SF 2568

2nd Engrossment - 86th Legislature (2009 - 2010) Posted on 03/18/2010 12:02pm

A bill for an act
relating to economic development; encouraging job creation; allowing tax
credits for investments in small businesses and historic structure rehabilitation;
disallowing the deduction of certain dividends; expanding the permitted use of
tax increment financing for certain projects; repealing restrictions on city of
Bloomington's development of the Mall of America site; distributing certain
proceeds of taconite taxes; authorizing sale of municipal bonds for energy
efficiency improvements to residential and business property; appropriating
money; amending Minnesota Statutes 2008, sections 290.21, subdivision 4;
429.101, subdivision 1; 469.174, by adding a subdivision; 469.175, by adding a
subdivision; 469.176, subdivisions 1b, 4c, by adding subdivisions; Minnesota
Statutes 2009 Supplement, section 298.294; Laws 1986, chapter 391, section
1; Laws 1995, chapter 264, article 5, sections 44, subdivision 4, as amended;
45, subdivision 1, as amended; Laws 2008, chapter 366, article 5, sections 28,
subdivision 1; 29, subdivisions 1, 2, 4; Laws 2009, chapter 78, article 7, section
2; proposing coding for new law in Minnesota Statutes, chapters 116J; 216C;
290; 297I; repealing Laws 1996, chapter 464, article 1, section 8, subdivision 5.

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

ARTICLE 1

SMALL BUSINESS INVESTMENT CREDIT

Section 1.

new text begin [116J.8737] SMALL BUSINESS INVESTMENT TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Qualified small business" means a business that satisfies all of the following
conditions:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;
new text end

new text begin (3) the business is engaged in, or is committed to engage in, innovation in Minnesota
in one of the following:
new text end

new text begin (i) using proprietary technology to add value to a product, process, or service in a
qualified high-technology field;
new text end

new text begin (ii) researching or developing a proprietary product, process, or service in a qualified
high-technology field;
new text end

new text begin (iii) researching, developing, or producing a new proprietary technology for use in
the fields of tourism, forestry, mining, or transportation; or
new text end

new text begin (iv) qualified green manufacturing;
new text end

new text begin (4) other than the activities specifically listed in clause (3), the business is not
engaged in real estate development, insurance, banking, lending, lobbying, political
consulting, information technology consulting, wholesale or retail trade, leisure,
hospitality, transportation, construction, ethanol production from corn, or professional
services provided by attorneys, accountants, business consultants, physicians, or health
care consultants;
new text end

new text begin (5) the business has fewer than 25 employees;
new text end

new text begin (6) if the business has five or more employees as measured on a full-time equivalent
basis, the business must pay its employees in excess of the first five annual wages at least
175 percent of the federal poverty guideline for the year for a family of four;
new text end

new text begin (7) the business has not been in operation for more than ten consecutive years;
new text end

new text begin (8) the business has not received more than $4,000,000 in qualifying investments
that have qualified for and received tax credits under this section;
new text end

new text begin (9) the business is not a member of a unitary group that employs more than 100
employees; and
new text end

new text begin (10) the business has not previously received private equity investments of more
than $2,000,000.
new text end

new text begin (c) "Qualified high-technology field" includes, but is not limited to, aerospace,
agricultural processing, alternative energy, environmental engineering, food technology,
cellulosic ethanol, information technology, materials science technology, nanotechnology,
telecommunications, biotechnology, medical device products, pharmaceuticals,
diagnostics, biologicals, and veterinary science.
new text end

new text begin (d) "Proprietary technology" means the technical innovations that are unique and
legally owned or licensed by a business and includes, without limitation, those innovations
that are patented, patent pending, a subject of trade secrets, or copyrighted.
new text end

new text begin (e) "Qualified green manufacturing" means a business whose primary business
activity is production of products, processes, methods, technologies, or services, excluding
consulting, intended to do one or more of the following:
new text end

new text begin (1) increase the use of energy from renewable sources, as defined in section
216B.1691;
new text end

new text begin (2) increase the energy efficiency of the electric utility-producing infrastructure
system or to increase energy conservation related to electricity or other utility use, as
provided in sections 216B.2401 and 216B.241;
new text end

new text begin (3) reduce greenhouse gas emissions, as defined in section 216H.01, subdivision 2,
or to mitigate greenhouse gas emissions or other waste products through, but not limited
to, carbon capture, storage, or sequestration;
new text end

new text begin (4) monitor, protect, restore, and preserve the quality of surface waters;
new text end

new text begin (5) expand the use of biofuels, including expanding the feasibility or reducing the
cost of producing biofuels or the types of equipment, machinery, and vehicles that can use
biofuels; and
new text end

new text begin (6) increase the use of green chemistry, as defined in section 116.9401.
new text end

new text begin (f) "Qualified taxpayer" means an accredited investor, within the meaning of
Regulation D of the Securities and Exchange Commission, Code of Federal Regulations,
title 17, section 230.501(a), who:
new text end

new text begin (1) does not own, control, or hold power to vote 20 percent or more of the outstanding
securities of the qualified small business in which the eligible investment is proposed; or
new text end

new text begin (2) does not receive more than 50 percent of the taxpayer's gross annual income from
the qualified small business in which the eligible investment is proposed.
new text end

new text begin A member of the family of a taxpayer disqualified by this subdivision is not eligible
for a credit under this section.
new text end

new text begin (g)(1) "Qualified angel investment network fund" means a pooled investment fund
that:
new text end

new text begin (i) invests in qualified small businesses;
new text end

new text begin (ii) is organized as a pass-through entity; and
new text end

new text begin (iii) has at least three separate investors, all of whom are qualified taxpayers
as defined in paragraph (f), and that own no more than 50 percent of the outstanding
ownership interests in the fund; and
new text end

new text begin (2) for purposes of determining the number of investors and the ownership interest
of an investor under this paragraph, the ownership interests of an investor include those of
the investor's family, and any corporation, limited liability company, partnership, or trust
in which the investor or the investor's family has a controlling equity interest or exercises
management control. Investments in the fund may consist of equity investments or notes
that pay interest or other fixed amounts, or any combination of both.
new text end

new text begin (h) "Qualified investment" means either a cash investment of a minimum of:
new text end

new text begin (1) $10,000 in a calendar year by a qualified taxpayer; or
new text end

new text begin (2) $50,000 in a calendar year by a qualified angel investment network fund.
new text end

new text begin The qualified investment in a qualified small business must be in exchange
for common stock, a partnership or membership interest, preferred stock, debt with
mandatory conversion to equity, or an equivalent ownership interest as determined by
the commissioner.
new text end

new text begin (i) "Family" means a family member within the meaning of section 267(c)(4) of the
Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Certification of small businesses. new text end

new text begin (a) Businesses may apply to the
commissioner for certification as a qualified small business. The application must be in the
form and be made under the procedures specified by the commissioner, accompanied by
an application fee of $150. The application for certification must be made available on the
department's Web site by August 1, 2010. Applications for subsequent years' certification
must be made available on the department's Web site by November 1 of the preceding year.
Application fees must be deposited in the state treasury and credited to the general fund.
new text end

new text begin (b) A business seeking certification must submit an application for each taxable
year for which the business desires certification. If a qualified small business receives
a qualified investment for which tax credits are allocated, the business must annually
submit a certified small business report in the form required by the commissioner with
the required fee no later than February 1 for the two years subsequent to the last qualified
investment. Failure to file an annual report as required under this subdivision results in a
fine of $500 and revocation of certification.
new text end

new text begin (c) The commissioner must maintain a list of businesses certified under this
subdivision and make the list accessible to the public on the department's Web site.
new text end

new text begin Subd. 3. new text end

new text begin Certification of qualified taxpayers. new text end

new text begin (a) Taxpayers may apply to the
commissioner for certification as a qualified taxpayer. The application must be in the
form and be made under the procedures specified by the commissioner, accompanied
by an application fee of $350. The application for certification of qualified taxpayers
must be made available on the department's Web site by August 1, 2010. Applications
for subsequent years' certification must be made available on the department's Web site
by November 1 of the preceding year. Application fees must be deposited in the state
treasury and credited to the general fund.
new text end

new text begin (b) A qualified taxpayer seeking certification must submit an application for each
taxable year in which the qualified taxpayer seeks certification. If a qualified taxpayer
receives tax credits under this section, a qualified taxpayer must submit an angel investor
annual report in the form required by the commissioner with the required fee no later than
February 1 of each year for two years subsequent to the last allocation of tax credits.
Failure to file an angel investor annual report as required under this subdivision results
in the revocation of tax credits. Once a qualified taxpayer has filed the required annual
reports and accompanying fees for two subsequent years following allocation of tax
credits and complied with all other requirements for that allocation, the tax credits are
no longer subject to revocation.
new text end

new text begin Subd. 4. new text end

new text begin Certification of qualified angel investment network funds. new text end

new text begin (a)
Angel investment network funds may apply to the commissioner of employment and
economic development for certification as a qualified angel investment network fund.
The application must be in the form and be made under the procedures specified by
the commissioner, accompanied by an application fee of $1,000. The application for
certification of qualified angel investor network funds must be made available on the
department's Web site by August 1, 2010. Applications for subsequent years' certification
must be made available by November 1 of the preceding year. Application fees must be
deposited in the state treasury and credited to the general fund.
new text end

new text begin (b) A qualified angel investment network fund seeking certification must submit an
application for each taxable year for which the angel investment network fund seeks
certification. If any member of a qualified angel investment network fund receives tax
credits under this section for qualified investments made by the fund, the qualified angel
investment network fund must annually submit an angel investor annual report in the
form required by the commissioner with the required fee no later than February 1 of
each year for two years subsequent to the last allocation of credits. Failure to file an
angel investor annual report as required under this subdivision results in revocation of
tax credits. Once a qualified angel investment network fund has filed the required annual
reports and accompanying fees for two subsequent years following allocation of tax
credits and complied with all other requirements for that allocation, the tax credits are
no longer subject to revocation.
new text end

new text begin Subd. 5. new text end

new text begin Credit allowed. new text end

new text begin (a) A qualified taxpayer or angel investor network fund is
allowed a credit for investment in a qualified small business in the amount determined
by the certification allocated by the commissioner against the tax imposed by chapter
290. The commissioner must not allocate more than $10,000,000 in credits to qualified
taxpayers or angel investment network funds per taxable year for taxable years beginning
after December 31, 2009, and before January 1, 2012, and must not allocate more than
$12,000,000 in credits per taxable year for taxable years beginning after December 31,
2011. Any portion of a taxable year's credits that is not allocated by the commissioner
does not cancel and may be carried forward to the subsequent taxable year until all credits
have been allocated. Applications for tax investment credits must be made available on
the department's Web site by September 1, 2010, and the department must begin accepting
applications by September 1, 2010. Applications for subsequent years must be made
available by November 1 of the preceding year.
new text end

new text begin (b) Tax investment credits must be allocated to qualified taxpayers or angel investor
network funds in the order that the tax credit request applications are filed with the
department. The investment specified in the application must be made within 60 days of
the allocation of the credits. If the investment is not made within 60 days, the credits are
deemed revoked. A qualified taxpayer or angel investor network fund that fails to invest
as specified in the application, within 60 days from allocation of the credits, must notify
the department of the failure to invest within five business days of the expiration of the
60-day investment period.
new text end

