.14 leased to the family farm corporation, limited liability 312.15 company,orpartnershipoperating a family farm, or joint farm 312.16 venture, as defined in paragraph (a), is eligible for 312.17 classification as class 1b or class 2a under section 273.13, if 312.18 the owner is actually residing on the property, and is actually 312.19 engaged in farming the land on behalf of that corporation, joint 312.20 farm venture, limited liability company, or partnership. This 312.21 paragraph applies without regard to any legal possession rights 312.22 of the family farm corporation, joint family farm venture, 312.23 limited liability company, or partnershipoperating a family312.24farmunder the lease. 312.25 [EFFECTIVE DATE.] This section is effective the day 312.26 following final enactment. 312.27 Sec. 11. Minnesota Statutes 2002, section 273.19, 312.28 subdivision 1a, is amended to read: 312.29 Subd. 1a. For purposes of this section, a lease includes 312.30 any agreement, except a cooperative farming agreement pursuant 312.31 to section 97A.135, subdivision 3, or a lease executed pursuant 312.32 to section 272.68, subdivision 4, permitting a nonexempt person 312.33 or entity to use the property, regardless of whether the 312.34 agreement is characterized as a lease. A lease has a "term of 312.35 at least one year" if the term is for a period of less than one 312.36 year and the lease permits the parties to renew the lease 313.1 without requiring that similar terms for leasing the property 313.2 will be offered to other applicants or bidders through a 313.3 competitive bidding or other form of offer to potential lessees 313.4 or users. 313.5 [EFFECTIVE DATE.] This section is effective the day 313.6 following final enactment. 313.7 Sec. 12. Minnesota Statutes 2003 Supplement, section 313.8 274.014, subdivision 3, is amended to read: 313.9 Subd. 3. [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] Any 313.10 city or town that does not provide proof to the county assessor 313.11 by December 1, 2006, and each year thereafter, that it is in 313.12 compliance with the requirements of subdivision 2, and that it 313.13 had a quorum at each meeting of the board of appeal and 313.14 equalization in thepriorcurrent year, is deemed to have 313.15 transferred its board of appeal and equalization powers to the 313.16 county under section 274.01, subdivision 3, for the following 313.17 year's assessment. 313.18 The county shall notify the taxpayers when the board of 313.19 appeal and equalization for a city or town has been transferred 313.20 to the county under this subdivision and, prior to the meeting 313.21 time of the county board of equalization, the county shall make 313.22 available to those taxpayers a procedure for a review of the 313.23 assessments, including, but not limited to, open book meetings. 313.24 This alternate review process shall take place in April and May. 313.25 A local board whose powers are transferred to the county 313.26 under this subdivision may be reinstated by resolution of the 313.27 governing body of the city or town and upon proof of compliance 313.28 with the requirements of subdivision 2. The resolution and 313.29 proofs must be provided to the county assessor by December 1 in 313.30 order to be effective for the following year's assessment. 313.31 [EFFECTIVE DATE.] This section is effective the day 313.32 following final enactment. 313.33 Sec. 13. Minnesota Statutes 2002, section 274.14, is 313.34 amended to read: 313.35 274.14 [LENGTH OF SESSION; RECORD.] 313.36The county board of equalization or the special board of314.1equalization appointed by it shall meet during the last ten314.2meeting days in June. For this purpose, "meeting days" are314.3defined as any day of the week excluding Saturday and Sunday.314.4 The board may meet on any ten consecutive meeting days in June, 314.5 after the second Friday in June, if. The actual meeting dates 314.6aremust be contained on the valuation notices mailed to each 314.7 property owner in the countyunderas provided in section 314.8 273.121. For this purpose, "meeting days" is defined as any day 314.9 of the week excluding Saturday and Sunday. No action taken by 314.10 the county board of review after June 30 is valid, except for 314.11 corrections permitted in sections 273.01 and 274.01. The county 314.12 auditor shall keep an accurate record of the proceedings and 314.13 orders of the board. The record must be published like other 314.14 proceedings of county commissioners. A copy of the published 314.15 record must be sent to the commissioner of revenue, with the 314.16 abstract of assessment required by section 274.16. 314.17 [EFFECTIVE DATE.] This section is effective the day 314.18 following final enactment. 314.19 Sec. 14. Minnesota Statutes 2002, section 275.065, 314.20 subdivision 1a, is amended to read: 314.21 Subd. 1a. [OVERLAPPING JURISDICTIONS.] In the case of a 314.22 taxing authority lying in two or more counties, the home county 314.23 auditor shall certify the proposed levy and the proposed local 314.24 tax rate to the other county auditor bySeptember 20October 5. 314.25 The home county auditor must estimate the levy or rate in 314.26 preparing the notices required in subdivision 3, if the other 314.27 county has not certified the appropriate information. If 314.28 requested by the home county auditor, the other county auditor 314.29 must furnish an estimate to the home county auditor. 314.30 [EFFECTIVE DATE.] This section is effective the day 314.31 following final enactment. 