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SF 826

1st Engrossment - 89th Legislature (2015 - 2016) Posted on 05/04/2015 03:34pm

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Current Version - 1st Engrossment

A bill for an act
relating to financing of state and local government; making changes to individual
income and corporate franchise, property, sales and use, estate, mineral, tobacco,
special, local, and other taxes and tax-related provisions; providing for and
expanding credits; modifying local government aids; modifying exclusions,
exemptions, and levy deadlines; modifying sales and use tax exemptions;
changing sales, use, and excise tax remittances; modifying certain local sales and
use taxes; modifying income tax credits; modifying the payment in lieu of tax
provisions; clarifying estate tax provisions; providing for and modifying certain
local development projects; modifying electric generation machinery valuation;
clarifying tax increment financing rules; modifying property tax interest rates;
modifying valuation and taxation of railroad property; modifying the Sustainable
Forest Incentive Act; modifying Iron Range fiscal disparities program; modifying
certain county levy authority; allocating additional tax reductions for border
cities; modifying the distribution of taconite production and occupation taxes;
modifying and providing provisions for public finance; making conforming,
policy, and technical changes to tax provisions; requiring reports; appropriating
money;amending Minnesota Statutes 2014, sections 13.51, subdivision 2;
16A.152, subdivisions 2, 8; 16D.08, subdivision 2; 69.021, subdivision 5;
126C.01, subdivision 3; 126C.40, subdivision 1; 136A.129, subdivision 3;
138.053; 216B.1621, subdivision 2; 216B.164, subdivision 2a; 216B.2424,
subdivision 5; 270.071, subdivisions 2, 7, 8, by adding a subdivision; 270.072,
subdivisions 2, 3, by adding a subdivision; 270.12, by adding a subdivision;
270.80, subdivisions 1, 2, 3, 4, by adding subdivisions; 270.81, subdivisions 1,
3, by adding a subdivision; 270.82; 270.83, subdivisions 1, 2; 270.84; 270.86;
270.87; 270A.03, subdivision 5; 270B.14, subdivision 1; 270C.03, subdivision
1; 270C.30; 270C.33, subdivisions 5, 8; 270C.34, subdivision 2; 270C.347,
subdivision 1; 270C.35, subdivision 3, by adding a subdivision; 270C.38,
subdivision 1; 270C.445, by adding a subdivision; 270C.446, subdivision
5; 270C.72, subdivision 4; 270C.89, subdivision 1; 271.06, subdivisions 2,
7; 271.08, subdivision 1; 271.21, subdivision 2; 272.02, subdivisions 9, 10;
272.0211, subdivision 1; 272.025, subdivision 1; 272.029, subdivisions 2, 4,
by adding a subdivision; 272.0295, subdivision 4; 272.115, subdivision 2;
273.032; 273.061, subdivision 7; 273.08; 273.121, by adding a subdivision;
273.124, subdivision 13; 273.13, subdivisions 23, 24; 273.1392; 273.1393;
273.33, subdivisions 1, 2; 273.37, subdivision 1; 273.371; 273.372, subdivisions
2, 4, by adding subdivisions; 274.01, subdivision 1; 274.13, subdivision 1;
274.135, subdivision 3; 275.025, subdivisions 1, 3; 275.065, subdivisions 1, 3;
275.066; 275.07, subdivision 1; 275.62, subdivision 2; 276.04, subdivision 2;
276A.06, subdivisions 3, 5; 278.01, subdivision 1; 279.01, subdivision 1; 279.37,
subdivision 2; 282.01, subdivisions 1a, 1d, 4; 282.261, subdivision 2; 287.2205;
289A.02, subdivision 7, as amended; 289A.08, subdivisions 11, 16, by adding
a subdivision; 289A.09, subdivisions 1, 2; 289A.11, subdivision 1; 289A.12,
subdivision 14; 289A.20, subdivision 4; 289A.38, subdivision 6; 289A.50,
subdivision 7; 289A.60, subdivisions 15, 28; 290.01, subdivisions 4a, 7, 19,
as amended, 19b, 19c, 19d, 31, as amended, by adding a subdivision; 290.06,
by adding subdivisions; 290.0671, subdivisions 1, 6a; 290.0672, subdivision
1; 290.0674, subdivisions 1, 2; 290.068, subdivisions 1, 2, 3, 6a, by adding
a subdivision; 290.091, subdivision 3; 290.0921, subdivision 3; 290.0922,
subdivision 2; 290.17, subdivision 4; 290.191, subdivision 5; 290.21, subdivision
4; 290A.03, subdivisions 13, 15, as amended; 290A.04, subdivision 2h; 290A.19;
290B.03, subdivision 1; 290B.04, subdivision 1; 290C.01; 290C.02, subdivisions
1, 3, 6; 290C.03; 290C.04; 290C.05; 290C.055; 290C.07; 290C.08, subdivision
1; 290C.10; 290C.11; 290C.13, subdivisions 3, 6; 291.005, subdivision 1;
291.03, subdivision 10, by adding a subdivision; 291.031; 295.54, subdivision 2;
295.55, subdivision 6; 296A.01, subdivisions 12, 33, 42, by adding subdivisions;
296A.02, by adding a subdivision; 296A.07, subdivisions 1, 4; 296A.08,
subdivision 2; 296A.09, subdivisions 1, 3, 5, 6; 296A.15, subdivisions 1, 4;
296A.17, subdivisions 1, 2, 3; 296A.18, subdivisions 1, 8; 296A.19, subdivision
1; 296A.22, subdivision 9; 296A.26; 297A.62, subdivision 3; 297A.67,
subdivision 7a, by adding subdivisions; 297A.68, subdivisions 5, 35a; 297A.70,
subdivisions 4, 14, by adding a subdivision; 297A.82, subdivision 4a; 297A.994,
subdivision 4; 297D.02; 297E.02, subdivisions 3, 7; 297E.04, subdivision
1; 297E.05, subdivision 4; 297E.06, subdivision 1; 297F.05, subdivision 3;
297F.09, subdivisions 1, 10; 297F.23; 297G.09, subdivisions 1, 9; 297G.22;
297H.04, subdivision 2; 297H.06, subdivision 2; 297I.05, subdivision 2; 297I.10,
subdivisions 1, 3; 297I.30, by adding a subdivision; 297I.60, subdivision 2;
298.01, subdivisions 3b, 4c; 298.17; 298.227; 298.24, subdivision 1, by adding
a subdivision; 298.28, subdivisions 3, 7a; 366.095, subdivision 1; 383B.117,
subdivision 2; 410.32; 412.301; 469.034, subdivision 2; 469.101, subdivision
1; 469.169, by adding a subdivision; 469.174, subdivision 12; 469.175,
subdivision 3; 469.176, subdivision 4c; 469.1761, by adding a subdivision;
469.1763, subdivisions 1, 2, 3; 469.178, subdivision 7; 469.190, subdivisions
1, 7; 469.194, subdivision 1; 469.319, subdivision 5; 469.40, subdivision
11, as amended; 469.43, by adding a subdivision; 469.45, subdivisions 1, 2;
469.47, subdivision 4, as amended; 473H.09; 475.58, subdivision 3b; 475.60,
subdivision 2; 477A.0124, subdivision 4; 477A.013, subdivision 1, by adding a
subdivision; 477A.014, subdivision 1; 477A.015; 477A.017, subdivisions 2, 3;
477A.03, subdivisions 2a, 2b, 2c; 477A.12, subdivisions 1, 2; 477A.13; 477A.15;
477A.19, by adding subdivisions; 477A.20; 524.3-916; 559.202, subdivision 2;
Laws 1980, chapter 511, sections 1, subdivision 2, as amended; 2, as amended;
Laws 1991, chapter 291, article 8, section 27, subdivisions 3, as amended, 4,
as amended, 5, 6; Laws 1996, chapter 471, article 3, section 51; Laws 2001,
First Special Session chapter 5, article 3, section 86; Laws 2006, chapter 257,
section 2, as amended; Laws 2008, chapter 366, article 7, section 20; Laws 2013,
chapter 143, article 8, sections 22, as amended; 23, as amended; Laws 2014,
chapter 308, article 1, section 14, subdivision 2; article 7, section 7; proposing
coding for new law in Minnesota Statutes, chapters 103C; 116J; 270C; 273; 290;
290B; 290C; 293; 383B; 465; 477A; repealing Minnesota Statutes 2014, sections
3.192; 270.81, subdivision 4; 270.83, subdivision 3; 272.02, subdivisions 23, 29,
33, 41, 44, 45, 47, 52, 54, 55, 56, 68, 69, 70, 71, 80, 84, 89, 92, 93, 96, 99;
272.0211; 273.111, subdivision 9a; 275.025, subdivision 4; 281.22; 290C.02,
subdivisions 5, 9; 469.194, subdivisions 2, 4; Minnesota Rules, parts 8092.2000;
8106.0100, subparts 1, 2, 3, 4, 5, 6, 7, 8, 10, 12, 13, 14, 17, 17a, 18, 19, 20,
21; 8106.0300, subparts 1, 3; 8106.0400; 8106.0500; 8106.0600; 8106.0700;
8106.0800; 8106.9900; 8125.1300, subpart 3.

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

ARTICLE 1

INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

Minnesota Statutes 2014, section 16D.08, subdivision 2, is amended to read:


Subd. 2.

Powers.

(a) In addition to the collection remedies available to private
collection agencies in this state, the commissioner, with legal assistance from the attorney
general, may utilize any statutory authority granted to a referring agency for purposes of
collecting debt owed to that referring agency. The commissioner may also use the tax
collection remedies in sections 270C.03, subdivision 1, clause (8) (9), 270C.31, 270C.32,
270C.52, subdivisions 2 and 3, 270C.63, 270C.65, and 270C.67 to 270C.72. A debtor
may take advantage of any administrative or appeal rights contained in the listed sections.
For administrative and appeal rights for nontax debts, references to administrative
appeals or to the taxpayer rights advocate shall be construed to be references to the case
reviewer, references to Tax Court shall be construed to mean district court, and offers
in compromise shall be submitted to the referring agency. A debtor who qualifies for
cancellation of collection costs under section 16D.11, subdivision 3, clause (1), can apply
to the commissioner for reduction or release of a continuous wage levy, if the debtor
establishes that the debtor needs all or a portion of the wages being levied upon to pay
for essential living expenses, such as food, clothing, shelter, medical care, or expenses
necessary for maintaining employment. The commissioner's determination not to reduce
or release a continuous wage levy is appealable to district court. The word "tax" or "taxes"
when used in the tax collection statutes listed in this subdivision also means debts referred
under this chapter.

(b) Before using the tax collection remedies listed in this subdivision, notice and
demand for payment of the amount due must be given to the person liable for the payment
or collection of the debt at least 30 days prior to the use of the remedies. The notice must
be sent to the person's last known address and must include a brief statement that sets forth
in simple and nontechnical terms the amount and source of the debt, the nature of the
available collection remedies, and remedies available to the debtor.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2014, section 136A.129, subdivision 3, is amended to read:


Subd. 3.

Program components.

(a) An intern must be an eligible student who has
been admitted to a major program that is related to the intern experience as determined
by the eligible institution.

(b) To participate in the program, an eligible institution must:

(1) enter into written agreements with eligible employers to provide internships that
are at least eight weeks long and located in greater Minnesota; and

(2) provide academic credit for the successful completion of the internship or ensure
that it fulfills requirements necessary to complete a vocational technical education program.

(c) To participate in the program, an eligible employer must enter into a written
agreement with an eligible institution specifying that the intern:

(1) would not have been hired without the tax credit described in subdivision 4;

(2) did not work for the employer in the same or a similar job prior to entering
the agreement;

(3) (2) does not replace an existing employee;

(4) (3) has not previously participated in the program;

(5) (4) will be employed at a location in greater Minnesota;

(6) (5) will be paid at least minimum wage for a minimum of 16 hours per week
for a period of at least eight weeks; and

(7) (6) will be supervised and evaluated by the employer.

(d) The written agreement between the eligible institution and the eligible employer
must certify a credit amount to the employer, not to exceed $2,000 per intern. The total
dollar amount of credits that an eligible institution certifies to eligible employers in a
calendar year may not exceed the amount of its allocation under subdivision 4.

(e) Participating eligible institutions and eligible employers must report annually to
the office. The report must include at least the following:

(1) the number of interns hired;

(2) the number of hours and weeks worked by interns; and

(3) the compensation paid to interns.

(f) An internship required to complete an academic program does not qualify for the
greater Minnesota internship program under this section.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 3.

Minnesota Statutes 2014, section 270C.03, subdivision 1, is amended to read:


Subdivision 1.

Powers and duties.

The commissioner shall have and exercise
the following powers and duties:

(1) administer and enforce the assessment and collection of taxes;

(2) make determinations, corrections, and assessments with respect to taxes,
including interest, additions to taxes, and assessable penalties;

(3) disallow the tax effects of a transaction governed under chapter 290 that does not
have economic substance;

(3) (4) use statistical or other sampling techniques consistent with generally accepted
auditing standards in examining returns or records and making assessments;

(4) (5) investigate the tax laws of other states and countries, and formulate and
submit to the legislature such legislation as the commissioner may deem expedient
to prevent evasions of state revenue laws and to secure just and equal taxation and
improvement in the system of state revenue laws;

(5) (6) consult and confer with the governor upon the subject of taxation, the
administration of the laws in regard thereto, and the progress of the work of the
department, and furnish the governor, from time to time, such assistance and information
as the governor may require relating to tax matters;

(6) (7) execute and administer any agreement with the secretary of the treasury or the
Bureau of Alcohol, Tobacco, Firearms and Explosives in the Department of Justice of the
United States or a representative of another state regarding the exchange of information
and administration of the state revenue laws;

(7) (8) require town, city, county, and other public officers to report information
as to the collection of taxes received from licenses and other sources, and such other
information as may be needful in the work of the commissioner, in such form as the
commissioner may prescribe;

(8) (9) authorize the use of unmarked motor vehicles to conduct seizures or criminal
investigations pursuant to the commissioner's authority;

(9) (10) authorize the participation in audits performed by the Multistate Tax
Commission. For the purposes of chapter 270B, the Multistate Tax Commission will be
considered to be a state for the purposes of auditing corporate sales, excise, and income
tax returns;

(10) (11) maintain toll-free telephone access for taxpayer assistance for calls from
locations within the state; and

(11) (12) exercise other powers and authority and perform other duties required of or
imposed upon the commissioner by law.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2015.

Sec. 4.

[270C.331] ECONOMIC SUBSTANCE.

Subdivision 1.

Economic substance.

(a) For the purposes of disallowing the
tax effects of a transaction that does not have substance pursuant to section 270C.03,
subdivision 1, clause (3), a transaction shall be treated as having economic substance
only if:

(1) the transaction changes in a meaningful way, apart from tax effects, the taxpayer's
economic position; and

(2) the taxpayer has a substantial purpose, apart from tax effects, for entering into
the transaction.

(b) In determining whether the requirements of paragraph (a), clauses (1) and (2),
are met, the potential for profit of a transaction shall be taken into account only if the
present value of the reasonable expected pretax profit from the transaction is substantial in
relation to the present value of the expected net tax benefits that would be allowed if the
transaction was respected. Fees and other transaction expenses shall be taken into account
as expenses in determining pretax profit.

(c) For the purposes of paragraph (a), clause (2), achieving a financial accounting
benefit shall not be taken into account as a purpose for entering into a transaction if the
origin of such financial accounting benefit is a reduction of federal, state, or local tax.

Subd. 2.

Apart from tax effects.

For purposes of this section, "apart from tax
effects" means without regard to the state and local tax effects arising from the application
of the laws of any state or local unit of government to the form of the transaction, the
federal tax effects, or both.

Subd. 3.

Transaction.

For purposes of this section and section 270C.03, subdivision
1, clause (3), "transaction" includes a series of transactions.

Subd. 4.

Personal transactions of individuals.

In the case of an individual,
subdivision 1 shall only apply to transactions entered into in connection with the trade or
business activity engaged in for the production of income.

Subd. 5.

Commissioner to issue guidance.

(a) The commissioner shall promulgate
guidance on how the provisions of this section will be applied. The guidance must
include, at a minimum, types of transactions that will not be challenged as not having
economic substance, and types of transactions that would be challenged as not having
economic substance.

(b) The commissioner shall promulgate rules setting forth how the requirements
of subdivision 1, paragraphs (a) and (b), would be determined, including definitions of
relevant terms used in this section that the commissioner would apply in determining
whether a transaction has economic substance.

(c) The commissioner shall establish and publish a formal departmental procedure
for uniform application of this section.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2015, except that subdivision 5 is effective the day following final enactment.

Sec. 5.

Minnesota Statutes 2014, section 289A.02, subdivision 7, as amended by Laws
2015, chapter 1, section 1, is amended to read:


Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through December
31, 2014
April 1, 2015.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 6.

Minnesota Statutes 2014, section 290.01, subdivision 4a, is amended to read:


Subd. 4a.

Financial institution.

(a) "Financial institution" means:

(1) a holding company any corporation or other business entity registered (i) under
state law as a bank holding company; (ii) under the federal Bank Holding Company Act
of 1956, as amended; or (iii) as a savings and loan holding company under the federal
National Housing Act, as amended
;

(2) any regulated financial corporation; or a national bank organized and existing
as a national bank association pursuant to the provisions of United States Code, title
12, chapter 2;

(3) any other corporation organized under the laws of the United States or organized
under the laws of this state or any other state or country that is carrying on the business of
a financial institution.
a savings association or federal savings bank as defined in United
States Code, title 12, section 1813(b)(1);

(4) any bank or thrift institution incorporated or organized under the laws of any state;

(5) any corporation organized under United States Code, title 12, sections 611 to 631;

(6) any agency or branch of a foreign depository as defined under United States
Code, title 12, section 3101;

(7) any corporation or other business entity that is more than 50 percent owned,
directly or indirectly, by any person or business entity described in clauses (1) to (6), other
than an insurance company taxable under chapter 297I;

(8) a corporation or other business entity that derives more than 50 percent of its
total gross income for financial accounting purposes from finance leases. For the purposes
of this clause, "gross income" is the average from the current tax year and immediately
preceding two years and excludes gross income from incidental or occasional transactions.
For purposes of this clause, "finance lease" means any lease transaction which is the
functional equivalent of an extension of credit, and that transfers substantially all of the
benefits and risks incident to the ownership of property, including any direct financing
lease or leverage lease that meets the criteria of Financial Accounting Standards Board
Statement No. 13, accounting for leases, or any other lease that is accounted for as
financing by a lessor under generally accepted accounting principles; or

(9) any other person or business entity, other than an insurance company taxable under
chapter 297I, which derives more than 50 percent of its gross income from activities that an
entity described in clauses (2) to (6), or (8), is authorized to transact. For the purposes of
this clause, gross income does not include income from nonrecurring, extraordinary items.

(b) "Holding company" means any corporation registered under the Federal Bank
Holding Company Act of 1956, as amended, or registered as a savings and loan holding
company under the Federal National Housing Act, as amended, or a federal savings
bank holding company.
The commissioner is authorized to exclude any person from the
application of paragraph (a), clause (9), if the person proves by clear and convincing
evidence that the person's income-producing activity is not in substantial competition with
any person described in paragraph (a), clauses (2) to (6), or (8).

(c) "Regulated financial corporation" means an institution, the deposits or accounts
of which are insured under the Federal Deposit Insurance Act or by the Federal Savings
and Loan Insurance Corporation, any institution which is a member of a Federal Home
Loan Bank, any other bank or thrift institution incorporated or organized under the laws of
any state or any foreign country which is engaged in the business of receiving deposits,
any corporation organized under the provisions of United States Code, title 12, sections
611 to 631 (Edge Act Corporations), and any agency of a foreign depository as defined in
United States Code, title 12, section 3101.

(d) "Business of a financial institution" means:

(1) the business that any corporation organized under the authority of the United
States or organized under the laws of this state or any other state or country does or has
authority to do which is substantially similar to the business which a corporation may be
created to do under chapters 46 to 55 or any business which a corporation is authorized
to do by those laws; or

(2) the business that any corporation organized under the authority of the United
States or organized under the laws of this state or any other state or country does or has
authority to do if the corporation derives more than 50 percent of its gross income from
lending activities (including discounting obligations) in substantial competition with the
businesses described in clause (1). For purposes of this clause, the computation of the gross
income of a corporation does not include income from nonrecurring, extraordinary items.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 7.

Minnesota Statutes 2014, section 290.01, subdivision 7, is amended to read:


Subd. 7.

Resident.

(a) The term "resident" means any individual domiciled
in Minnesota, except that an individual is not a "resident" for the period of time that
the individual is a "qualified individual" as defined in section 911(d)(1) of the Internal
Revenue Code, if the qualified individual notifies the county within three months of
moving out of the country that homestead status be revoked for the Minnesota residence
of the qualified individual, and the property is not classified as a homestead while the
individual remains a qualified individual.

(b) "Resident" also means any individual domiciled outside the state who maintains
a place of abode in the state and spends in the aggregate more than one-half of the tax
year in Minnesota, unless:

(1) the individual or the spouse of the individual is in the armed forces of the United
States; or

(2) the individual is covered under the reciprocity provisions in section 290.081.

For purposes of this subdivision, presence within the state for any part of a calendar
day constitutes a day spent in the state. Individuals shall keep adequate records to
substantiate the days spent outside the state, except that a day spent in Minnesota for the
primary purpose of receiving medical treatment by the taxpayer, or the spouse, child, or
parent of the taxpayer, is not treated as a day spent in Minnesota. "Medical treatment"
means treatment as defined in section 213(d)(1)(A) of the Internal Revenue Code
.

The term "abode" means a dwelling maintained by an individual, whether or not
owned by the individual and whether or not occupied by the individual, and includes a
dwelling place owned or leased by the individual's spouse.

(c) In determining where an individual is domiciled, neither the commissioner nor
any court shall consider:

(1) charitable contributions made by an the individual within or without the state in
determining if the individual is domiciled in Minnesota
;

(2) the location of the individual's attorney, certified public accountant, or financial
advisor; or

(3) the place of business of a financial institution at which the individual applies for
any new type of credit or at which the individual opens or maintains any type of account
.

(d) For purposes of this subdivision, the following terms have the meanings given
them:

(1) "financial advisor" means an individual, financial institution, or other firm
engaged in the business of providing services related to trust and estate administration;
financial advice and budgeting; investment selection or allocation; or purchase of life,
disability, long-term care, annuities, or similar insurance products; and includes certified
financial planners, registered investment advisors, securities broker-dealers, associated
persons and representatives of registered investment advisors and securities broker-dealers,
agents licensed to sell life insurance or annuities, and similar regulated products; and

(2) "financial institution" means a financial institution as that term is defined in
section 47.015, subdivision 1, a state or nationally chartered credit union, and a registered
broker-dealer under the Securities and Exchange Act of 1934.

EFFECTIVE DATE.

Changes to paragraph (b) are effective for taxable years
beginning after December 31, 2014. Changes to paragraphs (c) and (d) are effective the day
following final enactment, except that they do not apply to any case for which an appeal,
petition, or complaint has been filed in tax court or district court on or after April 28, 2015.

Sec. 8.

Minnesota Statutes 2014, section 290.01, subdivision 19, as amended by Laws
2015, chapter 1, section 2, is amended to read:


Subd. 19.

Net income.

The term "net income" means the federal taxable income,
as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
date named in this subdivision, incorporating the federal effective dates of changes to the
Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
Revenue Code must be applied by allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
Revenue Code; and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of
the Internal Revenue Code means the gross income as defined in section 468B(b) of the
Internal Revenue Code.

The Internal Revenue Code of 1986, as amended through December 31, 2014 April
1, 2015
, shall be in effect for taxable years beginning after December 31, 1996.

Except as otherwise provided, references to the Internal Revenue Code in
subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
the applicable year.

EFFECTIVE DATE.

This section is effective the day following final enactment,
except the changes incorporated by federal changes are effective retroactively at the same
time the changes were effective for federal purposes.

Sec. 9.

Minnesota Statutes 2014, section 290.01, is amended by adding a subdivision
to read:


Subd. 19i.

Accelerated recognition of certain installment sale gains.

(a) For the
purposes of this subdivision, the following definitions apply:

(1) "realized" means realized as defined by section 1001(b) of the Internal Revenue
Code;

(2) "installment sale" means any installment sale under section 453 of the Internal
Revenue Code, and any other sale which is reported utilizing a method of accounting
authorized under subchapter E of the Internal Revenue Code, which allows taxpayers to
delay reporting or recognition of a realized gain until a future year; and

(3) "allocable amount" means the full amount to be apportioned to Minnesota under
section 290.191, or the full amount to be assigned under section 290.17.

(b) In the case of a nonresident individual or a person who becomes a nonresident
individual during the tax year, net income includes the allocable amount realized upon a
sale of the assets of, or the sale of any interest in, an S corporation or partnership which
operated in Minnesota during the taxable year of sale, including any income or gain to be
recognized in future years pursuant to an installment sale method of reporting under the
Internal Revenue Code.

(c) An individual who becomes a nonresident of Minnesota in any year after an
installment sale is required to recognize the full amount of any income or gain not
recognized in a prior year on the individual's final Minnesota resident tax return.

(d) Notwithstanding paragraphs (b) and (c), taxpayers may elect to defer the
recognition of installment sale gains by making an election under this paragraph. The
election must be filed on a form prescribed by the commissioner and must be filed by
the due date of the individual tax return, including any extension. Electing taxpayers
are required to:

(1) file Minnesota tax returns in all subsequent years when gains from the installment
sale are recognized and reported to the Internal Revenue Service;

(2) allocate gains to the state of Minnesota as though the gains were incurred in the
year of sale under section 290.191 or 290.17; and

(3) include all relevant federal tax documents reporting the installment sale with
subsequent Minnesota tax returns.

(e) Income or gain recognized for Minnesota purposes under paragraphs (b) and (c)
and subjected to tax, is excluded from net income in future years.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 10.

Minnesota Statutes 2014, section 290.01, subdivision 31, as amended by Laws
2015, chapter 1, section 3, is amended to read:


Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through December
31, 2014
April 1, 2015. Internal Revenue Code also includes any uncodified provision in
federal law that relates to provisions of the Internal Revenue Code that are incorporated
into Minnesota law. When used in this chapter, the reference to "subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code as
amended through March 18, 2010.

EFFECTIVE DATE.

This section is effective the day following final enactment,
except the changes incorporated by federal changes are effective retroactively at the same
time the changes were effective for federal purposes.

Sec. 11.

Minnesota Statutes 2014, section 290.06, is amended by adding a subdivision
to read:


Subd. 37.

Refundable film production credit.

(a) A taxpayer is allowed a
credit against the taxes due under this chapter equal to 25 percent of film production
and postproduction expenditures made in Minnesota that are directly attributable to film
production in Minnesota.

(b) For purposes of this subdivision, "film" has the meaning given in section 116U.26.

(c) Expenditures that qualify for the credit under this subdivision must be
"production costs" as that term is defined in section 116U.26 and must be subject to
taxation in Minnesota.

(d) If the amount of the credit under this subdivision exceeds the taxpayer's tax
liability under this chapter for the taxable year, the amount of the excess must be refunded
to the taxpayer. The amount necessary to pay the refunds under this subdivision is
appropriated annually from the general fund to the commissioner of revenue.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2015.

Sec. 12.

Minnesota Statutes 2014, section 290.0671, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

(a) An individual who is a resident of Minnesota is
allowed a credit against the tax imposed by this chapter equal to a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code.

(b) For individuals with no qualifying children, the credit equals 2.10 percent of the
first $6,180 of earned income. The credit is reduced by 2.01 percent of earned income
or adjusted gross income, whichever is greater, in excess of $8,130, but in no case is
the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the
first $11,120 of earned income. The credit is reduced by 6.02 percent of earned income
or adjusted gross income, whichever is greater, in excess of $21,190, but in no case is
the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals 11 percent
of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned
income or adjusted gross income, whichever is greater, in excess of $25,130, but in no
case is the credit less than zero.

(e) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income
not subject to tax under this chapter, including income excluded under section 290.01,
subdivision 19b
, clause (9), the credit must be allocated based on the ratio of federal
adjusted gross income reduced by the earned income not subject to tax under this chapter
over federal adjusted gross income. For purposes of this paragraph, the subtractions
for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not
considered "earned income not subject to tax under this chapter."

For the purposes of this paragraph, the exclusion of combat pay under section 112
of the Internal Revenue Code is not considered "earned income not subject to tax under
this chapter."

(g) For tax years beginning after December 31, 2007, and before December 31,
2010, and for tax years beginning after December 31, 2017, the $8,130 in paragraph (b),
the $21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for
inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint
returns. For tax years beginning after December 31, 2008, the commissioner shall annually
adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f)
of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be
substituted for the word "1992." For 2009, the commissioner shall then determine the
percent change from the 12 months ending on August 31, 2007, to the 12 months ending on
August 31, 2008, and in each subsequent year, from the 12 months ending on August 31,
2007, to the 12 months ending on August 31 of the year preceding the taxable year. The
earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
commissioner under this subdivision is not a rule under the Administrative Procedure Act.

(h)(1) For tax years beginning after December 31, 2012, and before January 1, 2014,
the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph (d),
after being adjusted for inflation under subdivision 7, are increased by $5,340 for married
taxpayers filing joint returns; and (2) for tax years beginning after December 31, 2013, and
before January 1, 2018, the $8,130 in paragraph (b), the $21,190 in paragraph (c), and the
$25,130 in paragraph (d), after being adjusted for inflation under subdivision 7, are each
increased by $5,000 for married taxpayers filing joint returns. For tax years beginning
after December 31, 2010, and before January 1, 2012, and for tax years beginning after
December 31, 2013, and before January 1, 2018, the commissioner shall annually adjust
the $5,000 by the percentage determined pursuant to the provisions of section 1(f) of
the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be
substituted for the word "1992." For 2011, the commissioner shall then determine the
percent change from the 12 months ending on August 31, 2008, to the 12 months ending on
August 31, 2010, and in each subsequent year, from the 12 months ending on August 31,
2008, to the 12 months ending on August 31 of the year preceding the taxable year. The
earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
commissioner under this subdivision is not a rule under the Administrative Procedure Act.

(i) The commissioner shall construct tables showing the amount of the credit at
various income levels and make them available to taxpayers. The tables shall follow
the schedule contained in this subdivision, except that the commissioner may graduate
the transition between income brackets.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 13.

Minnesota Statutes 2014, section 290.0671, subdivision 6a, is amended to read:


Subd. 6a.

TANF appropriation for working family credit expansion.

(a) On
an annual basis the commissioner of revenue, with the assistance of the commissioner
of human services, shall calculate the value of the refundable portion of the Minnesota
Working Family Credit provided under this section that qualifies for payment with funds
from the federal Temporary Assistance for Needy Families (TANF) block grant. Of this
total amount, the commissioner of revenue shall estimate the portion entailed by the
expansion of the credit rates provided in Laws 2000, chapter 490, article 4, section 17,
for individuals with qualifying children over the rates provided in Laws 1999, chapter
243, article 2, section 12.

(b) An amount sufficient to pay the refunds entailed by the expansion of the credit
rates provided in Laws 2000, chapter 490, article 4, section 17, for individuals with
qualifying children over the rates provided in Laws 1999, chapter 243, article 2, section
12, as estimated in paragraph (a), is appropriated to the commissioner of human services
from the federal Temporary Assistance for Needy Families (TANF) block grant funds, for
transfer to the commissioner of revenue for deposit in the general fund.

EFFECTIVE DATE.

This section is effective only for transfers in fiscal year 2015.

Sec. 14.

Minnesota Statutes 2014, section 290.0674, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

An individual is allowed a credit against the
tax imposed by this chapter in an amount equal to 75 percent of the amount paid for
education-related expenses for a qualifying child in kindergarten preschool through grade
12. For purposes of this section, "education-related expenses" means:

(1) fees or tuition for instruction by an instructor under section 120A.22, subdivision
10
, clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers
Association, and who is not a lineal ancestor or sibling of the dependent for instruction
outside the regular school day or school year, including tutoring, driver's education
offered as part of school curriculum, regardless of whether it is taken from a public or
private entity or summer camps, in grade or age appropriate curricula that supplement
curricula and instruction available during the regular school year, that assists a dependent
to improve knowledge of core curriculum areas or to expand knowledge and skills under
the required academic standards under section 120B.021, subdivision 1, and the elective
standard under section 120B.022, subdivision 1, clause (2), and that do not include the
teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
tenets, doctrines, or worship;

(2) expenses for textbooks, including books and other instructional materials and
equipment purchased or leased for use in preschool, elementary, and secondary schools
in teaching only those subjects legally and commonly taught in public elementary and
secondary schools in this state. "Textbooks" does not include instructional books and
materials used in the teaching of religious tenets, doctrines, or worship, the purpose of
which is to instill such tenets, doctrines, or worship, nor does it include books or materials
for extracurricular activities including sporting events, musical or dramatic events, speech
activities, driver's education, or similar programs;

(3) a maximum expense of $200 per family for personal computer hardware,
excluding single purpose processors, and educational software that assists a dependent to
improve knowledge of core curriculum areas or to expand knowledge and skills under
the required academic standards under section 120B.021, subdivision 1, and the elective
standard under section 120B.022, subdivision 1, clause (2), purchased for use in the
taxpayer's home and not used in a trade or business regardless of whether the computer is
required by the dependent's school; and

(4) the amount paid to others for transportation of a qualifying child attending an a
preschool,
elementary, or secondary school situated in Minnesota, North Dakota, South
Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's
compulsory attendance laws, which is not operated for profit, and which adheres to the
provisions of the Civil Rights Act of 1964 and chapter 363A.

For purposes of this section, "qualifying child" has the meaning given in section
32(c)(3) of the Internal Revenue Code who is at least four years old when the expenses
are incurred. "Preschool" means the Head Start program under section 119A.50 or a
school district prekindergarten program
.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 15.

Minnesota Statutes 2014, section 290.0674, subdivision 2, is amended to read:


Subd. 2.

Limitations.

(a) For claimants with income not greater than $33,500
$45,000, the maximum credit allowed for a family is $1,000 multiplied by the number
of qualifying children in kindergarten preschool through grade 12 in the family. The
maximum credit for families with one qualifying child in kindergarten preschool through
grade 12 is reduced by $1 for each $4 of household income over $33,500 $45,000, and
the maximum credit for families with two or more qualifying children in kindergarten
through grade 12 is reduced by $2 for each $4 of household income over $33,500 $45,000,
but in no case is the credit less than zero.

For purposes of this section "income" has the meaning given in section 290.067,
subdivision 2a
. In the case of a married claimant, a credit is not allowed unless a joint
income tax return is filed.

(b) For a nonresident or part-year resident, the credit determined under subdivision 1
and the maximum credit amount in paragraph (a) must be allocated using the percentage
calculated in section 290.06, subdivision 2c, paragraph (e).

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 16.

Minnesota Statutes 2014, section 290.068, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

Subject to the requirements in subdivision 8, a
corporation, partners in a partnership, or shareholders in a corporation treated as an "S"
corporation under section 290.9725 are
individual, trust, or estate is allowed a credit
against the tax computed under this chapter for the taxable year equal to:

(a) ten percent of the first $2,000,000 of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount; and

(b) 2.5 percent on all of such excess expenses over $2,000,000.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 17.

Minnesota Statutes 2014, section 290.068, subdivision 2, is amended to read:


Subd. 2.

Definitions.

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

(a) "Qualified research expenses" means (i) qualified research expenses and basic
research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except
it does not include expenses incurred for qualified research or basic research conducted
outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue
Code; and (ii) contributions to a nonprofit corporation established and operated pursuant
to the provisions of chapter 317A for the purpose of promoting the establishment and
expansion of business in this state, provided the contributions are invested by the nonprofit
corporation for the purpose of providing funds for small, technologically innovative
enterprises in Minnesota during the early stages of their development.

(b) "Qualified research" means qualified research as defined in section 41(d) of the
Internal Revenue Code, except that the term does not include qualified research conducted
outside the state of Minnesota.

(c) "Base amount" means base amount as defined in section 41(c) of the Internal
Revenue Code, except that the average annual gross receipts must be calculated using
Minnesota sales or receipts under section 290.191 and the definitions contained in clauses
(a) and (b) shall apply. If there are inadequate records or the records are unavailable to
compute or verify the base percentage, a fixed base percentage of 16 percent must be used.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 18.

Minnesota Statutes 2014, section 290.068, subdivision 3, is amended to read:


Subd. 3.

Limitation; carryover.

(a) Except as provided in subdivision 6a,
paragraph (b),
the credit for a taxable year beginning before January 1, 2010, and after
December 31, 2012,
shall not exceed the liability for tax. "Liability for tax" for purposes
of this section means the sum of the tax imposed under section 290.06, subdivisions 1 and
2c
, for the taxable year reduced by the sum of the nonrefundable credits allowed under
this chapter, on all of the entities required to be included on the combined report of the
unitary business. If the amount of the credit allowed exceeds the liability for tax of the
taxpayer, but is allowed as a result of the liability for tax of other members of the unitary
group for the taxable year, the taxpayer must allocate the excess as a research credit
to another member of the unitary group.

