SF 2729

as introduced - 86th Legislature (2009 - 2010) Posted on 02/18/2010 03:23pm

A bill for an act
relating to property taxation; repealing changes to the green acres program and
agricultural classifications made in 2008 and 2009; amending Minnesota Statutes
2009 Supplement, sections 273.111, subdivisions 3, 11a; 273.13, subdivision
23; repealing Minnesota Statutes 2008, sections 273.111, subdivisions 8,
11; 273.1384, subdivision 2; Minnesota Statutes 2009 Supplement, sections
273.1108; 273.111, subdivisions 3a, 4, 9; 273.114; Laws 2008, chapter 366,
article 6, section 52.

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

Section 1.

Minnesota Statutes 2009 Supplement, section 273.111, subdivision 3,
is amended to read:

Subd. 3.

Requirements.

(a) Real estate consisting of ten acres or more or a nursery
or greenhouse, and qualifying for classification as class new text begin 1b, new text end 2a new text begin , or 2b new text end under section 273.13,
shall be entitled to valuation and tax deferment under this section new text begin only new text end if it is primarily
devoted to agricultural use, new text begin and meets the qualifications in subdivision 6, new text end and either:

(1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the
owner or is real estate which is farmed with the real estate which contains the homestead
property; or

(2) has been in possession of the applicant, the applicant's spouse, parent, or sibling,
or any combination thereof, for a period of at least seven years prior to application for
benefits under the provisions of this section, or is real estate which is farmed with the
real estate which qualifies under this clause and is within four townships or cities or
combination thereof from the qualifying real estate; or

(3) is the homestead of an individual who is part of an entity described in paragraph
(b), clause (1), (2), or (3); or

(4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor,
partnership, or corporation which also owns the nursery or greenhouse operations on the
parcel or parcels, provided that only the acres used to produce nursery stock qualify
for treatment under this section.

(b) Valuation of real estate under this section is limited to parcels owned by
individuals except for:

(1) a family farm entity or authorized farm entity regulated under section 500.24;

(2) an entity, not regulated under section 500.24, in which the majority of the
members, partners, or shareholders are related and at least one of the members, partners,
or shareholders either resides on the land or actively operates the land; and

(3) corporations that derive 80 percent or more of their gross receipts from the
wholesale or retail sale of horticultural or nursery stock.

The terms in this paragraph have the meanings given in section 500.24, where
applicable.

(c) Land that previously qualified for tax deferment under this section and no longer
qualifies because it is not primarily used for agricultural purposes but would otherwise
qualify under deleted text begin Minnesota Statutes 2006, section 273.111, subdivision deleted text end new text begin subdivisions new text end 3 new text begin and 6 new text end ,
for a period of at least three years will not be required to make payment of the previously
deferred taxes, notwithstanding the provisions of subdivision 9. Sale of the land prior to
the expiration of the three-year period requires payment of deferred taxes as follows: sale
in the year the land no longer qualifies requires payment of the current year's deferred
taxes plus payment of deferred taxes for the two prior years; sale during the second year
the land no longer qualifies requires payment of the current year's deferred taxes plus
payment of the deferred taxes for the prior year; and sale during the third year the land
no longer qualifies requires payment of the current year's deferred taxes. Deferred taxes
shall be paid even if the land qualifies pursuant to subdivision 11a. When such property is
sold or no longer qualifies under this paragraph, or at the end of the three-year period,
whichever comes first, all deferred special assessments plus interest are payable in equal
installments spread over the time remaining until the last maturity date of the bonds issued
to finance the improvement for which the assessments were levied. If the bonds have
matured, the deferred special assessments plus interest are payable within 90 days. The
provisions of section 429.061, subdivision 2, apply to the collection of these installments.
Penalties are not imposed on any such special assessments if timely paid.

(d) Land that is enrolled in the reinvest in Minnesota program under sections
103F.501 to 103F.535, the federal Conservation Reserve Program as contained in Public
Law 99-198, or a similar state or federal conservation program qualifies for valuation and
assessment deferral under this section if it was in agricultural use before enrollment deleted text begin and,
provided that, in the case of land enrolled in the reinvest in Minnesota program, it is not
subject to a perpetual easement deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2010 and
thereafter, for taxes payable in 2011 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2009 Supplement, section 273.111, subdivision 11a, is
amended to read:

Subd. 11a.