314.32 Sec. 15. Minnesota Statutes 2002, section 275.07, 314.33 subdivision 1, is amended to read: 314.34 Subdivision 1. [CERTIFICATION OF LEVY.] (a) Except as 314.35 provided under paragraph (b), the taxes voted by cities, 314.36 counties, school districts, and special districts shall be 315.1 certified by the proper authorities to the county auditor on or 315.2 before five working days after December 20 in each year. A town 315.3 must certify the levy adopted by the town board to the county 315.4 auditor by September 15 each year. If the town board modifies 315.5 the levy at a special town meeting after September 15, the town 315.6 board must recertify its levy to the county auditor on or before 315.7 five working days after December 20.The taxes certified shall315.8not be reduced by the county auditor by the aid received under315.9section 273.1398, subdivision 2, but shall be reduced by the315.10county auditor by the aid received under section 273.1398,315.11subdivision 3.If a city, town, county, school district, or 315.12 special district fails to certify its levy by that date, its 315.13 levy shall be the amount levied by it for the preceding year. 315.14 (b)(i) The taxes voted by counties under sections 103B.241, 315.15 103B.245, and 103B.251 shall be separately certified by the 315.16 county to the county auditor on or before five working days 315.17 after December 20 in each year. The taxes certified shall not 315.18 be reduced by the county auditor by the aid received under 315.19 section 273.1398, subdivisions 2 and 3. If a county fails to 315.20 certify its levy by that date, its levy shall be the amount 315.21 levied by it for the preceding year. 315.22 (ii) For purposes of the proposed property tax notice under 315.23 section 275.065 and the property tax statement under section 315.24 276.04, for the first year in which the county implements the 315.25 provisions of this paragraph, the county auditor shall reduce 315.26 the county's levy for the preceding year to reflect any amount 315.27 levied for water management purposes under clause (i) included 315.28 in the county's levy. 315.29 [EFFECTIVE DATE.] This section is effective the day 315.30 following final enactment. 315.31 Sec. 16. Minnesota Statutes 2002, section 275.07, 315.32 subdivision 4, is amended to read: 315.33 Subd. 4. [REPORT TO COMMISSIONER.] (a) On or before 315.34 October 8 of each year, the county auditor shall report to the 315.35 commissioner of revenue the proposed levy certified by local 315.36 units of government under section 275.065, subdivision 1. If 316.1 any taxing authorities have notified the county auditor that 316.2 they are in the process of negotiating an agreement for sharing, 316.3 merging, or consolidating services but that when the proposed 316.4 levy was certified under section 275.065, subdivision 1c, the 316.5 agreement was not yet finalized, the county auditor shall supply 316.6 that information to the commissioner when filing the report 316.7 under this section and shall recertify the affected levies as 316.8 soon as practical after October 10. 316.9 (b) On or before January 15 of each year, the county 316.10 auditor shall report to the commissioner of revenue the final 316.11 levy certified by local units of government under subdivision 1. 316.12 (c) The levies must be reported in the manner prescribed by 316.13 the commissioner.The reports must show a total levy and the316.14amount of each special levy.316.15 [EFFECTIVE DATE.] This section is effective the day 316.16 following final enactment. 316.17 Sec. 17. Minnesota Statutes 2003 Supplement, section 316.18 276.112, is amended to read: 316.19 276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.] 316.20 On or before January 25 each year, for the period ending 316.21 December 31 of the prior year, and on or before two business 316.22 days before June2930 each year, for the period ending on the 316.23 most recent settlement day determined in section 276.09, and on 316.24 or before December 2 each year, for the period ending November 316.25 20, the county treasurer must make full settlement with the 316.26 county auditor according to sections 276.09, 276.10, and 276.111 316.27 for all receipts of state property taxes levied under section 316.28 275.025, and must transmit those receipts to the commissioner of 316.29 revenue by electronic means. 316.30 [EFFECTIVE DATE.] This section is effective the day 316.31 following final enactment. 316.32 Sec. 18. Minnesota Statutes 2002, section 282.016, is 316.33 amended to read: 316.34 282.016 [PROHIBITED PURCHASERS.] 316.35No(a) A county auditor, county treasurer, court 316.36 administrator of the district court,orcounty assessoror, 317.1 supervisor of assessments,ordeputy or clerk or an employee of 317.2 such officer,and noa commissioner for tax-forfeited lands or 317.3 an assistant to such commissionermay, must not become a 317.4 purchaser, either personally or as an agent or attorney for 317.5 another person, of the properties offered for sale under the 317.6 provisions of this chapter, either personally, or as agent or317.7attorney for any other person, except thatin the county for 317.8 which the person performs duties. 317.9 (b) Notwithstanding paragraph (a), such officer, deputy, 317.10court administratorclerk, or employee or commissioner for 317.11 tax-forfeited lands or assistant to such commissioner may (1) 317.12 purchase lands owned by that official at the time the state 317.13 became the absolute owner thereof or (2) bid upon and purchase 317.14 forfeited property offered for sale under the alternate sale 317.15 procedure described in section 282.01, subdivision 7a. 317.16 [EFFECTIVE DATE.] This section is effective the day 317.17 following final enactment. 