(b) In the case of a corporation which is a partner in a partnership, the credit allowed
for the taxable year shall not exceed the lesser of the amount determined under paragraph
(a) for the taxable year or an amount (separately computed with respect to the corporation's
interest in the trade or business or entity) equal to the amount of tax attributable to that
portion of taxable income which is allocable or apportionable to the corporation's interest
in the trade or business or entity.

(c) If the amount of the credit determined under this section for any taxable year
exceeds the limitation under paragraph (a) or (b), including amounts allowed as a refund
under subdivision 6a, paragraph (b), or
allocated to other members of the unitary group,
the excess shall be a research credit carryover to each of the 15 succeeding taxable years.
The entire amount of the excess unused credit for the taxable year shall be carried first
to the earliest of the taxable years to which the credit may be carried and then to each
successive year to which the credit may be carried. The amount of the unused credit
which may be added under this clause shall not exceed the taxpayer's liability for tax
less the research credit for the taxable year.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 19.

Minnesota Statutes 2014, section 290.068, subdivision 6a, is amended to read:


Subd. 6a.

Credit to be refundable.

(a) If the amount of credit allowed in this
section for qualified research expenses incurred in taxable years beginning after December
31, 2009, and before January 1, 2013, exceeds the taxpayer's tax liability under this
chapter, the commissioner shall refund the excess amount. The credit allowed for qualified
research expenses incurred in taxable years beginning after December 31, 2009, and before
January 1, 2013, must be used before any research credit earned under subdivision 3.

(b) If the first $15,000 of the credit allowed in this section for qualified research
expenses incurred in taxable years beginning after December 31, 2014, exceeds the
taxpayer's tax liability under this chapter, the commissioner shall refund the excess
amount. The $15,000 limit must be applied at the corporation, partnership, or other entity
level, including sole proprietorships. The credit allowed for qualified research expenses
incurred in taxable years beginning before January 1, 2015, must be used before any
research credit earned under subdivision 3.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 20.

Minnesota Statutes 2014, section 290.068, is amended by adding a subdivision
to read:


Subd. 8.

Application and certification requirement for sole proprietors.

(a) A
taxpayer who is a sole proprietor claiming a credit under this section must submit an
application to the commissioner for determination that the expenses for which the credit is
claimed are qualified research expenses. The application must be submitted by September
15 of the calendar year following the taxable year in which the qualified research
expenses were incurred. The application must be in a form and manner prescribed by the
commissioner and must contain information sufficient to verify that the expenses for
which the credit is claimed under this section are qualified research expenses.

(b) The commissioner must notify the sole proprietor of the determination of the
application under paragraph (a) no later than 60 days after the application is received.

(c) Upon approving an application for credit under paragraph (a), the commissioner
must issue a credit certificate to the sole proprietor that verifies eligibility for the credit
and states the amount of credit and the taxable year to which the credit applies.

(d) The sole proprietor must claim the credit under this section in the return for the
taxable year immediately following the taxable year to which the credit applies. The
return must contain a copy of the credit certificate issued under paragraph (c).

(e) A credit must not be issued under this section unless the commissioner has
received the certification required under paragraph (c).

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 21.

[290.0693] MINNESOTA COLLEGE SAVINGS PLAN CREDIT.

Subdivision 1.

Definitions.

For purposes of this section, the terms "Minnesota
college savings plan," "account," "nonqualified distribution," and "plan administrator"
have the meanings given them in chapter 136G.

Subd. 2.

Credit allowed.

(a) A credit of up to $500 is allowed against the tax
imposed by this chapter, subject to the limitations in paragraph (b).

(b) The credit allowed must be calculated by applying the following rates to the
amount contributed to a Minnesota college savings plan, as established in chapter 136G,
in a taxable year:

(1) 200 percent for individual filers and married couples filing a joint return who
have federal adjusted gross income of not more than 150 percent of the federal poverty
guideline for a household size of four;

(2) 100 percent for individual filers and married couples filing a joint return who
have federal adjusted gross income over 150 percent, but not more than 200 percent of
the federal poverty guideline for a household size of four;

(3) 50 percent for individual filers who have federal adjusted gross income over
200 percent of the federal poverty guideline for a household size of four, but not more
than $80,000; and

(4) 50 percent for married couples filing a joint return who have federal adjusted
gross income over 200 percent of the federal poverty guideline for a household size of
four, except that the credit is reduced by $1 for every $160 over $80,000 in federal
adjusted gross income.

(c) For a nonresident or a part-year resident, the credit under this subdivision
must be allocated based on the percentage calculated under section 290.06, subdivision
2c, paragraph (e).

(d) The $80,000 in paragraph (b), clauses (3) and (4), used to calculate the credit and
phaseout must be adjusted for inflation. The commissioner shall adjust by the percentage
determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
that in section 1(f)(3)(B) the word "2014" shall be substituted for the word "1992." For
2016, the commissioner shall then determine the percent change from the 12 months ending
on August 31, 2014, to the 12 months ending on August 31, 2015, and in each subsequent
year, from the 12 months ending on August 31, 2014, to the 12 months ending on August
31 of the year preceding the taxable year. The earned income thresholds as adjusted for
inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount
is rounded up to the nearest $10 amount. The determination of the commissioner under this
subdivision is not a rule under the Administrative Procedure Act including section 14.386.

Subd. 3.

Credit transfer.

(a) The credit allowed under this section must be
calculated after applying all other credits to the taxpayer's tax liability. If the amount of
credit that the taxpayer is eligible to receive under this section exceeds the taxpayer's tax
liability after applying all other credits, the commissioner shall transfer the excess amount
pursuant to the requirements of paragraph (b).

(b) The commissioner shall transfer the excess amount calculated under paragraph
(a) to the plan administrator to be deposited to the taxpayer's Minnesota college savings
plan account. If the taxpayer made contributions to more than one account, the credit
amount must be allocated based on the contributions to each account as a percentage
of the total contributions to all accounts.

Subd. 4.

Verification of contribution amounts.

The commissioner of the Office of
Higher Education must provide sufficient information to the commissioner of revenue to
verify the taxpayer's annual contribution amounts to an account.

Subd. 5.

Recapture of credit.

In the case of a nonqualified distribution, the
taxpayer is liable to the commissioner for the lesser of: ten percent of the amount of the
nonqualified distribution, or the sum of credits received under this section for all years.

Subd. 6.

Appropriation.

An amount sufficient to pay the refunds required by this
section is appropriated to the commissioner from the general fund.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2015.

Sec. 22.

[290.0694] VETERANS JOBS TAX CREDIT.

Subdivision 1.

Definitions.

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

(b)(1) "Qualified employee" means an employee as defined in section 290.92,
subdivision 1, who meets the following criteria:

(i) the employee is a resident of Minnesota on the date of hire;

(ii) the employee is paid wages as defined in section 290.92, subdivision 1; and

(iii) the employee's wages are attributable to Minnesota under section 290.191,
subdivision 12;

(2) "Qualified employee" does not include:

(i) any employee who bears any of the relationships to the employer described in
subparagraphs (A) to (G) of section 152(d)(2) of the Internal Revenue Code;

(ii) if the employer is a corporation, an employee who owns, directly or indirectly,
more than 50 percent in value of the outstanding stock of the corporation, or if the
employer is an entity other than a corporation, an employee who owns, directly or
indirectly, more than 50 percent of the capital and profits interests in the entity, as
determined with the application of section 267(c) of the Internal Revenue Code; or

(iii) if the employer is an estate or trust, any employee who is a fiduciary of the estate
or trust, or is an individual who bears any of the relationships described in subparagraphs
(A) to (G) of section 152(d)(2) of the Internal Revenue Code to a grantor, beneficiary,
or fiduciary of the estate or trust.

(c) "Qualified employer" means an employer that hired an unemployed veteran
as a qualified employee.

(d) "Unemployed veteran" is a veteran who was unemployed on the date of hire.

(e) "Veteran" has the meaning given in section 197.447.

(f) "Date of hire" means the day that the qualified employee begins performing
services as an employee of the qualified employer.

Subd. 2.

Credit for hiring unemployed veterans.

A qualified employer who
is required to file a return under section 289A.08, subdivision 1, 2, or 3, and hires an
unemployed veteran as a qualified employee, is allowed a credit against the tax imposed
by this chapter equal to ten percent of the wages paid to the qualified employee during the
taxable year, but the amount of the credit shall not exceed $2,500. The credit is limited
to the liability for tax under this chapter for the taxable year. A qualified employer is
not eligible for the credit if the qualified employer currently employs or has previously
employed the qualified veteran.

Subd. 3.

Appropriation.

An amount sufficient to pay the refunds required by this
section is appropriated to the commissioner from the general fund.

Subd. 4.

Flow-through entities.

Credits granted to a partnership, limited liability
company taxed as a partnership, S corporation, or multiple owners of a business are passed
through to the partners, members, shareholders, or owners, respectively, pro rata to each
partner, member, shareholder, or owner based on their share of the entity's assets or as
specially allocated in their organizational documents, as of the last day of the taxable year.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2015.

Sec. 23.

[290.0695] EMPLOYEE CREDIT FOR CERTAIN
EMPLOYER-PROVIDED FITNESS FACILITY EXPENSES.

Subdivision 1.

Credit allowed.

(a) A taxpayer is allowed a credit against the tax
imposed by this chapter, subject to the requirements of this section. The credit shall not
exceed the taxpayer's tax liability. For married taxpayers filing a joint return, the credit is
$60. For all other taxpayers, the credit is $30.

(b) The credit is allowed to an employee whose employer either:

(1) pays a portion of any fees, dues, or membership expenses on behalf of the
employee to a fitness facility; or

(2) reimburses the employee for direct payment of fees, dues, or membership
expenses made by the employee to a fitness facility.

(c) The credit under this section is only allowed to individuals who use the fitness
facility for the preservation, maintenance, encouragement, or development of physical
fitness an average of four days per month, but if the fitness facility is used fewer than three
days per month, the credit is not allowed. The commissioner shall prescribe the form and
manner in which eligibility for the credit is determined.

(d) For purposes of this section, "fitness facility" means a facility located in the state:

(1) that provides instruction in a program of physical exercise; offers facilities for
the preservation, maintenance, encouragement, or development of physical fitness; or is
the site of such a program of a state or local government;

(2) that is not a private club owned and operated by its members;

(3) that does not offer golf, hunting, sailing, or horseback riding facilities;

(4) whose fitness facility is not incidental to its overall function and purpose;

(5) that is compliant with antidiscrimination laws under chapter 363A and applicable
federal antidiscrimination laws; and

(6) is located off the employer's premises.

Subd. 2.

Limitation.

The credit under this section applies only if the employer's
payment of fees, dues, or membership expenses to a fitness facility is available on
substantially the same terms to each member of a group of employees defined under a
reasonable classification by the employer, but no classification may include only highly
compensated employees, as defined under section 414(q) of the Internal Revenue Code, or
any other group that includes only executives, directors, or other managerial employees.

Subd. 3.

Nonresidents and part-year residents; flow-through entities.

For a
nonresident or part-year resident, the credit must be allocated based on the percentage
calculated under section 290.06, subdivision 2c, paragraph (e).

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 24.

Minnesota Statutes 2014, section 290.17, subdivision 4, is amended to read:


Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly
within this state or partly within and partly without this state is part of a unitary business,
the entire income of the unitary business is subject to apportionment pursuant to section
290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source and none may be allocated
to a particular place except as provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to business income subject to subdivision 5,
income of an insurance company, or income of an investment company determined under
section 290.36.

(b) The term "unitary business" means business activities or operations which
result in a flow of value between them. The term may be applied within a single legal
entity or between multiple entities and without regard to whether each entity is a sole
proprietorship, a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use,
evidenced by centralized management or executive force, centralized purchasing,
advertising, accounting, or other controlled interaction, but the absence of these
centralized activities will not necessarily evidence a nonunitary business. Unity is also
presumed when business activities or operations are of mutual benefit, dependent upon or
contributory to one another, either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business
entity that carries on business activity outside the state different in kind from that
conducted within this state, and the other business is conducted entirely outside the state, it
is presumed that the two business operations are unitary in nature, interrelated, connected,
and interdependent unless it can be shown to the contrary.

(e) Unity of ownership does not exist when two or more corporations are involved
unless more than 50 percent of the voting stock of each corporation is directly or indirectly
owned by a common owner or by common owners, either corporate or noncorporate, or
by one or more of the member corporations of the group. For this purpose, the term
"voting stock" shall include membership interests of mutual insurance holding companies
formed under section 66A.40.

(f) The net income and apportionment factors under section 290.191 or 290.20 of
foreign corporations and other foreign entities which are part of a unitary business shall
not be included in the net income or the apportionment factors of the unitary business;
except that the income and apportionment factors of a foreign entity, other than an entity
treated as a C corporation for federal income tax purposes, that are included in the federal
taxable income, as defined in section 63 of the Internal Revenue Code as amended through
the date named in section 290.01, subdivision 19, of a domestic corporation, domestic
entity, or individual must be included in determining net income and the factors to be used
in the apportionment of net income pursuant to section 290.191 or 290.20. A foreign
corporation or other foreign entity which is not included on a combined report and which
is required to file a return under this chapter shall file on a separate return basis.

(g) For purposes of determining the net income of a unitary business and the factors
to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
must be included only the income and apportionment factors of domestic corporations
or other domestic entities that are determined to be part of the unitary business pursuant
to this subdivision, notwithstanding that foreign corporations or other foreign entities
might be included in the unitary business; except that the income and apportionment
factors of a foreign entity, other than an entity treated as a C corporation for federal
income tax purposes, that is included in the federal taxable income, as defined in section
63 of the Internal Revenue Code as amended through the date named in section 290.01,
subdivision 19
, of a domestic corporation, domestic entity, or individual must be included
in determining net income and the factors to be used in the apportionment of net income
pursuant to section 290.191 or 290.20.

(h) Each corporation or other entity, except a sole proprietorship, that is part of a
unitary business must file combined reports as the commissioner determines. On the
reports, all intercompany transactions between entities included pursuant to paragraph
(g) must be eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using each entity's
Minnesota factors for apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all entities included pursuant
to paragraph (g) in the denominators of the apportionment formula. Except as otherwise
provided by paragraph (f), all sales of the unitary business made within this state pursuant
to section 290.191 or 290.20 must be included on the combined report of a corporation or
other entity that is a member of the unitary business and is subject to the jurisdiction of
this state to impose tax under this chapter.

(i) If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part
of the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must
be prorated or accounted for separately.

(j) For purposes of this subdivision, "insurance company" means any company that is:

(1) licensed to engage in the business of insurance in Minnesota pursuant to chapter
60A; or

(2) domiciled and licensed to engage in the business of insurance in another state
or country that imposes retaliatory taxes, and that does not grant, on a reciprocal basis,
exemption from such retaliatory taxes to insurance companies or their agents domiciled
in Minnesota.

(k) For the purposes of this subdivision, "retaliatory taxes" means taxes imposed on
insurance companies organized in another state or country that result from the fact that an
insurance company organized in the taxing jurisdiction and doing business in the other
jurisdiction is subject to taxes, fines, deposits, penalties, licenses, or fees in an amount
exceeding that imposed by the taxing jurisdiction upon an insurance company organized in
the other state or country and doing business to the same extent in the taxing jurisdiction.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 25.

Minnesota Statutes 2014, section 290.191, subdivision 5, is amended to read:


Subd. 5.

Determination of sales factor.

For purposes of this section, the following
rules apply in determining the sales factor.

(a) The sales factor includes all sales, gross earnings, or receipts received in the
ordinary course of the business, except that the following types of income are not included
in the sales factor:

(1) interest;

(2) dividends;

(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;

(4) sales of property used in the trade or business, except sales of leased property of
a type which is regularly sold as well as leased; and

(5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
Code or sales of stock.; and

(6) sales of derivatives including, but not limited to, swaps, options, futures, and
forwards.

(b) Sales of tangible personal property are made within this state if the property is
received by a purchaser at a point within this state, regardless of the f.o.b. point, other
conditions of the sale, or the ultimate destination of the property.

(c) Tangible personal property delivered to a common or contract carrier or foreign
vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
regardless of f.o.b. point or other conditions of the sale.

(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
licensed by a state or political subdivision to resell this property only within the state of
ultimate destination, the sale is made in that state.

(e) Sales made by or through a corporation that is qualified as a domestic
international sales corporation under section 992 of the Internal Revenue Code are not
considered to have been made within this state.

(f) Sales, rents, royalties, and other income in connection with real property is
attributed to the state in which the property is located.

(g) Receipts from the lease or rental of tangible personal property, including finance
leases and true leases, must be attributed to this state if the property is located in this
state and to other states if the property is not located in this state. Receipts from the
lease or rental of moving property including, but not limited to, motor vehicles, rolling
stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
factor to the extent that the property is used in this state. The extent of the use of moving
property is determined as follows:

(1) A motor vehicle is used wholly in the state in which it is registered.

(2) The extent that rolling stock is used in this state is determined by multiplying
the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
which is the miles traveled within this state by the leased or rented rolling stock and the
denominator of which is the total miles traveled by the leased or rented rolling stock.

(3) The extent that an aircraft is used in this state is determined by multiplying the
receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
the number of landings of the aircraft in this state and the denominator of which is the
total number of landings of the aircraft.

(4) The extent that a vessel, mobile equipment, or other mobile property is used in
the state is determined by multiplying the receipts from the lease or rental of the property
by a fraction, the numerator of which is the number of days during the taxable year the
property was in this state and the denominator of which is the total days in the taxable year.

(h) Royalties and other income received for the use of or for the privilege of using
intangible property, including patents, know-how, formulas, designs, processes, patterns,
copyrights, trade names, service names, franchises, licenses, contracts, customer lists, or
similar items, must be attributed to the state in which the property is used by the purchaser.
If the property is used in more than one state, the royalties or other income must be
apportioned to this state pro rata according to the portion of use in this state. If the portion
of use in this state cannot be determined, the royalties or other income must be excluded
from both the numerator and the denominator. Intangible property is used in this state if
the purchaser uses the intangible property or the rights therein in the regular course of its
business operations in this state, regardless of the location of the purchaser's customers.

(i) Sales of intangible property are made within the state in which the property is
used by the purchaser. If the property is used in more than one state, the sales must be
apportioned to this state pro rata according to the portion of use in this state. If the
portion of use in this state cannot be determined, the sale must be excluded from both the
numerator and the denominator of the sales factor. Intangible property is used in this
state if the purchaser used the intangible property in the regular course of its business
operations in this state.

(j) Receipts from the performance of services must be attributed to the state where
the services are received. For the purposes of this section, receipts from the performance
of services provided to a corporation, partnership, or trust may only be attributed to a
state where it has a fixed place of doing business. If the state where the services are
received is not readily determinable or is a state where the corporation, partnership, or
trust receiving the service does not have a fixed place of doing business, the services
shall be deemed to be received at the location of the office of the customer from which
the services were ordered in the regular course of the customer's trade or business. If the
ordering office cannot be determined, the services shall be deemed to be received at the
office of the customer to which the services are billed. Receipts received as compensation
by a nonresident individual for the performance of services as a member of a board of
directors, or similar body, are attributed to Minnesota based on the ratio of the time spent
in Minnesota providing services as a member of that board divided by the time spent
everywhere providing services as a member of that board.

(k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
from management, distribution, or administrative services performed by a corporation
or trust for a fund of a corporation or trust regulated under United States Code, title 15,
sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
the fund resides. Under this paragraph, receipts for services attributed to shareholders are
determined on the basis of the ratio of: (1) the average of the outstanding shares in the
fund owned by shareholders residing within Minnesota at the beginning and end of each
year; and (2) the average of the total number of outstanding shares in the fund at the
beginning and end of each year. Residence of the shareholder, in the case of an individual,
is determined by the mailing address furnished by the shareholder to the fund. Residence
of the shareholder, when the shares are held by an insurance company as a depositor for
the insurance company policyholders, is the mailing address of the policyholders. In
the case of an insurance company holding the shares as a depositor for the insurance
company policyholders, if the mailing address of the policyholders cannot be determined
by the taxpayer, the receipts must be excluded from both the numerator and denominator.
Residence of other shareholders is the mailing address of the shareholder.

EFFECTIVE DATE.

Paragraph (a) is effective for taxable years beginning after
December 31, 2014. Paragraph (j) is effective the day following final enactment and
applies retroactively to all open taxable years and returns.

Sec. 26.

Minnesota Statutes 2014, section 290.21, subdivision 4, is amended to read:


Subd. 4.

Dividends received from another corporation.

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

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

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

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

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

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

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

The dividend deduction provided in this subdivision does not apply to a dividend
received from a real estate investment trust as defined in section 856 of the Internal
Revenue Code.

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

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

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

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

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

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2014.

Sec. 27.

Minnesota Statutes 2014, section 290A.03, subdivision 15, as amended by
Laws 2015, chapter 1, section 4, is amended to read:


Subd. 15.

Internal Revenue Code.

"Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through December 31, 2014 April 1, 2015.

EFFECTIVE DATE.

This section is effective for property tax refunds based on
property taxes payable after December 31, 2015, and rent paid after December 31, 2014.

Sec. 28.

Minnesota Statutes 2014, section 291.005, subdivision 1, is amended to read:


Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following
terms used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code,
increased by the value of any property in which the decedent had a qualifying income
interest for life and for which an election was made under section 291.03, subdivision 1d,
for Minnesota estate tax purposes, but was not made for federal estate tax purposes.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through March 26, 2014.

(4) "Minnesota gross estate" means the federal gross estate of a decedent after
(a) excluding therefrom any property included in the estate which has its situs outside
Minnesota, and (b) including any property omitted from the federal gross estate which
is includable in the estate, has its situs in Minnesota, and was not disclosed to federal
taxing authorities.

(5) "Nonresident decedent" means an individual whose domicile at the time of
death was not in Minnesota.

(6) "Personal representative" means the executor, administrator or other person
appointed by the court to administer and dispose of the property of the decedent. If there
is no executor, administrator or other person appointed, qualified, and acting within this
state, then any person in actual or constructive possession of any property having a situs in
this state which is included in the federal gross estate of the decedent shall be deemed
to be a personal representative to the extent of the property and the Minnesota estate tax
due with respect to the property.

(7) "Resident decedent" means an individual whose domicile at the time of death
was in Minnesota. The provisions of section 290.01, subdivision 7, paragraphs (c) and
(d), apply to determinations of domicile under this chapter.

(8) "Situs of property" means, with respect to:

(i) real property, the state or country in which it is located;

(ii) tangible personal property, the state or country in which it was normally kept
or located at the time of the decedent's death or for a gift of tangible personal property
within three years of death, the state or country in which it was normally kept or located
when the gift was executed;

(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
Code, owned by a nonresident decedent and that is normally kept or located in this state
because it is on loan to an organization, qualifying as exempt from taxation under section
501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and

(iv) intangible personal property, the state or country in which the decedent was
domiciled at death or for a gift of intangible personal property within three years of death,
the state or country in which the decedent was domiciled when the gift was executed.

For a nonresident decedent with an ownership interest in a pass-through entity with
assets that include real or tangible personal property, situs of the real or tangible personal
property, including qualified works of art, is determined as if the pass-through entity does
not exist and the real or tangible personal property is personally owned by the decedent.
If the pass-through entity is owned by a person or persons in addition to the decedent,
ownership of the property is attributed to the decedent in proportion to the decedent's
capital ownership share of the pass-through entity.

(9) "Pass-through entity" includes the following:

(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;

(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;

(iii) a single-member limited liability company or similar entity, regardless of
whether it is taxed as an association or is disregarded for federal income tax purposes
under Code of Federal Regulations, title 26, section 301.7701-3; or

(iv) a trust to the extent the property is includible in the decedent's federal gross
estate; but excludes

(v) an entity whose ownership interest securities are traded on an exchange regulated
by the Securities and Exchange Commission as a national securities exchange under
section 6 of the Securities Exchange Act, United States Code, title 15, section 78f.

EFFECTIVE DATE.

This section is effective for estates of decedents dying after
December 31, 2014.

Sec. 29.

Minnesota Statutes 2014, section 291.03, is amended by adding a subdivision
to read:


Subd. 12.

Certain dispositions to government entities.

Notwithstanding any
provision of this section, no taxpayer shall be disqualified for the subtraction provided
under section 291.016, subdivision 3, nor shall any taxpayer be liable for the recapture tax
provided in subdivision 11, solely because the state, any local government unit, or any
other entity that has the power of eminent domain acquires title or possession of the land
for a public purpose within the three-year holding period.

EFFECTIVE DATE.

This section is effective retroactively for estates of decedents
dying after June 30, 2011.

Sec. 30. REPORT OF FREE ELECTRONIC FILING FOR INDIVIDUAL
INCOME TAX RETURNS.

(a) By March 16, 2016, the commissioner of revenue must provide a written
report to the chairs and ranking minority members of the legislative committees with
jurisdiction over taxes regarding free electronic filing options for individual income tax
filing, including a vendor-based solution. The report must include responses from a
commissioner's request for information to consumer-based tax filing software vendors.
The request for information may include, but is not limited to, seeking information on
the following aspects of a free electronic filing solution:

(1) costs, on a per return basis, that would be charged to the state of Minnesota to
provide an electronic individual income tax return preparation, submission, and payment
remittance process;

(2) vendor capability to provide customer service and issue resolution to taxpayers
using the software;

(3) vendor capability to provide and maintain an appropriate link between the
Department of Revenue and the Internal Revenue Service Modernized Electronic Filing
Program;

(4) vendor security capabilities to ensure that taxpayer return information is
maintained and protected as required by Minnesota Statutes, chapters 13 and 270B,
Internal Revenue Service Publication 1075, and any other applicable requirements;

(5) products for the free filing and submitting of both Minnesota and federal returns
offered to customers and the thresholds for using those products; and

(6) add-on products offered to customers and their costs.

(b) The report must address the possibility of implementing free electronic filing
while maintaining annual preparation of the income tax sample required under Minnesota
Statutes, section 270C.12, and must include a report on how other states with income tax
samples manage federal data on federal income tax returns.

(c) The report required under paragraph (a) must comply with Minnesota Statutes,
sections 3.195 and 3.197.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 31. VETERANS JOBS GRANT.

Subdivision 1.

Establishment.

The commissioner of revenue shall establish a
program to award a grant to a qualified employer for hiring an unemployed veteran as
a qualified employee. A qualified employer is eligible for a grant of $2,500 for each
qualified employee hired.

Subd. 2.

Definitions.

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

(b) "Local government" means statutory or home rule charter cities, counties, and
townships; special districts as defined under Minnesota Statutes, section 6.465; any
instrumentality of a statutory or home rule charter city, county, or township as defined in
Minnesota Statutes, section 471.59; and any joint powers board or organization created
under Minnesota Statutes, section 471.59.

(c) "Nonprofit organization" means an organization that has a current federal
determination letter stating that the nonprofit organization qualifies as an exempt
organization under section 501(c)(3) of the Internal Revenue Code and is exempt from tax
under section 501(a) of the Internal Revenue Code.

(d) "Qualified veteran employee" means any individual performing services within
the state of Minnesota for an employer that is a local government or nonprofit organization;
the performance of which services constitute, establish, and determine the relationship
between the parties as that of employer and employee; and who meets the following criteria:

(1) the employee is a resident of Minnesota on the date of hire;

(2) the employee is paid wages as defined in Minnesota Statutes, section 290.92,
subdivision 1;

(3) the employee's wages are attributable to Minnesota under Minnesota Statutes,
section 290.191, subdivision 12;

(4) the employee is employed for a period of at least 6 of the 12 months immediately
following the date of hire; and

(5) the employee is an unemployed veteran.

(e) "Qualified veteran employee" does not include any employee who, in the
preceding 12 months before the employee's date of hire was, and in the calendar year in
which the grant is paid, is:

(1) a member of the board of the nonprofit organization employer that hired the
qualified employee; or

(2) an elected or appointed official of the local government that hired the qualified
employee.

(f) "Qualified employer" means a local government or nonprofit organization that
hires a qualified employee.

(g) "Unemployed veteran" is a veteran who was unemployed on the date of hire.

(h) "Veteran" has the meaning given in Minnesota Statutes, section 197.447.

(i) "Date of hire" means the day that the qualified veteran employee begins
performing services as an employee of the qualified employer.

Subd. 3.

Application.

The commissioner must develop forms and procedures for
soliciting and reviewing applications for grants under this section. At a minimum:

(1) a local government must include a resolution of its governing body affirming the
number of qualified employees hired in the year for which the grant is applied; and

(2) a nonprofit organization must include a resolution of its board affirming the
number of qualified employees hired in the year for which the grant is applied.

Subd. 4.

Aid payment and calculation.

The commissioner of revenue shall remit
grants to qualified employers. The amount of the grant equals $2,500 multiplied by the
number of qualified veteran employees hired by the qualified employer. A qualified
employer must not claim a grant for hiring an unemployed veteran as a qualified veteran
employee if the unemployed veteran is currently employed or was previously employed by
the qualified employer. The commissioner of revenue shall pay the aid to the treasurer or
designated treasurer of each qualified employer by July 15 of the calendar year following
the year in which the qualified veteran employee was hired.

EFFECTIVE DATE.

This section is effective January 1, 2016.

Sec. 32. APPROPRIATION.

$175,000 in fiscal year 2016 is appropriated from the general fund to the
commissioner of revenue for administering the free electronic filing study provided in
this article.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 33. APPROPRIATION.

The following amounts are appropriated from the general fund to the commissioner
of revenue to make grants under the veteran jobs grant program provided in this article:

(1) $7,600,000 in fiscal year 2016;

(2) $7,200,000 in fiscal year 2017; and

(3) $6,900,000 in each fiscal year thereafter.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 2

PROPERTY TAX

Section 1.

[103C.333] COUNTY LEVY AUTHORITY.

Notwithstanding any other law to the contrary, a county levying a tax under section
103C.331 shall not include any taxes levied under those authorities in the levy certified
under section 275.07, subdivision 1, paragraph (a). A county levying under section
103C.331 shall separately certify that amount, and the auditor shall extend that levy as a
special taxing district levy under sections 275.066 and 275.07, subdivision 1, paragraph (b).

EFFECTIVE DATE.

This section is effective for certifications made in 2015 and
thereafter.

Sec. 2.

Minnesota Statutes 2014, section 126C.01, subdivision 3, is amended to read:


Subd. 3.

Referendum market value.

"Referendum market value" means the market
value of all taxable property, excluding property classified as class 2, or 4c(4), or 4c(12)
under section 273.13. The portion of class 2a property consisting of the house, garage, and
surrounding one acre of land of an agricultural homestead is included in referendum market
value. For the purposes of this subdivision, in the case of class 1a, 1b, or 2a property,
"market value" means the value prior to the exclusion under section 273.13, subdivision
35
. In the case of class 4c(12) property, "market value" means the market value exceeding
$300,000 for taxes payable in 2016 and thereafter.
Any class of property, or any portion of
a class of property, that is included in the definition of referendum market value and that has
a classification rate of less than one percent under section 273.13 shall have a referendum
market value equal to its market value times its classification rate, multiplied by 100.

EFFECTIVE DATE.

This section is effective for taxes payable in 2016 and
thereafter.

Sec. 3.

Minnesota Statutes 2014, section 138.053, is amended to read:


138.053 COUNTY HISTORICAL SOCIETY; TAX LEVY; CITIES OR
TOWNS.

The governing body of any home rule charter or statutory city or town may annually
appropriate from its general fund an amount not to exceed 0.02418 percent of estimated
market value, derived from ad valorem taxes on property or other revenues, to be paid to
the historical society of its respective city, town, or county to be used for the promotion of
historical work and to aid in defraying the expenses of carrying on the historical work in the
county. No city or town may appropriate any funds for the benefit of any historical society
unless the society is affiliated with and approved by the Minnesota Historical Society.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2014, section 273.13, subdivision 23, is amended to read:


Subd. 23.

Class 2.

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

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

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

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof,
that are unplatted real estate, rural in character and not used for agricultural purposes,
including land used for growing trees for timber, lumber, and wood and wood products,
that is not improved with a structure. The presence of a minor, ancillary nonresidential
structure as defined by the commissioner of revenue does not disqualify the property from
classification under this paragraph. Any parcel of 20 acres or more improved with a
structure that is not a minor, ancillary nonresidential structure must be split-classified, and
ten acres must be assigned to the split parcel containing the structure. Class 2b property
has a classification rate of one percent of market value unless it is part of an agricultural
homestead under paragraph (a), or qualifies as class 2c under paragraph (d).

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

(e) Agricultural land as used in this section means:

(1) contiguous acreage of ten acres or more, used during the preceding year for
agricultural purposes; or

(2) contiguous acreage used during the preceding year for an intensive livestock or
poultry confinement operation, provided that land used only for pasturing or grazing
does not qualify under this clause.

"Agricultural purposes" as used in this section means the raising, cultivation, drying,
or storage of agricultural products for sale, or the storage of machinery or equipment used
in support of agricultural production by the same farm entity. For a property to be classified
as agricultural based only on the drying or storage of agricultural products, the products
being dried or stored must have been produced by the same farm entity as the entity
operating the drying or storage facility. "Agricultural purposes" also includes enrollment
in the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal
Conservation Reserve Program as contained in Public Law 99-198
or a similar state or
federal conservation program, excluding the federal Conservation Reserve Program, if
the property was classified as agricultural (i) under this subdivision for taxes payable in
2003 because of its enrollment in a qualifying program and the land remains enrolled or
(ii) in the year prior to its enrollment. Enrollment in the federal Conservation Reserve
Program, as contained in Public Law 98-198, shall be considered an agricultural purpose
under this section.
Agricultural classification shall not be based upon the market value of
any residential structures on the parcel or contiguous parcels under the same ownership.

"Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous
portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion
of, a set of contiguous tax parcels under that section that are owned by the same person.

(f) Agricultural land under this section also includes:

(1) contiguous acreage that is less than ten acres in size and exclusively used in the
preceding year for raising or cultivating agricultural products; or

(2) contiguous acreage that contains a residence and is less than 11 acres in size, if
the contiguous acreage exclusive of the house, garage, and surrounding one acre of land
was used in the preceding year for one or more of the following three uses:

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

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

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

"Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as
described in section 272.193, or all of a set of contiguous tax parcels under that section
that are owned by the same person.

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

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

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

(i) The term "agricultural products" as used in this subdivision includes production
for sale of:

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

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

(3) the commercial boarding of horses, which may include related horse training and
riding instruction, if the boarding is done on property that is also used for raising pasture
to graze horses or raising or cultivating other agricultural products as defined in clause (1);

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

(5) game birds and waterfowl bred and raised (i) on a game farm licensed under
section 97A.105, provided that the annual licensing report to the Department of Natural
Resources, which must be submitted annually by March 30 to the assessor, indicates
that at least 500 birds were raised or used for breeding stock on the property during the
preceding year and that the owner provides a copy of the owner's most recent schedule F;
or (ii) for use on a shooting preserve licensed under section 97A.115;

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

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

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

(j) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

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

(3) warehousing or storage of processed goods; and

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

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

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

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

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

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

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

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

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

(1) a legal description of the property;

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

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

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

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

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

(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are
not rules and are exempt from the rulemaking provisions of chapter 14, and the provisions
in section 14.386 concerning exempt rules do not apply.

EFFECTIVE DATE.

This section is effective beginning with assessment year 2016.

Sec. 5.

Minnesota Statutes 2014, section 273.13, subdivision 24, is amended to read:


Subd. 24.

Class 3.

Commercial and industrial property and utility real and personal
property is class 3a.

(1) Except as otherwise provided, each parcel of commercial, industrial, or utility
real property has a classification rate of 1.5 1.55 percent of the first tier of market value,
and 2.0 2.1 percent of the remaining market value. In the case of contiguous parcels of
property owned by the same person or entity, only the value equal to the first-tier value of
the contiguous parcels qualifies for the reduced classification rate, except that contiguous
parcels owned by the same person or entity shall be eligible for the first-tier value
classification rate on each separate business operated by the owner of the property, provided
the business is housed in a separate structure. For the purposes of this subdivision, the first
tier means the first $150,000 of market value. Real property owned in fee by a utility for
transmission line right-of-way shall be classified at the classification rate for the higher tier.

For purposes of this subdivision, parcels are considered to be contiguous even if
they are separated from each other by a road, street, waterway, or other similar intervening
type of property. Connections between parcels that consist of power lines or pipelines do
not cause the parcels to be contiguous. Property owners who have contiguous parcels of
property that constitute separate businesses that may qualify for the first-tier classification
rate shall notify the assessor by July 1, for treatment beginning in the following taxes
payable year.

