SF 768

as introduced - 89th Legislature (2015 - 2016) Posted on 02/17/2015 09:01am

A bill for an act
relating to taxation; income; property; providing tax incentives for barn
preservation; amending Minnesota Statutes 2014, sections 273.11, by adding a
subdivision; 290.0681, subdivisions 1, 3, 4, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2014, section 273.11, is amended by adding a
subdivision to read:

new text begin Subd. 24. new text end

new text begin Valuation exclusion for improvements to certain barns. new text end

new text begin (a) The
increase in assessed value added to a farm structure constructed prior to 1937 as a result
of improvements made to the farm structure for purposes of preserving the integrity of
the internal and external features of the structure as a barn is exempt from taxation. To
be eligible for the exemption, the structure must have been first placed in service as a
barn prior to 1937. The exemption applies to the assessment year beginning after the
completion of the improvements to preserve the structure as a barn.
new text end

new text begin (b) For purposes of this subdivision, "barn" means an agricultural structure, in
whatever shape or design, which is used for the storage of farm products or feed or for
the housing of farm animals, poultry, or farm equipment.
new text end

new text begin (c) The assessing authority shall require an application for the valuation exclusion
and may require proof from the taxpayer of the date the improvements were made and
the age of the barn. The application must describe and locate the specific structure for
which the exemption for the added value is requested. Applications for this exemption
must be received prior to July 1 of any year in order to be effective for taxes payable in
the following year.
new text end

new text begin (d) The valuation exclusion terminates when the property is sold or when the
structure ceases to be used as a barn. The taxpayer must notify the assessing authority
when the structure ceases to be used as a barn.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2016 and
thereafter.
new text end

Sec. 2.

Minnesota Statutes 2014, section 290.0681, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

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

(b) "Account" means the historic credit administration account in the special
revenue fund.

(c) "Office" means the State Historic Preservation Office of the Minnesota Historical
Society.

(d) "Project" means rehabilitation of new text begin : (1) a barn located in Minnesota and constructed
prior to 1937; or (2) new text end a certified historic structure, as defined in section 47(c)(3)(A) of the
Internal Revenue Code, that is located in Minnesota and is allowed a federal credit.

(e) "Society" means the Minnesota Historical Society.

(f) "Federal credit" means the credit allowed under section 47(a)(2) of the Internal
Revenue Code.

(g) "Placed in service" has the meaning used in section 47 of the Internal Revenue
Code.

(h) "Qualified rehabilitation expenditures" has the meaning given in section 47 of
the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 3.

Minnesota Statutes 2014, section 290.0681, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Credit allowed; barn. new text end

new text begin (a) A credit is allowed against the tax imposed
under this chapter equal to 25 percent of the qualified rehabilitation costs on an eligible
barn. The rehabilitation costs must equal at least $25,000 or 25 percent of the fair market
value of the barn, excluding the land, prior to its rehabilitation, whichever is less. In
computing the tax credit, the only costs which may be included are the rehabilitation costs
incurred between the period ending on the project completion date and beginning on the
date two years prior to the project completion date.
new text end

new text begin (b) For purposes of this section, qualified rehabilitation costs include amounts if
they are properly includable in computing the basis for tax purposes of the eligible barn.
Amounts treated as an expense and deducted in the tax year in which they are paid or
incurred and amounts that are otherwise not added to the basis for tax purposes of the
eligible barn are not qualified rehabilitation costs. Amounts incurred for architectural and
engineering fees, site survey fees, legal expenses, insurance premiums, development fees,
and other construction-related costs are qualified rehabilitation costs to the extent they
are added to the basis for tax purposes of the eligible barn.
new text end

new text begin (c) For a barn that is eligible for the credit under this subdivision and subdivision
2, the taxpayer may apply for either credit, but not both.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 4.

Minnesota Statutes 2014, section 290.0681, subdivision 3, is amended to read:

Subd. 3.

Applications; allocations.

(a) To qualify for a credit or grant under this
section, the developer of a project must apply to the office before the rehabilitation begins.
The application must contain the information and be in the form prescribed by the office.
The office may collect a fee for application of up to 0.5 percent of qualified rehabilitation
expenditures, up to $40,000, based on estimated qualified rehabilitation expenditures, to
offset costs associated with personnel and administrative expenses related to administering
the credit and preparing the economic impact report in subdivision 9. Application fees are
deposited in the account. The application must indicate if the application is for a credit
or a grant in lieu of the credit or a combination of the two and designate the taxpayer
qualifying for the credit or the recipient of the grant.