new text begin (c) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. In the event that two or more qualified
taxpayers or angel investment network funds file tax credit request applications on the
same day, and the aggregate amount of credit allocation claims exceeds the aggregate limit
of credit under this section or the lesser amount of credits that remain unallocated on that
day, then the credits must be allocated among the qualified taxpayers or angel investment
network funds who filed on that day on a pro rata basis with respect to the amounts claimed.
The pro rata allocation for any one qualified taxpayer or angel investment network fund is
the product obtained by multiplying a fraction, the numerator of which is the amount of
the credit allocation claim filed on behalf of a qualified taxpayer and the denominator of
which is the total of all credit allocation claims filed on behalf of all applicants on that day,
by the amount of credits that remain unallocated on that day for the fiscal year.
new text end

new text begin (d) The commissioner must notify the commissioner of revenue of every credit
allocated and every credit revoked under this section.
new text end

new text begin Subd. 6. new text end

new text begin Annual reports. new text end

new text begin (a) By February 1 of each year for two years subsequent
to the last allocation of credits, qualified small businesses, qualified taxpayers, and
qualified angel investment network funds must submit to the commissioner an annual
report and a filing fee of $100. All report fees must be deposited in the state treasury
and credited to the general fund.
new text end

new text begin (b) Qualified small businesses must certify to the department in the form required by
the commissioner that it satisfies the following requirements:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;
new text end

new text begin (3) the business is engaged in, or is committed to engage in, innovation in Minnesota
as defined under subdivision 1; and
new text end

new text begin (4) the business meets the payroll requirements in subdivision 1, paragraph (b),
clause (6).
new text end

new text begin (c) Qualified taxpayers must certify to the department in the form required by the
commissioner that the investor satisfies the following requirements:
new text end

new text begin (1) the taxpayer continues to meet the requirements of subdivision 1, paragraph
(f); and
new text end

new text begin (2) the taxpayer continues to remain invested in the qualified small business as
required by section 290.0692, subdivision 3.
new text end

new text begin (d) Qualified angel investment network funds must certify to the department in the
form required by the commissioner that the investor satisfies the following requirements:
new text end

new text begin (1) the taxpayer continues to meet the requirements of subdivision 1, paragraph
(g); and
new text end

new text begin (2) the angel investment network fund continues to remain invested in the qualified
small business as required by section 290.0692, subdivision 3.
new text end

new text begin Subd. 7. new text end

new text begin Rulemaking exception. new text end

new text begin The commissioner's actions in establishing
procedures and requirements and in making determinations and certifications to administer
this section are not a rule for purposes of chapter 14, are not subject to the Administrative
Procedure Act contained in chapter 14, and are not subject to section 14.386.
new text end

new text begin Subd. 8. new text end

new text begin Report. new text end

new text begin Beginning in 2011, the commissioner must annually report by
March 15 to the chairs and ranking minority members of the legislative committees and
divisions having jurisdiction over taxes and economic development in the senate and
the house of representatives on the tax credits issued under this section. The report
must include:
new text end

new text begin (1) the number and amount of the credits issued;
new text end

new text begin (2) the recipients of the credits;
new text end

new text begin (3) the number and type of each business certified as a qualified small business;
new text end

new text begin (4) to the extent determinable, the total amount of investment generated by these
credits; and
new text end

new text begin (5) any other information relevant to evaluating the effect of these credits.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

new text begin [290.0692] SMALL BUSINESS INVESTMENT CREDIT; CREDIT
ALLOWED; LIMITATIONS; HOLDING PERIOD; AND CARRYOVER.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin A qualified taxpayer is allowed a credit against the
tax imposed under this chapter for investments made in the year in a qualified small
business as defined under section 116J.8737. The credit equals 25 percent of the qualified
taxpayer's investment in the business, but not to exceed the lesser of:
new text end

new text begin (1) the liability for tax under this chapter, including the applicable alternative
minimum tax, but excluding the minimum fee under section 290.0922; and
new text end

new text begin (2) the amount of the certificate provided to the qualified taxpayer under section
116J.8737.
new text end

new text begin Subd. 2. new text end

new text begin Limitations. new text end

new text begin No taxpayer may receive more than $125,000 in credits
under this section in any one year.
new text end

new text begin Subd. 3. new text end

new text begin Holding periods. new text end

new text begin The credit is allowed only for investments for which a
credit has been allocated by the commissioner of employment and economic development
under section 116J.8737. Any credit taken by a taxpayer must be repaid, and any unused
credits must be canceled, if the investment in the qualified small business is not held for at
least three years. The three-year holding period does not apply if:
new text end

new text begin (1) the investment by the qualified taxpayer becomes worthless before the end
of the three-year period;
new text end

new text begin (2) 80 percent or more of the assets of the qualified small business is sold before
the end of the three-year period;
new text end

new text begin (3) the qualified small business is sold before the end of the three-year period; or
new text end

new text begin (4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period.
new text end

new text begin Subd. 4. new text end

new text begin Proportional credits. new text end

new text begin Each pass-through entity must provide each
investor a statement indicating the investor's share of the credit amount certified to the
pass-through entity based on its share of the pass-through entity's assets at the time of
the qualified investment.
new text end

new text begin Subd. 5. new text end

new text begin Carryover. new text end

new text begin If the amount of the credit under this subdivision for any
taxable year exceeds the liability for tax, the excess is a credit carryover to each of the ten
succeeding taxable years. The entire amount of the excess unused credit for the taxable
year must be carried first to the earliest of the taxable years to which the credit may be
carried. The amount of the unused credit that may be added under this subdivision may
not exceed the taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin Subd. 6. new text end

new text begin Transfer of credits. new text end

new text begin Any taxpayer who has not had liability under this
chapter for the immediate past three taxable years and does not have anticipated liability
for the current taxable year may transfer the entirety of the credit to any natural person of
net worth, as defined in the Code of Federal Regulations, title 17, section 230.501(a). No
person is entitled to a refund for the interest created under this subdivision. Only the full
credit for any one taxpayer may be transferred and the interest may be transferred only one
time. A credit acquired by transfer is subject to the limitations prescribed in this section.
Documentation of any credit acquired by transfer must be provided by the taxpayer in
the form required by the commissioner.
new text end

new text begin Subd. 7. new text end

new text begin Audit powers. new text end

new text begin Notwithstanding the certification eligibility issued by the
commissioner of employment and economic development under section 116J.8737, the
commissioner may utilize any audit and examination powers under chapter 270C or 289A
to the extent necessary to verify that the taxpayer is eligible for the credit and to assess for
the amount of any improperly claimed credit.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for investments made after July
1, 2010, for taxable years beginning after December 31, 2009, and only applies to
investments for which a credit has been allocated by the commissioner of employment and
economic development.
new text end

Sec. 3. new text begin APPROPRIATION.
new text end

new text begin $100,000 is appropriated from the general fund to the commissioner of employment
and economic development to pay the costs of administering this article, to be available
for the fiscal year ending June 30, 2011.
new text end

ARTICLE 2

MINNESOTA BUSINESS INVESTMENT CREDIT

Section 1.

new text begin [116J.665] MINNESOTA BUSINESS INVESTMENT COMPANY
CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Affiliate" means:
new text end

new text begin (1) any person who, directly or indirectly, beneficially owns, controls, or holds
power to vote 15 percent or more of the outstanding voting securities or other voting
ownership interest of a Minnesota business investment company or insurance company; or
new text end

new text begin (2) any person, 15 percent or more of whose outstanding voting securities or other
voting ownership interests are directly or indirectly beneficially owned, controlled, or held
with power to vote by a Minnesota business investment company or insurance company.
new text end

new text begin Notwithstanding this subdivision, an investment by a participating investor in a
Minnesota business investment company pursuant to an allocation of premium tax credits
under this section does not cause that Minnesota business investment company to become
an affiliate of that participating investor.
new text end

new text begin (c) "Allocation date" means the date on which credits under section 297I.23 are
allocated to the participating investors of a Minnesota business investment company
under this section.
new text end

new text begin (d) "Designated capital" means an amount of money that:
new text end

new text begin (1) is invested by a participating investor in a Minnesota business investment
company; and
new text end

new text begin (2) fully funds the purchase price of either or both participating investor's equity
interest in a Minnesota business investment company or a qualified debt instrument issued
by a Minnesota business investment company.
new text end

new text begin (e) "Minnesota business investment company" means a partnership, corporation,
trust, or limited liability company, organized on a for-profit basis, that:
new text end

new text begin (1) has its principal office located or is headquartered in Minnesota;
new text end

new text begin (2) has as its primary business activity the investment of cash in qualified businesses;
and
new text end

new text begin (3) is certified by the Department of Employment and Economic Development as
meeting the criteria in this section.
new text end

new text begin (f) "Participating investor" means any insurance company as defined in section
60A.02, subdivision 4, excluding health maintenance organizations, that contributes
designated capital pursuant to this section.
new text end

new text begin (g) "Person" means any natural person or entity, including, but not limited to, a
corporation, general or limited partnership, trust, or limited liability company.
new text end

new text begin (h)(1) "Qualified business" means a business that is independently owned and
operated and meets all of the following requirements:
new text end

new text begin (i) it is headquartered in Minnesota, its principal business operations are located in
this state, and at least 80 percent of its employees are located in Minnesota;
new text end

new text begin (ii) it has no more than 100 employees;
new text end

new text begin (iii) it is not engaged in:
new text end

new text begin (A) professional services provided by accountants, doctors, or lawyers;
new text end

new text begin (B) banking or lending;
new text end

new text begin (C) real estate development;
new text end

new text begin (D) insurance;
new text end

new text begin (E) oil and gas exploration;
new text end

new text begin (F) direct gambling activities;
new text end

new text begin (G) retail sales; or
new text end

new text begin (H) making loans to or investments in a Minnesota business investment company
or an affiliate; and
new text end

new text begin (iv) it is not a franchise of and has no financial relationship with a Minnesota business
investment company or any affiliate of a Minnesota business investment company prior to
a Minnesota business investment company's first qualified investment in the business;
new text end

new text begin (2) a business classified as a qualified business at the time of the first qualified
investment in the business remains classified as a qualified business and may receive
continuing qualified investments from any Minnesota business investment company.
Continuing investments constitute qualified investments even though the business may not
meet the definition of a qualified business at the time of the continuing investments.
new text end

new text begin (i) "Qualified debt instrument" means a debt instrument issued by a Minnesota
business investment company which meets all of the following criteria:
new text end

new text begin (1) it is issued at par value or a premium; and
new text end

new text begin (2) it has an original maturity date of at least four years from the date of issuance,
and a repayment schedule which is not faster than a level principal amortization over
four years.
new text end

new text begin (j) "Qualified distribution" means any distribution or payment made by a Minnesota
business investment company in connection with any of the following:
new text end

new text begin (1) costs and expenses of forming, syndicating, and organizing the Minnesota
business investment company, including fees paid for professional services, and the costs
of financing and insuring the obligations of a Minnesota business investment company,
provided no payment is made to a participating investor;
new text end

new text begin (2) an annual management fee not to exceed one percent of designated capital on
an annual basis to offset the costs and expenses of managing and operating a Minnesota
business investment company;
new text end