317.18 Sec. 19. Minnesota Statutes 2002, section 282.21, is 317.19 amended to read: 317.20 282.21 [FORM OF CONVEYANCE.] 317.21 When any sale has been made under sections 282.14 to 317.22 282.22, upon payment in full of the purchase price, appropriate 317.23 conveyance in fee in such form as may be prescribed by the 317.24 attorney general shall be issued by the commissioner of finance 317.25 to the purchaser or the purchaser's assigns and this conveyance 317.26 shall have the force and effect of a patent from the state. 317.27 [EFFECTIVE DATE.] This section is effective the day 317.28 following final enactment. 317.29 Sec. 20. Minnesota Statutes 2002, section 282.224, is 317.30 amended to read: 317.31 282.224 [FORM OF CONVEYANCE.] 317.32 When any sale has been made under sections 282.221 to 317.33 282.226, upon payment in full of the purchase price, appropriate 317.34 conveyance in fee, in such form as may be prescribed by the 317.35 attorney general, shall be issued by the commissioner of natural 317.36 resources to the purchaser or the purchaser's assignee, and the 318.1 conveyance shall have the force and effect of a patent from the 318.2 state. 318.3 [EFFECTIVE DATE.] This section is effective the day 318.4 following final enactment. 318.5 Sec. 21. Minnesota Statutes 2002, section 282.301, is 318.6 amended to read: 318.7 282.301 [RECEIPTS FOR PAYMENTS.] 318.8 When any sale has been made under sections 282.012 and 318.9 282.241 to 282.324, the purchaser shall receive from the county 318.10 auditor at the time of repurchase a receipt, in such form as may 318.11 be prescribed by the attorney general. When the purchase price 318.12 of a parcel of land shall be paid in full, the following facts 318.13 shall be certified by the county auditor to the commissioner of 318.14 revenue of the state of Minnesota: the description of land, the 318.15 date of sale, the name of the purchaser or the purchaser's 318.16 assignee, and the date when the final installment of the 318.17 purchase price was paid. Upon payment in full of the purchase 318.18 price, the purchaser or the assignee shall receive a quitclaim 318.19 deed from the state, to be executed by the commissioner of 318.20 revenue. The deed must be sent to the county auditor who shall 318.21 have it recorded before it is forwarded to the purchaser. 318.22 Failure to make any payment herein required shall constitute 318.23 default and upon such default and cancellation in accord with 318.24 section 282.40, the right, title and interest of the purchaser 318.25 or the purchaser's heirs, representatives, or assigns in such 318.26 parcel shall terminate. 318.27 [EFFECTIVE DATE.] This section is effective the day 318.28 following final enactment. 318.29 Sec. 22. Minnesota Statutes 2003 Supplement, section 318.30 477A.03, subdivision 2b, is amended to read: 318.31 Subd. 2b. [COUNTIES.] (a) For aids payable in calendar 318.32 year 2005 and thereafter, the total aids paid to counties under 318.33 section 477A.0124, subdivision 3, are limited to $100,500,000. 318.34 Each calendar year, $500,000 shall be retained by the 318.35 commissioner of revenue to make reimbursements to the 318.36 commissioner of finance for payments made under section 611.27. 319.1 For calendar year 2004,the amount shall be$500,000 is 319.2 appropriated from the general fund for this purpose in addition 319.3 to the payments authorized under section 477A.0124, subdivision 319.4 1. For calendar year 2005 and subsequent years, the amount 319.5 shall be deducted from the appropriationunder this paragraph319.6 for section 477A.0124, subdivision 1. The reimbursements shall 319.7 be to defray the additional costs associated with court-ordered 319.8 counsel under section 611.27. Any retained amounts not used for 319.9 reimbursement in a year shall be included in the next 319.10 distribution of county need aid that is certified to the county 319.11 auditors for the purpose of property tax reduction for the next 319.12 taxes payable year. 319.13 (b) For aids payable in 2005 and thereafter, the total aids 319.14 under section 477A.0124, subdivision 4, are limited to 319.15 $105,000,000. The commissioner of finance shall bill the 319.16 commissioner of revenue for the cost of preparation of local 319.17 impact notes as required by section 3.987, not to exceed 319.18 $207,000 in fiscal year 2004 and thereafter. The commissioner 319.19 of education shall bill the commissioner of revenue for the cost 319.20 of preparation of local impact notes for school districts as 319.21 required by section 3.987, not to exceed $7,000 in fiscal year 319.22 2004 and thereafter. For aids payable in 2004, $214,000 is 319.23 appropriated from the general fund for this purpose. For aids 319.24 payable in 2005 and thereafter, the commissioner of revenue 319.25 shall deduct the amounts billed under this paragraph from the 319.26 appropriation under thisparagraphsection for section 319.27 477A.0124, subdivision 4. The amounts deducted are appropriated 319.28 to the commissioner of finance and the commissioner of education 319.29 for the preparation of local impact notes. 319.30 [EFFECTIVE DATE.] This section is effective for aids 319.31 payable in 2004 and thereafter. 319.32 Sec. 23. Laws 2003, First Special Session chapter 21, 319.33 article 6, section 9, is amended to read: 319.34 Sec. 9. [DEFINITIONS.] 319.35 (a) For purposes of sections 9 to 15, the following terms 319.36 have the meanings given them in this section. 