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Minnesota Session Laws - 1998, Regular Session

Key: (1) language to be deleted (2) new language

                            CHAPTER 389-H.F.No. 3840 
                  An act relating to the financing and operation of 
                  government in this state; providing property tax 
                  reform; providing a property tax rebate; making 
                  changes to property tax rates, levies, notices, 
                  hearings, assessments, exemptions, aids, and credits; 
                  providing bonding and levy authority, and other powers 
                  to certain political subdivisions; making changes to 
                  income, sales, excise, mortgage registry and deed, 
                  premiums, health care provider, and solid waste tax 
                  provisions; allowing credits; authorizing the 
                  imposition of certain local sales, use, excise, and 
                  lodging taxes; authorizing a sanitary sewer district; 
                  modifying provisions relating to the budget reserve 
                  and other accounts; making changes to tax increment 
                  financing, regional development, housing, and economic 
                  development provisions; providing for the taxation of 
                  taconite and the distribution of taconite taxes; 
                  modifying provisions relating to the taxation and 
                  operation of gaming; providing tax incentives for 
                  border city zones; making miscellaneous changes to 
                  state and local tax and administrative provisions; 
                  changing the senior citizens' property tax deferral 
                  program; providing grants, loan guarantees, and low 
                  interest loans; changing certain fiscal note 
                  requirements; providing for a land transfer; 
                  appropriating money; amending Minnesota Statutes 1996, 
                  sections 16A.102, subdivisions 1 and 2; 124A.03, 
                  subdivision 1f; 240.15, subdivisions 1 and 5; 
                  272.0211, subdivision 1; 273.135, subdivision 2; 
                  273.1391, subdivision 2; 273.1398, subdivisions 1a, 2, 
                  and 4; 275.07, by adding a subdivision; 290.01, 
                  subdivision 3b; 290.06, subdivisions 2c; 290.067, 
                  subdivision 2a; 290.0671, by adding subdivisions; 
                  290.091, subdivision 2; 290.0921, subdivision 3a; 
                  290.10; 290.21, subdivision 3; 290A.03, subdivision 3; 
                  290A.14; 295.52, subdivision 4a; 297A.01, subdivisions 
                  8 and 15; 297A.02, subdivisions 2 and 4; 297A.135, 
                  subdivisions 4, as amended; and 5, as added; 297A.25, 
                  subdivision 60, and by adding subdivisions; 297E.02, 
                  subdivisions 1, 4, and 6; 298.22, subdivision 2; 
                  298.221; 298.2213, subdivision 4; 298.225, subdivision 
                  1; 298.28, subdivisions 2, 3, 4, 6, 7, 9, 10, and 11; 
                  298.48, subdivision 1; 325E.112, by adding a 
                  subdivision; 462.396, subdivision 2; 462A.21, by 
                  adding a subdivision; 462A.222, subdivision 3; 
                  469.015, subdivision 4; 469.169, by adding 
                  subdivisions; 469.170, by adding a subdivision; 
                  469.171, subdivision 9; 469.174, by adding a 
                  subdivision; 469.175, subdivisions 5, 6, 6a, and by 
                  adding a subdivision; 469.176, subdivision 7; 469.177, 
                  by adding a subdivision; 469.1771, subdivision 5, and 
                  by adding a subdivision; 469.303; 473.39, by adding a 
                  subdivision; 473.3915, subdivisions 2 and 3; 475.58, 
                  subdivisions 1 and 3; 477A.0122, subdivision 6; 
                  477A.03, subdivision 2, and by adding a subdivision; 
                  and 477A.14; Minnesota Statutes 1997 Supplement, 
                  sections 3.986, subdivisions 2 and 4; 3.987, 
                  subdivisions 1 and 2; 3.988, subdivision 3; 3.989, 
                  subdivisions 1 and 2; 16A.152, subdivision 2; 60A.15, 
                  subdivision 1; 124.239, subdivisions 5, 5a, and 5b; 
                  124.315, subdivisions 4 and 5; 124.918, subdivision 8; 
                  270.60, subdivision 4; 270.67, subdivision 2; 272.02, 
                  subdivision 1; 272.115, subdivisions 4 and 5; 273.112, 
                  subdivisions 2, 3, and 4; 273.124, subdivision 14; 
                  273.126, subdivision 3; 273.127, subdivision 3; 
                  273.13, subdivisions 22, 23, 24, 25, and 31; 273.1382, 
                  subdivision 1, and by adding a subdivision; 275.065, 
                  subdivisions 3 and 6; 275.70, subdivision 5, and by 
                  adding a subdivision; 275.71, subdivisions 2, 3, and 
                  4; 275.72, by adding a subdivision; 276.04, 
                  subdivision 2; 287.08; 289A.02, subdivision 7; 
                  289A.19, subdivision 2; 290.01, subdivisions 19, 19a, 
                  19b, 19c, 19f, and 31; 290.0671, subdivision 1; 
                  290.0673, subdivisions 2 and 6; 290.091, subdivision 
                  6; 290.371, subdivision 2; 290A.03, subdivisions 11, 
                  13, and 15; 290B.03, subdivision 2; 290B.04, 
                  subdivisions 1, 3, and by adding subdivisions; 
                  290B.05, subdivisions 1, 2, and 4; 290B.06; 290B.07; 
                  290B.08, subdivision 2; 290B.09, subdivision 1; 
                  291.005, subdivision 1; 295.52, subdivision 4; 
                  297A.01, subdivision 16; 297A.25, subdivisions 3, 9, 
                  11, 59, and by adding a subdivision; 297A.256, 
                  subdivision 1; 297A.48, by adding a subdivision; 
                  297B.03; 297G.01, by adding a subdivision; 297G.03, 
                  subdivision 1; 297H.04, by adding a subdivision; 
                  298.24, subdivision 1; 298.28, subdivisions 9a and 9b; 
                  298.296, subdivision 4; 349.19, subdivision 2a; 
                  446A.085, subdivision 1; 462A.05, subdivision 39; 
                  462A.071, subdivisions 2, 4, 6, and 8; 465.715, by 
                  adding subdivisions; 469.169, subdivision 11; and 
                  477A.011, subdivision 36; Laws 1965, chapter 326, 
                  section 1, subdivision 5, as amended; Laws 1967, 
                  chapter 170, section 1, subdivision 5, as amended; 
                  Laws 1971, chapter 773, section 1, as amended; and 
                  section 2, as amended; Laws 1976, chapter 162, section 
                  1, as amended; Laws 1980, chapter 511, section 1, 
                  subdivision 2, as amended; section 2; and section 3; 
                  Laws 1984, chapter 380, section 1, as amended; and 
                  section 2; Laws 1991, chapter 291, article 8, section 
                  27, subdivision 3; Laws 1992, chapter 511, article 2, 
                  section 52, as amended; article 8, section 33, 
                  subdivision 5; Laws 1993, chapter 375, article 9, 
                  section 46, subdivisions 2, 3, and 5; Laws 1994, 
                  chapter 587, article 11, by adding; Laws 1995, chapter 
                  255, article 3, section 2, subdivision 1, as amended; 
                  and subdivision 4, as amended; chapter 264, article 2, 
                  section 44; Laws 1997, chapter 105, section 3, as 
                  amended; chapter 225, article 2, section 64; chapter 
                  231, article 1, section 16, as amended; article 2, 
                  section 63, subdivision 1; and section 68, 
                  subdivisions 1 and 3; article 5, section 18, 
                  subdivision 1; article 7, section 47; article 10, 
                  section 24; article 13, section 19; and Laws 1997 
                  Second Special Session chapter 2, section 4, 
                  subdivision 3; proposing coding for new law in 
                  Minnesota Statutes, chapters 272; 273; 290B; 298; 
                  365A; 462A; 469; 471; and 477A; repealing Minnesota 
                  Statutes 1996, sections 289A.50, subdivision 6; 
                  297A.02, subdivision 2; 298.012; 298.21; 298.23; 
                  298.34, subdivisions 1 and 4; 298.391, subdivisions 2 
                  and 5; and 365A.09; Minnesota Statutes 1997 
                  Supplement, sections 3.987, subdivision 3; 14.431; and 
                  273.13, subdivision 32. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                              PROPERTY TAX REBATE 
           Section 1.  [1998 PROPERTY TAX REBATE.] 
           (a) A credit is allowed against the tax imposed under 
        Minnesota Statutes, chapter 290, to an individual, other than a 
        dependent, as defined in sections 151 and 152 of the Internal 
        Revenue Code, disregarding section 152(b)(3) of the Internal 
        Revenue Code, equal to 20 percent of the qualified property tax 
        paid before January 1, 1999, for taxes assessed in 1997.  The 
        maximum amount of qualifying tax to which the credit applies is 
        $7,500. 
           (b) For property owned and occupied by the taxpayer during 
        1998, qualified property tax means property taxes payable as 
        defined in Minnesota Statutes, section 290A.03, subdivision 13, 
        assessed in 1997 and payable in 1998, and deductible by the 
        individual under section 164 of the Internal Revenue Code of 
        1986, as amended through December 31, 1997, except the 
        requirement in Minnesota Statutes, section 290A.03, subdivision 
        13, that the taxpayer own and occupy the property on January 2, 
        1998, does not apply.  In the case of agricultural land assessed 
        as part of a homestead pursuant to Minnesota Statutes, section 
        273.13, subdivision 23, the owner is allowed to calculate the 
        credit on all property taxes on the homestead, except to the 
        extent the owner is required to furnish a rent certificate under 
        Minnesota Statutes, section 290A.19, to a tenant leasing a part 
        of the farm homestead. 
           (c) For a renter, the qualified property tax means the 
        amount of rent constituting property taxes under Minnesota 
        Statutes, section 290A.03, subdivision 11, based on rent paid in 
        1998.  If two or more renters could be claimants under Minnesota 
        Statutes, chapter 290A, with regard to the rent constituting 
        property taxes, the rules under Minnesota Statutes, section 
        290A.03, subdivision 8, paragraph (f), apply to determine the 
        amount of the credit for the individual. 
           (d) For an individual who both owned and rented principal 
        residences in calendar year 1998, qualified taxes are the sum of 
        the amounts under paragraphs (b) and (c). 
           (e) If the amount of the credit under this section exceeds 
        the taxpayer's tax liability under Minnesota Statutes, chapter 
        290, the commissioner shall refund the excess. 
           (f) To claim a credit under this section, the taxpayer must 
        attach a copy of the property tax statement and certificate of 
        rent paid, as applicable, and provide any additional information 
        the commissioner requires. 
           (g) This credit applies to taxable years beginning after 
        December 31, 1997, and before January 1, 1999. 
           (h) Payment of the credit under this section is subject to 
        Minnesota Statutes, chapter 270A, and any other provision 
        applicable to refunds under Minnesota Statutes, chapter 290. 
           (i) An amount sufficient to pay refunds under this section 
        is appropriated to the commissioner of revenue from the general 
        fund. 
           Sec. 2.  [TRANSFER TO GENERAL FUND.] 
           The commissioner of finance shall transfer $500,000,000 
        from the property tax reform account to the general fund on July 
        1, 1998. 
           Sec. 3.  Laws 1997, chapter 231, article 1, section 16, as 
        amended by Laws 1997, First Special Session chapter 5, section 
        35, and Laws 1997, Third Special Session chapter 3, section 11, 
        and Laws 1998, chapter 304, section 1, is amended to read: 
           Sec. 16.  [PROPERTY TAX REBATE.] 
           (a) A credit is allowed against the tax imposed under 
        Minnesota Statutes, chapter 290, to an individual, other than as 
        a dependent, as defined in sections 151 and 152 of the Internal 
        Revenue Code, disregarding section 152(b)(3) of the Internal 
        Revenue Code, equal to 20 percent of the qualified property tax 
        paid before January 1, 1998, for taxes assessed in 1996.  
           (b) For property owned and occupied by the taxpayer during 
        1997, qualified tax means property taxes payable as defined in 
        Minnesota Statutes, section 290A.03, subdivision 13, assessed in 
        1996 and payable in 1997, except the requirement that the 
        taxpayer own and occupy the property on January 2, 1997, does 
        not apply.  The credit is allowed only to the individual and 
        spouse, if any, who paid the tax, whether directly, through an 
        escrow arrangement, or under a contractual agreement for the 
        purchase or sale of the property.  In the case of agricultural 
        land assessed as part of a homestead pursuant to Minnesota 
        Statutes, section 273.13, subdivision 23, the owner is allowed 
        to calculate the credit on all property taxes on the homestead, 
        except to the extent the owner is required to furnish a rent 
        certificate under Minnesota Statutes, section 290A.19, to a 
        tenant leasing a part of the farm homestead. 
           (c) For a renter, the qualified property tax means the 
        amount of rent constituting property taxes under Minnesota 
        Statutes, section 290A.03, subdivision 11, based on rent paid in 
        1997.  If two or more renters could be claimants under Minnesota 
        Statutes, chapter 290A with regard to the rent constituting 
        property taxes, the rules under Minnesota Statutes, section 
        290A.03, subdivision 8, paragraph (f), applies to determine the 
        amount of the credit for the individual. 
           (d) For an individual who both owned and rented principal 
        residences in calendar year 1997, qualified taxes are the sum of 
        the amounts under paragraphs (a) and (b). 
           (e) If the amount of the credit under this subdivision 
        exceeds the taxpayer's tax liability under this chapter, the 
        commissioner shall refund the excess. 
           (f) To claim a credit under this subdivision, the taxpayer 
        must attach a copy of the property tax statement and certificate 
        of rent paid, as applicable, and provide any additional 
        information the commissioner requires. 
           (g) An amount sufficient to pay refunds under this 
        subdivision is appropriated to the commissioner from the general 
        fund. 
           (h) This credit applies to taxable years beginning after 
        December 31, 1996, and before January 1, 1998. 
           (i) Payment of the credit under this section is subject to 
        Minnesota Statutes, chapter 270A, and any other provision 
        applicable to refunds under Minnesota Statutes, chapter 290. 
           Sec. 4.  [APPROPRIATION.] 
           $1,837,000 is appropriated from the general fund for fiscal 
        year 1999 to the commissioner of revenue to administer section 1.
                                   ARTICLE 2
                              PROPERTY TAX REFORM
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        124.239, subdivision 5, is amended to read: 
           Subd. 5.  [LEVY AUTHORIZED.] A district, after local board 
        approval, may levy for costs related to an approved facility 
        plan as follows:  
           (a) if the district has indicated to the commissioner that 
        bonds will be issued, the district may levy for the principal 
        and interest payments on outstanding bonds issued according to 
        subdivision 3 after reduction for any alternative facilities aid 
        receivable under subdivision 5a; or 
           (b) if the district has indicated to the commissioner that 
        the plan will be funded through levy, the district may levy 
        according to the schedule approved in the plan after reduction 
        for any alternative facilities aid receivable under subdivision 
        5a. 
           Sec. 2.  Minnesota Statutes 1997 Supplement, section 
        124.239, subdivision 5a, is amended to read: 
           Subd. 5a.  [ALTERNATIVE FACILITIES AID.] A district's 
        alternative facilities aid is the amount equal to the district's 
        annual debt service costs, provided that the amount does not 
        exceed the amount certified to be levied for those purposes for 
        taxes payable in 1997, or for a district that made a levy under 
        subdivision 5, paragraph (b), the lesser of the district's 
        annual levy amount, or one-sixth of the amount of levy that it 
        certified for that purpose for taxes payable in 1998. 
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 
        124.239, subdivision 5b, is amended to read: 
           Subd. 5b.  [ALTERNATIVE FACILITIES APPROPRIATION.] (a) An 
        amount not to exceed $17,000,000 $19,700,000 for fiscal year 
        2000 and $20,000,000 for fiscal year 2001 and each year 
        thereafter is appropriated from the general fund to the 
        commissioner of children, families, and learning for fiscal year 
        2000 and each year thereafter for payment of alternative 
        facilities aid under subdivision 5a.  The 2000 appropriation 
        includes $1,700,000 for 1999 and $15,300,000 for 2000. 
           (b) The appropriation in paragraph (a) must be reduced by 
        the amount of any money specifically appropriated for the same 
        purpose in any year from any state fund. 
           Sec. 4.  Minnesota Statutes 1997 Supplement, section 
        124.315, subdivision 4, is amended to read: 
           Subd. 4.  [INTEGRATION LEVY.] A district may levy an amount 
        equal to 46 33 percent for fiscal year 2000 and 22 percent for 
        fiscal year 2001 and thereafter of the district's integration 
        revenue as defined in subdivision 3. 
           Sec. 5.  Minnesota Statutes 1997 Supplement, section 
        124.315, subdivision 5, is amended to read: 
           Subd. 5.  [INTEGRATION AID.] A district's integration aid 
        equals 54 67 percent for fiscal year 2000 and 78 percent for 
        fiscal year 2001 and thereafter of the district's integration 
        revenue as defined in subdivision 3. 
           Sec. 6.  Minnesota Statutes 1996, section 124A.03, 
        subdivision 1f, is amended to read: 
           Subd. 1f.  [REFERENDUM EQUALIZATION REVENUE.] A district's 
        referendum equalization revenue equals $315 $350 times the 
        district's actual pupil units for that year. 
           Referendum equalization revenue must not exceed a 
        district's total referendum revenue for that year. 
           Sec. 7.  Minnesota Statutes 1997 Supplement, section 
        273.127, subdivision 3, is amended to read: 
           Subd. 3.  [CLASS 4C PROPERTIES.] For the market value of 
        properties that meet the criteria of subdivision 2, paragraph 
        (a), and which no longer qualify as a result of the eligibility 
        criteria specified in section 273.126, a class rate of 2.4 
        percent applies for taxes payable in 1999 and a class rate of 
        2.6 2.5 percent applies for taxes payable in 2000. 
           Sec. 8.  Minnesota Statutes 1997 Supplement, section 
        273.13, subdivision 22, is amended to read: 
           Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
        23, real estate which is residential and used for homestead 
        purposes is class 1.  The market value of class 1a property must 
        be determined based upon the value of the house, garage, and 
        land.  
           For taxes payable in 1998 and thereafter, The first $75,000 
        of market value of class 1a property has a net class rate of one 
        percent of its market value; and the market value of class 1a 
        property that exceeds $75,000 has a class rate of 1.85 1.7 
        percent of its market value.  
           (b) Class 1b property includes homestead real estate or 
        homestead manufactured homes used for the purposes of a 
        homestead by 
           (1) any blind person, or the blind person and the blind 
        person's spouse; or 
           (2) any person, hereinafter referred to as "veteran," who: 
           (i) served in the active military or naval service of the 
        United States; and 
           (ii) is entitled to compensation under the laws and 
        regulations of the United States for permanent and total 
        service-connected disability due to the loss, or loss of use, by 
        reason of amputation, ankylosis, progressive muscular 
        dystrophies, or paralysis, of both lower extremities, such as to 
        preclude motion without the aid of braces, crutches, canes, or a 
        wheelchair; and 
           (iii) has acquired a special housing unit with special 
        fixtures or movable facilities made necessary by the nature of 
        the veteran's disability, or the surviving spouse of the 
        deceased veteran for as long as the surviving spouse retains the 
        special housing unit as a homestead; or 
           (3) any person who: 
           (i) is permanently and totally disabled and 
           (ii) receives 90 percent or more of total income from 
           (A) aid from any state as a result of that disability; or 
           (B) supplemental security income for the disabled; or 
           (C) workers' compensation based on a finding of total and 
        permanent disability; or 
           (D) social security disability, including the amount of a 
        disability insurance benefit which is converted to an old age 
        insurance benefit and any subsequent cost of living increases; 
        or 
           (E) aid under the federal Railroad Retirement Act of 1937, 
        United States Code Annotated, title 45, section 228b(a)5; or 
           (F) a pension from any local government retirement fund 
        located in the state of Minnesota as a result of that 
        disability; or 
           (G) pension, annuity, or other income paid as a result of 
        that disability from a private pension or disability plan, 
        including employer, employee, union, and insurance plans and 
           (iii) has household income as defined in section 290A.03, 
        subdivision 5, of $50,000 or less; or 
           (4) any person who is permanently and totally disabled and 
        whose household income as defined in section 290A.03, 
        subdivision 5, is 275 percent or less of the federal poverty 
        level. 
           Property is classified and assessed under clause (4) only 
        if the government agency or income-providing source certifies, 
        upon the request of the homestead occupant, that the homestead 
        occupant satisfies the disability requirements of this paragraph.
           Property is classified and assessed pursuant to clause (1) 
        only if the commissioner of economic security certifies to the 
        assessor that the homestead occupant satisfies the requirements 
        of this paragraph.  
           Permanently and totally disabled for the purpose of this 
        subdivision means a condition which is permanent in nature and 
        totally incapacitates the person from working at an occupation 
        which brings the person an income.  The first $32,000 market 
        value of class 1b property has a net class rate of .45 percent 
        of its market value.  The remaining market value of class 1b 
        property has a net class rate using the rates for class 1 or 
        class 2a property, whichever is appropriate, of similar market 
        value.  
           (c) Class 1c property is commercial use real property that 
        abuts a lakeshore line and is devoted to temporary and seasonal 
        residential occupancy for recreational purposes but not devoted 
        to commercial purposes for more than 250 days in the year 
        preceding the year of assessment, and that includes a portion 
        used as a homestead by the owner, which includes a dwelling 
        occupied as a homestead by a shareholder of a corporation that 
        owns the resort or a partner in a partnership that owns the 
        resort, even if the title to the homestead is held by the 
        corporation or partnership.  For purposes of this clause, 
        property is devoted to a commercial purpose on a specific day if 
        any portion of the property, excluding the portion used 
        exclusively as a homestead, is used for residential occupancy 
        and a fee is charged for residential occupancy.  In order for a 
        property to be classified as class 1c, at least 40 percent of 
        the annual gross lodging receipts related to the property must 
        be from business conducted between Memorial Day weekend and 
        Labor Day weekend, and at least 60 percent of all bookings by 
        lodging guests during the year must be for periods of at least 
        two consecutive nights.  Class 1c property has a class rate of 
        one percent of total market value with the following 
        limitation:  the area of the property must not exceed 100 feet 
        of lakeshore footage for each cabin or campsite located on the 
        property up to a total of 800 feet and 500 feet in depth, 
        measured away from the lakeshore.  If any portion of the class 
        1c resort property is classified as class 4c under subdivision 
        25, the entire property must meet the requirements of 
        subdivision 25, paragraph (d), clause (1), to qualify for class 
        1c treatment under this paragraph. 
           (d) Class 1d property includes structures that meet all of 
        the following criteria: 
           (1) the structure is located on property that is classified 
        as agricultural property under section 273.13, subdivision 23; 
           (2) the structure is occupied exclusively by seasonal farm 
        workers during the time when they work on that farm, and the 
        occupants are not charged rent for the privilege of occupying 
        the property, provided that use of the structure for storage of 
        farm equipment and produce does not disqualify the property from 
        classification under this paragraph; 
           (3) the structure meets all applicable health and safety 
        requirements for the appropriate season; and 
           (4) the structure is not saleable as residential property 
        because it does not comply with local ordinances relating to 
        location in relation to streets or roads. 
           The market value of class 1d property has the same class 
        rates as class 1a property under paragraph (a). 
           Sec. 9.  Minnesota Statutes 1997 Supplement, section 
        273.13, subdivision 23, is amended to read: 
           Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
        land including any improvements that is homesteaded.  The market 
        value of the house and garage and immediately surrounding one 
        acre of land has the same class rates as class 1a property under 
        subdivision 22.  The value of the remaining land including 
        improvements up to $115,000 has a net class rate of 0.4 0.35 
        percent of market value.  The remaining value of class 2a 
        property over $115,000 of market value that does not exceed 320 
        acres has a net class rate of 0.9 0.8 percent of market value. 
        The remaining property over the $115,000 market value in excess 
        of 320 acres has a class rate of 1.4 1.25 percent of market 
        value. 
           (b) Class 2b property is (1) real estate, rural in 
        character and used exclusively for growing trees for timber, 
        lumber, and wood and wood products; (2) real estate that is not 
        improved with a structure and is used exclusively for growing 
        trees for timber, lumber, and wood and wood products, if the 
        owner has participated or is participating in a cost-sharing 
        program for afforestation, reforestation, or timber stand 
        improvement on that particular property, administered or 
        coordinated by the commissioner of natural resources; (3) real 
        estate that is nonhomestead agricultural land; or (4) a landing 
        area or public access area of a privately owned public use 
        airport.  Class 2b property has a net class rate of 1.4 1.25 
        percent of market value. 
           (c) Agricultural land as used in this section means 
        contiguous acreage of ten acres or more, used during the 
        preceding year for agricultural purposes.  "Agricultural 
        purposes" as used in this section means the raising or 
        cultivation of agricultural products or 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 Number 99-198.  Contiguous acreage on 
        the same parcel, or contiguous acreage on an immediately 
        adjacent parcel under the same ownership, may also qualify as 
        agricultural land, but only if it is pasture, timber, waste, 
        unusable wild land, or land included in state or federal farm 
        programs.  Agricultural classification for property shall be 
        determined excluding the house, garage, and immediately 
        surrounding one acre of land, and shall not be based upon the 
        market value of any residential structures on the parcel or 
        contiguous parcels under the same ownership. 
           (d) Real estate, excluding the house, garage, and 
        immediately surrounding one acre of land, of less than ten acres 
        which is exclusively and intensively used for raising or 
        cultivating agricultural products, shall be considered as 
        agricultural land.  
           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. 
           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. 
           (e) 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 described in sections 18.44 to 18.61, fruit of all kinds, 
        vegetables, forage, grains, bees, and apiary products by the 
        owner; 
           (2) fish bred for sale and consumption if the fish breeding 
        occurs on land zoned for agricultural use; 
           (3) the commercial boarding of horses if the boarding is 
        done in conjunction with raising or cultivating agricultural 
        products as defined in clause (1); 
           (4) property which is owned and operated by nonprofit 
        organizations used for equestrian activities, excluding racing; 
        and 
           (5) game birds and waterfowl bred and raised for use on a 
        shooting preserve licensed under section 97A.115.  
           (f) 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.  
           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.  
           (g) To qualify for classification under paragraph (b), 
        clause (4), a privately owned public use airport must be 
        licensed as a public airport under section 360.018.  For 
        purposes of paragraph (b), clause (4), "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 paragraph (b), clause 
        (4), 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 paragraph (b), clause (4).  For purposes of 
        paragraph (b), clause (4), "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.
           Sec. 10.  Minnesota Statutes 1997 Supplement, section 
        273.13, subdivision 24, is amended to read: 
           Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
        property and utility real and personal property, except class 5 
        property as identified in subdivision 31, clause (1), is class 
        3a.  Each parcel has a class rate of 2.7 2.45 percent of the 
        first tier of market value, and 4.0 3.5 percent of the remaining 
        market value, except that in the case of contiguous parcels of 
        commercial and industrial 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 class rate.  For 
        the purposes of this subdivision, the first tier means the first 
        $150,000 of market value.  In the case of utility property owned 
        by one person or entity, only one parcel in each county has a 
        reduced class rate on the first tier of market value. 
           For purposes of this paragraph, parcels are considered to 
        be contiguous even if they are separated from each other by a 
        road, street, vacant lot, waterway, or other similar intervening 
        type of property. 
           (b) Employment property defined in section 469.166, during 
        the period provided in section 469.170, shall constitute class 
        3b and has a class rate of 2.3 percent of the first $50,000 of 
        market value and 3.6 3.5 percent of the remainder, except that 
        for employment property located in a border city enterprise zone 
        designated pursuant to section 469.168, subdivision 4, paragraph 
        (c), the class rate of the first tier of market value and the 
        class rate of the remainder is determined under paragraph (a), 
        unless the governing body of the city designated as an 
        enterprise zone determines that a specific parcel shall be 
        assessed pursuant to the first clause of this sentence.  The 
        governing body may provide for assessment under the first clause 
        of the preceding sentence only for property which is located in 
        an area which has been designated by the governing body for the 
        receipt of tax reductions authorized by section 469.171, 
        subdivision 1. 
           (c) Structures which are (i) located on property classified 
        as class 3a, (ii) constructed under an initial building permit 
        issued after January 2, 1996, (iii) located in a transit zone as 
        defined under section 473.3915, subdivision 3, (iv) located 
        within the boundaries of a school district, and (v) not 
        primarily used for retail or transient lodging purposes, shall 
        have a class rate equal to 85 percent of the class rate of the 
        second tier of the commercial property rate under paragraph (a) 
        on any portion of the market value that does not qualify for the 
        first tier class rate under paragraph (a).  As used in item (v), 
        a structure is primarily used for retail or transient lodging 
        purposes if over 50 percent of its square footage is used for 
        those purposes.  The four percent rate A class rate equal to 85 
        percent of the class rate of the second tier of the commercial 
        property class rate under paragraph (a) shall also apply to 
        improvements to existing structures that meet the requirements 
        of items (i) to (v) if the improvements are constructed under an 
        initial building permit issued after January 2, 1996, even if 
        the remainder of the structure was constructed prior to January 
        2, 1996.  For the purposes of this paragraph, a structure shall 
        be considered to be located in a transit zone if any portion of 
        the structure lies within the zone.  If any property once 
        eligible for treatment under this paragraph ceases to remain 
        eligible due to revisions in transit zone boundaries, the 
        property shall continue to receive treatment under this 
        paragraph for a period of three years. 
           Sec. 11.  Minnesota Statutes 1997 Supplement, section 
        273.13, subdivision 25, as amended by Laws 1997, Third Special 
        Session chapter 3, section 28, is amended to read: 
           Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
        estate containing four or more units and used or held for use by 
        the owner or by the tenants or lessees of the owner as a 
        residence for rental periods of 30 days or more.  Class 4a also 
        includes hospitals licensed under sections 144.50 to 144.56, 
        other than hospitals exempt under section 272.02, and contiguous 
        property used for hospital purposes, without regard to whether 
        the property has been platted or subdivided.  Class 4a property 
        in a city with a population of 5,000 or less, that is (1) 
        located outside of the metropolitan area, as defined in section 
        473.121, subdivision 2, or outside any county contiguous to the 
        metropolitan area, and (2) whose city boundary is at least 15 
        miles from the boundary of any city with a population greater 
        than 5,000 has a class rate of 2.3 2.15 percent of market value. 
        All other class 4a property has a class rate of 2.9 2.5 percent 
        of market value.  For purposes of this paragraph, population has 
        the same meaning given in section 477A.011, subdivision 3. 
           (b) Class 4b includes: 
           (1) residential real estate containing less than four units 
        that does not qualify as class 4bb, other than seasonal 
        residential, and recreational; 
           (2) manufactured homes not classified under any other 
        provision; 
           (3) a dwelling, garage, and surrounding one acre of 
        property on a nonhomestead farm classified under subdivision 23, 
        paragraph (b) containing two or three units; 
           (4) unimproved property that is classified residential as 
        determined under section 273.13, subdivision 33.  
           Class 4b property has a class rate of 2.1 1.7 percent of 
        market value.  
           (c) Class 4bb includes: 
           (1) nonhomestead residential real estate containing one 
        unit, other than seasonal residential, and recreational; and 
           (2) a single family dwelling, garage, and surrounding one 
        acre of property on a nonhomestead farm classified under 
        subdivision 23, paragraph (b). 
           Class 4bb has a class rate of 1.9 1.25 percent on the first 
        $75,000 of market value and a class rate of 2.1 1.7 percent of 
        its market value that exceeds $75,000. 
           Property that has been classified as seasonal recreational 
        residential property at any time during which it has been owned 
        by the current owner or spouse of the current owner does not 
        qualify for class 4bb. 
           (d) Class 4c property includes: 
           (1) except as provided in subdivision 22, paragraph (c), 
        real property devoted to temporary and seasonal residential 
        occupancy for recreation purposes, including real property 
        devoted to temporary and seasonal residential occupancy for 
        recreation purposes and not devoted to commercial purposes for 
        more than 250 days in the year preceding the year of 
        assessment.  For purposes of this clause, property is devoted to 
        a commercial purpose on a specific day if any portion of the 
        property is used for residential occupancy, and a fee is charged 
        for residential occupancy.  In order for a property to be 
        classified as class 4c, seasonal recreational residential for 
        commercial purposes, at least 40 percent of the annual gross 
        lodging receipts related to the property must be from business 
        conducted between Memorial Day weekend and Labor Day weekend 
        during 90 consecutive days and either (i) at least 60 percent of 
        all paid bookings by lodging guests during the year must be for 
        periods of at least two consecutive nights; or (ii) at least 20 
        percent of the annual gross receipts must be from charges for 
        rental of fish houses, boats and motors, snowmobiles, downhill 
        or cross-country ski equipment, or charges for marina services, 
        launch services, and guide services, or the sale of bait and 
        fishing tackle.  For purposes of this determination, a paid 
        booking of five or more nights shall be counted as two 
        bookings.  Class 4c also includes commercial use real property 
        used exclusively for recreational purposes in conjunction with 
        class 4c property devoted to temporary and seasonal residential 
        occupancy for recreational purposes, up to a total of two acres, 
        provided the property is not devoted to commercial recreational 
        use for more than 250 days in the year preceding the year of 
        assessment and is located within two miles of the class 4c 
        property with which it is used.  Class 4c property classified in 
        this clause also includes the remainder of class 1c 
        resorts provided that the entire property including that portion 
        of the property classified as class 1c also meets the 
        requirements for class 4c under this clause; otherwise the 
        entire property is classified as class 3.  Owners of real 
        property devoted to temporary and seasonal residential occupancy 
        for recreation purposes and all or a portion of which was 
        devoted to commercial purposes for not more than 250 days in the 
        year preceding the year of assessment desiring classification as 
        class 1c or 4c, must submit a declaration to the assessor 
        designating the cabins or units occupied for 250 days or less in 
        the year preceding the year of assessment by January 15 of the 
        assessment year.  Those cabins or units and a proportionate 
        share of the land on which they are located will be designated 
        class 1c or 4c as otherwise provided.  The remainder of the 
        cabins or units and a proportionate share of the land on which 
        they are located will be designated as class 3a.  The owner of 
        property desiring designation as class 1c or 4c property must 
        provide guest registers or other records demonstrating that the 
        units for which class 1c or 4c designation is sought were not 
        occupied for more than 250 days in the year preceding the 
        assessment if so requested.  The portion of a property operated 
        as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
        nonresidential facility operated on a commercial basis not 
        directly related to temporary and seasonal residential occupancy 
        for recreation purposes shall not qualify for class 1c or 4c; 
           (2) qualified property used as a golf course if: 
           (i) any portion of the property is located within a county 
        that has a population of less than 50,000, or within a county 
        containing a golf course owned by a municipality, the county, or 
        a special taxing district; 
           (ii) it is open to the public on a daily fee basis.  It may 
        charge membership fees or dues, but a membership fee may not be 
        required in order to use the property for golfing, and its green 
        fees for golfing must be comparable to green fees typically 
        charged by municipal courses; and 
           (iii) (ii) it meets the requirements of section 273.112, 
        subdivision 3, paragraph (d). 
           A structure used as a clubhouse, restaurant, or place of 
        refreshment in conjunction with the golf course is classified as 
        class 3a property. 
           (3) real property up to a maximum of one acre of land owned 
        by a nonprofit community service oriented organization; provided 
        that the property is not used for a revenue-producing activity 
        for more than six days in the calendar year preceding the year 
        of assessment and the property is not used for residential 
        purposes on either a temporary or permanent basis.  For purposes 
        of this clause, a "nonprofit community service oriented 
        organization" means any corporation, society, association, 
        foundation, or institution organized and operated exclusively 
        for charitable, religious, fraternal, civic, or educational 
        purposes, and which is exempt from federal income taxation 
        pursuant to section 501(c)(3), (10), or (19) of the Internal 
        Revenue Code of 1986, as amended through December 31, 1990.  For 
        purposes of this clause, "revenue-producing activities" shall 
        include but not be limited to property or that portion of the 
        property that is used as an on-sale intoxicating liquor or 3.2 
        percent malt liquor establishment licensed under chapter 340A, a 
        restaurant open to the public, bowling alley, a retail store, 
        gambling conducted by organizations licensed under chapter 349, 
        an insurance business, or office or other space leased or rented 
        to a lessee who conducts a for-profit enterprise on the 
        premises.  Any portion of the property which is used for 
        revenue-producing activities for more than six days in the 
        calendar year preceding the year of assessment shall be assessed 
        as class 3a.  The use of the property for social events open 
        exclusively to members and their guests for periods of less than 
        24 hours, when an admission is not charged nor any revenues are 
        received by the organization shall not be considered a 
        revenue-producing activity; 
           (4) post-secondary student housing of not more than one 
        acre of land that is owned by a nonprofit corporation organized 
        under chapter 317A and is used exclusively by a student 
        cooperative, sorority, or fraternity for on-campus housing or 
        housing located within two miles of the border of a college 
        campus; and 
           (5) manufactured home parks as defined in section 327.14, 
        subdivision 3; and 
           (6) real property that is actively and exclusively devoted 
        to indoor fitness, health, social, recreational, and related 
        uses, is owned and operated by a not-for-profit corporation, and 
        is located within the metropolitan area as defined in section 
        473.121, subdivision 2. 
           Class 4c property has a class rate of 2.1 1.8 percent of 
        market value, except that (i) for each parcel of seasonal 
        residential recreational property not used for commercial 
        purposes the first $75,000 of market value has a class rate 
        of 1.4 1.25 percent, and the market value that exceeds $75,000 
        has a class rate of 2.5 2.2 percent, and (ii) manufactured home 
        parks assessed under clause (5) have a class rate of two 
        percent, and (iii) property described in paragraph (d), clause 
        (4), has the same class rate as the rate applicable to the first 
        tier of class 4bb nonhomestead residential real estate under 
        paragraph (c).  
           (e) Class 4d property is qualifying low-income rental 
        housing certified to the assessor by the housing finance agency 
        under sections 273.126 and 462A.071.  Class 4d includes land in 
        proportion to the total market value of the building that is 
        qualifying low-income rental housing.  For all properties 
        qualifying as class 4d, the market value determined by the 
        assessor must be based on the normal approach to value using 
        normal unrestricted rents. 
           Class 4d property has a class rate of one percent of market 
        value.  
           (f) Class 4e property consists of the residential portion 
        of any structure located within a city that was converted from 
        nonresidential use to residential use, provided that: 
           (1) the structure had formerly been used as a warehouse; 
           (2) the structure was originally constructed prior to 1940; 
           (3) the conversion was done after December 31, 1995, but 
        before January 1, 2003; and 
           (4) the conversion involved an investment of at least 
        $25,000 per residential unit. 
           Class 4e property has a class rate of 2.3 percent, provided 
        that a structure is eligible for class 4e classification only in 
        the 12 assessment years immediately following the conversion. 
           Sec. 12.  Minnesota Statutes 1997 Supplement, section 
        273.13, subdivision 31, is amended to read: 
           Subd. 31.  [CLASS 5.] Class 5 property includes:  
           (1) tools, implements, and machinery 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, which are fixtures; 
           (2) unmined iron ore and low-grade iron-bearing formations 
        as defined in section 273.14; and 
           (3) all other property not otherwise classified. 
           Class 5 property has a class rate of 4.0 3.5 percent of 
        market value for taxes payable in 1998 and thereafter. 
           Sec. 13.  Minnesota Statutes 1997 Supplement, section 
        273.1382, subdivision 1, is amended to read: 
           Subdivision 1.  [EDUCATION HOMESTEAD CREDIT.] Each year, 
        beginning with property taxes payable in 1998, the respective 
        county auditors shall determine the initial tax rate for each 
        school district for the general education levy certified under 
        section 124A.23, subdivision 2 or 3.  That rate plus the school 
        district's education homestead credit tax rate adjustment under 
        section 275.08, subdivision 1e, shall be the general education 
        homestead credit local tax rate for the district.  The auditor 
        shall then determine a general education homestead credit for 
        each homestead within the county equal to 32 68 percent for 
        taxes payable in 1999 and 69 percent for taxes payable in 2000 
        and thereafter of the general education homestead credit local 
        tax rate times the net tax capacity of the homestead for the 
        taxes payable year.  The amount of general education homestead 
        credit for a homestead may not exceed $225 $320 for taxes 
        payable in 1999 and $335 for taxes payable in 2000 and 
        thereafter.  In the case of an agricultural homestead, only the 
        net tax capacity of the house, garage, and surrounding one acre 
        of land shall be used in determining the property's education 
        homestead credit. 
           Sec. 14.  Minnesota Statutes 1997 Supplement, section 
        273.1382, is amended by adding a subdivision to read: 
           Subd. 1a.  [CREDIT PERCENTAGE REDUCTION.] If the general 
        education levy target for fiscal year 2000 or 2001 is increased 
        by another law enacted prior to the 1999 legislative session, 
        the commissioner of revenue shall adjust the percentage rates of 
        the education homestead credit for the corresponding taxes 
        payable year by multiplying the percentage rate by the ratio of 
        the prior general education levy target to the current general 
        education levy target.  If an adjustment is made under this 
        section for fiscal year 2001, the adjusted rate shall remain in 
        effect for future years until amended by subsequent legislation. 
           Sec. 15.  Minnesota Statutes 1996, section 273.1398, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
        1997 2000, for purposes of computing the fiscal disparity 
        adjustment only, the tax base differential is 0.25 0.2 percent 
        of the assessment year 1995 1998 taxable market value of class 
        4c noncommercial seasonal recreational residential 3 
        commercial-industrial property up to $72,000 over $150,000.  
           (b) For aids payable in 1998, the tax base differential is 
        0.25 percent of the assessment year 1996 taxable market value of 
        class 4c noncommercial seasonal recreational residential 
        property up to $72,000. 
           Sec. 16.  Minnesota Statutes 1996, section 273.1398, 
        subdivision 2, is amended to read: 
           Subd. 2.  [HOMESTEAD AND AGRICULTURAL CREDIT AID.] 
        Homestead and agricultural credit aid for each unique taxing 
        jurisdiction equals the product of (1) the homestead and 
        agricultural credit aid base, and (2) the growth adjustment 
        factor, plus the net tax capacity adjustment and the fiscal 
        disparity adjustment.  For aid payable in 2000, each county 
        shall have its homestead and agricultural credit aid permanently 
        reduced by an amount equal to one-third of the additional amount 
        received by the county under section 477A.03, subdivision 2, 
        paragraph (c), clause (ii). 
           Sec. 17.  Minnesota Statutes 1996, section 273.1398, 
        subdivision 4, is amended to read: 
           Subd. 4.  [DISPARITY REDUCTION CREDIT.] (a) Beginning with 
        taxes payable in 1989, class 4a, class 3a, and class 3b property 
        qualifies for a disparity reduction credit if:  (1) the property 
        is located in a border city that has an enterprise zone 
        designated pursuant to section 469.168, subdivision 4; (2) the 
        property is located in a city with a population greater than 
        2,500 and less than 35,000 according to the 1980 decennial 
        census; (3) the city is adjacent to a city in another state or 
        immediately adjacent to a city adjacent to a city in another 
        state; and (4) the adjacent city in the other state has a 
        population of greater than 5,000 and less than 75,000.  
           (b) The credit is an amount sufficient to reduce (i) the 
        taxes levied on class 4a property to 2.3 percent of the 
        property's market value and (ii) the tax on class 3a and class 
        3b property to 3.3 2.3 percent of market value.  
           (c) The county auditor shall annually certify the costs of 
        the credits to the department of revenue.  The department shall 
        reimburse local governments for the property taxes foregone as 
        the result of the credits in proportion to their total levies. 
           Sec. 18.  Minnesota Statutes 1997 Supplement, section 
        290A.03, subdivision 11, is amended to read: 
           Subd. 11.  [RENT CONSTITUTING PROPERTY TAXES.] "Rent 
        constituting property taxes" means 18 19 percent of the gross 
        rent actually paid in cash, or its equivalent, or the portion of 
        rent paid in lieu of property taxes, in any calendar year by a 
        claimant for the right of occupancy of the claimant's Minnesota 
        homestead in the calendar year, and which rent constitutes the 
        basis, in the succeeding calendar year of a claim for relief 
        under this chapter by the claimant.  
           Sec. 19.  Minnesota Statutes 1997 Supplement, 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, 
        273.1382, 273.1391, 273.42, subdivision 2, and any other state 
        paid property tax credits in any calendar year.  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 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 18 19 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. 
           Sec. 20.  Minnesota Statutes 1996, section 477A.0122, 
        subdivision 6, is amended to read: 
           Subd. 6.  [REPORT.] (a) On or before March 15 of the year 
        following the year in which the distributions under this section 
        are received, each county shall file with the commissioner of 
        revenue and commissioner of human services a report on prior 
        year expenditures for out-of-home placement and family 
        preservation, including expenditures under this section.  For 
        the human services programs specified in this section, the 
        commissioner of revenue and commissioner of human services, in 
        consultation with representatives of county governments, shall 
        make a recommendation to the 1999 legislature as to which 
        current reporting requirements imposed on county governments, if 
        any, may be eliminated, replaced, or consolidated on the report 
        established by this section.  For aid payable in calendar year 
        2000 and thereafter, each county shall provide information on 
        the amount of state aid, local property tax revenue, and federal 
        aid expended by that county on the programs specified in this 
        section using the consolidated financial report recommended by 
        the commissioner of revenue and commissioner of human services 
        under this subdivision. 
           (b) The commissioner of revenue and the commissioner of 
        human services, in consultation with representatives of county 
        governments and children's advocacy representatives, shall study 
        the current formula used in distributing aid under this section 
        and factors related to out-of-home placement and family 
        preservation expenditures and make a report to the house and 
        senate tax committees by February 1, 1999.  The report shall 
        include a recommendation for a new formula to be used in 
        distributing the aid under this section, beginning with aids 
        payable in 2000. 
           Sec. 21.  [REPEALER.] 
           Minnesota Statutes 1997 Supplement, section 273.13, 
        subdivision 32, is repealed. 
           Sec. 22.  [APPROPRIATIONS; FUND TRANSFERS.] 
           Subdivision 1.  [GENERAL FUND TRANSFER.] The sum of 
        $12,027,000 is transferred from the property tax reform account 
        to the general fund on June 30, 1999. 
           Subd. 2.  [EDUCATION LEVY REDUCTION APPROPRIATION.] In 
        addition to any amount appropriated by other law, $51,300,000 is 
        appropriated to the commissioner of children, families, and 
        learning in fiscal year 2000 and $57,000,000 in fiscal year 2001 
        and thereafter to fund a reduction in the statewide general 
        education property tax levy.  The fiscal year 2001 appropriation 
        includes $5,700,000 for 2000 and $51,300,000 for 2001.  The 
        amounts appropriated for fiscal years 2000 and 2001 are from the 
        property tax reform account; subsequent appropriations are from 
        the general fund. 
           Subd. 3.  [REFERENDUM EQUALIZATION AID.] For fiscal year 
        2000, $6,300,000 and for fiscal year 2001, $7,000,000 is 
        appropriated from the property tax reform account to the 
        commissioner of children, families, and learning to fund the 
        additional costs of referendum equalization aid under section 6. 
           Subd. 4.  [INTEGRATION AID.] For fiscal year 2000, 
        $6,300,000 and for fiscal year 2001, $12,400,000 is appropriated 
        to the commissioner of children, families, and learning from the 
        property tax reform account to fund the increase in integration 
        aid under section 5. 
           Subd. 5.  [ALTERNATIVE FACILITIES AID.] $2,700,000 for 
        fiscal year 2000 and $3,000,000 for fiscal year 2001 is 
        appropriated from the property tax reform account to the 
        commissioner of children, families, and learning to finance the 
        increase in alternative facilities aid under sections 2 and 3. 
           Subd. 6.  [EDUCATION HOMESTEAD CREDIT INCREASE.] The 
        amounts necessary to make the increased payments attributable to 
        the increases in education homestead credit percentage rates and 
        maximums under sections 13 and 14 are transferred from the 
        property tax reform account to the general fund in fiscal years 
        2000 and 2001. 
           Subd. 7.  [FISCAL DISPARITIES HACA.] The amount necessary 
        to fund the fiscal year 2001 cost of fiscal disparities HACA 
        under section 15 is transferred from the property tax reform 
        account to the general fund for fiscal year 2001. 
           Subd. 8.  [PROPERTY TAX REFUND INCREASE.] The additional 
        amount necessary to fund the changes in the property tax refund 
        under sections 18 and 19 for fiscal years 2000 and 2001 is 
        transferred from the property tax reform account to the general 
        fund in each of those fiscal years. 
           Subd. 9.  [FAMILY PRESERVATION AID INCREASE.] The sum of 
        $20,000,000 is transferred from the property tax reform account 
        to the general fund in fiscal year 2001 to fund a portion of the 
        increase in family preservation aid under article 4, section 8, 
        paragraph (c)(ii). 
           Subd. 10.  [LOCAL GOVERNMENT AID INCREASE.] The sum of 
        $3,000,000 in each of fiscal years 2000 and 2001 is transferred 
        from the property tax reform account to the general fund to 
        cover the additional local government aid appropriation provided 
        in article 4, section 8, paragraph (d). 
           Subd. 11.  [EXISTING LOW-INCOME HOUSING AID.] The amount 
        necessary to fund the cost of the existing low-income housing 
        aid under article 4, section 10, is transferred from the 
        property tax reform account to the general fund in each of 
        fiscal years 2000 and 2001. 
           Subd. 12.  [GENERAL FUND TRANSFER.] In the event that there 
        are insufficient funds within the property tax reform account to 
        fund any of the payments or transfers provided under this 
        section, sufficient funds are appropriated from the general fund 
        to the property tax reform account to fully fund the 
        appropriation or transfer in fiscal year 2000 or 2001. 
           Sec. 23.  [EFFECTIVE DATES.] 
           Sections 1 to 7 are effective for revenue for fiscal year 
        2000.  Sections 8 to 14 and 17 are effective beginning with 
        taxes payable in 1999.  Sections 15 and 16 are effective 
        beginning with aids payable in 2000.  Sections 18 and 19 are 
        effective beginning with rents paid in 1998.  Sections 20 to 22 
        are effective the day following final enactment. 
                                   ARTICLE 3 
                PROPERTY TAXES, LOCAL BONDING AND LEVY AUTHORITY 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        272.02, subdivision 1, is amended to read: 
           Subdivision 1.  All property described in this section to 
        the extent herein limited shall be exempt from taxation: 
           (1) All public burying grounds. 
           (2) All public schoolhouses. 
           (3) All public hospitals. 
           (4) All academies, colleges, and universities, and all 
        seminaries of learning. 
           (5) All churches, church property, and houses of worship. 
           (6) Institutions of purely public charity except parcels of 
        property containing structures and the structures described in 
        section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 
        and (3), or paragraph (d) (e), other than those that qualify for 
        exemption under clause (25). 
           (7) All public property exclusively used for any public 
        purpose. 
           (8) 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.  
           (9) Personal property used primarily for the abatement and 
        control of air, water, or land pollution to the extent that it 
        is so used, and real property which 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 clause, personal 
        property includes ponderous machinery and equipment used in a 
        business or production activity that at common law is considered 
        real property. 
           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 or water 
        pollution shall file an application with the commissioner of 
        revenue.  The equipment or device shall meet standards, rules, 
        or criteria prescribed by the Minnesota pollution control 
        agency, and must be installed or operated in accordance with a 
        permit or order issued by that agency.  The Minnesota pollution 
        control agency shall upon request of the commissioner furnish 
        information or advice to the commissioner.  On determining that 
        property qualifies for exemption, the commissioner shall issue 
        an order exempting the property from taxation.  The equipment or 
        device shall continue to be exempt from taxation as long as the 
        permit issued by the Minnesota pollution control agency remains 
        in effect. 
           (10) Wetlands.  For purposes of this subdivision, 
        "wetlands" means:  (i) land described in section 103G.005, 
        subdivision 15a; (ii) land which is mostly under water, produces 
        little if any income, and has no use except for wildlife or 
        water conservation purposes, provided it is preserved in its 
        natural condition and drainage of it would be legal, feasible, 
        and economically practical for the production of livestock, 
        dairy animals, poultry, fruit, vegetables, forage and grains, 
        except wild rice; or (iii) land in a wetland preservation area 
        under sections 103F.612 to 103F.616.  "Wetlands" under items (i) 
        and (ii) include adjacent land which is not suitable for 
        agricultural purposes due to the presence of the wetlands, but 
        do not include woody swamps containing shrubs or trees, wet 
        meadows, meandered water, streams, rivers, and floodplains or 
        river bottoms.  Exemption of wetlands from taxation pursuant to 
        this section shall not grant the public any additional or 
        greater right of access to the wetlands or diminish any right of 
        ownership to the wetlands. 
           (11) Native prairie.  The commissioner of the department of 
        natural resources shall determine lands in the state which are 
        native prairie and shall notify the county assessor of each 
        county in which the lands are located.  Pasture land used for 
        livestock grazing purposes shall not be considered native 
        prairie for the purposes of this clause.  Upon receipt of an 
        application for the exemption provided in this clause for lands 
        for which the assessor has no determination from the 
        commissioner of natural resources, the assessor shall refer the 
        application to the commissioner of natural resources who shall 
        determine within 30 days whether the land is native prairie and 
        notify the county assessor of the decision.  Exemption of native 
        prairie pursuant to this clause shall not grant the public any 
        additional or greater right of access to the native prairie or 
        diminish any right of ownership to it. 
           (12) Property used in a continuous program to provide 
        emergency shelter for victims of domestic abuse, provided the 
        organization that owns and sponsors the shelter is exempt from 
        federal income taxation pursuant to section 501(c)(3) of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1992, notwithstanding the fact that the sponsoring organization 
        receives funding under section 8 of the United States Housing 
        Act of 1937, as amended. 
           (13) If approved by the governing body of the municipality 
        in which the property is located, property not exceeding one 
        acre which is owned and operated by any senior citizen group or 
        association of groups that in general limits membership to 
        persons age 55 or older and is organized and operated 
        exclusively for pleasure, recreation, and other nonprofit 
        purposes, no part of the net earnings of which inures to the 
        benefit of any private shareholders; provided the property is 
        used primarily as a clubhouse, meeting facility, or recreational 
        facility by the group or association and the property is not 
        used for residential purposes on either a temporary or permanent 
        basis. 
           (14) To the extent provided by section 295.44, real and 
        personal property used or to be used primarily for the 
        production of hydroelectric or hydromechanical power on a site 
        owned by the federal government, the state, or a local 
        governmental unit which is developed and operated pursuant to 
        the provisions of section 103G.535. 
           (15) If approved by the governing body of the municipality 
        in which the property is located, and if construction is 
        commenced after June 30, 1983:  
           (a) a "direct satellite broadcasting facility" operated by 
        a corporation licensed by the federal communications commission 
        to provide direct satellite broadcasting services using direct 
        broadcast satellites operating in the 12-ghz. band; and 
           (b) a "fixed satellite regional or national program service 
        facility" operated by a corporation licensed by the federal 
        communications commission to provide fixed satellite-transmitted 
        regularly scheduled broadcasting services using satellites 
        operating in the 6-ghz. band. 
        An exemption provided by clause (15) shall apply for a period 
        not to exceed five years.  When the facility no longer qualifies 
        for exemption, it shall be placed on the assessment rolls as 
        provided in subdivision 4.  Before approving a tax exemption 
        pursuant to this paragraph, the governing body of the 
        municipality shall provide an opportunity to the members of the 
        county board of commissioners of the county in which the 
        facility is proposed to be located and the members of the school 
        board of the school district in which the facility is proposed 
        to be located to meet with the governing body.  The governing 
        body shall present to the members of those boards its estimate 
        of the fiscal impact of the proposed property tax exemption.  
        The tax exemption shall not be approved by the governing body 
        until the county board of commissioners has presented its 
        written comment on the proposal to the governing body or 30 days 
        have passed from the date of the transmittal by the governing 
        body to the board of the information on the fiscal impact, 
        whichever occurs first. 
           (16) Real and personal property owned and operated by a 
        private, nonprofit corporation exempt from federal income 
        taxation pursuant to United States Code, title 26, section 
        501(c)(3), primarily used in the generation and distribution of 
        hot water for heating buildings and structures.  
           (17) Notwithstanding section 273.19, state lands that are 
        leased from the department of natural resources under section 
        92.46. 
           (18) Electric power distribution lines and their 
        attachments and appurtenances, that are used primarily for 
        supplying electricity to farmers at retail.  
           (19) Transitional housing facilities.  "Transitional 
        housing facility" means a facility that meets the following 
        requirements.  (i) It provides temporary housing to individuals, 
        couples, or families.  (ii) It has the purpose of reuniting 
        families and enabling parents or individuals to obtain 
        self-sufficiency, advance their education, get job training, or 
        become employed in jobs that provide a living wage.  (iii) It 
        provides support services such as child care, work readiness 
        training, and career development counseling; and a 
        self-sufficiency program with periodic monitoring of each 
        resident's progress in completing the program's goals.  (iv) It 
        provides services to a resident of the facility for at least 
        three months but no longer than three years, except residents 
        enrolled in an educational or vocational institution or job 
        training program.  These residents may receive services during 
        the time they are enrolled but in no event longer than four 
        years.  (v) It is owned and operated or under lease from a unit 
        of government or governmental agency under a property 
        disposition program and operated by one or more organizations 
        exempt from federal income tax under section 501(c)(3) of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1992.  This exemption applies notwithstanding the fact that the 
        sponsoring organization receives financing by a direct federal 
        loan or federally insured loan or a loan made by the Minnesota 
        housing finance agency under the provisions of either Title II 
        of the National Housing Act or the Minnesota housing finance 
        agency law of 1971 or rules promulgated by the agency pursuant 
        to it, and notwithstanding the fact that the sponsoring 
        organization receives funding under Section 8 of the United 
        States Housing Act of 1937, as amended. 
           (20) Real and personal property, including leasehold or 
        other personal property interests, owned and operated by a 
        corporation if more than 50 percent of the total voting power of 
        the stock of the corporation is owned collectively by:  (i) the 
        board of regents of the University of Minnesota, (ii) the 
        University of Minnesota Foundation, an organization exempt from 
        federal income taxation under section 501(c)(3) of the Internal 
        Revenue Code of 1986, as amended through December 31, 1992, and 
        (iii) a corporation organized under chapter 317A, which by its 
        articles of incorporation is prohibited from providing pecuniary 
        gain to any person or entity other than the regents of the 
        University of Minnesota; which property is used primarily to 
        manage or provide goods, services, or facilities utilizing or 
        relating to large-scale advanced scientific computing resources 
        to the regents of the University of Minnesota and others. 
           (21)(a) Small scale wind energy conversion systems 
        installed after January 1, 1991, and used as an electric power 
        source are exempt. 
           "Small scale wind energy conversion systems" are wind 
        energy conversion systems, as defined in section 216C.06, 
        subdivision 12, including the foundation or support pad, which 
        are (i) used as an electric power source; (ii) located within 
        one county and owned by the same owner; and (iii) produce two 
        megawatts or less of electricity as measured by nameplate 
        ratings. 
           (b) Medium scale wind energy conversion systems installed 
        after January 1, 1991, are treated as follows:  (i) the 
        foundation and support pad are taxable; (ii) the associated 
        supporting and protective structures are exempt for the first 
        five assessment years after they have been constructed, and 
        thereafter, 30 percent of the market value of the associated 
        supporting and protective structures are taxable; and (iii) the 
        turbines, blades, transformers, and its related equipment, are 
        exempt.  "Medium scale wind energy conversion systems" are wind 
        energy conversion systems as defined in section 216C.06, 
        subdivision 12, including the foundation or support pad, which 
        are:  (i) used as an electric power source; (ii) located within 
        one county and owned by the same owner; and (iii) produce more 
        than two but equal to or less than 12 megawatts of energy as 
        measured by nameplate ratings. 
           (c) Large scale wind energy conversion systems installed 
        after January 1, 1991, are treated as follows:  25 percent of 
        the market value of all property is taxable, including (i) the 
        foundation and support pad; (ii) the associated supporting and 
        protective structures; and (iii) the turbines, blades, 
        transformers, and its related equipment.  "Large scale wind 
        energy conversion systems" are wind energy conversion systems as 
        defined in section 216C.06, subdivision 12, including the 
        foundation or support pad, which are:  (i) used as an electric 
        power source; and (ii) produce more than 12 megawatts of energy 
        as measured by nameplate ratings. 
           (22) Containment tanks, cache basins, and that portion of 
        the structure needed for the containment facility used to 
        confine agricultural chemicals as defined in section 18D.01, 
        subdivision 3, as required by the commissioner of agriculture 
        under chapter 18B or 18C. 
           (23) Photovoltaic devices, as defined in section 216C.06, 
        subdivision 13, installed after January 1, 1992, and used to 
        produce or store electric power. 
           (24) Real and personal property owned and operated by a 
        private, nonprofit corporation exempt from federal income 
        taxation pursuant to United States Code, title 26, section 
        501(c)(3), primarily used for an ice arena or ice rink, and used 
        primarily for youth and high school programs. 
           (25) A structure that is situated on real property that is 
        used for: 
           (i) housing for the elderly or for low- and moderate-income 
        families as defined in Title II of the National Housing Act, as 
        amended through December 31, 1990, and funded by a direct 
        federal loan or federally insured loan made pursuant to Title II 
        of the act; or 
           (ii) housing lower income families or elderly or 
        handicapped persons, as defined in Section 8 of the United 
        States Housing Act of 1937, as amended. 
           In order for a structure to be exempt under (i) or (ii), it 
        must also meet each of the following criteria: 
           (A) is owned by an entity which is operated as a nonprofit 
        corporation organized under chapter 317A; 
           (B) is owned by an entity which has not entered into a 
        housing assistance payments contract under Section 8 of the 
        United States Housing Act of 1937, or, if the entity which owns 
        the structure has entered into a housing assistance payments 
        contract under Section 8 of the United States Housing Act of 
        1937, the contract provides assistance for less than 90 percent 
        of the dwelling units in the structure, excluding dwelling units 
        intended for management or maintenance personnel; 
           (C) operates an on-site congregate dining program in which 
        participation by residents is mandatory, and provides assisted 
        living or similar social and physical support services for 
        residents; and 
           (D) was not assessed and did not pay tax under chapter 273 
        prior to the 1991 levy, while meeting the other conditions of 
        this clause. 
           An exemption under this clause remains in effect for taxes 
        levied in each year or partial year of the term of its permanent 
        financing. 
           (26) Real and personal property that is located in the 
        Superior National Forest, and owned or leased and operated by a 
        nonprofit organization that is exempt from federal income 
        taxation under section 501(c)(3) of the Internal Revenue Code of 
        1986, as amended through December 31, 1992, and primarily used 
        to provide recreational opportunities for disabled veterans and 
        their families. 
           (27) Manure pits and appurtenances, which may include 
        slatted floors and pipes, installed or operated in accordance 
        with a permit, order, or certificate of compliance issued by the 
        Minnesota pollution control agency.  The exemption shall 
        continue for as long as the permit, order, or certificate issued 
        by the Minnesota pollution control agency remains in effect. 
           (28) Notwithstanding clause (8), item (a), attached 
        machinery and other personal property which is part of a 
        facility containing a cogeneration system as described in 
        section 216B.166, subdivision 2, paragraph (a), if the 
        cogeneration system has met the following criteria:  (i) the 
        system utilizes natural gas as a primary fuel and the 
        cogenerated steam initially replaces steam generated from 
        existing thermal boilers utilizing coal; (ii) the facility 
        developer is selected as a result of a procurement process 
        ordered by the public utilities commission; and (iii) 
        construction of the facility is commenced after July 1, 1994, 
        and before July 1, 1997. 
           (29) Real property acquired by a home rule charter city, 
        statutory city, county, town, or school district under a lease 
        purchase agreement or an installment purchase contract during 
        the term of the lease purchase agreement as long as and to the 
        extent that the property is used by the city, county, town, or 
        school district and devoted to a public use and to the extent it 
        is not subleased to any private individual, entity, association, 
        or corporation in connection with a business or enterprise 
        operated for profit. 
           (30) Property owned by a nonprofit charitable organization 
        that qualifies for tax exemption under section 501(c)(3) of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1997, that is intended to be used as a business incubator in a 
        high-unemployment county but is not occupied on the assessment 
        date.  As used in this clause, a "business incubator" is a 
        facility used for the development of nonretail businesses, 
        offering access to equipment, space, services, and advice to the 
        tenant businesses, for the purpose of encouraging economic 
        development, diversification, and job creation in the area 
        served by the organization, and "high-unemployment county" is a 
        county that had an average annual unemployment rate of 7.9 
        percent or greater in 1997.  Property that qualifies for the 
        exemption under this clause is limited to no more than two 
        contiguous parcels and structures that do not exceed in the 
        aggregate 40,000 square feet.  This exemption expires after 
        taxes payable in 2005. 
           (31) Notwithstanding any other law to the contrary, real 
        property that meets the following criteria is exempt: 
           (i) constitutes a wastewater treatment system (a) 
        constructed by a municipality using public funds, (b) operates 
        under a State Disposal System Permit issued by the Minnesota 
        pollution control agency pursuant to chapters 115 and 116 and 
        Minnesota Rules, chapter 700l, and (c) applies its effluent to 
        land used as part of an agricultural operation; 
           (ii) is located within a municipality of a population of 
        less than 10,000; 
           (iii) is used for treatment of effluent from a private 
        potato processing facility; and 
           (iv) is owned by a municipality and operated by a private 
        entity under agreement with that municipality. 
           Sec. 2.  Minnesota Statutes 1996, section 272.0211, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EFFICIENCY DETERMINATION AND 
        CERTIFICATION.] An owner or operator of a new or existing 
        electric power generation facility, excluding wind energy 
        conversion systems, may apply to the commissioner of revenue for 
        a market value exclusion on the property as provided for in this 
        section.  This exclusion shall apply only to the market value of 
        the equipment of the facility, and shall not apply to the 
        structures and the land upon which the facility is located.  The 
        commissioner of revenue shall prescribe the forms and procedures 
        for this application.  Upon receiving the application, the 
        commissioner of revenue shall request the commissioner of public 
        service to make a determination of the efficiency of the 
        applicant's electric power generation facility.  In calculating 
        the efficiency of a facility, the commissioner of public service 
        shall use a definition of efficiency which calculates efficiency 
        as the sum of: 
           (1) the useful electrical power output; plus 
           (2) the useful thermal energy output; plus 
           (3) the fuel energy of the useful chemical products, 
        all divided by the total energy input to the facility, expressed 
        as a percentage.  The commissioner must include in this formula 
        the energy used in any on-site preparation of materials 
        necessary to convert the materials into the fuel used to 
        generate electricity, such as a process to gasify petroleum 
        coke.  The commissioner shall use the high heating value for all 
        substances in the commissioner's efficiency calculations, except 
        for wood for fuel in a biomass-eligible project under section 
        216B.2424; for these instances, the commissioner shall adjust 
        the heating value to allow for energy consumed for evaporation 
        of the moisture in the wood.  The applicant shall provide the 
        commissioner of public service with whatever information the 
        commissioner deems necessary to make the determination.  Within 
        30 days of the receipt of the necessary information, the 
        commissioner of public service shall certify the findings of the 
        efficiency determination to the commissioner of revenue and to 
        the applicant.  The commissioner of public service shall 
        determine the efficiency of the facility and certify the 
        findings of that determination to the commissioner of revenue 
        every two years thereafter from the date of the original 
        certification. 
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 
        273.112, subdivision 2, is amended to read: 
           Subd. 2.  The present general system of ad valorem property 
        taxation in the state of Minnesota does not provide an equitable 
        basis for the taxation of certain private outdoor recreational, 
        social, open space and park land property and has resulted in 
        excessive taxes on some of these lands.  Therefore, it is hereby 
        declared that the public policy of this state would be best 
        served by equalizing tax burdens upon private outdoor, 
        recreational, social, open space and park land within this state 
        through appropriate taxing measures to encourage private 
        development of these lands which would otherwise not occur or 
        have to be provided by governmental authority.  