new text begin (3) reasonable and necessary fees in accordance with industry custom for ongoing
professional services, including, but not limited to, legal and accounting services related
to the operation of a Minnesota business investment company, not including lobbying or
governmental relations;
new text end

new text begin (4) any increase or projected increase in federal or state taxes, including penalties
and related interest of the equity owners of a Minnesota business investment company
resulting from the earnings or other tax liability of a Minnesota business investment
company to the extent that the increase is related to the ownership, management, or
operation of a Minnesota business investment company;
new text end

new text begin (5) payments of principal and interest to holders of qualified debt instruments issued
by a Minnesota business investment company may be made without restriction whatsoever.
new text end

new text begin (k) "Qualified investment" means the investment of money by a Minnesota
business investment company in a qualified business for the purchase of any debt,
debt participation, equity, or hybrid security of any nature and description whatsoever,
including a debt instrument or security that has the characteristics of debt but that provides
for conversion into equity or equity participation instruments such as options or warrants.
Any repayment of a qualified investment prior to one year from the date of issuance shall
result in the amount of the qualified investment being reduced by 50 percent for purposes
of the cumulative investment requirement in subdivision 8, paragraph (d).
new text end

new text begin (l) "State premium tax liability" means any liability incurred by an insurance
company under chapter 297I or in the case of a repeal or a rate reduction by the state of
the liability imposed by chapter 297I, any other tax liability imposed upon an insurance
company by the state, other than the tax imposed on taxpayers under section 290.05.
new text end

new text begin Subd. 2. new text end

new text begin Certification. new text end

new text begin (a) The department must provide a standardized format for
applying for the business investment credit under section 297I.23, and for certification as a
Minnesota business investment company.
new text end

new text begin (b) An applicant for certification as a Minnesota business investment company
is required to:
new text end

new text begin (1) file an application with the department that includes, without limitation, a
statement that the applicant has read and understands the requirements of this chapter;
new text end

new text begin (2) pay a nonrefundable application fee of $7,500 at the time of filing the application;
new text end

new text begin (3) submit as part of its application an audited balance sheet that contains an
unqualified opinion of an independent certified public accountant issued not more than 35
days before the application date that states that the applicant has an equity capitalization
of $500,000 or more in the form of unencumbered cash, marketable securities, or other
liquid assets; and
new text end

new text begin (4) have at least two principals or persons, at least one of which is primarily located
in Minnesota, employed or engaged to manage the funds who each have a minimum of
five years of money management experience in the venture capital or business industry.
new text end

new text begin (c) The department may certify partnerships, corporations, trusts, or limited liability
companies, organized on a for-profit basis, which submit an application to be designated as
a Minnesota business investment company if the applicant is located, headquartered, and
licensed or registered to conduct business in Minnesota, has as its primary business activity
the investment of cash in qualified businesses, and meets the other criteria in this section.
new text end

new text begin (d) The department must review the organizational documents of each applicant
for certification and the business history of each applicant and determine whether the
applicant has satisfied the requirements of this section.
new text end

new text begin (e) Within 45 days after the receipt of an application, the department must issue the
certification or refuse the certification and communicate in detail to the applicant the
grounds for refusal, including suggestions for the removal of such grounds.
new text end

new text begin (f) The department must begin accepting applications to become a Minnesota
business investment company as defined under section 297I.23 by August 1, 2010.
new text end

new text begin (g) Application fees collected by the commissioner under this subdivision must be
deposited in the state treasury and credited to the general fund.
new text end

new text begin Subd. 3. new text end

new text begin Requirements. new text end

new text begin (a) A participating investor or affiliate of a participating
investor must not, directly or indirectly:
new text end

new text begin (1) beneficially own, whether through rights, options, convertible interest, or
otherwise, 15 percent or more of the voting securities or other voting ownership interest of
a Minnesota business investment company;
new text end

new text begin (2) manage a Minnesota business investment company; or
new text end

new text begin (3) control the direction of investments for a Minnesota business investment
company.
new text end

new text begin (b) A Minnesota business investment company may obtain one or more guaranties,
indemnities, bonds, insurance policies, or other payment undertakings for the benefit
of its participating investors from any entity, except that in no case can more than one
participating investor of a Minnesota business investment company on an aggregate
basis with all affiliates of the participating investor be entitled to provide the guaranties,
indemnities, bonds, insurance policies, or other payment undertakings in favor of the
participating investors of a Minnesota business investment company and its affiliates in
this state.
new text end

new text begin (c) This subdivision does not preclude a participating investor, insurance company,
or other party from exercising its legal rights and remedies, including, without limitation,
interim management of a Minnesota business investment company, in the event that a
Minnesota business investment company is in default of its statutory obligations or its
contractual obligations to the participating investor, insurance company, or other party, or
from monitoring a Minnesota business investment company to ensure its compliance with
this section or disallowing any investments that have not been approved by the department.
new text end

new text begin (d) The department may contract with an independent third party to review,
investigate, and certify that the applications comply with this section.
new text end

new text begin Subd. 4. new text end

new text begin Aggregate limitations on investment tax credits; allocation. new text end

new text begin (a)
The aggregate amount of investment tax credits to be allocated to all participating
investors of Minnesota business investment companies under this section shall not exceed
$60,000,000. No Minnesota business investment company, on an aggregate basis with its
affiliates, may file credit allocation claims that exceed $60,000,000.
new text end

new text begin (b) Credits must be allocated to participating investors in the order that the credit
allocation claims are filed with the department, provided that all credit allocation
claims filed with the department on the same day must be treated as having been filed
contemporaneously. Any credit allocation claims filed with the department prior to the
initial credit allocation claim filing date are deemed to have been filed on the initial credit
allocation claim filing date. The department must set the initial credit allocation claim
filing date not less than 120 days and not greater than 150 days after the department
begins accepting applications for certification.
new text end

new text begin (c) In the event that two or more Minnesota business investment companies file
credit allocation claims with the department on behalf of their respective participating
investors on the same day, and the aggregate amount of credit allocation claims exceeds
the aggregate limit of investment tax credits under this section or the lesser amount of
credits that remain unallocated on that day, then the department must allocate the credits
among the participating investors who filed on that day on a pro rata basis with respect
to the amounts claimed. The pro rata allocation for any one participating investor is the
product obtained by multiplying a fraction, the numerator of which is the amount of the
credit allocation claim filed on behalf of a participating investor and the denominator of
which is the total of all credit allocation claims filed on behalf of all participating investors
on that day, by the aggregate limit of credits under this section or the lesser amount of
credits that remain unallocated on that day.
new text end

new text begin (d) Within ten business days after the department receives a credit allocation claim
filed by a Minnesota business investment company on behalf of one or more of its
participating investors, the department must notify the Minnesota business investment
company of the amount of credits allocated to each of the participating investors of that
Minnesota business investment company. In the event a Minnesota business investment
company does not receive an investment of designated capital from each participating
investor required to earn the amount of credits allocated to the participating investor
within ten business days of the Minnesota business investment company's receipt of notice
of allocation, then it shall notify the department on or before the next business day, and
the credits allocated to the participating investor of the Minnesota business investment
company are forfeited. The department must then reallocate those forfeited credits among
the participating investors of the other Minnesota business investment companies on a pro
rata basis with respect to the credit allocation claims filed on behalf of the participating
investors. The commissioner is authorized, but not required, to levy a fine of not more than
$50,000 on any participating investor that does not invest the full amount of designated
capital required to fund the credits allocated to it by the department in accordance with
the credit allocation claim filed on its behalf. Fine receipts must be deposited in the state
treasury and credited to the general fund.
new text end

new text begin (e) No participating investor, on an aggregate basis with its affiliates, may file an
allocation claim for more than 25 percent of the maximum amount of investment tax
credits authorized under this subdivision, regardless of whether the claim is made in
connection with one or more Minnesota business investment companies.
new text end

new text begin Subd. 5. new text end

new text begin Requirements for continuance of certification. new text end

new text begin (a) To maintain its
certification, a Minnesota business investment company must make qualified investments
as follows:
new text end

new text begin (1) within two years after the allocation date, a Minnesota business investment
company must invest an amount equal to at least 35 percent of its designated capital in
qualified investments; and
new text end

new text begin (2) within three years after the allocation date, a Minnesota business investment
company must invest an amount equal to at least 50 percent of its designated capital
in qualified investments.
new text end

new text begin (b) Prior to making a proposed qualified investment in a specific business, a
Minnesota business investment company must request from the department a written
determination that the proposed investment qualifies as a qualified investment in a
qualified business. The department must notify a Minnesota business investment company
within ten business days from the receipt of a request of its determination and an
explanation thereof. If the department fails to notify the Minnesota business investment
company of its determination within the ten-business-day period, the proposed investment
is deemed a qualified investment in a qualified business. If the department determines that
the proposed investment does not meet the definition of a qualified investment or qualified
business, or both, the department may nevertheless consider the proposed investment a
qualified investment and, if necessary, the business a qualified business, if the department
determines that the proposed investment furthers state economic development.
new text end

new text begin (c) All designated capital not invested in qualified investments by a Minnesota
business investment company shall be held or invested in such manner as the Minnesota
business investment company, in its discretion, deems appropriate. Designated capital
and proceeds of designated capital returned to a Minnesota business investment company
after being originally invested in qualified investments may be invested again in qualified
investments and the investment shall count toward the requirements of paragraph (a) with
respect to making investments of designated capital in qualified investments.
new text end

new text begin (d) If, within four years after its allocation date, a Minnesota business investment
company has not invested at least 60 percent of its designated capital in qualified
investments, the Minnesota business investment company must not be permitted to pay
management fees.
new text end

new text begin (e) If, within six years after its allocation date, a Minnesota business investment
company has not invested at least 100 percent of its designated capital in qualified
investments, the Minnesota business investment company must not be permitted to pay
management fees.
new text end

new text begin (f) A Minnesota business investment company may not invest more than 15 percent
of its designated capital in any one qualified business without the specific approval
of the department.
new text end

new text begin (g) For purposes of calculating the investment percentage thresholds of paragraph
(a), the cumulative amount of all qualified investments made by a Minnesota business
investment company from the allocation date must be considered.
new text end

new text begin Subd. 6. new text end

new text begin Minnesota business investment company reporting requirements. new text end

new text begin (a)
Each Minnesota business investment company must report the following to the department
in the form designated by the commissioner:
new text end

new text begin (1) as soon as practicable after the receipt of designated capital:
new text end

new text begin (i) the name of each participating investor from which the designated capital was
received, including such participating investor's insurance tax identification number;
new text end

new text begin (ii) the amount of each participating investor's investment of designated capital; and
new text end

new text begin (iii) the date on which the designated capital was received;
new text end

new text begin (2) on an annual basis, on or before January 31 of each year:
new text end

new text begin (i) the amount of the Minnesota business investment company's designated capital
that remains to be invested in qualified investments at the end of the immediately
preceding taxable year;
new text end

new text begin (ii) whether or not the Minnesota business investment company has invested more
than 15 percent of its total designated capital in any one business;
new text end

