2nd Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to the financing and operation of government 1.3 in this state; providing property tax reform; making 1.4 changes to property rates, levies, notices, hearings, 1.5 assessments, exemptions, aids, and credits; providing 1.6 bonding and levy authority, and other powers to 1.7 certain political subdivisions; making changes to 1.8 income, sales, excise, premiums, health care provider, 1.9 and solid waste tax provisions; authorizing the 1.10 imposition of certain local sales, use, and excise 1.11 taxes; modifying provisions relating to the health 1.12 care access fund and to the budget reserve and other 1.13 accounts; authorizing certain tax incentives in 1.14 certain border communities; making changes to tax 1.15 increment financing, regional development, housing, 1.16 and economic development provisions; providing for the 1.17 taxation of taconite and the distribution of taconite 1.18 taxes; modifying provisions relating to the taxation 1.19 and operation of gaming; making miscellaneous changes 1.20 to state and local tax and operating provisions; 1.21 amending Minnesota Statutes 1996, sections 16A.6701, 1.22 by adding a subdivision; 124A.03, subdivision 1f; 1.23 240.15, subdivisions 1 and 5; 273.1398, subdivisions 2 1.24 and 4; 275.07, by adding a subdivision; 290.01, 1.25 subdivision 3b; 290.06, subdivisions 2c, and by adding 1.26 subdivisions; 290.067, subdivisions 2 and 2a; 1.27 290.0671, by adding subdivisions; 290.091, subdivision 1.28 2; 290.0921, subdivision 3a; 290.10; 290.191, 1.29 subdivisions 1, 6, and 11; 290.21, subdivision 3; 1.30 290A.03, subdivision 3; 297A.02, subdivisions 2 and 4; 1.31 297A.135, subdivision 4; 297A.25, by adding 1.32 subdivisions; 297E.02, subdivisions 1, 4, and 6; 1.33 298.22, subdivision 2; 298.221; 298.2213, subdivision 1.34 4; 298.225, subdivision 1; 298.28, subdivisions 2, 3, 1.35 4, 6, 7, 9, and 10; 298.48, subdivision 1; 462.396, 1.36 subdivision 2; 469.015, subdivision 4; 469.170, by 1.37 adding a subdivision; 469.171, subdivision 9; 469.174, 1.38 by adding a subdivision; 469.175, subdivisions 5, 6, 1.39 6a, and by adding a subdivision; 469.176, subdivision 1.40 7; 469.177, by adding a subdivision; 469.1771, 1.41 subdivision 5, and by adding a subdivision; 473.39, by 1.42 adding a subdivision; 473.3915, subdivisions 2, 3, and 1.43 5; 477A.0122, subdivision 6; 477A.03, subdivision 2; 1.44 Minnesota Statutes 1997 Supplement, sections 60A.15, 1.45 subdivision 1; 124.239, subdivisions 5, 5a, and 5b; 1.46 270.60, subdivision 4; 270.67, subdivision 2; 272.02, 2.1 subdivision 1; 272.115, subdivisions 4 and 5; 273.124, 2.2 subdivision 14; 273.126, subdivision 3; 273.127, 2.3 subdivision 3; 273.13, subdivisions 22, 23, 24, 25, 2.4 and 31; 273.1382, subdivisions 1 and 3; 275.065, 2.5 subdivisions 3 and 6; 275.16; 275.70, by adding a 2.6 subdivision; 287.08; 289A.02, subdivision 7; 289A.19, 2.7 subdivision 2; 290.01, subdivisions 19, 19a, 19b, 19c, 2.8 19f, and 31; 290.0672, subdivision 1; 290.0673, 2.9 subdivision 6; 290.091, subdivision 6; 290.371, 2.10 subdivision 2; 290A.03, subdivision 15; 290B.04, 2.11 subdivisions 1 and 3; 290B.05, subdivisions 1, 2, and 2.12 3; 290B.06; 290B.07; 291.005, subdivision 1; 295.52, 2.13 subdivisions 4 and 4a; 295.53, subdivisions 4 and 4a; 2.14 297A.25, subdivisions 11, 59, and by adding a 2.15 subdivision; 297A.256, subdivision 1; 297B.03; 2.16 297G.01, by adding a subdivision; 297G.03, subdivision 2.17 1; 298.24, subdivision 1; 298.28, subdivisions 9a and 2.18 9b; 298.296, subdivision 4; 462A.071, subdivisions 2, 2.19 4, and 8; 465.715, subdivision 1; 469.1812, 2.20 subdivision 4; 477A.011, subdivision 36; Laws 1965, 2.21 chapter 326, section 1, subdivision 5, as amended; 2.22 Laws 1971, chapter 773, sections 1, as amended, and 2, 2.23 as amended; Laws 1976, chapter 162, section 1, as 2.24 amended; Laws 1984, chapter 380, sections 1, as 2.25 amended, and 2; Laws 1991, chapter 291, article 8, 2.26 section 27, subdivision 3; Laws 1992, chapter 511, 2.27 article 2, section 52, as amended; Laws 1993, chapter 2.28 375, article 9, section 46, subdivision 2; Laws 1994, 2.29 chapter 571, article 11, by adding a section; Laws 2.30 1997, chapters 105, section 3, as amended; 225, 2.31 article 3, section 24; and 231, articles 1, section 2.32 16, as amended; 2, section 68, subdivision 3; 5, 2.33 section 18, subdivision 1; 7, section 47; 10, section 2.34 24; and 13, section 19; proposing coding for new law 2.35 in Minnesota Statutes, chapters 272; 290; 290B; 298; 2.36 and 469; repealing Minnesota Statutes 1996, sections 2.37 289A.50, subdivision 6; 290.191, subdivision 8; 2.38 298.012; 298.21; 298.23; 298.34, subdivisions 1 and 4; 2.39 298.391, subdivisions 2 and 5; Minnesota Statutes 1997 2.40 Supplement, sections 273.13, subdivision 32; 275.70; 2.41 275.71; 275.72; 275.73; 275.74; Laws 1997, chapter 2.42 231, article 3, section 8. 2.43 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.44 ARTICLE 1 2.45 PROPERTY TAX REFORM 2.46 Section 1. Minnesota Statutes 1997 Supplement, section 2.47 124.239, subdivision 5, is amended to read: 2.48 Subd. 5. [LEVY AUTHORIZED.] A district, after local board 2.49 approval, may levy for costs related to an approved facility 2.50 plan as follows: 2.51 (a) if the district has indicated to the commissioner that 2.52 bonds will be issued, the district may levy for the principal 2.53 and interest payments on outstanding bonds issued according to 2.54 subdivision 3 after reduction for any alternative facilities aid 2.55 receivable under subdivision 5a; or 2.56 (b) if the district has indicated to the commissioner that 3.1 the plan will be funded through levy, the district may levy 3.2 according to the schedule approved in the plan after reduction 3.3 for any alternative facilities aid receivable under subdivision 3.4 5a. 3.5 Sec. 2. Minnesota Statutes 1997 Supplement, section 3.6 124.239, subdivision 5a, is amended to read: 3.7 Subd. 5a. [ALTERNATIVE FACILITIES AID.] A district's 3.8 alternative facilities aid is the amount equal to the district's 3.9 annual debt service costs, provided that the amount does not 3.10 exceed the amount certified to be levied for those purposes for 3.11 taxes payable in 1997 plus, for districts with adjusted net tax 3.12 capacity per actual pupil unit of less than $2,800, an amount 3.13 equal to the district's gross levy authority under subdivision 3.14 5, clause (b), before reduction by debt service equalization aid 3.15 under section 124.95 for taxes payable in 1998. 3.16 Sec. 3. Minnesota Statutes 1997 Supplement, section 3.17 124.239, subdivision 5b, is amended to read: 3.18 Subd. 5b. [ALTERNATIVE FACILITIES APPROPRIATION.] (a) An 3.19 amount not to exceed$17,000,000$22,129,000 is appropriated 3.20 from the general fund to the commissioner of children, families, 3.21 and learning for fiscal year 2000 and not to exceed $22,698,000 3.22 for fiscal year 2001 and each year thereafter for payment of 3.23 alternative facilities aid under subdivision 5a. The 2000 3.24 appropriation includes $1,700,000 for 1999 3.25 and$15,300,000$20,429,000 for 2000. 3.26 (b) The appropriation in paragraph (a) must be reduced by 3.27 the amount of any money specifically appropriated for the same 3.28 purpose in any year from any state fund. 3.29 Sec. 4. Minnesota Statutes 1996, section 124A.03, 3.30 subdivision 1f, is amended to read: 3.31 Subd. 1f. [REFERENDUM EQUALIZATION REVENUE.] A district's 3.32 referendum equalization revenue equals$315$385 times the 3.33 district's actual pupil units for that year. 3.34 Referendum equalization revenue must not exceed a 3.35 district's total referendum revenue for that year. 3.36 Sec. 5. Minnesota Statutes 1997 Supplement, section 4.1 273.127, subdivision 3, is amended to read: 4.2 Subd. 3. [CLASS 4C PROPERTIES.] For the market value of 4.3 properties that meet the criteria of subdivision 2, paragraph 4.4 (a), and which no longer qualify as a result of the eligibility 4.5 criteria specified in section 273.126, a class rate of 2.4 4.6 percent applies for taxes payable in 1999 and a class rate of 4.72.62.5 percent applies for taxes payable in 2000. 4.8 Sec. 6. Minnesota Statutes 1997 Supplement, section 4.9 273.13, subdivision 22, is amended to read: 4.10 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 4.11 23, real estate which is residential and used for homestead 4.12 purposes is class 1. The market value of class 1a property must 4.13 be determined based upon the value of the house, garage, and 4.14 land. 4.15For taxes payable in 1998 and thereafter,The first $75,000 4.16 of market value of class 1a property has a net class rate of one 4.17 percent of its market value; and the market value of class 1a 4.18 property that exceeds $75,000 has a class rate of1.851.7 4.19 percent of its market value for taxes payable in 1999, and 1.6 4.20 percent of its market value for taxes payable in 2000 and 4.21 thereafter. 4.22 (b) Class 1b property includes homestead real estate or 4.23 homestead manufactured homes used for the purposes of a 4.24 homestead by 4.25 (1) any blind person, or the blind person and the blind 4.26 person's spouse; or 4.27 (2) any person, hereinafter referred to as "veteran," who: 4.28 (i) served in the active military or naval service of the 4.29 United States; and 4.30 (ii) is entitled to compensation under the laws and 4.31 regulations of the United States for permanent and total 4.32 service-connected disability due to the loss, or loss of use, by 4.33 reason of amputation, ankylosis, progressive muscular 4.34 dystrophies, or paralysis, of both lower extremities, such as to 4.35 preclude motion without the aid of braces, crutches, canes, or a 4.36 wheelchair; and 5.1 (iii) has acquired a special housing unit with special 5.2 fixtures or movable facilities made necessary by the nature of 5.3 the veteran's disability, or the surviving spouse of the 5.4 deceased veteran for as long as the surviving spouse retains the 5.5 special housing unit as a homestead; or 5.6 (3) any person who: 5.7 (i) is permanently and totally disabled and 5.8 (ii) receives 90 percent or more of total income from 5.9 (A) aid from any state as a result of that disability; or 5.10 (B) supplemental security income for the disabled; or 5.11 (C) workers' compensation based on a finding of total and 5.12 permanent disability; or 5.13 (D) social security disability, including the amount of a 5.14 disability insurance benefit which is converted to an old age 5.15 insurance benefit and any subsequent cost of living increases; 5.16 or 5.17 (E) aid under the federal Railroad Retirement Act of 1937, 5.18 United States Code Annotated, title 45, section 228b(a)5; or 5.19 (F) a pension from any local government retirement fund 5.20 located in the state of Minnesota as a result of that 5.21 disability; or 5.22 (G) pension, annuity, or other income paid as a result of 5.23 that disability from a private pension or disability plan, 5.24 including employer, employee, union, and insurance plans and 5.25 (iii) has household income as defined in section 290A.03, 5.26 subdivision 5, of $50,000 or less; or 5.27 (4) any person who is permanently and totally disabled and 5.28 whose household income as defined in section 290A.03, 5.29 subdivision 5, is 275 percent or less of the federal poverty 5.30 level. 5.31 Property is classified and assessed under clause (4) only 5.32 if the government agency or income-providing source certifies, 5.33 upon the request of the homestead occupant, that the homestead 5.34 occupant satisfies the disability requirements of this paragraph. 5.35 Property is classified and assessed pursuant to clause (1) 5.36 only if the commissioner of economic security certifies to the 6.1 assessor that the homestead occupant satisfies the requirements 6.2 of this paragraph. 6.3 Permanently and totally disabled for the purpose of this 6.4 subdivision means a condition which is permanent in nature and 6.5 totally incapacitates the person from working at an occupation 6.6 which brings the person an income. The first $32,000 market 6.7 value of class 1b property has a net class rate of .45 percent 6.8 of its market value. The remaining market value of class 1b 6.9 property has a net class rate using the rates for class 1 or 6.10 class 2a property, whichever is appropriate, of similar market 6.11 value. 6.12 (c) Class 1c property is commercial use real property that 6.13 abuts a lakeshore line and is devoted to temporary and seasonal 6.14 residential occupancy for recreational purposes but not devoted 6.15 to commercial purposes for more than 250 days in the year 6.16 preceding the year of assessment, and that includes a portion 6.17 used as a homestead by the owner, which includes a dwelling 6.18 occupied as a homestead by a shareholder of a corporation that 6.19 owns the resort or a partner in a partnership that owns the 6.20 resort, even if the title to the homestead is held by the 6.21 corporation or partnership. For purposes of this clause, 6.22 property is devoted to a commercial purpose on a specific day if 6.23 any portion of the property, excluding the portion used 6.24 exclusively as a homestead, is used for residential occupancy 6.25 and a fee is charged for residential occupancy. In order for a 6.26 property to be classified as class 1c, at least 40 percent of 6.27 the annual gross lodging receipts related to the property must 6.28 be from business conductedbetween Memorial Day weekend and6.29Labor Day weekendduring any three consecutive calendar months, 6.30 and either (i) at least 60 percent of all paid reservations or 6.31 paid bookings by lodging guests during the year must be for 6.32 periods of at least two consecutive nights; or (ii) at least 20 6.33 percent of the annual gross receipts must be from sales of 6.34 recreational services, which include rental of fish houses, 6.35 boats and motors, snowmobiles, downhill or cross-country ski 6.36 equipment, marina services, launch services, and fishing guide 7.1 services. Class 1c property has a class rate of one percent of 7.2 total market value with the following limitation: the area of 7.3 the property must not exceed 100 feet of lakeshore footage for 7.4 each cabin or campsite located on the property up to a total of 7.5 800 feet and 500 feet in depth, measured away from the lakeshore. 7.6 (d) Class 1d property includes structures that meet all of 7.7 the following criteria: 7.8 (1) the structure is located on property that is classified 7.9 as agricultural property under section 273.13, subdivision 23; 7.10 (2) the structure is occupied exclusively by seasonal farm 7.11 workers during the time when they work on that farm, and the 7.12 occupants are not charged rent for the privilege of occupying 7.13 the property, provided that use of the structure for storage of 7.14 farm equipment and produce does not disqualify the property from 7.15 classification under this paragraph; 7.16 (3) the structure meets all applicable health and safety 7.17 requirements for the appropriate season; and 7.18 (4) the structure is not saleable as residential property 7.19 because it does not comply with local ordinances relating to 7.20 location in relation to streets or roads. 7.21 The market value of class 1d property has the same class 7.22 rates as class 1a property under paragraph (a). 7.23 Sec. 7. Minnesota Statutes 1997 Supplement, section 7.24 273.13, subdivision 23, is amended to read: 7.25 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 7.26 land including any improvements that is homesteaded. The market 7.27 value of the house and garage and immediately surrounding one 7.28 acre of land has the same class rates as class 1a property under 7.29 subdivision 22. The value of the remaining land including 7.30 improvements up to $115,000 has a net class rate of0.40.37 7.31 percent of market value for taxes payable in 1999 and 0.35 7.32 percent of market value for taxes payable in 2000 and 7.33 thereafter. The remaining value of class 2a property over 7.34 $115,000 of market value that does not exceed 320 acres has a 7.35 net class rate of0.90.85 percent of market value for taxes 7.36 payable in 1999 and 0.8 percent of market value for taxes 8.1 payable in 2000 and thereafter. The remaining property over the 8.2 $115,000 market value in excess of 320 acres has a class rate of 8.31.41.25 percent of market value for taxes payable in 1999 and 8.4 1.15 percent of market value for taxes payable in 2000 and 8.5 thereafter. 8.6 (b) Class 2b property is (1) real estate, rural in 8.7 character and used exclusively for growing trees for timber, 8.8 lumber, and wood and wood products; (2) real estate that is not 8.9 improved with a structure and is used exclusively for growing 8.10 trees for timber, lumber, and wood and wood products, if the 8.11 owner has participated or is participating in a cost-sharing 8.12 program for afforestation, reforestation, or timber stand 8.13 improvement on that particular property, administered or 8.14 coordinated by the commissioner of natural resources; (3) real 8.15 estate that is nonhomestead agricultural land; or (4) a landing 8.16 area or public access area of a privately owned public use 8.17 airport. Class 2b property that is nonhomestead agricultural 8.18 land has a net class rate of1.41.25 percent of market 8.19 value for taxes payable in 1999 and 1.15 percent of market value 8.20 for taxes payable in 2000 and thereafter. The remainder of 8.21 class 2b has a net class rate of 1.35 percent of market value 8.22 for taxes payable in 1999 and 1.25 percent of market value for 8.23 taxes payable in 2000 and thereafter. 8.24 (c) Agricultural land as used in this section means 8.25 contiguous acreage of ten acres or more, used during the 8.26 preceding year for agricultural purposes. "Agricultural 8.27 purposes" as used in this section means the raising or 8.28 cultivation of agricultural products or enrollment in the 8.29 Reinvest in Minnesota program under sections 103F.501 to 8.30 103F.535 or the federal Conservation Reserve Program as 8.31 contained in Public Law Number 99-198. Contiguous acreage on 8.32 the same parcel, or contiguous acreage on an immediately 8.33 adjacent parcel under the same ownership, may also qualify as 8.34 agricultural land, but only if it is pasture, timber, waste, 8.35 unusable wild land, or land included in state or federal farm 8.36 programs. Agricultural classification for property shall be 9.1 determined excluding the house, garage, and immediately 9.2 surrounding one acre of land, and shall not be based upon the 9.3 market value of any residential structures on the parcel or 9.4 contiguous parcels under the same ownership. 9.5 (d) Real estate, excluding the house, garage, and 9.6 immediately surrounding one acre of land, of less than ten acres 9.7 which is exclusively and intensively used for raising or 9.8 cultivating agricultural products, shall be considered as 9.9 agricultural land. 9.10 Land shall be classified as agricultural even if all or a 9.11 portion of the agricultural use of that property is the leasing 9.12 to, or use by another person for agricultural purposes. 9.13 Classification under this subdivision is not determinative 9.14 for qualifying under section 273.111. 9.15 The property classification under this section supersedes, 9.16 for property tax purposes only, any locally administered 9.17 agricultural policies or land use restrictions that define 9.18 minimum or maximum farm acreage. 9.19 (e) The term "agricultural products" as used in this 9.20 subdivision includes production for sale of: 9.21 (1) livestock, dairy animals, dairy products, poultry and 9.22 poultry products, fur-bearing animals, horticultural and nursery 9.23 stock described in sections 18.44 to 18.61, fruit of all kinds, 9.24 vegetables, forage, grains, bees, and apiary products by the 9.25 owner; 9.26 (2) fish bred for sale and consumption if the fish breeding 9.27 occurs on land zoned for agricultural use; 9.28 (3) the commercial boarding of horses if the boarding is 9.29 done in conjunction with raising or cultivating agricultural 9.30 products as defined in clause (1); 9.31 (4) property which is owned and operated by nonprofit 9.32 organizations used for equestrian activities, excluding racing; 9.33 and 9.34 (5) game birds and waterfowl bred and raised for use on a 9.35 shooting preserve licensed under section 97A.115. 9.36 (f) If a parcel used for agricultural purposes is also used 10.1 for commercial or industrial purposes, including but not limited 10.2 to: 10.3 (1) wholesale and retail sales; 10.4 (2) processing of raw agricultural products or other goods; 10.5 (3) warehousing or storage of processed goods; and 10.6 (4) office facilities for the support of the activities 10.7 enumerated in clauses (1), (2), and (3), 10.8 the assessor shall classify the part of the parcel used for 10.9 agricultural purposes as class 1b, 2a, or 2b, whichever is 10.10 appropriate, and the remainder in the class appropriate to its 10.11 use. The grading, sorting, and packaging of raw agricultural 10.12 products for first sale is considered an agricultural purpose. 10.13 A greenhouse or other building where horticultural or nursery 10.14 products are grown that is also used for the conduct of retail 10.15 sales must be classified as agricultural if it is primarily used 10.16 for the growing of horticultural or nursery products from seed, 10.17 cuttings, or roots and occasionally as a showroom for the retail 10.18 sale of those products. Use of a greenhouse or building only 10.19 for the display of already grown horticultural or nursery 10.20 products does not qualify as an agricultural purpose. 10.21 The assessor shall determine and list separately on the 10.22 records the market value of the homestead dwelling and the one 10.23 acre of land on which that dwelling is located. If any farm 10.24 buildings or structures are located on this homesteaded acre of 10.25 land, their market value shall not be included in this separate 10.26 determination. 10.27 (g) To qualify for classification under paragraph (b), 10.28 clause (4), a privately owned public use airport must be 10.29 licensed as a public airport under section 360.018. For 10.30 purposes of paragraph (b), clause (4), "landing area" means that 10.31 part of a privately owned public use airport properly cleared, 10.32 regularly maintained, and made available to the public for use 10.33 by aircraft and includes runways, taxiways, aprons, and sites 10.34 upon which are situated landing or navigational aids. A landing 10.35 area also includes land underlying both the primary surface and 10.36 the approach surfaces that comply with all of the following: 11.1 (i) the land is properly cleared and regularly maintained 11.2 for the primary purposes of the landing, taking off, and taxiing 11.3 of aircraft; but that portion of the land that contains 11.4 facilities for servicing, repair, or maintenance of aircraft is 11.5 not included as a landing area; 11.6 (ii) the land is part of the airport property; and 11.7 (iii) the land is not used for commercial or residential 11.8 purposes. 11.9 The land contained in a landing area under paragraph (b), clause 11.10 (4), must be described and certified by the commissioner of 11.11 transportation. The certification is effective until it is 11.12 modified, or until the airport or landing area no longer meets 11.13 the requirements of paragraph (b), clause (4). For purposes of 11.14 paragraph (b), clause (4), "public access area" means property 11.15 used as an aircraft parking ramp, apron, or storage hangar, or 11.16 an arrival and departure building in connection with the airport. 11.17 Sec. 8. Minnesota Statutes 1997 Supplement, section 11.18 273.13, subdivision 24, is amended to read: 11.19 Subd. 24. [CLASS 3.] (a) Commercial and industrial 11.20 property and utility real and personal property, except class 5 11.21 property as identified in subdivision 31, clause (1), is class 11.22 3a. Each parcel has a class rate of2.72.6 percent for taxes 11.23 payable in 1999 and 2.5 percent for taxes payable in 2000 and 11.24 thereafter of the first tier of market value, and4.03.65 11.25 percent for taxes payable in 1999 and 3.5 percent for taxes 11.26 payable in 2000 and thereafter of the remaining market value, 11.27 except that in the case of contiguous parcels of commercial and 11.28 industrial property owned by the same person or entity, only the 11.29 value equal to the first-tier value of the contiguous parcels 11.30 qualifies for the reduced class rate. For the purposes of this 11.31 subdivision, the first tier means the first $150,000 of market 11.32 value. In the case of utility property owned by one person or 11.33 entity, only one parcel in each county has a reduced class rate 11.34 on the first tier of market value. 11.35 For purposes of this paragraph, parcels are considered to 11.36 be contiguous even if they are separated from each other by a 12.1 road, street, vacant lot, waterway, or other similar intervening 12.2 type of property. 12.3 (b) Employment property defined in section 469.166, during 12.4 the period provided in section 469.170, shall constitute class 12.5 3b and has a class rate of 2.3 percent of the first $50,000 of 12.6 market value and 3.6 percent for taxes payable in 1999 and 3.5 12.7 percent for taxes payable in 2000 and thereafter of the 12.8 remainder, except that for employment property located in a 12.9 border city enterprise zone designated pursuant to section 12.10 469.168, subdivision 4, paragraph (c), the class rate of the 12.11 first tier of market value and the class rate of the remainder 12.12 is determined under paragraph (a), unless the governing body of 12.13 the city designated as an enterprise zone determines that a 12.14 specific parcel shall be assessed pursuant to the first clause 12.15 of this sentence. The governing body may provide for assessment 12.16 under the first clause of the preceding sentence only for 12.17 property which is located in an area which has been designated 12.18 by the governing body for the receipt of tax reductions 12.19 authorized by section 469.171, subdivision 1. 12.20 (c) Structures which are (i) located on property classified 12.21 as class 3a, (ii) constructed under an initial building permit 12.22 issued after January 2, 1996, (iii) located in a transit zone as 12.23 defined under section 473.3915, subdivision 3, (iv) located 12.24 within the boundaries of a school district, and (v) not 12.25 primarily used for retail or transient lodging purposes, shall 12.26 have a class rate equal to 85 percent of the class rate of the 12.27 second tier of the commercial property rate under paragraph (a) 12.28 on any portion of the market value that does not qualify for the 12.29 first tier class rate under paragraph (a). As used in item (v), 12.30 a structure is primarily used for retail or transient lodging 12.31 purposes if over 50 percent of its square footage is used for 12.32 those purposes.The four percent rateA class rate equal to 85 12.33 percent of the class rate of the second tier of the commercial 12.34 property rate under paragraph (a) shall also apply to 12.35 improvements to existing structures that meet the requirements 12.36 of items (i) to (v) if the improvements are constructed under an 13.1 initial building permit issued after January 2, 1996, even if 13.2 the remainder of the structure was constructed prior to January 13.3 2, 1996. For the purposes of this paragraph, a structure shall 13.4 be considered to be located in a transit zone if any portion of 13.5 the structure lies within the zone. If any property once 13.6 eligible for treatment under this paragraph ceases to remain 13.7 eligible due to revisions in transit zone boundaries, the 13.8 property shall continue to receive treatment under this 13.9 paragraph for a period of three years. 13.10 Sec. 9. Minnesota Statutes 1997 Supplement, section 13.11 273.13, subdivision 25, as amended by Laws 1997, Third Special 13.12 Session chapter 3, section 28, is amended to read: 13.13 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 13.14 estate containing four or more units and used or held for use by 13.15 the owner or by the tenants or lessees of the owner as a 13.16 residence for rental periods of 30 days or more. Class 4a also 13.17 includes hospitals licensed under sections 144.50 to 144.56, 13.18 other than hospitals exempt under section 272.02, and contiguous 13.19 property used for hospital purposes, without regard to whether 13.20 the property has been platted or subdivided. Class 4a property 13.21 also includes property that constitutes an establishment that is 13.22 actively and exclusively devoted to indoor fitness, health, 13.23 social, recreational, and related uses and which is owned and 13.24 operated by a not-for-proft corporation. Class 4a property in a 13.25 city with a population of 5,000 or less, that is (1) located 13.26 outside of the metropolitan area, as defined in section 473.121, 13.27 subdivision 2, or outside any county contiguous to the 13.28 metropolitan area, and (2) whose city boundary is at least 15 13.29 miles from the boundary of any city with a population greater 13.30 than 5,000 has a class rate of2.32.25 percent of market value 13.31 for taxes payable in 1999 and 2.15 percent of market value for 13.32 taxes payable in 2000 and thereafter. All other class 4a 13.33 property has a class rate of2.92.65 percent of market 13.34 value for taxes payable in 1999 and 2.5 percent of market value 13.35 for taxes payable in 2000 and thereafter. For purposes of this 13.36 paragraph, population has the same meaning given in section 14.1 477A.011, subdivision 3. 14.2 (b) Class 4b includes: 14.3 (1) residential real estate containing less than four units 14.4 that does not qualify as class 4bb, other than seasonal 14.5 residential, and recreational; 14.6 (2) manufactured homes not classified under any other 14.7 provision; 14.8 (3) a dwelling, garage, and surrounding one acre of 14.9 property on a nonhomestead farm classified under subdivision 23, 14.10 paragraph (b) containing two or three units; 14.11 (4) unimproved property that is classified residential as 14.12 determined under section 273.13, subdivision 33. 14.13 Class 4b property has a class rate of2.11.8 percent of 14.14 market value. 14.15 (c) Class 4bb includes: 14.16 (1) nonhomestead residential real estate containing one 14.17 unit, other than seasonal residential, and recreational; and 14.18 (2) a single family dwelling, garage, and surrounding one 14.19 acre of property on a nonhomestead farm classified under 14.20 subdivision 23, paragraph (b). 14.21 Class 4bb has a class rate of1.91.5 percent for taxes 14.22 payable in 1999 and 1.25 percent for taxes payable in 2000 and 14.23 thereafter on the first $75,000 of market value and a class rate 14.24 of2.11.7 percent for taxes payable in 1999 and 1.6 percent for 14.25 taxes payable in 2000 and thereafter of its market value that 14.26 exceeds $75,000. 14.27 Property that has been classified as seasonal recreational 14.28 residential property at any time during which it has been owned 14.29 by the current owner or spouse of the current owner does not 14.30 qualify for class 4bb. 14.31 (d) Class 4c property includes: 14.32 (1) except as provided in subdivision 22, paragraph (c), 14.33 real property devoted to temporary and seasonal residential 14.34 occupancy for recreation purposes, including real property 14.35 devoted to temporary and seasonal residential occupancy for 14.36 recreation purposes and not devoted to commercial purposes for 15.1 more than 250 days in the year preceding the year of 15.2 assessment. For purposes of this clause, property is devoted to 15.3 a commercial purpose on a specific day if any portion of the 15.4 property is used for residential occupancy, and a fee is charged 15.5 for residential occupancy. In order for a property to be 15.6 classified as class 4c, seasonal recreational residential for 15.7 commercial purposes, at least 40 percent of the annual gross 15.8 lodging receipts related to the property must be from business 15.9 conductedbetween Memorial Day weekend and Labor Day15.10weekendduring three consecutive calendar months and either (i) 15.11 at least 60 percent of all paid reservations or paid bookings by 15.12 lodging guests during the year must be for periods of at least 15.13 two consecutive nights; or (ii) at least 20 percent of the 15.14 annual gross receipts must be from sales of recreational 15.15 services, which include rental of fish houses, boats and motors, 15.16 snowmobiles, downhill or cross-country ski equipment, marina 15.17 services, launch services, and fishing guide services. Class 4c 15.18 also includes commercial use real property used exclusively for 15.19 recreational purposes in conjunction with class 4c property 15.20 devoted to temporary and seasonal residential occupancy for 15.21 recreational purposes, up to a total of two acres, provided the 15.22 property is not devoted to commercial recreational use for more 15.23 than 250 days in the year preceding the year of assessment and 15.24 is located within two miles of the class 4c property with which 15.25 it is used. Class 4c property classified in this clause also 15.26 includes the remainder of class 1c resorts. Owners of real 15.27 property devoted to temporary and seasonal residential occupancy 15.28 for recreation purposes and all or a portion of which was 15.29 devoted to commercial purposes for not more than 250 days in the 15.30 year preceding the year of assessment desiring classification as 15.31 class 1c or 4c, must submit a declaration to the assessor 15.32 designating the cabins or units occupied for 250 days or less in 15.33 the year preceding the year of assessment by January 15 of the 15.34 assessment year. Those cabins or units and a proportionate 15.35 share of the land on which they are located will be designated 15.36 class 1c or 4c as otherwise provided. The remainder of the 16.1 cabins or units and a proportionate share of the land on which 16.2 they are located will be designated as class 3a. The owner of 16.3 property desiring designation as class 1c or 4c property must 16.4 provide guest registers or other records demonstrating that the 16.5 units for which class 1c or 4c designation is sought were not 16.6 occupied for more than 250 days in the year preceding the 16.7 assessment if so requested. The portion of a property operated 16.8 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 16.9 nonresidential facility operated on a commercial basis not 16.10 directly related to temporary and seasonal residential occupancy 16.11 for recreation purposes shall not qualify for class 1c or 4c; 16.12 (2) qualified property used as a golf course if: 16.13 (i)any portion of the property is located within a county16.14that has a population of less than 50,000, or within a county16.15containing a golf course owned by a municipality, the county, or16.16a special taxing district;16.17(ii)it is open to the public on a daily fee basis. It may 16.18 charge membership fees or dues, but a membership fee may not be 16.19 required in order to use the property for golfing, and its green 16.20 fees for golfing must be comparable to green fees typically 16.21 charged by municipal courses;and16.22(iii)(ii) it meets the requirements of section 273.112, 16.23 subdivision 3, paragraph (d); and 16.24 (iii) it does not require a customer who is able to 16.25 maintain the course pace of play to use, or pay for, a motorized 16.26 golf cart. 16.27 A structure used as a clubhouse, restaurant, or place of 16.28 refreshment in conjunction with the golf course is classified as 16.29 class 3a property. 16.30 (3) real property up to a maximum of one acre of land owned 16.31 by a nonprofit community service oriented organization; provided 16.32 that the property is not used for a revenue-producing activity 16.33 for more than six days in the calendar year preceding the year 16.34 of assessment and the property is not used for residential 16.35 purposes on either a temporary or permanent basis. For purposes 16.36 of this clause, a "nonprofit community service oriented 17.1 organization" means any corporation, society, association, 17.2 foundation, or institution organized and operated exclusively 17.3 for charitable, religious, fraternal, civic, or educational 17.4 purposes, and which is exempt from federal income taxation 17.5 pursuant to section 501(c)(3), (10), or (19) of the Internal 17.6 Revenue Code of 1986, as amended through December 31, 1990. For 17.7 purposes of this clause, "revenue-producing activities" shall 17.8 include but not be limited to property or that portion of the 17.9 property that is used as an on-sale intoxicating liquor or 3.2 17.10 percent malt liquor establishment licensed under chapter 340A, a 17.11 restaurant open to the public, bowling alley, a retail store, 17.12 gambling conducted by organizations licensed under chapter 349, 17.13 an insurance business, or office or other space leased or rented 17.14 to a lessee who conducts a for-profit enterprise on the 17.15 premises. Any portion of the property which is used for 17.16 revenue-producing activities for more than six days in the 17.17 calendar year preceding the year of assessment shall be assessed 17.18 as class 3a. The use of the property for social events open 17.19 exclusively to members and their guests for periods of less than 17.20 24 hours, when an admission is not charged nor any revenues are 17.21 received by the organization shall not be considered a 17.22 revenue-producing activity; 17.23 (4) post-secondary student housing of not more than one 17.24 acre of land that is owned by a nonprofit corporation organized 17.25 under chapter 317A and is used exclusively by a student 17.26 cooperative, sorority, or fraternity for on-campus housing or 17.27 housing located within two miles of the border of a college 17.28 campus; and 17.29 (5) manufactured home parks as defined in section 327.14, 17.30 subdivision 3. 17.31 Class 4c property has a class rate of2.11.95 percent of 17.32 market value for taxes payable in 1999 and 1.8 percent for taxes 17.33 payable in 2000 and thereafter, except that (i) for each parcel 17.34 of seasonal residential recreational property not used for 17.35 commercial purposes the first $75,000 of market value has a 17.36 class rate of1.41.35 percent for taxes payable in 1999 and 18.1 1.25 percent for taxes payable in 2000 and thereafter, and the 18.2 market value that exceeds $75,000 has a class rate of2.52.4 18.3 percent for taxes payable in 1999 and 2.2 percent for taxes 18.4 payable in 2000 and thereafter, and (ii) manufactured home parks 18.5 assessed under clause (5) have a class rate of two percent. 18.6 (e) Class 4d property is qualifying low-income rental 18.7 housing certified to the assessor by the housing finance agency 18.8 under sections 273.126 and 462A.071. Class 4d includes land in 18.9 proportion to the total market value of the building that is 18.10 qualifying low-income rental housing. For all properties 18.11 qualifying as class 4d, the market value determined by the 18.12 assessor must be based on the normal approach to value using 18.13 normal unrestricted rents. 18.14 Class 4d property has a class rate of one percent of market 18.15 value. 18.16 (f) Class 4e property consists of the residential portion 18.17 of any structure located within a city that was converted from 18.18 nonresidential use to residential use, provided that: 18.19 (1) the structure had formerly been used as a warehouse; 18.20 (2) the structure was originally constructed prior to 1940; 18.21 (3) the conversion was done after December 31, 1995, but 18.22 before January 1, 2003; and 18.23 (4) the conversion involved an investment of at least 18.24 $25,000 per residential unit. 18.25 Class 4e property has a class rate of 2.3 percent, provided 18.26 that a structure is eligible for class 4e classification only in 18.27 the 12 assessment years immediately following the conversion. 18.28 Sec. 10. Minnesota Statutes 1997 Supplement, section 18.29 273.13, subdivision 31, is amended to read: 18.30 Subd. 31. [CLASS 5.] Class 5 property includes: 18.31 (1) tools, implements, and machinery of an electric 18.32 generating, transmission, or distribution system or a pipeline 18.33 system transporting or distributing water, gas, crude oil, or 18.34 petroleum products or mains and pipes used in the distribution 18.35 of steam or hot or chilled water for heating or cooling 18.36 buildings, which are fixtures; 19.1 (2) unmined iron ore and low-grade iron-bearing formations 19.2 as defined in section 273.14; and 19.3 (3) all other property not otherwise classified. 19.4 Class 5 property has a class rate of4.03.65 percent of 19.5 market value for taxes payable in19981999 and 3.5 percent of 19.6 market value for taxes payable in 2000 and thereafter. 19.7 Sec. 11. Minnesota Statutes 1997 Supplement, section 19.8 273.1382, subdivision 1, is amended to read: 19.9 Subdivision 1. [EDUCATION HOMESTEAD CREDIT.] Each year, 19.10 beginning with property taxes payable in 1998, the respective 19.11 county auditors shall determine the initial tax rate for each 19.12 school district for the general education levy certified under 19.13 section 124A.23, subdivision 2 or 3. That rate plus the school 19.14 district's education homestead credit tax rate adjustment under 19.15 section 275.08, subdivision 1e, shall be the general education 19.16 homestead credit local tax rate for the district. The auditor 19.17 shall then determine a general education homestead credit for 19.18 each homestead within the county equal to3256 percent for 19.19 taxes payable in 1999 and 68 percent for taxes payable in 2000 19.20 and thereafter of the general education homestead credit local 19.21 tax rate times the net tax capacity of the homestead for the 19.22 taxes payable year. The amount of general education homestead 19.23 credit for a homestead may not exceed$225$270 for taxes 19.24 payable in 1999 and $290 for taxes payable in 2000 and 19.25 thereafter. In the case of an agricultural homestead, only the 19.26 net tax capacity of the house, garage, and surrounding one acre 19.27 of land shall be used in determining the property's education 19.28 homestead credit. 19.29 Sec. 12. Minnesota Statutes 1997 Supplement, section 19.30 273.1382, subdivision 3, is amended to read: 19.31 Subd. 3. [APPROPRIATION.] An amount sufficient to make the 19.32 payments required by this section is annually appropriated from 19.33 the general fund to the commissioner of children, families, and 19.34 learning, except that for fiscal years 2000 and 2001 the amount 19.35 necessary to make the increased payments attributable to section 19.36 11 is appropriated from the property tax reform account. 20.1 Sec. 13. Minnesota Statutes 1996, section 273.1398, 20.2 subdivision 2, is amended to read: 20.3 Subd. 2. [HOMESTEAD AND AGRICULTURAL CREDIT AID.] 20.4 Homestead and agricultural credit aid for each unique taxing 20.5 jurisdiction equals the product of (1) the homestead and 20.6 agricultural credit aid base, and (2) the growth adjustment 20.7 factor, plus the net tax capacity adjustment and the fiscal 20.8 disparity adjustment. Beginning with homestead and agricultural 20.9 credit aid payable in 2000, each county that receives an amount 20.10 in calendar year 2000 under section 477A.0122 as a result of the 20.11 appropriation in section 477A.03, subdivision 2, paragraph (c), 20.12 clause (3), shall have its homestead and agricultural credit aid 20.13 permanently reduced by an equal amount. 20.14 Sec. 14. Minnesota Statutes 1996, section 273.1398, 20.15 subdivision 4, is amended to read: 20.16 Subd. 4. [DISPARITY REDUCTION CREDIT.] (a) Beginning with 20.17 taxes payable in 1989, class 4a, class 3a, and class 3b property 20.18 qualifies for a disparity reduction credit if: (1) the property 20.19 is located in a border city that has an enterprise zone 20.20 designated pursuant to section 469.168, subdivision 4; (2) the 20.21 property is located in a city with a population greater than 20.22 2,500 and less than 35,000 according to the 1980 decennial 20.23 census; (3) the city is adjacent to a city in another state or 20.24 immediately adjacent to a city adjacent to a city in another 20.25 state; and (4) the adjacent city in the other state has a 20.26 population of greater than 5,000 and less than 75,000. 20.27 (b) The credit is an amount sufficient to reduce (i) the 20.28 taxes levied on class 4a property to 2.3 percent of the 20.29 property's market value and (ii) the tax on class 3a and class 20.30 3b property to3.32.3 percent of market value. 20.31 (c) The county auditor shall annually certify the costs of 20.32 the credits to the department of revenue. The department shall 20.33 reimburse local governments for the property taxes foregone as 20.34 the result of the credits in proportion to their total levies. 20.35 Sec. 15. Minnesota Statutes 1997 Supplement, section 20.36 275.16, is amended to read: 21.1 275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.] 21.2 If any such municipality shall return to the county auditor 21.3 a levy greater than permitted by chapters 124, 124A, 124B, 136C, 21.4 and 136D, and sections 275.124 to 275.16,and sections 275.70 to21.5275.74,such county auditor shall extend only such amount of 21.6 taxes as the limitations herein prescribed will permit; 21.7 provided, if such levy shall include any levy for the payment of 21.8 bonded indebtedness or judgments, such levies for bonded 21.9 indebtedness or judgments shall be extended in full, and the 21.10 remainder of the levies shall be reduced so that the total 21.11 thereof, including levies for bonds and judgments, shall not 21.12 exceed such amount as the limitations herein prescribed will 21.13 permit. 21.14 Sec. 16. Minnesota Statutes 1996, section 477A.0122, 21.15 subdivision 6, is amended to read: 21.16 Subd. 6. [REPORT.] On or before March 15 of the year 21.17 following the year in which the distributions under this section 21.18 are received, each county shall file with the commissioner of 21.19 revenue and commissioner of human services a report on prior 21.20 year expenditures for out-of-home placement and family 21.21 preservation, including expenditures under this section. For 21.22 the human services programs specified in this section, the 21.23 commissioner of revenue and commissioner of human services, in 21.24 consultation with representatives of county governments, shall 21.25 make a recommendation to the 1999 legislature as to which 21.26 current reporting requirements imposed on county governments, if 21.27 any, may be eliminated, replaced, or consolidated on the report 21.28 established by this section. For aid payable in calendar year 21.29 2000 and thereafter, each county shall provide information on 21.30 the amount of state aid, local property tax revenue, and federal 21.31 aid expended by that county on the programs specified in this 21.32 section using the consolidated financial report recommended by 21.33 the commissioner of revenue and commissioner of human services 21.34 under this subdivision. 21.35 Sec. 17. Minnesota Statutes 1996, section 477A.03, 21.36 subdivision 2, is amended to read: 22.1 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 22.2 discharge the duties imposed by sections 477A.011 to 477A.014 is 22.3 annually appropriated from the general fund to the commissioner 22.4 of revenue. For aids payable in 1996 and thereafter, the total 22.5 aids paid undersectionssection 477A.013, subdivision 9,and22.6477A.0122are the amounts certified to be paid in the previous 22.7 year, adjusted for inflation as provided under subdivision 22.8 3.Aid payments to counties under section 477A.0121 are limited22.9to $20,265,000 in 1996. Aid payments to counties under section22.10477A.0121 are limited to $27,571,625 in 1997.22.11 (b) For aid payable in 1998 and thereafter, the total aids 22.12 paid under section 477A.0121 are the amounts certified to be 22.13 paid in the previous year, adjusted for inflation as provided 22.14 under subdivision 3. 22.15 (c) For aid payable in 2000, the total aid payments under 22.16 section 477A.0122 are the sum of: 22.17 (1) the amounts certified to be paid in the previous year, 22.18 adjusted for inflation as provided in subdivision 3; plus 22.19 (2) $20,000,000; plus 22.20 (3) $10,000,000. 22.21 For aid payable in 2001 and thereafter, the total aid 22.22 payments under section 477A.0122 are the amounts certified to be 22.23 paid in the previous year, adjusted for inflation as provided in 22.24 subdivision 3. 22.25 Sec. 18. [LOCAL GOVERNMENT AID INCREASE FOR JURISDICTIONS 22.26 WITH LOW-INCOME RENTAL HOUSING.] 22.27 Notwithstanding the limitations in Minnesota Statutes, 22.28 section 477A.013, subdivision 9, paragraphs (b) and (c), if a 22.29 city's net tax capacity loss as a result of the conversion of 22.30 existing class 4b nonhomestead residential properties and 22.31 existing class 4a, 4c, and 4d apartments under section 273.13, 22.32 subdivision 25, for the 1997 assessment to class 4d low-income 22.33 rental housing under section 273.13, subdivision 25, for the 22.34 1998 assessment exceeds five percent of the city's net tax 22.35 capacity used for computation of the local tax rate under 22.36 Minnesota Statutes, section 275.07, subdivision 1b, for taxes 23.1 payable in 1998, the city shall receive additional local 23.2 government aid in 1999. The additional aid shall be equal to 50 23.3 percent of the product of the city's local tax rate for taxes 23.4 payable in 1998 and the city's net tax capacity loss as the 23.5 result of conversion. The net tax capacity loss shall be 23.6 calculated using limited market values for the 1997 assessment. 23.7 On or before June 15, 1998, a city qualifying for additional aid 23.8 shall certify the 1997 limited market value of the converted 23.9 units and the proportionate share of the land qualifying for 23.10 class 4d and the property's old classification for the 1997 23.11 assessment to the commissioner of revenue along with any 23.12 additional information the commissioner may require. For local 23.13 government aid in 2000 and subsequent years, the aid increase 23.14 under this section shall be added to the city's aid base under 23.15 Minnesota Statutes, section 477A.01. The amount appropriated 23.16 for aid to be paid under this section in any year shall not 23.17 exceed $1,000,000. If the total amount of aid that would 23.18 otherwise be payable under the formula in this section exceeds 23.19 $1,000,000, the amount of aid payable to each city is reduced 23.20 proportionately. 23.21 Sec. 19. [PROPERTY TAX REFUNDS FOR 1999 CLAIMS.] 23.22 Subdivision 1. [GENERALLY.] Claims based on rent paid in 23.23 1998 and property taxes payable in 1999 only are determined 23.24 according to this section in lieu of the provisions of Minnesota 23.25 Statutes, section 290A.04, subdivisions 2 and 2a. 23.26 Subd. 2. [HOMEOWNERS.] A claimant whose property taxes 23.27 payable are in excess of the percentage of the household income 23.28 stated below shall pay an amount equal to the percent of income 23.29 shown for the appropriate household income level along with the 23.30 percent to be paid by the claimant of the remaining amount of 23.31 property taxes payable. The state refund equals the amount of 23.32 property taxes payable that remain, up to the state refund 23.33 amount shown below. 23.34 Percent Percent Maximum 23.35 Household Income of Income Paid by State 23.36 Claimant Refund 23.37 $0 to 2,279 1.2 percent 18 percent $1,000 23.38 2,280 to 4,579 1.4 percent 20 percent $1,000 24.1 4,580 to 8,019 1.7 percent 20 percent $1,000 24.2 8,020 to 10,299 2.0 percent 25 percent $1,000 24.3 10,300 to 12,589 2.3 percent 30 percent $1,000 24.4 12,590 to 16,029 2.5 percent 30 percent $1,000 24.5 16,030 to 18,309 2.8 percent 35 percent $1,000 24.6 18,310 to 27,469 3.0 percent 40 percent $1,000 24.7 27,470 to 45,779 3.5 percent 45 percent $1,000 24.8 45,780 to 65,239 4.0 percent 50 percent $1,000 24.9 65,240 to 66,379 4.0 percent 50 percent $ 750 24.10 66,380 to 67,529 4.0 percent 50 percent $ 600 24.11 67,530 to 68,679 4.0 percent 50 percent $ 250 24.12 68,680 and up $ 0 24.13 The payment made to a claimant shall be the amount of the 24.14 state refund calculated under this subdivision. No payment is 24.15 allowed if the claimant's household income is $61,930 or more. 24.16 Subd. 3. [RENTERS.] A claimant whose rent constituting 24.17 property taxes exceeds the percentage of the household income 24.18 stated below must pay an amount equal to the percent of income 24.19 shown for the appropriate household income level along with the 24.20 percent to be paid by the claimant of the remaining amount of 24.21 rent constituting property taxes. The state refund equals the 24.22 amount of rent constituting property taxes that remain, up to 24.23 the maximum state refund amount shown below. 24.24 Percent Percent Maximum 24.25 Household Income of Income Paid by State 24.26 Claimant Refund 24.27 $0 to 4,579 0.8 percent 5 percent $1,200 24.28 4,580 to 8,019 1.0 percent 5 percent $1,200 24.29 8,020 to 10,299 1.0 percent 8 percent $1,200 24.30 10,300 to 11,439 1.0 percent 10 percent $1,200 24.31 11,440 to 12,589 1.0 percent 12 percent $1,200 24.32 12,590 to 16,029 1.2 percent 15 percent $1,200 24.33 16,030 to 17,169 1.4 percent 17 percent $1,200 24.34 17,170 to 19,459 1.5 percent 20 percent $1,200 24.35 19,460 to 20,609 1.7 percent 20 percent $1,200 24.36 20,610 to 21,749 1.8 percent 25 percent $1,200 24.37 21,750 to 22,889 2.0 percent 25 percent $1,200 24.38 22,890 to 24,029 2.0 percent 30 percent $1,200 24.39 24,030 to 25,189 2.3 percent 35 percent $1,200 24.40 25,190 to 27,469 2.5 percent 35 percent $1,200 24.41 27,470 to 29,769 2.8 percent 40 percent $1,200 24.42 29,770 to 32,049 3.0 percent 40 percent $1,200 24.43 32,050 to 33,189 3.2 percent 45 percent $1,075 24.44 33,190 to 34,329 3.2 percent 45 percent $ 950 24.45 34,330 to 35,489 3.5 percent 45 percent $ 800 24.46 35,490 to 36,629 3.5 percent 50 percent $ 690 24.47 36,630 to 37,769 3.5 percent 50 percent $ 580 24.48 37,770 to 38,909 3.5 percent 50 percent $ 340 24.49 38,910 to 40,059 3.5 percent 50 percent $ 110 24.50 40,060 and up $ 0 24.51 The payment made to a claimant is the amount of the state 24.52 refund calculated under this subdivision. No payment is allowed 24.53 if the claimant's household income is $36,120 or more. 24.54 Sec. 20. [EDUCATION LEVY REDUCTION APPROPRIATION.] 25.1 In addition to any amount appropriated by other law, 25.2 $50,557,000 is appropriated to the commissioner of children, 25.3 families, and learning in fiscal year 2000, $64,903,000 in 25.4 fiscal year 2001, and $65,873,000 in fiscal year 2002 and 25.5 thereafter to fund a reduction in the statewide general 25.6 education property tax levy. The fiscal year 2001 appropriation 25.7 includes $5,617,000 for 2000 and $59,286,000 for 2001. The 25.8 amounts appropriated under this section for fiscal years 2000 25.9 and 2001 are appropriated from the property tax reform account; 25.10 subsequent appropriations are from the general fund. 25.11 Sec. 21. [REPEALER.] 25.12 Minnesota Statutes 1997 Supplement, sections 273.13, 25.13 subdivision 32; 275.70; 275.71; 275.72; 275.73; and 275.74; and 25.14 Laws 1997, chapter 231, article 3, section 8, are repealed. 25.15 Sec. 22. [EFFECTIVE DATE.] 25.16 Sections 1 to 21 are effective for taxes payable in 1999 25.17 and thereafter and for aid payable in fiscal year 2000 and 25.18 thereafter. 25.19 ARTICLE 2 25.20 PROPERTY TAXES, LOCAL BONDING AND LEVY AUTHORITY 25.21 Section 1. Minnesota Statutes 1997 Supplement, section 25.22 272.02, subdivision 1, is amended to read: 25.23 Subdivision 1. All property described in this section to 25.24 the extent herein limited shall be exempt from taxation: 25.25 (1) All public burying grounds. 25.26 (2) All public schoolhouses. 25.27 (3) All public hospitals. 25.28 (4) All academies, colleges, and universities, and all 25.29 seminaries of learning. 25.30 (5) All churches, church property, and houses of worship. 25.31 (6) Institutions of purely public charity except parcels of 25.32 property containing structures and the structures described in 25.33 section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 25.34 and (3), or paragraph (d), other than those that qualify for 25.35 exemption under clause (25). 25.36 (7) All public property exclusively used for any public 26.1 purpose. 26.2 (8) Except for the taxable personal property enumerated 26.3 below, all personal property and the property described in 26.4 section 272.03, subdivision 1, paragraphs (c) and (d), shall be 26.5 exempt. 26.6 The following personal property shall be taxable: 26.7 (a) personal property which is part of an electric 26.8 generating, transmission, or distribution system or a pipeline 26.9 system transporting or distributing water, gas, crude oil, or 26.10 petroleum products or mains and pipes used in the distribution 26.11 of steam or hot or chilled water for heating or cooling 26.12 buildings and structures; 26.13 (b) railroad docks and wharves which are part of the 26.14 operating property of a railroad company as defined in section 26.15 270.80; 26.16 (c) personal property defined in section 272.03, 26.17 subdivision 2, clause (3); 26.18 (d) leasehold or other personal property interests which 26.19 are taxed pursuant to section 272.01, subdivision 2; 273.124, 26.20 subdivision 7; or 273.19, subdivision 1; or any other law 26.21 providing the property is taxable as if the lessee or user were 26.22 the fee owner; 26.23 (e) manufactured homes and sectional structures, including 26.24 storage sheds, decks, and similar removable improvements 26.25 constructed on the site of a manufactured home, sectional 26.26 structure, park trailer or travel trailer as provided in section 26.27 273.125, subdivision 8, paragraph (f); and 26.28 (f) flight property as defined in section 270.071. 26.29 (9) Personal property used primarily for the abatement and 26.30 control of air, water, or land pollution to the extent that it 26.31 is so used, and real property which is used primarily for 26.32 abatement and control of air, water, or land pollution as part 26.33 of an agricultural operation, as a part of a centralized 26.34 treatment and recovery facility operating under a permit issued 26.35 by the Minnesota pollution control agency pursuant to chapters 26.36 115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 27.1 and 7045.0020 to 7045.1260, as a wastewater treatment facility 27.2 and for the treatment, recovery, and stabilization of metals, 27.3 oils, chemicals, water, sludges, or inorganic materials from 27.4 hazardous industrial wastes, or as part of an electric 27.5 generation system. For purposes of this clause, personal 27.6 property includes ponderous machinery and equipment used in a 27.7 business or production activity that at common law is considered 27.8 real property. 27.9 Any taxpayer requesting exemption of all or a portion of 27.10 any real property or any equipment or device, or part thereof, 27.11 operated primarily for the control or abatement of air or water 27.12 pollution shall file an application with the commissioner of 27.13 revenue. The equipment or device shall meet standards, rules, 27.14 or criteria prescribed by the Minnesota pollution control 27.15 agency, and must be installed or operated in accordance with a 27.16 permit or order issued by that agency. The Minnesota pollution 27.17 control agency shall upon request of the commissioner furnish 27.18 information or advice to the commissioner. On determining that 27.19 property qualifies for exemption, the commissioner shall issue 27.20 an order exempting the property from taxation. The equipment or 27.21 device shall continue to be exempt from taxation as long as the 27.22 permit issued by the Minnesota pollution control agency remains 27.23 in effect. 27.24 (10) Wetlands. For purposes of this subdivision, 27.25 "wetlands" means: (i) land described in section 103G.005, 27.26 subdivision 15a; (ii) land which is mostly under water, produces 27.27 little if any income, and has no use except for wildlife or 27.28 water conservation purposes, provided it is preserved in its 27.29 natural condition and drainage of it would be legal, feasible, 27.30 and economically practical for the production of livestock, 27.31 dairy animals, poultry, fruit, vegetables, forage and grains, 27.32 except wild rice; or (iii) land in a wetland preservation area 27.33 under sections 103F.612 to 103F.616. "Wetlands" under items (i) 27.34 and (ii) include adjacent land which is not suitable for 27.35 agricultural purposes due to the presence of the wetlands, but 27.36 do not include woody swamps containing shrubs or trees, wet 28.1 meadows, meandered water, streams, rivers, and floodplains or 28.2 river bottoms. Exemption of wetlands from taxation pursuant to 28.3 this section shall not grant the public any additional or 28.4 greater right of access to the wetlands or diminish any right of 28.5 ownership to the wetlands. 