(2) All personal property that is: (i) part of an electric generation, transmission, or
distribution system; or (ii) part of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; and (iii) not described in clause (3), and all railroad
operating property has a classification rate as provided under clause (1) for the first tier
of market value and the remaining market value. In the case of multiple parcels in one
county that are owned by one person or entity, only one first tier amount is eligible for the
reduced rate.

(3) The entire market value of personal property that is: (i) tools, implements, and
machinery of an electric generation, transmission, or distribution system; (ii) tools,
implements, and machinery of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; or (iii) the mains and pipes used in the distribution of
steam or hot or chilled water for heating or cooling buildings, has a classification rate as
provided under clause (1) for the remaining market value in excess of the first tier.

EFFECTIVE DATE.

This section is effective for taxes payable in 2016 and
thereafter.

Sec. 6.

Minnesota Statutes 2014, section 273.1392, is amended to read:


273.1392 PAYMENT; SCHOOL DISTRICTS.

The amounts of bovine tuberculosis credit reimbursements under section 273.113;
conservation tax credits under section 273.119; disaster or emergency reimbursement
under sections 273.1231 to 273.1235; homestead and agricultural credits under section
sections 273.1384 and 273.88; aids and credits under section 273.1398; enterprise zone
property credit payments under section 469.171; and metropolitan agricultural preserve
reduction under section 473H.10 for school districts, shall be certified to the Department
of Education by the Department of Revenue. The amounts so certified shall be paid
according to section 127A.45, subdivisions 9 and 13.

EFFECTIVE DATE.

This section is effective for property taxes payable in 2016
and thereafter.

Sec. 7.

Minnesota Statutes 2014, section 273.1393, is amended to read:


273.1393 COMPUTATION OF NET PROPERTY TAXES.

Notwithstanding any other provisions to the contrary, "net" property taxes are
determined by subtracting the credits in the order listed from the gross tax:

(1) disaster credit as provided in sections 273.1231 to 273.1235;

(2) powerline credit as provided in section 273.42;

(3) agricultural preserves credit as provided in section 473H.10;

(4) enterprise zone credit as provided in section 469.171;

(5) disparity reduction credit;

(6) conservation tax credit as provided in section 273.119;

(7) agricultural credit as provided in section 273.1384;

(8) taconite homestead credit as provided in section 273.135;

(9) supplemental homestead credit as provided in section 273.1391; and

(10) the bovine tuberculosis zone credit, as provided in section 273.113; and

(11) the targeted agricultural land credit, as provided in section 273.88.

The combination of all property tax credits must not exceed the gross tax amount.

EFFECTIVE DATE.

This section is effective for property taxes payable in 2016
and thereafter.

Sec. 8.

[273.88] TARGETED AGRICULTURAL LAND TAX CREDIT.

Subdivision 1.

Eligibility; amount of credit.

(a) Property classified in whole or
in part as class 2a agricultural property under section 273.13, subdivision 23, paragraph
(b), in both the prior year and the current year, is eligible for a property tax credit if the
gross property taxes payable on that portion of the property classified as agricultural
increase by more than eight percent over the property taxes payable in the prior year on the
same property and the amount of that increase is $200 or more. The amount of the credit
shall equal the amount of the increase over the greater of eight percent of the prior year's
property taxes payable or $200. The maximum credit allowed under this section is $2,000.

(b) For purposes of this subdivision, "gross property taxes payable" means property
taxes payable excluding special assessments, penalties and interest, and assessed fees upon
the property determined without regard to the credit allowed under this section.

(c) Agricultural property shall not be eligible for the credit under this section if: (1)
the property's boundaries have changed in the current payable year; (2) an improvement
was constructed upon the property; (3) valuation increases occurred relating to an
incremental value increase due to a plat law provision or based upon the termination of an
exclusion under section 273.11, subdivision 14a, 14b, or 14c; or (4) in the prior payable
year, the property was enrolled under section 273.111, 273.113, or 273.114, or chapter
473H or 40A, and that enrollment was removed for the current payable year.

(d) If the amount of the credit exceeds the total of the net tax capacity-based gross
property taxes on that portion of the property eligible for a credit under subdivision (a),
the credit shall be limited to the net tax capacity-based gross property taxes payable on
that part of the property classified under section 273.13, subdivision 23, paragraph (b).

Subd. 2.

Credit reimbursement.

The county auditor shall determine the tax
reductions allowed under subdivision 1 within the county for each taxes payable year and
certify that amount to the commissioner of revenue as part of the abstracts of tax listings
submitted by the county auditors under section 275.29. Any prior year adjustments
shall also be certified on the abstracts of tax lists. The commissioner shall review the
certifications for accuracy and make changes as necessary, or return the certification to the
county auditor for correction. The credit under this section must be used to proportionately
reduce the net tax capacity-based property tax payable to each local taxing jurisdiction
as provided in section 273.1393.

Subd. 3.

Payment.

(a) The commissioner of revenue shall reimburse each local
taxing jurisdiction, other than school districts, for the tax reductions granted under
subdivision 1 in two equal installments on October 31 and December 26 of the taxes
payable year for which the reductions are granted, including in each payment the prior
year adjustments certified on the abstracts for that taxes payable year. The reimbursements
related to tax increments shall be issued in one installment each year on December 26.

(b) The commissioner of revenue shall certify the total of the tax reductions
granted under subdivision 1 for each taxes payable year within each school district
to the commissioner of education, and the commissioner of education shall pay the
reimbursement amounts to each school district as provided in section 273.1392.

Subd. 4.

Appropriation.

An amount sufficient to make the payments required by
this section to taxing jurisdictions other than school districts is annually appropriated
from the general fund to the commissioner of revenue. An amount sufficient to make the
payments required under this section for school districts is annually appropriated from the
general fund to the commissioner of education.

EFFECTIVE DATE.

This section is effective for property taxes payable in 2016
and thereafter.

Sec. 9.

Minnesota Statutes 2014, section 275.025, subdivision 1, is amended to read:


Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levy base amount for commercial-industrial property is
$592,000,000 $767,092,100 for taxes payable in 2002 2016. The state general levy base
amount for seasonal residential recreational property is $34,057,500 for taxes payable in
2016.
For taxes payable in subsequent years, the each levy base amount is increased each
year by multiplying the levy base amount for the prior year by the sum of one plus the rate
of increase, if any, in the implicit price deflator for government consumption expenditures
and gross investment for state and local governments prepared by the Bureau of Economic
Analysts of the United States Department of Commerce for the 12-month period ending
March 31 of the year prior to the year the taxes are payable. The tax under this section is
not treated as a local tax rate under section 469.177 and is not the levy of a governmental
unit under chapters 276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year
as necessary to account for errors and tax base changes that affected a preliminary or final
rate for either of the two preceding years. Adjustments are allowed to the extent that the
necessary information is available to the commissioner at the time the rates for a year must
be certified, and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under
section 275.29 that was not reported on the abstracts of assessment submitted under
section 270C.89 for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

EFFECTIVE DATE.

This section is effective for taxes payable in 2016 and
thereafter.

Sec. 10.

Minnesota Statutes 2014, section 275.025, subdivision 3, is amended to read:


Subd. 3.

Seasonal residential recreational tax capacity.

For the purposes of this
section, "seasonal residential recreational tax capacity" means the tax capacity of tier III of
class 1c under section 273.13, subdivision 22, and all class 4c(1), 4c(3)(ii), and 4c(12)
property under section 273.13, subdivision 25, except that for each noncommercial class
4c(12) property: (i)
the first $76,000 of market value of each noncommercial class 4c(12)
property
has a tax capacity for this purpose equal to 40 percent of its tax capacity under
section 273.13; and (ii) the market value exceeding $300,000 shall be excluded for taxes
payable in 2016 and thereafter
.

EFFECTIVE DATE.

This section is effective for taxes payable in 2016 and
thereafter.

Sec. 11.

Minnesota Statutes 2014, section 275.065, subdivision 1, is amended to read:


Subdivision 1.

Proposed levy.

(a) Notwithstanding any law or charter to the
contrary, on or before September 30, each county and each, home rule charter or statutory
city, and special taxing district, excluding the metropolitan council and the metropolitan
mosquito control commission,
shall certify to the county auditor the proposed property
tax levy for taxes payable in the following year. The proposed levy certification date for
the metropolitan council shall be as prescribed in sections 473.249 and 473.446. The
proposed levy certification date for the metropolitan mosquito control district shall be
as prescribed in section 473.711.

(b) Notwithstanding any law or charter to the contrary, on or before September 15,
each town and each special taxing district shall adopt and certify to the county auditor a
proposed property tax levy for taxes payable in the following year. For towns, the final
certified levy shall also be considered the proposed levy.

(c) On or before September 30, each school district that has not mutually agreed
with its home county to extend this date shall certify to the county auditor the proposed
property tax levy for taxes payable in the following year. Each school district that has
agreed with its home county to delay the certification of its proposed property tax levy
must certify its proposed property tax levy for the following year no later than October
7. The school district shall certify the proposed levy as:

(1) a specific dollar amount by school district fund, broken down between
voter-approved and non-voter-approved levies and between referendum market value
and tax capacity levies; or

(2) the maximum levy limitation certified by the commissioner of education
according to section 126C.48, subdivision 1.

(d) If the board of estimate and taxation or any similar board that establishes
maximum tax levies for taxing jurisdictions within a first class city certifies the maximum
property tax levies for funds under its jurisdiction by charter to the county auditor by the
date specified in paragraph (a), the city shall be deemed to have certified its levies for
those taxing jurisdictions.

(e) For purposes of this section, "special taxing district" means a special taxing
district as defined in section 275.066. Intermediate school districts that levy a tax
under chapter 124 or 136D, joint powers boards established under sections 123A.44 to
123A.446, and Common School Districts No. 323, Franconia, and No. 815, Prinsburg, are
also special taxing districts for purposes of this section.

(f) At the meeting at which a taxing authority, other than a town, adopts its proposed
tax levy under this subdivision, the taxing authority shall announce the time and place
of its subsequent regularly scheduled meetings at which the budget and levy will be
discussed and at which the public will be allowed to speak. The time and place of those
meetings must be included in the proceedings or summary of proceedings published in the
official newspaper of the taxing authority under section 123B.09, 375.12, or 412.191.

EFFECTIVE DATE.

This section is effective beginning with proposed levy
certifications for taxes payable in 2016.

Sec. 12.

Minnesota Statutes 2014, section 275.065, subdivision 3, is amended to read:


Subd. 3.

Notice of proposed property taxes.

(a) The county auditor shall prepare
and the county treasurer shall deliver after November 10 and on or before November 24
each year, by first class mail to each taxpayer at the address listed on the county's current
year's assessment roll, a notice of proposed property taxes. Upon written request by
the taxpayer, the treasurer may send the notice in electronic form or by electronic mail
instead of on paper or by ordinary mail.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes
each taxing authority proposes to collect for taxes payable the following year. In the case of
a town, or in the case of the state general tax, the final tax amount will be its proposed tax.
The notice must clearly state for each city that has a population over 500, county, school
district, regional library authority established under section 134.201, and metropolitan
taxing districts as defined in paragraph (i), the time and place of a meeting for each taxing
authority in which the budget and levy will be discussed and public input allowed, prior to
the final budget and levy determination. The taxing authorities must provide the county
auditor with the information to be included in the notice on or before the time it certifies
its proposed levy under subdivision 1. The public must be allowed to speak at that
meeting, which must occur after November 24 and must not be held before 6:00 p.m. It
must provide a telephone number for the taxing authority that taxpayers may call if they
have questions related to the notice and an address where comments will be received by
mail, except that no notice required under this section shall be interpreted as requiring the
printing of a personal telephone number or address as the contact information for a taxing
authority. If a taxing authority does not maintain public offices where telephone calls can
be received by the authority, the authority may inform the county of the lack of a public
telephone number and the county shall not list a telephone number for that taxing authority.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used
for computing property taxes payable in the following year and for taxes payable in the
current year as each appears in the records of the county assessor on November 1 of the
current year; and, in the case of residential property, whether the property is classified as
homestead or nonhomestead. The notice must clearly inform taxpayers of the years to
which the market values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state
general tax, agricultural homestead credit under section 273.1384, targeted agricultural
land credit under section 273.88,
voter approved school levy, other local school levy, and
the sum of the special taxing districts, and as a total of all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) includes an amount for a lake improvement
district as defined under sections 103B.501 to 103B.581, the amount attributable for that
purpose must be separately stated from the remaining county levy amount.

In the case of a town or the state general tax, the final tax shall also be its proposed
tax unless the town changes its levy at a special town meeting under section 365.52. If a
school district has certified under section 126C.17, subdivision 9, that a referendum will
be held in the school district at the November general election, the county auditor must
note next to the school district's proposed amount that a referendum is pending and that, if
approved by the voters, the tax amount may be higher than shown on the notice. In the
case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be
listed separately from the remaining amount of the city's levy. In the case of the city of
St. Paul, the levy for the St. Paul Library Agency must be listed separately from the
remaining amount of the city's levy. In the case of Ramsey County, any amount levied
under section 134.07 may be listed separately from the remaining amount of the county's
levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax
under chapter 276A or 473F applies, the proposed tax levy on the captured value or the
proposed tax levy on the tax capacity subject to the areawide tax must each be stated
separately and not included in the sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and
the total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under
the senior citizens' property tax deferral program under chapter 290B is the total amount
of property tax before subtraction of the deferred property tax amount.

(e) The notice must clearly state that the proposed or final taxes do not include
the following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified,
including bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first
Monday in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster
occurring after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become
final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value
reductions for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or
the county treasurer to deliver the notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as
nonhomestead, and satisfactory documentation is provided to the county assessor by the
applicable deadline, and the property qualifies for the homestead classification in that
assessment year, the assessor shall reclassify the property to homestead for taxes payable
in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental
periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant,
renter, or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within
three days of receipt of the notice, whichever is later. A taxpayer may notify the county
treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to
which the notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing
districts" means the following taxing districts in the seven-county metropolitan area that
levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325,
473.446, 473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672;
and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the
county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
398A shall be included with the appropriate county's levy.

(j) The governing body of a county, city, or school district may, with the consent
of the county board, include supplemental information with the statement of proposed
property taxes about the impact of state aid increases or decreases on property tax
increases or decreases and on the level of services provided in the affected jurisdiction.
This supplemental information may include information for the following year, the current
year, and for as many consecutive preceding years as deemed appropriate by the governing
body of the county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and
local government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services
that the governing body of the county, city, or school district may deem appropriate to
include.

The information may be presented using tables, written narrative, and graphic
representations and may contain instruction toward further sources of information or
opportunity for comment.

EFFECTIVE DATE.

This section is effective for property taxes payable in 2016
and thereafter.

Sec. 13.

Minnesota Statutes 2014, section 275.066, is amended to read:


275.066 SPECIAL TAXING DISTRICTS; DEFINITION.

For the purposes of property taxation and property tax state aids, the term "special
taxing districts" includes the following entities:

(1) watershed districts under chapter 103D;

(2) sanitary districts under sections 442A.01 to 442A.29;

(3) regional sanitary sewer districts under sections 115.61 to 115.67;

(4) regional public library districts under section 134.201;

(5) park districts under chapter 398;

(6) regional railroad authorities under chapter 398A;

(7) hospital districts under sections 447.31 to 447.38;

(8) St. Cloud Metropolitan Transit Commission under sections 458A.01 to 458A.15;

(9) Duluth Transit Authority under sections 458A.21 to 458A.37;

(10) regional development commissions under sections 462.381 to 462.398;

(11) housing and redevelopment authorities under sections 469.001 to 469.047;

(12) port authorities under sections 469.048 to 469.068;

(13) economic development authorities under sections 469.090 to 469.1081;

(14) Metropolitan Council under sections 473.123 to 473.549;

(15) Metropolitan Airports Commission under sections 473.601 to 473.679;

(16) Metropolitan Mosquito Control Commission under sections 473.701 to 473.716;

(17) Morrison County Rural Development Financing Authority under Laws 1982,
chapter 437, section 1;

(18) Croft Historical Park District under Laws 1984, chapter 502, article 13, section 6;

(19) East Lake County Medical Clinic District under Laws 1989, chapter 211,
sections 1 to 6;

(20) Floodwood Area Ambulance District under Laws 1993, chapter 375, article
5, section 39;

(21) Middle Mississippi River Watershed Management Organization under sections
103B.211 and 103B.241;

(22) emergency medical services special taxing districts under section 144F.01;

(23) a county levying under the authority of section 103B.241, 103B.245, or
103B.251, or 103C.331;

(24) Southern St. Louis County Special Taxing District; Chris Jensen Nursing Home
under Laws 2003, First Special Session chapter 21, article 4, section 12;

(25) an airport authority created under section 360.0426; and

(26) any other political subdivision of the state of Minnesota, excluding counties,
school districts, cities, and towns, that has the power to adopt and certify a property tax
levy to the county auditor, as determined by the commissioner of revenue.

EFFECTIVE DATE.

This section is effective for assessment year 2016.

Sec. 14.

Minnesota Statutes 2014, section 275.07, subdivision 1, is amended to read:


Subdivision 1.

Certification of levy.

(a) Except as provided under paragraph (b),
the taxes voted by cities, counties, school districts, and special districts shall be certified
by the proper authorities to the county auditor on or before five working days after
December 20 in each year. A town must certify the levy adopted by the town board to
the county auditor by September 15 each year. If the town board modifies the levy at a
special town meeting after September 15, the town board must recertify its levy to the
county auditor on or before five working days after December 20. If a city, town, county,
school district, or special district fails to certify its levy by that date, its levy shall be the
amount levied by it for the preceding year.

(b)(i) The taxes voted by counties under sections 103B.241, 103B.245, and
103B.251, and 103C.331 shall be separately certified by the county to the county auditor
on or before five working days after December 20 in each year. The taxes certified
shall not be reduced by the county auditor by the aid received under section 273.1398,
subdivision 3
. If a county fails to certify its levy by that date, its levy shall be the amount
levied by it for the preceding year.

(ii) For purposes of the proposed property tax notice under section 275.065 and
the property tax statement under section 276.04, for the first year in which the county
implements the provisions of this paragraph, the county auditor shall reduce the county's
levy for the preceding year to reflect any amount levied for water management purposes
under clause (i) included in the county's levy.

EFFECTIVE DATE.

This section is effective for assessment year 2016.

Sec. 15.

Minnesota Statutes 2014, section 276.04, subdivision 2, is amended to read:


Subd. 2.

Contents of tax statements.

(a) The treasurer shall provide for the printing
of the tax statements. The commissioner of revenue shall prescribe the form of the property
tax statement and its contents. The tax statement must not state or imply that property tax
credits are paid by the state of Minnesota. The statement must contain a tabulated statement
of the dollar amount due to each taxing authority and the amount of the state tax from the
parcel of real property for which a particular tax statement is prepared. The dollar amounts
attributable to the county, the state tax, the voter approved school tax, the other local school
tax, the township or municipality, and the total of the metropolitan special taxing districts
as defined in section 275.065, subdivision 3, paragraph (i), must be separately stated.
The amounts due all other special taxing districts, if any, may be aggregated except that
any levies made by the regional rail authorities in the county of Anoka, Carver, Dakota,
Hennepin, Ramsey, Scott, or Washington under chapter 398A shall be listed on a separate
line directly under the appropriate county's levy. If the county levy under this paragraph
includes an amount for a lake improvement district as defined under sections 103B.501
to 103B.581, the amount attributable for that purpose must be separately stated from the
remaining county levy amount. In the case of Ramsey County, if the county levy under this
paragraph includes an amount for public library service under section 134.07, the amount
attributable for that purpose may be separated from the remaining county levy amount.
The amount of the tax on homesteads qualifying under the senior citizens' property tax
deferral program under chapter 290B is the total amount of property tax before subtraction
of the deferred property tax amount. The amount of the tax on contamination value
imposed under sections 270.91 to 270.98, if any, must also be separately stated. The dollar
amounts, including the dollar amount of any special assessments, may be rounded to the
nearest even whole dollar. For purposes of this section whole odd-numbered dollars may
be adjusted to the next higher even-numbered dollar. The amount of market value excluded
under section 273.11, subdivision 16, if any, must also be listed on the tax statement.

(b) The property tax statements for manufactured homes and sectional structures
taxed as personal property shall contain the same information that is required on the
tax statements for real property.

(c) Real and personal property tax statements must contain the following information
in the order given in this paragraph. The information must contain the current year tax
information in the right column with the corresponding information for the previous year
in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's homestead market value exclusion under section 273.13,
subdivision 35;

(3) the property's taxable market value under section 272.03, subdivision 15;

(4) the property's gross tax, before credits;

(5) for agricultural properties, the credit under section 273.88;

(5) (6) for homestead agricultural properties, the credit under section 273.1384;

(6) (7) any credits received under sections 273.119; 273.1234 or 273.1235; 273.135;
273.1391; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of
credit received under section 273.135 must be separately stated and identified as "taconite
tax relief"; and

(7) (8) the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county
agrees, a taxing district may include a notice with the property tax statement notifying
taxpayers when the taxing district will begin its budget deliberations for the current
year, and encouraging taxpayers to attend the hearings. If the county allows notices to
be included in the envelope containing the property tax statement, and if more than
one taxing district relative to a given property decides to include a notice with the tax
statement, the county treasurer or auditor must coordinate the process and may combine
the information on a single announcement.

EFFECTIVE DATE.

This section is effective for property taxes payable in 2016
and thereafter.

Sec. 16.

Minnesota Statutes 2014, section 276A.06, subdivision 3, is amended to read:


Subd. 3.

Apportionment of levy.

The county auditor shall apportion the levy of
each governmental unit in the county in the manner prescribed by this subdivision. The
auditor shall:

(1) by August 20 of 2014 and each subsequent year, determine the preliminary
areawide portion of the levy for each governmental unit by multiplying the local tax
rate of the governmental unit for the preceding levy year times the distribution value set
forth in subdivision 2, clause (2);

(2) by September 5 of each year, adjust the preliminary areawide portion of the
levy for each governmental unit by the adjustment percentage, if any, determined under
subdivision 5, paragraph (b);

(2) (3) by September 5 of 2014 and each subsequent year, determine the areawide
portion of the levy for each governmental unit by multiplying the adjusted preliminary
areawide portion of the levy for each governmental unit times a fraction, the numerator of
which is the difference between the sum of the adjusted preliminary areawide levies for all
governmental units in the area minus the school fund allocation and the denominator is the
sum of the adjusted preliminary areawide levy for all governmental units in the area; and

(3) (4) by September 5 of 2014 and each subsequent year, determine the local
portion of the current year's levy by subtracting the resulting amount from clause (1) (2)
from the governmental unit's current year's levy.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2017.

Sec. 17.

Minnesota Statutes 2014, section 276A.06, subdivision 5, is amended to read:


Subd. 5.

Areawide tax rate.

(a) On or before August 25, 1997, and of each
subsequent year, the county auditor shall certify to the administrative auditor the
preliminary portion of the levy of each governmental unit determined pursuant to
subdivision 3, clause (1). The administrative auditor shall then determine the areawide
tax rate sufficient to yield an amount equal to the sum of the levies from the preliminary
areawide net tax capacity.

(b) The areawide tax rate may not deviate from the previous year's areawide rate by
more than five percentage points. If the areawide tax rate determined under paragraph
(a) does not fall within that range, the auditor must determine the percentage increase or
reduction to each jurisdiction's distribution levy necessary so that the areawide rate falls
within the range and recalculate the areawide rate accordingly.

(c) On or before September 1, the administrative auditor shall certify the areawide
tax rate to each of the county auditors.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2017.

Sec. 18.

Minnesota Statutes 2014, section 279.01, subdivision 1, is amended to read:


Subdivision 1.

Due dates; penalties.

(a) Except as provided in subdivisions 3 to 5,
on May 16 or 21 days after the postmark date on the envelope containing the property tax
statement, whichever is later, a penalty accrues and thereafter is charged upon all unpaid
taxes on real estate on the current lists in the hands of the county treasurer. The penalty is
at a rate of two percent on homestead property until May 31 and four percent on June 1.
The penalty on nonhomestead property is at a rate of four percent until May 31 and eight
percent on June 1. This penalty does not accrue until June 1 of each year, or 21 days after
the postmark date on the envelope containing the property tax statements, whichever is
later, on commercial use real property used for seasonal residential recreational purposes
and classified as class 1c or 4c, and on other commercial use real property classified as
class 3a, provided that over 60 percent of the gross income earned by the enterprise on the
class 3a property is earned during the months of May, June, July, and August. In order for
the first half of the tax due on class 3a property to be paid after May 15 and before June 1,
or 21 days after the postmark date on the envelope containing the property tax statement,
whichever is later, without penalty, the owner of the property must attach an affidavit
to the payment attesting to compliance with the income provision of this subdivision.
Thereafter, for both homestead and nonhomestead property, on the first day of each month
beginning July 1, up to and including October 1 following, an additional penalty of one
percent for each month accrues and is charged on all such unpaid taxes provided that if the
due date was extended beyond May 15 as the result of any delay in mailing property tax
statements no additional penalty shall accrue if the tax is paid by the extended due date. If
the tax is not paid by the extended due date, then all penalties that would have accrued if
the due date had been May 15 shall be charged. When the taxes against any tract or lot
exceed $100, one-half thereof may be paid prior to May 16 or 21 days after the postmark
date on the envelope containing the property tax statement, whichever is later; and, if so
paid, no penalty attaches; the remaining one-half may be paid at any time prior to October
16 following, without penalty; but, if not so paid, then a penalty of two percent accrues
thereon for homestead property and a penalty of four percent on nonhomestead property.
Thereafter, for homestead property, on the first day of November an additional penalty of
four percent accrues and on the first day of December following, an additional penalty of
two percent accrues and is charged on all such unpaid taxes. Thereafter, for nonhomestead
property, on the first day of November and December following, an additional penalty of
four percent for each month accrues and is charged on all such unpaid taxes. If one-half of
such taxes are not paid prior to May 16 or 21 days after the postmark date on the envelope
containing the property tax statement, whichever is later, the same may be paid at any time
prior to October 16, with accrued penalties to the date of payment added, and thereupon
no penalty attaches to the remaining one-half until October 16 following.

(b) This section applies to payment of personal property taxes assessed against
improvements to leased property, except as provided by section 277.01, subdivision 3.

(c) A county may provide by resolution that in the case of a property owner that has
multiple tracts or parcels with aggregate taxes exceeding $100, payments may be made in
installments as provided in this subdivision.

(d) The county treasurer may accept payments of more or less than the exact amount
of a tax installment due. Payments must be applied first to the oldest installment that is due
but which has not been fully paid. If the accepted payment is less than the amount due,
payments must be applied first to the penalty accrued for the year or the installment being
paid. Acceptance of partial payment of tax does not constitute a waiver of the minimum
payment required as a condition for filing an appeal under section 278.03 or any other law,
nor does it affect the order of payment of delinquent taxes under section 280.39.

(e) No penalty under this section shall accrue if the property tax payment is delivered
by mail to the county treasurer and the envelope containing the payment is postmarked
within two business days of the due date prescribed under this section.

EFFECTIVE DATE.

This section is effective for property taxes payable in 2016
and thereafter.

Sec. 19.

Minnesota Statutes 2014, section 279.37, subdivision 2, is amended to read:


Subd. 2.

Installment payments.

(a) The owner of any such parcel, or any person to
whom the right to pay taxes has been given by statute, mortgage, or other agreement, may
make and file with the county auditor of the county in which the parcel is located a written
offer to pay the current taxes each year before they become delinquent, or to contest
the taxes under chapter 278 and agree to confess judgment for the amount provided, as
determined by the county auditor. By filing the offer, the owner waives all irregularities
in connection with the tax proceedings affecting the parcel and any defense or objection
which the owner may have to the proceedings, and also waives the requirements of any
notice of default in the payment of any installment or interest to become due pursuant to
the composite judgment to be so entered. Unless the property is subject to subdivision 1a,
with the offer, the owner shall (i) tender one-tenth of the amount of the delinquent taxes,
costs, penalty, and interest, and (ii) tender all current year taxes and penalty due at the
time the confession of judgment is entered. In the offer, the owner shall agree to pay the
balance in nine equal installments, with interest as provided in section 279.03, payable
annually on installments remaining unpaid from time to time, on or before December 31
of each year following the year in which judgment was confessed.

(b) For property which qualifies under section 279.03, subdivision 2, paragraph (b),
each year the commissioner shall set the interest rate for offers made under paragraph (a)
at the greater of five percent or two percent above the prime rate charged by banks during
the six-month period ending on September 30 of that year, rounded to the nearest full
percent, provided that the rate must not exceed the maximum annum rate specified under
section 279.03, subdivision 1a. The rate of interest becomes effective on January 1 of the
immediately succeeding year. The commissioner's determination under this subdivision is
not a rule subject to the Administrative Procedure Act in chapter 14, including section
14.386. If a default occurs in the payments under any confessed judgment entered under
this paragraph, the taxes and penalties due are subject to the interest rate specified in
section 279.03.

For the purposes of this subdivision:

(1) the term "prime rate charged by banks" means the average predominant prime
rate quoted by commercial banks to large businesses, as determined by the Board of
Governors of the Federal Reserve System; and

(2) "default" means the cancellation of the confession of judgment due to
nonpayment of the current year tax or failure to make any installment payment required by
this confessed judgment within 60 days from the date on which payment was due.

(c) The interest rate established at the time judgment is confessed is fixed for the
duration of the judgment. By October 15 of each year, the commissioner of revenue must
determine the rate of interest as provided under paragraph (b) and, by November 1 of each
year, must certify the rate to the county auditor.

(d) A qualified property owner eligible to enter into a second confession of judgment
may do so at the interest rate provided in paragraph (b).

(e) Repurchase agreements or contracts for repurchase for properties being
repurchased under section 282.261 are not eligible to receive the interest rate under
paragraph (b).

(f) (e) The offer must be substantially as follows:

"To the court administrator of the district court of ........... county, I, .....................,
am the owner of the following described parcel of real estate located in ....................
county, Minnesota:

.............................. Upon that real estate there are delinquent taxes for the year ........., and
prior years, as follows: (here insert year of delinquency and the total amount of delinquent
taxes, costs, interest, and penalty). By signing this document I offer to confess judgment
in the sum of $...... and waive all irregularities in the tax proceedings affecting these
taxes and any defense or objection which I may have to them, and direct judgment to be
entered for the amount stated above, minus the sum of $............, to be paid with this
document, which is one-tenth or one-fifth of the amount of the taxes, costs, penalty, and
interest stated above. I agree to pay the balance of the judgment in nine or four equal,
annual installments, with interest as provided in section 279.03, payable annually, on the
installments remaining unpaid. I agree to pay the installments and interest on or before
December 31 of each year following the year in which this judgment is confessed and
current taxes each year before they become delinquent, or within 30 days after the entry of
final judgment in proceedings to contest the taxes under chapter 278.

Dated .............., ......."

EFFECTIVE DATE.

This section is effective for sales and repurchases occurring
after June 30, 2015.

Sec. 20.

Minnesota Statutes 2014, section 282.01, subdivision 4, is amended to read:


Subd. 4.

Sale: method, requirements, effects.

The sale authorized under
subdivision 3 must be conducted by the county auditor at the county seat of the county in
which the parcels lie, except that in St. Louis and Koochiching Counties, the sale may
be conducted in any county facility within the county. The sale must not be for less than
the appraised value except as provided in subdivision 7a. The parcels must be sold for
cash only, unless the county board of the county has adopted a resolution providing for
their sale on terms, in which event the resolution controls with respect to the sale. When
the sale is made on terms other than for cash only (1) a payment of at least ten percent
of the purchase price must be made at the time of purchase, and the balance must be
paid in no more than ten equal annual installments, or (2) the payments must be made
in accordance with county board policy, but in no event may the board require more
than 12 installments annually, and the contract term must not be for more than ten years.
Standing timber or timber products must not be removed from these lands until an amount
equal to the appraised value of all standing timber or timber products on the lands at the
time of purchase has been paid by the purchaser. If a parcel of land bearing standing
timber or timber products is sold at public auction for more than the appraised value, the
amount bid in excess of the appraised value must be allocated between the land and the
timber in proportion to their respective appraised values. In that case, standing timber or
timber products must not be removed from the land until the amount of the excess bid
allocated to timber or timber products has been paid in addition to the appraised value of
the land. The purchaser is entitled to immediate possession, subject to the provisions of
any existing valid lease made in behalf of the state.

For sales occurring on or after July 1, 1982, the unpaid balance of the purchase price
is subject to interest at the rate determined pursuant to section 549.09.
The unpaid balance
of the purchase price for sales occurring after December 31, 1990, is subject to interest
at the same rate as installment payments on confession of judgment for delinquent taxes
determined in section 279.03, subdivision 1a 279.37, subdivision 2, paragraph (b). The
interest rate is subject to change each year on the unpaid balance in the manner provided
for rate changes in section 549.09 or 279.03, subdivision 1a, whichever, is applicable.
Interest on the unpaid contract balance on sales occurring before July 1, 1982, is payable
at the rate applicable to the sale at the time that the sale occurred.

EFFECTIVE DATE.

This section is effective for sales occurring after June 30, 2015.

Sec. 21.

Minnesota Statutes 2014, section 282.261, subdivision 2, is amended to read:


Subd. 2.

Interest rate.

The unpaid balance on any repurchase contract approved
by the county board is subject to interest at the same rate as installment payments on
confession of judgment for delinquent taxes
determined in section 279.03, subdivision 1a
279.37, subdivision 2, paragraph (b). The interest rate is subject to change each year on the
unpaid balance in the manner provided for rate changes in section 279.03, subdivision 1a.

EFFECTIVE DATE.

This section is effective for repurchases occurring after June
30, 2015.

Sec. 22.

Minnesota Statutes 2014, section 290A.03, subdivision 13, is amended to read:


Subd. 13.

Property taxes payable.

"Property taxes payable" means the property tax
exclusive of special assessments, penalties, and interest payable on a claimant's homestead
after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
and any other state paid property tax credits in any calendar year, and after any refund
claimed and allowable under section 290A.04, subdivision 2h, that is first payable in
the year that the property tax is payable. In the case of a claimant who makes ground
lease payments, "property taxes payable" includes the amount of the payments directly
attributable to the property taxes assessed against the parcel on which the house is located.
No apportionment or reduction of the "property taxes payable" shall be required for the
use of a portion of the claimant's homestead for a business purpose if the claimant does not
deduct any business depreciation expenses for the use of a portion of the homestead, or
elects to deduct expenses under section 280A of the Internal Revenue Code for a business
operated in a home,
in the determination of federal adjusted gross income. For homesteads
which are manufactured homes as defined in section 273.125, subdivision 8, and for
homesteads which are park trailers taxed as manufactured homes under section 168.012,
subdivision 9
, "property taxes payable" shall also include 17 percent of the gross rent paid
in the preceding year for the site on which the homestead is located. When a homestead
is owned by two or more persons as joint tenants or tenants in common, such tenants
shall determine between them which tenant may claim the property taxes payable on the
homestead. If they are unable to agree, the matter shall be referred to the commissioner of
revenue whose decision shall be final. Property taxes are considered payable in the year
prescribed by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have
owned and occupied the homestead on January 2 of the year in which the tax is payable
and (i) the property must have been classified as homestead property pursuant to section
273.124, on or before December 15 of the assessment year to which the "property taxes
payable" relate; or (ii) the claimant must provide documentation from the local assessor
that application for homestead classification has been made on or before December 15
of the year in which the "property taxes payable" were payable and that the assessor has
approved the application.

EFFECTIVE DATE.

This section is effective for refunds based on rent paid after
December 31, 2013, and property taxes payable after December 31, 2014.

Sec. 23.

Minnesota Statutes 2014, section 290A.04, subdivision 2h, is amended to read:


Subd. 2h.

Additional refund.

(a) If the gross property taxes payable on a homestead
increase more than 12 ten percent over the property taxes payable in the prior year on the
same property that is owned and occupied by the same owner on January 2 of both years,
and the amount of that increase is $100 or more, a claimant who is a homeowner shall
be allowed an additional refund equal to 60 percent of the amount of the increase over
the greater of 12 ten percent of the prior year's property taxes payable or $100. This
subdivision shall not apply to any increase in the gross property taxes payable attributable
to improvements made to the homestead after the assessment date for the prior year's
taxes. This subdivision shall not apply to any increase in the gross property taxes payable
attributable to the termination of valuation exclusions under section 273.11, subdivision 16.

The maximum refund allowed under this subdivision is $1,000.

(b) For purposes of this subdivision "gross property taxes payable" means property
taxes payable determined without regard to the refund allowed under this subdivision.

(c) In addition to the other proofs required by this chapter, each claimant under this
subdivision shall file with the property tax refund return a copy of the property tax statement
for taxes payable in the preceding year or other documents required by the commissioner.