           Sec. 4.  Minnesota Statutes 1997 Supplement, section 
        273.112, subdivision 3, is amended to read: 
           Subd. 3.  Real estate shall be entitled to valuation and 
        tax deferment under this section only if it is: 
           (a) actively and exclusively devoted to golf, skiing, lawn 
        bowling, croquet, or archery or firearms range recreational use 
        or other recreational or social uses carried on at the 
        establishment; 
           (b) five acres in size or more, except in the case of a 
        lawn bowling or croquet green or an archery or firearms range or 
        an establishment actively and exclusively devoted to indoor 
        fitness, health, social, recreational, and related uses in which 
        the establishment is owned and operated by a not-for-profit 
        corporation; 
           (c)(1) operated by private individuals or, in the case of a 
        lawn bowling or croquet green, by private individuals or 
        corporations, and open to the public; or 
           (2) operated by firms or corporations for the benefit of 
        employees or guests; or 
           (3) operated by private clubs having a membership of 50 or 
        more or open to the public, provided that the club does not 
        discriminate in membership requirements or selection on the 
        basis of sex or marital status; and 
           (d) made available for use in the case of real estate 
        devoted to golf without discrimination on the basis of sex 
        during the time when the facility is open to use by the public 
        or by members, except that use for golf may be restricted on the 
        basis of sex no more frequently than one, or part of one, 
        weekend each calendar month for each sex and no more than two, 
        or part of two, weekdays each week for each sex.  
           If a golf club membership allows use of golf course 
        facilities by more than one adult per membership, the use must 
        be equally available to all adults entitled to use of the golf 
        course under the membership, except that use may be restricted 
        on the basis of sex as permitted in this section.  Memberships 
        that permit play during restricted times may be allowed only if 
        the restricted times apply to all adults using the membership.  
        A golf club may not offer a membership or golfing privileges to 
        a spouse of a member that provides greater or less access to the 
        golf course than is provided to that person's spouse under the 
        same or a separate membership in that club, except that the 
        terms of a membership may provide that one spouse may have no 
        right to use the golf course at any time while the other spouse 
        may have either limited or unlimited access to the golf course.  
           A golf club may have or create an individual membership 
        category which entitles a member for a reduced rate to play 
        during restricted hours as established by the club.  The club 
        must have on record a written request by the member for such 
        membership.  
           A golf club that has food or beverage facilities or 
        services must allow equal access to those facilities and 
        services for both men and women members in all membership 
        categories at all times.  Nothing in this paragraph shall be 
        construed to require service or access to facilities to persons 
        under the age of 21 years or require any act that would violate 
        law or ordinance regarding sale, consumption, or regulation of 
        alcoholic beverages. 
           For purposes of this subdivision and subdivision 7a, 
        discrimination means a pattern or course of conduct and not 
        linked to an isolated incident. 
           Sec. 5.  Minnesota Statutes 1997 Supplement, section 
        273.112, subdivision 4, is amended to read: 
           Subd. 4.  The value of any real estate described in 
        subdivision 3 shall upon timely application by the owner, in the 
        manner provided in subdivision 6, be determined solely with 
        reference to its appropriate private outdoor, 
        recreational, social, open space and park land classification 
        and value notwithstanding sections 272.03, subdivision 8, and 
        273.11.  In determining such value for ad valorem tax purposes 
        the assessor shall not consider the value such real estate would 
        have if it were converted to commercial, industrial, residential 
        or seasonal residential use. 
           Sec. 6.  Minnesota Statutes 1997 Supplement, section 
        272.115, subdivision 4, is amended to read: 
           Subd. 4.  [ELIGIBILITY FOR HOMESTEAD STATUS.] No real 
        estate sold or transferred on or after January 1, 1993, for 
        which a certificate of real estate value is required under 
        subdivision 1 this section shall be classified as a homestead, 
        unless (1) a certificate of value has been filed with the county 
        auditor in accordance with this section, or (2) the real estate 
        was conveyed by the federal government, the state, a political 
        subdivision of the state, or combination of them to a person 
        otherwise eligible to receive homestead classification of the 
        property. 
           This subdivision shall apply to any real estate taxes that 
        are payable the year or years following the sale or transfer of 
        the property. 
           Sec. 7.  Minnesota Statutes 1997 Supplement, section 
        272.115, subdivision 5, is amended to read: 
           Subd. 5.  [EXEMPTION FOR GOVERNMENT BODIES.] A certificate 
        of real estate value is not required when the real estate is 
        being conveyed to or by a public authority or agency of the 
        federal government, the state of Minnesota, a political 
        subdivision of the state, or any combination of them, for 
        highway or roadway right-of-way purposes, provided that the 
        authority, agency, or governmental unit has agreed to file a 
        list of the real estate conveyed by or to the authority, agency, 
        or governmental unit with the commissioner of revenue by June 1 
        of the year following the year of the conveyance. 
           Sec. 8.  Minnesota Statutes 1997 Supplement, section 
        273.124, subdivision 14, is amended to read: 
           Subd. 14.  [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 
        (a) Real estate of less than ten acres that is the homestead of 
        its owner must be classified as class 2a under section 273.13, 
        subdivision 23, paragraph (a), if:  
           (1) the parcel on which the house is located is contiguous 
        on at least two sides to (i) agricultural land, (ii) land owned 
        or administered by the United States Fish and Wildlife Service, 
        or (iii) land administered by the department of natural 
        resources on which in lieu taxes are paid under sections 477A.11 
        to 477A.14; 
           (2) its owner also owns a noncontiguous parcel of 
        agricultural land that is at least 20 acres; 
           (3) the noncontiguous land is located not farther than two 
        four townships or cities, or a combination of townships or 
        cities from the homestead; and 
           (4) the agricultural use value of the noncontiguous land 
        and farm buildings is equal to at least 50 percent of the market 
        value of the house, garage, and one acre of land. 
           Homesteads initially classified as class 2a under the 
        provisions of this paragraph shall remain classified as class 
        2a, irrespective of subsequent changes in the use of adjoining 
        properties, as long as the homestead remains under the same 
        ownership, the owner owns a noncontiguous parcel of agricultural 
        land that is at least 20 acres, and the agricultural use value 
        qualifies under clause (4). 
           (b) Except as provided in paragraph (d), noncontiguous land 
        shall be included as part of a homestead under section 273.13, 
        subdivision 23, paragraph (a), only if the homestead is 
        classified as class 2a and the detached land is located in the 
        same township or city, or not farther than two four townships or 
        cities or combination thereof from the homestead.  Any taxpayer 
        of these noncontiguous lands must notify the county assessor 
        that the noncontiguous land is part of the taxpayer's homestead, 
        and, if the homestead is located in another county, the taxpayer 
        must also notify the assessor of the other county. 
           (c) Agricultural land used for purposes of a homestead and 
        actively farmed by a person holding a vested remainder interest 
        in it must be classified as a homestead under section 273.13, 
        subdivision 23, paragraph (a).  If agricultural land is 
        classified class 2a, any other dwellings on the land used for 
        purposes of a homestead by persons holding vested remainder 
        interests who are actively engaged in farming the property, and 
        up to one acre of the land surrounding each homestead and 
        reasonably necessary for the use of the dwelling as a home, must 
        also be assessed class 2a. 
           (d) Agricultural land and buildings that were class 2a 
        homestead property under section 273.13, subdivision 23, 
        paragraph (a), for the 1997 assessment shall remain classified 
        as agricultural homesteads for subsequent assessments if:  
           (1) the property owner abandoned the homestead dwelling 
        located on the agricultural homestead as a result of the April 
        1997 floods; 
           (2) the property is located in the county of Polk, Clay, 
        Kittson, Marshall, Norman, or Wilkin; 
           (3) the agricultural land and buildings remain under the 
        same ownership for the current assessment year as existed for 
        the 1997 assessment year and continue to be used for 
        agricultural purposes; 
           (4) the dwelling occupied by the owner is located in 
        Minnesota and is within 30 miles of one of the parcels of 
        agricultural land that is owned by the taxpayer; and 
           (5) the owner notifies the county assessor that the 
        relocation was due to the 1997 floods, and the owner furnishes 
        the assessor any information deemed necessary by the assessor in 
        verifying the change in homestead dwelling.  For taxes payable 
        in 1998, the owner must notify the assessor by December 1, 
        1997.  Further notifications to the assessor are not required if 
        the property continues to meet all the requirements in this 
        paragraph and any dwellings on the agricultural land remain 
        uninhabited. 
           Sec. 9.  Minnesota Statutes 1997 Supplement, section 
        273.126, subdivision 3, is amended to read: 
           Subd. 3.  [RENT RESTRICTIONS.] (a) In order to qualify 
        under class 4d, a unit must be subject to a rent restriction 
        agreement with the housing finance agency for a period of at 
        least five years.  The agreement must be in effect and apply to 
        the rents to be charged for the year in which the property taxes 
        are payable.  The agreement must provide that the restrictions 
        apply to each year of the period, regardless of whether the unit 
        is occupied by an individual with qualifying income or whether 
        class 4d applies.  The rent restriction agreement must provide 
        for rents for the unit to be no higher than 30 percent of 60 
        percent of the median gross income.  The definition of median 
        gross income specified in this section applies.  "Rent" means 
        "gross rent" as defined in section 42(g)(2)(B) of the Internal 
        Revenue Code of 1986, as amended through December 31, 1996.  
           (b) Notwithstanding the maximum rent levels permitted, 20 
        percent of the units in the metropolitan area and ten percent of 
        the units in greater Minnesota qualifying under class 4d must be 
        made available to a family with a section 8 certificate or 
        voucher.  For applications for class 4d made before July 1, 
        1999, the required percent of units for an applicant is 
        increased to 40 percent and the maximum rent that may be charged 
        on a unit occupied by a family with a section 8 certificate or 
        voucher is limited to the fair market rent for the area, as 
        established by the United States Department of Housing and Urban 
        Development, if within the five year period ending January 2 of 
        the assessment year: 
           (1) 40 percent or more of the units in the project or 
        development were covered by a section 8 project-based housing 
        assistance contract and the contract has been canceled or no 
        longer applies; or 
           (2) the units were in a project or development financed 
        with a direct federal loan or federally insured loan made 
        pursuant to Title II of the National Housing Act and the loan 
        has been paid or prepaid, eliminating the restrictions on rents 
        under Title II of the Act. 
           (c) The rent restriction agreement runs with the land and 
        binds any successor to title to the property, without regard to 
        whether the successor had actual notice or knowledge of the 
        agreement.  The owner must promptly record the agreement in the 
        office of the county recorder or must file it in the office of 
        the registrar of titles, in the county where the property is 
        located.  If the agreement is not recorded, class 4d does not 
        apply to the property. 
           Sec. 10.  [273.1383] [1997 FLOOD LOSS REPLACEMENT AID.] 
           Subdivision 1.  [FLOOD NET TAX CAPACITY LOSS.] In 
        assessment years 1998, 1999, and 2000, the county assessor of 
        each county listed in section 273.124, subdivision 14, paragraph 
        (d), clause (2), shall compute a hypothetical county net tax 
        capacity based upon market values for the current assessment 
        year and the class rates that were in effect for assessment year 
        1997.  The amount, if any, by which the assessment year 1997 
        total taxable net tax capacity exceeds the hypothetical taxable 
        net tax capacity shall be known as the county's "flood net tax 
        capacity loss" for the current assessment year.  The county 
        assessor of each county whose flood net tax capacity loss for 
        the current year exceeds five percent of its assessment year 
        1997 total taxable net tax capacity shall certify its flood net 
        tax capacity loss to the commissioner of revenue by August 1 of 
        the assessment year. 
           Subd. 2.  [FLOOD LOSS AID.] Each year, each county with a 
        flood net tax capacity loss equal to or greater than five 
        percent of its assessment year 1997 total taxable net tax 
        capacity shall be entitled to flood loss aid equal to the flood 
        net tax capacity loss times the county government's average 
        local tax rate for taxes payable in 1998. 
           Subd. 3.  [DUTIES OF COMMISSIONER.] The commissioner of 
        revenue shall determine each qualifying county's aid amount.  If 
        the sum of the aid amounts for all qualifying counties exceeds 
        the appropriation limit, the commissioner shall proportionately 
        reduce each county's aid amount so that the sum of county aid 
        amounts is equal to the appropriation limit.  The commissioner 
        shall notify each county of its flood loss aid amount by August 
        15 of the assessment year.  The commissioner shall make payments 
        to each county on or before July 20 of the taxes payable year 
        corresponding to the assessment year. 
           Subd. 4.  [APPROPRIATION.] An amount necessary to fund the 
        aid amounts under this section is annually appropriated from the 
        general fund to the commissioner of revenue in fiscal years 
        2000, 2001, and 2002, for calendar years 1999, 2000, and 2001.  
        The maximum amount of the appropriation is limited to $1,700,000 
        for fiscal year 2000 and $1,500,000 per year for fiscal years 
        2001 and 2002.  In addition, the amount of the appropriation 
        under Laws 1997, Second Special Session chapter 2, section 9, 
        that the commissioner determines will not be spent for the 
        programs under that section is available to pay the aid amounts 
        under this section. 
           Sec. 11.  [273.80] [DISTRESSED HOMESTEAD REINVESTMENT 
        EXEMPTION.] 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the following terms shall have the meanings given. 
           "Substantially condition deficient" means that repairs 
        estimated to cost at least $20,000 are necessary to restore a 
        house to sound operating condition, according to prevailing 
        costs of home improvements for the area. 
           "Sound operating condition" means that a home meets minimal 
        health and safety standards for residential occupancy under 
        applicable housing or building codes. 
           "Residential rehabilitation consultant" means a person who 
        is employed by a housing services organization recognized by 
        resolution of the city council of the city in which the property 
        is located, and who has been trained in residential housing 
        rehabilitation. 
           "Census tract" means a tract defined for the 1990 federal 
        census. 
           Subd. 2.  [ELIGIBILITY.] An owner-occupied, detached, 
        single-family dwelling is eligible for treatment under this 
        section if it: 
           (1) is located in a city of the first class; 
           (2) is located in a census tract where the median value of 
        owner-occupied homes is less than 80 percent of the median value 
        of owner-occupied homes for the entire city, according to the 
        1998 assessment; 
           (3) has an estimated market value less than 60 percent of 
        the median value of owner-occupied homes for the entire city, 
        according to the 1998 assessment; and 
           (4) has been declared to be substantially condition 
        deficient, by a residential rehabilitation consultant. 
           Subd. 3.  [QUALIFICATION.] A home which meets the 
        eligibility requirements of subdivision 2 before May 1, 2003, 
        qualifies for the property tax exemption under subdivision 4 
        after a residential rehabilitation consultant certifies that the 
        home is in sound operating condition, and that all permits 
        necessary to make the repairs were obtained.  An owner need not 
        occupy the dwelling while the necessary repairs are being done, 
        provided that the property is occupied prior to granting the 
        exemption under subdivision 4.  All or a part of the repairs 
        necessary to restore the house to sound operating conditions may 
        be done prior to the owner purchasing the property, if those 
        repairs are done by or for a 501(c)(3) nonprofit organization. 
           Subd. 4.  [PROPERTY TAX EXEMPTION.] A home qualifying under 
        subdivision 3 is exempt from all property taxes on the land and 
        buildings for taxes payable for five consecutive years following 
        its certification under subdivision 3, if the property is owned 
        and occupied by the same person who owned it when the home was 
        certified as substantially condition deficient or by the first 
        purchaser from the 501(c)(3) nonprofit organization that 
        repaired the property.  To be effective beginning with taxes 
        payable in the following year, the certification must be made by 
        September 1. 
           Subd. 5.  [ASSESSMENT; RECORD.] The assessor may require 
        whatever information is necessary to determine eligibility for 
        the tax exemption under this section.  During the time that the 
        property is exempt, the assessor shall continue to value the 
        property and record its current value on the tax rolls. 
           Sec. 12.  Minnesota Statutes 1997 Supplement, 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.  
           (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 determined portion of the 
        school district levy, the final tax amount will be its proposed 
        tax.  The notice must clearly state that each taxing authority, 
        including regional library districts established under section 
        134.201, and including the metropolitan taxing districts as 
        defined in paragraph (i), but excluding all other special taxing 
        districts and towns, will hold a public meeting to receive 
        public testimony on the proposed budget and proposed or final 
        property tax levy, or, in case of a school district, on the 
        current budget and proposed property tax levy.  It must clearly 
        state the time and place of each taxing authority's meeting and 
        an address where comments will be received by mail.  
           (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, state determined school tax net of the education 
        homestead credit under section 273.1382, 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; 
           (ii) the tax change due to spending factors, defined as the 
        proposed tax minus the constant spending tax amount; 
           (iii) the tax change due to other factors, defined as the 
        constant spending tax amount minus the actual current year tax; 
        and 
           (iv) the proposed tax amount. 
           In the case of a town or the state determined school 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 
        124A.03, subdivision 2, 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 the 
        Minneapolis library board and the levy for Minneapolis park and 
        recreation shall be listed separately from the remaining amount 
        of the city'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, school 
        district levy referenda, and levy limit increase referenda; 
           (3) amounts necessary to pay cleanup or other costs due to 
        a natural disaster occurring after the date the proposed taxes 
        are certified; 
           (4) amounts necessary to pay tort judgments against the 
        taxing authority that become final after the date the proposed 
        taxes are certified; and 
           (5) 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, subdivisions 5a and 
        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 and 
        shall be discussed at that county's public hearing. 
           (j) If a statutory or home rule charter city or a town has 
        exercised the local levy option provided by section 473.388, 
        subdivision 7, it may include in the notice of its proposed 
        taxes the amount of its proposed taxes attributable to its 
        exercise of the option.  In the first year of the city or town's 
        exercise of this option, the statement shall include an estimate 
        of the reduction of the metropolitan council's tax on the parcel 
        due to exercise of that option.  The metropolitan council's levy 
        shall be adjusted accordingly. 
           Sec. 13.  Minnesota Statutes 1997 Supplement, section 
        275.065, subdivision 6, is amended to read: 
           Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
        (a) For purposes of this section, the following terms shall have 
        the meanings given: 
           (1) "Initial hearing" means the first and primary hearing 
        held to discuss the taxing authority's proposed budget and 
        proposed property tax levy for taxes payable in the following 
        year, or, for school districts, the current budget and the 
        proposed property tax levy for taxes payable in the following 
        year. 
           (2) "Continuation hearing" means a hearing held to complete 
        the initial hearing, if the initial hearing is not completed on 
        its scheduled date. 
           (3) "Subsequent hearing" means the hearing held to adopt 
        the taxing authority's final property tax levy, and, in the case 
        of taxing authorities other than school districts, the final 
        budget, for taxes payable in the following year. 
           (b) Between November 29 and December 20, the governing 
        bodies of a city that has a population over 500, county, 
        metropolitan special taxing districts as defined in subdivision 
        3, paragraph (i), and regional library districts shall each hold 
        an initial public hearing to discuss and seek public comment on 
        its final budget and property tax levy for taxes payable in the 
        following year, and the governing body of the school district 
        shall hold an initial public hearing to review its current 
        budget and proposed property tax levy for taxes payable in the 
        following year.  The metropolitan special taxing districts shall 
        be required to hold only a single joint initial public hearing, 
        the location of which will be determined by the affected 
        metropolitan agencies. 
           (c) The initial hearing must be held after 5:00 p.m. if 
        scheduled on a day other than Saturday.  No initial hearing may 
        be held on a Sunday.  
           (d) At the initial hearing under this subdivision, the 
        percentage increase in property taxes proposed by the taxing 
        authority, if any, and the specific purposes for which property 
        tax revenues are being increased must be discussed.  During the 
        discussion, the governing body shall hear comments regarding a 
        proposed increase and explain the reasons for the proposed 
        increase.  The public shall be allowed to speak and to ask 
        questions.  At the public hearing, the school district must also 
        provide and discuss information on the distribution of its 
        revenues by revenue source, and the distribution of its spending 
        by program area.  
           (e) If the initial hearing is not completed on its 
        scheduled date, the taxing authority must announce, prior to 
        adjournment of the hearing, the date, time, and place for the 
        continuation of the hearing.  The continuation hearing must be 
        held at least five business days but no more than 14 business 
        days after the initial hearing.  A continuation hearing may not 
        be held later than December 20 except as provided in paragraphs 
        (f) and (g).  A continuation hearing must be held after 5:00 
        p.m. if scheduled on a day other than Saturday.  No continuation 
        hearing may be held on a Sunday. 
           (f) The governing body of a county shall hold its initial 
        hearing on the second Tuesday first Thursday in December each 
        year, and may hold additional initial hearings on other dates 
        before December 20 if necessary for the convenience of county 
        residents.  If the county needs a continuation of its hearing, 
        the continuation hearing shall be held on the third Tuesday in 
        December.  If the third Tuesday in December falls on December 
        21, the county's continuation hearing shall be held on Monday, 
        December 20.  
           (g) The metropolitan special taxing districts shall hold a 
        joint initial public hearing on the first Monday Wednesday of 
        December.  A continuation hearing, if necessary, shall be held 
        on the second Monday Wednesday of December even if that second 
        Monday Wednesday is after December 10. 
           (h) The county auditor shall provide for the coordination 
        of initial and continuation hearing dates for all school 
        districts and cities within the county to prevent conflicts 
        under clauses (i) and (j). 
           (i) By August 10, each school board and the board of the 
        regional library district shall certify to the county auditors 
        of the counties in which the school district or regional library 
        district is located the dates on which it elects to hold its 
        initial hearing and any continuation hearing.  If a school board 
        or regional library district does not certify these dates by 
        August 10, the auditor will assign the initial and continuation 
        hearing dates.  The dates elected or assigned must not conflict 
        with the initial and continuation hearing dates of the county or 
        the metropolitan special taxing districts.  
           (j) By August 20, the county auditor shall notify the 
        clerks of the cities within the county of the dates on which 
        school districts and regional library districts have elected to 
        hold their initial and continuation hearings.  At the time a 
        city certifies its proposed levy under subdivision 1 it shall 
        certify the dates on which it elects to hold its initial hearing 
        and any continuation hearing.  Until September 15, the first and 
        second Mondays of December are reserved for the use of the 
        cities.  If a city does not certify these its hearing dates by 
        September 15, the auditor shall assign the initial and 
        continuation hearing dates.  The dates elected or assigned for 
        the initial hearing must not conflict with the initial hearing 
        dates of the county, metropolitan special taxing districts, 
        regional library districts, or school districts within which the 
        city is located.  To the extent possible, the dates of the 
        city's continuation hearing should not conflict with the 
        continuation hearing dates of the county, metropolitan special 
        taxing districts, regional library districts, or school 
        districts within which the city is located.  This paragraph does 
        not apply to cities of 500 population or less. 
           (k) The county initial hearing date and the city, 
        metropolitan special taxing district, regional library district, 
        and school district initial hearing dates must be designated on 
        the notices required under subdivision 3.  The continuation 
        hearing dates need not be stated on the notices.  
           (l) At a subsequent hearing, each county, school district, 
        city over 500 population, and metropolitan special taxing 
        district may amend its proposed property tax levy and must adopt 
        a final property tax levy.  Each county, city over 500 
        population, and metropolitan special taxing district may also 
        amend its proposed budget and must adopt a final budget at the 
        subsequent hearing.  The final property tax levy must be adopted 
        prior to adopting the final budget.  A school district is not 
        required to adopt its final budget at the subsequent hearing.  
        The subsequent hearing of a taxing authority must be held on a 
        date subsequent to the date of the taxing authority's initial 
        public hearing.  If a continuation hearing is held, the 
        subsequent hearing must be held either immediately following the 
        continuation hearing or on a date subsequent to the continuation 
        hearing.  The subsequent hearing may be held at a regularly 
        scheduled board or council meeting or at a special meeting 
        scheduled for the purposes of the subsequent hearing.  The 
        subsequent hearing of a taxing authority does not have to be 
        coordinated by the county auditor to prevent a conflict with an 
        initial hearing, a continuation hearing, or a subsequent hearing 
        of any other taxing authority.  All subsequent hearings must be 
        held prior to five working days after December 20 of the levy 
        year.  The date, time, and place of the subsequent hearing must 
        be announced at the initial public hearing or at the 
        continuation hearing. 
           (m) The property tax levy certified under section 275.07 by 
        a city of any population, county, metropolitan special taxing 
        district, regional library district, or school district must not 
        exceed the proposed levy determined under subdivision 1, except 
        by an amount up to the sum of the following amounts: 
           (1) the amount of a school district levy whose voters 
        approved a referendum to increase taxes under section 124.82, 
        subdivision 3, 124A.03, subdivision 2, or 124B.03, subdivision 
        2, after the proposed levy was certified; 
           (2) the amount of a city or county levy approved by the 
        voters after the proposed levy was certified; 
           (3) the amount of a levy to pay principal and interest on 
        bonds approved by the voters under section 475.58 after the 
        proposed levy was certified; 
           (4) the amount of a levy to pay costs due to a natural 
        disaster occurring after the proposed levy was certified, if 
        that amount is approved by the commissioner of revenue under 
        subdivision 6a; 
           (5) the amount of a levy to pay tort judgments against a 
        taxing authority that become final after the proposed levy was 
        certified, if the amount is approved by the commissioner of 
        revenue under subdivision 6a; 
           (6) the amount of an increase in levy limits certified to 
        the taxing authority by the commissioner of children, families, 
        and learning or the commissioner of revenue after the proposed 
        levy was certified; and 
           (7) the amount required under section 124.755. 
           (n) This subdivision does not apply to towns and special 
        taxing districts other than regional library districts and 
        metropolitan special taxing districts. 
           (o) Notwithstanding the requirements of this section, the 
        employer is required to meet and negotiate over employee 
        compensation as provided for in chapter 179A.  
           Sec. 14.  Minnesota Statutes 1996, section 275.07, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [REVISED FINAL LEVY.] (a) If the final levy of a 
        taxing jurisdiction certified to the county auditor is incorrect 
        due to an error in the deduction of the aid received under 
        section 273.1398, subdivision 2, in determining the certified 
        levy as required under subdivision 1, the taxing jurisdiction 
        may apply to the commissioner of revenue to increase the levy 
        and recertify it in the correct amount.  The commissioner must 
        receive the request by January 2. 
           (b) If the commissioner determines that the requirements of 
        paragraph (a) have been met, the commissioner shall notify the 
        taxing jurisdiction that the revised final levy has been 
        approved.  Upon receipt of the approval, but no later than 
        January 15, the governing body of the taxing jurisdiction shall 
        adopt the revised final levy and the taxing jurisdiction shall 
        recertify the revised final levy to the county auditor.  The 
        county auditor shall use the revised final levy to compute the 
        tax rate for the taxing jurisdiction. 
           (c) The county auditor shall report to the commissioner of 
        revenue the revised final levy used to determine the tax rates 
        for the taxing jurisdiction.  The provisions of section 275.065, 
        subdivisions 6, 6a, and 7 do not apply to the revised final levy 
        for the taxing jurisdiction certified under this section. 
           (d) The taxing jurisdiction must publish in an official 
        newspaper of general circulation in the taxing jurisdiction a 
        notice of its revised final levy.  The notice shall contain 
        examples of the tax impact of the revised final levy on 
        homestead, apartment, and commercial classes of property in the 
        taxing jurisdiction.  The county auditor shall assist the taxing 
        jurisdiction in preparing the examples for the publication. 
           Sec. 15.  Minnesota Statutes 1997 Supplement, section 
        287.08, is amended to read: 
           287.08 [TAX, HOW PAYABLE; RECEIPTS.] 
           (a) The tax imposed by sections 287.01 to 287.12 shall be 
        paid to the treasurer of the county in which the mortgaged land 
        or some part thereof is situated at or before the time of filing 
        the mortgage for record or registration.  The treasurer shall 
        endorse receipt on the mortgage, countersigned by the county 
        auditor, who shall charge the amount to the treasurer and such 
        receipt shall be recorded with the mortgage, and such receipt of 
        the record thereof shall be conclusive proof that the tax has 
        been paid to the amount therein stated and authorize any county 
        recorder to record the mortgage.  Its form, in substance, shall 
        be "registration tax hereon of ..................... dollars 
        paid."  If the mortgages be exempt from taxation the endorsement 
        shall be "exempt from registration tax," to be signed in either 
        case by the treasurer as such, and in case of payment to be 
        countersigned by the auditor.  In case the treasurer shall be 
        unable to determine whether a claim of exemption should be 
        allowed, the tax shall be paid as in the case of a taxable 
        mortgage.  
           (b) Upon written application of the taxpayer, the county 
        treasurer may refund in whole or in part any tax which has been 
        erroneously paid, or a person having paid a mortgage registry 
        tax amount may seek a refund of such tax, or other appropriate 
        relief, by bringing an action in tax court in the county in 
        which the tax was paid, within 60 days of the payment.  The 
        action is commenced by the serving of a petition for relief on 
        the county treasurer, and by filing a copy with the court.  The 
        county attorney shall defend the action.  The county treasurer 
        shall notify the treasurer of each county that has or would 
        receive a portion of the tax as paid.  
           (c) If the county treasurer determines a refund should be 
        paid, or if a refund is ordered, the county treasurer of each 
        county that actually received a portion of the tax shall 
        immediately pay a proportionate share of three percent of the 
        refund using any available county funds.  The county treasurer 
        of each county which received, or would have received, a portion 
        of the tax shall also pay their county's proportionate share of 
        the remaining 97 percent of the court-ordered refund on or 
        before the tenth day of the following month using solely the 
        mortgage registry tax funds that would be paid to the 
        commissioner of revenue on that date under section 287.12.  If 
        the funds on hand under this procedure are insufficient to fully 
        fund 97 percent of the court-ordered refund, the county 
        treasurer of the county in which the action was brought shall 
        file a claim with the commissioner of revenue under section 
        16A.48 for the remaining portion of 97 percent of the refund, 
        and shall pay over the remaining portion upon receipt of a 
        warrant from the state issued pursuant to the claim.  
           (d) When any such mortgage covers real property situate in 
        more than one county in this state the whole of such tax shall 
        be paid to the treasurer of the county where the mortgage is 
        first presented for record or registration, and the payment 
        shall be receipted and countersigned as above provided.  If the 
        principal debt or obligation secured by such a multiple county 
        mortgage exceeds $1,000,000, the tax shall be divided and paid 
        over by the county treasurer receiving the same, on or before 
        the tenth day of each month after receipt thereof, to the county 
        or counties entitled thereto in the ratio which the market value 
        of the real property covered by the mortgage in each county 
        bears to the market value of all the property described in the 
        mortgage.  In making such division and payment the county 
        treasurer shall send therewith a statement giving the 
        description of the property described in the mortgage and the 
        market value of the part thereof situate in each county.  For 
        the purpose aforesaid, the treasurer of any county may require 
        the treasurer of any other county to certify to the former the 
        market valuation of any tract of land in any such mortgage. 
           Sec. 16.  [365A.095] [DISSOLUTION.] 
           A petition signed by at least 75 percent of the property 
        owners in the territory of the subordinate service district 
        requesting the removal of the district may be presented to the 
        town board.  Within 30 days after the town board receives the 
        petition, the town clerk shall determine the validity of the 
        signatures on the petition.  If the requisite number of 
        signatures are certified as valid, the town board must hold a 
        public hearing on the petitioned matter.  Within 30 days after 
        the end of the hearing, the town board must decide whether to 
        discontinue the subordinate service district, continue as it is, 
        or take some other action with respect to it. 
           Sec. 17.  Minnesota Statutes 1996, section 462.396, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BUDGET; HEARING; LEVY LIMITS.] On or before 
        August 20 each year, the commission shall submit its proposed 
        budget for the ensuing calendar year showing anticipated 
        receipts, disbursements and ad valorem tax levy with a written 
        notice of the time and place of the public hearing on the 
        proposed budget to each county auditor and municipal clerk 
        within the region and those town clerks who in advance have 
        requested a copy of the budget and notice of public hearing.  On 
        or before September 15 each year, the commission shall adopt, 
        after a public hearing held not later than September 15, a 
        budget covering its anticipated receipts and disbursements for 
        the ensuing year and shall decide upon the total amount 
        necessary to be raised from ad valorem tax levies to meet its 
        budget.  After adoption of the budget and no later than 
        September 15, the secretary of the commission shall certify to 
        the auditor of each county within the region the county share of 
        the tax, which shall be an amount bearing the same proportion to 
        the total levy agreed on by the commission as the net tax 
        capacity of the county bears to the net tax capacity of the 
        region.  (1) For taxes levied in 1990 and thereafter 1998, the 
        maximum amounts of levies made for the purposes of sections 
        462.381 to 462.398 are the following amounts, less the sum of 
        regional planning grants from the commissioner to that region:  
        for Region 1, $180,337; for Region 2, $150,000 $180,000; for 
        Region 3, $353,110; for Region 5, $195,865; for Region 6E, 
        $197,177; for Region 6W, $150,000 $180,000; for Region 
        7E, $158,653 $180,000; for Region 8, $206,107; for Region 9, 
        $343,572.  (2) For taxes levied in 1999 and thereafter, the 
        maximum amount that may be levied by each commission shall be 
        the amount authorized in clause (1), or 103 percent of the 
        amount levied in the previous year, whichever is greater.  The 
        auditor of each county in the region shall add the amount of any 
        levy made by the commission within the limits imposed by this 
        subdivision to other tax levies of the county for collection by 
        the county treasurer with other taxes.  When collected the 
        county treasurer shall make settlement of the taxes with the 
        commission in the same manner as other taxes are distributed to 
        political subdivisions. 
           Sec. 18.  Minnesota Statutes 1997 Supplement, section 
        462A.071, subdivision 2, is amended to read: 
           Subd. 2.  [APPLICATION.] (a) In order to qualify for 
        certification under subdivision 1, the owner or manager of the 
        property must annually apply to the agency.  The application 
        must be in the form prescribed by the agency, contain the 
        information required by the agency, and be submitted by the date 
        and time specified by the agency.  Beginning in calendar year 
        2000, the agency shall adopt procedures and deadlines for making 
        application to permit certification of the units qualifying to 
        the assessor by no later than April 1 of the assessment year.  
           (b) Each application must include: 
           (1) the property tax identification number; 
           (2) the number, type, and size of units the applicant seeks 
        to qualify as low-income housing under class 4d; 
           (3) the number, type, and size of units in the property for 
        which the applicant is not seeking qualification, if any; 
           (4) a certification that the property has been inspected by 
        a qualified inspector within the past three years and meets the 
        minimum housing quality standards or is exempt from the 
        inspection requirement under subdivision 4; 
           (5) a statement indicating the building is qualifying units 
        in compliance with the income limits; 
           (6) an executed agreement to restrict rents meeting the 
        requirements specified by the agency or executed leases for the 
        units for which qualification as low-income housing as class 4d 
        under section 273.13 is sought and the rent schedule; and 
           (7) any additional information the agency deems appropriate 
        to require. 
           (c) The applicant must pay a per-unit application fee to be 
        set by the agency.  The application fee charged by the agency 
        must approximately equal the costs of processing and reviewing 
        the applications.  The fee must be deposited in the general 
        housing development fund. 
           Sec. 19.  Minnesota Statutes 1997 Supplement, section 
        462A.071, subdivision 4, is amended to read: 
           Subd. 4.  [MINIMUM HOUSING QUALITY STANDARDS.] (a) To 
        qualify for taxation under class 4d under section 273.13, a unit 
        must meet both the housing maintenance code of the local unit of 
        government in which the unit is located, if such a code has been 
        adopted, and or the housing quality standards adopted by the 
        United States Department of Housing and Urban Development, if no 
        local housing maintenance code has been adopted. 
           (b) In order to meet the minimum housing quality standards, 
        a building must be inspected by an independent designated 
        inspector at least once every three years.  The inspector must 
        certify that the building complies with the minimum standards.  
        The property owner must pay the cost of the inspection. 
           (c) The agency may exempt from the inspection requirement 
        housing units that are financed by a governmental entity and 
        subject to regular inspection or other compliance checks with 
        regard to minimum housing quality.  Written certification must 
        be supplied to show that these exempt units have been inspected 
        within the last three years and comply with the requirements 
        under the public financing or local requirements. 
           Sec. 20.  Minnesota Statutes 1997 Supplement, section 
        462A.071, subdivision 6, is amended to read: 
           Subd. 6.  [SECTION 8 AND, TAX CREDIT, AND RURAL HOUSING 
        SERVICE UNITS.] (a) The agency may deem units as meeting the 
        requirements of section 273.126 and this section, if the 
        units either: 
           (1) are subject to a housing assistance payments contract 
        under section 8 of the United States Housing Act of 1937, as 
        amended; or 
           (2) are rent and income restricted units of a qualified 
        low-income housing project receiving tax credits under section 
        42(g) of the Internal Revenue Code of 1986, as amended; or 
           (3) are financed by the Rural Housing Service of the United 
        States Department of Agriculture and receive payments under the 
        rental assistance program pursuant to section 521(a) of the 
        Housing Act of 1949, as amended. 
           (b) The agency may certify these deemed units under 
        subdivision 1 based on a simplified application procedure that 
        verifies the unit's qualifications under paragraph (a).  
           Sec. 21.  Minnesota Statutes 1997 Supplement, section 
        462A.071, subdivision 8, is amended to read: 
           Subd. 8.  [PENALTIES.] (a) The penalties provided by this 
        subdivision apply to each unit that received class 4d taxation 
        for a year and failed to meet the requirements of section 
        273.126 and this section. 
           (b) If the owner or manager does not comply with the rent 
        restriction agreement, or does not comply with the income 
        restrictions or, minimum housing quality standards, or the 
        section 8 availability requirements, a penalty applies equal to 
        the increased taxes that would have been imposed if the property 
        unit had not been classified under class 4d for the year in 
        which restrictions were violated, plus an additional amount 
        equal to ten percent of the increased taxes.  The provisions of 
        section 279.03 apply to the amount of increased taxes that would 
        have been imposed if a unit had not been classified under class 
        4d for the year in which restrictions were violated. 
           (c) If the agency finds that the violations were 
        inadvertent and insubstantial, a penalty of $50 per unit per 
        year applies in lieu of the penalty specified under paragraph 
        (b).  In order to qualify under this paragraph, violations of 
        the minimum housing quality standards must be corrected within a 
        reasonable period of time and rent charged in excess of the 
        agreement must be rebated to the tenants. 
           (d) The agency may abate the penalties under this 
        subdivision for reasonable cause. 
           (e) Penalties assessed under paragraph (c) are payable to 
        the agency and must be deposited in the general housing 
        development fund.  If an owner or manager fails to timely pay a 
        penalty imposed under paragraph (c), the agency may choose to: 
           (1) impose the penalty under paragraph (b); or 
           (2) certify the penalty under paragraph (c) to the auditor 
        for collection as additional taxes. 
        The agency shall certify to the county auditor penalties 
        assessed under paragraph (b) and clause (2).  The auditor shall 
        impose and collect the certified penalties as additional taxes 
        which will be distributed to taxing districts in the same manner 
        as property taxes on the property. 
           Sec. 22.  Minnesota Statutes 1996, section 473.39, is 
        amended by adding a subdivision to read: 
           Subd. 1e.  [OBLIGATIONS.] In addition to the authority in 
        subdivisions 1a, 1b, 1c, and 1d, the council may issue 
        certificates of indebtedness, bonds, or other obligations under 
        this section in an amount not exceeding $32,500,000, which may 
        be used for capital expenditures as prescribed in the council's 
        transit capital improvement program and for related costs, 
        including the costs of issuance and sale of the obligations. 
           The metropolitan council, the city of St. Paul, and the 
        Minnesota department of transportation shall jointly assess the 
        feasibility of locating a bus storage facility near Mississippi 
        and Cayuga Street and I-35E in St. Paul.  If the metropolitan 
        council determines feasibility, the first priority for siting 
        must be at that location. 
           Sec. 23.  Minnesota Statutes 1996, section 473.3915, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REGULAR ROUTE TRANSIT SERVICE.] "Regular route 
        transit service" means services as defined in section 473.385, 
        subdivision 1, paragraph (b), with at least two scheduled runs 
        per hour between 7:00 a.m. and 6:30 p.m., Monday to Friday, and 
        regularly scheduled service on Saturday, Sunday, and holidays, 
        and weekdays after 6:30 p.m.  The two scheduled runs for buses 
        leaving a replacement transit service transit hub need not be on 
        the same route.  
           Sec. 24.  Minnesota Statutes 1996, section 473.3915, 
        subdivision 3, is amended to read: 
           Subd. 3.  [TRANSIT ZONE.] "Transit zone" means:  (1) the 
        area within one-quarter of a mile of a route along which regular 
        route transit service is provided that is also within the 
        metropolitan urban service area, as determined by the council; 
        or (2) the area within one-eighth of a mile around a replacement 
        transit service transit hub.  "Transit zone" includes any light 
        rail transit route for which funds for construction have been 
        committed. 
           Sec. 25.  Minnesota Statutes 1996, section 475.58, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPROVAL BY ELECTORS; EXCEPTIONS.] 
        Obligations authorized by law or charter may be issued by any 
        municipality upon obtaining the approval of a majority of the 
        electors voting on the question of issuing the obligations, but 
        an election shall not be required to authorize obligations 
        issued: 
           (1) to pay any unpaid judgment against the municipality; 
           (2) for refunding obligations; 
           (3) for an improvement or improvement program, which 
        obligation is payable wholly or partly from the proceeds of 
        special assessments levied upon property specially benefited by 
        the improvement or by an improvement within the improvement 
        program, or of taxes levied upon the increased value of property 
        within a district for the development of which the improvement 
        is undertaken, including obligations which are the general 
        obligations of the municipality, if the municipality is entitled 
        to reimbursement in whole or in part from the proceeds of such 
        special assessments or taxes and not less than 20 percent of the 
        cost of the improvement or the improvement program is to be 
        assessed against benefited property or is to be paid from the 
        proceeds of federal grant funds or a combination thereof, or is 
        estimated to be received from such taxes within the district; 
           (4) payable wholly from the income of revenue producing 
        conveniences; 
           (5) under the provisions of a home rule charter which 
        permits the issuance of obligations of the municipality without 
        election; 
           (6) under the provisions of a law which permits the 
        issuance of obligations of a municipality without an election; 
           (7) to fund pension or retirement fund liabilities pursuant 
        to section 475.52, subdivision 6; 
           (8) under a capital improvement plan under section 373.40; 
        and 
           (9) to fund facilities as provided in subdivision 3; and 
           (10) under sections 469.1813 to 469.1815 (property tax 
        abatement authority bonds). 
           Sec. 26.  Minnesota Statutes 1996, section 477A.14, is 
        amended to read: 
           477A.14 [USE OF FUNDS.] 
           Forty percent of the total payment to the county shall be 
        deposited in the county general revenue fund to be used to 
        provide property tax levy reduction.  The remainder shall be 
        distributed by the county in the following priority:  
           (a) 37.5 cents for each acre of county-administered other 
        natural resources land shall be deposited in a resource 
        development fund to be created within the county treasury for 
        use in resource development, forest management, game and fish 
        habitat improvement, and recreational development and 
        maintenance of county-administered other natural resources 
        land.  Any county receiving less than $5,000 annually for the 
        resource development fund may elect to deposit that amount in 
        the county general revenue fund; 
           (b) From the funds remaining, within 30 days of receipt of 
        the payment to the county, the county treasurer shall pay each 
        organized township 30 cents per acre of acquired natural 
        resources land and 7.5 cents per acre of other natural resources 
        land located within its boundaries.  Payments for natural 
        resources lands not located in an organized township shall be 
        deposited in the county general revenue fund.  Payments to 
        counties and townships pursuant to this paragraph shall be used 
        to provide property tax levy reduction, except that of the 
        payments for natural resources lands not located in an organized 
        township, the county may allocate the amount determined to be 
        necessary for maintenance of roads in unorganized townships.  
        Provided that, if the total payment to the county pursuant to 
        section 477A.12 is not sufficient to fully fund the distribution 
        provided for in this clause, the amount available shall be 
        distributed to each township and the county general revenue fund 
        on a pro rata basis; and 
           (c) Any remaining funds shall be deposited in the county 
        general revenue fund.  Provided that, if the distribution to the 
        county general revenue fund exceeds $35,000, the excess shall be 
        used to provide property tax levy reduction. 
           Sec. 27.  Laws 1971, chapter 773, section 1, as amended by 
        Laws 1974, chapter 351, section 5, Laws 1976, chapter 234, 
        sections 1 and 7, Laws 1978, chapter 788, section 1, Laws 1981, 
        chapter 369, section 1, Laws 1983, chapter 302, section 1, Laws 
        1988, chapter 513, section 1, and Laws 1992, chapter 511, 
        article 9, section 23, is amended to read: 
           Section 1.  [ST. PAUL, CITY OF; CAPITAL IMPROVEMENT 
        PROGRAM.] 
           Subdivision 1.  Notwithstanding any provision of the 
        charter of the city of St. Paul, the council of said city shall 
        have power by a resolution adopted by five affirmative votes of 
        all its members to authorize the issuance and sale of general 
        obligation bonds of the city in the years stated and in the 
        aggregate annual amounts not to exceed the limits prescribed in 
        subdivision 2 of this section for the payment of which the full 
        faith and credit of the city is irrevocably pledged. 
           Subd. 2.  For each of the years through 1998 2003, the city 
        of St. Paul is authorized to issue bonds in the aggregate 
        principal amount of $8,000,000 $15,000,000 for each year; or in 
        an amount equal to one-fourth of one percent of the assessors 
        estimated market value of taxable property in St. Paul, 
        whichever is greater, provided that no more than 
        $8,000,000 $15,000,000 of bonds is authorized to be issued in 
        any year, unless St. Paul's local general obligation debt as 
        defined in this section is less than six percent of market value 
        calculated as of December 31 of the preceding year; but at no 
        time shall the aggregate principal amount of bonds authorized 
        exceed $15,700,000 in 1992, $16,600,000 in 1993, $16,600,000 in 
        1994, $16,600,000 in 1995, $17,500,000 in 1996, $17,500,000 in 
        1997, and $18,000,000 in 1998, $18,000,000 in 1999, $19,000,000 
        in 2000, $19,000,000 in 2001, $19,500,000 in 2002, and 
        $20,000,000 in 2003. 
           Subd. 3.  For purposes of this section, St. Paul's general 
        obligation debt shall consist of the principal amount of all 
        outstanding bonds of (1) the city of St. Paul, the housing and 
        redevelopment authority of St. Paul, the civic center authority 
        of St. Paul, and the port authority of St. Paul, for which the 
        full faith and credit of the city or any of the foregoing 
        authorities has been pledged; (2) Independent School District 
        625, for which the full faith and credit of the district has 
        been pledged; and (3) the county of Ramsey, for which the full 
        faith and credit of the county has been pledged, reduced by an 
        amount equal to the principal amount of the outstanding bonds 
        multiplied by a figure, the numerator of which is equal to the 
        assessed value net tax capacity of property within the county 
        outside of the city of St. Paul and the denominator of which is 
        equal to the assessed value net tax capacity of the county.  
           There shall be deducted before making the foregoing 
        computations the outstanding principal amount of all refunded 
        bonds, all tax or aid anticipation certificates of indebtedness 
        of the city, the authorities, the school district and the county 
        for which the full faith and credit of the bodies has been 
        pledged and all tax increment financed bonds which have not 
        used, for the prior three consecutive years, general tax levies 
        or capitalized interest to support annual principal and interest 
        payments. 
           Sec. 28.  Laws 1971, chapter 773, section 2, as amended by 
        Laws 1978, chapter 788, section 2, Laws 1983, chapter 302, 
        section 2, Laws 1988, chapter 513, section 2, and Laws 1992, 
        chapter 511, article 9, section 24, is amended to read: 
           Sec. 2.  The proceeds of all bonds issued pursuant to 
        section 1 hereof shall be used exclusively for the acquisition, 
        construction, and repair of capital improvements and, commencing 
        in the year 1992 and notwithstanding any provision in Laws 1978, 
        chapter 788, section 5, as amended, for redevelopment project 
        activities as defined in Minnesota Statutes, section 469.002, 
        subdivision 14, in accordance with Minnesota Statutes, section 
        469.041, clause (6).  The amount of proceeds of bonds authorized 
        by section 1 used for redevelopment project activities shall not 
        exceed $655,000 in 1992, $690,000 in 1993, $690,000 in 1994, 
        $690,000 in 1995, $700,000 in 1996, $700,000 in 1997, 
        and $725,000 in 1998 or any later year. 
           None of the proceeds of any bonds so issued shall be 
        expended except upon projects which have been reviewed, and have 
        received a priority rating, from a capital improvements 
        committee consisting of 18 members, of whom a majority shall not 
        hold any paid office or position under the city of St. Paul.  
        The members shall be appointed by the mayor, with at least four 
        members from each Minnesota senate district located entirely 
        within the city and at least two members from each senate 
        district located partly within the city.  Prior to making an 
        appointment to a vacancy on the capital improvement budget 
        committee, the mayor shall consult the legislators of the senate 
        district in which the vacancy occurs.  The priorities and 
        recommendations of the committee shall be purely advisory, and 
        no buyer of any bonds shall be required to see to the 
        application of the proceeds. 
           Sec. 29.  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, and Laws 1991, chapter 167, section 1, is amended to 
        read: 
           Section 1.  [RED RIVER OF THE NORTH WATERSHED; TAX BY 
        WATERSHED DISTRICTS.] 
           Each watershed district located both within the counties of 
        Kittson, Marshall, Polk, Pennington, Red Lake, Norman, Clay, 
        Mahnomen, Clearwater, Roseau, Wilkin, Ottertail, Becker, 
        Koochiching, Beltrami, Traverse, Grant, Big Stone, Stevens, and 
        Itasca, which district and within the hydrologic basin of the 
        Red River of the North that is a member of the Red River 
        watershed management board, established by a joint powers 
        agreement in accordance with Minnesota Statutes, section 471.59, 
        may levy an ad valorem tax not to exceed 0.04836 percent of the 
        taxable market value of all property within the district.  This 
        levy shall be in excess of any levy authorized by Minnesota 
        Statutes, section 103D.905.  The proceeds of one-half of this 
        levy shall be credited to the district's construction fund and 
        shall be used for the development, construction, and maintenance 
        of projects and programs of benefit to the district.  The 
        proceeds of the remaining one-half of this levy shall be 
        credited to the general fund of the Red River watershed 
        management board and shall be used for funding the development, 
        construction, and maintenance of projects and programs of 
        benefit to the Red River basin.  The Red River management board 
        shall adopt criteria for member districts to follow in applying 
        for funding from the board. 
           Sec. 30.  Laws 1984, chapter 380, section 1, as amended by 
        Laws 1994, chapter 505, article 6, section 27, is amended to 
        read: 
           Section 1.  [TAX.] 
           The Anoka county board may levy a tax on of not more than 
        .01 percent of the taxable market value of taxable 
        property located within the county outside of excluding any 
        taxable property taxed by any city in which is situated a for 
        the support of any free public library, to acquire, better, and 
        construct county library buildings and to pay principal and 
        interest on bonds issued for that purpose.  The tax shall be 
        disregarded in the calculation of levies or limits on levies 
        provided by Minnesota Statutes, section 373.40, or other law.  
           Sec. 31.  Laws 1984, chapter 380, section 2, is amended to 
        read: 
           Sec. 2.  [AUTHORIZATION.] 
           The Anoka county board may, by resolution adopted by a 
        four-sevenths vote, issue and sell general obligation bonds of 
        the county in the amount of $9,000,000 in the manner provided in 
        Minnesota Statutes, chapter 475, to acquire, better, and 
        construct county library buildings.  The total amount of bonds 
        outstanding at any time shall not exceed $5,000,000.  The county 
        board, prior to the issuance of any bonds authorized by section 
        1 and after adopting the resolution as provided above in this 
        section, shall adopt a resolution by majority vote of the county 
        board stating the amount, purpose and, in general, the security 
        to be provided for the bonds, and shall publish the resolution 
        once each week for two consecutive weeks in the medium of 
        official and legal publication of the county.  The bonds may be 
        issued without the submission of the question of their issuance 
        to the voters of the county library district unless within 21 
        days after the second publication of the resolution a petition 
        requesting a referendum, signed by at least ten percent of the 
        registered voters of the county, is filed with the county 
        auditor.  If a petition is filed, bonds may be issued unless 
        disapproved by a majority of the voters of the county library 
        district, voting on the question of their issuance at a regular 
        or special election.  The bonds shall not be subject to the 
        requirements of Minnesota Statutes, sections 475.57 to 475.59.  
        The maturity years and amounts and interest rates of each series 
        of bonds shall be fixed so that the maximum amount of principal 
        and interest to become due in any year, on the bonds of that 
        series and of all outstanding series issued by or for the 
        purposes of libraries, shall not exceed an amount equal to 
        three-fourths of a mill times the assessed value the lesser of 
        (i) .01 percent of the taxable market value of all taxable 
        property in the county, which was not excluding any taxable 
        property taxed in 1981 by any city for the support of any free 
        public library, as last finally equalized before the issuance of 
        the series or (ii) $1,250,000.  When the tax levy authorized in 
        this sections section is collected, it shall be appropriated and 
        credited to a debt service fund for the bonds.  The tax levy for 
        the debt service fund under Minnesota Statutes, section 475.61 
        shall be reduced by the amount available or reasonably 
        anticipated to be available in the fund to make payments 
        otherwise payable from the levy pursuant to section 475.61. 
           Sec. 32.  Laws 1992, chapter 511, article 2, section 52, as 
        amended by Laws 1997, chapter 231, article 2, section 50, is 
        amended to read: 
           Sec. 52.  [WATERSHED DISTRICT LEVIES.] 
           (a) The Nine Mile Creek watershed district, the 
        Riley-Purgatory Bluff Creek watershed district, the Minnehaha 
        Creek watershed district, the Coon Creek watershed district, and 
        the Lower Minnesota River watershed district may levy in 1992 
        and thereafter a tax not to exceed $200,000 on property within 
        the district for the administrative fund.  The levy authorized 
        under this section is in lieu of Minnesota Statutes, section 
        103D.905, subdivision 3.  The administrative fund shall be used 
        for the purposes contained in Minnesota Statutes, section 
        103D.905, subdivision 3.  The board of managers shall make the 
        levy for the administrative fund in accordance with Minnesota 
        Statutes, section 103D.915. 
           (b) The Wild Rice watershed district may levy, for taxes 
        payable in 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 
        and 2002, an ad valorem tax not to exceed $200,000 on property 
        within the district for the administrative fund.  The additional 
        $75,000 above the amount authorized in Minnesota Statutes, 
        section 103D.905, subdivision 3, must be used for (1) costs 
        incurred in connection with the development and maintenance of 
        cost-sharing projects with the United States Army Corps of 
        Engineers or (2) administrative costs associated with 1997 flood 
        mitigation projects.  The board of managers shall make the levy 
        for the administrative fund in accordance with Minnesota 
        Statutes, section 103D.915. 
           Sec. 33.  Laws 1994, chapter 587, article 11, is amended by 
        adding a section to read: 
           Sec. 5a.  [POLITICAL SUBDIVISION.] 
           For purposes of Minnesota Statutes, section 275.066, the 
        Chisholm/Hibbing airport authority is a political subdivision of 
        the state of Minnesota. 
           Sec. 34.  Laws 1997, chapter 231, article 2, section 63, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [IMPROVEMENTS MADE TO CERTAIN APARTMENTS.] 
        (a) Notwithstanding any other provisions to the contrary, the 
        market value increase resulting from improvements made after the 
        effective date of this act and prior to January 1, 1999 2000, to 
        qualifying property located in the city of Brooklyn Center, 
        Richfield, or St. Louis Park shall be excluded for assessment 
        purposes under the conditions provided in this subdivision.  
           (b) "Qualifying property" means property that meets all of 
        the following criteria: 
           (1) the building is at least 30 years old at the time of 
        the improvements; 
           (2) the building is residential real estate of four or more 
        units and is classified under Minnesota Statutes, section 
        273.13, subdivision 25, as class 4a, 4c, or 4d property; and 
           (3) the total cost of the qualifying improvements exceeds 
        $5,000 $2,500 per unit. 
           (c) A building permit must have been issued prior to the 
        commencement of the improvements.  Only improvements to the 
        residential structure and garages qualify under this 
        subdivision.  The assessor shall require an application, 
        including, if unknown by the assessor, documentation of the age 
        of the building from the owner.  The application may be filed 
        subsequent to the date of the building permit provided that the 
        application is filed prior to the next assessment date. 
           (d) If the property qualifies under this subdivision, the 
        assessor shall note the qualifying value of the improvements on 
        the property's record and that amount shall be subtracted from 
        the qualifying property's market value for the five assessment 
        years immediately following the year in which the improvements 
        were completed, at which time the assessor shall determine the 
        property's estimated market value, and 20 percent of the 
        qualifying value shall be added back in each of the next five 
        subsequent assessment years.  The assessor may require from the 
        owner any documentation necessary to verify that the cost of 
        improvements exceed the $5,000 $2,500 per unit minimum.  
           Sec. 35.  Laws 1997, chapter 231, article 2, section 68, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION.] To facilitate a review by 
        the 1998 legislature of the property taxation of elderly 
        assisted living facilities and the development of standards and 
        criteria for the taxation of these facilities, this section: 
           (1) requires the commissioner of revenue to conduct a 
        survey of the tax status of these facilities under subdivision 
        2; and 
           (2) prohibits changes in assessment practices and policies 
        regarding these facilities under subdivision 3. 
           Sec. 36.  Laws 1997, chapter 231, article 2, section 68, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MORATORIUM ON CHANGES IN ASSESSMENT PRACTICES.] 
        (a) An assessor may not change the current practices or policies 
        used generally in assessing elderly assisted living facilities. 
           (b) An assessor may not change the assessment of an 
        existing elderly assisted living facility, unless the change is 
        made as a result of a change in ownership, occupancy, or use of 
        the facility.  This paragraph does not apply to: 
           (1) a facility that was constructed during calendar year 
        1997 or 1998; 
           (2) a facility that was converted to an elderly assisted 
        living facility during calendar year 1997 or 1998; or 
           (3) a change in market value. 
           (c) This subdivision expires and no longer applies on the 
        earlier of: 
           (1) the enactment of legislation establishing criteria for 
        the property taxation of elderly assisted living facilities; or 
           (2) final adjournment of the 1998 legislature 1999 regular 
        legislative session. 
           Sec. 37.  [CHILD CARE FACILITY.] 
           In connection with the capital expenditure authority in 
        Minnesota Statutes, section 473.39, subdivision 1e, the 
        metropolitan council shall consider incorporating in a new 
        transfer garage a child care facility to assist in the 
        recruitment and retention of metropolitan transit drivers. 
           Sec. 38.  [QUALIFIED PROPERTY.] 
           A contiguous property located within a county adjacent to a 
        county containing a city of the first class and within the 
        metropolitan area as defined in Minnesota Statutes, section 
        473.121, shall be valued and classified under sections 39 and 
        40, provided it meets the following conditions: 
           (1) the property does not exceed 60 acres; 
           (2) the property includes a sculpture garden open to the 
        public, either free of charge or for a nominal admission fee; 
           (3) the property includes a system of internal roads and 
        paths for pedestrian use and an amphitheater for live artistic 
        performances; 
           (4) the property is used for a summer youth art camp; 
           (5) the property is used for seminars for aspiring and 
        professional artists; 
           (6) the property includes the homestead of the owner; and 
           (7) the property has been owned by the owner for at least 
        40 years. 
           Sec. 39.  [CLASSIFICATION.] 
           Notwithstanding any law to the contrary, a property 
        qualifying under section 38 shall be classified as class 2a 
        property under Minnesota Statutes, section 273.13, subdivision 
        23. 
           Sec. 40.  [VALUATION.] 
           Notwithstanding Minnesota Statutes, section 273.11, 
        subdivision 1, the land qualifying under section 38 shall be 
        valued as if it were agricultural property, using a per acre 
        valuation equal to the average per acre valuation of similar 
        agricultural property within the county. 
           Sec. 41.  [SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.] 
           Notwithstanding Minnesota Statutes, chapter 429, a city may 
        defer the payment of any special assessment levied against a 
        property qualifying under section 38 as determined by the city. 
           Sec. 42.  [TRANSFER OF PROPERTY; PAYMENT OF DEFERRED 
        TAXES.] 
           Subdivision 1.  [ADDITIONAL TAX.] The assessor shall make a 
        separate determination of the market value and net tax capacity 
        of a property qualifying under section 38 as if sections 39 and 
        40 did not apply.  The tax based upon the appropriate local tax 
        rate applicable to such property in the taxing district shall be 
        recorded on the property assessment records. 
           Subd. 2.  [RECAPTURE.] (a) Property or any portion thereof 
        qualifying under section 38 is subject to additional taxes if (1)
        ownership of the property is transferred to anyone other than 
        the spouse or child of the current owner, or (2) the current 
        owner or the spouse or child of the current owner has not 
        conveyed or entered into a contract before July 1, 2002, to 
        convey the property to a nonprofit foundation or corporation 
        created to own and operate the property as an art park providing 
        the services included in section 38, clauses (2) to (5).  
           (b) The additional taxes are imposed at the earlier of (1) 
        the year following transfer of ownership to anyone other than 
        the spouse or child of the current owner or a nonprofit 
        foundation or corporation created to own and operate the 
        property as an art park, or (2) for taxes payable in 2003.  The 
        additional taxes are equal to the difference between the taxes 
        determined under sections 39 and 40 and the amount determined 
        under subdivision 1 for all years that the property qualified 
        under section 38.  The additional taxes must be extended against 
        the property on the tax list for the current year; provided, 
        however, that no interest or penalties may be levied on the 
        additional taxes if timely paid. 
           Subd. 3.  [CURRENT OWNER.] For purposes of this section, 
        "current owner" means the owner of property qualifying under 
        section 38 on the date of final enactment of this act or that 
        owner's spouse or child.  
           Subd. 4.  [NONPROFIT FOUNDATION OR CORPORATION.] For 
        purposes of this act, "nonprofit foundation or corporation" 
        means a nonprofit entity created to own and operate the property 
        as an art park providing the services included in section 38, 
        clauses (2) to (5). 
           Sec. 43.  [WATER SUPPLY PROJECTS OF MORE THAN $15,000,000.] 
           Notwithstanding Minnesota Statutes, chapter 410, or 
        Minneapolis city charter, chapter 15, section 9, the city of 
        Minneapolis and its board of estimate and taxation may issue and 
        sell bonds or incur other indebtedness for a capital improvement 
        project related to water supply that in all phases from 
        inception to completion exceeds $15,000,000 without submitting 
        the question of issuing such obligations or incurring such 
        indebtedness to the electorate for approval. 
           Sec. 44.  [JENSEN-NOPEMING SPECIAL DISTRICT.] 
           Subdivision 1.  [SPECIAL DISTRICT MAY BE ESTABLISHED.] The 
        counties of Carlton and St. Louis may establish the 
        Jensen-Nopeming Special District with authority to levy a 
        property tax not greater than $200,000 annually for the capital 
        costs of the Chris Jensen Nursing Home and the Nopeming Nursing 
        Home.  The tax may be levied on taxable property in the 
        territory described in Minnesota Statutes, section 458D.02, 
        subdivision 2.  The district shall be governed by a board 
        composed of those members of the St. Louis county board who 
        represent territory subject to taxation by the district and two 
        members of the Carlton county board elected by the Carlton 
        county board to serve terms provided by the board.  The proceeds 
        of the tax may be used only for capital costs of the nursing 
        homes.  As provided by Minnesota Statutes, chapter 475, debt may 
        be incurred by the district for capital costs of the nursing 
        home and the proceeds of the tax may be pledged to secure the 
        debt.  The district may enter into appropriate agreements with 
        either county to facilitate the incurrence of debt or otherwise 
        discharge its duties under this section. 
           By April 15, 1999, the St. Louis county board shall 
        complete a study examining the long-term profitability of Chris 
        Jensen and Nopeming nursing homes.  Upon completion of the 
        study, the board must adopt a plan to eliminate any future 
        property tax revenue dedicated to operating costs of the two 
        facilities. 
           Subd. 2.  [LOCAL APPROVAL.] Subdivision 1 is effective the 
        day after the county boards of Carlton and St. Louis counties 
        comply with the provisions of Minnesota Statutes, section 
        645.021, subdivision 3. 
           Sec. 45.  [CITIES OF MINNEAPOLIS AND ST. PAUL; TRANSIT ZONE 
        TAX.] 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section, the following terms have the meanings given. 
           (b) "City" is the city of Minneapolis or the city of St. 
        Paul. 
           (c) "Downtown taxing district" means: 
           (1) for the city of Minneapolis, the geographic area in 
        which the city may impose the tax under Laws 1986, chapter 396, 
        section 4, as amended by Laws 1986, chapter 400, section 44; and 
           (2) for the city of St. Paul, taxing wards numbers 3 and 4. 
           (d) "Purchase agreement" includes an option agreement to 
        acquire a leasehold interest that includes an option to purchase.
           (e) "Transit zone tax capacity" means the reduction in net 
        tax capacity of transit zone property in the downtown taxing 
        district that result from the reduced class rate under the 
        provisions of Minnesota Statutes, section 273.13, subdivision 
        24, paragraph (c), or a successor provision.  Transit zone tax 
        capacity is determined without regard to captured or original 
        net tax capacity under Minnesota Statutes, section 469.177, or 
        to the distribution or contribution value under Minnesota 
        Statutes, section 473F.08. 
           Subd. 2.  [EXEMPTION.] The tax under this section does not 
        apply to: 
           (1) property for which a building permit was issued before 
        December 31, 1998; or 
           (2) property for which a building permit was issued before 
        June 30, 2001, if: 
           (i) at least 50 percent of the land on which the structure 
        is to be built has been acquired or is the subject of signed 
        purchase agreements or signed options as of March 15, 1998, by 
        the entity that proposes construction of the project or an 
        affiliate of the entity; 
           (ii) signed agreements have been entered into with one 
        entity or with affiliated entities to lease for the account of 
        the entity or affiliated entities at least 50 percent of the 
        square footage of the structure or the owner of the structure 
        will occupy at least 50 percent of the square footage of the 
        structure; and 
           (iii)(A) the project proposer has submitted the completed 
        data portions of an environmental assessment worksheet by 
        December 31, 1998, or (B) a notice of determination of adequacy 
        of an environmental impact statement has been published by April 
        1, 1999, or (C) an alternative urban areawide review has been 
        completed by April 1, 1999; or 
           (3) property for which a building permit is issued before 
        July 30, 1999, if: 
           (i) at least 50 percent of the land on which the structure 
        is to be built has been acquired or is the subject of signed 
        purchase agreements as of March 31, 1998, by the entity that 
        proposes construction of the project or an affiliate of the 
        entity; 
           (ii) a signed agreement has been entered into between the 
        building developer and a tenant to lease for its own account at 
        least 200,000 square feet of space in the building; 
           (iii) a signed letter of intent is entered into by July 1, 
        1998, between the building developer and the tenant to lease the 
        space for its own account; and 
           (iv) the environmental review process required by state law 
        was commenced by December 31, 1998; or 
           (4)(i) property a portion of the land on which the 
        structure is to be built is the subject of condemnation 
        proceedings as of March 15, 1998; and 
           (ii) signed agreements have been entered into with one 
        entity or with affiliated entities to lease for the account of 
        the entity or affiliated entities at least 50 percent of the 
        square footage of the structure or the owner of the structure 
        will occupy at least 50 percent of the square footage of the 
        structure. 
           Subd. 3.  [AUTHORITY TO IMPOSE.] (a) The city may, by 
        ordinance, impose a tax on transit zone tax capacity within the 
        downtown taxing district. 
           (b) The rate of the tax equals the sum of the ad valorem 
        property tax rates imposed by the county, city, school district, 
        and special taxing districts in the city that apply for the 
        taxable year. 
           (c) The tax equals the rate multiplied by the transit zone 
        tax capacity. 
           (d) The tax imposed is not included in the calculation of 
        levies or levy limits. 
           Subd. 4.  [COLLECTION AND ADMINISTRATION.] Any tax imposed 
        under this section is payable at the same time and in the same 
        manner and must be collected and imposed as provided by general 
        law for ad valorem taxes.  Any tax not paid by the due date is 
        subject to the same penalty and interest as ad valorem taxes not 
        paid by the due date. 
           Subd. 5.  [USE OF REVENUES.] The revenues from the tax 
        imposed under this section must be deposited in a separate 
        account on the city's books and records.  Money in the account 
        may only be used in the downtown taxing district to provide 
        transit services or transit related projects that directly 
        increase the feasibility of existing or proposed transit system 
        services or improvements. 
           Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
        day following final enactment and applies to the cities of 
        Minneapolis and St. Paul under the provisions of Minnesota 
        Statutes, section 645.023. 
           Sec. 46.  [APPLICATION.] 
           Sections 23 and 24 apply in the counties of Anoka, Carver, 
        Dakota, Hennepin, Ramsey, Scott, and Washington.  
           Sec. 47.  [REPEALER.] 
           Minnesota Statutes 1996, section 365A.09, is repealed. 
           Sec. 48.  [EFFECTIVE DATE.] 
           Section 1, clause (30), is effective for the 1998 
        assessment for taxes payable in 1999 through assessment year 
        2004, taxes payable in 2005, and section 1, clause (31), is 
        effective beginning with the 1998 assessment payable 1999 and 
        thereafter, except that for the 1998 assessment, the filing 
        requirement under Minnesota Statutes, section 272.025, 
        subdivision 3, for both clauses (30) and (31) shall be 60 days 
        after enactment of this act.  Sections 2, 29, and 43 are 
        effective the day following final enactment.  Sections 3 to 5 
        and 8 are effective for the 1998 assessment, taxes payable in 
        1999 and thereafter.  Sections 6 and 7 are effective for real 
        estate sales and transfers occurring on or after July 1, 1998.  
        Sections 9, 18, paragraph (c), and 19 to 21 are effective 
        beginning for property taxes assessed in 1998 and payable in 
        1999.  Section 10 is effective for aids payable in 1999, 2000, 
        and 2001.  Section 12 is effective beginning with notices 
        prepared in 1998 for taxes payable in 1999.  Section 13 is 
        effective for public hearings held in 1998 and thereafter.  
        Sections 14, 23, 24, and 46 are effective for taxes payable in 
        1999 and thereafter.  Section 15 is effective for mortgages 
        recorded or registered on or after July 1, 1998.  Section 25 
        confirms the original intent of the legislature in enacting the 
        abatement law and is effective retroactively to the same time 
        Minnesota Statutes, sections 469.1813 to 469.1815, became 
        effective.  Section 26 is effective for payments to counties 
        after June 30, 1998.  Sections 27 and 28 are effective upon 
        compliance by the governing body of the city of St. Paul with 
        Minnesota Statutes, section 645.021, subdivision 3.  Sections 30 
        and 31 are effective the day after the chief clerical officer of 
        Anoka county complies with Minnesota Statutes, section 645.021, 
        subdivision 3.  Sections 32 and 33 are effective for taxes 
        levied in 1997, payable in 1998, and thereafter.  Section 34 is 
        effective for each of the cities of Brooklyn Center, Richfield, 
        and St. Louis Park upon compliance with Minnesota Statutes, 
        section 645.021, subdivision 3, by the governing body of that 
        city.  Sections 38 to 42 are effective beginning with taxes 
        payable in 1998 and ending with taxes payable in 2003.  Section 
        48, subdivision 1, is effective the day following final 
        enactment.  
           An applicant for class 4d for taxes payable in 1999 may 
        withdraw its application by June 1, 1998, if the provisions 
        added to Minnesota Statutes, section 273.126, subdivision 3, by 
        section 9, would require the applicant to increase the percent 
        of units that must be made available for section 8 tenants. 
                                   ARTICLE 4 
                       GENERAL LEVY LIMITS AND STATE AIDS 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        275.70, subdivision 5, is amended to read: 
           Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
        portions of ad valorem taxes levied by a local governmental unit 
        for the following purposes or in the following manner: 
           (1) to pay the costs of the principal and interest on 
        bonded indebtedness or to reimburse for the amount of liquor 
        store revenues used to pay the principal and interest due on 
        municipal liquor store bonds in the year preceding the year for 
        which the levy limit is calculated; 
           (2) to pay the costs of principal and interest on 
        certificates of indebtedness issued for any corporate purpose 
        except for the following: 
           (i) tax anticipation or aid anticipation certificates of 
        indebtedness; 
           (ii) certificates of indebtedness issued under sections 
        298.28 and 298.282; 
           (iii) certificates of indebtedness used to fund current 
        expenses or to pay the costs of extraordinary expenditures that 
        result from a public emergency; or 
           (iv) certificates of indebtedness used to fund an 
        insufficiency in tax receipts or an insufficiency in other 
        revenue sources; 
           (3) to provide for the bonded indebtedness portion of 
        payments made to another political subdivision of the state of 
        Minnesota; 
           (4) to fund payments made to the Minnesota state armory 
        building commission under section 193.145, subdivision 2, to 
        retire the principal and interest on armory construction bonds; 
           (5) for unreimbursed expenses related to flooding that 
        occurred during the first half of calendar year 1997, as allowed 
        by the commissioner of revenue under section 275.74, paragraph 
        (b); 
           (6) for local units of government located in an area 
        designated by the Federal Emergency Management Agency pursuant 
        to a major disaster declaration issued for Minnesota by 
        President Clinton after April 1, 1997, and before June 11, 1997, 
        for the amount of tax dollars lost due to abatements authorized 
        under section 273.123, subdivision 7, and Laws 1997, chapter 
        231, article 2, section 64, to the extent that they are related 
        to the major disaster and to the extent that neither the state 
        or federal government reimburses the local government for the 
        amount lost; 
           (7) property taxes approved by voters which are levied 
        against the referendum market value as provided under section 
        275.61; 
           (8) to fund matching requirements needed to qualify for 
        federal or state grants or programs to the extent that either 
        (i) the matching requirement exceeds the matching requirement in 
        calendar year 1997, or (ii) it is a new matching requirement 
        that didn't exist prior to 1998; and 
           (9) to pay the expenses reasonably and necessarily incurred 
        in preparing for or repairing the effects of natural disaster 
        including the occurrence or threat of widespread or severe 
        damage, injury, or loss of life or property resulting from 
        natural causes, in accordance with standards formulated by the 
        emergency services division of the state department of public 
        safety, as allowed by the commissioner of revenue under section 
        275.74, paragraph (b).; 
           (10) for the amount of tax revenue lost due to abatements 
        authorized under section 273.123, subdivision 7, for damage 
        related to the tornadoes of March 29, 1998, to the extent that 
        neither the state or federal government provides reimbursement 
        for the amount lost; 
           (11) pay amounts required to correct an error in the levy 
        certified to the county auditor by a city or county in a levy 
        year, but only to the extent that when added to the preceding 
        year's levy it is not in excess of an applicable statutory, 
        special law or charter limitation, or the limitation imposed on 
        the governmental subdivision by sections 275.70 to 275.74 in the 
        preceding levy year; and 
           (12) to pay an abatement under section 469.1815. 
           Sec. 2.  Minnesota Statutes 1997 Supplement, section 
        275.70, is amended by adding a subdivision to read: 
           Subd. 6.  [MATCHING FUND REQUIREMENTS.] The special levy 
        provided in subdivision 5, clause (8), does not include the 
        increased direct and indirect costs related to general increases 
        in program costs where there is no mandated increase regarding 
        the matching fund requirements.  Specifically, but without 
        limitation, the following provisions apply to the special levy 
        authorization in subdivision 5, clause (8):  (1) increases in 
        direct or indirect income maintenance administrative costs are 
        not included; (2) increases for social services and social 
        services administration are included, but only to the extent 
        that the minimum local share amount needed to receive community 
        social service aids exceeds the amount levied for social 
        services and social services administration for the taxes 
        payable year 1997; and (3) increases in county costs for Title 
        IV-E Foster Care Services over the amount levied for the taxes 
        payable year 1997 are included to the extent the amount from 
        both years represents the local matching fund requirement for 
        the federal grant.  
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 
        275.71, subdivision 2, is amended to read: 
           Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
        local governmental unit for taxes levied in 1997 shall be equal 
        to the sum of: 
           (1) the amount the local governmental unit levied in 1996, 
        less any amount levied for debt, as reported to the department 
        of revenue under section 275.62, subdivision 1, clause (1), and 
        less any tax levied in 1996 against market value as provided for 
        in section 275.61; 
           (2) the amount of aids the local governmental unit was 
        certified to receive in calendar year 1997 under sections 
        477A.011 to 477A.03 before any reductions for state tax 
        increment financing aid under section 273.1399, subdivision 5; 
           (3) the amount of homestead and agricultural credit aid the 
        local governmental unit was certified to receive under section 
        273.1398 in calendar year 1997 before any reductions for tax 
        increment financing aid under section 273.1399, subdivision 5; 
           (4) the amount of local performance aid the local 
        governmental unit was certified to receive in calendar year 1997 
        under section 477A.05; and 
           (5) the amount of any payments certified to the local 
        government unit in 1997 under sections 298.28 and 298.282. 
           If a governmental unit was not required to report under 
        section 275.62 for taxes levied in 1997, the commissioner shall 
        request information on levies used for debt from the local 
        governmental unit and adjust its levy limit base accordingly. 
           (b) The levy limit base for a local governmental unit for 
        taxes levied in 1998 is limited equal to its adjusted levy limit 
        base in the previous year, subject to any adjustments under 
        section 275.72 and multiplied by the increase that would have 
        occurred under subdivision 3, clause (3), if that clause had 
        been in effect for taxes levied in 1997. 
           Sec. 4.  Minnesota Statutes 1997 Supplement, section 
        275.71, subdivision 3, is amended to read: 
           Subd. 3.  [ADJUSTED LEVY LIMIT BASE.] For taxes levied 
        in 1997 and 1998, the adjusted levy limit is equal to the levy 
        limit base computed under subdivision 2 or section 275.72, 
        multiplied by: 
           (1) one plus a percentage equal to the percentage growth in 
        the implicit price deflator; and 
           (2) for all cities and for counties outside of the 
        seven-county metropolitan area, one plus a percentage equal to 
        the percentage increase in number of households, if any, for the 
        most recent 12-month period for which data is available; and 
           (3) for counties located in the seven-county metropolitan 
        area, one plus a percentage equal to the greater of the 
        percentage increase in the number of households in the county or 
        the percentage increase in the number of households in the 
        entire seven-county metropolitan area for the most recent 
        12-month period for which data is available; and 
           (3) one plus a percentage equal to the percentage increase 
        in the taxable market value of the jurisdiction due to new 
        construction of class 3 and class 5 property, as defined in 
        section 273.13, subdivisions 24 and 31, for the most recent year 
        for which data are available. 
           Sec. 5.  Minnesota Statutes 1997 Supplement, section 
        275.71, subdivision 4, is amended to read: 
           Subd. 4.  [PROPERTY TAX LEVY LIMIT.] For taxes levied in 
        1997 and 1998, the property tax levy limit for a local 
        governmental unit is equal to its adjusted levy limit base 
        determined under subdivision 3 plus any additional levy 
        authorized under section 275.73, which is levied against net tax 
        capacity, reduced by the sum of (1) the total amount of aids 
        that the local governmental unit is certified to receive under 
        sections 477A.011 to 477A.014, (2) homestead and agricultural 
        aids it is certified to receive under section 273.1398, (3) 
        local performance aid it is certified to receive under section 
        477A.05, and (4) taconite aids under sections 298.28 and 298.282 
        including any aid which was required to be placed in a special 
        fund for expenditure in the next succeeding year, (5) flood loss 
        aid under section 273.1383, and (6) low-income housing aid under 
        sections 477A.06 and 477A.065. 
           Sec. 6.  Minnesota Statutes 1997 Supplement, section 
        275.72, is amended by adding a subdivision to read: 
           Subd. 2a.  [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If 
        a local governmental unit, as a result of an annexation 
        agreement prior to January 1, 1997, has different tax rates in 
        various parts of the jurisdiction due to different service 
        levels, it may petition the commissioner of revenue to adjust 
        its levy limits established under section 275.71.  The 
        commissioner shall adjust the levy limits to reflect scheduled 
        changes in tax rates related to increasing service levels in 
        areas currently receiving less city services.  The local 
        governmental unit shall provide the commissioner with any 
        information the commissioner deems necessary in making the levy 
        limit adjustment. 
           Sec. 7.  Minnesota Statutes 1997 Supplement, section 
        477A.011, subdivision 36, is amended to read: 
           Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
        paragraphs (b), (c), and (d), "city aid base" means, for each 
        city, the sum of the local government aid and equalization aid 
        it was originally certified to receive in calendar year 1993 
        under Minnesota Statutes 1992, section 477A.013, subdivisions 3 
        and 5, and the amount of disparity reduction aid it received in 
        calendar year 1993 under Minnesota Statutes 1992, section 
        273.1398, subdivision 3. 
           (b) For aids payable in 1996 and thereafter, a city that in 
        1992 or 1993 transferred an amount from governmental funds to 
        its sewer and water fund, which amount exceeded its net levy for 
        taxes payable in the year in which the transfer occurred, has a 
        "city aid base" equal to the sum of (i) its city aid base, as 
        calculated under paragraph (a), and (ii) one-half of the 
        difference between its city aid distribution under section 
        477A.013, subdivision 9, for aids payable in 1995 and its city 
        aid base for aids payable in 1995. 
           (c) The city aid base for any city with a population less 
        than 500 is increased by $40,000 for aids payable in calendar 
        year 1995 and thereafter, and the maximum amount of total aid it 
        may receive under section 477A.013, subdivision 9, paragraph 
        (c), is also increased by $40,000 for aids payable in calendar 
        year 1995 only, provided that: 
           (i) the average total tax capacity rate for taxes payable 
        in 1995 exceeds 200 percent; 
           (ii) the city portion of the tax capacity rate exceeds 100 
        percent; and 
           (iii) its city aid base is less than $60 per capita. 
           (d) The city aid base for a city is increased by $20,000 in 
        1998 and thereafter and the maximum amount of total aid it may 
        receive under section 477A.013, subdivision 9, paragraph (c), is 
        also increased by $20,000 in calendar year 1998 only, provided 
        that: 
           (i) the city has a population in 1994 of 2,500 or more; 
           (ii) the city is located in a county, outside of the 
        metropolitan area, which contains a city of the first class; 
           (iii) the city's net tax capacity used in calculating its 
        1996 aid under section 477A.013 is less than $400 per capita; 
        and 
           (iv) at least four percent of the total net tax capacity, 
        for taxes payable in 1996, of property located in the city is 
        classified as railroad property. 
           (e) The city aid base for a city is increased by $200,000 
        in 1999 and thereafter and the maximum amount of total aid it 
        may receive under section 477A.013, subdivision 9, paragraph 
        (c), is also increased by $200,000 in calendar year 1999 only, 
        provided that: 
           (i) the city was incorporated as a statutory city after 
        December 1, 1993; 
           (ii) its city aid base does not exceed $5,600; and 
           (iii) the city had a population in 1996 of 5,000 or more. 
           (f) The city aid base for a city is increased by $450,000 
        in 1999 to 2008 and the maximum amount of total aid it may 
        receive under section 477A.013, subdivision 9, paragraph (c), is 
        also increased by $450,000 in calendar year 1999 only, provided 
        that: 
           (i) the city had a population in 1996 of at least 50,000; 
           (ii) its population had increased by at least 40 percent in 
        the ten-year period ending in 1996; and 
           (iii) its city's net tax capacity for aids payable in 1998 
        is less than $700 per capita. 
           (g) Beginning in 2002, the city aid base for a city is 
        equal to the sum of its city aid base in 2001 and the amount of 
        additional aid it was certified to receive under section 477A.06 
        in 2001.  For 2002 only, the maximum amount of total aid a city 
        may receive under section 477A.013, subdivision 9, paragraph 
        (c), is also increased by the amount it was certified to receive 
        under section 477A.06 in 2001. 
           Sec. 8.  Minnesota Statutes 1996, section 477A.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
        discharge the duties imposed by sections 477A.011 to 477A.014 is 
        annually appropriated from the general fund to the commissioner 
        of revenue.  For aids payable in 1996 and thereafter, the total 
        aids paid under sections 477A.013, subdivision 9, and 477A.0122 
        are the amounts certified to be paid in the previous year, 
        adjusted for inflation as provided under subdivision 3.  
           (b) Aid payments to counties under section 477A.0121 are 
        limited to $20,265,000 in 1996.  Aid payments to counties under 
        section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
        payable in 1998 and thereafter, the total aids paid under 
        section 477A.0121 are the amounts certified to be paid in the 
        previous year, adjusted for inflation as provided under 
        subdivision 3. 
           (c)(i) For aids payable in 1998 and thereafter, the total 
        aids paid to counties under section 477A.0122 are the amounts 
        certified to be paid in the previous year, adjusted for 
        inflation as provided under subdivision 3. 
           (ii) Aid payments to counties under section 477A.0122 in 
        2000 are further increased by an additional $30,000,000 in 2000. 
           (d) Aid payments to cities in 1999 under section 477A.013, 
        subdivision 9, are limited to $380,565,489.  For aids payable in 
        2000 and 2001, the total aids paid under section 477A.013, 
        subdivision 9, are the amounts certified to be paid in the 
        previous year, adjusted for inflation as provided under 
        subdivision 3.  For aids payable in 2002, the total aids paid 
        under section 477A.013, subdivision 9, are the amounts certified 
        to be paid in the previous year, adjusted for inflation as 
        provided under subdivision 3, and increased by the amount 
        certified to be paid in 2001 under section 477A.06.  For aids 
        payable in 2003 and thereafter, the total aids paid under 
        section 477A.013, subdivision 9, are the amounts certified to be 
        paid in the previous year, adjusted for inflation as provided 
        under subdivision 3.  The additional amount authorized under 
        subdivision 4 is not included when calculating the appropriation 
        limits under this paragraph. 
           Sec. 9.  Minnesota Statutes 1996, section 477A.03, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [ADDITIONAL MONEY FOR CITY AID.] For the calendar 
        years 1999 to 2008, the limit on the annual appropriation for 
        aids paid under section 477A.013, subdivision 9, as determined 
        in subdivision 2, paragraph (d), is increased by $450,000.  
           Sec. 10.  [477A.06] [EXISTING LOW-INCOME HOUSING AID.] 
           Subdivision 1.  [ELIGIBILITY.] (a) For assessment years 
        1998, 1999, and 2000, for all class 4d property on which 
        construction was begun before January 1, 1999, the assessor 
        shall determine the difference between the actual net tax 
        capacity and the net tax capacity that would be determined for 
        the property if the class rates for assessment year 1997 were in 
        effect. 
           (b) In calendar years 1999, 2000, and 2001, each city shall 
        be eligible for aid equal to (i) the amount by which the sum of 
        the differences determined in clause (a) for the corresponding 
        assessment year exceeds 2.5 percent of the city's total taxable 
        net tax capacity for taxes payable in 1998, multiplied by (ii) 
        the city government's average local tax rate for taxes payable 
        in 1998. 
           Subd. 2.  [CERTIFICATION.] The county assessor shall notify 
        the commissioner of revenue of the amount determined under 
        subdivision 1, paragraph (b), clause (i), for any city which 
        qualifies for aid under this section by June 30 of the 
        assessment year, in a form prescribed by the commissioner.  The 
        commissioner shall notify each city of its qualifying aid amount 
        by August 15 of the assessment year.  
           Subd. 3.  [APPROPRIATION; PAYMENT.] (a) The commissioner 
        shall pay each city its qualifying aid amount on or before July 
        20 of each year.  An amount sufficient to pay the aid authorized 
        under this section is appropriated to the commissioner of 
        revenue from the property tax reform account in fiscal years 
        2000 and 2001, and from the general fund in fiscal year 2002. 
           (b) For fiscal years 2001 and 2002, the amount of aid 
        appropriated under this section may not exceed $1,500,000 each 
        year. 
           (c) If the total amount of aid that would otherwise be 
        payable under the formula in this section exceeds the maximum 
        allowed under paragraph (b), the amount of aid for each city is 
        reduced proportionately to equal the limit. 
           Sec. 11.  [477A.065] [NEW CONSTRUCTION LOW-INCOME HOUSING 
        AID.] 
           Subdivision 1.  [ELIGIBILITY.] Each taxes payable year, 
        each city containing class 4d property on which initial 
        construction was begun after January 1, 1999, shall be eligible 
        for aid equal to (1) 1.5 times the net tax capacity of the 
        property for the assessment year corresponding to the taxes 
        payable year, multiplied by (2) the city government's average 
        local tax rate for the previous taxes payable year. 
           Subd. 2.  [CERTIFICATION.] The county assessor shall notify 
        the commissioner of revenue of the amount determined under 
        subdivision 1, clause (1), for any city which qualifies for aid 
        under this section by June 30 of each assessment year, in a form 
        prescribed by the commissioner.  The commissioner shall notify 
        each city of its qualifying aid amount by August 15 of the 
        assessment year.  
           Subd. 3.  [APPROPRIATION; PAYMENT.] The commissioner shall 
        pay each city its qualifying aid amount on or before July 20 of 
        each year.  An amount sufficient to pay the aid authorized under 
        this section is appropriated to the commissioner of revenue from 
        the general fund each year. 
           Sec. 12.  [CITY OF COON RAPIDS; ADJUSTMENT IN 1999 AID 
        PAYMENTS.] 
           Notwithstanding Minnesota Statutes, section 477A.015, the 
        July 20, 1999, aid payment to the city of Coon Rapids for aid 
        under section 477A.013, subdivision 9, shall equal the entire 
        amount of its city aid base increase in 1999 under section 
        477A.011, subdivision 36, plus one-half of the remaining amount 
        of its aid under section 477A.013, subdivision 9.  The remainder 
        of its 1999 aid under section 477A.013, subdivision 9, shall be 
        paid on or before December 26, 1999. 
           Sec. 13.  [TEMPORARY LOCAL GOVERNMENT AID INCREASES.] 
           For payments in calendar year 1998 only, the city of East 
        Grand Forks shall receive an additional payment of $9,200,000 
        and the city of Warren shall receive an additional payment of 
        $800,000 under the provisions of Minnesota Statutes, sections 
        477A.011 to 477A.014.  For payments in calendar year 1999 only, 
        the city of East Grand Forks shall receive an additional aid 
        payment of $4,600,000 and the city of Warren shall receive an 
        additional payment of $400,000 under the provisions of Minnesota 
        Statutes, sections 447A.011 to 477A.014.  The amounts of these 
        payments shall not be included in the calculation of any other 
        aids provided under Minnesota Statutes, chapter 477A, or other 
        law, or in any limitations on levies or expenditures. 
           $10,000,000 is appropriated in fiscal year 1999 and 
        $5,000,000 is appropriated in fiscal year 2000 to the 
        commissioner of revenue from the general fund to make the 
        payments under this section. 
           Sec. 14.  [CITY OF RED WING; LEVY LIMITS.] 
           Subdivision 1.  [LEVY LIMIT BASE INCREASE.] The levy limit 
        base of the city of Red Wing for taxes levied in 1998 under 
        Minnesota Statutes, section 275.71, subdivision 2, paragraph 
        (b), is increased by $477,677. 
           Subd. 2.  [EFFECTIVE DATE.] Upon compliance by the 
        governing body of the city of Red Wing with Minnesota Statutes, 
        section 645.021, subdivision 3, subdivision 1 is effective for 
        taxes levied in 1998, payable in 1999. 
           Sec. 15.  [WAITE PARK; LEVY LIMIT ADJUSTMENT.] 
           Subdivision 1.  [ADJUSTED LEVY LIMIT BASE.] For taxes 
        levied in 1998 only, the adjusted levy limit base defined in 
        Minnesota Statutes, section 275.71, subdivision 3, for the city 
        of Waite Park, is increased by $117,000. 
           Subd. 2.  [EFFECTIVE DATE.] Upon compliance by the 
        governing body of the city of Waite Park with Minnesota 
        Statutes, section 645.021, subdivision 3, subdivision 1 is 
        effective for taxes levied in 1998, payable in 1999. 
           Sec. 16.  [CITY OF COON RAPIDS; LEVY LIMITS.] 
           Subdivision 1.  [LEVY LIMIT BASE INCREASE.] For taxes 
        levied in 1998 only, the adjusted levy limit base defined in 
        Minnesota Statutes, section 275.71, subdivision 3, for the city 
        of Coon Rapids, is increased by $450,000. 
           Subd. 2.  [EFFECTIVE DATE.] Upon compliance by the 
        governing body of the city of Coon Rapids with Minnesota 
        Statutes, section 645.021, subdivision 3, subdivision 1 is 
        effective for taxes levied in 1998, payable in 1999. 
           Sec. 17.  [CITY OF ST. PETER; LEVY LIMIT EXEMPTION.] 
           For taxes levied in 1998, payable in 1999, the city of St. 
        Peter is exempt from the levy limits imposed under Minnesota 
        Statutes, sections 275.71 to 275.74.  This section is effective 
        the day after compliance by the governing body of the city of 
        St. Peter with Minnesota Statutes, section 645.021, subdivision 
        3. 
           Sec. 18.  [EFFECTIVE DATES.] 
           Sections 1, 3 to 6, 14, and 15 are effective for taxes 
        levied in 1998, payable in 1999.  Section 2 is effective for 
        taxes levied in 1997 and 1998, payable in 1998 and 1999.  
        Sections 7 and 8 are effective for aids payable in 1999 and 
        thereafter.  Section 9 is effective for aids payable in 1999 to 
        2008.  Section 10 is effective for aids payable in 1999 to 
        2001.  Section 11 is effective for aids payable in 2001 and 
        thereafter.  Section 12 is effective for aids payable in 1999 
        only.  Section 13 is effective for aids payable in 1998 and 1999 
        only. 
                                   ARTICLE 5  
                     SENIOR CITIZEN'S PROPERTY TAX DEFERRAL
           Section 1.  Minnesota Statutes 1997 Supplement, 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 statement must contain a 
        tabulated statement of the dollar amount due to each taxing 
        authority and the amount of the state determined school tax from 
        the parcel of real property for which a particular tax statement 
        is prepared.  The dollar amounts attributable to the county, the 
        state determined school 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.  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.  The statement shall include the following sentences, 
        printed in upper case letters in boldface print:  "EVEN THOUGH 
        THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX 
        REVENUES, IT SETS THE AMOUNT OF THE STATE-DETERMINED SCHOOL TAX 
        LEVY.  THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY 
        PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT." 
           (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 taxable market value after reductions 
        under section 273.11, subdivisions 1a and 16; 
           (3) the property's gross tax, calculated by adding the 
        property's total property tax to the sum of the aids enumerated 
        in clause (4); 
           (4) a total of the following aids: 
           (i) education aids payable under chapters 124 and 124A; 
           (ii) local government aids for cities, towns, and counties 
        under chapter 477A; 
           (iii) disparity reduction aid under section 273.1398; and 
           (iv) homestead and agricultural credit aid under section 
        273.1398; 
           (5) for homestead residential and agricultural properties, 
        the education homestead credit under section 273.1382; 
           (6) any credits received under sections 273.119; 273.123; 
        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) any deferred property tax amount under the senior 
        citizens' property tax deferral program under chapter 290B, as 
        well as the total deferred amount plus accrued interest; and 
           (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.  
           The commissioner of revenue shall certify to the county 
        auditor the actual or estimated aids enumerated in clause (4) 
        that local governments will receive in the following year.  The 
        commissioner must certify this amount by January 1 of each year. 
           Sec. 2.  Minnesota Statutes 1996, section 290A.14, is 
        amended to read: 
           290A.14 [PROPERTY TAX STATEMENT.] 
           The county treasurer shall prepare and send a sufficient 
        number of copies of the property tax statement to the owner, and 
        to the owner's escrow agent if the taxes are paid via an escrow 
        account, to enable the owner to comply with the filing 
        requirements of this chapter and to retain one copy as a 
        record.  The property tax statement, in a form prescribed by the 
        commissioner, shall indicate the manner in which the claimant 
        may claim relief from the state under both this chapter and 
        chapter 290B, and the amount of the tax for which the applicant 
        may claim relief.  The statement shall also indicate if there 
        are delinquent property taxes on the property in the preceding 
        year.  Taxes included in a confession of judgment under section 
        279.37 shall not constitute delinquent taxes as long as the 
        claimant is current on the payments required to be made under 
        section 279.37. 
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 
        290B.03, subdivision 2, is amended to read: 
           Subd. 2.  [QUALIFYING HOMESTEAD; DEFINED.] Qualifying 
        homestead property is defined as the dwelling occupied as the 
        homeowner's principal residence and so much of the land 
        surrounding it, not exceeding one acre, as is reasonably 
        necessary for use of the dwelling as a home and any other 
        property used for purposes of a homestead as defined in section 
        273.13, subdivisions 22 and 23, but not to exceed one acre.  The 
        homestead may be part of a multidwelling building and the land 
        on which it is built. 
           Sec. 4.  Minnesota Statutes 1997 Supplement, 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 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 for each year and, the cumulative deferral and 
        interest to that appear on each year's property tax statement as 
        notice prepared by the county under section 290B.04, 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. 
           Sec. 5.  Minnesota Statutes 1997 Supplement, section 
        290B.04, subdivision 3, is amended to read: 
           Subd. 3.  [ANNUAL EXCESS-INCOME CERTIFICATION BY TAXPAYER.] 
        Annually on or before July 1, A taxpayer whose initial 
        application has been approved under subdivision 2, 
        shall complete the certification form and return it to notify 
        the commissioner of revenue in writing by July 1 if the 
        taxpayer's household income for the preceding calendar year 
        exceeded $30,000.  The certification must state whether or not 
        the taxpayer wishes to have property taxes deferred for the 
        following year provided the taxes exceed the maximum property 
        tax amount under section 290B.05.  If the taxpayer does wish to 
        have property taxes deferred, the certification must state the 
        homeowner's total household income for the previous calendar 
        year and any other information which the commissioner deems 
        necessary.  No property taxes may be deferred under chapter 290B 
        in any year following the year in which a program participant 
        filed or should have filed an excess-income certification under 
        this subdivision, unless the participant has filed a resumption 
        of eligibility certification as described in subdivision 4. 
           Sec. 6.  Minnesota Statutes 1997 Supplement, section 
        290B.04, is amended by adding a subdivision to read: 
           Subd. 4.  [RESUMPTION OF ELIGIBILITY CERTIFICATION BY 
        TAXPAYER.] A taxpayer who has previously filed an excess-income 
        certification under subdivision 3 may resume program 
        participation if the taxpayer's household income for a 
        subsequent year is $30,000 or less.  If the taxpayer chooses to 
        resume program participation, the taxpayer must notify the 
        commissioner of revenue in writing by July 1 of the year 
        following a calendar year in which the taxpayer's household 
        income is $30,000 or less.  The certification must state the 
        taxpayer's total household income for the previous calendar 
        year.  Once a taxpayer resumes participation in the program 
        under this subdivision, participation will continue until the 
        taxpayer files a subsequent excess-income certification under 
        subdivision 3 or until participation is terminated under section 
        290B.08, subdivision 1. 
           Sec. 7.  Minnesota Statutes 1997 Supplement, section 
        290B.04, is amended by adding a subdivision to read: 
           Subd. 5.  [PENALTY FOR FAILURE TO FILE EXCESS-INCOME 
        CERTIFICATION; INVESTIGATIONS.] (a) The commissioner shall 
        assess a penalty equal to 20 percent of the property taxes 
        improperly deferred in the case of a false application, a false 
        certification, or in the case of a required excess-income 
        certification which was not filed as of the applicable due 
        date.  The commissioner shall assess a penalty equal to 50 
        percent of the property taxes improperly deferred if the 
        taxpayer knowingly filed a false application or certification, 
        or knowingly failed to file a required excess-income 
        certification by the applicable due date.  The commissioner 
        shall assess penalties under this section through the issuance 
        of an order under the provisions of chapter 289A.  Persons 
        affected by a commissioner's order issued under this section may 
        appeal as provided in chapter 289A. 
           (b) The commissioner may conduct investigations related to 
        initial applications and excess-income certifications required 
        under this chapter within the period ending 3-1/2 years from the 
        due date of the application or certification.  
           Sec. 8.  Minnesota Statutes 1997 Supplement, section 
        290B.04, is amended by adding a subdivision to read: 
           Subd. 6.  [ANNUAL NOTICE TO PARTICIPANT.] Annually, on or 
        before July 1, the county auditor shall notify, in writing, each 
        participant in the county who is in the senior citizen's 
        deferral program of the current year's deferred taxes and the 
        total cumulative deferred taxes and accrued interest on the 
        participant's property as of that date. 
           Sec. 9.  Minnesota Statutes 1997 Supplement, section 
        290B.05, subdivision 1, is amended to read: 
           Subdivision 1.  [DETERMINATION BY COMMISSIONER.] The 
        commissioner shall determine each qualifying homeowner's "annual 
        maximum property tax amount" following approval of the 
        homeowner's initial application and following the receipt of a 
        resumption of eligibility certification.  The "annual maximum 
        property tax amount" equals five percent of the homeowner's 
        total household income for the year preceding either the initial 
        application or the resumption of eligibility certification, 
        whichever is applicable.  Following approval of the initial 
        application, the commissioner shall annually determine the 
        qualifying homeowner's "maximum property tax amount" 
        and "maximum allowable deferral."  The maximum property tax 
        amount calculated for taxes payable in the following year is 
        equal to five percent of the homeowner's total household income 
        for the previous calendar year.  No tax may be deferred relative 
        to the appropriate assessment year for any homeowner whose total 
        household income for the previous year exceeds $30,000.  No tax 
        shall be deferred in any year in which the homeowner does not 
        meet the program qualifications in section 290B.03.  The maximum 
        allowable total deferral is equal to 75 percent of the 
        assessor's estimated market value for the year, less (1) the 
        balance of any mortgage loans and other amounts secured by liens 
        against the property at the time of application, including any 
        unpaid special assessments but not including property taxes 
        payable during the year; and (2) any outstanding deferral and 
        interest.  
           Sec. 10.  Minnesota Statutes 1997 Supplement, section 
        290B.05, subdivision 2, is amended to read: 
           Subd. 2.  [CERTIFICATION BY COMMISSIONER.] On or before 
        December 1 of the year of initial application, the commissioner 
        shall certify to the county auditor of the county in which the 
        qualifying homestead is located (1) the annual maximum property 
        tax amount; and (2) the maximum allowable deferral for the year; 
        and (3) the cumulative deferral and interest for all years 
        preceding the next taxes payable year.  On or before December 1 
        of any year in which a homeowner files a resumption of 
        eligibility certification, the commissioner shall certify to the 
        county auditor the new annual maximum property tax amount to be 
        used in calculating the deferral for subsequent years. 
           Sec. 11.  Minnesota Statutes 1997 Supplement, section 
        290B.05, subdivision 4, is amended to read: 
           Subd. 4.  [LIMITATION ON TOTAL AMOUNT OF DEFERRED TAXES.] 
        On or before September 1 of each year, the commissioner shall 
        request, and each county or city assessor shall provide, the 
        current year's estimated market value of each property on the 
        list supplied by the commissioner that may be eligible for 
        deferral under this section for taxes payable in the following 
        year.  The total amount of deferred taxes and interest on a 
        property, when added to (1) the balance owing on any mortgages 
        on the property at the time of initial application; and (2) 
        other amounts secured by liens on the property at the time of 
        the initial application, may not exceed 75 percent of the 
        assessor's current estimated market value of the property. 
           Sec. 12.  Minnesota Statutes 1997 Supplement, section 
        290B.06, is amended to read: 
           290B.06 [PROPERTY TAX REFUNDS; OFFSET.] 
           For purposes of qualifying for the regular property tax 
        refund or the special refund for homeowners under chapter 290A, 
        the qualifying tax is the full amount of taxes, including the 
        deferred portion of the tax.  In any year in which a program 
        participant chooses to have property taxes deferred under this 
        section, any regular or special property tax refund awarded 
        based upon those property taxes as defined in section 270A.03, 
        subdivision 7, must be taken first as a deduction from the 
        amount of the deferred tax for that year, and second as a 
        deduction against any outstanding deferral from previous years, 
        rather than as a cash payment to the homeowner.  The 
        commissioner shall cancel any current year's deferral or 
        previous years' deferral and interest that is offset by the 
        property tax refunds.  If the total of the regular and the 
        special property tax refund amounts exceeds the sum of the 
        deferred tax for the current year and cumulative deferred tax 
        and interest for previous years, the commissioner shall then 
        remit the excess amount to the homeowner.  On or before the date 
        on which the commissioner issues property tax refunds, the 
        commissioner shall notify program participants of any reduction 
        in the deferred amount for the current and previous years 
        resulting from property tax refunds. 
           Sec. 13.  Minnesota Statutes 1997 Supplement, section 
        290B.07, is amended to read: 
           290B.07 [LIEN; DEFERRED PORTION.] 
           (a) Payment by the state to the county treasurer of taxes 
        deferred under this section is deemed a loan from the state to 
        the program participant.  The commissioner must compute the 
        interest as provided in section 270.75, subdivision 5, but not 
        to exceed five percent, and maintain records of the total 
        deferred amount and interest for each participant.  Interest 
        shall accrue beginning September 1 of the payable year for which 
        the taxes are deferred.  Any deferral made under this chapter 
        shall not be construed as delinquent property taxes. 
           The lien created under section 272.31 continues to secure 
        payment by the taxpayer, or by the taxpayer's successors or 
        assigns, of the amount deferred, including interest, with 
        respect to all years for which amounts are deferred.  The lien 
        for deferred taxes and interest has the same priority as any 
        other lien under section 272.31, except that liens, including 
        mortgages, recorded or filed prior to the recording or filing of 
        the notice under section 290B.04, subdivision 2, have priority 
        over the lien for deferred taxes and interest.  A seller's 
        interest in a contract for deed, in which a qualifying homeowner 
        is the purchaser or an assignee of the purchaser, has priority 
        over deferred taxes and interest on deferred taxes, regardless 
        of whether the contract for deed is recorded or filed.  The lien 
        for deferred taxes and interest for future years has the same 
        priority as the lien for deferred taxes and interest for the 
        first year, which is always higher in priority than any 
        mortgages or other liens filed, recorded, or created after the 
        notice recorded or filed under section 290B.04, subdivision 2.  
        The county treasurer or auditor shall maintain records of the 
        deferred portion and shall list the amount of deferred taxes for 
        the year and the cumulative deferral and interest for all 
        previous years as a lien against the property on the property 
        tax statement.  In any certification of unpaid taxes for a tax 
        parcel, the county auditor shall clearly distinguish between 
        taxes payable in the current year, deferred taxes and interest, 
        and delinquent taxes.  Payment of the deferred portion becomes 
        due and owing at the time specified in section 290B.08.  Upon 
        receipt of the payment, the commissioner shall issue a receipt 
        for it to the person making the payment upon request and shall 
        notify the auditor of the county in which the parcel is located, 
        within ten days, identifying the parcel to which the payment 
        applies.  Upon receipt by the commissioner of revenue of 
        collected funds in the amount of the deferral, the state's loan 
        to the program participant is deemed paid in full. 
           (b) If property for which taxes have been deferred under 
        this chapter forfeits under chapter 281 for nonpayment of a 
        nondeferred property tax amount, or because of nonpayment of 
        amounts previously deferred following a termination under 
        section 290B.08, the lien for the taxes deferred under this 
        chapter, plus interest and costs, shall be canceled by the 
        county auditor as provided in section 282.07.  However, 
        notwithstanding any other law to the contrary, any proceeds from 
        a subsequent sale of the property under chapter 282 or another 
        law, must be used to first reimburse the county's forfeited tax 
        sale fund for any direct costs of selling the property or any 
        costs directly related to preparing the property for sale, and 
        then to reimburse the state for the amount of the canceled 
        lien.  Within 90 days of the receipt of any sale proceed to 
        which the state is entitled under these provisions, the county 
        auditor must pay those funds to the commissioner of revenue by 
        warrant for deposit in the general fund.  No other deposit, use, 
        distribution, or release of gross sale proceeds or receipts may 
        be made by the county until payments sufficient to fully 
        reimburse the state for the canceled lien amount have been 
        transmitted to the commissioner. 
           Sec. 14.  Minnesota Statutes 1997 Supplement, section 
        290B.08, subdivision 2, is amended to read: 
           Subd. 2.  [PAYMENT UPON TERMINATION.] Upon the termination 
        of the deferral under subdivision 1, the amount of deferred 
        taxes and interest plus the recording or filing fees under both 
        section 290B.04, subdivision 2, and this subdivision becomes due 
        and payable to the commissioner within 90 days of termination of 
        the deferral for terminations under subdivision 1, paragraph 
        (a), clauses (1) and (2), and within one year of termination of 
        the deferral for terminations under subdivision 1, paragraph 
        (a), clauses (3) and (4).  No additional interest is due on the 
        deferral if timely paid.  On receipt of payment, the 
        commissioner shall within ten days notify the auditor of the 
        county in which the parcel is located, identifying the parcel to 
        which the payment applies and shall remit the recording or 
        filing fees under section 290B.04, subdivision 2, and this 
        subdivision to the auditor.  A notice of termination of 
        deferral, containing the legal description and the recording or 
        filing data for the notice of qualification for deferral under 
        section 290B.04, subdivision 2, shall be prepared and recorded 
        or filed by the county auditor in the same office in which the 
        notice of qualification for deferral under section 290B.04, 
        subdivision 2, was recorded or filed, and the county auditor 
        shall mail a copy of the notice of termination to the property 
        owner.  The property owner shall pay the recording or filing 
        fees.  Upon recording or filing of the notice of termination of 
        deferral, the notice of qualification for deferral under section 
        290B.04, subdivision 2, and the lien created by it are 
        discharged.  If the deferral is not timely paid, the penalty, 
        interest, lien, forfeiture, and other rules for the collection 
        of ad valorem property taxes apply. 
           Sec. 15.  Minnesota Statutes 1997 Supplement, section 
        290B.09, subdivision 1, is amended to read: 
           Subdivision 1.  [DETERMINATION; PAYMENT.] The commissioner 
        of revenue county auditor shall determine the total current 
        year's deferred amount of property tax under this chapter in 
        each the county, basing determinations on a review of and submit 
        those amounts as part of the abstracts of tax lists submitted by 
        the county auditors under section 275.29.  The commissioner may 
        make changes in the abstracts of tax lists as deemed necessary.  
        The commissioner of revenue, after such review, shall pay the 
        deferred amount of property tax to each county treasurer on or 
        before August 31.  
           At least once each year, the commissioner shall report to 
        the county auditor the total cumulative amount of deferred taxes 
        and interest that constitute a lien against the property.  
           The county treasurer shall distribute as part of the 
        October settlement the funds received as if they had been 
        collected as a part of the property tax. 
           Sec. 16.  [290B.10] [SENIOR DEFERRAL PROGRAM; INFORMATION 
        PROVIDED.] 
           The commissioner of revenue shall provide information about 
        the senior deferral program and eligibility criteria for the 
        program in the instruction booklet prepared for taxpayers to use 
        in applying for property tax refunds under chapter 290A. 
           Sec. 17.  [EFFECTIVE DATE.] 
           Sections 1 and 3 to 15 are effective for deferrals of 
        property taxes payable in 1999 and thereafter, except that the 
        July 1 application date for taxes payable in 1999 in section 4 
        is extended to August 1 for applications filed in 1998 only. 
           Section 2 is effective for statements prepared in 1998 for 
        taxes payable in 1999 and thereafter.  Section 16 is effective 
        for booklets prepared in 1998 for refunds claimed in 1999 and 
        thereafter. 
                                   ARTICLE 6 
                           INCOME AND FRANCHISE TAXES 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        289A.19, subdivision 2, is amended to read: 
           Subd. 2.  [CORPORATE FRANCHISE AND MINING COMPANY TAXES.] 
        Corporations or mining companies shall receive an extension of 
        seven months for filing the return of a corporation subject to 
        tax under chapter 290 or for filing the return of a mining 
        company subject to tax under sections 298.01 and 298.015 if:.  
        Interest on any balance of tax not paid when the regularly 
        required return is due must be paid at the rate specified in 
        section 270.75, from the date such payment should have been made 
        if no extension was granted, until the date of payment of such 
        tax. 
           If a corporation or mining company does not:  
           (1) the corporation or mining company pays pay at least 90 
        percent of the amount of tax shown on the return on or before 
        the regular due date of the return, the penalty prescribed by 
        section 289A.60, subdivision 1, shall be imposed on the unpaid 
        balance of tax; or 
           (2) pay the balance due shown on the regularly required 
        return is paid on or before the extended due date of the return; 
        and 
           (3) interest on any balance due is paid at the rate 
        specified in section 270.75 from the regular due date of the 
        return until the tax is paid, the penalty prescribed by section 
        289A.60, subdivision 1, shall be imposed on the unpaid balance 
        of tax from the original due date of the return.  
           Sec. 2.  Minnesota Statutes 1996, section 290.01, 
        subdivision 3b, is amended to read: 
           Subd. 3b.  [LIMITED LIABILITY COMPANY.] For purposes of 
        this chapter and chapter 289A, a limited liability company that 
        is formed under either the laws of this state or under similar 
        laws of another state, and that is considered to be a 
        partnership will be treated as an entity similar to its 
        treatment for federal income tax purposes, is considered to be a 
        partnership and the members must be considered to be partners. 
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 
        290.01, subdivision 19a, is amended to read: 
           Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
        individuals, estates, and trusts, there shall be added to 
        federal taxable income: 
           (1)(i) interest income on obligations of any state other 
        than Minnesota or a political or governmental subdivision, 
        municipality, or governmental agency or instrumentality of any 
        state other than Minnesota exempt from federal income taxes 
        under the Internal Revenue Code or any other federal statute, 
        and 
           (ii) exempt-interest dividends as defined in section 
        852(b)(5) of the Internal Revenue Code, except the portion of 
        the exempt-interest dividends derived from interest income on 
        obligations of the state of Minnesota or its political or 
        governmental subdivisions, municipalities, governmental agencies 
        or instrumentalities, but only if the portion of the 
        exempt-interest dividends from such Minnesota sources paid to 
        all shareholders represents 95 percent or more of the 
        exempt-interest dividends that are paid by the regulated 
        investment company as defined in section 851(a) of the Internal 
        Revenue Code, or the fund of the regulated investment company as 
        defined in section 851(h) of the Internal Revenue Code, making 
        the payment; and 
           (iii) for the purposes of items (i) and (ii), interest on 
        obligations of an Indian tribal government described in section 
        7871(c) of the Internal Revenue Code shall be treated as 
        interest income on obligations of the state in which the tribe 
        is located; 
           (2) the amount of income taxes paid or accrued within the 
        taxable year under this chapter and income taxes paid to any 
        other state or to any province or territory of Canada, to the 
        extent allowed as a deduction under section 63(d) of the 
        Internal Revenue Code, but the addition may not be more than the 
        amount by which the itemized deductions as allowed under section 
        63(d) of the Internal Revenue Code exceeds the amount of the 
        standard deduction as defined in section 63(c) of the Internal 
        Revenue Code.  For the purpose of this paragraph, the 
        disallowance of itemized deductions under section 68 of the 
        Internal Revenue Code of 1986, income tax is the last itemized 
        deduction disallowed; 
           (3) the capital gain amount of a lump sum distribution to 
        which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
        Reform Act of 1986, Public Law Number 99-514, applies; 
           (4) the amount of income taxes paid or accrued within the 
        taxable year under this chapter and income taxes paid to any 
        other state or any province or territory of Canada, to the 
        extent allowed as a deduction in determining federal adjusted 
        gross income.  For the purpose of this paragraph, income taxes 
        do not include the taxes imposed by sections 290.0922, 
        subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
           (5) the amount of loss or expense included in federal 
        taxable income under section 1366 of the Internal Revenue Code 
        flowing from a corporation that has a valid election in effect 
        for the taxable year under section 1362 of the Internal Revenue 
        Code, but which is not allowed to be an "S" corporation under 
        section 290.9725; and 
           (6) the amount of any distributions in cash or property 
        made to a shareholder during the taxable year by a corporation 
        that has a valid election in effect for the taxable year under 
        section 1362 of the Internal Revenue Code, but which is not 
        allowed to be an "S" corporation under section 290.9725 to the 
        extent not already included in federal taxable income under 
        section 1368 of the Internal Revenue Code.; 
           (7) in the year stock of a corporation that had made a 
        valid election under section 1362 of the Internal Revenue Code 
        but was not an "S" corporation under section 290.9725 is sold or 
        disposed of in a transaction taxable under the Internal Revenue 
        Code, the amount of difference between the Minnesota basis of 
        the stock under subdivision 19f, paragraph (m), and the federal 
        basis if the Minnesota basis is lower than the shareholder's 
        federal basis; and 
           (8) the amount of expense, interest, or taxes disallowed 
        pursuant to section 290.10. 
           Sec. 4.  Minnesota Statutes 1997 Supplement, section 
        290.01, subdivision 19b, is amended to read: 
           Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
        individuals, estates, and trusts, there shall be subtracted from 
        federal taxable income: 
           (1) interest income on obligations of any authority, 
        commission, or instrumentality of the United States to the 
        extent includable in taxable income for federal income tax 
        purposes but exempt from state income tax under the laws of the 
        United States; 
           (2) if included in federal taxable income, the amount of 
        any overpayment of income tax to Minnesota or to any other 
        state, for any previous taxable year, whether the amount is 
        received as a refund or as a credit to another taxable year's 
        income tax liability; 
           (3) the amount paid to others, less the credit allowed 
        under section 290.0674, not to exceed $1,625 for each dependent 
        in grades kindergarten to 6 and $2,500 for each dependent in 
        grades 7 to 12, for tuition, textbooks, and transportation of 
        each dependent in attending an 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 363.  For the purposes of this 
        clause, "tuition" includes fees or tuition as defined in section 
        290.0674, subdivision 1, clause (1).  As used in this clause, 
        "textbooks" includes books and other instructional materials and 
        equipment used in elementary and secondary schools in teaching 
        only those subjects legally and commonly taught in public 
        elementary and secondary schools in this state.  Equipment 
        expenses qualifying for deduction includes expenses as defined 
        and limited in section 290.0674, subdivision 1, clause (3).  
        "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, or 
        transportation to, extracurricular activities including sporting 
        events, musical or dramatic events, speech activities, driver's 
        education, or similar programs; 
           (4) to the extent included in federal taxable income, 
        distributions from a qualified governmental pension plan, an 
        individual retirement account, simplified employee pension, or 
        qualified plan covering a self-employed person that represent a 
        return of contributions that were included in Minnesota gross 
        income in the taxable year for which the contributions were made 
        but were deducted or were not included in the computation of 
        federal adjusted gross income.  The distribution shall be 
        allocated first to return of contributions until the 
        contributions included in Minnesota gross income have been 
        exhausted.  This subtraction applies only to contributions made 
        in a taxable year prior to 1985; 
           (5) income as provided under section 290.0802; 
           (6) the amount of unrecovered accelerated cost recovery 
        system deductions allowed under subdivision 19g; 
           (7) to the extent included in federal adjusted gross 
        income, income realized on disposition of property exempt from 
        tax under section 290.491; 
           (8) to the extent not deducted in determining federal 
        taxable income, the amount paid for health insurance of 
        self-employed individuals as determined under section 162(l) of 
        the Internal Revenue Code, except that the 25 percent limit does 
        not apply.  If the taxpayer deducted insurance payments under 
        section 213 of the Internal Revenue Code of 1986, the 
        subtraction under this clause must be reduced by the lesser of: 
           (i) the total itemized deductions allowed under section 
        63(d) of the Internal Revenue Code, less state, local, and 
        foreign income taxes deductible under section 164 of the 
        Internal Revenue Code and the standard deduction under section 
        63(c) of the Internal Revenue Code; or 
           (ii) the lesser of (A) the amount of insurance qualifying 
        as "medical care" under section 213(d) of the Internal Revenue 
        Code to the extent not deducted under section 162(1) of the 
        Internal Revenue Code or excluded from income or (B) the total 
        amount deductible for medical care under section 213(a); 
           (9) the exemption amount allowed under Laws 1995, chapter 
        255, article 3, section 2, subdivision 3; 
           (10) to the extent included in federal taxable income, 
        postservice benefits for youth community service under section 
        121.707 for volunteer service under United States Code, title 
        42, section 5011(d), as amended; and 
           (11) to the extent not subtracted under clause (1), the 
        amount of income or gain included in federal taxable income 
        under section 1366 of the Internal Revenue Code flowing from a 
        corporation that has a valid election in effect for the taxable 
        year under section 1362 of the Internal Revenue Code which is 
        not allowed to be an "S" corporation under section 290.9725.; 
           (12) in the year stock of a corporation that had made a 
        valid election under section 1362 of the Internal Revenue Code 
        but was not an "S" corporation under section 290.9725 is sold or 
        disposed of in a transaction taxable under the Internal Revenue 
        Code, the amount of difference between the Minnesota basis of 
        the stock under subdivision 19f, paragraph (m), and the federal 
        basis if the Minnesota basis is higher than the shareholder's 
        federal basis; and 
           (13) an amount equal to an individual's, trust's, or 
        estate's net federal income tax liability for the tax year that 
        is attributable to items of income, expense, gain, loss, or 
        credits federally flowing to the taxpayer in the tax year from a 
        corporation, having a valid election in effect for federal tax 
        purposes under section 1362 of the Internal Revenue Code but not 
        treated as a "S" corporation for state tax purposes under 
        section 290.9725. 
           Sec. 5.  Minnesota Statutes 1997 Supplement, section 
        290.01, subdivision 19f, is amended to read: 
           Subd. 19f.  [BASIS MODIFICATIONS AFFECTING GAIN OR LOSS ON 
        DISPOSITION OF PROPERTY.] (a) For individuals, estates, and 
        trusts, the basis of property is its adjusted basis for federal 
        income tax purposes except as set forth in paragraphs (f), (g), 
        and (m).  For corporations, the basis of property is its 
        adjusted basis for federal income tax purposes, without regard 
        to the time when the property became subject to tax under this 
        chapter or to whether out-of-state losses or items of tax 
        preference with respect to the property were not deductible 
        under this chapter, except that the modifications to the basis 
        for federal income tax purposes set forth in paragraphs (b) to 
        (j) are allowed to corporations, and the resulting modifications 
        to federal taxable income must be made in the year in which gain 
        or loss on the sale or other disposition of property is 
        recognized. 
           (b) The basis of property shall not be reduced to reflect 
        federal investment tax credit.  
           (c) The basis of property subject to the accelerated cost 
        recovery system under section 168 of the Internal Revenue Code 
        shall be modified to reflect the modifications in depreciation 
        with respect to the property provided for in subdivision 19e.  
        For certified pollution control facilities for which 
        amortization deductions were elected under section 169 of the 
        Internal Revenue Code of 1954, the basis of the property must be 
        increased by the amount of the amortization deduction not 
        previously allowed under this chapter. 
           (d) For property acquired before January 1, 1933, the basis 
        for computing a gain is the fair market value of the property as 
        of that date.  The basis for determining a loss is the cost of 
        the property to the taxpayer less any depreciation, 
        amortization, or depletion, actually sustained before that 
        date.  If the adjusted cost exceeds the fair market value of the 
        property, then the basis is the adjusted cost regardless of 
        whether there is a gain or loss.  
           (e) The basis is reduced by the allowance for amortization 
        of bond premium if an election to amortize was made pursuant to 
        Minnesota Statutes 1986, section 290.09, subdivision 13, and the 
        allowance could have been deducted by the taxpayer under this 
        chapter during the period of the taxpayer's ownership of the 
        property.  
           (f) For assets placed in service before January 1, 1987, 
        corporations, partnerships, or individuals engaged in the 
        business of mining ores other than iron ore or taconite 
        concentrates subject to the occupation tax under chapter 298 
        must use the occupation tax basis of property used in that 
        business. 
           (g) For assets placed in service before January 1, 1990, 
        corporations, partnerships, or individuals engaged in the 
        business of mining iron ore or taconite concentrates subject to 
        the occupation tax under chapter 298 must use the occupation tax 
        basis of property used in that business.  
           (h) In applying the provisions of sections 301(c)(3)(B), 
        312(f) and (g), and 316(a)(1) of the Internal Revenue Code, the 
        dates December 31, 1932, and January 1, 1933, shall be 
        substituted for February 28, 1913, and March 1, 1913, 
        respectively.  
           (i) In applying the provisions of section 362(a) and (c) of 
        the Internal Revenue Code, the date December 31, 1956, shall be 
        substituted for June 22, 1954.  
           (j) The basis of property shall be increased by the amount 
        of intangible drilling costs not previously allowed due to 
        differences between this chapter and the Internal Revenue Code.  
           (k) The adjusted basis of any corporate partner's interest 
        in a partnership is the same as the adjusted basis for federal 
        income tax purposes modified as required to reflect the basis 
        modifications set forth in paragraphs (b) to (j).  The adjusted 
        basis of a partnership in which the partner is an individual, 
        estate, or trust is the same as the adjusted basis for federal 
        income tax purposes modified as required to reflect the basis 
        modifications set forth in paragraphs (f) and (g).  
           (l) The modifications contained in paragraphs (b) to (j) 
        also apply to the basis of property that is determined by 
        reference to the basis of the same property in the hands of a 
        different taxpayer or by reference to the basis of different 
        property.  
           (m) If a corporation has a valid election in effect for the 
        taxable year under section 1362 of the Internal Revenue Code, 
        but is not allowed to be an "S" corporation under section 
        290.9725, and the corporation is liquidated or the individual 
        shareholder disposes of the stock and there is no capital loss 
        reflected in federal adjusted gross income because of the fact 
        that corporate losses have exhausted the shareholders' basis for 
        federal purposes, the shareholders shall be entitled to a 
        capital loss commensurate to their Minnesota basis for the 
        stock, the Minnesota basis in the shareholder's stock in the 
        corporation shall be computed as if the corporation were not an 
        "S" corporation for federal tax purposes. 
           Sec. 6.  Minnesota Statutes 1996, section 290.06, 
        subdivision 2c, is amended to read: 
           Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
        AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
        married individuals filing joint returns and surviving spouses 
        as defined in section 2(a) of the Internal Revenue Code must be 
        computed by applying to their taxable net income the following 
        schedule of rates: 
           (1) On the first $19,910, 6 percent; 
           (2) On all over $19,910, but not over $79,120, 8 percent; 
           (3) On all over $79,120, 8.5 percent. 
           Married individuals filing separate returns, estates, and 
        trusts must compute their income tax by applying the above rates 
        to their taxable income, except that the income brackets will be 
        one-half of the above amounts.  
           (b) The income taxes imposed by this chapter upon unmarried 
        individuals must be computed by applying to taxable net income 
        the following schedule of rates: 
           (1) On the first $13,620, 6 percent; 
           (2) On all over $13,620, but not over $44,750, 8 percent; 
           (3) On all over $44,750, 8.5 percent. 
           (c) The income taxes imposed by this chapter upon unmarried 
        individuals qualifying as a head of household as defined in 
        section 2(b) of the Internal Revenue Code must be computed by 
        applying to taxable net income the following schedule of rates: 
           (1) On the first $16,770, 6 percent; 
           (2) On all over $16,770, but not over $67,390, 8 percent; 
           (3) On all over $67,390, 8.5 percent. 
           (d) In lieu of a tax computed according to the rates set 
        forth in this subdivision, the tax of any individual taxpayer 
        whose taxable net income for the taxable year is less than an 
        amount determined by the commissioner must be computed in 
        accordance with tables prepared and issued by the commissioner 
        of revenue based on income brackets of not more than $100.  The 
        amount of tax for each bracket shall be computed at the rates 
        set forth in this subdivision, provided that the commissioner 
        may disregard a fractional part of a dollar unless it amounts to 
        50 cents or more, in which case it may be increased to $1. 
           (e) An individual who is not a Minnesota resident for the 
        entire year must compute the individual's Minnesota income tax 
        as provided in this subdivision.  After the application of the 
        nonrefundable credits provided in this chapter, the tax 
        liability must then be multiplied by a fraction in which:  
           (1) The numerator is the individual's Minnesota source 
        federal adjusted gross income as defined in section 62 of the 
        Internal Revenue Code disregarding income or loss flowing from a 
        corporation having a valid election for the taxable year under 
        section 1362 of the Internal Revenue Code but which is not an 
        "S" corporation under section 290.9725 and increased by the 
        addition required for interest income from non-Minnesota state 
        and municipal bonds under section 290.01, subdivision 19a, 
        clause (1), after applying the allocation and assignability 
        provisions of section 290.081, clause (a), or 290.17; and 
           (2) the denominator is the individual's federal adjusted 
        gross income as defined in section 62 of the Internal Revenue 
        Code of 1986, as amended through April 15, 1995, increased by 
        the addition required for interest income from non-Minnesota 
        state and municipal bonds under section 290.01, subdivision 19a, 
        clause (1) amounts specified in section 290.01, subdivision 19a, 
        clauses (1), (5), (6), and (7), and reduced by the amounts 
        specified in section 290.01, subdivision 19b, clauses (1), (11), 
        and (12). 
           Sec. 7.  Minnesota Statutes 1997 Supplement, section 
        290.0671, subdivision 1, is amended to read: 
           Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
        allowed a credit against the tax imposed by this chapter equal 
        to a percentage of the credit for which the individual is 
        eligible earned income.  To receive a credit, a taxpayer must be 
        eligible for a credit under section 32 of the Internal Revenue 
        Code.  The percentage is 15 for individuals without a qualifying 
        child, and 25 for individuals with at least one qualifying 
        child.  For purposes of this section, "qualifying child" has the 
        meaning given in section 32(c)(3) of the Internal Revenue Code. 
           (b) For individuals with no qualifying children, the credit 
        equals 1.1475 percent of the first $4,460 of earned income.  The 
        credit is reduced by 1.1475 percent of earned income or modified 
        adjusted gross income, whichever is greater, in excess of 
        $5,570, but in no case is the credit less than zero. 
           (c) For individuals with one qualifying child, the credit 
        equals 6.8 percent of the first $6,680 of earned income and 8.5 
        percent of earned income over $11,650 but less than $12,990.  
        The credit is reduced by 4.77 percent of earned income or 
        modified adjusted gross income, whichever is greater, in excess 
        of $14,560, but in no case is the credit less than zero. 
           (d) For individuals with two or more qualifying children, 
        the credit equals eight percent of the first $9,390 of earned 
        income and 20 percent of earned income over $14,350 but less 
        than $16,230.  The credit is reduced by 8.8 percent of earned 
        income or modified adjusted gross income, whichever is greater, 
        in excess of $17,280, but in no case is the credit less than 
        zero. 
           (e) For a nonresident or part-year resident, the credit 
        determined under section 32 of the Internal Revenue Code 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, 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. 
           Sec. 8.  Minnesota Statutes 1996, section 290.0671, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [DEFINITIONS.] For purposes of this section, the 
        terms "qualifying child," "earned income," and "modified 
        adjusted gross income" have the meanings given in section 32(c) 
        of the Internal Revenue Code. 
           Sec. 9.  Minnesota Statutes 1996, section 290.0671, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [INFLATION ADJUSTMENT.] The earned income amounts 
        used to calculate the credit and the income thresholds at which 
        the maximum credit begins to be reduced in subdivision 1 must be 
        adjusted for inflation.  The commissioner shall adjust the 
        earned income and threshold amounts by the percentage determined 
        under section 290.06, subdivision 2d, for the taxable year. 
           Sec. 10.  Minnesota Statutes 1997 Supplement, section 
        290.0673, subdivision 2, is amended to read: 
           Subd. 2.  [QUALIFIED JOB TRAINING PROGRAM.] (a) To qualify 
        for credits under this section, a job training program must 
        satisfy the following requirements: 
           (1) It must be operated by a nonprofit corporation that 
        qualifies under section 501(c)(3) of the Internal Revenue Code. 
           (2) The organization must spend at least $5,000 per 
        graduate of the program. 
           (3) The program must provide education and training in: 
           (i) basic skills, such as reading, writing, mathematics, 
        and communications; 
           (ii) thinking skills, such as reasoning, creative thinking, 
        decision making, and problem solving; and 
           (iii) personal qualities, such as responsibility, 
        self-esteem, self-management, honesty, and integrity. 
           (4) The program must provide income supplements, when 
        needed, to participants for housing, counseling, tuition, and 
        other basic needs. 
           (5) The education and training course must last for at 
        least six months. 
           (6) Individuals served by the program must: 
           (i) be 18 years old or older; 
           (ii) have had federal adjusted gross income of no more than 
        $10,000 $15,000 per year in the last two years; 
           (iii) have assets of no more than $5,000 $7,000, excluding 
        the value of a homestead; and 
           (iv) not have been claimed as a dependent on the federal 
        tax return of another person in the previous taxable year. 
           (7) The program must charge placement and retention fees 
        that cumulatively exceed the amount of credit certificates 
        provided to the employer by at least 20 percent. 
           (b) The program must be certified by the commissioner of 
        children, families, and learning as meeting the requirements of 
        this subdivision. 
           Sec. 11.  Minnesota Statutes 1997 Supplement, section 
        290.0673, subdivision 6, is amended to read: 
           Subd. 6.  [NONREFUNDABLE REFUNDABLE.] The taxpayer must use 
        the tax credit for the taxable year in which the certificate is 
        issued to the employer.  If the credit for the taxable year may 
        not exceed exceeds the liability for tax under section 290.06, 
        subdivision 1, chapter 290 for the taxable year, before 
        reduction by the nonrefundable credits allowed under this 
        chapter the commissioner shall refund the excess to the 
        taxpayer.  An amount sufficient to pay the refunds authorized by 
        this subdivision is appropriated to the commissioner from the 
        general fund. 
           Sec. 12.  Minnesota Statutes 1996, section 290.091, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
        this section, the following terms have the meanings given: 
           (a) "Alternative minimum taxable income" means the sum of 
        the following for the taxable year: 
           (1) the taxpayer's federal alternative minimum taxable 
        income as defined in section 55(b)(2) of the Internal Revenue 
        Code; 
           (2) the taxpayer's itemized deductions allowed in computing 
        federal alternative minimum taxable income, but excluding: 
           (i) the Minnesota charitable contribution deduction and; 
           (ii) the medical expense deduction; 
           (iii) the casualty, theft, and disaster loss deduction; and 
           (iv) the impairment-related work expenses of a disabled 
        person; 
           (3) for depletion allowances computed under section 613A(c) 
        of the Internal Revenue Code, with respect to each property (as 
        defined in section 614 of the Internal Revenue Code), to the 
        extent not included in federal alternative minimum taxable 
        income, the excess of the deduction for depletion allowable 
        under section 611 of the Internal Revenue Code for the taxable 
        year over the adjusted basis of the property at the end of the 
        taxable year (determined without regard to the depletion 
        deduction for the taxable year); 
           (4) to the extent not included in federal alternative 
        minimum taxable income, the amount of the tax preference for 
        intangible drilling cost under section 57(a)(2) of the Internal 
        Revenue Code determined without regard to subparagraph (E); 
           (5) to the extent not included in federal alternative 
        minimum taxable income, the amount of interest income as 
        provided by section 290.01, subdivision 19a, clause (1); 
           (6) amounts added to federal taxable income as provided by 
        section 290.01, subdivision 19a, clauses (5), (6), and (7); 
           less the sum of the amounts determined under the following 
        clauses (1) to (3) (4): 
           (1) interest income as defined in section 290.01, 
        subdivision 19b, clause (1); 
           (2) an overpayment of state income tax as provided by 
        section 290.01, subdivision 19b, clause (2), to the extent 
        included in federal alternative minimum taxable income; and 
           (3) the amount of investment interest paid or accrued 
        within the taxable year on indebtedness to the extent that the 
        amount does not exceed net investment income, as defined in 
        section 163(d)(4) of the Internal Revenue Code.  Interest does 
        not include amounts deducted in computing federal adjusted gross 
        income; and 
           (4) amounts subtracted from federal taxable income as 
        provided by section 290.01, subdivision 19b, clauses (11) and 
        (12). 
           In the case of an estate or trust, alternative minimum 
        taxable income must be computed as provided in section 59(c) of 
        the Internal Revenue Code. 
           (b) "Investment interest" means investment interest as 
        defined in section 163(d)(3) of the Internal Revenue Code. 
           (c) "Tentative minimum tax" equals seven percent of 
        alternative minimum taxable income after subtracting the 
        exemption amount determined under subdivision 3. 
           (d) "Regular tax" means the tax that would be imposed under 
        this chapter (without regard to this section and section 
        290.032), reduced by the sum of the nonrefundable credits 
        allowed under this chapter.  
           (e) "Net minimum tax" means the minimum tax imposed by this 
        section. 