28.6 (11) Native prairie. The commissioner of the department of 28.7 natural resources shall determine lands in the state which are 28.8 native prairie and shall notify the county assessor of each 28.9 county in which the lands are located. Pasture land used for 28.10 livestock grazing purposes shall not be considered native 28.11 prairie for the purposes of this clause. Upon receipt of an 28.12 application for the exemption provided in this clause for lands 28.13 for which the assessor has no determination from the 28.14 commissioner of natural resources, the assessor shall refer the 28.15 application to the commissioner of natural resources who shall 28.16 determine within 30 days whether the land is native prairie and 28.17 notify the county assessor of the decision. Exemption of native 28.18 prairie pursuant to this clause shall not grant the public any 28.19 additional or greater right of access to the native prairie or 28.20 diminish any right of ownership to it. 28.21 (12) Property used in a continuous program to provide 28.22 emergency shelter for victims of domestic abuse, provided the 28.23 organization that owns and sponsors the shelter is exempt from 28.24 federal income taxation pursuant to section 501(c)(3) of the 28.25 Internal Revenue Code of 1986, as amended through December 31, 28.26 1992, notwithstanding the fact that the sponsoring organization 28.27 receives funding under section 8 of the United States Housing 28.28 Act of 1937, as amended. 28.29 (13) If approved by the governing body of the municipality 28.30 in which the property is located, property not exceeding one 28.31 acre which is owned and operated by any senior citizen group or 28.32 association of groups that in general limits membership to 28.33 persons age 55 or older and is organized and operated 28.34 exclusively for pleasure, recreation, and other nonprofit 28.35 purposes, no part of the net earnings of which inures to the 28.36 benefit of any private shareholders; provided the property is 29.1 used primarily as a clubhouse, meeting facility, or recreational 29.2 facility by the group or association and the property is not 29.3 used for residential purposes on either a temporary or permanent 29.4 basis. 29.5 (14) To the extent provided by section 295.44, real and 29.6 personal property used or to be used primarily for the 29.7 production of hydroelectric or hydromechanical power on a site 29.8 owned by the federal government, the state, or a local 29.9 governmental unit which is developed and operated pursuant to 29.10 the provisions of section 103G.535. 29.11 (15) If approved by the governing body of the municipality 29.12 in which the property is located, and if construction is 29.13 commenced after June 30, 1983: 29.14 (a) a "direct satellite broadcasting facility" operated by 29.15 a corporation licensed by the federal communications commission 29.16 to provide direct satellite broadcasting services using direct 29.17 broadcast satellites operating in the 12-ghz. band; and 29.18 (b) a "fixed satellite regional or national program service 29.19 facility" operated by a corporation licensed by the federal 29.20 communications commission to provide fixed satellite-transmitted 29.21 regularly scheduled broadcasting services using satellites 29.22 operating in the 6-ghz. band. 29.23 An exemption provided by clause (15) shall apply for a period 29.24 not to exceed five years. When the facility no longer qualifies 29.25 for exemption, it shall be placed on the assessment rolls as 29.26 provided in subdivision 4. Before approving a tax exemption 29.27 pursuant to this paragraph, the governing body of the 29.28 municipality shall provide an opportunity to the members of the 29.29 county board of commissioners of the county in which the 29.30 facility is proposed to be located and the members of the school 29.31 board of the school district in which the facility is proposed 29.32 to be located to meet with the governing body. The governing 29.33 body shall present to the members of those boards its estimate 29.34 of the fiscal impact of the proposed property tax exemption. 29.35 The tax exemption shall not be approved by the governing body 29.36 until the county board of commissioners has presented its 30.1 written comment on the proposal to the governing body or 30 days 30.2 have passed from the date of the transmittal by the governing 30.3 body to the board of the information on the fiscal impact, 30.4 whichever occurs first. 30.5 (16) Real and personal property owned and operated by a 30.6 private, nonprofit corporation exempt from federal income 30.7 taxation pursuant to United States Code, title 26, section 30.8 501(c)(3), primarily used in the generation and distribution of 30.9 hot water for heating buildings and structures. 30.10 (17) Notwithstanding section 273.19, state lands that are 30.11 leased from the department of natural resources under section 30.12 92.46. 30.13 (18) Electric power distribution lines and their 30.14 attachments and appurtenances, that are used primarily for 30.15 supplying electricity to farmers at retail. 30.16 (19) Transitional housing facilities. "Transitional 30.17 housing facility" means a facility that meets the following 30.18 requirements. (i) It provides temporary housing to individuals, 30.19 couples, or families. (ii) It has the purpose of reuniting 30.20 families and enabling parents or individuals to obtain 30.21 self-sufficiency, advance their education, get job training, or 30.22 become employed in jobs that provide a living wage. (iii) It 30.23 provides support services such as child care, work readiness 30.24 training, and career development counseling; and a 30.25 self-sufficiency program with periodic monitoring of each 30.26 resident's progress in completing the program's goals. (iv) It 30.27 provides services to a resident of the facility for at least 30.28 three months but no longer than three years, except residents 30.29 enrolled in an educational or vocational institution or job 30.30 training program. These residents may receive services during 30.31 the time they are enrolled but in no event longer than four 30.32 years. (v) It is owned and operated or under lease from a unit 30.33 of government or governmental agency under a property 30.34 disposition program and operated by one or more organizations 30.35 exempt from federal income tax under section 501(c)(3) of the 30.36 Internal Revenue Code of 1986, as amended through December 31, 31.1 1992. This exemption applies notwithstanding the fact that the 31.2 sponsoring organization receives financing by a direct federal 31.3 loan or federally insured loan or a loan made by the Minnesota 31.4 housing finance agency under the provisions of either Title II 31.5 of the National Housing Act or the Minnesota housing finance 31.6 agency law of 1971 or rules promulgated by the agency pursuant 31.7 to it, and notwithstanding the fact that the sponsoring 31.8 organization receives funding under Section 8 of the United 31.9 States Housing Act of 1937, as amended. 31.10 (20) Real and personal property, including leasehold or 31.11 other personal property interests, owned and operated by a 31.12 corporation if more than 50 percent of the total voting power of 31.13 the stock of the corporation is owned collectively by: (i) the 31.14 board of regents of the University of Minnesota, (ii) the 31.15 University of Minnesota Foundation, an organization exempt from 31.16 federal income taxation under section 501(c)(3) of the Internal 31.17 Revenue Code of 1986, as amended through December 31, 1992, and 31.18 (iii) a corporation organized under chapter 317A, which by its 31.19 articles of incorporation is prohibited from providing pecuniary 31.20 gain to any person or entity other than the regents of the 31.21 University of Minnesota; which property is used primarily to 31.22 manage or provide goods, services, or facilities utilizing or 31.23 relating to large-scale advanced scientific computing resources 31.24 to the regents of the University of Minnesota and others. 31.25 (21)(a) Small scale wind energy conversion systems 31.26 installed after January 1, 1991, and used as an electric power 31.27 source are exempt. 31.28 "Small scale wind energy conversion systems" are wind 31.29 energy conversion systems, as defined in section 216C.06, 31.30 subdivision 12, including the foundation or support pad, which 31.31 are (i) used as an electric power source; (ii) located within 31.32 one county and owned by the same owner; and (iii) produce two 31.33 megawatts or less of electricity as measured by nameplate 31.34 ratings. 31.35 (b) Medium scale wind energy conversion systems installed 31.36 after January 1, 1991, are treated as follows: (i) the 32.1 foundation and support pad are taxable; (ii) the associated 32.2 supporting and protective structures are exempt for the first 32.3 five assessment years after they have been constructed, and 32.4 thereafter, 30 percent of the market value of the associated 32.5 supporting and protective structures are taxable; and (iii) the 32.6 turbines, blades, transformers, and its related equipment, are 32.7 exempt. "Medium scale wind energy conversion systems" are wind 32.8 energy conversion systems as defined in section 216C.06, 32.9 subdivision 12, including the foundation or support pad, which 32.10 are: (i) used as an electric power source; (ii) located within 32.11 one county and owned by the same owner; and (iii) produce more 32.12 than two but equal to or less than 12 megawatts of energy as 32.13 measured by nameplate ratings. 32.14 (c) Large scale wind energy conversion systems installed 32.15 after January 1, 1991, are treated as follows: 25 percent of 32.16 the market value of all property is taxable, including (i) the 32.17 foundation and support pad; (ii) the associated supporting and 32.18 protective structures; and (iii) the turbines, blades, 32.19 transformers, and its related equipment. "Large scale wind 32.20 energy conversion systems" are wind energy conversion systems as 32.21 defined in section 216C.06, subdivision 12, including the 32.22 foundation or support pad, which are: (i) used as an electric 32.23 power source; and (ii) produce more than 12 megawatts of energy 32.24 as measured by nameplate ratings. 32.25 (22) Containment tanks, cache basins, and that portion of 32.26 the structure needed for the containment facility used to 32.27 confine agricultural chemicals as defined in section 18D.01, 32.28 subdivision 3, as required by the commissioner of agriculture 32.29 under chapter 18B or 18C. 32.30 (23) Photovoltaic devices, as defined in section 216C.06, 32.31 subdivision 13, installed after January 1, 1992, and used to 32.32 produce or store electric power. 32.33 (24) Real and personal property owned and operated by a 32.34 private, nonprofit corporation exempt from federal income 32.35 taxation pursuant to United States Code, title 26, section 32.36 501(c)(3), primarily used for an ice arena or ice rink, and used 33.1 primarily for youth and high school programs. 33.2 (25) A structure that is situated on real property that is 33.3 used for: 33.4 (i) housing for the elderly or for low- and moderate-income 33.5 families as defined in Title II of the National Housing Act, as 33.6 amended through December 31, 1990, and funded by a direct 33.7 federal loan or federally insured loan made pursuant to Title II 33.8 of the act; or 33.9 (ii) housing lower income families or elderly or 33.10 handicapped persons, as defined in Section 8 of the United 33.11 States Housing Act of 1937, as amended. 33.12 In order for a structure to be exempt under (i) or (ii), it 33.13 must also meet each of the following criteria: 33.14 (A) is owned by an entity which is operated as a nonprofit 33.15 corporation organized under chapter 317A; 33.16 (B) is owned by an entity which has not entered into a 33.17 housing assistance payments contract under Section 8 of the 33.18 United States Housing Act of 1937, or, if the entity which owns 33.19 the structure has entered into a housing assistance payments 33.20 contract under Section 8 of the United States Housing Act of 33.21 1937, the contract provides assistance for less than 90 percent 33.22 of the dwelling units in the structure, excluding dwelling units 33.23 intended for management or maintenance personnel; 33.24 (C) operates an on-site congregate dining program in which 33.25 participation by residents is mandatory, and provides assisted 33.26 living or similar social and physical support services for 33.27 residents; and 33.28 (D) was not assessed and did not pay tax under chapter 273 33.29 prior to the 1991 levy, while meeting the other conditions of 33.30 this clause. 33.31 An exemption under this clause remains in effect for taxes 33.32 levied in each year or partial year of the term of its permanent 33.33 financing. 33.34 (26) Real and personal property that is located in the 33.35 Superior National Forest, and owned or leased and operated by a 33.36 nonprofit organization that is exempt from federal income 34.1 taxation under section 501(c)(3) of the Internal Revenue Code of 34.2 1986, as amended through December 31, 1992, and primarily used 34.3 to provide recreational opportunities for disabled veterans and 34.4 their families. 34.5 (27) Manure pits and appurtenances, which may include 34.6 slatted floors and pipes, installed or operated in accordance 34.7 with a permit, order, or certificate of compliance issued by the 34.8 Minnesota pollution control agency. The exemption shall 34.9 continue for as long as the permit, order, or certificate issued 34.10 by the Minnesota pollution control agency remains in effect. 34.11 (28) Notwithstanding clause (8), item (a), attached 34.12 machinery and other personal property which is part of a 34.13 facility containing a cogeneration system as described in 34.14 section 216B.166, subdivision 2, paragraph (a), if the 34.15 cogeneration system has met the following criteria: (i) the 34.16 system utilizes natural gas as a primary fuel and the 34.17 cogenerated steam initially replaces steam generated from 34.18 existing thermal boilers utilizing coal; (ii) the facility 34.19 developer is selected as a result of a procurement process 34.20 ordered by the public utilities commission; and (iii) 34.21 construction of the facility is commenced after July 1, 1994, 34.22 and before July 1, 1997. 34.23 (29) Real property acquired by a home rule charter city, 34.24 statutory city, county, town, or school district under a lease 34.25 purchase agreement or an installment purchase contract during 34.26 the term of the lease purchase agreement as long as and to the 34.27 extent that the property is used by the city, county, town, or 34.28 school district and devoted to a public use and to the extent it 34.29 is not subleased to any private individual, entity, association, 34.30 or corporation in connection with a business or enterprise 34.31 operated for profit. 34.32 (30) Property owned by a nonprofit charitable organization 34.33 that qualifies for tax exemption under section 501(c)(3) of the 34.34 Internal Revenue Code of 1986, as amended through December 31, 34.35 1997, that is intended to be used as a business incubator in a 34.36 high-unemployment county but is not occupied on the assessment 35.1 date. As used in this clause, a "business incubator" is a 35.2 facility used for the development of nonretail businesses, 35.3 offering access to equipment, space, services, and advice to the 35.4 tenant businesses, for the purpose of encouraging economic 35.5 development, diversification, and job creation in the area 35.6 served by the organization, and "high-unemployment county" is a 35.7 county that had an average annual unemployment rate of 7.9 35.8 percent or greater in 1997. Property that qualifies for the 35.9 exemption under this clause is limited to no more than two 35.10 contiguous parcels and structures that do not exceed in the 35.11 aggregate 40,000 square feet. 35.12 Sec. 2. Minnesota Statutes 1997 Supplement, section 35.13 272.115, subdivision 4, is amended to read: 35.14 Subd. 4. [ELIGIBILITY FOR HOMESTEAD STATUS.] No real 35.15 estate sold or transferredon or after January 1, 1993,for 35.16 which a certificate of real estate value is required under 35.17subdivision 1this section shall be classified as a homestead, 35.18 unless(1)a certificate of value has been filed with the county 35.19 auditor in accordance with this section, or (2) the real estate35.20was conveyed by the federal government, the state, a political35.21subdivision of the state, or combination of them to a person35.22otherwise eligible to receive homestead classification of the35.23property. 35.24 This subdivision shall apply to any real estate taxes that 35.25 are payable the year or years following the sale or transfer of 35.26 the property. 35.27 Sec. 3. Minnesota Statutes 1997 Supplement, section 35.28 272.115, subdivision 5, is amended to read: 35.29 Subd. 5. [EXEMPTION FOR GOVERNMENT BODIES.] A certificate 35.30 of real estate value is not required when the real estate is 35.31 being conveyed toor by a public authority or agency of the35.32federal government,the state of Minnesota, a political 35.33 subdivision of the state, or any combination of them, for 35.34 highway or roadway right-of-way purposes, provided that the 35.35authority,agency,or governmental unit has agreed to file a 35.36 list of the real estate conveyedby orto theauthority,agency,36.1 or governmental unit with the commissioner of revenue by June 1 36.2 of the year following the year of the conveyance. 36.3 Sec. 4. Minnesota Statutes 1997 Supplement, section 36.4 273.124, subdivision 14, is amended to read: 36.5 Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 36.6 (a) Real estate of less than ten acres that is the homestead of 36.7 its owner must be classified as class 2a under section 273.13, 36.8 subdivision 23, paragraph (a), if: 36.9 (1) the parcel on which the house is located is contiguous 36.10 on at least two sides to (i) agricultural land, (ii) land owned 36.11 or administered by the United States Fish and Wildlife Service, 36.12 or (iii) land administered by the department of natural 36.13 resources on which in lieu taxes are paid under sections 477A.11 36.14 to 477A.14; 36.15 (2) its owner also owns a noncontiguous parcel of 36.16 agricultural land that is at least 20 acres; 36.17 (3) the noncontiguous land is located not farther than two 36.18 townships or cities, or a combination of townships or cities 36.19 from the homestead; and 36.20 (4) the agricultural use value of the noncontiguous land 36.21 and farm buildings is equal to at least 50 percent of the market 36.22 value of the house, garage, and one acre of land. 36.23 Homesteads initially classified as class 2a under the 36.24 provisions of this paragraph shall remain classified as class 36.25 2a, irrespective of subsequent changes in the use of adjoining 36.26 properties, as long as the homestead remains under the same 36.27 ownership, the owner owns a noncontiguous parcel of agricultural 36.28 land that is at least 20 acres, and the agricultural use value 36.29 qualifies under clause (4). 36.30 (b) Except as provided in paragraph (d), noncontiguous land 36.31 shall be included as part of a homestead under section 273.13, 36.32 subdivision 23, paragraph (a), only if the homestead is 36.33 classified as class 2a and the detached land is located in the 36.34 same township or city, or not farther than two townships or 36.35 cities or combination thereof from the homestead. 36.36 (c) Agricultural land used for purposes of a homestead and 37.1 actively farmed by a person holding a vested remainder interest 37.2 in it must be classified as a homestead under section 273.13, 37.3 subdivision 23, paragraph (a). If agricultural land is 37.4 classified class 2a, any other dwellings on the land used for 37.5 purposes of a homestead by persons holding vested remainder 37.6 interests who are actively engaged in farming the property, and 37.7 up to one acre of the land surrounding each homestead and 37.8 reasonably necessary for the use of the dwelling as a home, must 37.9 also be assessed class 2a. 37.10 (d) Agricultural land and buildings that were class 2a 37.11 homestead property under section 273.13, subdivision 23, 37.12 paragraph (a), for the 1997 assessment shall remain classified 37.13 as agricultural homesteads for subsequent assessments if: 37.14 (1) the property owner abandoned the homestead dwelling 37.15 located on the agricultural homestead as a result of the April 37.16 1997 floods; 37.17 (2) the property is located in the county of Polk, Clay, 37.18 Kittson, Marshall, Norman, or Wilkin; 37.19 (3) the agricultural land and buildings remain under the 37.20 same ownership for the current assessment year as existed for 37.21 the 1997 assessment year and continue to be used for 37.22 agricultural purposes; 37.23 (4) the dwelling occupied by the owner is located in 37.24 Minnesota and is within 30 miles of one of the parcels of 37.25 agricultural land that is owned by the taxpayer; and 37.26 (5) the owner notifies the county assessor that the 37.27 relocation was due to the 1997 floods, and the owner furnishes 37.28 the assessor any information deemed necessary by the assessor in 37.29 verifying the change in homestead dwelling. For taxes payable 37.30 in 1998, the owner must notify the assessor by December 1, 37.31 1997. For taxes payable in 1999 and later years, additional 37.32 notifications to the assessor are not required if the property 37.33 continues to meet the requirements of this paragraph. 37.34 Sec. 5. Minnesota Statutes 1997 Supplement, section 37.35 273.126, subdivision 3, is amended to read: 37.36 Subd. 3. [RENT RESTRICTIONS.] (a) In order to qualify 38.1 under class 4d, a unit must be subject to a rent restriction 38.2 agreement with the housing finance agency for a period of at 38.3 least five years. The agreement must be in effect and apply to 38.4 the rents to be charged for the year in which the property taxes 38.5 are payable. The agreement must provide that the restrictions 38.6 apply to each year of the period, regardless of whether the unit 38.7 is occupied by an individual with qualifying income or whether 38.8 class 4d applies. The rent restriction agreement must provide 38.9 for rents for the unit to be no higher than 30 percent of 60 38.10 percent of the median gross income. The definition of median 38.11 gross income specified in this section applies. "Rent" means 38.12 "gross rent" as defined in section 42(g)(2)(B) of the Internal 38.13 Revenue Code of 1986, as amended through December 31, 1996. 38.14 (b) Notwithstanding the maximum rent levels permitted, 20 38.15 percent of the units in the metropolitan area and ten percent of 38.16 the units in greater Minnesota qualifying under class 4d must be 38.17 made available to a family with a section 8 certificate or 38.18 voucher. 38.19 (c) The rent restriction agreement runs with the land and 38.20 binds any successor to title to the property, without regard to 38.21 whether the successor had actual notice or knowledge of the 38.22 agreement. The owner must promptly record the agreement in the 38.23 office of the county recorder or must file it in the office of 38.24 the registrar of titles, in the county where the property is 38.25 located. If the agreement is not recorded, class 4d does not 38.26 apply to the property. 38.27 Sec. 6. Minnesota Statutes 1997 Supplement, section 38.28 275.065, subdivision 3, is amended to read: 38.29 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 38.30 county auditor shall prepare and the county treasurer shall 38.31 deliver after November 10 and on or before November 24 each 38.32 year, by first class mail to each taxpayer at the address listed 38.33 on the county's current year's assessment roll, a notice of 38.34 proposed property taxes. 38.35 (b) The commissioner of revenue shall prescribe the form of 38.36 the notice. 39.1 (c) The notice must inform taxpayers that it contains the 39.2 amount of property taxes each taxing authority proposes to 39.3 collect for taxes payable the following year. In the case of a 39.4 town, or in the case of the state determined portion of the 39.5 school district levy, the final tax amount will be its proposed 39.6 tax. The notice must clearly state that each taxing authority, 39.7 including regional library districts established under section 39.8 134.201, and including the metropolitan taxing districts as 39.9 defined in paragraph (i), but excluding all other special taxing 39.10 districts and towns, will hold a public meeting to receive 39.11 public testimony on the proposed budget and proposed or final 39.12 property tax levy, or, in case of a school district, on the 39.13 current budget and proposed property tax levy. It must clearly 39.14 state the time and place of each taxing authority's meeting and 39.15 an address where comments will be received by mail. 39.16 (d) The notice must state for each parcel: 39.17 (1) the market value of the property as determined under 39.18 section 273.11, and used for computing property taxes payable in 39.19 the following year and for taxes payable in the current year as 39.20 each appears in the records of the county assessor on November 1 39.21 of the current year; and, in the case of residential property, 39.22 whether the property is classified as homestead or 39.23 nonhomestead. The notice must clearly inform taxpayers of the 39.24 years to which the market values apply and that the values are 39.25 final values; 39.26 (2) the items listed below, shown separately by county, 39.27 city or town, state determined school tax net of the education 39.28 homestead credit under section 273.1382, voter approved school 39.29 levy, other local school levy, and the sum of the special taxing 39.30 districts, and as a total of all taxing authorities: 39.31 (i) the actual tax for taxes payable in the current year; 39.32 (ii) the tax change due to spending factors, defined as the 39.33 proposed tax minus the constant spending tax amount; 39.34 (iii) the tax change due to other factors, defined as the 39.35 constant spending tax amount minus the actual current year tax; 39.36 and 40.1 (iv) the proposed tax amount. 40.2 In the case of a town or the state determined school tax, 40.3 the final tax shall also be its proposed tax unless the town 40.4 changes its levy at a special town meeting under section 40.5 365.52. If a school district has certified under section 40.6 124A.03, subdivision 2, that a referendum will be held in the 40.7 school district at the November general election, the county 40.8 auditor must note next to the school district's proposed amount 40.9 that a referendum is pending and that, if approved by the 40.10 voters, the tax amount may be higher than shown on the notice. 40.11 In the case of the city of Minneapolis, the levy for the 40.12 Minneapolis library board and the levy for Minneapolis park and 40.13 recreation shall be listed separately from the remaining amount 40.14 of the city's levy. In the case of a parcel where tax increment 40.15 or the fiscal disparities areawide tax under chapter 276A or 40.16 473F applies, the proposed tax levy on the captured value or the 40.17 proposed tax levy on the tax capacity subject to the areawide 40.18 tax must each be stated separately and not included in the sum 40.19 of the special taxing districts; and 40.20 (3) the increase or decrease between the total taxes 40.21 payable in the current year and the total proposed taxes, 40.22 expressed as a percentage. 40.23 For purposes of this section, the amount of the tax on 40.24 homesteads qualifying under the senior citizens' property tax 40.25 deferral program under chapter 290B is the total amount of 40.26 property tax before subtraction of the deferred property tax 40.27 amount. 40.28 (e) The notice must clearly state that the proposed or 40.29 final taxes do not include the following: 40.30 (1) special assessments; 40.31 (2) levies approved by the voters after the date the 40.32 proposed taxes are certified, including bond referenda, school 40.33 district levy referenda, and levy limit increase referenda; 40.34 (3) amounts necessary to pay cleanup or other costs due to 40.35 a natural disaster occurring after the date the proposed taxes 40.36 are certified; 41.1 (4) amounts necessary to pay tort judgments against the 41.2 taxing authority that become final after the date the proposed 41.3 taxes are certified; and 41.4 (5) the contamination tax imposed on properties which 41.5 received market value reductions for contamination. 41.6 (f) Except as provided in subdivision 7, failure of the 41.7 county auditor to prepare or the county treasurer to deliver the 41.8 notice as required in this section does not invalidate the 41.9 proposed or final tax levy or the taxes payable pursuant to the 41.10 tax levy. 41.11 (g) If the notice the taxpayer receives under this section 41.12 lists the property as nonhomestead, and satisfactory 41.13 documentation is provided to the county assessor by the 41.14 applicable deadline, and the property qualifies for the 41.15 homestead classification in that assessment year, the assessor 41.16 shall reclassify the property to homestead for taxes payable in 41.17 the following year. 41.18 (h) In the case of class 4 residential property used as a 41.19 residence for lease or rental periods of 30 days or more, the 41.20 taxpayer must either: 41.21 (1) mail or deliver a copy of the notice of proposed 41.22 property taxes to each tenant, renter, or lessee; or 41.23 (2) post a copy of the notice in a conspicuous place on the 41.24 premises of the property. 41.25 The notice must be mailed or posted by the taxpayer by 41.26 November 27 or within three days of receipt of the notice, 41.27 whichever is later. A taxpayer may notify the county treasurer 41.28 of the address of the taxpayer, agent, caretaker, or manager of 41.29 the premises to which the notice must be mailed in order to 41.30 fulfill the requirements of this paragraph. 41.31 (i) For purposes of this subdivision, subdivisions 5a and 41.32 6, "metropolitan special taxing districts" means the following 41.33 taxing districts in the seven-county metropolitan area that levy 41.34 a property tax for any of the specified purposes listed below: 41.35 (1) metropolitan council under section 473.132, 473.167, 41.36 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 42.1 (2) metropolitan airports commission under section 473.667, 42.2 473.671, or 473.672; and 42.3 (3) metropolitan mosquito control commission under section 42.4 473.711. 42.5 For purposes of this section, any levies made by the 42.6 regional rail authorities in the county of Anoka, Carver, 42.7 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 42.8 398A shall be included with the appropriate county's levy and 42.9 shall be discussed at that county's public hearing. 42.10 (j) If a statutory or home rule charter city or a town 42.11 exercises the local levy option provided by section 473.388, 42.12 subdivision 7, it may include in the notice of its proposed 42.13 taxes a statement of the amount by which its proposed taxes are 42.14 attributable to its exercise of the option, together with a 42.15 statement that the levy of the metropolitan council was 42.16 decreased by a similar amount because of exercise of that option. 42.17 Sec. 7. Minnesota Statutes 1997 Supplement, section 42.18 275.065, subdivision 6, is amended to read: 42.19 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 42.20 (a) For purposes of this section, the following terms shall have 42.21 the meanings given: 42.22 (1) "Initial hearing" means the first and primary hearing 42.23 held to discuss the taxing authority's proposed budget and 42.24 proposed property tax levy for taxes payable in the following 42.25 year, or, for school districts, the current budget and the 42.26 proposed property tax levy for taxes payable in the following 42.27 year. 42.28 (2) "Continuation hearing" means a hearing held to complete 42.29 the initial hearing, if the initial hearing is not completed on 42.30 its scheduled date. 42.31 (3) "Subsequent hearing" means the hearing held to adopt 42.32 the taxing authority's final property tax levy, and, in the case 42.33 of taxing authorities other than school districts, the final 42.34 budget, for taxes payable in the following year. 42.35 (b) Between November 29 and December 20, the governing 42.36 bodies of a city that has a population over 500, county, 43.1 metropolitan special taxing districts as defined in subdivision 43.2 3, paragraph (i), and regional library districts shall each hold 43.3 an initial public hearing to discuss and seek public comment on 43.4 its final budget and property tax levy for taxes payable in the 43.5 following year, and the governing body of the school district 43.6 shall hold an initial public hearing to review its current 43.7 budget and proposed property tax levy for taxes payable in the 43.8 following year. The metropolitan special taxing districts shall 43.9 be required to hold only a single joint initial public hearing, 43.10 the location of which will be determined by the affected 43.11 metropolitan agencies. 43.12 (c) The initial hearing must be held after 5:00 p.m. if 43.13 scheduled on a day other than Saturday. No initial hearing may 43.14 be held on a Sunday. 43.15 (d) At the initial hearing under this subdivision, the 43.16 percentage increase in property taxes proposed by the taxing 43.17 authority, if any, and the specific purposes for which property 43.18 tax revenues are being increased must be discussed. During the 43.19 discussion, the governing body shall hear comments regarding a 43.20 proposed increase and explain the reasons for the proposed 43.21 increase. The public shall be allowed to speak and to ask 43.22 questions. At the public hearing, the school district must also 43.23 provide and discuss information on the distribution of its 43.24 revenues by revenue source, and the distribution of its spending 43.25 by program area. 43.26 (e) If the initial hearing is not completed on its 43.27 scheduled date, the taxing authority must announce, prior to 43.28 adjournment of the hearing, the date, time, and place for the 43.29 continuation of the hearing. The continuation hearing must be 43.30 held at least five business days but no more than 14 business 43.31 days after the initial hearing. A continuation hearing may not 43.32 be held later than December 20 except as provided in paragraphs 43.33 (f) and (g). A continuation hearing must be held after 5:00 43.34 p.m. if scheduled on a day other than Saturday. No continuation 43.35 hearing may be held on a Sunday. 43.36 (f) The governing body of a county shall hold its initial 44.1 hearing on the second Tuesday in December each year, and may 44.2 hold additional initial hearings on other dates before December 44.3 20 if necessary for the convenience of county residents. If the 44.4 county needs a continuation of its hearing, the continuation 44.5 hearing shall be held on the third Tuesday in December. If the 44.6 third Tuesday in December falls on December 21, the county's 44.7 continuation hearing shall be held on Monday, December 20. 44.8 (g) The metropolitan special taxing districts shall hold a 44.9 joint initial public hearing on the firstMondayWednesday of 44.10 December. A continuation hearing, if necessary, shall be held 44.11 on the secondMondayWednesday of December even if that second 44.12MondayWednesday is after December 10. 44.13 (h) The county auditor shall provide for the coordination 44.14 of initial and continuation hearing dates for all school 44.15 districts and cities within the county to prevent conflicts 44.16 under clauses (i) and (j). 44.17 (i) By August 10, each school board and the board of the 44.18 regional library district shall certify to the county auditors 44.19 of the counties in which the school district or regional library 44.20 district is located the dates on which it elects to hold its 44.21 initial hearing and any continuation hearing. If a school board 44.22 or regional library district does not certify these dates by 44.23 August 10, the auditor will assign the initial and continuation 44.24 hearing dates. The dates elected or assigned must not conflict 44.25 with the initial and continuation hearing dates of the county or 44.26 the metropolitan special taxing districts. 44.27 (j) By August 20, the county auditor shall notify the 44.28 clerks of the cities within the county of the dates on which 44.29 school districts and regional library districts have elected to 44.30 hold their initial and continuation hearings. At the time a 44.31 city certifies its proposed levy under subdivision 1 it shall 44.32 certify the dates on which it elects to hold its initial hearing 44.33 and any continuation hearing. Until September 15, the first and 44.34 second Mondays of December are reserved for the use of cities. 44.35 If a city does not certifytheseits hearing dates by September 44.36 15, the auditor shall assign the initial and continuation 45.1 hearing dates. The dates elected or assigned for the initial 45.2 hearing must not conflict with the initial hearing dates of the 45.3 county, metropolitan special taxing districts, regional library 45.4 districts, or school districts within which the city is 45.5 located. To the extent possible, the dates of the city's 45.6 continuation hearing should not conflict with the continuation 45.7 hearing dates of the county, metropolitan special taxing 45.8 districts, regional library districts, or school districts 45.9 within which the city is located. This paragraph does not apply 45.10 to cities of 500 population or less. 45.11 (k) The county initial hearing date and the city, 45.12 metropolitan special taxing district, regional library district, 45.13 and school district initial hearing dates must be designated on 45.14 the notices required under subdivision 3. The continuation 45.15 hearing dates need not be stated on the notices. 45.16 (l) At a subsequent hearing, each county, school district, 45.17 city over 500 population, and metropolitan special taxing 45.18 district may amend its proposed property tax levy and must adopt 45.19 a final property tax levy. Each county, city over 500 45.20 population, and metropolitan special taxing district may also 45.21 amend its proposed budget and must adopt a final budget at the 45.22 subsequent hearing. The final property tax levy must be adopted 45.23 prior to adopting the final budget. A school district is not 45.24 required to adopt its final budget at the subsequent hearing. 45.25 The subsequent hearing of a taxing authority must be held on a 45.26 date subsequent to the date of the taxing authority's initial 45.27 public hearing. If a continuation hearing is held, the 45.28 subsequent hearing must be held either immediately following the 45.29 continuation hearing or on a date subsequent to the continuation 45.30 hearing. The subsequent hearing may be held at a regularly 45.31 scheduled board or council meeting or at a special meeting 45.32 scheduled for the purposes of the subsequent hearing. The 45.33 subsequent hearing of a taxing authority does not have to be 45.34 coordinated by the county auditor to prevent a conflict with an 45.35 initial hearing, a continuation hearing, or a subsequent hearing 45.36 of any other taxing authority. All subsequent hearings must be 46.1 held prior to five working days after December 20 of the levy 46.2 year. The date, time, and place of the subsequent hearing must 46.3 be announced at the initial public hearing or at the 46.4 continuation hearing. 46.5 (m) The property tax levy certified under section 275.07 by 46.6 a city of any population, county, metropolitan special taxing 46.7 district, regional library district, or school district must not 46.8 exceed the proposed levy determined under subdivision 1, except 46.9 by an amount up to the sum of the following amounts: 46.10 (1) the amount of a school district levy whose voters 46.11 approved a referendum to increase taxes under section 124.82, 46.12 subdivision 3, 124A.03, subdivision 2, or 124B.03, subdivision 46.13 2, after the proposed levy was certified; 46.14 (2) the amount of a city or county levy approved by the 46.15 voters after the proposed levy was certified; 46.16 (3) the amount of a levy to pay principal and interest on 46.17 bonds approved by the voters under section 475.58 after the 46.18 proposed levy was certified; 46.19 (4) the amount of a levy to pay costs due to a natural 46.20 disaster occurring after the proposed levy was certified, if 46.21 that amount is approved by the commissioner of revenue under 46.22 subdivision 6a; 46.23 (5) the amount of a levy to pay tort judgments against a 46.24 taxing authority that become final after the proposed levy was 46.25 certified, if the amount is approved by the commissioner of 46.26 revenue under subdivision 6a; 46.27 (6) the amount of an increase in levy limits certified to 46.28 the taxing authority by the commissioner of children, families, 46.29 and learning or the commissioner of revenue after the proposed 46.30 levy was certified; and 46.31 (7) the amount required under section 124.755. 46.32 (n) This subdivision does not apply to towns and special 46.33 taxing districts other than regional library districts and 46.34 metropolitan special taxing districts. 46.35 (o) Notwithstanding the requirements of this section, the 46.36 employer is required to meet and negotiate over employee 47.1 compensation as provided for in chapter 179A. 47.2 Sec. 8. Minnesota Statutes 1996, section 275.07, is 47.3 amended by adding a subdivision to read: 47.4 Subd. 5. [REVISED FINAL LEVY.] (a) If the final levy of a 47.5 taxing jurisdiction certified to the county auditor is incorrect 47.6 due to an error in the deduction of the aid received under 47.7 section 273.1398, subdivision 2, in determining the certified 47.8 levy as required under subdivision 1, the taxing jurisdiction 47.9 may apply to the commissioner of revenue to increase the levy 47.10 and recertify it in the correct amount. The commissioner must 47.11 receive the request by January 2. 47.12 (b) If the commissioner determines that the requirements of 47.13 paragraph (a) have been met, the commissioner shall notify the 47.14 taxing jurisdiction that the revised final levy has been 47.15 approved. Upon receipt of the approval, but no later than 47.16 January 15, the governing body of the taxing jurisdiction shall 47.17 adopt the revised final levy and the taxing jurisdiction shall 47.18 recertify the revised final levy to the county auditor. The 47.19 county auditor shall use the revised final levy to compute the 47.20 tax rate for the taxing jurisdiction. 47.21 (c) The county auditor shall report to the commissioner of 47.22 revenue the revised final levy used to determine the tax rates 47.23 for the taxing jurisdiction. The provisions of section 275.065, 47.24 subdivisions 6, 6a, and 7 do not apply to the revised final levy 47.25 for the taxing jurisdiction certified under this section. 47.26 (d) The taxing jurisdiction must publish in an official 47.27 newspaper of general circulation in the taxing jurisdiction a 47.28 notice of its revised final levy. The notice shall contain 47.29 examples of the tax impact of the revised final levy on 47.30 homestead, apartment, and commercial classes of property in the 47.31 taxing jurisdiction. The county auditor shall assist the taxing 47.32 jurisdiction in preparing the examples for the publication. 47.33 Sec. 9. Minnesota Statutes 1997 Supplement, section 47.34 275.70, is amended by adding a subdivision to read: 47.35 Subd. 6. [MATCHING FUND REQUIREMENTS.] The special levy 47.36 provided in subdivision 5, clause (8), does not include the 48.1 increased direct and indirect costs related to general increases 48.2 in program costs where there is no mandated increase regarding 48.3 the matching fund requirements. Specifically, but without 48.4 limitation, the following provisions apply to the special levy 48.5 authorization in subdivision 5, clause (8): (1) increases in 48.6 direct or indirect income maintenance administrative costs are 48.7 not included; (2) increases for social services and social 48.8 services administration are included, but only to the extent 48.9 that the minimum local share amount needed to receive community 48.10 social service aids exceeds the amount levied for social 48.11 services and social services administration for the taxes 48.12 payable year 1997; and (3) increases in county costs for Title 48.13 IV-E Foster Care Services over the amount levied for the taxes 48.14 payable year 1997 are included to the extent the amount from 48.15 both years represents the local matching fund requirement for 48.16 the federal grant. 48.17 Sec. 10. Minnesota Statutes 1997 Supplement, section 48.18 287.08, is amended to read: 48.19 287.08 [TAX, HOW PAYABLE; RECEIPTS.] 48.20 (a) The tax imposed by sections 287.01 to 287.12 shall be 48.21 paid to the treasurer of the county in which the mortgaged land 48.22 or some part thereof is situated at or before the time of filing 48.23 the mortgage for record or registration. The treasurer shall 48.24 endorse receipt on the mortgage, countersigned by the county 48.25 auditor, who shall charge the amount to the treasurer and such 48.26 receipt shall be recorded with the mortgage, and such receipt of 48.27 the record thereof shall be conclusive proof that the tax has 48.28 been paid to the amount therein stated and authorize any county 48.29 recorder to record the mortgage. Its form, in substance, shall 48.30 be "registration tax hereon of ..................... dollars 48.31 paid." If the mortgages be exempt from taxation the endorsement 48.32 shall be "exempt from registration tax," to be signed in either 48.33 case by the treasurer as such, and in case of payment to be 48.34 countersigned by the auditor. In case the treasurer shall be 48.35 unable to determine whether a claim of exemption should be 48.36 allowed, the tax shall be paid as in the case of a taxable 49.1 mortgage. 49.2 (b) Upon written application of the taxpayer, the county 49.3 treasurer may refund in whole or in part any tax which has been 49.4 erroneously paid, or a person having paid a mortgage registry 49.5 tax amount may seek a refund of such tax, or other appropriate 49.6 relief, by bringing an action in tax court in the county in 49.7 which the tax was paid, within 60 days of the payment. The 49.8 action is commenced by the serving of a petition for relief on 49.9 the county treasurer, and by filing a copy with the court. The 49.10 county attorney shall defend the action. The county treasurer 49.11 shall notify the treasurer of each county that has or would 49.12 receive a portion of the tax as paid. 49.13 (c) If the county treasurer determines a refund should be 49.14 paid, or if a refund is ordered, the county treasurer of each 49.15 county that actually received a portion of the tax shall 49.16 immediately pay a proportionate share of three percent of the 49.17 refund using any available county funds. The county treasurer 49.18 of each county which received, or would have received, a portion 49.19 of the tax shall also pay their county's proportionate share of 49.20 the remaining 97 percent of the court-ordered refund on or 49.21 before the tenth day of the following month using solely the 49.22 mortgage registry tax funds that would be paid to the 49.23 commissioner of revenue on that date under section 287.12. If 49.24 the funds on hand under this procedure are insufficient to fully 49.25 fund 97 percent of the court-ordered refund, the county 49.26 treasurer of the county in which the action was brought shall 49.27 file a claim with the commissioner of revenue under section 49.28 16A.48 for the remaining portion of 97 percent of the refund, 49.29 and shall pay over the remaining portion upon receipt of a 49.30 warrant from the state issued pursuant to the claim. 49.31 (d) When any such mortgage covers real property situate in 49.32 more than one county in this state the whole of such tax shall 49.33 be paid to the treasurer of the county where the mortgage is 49.34 first presented for record or registration, and the payment 49.35 shall be receipted and countersigned as above provided. If the 49.36 principal debt or obligation secured by such a multiple county 50.1 mortgage exceeds $1,000,000, the tax shall be divided and paid 50.2 over by the county treasurer receiving the same, on or before 50.3 the tenth day of each month after receipt thereof, to the county 50.4 or counties entitled thereto in the ratio which the market value 50.5 of the real property covered by the mortgage in each county 50.6 bears to the market value of all the property described in the 50.7 mortgage. In making such division and payment the county 50.8 treasurer shall send therewith a statement giving the 50.9 description of the property described in the mortgage and the 50.10 market value of the part thereof situate in each county. For 50.11 the purpose aforesaid, the treasurer of any county may require 50.12 the treasurer of any other county to certify to the former the 50.13 market valuation of any tract of land in any such mortgage. 50.14 Sec. 11. Minnesota Statutes 1996, section 462.396, 50.15 subdivision 2, is amended to read: 50.16 Subd. 2. [BUDGET; HEARING; LEVY LIMITS.] On or before 50.17 August 20 each year, the commission shall submit its proposed 50.18 budget for the ensuing calendar year showing anticipated 50.19 receipts, disbursements and ad valorem tax levy with a written 50.20 notice of the time and place of the public hearing on the 50.21 proposed budget to each county auditor and municipal clerk 50.22 within the region and those town clerks who in advance have 50.23 requested a copy of the budget and notice of public hearing. On 50.24 or before September 15 each year, the commission shall adopt, 50.25 after a public hearing held not later than September 15, a 50.26 budget covering its anticipated receipts and disbursements for 50.27 the ensuing year and shall decide upon the total amount 50.28 necessary to be raised from ad valorem tax levies to meet its 50.29 budget. After adoption of the budget and no later than 50.30 September 15, the secretary of the commission shall certify to 50.31 the auditor of each county within the region the county share of 50.32 the tax, which shall be an amount bearing the same proportion to 50.33 the total levy agreed on by the commission as the net tax 50.34 capacity of the county bears to the net tax capacity of the 50.35 region. (1) For taxes levied in1990 and thereafter1998, the 50.36 maximum amounts of levies made for the purposes of sections 51.1 462.381 to 462.398 are the following amounts, less the sum of51.2regional planning grants from the commissioner to that region: 51.3 for Region 1, $180,337; for Region 2,$150,000$180,000; for 51.4 Region 3, $353,110; for Region 5, $195,865; for Region 6E, 51.5 $197,177; for Region 6W,$150,000$180,000; for Region 51.6 7E,$158,653$180,000; for Region 8, $206,107; for Region 9, 51.7 $343,572. (2) For taxes levied in 1999 and thereafter, the 51.8 maximum amount that may be levied by each commission shall be 51.9 the amount authorized in clause (1), or 103 percent of the 51.10 amount levied in the previous year, whichever is greater. The 51.11 auditor of each county in the region shall add the amount of any 51.12 levy made by the commission within the limits imposed by this 51.13 subdivision to other tax levies of the county for collection by 51.14 the county treasurer with other taxes. When collected the 51.15 county treasurer shall make settlement of the taxes with the 51.16 commission in the same manner as other taxes are distributed to 51.17 political subdivisions. 51.18 Sec. 12. Minnesota Statutes 1997 Supplement, section 51.19 462A.071, subdivision 2, is amended to read: 51.20 Subd. 2. [APPLICATION.] (a) In order to qualify for 51.21 certification under subdivision 1, the owner or manager of the 51.22 property must annually apply to the agency. The application 51.23 must be in the form prescribed by the agency, contain the 51.24 information required by the agency, and be submitted by the date 51.25 and time specified by the agency. 51.26 (b) Each application must include: 51.27 (1) the property tax identification number; 51.28 (2) the number, type, and size of units the applicant seeks 51.29 to qualify as low-income housing under class 4d; 51.30 (3) the number, type, and size of units in the property for 51.31 which the applicant is not seeking qualification, if any; 51.32 (4) a certification that the property has been inspected by 51.33 a qualified inspector within the past three years and meets the 51.34 minimum housing quality standards or is exempt from the 51.35 inspection requirement under subdivision 4; 51.36 (5) a statement indicating thebuilding isqualifying units 52.1 in compliance with the income limits; 52.2 (6) an executed agreement to restrict rents meeting the 52.3 requirements specified by the agency or executed leases for the 52.4 units for which qualification as low-income housing as class 4d 52.5 under section 273.13 is sought and the rent schedule; and 52.6 (7) any additional information the agency deems appropriate 52.7 to require. 52.8 (c) The applicant must pay a per-unit application fee to be 52.9 set by the agency. The application fee charged by the agency 52.10 must approximately equal the costs of processing and reviewing 52.11 the applications. The fee must be deposited in thegeneral52.12 housing development fund. 52.13 Sec. 13. Minnesota Statutes 1997 Supplement, section 52.14 462A.071, subdivision 4, is amended to read: 52.15 Subd. 4. [MINIMUM HOUSING QUALITY STANDARDS.] (a) To 52.16 qualify for taxation under class 4d under section 273.13, a unit 52.17 must meetboththe housing maintenance code of the local unit of 52.18 government in which the unit is located, if such a code has been 52.19 adopted,andor the housing quality standards adopted by the 52.20 United States Department of Housing and Urban Development, if no 52.21 local housing maintenance code has been adopted. 52.22 (b) In order to meet the minimum housing quality standards, 52.23 a building must be inspected by an independent designated 52.24 inspector at least once every three years. The inspector must 52.25 certify that the building complies with the minimum standards. 52.26 The property owner must pay the cost of the inspection. 52.27 (c) The agency may exempt from the inspection requirement 52.28 housing units that are financed by a governmental entity and 52.29 subject to regular inspection or other compliance checks with 52.30 regard to minimum housing quality. Written certification must 52.31 be supplied to show that these exempt units have been inspected 52.32 within the last three years and comply with the requirements 52.33 under the public financing or local requirements. 52.34 Sec. 14. Minnesota Statutes 1997 Supplement, section 52.35 462A.071, subdivision 8, is amended to read: 52.36 Subd. 8. [PENALTIES.] (a) The penalties provided by this 53.1 subdivision apply to each unit that received class 4d taxation 53.2 for a year and failed to meet the requirements of section 53.3 273.126 and this section. 53.4 (b) If the owner or manager does not comply with the rent 53.5 restriction agreement, or does not comply with the income 53.6 restrictionsor, minimum housing quality standards, or the 53.7 section 8 availability requirements, a penalty applies equal to 53.8 the increased taxes that would have been imposed if theproperty53.9 unit had not been classified under class 4d for the year in 53.10 which restrictions were violated, plus an additional amount 53.11 equal to ten percent of the increased taxes. The provisions of 53.12 section 279.03 apply to the amount of increased taxes that would 53.13 have been imposed if a unit had not been classified under class 53.14 4d for the year in which restrictions were violated. 53.15 (c) If the agency finds that the violations were 53.16 inadvertent and insubstantial, a penalty of $50 per unit per 53.17 year applies in lieu of the penalty specified under paragraph 53.18 (b). In order to qualify under this paragraph, violations of 53.19 the minimum housing quality standards must be corrected within a 53.20 reasonable period of time and rent charged in excess of the 53.21 agreement must be rebated to the tenants. 53.22 (d) The agency may abate the penalties under this 53.23 subdivision for reasonable cause. 53.24 (e) Penalties assessed under paragraph (c) are payable to 53.25 the agency and must be deposited in thegeneralhousing 53.26 development fund. If an owner or manager fails to timely pay a 53.27 penalty imposed under paragraph (c), the agency may choose to: 53.28 (1) impose the penalty under paragraph (b); or 53.29 (2) certify the penalty under paragraph (c) to the auditor 53.30 for collection as additional taxes. 53.31 The agency shall certify to the county auditor penalties 53.32 assessed under paragraph (b) and clause (2). The auditor shall 53.33 impose and collect the certified penalties as additional taxes 53.34 which will be distributed to taxing districts in the same manner 53.35 as property taxes on the property. 53.36 Sec. 15. Minnesota Statutes 1996, section 473.39, is 54.1 amended by adding a subdivision to read: 54.2 Subd. 1e. [OBLIGATIONS.] In addition to the authority in 54.3 subdivisions 1a, 1b, 1c, and 1d, the council may issue 54.4 certificates of indebtedness, bonds, or other obligations under 54.5 this section in an amount not exceeding $32,500,000, which may 54.6 be used for capital expenditures as prescribed in the council's 54.7 transit capital improvement program and for related costs, 54.8 including the costs of issuance and sale of the obligations. 54.9 Sec. 16. Minnesota Statutes 1997 Supplement, section 54.10 477A.011, subdivision 36, is amended to read: 54.11 Subd. 36. [CITY AID BASE.] (a) Except as provided in 54.12 paragraphs (b), (c), and (d), "city aid base" means, for each 54.13 city, the sum of the local government aid and equalization aid 54.14 it was originally certified to receive in calendar year 1993 54.15 under Minnesota Statutes 1992, section 477A.013, subdivisions 3 54.16 and 5, and the amount of disparity reduction aid it received in 54.17 calendar year 1993 under Minnesota Statutes 1992, section 54.18 273.1398, subdivision 3. 54.19 (b) For aids payable in 1996 and thereafter, a city that in 54.20 1992 or 1993 transferred an amount from governmental funds to 54.21 its sewer and water fund, which amount exceeded its net levy for 54.22 taxes payable in the year in which the transfer occurred, has a 54.23 "city aid base" equal to the sum of (i) its city aid base, as 54.24 calculated under paragraph (a), and (ii) one-half of the 54.25 difference between its city aid distribution under section 54.26 477A.013, subdivision 9, for aids payable in 1995 and its city 54.27 aid base for aids payable in 1995. 54.28 (c) The city aid base for any city with a population less 54.29 than 500 is increased by $40,000 for aids payable in calendar 54.30 year 1995 and thereafter, and the maximum amount of total aid it 54.31 may receive under section 477A.013, subdivision 9, paragraph 54.32 (c), is also increased by $40,000 for aids payable in calendar 54.33 year 1995 only, provided that: 54.34 (i) the average total tax capacity rate for taxes payable 54.35 in 1995 exceeds 200 percent; 54.36 (ii) the city portion of the tax capacity rate exceeds 100 55.1 percent; and 55.2 (iii) its city aid base is less than $60 per capita. 55.3 (d) The city aid base for a city is increased by $20,000 in 55.4 1998 and thereafter and the maximum amount of total aid it may 55.5 receive under section 477A.013, subdivision 9, paragraph (c), is 55.6 also increased by $20,000 in calendar year 1998 only, provided 55.7 that: 55.8 (i) the city has a population in 1994 of 2,500 or more; 55.9 (ii) the city is located in a county, outside of the 55.10 metropolitan area, which contains a city of the first class; 55.11 (iii) the city's net tax capacity used in calculating its 55.12 1996 aid under section 477A.013 is less than $400 per capita; 55.13 and 55.14 (iv) at least four percent of the total net tax capacity, 55.15 for taxes payable in 1996, of property located in the city is 55.16 classified as railroad property. 