new text begin (iii) all qualified investments that the Minnesota business investment company has
made in the previous taxable year, including the number of employees of each qualified
business in which it has made investments at the time of such investment, and as of
December 1 of the preceding taxable year; and
new text end

new text begin (iv) for any qualified business where the Minnesota business investment company
no longer has an investment, the Minnesota business investment company must provide
employment figures for that company as of the last day before the investment was
terminated;
new text end

new text begin (3) other information that the department may reasonably request that helps the
department ascertain the impact of the Minnesota business investment company program
both directly and indirectly on the economy of the state including, but not limited to, the
number of jobs created by qualified businesses that have received qualified investments;
new text end

new text begin (4) within 90 days of the close of its fiscal year, annual audited financial statements
of the Minnesota business investment company, which must include the opinion of an
independent certified public accountant; and
new text end

new text begin (5) an agreed upon procedures report or equivalent regarding the operations of the
Minnesota business investment company.
new text end

new text begin (b) A Minnesota business investment company must pay to the department an annual,
nonrefundable certification fee of $5,000 on or before April 1, or $10,000 if later. The
certification fee must be deposited in the state treasury and credited to the general fund.
No annual certification fee is required if the payment date for the fee is within six months
of the date a Minnesota business investment company is first certified by the department.
new text end

new text begin (c) Upon satisfying the requirements of subdivision 5, paragraph (a), clause (2),
a Minnesota business investment company must provide the notice to the department
and the department shall, within 60 days of receipt of the notice, either confirm that the
Minnesota business investment company has satisfied the requirements of subdivision
5, paragraph (a), clause (2), as of such date or provide notice of noncompliance and an
explanation of any existing deficiencies. If the department does not provide notification
within 60 days, the Minnesota business investment company is deemed to have met the
requirements of subdivision 5, paragraph (a), clause (2).
new text end

new text begin Subd. 7. new text end

new text begin Distributions. new text end

new text begin (a) A Minnesota business investment company may
make qualified distributions at any time. In order for a Minnesota business investment
company to make a distribution other than a qualified distribution to its equity holders,
the cumulative amount of all qualified investments of the Minnesota business investment
company must equal or exceed 100 percent of its designated capital.
new text end

new text begin (b) The state shall receive ten percent of the net profits on qualified investments.
For purposes of this paragraph, "net profits on qualified investments" means the amount
of money returned to the Minnesota business investment company in exchange for or
repayment of its qualified investments in qualified businesses in excess of the amount
invested by the Minnesota business investment company in qualified investments. The
net profits on qualified investments are the aggregate of all of the Minnesota business
investment company's qualified investments where gains on qualified investments are
netted against losses on qualified investments.
new text end

new text begin Subd. 8. new text end

new text begin Decertification. new text end

new text begin (a) The department shall conduct an annual review of
each Minnesota business investment company to determine if a Minnesota business
investment company is abiding by the requirements of certification and to ensure that no
investment has been made in violation of this section. The cost of the annual review must
be paid by each Minnesota business investment company according to a reasonable fee
schedule adopted by the department. Fee receipts must be deposited in the state treasury
and credited to the general fund.
new text end

new text begin (b) Any material violation of this section, including any material misrepresentation
made to the department in connection with the application process, is grounds for
decertification of a Minnesota business investment company and the disallowance of
credits under section 297I.23, provided that in all instances the department shall provide
notice to the Minnesota business investment company of the grounds of the proposed
decertification and the opportunity to cure the violation before any decertification becomes
effective.
new text end

new text begin (c) The department shall send written notice of decertification to the commissioner
of revenue and to the address of each participating investor whose tax credit may be
subject to recapture or forfeiture, using the address shown on the last filing submitted
to the department.
new text end

new text begin (d) Once a Minnesota business investment company has invested an amount
cumulatively equal to 100 percent of its designated capital in qualified investments,
provided that the Minnesota business investment company has met all other requirements
under this section as of such date, the Minnesota business investment company is no
longer subject to regulation by the department or the reporting requirements under
subdivision 6. Upon receiving certification by a Minnesota business investment company
that it has invested an amount equal to 100 percent of its designated capital, the department
shall notify a Minnesota business investment company within 60 days that it has or has not
met the requirements, with a reason for the determination if it has not. If the department
does not provide notification of deregulation within 60 days, the Minnesota business
investment company is deemed to have met the requirements and is deemed to no longer
be subject to regulation by the department.
new text end

new text begin Subd. 9. new text end

new text begin Registration requirements. new text end

new text begin All investments by participating investors
for which tax credits are awarded under this section must be registered or specifically
exempt from registration.
new text end

new text begin Subd. 10. new text end

new text begin Rulemaking. new text end

new text begin The commissioner's actions in establishing procedures and
requirements and in making determinations and certifications to administer this section are
not a rule for purposes of chapter 14, are not subject to the Administrative Procedure Act
contained in chapter 14, and are not subject to section 14.386.
new text end

new text begin Subd. 11. new text end

new text begin Reports to governor and legislature. new text end

new text begin The department shall make an
annual report by March 15 of each year to the governor and the chairs and ranking
minority members of the legislative committees and divisions having jurisdiction over
taxes and economic development. The report must include:
new text end

new text begin (1) the number of Minnesota business investment companies holding designated
capital;
new text end

new text begin (2) the amount of designated capital invested in each Minnesota business investment
company;
new text end

new text begin (3) the cumulative amount that each Minnesota business investment company has
invested as of January 1, 2011, and the cumulative total each year thereafter;
new text end

new text begin (4) the cumulative amount of follow-on capital that the investments of each
Minnesota business investment company have created in terms of capital invested in
qualified businesses at the same time or subsequent to investments made by a Minnesota
business investment company in such businesses by sources other than Minnesota
business investment companies;
new text end

new text begin (5) the total amount of investment tax credits applied under this section for each year;
new text end

new text begin (6) the performance of each Minnesota business investment company with regard to
the requirements for continued certification;
new text end

new text begin (7) the classification of the companies in which each Minnesota business investment
company has invested according to industrial sector and size of company;
new text end

new text begin (8) the gross number of jobs created by investments made by each Minnesota
business investment company and the number of jobs retained;
new text end

new text begin (9) the location of the companies in which each Minnesota business investment
company has invested;
new text end

new text begin (10) those Minnesota business investment companies that have been decertified,
including the reasons for decertification; and
new text end

new text begin (11) other related information as necessary to evaluate the effect of this section on
economic development.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

new text begin [297I.23] MINNESOTA BUSINESS INVESTMENT COMPANY CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin (a) A participating investor as defined under section
116J.665, subdivision 1, is allowed a credit against the tax imposed in this chapter equal to
80 percent of the participating investor's investment of designated capital in a Minnesota
business investment company. Beginning January 1, 2014, in tax years 2014 to 2017,
a participating investor may claim an amount equal to 20 percent of the participating
investor's investment of designated capital.
new text end

new text begin (b) The credit for any taxable year must not exceed the liability for tax. If the
amount of the credit determined under this section for any taxable year exceeds the
liability for tax, the excess is an investment tax credit carryover to each of the succeeding
taxable years and must be carried forward to each succeeding taxable year until the entire
carryforward has been credited against the participating investor's liability for tax under
this chapter. Credits may be used in connection with both estimated and return payments
of a participating investor's state premium tax liability.
new text end

new text begin (c) A participating investor claiming a credit under this section is not required to pay
any additional retaliatory tax levied by Minnesota as a result of claiming the credit.
new text end

new text begin (d) A participating investor is not required to reduce the amount of tax pursuant to
the state premium tax liability included by the participating investor in connection with
ratemaking for any insurance contract written in this state because of a reduction in the
participating investor's tax liability based on the tax credit allowed under this section.
new text end

new text begin (e) Decertification of a Minnesota business investment company under section
116J.665 may result in the disallowance and the recapture of the credit allowed under this
section. The amount disallowed and recaptured must be assessed as follows:
new text end

new text begin (1) decertification of a Minnesota business investment company within two years
of the allocation date of tax credits and prior to meeting the requirements of section
116J.665, subdivision 5, paragraph (a), clause (1), shall result in the disallowance of all
of the credits allowed under this section;
new text end

new text begin (2) decertification of a Minnesota business investment company after two years
of the allocation date of tax credits, but prior to meeting the requirements of section
116J.665, subdivision 5, paragraph (a), clause (1), results in the disallowance of one-half
of all the credits allowed under this section; and
new text end

new text begin (3) decertification of a Minnesota business investment company that has already met
the requirements of section 116J.665, subdivision 5, paragraph (a), clause (1), does not
cause the disallowance of any credits allowed under this section nor the recapture of any
portion of the credits that was previously taken.
new text end

new text begin Subd. 2. new text end

new text begin Transfers. new text end

new text begin A participating investor must not transfer, agree to transfer,
sell, or agree to sell the credit under this section until 180 days from the date on which
the participating investor invested designated capital. After 180 days from the date of
investment, a participating investor, or subsequent transferee, may transfer credits to
another person who is subject to tax and must notify the department in the form prescribed
by the commissioner within 30 days of the transfer. A person must not transfer a credit
more than once in a 12-month period. No person is entitled to a refund for the interest
created under this subdivision. A credit acquired by transfer is subject to the limitations
prescribed in this section. Any transfer or sale of the credits does not affect the time
schedule for claiming the credit. Any tax credits recaptured under this section remain the
liability of the participating investor that actually applied the credit towards its tax liability.
new text end

new text begin Subd. 3. new text end

new text begin Repayment of tax benefits received. new text end

new text begin (a) Decertification of a Minnesota
small business investment company or revocation of credits under section 116J.665,
results in the disallowance to certified investors of any credits for that tax year or future
tax years and the participating investor is required to repay any credits claimed for the
previous year. Repayment must be made within 60 days of the decertification or the
revocation of the certification.
new text end

new text begin (b) The provisions of chapters 270C and 297I relating to audit, assessment, refund,
collection, and appeals are applicable to the credits claimed and repayment required under
this section. The commissioner may impose civil penalties as provided in section 297I.85,
and additional tax and penalties are subject to interest at the rate provided in section
270C.40, from the date payment was due.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2010.
new text end

Sec. 3. new text begin APPROPRIATION.
new text end

new text begin $75,000 is appropriated from the general fund to the commissioner of employment
and economic development to pay the costs of certifying Minnesota business investment
companies under section 1, to be available for the fiscal year ending June 30, 2011. The
general fund base for fiscal year 2012 is $50,000 and for fiscal year 2013 is $50,000.
new text end

ARTICLE 3

HISTORICAL STRUCTURE REHABILITATION CREDIT &
REIT CONFORMITY

Section 1.