(d) Upon request, the appropriate county official shall make available the names and
addresses of the property taxpayers who may be eligible for the additional property tax
refund under this section. The information shall be provided on a magnetic computer
disk. The county may recover its costs by charging the person requesting the information
the reasonable cost for preparing the data. The information may not be used for any
purpose other than for notifying the homeowner of potential eligibility and assisting the
homeowner, without charge, in preparing a refund claim.

EFFECTIVE DATE.

This section is effective for refund claims based on taxes
payable in 2016 and thereafter.

Sec. 24.

Minnesota Statutes 2014, section 290B.03, subdivision 1, is amended to read:


Subdivision 1.

Program qualifications.

The qualifications for the senior citizens'
property tax deferral program are as follows:

(1) the property must be owned and occupied as a homestead by a person 65 years of
age or older. In the case of a married couple, at least one of the spouses must be at least 65
years old at the time the first property tax deferral is granted, regardless of whether the
property is titled in the name of one spouse or both spouses, or titled in another way that
permits the property to have homestead status, and the other spouse must be at least 62
years of age;

(2) the total household income of the qualifying homeowners, as defined in section
290A.03, subdivision 5, for the calendar year preceding the year of the initial application
may not exceed $60,000;

(3) the homestead must have been owned and occupied as the homestead of at least
one of the qualifying homeowners for at least 15 five years prior to the year the initial
application is filed;

(4) there are no state or federal tax liens or judgment liens on the homesteaded
property;

(5) there are no mortgages or other liens on the property that secure future advances,
except for those subject to credit limits that result in compliance with clause (6); and

(6) the total unpaid balances of debts secured by mortgages and other liens on the
property, including unpaid and delinquent special assessments and interest and any
delinquent property taxes, penalties, and interest, but not including property taxes payable
during the year, does not exceed 75 percent of the assessor's estimated market value for
the year.

EFFECTIVE DATE.

This section is effective for applications for deferral of taxes
payable in 2016 and thereafter.

Sec. 25.

Minnesota Statutes 2014, section 290B.04, subdivision 1, is amended to read:


Subdivision 1.

Initial application.

(a) A taxpayer meeting the program
qualifications under section 290B.03 may apply to the commissioner of revenue for the
deferral of taxes. Applications are due on or before July November 1 for deferral of any
of the following year's property taxes. A taxpayer may apply in the year in which the
taxpayer becomes 65 years old, provided that no deferral of property taxes will be made
until the calendar year after the taxpayer becomes 65 years old. The application, which
shall be prescribed by the commissioner of revenue, shall include the following items and
any other information which the commissioner deems necessary:

(1) the name, address, and Social Security number of the owner or owners;

(2) a copy of the property tax statement for the current payable year for the
homesteaded property;

(3) the initial year of ownership and occupancy as a homestead;

(4) the owner's household income for the previous calendar year; and

(5) information on any mortgage loans or other amounts secured by mortgages or
other liens against the property, for which purpose the commissioner may require the
applicant to provide a copy of the mortgage note, the mortgage, or a statement of the
balance owing on the mortgage loan provided by the mortgage holder. The commissioner
may require the appropriate documents in connection with obtaining and confirming
information on unpaid amounts secured by other liens.

The application must state that program participation is voluntary. The application
must also state that the deferred amount depends directly on the applicant's household
income, and that program participation includes authorization for the annual deferred
amount, the cumulative deferral and interest that appear on each year's notice prepared by
the county under subdivision 6, is public data.

The application must state that program participants may claim the property tax
refund based on the full amount of property taxes eligible for the refund, including any
deferred amounts. The application must also state that property tax refunds will be used to
offset any deferral and interest under this program, and that any other amounts subject to
revenue recapture under section 270A.03, subdivision 7, will also be used to offset any
deferral and interest under this program.

(b) As part of the initial application process, the commissioner may require the
applicant to obtain at the applicant's own cost and submit:

(1) if the property is registered property under chapter 508 or 508A, a copy of the
original certificate of title in the possession of the county registrar of titles (sometimes
referred to as "condition of register"); or

(2) if the property is abstract property, a report prepared by a licensed abstracter
showing the last deed and any unsatisfied mortgages, liens, judgments, and state and
federal tax lien notices which were recorded on or after the date of that last deed with
respect to the property or to the applicant.

The certificate or report under clauses (1) and (2) need not include references to
any documents filed or recorded more than 40 years prior to the date of the certification
or report. The certification or report must be as of a date not more than 30 days prior
to submission of the application.

The commissioner may also require the county recorder or county registrar of the
county where the property is located to provide copies of recorded documents related to
the applicant or the property, for which the recorder or registrar shall not charge a fee. The
commissioner may use any information available to determine or verify eligibility under
this section. The household income from the application is private data on individuals as
defined in section 13.02, subdivision 12.

EFFECTIVE DATE.

This section is effective for applications for deferral of taxes
payable in 2016 and thereafter.

Sec. 26.

Minnesota Statutes 2014, section 469.194, subdivision 1, is amended to read:


Subdivision 1.

Authority; aggregate limit.

(a) The governing body of a
municipality
the city of Worthington may, by resolution, issue obligations under chapter
475 to acquire land or interests in land for, and to design, engineer, and construct pipeline
and other facilities and infrastructure necessary to complete the Lewis and Clark Regional
Water System Project.

(b) The maximum amount of bonds that may be issued under this section is limited to
an aggregate a principal amount of $45,000,000 $50,000,000, plus any costs of issuance and
amounts to be deposited into a debt service or reserve account. The Lewis and Clark Joint
Powers Board shall allocate the limit among the municipalities designated in subdivision 2.

EFFECTIVE DATE.

This section is effective the day following final enactment
without local approval under the provisions of Minnesota Statutes, section 645.023.

Sec. 27.

Minnesota Statutes 2014, section 473H.09, is amended to read:


473H.09 EARLY TERMINATION.

Subdivision 1.

Public emergency.

Termination of an agricultural preserve earlier
than a date derived through application of section 473H.08 may be permitted only in the
event of a public emergency upon petition from the owner or authority to the governor.
The determination of a public emergency shall be by the governor through executive order
pursuant to sections 4.035 and 12.01 to 12.46. The executive order shall identify the
preserve, the reasons requiring the action and the date of termination.

Subd. 2.

Death of owner.

(a) Within 180 days of the death of an owner, an owner's
spouse, or other qualifying person, the surviving owner may elect to terminate the
agricultural preserve and the covenant allowing the land to be enrolled as an agricultural
preserve by notifying the authority on a form provided by the commissioner of agriculture.
Termination of a covenant under this subdivision must be executed and acknowledged in
the manner required by law to execute and acknowledge a deed.

(b) For purposes of this subdivision, the following definitions apply:

(1) "qualifying person" includes a partner, shareholder, trustee for a trust that the
decedent was the settlor or a beneficiary of, or member of an entity permitted to own
agricultural land and engage in farming under section 500.24 that owned the agricultural
preserve; and

(2) "surviving owner" includes the executor of the estate of the decedent, trustee for a
trust that the decedent was the settlor or a beneficiary of, or an entity permitted to own farm
land under section 500.24 of which the decedent was a partner, shareholder, or member.

(c) When an agricultural preserve is terminated under this subdivision, the property
is subject to additional taxes in an amount equal to 50 percent of the taxes actually
levied against the property for the current taxes payable year. The additional taxes are
extended against the property on the tax list for taxes payable in the current year. The
additional taxes must be distributed among the jurisdictions levying taxes on the property
in proportion to the current year's taxes.

EFFECTIVE DATE.

This section is effective July 1, 2015.

Sec. 28.

Laws 1996, chapter 471, article 3, section 51, is amended to read:


Sec. 51. RECREATION LEVY FOR SAWYER BY CARLTON COUNTY.

Subdivision 1.

Levy authorized.

Notwithstanding other law to the contrary, the
Carlton county board of commissioners may levy in and for the unorganized township of
Sawyer an amount up to $1,500 $2,000 annually for recreational purposes, beginning with
taxes payable in 1997 and ending with taxes payable in 2006
.

Subd. 2.

Effective date.

This section is effective June 1, 1996, without local
approval
applies to taxes payable in 2015 and thereafter, and is effective the day after the
Carlton County Board of Commissioners and its chief clerical officer timely complete
their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3
.

Sec. 29. BOARD OF APPEALS AND EQUALIZATION IN-PERSON
TRAINING.

Notwithstanding any other law to the contrary, the commissioner of revenue, in
consultation with the Minnesota Association of Townships, shall offer not less than 12
in-person board of appeals and equalization course trainings in 2015 and in 2016.

EFFECTIVE DATE.

This section is effective June 1, 2015.

Sec. 30. OPTIONAL CANCELLATION OF TAX FORFEITURE FOR CERTAIN
BUILDINGS; ST. LOUIS COUNTY.

Subdivision 1.

Definitions.

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

(b) "Building PIN" means a parcel identification number that is assigned to a
building and does not include the land upon which the building is located; and

(c) "Land PIN" means a parcel identification number that is assigned to land upon
which a building associated with a building PIN is located.

Subd. 2.

Optional cancellation of tax forfeiture for buildings with building PINs.

Notwithstanding any law to the contrary, if any building associated with a building PIN
and located in St. Louis County forfeits or has forfeited to the state of Minnesota before,
on, or after the date of enactment of this section because of nonpayment of delinquent
property taxes, special assessments, penalties, interest, or costs, the county auditor of St.
Louis County may, with approval from the county board and the commissioner of revenue:

(1) cancel the certificate of forfeiture and set aside the forfeiture without reinstating
the unpaid property taxes, special assessments, penalties, interest, or costs; and

(2) combine the building PIN with its associated land PIN. When this occurs, the
land PIN is the only surviving parcel identification number, and includes both the building
and the land upon which the building is located.

Subd. 3.

Cancellation of tax forfeiture; taxation through date of cancellation.

Notwithstanding any law to the contrary, if the county auditor of St. Louis County cancels
a certificate of forfeiture and sets aside a forfeiture in accordance with subdivision 2,
the affected building is not subject to taxation from the date of forfeiture through the
date of cancellation.

Subd. 4.

Appropriation.

$1,000,000 in fiscal year 2016 only is appropriated from
the general fund to the commissioner of revenue for a grant to St. Louis County that shall
be paid on July 1, 2015. The county may only use the grant to remove any building,
upon the request of the landowner, after the county has complied with the provisions of
subdivision 2.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 31. STUDY AND REPORT OF PRODUCTION BASED VALUATION OF
AGRICULTURAL LAND.

(a) The commissioner of agriculture and the commissioner of revenue shall conduct
a study and prepare a report on the possibility of valuing agricultural land in the state for
property tax purposes based on the value of agricultural commodities produced minus the
cost of agricultural production.

(b) The study must, to the extent practicable under the appropriation and the time
available:

(1) assess the availability and accuracy of data sources necessary to determine the
productivity of agricultural land, the prices of agricultural commodities, and the costs of
production, for all agricultural land across the state;

(2) analyze the potential impacts on other types of properties and on local
governments if the state were to adopt a system valuing agricultural land based on
production value, including the impacts of any changes in state aids;

(3) identify types of agricultural properties that are not directly used in agricultural
production, and propose approaches for valuing those properties within a production
value based system;

(4) assign values to agricultural land based on the best currently available data, and
compare the resulting values to valuations currently used for property tax purposes; to the
extent possible, analyze what that relationship would be in years other than the study year;

(5) analyze the potential volatility of land values under a production value based
system and propose approaches for reducing the effects of agricultural land value volatility
on other types of properties;

(6) analyze the potential tax shifts between different types of agricultural properties
under a production value based system;

(7) analyze and make recommendations for how a production value based system
would be administered in terms of the role of the Department of Revenue, county and
local assessors, and other agencies;

(8) analyze how appeals of assessments by property owners would be handled
under a production value based system;

(9) analyze how a production value based system would affect the green acres and
metropolitan agricultural preserves programs;

(10) identify other states that have adopted production based valuation systems and
describe how they have been implemented, with special emphasis upon neighboring
states; and

(11) identify possible alternative methods of valuing agricultural land in addition to
market value and production based agricultural land valuation.

(c) The commissioners must seek input from the dean of the University of
Minnesota College of Food, Agricultural, and Natural Resource Sciences in the design
and implementation of the study.

(d) The commissioners must request the involvement and participation of
stakeholders including groups representing assessors and groups representing agricultural
property owners.

(e) The commissioners shall report the findings of the study to the committees of the
house of representatives and senate having jurisdiction over taxes by February 1, 2017,
and file the report as required by Minnesota Statutes, section 3.195.

(f) $200,000 in fiscal year 2016 is appropriated from the general fund to the
commissioner of revenue for purposes of preparing the report under this section. This is a
onetime appropriation and is not added to the base.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 32. TOWN OF TOFTE; MUNICIPAL HOUSING.

(a) Notwithstanding the provisions of Laws 1988, chapter 516, and Laws 1988,
chapter 719, article 19, section 27, the town of Tofte may own and operate within its
boundary up to 12 units of housing for individuals over 55 years of age or families with
one member of the household that is over 55 year of age.

(b) The town of Tofte shall have the powers of a city under Minnesota Statutes,
chapter 462C, and the powers of an authority under Minnesota Statutes, sections 469.001
to 469.047, with respect to this section. Upon the approval of the town board, the town of
Tofte may levy the tax described in Minnesota Statutes, section 469.033, subdivision 6.

(c) Nothing in this section shall limit the power of the Cook County/Grand Marais
Joint Economic Development Authority to exercise jurisdiction within the town of Tofte.
The authority to undertake new projects under this section shall expire on June 30, 2016.

EFFECTIVE DATE.

This section is effective the day after compliance by
the governing body of the town of Tofte with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.

Sec. 33. APPROPRIATION.

$1,130,000 in fiscal year 2016 only is appropriated from the general fund to the
commissioner of revenue for a grant to Hennepin County. Of this amount, $880,000 must
be used for the North Branch Library EMERGE Career and Technology Center, and
$250,000 must be used for the Cedar Riverside Opportunity Center.

Sec. 34. REPEALER.

(a) Minnesota Statutes 2014, section 272.02, subdivision 23, is repealed.

(b) Minnesota Statutes 2014, section 275.025, subdivision 4, is repealed.

(c) Minnesota Statutes 2014, section 469.194, subdivisions 2 and 4, are repealed.

EFFECTIVE DATE.

Paragraph (a) is effective for taxes payable in 2015.
Paragraph (b) is effective for taxes payable in 2016 and thereafter. Paragraph (c) is
effective the day following final enactment.

ARTICLE 3

LOCAL DEVELOPMENT

Section 1.

Minnesota Statutes 2014, section 469.1763, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

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

(b) "Activities" means acquisition of property, clearing of land, site preparation, soils
correction, removal of hazardous waste or pollution, installation of utilities, construction
of public or private improvements, and other similar activities, but only to the extent that
tax increment revenues may be spent for such purposes under other law.

(c) "Third party" means an entity other than (1) the person receiving the benefit
of assistance financed with tax increments, or (2) the municipality or the development
authority or other person substantially under the control of the municipality.

(d) "Revenues derived from tax increments paid by properties in the district" means
only tax increment as defined in section 469.174, subdivision 25, clause (1), and does
not include tax increment as defined in section 469.174, subdivision 25, clauses (2),
(3), and (4)
to (5).

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2014, section 469.1763, subdivision 2, is amended to read:


Subd. 2.

Expenditures outside district.

(a) For each tax increment financing
district, an amount equal to at least 75 percent of the total revenue derived from tax
increments paid by properties in the district must be expended on activities in the district
or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities
in the district or to pay, or secure payment of, debt service on credit enhanced bonds.
For districts, other than redevelopment districts for which the request for certification
was made after June 30, 1995, the in-district percentage for purposes of the preceding
sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax
increments paid by properties in the district may be expended, through a development fund
or otherwise, on activities outside of the district but within the defined geographic area of
the project except to pay, or secure payment of, debt service on credit enhanced bonds.
For districts, other than redevelopment districts for which the request for certification was
made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is
20 percent. The revenue revenues derived from tax increments for paid by properties in
the district that are expended on costs under section 469.176, subdivision 4h, paragraph
(b), may be deducted first before calculating the percentages that must be expended within
and without the district.

(b) In the case of a housing district, a housing project, as defined in section 469.174,
subdivision 11
, is an activity in the district.

(c) All administrative expenses are for activities outside of the district, except that
if the only expenses for activities outside of the district under this subdivision are for
the purposes described in paragraph (d), administrative expenses will be considered as
expenditures for activities in the district.

(d) The authority may elect, in the tax increment financing plan for the district,
to increase by up to ten percentage points the permitted amount of expenditures for
activities located outside the geographic area of the district under paragraph (a). As
permitted by section 469.176, subdivision 4k, the expenditures, including the permitted
expenditures under paragraph (a), need not be made within the geographic area of the
project. Expenditures that meet the requirements of this paragraph are legally permitted
expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j.
To qualify for the increase under this paragraph, the expenditures must:

(1) be used exclusively to assist housing that meets the requirement for a qualified
low-income building, as that term is used in section 42 of the Internal Revenue Code; and

(2) not exceed the qualified basis of the housing, as defined under section 42(c) of
the Internal Revenue Code, less the amount of any credit allowed under section 42 of
the Internal Revenue Code; and

(3) be used to:

(i) acquire and prepare the site of the housing;

(ii) acquire, construct, or rehabilitate the housing; or

(iii) make public improvements directly related to the housing; or

(4) be used to develop housing:

(i) if the market value of the housing does not exceed the lesser of:

(A) 150 percent of the average market value of single-family homes in that
municipality; or

(B) $200,000 for municipalities located in the metropolitan area, as defined in
section 473.121, or $125,000 for all other municipalities; and

(ii) if the expenditures are used to pay the cost of site acquisition, relocation,
demolition of existing structures, site preparation, and pollution abatement on one or
more parcels, if the parcel contains a residence containing one to four family dwelling
units that has been vacant for six or more months and is in foreclosure as defined in
section 325N.10, subdivision 7, but without regard to whether the residence is the owner's
principal residence, and only after the redemption period has expired.

(e) For a district created within a biotechnology and health sciences industry zone
as defined in Minnesota Statutes 2012, section 469.330, subdivision 6, or for an existing
district located within such a zone, tax increment derived from such a district may be
expended outside of the district but within the zone only for expenditures required for the
construction of public infrastructure necessary to support the activities of the zone, land
acquisition, and other redevelopment costs as defined in section 469.176, subdivision 4j.
These expenditures are considered as expenditures for activities within the district. The
authority provided by this paragraph expires for expenditures made after the later of (1)
December 31, 2015, or (2) the end of the five-year period beginning on the date the district
was certified, provided that date was before January 1, 2016.

(f) The authority under paragraph (d), clause (4), expires on December 31, 2016.
Increments may continue to be expended under this authority after that date, if they are
used to pay bonds or binding contracts that would qualify under subdivision 3, paragraph
(a), if December 31, 2016, is considered to be the last date of the five-year period after
certification under that provision.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2014, section 469.1763, subdivision 3, is amended to read:


Subd. 3.

Five-year rule.

(a) Revenues derived from tax increments paid by
properties in the district
are considered to have been expended on an activity within the
district under subdivision 2 only if one of the following occurs:

(1) before or within five years after certification of the district, the revenues are
actually paid to a third party with respect to the activity;

(2) bonds, the proceeds of which must be used to finance the activity, are issued and
sold to a third party before or within five years after certification, the revenues are spent
to repay the bonds, and the proceeds of the bonds either are, on the date of issuance,
reasonably expected to be spent before the end of the later of (i) the five-year period, or
(ii) a reasonable temporary period within the meaning of the use of that term under section
148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably required reserve
or replacement fund;

(3) binding contracts with a third party are entered into for performance of the
activity before or within five years after certification of the district and the revenues are
spent under the contractual obligation;

(4) costs with respect to the activity are paid before or within five years after
certification of the district and the revenues are spent to reimburse a party for payment
of the costs, including interest on unreimbursed costs; or

(5) expenditures are made for housing purposes as permitted by subdivision 2,
paragraphs (b) and (d), or for public infrastructure purposes within a zone as permitted
by subdivision 2, paragraph (e).

(b) For purposes of this subdivision, bonds include subsequent refunding bonds if
the original refunded bonds meet the requirements of paragraph (a), clause (2).

(c) For a redevelopment district or a renewal and renovation district certified after
June 30, 2003, and before April 20, 2009, the five-year periods described in paragraph (a)
are extended to ten years after certification of the district. For a redevelopment district
certified after April 20, 2009, and before June 30, 2012, the five-year periods described in
paragraph (a) are extended to eight years after certification of the district. This extension is
provided primarily to accommodate delays in development activities due to unanticipated
economic circumstances.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2014, section 469.178, subdivision 7, is amended to read:


Subd. 7.

Interfund loans.

(a) The authority or municipality may advance or loan
money to finance expenditures under section 469.176, subdivision 4, from its general fund
or any other fund under which it has legal authority to do so.

(b) Not later than 60 days after money is transferred, advanced, or spent, whichever
is earliest,
the loan or advance must be authorized, by resolution of the governing body or
of the authority, whichever has jurisdiction over the fund from which the advance or loan
is authorized, before money is transferred, advanced, or spent, whichever is earliest.

(c) The resolution may generally grant to the municipality or the authority the power
to make interfund loans under one or more tax increment financing plans or for one or
more districts. The resolution may be adopted before or after the adoption of the tax
increment financing plan or the creation of the tax increment financing district from which
the advance or loan is to be repaid.

(d) The terms and conditions for repayment of the loan must be provided in
writing and. The written terms and conditions may be in any form, but must include, at
a minimum, the principal amount, the interest rate, and maximum term. Written terms
may be modified or amended in writing by the municipality or the authority before the
latest decertification of the tax increment financing district from which the interfund loan
will be paid.
The maximum rate of interest permitted to be charged is limited to the
greater of the rates specified under section 270C.40 or 549.09 as of the date the loan or
advance is authorized, unless the written agreement states that the maximum interest rate
will fluctuate as the interest rates specified under section 270C.40 or 549.09 are from time
to time adjusted. Loans or advances may be structured as draw-down or line-of-credit
obligations of the lending fund.

(e) The authority shall report in the annual report submitted pursuant to section
469.175, subdivision 6:

(1) the amount of any interfund loan or advance made in a calendar year; and

(2) any amendment of an interfund loan or advance made in a calendar year.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies to all districts, regardless of when the request for certification was made.

Sec. 5. CITY OF COON RAPIDS; TAX INCREMENT FINANCING.

Notwithstanding the provisions of Minnesota Statutes, section 469.176, subdivision
1b, or any other law to the contrary, the city of Coon Rapids may collect tax increment
from District 6-1 Port Riverwalk through December 31, 2038.

EFFECTIVE DATE.

This section is effective upon compliance by the governing
bodies of the city of Coon Rapids, Anoka County, and Independent School District No.
11 with the requirements of Minnesota Statutes, sections 469.1782, subdivision 2, and
645.021, subdivision 3.

Sec. 6. CITY OF COTTAGE GROVE; TAX INCREMENT FINANCING.

The requirement of Minnesota Statutes, section 469.1763, subdivision 3, that
activities must be undertaken within a five-year period from the date of certification of a
tax increment financing district, are considered to be met for Tax Increment Financing
District No. 1-12 (Gateway North), administered by the Cottage Grove Economic
Development Authority, if the activities are undertaken prior to January 1, 2017.

EFFECTIVE DATE.

This section is effective upon compliance by the chief clerical
officer of the governing body of the city of Cottage Grove with the requirements of
Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Sec. 7. CITY OF RICHFIELD; EXTENSION OF DISTRICT.

Notwithstanding Minnesota Statutes, section 469.176, subdivision 1b, or any other
law to the contrary, the city of Richfield and the Housing and Redevelopment Authority in
and for the city of Richfield may elect to extend the duration limit of the redevelopment
tax increment financing district known as the Cedar Avenue Tax Increment Financing
District established by Laws 2005, chapter 152, article 2, section 25, by ten years.

EFFECTIVE DATE.

This section is effective upon compliance by the city
of Richfield, Hennepin County, and Independent School District No. 280 with the
requirements of Minnesota Statutes, sections 469.1782, subdivision 2, and 645.021,
subdivisions 2 and 3.

Sec. 8. CITY OF ST. PAUL; TIF AUTHORITY.

Subdivision 1.

Establishment.

Under the special rules in subdivision 2, the
housing and redevelopment authority of the city of St. Paul may establish one or
more redevelopment tax increment financing districts located wholly within the area
of the former Ford Motor Company plant properties, consisting of two tax parcels,
17-28-23-31-0001 and 17-28-23-13-0002, and adjacent roads and rights-of-way.

Subd. 2.

Special rules.

(a) If the authority establishes any tax increment district
under this section, the following special rules apply:

(1) the districts are deemed to meet all the requirements of Minnesota Statutes,
section 469.174, subdivision 10;

(2) any expenditure for, or payment of bonds issued to finance, activities within the
area described in subdivision 1 is not subject to the restrictions under Minnesota Statutes,
section 469.1763, for any district established under this section, except that expenditures
for activities outside the area defined in subdivision 1 are subject to the percentage limits
under Minnesota Statutes, section 469.1763, subdivision 2, paragraph (a); and

(3) Minnesota Statutes, section 469.176, subdivision 4j, does not apply.

(b) Except as otherwise provided in paragraph (a), the provisions of Minnesota
Statutes, sections 469.174 to 469.1794, apply to districts established under this section.

Subd. 3.

Expiration.

The authority to request certification of districts under this
section expires June 30, 2020, unless the city has requested certification of at least one
district by that date. The authority to request certification of any district under this section
expires June 30, 2030.

EFFECTIVE DATE.

This section is effective upon approval by the governing
body of the city of St. Paul and compliance with the requirements of Minnesota Statutes,
section 645.021.

ARTICLE 4

SALES AND USE TAXES

Section 1.

Minnesota Statutes 2014, section 289A.20, subdivision 4, is amended to read:


Subd. 4.

Sales and use tax.

(a) The taxes imposed by chapter 297A are due and
payable to the commissioner monthly on or before the 20th day of the month following the
month in which the taxable event occurred, or following another reporting period as the
commissioner prescribes or as allowed under section 289A.18, subdivision 4, paragraph
(f) or (g), except that use taxes due on an annual use tax return as provided under section
289A.11, subdivision 1, are payable by April 15 following the close of the calendar year.

(b) A vendor having a liability of $250,000 or more during a fiscal year ending June
30 must remit the June liability for the next year in the following manner:

(1) Two business days before June 30 of the year, the vendor must remit 81.4 80
percent of the estimated June liability to the commissioner.

(2) On or before August 20 of the year, the vendor must pay any additional amount
of tax not remitted in June.

(c) A vendor having a liability of:

(1) $10,000 or more, but less than $250,000 during a fiscal year ending June 30,
2013, and fiscal years thereafter, must remit by electronic means all liabilities on returns
due for periods beginning in all subsequent calendar years on or before the 20th day of
the month following the month in which the taxable event occurred, or on or before the
20th day of the month following the month in which the sale is reported under section
289A.18, subdivision 4; or

(2) $250,000 or more, during a fiscal year ending June 30, 2013, and fiscal years
thereafter, must remit by electronic means all liabilities in the manner provided in
paragraph (a) on returns due for periods beginning in the subsequent calendar year, except
for 81.4 80 percent of the estimated June liability, which is due two business days before
June 30. The remaining amount of the June liability is due on August 20.

(d) Notwithstanding paragraph (b) or (c), a person prohibited by the person's
religious beliefs from paying electronically shall be allowed to remit the payment by mail.
The filer must notify the commissioner of revenue of the intent to pay by mail before
doing so on a form prescribed by the commissioner. No extra fee may be charged to a
person making payment by mail under this paragraph. The payment must be postmarked
at least two business days before the due date for making the payment in order to be
considered paid on a timely basis.

EFFECTIVE DATE.

This section is effective for taxes due and payable after
July 1, 2015.

Sec. 2.

Minnesota Statutes 2014, section 289A.60, subdivision 15, is amended to read:


Subd. 15.

Accelerated payment of June sales tax liability; penalty for
underpayment.

For payments made after December 31, 2013, if a vendor is required by
law to submit an estimation of June sales tax liabilities and 81.4 80 percent payment by a
certain date, the vendor shall pay a penalty equal to ten percent of the amount of actual
June liability required to be paid in June less the amount remitted in June. The penalty
must not be imposed, however, if the amount remitted in June equals the lesser of 81.4
80 percent of the preceding May's liability or 81.4 80 percent of the average monthly
liability for the previous calendar year.

EFFECTIVE DATE.

This section is effective for taxes due and payable after
July 1, 2015.

Sec. 3.

Minnesota Statutes 2014, section 297A.62, subdivision 3, is amended to read:


Subd. 3.

Manufactured housing and park trailers; modular housing.

(a) For
retail sales of manufactured homes as defined in section 327.31, subdivision 6, for
residential uses, the sales tax under subdivisions 1 and 1a is imposed on 65 percent of the
dealer's cost of the manufactured home. For retail sales of new or used park trailers, as
defined in section 168.002, subdivision 23, the sales tax under subdivisions 1 and 1a is
imposed on 65 percent of the sales price of the park trailer.

(b) For retail sales of a modular home, as defined in section 297A.668, subdivision
8, paragraph (b), for residential use, the sales tax under subdivisions 1 and 1a is imposed
on 65 percent of the dealer's cost of the modular home.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2015.

Sec. 4.

Minnesota Statutes 2014, section 297A.67, subdivision 7a, is amended to read:


Subd. 7a.

Accessories and supplies.

Accessories and supplies required for the
effective use of durable medical equipment for home use only or purchased in a transaction
covered by Medicare or, Medicaid, or other health insurance plan, that are not already
exempt under subdivision 7, are exempt. Accessories and supplies for the effective use
of a prosthetic device, that are not already exempt under subdivision 7, are exempt.
For purposes of this subdivision "durable medical equipment," "prosthetic device,"
"Medicare," and "Medicaid" have the definitions given in subdivision 7., and "other health
insurance plan" means a health plan defined in section 62A.011, subdivision 3, or 62V.02,
subdivision 4, or a qualified health plan defined in section 62A.011, subdivision 7.

EFFECTIVE DATE.

This section is effective retroactively for sales and purchases
made after April 1, 2009. Any vendor who paid sales or use tax on accessories and
supplies purchased in a transaction covered by a health insurance plan defined in
Minnesota Statutes, section 62A.011, subdivision 3, or 62V.02, subdivision 4, or a
qualified health plan defined in Minnesota Statutes, section 62A.011, subdivision 7, that
are not already exempt under Minnesota Statutes, section 297A.67, subdivision 7, and
that were sold after April 1, 2009, and before July 1, 2015, may apply for a refund of the
sales or use tax paid in the manner provided in Minnesota Statutes, section 289A.50,
subdivision 1, but only if the vendor did not collect and remit sales tax on the accessories
and supplies for which a refund is claimed. Interest on the refund shall be paid at the rate
in Minnesota Statutes, section 270C.405, from 90 days after the refund claim is filed with
the commissioner of revenue. The amount to make the refunds is annually appropriated
to the commissioner of revenue from the general fund. Refunds must not be filed until
after June 30, 2015. Notwithstanding limitations on claims for refunds under Minnesota
Statutes, section 289A.40, claims may be filed with the commissioner until June 30, 2016.

Sec. 5.

Minnesota Statutes 2014, section 297A.67, is amended by adding a subdivision
to read:


Subd. 34.

Precious metal bullion.

(a) Sales of precious metal bullion by registered
dealers under section 80G.02 that are required to be reported under Internal Revenue
Service revenue procedure 92-103 are exempt. For purposes of this subdivision, "precious
metal bullion" means bullion that would qualify for the exception for certain coins and
bullion under section 408(m)(3) of the Internal Revenue Code of 1986 as amended
through December 31, 2014. "Precious metal bullion" does not include jewelry, certified
or graded coins, numismatic coins, or works of art.

(b) The intent of this subdivision is to afford the sale of precious metal bullion
similar treatment as afforded the sale of stock, bullion exchange traded funds, bonds,
and other investment instruments.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2015.

Sec. 6.

Minnesota Statutes 2014, section 297A.67, is amended by adding a subdivision
to read:


Subd. 35.

Car seats.

The sale of an infant or child car seat, including a booster seat,
that meets the requirements of a child passenger restraint system under motor vehicle
safety standards established by the United States Department of Transportation is exempt.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2015.

Sec. 7.

Minnesota Statutes 2014, section 297A.68, subdivision 5, is amended to read:


Subd. 5.

Capital equipment.

(a) Capital equipment is exempt. The tax must be
imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and
then refunded in the manner provided in section 297A.75.

"Capital equipment" means machinery and equipment purchased or leased, and used
in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
or refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment
used primarily to electronically transmit results retrieved by a customer of an online
computerized data retrieval system.

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or regulate the production
equipment;

(2) machinery and equipment used for research and development, design, quality
control, and testing activities;

(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;

(4) materials and supplies used to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment;

(7) materials used to construct and install special purpose buildings used in the
production process;

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
as part of the delivery process regardless if mounted on a chassis, repair parts for
ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development, design, or production
of computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials, except for materials included in paragraph (b), clauses (6)
and (7);

(4) machinery or equipment used for nonproduction purposes, including, but not
limited to, the following: plant security, fire prevention, first aid, and hospital stations;
support operations or administration; pollution control; and plant cleaning, disposal of
scrap and waste, plant communications, space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as defined by section
297A.61, subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;

(7) machinery and equipment used by restaurants in the furnishing, preparing, or
serving of prepared foods as defined in section 297A.61, subdivision 31;

(8) machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3
, paragraph (g), clause (6), items (i) to (vi) and (viii);

(9) machinery or equipment used in the transportation, transmission, or distribution
of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
tanks, mains, or other means of transporting those products. This clause does not apply to
machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
239.77; or

(10) any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.

(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For
purposes of this clause, (i) manufacturing begins with the removal of raw materials
from inventory and ends when the last process prior to loading for shipment has been
completed; (ii) fabricating begins with the removal from storage or inventory of the
property to be assembled, processed, altered, or modified and ends with the creation
or production of the new or changed product; (iii) mining begins with the removal of
overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
ends when the last process before stockpiling is completed; and (iv) refining begins with
the removal from inventory or storage of a natural resource and ends with the conversion
of the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical devices, including
computers and computer software, that are purchased or constructed to be used for the
activities set forth in paragraph (a), beginning with the removal of raw materials from
inventory through completion of the product, including packaging of the product.

(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).

(6) "Manufacturing" means an operation or series of operations where raw materials
are changed in form, composition, or condition by machinery and equipment and which
results in the production of a new article of tangible personal property. For purposes of
this subdivision, "manufacturing" includes the generation of electricity or steam to be
sold at retail.

(7) "Mining" means the extraction of minerals, ores, stone, or peat.

(8) "Online data retrieval system" means a system whose cumulation of information
is equally available and accessible to all its customers.

(9) "Primarily" means machinery and equipment used 50 percent or more of the time
in an activity described in paragraph (a).

(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.

(11) This subdivision does not apply to telecommunications equipment as provided
in subdivision 35a, and does not apply to wire, cable, fiber, or poles, or conduit for
telecommunications services.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2015.

Sec. 8.

Minnesota Statutes 2014, section 297A.68, subdivision 35a, is amended to read:


Subd. 35a.

Telecommunications or pay television services machinery and
equipment.

(a) Telecommunications or pay television services machinery and equipment
purchased or leased for use directly by a telecommunications or pay television services
provider primarily in the provision of telecommunications or pay television services
that are ultimately to be sold at retail are exempt, regardless of whether purchased by
the owner, a contractor, or a subcontractor.

(b) For purposes of this subdivision, "telecommunications or pay television
machinery and equipment" includes, but is not limited to:

(1) machinery, equipment, and fixtures utilized in receiving, initiating,
amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring
telecommunications or pay television services, such as computers, transformers, amplifiers,
routers, bridges, repeaters, multiplexers, and other items performing comparable functions;

(2) machinery, equipment, and fixtures used in the transportation of
telecommunications or pay television services, such as radio transmitters and receivers,
satellite equipment, microwave equipment, and other transporting media, but not wire,
cable,
including fiber, poles, or and conduit, but not including wire, cable, or poles;

(3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or
enable the machinery in clauses (1) and (2) to accomplish its intended function, such as
auxiliary power supply, test equipment, towers, heating, ventilating, and air conditioning
equipment necessary to the operation of the telecommunications or pay television
equipment; and software necessary to the operation of the telecommunications or pay
television equipment; and

(4) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to qualified machinery or equipment.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2015.

Sec. 9.

Minnesota Statutes 2014, section 297A.70, subdivision 4, is amended to read:


Subd. 4.

Sales to nonprofit groups.