           (f) "Minnesota charitable contribution deduction" means a 
        charitable contribution deduction under section 170 of the 
        Internal Revenue Code to or for the use of an entity described 
        in section 290.21, subdivision 3, clauses (a) to (e).  When the 
        federal deduction for charitable contributions is limited under 
        section 170(b) of the Internal Revenue Code, the allowable 
        contributions in the year of contribution are deemed to be first 
        contributions to entities described in section 290.21, 
        subdivision 3, clauses (a) to (e). 
           Sec. 13.  Minnesota Statutes 1997 Supplement, section 
        290.091, subdivision 6, is amended to read: 
           Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
        is allowed against the tax imposed by this chapter on 
        individuals, trusts, and estates equal to the minimum tax credit 
        for the taxable year.  The minimum tax credit equals the 
        adjusted net minimum tax for taxable years beginning after 
        December 31, 1988, reduced by the minimum tax credits allowed in 
        a prior taxable year.  The credit may not exceed the excess (if 
        any) for the taxable year of 
           (1) the regular tax, over 
           (2) the greater of (i) the tentative alternative minimum 
        tax, or (ii) zero. 
           (b) The adjusted net minimum tax for a taxable year equals 
        the lesser of the net minimum tax or the excess (if any) of 
           (1) the tentative minimum tax, over 
           (2) seven percent of the sum of 
           (i) adjusted gross income as defined in section 62 of the 
        Internal Revenue Code, 
           (ii) interest income as defined in section 290.01, 
        subdivision 19a, clause (1), 
           (iii) the amount added to federal taxable income as 
        provided by section 290.01, subdivision 19a, clauses (5), (6), 
        and (7), 
           (iv) interest on specified private activity bonds, as 
        defined in section 57(a)(5) of the Internal Revenue Code, to the 
        extent not included under clause (ii), 
           (iv) (v) depletion as defined in section 57(a)(1), 
        determined without regard to the last sentence of paragraph (1), 
        of the Internal Revenue Code, less 
           (v) (vi) the deductions allowed in computing alternative 
        minimum taxable income provided in subdivision 2, paragraph (a), 
        clause (2) of the first series of clauses and clauses (1), 
        (2), and (3), and (4) of the second series of clauses, and 
           (vi) (vii) the exemption amount determined under 
        subdivision 3. 
           In the case of an individual who is not a Minnesota 
        resident for the entire year, adjusted net minimum tax must be 
        multiplied by the fraction defined in section 290.06, 
        subdivision 2c, paragraph (e).  In the case of a trust or 
        estate, adjusted net minimum tax must be multiplied by the 
        fraction defined under subdivision 4, paragraph (b). 
           Sec. 14.  Minnesota Statutes 1996, section 290.10, is 
        amended to read: 
           290.10 [NONDEDUCTIBLE ITEMS.] 
           Except as provided in section 290.17, subdivision 4, 
        paragraph (i), in computing the net income of a corporation 
        taxpayer no deduction shall in any case be allowed for expenses, 
        interest and taxes connected with or allocable against the 
        production or receipt of all income not included in the measure 
        of the tax imposed by this chapter, except that for corporations 
        engaged in the business of mining or producing iron ore, the 
        mining of which is subject to the occupation tax imposed by 
        section 298.01, subdivision 4, this shall not prevent the 
        deduction of expenses and other items to the extent that the 
        expenses and other items are allowable under this chapter and 
        are not deductible, capitalizable, retainable in basis, or taken 
        into account by allowance or otherwise in computing the 
        occupation tax and do not exceed the amounts taken for federal 
        income tax purposes for that year.  Occupation taxes imposed 
        under chapter 298, royalty taxes imposed under chapter 299, or 
        depletion expenses may not be deducted under this clause. 
           Sec. 15.  Minnesota Statutes 1996, section 290.21, 
        subdivision 3, is amended to read: 
           Subd. 3.  An amount for contribution or gifts made within 
        the taxable year: 
           (a) to or for the use of the state of Minnesota, or any of 
        its political subdivisions for exclusively public purposes, 
           (b) to or for the use of any community chest, corporation, 
        organization, trust, fund, association, or foundation located in 
        and carrying on substantially all of its activities within this 
        state, organized and operating exclusively for religious, 
        charitable, public cemetery, scientific, literary, artistic, or 
        educational purposes, or for the prevention of cruelty to 
        children or animals, no part of the net earnings of which inures 
        to the benefit of any private stockholder or individual, 
           (c) to a fraternal society, order, or association, 
        operating under the lodge system located in and carrying on 
        substantially all of their activities within this state if such 
        contributions or gifts are to be used exclusively for the 
        purposes specified in clause (b), or for or to posts or 
        organizations of war veterans or auxiliary units or societies of 
        such posts or organizations, if they are within the state and no 
        part of their net income inures to the benefit of any private 
        shareholder or individual, 
           (d) to or for the use of the United States of America for 
        exclusively public purposes if the contribution or gift consists 
        of real property located in Minnesota, 
           (e) to or for the use of a foundation if the foundation is 
        organized and operated exclusively for a purpose in clause (b), 
        and has no part of its net earnings inuring to the benefit of a 
        private shareholder or individual, but does not carry on 
        substantially all of its activities within this state.  The 
        deduction under this clause equals the amount of the 
        corporation's contributions or gifts to the foundation within 
        the taxable year multiplied by a fraction equal to the ratio of 
        the foundation's total expenditures during the taxable year for 
        the benefit of organizations described in clause (b) to the 
        foundation's total expenditures during the taxable year, 
           (f) the total deduction hereunder shall not exceed 15 
        percent of the taxpayer's taxable net income less the deductions 
        allowable under this section other than those for contributions 
        or gifts, 
           (g) in the case of a corporation reporting its taxable 
        income on the accrual basis, if:  (A) the board of directors 
        authorizes a charitable contribution during any taxable year, 
        and (B) payment of such contribution is made after the close of 
        such taxable year and on or before the 15th day of the third 
        month following the close of such taxable year; then the 
        taxpayer may elect to treat such contribution as paid during 
        such taxable year.  The election may be made only at the time of 
        the filing of the return for such taxable year, and shall be 
        signified in such manner as the commissioner shall by rules 
        prescribe. 
           For a contribution of ordinary income or capital gain 
        property, the amount allowed as a deduction is limited to the 
        amount deductible under section 170(e) of the Internal Revenue 
        Code.  The contribution must also qualify under the rules in 
        clauses (a) to (g) to be deductible. 
           Sec. 16.  Minnesota Statutes 1997 Supplement, section 
        290.371, subdivision 2, is amended to read: 
           Subd. 2.  [EXEMPTIONS.] A corporation is not required to 
        file a notice of business activities report if:  
           (1) by the end of an accounting period for which it was 
        otherwise required to file a notice of business activities 
        report under this section, it had received a certificate of 
        authority to do business in this state; 
           (2) a timely return has been filed under section 289A.08; 
           (3) the corporation is exempt from taxation under this 
        chapter pursuant to section 290.05; or 
           (4) the corporation's activities in Minnesota, or the 
        interests in property which it owns, consist solely of 
        activities or property exempted from jurisdiction to tax under 
        section 290.015, subdivision 3, paragraph (b); or 
           (5) the corporation is an "S" corporation under section 
        290.9725. 
           Sec. 17.  Laws 1995, chapter 255, article 3, section 2, 
        subdivision 1, as amended by Laws 1996, chapter 464, article 4, 
        section 1, and Laws 1997, chapter 231, article 5, section 16, is 
        amended to read: 
           Subdivision 1.  [URBAN REVITALIZATION AND STABILIZATION 
        ZONES.] (a) By September 1, 1995, the metropolitan council shall 
        designate one or more urban revitalization and stabilization 
        zones in the metropolitan area, as defined in section 473.121, 
        subdivision 2.  The designated zones must contain no more than 
        1,000 single family homes in total.  In designating urban 
        revitalization and stabilization zones, the council shall choose 
        areas that are in transition toward blight and poverty.  The 
        council shall use indicators that evidence increasing 
        neighborhood distress such as declining residential property 
        values, declining resident incomes, declining rates of 
        owner-occupancy, and other indicators of blight and poverty in 
        determining which areas are to be urban revitalization and 
        stabilization zones. 
           (b) An urban revitalization and stabilization zone is 
        created in the geographic area composed entirely of parcels that 
        are in whole or in part located within the 1996 65Ldn contour 
        surrounding the Minneapolis-St. Paul International Airport, or 
        within one mile of the boundaries of the 1996 65Ldn contour.  
        For residents of the zone created under this paragraph, 
        eligibility for the program as provided in subdivision 2 is 
        limited to persons buying and occupying a residence in the zone 
        after June 1, 1996, who have entered into purchase agreements 
        related to those homes before July 1, 1997.  Initial 
        applications for the homesteading program in this paragraph 
        shall not be accepted after December 31, 1998. 
           Sec. 18.  Laws 1995, chapter 255, article 3, section 2, 
        subdivision 4, as amended by Laws 1996, chapter 464, article 4, 
        section 2, is amended to read: 
           Subd. 4.  [EXPIRATION.] Initial applications for the urban 
        homesteading program in the zones designated under subdivision 
        1, paragraph (a), shall not be accepted after July 1, 1997, for 
        homes purchased and occupied before May 1, 1997.  For homes 
        purchased and occupied on or after May 1, 1997, but before July 
        1, 1998, initial applications shall not be accepted after June 
        30, 1998. 
           Sec. 19.  [PROHIBITION OF USE OF SOCIAL SECURITY NUMBERS.] 
           No label, envelope, or other material printed by the 
        department of revenue may include the social security number of 
        the taxpayer in a place that will be visible when delivered or 
        mailed to the taxpayer. 
           Sec. 20.  [REPEALER.] 
           Minnesota Statutes 1996, section 289A.50, subdivision 6, is 
        repealed. 
           Sec. 21.  [EFFECTIVE DATES.] 
           Section 1 is effective for extensions received under 
        Minnesota Statutes, section 289A.19, subdivision 2, for tax 
        years beginning after December 31, 1996.  Section 2 is effective 
        retroactive to August 1, 1997.  The change in section 3 made by 
        clause (7) and section 12, paragraph (a), clause (2)(iii) of the 
        first set of clauses, are effective for tax years beginning 
        after December 31, 1996.  The change in section 3 made by clause 
        (8) is effective for tax years beginning after December 31, 1997.
        Sections 4, clauses (11) and (12); 5; 12, paragraph (a), clause 
        (6) of the first set of clauses, and clause (4) of the second 
        set of clauses; 10; 11; and 13 are effective for tax years 
        beginning after December 31, 1996.  Section 6 is effective for 
        tax years beginning after December 31, 1996, except the change 
        in denominator for Minnesota Statutes, section 290.01, 
        subdivision 19b, clause (1), is effective for tax years 
        beginning after December 31, 1997.  Sections 7 and 8 are 
        effective for tax years beginning after December 31, 1997.  
        Section 9 is effective for tax years beginning after December 
        31, 1998.  Section 4, clause (13); section 12, paragraph (a), 
        clause (2)(iv) of the first set of clauses; and sections 14, 15, 
        and 20 are effective for tax years beginning after December 31, 
        1997.  Section 16 is effective for tax years beginning after 
        December 31, 1998.  Sections 17 and 18 are effective the day 
        following final enactment. 
                                   ARTICLE 7
                                 FEDERAL UPDATE 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        289A.02, subdivision 7, 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, 1996, and 
        includes the provisions of section 1(a) and (b) of Public Law 
        Number 104-117 1997. 
           Sec. 2.  Minnesota Statutes 1997 Supplement, section 
        290.01, subdivision 19, 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 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(h) 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, 1986, shall be in effect for taxable years 
        beginning after December 31, 1986.  The provisions of sections 
        10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 
        10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 
        Omnibus Budget Reconciliation Act of 1987, Public Law Number 
        100-203, the provisions of sections 1001, 1002, 1003, 1004, 
        1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 
        1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 
        6277, and 6282 of the Technical and Miscellaneous Revenue Act of 
        1988, Public Law Number 100-647, the provisions of sections 
        7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 
        1989, Public Law Number 101-239, and the provisions of sections 
        1305, 1704(r), and 1704(e)(1) of the Small Business Job 
        Protection Act, Public Law Number 104-188, and the provisions of 
        sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act 
        of 1997, Public Law Number 105-34, shall be effective at the 
        time they become effective for federal income tax purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1987, shall be in effect for taxable years 
        beginning after December 31, 1987.  The provisions of sections 
        4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 
        6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 
        6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 
        Act of 1988, Public Law Number 100-647, the provisions of 
        sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 
        of 1989, Public Law Number 101-239, and the provisions of 
        section 11702 of the Revenue Reconciliation Act of 1990, Public 
        Law Number 101-508, shall become effective at the time they 
        become effective for federal tax purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1988, shall be in effect for taxable years 
        beginning after December 31, 1988.  The provisions of sections 
        7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 
        7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 
        7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 
        Reconciliation Act of 1989, Public Law Number 101-239, the 
        provision of section 1401 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 
        the provisions of sections 11701 and 11703 of the Revenue 
        Reconciliation Act of 1990, Public Law Number 101-508, and the 
        provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 
        Small Business Job Protection Act, Public Law Number 104-188, 
        shall become effective at the time they become effective for 
        federal tax purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1989, shall be in effect for taxable years 
        beginning after December 31, 1989.  The provisions of sections 
        11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 
        the Revenue Reconciliation Act of 1990, Public Law Number 
        101-508, and the provisions of sections 13224 and 13261 of the 
        Omnibus Budget Reconciliation Act of 1993, Public Law Number 
        103-66, shall become effective at the time they become effective 
        for federal purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1990, shall be in effect for taxable years 
        beginning after December 31, 1990. 
           The provisions of section 13431 of the Omnibus Budget 
        Reconciliation Act of 1993, Public Law Number 103-66, shall 
        become effective at the time they became effective for federal 
        purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1991, shall be in effect for taxable years 
        beginning after December 31, 1991.  
           The provisions of sections 1936 and 1937 of the 
        Comprehensive National Energy Policy Act of 1992, Public Law 
        Number 102-486, and the provisions of sections 13101, 13114, 
        13122, 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of 
        the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
        103-66, and the provisions of section 1604(a)(1), (2), and (3) 
        of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
        shall become effective at the time they become effective for 
        federal purposes.  
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1992, shall be in effect for taxable years 
        beginning after December 31, 1992.  
           The provisions of sections 13116, 13121, 13206, 13210, 
        13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 
        the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
        103-66, and the provisions of sections 1703(a), 1703(d), 
        1703(i), 1703(l), and 1703(m) of the Small Business Job 
        Protection Act, Public Law Number 104-188, and the provision of 
        section 1604(c) of the Taxpayer Relief Act of 1997, Public Law 
        Number 105-34, shall become effective at the time they become 
        effective for federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1993, shall be in effect for taxable years 
        beginning after December 31, 1993. 
           The provision of section 741 of Legislation to Implement 
        Uruguay Round of General Agreement on Tariffs and Trade, Public 
        Law Number 103-465, the provisions of sections 1, 2, and 3, of 
        the Self-Employed Health Insurance Act of 1995, Public Law 
        Number 104-7, the provision of section 501(b)(2) of the Health 
        Insurance Portability and Accountability Act, Public Law Number 
        104-191, and the provisions of sections 1604 and 1704(p)(1) and 
        (2) of the Small Business Job Protection Act, Public Law Number 
        104-188, and the provisions of sections 1011, 1211(b)(1), and 
        1602(f) of the Taxpayer Relief Act of 1997, Public Law Number 
        105-34, shall become effective at the time they become effective 
        for federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1994, shall be in effect for taxable years 
        beginning after December 31, 1994. 
           The provisions of sections 1119(a), 1120, 1121, 1202(a), 
        1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 
        Business Job Protection Act, Public Law Number 104-188, and the 
        provision of section 511 of the Health Insurance Portability and 
        Accountability Act, Public Law Number 104-191, and the 
        provisions of sections 1174 and 1601(i)(2) of the Taxpayer 
        Relief Act of 1997, Public Law Number 105-34, shall become 
        effective at the time they become effective for federal purposes.
           The Internal Revenue Code of 1986, as amended through March 
        22, 1996, is in effect for taxable years beginning after 
        December 31, 1995. 
           The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
        1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
        1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
        Protection Act, Public Law Number 104-188, and the provisions of 
        Public Law Number 104-117, and the provisions of sections 313(a) 
        and (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 
        1002, 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 
        1087, 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 
        1601(f)(5) and (h), and 1604(d)(1) of the Taxpayer Relief Act of 
        1997, Public Law Number 105-34, shall become effective at the 
        time they become effective for federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1996, shall be in effect for taxable years 
        beginning after December 31, 1996. 
           The provisions of sections 202(a) and (b), 221(a), 225, 
        312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
        (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
        1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
        1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
        of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
        shall become effective at the time they become effective for 
        federal purposes. 
           The Internal Revenue Code of 1986, as amended through 
        December 31, 1997, shall be in effect for taxable years 
        beginning after December 31, 1997. 
           Except as otherwise provided, references to the Internal 
        Revenue Code in subdivisions 19a to 19g mean the code in effect 
        for purposes of determining net income for the applicable year. 
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 
        290.01, subdivision 19a, is amended to read: 
           Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
        individuals, estates, and trusts, there shall be added to 
        federal taxable income: 
           (1)(i) interest income on obligations of any state other 
        than Minnesota or a political or governmental subdivision, 
        municipality, or governmental agency or instrumentality of any 
        state other than Minnesota exempt from federal income taxes 
        under the Internal Revenue Code or any other federal statute, 
        and 
           (ii) exempt-interest dividends as defined in section 
        852(b)(5) of the Internal Revenue Code, except the portion of 
        the exempt-interest dividends derived from interest income on 
        obligations of the state of Minnesota or its political or 
        governmental subdivisions, municipalities, governmental agencies 
        or instrumentalities, but only if the portion of the 
        exempt-interest dividends from such Minnesota sources paid to 
        all shareholders represents 95 percent or more of the 
        exempt-interest dividends that are paid by the regulated 
        investment company as defined in section 851(a) of the Internal 
        Revenue Code, or the fund of the regulated investment company as 
        defined in section 851(h) of the Internal Revenue Code, making 
        the payment; and 
           (iii) for the purposes of items (i) and (ii), interest on 
        obligations of an Indian tribal government described in section 
        7871(c) of the Internal Revenue Code shall be treated as 
        interest income on obligations of the state in which the tribe 
        is located; 
           (2) the amount of income taxes paid or accrued within the 
        taxable year under this chapter and income taxes paid to any 
        other state or to any province or territory of Canada, to the 
        extent allowed as a deduction under section 63(d) of the 
        Internal Revenue Code, but the addition may not be more than the 
        amount by which the itemized deductions as allowed under section 
        63(d) of the Internal Revenue Code exceeds the amount of the 
        standard deduction as defined in section 63(c) of the Internal 
        Revenue Code.  For the purpose of this paragraph, the 
        disallowance of itemized deductions under section 68 of the 
        Internal Revenue Code of 1986, income tax is the last itemized 
        deduction disallowed; 
           (3) the capital gain amount of a lump sum distribution to 
        which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
        Reform Act of 1986, Public Law Number 99-514, applies; 
           (4) the amount of income taxes paid or accrued within the 
        taxable year under this chapter and income taxes paid to any 
        other state or any province or territory of Canada, to the 
        extent allowed as a deduction in determining federal adjusted 
        gross income.  For the purpose of this paragraph, income taxes 
        do not include the taxes imposed by sections 290.0922, 
        subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
           (5) the amount of loss or expense included in federal 
        taxable income under section 1366 of the Internal Revenue Code 
        flowing from a corporation that has a valid election in effect 
        for the taxable year under section 1362 of the Internal Revenue 
        Code, but which is not allowed to be an "S" corporation under 
        section 290.9725; and 
           (6) the amount of any distributions in cash or property 
        made to a shareholder during the taxable year by a corporation 
        that has a valid election in effect for the taxable year under 
        section 1362 of the Internal Revenue Code, but which is not 
        allowed to be an "S" corporation under section 290.9725 to the 
        extent not already included in federal taxable income under 
        section 1368 of the Internal Revenue Code.; and 
           (7) the amount of a partner's pro rata share of net income 
        which does not flow through to the partner because the 
        partnership elected to pay the tax on the income under section 
        6242(a)(2) of the Internal Revenue Code. 
           Sec. 4.  Minnesota Statutes 1997 Supplement, section 
        290.01, subdivision 19c, is amended to read: 
           Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
        INCOME.] For corporations, there shall be added to federal 
        taxable income: 
           (1) the amount of any deduction taken for federal income 
        tax purposes for income, excise, or franchise taxes based on net 
        income or related minimum taxes paid by the corporation to 
        Minnesota, another state, a political subdivision of another 
        state, the District of Columbia, or any foreign country or 
        possession of the United States; 
           (2) interest not subject to federal tax upon obligations 
        of:  the United States, its possessions, its agencies, or its 
        instrumentalities; the state of Minnesota or any other state, 
        any of its political or governmental subdivisions, any of its 
        municipalities, or any of its governmental agencies or 
        instrumentalities; the District of Columbia; or Indian tribal 
        governments; 
           (3) exempt-interest dividends received as defined in 
        section 852(b)(5) of the Internal Revenue Code; 
           (4) the amount of any net operating loss deduction taken 
        for federal income tax purposes under section 172 or 832(c)(10) 
        of the Internal Revenue Code or operations loss deduction under 
        section 810 of the Internal Revenue Code; 
           (5) the amount of any special deductions taken for federal 
        income tax purposes under sections 241 to 247 of the Internal 
        Revenue Code; 
           (6) losses from the business of mining, as defined in 
        section 290.05, subdivision 1, clause (a), that are not subject 
        to Minnesota income tax; 
           (7) the amount of any capital losses deducted for federal 
        income tax purposes under sections 1211 and 1212 of the Internal 
        Revenue Code; 
           (8) the amount of any charitable contributions deducted for 
        federal income tax purposes under section 170 of the Internal 
        Revenue Code; 
           (9) the exempt foreign trade income of a foreign sales 
        corporation under sections 921(a) and 291 of the Internal 
        Revenue Code; 
           (10) the amount of percentage depletion deducted under 
        sections 611 through 614 and 291 of the Internal Revenue Code; 
           (11) for certified pollution control facilities placed in 
        service in a taxable year beginning before December 31, 1986, 
        and for which amortization deductions were elected under section 
        169 of the Internal Revenue Code of 1954, as amended through 
        December 31, 1985, the amount of the amortization deduction 
        allowed in computing federal taxable income for those 
        facilities; 
           (12) the amount of any deemed dividend from a foreign 
        operating corporation determined pursuant to section 290.17, 
        subdivision 4, paragraph (g); and 
           (13) the amount of any environmental tax paid under section 
        59(a) of the Internal Revenue Code.; and 
           (14) the amount of a partner's pro rata share of net income 
        which does not flow through to the partner because the 
        partnership elected to pay the tax on the income under section 
        6242(a)(2) of the Internal Revenue Code. 
           Sec. 5.  Minnesota Statutes 1997 Supplement, section 
        290.01, subdivision 31, 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, 1996, and 
        includes the provisions of section 1(a) and (b) of Public Law 
        Number 104-117 1997. 
           Sec. 6.  Minnesota Statutes 1996, section 290.06, 
        subdivision 2c, is amended to read: 
           Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
        AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
        married individuals filing joint returns and surviving spouses 
        as defined in section 2(a) of the Internal Revenue Code must be 
        computed by applying to their taxable net income the following 
        schedule of rates: 
           (1) On the first $19,910, 6 percent; 
           (2) On all over $19,910, but not over $79,120, 8 percent; 
           (3) On all over $79,120, 8.5 percent. 
           Married individuals filing separate returns, estates, and 
        trusts must compute their income tax by applying the above rates 
        to their taxable income, except that the income brackets will be 
        one-half of the above amounts.  
           (b) The income taxes imposed by this chapter upon unmarried 
        individuals must be computed by applying to taxable net income 
        the following schedule of rates: 
           (1) On the first $13,620, 6 percent; 
           (2) On all over $13,620, but not over $44,750, 8 percent; 
           (3) On all over $44,750, 8.5 percent. 
           (c) The income taxes imposed by this chapter upon unmarried 
        individuals qualifying as a head of household as defined in 
        section 2(b) of the Internal Revenue Code must be computed by 
        applying to taxable net income the following schedule of rates: 
           (1) On the first $16,770, 6 percent; 
           (2) On all over $16,770, but not over $67,390, 8 percent; 
           (3) On all over $67,390, 8.5 percent. 
           (d) In lieu of a tax computed according to the rates set 
        forth in this subdivision, the tax of any individual taxpayer 
        whose taxable net income for the taxable year is less than an 
        amount determined by the commissioner must be computed in 
        accordance with tables prepared and issued by the commissioner 
        of revenue based on income brackets of not more than $100.  The 
        amount of tax for each bracket shall be computed at the rates 
        set forth in this subdivision, provided that the commissioner 
        may disregard a fractional part of a dollar unless it amounts to 
        50 cents or more, in which case it may be increased to $1. 
           (e) An individual who is not a Minnesota resident for the 
        entire year must compute the individual's Minnesota income tax 
        as provided in this subdivision.  After the application of the 
        nonrefundable credits provided in this chapter, the tax 
        liability must then be multiplied by a fraction in which:  
           (1) The numerator is the individual's Minnesota source 
        federal adjusted gross income as defined in section 62 of the 
        Internal Revenue Code increased by the addition additions 
        required for interest income from non-Minnesota state and 
        municipal bonds under section 290.01, subdivision 19a, clause 
        clauses (1) and (7), after applying the allocation and 
        assignability provisions of section 290.081, clause (a), or 
        290.17; and 
           (2) the denominator is the individual's federal adjusted 
        gross income as defined in section 62 of the Internal Revenue 
        Code of 1986, as amended through April 15, 1995, increased by 
        the addition required for interest income from non-Minnesota 
        state and municipal bonds amounts specified under section 
        290.01, subdivision 19a, clause clauses (1) and (7). 
           Sec. 7.  Minnesota Statutes 1996, section 290.067, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [INCOME.] (a) For purposes of this section, 
        "income" means the sum of the following: 
           (1) federal adjusted gross income as defined in section 62 
        of the Internal Revenue Code; and 
           (2) the sum of the following amounts to the extent not 
        included in clause (1): 
           (i) all nontaxable income; 
           (ii) the amount of a passive activity loss that is not 
        disallowed as a result of section 469, paragraph (i) or (m) of 
        the Internal Revenue Code and the amount of passive activity 
        loss carryover allowed under section 469(b) of the Internal 
        Revenue Code; 
           (iii) an amount equal to the total of any discharge of 
        qualified farm indebtedness of a solvent individual excluded 
        from gross income under section 108(g) of the Internal Revenue 
        Code; 
           (iv) cash public assistance and relief; 
           (v) any pension or annuity (including railroad retirement 
        benefits, all payments received under the federal Social 
        Security Act, supplemental security income, and veterans 
        benefits), which was not exclusively funded by the claimant or 
        spouse, or which was funded exclusively by the claimant or 
        spouse and which funding payments were excluded from federal 
        adjusted gross income in the years when the payments were made; 
           (vi) interest received from the federal or a state 
        government or any instrumentality or political subdivision 
        thereof; 
           (vii) workers' compensation; 
           (viii) nontaxable strike benefits; 
           (ix) the gross amounts of payments received in the nature 
        of disability income or sick pay as a result of accident, 
        sickness, or other disability, whether funded through insurance 
        or otherwise; 
           (x) a lump sum distribution under section 402(e)(3) of the 
        Internal Revenue Code; 
           (xi) contributions made by the claimant to an individual 
        retirement account, including a qualified voluntary employee 
        contribution; simplified employee pension plan; self-employed 
        retirement plan; cash or deferred arrangement plan under section 
        401(k) of the Internal Revenue Code; or deferred compensation 
        plan under section 457 of the Internal Revenue Code; and 
           (xii) nontaxable scholarship or fellowship grants. 
           In the case of an individual who files an income tax return 
        on a fiscal year basis, the term "federal adjusted gross income" 
        means federal adjusted gross income reflected in the fiscal year 
        ending in the next calendar year.  Federal adjusted gross income 
        may not be reduced by the amount of a net operating loss 
        carryback or carryforward or a capital loss carryback or 
        carryforward allowed for the year. 
           (b) "Income" does not include: 
           (1) amounts excluded pursuant to the Internal Revenue Code, 
        sections 101(a), and 102, and 121; 
           (2) amounts of any pension or annuity that were exclusively 
        funded by the claimant or spouse if the funding payments were 
        not excluded from federal adjusted gross income in the years 
        when the payments were made; 
           (3) surplus food or other relief in kind supplied by a 
        governmental agency; 
           (4) relief granted under chapter 290A; and 
           (5) child support payments received under a temporary or 
        final decree of dissolution or legal separation. 
           Sec. 8.  Minnesota Statutes 1996, section 290.0921, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  [EXEMPTIONS.] The following entities are exempt 
        from the tax imposed by this section: 
           (1) cooperatives taxable under subchapter T of the Internal 
        Revenue Code or organized under chapter 308 or a similar law of 
        another state; 
           (2) corporations subject to tax under section 60A.15, 
        subdivision 1; 
           (3) real estate investment trusts; 
           (4) regulated investment companies or a fund thereof; and 
           (5) entities having a valid election in effect under 
        section 860D(b) of the Internal Revenue Code.; and 
           (6) small corporations exempt from the federal alternative 
        minimum tax under section 55(e) of the Internal Revenue Code. 
           Sec. 9.  Minnesota Statutes 1996, section 290A.03, 
        subdivision 3, is amended to read: 
           Subd. 3.  [INCOME.] (1) "Income" means the sum of the 
        following:  
           (a) federal adjusted gross income as defined in the 
        Internal Revenue Code; and 
           (b) the sum of the following amounts to the extent not 
        included in clause (a):  
           (i) all nontaxable income; 
           (ii) the amount of a passive activity loss that is not 
        disallowed as a result of section 469, paragraph (i) or (m) of 
        the Internal Revenue Code and the amount of passive activity 
        loss carryover allowed under section 469(b) of the Internal 
        Revenue Code; 
           (iii) an amount equal to the total of any discharge of 
        qualified farm indebtedness of a solvent individual excluded 
        from gross income under section 108(g) of the Internal Revenue 
        Code; 
           (iv) cash public assistance and relief; 
           (v) any pension or annuity (including railroad retirement 
        benefits, all payments received under the federal Social 
        Security Act, supplemental security income, and veterans 
        benefits), which was not exclusively funded by the claimant or 
        spouse, or which was funded exclusively by the claimant or 
        spouse and which funding payments were excluded from federal 
        adjusted gross income in the years when the payments were made; 
           (vi) interest received from the federal or a state 
        government or any instrumentality or political subdivision 
        thereof; 
           (vii) workers' compensation; 
           (viii) nontaxable strike benefits; 
           (ix) the gross amounts of payments received in the nature 
        of disability income or sick pay as a result of accident, 
        sickness, or other disability, whether funded through insurance 
        or otherwise; 
           (x) a lump sum distribution under section 402(e)(3) of the 
        Internal Revenue Code; 
           (xi) contributions made by the claimant to an individual 
        retirement account, including a qualified voluntary employee 
        contribution; simplified employee pension plan; self-employed 
        retirement plan; cash or deferred arrangement plan under section 
        401(k) of the Internal Revenue Code; or deferred compensation 
        plan under section 457 of the Internal Revenue Code; and 
           (xii) nontaxable scholarship or fellowship grants.  
           In the case of an individual who files an income tax return 
        on a fiscal year basis, the term "federal adjusted gross income" 
        shall mean federal adjusted gross income reflected in the fiscal 
        year ending in the calendar year.  Federal adjusted gross income 
        shall not be reduced by the amount of a net operating loss 
        carryback or carryforward or a capital loss carryback or 
        carryforward allowed for the year.  
           (2) "Income" does not include 
           (a) amounts excluded pursuant to the Internal Revenue Code, 
        sections 101(a), and 102, and 121; 
           (b) amounts of any pension or annuity which was exclusively 
        funded by the claimant or spouse and which funding payments were 
        not excluded from federal adjusted gross income in the years 
        when the payments were made; 
           (c) surplus food or other relief in kind supplied by a 
        governmental agency; 
           (d) relief granted under this chapter; or 
           (e) child support payments received under a temporary or 
        final decree of dissolution or legal separation.  
           (3) The sum of the following amounts may be subtracted from 
        income:  
           (a) for the claimant's first dependent, the exemption 
        amount multiplied by 1.4; 
           (b) for the claimant's second dependent, the exemption 
        amount multiplied by 1.3; 
           (c) for the claimant's third dependent, the exemption 
        amount multiplied by 1.2; 
           (d) for the claimant's fourth dependent, the exemption 
        amount multiplied by 1.1; 
           (e) for the claimant's fifth dependent, the exemption 
        amount; and 
           (f) if the claimant or claimant's spouse was disabled or 
        attained the age of 65 on or before December 31 of the year for 
        which the taxes were levied or rent paid, the exemption amount.  
           For purposes of this subdivision, the "exemption amount" 
        means the exemption amount under section 151(d) of the Internal 
        Revenue Code for the taxable year for which the income is 
        reported.  
           Sec. 10.  Minnesota Statutes 1997 Supplement, section 
        290A.03, subdivision 15, is amended to read: 
           Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
        means the Internal Revenue Code of 1986, as amended through 
        December 31, 1996 1997. 
           Sec. 11.  Minnesota Statutes 1997 Supplement, section 
        291.005, subdivision 1, is amended to read: 
           Subdivision 1.  Unless the context otherwise clearly 
        requires, the following terms used in this chapter shall have 
        the following meanings: 
           (1) "Federal gross estate" means the gross estate of a 
        decedent as valued and otherwise determined for federal estate 
        tax purposes by federal taxing authorities pursuant to the 
        provisions of the Internal Revenue Code. 
           (2) "Minnesota gross estate" means the federal gross estate 
        of a decedent after (a) excluding therefrom any property 
        included therein which has its situs outside Minnesota and (b) 
        including therein any property omitted from the federal gross 
        estate which is includable therein, has its situs in Minnesota, 
        and was not disclosed to federal taxing authorities.  
           (3) "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. 
           (4) "Resident decedent" means an individual whose domicile 
        at the time of death was in Minnesota. 
           (5) "Nonresident decedent" means an individual whose 
        domicile at the time of death was not in Minnesota. 
           (6) "Situs of property" means, with respect to real 
        property, the state or country in which it is located; with 
        respect to tangible personal property, the state or country in 
        which it was normally kept or located at the time of the 
        decedent's death; and with respect to intangible personal 
        property, the state or country in which the decedent was 
        domiciled at death. 
           (7) "Commissioner" means the commissioner of revenue or any 
        person to whom the commissioner has delegated functions under 
        this chapter. 
           (8) "Internal Revenue Code" means the United States 
        Internal Revenue Code of 1986, as amended through December 31, 
        1996, and includes the provisions of section 1(a)(4) of Public 
        Law Number 104-117 1997. 
           Sec. 12.  [INSTRUCTION TO REVISOR.] 
           Each place in Minnesota Statutes that refers to section 
        851(h) or 851(q) of the Internal Revenue Code, the revisor in 
        the next edition of Minnesota Statutes shall substitute "851(g)" 
        for those references. 
           Sec. 13.  [EFFECTIVE DATES.] 
           Sections 1, 3, 4, and 6 to 9 are effective for tax years 
        beginning after December 31, 1997.  Sections 5, 10, and 11 are 
        effective at the same time federal changes made by the Taxpayer 
        Relief Act of 1997, Public Law Number 105-34, which are 
        incorporated into Minnesota Statutes, chapters 290, 290A, and 
        291 by these sections, become effective for federal tax purposes.
                                   ARTICLE 8 
                                   SALES TAX 
           Section 1.  Minnesota Statutes 1996, section 297A.01, 
        subdivision 8, is amended to read: 
           Subd. 8.  "Sales price" means the total consideration 
        valued in money, for a retail sale whether paid in money or 
        otherwise, excluding therefrom any amount allowed as credit for 
        tangible personal property taken in trade for resale, without 
        deduction for the cost of the property sold, cost of materials 
        used, labor or service cost, interest, or discount allowed after 
        the sale is consummated, the cost of transportation incurred 
        prior to the time of sale, any amount for which credit is given 
        to the purchaser by the seller, or any other expense 
        whatsoever.  A deduction may be made for charges of up to 15 
        percent in lieu of tips, if the consideration for such charges 
        is separately stated.  No deduction shall be allowed for charges 
        for services that are part of a sale.  Except as otherwise 
        provided in this subdivision, a deduction may also be made for 
        interest, financing, or carrying charges, charges for labor or 
        services used in installing or applying the property sold or 
        transportation charges if the transportation occurs after the 
        retail sale of the property only if the consideration for such 
        charges is separately stated.  "Sales price," for purposes of 
        sales of ready-mixed concrete sold from a ready-mixed concrete 
        truck, includes any transportation, delivery, or other service 
        charges, and no deduction is allowed for those charges, whether 
        or not the charges are separately stated.  There shall not be 
        included in "sales price" cash discounts allowed and taken on 
        sales or the amount refunded either in cash or in credit for 
        property returned by purchasers. 
           Sec. 2.  Minnesota Statutes 1996, section 297A.01, 
        subdivision 15, is amended to read: 
           Subd. 15.  "Farm machinery" means new or used machinery, 
        equipment, implements, accessories, and contrivances used 
        directly and principally in the production for sale, but not 
        including the processing, of livestock, dairy animals, dairy 
        products, poultry and poultry products, fruits, vegetables, 
        forage, grains and bees and apiary products.  "Farm machinery"  
        includes: 
           (1) machinery for the preparation, seeding or cultivation 
        of soil for growing agricultural crops and sod, harvesting and 
        threshing of agricultural products, harvesting or mowing of sod, 
        and certain machinery for dairy, livestock and poultry farms; 
           (2) barn cleaners, milking systems, grain dryers, automatic 
        feeding systems and similar installations, whether or not the 
        equipment is installed by the seller and becomes part of the 
        real property; 
           (3) irrigation equipment sold for exclusively agricultural 
        use, including pumps, pipe fittings, valves, sprinklers and 
        other equipment necessary to the operation of an irrigation 
        system when sold as part of an irrigation system, whether or not 
        the equipment is installed by the seller and becomes part of the 
        real property; 
           (4) logging equipment, including chain saws used for 
        commercial logging; 
           (5) fencing used for the containment of farmed cervidae, as 
        defined in section 17.451, subdivision 2; and 
           (6) primary and backup generator units used to generate 
        electricity for the purpose of operating farm machinery, as 
        defined in this subdivision, or providing light or space heating 
        necessary for the production of livestock, dairy animals, dairy 
        products, or poultry and poultry products; and 
           (7) aquaculture production equipment as defined in 
        subdivision 19.  
           Repair or replacement parts for farm machinery shall not be 
        included in the definition of farm machinery.  
           Tools, shop equipment, grain bins, feed bunks, fencing 
        material except fencing material covered by clause (5), 
        communication equipment and other farm supplies shall not be 
        considered to be farm machinery.  "Farm machinery" does not 
        include motor vehicles taxed under chapter 297B, snowmobiles, 
        snow blowers, lawn mowers except those used in the production of 
        sod for sale, garden-type tractors or garden tillers and the 
        repair and replacement parts for those vehicles and machines. 
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 
        297A.01, subdivision 16, is amended to read: 
           Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
        machinery and equipment purchased or leased for use in this 
        state and used by the purchaser or lessee primarily for 
        manufacturing, fabricating, mining, or refining tangible 
        personal property to be sold ultimately at retail and for 
        electronically transmitting results retrieved by a customer of 
        an on-line computerized data retrieval system.  
           (b) Capital equipment includes all machinery and equipment 
        that is essential to the integrated production process.  Capital 
        equipment includes, but is not limited to: 
           (1) machinery and equipment used or required 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 necessary 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; or 
           (7) materials used to construct and install special purpose 
        buildings used in the production process; or 
           (8) ready-mixed concrete trucks in which the ready-mixed 
        concrete is mixed as part of the delivery process. 
           (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; 
           (4) machinery or equipment used for nonproduction purposes, 
        including, but not limited to, the following:  machinery and 
        equipment used for plant security, fire prevention, first aid, 
        and hospital stations; machinery and equipment used in support 
        operations or for administrative purposes; machinery and 
        equipment used solely for pollution control, prevention, or 
        abatement; and machinery and equipment used in plant cleaning, 
        disposal of scrap and waste, plant communications, space 
        heating, lighting, or safety; 
           (5) "farm machinery" as defined by subdivision 15, and 
        "aquaculture production equipment" as defined by subdivision 19; 
        or 
           (6) 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 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) "Machinery" means mechanical, electronic, or electrical 
        devices, including computers and 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 the completion of the product, including packaging of 
        the product. 
           (4) "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. 
           (5) "Mining" means the extraction of minerals, ores, stone, 
        and peat. 
           (6) "On-line data retrieval system" means a system whose 
        cumulation of information is equally available and accessible to 
        all its customers. 
           (7) "Pollution control equipment" means machinery and 
        equipment used to eliminate, prevent, or reduce pollution 
        resulting from an activity described in paragraph (a). 
           (8) "Primarily" means machinery and equipment used 50 
        percent or more of the time in an activity described in 
        paragraph (a). 
           (9) "Refining" means the process of converting a natural 
        resource to a product, including the treatment of water to be 
        sold at retail. 
           (e) For purposes of this subdivision the requirement that 
        the machinery or equipment "must be used by the purchaser or 
        lessee" means that the person who purchases or leases the 
        machinery or equipment must be the one who uses it for the 
        qualifying purpose.  When a contractor buys and installs 
        machinery or equipment as part of an improvement to real 
        property, only the contractor is considered the purchaser. 
           Sec. 4.  Minnesota Statutes 1996, section 297A.02, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MACHINERY AND EQUIPMENT.] Notwithstanding the 
        provisions of subdivision 1, the rate of the excise tax imposed 
        upon sales of farm machinery and aquaculture production 
        equipment is 2.5 2.0 percent for sales after June 30, 1998, and 
        before July 1, 1999, and 1.0 percent for sales after June 30, 
        1999, and before July 1, 2000. 
           Sec. 5.  Minnesota Statutes 1996, section 297A.02, 
        subdivision 4, is amended to read: 
           Subd. 4.  [MANUFACTURED HOUSING AND PARK TRAILERS.] 
        Notwithstanding the provisions of subdivision 1, for sales at 
        retail of manufactured homes as defined in section 327.31, 
        subdivision 6, that are used for residential purposes and new or 
        used park trailers, as defined in section 168.011, subdivision 
        8, paragraph (b), the excise tax is imposed upon 65 percent of 
        the sales price dealer's cost of the home or, and for sales of 
        new and used park trailers, as defined in section 168.011, 
        subdivision 8, paragraph (b), the excise tax is imposed upon 65 
        percent of the sales price of the park trailer. 
           Sec. 6.  Minnesota Statutes 1996, section 297A.135, 
        subdivision 4, as amended by Laws 1997, Third Special Session 
        chapter 3, section 23, is amended to read: 
           Subd. 4.  [EXEMPTION EXEMPTIONS.] (a) The tax and the fee 
        imposed by this section do not apply to a lease or rental of (1) 
        a vehicle to be used by the lessee to provide a licensed taxi 
        service; (2) a hearse or limousine used in connection with a 
        burial or funeral service; or (3) a van designed or adapted 
        primarily for transporting property rather than passengers. 
           (b) The lessor may elect not to charge the fee imposed in 
        subdivision 1a if in the previous calendar year the lessor had 
        no more than 20 vehicles available for lease that would have 
        been subject to tax under this section, or no more than $50,000 
        in gross receipts that would have been subject to tax under this 
        section. 
           Sec. 7.  Minnesota Statutes 1996, section 297A.135, 
        subdivision 5, as added by Laws 1997, Third Special Session 
        chapter 3, section 23, is amended to read: 
           Subd. 5.  [PAYMENT OF EXCESS FEES.] On the first sales tax 
        return due following the end of a calendar year during which a 
        lessor has imposed a fee under subdivision 1a, the lessor shall 
        report to the commissioner of revenue, in the form required by 
        the commissioner, the amount of the fee collected and the amount 
        of motor vehicle registration taxes paid by the lessor under 
        chapter 168 on vehicles subject to the fee under this section.  
        If the amount of the fee collected during the previous year 
        exceeds the amount of motor vehicle registration taxes paid 
        under chapter 168 during the previous year, the lessor shall 
        remit the excess to the commissioner of revenue at the time the 
        report is submitted. 
           Sec. 8.  Minnesota Statutes 1997 Supplement, section 
        297A.25, subdivision 3, is amended to read: 
           Subd. 3.  [MEDICINES; MEDICAL DEVICES.] The gross receipts 
        from the sale of and storage, use, or consumption of prescribed 
        drugs, prescribed medicine and insulin, intended for use, 
        internal or external, in the cure, mitigation, treatment or 
        prevention of illness or disease in human beings are exempt, 
        together with prescription glasses, fever thermometers, 
        therapeutic, and prosthetic devices.  "Prescribed drugs" or 
        "prescribed medicine" includes over-the-counter drugs or 
        medicine prescribed by a licensed physician.  "Therapeutic 
        devices" includes reusable finger pricking devices for the 
        extraction of blood, blood glucose monitoring machines, and 
        other diagnostic agents used in diagnosing, monitoring, or 
        treating diabetes.  Nonprescription analgesics consisting 
        principally (determined by the weight of all ingredients) of 
        acetaminophen, acetylsalicylic acid, ibuprofen, ketoprofen, 
        naproxen, and other nonprescription analgesics that are approved 
        by the United States Food and Drug Administration for internal 
        use by human beings, or a combination thereof, are exempt. 
           Medical supplies purchased by a licensed health care 
        facility or licensed health care professional to provide medical 
        treatment to residents or patients are exempt.  The exemption 
        does not apply to medical equipment or components of medical 
        equipment, laboratory supplies, radiological supplies, and other 
        items used in providing medical services.  For purposes of this 
        subdivision, "medical supplies" means adhesive and nonadhesive 
        bandages, gauze pads and strips, cotton applicators, 
        antiseptics, nonprescription drugs, eye solution, and other 
        similar supplies used directly on the resident or patient in 
        providing medical services. 
           Sec. 9.  Minnesota Statutes 1997 Supplement, section 
        297A.25, subdivision 9, is amended to read: 
           Subd. 9.  [MATERIALS CONSUMED IN PRODUCTION.] The gross 
        receipts from the sale of and the storage, use, or consumption 
        of all materials, including chemicals, fuels, petroleum 
        products, lubricants, packaging materials, including returnable 
        containers used in packaging food and beverage products, feeds, 
        seeds, fertilizers, electricity, gas and steam, used or consumed 
        in agricultural or industrial production of personal property 
        intended to be sold ultimately at retail, whether or not the 
        item so used becomes an ingredient or constituent part of the 
        property produced are exempt.  Seeds, trees, fertilizers, and 
        herbicides purchased for use by farmers in the Conservation 
        Reserve Program under United States Code, title 16, section 
        590h, as amended through December 31, 1991, the Integrated Farm 
        Management Program under section 1627 of Public Law Number 
        101-624, the Wheat and Feed Grain Programs under sections 301 to 
        305 and 401 to 405 of Public Law Number 101-624, and the 
        conservation reserve program under sections 103F.505 to 
        103F.531, are included in this exemption.  Sales to a 
        veterinarian of materials used or consumed in the care, 
        medication, and treatment of horses and agricultural production 
        animals are exempt under this subdivision.  Chemicals used for 
        cleaning food processing machinery and equipment are included in 
        this exemption.  Materials, including chemicals, fuels, and 
        electricity purchased by persons engaged in agricultural or 
        industrial production to treat waste generated as a result of 
        the production process are included in this exemption.  Such 
        production shall include, but is not limited to, research, 
        development, design or production of any tangible personal 
        property, manufacturing, processing (other than by restaurants 
        and consumers) of agricultural products whether vegetable or 
        animal, commercial fishing, refining, smelting, reducing, 
        brewing, distilling, printing, mining, quarrying, lumbering, 
        generating electricity and the production of road building 
        materials.  Such production shall not include painting, 
        cleaning, repairing or similar processing of property except as 
        part of the original manufacturing process.  Machinery, 
        equipment, implements, tools, accessories, appliances, 
        contrivances, furniture and fixtures, used in such production 
        and fuel, electricity, gas or steam used for space heating or 
        lighting, are not included within this exemption; however, 
        accessory tools, equipment and other short lived items, which 
        are separate detachable units used in producing a direct effect 
        upon the product, where such items have an ordinary useful life 
        of less than 12 months, are included within the exemption 
        provided herein.  Electricity used to make snow for outdoor use 
        for ski hills, ski slopes, or ski trails is included in this 
        exemption.  Petroleum and special fuels used in producing or 
        generating power for propelling ready-mixed concrete trucks on 
        the public highways of this state are not included in this 
        exemption. 
           Sec. 10.  Minnesota Statutes 1997 Supplement, section 
        297A.25, subdivision 11, is amended to read: 
           Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
        all sales, including sales in which title is retained by a 
        seller or a vendor or is assigned to a third party under an 
        installment sale or lease purchase agreement under section 
        465.71, of tangible personal property to, and all storage, use 
        or consumption of such property by, the United States and its 
        agencies and instrumentalities, the University of Minnesota, 
        state universities, community colleges, technical colleges, 
        state academies, the Lola and Rudy Perpich Minnesota center for 
        arts education, and an instrumentality of a political 
        subdivision that is accredited as an optional/special function 
        school by the North Central Association of Colleges and Schools, 
        school districts, public libraries, public library systems, 
        multicounty, multitype library systems as defined in section 
        134.001, county law libraries under chapter 134A, the state 
        library under section 480.09, and the legislative reference 
        library are exempt. 
           As used in this subdivision, "school districts" means 
        public school entities and districts of every kind and nature 
        organized under the laws of the state of Minnesota, including, 
        without limitation, school districts, intermediate school 
        districts, education districts, service cooperatives, secondary 
        vocational cooperative centers, special education cooperatives, 
        joint purchasing cooperatives, telecommunication cooperatives, 
        regional management information centers, and any instrumentality 
        of a school district, as defined in section 471.59. 
           Sales exempted by this subdivision include sales under 
        section 297A.01, subdivision 3, paragraph (f).  
           Sales to hospitals and nursing homes owned and operated by 
        political subdivisions of the state are exempt under this 
        subdivision.  
           The sales to and exclusively for the use of libraries of 
        books, periodicals, audio-visual materials and equipment, 
        photocopiers for use by the public, and all cataloguing and 
        circulation equipment, and cataloguing and circulation software 
        for library use are exempt under this subdivision.  For purposes 
        of this paragraph "libraries" means libraries as defined in 
        section 134.001, county law libraries under chapter 134A, the 
        state library under section 480.09, and the legislative 
        reference library. 
           Sales of supplies and equipment used in the operation of an 
        ambulance service owned and operated by a political subdivision 
        of the state are exempt under this subdivision provided that the 
        supplies and equipment are used in the course of providing 
        medical care.  Sales to a political subdivision of repair and 
        replacement parts for emergency rescue vehicles and fire trucks 
        and apparatus are exempt under this subdivision.  
           Sales to a political subdivision of machinery and 
        equipment, except for motor vehicles, used directly for mixed 
        municipal solid waste management services at a solid waste 
        disposal facility as defined in section 115A.03, subdivision 10, 
        are exempt under this subdivision.  
           Sales to political subdivisions of chore and homemaking 
        services to be provided to elderly or disabled individuals are 
        exempt. 
           Sales to a town of gravel and of machinery, equipment, and 
        accessories, except motor vehicles, used exclusively for road 
        and bridge maintenance are exempt. 
           Sales of telephone services to the department of 
        administration that are used to provide telecommunications 
        services through the intertechnologies revolving fund are exempt 
        under this subdivision. 
           This exemption shall not apply to 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.  This exemption does not apply to 
        construction materials purchased by tax exempt entities or their 
        contractors to be used in constructing buildings or facilities 
        which will not be used principally by the tax exempt entities. 
           This exemption does not apply to the leasing of a motor 
        vehicle as defined in section 297B.01, subdivision 5, except for 
        leases entered into by the United States or its agencies or 
        instrumentalities.  
           The tax imposed on sales to political subdivisions of the 
        state under this section applies to all political subdivisions 
        other than those explicitly exempted under this subdivision, 
        notwithstanding section 115A.69, subdivision 6, 116A.25, 
        360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
        469.127, 473.448, 473.545, or 473.608 or any other law to the 
        contrary enacted before 1992. 
           Sales exempted by this subdivision include sales made to 
        other states or political subdivisions of other states, if the 
        sale would be exempt from taxation if it occurred in that state, 
        but do not include sales under section 297A.01, subdivision 3, 
        paragraphs (c) and (e). 
           Sec. 11.  Minnesota Statutes 1997 Supplement, section 
        297A.25, subdivision 59, is amended to read: 
           Subd. 59.  [FARM MACHINERY.] The gross receipts from the 
        sale of used farm machinery and, after June 30, 2000, the gross 
        receipts from the sale of new farm machinery, are exempt. 
           Sec. 12.  Minnesota Statutes 1996, section 297A.25, 
        subdivision 60, is amended to read: 
           Subd. 60.  [CONSTRUCTION MATERIALS; STATE CONVENTION 
        CENTER.] Construction materials and supplies are exempt from the 
        tax imposed under this chapter, regardless of whether purchased 
        by the owner or a contractor, subcontractor, or builder, if: 
           (1) the materials and supplies are used or consumed in 
        constructing improvements to a state convention center located 
        in a city located outside of the metropolitan area as defined in 
        section 473.121, subdivision 2, and the center is governed by an 
        11-person board of which four are appointed by the governor; and 
           (2) the improvements are financed in whole or in part by 
        nonstate resources including, but not limited to, revenue or 
        general obligations issued by the state convention center board 
        of the city in which the center is located. 
           The exemption provided by this subdivision applies to 
        construction materials and supplies purchased prior to December 
        31, 1998. 
           Sec. 13.  Minnesota Statutes 1996, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 73.  [BIOSOLIDS PROCESSING EQUIPMENT.] The gross 
        receipts from the sale of and the storage, use, or consumption 
        of equipment designed to process, dewater, and recycle biosolids 
        for wastewater treatment facilities of political subdivisions, 
        and materials incidental to installation of that equipment, are 
        exempt. 
           Sec. 14.  Minnesota Statutes 1996, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 74.  [CONSTRUCTION MATERIALS; MINNEAPOLIS CONVENTION 
        CENTER.] Purchases of materials, supplies, or equipment used or 
        consumed in the construction, equipment, improvement, or 
        expansion of the Minneapolis convention center are exempt from 
        the tax imposed under this chapter and from any sales and use 
        tax imposed by a local unit of government notwithstanding any 
        ordinance or charter provision.  This exemption applies 
        regardless of whether the materials, supplies, or equipment are 
        purchased by the city or by a construction manager or contractor.
           Sec. 15.  Minnesota Statutes 1996, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 75.  [CONSTRUCTION MATERIALS; RIVERCENTRE 
        ARENA.] Purchases of materials, supplies, or equipment used or 
        consumed in the construction, equipment, improvement, or 
        expansion of the RiverCentre arena complex in the city of St. 
        Paul are exempt from the tax imposed under this chapter and from 
        any sales and use tax imposed by a local unit of government 
        notwithstanding any ordinance or charter provision.  This 
        exemption applies regardless of whether the materials, supplies, 
        or equipment are purchased by the city or by a construction 
        manager or contractor. 
           Sec. 16.  Minnesota Statutes 1997 Supplement, section 
        297A.25, is amended by adding a subdivision to read: 
           Subd. 76.  [CONSTRUCTION MATERIALS FOR AN ENVIRONMENTAL 
        LEARNING CENTER.] Construction materials and supplies are exempt 
        from the tax imposed under this section, regardless of whether 
        purchased by the owner or a contractor, subcontractor, or 
        builder, if they are used or consumed in constructing or 
        improving the Long Lake Conservation Center pursuant to the 
        funding provided under Laws 1994, chapter 643, section 23, 
        subdivision 28, as amended by Laws 1995, First Special Session 
        chapter 2, article 1, section 48; and Laws 1996, chapter 463, 
        section 7, subdivision 26.  The tax shall be calculated and paid 
        as if the rate in section 297A.02, subdivision 1, was in effect 
        and a refund applied for in the manner prescribed in section 
        297A.15, subdivision 7. 
           Sec. 17.  Minnesota Statutes 1996, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 77.  [SOYBEAN OILSEED PROCESSING AND REFINING 
        FACILITY.] Purchases of construction materials and supplies are 
        exempt from the sales and use taxes imposed under this chapter, 
        regardless of whether purchased by the owner or a contractor, 
        subcontractor, or builder, if: 
           (1) the materials and supplies are used or consumed in 
        constructing a facility for soybean oilseed processing and 
        refining; 
           (2) the total capital investment made in the facility is at 
        least $60,000,000; and 
           (3) the facility is constructed by a Minnesota-based 
        cooperative, organized under chapter 308A. 
           Sec. 18.  Minnesota Statutes 1996, section 297A.25, is 
        amended by adding a subdivision to read: 
           Subd. 78.  [EARLE BROWN HERITAGE CENTER CONSTRUCTION 
        MATERIALS.] Purchases of materials and supplies used or consumed 
        in and equipment incorporated into the construction, 
        improvement, or expansion of the Earle Brown Heritage Center in 
        Brooklyn Center are exempt from the tax imposed under this 
        chapter, and from any sales and use tax imposed by a local unit 
        of government notwithstanding any ordinance or charter 
        provision.  This exemption applies regardless of whether the 
        materials, supplies, or equipment are purchased by the city or a 
        contractor, subcontractor, or builder. 
           Sec. 19.  Minnesota Statutes 1997 Supplement, section 
        297A.256, subdivision 1, is amended to read: 
           Subdivision 1.  [FUNDRAISING SALES BY NONPROFIT GROUPS.] 
        Notwithstanding the provisions of this chapter, the following 
        sales made by a "nonprofit organization" are exempt from the 
        sales and use tax. 
           (a)(1) All sales made by an organization for fundraising 
        purposes if that organization exists solely for the purpose of 
        providing educational or social activities for young people 
        primarily age 18 and under.  This exemption shall apply only if 
        the gross annual sales receipts of the organization from 
        fundraising do not exceed $10,000. 
           (2) A club, association, or other organization of 
        elementary or secondary school students organized for the 
        purpose of carrying on sports, educational, or other 
        extracurricular activities is a separate organization from the 
        school district or school for purposes of applying the $10,000 
        limit.  This paragraph does not apply if the sales are derived 
        from admission charges or from activities for which the money 
        must be deposited with the school district treasurer under 
        section 123.38, subdivision 2, or be recorded in the same manner 
        as other revenues or expenditures of the school district under 
        section 123.38, subdivision 2b. 
           (b) All sales made by an organization for fundraising 
        purposes if that organization is a senior citizen group or 
        association of groups that in general limits membership to 
        persons age 55 or older and is organized and operated 
        exclusively for pleasure, recreation and other nonprofit 
        purposes and no part of the net earnings inure to the benefit of 
        any private shareholders.  This exemption shall apply only if 
        the gross annual sales receipts of the organization from 
        fundraising do not exceed $10,000. 
           (c) The gross receipts from the sales of tangible personal 
        property at, admission charges for, and sales of food, meals, or 
        drinks at fundraising events sponsored by a nonprofit 
        organization when the entire proceeds, except for the necessary 
        expenses therewith, will be used solely and exclusively for 
        charitable, religious, or educational purposes.  This exemption 
        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.  For 
        purposes of this paragraph, a "nonprofit organization" means any 
        unit of government, corporation, society, association, 
        foundation, or institution organized and operated for 
        charitable, religious, educational, civic, fraternal, senior 
        citizens' or veterans' purposes, no part of the net earnings of 
        which inures to the benefit of a private individual. 
           If the profits are not used solely and exclusively for 
        charitable, religious, or educational purposes, the entire gross 
        receipts are subject to tax. 
           Each nonprofit organization shall keep a separate 
        accounting record, including receipts and disbursements from 
        each fundraising event.  All deductions from gross receipts must 
        be documented with receipts and other records.  If records are 
        not maintained as required, the entire gross receipts are 
        subject to tax. 
           The exemption provided by this paragraph 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. 
           The exemption for fundraising events under this paragraph 
        is limited to no more than 24 days a year.  Fundraising events 
        conducted on premises leased for more than four five days but 
        less than 30 days do not qualify for this exemption. 
           (d) The gross receipts from the sale or use of tickets or 
        admissions to a golf tournament held in Minnesota are exempt if 
        the beneficiary of the tournament's net proceeds qualifies as a 
        tax-exempt organization under section 501(c)(3) of the Internal 
        Revenue Code, as amended through December 31, 1994, including a 
        tournament conducted on premises leased or occupied for more 
        than four days. 
           Sec. 20.  Minnesota Statutes 1997 Supplement, section 
        297A.48, is amended by adding a subdivision to read: 
           Subd. 9a.  [LOCAL RESOLUTION BEFORE APPLICATION FOR 
        AUTHORITY.] Before the governing body of a political subdivision 
        requests legislative approval of a special law for a local sales 
        tax that is administered under this section, it shall adopt a 
        resolution indicating its approval of the tax.  The resolution 
        must include, at a minimum, information on the proposed tax 
        rate, how the revenues will be used, the total revenue that will 
        be raised before the tax expires, and the estimated length of 
        time that the tax will be in effect. 
           Sec. 21.  Minnesota Statutes 1997 Supplement, section 
        297B.03, is amended to read: 
           297B.03 [EXEMPTIONS.] 
           There is specifically exempted from the provisions of this 
        chapter and from computation of the amount of tax imposed by it 
        the following:  
           (1) Purchase or use, including use under a lease purchase 
        agreement or installment sales contract made pursuant to section 
        465.71, of any motor vehicle by the United States and its 
        agencies and instrumentalities and by any person described in 
        and subject to the conditions provided in section 297A.25, 
        subdivision 18.  
           (2) Purchase or use of any motor vehicle by any person who 
        was a resident of another state at the time of the purchase and 
        who subsequently becomes a resident of Minnesota, provided the 
        purchase occurred more than 60 days prior to the date such 
        person began residing in the state of Minnesota.  
           (3) Purchase or use of any motor vehicle by any person 
        making a valid election to be taxed under the provisions of 
        section 297A.211.  
           (4) Purchase or use of any motor vehicle previously 
        registered in the state of Minnesota when such transfer 
        constitutes a transfer within the meaning of section 351 or 721 
        of the Internal Revenue Code of 1986, as amended through 
        December 31, 1988.  
           (5) Purchase or use of any vehicle owned by a resident of 
        another state and leased to a Minnesota based private or for 
        hire carrier for regular use in the transportation of persons or 
        property in interstate commerce provided the vehicle is titled 
        in the state of the owner or secured party, and that state does 
        not impose a sales tax or sales tax on motor vehicles used in 
        interstate commerce.  
           (6) Purchase or use of a motor vehicle by a private 
        nonprofit or public educational institution for use as an 
        instructional aid in automotive training programs operated by 
        the institution.  "Automotive training programs" includes motor 
        vehicle body and mechanical repair courses but does not include 
        driver education programs.  
           (7) Purchase of a motor vehicle for use as an ambulance by 
        an ambulance service licensed under section 144E.10. 
           (8) Purchase of a motor vehicle by or for a public library, 
        as defined in section 134.001, subdivision 2, as a bookmobile or 
        library delivery vehicle. 
           (9) Purchase of a ready-mixed concrete truck. 
           (10) Purchase or use of a motor vehicle by a town for use 
        exclusively for road maintenance, including snowplows and dump 
        trucks, but not including automobiles, vans, or pickup trucks. 
           Sec. 22.  Minnesota Statutes 1997 Supplement, section 
        297G.01, is amended by adding a subdivision to read: 
           Subd. 3a.  [CIDER.] "Cider" means a product that contains 
        not less than one-half of one percent nor more than seven 
        percent alcohol by volume and is made from the alcoholic 
        fermentation of the juice of apples.  Cider includes, but is not 
        limited to, flavored, sparkling, and carbonated cider. 
           Sec. 23.  Minnesota Statutes 1997 Supplement, section 
        297G.03, subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 
        The following excise tax is imposed on all distilled spirits and 
        wine manufactured, imported, sold, or possessed in this state: 
                                        Standard             Metric
        (a) Distilled spirits,      $5.03 per gallon   $1.33 per liter
        liqueurs, cordials, 
        and specialties regardless 
        of alcohol content 
        (excluding ethyl alcohol) 
        (b) Wine containing         $ .30 per gallon   $ .08 per liter 
        14 percent or less
        alcohol by volume 
        (except cider as defined 
        in section 297G.01, 
        subdivision 3a) 
        (c) Wine containing         $ .95 per gallon   $ .25 per liter
        more than 14 percent 
        but not more than 21
        percent alcohol by volume 
        (d) Wine containing more    $1.82 per gallon   $ .48 per liter
        than 21 percent but not 
        more than 24 percent
        alcohol by volume 
        (e) Wine containing more    $3.52 per gallon   $ .93 per liter
        than 24 percent alcohol
        by volume
        (f) Natural and             $1.82 per gallon   $ .48 per liter
        artificial sparkling wines
        containing alcohol 
        (g) Cider as defined in     $ .15 per gallon   $ .04 per liter
        section 297G.01,
        subdivision 3a
           In computing the tax on a package of distilled spirits or 
        wine, a proportional tax at a like rate on all fractional parts 
        of a gallon or liter must be paid, except that the tax on a 
        fractional part of a gallon less than 1/16 of a gallon is the 
        same as for 1/16 of a gallon. 
           Sec. 24.  Minnesota Statutes 1996, section 475.58, 
        subdivision 3, is amended to read: 
           Subd. 3.  [YOUTH ICE FACILITIES.] (a) A municipality may, 
        without regard to the election requirement under subdivision 1 
        or under any other provision of law or a home rule charter, 
        issue and sell obligations to finance acquisition, improvement, 
        or construction of an indoor ice arena intended to be used 
        predominantly for youth athletic activities if all the following 
        conditions are met: 
           (1) the obligations are secured by a pledge of revenues 
        from the facility; 
           (2) the facility and its financing are approved by 
        resolutions of at least two of the following governing bodies of 
        (i) the city in which the facility is located, (ii) the school 
        district in which the facility is located, or (iii) the county 
        in which the facility is located; 
           (3) the governing body of the municipality finds, based on 
        analysis provided by a professional experienced in finance, that 
        the facility's revenues and other available money will be 
        sufficient to pay the obligations, without reliance on a 
        property tax levy or the municipality's general purpose state 
        aid; and 
           (4) no petition for an election has been timely filed under 
        paragraph (b). 
           (b) At least 30 days before issuing obligations under this 
        subdivision, the municipality must hold a public hearing on the 
        issue.  The municipality must publish or provide notice of the 
        hearing in the same manner provided for its regular meetings.  
        The obligations are not exempt from the election requirement 
        under this subdivision, if: 
           (1) registered voters equal to ten percent of the votes 
        cast in the last general election in the municipality sign a 
        petition requesting a vote on the issue; and 
           (2) the petition is filed with the municipality within 20 
        days after the public hearing. 
           (c) This subdivision expires December 31, 1997 1998. 
           Sec. 25.  Laws 1980, chapter 511, section 1, subdivision 2, 
        as amended by Laws 1991, chapter 291, article 8, section 22, is 
        amended to read:  
           Subd. 2.  Notwithstanding Minnesota Statutes, Section 
        477A.01, Subdivision 18 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 one-half percent on sales transactions which are 
        described in Minnesota Statutes, Section 297A.01, Subdivision 3, 
        Clause (c).  When the city council determines that the taxes 
        imposed under this subdivision and under section 26 at a rate of 
        one-half of one percent have produced revenue sufficient to pay 
        the debt service on bonds in a principal amount of $8,000,000 
        since the imposition of the taxes at the rate of one and 
        one-half percent, the rate of the tax under this subdivision is 
        reduced to one percent.  The imposition of this tax shall not be 
        subject to voter referendum under either state law or city 
        charter provisions. 
           Sec. 26.  Laws 1980, chapter 511, section 2, is amended to 
        read: 
           Sec. 2.  [CITY OF DULUTH; TAX ON RECEIPTS BY HOTELS AND 
        MOTELS.] 