new text begin [290.0695] CREDIT FOR HISTORIC STRUCTURE
REHABILITATION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) As used in this section, the terms defined in this
subdivision have the meanings given.
new text end

new text begin (b) "Certified historic structure" means a property located in Minnesota and listed
individually on the National Register of Historic Places or a historic property designated
by either a certified local government or a heritage preservation commission created
under the National Historic Preservation Act of 1966 and whose designation is approved
by the state historic preservation officer.
new text end

new text begin (c) "Eligible property" means a certified historic structure or a structure in a certified
historic district that is offered or used for residential or business purposes.
new text end

new text begin (d) "Structure in a certified historic district" means a structure located in Minnesota
that is certified by the State Historic Preservation Office as contributing to the historic
significance of a certified historic district listed on the National Register of Historic Places
or a local district that has been certified by the United States Department of the Interior.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A taxpayer who incurs costs for the rehabilitation of
eligible property may take a credit against the tax imposed under this chapter in an amount
equal to 20 percent of the total costs of rehabilitation. Costs of rehabilitation include,
but are not limited to, qualified rehabilitation expenditures as defined under section
47(c)(2)(A) of the Internal Revenue Code, provided that the costs of rehabilitation must
exceed 50 percent of the total basis in the property at the time the rehabilitation activity
begins and the rehabilitation must meet standards consistent with the standards of the
Secretary of the Interior for rehabilitation as determined by the State Historic Preservation
Office of the Minnesota Historical Society.
new text end

new text begin Subd. 3. new text end

new text begin Carryforward. new text end

new text begin If the amount of the credit under subdivision 2 exceeds the
tax liability under this chapter for the year in which the cost is incurred, the amount that
exceeds the tax liability may be carried forward to each of the ten taxable years succeeding
the taxable year in which the expense was incurred. The entire amount of the credit must
be carried to the earliest taxable year to which the amount may be carried. The unused
portion of the credit must be carried to the following taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners; transfers. new text end

new text begin (a) Credits granted to a
partnership, a limited liability company taxed as a partnership, or multiple owners of
property shall be passed through to the partners, members, or owners, respectively, pro
rata or pursuant to an executed agreement among the partners, members, or owners
documenting an alternate distribution method.
new text end

new text begin (b) Taxpayers eligible for credits may transfer, sell, or assign the credits in whole
or part. Any assignee may use acquired credits to offset up to 100 percent of the taxes
otherwise imposed by this chapter. The assignee shall perfect such transfer by notifying
the Department of Revenue in writing within 30 calendar days following the effective
date of the transfer in such form and manner as shall be prescribed by the Department
of Revenue. The proceeds of any sale or assignment of a credit shall be exempt from
taxation under this chapter.
new text end

new text begin Subd. 5. new text end

new text begin Process. new text end

new text begin To claim the credit, the taxpayer must apply to the State Historic
Preservation Office of the Minnesota Historical Society before a historic rehabilitation
project begins. The State Historic Preservation Office shall determine the amount of
eligible rehabilitation costs and whether the rehabilitation meets the standards of the
United States Department of the Interior. The State Historic Preservation Office shall issue
certificates verifying eligibility for and the amount of credit. The taxpayer shall attach
the certificate to any income tax return on which the credit is claimed. The State Historic
Preservation Office of the Minnesota Historical Society may collect fees for applications
for the historic preservation tax credit. Fee receipts must be deposited in the state treasury
and credited to a special account and are appropriated to the Minnesota Historical Society
to administer the tax credit program. Fees shall be set at an amount that does not exceed
the costs of administering the tax credit program.
new text end

new text begin Subd. 6. new text end

new text begin Mortgage certificates; credit for lending institutions. new text end

new text begin (a) The taxpayer
may elect, in lieu of the credit otherwise allowed under this section, to receive a historic
rehabilitation mortgage credit certificate.
new text end

new text begin (b) For purposes of this subdivision, a historic rehabilitation mortgage credit is a
certificate that is issued to the taxpayer according to procedures prescribed by the State
Historic Preservation Office with respect to the certified rehabilitation and which meets
the requirements of this paragraph. The face amount of the certificate must be equal to
the credit that would be allowable under subdivision 2 to the taxpayer with respect to
the rehabilitation. The certificate may only be transferred by the taxpayer to a lending
institution, including a nondepository home mortgage lending institution, in connection
with a loan:
new text end

new text begin (1) that is secured by the building with respect to which the credit is issued; and
new text end

new text begin (2) the proceeds of which may not be used for any purpose other than the acquisition
or rehabilitation of the building.
new text end

new text begin (c) In exchange for the certificate, the lending institution must provide to the
taxpayer an amount equal to the face amount of the certificate discounted by the amount
by which the federal income tax liability of the lending institution is increased due to its
use of the certificate in the manner provided in this section. That amount must be applied,
as directed by the taxpayer, in whole or in part, to reduce:
new text end

new text begin (1) the principal amount of the loan;
new text end

new text begin (2) the rate of interest on the loan; or
new text end

new text begin (3) the taxpayer's cost of purchasing the building, but only in the case of a qualified
historic home that is located in a poverty-impacted area as designated by the State Historic
Preservation Office.
new text end

new text begin (d) The lending institution may take as a credit against the tax due under this chapter
an amount equal to the amount specified in the certificate. If the amount of the discount
retained by the lender exceeds the amount by which the lending institution's federal
income tax liability is increased due to the use of a mortgage credit certificate, the excess
shall be refunded to the borrower with interest at the rate prescribed by the State Historic
Preservation Office. The lending institution may carry forward all unused credits under
this subdivision until exhausted. Nothing in this subdivision requires a lending institution
to accept a historic rehabilitation certificate from any person.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years after December 31,
2009, except that only projects that have obtained a certificate pursuant to subdivision 5
after June 30, 2010, are eligible for the credit.
new text end

Sec. 2.

Minnesota Statutes 2008, section 290.21, subdivision 4, is amended to read:

Subd. 4.

Dividends received from another corporation.

(a)(1) Eighty percent
of dividends received by a corporation during the taxable year from another corporation,
in which the recipient owns 20 percent or more of the stock, by vote and value, not
including stock described in section 1504(a)(4) of the Internal Revenue Code when the
corporate stock with respect to which dividends are paid does not constitute the stock in
trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
constitute property held by the taxpayer primarily for sale to customers in the ordinary
course of the taxpayer's trade or business, or when the trade or business of the taxpayer
does not consist principally of the holding of the stocks and the collection of the income
and gains therefrom; and

(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
an affiliated company transferred in an overall plan of reorganization and the dividend
is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
amended through December 31, 1989;

(ii) the remaining 20 percent of dividends if the dividends are received from a
corporation which is subject to tax under section 290.36 and which is a member of an
affiliated group of corporations as defined by the Internal Revenue Code and the dividend
is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
amended through December 31, 1989, or is deducted under an election under section
243(b) of the Internal Revenue Code; or

(iii) the remaining 20 percent of the dividends if the dividends are received from a
property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
member of an affiliated group of corporations as defined by the Internal Revenue Code
and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
under an election under section 243(b) of the Internal Revenue Code.

(b) Seventy percent of dividends received by a corporation during the taxable year
from another corporation in which the recipient owns less than 20 percent of the stock,
by vote or value, not including stock described in section 1504(a)(4) of the Internal
Revenue Code when the corporate stock with respect to which dividends are paid does not
constitute the stock in trade of the taxpayer, or does not constitute property held by the
taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
business, or when the trade or business of the taxpayer does not consist principally of the
holding of the stocks and the collection of income and gain therefrom.

(c) The dividend deduction provided in this subdivision shall be allowed only with
respect to dividends that are included in a corporation's Minnesota taxable net income
for the taxable year.

The dividend deduction provided in this subdivision does not apply to a dividend
from a corporation which, for the taxable year of the corporation in which the distribution
is made or for the next preceding taxable year of the corporation, is a corporation exempt
from tax under section 501 of the Internal Revenue Code.

The dividend deduction provided in this subdivision applies to the amount of
regulated investment company dividends only to the extent determined under section
854(b) of the Internal Revenue Code.

The dividend deduction provided in this subdivision shall not be allowed with
respect to any dividend for which a deduction is not allowed under the provisions of
section 246(c) of the Internal Revenue Code.

(d) If dividends received by a corporation that does not have nexus with Minnesota
under the provisions of Public Law 86-272 are included as income on the return of
an affiliated corporation permitted or required to file a combined report under section
290.17, subdivision 4, or 290.34, subdivision 2, then for purposes of this subdivision the
determination as to whether the trade or business of the corporation consists principally
of the holding of stocks and the collection of income and gains therefrom shall be made
with reference to the trade or business of the affiliated corporation having a nexus with
Minnesota.

(e) The deduction provided by this subdivision does not apply if the dividends are
paid by a FSC as defined in section 922 of the Internal Revenue Code.

(f) If one or more of the members of the unitary group whose income is included on
the combined report received a dividend, the deduction under this subdivision for each
member of the unitary business required to file a return under this chapter is the product
of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
income apportionable to this state for the taxable year under section 290.191 or 290.20.

new text begin (g) The deduction provided by this subdivision does not apply to dividends received
from a real estate investment trust, if the dividends are not considered to be dividends
under sections 243(d)(3) and 857(c) of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

ARTICLE 4

TAX INCREMENT FINANCING

Section 1.

Minnesota Statutes 2008, section 469.174, is amended by adding a
subdivision to read:

new text begin Subd. 10c. new text end

new text begin Compact development district. new text end

new text begin "Compact development district" means
a type of tax increment financing district consisting of a project, or portions of a project,
within which the authority finds by resolution that the following conditions are satisfied:
new text end

new text begin (1) parcels consisting of 70 percent of the area of the district are occupied by
buildings or other structures that are classified as class 3a property under section 273.13,
subdivision 24; and
new text end

new text begin (2) the planned redevelopment or development of the district, when completed, will
increase the total square footage of buildings, classified as class 3a under section 273.13,
subdivision 24, occupying the district by three times or more relative to the square footage
of similar buildings occupying the district when the resolution was approved.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts for which the request for
certification is made after June 30, 2009.
new text end

Sec. 2.

Minnesota Statutes 2008, section 469.175, is amended by adding a subdivision
to read:

new text begin Subd. 2b. new text end

new text begin Compact development districts; sunset. new text end

new text begin The authority to establish or
approve the tax increment financing plan for a new compact development district expires
on June 30, 2012.
new text end

Sec. 3.

Minnesota Statutes 2008, section 469.176, subdivision 1b, is amended to read:

Subd. 1b.

Duration limits; terms.

(a) No tax increment shall in any event be
paid to the authority

(1) after 15 years after receipt by the authority of the first increment for a renewal
and renovation district,

(2) after 20 years after receipt by the authority of the first increment for a soils
condition district,

(3) after eight years after receipt by the authority of the first increment for an
economic development district,

(4) for a housing district new text begin , a compact development district, new text end or a redevelopment
district, after 25 years from the date of receipt by the authority of the first increment.

(b) For purposes of determining a duration limit under this subdivision or subdivision
1e that is based on the receipt of an increment, any increments from taxes payable in
the year in which the district terminates shall be paid to the authority. This paragraph
does not affect a duration limit calculated from the date of approval of the tax increment
financing plan or based on the recovery of costs or to a duration limit under subdivision
1c. This paragraph does not supersede the restrictions on payment of delinquent taxes in
subdivision 1f.

(c) An action by the authority to waive or decline to accept an increment has no
effect for purposes of computing a duration limit based on the receipt of increment under
this subdivision or any other provision of law. The authority is deemed to have received an
increment for any year in which it waived or declined to accept an increment, regardless
of whether the increment was paid to the authority.

(d) Receipt by a hazardous substance subdistrict of an increment as a result of a
reduction in original net tax capacity under section 469.174, subdivision 7, paragraph
(b), does not constitute receipt of increment by the overlying district for the purpose of
calculating the duration limit under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts for which the request for
certification is made after June 30, 2009.
new text end

Sec. 4.