320.1 (b) The 2003 and 2004 "levy plus aid revenue base" for a 320.2 county is the sum of that county's certified property tax levy 320.3 for taxes payable in 2003, plus the sum of the amounts the 320.4 county was certified to receive in the designated calendar year 320.5 as: 320.6 (1) homestead and agricultural credit aid under Minnesota 320.7 Statutes, section 273.1398, subdivision 2, plus any additional 320.8 aid under section 16, minus the amount calculated under section 320.9 273.1398, subdivision 4a, paragraph (b), for counties in 320.10 judicial districts one, three, six, and ten, and 25 percent of 320.11 the amount calculated under section 273.1398, subdivision 4a, 320.12 paragraph (b), for counties in judicial districts two and four; 320.13 (2) the amount of county manufactured home homestead and 320.14 agricultural credit aid computed for the county for payment in 320.15 2003 under section 273.166; 320.16 (3) criminal justice aid under Minnesota Statutes, section 320.17 477A.0121; 320.18 (4) family preservation aid under Minnesota Statutes, 320.19 section 477A.0122; 320.20 (5) taconite aids under Minnesota Statutes, sections 298.28 320.21 and 298.282, including any aid which was required to be placed 320.22 in a special fund for expenditure in the next succeeding year; 320.23 and 320.24 (6) county program aid under section 477A.0124, exclusive 320.25 of the attached machinery aid component. 320.26 [EFFECTIVE DATE.] This section is effective for aids 320.27 payable in 2004. 320.28 Sec. 24. [REPEALER.] 320.29 Minnesota Statutes 2002, sections 273.19, subdivision 5; 320.30 274.05; 275.15; and 283.07, are repealed effective the day 320.31 following final enactment. 320.32 ARTICLE 14 320.33 MISCELLANEOUS 320.34 DEPARTMENT OF REVENUE TECHNICAL CHANGES 320.35 Section 1. Minnesota Statutes 2002, section 270.65, is 320.36 amended to read: 321.1 270.65 [DATE OF ASSESSMENT; DEFINITION.] 321.2 For purposes of taxes administered by the commissioner, the 321.3 term "date of assessment" means the date a liability reported on 321.4 a return was entered into the records of the commissioner or the 321.5 date a return should have been filed, whichever is later; or, in 321.6 the case of taxes determined by the commissioner, "date of 321.7 assessment" means the date of the order assessing taxes or date 321.8 of the return made by the commissioner; or, in the case of an 321.9 amended return filed by the taxpayer, the assessment date is the 321.10 date additional liability reported on the return, if any, was 321.11 entered into the records of the commissioner; or, in the case of 321.12 a consent agreement signed by the taxpayer under section 270.67, 321.13 subdivision 3, the assessment date is the notice date shown on 321.14 the agreement; or, in the case of a check from a taxpayer that 321.15 is dishonored and results in an erroneous refund being given to 321.16 the taxpayer, remittance of the check is deemed to be an 321.17 assessment and the "date of assessment" is the date the check 321.18 was received by the commissioner. 321.19 [EFFECTIVE DATE.] This section is effective the day 321.20 following final enactment. 321.21 Sec. 2. Minnesota Statutes 2003 Supplement, section 321.22 289A.19, subdivision 4, is amended to read: 321.23 Subd. 4. [ESTATE TAX RETURNS.]When in the commissioner's321.24judgment good cause exists, the commissioner may extend the time321.25for filing an estate tax return for not more than six months.321.26 When an extension to file the federal estate tax return has been 321.27 granted under section 6081 of the Internal Revenue Code, the 321.28 time for filing the estate tax return is extended for that 321.29 period. If the estate requests an extension to file an estate 321.30 tax return within the time provided in section 289A.18, 321.31 subdivision 3, the commissioner shall extend the time for filing 321.32 the estate tax return for six months. 321.33 [EFFECTIVE DATE.] This section is effective for estates of 321.34 decedents dying after December 31, 2003. 321.35 Sec. 3. Minnesota Statutes 2002, section 289A.37, 321.36 subdivision 5, is amended to read: 322.1 Subd. 5. [SUFFICIENCY OF NOTICE.] An order of assessment, 322.2 sent postage prepaid by United States mail to the taxpayer at 322.3 the taxpayer's last known address, or sent by electronic mail to 322.4 the taxpayer's last known electronic mailing address as provided 322.5 for in section 325L.08, is sufficient even if the taxpayer is 322.6 deceased or is under a legal disability, or, in the case of a 322.7 corporation, has terminated its existence, unless the department 322.8 has been provided with a new address by a party authorized to 322.9 receive notices of assessment. 322.10 [EFFECTIVE DATE.] This section is effective the day 322.11 following final enactment. 322.12 Sec. 4. Minnesota Statutes 2002, section 289A.60, 322.13 subdivision 6, is amended to read: 322.14 Subd. 6. [PENALTY FOR FAILURE TO FILE, FALSE OR FRAUDULENT 322.15 RETURN, EVASION.] If a person, with intent to evade or defeat a 322.16 tax or payment of tax, fails to file a return, files a false or 322.17 fraudulent return, or attempts in any other manner to evade or 322.18 defeat a tax or payment of tax, there is imposed on the person a 322.19 penalty equal to 50 percent of the tax, less amounts paid by the 322.20 person on the basis of the false or fraudulent return, if any, 322.21 due for the period to which the return related. 322.22 [EFFECTIVE DATE.] This section is effective the day 322.23 following final enactment. 