           Notwithstanding Minnesota Statutes, Section 477A.01, 
        Subdivision 18 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 and one-half 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.  When the city council determines that the taxes imposed 
        under this section and section 25 at a rate of one-half of one 
        percent have produced revenue sufficient to pay the debt service 
        on bonds in a principal amount of $8,000,000 since the 
        imposition of the taxes at the rate of one and one-half percent, 
        the rate of the tax under this section is reduced to one 
        percent.  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. 
           Sec. 27.  Laws 1980, chapter 511, section 3, is amended to 
        read: 
           Sec. 3.  [ALLOCATION OF REVENUES.] 
           Revenues received from the taxes authorized by section 1, 
        subdivision 2, and section 2 shall be used to pay for activities 
        conducted by the city or by other organizations which promote 
        tourism in the city of Duluth, including capital improvements of 
        tourism facilities, and to subsidize the Duluth Arena-Auditorium 
        and the Spirit Mountain recreation authority.  Distribution of 
        the revenues derived from these taxes shall be approved by the 
        Duluth city council at least once annually, may include pledging 
        such revenues to pay principal of and interest on city of Duluth 
        bonds issued to finance such tourism facilities, and shall be 
        made in accordance with the policy set forth in this section. 
           Sec. 28.  Laws 1991, chapter 291, article 8, section 27, 
        subdivision 3, is amended to read: 
           Subd. 3.  [USE OF REVENUES.] 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 operating 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. 
           Sec. 29.  Laws 1992, chapter 511, article 8, section 33, 
        subdivision 5, is amended to read: 
           Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed 
        pursuant to subdivisions 1 and 2 shall terminate at the later of 
        (1) December 31, 1998, or (2) on the first day of the second 
        month next succeeding a determination by the city council that 
        sufficient funds have been received from the taxes to finance 
        capital and administrative costs of $28,760,000 for improvements 
        for fire station, city hall, and public library facilities and 
        to prepay or retire at maturity the principal, interest, and 
        premium due on any bonds issued for the improvements.  Any funds 
        remaining after completion of the improvements and retirement or 
        redemption of the bonds may be placed in the general fund of the 
        city. 
           Sec. 30.  Laws 1993, chapter 375, article 9, section 46, 
        subdivision 2, is amended to read: 
           Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
        authorized by subdivision 1 may only be used by the city to pay 
        the cost of collecting the tax, and to pay for the following 
        projects or to secure or pay any principal, premium, or interest 
        on bonds issued in accordance with subdivision 3 for the 
        following projects.  
           (a) To pay all or a portion of the capital expenses of 
        construction, equipment and acquisition costs for the expansion 
        and remodeling of the St. Paul Civic Center complex, including 
        the demolition of the existing arena and the construction and 
        equipping of a new arena. 
           (b) The remainder of the funds must be spent for capital 
        projects to further residential, cultural, commercial, and 
        economic development in both downtown St. Paul and St. Paul 
        neighborhoods.  The amount apportioned under this paragraph 
        shall be no less than 60 percent of the revenues derived from 
        the tax each year, except to the extent that a portion of that 
        amount is required to pay debt service on (1) bonds issued for 
        the purposes of paragraph (a) prior to March 1, 1998; or (2) 
        bonds issued for the purposes of paragraph (a) after March 1, 
        1998, but only if the city council determines that 40 percent of 
        the revenues derived from the tax together with other revenues 
        pledged to the payment of the bonds, including the proceeds of 
        definitive bonds, is expected to exceed the annual debt service 
        on the bonds. 
           (c) If in any year more than 40 percent of the revenue 
        derived from the tax authorized by subdivision 1 is used to pay 
        debt service on the bonds issued for the purposes of paragraph 
        (a) and to fund a reserve for the bonds, the amount of the debt 
        service payment that exceeds 40 percent of the revenue must be 
        determined for that year.  In any year when 40 percent of the 
        revenue produced by the sales tax exceeds the amount required to 
        pay debt service on the bonds and to fund a reserve for the 
        bonds under paragraph (a), the amount of the excess must be made 
        available for capital projects to further residential, cultural, 
        commercial, and economic development in the neighborhoods and 
        downtown until the cumulative amounts determined for all years 
        under the preceding sentence have been made available under this 
        sentence.  The amount made available as reimbursement in the 
        preceding sentence is not included in the 60 percent determined 
        under paragraph (b). 
           (d) By January 15 of each odd-numbered year, the mayor and 
        the city council must report to the legislature on the use of 
        sales tax revenues during the preceding two-year period. 
           Sec. 31.  Laws 1993, chapter 375, article 9, section 46, 
        subdivision 3, is amended to read: 
           Subd. 3.  [BONDS.] The city may issue general obligation 
        bonds of the city or special revenue bonds to finance all or a 
        portion of the cost for projects authorized in subdivision 2, 
        paragraph (a).  The debt represented by the bonds shall not be 
        included in computing any debt limitations applicable to the 
        city.  The bonds may be paid from or secured by any funds 
        available to the city, including the tax authorized under 
        subdivision 1, any revenues derived from the project, tax 
        increments from the tax increment district that includes the 
        project, and revenue from any lodging tax imposed under Laws 
        1982, chapter 523, article 25, section 1.  The bonds may be 
        issued in one or more series and sold without election on the 
        question of issuance of the bonds or a property tax to pay 
        them.  Except as otherwise provided in this section, the bonds 
        must be issued, sold, and secured in the manner provided in 
        Minnesota Statutes, chapter 475.  The aggregate principal amount 
        of bonds issued under this subdivision may not exceed $65 
        million, provided that the city may issue additional bonds under 
        this subdivision as long as the total principal amount of the 
        additional bonds together with the outstanding principal amount 
        of the bonds previously issued under this subdivision does not 
        exceed $130 million.  The bonds authorized by this subdivision 
        shall not be included in local general obligation debt as 
        defined in Laws 1971, chapter 773, as amended, including Laws 
        1992, chapter 511, and shall not affect the amount of capital 
        improvement bonds authorized to be issued by the city of St. 
        Paul.  
           Sec. 32.  Laws 1993, chapter 375, article 9, section 46, 
        subdivision 5, is amended to read: 
           Subd. 5.  [EXPIRATION OF TAXING AUTHORITY.] The authority 
        granted by subdivision 1 to the city to impose a sales tax shall 
        expire when the principal and interest on any bonds or other 
        obligations issued to finance projects authorized in subdivision 
        2, paragraph (a) have been paid on December 31, 2030, or at an 
        earlier time as the city shall, by ordinance, determine.  Any 
        funds remaining after completion of projects approved under 
        subdivision 2, paragraph (a) and retirement or redemption of any 
        bonds or other obligations may be placed in the general fund of 
        the city. 
           Sec. 33.  Laws 1995, chapter 264, article 2, section 44, as 
        amended by Laws 1996, chapter 471, article 2, section 27, is 
        amended to read: 
           Sec. 44.  [EFFECTIVE DATE.] 
           Section 1 is effective the day following final enactment. 
           Sections 3 and 4 are effective June 1, 1995.  Section 4 is 
        repealed June 1, 2000. 
           Sections 5 to 21 and 43, paragraph (a), are effective July 
        1, 1995. 
           Sections 23, 28, 33, 40, 42, and the part of section 22 
        amending language in paragraph (i), clause (vii), are effective 
        the day following final enactment. 
           Sections 24 and 34 are effective for sales made after 
        December 31, 1996. 
           Section 25 is effective beginning with leases or rentals 
        made after June 30, 1995. 
           Section 26 is effective retroactively for sales after May 
        31, 1992. 
           Section 27 is effective for sales made after June 30, 1995. 
           Section 29 and the part of section 22 striking the language 
        after paragraph (h) are effective for sales after June 30, 1995. 
           Section 32 is effective for sales made after June 30, 1995, 
        and before July 1, 1998 1999. 
           Sections 35 and 36 are effective for sales or transfers 
        made after June 30, 1995. 
           Section 38 is effective the day after the governing body of 
        the city of Winona complies with Minnesota Statutes, section 
        645.021, subdivision 3. 
           Section 39 is effective upon compliance by the Minneapolis 
        city council with Minnesota Statutes, section 645.021, 
        subdivision 3. 
           Section 43, paragraph (b), is effective for sales of 900 
        information services made after June 30, 1995. 
           Sec. 34.  Laws 1997, chapter 231, article 7, section 47, is 
        amended to read: 
           Sec. 47.  [EFFECTIVE DATES.] 
           Section 1 is effective for refund claims filed after June 
        30, 1997. 
           Sections 2, 6, 7, 9, 13, 15, 16, 17, 18, 20, 21, 25, 31, 
        and 32 are effective for purchases, sales, storage, use, or 
        consumption occurring after June 30, 1997. 
           Section 3 is effective on July 1, 1997, or upon adoption of 
        the corresponding rules, whichever occurs earlier. 
           Section 4, paragraph (i), clause (iv), is effective for 
        purchases and sales occurring after September 30, 1987; the 
        remainder of section 4 is effective for purchases and sales 
        occurring after June 30, 1997. 
           Section 5, paragraph (h), is effective for purchases and 
        sales occurring after June 30, 1997, and paragraph (i) is 
        effective for purchases and sales occurring after December 31, 
        1992. 
           Sections 8 and 46 are effective July 1, 1998. 
           Sections 10 and 22 are effective for purchases, sales, 
        storage, use, or consumption occurring after August 31, 1996. 
           Sections 11, 12, 33, 34, and 35 are effective July 1, 1997. 
           Sections 14 and 19 are effective for purchases and sales 
        after June 30, 1999. 
           Section 20 is effective for sales and purchases occurring 
        after December 31, 1995. 
           Section 23 is effective January 1, 1997. 
           Section 24 is effective for purchases, sales, storage, use, 
        or consumption occurring after April 30, 1997. 
           Sections 26 and 45 are effective for purchases, sales, 
        storage, use, or consumption occurring after July 31, 1997, and 
        before August 1, 2003. 
           Section 27 is effective for purchases, sales, storage, use, 
        or consumption occurring after May 31, 1997. 
           Section 28 is effective for sales made after December 31, 
        1989, and before January 1, 1997.  The provisions of Minnesota 
        Statutes, section 289A.50, apply to refunds claimed under 
        section 28.  Refunds claimed under section 28 must be filed by 
        the later of December 31, 1997, or the time limit under 
        Minnesota Statutes, section 289A.40, subdivision 1. 
           Section 29 is effective for sales or first use after May 
        31, 1997, and before June 1, 1998. 
           Sections 30, 42, and 43 are effective the day following 
        final enactment. 
           Sections 36 to 39 are effective the day after compliance by 
        the governing body of Cook county with Minnesota Statutes, 
        section 645.021, subdivision 3. 
           Sec. 35.  [TRANSFER OF TRAVEL TRAILERS EXEMPTED.] 
           Notwithstanding the provisions of Minnesota Statutes, 
        chapter 297B, any transfer of title of a travel trailer from the 
        Federal Emergency Management Agency to the state of Minnesota 
        and any subsequent transfer of title of the trailer to a 
        political subdivision of the state shall be exempt from the tax 
        imposed under Minnesota Statutes, chapter 297B. 
           Sec. 36.  [CITY OF ST. PAUL; USE OF SALES TAX REVENUES.] 
           The revenue derived from the sales tax imposed by the city 
        of St. Paul under Laws 1993, chapter 375, article 9, section 46, 
        as amended by Laws 1997, chapter 231, article 7, section 40, 
        that is distributed to the city's cultural STAR program must be 
        awarded through a grant or loan review process as provided in 
        this section.  Eighty percent of the revenue must be annually 
        awarded to nonprofit arts organizations, libraries, and museums 
        that are located in the designated cultural district of downtown 
        St. Paul, and the remaining 20 percent may be awarded to 
        businesses in the cultural district for projects which enhance 
        visitor enjoyment of the district, or to nonprofit arts 
        organizations, libraries, and museums located in St. Paul but 
        outside of the cultural district.  Grants or loans may be used 
        for capital improvements.  The restrictions in this section 
        apply to all STAR cultural funds expended for projects approved 
        after June 30, 1998. 
           Sec. 37.  [ST. PAUL NEIGHBORHOOD INVESTMENT SALES TAX 
        EXPENDITURES; CITIZEN REVIEW PROCESS.] 
           Subdivision 1.  [REQUIREMENT.] Expenditures of revenues 
        from the sales tax imposed by the city of St. Paul that are 
        dedicated to neighborhood investments may be made only after 
        review of the proposals for expenditures by the citizen review 
        panel described in this section.  The panel must evaluate the 
        proposals and provide a report to the city council that makes 
        recommendations regarding the proposed expenditures in rank 
        order. 
           Subd. 2.  [APPOINTMENT OF MEMBERS.] The citizen review 
        panel must consist of 17 members, each of whom represents one of 
        the district councils.  The mayor must appoint the members, and 
        the appointments are subject to confirmation by a majority vote 
        of the city council.  Members serve for a term of four years.  
        Elected officials and employees of the city are ineligible to 
        serve as members of the panel. 
           Sec. 38.  [CITY OF BEMIDJI.] 
           Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
        Notwithstanding Minnesota Statutes, section 477A.016, or any 
        other provision of law, ordinance, or city charter, if approved 
        by the city voters at a general election held within one year of 
        the date of final enactment of this act, the city of Bemidji may 
        impose by ordinance a sales and use tax of up to one-half of one 
        percent for the purposes specified in subdivision 3.  The 
        provisions of Minnesota Statutes, section 297A.48, govern the 
        imposition, administration, collection, and enforcement of the 
        tax authorized under this subdivision. 
           Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other provision of 
        law, ordinance, or city charter, if a sales and use tax is 
        imposed under subdivision 1, the city of Bemidji may impose by 
        ordinance, for the purpose specified in subdivision 3, an excise 
        tax of up to $20 per motor vehicle, as defined by ordinance, 
        purchased or acquired from any person engaged within the city in 
        the business of selling motor vehicles at retail. 
           Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
        authorized by subdivisions 1 and 2 must be used by the city to 
        pay the cost of collecting the taxes and to pay all or part of 
        the capital and administrative cost of acquiring and 
        constructing facilities as part of a regional convention center 
        in Bemidji.  Authorized expenses include, but are not limited 
        to, acquiring property and paying construction expenses related 
        to the development of a convention center which is an arena for 
        sporting events, concerts, trade shows, conventions, meeting 
        rooms, and other compatible uses including, but not limited to, 
        parking, lighting, and landscaping. 
           Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
        under Minnesota Statutes, chapter 475, to finance the capital 
        expenditure and improvement projects.  An election to approve 
        the bonds under Minnesota Statutes, section 475.58, may be held 
        in combination with the election to authorize imposition of the 
        tax under subdivision 1.  Whether to permit imposition of the 
        tax and issuance of bonds may be posed to the voters as a single 
        question.  The question must state that the sales tax revenues 
        are pledged to pay the bonds, but that the bonds are general 
        obligations and will be guaranteed by the city's property taxes. 
           (b) The issuance of bonds under this subdivision is not 
        subject to Minnesota Statutes, section 275.60. 
           (c) The bonds are not included in computing any debt 
        limitation applicable to the city, and the levy of taxes under 
        Minnesota Statutes, section 475.61, to pay principal of and 
        interest on the bonds is not subject to any levy limitation. 
        The aggregate principal amount of bonds, plus the aggregate of 
        the taxes used directly to pay eligible capital expenditures and 
        improvements, may not exceed $25,000,000, plus an amount equal 
        to the costs related to issuance of the bonds. 
           (d) The taxes may be pledged to and used for the payment of 
        the bonds and any bonds issued to refund them only if the bonds 
        and any refunding bonds are general obligations of the city. 
           Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
        subdivisions 1 and 2 expire when the city council determines 
        that sufficient funds have been received from taxes to finance 
        the capital and administrative costs for acquisition and 
        construction of a convention center and related facilities to 
        repay or retire at maturity the principal, interest, and premium 
        due on any bonds issued for the project under subdivision 4.  
        Any funds remaining after completion of the project and 
        retirement or redemption of the bonds may be placed in 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. 
           Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
        day after compliance by the governing body of the city of 
        Bemidji with Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 39.  [CITY OF DETROIT LAKES.] 
           Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
        Notwithstanding Minnesota Statutes, section 477A.016, or any 
        other contrary provision of law, ordinance, or city charter, if 
        approved by the city voters at a general election held within 
        one year of the date of final enactment of this act, the city of 
        Detroit Lakes may, by ordinance, impose an additional sales and 
        use tax of up to one-half of one percent for the purposes 
        specified in subdivision 3.  The provisions of Minnesota 
        Statutes, section 297A.48, govern the imposition, 
        administration, collection, and enforcement of the tax 
        authorized under this subdivision. 
           Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other contrary 
        provision of law, ordinance, or city charter, the city of 
        Detroit Lakes may impose, by ordinance, for the purposes 
        specified in subdivision 3, an excise tax of up to $20 per motor 
        vehicle, as defined by ordinance, purchased or acquired from any 
        person engaged within the city in the business of selling motor 
        vehicles at retail. 
           Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
        authorized by subdivisions 1 and 2 must be used by the city to 
        pay the costs of collecting the taxes and to pay all or part of 
        the capital and administrative costs, up to $6,000,000, for 
        constructing a community center.  Authorized expenses include, 
        but are not limited to, acquiring property and paying 
        construction and operating expenses related to the development 
        of the community center and paying debt service on bonds or 
        other obligations issued to finance the construction of the 
        community center. 
           Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
        under Minnesota Statutes, chapter 475, to finance the capital 
        expenditure and improvement projects.  An election to approve 
        the bonds under Minnesota Statutes, section 475.58, may be held 
        in combination with the election to authorize imposition of the 
        tax under subdivision 1.  Whether to permit imposition of the 
        tax and issuance of bonds may be posed to the voters as a single 
        question.  The question must state that the sales tax revenues 
        are pledged to pay the bonds, but that the bonds are general 
        obligations and will be guaranteed by the city's property taxes. 
           (b) The issuance of bonds under this subdivision is not 
        subject to Minnesota Statutes, section 275.60. 
           (c) The bonds are not included in computing any debt 
        limitation applicable to the city, and the levy of taxes under 
        Minnesota Statutes, section 475.61, to pay principal of and 
        interest on the bonds is not subject to any levy limitation. 
        The aggregate principal amount of bonds, plus the aggregate of 
        the taxes used directly to pay eligible capital expenditures and 
        improvements may not exceed $6,000,000, plus an amount equal to 
        the costs related to issuance of the bonds. 
           (d) The taxes may be pledged to and used for the payment of 
        the bonds and any bonds issued to refund them, only if the bonds 
        and any refunding bonds are general obligations of the city. 
           Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
        subdivisions 1 and 2 expire when the city council determines 
        that sufficient funds have been received from the taxes to 
        finance the capital and administrative costs for constructing 
        the community center and to prepay or retire at maturity the 
        principal, interest, and premium due on any bonds issued for the 
        construction.  Any funds remaining after completion of the 
        project or retirement or redemption of the bonds may be placed 
        in the general fund of the city.  
           Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
        day after compliance by the governing body of the city of 
        Detroit Lakes with Minnesota Statutes, section 645.021, 
        subdivision 3. 
           Sec. 40.  [CITY OF FERGUS FALLS.] 
           Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
        Notwithstanding Minnesota Statutes, section 477A.016, or any 
        other provision of law, ordinance, or city charter, if approved 
        by the city voters at a general election held within one year of 
        the date of final enactment of this act, the city of Fergus 
        Falls may impose by ordinance a sales and use tax of up to 
        one-half of one percent for the purposes specified in 
        subdivision 3.  The provisions of Minnesota Statutes, section 
        297A.48, govern the imposition, administration, collection, and 
        enforcement of the tax authorized under this subdivision, except 
        that the sales and use taxes shall not apply to farm machinery. 
           Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other provision of 
        law, ordinance, or city charter, if a sales and use tax is 
        imposed under subdivision 1, the city of Fergus Falls may impose 
        by ordinance, for the purposes specified in subdivision 3, an 
        excise tax of up to $20 per motor vehicle, as defined by 
        ordinance, purchased or acquired from any person engaged within 
        the city in the business of selling motor vehicles at retail. 
           Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
        authorized by subdivisions 1 and 2 must be used by the city to 
        pay the costs of collecting the taxes and to pay all or part of 
        the capital and administrative costs of constructing facilities 
        as part of a regional conference center, community center, 
        recreational and tourism project in Fergus Falls known as 
        Project Reach Out.  Authorized expenses include, but are not 
        limited to, acquiring property and paying construction and 
        operating expenses related to the development of Project Reach 
        Out and related facilities, and paying debt service on bonds or 
        other obligations issued to finance the construction of Project 
        Reach Out and related facilities. 
           For purposes of this section, "Project Reach Out and 
        related facilities" means a regional conference center, 
        community center, regional park and recreational facilities, and 
        all publicly owned real or personal property that the governing 
        body of the city determines are necessary to facilitate the use 
        of these facilities, including but not limited to, parking, 
        pedestrian bridges, lighting, and landscaping. 
           Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
        under Minnesota Statutes, chapter 475, to finance the capital 
        expenditure and improvement projects.  An election to approve 
        the bonds under Minnesota Statutes, section 475.58, may be held 
        in combination with the election to authorize imposition of the 
        tax under subdivision 1.  Whether to permit imposition of the 
        tax and issuance of bonds may be posed to the voters as a single 
        question.  The question must state that the sales tax revenues 
        are pledged to pay the bonds, but that the bonds are general 
        obligations and will be guaranteed by the city's property taxes. 
           (b) The issuance of bonds under this subdivision is not 
        subject to Minnesota Statutes, section 275.60. 
           (c) The bonds are not included in computing any debt 
        limitation applicable to the city, and the levy of taxes under 
        Minnesota Statutes, section 475.61, to pay principal of and 
        interest on the bonds is not subject to any levy limitation. 
        The aggregate principal amount of bonds, plus the aggregate of 
        the taxes used directly to pay eligible capital expenditures and 
        improvements may not exceed $9,000,000, plus an amount equal to 
        the costs related to issuance of the bonds. 
           (d) The taxes may be pledged to and used for the payment of 
        the bonds and any bonds issued to refund them, only if the bonds 
        and any refunding bonds are general obligations of the city. 
           Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
        subdivisions 1 and 2 expire when the city determines that 
        sufficient funds have been received from the taxes to finance 
        the capital and administrative costs for acquisition, 
        construction, improvement, and operation of Project Reach Out 
        and related facilities and to prepay or retire at maturity the 
        principal, interest, and premium due on any bonds issued for the 
        project under subdivision 4.  Any funds remaining after 
        completion of the project and retirement or redemption of the 
        bonds may be placed in 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. 
           Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
        day after compliance by the governing body of the city of Fergus 
        Falls with Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 41.  [CITY OF HUTCHINSON; TAXES AUTHORIZED.] 
           Subdivision 1.  [SALES AND USE TAX.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other provision of 
        law, ordinance, or city charter, if approved by the city voters 
        at a general election or special election held within one year 
        of final enactment of this act, the city of Hutchinson may 
        impose by ordinance a sales and use tax of up to one-half of one 
        percent for the purposes specified in subdivision 3.  The 
        provisions of Minnesota Statutes, section 297A.48, govern the 
        imposition, administration, collection, and enforcement of the 
        tax authorized under this subdivision. 
           Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other provision of 
        law, ordinance, or city charter, the city of Hutchinson may 
        impose by ordinance, for the purposes specified in subdivision 
        3, an excise tax of up to $20 per motor vehicle, as defined by 
        ordinance, purchased or acquired from any person engaged within 
        the city in the business of selling motor vehicles at retail. 
           Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
        authorized by subdivisions 1 and 2 must be used by the city to 
        pay the cost of collecting the taxes and to pay for construction 
        and improvement of a civic and community center and recreational 
        facilities to serve seniors and youth.  Authorized expenses 
        include, but are not limited to, acquiring property, paying 
        construction and operating expenses related to the development 
        of an authorized facility, and paying debt service on bonds or 
        other obligations issued to finance the construction or 
        expansion of an authorized facility.  The capital expenses for 
        all projects authorized under this paragraph that may be paid 
        with these taxes is limited to $5,000,000, plus an amount equal 
        to the costs related to issuance of the bonds. 
           Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
        under Minnesota Statutes, chapter 475, to finance the capital 
        expenditure and improvement projects.  An election to approve 
        the bonds under Minnesota Statutes, section 475.58, may be held 
        in combination with the election to authorize imposition of the 
        tax under subdivision 1.  Whether to permit imposition of the 
        tax and issuance of bonds may be posed to the voters as a single 
        question.  The question must state that the sales tax revenues 
        are pledged to pay the bonds, but that the bonds are general 
        obligations and will be guaranteed by the city's property taxes. 
           (b) The issuance of bonds under this subdivision is not 
        subject to Minnesota Statutes, section 275.60. 
           (c) The bonds are not included in computing any debt 
        limitation applicable to the city, and the levy of taxes under 
        Minnesota Statutes, section 475.61, to pay principal of and 
        interest on the bonds is not subject to any levy limitation. 
        The aggregate principal amount of bonds, plus the aggregate of 
        the taxes used directly to pay eligible capital expenditures and 
        improvements may not exceed $5,000,000, plus an amount equal to 
        the costs related to issuance of the bonds. 
           (d) The taxes may be pledged to and used for the payment of 
        the bonds and any bonds issued to refund them, only if the bonds 
        and any refunding bonds are general obligations of the city. 
           Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
        subdivisions 1 and 2 expire when the city council determines 
        that sufficient funds have been received from the taxes to 
        finance the capital and administrative costs for the 
        acquisition, construction, and improvement of facilities 
        described in subdivision 3, and to prepay or retire at maturity 
        the principal, interest, and premium due on any bonds issued for 
        the facilities under subdivision 5.  Any funds remaining after 
        completion of the project and retirement or redemption of the 
        bonds may be placed in 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. 
           Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
        day after compliance by the governing body of the city of 
        Hutchinson with Minnesota Statutes, section 645.021, subdivision 
        3. 
           Sec. 42.  [CITY OF OWATONNA; SALES AND USE TAX.] 
           Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
        Notwithstanding Minnesota Statutes, section 477A.016, or any 
        other provision of law, ordinance, or city charter, if approved 
        by the city voters at a general election held within one year of 
        the date of final enactment of this act, the city of Owatonna 
        may impose by ordinance a sales and use tax of up to one-half of 
        one percent for the purposes specified in subdivision 3.  The 
        provisions of Minnesota Statutes, section 297A.48, govern the 
        imposition, administration, collection, and enforcement of the 
        tax authorized under this subdivision. 
           Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other provision of 
        law, ordinance, or city charter, if a sales and use tax is 
        imposed under subdivision 1, the city of Owatonna may impose by 
        ordinance, for the purposes specified in subdivision 3, an 
        excise tax of up to $20 per motor vehicle, as defined by 
        ordinance, purchased or acquired from any person engaged within 
        the city in the business of selling motor vehicles at retail. 
           Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
        authorized by subdivisions 1 and 2 must be used by the city to 
        pay the costs of collecting the taxes and to pay all or part of 
        the capital and administrative costs of constructing and 
        improving infrastructure and facilities as part of Owatonna 
        Economic Development 2000 and related facilities.  Authorized 
        expenses include, but are not limited to, acquiring property and 
        paying construction and operating expenses related to the 
        development of Owatonna Economic Development 2000 and related 
        facilities, and paying debt service on bonds or other 
        obligations issued to finance the construction of Owatonna 
        Economic Development 2000 and related facilities. 
           For purposes of this section, "Owatonna Economic 
        Development 2000 and related facilities" means the improvement 
        of the Owatonna regional airport and infrastructure 
        improvements, including roads and the extension of water and 
        sewer services, for an economic and tourism project. 
           Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
        under Minnesota Statutes, chapter 475, to finance the capital 
        expenditure and improvement projects.  An election to approve 
        the bonds under Minnesota Statutes, section 475.58, may be held 
        in combination with the election to authorize imposition of the 
        tax under subdivision 1.  Whether to permit imposition of the 
        tax and issuance of bonds may be posed to the voters as a single 
        question.  The question must state that the sales tax revenues 
        are pledged to pay the bonds, but that the bonds are general 
        obligations and will be guaranteed by the city's property taxes. 
           (b) The issuance of bonds under this subdivision is not 
        subject to Minnesota Statutes, section 275.60. 
           (c) The bonds are not included in computing any debt 
        limitation applicable to the city, and the levy of taxes under 
        Minnesota Statutes, section 475.61, to pay principal of and 
        interest on the bonds is not subject to any levy limitation. 
        The aggregate principal amount of bonds, plus the aggregate of 
        the taxes used directly to pay eligible capital expenditures and 
        improvements may not exceed $5,000,000, plus an amount equal to 
        the costs related to issuance of the bonds. 
           (d) The taxes may be pledged to and used for the payment of 
        the bonds and any bonds issued to refund them, only if the bonds 
        and any refunding bonds are general obligations of the city. 
           Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
        subdivisions 1 and 2 expire when the city council determines 
        that sufficient funds have been received from the taxes to 
        finance the capital and administrative costs for acquisition, 
        construction, and improvement of Owatonna Economic Development 
        2000 and related facilities and to prepay or retire at maturity 
        the principal, interest, and premium due on any bonds issued for 
        the project under subdivision 4.  Any funds remaining after 
        completion of the project and retirement or redemption of the 
        bonds may be placed in 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. 
           Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
        day after compliance by the governing body of the city of 
        Owatonna with Minnesota Statutes, section 645.021, subdivision 3.
           Sec. 43.  [CITY OF ROCHESTER; TAXES.] 
           Subdivision 1.  [SALES AND USE TAXES AUTHORIZED.] 
        Notwithstanding Minnesota Statutes, section 477A.016, or any 
        other contrary provision of law, ordinance, or city charter, 
        upon termination of the taxes authorized under Laws 1992, 
        chapter 511, article 8, section 33, subdivision 1, and if 
        approved by the voters of the city at a general or special 
        election held within one year of the date of final enactment of 
        this act, the city of Rochester may, by ordinance, impose an 
        additional sales and use tax of up to one-half of one percent.  
        The provisions of Minnesota Statutes, section 297A.48, govern 
        the imposition, administration, collection, and enforcement of 
        the tax authorized under this subdivision. 
           Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other contrary 
        provision of law, ordinance, or city charter, upon termination 
        of the tax authorized under Laws 1992, chapter 511, article 8, 
        section 33, subdivision 2, the city of Rochester may, by 
        ordinance, impose an excise tax of up to $20 per motor vehicle, 
        as defined by ordinance, purchased or acquired from any person 
        engaged within the city in the business of selling motor 
        vehicles at retail. 
           Subd. 3.  [USE OF REVENUES.] Revenues received from the 
        taxes authorized by subdivisions 1 and 2 must be used by the 
        city to pay for the cost of collecting and administering the 
        taxes and to pay for the following projects: 
           (1) transportation infrastructure improvements including 
        both highway and airport improvements; 
           (2) improvements to the civic center complex; 
           (3) a municipal water, sewer, and storm sewer project 
        necessary to improve regional ground water quality; and 
           (4) construction of a regional recreation and sports center 
        and associated facilities available for both community and 
        student use, located at or adjacent to the Rochester center. 
        The total amount of capital expenditures or bonds for these 
        projects that may be paid from the revenues raised from the 
        taxes authorized in this section may not exceed $71,500,000.  
        The total amount of capital expenditures or bonds for the 
        project in clause (4) that may be paid from the revenues raised 
        from the taxes authorized in this section may not exceed 
        $20,000,000. 
           Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
        under Minnesota Statutes, chapter 475, to finance the capital 
        expenditure and improvement projects.  An election to approve 
        the bonds under Minnesota Statutes, section 475.58, may be held 
        in combination with the election to authorize imposition of the 
        tax under subdivision 1.  Whether to permit imposition of the 
        tax and issuance of bonds may be posed to the voters as a single 
        question.  The question must state that the sales tax revenues 
        are pledged to pay the bonds, but that the bonds are general 
        obligations and will be guaranteed by the city's property taxes. 
           (b) The issuance of bonds under this subdivision is not 
        subject to Minnesota Statutes, section 275.60. 
           (c) The bonds are not included in computing any debt 
        limitation applicable to the city, and the levy of taxes under 
        Minnesota Statutes, section 475.61, to pay principal of and 
        interest on the bonds is not subject to any levy limitation. 
        The aggregate principal amount of bonds, plus the aggregate of 
        the taxes used directly to pay eligible capital expenditures and 
        improvements may not exceed $71,500,000, plus an amount equal to 
        the costs related to issuance of the bonds. 
           (d) The taxes may be pledged to and used for the payment of 
        the bonds and any bonds issued to refund them, only if the bonds 
        and any refunding bonds are general obligations of the city. 
           Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
        subdivisions 1 and 2 expire when the city council determines 
        that sufficient funds have been received from the taxes to 
        finance the projects and to prepay or retire at maturity the 
        principal, interest, and premium due on any bonds issued for the 
        projects under subdivision 4.  Any funds remaining after 
        completion of the project and retirement or redemption of the 
        bonds may be placed in 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. 
           Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
        day after compliance by the governing body of the city of 
        Rochester with Minnesota Statutes, section 645.021, subdivision 
        3. 
           Sec. 44.  [CENTRAL MINNESOTA EVENTS CENTER; LOCAL OPTION 
        TAXES.] 
           Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
        Notwithstanding Minnesota Statutes, section 477A.016, or any 
        other provision of law, ordinance, or city charter, the cities 
        of St. Cloud, Sauk Rapids, Sartell, Waite Park, and St. Joseph 
        may impose by ordinance a sales and use tax of up to one-half of 
        one percent for the purposes specified in subdivision 3.  This 
        tax, and the taxes described in subdivisions 2 to 4, may be 
        imposed in any of these cities only if approved by the voters of 
        the city at a general election held within one year of the date 
        of final enactment of this act, or at an election held on the 
        first Tuesday in November of 1999.  The provisions of Minnesota 
        Statutes, section 297A.48, govern the imposition, 
        administration, collection, and enforcement of the taxes 
        authorized under this subdivision. 
           Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other provision of 
        law, ordinance, or city charter, the cities identified in 
        subdivision 1 may impose by ordinance, for the purposes 
        specified in subdivision 3, an excise tax of up to $20 per motor 
        vehicle acquired from any person engaged within the city in the 
        business of selling motor vehicles at retail. 
           Subd. 3.  [FOOD AND BEVERAGE TAX 
        AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
        477A.016, or any other provision of law, ordinance, or city 
        charter, the cities identified in subdivision 1 may each impose 
        by ordinance, for the purposes specified in subdivision 5, a tax 
        of up to one percent on the gross receipts from the on-sales of 
        intoxicating liquor and fermented malt beverages and the sale of 
        food and beverages sold at restaurants and places of refreshment 
        within the city.  The city shall define "restaurant" and "place 
        of refreshment" as part of the ordinance. 
           Subd. 4.  [LODGING TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other provision of 
        law, ordinance, or city charter, the cities identified in 
        subdivision 1 may each impose by ordinance, for the purposes 
        specified in subdivision 5, a tax of up to one percent on the 
        gross receipts from the furnishing for a consideration of 
        lodging and related services by a hotel, rooming house, tourist 
        court, motel, or trailer camp, other than the renting or leasing 
        of it for a continuous period of 30 days or more.  This tax is 
        in addition to the tax authorized in Minnesota Statutes, section 
        469.190, and is not included in calculating the tax rate subject 
        to the limit imposed on lodging taxes in Minnesota Statutes, 
        section 469.190, subdivision 2. 
           Subd. 5.  [USE OF REVENUES.] (a) Revenues received from the 
        taxes authorized by subdivisions 1 to 4 must be used to pay for 
        the cost of collecting the taxes; to pay all or part of the 
        capital or administrative cost of the acquisition, construction, 
        and improvement of the Central Minnesota Events Center and 
        related on-site and off-site improvements; and to pay for the 
        operating deficit, if any, in the first five years of operation 
        of the facility.  Authorized expenses related to acquisition, 
        construction, and improvement of the center include, but are not 
        limited to, acquiring property, paying construction and 
        operating expenses related to the development of the facility, 
        and securing and paying debt service on bonds or other 
        obligations issued to finance construction or improvement of the 
        authorized facility. 
           (b) In addition, if the revenues collected from a tax 
        imposed in subdivisions 1 to 4 are greater than the amount 
        needed to meet obligations under paragraph (a) in any year, the 
        surplus may be returned to the cities in a manner agreed upon by 
        the participating cities under this section, to be used by the 
        cities for projects of regional significance, limited to the 
        acquisition and improvement of park land and open space; the 
        purchase, renovation, and construction of public buildings and 
        land primarily used for the arts, libraries, and community 
        centers; and for debt service on bonds issued for these 
        purposes.  The amount of surplus revenues raised by a tax will 
        be determined either as provided for by an applicable joint 
        powers agreement or by a governing entity in charge of 
        administering the project in paragraph (a). 
           Subd. 6.  [BONDING AUTHORITY.] (a) The cities named in 
        subdivision 1 may issue bonds under Minnesota Statutes, chapter 
        475, to finance the acquisition, construction, and improvement 
        of the Central Minnesota Events Center.  An election to approve 
        the bonds under Minnesota Statutes, section 475.58, may be held 
        in combination with the election to authorize imposition of the 
        tax under subdivision 1.  Whether to permit imposition of the 
        tax and issuance of bonds may be posed to the voters as a single 
        question.  The question must state that the sales tax revenues 
        are pledged to pay the bonds, but that the bonds are general 
        obligations and will be guaranteed by the city's property taxes. 
           (b) The issuance of bonds under this subdivision is not 
        subject to Minnesota Statutes, section 275.60. 
           (c) The bonds are not included in computing any debt 
        limitation applicable to the city, and the levy of taxes under 
        Minnesota Statutes, section 475.61, to pay principal of and 
        interest on the bonds is not subject to any levy limitation. 
        The aggregate principal amount of bonds issued by all cities 
        named in subdivision 1, plus the aggregate of the taxes used 
        directly to pay eligible capital expenditures and improvements 
        may not exceed $50,000,000, plus an amount equal to the costs 
        related to issuance of the bonds, less any amount made available 
        to the cities for the project described in subdivision 5 under 
        the capital expenditure legislation adopted during the 1998 
        session of the legislature. 
           (d) The taxes may be pledged to and used for the payment of 
        the bonds and any bonds issued to refund them, only if the bonds 
        and any refunding bonds are general obligations of the city. 
           Subd. 7.  [TERMINATION OF TAXES.] The taxes imposed by each 
        city under subdivisions 1 to 4 expire when sufficient funds have 
        been received from the taxes to finance the obligations under 
        subdivision 3, and to prepay or retire at maturity the 
        principal, interest, and premium due on the original bonds 
        issued for the initial acquisition, construction, and 
        improvement of the Central Minnesota Events Center as determined 
        under an applicable joint powers agreement or by a governing 
        entity in charge of administering the project.  Any funds 
        remaining after completion of the project and retirement or 
        redemption of the bonds may be placed in the general funds of 
        the cities imposing the taxes.  The taxes imposed by a city 
        under this section may expire at an earlier time by city 
        ordinance, if authorized under the applicable joint powers 
        agreement or by the governing entity in charge of administering 
        the project. 
           If the cities that pass a referendum required under 
        subdivision 6 determine that the revenues raised from the sum of 
        all the taxes authorized by referendum under this subdivision 
        will not be sufficient to fund the project in subdivision 5, 
        none of the authorized taxes may be imposed. 
           Subd. 8.  [EFFECTIVE DATE.] This section is effective 
        August 1, 1998, with respect to any city listed in subdivision 1 
        upon compliance of the governing body of that city with 
        Minnesota Statutes, section 645.021, subdivision 3.  
           Sec. 45.  [CITY OF TWO HARBORS; TAXES AUTHORIZED.] 
           Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other provision of 
        law, ordinance, or city charter, if approved by the voters of 
        the city at the next general election held after the date of 
        final enactment of this act, the city of Two Harbors may impose 
        by ordinance, a sales and use tax at a rate of up to one-half of 
        one percent for the purposes specified in subdivision 3.  The 
        provisions of Minnesota Statutes, section 297A.48, govern the 
        imposition, administration, collection, and enforcement of the 
        tax authorized under this subdivision. 
           Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other contrary 
        provision of law, ordinance, or city charter, the city of Two 
        Harbors may impose by ordinance, for the purposes specified in 
        subdivision 3, an excise tax of up to $20 per motor vehicle, as 
        defined by ordinance, purchased or acquired from any person 
        engaged within the city in the business of selling motor 
        vehicles at retail. 
           Subd. 3.  [USE OF REVENUES.] Revenues received from the 
        taxes authorized under subdivision 1 must be used for sanitary 
        sewer separation, wastewater treatment, and harbor refuge 
        development projects. 
           Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
        under Minnesota Statutes, chapter 475, to finance the capital 
        expenditure and improvement projects.  An election to approve 
        the bonds under Minnesota Statutes, section 475.58, may be held 
        in combination with the election to authorize imposition of the 
        tax under subdivision 1.  Whether to permit imposition of the 
        tax and issuance of bonds may be posed to the voters as a single 
        question.  The question must state that the sales tax revenues 
        are pledged to pay the bonds, but that the bonds are general 
        obligations and will be guaranteed by the city's property taxes. 
           (b) The issuance of bonds under this subdivision is not 
        subject to Minnesota Statutes, section 275.60. 
           (c) The bonds are not included in computing any debt 
        limitation applicable to the city, and the levy of taxes under 
        Minnesota Statutes, section 475.61, to pay principal of and 
        interest on the bonds is not subject to any levy limitation. 
        The aggregate principal amount of bonds, plus the aggregate of 
        the taxes used directly to pay eligible capital expenditures and 
        improvements may not exceed $20,000,000, plus an amount equal to 
        the costs related to issuance of the bonds. 
           (d) The taxes may be pledged to and used for the payment of 
        the bonds and any bonds issued to refund them, only if the bonds 
        and any refunding bonds are general obligations of the city. 
           Subd. 5.  [TERMINATION OF TAXES.] The authority granted 
        under subdivision 1 to the city of Two Harbors to impose sales 
        and use taxes expires when the costs of the projects described 
        in subdivision 3 have been paid. 
           Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
        day after compliance by the governing body of the city of Two 
        Harbors with Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 46.  [CITY OF WINONA; 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, if approved 
        by the city voters at a general election held within one year of 
        the date of final enactment of this act, the city of Winona may 
        impose by ordinance a sales and use tax of up to one-half of one 
        percent for the purposes specified in subdivision 3.  The 
        provisions of Minnesota Statutes, section 297A.48, govern the 
        imposition, administration, collection, and enforcement of the 
        tax authorized under this subdivision. 
           Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
        Minnesota Statutes, section 477A.016, or any other contrary 
        provision of law, ordinance, or city charter, the city of Winona 
        may impose by ordinance, for the purposes specified in 
        subdivision 3, an excise tax of up to $20 per motor vehicle, as 
        defined by ordinance, purchased or acquired from any person 
        engaged within the city in the business of selling motor 
        vehicles at retail. 
           Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
        authorized by subdivisions 1 and 2 must be used by the city to 
        pay the costs of collecting the taxes and to pay all or a part 
        of the capital and administrative costs of the dredging of Lake 
        Winona, including paying debt service on bonds or other 
        obligations issued to finance the project under subdivision 4.  
           Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
        under Minnesota Statutes, chapter 475, to finance the capital 
        expenditure and improvement projects.  An election to approve 
        the bonds under Minnesota Statutes, section 475.58, may be held 
        in combination with the election to authorize imposition of the 
        tax under subdivision 1.  Whether to permit imposition of the 
        tax and issuance of bonds may be posed to the voters as a single 
        question.  The question must state that the sales tax revenues 
        are pledged to pay the bonds, but that the bonds are general 
        obligations and will be guaranteed by the city's property taxes. 
           (b) The issuance of bonds under this subdivision is not 
        subject to Minnesota Statutes, section 275.60. 
           (c) The bonds are not included in computing any debt 
        limitation applicable to the city, and the levy of taxes under 
        Minnesota Statutes, section 475.61, to pay principal of and 
        interest on the bonds is not subject to any levy limitation. 
        The aggregate principal amount of bonds, plus the aggregate of 
        the taxes used directly to pay eligible capital expenditures and 
        improvements may not exceed $4,000,000, plus an amount equal to 
        the costs related to issuance of the bonds. 
           (d) The taxes may be pledged to and used for the payment of 
        the bonds and any bonds issued to refund them, only if the bonds 
        and any refunding bonds are general obligations of the city. 
           Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
        subdivisions 1 and 2 expire when the city council determines 
        that sufficient funds have been received from the taxes to 
        finance the dredging of Lake Winona and to prepay or retire at 
        maturity the principal, interest, and premium due on any bonds 
        issued for the project under subdivision 4.  Any funds remaining 
        after completion of the project and retirement or redemption of 
        the bonds may be placed in 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.  
           Subd. 6.  [EFFECTIVE DATE.] This section is effective upon 
        compliance by the governing body of the city of Winona with 
        Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 47.  [REPEALER.] 
           Minnesota Statutes 1996, section 297A.02, subdivision 2, is 
        repealed. 
           Sec. 48.  [EFFECTIVE DATE.] 
           Sections 1, 3, 8, 9, 19, and 21 are effective for sales and 
        purchases made after June 30, 1998.  Sections 2 and 47 are 
        effective for sales made after June 30, 2000.  Sections 5, 13, 
        and 17 are effective for sales made after June 30, 1998.  
        Sections 6 and 7 are effective for rentals after June 30, 1998.  
        Section 10 is effective for purchases made after June 30, 1998.  
        Sections 12, 14, 15, and 34 are effective the day following 
        final enactment.  Section 16 is effective for purchases made 
        after December 1, 1997.  Section 18 is effective for purchases 
        made after June 30, 1998, and before July 1, 2003.  Section 20 
        is effective for local laws enacted after June 30, 1998.  
        Sections 22 and 23 are effective July 1, 1998.  Section 24 is 
        effective December 31, 1997.  Sections 25 to 27 are effective 
        upon approval by the governing body of the city of Duluth and 
        compliance with Minnesota Statutes, section 645.021, subdivision 
        3.  Section 28 is effective upon approval by the governing body 
        of the city of Mankato and compliance with Minnesota Statutes, 
        section 645.021, subdivision 3.  Section 29 is effective upon 
        approval by the governing body of the city of Rochester and 
        compliance with Minnesota Statutes, section 645.021, subdivision 
        3.  Sections 30 to 32, 36, and 37 are effective the day after 
        the governing body of the city of St. Paul complies with 
        Minnesota Statutes, section 645.021.  Section 35 is effective 
        for transfers after November 30, 1997, and before January 1, 
        1999. 
                                   ARTICLE 9
                                BUDGET RESERVES
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        16A.152, subdivision 2, is amended to read: 
           Subd. 2.  [ADDITIONAL REVENUES; PRIORITY.] If on the basis 
        of a forecast of general fund revenues and expenditures after 
        November 1 in an odd-numbered year, the commissioner of finance 
        determines that there will be a positive unrestricted budgetary 
        general fund balance at the close of the biennium, the 
        commissioner of finance must allocate money as follows: 
           (a) first, to the budget reserve until the total amount in 
        the account equals $522,000,000 $622,000,000; then 
           (b) 60 percent to the property tax reform account 
        established in section 16A.1521; and 
           (c) 40 percent is an unrestricted balance in the general 
        fund. 
           The amounts necessary to meet the requirements of this 
        section are appropriated from the general fund within two weeks 
        after the forecast is released. 
           Sec. 2.  [EXCESS REVENUE; TO REDUCE BORROWING.] 
           Subdivision 1.  [TAX REFORM AND REDUCTION ACCOUNT.] A tax 
        reform and reduction account is established in the general fund. 
        Amounts in the account are available only to provide tax reform 
        and reduction, as enacted by law.  The governor shall make 
        recommendations to the legislature regarding uses of the money 
        in the account to reduce taxes and to reform the Minnesota tax 
        system. 
           Subd. 2.  [PRIORITIES.] If on the basis of a forecast of 
        general fund revenues and expenditures after November 1 in 1998, 
        the commissioner of finance determines that there will be a 
        positive unrestricted budgetary general fund balance at the 
        close of the biennium, the commissioner of finance must allocate 
        money as follows: 
           (1) first, to the budget reserve until the total amount in 
        that account equals $622,000,000; then 
           (2) second, to the tax reduction and reform account until 
        the amount allocated equals $200,000,000; and 
           (3) third, to reduce the need to borrow money to finance 
        state building projects as provided in subdivision 3. 
           Subd. 3.  [CANCELLATION OF BOND APPROPRIATIONS AND 
        AUTHORIZATIONS.] The commissioner of finance shall reduce 
        appropriations from the bond proceeds fund and the state 
        transportation fund in 1998 H.F. No. 3843, if enacted, for which 
        bonds have not yet been sold as authorized by that law, by the 
        amount of general fund revenue made available for this purpose 
        under subdivision 2, and the amount reduced is appropriated from 
        the general fund for the same purposes as the appropriations 
        reduced.  The commissioner of finance shall reduce the bond sale 
        authorizations in 1998 H.F. No. 3843 accordingly. 
           Sec. 3.  [APPROPRIATION.] 
           On July 1, 1998, $100,000,000 is appropriated from the 
        general fund to the commissioner of finance to transfer to the 
        budget reserve account under Minnesota Statutes, section 
        16A.152, subdivision 1a. 
                                   ARTICLE 10 
                                 TACONITE TAXES 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        124.918, subdivision 8, is amended to read: 
           Subd. 8.  [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) 
        Reductions in levies pursuant to section 124.918, subdivision 1, 
        and section 273.138, shall be made prior to the reductions in 
        clause (2). 
           (2) Notwithstanding any other law to the contrary, 
        districts which received payments pursuant to sections 298.018; 
        298.23 to 298.28, except an amount distributed under section 
        298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to 
        298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 
        upon severed mineral values, or recognized revenue pursuant to 
        section 477A.15; shall not include a portion of these aids in 
        their permissible levies pursuant to those sections, but instead 
        shall reduce the permissible levies authorized by this chapter 
        and chapter 124A by the greater of the following: 
           (a) an amount equal to 50 percent of the total dollar 
        amount of the payments received pursuant to those sections or 
        revenue recognized pursuant to section 477A.15 in the previous 
        fiscal year; or 
           (b) an amount equal to the total dollar amount of the 
        payments received pursuant to those sections or revenue 
        recognized pursuant to section 477A.15 in the previous fiscal 
        year less the product of the same dollar amount of payments or 
        revenue times the ratio of the maximum levy allowed the district 
        under Minnesota Statutes 1986, sections 124A.03, subdivision 2, 
        124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, 
        subdivision 3a, 124A.12, subdivision 3a, and 124A.14, 
        subdivision 5a, to the total levy allowed the district under 
        this section and Minnesota Statutes 1986, sections 124A.03, 
        124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, 
        subdivision 3a, 124A.12, subdivision 3a, 124A.14, subdivision 
        5a, and 124A.20, subdivision 2, for levies certified in 
        1986 five percent. 
           (3) No reduction pursuant to this subdivision shall reduce 
        the levy made by the district pursuant to section 124A.23, to an 
        amount less than the amount raised by a levy of a net tax rate 
        of 6.82 percent times the adjusted net tax capacity for taxes 
        payable in 1990 and thereafter of that district for the 
        preceding year as determined by the commissioner.  The amount of 
        any increased levy authorized by referendum pursuant to section 
        124A.03, subdivision 2, shall not be reduced pursuant to this 
        subdivision.  The amount of any levy authorized by section 
        124.912, subdivision 1, to make payments for bonds issued and 
        for interest thereon, shall not be reduced pursuant to this 
        subdivision.  
           (4) Before computing the reduction pursuant to this 
        subdivision of the health and safety levy authorized by sections 
        124.83 and 124.91, subdivision 6, the commissioner shall 
        ascertain from each affected school district the amount it 
        proposes to levy under each section or subdivision.  The 
        reduction shall be computed on the basis of the amount so 
        ascertained. 
           (5) Notwithstanding any law to the contrary, any amounts 
        received by districts in any fiscal year pursuant to sections 
        298.018; 298.23 to 298.28; 298.34 to 298.39; 298.391 to 298.396; 
        298.405; or any law imposing a tax on severed mineral values; 
        and not deducted from general education aid pursuant to section 
        124A.035, subdivision 5, clause (2), and not applied to reduce 
        levies pursuant to this subdivision shall be paid by the 
        district to the St. Louis county auditor in the following amount 
        by March 15 of each year, the amount required to be subtracted 
        from the previous fiscal year's general education aid pursuant 
        to section 124A.035, subdivision 5, which is in excess of the 
        general education aid earned for that fiscal year.  The county 
        auditor shall deposit any amounts received pursuant to this 
        clause in the St. Louis county treasury for purposes of paying 
        the taconite homestead credit as provided in section 273.135. 
           Sec. 2.  Minnesota Statutes 1996, section 273.135, 
        subdivision 2, is amended to read: 
           Subd. 2.  The amount of the reduction authorized by 
        subdivision 1 shall be: 
           (a) In the case of property located within the boundaries 
        of a municipality which meets the qualifications prescribed in 
        section 273.134, 66 percent of the tax, provided that the 
        reduction shall not exceed the maximum amounts specified in 
        clause (c), and shall not exceed an amount sufficient to reduce 
        the effective tax rate on each parcel of property to 95 percent 
        of the base year effective tax rate.  In no case will the 
        reduction for each homestead resulting from this credit be less 
        than $10.  
           (b) In the case of property located within the boundaries 
        of a school district which qualifies as a tax relief area but 
        which is outside the boundaries of a municipality which meets 
        the qualifications prescribed in section 273.134, 57 percent of 
        the tax, provided that the reduction shall not exceed the 
        maximum amounts specified in clause (c), and shall not exceed an 
        amount sufficient to reduce the effective tax rate on each 
        parcel of property to 95 percent of the base year effective tax 
        rate.  In no case will the reduction for each homestead 
        resulting from this credit be less than $10.  
           (c) The maximum reduction of the tax is $225.40 $315.10 on 
        property described in clause (a) and $200.10 $289.80 on property 
        described in clause (b). , for taxes payable in 1985.  These 
        maximum amounts shall increase by $15 times the quantity one 
        minus the homestead credit equivalency percentage per year for 
        taxes payable in 1986 and subsequent years.  
           For the purposes of this subdivision, "homestead credit 
        equivalency percentage" means one minus the ratio of the net 
        class rate to the gross class rate applicable to the first 
        $72,000 of the market value of residential homesteads, 
        "effective tax rate" means tax divided by the market value of a 
        property, and the "base year effective tax rate" means the 
        payable 1988 tax on a property with an identical market value to 
        that of the property receiving the credit in the current year 
        after the application of the credits payable under Minnesota 
        Statutes 1988, section 273.13, subdivisions 22 and 23, and this 
        section, divided by the market value of the property.  
           Sec. 3.  Minnesota Statutes 1996, section 273.1391, 
        subdivision 2, is amended to read: 
           Subd. 2.  The amount of the reduction authorized by 
        subdivision 1 shall be: 
           (a) In the case of property located within a school 
        district which does not meet the qualifications of section 
        273.134 as a tax relief area, but which is located in a county 
        with a population of less than 100,000 in which taconite is 
        mined or quarried and wherein a school district is located which 
        does meet the qualifications of a tax relief area, and provided 
        that at least 90 percent of the area of the school district 
        which does not meet the qualifications of section 273.134 lies 
        within such county, 57 percent of the tax on qualified property 
        located in the school district that does not meet the 
        qualifications of section 273.134, provided that the amount of 
        said reduction shall not exceed the maximum amounts specified in 
        clause (c), and shall not exceed an amount sufficient to reduce 
        the effective tax rate on each parcel of property to the product 
        of 95 percent of the base year effective tax rate multiplied by 
        the ratio of the current year's tax rate to the payable 1989 tax 
        rate.  In no case will the reduction for each homestead 
        resulting from this credit be less than $10.  The reduction 
        provided by this clause shall only be applicable to property 
        located within the boundaries of the county described therein.  
           (b) In the case of property located within a school 
        district which does not meet the qualifications of section 
        273.134 as a tax relief area, but which is located in a school 
        district in a county containing a city of the first class and a 
        qualifying municipality, but not in a school district containing 
        a city of the first class or adjacent to a school district 
        containing a city of the first class unless the school district 
        so adjacent contains a qualifying municipality, 57 percent of 
        the tax, but not to exceed the maximums specified in clause (c), 
        and shall not exceed an amount sufficient to reduce the 
        effective tax rate on each parcel of property to the product of 
        95 percent of the base year effective tax rate multiplied by the 
        ratio of the current year's tax rate to the payable 1989 tax 
        rate.  In no case will the reduction for each homestead 
        resulting from this credit be less than $10. 
           (c) The maximum reduction of the tax is $200.10 for taxes 
        payable in 1985.  This maximum amount shall increase by $15 
        multiplied by the quantity one minus the homestead credit 
        equivalency percentage per year for taxes payable in 1986 and 
        subsequent years $289.80.  
           For the purposes of this subdivision, "homestead credit 
        equivalency percentage" means one minus the ratio of the net 
        class rate to the gross class rate applicable to the first 
        $72,000 of the market value of residential homesteads, and 
        "effective tax rate" means tax divided by the market value of a 
        property, and the "base year effective tax rate" means the 
        payable 1988 tax on a property with an identical market value to 
        that of the property receiving the credit in the current year 
        after application of the credits payable under Minnesota 
        Statutes 1988, section 273.13, subdivisions 22 and 23, and this 
        section, divided by the market value of the property. 
           Sec. 4.  [298.001] [DEFINITIONS.] 
           Subdivision 1.  [GENERALLY.] As used in this chapter, the 
        terms defined in this section have the meanings given in this 
        section. 
           Subd. 2.  [CITY.] "City" includes any home rule charter 
        city, statutory city, or any city however organized. 
           Subd. 3.  [PERSON.] "Person" means individuals, 
        fiduciaries, estates, trusts, partnerships, companies, joint 
        stock companies, corporations, and all associations. 
           Subd. 4.  [TACONITE.] "Taconite" means ferruginous chert or 
        ferruginous slate in the form of compact, siliceous rock, in 
        which the iron oxide is so finely disseminated that 
        substantially all of the iron-bearing particles of merchantable 
        grade are smaller than 20 mesh and which is not merchantable as 
        iron ore in its natural state, and which cannot be made 
        merchantable by simple methods of beneficiation involving only 
        crushing, screening, washing, jigging, drying, or any 
        combination thereof. 
           Subd. 5.  [IRON SULPHIDES.] "Iron sulphides" means chemical 
        combinations of iron and sulphur (mineralogically known as 
        pyrrhotite, pyrites, or marcasite), in relatively impure 
        condition, which are not merchantable as iron ore and which 
        cannot be made merchantable by the simple methods of 
        beneficiation above described.  
           Subd. 6.  [SEMITACONITE.] "Semitaconite" means altered iron 
        formation, altered taconite, ferruginous chert, or ferruginous 
        slate which has been oxidized and partially leached and in which 
        the iron oxide is so finely disseminated that substantially all 
        of the iron-bearing particles of merchantable grade are smaller 
        than 20 mesh and which is not merchantable as iron ore in its 
        natural state, and which cannot be made merchantable by simple 
        methods of beneficiation involving only crushing, screening, 
        washing, jigging, heavy media separation, spirals, cyclones, 
        drying, or any combination thereof.  
           Subd. 7.  [AGGLOMERATES.] "Agglomerates" means the 
        merchantable iron ore aggregates which are produced by 
        agglomeration.  
           Subd. 8.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of revenue of the state of Minnesota.  
           Sec. 5.  Minnesota Statutes 1996, section 298.22, 
        subdivision 2, is amended to read: 
           Subd. 2.  There is hereby created the iron range resources 
        and rehabilitation board, consisting of 11 members, five of whom 
        shall be are state senators appointed by the subcommittee on 
        committees of the rules committee of the senate, and five of 
        whom shall be are representatives, appointed by the speaker of 
        the house of representatives, their terms of office to commence 
        on May 1, 1943, and continue until January 3rd, 1945, or until 
        their successors are appointed and qualified.  Their successors 
        The members shall be appointed each two years in the same manner 
        as the original members were appointed, in January of every 
        second odd-numbered year, commencing in January, 1945.  The 11th 
        member of said the board shall be is the commissioner of natural 
        resources of the state of Minnesota.  Vacancies on the board 
        shall be filled in the same manner as the original members were 
        chosen.  At least a majority of the legislative members of the 
        board shall be elected from state senatorial or legislative 
        districts in which over 50 percent of the residents reside 
        within a tax relief area as defined in section 273.134.  All 
        expenditures and projects made by the commissioner of iron range 
        resources and rehabilitation shall first be submitted to said 
        the iron range resources and rehabilitation board for approval 
        by at least eight board members of expenditures and projects for 
        rehabilitation purposes as provided by this section, and the 
        method, manner, and time of payment of all said funds proposed 
        to be disbursed shall be first approved or disapproved by said 
        the board.  The board shall biennially make its report to the 
        governor and the legislature on or before November 15 of each 
        even-numbered year.  The expenses of said the board shall be 
        paid by the state of Minnesota from the funds raised pursuant to 
        this section. 
           Sec. 6.  Minnesota Statutes 1996, section 298.221, is 
        amended to read: 
           298.221 [RECEIPTS FROM CONTRACTS; APPROPRIATION.] 
           (a) All moneys money paid to the state of Minnesota 
        pursuant to the terms of any contract entered into by the state 
        under authority of Laws 1941, chapter 544, section 4, or of said 
        section as amended section 298.22 and any fees which may, in the 
        discretion of the commissioner of iron range resources and 
        rehabilitation, be charged in connection with any project 
        pursuant to that section as amended, shall be deposited in the 
        state treasury to the credit of the iron range resources and 
        rehabilitation board account in the special revenue fund and are 
        hereby appropriated for the purposes of section 298.22. 
           (b) Notwithstanding section 7.09, merchandise may be 
        accepted by the commissioner of the iron range resources and 
        rehabilitation board for payment of advertising contracts if the 
        commissioner determines that the merchandise can be used for 
        special event prizes or mementos at facilities operated by the 
        board.  Nothing in this paragraph authorizes the commissioner or 
        a member of the board to receive merchandise for personal use.  
           Sec. 7.  Minnesota Statutes 1996, section 298.2213, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PROJECT APPROVAL.] The board shall by August 1, 
        1987, and each year thereafter prepare a list of projects to be 
        funded from the money appropriated in this section with 
        necessary supporting information including descriptions of the 
        projects, plans, and cost estimates.  A project must not be 
        approved by the board unless it finds that:  
           (1) the project will materially assist, directly or 
        indirectly, the creation of additional long-term employment 
        opportunities; 
           (2) the prospective benefits of the expenditure exceed the 
        anticipated costs; and 
           (3) in the case of assistance to private enterprise, the 
        project will serve a sound business purpose.  
           To be proposed by the board, a project must be approved by 
        at least eight iron range resources and rehabilitation board 
        members and the commissioner of iron range resources and 
        rehabilitation.  The list of projects must be submitted to the 
        governor, who shall, by November 15 of each year, approve, 
        disapprove, or return for further consideration, each project.  
        The money for a project may be spent only upon approval of the 
        project by the governor.  The board may submit supplemental 
        projects for approval at any time.  
           Sec. 8.  Minnesota Statutes 1996, section 298.225, 
        subdivision 1, is amended to read: 
           Subdivision 1.  For distribution of taconite production tax 
        in 1987 and thereafter with respect to production in 1986 and 
        thereafter, The distribution of the taconite production tax as 
        provided in section 298.28, subdivisions 2 to 5, 6, paragraphs 
        paragraph (b) and (c), 7, and 8, shall equal the lesser of the 
        following amounts:  
           (1) the amount distributed pursuant to this section and 
        section 298.28, with respect to 1983 production if the 
        production for the year prior to the distribution year is no 
        less than 42,000,000 taxable tons.  If the production is less 
        than 42,000,000 taxable tons, the amount of the distributions 
        shall be reduced proportionately at the rate of two percent for 
        each 1,000,000 tons, or part of 1,000,000 tons by which the 
        production is less than 42,000,000 tons; or 
           (2)(i) for the distributions made pursuant to section 
        298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 
        (c), 50 40.5 percent of the amount distributed pursuant to this 
        section and section 298.28, with respect to 1983 production.  
           (ii) for the distributions made pursuant to section 298.28, 
        subdivision 5, paragraphs (b) and (d), 75 percent of the amount 
        distributed pursuant to this section and section 298.28, with 
        respect to 1983 production.  
           Sec. 9.  Minnesota Statutes 1997 Supplement, section 
        298.24, subdivision 1, is amended to read: 
           Subdivision 1.  (a) For concentrate produced in 1992, 1993, 
        1994, and 1995 1997 and 1998, 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 $2.054 $2.141 per gross 
        ton of merchantable iron ore concentrate produced therefrom.  
           (b) On concentrates produced in 1997 and thereafter, 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. 
           (c) For concentrates produced in 1996 1999 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, provided that, for 
        concentrates produced in 1996 only, the increase in the rate of 
        tax imposed under this section over the rate imposed for the 
        previous year may not exceed four cents per ton.  "Implicit 
        price deflator" for the gross national product means the 
        implicit price deflator prepared by the bureau of economic 
        analysis of the United States Department of Commerce.  
           (c) On concentrates produced in 1997 and thereafter, 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 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.  
           (e) If the tax or any part of the tax imposed by this 
        subdivision is held to be unconstitutional, a tax 
        of $2.054 $2.141 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 production of 
        direct reduced ore, no tax is imposed under this section.  As 
        used in this paragraph, "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 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 such production year, the rate is 50 percent of the 
        rate otherwise determined under this subdivision; for the fifth 
        such production year, the rate is 75 percent of the rate 
        otherwise determined under this subdivision; and for all 
        subsequent 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 or 
        iron sulfides, the production of taconite or iron sulfides 
        consumed in the production of direct reduced iron in this state 
        is not subject to the tax imposed by this section on taconite or 
        iron sulfides. 
           Sec. 10.  Minnesota Statutes 1996, section 298.28, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CITY OR TOWN WHERE QUARRIED OR PRODUCED.] (a) 
        4.5 cents per gross ton of merchantable iron ore concentrate, 
        hereinafter referred to as "taxable ton," must be allocated to 
        the city or town in the county in which the lands from which 
        taconite was mined or quarried were located or within which the 
        concentrate was produced.  If the mining, quarrying, and 
        concentration, or different steps in either thereof are carried 
        on in more than one taxing district, the commissioner shall 
        apportion equitably the proceeds of the part of the tax going to 
        cities and towns among such subdivisions upon the basis of 
        attributing 40 percent of the proceeds of the tax to the 
        operation of mining or quarrying the taconite, and the remainder 
        to the concentrating plant and to the processes of 
        concentration, and with respect to each thereof giving due 
        consideration to the relative extent of such operations 
        performed in each such taxing district.  The commissioner's 
        order making such apportionment shall be subject to review by 
        the tax court at the instance of any of the interested taxing 
        districts, in the same manner as other orders of the 
        commissioner. 
           (b) Four cents per taxable ton shall be allocated to cities 
        and organized townships affected by mining because their 
        boundaries are within three miles of a taconite mine pit that 
        has been actively mined in at least one of the prior three years.
        If a city or town is located near more than one mine meeting 
        these criteria, the city or town is eligible to receive aid 
        calculated from only the mine producing the largest taxable 
        tonnage.  When more than one municipality qualifies for aid 
        based on one company's production, the aid must be apportioned 
        among the municipalities in proportion to their populations.  Of 
        the amounts distributed under this paragraph to each 
        municipality, one-half must be used for infrastructure 
        improvement projects, and one-half must be used for projects in 
        which two or more municipalities cooperate.  Each municipality 
        that receives a distribution under this paragraph must report 
        annually to the iron range resources and rehabilitation board 
        and the commissioner of iron range resources and rehabilitation 
        on the projects involving cooperation with other municipalities. 
           Sec. 11.  Minnesota Statutes 1996, 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 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, for distributions for production 
        year 1989, production taxes payable in 1990, the appropriate net 
        tax capacities multiplied by 8.2 and for distributions for 
        production year 1990 and thereafter, production taxes payable in 
        1991 and thereafter, the appropriate net tax capacities 
        multiplied by 10.2. 