Continuation of tax treatment upon sale or other event.

(a) When
real property qualifying under deleted text begin subdivision deleted text end new text begin subdivisions new text end 3 new text begin and 6 new text end is sold or transferred, no
additional taxes or deferred special assessments plus interest shall be extended against the
property provided the property continues to qualify pursuant to deleted text begin subdivision deleted text end new text begin subdivisions new text end
3 new text begin and 6 new text end , and provided the new owner files an application for continued deferment within
30 days after the sale or transfer.

new text begin For purposes of meeting the income requirements of subdivision 6, the property
purchased shall be considered in conjunction with other qualifying property owned by
the purchaser.
new text end

(b) The following transfers do not constitute a change of ownership of property
qualifying under subdivision 3:

(1) death of a property owner when a surviving owner retains ownership of the
property thereafter;

(2) divorce of a married couple when one of the spouses retains ownership of the
property thereafter;

(3) marriage of a single property owner when that owner retains ownership of the
property in whole or in part thereafter;

(4) organization into or reorganization of a farm entity ownership under section
500.24, if all owners maintain the same beneficial interest both before and after the
organizational changes; and

(5) placement of the property in trust provided that the individual owners of the
property are the grantors of the trust and they maintain the same beneficial interest both
before and after placement of the property in trust.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2010 and
thereafter, for taxes payable in 2011 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2009 Supplement, section 273.13, subdivision 23, is
amended to read:

Subd. 23.

Class 2.

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

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

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

deleted text begin (c) deleted text end Class 2b deleted text begin rural vacant land consists of parcels of property, or portions thereof, that
are unplatted deleted text end new text begin property is (1) new text end real estate, rural in character and deleted text begin not used for agricultural
purposes, including land deleted text end used new text begin exclusively new text end for growing trees for timber, lumber, and
wood and wood products deleted text begin , deleted text end new text begin ; (2) real estate new text end that is not improved with a structure new text begin and is
used exclusively for growing trees for timber, lumber, and wood and wood products, if
the owner has participated or is participating in a cost-sharing program for afforestration,
reforestration, or timber stand improvement on that particular property, administered
or coordinated by the commissioner of natural resources; or (3) real estate that is
nonhomestead agricultural land new text end . deleted text begin The presence of a minor, ancillary nonresidential
structure as defined by the commissioner of revenue does not disqualify the property from
classification under this paragraph. Any parcel of 20 acres or more improved with a
structure that is not a minor, ancillary nonresidential structure must be split-classified, and
ten acres must be assigned to the split parcel containing the structure. deleted text end Class 2b property
has a net class rate of one percent of market value unless it deleted text begin is part of an agricultural
homestead under paragraph (a), or deleted text end qualifies as class 2c under paragraph deleted text begin (d) deleted text end new text begin (c) new text end .

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

deleted text begin (e) deleted text end new text begin (d) new text end Agricultural land as used in this section means contiguous acreage of ten
acres or more, used during the preceding year for agricultural purposes. "Agricultural
purposes" as used in this section means the raising, cultivation, drying, or storage of
agricultural products for sale, or the storage of machinery or equipment used in support
of agricultural production by the same farm entity. For a property to be classified as
agricultural based only on the drying or storage of agricultural products, the products
being dried or stored must have been produced by the same farm entity as the entity
operating the drying or storage facility. "Agricultural purposes" also includes enrollment
in the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal
Conservation Reserve Program as contained in Public Law 99-198 or a similar state
or federal conservation program if the property was classified as agricultural (i) under
this subdivision for the assessment year 2002 or (ii) in the year prior to its enrollment. new text begin
Contiguous acreage on the same parcel, or contiguous acreage on an immediately adjacent
parcel under the same ownership, may also qualify as agricultural land, but only if it
is pasture, timber, waste, unusable wild land, or land included in state or federal farm
programs. new text end Agricultural classification new text begin for property shall be determined excluding the
house, garage, and immediately surrounding one acre of land, and new text end shall not be based
upon the market value of any residential structures on the parcel or contiguous parcels
under the same ownership.