322.24 Sec. 5. Minnesota Statutes 2003 Supplement, section 322.25 290.01, subdivision 19a, is amended to read: 322.26 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 322.27 individuals, estates, and trusts, there shall be added to 322.28 federal taxable income: 322.29 (1)(i) interest income on obligations of any state other 322.30 than Minnesota or a political or governmental subdivision, 322.31 municipality, or governmental agency or instrumentality of any 322.32 state other than Minnesota exempt from federal income taxes 322.33 under the Internal Revenue Code or any other federal statute; 322.34 and 322.35 (ii) exempt-interest dividends as defined in section 322.36 852(b)(5) of the Internal Revenue Code, except the portion of 323.1 the exempt-interest dividends derived from interest income on 323.2 obligations of the state of Minnesota or its political or 323.3 governmental subdivisions, municipalities, governmental agencies 323.4 or instrumentalities, but only if the portion of the 323.5 exempt-interest dividends from such Minnesota sources paid to 323.6 all shareholders represents 95 percent or more of the 323.7 exempt-interest dividends that are paid by the regulated 323.8 investment company as defined in section 851(a) of the Internal 323.9 Revenue Code, or the fund of the regulated investment company as 323.10 defined in section 851(g) of the Internal Revenue Code, making 323.11 the payment; and 323.12 (iii) for the purposes of items (i) and (ii), interest on 323.13 obligations of an Indian tribal government described in section 323.14 7871(c) of the Internal Revenue Code shall be treated as 323.15 interest income on obligations of the state in which the tribe 323.16 is located; 323.17 (2) the amount of income taxes paid or accrued within the 323.18 taxable year under this chapter andincomethe amount of taxes 323.19 based on net income paid to any other state or to any province 323.20 or territory of Canada, to the extent allowed as a deduction 323.21 under section 63(d) of the Internal Revenue Code, but the 323.22 addition may not be more than the amount by which the itemized 323.23 deductions as allowed under section 63(d) of the Internal 323.24 Revenue Code exceeds the amount of the standard deduction as 323.25 defined in section 63(c) of the Internal Revenue Code. For the 323.26 purpose of this paragraph, the disallowance of itemized 323.27 deductions under section 68 of the Internal Revenue Code of 323.28 1986, income tax is the last itemized deduction disallowed; 323.29 (3) the capital gain amount of a lump sum distribution to 323.30 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 323.31 Reform Act of 1986, Public Law 99-514, applies; 323.32 (4) the amount of income taxes paid or accrued within the 323.33 taxable year under this chapter andincometaxes based on net 323.34 income paid to any other state or any province or territory of 323.35 Canada, to the extent allowed as a deduction in determining 323.36 federal adjusted gross income. For the purpose of this 324.1 paragraph, income taxes do not include the taxes imposed by 324.2 sections 290.0922, subdivision 1, paragraph (b), 290.9727, 324.3 290.9728, and 290.9729; 324.4 (5) the amount of expense, interest, or taxes disallowed 324.5 pursuant to section 290.10; 324.6 (6) the amount of a partner's pro rata share of net income 324.7 which does not flow through to the partner because the 324.8 partnership elected to pay the tax on the income under section 324.9 6242(a)(2) of the Internal Revenue Code; and 324.10 (7) 80 percent of the depreciation deduction allowed under 324.11 section 168(k) of the Internal Revenue Code. For purposes of 324.12 this clause, if the taxpayer has an activity that in the taxable 324.13 year generates a deduction for depreciation under section 168(k) 324.14 and the activity generates a loss for the taxable year that the 324.15 taxpayer is not allowed to claim for the taxable year, "the 324.16 depreciation allowed under section 168(k)" for the taxable year 324.17 is limited to excess of the depreciation claimed by the activity 324.18 under section 168(k) over the amount of the loss from the 324.19 activity that is not allowed in the taxable year. In succeeding 324.20 taxable years when the losses not allowed in the taxable year 324.21 are allowed, the depreciation under section 168(k) is allowed. 324.22 [EFFECTIVE DATE.] This section is effective for tax years 324.23 beginning after December 31, 2003. 324.24 Sec. 6. Minnesota Statutes 2002, section 290.06, 324.25 subdivision 22, is amended to read: 324.26 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 324.27 taxpayer who is liable for taxes based onor measured bynet 324.28 income to another state, as provided in paragraphs (b) through 324.29 (f), upon income allocated or apportioned to Minnesota, is 324.30 entitled to a credit for the tax paid to another state if the 324.31 tax is actually paid in the taxable year or a subsequent taxable 324.32 year. A taxpayer who is a resident of this state pursuant to 324.33 section 290.01, subdivision 7,clause (2)paragraph (b), and who 324.34 is subject to income tax as a resident in the state of the 324.35 individual's domicile is not allowed this credit unless the 324.36 state of domicile does not allow a similar credit. 325.1 (b) For an individual, estate, or trust, the credit is 325.2 determined by multiplying the tax payable under this chapter by 325.3 the ratio derived by dividing the income subject to tax in the 325.4 other state that is also subject to tax in Minnesota while a 325.5 resident of Minnesota by the taxpayer's federal adjusted gross 325.6 income, as defined in section 62 of the Internal Revenue Code, 325.7 modified by the addition required by section 290.01, subdivision 325.8 19a, clause (1), and the subtraction allowed by section 290.01, 325.9 subdivision 19b, clause (1), to the extent the income is 325.10 allocated or assigned to Minnesota under sections 290.081 and 325.11 290.17. 