Minnesota Statutes 2008, section 469.176, is amended by adding a subdivision
to read:

new text begin Subd. 1i. new text end

new text begin Compact development districts. new text end

new text begin Tax increments derived from a compact
development district may be used only to pay:
new text end

new text begin (1) administrative expenses up to the amount permitted under subdivision 3;
new text end

new text begin (2) the cost of acquiring land located in the district or abutting the boundary of
the district;
new text end

new text begin (3) demolition and removal of buildings or other improvements and other site
preparation costs for lands located in the district or abutting the boundary of the district;
and
new text end

new text begin (4) installation of public infrastructure or public improvements serving the district,
but excluding the costs of streets, roads, highways, parking, or other public improvements
primarily designed to serve private passenger motor vehicles.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts for which the request for
certification is made after June 30, 2009.
new text end

Sec. 5.

Minnesota Statutes 2008, section 469.176, subdivision 4c, is amended to read:

Subd. 4c.

Economic development districts.

(a) Revenue derived from tax
increment from an economic development district may not be used to provide
improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form
to developments consisting of buildings and ancillary facilities, if more than 15 percent
of the buildings and facilities (determined on the basis of square footage) are used for a
purpose other than:

(1) the manufacturing or production of tangible personal property, including
processing resulting in the change in condition of the property;

(2) warehousing, storage, and distribution of tangible personal property, excluding
retail sales;

(3) research and development related to the activities listed in clause (1) or (2);

(4) telemarketing if that activity is the exclusive use of the property;

(5) tourism facilities;

(6) qualified border retail facilities; or

(7) space necessary for and related to the activities listed in clauses (1) to (6).

(b) deleted text begin Notwithstanding the provisions of this subdivision, revenue derived from tax
increment from an economic development district may be used to pay for site preparation
and public improvements, if the following conditions are met:
deleted text end

deleted text begin (1) bedrock soils conditions are present in 80 percent or more of the acreage of
the district;
deleted text end

deleted text begin (2) the estimated cost of physical preparation of the site exceeds the fair market
value of the land before completion of the preparation; and
deleted text end

deleted text begin (3) revenues from tax increments are expended only for the additional costs of
preparing the site because of unstable soils and the bedrock soils condition, the additional
cost of installing public improvements because of unstable soils or the bedrock soils
condition, and reasonable administrative costs.
deleted text end

deleted text begin (c) deleted text end Notwithstanding the provisions of this subdivision, revenues derived from tax
increment from an economic development district may be used to provide improvements,
loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000
square feet of any separately owned commercial facility located within the municipal
jurisdiction of a small city, if the revenues derived from increments are spent only to
assist the facility directly or for administrative expenses, the assistance is necessary to
develop the facility, and all of the increments, except those for administrative expenses,
are spent only for activities within the district.

deleted text begin (d) For purposes of this subdivision, a qualified border retail facility is a development
consisting of a shopping center or one or more retail stores, if the authority finds that all
of the following conditions are satisfied:
deleted text end

deleted text begin (1) the district is in a small city located within one mile or less of the border of
the state;
deleted text end

deleted text begin (2) the development is not located in the seven-county metropolitan area, as defined
in section 473.121, subdivision 2;
deleted text end

deleted text begin (3) the development will contain new buildings or will substantially rehabilitate
existing buildings that together contain at least 25,000 square feet of retail space; and
deleted text end

deleted text begin (4) without the use of tax increment financing for the development, the development
or a similar competing development will instead occur in the bordering state or province.
deleted text end

deleted text begin (e) deleted text end new text begin (c) new text end A city is a small city for purposes of this subdivision if the city was a small
city in the year in which the request for certification was made and applies for the rest of
the duration of the district, regardless of whether the city qualifies or ceases to qualify
as a small city.

new text begin (d) Notwithstanding the requirements of paragraph (a) and the finding requirements
of section 469.174, subdivision 12, tax increments from an economic development district
may be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or
assistance in any form to developments consisting of buildings and ancillary facilities, if
all the following conditions are met:
new text end

new text begin (1) the municipality finds that the project will create or retain jobs in this state,
including construction jobs, and that construction of the project would not have
commenced before July 1, 2011, without the authority providing assistance under the
provisions of this paragraph;
new text end

new text begin (2) construction of the project begins no later than July 1, 2011; and
new text end

new text begin (3) the request for certification of the district is made no later than June 30, 2011.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to any economic development district for which the request for certification
was made after June 30, 2009.
new text end

Sec. 6.

Minnesota Statutes 2008, section 469.176, is amended by adding a subdivision
to read:

new text begin Subd. 4m. new text end

new text begin Temporary authority to stimulate construction. new text end

new text begin (a) Notwithstanding
the restrictions in any other subdivision of this section or any other law to the contrary,
except the requirement to pay bonds to which the increments are pledged and the
provisions of subdivisions 4g and 4h, the authority may spend tax increments for one or
more of the following purposes:
new text end

new text begin (1) to provide improvements, loans, interest rate subsidies, or assistance in any
form to private development consisting of the construction or substantial rehabilitation
of buildings and ancillary facilities, if doing so will create or retain jobs in this state,
including construction jobs, and that the construction commences before July 1, 2011, and
would not have commenced before that date without the assistance; or
new text end

new text begin (2) to make an equity or similar investment in a corporation, partnership, or limited
liability company that the authority determines is necessary to make a construction of a
development that meets the requirements of clause (1) financially feasible.
new text end

new text begin (b) The authority may undertake actions under the authority of this subdivision only
after approval by the municipality of a written spending plan that specifically authorizes
the authority to take the actions. The municipality shall approve the spending plan only
after a public hearing after published notice in a newspaper of general circulation in
the municipality at least once, not less than ten days nor more than 30 days prior to the
date of the hearing.
new text end

new text begin (c) The authority to spend tax increments under this subdivision expires December
31, 2011.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to tax increments derived from a district, regardless of when the request for
certification was made.
new text end

Sec. 7.

Laws 1995, chapter 264, article 5, section 44, subdivision 4, as amended by
Laws 1996, chapter 471, article 7, section 21, and Laws 1997, chapter 231, article 10,
section 12, and Laws 2008, chapter 154, article 9, section 18, is amended to read:

Subd. 4.

Authority.

For housing replacement projects in the city of Crystal,
"authority" means the Crystal economic development authority. For housing replacement
projects in the city of Fridley, "authority" means the housing and redevelopment authority
in and for the city of Fridley or a successor in interest. For housing replacement
projects in the city of Minneapolis, "authority" means the Minneapolis community
development agency or its successors and assigns. For housing replacement projects
in the city of St. Paul, "authority" means the St. Paul housing and redevelopment
authority. For housing replacement projects in the city of Duluth, "authority" means the
Duluth economic development authority. For housing replacement projects in the city of
Richfield, "authority" is the authority as defined in Minnesota Statutes, section 469.174,
subdivision 2, that is designated by the governing body of the city of Richfield. For
housing replacement projects in the city of Columbia Heights, "authority" is the authority
as defined in Minnesota Statutes, section 469.174, subdivision 2, that is designated by
the governing body of the city of Columbia Heights. new text begin For housing replacement projects in
the city of Brooklyn Park, "authority" is the authority as defined in Minnesota Statutes,
section 469.174, subdivision 2, that is designated by the governing body of the city of
Brooklyn Park.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to the city of Brooklyn Park without local approval under Minnesota Statutes,
section 645.023, subdivision 1, paragraph (a).
new text end

Sec. 8.

Laws 1995, chapter 264, article 5, section 45, subdivision 1, as amended by
Laws 1996, chapter 471, article 7, section 22, and Laws 1997, chapter 231, article 10,
section 13, and Laws 2002, chapter 377, article 7, section 6, and Laws 2008, chapter 154,
article 9, section 19, is amended to read:

Subdivision 1.

Creation of projects.

(a) An authority may create a housing
replacement project under sections 44 to 47, as provided in this section.

(b) For the cities of Crystal, Fridley, Richfield, deleted text begin and deleted text end Columbia Heights new text begin , and Brooklyn
Park new text end , the authority may designate up to deleted text begin 50 deleted text end new text begin 100 new text end parcels in the city to be included in a
housing replacement district new text begin over the life of a district or districts new text end . deleted text begin No more than ten
parcels may be included in year one of the district, with up to ten additional parcels added
to the district in each of the following nine years. deleted text end For the cities of St. Paul and Duluth,
each authority may designate not more than 200 parcels in the city to be included in a
housing replacement district over the life of the district. For the city of Minneapolis, the
authority may designate not more than 400 parcels in the city to be included in housing
replacement districts over the life of the districts. The only parcels that may be included
in a district are (1) vacant sites, (2) parcels containing vacant houses, or (3) parcels
containing houses that are structurally substandard, as defined in Minnesota Statutes,
section 469.174, subdivision 10.

(c) The city in which the authority is located must pay at least 25 percent of the
housing replacement project costs from its general fund, a property tax levy, or other
unrestricted money, not including tax increments.

(d) The housing replacement district plan must have as its sole object the acquisition
of parcels for the purpose of preparing the site to be sold for market rate housing. As
used in this section, "market rate housing" means housing that has a market value that
does not exceed 150 percent of the average market value of single-family housing in that
municipality.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to the affected cities without local approval under Minnesota Statutes, section
645.023, subdivision 1, paragraph (a).
new text end

Sec. 9. new text begin CITY OF ST. PAUL; AUTHORITY TO EXERCISE SPECIAL LAW
AUTHORITY.
new text end

new text begin Notwithstanding the failure of the governing body of the city of St. Paul to approve
Laws 1995, chapter 264, article 5, sections 44 to 47, as required by Laws 1995, chapter
264, article 5, section 49, the provisions of sections 44 to 47, as amended, apply to the city
of St. Paul without local approval under Minnesota Statutes, section 645.023, subdivision
1, paragraph (a).
new text end

new text begin EFFECTIVE DATE. new text end

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

ARTICLE 5

MALL OF AMERICA

Section 1.

Laws 1986, chapter 391, section 1, is amended to read:

Section 1.

The legislature finds that providing areawide and local financial assistance,
including the provision of security for debt financing, but not including direct subsidies to
private interests, in the development of the deleted text begin former metropolitan stadium site deleted text end new text begin Industrial
Development District 1 (Airport South) of the city of Bloomington, as amended new text end , is a
public purpose of state, metropolitan, and local government in Minnesota and that it is a
benefit to the metropolitan area within the purpose of the metropolitan revenue distribution
program pursuant to chapter 473F.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon local approval of and
compliance by the governing body of the city of Bloomington with the requirements
of Minnesota Statutes, section 645.023.
new text end

Sec. 2.

Laws 2008, chapter 366, article 5, section 28, subdivision 1, is amended to read:

Subdivision 1.

Additional taxes authorized; use of proceeds.