(a) All sales, except those listed in paragraph
(b) (c), to the following "nonprofit organizations" are exempt if the item purchased is
used in the performance of their exempt function. The exemptions under this paragraph
do not apply to
:

(1) a corporation, society, association, foundation, or institution organized and
operated exclusively for charitable, religious, or educational purposes if the item
purchased is used in the performance of charitable, religious, or educational functions;
and
veterans groups under subdivision 5;

(2) any senior citizen group or association of groups that: hospitals, outpatient
surgical centers, and critical access dental providers under subdivision 7, paragraphs (a)
to (c), (e), and (f);

(i) in general limits membership to persons who are either age 55 or older, or
physically disabled;

(ii) is organized and operated exclusively for pleasure, recreation, and other
nonprofit purposes, not including housing, no part of the net earnings of which inures to
the benefit of any private shareholders; and

(iii) is an exempt organization under section 501(c) of the Internal Revenue Code.

(3) products and services under subdivision 7, paragraph (d);

(4) nursing homes and boarding care homes under subdivision 18; or

(5) a nonprofit organization authorized under section 465.717.

(b) For purposes of this subdivision, charitable purpose includes the maintenance of
a cemetery owned by a religious organization.
"nonprofit organization" means:

(1) an organization that has a current federal determination letter stating that the
nonprofit organization qualifies as an exempt organization under section 501(c)(3) of the
Internal Revenue Code and has obtained a Minnesota tax identification number from the
Department of Revenue under section 297A.83; or

(2) any senior citizen group or association of groups that:

(i) in general, limits membership to persons who are either age 55 or older or
physically disabled;

(ii) is organized and operated exclusively for pleasure, recreation, and other
nonprofit purposes, not including housing, no part of the net earnings of which inures to
the benefit of any private shareholders; and

(iii) is an exempt organization under section 501(c) of the Internal Revenue Code.

(b) (c) This exemption does not apply to the following sales:

(1) building, construction, or reconstruction materials purchased by a contractor
or a subcontractor as a part of a lump-sum contract or similar type of contract with a
guaranteed maximum price covering both labor and materials for use in the construction,
alteration, or repair of a building or facility;

(2) construction materials purchased by tax-exempt entities or their contractors to
be used in constructing buildings or facilities that will not be used principally by the
tax-exempt entities;

(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
297A.67, subdivision 2, except wine purchased by an established religious organization
for sacramental purposes or as allowed under subdivision 9a; and

(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
as provided in paragraph (c) (d).

(c) (d) This exemption applies to the leasing of a motor vehicle as defined in section
297B.01, subdivision 11, only if the vehicle is:

(1) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
passenger automobile, as defined in section 168.002, if the automobile is designed and
used for carrying more than nine persons including the driver; and

(2) intended to be used primarily to transport tangible personal property or
individuals, other than employees, to whom the organization provides service in
performing its charitable, religious, or educational purpose.

(d) (e) A limited liability company also qualifies for exemption under this
subdivision if (1) it consists of a sole member that would qualify for the exemption, and
(2) the items purchased qualify for the exemption.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2015.

Sec. 10.

Minnesota Statutes 2014, section 297A.70, subdivision 14, is amended to read:


Subd. 14.

Fund-raising events sponsored by nonprofit groups.

(a) Sales of
tangible personal property or services at, and admission charges for fund-raising events
sponsored by, a nonprofit organization are exempt if:

(1) all gross receipts are recorded as such, in accordance with generally accepted
accounting practices, on the books of the nonprofit organization; and

(2) the entire proceeds, less the necessary expenses for the event, will be used solely
and exclusively for charitable, religious, or educational purposes. Exempt sales include
the sale of prepared food, candy, and soft drinks at the fund-raising event.

(b) This exemption is limited in the following manner:

(1) it does not apply to admission charges for events involving bingo or other
gambling activities or to charges for use of amusement devices involving bingo or other
gambling activities;

(2) all gross receipts are taxable if the profits are not used solely and exclusively for
charitable, religious, or educational purposes;

(3) it does not apply unless the organization keeps a separate accounting record,
including receipts and disbursements from each fund-raising event that documents all
deductions from gross receipts with receipts and other records;

(4) it does not apply to any sale made by or in the name of a nonprofit corporation as
the active or passive agent of a person that is not a nonprofit corporation;

(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;

(6) it does not apply to fund-raising events conducted on premises leased for more
than five ten days but less than 30 days; and

(7) it does not apply if the risk of the event is not borne by the nonprofit organization
and the benefit to the nonprofit organization is less than the total amount of the state and
local tax revenues forgone by this exemption.

(c) For purposes of this subdivision, a "nonprofit organization" means any unit of
government, corporation, society, association, foundation, or institution organized and
operated for charitable, religious, educational, civic, fraternal, and senior citizens' or
veterans' purposes, no part of the net earnings of which inures to the benefit of a private
individual.

(d) For purposes of this subdivision, "fund-raising events" means activities of
limited duration, not regularly carried out in the normal course of business, that attract
patrons for community, social, and entertainment purposes, such as auctions, bake sales,
ice cream socials, block parties, carnivals, competitions, concerts, concession stands,
craft sales, bazaars, dinners, dances, door-to-door sales of merchandise, fairs, fashion
shows, festivals, galas, special event workshops, sporting activities such as marathons and
tournaments, and similar events. Fund-raising events do not include the operation of a
regular place of business in which services are provided or sales are made during regular
hours such as bookstores, thrift stores, gift shops, restaurants, ongoing Internet sales,
regularly scheduled classes, or other activities carried out in the normal course of business.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2015.

Sec. 11.

Minnesota Statutes 2014, section 297A.70, is amended by adding a
subdivision to read:


Subd. 20.

Animal shelters.

Sales of animals by a nonprofit animal shelter are
exempt. For purposes of this subdivision, the term "nonprofit animal shelter" means
a nonprofit organization that is exempt under section 297A.70, subdivision 4, and is
engaged in the business of rescuing, sheltering, and finding homes for unwanted animals.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2015.

Sec. 12.

Minnesota Statutes 2014, section 297F.05, subdivision 3, is amended to read:


Subd. 3.

Rates; tobacco products.

(a) Except as provided in paragraphs (b) and (c)
and
subdivision 3a, a tax is imposed upon all tobacco products in this state and upon any
person engaged in business as a distributor, at the rate of 95 percent of the wholesale sales
price of the tobacco products. The tax is imposed at the time the distributor:

(1) brings, or causes to be brought, into this state from outside the state tobacco
products for sale;

(2) makes, manufactures, or fabricates tobacco products in this state for sale in
this state; or

(3) ships or transports tobacco products to retailers in this state, to be sold by those
retailers.

(b) Notwithstanding paragraph (a), A minimum tax equal to the greater of the tax
imposed under paragraph (a) or a minimum tax equal to the
rate imposed on a pack of
20 cigarettes weighing not more than three pounds per thousand, as established under
subdivision 1, is imposed on each container of moist snuff weighing not more than 1.2
ounces. When more than one container subject to tax under this clause is packaged
together, each container is subject to the minimum tax.

(c) Except as provided in paragraph (b), a tax equal to the greater of the tax imposed
under paragraph (a) or a minimum tax equal to the rate imposed on a pack of 20 cigarettes
weighing not more than three pounds per thousand, as established under subdivision 1,
times the number of ounces of moist snuff in the container, divided by 1.2, is imposed on
each container of moist snuff weighing more than 1.2 ounces
.

For purposes of this subdivision, a "container" means the smallest a consumer-size can,
package, or other container that is marketed or packaged by the manufacturer, distributor,
or retailer
for separate sale to a retail purchaser. When more than one container is
packaged together, each container is subject to tax.

EFFECTIVE DATE.

This section is effective July 1, 2015.

Sec. 13.

Minnesota Statutes 2014, section 297F.09, subdivision 10, is amended to read:


Subd. 10.

Accelerated tax payment; cigarette or tobacco products distributor.

A cigarette or tobacco products distributor having a liability of $250,000 or more during a
fiscal year ending June 30, shall remit the June liability for the next year in the following
manner:

(a) Two business days before June 30 of the year, the distributor shall remit the
actual May liability and 81.4 80 percent of the estimated June liability to the commissioner
and file the return in the form and manner prescribed by the commissioner.

(b) On or before August 18 of the year, the distributor shall submit a return showing
the actual June liability and pay any additional amount of tax not remitted in June. A
penalty is imposed equal to ten percent of the amount of June liability required to be paid
in June, less the amount remitted in June. However, the penalty is not imposed if the
amount remitted in June equals the lesser of:

(1) 81.4 80 percent of the actual June liability; or

(2) 81.4 80 percent of the preceding May liability.

EFFECTIVE DATE.

This section is effective for taxes due and payable after
July 1, 2015.

Sec. 14.

Minnesota Statutes 2014, section 297G.09, subdivision 9, is amended to read:


Subd. 9.

Accelerated tax payment; penalty.

A person liable for tax under this
chapter having a liability of $250,000 or more during a fiscal year ending June 30, shall
remit the June liability for the next year in the following manner:

(a) Two business days before June 30 of the year, the taxpayer shall remit the actual
May liability and 81.4 80 percent of the estimated June liability to the commissioner and
file the return in the form and manner prescribed by the commissioner.

(b) On or before August 18 of the year, the taxpayer shall submit a return showing
the actual June liability and pay any additional amount of tax not remitted in June. A
penalty is imposed equal to ten percent of the amount of June liability required to be paid
in June less the amount remitted in June. However, the penalty is not imposed if the
amount remitted in June equals the lesser of:

(1) 81.4 80 percent of the actual June liability; or

(2) 81.4 80 percent of the preceding May liability.

EFFECTIVE DATE.

This section is effective for taxes due and payable after
July 1, 2015.

Sec. 15.

Minnesota Statutes 2014, section 297H.04, subdivision 2, is amended to read:


Subd. 2.

Rate.

(a) Commercial generators that generate nonmixed municipal
solid waste shall pay a solid waste management tax of 60 cents per noncompacted
cubic yard of periodic waste collection capacity purchased by the generator, based on
the size of the container for the nonmixed municipal solid waste, the actual volume,
or the weight-to-volume conversion schedule in paragraph (c). However, the tax must
be calculated by the waste management service provider using the same method for
calculating the waste management service fee so that both are calculated according to
container capacity, actual volume, or weight.

(b) Notwithstanding section 297H.02, a residential generator that generates
nonmixed municipal solid waste shall pay a solid waste management tax in the same
manner as provided in paragraph (a).

(c) The weight-to-volume conversion schedule for:

(1) construction debris as defined in section 115A.03, subdivision 7, is one ton
equals 3.33 cubic yards, or $2 per ton
equal to 60 cents per cubic yard. The commissioner
of revenue, after consultation with the commissioner of the Pollution Control Agency,
shall determine and may publish by notice a conversion schedule for construction debris
;

(2) industrial waste as defined in section 115A.03, subdivision 13a, is equal to
60 cents per cubic yard. The commissioner of revenue after consultation with the
commissioner of the Pollution Control Agency, shall determine, and may publish by
notice, a conversion schedule for various industrial wastes; and

(3) infectious waste as defined in section 116.76, subdivision 12, and pathological
waste as defined in section 116.76, subdivision 14, is 150 pounds equals one cubic yard, or
60 cents per 150 pounds.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2015.

Sec. 16.

Minnesota Statutes 2014, section 469.190, subdivision 1, is amended to read:


Subdivision 1.

Authorization.

Notwithstanding section 477A.016 or any other law,
a statutory or home rule charter city may by ordinance, and a town may by the affirmative
vote of the electors at the annual town meeting, or at a special town meeting, impose a
tax of up to three percent on the gross receipts from the furnishing for consideration of
lodging at a hotel, motel, rooming house, tourist court, or resort, other than the renting or
leasing of it for a continuous period of 30 days or more. A statutory or home rule charter
city may by ordinance impose the tax authorized under this subdivision on the camping
site receipts of a municipal campground. Regardless of whether the tax is collected locally
or by the state, a tax imposed under this subdivision or under a special law applies to
the entire consideration paid to obtain access to lodging, including ancillary or related
services, such as services provided by accommodation intermediaries as defined in section
297A.61, and similar services.

EFFECTIVE DATE.

This section is effective the day following final enactment. In
enacting this section, the legislature confirms that Minnesota Statutes, section 469.190, its
predecessor provisions, and any special laws authorizing political subdivisions to impose
lodging taxes, were and are intended to apply to the entire consideration paid to obtain
access to lodging, including ancillary or related services, such as services provided by
accommodation intermediaries as defined in Minnesota Statutes, section 297A.61, and
similar services. The provisions of this section must not be interpreted to imply a narrower
construction of the tax base under lodging tax provisions of Minnesota law prior to the
enactment of this section.

Sec. 17.

Minnesota Statutes 2014, section 469.190, subdivision 7, is amended to read:


Subd. 7.

Collection.

(a) The statutory or home rule charter city may agree with the
commissioner of revenue that a tax imposed pursuant to this section shall be collected
by the commissioner together with the tax imposed by chapter 297A, and subject to the
same interest, penalties, and other rules and that its proceeds, less the cost of collection,
shall be remitted to the city.

(b) If a tax under this section or under a special law is not collected by the
commissioner of revenue, the local government imposing the tax may by ordinance limit
the required filing and remittance of the tax by an accommodation intermediary, as
defined in section 297A.61, subdivision 47, to once in every calendar year. The local
government must inform the accommodation intermediary of the date when the return
or remittance is due and the dates must coincide with one of the monthly dates for filing
and remitting state sales tax under chapter 297A. The local government must also provide
accommodation intermediaries electronically with geographic and zip code information
necessary to correctly collect the tax.

EFFECTIVE DATE.

This section is effective the day after final enactment.

Sec. 18.

Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991,
chapter 291, article 8, section 22, Laws 1998, chapter 389, article 8, section 25, Laws
2003, First Special Session chapter 21, article 8, section 11, Laws 2008, chapter 154,
article 5, section 2, and Laws 2014, chapter 308, article 3, section 21, is amended to read:


Subd. 2.

(a) Notwithstanding Minnesota Statutes, section 477A.016, or any other
law, ordinance, or city charter provision to the contrary, the city of Duluth may, by
ordinance, impose an additional sales tax of up to one and three-quarter percent on sales
transactions which are described in Minnesota Statutes 2000, section 297A.01, subdivision
3, clause (c). The imposition of this tax shall not be subject to voter referendum under
either state law or city charter provisions. When the city council determines that the taxes
imposed under this paragraph at a rate of three-quarters of one percent and other sources
of revenue produce revenue sufficient to pay debt service on bonds in the principal amount
of $40,285,000 plus issuance and discount costs, issued for capital improvements at the
Duluth Entertainment and Convention Center, which include a new arena, the rate of tax
under this subdivision must be reduced by three-quarters of one percent.

(b) In addition to the tax in paragraph (a) and notwithstanding Minnesota Statutes,
section 477A.016, or any other law, ordinance, or city charter provision to the contrary,
the city of Duluth may, by ordinance, impose an additional sales tax of up to one-half of
one percent on sales transactions which are described in Minnesota Statutes 2000, section
297A.01, subdivision 3, clause (c). This tax expires when the city council determines
that the tax imposed under this paragraph, along with the tax imposed under section
22, paragraph (b), has produced revenues sufficient to pay the debt service on bonds
in a principal amount of no more than $18,000,000, plus issuance and discount costs,
to finance capital improvements to public facilities to support tourism and recreational
activities in that portion of the city west of 34th 14th Avenue West and the area south of
and including Skyline Parkway
.

(c) The city of Duluth may sell and issue up to $18,000,000 in general obligation
bonds under Minnesota Statutes, chapter 475, plus an additional amount to pay for the
costs of issuance and any premiums. The proceeds may be used to finance capital
improvements to public facilities that support tourism and recreational activities in the
portion of the city west of 34th 14th Avenue West and the area south of and including
Skyline Parkway
, as described in paragraph (b). The issuance of the bonds is subject to the
provisions of Minnesota Statutes, chapter 475, except no election shall be required unless
required by the city charter. The bonds shall not be included in computing net debt. The
revenues from the taxes that the city of Duluth may impose under paragraph (b) and under
section 22, paragraph (b), may be pledged to pay principal of and interest on such bonds.

EFFECTIVE DATE.

This section is effective the day after the governing body of
the city of Duluth and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.

Sec. 19.

Laws 1980, chapter 511, section 2, as amended by Laws 1998, chapter 389,
article 8, section 26, Laws 2003, First Special Session chapter 21, article 8, section 12, and
Laws 2014, chapter 308, article 3, section 22, is amended to read:


Sec. 22. CITY OF DULUTH; TAX ON RECEIPTS BY HOTELS AND
MOTELS.

(a) Notwithstanding Minnesota Statutes, section 477A.016, or any other law, or
ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance,
impose an additional tax of one percent upon the gross receipts from the sale of lodging
for periods of less than 30 days in hotels and motels located in the city. The tax shall be
collected in the same manner as the tax set forth in the Duluth city charter, section 54(d),
paragraph one. The imposition of this tax shall not be subject to voter referendum under
either state law or city charter provisions.

(b) In addition to the tax in paragraph (a) and notwithstanding Minnesota Statutes,
section 477A.016, or any other law, ordinance, or city charter provision to the contrary,
the city of Duluth may, by ordinance, impose an additional sales tax of up to one-half
of one percent on the gross receipts from the sale of lodging for periods of less than
30 days in hotels and motels located in the city. This tax expires when the city council
first determines that the tax imposed under this paragraph, along with the tax imposed
under section 21, paragraph (b), has produced revenues sufficient to pay the debt
service on bonds in a principal amount of no more than $18,000,000, plus issuance and
discount costs, to finance capital improvements to public facilities to support tourism and
recreational activities in that portion of the city west of 34th 14th Avenue West and the
area south of and including Skyline Parkway
.

EFFECTIVE DATE.

This section is effective the day after the governing body of
the city of Duluth and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.

Sec. 20.

Laws 1991, chapter 291, article 8, section 27, subdivision 3, as amended by
Laws 1998, chapter 389, article 8, section 28, Laws 2008, chapter 366, article 7, section 9,
and Laws 2009, chapter 88, article 4, section 14, is amended to read:


Subd. 3.

Use of revenues.

(a) Revenues received from taxes authorized by
subdivisions 1 and 2 shall be used by the city to pay the cost of collecting the tax and to
pay all or a portion of the expenses of constructing and improving facilities as part of an
urban revitalization project in downtown Mankato known as Riverfront 2000. Authorized
expenses include, but are not limited to, acquiring property and paying relocation expenses
related to the development of Riverfront 2000 and related facilities, and securing or paying
debt service on bonds or other obligations issued to finance the construction of Riverfront
2000 and related facilities. For purposes of this section, "Riverfront 2000 and related
facilities" means a civic-convention center, an arena, a riverfront park, a technology center
and related educational facilities, and all publicly owned real or personal property that
the governing body of the city determines will be necessary to facilitate the use of these
facilities, including but not limited to parking, skyways, pedestrian bridges, lighting, and
landscaping. It also includes the performing arts theatre and the Southern Minnesota
Women's Hockey Exposition Center, for use by Minnesota State University, Mankato.

(b) Notwithstanding Minnesota Statutes, section 297A.99, subdivision 3, and subject
to voter approval at a special or general election held on or before December 31, 2018, the
city may by ordinance also use revenues from taxes authorized under subdivisions 1 and 2:

(1) up to a maximum of $29,000,000, plus associated bond costs, to pay all or a
portion of the expenses of the following capital projects:

(i) improvements to regional recreational facilities including existing hockey and
curling rinks, a baseball park, youth athletic fields and facilities, and the municipal
swimming pool including improvements to make the pool compliant with the Americans
with Disabilities Act;

(ii) improvements to flood control and the levee system;

(iii) water quality improvement projects in Blue Earth and Nicollet Counties;

(iv) expansion of the regional transit building and related multimodal transit
improvements;

(v) regional public safety and emergency communications improvements and
equipment; and

(vi) matching funds for improvements to publicly owned regional facilities including
a historic museum, supportive housing, and a senior center; and

(2) up to a maximum of $25,000,000, plus associated bond costs, to pay all or a
portion of the costs of constructing the following new regional athletic facilities: ice
sheets, swimming and aquatic facility, multi-use sports bubble, indoor field house, or
indoor tennis courts.

(c) The additional uses of revenues authorized in paragraph (b) must be presented to
voters in one ballot question. The election must be held on the same date as the election to
extend the North Mankato local option sales tax authorized under section 25 of this article.

EFFECTIVE DATE.

This section is effective the day after the governing body of
the city of Mankato and its chief clerical officer timely complete their compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Sec. 21.

Laws 1991, chapter 291, article 8, section 27, subdivision 4, as amended by
Laws 2005, First Special Session chapter 3, article 5, section 25, and Laws 2008, chapter
366, article 7, section 10, is amended to read:


Subd. 4.

Expiration of taxing authority and expenditure limitation.

The
authority granted by subdivisions 1 and 2 to the city to impose a sales tax and an excise tax
shall expire on at the later of when revenues are sufficient to pay off the bonds, including
interest and all other associated bond costs authorized under subdivision 5, or
December
31, 2022, unless the additional uses under subdivision 3, paragraph (b), are authorized. If
the additional uses allowed in subdivision 3, paragraph (b), are authorized, the taxes expire
at the later of when revenues are sufficient to pay off the bonds, including interest and all
other associated bond costs authorized under subdivision 5, or December 31, 2038. Upon
expiration of the taxes, any remaining fund balance of revenues derived from the taxes
shall be disbursed to the general fund of the city. The taxes imposed under subdivisions 1
and 2 may expire at an earlier time if the city so determines by ordinance
.

EFFECTIVE DATE.

This section is effective the day following final enactment
without local approval pursuant to Minnesota Statutes, section 645.023, subdivision 1.

Sec. 22.

Laws 1991, chapter 291, article 8, section 27, subdivision 5, is amended to read:


Subd. 5.

Bonds.

(a) The city of Mankato may issue general obligation bonds of the
city in an amount not to exceed $25,000,000 for Riverfront 2000 and related facilities,
without election under Minnesota Statutes, chapter 475, on the question of issuance of the
bonds or a tax to pay them. The debt represented by bonds issued for Riverfront 2000
and related facilities shall not be included in computing any debt limitations applicable
to the city of Mankato, and the levy of taxes required by section 475.61 to pay principal
of and interest on the bonds shall not be subject to any levy limitation or be included in
computing or applying any levy limitation applicable to the city.

(b) The city of Mankato, subject to voter approval at the election required under
subdivision 3, paragraph (b), may issue general obligation bonds of the city in an amount
not to exceed $29,000,000 for the projects listed under subdivision 3, paragraph (b),
clause (1), and not to exceed $25,000,000 for the projects listed under subdivision 3,
paragraph (b), clause (2), without election under Minnesota Statutes, chapter 475, on the
question of issuance of the bonds or a tax to pay them. The debt represented by bonds
under this paragraph shall not be included in computing any debt limitations applicable
to the city of Mankato, and the levy of taxes required by Minnesota Statutes, section
475.61, to pay principal of and interest on the bonds, and shall not be subject to any levy
limitation or be included in computing or applying any levy limitation applicable to the
city. The city may use tax revenue in excess of one year's principal interest reserve for
intended annual bond payments to pay all or a portion of the cost of capital improvements
authorized in subdivision 3.

(c) Notwithstanding the maximum bond limits in this subdivision, the city may use
tax revenue in excess of any and all annual principal and interest payment obligations for
capital replacement associated with the uses authorized in subdivision 3.

EFFECTIVE DATE.

This section is effective the day following final enactment
without local approval pursuant to Minnesota Statutes, section 645.023, subdivision 1.

Sec. 23.

Laws 1991, chapter 291, article 8, section 27, subdivision 6, is amended to read:


Subd. 6.

Reverse referendum; authorization of extensions.

(a) If the Mankato city
council intends to exercise the authority provided by this section, it shall pass a resolution
stating the fact before July 1, 1991. The resolution must be published for two successive
weeks in the official newspaper of the city or, if there is no official newspaper, in a
newspaper of general circulation in the city, together with a notice fixing a date for a public
hearing on the matter. The hearing must be held at least two weeks but not more than four
weeks after the first publication of the resolution. Following the public hearing, the city
may determine to take no further action or adopt a resolution confirming its intention to
exercise the authority. That resolution must also be published in the official newspaper of
the city or, if there is no official newspaper, in a newspaper of general circulation in the
city. If within 30 days after publication of the resolution a petition signed by voters equal
in number to ten percent of the votes cast in the city in the last general election requesting
a vote on the proposed resolution is filed with the county auditor, the resolution is not
effective until it has been submitted to the voters at a general or special election and a
majority of votes cast on the question of approving the resolution are in the affirmative. The
commissioner of revenue shall prepare a suggested form of question to be presented at the
election. The referendum must be held at a special or general election before December 1,
1991. This subdivision applies notwithstanding any city charter provision to the contrary.

(b) If the Mankato city council wishes to extend the taxes authorized under
subdivisions 1 and 2 to fund any of the projects listed in subdivision 3, paragraph (b) or
(c), the city must pass a resolution extending the taxes before July 1, 2015. The tax may
not be imposed unless approved by the voters.

EFFECTIVE DATE.

This section is effective the day following final enactment
without local approval pursuant to Minnesota Statutes, section 645.023, subdivision 1.

Sec. 24.

Laws 2006, chapter 257, section 2, the effective date, as amended by Laws
2011, First Special Session chapter 7, article 3, section 17, is amended to read:


EFFECTIVE DATE.

This section is effective for sales and purchases after June 30,
2006, and before July 1, 2015.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 25.

Laws 2008, chapter 366, article 7, section 20, is amended to read:


Sec. 20. CITY OF NORTH MANKATO; TAXES AUTHORIZED.

Subdivision 1.

Sales and use tax authorized.

Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to
the approval of the voters on November 7, 2006, the city of North Mankato may impose
by ordinance a sales and use tax of one-half of one percent for the purposes specified
in subdivision 2. The provisions of Minnesota Statutes, section 297A.99, govern the
imposition, administration, collection, and enforcement of the taxes authorized under
this subdivision.

Subd. 2.

Use of revenues.

(a) Revenues received from the tax authorized by
subdivision 1 must be used to pay all or part of the capital costs of the following projects:

(1) the local share of the Trunk Highway 14/County State-Aid Highway 41
interchange project;

(2) development of regional parks and hiking and biking trails;

(3) expansion of the North Mankato Taylor Library;

(4) riverfront redevelopment; and

(5) lake improvement projects.

The total amount of revenues from the tax in subdivision 1 that may be used to fund
these projects is $6,000,000 plus any associated bond costs.

(b) If the city extends the tax as authorized under subdivision 2a, paragraph (a), the
total amount that may be used to fund these projects is increased by $9,000,000, plus
associated bond costs, including interest on the bonds, minus any revenues used for the
purposes listed in paragraph (c)
.

(c) Revenues raised from the tax imposed under subdivision 1 may also be used to
fund all or a portion of the costs of constructing new regional athletic facilities: ice sheets,
swimming and aquatic facility, multi-use sports bubble, indoor field house, or indoor
tennis courts if those facilities are constructed within the corporate boundaries of the city
of North Mankato. The tax may only be used for this purpose if authorized by the voters
as provided for in subdivision 2a, paragraph (b).

Subd. 2a.

Authorization to extend the tax.

(a) Notwithstanding section 297A.99,
subdivision 3, if the North Mankato city council intends to extend the tax authorized under
subdivision 1 to cover an additional $9,000,000 in bonds, plus associated bond costs,
including interest on the bonds, to fund the projects in subdivision 2, paragraph (a), the
city must pass a resolution extending the tax before July 1, 2015. The resolution is not
effective until it has been submitted to the voters at a general or special election and a
majority of votes cast on the question of approving the resolution are in the affirmative.
The referendum must be held at a special or general election before December 1, 2018,
and must be held on the same date as the referendum required under section 20. This
subdivision applies notwithstanding any city charter provision to the contrary.

(b) Notwithstanding section 297A.99, subdivision 3, and subject to voter approval
at a special or general election held on or before December 1, 2018, the city may use up
to $5,000,000, plus associated bond costs of the additional sales tax revenue allowed to
be raised under paragraph (a), to pay all or a portion of the costs of constructing the new
regional athletic facilities listed in subdivision 2, paragraph (c). The referendum required
under this paragraph must be held on the same date as the referendum required under
paragraph (a). The uses of revenues authorized in this paragraph and paragraph (a) must
be presented to voters in one ballot question. The election must be held on the same date
as the election to extend the Mankato local option sales tax authorized under section 20.

Subd. 3.

Bonds.

(a) The city of North Mankato, pursuant to the approval of the
voters at the November 7, 2006 referendum authorizing the imposition of the taxes in
this section, may issue bonds under Minnesota Statutes, chapter 475, to pay capital and
administrative expenses for the projects described in subdivision 2, paragraph (a), in an
amount that does not exceed $6,000,000. A separate election to approve the bonds under
Minnesota Statutes, section 475.58, is not required.

(b) The city of North Mankato, subject to voter approval under subdivision 2a,
paragraph (a), allowing for additional revenue to be spent for the projects in subdivision 2,
paragraph (a), may issue additional bonds under Minnesota Statutes, chapter 475, to pay
capital and administrative expenses for those projects in an amount that does not exceed
$9,000,000, plus associated bond costs, including interest on the bonds. If approved by
voters as required under subdivision 2a, paragraph (b), up to $5,000,000 of the bonds, plus
associated bond costs, may be used to pay capital and administrative costs for the projects
listed in subdivision 2, paragraph (b), instead. A separate election to approve the bonds
under Minnesota Statutes, section 475.58, is not required.

(b) (c) The debt represented by the bonds is not included in computing any debt
limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section
475.61, to pay principal and interest on the bonds is not subject to any levy limitation.

(d) Notwithstanding the maximum bond limits set forth above, the city may use tax
revenue in excess of any and all annual principal and interest payment obligations for
capital replacement associated with the uses authorized in subdivision 2.

Subd. 4.

Termination of taxes.

The tax imposed under subdivision 1 expires when
the city council determines that the amount of revenues received from the taxes to pay for
the projects under subdivision 2, paragraph (a), first equals or exceeds $6,000,000 plus the
additional amount needed to pay the costs related to issuance of bonds under subdivision
3, including interest on the bonds, unless the tax is extended as allowed in this section.
If the tax is extended as allowed under subdivision 2a, paragraphs (a) and (b), the tax
expires December 31, 2038
. Any funds remaining after completion of the projects and
retirement or redemption of the bonds shall be placed in a capital facilities and equipment
replacement fund of the city. The tax imposed under subdivision 1 may expire at an earlier
time if the city so determines by ordinance.

EFFECTIVE DATE.

This section is effective the day after the governing body of
the city of North Mankato and its chief clerical officer timely complete their compliance
with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Sec. 26.

Laws 2013, chapter 143, article 8, section 22, the effective date, as amended
by Laws 2014, chapter 308, article 3, section 30, is amended to read:


EFFECTIVE DATE.

Subdivision 7, paragraph (c), clause (2), is effective for sales
and purchases made after June 30, 2013. The provisions of subdivision 7, paragraph (b),
and paragraph (c), clause (8), are effective retroactively for sales and purchases made
after April 1, 2009. Any vendor who paid sales or use tax on items now exempt under
subdivision 7, paragraph (b), and paragraph (c), clause (8), that were sold after April 1,
2009, and before July 1, 2013, may apply for a refund of the sales or use tax paid in the
manner provided in Minnesota Statutes, section 289A.50, subdivision 1, but only if the
vendor did not collect and remit sales tax on the items for which a refund is claimed.
Interest on the refund shall be paid at the rate in Minnesota Statutes, section 270C.405,
from 90 days after the refund claim is filed with the commissioner of revenue. The amount
to make the refunds is annually appropriated to the commissioner of revenue from the
general fund. Notwithstanding limitations on claims for refunds under Minnesota Statutes,
section 289A.40, claims may be filed with the commissioner until June 30, 2015 2016.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 27.

Laws 2013, chapter 143, article 8, section 23, the effective date, as amended
by Laws 2014, chapter 308, article 3, section 31, is amended to read:


EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2013, except that the provision regarding accessories and supplies purchased
in a transaction covered by Medicare or Medicaid that are not already exempt under
Minnesota Statutes, section 297A.67, subdivision 7, and the provision defining "Medicare"
and "Medicaid" are effective retroactively for sales and purchases made after April 1,
2009. Any vendor who paid sales or use tax on accessories and supplies purchased in a
transaction covered by Medicare or Medicaid that are not already exempt under Minnesota
Statutes, section 297A.67, subdivision 7, and that were sold after April 1, 2009, and before
July 1, 2013, may apply for a refund of the sales or use tax paid in the manner provided in
Minnesota Statutes, section 289A.50, subdivision 1, but only if the vendor did not collect
and remit sales tax on the accessories and supplies for which a refund is claimed. Interest
on the refund shall be paid at the rate in Minnesota Statutes, section 270C.405, from 90
days after the refund claim is filed with the commissioner of revenue. The amount to make
the refunds is annually appropriated to the commissioner of revenue from the general
fund. Notwithstanding limitations on claims for refunds under Minnesota Statutes, section
289A.40, claims may be filed with the commissioner until June 30, 2015 2016.

EFFECTIVE DATE.

This section is effective retroactively for sales and purchases
made after April 1, 2009.

Sec. 28.

Laws 2014, chapter 308, article 7, section 7, is amended to read:


Sec. 7. CITY OF LUVERNE LOCAL SALES TAX.

(a) Notwithstanding Minnesota Statutes, sections 297A.99, 297A.993, and
477A.016, or any other contrary provision of law, ordinance, or city charter, the city of
Luverne may, by ordinance, impose a sales and use tax of up to one-half of one percent for
the purposes specified in paragraph (b), if approved by the voters at a general election held
prior to December 31, 2020
. Except as otherwise provided in this section, the provisions
of Minnesota Statutes, section 297A.99, subdivisions 4 to 13, govern the imposition,
administration, collection, and enforcement of the tax authorized under this paragraph.

(b) The proceeds of any tax imposed under paragraph (a), less refunds and costs of
collection, must be first used by the city to pay debt service on bonds issued the city's
local share
under Minnesota Statutes, section 469.194 477A.20, to fund the Lewis and
Clark Regional Water System project. Revenues collected in any calendar year in excess
of the city obligation to pay for debt service on bonds issued the city's local share under
Minnesota Statutes, section 469.194 477A.20, may be retained by the city and used for
funding other capital projects within the city.

(c) A tax imposed under paragraph (a) expires when the city's share of bonds local
share
issued under Minnesota Statutes, section 469.194 477A.20, to fund the Lewis and
Clark Regional Water System Project has been made, or at an earlier time if approved
by the city council. The tax must not terminate before the city council determines that
revenues from this tax and any other revenue source the city dedicates are sufficient to
pay the city city's local share of debt service on bonds issued under Minnesota Statutes,
section 469.194 477A.20.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 29. CITY OF MARSHALL; VALIDATION OF PRIOR ACT.

(a) Notwithstanding the time limits in Minnesota Statutes, section 645.021, the city
of Marshall may approve Laws 2011, First Special Session chapter 7, article 4, section 14,
and file its approval with the secretary of state by June 15, 2013. If approved as authorized
under this paragraph, actions undertaken by the city pursuant to the approval of the voters
on November 6, 2012, and otherwise in accordance with Laws 2011, First Special Session
chapter 7, article 4, section 14, are validated.

(b) Notwithstanding the time limit on the imposition of tax under Laws 2011, First
Special Session chapter 7, article 4, section 14, and subject to local approval under
paragraph (a), the city of Marshall may impose the tax on or before July 1, 2013.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 5

PROPERTY TAX AIDS AND CREDITS

Section 1.

Minnesota Statutes 2014, section 477A.0124, subdivision 4, is amended to
read:


Subd. 4.

County tax-base equalization aid.

(a) For 2006 and subsequent years,
the money appropriated to county tax-base equalization aid each calendar year, after the
payment under paragraph (f), shall be apportioned among the counties according to each
county's tax-base equalization aid factor.

(b) A county's tax-base equalization aid factor is equal to the amount by which (i)
$185 $330 times the county's population, exceeds (ii) 9.45 12 percent of the county's
net tax capacity.

(c) In the case of a county with a population less than 10,000, the factor determined
in paragraph (b) shall be multiplied by a factor of three.

(d) In the case of a county with a population greater than or equal to 10,000, but less
than 12,500, the factor determined in paragraph (b) shall be multiplied by a factor of two.

(e) In the case of a county with a population greater than or equal to 12,500 but less
than 16,500, the factor determined in paragraph (b) shall be multiplied by a factor of 1.25.

(e) (f) In the case of a county with a population greater than 500,000, the factor
determined in paragraph (b) shall be multiplied by a factor of 0.25.

(g) For distributions in 2016, the allocation to a county under paragraphs (a) to (f)
shall not be less than 95 percent of the sum of the tax base equalization aid in 2014 plus
any supplemental program aid that was distributed to the county under Laws 2014, chapter
308, article 1, section 13. For distributions in 2017 and subsequent years, the allocation
to a county under paragraphs (a) to (f) shall not be less than 95 percent of the tax base
equalization aid of the county in the prior year.