55.17 (e) The city aid base for a city is increased by $200,000 55.18 in 1999 and thereafter and the maximum amount of total aid it 55.19 may receive under section 477A.013, subdivision 9, paragraph 55.20 (c), is also increased by $200,000 in calendar year 1999 only, 55.21 provided that: 55.22 (i) the city was incorporated as a statutory city after 55.23 December 1, 1993; 55.24 (ii) its city aid base does not exceed $5,600; and 55.25 (iii) the city had a population in 1996 of 5,000 or more. 55.26 Sec. 17. Laws 1971, chapter 773, section 1, subdivision 2, 55.27 as amended by Laws 1974, chapter 351, section 5, Laws 1976, 55.28 chapter 234, section 7, Laws 1978, chapter 788, section 1, Laws 55.29 1981, chapter 369, section 1, Laws 1983, chapter 302, section 1, 55.30 Laws 1988, chapter 513, section 1, and Laws 1992, chapter 511, 55.31 article 9, section 23, is amended to read: 55.32 Subd. 2. For each of the years through19982003, the city 55.33 of St. Paul is authorized to issue bonds in the aggregate 55.34 principal amount of$8,000,000$15,000,000 for each year; or in 55.35 an amount equal to one-fourth of one percent of the assessors 55.36 estimated market value of taxable property in St. Paul, 56.1 whichever is greater, provided that no more than 56.2$8,000,000$15,000,000 of bonds is authorized to be issued in 56.3 any year, unless St. Paul's local general obligation debt as 56.4 defined in this section is less than six percent of market value 56.5 calculated as of December 31 of the preceding year; but at no 56.6 time shall the aggregate principal amount of bonds authorized 56.7 exceed$15,700,000 in 1992, $16,600,000 in 1993, $16,600,000 in56.81994, $16,600,000 in 1995, $17,500,000 in 1996, $17,500,000 in56.91997, and$18,000,000 in 1998, $18,000,000 in 1999, $19,000,000 56.10 in 2000, $19,000,000 in 2001, $19,500,000 in 2002, and 56.11 $20,000,000 in 2003. 56.12 Sec. 18. Laws 1971, chapter 773, section 1, as amended by 56.13 Laws 1974, chapter 351, section 5, subdivision 1, Laws 1976, 56.14 chapter 234, section 1, Laws 1978, chapter 788, section 1, Laws 56.15 1981, chapter 369, section 1, and Laws 1983, chapter 302, 56.16 section 1, is amended to read: 56.17 Section 1. [ST. PAUL, CITY OF; CAPITAL IMPROVEMENT 56.18 PROGRAM.] 56.19 Subdivision 1. Notwithstanding any provision of the 56.20 charter of the city of St. Paul, the council of said city shall 56.21 have power by a resolution adopted by five affirmative votes of 56.22 all its members to authorize the issuance and sale of general 56.23 obligation bonds of the city in the years stated and in the 56.24 aggregate annual amounts not to exceed the limits prescribed in 56.25 subdivision 2 of this section for the payment of which the full 56.26 faith and credit of the city is irrevocably pledged. 56.27 Subd. 2. For each of the years 1983, 1984, 1985, 1986, 56.28 1987, and 1988 the city of St. Paul is authorized to issue bonds 56.29 in the aggregate principal amount of $8,000,000 for each year; 56.30 or in an amount equal to one-fourth of one percent of the 56.31 assessors estimated market value of taxable property in St. 56.32 Paul, whichever is greater, provided that no more than 56.33 $8,000,000 of bonds is authorized to be issued in any year, 56.34 unless St. Paul's local general obligation debt as defined in 56.35 this section is less than six percent of market value calculated 56.36 as of December 31 of the preceding year; but at no time shall 57.1 the aggregate principal amount of bonds authorized exceed 57.2 $9,000,000 in 1983, $9,500,000 in 1984, $10,100,000 in 1985, 57.3 $10,700,000 in 1986, $11,300,000 in 1987, and $12,000,000 in 57.4 1988. 57.5 Subd. 3. For purposes of this section, St. Paul's general 57.6 obligation debt shall consist of the principal amount of all 57.7 outstanding bonds of (1) the city of St. Paul, the housing and 57.8 redevelopment authority of St. Paul, the civic center authority 57.9 of St. Paul, and the port authority of St. Paul, for which the 57.10 full faith and credit of the city or any of the foregoing 57.11 authorities has been pledged; (2) Independent School District 57.12 625, for which the full faith and credit of the district has 57.13 been pledged; and (3) the county of Ramsey, for which the full 57.14 faith and credit of the county has been pledged, reduced by an 57.15 amount equal to the principal amount of the outstanding bonds 57.16 multiplied by a figure, the numerator of which is equal to the 57.17assessed valuenet tax capacity of property within the county 57.18 outside of the city of St. Paul and the denominator of which is 57.19 equal to theassessed valuenet tax capacity of the county. 57.20 There shall be deducted before making the foregoing 57.21 computations the outstanding principal amount of all refunded 57.22 bonds, all tax or aid anticipation certificates of indebtedness 57.23 of the city, the authorities, the school district and the county 57.24 for which the full faith and credit of the bodies has been 57.25 pledged and all tax increment financed bonds which have not 57.26 used, for the prior three consecutive years, general tax levies 57.27or capitalized interestto support annual principal and interest 57.28 payments. 57.29 Sec. 19. Laws 1971, chapter 773, section 2, as amended by 57.30 Laws 1978, chapter 788, section 2, Laws 1983, chapter 302, 57.31 section 2, Laws 1988, chapter 513, section 2, and Laws 1992, 57.32 chapter 511, article 9, section 24, is amended to read: 57.33 Sec. 2. The proceeds of all bonds issued pursuant to 57.34 section 1 hereof shall be used exclusively for the acquisition, 57.35 construction, and repair of capital improvements and, commencing 57.36 in the year 1992 and notwithstanding any provision in Laws 1978, 58.1 chapter 788, section 5, as amended, for redevelopment project 58.2 activities as defined in Minnesota Statutes, section 469.002, 58.3 subdivision 14, in accordance with Minnesota Statutes, section 58.4 469.041, clause (6). The amount of proceeds of bonds authorized 58.5 by section 1 used for redevelopment project activities shall not 58.6 exceed$655,000 in 1992, $690,000 in 1993, $690,000 in 1994,58.7$690,000 in 1995, $700,000 in 1996, $700,000 in 1997,58.8and$725,000 in 1998 or any later year. 58.9 None of the proceeds of any bonds so issued shall be 58.10 expended except upon projects which have been reviewed, and have 58.11 received a priority rating, from a capital improvements 58.12 committee consisting of 18 members, of whom a majority shall not 58.13 hold any paid office or position under the city of St. Paul. 58.14 The members shall be appointed by the mayor, with at least four 58.15 members from each Minnesota senate district located entirely 58.16 within the city and at least two members from each senate 58.17 district located partly within the city. Prior to making an 58.18 appointment to a vacancy on the capital improvement budget 58.19 committee, the mayor shall consult the legislators of the senate 58.20 district in which the vacancy occurs. The priorities and 58.21 recommendations of the committee shall be purely advisory, and 58.22 no buyer of any bonds shall be required to see to the 58.23 application of the proceeds. 58.24 Sec. 20. Laws 1976, chapter 162, section 1, as amended by 58.25 Laws 1982, chapter 474, section 1, Laws 1983, chapter 338, 58.26 section 1, Laws 1989 First Special Session chapter 1, article 5, 58.27 section 45, and Laws 1991, chapter 167, section 1, is amended to 58.28 read: 58.29 Section 1. [RED RIVER OF THE NORTH WATERSHED; TAX BY 58.30 WATERSHED DISTRICTS.] 58.31 Each watershed district located both within the counties of 58.32 Kittson, Marshall, Polk, Pennington, Red Lake, Norman, Clay, 58.33 Mahnomen, Clearwater, Roseau, Wilkin, Ottertail, Becker, 58.34 Koochiching, Beltrami, Traverse, Grant, Big Stone, Stevens, and 58.35 Itasca,which districtand within the hydrologic basin of the 58.36 Red River of the North that is a member of the Red River 59.1 watershed management board, established by a joint powers 59.2 agreement in accordance with Minnesota Statutes, section 471.59, 59.3 may levy an ad valorem tax not to exceed 0.04836 percent of the 59.4 taxable market value of all property within the district. This 59.5 levy shall be in excess of any levy authorized by Minnesota 59.6 Statutes, section 103D.905. The proceeds of one-half of this 59.7 levy shall be credited to the district's construction fund and 59.8 shall be used for the development, construction, and maintenance 59.9 of projects and programs of benefit to the district. The 59.10 proceeds of the remaining one-half of this levy shall be 59.11 credited to the general fund of the Red River watershed 59.12 management board and shall be used for funding the development, 59.13 construction, and maintenance of projects and programs of 59.14 benefit to the Red River basin. The Red River management board 59.15 shall adopt criteria for member districts to follow in applying 59.16 for funding from the board. 59.17 Sec. 21. Laws 1984, chapter 380, section 1, as amended by 59.18 Laws 1994, chapter 505, article 6, section 27, is amended to 59.19 read: 59.20 Section 1. [TAX.] 59.21 The Anoka county board may levy a taxonof not more than 59.22 .01 percent of the taxable market value of taxable 59.23 property located within the countyoutside ofexcluding any 59.24 taxable property taxed by any cityin which is situated afor 59.25 the support of any free public library, to acquire, better, and 59.26 construct county library buildings and to pay principal and 59.27 interest on bonds issued for that purpose. The tax shall be 59.28 disregarded in the calculation of levies or limits on levies 59.29 provided by Minnesota Statutes, section 373.40, or other law. 59.30 Sec. 22. Laws 1984, chapter 380, section 2, is amended to 59.31 read: 59.32 Sec. 2. [AUTHORIZATION.] 59.33 The Anoka county board may, by resolution adopted by a 59.34 four-sevenths vote, issue and sell general obligation bonds of 59.35 the countyin the amount of $9,000,000in the manner provided in 59.36 Minnesota Statutes, chapter 475, to acquire, better, and 60.1 construct county library buildings.The total amount of bonds60.2outstanding at any time shall not exceed $5,000,000. The county60.3board, prior to the issuance of any bonds authorized by section60.41 and after adopting the resolution as provided above in this60.5section, shall adopt a resolution by majority vote of the county60.6board stating the amount, purpose and, in general, the security60.7to be provided for the bonds, and shall publish the resolution60.8once each week for two consecutive weeks in the medium of60.9official and legal publication of the county. The bonds may be60.10issued without the submission of the question of their issuance60.11to the voters of the county library district unless within 2160.12days after the second publication of the resolution a petition60.13requesting a referendum, signed by at least ten percent of the60.14registered voters of the county, is filed with the county60.15auditor. If a petition is filed, bonds may be issued unless60.16disapproved by a majority of the voters of the county library60.17district, voting on the question of their issuance at a regular60.18or special election.The bonds shall not be subject to the 60.19 requirements of Minnesota Statutes, sections 475.57 to 475.59. 60.20 The maturity years and amounts and interest rates of each series 60.21 of bonds shall be fixed so that the maximum amount of principal 60.22 and interest to become due in any year, on the bonds of that 60.23 series and of all outstanding series issued by or for the 60.24 purposes of libraries, shall not exceed an amount equal to 60.25three-fourths of a mill times the assessed valuethe lesser of 60.26 (i) .01 percent of the taxable market value of all taxable 60.27 property in the county,which was notexcluding any taxable 60.28 property taxedin 1981by any city for the support of any free 60.29 public library,as last finally equalized before the issuance of60.30the seriesor (ii) $1,250,000. When the tax levy authorized in 60.31 thissectionssection is collected, it shall be appropriated and 60.32 credited to a debt service fund for the bonds. The tax levy for 60.33 the debt service fund under Minnesota Statutes, section 475.61 60.34 shall be reduced by the amount available or reasonably 60.35 anticipated to be available in the fund to make payments 60.36 otherwise payable from the levy pursuant to section 475.61. 61.1 Sec. 23. Laws 1992, chapter 511, article 2, section 52, as 61.2 amended by Laws 1997, chapter 231, article 2, section 50, is 61.3 amended to read: 61.4 Sec. 52. [WATERSHED DISTRICT LEVIES.] 61.5 (a) The Nine Mile Creek watershed district, the 61.6 Riley-Purgatory Bluff Creek watershed district, the Minnehaha 61.7 Creek watershed district, the Coon Creek watershed district, and 61.8 the Lower Minnesota River watershed district may levy in 1992 61.9 and thereafter a tax not to exceed $200,000 on property within 61.10 the district for the administrative fund. The levy authorized 61.11 under this section is in lieu of Minnesota Statutes, section 61.12 103D.905, subdivision 3. The administrative fund shall be used 61.13 for the purposes contained in Minnesota Statutes, section 61.14 103D.905, subdivision 3. The board of managers shall make the 61.15 levy for the administrative fund in accordance with Minnesota 61.16 Statutes, section 103D.915. 61.17 (b) The Wild Rice watershed district may levy, for taxes 61.18 payable in 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 61.19 and 2002, an ad valorem tax not to exceed $200,000 on property 61.20 within the district for the administrative fund. The additional 61.21 $75,000 above the amount authorized in Minnesota Statutes, 61.22 section 103D.905, subdivision 3, must be used for (1) costs 61.23 incurred in connection with the development and maintenance of 61.24 cost-sharing projects with the United States Army Corps of 61.25 Engineers or (2) administrative costs associated with 1997 flood 61.26 mitigation projects. The board of managers shall make the levy 61.27 for the administrative fund in accordance with Minnesota 61.28 Statutes, section 103D.915. 61.29 Sec. 24. Laws 1994, chapter 571, article 11, is amended by 61.30 adding a section to read: 61.31 Sec. 5a. [POLITICAL SUBDIVISION.] 61.32 For purposes of Minnesota Statutes, section 275.066, the 61.33 Chisholm-Hibbing airport authority is a political subdivision of 61.34 the state of Minnesota. 61.35 Sec. 25. Laws 1997, chapter 231, article 2, section 68, 61.36 subdivision 1, is amended to read: 62.1 Subdivision 1. [APPLICATION.] To facilitate a review by 62.2 the1998legislature of the property taxation of elderly 62.3 assisted living facilities and the development of standards and 62.4 criteria for the taxation of these facilities, this section: 62.5 (1) requires the commissioner of revenue to conduct a 62.6 survey of the tax status of these facilities under subdivision 62.7 2; and 62.8 (2) prohibits changes in assessment practices and policies 62.9 regarding these facilities under subdivision 3. 62.10 Sec. 26. Laws 1997, chapter 231, article 2, section 68, 62.11 subdivision 3, is amended to read: 62.12 Subd. 3. [MORATORIUM ON CHANGES IN ASSESSMENT PRACTICES.] 62.13 (a) An assessor may not change the current practices or policies 62.14 used generally in assessing elderly assisted living facilities. 62.15 (b) An assessor may not change the assessment of an 62.16 existing elderly assisted living facility, unless the change is 62.17 made as a result of a change in ownership, occupancy, or use of 62.18 the facility. This paragraph does not apply to: 62.19 (1) a facility that was constructed during calendar year 62.20 1997 or 1998; 62.21 (2) a facility that was converted to an elderly assisted 62.22 living facility during calendar year 1997 or 1998; or 62.23 (3) a change in market value. 62.24 (c) This subdivision expires and no longer applies on the 62.25 earlier of: 62.26 (1) the enactment of legislation establishing criteria for 62.27 the property taxation of elderly assisted living facilities; or 62.28 (2) final adjournment of the19981999 legislature. 62.29 Sec. 27. [CHILD CARE FACILITY.] 62.30 In connection with the capital expenditure authority in 62.31 Minnesota Statutes, section 473.39, subdivision 1e, the 62.32 metropolitan council shall consider incorporating in a new 62.33 transfer garage a child care facility to assist in the 62.34 recruitment and retention of metropolitan transit drivers. 62.35 Sec. 28. [QUALIFIED PROPERTY.] 62.36 A contiguous property located within a county adjacent to a 63.1 county containing a city of the first class and within the 63.2 metropolitan area as defined in Minnesota Statutes, section 63.3 473.121, that was valued under Minnesota Statutes, section 63.4 273.111, for taxes payable in 1995, shall be valued and 63.5 classified under sections 29 and 30 and shall be eligible for 63.6 deferral of special assessments under section 31, provided it 63.7 meets the following conditions: 63.8 (1) the property does not exceed 60 acres; 63.9 (2) the property includes a sculpture garden open to the 63.10 public; 63.11 (3) the property includes a system of internal roads and 63.12 paths for pedestrian use and a planned amphitheater for live 63.13 artistic performances; 63.14 (4) the property is used for a summer youth art camp; 63.15 (5) the property is used for seminars for aspiring and 63.16 professional artists; 63.17 (6) the property includes the homestead of the owner; and 63.18 (7) the property has been owned by the owner for at least 63.19 40 years. 63.20 Sec. 29. [CLASSIFICATION.] 63.21 Notwithstanding any law to the contrary, a property 63.22 qualifying under section 28 shall be classified as class 2a 63.23 property under Minnesota Statutes, section 273.13, subdivision 63.24 23. 63.25 Sec. 30. [VALUATION.] 63.26 Notwithstanding Minnesota Statutes, section 273.111, 63.27 subdivisions 3 and 6, a property qualifying under section 28 63.28 shall be valued solely with reference to its agricultural value 63.29 as otherwise provided under Minnesota Statutes, section 273.111. 63.30 Sec. 31. [SPECIAL ASSESSMENT DEFERRAL.] 63.31 Notwithstanding Minnesota Statutes, section 273.111, 63.32 subdivisions 3 and 6, a property qualifying under section 28 63.33 shall be eligible for deferral of both levied and pending 63.34 special assessments as otherwise provided under Minnesota 63.35 Statutes, section 273.111, subdivision 11. Nothing in this 63.36 section requires the refund of special assessments already paid. 64.1 Sec. 32. [TRANSFER OF PROPERTY; PAYMENT OF DEFERRED TAXES 64.2 AND SPECIAL ASSESSMENTS.] 64.3 Subdivision 1. [ADDITIONAL TAX.] The assessor shall make a 64.4 separate determination of the market value and net tax capacity 64.5 of a property qualifying under section 28 as if sections 29 and 64.6 30 did not apply. The tax based upon the appropriate local tax 64.7 rate applicable to such property in the taxing district shall be 64.8 recorded on the property assessment records. 64.9 Subd. 2. [RECAPTURE.] (a) Property or any portion thereof 64.10 qualifying under section 28 is subject to additional taxes if (1) 64.11 ownership of the property is transferred to anyone other than 64.12 the spouse or child of the current owner, or (2) the current 64.13 owner or the spouse or child of the current owner has not 64.14 conveyed or entered into a contract to convey the property to a 64.15 nonprofit foundation or corporation created to own and operate 64.16 the property as an art park providing services included in 64.17 section 28, clauses (2) to (5), before July 1, 2002. 64.18 (b) The additional taxes are imposed at the earlier of (1) 64.19 the year following transfer of ownership to anyone other than 64.20 the spouse of the current owner or a nonprofit foundation or 64.21 corporation created to own and operate the property as an art 64.22 park, or (2) 2003. The additional taxes are equal to the 64.23 difference between the taxes determined under sections 29 and 30 64.24 and the amount determined under subdivision 1 for all years that 64.25 the property qualified under section 28. The additional taxes 64.26 must be extended against the property on the tax list for the 64.27 current year; provided, however, that no interest or penalties 64.28 may be levied on the additional taxes if timely paid. 64.29 Subd. 3. [PAYMENT OF DEFERRED SPECIAL 64.30 ASSESSMENTS.] Beginning with earlier of (1) the tax payable in 64.31 2003, or (2) the date ownership of the property is transferred 64.32 to anyone other than the spouse or child of the current owner or 64.33 an organization described in subdivision 2 for a property 64.34 qualifying under section 28, all deferred special assessments 64.35 plus interest are payable in equal installments spread over the 64.36 time remaining until the last maturity date of the bonds issued 65.1 to finance the improvement for which the assessments were 65.2 levied. If the bonds have matured or if no bonds were issued to 65.3 finance the improvements, the deferred special assessments plus 65.4 interest are payable within 90 days. The provisions of 65.5 Minnesota Statutes, section 429.061, subdivision 2, apply to the 65.6 collection of these installments. Penalty may not be levied on 65.7 any such special assessments if timely paid. 65.8 Subd. 4. [CURRENT OWNER.] For purposes of this section, 65.9 "current owner" means the owner of property qualifying under 65.10 section 28 on the date of final enactment of this act. 65.11 Subd. 5. [NONPROFIT FOUNDATION OR CORPORATION.] For 65.12 purposes of sections 28 to 32, "nonprofit foundation or 65.13 corporation" means a nonprofit entity created to own and operate 65.14 the property as an art park providing the services included in 65.15 section 28, clauses (2) to (5). 65.16 Sec. 33. [WATER SUPPLY PROJECTS OF MORE THAN $15,000,000.] 65.17 Notwithstanding Minnesota Statutes, chapter 410, or 65.18 Minneapolis city charter, chapter 15, section 9, the city of 65.19 Minneapolis and its board of estimate and taxation may issue and 65.20 sell bonds or incur other indebtedness for a capital improvement 65.21 project related to water supply that in all phases from 65.22 inception to completion exceeds $15,000,000 without submitting 65.23 the question of issuing such obligations or incurring such 65.24 indebtedness to the electorate for approval. 65.25 Sec. 34. [EFFECTIVE DATE.] 65.26 Sections 1, 4 to 6, 8, and 11 to 14 are effective for 65.27 property taxes assessed in 1998 and payable in 1999, and 65.28 thereafter. 65.29 Sections 2 and 3 are effective for real estate sales and 65.30 transfers occurring on or after July 1, 1998. 65.31 Section 7 is effective for public hearings held in 1998, 65.32 and thereafter. 65.33 Section 9 is effective for property taxes payable in 1998 65.34 only. 65.35 Section 16 is effective for aids payable in 1999 and 65.36 thereafter. 66.1 Sections 17 to 19 are effective upon compliance by the 66.2 governing body of the city of St. Paul with Minnesota Statutes, 66.3 section 645.021, subdivision 3. 66.4 Sections 21 and 22 are effective upon compliance by the 66.5 governing body of Anoka county with Minnesota Statutes, section 66.6 645.021, subdivision 3. 66.7 Sections 23 and 24 are effective for property taxes levied 66.8 in 1997, payable in 1998, and thereafter. 66.9 Sections 28 to 32 are effective beginning with taxes 66.10 payable in 1998 and ending with taxes payable in 2003. 66.11 Sections 20 and 33 are effective the day following final 66.12 enactment. 66.13 ARTICLE 3 66.14 SENIOR CITIZEN'S PROPERTY TAX DEFERRAL 66.15 Section 1. Minnesota Statutes 1997 Supplement, section 66.16 290B.04, subdivision 1, is amended to read: 66.17 Subdivision 1. [INITIAL APPLICATION.] A taxpayer meeting 66.18 the program qualifications under section 290B.03 may apply to 66.19 the commissioner of revenue for the deferral of taxes. 66.20 Applications are due on or before July 1 for deferral of any of 66.21 the following year's property taxes. A taxpayer may apply in 66.22 the year in which the taxpayer becomes 65 years old, provided 66.23 that no deferral of property taxes will be made until the 66.24 calendar year after the taxpayer becomes 65 years old. The 66.25 application, which shall be prescribed by the commissioner of 66.26 revenue, shall include the following items and any other 66.27 information which the commissioner deems necessary: 66.28 (1) the name, address, and social security number of the 66.29 owner or owners; 66.30 (2) a copy of the property tax statement for the current 66.31 payable year for the homesteaded property; 66.32 (3) the initial year of ownership and occupancy as a 66.33 homestead; 66.34 (4) the owner's household income for the previous calendar 66.35 year; and 66.36 (5) information on any mortgage loans or other amounts 67.1 secured by mortgages or other liens against the property, for 67.2 which purpose the commissioner may require the applicant to 67.3 provide a copy of the mortgage note, the mortgage, or a 67.4 statement of the balance owing on the mortgage loan provided by 67.5 the mortgage holder. The commissioner may require the 67.6 appropriate documents in connection with obtaining and 67.7 confirming information on unpaid amounts secured by other 67.8 liens. As a condition for approving an initial application, the 67.9 commissioner may require applicants to obtain at their own cost, 67.10 a report which has been prepared by a licensed abstracter 67.11 showing the existing mortgages, lien notices, and other 67.12 obligations or encumbrances which are on record against the 67.13 involved property or the applicant as of 30 days prior to the 67.14 date of such report, and to submit that report by the due date 67.15 of the initial application. The commissioner may also require 67.16 the county recorder or county registrar in the county where the 67.17 property is located to provide other documents or information 67.18 related to the applicant or the property, for which the recorder 67.19 or registrar shall not charge a fee. 67.20 The application must state that program participation is 67.21 voluntary. The application must also state that the deferred 67.22 amount depends directly on the applicant's household income, and 67.23 that program participation includes authorization for the 67.24 deferred amount for each year and the cumulative deferral and 67.25 interest to appear on each year's property tax statement as 67.26 public data. 67.27 Sec. 2. Minnesota Statutes 1997 Supplement, section 67.28 290B.04, subdivision 3, is amended to read: 67.29 Subd. 3. [ANNUALEXCESS-INCOME CERTIFICATION BY TAXPAYER.] 67.30Annually on or before July 1,A taxpayer whose initial 67.31 application has been approved under subdivision 2, shall 67.32 completethea certification form and return it to the 67.33 commissioner of revenue by July 1 of each year of eligibility if 67.34 the taxpayer's household income in the preceding year exceeded 67.35 $30,000. The certification must statewhether or not the67.36taxpayer wishes to have property taxes deferred for the68.1following year provided the taxes exceed the maximum property68.2tax amount under section 290B.05. If the taxpayer does wish to68.3have property taxes deferred, the certification must statethe 68.4 homeowner's total household income for the previous calendar 68.5 year and any other information which the commissioner deems 68.6 necessary. No property taxes may be deferred under chapter 290B 68.7 in the year following the year in which a program participant is 68.8 required to file an excess-income certification under this 68.9 subdivision. 68.10 Sec. 3. Minnesota Statutes 1997 Supplement, section 68.11 290B.05, subdivision 1, is amended to read: 68.12 Subdivision 1. [DETERMINATION BY COMMISSIONER.] The 68.13 commissioner shall annually determine the qualifying homeowner's 68.14"maximum property tax amount" and"maximum allowable deferral." 68.15The maximum property tax amount calculated for taxes payable in68.16the following year is equal to five percent of the homeowner's68.17total household income for the previous calendar year. No tax68.18may be deferred for any homeowner whose total household income68.19for the previous year exceeds $30,000.No tax shall be deferred 68.20 in any year in which the homeowner or the property does not meet 68.21 the program qualifications in section 290B.03, subdivision 1, 68.22 clauses (1) and (3) through (8). The maximum allowable total 68.23 deferral is equal to 75 percent of the assessor's estimated 68.24 market value for the year, less (1) the balance of any mortgage 68.25 loans and other amounts secured by liens against the property at 68.26 the time of application, including any unpaid special 68.27 assessments but not including property taxes payable during the 68.28 year; and (2) any outstanding deferral and interest. 68.29 Sec. 4. Minnesota Statutes 1997 Supplement, section 68.30 290B.05, subdivision 2, is amended to read: 68.31 Subd. 2. [CERTIFICATION BY COMMISSIONER.] On or before 68.32 December 1, the commissioner shall certify to the county auditor 68.33 of the county in which the qualifying homestead is located(1)68.34the maximum property tax amount; (2)the maximum allowable 68.35 deferral forthe year; and (3) the cumulative deferral and68.36interest for all years precedingthe next taxes payable year. 69.1 Sec. 5. Minnesota Statutes 1997 Supplement, section 69.2 290B.05, subdivision 3, is amended to read: 69.3 Subd. 3. [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 69.4 When final property tax amounts for the following year have been 69.5 determined, the county auditor shall calculate the "deferred 69.6 property tax amount." The deferred property tax amount is equal 69.7 to the lesser of (1) the maximum allowable deferral for the 69.8 year; or (2) thedifference between thetotal amount of property 69.9 taxes levied upon the qualifying homestead by all taxing 69.10 jurisdictionsand the maximum property tax amount. Any special 69.11 assessments levied by any local unit of government must not be 69.12 included in the total tax used to calculate the deferred tax 69.13 amount. No deferral of the current year's property taxes is 69.14 allowed if there are any delinquent property taxes or delinquent 69.15 special assessments for any previous year. Any tax attributable 69.16 to new improvements made to the property after the initial 69.17 application has been approved under section 290B.04, subdivision 69.18 2, must be excluded when determining any subsequent deferred 69.19 property tax amount. The county auditor shall annually, on or 69.20 before April 15, certify to the commissioner of revenue the 69.21 property tax deferral amounts determined under this subdivision 69.22 by property and by owner. 69.23 Sec. 6. Minnesota Statutes 1997 Supplement, section 69.24 290B.06, is amended to read: 69.25 290B.06 [PROPERTY TAX REFUNDS.] 69.26 For purposes of qualifying for the regular property tax 69.27 refund or the special refund for homeowners under chapter 290A, 69.28 the qualifying tax is the full amount of taxes, including the 69.29 deferred portion of the tax.In any year in which a program69.30participant chooses to have property taxes deferred under this69.31section, any regular or special property tax refund awarded69.32based upon those property taxes must be taken first as a69.33deduction from the amount of the deferred tax for that year, and69.34second as a deduction against any outstanding deferral from69.35previous years, rather than as a cash payment to the homeowner.69.36The commissioner shall cancel any current year's deferral or70.1previous years' deferral and interest that is offset by the70.2property tax refunds. If the total of the regular and the70.3special property tax refund amounts exceeds the sum of the70.4deferred tax for the current year and cumulative deferred tax70.5and interest for previous years, the commissioner shall then70.6remit the excess amount to the homeowner. On or before the date70.7on which the commissioner issues property tax refunds, the70.8commissioner shall notify program participants of any reduction70.9in the deferred amount for the current and previous years70.10resulting from property tax refunds.70.11 Sec. 7. Minnesota Statutes 1997 Supplement, section 70.12 290B.07, is amended to read: 70.13 290B.07 [LIEN; DEFERRED PORTION.] 70.14 (a) Payment by the state to the county treasurer of taxes 70.15 deferred under this section is deemed a loan from the state to 70.16 the program participant. The commissioner must compute the 70.17 interest as provided in section 270.75, subdivision 5, but not 70.18 to exceed five percent, and maintain records of the total 70.19 deferred amount and interest for each participant. Interest 70.20 shall accrue beginning September 1 of the payable year for which 70.21 the taxes are deferred. The lien created under section 272.31 70.22 continues to secure payment by the taxpayer, or by the 70.23 taxpayer's successors or assigns, of the amount deferred, 70.24 including interest, with respect to all years for which amounts 70.25 are deferred. The lien for deferred taxes and interest has the 70.26 same priority as any other lien under section 272.31, except 70.27 that liens, including mortgages, recorded or filed prior to the 70.28 recording or filing of the notice under section 290B.04, 70.29 subdivision 2, have priority over the lien for deferred taxes 70.30 and interest. A seller's interest in a contract for deed, in 70.31 which a qualifying homeowner is the purchaser or an assignee of 70.32 the purchaser, has priority over deferred taxes and interest on 70.33 deferred taxes, regardless of whether the contract for deed is 70.34 recorded or filed. The lien for deferred taxes and interest for 70.35 future years has the same priority as the lien for deferred 70.36 taxes and interest for the first year, which is always higher in 71.1 priority than any mortgages or other liens filed, recorded, or 71.2 created after the notice recorded or filed under section 71.3 290B.04, subdivision 2. The county treasurer or auditor shall 71.4 maintain records of the deferred portion and shall list the 71.5 amount of deferred taxes for the year and the cumulative 71.6 deferral and interest for all previous years as a lien against 71.7 the property on the property tax statement. In any 71.8 certification of unpaid taxes for a tax parcel, the county 71.9 auditor shall clearly distinguish between taxes payable in the 71.10 current year, deferred taxes and interest, and delinquent 71.11 taxes. Payment of the deferred portion becomes due and owing at 71.12 the time specified in section 290B.08. Upon receipt of the 71.13 payment, the commissioner shall issue a receipt for it to the 71.14 person making the payment upon request and shall notify the 71.15 auditor of the county in which the parcel is located, within ten 71.16 days, identifying the parcel to which the payment applies. Upon 71.17 receipt by the commissioner of revenue of collected funds in the 71.18 amount of the deferral, the state's loan to the program 71.19 participant is deemed paid in full. 71.20 (b) If property for which taxes have been deferred under 71.21 this chapter forfeits under chapter 281 for nonpayment of a 71.22 nondeferred property tax amount, or because of nonpayment of 71.23 amounts previously deferred following a termination under 71.24 section 290B.08, the lien for the taxes deferred under this 71.25 chapter, plus interest and costs, shall be canceled by the 71.26 county auditor as provided in section 282.07. However, 71.27 notwithstanding any other law to the contrary, any proceeds from 71.28 a subsequent sale of the property under chapter 282 or another 71.29 law, must be used to first reimburse the county's forfeited tax 71.30 sale fund for any direct costs of selling the property or any 71.31 costs directly related to preparing the property for sale, and 71.32 then to reimburse the state for the amount of the canceled 71.33 lien. Within 90 days of the receipt of any sale proceed to 71.34 which the state is entitled under these provisions, the county 71.35 auditor must pay those funds to the commissioner of revenue by 71.36 warrant for deposit in the general fund. No other deposit, use, 72.1 distribution, or release of gross sale proceeds or receipts may 72.2 be made by the county until payments sufficient to fully 72.3 reimburse the state for the canceled lien amount have been 72.4 transmitted to the commissioner. 72.5 Sec. 8. [290B.10] [INVESTIGATIONS; PENALTIES.] 72.6 The commissioner may use any information to which he or she 72.7 has access under the law in determining or verifying eligibility 72.8 under any provision of the senior citizens' property tax 72.9 deferral program. The commissioner may conduct investigations 72.10 related to initial applications and excess-income certifications 72.11 required under this chapter within the period ending 3-1/2 years 72.12 from the due date of the application or certification. The 72.13 commissioner shall assess a penalty equal to 50 percent of the 72.14 property taxes improperly deferred in the case of a false 72.15 application, a false certification, or in the case of a required 72.16 excess-income certification which was not filed as of the 72.17 applicable due date. The commissioner shall assess a penalty 72.18 equal to 100 percent of the property taxes improperly deferred 72.19 if the taxpayer knowingly filed a false application or 72.20 certification, or knowingly failed to file a required 72.21 excess-income certification by the applicable due date. The 72.22 commissioner shall assess penalties under this section through 72.23 the issuance of an order under the provisions of chapter 289A. 72.24 Persons affected by a commissioner's order issued under this 72.25 section may appeal as provided in chapter 289A. 72.26 Sec. 9. [EFFECTIVE DATE.] 72.27 Sections 1 to 8 are effective for deferrals of property 72.28 taxes payable in 1999 and thereafter. 72.29 ARTICLE 4 72.30 INCOME AND FRANCHISE TAXES 72.31 Section 1. Minnesota Statutes 1997 Supplement, section 72.32 289A.19, subdivision 2, is amended to read: 72.33 Subd. 2. [CORPORATE FRANCHISE AND MINING COMPANY TAXES.] 72.34 Corporations or mining companies shall receive an extension of 72.35 seven months for filing the return of a corporation subject to 72.36 tax under chapter 290 or for filing the return of a mining 73.1 company subject to tax under sections 298.01 and 298.015if:. 73.2 Interest on any balance of tax not paid when the regularly 73.3 required return is due must be paid at the rate specified in 73.4 section 270.75, from the date such payment should have been made 73.5 if no extension was granted, until the date of payment of such 73.6 tax. 73.7 If a corporation or mining company does not: 73.8 (1)the corporation or mining company payspay at least 90 73.9 percent of the amount of tax shown on the return on or before 73.10 the regular due date of the return, the penalty prescribed by 73.11 section 289A.60, subdivision 1, shall be imposed on the unpaid 73.12 balance of tax; or 73.13 (2) pay the balance due shown on the regularly required 73.14 returnis paidon or before the extended due date of the return;73.15and73.16(3) interest on any balance due is paid at the rate73.17specified in section 270.75 from the regular due date of the73.18return until the tax is paid, the penalty prescribed by section 73.19 289A.60, subdivision 1, shall be imposed on the unpaid balance 73.20 of tax from the original due date of the return. 73.21 Sec. 2. Minnesota Statutes 1996, section 290.01, 73.22 subdivision 3b, is amended to read: 73.23 Subd. 3b. [LIMITED LIABILITY COMPANY.] For purposes of 73.24 this chapter and chapter 289A, a limited liability company that 73.25 is formed under either the laws of this state or under similar 73.26 laws of another state,and that is considered to be a73.27partnershipwill be treated as an entity similar to its 73.28 treatment for federal income tax purposes, is considered to be a73.29partnership and the members must be considered to be partners. 73.30 Sec. 3. Minnesota Statutes 1997 Supplement, section 73.31 290.01, subdivision 19a, is amended to read: 73.32 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 73.33 individuals, estates, and trusts, there shall be added to 73.34 federal taxable income: 73.35 (1)(i) interest income on obligations of any state other 73.36 than Minnesota or a political or governmental subdivision, 74.1 municipality, or governmental agency or instrumentality of any 74.2 state other than Minnesota exempt from federal income taxes 74.3 under the Internal Revenue Code or any other federal statute, 74.4 and 74.5 (ii) exempt-interest dividends as defined in section 74.6 852(b)(5) of the Internal Revenue Code, except the portion of 74.7 the exempt-interest dividends derived from interest income on 74.8 obligations of the state of Minnesota or its political or 74.9 governmental subdivisions, municipalities, governmental agencies 74.10 or instrumentalities, but only if the portion of the 74.11 exempt-interest dividends from such Minnesota sources paid to 74.12 all shareholders represents 95 percent or more of the 74.13 exempt-interest dividends that are paid by the regulated 74.14 investment company as defined in section 851(a) of the Internal 74.15 Revenue Code, or the fund of the regulated investment company as 74.16 defined in section 851(h) of the Internal Revenue Code, making 74.17 the payment; and 74.18 (iii) for the purposes of items (i) and (ii), interest on 74.19 obligations of an Indian tribal government described in section 74.20 7871(c) of the Internal Revenue Code shall be treated as 74.21 interest income on obligations of the state in which the tribe 74.22 is located; 74.23 (2) the amount of income taxes paid or accrued within the 74.24 taxable year under this chapter and income taxes paid to any 74.25 other state or to any province or territory of Canada, to the 74.26 extent allowed as a deduction under section 63(d) of the 74.27 Internal Revenue Code, but the addition may not be more than the 74.28 amount by which the itemized deductions as allowed under section 74.29 63(d) of the Internal Revenue Code exceeds the amount of the 74.30 standard deduction as defined in section 63(c) of the Internal 74.31 Revenue Code. For the purpose of this paragraph, the 74.32 disallowance of itemized deductions under section 68 of the 74.33 Internal Revenue Code of 1986, income tax is the last itemized 74.34 deduction disallowed; 74.35 (3) the capital gain amount of a lump sum distribution to 74.36 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 75.1 Reform Act of 1986, Public Law Number 99-514, applies; 75.2 (4) the amount of income taxes paid or accrued within the 75.3 taxable year under this chapter and income taxes paid to any 75.4 other state or any province or territory of Canada, to the 75.5 extent allowed as a deduction in determining federal adjusted 75.6 gross income. For the purpose of this paragraph, income taxes 75.7 do not include the taxes imposed by sections 290.0922, 75.8 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 75.9 (5) the amount of loss or expense included in federal 75.10 taxable income under section 1366 of the Internal Revenue Code 75.11 flowing from a corporation that has a valid election in effect 75.12 for the taxable year under section 1362 of the Internal Revenue 75.13 Code, but which is not allowed to be an "S" corporation under 75.14 section 290.9725;and75.15 (6) the amount of any distributions in cash or property 75.16 made to a shareholder during the taxable year by a corporation 75.17 that has a valid election in effect for the taxable year under 75.18 section 1362 of the Internal Revenue Code, but which is not 75.19 allowed to be an "S" corporation under section 290.9725 to the 75.20 extent not already included in federal taxable income under 75.21 section 1368 of the Internal Revenue Code.; 75.22 (7) in the year stock of a corporation that had made a 75.23 valid election under section 1362 of the Internal Revenue Code 75.24 but was not an "S" corporation under section 290.9725 is sold or 75.25 disposed of in a transaction taxable under the Internal Revenue 75.26 Code, the amount of difference between the Minnesota basis of 75.27 the stock under subdivision 19f, paragraph (m), and the federal 75.28 basis if the Minnesota basis is lower than the shareholder's 75.29 federal basis; and 75.30 (8) the amount of expense, interest, or taxes disallowed 75.31 pursuant to section 290.10. 75.32 Sec. 4. Minnesota Statutes 1997 Supplement, section 75.33 290.01, subdivision 19b, is amended to read: 75.34 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 75.35 individuals, estates, and trusts, there shall be subtracted from 75.36 federal taxable income: 76.1 (1) interest income on obligations of any authority, 76.2 commission, or instrumentality of the United States to the 76.3 extent includable in taxable income for federal income tax 76.4 purposes but exempt from state income tax under the laws of the 76.5 United States; 76.6 (2) if included in federal taxable income, the amount of 76.7 any overpayment of income tax to Minnesota or to any other 76.8 state, for any previous taxable year, whether the amount is 76.9 received as a refund or as a credit to another taxable year's 76.10 income tax liability; 76.11 (3) the amount paid to others, less the credit allowed 76.12 under section 290.0674, not to exceed $1,625 for each dependent 76.13 in grades kindergarten to 6 and $2,500 for each dependent in 76.14 grades 7 to 12, for tuition, textbooks, and transportation of 76.15 each dependent in attending an elementary or secondary school 76.16 situated in Minnesota, North Dakota, South Dakota, Iowa, or 76.17 Wisconsin, wherein a resident of this state may legally fulfill 76.18 the state's compulsory attendance laws, which is not operated 76.19 for profit, and which adheres to the provisions of the Civil 76.20 Rights Act of 1964 and chapter 363. For the purposes of this 76.21 clause, "tuition" includes fees or tuition as defined in section 76.22 290.0674, subdivision 1, clause (1). As used in this clause, 76.23 "textbooks" includes books and other instructional materials and 76.24 equipment used in elementary and secondary schools in teaching 76.25 only those subjects legally and commonly taught in public 76.26 elementary and secondary schools in this state. Equipment 76.27 expenses qualifying for deduction includes expenses as defined 76.28 and limited in section 290.0674, subdivision 1, clause (3). 76.29 "Textbooks" does not include instructional books and materials 76.30 used in the teaching of religious tenets, doctrines, or worship, 76.31 the purpose of which is to instill such tenets, doctrines, or 76.32 worship, nor does it include books or materials for, or 76.33 transportation to, extracurricular activities including sporting 76.34 events, musical or dramatic events, speech activities, driver's 76.35 education, or similar programs; 76.36 (4) to the extent included in federal taxable income, 77.1 distributions from a qualified governmental pension plan, an 77.2 individual retirement account, simplified employee pension, or 77.3 qualified plan covering a self-employed person that represent a 77.4 return of contributions that were included in Minnesota gross 77.5 income in the taxable year for which the contributions were made 77.6 but were deducted or were not included in the computation of 77.7 federal adjusted gross income. The distribution shall be 77.8 allocated first to return of contributions until the 77.9 contributions included in Minnesota gross income have been 77.10 exhausted. This subtraction applies only to contributions made 77.11 in a taxable year prior to 1985; 77.12 (5) income as provided under section 290.0802; 77.13 (6) the amount of unrecovered accelerated cost recovery 77.14 system deductions allowed under subdivision 19g; 77.15 (7) to the extent included in federal adjusted gross 77.16 income, income realized on disposition of property exempt from 77.17 tax under section 290.491; 77.18 (8) to the extent not deducted in determining federal 77.19 taxable income, the amount paid for health insurance of 77.20 self-employed individuals as determined under section 162(l) of 77.21 the Internal Revenue Code, except that the 25 percent limit does 77.22 not apply. If the taxpayer deducted insurance payments under 77.23 section 213 of the Internal Revenue Code of 1986, the 77.24 subtraction under this clause must be reduced by the lesser of: 77.25 (i) the total itemized deductions allowed under section 77.26 63(d) of the Internal Revenue Code, less state, local, and 77.27 foreign income taxes deductible under section 164 of the 77.28 Internal Revenue Code and the standard deduction under section 77.29 63(c) of the Internal Revenue Code; or 77.30 (ii) the lesser of (A) the amount of insurance qualifying 77.31 as "medical care" under section 213(d) of the Internal Revenue 77.32 Code to the extent not deducted under section 162(1) of the 77.33 Internal Revenue Code or excluded from income or (B) the total 77.34 amount deductible for medical care under section 213(a); 77.35 (9) the exemption amount allowed under Laws 1995, chapter 77.36 255, article 3, section 2, subdivision 3; 78.1 (10) to the extent included in federal taxable income, 78.2 postservice benefits for youth community service under section 78.3 121.707 for volunteer service under United States Code, title 78.4 42, section 5011(d), as amended;and78.5 (11) to the extent not subtracted under clause (1), the 78.6 amount of income or gain included in federal taxable income 78.7 under section 1366 of the Internal Revenue Code flowing from a 78.8 corporation that has a valid election in effect for the taxable 78.9 year under section 1362 of the Internal Revenue Code which is 78.10 not allowed to be an "S" corporation under section 290.9725; 78.11 (12) in the year stock of a corporation that had made a 78.12 valid election under section 1362 of the Internal Revenue Code 78.13 but was not an "S" corporation under section 290.9725 is sold or 78.14 disposed of in a transaction taxable under the Internal Revenue 78.15 Code, the amount of difference between the Minnesota basis of 78.16 the stock under subdivision 19f, paragraph (m), and the federal 78.17 basis if the Minnesota basis is higher than the shareholder's 78.18 federal basis; and 78.19 (13) an amount equal to the portion of the distributions 78.20 made by a corporation, having a valid election in effect for 78.21 federal tax purposes under section 1362 of the Internal Revenue 78.22 Code but not treated as a "S" corporation for state tax purposes 78.23 under section 290.9725, which is equal to the individual's, 78.24 estate's, or trust's federal income tax liability that is 78.25 attributable to the items of income, expense, gain, loss, or 78.26 credits from the corporation. 78.27 Sec. 5. Minnesota Statutes 1997 Supplement, section 78.28 290.01, subdivision 19f, is amended to read: 78.29 Subd. 19f. [BASIS MODIFICATIONS AFFECTING GAIN OR LOSS ON 78.30 DISPOSITION OF PROPERTY.] (a) For individuals, estates, and 78.31 trusts, the basis of property is its adjusted basis for federal 78.32 income tax purposes except as set forth in paragraphs (f), (g), 78.33 and (m). For corporations, the basis of property is its 78.34 adjusted basis for federal income tax purposes, without regard 78.35 to the time when the property became subject to tax under this 78.36 chapter or to whether out-of-state losses or items of tax 79.1 preference with respect to the property were not deductible 79.2 under this chapter, except that the modifications to the basis 79.3 for federal income tax purposes set forth in paragraphs (b) to 79.4 (j) are allowed to corporations, and the resulting modifications 79.5 to federal taxable income must be made in the year in which gain 79.6 or loss on the sale or other disposition of property is 79.7 recognized. 79.8 (b) The basis of property shall not be reduced to reflect 79.9 federal investment tax credit. 79.10 (c) The basis of property subject to the accelerated cost 79.11 recovery system under section 168 of the Internal Revenue Code 79.12 shall be modified to reflect the modifications in depreciation 79.13 with respect to the property provided for in subdivision 19e. 79.14 For certified pollution control facilities for which 79.15 amortization deductions were elected under section 169 of the 79.16 Internal Revenue Code of 1954, the basis of the property must be 79.17 increased by the amount of the amortization deduction not 79.18 previously allowed under this chapter. 79.19 (d) For property acquired before January 1, 1933, the basis 79.20 for computing a gain is the fair market value of the property as 79.21 of that date. The basis for determining a loss is the cost of 79.22 the property to the taxpayer less any depreciation, 79.23 amortization, or depletion, actually sustained before that 79.24 date. If the adjusted cost exceeds the fair market value of the 79.25 property, then the basis is the adjusted cost regardless of 79.26 whether there is a gain or loss. 79.27 (e) The basis is reduced by the allowance for amortization 79.28 of bond premium if an election to amortize was made pursuant to 79.29 Minnesota Statutes 1986, section 290.09, subdivision 13, and the 79.30 allowance could have been deducted by the taxpayer under this 79.31 chapter during the period of the taxpayer's ownership of the 79.32 property. 79.33 (f) For assets placed in service before January 1, 1987, 79.34 corporations, partnerships, or individuals engaged in the 79.35 business of mining ores other than iron ore or taconite 79.36 concentrates subject to the occupation tax under chapter 298 80.1 must use the occupation tax basis of property used in that 80.2 business. 80.3 (g) For assets placed in service before January 1, 1990, 80.4 corporations, partnerships, or individuals engaged in the 80.5 business of mining iron ore or taconite concentrates subject to 80.6 the occupation tax under chapter 298 must use the occupation tax 80.7 basis of property used in that business. 80.8 (h) In applying the provisions of sections 301(c)(3)(B), 80.9 312(f) and (g), and 316(a)(1) of the Internal Revenue Code, the 80.10 dates December 31, 1932, and January 1, 1933, shall be 80.11 substituted for February 28, 1913, and March 1, 1913, 80.12 respectively. 80.13 (i) In applying the provisions of section 362(a) and (c) of 80.14 the Internal Revenue Code, the date December 31, 1956, shall be 80.15 substituted for June 22, 1954. 80.16 (j) The basis of property shall be increased by the amount 80.17 of intangible drilling costs not previously allowed due to 80.18 differences between this chapter and the Internal Revenue Code. 80.19 (k) The adjusted basis of any corporate partner's interest 80.20 in a partnership is the same as the adjusted basis for federal 80.21 income tax purposes modified as required to reflect the basis 80.22 modifications set forth in paragraphs (b) to (j). The adjusted 80.23 basis of a partnership in which the partner is an individual, 80.24 estate, or trust is the same as the adjusted basis for federal 80.25 income tax purposes modified as required to reflect the basis 80.26 modifications set forth in paragraphs (f) and (g). 80.27 (l) The modifications contained in paragraphs (b) to (j) 80.28 also apply to the basis of property that is determined by 80.29 reference to the basis of the same property in the hands of a 80.30 different taxpayer or by reference to the basis of different 80.31 property. 80.32 (m) If a corporation has a valid election in effect for the 80.33 taxable year under section 1362 of the Internal Revenue Code, 80.34 but is not allowed to be an "S" corporation under section 80.35 290.9725, and the corporation is liquidated or the individual 80.36 shareholder disposes of the stockand there is no capital loss81.1reflected in federal adjusted gross income because of the fact81.2that corporate losses have exhausted the shareholders' basis for81.3federal purposes, the shareholders shall be entitled to a81.4capital loss commensurate to their Minnesota basis for the81.5stock, the Minnesota basis in the shareholder's stock in the 81.6 corporation shall be computed as if the corporation were not an 81.7 "S" corporation for federal tax purposes. 81.8 Sec. 6. Minnesota Statutes 1996, section 290.06, 81.9 subdivision 2c, is amended to read: 81.10 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 81.11 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 81.12 married individuals filing joint returns and surviving spouses 81.13 as defined in section 2(a) of the Internal Revenue Code must be 81.14 computed by applying to their taxable net income the following 81.15 schedule of rates: 81.16 (1) On the first $19,910, 6 percent; 81.17 (2) On all over $19,910, but not over $79,120, 8 percent; 81.18 (3) On all over $79,120, 8.5 percent. 81.19 Married individuals filing separate returns, estates, and 81.20 trusts must compute their income tax by applying the above rates 81.21 to their taxable income, except that the income brackets will be 81.22 one-half of the above amounts. 81.23 (b) The income taxes imposed by this chapter upon unmarried 81.24 individuals must be computed by applying to taxable net income 81.25 the following schedule of rates: 81.26 (1) On the first $13,620, 6 percent; 81.27 (2) On all over $13,620, but not over $44,750, 8 percent; 81.28 (3) On all over $44,750, 8.5 percent. 81.29 (c) The income taxes imposed by this chapter upon unmarried 81.30 individuals qualifying as a head of household as defined in 81.31 section 2(b) of the Internal Revenue Code must be computed by 81.32 applying to taxable net income the following schedule of rates: 81.33 (1) On the first $16,770, 6 percent; 81.34 (2) On all over $16,770, but not over $67,390, 8 percent; 81.35 (3) On all over $67,390, 8.5 percent. 81.36 (d) In lieu of a tax computed according to the rates set 82.1 forth in this subdivision, the tax of any individual taxpayer 82.2 whose taxable net income for the taxable year is less than an 82.3 amount determined by the commissioner must be computed in 82.4 accordance with tables prepared and issued by the commissioner 82.5 of revenue based on income brackets of not more than $100. The 82.6 amount of tax for each bracket shall be computed at the rates 82.7 set forth in this subdivision, provided that the commissioner 82.8 may disregard a fractional part of a dollar unless it amounts to 82.9 50 cents or more, in which case it may be increased to $1. 82.10 (e) An individual who is not a Minnesota resident for the 82.11 entire year must compute the individual's Minnesota income tax 82.12 as provided in this subdivision. After the application of the 82.13 nonrefundable credits provided in this chapter, the tax 82.14 liability must then be multiplied by a fraction in which: 82.15 (1) The numerator is the individual's Minnesota source 82.16 federal adjusted gross income as defined in section 62 of the 82.17 Internal Revenue Code disregarding income or loss flowing from a 82.18 corporation having a valid election for the taxable year under 82.19 section 1362 of the Internal Revenue Code but which is not an 82.20 "S" corporation under section 290.9725 and increased by the 82.21 addition required for interest income from non-Minnesota state 82.22 and municipal bonds under section 290.01, subdivision 19a, 82.23 clause (1), after applying the allocation and assignability 82.24 provisions of section 290.081, clause (a), or 290.17; and 82.25 (2) the denominator is the individual's federal adjusted 82.26 gross income as defined in section 62 of the Internal Revenue 82.27 Code of 1986, as amended through April 15, 1995,increased by 82.28 theaddition required for interest income from non-Minnesota82.29state and municipal bonds under section 290.01, subdivision 19a,82.30clause (1)amounts specified in section 290.01, subdivision 19a, 82.31 clauses (1), (5), (6), and (7), and reduced by the amounts 82.32 specified in section 290.01, subdivision 19b, clauses (1), (11), 82.33 and (12). 