SF 3377

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to property taxation; exempting electric 
  1.3             utility generation attached machinery; establishing a 
  1.4             temporary in-lieu tax; establishing temporary 
  1.5             surcharge; providing a state guarantee and 
  1.6             appropriation for certain local bonds; amending 
  1.7             Minnesota Statutes 1996, section 124A.24; Minnesota 
  1.8             Statutes 1997 Supplement, sections 272.02, subdivision 
  1.9             1; and 273.13, subdivision 31; proposing coding for 
  1.10            new law in Minnesota Statutes, chapters 216B; 275; and 
  1.11            475A. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 1996, section 124A.24, is 
  1.14  amended to read: 
  1.15     124A.24 [GENERAL EDUCATION LEVY EQUITY.] 
  1.16     Subdivision 1.  [OFF-FORMULA DISTRICTS.] If a district's 
  1.17  general education levy is determined according to section 
  1.18  124A.23, subdivision 3, an amount must be deducted from state 
  1.19  aid authorized in this chapter and chapters 124 and 124B, 
  1.20  receivable for the same school year, and from other state 
  1.21  payments receivable for the same school year authorized in 
  1.22  chapter 273.  The aid in section 124.646 must not be reduced. 
  1.23     The amount of the deduction equals the difference between: 
  1.24     (1) the general education tax rate, according to section 
  1.25  124A.23, times the district's adjusted net tax capacity used to 
  1.26  determine the general education aid for the same school year; 
  1.27  and 
  1.28     (2) the district's general education revenue, excluding 
  2.1   transition revenue and supplemental revenue, for the same school 
  2.2   year, according to section 124A.22. 
  2.3      Subd. 2.  [ELECTRIC GENERATION FACILITY IN-LIEU TAX 
  2.4   PAYMENTS.] An amount equal to the amounts received by a district 
  2.5   under sections 216B.169 and 275.071 must be deducted from state 
  2.6   aid authorized in this chapter and chapter 124, receivable for 
  2.7   the same school year, and from other state payments receivable 
  2.8   for the same school year authorized in chapter 273.  The aid in 
  2.9   section 124.646 must not be reduced. 
  2.10     Sec. 2.  [216B.169] [GENERATION EQUIPMENT PROPERTY TAX 
  2.11  REPLACEMENT SURCHARGE.] 
  2.12     Subdivision 1.  [DEFINITIONS.] For purposes of this act, 
  2.13  the following terms shall have the meanings given. 
  2.14     (a) "Electric utility" means an electric utility as defined 
  2.15  in section 216B.38, subdivision 5, that is subject to ad valorem 
  2.16  taxes on its electric utility generation equipment on January 1, 
  2.17  1998. 
  2.18     (b) "Electric utility generation equipment" means the 
  2.19  property which is part of an electric utility's generation 
  2.20  system. 
  2.21     (c) "Service area" means the geographic area assigned to an 
  2.22  electric utility under section 216B.39. 
  2.23     (d) "Service area provider" means the electric utility 
  2.24  providing retail electric service within a service area on 
  2.25  January 1, 1998. 
  2.26     Subd. 2.  [IMPOSITION OF SURCHARGE.] Any electric utility 
  2.27  providing electric power within a service area shall impose a 
  2.28  generation equipment personal property tax replacement surcharge 
  2.29  on each kilowatt-hour distributed to its retail customers.  The 
  2.30  surcharge shall be separately identified on each customer's 
  2.31  bill.  The rate of the surcharge shall be expressed as a 
  2.32  fraction of a dollar per kilowatt-hour and shall be set 
  2.33  according to the following schedule: 
  2.34     (1) Until March 31, 2005, the rate schedule of the 
  2.35  surcharge within each service area shall be based upon the ratio 
  2.36  of (i) the amount of ad valorem taxes levied upon the service 
  3.1   area provider's electric utility generation equipment payable in 
  3.2   1998 minus the amount of in-lieu taxes imposed upon the service 
  3.3   area provider in the current year, to (ii) the total 
  3.4   kilowatt-hours distributed by all utilities selling power to 
  3.5   retail customers in the service area in the previous year.  The 
  3.6   rate schedule shall apply to all retail customers in the service 
  3.7   area, regardless of electric utility provider. 