(h) Beginning with aid payable in 2017, the amount under paragraph (b), item (i),
shall be increased by the ratio of the statewide net tax capacity per capita to the statewide
net tax capacity per capita in the 2014 assessment year provided that in no case shall the
ratio be less than one or the ratio in the prior year, whichever is greater. The amount shall
be rounded to the nearest $10. The statewide taxable market value per capita shall be
calculated using the most recent population available for the relevant assessment year at
the time of the calculation of the aid by the commissioner under section 477A.014.

(f) (i) Before the money appropriated to county base equalization aid is apportioned
among the counties as provided in paragraph (a), an amount up to $73,259 is allocated
annually to Anoka County and up to $59,664 is annually allocated to Washington County
for the county to pay postretirement costs of health insurance premiums for court
employees. The allocation under this paragraph is in addition to the allocations under
paragraphs (a) to (e) (h).

EFFECTIVE DATE.

This section is effective for aids payable in 2016 and thereafter.

Sec. 2.

[477A.0126] REIMBURSEMENT OF COUNTY AND TRIBES FOR
CERTAIN OUT-OF-HOME PLACEMENT.

Subdivision 1.

Definition.

When used in this section, "out-of-home placement"
means 24-hour substitute care for an Indian child as defined by section 260C.007,
subdivision 21, placed under the Indian Child Welfare Act (ICWA) and chapter 260C,
away from the child's parent or guardian and for whom the county social services agency
or county correctional agency has been assigned responsibility for the child's placement
and care, which includes placement in foster care under section 260C.007, subdivision
18, and a correctional facility pursuant to a court order.

Subd. 2.

Determination of nonfederal share of costs.

(a) By January 1, 2016, each
county shall report the following information to the commissioners of human services and
corrections: (1) the separate amounts paid out of its social service agency and its corrections
budget for out-of-home placement of children under the ICWA in calendar years 2012,
2013, and 2014; and (2) the number of case days associated with the expenditures from
each budget. By March 15, 2016, the commissioner of human services, in consultation with
the commissioner of corrections, shall certify to the commissioner of revenue and to the
legislative committees responsible for local government aids and out-of-home placement
funding, whether the data reported under this subdivision accurately reflects total
expenditures by counties for out-of-home placement costs of children under the ICWA.

(b) By January 1, 2018, and each January 1 thereafter, each county shall report to the
commissioners of human services and corrections the separate amounts paid out of its
social service agency and its corrections budget for out-of-home placement of children
under the ICWA in the calendar years two years before the current calendar year along
with the number of case days associated with the expenditures from each budget.

(c) Until the commissioner of human services develops another mechanism for
collecting and verifying data on out-of-home placements of children under the ICWA, and
the legislature authorizes the use of that data, the data collected under this subdivision
must be used to calculate payments under subdivision 3. The commissioner of human
services shall certify the information to the commissioner of revenue by July 1 of the year
prior to the aid payment.

Subd. 3.

Aid payments to counties.

For aids payable in calendar year 2017 and
thereafter, the commissioner of revenue shall reimburse each county for 100 percent of
the nonfederal share of the cost of out-of-home placement of children under the ICWA
provided the commissioner of human services, in consultation with the commissioner
of corrections, certifies to the commissioner of revenue that accurate data is available
to make the aid determination under this section. The amount of reimbursement is the
county's average nonfederal share of the cost for out-of-home placement of children
under the ICWA for the most recent three calendar years for which data is available.
The commissioner shall pay the aid under the schedule used for local government aid
payments under section 477A.015.

Subd. 4.

Aid payments to tribes.

(a) By January 1, 2016, and each year
thereafter, each tribe must certify to the commissioner of revenue the amount of federal
reimbursement received by the tribe for out-of-home placement of children under the
ICWA for the immediately preceding three calendar years.

(b) The amount of reimbursement to the tribe shall be the greater of: (1) five
percent of the average reimbursement amount received from the federal government for
out-of-home placement costs for the most recent three calendar years; or (2) $200,000.
The commissioner shall pay the aid under this section under the schedule used for local
government aid payments under section 477A.015.

Subd. 5.

Appropriation.

An amount sufficient to pay aid under this section is
annually appropriated to the commissioner of revenue from the general fund.

EFFECTIVE DATE.

This section is effective beginning with aids payable in 2017.

Sec. 3.

Minnesota Statutes 2014, section 477A.013, subdivision 1, is amended to read:


Subdivision 1.

Towns and unorganized territories.

In 2014 2016 and thereafter,
each town and the total area of any unorganized territory within a county is eligible for
a distribution under this subdivision equal to the product of (i) its agricultural property
factor, (ii) its town area factor, (iii) its population factor, and (iv) 0.0045. As used in this
subdivision, the following terms have the meanings given them:

(1) "agricultural property factor" means the ratio of the adjusted net tax capacity of
agricultural property located in a town, or unorganized territory divided by the adjusted
net tax capacity of all other property located in the town or unorganized territory. The
agricultural property factor cannot exceed eight;

(2) "agricultural property" means property classified under section 273.13, as
homestead and nonhomestead agricultural property, rural vacant land, and noncommercial
seasonal recreational property;

(3) "town area factor" means the most recent estimate of total acreage, not to exceed
50,000 acres, located in the case of a township, or 75,000 acres in the case of unorganized
territory,
available as of July 1 in the aid calculation year, estimated or established by:

(i) the United States Bureau of the Census;

(ii) the State Land Management Information Center Minnesota Geospatial
Information Office
; or

(iii) the secretary of state; and

(4) "population factor" means the square root of the towns' town's or unorganized
territory's
population.

If the sum of the aids payable to all towns and unorganized territories under this
subdivision exceeds or is less than the limit under section 477A.03, subdivision 2c,
the distribution to each town and unorganized territory must be reduced or increased
proportionately so that the total amount of aids distributed under this section does not
exceed the limit in section 477A.03, subdivision 2c.

EFFECTIVE DATE.

This section is effective for aids payable in 2016 and thereafter.

Sec. 4.

Minnesota Statutes 2014, section 477A.014, subdivision 1, is amended to read:


Subdivision 1.

Calculations and payments.

(a) The commissioner of revenue shall
make all necessary calculations and make payments pursuant to sections 477A.013 and
477A.03 directly to the affected taxing authorities annually. In addition, the commissioner
shall notify the authorities of their aid amounts, as well as the computational factors used
in making the calculations for their authority, and those statewide total figures that are
pertinent, before August 1 of the year preceding the aid distribution year. In the case of
unorganized territory, the commissioner shall notify the affected county government of
the aid amount for any unorganized territory within the county and make payments of aid
payable based on unorganized territory to the county government. The aid received by the
county government must be spent in and for the unorganized territory.

(b) For the purposes of this subdivision, aid is determined for a city or, town,
or unorganized territory
based on its city or, town, or unorganized territory status as
of June 30 of the year preceding the aid distribution year. If the effective date for a
municipal incorporation, consolidation, annexation, detachment, dissolution, or township
organization is on or before June 30 of the year preceding the aid distribution year, such
change in boundaries or form of government shall be recognized for aid determinations for
the aid distribution year. If the effective date for a municipal incorporation, consolidation,
annexation, detachment, dissolution, or township organization is after June 30 of the year
preceding the aid distribution year, such change in boundaries or form of government shall
not be recognized for aid determinations until the following year.

(c) Changes in boundaries or form of government will only be recognized for the
purposes of this subdivision, to the extent that: (1) changes in market values are included
in market values reported by assessors to the commissioner, and changes in population
and household size are included in their respective certifications to the commissioner as
referenced in section 477A.011, or (2) an annexation information report as provided in
paragraph (d) is received by the commissioner on or before July 15 of the aid calculation
year. Revisions to estimates or data for use in recognizing changes in boundaries or form
of government are not effective for purposes of this subdivision unless received by the
commissioner on or before July 15 of the aid calculation year. Clerical errors in the
certification or use of estimates and data established as of July 15 in the aid calculation
year are subject to correction within the time periods allowed under subdivision 3.

(d) In the case of an annexation, an annexation information report may be completed
by the annexing jurisdiction and submitted to the commissioner for purposes of this
subdivision if the net tax capacity of annexed area for the assessment year preceding the
effective date of the annexation exceeds five percent of the city's net tax capacity for the
same year. The form and contents of the annexation information report shall be prescribed
by the commissioner. The commissioner shall change the net tax capacity, the population,
the population decline, the commercial industrial percentage, and the transformed
population for the annexing jurisdiction only if the annexation information report provides
data the commissioner determines to be reliable for all of these factors used to compute city
revenue need for the annexing jurisdiction. The commissioner shall adjust the pre-1940
housing percentage and household size only if the entire area of an existing city or, town,
or unorganized territory
is annexed or consolidated and only if reliable data is available
for all of these factors used to compute city revenue need for the annexing jurisdiction.

EFFECTIVE DATE.

This section is effective for aids payable in 2016 and thereafter.

Sec. 5.

Minnesota Statutes 2014, section 477A.015, is amended to read:


477A.015 PAYMENT DATES.

The commissioner of revenue shall make the payments of local government aid to
affected taxing authorities in two four installments on March 15, July 20 and December 26
15, September 15, and November 15 annually.

When the commissioner of public safety determines that a local government has
suffered financial hardship due to a natural disaster, the commissioner of public safety
shall notify the commissioner of revenue, who shall make payments of aids under sections
477A.011 to 477A.014, which are otherwise due on December 26 November 15, as soon
as is practical after the determination is made but not before July 20.

The commissioner may pay all or part of the payments of aids under sections
477A.011 to 477A.014, which are due on December 26 November 15 at any time after
August 15 if a local government requests such payment as being necessary for meeting its
cash flow needs. For aids payable in 2013 only, a city that is located in an area deemed a
disaster area during the month of April 2013, as defined in section 12A.02, subdivision 5,
shall receive its December 26, 2013 payment with its July 20, 2013 payment.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2016 and thereafter.

Sec. 6.

Minnesota Statutes 2014, section 477A.017, subdivision 2, is amended to read:


Subd. 2.

State auditor's duties.

The state auditor shall prescribe uniform financial
accounting and reporting standards in conformity with national standards to be applicable
to cities and towns of more than 2,500 population and uniform reporting standards to be
applicable to cities and towns of less than 2,500 population.

EFFECTIVE DATE.

This section applies to reporting of financial information for
years ending on or after December 31, 2015.

Sec. 7.

Minnesota Statutes 2014, section 477A.017, subdivision 3, is amended to read:


Subd. 3.

Conformity.

Other law to the contrary notwithstanding, in order to receive
distributions under sections 477A.011 to 477A.03, counties and, cities, and towns must
conform to the standards set in subdivision 2 in making all financial reports required to be
made to the state auditor after June 30, 1984.

EFFECTIVE DATE.

This section applies to reporting of financial information for
years ending on or after December 31, 2015.

Sec. 8.

Minnesota Statutes 2014, section 477A.03, subdivision 2a, is amended to read:


Subd. 2a.

Cities.

For aids payable in 2014, the total aid paid under section
477A.013, subdivision 9, is $507,598,012. The total aid paid under section 477A.013,
subdivision 9
, is $516,898,012 for aids payable in 2015. For aids payable in 2016 and
thereafter
, the total aid paid under section 477A.013, subdivision 9, is $519,398,012
$540,940,079. For aids payable in 2017 and thereafter, the total aid paid under section
477A.013, subdivision 9, is $564,982,145
.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2016 and thereafter.

Sec. 9.

Minnesota Statutes 2014, section 477A.03, subdivision 2b, is amended to read:


Subd. 2b.

Counties.

(a) For aids payable in 2014 and thereafter through 2016,
the total aid payable under section 477A.0124, subdivision 3, is $100,795,000. For
aids payable in 2017 and thereafter, the total aid payable under section 477A.0124,
subdivision 3, is $102,895,000.
Each calendar year, $500,000 of this appropriation shall
be retained by the commissioner of revenue to make reimbursements to the commissioner
of management and budget for payments made under section 611.27. The reimbursements
shall be to defray the additional costs associated with court-ordered counsel under section
611.27. Any retained amounts not used for reimbursement in a year shall be included in
the next distribution of county need aid that is certified to the county auditors for the
purpose of property tax reduction for the next taxes payable year.

(b) For aids payable in 2014 and thereafter through 2016, the total aid under section
477A.0124, subdivision 4, is $104,909,575 $129,909,575. For aids payable in 2017 and
thereafter, the total aid payable under section 477A.0124, subdivision 4, is $132,509,575
.
The commissioner of revenue shall transfer to the commissioner of management and
budget $207,000 annually for the cost of preparation of local impact notes as required by
section 3.987, and other local government activities. The commissioner of revenue shall
transfer to the commissioner of education $7,000 annually for the cost of preparation of
local impact notes for school districts as required by section 3.987. The commissioner of
revenue shall deduct the amounts transferred under this paragraph from the appropriation
under this paragraph. The amounts transferred are appropriated to the commissioner of
management and budget and the commissioner of education respectively.

EFFECTIVE DATE.

This section is effective for aids payable in 2016 and thereafter.

Sec. 10.

Minnesota Statutes 2014, section 477A.03, subdivision 2c, is amended to read:


Subd. 2c.

Towns and unorganized territories.

For aids payable in 2014 2016
and thereafter
, the total aids paid under section 477A.013, subdivision 1, is limited to
$10,000,000 $12,000,000. For aids payable in 2015 and thereafter, the total aids paid
under section 477A.013, subdivision 1, is limited to the amount certified to be paid in
the previous year.

EFFECTIVE DATE.

This section is effective for aids payable in 2016 and thereafter.

Sec. 11.

Minnesota Statutes 2014, section 477A.12, subdivision 1, is amended to read:


Subdivision 1.

Types of land; payments.

The following amounts are annually
appropriated to the commissioner of natural resources from the general fund for transfer
to the commissioner of revenue. The commissioner of revenue shall pay the transferred
funds to counties as required by sections 477A.11 to 477A.14. The amounts, based on the
acreage as of July 1 of each year prior to the payment year, are:

(1) $5.133 multiplied by (i) the total number of acres of acquired natural resources
land or, at the county's option three-fourths of one percent of the appraised value of all
acquired natural resources land in the county, whichever is greater; and (ii) the total
number of acres in the county that were purchased by a federally recognized Indian tribe
with funding provided under section 97A.056
;

(2) $5.133, multiplied by the total number of acres of transportation wetland or, at
the county's option, three-fourths of one percent of the appraised value of all transportation
wetland in the county, whichever is greater;

(3) $5.133, multiplied by the total number of acres of wildlife management land, or,
at the county's option, three-fourths of one percent of the appraised value of all wildlife
management land in the county, whichever is greater;

(4) 50 percent of the dollar amount as determined under clause (1), multiplied by
the number of acres of military refuge land in the county;

(5) $1.50 $2, multiplied by the number of acres of county-administered other natural
resources land in the county;

(6) $5.133, multiplied by the total number of acres of land utilization project land
in the county;

(7) $1.50 $2, multiplied by the number of acres of commissioner-administered other
natural resources land in the county; and

(8) without regard to acreage, and notwithstanding the rules adopted under section
84A.55, $300,000 for local assessments under section 84A.55, subdivision 9, that shall be
divided and distributed to the counties containing state-owned lands within a conservation
area in proportion to each county's percentage of the total annual ditch assessments.; and

(9) without regard to acreage, and notwithstanding the rules adopted under section
84A.55, $300,000 for past unpaid local assessments under section 84A.55, subdivision 9,
shall be distributed to the counties containing state-owned lands within a conservation
area in proportion to each county's percentage of the total past unpaid ditch assessments.
The payments shall be made for aids payable in calendar years 2015 through 2024. The
payments made to counties under this paragraph shall be considered the final payment
for this purpose.

The commissioner of natural resources shall certify the number of acres and appraised
values for wildlife management lands under clause (3) for calendar year 2013 to the
commissioner of revenue by June 15, 2014. The commissioner of revenue shall make the
payment for any positive difference in the 2013 payment under clause (3) by June 30, 2014.

EFFECTIVE DATE.

Changes to clause (1) are effective for aids payable in
calendar year 2017 and thereafter. Changes to clauses (5), (7), and (9) are effective for
aids payable in calendar year 2015 and thereafter.

Sec. 12.

Minnesota Statutes 2014, section 477A.12, subdivision 2, is amended to read:


Subd. 2.

Procedure.

(a) Each county auditor shall certify to the Department of
Natural Resources during July of each year prior to the payment year the number of acres
of county-administered other natural resources land within the county. The Department of
Natural resources may, in addition to the certification of acreage, require descriptive lists
of land so certified. The commissioner of natural resources shall determine and certify to
the commissioner of revenue by March 1 of the payment year:

(1) the number of acres and most recent appraised value of acquired natural
resources land, wildlife management land, and military refuge land within each county;

(2) the number of acres of commissioner-administered natural resources land within
each county;

(3) the number of acres of county-administered other natural resources land within
each county, based on the reports filed by each county auditor with the commissioner
of natural resources; and

(4) the number of acres of land utilization project land within each county; and

(5) the number of acres within each county purchased by a federally recognized
Indian tribe with funding provided under section 97A.056
.

(b) The commissioner of transportation shall determine and certify to the
commissioner of revenue by March 1 of the payment year the number of acres of
transportation wetland and the appraised value of the land, but only if it exceeds 500
acres in a county.

(c) Each auditor of a county that contains state-owned lands within a conservation
area shall determine and certify to the commissioner of natural resources by May 31 of
the payment year, the county's ditch assessments for state-owned lands subject to section
84A.55, subdivision 9. A joint certification for two or more counties may be submitted to
the commissioner of natural resources through the Consolidated Conservation Counties
Joint Powers Board. The commissioner of natural resources shall certify the ditch
assessments to the commissioner of revenue by June 15 of the payment year. The
commissioner of natural resources shall certify the ditch assessments under this paragraph
for payment year 2013 by June 15, 2014. The commissioner of revenue shall make the
payment for 2013 by June 30, 2014.

(d) The commissioner of revenue shall determine the distributions provided for in this
section using: (1) the number of acres and appraised values certified by the commissioner
of natural resources and the commissioner of transportation by March 1 of the payment
year; and (2) ditch assessments under paragraph (c), by July 15 of the payment year.

EFFECTIVE DATE.

This section is effective for certifications made in 2016 and
thereafter.

Sec. 13.

Minnesota Statutes 2014, section 477A.13, is amended to read:


477A.13 TIME OF PAYMENT, DEDUCTIONS.

Payments to the counties of the amounts determined under section 477A.12 must
be made by the commissioner of revenue from the general fund at the time provided in
section 477A.015 for the first second installment of local government aid.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2016 and thereafter.

Sec. 14.

Minnesota Statutes 2014, section 477A.15, is amended to read:


477A.15 TACONITE AID REIMBURSEMENT.

Any school district in which is located property which had been entitled to a reduction
of tax pursuant to Minnesota Statutes 1978, section 273.135, subdivision 2, clause (c),
shall receive in 1981 and subsequent years an amount equal to the amount it received in
1980 pursuant to Minnesota Statutes 1978, section 298.28, subdivision 1, clause (3)(b).
Payments shall be made pursuant to this section and section 126C.48, subdivision 8,
paragraph (5), by the commissioner of revenue to the taxing jurisdictions on the date in
each calendar year when the first second installment is paid under section 477A.015.

EFFECTIVE DATE.

This section is effective for payments made in calendar
year 2016 and thereafter.

Sec. 15.

Minnesota Statutes 2014, section 477A.20, is amended to read:


477A.20 DEBT SERVICE AID; LEWIS AND CLARK JOINT POWERS
BOARD
CITY OF WORTHINGTON.

(a) The Lewis and Clark Joint Powers Board The city of Worthington is eligible to
receive an aid distribution under this section equal to (1) the principal and interest payable
in the succeeding calendar year for bonds issued under section 469.194 minus the sum of
(2) the combined adjusted net tax capacity of Rock County and Nobles County for the
assessment year prior to the aid payable year multiplied by 1.5 percent and (3) 50 percent
of any federal aid received to fund the project in the calendar year
the total local share. For
purposes of this section, the "total local share" is as follows: the city of Worthington shall
pay $300,000, the city of Luverne shall pay $100,000, Rock County shall pay $50,000, and
Nobles County shall pay $50,000. Each municipality other than the city of Worthington
shall pay the amount indicated to the city of Worthington by July 1 of the year following
the year in which the bonds were issued and in each year thereafter until all principal
and interest has been paid. If a jurisdiction fails to pay the amount as indicated, the aid
reductions for that municipality under section 477A.21 shall be made. The commissioner
of revenue shall add the amount of any aid reduction to the aid distribution under this
section
. The Board city of Worthington shall certify to the commissioner of revenue any
federal aid allocated to the project for the calendar year and
the principal and interest due
in the succeeding calendar year by June 1 of the aid payable year. The commissioner of
revenue shall calculate the aid payable under this section and certify the amount payable
before July 1 of the aid distribution year. The commissioner shall pay the aid under this
section to the board city of Worthington at the times specified for payments of local
government aid in section 477A.015. An amount sufficient to pay the state aid authorized
under this section is annually appropriated to the commissioner from the general fund.

(b) The board must allocate the aid to the municipalities issuing bonds under section
469.194 in proportion to their principal and interest payments.

(c) If the deduction under paragraph (a), clause (3), eliminates the aid payment
under this section in a calendar year, then the excess of the deduction must be carried
over and used to reduce the principal and interest in the succeeding year or years used to
calculate aid under paragraph (a).

(d) If federal grants and aid received for the project, not deducted under paragraph
(a), clause (3), exceed the total debt service payments for bonds issued under section
469.194, other than payments made with state aid under this section, the joint powers
board must repay any excess to the commissioner of revenue for deposit in the general
fund. The repayment may not exceed the sum of state aid payments under this section and
any other grants made by the state for the project.

(e) (b) This section expires at the earlier of January 1, 2039, or when the bonds
authorized under section 469.194 have been paid or defeased.

EFFECTIVE DATE.

This section is effective for aids payable in 2016 and thereafter.

Sec. 16.

[477A.21] AID REDUCTIONS.

If a municipality fails to pay the amount indicated in section 477A.20, paragraph (a),
the following aid reduction for that municipality must be made for that year:

(1) for the city of Luverne, the aid payable under section 477A.013, subdivision
9, shall be reduced by $100,000;

(2) for Rock County, the aid payable under section 477A.0124, subdivision 3, shall
be reduced by $50,000; and

(3) for Nobles County, the aid payable under section 477A.0124, subdivision 3, shall
be reduced by $50,000.

The amount of the aid reductions under this section shall cancel to the general fund.

EFFECTIVE DATE.

This section is effective for aids payable in 2016 and thereafter.

Sec. 17.

Laws 2001, First Special Session chapter 5, article 3, section 86, is amended
to read:


Sec. 86. RED RIVER WATERSHED MANAGEMENT BOARD; PAYMENT
IN LIEU OF TAXES.

(a) The Red River watershed management board may spend money from its general
fund to compensate counties and townships for lost tax revenue from land that becomes
tax exempt after it is acquired by the board or a member watershed district for flood
damage reduction project. The amount that may be paid under this section to a county
or township must not exceed the tax that was payable to that taxing jurisdiction on the
land in the last taxes payable year before the land became exempt due to the acquisition,
not to exceed $4 $5.133 per acre, multiplied by 20. This total amount may be paid in one
payment, or in equal annual installments over a period that does not exceed 20 years. A
member watershed district of the Red River management board may spend money from its
construction fund for the purposes described in this section.

(b) For the purposes of this section, "Red River watershed management board"
refers to the board established by Laws 1976, chapter 162, section 1, as amended by Laws
1982, chapter 474, section 1, Laws 1983, chapter 338, section 1, Laws 1989 First Special
Session chapter 1, article 5, section 45, Laws 1991, chapter 167, section 1, and Laws
1998, chapter 389, article 3, section 29.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year
2015 and thereafter.

Sec. 18. 2013 CITY AID PENALTY FORGIVENESS; CITY OF OSLO.

Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the city of
Oslo shall receive the portion of its aid payment for calendar year 2013 under Minnesota
Statutes, section 477A.013, that was withheld under Minnesota Statutes, section
477A.017, subdivision 3, provided that the state auditor certifies to the commissioner
of revenue that it received audited financial statements from the city for calendar year
2012 by December 31, 2013. The commissioner of revenue shall make a payment of
$37,473.50 with the first payment of aids under Minnesota Statutes, section 477A.015.
$37,473.50 is appropriated from the general fund to the commissioner of revenue in fiscal
year 2016 to make this payment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 19. 2014 AID PENALTY FORGIVENESS.

(a) Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the cities
of Dundee, Jeffers, and Woodstock shall receive all of its calendar year 2014 aid payment
that was withheld under Minnesota Statutes, section 477A.017, subdivision 3, provided
that the state auditor certifies to the commissioner of revenue that the city complied with
all reporting requirements under Minnesota Statutes, section 477A.017, subdivision 3, for
calendar years 2013 and 2014 by June 1, 2015.

(b) The commissioner of revenue shall make payment to each city no later than June
30, 2015. Up to $101,570 of the fiscal year 2015 appropriation for local government aid is
available for the payment under this section.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 6

WORKFORCE HOUSING

Section 1.

[116J.549] WORKFORCE HOUSING TAX CREDIT.

Subdivision 1.

Definitions.

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

(b) "City" means a statutory or home rule charter city.

(c) "Eligible project area" means an area that meets the following criteria:

(1) a census block with a population density over 200 persons per square mile
according to the most recent United States census data available;

(2) located in a city with a population greater than 1,500;

(3) having a median number of full-time jobs of at least 500 for the last five years;

(4) the average vacancy rate for rental housing located in the municipality and in
any statutory or home rule charter city located within 15 miles or less of the boundaries
of the municipality has been four percent or less for at least the immediately preceding
two-year period;

(5) located in an area served by a joint county-city economic development authority
or located in an area outside the following counties: Anoka, Benton, Carver, Chisago,
Dakota, Hennepin, Isanti, Olmsted, Ramsey, Scott, Sherburne, Stearns, Washington,
and Wright; and

(6) fewer than four market rate residential rental units per 1,000 residents were
constructed in the city in the last ten years without government financing, grants, or other
subsidies, other than subsidies under this section or section 469.175, subdivision 3.

(d) "Joint county-city economic development authority" means an economic
development authority, formed under Laws 1988, chapter 516, section 1, as a joint
partnership between a city and county and excluding those established by the county only.

(e) "Market rate residential rental properties" means properties that are rented at
market value and excludes: (1) properties constructed with financial assistance requiring
the property to be occupied by residents that meet income limits under federal or state
law of initial occupancy; and (2) properties constructed with federal, state, or local flood
recovery assistance, regardless of whether that assistance imposed income limits as a
condition of receiving assistance.

(f) "Officer" means a person elected or appointed by the board of directors to
manage the daily operations of a business.

(g) "Principal" means a person having authority to act on behalf of a business.

(h) "Qualified investment" means a cash investment or the fair market value
equivalent for common stock, land, a partnership or membership interest, preferred
stock, debt with mandatory conversion to equity, or an equivalent ownership interest as
determined by the commissioner that is made in a qualified workforce housing project.

(i) "Qualified project investor" means an investor who has been certified by the
commissioner under subdivision 2.

(j) "Qualifying workforce housing project" means a project:

(1) for market rate residential rental properties with a minimum of three dwelling
units;

(2) with a cost per unit of no more than $150,000 and no less than $75,000;

(3) located in an eligible project area;

(4) that has more than 50 percent nonstate funding proposed to fund the project; and

(5) that has been designated by the commissioner as a qualifying workforce housing
project.

Subd. 2.

Qualified project investor tax credits.

(a) A credit of up to $1,000,000 is
allowed against the tax imposed under chapter 290 for a taxpayer that makes a qualified
investment in a qualified workforce housing project equal to 33 percent of the amount of
the qualified investment.

(b) The credit under this subdivision is allowed in the taxable year that the qualified
workforce housing project has housing units that are certified for occupancy by the
Department of Labor and Industry or a city inspector.

(c) The commissioner must not allocate more than $5,000,000 in credits to qualified
project investors for taxable years beginning after December 31, 2015, and before January
1, 2017, and must not allocate more than $7,000,000 in credits to qualified project
investors for taxable years beginning after December 31, 2016, and before January 1,
2022. The commissioner must not allocate more than 33 percent of qualified project
investor tax credits to the same qualified workforce housing project.

(d) Applications for tax credits for a taxable year must be made available by
the commissioner by November 1 of the prior calendar year. The commissioner must
make every effort to provide applications and relevant data to applicants in a simple,
concise manner using plain language. Tax credits must be allocated to qualified project
investors in the order that the tax credit request applications are filed, except where
the commissioner determines the investment is circumventing the spirit of the law or
where little or no local economic growth would occur as a result of the investment. The
commissioner must approve or reject a tax credit request application within 15 days of
receiving the application. The investment specified in the application must be made within
60 days of the allocation of the credit. If the investment is not made within 60 days, the
credit allocation is canceled. A qualified project investor who fails to invest as specified in
the application must notify the commissioner immediately and no later than five business
days after the expiration of the 60-day investment period. The commissioner may require
an application fee for the applications submitted under this subdivision.

(e) All tax credit request applications filed with the department on the same day
must be treated as having been filed contemporaneously. If two or more qualified project
investors file tax credit request applications on the same day, and the aggregate amount of
credit allocation claims exceeds the aggregate limit of credits under this section or the lesser
amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified project investors who filed on that day on a pro rata basis with respect
to the amounts claimed. The pro rata allocation for any one qualified project investor is the
product obtained by multiplying a fraction, the numerator of which is the amount of the
credit allocation claim filed on behalf of a qualified project investor and the denominator
of which is the total of all credit allocation claims filed on behalf of all applicants on that
day, by the amount of credits that remain unallocated on that day for the taxable year.

(f) If a credit allocation has been granted to the qualified project investor and the
qualified project investor has made the investment specified in the application as required
under paragraph (d), the commissioner must issue a credit certificate to the taxpayer
designated in the application. The credit certificate must state the amount of the credit.
The commissioner must notify the commissioner of revenue of credit certificates issued
under this subdivision.

(g) The commissioner of revenue shall prescribe the manner in which the credit
may be issued or claimed.

Subd. 3.

Transfer and revocation of credits.

(a) A tax credit under this section
is not transferable to any other taxpayer. Credits passed through to partners, members,
shareholders, or owners are not considered transfers for purposes of this subdivision.

(b) If the commissioner discovers that a qualified project investor did not meet the
eligibility requirements for the tax credits under this section after the credits have been
allocated, the commissioner may determine that credit allocated is revoked and must be
repaid by the investor. The commissioner must notify the commissioner of revenue of
every credit revoked and subject to full or partial repayment under this section.

Subd. 4.

Reporting.

Beginning in 2017, the commissioner must annually report
by March 15 to the chairs and ranking minority members of the committees in the senate
and house of representatives with jurisdiction over taxes and economic development, in
compliance with sections 3.195 and 3.197, on tax credits issued under this section. The
report must include:

(1) information about the availability of workforce housing in greater Minnesota;

(2) information from employers and communities in greater Minnesota about
whether or not workforce housing needs are being met;

(3) which projects have been funded by the workforce housing tax credit and
whether previously funded projects have created economic growth;

(4) any suggested legislation to accelerate construction of workforce housing;

(5) the number and amount of tax credits issued and the identity of the recipients;

(6) the number and amount of tax credits revoked under subdivision 3;

(7) the location, total cost of, and expected rent to be received as a result of
qualifying workforce housing projects funded under this section; and

(8) any other relevant information needed to evaluate the effect of the workforce
housing tax credits.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2015.

Sec. 2.

Minnesota Statutes 2014, section 290.06, is amended by adding a subdivision
to read:


Subd. 38.

Workforce housing tax credit.

(a) A taxpayer is allowed a credit against
the tax under this chapter equal to the amount certified by the commissioner of employment
and economic development under section 116J.549 to the taxpayer for the taxable year.

(b) Credits allowed to a partnership, limited liability company taxed as a partnership,
corporation, or multiple owners of property are passed through to the partners, members,
shareholders, or owners, respectively, pro rata to each partner, member, shareholder, or
owner based on that person's share of the entity's income for the taxable year.

(c) If the amount of the credit that the taxpayer is eligible to receive under this
subdivision exceeds the liability for tax under this chapter, the commissioner shall
refund the excess to the taxpayer. For purposes of this subdivision, "liability for tax"
means the tax imposed under this chapter for the taxable year reduced by the sum of the
nonrefundable credits allowed under this chapter.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2015.

Sec. 3.

Minnesota Statutes 2014, section 469.174, subdivision 12, is amended to read:


Subd. 12.

Economic development district.

"Economic development district"
means a type of tax increment financing district which consists of any project, or portions
of a project, which the authority finds to be in the public interest because:

(1) it will discourage commerce, industry, or manufacturing from moving their
operations to another state or municipality; or

(2) it will result in increased employment in the state; or

(3) it will result in preservation and enhancement of the tax base of the state; or

(4) it satisfies the requirements of a workforce housing project under section
469.176, subdivision 4c, paragraph (d)
.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after June 30, 2015.

Sec. 4.

Minnesota Statutes 2014, section 469.175, subdivision 3, is amended to read:


Subd. 3.

Municipality approval.

(a) A county auditor shall not certify the original
net tax capacity of a tax increment financing district until the tax increment financing plan
proposed for that district has been approved by the municipality in which the district
is located. If an authority that proposes to establish a tax increment financing district
and the municipality are not the same, the authority shall apply to the municipality in
which the district is proposed to be located and shall obtain the approval of its tax
increment financing plan by the municipality before the authority may use tax increment
financing. The municipality shall approve the tax increment financing plan only after a
public hearing thereon after published notice in a newspaper of general circulation in the
municipality at least once not less than ten days nor more than 30 days prior to the date
of the hearing. The published notice must include a map of the area of the district from
which increments may be collected and, if the project area includes additional area, a map
of the project area in which the increments may be expended. The hearing may be held
before or after the approval or creation of the project or it may be held in conjunction with
a hearing to approve the project.

(b) Before or at the time of approval of the tax increment financing plan, the
municipality shall make the following findings, and shall set forth in writing the reasons
and supporting facts for each determination:

(1) that the proposed tax increment financing district is a redevelopment district, a
renewal or renovation district, a housing district, a soils condition district, or an economic
development district; if the proposed district is a redevelopment district or a renewal or
renovation district, the reasons and supporting facts for the determination that the district
meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or
subdivision 10a, must be documented in writing and retained and made available to the
public by the authority until the district has been terminated;

(2) that, in the opinion of the municipality:

(i) the proposed development or redevelopment would not reasonably be expected to
occur solely through private investment within the reasonably foreseeable future; and

(ii) the increased market value of the site that could reasonably be expected to occur
without the use of tax increment financing would be less than the increase in the market
value estimated to result from the proposed development after subtracting the present
value of the projected tax increments for the maximum duration of the district permitted
by the plan. The requirements of this item do not apply if the district is a housing district;

(3) that the tax increment financing plan conforms to the general plan for the
development or redevelopment of the municipality as a whole;

(4) that the tax increment financing plan will afford maximum opportunity,
consistent with the sound needs of the municipality as a whole, for the development or
redevelopment of the project by private enterprise;

(5) that the municipality elects the method of tax increment computation set forth in
section 469.177, subdivision 3, paragraph (b), if applicable.

(c) When the municipality and the authority are not the same, the municipality shall
approve or disapprove the tax increment financing plan within 60 days of submission by the
authority. When the municipality and the authority are not the same, the municipality may
not amend or modify a tax increment financing plan except as proposed by the authority
pursuant to subdivision 4. Once approved, the determination of the authority to undertake
the project through the use of tax increment financing and the resolution of the governing
body shall be conclusive of the findings therein and of the public need for the financing.

(d) For a district that is subject to the requirements of paragraph (b), clause (2),
item (ii), the municipality's statement of reasons and supporting facts must include all of
the following:

(1) an estimate of the amount by which the market value of the site will increase
without the use of tax increment financing;

(2) an estimate of the increase in the market value that will result from the
development or redevelopment to be assisted with tax increment financing; and

(3) the present value of the projected tax increments for the maximum duration of
the district permitted by the tax increment financing plan.

(e) For purposes of this subdivision, "site" means the parcels on which the
development or redevelopment to be assisted with tax increment financing will be located.