(b) Upon approving an application for credit new text begin allowed under subdivision 2 new text end , the office
shall issue allocation certificates that:

(1) verify eligibility for the credit or grant;

(2) state the amount of credit or grant anticipated with the project, with the credit
amount equal to 100 percent and the grant amount equal to 90 percent of the federal
credit anticipated in the application;

(3) state that the credit or grant allowed may increase or decrease if the federal
credit the project receives at the time it is placed in service is different than the amount
anticipated at the time the allocation certificate is issued; and

(4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer
or grant recipient is entitled to receive the credit or grant at the time the project is placed
in service, provided that date is within three calendar years following the issuance of
the allocation certificate.

new text begin (c) Upon approving an application for credit allowed under subdivision 2a, the
office shall issue allocation certificates that:
new text end

new text begin (1) verify eligibility for the credit;
new text end

new text begin (2) state the amount of the credit anticipated with the project, with the credit amount
equal to 25 percent of the qualified rehabilitation costs on an eligible barn; and
new text end

new text begin (3) state the fiscal year in which the credit is allocated, and that the taxpayer recipient
is entitled to receive the credit at the time the project is placed in service, provided that
date is within two calendar years following the issuance of the allocation certificate.
new text end

deleted text begin (c) deleted text end new text begin (d) new text end The office, in consultation with the commissioner, shall determine if the
project is eligible for a credit or a grant under this section and must notify the developer
in writing of its determination. Eligibility for the credit is subject to review and audit by
the commissioner.

deleted text begin (d) deleted text end new text begin (e) new text end The federal credit recapture and repayment requirements under section 50 of
the Internal Revenue Code do not apply to the credit allowed under this section.

deleted text begin (e) deleted text end new text begin (f) new text end Any decision of the office under paragraph (c) may be challenged as a
contested case under chapter 14. The contested case proceeding must be initiated within
45 days of the date of written notification by the office.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 5.

Minnesota Statutes 2014, section 290.0681, subdivision 4, is amended to read:

Subd. 4.

Credit certificates; grants.

(a)(1) The developer of a project for which
the office has issued an allocation certificate must notify the office when the project is
placed in service. Upon verifying that the project has been placed in service, and new text begin , if
applicable, new text end was allowed a federal credit, the office must issue a credit certificate to the
taxpayer designated in the application or must issue a grant to the recipient designated in
the application. The credit certificate must state the amount of the credit.

(2) new text begin For credits allowed under subdivision 2, new text end the credit amount equals the federal
credit allowed for the project.

(3) The grant amount equals 90 percent of the federal credit allowed for the project.

new text begin (4) For credits allowed under subdivision 2a, the credit amount equals 25 percent of
the qualified rehabilitation costs on an eligible barn.
new text end

(b) The recipient of a credit certificate new text begin allowed under subdivision 2 new text end may assign the
certificate to another taxpayer, which is then allowed the credit under this section or
section 297I.20, subdivision 3. An assignment is not valid unless the assignee notifies the
commissioner within 30 days of the date that the assignment is made. The commissioner
shall prescribe the forms necessary for notifying the commissioner of the assignment of a
credit certificate and for claiming a credit by assignment.

(c) Credits passed through to partners, members, shareholders, or owners pursuant to
subdivision 5 are not an assignment of a credit certificate under this subdivision.

(d) A grant agreement between the office and the recipient of a grant may allow the
grant to be issued to another individual or entity.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 6. new text begin PURPOSE.
new text end

new text begin The public interest is served by encouraging the preservation of historic agricultural
structures that are potentially subject to decay or demolition, thus maintaining the
historic rural character of the state's landscape, sustaining agricultural traditions, and
providing an attractive scenic environment for work and recreation of the state's citizens
and visitors. It is also in the public interest to prevent the loss of historic agricultural
structures due to property taxation at values incompatible with their preservation. The
means for encouraging preservation of historic agricultural structures is the acquisition of
discretionary preservation easements by town or city governments to ensure preservation
of such structures which provide a demonstrated public benefit.
new text end