           Sec. 12.  Minnesota Statutes 1996, section 298.28, 
        subdivision 4, is amended to read: 
           Subd. 4.  [SCHOOL DISTRICTS.] (a) 27.5 22.28 cents per 
        taxable ton plus the increase provided in paragraph (d) must be 
        allocated to qualifying school districts to be distributed, 
        based upon the certification of the commissioner of revenue, 
        under paragraphs (b) and (c). 
           (b) 5.5 4.46 cents per taxable ton must be distributed to 
        the school districts in which the lands from which taconite was 
        mined or quarried were located or within which the concentrate 
        was produced.  The distribution must be based on the 
        apportionment formula prescribed in subdivision 2. 
           (c)(i) 22 17.82 cents per taxable ton, less any amount 
        distributed under paragraph (e), shall be distributed to a group 
        of school districts comprised of those school districts in which 
        the taconite was mined or quarried or the concentrate produced 
        or in which there is a qualifying municipality as defined by 
        section 273.134 in direct proportion to school district indexes 
        as follows:  for each school district, its pupil units 
        determined under section 124.17 for the prior school year shall 
        be multiplied by the ratio of the average adjusted net tax 
        capacity per pupil unit for school districts receiving aid under 
        this clause as calculated pursuant to chapter 124A for the 
        school year ending prior to distribution to the adjusted net tax 
        capacity per pupil unit of the district.  Each district shall 
        receive that portion of the distribution which its index bears 
        to the sum of the indices for all school districts that receive 
        the distributions.  
           (ii) Notwithstanding clause (i), each school district that 
        receives a distribution under sections 298.018; 298.23 to 
        298.28, exclusive of any amount received under this clause; 
        298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
        imposing a tax on severed mineral values that is less than the 
        amount of its levy reduction under section 124.918, subdivision 
        8, for the second year prior to the year of the distribution 
        shall receive a distribution equal to the difference; the amount 
        necessary to make this payment shall be derived from 
        proportionate reductions in the initial distribution to other 
        school districts under clause (i).  
           (d) Any school district described in paragraph (c) where a 
        levy increase pursuant to section 124A.03, subdivision 2, is 
        authorized by referendum, shall receive a distribution according 
        to the following formula.  In 1994, the amount distributed per 
        ton shall be equal to the amount per ton distributed in 1991 
        under this paragraph increased in the same proportion as the 
        increase between the fourth quarter of 1989 and the fourth 
        quarter of 1992 in the implicit price deflator as defined in 
        section 298.24, subdivision 1 from a fund that receives a 
        distribution in 1998 of 21.3 cents per ton.  On July 15, 1995, 
        and subsequent years of 1999, and each year thereafter, the 
        increase over the amount established for the prior year shall be 
        determined according to the increase in the implicit price 
        deflator as provided in section 298.24, subdivision 1.  Each 
        district shall receive the product of: 
           (i) $175 times the pupil units identified in section 
        124.17, subdivision 1, enrolled in the second previous year or 
        the 1983-1984 school year, whichever is greater, less the 
        product of 1.8 percent times the district's taxable net tax 
        capacity in the second previous year; times 
           (ii) the lesser of: 
           (A) one, or 
           (B) the ratio of the sum of the amount certified pursuant 
        to section 124A.03, subdivision 1g, in the previous year, plus 
        the amount certified pursuant to section 124A.03, subdivision 
        1i, in the previous year, plus the referendum aid according to 
        section 124A.03, subdivision 1h, for the current year, plus an 
        amount equal to the reduction under section 124A.03, subdivision 
        3b, to the product of 1.8 percent times the district's taxable 
        net tax capacity in the second previous year. 
           If the total amount provided by paragraph (d) is 
        insufficient to make the payments herein required then the 
        entitlement of $175 per pupil unit shall be reduced uniformly so 
        as not to exceed the funds available.  Any amounts received by a 
        qualifying school district in any fiscal year pursuant to 
        paragraph (d) shall not be applied to reduce general education 
        aid which the district receives pursuant to section 124A.23 or 
        the permissible levies of the district.  Any amount remaining 
        after the payments provided in this paragraph shall be paid to 
        the commissioner of iron range resources and rehabilitation who 
        shall deposit the same in the taconite environmental protection 
        fund and the northeast Minnesota economic protection trust fund 
        as provided in subdivision 11. 
           Each district receiving money according to this paragraph 
        shall reserve $25 times the number of pupil units in the 
        district.  It may use the money for early childhood programs or 
        for outcome-based learning programs that enhance the academic 
        quality of the district's curriculum.  The outcome-based 
        learning programs must be approved by the commissioner of 
        children, families, and learning. 
           (e) There shall be distributed to any school district the 
        amount which the school district was entitled to receive under 
        section 298.32 in 1975. 
           Sec. 13.  Minnesota Statutes 1996, section 298.28, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PROPERTY TAX RELIEF.] (a) Fifteen In 1999, 38.81 
        cents per taxable ton, less any amount required to be 
        distributed under paragraphs (b) and (c), and less any amount 
        required to be deducted under paragraph (d), must be allocated 
        to St. Louis county acting as the counties' fiscal agent, to be 
        distributed as provided in sections 273.134 to 273.136. 
           (b) If an electric power plant owned by and providing the 
        primary source of power for a taxpayer mining and concentrating 
        taconite is located in a county other than the county in which 
        the mining and the concentrating processes are conducted, .1875 
        cent per taxable ton of the tax imposed and collected from such 
        taxpayer shall be paid to the county. 
           (c) If an electric power plant owned by and providing the 
        primary source of power for a taxpayer mining and concentrating 
        taconite is located in a school district other than a school 
        district in which the mining and concentrating processes are 
        conducted, .5625 .7282 cent per taxable ton of the tax imposed 
        and collected from the taxpayer shall be paid to the school 
        district. 
           (d) Two cents per taxable ton must be deducted from the 
        amount allocated to the St. Louis county auditor under paragraph 
        (a). 
           Sec. 14.  Minnesota Statutes 1996, section 298.28, 
        subdivision 7, is amended to read: 
           Subd. 7.  [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 
        Three For the 1998 distribution, 6.5 cents per taxable ton shall 
        be paid to the iron range resources and rehabilitation board for 
        the purposes of section 298.22.  The amount determined in this 
        subdivision shall be increased in 1981 and subsequent years 
        prior to 1988 in the same proportion as the increase in the 
        steel mill products index as provided in section 298.24, 
        subdivision 1, and shall be increased in 1989, 1990, and 1991 
        according to the increase in the implicit price deflator as 
        provided in section 298.24, subdivision 1.  In 1992 and 1993, 
        the amount distributed per ton shall be the same as the amount 
        distributed per ton in 1991.  In 1994, the amount distributed 
        shall be the distribution per ton for 1991 increased in the same 
        proportion as the increase between the fourth quarter of 1989 
        and the fourth quarter of 1992 in the implicit price deflator as 
        defined in section 298.24, subdivision 1.  That amount shall be 
        increased in 1995 1999 and subsequent years in the same 
        proportion as the increase in the implicit price deflator as 
        provided in section 298.24, subdivision 1.  The amount 
        distributed in 1988 shall be increased according to the increase 
        that would have occurred in the rate of tax under section 298.24 
        if the rate had been adjusted according to the implicit price 
        deflator for 1987 production.  The amount distributed pursuant 
        to this subdivision shall be expended within or for the benefit 
        of a tax relief area defined in section 273.134.  No part of the 
        fund provided in this subdivision may be used to provide loans 
        for the operation of private business unless the loan is 
        approved by the governor. 
           Sec. 15.  Minnesota Statutes 1996, section 298.28, 
        subdivision 9, is amended to read: 
           Subd. 9.  [MINNESOTA ECONOMIC PROTECTION TRUST FUND.] 1.5 
        In 1999, 3.35 cents per taxable ton shall be paid to the 
        northeast Minnesota economic protection trust fund.  
           Sec. 16.  Minnesota Statutes 1997 Supplement, section 
        298.28, subdivision 9a, is amended to read: 
           Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 15.4 
        cents per ton for distributions in 1996, 1998, and 1999, and 
        2000 and 20.4 cents per ton for distributions in 1997 shall be 
        paid to the taconite economic development fund.  No distribution 
        shall be made under this paragraph in any year in which total 
        industry production falls below 30 million tons. 
           (b) An amount equal to 50 percent of the tax under section 
        298.24 for concentrate sold in the form of pellet chips and 
        fines not exceeding 5/16 inch in size and not including crushed 
        pellets shall be paid to the taconite economic development 
        fund.  The amount paid shall not exceed $700,000 annually for 
        all companies.  If the initial amount to be paid to the fund 
        exceeds this amount, each company's payment shall be prorated so 
        the total does not exceed $700,000. 
           Sec. 17.  Minnesota Statutes 1997 Supplement, section 
        298.28, subdivision 9b, is amended to read: 
           Subd. 9b.  [TACONITE ENVIRONMENTAL FUND.] Five cents per 
        ton for distributions in 1998 and 1999, and 2000 shall be paid 
        to the taconite environmental fund for use under section 
        298.2961.  No distribution may be made under this paragraph in 
        any year in which total industry production falls below 
        30,000,000 tons. 
           Sec. 18.  Minnesota Statutes 1996, section 298.28, 
        subdivision 10, is amended to read: 
           Subd. 10.  [INCREASE.] Beginning with distributions in 
        2000, the amounts determined under subdivisions 6, paragraph 
        (a), and 9 shall be increased in 1979 and subsequent years prior 
        to 1988 in the same proportion as the increase in the steel mill 
        products index as provided in section 298.24, subdivision 1.  
        The amount distributed in 1988 shall be increased according to 
        the increase that would have occurred in the rate of tax under 
        section 298.24 if the rate had been adjusted according to the 
        implicit price deflator for 1987 production.  Those amounts 
        shall be increased in 1989, 1990, and 1991 in the same 
        proportion as the increase in the implicit price deflator as 
        provided in section 298.24, subdivision 1.  In 1992 and 1993, 
        the amounts determined under subdivisions 6, paragraph (a), and 
        9, shall be the distribution per ton determined for distribution 
        in 1991.  In 1994, the amounts determined under subdivisions 6, 
        paragraph (a), and 9, shall be the distribution per ton 
        determined for distribution in 1991 increased in the same 
        proportion as the increase between the fourth quarter of 1989 
        and the fourth quarter of 1992 in the implicit price deflator as 
        defined in section 298.24, subdivision 1.  Those amounts shall 
        be increased in 1995 and subsequent years in the same proportion 
        as the increase in the implicit price deflator as provided in 
        section 298.24, subdivision 1.  
           The distributions per ton determined under subdivisions 5, 
        paragraphs (b) and (d), and 6, paragraphs paragraph (b) and (c) 
        for distribution in 1988 and subsequent years shall be the 
        distribution per ton determined for distribution in 1987.  The 
        distribution per ton under subdivision 6, paragraph (c), for 
        distribution in 2000 and subsequent years shall be 81 percent of 
        the distribution per ton determined for distribution in 1987. 
           Sec. 19.  Minnesota Statutes 1996, section 298.28, 
        subdivision 11, is amended to read: 
           Subd. 11.  [REMAINDER.] (a) The proceeds of the tax imposed 
        by section 298.24 which remain after the distributions and 
        payments in subdivisions 2 to 10a, as certified by the 
        commissioner of revenue, and paragraphs (b) and, (c), and (d) 
        have been made, together with interest earned on all money 
        distributed under this section prior to distribution, shall be 
        divided between the taconite environmental protection fund 
        created in section 298.223 and the northeast Minnesota economic 
        protection trust fund created in section 298.292 as follows:  
        Two-thirds to the taconite environmental protection fund and 
        one-third to the northeast Minnesota economic protection trust 
        fund.  The proceeds shall be placed in the respective special 
        accounts. 
           (b) There shall be distributed to each city, town, school 
        district, and county the amount that it received under section 
        294.26 in calendar year 1977; provided, however, that the amount 
        distributed in 1981 to the unorganized territory number 2 of 
        Lake county and the town of Beaver Bay based on the 
        between-terminal trackage of Erie Mining Company will be 
        distributed in 1982 and subsequent years to the unorganized 
        territory number 2 of Lake county and the towns of Beaver Bay 
        and Stony River based on the miles of track of Erie Mining 
        Company in each taxing district. 
           (c) There shall be distributed to the iron range resources 
        and rehabilitation board the amounts it received in 1977 under 
        section 298.22.  The amount distributed under this paragraph 
        shall be expended within or for the benefit of the tax relief 
        area defined in section 273.134. 
           (d) There shall be distributed to each school district 81 
        percent of the amount that it received under section 294.26 in 
        calendar year 1977. 
           Sec. 20.  Minnesota Statutes 1997 Supplement, section 
        298.296, subdivision 4, is amended to read: 
           Subd. 4.  [TEMPORARY LOAN AUTHORITY.] (a) The board may 
        recommend that up to $7,500,000 from the corpus of the trust may 
        be used for loans as provided in this subdivision.  The money 
        would be available for loans for construction and equipping of 
        facilities constituting (1) a value added iron products plant, 
        which may be either a new plant or a facility incorporated into 
        an existing plant that produces iron upgraded to a minimum of 75 
        percent iron content or any iron alloy with a total minimum 
        metallic content of 90 percent; or (2) a new mine or minerals 
        processing plant for any mineral subject to the net proceeds tax 
        imposed under section 298.015.  A loan under this paragraph may 
        not exceed $5,000,000 for any facility.  
           (b) Additionally, the board must reserve the first 
        $2,000,000 of the net interest, dividends, and earnings arising 
        from the investment of the trust after June 30, 1996, to be used 
        for additional grants for the purposes set forth in paragraph 
        (a).  This amount must be reserved until it is used for the 
        grants or until June 30, 1998 1999, whichever is earlier. 
           (c) Additionally, the board may recommend that up to 
        $5,500,000 from the corpus of the trust may be used for 
        additional grants for the purposes set forth in paragraph (a). 
           (d) The board may require that it receive an equity 
        percentage in any project to which it contributes under this 
        section. 
           (e) The authority to make loans and grants under this 
        subdivision terminates June 30, 1998 1999. 
           Sec. 21.  Minnesota Statutes 1996, section 298.48, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ANNUAL FILING.] By April 1 each year, 
        every owner or lessee of mineral rights who, in respect thereto, 
        has engaged in any exploration for or mining of taconite, 
        semitaconite, or iron-sulphide shall, within six months of June 
        3, 1977, file with the commissioner of revenue all data of the 
        following kinds in the possession or under the control of the 
        owner or lessee which was acquired prior to January 1, 1977 
        during the preceding calendar year: 
           (a) Maps and other records indicating the location, 
        character and extent of exploration for taconite, semitaconite, 
        or iron-sulphides; 
           (b) Logs, notes and other records indicating the nature of 
        minerals encountered during the course of exploration; 
           (c) The results of any analyses of metallurgical tests or 
        samples taken in connection with exploration; 
           (d) The ultimate pit layout and the supporting cross 
        sections; and 
           (e) Any other data which the commissioner of revenue may 
        determine to be relevant to the determination of the location, 
        nature, extent, quality or quantity of unmined ores of said 
        minerals.  The commissioner of revenue shall have the power to 
        may compel submission of the data.  The court administrator of 
        any court of record, upon demand of the commissioner, shall 
        issue a subpoena for the production of any data before the 
        commissioner.  Disobedience of subpoenas issued under this 
        section shall be punished by the district court of the district 
        in which the subpoena is issued as for a contempt of the 
        district court.  By April 1 of each succeeding year every owner 
        or lessee of mineral rights shall file with the commissioner of 
        revenue all such data acquired during the preceding calendar 
        year. 
           Sec. 22.  [USE OF PRODUCTION TAX PROCEEDS.] 
           An amount equal to the amount distributed under Laws 1997, 
        chapter 231, article 8, section 16, shall be used by the iron 
        range resources and rehabilitation board to make equal grants to 
        the cities of Chisholm and Hibbing to be used for the 
        establishment of an industrial park located at the 
        Chisholm/Hibbing airport. 
           Sec. 23.  [REPEALER.] 
           Minnesota Statutes 1996, sections 298.012; 298.21; 298.23; 
        298.34, subdivisions 1 and 4; and 298.391, subdivisions 2 and 5, 
        are repealed. 
           Sec. 24.  [EFFECTIVE DATE.] 
           Section 1 is effective for taxes levied in 2000.  Sections 
        2 and 3 are effective for taxes payable in 1999.  Sections 8; 
        10; 12, other than paragraph (d); 13, paragraph (c); 18; and 19 
        are effective for distributions in 2000 and subsequent years.  
        Sections 13, paragraph (a); and 22 are effective for production 
        year 1998, distributions made in 1999. 
                                   ARTICLE 11
                    TAX INCREMENT FINANCING AND DEVELOPMENT
           Section 1.  Minnesota Statutes 1996, section 469.174, is 
        amended by adding a subdivision to read: 
           Subd. 28.  [DECERTIFY OR DECERTIFICATION.] "Decertify" or 
        "decertification" means the termination of a tax increment 
        financing district which occurs when the county auditor removes 
        all remaining parcels from the district. 
           Sec. 2.  Minnesota Statutes 1996, section 469.175, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ANNUAL DISCLOSURE.] (a) For all tax increment 
        financing districts, whether created prior or subsequent to 
        August 1, 1979, on or before July 1 of each year, The authority 
        shall annually submit to the county board, the county auditor, 
        the school board, state auditor and, if the authority is other 
        than the municipality, the governing body of the municipality, a 
        report of the status of the district.  The report shall include 
        the following information:  the amount and the source of revenue 
        in the account, the amount and purpose of expenditures from the 
        account, the amount of any pledge of revenues, including 
        principal and interest on any outstanding bonded indebtedness, 
        the original net tax capacity of the district and any 
        subdistrict, the captured net tax capacity retained by the 
        authority, the captured net tax capacity shared with other 
        taxing districts, the tax increment received, and any additional 
        information necessary to demonstrate compliance with any 
        applicable tax increment financing plan.  The authority must 
        submit the annual report for a year on or before August 1 of the 
        next year. 
           (b) An annual statement showing the tax increment received 
        and expended in that year, the original net tax capacity, 
        captured net tax capacity, amount of outstanding bonded 
        indebtedness, the amount of the district's and any subdistrict's 
        increments paid to other governmental bodies, the amount paid 
        for administrative costs, the sum of increments paid, directly 
        or indirectly, for activities and improvements located outside 
        of the district, and any additional information the authority 
        deems necessary shall be published in a newspaper of general 
        circulation in the municipality.  If the fiscal disparities 
        contribution under chapter 276A or 473F for the district is 
        computed under section 469.177, subdivision 3, paragraph (a), 
        the annual statement must disclose that fact and indicate the 
        amount of increased property tax imposed on other properties in 
        the municipality as a result of the fiscal disparities 
        contribution.  The commissioner of revenue shall prescribe the 
        form of this statement and the method for calculating the 
        increased property taxes.  The authority must publish the annual 
        statement for a year no later than July 1 August 15 of the next 
        year.  The authority must identify the newspaper of general 
        circulation in the municipality to which the annual statement 
        has been or will be submitted for publication and provide a copy 
        of the annual statement to the state auditor by the time it 
        submits it for publication on or before August 1 of the year in 
        which the statement must be published.  
           (c) The disclosure and reporting requirements imposed by 
        this subdivision apply to districts certified before, on, or 
        after August 1, 1979. 
           Sec. 3.  Minnesota Statutes 1996, section 469.175, 
        subdivision 6, is amended to read: 
           Subd. 6.  [FINANCIAL REPORTING.] (a) The state auditor 
        shall develop a uniform system of accounting and financial 
        reporting for tax increment financing districts.  The system of 
        accounting and financial reporting shall, as nearly as possible: 
           (1) provide for full disclosure of the sources and uses of 
        public funds in the district; 
           (2) permit comparison and reconciliation with the affected 
        local government's accounts and financial reports; 
           (3) permit auditing of the funds expended on behalf of a 
        district, including a single district that is part of a 
        multidistrict project or that is funded in part or whole through 
        the use of a development account funded with tax increments from 
        other districts or with other public money; 
           (4) be consistent with generally accepted accounting 
        principles. 
           (b) The authority must annually submit to the state 
        auditor, on or before July 1, a financial report in compliance 
        with paragraph (a).  Copies of the report must also be provided 
        to the county and school district boards and to the governing 
        body of the municipality, if the authority is not the 
        municipality.  To the extent necessary to permit compliance with 
        the requirement of financial reporting, the county and any other 
        appropriate local government unit or private entity must provide 
        the necessary records or information to the authority or the 
        state auditor as provided by the system of accounting and 
        financial reporting developed pursuant to paragraph (a).  The 
        authority must submit the annual report for a year on or before 
        August 1 of the next year. 
           (c) The annual financial report must also include the 
        following items: 
           (1) the original net tax capacity of the district and any 
        subdistrict; 
           (2) the captured net tax capacity of the district, 
        including the amount of any captured net tax capacity shared 
        with other taxing districts; 
           (3) for the reporting period and for the duration of the 
        district, the amount budgeted under the tax increment financing 
        plan, and the actual amount expended for, at least, the 
        following categories: 
           (i) acquisition of land and buildings through condemnation 
        or purchase; 
           (ii)  site improvements or preparation costs; 
           (iii) installation of public utilities, parking facilities, 
        streets, roads, sidewalks, or other similar public improvements; 
           (iv) administrative costs, including the allocated cost of 
        the authority; 
           (v) public park facilities, facilities for social, 
        recreational, or conference purposes, or other similar public 
        improvements; 
           (4) for properties sold to developers, the total cost of 
        the property to the authority and the price paid by the 
        developer; and 
           (5) the amount of increments rebated or paid to developers 
        or property owners for privately financed improvements or other 
        qualifying costs. 
           (d) The reporting requirements imposed by this subdivision 
        apply to districts certified before, on, and after August 1, 
        1979. 
           Sec. 4.  Minnesota Statutes 1996, section 469.175, 
        subdivision 6a, is amended to read: 
           Subd. 6a.  [REPORTING REQUIREMENTS.] (a) The municipality 
        must annually report to the state auditor the following amounts 
        for the entire municipality: 
           (1) the total principal amount of nondefeased tax increment 
        financing bonds that are outstanding at the end of the previous 
        calendar year; and 
           (2) the total annual amount of principal and interest 
        payments that are due for the current calendar year on (i) 
        general obligation tax increment financing bonds, and (ii) other 
        tax increment financing bonds. 
           (b) The municipality must annually report to the state 
        auditor the following amounts for each tax increment financing 
        district located in the municipality: 
           (1) the type of district, whether economic development, 
        redevelopment, housing, soils condition, mined underground 
        space, or hazardous substance site; 
           (2) the date on which the district is required to be 
        decertified; 
           (3) the amount of any payments and the value of in-kind 
        benefits, such as physical improvements and the use of building 
        space, that are financed with revenues derived from increments 
        and are provided to another governmental unit (other than the 
        municipality) during the preceding calendar year; 
           (4) the tax increment revenues for taxes payable in the 
        current calendar year; 
           (5) whether the tax increment financing plan or other 
        governing document permits increment revenues to be expended (i) 
        to pay bonds, the proceeds of which were or may be expended on 
        activities located outside of the district, (ii) for deposit 
        into a common fund from which money may be expended on 
        activities located outside of the district, or (iii) to 
        otherwise finance activities located outside of the tax 
        increment financing district; and 
           (6) any additional information that the state auditor may 
        require.  
           (c) The report required by this subdivision must be filed 
        with the state auditor on or before July 1 of each year.  The 
        municipality must submit the annual report for a year required 
        by this subdivision on or before August 1 of the next year. 
           (d) The state auditor may provide for combining the reports 
        required by this subdivision and subdivisions 5 and 6 so that 
        only one report is made for each year to the auditor. 
           (e) This section applies to districts certified before, on, 
        and after August 1, 1979. 
           Sec. 5.  Minnesota Statutes 1996, section 469.175, is 
        amended by adding a subdivision to read: 
           Subd. 6b.  [DURATION OF DISCLOSURE AND REPORTING 
        REQUIREMENTS.] The disclosure and reporting requirements imposed 
        by subdivisions 5, 6, and 6a apply with respect to a tax 
        increment financing district beginning with the annual 
        disclosure and reports for the year in which the original net 
        tax capacity of the district was certified and ending with the 
        annual disclosure and reports for the year in which both of the 
        following events have occurred: 
           (1) decertification of the district; and 
           (2) expenditure or return to the county auditor of all 
        remaining revenues derived from tax increments paid by 
        properties in the district. 
           Sec. 6.  Minnesota Statutes 1996, section 469.176, 
        subdivision 7, is amended to read: 
           Subd. 7.  [PARCELS NOT INCLUDABLE IN DISTRICTS.] (a) The 
        authority may request inclusion in a tax increment financing 
        district and the county auditor may certify the original tax 
        capacity of a parcel or a part of a parcel that qualified under 
        the provisions of section 273.111 or 273.112 or chapter 473H for 
        taxes payable in any of the five calendar years before the 
        filing of the request for certification only for 
           (1) a district in which 85 percent or more of the planned 
        buildings and facilities (determined on the basis of square 
        footage) are for a qualified manufacturing or production of 
        tangible personal property, including processing resulting in 
        the change in condition of the property facility or a qualified 
        distribution facility or a combination of both; or 
           (2) a qualified housing district as defined in section 
        273.1399, subdivision 1. 
           (b) (1) A distribution facility means buildings and other 
        improvements to real property that are used to conduct 
        activities in at least each of the following categories: 
           (i) to store or warehouse tangible personal property; 
           (ii) to take orders for shipment, mailing, or delivery; 
           (iii) to prepare personal property for shipment, mailing, 
        or delivery; and 
           (iv) to ship, mail, or deliver property. 
           (2) A manufacturing facility includes space used for 
        manufacturing or producing tangible personal property, including 
        processing resulting in the change in condition of the property, 
        and space necessary for and related to the manufacturing 
        activities. 
           (3) To be a qualified facility, the owner or operator of a 
        manufacturing or distribution facility must agree to pay and pay 
        90 percent or more of the employees of the facility at a rate 
        equal to or greater than 160 percent of the federal minimum wage 
        for individuals over the age of 20. 
           Sec. 7.  Minnesota Statutes 1996, section 469.177, is 
        amended by adding a subdivision to read: 
           Subd. 12.  [DECERTIFICATION OF TAX INCREMENT FINANCING 
        DISTRICT.] The county auditor shall decertify a tax increment 
        financing district when the earliest of the following times is 
        reached: 
           (1) the applicable maximum duration limit under section 
        469.176, subdivisions 1a to 1g; 
           (2) the maximum duration limit, if any, provided by the 
        municipality pursuant to section 469.176, subdivision 1; 
           (3) the time of decertification specified in section 
        469.1761, subdivision 4, if the commissioner of revenue issues 
        an order of noncompliance and the maximum duration limit for 
        economic development districts has been exceeded; 
           (4) upon completion of the required actions to allow 
        decertification under section 469.1763, subdivision 4; or 
           (5) upon receipt by the county auditor of a written request 
        for decertification from the authority that requested 
        certification of the original net tax capacity of the district 
        or its successor. 
           Sec. 8.  Minnesota Statutes 1996, section 469.1771, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [SUSPENSION OF DISTRIBUTION OF TAX 
        INCREMENT.] (a) If an authority fails to make a disclosure or to 
        submit a report containing the information required by section 
        469.175, subdivisions 5 and 6, regarding a tax increment 
        financing district within the time provided in section 469.175, 
        subdivisions 5 and 6, or if a municipality fails to submit a 
        report containing the information required of section 469.175, 
        subdivision 6a, regarding a tax increment financing district 
        within the time provided in section 469.175, subdivision 6a, the 
        state auditor shall mail to the authority a written notice that 
        it or the municipality has failed to make the required 
        disclosure or to submit a required report with respect to a 
        particular district.  The state auditor shall mail the notice on 
        or before the third Tuesday of August of the year in which the 
        disclosure or report was required to be made or submitted.  The 
        notice must describe the consequences of failing to disclose or 
        submit a report as provided in paragraph (b).  If the state 
        auditor has not received a copy of a disclosure or a report 
        described in this paragraph on or before the third Tuesday of 
        November of the year in which the disclosure or report was 
        required to be made or submitted, the state auditor shall mail a 
        written notice to the county auditor to hold the distribution of 
        tax increment from a particular district.  
           (b) Upon receiving written notice from the state auditor to 
        hold the distribution of tax increment, the county auditor shall 
        hold: 
           (1) 25 percent of the amount of tax increment that 
        otherwise would be distributed, if the distribution is made 
        after the third Friday in November but during the year in which 
        the disclosure or report was required to be made or submitted; 
        or 
           (2) 100 percent of the amount of tax increment that 
        otherwise would be distributed, if the distribution is made 
        after December 31 of the year in which the disclosure or report 
        was required to be made or submitted. 
           (c) Upon receiving the copy of the disclosure and all of 
        the reports described in paragraph (a) with respect to a 
        district regarding which the state auditor has mailed to the 
        county auditor a written notice to hold distribution of tax 
        increment, the state auditor shall mail to the county auditor a 
        written notice lifting the hold and authorizing the county 
        auditor to distribute to the authority or municipality any tax 
        increment that the county auditor had held pursuant to paragraph 
        (b).  The state auditor shall mail the written notice required 
        by this paragraph within five working days after receiving the 
        last outstanding item.  The county auditor shall distribute the 
        tax increment to the authority or municipality within 15 working 
        days after receiving the written notice required by this 
        paragraph. 
           (d) Notwithstanding any law to the contrary, any interest 
        that accrues on tax increment while it is being held by the 
        county auditor pursuant to paragraph (b) is not tax increment 
        and may be retained by the county. 
           (e) For purposes of sections 469.176, subdivisions 1a to 
        1g, and 469.177, subdivision 11, tax increment being held by the 
        county auditor pursuant to paragraph (b) is considered 
        distributed to or received by the authority or municipality as 
        of the time that it would have been distributed or received but 
        for paragraph (b). 
           Sec. 9.  Minnesota Statutes 1996, section 469.1771, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DISPOSITION OF PAYMENTS.] If the authority does 
        not have sufficient increments or other available money to make 
        a payment required by this section, the municipality that 
        approved the district must use any available money to make the 
        payment including the levying of property taxes.  Money received 
        by the county auditor under this section must be distributed as 
        excess increments under section 469.176, subdivision 2, 
        paragraph (a), clause (4)., except that if the county auditor 
        receives the payment after (1) 60 days from a municipality's 
        receipt of the state auditor's notification under subdivision 1, 
        paragraph (c), of noncompliance requiring the payment, or (2) 
        the commencement of an action by the county attorney to compel 
        the payment, then no distributions may be made to the 
        municipality that approved the tax increment financing district. 
           Sec. 10.  [469.1791] [TAX INCREMENT FINANCING SPECIAL 
        TAXING DISTRICT.] 
           Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
        the terms defined in this subdivision have the meanings given 
        them. 
           (b) "City" means a city containing a tax increment 
        financing district, the request for certification of which was 
        made before June 2, 1997. 
           (c) "Enabling ordinance" means an ordinance adopted by a 
        city council establishing a special taxing district. 
           (d) "Special taxing district" means all or any portion of 
        the property located within a tax increment financing district, 
        the request for certification of which was made before June 2, 
        1997. 
           (e) "Development or redevelopment services" has the meaning 
        given in the city's enabling ordinance, and may include any 
        services or expenditures the city or its economic development 
        authority or housing and redevelopment authority or port 
        authority may provide or incur under sections 469.001 to 
        469.1081 and 469.124 to 469.134, including, without limitation, 
        amounts necessary to pay the principal of or interest on bonds 
        issued by the city or its economic development authority or 
        housing and redevelopment authority or port authority under 
        section 469.178, for the tax increment financing districts 
        contained within the special taxing district or projects to be 
        funded with increments from tax increment financing districts 
        contained within the special taxing district. 
           (f) "Preexisting obligations" means bonds issued and sold 
        before June 2, 1997, and binding contracts entered into before 
        June 2, 1997, to the extent that the bonds and contracts are 
        secured by a pledge of increments from the tax increment 
        financing district contained within the special taxing district. 
           Subd. 2.  [ESTABLISHMENT OF SPECIAL TAXING DISTRICT.] The 
        governing body of a city may adopt an ordinance establishing a 
        special taxing district, if the conditions under subdivision 3 
        are satisfied.  The ordinance must describe with particularity 
        the property to be included in the district and the development 
        or redevelopment services to be provided in the district.  Only 
        property that is subject to an assessment agreement or 
        development agreement with the city or its economic development 
        authority, housing and redevelopment authority, or port 
        authority, as of the date of adoption of the ordinance, may be 
        included within the special taxing district and be subject to 
        the tax imposed by the city on the district.  The ordinance may 
        not be adopted until after a public hearing has been held on the 
        question.  Notice of the hearing must include the time and place 
        of the hearing, a map showing the boundaries of the proposed 
        district, and a statement that all persons owning property in 
        the proposed district that would be subject to a special tax 
        will be given the opportunity to be heard at the hearing.  
        Within 30 days after adoption of the ordinance under this 
        subdivision, the governing body shall send a copy of the 
        ordinance to the commissioner of revenue. 
           Subd. 3.  [PRECONDITIONS TO ESTABLISH DISTRICT.] (a) A city 
        may establish a special taxing district within a tax increment 
        financing district under this section only if the conditions 
        under paragraphs (b) and (c) are met or if the city elects to 
        exercise the authority under paragraph (d). 
           (b) The city has determined that: 
           (1) total tax increments from the district, including 
        unspent increments from previous years and increments 
        transferred under paragraph (c), will be insufficient to pay the 
        amounts due in a year on preexisting obligations; and 
           (2) this insufficiency of increments resulted from the 
        reduction in property tax class rates enacted in the 1997 and 
        1998 legislative sessions. 
           (c) The city has agreed to transfer any available 
        increments from other tax increment financing districts in the 
        city to pay the preexisting obligations of the district.  This 
        requirement does not apply to any available increments of a 
        qualified housing district, as defined in section 273.1399, 
        subdivision 1.  Notwithstanding any law to the contrary, the 
        city may require a development authority to transfer available 
        increments for any of its tax increment financing districts in 
        the city to make up an insufficiency in another district in the 
        city, regardless of whether the district was established by the 
        development authority or another development authority.  
        Notwithstanding any law to the contrary, increments transferred 
        under this authority must be spent to pay preexisting 
        obligations.  "Development authority" for this purpose means any 
        authority as defined in section 469.174, subdivision 2. 
           (d) If a tax increment financing district does not qualify 
        under paragraphs (b) and (c), the governing body may elect to 
        establish a special taxing district under this section.  If the 
        city elects to exercise this authority, increments from the tax 
        increment financing district and the proceeds of the tax imposed 
        under this section may only be used to pay preexisting 
        obligations and reasonable administrative expenses of the 
        authority for the tax increment financing district.  The tax 
        increment financing district must be decertified when all 
        preexisting obligations have been paid.  
           Subd. 4.  [NOTICE; HEARING.] Notice of the hearing must be 
        given by publication in the official newspaper of the city at 
        least ten but not more than 30 days prior to the hearing.  Not 
        less than ten days before the hearing, notice must also be 
        mailed to the owner of each parcel within the area proposed to 
        be included within the district.  For the purpose of giving 
        mailed notice, owners are those shown on the records of the 
        county auditor.  At the public hearing a person affected by the 
        proposed district may testify on any issues relevant to the 
        proposed district.  The hearing may be adjourned from time to 
        time and the ordinance establishing the district may be adopted 
        at any time within six months after the date of the conclusion 
        of the hearing by a vote of the majority of the governing body 
        of the city. 
           Subd. 5.  [BENEFIT; OBJECTION.] Before the ordinance is 
        adopted or at the hearing at which it is to be adopted, any 
        affected landowner may file a written objection with the city 
        clerk asserting that the landowner's property should not be 
        included in the district or should not be subject to a special 
        tax and objecting to: 
           (1) the fact that the landowner's property is not subject 
        to an assessment agreement or development agreement; or 
           (2) the fact that neither the landowner's property nor its 
        use is benefited by the development or redevelopment services 
        provided. 
        The governing body shall make a determination on the objection 
        within 30 days of its filing.  Pending its determination, the 
        governing body may delay adoption of the ordinance or it may 
        adopt the ordinance with a reservation that the landowner's 
        property may be excluded from the district or district special 
        taxes when a determination is made. 
           Subd. 6.  [APPEAL TO DISTRICT COURT.] Within 30 days after 
        the determination of the objection, any person aggrieved may 
        appeal to the district court by serving a notice upon the mayor 
        or city clerk.  No appeal may be filed if the aggrieved person 
        failed to timely file a written objection with the city clerk 
        under subdivision 5, and the failure was not due to reasonable 
        cause.  The notice must be filed with the court administrator of 
        the district court within ten days after its service.  The city 
        clerk shall furnish the appellant a certified copy of the 
        findings and determination of the governing body.  The court may 
        affirm the action objected to or, if the appellant's objections 
        have merit, modify or cancel it.  If the appellant does not 
        prevail upon the appeal, the costs incurred are taxed to the 
        appellant by the court and judgment entered for them.  All 
        objections are deemed waived unless presented on appeal. 
           Subd. 7.  [MODIFICATION OF SPECIAL TAXING DISTRICT.] The 
        boundaries of the special taxing district may be enlarged or 
        reduced under the procedures for establishment of the district 
        under subdivision 2.  Property added to the district is subject 
        to the special tax imposed within the district after the 
        property becomes a part of the district. 
           Subd. 8.  [SPECIAL TAX AUTHORITY.] A city may impose a 
        special tax within a special taxing district that is reasonably 
        related to the development or redevelopment services provided.  
        The tax may be imposed at a rate or amount sufficient to produce 
        the revenues required to provide the development or 
        redevelopment services within the project area subject to limits 
        under subdivision 9.  The special tax is payable only in a year 
        in which the assessment or development agreement for the 
        property subject to the tax remains in effect for that taxes 
        payable year. 
           Subd. 9.  [LIMITS ON TAX.] (a) The maximum levy for any 
        year may not exceed the least of: 
           (1) the amount specified in the assessment agreement or 
        development agreement; 
           (2) the amount needed to pay preexisting obligations, less 
        available increments including increments transferred from other 
        districts; and 
           (3) the amount of the general ad valorem tax that would 
        have been paid by the captured net tax capacity of the tax 
        increment financing district, if the property tax class rates 
        for taxes payable in 1997 were in effect, less the amount of the 
        general ad valorem tax imposed for the payable year on the 
        captured net tax capacity. 
           (b) If the city uses the proceeds of a tax imposed under 
        this section to pay preexisting obligations secured by 
        increments from more than one tax increment financing district, 
        the city must establish a special taxing district in each of the 
        districts and impose a uniform rate upon all the districts.  The 
        maximum limits under paragraph (a) must be calculated in 
        aggregate for all of the affected districts.  
           (c) If neither the assessment agreement nor the development 
        agreement specify a tax amount but state an agreed market value 
        for the property, the amount specified for purposes of paragraph 
        (a), clause (1), is the market value of the property under the 
        agreement multiplied by the class rate for taxes payable in 1997 
        and multiplied by the sum of the ad valorem tax rates for all 
        the taxing jurisdictions. 
           Subd. 10.  [LIMITS UNDER OTHER LAW.] The tax imposed under 
        this section is not included in the calculation of levies or 
        limits imposed under law or charter.  Section 275.065 does not 
        apply to any tax imposed under this section.  The tax proceeds 
        are subject to the restrictions imposed by law on revenues 
        derived from tax increments and may only be spent for the 
        purposes for which increments may be spent. 
           Subd. 11.  [COLLECTION AND ADMINISTRATION.] The special tax 
        must be imposed on the net tax capacity of the taxable property 
        located in the geographic area described in the ordinance.  
        Taxable net tax capacity must be determined without regard to 
        captured or original net tax capacity under section 469.177 or 
        to the distribution or contribution value under section 
        473F.08.  The city shall compute the amount of the tax for each 
        parcel subject to tax and certify the amount to the county 
        auditor by the date provided in section 429.061, subdivision 3, 
        for the annual certification of special assessment 
        installments.  The special tax is payable and must be collected 
        at the same time and in the same manner as provided for payment 
        and collection of ad valorem taxes.  Special taxes not paid on 
        or before the applicable due date are subject to the same 
        penalty and interest as ad valorem tax amounts not paid by the 
        respective due date.  The due date for the special tax is the 
        due date for the real property tax for the property on which the 
        special tax is imposed. 
           Sec. 11.  Laws 1965, chapter 326, section 1, subdivision 5, 
        as amended by Laws 1975, chapter 110, section 1, and Laws 1985, 
        chapter 87, section 3, is amended to read: 
           Subd. 5.  [PROMOTION OF TOURIST, AGRICULTURAL AND 
        INDUSTRIAL DEVELOPMENT.] The amount to be spent annually for the 
        purposes of this subdivision shall not exceed $1 $4 per capita 
        of the county's population. 
           Sec. 12.  Laws 1967, chapter 170, section 1, subdivision 5, 
        as amended by Laws 1985, chapter 87, section 6, is amended to 
        read: 
           Subd. 5.  Promotion of tourist, agricultural and industrial 
        developments.  The amount to be spent annually for the purposes 
        of this subdivision shall not exceed $1 $4 per capita of the 
        county's population. 
           Sec. 13.  Laws 1997, chapter 231, article 10, section 24, 
        is amended to read: 
           Sec. 24.  [TASK FORCE; TIF TAX INCREMENT FINANCING 
        RECODIFICATION.] 
           (a) A legislative task force is established on tax 
        increment financing and local economic development powers.  The 
        task force consists of 12 members as follows: 
           (1) six members of the house of representatives, at least 
        two of whom are members of the minority caucus, appointed by the 
        speaker; and 
           (2) six members of the senate, at least two of whom are 
        members of the minority caucus, appointed by the committee on 
        committees. 
           (b) The task force shall prepare a bill for the 1998 1999 
        legislative session that recodifies the Tax Increment Financing 
        Act and combines the statutes providing local economic 
        development powers into one law providing a uniform set of 
        powers relative to the use of tax increment financing. 
           (c) In preparing the bill under this section, the task 
        force shall consult with and seek comments from and 
        participation by representatives of the affected local 
        governments. 
           (d) The revisor of statutes and house and senate 
        legislative staff shall staff the task force. 
           (e) This section expires on March 1, 1998 May 1, 1999. 
           Sec. 14.  [GOLDEN VALLEY; TAX INCREMENT FINANCING.] 
           Subdivision 1.  [DISTRICT EXTENSION.] (a) Notwithstanding 
        Minnesota Statutes, section 469.176, subdivision 1c, tax 
        increments from the Valley Square tax increment financing 
        district shall be paid to the housing and redevelopment 
        authority of the city of Golden Valley for property taxes 
        payable in 2001 through 2010 for the following parcels in the 
        district, identified by their property tax identification 
        numbers: 
           (1) 31-118-21-14-0001; 
           (2) 31-118-21-14-0006; 
           (3) 31-118-21-14-0018 through 31-118-21-14-0022; 
           (4) 31-118-21-14-0029 through 31-118-21-14-0032; and 
           (5) 31-118-21-41-0001. 
           (b) Increments permitted to be paid to the authority by 
        paragraph (a) may only be used to pay or defease bonds issued to 
        fund public redevelopment costs within the redevelopment project 
        or bonds issued to refund the bonds. 
           (c) Collection or receipt of increments by the housing and 
        redevelopment authority under paragraph (a) does not reduce or 
        affect the amount of increments that the authority may receive 
        after April 1, 2001, for the district to pay bonds issued before 
        April 1, 1990. 
           (d) Any housing financed or assisted, directly or 
        indirectly, with increments from the district during the 
        extension period permitted by this section must meet the 
        requirements of Minnesota Statutes, section 469.1761. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective the 
        day after compliance with the requirements of Minnesota 
        Statutes, sections 469.1782, subdivision 2, and 645.021, 
        subdivision 3. 
           Sec. 15.  [CITY OF BROWERVILLE; TAX INCREMENT FINANCING.] 
           Subdivision 1.  [EXPENDITURE OUTSIDE DISTRICT.] 
        Notwithstanding the provisions of Minnesota Statutes, section 
        469.1763, the city of Browerville may expend tax increments from 
        tax increment district No. 2 for eligible activities outside tax 
        increment district No. 2 but within development district No. 1.  
        The limitations contained in Minnesota Statutes, section 
        469.1763, subdivision 2, do not apply if the expenditures are 
        used to finance improvements to provide sewer and water service 
        to the tax increment financing district.  
           Subd. 2.  [EFFECTIVE DATE.] This section is effective only 
        after its approval by the governing body of the city of 
        Browerville and compliance with Minnesota Statutes, section 
        645.021, subdivision 3. 
           Sec. 16.  [CITY OF DEEPHAVEN; TAX INCREMENT FINANCING.] 
           Subdivision 1.  [AUTHORIZATION OF EXPENDITURES.] 
        Notwithstanding any law to the contrary, the city of Deephaven 
        may expend revenues derived from tax increment financing 
        district number 1-1 that are available and unencumbered on the 
        date of enactment of this act to finance a public improvement 
        located outside of the district under the conditions in 
        subdivision 2.  The public improvement must be included in the 
        tax increment plan prior to January 1, 1997. 
           Subd. 2.  [CONDITIONS ON USE.] The authority under 
        subdivision 1 to spend increments outside of the tax increment 
        financing district number 1-1 is subject to the following 
        conditions: 
           (1) The city must request decertification of district 
        number 1-1 by no later than December 31, 1998. 
           (2) The city transfers no more than $800,000 of increments 
        from district number 1-1 to a separate account on the city's 
        books and records.  The interest earned on this account is not 
        tax increment for purposes of Minnesota Statutes, sections 
        469.174 to 469.179. 
           (3) Any unspent increments from district number 1-1 after 
        the transfer under clause (2) are excess increments that must be 
        distributed under Minnesota Statutes, section 469.176, 
        subdivision 2, clause (4). 
           (4) Money in the account established under clause (2) may 
        only be spent to pay for the improvement of the Minnetonka 
        boulevard-Carsons Bay bridge project in the city.  If matching 
        funds are not available for the project by December 31, 2002, 
        the balance in the account must be distributed as excess 
        increments under Minnesota Statutes, section 469.176, 
        subdivision 2, clause (4).  Any unspent amounts after completion 
        of the project must be distributed as excess increments under 
        Minnesota Statutes, section 469.176, subdivision 2, clause (4). 
           (5) The authority to spend increments from district number 
        1-1 other than money transferred to the account under clause (2) 
        expires upon the day following final enactment of this act. 
           Subd. 3.  [EFFECTIVE DATE.] This section is effective the 
        day upon approval by the governing body of the city of Deephaven 
        and compliance with Minnesota Statutes, section 645.021, 
        subdivision 3, and applies to revenues expended after the date 
        of final enactment. 
           Sec. 17.  [CITY OF BURNSVILLE; ADMISSIONS TAX.] 
           Subdivision 1.  [IMPOSITION.] Notwithstanding Minnesota 
        Statutes, section 477A.016, or any other contrary provision of 
        law or ordinance, the governing body of the city of Burnsville 
        may by ordinance impose a tax on admissions to an amphitheater 
        to be constructed within the city. 
           Subd. 2.  [RATE.] The tax may be imposed at a rate not to 
        exceed $2 per paid admission.  The governing body of the city 
        may by ordinance change the rate imposed, subject to the 
        limitation in this subdivision. 
           Subd. 3.  [COLLECTION.] The method of collection of the tax 
        must be specified in the ordinance imposing the tax.  The tax is 
        exempt from the rules under Minnesota Statutes, section 
        297A.48.  The commissioner of revenue and the city may enter 
        into agreements for the collection and administration of the tax 
        by the state on behalf of the city.  The commissioner may charge 
        the city a reasonable fee for its services from the proceeds of 
        the tax.  The tax is subject to the same interest, penalties, 
        and enforcement provisions as the tax imposed under Minnesota 
        Statutes, chapter 297A. 
           Subd. 4.  [USE OF PROCEEDS.] The city must pay money 
        received from the tax imposed under this section into a separate 
        fund or account to be used only to pay: 
           (1) the costs of imposing and collecting the tax; and 
           (2) for parking lots or ramps, and other public 
        improvements as defined by Minnesota Statutes, section 429.021, 
        within the boundaries of the tax increment financing district 
        established under section 18, or that serve the area within the 
        district. 
           Subd. 5.  [EFFECTIVE DATE.] This section is effective the 
        day following final enactment. 
           Sec. 18.  [CITY OF BURNSVILLE; TAX INCREMENT FINANCING 
        DISTRICT.] 
           Subdivision 1.  [AUTHORIZATION.] The governing body of the 
        city of Burnsville may create a soils condition tax increment 
        financing district, as provided in this section, for an 
        amphitheater and related infrastructure improvements.  Except as 
        otherwise provided in this section, the provisions of Minnesota 
        Statutes, sections 469.174 to 469.179, apply to the district.  
        The city or its economic development authority may be the 
        "authority" for the purposes of Minnesota Statutes, sections 
        469.174 to 469.179. 
           Subd. 2.  [SPECIAL RULES.] (a) The district established 
        under subdivision 1 is subject to the provisions of Minnesota 
        Statutes, sections 469.174 to 469.179, except as provided in 
        this subdivision. 
           (b) The district may consist of all or any portion of the 
        parcels designated by the city of Burnsville as development 
        district No. 2 as of April 26, 1990. 
           (c) Minnesota Statutes, sections 469.174, subdivision 19, 
        and 469.176, subdivision 4b, do not apply to the district. 
           (d) Upon approval of the tax increment financing plan, the 
        governing body of the city of Burnsville must find that the 
        present value of the projected cost of closure of the former 
        solid waste landfill within the district equals or exceeds the 
        present value of the projected tax increments for the maximum 
        duration of the district permitted by the plan. 
           (e) Notwithstanding the provisions of Minnesota Statutes, 
        section 469.1763, increments from the district established under 
        this section may only be expended on improvements and activities 
        within or directly in aid of the district and on administrative 
        expenses. 
           (f) Notwithstanding the provisions of Minnesota Statutes, 
        section 469.176, subdivision 1b, no tax increment may be paid to 
        the authority after 18 years after receipt by the authority of 
        the first increment for the district. 
           Subd. 3.  [DISTRICT NO. 2-1.] Upon approval of the tax 
        increment financing plan for the district created under 
        subdivision 1, the city shall request decertification of tax 
        increment financing district No. 2-1.  The balance of the tax 
        increments derived from tax increment financing district No. 2-1 
        may be expended under the tax increment financing plan for the 
        district created under subdivision 1.  Minnesota Statutes, 
        section 469.176, subdivision 4c, does not apply to the 
        expenditures.  Minnesota Statutes, section 469.1782, subdivision 
        1, does not apply to tax increment financing district No. 2-1 or 
        the district created under subdivision 1. 
           Subd. 4.  [EFFECTIVE DATE.] This section is effective upon 
        compliance with Minnesota Statutes, sections 469.1782, 
        subdivision 2, and 645.021, subdivision 2. 
           Sec. 19.  [REDEVELOPMENT DISTRICT FOR LAKE STREET PROJECT.] 
           Subdivision 1.  [AUTHORIZATION.] Upon approval of the 
        governing body of the city of Minneapolis by resolution, the 
        Minneapolis community development agency may establish for the 
        Lake Street project a redevelopment tax increment financing 
        district with phased redevelopment.  The district is subject to 
        Minnesota Statutes, sections 469.174 to 469.179, as amended, 
        except as provided in this section.  
           Subd. 2.  [ORIGINAL NET TAX CAPACITY.] Notwithstanding 
        Minnesota Statutes, section 469.174, subdivision 7, the original 
        net tax capacity of the district, as of the date the authority 
        certifies to the county auditor that the authority has entered 
        into a redevelopment or other agreement for rehabilitation of 
        the site or remediation of hazardous substances, is zero.  
           Subd. 3.  [DURATION OF DISTRICT.] Notwithstanding the 
        provisions of Minnesota Statutes, section 469.176, subdivision 
        1b, no tax increment may be paid to the authority after 18 years 
        from the date of receipt by the authority of the first increment 
        generated from the final phase of redevelopment.  In no case may 
        increments be paid to the authority after 30 years from approval 
        of the tax increment plan.  "Final phase of redevelopment" means 
        that phase of redevelopment activity which completes the 
        rehabilitation of the Lake Street site.  
           Subd. 4.  [REMOVAL OF HAZARDOUS SUBSTANCES.] For purposes 
        of the three-year activity rule under Minnesota Statutes, 
        section 469.176, subdivision 1a, and the four-year action 
        requirement under Minnesota Statutes, section 469.176, 
        subdivision 6, the removal of hazardous substances from the site 
        shall constitute a qualifying activity.  
           Subd. 5.  [FIVE-YEAR RULE.] The five-year period under 
        Minnesota Statutes, section 469.1763, subdivision 3, is extended 
        to ten years.  
           Subd. 6.  [NO POOLING AUTHORITY.] Notwithstanding the 
        provisions of Minnesota Statutes, section 469.1763, increments 
        from the district established under this section may only be 
        expended on improvements and activities within or directly in 
        aid of the district and on administrative expenses related to 
        the district. 
           Subd. 7.  [EFFECTIVE DATE.] This section is effective upon 
        compliance with Minnesota Statutes, sections 469.1782, 
        subdivision 2, and 645.021, subdivision 2. 
           Sec. 20.  [CITY OF WEST ST. PAUL; DAKOTA COUNTY HOUSING AND 
        REDEVELOPMENT AUTHORITY; EXCEPTION TO TAX INCREMENT FINANCING 
        REQUIREMENTS.] 
           Subdivision 1.  [GENERALLY.] The city of West St. Paul and 
        the Dakota county housing and redevelopment authority may 
        operate the Signal Hills redevelopment tax increment financing 
        district (Dakota county housing and redevelopment authority tax 
        increment financing district No. 10) under the provisions of 
        this section. 
           Subd. 2.  [TIME LIMITS FOR INITIATING ACTION.] The time 
        limits for initiation of activity in the district and reporting 
        the initiation to the county auditor under Minnesota Statutes, 
        section 469.176, subdivision 6, are extended to five and six 
        years, respectively. 
           Subd. 3.  [FIVE-YEAR RULE.] The district is subject to the 
        requirement of Minnesota Statutes, section 469.1763, subdivision 
        3, except that the five-year period is extended to a nine-year 
        period. 
           Subd. 4.  [THREE-YEAR RULE; EXCEPTION.] The district is 
        subject to the provisions of Minnesota Statutes, section 
        469.176, subdivision 1a, except that any references to three 
        years in that subdivision are five years for purposes of this 
        section. 
           Subd. 5.  [POOLING EXCEPTION.] The city and the Dakota 
        county housing and redevelopment authority may elect to increase 
        the limit on the percentage of increments under Minnesota 
        Statutes, section 469.1763, subdivision 2, that may be spent 
        outside of the district to 40 percent, if all the amounts spent 
        outside of the district, other than administrative expenses, are 
        for improvements and activities within or directly in aid of the 
        South Robert Street redevelopment tax increment financing 
        district (Dakota county housing and redevelopment authority tax 
        increment financing district No. 4). 
           Subd. 6.  [EFFECTIVE DATE.] This section is effective upon 
        approval by the governing bodies of the city of West St. Paul 
        and Dakota county and upon compliance by the city with Minnesota 
        Statutes, section 645.021, subdivision 3. 
           Sec. 21.  [CITY OF RENVILLE; TAX INCREMENT FINANCING 
        DISTRICT.] 
           Subdivision 1.  [CERTIFICATION DATE.] Except as otherwise 
        provided in this section, for purposes of Minnesota Statutes, 
        section 273.1399, and chapter 469, the certification date of the 
        addition of the following described property to tax increment 
        financing district No. 1 in the city of Renville is deemed to be 
        November 1, 1994:  Lots 5, 6, 7, 8, and 9, Block 32, O'Connor's 
        Addition. 
           Subd. 2.  [ORIGINAL NET TAX CAPACITY; ORIGINAL LOCAL TAX 
        RATE.] The original net tax capacity of property in subdivision 
        1 is $432. 
           Subd. 3.  [EXPENDITURE OF INCREMENT.] Notwithstanding the 
        provisions of Minnesota Statutes, section 469.176, subdivision 
        1b, the city of Renville may collect and expend tax increment 
        generated by the lots cited in subdivision 1, in tax increment 
        financing district No. 1 in the city of Renville, until December 
        31, 2003. 
           Subd. 4.  [STATE AID OFFSET.] Minnesota Statutes, section 
        469.1782, subdivision 1, does not apply to the extension allowed 
        by this section. 
           Subd. 5.  [EFFECTIVE DATE.] This section is effective upon 
        compliance with Minnesota Statutes, sections 469.1782, 
        subdivision 2, and 645.021, subdivision 3. 
           Sec. 22.  [CITY OF FOLEY; TAX INCREMENT FINANCING.] 
           Subdivision 1.  [EXPENDITURE AUTHORITY.] Notwithstanding 
        any law to the contrary, expenditures by the city of Foley 
        before January 1, 1998, of revenue derived from tax increment 
        financing district number 1 to finance a wastewater treatment 
        facility located outside of the district are authorized 
        expenditures of that revenue.  
           Subd. 2.  [CONDITIONS.] The authority to spend increment 
        under subdivision 1 on the wastewater treatment facility is 
        subject to the following conditions: 
           (1) the city must request decertification of tax increment 
        financing district number 1 by no later than December 31, 1998; 
        and 
           (2) any unspent increments and any increments collected 
        after December 31, 1997, must be distributed under Minnesota 
        Statutes, section 469.176, subdivision 2, clause (4). 
           Subd. 3.  [EFFECTIVE DATE.] This section is effective upon 
        local approval by the governing body of the city of Foley and 
        compliance with Minnesota Statutes, section 645.021, subdivision 
        3. 
           Sec. 23.  [GARRISON; TAX INCREMENT FINANCING.] 
           The reduction in state aid under Minnesota Statutes, 
        section 273.1399, for the city of Garrison as a result of tax 
        increment financing district number 1 does not apply for aids 
        paid in fiscal years 1999 and 2000.  The aid reduction for 
        fiscal years 1999 and 2000 must be deducted from aid payable to 
        the city in the year or years after the remainder of the aid 
        reduction for tax increment financing district number 1 has been 
        made. 
           Sec. 24.  [NEW BRIGHTON; TAX INCREMENT FINANCING.] 
           Subdivision 1.  [SPECIAL RULES.] (a) If the city elects 
        upon the adoption of the tax increment financing plan for the 
        district, the rules under this section apply to redevelopment or 
        soils condition tax increment financing districts established by 
        the city of New Brighton or a development authority of the city 
        in the area bounded on the north by the south boundary line of 
        tax increment district number 8 extended to Long Lake regional 
        park, on the east by interstate highway 35W, on the south by 
        interstate highway 694, and on the west by Long Lake regional 
        park. 
           (b) The five-year rule under Minnesota Statutes, section 
        469.1763, subdivision 3, is extended to nine years for the 
        district. 
           (c) The limitations on spending increment outside of the 
        district under Minnesota Statutes, section 469.1763, subdivision 
        2, do not apply, but increments may only be expended on 
        improvements or activities within the area defined in paragraph 
        (a). 
           Subd. 2.  [EXPIRATION.] (a) The exception from the 
        limitations of Minnesota Statutes, section 469.1763, subdivision 
        2, expires 18 years after the receipt of the first increment 
        from a district to which the city has elected that this section 
        applies. 
           (b) The authority to approve tax increment financing plans 
        to establish a tax increment financing district under this 
        section expires on December 31, 2008. 
           Subd. 3.  [EFFECTIVE DATE.] This section is effective upon 
        approval by the governing bodies of the city of New Brighton and 
        Ramsey county and upon compliance by the city with Minnesota 
        Statutes, section 645.021, subdivision 3. 
           Sec. 25.  [MEEKER COUNTY; ECONOMIC DEVELOPMENT AUTHORITY; 
        ESTABLISHMENT AND POWERS.] 
           Subdivision 1.  [ESTABLISHMENT.] The board of county 
        commissioners of Meeker county may establish an economic 
        development authority in the manner provided in Minnesota 
        Statutes, sections 469.090 to 469.1081, and may impose limits on 
        the authority enumerated in Minnesota Statutes, section 469.092. 
        The economic development authority has all of the powers and 
        duties granted to or imposed upon economic development 
        authorities under Minnesota Statutes, sections 469.090 to 
        469.1081.  The county economic development authority may create 
        and define the boundaries of economic development districts at 
        any place or places within the county, provided that a project 
        as recommended by the county authority that is to be located 
        within the corporate limits of a city may not be commenced 
        without the approval of the governing body of the city.  
        Minnesota Statutes, section 469.174, subdivision 10, and the 
        contiguity requirement specified under Minnesota Statutes, 
        section 469.101, subdivision 1, do not apply to limit the areas 
        that may be designated as county economic development districts. 
           Subd. 2.  [POWERS.] If an economic development authority is 
        established as provided in subdivision 1, the county may 
        exercise all of the powers relating to an economic development 
        authority granted to a city under Minnesota Statutes, sections 
        469.090 to 469.1081, or other law, including the power to levy a 
        tax to support the activities of the authority. 
           Subd. 3.  [EFFECTIVE DATE.] This section is effective the 
        day after the Meeker county board's approval is filed as 
        provided in Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 26.  [KITTSON COUNTY; ECONOMIC DEVELOPMENT AUTHORITY; 
        ESTABLISHMENT AND POWERS.] 
           Subdivision 1.  [ESTABLISHMENT.] The board of county 
        commissioners of Kittson county may establish an economic 
        development authority in the manner provided in Minnesota 
        Statutes, sections 469.090 to 469.1081, and may impose limits on 
        the authority enumerated in Minnesota Statutes, section 469.092. 
        The economic development authority has all of the powers and 
        duties granted to or imposed upon economic development 
        authorities under Minnesota Statutes, sections 469.090 to 
        469.1081.  The county economic development authority may create 
        and define the boundaries of economic development districts at 
        any place or places within the county, provided that a project 
        as recommended by the county authority that is to be located 
        within the corporate limits of a city may not be commenced 
        without the approval of the governing body of the city.  
        Minnesota Statutes, section 469.174, subdivision 10, and the 
        contiguity requirement specified under Minnesota Statutes, 
        section 469.101, subdivision 1, do not apply to limit the areas 
        that may be designated as county economic development districts. 
           Subd. 2.  [POWERS.] If an economic development authority is 
        established as provided in subdivision 1, the county may 
        exercise all of the powers relating to an economic development 
        authority granted to a city under Minnesota Statutes, sections 
        469.090 to 469.1081, or other law, including the power to levy a 
        tax to support the activities of the authority. 
           Subd. 3.  [EFFECTIVE DATE.] This section is effective the 
        day after the Kittson county board's approval is filed as 
        provided in Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 27.  [BLUE EARTH COUNTY; ECONOMIC DEVELOPMENT 
        AUTHORITY; ESTABLISHMENT AND POWERS.] 
           Subdivision 1.  [ESTABLISHMENT.] The board of county 
        commissioners of Blue Earth county may establish an economic 
        development authority in the manner provided in Minnesota 
        Statutes, sections 469.090 to 469.1081, and may impose limits on 
        the authority enumerated in Minnesota Statutes, section 469.092. 
        The economic development authority has all of the powers and 
        duties granted to or imposed upon economic development 
        authorities under Minnesota Statutes, sections 469.090 to 
        469.1081.  The county economic development authority may create 
        and define the boundaries of economic development districts at 
        any place or places within the county, provided that a project 
        as recommended by the county authority that is to be located 
        within the corporate limits of a city may not be commenced 
        without the approval of the governing body of the city.  
        Minnesota Statutes, section 469.174, subdivision 10, and the 
        contiguity requirement specified under Minnesota Statutes, 
        section 469.101, subdivision 1, do not apply to limit the areas 
        that may be designated as county economic development districts. 
           Subd. 2.  [POWERS.] If an economic development authority is 
        established as provided in subdivision 1, the county may 
        exercise all of the powers relating to an economic development 
        authority granted to a city under Minnesota Statutes, sections 
        469.090 to 469.1081, or other law, including the power to levy a 
        tax to support the activities of the authority. 
           Subd. 3.  [HOUSING PROGRAMS.] The Blue Earth county 
        economic development authority may exercise its authority for 
        purposes of consolidating housing programs with the city of 
        Mankato. 
           Subd. 4.  [EFFECTIVE DATE.] This section is effective the 
        day after the Blue Earth county board's approval is filed as 
        provided in Minnesota Statutes, section 645.021, subdivision 3. 
           Sec. 28.  [SPECIAL TAXING AUTHORITY; BROOKLYN CENTER.] 
           Subdivision 1.  [AUTHORITY.] The city of Brooklyn Center 
        may establish a special taxing district and impose a tax under 
        Minnesota Statutes, section 469.1791, for the following 
        described property within tax increment financing district No. 3 
        in the city: 
           All that property that is located within the area bounded 
        by a continuous line beginning at a point at the intersection of 
        county road No. 10 and trunk highway No. 100 and going 
        southwesterly along the center line of trunk highway No. 100 to 
        its intersection with Brooklyn Boulevard; thence northerly along 
        the center line of Brooklyn Boulevard to a point 476.52 feet 
        northerly of the intersection of Brooklyn Boulevard and county 
        road No. 10; thence easterly from that point along a straight 
        line to the center line of Shingle Creek; thence southerly along 
        the center line of Shingle Creek to its intersection with the 
        north right-of-way line of county road No. 10; thence easterly 
        along the north right-of-way line of county road No. 10 to the 
        east right-of-way line of Shingle Creek Parkway; thence 
        northerly along the west property line of lot 2, block 2, 
        Brookdale square addition 165.43 feet; thence northeasterly 
        along the northwest property line of lot 2, block 2, Brookdale 
        square addition 297.73 feet; thence easterly along the north 
        property line of lot 2, block 2, Brookdale square addition 
        914.34 feet; thence southerly 517.9 feet along the easterly 
        property line of lot 2, block 2, Brookdale square addition 
        extended to the center line of county road No. 10; thence 
        easterly along the center line of county road No. 10 to the 
        point of the beginning. 
           Subd. 2.  [EXCEPTIONS FROM GENERAL LAW.] The following 
        requirements under general law do not apply to a special taxing 
        district created under this section: 
           (1) the preconditions for establishing a special taxing 
        district under Minnesota Statutes, section 469.1791, subdivision 
        3; 
           (2) the authority to file written objections under 
        Minnesota Statutes, section 469.1791, subdivision 5, and to 
        appeal to the district court under Minnesota Statutes, section 
        469.1791, subdivision 6; and 
           (3) the limits on the maximum levy and the use of the 
        proceeds under Minnesota Statutes, section 469.1791, subdivision 
        9. 
           Subd. 3.  [RESTRICTIONS.] The authority to impose the tax 
        under this section is limited to property that is subject to an 
        assessment agreement with the city or its economic development 
        authority under Minnesota Statutes, section 469.177, subdivision 
        8, as of the date of adoption of the enabling ordinance.  The 
        maximum levy may not exceed the amount specified in the 
        assessment agreement. 
           Subd. 4.  [EFFECTIVE DATE.] This section is effective upon 
        compliance by the city of Brooklyn Center with Minnesota 
        Statutes, section 645.021, subdivision 3. 
           Sec. 29.  [EFFECTIVE DATE.] 
           Sections 1, 5, and 7 apply to tax increment financing 
        districts certified on, before, and after August 1, 1979. 
           Sections 2, 3, 4, and 8 are effective for disclosures 
        required to be made and reports required to be submitted 
        beginning in 1999. 
           Section 6 is effective for tax increment financing 
        districts for which the request for certification is made after 
        April 30, 1998. 
           Section 9 is effective the day following final enactment 
        and applies to tax increment financing districts certified on, 
        before, and after August 1, 1979. 
           Section 10 is effective beginning for taxes payable in 1999.
           Section 11 is effective upon compliance by Itasca county 
        with Minnesota Statutes, section 645.021, subdivision 3. 
           Section 12 is effective upon compliance by Koochiching 
        county with Minnesota Statutes, section 645.021, subdivision 3. 
                                   ARTICLE 12 
                               BORDER CITY ZONES 
           Section 1.  [272.0212] [BORDER DEVELOPMENT ZONE PROPERTY.] 