(f) Before or at the time of approval of the tax increment financing plan for a district
to be used to fund a workforce housing project under section 469.176, subdivision 4c,
paragraph (d), the municipality shall make the following findings and shall set forth in
writing the reasons and supporting facts for each determination:

(1) the city has a population greater than 1,500;

(2) having a median number of full-time jobs of at least 500 for the last five years;

(3) located in a census block with a population density over 200 persons per square
mile, according to the most recent United States census data available;

(4) located in an area served by a joint county-city economic development authority
or outside the following counties: Anoka, Benton, Carver, Chisago, Dakota, Hennepin,
Isanti, Olmsted, Ramsey, Scott, Sherburne, Stearns, Washington, and Wright;

(5) the average vacancy rate for rental housing located in the municipality, and in
any statutory or home rule charter city located within 15 miles or less of the boundaries
of the municipality, has been four percent or less for at least the immediately preceding
two-year period;

(6) at least one business located in the municipality, or within 15 miles of the
municipality, that employs a minimum of 20 full-time equivalent employees in aggregate
has provided a written statement to the municipality indicating that the lack of available
rental housing has impeded their ability to recruit and hire employees;

(7) fewer than four market rate residential rental units per 1,000 residents were
constructed in the city in the last ten years without government financing, grants, or other
subsidies, other than subsidies under this section; and

(8) the municipality and the development authority intend to use increments from
the district for the development of market rate residential rental properties and includes
new modular homes or new manufactured homes, new manufactured homes on leased
land, or in a manufacturer's home park to serve employees or businesses located in the
municipality or surrounding area.

For purposes of this section: (1) "joint county-city economic development authority"
means an economic development authority, formed under Laws 1988, chapter 516, section
1, as a joint partnership between a city and county and excluding those established by the
county only; and (2) "market rate residential rental properties" means properties that are
rented at market value and excludes: (i) properties constructed with financial assistance
requiring the property to be occupied by residents that meet income limits under federal or
state law of initial occupancy; and (ii) properties constructed with federal, state, or local
flood recovery assistance, regardless of whether that assistance imposed income limits as a
condition of receiving assistance.

The authority to request certification of districts under this section expires June
30, 2020.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after June 30, 2015.

Sec. 5.

Minnesota Statutes 2014, section 469.176, subdivision 4c, is amended to read:


Subd. 4c.

Economic development districts.

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

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

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

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

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

(5) tourism facilities; or

(6) space necessary for and related to the activities listed in clauses (1) to (5); or

(7) a workforce housing project that satisfies the requirements of paragraph (d).

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

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

(d) A project qualifies as a workforce housing project under this subdivision if
increments from the district are used exclusively to assist in the acquisition of property;
construction of improvements; and provision of loans or subsidies, grants, interest
rate subsidies, public infrastructure, and related financing costs for rental housing
developments in the municipality, and if the governing body of the municipality made the
findings for the project required by section 469.175, subdivision 3, paragraph (f).

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after June 30, 2015.

Sec. 6.

Minnesota Statutes 2014, section 469.1761, is amended by adding a subdivision
to read:


Subd. 5.

Income limits; Minnesota Housing Finance Agency challenge program.

For a project receiving a loan or grant from the Minnesota Housing Finance Agency
challenge program under section 462A.33, the income limits under section 462A.33 are
substituted for the applicable income limits under subdivision 2 or 3 for the project.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after June 30, 2015.

ARTICLE 7

MINERALS

Section 1.

Minnesota Statutes 2014, section 298.17, is amended to read:


298.17 OCCUPATION TAXES TO BE APPORTIONED.

(a) All occupation taxes paid by persons, copartnerships, companies, joint stock
companies, corporations, and associations, however or for whatever purpose organized,
engaged in the business of mining or producing iron ore or other ores, when collected
shall be apportioned and distributed in accordance with the Constitution of the state of
Minnesota, article X, section 3, in the manner following: 90 percent shall be deposited
in the state treasury and credited to the general fund of which four-ninths shall be used
for the support of elementary and secondary schools; and ten percent of the proceeds of
the tax imposed by this section shall be deposited in the state treasury and credited to the
general fund for the general support of the university.

(b) Of the money apportioned to the general fund by this section: (1) there
is annually appropriated and credited to the mining environmental and regulatory
account in the special revenue fund an amount equal to the greater of $1,500,000 or
that which would have been generated by a 2-1/2 cent tax imposed by section 298.24
on each taxable ton produced in the preceding calendar year. Money in the mining
environmental and regulatory account is appropriated annually to the commissioner of
natural resources to fund agency staff to work on environmental issues and provide
regulatory services for ferrous and nonferrous mining operations in this state. Payment to
the mining environmental and regulatory account shall be made by on July 1 annually.
The commissioner of natural resources shall execute an interagency agreement with
the Pollution Control Agency to assist with the provision of environmental regulatory
services such as monitoring and permitting required for ferrous and nonferrous mining
operations; (2) there is annually appropriated and credited to the Iron Range Resources and
Rehabilitation Board account in the special revenue fund an amount equal to that which
would have been generated by a 1.5 cent tax imposed by section 298.24 on each taxable
ton produced in the preceding calendar year, to be expended for the purposes of section
298.22; and (3) there is annually appropriated and credited to the Iron Range Resources
and Rehabilitation Board account in the special revenue fund for transfer to the Iron Range
school consolidation and cooperatively operated school account under section 298.28,
subdivision 7a
, an amount equal to that which would have been generated by a six cent tax
imposed by section 298.24 on each taxable ton produced in the preceding calendar year.
Payment to the Iron Range Resources and Rehabilitation Board account shall be made by
May 15
on July 1 annually; and (4) there is annually appropriated and credited to the Iron
Range Resources and Rehabilitation Board account in the special revenue fund for transfer
to the energy efficiency and mining protection account under section 298.227, paragraph
(d), an amount equal to that which would have been generated by a 15 cent tax imposed
by section 298.24 on each taxable ton produced in the preceding year. Payment to the Iron
Range Resources and Rehabilitation Board account shall be made on July 1 annually
.

(c) The money appropriated pursuant to paragraph (b), clause (2), shall be used (i)
to provide environmental development grants to local governments located within any
county in region 3 as defined in governor's executive order number 60, issued on June
12, 1970, which does not contain a municipality qualifying pursuant to section 273.134,
paragraph (b)
, or (ii) to provide economic development loans or grants to businesses
located within any such county, provided that the county board or an advisory group
appointed by the county board to provide recommendations on economic development
shall make recommendations to the Iron Range Resources and Rehabilitation Board
regarding the loans. Payment to the Iron Range Resources and Rehabilitation Board
account shall be made by May 15 on July 1 annually.

(d) Of the money allocated to Koochiching County, one-third must be paid to the
Koochiching County Economic Development Commission.

EFFECTIVE DATE.

This section is effective beginning with the 2015 production
year.

Sec. 2.

Minnesota Statutes 2014, section 298.227, is amended to read:


298.227 TACONITE ECONOMIC DEVELOPMENT FUND.

(a) An amount equal to that distributed pursuant to each taconite producer's taxable
production and qualifying sales under section 298.28, subdivision 9a, shall be held by
the Iron Range Resources and Rehabilitation Board in a separate taconite economic
development fund for each taconite and direct reduced ore producer. Money from the
fund for each producer shall be released by the commissioner after review by a joint
committee consisting of an equal number of representatives of the salaried employees and
the nonsalaried production and maintenance employees of that producer. The District 11
director of the United States Steelworkers of America, on advice of each local employee
president, shall select the employee members. In nonorganized operations, the employee
committee shall be elected by the nonsalaried production and maintenance employees.
The review must be completed no later than six months after the producer presents a
proposal for expenditure of the funds to the committee. The funds held pursuant to this
section may be released only for workforce development and associated public facility
improvement, or for acquisition of plant and stationary mining equipment and facilities
for the producer or for research and development in Minnesota on new mining, or
taconite, iron, or steel production technology, but only if the producer provides a matching
expenditure equal to the amount of the distribution to be used for the same purpose
beginning with distributions in 2014. Effective for proposals for expenditures of money
from the fund beginning May 26, 2007, the commissioner may not release the funds
before the next scheduled meeting of the board. If a proposed expenditure is not approved
by the board, the funds must be deposited in the Taconite Environmental Protection Fund
under sections 298.222 to 298.225. If a producer uses money which has been released
from the fund prior to May 26, 2007 to procure haulage trucks, mobile equipment, or
mining shovels, and the producer removes the piece of equipment from the taconite tax
relief area defined in section 273.134 within ten years from the date of receipt of the
money from the fund, a portion of the money granted from the fund must be repaid to
the taconite economic development fund. The portion of the money to be repaid is 100
percent of the grant if the equipment is removed from the taconite tax relief area within 12
months after receipt of the money from the fund, declining by ten percent for each of the
subsequent nine years during which the equipment remains within the taconite tax relief
area. If a taconite production facility is sold after operations at the facility had ceased, any
money remaining in the fund for the former producer may be released to the purchaser of
the facility on the terms otherwise applicable to the former producer under this section. If
a producer fails to provide matching funds for a proposed expenditure within six months
after the commissioner approves release of the funds, the funds are available for release to
another producer in proportion to the distribution provided and under the conditions of
this section. Any portion of the fund which is not released by the commissioner within
one year of its deposit in the fund shall be divided between the taconite environmental
protection fund created in section 298.223 and the Douglas J. Johnson economic protection
trust fund created in section 298.292 for placement in their respective special accounts.
Two-thirds of the unreleased funds shall be distributed to the taconite environmental
protection fund and one-third to the Douglas J. Johnson economic protection trust fund.

(b)(i) Notwithstanding the requirements of paragraph (a), setting the amount of
distributions and the review process, an amount equal to ten cents per taxable ton of
production in 2007, for distribution in 2008 only, that would otherwise be distributed
under paragraph (a), may be used for a loan or grant for the cost of providing for a
value-added wood product facility located in the taconite tax relief area and in a county
that contains a city of the first class. This amount must be deducted from the distribution
under paragraph (a) for which a matching expenditure by the producer is not required. The
granting of the loan or grant is subject to approval by the board. If the money is provided
as a loan, interest must be payable on the loan at the rate prescribed in section 298.2213,
subdivision 3
. (ii) Repayments of the loan and interest, if any, must be deposited in the
taconite environment protection fund under sections 298.222 to 298.225. If a loan or
grant is not made under this paragraph by July 1, 2012, the amount that had been made
available for the loan under this paragraph must be transferred to the taconite environment
protection fund under sections 298.222 to 298.225. (iii) Money distributed in 2008 to the
fund established under this section that exceeds ten cents per ton is available to qualifying
producers under paragraph (a) on a pro rata basis.

(c) Repayment or transfer of money to the taconite environmental protection fund
under paragraph (b), item (ii), must be allocated by the Iron Range Resources and
Rehabilitation Board for public works projects in house legislative districts in the same
proportion as taxable tonnage of production in 2007 in each house legislative district, for
distribution in 2008, bears to total taxable tonnage of production in 2007, for distribution
in 2008. Notwithstanding any other law to the contrary, expenditures under this paragraph
do not require approval by the governor. For purposes of this paragraph, "house legislative
districts" means the legislative districts in existence on May 15, 2009.

(d) An amount equal to that determined under section 298.17, paragraph (b),
clause (4), shall be held by the Iron Range Resources and Rehabilitation Board in a
separate energy efficiency and mining protection account within the taconite economic
development fund that is hereby created for taconite and direct reduced ore producers.
Funds from the account shall be released annually by the Iron Range Resources and
Rehabilitation Board to each producer in direct proportion to the amount of the tax paid by
that producer in the preceding year under section 298.01, as compared to the total amount
of tax paid under section 298.01 in the preceding year by all producers, provided that a
producer shall not be eligible for a distribution in amount greater than the amount of the
tax paid in the preceding year. No expenditure under this section shall be paid unless
approved by seven members of the Iron Range Resources and Rehabilitation Board.

Notwithstanding any other law to the contrary, any amount allocated to the energy
efficiency and mining protection account does not cancel nor is eligible for transfer to
another account or fund.

EFFECTIVE DATE.

This section is effective beginning with the 2015 production
year.

Sec. 3.

Minnesota Statutes 2014, section 298.24, subdivision 1, is amended to read:


Subdivision 1.

Imposed; calculation.

(a) For concentrate produced in 2013, there is
imposed upon taconite and iron sulphides, and upon the mining and quarrying thereof,
and upon the production of iron ore concentrate therefrom, and upon the concentrate so
produced, a tax of $2.56 per gross ton of merchantable iron ore concentrate produced
therefrom. The tax is also imposed upon other iron-bearing material.

(b) For concentrates produced in 2014 and subsequent years, the tax rate shall be
equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate
multiplied by the percentage increase in the implicit price deflator from the fourth quarter
of the second preceding year to the fourth quarter of the preceding year. "Implicit price
deflator" means the implicit price deflator for the gross domestic product prepared by the
Bureau of Economic Analysis of the United States Department of Commerce.

(c) An additional tax is imposed equal to three cents per gross ton of merchantable
iron ore concentrate for each one percent that the iron content of the product exceeds 72
percent, when dried at 212 degrees Fahrenheit.

(d) The tax on taconite and iron sulphides shall be imposed on the average of the
production for the current year and the previous two years. The rate of the tax imposed
will be the current year's tax rate. This clause shall not apply in the case of the closing
of a taconite facility if the property taxes on the facility would be higher if this clause
and section 298.25 were not applicable. The tax on other iron-bearing material shall be
imposed on the current year production.

(e) If the tax or any part of the tax imposed by this subdivision is held to be
unconstitutional, a tax of $2.56 per gross ton of merchantable iron ore concentrate
produced shall be imposed.

(f) Consistent with the intent of this subdivision to impose a tax based upon the
weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly
determine the weight of merchantable iron ore concentrate included in fluxed pellets by
subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic
flux additives included in the pellets from the weight of the pellets. For purposes of this
paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite,
olivine, or other basic flux additives are combined with merchantable iron ore concentrate.
No subtraction from the weight of the pellets shall be allowed for binders, mineral and
chemical additives other than basic flux additives, or moisture.

(g)(1) Notwithstanding any other provision of this subdivision, for the first two years
of a plant's commercial production of direct reduced ore from ore mined in this state, no
tax is imposed under this section. As used in this paragraph, "commercial production" is
production of more than 50,000 tons of direct reduced ore in the current year or in any prior
year, "noncommercial production" is production of 50,000 tons or less of direct reduced ore
in any year, and "direct reduced ore" is ore that results in a product that has an iron content
of at least 75 percent. For the third year of a plant's commercial production of direct
reduced ore, the rate to be applied to direct reduced ore is 25 percent of the rate otherwise
determined under this subdivision. For the fourth commercial production year, the rate is
50 percent of the rate otherwise determined under this subdivision; for the fifth commercial
production year, the rate is 75 percent of the rate otherwise determined under this
subdivision; and for all subsequent commercial production years, the full rate is imposed.

(2) Subject to clause (1), production of direct reduced ore in this state is subject to
the tax imposed by this section, but if that production is not produced by a producer of
taconite, iron sulfides, or other iron-bearing material, the production of taconite, iron
sulfides, or other iron-bearing material, that is consumed in the production of direct
reduced iron in this state is not subject to the tax imposed by this section on taconite,
iron sulfides, or other iron-bearing material.

(3) Notwithstanding any other provision of this subdivision, no tax is imposed
on direct reduced ore under this section during the facility's noncommercial production
of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial
production of direct reduced ore is subject to the tax imposed by this section on taconite
and iron sulphides. Three-year average production of direct reduced ore does not
include production of direct reduced ore in any noncommercial year. Three-year average
production for a direct reduced ore facility that has noncommercial production is the
average of the commercial production of direct reduced ore for the current year and the
previous two commercial years.

(4) This paragraph applies only to plants for which all environmental permits have
been obtained and construction has begun before July 1, 2008 2020.

EFFECTIVE DATE.

This section is effective for taxes based on concentrate
produced in 2015 and thereafter.

Sec. 4.

Minnesota Statutes 2014, section 298.24, is amended by adding a subdivision
to read:


Subd. 5.

TEDF; deposits redirected.

(a) For concentrates produced by a plant
subject to a reimbursement agreement dated September 9, 2008, by and among Itasca
County, Essar Global Limited, and Minnesota Steel Industries LLC, the provisions of
sections 298.227 and 298.28, subdivision 9a, do not apply to the plant's production.

(b) All amounts not deposited in the taconite economic development fund as a
result of paragraph (a) must be deposited in the Douglas J. Johnson economic protection
trust fund created under section 298.292.

(c) The provisions of this subdivision expire upon certification by the commissioner
of employment and economic development that all requirements of the reimbursement
agreement, as specified in paragraph (a), are satisfied.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5.

Minnesota Statutes 2014, section 298.28, subdivision 3, is amended to read:


Subd. 3.

Cities; towns.

(a) 12.5 cents per taxable ton, less any amount distributed
under subdivision 8, and paragraph (b), must be allocated to the taconite municipal aid
account to be distributed as provided in section 298.282.

(b) An amount must be allocated to towns or cities that is annually certified by
the county auditor of a county containing a taconite tax relief area as defined in section
273.134, paragraph (b), within which there is (1) an organized township if, as of January
2, 1982, more than 75 percent of the assessed valuation of the township consists of iron
ore or (2) a city if, as of January 2, 1980, more than 75 percent of the assessed valuation
of the city consists of iron ore.

(c) The amount allocated under paragraph (b) will be the portion of a township's or
city's certified levy equal to the proportion of (1) the difference between 50 percent of
January 2, 1982, assessed value in the case of a township and 50 percent of the January 2,
1980, assessed value in the case of a city and its current assessed value to (2) the sum of
its current assessed value plus the difference determined in (1), provided that the amount
distributed shall not exceed $55 per capita in the case of a township or $75 per capita in
the case of a city. For purposes of this limitation, population will be determined according
to the 1980 decennial census conducted by the United States Bureau of the Census. If the
current assessed value of the township exceeds 50 percent of the township's January 2,
1982, assessed value, or if the current assessed value of the city exceeds 50 percent of the
city's January 2, 1980, assessed value, this paragraph shall not apply. For purposes of this
paragraph, "assessed value," when used in reference to years other than 1980 or 1982,
means the appropriate net tax capacities multiplied by 10.2.

(d) In addition to other distributions under this subdivision, three cents per taxable
ton for distributions in 2009 must be allocated for distribution to (1) towns that are entirely
located within the taconite tax relief area defined in section 273.134, paragraph (b); and
(2) the following unorganized territories located in St. Louis County: 56-17; 58-22; 59-16;
59-21; 60-18; and 60-19
. For distribution in 2010 through 2014 and for distribution in
2018 and subsequent years, the three-cent amount must be annually increased in the
same proportion as the increase in the implicit price deflator as provided in section
298.24, subdivision 1. The amount available under this paragraph will be to towns shall
be
distributed to eligible towns on a per capita basis, provided that no town may receive
more than $50,000 in any year under this paragraph. Any amount of the distribution that
exceeds the $50,000 limitation for a town under this paragraph must be redistributed on
a per capita basis among the other eligible towns, to whose distributions do not exceed
$50,000. The amount available to unorganized territories in St. Louis County may be held
by the county and combined for public infrastructure projects
.

EFFECTIVE DATE.

This section is effective beginning with the 2015 production
year.

Sec. 6.

Minnesota Statutes 2014, section 298.28, subdivision 7a, is amended to read:


Subd. 7a.

Iron Range school consolidation and cooperatively operated school
account.

The following amounts must be allocated to the Iron Range Resources and
Rehabilitation Board to be deposited in the Iron Range school consolidation and
cooperatively operated school account that is hereby created:

(1)(i) for distributions in 2015 through 2023, ten cents per taxable ton of the tax
imposed under section 298.24; and (ii) for distributions beginning in 2024, five cents per
taxable ton of the tax imposed under section 298.24;

(2) the amount as determined under section 298.17, paragraph (b), clause (3);

(3)(i) for distributions in 2015, an amount equal to two-thirds of the increased tax
proceeds attributable to the increase in the implicit price deflator as provided in section
298.24, subdivision 1, with the remaining one-third to be distributed to the Douglas J.
Johnson economic protection trust fund;

(ii) for distributions in 2016, an amount equal to two-thirds of the sum of the
increased tax proceeds attributable to the increase in the implicit price deflator as provided
in section 298.24, subdivision 1, for distribution years 2015 and 2016, with the remaining
one-third to be distributed to the Douglas J. Johnson economic protection trust fund; and

(iii) for distributions in 2017 and thereafter, an amount equal to two-thirds of the
sum of the increased tax proceeds attributable to the increase in the implicit price deflator
as provided in section 298.24, subdivision 1, for distribution years 2015, 2016, and
2017, with the remaining one-third to be distributed to the Douglas J. Johnson economic
protection trust fund; and

(4) any other amount as provided by law.

Expenditures from this account shall be made only to provide disbursements to
assist school districts with the payment of bonds that were issued for qualified school
projects, or for any other school disbursement as approved by the Iron Range Resources
and Rehabilitation Board. For purposes of this section, "qualified school projects" means
school projects within the taconite assistance area as defined in section 273.1341, that were
(1) approved, by referendum, after April 3, 2006; and (2) approved by the commissioner
of education pursuant to section 123B.71.

Beginning in fiscal year 2019, the disbursement to school districts for payments for
bonds issued under section 123A.482, subdivision 9, must be increased each year to
offset any reduction in debt service equalization aid that the school district qualifies for in
that year, under section 123B.53, subdivision 6, compared with the amount the school
district qualified for in fiscal year 2018.

No expenditure under this section shall be made unless approved by seven members
of the Iron Range Resources and Rehabilitation Board.

EFFECTIVE DATE.

This section is effective for distributions beginning in 2016
and thereafter.

ARTICLE 8

ELECTRIC GENERATION MACHINERY

Section 1.

Minnesota Statutes 2014, section 216B.1621, subdivision 2, is amended to
read:


Subd. 2.

Commission approval.

(a) The commission shall approve an agreement
under this section upon finding that:

(1) the proposed electric service power generation facility could reasonably be
expected to qualify for a market value exclusion under section 272.0211;

(2) (1) the public utility has a contractual option to purchase electric power from
the proposed facility; and

(3) (2) the public utility can use the output from the proposed facility to meet its
future need for power as demonstrated in the most recent resource plan filed with and
approved by the commission under section 216B.2422.

(b) Sections 216B.03, 216B.05, 216B.06, 216B.07, 216B.16, 216B.162, and
216B.23 do not apply to an agreement under this section.

EFFECTIVE DATE.

This section is effective beginning with assessment year
2016 and thereafter.

Sec. 2.

Minnesota Statutes 2014, section 216B.164, subdivision 2a, is amended to read:


Subd. 2a.

Definitions.

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

(b) "Aggregated meter" means a meter located on the premises of a customer's
owned or leased property that is contiguous with property containing the customer's
designated meter.

(c) "Capacity" means the number of megawatts alternating current (AC) at the point
of interconnection between a distributed generation facility and a utility's electric system.

(d) "Cogeneration" means a combined process whereby electrical and useful thermal
energy are produced simultaneously.

(e) "Contiguous property" means property owned or leased by the customer sharing
a common border, without regard to interruptions in contiguity caused by easements,
public thoroughfares, transportation rights-of-way, or utility rights-of-way.

(f) "Customer" means the person who is named on the utility electric bill for the
premises.

(g) "Designated meter" means a meter that is physically attached to the customer's
facility that the customer-generator designates as the first meter to which net metered
credits are to be applied as the primary meter for billing purposes when the customer is
serviced by more than one meter.

(h) "Distributed generation" means a facility that:

(1) has a capacity of ten megawatts or less;

(2) is interconnected with a utility's distribution system, over which the commission
has jurisdiction; and

(3) generates electricity from natural gas, renewable fuel, or a similarly clean fuel,
and may include waste heat, cogeneration, or fuel cell technology.

(i) "High-efficiency distributed generation" means a distributed energy facility that
has a minimum efficiency of 40 percent, as calculated under Minnesota Statutes 2014,
section 272.0211, subdivision 1.

(j) "Net metered facility" means an electric generation facility constructed for the
purpose of offsetting energy use through the use of renewable energy or high-efficiency
distributed generation sources.

(k) "Renewable energy" has the meaning given in section 216B.2411, subdivision 2.

(l) "Standby charge" means a charge imposed by an electric utility upon a distributed
generation facility for the recovery of costs for the provision of standby services, as
provided for in a utility's tariffs approved by the commission, necessary to make electricity
service available to the distributed generation facility.

EFFECTIVE DATE.

This section is effective beginning with assessment year
2016 and thereafter.

Sec. 3.

Minnesota Statutes 2014, section 216B.2424, subdivision 5, is amended to read:


Subd. 5.

Mandate.

(a) A public utility, as defined in section 216B.02, subdivision 4,
that operates a nuclear-powered electric generating plant within this state must construct
and operate, purchase, or contract to construct and operate (1) by December 31, 1998,
50 megawatts of electric energy installed capacity generated by farm-grown closed-loop
biomass scheduled to be operational by December 31, 2001; and (2) by December 31,
1998, an additional 75 megawatts of installed capacity so generated scheduled to be
operational by December 31, 2002.

(b) Of the 125 megawatts of biomass electricity installed capacity required under
this subdivision, no more than 55 megawatts of this capacity may be provided by a facility
that uses poultry litter as its primary fuel source and any such facility:

(1) need not use biomass that complies with the definition in subdivision 1;

(2) must enter into a contract with the public utility for such capacity, that has an
average purchase price per megawatt hour over the life of the contract that is equal to or
less than the average purchase price per megawatt hour over the life of the contract in
contracts approved by the Public Utilities Commission before April 1, 2000, to satisfy
the mandate of this section, and file that contract with the Public Utilities Commission
prior to September 1, 2000; and

(3) must schedule such capacity to be operational by December 31, 2002.

(c) Of the total 125 megawatts of biomass electric energy installed capacity required
under this section, no more than 75 megawatts may be provided by a single project.

(d) Of the 75 megawatts of biomass electric energy installed capacity required under
paragraph (a), clause (2), no more than 33 megawatts of this capacity may be provided by
a St. Paul district heating and cooling system cogeneration facility utilizing waste wood
as a primary fuel source. The St. Paul district heating and cooling system cogeneration
facility need not use biomass that complies with the definition in subdivision 1.

(e) The public utility must accept and consider on an equal basis with other biomass
proposals:

(1) a proposal to satisfy the requirements of this section that includes a project that
exceeds the megawatt capacity requirements of either paragraph (a), clause (1) or (2), and
that proposes to sell the excess capacity to the public utility or to other purchasers; and

(2) a proposal for a new facility to satisfy more than ten but not more than 20
megawatts of the electrical generation requirements by a small business-sponsored
independent power producer facility to be located within the northern quarter of the state,
which means the area located north of Constitutional Route No. 8 as described in section
161.114, subdivision 2, and that utilizes biomass residue wood, sawdust, bark, chipped
wood, or brush to generate electricity. A facility described in this clause is not required
to utilize biomass complying with the definition in subdivision 1, but must be under
construction by December 31, 2005.

(f) If a public utility files a contract with the commission for electric energy installed
capacity that uses poultry litter as its primary fuel source, the commission must do a
preliminary review of the contract to determine if it meets the purchase price criteria
provided in paragraph (b), clause (2). The commission shall perform its review and advise
the parties of its determination within 30 days of filing of such a contract by a public
utility. A public utility may submit by September 1, 2000, a revised contract to address the
commission's preliminary determination.

(g) The commission shall finally approve, modify, or disapprove no later than July
1, 2001, all contracts submitted by a public utility as of September 1, 2000, to meet the
mandate set forth in this subdivision.

(h) If a public utility subject to this section exercises an option to increase the
generating capacity of a project in a contract approved by the commission prior to April
25, 2000, to satisfy the mandate in this subdivision, the public utility must notify the
commission by September 1, 2000, that it has exercised the option and include in the
notice the amount of additional megawatts to be generated under the option exercised.
Any review by the commission of the project after exercise of such an option shall be
based on the same criteria used to review the existing contract.

(i) A facility specified in this subdivision qualifies for exemption from property
taxation under section 272.02, subdivision 45.

EFFECTIVE DATE.

This section is effective beginning with assessment year
2016 and thereafter.

Sec. 4.

Minnesota Statutes 2014, section 272.02, subdivision 9, is amended to read:


Subd. 9.

Personal property; exceptions.

Except for the taxable personal property
enumerated below, all personal property and the property described in section 272.03,
subdivision 1
, paragraphs (c) and (d), shall be exempt.

The following personal property shall be taxable:

(a) personal property which is part of an electric generating, transmission, or
distribution system or a pipeline system transporting or distributing water, gas, crude
oil, or petroleum products or mains and pipes used in the distribution of steam or hot or
chilled water for heating or cooling buildings and structures;

(b) railroad docks and wharves which are part of the operating property of a railroad
company as defined in section 270.80;

(c) personal property defined in section 272.03, subdivision 2, clause (3);

(d) leasehold or other personal property interests which are taxed pursuant to section
272.01, subdivision 2; 273.124, subdivision 7; or 273.19, subdivision 1; or any other law
providing the property is taxable as if the lessee or user were the fee owner;

(e) manufactured homes and sectional structures, including storage sheds, decks,
and similar removable improvements constructed on the site of a manufactured home,
sectional structure, park trailer or travel trailer as provided in section 273.125, subdivision
8
, paragraph (f); and

(f) flight property as defined in section 270.071.

EFFECTIVE DATE.

This section is effective beginning with assessment year
2016 and thereafter.

Sec. 5.

Minnesota Statutes 2014, section 272.02, subdivision 10, is amended to read:


Subd. 10.

Personal property used for pollution control.

Personal property used
primarily for the abatement and control of air, water, or land pollution is exempt to the
extent that it is so used, and real property is exempt if it is used primarily for abatement
and control of air, water, or land pollution as part of an agricultural operation, as a part
of a centralized treatment and recovery facility operating under a permit issued by the
Minnesota Pollution Control Agency pursuant to chapters 115 and 116 and Minnesota
Rules, parts 7001.0500 to 7001.0730, and 7045.0020 to 7045.1260, as a wastewater
treatment facility and for the treatment, recovery, and stabilization of metals, oils,
chemicals, water, sludges, or inorganic materials from hazardous industrial wastes, or as
part of an electric generation system
. For purposes of this subdivision, personal property
includes ponderous machinery and equipment used in a business or production activity
that at common law is considered real property. The real or personal property of an
electric generation system is not eligible for an exemption under this section
.

Any taxpayer requesting exemption of all or a portion of any real property or any
equipment or device, or part thereof, operated primarily for the control or abatement of
air, water, or land pollution shall file an application with the commissioner of revenue.
The commissioner shall develop an electronic means to notify interested parties when
electric power generation facilities have filed an application. The Minnesota Pollution
Control Agency shall upon request of the commissioner furnish information and advice to
the commissioner.

The information and advice furnished by the Minnesota Pollution Control
Agency must include statements as to whether the equipment, device, or real property
meets a standard, rule, criteria, guideline, policy, or order of the Minnesota Pollution
Control Agency, and whether the equipment, device, or real property is installed or
operated in accordance with it. On determining that property qualifies for exemption,
the commissioner shall issue an order exempting the property from taxation. The
commissioner shall develop an electronic means to notify interested parties when
the commissioner has issued an order exempting property from taxation under this
subdivision. The equipment, device, or real property shall continue to be exempt from
taxation as long as the order issued by the commissioner remains in effect.

EFFECTIVE DATE.

This section is effective for assessment year 2016 and
thereafter.

Sec. 6.

[273.129] ELECTRIC GENERATION MACHINERY; VALUATION.

Subdivision 1.

Definitions.

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

(b) "Biomass generating system" means any device used to produce energy by the
direct combustion of carbon-based organisms.

(c) "Coal generating system" means any device whose primary purpose is the
production of electricity derived by the direct combustion of coal to produce steam.

(d) "Electric generation machinery" means all personal property of an electric
generation system, excluding solar energy generating systems and wind energy conversion
systems, used for the purpose of generating electricity.

(e) "Generation capacity" means the generation rate per megawatt as follows:

(1) $0 for hydroelectric generating systems;

(2) $5,000 for machinery used to generate electricity from biomass, natural gas, or
nuclear fuel generation systems; and

(3) $10,000 for machinery used to generate electricity from a coal or oil generation
system or any other fossil fuel.

(f) "Generation rate" means the rate per kilowatt hour as follows:

(1) $.05 for hydroelectric generating systems;

(2) $.0525 for machinery used to generate electricity from biomass, natural gas, or
nuclear fuel generation systems; and

(3) $.055 for machinery used to generate electricity from a coal or oil generation
system or any other fossil fuel.

(g) "Hydroelectric generating system" means any device whose primary purpose is
the production of electricity derived from flowing water.

(h) "Nameplate capacity" means the maximum rated output of a generator, prime
mover, or other electric power production equipment under specific conditions designated
by the manufacturer.

(i) "Natural gas generating system" means any device whose primary purpose is the
production of electricity derived from natural gas.

(j) "Nuclear fuel generating system" means any device whose primary purpose is
the production of electricity generated by the use of the thermal energy released from the
fission of nuclear fuel in a reactor.

(k) "Oil generating system" means any device whose primary purpose is the
production of electricity derived by direct combustion of oil to produce steam.

(l) "Primary fuel source" means the fuel source that is dominantly used by a facility
in the production of electricity.

(m) "Spent fuel" means fuel that has been irradiated in a nuclear reactor to the point
where it is no longer useful in sustaining a nuclear reaction.

(n) "Spent fuel tax base" means $150,000,000 per facility plus $100,000 per ton of
spent fuel of a nuclear generating facility.

Subd. 2.

Rates; adjustment.

The generation and capacity rates as provided in
subdivision 1, paragraphs (e) and (f), shall be increased annually by an amount equal to the
percentage change in the retail price of electricity for the residential sector in Minnesota
for the prior year as reported by the U.S. Energy Information Administration.

Subd. 3.

Electric generation tax base.

(a) The commissioner shall annually
calculate the electric generation tax base under this section. An electric generating system
with a capacity of one megawatt or less as determined under subdivision 4 shall be
exempt from the provisions of this section. The commissioner shall calculate the electric
generation tax base using the applicable capacity and generation rate based on the electric
generation system's primary fuel source.

(b) The electric generation tax base for property described in subdivision 1 is equal
to the sum of: (1) its nameplate capacity multiplied by its generation capacity rate; (2)
the average of its electric energy production as reported to the commissioner of revenue
for the immediately preceding five years, multiplied by its generation rate; and (3) its
spent fuel tax base. For electric generating systems that have been operational for less
than the immediately preceding five years, the average of its electric energy production
shall be the average of its electric energy production for the time period since the facility
commenced operation.

(c) For purposes of a levy based on market value, the electric generation tax base
shall become part of the jurisdiction's market value tax base. For all levies based on net
tax capacity, the electric generation tax base multiplied by two percent shall be added
to the jurisdiction's net tax capacity base.

Subd. 4.

Electric generating systems; size.

The total capacity of an electric
generating system, pursuant to this section, shall be determined by combining all
generators of each fuel type within each facility, based on the information reported to the
commissioner of revenue as required under subdivision 5.

Subd. 5.

Generating systems; reports.

An owner of an electric generating system
shall file a report with the commissioner of revenue annually on or before February 1
detailing: (1) the amount of electricity that was produced by each generator in the previous
calendar year as reported to the U.S. Energy Information Administration; and (2) the
location, length, and capacity of all transmission and distribution lines. The commissioner
shall prescribe the form of the report. The report must contain the information required by
the commissioner to determine the electric generation tax base. If an owner of an electric
generating system fails to file the report by the due date, the commissioner of revenue
shall determine the electric generation tax base based upon the nameplate capacity of the
system multiplied by a capacity factor of 100 percent.

EFFECTIVE DATE.

This section is effective for assessment year 2016.

Sec. 7.

Minnesota Statutes 2014, section 273.13, subdivision 24, is amended to read:


Subd. 24.

Class 3.

Commercial and industrial property and utility real and personal
property is class 3a.

(1) Except as otherwise provided, each parcel of commercial, industrial, or utility
real property has a classification rate of 1.5 percent of the first tier of market value, and 2.0
percent of the remaining market value. In the case of contiguous parcels of property owned
by the same person or entity, only the value equal to the first-tier value of the contiguous
parcels qualifies for the reduced classification rate, except that contiguous parcels owned
by the same person or entity shall be eligible for the first-tier value classification rate on
each separate business operated by the owner of the property, provided the business is
housed in a separate structure. For the purposes of this subdivision, the first tier means the
first $150,000 of market value. Real property owned in fee by a utility for transmission
line right-of-way shall be classified at the classification rate for the higher tier.

For purposes of this subdivision, parcels are considered to be contiguous even if
they are separated from each other by a road, street, waterway, or other similar intervening
type of property. Connections between parcels that consist of power lines or pipelines do
not cause the parcels to be contiguous. Property owners who have contiguous parcels of
property that constitute separate businesses that may qualify for the first-tier classification
rate shall notify the assessor by July 1, for treatment beginning in the following taxes
payable year.

(2) All personal property that is: (i) part of an electric generation, transmission, or
distribution system; or (ii) part of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; and (iii) not described in clause (3), and all railroad
operating property has a classification rate as provided under clause (1) for the first tier
of market value and the remaining market value. In the case of multiple parcels in one
county that are owned by one person or entity, only one first tier amount is eligible for the
reduced rate.