82.34 Sec. 7. Minnesota Statutes 1996, section 290.06, is 82.35 amended by adding a subdivision to read: 82.36 Subd. 26. [COLLECTORS OF USED MOTOR OIL.] A person who 83.1 accepts used motor oil and used motor oil filters as defined in 83.2 section 325E.11, subdivisions 3 and 5, from the public may take 83.3 a credit against the tax liability under this chapter of $250 83.4 for any taxable year during which the taxpayer operates a 83.5 facility that qualifies for the reimbursement under section 83.6 325E.112, subdivision 2, or would qualify for the reimbursement 83.7 except that it does not accept contaminated motor oil. In order 83.8 to claim the credit, the taxpayer must provide the commissioner 83.9 with a copy of a credit certificate issued to the taxpayer by 83.10 the commissioner of the pollution control agency verifying the 83.11 taxpayer's eligibility for this credit. The commissioner of the 83.12 pollution control agency may issue no more than 200 certificates 83.13 for any calendar year. 83.14 Sec. 8. Minnesota Statutes 1996, section 290.067, 83.15 subdivision 2, is amended to read: 83.16 Subd. 2. [LIMITATIONS.] The credit for expenses incurred 83.17 for the care of each dependent shall not exceed $720 in any 83.18 taxable year, and the total credit for all dependents of a 83.19 claimant shall not exceed $1,440 in a taxable year. The maximum 83.20 total credit shall be reduced according to the amount of the 83.21 income of the claimant and a spouse, if any, as follows: 83.22 income up to$13,350$17,430, $720 maximum for a claimant 83.23 with one dependent, and $1,440 forall dependentsa claimant 83.24 with more than one dependent; 83.25 income over$13,350$17,430, the maximum credit for a 83.26 claimant with one dependent shall be reduced by$18$9 for 83.27 every$350$410 of additional income,$36 for all dependentsup 83.28 to $8,200 of income in excess of the threshold amount as 83.29 adjusted under subdivision 2b and by $27 for every $410 of 83.30 income in excess of that second threshold amount; the maximum 83.31 credit for a claimant with more than one dependent shall be 83.32 reduced by $18 for every $410 of additional income up to $8,200 83.33 in excess of the threshold amount as adjusted under subdivision 83.34 26, and by $54 for every $410 of income in excess of that second 83.35 threshold amount. 83.36 The commissioner shall construct and make available to 84.1 taxpayers tables showing the amount of the credit at various 84.2 levels of income and expenses. The tables shall follow the 84.3 schedule contained in this subdivision, except that the 84.4 commissioner may graduate the transitions between expenses and 84.5 income brackets. 84.6 Sec. 9. Minnesota Statutes 1997 Supplement, section 84.7 290.0671, subdivision 1, is amended to read: 84.8 Subdivision 1. [CREDIT ALLOWED.] An individual is allowed 84.9 a credit against the tax imposed by this chapter equal to a 84.10 percentage ofthe credit for which the individual is84.11eligibleearned income. To receive a credit, a taxpayer must be 84.12 eligible for a credit under section 32 of the Internal Revenue 84.13 Code.The percentage is 15 for individuals without a qualifying84.14child, and 25 for individuals with at least one qualifying84.15child. For purposes of this section, "qualifying child" has the84.16meaning given in section 32(c)(3) of the Internal Revenue Code.84.17 (a) For individuals with no qualifying children, the credit 84.18 equals 1.1475 percent of the first $4,460 of earned income. The 84.19 credit is reduced by 1.1475 percent of earned income or modified 84.20 adjusted gross income, whichever is greater, in excess of 84.21 $5,570, but in no case is the credit less than zero. 84.22 (b) For individuals with one qualifying child, the credit 84.23 equals 8.5 percent of the first $6,680 of earned income. The 84.24 credit is reduced by 4.77 percent of earned income or modified 84.25 adjusted gross income, whichever is greater, in excess of 84.26 $14,560, but in no case is the credit less than zero. 84.27 (c) For individuals with two or more qualifying children, 84.28 the credit equals ten percent of the first $9,390 of earned 84.29 income. The credit is reduced by 6.98 percent of earned income 84.30 or modified adjusted gross income, whichever is greater, in 84.31 excess of $16,640, but in no case is the credit less than zero. 84.32 For a nonresident or part-year resident, the credit 84.33 determined under section 32 of the Internal Revenue Code must be 84.34 allocated based on the percentage calculated under section 84.35 290.06, subdivision 2c, paragraph (e). 84.36 For a person who was a resident for the entire tax year and 85.1 has earned income not subject to tax under this chapter, the 85.2 credit must be allocated based on the ratio of federal adjusted 85.3 gross income reduced by the earned income not subject to tax 85.4 under this chapter over federal adjusted gross income. 85.5 Sec. 10. Minnesota Statutes 1996, section 290.0671, is 85.6 amended by adding a subdivision to read: 85.7 Subd. 1a. [DEFINITIONS.] For purposes of this section, the 85.8 terms "qualifying child," "earned income," and "modified 85.9 adjusted gross income" have the meanings given in section 32(c) 85.10 of the Internal Revenue Code. 85.11 Sec. 11. Minnesota Statutes 1996, section 290.0671, is 85.12 amended by adding a subdivision to read: 85.13 Subd. 7. [INFLATION ADJUSTMENT.] The earned income amounts 85.14 used to calculate the credit and the income thresholds at which 85.15 the maximum credit begins to be reduced in subdivision 1 must be 85.16 adjusted for inflation. The commissioner shall adjust the 85.17 earned income and threshold amounts by the percentage determined 85.18 under section 290.06, subdivision 2d, for the taxable year. 85.19 Sec. 12. Minnesota Statutes 1997 Supplement, section 85.20 290.0672, subdivision 1, is amended to read: 85.21 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 85.22 section, the following terms have the meanings given. 85.23 (b) "Long-term care insurance" means a policy that: 85.24 (1) qualifies for a deduction under section 213 of the 85.25 Internal Revenue Code, disregarding the 7.5 percent income test; 85.26 or meets the requirements given in section 62A.46; or provides 85.27 similar coverage issued under the laws of another jurisdiction; 85.28 and 85.29 (2) does not have a lifetime long-term care benefit limit 85.30 of less than $100,000; and 85.31 (3)includesprovides an offer of inflation protection that 85.32 meets or exceeds the inflation protection requirements ofthe85.33long-term care insurance model regulation cited undersection 85.347702B(g)(2)(A)(i)(x) of the Internal Revenue Code62S.23. 85.35 (c) "Qualified beneficiary" means the taxpayer or the 85.36 taxpayer's spouse. 86.1 (d) "Premiums deducted in determining federal taxable 86.2 income" means the lesser of (1) long-term care insurance 86.3 premiums that qualify as deductions under section 213 of the 86.4 Internal Revenue Code; and (2) the total amount deductible for 86.5 medical care under section 213 of the Internal Revenue Code. 86.6 Sec. 13. Minnesota Statutes 1997 Supplement, section 86.7 290.0673, subdivision 6, is amended to read: 86.8 Subd. 6. [NONREFUNDABLEREFUNDABLE.] The taxpayer must use 86.9 the tax credit for the taxable year in which the certificate is 86.10 issued to the employer. If the credit for the taxable yearmay86.11not exceedexceeds the liability for tax undersection 290.06,86.12subdivision 1,chapter 290 for the taxable year,before86.13reduction by the nonrefundable credits allowed under this86.14chapterthe commissioner shall refund the excess to the 86.15 taxpayer. An amount sufficient to pay the refunds authorized by 86.16 this subdivision is appropriated to the commissioner from the 86.17 general fund. 86.18 Sec. 14. [290.0681] [CREDIT FOR EMPLOYER CONTRIBUTIONS FOR 86.19 EMPLOYEE HOUSING.] 86.20 Subdivision 1. [CREDIT ALLOWED.] Subject to the 86.21 limitations and conditions of this section, a taxpayer is 86.22 allowed a credit against the tax imposed by section 290.06, 86.23 subdivision 1 or 2c, in an amount equal to 50 percent of the 86.24 amount certified to the commissioner by the commissioner of the 86.25 housing finance agency as qualifying employer housing 86.26 contributions made by the taxpayer during the taxable year. 86.27 Subd. 2. [DEFINITION.] For the purpose of this section, a 86.28 "qualifying employer housing contribution" means a cash 86.29 contribution made by an employer (1) as capital for production 86.30 of affordable housing; (2) for direct down payment assistance 86.31 for employees; or (3) to a fund administered by a nonprofit 86.32 corporation or government agency and used as capital for 86.33 production of affordable housing or direct down payment 86.34 assistance. A contribution is a qualifying contribution only if 86.35 the commissioner of the housing finance agency determines that 86.36 its use is consistent with the requirements of section 87.1 42(m)(2)(A) of the Internal Revenue Code. 87.2 Subd. 3. [CREDIT ALLOCATION.] An employer must apply each 87.3 year to the commissioner of the housing finance agency for an 87.4 allocation of qualifying employer housing contribution tax 87.5 credits. The credit is at a rate of 50 percent of qualifying 87.6 employer housing contributions. A credit need not be allocated 87.7 for all of an employer's qualifying contributions. The 87.8 commissioner shall notify the commissioner of revenue regarding 87.9 the identity of each employer that has been allocated the tax 87.10 credits for the following calendar year, by September 1 of each 87.11 year. The commissioner of the housing finance agency shall give 87.12 priority to employers that collaborate and receive matching 87.13 funds from a nonprofit organization and projects which best 87.14 promote the economic vitality of the community or region they 87.15 are located in. 87.16 Subd. 4. [LIMITATIONS; CARRYOVER.] (a) The credit allowed 87.17 to any taxpayer under this section may not exceed $250,000 for 87.18 any taxable year. 87.19 (b) The credit for the taxable year shall not exceed the 87.20 tax imposed on the taxpayer for the taxable year under section 87.21 290.06, subdivision 1 or 2c, reduced by the sum of the 87.22 nonrefundable credits allowed under this chapter. 87.23 (c) If the amount of the credit determined under this 87.24 section for any taxable year exceeds the limitation under 87.25 paragraph (b), the excess shall be a credit carryover to each of 87.26 the five succeeding taxable years. The entire amount of the 87.27 excess unused credit for the taxable year shall be carried, 87.28 first to the earliest of the taxable years to which the credit 87.29 may be carried, and then to each successive year to which the 87.30 credit may be carried. The amount of the unused credit which 87.31 may be added under this paragraph shall not exceed the 87.32 taxpayer's liability for tax less any additional credit under 87.33 this section for the current taxable year. 87.34 (d) The total credit allocation allowed for all taxpayers 87.35 is limited to $2,000,000. The total credit remains available 87.36 until it is completely allocated or until December 31, 2003, 88.1 whichever occurs earlier. Unallocated credits carry over from 88.2 one year to the next. 88.3 Sec. 15. Minnesota Statutes 1996, section 290.091, 88.4 subdivision 2, is amended to read: 88.5 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 88.6 this section, the following terms have the meanings given: 88.7 (a) "Alternative minimum taxable income" means the sum of 88.8 the following for the taxable year: 88.9 (1) the taxpayer's federal alternative minimum taxable 88.10 income as defined in section 55(b)(2) of the Internal Revenue 88.11 Code; 88.12 (2) the taxpayer's itemizeddeductionsdeduction allowed in 88.13 computing federal alternative minimum taxable income, but88.14excluding the Minnesota charitable contribution deduction and88.15the medical expense deductionand described in section 67(b)(1), 88.16 (2), and (4) of the Internal Revenue Code; 88.17 (3) for depletion allowances computed under section 613A(c) 88.18 of the Internal Revenue Code, with respect to each property (as 88.19 defined in section 614 of the Internal Revenue Code), to the 88.20 extent not included in federal alternative minimum taxable 88.21 income, the excess of the deduction for depletion allowable 88.22 under section 611 of the Internal Revenue Code for the taxable 88.23 year over the adjusted basis of the property at the end of the 88.24 taxable year (determined without regard to the depletion 88.25 deduction for the taxable year); 88.26 (4)to the extent not included in federal alternative88.27minimum taxable income, the amount of the tax preference for88.28intangible drilling cost under section 57(a)(2) of the Internal88.29Revenue Code determined without regard to subparagraph (E);88.30(5)to the extent not included in federal alternative 88.31 minimum taxable income, the amount of interest income as 88.32 provided by section 290.01, subdivision 19a, clause (1); 88.33 (5) amounts added to federal taxable income as provided by 88.34 section 290.01, subdivision 19a, clauses (5), (6), and (7); 88.35 less the sum of the amounts determined under the following 88.36 clauses (1) to(3)(4): 89.1 (1) interest income as defined in section 290.01, 89.2 subdivision 19b, clause (1); 89.3 (2) an overpayment of state income tax as provided by 89.4 section 290.01, subdivision 19b, clause (2), to the extent 89.5 included in federal alternative minimum taxable income;and89.6 (3) the amount of investment interest paid or accrued 89.7 within the taxable year on indebtedness to the extent that the 89.8 amount does not exceed net investment income, as defined in 89.9 section 163(d)(4) of the Internal Revenue Code. Interest does 89.10 not include amounts deducted in computing federal adjusted gross 89.11 income; 89.12 (4) amounts subtracted from federal taxable income as 89.13 provided by section 290.01, subdivision 19b, clauses (11) and 89.14 (12); and 89.15 (5) the Minnesota charitable contribution deduction. 89.16 In the case of an estate or trust, alternative minimum 89.17 taxable income must be computed as provided in section 59(c) of 89.18 the Internal Revenue Code. 89.19 (b) "Investment interest" means investment interest as 89.20 defined in section 163(d)(3) of the Internal Revenue Code. 89.21 (c) "Tentative minimum tax" equals seven percent of 89.22 alternative minimum taxable income after subtracting the 89.23 exemption amount determined under subdivision 3. 89.24 (d) "Regular tax" means the tax that would be imposed under 89.25 this chapter (without regard to this section and section 89.26 290.032), reduced by the sum of the nonrefundable credits 89.27 allowed under this chapter. 89.28 (e) "Net minimum tax" means the minimum tax imposed by this 89.29 section. 89.30 (f) "Minnesota charitable contribution deduction" means a 89.31 charitable contribution deduction under section 170 of the 89.32 Internal Revenue Code to or for the use of an entity described 89.33 in section 290.21, subdivision 3, clauses (a) to (e). When the 89.34 federal deduction for charitable contributions is limited under 89.35 section 170(b) of the Internal Revenue Code, the allowable 89.36 contributions in the year of contribution are deemed to be first 90.1 contributions to entities described in section 290.21, 90.2 subdivision 3, clauses (a) to (e). 90.3 Sec. 16. Minnesota Statutes 1997 Supplement, section 90.4 290.091, subdivision 6, is amended to read: 90.5 Subd. 6. [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 90.6 is allowed against the tax imposed by this chapter on 90.7 individuals, trusts, and estates equal to the minimum tax credit 90.8 for the taxable year. The minimum tax credit equals the 90.9 adjusted net minimum tax for taxable years beginning after 90.10 December 31, 1988, reduced by the minimum tax credits allowed in 90.11 a prior taxable year. The credit may not exceed the excess (if 90.12 any) for the taxable year of 90.13 (1) the regular tax, over 90.14 (2) the greater of (i) the tentative alternative minimum 90.15 tax, or (ii) zero. 90.16 (b) The adjusted net minimum tax for a taxable year equals 90.17 the lesser of the net minimum tax or the excess (if any) of 90.18 (1) the tentative minimum tax, over 90.19 (2) seven percent of the sum of 90.20 (i) adjusted gross income as defined in section 62 of the 90.21 Internal Revenue Code, 90.22 (ii) interest income as defined in section 290.01, 90.23 subdivision 19a, clause (1), 90.24 (iii) the amount added to federal taxable income as 90.25 provided by section 290.01, subdivision 19a, clauses (5), (6), 90.26 and (7), 90.27 (iv) the itemized deduction allowed for computing federal 90.28 alternative income under section 56(b) of the Internal Revenue 90.29 Code and not disallowed for Minnesota purposes under subdivision 90.30 2, paragraph (a), clause (2), of the first series of clauses, 90.31 (v) interest on specified private activity bonds, as 90.32 defined in section 57(a)(5) of the Internal Revenue Code, to the 90.33 extent not included under clause (ii), 90.34(iv)(vi) depletion as defined in section 57(a)(1), 90.35 determined without regard to the last sentence of paragraph (1), 90.36 of the Internal Revenue Code, less 91.1(v)(vii) the deductions allowed in computing alternative 91.2 minimum taxable income provided in subdivision 2, paragraph (a), 91.3 clause (2) of the first series of clauses and clauses (1), 91.4 (2),and(3), and (5) of the second series of clauses, and 91.5(vi)(viii) the exemption amount determined under 91.6 subdivision 3. 91.7 In the case of an individual who is not a Minnesota 91.8 resident for the entire year, adjusted net minimum tax must be 91.9 multiplied by the fraction defined in section 290.06, 91.10 subdivision 2c, paragraph (e). In the case of a trust or 91.11 estate, adjusted net minimum tax must be multiplied by the 91.12 fraction defined under subdivision 4, paragraph (b). 91.13 Sec. 17. Minnesota Statutes 1996, section 290.10, is 91.14 amended to read: 91.15 290.10 [NONDEDUCTIBLE ITEMS.] 91.16 Except as provided in section 290.17, subdivision 4, 91.17 paragraph (i), in computing the net income of acorporation91.18 taxpayer no deduction shall in any case be allowed for expenses, 91.19 interest and taxes connected with or allocable against the 91.20 production or receipt of all income not included in the measure 91.21 of the tax imposed by this chapter, except that for corporations 91.22 engaged in the business of mining or producing iron ore, the 91.23 mining of which is subject to the occupation tax imposed by 91.24 section 298.01, subdivision 4, this shall not prevent the 91.25 deduction of expenses and other items to the extent that the 91.26 expenses and other items are allowable under this chapter and 91.27 are not deductible, capitalizable, retainable in basis, or taken 91.28 into account by allowance or otherwise in computing the 91.29 occupation tax and do not exceed the amounts taken for federal 91.30 income tax purposes for that year. Occupation taxes imposed 91.31 under chapter 298, royalty taxes imposed under chapter 299, or 91.32 depletion expenses may not be deducted under this clause. 91.33 Sec. 18. Minnesota Statutes 1996, section 290.191, 91.34 subdivision 1, is amended to read: 91.35 Subdivision 1. [GENERAL RULE.] (a) Except as otherwise 91.36 provided in section 290.17, subdivision 5, the net income from a 92.1 trade or business carried on partly within and partly without 92.2 this state must be apportioned to this state as provided in this 92.3 section. 92.4 (b) For purposes of this section, "state" means a state of 92.5 the United States, the District of Columbia, the commonwealth of 92.6 Puerto Rico, or any territory or possession of the United States 92.7 or any foreign country. 92.8 (c) For purposes of this section, "commercial domicile" 92.9 means the headquarters of the trade or business, that is, the 92.10 place from which the trade or business is principally managed 92.11 and directed. If a taxpayer is organized under the laws of a 92.12 foreign country, or of the Commonwealth of Puerto Rico, or any 92.13 territory or possession of the United States, the taxpayer's 92.14 commercial domicile is the state that the taxpayer has declared 92.15 to be its home state under the International Banking Act of 92.16 1978; or, if the taxpayer has not made such a declaration or is 92.17 not required to make such a declaration, its commercial domicile 92.18 for the purpose of this section is the state of the United 92.19 States or the District of Columbia to which the greatest number 92.20 of employees are regularly connected or out of which they are 92.21 working, irrespective of where the services of the employees are 92.22 performed, as of the last day of the taxable year. 92.23 Sec. 19. Minnesota Statutes 1996, section 290.191, 92.24 subdivision 6, is amended to read: 92.25 Subd. 6. [DETERMINATION OF RECEIPTS FACTOR FOR FINANCIAL 92.26 INSTITUTIONS.] (a) For purposes of this section, the rules in 92.27 this subdivisionand subdivision 8apply in determining the 92.28 receipts factor for financial institutions. 92.29 (b) "Receipts" for this purpose means gross income, 92.30 including net taxable gain on disposition of assets, including 92.31 securities and money market instruments, when derived from 92.32 transactions and activities in the regular course of the 92.33 taxpayer's trade or business. 92.34 (c) "Money market instruments" means federal funds sold and 92.35 securities purchased under agreements to resell, commercial 92.36 paper, banker's acceptances, and purchased certificates of 93.1 deposit and similar instruments to the extent that the 93.2 instruments are reflected as assets under generally accepted 93.3 accounting principles. 93.4 (d) "Securities" means United States Treasury securities, 93.5 obligations of United States government agencies and 93.6 corporations, obligations of state and political subdivisions, 93.7 corporate stock, bonds, and other securities, participations in 93.8 securities backed by mortgages held by United States or state 93.9 government agencies, loan-backed securities and similar 93.10 investments to the extent the investments are reflected as 93.11 assets under generally accepted accounting principles. 93.12 (e) Receipts from the lease or rental of real or tangible 93.13 personal property, including both finance leases and true 93.14 leases, must be attributed to this state if the property is 93.15 located in this state. Receipts from the lease or rental of 93.16 tangible personal property that is characteristically moving 93.17 property, including, but not limited to, motor vehicles, rolling 93.18 stock, aircraft, vessels, or mobile equipment are included in 93.19 the numerator of the receipts factor to the extent that the 93.20 property is used in this state. The extent of the use of moving 93.21 property is determined as follows: 93.22 (1) A motor vehicle is used wholly in the state in which it 93.23 is registered. 93.24 (2) The extent that rolling stock is used in this state is 93.25 determined by multiplying the receipts from the lease or rental 93.26 of the rolling stock by a fraction, the numerator of which is 93.27 the miles traveled within this state by the leased or rented 93.28 rolling stock and the denominator of which is the total miles 93.29 traveled by the leased or rented rolling stock. 93.30 (3) The extent that an aircraft is used in this state is 93.31 determined by multiplying the receipts from the lease or rental 93.32 of the aircraft by a fraction, the numerator of which is the 93.33 number of landings of the aircraft in this state and the 93.34 denominator of which is the total number of landings of the 93.35 aircraft. 93.36 (4) The extent that a vessel, mobile equipment, or other 94.1 mobile property is used in the state is determined by 94.2 multiplying the receipts from the lease or rental of property by 94.3 a fraction, the numerator of which is the number of days during 94.4 the taxable year the property was in this state and the 94.5 denominator of which is the total days in the taxable year. 94.6 (f) Interest income and other receipts from assets in the 94.7 nature of loans that are secured primarily by real estate or 94.8 tangible personal property must be attributed to this state if 94.9 the security property is located in this state under the 94.10 principles stated in paragraph (e). 94.11 (g) Interest income and other receipts from consumer loans 94.12 not secured by real or tangible personal property that are made 94.13 to residents of this state, whether at a place of business, by 94.14 traveling loan officer, by mail, by telephone or other 94.15 electronic means, must be attributed to this state. 94.16 (h) Interest income and other receipts from commercial 94.17 loans and installment obligations that are unsecured by real or 94.18 tangible personal property or secured by intangible property 94.19 must be attributed to this state if theproceeds of the loan are94.20to be applied in this state. If it cannot be determined where94.21the funds are to be applied, the income and receipts are94.22attributed to the state in which the office of the borrower from94.23which the application would be made in the regular course of94.24business is located. If this cannot be determined, the94.25transaction is disregarded in the apportionment94.26formulaborrower's commercial domicile is located in this state. 94.27 (i) Interest income and other receipts from a participating 94.28 financial institution's portion of participation and syndication 94.29 loans must be attributed under paragraphs (e) to (h). A 94.30 participation loan is an arrangement in which a lender makes a 94.31 loan to a borrower and then sells, assigns, or otherwise 94.32 transfers all or a part of the loan to a purchasing financial 94.33 institution. A syndication loan is a loan transaction involving 94.34 multiple financial institutions in which all the lenders are 94.35 named as parties to the loan documentation, are known to the 94.36 borrower, and have privity of contract with the borrower. 95.1 (j) Interest income and other receipts including service 95.2 charges from financial institution credit card and travel and 95.3 entertainment credit card receivables and credit card holders' 95.4 fees must be attributed to the state to which the card charges 95.5 and fees are regularly billed. 95.6 (k) The receipts factor includes net gains (but not less 95.7 than zero) from the sale of credit card receivables, the 95.8 numerator of which is determined by multiplying the net gains by 95.9 a fraction, the numerator of which is the amount in the 95.10 numerator of the receipts factor under paragraph (j) and the 95.11 denominator of which is the taxpayer's total amount of interest 95.12 and fees or penalties in the nature of interest from credit card 95.13 receivables and fees charged to cardholders. 95.14 (1) The receipts factor includes all credit card issuer's 95.15 reimbursement fees, the numerator of which is determined by 95.16 multiplying the reimbursement fees by a fraction, the numerator 95.17 of which is the amount included in the numerator of the receipts 95.18 factor under paragraph (j) and the denominator of which is the 95.19 total amount of interest and fees or penalties in the nature of 95.20 interest from credit card receivables and fees charged to 95.21 cardholders. 95.22 (m) Merchant discount income derived from financial 95.23 institution credit card holder transactions with a merchant must 95.24 be attributed to the statein which the merchant is located. In95.25the case of merchants located within and outside the state, only95.26receipts from merchant discounts attributable to sales made from95.27locations within the state are attributed to this state. It is95.28presumed, subject to rebuttal, that the location of a merchant95.29is the address shown on the invoice submitted by the merchant to95.30the taxpayerof the merchant's commercial domicile. 95.31 (n) The receipts from the servicing of loans are included 95.32 in the receipts factor and are attributed to this state as 95.33 follows: 95.34 (1) The numerator of the receipts factor includes loan 95.35 servicing fees derived from loans secured by real estate or 95.36 tangible personal property multiplied by a fraction, the 96.1 numerator of which is the amount included in the numerator of 96.2 the receipts factor under paragraph (f) and the denominator of 96.3 which is the total amount of interest and fees or penalties in 96.4 the nature of interest from loans secured by real estate and 96.5 tangible personal property. 96.6 (2) The numerator of the receipts factor includes loan 96.7 servicing fees derived from consumer loans not secured by real 96.8 estate or tangible personal property multiplied by a fraction, 96.9 the numerator of which is the amount included in the numerator 96.10 of the receipts factor under paragraph (g) and the denominator 96.11 of which is the total amount of interest and fees or penalties 96.12 in the nature of interest from loans not secured by real estate 96.13 and tangible personal property. 96.14 (3) The numerator of the receipts factor includes loan 96.15 servicing fees derived from commercial loans and installment 96.16 obligations that are unsecured by real or tangible personal 96.17 property or secured by intangible property multiplied by a 96.18 fraction, the numerator of which is the amount included in the 96.19 numerator of the receipts factor under paragraph (h) and the 96.20 denominator of which is the total amount of interest and fees or 96.21 penalties in the nature of interest from commercial loans and 96.22 installment obligations that are unsecured by real or tangible 96.23 personal property or secured by intangible property. 96.24 (4) The numerator of the receipts factor includes loan 96.25 servicing fees derived from financial institution credit card 96.26 and travel and entertainment credit card receivables and credit 96.27 cardholders' fees multiplied by a fraction, the numerator of 96.28 which is the amount included in the numerator of the receipts 96.29 factor under paragraph (j) and the denominator of which is the 96.30 total amount of interest and fees or penalties in the nature of 96.31 interest from financial institution credit card and travel and 96.32 entertainment credit card receivables and credit cardholders' 96.33 fees. 96.34 (5) If the taxpayer receives loan servicing fees for 96.35 servicing either the secured or the unsecured loans of the 96.36 unrelated third party, the receipts are attributed under the 97.1 principles in paragraph (o). 97.2(l)(o) Receipts from the performance of fiduciary and 97.3 other services must be attributed to the state in which the 97.4 services are received. For the purposes of this section, 97.5 services provided to a corporation, partnership, or trust must 97.6 be attributed to a state where it has a fixed place of doing 97.7 business. If the state where the services are received is not 97.8 readily determinable or is a state where the corporation, 97.9 partnership, or trust does not have a fixed place of doing 97.10 business, the services shall be deemed to be received at the 97.11 location of the office of the customer from which the services 97.12 were ordered in the regular course of the customer's trade or 97.13 business. If the ordering office cannot be determined, the 97.14 services shall be deemed to be received at the office of the 97.15 customer to which the services are billed. 97.16(m)(p) Receipts from the issuance of travelers checks and 97.17 money orders must be attributed to the state in which the checks 97.18 and money orders are purchased. 97.19(n)(q) Receipts from investments of a financial 97.20 institution in securities and from money market instrumentsmust97.21be apportioned to this state based on the ratio that total97.22deposits from this state, its residents, including any business97.23with an office or other place of business in this state, its97.24political subdivisions, agencies, and instrumentalities bear to97.25the total deposits from all states, their residents, their97.26political subdivisions, agencies, and instrumentalities. In the97.27case of an unregulated financial institution subject to this97.28section, these receipts are apportioned to this state based on97.29the ratio that its gross business income, excluding such97.30receipts, earned from sources within this state bears to gross97.31business income, excluding such receipts, earned from sources97.32within all states. For purposes of this subdivision, deposits97.33made by this state, its residents, its political subdivisions,97.34agencies, and instrumentalities must be attributed to this97.35state, whether or not the deposits are accepted or maintained by97.36the taxpayer at locationsare attributed to this state if the 98.1 investments are properly assigned to a regular place of business 98.2 of the taxpayer within this state. 98.3 The taxpayer has the burden of proving that investments of 98.4 a financial institution in securities and from money market 98.5 instruments are properly assigned to a regular place of business 98.6 outside this state. Where the day-to-day decisions regarding an 98.7 investment occur at more than one regular place of business, the 98.8 investment is considered to be located at the regular place of 98.9 business of the taxpayer where the investment or trading 98.10 policies and guidelines with respect to the investment are 98.11 established. 98.12(o)(r) A financial institution's interest in property 98.13 described in section 290.015, subdivision 3, paragraph (b), is 98.14 included in the receipts factor in the same manner as assets in 98.15 the nature of securities or money market instruments are 98.16 included in paragraph(n)(q). 98.17 (s) Receipts from investments in securities and money 98.18 market instruments of financial institutions which are managed 98.19 by a third party are assigned to the commercial domicile of the 98.20 financial institution. 98.21 Sec. 20. Minnesota Statutes 1996, section 290.191, 98.22 subdivision 11, is amended to read: 98.23 Subd. 11. [FINANCIAL INSTITUTIONS; PROPERTY FACTOR.] (a) 98.24 For financial institutions, the property factor includes, as 98.25 well as tangible property, intangible property as set forth in 98.26 this subdivision. 98.27 (b) Intangible personal property must be included at its 98.28 tax basis for federal income tax purposes. 98.29 (c) Goodwill must not be included in the property factor. 98.30 (d) Coin and currencylocated in this state must be98.31attributed to this statemust not be included in the property 98.32 factor. 98.33 (e) Lease financing receivables from both financial leases 98.34 and true leases must be attributed to this state ifand to the98.35extent that the property is locatedthe receivables are properly 98.36 assigned to a regular place of business of the taxpayer within 99.1 this state. 99.2 (f) Assets in the nature of loansthat are secured by real99.3or tangible personal propertymust be attributed to this state 99.4 ifand to the extent that the security property is locatedthe 99.5 loans are properly assigned to a regular place of business of 99.6 the taxpayer within this state. 99.7 (g)Assets in the nature of consumer loans and installment99.8obligations that are unsecured or secured by intangible property99.9must be attributed to this state if the loan was made to a99.10resident of this state.99.11(h) Assets in the nature of commercial loan and installment99.12obligations that are unsecured by real or tangible personal99.13property or secured by intangible property must be attributed to99.14this state if the proceeds of the loan are to be applied in this99.15state. If it cannot be determined where the funds are to be99.16applied, the assets must be attributed to the state in which99.17there is located the office of the borrower from which the99.18application would be made in the regular course of business. If99.19this cannot be determined, the transaction is disregarded in the99.20apportionment formula.99.21(i)A participating financial institution's portion of 99.22 participation and syndication loans must be attributed under 99.23 paragraphs (e)to (h)and (f). 99.24(j)(h) Financial institution credit card and travel and 99.25 entertainment credit card receivables must be attributed to the 99.26 stateto which the credit card charges and fees are regularly99.27billedif the receivables are properly assigned to a regular 99.28 place of business of the taxpayer within the state. 99.29(k)(i) Receivables arising from merchant discount income 99.30 derived from financial institution credit card holder 99.31 transactions with a merchant are attributed to the statein99.32which the merchant is located. In the case of merchants located99.33within and without the state, only receivables from merchant99.34discounts attributable to sales made from locations within the99.35state are attributed to this state. It is presumed, subject to99.36rebuttal, that the location of a merchant is the address shown100.1on the invoice submitted by the merchant to the taxpayerif the 100.2 receivables are properly assigned to a regular place of business 100.3 of the taxpayer within the state. 100.4(l)(j) Assets in the nature of securities and money market 100.5 instrumentsare apportioned to this state based upon the ratio100.6that total deposits from this state, its residents, its100.7political subdivisions, agencies and instrumentalities bear to100.8the total deposits from all states, their residents, their100.9political subdivisions, agencies and instrumentalities. In the100.10case of an unregulated financial institution, the assets are100.11apportioned to this state based upon the ratio that its gross100.12business income earned from sources within this state bears to100.13gross business income earned from sources within all states.100.14For purposes of this paragraph, deposits made by this state, its100.15residents, its political subdivisions, agencies, and100.16instrumentalities are attributed to this state, whether or not100.17the deposits are accepted or maintained by the taxpayer at100.18locations within this statemust not be included in the property 100.19 factor. 100.20(m)(k) A financial institution's interest in any property 100.21 described in section 290.015, subdivision 3, paragraph (b),is100.22included in the property factor in the same manner as assets in100.23the nature of securities or money market instruments are100.24included under paragraph (1)must not be included in the 100.25 property factor. 100.26 (l) For the purposes of paragraphs (e) to (i), loan assets 100.27 and receivables are properly assigned in this state if the 100.28 preponderance of substantive contact occurred in this state. In 100.29 determining where the preponderance of substantive contact 100.30 occurred, the following consideration should be given: 100.31 (1) solicitation; 100.32 (2) investigation; 100.33 (3) negotiation; 100.34 (4) approval; and 100.35 (5) administration. 100.36 Sec. 21. Minnesota Statutes 1996, section 290.21, 101.1 subdivision 3, is amended to read: 101.2 Subd. 3. An amount for contribution or gifts made within 101.3 the taxable year: 101.4 (a) to or for the use of the state of Minnesota, or any of 101.5 its political subdivisions for exclusively public purposes, 101.6 (b) to or for the use of any community chest, corporation, 101.7 organization, trust, fund, association, or foundation located in 101.8 and carrying on substantially all of its activities within this 101.9 state, organized and operating exclusively for religious, 101.10 charitable, public cemetery, scientific, literary, artistic, or 101.11 educational purposes, or for the prevention of cruelty to 101.12 children or animals, no part of the net earnings of which inures 101.13 to the benefit of any private stockholder or individual, 101.14 (c) to a fraternal society, order, or association, 101.15 operating under the lodge system located in and carrying on 101.16 substantially all of their activities within this state if such 101.17 contributions or gifts are to be used exclusively for the 101.18 purposes specified in clause (b), or for or to posts or 101.19 organizations of war veterans or auxiliary units or societies of 101.20 such posts or organizations, if they are within the state and no 101.21 part of their net income inures to the benefit of any private 101.22 shareholder or individual, 101.23 (d) to or for the use of the United States of America for 101.24 exclusively public purposes if the contribution or gift consists 101.25 of real property located in Minnesota, 101.26 (e) to or for the use of a foundation if the foundation is 101.27 organized and operated exclusively for a purpose in clause (b), 101.28 and has no part of its net earnings inuring to the benefit of a 101.29 private shareholder or individual, but does not carry on 101.30 substantially all of its activities within this state. The 101.31 deduction under this clause equals the amount of the 101.32 corporation's contributions or gifts to the foundation within 101.33 the taxable year multiplied by a fraction equal to the ratio of 101.34 the foundation's total expenditures during the taxable year for 101.35 the benefit of organizations described in clause (b) to the 101.36 foundation's total expenditures during the taxable year, 102.1 (f) the total deduction hereunder shall not exceed 15 102.2 percent of the taxpayer's taxable net income less the deductions 102.3 allowable under this section other than those for contributions 102.4 or gifts, 102.5 (g) in the case of a corporation reporting its taxable 102.6 income on the accrual basis, if: (A) the board of directors 102.7 authorizes a charitable contribution during any taxable year, 102.8 and (B) payment of such contribution is made after the close of 102.9 such taxable year and on or before the 15th day of the third 102.10 month following the close of such taxable year; then the 102.11 taxpayer may elect to treat such contribution as paid during 102.12 such taxable year. The election may be made only at the time of 102.13 the filing of the return for such taxable year, and shall be 102.14 signified in such manner as the commissioner shall by rules 102.15 prescribe, 102.16 (h) in the case of a contribution of ordinary income or 102.17 capital gains property, the amount allowed as a deduction is 102.18 limited to the federal amount deductible under section 170(e) of 102.19 the Internal Revenue Code. 102.20 Sec. 22. Minnesota Statutes 1997 Supplement, section 102.21 290.371, subdivision 2, is amended to read: 102.22 Subd. 2. [EXEMPTIONS.] A corporation is not required to 102.23 file a notice of business activities report if: 102.24 (1) by the end of an accounting period for which it was 102.25 otherwise required to file a notice of business activities 102.26 report under this section, it had received a certificate of 102.27 authority to do business in this state; 102.28 (2) a timely return has been filed under section 289A.08; 102.29 (3) the corporation is exempt from taxation under this 102.30 chapter pursuant to section 290.05; or 102.31 (4) the corporation's activities in Minnesota, or the 102.32 interests in property which it owns, consist solely of 102.33 activities or property exempted from jurisdiction to tax under 102.34 section 290.015, subdivision 3, paragraph (b); or102.35(5) the corporation is an "S" corporation under section102.36290.9725. 103.1 Sec. 23. Laws 1997, chapter 231, article 1, section 16, as 103.2 amended by Laws 1997, First Special Session chapter 5, section 103.3 35, as amended by Laws 1997, Third Special Session chapter 3, 103.4 section 11, is amended to read: 103.5 Sec. 16. [PROPERTY TAX REBATE.] 103.6 (a) A credit is allowed against the tax imposed under 103.7 Minnesota Statutes, chapter 290, to an individual, other than as 103.8 a dependent, as defined in sections 151 and 152 of the Internal 103.9 Revenue Code, disregarding section 152(b)(3) of the Internal 103.10 Revenue Code, equal to 20 percent of the qualified property tax 103.11 paidin calendar year 1997before January 1, 1998, for taxes 103.12 assessed in 1996. 103.13 (b) For property owned and occupied by the taxpayer during 103.14 1997, qualified tax means property taxes payable as defined in 103.15 Minnesota Statutes, section 290A.03, subdivision 13, assessed in 103.16 1996 and payable in 1997, except the requirement that the 103.17 taxpayer own and occupy the property on January 2, 1997, does 103.18 not apply. The credit is allowed only to the individual and 103.19 spouse, if any, who paid the tax, whether directly, through an 103.20 escrow arrangement, or under a contractual agreement for the 103.21 purchase or sale of the property. In the case of agricultural 103.22 land assessed as part of a homestead pursuant to section 273.13, 103.23 subdivision 23, the owner is allowed to calculate the credit on 103.24 all property taxes on the homestead, except to the extent the 103.25 owner is required to furnish a rent certificate under section 103.26 290A.19 to a tenant leasing a part of the farm homestead. 103.27 (c) For a renter, the qualified property tax means the 103.28 amount of rent constituting property taxes under Minnesota 103.29 Statutes, section 290A.03, subdivision 11, based on rent paid in 103.30 1997. If two or more renters could be claimants under Minnesota 103.31 Statutes, chapter 290A with regard to the rent constituting 103.32 property taxes, the rules under Minnesota Statutes, section 103.33 290A.03, subdivision 8, paragraph (f), applies to determine the 103.34 amount of the credit for the individual. 103.35 (d) For an individual who both owned and rented principal 103.36 residences in calendar year 1997, qualified taxes are the sum of 104.1 the amounts under paragraphs (a) and (b). 104.2 (e) If the amount of the credit under this subdivision 104.3 exceeds the taxpayer's tax liability under this chapter, the 104.4 commissioner shall refund the excess. 104.5 (f) To claim a credit under this subdivision, the taxpayer 104.6 must attach a copy of the property tax statement and certificate 104.7 of rent paid, as applicable, and provide any additional 104.8 information the commissioner requires. 104.9 (g) An amount sufficient to pay refunds under this 104.10 subdivision is appropriated to the commissioner from the general 104.11 fund. 104.12 (h) This credit applies to taxable years beginning after 104.13 December 31, 1996, and before January 1, 1998. 104.14 (i) Payment of the credit under this section is subject to 104.15 Minnesota Statutes, chapter 270A, and any other provision 104.16 applicable to refunds under Minnesota Statutes, chapter 290. 104.17 Sec. 24. Laws 1997, chapter 231, article 5, section 18, 104.18 subdivision 1, is amended to read: 104.19 Subdivision 1. [COMMISSION RESPONSIBILITIES.] (a) The 104.20 legislative coordinating commission shall prepare studies of 104.21 business taxation and the taxation of telecommunications 104.22 services during the1997-981998 interim and the 1999 104.23 legislative session, as provided by this section. The 104.24 commission is responsible for managing any contracts under this 104.25 section and for preparing the studies. It may delegate any or 104.26 all of its responsibilities under this section to the 104.27 legislative commission on planning and fiscal policy. 104.28 (b) For the business tax study under subdivision 2, the 104.29 commission may appoint a formal or informal bipartisan working 104.30 group of house and senate members to oversee and coordinate the 104.31 study. 104.32 (c) For the study of the taxation of telecommunications 104.33 services under subdivision 4, the commission shall appoint a 104.34 bipartisan working group that includes house and senate members 104.35 and members of the public, at least two of whom are 104.36 representatives of Internet service businesses who are 105.1 knowledgeable about the technologies and practices of the 105.2 Internet and at least two of whom are the representatives of 105.3 businesses that conduct commerce on the Internet. 105.4 Sec. 25. [STUDY OF HOME CARE TAX INCENTIVES.] 105.5 The commissioners of revenue and human services shall 105.6 conduct a study on the issue of the effectiveness of tax 105.7 incentives to encourage people to provide care for elderly or 105.8 disabled individuals in their homes. The study must include 105.9 analysis of the most effective types of incentives and their 105.10 cost. The commissioners shall transmit the conclusions of the 105.11 study in a report to the legislature by January 15, 1999. 105.12 Sec. 26. [PROHIBITION OF USE OF SOCIAL SECURITY NUMBERS.] 105.13 No label, envelope, or other material printed by the 105.14 department of revenue may include the social security number of 105.15 the taxpayer in a place that will be visible when delivered or 105.16 mailed to the taxpayer. 105.17 Sec. 27. [REPEALER.] 105.18 Minnesota Statutes 1996, sections 289A.50, subdivision 6; 105.19 and 290.191, subdivision 8, are repealed. 105.20 Sec. 28. [EFFECTIVE DATES.] 105.21 Section 1 is effective for extensions received under 105.22 Minnesota Statutes, section 289A.19, subdivision 2, for tax 105.23 years beginning after December 31, 1996. 105.24 Section 2 is effective retroactive to August 1, 1997. The 105.25 change in section 3 made by clause (7) is effective for tax 105.26 years beginning after December 31, 1996. The change in section 105.27 3 made by clause (8) is effective for tax years beginning after 105.28 December 31, 1997. 105.29 Sections 4, clause (12), 5, 14, and 16, items (iii) and 105.30 (vii) are effective for tax years beginning after December 31, 105.31 1996. 105.32 Section 6 is effective for tax years beginning after 105.33 December 31, 1996, except the change in denominator for 105.34 Minnesota Statutes, section 290.01, subdivision 19b, clause (1), 105.35 is effective for tax years beginning after December 31, 1997. 105.36 Section 7 is effective for taxable years beginning after 106.1 December 31, 1997. 106.2 Sections 4, clause (13), 8, 9, 10, 16, item (iv), 17, and 106.3 21 are effective for tax years beginning after December 31, 1997. 106.4 Sections 11, 12, 18 to 20, and 22 are effective for tax 106.5 years beginning after December 31, 1998. 106.6 Contingent on the agency receiving a commitment for at 106.7 least $2,000,000 from nonstate resources that would be used in 106.8 coordination with the agency's programs to secure affordable 106.9 housing for workers, section 13 is effective for taxable years 106.10 beginning after December 31, 1998. 106.11 Section 23 is effective the day following final enactment. 106.12 Section 27 is effective for tax years beginning after 106.13 December 31, 1997, except that the repeal of Minnesota Statutes, 106.14 section 290.191, subdivision 8, is effective for tax years 106.15 beginning after December 31, 1998. 106.16 ARTICLE 5 106.17 FEDERAL UPDATE 106.18 Section 1. Minnesota Statutes 1997 Supplement, section 106.19 289A.02, subdivision 7, is amended to read: 106.20 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 106.21 defined otherwise, "Internal Revenue Code" means the Internal 106.22 Revenue Code of 1986, as amended through December 31,1996, and106.23includes the provisions of section 1(a) and (b) of Public Law106.24Number 104-1171997. 106.25 Sec. 2. Minnesota Statutes 1997 Supplement, section 106.26 290.01, subdivision 19, is amended to read: 106.27 Subd. 19. [NET INCOME.] The term "net income" means the 106.28 federal taxable income, as defined in section 63 of the Internal 106.29 Revenue Code of 1986, as amended through the date named in this 106.30 subdivision, incorporating any elections made by the taxpayer in 106.31 accordance with the Internal Revenue Code in determining federal 106.32 taxable income for federal income tax purposes, and with the 106.33 modifications provided in subdivisions 19a to 19f. 106.34 In the case of a regulated investment company or a fund 106.35 thereof, as defined in section 851(a) or 851(h) of the Internal 106.36 Revenue Code, federal taxable income means investment company 107.1 taxable income as defined in section 852(b)(2) of the Internal 107.2 Revenue Code, except that: 107.3 (1) the exclusion of net capital gain provided in section 107.4 852(b)(2)(A) of the Internal Revenue Code does not apply; 107.5 (2) the deduction for dividends paid under section 107.6 852(b)(2)(D) of the Internal Revenue Code must be applied by 107.7 allowing a deduction for capital gain dividends and 107.8 exempt-interest dividends as defined in sections 852(b)(3)(C) 107.9 and 852(b)(5) of the Internal Revenue Code; and 107.10 (3) the deduction for dividends paid must also be applied 107.11 in the amount of any undistributed capital gains which the 107.12 regulated investment company elects to have treated as provided 107.13 in section 852(b)(3)(D) of the Internal Revenue Code. 107.14 The net income of a real estate investment trust as defined 107.15 and limited by section 856(a), (b), and (c) of the Internal 107.16 Revenue Code means the real estate investment trust taxable 107.17 income as defined in section 857(b)(2) of the Internal Revenue 107.18 Code. 107.19 The net income of a designated settlement fund as defined 107.20 in section 468B(d) of the Internal Revenue Code means the gross 107.21 income as defined in section 468B(b) of the Internal Revenue 107.22 Code. 107.23 The Internal Revenue Code of 1986, as amended through 107.24 December 31, 1986, shall be in effect for taxable years 107.25 beginning after December 31, 1986. The provisions of sections 107.26 10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 107.27 10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 107.28 Omnibus Budget Reconciliation Act of 1987, Public Law Number 107.29 100-203, the provisions of sections 1001, 1002, 1003, 1004, 107.30 1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 107.31 1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 107.32 6277, and 6282 of the Technical and Miscellaneous Revenue Act of 107.33 1988, Public Law Number 100-647, the provisions of sections 107.34 7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 107.35 1989, Public Law Number 101-239,andthe provisions of sections 107.36 1305, 1704(r), and 1704(e)(1) of the Small Business Job 108.1 Protection Act, Public Law Number 104-188, and the provisions of 108.2 sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act 108.3 of 1997, Public Law Number 105-34, shall be effective at the 108.4 time they become effective for federal income tax purposes. 108.5 The Internal Revenue Code of 1986, as amended through 108.6 December 31, 1987, shall be in effect for taxable years 108.7 beginning after December 31, 1987. The provisions of sections 108.8 4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 108.9 6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 108.10 6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 108.11 Act of 1988, Public Law Number 100-647, the provisions of 108.12 sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 108.13 of 1989, Public Law Number 101-239, and the provisions of 108.14 section 11702 of the Revenue Reconciliation Act of 1990, Public 108.15 Law Number 101-508, shall become effective at the time they 108.16 become effective for federal tax purposes. 108.17 The Internal Revenue Code of 1986, as amended through 108.18 December 31, 1988, shall be in effect for taxable years 108.19 beginning after December 31, 1988. The provisions of sections 108.20 7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 108.21 7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 108.22 7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 108.23 Reconciliation Act of 1989, Public Law Number 101-239, the 108.24 provision of section 1401 of the Financial Institutions Reform, 108.25 Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 108.26 the provisions of sections 11701 and 11703 of the Revenue 108.27 Reconciliation Act of 1990, Public Law Number 101-508, and the 108.28 provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 108.29 Small Business Job Protection Act, Public Law Number 104-188, 108.30 shall become effective at the time they become effective for 108.31 federal tax purposes. 108.32 The Internal Revenue Code of 1986, as amended through 108.33 December 31, 1989, shall be in effect for taxable years 108.34 beginning after December 31, 1989. The provisions of sections 108.35 11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 108.36 the Revenue Reconciliation Act of 1990, Public Law Number 109.1 101-508, and the provisions of sections 13224 and 13261 of the 109.2 Omnibus Budget Reconciliation Act of 1993, Public Law Number 109.3 103-66, shall become effective at the time they become effective 109.4 for federal purposes. 109.5 The Internal Revenue Code of 1986, as amended through 109.6 December 31, 1990, shall be in effect for taxable years 109.7 beginning after December 31, 1990. 109.8 The provisions of section 13431 of the Omnibus Budget 109.9 Reconciliation Act of 1993, Public Law Number 103-66, shall 109.10 become effective at the time they became effective for federal 109.11 purposes. 109.12 The Internal Revenue Code of 1986, as amended through 109.13 December 31, 1991, shall be in effect for taxable years 109.14 beginning after December 31, 1991. 109.15 The provisions of sections 1936 and 1937 of the 109.16 Comprehensive National Energy Policy Act of 1992, Public Law 109.17 Number 102-486,andthe provisions of sections 13101, 13114, 109.18 13122, 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of 109.19 the Omnibus Budget Reconciliation Act of 1993, Public Law Number 109.20 103-66, and the provisions of section 1604(a)(1), (2), and (3) 109.21 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 109.22 shall become effective at the time they become effective for 109.23 federal purposes. 109.24 The Internal Revenue Code of 1986, as amended through 109.25 December 31, 1992, shall be in effect for taxable years 109.26 beginning after December 31, 1992. 109.27 The provisions of sections 13116, 13121, 13206, 13210, 109.28 13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 109.29 the Omnibus Budget Reconciliation Act of 1993, Public Law Number 109.30 103-66,andthe provisions of sections 1703(a), 1703(d), 109.31 1703(i), 1703(l), and 1703(m) of the Small Business Job 109.32 Protection Act, Public Law Number 104-188, and the provision of 109.33 section 1604(c) of the Taxpayer Relief Act of 1997, Public Law 109.34 Number 105-34, shall become effective at the time they become 109.35 effective for federal purposes. 109.36 The Internal Revenue Code of 1986, as amended through 110.1 December 31, 1993, shall be in effect for taxable years 110.2 beginning after December 31, 1993. 110.3 The provision of section 741 of Legislation to Implement 110.4 Uruguay Round of General Agreement on Tariffs and Trade, Public 110.5 Law Number 103-465, the provisions of sections 1, 2, and 3, of 110.6 the Self-Employed Health Insurance Act of 1995, Public Law 110.7 Number 104-7, the provision of section 501(b)(2) of the Health 110.8 Insurance Portability and Accountability Act, Public Law Number 110.9 104-191,andthe provisions of sections 1604 and 1704(p)(1) and 110.10 (2) of the Small Business Job Protection Act, Public Law Number 110.11 104-188, and the provisions of sections 1011, 1211(b)(1), and 110.12 1602(f) of the Taxpayer Relief Act of 1997, Public Law Number 110.13 105-34, shall become effective at the time they become effective 110.14 for federal purposes. 110.15 The Internal Revenue Code of 1986, as amended through 110.16 December 31, 1994, shall be in effect for taxable years 110.17 beginning after December 31, 1994. 110.18 The provisions of sections 1119(a), 1120, 1121, 1202(a), 110.19 1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 110.20 Business Job Protection Act, Public Law Number 104-188,andthe 110.21 provision of section 511 of the Health Insurance Portability and 110.22 Accountability Act, Public Law Number 104-191, and the 110.23 provisions of sections 1174 and 1601(i)(2) of the Taxpayer 110.24 Relief Act of 1997, Public Law Number 105-34, shall become 110.25 effective at the time they become effective for federal purposes. 110.26 The Internal Revenue Code of 1986, as amended through March 110.27 22, 1996, is in effect for taxable years beginning after 110.28 December 31, 1995. 110.29 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 110.30 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 110.31 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 110.32 Protection Act, Public Law Number 104-188,andthe provisions of 110.33 Public Law Number 104-117, and the provisions of sections 313(a) 110.34 and (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 110.35 1002, 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 110.36 1087, 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 111.1 1601(f)(5) and (h), and 1604(d)(1) of the Taxpayer Relief Act of 111.2 1997, Public Law Number 105-34, shall become effective at the 111.3 time they become effective for federal purposes. 