deleted text begin (f) deleted text end new text begin (e) new text end Real estate of less than ten acres, which is exclusively or intensively used for
raising or cultivating agricultural products, shall be considered as agricultural land. To
qualify under this paragraph, property that includes a residential structure must be used
intensively for one of the following purposes:

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

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

(iii) for livestock or poultry confinement, provided that land that is used only for
pasturing and grazing does not qualify; or

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

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

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

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

deleted text begin (i) deleted text end new text begin (h) new text end The term "agricultural products" as used in this subdivision includes
production for sale of:

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

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

(3) the commercial boarding of horses if the boarding is done in conjunction with
raising or cultivating agricultural products as defined in clause (1);

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

(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed
under section 97A.115;

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

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

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

deleted text begin (j) deleted text end new text begin (i) new text end If a parcel used for agricultural purposes is also used for commercial or
industrial purposes, including but not limited to:

(1) wholesale and retail sales;

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

(3) warehousing or storage of processed goods; and

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

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

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

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

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

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

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

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

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

(1) a legal description of the property;

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

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

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

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

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

deleted text begin (o) deleted text end new text begin (n) new text end The deleted text begin definitions deleted text end new text begin definition new text end prescribed by the commissioner under deleted text begin paragraphs deleted text end new text begin
paragraph new text end (c) deleted text begin and (d) are deleted text end new text begin is new text end not deleted text begin rules deleted text end new text begin a rule new text end and deleted text begin are deleted text end new text begin is new text end exempt from the rulemaking
provisions of chapter 14, and the provisions in section 14.386 concerning exempt rules
do not apply.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2010 and
thereafter, for taxes payable in 2011 and thereafter.
new text end

Sec. 4. new text begin LAND REMOVED FROM PROGRAM.
new text end

new text begin (a) Any land that had been enrolled in the Minnesota Agricultural Property Tax
Law under Minnesota Statutes 2006, section 273.111, and that was removed from the
program between May 21, 2008, and the effective date of this section, must be reinstated
to the program at the request of the owner provided that the eligibility requirements under
Minnesota Statutes 2006, section 273.111, subdivisions 3 and 6, are met.
new text end

new text begin (b) If additional taxes have been paid by a property owner prior to the effective
date of this section with respect to property described in paragraph (a), as a result of the
property being removed from the program authorized under Minnesota Statutes 2006,
section 273.111, the county must repay the property owner in the manner prescribed
by the commissioner of revenue.
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. 5. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall correct internal cross-references to sections that are
affected by the relettering in section 3.
new text end

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

new text begin (a) new text end new text begin Minnesota Statutes 2008, section 273.111, subdivisions 8 and 11, new text end new text begin are repealed,
and Minnesota Statutes 2006, section 273.111, subdivisions 8 and 11, are reenacted.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2008, section 273.1384, subdivision 2, new text end new text begin is repealed, and
Minnesota Statutes 2006, section 273.1384, subdivision 2, is reenacted.
new text end

new text begin (c) new text end new text begin Minnesota Statutes 2009 Supplement, section 273.111, subdivision 4, new text end new text begin is repealed,
and Minnesota Statutes 2006, section 273.111, subdivision 4, is reenacted.
new text end

new text begin (d) new text end new text begin Minnesota Statutes 2009 Supplement, section 273.111, subdivision 9, new text end new text begin is repealed,
and Minnesota Statutes 2006, section 273.111, subdivision 9, is reenacted.
new text end

new text begin (e) new text end new text begin Minnesota Statutes 2009 Supplement, sections 273.1108; 273.111, subdivision
3a; and 273.114, new text end new text begin are repealed.
new text end

new text begin (f) new text end new text begin Laws 2008, chapter 366, article 6, section 52, paragraph (c), new text end new text begin is repealed, and
pursuant to Minnesota Statutes, section 645.36, Minnesota Statutes 2006, section 273.111,
subdivision 6, is revived.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraphs (a) to (e) are effective for assessment year 2010
and thereafter, for taxes payable in 2011 and thereafter. Paragraph (f) is effective the
day following final enactment.
new text end