(3) The entire market value of personal property that is: (i) tools, and implements,
and machinery
of an electric generation, transmission, or distribution system; (ii) tools,
implements, and machinery of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; or (iii) the mains and pipes used in the distribution of
steam or hot or chilled water for heating or cooling buildings, has a classification rate as
provided under clause (1) for the remaining market value in excess of the first tier.

EFFECTIVE DATE.

This section is effective beginning with assessment year 2016.

Sec. 8.

Minnesota Statutes 2014, section 273.37, subdivision 1, is amended to read:


Subdivision 1.

Listing and assessment where situated.

(a) Personal property of
electric light and power companies, and other individuals and partnerships supplying
electric light and power, having a fixed situs outside of the corporate limits of cities shall
be listed and assessed in the district where situated, except as otherwise provided.

(b) Notwithstanding any other law to the contrary, the nonoperating property, and
operating real property of electric light and power companies that is part of an electric
generation system, shall be listed and assessed by the local or county assessor.

EFFECTIVE DATE.

This section is effective for assessment year 2016 and
thereafter.

Sec. 9.

[477A.21] ELECTRIC GENERATION PROPERTY TRANSITION AID.

Subdivision 1.

Definitions.

For the purposes of this section, "local unit" means a
home rule charter or statutory city, county, or a town.

Subd. 2.

Aid eligibility; payment.

For aids payable in 2017 and thereafter,
transition aid under this section for an eligible local unit equals: (1) the net tax capacity of
all personal property of all electric generating systems as determined for assessment year
2015 multiplied by the 2015 local tax rate; minus (2) the net tax capacity in the current
year of all electric generating systems as determined under section 273.129, multiplied by
the current local tax rate. Aid to a local unit shall cease beginning in the year following
the year in which the aid equals zero. Once a local unit becomes ineligible for aid under
this section, it may not subsequently become eligible.

The commissioner of revenue shall compute the amount of transition aid payable to
each local unit under this section. On or before August 1 of each year, the commissioner
shall certify the amount of transition aid computed for aids payable in the following year
for each recipient local unit. The commissioner shall pay transition aid to local units
annually at the time provided for the second installment of local government aid under
section 477A.015.

The commissioner of revenue may require counties to provide any data that the
commissioner deems necessary to administer this section.

Subd. 3.

Appropriation.

An amount sufficient to pay transition aid under this
section is annually appropriated to the commissioner of revenue from the general fund.

EFFECTIVE DATE.

This section is effective beginning with aids payable in 2017.

Sec. 10. REPEALER.

Minnesota Statutes 2014, sections 272.02, subdivisions 29, 33, 41, 44, 45, 47, 52,
54, 55, 56, 68, 69, 70, 71, 80, 84, 89, 92, 93, 96, and 99; 272.0211,
are repealed.

EFFECTIVE DATE.

This section is effective beginning with assessment year
2016 and thereafter.

ARTICLE 9

RAILROAD RECODIFICATION

Section 1.

Minnesota Statutes 2014, section 270.80, subdivision 1, is amended to read:


Subdivision 1.

Applicability.

The following words and phrases when used
in sections 270.80 273.3712 to 270.87 273.3719, unless the context clearly indicates
otherwise, have the meanings ascribed to them in this section.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 2.

Minnesota Statutes 2014, section 270.80, subdivision 2, is amended to read:


Subd. 2.

Railroad company.

"Railroad company" means:

(1) any company which as a common carrier operates a railroad or a line or lines of
railway railroad situated within or partly within Minnesota; or

(2) any company owning or operating, other than as a common carrier, a railway
principally used for transportation of taconite concentrates from the plant at which the
taconite concentrates are produced in shipping form to a point of consumption or port
for shipment beyond the state; or

(3) any company that produces concentrates from taconite and transports that
taconite in the course of the concentrating process and before the concentrating process is
completed to a concentrating plant located within the state over a railroad that is not a
common carrier and shall does not use a common carrier or taconite railroad company as
defined in clause (2) for the movement of the concentrate to a point of consumption or
port for shipment beyond the state.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 3.

Minnesota Statutes 2014, section 270.80, subdivision 3, is amended to read:


Subd. 3.

Operating property.

"Operating property" means all property owned
or used by a railroad company in the performance of railroad transportation services,
including without limitation franchises, rights-of-way, bridges, trestles, shops, docks,
wharves, buildings and structures
, but not limited to, road, locomotives, freight cars,
and improvements on leased property. Operating property is listed and assessed by the
commissioner where the property is located
.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 4.

Minnesota Statutes 2014, section 270.80, subdivision 4, is amended to read:


Subd. 4.

Nonoperating property.

"Nonoperating property" means and includes all
property other than property defined in subdivision 3. Nonoperating property shall include
includes real property which that is leased or rented or available for lease or rent to any
person which that is not a railroad company. Vacant land shall be presumed to be available
for lease or rent if it has not been used as operating property for a period of one year
immediately preceding the valuation date. Nonoperating property also includes land which
that is not necessary and integral to the performance of railroad transportation services
and which that is not used on a regular and continual basis in the performance of these
services. Nonoperating property also includes that portion of a general corporation office
building and its proportionate share of land which that is not used for railway railroad
operation or purpose. Nonoperating property is assessed by the local or county assessor.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 5.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


Subd. 6.

Company.

"Company" means any corporation, limited liability company,
association, partnership, trust, estate, fiduciary, public or private organization of any kind,
or any other legal entity.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 6.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


Subd. 7.

Unit value.

"Unit value" means the value of the whole integrated system
of a railroad company operating as a going concern without regard to the value of its
component parts.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 7.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


Subd. 8.

Book depreciation.

"Book depreciation" means the accumulated
depreciation shown by a railroad company on its books or allowed to the company by
the Surface Transportation Board.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 8.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


Subd. 9.

Equalization.

"Equalization" means the adjustment of the estimated value
of railroad operating property to the apparent sales ratio of commercial and industrial
property.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 9.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


Subd. 10.

Exempt property.

"Exempt property" means property which is
nontaxable for ad valorem tax purposes under Minnesota Statutes, including personal
property exempt from taxation under chapter 272.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 10.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


Subd. 11.

Original cost.

"Original cost" means the amount paid for an asset by the
current owner as recorded on the railroad's books or allowed by the Surface Transportation
Board.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 11.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


Subd. 12.

System.

"System" means the total property, real and personal, of a
railroad, that is used in its railroad operations.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 12.

Minnesota Statutes 2014, section 270.80, is amended by adding a subdivision
to read:


Subd. 14.

Minnesota allocated value.

"Minnesota allocated value" means the value
of a railroad company's operating property that is assigned to Minnesota for tax purposes.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 13.

Minnesota Statutes 2014, section 270.81, subdivision 1, is amended to read:


Subdivision 1.

Valuation of operating property.

The operating property of every
railroad company doing business in Minnesota shall be valued by the commissioner in the
manner prescribed by sections 270.80 273.3712 to 270.87 273.3719.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 14.

Minnesota Statutes 2014, section 270.81, subdivision 3, is amended to read:


Subd. 3.

Determination of type of property.

(a) The commissioner shall have has
exclusive primary jurisdiction to determine what whether railroad property is operating
property and what is or nonoperating property. In making such the determination, the
commissioner shall may solicit information and opinions from outside the department
and afford all interested persons an opportunity to submit data or views on the subject
in writing or orally.

(b) Local and county assessors may submit written requests to the commissioner,
asking for a determination of the nature of specific whether property owned by a
railroad and located within their assessing jurisdiction is operating or nonoperating. Any
determination made by the commissioner may be appealed by the assessor to the Tax Court
pursuant to chapter 271.
The requests must be submitted by April 1 of the assessing year.
The commissioner must send the assessor a written determination by May 1. Assessors may
appeal determinations made by the commissioner to the Tax Court pursuant to chapter 271.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 15.

Minnesota Statutes 2014, section 270.81, is amended by adding a subdivision
to read:


Subd. 6.

Deduction for nonoperating and exempt property.

Property that was part
of the system, but is nonoperating property, or that is exempt from ad valorem taxation, is
excluded from the Minnesota allocated value under section 273.3718, subdivision 1a. Only
qualifying property located in Minnesota may be deducted from the Minnesota allocated
value. The commissioner must deduct the market value of the property to be excluded. This
must be calculated by multiplying the book value of the property by the market-to-book
ratio of the unit. The company has the burden of proof to establish that property should
be excluded from the Minnesota allocated value. The railroad company must submit
schedules of exempt or nonoperating property as the commissioner may require. The
remaining amount after this deduction is the Minnesota apportionable market value.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 16.

Minnesota Statutes 2014, section 270.82, is amended to read:


270.82 REPORTS OF RAILROAD COMPANIES.

Subdivision 1.

Annual report required.

Before March 31, every railroad company
doing business in Minnesota shall annually must file with the commissioner on or before
March 31 a
an annual report under oath setting forth the information prescribed by the
commissioner to enable the commissioner to make the valuation and equalization required
by sections 270.80 273.3712 to 270.87. 273.3719. The commissioner shall prescribe the
content, format, and manner of the report pursuant to section 270C.30. If a report is made
by electronic means, the taxpayer's signature is defined pursuant to section 270C.304,
except that a "law administered by the commissioner" includes the property tax laws.

Subd. 2.

Extension of time.

If the commissioner for good determines that there is
reasonable
cause, the commissioner may extend the time for filing the report required by
subdivision 1
for up to 15 days the time for filing the report required by subdivision 1.

Subd. 3.

Amended reports.

A railroad company may file an amended report to
correct or add information to the original report. Amended reports must be filed with
the commissioner by April 30.

Subd. 4.

Failure to file reports.

(a) The commissioner may make the valuation
provided for by sections 273.3712 to 237.3719, according to the commissioner's best
judgment based on available information, if any railroad company does not:

(1) make the report required by this section;

(2) permit an inspection and examination of its property, records, books, accounts,
or other papers when requested by the commissioner; or

(3) appear before the commissioner or a person appointed under section 273.3715,
when required to do so.

(b) If the commissioner makes the valuation pursuant to paragraph (a), the
commissioner's valuation is final. Notwithstanding any other law to the contrary,
the commissioner's valuation made pursuant to this subdivision is not appealable
administratively.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 17.

Minnesota Statutes 2014, section 270.83, subdivision 1, is amended to read:


Subdivision 1.

Powers of commissioner.

The commissioner shall have has the
power to examine or cause to be examined any books, papers, records, or memoranda
relevant to the determination of the valuation of operating property as herein provided.
The commissioner shall have the further power to may require the attendance of any
person having knowledge or information in the premises concerning the valuation of the
operating property
, to compel the production of books, papers, records, or memoranda by
persons so required to attend, to take testimony on matters material to such determination
determine the valuation of operating property, and administer oaths or affirmations.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 18.

Minnesota Statutes 2014, section 270.83, subdivision 2, is amended to read:


Subd. 2.

Appointment of persons; subpoenas.

For the purpose of making such
examinations,
The commissioner may appoint such persons as the commissioner may
deem
deems necessary to make the examinations described in subdivision 1. Such
persons shall have the rights and powers of the examining of
Persons appointed may
examine
books, papers, records or memoranda, and of subpoenaing subpoena witnesses,
administering administer oaths and affirmations, and taking of take testimony, which are
conferred upon the commissioner hereby
. The court administrator of any court of record,
upon demand of any such person appointed, shall issue a subpoena for the attendance of
any witness or the production of any books, papers, records, or memoranda before such
person. The commissioner may also issue subpoenas for the appearance of witnesses
before the commissioner or before such persons. Disobedience of subpoenas so issued
shall be punished by the district court of the district in which the subpoena is issued for a
contempt of the district court
. Failure to comply with a subpoena shall be punished in the
same manner as contempt of the district court.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 19.

Minnesota Statutes 2014, section 270.84, is amended to read:


270.84 ANNUAL VALUATION OF OPERATING PROPERTY.

Subdivision 1.

Annual valuation; rules.

(a) Before July 1, the commissioner
shall annually between March 31 and May 31 make a determination of must determine
the fair market value of the operating property of every railroad company doing business
in this state as of January 2 of the year in which the valuation is made. In making
this determination,
The commissioner shall must employ generally accepted appraisal
principles and practices which may include the unit method of determining value., and
approaches approved by the Western States Association of Tax Administrators, National
Conference of Unit Valuation States, and the International Association of Assessing
Officers.

(b) The unit value of railroad property is the reconciled value considering the cost,
income, and market approaches under subdivisions 1a, 1b, and 1c. Each approach must
be weighted in accordance with the reliability of the information and the commissioner's
judgment.

Subd. 1a.

Cost approach.

(a) The commissioner may use the cost approach,
including but not limited to original cost less book depreciation and replacement cost
less depreciation.

(b) Book depreciation is allowed as a deduction from an original cost model. Book
depreciation is assumed to include all forms of appraisal depreciation.

(c) Explicitly calculated appraisal depreciation, including physical, functional, and
external obsolescence, is allowed as a deduction from the replacement cost model.

Subd. 1b.

Income approach.

(a) The commissioner may use the income approach,
including but not limited to direct capitalization models and yield capitalization models.

(b) The yield rate is calculated using market data on selected comparable companies
in the band of investment method.

(1) Discounted cash flows is a yield capitalization model that calculates the present
value of explicit cash flow forecasts capitalized using the yield rate, plus reversion to
stable growth yield capitalization after the period of explicit forecasts.

(2) Stable growth yield capitalization is a yield capitalization model that calculates
the present value of anticipated future cash flows, capitalized using the yield rate and
considering growth.

(c) Direct capitalization is the expected net operating income for the following year,
divided by the direct capitalization rate. The direct capitalization rate is calculated by
using direct market observations from comparable sales or using market earning-to-price
information in the band of investment method.

Subd. 1c.

Market approach.

The commissioner may use the market approach,
including but not limited to a sales comparison model, a stock and debt model, or other
market models that are available and reliable.

Subd. 2.

Notice.

The commissioner, after determining the fair market value of the
operating property of each railroad company, shall give notice to must notify the railroad
company of the valuation by first class mail, overnight delivery, or messenger service.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 20.

Minnesota Statutes 2014, section 270.86, is amended to read:


270.86 APPORTIONMENT AND EQUALIZATION OF VALUATION.

Subdivision 1.

Apportionment of value.

Upon determining After allocating to
Minnesota
the fair market value of the operating property of each railroad company, the
commissioner shall must apportion such the value to the respective counties and to the
taxing districts therein in conformity with fair and reasonable rules and standards to be
established by the commissioner pursuant to notice and hearing, except as provided in
section 270.81. In establishing such rules and standards the commissioner may consider
(a) the physical situs of all station houses, depots, docks, wharves, and other buildings and
structures with an original cost in excess of $10,000; (b) the proportion that the length and
type of all the tracks used by the railroad in such county and taxing district bears to the
length and type of all the track used in the state; and (c) other facts as will result in a fair
and equitable apportionment of value
the operating parcels in Minnesota.

The apportioned market value of each company's operating parcel in Minnesota is
the current original cost of each parcel as of the last assessment date plus original cost
of new construction minus the original cost of property retired since the last assessment
date. The total Minnesota apportionable market value of the railroad is divided by the
total current original cost of the railroad in Minnesota to determine a percentage. The
resulting percentage is multiplied by the current original cost of each parcel to determine
the apportioned market value of each parcel.

Subd. 1a.

Allocation of value.

(a) After the market value of operating property has
been estimated, the portion of value that is attributable to Minnesota must be determined
by calculating an allocation percentage using factors relevant to the industry segment of
the railroad company. The allocation percentage must be multiplied by the value of the
operating property to determine the Minnesota allocated value.

(b) The Minnesota allocated value is determined by averaging the following factors:

(1) miles of railroad track operated in Minnesota divided by miles of railroad track
operated in all states;

(2) ton miles of revenue freight transported in Minnesota divided by ton miles of
revenue freight transported in all states;

(3) gross revenues from transportation operations within Minnesota divided by gross
revenues from transportation operations in all states; and

(4) cost of railroad property in Minnesota divided by cost of railroad property in
all states.

(c) Each of the available factors must be weighted equally.

Subd. 2.

Equalized valuation.

After making the apportionment provided in
subdivision 1, the commissioner shall must determine the equalized valuation of the
operating property in each county by applying to the apportioned value an estimated
current year median sales ratio for all commercial and industrial property in that county.
If the commissioner decides determines that there are insufficient sales to determine a
median commercial-industrial sales ratio, an estimated current year countywide median
sales ratio for all property shall must be applied to the apportioned value. No equalization
shall
Equalization must not be made to the market value of the operating property if the
median sales ratio determined pursuant to this subdivision is within five at least 90 but less
than 105
percent of the assessment ratio of the railroad operating property.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 21.

Minnesota Statutes 2014, section 270.87, is amended to read:


270.87 CERTIFICATION TO COUNTY ASSESSORS.

After making an annual determination of the equalized fair market value of the
operating property of each company in each of the respective counties, and in the taxing
districts therein,
The commissioner shall must certify the equalized fair market value of
the operating property
to the county assessor on or before June 30 August 1. The equalized
fair market value of the operating property of the railroad company in the county and the
taxing districts therein is the value on which taxes must be levied and collected in the
same manner as on the commercial and industrial property of such county and the taxing
districts therein
in the counties and taxing districts. If the commissioner determines that
the equalized fair market value certified on or before June 30 August 1 is in error, the
commissioner may issue a corrected certification on or before August 31 October 1. The
commissioner may correct errors that are merely clerical in nature until December 31.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 22.

Minnesota Statutes 2014, section 272.02, subdivision 9, is amended to read:


Subd. 9.

Personal property; exceptions.

Except for the taxable personal property
enumerated below, all personal property and the property described in section 272.03,
subdivision 1
, paragraphs (c) and (d), shall be exempt.

The following personal property shall be taxable:

(a) personal property which is part of an electric generating, transmission, or
distribution system or a pipeline system transporting or distributing water, gas, crude
oil, or petroleum products or mains and pipes used in the distribution of steam or hot or
chilled water for heating or cooling buildings and structures;

(b) railroad docks and wharves which are part of the personal property that is part of
the
operating property of a railroad company as defined in section 270.80 273.3712;

(c) personal property defined in section 272.03, subdivision 2, clause (3);

(d) leasehold or other personal property interests which are taxed pursuant to section
272.01, subdivision 2; 273.124, subdivision 7; or 273.19, subdivision 1; or any other law
providing the property is taxable as if the lessee or user were the fee owner;

(e) manufactured homes and sectional structures, including storage sheds, decks,
and similar removable improvements constructed on the site of a manufactured home,
sectional structure, park trailer or travel trailer as provided in section 273.125, subdivision
8
, paragraph (f); and

(f) flight property as defined in section 270.071.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 23. SEVERABILITY.

If any part of this article is found to be invalid because it is in conflict with a
provision of the Minnesota Constitution or for any other reason, all other provisions
of this act shall remain valid and any rights, remedies, and privileges that have been
otherwise accrued by this act, shall remain in effect and may be proceeded with and
concluded under the provisions of this act.

Sec. 24. REVISOR'S INSTRUCTION.

The revisor of statutes shall renumber the provisions of Minnesota Statutes listed
in column A to the references listed in column B. The revisor shall also make necessary
cross-reference changes in Minnesota Statutes and Minnesota Rules consistent with
renumbering.

Column A
Column B
270.80
273.3712
270.81
273.3713
270.82
273.3714
270.83
273.3715
270.84
273.3716
270.85
273.3717
270.86
273.3718
270.87
273.3719

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

Sec. 25. REPEALER.

Minnesota Statutes 2014, sections 270.81, subdivision 4; and 270.83, subdivision 3,
and

Minnesota Rules, parts 8106.0100, subparts 1, 2, 3, 4, 5, 6, 7, 8, 10, 12, 13, 14, 17,
17a, 18, 19, 20, and 21; 8106.0300, subparts 1 and 3; 8106.0400; 8106.0500; 8106.0600;
8106.0700; 8106.0800; and 8106.9900,
are repealed.

EFFECTIVE DATE.

This section is effective for assessment year 2015 and
thereafter.

ARTICLE 10

PUBLIC FINANCE

Section 1.

Minnesota Statutes 2014, section 126C.40, subdivision 1, is amended to read:


Subdivision 1.

To lease building or land.

(a) When an independent or a special
school district or a group of independent or special school districts finds it economically
advantageous to rent or lease a building or land for any instructional purposes or for school
storage or furniture repair, and it determines that the operating capital revenue authorized
under section 126C.10, subdivision 13, is insufficient for this purpose, it may apply to seek
permission from
the commissioner for permission to make an additional capital expenditure
levy for this purpose. An application for permission to levy under this subdivision must
contain financial justification for the proposed levy, the terms and conditions of the
proposed lease, and a description of the space to be leased and its proposed use.

(b) In granting permission to levy under this subdivision, the commissioner may
consider the financial justification for the proposed levy, the terms and conditions
of the proposed lease, and a description of the space to be leased and its proposed
use. Additional information shall be provided for consideration upon request of the
commissioner.
The criteria for approval of applications granting permission to levy under
this subdivision must include: the reasonableness of the price, the appropriateness of the
space to the proposed activity, the feasibility of transporting pupils to the leased building
or land, conformity of the lease to the laws and rules of the state of Minnesota, and the
appropriateness of the proposed lease to the space needs and the financial condition of the
district. The commissioner must not authorize a levy under this subdivision in an amount
greater than the cost to the district of renting or leasing a building or land for approved
purposes. The proceeds of this levy must not be used for custodial or other maintenance
services. A district may not levy under this subdivision for the purpose of leasing or
renting a district-owned building or site to itself.

(c) For agreements finalized after July 1, 1997, a district may not levy under this
subdivision for the purpose of leasing: (1) a newly constructed building used primarily
for regular kindergarten, elementary, or secondary instruction; or (2) a newly constructed
building addition or additions used primarily for regular kindergarten, elementary, or
secondary instruction that contains more than 20 percent of the square footage of the
previously existing building.

(d) Notwithstanding paragraph (b), a district may levy under this subdivision for the
purpose of leasing or renting a district-owned building or site to itself only if the amount
is needed by the district to make payments required by a lease purchase agreement,
installment purchase agreement, or other deferred payments agreement authorized by law,
and the levy meets the requirements of paragraph (c). A levy authorized for a district by
the commissioner under this paragraph may be in the amount needed by the district to
make payments required by a lease purchase agreement, installment purchase agreement,
or other deferred payments agreement authorized by law, provided that any agreement
include a provision giving the school districts the right to terminate the agreement
annually without penalty.

(e) The total levy under this subdivision for a district for any year must not exceed
$212 times the adjusted pupil units for the fiscal year to which the levy is attributable.

(f) For agreements for which a review and comment have been submitted to the
Department of Education after April 1, 1998, the term "instructional purpose" as used in
this subdivision excludes expenditures on stadiums.

(g) The commissioner of education may authorize a school district to exceed the
limit in paragraph (e) if the school district petitions the commissioner for approval. The
commissioner shall grant approval to a school district to exceed the limit in paragraph (e)
for not more than five years if the district meets the following criteria:

(1) the school district has been experiencing pupil enrollment growth in the
preceding five years;

(2) the purpose of the increased levy is in the long-term public interest;

(3) the purpose of the increased levy promotes colocation of government services; and

(4) the purpose of the increased levy is in the long-term interest of the district by
avoiding over construction of school facilities.

(h) A school district that is a member of an intermediate school district may include
in its authority under this section the costs associated with leases of administrative and
classroom space for intermediate school district programs. This authority must not exceed
$65 times the adjusted pupil units of the member districts. This authority is in addition to
any other authority authorized under this section.

(i) In addition to the allowable capital levies in paragraph (a), for taxes payable in
2012 to 2023, a district that is a member of the "Technology and Information Education
Systems" data processing joint board, that finds it economically advantageous to enter into
a lease agreement to finance improvements to a building and land for a group of school
districts or special school districts for staff development purposes, may levy for its portion
of lease costs attributed to the district within the total levy limit in paragraph (e). The total
levy authority under this paragraph shall not exceed $632,000.

(j) Notwithstanding paragraph (a), a district may levy under this subdivision for the
purpose of leasing administrative space if the district can demonstrate to the satisfaction of
the commissioner that the lease cost for the administrative space is no greater than the
lease cost for instructional space that the district would otherwise lease. The commissioner
must deny this levy authority unless the district passes a resolution stating its intent to
lease instructional space under this section if the commissioner does not grant authority
under this paragraph. The resolution must also certify that the lease cost for administrative
space under this paragraph is no greater than the lease cost for the district's proposed
instructional lease.

Sec. 2.

Minnesota Statutes 2014, section 366.095, subdivision 1, is amended to read:


Subdivision 1.

Certificates of indebtedness.

The town board may issue certificates
of indebtedness within the debt limits for a town purpose otherwise authorized by law.
The certificates shall be payable in not more than ten years and be issued on the terms and
in the manner as the board may determine, provided that notes issued for projects that
eliminate R-22, as such projects are defined in section 240A.09, paragraph (b), clause (2),
shall be payable in not more than 20 years
. If the amount of the certificates to be issued
exceeds 0.25 percent of the estimated market value of the town, they shall not be issued
for at least ten days after publication in a newspaper of general circulation in the town of
the board's resolution determining to issue them. If within that time, a petition asking for
an election on the proposition signed by voters equal to ten percent of the number of voters
at the last regular town election is filed with the clerk, the certificates shall not be issued
until their issuance has been approved by a majority of the votes cast on the question at
a regular or special election. A tax levy shall be made to pay the principal and interest
on the certificates as in the case of bonds.

Sec. 3.

Minnesota Statutes 2014, section 383B.117, subdivision 2, is amended to read:


Subd. 2.

Equipment acquisition; capital notes.

The board may, by resolution and
without public referendum, issue capital notes within existing debt limits for the purpose
of purchasing ambulance and other medical equipment, road construction or maintenance
equipment, public safety equipment and other capital equipment having an expected
useful life at least equal to the term of the notes issued. The notes shall be payable
in not more than ten years and shall be issued on terms and in a manner as the board
determines, provided that notes issued for projects that eliminate R-22, as such projects
are defined in section 240A.09, paragraph (b), clause (2), shall be payable in not more
than 20 years
. The total principal amount of the notes issued for any fiscal year shall not
exceed one percent of the total annual budget for that year and shall be issued solely for
the purchases authorized in this subdivision. A tax levy shall be made for the payment
of the principal and interest on such notes as in the case of bonds. For purposes of this
subdivision, "equipment" includes computer hardware and software, whether bundled with
machinery or equipment or unbundled. For purposes of this subdivision, the term "medical
equipment" includes computer hardware and software and other intellectual property for
use in medical diagnosis, medical procedures, research, record keeping, billing, and other
hospital applications, together with application development services and training related
to the use of the computer hardware and software and other intellectual property, all
without regard to their useful life. For purposes of determining the amount of capital notes
which the county may issue in any year, the budget of the county and Hennepin Healthcare
System, Inc. shall be combined and the notes issuable under this subdivision shall be in
addition to obligations issuable under section 373.01, subdivision 3.

Sec. 4.

Minnesota Statutes 2014, section 410.32, is amended to read:


410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.

(a) Notwithstanding any contrary provision of other law or charter, a home rule
charter city may, by resolution and without public referendum, issue capital notes subject
to the city debt limit to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road
construction and maintenance equipment, and other capital equipment; and

(2) computer hardware and software, whether bundled with machinery or equipment
or unbundled, together with application development services and training related to the
use of the computer hardware and software.

(c) The equipment or software must have an expected useful life at least as long
as the term of the notes.

(d) The notes shall be payable in not more than ten years and be issued on terms and
in the manner the city determines, provided that notes issued for projects that eliminate
R-22, as such projects are defined in section 240A.09, paragraph (b), clause (2), shall be
payable in not more than 20 years
. The total principal amount of the capital notes issued
in a fiscal year shall not exceed 0.03 percent of the estimated market value of taxable
property in the city for that year.

(e) A tax levy shall be made for the payment of the principal and interest on the
notes, in accordance with section 475.61, as in the case of bonds.

(f) Notes issued under this section shall require an affirmative vote of two-thirds of
the governing body of the city.

(g) Notwithstanding a contrary provision of other law or charter, a home rule charter
city may also issue capital notes subject to its debt limit in the manner and subject to the
limitations applicable to statutory cities pursuant to section 412.301.

Sec. 5.

Minnesota Statutes 2014, section 412.301, is amended to read:


412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.

(a) The council may issue certificates of indebtedness or capital notes subject to the
city debt limits to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road
construction and maintenance equipment, and other capital equipment; and

(2) computer hardware and software, whether bundled with machinery or equipment
or unbundled, together with application development services and training related to the
use of the computer hardware or software.

(c) The equipment or software must have an expected useful life at least as long as
the terms of the certificates or notes.

(d) Such certificates or notes shall be payable in not more than ten years and shall
be issued on such terms and in such manner as the council may determine, provided,
however, that notes issued for projects that eliminate R-22, as such projects are defined in
section 240A.09, paragraph (b), clause (2), shall be payable in not more than 20 years
.

(e) If the amount of the certificates or notes to be issued to finance any such purchase
exceeds 0.25 percent of the estimated market value of taxable property in the city, they
shall not be issued for at least ten days after publication in the official newspaper of
a council resolution determining to issue them; and if before the end of that time, a
petition asking for an election on the proposition signed by voters equal to ten percent
of the number of voters at the last regular municipal election is filed with the clerk, such
certificates or notes shall not be issued until the proposition of their issuance has been
approved by a majority of the votes cast on the question at a regular or special election.

(f) A tax levy shall be made for the payment of the principal and interest on such
certificates or notes, in accordance with section 475.61, as in the case of bonds.

Sec. 6.

Minnesota Statutes 2014, section 469.034, subdivision 2, is amended to read:


Subd. 2.

General obligation revenue bonds.

(a) An authority may pledge the
general obligation of the general jurisdiction governmental unit as additional security for
bonds payable from income or revenues of the project or the authority. The authority
must find that the pledged revenues will equal or exceed 110 percent of the principal and
interest due on the bonds for each year. The proceeds of the bonds must be used for a
qualified housing development project or projects. The obligations must be issued and
sold in the manner and following the procedures provided by chapter 475, except the
obligations are not subject to approval by the electors, and the maturities may extend to
not more than 35 years for obligations sold to finance housing for the elderly and 40 years
for other obligations issued under this subdivision. The authority is the municipality for
purposes of chapter 475.

(b) The principal amount of the issue must be approved by the governing body of
the general jurisdiction governmental unit whose general obligation is pledged. Public
hearings must be held on issuance of the obligations by both the authority and the general
jurisdiction governmental unit. The hearings must be held at least 15 days, but not more
than 120 days, before the sale of the obligations.

(c) The maximum amount of general obligation bonds that may be issued and
outstanding under this section equals the greater of (1) one-half of one percent of the
estimated market value of the general jurisdiction governmental unit whose general
obligation is pledged, or (2) $3,000,000 $5,000,000. In the case of county or multicounty
general obligation bonds, the outstanding general obligation bonds of all cities in the
county or counties issued under this subdivision must be added in calculating the limit
under clause (1).

(d) "General jurisdiction governmental unit" means the city in which the housing
development project is located. In the case of a county or multicounty authority, the
county or counties may act as the general jurisdiction governmental unit. In the case of
a multicounty authority, the pledge of the general obligation is a pledge of a tax on the
taxable property in each of the counties.

(e) "Qualified housing development project" means a housing development project
providing housing either for the elderly or for individuals and families with incomes not
greater than 80 percent of the median family income as estimated by the United States
Department of Housing and Urban Development for the standard metropolitan statistical
area or the nonmetropolitan county in which the project is located. The project must be
owned for the term of the bonds either by the authority or by a limited partnership or other
entity in which the authority or another entity under the sole control of the authority is
the sole general partner and the partnership or other entity must receive (1) an allocation
from the Department of Management and Budget or an entitlement issuer of tax-exempt
bonding authority for the project and a preliminary determination by the Minnesota
Housing Finance Agency or the applicable suballocator of tax credits that the project
will qualify for four percent low-income housing tax credits or (2) a reservation of nine
percent low-income housing tax credits from the Minnesota Housing Finance Agency or a
suballocator of tax credits for the project. A qualified housing development project may
admit nonelderly individuals and families with higher incomes if:

(1) three years have passed since initial occupancy;

(2) the authority finds the project is experiencing unanticipated vacancies resulting in
insufficient revenues, because of changes in population or other unforeseen circumstances
that occurred after the initial finding of adequate revenues; and

(3) the authority finds a tax levy or payment from general assets of the general
jurisdiction governmental unit will be necessary to pay debt service on the bonds if higher
income individuals or families are not admitted.

(f) The authority may issue bonds to refund bonds issued under this subdivision in
accordance with section 475.67. The finding of the adequacy of pledged revenues required
by paragraph (a) and the public hearing required by paragraph (b) shall not apply to the
issuance of refunding bonds. This paragraph applies to refunding bonds issued on and
after July 1, 1992.

Sec. 7.

Minnesota Statutes 2014, section 469.101, subdivision 1, is amended to read:


Subdivision 1.

Establishment.

An economic development authority may create
and define the boundaries of economic development districts at any place or places within
the city, except that the district boundaries must be contiguous, and may use the powers
granted in sections 469.090 to 469.108 to carry out its purposes. First the authority must
hold a public hearing on the matter. At least ten days before the hearing, the authority
shall publish notice of the hearing in a daily newspaper of general circulation in the city.
Also, the authority shall find that an economic development district is proper and desirable
to establish and develop within the city.

Sec. 8.

Minnesota Statutes 2014, section 475.58, subdivision 3b, is amended to read:


Subd. 3b.

Street reconstruction and bituminous overlays.

(a) A municipality may,
without regard to the election requirement under subdivision 1, issue and sell obligations
for street reconstruction or bituminous overlays, if the following conditions are met:

(1) the streets are reconstructed or overlaid under a street reconstruction or overlay
plan that describes the street reconstruction or overlay to be financed, the estimated costs,
and any planned reconstruction or overlay of other streets in the municipality over the next
five years, and the plan and issuance of the obligations has been approved by a vote of
all a majority of the members of the governing body present at the meeting following a
public hearing for which notice has been published in the official newspaper at least ten
days but not more than 28 days prior to the hearing; and

(2) if a petition requesting a vote on the issuance is signed by voters equal to
five percent of the votes cast in the last municipal general election and is filed with the
municipal clerk within 30 days of the public hearing, the municipality may issue the bonds
only after obtaining the approval of a majority of the voters voting on the question of the
issuance of the obligations. If the municipality elects not to submit the question to the
voters, the municipality shall not propose the issuance of bonds under this section for the
same purpose and in the same amount for a period of 365 days from the date of receipt
of the petition. If the question of issuing the bonds is submitted and not approved by the
voters, the provisions of section 475.58, subdivision 1a, shall apply.

(b) Obligations issued under this subdivision are subject to the debt limit of the
municipality and are not excluded from net debt under section 475.51, subdivision 4.

(c) For purposes of this subdivision, street reconstruction and bituminous overlays
includes utility replacement and relocation and other activities incidental to the street
reconstruction, turn lanes and other improvements having a substantial public safety
function, realignments, other modifications to intersect with state and county roads, and
the local share of state and county road projects. For purposes of this subdivision, "street
reconstruction" includes expenditures for street reconstruction that have been incurred
by a municipality before approval of a street reconstruction plan, if such expenditures
are included in a street reconstruction plan approved on or before the date of the public
hearing under paragraph (a), clause (1), regarding issuance of bonds for such expenditures.

(d) Except in the case of turn lanes, safety improvements, realignments, intersection
modifications, and the local share of state and county road projects, street reconstruction
and bituminous overlays does not include the portion of project cost allocable to widening
a street or adding curbs and gutters where none previously existed.

Sec. 9.

Minnesota Statutes 2014, section 475.60, subdivision 2, is amended to read:


Subd. 2.

Requirements waived.

The requirements as to public sale shall not
apply to:

(1) obligations issued under the provisions of a home rule charter or of a law
specifically authorizing a different method of sale, or authorizing them to be issued in such
manner or on such terms and conditions as the governing body may determine;

(2) obligations sold by an issuer in an amount not exceeding the total sum of
$1,200,000 in any 12-month period;

(3) obligations issued by a governing body other than a school board in anticipation
of the collection of taxes or other revenues appropriated for expenditure in a single year, if
sold in accordance with the most favorable of two or more proposals solicited privately;

(4) obligations sold to any board, department, or agency of the United States of
America or of the state of Minnesota, in accordance with rules or regulations promulgated
by such board, department, or agency;

(5) obligations issued to fund pension and retirement fund liabilities under section
475.52, subdivision 6, obligations issued with tender options under section 475.54,
subdivision 5a
, crossover refunding obligations referred to in section 475.67, subdivision
13
, and any issue of obligations comprised in whole or in part of obligations bearing
interest at a rate or rates which vary periodically referred to in section 475.56;