  3.8      (2) Between April 1, 2005, and March 31, 2009, the rate 
  3.9   schedule of the surcharge shall be calculated as in paragraph 
  3.10  (1), except that each year the amount determined under paragraph 
  3.11  (1), clause (i), shall be reduced by 20 percent of the service 
  3.12  area provider's electric utility generation equipment tax 
  3.13  payable in 1998. 
  3.14     (3) If an electric generation facility ceases operation due 
  3.15  to action of the state of Minnesota or any agency thereof, the 
  3.16  payable 1998 property taxes attributable to the facility's 
  3.17  generation equipment shall be subtracted in performing the 
  3.18  calculations required in clauses (1) and (2). 
  3.19     Subd. 3.  [COMMISSIONER OF REVENUE TO SET RATES.] By 
  3.20  February 1 of each year, beginning in 1999, each service area 
  3.21  provider shall submit a schedule of surcharge rates to the 
  3.22  commissioners of the public utilities commission and the 
  3.23  department of revenue which fairly reflects the amount and 
  3.24  percentage of personal property tax on generation paid for by 
  3.25  each customer class.  The commissioner of revenue shall approve 
  3.26  or amend the schedule by March 1 of each year.  The electric 
  3.27  utilities shall impose the surcharge for that year beginning 
  3.28  April 1.  Each electric utility shall provide the commissioner 
  3.29  of revenue any information the commissioner deems necessary to 
  3.30  evaluate the rate schedule submitted, in a format to be 
  3.31  determined by the commissioner.  In establishing the rate 
  3.32  schedule, the provider shall adjust the rate of the surcharge to 
  3.33  account for any surplus or deficiency produced in the previous 
  3.34  year. 
  3.35     Subd. 4.  [SEPARATE ACCOUNT.] An electric utility subject 
  3.36  to this section shall keep a separate account of all revenues 
  4.1   received from the surcharge by service area, and shall 
  4.2   distribute these revenues to the commissioner 30 days prior to 
  4.3   when property taxes become due.  The commissioner shall 
  4.4   apportion the money to the appropriate county treasurer, who 
  4.5   shall distribute the money in the same way as the tax under 
  4.6   section 275.071, at the times prescribed under sections 276.11 
  4.7   and 276.111.  This account shall not be subject to section 
  4.8   216B.10, and the public utilities commission shall not consider 
  4.9   these revenues in a proceeding under section 216B.16.  The 
  4.10  commissioner of revenue may audit the revenues derived from the 
  4.11  surcharge. 
  4.12     Subd. 5.  [ASSURED RATE REDUCTIONS FOR CUSTOMERS OF RATE 
  4.13  REGULATED UTILITIES.] The public utilities commission shall 
  4.14  reduce the rates of an electric utility subject to rate 
  4.15  regulation by the commission to reflect the net effect of the 
  4.16  elimination of the utility's ad valorem tax obligations pursuant 
  4.17  to sections 272.02, subdivision 1, and 273.13, subdivision 31, 
  4.18  and the imposition of the in-lieu tax under section 275.071.  
  4.19  Each utility shall submit a plan implementing the rate 
  4.20  reductions to the public utilities commission, which reflects 
  4.21  the percentage of personal property tax on generation which had 
  4.22  been paid by each customer class.  The commission shall treat 
  4.23  these rate reductions separately from other rate adjustments.  
  4.24  Reductions in rates under this subdivision shall be distributed 
  4.25  among customer classes in proportion to the contribution the 
  4.26  customer class made to the utility's electric utility generation 
  4.27  equipment ad valorem tax obligations. 
  4.28     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
  4.29  272.02, subdivision 1, is amended to read: 
  4.30     Subdivision 1.  All property described in this section to 
  4.31  the extent herein limited shall be exempt from taxation: 
  4.32     (1) All public burying grounds. 
  4.33     (2) All public schoolhouses. 
  4.34     (3) All public hospitals. 
  4.35     (4) All academies, colleges, and universities, and all 
  4.36  seminaries of learning. 
  5.1      (5) All churches, church property, and houses of worship. 
  5.2      (6) Institutions of purely public charity except parcels of 
  5.3   property containing structures and the structures described in 
  5.4   section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 
  5.5   and (3), or paragraph (d), other than those that qualify for 
  5.6   exemption under clause (25). 