Notwithstanding
Minnesota Statutes, section 477A.016, or any other law, ordinance, or charter provision
to the contrary, the governing body of the city of Bloomington may impose any or all of
the taxes described in this section. The proceeds of any taxes imposed under this section
or section 27, less refunds and the cost of collection, must be used to provide financing
for parking facilities or other public improvements for new text begin any phase of new text end the Mall of America
deleted text begin phase II deleted text end . The Port Authority of the city of Bloomington may, but is not required to,
issue or cause the sale of bonds, a developer's note, or other obligations to finance the
improvements. If a governmental entity other than the city of Bloomington issues the
obligations used to finance the parking facilities and other public improvements, the
city may transfer the funds available under this section and section 27 for financing the
project to the entity that issued the bonds.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon local approval of and
compliance by the governing body of the city of Bloomington with the requirements
of Minnesota Statutes, section 645.023.
new text end

Sec. 3.

Laws 2008, chapter 366, article 5, section 29, subdivision 1, is amended to read:

Subdivision 1.

Issuing authority.

(a) The city of Bloomington may contract with
any of the following authorities to issue and sell revenue bonds for the purposes and
in the amounts specified in subdivision 2:

(1) the commissioner of finance, exercising the authority granted under this section
and Minnesota Statutes, sections 16A.672 to 16A.675;

(2) the Agricultural and Economic Development Board, exercising the powers
granted under this section and Minnesota Statutes, chapter 41A; or

(3) the Minnesota Public Facilities Authority, exercising the powers granted under
this section and Minnesota Statutes, chapter 446A.

(b) The authority granted in this section is in addition to the statutes in paragraph
(a) and notwithstanding any contrary provisions in them.

(c) The contract must include as a party the developer of new text begin any new text end phase deleted text begin II deleted text end of the Mall
of America and may include as a party any other entity deemed appropriate by the city
of Bloomington, the issuing authority, and the developer.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon local approval of and
compliance by the governing body of the city of Bloomington with the requirements
of Minnesota Statutes, section 645.023.
new text end

Sec. 4.

Laws 2008, chapter 366, article 5, section 29, subdivision 2, is amended to read:

Subd. 2.

Purposes and amounts.

(a) The revenue bonds may be issued in a single
or multiple issues and sold for the following purposes:

(1) to pay the costs to design, construct, furnish, and equip parking facilities and
deleted text begin related deleted text end new text begin other new text end public improvements for new text begin any new text end phase deleted text begin II deleted text end of the Mall of America;

(2) to pay the costs of issuance, debt service, and bond insurance or other credit
enhancements, and to fund reserves; and

(3) to refund bonds issued under this section.

(b) The amount of bonds that may be issued for the purposes of paragraph (a), clause
(1), may not exceed per issue the estimated cost from time to time of the parking facilities
and other public improvements, including soft costs; the amount of bonds that may be
issued for the purposes of paragraph (a), clauses (2) and (3), is not limited.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon local approval of and
compliance by the governing body of the city of Bloomington with the requirements
of Minnesota Statutes, section 645.023.
new text end

Sec. 5.

Laws 2008, chapter 366, article 5, section 29, subdivision 4, is amended to read:

Subd. 4.

Sale and issuance; proceeds.

(a) The issuing authority may sell and issue
the bonds on the terms and conditions the issuing authority determines to be in the best
interests of the state after reviewing an agreement between the city of Bloomington and
the developer of new text begin any new text end phase deleted text begin II deleted text end of the Mall of America setting out the terms upon which
the city of Bloomington will use the proceeds of the bond sales. The bonds may be sold
at public or private sale at a price or prices the issuing authority finds appropriate. The
issuing authority may enter any agreements or pledges the issuing authority determines
necessary or useful to sell the bonds that are not inconsistent with this section.

(b) The city may enter into a preliminary agreement with the issuing authority under
which the city agrees, if the revenue bonds are not issued, to pay or cause to be paid the
costs and expenses incurred by the issuing authority relating to the proposed issuance of
the revenue bonds.

(c) The proceeds of the bonds issued under this section must be credited to a special
Mall of America revenue bond proceeds account with the issuing authority or a trustee
and are appropriated to the issuing authority for payment to the city of Bloomington
for the purposes specified in subdivision 2.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon local approval of and
compliance by the governing body of the city of Bloomington with the requirements
of Minnesota Statutes, section 645.023.
new text end

Sec. 6. new text begin REPEALER.
new text end

new text begin Laws 1996, chapter 464, article 1, section 8, subdivision 5, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon local approval of and
compliance by the governing body of the city of Bloomington with the requirements
of Minnesota Statutes, section 645.023.
new text end

ARTICLE 6

MINERALS

Section 1.

Minnesota Statutes 2009 Supplement, section 298.294, is amended to read:

298.294 INVESTMENT OF FUND.

(a) The trust fund established by section 298.292 shall be invested pursuant to law
by the State Board of Investment and the net interest, dividends, and other earnings arising
from the investments shall be transferred, except as provided in paragraph (b), on the first
day of each month to the trust and shall be included and become part of the trust fund.
The amounts transferred, including the interest, dividends, and other earnings earned
prior to July 13, 1982, together with the additional amount of $10,000,000 for fiscal year
1983, which is appropriated April 21, 1983, are appropriated from the trust fund to the
commissioner of Iron Range resources and rehabilitation for deposit in a separate account
for expenditure for the purposes set forth in section 298.292. Amounts appropriated
pursuant to this section shall not cancel but shall remain available unless expended.

(b) For fiscal years 2010 and 2011 only, deleted text begin $1,000,000 deleted text end new text begin $1,500,000 new text end of the net interest,
dividends, and other earnings under paragraph (a) shall be transferred to a special account.
Funds in the special account are available for loans or grants to businesses, with priority
given to businesses with 25 or fewer employees. Funds may be used for wage subsidies
new text begin for up to 52 weeks new text end of up to $5 per hour or other activities new text begin , including, but not limited to,
short-term operating expenses and purchase of equipment and materials by businesses
under financial duress, new text end that will create additional jobs in the taconite assistance area under
section 273.1341. Expenditures from the special account must be approved by at least
seven Iron Range Resources and Rehabilitation Board members.

(c) To qualify for a grant or loan, a business must be currently operating and have
been operating for one year immediately prior to its application for a loan or grant, and its
corporate headquarters must be located in the taconite assistance area.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Laws 2009, chapter 78, article 7, section 2, is amended to read:

Sec. 2.

IRON RANGE RESOURCES AND REHABILITATION; EARLY
SEPARATION INCENTIVE PROGRAM AUTHORIZATION.

(a) Notwithstanding any law to the contrary, the commissioner of Iron Range
resources and rehabilitation, in consultation with the commissioner of management and
budget, deleted text begin may deleted text end new text begin shall new text end offer a targeted early separation incentive program for employees of the
commissioner who have attained the age of 60 years or who have received credit for at
least 30 years of allowable service under the provisions of Minnesota Statutes, chapter 352.

(b) The early separation incentive program may include one or more of the following:

(1) employer-paid postseparation health, medical, and dental insurance until age
65; and

(2) cash incentives that may, but are not required to be, used to purchase additional
years of service credit through the Minnesota State Retirement System, to the extent that
the purchases are otherwise authorized by law.

(c) The commissioner of Iron Range resources and rehabilitation shall establish
eligibility requirements for employees to receive an incentive.

(d) The commissioner of Iron Range resources and rehabilitation, consistent with the
established program provisions under paragraph (b), and with the eligibility requirements
under paragraph (c), may designate specific programs or employees as eligible to be
offered the incentive program.

(e) Acceptance of the offered incentive must be voluntary on the part of the
employee and must be in writing. The incentive may only be offered at the sole discretion
of the commissioner of Iron Range resources and rehabilitation.

(f) The cost of the incentive is payable solely by funds made available to the
commissioner of Iron Range resources and rehabilitation by law, but only on prior approval
of the expenditures by a majority of the Iron Range Resources and Rehabilitation Board.

(g) This section and section 3 are repealed deleted text begin June 30, 2011 deleted text end new text begin December 31, 2012 new text end .

new text begin EFFECTIVE DATE. new text end

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

Sec. 3. new text begin 2010 DISTRIBUTIONS ONLY.
new text end

new text begin For distributions in 2010 only, a special fund is established to receive 27.067 cents
per ton that otherwise would be allocated under Minnesota Statutes, section 298.28,
subdivision 6:
new text end

new text begin (1) 0.764 cent per ton must be paid to Northern Minnesota Dental to provide
incentives for at least two dentists to establish dental practices in high-need areas of the
taconite tax relief area;
new text end

new text begin (2) 0.955 cent per ton must be paid to the city of Virginia for repairs and geothermal
heat at the Olcott Park Greenhouse/Virginia Commons project;
new text end

new text begin (3) 0.637 cent per ton must be paid to the city of Virginia for health and safety
repairs at the Miners Memorial;
new text end

new text begin (4) 0.955 cent per ton must be paid to the city of Eveleth for the reconstruction
of Highway 142/Grant and Park Avenues;
new text end

new text begin (5) 0.478 cent per ton must be paid to the Greenway Joint Recreation Board for
upgrades and capital improvements to the Hodgins Berardo Arena in Coleraine;
new text end

new text begin (6) 0.796 cent per ton must be paid to the city of Calumet for water treatment and
pumphouse modifications;
new text end

new text begin (7) 0.159 cent per ton must be paid to the city of Bovey for residential and
commercial claims for water damage due to water and flood-related damage caused by
the Canisteo Pit;
new text end

new text begin (8) 0.637 cent per ton must be paid to the city of Nashwauk for a community and
child care center;
new text end

new text begin (9) 0.637 cent per ton must be paid to the city of Keewatin for water and sewer
upgrades;
new text end

new text begin (10) 0.637 cent per ton must be paid to the city of Marble for the city hall and
library project;
new text end

new text begin (11) 0.955 cent per ton must be paid to the city of Grand Rapids for extension of
water and sewer services for Lakewood Housing;
new text end

new text begin (12) 0.159 cent per ton must be paid to the city of Grand Rapids for exhibits at
the Children's Museum;
new text end

new text begin (13) 0.637 cent per ton must be paid to the city of Grand Rapids for Block 20/21 soil
corrections. This amount must be matched by local sources;
new text end

new text begin (14) 0.605 cent per ton must be paid to the city of Aitkin for three water loops;
new text end

new text begin (15) 0.048 cent per ton must be paid to the city of Aitkin for signage;
new text end

new text begin (16) 0.159 cent per ton must be paid to Itasca County for an ATV trail;
new text end

new text begin (17) 0.637 cent per ton must be paid to the city of Cohasset for the Beiers Road
railroad crossing;
new text end

new text begin (18) 0.088 cent per ton must be paid to the city of Clinton for expansion and striping
of the community center parking lot;
new text end

new text begin (19) 0.398 cent per ton must be paid to the city of Kinney for water line replacement;
new text end

new text begin (20) 0.796 cent per ton must be paid to the city of Gilbert for infrastructure
improvements, milling, and overlay for Summit Street between Alaska Avenue and
Highway 135;
new text end

new text begin (21) 0.318 cent per ton must be paid to the city of Gilbert for sanitary sewer main
replacements and improvements in the Northeast Lower Alley area;
new text end

new text begin (22) 0.637 cent per ton must be paid to the town of White for replacement of the
Stepetz Road culvert;
new text end

new text begin (23) 0.637 cent per ton must be paid to the city of Buhl for reconstruction of Sharon
Street and associated infrastructure;
new text end