           Subdivision 1.  [EXEMPTION.] All qualified property in a 
        zone is exempt to the extent and for the duration provided by 
        the zone designation and under sections 469.1731 to 469.1735. 
           Subd. 2.  [LIMITS ON EXEMPTION.] Property in a zone is not 
        exempt under this section from the following: 
           (1) special assessments; 
           (2) ad valorem property taxes specifically levied for the 
        payment of principal and interest on debt obligations; and 
           (3) all taxes levied by a school district, except equalized 
        school levies as defined in section 273.1398, subdivision 1, 
        paragraph (e). 
           Subd. 3.  [STATE AID.] Property exempt under this section 
        is included in the net tax capacity for purposes of computing 
        aids under chapter 477A. 
           Subd. 4.  [DEFINITIONS.] (a) For purposes of this section, 
        the following terms have the meanings given. 
           (b) "Qualified property" means class 3 and class 5 property 
        as defined in section 273.13 that is located in a zone and is 
        newly constructed after the zone was designated, including the 
        land that contains the improvements. 
           (c) "Zone" means a border city development zone designated 
        under the provisions of section 469.1731. 
           Subd. 5.  [FINDING REQUIRED.] The exemption under this 
        section is available to a parcel only if the municipality 
        determines that the granting of the tax exemption is necessary 
        to enable a business to expand within a zone or to attract a 
        business to a zone.  
           Sec. 2.  Minnesota Statutes 1997 Supplement, section 
        469.169, subdivision 11, is amended to read: 
           Subd. 11.  [ADDITIONAL BORDER CITY ALLOCATIONS.] In 
        addition to tax reductions authorized in subdivisions 7, 8, 9, 
        and 10, the commissioner may allocate $1,500,000 for tax 
        reductions to border city enterprise zones in cities located on 
        the western border of the state.  The commissioner shall make 
        allocations to zones in cities on the western border on a per 
        capita basis.  Allocations made under this subdivision may be 
        used for tax reductions as provided in section 469.171, or other 
        offsets of taxes imposed on or remitted by businesses located in 
        the enterprise zone, but only if the municipality determines 
        that the granting of the tax reduction or offset is necessary in 
        order to retain a business within or attract a business to the 
        zone.  Limitations on allocations under section 469.169, 
        subdivision 7, do not apply to this allocation.  Enterprise 
        zones that receive allocations under this subdivision may 
        continue in effect for purposes of those allocations through 
        December 31, 1998. 
           Sec. 3.  Minnesota Statutes 1996, section 469.169, is 
        amended by adding a subdivision to read: 
           Subd. 12.  [ADDITIONAL ZONE ALLOCATIONS.] In addition to 
        tax reductions authorized in subdivisions 7, 8, 9, 10, and 11, 
        the commissioner shall allocate tax reductions to border city 
        enterprise zones located on the western border of the state.  
        The cumulative total amount of tax reductions for all years of 
        the program under sections 469.1731 to 469.1735, is limited to: 
           (1) for the city of Breckenridge, $394,000; 
           (2) for the city of Dilworth, $118,200; 
           (3) for the city of East Grand Forks, $788,000; 
           (4) for the city of Moorhead, $591,000; and 
           (5) for the city of Ortonville, $78,800. 
           Allocations made under this subdivision may be used for tax 
        reductions provided in section 469.1732 or 469.1734 or for 
        reimbursements under section 469.1735, subdivision 3, but only 
        if the municipality determines that the granting of the tax 
        reduction or offset is necessary to enable a business to expand 
        within a city or to attract a business to a city.  Limitations 
        on allocations under subdivision 7 do not apply to this 
        allocation. 
           Sec. 4.  Minnesota Statutes 1996, section 469.170, is 
        amended by adding a subdivision to read: 
           Subd. 5e.  [LIMITS ON MULTIYEAR PLANS.] The requirements 
        for a multiyear enterprise zone tax credit distribution plan 
        under subdivisions 5a to 5d apply only for: 
           (1) each business that will receive more than $25,000 in 
        credits in a year; or 
           (2) tax reductions under section 469.171, subdivision 1, 
        for businesses in areas designated under section 469.171, 
        subdivision 5. 
           Sec. 5.  Minnesota Statutes 1996, section 469.171, 
        subdivision 9, is amended to read: 
           Subd. 9.  [RECAPTURE.] Any business that (1) receives tax 
        reductions authorized by subdivisions 1 to 8, classification as 
        employment property pursuant to section 469.170, or an 
        alternative local contribution under section 469.169, 
        subdivision 5; and (2) ceases to operate its facility located 
        within the enterprise zone within two years after the expiration 
        of the tax reductions shall repay the amount of the tax 
        reduction or local contribution pursuant to the following 
        schedule:  
              Termination                                   Repayment
              of operations                                   Portion
              Less than 6 months                            100 percent
              6 months or more but less than 12 months       75 percent
              12 months or more but less than 18 months      50 percent
              18 months or more but less than 24 months      25 percent
        received during the two years immediately before it ceased to 
        operate in the zone. 
           The repayment must be paid to the state to the extent it 
        represents a tax reduction under subdivisions 1 to 8 and to the 
        municipality to the extent it represents a property tax 
        reduction or other local contribution.  Any amount repaid to the 
        state must be credited to the amount certified as available for 
        tax reductions in the zone pursuant to section 469.169, 
        subdivision 7.  Any amount repaid to the municipality must be 
        used by the municipality for economic development purposes.  The 
        commissioner of revenue may seek repayment of tax credits from a 
        business ceasing to operate within an enterprise zone by 
        utilizing any remedies available for the collection of tax.  
           Sec. 6.  [469.1731] [BORDER CITY DEVELOPMENT ZONES.] 
           Subdivision 1.  [DESIGNATION.] To encourage economic 
        development, to revitalize the designated areas, to expand tax 
        base and economic activity, and to provide job creation, growth, 
        and retention, the following border cities may designate, by 
        resolution, areas of the city as development zones after a 
        public hearing upon 30-day notice. 
           (a) The city of Breckenridge may designate all or any part 
        of the city as a zone. 
           (b) The city of Dilworth may designate between one and six 
        areas of the city as zones containing not more than 100 acres in 
        the aggregate. 
           (c) The city of East Grand Forks may designate all or any 
        part of the city as a zone. 
           (d) The city of Moorhead may designate between one and six 
        areas of the city as zones containing not more than 100 acres in 
        the aggregate. 
           (e) The city of Ortonville may designate between one and 
        six areas of the city as zones containing not more than 100 
        acres in the aggregate. 
           Subd. 2.  [DEVELOPMENT PLAN.] (a) Before designating a 
        development zone, the city must adopt a written development plan 
        that addresses: 
           (1) evidence of adverse economic conditions within the area 
        resulting from competition with the bordering state or the 1997 
        floods or both; 
           (2) the viability of the development plan; 
           (3) public and private commitment to and other resources 
        available for the area; 
           (4) how designation would relate to a development and 
        revitalization plan for the city as a whole; and 
           (5) how the local regulatory burden will be eased for 
        businesses operating in the area. 
           (b) The development plan must include: 
           (1) a map of the proposed zone that indicates the 
        geographic boundaries, the total area, and the present use and 
        conditions generally of land and structures within the area; 
           (2) evidence of community support and commitment from 
        business interests; 
           (3) a description of the methods proposed to increase 
        economic opportunity and expansion, facilitate infrastructure 
        improvement, and identify job opportunities; and 
           (4) the duration of the zone designation, not to exceed 15 
        years. 
           Subd. 3.  [FILING.] The city must file a copy of the 
        resolution and development plan with the commissioner of trade 
        and economic development.  The designation takes effect for the 
        first calendar year that begins more than 90 days after the 
        filing. 
           Sec. 7.  [469.1732] [TAX INCENTIVES WITHIN DEVELOPMENT 
        ZONES.] 
           Subdivision 1.  [AUTHORITY.] A business that conducts 
        business activity within a border city development zone 
        designated under section 469.1731 may qualify for the property 
        tax exemption under section 272.0212, the corporate franchise 
        tax credit under subdivision 2, and the sales tax exemption 
        under section 469.1734, subdivision 6. 
           Subd. 2.  [BORDER CITY ZONE CREDIT.] (a) A corporation may 
        claim a credit against the tax imposed by sections 290.02, 
        290.0921, and 290.0922, subdivision 1, paragraph (a).  The 
        commissioner of revenue shall prescribe the method in which the 
        credit may be claimed.  This may include allowing the credit 
        only as a separately processed claim for refund. The allowable 
        credit is based on the tax liability attributable to business 
        conducted within a zone, and may be equal to all or a portion of 
        that liability, as determined by the city. 
           (b) "Tax liability" means the tax liability under sections 
        290.02, 290.0921, and 290.0922, subdivision 1, paragraph (a), 
        after any other credits. 
           (c) The tax liability attributable to business conducted 
        within a zone means the taxpayer's tax liability multiplied by a 
        fraction: 
           (1) the numerator of which is: 
           (i) the ratio of the taxpayer's property factor under 
        section 290.191 located in the border city development zone, for 
        the taxable year over the property factor denominator determined 
        under section 290.191, plus 
           (ii) the ratio of the taxpayer's payroll factor under 
        section 290.191 located in the border city development zone, for 
        the taxable year over the payroll factor denominator determined 
        under section 290.191; and 
           (2) the denominator of which is two. 
           (d) Any portion of the taxpayer's tax liability that is 
        attributable to illegal activity conducted in the zone must not 
        be used to calculate a credit under this subdivision. 
           (e) The credit allowed under this subdivision continues 
        through the taxable year in which the zone designation expires. 
           (f) To be eligible for a credit under this subdivision, the 
        taxpayer must file an annual return under chapter 290. 
           (g) The credit allowed under this subdivision may not 
        exceed the lesser of: 
           (1) the tax liability of the taxpayer for the taxable year; 
        or 
           (2) the amount of the tax credit certificates received by 
        the taxpayer from the city, less any tax credit certificates 
        used under section 469.1734, subdivisions 4, 5, and 6. 
           Subd. 3.  [PHASEOUT AT END OF ZONE DURATION.] During the 
        last three years of the duration of a border city development 
        zone, the available exemptions, subtractions, or credits are 
        reduced by the following percentages for the taxes payable year 
        or the taxable years that begin during: 
           (1) the calendar year that is two years before the final 
        year of designation as a development zone, 25 percent; 
           (2) the calendar year that is immediately before the final 
        year of designation as a development zone, 50 percent; and 
           (3) for the final calendar year of designation as a 
        development zone, 75 percent. 
           Sec. 8.  [469.1733] [DISQUALIFIED TAXPAYERS.] 
           Subdivision 1.  [DELINQUENT TAXPAYERS.] An individual or a 
        business is not eligible for the exemptions or credits available 
        under section 272.0212, 469.1732, or 469.1734, if the individual 
        or business owes delinquent amounts under chapter 290, 296, 297, 
        297A, 297B, or 297C or if the individual or business owns 
        property located in the city or county in which the zone is 
        located on which the property taxes are delinquent.  Delinquency 
        is determined as of the date of the application for a 
        certificate under section 469.1735, subdivision 1.  As a 
        condition of receiving a certificate, the individual or business 
        must authorize the department of revenue to disclose information 
        necessary to make the determination under this subdivision 
        notwithstanding any provision of chapter 270B or other law to 
        the contrary. 
           Subd. 2.  [RELOCATION WITHIN COUNTY.] If a business located 
        in the county in which the border city development zone is 
        located relocates from outside a zone into a zone, the business 
        is not eligible for the exemptions or credits available in the 
        border city development zone, unless the governing body of the 
        city, for a business located in an incorporated area, or the 
        county, for a business located outside of an incorporated area, 
        approves the relocation of the business. 
           Subd. 3.  [RELOCATION FROM OUTSIDE COUNTY.] (a) If a 
        business relocates more than 25 full-time equivalent jobs from a 
        location in Minnesota outside of the county in which the zone is 
        located, the business must notify the commissioner of trade and 
        economic development and the city and county governments from 
        which the jobs are being relocated.  A business may satisfy the 
        notification requirement by notifying the commissioner of trade 
        and economic development, the city, and county of its intent to 
        transfer jobs to a zone before actually doing so.  The business 
        is not eligible for the exemptions and credits available in the 
        border city development zone, if the governing body of the city 
        or county from which the jobs are being relocated adopts a 
        resolution objecting to the relocation within 60 days after its 
        receipt of the notice. 
           (b) The business becomes eligible for the exemptions and 
        credits available in the zone when each city and county that 
        objected to the relocation rescinds its objection by resolution. 
           (c) A city or county that objects to the relocation of jobs 
        must file a copy of the resolution with the commissioner of 
        trade and economic development and the city that created the 
        border city development zone into which the jobs were or intend 
        to be transferred. 
           Sec. 9.  [469.1734] [TAX INCENTIVES OUTSIDE ZONES.] 
           Subdivision 1.  [AUTHORITY.] A city with authority to 
        establish a border city development zone under section 469.1731 
        may grant the tax incentives provided by this section.  This 
        authority applies only to projects located outside of a zone, 
        except as provided in subdivision 6. 
           Subd. 2.  [DEFINITIONS.] For purposes of this section, 
        "qualifying business" means the business conducted by a 
        corporation, partnership, or individual doing business from a 
        fixed location within the border city but located outside of the 
        border city development zone. 
           Subd. 3.  [PROPERTY TAX.] (a) A city may grant a partial or 
        complete exemption from property taxation of all buildings, 
        structures, fixtures, and improvements used in or necessary to a 
        qualifying business for a period not exceeding five taxes 
        payable years.  A partial exemption must be stated as a 
        percentage of the total ad valorem taxes assessed against the 
        property. 
           (b) In addition to, or in lieu of, a property tax exemption 
        under paragraph (a), a city may establish an amount due as 
        payments in lieu of ad valorem taxes on buildings, structures, 
        fixtures, and improvements used by the qualifying business.  The 
        city council shall designate the amount of the payments for each 
        year and the beginning year and the concluding year for payments 
        in lieu of taxes.  The option to make payments in lieu of taxes 
        under this section is limited to 20 consecutive taxes payable 
        years for any qualifying business.  To establish the amount of 
        payments in lieu of taxes, the city council may use actual or 
        estimated levels of assessment and taxation or may designate 
        different amounts of payments in lieu of other taxes in 
        different years to recognize future expansion plans of a 
        qualifying business or other considerations.  The payments in 
        lieu shall be collected and distributed in the same manner as ad 
        valorem taxes. 
           (c) The city council must determine whether granting the 
        exemption or payments in lieu of taxes, or both, is necessary to 
        enable a business to expand in the city or to attract a business 
        to the city and is in the best interest of the city.  If it so 
        determines, the city must give its approval. 
           Subd. 4.  [INCOME TAX.] (a) Upon application by the 
        qualifying business to the city, and approval of the city, a 
        qualifying business shall receive a credit against taxes imposed 
        under chapter 290, other than the tax imposed under section 
        290.92, based on the taxable net income of the qualified 
        business attributable to the border city, but outside the border 
        city development zone, multiplied by 9.8 percent in the case of 
        a taxpayer under section 290.02, and 8.5 percent in the case of 
        a taxpayer taxable under section 290.06, subdivision 2c.  The 
        attributable net income of a qualified business in the border 
        city is determined by multiplying the taxable net income of the 
        business entity, determined as if the business were a C 
        corporation, by a fraction: 
           (1) the numerator of which is: 
           (i) the ratio of the taxpayer's property factor under 
        section 290.191 located in the border city, but outside of the 
        border city development zone, for the taxable year over the 
        property factor denominator determined under section 290.191, 
        plus 
           (ii) the ratio of the taxpayer's payroll factor under 
        section 290.191 located in the border city, but outside of the 
        border city development zone, for the taxable year over the 
        payroll factor denominator determined under section 290.191; and 
           (2) the denominator of which is two. 
           (b) The credit under this subdivision applies after any 
        credit allowed under subdivision 5. 
           (c) After any notice period required by subdivision 7, the 
        city council must determine whether granting the credit is in 
        the best interest of the city, and if it so determines, must 
        approve the granting of the credit and determine its amount. 
           (d) The credit under this subdivision may not exceed the 
        amount of the tax credit certificates received by the taxpayer 
        from the city, less any tax credit certificates used under 
        section 469.1732, subdivision 2, and subdivisions 5 and 6. 
           (e) No taxpayer may receive the credit under this 
        subdivision for more than five taxable years. 
           Subd. 5.  [BORDER CITY NEW INDUSTRY CREDIT.] (a) To provide 
        a tax incentive for new industry in border cities, a corporation 
        may be allowed a credit against the tax imposed by section 
        290.02.  The commissioner shall prescribe the method in which 
        the credit may be claimed.  This may include allowing the credit 
        only as a separately processed claim for refund. 
           (b) The credit equals one percent of the wages and salaries 
        paid by the taxpayer during the taxable year for employees whose 
        principal place of work is located in a border city but outside 
        of a zone designated under section 469.1731.  The credit applies 
        for the first three taxable years of the operation of the 
        corporation in the border city.  In the fourth and fifth taxable 
        years of the operation of the corporation in the border city, 
        the credit equals 0.5 percent of the wages and salaries.  After 
        the fifth year, no credit is allowed.  The city shall determine 
        the amount of wages that qualify for the credit and issue tax 
        credit certificates in the correct amount. 
           (c) The credit under this subdivision applies only to a 
        corporate enterprise engaged in assembling, fabricating, 
        manufacturing, mixing, or processing of any agricultural, 
        mineral, or manufactured product or combinations of them. 
           (d) The credit allowed under this subdivision may not 
        exceed the lesser of: 
           (1) the tax liability of the taxpayer for the taxable year; 
        or 
           (2) the amount of the tax credit certificates received by 
        the taxpayer from the city, less any tax credit certificates 
        used under subdivisions 4 and 6, and section 469.1732, 
        subdivision 2. 
           Subd. 6.  [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 
        MATERIALS.] (a) The gross receipts from the sale of machinery 
        and equipment and repair parts are exempt from taxation under 
        chapter 297A, if the machinery and equipment: 
           (1) are used in connection with a trade or business; 
           (2) are placed in service in a city that is authorized to 
        designate a zone under section 469.1731, regardless of whether 
        the machinery and equipment are used in a zone; and 
           (3) have a useful life of 12 months or more. 
           (b) The gross receipts from the sale of construction 
        materials are exempt, if they are used to construct a facility 
        for use in a trade or business located in a city that is 
        authorized to designate a zone under section 469.1731, 
        regardless of whether the facility is located in a zone.  The 
        exemptions under this paragraph apply regardless of whether the 
        purchase is made by the owner, the user, or a contractor. 
           (c) A purchaser may claim an exemption under this 
        subdivision for tax on the purchases up to, but not exceeding: 
           (1) the amount of the tax credit certificates received from 
        the city, less 
           (2) any tax credit certificates used under the provisions 
        of subdivisions 4 and 5, and 469.1732, subdivision 2. 
           (d) The tax on sales of items exempted under this 
        subdivision shall be imposed and collected as if the applicable 
        rate under section 297A.02 applied.  Upon application by the 
        purchaser, on forms prescribed by the commissioner, a refund 
        equal to the tax paid shall be paid to the purchaser.  The 
        application must include sufficient information to permit the 
        commissioner to verify the sales tax paid and the eligibility of 
        the claimant to receive the credit.  No more than two 
        applications for refunds may be filed under this subdivision in 
        a calendar year.  The provisions of section 289A.40 apply to the 
        refunds payable under this subdivision.  There is annually 
        appropriated to the commissioner of revenue the amount required 
        to make the refunds, which must be deducted from the amount of 
        the city's allocation under section 469.169, subdivision 12, 
        that remains available and its limitation under section 469.1735.
        The amount to be refunded shall bear interest at the rate in 
        section 270.76 from the date the refund claim is filed with the 
        commissioner. 
           Subd. 7.  [NOTICE TO COMPETITORS.] (a) Before an exemption 
        or other concession is granted under subdivision 3 or 4, the 
        procedure under this subdivision applies. 
           (b) Unless the city council determines that no existing 
        business within the city would be a potential competitor of the 
        project, the project operator shall publish two notices to 
        competitors of the application of the tax exemption or payments 
        in lieu in the official newspaper of the city.  The city shall 
        prescribe the form of the notice.  The two notices must be 
        published at least one week apart.  The publications must be 
        completed not less than 15 days nor more than 30 days before the 
        city council approves the tax exemption or payments in lieu of 
        taxes. 
           Sec. 10.  [469.1735] [LIMIT ON TAX REDUCTIONS; APPLICATIONS 
        REQUIRED.] 
           Subdivision 1.  [BUSINESSES MUST APPLY.] To claim a tax 
        credit under section 469.1732, subdivision 2, or 469.1734, 
        subdivision 4 or 5, or an exemption from sales tax under section 
        469.1734, subdivision 6, a business must apply to the city for a 
        tax credit certificate.  As a condition of its application, the 
        business must agree to furnish information to the city that is 
        sufficient to verify the eligibility for any credits or other 
        tax reductions claimed.  The total amount of the state tax 
        reductions allowed for the specified period may not exceed the 
        amount of the tax credit certificates provided by the city to 
        the business.  The city must verify the amount of tax reduction 
        or credits for which each business is eligible. 
           Subd. 2.  [CITY LIMITATIONS.] (a) Each city may provide tax 
        credit certificates to businesses that apply and meet the 
        requirements for the tax credit and exemption.  The certificates 
        that each city may provide for the period covered by this 
        section is limited to the amount specified in this subdivision.  
           (b) The maximum amount of tax credit certificates each city 
        may issue over the duration of the program equals the amount of 
        the allocation to the city under section 469.169, subdivision 12.
           Subd. 3.  [TRANSFER AUTHORITY FOR PROPERTY TAX.] (a) A city 
        may elect to use all or part of its allocation under subdivision 
        2 to reimburse the city or county or both for property tax 
        reductions under section 272.0212.  To elect this option, the 
        city must notify the commissioner of revenue by October 1 of 
        each calendar year of the amount of the property tax reductions 
        it seeks reimbursements for taxes payable during the following 
        year and the governmental units to which the amounts will be 
        paid.  The commissioner may require the city to provide 
        information substantiating the amount of the reductions granted 
        or any other information necessary to administer this 
        provision.  The commissioner shall pay the reimbursements by 
        December 26.  Any amount transferred under this authority 
        reduces the amount of tax credit certificates available under 
        subdivisions 1 and 2. 
           (b) The amount elected by the city under paragraph (a) is 
        appropriated to the commissioner of revenue from the general 
        fund to reimburse the city or county for tax reductions under 
        section 272.0212.  The amount appropriated may not exceed the 
        maximum amounts allocated to a city under subdivision 2, 
        paragraph (b), less the amount of certificates issued by the 
        city under subdivision 1, and is available until expended.  
           Sec. 11.  [EFFECTIVE DATE.] 
           Sections 1, 2, and 6 to 10 are effective the day following 
        final enactment, provided that sections 7, subdivision 2, and 9, 
        subdivisions 4 and 5, are effective for taxable years beginning 
        after December 31, 1998. 
           Section 4 is effective for plans required to be filed after 
        the day following final enactment, regardless of whether the 
        business received a credit and was required to file a plan in a 
        prior year. 
           Section 5 is effective for tax reductions received 
        beginning in the first calendar year after the day following 
        final enactment. 
                                   ARTICLE 13
                                  GAMING TAXES
           Section 1.  Minnesota Statutes 1996, section 240.15, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TAXES IMPOSED.] (a) From July 1, 1996, 
        until July 1, 1999, There is imposed a tax at the rate of six 
        percent of the amount in excess of $12,000,000 annually withheld 
        from all pari-mutuel pools by the licensee, including breakage 
        and amounts withheld under section 240.13, subdivision 4.  After 
        June 30, 1999, the tax is imposed on the total amount withheld 
        from all pari-mutuel pools.  For the purpose of this 
        subdivision, "annually" is the period from July 1 to June 30 of 
        the next year. 
           In addition to the above tax, the licensee must designate 
        and pay to the commission a tax of one percent of the total 
        amount bet on each racing day, for deposit in the Minnesota 
        breeders fund.  
           The taxes imposed by this clause must be paid from the 
        amounts permitted to be withheld by a licensee under section 
        240.13, subdivision 4.  
           (b) The commission may impose an admissions tax of not more 
        than ten cents on each paid admission at a licensed racetrack on 
        a racing day if:  
           (1) the tax is requested by a local unit of government 
        within whose borders the track is located; 
           (2) a public hearing is held on the request; and 
           (3) the commission finds that the local unit of government 
        requesting the tax is in need of its revenue to meet 
        extraordinary expenses caused by the racetrack. 
           Sec. 2.  Minnesota Statutes 1996, section 240.15, 
        subdivision 5, is amended to read: 
           Subd. 5.  [UNREDEEMED TICKETS.] (a) Notwithstanding any 
        provision to the contrary in chapter 345, unredeemed pari-mutuel 
        tickets shall not be considered unclaimed funds and shall be 
        handled in accordance with the provisions of this subdivision.  
           (b) Until the end of calendar year 1999, Any person 
        claiming to be entitled to the proceeds of any unredeemed ticket 
        may within one year after the conclusion of each race meet file 
        with the licensee a verified claim for such proceeds on such 
        form as the licensee prescribes along with the pari-mutuel 
        ticket.  Unless the claimant satisfactorily establishes the 
        right to the proceeds, the claim shall be rejected.  If the 
        claim is allowed, the licensee shall pay the proceeds without 
        interest to the claimant.  
           (c) Beginning January 1, 2000, not later than 100 days 
        after the end of a race meet a licensee who sells pari-mutuel 
        tickets must remit to the commission or its representative an 
        amount equal to the total value of unredeemed tickets from the 
        race meet.  The remittance must be accompanied by a detailed 
        statement of the money on a form the commission prescribes.  Any 
        person claiming to be entitled to the proceeds of any unredeemed 
        ticket who fails to claim said proceeds prior to their being 
        remitted to the commission, may within one year after the date 
        of remittance to the commission file with the commission a 
        verified claim for such proceeds on such form as the commission 
        prescribes along with the pari-mutuel ticket.  Unless the 
        claimant satisfactorily establishes the right to the proceeds, 
        the claim shall be rejected.  If the claim is allowed, the 
        commission shall pay the proceeds without interest to the 
        claimant.  There is hereby appropriated from the general fund to 
        the commission an amount sufficient to make payment to persons 
        entitled to such proceeds. 
           Sec. 3.  Minnesota Statutes 1996, section 297E.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [IMPOSITION.] A tax is imposed on all 
        lawful gambling other than (1) pull-tabs purchased and placed 
        into inventory after January 1, 1987, and (2) tipboards 
        purchased and placed into inventory after June 30, 1988, at the 
        rate of ten 9.5 percent on the gross receipts as defined in 
        section 297E.01, subdivision 8, less prizes actually paid.  The 
        tax imposed by this subdivision is in lieu of the tax imposed by 
        section 297A.02 and all local taxes and license fees except a 
        fee authorized under section 349.16, subdivision 8, or a tax 
        authorized under subdivision 5.  
           The tax imposed under this subdivision is payable by the 
        organization or party conducting, directly or indirectly, the 
        gambling.  
           Sec. 4.  Minnesota Statutes 1996, section 297E.02, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
        on the sale of each deal of pull-tabs and tipboards sold by a 
        distributor.  The rate of the tax is two 1.9 percent of the 
        ideal gross of the pull-tab or tipboard deal.  The sales tax 
        imposed by chapter 297A on the sale of the pull-tabs and 
        tipboards by the distributor is imposed on the retail sales 
        price less the tax imposed by this subdivision.  The retail sale 
        of pull-tabs or tipboards by the organization is exempt from 
        taxes imposed by chapter 297A and is exempt from all local taxes 
        and license fees except a fee authorized under section 349.16, 
        subdivision 8.  
           (b) The liability for the tax imposed by this section is 
        incurred when the pull-tabs and tipboards are delivered by the 
        distributor to the customer or to a common or contract carrier 
        for delivery to the customer, or when received by the customer's 
        authorized representative at the distributor's place of 
        business, regardless of the distributor's method of accounting 
        or the terms of the sale.  
           The tax imposed by this subdivision is imposed on all sales 
        of pull-tabs and tipboards, except the following:  
           (1) sales to the governing body of an Indian tribal 
        organization for use on an Indian reservation; 
           (2) sales to distributors licensed under the laws of 
        another state or of a province of Canada, as long as all 
        statutory and regulatory requirements are met in the other state 
        or province; 
           (3) sales of promotional tickets as defined in section 
        349.12; and 
           (4) pull-tabs and tipboards sold to an organization that 
        sells pull-tabs and tipboards under the exemption from licensing 
        in section 349.166, subdivision 2.  A distributor shall require 
        an organization conducting exempt gambling to show proof of its 
        exempt status before making a tax-exempt sale of pull-tabs or 
        tipboards to the organization.  A distributor shall identify, on 
        all reports submitted to the commissioner, all sales of 
        pull-tabs and tipboards that are exempt from tax under this 
        subdivision.  
           (c) A distributor having a liability of $120,000 or more 
        during a fiscal year ending June 30 must remit all liabilities 
        in the subsequent calendar year by a funds transfer as defined 
        in section 336.4A-104, paragraph (a).  The funds transfer 
        payment date, as defined in section 336.4A-401, must be on or 
        before the date the tax is due.  If the date the tax is due is 
        not a funds transfer business day, as defined in section 
        336.4A-105, paragraph (a), clause (4), the payment date must be 
        on or before the funds transfer business day next following the 
        date the tax is due. 
           (d) Any customer who purchases deals of pull-tabs or 
        tipboards from a distributor may file an annual claim for a 
        refund or credit of taxes paid pursuant to this subdivision for 
        unsold pull-tab and tipboard tickets.  The claim must be filed 
        with the commissioner on a form prescribed by the commissioner 
        by March 20 of the year following the calendar year for which 
        the refund is claimed.  The refund must be filed as part of the 
        customer's February monthly return.  The refund or credit is 
        equal to two 1.9 percent of the face value of the unsold 
        pull-tab or tipboard tickets, provided that the refund or credit 
        will be 1.95 percent of the face value of the unsold pull-tab or 
        tipboard tickets for claims for a refund or credit of taxes 
        filed on the February 1999 monthly return.  The refund claimed 
        will be applied as a credit against tax owing under this chapter 
        on the February monthly return.  If the refund claimed exceeds 
        the tax owing on the February monthly return, that amount will 
        be refunded.  The amount refunded will bear interest pursuant to 
        section 270.76 from 90 days after the claim is filed.  
           Sec. 5.  Minnesota Statutes 1996, section 297E.02, 
        subdivision 6, is amended to read: 
           Subd. 6.  [COMBINED RECEIPTS TAX.] In addition to the taxes 
        imposed under subdivisions 1 and 4, a tax is imposed on the 
        combined receipts of the organization.  As used in this section, 
        "combined receipts" is the sum of the organization's gross 
        receipts from lawful gambling less gross receipts directly 
        derived from the conduct of bingo, raffles, and paddlewheels, as 
        defined in section 297E.01, subdivision 8, for the fiscal year.  
        The combined receipts of an organization are subject to a tax 
        computed according to the following schedule: 
           If the combined receipts for the          The tax is:
           fiscal year are:
           Not over $500,000                   zero
           Over $500,000, but not over
           $700,000                            two 1.9 percent of the 
                                               amount over $500,000, but 
                                               not over $700,000
           Over $700,000, but not over
           $900,000                            $4,000 $3,800 plus four 
                                               3.8 percent of the 
                                               amount over $700,000, but 
                                               not over $900,000
           Over $900,000                       $12,000 $11,400 plus six 
                                               5.7 percent of the 
                                               amount over $900,000
           Sec. 6.  Minnesota Statutes 1997 Supplement, section 
        349.19, subdivision 2a, is amended to read: 
           Subd. 2a.  [TAX REFUND OR CREDIT.] (a) Each organization 
        that receives a refund or credit under section 297E.02, 
        subdivision 4, paragraph (d), must within four business days of 
        receiving a refund under that paragraph deposit the refund in 
        the organization's gambling account.  
           (b) In addition, each organization must annually calculate 
        5.26 percent of the sum of the amount of tax it paid under: 
           (1) section 297E.02, subdivision 1, on gross receipts, less 
        prizes paid, after August 1, 1998; and 
           (2) section 297E.02, subdivision 6, on combined receipts 
        received after August 1, 1998. 
           (c) The calculated amount must be reported to the board on 
        a form prescribed by the board by March 20 of the year after the 
        calendar year for which the calculated amount is made.  The 
        calculated amount must be filed as part of the organization's 
        report of expenditure of profits from lawful gambling required 
        under section 349.19, subdivision 5. 
           (d) The organization may expend the tax refund or credit 
        issued under section 297E.02, subdivision 4, paragraph (d), plus 
        the amount calculated under paragraph (b), only for lawful 
        purposes, other than lawful purposes described in section 
        349.12, subdivision 25, paragraph (a), clauses (8), (9), and 
        (12).  Amounts received as refunds or allowed as credits subject 
        to this paragraph must be spent for qualifying lawful purposes 
        no later than one year after the refund or credit is received or 
        the tax savings calculated under paragraph (b). 
           Sec. 7.  [EFFECTIVE DATE.] 
           Sections 3 to 5 are effective July 1, 1998. 
                                   ARTICLE 14
                                    HOUSING
        Section 1.  [HOUSING APPROPRIATIONS.] 
           The sums in the columns marked "APPROPRIATIONS" are 
        appropriated from the general fund, or another named fund, to 
        the agencies and for the purposes specified in this article, to 
        be available for the fiscal years indicated for each purpose.  
        The figures "1998" and "1999," where used in this act, mean that 
        the appropriation or appropriations listed under them are 
        available for the year ending June 30, 1998, or June 30, 1999, 
        respectively.  The term "first year" means the fiscal year 
        ending June 30, 1998, and "second year" means the fiscal year 
        ending June 30, 1999. 
                                SUMMARY BY FUND 
                                                 1998           1999 
        General                              $     -0-      $10,000,000 
        TOTAL                                $     -0-      $10,000,000 
                                                   APPROPRIATIONS 
                                               Available for the Year 
                                                   Ending June 30 
                                                  1998         1999 
        Sec. 2.  MINNESOTA HOUSING 
        FINANCE AGENCY                             -0-       10,000,000
        The amounts that may be spent from this 
        appropriation for certain programs are 
        specified below. 
        This appropriation is for transfer to 
        the housing development fund for the 
        programs specified and is part of the 
        agency's budget base. 
        (a) Affordable Rental Investment Fund
        $10,000,000 in 1999 is for the 
        affordable rental investment fund 
        program under Minnesota Statutes, 
        section 462A.21, subdivision 8b, to 
        finance the acquisition, 
        rehabilitation, and debt restructuring 
        of federally assisted rental property 
        and for making equity take-out loans 
        under Minnesota Statutes, section 
        462A.05, subdivision 39.  The owner of 
        the rental property must agree to 
        participate in the applicable federally 
        assisted housing program and to extend 
        any existing low-income affordability 
        restrictions on the housing for the 
        maximum term permitted.  The owner must 
        also enter into an agreement that gives 
        local units of government, housing and 
        redevelopment authorities, and 
        nonprofit housing organizations the 
        right of first refusal if the rental 
        property is offered for sale.  Priority 
        must be given to properties with the 
        longest remaining term under an 
        agreement for federal rental 
        assistance.  Priority must also be 
        given among comparable rental housing 
        developments to developments that are 
        or will be owned by a local government 
        unit, a housing and redevelopment 
        authority, or a nonprofit housing 
        organization.  This appropriation is 
        reduced by the amount of an 
        appropriation for the affordable rental 
        investment fund program enacted in any 
        other legislation in the 1998 regular 
        session of the Minnesota Legislature.  
        (b) Administrative Spending Limit
        Notwithstanding Laws 1997, chapter 200, 
        article 1, section 6, the spending 
        limit on cost of general administration 
        of housing finance agency programs is 
        $11,684,000 in fiscal year 1998 and 
        $13,278,000 in fiscal year 1999. 
           Sec. 3.  [TRANSFER OF BONDING AUTHORITY.] 
           The Minnesota housing finance agency may enter into an 
        agreement with the city of Minnetonka for a residential rental 
        project which received an allocation from the housing pool in 
        1998, whereby the city of Minnetonka may issue up to $500,000 in 
        obligations pursuant to bonding authority allocated to the 
        Minnesota housing finance agency in 1998 under Minnesota 
        Statutes, section 474A.03.  
           Sec. 4.  Minnesota Statutes 1997 Supplement, section 
        462A.05, subdivision 39, is amended to read: 
           Subd. 39.  [EQUITY TAKE-OUT LOANS.] The agency may make 
        equity take-out loans to owners of section 8 project-based and 
        section 236 federally assisted rental property upon which the 
        agency holds a first mortgage.  The owner of a section 8 
        project-based federally assisted rental property must agree to 
        participate in the section 8 federal assistance program and 
        extend the low-income affordability restrictions on the housing 
        for the maximum term of the section 8 federal assistance 
        contract.  The owner of section 236 rental property must agree 
        to participate in the section 236 interest reduction payments 
        program, to extend any existing low-income affordability 
        restrictions on the housing, and to extend any rental assistance 
        payments for the maximum term permitted under the agreement for 
        rental assistance payments.  The An equity take-out loan must be 
        secured by a subordinate loan on the property and may include 
        additional appropriate security determined necessary by the 
        agency. 
           Sec. 5.  Minnesota Statutes 1996, section 462A.222, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ALLOCATION PROCEDURE.] (a) Projects will be 
        awarded tax credits in three competitive rounds on an annual 
        basis.  The date for applications for each round must be 
        determined by the agency.  No allocating agency may award tax 
        credits prior to the application dates established by the agency.
           (b) Each allocating agency must meet the requirements of 
        section 42(m) of the Internal Revenue Code of 1986, as amended 
        through December 31, 1989, for the allocation of tax credits and 
        the selection of projects. 
           (c) For projects that are eligible for an allocation of 
        credits pursuant to section 42(h)(4) of the Internal Revenue 
        Code of 1986, as amended, tax credits may only be allocated if 
        the project satisfies the requirements of the allocating 
        agency's qualified allocation plan.  For projects that are 
        eligible for an allocation of credits pursuant to section 
        42(h)(4) of the Internal Revenue Code of 1986, as amended, for 
        which the agency is the issuer of the bonds for the project, or 
        the issuer of the bonds for the project is located outside the 
        jurisdiction of a city or county that has received reserved tax 
        credits, the applicable allocation plan is the agency's 
        qualified allocation plan. 
           (d) For applications submitted for the first round, an 
        allocating agency may allocate tax credits only to the following 
        types of projects: 
           (1) in the metropolitan area: 
           (i) new construction or substantial rehabilitation of 
        projects in which, for the term of the extended use period, at 
        least 75 percent of the total tax credit units are single-room 
        occupancy, efficiency, or one bedroom units and which are 
        affordable by households whose income does not exceed 30 percent 
        of the median income; 
           (ii) new construction or substantial rehabilitation family 
        housing projects that are not restricted to persons who are 55 
        years of age or older and in which, for the term of the extended 
        use period, at least 75 percent of the tax credit units contain 
        two or more bedrooms and at least one-third of the 75 percent 
        contain three or more bedrooms; or 
           (iii) substantial rehabilitation projects in neighborhoods 
        targeted by the city for revitalization; 
           (2) outside the metropolitan area, projects which meet a 
        locally identified housing need and which are in short supply in 
        the local housing market as evidenced by credible data submitted 
        with the application; 
           (3) projects that are not restricted to persons of a 
        particular age group and in which, for the term of the extended 
        use period, a percentage of the units are set aside and rented 
        to persons: 
           (i) with a serious and persistent mental illness as defined 
        in section 245.462, subdivision 20, paragraph (c); 
           (ii) with a developmental disability as defined in United 
        States Code, title 42, section 6001, paragraph (5), as amended 
        through December 31, 1990; 
           (iii) who have been assessed as drug dependent persons as 
        defined in section 254A.02, subdivision 5, and are receiving or 
        will receive care and treatment services provided by an approved 
        treatment program as defined in section 254A.02, subdivision 2; 
           (iv) with a brain injury as defined in section 256B.093, 
        subdivision 4, paragraph (a); or 
           (v) with permanent physical disabilities that substantially 
        limit one or more major life activities, if at least 50 percent 
        of the units in the project are accessible as provided under 
        Minnesota Rules, chapter 1340; 
           (4) projects, whether or not restricted to persons of a 
        particular age group, which preserve existing subsidized housing 
        which is subject to prepayment if the use of tax credits is 
        necessary to prevent conversion to market rate use; or 
           (5) projects financed by the Farmers Home Administration, 
        or its successor agency, which meet statewide distribution goals.
           (e) Before the date for applications for the second round, 
        the allocating agencies other than the agency shall return all 
        uncommitted and unallocated tax credits to the pool from which 
        they were allocated, along with copies of any allocation or 
        commitment.  In the second round, the agency shall allocate the 
        remaining credits from the regional pools to projects from the 
        respective regions.  
           (f) In the third round, all unallocated tax credits must be 
        transferred to a unified pool for allocation by the agency on a 
        statewide basis. 
           (g) Unused portions of the state ceiling for low-income 
        housing tax credits reserved to cities and counties for 
        allocation may be returned at any time to the agency for 
        allocation. 
           (h) If an allocating agency determines, at any time after 
        the initial commitment or allocation for a specific project, 
        that a project is no longer eligible for all or a portion of the 
        low-income housing tax credits committed or allocated to the 
        project, the credits must be transferred to the agency to be 
        reallocated pursuant to the procedures established in paragraphs 
        (e) to (g); provided that if the tax credits for which the 
        project is no longer eligible are from the current year's annual 
        ceiling and the allocating agency maintains a waiting list, the 
        allocating agency may continue to commit or allocate the credits 
        until not later than October 1, at which time any uncommitted 
        credits must be transferred to the agency. 
           Sec. 6.  [471.9997] [FEDERALLY ASSISTED RENTAL HOUSING; 
        IMPACT STATEMENT.] 
           At least 12 months before termination of participation in a 
        federally assisted rental housing program, including 
        project-based section 8 and section 236 rental housing, the 
        owner of the federally assisted rental housing must submit a 
        statement regarding the impact of termination on the residents 
        of the rental housing to the governing body of the local 
        government unit in which the housing is located.  The impact 
        statement must identify the number of units that will no longer 
        be subject to rent restrictions imposed by the federal program, 
        the estimated rents that will be charged as compared to rents 
        charged under the federal program, and actions the owner will 
        take to assist displaced tenants in obtaining other housing.  A 
        copy of the impact statement must be provided to each resident 
        of the affected building, the Minnesota housing finance agency, 
        and, if the property is located in the metropolitan area as 
        defined in section 473.121, subdivision 2, the metropolitan 
        council. 
           Sec. 7.  Laws 1997, Second Special Session chapter 2, 
        section 4, subdivision 3, is amended to read: 
        Subd. 3.  Community Rehabilitation
        Fund Program                                          4,500,000
        This is a one-time appropriation from 
        the general fund for the community 
        rehabilitation fund program under 
        Minnesota Statutes, section 462A.206.  
        Of this amount, up to $500,000 is 
        available for grants for damages 
        occurring after June 10, 1997, in an 
        area designated under a presidential 
        declaration of major 
        disaster.  Pursuant to a plan approved 
        by the agency, grants or loans may be 
        made without regard to the income of 
        the borrower in communities where at 
        least 20 percent of the housing stock 
        is subject to acquisition and buyout as 
        a result of the 1997 flooding.  The 
        grants or loans made without regard to 
        the borrower's income shall not exceed 
        the maximum grant or loan amount 
        available to buyout households.  This 
        appropriation is available until 
        expended. 
           Sec. 8.  [EFFECTIVE DATES.] 
           Sections 3, 4, and 7 are effective the day following final 
        enactment. 
                                   ARTICLE 15 
                                SANITARY SEWERS 
           Section 1.  [LEGISLATIVE PURPOSE AND POLICY.] 
           The legislature determines that in the cities of Farwell 
        and Kensington there are serious problems of water pollution and 
        disposal of sewage which cannot be effectively or economically 
        dealt with by existing government units under existing laws.  
        The legislature, therefore, declares that for the protection of 
        the public health, safety, and welfare of these areas, for the 
        preservation and best use of waters and other natural resources 
        of the state in the area, for the prevention, control, and 
        abatement of water pollution in the area, and for the efficient 
        and economic collection, treatment, and disposal of sewage, it 
        is necessary to establish in Minnesota for said area a sanitary 
        sewer board. 
           Sec. 2.  [DEFINITIONS.] 
           Subdivision 1.  [APPLICATION.] The terms defined in this 
        section shall have the meaning given them unless otherwise 
        provided or indicated by the context. 
           Subd. 2.  [ACQUISITION AND BETTERMENT.] "Acquisition" and 
        "betterment" shall have the meanings given them in Minnesota 
        Statutes, chapter 475. 
           Subd. 3.  [AGENCY.] "Agency" means the Minnesota pollution 
        control agency created and established by Minnesota Statutes, 
        chapter 116. 
           Subd. 4.  [AGRICULTURAL PROPERTY.] "Agricultural property" 
        means land as is classified agricultural land within the meaning 
        of Minnesota Statutes, section 273.13, subdivision 23. 
           Subd. 5.  [CURRENT COSTS OF ACQUISITION, BETTERMENT, AND 
        DEBT SERVICE.] "Current costs of acquisition, betterment, and 
        debt service" means interest and principal estimated to be due 
        during the budget year on bonds issued to finance said 
        acquisition and betterment and all other costs of acquisition 
        and betterment estimated to be paid during such year from funds 
        other than bond proceeds and federal or state grants. 
           Subd. 6.  [DISTRICT DISPOSAL SYSTEM.] "District disposal 
        system" means any and all of the interceptors or treatment works 
        owned, constructed, or operated by the board unless designated 
        by the board as local sanitary sewer facilities. 
           Subd. 7.  [FARWELL-KENSINGTON SANITARY DISTRICT AND 
        DISTRICT.] "Farwell-Kensington sanitary district" and "district" 
        mean the area over which the sanitary sewer board has 
        jurisdiction which shall include all that part of Douglas county 
        and Pope county described as follows, to wit: 
           (1) all of the land within the corporate limits of the city 
        of Farwell; 
           (2) all of the land within the corporate limits of the city 
        of Kensington. 
           Subd. 8.  [INTERCEPTOR.] "Interceptor" means any sewer and 
        necessary appurtenances thereto, including but not limited to, 
        mains, pumping stations, and sewage flow regulating and 
        measuring stations, which is designed for or used to conduct 
        sewage originating in more than one local government unit, or 
        which is designed or used to conduct all or substantially all 
        the sewage originating in a single local government unit from a 
        point of collection in that unit to an interceptor or treatment 
        works outside that unit, or which is determined by the board to 
        be a major collector of sewage used or designed to serve a 
        substantial area in the district. 
           Subd. 9.  [LOCAL GOVERNMENT UNIT OR GOVERNMENT 
        UNIT.] "Local government unit" or "government unit" means any 
        municipal or public corporation or governmental or political 
        subdivision or agency located in whole or in part in the 
        district, authorized by law to provide for the collection and 
        disposal of sewage. 
           Subd. 10.  [LOCAL SANITARY SEWER FACILITIES.] "Local 
        sanitary sewer facilities" means all or any part of any disposal 
        system in the district other than the district disposal system. 
           Subd. 11.  [MUNICIPALITY.] "Municipality" means any city or 
        town located in whole or in part in the district. 
           Subd. 12.  [PERSON.] "Person" means any individual, 
        partnership, corporation, cooperative, or other organization or 
        entity, public or private. 
           Subd. 13.  [POLLUTION AND SEWAGE SYSTEM.] "Pollution" and 
        "sewage system" shall have the meanings given them in Minnesota 
        Statutes, section 115.01. 
           Subd. 14.  [SANITARY SEWER BOARD OR BOARD.] "Sanitary sewer 
        board" or "board" means the sanitary sewer board established for 
        the Farwell-Kensington sanitary district as provided in section 
        3. 
           Subd. 15.  [SEWAGE.] "Sewage" means all liquid or 
        water-carried waste products from whatever sources derived, 
        together with such groundwater infiltration and surface water as 
        may be present. 
           Subd. 16.  [TOTAL COSTS OF ACQUISITION AND BETTERMENT AND 
        COSTS OF ACQUISITION AND BETTERMENT.] "Total costs of 
        acquisition and betterment" and "costs of acquisition and 
        betterment" mean all acquisition and betterment expenses which 
        are permitted to be financed out of bond proceeds issued in 
        accordance with section 13, subdivision 4, whether or not such 
        expenses are in fact financed out of such bond proceeds. 
           Subd. 17.  [TREATMENT WORKS AND DISPOSAL SYSTEM.] 
        "Treatment works" and "disposal system" shall have the meanings 
        given them in Minnesota Statutes, section 115.01. 
           Sec. 3.  [SANITARY SEWER BOARD.] 
           Subdivision 1.  [ESTABLISHMENT.] A sanitary sewer board 
        with jurisdiction in the Farwell-Kensington sanitary district is 
        established as a public corporation and political subdivision of 
        the state with perpetual succession and all the rights, powers, 
        privileges, immunities, and duties which may be validly granted 
        to or imposed upon a municipal corporation, as provided in this 
        article. 
           Subd. 2.  [NUMBER, TERMS, AND ELECTION OF MEMBERS.] The 
        board has five members, two elected at large from the city of 
        Farwell and three elected at large from the city of Kensington.  
        The terms of the members are four years and until a successor is 
        qualified, except that for the first election in 1998 one at 
        large seat from Farwell and one from Kensington shall be for two 
        years and until a successor is qualified.  The short term shall 
        be determined by lot and designated before filings open by the 
        municipal clerks of the two cities.  The election shall be 
        conducted by the municipal clerks as provided in Minnesota 
        Statutes, chapter 205, at the same time as the city council 
        elections are held.  Vacancies, removal, and qualification for 
        office are as otherwise provided by statute for elected city 
        council members. 
           Subd. 3.  [CERTIFICATES OF SELECTION, OATH OF OFFICE.] A 
        certificate of selection of every board member selected under 
        subdivision 2 stating the term shall be made by the respective 
        municipal clerks.  The certificates, with the approval appended 
        by other authority, if required, shall be filed with the 
        secretary of state.  Counterparts shall be furnished to the 
        board member and the secretary of the board.  Each member shall 
        qualify by taking and subscribing the oath of office prescribed 
        by the Minnesota Constitution, article V, section 6.  Such oath, 
        duly certified by the official administering the same, shall be 
        filed with the secretary of state and the secretary of the board.
           Subd. 4.  [COMPENSATION OF BOARD MEMBERS.] Each board 
        member shall be paid a per diem compensation for meetings and 
        for such other services in such amount as may be specifically 
        authorized by the board from time to time.  Per diem 
        compensation shall not exceed $2,000 in any one year.  All 
        members of the board shall be reimbursed for all reasonable 
        expenses incurred in the performance of their duties as 
        determined by the board. 
           Sec. 4.  [GENERAL PROVISIONS FOR ORGANIZATION AND OPERATION 
        OF BOARD.] 
           Subdivision 1.  [OFFICERS, MEETINGS, SEAL.] A majority of 
        the members shall constitute a quorum at all meetings of the 
        board, but a lesser number may meet and adjourn from time to 
        time and compel the attendance of absent members.  The board 
        shall meet regularly at such time and place as the board shall 
        by resolution designate.  Special meetings may be held at any 
        time upon call of the chair or any two members, upon written 
        notice sent by mail to each member at least three days prior to 
        the meeting, or upon such other notice as the board by 
        resolution may provide, or without notice if each member is 
        present or files with the secretary a written consent to the 
        meeting either before or after the meeting.  Except as otherwise 
        provided in this article, any action within the authority of the 
        board may be taken by the affirmative vote of a majority of the 
        board at a regular or adjourned regular meeting or at a duly 
        held special meeting, but in any case only if a quorum is 
        present.  All meetings of the board shall be open to the public 
        as provided in Minnesota Statutes, section 471.705.  The board 
        may adopt a seal, which shall be officially and judicially 
        noticed, to authenticate instruments executed by its authority, 
        but omission of the seal shall not affect the validity of any 
        instrument. 
           Subd. 2.  [CHAIR.] The board shall elect a chair from its 
        membership.  The term of the chair shall expire on January 1 of 
        each year.  The chair shall preside at all meetings of the 
        board, if present, and shall perform all other duties and 
        functions usually incumbent upon such an officer, and all 
        administrative functions assigned to the chair by the board.  
        The board shall elect a vice-chair from its membership to act 
        for the chair during a temporary absence or disability. 
           Subd. 3.  [SECRETARY AND TREASURER.] The board shall select 
        a person or persons who may but need not be a member or members 
        of the board, to act as its secretary and treasurer.  The 
        secretary and treasurer shall hold office at the pleasure of the 
        board, subject to the terms of any contract of employment which 
        the board may enter into with the secretary or treasurer.  The 
        secretary shall record the minutes of all meetings of the board, 
        and shall be custodian of all books and records of the board 
        except such as the board shall entrust to the custody of a 
        designated employee.  The board may appoint a deputy to perform 
        any and all functions of either the secretary or the treasurer.  
        A secretary or treasurer who is not a member of the board or a 
        deputy of either shall not have any right to vote. 
           Subd. 4.  [GENERAL MANAGER.] The board may appoint a 
        general manager who shall be selected solely upon the basis of 
        training, experience, and other qualifications and who shall 
        serve at the pleasure of the board and at a compensation to be 
        determined by the board.  The general manager need not be a 
        resident of the district and may also be selected by the board 
        to serve as either secretary or treasurer, or both, of the 
        board.  The general manager shall attend all meetings of the 
        board, but shall not vote, and shall: 
           (1) see that all resolutions, rules, regulations, or orders 
        of the board are enforced; 
           (2) appoint and remove, upon the basis of merit and 
        fitness, all subordinate officers and regular employees of the 
        board except the secretary and the treasurer and their deputies; 
           (3) present to the board plans, studies, and other reports 
        prepared for board purposes and recommend to the board for 
        adoption such measures as the general manager deems necessary to 
        enforce or carry out the powers and duties of the board, or the 
        efficient administration of the affairs of the board; 
           (4) keep the board fully advised as to its financial 
        condition, and prepare and submit to the board, and to the 
        governing bodies of the local government units, the board's 
        annual budget and such other financial information as the board 
        may request; 
           (5) recommend to the board for adoption such rules and 
        regulations as he or she deems necessary for the efficient 
        operation of a district disposal system and all local sanitary 
        sewer facilities over which the board may assume responsibility 
        as provided in section 18; and 
           (6) perform such other duties as may be prescribed by the 
        board. 
           Subd. 5.  [PUBLIC EMPLOYEES.] The general manager and all 
        persons employed by the general manager shall be public 
        employees, and shall have all the rights and duties conferred on 
        public employees under Minnesota Statutes, sections 179A.01 to 
        179A.25.  The compensation and conditions of employment of such 
        employees shall not be governed by any rule applicable to state 
        employees in the classified service nor to any of the provisions 
        of Minnesota Statutes, chapter 15A, unless the board so provides.
           Subd. 6.  [PROCEDURES.] The board shall adopt resolutions 
        or bylaws establishing procedures for board action, personnel 
        administration, recordkeeping, investment policy, approving 
        claims, authorizing or making disbursements, safekeeping funds, 
        and audit of all financial operations of the board. 
           Subd. 7.  [SURETY BONDS AND INSURANCE.] The board may 
        procure surety bonds for its officers and employees and in such 
        amounts as are deemed necessary to assure proper performance of 
        their duties and proper accounting for funds in their custody. 
        It may procure insurance against such risks to property and such 
        liability of the board and its officers, agents, and employees 
        for personal injuries or death and property damage and 
        destruction and in such amounts as may be deemed necessary or 
        desirable, with the force and effect stated in Minnesota 
        Statutes, chapter 466. 
           Sec. 5.  [COMPREHENSIVE PLAN.] 
           Subdivision 1.  [BOARD PLAN AND PROGRAM.] The board shall 
        adopt a comprehensive plan for the collection, treatment, and 
        disposal of sewage in the district for such designated period as 
        the board deems proper and reasonable.  The board shall prepare 
        and adopt subsequent comprehensive plans for the collection, 
        treatment, and disposal of sewage in the district for each such 
        succeeding designated period as the board deems proper and 
        reasonable.  The plan shall take into account the preservation 
        and best and most economic use of water and other natural 
        resources in the area; the preservation, use and potential for 
        use of lands adjoining waters of the state to be used for the 
        disposal of sewage; and the impact such a disposal system will 
        have on present and future land use in the area affected 
        thereby.  Such plans shall include the general location of 
        needed interceptors and treatment works, a description of the 
        area that is to be served by the various interceptors and 
        treatment works, a long-range capital improvements program and 
        such other details as the board shall deem appropriate.  In 
        developing the plans, the board shall consult with persons 
        designated for such purpose by governing bodies of any municipal 
        or public corporation or governmental or political subdivision 
        or agency within the district to represent such entities and 
        shall consider the data, resources, and input offered to the 
        board by such entities and any planning agency acting on behalf 
        of one or more such entities.  Each such plan, when adopted, 
        shall be followed in the district and may be revised as often as 
        the board deems necessary. 
           Subd. 2.  [COMPREHENSIVE PLANS; HEARING.] Before adopting 
        any subsequent comprehensive plan the board shall hold a public 
        hearing on such proposed plan at such time and place in the 
        district as it shall determine.  The hearing may be continued 
        from time to time.  Not less than 45 days before the hearing, 
        the board shall publish notice thereof in a newspaper or 
        newspapers having general circulation in the district, stating 
        the date, time, and place of the hearing, and the place where 
        the proposed plan may be examined by any interested person.  At 
        the hearing, all interested persons shall be permitted to 
        present their views on the plan. 
           Subd. 3.  [MUNICIPAL PLANS AND PROGRAMS; COORDINATION WITH 
        BOARD'S RESPONSIBILITIES.] Before undertaking the construction 
        of new sewers of other disposal facilities or the substantial 
        alteration or improvement of any existing sewers or other 
        disposal facilities, each local government unit may, and shall 
        if the construction or alteration of any sewage disposal 
        facilities is contemplated by such government unit, adopt a 
        comprehensive plan and program for the collection, treatment, 
        and disposal of sewage for which the local government unit is 
        responsible, coordinated with the board's comprehensive plan, 
        and may revise the same as often as deems necessary.  Each such 
        local plan or revision thereof shall be submitted forthwith to 
        the board for review and shall be subject to the approval of the 
        board as to those features of the plan affecting the board's 
        responsibilities as determined by the board.  Any such features 
        disapproved by the board shall be modified in accordance with 
        the board's recommendations.  No construction project involving 
        such features shall be undertaken by the local government unit 
        unless its governing body shall first find the project to be in 
        accordance with the government unit's comprehensive plan and 
        program as approved by the board.  Prior to approval by the 
        board of the comprehensive plan and program of any local 
        government unit in the district, no construction project shall 
        be undertaken by such government unit unless approval of the 
        project is first secured from the board as to those features of 
        the project affecting the board's responsibilities as determined 
        by the board. 
           Sec. 6.  [SEWER SERVICE FUNCTION.] 
           Subdivision 1.  [DUTY OF BOARD; ACQUISITION OF EXISTING 
        FACILITIES; NEW FACILITIES.] At any time after the board has 
        become organized it shall assume ownership of all existing 
        interceptors and treatment works which will be needed to 
        implement the board's comprehensive plan for the collection, 
        treatment, and disposal of sewage in the district, in the manner 
        and subject to the conditions prescribed in subdivision 2, and 
        shall design, acquire, construct, better, equip, operate, and 
        maintain all additional interceptors and treatment works which 
        will be needed for such purpose.  The board shall assume 
        ownership of all treatment works owned by a local government 
        unit if any part of such treatment works will be needed for such 
        purpose. 
           Subd. 2.  [METHOD OF ACQUISITION; EXISTING DEBT.] The board 
        may require any local government unit to transfer to the board, 
        all of its right, title, and interest in any interceptors or 
        treatment works and all necessary appurtenances thereto owned by 
        such local government unit which will be needed for the purpose 
        stated in subdivision 1.  Appropriate instruments of conveyance 
        for all such property shall be executed and delivered to the 
        board by the proper officers of each local government unit 
        concerned.  The board, upon assuming ownership of any such 
        interceptors or treatment works, shall become obligated to pay 
        to such local government unit amounts sufficient to pay when due 
        all remaining principal of and interests on bonds issued by such 
        local government unit for the acquisition or betterment of the 
        interceptors or treatment works taken over.  The board shall 
        also assume the same obligation with respect to so much of any 
        other existing disposal system owned by a local government unit 
        as the board determines to have been replaced or rendered 
        useless by the district disposal system.  The amounts to be paid 
        under this subdivision may be offset against any amount to be 
        paid to the board by the local government unit as provided in 
        section 9.  The board shall not be obligated to pay the local 
        government unit anything in addition to the assumption of debt 
        herein provided for. 
           Subd. 3.  [EXISTING JOINT POWERS BOARD.] Effective January 
        1, 2000, or such earlier date as determined by the board, the 
        corporate existence of the joint powers board created by 
        agreement among local government units pursuant to Minnesota 
        Statutes, section 471.59, to provide the financing, acquisition, 
        construction, improvement, extension, operation, and maintenance 
        of facilities for the collection, treatment, and disposal of 
        sewage shall terminate.  All persons regularly employed by such 
        joint powers board on that date shall be employees of the board, 
        and may at their option become members of the retirement system 
        applicable to persons employed directly by the board or may 
        continue as members of a public retirement association under any 
        other law, to which they belonged before such date, and shall 
        retain all pension rights which they may have under such latter 
        laws, and all other rights to which they are entitled by 
        contract or law.  The board shall make the employer's 
        contributions to pension funds of its employees.  Such employees 
        shall perform such duties as may be prescribed by the board.  On 
        January 1, 2000, or such earlier date, all funds of such joint 
        powers board then on hand, and all subsequent collections of 
        taxes, special assessments, or service charges or any other sums 
        due the joint powers board or levied, or imposed by or for such 
        joint powers board shall be transferred to or made payable to 
        the sanitary sewer board and the county auditor shall remit the 
        sums to the board.  The local government units otherwise 
        entitled to such cash, taxes, assessments, or service charges 
        shall be credited with such amounts, and such credits shall be 
        offset against any amounts to be paid by them to the board as 
        provided in section 9.  On January 1, 2000, or such earlier 
        date, the board shall succeed to and become vested with all 
        right, title, and interest in and to any property, real or 
        personal, owned or operated by such joint powers board; and 
        prior to that date the proper officers of such joint powers 
        board shall execute and deliver to the sanitary sewer board all 
        deeds, conveyances, bills of sale, and other documents or 
        instruments required to vest in the board good and marketable 
        title to all such real or personal property, but this article 
        shall operate as such transfer and conveyance to the board of 
        such real or personal property, if not so transferred, as may be 
        required under the law or under the circumstances.  On January 
        1, 2000, or such earlier date, the board shall become obligated 
        to pay or assume all outstanding bonds or other debt and all 
        contracts or obligations incurred by such joint powers board, 
        and all such bonds, obligations, or debts of the joint powers 
        board outstanding on the date this article becomes effective are 
        validated. 
           Subd. 4.  [CONTRACTS BETWEEN LOCAL GOVERNMENT UNITS.] The 
        board may terminate upon 60 days mailed notice to the 
        contracting parties, any existing contract between or among 
        local government units requiring payments by a local government 
        unit to any other local government unit, for the use of a 
        disposal system, or as reimbursement of capital costs of such a 
        disposal system, all or part of which will be needed to 
        implement the board's comprehensive plan.  All contracts between 
        or among local government units for use of a disposal system 
        entered into subsequent to the date on which this article 
        becomes effective shall be submitted to the board for approval 
        as to those features affecting the board's responsibilities as 
        determined by the board and shall not become effective until 
        such approval is given. 
           Sec. 7.  [SEWAGE COLLECTION AND DISPOSAL; POWERS.] 
           Subdivision 1.  [POWERS.] In addition to all other powers 
        conferred upon the board in this article, the board has the 
        powers specified in this section. 
           Subd. 2.  [DISCHARGE OF TREATED SEWAGE.] The board shall 
        have the right to discharge the effluent from any treatment 
        works operated by it into any waters of the state, subject to 
        approval of the agency if required and in accordance with any 
        effluent or water quality standards lawfully adopted by the 
        agency, any interstate agency or any federal agency having 
        jurisdiction. 
           Subd. 3.  [UTILIZATION OF DISTRICT SYSTEM.] The board may 
        require any person or local government unit to provide for the 
        discharge of any sewage, directly or indirectly, into the 
        district disposal system, or to connect any disposal system or a 
        part thereof with the district disposal system wherever 
        reasonable opportunity therefore is provided; may regulate the 
        manner in which such connections are made; may require any 
        person or local government unit discharging sewage into the 
        disposal system to provide preliminary treatment therefore; may 
        prohibit the discharge into the district disposal system of any 
        substance which it determines will or may be harmful to the 
        system or any persons operating it; may prohibit any extraneous 
        flow into the system; and may require any local government unit 
        to discontinue the acquisition, betterment, or operation of any 
        facility for such unit's disposal system wherever and so far as 
        adequate service is or will be provided by the district disposal 
        system. 
           Sec. 8.  [BUDGET.] 
           Except as otherwise specifically provided in this article, 
        the board is subject to Minnesota Statutes, section 275.065, 
        popularly known as the Truth in Taxation Act.  The board shall 
        prepare and adopt, on or before September 15 of each year, a 
        budget showing for the following calendar year or other fiscal 
        year determined by the board, sometimes referred to in this 
        article as the budget year, estimated receipts of money from all 
        sources including, but not limited to, payments by each local 
        government unit, federal or state grants, taxes on property, and 
        funds on hand at the beginning of the year, and estimated 
        expenditures for: 
           (1) costs of operation, administration, and maintenance of 
        the district disposal system; 
           (2) cost acquisition and betterment of the district 
        disposal system; and 
           (3) debt service, including principal and interest, on 
        general obligation bonds and certificates issued pursuant to 
        section 13, obligations and debts assumed under section 6, 
        subdivisions 2 and 3, and any money judgments entered by a court 
        of competent jurisdiction.  
           Expenditures within these general categories, and such 
        others as the board may from time to time determine, shall be 
        itemized in such detail as the board shall prescribe.  The board 
        and its officers, agents, and employees shall not spend money 
        for any purpose other than debt service without having set forth 
        such expense in the budget nor in excess of the amount set forth 
        in the budget therefor, and no obligation to make sure an 
        expenditure shall be enforceable except as the obligation of the 
        person or persons incurring it; provided that the board may 
        amend the budget at any time by transferring from one purpose to 
        another any sums except money for debt service and bond proceeds 
        or by increasing expenditures in any amount by which cash 
        receipts during the budget year actually exceed the total 
        amounts designated in the original budget.  The creation of any 
        obligation pursuant to section 13 or the receipts of any federal 
        or state grant is a sufficient budget designation of the 
        proceeds for the purpose for which it is authorized, and of the 
        tax or other revenue pledged to pay the obligation and interest 
        on it, whether or not specifically included in any annual budget.
           Sec. 9.  [ALLOCATION OF COSTS.] 
           Subdivision 1.  [DEFINITION OF CURRENT COSTS.] The 
        estimated cost of administration, operation, maintenance, and 
        debt service of the district disposal system to be paid by the 
        board in each fiscal year and the estimated costs of acquisition 
        and betterment of the system which are to be paid during the 
        year from funds other than state or federal grants and bond 
        proceeds and all other previously unallocated payments made by 
        the board pursuant to this article in such year are referred to 
        as current costs. 
           Subd. 2.  [COLLECTION OF CURRENT COSTS.] Current costs 
        shall be collected as follows: 
           (a) Allocation of current costs:  current costs may be 
        allocated to local government units in the district on an 
        equitable basis as the board may from time to time determine by 
        resolution to be fair and reasonable and in the best interests 
        of the district.  In making the allocation the board may provide 
        for the deferment of payment of all or part of current costs, 
        the reallocation of deferred costs and the reimbursement of 
        reallocated deferred costs on an equitable basis as the board 
        may from time to time determine by resolution to be fair and 
        reasonable and in the best interests of the district.  The 
        adoption or revision of a method of allocation, deferment, 
        reallocation, or reimbursement used by the board shall be made 
        by the affirmative vote of at least two-thirds of the members of 
        the board. 