  5.7      (7) All public property exclusively used for any public 
  5.8   purpose. 
  5.9      (8) Except for the taxable personal property enumerated 
  5.10  below, all personal property and the property described in 
  5.11  section 272.03, subdivision 1, paragraphs (c) and (d), shall be 
  5.12  exempt.  
  5.13     The following personal property shall be taxable:  
  5.14     (a) personal property which is part of an electric 
  5.15  generating, transmission, or distribution system or a pipeline 
  5.16  system transporting or distributing water, gas, crude oil, or 
  5.17  petroleum products or mains and pipes used in the distribution 
  5.18  of steam or hot or chilled water for heating or cooling 
  5.19  buildings and structures; 
  5.20     (b) railroad docks and wharves which are part of the 
  5.21  operating property of a railroad company as defined in section 
  5.22  270.80; 
  5.23     (c) personal property defined in section 272.03, 
  5.24  subdivision 2, clause (3); 
  5.25     (d) leasehold or other personal property interests which 
  5.26  are taxed pursuant to section 272.01, subdivision 2; 273.124, 
  5.27  subdivision 7; or 273.19, subdivision 1; or any other law 
  5.28  providing the property is taxable as if the lessee or user were 
  5.29  the fee owner; 
  5.30     (e) manufactured homes and sectional structures, including 
  5.31  storage sheds, decks, and similar removable improvements 
  5.32  constructed on the site of a manufactured home, sectional 
  5.33  structure, park trailer or travel trailer as provided in section 
  5.34  273.125, subdivision 8, paragraph (f); and 
  5.35     (f) flight property as defined in section 270.071.  
  5.36     (9) Personal property used primarily for the abatement and 
  6.1   control of air, water, or land pollution to the extent that it 
  6.2   is so used, and real property which is used primarily for 
  6.3   abatement and control of air, water, or land pollution as part 
  6.4   of an agricultural operation, as a part of a centralized 
  6.5   treatment and recovery facility operating under a permit issued 
  6.6   by the Minnesota pollution control agency pursuant to chapters 
  6.7   115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
  6.8   and 7045.0020 to 7045.1260, as a wastewater treatment facility 
  6.9   and for the treatment, recovery, and stabilization of metals, 
  6.10  oils, chemicals, water, sludges, or inorganic materials from 
  6.11  hazardous industrial wastes, or as part of an electric 
  6.12  generation system.  For purposes of this clause, personal 
  6.13  property includes ponderous machinery and equipment used in a 
  6.14  business or production activity that at common law is considered 
  6.15  real property. 
  6.16     Any taxpayer requesting exemption of all or a portion of 
  6.17  any real property or any equipment or device, or part thereof, 
  6.18  operated primarily for the control or abatement of air or water 
  6.19  pollution shall file an application with the commissioner of 
  6.20  revenue.  The equipment or device shall meet standards, rules, 
  6.21  or criteria prescribed by the Minnesota pollution control 
  6.22  agency, and must be installed or operated in accordance with a 
  6.23  permit or order issued by that agency.  The Minnesota pollution 
  6.24  control agency shall upon request of the commissioner furnish 
  6.25  information or advice to the commissioner.  On determining that 
  6.26  property qualifies for exemption, the commissioner shall issue 
  6.27  an order exempting the property from taxation.  The equipment or 
  6.28  device shall continue to be exempt from taxation as long as the 
  6.29  permit issued by the Minnesota pollution control agency remains 
  6.30  in effect. 
  6.31     (10) Wetlands.  For purposes of this subdivision, 
  6.32  "wetlands" means:  (i) land described in section 103G.005, 
  6.33  subdivision 15a; (ii) land which is mostly under water, produces 
  6.34  little if any income, and has no use except for wildlife or 
  6.35  water conservation purposes, provided it is preserved in its 
  6.36  natural condition and drainage of it would be legal, feasible, 
  7.1   and economically practical for the production of livestock, 
  7.2   dairy animals, poultry, fruit, vegetables, forage and grains, 
  7.3   except wild rice; or (iii) land in a wetland preservation area 
  7.4   under sections 103F.612 to 103F.616.  "Wetlands" under items (i) 
  7.5   and (ii) include adjacent land which is not suitable for 
  7.6   agricultural purposes due to the presence of the wetlands, but 
  7.7   do not include woody swamps containing shrubs or trees, wet 
  7.8   meadows, meandered water, streams, rivers, and floodplains or 
  7.9   river bottoms.  Exemption of wetlands from taxation pursuant to 
  7.10  this section shall not grant the public any additional or 
  7.11  greater right of access to the wetlands or diminish any right of 
  7.12  ownership to the wetlands. 