111.4 The Internal Revenue Code of 1986, as amended through 111.5 December 31, 1996, shall be in effect for taxable years 111.6 beginning after December 31, 1996. 111.7 The provisions of sections 202(a) and (b), 221(a), 225, 111.8 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 111.9 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 111.10 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 111.11 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 111.12 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 111.13 shall become effective at the time they become effective for 111.14 federal purposes. 111.15 The Internal Revenue Code of 1986, as amended through 111.16 December 31, 1997, shall be in effect for taxable years 111.17 beginning after December 31, 1997. 111.18 Except as otherwise provided, references to the Internal 111.19 Revenue Code in subdivisions 19a to 19g mean the code in effect 111.20 for purposes of determining net income for the applicable year. 111.21 Sec. 3. Minnesota Statutes 1997 Supplement, section 111.22 290.01, subdivision 19a, is amended to read: 111.23 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 111.24 individuals, estates, and trusts, there shall be added to 111.25 federal taxable income: 111.26 (1)(i) interest income on obligations of any state other 111.27 than Minnesota or a political or governmental subdivision, 111.28 municipality, or governmental agency or instrumentality of any 111.29 state other than Minnesota exempt from federal income taxes 111.30 under the Internal Revenue Code or any other federal statute, 111.31 and 111.32 (ii) exempt-interest dividends as defined in section 111.33 852(b)(5) of the Internal Revenue Code, except the portion of 111.34 the exempt-interest dividends derived from interest income on 111.35 obligations of the state of Minnesota or its political or 111.36 governmental subdivisions, municipalities, governmental agencies 112.1 or instrumentalities, but only if the portion of the 112.2 exempt-interest dividends from such Minnesota sources paid to 112.3 all shareholders represents 95 percent or more of the 112.4 exempt-interest dividends that are paid by the regulated 112.5 investment company as defined in section 851(a) of the Internal 112.6 Revenue Code, or the fund of the regulated investment company as 112.7 defined in section 851(h) of the Internal Revenue Code, making 112.8 the payment; and 112.9 (iii) for the purposes of items (i) and (ii), interest on 112.10 obligations of an Indian tribal government described in section 112.11 7871(c) of the Internal Revenue Code shall be treated as 112.12 interest income on obligations of the state in which the tribe 112.13 is located; 112.14 (2) the amount of income taxes paid or accrued within the 112.15 taxable year under this chapter and income taxes paid to any 112.16 other state or to any province or territory of Canada, to the 112.17 extent allowed as a deduction under section 63(d) of the 112.18 Internal Revenue Code, but the addition may not be more than the 112.19 amount by which the itemized deductions as allowed under section 112.20 63(d) of the Internal Revenue Code exceeds the amount of the 112.21 standard deduction as defined in section 63(c) of the Internal 112.22 Revenue Code. For the purpose of this paragraph, the 112.23 disallowance of itemized deductions under section 68 of the 112.24 Internal Revenue Code of 1986, income tax is the last itemized 112.25 deduction disallowed; 112.26 (3) the capital gain amount of a lump sum distribution to 112.27 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 112.28 Reform Act of 1986, Public Law Number 99-514, applies; 112.29 (4) the amount of income taxes paid or accrued within the 112.30 taxable year under this chapter and income taxes paid to any 112.31 other state or any province or territory of Canada, to the 112.32 extent allowed as a deduction in determining federal adjusted 112.33 gross income. For the purpose of this paragraph, income taxes 112.34 do not include the taxes imposed by sections 290.0922, 112.35 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 112.36 (5) the amount of loss or expense included in federal 113.1 taxable income under section 1366 of the Internal Revenue Code 113.2 flowing from a corporation that has a valid election in effect 113.3 for the taxable year under section 1362 of the Internal Revenue 113.4 Code, but which is not allowed to be an "S" corporation under 113.5 section 290.9725;and113.6 (6) the amount of any distributions in cash or property 113.7 made to a shareholder during the taxable year by a corporation 113.8 that has a valid election in effect for the taxable year under 113.9 section 1362 of the Internal Revenue Code, but which is not 113.10 allowed to be an "S" corporation under section 290.9725 to the 113.11 extent not already included in federal taxable income under 113.12 section 1368 of the Internal Revenue Code; 113.13 (7) the amount of a partner's pro rata share of net income 113.14 which does not flow through to the partner because the 113.15 partnership elected to pay the tax on the income under section 113.16 6242(a)(2) of the Internal Revenue Code; and 113.17 (8) upon withdrawal of funds from a Roth IRA authorized 113.18 under section 408A of the Internal Revenue Code or from an 113.19 education IRA authorized under section 530 of the Internal 113.20 Revenue Code, the amount withdrawn that exceeds the amount of 113.21 unwithdrawn contributions made to the fund over all years on the 113.22 basis that withdrawals are first made out of contributions. 113.23 Sec. 4. Minnesota Statutes 1997 Supplement, section 113.24 290.01, subdivision 19b, is amended to read: 113.25 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 113.26 individuals, estates, and trusts, there shall be subtracted from 113.27 federal taxable income: 113.28 (1) interest income on obligations of any authority, 113.29 commission, or instrumentality of the United States to the 113.30 extent includable in taxable income for federal income tax 113.31 purposes but exempt from state income tax under the laws of the 113.32 United States; 113.33 (2) if included in federal taxable income, the amount of 113.34 any overpayment of income tax to Minnesota or to any other 113.35 state, for any previous taxable year, whether the amount is 113.36 received as a refund or as a credit to another taxable year's 114.1 income tax liability; 114.2 (3) the amount paid to others, less the credit allowed 114.3 under section 290.0674, not to exceed $1,625 for each dependent 114.4 in grades kindergarten to 6 and $2,500 for each dependent in 114.5 grades 7 to 12, for tuition, textbooks, and transportation of 114.6 each dependent in attending an elementary or secondary school 114.7 situated in Minnesota, North Dakota, South Dakota, Iowa, or 114.8 Wisconsin, wherein a resident of this state may legally fulfill 114.9 the state's compulsory attendance laws, which is not operated 114.10 for profit, and which adheres to the provisions of the Civil 114.11 Rights Act of 1964 and chapter 363. For the purposes of this 114.12 clause, "tuition" includes fees or tuition as defined in section 114.13 290.0674, subdivision 1, clause (1). As used in this clause, 114.14 "textbooks" includes books and other instructional materials and 114.15 equipment used in elementary and secondary schools in teaching 114.16 only those subjects legally and commonly taught in public 114.17 elementary and secondary schools in this state. Equipment 114.18 expenses qualifying for deduction includes expenses as defined 114.19 and limited in section 290.0674, subdivision 1, clause (3). 114.20 "Textbooks" does not include instructional books and materials 114.21 used in the teaching of religious tenets, doctrines, or worship, 114.22 the purpose of which is to instill such tenets, doctrines, or 114.23 worship, nor does it include books or materials for, or 114.24 transportation to, extracurricular activities including sporting 114.25 events, musical or dramatic events, speech activities, driver's 114.26 education, or similar programs; 114.27 (4) to the extent included in federal taxable income, 114.28 distributions from a qualified governmental pension plan, an 114.29 individual retirement account, simplified employee pension, or 114.30 qualified plan covering a self-employed person that represent a 114.31 return of contributions that were included in Minnesota gross 114.32 income in the taxable year for which the contributions were made 114.33 but were deducted or were not included in the computation of 114.34 federal adjusted gross income. The distribution shall be 114.35 allocated first to return of contributions until the 114.36 contributions included in Minnesota gross income have been 115.1 exhausted. This subtraction applies only to contributions made 115.2 in a taxable year prior to 1985; 115.3 (5) income as provided under section 290.0802; 115.4 (6) the amount of unrecovered accelerated cost recovery 115.5 system deductions allowed under subdivision 19g; 115.6 (7) to the extent included in federal adjusted gross 115.7 income, income realized on disposition of property exempt from 115.8 tax under section 290.491; 115.9 (8) to the extent not deducted in determining federal 115.10 taxable income, the amount paid for health insurance of 115.11 self-employed individuals as determined under section 162(l) of 115.12 the Internal Revenue Code, except that the 25 percent limit does 115.13 not apply. If the taxpayer deducted insurance payments under 115.14 section 213 of the Internal Revenue Code of 1986, the 115.15 subtraction under this clause must be reduced by the lesser of: 115.16 (i) the total itemized deductions allowed under section 115.17 63(d) of the Internal Revenue Code, less state, local, and 115.18 foreign income taxes deductible under section 164 of the 115.19 Internal Revenue Code and the standard deduction under section 115.20 63(c) of the Internal Revenue Code; or 115.21 (ii) the lesser of (A) the amount of insurance qualifying 115.22 as "medical care" under section 213(d) of the Internal Revenue 115.23 Code to the extent not deducted under section 162(1) of the 115.24 Internal Revenue Code or excluded from income or (B) the total 115.25 amount deductible for medical care under section 213(a); 115.26 (9) the exemption amount allowed under Laws 1995, chapter 115.27 255, article 3, section 2, subdivision 3; 115.28 (10) to the extent included in federal taxable income, 115.29 postservice benefits for youth community service under section 115.30 121.707 for volunteer service under United States Code, title 115.31 42, section 5011(d), as amended;and115.32 (11) the amount of income or gain included in federal 115.33 taxable income under section 1366 of the Internal Revenue Code 115.34 flowing from a corporation that has a valid election in effect 115.35 for the taxable year under section 1362 of the Internal Revenue 115.36 Code which is not allowed to be an "S" corporation under section 116.1 290.9725; and 116.2 (12) upon the final withdrawal of funds from a Roth IRA 116.3 authorized under section 408A of the Internal Revenue Code or 116.4 from an education IRA under section 530 of the Internal Revenue 116.5 Code, the amount by which the total of contributions to the 116.6 account over all years exceeds the amount withdrawn from the 116.7 account for all years. 116.8 Sec. 5. Minnesota Statutes 1997 Supplement, section 116.9 290.01, subdivision 19c, is amended to read: 116.10 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 116.11 INCOME.] For corporations, there shall be added to federal 116.12 taxable income: 116.13 (1) the amount of any deduction taken for federal income 116.14 tax purposes for income, excise, or franchise taxes based on net 116.15 income or related minimum taxes paid by the corporation to 116.16 Minnesota, another state, a political subdivision of another 116.17 state, the District of Columbia, or any foreign country or 116.18 possession of the United States; 116.19 (2) interest not subject to federal tax upon obligations 116.20 of: the United States, its possessions, its agencies, or its 116.21 instrumentalities; the state of Minnesota or any other state, 116.22 any of its political or governmental subdivisions, any of its 116.23 municipalities, or any of its governmental agencies or 116.24 instrumentalities; the District of Columbia; or Indian tribal 116.25 governments; 116.26 (3) exempt-interest dividends received as defined in 116.27 section 852(b)(5) of the Internal Revenue Code; 116.28 (4) the amount of any net operating loss deduction taken 116.29 for federal income tax purposes under section 172 or 832(c)(10) 116.30 of the Internal Revenue Code or operations loss deduction under 116.31 section 810 of the Internal Revenue Code; 116.32 (5) the amount of any special deductions taken for federal 116.33 income tax purposes under sections 241 to 247 of the Internal 116.34 Revenue Code; 116.35 (6) losses from the business of mining, as defined in 116.36 section 290.05, subdivision 1, clause (a), that are not subject 117.1 to Minnesota income tax; 117.2 (7) the amount of any capital losses deducted for federal 117.3 income tax purposes under sections 1211 and 1212 of the Internal 117.4 Revenue Code; 117.5 (8) the amount of any charitable contributions deducted for 117.6 federal income tax purposes under section 170 of the Internal 117.7 Revenue Code; 117.8 (9) the exempt foreign trade income of a foreign sales 117.9 corporation under sections 921(a) and 291 of the Internal 117.10 Revenue Code; 117.11 (10) the amount of percentage depletion deducted under 117.12 sections 611 through 614 and 291 of the Internal Revenue Code; 117.13 (11) for certified pollution control facilities placed in 117.14 service in a taxable year beginning before December 31, 1986, 117.15 and for which amortization deductions were elected under section 117.16 169 of the Internal Revenue Code of 1954, as amended through 117.17 December 31, 1985, the amount of the amortization deduction 117.18 allowed in computing federal taxable income for those 117.19 facilities; 117.20 (12) the amount of any deemed dividend from a foreign 117.21 operating corporation determined pursuant to section 290.17, 117.22 subdivision 4, paragraph (g);and117.23 (13) the amount of any environmental tax paid under section 117.24 59(a) of the Internal Revenue Code.; and 117.25 (14) the amount of a partner's pro rata share of net income 117.26 which does not flow through to the partner because the 117.27 partnership elected to pay the tax on the income under section 117.28 6242(a)(2) of the Internal Revenue Code. 117.29 Sec. 6. Minnesota Statutes 1997 Supplement, section 117.30 290.01, subdivision 31, is amended to read: 117.31 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 117.32 defined otherwise, "Internal Revenue Code" means the Internal 117.33 Revenue Code of 1986, as amended through December 31,1996, and117.34includes the provisions of section 1(a) and (b) of Public Law117.35Number 104-1171997. 117.36 Sec. 7. Minnesota Statutes 1996, section 290.06, 118.1 subdivision 2c, is amended to read: 118.2 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 118.3 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 118.4 married individuals filing joint returns and surviving spouses 118.5 as defined in section 2(a) of the Internal Revenue Code must be 118.6 computed by applying to their taxable net income the following 118.7 schedule of rates: 118.8 (1) On the first $19,910, 6 percent; 118.9 (2) On all over $19,910, but not over $79,120, 8 percent; 118.10 (3) On all over $79,120, 8.5 percent. 118.11 Married individuals filing separate returns, estates, and 118.12 trusts must compute their income tax by applying the above rates 118.13 to their taxable income, except that the income brackets will be 118.14 one-half of the above amounts. 118.15 (b) The income taxes imposed by this chapter upon unmarried 118.16 individuals must be computed by applying to taxable net income 118.17 the following schedule of rates: 118.18 (1) On the first $13,620, 6 percent; 118.19 (2) On all over $13,620, but not over $44,750, 8 percent; 118.20 (3) On all over $44,750, 8.5 percent. 118.21 (c) The income taxes imposed by this chapter upon unmarried 118.22 individuals qualifying as a head of household as defined in 118.23 section 2(b) of the Internal Revenue Code must be computed by 118.24 applying to taxable net income the following schedule of rates: 118.25 (1) On the first $16,770, 6 percent; 118.26 (2) On all over $16,770, but not over $67,390, 8 percent; 118.27 (3) On all over $67,390, 8.5 percent. 118.28 (d) In lieu of a tax computed according to the rates set 118.29 forth in this subdivision, the tax of any individual taxpayer 118.30 whose taxable net income for the taxable year is less than an 118.31 amount determined by the commissioner must be computed in 118.32 accordance with tables prepared and issued by the commissioner 118.33 of revenue based on income brackets of not more than $100. The 118.34 amount of tax for each bracket shall be computed at the rates 118.35 set forth in this subdivision, provided that the commissioner 118.36 may disregard a fractional part of a dollar unless it amounts to 119.1 50 cents or more, in which case it may be increased to $1. 119.2 (e) An individual who is not a Minnesota resident for the 119.3 entire year must compute the individual's Minnesota income tax 119.4 as provided in this subdivision. After the application of the 119.5 nonrefundable credits provided in this chapter, the tax 119.6 liability must then be multiplied by a fraction in which: 119.7 (1) The numerator is the individual's Minnesota source 119.8 federal adjusted gross income as defined in section 62 of the 119.9 Internal Revenue Code increased by theadditionadditions 119.10 requiredfor interest income from non-Minnesota state and119.11municipal bondsunder section 290.01, subdivision 19a,clause119.12 clauses (1) and (7), after applying the allocation and 119.13 assignability provisions of section 290.081, clause (a), or 119.14 290.17; and 119.15 (2) the denominator is the individual's federal adjusted 119.16 gross income as defined in section 62 of the Internal Revenue 119.17 Code of 1986,as amended through April 15, 1995,increased by 119.18 theaddition required for interest income from non-Minnesota119.19state and municipal bondsamounts specified under section 119.20 290.01, subdivision 19a,clauseclauses (1) and (7). 119.21 Sec. 8. Minnesota Statutes 1996, section 290.067, 119.22 subdivision 2a, is amended to read: 119.23 Subd. 2a. [INCOME.] (a) For purposes of this section, 119.24 "income" means the sum of the following: 119.25 (1) federal adjusted gross income as defined in section 62 119.26 of the Internal Revenue Code; and 119.27 (2) the sum of the following amounts to the extent not 119.28 included in clause (1): 119.29 (i) all nontaxable income; 119.30 (ii) the amount of a passive activity loss that is not 119.31 disallowed as a result of section 469, paragraph (i) or (m) of 119.32 the Internal Revenue Code and the amount of passive activity 119.33 loss carryover allowed under section 469(b) of the Internal 119.34 Revenue Code; 119.35 (iii) an amount equal to the total of any discharge of 119.36 qualified farm indebtedness of a solvent individual excluded 120.1 from gross income under section 108(g) of the Internal Revenue 120.2 Code; 120.3 (iv) cash public assistance and relief; 120.4 (v) any pension or annuity (including railroad retirement 120.5 benefits, all payments received under the federal Social 120.6 Security Act, supplemental security income, and veterans 120.7 benefits), which was not exclusively funded by the claimant or 120.8 spouse, or which was funded exclusively by the claimant or 120.9 spouse and which funding payments were excluded from federal 120.10 adjusted gross income in the years when the payments were made; 120.11 (vi) interest received from the federal or a state 120.12 government or any instrumentality or political subdivision 120.13 thereof; 120.14 (vii) workers' compensation; 120.15 (viii) nontaxable strike benefits; 120.16 (ix) the gross amounts of payments received in the nature 120.17 of disability income or sick pay as a result of accident, 120.18 sickness, or other disability, whether funded through insurance 120.19 or otherwise; 120.20 (x) a lump sum distribution under section 402(e)(3) of the 120.21 Internal Revenue Code; 120.22 (xi) contributions made by the claimant to an individual 120.23 retirement account, including a qualified voluntary employee 120.24 contribution; simplified employee pension plan; self-employed 120.25 retirement plan; cash or deferred arrangement plan under section 120.26 401(k) of the Internal Revenue Code; or deferred compensation 120.27 plan under section 457 of the Internal Revenue Code; and 120.28 (xii) nontaxable scholarship or fellowship grants. 120.29 In the case of an individual who files an income tax return 120.30 on a fiscal year basis, the term "federal adjusted gross income" 120.31 means federal adjusted gross income reflected in the fiscal year 120.32 ending in the next calendar year. Federal adjusted gross income 120.33 may not be reduced by the amount of a net operating loss 120.34 carryback or carryforward or a capital loss carryback or 120.35 carryforward allowed for the year. 120.36 (b) "Income" does not include: 121.1 (1) amounts excluded pursuant to the Internal Revenue Code, 121.2 sections 101(a),and 102, and 121; 121.3 (2) amounts of any pension or annuity that were exclusively 121.4 funded by the claimant or spouse if the funding payments were 121.5 not excluded from federal adjusted gross income in the years 121.6 when the payments were made; 121.7 (3) surplus food or other relief in kind supplied by a 121.8 governmental agency; 121.9 (4) relief granted under chapter 290A; and 121.10 (5) child support payments received under a temporary or 121.11 final decree of dissolution or legal separation. 121.12 Sec. 9. Minnesota Statutes 1996, section 290.0921, 121.13 subdivision 3a, is amended to read: 121.14 Subd. 3a. [EXEMPTIONS.] The following entities are exempt 121.15 from the tax imposed by this section: 121.16 (1) cooperatives taxable under subchapter T of the Internal 121.17 Revenue Code or organized under chapter 308 or a similar law of 121.18 another state; 121.19 (2) corporations subject to tax under section 60A.15, 121.20 subdivision 1; 121.21 (3) real estate investment trusts; 121.22 (4) regulated investment companies or a fund thereof;and121.23 (5) entities having a valid election in effect under 121.24 section 860D(b) of the Internal Revenue Code.; and 121.25 (6) small corporations exempt from the federal alternative 121.26 minimum tax under section 55(e) of the Internal Revenue Code. 121.27 Sec. 10. Minnesota Statutes 1996, section 290A.03, 121.28 subdivision 3, is amended to read: 121.29 Subd. 3. [INCOME.] (1) "Income" means the sum of the 121.30 following: 121.31 (a) federal adjusted gross income as defined in the 121.32 Internal Revenue Code; and 121.33 (b) the sum of the following amounts to the extent not 121.34 included in clause (a): 121.35 (i) all nontaxable income; 121.36 (ii) the amount of a passive activity loss that is not 122.1 disallowed as a result of section 469, paragraph (i) or (m) of 122.2 the Internal Revenue Code and the amount of passive activity 122.3 loss carryover allowed under section 469(b) of the Internal 122.4 Revenue Code; 122.5 (iii) an amount equal to the total of any discharge of 122.6 qualified farm indebtedness of a solvent individual excluded 122.7 from gross income under section 108(g) of the Internal Revenue 122.8 Code; 122.9 (iv) cash public assistance and relief; 122.10 (v) any pension or annuity (including railroad retirement 122.11 benefits, all payments received under the federal Social 122.12 Security Act, supplemental security income, and veterans 122.13 benefits), which was not exclusively funded by the claimant or 122.14 spouse, or which was funded exclusively by the claimant or 122.15 spouse and which funding payments were excluded from federal 122.16 adjusted gross income in the years when the payments were made; 122.17 (vi) interest received from the federal or a state 122.18 government or any instrumentality or political subdivision 122.19 thereof; 122.20 (vii) workers' compensation; 122.21 (viii) nontaxable strike benefits; 122.22 (ix) the gross amounts of payments received in the nature 122.23 of disability income or sick pay as a result of accident, 122.24 sickness, or other disability, whether funded through insurance 122.25 or otherwise; 122.26 (x) a lump sum distribution under section 402(e)(3) of the 122.27 Internal Revenue Code; 122.28 (xi) contributions made by the claimant to an individual 122.29 retirement account, including a qualified voluntary employee 122.30 contribution; simplified employee pension plan; self-employed 122.31 retirement plan; cash or deferred arrangement plan under section 122.32 401(k) of the Internal Revenue Code; or deferred compensation 122.33 plan under section 457 of the Internal Revenue Code; and 122.34 (xii) nontaxable scholarship or fellowship grants. 122.35 In the case of an individual who files an income tax return 122.36 on a fiscal year basis, the term "federal adjusted gross income" 123.1 shall mean federal adjusted gross income reflected in the fiscal 123.2 year ending in the calendar year. Federal adjusted gross income 123.3 shall not be reduced by the amount of a net operating loss 123.4 carryback or carryforward or a capital loss carryback or 123.5 carryforward allowed for the year. 123.6 (2) "Income" does not include 123.7 (a) amounts excluded pursuant to the Internal Revenue Code, 123.8 sections 101(a),and 102, and 121; 123.9 (b) amounts of any pension or annuity which was exclusively 123.10 funded by the claimant or spouse and which funding payments were 123.11 not excluded from federal adjusted gross income in the years 123.12 when the payments were made; 123.13 (c) surplus food or other relief in kind supplied by a 123.14 governmental agency; 123.15 (d) relief granted under this chapter; or 123.16 (e) child support payments received under a temporary or 123.17 final decree of dissolution or legal separation. 123.18 (3) The sum of the following amounts may be subtracted from 123.19 income: 123.20 (a) for the claimant's first dependent, the exemption 123.21 amount multiplied by 1.4; 123.22 (b) for the claimant's second dependent, the exemption 123.23 amount multiplied by 1.3; 123.24 (c) for the claimant's third dependent, the exemption 123.25 amount multiplied by 1.2; 123.26 (d) for the claimant's fourth dependent, the exemption 123.27 amount multiplied by 1.1; 123.28 (e) for the claimant's fifth dependent, the exemption 123.29 amount; and 123.30 (f) if the claimant or claimant's spouse was disabled or 123.31 attained the age of 65 on or before December 31 of the year for 123.32 which the taxes were levied or rent paid, the exemption amount. 123.33 For purposes of this subdivision, the "exemption amount" 123.34 means the exemption amount under section 151(d) of the Internal 123.35 Revenue Code for the taxable year for which the income is 123.36 reported. 124.1 Sec. 11. Minnesota Statutes 1997 Supplement, section 124.2 290A.03, subdivision 15, is amended to read: 124.3 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 124.4 means the Internal Revenue Code of 1986, as amended through 124.5 December 31,19961997. 124.6 Sec. 12. Minnesota Statutes 1997 Supplement, section 124.7 291.005, subdivision 1, is amended to read: 124.8 Subdivision 1. Unless the context otherwise clearly 124.9 requires, the following terms used in this chapter shall have 124.10 the following meanings: 124.11 (1) "Federal gross estate" means the gross estate of a 124.12 decedent as valued and otherwise determined for federal estate 124.13 tax purposes by federal taxing authorities pursuant to the 124.14 provisions of the Internal Revenue Code. 124.15 (2) "Minnesota gross estate" means the federal gross estate 124.16 of a decedent after (a) excluding therefrom any property 124.17 included therein which has its situs outside Minnesota and (b) 124.18 including therein any property omitted from the federal gross 124.19 estate which is includable therein, has its situs in Minnesota, 124.20 and was not disclosed to federal taxing authorities. 124.21 (3) "Personal representative" means the executor, 124.22 administrator or other person appointed by the court to 124.23 administer and dispose of the property of the decedent. If 124.24 there is no executor, administrator or other person appointed, 124.25 qualified, and acting within this state, then any person in 124.26 actual or constructive possession of any property having a situs 124.27 in this state which is included in the federal gross estate of 124.28 the decedent shall be deemed to be a personal representative to 124.29 the extent of the property and the Minnesota estate tax due with 124.30 respect to the property. 124.31 (4) "Resident decedent" means an individual whose domicile 124.32 at the time of death was in Minnesota. 124.33 (5) "Nonresident decedent" means an individual whose 124.34 domicile at the time of death was not in Minnesota. 124.35 (6) "Situs of property" means, with respect to real 124.36 property, the state or country in which it is located; with 125.1 respect to tangible personal property, the state or country in 125.2 which it was normally kept or located at the time of the 125.3 decedent's death; and with respect to intangible personal 125.4 property, the state or country in which the decedent was 125.5 domiciled at death. 125.6 (7) "Commissioner" means the commissioner of revenue or any 125.7 person to whom the commissioner has delegated functions under 125.8 this chapter. 125.9 (8) "Internal Revenue Code" means the United States 125.10 Internal Revenue Code of 1986, as amended through December 31, 125.111996, and includes the provisions of section 1(a)(4) of Public125.12Law Number 104-1171997. 125.13 Sec. 13. [EFFECTIVE DATES.] 125.14 Sections 1, 3, 5, and 7 to 10 are effective for tax years 125.15 beginning after December 31, 1997. 125.16 Sections 6, 11, and 12 are effective at the same time 125.17 federal changes made by the Taxpayer Relief Act of 1997, Public 125.18 Law Number 105-34, which are incorporated into Minnesota 125.19 Statutes, chapters 290, 290A, and 291 by these sections become 125.20 effective for federal tax purposes. 125.21 ARTICLE 6 125.22 SALES AND EXCISE TAXES 125.23 Section 1. Minnesota Statutes 1996, section 297A.02, 125.24 subdivision 2, is amended to read: 125.25 Subd. 2. [MACHINERY AND EQUIPMENT.] Notwithstanding the 125.26 provisions of subdivision 1, the rate of the excise tax imposed 125.27 upon sales of farm machinery and aquaculture production 125.28 equipment is2.5two percent for sales after June 30, 1998, and 125.29 before July 1, 1999, and one percent for sales after June 30, 125.30 1999, and before July 1, 2000. 125.31 Sec. 2. Minnesota Statutes 1996, section 297A.02, 125.32 subdivision 4, is amended to read: 125.33 Subd. 4. [MANUFACTURED HOUSING AND PARK TRAILERS.] 125.34 Notwithstanding the provisions of subdivision 1, for sales at 125.35 retail of manufactured homes as defined in section 327.31, 125.36 subdivision 6, that is used for residential purposesand new or126.1used park trailers, as defined in section 168.011, subdivision126.28, paragraph (b), the excise tax is imposed upon 65 percent of 126.3 thesales pricedealer's cost of the homeor, and for sales of 126.4 new and used park trailers, as defined in section 168.011, 126.5 subdivision 8, paragraph (b), the excise tax is imposed upon 65 126.6 percent of the sales price of the park trailer. 126.7 Sec. 3. Minnesota Statutes 1996, section 297A.135, 126.8 subdivision 4, is amended to read: 126.9 Subd. 4. [EXEMPTIONEXEMPTIONS.] (a) The tax and the fee 126.10 imposed by this section do not apply to a lease or rental of (1) 126.11 a vehicle to be used by the lessee to provide a licensed taxi 126.12 service; (2) a hearse or limousine used in connection with a 126.13 burial or funeral service; or (3) a van designed or adapted 126.14 primarily for transporting property rather than passengers. 126.15 (b) The fee imposed by this section does not apply if: 126.16 (1) the lessor either: 126.17 (i) has available for rent during the calendar year no more 126.18 than 20 registered vehicles; or 126.19 (ii) had during the previous calendar year not more than 126.20 $50,000 in gross receipts that would otherwise, except for the 126.21 exemption provided by this paragraph, have been subject to tax 126.22 under this section; 126.23 (2) the lessor pays the registration tax under chapter 168; 126.24 and 126.25 (3) the lessor elects not to charge the fee. 126.26 Sec. 4. Minnesota Statutes 1997 Supplement, section 126.27 297A.25, subdivision 11, is amended to read: 126.28 Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from 126.29 all sales, including sales in which title is retained by a 126.30 seller or a vendor or is assigned to a third party under an 126.31 installment sale or lease purchase agreement under section 126.32 465.71, of tangible personal property to, and all storage, use 126.33 or consumption of such property by, the United States and its 126.34 agencies and instrumentalities, the University of Minnesota, 126.35 state universities, community colleges, technical colleges, 126.36 state academies, the Lola and Rudy Perpich Minnesota center for 127.1 arts education,andschool districts, public libraries, public 127.2 library systems, multicounty, multitype library systems as 127.3 defined in section 134.001, county law libraries under chapter 127.4 134A, the state library under section 480.09, and the 127.5 legislative reference library are exempt. 127.6 As used in this subdivision, "school districts" means 127.7 public school entities and districts of every kind and nature 127.8 organized under the laws of the state of Minnesota, including, 127.9 without limitation, school districts, intermediate school 127.10 districts, education districts, service cooperatives, secondary 127.11 vocational cooperative centers, special education cooperatives, 127.12 joint purchasing cooperatives, telecommunication cooperatives, 127.13 regional management information centers, and any instrumentality 127.14 of a school district, as defined in section 471.59. 127.15 Sales exempted by this subdivision include sales under 127.16 section 297A.01, subdivision 3, paragraph (f). 127.17 Sales to hospitals and nursing homes owned and operated by 127.18 political subdivisions of the state are exempt under this 127.19 subdivision. 127.20The sales to and exclusively for the use of libraries of127.21books, periodicals, audio-visual materials and equipment,127.22photocopiers for use by the public, and all cataloguing and127.23circulation equipment, and cataloguing and circulation software127.24for library use are exempt under this subdivision. For purposes127.25of this paragraph "libraries" means libraries as defined in127.26section 134.001, county law libraries under chapter 134A, the127.27state library under section 480.09, and the legislative127.28reference library.127.29 Sales of supplies and equipment used in the operation of an 127.30 ambulance service owned and operated by a political subdivision 127.31 of the state are exempt under this subdivision provided that the 127.32 supplies and equipment are used in the course of providing 127.33 medical care. Sales to a political subdivision of repair and 127.34 replacement parts for emergency rescue vehicles and fire trucks 127.35 and apparatus are exempt under this subdivision. 127.36 Sales to a political subdivision of machinery and 128.1 equipment, except for motor vehicles, used directly for mixed 128.2 municipal solid waste management services at a solid waste 128.3 disposal facility as defined in section 115A.03, subdivision 10, 128.4 are exempt under this subdivision. 128.5 Sales to political subdivisions of chore and homemaking 128.6 services to be provided to elderly or disabled individuals are 128.7 exempt. 128.8 Sales to a town of gravel and of machinery, equipment, and 128.9 accessories, except motor vehicles, used exclusively for road 128.10 maintenance are exempt. 128.11 Sales of telephone services to the department of 128.12 administration that are used to provide telecommunications 128.13 services through the intertechnologies revolving fund are exempt 128.14 under this subdivision. 128.15 This exemption shall not apply to building, construction or 128.16 reconstruction materials purchased by a contractor or a 128.17 subcontractor as a part of a lump-sum contract or similar type 128.18 of contract with a guaranteed maximum price covering both labor 128.19 and materials for use in the construction, alteration, or repair 128.20 of a building or facility. This exemption does not apply to 128.21 construction materials purchased by tax exempt entities or their 128.22 contractors to be used in constructing buildings or facilities 128.23 which will not be used principally by the tax exempt entities. 128.24 This exemption does not apply to the leasing of a motor 128.25 vehicle as defined in section 297B.01, subdivision 5, except for 128.26 leases entered into by the United States or its agencies or 128.27 instrumentalities. 128.28 The tax imposed on sales to political subdivisions of the 128.29 state under this section applies to all political subdivisions 128.30 other than those explicitly exempted under this subdivision, 128.31 notwithstanding section 115A.69, subdivision 6, 116A.25, 128.32 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 128.33 469.127, 473.448, 473.545, or 473.608 or any other law to the 128.34 contrary enacted before 1992. 128.35 Sales exempted by this subdivision include sales made to 128.36 other states or political subdivisions of other states, if the 129.1 sale would be exempt from taxation if it occurred in that state, 129.2 but do not include sales under section 297A.01, subdivision 3, 129.3 paragraphs (c) and (e). 129.4 Sec. 5. Minnesota Statutes 1997 Supplement, section 129.5 297A.25, subdivision 59, is amended to read: 129.6 Subd. 59. [FARM MACHINERY.] The gross receipts from the 129.7 sale of used farm machinery and, after June 30, 2000, the gross 129.8 receipts from the sale of new farm machinery, are exempt. 129.9 Sec. 6. Minnesota Statutes 1996, section 297A.25, is 129.10 amended by adding a subdivision to read: 129.11 Subd. 73. [BIOSOLIDS PROCESSING EQUIPMENT.] The gross 129.12 receipts from the sale of and the storage, use, or consumption 129.13 of equipment designed to process, dewater, and recycle biosolids 129.14 for wastewater treatment facilities of political subdivisions, 129.15 and materials incidental to installation of that equipment, are 129.16 exempt. 129.17 Sec. 7. Minnesota Statutes 1996, section 297A.25, is 129.18 amended by adding a subdivision to read: 129.19 Subd. 74. [CONSTRUCTION MATERIALS; DULUTH ENTERTAINMENT 129.20 CONVENTION CENTER.] Purchases of materials, supplies, or 129.21 equipment used or consumed in the construction, equipment, 129.22 improvement, or expansion of the Duluth entertainment convention 129.23 center are exempt from the tax imposed under this chapter and 129.24 from any sales and use tax imposed by a local unit of government 129.25 notwithstanding any ordinance or charter provision. This 129.26 exemption applies regardless of whether the materials, supplies, 129.27 or equipment are purchased by the city or by a construction 129.28 manager or contractor. 129.29 Sec. 8. Minnesota Statutes 1996, section 297A.25, is 129.30 amended by adding a subdivision to read: 129.31 Subd. 75. [CONSTRUCTION MATERIALS; MINNEAPOLIS CONVENTION 129.32 CENTER.] Purchases of materials, supplies, or equipment used or 129.33 consumed in the construction, equipment, improvement, or 129.34 expansion of the Minneapolis convention center are exempt from 129.35 the tax imposed under this chapter and from any sales and use 129.36 tax imposed by a local unit of government notwithstanding any 130.1 ordinance or charter provision. This exemption applies 130.2 regardless of whether the materials, supplies, or equipment are 130.3 purchased by the city or by a construction manager or contractor. 130.4 Sec. 9. Minnesota Statutes 1996, section 297A.25, is 130.5 amended by adding a subdivision to read: 130.6 Subd. 76. [CONSTRUCTION MATERIALS; RIVERCENTRE 130.7 ARENA.] Purchases of materials, supplies, or equipment used or 130.8 consumed in the construction, equipment, improvement, or 130.9 expansion of the RiverCentre arena complex in the city of St. 130.10 Paul are exempt from the tax imposed under this chapter and from 130.11 any sales and use tax imposed by a local unit of government 130.12 notwithstanding any ordinance or charter provision. This 130.13 exemption applies regardless of whether the materials, supplies, 130.14 or equipment are purchased by the city or by a construction 130.15 manager or contractor. 130.16 Sec. 10. Minnesota Statutes 1997 Supplement, section 130.17 297A.25, is amended by adding a subdivision to read: 130.18 Subd. 77. [CONSTRUCTION MATERIALS FOR AN ENVIRONMENTAL 130.19 LEARNING CENTER.] Construction materials and supplies are exempt 130.20 from the tax imposed under this section, regardless of whether 130.21 purchased by the owner or a contractor, subcontractor, or 130.22 builder, if they are used or consumed in constructing or 130.23 improving the Long Lake Conservation Center pursuant to the 130.24 funding provided under Laws 1994, chapter 643, section 23, 130.25 subdivision 28, as amended by Laws 1995 First Special Session, 130.26 chapter 2, article 1, section 48; and Laws 1996, chapter 463, 130.27 section 7, subdivision 26. The tax shall be calculated and paid 130.28 as if the rate in section 297A.02, subdivision 1, was in effect 130.29 and a refund applied for in the manner prescribed in section 130.30 297A.15, subdivision 7. 130.31 Sec. 11. Minnesota Statutes 1996, section 297A.25, is 130.32 amended by adding a subdivision to read: 130.33 Subd. 78. [SOYBEAN OILSEED PROCESSING AND REFINING 130.34 FACILITY.] Purchases of construction materials and supplies are 130.35 exempt from the sales and use taxes imposed under this chapter, 130.36 regardless of whether purchased by the owner or a contractor, 131.1 subcontractor, or builder, if: 131.2 (1) the materials and supplies are used or consumed in 131.3 constructing a facility for soybean oilseed processing and 131.4 refining; 131.5 (2) the total capital investment made in the facility is at 131.6 least $60,000,000; and 131.7 (3) the facility is constructed by a Minnesota-based 131.8 cooperative, organized under chapter 308A. 131.9 Sec. 12. Minnesota Statutes 1997 Supplement, section 131.10 297A.256, subdivision 1, is amended to read: 131.11 Subdivision 1. [FUNDRAISING SALES BY NONPROFIT GROUPS.] 131.12 Notwithstanding the provisions of this chapter, the following 131.13 sales made by a "nonprofit organization" are exempt from the 131.14 sales and use tax. 131.15 (a)(1) All sales made by an organization for fundraising 131.16 purposes if that organization exists solely for the purpose of 131.17 providing educational or social activities for young people 131.18 primarily age 18 and under. This exemption shall apply only if 131.19 the gross annual sales receipts of the organization from 131.20 fundraising do not exceed $10,000. 131.21 (2) A club, association, or other organization of 131.22 elementary or secondary school students organized for the 131.23 purpose of carrying on sports, educational, or other 131.24 extracurricular activities is a separate organization from the 131.25 school district or school for purposes of applying the $10,000 131.26 limit. This paragraph does not apply if the sales are derived 131.27 from admission charges or from activities for which the money 131.28 must be deposited with the school district treasurer under 131.29 section 123.38, subdivision 2, or be recorded in the same manner 131.30 as other revenues or expenditures of the school district under 131.31 section 123.38, subdivision 2b. 131.32 (b) All sales made by an organization for fundraising 131.33 purposes if that organization is a senior citizen group or 131.34 association of groups that in general limits membership to 131.35 persons age 55 or older and is organized and operated 131.36 exclusively for pleasure, recreation and other nonprofit 132.1 purposes and no part of the net earnings inure to the benefit of 132.2 any private shareholders. This exemption shall apply only if 132.3 the gross annual sales receipts of the organization from 132.4 fundraising do not exceed $10,000. 132.5 (c) The gross receipts from the sales of tangible personal 132.6 property at, admission charges for, and sales of food, meals, or 132.7 drinks at fundraising events sponsored by a nonprofit 132.8 organization when the entire proceeds, except for the necessary 132.9 expenses therewith, will be used solely and exclusively for 132.10 charitable, religious, or educational purposes. This exemption 132.11 does not apply to admission charges for events involving bingo 132.12 or other gambling activities or to charges for use of amusement 132.13 devices involving bingo or other gambling activities. For 132.14 purposes of this paragraph, a "nonprofit organization" means any 132.15 unit of government, corporation, society, association, 132.16 foundation, or institution organized and operated for 132.17 charitable, religious, educational, civic, fraternal, senior 132.18 citizens' or veterans' purposes, no part of the net earnings of 132.19 which inures to the benefit of a private individual. 132.20 If the profits are not used solely and exclusively for 132.21 charitable, religious, or educational purposes, the entire gross 132.22 receipts are subject to tax. 132.23 Each nonprofit organization shall keep a separate 132.24 accounting record, including receipts and disbursements from 132.25 each fundraising event. All deductions from gross receipts must 132.26 be documented with receipts and other records. If records are 132.27 not maintained as required, the entire gross receipts are 132.28 subject to tax. 132.29 The exemption provided by this paragraph does not apply to 132.30 any sale made by or in the name of a nonprofit corporation as 132.31 the active or passive agent of a person that is not a nonprofit 132.32 corporation. 132.33 The exemption for fundraising events under this paragraph 132.34 is limited to no more than 24 days a year. Fundraising events 132.35 conducted on premises leased for more thanfourfive days but 132.36 less than 30 days do not qualify for this exemption. 133.1 (d) The gross receipts from the sale or use of tickets or 133.2 admissions to a golf tournament held in Minnesota are exempt if 133.3 the beneficiary of the tournament's net proceeds qualifies as a 133.4 tax-exempt organization under section 501(c)(3) of the Internal 133.5 Revenue Code, as amended through December 31, 1994, including a 133.6 tournament conducted on premises leased or occupied for more 133.7 than four days. 133.8 Sec. 13. Minnesota Statutes 1997 Supplement, section 133.9 297B.03, is amended to read: 133.10 297B.03 [EXEMPTIONS.] 133.11 There is specifically exempted from the provisions of this 133.12 chapter and from computation of the amount of tax imposed by it 133.13 the following: 133.14 (1) Purchase or use, including use under a lease purchase 133.15 agreement or installment sales contract made pursuant to section 133.16 465.71, of any motor vehicle by the United States and its 133.17 agencies and instrumentalities and by any person described in 133.18 and subject to the conditions provided in section 297A.25, 133.19 subdivision 18. 133.20 (2) Purchase or use of any motor vehicle by any person who 133.21 was a resident of another state at the time of the purchase and 133.22 who subsequently becomes a resident of Minnesota, provided the 133.23 purchase occurred more than 60 days prior to the date such 133.24 person began residing in the state of Minnesota. 133.25 (3) Purchase or use of any motor vehicle by any person 133.26 making a valid election to be taxed under the provisions of 133.27 section 297A.211. 133.28 (4) Purchase or use of any motor vehicle previously 133.29 registered in the state of Minnesota when such transfer 133.30 constitutes a transfer within the meaning of section 351 or 721 133.31 of the Internal Revenue Code of 1986, as amended through 133.32 December 31, 1988. 133.33 (5) Purchase or use of any vehicle owned by a resident of 133.34 another state and leased to a Minnesota based private or for 133.35 hire carrier for regular use in the transportation of persons or 133.36 property in interstate commerce provided the vehicle is titled 134.1 in the state of the owner or secured party, and that state does 134.2 not impose a sales tax or sales tax on motor vehicles used in 134.3 interstate commerce. 134.4 (6) Purchase or use of a motor vehicle by a private 134.5 nonprofit or public educational institution for use as an 134.6 instructional aid in automotive training programs operated by 134.7 the institution. "Automotive training programs" includes motor 134.8 vehicle body and mechanical repair courses but does not include 134.9 driver education programs. 134.10 (7) Purchase of a motor vehicle for use as an ambulance by 134.11 an ambulance service licensed under section 144E.10. 134.12 (8) Purchase of a motor vehicle by or for a public library, 134.13 as defined in section 134.001, subdivision 2, as a bookmobile or 134.14 library delivery vehicle. 134.15 (9) Purchase or use of a motor vehicle by a town for use 134.16 exclusively for road maintenance, including snowplows and dump 134.17 trucks, but not including automobiles, vans, or pickup trucks. 134.18 Sec. 14. Minnesota Statutes 1997 Supplement, section 134.19 297G.01, is amended by adding a subdivision to read: 134.20 Subd. 3a. [CIDER.] "Cider" means a product that contains 134.21 not less than one-half of one percent nor more than seven 134.22 percent alcohol by volume and is made from the alcoholic 134.23 fermentation of the juice of apples. Cider includes, but is not 134.24 limited to, flavored, sparkling, and carbonated cider. 134.25 Sec. 15. Minnesota Statutes 1997 Supplement, section 134.26 297G.03, subdivision 1, is amended to read: 134.27 Subdivision 1. [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 134.28 The following excise tax is imposed on all distilled spirits and 134.29 wine manufactured, imported, sold, or possessed in this state: 134.30 Standard Metric 134.31 (a) Distilled spirits, $5.03 per gallon $1.33 per liter 134.32 liqueurs, cordials, 134.33 and specialties regardless 134.34 of alcohol content 134.35 (excluding ethyl alcohol) 134.36 (b) Wine containing $ .30 per gallon $ .08 per liter 135.1 14 percent or less 135.2 alcohol by volume 135.3 (except cider as defined 135.4 in section 297G.01, 135.5 subdivision 3a) 135.6 (c) Wine containing $ .95 per gallon $ .25 per liter 135.7 more than 14 percent 135.8 but not more than 21 135.9 percent alcohol by volume 135.10 (d) Wine containing more $1.82 per gallon $ .48 per liter 135.11 than 21 percent but not 135.12 more than 24 percent 135.13 alcohol by volume 135.14 (e) Wine containing more $3.52 per gallon $ .93 per liter 135.15 than 24 percent alcohol 135.16 by volume 135.17 (f) Natural and $1.82 per gallon $ .48 per liter 135.18 artificial sparkling wines 135.19 containing alcohol 135.20 (g) Cider as defined in $ .15 per gallon $ .04 per liter 135.21 section 297G.01, 135.22 subdivision 3a 135.23 In computing the tax on a package of distilled spirits or 135.24 wine, a proportional tax at a like rate on all fractional parts 135.25 of a gallon or liter must be paid, except that the tax on a 135.26 fractional part of a gallon less than 1/16 of a gallon is the 135.27 same as for 1/16 of a gallon. 135.28 Sec. 16. Laws 1997, chapter 231, article 7, section 47, is 135.29 amended to read: 135.30 Sec. 47. [EFFECTIVE DATES.] 135.31 Section 1 is effective for refund claims filed after June 135.32 30, 1997. 135.33 Sections 2, 6, 7, 9, 13, 15, 16, 17, 18,20,21, 25, 31, 135.34 and 32 are effective for purchases, sales, storage, use, or 135.35 consumption occurring after June 30, 1997. 135.36 Section 3 is effective on July 1, 1997, or upon adoption of 136.1 the corresponding rules, whichever occurs earlier. 136.2 Section 4, paragraph (i), clause (iv), is effective for 136.3 purchases and sales occurring after September 30, 1987; the 136.4 remainder of section 4 is effective for purchases and sales 136.5 occurring after June 30, 1997. 136.6 Section 5, paragraph (h), is effective for purchases and 136.7 sales occurring after June 30, 1997, and paragraph (i) is 136.8 effective for purchases and sales occurring after December 31, 136.9 1992. 136.10 Sections 8 and 46 are effective July 1, 1998. 136.11 Sections 10 and 22 are effective for purchases, sales, 136.12 storage, use, or consumption occurring after August 31, 1996. 136.13 Sections 11, 12, 33, 34, and 35 are effective July 1, 1997. 136.14 Sections 14 and 19 are effective for purchases and sales 136.15 after June 30, 1999. 136.16 Section 20 is effective for sales and purchases occurring 136.17 after December 31, 1995. 136.18 Section 23 is effective January 1, 1997. 136.19 Section 24 is effective for purchases, sales, storage, use, 136.20 or consumption occurring after April 30, 1997. 136.21 Sections 26 and 45 are effective for purchases, sales, 136.22 storage, use, or consumption occurring after July 31, 1997, and 136.23 before August 1, 2003. 136.24 Section 27 is effective for purchases, sales, storage, use, 136.25 or consumption occurring after May 31, 1997. 136.26 Section 28 is effective for sales made after December 31, 136.27 1989, and before January 1, 1997. The provisions of Minnesota 136.28 Statutes, section 289A.50, apply to refunds claimed under 136.29 section 28. Refunds claimed under section 28 must be filed by 136.30 the later of December 31, 1997, or the time limit under 136.31 Minnesota Statutes, section 289A.40, subdivision 1. 136.32 Section 29 is effective for sales or first use after May 136.33 31, 1997, and before June 1, 1998. 136.34 Sections 30, 42, and 43 are effective the day following 136.35 final enactment. 136.36 Sections 36 to 39 are effective the day after compliance by 137.1 the governing body of Cook county with Minnesota Statutes, 137.2 section 645.021, subdivision 3. 137.3 Section 40 is effective for STAR funds collected after June 137.4 30, 1997. 137.5 Sec. 17. Laws 1997, chapter 231, article 13, section 19, 137.6 is amended to read: 137.7 Sec. 19. [MORATORIUM.] 137.8 The commissioner of revenue shall not initiate or continue 137.9 any action to collect any underpayment from political 137.10 subdivisions, or to reimburse any overpayment to any political 137.11 subdivisions, of use taxes on solid waste management services 137.12 under Minnesota Statutes, section 297A.45, or of sales taxes on 137.13 any amount included on a property tax statement for county solid 137.14 waste management services, and any other amount collected by a 137.15 county under Minnesota Statutes, section 400.08 or 473.811, 137.16 subdivision 3a. The moratorium is effective for the period from 137.17 January 1, 1990, through December 31,19961997. 137.18 Sec. 18. Laws 1993, chapter 375, article 9, section 46, 137.19 subdivision 2, is amended to read: 137.20 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 137.21 authorized by subdivision 1 may only be used by the city to pay 137.22 the cost of collecting the tax, and to pay for the following 137.23 projects or to secure or pay any principal, premium, or interest 137.24 on bonds issued in accordance with subdivision 3 for the 137.25 following projects. 137.26 (a) To pay all or a portion of the capital expenses of 137.27 construction, equipment and acquisition costs for the expansion 137.28 and remodeling of the St. Paul Civic Center complex. 137.29 (b) The remainder of the funds must be spent for capital 137.30 projects to further residential, cultural, commercial, and 137.31 economic development in both downtown St. Paul and St. Paul 137.32 neighborhoods. The amount apportioned under this paragraph 137.33 shall be no less than 60 percent of the revenues derived from 137.34 the tax each year, except to the extent that a portion of that 137.35 amount is required to pay debt service on bonds issued for the 137.36 purposes of paragraph (a) prior to March 1, 1998. 138.1 By January 15 of each odd-numbered year, the mayor and the 138.2 city council must report to the legislature on the use of sales 138.3 tax revenues during the preceding two-year period. 138.4 Sec. 19. Laws 1991, chapter 291, article 8, section 27, 138.5 subdivision 3, is amended to read: 138.6 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 138.7 authorized by subdivisions 1 and 2 shall be used by the city to 138.8 pay the cost of collecting the tax and to pay all or a portion 138.9 of the expenses of constructing and operating facilities as part 138.10 of an urban revitalization project in downtown Mankato known as 138.11 Riverfront 2000. Authorized expenses include, but are not 138.12 limited to, acquiring property and paying relocation expenses 138.13 related to the development of Riverfront 2000 and related 138.14 facilities, and securing or paying debt service on bonds or 138.15 other obligations issued to finance the construction of 138.16 Riverfront 2000 and related facilities. For purposes of this 138.17 section, "Riverfront 2000 and related facilities" means a 138.18 civic-convention center, an arena, a riverfront park, a 138.19 technology center and related educational facilities, and all 138.20 publicly owned real or personal property that the governing body 138.21 of the city determines will be necessary to facilitate the use 138.22 of these facilities, including but not limited to parking, 138.23 skyways, pedestrian bridges, lighting, and landscaping. 138.24 Sec. 20. [CITY OF ST. PAUL; USE OF SALES TAX REVENUES.] 138.25 The revenue derived from the sales tax imposed by the city 138.26 of St. Paul under Laws 1993, chapter 375, article 9, section 46, 138.27 as amended by Laws 1997, chapter 231, article 7, section 40, 138.28 that is distributed to the city's cultural STAR program must be 138.29 awarded through a grant or loan review process as provided in 138.30 this section. Eighty percent of the revenue must be annually 138.31 awarded to nonprofit arts organizations, libraries, and museums 138.32 that are located in the designated cultural district of downtown 138.33 St. Paul, and the remaining 20 percent may be awarded to 138.34 businesses in the cultural district for projects which enhance 138.35 visitor enjoyment of the district, or to nonprofit arts 138.36 organizations, libraries, and museums located in St. Paul but 139.1 outside of the cultural district. Grants or loans may be used 139.2 for capital improvements. The restrictions in this section apply 139.3 to all STAR cultural funds collected after June 30, 1998. 139.4 Sec. 21. [ST. PAUL NEIGHBORHOOD INVESTMENT SALES TAX 139.5 EXPENDITURES; CITIZEN REVIEW PROCESS.] 139.6 Subdivision 1. [REQUIREMENT.] Expenditures of revenues 139.7 from the sales tax imposed by the city of St. Paul that are 139.8 dedicated to neighborhood investments may be made only after 139.9 review of the proposals for expenditures by the citizen review 139.10 panel described in this section. The panel must evaluate the 139.11 proposals and provide a report to the city council that makes 139.12 recommendations regarding the proposed expenditures in rank 139.13 order. 139.14 Subd. 2. [APPOINTMENT OF MEMBERS.] The citizen review 139.15 panel must consist of at least seven members, with at least one 139.16 member residing in each of the city council ward areas. The 139.17 mayor must appoint the members, and the appointments are subject 139.18 to confirmation by a majority vote of the city council. Members 139.19 serve for a term of four years. Elected officials and employees 139.20 of the city are ineligible to serve as members of the panel. 139.21 Sec. 22. [CITY OF BEMIDJI; TAXES AUTHORIZED.] 