325.12 (c) If the taxpayer is an athletic team that apportions all 325.13 of its income under section 290.17, subdivision 5, the credit is 325.14 determined by multiplying the tax payable under this chapter by 325.15 the ratio derived from dividing the total net income subject to 325.16 tax in the other state by the taxpayer's Minnesota taxable 325.17 income. 325.18 (d) The credit determined under paragraph (b) or (c) shall 325.19 not exceed the amount of tax so paid to the other state on the 325.20 gross income earned within the other state subject to tax under 325.21 this chapter, nor shall the allowance of the credit reduce the 325.22 taxes paid under this chapter to an amount less than what would 325.23 be assessed if such income amount was excluded from taxable net 325.24 income. 325.25 (e) In the case of the tax assessed on a lump sum 325.26 distribution under section 290.032, the credit allowed under 325.27 paragraph (a) is the tax assessed by the other state on the lump 325.28 sum distribution that is also subject to tax under section 325.29 290.032, and shall not exceed the tax assessed under section 325.30 290.032. To the extent the total lump sum distribution defined 325.31 in section 290.032, subdivision 1, includes lump sum 325.32 distributions received in prior years or is all or in part an 325.33 annuity contract, the reduction to the tax on the lump sum 325.34 distribution allowed under section 290.032, subdivision 2, 325.35 includes tax paid to another state that is properly apportioned 325.36 to that distribution. 326.1 (f) If a Minnesota resident reported an item of income to 326.2 Minnesota and is assessed tax in such other state on that same 326.3 income after the Minnesota statute of limitations has expired, 326.4 the taxpayer shall receive a credit for that year under 326.5 paragraph (a), notwithstanding any statute of limitations to the 326.6 contrary. The claim for the credit must be submitted within one 326.7 year from the date the taxes were paid to the other state. The 326.8 taxpayer must submit sufficient proof to show entitlement to a 326.9 credit. 326.10 (g) For the purposes of this subdivision, a resident 326.11 shareholder of a corporation treated as an "S" corporation under 326.12 section 290.9725, must be considered to have paid a tax imposed 326.13 on the shareholder in an amount equal to the shareholder's pro 326.14 rata share of any net income tax paid by the S corporation to 326.15 another state. For the purposes of the preceding sentence, the 326.16 term "net income tax" means any tax imposed on or measured by a 326.17 corporation's net income. 326.18 (h) For the purposes of this subdivision, a resident 326.19 partner of an entity taxed as a partnership under the Internal 326.20 Revenue Code must be considered to have paid a tax imposed on 326.21 the partner in an amount equal to the partner's pro rata share 326.22 of any net income tax paid by the partnership to another state. 326.23 For purposes of the preceding sentence, the term "net income" 326.24 tax means any tax imposed on or measured by a partnership's net 326.25 income. 326.26 (i) For the purposes of this subdivision, "another state": 326.27 (1) includes: 326.28 (i) the District of Columbia; and 326.29 (ii) a province or territory of Canada; but 326.30 (2) excludes Puerto Rico and the several territories 326.31 organized by Congress. 326.32 (j) The limitations on the credit in paragraphs (b), (c), 326.33 and (d), are imposed on a state by state basis. 326.34 (k) For a tax imposed by a province or territory of Canada, 326.35 the tax for purposes of this subdivision is the excess of the 326.36 tax over the amount of the foreign tax credit allowed under 327.1 section 27 of the Internal Revenue Code. In determining the 327.2 amount of the foreign tax credit allowed, the net income taxes 327.3 imposed by Canada on the income are deducted first. Any 327.4 remaining amount of the allowable foreign tax credit reduces the 327.5 provincial or territorial tax that qualifies for the credit 327.6 under this subdivision. 327.7 [EFFECTIVE DATE.] This section is effective for tax years 327.8 beginning after December 31, 2003. 327.9 Sec. 7. Minnesota Statutes 2003 Supplement, section 327.10 290.0674, subdivision 1, is amended to read: 327.11 Subdivision 1. [CREDIT ALLOWED.] An individual is allowed 327.12 a credit against the tax imposed by this chapter in an amount 327.13 equal to 75 percent of the amount paid for education-related 327.14 expenses for a qualifying child in kindergarten through grade 327.15 12. For purposes of this section, "education-related expenses" 327.16 means: 327.17 (1) fees or tuition for instruction by an instructor under 327.18 section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 327.19 (5), or a member of the Minnesota Music Teachers Association, 327.20 and who is not a lineal ancestor or sibling of the dependent for 327.21 instruction outside the regular school day or school year, 327.22 including tutoring, driver's education offered as part of school 327.23 curriculum, regardless of whether it is taken from a public or 327.24 private entity or summer camps, in grade or age appropriate 327.25 curricula that supplement curricula and instruction available 327.26 during the regular school year, that assists a dependent to 327.27 improve knowledge of core curriculum areas or to expand 327.28 knowledge and skills under thegraduation rule under section327.29120B.02, paragraph (e), clauses (1) to (7), (9), and (10)327.30 required academic standards under section 120B.021, subdivision 327.31 1, and the elective standard under section 120B.022, subdivision 327.32 1, clause (3), and that do not include the teaching of religious 327.33 tenets, doctrines, or worship, the