new text begin (24) 0.637 cent per ton must be paid to the city of Mountain Iron for site
improvements at the Park Ridge development;
new text end

new text begin (25) 0.796 cent per ton must be paid to the city of Mountain Iron for infrastructure
and site preparation for its renewable and sustainable energy park;
new text end

new text begin (26) 0.637 cent per ton must be paid to the city of Biwabik for sanitary sewer
improvements;
new text end

new text begin (27) 0.796 cent per ton must be paid to the city of Aurora for alley and road
rebuilding for the Summit Addition;
new text end

new text begin (28) 0.955 cent per ton must be paid to the city of Silver Bay for bioenergy facility
improvements;
new text end

new text begin (29) 0.318 cent per ton must be paid to the city of Grand Marais for water and
sewer infrastructure improvements;
new text end

new text begin (30) 0.318 cent per ton must be paid to the city of Orr for airport, water, and sewer
improvements;
new text end

new text begin (31) 0.318 cent per ton must be paid to the city of Cook for street and bridge
improvements;
new text end

new text begin (32) 0.955 cent per ton must be paid to the city of Ely for street, water, and sewer
improvements;
new text end

new text begin (33) 0.318 cent per ton must be paid to the city of Tower for water and sewer
improvements;
new text end

new text begin (34) 0.955 cent per ton must be paid to the city of Two Harbors for water and sewer
improvements;
new text end

new text begin (35) 0.637 cent per ton must be paid to the city of Babbitt for water and sewer
improvements;
new text end

new text begin (36) 0.096 cent per ton must be paid to the township of Duluth for infrastructure
improvements;
new text end

new text begin (37) 0.096 cent per ton must be paid to the township of Tofte for infrastructure
improvements;
new text end

new text begin (38) 3.184 cents per ton must be paid to the city of Hibbing for sewer improvements;
new text end

new text begin (39) 1.273 cents per ton must be paid to the city of Chisholm for NW Area Project
infrastructure improvements;
new text end

new text begin (40) 0.318 cent per ton must be paid to the city of Chisholm for health and safety
improvements at the athletic facility;
new text end

new text begin (41) 0.796 cent per ton must be paid to the city of Hoyt Lakes for residential street
improvements;
new text end

new text begin (42) 0.796 cent per ton must be paid to the Bois Forte Indian Reservation for
infrastructure related to a housing development; and
new text end

new text begin (43) 0.159 cent per ton must be paid to Balkan Township for building improvements.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for the 2010 distribution, all of which
must be made in the August 2010 payment.
new text end

ARTICLE 7

GREEN ENERGY REVENUE BONDS

Section 1.

new text begin [216C.435] DEFINITIONS; ENERGY IMPROVEMENTS
FINANCING PROGRAM FOR RESIDENTIAL AND BUSINESS PROPERTY.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purposes of this section and section 216C.436, the
terms defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin City. new text end

new text begin "City" means a home rule charter or statutory city.
new text end

new text begin Subd. 3. new text end

new text begin Energy audit. new text end

new text begin "Energy audit" means a formal evaluation of the energy
consumption of a building by a certified energy auditor, whose certification is approved by
the commissioner, for the purpose of identifying appropriate energy improvements that
could be made to the building and including an estimate of the length of time a specific
energy improvement will take to repay its purchase and installation costs, based on the
amount of energy saved and estimated future energy prices.
new text end

new text begin Subd. 4. new text end

new text begin Energy improvement. new text end

new text begin "Energy improvement" means:
new text end

new text begin (1) any renovation or retrofitting of a building to improve energy efficiency that
is permanently affixed to the property and that results in a net reduction in energy
consumption without altering the principal source of energy; or
new text end

new text begin (2) a renewable energy system attached to or installed within or proximate to a
building that generates electrical or thermal energy from a renewable energy source.
new text end

new text begin Subd. 5. new text end

new text begin Qualifying real property. new text end

new text begin "Qualifying real property" means a
single-family or multifamily residential dwelling, or a commercial or industrial building,
that the city has determined, after review of an energy audit or renewable energy system
feasibility study, can be benefited by installation of energy improvements.
new text end

new text begin Subd. 6. new text end

new text begin Renewable energy. new text end

new text begin "Renewable energy" means energy produced by
means of solar thermal, solar photovoltaic, wind, or geothermal resources.
new text end

new text begin Subd. 7. new text end

new text begin Renewable energy system feasibility study. new text end

new text begin "Renewable energy system
feasibility study" means a written study, conducted by a contractor trained to perform that
analysis, for the purpose of determining the feasibility of installing a renewable energy
system in a building, including an estimate of the length of time a specific renewable
energy system will take to repay its purchase and installation costs, based on the amount of
energy saved and estimated future energy prices. For a geothermal energy improvement,
the feasibility study must calculate net savings in terms of nongeothermal energy and costs.
new text end

new text begin Subd. 8. new text end

new text begin Solar thermal. new text end

new text begin "Solar thermal" has the meaning given to "qualifying solar
thermal project" in section 216B.2411, subdivision 2, paragraph (e).
new text end

new text begin Subd. 9. new text end

new text begin Solar photovoltaic. new text end

new text begin "Solar photovoltaic" has the meaning given in section
216C.06, subdivision 16, and must meet the requirements of section 216C.25.
new text end

new text begin Subd. 10. new text end

new text begin Cost-effective energy efficiency improvements. new text end

new text begin "Cost-effective energy
efficiency improvements" mean projects that have a simple payback of ten years or less.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

new text begin [216C.436] VOLUNTARY ENERGY EFFICIENCY FINANCING
PROGRAM FOR CITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Program authority. new text end

new text begin A city may establish a program to make loans
to owners of qualifying real property to pay for cost-effective energy improvements to
the qualifying real property with the net proceeds and interest earnings of revenue bonds
authorized in this section.
new text end

new text begin Subd. 2. new text end

new text begin Program requirements. new text end

new text begin A loan program must:
new text end

new text begin (1) impose requirements and conditions on loans to ensure their timely repayment;
new text end

new text begin (2) require an energy audit or renewable energy system feasibility study to be
conducted on the qualifying real property and reviewed by the city prior to approval of
the loan;
new text end

new text begin (3) inspect the installation and verify the performance of energy improvements
financed by the loan program;
new text end

new text begin (4) require that all cost-effective energy efficiency improvements be made to a
qualifying real property prior to, or in conjunction with, an applicant receiving a loan for a
renewable energy system for that property;
new text end

new text begin (5) have work funded by a loan be done by licensed contractors as required by
chapter 326B or other law or ordinance;
new text end

new text begin (6) require disclosures to borrowers by the city of the risks involved in borrowing,
including the risk of foreclosure if a tax delinquency results from a default;
new text end

new text begin (7) provide loans only to those who demonstrate an ability to repay the loan;
new text end

new text begin (8) not make loans for a qualifying real property in which the owner has a negative
equity or is not current on mortgage or real property tax payments;
new text end

new text begin (9) provide that payments and assessments are not accelerated due to a default and
that a tax delinquency exists only for assessments not paid when due; and
new text end

new text begin (10) that liability for special assessments related to the loan runs with the qualifying
real property.
new text end

new text begin Subd. 3. new text end

new text begin Loan terms. new text end

new text begin Loans made under this section must have:
new text end

new text begin (1) a term not to exceed the weighted average of the useful life of the energy
improvements installed, as determined by the city, but in no event may a term exceed
20 years;
new text end

new text begin (2) a principal amount not to exceed the lesser of ten percent of the appraised value
of the real property on which the improvements are to be installed or the actual cost of
installing the energy improvements, including the costs of necessary equipment, materials,
and labor, the costs of each related energy audit or renewable energy system feasibility
study, and the cost of verification of installation; and
new text end

new text begin (3) an interest rate sufficient to pay the financing costs of the program, including the
issuance of bonds and loan delinquencies.
new text end

new text begin Subd. 4. new text end

new text begin Coordination with other programs. new text end

new text begin A loan program must include
cooperation and coordination with the conservation improvement activities of the utility
serving the qualifying real property and other public and private energy improvement
programs.
new text end

new text begin Subd. 5. new text end

new text begin Certificate of participation. new text end

new text begin Upon completion of a project, a city shall
provide a borrower with a certificate stating participation in the program and what energy
improvements have been made with loan proceeds.
new text end

new text begin Subd. 6. new text end

new text begin Loan repayment. new text end

new text begin In addition to any other method established in the
program for loan repayment, a city making a loan under this section may:
new text end

new text begin (1) secure the loan with a lien against the benefited qualifying real property; and
new text end

new text begin (2) collect loan repayments as a special assessment as provided for in section
429.101 or by charter.
new text end

new text begin Subd. 7. new text end

new text begin Bond issuance; repayment. new text end

new text begin (a) A city may issue revenue bonds as
provided in chapter 475 for the purposes of this section.
new text end

new text begin (b) The bonds must be payable as to both principal and interest solely from the
revenues from the assessments established in subdivision 6.
new text end

new text begin (c) No holder of bonds issued under this subdivision may compel any exercise
of the taxing power of the city that issued the bonds to pay principal or interest on the
bonds. Bonds issued under this subdivision are not a debt or obligation of the city that
issued them, nor is the payment of the bonds enforceable out of any money other than the
revenue pledged to the payment of the bonds.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2008, section 429.101, subdivision 1, is amended to read:

Subdivision 1.

Ordinances.

(a) In addition to any other method authorized by
law or charter, the governing body of any municipality may provide for the collection
of unpaid special charges as a special assessment against the property benefited for all
or any part of the cost of:

(1) snow, ice, or rubbish removal from sidewalks;

(2) weed elimination from streets or private property;

(3) removal or elimination of public health or safety hazards from private property,
excluding any structure included under the provisions of sections 463.15 to 463.26;

(4) installation or repair of water service lines, street sprinkling or other dust
treatment of streets;

(5) the trimming and care of trees and the removal of unsound trees from any street;

(6) the treatment and removal of insect infested or diseased trees on private property,
the repair of sidewalks and alleys;

(7) the operation of a street lighting system;

(8) the operation and maintenance of a fire protection or a pedestrian skyway system;

(9) inspections relating to a municipal housing maintenance code violation;

(10) the recovery of any disbursements under section 504B.445, subdivision 4,
clause (5), including disbursements for payment of utility bills and other services, even if
provided by a third party, necessary to remedy violations as described in section 504B.445,
subdivision 4, clause (2); deleted text begin or deleted text end

(11) [Repealed, 2004 c 275 s 5]

(12) the recovery of delinquent vacant building registration fees under a municipal
program designed to identify and register vacant buildings new text begin ; or
new text end

new text begin (13) energy improvements to residential or business property, as authorized under
section 216C.435 new text end .

(b) The council may by ordinance adopt regulations consistent with this section to
make this authority effective, including, at the option of the council, provisions for placing
primary responsibility upon the property owner or occupant to do the work personally
(except in the case of street sprinkling or other dust treatment, alley repair, tree trimming,
care, and removal new text begin , new text end or the operation of a street lighting system) upon notice before the work
is undertaken, and for collection from the property owner or other person served of the
charges when due before unpaid charges are made a special assessment.

new text begin EFFECTIVE DATE. new text end

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