  7.13     (11) Native prairie.  The commissioner of the department of 
  7.14  natural resources shall determine lands in the state which are 
  7.15  native prairie and shall notify the county assessor of each 
  7.16  county in which the lands are located.  Pasture land used for 
  7.17  livestock grazing purposes shall not be considered native 
  7.18  prairie for the purposes of this clause.  Upon receipt of an 
  7.19  application for the exemption provided in this clause for lands 
  7.20  for which the assessor has no determination from the 
  7.21  commissioner of natural resources, the assessor shall refer the 
  7.22  application to the commissioner of natural resources who shall 
  7.23  determine within 30 days whether the land is native prairie and 
  7.24  notify the county assessor of the decision.  Exemption of native 
  7.25  prairie pursuant to this clause shall not grant the public any 
  7.26  additional or greater right of access to the native prairie or 
  7.27  diminish any right of ownership to it. 
  7.28     (12) Property used in a continuous program to provide 
  7.29  emergency shelter for victims of domestic abuse, provided the 
  7.30  organization that owns and sponsors the shelter is exempt from 
  7.31  federal income taxation pursuant to section 501(c)(3) of the 
  7.32  Internal Revenue Code of 1986, as amended through December 31, 
  7.33  1992, notwithstanding the fact that the sponsoring organization 
  7.34  receives funding under section 8 of the United States Housing 
  7.35  Act of 1937, as amended. 
  7.36     (13) If approved by the governing body of the municipality 
  8.1   in which the property is located, property not exceeding one 
  8.2   acre which is owned and operated by any senior citizen group or 
  8.3   association of groups that in general limits membership to 
  8.4   persons age 55 or older and is organized and operated 
  8.5   exclusively for pleasure, recreation, and other nonprofit 
  8.6   purposes, no part of the net earnings of which inures to the 
  8.7   benefit of any private shareholders; provided the property is 
  8.8   used primarily as a clubhouse, meeting facility, or recreational 
  8.9   facility by the group or association and the property is not 
  8.10  used for residential purposes on either a temporary or permanent 
  8.11  basis. 
  8.12     (14) To the extent provided by section 295.44, real and 
  8.13  personal property used or to be used primarily for the 
  8.14  production of hydroelectric or hydromechanical power on a site 
  8.15  owned by the federal government, the state, or a local 
  8.16  governmental unit which is developed and operated pursuant to 
  8.17  the provisions of section 103G.535. 
  8.18     (15) If approved by the governing body of the municipality 
  8.19  in which the property is located, and if construction is 
  8.20  commenced after June 30, 1983:  
  8.21     (a) a "direct satellite broadcasting facility" operated by 
  8.22  a corporation licensed by the federal communications commission 
  8.23  to provide direct satellite broadcasting services using direct 
  8.24  broadcast satellites operating in the 12-ghz. band; and 
  8.25     (b) a "fixed satellite regional or national program service 
  8.26  facility" operated by a corporation licensed by the federal 
  8.27  communications commission to provide fixed satellite-transmitted 
  8.28  regularly scheduled broadcasting services using satellites 
  8.29  operating in the 6-ghz. band. 
  8.30  An exemption provided by clause (15) shall apply for a period 
  8.31  not to exceed five years.  When the facility no longer qualifies 
  8.32  for exemption, it shall be placed on the assessment rolls as 
  8.33  provided in subdivision 4.  Before approving a tax exemption 
  8.34  pursuant to this paragraph, the governing body of the 
  8.35  municipality shall provide an opportunity to the members of the 
  8.36  county board of commissioners of the county in which the 
  9.1   facility is proposed to be located and the members of the school 
  9.2   board of the school district in which the facility is proposed 
  9.3   to be located to meet with the governing body.  The governing 
  9.4   body shall present to the members of those boards its estimate 
  9.5   of the fiscal impact of the proposed property tax exemption.  