purpose of which is to 327.34 instill such tenets, doctrines, or worship; 327.35 (2) expenses for textbooks, including books and other 327.36 instructional materials and equipment purchased or leased for 328.1 use in elementary and secondary schools in teaching only those 328.2 subjects legally and commonly taught in public elementary and 328.3 secondary schools in this state. "Textbooks" does not include 328.4 instructional books and materials used in the teaching of 328.5 religious tenets, doctrines, or worship, the purpose of which is 328.6 to instill such tenets, doctrines, or worship, nor does it 328.7 include books or materials for extracurricular activities 328.8 including sporting events, musical or dramatic events, speech 328.9 activities, driver's education, or similar programs; 328.10 (3) a maximum expense of $200 per family for personal 328.11 computer hardware, excluding single purpose processors, and 328.12 educational software that assists a dependent to improve 328.13 knowledge of core curriculum areas or to expand knowledge and 328.14 skills under thegraduation rule under section 120B.02required 328.15 academic standards under section 120B.021, subdivision 1, and 328.16 the elective standard under section 120B.022, subdivision 1, 328.17 clause (3), purchased for use in the taxpayer's home and not 328.18 used in a trade or business regardless of whether the computer 328.19 is required by the dependent's school; and 328.20 (4) the amount paid to others for transportation of a 328.21 qualifying child attending an elementary or secondary school 328.22 situated in Minnesota, North Dakota, South Dakota, Iowa, or 328.23 Wisconsin, wherein a resident of this state may legally fulfill 328.24 the state's compulsory attendance laws, which is not operated 328.25 for profit, and which adheres to the provisions of the Civil 328.26 Rights Act of 1964 and chapter 363A. 328.27 For purposes of this section, "qualifying child" has the 328.28 meaning given in section 32(c)(3) of the Internal Revenue Code. 328.29 [EFFECTIVE DATE.] This section is effective for tax years 328.30 beginning after December 31, 2003. 328.31 Sec. 8. Minnesota Statutes 2002, section 290.92, 328.32 subdivision 1, is amended to read: 328.33 Subdivision 1. [DEFINITIONS.] (1) [WAGES.] For purposes 328.34 of this section, the term "wages" means the same as that term is 328.35 defined in section 3401(a) and (f) of the Internal Revenue Code. 328.36 (2) [PAYROLL PERIOD.] For purposes of this section the 329.1 term "payroll period" means a period for which a payment of 329.2 wages is ordinarily made to the employee by the employee's 329.3 employer, and the term "miscellaneous payroll period" means a 329.4 payroll period other than a daily, weekly, biweekly, 329.5 semimonthly, monthly, quarterly, semiannual, or annual payroll 329.6 period. 329.7 (3) [EMPLOYEE.] For purposes of this section the term 329.8 "employee" means any resident individual performing services for 329.9 an employer, either within or without, or both within and 329.10 without the state of Minnesota, and every nonresident individual 329.11 performing services within the state of Minnesota, the 329.12 performance of which services constitute, establish, and 329.13 determine the relationship between the parties as that of 329.14 employer and employee. As used in the preceding sentence, the 329.15 term "employee" includes an officer of a corporation, and an 329.16 officer, employee, or elected official of the United States, a 329.17 state, or any political subdivision thereof, or the District of 329.18 Columbia, or any agency or instrumentality of any one or more of 329.19 the foregoing. 329.20 (4) [EMPLOYER.] For purposes of this section the term 329.21 "employer" means any person, including individuals, fiduciaries, 329.22 estates, trusts, partnerships, limited liability companies, and 329.23 corporations transacting business in or deriving any income from 329.24 sources within the state of Minnesota for whom an individual 329.25 performs or performed any service, of whatever nature, as the 329.26 employee of such person, except that if the person for whom the 329.27 individual performs or performed the services does not have 329.28legalcontrol of the payment of the wages for such services, the 329.29 term "employer," except for purposes of paragraph (1), means the 329.30 person havinglegalcontrol of the payment of such wages. As 329.31 used in the preceding sentence, the term "employer" includes any 329.32 corporation, individual, estate, trust, or organization which is 329.33 exempt from taxation under section 290.05 and further includes, 329.34 but is not limited to, officers of corporations who havelegal329.35 control, either individually or jointly with another or others, 329.36 of the payment of the wages. 330.1 (5) [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 330.2 purposes of this section, the term "number of withholding 330.3 exemptions claimed" means the number of withholding exemptions 330.4 claimed in a withholding exemption certificate in effect under 330.5 subdivision 5, except that if no such certificate is in effect, 330.6 the number of withholding exemptions claimed shall be considered 330.7 to be zero. 330.8 [EFFECTIVE DATE.] This section is effective the day 330.9 following final enactment. 330.10 Sec. 9. Minnesota Statutes 2002, section 290C.05, is 330.11 amended to read: 330.12 290C.05 [ANNUAL CERTIFICATION.] 