139.22 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 139.23 Minnesota Statutes, section 477A.016, or any other provision of 139.24 law, ordinance, or city charter, if approved by the city voters 139.25 at the next general election held after the date of final 139.26 enactment of this act, the city of Bemidji may impose by 139.27 ordinance sales and use taxes of up to one percent for the 139.28 purposes specified in subdivision 3. The provisions of 139.29 Minnesota Statutes, section 297A.48, govern the imposition, 139.30 administration, collection, and enforcement of the taxes 139.31 authorized under this subdivision. 139.32 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 139.33 Minnesota Statutes, section 477A.016, or any other provision of 139.34 law, ordinance, or city charter, if a sales and use tax is 139.35 imposed under subdivision 1, the city of Bemidji may impose by 139.36 ordinance, for the purpose specified in subdivision 3, an excise 140.1 tax of up to $20 per motor vehicle, as defined by ordinance, 140.2 purchased or acquired from any person engaged within the city in 140.3 the business of selling motor vehicles at retail. 140.4 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 140.5 authorized by subdivisions 1 and 2 must be used by the city to 140.6 pay the cost of collecting the taxes and to pay all or part of 140.7 the capital and administrative cost of constructing, 140.8 maintaining, and operating facilities as part of a regional 140.9 convention center in Bemidji. Authorized expenses include, but 140.10 are not limited to, acquiring property and paying construction, 140.11 maintenance, and operating expenses related to the development 140.12 of a convention center which is an arena for sporting events, 140.13 concerts, trade shows, conventions, meeting rooms, and other 140.14 compatible uses including, but not limited to, parking, 140.15 lighting, and landscaping. 140.16 Subd. 4. [BONDS.] If the tax authorized under subdivision 140.17 1 is approved by the city voters, the city of Bemidji may issue, 140.18 without additional election, general obligation bonds of the 140.19 city in an amount not to exceed $25,000,000 to pay capital and 140.20 administrative expenses for the acquisition, construction, 140.21 improvement, operation, and maintenance of a convention center. 140.22 The debt represented by the bonds must not be included in 140.23 computing any debt limitations applicable to the city, and the 140.24 levy of taxes required by Minnesota Statutes, section 475.61, to 140.25 pay the principal or any interest on the bonds must not be 140.26 subject to any levy limitations or be included in computing or 140.27 applying any levy limitation applicable to the city. 140.28 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 140.29 subdivisions 1 and 2 expire when the city council determines 140.30 that sufficient funds have been received from taxes to finance 140.31 the capital and administrative costs for acquisition, 140.32 construction, improvement, operation, and maintenance of a 140.33 convention center and related facilities to repay or retire at 140.34 maturity the principal, interest, and premium due on any bonds 140.35 issued for the project under subdivision 4. Any funds remaining 140.36 after completion of the project and retirement or redemption of 141.1 the bonds may be placed in the general fund of the city. The 141.2 taxes imposed under subdivisions 1 and 2 may expire at an 141.3 earlier time if the city so determines by ordinance. 141.4 Subd. 6. [EFFECTIVE DATE.] This section is effective the 141.5 day after compliance by the governing body of the city of 141.6 Bemidji with Minnesota Statutes, section 645.021, subdivision 3. 141.7 Sec. 23. [CITY OF DETROIT LAKES; TAXES AUTHORIZED.] 141.8 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 141.9 Minnesota Statutes, section 477A.016, or any other provision of 141.10 law, ordinance, or city charter, if approved by the city voters 141.11 at the next general election held after the date of final 141.12 enactment of this act, the city of Detroit Lakes may impose by 141.13 ordinance sales and use taxes of up to one-half of one percent. 141.14 The provisions of Minnesota Statutes, section 297A.48, govern 141.15 the imposition, administration, collection, and enforcement of 141.16 the taxes authorized under this subdivision. 141.17 Subd. 2. [USE OF REVENUES.] Revenues received from the 141.18 taxes authorized under subdivision 1 must be used for 141.19 construction of a community center and for economic development 141.20 projects. 141.21 Subd. 3. [EFFECTIVE DATE.] This section is effective the 141.22 day after compliance by the governing body of the city of 141.23 Detroit Lakes with Minnesota Statutes, section 645.021, 141.24 subdivision 3. 141.25 Sec. 24. [CITY OF FERGUS FALLS; TAXES AUTHORIZED.] 141.26 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 141.27 Minnesota Statutes, section 477A.016, or any other provision of 141.28 law, ordinance, or city charter, if approved by the city voters 141.29 at the next general election held after the date of final 141.30 enactment of this act, the city of Fergus Falls may impose by 141.31 ordinance sales and use taxes of up to one-half of one percent 141.32 for the purposes specified in subdivision 3. The provisions of 141.33 Minnesota Statutes, section 297A.48, govern the imposition, 141.34 administration, collection, and enforcement of the taxes 141.35 authorized under this subdivision, except that the sales and use 141.36 tax shall not apply to farm machinery. 142.1 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 142.2 Minnesota Statutes, section 477A.016, or any other provision of 142.3 law, ordinance, or city charter, if a sales and use tax is 142.4 imposed under subdivision 1, the city of Fergus Falls may impose 142.5 by ordinance, for the purposes specified in subdivision 3, an 142.6 excise tax of up to $20 per motor vehicle, as defined by 142.7 ordinance, purchased or acquired from any person engaged within 142.8 the city in the business of selling motor vehicles at retail. 142.9 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 142.10 authorized by subdivisions 1 and 2 must be used by the city to 142.11 pay the costs of collecting the taxes and to pay all or part of 142.12 the capital and administrative costs of constructing and 142.13 operating facilities as part of a regional conference center, 142.14 community center, recreational and tourism project in Fergus 142.15 Falls known as Project Reach Out. Authorized expenses include, 142.16 but are not limited to, acquiring property and paying 142.17 construction and operating expenses related to the development 142.18 of Project Reach Out and related facilities, and securing or 142.19 paying debt service on bonds or other obligations issued to 142.20 finance the construction of Project Reach Out and related 142.21 facilities. 142.22 For purposes of this section, "Project Reach Out and 142.23 related facilities" means a regional conference center, 142.24 community center, regional park and recreational facilities, and 142.25 all publicly owned real or personal property that the governing 142.26 body of the city determines are necessary to facilitate the use 142.27 of these facilities, including but not limited to, parking, 142.28 pedestrian bridges, lighting, and landscaping. 142.29 Subd. 4. [BONDS.] If the taxes authorized under 142.30 subdivision 1 are approved by the city voters, the city of 142.31 Fergus Falls may issue without additional election general 142.32 obligation bonds of the city in an amount necessary to pay 142.33 capital and administrative expenses for the acquisition, 142.34 construction, improvement, and maintenance of Project Reach Out 142.35 and related facilities. The debt represented by the bonds must 142.36 not be included in computing any debt limitations applicable to 143.1 the city, and the levy of taxes required by Minnesota Statutes, 143.2 section 475.61, to pay the principal or any interest on the 143.3 bonds must not be subject to any levy limitation or be included 143.4 in computing or applying any levy limitation applicable to the 143.5 city. 143.6 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 143.7 subdivisions 1 and 2 expire at the end of 15 years beginning 143.8 with the date the tax is imposed, unless the city determines 143.9 that insufficient funds have been received from the taxes to 143.10 finance the capital and administrative costs for acquisition, 143.11 construction, improvement, and operation of Project Reach Out 143.12 and related facilities and to prepay or retire at maturity the 143.13 principal, interest, and premium due on any bonds issued for the 143.14 project under subdivision 4. If the city council determines 143.15 that the funds are not sufficient, it may extend the tax by 143.16 ordinance, subject to the provisions of Minnesota Statutes, 143.17 section 297A.48, subdivision 9. The tax may be extended for the 143.18 period of time the city council determines is necessary to 143.19 finance the capital and administrative costs of the project and 143.20 to prepay or retire at maturity the principal, interest, and 143.21 premium due on any bonds issued for the project under 143.22 subdivision 4. Any funds remaining after completion of the 143.23 project and retirement or redemption of the bonds may be placed 143.24 in the general fund of the city. The taxes imposed under 143.25 subdivisions 1 and 2 may expire at an earlier time if the city 143.26 so determines by ordinance. 143.27 Subd. 6. [EFFECTIVE DATE.] This section is effective the 143.28 day after compliance by the governing body of the city of Fergus 143.29 Falls with Minnesota Statutes, section 645.021, subdivision 3. 143.30 Sec. 25. [CITY OF HUTCHINSON; TAXES AUTHORIZED.] 143.31 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 143.32 Minnesota Statutes, section 477A.016, or any other provision of 143.33 law, ordinance, or city charter, the city of Hutchinson may 143.34 impose by ordinance a sales and use tax of up to one-half of one 143.35 percent for the purposes specified in subdivision 4, paragraph 143.36 (a). The provisions of Minnesota Statutes, section 297A.48, 144.1 govern the imposition, administration, collection, and 144.2 enforcement of the tax authorized under this subdivision. 144.3 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 144.4 Minnesota Statutes, section 477A.016, or any other provision of 144.5 law, ordinance, or city charter, if a sales and use tax is 144.6 imposed under subdivision 1, the city of Hutchinson may impose 144.7 by ordinance, for the purposes specified in subdivision 4, 144.8 paragraph (a), an excise tax of up to $20 per motor vehicle, as 144.9 defined by ordinance, purchased or acquired from any person 144.10 engaged within the city in the business of selling motor 144.11 vehicles at retail. 144.12 Subd. 3. [TAX ON FOOD AND BEVERAGES 144.13 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 144.14 477A.016, or any other provision of law, ordinance, or city 144.15 charter, the city of Hutchinson may impose by ordinance, for the 144.16 purposes specified in subdivision 4, paragraph (b), a tax on the 144.17 gross receipts from the on-sales of intoxicating liquor and 144.18 fermented malt beverages and the sale of food and beverages sold 144.19 for consumption on or off the premises by restaurants and places 144.20 of refreshment within the city. The tax is limited to one-half 144.21 of one percent on gross receipts while the tax under subdivision 144.22 1 is imposed and one percent on gross receipts when the tax 144.23 under subdivision 1 expires as provided in subdivision 7. The 144.24 city shall define "restaurant" and "place of refreshment" as 144.25 part of the ordinance. 144.26 Subd. 4. [USE OF REVENUES.] (a) Revenues received from 144.27 taxes authorized by subdivisions 1 and 2 must be used by the 144.28 city to pay the cost of collecting the taxes and to pay for 144.29 construction and improvement of a civic and community center and 144.30 recreational facilities to serve seniors and youth. Authorized 144.31 expenses include, but are not limited to, acquiring property, 144.32 paying construction and operating expenses related to the 144.33 development of an authorized facility, and securing or paying 144.34 debt service on bonds or other obligations issued to finance the 144.35 construction or expansion of an authorized facility. The 144.36 capital expenses for all projects authorized under this 145.1 paragraph that may be paid with these taxes is limited to 145.2 $5,000,000. In addition, an amount not to exceed the amount 145.3 raised by the tax in subdivision 3 may be used each year for the 145.4 purposes listed in paragraph (b). 145.5 (b) Revenues received from taxes authorized under 145.6 subdivision 3 shall be used by the city to pay the cost of 145.7 collecting the tax and to pay all or part of the operating costs 145.8 for the civic and community center. 145.9 Subd. 5. [REFERENDUM.] If the Hutchinson city council 145.10 intends to exercise the authority provided in subdivisions 1 to 145.11 3, it shall conduct a referendum on the issue. The question, 145.12 which shall seek simultaneous approval for imposing all three 145.13 taxes, must be submitted to the voters at the next general 145.14 election held after the date of final enactment of this act or 145.15 at a special election. The taxes may not be imposed unless a 145.16 majority of votes cast on the question of imposing the taxes is 145.17 in the affirmative. The commissioner of revenue shall prepare a 145.18 suggested form of question to be presented at the election. 145.19 This subdivision applies notwithstanding any city charter 145.20 provision to the contrary. 145.21 Subd. 6. [BONDS.] If the taxes are approved by the city 145.22 voters as provided in subdivision 5, the city of Hutchinson may 145.23 issue, without additional election, general obligation bonds of 145.24 the city in an amount equal to $5,000,000 to pay capital and 145.25 administrative expenses for the acquisition, construction, 145.26 improvement, and maintenance of the facilities listed in 145.27 subdivision 4, paragraph (a). The debt represented by the bonds 145.28 must not be included in computing any debt limitations 145.29 applicable to the city. The levy of taxes required by Minnesota 145.30 Statutes, section 475.61, to pay the principal or any interest 145.31 on the bonds must not be subject to any levy limitation or be 145.32 included in computing or applying any levy limitation applicable 145.33 to the city. 145.34 Subd. 7. [TERMINATION OF TAXES.] (a) The taxes imposed 145.35 under subdivisions 1 and 2 expire when the city council 145.36 determines that sufficient funds have been received from the 146.1 taxes to finance the capital and administrative costs for the 146.2 acquisition, construction, and improvement of facilities 146.3 described in subdivision 4, paragraph (a), and to prepay or 146.4 retire at maturity the principal, interest, and premium due on 146.5 any bonds issued for the facilities under subdivision 6. Any 146.6 funds remaining after completion of the project and retirement 146.7 or redemption of the bonds may be placed in the general fund of 146.8 the city. The taxes imposed under subdivisions 1 and 2 may 146.9 expire at an earlier time if the city so determines by ordinance. 146.10 (b) The tax imposed under subdivision 3 shall only expire 146.11 if the city chooses to rescind it by ordinance. 146.12 Subd. 8. [EFFECTIVE DATE.] This section is effective the 146.13 day after compliance by the governing body of the city of 146.14 Hutchinson with Minnesota Statutes, section 645.021, subdivision 146.15 3. 146.16 Sec. 26. [CITY OF OWATONNA; TAXES AUTHORIZED.] 146.17 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 146.18 Minnesota Statutes, section 477A.016, or any other provision of 146.19 law, ordinance, or city charter, if approved by the city voters 146.20 at the next general election held after final enactment of this 146.21 act, the city of Owatonna may impose by ordinance a sales and 146.22 use tax of up to one-half of one percent for the purposes 146.23 specified in subdivision 3. The provisions of Minnesota 146.24 Statutes, section 297A.48, govern the imposition, 146.25 administration, collection, and enforcement of the tax 146.26 authorized under this subdivision. 146.27 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 146.28 Minnesota Statutes, section 477A.016, or any other provision of 146.29 law, ordinance, or city charter, if a sales and use tax is 146.30 imposed under subdivision 1, the city of Owatonna may impose by 146.31 ordinance, for the purposes specified in subdivision 3, an 146.32 excise tax of up to $20 per motor vehicle, as defined by 146.33 ordinance, purchased or acquired from any person engaged within 146.34 the city in the business of selling motor vehicles at retail. 146.35 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 146.36 authorized by subdivisions 1 and 2 must be used by the city to 147.1 pay the costs of collecting the taxes and to pay all or part of 147.2 the capital and administrative costs of constructing and 147.3 improving infrastructure and facilities as part of Owatonna 147.4 Economic Development 2000 and related facilities. Authorized 147.5 expenses include, but are not limited to, acquiring property and 147.6 paying construction and operating expenses related to the 147.7 development of Owatonna Economic Development 2000 and related 147.8 facilities, and securing or paying debt service on bonds or 147.9 other obligations issued to finance the construction of Owatonna 147.10 Economic Development 2000 and related facilities. 147.11 For purposes of this section, "Owatonna Economic 147.12 Development 2000 and related facilities" means the improvement 147.13 of the Owatonna regional airport and infrastructure 147.14 improvements, including roads and the extension of water and 147.15 sewer services, for an economic and tourism project. 147.16 Subd. 4. [BONDS.] If the taxes authorized under 147.17 subdivision 1 are approved by the city voters, the city of 147.18 Owatonna may issue without additional election general 147.19 obligation bonds of the city in an amount not to exceed 147.20 $5,000,000 to pay capital and administrative expenses for the 147.21 acquisition, construction, improvement, and maintenance of 147.22 Owatonna Economic Development 2000 and related facilities. The 147.23 debt represented by the bonds must not be included in computing 147.24 any debt limitations applicable to the city, and the levy of 147.25 taxes required by Minnesota Statutes, section 475.61, to pay the 147.26 principal and any interest on the bonds must not be subject to 147.27 any levy limitation or be included in computing or applying any 147.28 levy limitation applicable to the city. 147.29 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 147.30 subdivisions 1 and 2 expire when the city council determines 147.31 that sufficient funds have been received from the taxes to 147.32 finance the capital and administrative costs for acquisition, 147.33 construction, and improvement of Owatonna Economic Development 147.34 2000 and related facilities and to prepay or retire at maturity 147.35 the principal, interest, and premium due on any bonds issued for 147.36 the project under subdivision 4. Any funds remaining after 148.1 completion of the project and retirement or redemption of the 148.2 bonds may be placed in the general fund of the city. The taxes 148.3 imposed under subdivisions 1 and 2 may expire at an earlier time 148.4 if the city so determines by ordinance. 148.5 Subd. 6. [EFFECTIVE DATE.] This section is effective the 148.6 day after compliance by the governing body of the city of 148.7 Owatonna with Minnesota Statutes, section 645.021, subdivision 3. 148.8 Sec. 27. [ST. CLOUD, SAUK RAPIDS, SARTELL, WAITE PARK, ST. 148.9 JOSEPH; TAXES AUTHORIZED.] 148.10 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 148.11 Minnesota Statutes, section 477A.016, or any other provision of 148.12 law, ordinance, or city charter, the cities of St. Cloud, Sauk 148.13 Rapids, Sartell, Waite Park, and St. Joseph may each impose by 148.14 ordinance a sales and use tax of up to one percent for the 148.15 purposes specified in subdivision 5. The provisions of 148.16 Minnesota Statutes, section 297A.48, govern the imposition, 148.17 administration, collection, and enforcement of the taxes 148.18 authorized under this subdivision. 148.19 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 148.20 Minnesota Statutes, section 477A.016, or any other provision of 148.21 law, ordinance, or city charter, the cities that impose the 148.22 sales and use taxes under subdivision 1 may each impose by 148.23 ordinance, for the purposes specified in subdivision 5, an 148.24 excise tax of up to $20 per motor vehicle acquired from any 148.25 person engaged within the city in the business of selling motor 148.26 vehicles at retail. 148.27 Subd. 3. [FOOD AND BEVERAGE TAX 148.28 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 148.29 477A.016, or any other provision of law, ordinance, or city 148.30 charter, the cities identified in subdivision 1 may each impose 148.31 by ordinance, for the purposes specified in subdivision 5, a tax 148.32 of up to one percent on the gross receipts from the on-sales of 148.33 intoxicating liquor and fermented malt beverages and the sale of 148.34 food and beverages sold at restaurants and places of refreshment 148.35 within the city. The city shall define "restaurant" and "place 148.36 of refreshment" as part of the ordinance. 149.1 Subd. 4. [LODGING TAX AUTHORIZED.] Notwithstanding 149.2 Minnesota Statutes, section 477A.016, or any other provision of 149.3 law, ordinance, or city charter, the cities identified in 149.4 subdivision 1 may each impose by ordinance, for the purposes 149.5 specified in subdivision 5, a tax of up to one percent on the 149.6 gross receipts from the furnishing for a consideration of 149.7 lodging and related services by a hotel, rooming house, tourist 149.8 court, motel, or trailer camp, other than the renting or leasing 149.9 of it for a continuous period of 30 days or more. This tax is 149.10 in addition to the tax authorized in Minnesota Statutes, section 149.11 469.190, and is not included in calculating the tax rate subject 149.12 to the limit imposed on lodging taxes in Minnesota Statutes, 149.13 section 469.190, subdivision 2. 149.14 Subd. 5. [USE OF REVENUES.] (a) Revenues received from the 149.15 taxes authorized by subdivisions 1 to 4 must be used to pay for 149.16 the cost of collecting the taxes; to pay all or part of the 149.17 capital or administrative cost of the acquisition, construction, 149.18 and improvement of the Central Minnesota Events Center and 149.19 related on-site and off-site improvements; and to pay for the 149.20 operating deficit, if any, in the first five years of operation 149.21 of the facility. Authorized expenses related to acquisition, 149.22 construction, and improvement of the center include, but are not 149.23 limited to, acquiring property, paying construction and 149.24 operating expenses related to the development of the facility, 149.25 and securing and paying debt service on bonds or other 149.26 obligations issued to finance construction or improvement of the 149.27 authorized facility. 149.28 (b) In addition, if the revenues collected from a tax 149.29 imposed in subdivisions 1 to 4 are greater than the amount 149.30 needed to meet obligations under paragraph (a) in any year, the 149.31 surplus shall be returned to the cities in proportion to the 149.32 amount of each city's tax collections under this section for the 149.33 year of the surplus, and may be used by the city for the 149.34 acquisition and improvement of park land and open space; for the 149.35 purchase, renovation, and construction of public buildings and 149.36 land primarily used for the arts, libraries, and community 150.1 centers; and for debt service on bonds issued for these 150.2 purposes. The amount of surplus revenues raised by a tax will 150.3 be determined either as provided for by an applicable joint 150.4 powers agreement or by a governing entity in charge of 150.5 administering the project in paragraph (a). 150.6 Subd. 6. [BONDS.] The cities named in subdivision 1 may 150.7 each issue bonds that produce in the aggregate the amount needed 150.8 to pay capital and administrative expenses for the acquisition, 150.9 construction, and improvement of the Central Minnesota Events 150.10 Center. The debt represented by the bonds must not be included 150.11 in computing any debt limitation applicable to the city and the 150.12 levy of taxes required by Minnesota Statutes, section 475.61, to 150.13 pay the principal of and interest on the bonds must not be 150.14 subject to any levy limitation or be included in computing or 150.15 applying any levy limitation applicable to the city. 150.16 Subd. 7. [TERMINATION OF TAXES.] The taxes imposed by each 150.17 city under subdivisions 1 to 4 expire when sufficient funds have 150.18 been received from the taxes to finance the obligations under 150.19 subdivision (5), paragraph (a), and to prepay or retire at 150.20 maturity the principal, interest, and premium due on the 150.21 original bonds issued for the initial acquisition, construction, 150.22 and improvement of the Central Minnesota Events Center as 150.23 determined under an applicable joint powers agreement or by a 150.24 governing entity in charge of administering the project. Any 150.25 funds remaining after completion of the project and retirement 150.26 or redemption of the bonds may be placed in the general funds of 150.27 the cities imposing the taxes. The taxes imposed by a city 150.28 under this section may expire at an earlier time by city 150.29 ordinance, if authorized under the applicable joint powers 150.30 agreement or by the governing entity in charge of administering 150.31 the project. 150.32 Subd. 8. [REFERENDUM.] (a) If a governing body of any of 150.33 the cities listed in subdivision 1 intends to impose any tax 150.34 authorized under subdivisions 1 to 4, it shall conduct a 150.35 referendum on the issue. The question of imposition of the tax 150.36 must be submitted to the voters at the next general election 151.1 held after final enactment of this act, and the tax may not be 151.2 imposed unless a majority of votes cast on the question are in 151.3 the affirmative. The commissioner of revenue shall prepare a 151.4 suggested form of question to be presented at the election. 151.5 (b) If the cities that pass a referendum required under 151.6 paragraph (a) determine that the revenues raised from the sum of 151.7 all the taxes authorized by referendum under this subdivision 151.8 will not be sufficient to fund the project in subdivision 5, 151.9 paragraph (a), none of the authorized taxes may be imposed. 151.10 Subd. 9. [COLLECTION.] The commissioner of revenue may 151.11 enter into appropriate agreements with any city listed in 151.12 subdivision 1 to collect, on behalf of the city, a tax imposed 151.13 under subdivisions 2 to 4. The commissioner shall charge the 151.14 city from the proceeds of any tax a reasonable fee for its 151.15 collection. 151.16 Subd. 10. [EFFECTIVE DATE.] This section is effective 151.17 August 1, 1998, with respect to any city listed in subdivision 1 151.18 upon compliance of the governing body of that city with 151.19 Minnesota Statutes, section 645.021, subdivision 3. 151.20 Sec. 28. [CITY OF ROCHESTER; TAXES AUTHORIZED.] 151.21 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 151.22 Minnesota Statutes, section 477A.016, or any other provision of 151.23 law, ordinance, or city charter, upon termination of the taxes 151.24 authorized under Laws 1992, chapter 511, article 8, section 33, 151.25 subdivision 1, the city of Rochester may, by ordinance, impose 151.26 sales and use taxes of up to one percent. The provisions of 151.27 Minnesota Statutes, section 297A.48, govern the imposition, 151.28 administration, collection, and enforcement of the tax 151.29 authorized under this subdivision. 151.30 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 151.31 Minnesota Statutes, section 477A.016, or any other contrary 151.32 provision of law, ordinance, or city charter, upon termination 151.33 of the tax authorized under Laws 1992, chapter 511, article 8, 151.34 section 33, subdivision 2, the city of Rochester may, by 151.35 ordinance, impose an excise tax of up to $20 per motor vehicle, 151.36 as defined by ordinance, purchased or acquired from any person 152.1 engaged within the city in the business of selling motor 152.2 vehicles at retail. 152.3 Subd. 3. [USE OF REVENUES.] Revenues received from the 152.4 taxes authorized by subdivisions 1 and 2 must be used by the 152.5 city to pay for the cost of collecting and administering the 152.6 taxes and to pay for capital expenditures and improvements 152.7 projects approved by ordinance by the Rochester city council up 152.8 to an amount equal to $76,000,000 provided that at least 25 152.9 percent of the revenue may be used to fund regional, cultural, 152.10 recreational, or athletic facilities at the Rochester Center 152.11 which are approved by the board of trustees of the Minnesota 152.12 state colleges and universities or the University of Minnesota 152.13 and which will be available for both community and student use. 152.14 Subd. 4. [REFERENDUM.] If the Rochester city council 152.15 intends to exercise the authority provided in subdivisions 1 and 152.16 2, it shall conduct a referendum on the issue. The referendum, 152.17 which must be approved by the majority of votes cast on the 152.18 question of imposing the tax, must occur at a general or special 152.19 election within one year of the date of final enactment of this 152.20 act. 152.21 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 152.22 subdivisions 1 and 2 expire when the city council determines 152.23 that sufficient funds have been received from the taxes to 152.24 finance the projects and to prepay or retire at maturity the 152.25 principal, interest, and premium due on any bonds issued for the 152.26 projects under subdivision 3. Any funds remaining after 152.27 completion of the project and retirement or redemption of the 152.28 bonds may be placed in the general fund of the city. The taxes 152.29 imposed under subdivisions 1 and 2 may expire at an earlier time 152.30 if the city so determines by ordinance. 152.31 Subd. 6. [EFFECTIVE DATE.] This section is effective the 152.32 day after compliance by the governing body of the city of 152.33 Rochester with Minnesota Statutes, section 645.021, subdivision 152.34 3. 152.35 Sec. 29. [CITY OF TWO HARBORS; TAXES AUTHORIZED.] 152.36 Subdivision 1. [SALES AND USE TAXES.] Notwithstanding 153.1 Minnesota Statutes, section 477A.016, or any other provision of 153.2 law, ordinance, or city charter, the city of Two Harbors may 153.3 impose by ordinance, if approved by the voters of the city at 153.4 the next general election held after the date of final enactment 153.5 of this act, sales and use taxes at a rate of up to one 153.6 percent. The provisions of Minnesota Statutes, section 297A.48, 153.7 govern the imposition, administration, collection, and 153.8 enforcement of the taxes authorized under this subdivision. 153.9 Subd. 2. [USE OF REVENUES.] Revenues received from the 153.10 taxes authorized under subdivision 1 must be used for sanitary 153.11 sewer separation, wastewater treatment, and harbor refuge 153.12 development projects. 153.13 Subd. 3. [TERMINATION OF TAXES.] The authority granted 153.14 under subdivision 1 to the city of Two Harbors to impose sales 153.15 and use taxes expires when the costs of the projects described 153.16 in subdivision 2 have been paid. 153.17 Subd. 4. [EFFECTIVE DATE.] This section is effective the 153.18 day after compliance by the governing body of the city of Two 153.19 Harbors with Minnesota Statutes, section 645.021, subdivision 3. 153.20 Sec. 30. [CITY OF WINONA; TAXES AUTHORIZED.] 153.21 Subdivision 1. [SALES AND USE TAX 153.22 AUTHORIZED.] Notwithstanding Minnesota Statutes, section 153.23 477A.016, or any other provision of law, ordinance, or city 153.24 charter, if approved by the city voters at the next general 153.25 election held after the date of final enactment of this act, the 153.26 city of Winona may impose by ordinance sales and use taxes of up 153.27 to one-half of one percent for the purposes specified in 153.28 subdivision 3. The provisions of Minnesota Statutes, section 153.29 297A.48, govern the imposition, administration, collection, and 153.30 enforcement of the tax authorized under this subdivision. 153.31 Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding 153.32 Minnesota Statutes, section 477A.016, or any other contrary 153.33 provision of law, ordinance, or city charter, the city of Winona 153.34 may impose by ordinance, for the purposes specified in 153.35 subdivision 3, an excise tax of up to $20 per motor vehicle, as 153.36 defined by ordinance, purchased or acquired from any person 154.1 engaged within the city in the business of selling motor 154.2 vehicles at retail. 154.3 Subd. 3. [USE OF REVENUES.] Revenues received from taxes 154.4 authorized by subdivisions 1 and 2 must be used by the city to 154.5 pay the costs of collecting the taxes and to pay all or a part 154.6 of the capital and administrative costs of the dredging of Lake 154.7 Winona, including securing or paying debt service on bonds or 154.8 other obligations issued to finance the project under 154.9 subdivision 4. 154.10 Subd. 4. [BONDS.] Pursuant to the approval of the city 154.11 voters under subdivision 1, the city of Winona may issue without 154.12 additional election general obligation bonds of the city in an 154.13 amount not to exceed $4,000,000 to pay capital and 154.14 administrative expenses for the dredging of Lake Winona. The 154.15 debt represented by the bonds must not be included in computing 154.16 any debt limitations applicable to the city, and the levy of 154.17 taxes required by Minnesota Statutes, section 475.61, to pay the 154.18 principal of and interest on the bonds must not be subject to 154.19 any levy limitation or be included in computing or applying any 154.20 levy limitation applicable to the city. 154.21 Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under 154.22 subdivisions 1 and 2 expire when the city council determines 154.23 that sufficient funds have been received from the taxes to 154.24 finance the dredging of Lake Winona and to prepay or retire at 154.25 maturity the principal, interest, and premium due on any bonds 154.26 issued for the project under subdivision 4. Any funds remaining 154.27 after completion of the project and retirement or redemption of 154.28 the bonds may be placed in the general fund of the city. The 154.29 taxes imposed under subdivisions 1 and 2 may expire at an 154.30 earlier time if the city so determines by ordinance. 154.31 Subd. 6. [EFFECTIVE DATE.] This section is effective upon 154.32 compliance by the governing body of the city of Winona with 154.33 Minnesota Statutes, section 645.021, subdivision 3. 154.34 Sec. 31. [CITY OF BURNSVILLE; ADMISSIONS TAX.] 154.35 Subdivision 1. [IMPOSITION.] Notwithstanding Minnesota 154.36 Statutes, section 477A.016, or any other contrary provision of 155.1 law or ordinance, the governing body of the city of Burnsville 155.2 may by ordinance impose a tax on admissions to an amphitheater 155.3 to be constructed within the city. 155.4 Subd. 2. [RATE.] The tax may be imposed at a rate not to 155.5 exceed two dollars per paid admission. The governing body of 155.6 the city may by ordinance change the rate imposed, subject to 155.7 the limitation in this subdivision. 155.8 Subd. 3. [COLLECTION.] The method of collection of the tax 155.9 must be specified in the ordinance imposing the tax. The tax is 155.10 exempt from the rules under Minnesota Statutes, section 155.11 297A.48. The commissioner of revenue and the city may enter 155.12 into agreements for the collection and administration of the tax 155.13 by the state on behalf of the city. The commissioner may charge 155.14 the city a reasonable fee for its services from the proceeds of 155.15 the tax. The tax is subject to the same interest, penalties, 155.16 and enforcement provisions as the tax imposed under Minnesota 155.17 Statutes, chapter 297A. 155.18 Subd. 4. [USE OF PROCEEDS.] The city must pay money 155.19 received from the tax imposed under this section into a separate 155.20 fund or account to be used only to pay: 155.21 (1) the costs of imposing and collecting the tax; and 155.22 (2) for parking lots or ramps, and other public 155.23 improvements as defined by Minnesota Statutes, section 429.021, 155.24 within the boundaries of the tax increment financing district 155.25 established under section 2, or that serve the area within the 155.26 district. 155.27 Sec. 32. [EFFECTIVE DATE.] 155.28 Section 3 is effective for vehicles registered after June 155.29 30, 1998. 155.30 Sections 2, 4, 6, 11, 12, 13, and 14 are effective for 155.31 sales occurring after June 30, 1998. 155.32 Sections 7 to 9, 16 to 21, and 31 are effective the day 155.33 following final enactment. 155.34 Section 10 is effective for purchases made after December 155.35 1, 1997. 155.36 Sections 14 and 15 are effective July 1, 1998. 156.1 ARTICLE 7 156.2 BUDGET RESERVES 156.3 Section 1. Minnesota Statutes 1996, section 16A.6701, is 156.4 amended by adding a subdivision to read: 156.5 Subd. 4. [DISCHARGE OF REVENUE BONDS.] Notwithstanding 156.6 subdivision 2, the commissioner shall transfer from the special 156.7 revenue fund to the debt service fund, by the tenth day of each 156.8 month, all money then on hand in the special revenue fund, until 156.9 the cash and securities on hand in the debt service fund are 156.10 sufficient to defease all outstanding revenue bonds issued under 156.11 section 16A.67 in accordance with the commissioner's order 156.12 authorizing their issuance. The commissioner shall take all 156.13 actions required under the order authorizing the issuance of the 156.14 bonds to defease them at the earliest practical date. The 156.15 commissioner may retain or contract for the services of 156.16 accountants, escrow agents, financial advisors, and other 156.17 consultants or agents as may be necessary in accordance with the 156.18 order. 156.19 Sec. 2. [APPROPRIATION TO BUDGET RESERVE.] 156.20 $100,000,000 is appropriated from the general fund to the 156.21 commissioner of finance for transfer to the budget reserve 156.22 account under Minnesota Statutes, section 16A.152, subdivision 156.23 1a, on July 1, 1998. 156.24 Sec. 3. [PROPERTY TAX REFORM ACCOUNT CANCELLATION.] 156.25 On July 1, 1998, the commissioner of finance shall cancel 156.26 $504,387,000 from the balance in the property tax reform account 156.27 established in Minnesota Statutes, section 16A.1521, to the 156.28 general fund. 156.29 Sec. 4. [LOAN GUARANTEES.] 156.30 The director of the division of emergency management of the 156.31 department of public safety shall, as the governor's authorized 156.32 representative and on behalf of the state, agree to provide 156.33 security for and guarantee promissory notes or similar documents 156.34 for loans from the Federal Emergency Management Agency under its 156.35 community disaster loan program to the city of Ada in the amount 156.36 of $1,423,448 and to the city of East Grand Forks in the amount 157.1 of $2,907,340. The loan to the city of Ada is to cover 157.2 operating losses for a publicly owned health care facility that 157.3 was damaged in the spring floods of 1997. $4,330,788 is 157.4 appropriated from the general fund to the commissioner of 157.5 finance for transfer to a separate community disaster loan 157.6 guarantee account in the general fund in the state treasury for 157.7 the purpose of this section. 157.8 Sec. 5. [TEMPORARY LOCAL GOVERNMENT AID INCREASES.] 157.9 For payments in calendar year 1998 only, the city of East 157.10 Grand Forks shall receive an additional payment of $13,800,000 157.11 and the city of Warren shall receive an additional payment of 157.12 $1,200,000 under the provisions of Minnesota Statutes, sections 157.13 477A.011 to 477A.014. The amounts of these payments shall not 157.14 be included in the calculation of any other aids provided under 157.15 Minnesota Statutes, chapter 477A, or other law or in any 157.16 limitations on levies or expenditures. 157.17 $15,000,000 is appropriated to the commissioner of revenue 157.18 from the general fund to make the payments under this section. 157.19 ARTICLE 8 157.20 TACONITE TAXES 157.21 Section 1. [298.001] [DEFINITIONS.] 157.22 Subdivision 1. [GENERALLY.] As used in this chapter, the 157.23 terms defined in this section have the meanings given in this 157.24 section. 157.25 Subd. 2. [CITY.] "City" includes any home rule charter 157.26 city, statutory city, or any city however organized. 157.27 Subd. 3. [PERSON.] "Person" means individuals, 157.28 fiduciaries, estates, trusts, partnerships, companies, joint 157.29 stock companies, corporations, and all associations. 157.30 Subd. 4. [TACONITE.] "Taconite" means ferruginous chert or 157.31 ferruginous slate in the form of compact, siliceous rock, in 157.32 which the iron oxide is so finely disseminated that 157.33 substantially all of the iron-bearing particles of merchantable 157.34 grade are smaller than 20 mesh and which is not merchantable as 157.35 iron ore in its natural state, and which cannot be made 157.36 merchantable by simple methods of beneficiation involving only 158.1 crushing, screening, washing, jigging, drying, or any 158.2 combination thereof. 158.3 Subd. 5. [IRON SULPHIDES.] "Iron sulphides" means chemical 158.4 combinations of iron and sulphur (mineralogically known as 158.5 pyrrhotite, pyrites, or marcasite), in relatively impure 158.6 condition, which are not merchantable as iron ore and which 158.7 cannot be made merchantable by the simple methods of 158.8 beneficiation above described. 158.9 Subd. 6. [SEMITACONITE.] "Semitaconite" means altered iron 158.10 formation, altered taconite, ferruginous chert, or ferruginous 158.11 slate which has been oxidized and partially leached and in which 158.12 the iron oxide is so finely disseminated that substantially all 158.13 of the iron-bearing particles of merchantable grade are smaller 158.14 than 20 mesh and which is not merchantable as iron ore in its 158.15 natural state, and which cannot be made merchantable by simple 158.16 methods of beneficiation involving only crushing, screening, 158.17 washing, jigging, heavy media separation, spirals, cyclones, 158.18 drying, or any combination thereof. 158.19 Subd. 7. [AGGLOMERATES.] "Agglomerates" means the 158.20 merchantable iron ore aggregates which are produced by 158.21 agglomeration. 158.22 Subd. 8. [COMMISSIONER.] "Commissioner" means the 158.23 commissioner of revenue of the state of Minnesota. 158.24 Sec. 2. Minnesota Statutes 1996, section 298.22, 158.25 subdivision 2, is amended to read: 158.26 Subd. 2. There is hereby created the iron range resources 158.27 and rehabilitation board, consisting of 11 members, five of whom 158.28shall beare state senators appointed by the subcommittee on 158.29 committees of the rules committee of the senate, and five of 158.30 whomshall beare representatives, appointed by the speaker of 158.31 the house of representatives, their terms of office to commence158.32on May 1, 1943, and continue until January 3rd, 1945, or until158.33their successors are appointed and qualified.Their successors158.34 The members shall be appointedeach two years in the same manner158.35as the original members were appointed,in January of every 158.36secondodd-numbered year, commencing in January, 1945. The 11th 159.1 member ofsaidthe boardshall beis the commissioner of natural 159.2 resourcesof the state of Minnesota. Vacancies on the board 159.3 shall be filled in the same manner as the original members were 159.4 chosen. At least a majority of the legislative members of the 159.5 board shall be elected from state senatorial or legislative 159.6 districts in which over 50 percent of the residents reside 159.7 within a tax relief area as defined in section 273.134. All 159.8 expenditures and projects made by the commissioner of iron range 159.9 resources and rehabilitation shall first be submitted tosaid159.10 the iron range resources and rehabilitation board for approval 159.11 by at least eight board members of expenditures and projects for 159.12 rehabilitation purposes as provided by this section, and the 159.13 method, manner, and time of payment of allsaidfunds proposed 159.14 to be disbursed shall be first approved or disapproved bysaid159.15 the board. The board shall biennially make its report to the 159.16 governor and the legislature on or before November 15 of each 159.17 even-numbered year. The expenses ofsaidthe board shall be 159.18 paid by the stateof Minnesotafrom the funds raised pursuant to 159.19 this section. 159.20 Sec. 3. Minnesota Statutes 1996, section 298.221, is 159.21 amended to read: 159.22 298.221 [RECEIPTS FROM CONTRACTS; APPROPRIATION.] 159.23 (a) Allmoneysmoney paid to the state of Minnesota 159.24 pursuant to the terms of any contract entered into by the state 159.25 under authority ofLaws 1941, chapter 544, section 4, or of said159.26section as amendedsection 298.22 and any fees which may, in the 159.27 discretion of the commissioner of iron range resources and 159.28 rehabilitation, be charged in connection with any project 159.29 pursuant to that section as amended, shall be deposited in the 159.30 state treasury to the credit of the iron range resources and 159.31 rehabilitation board account in the special revenue fund and are 159.32 hereby appropriated for the purposes of section 298.22. 159.33 (b) Notwithstanding section 7.09, merchandise may be 159.34 accepted by the commissioner of the iron range resources and 159.35 rehabilitation board for payment of advertising contracts if the 159.36 commissioner determines that the merchandise can be used for 160.1 special event prizes or mementos at facilities operated by the 160.2 board. Nothing in this paragraph authorizes the commissioner or 160.3 a member of the board to receive merchandise for personal use. 160.4 Sec. 4. Minnesota Statutes 1996, section 298.2213, 160.5 subdivision 4, is amended to read: 160.6 Subd. 4. [PROJECT APPROVAL.] The board shall by August 1,160.71987, andeach yearthereafterprepare a list of projects to be 160.8 funded from the money appropriated in this section with 160.9 necessary supporting information including descriptions of the 160.10 projects, plans, and cost estimates. A project must not be 160.11 approved by the board unless it finds that: 160.12 (1) the project will materially assist, directly or 160.13 indirectly, the creation of additional long-term employment 160.14 opportunities; 160.15 (2) the prospective benefits of the expenditure exceed the 160.16 anticipated costs; and 160.17 (3) in the case of assistance to private enterprise, the 160.18 project will serve a sound business purpose. 160.19 To be proposed by the board, a project must be approved by 160.20 at least eight iron range resources and rehabilitation board 160.21 members and the commissioner of iron range resources and 160.22 rehabilitation. The list of projects must be submitted to the 160.23 governor, who shall, by November 15 of each year, approve, 160.24 disapprove, or return for further consideration, each project. 160.25 The money for a project may be spent only upon approval of the 160.26 project by the governor. The board may submit supplemental 160.27 projects for approval at any time. 160.28 Sec. 5. Minnesota Statutes 1996, section 298.225, 160.29 subdivision 1, is amended to read: 160.30 Subdivision 1.For distribution of taconite production tax160.31in 1987 and thereafter with respect to production in 1986 and160.32thereafter,The distribution of the taconite production tax as 160.33 provided in section 298.28, subdivisions 2 to 5, 6, paragraphs 160.34 (b) and (c), 7, and 8, shall equal the lesser of the following 160.35 amounts: 160.36 (1) the amount distributed pursuant to this section and 161.1 section 298.28, with respect to 1983 production if the 161.2 production for the year prior to the distribution year is no 161.3 less than 42,000,000 taxable tons. If the production is less 161.4 than 42,000,000 taxable tons, the amount of the distributions 161.5 shall be reduced proportionately at the rate of two percent for 161.6 each 1,000,000 tons, or part of 1,000,000 tons by which the 161.7 production is less than 42,000,000 tons; or 161.8 (2)(i) for the distributions made pursuant to section 161.9 298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 161.10 (c), 50 percent of the amount distributed pursuant to this 161.11 section and section 298.28, with respect to 1983 production. 161.12 (ii) for the distributions made pursuant to section 298.28, 161.13 subdivision 5, paragraphs (b) and (d), 75 percent of the amount 161.14 distributed pursuant to this section and section 298.28, with 161.15 respect to 1983 production. 161.16 Sec. 6. Minnesota Statutes 1997 Supplement, section 161.17 298.24, subdivision 1, is amended to read: 161.18 Subdivision 1. (a) For concentrate produced in1992, 1993,161.191994, and 19951997 and 1998, there is imposed upon taconite and 161.20 iron sulphides, and upon the mining and quarrying thereof, and 161.21 upon the production of iron ore concentrate therefrom, and upon 161.22 the concentrate so produced, a tax of$2.054$2.141 per gross 161.23 ton of merchantable iron ore concentrate produced therefrom. 161.24 (b)On concentrates produced in 1997 and thereafter, an161.25additional tax is imposed equal to three cents per gross ton of161.26merchantable iron ore concentrate for each one percent that the161.27iron content of the product exceeds 72 percent, when dried at161.28212 degrees Fahrenheit.161.29(c)For concentrates produced in19961999 and subsequent 161.30 years, the tax rate shall be equal to the preceding year's tax 161.31 rate plus an amount equal to the preceding year's tax rate 161.32 multiplied by the percentage increase in the implicit price 161.33 deflator from the fourth quarter of the second preceding year to 161.34 the fourth quarter of the preceding year, provided that, for161.35concentrates produced in 1996 only, the increase in the rate of161.36tax imposed under this section over the rate imposed for the162.1previous year may not exceed four cents per ton. "Implicit 162.2 price deflator" for the gross national product means the 162.3 implicit price deflator prepared by the bureau of economic 162.4 analysis of the United States Department of Commerce. 162.5 (c) On concentrates produced in 1997 and thereafter, an 162.6 additional tax is imposed equal to three cents per gross ton of 162.7 merchantable iron ore concentrate for each one percent that the 162.8 iron content of the product exceeds 72 percent, when dried at 162.9 212 degrees Fahrenheit. 162.10 (d) The tax shall be imposed on the average of the 162.11 production for the current year and the previous two years. The 162.12 rate of the tax imposed will be the current year's tax rate. 162.13 This clause shall not apply in the case of the closing of a 162.14 taconite facility if the property taxes on the facility would be 162.15 higher if this clause and section 298.25 were not applicable. 162.16 (e) If the tax or any part of the tax imposed by this 162.17 subdivision is held to be unconstitutional, a tax 162.18 of$2.054$2.141 per gross ton of merchantable iron ore 162.19 concentrate produced shall be imposed. 162.20 (f) Consistent with the intent of this subdivision to 162.21 impose a tax based upon the weight of merchantable iron ore 162.22 concentrate, the commissioner of revenue may indirectly 162.23 determine the weight of merchantable iron ore concentrate 162.24 included in fluxed pellets by subtracting the weight of the 162.25 limestone, dolomite, or olivine derivatives or other basic flux 162.26 additives included in the pellets from the weight of the 162.27 pellets. For purposes of this paragraph, "fluxed pellets" are 162.28 pellets produced in a process in which limestone, dolomite, 162.29 olivine, or other basic flux additives are combined with 162.30 merchantable iron ore concentrate. No subtraction from the 162.31 weight of the pellets shall be allowed for binders, mineral and 162.32 chemical additives other than basic flux additives, or moisture. 162.33 (g)(1) Notwithstanding any other provision of this 162.34 subdivision, for the first two years of a plant's production of 162.35 direct reduced ore, no tax is imposed under this section. As 162.36 used in this paragraph, "direct reduced ore" is ore that results 163.1 in a product that has an iron content of at least 75 percent. 163.2 For the third year of a plant's production of direct reduced 163.3 ore, the rate to be applied to direct reduced ore is 25 percent 163.4 of the rate otherwise determined under this subdivision. For 163.5 the fourth such production year, the rate is 50 percent of the 163.6 rate otherwise determined under this subdivision; for the fifth 163.7 such production year, the rate is 75 percent of the rate 163.8 otherwise determined under this subdivision; and for all 163.9 subsequent production years, the full rate is imposed. 163.10 (2) Subject to clause (1), production of direct reduced ore 163.11 in this state is subject to the tax imposed by this section, but 163.12 if that production is not produced by a producer of taconite or 163.13 iron sulfides, the production of taconite or iron sulfides 163.14 consumed in the production of direct reduced iron in this state 163.15 is not subject to the tax imposed by this section on taconite or 163.16 iron sulfides. 163.17 Sec. 7. Minnesota Statutes 1996, section 298.28, 163.18 subdivision 2, is amended to read: 163.19 Subd. 2. [CITY OR TOWN WHERE QUARRIED OR PRODUCED.] (a) 163.20 4.5 cents per gross ton of merchantable iron ore concentrate, 163.21 hereinafter referred to as "taxable ton," must be allocated to 163.22 the city or town in the county in which the lands from which 163.23 taconite was mined or quarried were located or within which the 163.24 concentrate was produced. If the mining, quarrying, and 163.25 concentration, or different steps in either thereof are carried 163.26 on in more than one taxing district, the commissioner shall 163.27 apportion equitably the proceeds of the part of the tax going to 163.28 cities and towns among such subdivisions upon the basis of 163.29 attributing 40 percent of the proceeds of the tax to the 163.30 operation of mining or quarrying the taconite, and the remainder 163.31 to the concentrating plant and to the processes of 163.32 concentration, and with respect to each thereof giving due 163.33 consideration to the relative extent of such operations 163.34 performed in each such taxing district. The commissioner's 163.35 order making such apportionment shall be subject to review by 163.36 the tax court at the instance of any of the interested taxing 164.1 districts, in the same manner as other orders of the 164.2 commissioner. 164.3 (b) Four cents per taxable ton shall be allocated to cities 164.4 and organized townships affected by mining because their 164.5 boundaries are within two miles of a taconite mine pit that has 164.6 been actively mined in at least one of the prior three years. 164.7 If a city or town is located near more than one mine meeting 164.8 these criteria, the city or town is eligible to receive aid 164.9 calculated from only the mine producing the largest taxable 164.10 tonnage. When more than one municipality qualifies for aid 164.11 based on one company's production, the aid must be apportioned 164.12 among the municipalities in proportion to their populations. Of 164.13 the amounts distributed under this paragraph to each 164.14 municipality, one-half must be used for infrastructure 164.15 improvement projects, and one-half must be used for projects in 164.16 which two or more municipalities cooperate. Each municipality 164.17 that receives a distribution under this paragraph must report 164.18 annually to the iron range resources and rehabilitation board 164.19 and the commissioner of iron range resources and rehabilitation 164.20 on the projects involving cooperation with other municipalities. 164.21 Sec. 8. Minnesota Statutes 1996, section 298.28, 164.22 subdivision 3, is amended to read: 164.23 Subd. 3. [CITIES; TOWNS.] (a) 12.5 cents per taxable ton, 164.24 less any amount distributed under subdivision 8, and paragraph 164.25 (b), must be allocated to the taconite municipal aid account to 164.26 be distributed as provided in section 298.282. 164.27 (b) An amount must be allocated to towns or cities that is 164.28 annually certified by the county auditor of a county containing 164.29 a taconite tax relief area within which there is (1) an 164.30 organized township if, as of January 2, 1982, more than 75 164.31 percent of the assessed valuation of the township consists of 164.32 iron ore or (2) a city if, as of January 2, 1980, more than 75 164.33 percent of the assessed valuation of the city consists of iron 164.34 ore. 164.35 (c) The amount allocated under paragraph (b) will be the 164.36 portion of a township's or city's certified levy equal to the 165.1 proportion of (1) the difference between 50 percent of January 165.2 2, 1982, assessed value in the case of a township and 50 percent 165.3 of the January 2, 1980, assessed value in the case of a city and 165.4 its current assessed value to (2) the sum of its current 165.5 assessed value plus the difference determined in (1), provided 165.6 that the amount distributed shall not exceed $55 per capita in 165.7 the case of a township or $75 per capita in the case of a city. 165.8 For purposes of this limitation, population will be determined 165.9 according to the 1980 decennial census conducted by the United 165.10 States Bureau of the Census. If the current assessed value of 165.11 the township exceeds 50 percent of the township's January 2, 165.12 1982, assessed value, or if the current assessed value of the 165.13 city exceeds 50 percent of the city's January 2, 1980, assessed 165.14 value, this paragraph shall not apply. For purposes of this 165.15 paragraph, "assessed value," when used in reference to years 165.16 other than 1980 or 1982, means, for distributions for production165.17year 1989, production taxes payable in 1990, the appropriate net165.18tax capacities multiplied by 8.2 and for distributions for165.19production year 1990 and thereafter, production taxes payable in165.201991 and thereafter,the appropriate net tax capacities 165.21 multiplied by 10.2. 165.22 Sec. 9. Minnesota Statutes 1996, section 298.28, 165.23 subdivision 4, is amended to read: 165.24 Subd. 4. [SCHOOL DISTRICTS.] (a) 27.5 cents per taxable 165.25 ton plus the increase provided in paragraph (d) must be 165.26 allocated to qualifying school districts to be distributed, 165.27 based upon the certification of the commissioner of revenue, 165.28 under paragraphs (b) and (c). 165.29 (b) 5.5 cents per taxable ton must be distributed to the 165.30 school districts in which the lands from which taconite was 165.31 mined or quarried were located or within which the concentrate 165.32 was produced. The distribution must be based on the 165.33 apportionment formula prescribed in subdivision 2. 165.34 (c)(i) 22 cents per taxable ton, less any amount 165.35 distributed under paragraph (e), shall be distributed to a group 165.36 of school districts comprised of those school districts in which 166.1 the taconite was mined or quarried or the concentrate produced 166.2 or in which there is a qualifying municipality as defined by 166.3 section 273.134 in direct proportion to school district indexes 166.4 as follows: for each school district, its pupil units 166.5 determined under section 124.17 for the prior school year shall 166.6 be multiplied by the ratio of the average adjusted net tax 166.7 capacity per pupil unit for school districts receiving aid under 166.8 this clause as calculated pursuant to chapter 124A for the 166.9 school year ending prior to distribution to the adjusted net tax 166.10 capacity per pupil unit of the district. Each district shall 166.11 receive that portion of the distribution which its index bears 166.12 to the sum of the indices for all school districts that receive 166.13 the distributions. 