  9.6   The tax exemption shall not be approved by the governing body 
  9.7   until the county board of commissioners has presented its 
  9.8   written comment on the proposal to the governing body or 30 days 
  9.9   have passed from the date of the transmittal by the governing 
  9.10  body to the board of the information on the fiscal impact, 
  9.11  whichever occurs first. 
  9.12     (16) Real and personal property owned and operated by a 
  9.13  private, nonprofit corporation exempt from federal income 
  9.14  taxation pursuant to United States Code, title 26, section 
  9.15  501(c)(3), primarily used in the generation and distribution of 
  9.16  hot water for heating buildings and structures.  
  9.17     (17) Notwithstanding section 273.19, state lands that are 
  9.18  leased from the department of natural resources under section 
  9.19  92.46. 
  9.20     (18) Electric power distribution lines and their 
  9.21  attachments and appurtenances, that are used primarily for 
  9.22  supplying electricity to farmers at retail.  
  9.23     (19) Transitional housing facilities.  "Transitional 
  9.24  housing facility" means a facility that meets the following 
  9.25  requirements.  (i) It provides temporary housing to individuals, 
  9.26  couples, or families.  (ii) It has the purpose of reuniting 
  9.27  families and enabling parents or individuals to obtain 
  9.28  self-sufficiency, advance their education, get job training, or 
  9.29  become employed in jobs that provide a living wage.  (iii) It 
  9.30  provides support services such as child care, work readiness 
  9.31  training, and career development counseling; and a 
  9.32  self-sufficiency program with periodic monitoring of each 
  9.33  resident's progress in completing the program's goals.  (iv) It 
  9.34  provides services to a resident of the facility for at least 
  9.35  three months but no longer than three years, except residents 
  9.36  enrolled in an educational or vocational institution or job 
 10.1   training program.  These residents may receive services during 
 10.2   the time they are enrolled but in no event longer than four 
 10.3   years.  (v) It is owned and operated or under lease from a unit 
 10.4   of government or governmental agency under a property 
 10.5   disposition program and operated by one or more organizations 
 10.6   exempt from federal income tax under section 501(c)(3) of the 
 10.7   Internal Revenue Code of 1986, as amended through December 31, 
 10.8   1992.  This exemption applies notwithstanding the fact that the 
 10.9   sponsoring organization receives financing by a direct federal 
 10.10  loan or federally insured loan or a loan made by the Minnesota 
 10.11  housing finance agency under the provisions of either Title II 
 10.12  of the National Housing Act or the Minnesota housing finance 
 10.13  agency law of 1971 or rules promulgated by the agency pursuant 
 10.14  to it, and notwithstanding the fact that the sponsoring 
 10.15  organization receives funding under Section 8 of the United 
 10.16  States Housing Act of 1937, as amended. 
 10.17     (20) Real and personal property, including leasehold or 
 10.18  other personal property interests, owned and operated by a 
 10.19  corporation if more than 50 percent of the total voting power of 
 10.20  the stock of the corporation is owned collectively by:  (i) the 
 10.21  board of regents of the University of Minnesota, (ii) the 
 10.22  University of Minnesota Foundation, an organization exempt from 
 10.23  federal income taxation under section 501(c)(3) of the Internal 
 10.24  Revenue Code of 1986, as amended through December 31, 1992, and 
 10.25  (iii) a corporation organized under chapter 317A, which by its 
 10.26  articles of incorporation is prohibited from providing pecuniary 
 10.27  gain to any person or entity other than the regents of the 
 10.28  University of Minnesota; which property is used primarily to 
 10.29  manage or provide goods, services, or facilities utilizing or 
 10.30  relating to large-scale advanced scientific computing resources 
 10.31  to the regents of the University of Minnesota and others. 
 10.32     (21)(a) Small scale wind energy conversion systems 
 10.33  installed after January 1, 1991, and used as an electric power 
 10.34  source are exempt. 
 10.35     "Small scale wind energy conversion systems" are wind 
 10.36  energy conversion systems, as defined in section 216C.06, 
 11.1   subdivision 12, including the foundation or support pad, which 
 11.2   are (i) used as an electric power source; (ii) located within 
 11.3   one county and owned by the same owner; and (iii) produce two 
 11.4   megawatts or less of electricity as measured by nameplate 
 11.5   ratings. 