330.13 On or before July 1 of each year, beginning with the year 330.14 after the claimant has received an approved application, the 330.15 commissioner shall send each claimant enrolled under the 330.16 sustainable forest incentive program a certification form. The 330.17 claimant must sign the certification, attesting that the 330.18 requirements and conditions for continued enrollment in the 330.19 program are currently being met, and must return the signed 330.20 certification form to the commissioner by August 15 of that same 330.21 year.Failure toIf the claimant does not return an annual 330.22 certification form by the due dateshall result in removal of330.23the lands from the provisions of the sustainable forest330.24incentive program, and the imposition of any applicable removal330.25penalty, the provisions in section 290C.11 apply.The claimant330.26may appeal the removal and any associated penalty according to330.27the procedures and within the time allowed under this chapter.330.28 [EFFECTIVE DATE.] This section is effective the day 330.29 following final enactment. 330.30 Sec. 10. [290C.055] [LENGTH OF COVENANT.] 330.31 The covenant remains in effect for a minimum of eight 330.32 years. If land is removed from the program after it has been 330.33 enrolled for less than four years, the covenant remains in 330.34 effect for eight years from the date recorded. 330.35 In the case of land that has been enrolled for more than 330.36 four years and is removed from the program for any reason, there 331.1 is a four-year waiting period to end the covenant. The covenant 331.2 remains in effect until January 1 of the fifth calendar year 331.3 that begins after the date that: 331.4 (1) the commissioner receives notification from the 331.5 claimant that the claimant wishes to be removed from the program 331.6 under section 290C.10, or 331.7 (2) the date that land is removed from the program under 331.8 section 290C.11. 331.9 Notwithstanding the other provisions of this section, the 331.10 covenant is terminated at the same time that land is removed 331.11 from the program due to acquisition of title or possession for a 331.12 public purpose under section 290C.10. 331.13 [EFFECTIVE DATE.] This section is effective the day 331.14 following final enactment. 331.15 Sec. 11. Minnesota Statutes 2002, section 325D.33, 331.16 subdivision 6, is amended to read: 331.17 Subd. 6. [VIOLATIONS.] If the commissioner determines that 331.18 a distributor is violating any provision of this chapter, the 331.19 commissioner must give the distributor a written warning 331.20 explaining the violation and an explanation of what must be done 331.21 to comply with this chapter. Within ten days of issuance of the 331.22 warning, the distributor must notify the commissioner that the 331.23 distributor has complied with the commissioner's recommendation 331.24 or request that the commissioner set the issue for a hearing 331.25 pursuant to chapter 14. If a hearing is requested, the hearing 331.26 shall be scheduled within 20 days of the request and the 331.27 recommendation of the administrative law judge shall be issued 331.28 within five working days of the close of the hearing. The 331.29 commissioner's final determination shall be issued within five 331.30 working days of the receipt of the administrative law judge's 331.31 recommendation. If the commissioner's final determination is 331.32 adverse to the distributor and the distributor does not comply 331.33 within ten days of receipt of the commissioner's final 331.34 determination, the commissioner may order the distributor to 331.35 immediately cease the stamping of cigarettes. As soon as 331.36 practicable after the order, the commissioner must remove the 332.1 meter and any unapplied cigarette stamps from the premises of 332.2 the distributor. 332.3 If within ten days of issuance of the written warning the 332.4 distributor has not complied with the commissioner's 332.5 recommendation or requested a hearing, the commissioner may 332.6 order the distributor to immediately cease the stamping of 332.7 cigarettes and remove the meter and unapplied stamps from the 332.8 distributor's premises. 332.9If, within any 12-month period, the commissioner has issued332.10three written warnings to any distributor, even if the332.11distributor has complied within ten days, the commissioner shall332.12notify the distributor of the commissioner's intent to revoke332.13the distributor's license for a continuing course of conduct332.14contrary to this chapter. For purposes of this paragraph, a332.15written warning that was ultimately resolved by removal of the332.16warning by the commissioner is not deemed to be a warning. The332.17commissioner must notify the distributor of the date and time of332.18a hearing pursuant to chapter 14 at least 20 days before the332.19hearing is held. The hearing must provide an opportunity for332.20the distributor to show cause why the license should not be332.21revoked. If the commissioner revokes a distributor's license,332.22the commissioner shall not issue a new license to that332.23distributor for 180 days.332.24 [EFFECTIVE DATE.] This section is effective the day 332.25 following final enactment. 332.26 Sec. 12. Minnesota Statutes 2002, section 473.843, 332.27 subdivision 5, is amended to read: 332.28 Subd. 5. [PENALTIES; ENFORCEMENT.] The audit, penalty, and 332.29 enforcement provisions applicable to corporate franchise taxes 332.30 imposed under chapter 290 apply to the fees imposed under this 332.31 section. The commissioner of revenue shall administer the 332.32 provisions. 332.33 [EFFECTIVE DATE.] This section is effective the day 332.34 following final enactment. 332.35 Sec. 13. [REPEALER.] 332.36 Minnesota Rules, parts 8093.2000 and 8093.3000, are 333.1 repealed. 333.2 [EFFECTIVE DATE.] This section is effective the day 333.3 following final enactment.