166.14 (ii) Notwithstanding clause (i), each school district that 166.15 receives a distribution under sections 298.018; 298.23 to 166.16 298.28, exclusive of any amount received under this clause; 166.17 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 166.18 imposing a tax on severed mineral values that is less than the 166.19 amount of its levy reduction under section 124.918, subdivision 166.20 8, for the second year prior to the year of the distribution 166.21 shall receive a distribution equal to the difference; the amount 166.22 necessary to make this payment shall be derived from 166.23 proportionate reductions in the initial distribution to other 166.24 school districts under clause (i). 166.25 (d) Any school district described in paragraph (c) where a 166.26 levy increase pursuant to section 124A.03, subdivision 2, is 166.27 authorized by referendum, shall receive a distributionaccording166.28to the following formula. In 1994, the amount distributed per166.29ton shall be equal to the amount per ton distributed in 1991166.30under this paragraph increased in the same proportion as the166.31increase between the fourth quarter of 1989 and the fourth166.32quarter of 1992 in the implicit price deflator as defined in166.33section 298.24, subdivision 1from a fund that receives a 166.34 distribution in 1998 of 21.3 cents per ton. On July 15, 1995,166.35and subsequent yearsof 1999, and each year thereafter, the 166.36 increase over the amount established for the prior year shall be 167.1 determined according to the increase in the implicit price 167.2 deflator as provided in section 298.24, subdivision 1. Each 167.3 district shall receive the product of: 167.4 (i) $175 times the pupil units identified in section 167.5 124.17, subdivision 1, enrolled in the second previous year or 167.6 the 1983-1984 school year, whichever is greater, less the 167.7 product of 1.8 percent times the district's taxable net tax 167.8 capacity in the second previous year; times 167.9 (ii) the lesser of: 167.10 (A) one, or 167.11 (B) the ratio of the sum of the amount certified pursuant 167.12 to section 124A.03, subdivision 1g, in the previous year, plus 167.13 the amount certified pursuant to section 124A.03, subdivision 167.14 1i, in the previous year, plus the referendum aid according to 167.15 section 124A.03, subdivision 1h, for the current year, plus an 167.16 amount equal to the reduction under section 124A.03, subdivision 167.17 3b, to the product of 1.8 percent times the district's taxable 167.18 net tax capacity in the second previous year. 167.19 If the total amount provided by paragraph (d) is 167.20 insufficient to make the payments herein required then the 167.21 entitlement of $175 per pupil unit shall be reduced uniformly so 167.22 as not to exceed the funds available. Any amounts received by a 167.23 qualifying school district in any fiscal year pursuant to 167.24 paragraph (d) shall not be applied to reduce general education 167.25 aid which the district receives pursuant to section 124A.23 or 167.26 the permissible levies of the district. Any amount remaining 167.27 after the payments provided in this paragraph shall be paid to 167.28 the commissioner of iron range resources and rehabilitation who 167.29 shall deposit the same in the taconite environmental protection 167.30 fund and the northeast Minnesota economic protection trust fund 167.31 as provided in subdivision 11. 167.32 Each district receiving money according to this paragraph 167.33 shall reserve $25 times the number of pupil units in the 167.34 district. It may use the money for early childhood programs or 167.35 for outcome-based learning programs that enhance the academic 167.36 quality of the district's curriculum. The outcome-based 168.1 learning programs must be approved by the commissioner of 168.2 children, families, and learning. 168.3 (e) There shall be distributed to any school district the 168.4 amount which the school district was entitled to receive under 168.5 section 298.32 in 1975. 168.6 Sec. 10. Minnesota Statutes 1996, section 298.28, 168.7 subdivision 6, is amended to read: 168.8 Subd. 6. [PROPERTY TAX RELIEF.] (a)Fifteen32.6 cents per 168.9 taxable ton, less any amount required to be distributed under 168.10 paragraphs (b) and (c), and less any amount required to be 168.11 deducted under paragraph (d), must be allocated to St. Louis 168.12 county acting as the counties' fiscal agent, to be distributed 168.13 as provided in sections 273.134 to 273.136. 168.14 (b) If an electric power plant owned by and providing the 168.15 primary source of power for a taxpayer mining and concentrating 168.16 taconite is located in a county other than the county in which 168.17 the mining and the concentrating processes are conducted, .1875 168.18 cent per taxable ton of the tax imposed and collected from such 168.19 taxpayer shall be paid to the county. 168.20 (c) If an electric power plant owned by and providing the 168.21 primary source of power for a taxpayer mining and concentrating 168.22 taconite is located in a school district other than a school 168.23 district in which the mining and concentrating processes are 168.24 conducted, .5625 cent per taxable ton of the tax imposed and 168.25 collected from the taxpayer shall be paid to the school district. 168.26 (d) Two cents per taxable ton must be deducted from the 168.27 amount allocated to the St. Louis county auditor under paragraph 168.28 (a). 168.29 Sec. 11. Minnesota Statutes 1996, section 298.28, 168.30 subdivision 7, is amended to read: 168.31 Subd. 7. [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 168.32ThreeFor the 1998 distribution, 6.5 cents per taxable ton shall 168.33 be paid to the iron range resources and rehabilitation board for 168.34 the purposes of section 298.22.The amount determined in this168.35subdivision shall be increased in 1981 and subsequent years168.36prior to 1988 in the same proportion as the increase in the169.1steel mill products index as provided in section 298.24,169.2subdivision 1, and shall be increased in 1989, 1990, and 1991169.3according to the increase in the implicit price deflator as169.4provided in section 298.24, subdivision 1. In 1992 and 1993,169.5the amount distributed per ton shall be the same as the amount169.6distributed per ton in 1991. In 1994, the amount distributed169.7shall be the distribution per ton for 1991 increased in the same169.8proportion as the increase between the fourth quarter of 1989169.9and the fourth quarter of 1992 in the implicit price deflator as169.10defined in section 298.24, subdivision 1.That amount shall be 169.11 increased in19951999 and subsequent years in the same 169.12 proportion as the increase in the implicit price deflator as 169.13 provided in section 298.24, subdivision 1.The amount169.14distributed in 1988 shall be increased according to the increase169.15that would have occurred in the rate of tax under section 298.24169.16if the rate had been adjusted according to the implicit price169.17deflator for 1987 production.The amount distributed pursuant 169.18 to this subdivision shall be expended within or for the benefit 169.19 of a tax relief area defined in section 273.134. No part of the 169.20 fund provided in this subdivision may be used to provide loans 169.21 for the operation of private business unless the loan is 169.22 approved by the governor. 169.23 Sec. 12. Minnesota Statutes 1996, section 298.28, 169.24 subdivision 9, is amended to read: 169.25 Subd. 9. [MINNESOTA ECONOMIC PROTECTION TRUST FUND.] 169.261.53.3 cents per taxable ton shall be paid to the northeast 169.27 Minnesota economic protection trust fund. 169.28 Sec. 13. Minnesota Statutes 1997 Supplement, section 169.29 298.28, subdivision 9a, is amended to read: 169.30 Subd. 9a. [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 15.4 169.31 cents per ton for distributions in 1996, 1998,and1999, and 169.32 2000 and 20.4 cents per ton for distributions in 1997 shall be 169.33 paid to the taconite economic development fund. No distribution 169.34 shall be made under this paragraph in any year in which total 169.35 industry production falls below 30 million tons. 169.36 (b) An amount equal to 50 percent of the tax under section 170.1 298.24 for concentrate sold in the form of pellet chips and 170.2 fines not exceeding 5/16 inch in size and not including crushed 170.3 pellets shall be paid to the taconite economic development 170.4 fund. The amount paid shall not exceed $700,000 annually for 170.5 all companies. If the initial amount to be paid to the fund 170.6 exceeds this amount, each company's payment shall be prorated so 170.7 the total does not exceed $700,000. 170.8 Sec. 14. Minnesota Statutes 1997 Supplement, section 170.9 298.28, subdivision 9b, is amended to read: 170.10 Subd. 9b. [TACONITE ENVIRONMENTAL FUND.] Five cents per 170.11 ton for distributions in 1998and1999, and 2000 shall be paid 170.12 to the taconite environmental fund for use under section 170.13 298.2961. No distribution may be made under this paragraph in 170.14 any year in which total industry production falls below 170.15 30,000,000 tons. 170.16 Sec. 15. Minnesota Statutes 1996, section 298.28, 170.17 subdivision 10, is amended to read: 170.18 Subd. 10. [INCREASE.] The amounts determined under 170.19subdivisionssubdivision 6, paragraph (a), and subdivision 9 170.20 shall be increasedin 1979 and subsequent years prior to 1988 in170.21the same proportion as the increase in the steel mill products170.22index as provided in section 298.24, subdivision 1. The amount170.23distributed in 1988 shall be increased according to the increase170.24that would have occurred in the rate of tax under section 298.24170.25if the rate had been adjusted according to the implicit price170.26deflator for 1987 production. Those amounts shall be increased170.27in 1989, 1990, and 1991 in the same proportion as the increase170.28in the implicit price deflator as provided in section 298.24,170.29subdivision 1. In 1992 and 1993, the amounts determined under170.30subdivisions 6, paragraph (a), and 9, shall be the distribution170.31per ton determined for distribution in 1991. In 1994, the170.32amounts determined under subdivisions 6, paragraph (a), and 9,170.33shall be the distribution per ton determined for distribution in170.341991 increased in the same proportion as the increase between170.35the fourth quarter of 1989 and the fourth quarter of 1992 in the170.36implicit price deflator as defined in section 298.24,171.1subdivision 1. Those amounts shall be increased in 1995for 171.2 distributions based on the 1998 production year and subsequent 171.3 years in the same proportion as the increase in the implicit 171.4 price deflator as provided in section 298.24, subdivision 1. 171.5 The distributions per ton determined under subdivisions 5, 171.6 paragraphs (b) and (d), and 6, paragraphs (b) and (c) for 171.7 distribution in 1988 and subsequent years shall be the 171.8 distribution per ton determined for distribution in 1987. 171.9 Sec. 16. Minnesota Statutes 1997 Supplement, section 171.10 298.296, subdivision 4, is amended to read: 171.11 Subd. 4. [TEMPORARY LOAN AUTHORITY.] (a) The board may 171.12 recommend that up to $7,500,000 from the corpus of the trust may 171.13 be used for loans as provided in this subdivision. The money 171.14 would be available for loans for construction and equipping of 171.15 facilities constituting (1) a value added iron products plant, 171.16 which may be either a new plant or a facility incorporated into 171.17 an existing plant that produces iron upgraded to a minimum of 75 171.18 percent iron content or any iron alloy with a total minimum 171.19 metallic content of 90 percent; or (2) a new mine or minerals 171.20 processing plant for any mineral subject to the net proceeds tax 171.21 imposed under section 298.015. A loan under this paragraph may 171.22 not exceed $5,000,000 for any facility. 171.23 (b) Additionally, the board must reserve the first 171.24 $2,000,000 of the net interest, dividends, and earnings arising 171.25 from the investment of the trust after June 30, 1996, to be used 171.26 for additional grants for the purposes set forth in paragraph 171.27 (a). This amount must be reserved until it is used for the 171.28 grants or until June 30,19981999, whichever is earlier. 171.29 (c) Additionally, the board may recommend that up to 171.30 $5,500,000 from the corpus of the trust may be used for 171.31 additional grants for the purposes set forth in paragraph (a). 171.32 (d) The board may require that it receive an equity 171.33 percentage in any project to which it contributes under this 171.34 section. 171.35 (e) The authority to make loans and grants under this 171.36 subdivision terminates June 30,19981999. 172.1 Sec. 17. Minnesota Statutes 1996, section 298.48, 172.2 subdivision 1, is amended to read: 172.3 Subdivision 1. [ANNUAL FILING.] By April 1 each year, 172.4 every owner or lessee of mineral rights who, in respect thereto, 172.5 has engaged in any exploration for or mining of taconite, 172.6 semitaconite, or iron-sulphide shall, within six months of June172.73, 1977,file with the commissioner of revenue all data of the 172.8 following kinds in the possession or under the control of the 172.9 owner or lessee which was acquiredprior to January 1, 1977172.10 during the preceding calendar year: 172.11 (a) Maps and other records indicating the location, 172.12 character and extent of exploration for taconite, semitaconite, 172.13 or iron-sulphides; 172.14 (b) Logs, notes and other records indicating the nature of 172.15 minerals encountered during the course of exploration; 172.16 (c) The results of any analyses of metallurgical tests or 172.17 samples taken in connection with exploration; 172.18 (d) The ultimate pit layout and the supporting cross 172.19 sections; and 172.20 (e) Any other data which the commissioner of revenue may 172.21 determine to be relevant to the determination of the location, 172.22 nature, extent, quality or quantity of unmined ores of said 172.23 minerals. The commissioner of revenueshall have the power to172.24 may compel submission of the data. The court administrator of 172.25 any court of record, upon demand of the commissioner, shall 172.26 issue a subpoena for the production of any data before the 172.27 commissioner. Disobedience of subpoenas issued under this 172.28 section shall be punished by the district court of the district 172.29 in which the subpoena is issued as for a contempt of the 172.30 district court.By April 1 of each succeeding year every owner172.31or lessee of mineral rights shall file with the commissioner of172.32revenue all such data acquired during the preceding calendar172.33year.172.34 Sec. 18. [USE OF PRODUCTION TAX PROCEEDS.] 172.35 Of the amount distributed to the iron range resources and 172.36 rehabilitation board under Minnesota Statutes, section 298.28, 173.1 subdivision 7, an amount equal to the amount distributed under 173.2 Laws 1997, chapter 231, article 8, section 16, shall be used by 173.3 the board to make equal grants to the cities of Chisholm and 173.4 Hibbing to be used for the establishment of an industrial park 173.5 located at the Hibbing-Chisholm airport. 173.6 Sec. 19. [REPEALER.] 173.7 Minnesota Statutes 1996, sections 298.012; 298.21; 298.23; 173.8 298.34, subdivisions 1 and 4; and 298.391, subdivisions 2 and 5, 173.9 are repealed. 173.10 Sec. 20. [EFFECTIVE DATE.] 173.11 Section 7 is effective for distributions in 2000 and 173.12 subsequent years. 173.13 ARTICLE 9 173.14 TAX INCREMENT FINANCING AND DEVELOPMENT 173.15 Section 1. Minnesota Statutes 1996, section 469.174, is 173.16 amended by adding a subdivision to read: 173.17 Subd. 28. [DECERTIFY OR DECERTIFICATION.] "Decertify" or 173.18 "decertification" means the termination of a tax increment 173.19 financing district which occurs when the county auditor removes 173.20 all remaining parcels from the district. 173.21 Sec. 2. Minnesota Statutes 1996, section 469.175, 173.22 subdivision 5, is amended to read: 173.23 Subd. 5. [ANNUAL DISCLOSURE.] (a)For all tax increment173.24financing districts, whether created prior or subsequent to173.25August 1, 1979, on or before July 1 of each year,The authority 173.26 shall annually submit to the county board, the county auditor, 173.27 the school board, state auditor and, if the authority is other 173.28 than the municipality, the governing body of the municipality, a 173.29 report of the status of the district. The report shall include 173.30 the following information: the amount and the source of revenue 173.31 in the account, the amount and purpose of expenditures from the 173.32 account, the amount of any pledge of revenues, including 173.33 principal and interest on any outstanding bonded indebtedness, 173.34 the original net tax capacity of the district and any 173.35 subdistrict, the captured net tax capacity retained by the 173.36 authority, the captured net tax capacity shared with other 174.1 taxing districts, the tax increment received, and any additional 174.2 information necessary to demonstrate compliance with any 174.3 applicable tax increment financing plan. The authority must 174.4 submit the annual report for a year on or before August 1 of the 174.5 next year. 174.6 (b) An annual statement showing the tax increment received 174.7 and expended in that year, the original net tax capacity, 174.8 captured net tax capacity, amount of outstanding bonded 174.9 indebtedness, the amount of the district's and any subdistrict's 174.10 increments paid to other governmental bodies, the amount paid 174.11 for administrative costs, the sum of increments paid, directly 174.12 or indirectly, for activities and improvements located outside 174.13 of the district, and any additional information the authority 174.14 deems necessary shall be published in a newspaper of general 174.15 circulation in the municipality. If the fiscal disparities 174.16 contribution under chapter 276A or 473F for the district is 174.17 computed under section 469.177, subdivision 3, paragraph (a), 174.18 the annual statement must disclose that fact and indicate the 174.19 amount of increased property tax imposed on other properties in 174.20 the municipality as a result of the fiscal disparities 174.21 contribution. The commissioner of revenue shall prescribe the 174.22 form of this statement and the method for calculating the 174.23 increased property taxes. The authority must publish the annual 174.24 statement for a year no later thanJuly 1August 15 of the next 174.25 year. The authority mustprovideidentify the newspaper of 174.26 general circulation in the municipality to which the annual 174.27 statement has been or will be submitted for publication and 174.28 provide a copy of the annual statement to the state auditorby174.29the time it submits it for publicationon or before August 1 of 174.30 the year in which the statement must be published. 174.31 (c) The disclosure and reporting requirements imposed by 174.32 this subdivision apply to districts certified before, on, or 174.33 after August 1, 1979. 174.34 Sec. 3. Minnesota Statutes 1996, section 469.175, 174.35 subdivision 6, is amended to read: 174.36 Subd. 6. [FINANCIAL REPORTING.] (a) The state auditor 175.1 shall develop a uniform system of accounting and financial 175.2 reporting for tax increment financing districts. The system of 175.3 accounting and financial reporting shall, as nearly as possible: 175.4 (1) provide for full disclosure of the sources and uses of 175.5 public funds in the district; 175.6 (2) permit comparison and reconciliation with the affected 175.7 local government's accounts and financial reports; 175.8 (3) permit auditing of the funds expended on behalf of a 175.9 district, including a single district that is part of a 175.10 multidistrict project or that is funded in part or whole through 175.11 the use of a development account funded with tax increments from 175.12 other districts or with other public money; 175.13 (4) be consistent with generally accepted accounting 175.14 principles. 175.15 (b) The authority must annually submit to the state 175.16 auditor, on or before July 1,a financial report in compliance 175.17 with paragraph (a). Copies of the report must also be provided 175.18 to the county and school district boards and to the governing 175.19 body of the municipality, if the authority is not the 175.20 municipality. To the extent necessary to permit compliance with 175.21 the requirement of financial reporting, the county and any other 175.22 appropriate local government unit or private entity must provide 175.23 the necessary records or information to the authority or the 175.24 state auditor as provided by the system of accounting and 175.25 financial reporting developed pursuant to paragraph (a). The 175.26 authority must submit the annual report for a year on or before 175.27 August 1 of the next year. 175.28 (c) The annual financial report must also include the 175.29 following items: 175.30 (1) the original net tax capacity of the district and any 175.31 subdistrict; 175.32 (2) the captured net tax capacity of the district, 175.33 including the amount of any captured net tax capacity shared 175.34 with other taxing districts; 175.35 (3) for the reporting period and for the duration of the 175.36 district, the amount budgeted under the tax increment financing 176.1 plan, and the actual amount expended for, at least, the 176.2 following categories: 176.3 (i) acquisition of land and buildings through condemnation 176.4 or purchase; 176.5 (ii) site improvements or preparation costs; 176.6 (iii) installation of public utilities, parking facilities, 176.7 streets, roads, sidewalks, or other similar public improvements; 176.8 (iv) administrative costs, including the allocated cost of 176.9 the authority; 176.10 (v) public park facilities, facilities for social, 176.11 recreational, or conference purposes, or other similar public 176.12 improvements; 176.13 (4) for properties sold to developers, the total cost of 176.14 the property to the authority and the price paid by the 176.15 developer; and 176.16 (5) the amount of increments rebated or paid to developers 176.17 or property owners for privately financed improvements or other 176.18 qualifying costs. 176.19 (d) The reporting requirements imposed by this subdivision 176.20 apply to districts certified before, on, and after August 1, 176.21 1979. 176.22 Sec. 4. Minnesota Statutes 1996, section 469.175, 176.23 subdivision 6a, is amended to read: 176.24 Subd. 6a. [REPORTING REQUIREMENTS.] (a) The municipality 176.25 must annually report to the state auditor the following amounts 176.26 for the entire municipality: 176.27 (1) the total principal amount of nondefeased tax increment 176.28 financing bonds that are outstanding at the end of the previous 176.29 calendar year; and 176.30 (2) the total annual amount of principal and interest 176.31 payments that are due for the current calendar year on (i) 176.32 general obligation tax increment financing bonds, and (ii) other 176.33 tax increment financing bonds. 176.34 (b) The municipality must annually report to the state 176.35 auditor the following amounts for each tax increment financing 176.36 district located in the municipality: 177.1 (1) the type of district, whether economic development, 177.2 redevelopment, housing, soils condition, mined underground 177.3 space, or hazardous substance site; 177.4 (2) the date on which the district is required to be 177.5 decertified; 177.6 (3) the amount of any payments and the value of in-kind 177.7 benefits, such as physical improvements and the use of building 177.8 space, that are financed with revenues derived from increments 177.9 and are provided to another governmental unit (other than the 177.10 municipality) during the preceding calendar year; 177.11 (4) the tax increment revenues for taxes payable in the 177.12 current calendar year; 177.13 (5) whether the tax increment financing plan or other 177.14 governing document permits increment revenues to be expended (i) 177.15 to pay bonds, the proceeds of which were or may be expended on 177.16 activities located outside of the district, (ii) for deposit 177.17 into a common fund from which money may be expended on 177.18 activities located outside of the district, or (iii) to 177.19 otherwise finance activities located outside of the tax 177.20 increment financing district; and 177.21 (6) any additional information that the state auditor may 177.22 require. 177.23 (c)The report required by this subdivision must be filed177.24with the state auditor on or before July 1 of each year.The 177.25 municipality must submit the annual report for a year required 177.26 by this subdivision on or before August 1 of the next year. 177.27 (d) The state auditor may provide for combining the reports 177.28 required by this subdivision and subdivisions 5 and 6 so that 177.29 only one report is made for each year to the auditor. 177.30 (e) This section applies to districts certified before, on, 177.31 and after August 1, 1979. 177.32 Sec. 5. Minnesota Statutes 1996, section 469.175, is 177.33 amended by adding a subdivision to read: 177.34 Subd. 6b. [DURATION OF DISCLOSURE AND REPORTING 177.35 REQUIREMENTS.] The disclosure and reporting requirements imposed 177.36 by subdivisions 5, 6, and 6a apply with respect to a tax 178.1 increment financing district beginning with the annual 178.2 disclosure and reports for the year in which the original net 178.3 tax capacity of the district was certified and ending with the 178.4 annual disclosure and reports for the year in which both of the 178.5 following events have occurred: 178.6 (1) decertification of the district; and 178.7 (2) expenditure or return to the county auditor of all 178.8 remaining revenues derived from tax increments paid by 178.9 properties in the district. 178.10 Sec. 6. Minnesota Statutes 1996, section 469.176, 178.11 subdivision 7, is amended to read: 178.12 Subd. 7. [PARCELS NOT INCLUDABLE IN DISTRICTS.] The 178.13 authority may request inclusion in a tax increment financing 178.14 district and the county auditor may certify the original tax 178.15 capacity of a parcel or a part of a parcel that qualified under 178.16 the provisions of section 273.111 or 273.112 or chapter 473H for 178.17 taxes payable in any of the five calendar years before the 178.18 filing of the request for certification only for 178.19 (1) a district in which 85 percent or more of the planned 178.20 buildings and facilities (determined on the basis of square 178.21 footage) are for manufacturing or production of tangible 178.22 personal property, including processing resulting in the change 178.23 in condition of the property or space necessary for and related 178.24 to the manufacturing activities; or 178.25 (2) a qualified housing district as defined in section 178.26 273.1399, subdivision 1. 178.27 Sec. 7. Minnesota Statutes 1996, section 469.177, is 178.28 amended by adding a subdivision to read: 178.29 Subd. 12. [DECERTIFICATION OF TAX INCREMENT FINANCING 178.30 DISTRICT.] The county auditor shall decertify a tax increment 178.31 financing district when the earliest of the following times is 178.32 reached: 178.33 (1) the applicable maximum duration limit under section 178.34 469.176, subdivisions 1a to 1g; 178.35 (2) the maximum duration limit, if any, provided by the 178.36 municipality pursuant to section 469.176, subdivision 1; 179.1 (3) the time of decertification specified in section 179.2 469.1761, subdivision 4, if the commissioner of revenue issues 179.3 an order of noncompliance and the maximum duration limit for 179.4 economic development districts has been exceeded; 179.5 (4) upon completion of the required actions to allow 179.6 decertification under section 469.1763, subdivision 4; or 179.7 (5) upon receipt by the county auditor of a written request 179.8 for decertification from the authority that requested 179.9 certification of the original net tax capacity of the district 179.10 or its successor. 179.11 Sec. 8. Minnesota Statutes 1996, section 469.1771, is 179.12 amended by adding a subdivision to read: 179.13 Subd. 2a. [SUSPENSION OF DISTRIBUTION OF TAX 179.14 INCREMENT.] (a) If an authority fails to make a disclosure or to 179.15 submit a report containing the information required by section 179.16 469.175, subdivisions 5 and 6, regarding a tax increment 179.17 financing district within the time provided in section 469.175, 179.18 subdivisions 5 and 6, or if a municipality fails to submit a 179.19 report containing the information required of section 469.175, 179.20 subdivision 6a, regarding a tax increment financing district 179.21 within the time provided in section 469.175, subdivision 6a, the 179.22 state auditor shall mail to the authority a written notice that 179.23 it or the municipality has failed to make the required 179.24 disclosure or to submit a required report with respect to a 179.25 particular district. The state auditor shall mail the notice on 179.26 or before the third Tuesday of August of the year in which the 179.27 disclosure or report was required to be made or submitted. The 179.28 notice shall describe the consequences of failing to disclose or 179.29 submit a report as provided in paragraph (b). If the state 179.30 auditor has not received a copy of a disclosure or a report 179.31 described in this paragraph on or before the third Tuesday of 179.32 November of the year in which the disclosure or report was 179.33 required to be made or submitted, the state auditor shall mail a 179.34 written notice to the county auditor to hold the distribution of 179.35 tax increment from a particular district. 179.36 (b) Upon receiving written notice from the state auditor to 180.1 hold the distribution of tax increment, the county auditor shall 180.2 hold: 180.3 (1) 25 percent of the amount of tax increment that 180.4 otherwise would be distributed, if the distribution is made 180.5 after the third Friday in November but during the year in which 180.6 the disclosure or report was required to be made or submitted; 180.7 or 180.8 (2) 100 percent of the amount of tax increment that 180.9 otherwise would be distributed, if the distribution is made 180.10 after December 31 of the year in which the disclosure or report 180.11 was required to be made or submitted. 180.12 (c) Upon receiving the copy of the disclosure and all of 180.13 the reports described in paragraph (a) with respect to a 180.14 district regarding which the state auditor has mailed to the 180.15 county auditor a written notice to hold distribution of tax 180.16 increment, the state auditor shall mail to the county auditor a 180.17 written notice lifting the hold and authorizing the county 180.18 auditor to distribute to the authority or municipality any tax 180.19 increment that the county auditor had held pursuant to paragraph 180.20 (b). The state auditor shall mail the written notice required 180.21 by this paragraph within five working days after receiving the 180.22 last outstanding item. The county auditor shall distribute the 180.23 tax increment to the authority or municipality within 15 working 180.24 days after receiving the written notice required by this 180.25 paragraph. 180.26 (d) Notwithstanding any law to the contrary, any interest 180.27 that accrues on tax increment while it is being held by the 180.28 county auditor pursuant to paragraph (b) is not tax increment 180.29 and may be retained by the county. 180.30 (e) For purposes of sections 469.176, subdivisions 1a to 180.31 1g, and 469.177, subdivision 11, tax increment being held by the 180.32 county auditor pursuant to paragraph (b) shall be considered 180.33 distributed to or received by the authority or municipality as 180.34 of the time that it would have been distributed or received but 180.35 for paragraph (b). 180.36 Sec. 9. Minnesota Statutes 1996, section 469.1771, 181.1 subdivision 5, is amended to read: 181.2 Subd. 5. [DISPOSITION OF PAYMENTS.] If the authority does 181.3 not have sufficient increments or other available money to make 181.4 a payment required by this section, the municipality that 181.5 approved the district must use any available money to make the 181.6 payment including the levying of property taxes. Money received 181.7 by the county auditor under this section must be distributed as 181.8 excess increments under section 469.176, subdivision 2, 181.9 paragraph (a), clause (4)., except that if the county auditor 181.10 receives the payment after (1) 60 days from a municipality's 181.11 receipt of the state auditor's notification under subdivision 1, 181.12 paragraph (c), of noncompliance requiring the payment, or (2) 181.13 the commencement of an action by the county attorney to compel 181.14 the payment, then no distributions may be made to the 181.15 municipality that approved the tax increment financing district. 181.16 Sec. 10. [469.1791] [TAX INCREMENT FINANCING SPECIAL 181.17 TAXING DISTRICT.] 181.18 Subdivision 1. [DEFINITIONS.] (a) As used in this section, 181.19 the terms defined in this subdivision have the meanings given 181.20 them. 181.21 (b) "City" means a city containing a tax increment 181.22 financing district the request for certification of which was 181.23 made before June 2, 1997. 181.24 (c) "Enabling ordinance" means an ordinance adopted by a 181.25 city council establishing a special taxing district. 181.26 (d) "Special taxing district" means all or any portion of 181.27 the property located within a tax increment financing district 181.28 the request for certification of which was made before June 2, 181.29 1997. 181.30 (e) "Development or redevelopment services" has the meaning 181.31 given in the city's enabling ordinance, and may include any 181.32 services or expenditures the city or its economic development 181.33 authority or housing and redevelopment authority or port 181.34 authority may provide or incur under sections 469.001 to 181.35 469.1081 and 469.124 to 469.134, including, without limitation, 181.36 amounts necessary to pay the principal of or interest on bonds 182.1 issued by the city or its economic development authority or 182.2 housing and redevelopment authority or port authority under 182.3 section 469.178, for the tax increment financing districts 182.4 contained within the special taxing district or projects to be 182.5 funded with increments from tax increment financing districts 182.6 contained within the special taxing district. 182.7 Subd. 2. [ESTABLISHMENT OF SPECIAL TAXING DISTRICT.] The 182.8 governing body of a city may adopt an ordinance establishing a 182.9 special taxing district. The ordinance must describe with 182.10 particularity the property to be included in the district and 182.11 the development or redevelopment services to be provided in the 182.12 district. Only property that is subject to an assessment 182.13 agreement with the city or its economic development authority, 182.14 housing and redevelopment authority, or port authority, as of 182.15 the date of adoption of the ordinance, may be included within 182.16 the special taxing district and be subject to the tax imposed by 182.17 the city on the district. 182.18 Subd. 3. [MODIFICATION OF SPECIAL TAXING DISTRICT.] The 182.19 boundaries of the special taxing district may be enlarged or 182.20 reduced under the procedures for establishment of the district 182.21 under subdivision 2. Property added to the district is subject 182.22 to the special tax imposed within the district after the 182.23 property becomes a part of the district. 182.24 Subd. 4. [SPECIAL TAX AUTHORITY.] A city may impose a 182.25 special tax within a special taxing district that is reasonably 182.26 related to the development or redevelopment services provided. 182.27 The tax may be imposed at a rate or amount sufficient to produce 182.28 the revenues required to provide redevelopment services within 182.29 the district. The special tax is payable only in a year in 182.30 which the assessment agreement for the property subject to the 182.31 tax remains in effect for that taxes payable year. The maximum 182.32 levy may not exceed the amount specified in the assessment 182.33 agreement. The tax imposed under this section is not included 182.34 in the calculation of levies or limits imposed under law or 182.35 chapter. The tax proceeds are subject to the restrictions 182.36 imposed by law on revenues derived from tax increments and may 183.1 only be spent for the purposes for which increments may be spent. 183.2 Subd. 5. [COLLECTION OF TAX.] The special tax must be 183.3 imposed on the net tax capacity of the taxable property located 183.4 in the geographic area described in the ordinance. Taxable net 183.5 tax capacity must be determined without regard to captured or 183.6 original net tax capacity under Minnesota Statutes, section 183.7 469.177, or to the distribution or contribution value under 183.8 section 473F.08. The special tax is payable and must be 183.9 collected at the same time and in the same manner as provided 183.10 for payment and collection of ad valorem taxes. Special taxes 183.11 not paid on or before the applicable due date are subject to the 183.12 same penalty and interest as ad valorem tax amounts not paid by 183.13 the respective due date. The due date for the special tax is 183.14 the due date for the real property tax for the property on which 183.15 the special tax is imposed. 183.16 Sec. 11. Minnesota Statutes 1997 Supplement, section 183.17 469.1812, subdivision 4, is amended to read: 183.18 Subd. 4. [POLITICAL SUBDIVISION OR SUBDIVISION.] 183.19 "Political subdivision" or "subdivision" means a statutory or 183.20 home rule charter city, town, or school district, or county. 183.21 Sec. 12. Laws 1965, chapter 326, section 1, subdivision 5, 183.22 as amended by Laws 1975, chapter 110, section 1, and Laws 1985, 183.23 chapter 87, section 3, is amended to read: 183.24 Subd. 5. [PROMOTION OF TOURIST, AGRICULTURAL AND 183.25 INDUSTRIAL DEVELOPMENT.] The amount to be spent annually for the 183.26 purposes of this subdivision shall not exceed$1$4 per capita 183.27 of the county's population. 183.28 Sec. 13. Laws 1997, chapter 231, article 10, section 24, 183.29 is amended to read: 183.30 Sec. 24. [TASK FORCE; TIF RECODIFICATION.] 183.31 (a) A legislative task force is established on tax 183.32 increment financing and local economic development powers. The 183.33 task force consists of 12 members as follows: 183.34 (1) six members of the house of representatives, at least 183.35 two of whom are members of the minority caucus, appointed by the 183.36 speaker; and 184.1 (2) six members of the senate, at least two of whom are 184.2 members of the minority caucus, appointed by the committee on 184.3 committees. 184.4 (b) The task force shall prepare a bill for the19981999 184.5 legislative session that recodifies the Tax Increment Financing 184.6 Act and combines the statutes providing local economic 184.7 development powers into one law providing a uniform set of 184.8 powers relative to the use of tax increment financing. 184.9 (c) In preparing the bill under this section, the task 184.10 force shall consult with and seek comments from and 184.11 participation by representatives of the affected local 184.12 governments. 184.13 (d) The revisor of statutes and house and senate 184.14 legislative staff shall staff the task force. 184.15 (e) This section expires onMarch 1, 1998May 1, 1999. 184.16 Sec. 14. [CITY OF BURNSVILLE; USE OF TAX INCREMENTS.] 184.17 Subdivision 1. [AUTHORIZATION.] Notwithstanding Minnesota 184.18 Statutes, section 469.176, 469.1763, or any other law to the 184.19 contrary, tax increments derived from the tax increment 184.20 financing district No. 2-1 in the city of Burnsville may, to the 184.21 extent not required for purposes of that district's tax 184.22 increment financing plan, be used to meet costs incurred by the 184.23 city or its economic development authority in relation to 184.24 assisting in the construction of an amphitheater and related 184.25 infrastructure improvements. This section does not authorize an 184.26 extension of the duration of tax increment financing district No. 184.27 2-1 beyond its duration under current law. 184.28 Subd. 2. [EFFECTIVE DATE.] This section is effective upon 184.29 compliance by the city of Burnsville with Minnesota Statutes, 184.30 section 645.021, subdivision 3. 184.31 Sec. 15. [CITY OF FOLEY; TAX INCREMENT FINANCING.] 184.32 Subdivision 1. [AUTHORIZATION OF USE OF 184.33 INCREMENTS.] Notwithstanding any law to the contrary, 184.34 expenditures by the city of Foley before January 1, 1998, of 184.35 revenue derived from tax increment financing district No. 1 to 184.36 finance a wastewater treatment facility located outside of the 185.1 district are authorized expenditures of that revenue. 185.2 Subd. 2. [EFFECTIVE DATE.] Pursuant to Minnesota Statutes, 185.3 section 645.023, subdivision 1, paragraph (a), this section is 185.4 effective without local approval the day following final 185.5 enactment and applies to revenues expended before January 1, 185.6 1998. 185.7 Sec. 16. [CITY OF MINNEAPOLIS; LAKE STREET REDEVELOPMENT 185.8 DISTRICT.] 185.9 Subdivision 1. [AUTHORIZATION.] Upon approval of the 185.10 governing body of the Minneapolis community development agency 185.11 by resolution, the authority may establish a redevelopment tax 185.12 increment financing district with phased redevelopment at a site 185.13 located on Lake Street and Chicago Avenue. The district shall 185.14 be subject to Minnesota Statutes, sections 469.174 to 469.179, 185.15 except as provided in this section. 185.16 Subd. 2. [ORIGINAL NET TAX CAPACITY.] Notwithstanding 185.17 Minnesota Statutes, section 469.174, subdivision 7, the original 185.18 net tax capacity of the district, as of the date the authority 185.19 certifies to the county auditor that the authority has entered 185.20 into a redevelopment or other agreement for rehabilitation of 185.21 the site or remediation of hazardous substances, shall be zero. 185.22 Subd. 3. [DURATION OF DISTRICT.] Notwithstanding the 185.23 provisions of Minnesota Statutes, section 469.176, subdivision 185.24 1b, no tax increment shall be paid to the authority after the 185.25 earlier of: (1) 18 years from the date of receipt by the 185.26 authority of the first increment generated from the final phase 185.27 of redevelopment or (2) 30 years from the date of receipt by the 185.28 authority of the first increment from the district. "Final 185.29 phase of redevelopment" means that phase of redevelopment 185.30 activity which completes the rehabilitation of the Sears site. 185.31 Subd. 4. [REMOVAL OF HAZARDOUS SUBSTANCES.] For purposes 185.32 of the three-year activity rule under Minnesota Statutes, 185.33 section 469.176, subdivision 1a, and the four-year action 185.34 requirement under Minnesota Statutes, section 469.176, 185.35 subdivision 6, the removal of hazardous substances from the site 185.36 shall constitute a qualifying activity. 186.1 Subd. 5. [FIVE-YEAR RULE.] Minnesota Statutes, section 186.2 469.1763, subdivision 3, does not apply. 186.3 Subd. 6. [NEIGHBORHOOD REVITALIZATION FUNDS.] Revenues 186.4 reserved by the authority for the neighborhood revitalization 186.5 program and allocated pursuant to the requirements of Minnesota 186.6 Statutes, section 469.1831, for expenditure in the tax increment 186.7 financing district described in this section qualify as a local 186.8 contribution for purposes of Minnesota Statutes, section 186.9 273.1399, subdivision 6. 186.10 Subd. 7. [EFFECTIVE DATE.] Subdivisions 1 to 6 are 186.11 effective upon compliance by the governing body of the 186.12 Minneapolis community development agency with Minnesota 186.13 Statutes, section 645.021, subdivision 3. Subdivision 6 is 186.14 effective for aid paid after July 1, 1998. 186.15 Sec. 17. [CITY OF RENVILLE; TAX INCREMENT FINANCING 186.16 DISTRICT.] 186.17 Subdivision 1. [CERTIFICATION DATE.] Except as otherwise 186.18 provided in this section, for purposes of Minnesota Statutes, 186.19 section 273.1399, and chapter 469, the certification date of the 186.20 addition of the following described property to tax increment 186.21 financing district No. 1 in the city of Renville is deemed to be 186.22 November 1, 1994: Lots 5, 6, 7, 8, and 9, Block 32, O'Connor's 186.23 Addition. 186.24 Subd. 2. [ORIGINAL NET TAX CAPACITY; ORIGINAL LOCAL TAX 186.25 RATE.] The original net tax capacity of property in subdivision 186.26 1 shall be $432 and the original local tax rate shall be 186.871 186.27 as of January 2, 1998, for increment collected in 1999. 186.28 Subd. 3. [EXPENDITURE OF INCREMENT.] Notwithstanding the 186.29 provisions of Minnesota Statutes, section 469.176, subdivision 186.30 1b, the city of Renville may collect and expend tax increment 186.31 generated by the lots cited in subdivision 1, in tax increment 186.32 financing district No. 1 in the city of Renville, until December 186.33 31, 2007. 186.34 Subd. 4. [APPLICABILITY.] The provisions of Minnesota 186.35 Statutes, sections 273.1399, subdivision 8, and 469.1782, do not 186.36 apply to the authority granted in this section. 187.1 Subd. 5. [LOCAL APPROVAL.] This section is effective upon 187.2 compliance by the city of Renville with Minnesota Statutes, 187.3 section 645.021, subdivision 3. 187.4 Sec. 18. [CITY OF WEST ST. PAUL; DAKOTA COUNTY HOUSING AND 187.5 REDEVELOPMENT AUTHORITY; EXCEPTION TO TAX INCREMENT FINANCING 187.6 REQUIREMENTS.] 187.7 Subdivision 1. [GENERALLY.] The city of West St. Paul and 187.8 the Dakota county housing and redevelopment authority may 187.9 operate the Signal Hills Redevelopment tax increment financing 187.10 district (Dakota county housing and redevelopment authority tax 187.11 increment financing district No. 11) hereinafter referred to as 187.12 "the district" according to the provisions set forth in this 187.13 section. 187.14 Subd. 2. [LOCAL CONTRIBUTION.] The district is exempt from 187.15 the reduction in state aid imposed under Minnesota Statutes, 187.16 section 273.1399, without making a contribution required under 187.17 Minnesota Statutes, section 273.1399, subdivision 6, paragraph 187.18 (d), if it contributes each year an amount equal to 15 percent 187.19 of the tax increments from the district received in that year 187.20 into a redevelopment account, which may be used for 187.21 redevelopment projects in the South Robert Street Redevelopment 187.22 tax increment financing district (Dakota county housing and 187.23 redevelopment authority tax increment financing district No. 4). 187.24 Subd. 3. [TIME LIMIT FOR INITIATING ACTION.] The time 187.25 limits for initiation of activity in the district and reporting 187.26 the initiation to the county auditor under Minnesota Statutes, 187.27 section 469.176, subdivision 6, are extended to five and six 187.28 years, respectively. 187.29 Subd. 4. [FIVE-YEAR RULE.] The district is subject to the 187.30 requirement of Minnesota Statutes, section 469.1763, subdivision 187.31 3, except that the five-year period is extended to a ten-year 187.32 period. 187.33 Subd. 5. [THREE-YEAR RULE.] The district is not subject to 187.34 the provisions of Minnesota Statutes, section 469.176, 187.35 subdivision 1a. 187.36 Subd. 6. [EFFECTIVE DATE.] This section is effective upon 188.1 compliance by the city of West St. Paul with Minnesota Statutes, 188.2 section 645.021, subdivision 3. 188.3 Sec. 19. [CITY OF BROWERVILLE; TAX INCREMENT FINANCING 188.4 DISTRICT.] 188.5 Subdivision 1. [EXPENDITURES OUTSIDE OF 188.6 DISTRICT.] Notwithstanding the provisions of Minnesota Statutes, 188.7 section 469.1763, the city of Browerville may expend tax 188.8 increments from tax increment district No. 2 for eligible 188.9 activities outside tax increment district No. 2 but within 188.10 development district No. 1, and the limitations contained in 188.11 Minnesota Statutes, section 469.1763, subdivision 2, shall not 188.12 apply. 188.13 Subd. 2. [EFFECTIVE DATE.] This section is effective after 188.14 its approval by the governing body of the city of Browerville 188.15 and compliance with Minnesota Statutes, section 645.021, 188.16 subdivision 3. 188.17 Sec. 20. [CITY OF DEEPHAVEN; TAX INCREMENT FINANCING.] 188.18 Subdivision 1. [AUTHORIZATION OF 188.19 EXPENDITURES.] Notwithstanding any law to the contrary, the city 188.20 of Deephaven may expend revenues derived from tax increment 188.21 financing district number 1-1 that are available and 188.22 unencumbered on the date of enactment of this act to finance a 188.23 public improvement located outside of the district. The public 188.24 improvement must be included in the tax increment plan prior to 188.25 January 1, 1997. 188.26 Subd. 2. [EFFECTIVE DATE.] This section is effective the 188.27 day upon approval by the governing body of the city of Deephaven 188.28 and compliance with Minnesota Statutes, section 645.021, 188.29 subdivision 3, and applies to revenues expended after the date 188.30 of final enactment. 188.31 Sec. 21. [MEEKER COUNTY; ECONOMIC DEVELOPMENT AUTHORITY; 188.32 ESTABLISHMENT AND POWERS.] 188.33 Subdivision 1. [ESTABLISHMENT.] The board of county 188.34 commissioners of Meeker county may establish an economic 188.35 development authority in the manner provided in Minnesota 188.36 Statutes, sections 469.090 to 469.1081, and may impose limits on 189.1 the authority enumerated in Minnesota Statutes, section 469.092. 189.2 The economic development authority has all of the powers and 189.3 duties granted to or imposed upon economic development 189.4 authorities under Minnesota Statutes, sections 469.090 to 189.5 469.1081. The county economic development authority may create 189.6 and define the boundaries of economic development districts at 189.7 any place or places within the county, provided that a project 189.8 as recommended by the county authority that is to be located 189.9 within the corporate limits of a city may not be commenced 189.10 without the approval of the governing body of the city. 189.11 Minnesota Statutes, section 469.174, subdivision 10, and the 189.12 contiguity requirement specified under Minnesota Statutes, 189.13 section 469.101, subdivision 1, do not apply to limit the areas 189.14 that may be designated as county economic development districts. 189.15 Subd. 2. [POWERS.] If an economic development authority is 189.16 established as provided in subdivision 1, the county may 189.17 exercise all of the powers relating to an economic development 189.18 authority granted to a city under Minnesota Statutes, sections 189.19 469.090 to 469.1081, or other law, including the power to levy a 189.20 tax to support the activities of the authority. 189.21 Subd. 3. [LOCAL APPROVAL.] This section is effective the 189.22 day after the Meeker county board's approval is filed as 189.23 provided in Minnesota Statutes, section 645.021, subdivision 3. 189.24 Sec. 22. [KITTSON COUNTY; ECONOMIC DEVELOPMENT AUTHORITY; 189.25 ESTABLISHMENT AND POWERS.] 189.26 Subdivision 1. [ESTABLISHMENT.] The board of county 189.27 commissioners of Kittson county may establish an economic 189.28 development authority in the manner provided in Minnesota 189.29 Statutes, sections 469.090 to 469.1081, and may impose limits on 189.30 the authority enumerated in Minnesota Statutes, section 469.092. 189.31 The economic development authority has all of the powers and 189.32 duties granted to or imposed upon economic development 189.33 authorities under Minnesota Statutes, sections 469.090 to 189.34 469.1081. The county economic development authority may create 189.35 and define the boundaries of economic development districts at 189.36 any place or places within the county, provided that a project 190.1 as recommended by the county authority that is to be located 190.2 within the corporate limits of a city may not be commenced 190.3 without the approval of the governing body of the city. 190.4 Minnesota Statutes, section 469.174, subdivision 10, and the 190.5 contiguity requirement specified under Minnesota Statutes, 190.6 section 469.101, subdivision 1, do not apply to limit the areas 190.7 that may be designated as county economic development districts. 190.8 Subd. 2. [POWERS.] If an economic development authority is 190.9 established as provided in subdivision 1, the county may 190.10 exercise all of the powers relating to an economic development 190.11 authority granted to a city under Minnesota Statutes, sections 190.12 469.090 to 469.1081, or other law, including the power to levy a 190.13 tax to support the activities of the authority. 190.14 Subd. 3. [LOCAL APPROVAL.] This section is effective the 190.15 day after the Kittson county board's approval is filed as 190.16 provided in Minnesota Statutes, section 645.021, subdivision 3. 190.17 Sec. 23. [EFFECTIVE DATE.] 190.18 Sections 1, 5, and 7 apply to tax increment financing 190.19 districts certified before, on, or after August 1, 1979. 190.20 Sections 2, 3, 4, and 8 are effective for disclosures 190.21 required to be made and reports required to be submitted in 1999. 190.22 Section 6 is effective for tax increment financing 190.23 districts for which certification is requested after April 30, 190.24 1998. 190.25 Section 9 is effective the day following final enactment. 190.26 Section 11 is effective the day following final enactment 190.27 and applies to abatements granted on or after that date. 190.28 Section 12 is effective upon compliance by Itasca county 190.29 with Minnesota Statutes, section 645.021, subdivision 3. 190.30 ARTICLE 10 190.31 BORDER CITY ZONES 190.32 Section 1. [272.0212] [BORDER DEVELOPMENT ZONE PROPERTY.] 190.33 Subdivision 1. [EXEMPTION.] All qualified property in a 190.34 zone is exempt to the extent and for the duration provided by 190.35 the zone designation and under sections 469.1931 to 469.1933. 190.36 Subd. 2. [LIMITS ON EXEMPTION.] Property in a zone is not 191.1 exempt under this section from the following: 191.2 (1) special assessments; 191.3 (2) ad valorem property taxes specifically levied for the 191.4 payment of principal and interest on debt obligations; and 191.5 (3) all taxes levied by a school district, except equalized 191.6 school levies as defined in section 273.1398, subdivision 1, 191.7 paragraph (e). 191.8 Subd. 3. [STATE AID.] Property exempt under this section 191.9 is included in the net tax capacity for purposes of computing 191.10 aids under chapter 477A. 191.11 Subd. 4. [DEFINITIONS.] (a) For purposes of this section, 191.12 the following terms have the meanings given. 191.13 (b) "Qualified property" means class 3 and class 5 property 191.14 as defined in section 273.13 that is located in a zone: 191.15 (1) designated by the city of Breckenridge or East Grand 191.16 Forks; or 191.17 (2) not covered by clause (1) and is newly constructed 191.18 after the zone was designated. 191.19 (c) "Zone" means a border city development zone designated 191.20 under the provisions of section 469.1931. 191.21 Sec. 2. Minnesota Statutes 1996, section 290.06, is 191.22 amended by adding a subdivision to read: 191.23 Subd. 26. [BORDER CITY ZONE CREDIT.] (a) A corporation may 191.24 claim a credit against the tax imposed by this section and 191.25 sections 290.0921 and 290.0922. The commissioner shall 191.26 prescribe the method in which the credit may be claimed. This 191.27 may include allowing the credit only as a separately processed 191.28 claim for refund. The allowable credit equals the tax liability 191.29 attributable to business conducted within a zone. 191.30 (b) Tax liability means the tax liability under this 191.31 section and sections 290.0921 and 290.0922 after any other 191.32 credits. 191.33 (c) The tax liability attributable to business conducted 191.34 within a zone means the taxpayer's tax liability multiplied by a 191.35 fraction: 191.36 (1) the numerator of which is (i) the ratio of the 192.1 taxpayer's property factor under section 290.191 located in the 192.2 zone for the taxable year minus the property factor located in 192.3 zone for the taxable year immediately before the zone 192.4 designation took effect to the taxpayer's total Minnesota 192.5 property factor, plus (ii) the ratio of the taxpayer's payroll 192.6 factor under section 290.191 for services performed in the zone 192.7 for the taxable year minus the payroll factor for services 192.8 performed in zone for the taxable year immediately before the 192.9 zone designation took effect to the taxpayer's total Minnesota 192.10 payroll factor; and 192.11 (2) the denominator of which is two. 192.12 (d) Any portion of the taxpayer's tax liability that is 192.13 attributable to illegal activity conducted in the zone must not 192.14 be used to calculate a credit under this subdivision. 192.15 (e) The credit allowed under this section continues through 192.16 the taxable year in which the zone designation expires. 192.17 (f) To be eligible for a credit under this subdivision, the 192.18 taxpayer must file an annual return under this chapter. 192.19 (g) The credit allowed under this subdivision may not 192.20 exceed the lesser of: 192.21 (1) the tax liability of the taxpayer for the taxable year; 192.22 or 192.23 (2) for taxable years beginning before January 1, 2002, the 192.24 amount of the tax credit certificates received by the taxpayer 192.25 from the city, less any tax credit certificates used under 192.26 subdivision 27, and sections 297A.25, subdivision 73; and 192.27 469.1934, subdivision 4. 192.28 (h) "Zone" means a border city development zone designated 192.29 under the provisions of section 469.1931. 192.30 Sec. 3. Minnesota Statutes 1996, section 290.06, is 192.31 amended by adding a subdivision to read: 192.32 Subd. 27. [BORDER CITY NEW INDUSTRY CREDIT.] (a) To 192.33 provide a tax incentive for new industry in border cities, a 192.34 corporation is allowed a credit against the tax imposed by this 192.35 section. The commissioner shall prescribe the method in which 192.36 the credit may be claimed. This may include allowing the credit 193.1 only as a separately processed claim for refund. 193.2 (b) For purposes of this subdivision, a border city means 193.3 any city that is authorized to create a border city development 193.4 zone under section 469.1931. 193.5 (c) The credit equals one percent of the wages and salaries 193.6 paid by the taxpayer during the taxable year for employees whose 193.7 principal place of work is located in a border city but outside 193.8 of a zone designated under section 469.1931. The credit applies 193.9 for the first three taxable years of the operation of the 193.10 corporation in the border city. In the fourth and fifth taxable 193.11 years of the operation of the corporation in the border city, 193.12 the credit equals 0.5 percent of the wages and salaries. After 193.13 the fifth year, no credit is allowed. 193.14 (d) The credit under this subdivision applies only to a 193.15 corporate enterprise engaged in assembling, fabricating, 193.16 manufacturing, mixing, or processing of any agricultural, 193.17 mineral, or manufactured product or combinations of them. 193.18 (e) A corporation is not a new industry in a border city if 193.19 the corporation is created from an existing corporation and 193.20 remains part of the same unitary business as defined in section 193.21 290.17. 193.22 (f) The credit allowed under this subdivision may not 193.23 exceed the lesser of: 193.24 (1) the tax liability of the taxpayer for the taxable year; 193.25 or 193.26 (2) for taxable years beginning before January 1, 2002, the 193.27 amount of the tax credit certificates received by the taxpayer 193.28 from the city, less any tax credit certificates used under 193.29 subdivision 26, and sections 297A.25, subdivision 73; and 193.30 469.1934, subdivision 4. 193.31 Sec. 4. Minnesota Statutes 1996, section 297A.25, is 193.32 amended by adding a subdivision to read: 193.33 Subd. 73. [BORDER CITIES; CAPITAL EQUIPMENT; CONSTRUCTION 193.34 MATERIALS.] (a) The gross receipts from the sale of machinery 193.35 and equipment and repair parts are exempt, if the machinery and 193.36 equipment: 194.1 (1) are used in connection with a trade or business; 194.2 (2) are placed in service in a city that has designated a 194.3 zone under section 469.1931, regardless of whether the machinery 194.4 and equipment are used in a zone; and 194.5 (3) have a useful life of 12 months or more. 194.6 (b) The gross receipts from the sale of construction 194.7 materials are exempt, if they are used to construct a facility 194.8 for use in a trade or business located in a city that has 194.9 designated a zone under section 469.1931, regardless of whether 194.10 the facility is located in a zone. 194.11 (c) The exemptions under this subdivision apply regardless 194.12 of whether the purchase is made by the owner, the user, or a 194.13 contractor. 