 11.6      (b) Medium scale wind energy conversion systems installed 
 11.7   after January 1, 1991, are treated as follows:  (i) the 
 11.8   foundation and support pad are taxable; (ii) the associated 
 11.9   supporting and protective structures are exempt for the first 
 11.10  five assessment years after they have been constructed, and 
 11.11  thereafter, 30 percent of the market value of the associated 
 11.12  supporting and protective structures are taxable; and (iii) the 
 11.13  turbines, blades, transformers, and its related equipment, are 
 11.14  exempt.  "Medium scale wind energy conversion systems" are wind 
 11.15  energy conversion systems as defined in section 216C.06, 
 11.16  subdivision 12, including the foundation or support pad, which 
 11.17  are:  (i) used as an electric power source; (ii) located within 
 11.18  one county and owned by the same owner; and (iii) produce more 
 11.19  than two but equal to or less than 12 megawatts of energy as 
 11.20  measured by nameplate ratings. 
 11.21     (c) Large scale wind energy conversion systems installed 
 11.22  after January 1, 1991, are treated as follows:  25 percent of 
 11.23  the market value of all property is taxable, including (i) the 
 11.24  foundation and support pad; (ii) the associated supporting and 
 11.25  protective structures; and (iii) the turbines, blades, 
 11.26  transformers, and its related equipment.  "Large scale wind 
 11.27  energy conversion systems" are wind energy conversion systems as 
 11.28  defined in section 216C.06, subdivision 12, including the 
 11.29  foundation or support pad, which are:  (i) used as an electric 
 11.30  power source; and (ii) produce more than 12 megawatts of energy 
 11.31  as measured by nameplate ratings. 
 11.32     (22) Containment tanks, cache basins, and that portion of 
 11.33  the structure needed for the containment facility used to 
 11.34  confine agricultural chemicals as defined in section 18D.01, 
 11.35  subdivision 3, as required by the commissioner of agriculture 
 11.36  under chapter 18B or 18C. 
 12.1      (23) Photovoltaic devices, as defined in section 216C.06, 
 12.2   subdivision 13, installed after January 1, 1992, and used to 
 12.3   produce or store electric power. 
 12.4      (24) Real and personal property owned and operated by a 
 12.5   private, nonprofit corporation exempt from federal income 
 12.6   taxation pursuant to United States Code, title 26, section 
 12.7   501(c)(3), primarily used for an ice arena or ice rink, and used 
 12.8   primarily for youth and high school programs. 
 12.9      (25) A structure that is situated on real property that is 
 12.10  used for: 
 12.11     (i) housing for the elderly or for low- and moderate-income 
 12.12  families as defined in Title II of the National Housing Act, as 
 12.13  amended through December 31, 1990, and funded by a direct 
 12.14  federal loan or federally insured loan made pursuant to Title II 
 12.15  of the act; or 
 12.16     (ii) housing lower income families or elderly or 
 12.17  handicapped persons, as defined in Section 8 of the United 
 12.18  States Housing Act of 1937, as amended. 
 12.19     In order for a structure to be exempt under (i) or (ii), it 
 12.20  must also meet each of the following criteria: 
 12.21     (A) is owned by an entity which is operated as a nonprofit 
 12.22  corporation organized under chapter 317A; 
 12.23     (B) is owned by an entity which has not entered into a 
 12.24  housing assistance payments contract under Section 8 of the 
 12.25  United States Housing Act of 1937, or, if the entity which owns 
 12.26  the structure has entered into a housing assistance payments 
 12.27  contract under Section 8 of the United States Housing Act of 
 12.28  1937, the contract provides assistance for less than 90 percent 
 12.29  of the dwelling units in the structure, excluding dwelling units 
 12.30  intended for management or maintenance personnel; 
 12.31     (C) operates an on-site congregate dining program in which 
 12.32  participation by residents is mandatory, and provides assisted 
 12.33  living or similar social and physical support services for 
 12.34  residents; and 
 12.35     (D) was not assessed and did not pay tax under chapter 273 
 12.36  prior to the 1991 levy, while meeting the other conditions of 
 13.1   this clause. 
 13.2      An exemption under this clause remains in effect for taxes 
 13.3   levied in each year or partial year of the term of its permanent 
 13.4   financing. 
 13.5      (26) Real and personal property that is located in the 
 13.6   Superior National Forest, and owned or leased and operated by a 
 13.7   nonprofit organization that is exempt from federal income 
 13.8   taxation under section 501(c)(3) of the Internal Revenue Code of 
 13.9   1986, as amended through December 31, 1992, and primarily used 
 13.10  to provide recreational opportunities for disabled veterans and 
 13.11  their families. 
 13.12     (27) Manure pits and appurtenances, which may include 
 13.13  slatted floors and pipes, installed or operated in accordance 
 13.14  with a permit, order, or certificate of compliance issued by the 
 13.15  Minnesota pollution control agency.  The exemption shall 
 13.16  continue for as long as the permit, order, or certificate issued 
 13.17  by the Minnesota pollution control agency remains in effect. 
 13.18     (28) Notwithstanding clause (8), item (a), attached 
 13.19  machinery and other personal property which is part of a 
 13.20  facility containing a cogeneration system as described in 
 13.21  section 216B.166, subdivision 2, paragraph (a), if the 
 13.22  cogeneration system has met the following criteria:  (i) the 
 13.23  system utilizes natural gas as a primary fuel and the 
 13.24  cogenerated steam initially replaces steam generated from 
 13.25  existing thermal boilers utilizing coal; (ii) the facility 
 13.26  developer is selected as a result of a procurement process 
 13.27  ordered by the public utilities commission; and (iii) 
 13.28  construction of the facility is commenced after July 1, 1994, 
 13.29  and before July 1, 1997. 
 13.30     (29) Real property acquired by a home rule charter city, 
 13.31  statutory city, county, town, or school district under a lease 
 13.32  purchase agreement or an installment purchase contract during 
 13.33  the term of the lease purchase agreement as long as and to the 
 13.34  extent that the property is used by the city, county, town, or 
 13.35  school district and devoted to a public use and to the extent it 
 13.36  is not subleased to any private individual, entity, association, 
 14.1   or corporation in connection with a business or enterprise 
 14.2   operated for profit. 
 14.3      Sec. 4.  Minnesota Statutes 1997 Supplement, section 
 14.4   273.13, subdivision 31, is amended to read: 
 14.5      Subd. 31.  [CLASS 5.] Class 5 property includes:  
 14.6      (1) tools, implements, and machinery of an electric 
 14.7   generating, transmission, or distribution system or a pipeline 
 14.8   system transporting or distributing water, gas, crude oil, or 
 14.9   petroleum products or mains and pipes used in the distribution 
 14.10  of steam or hot or chilled water for heating or cooling 
 14.11  buildings, which are fixtures; 
 14.12     (2) unmined iron ore and low-grade iron-bearing formations 
 14.13  as defined in section 273.14; and 
 14.14     (3) all other property not otherwise classified. 
 14.15     Class 5 property has a class rate of 4.0 percent of market 
 14.16  value for taxes payable in 1998 and thereafter. 
 14.17     Sec. 5.  [275.071] [IN-LIEU TAX ON ELECTRIC GENERATION 
 14.18  FACILITIES.] 
 14.19     Subdivision 1.  [ELIGIBLE PROPERTY.] Each electric 
 14.20  generation facility containing machinery which was subject to 
 14.21  the property tax for assessment year 1997 shall be subject to an 
 14.22  in-lieu tax as provided in this section. 
 14.23     Subd. 2.  [BASE TAX AMOUNT.] The in-lieu tax amount for 
 14.24  each electric generation facility shall be the portion of the 
 14.25  property tax due and payable on that property for taxes payable 
 14.26  in 1998 attributable to machinery used for electric generation.  
 14.27  For each electric generation facility, the base tax amount shall 
 14.28  be considered to be apportioned among recipient local taxing 
 14.29  jurisdictions in the same proportions as the actual payable 1998 
 14.30  property taxes were apportioned. 
 14.31     Subd. 3.  [IN-LIEU TAX.] For taxes payable in 1999, the 
 14.32  in-lieu tax on each electric generation facility shall be equal 
 14.33  to 80 percent of the base tax amount determined under 
 14.34  subdivision 2.  In each subsequent year, the in-lieu tax of each 
 14.35  electric generation facility shall be reduced by 20 percent of 
 14.36  the base tax amount.  The in-lieu tax on a facility shall 
 15.1   terminate whenever the facility ceases operation due to action 
 15.2   of the state of Minnesota or any agency thereof. 