194.14 (d) For purchases made before July 1, 2001, a purchaser may 194.15 claim an exemption under this subdivision for tax on the 194.16 purchases up to, but not exceeding: 194.17 (1) the amount of the tax credit certificates received from 194.18 the city, less 194.19 (2) any tax credit certificates used under the provisions 194.20 of sections 290.06, subdivisions 26 and 27; and 469.1934, 194.21 subdivision 4. 194.22 Sec. 5. Minnesota Statutes 1996, section 469.170, is 194.23 amended by adding a subdivision to read: 194.24 Subd. 5e. [LIMITS ON MULTIYEAR PLANS.] The requirements 194.25 for a multiyear enterprise zone tax credit distribution plan 194.26 under subdivisions 5a to 5d apply only for: 194.27 (1) each business that will receive more than $25,000 in 194.28 credits in a year; or 194.29 (2) tax reductions under section 469.171, subdivision 1, 194.30 for businesses in areas designated under section 469.171, 194.31 subdivision 5. 194.32 Sec. 6. Minnesota Statutes 1996, section 469.171, 194.33 subdivision 9, is amended to read: 194.34 Subd. 9. [RECAPTURE.] Any business that (1) receives tax 194.35 reductions authorized by subdivisions 1 to 8, classification as 194.36 employment property pursuant to section 469.170, or an 195.1 alternative local contribution under section 469.169, 195.2 subdivision 5; and (2) ceases to operate its facility located 195.3 within the enterprise zonewithin two years after the expiration195.4of the tax reductionsshall repay the amount of the tax 195.5 reduction or local contributionpursuant to the following195.6schedule:195.7TerminationRepayment195.8of operationsPortion195.9Less than 6 months100 percent195.106 months or more but less than 12 months75 percent195.1112 months or more but less than 18 months50 percent195.1218 months or more but less than 24 months25 percent195.13 received during the two years immediately before it stopped 195.14 operating in the zone. 195.15 The repayment must be paid to the state to the extent it 195.16 represents a tax reduction under subdivisions 1 to 8 and to the 195.17 municipality to the extent it represents a property tax 195.18 reduction or other local contribution. Any amount repaid to the 195.19 state must be credited to the amount certified as available for 195.20 tax reductions in the zone pursuant to section 469.169, 195.21 subdivision 7. Any amount repaid to the municipality must be 195.22 used by the municipality for economic development purposes. The 195.23 commissioner of revenue may seek repayment of tax credits from a 195.24 business ceasing to operate within an enterprise zone. 195.25 Sec. 7. [469.1931] [BORDER CITY DEVELOPMENT ZONES.] 195.26 Subdivision 1. [DESIGNATION.] To encourage economic 195.27 development, to revitalize the designated areas, to expand tax 195.28 base and economic activity, and to provide job creation, growth, 195.29 and retention, the following border cities may designate, by 195.30 resolution, areas of the city as development zones after a 195.31 public hearing upon 30-day notice. 195.32 (a) The city of Breckenridge may designate all or any part 195.33 of the city as a zone. 195.34 (b) The city of Dilworth may designate between one and six 195.35 areas of the city as zones containing not more than 100 acres in 195.36 the aggregate. 196.1 (c) The city of East Grand Forks may designate all or any 196.2 part of the city as a zone. 196.3 (d) The city of Moorhead may designate between one and six 196.4 areas of the city as zones containing not more than 100 acres in 196.5 the aggregate. 196.6 (e) The city of Ortonville may designate between one and 196.7 six areas of the city as zones containing not more than 100 196.8 acres in the aggregate. 196.9 Subd. 2. [DEVELOPMENT PLAN.] (a) Before designating a 196.10 development zone, the city must adopt a written development plan 196.11 that addresses: 196.12 (1) evidence of adverse economic conditions within the area 196.13 resulting from competition with the bordering state or the 1997 196.14 floods or both; 196.15 (2) the viability of the development plan; 196.16 (3) public and private commitment to and other resources 196.17 available for the area; 196.18 (4) how designation would relate to a development and 196.19 revitalization plan for the city as a whole; and 196.20 (5) how the local regulatory burden will be eased for 196.21 businesses operating in the area. 196.22 (b) The development plan must include: 196.23 (1) a map of the proposed zone that indicates the 196.24 geographic boundaries, the total area, and the present use and 196.25 conditions generally of land and structures within the area; 196.26 (2) evidence of community support and commitment from 196.27 business interests; 196.28 (3) a description of the methods proposed to increase 196.29 economic opportunity and expansion, facilitate infrastructure 196.30 improvement, and identify job opportunities; and 196.31 (4) the duration of the zone designation, not to exceed 15 196.32 years. 196.33 Subd. 3. [FILING.] The city must file a copy of the 196.34 resolution and development plan with the commissioner of trade 196.35 and economic development. The designation takes effect for the 196.36 first calendar year that begins more than 90 days after the 197.1 filing. 197.2 Sec. 8. [469.1932] [TAX INCENTIVES.] 197.3 Subdivision 1. [ZONE INCENTIVES.] A business that conducts 197.4 business activity within a border city development zone may 197.5 qualify for the property tax exemption under section 272.0212, 197.6 the corporate franchise tax credit under section 290.06, 197.7 subdivision 26, and the sales tax exemption under section 197.8 297A.25, subdivision 73. 197.9 Subd. 2. [PHASEOUT AT END OF ZONE DURATION.] During the 197.10 last three years of the duration of a border city development 197.11 zone, the available exemptions, subtractions, or credits are 197.12 reduced by the following percentages for the taxes payable year 197.13 or the taxable years that begin during: 197.14 (1) the calendar year that is two years before the final 197.15 year of designation as a development zone, 25 percent; 197.16 (2) the calendar year that is immediately before the final 197.17 year of designation as a development zone, 50 percent; and 197.18 (3) for the final calendar year of designation as a 197.19 development zone, 75 percent. 197.20 Sec. 9. [469.1933] [DISQUALIFIED TAXPAYERS.] 197.21 Subdivision 1. [DELINQUENT TAXPAYERS.] An individual who 197.22 is a resident of a border city development zone or a business 197.23 that conducts business activity within a border city development 197.24 zone is not eligible for the exemptions or credits available in 197.25 the border city development zone, if the individual or business 197.26 owes delinquent amounts under chapter 290 or if the individual 197.27 or business owns property located in the city or county in which 197.28 the zone is located on which the property taxes are delinquent. 197.29 Subd. 2. [RELOCATION WITHIN COUNTY.] If a business located 197.30 in the county in which the border city development zone is 197.31 located relocates from outside a zone into a zone, the business 197.32 is not eligible for the exemptions or credits available in the 197.33 border city development zone, unless the governing body of the 197.34 city, for a business located in an incorporated area, or the 197.35 county, for a business located outside of an incorporated area, 197.36 approves the relocation of the business. 198.1 Subd. 3. [RELOCATION FROM OUTSIDE COUNTY.] (a) If a 198.2 business relocates more than 25 full-time equivalent jobs from a 198.3 location in Minnesota outside of the county in which the zone is 198.4 located, the business must notify the commissioner of trade and 198.5 economic development and the city and county governments from 198.6 which the jobs are being relocated. A business may satisfy the 198.7 notification requirement by notifying the commissioner of trade 198.8 and economic development, the city, and county of its intent to 198.9 transfer jobs to a zone before actually doing so. The business 198.10 is not eligible for the exemptions and credits available in the 198.11 border city development zone, if the governing body of the city 198.12 or county from which the jobs are being relocated adopts a 198.13 resolution objecting to the relocation within 60 days after its 198.14 receipt of the notice. 198.15 (b) The business becomes eligible for the exemptions and 198.16 credits available in the zone when each city and county that 198.17 objected to the relocation rescinds its objection by resolution. 198.18 (c) A city or county that objects to the relocation of jobs 198.19 must file a copy of the resolution with the commissioners of 198.20 trade and economic development and revenue, and the city that 198.21 created the border city development zone into which the jobs 198.22 were or intend to be transferred. 198.23 Sec. 10. [469.1934] [TAX INCENTIVES OUTSIDE ZONES.] 198.24 Subdivision 1. [AUTHORITY.] A city with authority to 198.25 establish a border city development zone under section 469.1931 198.26 may grant the tax incentives provided by this section. This 198.27 authority applies only to projects located outside of a zone. 198.28 Subd. 2. [DEFINITIONS.] For purposes of this section, 198.29 "qualifying business" means the business conducted by a 198.30 corporation, partnership, or individual doing business from a 198.31 fixed location within the border city but located outside of the 198.32 border city development zone. 198.33 Subd. 3. [PROPERTY TAX.] (a) A city may grant a partial or 198.34 complete exemption from property taxation of all buildings, 198.35 structures, fixtures, and improvements used in or necessary to a 198.36 qualifying business for a period not exceeding five years from 199.1 the date the project begins operating. A partial exemption must 199.2 be stated as a percentage of the total ad valorem taxes assessed 199.3 against the property. 199.4 (b) In addition to, or in lieu of, a property tax exemption 199.5 under paragraph (a), a city may establish an amount due as 199.6 payments in lieu of ad valorem taxes on buildings, structures, 199.7 fixtures, and improvements used by the qualifying business. The 199.8 city council shall designate the amount of the payments for each 199.9 year and the beginning year and the concluding year for payments 199.10 in lieu of taxes. The option to make payments in lieu of taxes 199.11 under this section may not extend beyond the 20th year after the 199.12 taxpayer becomes a qualifying business. To establish the amount 199.13 of payments in lieu of taxes, the city council may use actual or 199.14 estimated levels of assessment and taxation or may designate 199.15 different amounts of payments in lieu of other taxes in 199.16 different years to recognize future expansion plans of a 199.17 qualifying business or other considerations. The payments in 199.18 lieu shall be collected and distributed in the same manner as ad 199.19 valorem taxes. 199.20 (c) The city council must determine whether granting the 199.21 exemption or payments in lieu of taxes, or both, is in the best 199.22 interest of the city, and if it so determines, must give its 199.23 approval. 199.24 Subd. 4. [INCOME TAX.] (a) Upon application by the 199.25 qualifying business to the city, and approval of the city, the 199.26 net income of the qualified business attributable to the border 199.27 city, but outside the border city development zone, shall be 199.28 exempt. The attributable net income of a qualified business in 199.29 the border city is determined by multiplying the net income of 199.30 the taxpayer by a fraction: 199.31 (1) the numerator of which is: 199.32 (i) the ratio of the taxpayer's property factor under 199.33 section 290.191 located in the border city, but outside of the 199.34 border city development zone, for the taxable year over the 199.35 property factor denominator determined under section 290.191, 199.36 plus 200.1 (ii) the ratio of the taxpayer's payroll factor under 200.2 section 290.191 located in the border city, but outside of the 200.3 border city development zone, for the taxable year over the 200.4 payroll factor denominator determined under section 290.191; and 200.5 (2) the denominator of which is two. 200.6 (b) The exemption under this subdivision applies after any 200.7 credit allowed under section 290.06, subdivision 27. 200.8 (c) After any notice period required by subdivision 5, the 200.9 city council must determine whether granting the exemption is in 200.10 the best interest of the city, and if it so determines, must 200.11 give its approval. 200.12 (d) For taxable years beginning before January 1, 2002, the 200.13 exemption under this subdivision may not exceed the amount of 200.14 the tax credit certificates received by the taxpayer from the 200.15 city, less any tax credit certificates used under sections 200.16 290.06, subdivisions 26 and 27; and 297A.25, subdivision 73. 200.17 Subd. 5. [NOTICE TO COMPETITORS.] (a) Before an exemption 200.18 or other concession is granted under subdivision 3 or 4, the 200.19 procedure under this subdivision applies. 200.20 (b) Unless the city council determines that no existing 200.21 business within the city would be a potential competitor of the 200.22 project, the project operator shall publish two notices to 200.23 competitors of the application of the tax exemption or payments 200.24 in lieu in the official newspaper of the city. The commissioner 200.25 of revenue shall prescribe the form of the notice. The two 200.26 notices must be published at least one week apart. The 200.27 publications must be completed not less than 15 days nor more 200.28 than 30 days before the city council approves the tax exemption 200.29 or payments in lieu of taxes. 200.30 Sec. 11. [469.1935] [NEW HOME EXEMPTION.] 200.31 The governing body of a city with authority to establish a 200.32 border city development zone under section 469.1931 may grant a 200.33 property tax exemption for the first $75,000 of estimated market 200.34 value of new property that will be assessed under section 200.35 273.13, subdivision 22, as class 1, or under subdivision 25, as 200.36 class 4bb, and that consists of no more than one dwelling unit. 201.1 The exemption does not apply to the value of the land. The 201.2 exemption applies to the first two assessment years that begin 201.3 after construction began on the dwelling. The following 201.4 requirements apply: 201.5 (1) the governing body must grant the exemption by 201.6 resolution. It may rescind or amend the resolution at any time, 201.7 effective for assessment years beginning after the date of 201.8 adoption; 201.9 (2) special assessments and taxes on the property upon 201.10 which the dwelling is situated are not delinquent; and 201.11 (3) the first owner after the builder resides on the 201.12 property or the builder still owns the property. A builder 201.13 includes a person who builds that person's own residence. 201.14 Sec. 12. [469.1936] [LIMIT ON TAX REDUCTIONS; FISCAL YEARS 201.15 1999-2001.] 201.16 Subdivision 1. [BUSINESSES MUST APPLY.] To claim a tax 201.17 credit or exemption under section 290.06, subdivision 26 or 27; 201.18 or 469.1934, subdivision 4 for a taxable year beginning before 201.19 January 1, 2002 or an exemption from sales tax under section 201.20 297A.25, subdivision 73, for a purchase made before July 1, 201.21 2001, a business must apply to the city for a tax credit 201.22 certificate. The total amount of the state tax reductions 201.23 allowed for the specified period may not exceed the amount of 201.24 the tax credit certificates provided by the city to the business. 201.25 Subd. 2. [CITY LIMITS.] (a) Each city may provide tax 201.26 credit certificates to businesses that apply and meet the 201.27 requirements for the tax credit and exemption. The certificates 201.28 that each city may provide for the period covered by this 201.29 section is limited to the amount specified in this subdivision. 201.30 No other tax credits or exemptions apply for otherwise 201.31 qualifying activity or purchases during taxable years beginning 201.32 before January 1, 2002 or for purchases made before July 1, 2001. 201.33 (b) The maximum amount of tax credit certificates each city 201.34 may issue equals: 201.35 (1) for the city of Breckenridge, $394,000; 201.36 (2) for the city of Dilworth, $118,200; 202.1 (3) for the city of East Grand Forks, $788,000; 202.2 (4) for the city of Moorhead, $591,000; and 202.3 (5) for the city of Ortonville, $78,800. 202.4 Sec. 13. [EFFECTIVE DATE.] 202.5 Sections 1 to 4 and 7 to 12 are effective the day following 202.6 final enactment. 202.7 Section 5 is effective for plans required to be filed after 202.8 the day following final enactment, regardless of whether the 202.9 business received a credit and was required to file a plan in a 202.10 prior year. 202.11 Section 6 is effective for tax reductions received 202.12 beginning in the first calendar year after the day following 202.13 final enactment. 202.14 ARTICLE 11 202.15 GAMING TAXES 202.16 Section 1. Minnesota Statutes 1996, section 240.15, 202.17 subdivision 1, is amended to read: 202.18 Subdivision 1. [TAXES IMPOSED.] (a)From July 1, 1996,202.19until July 1, 1999,There is imposed a tax at the rate of six 202.20 percent of the amount in excess of $12,000,000 annually withheld 202.21 from all pari-mutuel pools by the licensee, including breakage 202.22 and amounts withheld under section 240.13, subdivision 4.After202.23June 30, 1999, the tax is imposed on the total amount withheld202.24from all pari-mutuel pools.For the purpose of this 202.25 subdivision, "annually" is the period from July 1 to June 30 of 202.26 the next year. 202.27 In addition to the above tax, the licensee must designate 202.28 and pay to the commission a tax of one percent of the total 202.29 amount bet on each racing day, for deposit in the Minnesota 202.30 breeders fund. 202.31 The taxes imposed by this clause must be paid from the 202.32 amounts permitted to be withheld by a licensee under section 202.33 240.13, subdivision 4. 202.34 (b) The commission may impose an admissions tax of not more 202.35 than ten cents on each paid admission at a licensed racetrack on 202.36 a racing day if: 203.1 (1) the tax is requested by a local unit of government 203.2 within whose borders the track is located; 203.3 (2) a public hearing is held on the request; and 203.4 (3) the commission finds that the local unit of government 203.5 requesting the tax is in need of its revenue to meet 203.6 extraordinary expenses caused by the racetrack. 203.7 Sec. 2. Minnesota Statutes 1996, section 240.15, 203.8 subdivision 5, is amended to read: 203.9 Subd. 5. [UNREDEEMED TICKETS.] (a) Notwithstanding any 203.10 provision to the contrary in chapter 345, unredeemed pari-mutuel 203.11 tickets shall not be considered unclaimed funds and shall be 203.12 handled in accordance with the provisions of this subdivision. 203.13 (b)Until the end of calendar year 1999,Any person 203.14 claiming to be entitled to the proceeds of any unredeemed ticket 203.15 may within one year after the conclusion of each race meet file 203.16 with the licensee a verified claim for such proceeds on such 203.17 form as the licensee prescribes along with the pari-mutuel 203.18 ticket. Unless the claimant satisfactorily establishes the 203.19 right to the proceeds, the claim shall be rejected. If the 203.20 claim is allowed, the licensee shall pay the proceeds without 203.21 interest to the claimant. 203.22(c) Beginning January 1, 2000, not later than 100 days203.23after the end of a race meet a licensee who sells pari-mutuel203.24tickets must remit to the commission or its representative an203.25amount equal to the total value of unredeemed tickets from the203.26race meet. The remittance must be accompanied by a detailed203.27statement of the money on a form the commission prescribes. Any203.28person claiming to be entitled to the proceeds of any unredeemed203.29ticket who fails to claim said proceeds prior to their being203.30remitted to the commission, may within one year after the date203.31of remittance to the commission file with the commission a203.32verified claim for such proceeds on such form as the commission203.33prescribes along with the pari-mutuel ticket. Unless the203.34claimant satisfactorily establishes the right to the proceeds,203.35the claim shall be rejected. If the claim is allowed, the203.36commission shall pay the proceeds without interest to the204.1claimant. There is hereby appropriated from the general fund to204.2the commission an amount sufficient to make payment to persons204.3entitled to such proceeds.204.4 Sec. 3. Minnesota Statutes 1996, section 297E.02, 204.5 subdivision 1, is amended to read: 204.6 Subdivision 1. [IMPOSITION.] A tax is imposed on all 204.7 lawful gambling other than (1) pull-tabs purchased and placed 204.8 into inventory after January 1, 1987, and (2) tipboards 204.9 purchased and placed into inventory after June 30, 1988, at the 204.10 rate often9.5 percent on the gross receipts as defined in 204.11 section 297E.01, subdivision 8, less prizes actually paid. The 204.12 tax imposed by this subdivision is in lieu of the tax imposed by 204.13 section 297A.02 and all local taxes and license fees except a 204.14 fee authorized under section 349.16, subdivision 8, or a tax 204.15 authorized under subdivision 5. 204.16 The tax imposed under this subdivision is payable by the 204.17 organization or party conducting, directly or indirectly, the 204.18 gambling. 204.19 Sec. 4. Minnesota Statutes 1996, section 297E.02, 204.20 subdivision 4, is amended to read: 204.21 Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 204.22 on the sale of each deal of pull-tabs and tipboards sold by a 204.23 distributor. The rate of the tax istwo1.9 percent of the 204.24 ideal gross of the pull-tab or tipboard deal. The sales tax 204.25 imposed by chapter 297A on the sale of the pull-tabs and 204.26 tipboards by the distributor is imposed on the retail sales 204.27 price less the tax imposed by this subdivision. The retail sale 204.28 of pull-tabs or tipboards by the organization is exempt from 204.29 taxes imposed by chapter 297A and is exempt from all local taxes 204.30 and license fees except a fee authorized under section 349.16, 204.31 subdivision 8. 204.32 (b) The liability for the tax imposed by this section is 204.33 incurred when the pull-tabs and tipboards are delivered by the 204.34 distributor to the customer or to a common or contract carrier 204.35 for delivery to the customer, or when received by the customer's 204.36 authorized representative at the distributor's place of 205.1 business, regardless of the distributor's method of accounting 205.2 or the terms of the sale. 205.3 The tax imposed by this subdivision is imposed on all sales 205.4 of pull-tabs and tipboards, except the following: 205.5 (1) sales to the governing body of an Indian tribal 205.6 organization for use on an Indian reservation; 205.7 (2) sales to distributors licensed under the laws of 205.8 another state or of a province of Canada, as long as all 205.9 statutory and regulatory requirements are met in the other state 205.10 or province; 205.11 (3) sales of promotional tickets as defined in section 205.12 349.12; and 205.13 (4) pull-tabs and tipboards sold to an organization that 205.14 sells pull-tabs and tipboards under the exemption from licensing 205.15 in section 349.166, subdivision 2. A distributor shall require 205.16 an organization conducting exempt gambling to show proof of its 205.17 exempt status before making a tax-exempt sale of pull-tabs or 205.18 tipboards to the organization. A distributor shall identify, on 205.19 all reports submitted to the commissioner, all sales of 205.20 pull-tabs and tipboards that are exempt from tax under this 205.21 subdivision. 205.22 (c) A distributor having a liability of $120,000 or more 205.23 during a fiscal year ending June 30 must remit all liabilities 205.24 in the subsequent calendar year by a funds transfer as defined 205.25 in section 336.4A-104, paragraph (a). The funds transfer 205.26 payment date, as defined in section 336.4A-401, must be on or 205.27 before the date the tax is due. If the date the tax is due is 205.28 not a funds transfer business day, as defined in section 205.29 336.4A-105, paragraph (a), clause (4), the payment date must be 205.30 on or before the funds transfer business day next following the 205.31 date the tax is due. 205.32 (d) Any customer who purchases deals of pull-tabs or 205.33 tipboards from a distributor may file an annual claim for a 205.34 refund or credit of taxes paid pursuant to this subdivision for 205.35 unsold pull-tab and tipboard tickets. The claim must be filed 205.36 with the commissioner on a form prescribed by the commissioner 206.1 by March 20 of the year following the calendar year for which 206.2 the refund is claimed. The refund must be filed as part of the 206.3 customer's February monthly return. The refund or credit is 206.4 equal totwo1.9 percent of the face value of the unsold 206.5 pull-tab or tipboard tickets, provided that the refund or credit 206.6 will be 1.95 percent of the face value of the unsold pull-tab or 206.7 tipboard tickets for claims for a refund or credit of taxes 206.8 filed on the February 1999 monthly return. The refund claimed 206.9 will be applied as a credit against tax owing under this chapter 206.10 on the February monthly return. If the refund claimed exceeds 206.11 the tax owing on the February monthly return, that amount will 206.12 be refunded. The amount refunded will bear interest pursuant to 206.13 section 270.76 from 90 days after the claim is filed. 206.14 Sec. 5. Minnesota Statutes 1996, section 297E.02, 206.15 subdivision 6, is amended to read: 206.16 Subd. 6. [COMBINED RECEIPTS TAX.] In addition to the taxes 206.17 imposed under subdivisions 1 and 4, a tax is imposed on the 206.18 combined receipts of the organization. As used in this section, 206.19 "combined receipts" is the sum of the organization's gross 206.20 receipts from lawful gambling less gross receipts directly 206.21 derived from the conduct of bingo, raffles, and paddlewheels, as 206.22 defined in section 297E.01, subdivision 8, for the fiscal year. 206.23 The combined receipts of an organization are subject to a tax 206.24 computed according to the following schedule: 206.25 If the combined receipts for the The tax is: 206.26 fiscal year are: 206.27 Not over $500,000 zero 206.28 Over $500,000, but not over 206.29 $700,000two1.9 percent of the 206.30 amount over $500,000, but 206.31 not over $700,000 206.32 Over $700,000, but not over 206.33 $900,000$4,000$3,800 plusfour206.34 3.8 percent of the 206.35 amount over $700,000, but 206.36 not over $900,000 207.1 Over $900,000$12,000$11,400 plussix207.2 5.7 percent of the 207.3 amount over $900,000 207.4 Sec. 6. [EFFECTIVE DATE.] 207.5 Sections 2 to 5 are effective July 1, 1998. 207.6 ARTICLE 12 207.7 MISCELLANEOUS 207.8 Section 1. Minnesota Statutes 1997 Supplement, section 207.9 60A.15, subdivision 1, is amended to read: 207.10 Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 207.11 before April 1, June 1, and December 1 of each year, every 207.12 domestic and foreign company, including town and farmers' mutual 207.13 insurance companies, domestic mutual insurance companies, marine 207.14 insurance companies, health maintenance organizations, community 207.15 integrated service networks, and nonprofit health service plan 207.16 corporations, shall pay to the commissioner of revenue 207.17 installments equal to one-third of the insurer's total estimated 207.18 tax for the current year. Except as provided in paragraphs (d), 207.19 (e), (h), and (i), installments must be based on a sum equal to 207.20 two percent of the premiums described in paragraph (b). 207.21 (b) Installments under paragraph (a), (d), or (e) are 207.22 percentages of gross premiums less return premiums on all direct 207.23 business received by the insurer in this state, or by its agents 207.24 for it, in cash or otherwise, during such year. 207.25 (c) Failure of a company to make payments of at least 207.26 one-third of either (1) the total tax paid during the previous 207.27 calendar year or (2) 80 percent of the actual tax for the 207.28 current calendar year shall subject the company to the penalty 207.29 and interest provided in this section, unless the total tax for 207.30 the current tax year is $500 or less. 207.31 (d) For health maintenance organizations, nonprofit health 207.32 service plan corporations, and community integrated service 207.33 networks, the installments must be based on an amount determined 207.34 under paragraph (h) or (i). 207.35 (e) For purposes of computing installments for town and 207.36 farmers' mutual insurance companies and for mutual property 208.1 casualty companies with total assets on December 31, 1989, of 208.2 $1,600,000,000 or less, the following rates apply: 208.3 (1) for all life insurance, two percent; 208.4 (2) for town and farmers' mutual insurance companies and 208.5 for mutual property and casualty companies with total assets of 208.6 $5,000,000 or less, on all other coverages, one percent; and 208.7 (3) for mutual property and casualty companies with total 208.8 assets on December 31, 1989, of $1,600,000,000 or less, on all 208.9 other coverages, 1.26 percent. 208.10 (f) If the aggregate amount of premium tax payments under 208.11 this section and the fire marshal tax payments under section 208.12 299F.21 made during a calendar year is equal to or exceeds 208.13 $120,000, all tax payments in the subsequent calendar year must 208.14 be paid by means of a funds transfer as defined in section 208.15 336.4A-104, paragraph (a). The funds transfer payment date, as 208.16 defined in section 336.4A-401, must be on or before the date the 208.17 payment is due. If the date the payment is due is not a funds 208.18 transfer business day, as defined in section 336.4A-105, 208.19 paragraph (a), clause (4), the payment date must be on or before 208.20 the funds transfer business day next following the date the 208.21 payment is due. 208.22 (g) Premiums under medical assistance, general assistance 208.23 medical care, the MinnesotaCare program, and the Minnesota 208.24 comprehensive health insurance plan and all payments, revenues, 208.25 and reimbursements received from the federal government for 208.26 Medicare-related coverage as defined in section 62A.31, 208.27 subdivision 3, paragraph (e), are not subject to tax under this 208.28 section. 208.29 (h) For calendar years 1997, 1998, and 1999, the 208.30 installments for health maintenance organizations, community 208.31 integrated service networks, and nonprofit health service plan 208.32 corporations must be based on an amount equal to one percent of 208.33 premiums described under paragraph (b). Health maintenance 208.34 organizations, community integrated service networks, and 208.35 nonprofit health service plan corporations that have met the 208.36 cost containment goals established under section 62J.04 in the 209.1 individual and small employer market for calendar year 1996 are 209.2 exempt from payment of the tax imposed under this section for 209.3 premiums paid after March 30, 1997, and before April 1, 1998. 209.4 Health maintenance organizations, community integrated service 209.5 networks, and nonprofit health service plan corporations that 209.6 have met the cost containment goals established under section 209.7 62J.04 in the individual and small employer market for calendar 209.8 year 1997 are exempt from payment of the tax imposed under this 209.9 section for premiums paid after March 30, 1998, and before April 209.10 1, 1999. Health maintenance organizations, community integrated 209.11 service networks, and nonprofit health service plan corporations 209.12 that have met the cost containment goals established under 209.13 section 62J.04 in the individual and small employer market for 209.14 calendar year 1998 are exempt from payment of the tax imposed 209.15 under this section for premiums paid after March 30, 1999, and 209.16 before January 1, 2000. 209.17 (i) For calendar years after 1999, the commissioner of 209.18 finance shall determine the balance of the health care access 209.19 fund on September 1 of each year beginning September 1, 1999. 209.20 If the commissioner determines that there is no structural 209.21 deficit for the next fiscal year, no tax shall be imposed under 209.22 paragraph (d) for the following calendar year. If the 209.23 commissioner determines that there will be a structural deficit 209.24 in the fund for the following fiscal year, then the 209.25 commissioner, in consultation with the commissioner of revenue, 209.26 shall determine the amount needed to eliminate the structural 209.27 deficit and a tax shall be imposed under paragraph (d) for the 209.28 following calendar year. The commissioner shall determine the 209.29 rate of the tax as either one-quarter of one percent, one-half 209.30 of one percent, three-quarters of one percent, or one percent of 209.31 premiums described in paragraph (b), whichever is the lowest of 209.32 those rates that the commissioner determines will produce 209.33 sufficient revenue to eliminate the projected structural 209.34 deficit. The commissioner of finance shall publish in the State 209.35 Register by October 1 of each year the amount of tax to be 209.36 imposed for the following calendar year. 210.1 (j) In approving the premium rates as required in sections 210.2 62L.08, subdivision 8, and 62A.65, subdivision 3, the 210.3 commissioners of health and commerce shall ensure that any 210.4 exemption from the tax as described in paragraphs (h) and (i) is 210.5 reflected in the premium rate. 210.6 Sec. 2. [SPECIAL PREMIUM TAX PAYMENT.] 210.7 Health maintenance organizations, community integrated 210.8 service networks, and nonprofit health service plan corporations 210.9 that have met the cost containment goals established in 210.10 Minnesota Statutes, section 62J.04, in the individual and small 210.11 employer market for calendar year 1996 shall pay a special, 210.12 one-time 1999 premium tax payment. The tax payment must be 210.13 based on an amount equal to one percent of gross premiums less 210.14 return premiums on all direct business received by the insurer 210.15 in this state, or by its agents for it, in cash or otherwise 210.16 after March 30, 1997, and before January 1, 1998. Payment of 210.17 the tax under this section is due January 2, 1999. Provisions 210.18 relating to the payment, assessment, and collection of the tax 210.19 assessed under Minnesota Statutes, section 60A.15, shall apply 210.20 to the special tax payment assessed under this section. 210.21 Sec. 3. Minnesota Statutes 1997 Supplement, section 210.22 270.60, subdivision 4, is amended to read: 210.23 Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner 210.24 shall pay to aqualifiedcounty in which an Indian gaming casino 210.25 is located ten percent of the state share of all taxes generated 210.26 from activities on reservations and collected under a tax 210.27 agreement under this section with the tribal government for the 210.28 reservation located in the county. If the tribe has casinos 210.29 located in more than one county, the payment must be divided 210.30 equally among the counties in which the casinos are located. 210.31 (b)A county qualifies for payments under this subdivision210.32only if one of the following conditions is met:210.33(1) the county's per capita income is less than 80 percent210.34of the state per capita personal income, based on the most210.35recent estimates made by the United States Bureau of Economic210.36Analysis; or211.1(2) 30 percent or more of the total market value of real211.2property in the county is exempt from ad valorem taxation.211.3(c)The commissioner shall make the payments required under 211.4 this subdivision by February 28 of the year following the year 211.5 the taxes are collected. 211.6(d)(c) An amount sufficient to make the payments 211.7 authorized by this subdivision, not to exceed $1,100,000 in any 211.8 fiscal year, is annually appropriated from the general fund to 211.9 the commissioner. If the authorized payments exceed the amount 211.10 of the appropriation, the commissioner shall proportionately 211.11 reduce the rate so that the total amount equals the 211.12 appropriation. 211.13 Sec. 4. Minnesota Statutes 1997 Supplement, section 211.14 270.67, subdivision 2, is amended to read: 211.15 Subd. 2. [EXTENSION AGREEMENTS.] When any portion of any 211.16 tax payable to the commissioner of revenue together with 211.17 interest and penalty thereon, if any, has not been paid, the 211.18 commissioner may extend the time for payment for a further 211.19 period. When the authority of this section is invoked, the 211.20 extension shall be evidenced by written agreement signed by the 211.21 taxpayer and the commissioner, stating the amount of the tax 211.22 with penalty and interest, if any, and providing for the payment 211.23 of the amount in installments. The agreement may contain a 211.24 confession of judgment for the amount and for any unpaid portion 211.25 thereof and shall provide that the commissioner may forthwith 211.26 enter judgment against the taxpayer in the district court of the 211.27 county of residence as shown upon the taxpayer's tax return for 211.28 the unpaid portion of the amount specified in the extension 211.29 agreement. The agreement shall provide that it can be 211.30 terminated, after notice by the commissioner, if information 211.31 provided by the taxpayer prior to the agreement was inaccurate 211.32 or incomplete, collection of the tax covered by the agreement is 211.33 in jeopardy, there is a subsequent change in the taxpayer's 211.34 financial condition, the taxpayer has failed to make a payment 211.35 due under the agreement, or has failed to pay any other tax or 211.36 file a tax return coming due after the agreement. The notice 212.1 must be given at least 14 calendar days prior to termination, 212.2 and shall advise the taxpayer of the right to request a 212.3 reconsideration from the commissioner of whether termination is 212.4 reasonable and appropriate under the circumstances. A request 212.5 for reconsideration does not stay collection action beyond the 212.6 14-day notice period. If the commissioner has reason to believe 212.7 that collection of the tax covered by the agreement is in 212.8 jeopardy, the commissioner may proceed under sections 270.70, 212.9 subdivision 2, paragraph (b), and 270.274, and terminate the 212.10 agreement without regard to the 14-day period. The commissioner 212.11 may accept other collateral the commissioner considers 212.12 appropriate to secure satisfaction of the tax liability. The 212.13 principal sum specified in the agreement shall bear interest at 212.14 the rate specified in section 270.75 on all unpaid portions 212.15 thereof until the same has been fully paid or the unpaid portion 212.16 thereof has been entered as a judgment. The judgment shall bear 212.17 interest at the rate specified in section 270.75. If it appears 212.18 to the commissioner that the tax reported by the taxpayer is in 212.19 excess of the amount actually owing by the taxpayer, the 212.20 extension agreement or the judgment entered pursuant thereto 212.21 shall be corrected. If after making the extension agreement or 212.22 entering judgment with respect thereto, the commissioner 212.23 determines that the tax as reported by the taxpayer is less than 212.24 the amount actually due, the commissioner shall assess a further 212.25 tax in accordance with the provisions of law applicable to the 212.26 tax. The authority granted to the commissioner by this section 212.27 is in addition to any other authority granted to the 212.28 commissioner by law to extend the time of payment or the time 212.29 for filing a return and shall not be construed in limitation 212.30 thereof. 212.31 Sec. 5. Minnesota Statutes 1997 Supplement, section 212.32 295.52, subdivision 4, is amended to read: 212.33 Subd. 4. [USE TAX; PRESCRIPTION DRUGS.] (a) A person that 212.34 receives prescription drugs for resale or use in Minnesota, 212.35 other than from a wholesale drug distributor that paid the tax 212.36 under subdivision 3, is subject to a tax equal to the price paid 213.1 to the wholesale drug distributor multiplied by the tax 213.2 percentage specified in this section. Liability for the tax is 213.3 incurred when prescription drugs are received or delivered in 213.4 Minnesota by the person. 213.5 (b) A person that receives prescription drugs for use in 213.6 Minnesota from a nonresident pharmacy required to be registered 213.7 under section 151.19 is subject to a tax equal to the price paid 213.8 by the nonresident pharmacy to the wholesale drug distributor or 213.9 the price received by the nonresident pharmacy, whichever is 213.10 lower, multiplied by the tax percentage specified in this 213.11 section. Liability for the tax is incurred when prescription 213.12 drugs are received in Minnesota by the person. 213.13 Sec. 6. Minnesota Statutes 1996, section 295.52, 213.14 subdivision 4a, is amended to read: 213.15 Subd. 4a. [TAX COLLECTION.] A wholesale drug distributor 213.16 with nexus in Minnesota, who is not subject to tax under 213.17 subdivision 3, on all or a particular transaction or a 213.18 nonresident pharmacy with nexus in Minnesota, is required to 213.19 collect the tax imposed under subdivision 4, from the purchaser 213.20 of the drugs and give the purchaser a receipt for the tax paid. 213.21 The tax collected shall be remitted to the commissioner in the 213.22 manner prescribed by section 295.55, subdivision 3. 213.23 Sec. 7. Minnesota Statutes 1997 Supplement, section 213.24 295.53, subdivision 4, is amended to read: 213.25 Subd. 4. [DEDUCTION FOR RESEARCH.] (a) In addition to the 213.26 exemptions allowed under subdivision 1, a hospital or health 213.27 care provider may deduct from its gross revenues subject to the 213.28 hospital or health care provider taxes under sections 295.50 to 213.29 295.57 revenues equal to expenditures for qualifying research 213.30 conducted by an allowable research program. 213.31 (b) For purposes of this subdivision, the following 213.32 requirements apply: 213.33 (1) expenditures must be for program costs of qualifying 213.34 research conducted by an allowable research program; 213.35 (2) an allowable research program must be a formal program 213.36 of medical and health care research conducted by an entity which 214.1 is exempt under section 501(c)(3) of the Internal Revenue Code 214.2 of 1986 or is owned and operated under authority of a 214.3 governmental unit; 214.4 (3) qualifying research must: 214.5 (A) be approved in writing by the governing body of the 214.6 hospital or health care provider which is taking the deduction 214.7 under this subdivision; 214.8 (B) have as its purpose the development of new knowledge in 214.9 basic or applied science relating to the diagnosis and treatment 214.10 of conditions affecting the human body; 214.11 (C) be subject to review by individuals with expertise in 214.12 the subject matter of the proposed study but who have no 214.13 financial interest in the proposed study and are not involved in 214.14 the conduct of the proposed study; and 214.15 (D) be subject to review and supervision by an 214.16 institutional review board operating in conformity with federal 214.17 regulations if the research involves human subjects or an 214.18 institutional animal care and use committee operating in 214.19 conformity with federal regulations if the research involves 214.20 animal subjects. Research expenses are not exempt if the study 214.21 is a routine evaluation of health care methods or products used 214.22 in a particular setting conducted for the purpose of making a 214.23 management decision. Costs of clinical research activities paid 214.24 directly for the benefit of an individual patient are excluded 214.25 from this exemption. Basic research in fields including 214.26 biochemistry, molecular biology, and physiology are also 214.27 included if such programs are subject to a peer review process. 214.28 (c) No deduction shall be allowed under this subdivision 214.29 for any revenue received by the hospital or health care provider 214.30 in the form of a grant, gift, or otherwise, whether from a 214.31 government or nongovernment source, on which the tax liability 214.32 under section 295.52 is not imposed. 214.33 (d) Effective beginning with calendar year 1995, the 214.34 taxpayer shall not take the deduction under this section into 214.35 account in determining estimated tax payments or the payment 214.36 made with the annual return under section 295.55. The total 215.1 deduction allowable to all taxpayers under this section for 215.2 calendar years beginning after December 31, 1994, may not exceed 215.3 $65,000,000. To implement this limit, each qualifying hospital 215.4 and qualifying health care provider shall submit to the 215.5 commissioner by March 15 its total expenditures qualifying for 215.6 the deduction under this section for the previous calendar 215.7 year. The commissioner shall sum the total expenditures of all 215.8 taxpayers qualifying under this section for the calendar year. 215.9 If the resulting amount exceeds $65,000,000, the commissioner 215.10 shall allocate a part of the $65,000,000 deduction limit to each 215.11 qualifying hospital and health care provider in proportion to 215.12 its share of the total deductions. The commissioner shall pay a 215.13 refund to each qualifying hospital or provider equal to its 215.14 share of the deduction limit multiplied by the tax percentage 215.15 specified in section 295.52. The commissioner shall pay the 215.16 refund no later than May 15 of the calendar year. 215.17 (e) This subdivision expires January 1,20001998. 215.18 Sec. 8. Minnesota Statutes 1997 Supplement, section 215.19 295.53, subdivision 4a, is amended to read: 215.20 Subd. 4a. [CREDIT FOR RESEARCH.] (a)In addition to the215.21exemptions allowed under subdivision 1,A hospital or health 215.22 care provider may claim an annual credit against the total 215.23 amount of tax, if any, the hospital or health care provider owes 215.24 for that calendar year under sections 295.50 to 295.57. The 215.25 credit shall equal2.5 percenta percentage, as determined under 215.26 paragraph (e) of this subdivision, ofrevenues for patient215.27services used to fundtotal expenditures for qualifying research 215.28conducted by an allowable research programpaid for during the 215.29 calendar year. The amount of the credit shall not exceed the 215.30 research expenditures or the tax liability of the hospital or 215.31 health care provider under sections 295.50 to 295.57. 215.32 (b) For purposes of this subdivision, the following 215.33 requirements apply: 215.34 (1) expenditures must be for program costs of qualifying 215.35 research conducted by an allowable research program; 215.36 (2) an allowable research program must be a formal program 216.1 of medical and health care research conducted by an entity which 216.2 is exempt under section 501(c)(3) of the Internal Revenue Code 216.3 of 1986 or is owned and operated under authority of a 216.4 governmental unit; 216.5 (3) qualifying research must: 216.6 (A) be approved in writing by the governing body of the 216.7 hospital or health care provider which is taking the 216.8deductioncredit under this subdivision; 216.9 (B) have as its purpose the development of new knowledge in 216.10 basic or applied science relating to the diagnosis and treatment 216.11 of conditions affecting the human body; 216.12 (C) be subject to review by individuals with expertise in 216.13 the subject matter of the proposed study but who have no 216.14 financial interest in the proposed study and are not involved in 216.15 the conduct of the proposed study; and 216.16 (D) be subject to review and supervision by an 216.17 institutional review board operating in conformity with federal 216.18 regulations if the research involves human subjects or an 216.19 institutional animal care and use committee operating in 216.20 conformity with federal regulations if the research involves 216.21 animal subjects. Research expenses are notexemptqualified for 216.22 this credit if the study is a routine evaluation of health care 216.23 methods or products used in a particular setting conducted for 216.24 the purpose of making a management decision. Costs of clinical 216.25 research activities paid directly for the benefit of an 216.26 individual patient are excluded from thisexemptioncredit. 216.27 Basic research in fields including biochemistry, molecular 216.28 biology, and physiology are also included if such programs are 216.29 subject to a peer review process. 216.30 (c) No credit shall be allowed under this subdivision for 216.31 any revenue received by the hospital or health care provider in 216.32 the form of a grant, gift, or otherwise,whether from a216.33government or nongovernment source, on which the tax liability216.34under section 295.52 is not imposedto conduct research. 216.35 (d) The taxpayer shall apply for the credit under this 216.36 section on the annual return under section 295.55, subdivision 5. 217.1 (e)Beginning September 1, 2000, if the actual or estimated217.2amount paid under this section for the calendar year exceeds217.3$2,500,000, the commissioner of finance shall determine the rate217.4of the research credit for the following calendar year to the217.5nearest one-half percent so that refunds paid under this section217.6will most closely equal $2,500,000.For research expenses paid 217.7 in 1998, the credit shall equal two percent of total 217.8 expenditures for qualifying research. Beginning in 1998, the 217.9 commissioner of finance shall, based upon an analysis of the 217.10 allowed research deductions under section 295.53, subdivision 4, 217.11 for calendar year 1998, and in subsequent years, based upon an 217.12 analysis of credits claimed under this subdivision for research 217.13 conducted in the prior year, determine the rate of the credit 217.14 for the following calendar year that will most closely equal 217.15 $2,000,000 for all taxpayers under this subdivision for fiscal 217.16 year 1999 and $8,000,000 for all taxpayers for later fiscal 217.17 years. The commissioner of finance shall publish in the State 217.18 Register by October 1 of each year the rate of the credit for 217.19 the following calendar year. A determination under this section 217.20 is not subject to the rulemaking provisions of chapter 14. 217.21 Sec. 9. Minnesota Statutes 1997 Supplement, section 217.22 465.715, subdivision 1, is amended to read: 217.23 Subdivision 1. [STATUTORY AUTHORIZATION REQUIRED.] A 217.24 county, home rule charter city, statutory city, town, school 217.25 district, or other political subdivision may not create a 217.26 corporation, whether for profit or not for profit, unless 217.27 explicitly authorized to do so by law. Except as provided by 217.28 subdivision 2, this subdivision applies to a corporation for 217.29 which a certificate of incorporation is issued by the secretary 217.30 of state on or after June 1, 1997. A corporation that had been 217.31 issued a certificate of incorporation before June 1, 1997, may 217.32 continue to operate as if it had been created in compliance with 217.33 this subdivision. 217.34 Sec. 10. Minnesota Statutes 1996, section 469.015, 217.35 subdivision 4, is amended to read: 217.36 Subd. 4. [EXCEPTIONS.] (a) An authority need not require 218.1 competitive bidding in the following circumstances: 218.2 (1) in the case of a contract for the acquisition of a 218.3 low-rent housing project: 218.4 (i) for which financial assistance is provided by the 218.5 federal government; 218.6 (ii) which does not require any direct loan or grant of 218.7 money from the municipality as a condition of the federal 218.8 financial assistance; and 218.9 (iii) for which the contract provides for the construction 218.10 of the project upon land that is either owned by the authority 218.11 for redevelopment purposes or not owned by the authority at the 218.12 time of the contract but the contract provides for the 218.13 conveyance or lease to the authority of the project or 218.14 improvements upon completion of construction; 218.15 (2) with respect to a structured parking facility: 218.16 (i) constructed in conjunction with, and directly above or 218.17 below, a development; and 218.18 (ii) financed with the proceeds of tax increment or parking 218.19 ramp general obligation or revenue bonds; and 218.20 (3) in the case of any building in which at least 75 218.21 percent of the useable square footage constitutes a housing 218.22 development project if: 218.23 (i) the project is financed with the proceeds of bonds 218.24 issued under section 469.034 or from nongovernmental sources; 218.25 (ii) the project is either located on land that is owned or 218.26 is being acquired by the authority only for development 218.27 purposes, or is not owned by the authority at the time the 218.28 contract is entered into but the contract provides for 218.29 conveyance or lease to the authority of the project or 218.30 improvements upon completion of construction; and 218.31 (iii) the authority finds and determines that elimination 218.32 of the public bidding requirements is necessary in order for the 218.33 housing development project to be economical and feasible. 218.34 (b) An authority need not require a performance bond for 218.35 the following projects: 218.36 (1) a contract described in paragraph (a), clause (1); 219.1 (2) a construction change order for a housing project in 219.2 which 30 percent of the construction has been completed; 219.3 (3) a construction contract for a single-family housing 219.4 project in which the authority acts as the general construction 219.5 contractor; or 219.6 (4) a services or materials contract for a housing project. 219.7 For purposes of this paragraph, "services or materials 219.8 contract" does not include construction contracts. 219.9 Sec. 11. Minnesota Statutes 1996, section 473.3915, 219.10 subdivision 2, is amended to read: 219.11 Subd. 2. [REGULAR ROUTE TRANSIT SERVICE.] "Regular route 219.12 transit service" means services as defined in section 473.385, 219.13 subdivision 1, paragraph (b), with at least two scheduled runs 219.14 per hour between 7:00 a.m. and 6:30 p.m., Monday to Friday, and 219.15 regularly scheduled service on Saturday, Sunday, and holidays, 219.16 and weekdays after 6:30 p.m. The two scheduled runs for buses 219.17 leaving a replacement transit service transit hub need not be on 219.18 the same route. 219.19 Sec. 12. Minnesota Statutes 1996, section 473.3915, 219.20 subdivision 3, is amended to read: 219.21 Subd. 3. [TRANSIT ZONE.] (a) Except as provided in 219.22 paragraph (b), "transit zone" means the area within one-quarter 219.23 of a mile of a route along which regular route transit service 219.24 is provided that is also within the metropolitan urban service 219.25 area, as determined by the council. "Transit zone" includes any 219.26 light rail transit route for which funds for construction have 219.27 been committed. 219.28 (b) A transit zone that surrounds a replacement transit 219.29 service transit hub has a limiting area of one-eighth mile 219.30 rather than the one-quarter mile provided in paragraph (a). 219.31 (c) The prohibition under section 273.13, subdivision 24, 219.32 paragraph (c), item (v), that applies to structures primarily 219.33 used for retail does not apply to structures primarily used for 219.34 retail that are in transit zones described in paragraph (b). 219.35 Sec. 13. Minnesota Statutes 1996, section 473.3915, 219.36 subdivision 5, is amended to read: 220.1 Subd. 5. [TRANSIT ZONEMAP; DATE FIRST PRODUCEDMAPS.] The 220.2 metropolitan council shall produce an initial version of the 220.3 transit zone map required under subdivision 4 by January 1, 220.4 1996, and a later version as required by the amendments made in 220.5 sections 11 and 12. 220.6 Sec. 14. Laws 1997, chapter 105, section 3, as amended by 220.7 Laws 1997, Second Special Session chapter 2, section 23, is 220.8 amended to read: 220.9 Sec. 3. [TEMPORARY WAIVER OF FEES, ASSESSMENTS, OR TAXES.] 220.10 Subdivision 1. [FEES.] Notwithstanding any law to the 220.11 contrary, for fiscal years 1997 and 1998, an agency, with the 220.12 approval of the governor, may waive fees that would otherwise be 220.13 charged for agency services. The waiver of fees must be 220.14 confined to geographic areas affected by flooding within 220.15 counties included in a federal disaster declaration and to the 220.16 minimum periods of times necessary to deal with the emergency 220.17 situation. The agency must promptly report the reasons for and 220.18 the impact of any suspended fees to the chairs of the 220.19 legislative committees that oversee the policy and budgetary 220.20 affairs of the agency. This subdivision expires February 1, 220.21 1998. 220.22 Subd. 2. [SOLID WASTE GENERATOR ASSESSMENTS AND SOLID 220.23 WASTE MANAGEMENT TAXES.] Notwithstanding any law to the 220.24 contrary, the waiver authority provided in subdivision 1 is also 220.25 extended to the commissioner of revenue in relation to the solid 220.26 waste generator assessment under Minnesota Statutes, section 220.27 116.07, subdivision 10, and the solid waste management taxes 220.28 under Laws 1997, chapter 231, article 13, for construction 220.29 debris generated from repair and demolition activities in the 220.30 area designated under Presidential Declaration of Major 220.31 Disaster, DR-1175, and disposed of in a waste management 220.32 facility designated by the commissioner of the pollution control 220.33 agency. The commissioner of revenue's authority under this 220.34 subdivision to waive the assessment and tax expires for waste 220.35 transported to the designated facilities afterDecember 31, 1997220.36 June 30, 1998, including waste transported to a landfill that is 221.1 limited by permit exclusively to the disposal of flood debris. 221.2 The waiver authority granted to the commissioner of revenue is 221.3 retroactive to April 1, 1997. 221.4 Sec. 15. Laws 1997, chapter 225, article 3, section 24, is 221.5 amended to read: 221.6 Sec. 24. [EFFECTIVE DATES.] 221.7 Section 2, subdivision 1, paragraph (f), is effective for 221.8 payments, revenues, and reimbursements received from the federal 221.9 government on or after December 31, 1996. 221.10 Sections 1 and 3 are effective July 1, 1997. 221.11 Sections 4, 5, 6, 9 to 13, 15, and 19 are effective for 221.12 gross revenues received after December 31, 1997. 221.13 Section 14, subdivision 1, paragraph (a), clause (6), and 221.14 paragraph (b) are effective the day following final enactment. 221.15 Section 14, paragraph (a), clause (17), is effective for gross 221.16 revenues received for hearing aids and related equipment or 221.17 prescription eyewear after December 31, 1997. 221.18 Section 18 is effective January 1, 1998. Section 21, 221.19 paragraph (a), is effective January 1, 1998. 221.20 Section 20 is effective for estimated payments due after 221.21 July 1, 1997. 221.22 Sections 7, 8, and 21, paragraphs (c) and (d), are 221.23 effective the day following final enactment. 221.24 Section 16 is effective for research expenditures incurred 221.25 after December 31, 1995. Section 17 is effective for research 221.26 expenditures incurred after December 31,19991997. 221.27 Section 23 is effective January 1, 1998. 221.28 Sec. 16. [FEDERAL RESERVE; RESEARCH CREDIT.] 221.29 (a) Notwithstanding Minnesota Statutes, section 16A.76, 221.30 subdivision 2, the federal contingency reserve shall be reduced 221.31 by $2,000,000 for fiscal year 1999. 221.32 (b) Beginning fiscal year 2000, $8,000,000 shall be 221.33 transferred each fiscal year from the general fund to the health 221.34 care access fund for the research credit established in 221.35 Minnesota Statutes, section 295.53, subdivision 4a. 221.36 Sec. 17. [EFFECTIVE DATE.] 222.1 Section 4 is effective the day following final enactment. 222.2 Section 8 is effective for research expenditures paid after 222.3 December 31, 1997. 222.4 Section 12, paragraph (c), is effective July 1, 1998, only 222.5 for taxes levied in 1998, payable in 1999, through taxes levied 222.6 in 2008, payable in 2009. 222.7 Section 14 is effective January 1, 1998.