 15.3      Subd. 4.  [ADMINISTRATION.] The county treasurer shall 
 15.4   annually provide a tax statement to each owner of a facility 
 15.5   subject to the in-lieu tax.  The in-lieu tax shall be collected, 
 15.6   distributed, and otherwise administered in the same manner as 
 15.7   property taxes under chapter 276. 
 15.8      Subd. 5.  [TERMINATION.] The tax under this section shall 
 15.9   terminate the earlier of (1) January 1, 2003; or (2) when the 
 15.10  commissioner of public service certifies to the commissioner of 
 15.11  revenue that retail competition for electric supply has been 
 15.12  implemented. 
 15.13     Sec. 6.  [475A.07] [LOCAL BONDS; STATE GUARANTY.] 
 15.14     Subdivision 1.  [APPLICATION.] This section applies to the 
 15.15  bonds of a local unit of government, if the following conditions 
 15.16  are met: 
 15.17     (1) for taxes payable in 1998, electric utility generation 
 15.18  equipment net tax capacity constitutes at least 20 percent of 
 15.19  the total net tax capacity of the local government; 
 15.20     (2) the bonds are general obligations to which the full 
 15.21  faith and credit of the local government unit is pledged, 
 15.22  including an unlimited pledge to levy the amount of property 
 15.23  taxes needed to pay the obligations; and 
 15.24     (3) the bonds were outstanding on March 1, 1998, or were 
 15.25  issued to refund bonds that were outstanding on that date. 
 15.26     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 15.27  the following terms have the meanings given them. 
 15.28     (b) "Bond" means any obligation, as defined in section 
 15.29  475.51, subdivision 3, regardless of whether the obligations 
 15.30  were issued under the authority of chapter 475. 
 15.31     (c) "Local government unit" means a statutory or home rule 
 15.32  charter city, a county, a school district, or a special taxing 
 15.33  district with authority to issue general obligation bonds. 
 15.34     Subd. 3.  [STATE GUARANTY.] (a) The state guaranties the 
 15.35  payment of bonds covered by the provisions of this section.  If 
 15.36  a deficiency or a default occurs under any bond covered by this 
 16.1   section, the commissioner of finance shall pay any amount needed 
 16.2   to remedy and correct the deficiency or default.  This guaranty 
 16.3   is permanent and irrevocable. 
 16.4      (b) The guaranty, pledge, and any payment by the 
 16.5   commissioner under paragraph (a) does not relieve the local 
 16.6   governmental unit of its obligation to pay the bonds. 
 16.7      (c) If the commissioner makes a payment under paragraph 
 16.8   (a), the commissioner may recover the amount, plus any 
 16.9   additional costs incurred including interest at the rate 
 16.10  specified in section 279.03, subdivision 1a, from the local 
 16.11  governmental unit by: 
 16.12     (1) deducting the amount from state aid payments made to 
 16.13  the local governmental unit; 
 16.14     (2) compelling the levying of property taxes by the local 
 16.15  governmental unit to be paid to the commissioner of finance; 
 16.16     (3) bringing legal action to collect the amounts; or 
 16.17     (4) any combination of the actions in clauses (1) to (3). 
 16.18     Subd. 4.  [APPROPRIATION.] An amount sufficient to provide 
 16.19  any funds needed to pay and administer the guaranty under this 
 16.20  section is appropriated from the general fund to the 
 16.21  commissioner of finance. 
 16.22     Sec. 7.  [DETERMINATION OF ADJUSTED NET TAX CAPACITY.] 
 16.23     The exemption of the electric generation attached machinery 
 16.24  from the property tax base shall be considered a change in net 
 16.25  tax capacity percentage for the purposes of Minnesota Statutes, 
 16.26  section 124.2131. 
 16.27     Sec. 8.  [EFFECTIVE DATE.] 
 16.28     Sections 1 and 7 are effective for aids payable in fiscal 
 16.29  year 2000 and subsequent years.  Sections 2 and 5 are effective 
 16.30  January 1, 1999.  Sections 3 and 4 are effective for taxes 
 16.31  payable in 1999 and subsequent years.  Section 6 is effective 
 16.32  the day following final enactment.