           (b) Direct collection:  upon approval of at least 
        two-thirds of the members of the board, the board may provide 
        for direct collection of current costs by monthly or other 
        periodic billing of sewer users. 
           Sec. 10.  [GOVERNMENT UNITS; PAYMENTS TO BOARD.] 
           Subdivision 1.  [OBLIGATIONS OF GOVERNMENT UNITS TO THE 
        BOARD.] Each government unit shall pay to the board all sums 
        charged to it as provided in section 9, at the times and in the 
        manner determined by the board.  The governing body of each such 
        government unit shall take all action that may be necessary to 
        provide the funds required for such payments and to make the 
        same when due. 
           Subd. 2.  [AMOUNTS DUE BOARD; WHEN PAYABLE.] Charges 
        payable to the board by local government units may be made 
        payable at such times during each year as the board determines, 
        after it has taken into account the dates on which taxes, 
        assessments, revenue collections, and other funds become 
        available to the government unit required to pay such charges. 
           Subd. 3.  [GENERAL POWERS OF GOVERNMENT UNITS; LOCAL TAX 
        LEVIES.] To accomplish any duty imposed on it by the board, the 
        governing body of every government unit may, in addition to the 
        powers granted in this article and in any other law or charter, 
        exercise the powers granted any municipality by Minnesota 
        Statutes, chapters 117, 412, 429, and 475 and sections 115.46, 
        444.075, and 471.59, with respect to the area of the government 
        unit located in the district.  In addition thereto, the 
        governing body of every government unit located in whole or part 
        in the district may levy taxes upon all taxable property in that 
        part of the government unit located in the district for all or a 
        part of the amount payable to the board, but if the levy is for 
        only part of the amounts payable to the board, the governing 
        body of the government unit may levy additional taxes on the 
        entire net tax capacity of all taxable property for all or a 
        part of the balance remaining payable.  The taxes levied under 
        this subdivision shall be assessed and extended as a tax upon 
        such taxable property by the county auditor for the next 
        calendar year, free from any limitation of rate or amount 
        imposed by law or charter.  The tax shall be collected and 
        remitted in the same manner as other general taxes of the 
        government unit. 
           Subd. 3a.  [ALTERNATE LEVY.] In lieu of levying taxes on 
        all taxable property pursuant to subdivision 3, the governing 
        body of the government unit may elect to levy taxes upon the net 
        tax capacity of all taxable property, except agricultural 
        property, and upon only 25 percent of the net tax capacity of 
        all agricultural property, in that part of the government unit 
        located in the district for all or a part of the amounts payable 
        to the board.  If the levy is for only part of the amounts 
        payable to the board, the governing body may levy additional 
        taxes on the entire net tax capacity of all such property, 
        including agricultural property, for all or a part of the 
        balance of such amounts.  The taxes shall be assessed and 
        extended as a tax upon such taxable property by the county 
        auditor for the next calendar year, free from any limitation of 
        rate or amount imposed by law or charge, and shall be collected 
        and remitted in the same manner as other general taxes of the 
        government unit.  In computing the tax capacity pursuant to this 
        subdivision, the county auditor shall include only 25 percent of 
        the net tax capacity of all taxable agricultural property and 
        100 percent of the net tax capacity of all other taxable 
        property in that part of the government unit located within the 
        district and, in spreading the levy, the auditor shall apply the 
        tax rate upon the same percentages of agricultural and 
        nonagricultural taxable property.  If the government unit elects 
        to levy taxes under this subdivision and any of the taxable 
        agricultural property is reclassified so as to no longer qualify 
        as agricultural property, it shall be subject to additional 
        taxes.  The additional taxes shall be in an amount which, 
        together with any such additional taxes previously levied and 
        the estimated collection of additional taxes subsequently levied 
        on any other such reclassified property, is determined by the 
        governing body of the government unit to be at least sufficient 
        to reimburse each other government unit for any excess current 
        costs reallocated to it as a result of the board deferring any 
        current costs under section 9 on account of the difference 
        between the amount of such current costs initially allocated to 
        each government unit based on the total net tax capacity of all 
        taxable property in the district and the amount of such current 
        costs reallocated to each government unit based on 25 percent of 
        the net tax capacity of agricultural property and 100 percent of 
        the net tax capacity of all other taxable property in the 
        district.  Any reimbursement shall be made on terms which the 
        board determines to be just and reasonable.  These additional 
        taxes may be levied in any greater amount as the governing body 
        of the government unit determines to be appropriate, provided 
        that in no event shall the total amount of the additional taxes 
        exceed the difference between: 
           (1) the total amount of taxes which would have been levied 
        upon such reclassified property to help pay current costs 
        charged in each year to the government unit by the board if that 
        portion of such costs, if any, initially allocated by the board 
        solely on the basis of 100 percent of the net tax capacity of 
        all taxable property in the district and then reallocated on the 
        basis of inclusion of only 25 percent of the net tax capacity of 
        agricultural property in the district was not reallocated and if 
        the amount of taxes levied by the government unit each year 
        under this subdivision to pay current costs had been based on 
        such initial allocation and had been imposed upon 100 percent of 
        the net tax capacity of all taxable property, including 
        agricultural property, in that part of the government unit 
        located in the district; and 
           (2) the amount of taxes theretofore levied each year under 
        this subdivision upon such reclassified property, plus interest 
        on the cumulative amount of such difference accruing each year 
        at the approximate average annual rate borne by bonds issued by 
        the board and outstanding at the beginning of such year or, if 
        no bonds are then outstanding, at such rate of interest which 
        may be determined by the board, but not exceeding the maximum 
        rate of interest which may then be paid on bonds issued by the 
        board.  The additional taxes shall be a lien upon the 
        reclassified property assessed in the same manner and for the 
        same duration as all other ad valorem taxes levied upon the 
        property.  The additional taxes shall be extended against the 
        reclassified property on the tax list for the current year, 
        provided however that no penalties or additional interest shall 
        be levied on such additional taxes if timely paid, and shall be 
        collected and remitted in the same manner as other general taxes 
        of the government unit. 
           Subd. 4.  [DEBT LIMIT.] Any ad valorem taxes levied under 
        section 10, subdivision 3, or section 5 by the governing body of 
        a government unit to pay any sums charged to it by the board 
        pursuant to this article are not subject to, or counted towards, 
        any limit imposed by law on the levy of taxes upon taxable 
        property within any governmental unit. 
           Subd. 5.  [DEFICIENCY TAX LEVIES.] If the local government 
        unit fails to make any payment to the board when due, the board 
        may certify to the auditor of the county in which the government 
        unit is located the amount required for payment of such amount 
        with interest at not more than the maximum rate per annum 
        authorized at that time on assessments pursuant to Minnesota 
        Statutes, section 429.061, subdivision 2.  The auditor shall 
        levy and extend such amount as a tax upon all taxable property 
        in that part of the government unit located in the district, for 
        the next calendar year, free from any limitation imposed by law 
        or charter.  Such tax shall be collected in the same manner as 
        other general taxes of the government unit, and the proceeds 
        thereof, when collected, shall be paid by the county treasurer 
        to the treasurer of the board and credited to the government 
        unit for which the tax was levied. 
           Sec. 11.  [PUBLIC HEARING AND SPECIAL ASSESSMENTS.] 
           Subdivision 1.  [PUBLIC HEARING REQUIREMENT ON SPECIFIC 
        PROJECT.] Before the board orders any project involving the 
        acquisition or betterment of any interceptor or treatment works, 
        all or a part of the cost of which will be allocated to local 
        government units pursuant to section 9, as current costs, the 
        board shall hold a public hearing on the proposed project 
        following two publications in a newspaper or newspapers having 
        general circulation in the district, stating the time and place 
        of the hearing, the general nature and location of the project, 
        the estimated total cost of acquisition and betterment, that 
        portion of such costs estimated to be paid out of federal and 
        state grants, and that portion of such costs estimated to be 
        allocated to each local government unit affected thereby.  The 
        two publications shall be a week apart and the hearing shall be 
        at least three days after the last publication.  Not less than 
        45 days before the hearing notice thereof shall also be mailed 
        to each clerk of all local government units in the district, but 
        failure to give mailed notice of any defects in the notice shall 
        not invalidate the proceedings.  The project may include all or 
        part of one or more interceptors or treatment works.  A hearing 
        is not required with respect to a project, no part of the costs 
        of which are to be allocated to local government units as the 
        current costs of acquisition, betterment, and debt service. 
           Subd. 2.  [NOTICE TO BENEFITED PROPERTY OWNERS.] If the 
        governing body of any local government unit in the district 
        proposes to assess against benefited property within such units 
        all or any part of the allocable costs of the project as 
        provided in subdivision 5, such governing body shall, not less 
        than ten days prior to the hearing provided for in subdivision 1 
        cause mailed notice thereof to be given to the owner of each 
        parcel within the area proposed to be specially assessed and 
        shall also give one week's published notice of the hearing.  The 
        notice of hearing shall contain the same information provided in 
        the notice published by the board pursuant to subdivision 1, and 
        in addition, a description of the area proposed to be assessed 
        by the local government unit.  For the purpose of giving mailed 
        notice, owners shall be those shown to be on the records of the 
        county auditor or, in any county where tax statements are mailed 
        by the county treasurer, on the records of the county treasurer; 
        but other appropriate records may be used for this purpose.  
        However, as to properties which are tax exempt or subject to 
        taxation on a gross earnings basis and are not listed on the 
        records of the county auditor or the county treasurer, the 
        owners thereof shall be ascertained by any practicable means and 
        mailed notice shall be given them as herein provided.  Failure 
        to give mailed notice or any defects in the notice shall not 
        invalidate the proceedings of the board or the local governing 
        body. 
           Subd. 3.  [BOARD PROCEEDINGS PERTAINING TO HEARING.] Prior 
        to adoption of the resolution calling for such a hearing, the 
        board shall secure from the district engineer or some other 
        competent person of the board's selection a report advising it 
        in a preliminary way as to whether the proposed project is 
        feasible, necessary, and cost effective and as to whether it 
        should best be made as proposed or in connection with some other 
        project and the estimated costs of the project as recommended; 
        but no error or omission in such report shall invalidate the 
        proceeding.  The board may also take such other steps prior to 
        the hearing, as well in its judgment provide helpful information 
        in determining the desirability and feasibility of the project 
        including, but not limited to, preparation of plans and 
        specifications and advertisement for bids thereon.  The hearing 
        may be adjourned from time to time and a resolution ordering the 
        project may be adopted at any time within six months after the 
        date of hearing.  In ordering the project the board may reduce 
        but not increase the extent of the project as stated in the 
        notice of hearing, unless another hearing is held, and shall 
        find that the project as ordered is in accordance with the 
        comprehensive plan and program adopted by the board pursuant to 
        section 5. 
           Subd. 4.  [EMERGENCY ACTION.] If the board by resolution 
        adopted by the affirmative vote of not less than two-thirds of 
        its members determines that an emergency exists requiring the 
        immediate purchase of materials or supplies or the making of 
        emergency repairs, it may order the purchase of such supplies 
        and materials and the making of such repairs prior to any 
        hearing required under this section, provided that the board 
        shall set as early a date as practicable for such hearing at the 
        time it declares such emergency.  All other provisions of this 
        section shall be followed in giving notice of and conducting 
        such hearing.  Nothing herein shall be construed as preventing 
        the board or its agents from purchasing maintenance supplies or 
        incurring maintenance costs without regard to the requirements 
        of this section. 
           Subd. 5.  [POWER OF GOVERNMENT UNIT TO SPECIALLY ASSESS.] A 
        local government unit may specially assess all or any part of 
        the costs of acquisition and betterment as herein provided, of 
        any project ordered by the board pursuant to this section.  Such 
        special assessments shall be levied in accordance with Minnesota 
        Statutes, sections 429.051 to 429.081, except as otherwise 
        provided in this subdivision.  No other provisions of Minnesota 
        Statutes, chapter 429, shall apply.  For purposes of levying 
        such special assessments, the hearing on such project required 
        in subdivision 1 shall serve as the hearing on the making of the 
        original improvement provided for by Minnesota Statutes, section 
        429.051.  The area assessed may be less than but may not exceed 
        the area proposed to be assessed as stated in the notice of 
        hearing on the project provided for in subdivision 2.  For the 
        purpose of determining the allocable cost of the project, or 
        part thereof, to the local government unit, the government unit 
        may adopt one of the following procedures. 
           (a) At any time after a contract is let for the project, 
        the local government unit may obtain from the board a current 
        written estimate, on the basis of such historical and reasonably 
        projected data as may be available, of that part of the total 
        costs of acquisition and betterment of such project or of some 
        portion of the project which the government unit shall 
        designate, which will be allocated to the government unit and 
        the number of years over which such costs will be allocated as 
        current costs of acquisition, betterment, and debt service 
        pursuant to section 9.  The board shall not in any way be bound 
        by this estimate for the purpose of allocating the costs of such 
        project to local government units. 
           (b) The governing body may obtain from the board a written 
        statement setting forth, for such prior period as the governing 
        body designates, that portion of the costs previously allocated 
        to the local government unit as current costs of acquisition, 
        betterment, and debt service only, of all or any part of the 
        project designated by the governing body.  In addition to the 
        allocable costs so ascertained, the local government unit may 
        include in the total expense it will pay, as a basis for levying 
        assessments, all other expenses incurred directly by the 
        government unit in connection with said project, or any part 
        thereof.  Special assessments levied by the government unit with 
        respect to previously allocated costs ascertained under this 
        paragraph shall be payable in equal annual installments 
        extending over a period not exceeding by more than one year the 
        number of years which such costs have been allocated to the 
        government unit or the estimated useful life of said project, or 
        part thereof, whichever number of years is the lesser.  No 
        limitation is placed upon the number of times the governing body 
        of a government unit may assess such previously allocated costs 
        not previously assessed by the government unit.  The power to 
        specially assess provided for in this section shall be in 
        addition and supplemental to all other powers of government 
        units to levy special assessments. 
           Sec. 12.  [INITIAL COSTS.] 
           Subdivision 1.  [CONTRIBUTIONS OR ADVANCES FROM LOCAL 
        GOVERNMENT UNITS.] The board may, at such time as it deems 
        necessary and proper, request from all or some of the local 
        government units necessary money to defray the costs of any 
        obligations assumed under section 6 and the costs of 
        administration, operation, and maintenance.  Before making such 
        request, the board shall, by formal resolution, determine the 
        necessity for such money, setting forth in such resolution the 
        purposes for which such money is needed and the estimated amount 
        for each such purpose.  Upon receiving such request, the 
        governing body of each such government unit may provide for 
        payment of the amount requested or such part thereof as it deems 
        fair and reasonable.  Such money may be paid out of general 
        revenue funds or any other available funds of any local 
        government unit and the governing bodies thereof may levy taxes 
        to provide funds therefor, free from any existing limitations 
        imposed by law or charter.  Such money may be provided by such 
        government units with or without interest but if interest is 
        charged it shall not exceed five percent per annum.  The board 
        shall credit the local government units for such payments in 
        allocating current costs pursuant to section 9, on such terms 
        and at such times as it may agree with the unit furnishing the 
        same. 
           Subd. 2.  [LIMITED TAX LEVY.] The board may levy ad valorem 
        taxes on all taxable property in the district to defray any of 
        the costs described in subdivision 1, provided that such costs 
        have not been defrayed by contribution under subdivision 1. 
           Before certification of such levy to the county auditor, 
        the board shall determine the need for the money to be derived 
        from such levy by formal resolution setting forth in said 
        resolution the purposes for which the tax money will be used and 
        the amount proposed to be used for each such purpose.  In 
        allocating current costs pursuant to section 9 the board shall 
        credit the government units for taxes collected pursuant to levy 
        made under this subdivision on such terms and at such time or 
        times as the board deems fair and reasonable and upon such terms 
        as are consistent with the provisions of section 9, subdivision 
        2. 
           Sec. 13.  [BONDS, CERTIFICATES, AND OTHER OBLIGATIONS.] 
           Subdivision 1.  [BUDGET ANTICIPATION CERTIFICATES OF 
        INDEBTEDNESS.] (a) At any time or times after adoption of its 
        annual budget and in anticipation of the collection of tax and 
        other revenues estimated and set forth by the board in such 
        budget, except: 
           (1) taxes already anticipated by the issuance of 
        certificates under subdivision 2; 
           (2) deficiency taxes levied pursuant to this subdivision; 
        and 
           (3) taxes levied for the payment of certificates issued 
        pursuant to subdivision 3, the board may by resolution, 
        authorize the issuance, negotiation, and sale in accordance with 
        subdivision 5 in such form and manner and upon such terms as it 
        may determine of its negotiable general obligation certificates 
        of indebtedness in aggregate principal amounts not exceeding 50 
        percent of the total amount of such tax collections and other 
        revenues and maturing not later than three months after the 
        close of the budget year in which issued.  The proceeds of the 
        sale of such certificates shall be used solely for the purposes 
        for which such tax collections and other revenues are to be 
        expended pursuant to such budget. 
           (b) All such tax collections and other revenues included in 
        the budget for such budget year, after the expenditures of such 
        tax collections and other revenues in accordance with the 
        budget, shall be irrevocably pledged and appropriated to a 
        special fund to pay the principal and interest on the 
        certificates when due.  If for any reason such tax collections 
        and other revenues are insufficient to pay the certificates and 
        interest when due, the board shall levy a tax in the amount of 
        the deficiency on all taxable property in the district and shall 
        appropriate this amount when received to the special fund. 
           Subd. 2.  [TAX LEVY ANTICIPATION CERTIFICATES OF 
        INDEBTEDNESS.] At any time or times after a tax is levied by the 
        board pursuant to section 12, subdivision 2, and certified to 
        the county auditors in anticipation of the collection of such 
        tax, provided that such tax has not been anticipated by the 
        issuance of certificates under subdivision 1, the board may, by 
        resolution, authorize the issuance, negotiation, and sale in 
        accordance with subdivision 5 in such form and manner and upon 
        such terms and conditions as it may determine of its negotiable 
        general obligation tax levy anticipation certificates of 
        indebtedness in aggregate principal amounts not exceeding 50 
        percent of such uncollected tax as to which no penalty for 
        nonpayment or delinquency has attached.  Such certificates shall 
        mature not later than April 1 in the year following the year in 
        which such tax is collectible.  The proceeds of the tax in 
        anticipation of which such certificates were issued and other 
        funds which may become available shall be applied to the extent 
        necessary to repay such certificates. 
           Subd. 3.  [EMERGENCY CERTIFICATES OF INDEBTEDNESS.] If in 
        any budget year the receipts of tax and other revenues should 
        for some unforeseen cause become insufficient to pay the board's 
        current expenses, or if any calamity or other public emergency 
        should subject it to the necessity of making extraordinary 
        expenditures, the board may by resolution authorize the 
        issuance, negotiation, and sale in accordance with subdivision 5 
        in such form and manner and upon such terms and conditions as it 
        may determine of its negotiable general obligation certificates 
        of indebtedness in an amount sufficient to meet such deficiency, 
        and the board shall forthwith levy on all taxable property in 
        the district a tax sufficient to pay the certificates and 
        interest thereon and shall appropriate all collections of such 
        tax to a special fund created for the payment of such 
        certificates and the interest thereon. 
           Subd. 4.  [GENERAL OBLIGATION BONDS.] The board may by 
        resolution authorize the issuance of general obligation bonds 
        maturing serially in one or more annual or semiannual 
        installments, for the acquisition or betterment of any part of 
        the district disposal system, including but without limitation 
        the payment of interest during construction and for a reasonable 
        period thereafter, or for the refunding of outstanding bonds, 
        certificates of indebtedness, or judgments.  The board shall 
        pledge its full faith and credit and taxing power for the 
        payment of such bonds and shall provide for the issuance and 
        sale and for the security of such bonds in the manner provided 
        in Minnesota Statutes, chapter 475, and shall have the same 
        powers and duties as a municipality issuing bonds under that 
        law.  No election shall be required to authorize the issuance of 
        such bonds and the debt limitations of Minnesota Statutes, 
        chapter 475, shall not apply to such bonds.  The board may also 
        pledge for the payment of such bonds and deduct from the amount 
        of any tax levy required under Minnesota Statutes, section 
        475.61, subdivision 1, any sums receivable under section 10 or 
        any state and federal grants anticipated by the board and may 
        covenant to refund such bonds if and when and to the extent that 
        for any reasons such revenues, together with other funds 
        properly available and appropriated for such purpose, are not 
        sufficient to pay all principal and interest due or about to 
        become due thereon, provided that such revenues have not been 
        anticipated by the issuance of certificates under subdivision 1. 
        All bonds which have been or shall hereafter be issued and sold 
        in conformity with the provisions of this subdivision, and 
        otherwise in conformity with law, are hereby authorized, 
        legalized, and validated. 
           Subd. 5.  [MANNER OF SALE AND ISSUANCE OF CERTIFICATES.] 
        Certificates issued under subdivisions 1, 2, and 3 may be issued 
        and sold by negotiation, without public sale, and may be sold at 
        a price equal to such percentage of the par value thereof, plus 
        accrued interest, and bearing interest at such rate or rates as 
        may be determined by the board.  No election shall be required 
        to authorize the issuance of such certificates.  Such 
        certificates shall bear the same rate of interest after maturity 
        as before and the full faith and credit and taxing power of the 
        board shall be pledged to the payment of such certificates. 
           Sec. 14.  [TAX LEVIES.] 
           The board shall have power to levy taxes for the payment of 
        bonds or other obligations assumed by the district under section 
        6 and for debt service of the district disposal system 
        authorized in section 13 upon all taxable property within the 
        district without limitation of rate or amount and without 
        affecting the amount or rate of taxes which may be levied by the 
        board for other purposes or by any local government unit in the 
        district.  No other provision of law relating to debt limit 
        shall restrict or in any way limit the power of the board to 
        issue the bonds and certificates authorized in section 13.  The 
        board shall also have power to levy taxes as provided in 
        sections 10 and 12.  The county auditor shall annually assess 
        and extend upon the tax rolls the portion of the taxes levied by 
        the board in each year which is certified to the auditor by the 
        board.  The county treasurer shall collect and make settlement 
        of such taxes with the treasurer of the board. 
           Sec. 15.  [DEPOSITORIES.] 
           The board shall from time to time designate one or more 
        national or state banks, or trust companies authorized to do a 
        banking business, as official depositories for money of the 
        board, and thereupon shall require the treasurer to deposit all 
        or a part of such money in such institutions.  Such designation 
        shall be in writing and shall set forth all the terms and 
        conditions upon which the deposits are made, and shall be signed 
        by the chair and treasurer, and made a part of the minutes of 
        the board.  Any bank or trust company so designated shall 
        qualify as a depository by furnishing a corporate surety bond or 
        collateral in the amounts required by Minnesota Statutes, 
        section 118A.03.  However, no bond or collateral shall be 
        required to secure any deposit insofar as it is insured under 
        federal law. 
           Sec. 16.  [MONEY; ACCOUNTS AND INVESTMENTS.] 
           Subdivision 1.  [RECEIPT AND APPLICATION.] All money 
        received by the board shall be deposited or invested by the 
        treasurer and disposed of as the board may direct in accordance 
        with its budget; provided that any money that has been pledged 
        or dedicated by the board to the payment of obligations or 
        interest thereon or expenses incident thereto, or for any other 
        specific purpose authorized by law, shall be paid by the 
        treasurer into the fund to which they have been pledged. 
           Subd. 2.  [FUNDS AND ACCOUNTS.] The board's treasurer shall 
        establish such funds and accounts as may be necessary or 
        convenient to handle the receipts and disbursements of the board 
        in an orderly fashion. 
           Subd. 3.  [DEPOSIT AND INVESTMENT.] The money on hand in 
        said funds and accounts may be deposited in the official 
        depositories of the board or invested as hereinafter provided. 
        The amount thereof not currently needed or required by law to be 
        kept in cash on deposit may be invested in obligations 
        authorized for the investment of municipal sinking funds by 
        law.  The money may also be held under certificates of deposit 
        issued by any official depository of the board.  All investments 
        by the board must conform to an investment policy adopted by the 
        board and amended from time to time. 
           Subd. 4.  [BONDS PROCEEDS.] The use of proceeds of all 
        bonds issued by the board for the acquisition and betterment of 
        the district disposal system, and the use, other than 
        investment, of all money on hand in any sinking fund or funds of 
        the board, shall be governed by Minnesota Statutes, chapter 475, 
        this article, and the resolutions authorizing the issuance of 
        the bonds.  Such bond proceeds when received shall be 
        transferred to the treasurer of the board for safekeeping, 
        investment, and payment of the costs for which they were issued. 
           Subd. 5.  [AUDIT.] The board shall provide for and pay the 
        cost of an independent annual audit of its official books and 
        records by the state public examiner or a certified public 
        accountant. 
           Sec. 17.  [GENERAL POWERS OF BOARD.] 
           Subdivision 1.  [ALL NECESSARY OR CONVENIENT POWER.] The 
        board shall have all powers which may be necessary or convenient 
        to discharge the duties imposed upon it by law.  The powers 
        shall include those herein specified, but the express grant or 
        enumeration of powers does not limit the generality or scope of 
        the grant of power contained in this subdivision. 
           Subd. 2.  [SUITS.] The board may sue or be sued. 
           Subd. 3.  [CONTRACTS.] The board may enter into any 
        contract necessary or proper for the exercise of its powers of 
        the accomplishment of its purposes. 
           Subd. 4.  [RULES.] The board shall have the power to adopt 
        rules relating to the board's responsibilities and may provide 
        penalties for the violation thereof not exceeding the maximum 
        which may be specified for a misdemeanor, and the cost of 
        prosecution may be added to the penalties imposed.  Any rule 
        prescribing a penalty for violation shall be published at least 
        once in a newspaper having general circulation in the district.  
        Such violations may be prosecuted before any court in the 
        district having jurisdiction of misdemeanor, and every such 
        court shall have jurisdiction of such violations.  Any constable 
        or other peace officer of any municipality in the district may 
        make arrests for such violations committed anywhere in the 
        district in like manner and with like effect as for violations 
        of village ordinances or for statutory misdemeanors.  All fines 
        collected in such cases shall be deposited in the treasury of 
        the board, or may be allocated between the board and the 
        municipality in which such prosecution occurs on such basis as 
        the board and the municipality agree. 
           Subd. 5.  [GIFTS; GRANTS.] The board may accept gifts, may 
        apply for and accept grants or loans of money or other property 
        from the United States, the state, or any person for any of its 
        purposes, may enter into any agreement required in connection 
        herewith, and may hold, use, and dispose of such money or 
        property in accordance with the terms of the gift, grant, loan, 
        or agreement relating thereto; and, with respect to any loans or 
        grants of funds or real or personal property or other assistance 
        from any state or federal government or any agency or 
        instrumentality thereof, the board may contract to do and 
        perform all acts and things required as a condition or 
        consideration therefore pursuant to state or federal law or 
        regulations, whether or not included among the powers expressly 
        granted to the board in this article. 
           Subd. 6.  [JOINT POWERS.] The board may act under Minnesota 
        Statutes, section 471.59, or any other appropriate law providing 
        for joint or cooperative action between government units. 
           Subd. 7.  [RESEARCH, HEARINGS, INVESTIGATIONS, ADVISE.] The 
        board may conduct research studies and programs, collect and 
        analyze data, prepare reports, maps, charts, and tables, and 
        conduct all necessary hearings and investigations in connection 
        with the design, construction, and operation of the district 
        disposal system; and may advise and assist other government 
        units on system planning matters within the scope of its powers, 
        duties, and objectives and may provide at the request of any 
        such governmental unit such other technical and administrative 
        assistance as the board deems appropriate for the government 
        unit to carry out the powers and duties vested in the government 
        unit under this article or imposed on by the board. 
           Subd. 8.  [EMPLOYEES, CONTRACTORS, INSURANCE.] The board 
        may employ on such terms as it deems advisable, persons or firms 
        performing engineering, legal, or other services of a 
        professional nature; require any employee to obtain and file 
        with it an individual bond or fidelity insurance policy; and 
        procure insurance in such amounts as it deems necessary against 
        liability of the board or its officers or both, for personal 
        injury or death and property damage or destruction, with the 
        force and effect stated in Minnesota Statutes, chapter 466, and 
        against risks of damage to or destruction of any of its 
        facilities, equipment, or other property as it deems necessary. 
           Subd. 9.  [PROPERTY.] The board may acquire by purchase, 
        lease, condemnation, gift, or grant, and real or personal 
        property including positive and negative easements and water and 
        air rights, and it may construct, enlarge, improve, replace, 
        repair, maintain, and operate any interceptor, treatment works, 
        or water facility determined to be necessary or convenient for 
        the collection and disposal of sewage in the district.  Any 
        local government unit and the commissioners of transportation 
        and natural resources may convey to or permit the use of any 
        such facilities owned or controlled by it, by the board, subject 
        to the rights of the holders of any bonds issued with respect 
        thereto, with or without compensation, without an election or 
        approval by any other government unit or agency.  All powers 
        conferred by this subdivision may be exercised both within or 
        without the district as may be necessary for the exercise by the 
        board of its powers or the accomplishment of its purposes.  The 
        board may hold, lease, convey, or otherwise dispose of such 
        property for its purposes upon such terms and in such manner as 
        it shall deem advisable.  Unless otherwise provided, the right 
        to acquire lands and property rights by condemnation shall be 
        exercised in accordance with Minnesota Statutes, chapter 117, 
        and shall apply to any property or interest therein owned by any 
        local government unit; provided, that no such property devoted 
        to an actual public use at the time, or held to be devoted to 
        such use within a reasonable time, shall be so acquired unless a 
        court of competent jurisdiction shall determine that the use 
        proposed by the board is paramount to such use.  Except in case 
        of property in actual public use, the board may take possession 
        of any property of which condemnation proceedings have been 
        commenced at any time after the issuance of a court order 
        appointing commissioners for its condemnation. 
           Subd. 10.  [RIGHTS-OF-WAY.] The board may construct or 
        maintain its systems or facilities in, along, on, under, over, 
        or through public waters, streets, bridges, viaducts, and other 
        public right-of-way without first obtaining a franchise from any 
        county or local government unit having jurisdiction over them; 
        but such facilities shall be constructed and maintained in 
        accordance with the ordinances and resolutions of any such 
        county or government unit relating to construction, 
        installation, and maintenance of similar facilities on such 
        public properties and shall not unnecessarily obstruct the 
        public use of such rights-of-way. 
           Subd. 11.  [DISPOSAL OF PROPERTY.] The board may sell, 
        lease, or otherwise dispose of any real or personal property 
        acquired by it which is no longer required for accomplishment of 
        its purposes.  Such property may be sold in the manner provided 
        by Minnesota Statutes, section 469.065, insofar as practical.  
        The board may give such notice of sale as it shall deem 
        appropriate.  When the board determines that any property or any 
        part of the district disposal system which has been acquired 
        from a local government unit without compensation is no longer 
        required but is required as a local facility by the government 
        unit from which it was acquired, the board may by resolution 
        transfer it to such government unit. 
           Subd. 12.  [JOINT OPERATIONS.] The board may contract with 
        the United States or any agency thereof, any state or agency 
        thereof, or any regional public planning body in the state with 
        jurisdiction over any part of the district, or any other 
        municipal or public corporation, or governmental subdivision in 
        any state, for the joint use of any facility owned by the board 
        or such entity, for the operation by such entity of any system 
        or facility of the board, or for the performance on the board's 
        behalf of any service including, but not limited to, planning, 
        on such terms as may be agreed upon by the contracting parties.  
        Unless designated by the board as a local sanitary sewer 
        facility, any treatment works or interceptor jointly used, or 
        operated on behalf of the board, as provided in this 
        subdivision, shall be deemed to be operated by the board for 
        purposes of including said facilities in the district disposal 
        system. 
           Sec. 18.  [LOCAL FACILITIES.] 
           Subdivision 1.  [SANITARY SEWER FACILITIES.] Except as 
        otherwise provided in this article, local government units shall 
        retain responsibility for the planning, design, acquisition, 
        betterment, operation, administration, and maintenance of all 
        local sanitary sewer facilities as provided by law. 
           Subd. 2.  [ASSUMPTION OF RESPONSIBILITY OVER LOCAL SANITARY 
        SEWER FACILITIES.] The board shall upon request of any 
        government unit or units assume either alone or jointly with the 
        local government unit all or any part of the responsibility of 
        the local government unit described in subdivision 1.  Except as 
        provided in subdivision 4 and for the purpose of exercising such 
        responsibility, the board shall have all the powers and duties 
        elsewhere conferred in this article with the same force and 
        effect as if such local sanitary sewer facilities were a part of 
        the district disposal system. 
           Subd. 3.  [WATER AND STREET FACILITIES.] The board may, 
        upon request of any governmental unit or units, enter into an 
        agreement under which the board may assume either alone or 
        jointly with such unit or units, the responsibility for the 
        acquisition and construction of water and street facilities in 
        conjunction with (1) any project for the acquisition or 
        betterment of the district disposal system, or (2) any project 
        undertaken by the board under subdivision 2.  Except as provided 
        in subdivision 4, and for the purpose of exercising any 
        responsibilities pursuant to this subdivision, the board shall 
        have all the powers and duties elsewhere conferred in this 
        article with the same force and effect as if such water or 
        street facilities were a part of the district disposal system. 
           Subd. 4.  [ALLOCATION OF CURRENT COSTS.] All current costs 
        attributable to responsibilities assumed by the board over local 
        sanitary sewer facilities and water and street facilities as 
        provided in this section shall be allocated solely to the local 
        unit for or with whom such responsibilities are assumed on such 
        terms and over such period as the board determines to be 
        equitable and in the best interest of the district, provided 
        that if two or more government units form a region in accordance 
        with this section, all or part of such current costs 
        attributable to the region shall at the request of its joint 
        board be allocated to the region and provided in the agreement 
        establishing the region. 
           Subd. 5.  [PART OF DISTRICT SYSTEM.] Nothing contained in 
        this section or in any other part of this article shall be 
        construed to prevent the board from including, where 
        appropriate, treatment works or interceptors, previously 
        designated or treated as local sanitary sewer facilities as a 
        part of the district disposal system. 
           Sec. 19.  [SERVICE CONTRACTS WITH GOVERNMENTS OUTSIDE 
        DISTRICT.] 
           The board may contract with the United States or any agency 
        thereof, any state or any agency thereof, or any municipal or 
        public corporation, governmental subdivision or agency or 
        political subdivision in any state, outside the jurisdiction of 
        the board, for furnishing to such entities any services which 
        the board may furnish to local government units in the district 
        under this article including, but not limited to, planning for 
        and the acquisition, betterment, operation, administration, and 
        maintenance of any or all interceptors, treatment works, and 
        local sanitary sewer facilities, provided that the board may 
        further include as one of the terms of the contract that such 
        entity also pay to the board such amount as may be agreed upon 
        as a reasonable estimate of the proportionate share properly 
        allocable to the entity of costs of acquisition, betterment, and 
        debt service previously allocated to local government units in 
        the district.  When such payments are made by such entities to 
        the board, they shall be applied in reduction of the total 
        amount of costs thereafter allocated to each local government 
        unit in the district, on such equitable basis as the board deems 
        to be in the best interest of the district.  Any municipality in 
        the state of Minnesota may enter into such contract and perform 
        all acts and things required as a condition or consideration 
        therefore consistent with the purpose of this article, whether 
        or not included among the powers otherwise granted to such 
        municipality by law or charter, such powers to include those 
        powers set out in section 10, subdivisions 3, 3a, and 4. 
           Sec. 20.  [CONTRACTS FOR CONSTRUCTION, MATERIALS, SUPPLIES, 
        AND EQUIPMENT.] 
           Subdivision 1.  [PLANS AND SPECIFICATIONS.] When the board 
        orders a project involving the acquisition or betterment of a 
        part of the district disposal system it shall cause plans and 
        specifications of this project to be made, or if previously 
        made, to be modified, if necessary, and to be approved by the 
        agency if required, and after any required approval by the 
        agency, one or more contracts for work and materials called for 
        by such plans and specification may be awarded as provided in 
        this section. 
           Subd. 2.  [UNIFORM MUNICIPAL CONTRACTING LAW.] Except as 
        otherwise provided in this section, all contracts for work to be 
        done or for purchases of materials, supplies, or equipment shall 
        be done in accordance with Minnesota Statutes, section 471.345. 
           Subd. 3.  [CONTRACTS OR PURCHASES.] The board may, without 
        advertising for bids, enter into any contract or purchase any 
        materials, supplies, or equipment of the type referred to in 
        subdivision 2 in accordance with applicable state law. 
           Sec. 21.  [ANNEXATION OF TERRITORY.] 
           Any municipality in Douglas county or Pope county, upon 
        resolution adopted by a four-fifths vote of its governing body, 
        may petition the board for annexation to the district of the 
        area then comprising the municipality, or any part thereof and, 
        if accepted by the board, such area shall be deemed annexed to 
        the district and subject to the jurisdiction of the board under 
        the terms and provisions of this article.  The territory so 
        annexed shall be subject to taxation and assessment pursuant to 
        the provisions of this article and shall be subject to taxation 
        by the board like other property in the district for the payment 
        of principal and interest thereafter becoming due on general 
        obligations of the board, whether authorized or issued before or 
        after such annexation.  The board may, in its discretion, 
        condition approval of the annexation upon the contribution, by 
        or on behalf of the municipality petitioning for annexation, to 
        the board of such amount as may be agreed upon as being a 
        reasonable estimate of the proportionate share, properly 
        allocable to the municipality, of costs or acquisition, 
        betterment, and debt service previously allocated to local 
        government units in the district, on such terms as may be agreed 
        upon; and in place of or in addition thereto such other and 
        further conditions as the board deems in the best interests of 
        the district.  Notwithstanding any other provisions of this 
        article to the contrary, the conditions established for 
        annexation may include the requirement that the annexed 
        municipality pay for, contract for, and oversee the construction 
        of local sanitary sewer facilities and interceptor sewers as 
        those terms are defined in section 2.  For the purpose of paying 
        such contribution or of satisfying any other condition 
        established by the board, the municipality petitioning 
        annexation may exercise the powers conferred in section 10.  
        When such contributions are made by the municipality to the 
        board, they shall be applied in reduction of the total amount of 
        costs thereafter allocated to each local government unit in the 
        district, on such equitable basis as the board deems to be in 
        the best interests of the district, applying so far as 
        practicable and appropriate the criteria set forth in section 9, 
        subdivision 2.  Upon annexation of such territory, the secretary 
        of the board shall certify to the auditor and treasurer of the 
        county in which the municipality is located the fact of such 
        annexation and a legal description of the territory annexed. 
           Sec. 22.  [PROPERTY EXEMPT FROM TAXATION.] 
           Any properties, real or personal, owned, leased, 
        controlled, used, or occupied by the sanitary sewer board for 
        any purpose under this article are declared to be acquired, 
        owned, leased, controlled, used, and occupied for public, 
        governmental, and municipal purposes, and are exempt from 
        taxation by the state or any political subdivision of the state, 
        provided that such properties are subject to special assessments 
        levied by a political subdivision for a local improvement in 
        amounts proportionate to and not exceeding the special benefit 
        received by the properties from such improvement.  No possible 
        use of any such properties in any manner different from their 
        use as part of the disposal system at the time shall be 
        considered in determining the special benefit received by such 
        properties.  All such assessments shall be subject to final 
        approval by the board, whose determination of the benefits shall 
        be conclusive upon the political subdivision levying the 
        assessment.  All bonds, certificates of indebtedness, or other 
        obligations of the board, and the interest thereon, are exempt 
        from taxation by the state or any political subdivision of the 
        state. 
           Sec. 23.  [RELATION TO EXISTING LAWS.] 
           This article prevails over any law or charter inconsistent 
        with it.  The powers conferred on the board under this article 
        do not diminish or supersede the powers conferred on the agency 
        by Minnesota Statutes, chapters 115 and 116. 
           Sec. 24.  [LOCAL APPROVAL.] 
           This article takes effect the day after the governing 
        bodies of the city of Farwell in Pope county and the city of 
        Kensington in Douglas county comply with Minnesota Statutes, 
        section 645.021, subdivision 3, or 30 days after a referendum is 
        held in those cities. 
                                   ARTICLE 16
                                 MISCELLANEOUS 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        3.986, subdivision 2, is amended to read: 
           Subd. 2.  [LOCAL FISCAL IMPACT.] (a) "Local fiscal impact" 
        means increased or decreased costs or revenues that a political 
        subdivision would incur as a result of a law enacted after June 
        30, 1997, or rule proposed after June 30 December 31, 1998: 
           (1) that mandates a new program, eliminates an existing 
        mandated program, requires an increased level of service of an 
        existing program, or permits a decreased level of service in an 
        existing mandated program; 
           (2) that implements or interprets federal law and, by its 
        implementation or interpretation, increases or decreases program 
        or service levels beyond the level required by the federal law; 
           (3) that implements or interprets a statute or amendment 
        adopted or enacted pursuant to the approval of a statewide 
        ballot measure by the voters and, by its implementation or 
        interpretation, increases or decreases program or service levels 
        beyond the levels required by the ballot measure; 
           (4) that removes an option previously available to 
        political subdivisions, or adds an option previously unavailable 
        to political subdivisions, thus requiring higher program or 
        service levels or permitting lower program or service levels, or 
        prohibits a specific activity and so forces political 
        subdivisions to use a more costly alternative to provide a 
        mandated program or service; 
           (5) that requires that an existing program or service be 
        provided in a shorter time period and thus increases the cost of 
        the program or service, or permits an existing mandated program 
        or service to be provided in a longer time period, thus 
        permitting a decrease in the cost of the program or service; 
           (6) that adds new requirements to an existing optional 
        program or service and thus increases the cost of the program or 
        service because the political subdivisions have no reasonable 
        alternative other than to continue the optional program; 
           (7) that affects local revenue collections by changes in 
        property or sales and use tax exemptions; 
           (8) that requires costs previously incurred at local option 
        that have subsequently been mandated by the state; or 
           (9) that requires payment of a new fee or increases the 
        amount of an existing fee, or permits the elimination or 
        decrease of an existing fee mandated by the state. 
           (b) When state law is intended to achieve compliance with 
        federal law or court orders, state mandates shall be determined 
        as follows: 
           (1) if the federal law or court order is discretionary, the 
        state law is a state mandate; 
           (2) if the state law exceeds what is required by the 
        federal law or court order, only the provisions of the state law 
        that exceed the federal requirements are a state mandate; and 
           (3) if the state law does not exceed what is required by 
        the federal statute or regulation or court order, the state law 
        is not a state mandate. 
           Sec. 2.  Minnesota Statutes 1997 Supplement, section 3.986, 
        subdivision 4, is amended to read: 
           Subd. 4.  [POLITICAL SUBDIVISION.] A "political 
        subdivision" is a county, or home rule charter or statutory city 
        , town, or other taxing district or municipal corporation. 
           Sec. 3.  Minnesota Statutes 1997 Supplement, section 3.987, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LOCAL IMPACT NOTES.] The commissioner of 
        finance shall coordinate the development of a local impact note 
        for any proposed legislation introduced after June 30, 1997, or 
        any rule proposed after June 30 December 31, 1998, upon request 
        of the chair or the ranking minority member of either 
        legislative tax committee.  Upon receipt of a request to prepare 
        a local impact note, the commissioner must notify the authors of 
        the proposed legislation or, for an administrative rule, the 
        head of the relevant executive agency or department, that the 
        request has been made.  The local impact note must be prepared 
        as provided in section 3.98, subdivision 2, and made available 
        to the public upon request.  If the action is among the 
        exceptions listed in section 3.988, a local impact note need not 
        be requested nor prepared.  The commissioner shall make a 
        reasonable and timely estimate of the local fiscal impact on 
        each type of political subdivision that would result from the 
        proposed legislation.  The commissioner of finance may require 
        any political subdivision or the commissioner of an 
        administrative agency of the state to supply in a timely manner 
        any information determined to be necessary to determine local 
        fiscal impact.  The political subdivision, its representative 
        association, or commissioner shall convey the requested 
        information to the commissioner of finance with a signed 
        statement to the effect that the information is accurate and 
        complete to the best of its ability.  The political subdivision, 
        its representative association, or commissioner, when requested, 
        shall update its determination of local fiscal impact based on 
        actual cost or revenue figures, improved estimates, or 
        both.  Upon completion of the note, the commissioner must 
        provide a copy to the authors of the proposed legislation or, 
        for an administrative rule, to the head of the relevant 
        executive agency or department. 
           Sec. 4.  Minnesota Statutes 1997 Supplement, section 3.987, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MANDATE EXPLANATIONS.] Before a committee 
        hearing on any bill introduced in the legislature after June 30, 
        1997, that seeks to impose program or financial mandates on 
        political subdivisions must include an attachment from the chair 
        or ranking minority member of the committee may request that the 
        author provide the committee with a note that gives appropriate 
        responses to the following guidelines.  It must state and list: 
           (1) the policy goals that are sought to be attained, 
        the and any performance standards that are to be imposed, and an 
        explanation why the goals and standards will best be served by 
        requiring compliance by on political subdivisions; 
           (2) any performance standards that will allow political 
        subdivisions flexibility and innovation of method in achieving 
        those goals; 
           (3) the reasons for each prescribed standard and the 
        process by which each standard governs input such as staffing 
        and other administrative aspects of the program; 
           (4) the sources of additional revenue, in addition to 
        existing funding for similar programs, that are directly linked 
        to imposition of the mandates that will provide adequate and 
        stable funding for their requirements; 
           (5) what input has been obtained to ensure that the 
        implementing agencies have the capacity to carry out the 
        delegated responsibilities; and 
           (6) the reasons why less intrusive measures such as 
        financial incentives or voluntary compliance would not yield the 
        equity, efficiency, or desired level of statewide uniformity in 
        the proposed program; 
           (6) what input has been obtained to ensure that the 
        implementing agencies have the capacity to carry out the 
        delegated responsibilities; and 
           (7) the efforts put forth, if any, to involve political 
        subdivisions in the creation or development of the proposed 
        mandate. 
           Sec. 5.  Minnesota Statutes 1997 Supplement, section 3.988, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MISCELLANEOUS EXCEPTIONS.] A local impact note 
        or an attachment as provided in section 3.987, subdivision 2, 
        need not be prepared for the cost of a mandated action if the 
        law, including a rulemaking, containing the mandate:  
           (1) accommodates a specific local request; 
           (2) results in no new local government duties; 
           (3) leads to revenue losses from exemptions to taxes; 
           (4) provided only clarifying or conforming, nonsubstantive 
        charges on local government; 
           (5) imposes additional net local costs that are minor (less 
        than $200 an amount less than or equal to one-half of one 
        percent of the local revenue base as defined in section 
        477A.011, subdivision 27, or $50,000, whichever is less for any 
        single local government if the mandate does not apply statewide 
        or less than $3,000,000 $1,000,000 if the mandate is statewide) 
        and do not cause a financial burden on local government; 
           (6) is a law or executive order enacted before July 1, 
        1997, or a rule initially implementing a law enacted before July 
        1, 1997; 
           (7) implements something other than a law or executive 
        order, such as a federal, court, or voter-approved mandate; 
           (8) defines a new crime or redefines an existing crime or 
        infraction; 
           (9) results in savings that equal or exceed costs; 
           (10) (9) requires the holding of elections; 
           (11) (10) ensures due process or equal protection; 
           (12) (11) provides for the notification and conduct of 
        public meetings; 
           (13) (12) establishes the procedures for administrative and 
        judicial review of actions taken by political subdivisions; 
           (14) (13) protects the public from malfeasance, 
        misfeasance, or nonfeasance by officials of political 
        subdivisions; 
           (15) (14) relates directly to financial administration, 
        including the levy, assessment, and collection of taxes; 
           (16) (15) relates directly to the preparation and 
        submission of financial audits necessary to the administration 
        of state laws; or 
           (17) (16) requires uniform standards to apply to public and 
        private institutions without differentiation. 
           Sec. 6.  Minnesota Statutes 1997 Supplement, section 3.989, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] In this section: 
           (1) "Class A state mandates" means those laws under which 
        the state mandates to political subdivisions, their 
        participation, the organizational structure of the program, and 
        the procedural regulations under which the law must be 
        administered; and 
           (2) "Class B state mandates" means those mandates resulting 
        from legislation enacted after July 1, 1998, that specifically 
        reference this section and that allow the political subdivisions 
        to opt for administration of a law with program elements 
        mandated beforehand and with an assured revenue level from the 
        state of at least 90 percent of full program and administrative 
        costs.  
           Sec. 7.  Minnesota Statutes 1997 Supplement, section 3.989, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REPORT.] The commissioner of finance shall 
        prepare by September 1, 1998 2000, and by September 1 of each 
        even-numbered year thereafter, a report by political 
        subdivisions of the costs of class A state local mandates 
        established after June 30, 1997.  
           The commissioner shall annually include the statewide total 
        of the statement of costs of class A local mandates after June 
        30, 1997, as a notation in the state biennial budget for the 
        next fiscal year. 
           Sec. 8.  Minnesota Statutes 1996, section 16A.102, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GOVERNOR'S RECOMMENDATION.] By the fourth 
        Monday in January of each odd-numbered year, the governor shall 
        submit to the legislature a recommended revenue target for the 
        next two bienniums.  The recommended revenue target must specify:
           (1) the maximum share of Minnesota personal income to be 
        collected in taxes and other revenues to pay for state and local 
        government services; 
           (2) the division of the share between state and local 
        government revenues; and 
           (3) the appropriate mix and rates of income, sales, and 
        other state and local taxes including property taxes and other 
        revenues, other than property taxes, and the amount of property 
        taxes and the effect of the recommendations on the incidence of 
        the tax burden by income class. 
        The recommendations must be based on the November forecast 
        prepared under section 16A.103. 
           Sec. 9.  Minnesota Statutes 1996, section 16A.102, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LEGISLATIVE BUDGET RESOLUTION.] By March 15 of 
        each odd-numbered year, the legislature shall by concurrent 
        resolution adopt revenue targets for the next two bienniums.  
        The resolution must specify: 
           (1) the maximum share of Minnesota personal income to be 
        collected in taxes and other revenues to pay for state and local 
        government services; 
           (2) the division of the share between state and local 
        government services; and 
           (3) the appropriate mix and rates of income, sales, and 
        other state and local taxes including property taxes and other 
        revenues, other than property taxes, and the amount of property 
        taxes and the effect of the resolution on the incidence of the 
        tax burden by income class. 
        The resolution must be based on the February forecast prepared 
        under section 16A.103 and take into consideration the revenue 
        targets recommended by the governor under subdivision 1.  
           Sec. 10.  Minnesota Statutes 1997 Supplement, section 
        60A.15, subdivision 1, is amended to read: 
           Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
        before April 1, June 1, and December 1 of each year, every 
        domestic and foreign company, including town and farmers' mutual 
        insurance companies, domestic mutual insurance companies, marine 
        insurance companies, health maintenance organizations, community 
        integrated service networks, and nonprofit health service plan 
        corporations, shall pay to the commissioner of revenue 
        installments equal to one-third of the insurer's total estimated 
        tax for the current year.  Except as provided in paragraphs (d), 
        (e), (h), and (i), installments must be based on a sum equal to 
        two percent of the premiums described in paragraph (b). 
           (b) Installments under paragraph (a), (d), or (e) are 
        percentages of gross premiums less return premiums on all direct 
        business received by the insurer in this state, or by its agents 
        for it, in cash or otherwise, during such year. 
           (c) Failure of a company to make payments of at least 
        one-third of either (1) the total tax paid during the previous 
        calendar year or (2) 80 percent of the actual tax for the 
        current calendar year shall subject the company to the penalty 
        and interest provided in this section, unless the total tax for 
        the current tax year is $500 or less. 
           (d) For health maintenance organizations, nonprofit health 
        service plan corporations, and community integrated service 
        networks, the installments must be based on an amount determined 
        under paragraph (h) or (i). 
           (e) For purposes of computing installments for town and 
        farmers' mutual insurance companies and for mutual property 
        casualty companies with total assets on December 31, 1989, of 
        $1,600,000,000 or less, the following rates apply: 
           (1) for all life insurance, two percent; 
           (2) for town and farmers' mutual insurance companies and 
        for mutual property and casualty companies with total assets of 
        $5,000,000 or less, on all other coverages, one percent; and 
           (3) for mutual property and casualty companies with total 
        assets on December 31, 1989, of $1,600,000,000 or less, on all 
        other coverages, 1.26 percent. 
           (f) If the aggregate amount of premium tax payments under 
        this section and the fire marshal tax payments under section 
        299F.21 made during a calendar year is equal to or exceeds 
        $120,000, all tax payments in the subsequent calendar year must 
        be paid by means of a funds transfer as defined in section 
        336.4A-104, paragraph (a).  The funds transfer payment date, as 
        defined in section 336.4A-401, must be on or before the date the 
        payment is due.  If the date the payment is due is not a funds 
        transfer business day, as defined in section 336.4A-105, 
        paragraph (a), clause (4), the payment date must be on or before 
        the funds transfer business day next following the date the 
        payment is due.  
           (g) Premiums under medical assistance, general assistance 
        medical care, the MinnesotaCare program, and the Minnesota 
        comprehensive health insurance plan and all payments, revenues, 
        and reimbursements received from the federal government for 
        Medicare-related coverage as defined in section 62A.31, 
        subdivision 3, paragraph (e), are not subject to tax under this 
        section. 
           (h) For calendar years 1997, 1998, and 1999, the 
        installments for health maintenance organizations, community 
        integrated service networks, and nonprofit health service plan 
        corporations must be based on an amount equal to one percent of 
        premiums described under paragraph (b).  Health maintenance 
        organizations, community integrated service networks, and 
        nonprofit health service plan corporations that have met the 
        cost containment goals established under section 62J.04 in the 
        individual and small employer market for calendar year 1996 are 
        exempt from payment of the tax imposed under this section for 
        premiums paid after March 30, 1997, and before April 1, 1998.  
        Health maintenance organizations, community integrated service 
        networks, and nonprofit health service plan corporations that 
        have met the cost containment goals established under section 
        62J.04 in the individual and small employer market for calendar 
        year 1997 are exempt from payment of the tax imposed under this 
        section for premiums paid after March 30, 1998, and before April 
        1, 1999.  Health maintenance organizations, community integrated 
        service networks, and nonprofit health service plan corporations 
        that have met the cost containment goals established under 
        section 62J.04 in the individual and small employer market for 
        calendar year 1998 are exempt from payment of the tax imposed 
        under this section for premiums paid after March 30, 1999, and 
        before January 1, 2000.  
           (i) For calendar years after 1999, the commissioner of 
        finance shall determine the balance of the health care access 
        fund on September 1 of each year beginning September 1, 1999.  
        If the commissioner determines that there is no structural 
        deficit for the next fiscal year, no tax shall be imposed under 
        paragraph (d) for the following calendar year.  If the 
        commissioner determines that there will be a structural deficit 
        in the fund for the following fiscal year, then the 
        commissioner, in consultation with the commissioner of revenue, 
        shall determine the amount needed to eliminate the structural 
        deficit and a tax shall be imposed under paragraph (d) for the 
        following calendar year.  The commissioner shall determine the 
        rate of the tax as either one-quarter of one percent, one-half 
        of one percent, three-quarters of one percent, or one percent of 
        premiums described in paragraph (b), whichever is the lowest of 
        those rates that the commissioner determines will produce 
        sufficient revenue to eliminate the projected structural 
        deficit.  The commissioner of finance shall publish in the State 
        Register by October 1 of each year the amount of tax to be 
        imposed for the following calendar year. 
           (j) In approving the premium rates as required in sections 
        62L.08, subdivision 8, and 62A.65, subdivision 3, the 
        commissioners of health and commerce shall ensure that any 
        exemption from the tax as described in paragraphs (h) and (i) is 
        reflected in the premium rate. 
           Sec. 11.  Minnesota Statutes 1997 Supplement, section 
        270.60, subdivision 4, is amended to read: 
           Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
        shall pay to a qualified county in which an Indian gaming casino 
        is located ten percent of the state share of all taxes generated 
        from activities on reservations and collected under a tax 
        agreement under this section with the tribal government for the 
        reservation located in the county.  If the tribe has casinos 
        located in more than one county, the payment must be divided 
        equally among the counties in which the casinos are located. 
           (b) A county qualifies for payments is a qualified county 
        under this subdivision only if one of the following conditions 
        is met: 
           (1) the county's per capita income is less than 80 percent 
        of the state per capita personal income, based on the most 
        recent estimates made by the United States Bureau of Economic 
        Analysis; or 
           (2) 30 percent or more of the total market value of real 
        property in the county is exempt from ad valorem taxation. 
           (c) The commissioner shall make the payments required under 
        this subdivision by February 28 of the year following the year 
        the taxes are collected. 
           (d) An amount sufficient to make the payments authorized by 
        this subdivision, not to exceed $1,100,000 in any fiscal year, 
        is annually appropriated from the general fund to the 
        commissioner.  If the authorized payments exceed the amount of 
        the appropriation, the commissioner shall first proportionately 
        reduce the rate payments to counties other than qualified 
        counties so that the total amount equals the appropriation.  If 
        the authorized payments to qualified counties also exceed the 
        amount of the appropriation, the commissioner shall then 
        proportionately reduce the rate so that the total amount to be 
        paid to qualified counties equals the appropriation. 
           Sec. 12.  Minnesota Statutes 1997 Supplement, section 
        270.67, subdivision 2, is amended to read: 
           Subd. 2.  [EXTENSION AGREEMENTS.] When any portion of any 
        tax payable to the commissioner of revenue together with 
        interest and penalty thereon, if any, has not been paid, the 
        commissioner may extend the time for payment for a further 
        period.  When the authority of this section is invoked, the 
        extension shall be evidenced by written agreement signed by the 
        taxpayer and the commissioner, stating the amount of the tax 
        with penalty and interest, if any, and providing for the payment 
        of the amount in installments.  The agreement may contain a 
        confession of judgment for the amount and for any unpaid portion 
        thereof and shall provide that the commissioner may forthwith 
        enter judgment against the taxpayer in the district court of the 
        county of residence as shown upon the taxpayer's tax return for 
        the unpaid portion of the amount specified in the extension 
        agreement.  The agreement shall provide that it can be 
        terminated, after notice by the commissioner, if information 
        provided by the taxpayer prior to the agreement was inaccurate 
        or incomplete, collection of the tax covered by the agreement is 
        in jeopardy, there is a subsequent change in the taxpayer's 
        financial condition, the taxpayer has failed to make a payment 
        due under the agreement, or has failed to pay any other tax or 
        file a tax return coming due after the agreement.  The notice 
        must be given at least 14 calendar days prior to termination, 
        and shall advise the taxpayer of the right to request a 
        reconsideration from the commissioner of whether termination is 
        reasonable and appropriate under the circumstances.  A request 
        for reconsideration does not stay collection action beyond the 
        14-day notice period.  If the commissioner has reason to believe 
        that collection of the tax covered by the agreement is in 
        jeopardy, the commissioner may proceed under sections 270.70, 
        subdivision 2, paragraph (b), and 270.274, and terminate the 
        agreement without regard to the 14-day period.  The commissioner 
        may accept other collateral the commissioner considers 
        appropriate to secure satisfaction of the tax liability.  The 
        principal sum specified in the agreement shall bear interest at 
        the rate specified in section 270.75 on all unpaid portions 
        thereof until the same has been fully paid or the unpaid portion 
        thereof has been entered as a judgment.  The judgment shall bear 
        interest at the rate specified in section 270.75.  If it appears 
        to the commissioner that the tax reported by the taxpayer is in 
        excess of the amount actually owing by the taxpayer, the 
        extension agreement or the judgment entered pursuant thereto 
        shall be corrected.  If after making the extension agreement or 
        entering judgment with respect thereto, the commissioner 
        determines that the tax as reported by the taxpayer is less than 
        the amount actually due, the commissioner shall assess a further 
        tax in accordance with the provisions of law applicable to the 
        tax.  The authority granted to the commissioner by this section 
        is in addition to any other authority granted to the 
        commissioner by law to extend the time of payment or the time 
        for filing a return and shall not be construed in limitation 
        thereof. 
           Sec. 13.  Minnesota Statutes 1997 Supplement, section 
        295.52, subdivision 4, is amended to read: 
           Subd. 4.  [USE TAX; PRESCRIPTION DRUGS.] (a) A person that 
        receives prescription drugs for resale or use in Minnesota, 
        other than from a wholesale drug distributor that paid the tax 
        under subdivision 3, is subject to a tax equal to the price paid 
        to the wholesale drug distributor multiplied by the tax 
        percentage specified in this section.  Liability for the tax is 
        incurred when prescription drugs are received or delivered in 
        Minnesota by the person. 
           (b) A person that receives prescription drugs for use in 
        Minnesota from a nonresident pharmacy required to be registered 
        under section 151.19 is subject to a tax equal to the price paid 
        by the nonresident pharmacy to the wholesale drug distributor or 
        the price received by the nonresident pharmacy, whichever is 
        lower, multiplied by the tax percentage specified in this 
        section.  Liability for the tax is incurred when prescription 
        drugs are received in Minnesota by the person.  
           Sec. 14.  Minnesota Statutes 1996, section 295.52, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [TAX COLLECTION.] A wholesale drug distributor 
        with nexus in Minnesota, who is not subject to tax under 
        subdivision 3, on all or a particular transaction or a 
        nonresident pharmacy with nexus in Minnesota, is required to 
        collect the tax imposed under subdivision 4, from the purchaser 
        of the drugs and give the purchaser a receipt for the tax paid.  
        The tax collected shall be remitted to the commissioner in the 
        manner prescribed by section 295.55, subdivision 3. 
           Sec. 15.  Minnesota Statutes 1997 Supplement, section 
        297H.04, is amended by adding a subdivision to read: 
           Subd. 3.  [INCINERATION WITH MIXED WASTE; RATE.] Nonmixed 
        municipal solid waste that is separately collected and 
        processed, but must be incinerated with mixed municipal solid 
        waste in accordance with an industrial solid waste management 
        plan approved by the pollution control agency, shall be taxed at 
        the rate for nonmixed municipal solid waste. 
           Sec. 16.  Minnesota Statutes 1996, section 325E.112, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [REFUND PROGRAM.] A person who accepts from the 
        public used motor oil and used motor oil filters as defined in 
        section 325E.10, subdivisions 3 and 5, may apply for a refund of 
        $250 for the year in which the person operates a facility that 
        qualifies for the reimbursement under subdivision 2, or would 
        qualify for the reimbursement except that it does not accept 
        contaminated motor oil.  The refund is issued by the department 
        of revenue.  In order to claim the refund, the applicant must 
        provide the commissioner of revenue with a copy of a certificate 
        issued to the applicant by the commissioner of the pollution 
        control agency verifying the applicant's eligibility for the 
        refund, and other information as the commissioner may 
        prescribe.  The commissioner of the pollution control agency may 
        issue no more than 200 certificates for any calendar year.  The 
        amount necessary to pay the refunds under this subdivision is 
        appropriated to the commissioner of revenue an amount from the 
        general fund. 
           Sec. 17.  Minnesota Statutes 1997 Supplement, section 
        446A.085, subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] For the purposes of this 
        section, the terms defined in this subdivision have the meanings 
        given them. 
           (a)  [ACT.] "Act" means the National Highway System 
        Designation Act of 1995, Public Law Number 104-59, as amended. 
           (b)  [BORROWER.] "Borrower" means the state, counties, 
        cities, and other governmental entities eligible under the act 
        and state law to apply for and receive loans from the 
        transportation revolving loan fund, the trunk highway revolving 
        loan account, the county state-aid highway revolving loan 
        account, and the municipal state-aid street revolving loan 
        account. 
           (c)  [DEPARTMENT.] "Department" means the department of 
        transportation. 
           (d)  [LOAN.] "Loan" means financial assistance provided for 
        all or part of the cost of a project including money disbursed 
        in anticipation of reimbursement or repayment, loan guarantees, 
        lines of credit, credit enhancements, equipment financing 
        leases, bond insurance, or other forms of financial assistance. 
           (e)  [TRANSPORTATION COMMITTEE.] "Transportation committee" 
        means a committee of the Minnesota public facilities authority, 
        acting on behalf of the Minnesota public facilities authority, 
        consisting of the commissioner of the department of trade and 
        economic development, the commissioner of finance, and the 
        commissioner of transportation. 
           Sec. 18.  [462A.2092] [EMPLOYER HOUSING CONTRIBUTIONS; 
        MATCHING GRANT.] 
           (a) The commissioner may provide matching grants for 
        contributions made by employers for the development, 
        rehabilitation, or acquisition of affordable housing.  An 
        employer contribution is eligible for a matching grant or 
        low-interest loan if the contribution is: 
           (1) made to a fund administered by a nonprofit corporation 
        to which the employer is not associated or to a government 
        agency; and 
           (2) used to develop or rehabilitate affordable housing 
        located in Minnesota or is used to assist low-income and 
        moderate-income households to acquire affordable housing located 
        in Minnesota. 
           (b) The matching grant is available up to the amount of the 
        contribution made by the employer.  The amount of the matching 
        grant may not exceed the amount the commissioner determines is 
        necessary for the financial feasibility of the project or loan.  
        The total matching grants available for an employer's 
        contributions may not exceed $250,000.  The commissioner shall 
        award the matching grant to the housing project or initiative 
        for which the employer contribution is used. 
           Sec. 19.  Minnesota Statutes 1996, section 462A.21, is 
        amended by adding a subdivision to read: 
           Subd. 24.  [EMPLOYER HOUSING CONTRIBUTIONS; MATCHING 
        GRANT.] It may spend money for the purpose of the matching grant 
        for employer contributions program under section 462A.2092, and 
        may pay costs and expenses necessary and incidental to the 
        development and operation of the program. 
           Sec. 20.  Minnesota Statutes 1997 Supplement, section 
        465.715, is amended by adding a subdivision to read: 
           Subd. 1a.  [APPLICATION.] Except as provided by subdivision 
        2, subdivision 1 only applies to a corporation for which a 
        certificate of incorporation is issued by the secretary of state 
        on or after June 1, 1997.  A corporation that had been issued a 
        certificate of incorporation before June 1, 1997, may continue 
        to operate as if it had been created in compliance with 
        subdivision 1.  This subdivision expires July 1, 1999. 
           Sec. 21.  Minnesota Statutes 1997 Supplement, section 
        465.715, is amended by adding a subdivision to read: 
           Subd. 3.  [INFORMATION.] (a) By June 30, 1998, the office 
        of the state auditor shall request from all counties, home rule 
        charter cities, statutory cities, urban towns, and school 
        districts information regarding all corporations, including 
        limited liability companies or limited liability partnerships, 
        whether for profit or not for profit, created by the political 
        subdivision.  The information requested must include information 
        regarding the corporation's incorporation date, organizational 
        structure, purpose, a brief summary of the extent to which the 
        corporation receives or expends public funds, potential public 
        liabilities for conduct of the corporation, public oversight, 
        and public laws applicable to the corporation.  This information 
        must be received by the state auditor on or before October 15, 
        1998. 
           (b) The office of the state auditor shall compile and 
        summarize the information received and report to the senate 
        local and metropolitan government committee and the house of 
        representatives local government and metropolitan affairs 
        committee or their successor committees by January 30, 1999.  
        The report may include recommendations for any changes in laws 
        governing the operation of existing and future corporate 
        entities created by such political subdivisions, and changes in 
        laws needed to clarify the legal status of these corporate 
        entities.  Any corporate entity created by a political 
        subdivision before September 1, 1998, for which a report is not 
        received by the state auditor is not authorized to receive 
        public funds or contract with public entities after July 1, 1999.
           Sec. 22.  Minnesota Statutes 1996, section 469.015, 
        subdivision 4, is amended to read: 
           Subd. 4.  [EXCEPTIONS.] (a) An authority need not require 
        competitive bidding in the following circumstances:  
           (1) in the case of a contract for the acquisition of a 
        low-rent housing project: 
           (i) for which financial assistance is provided by the 
        federal government; 
           (ii) which does not require any direct loan or grant of 
        money from the municipality as a condition of the federal 
        financial assistance; and 
           (iii) for which the contract provides for the construction 
        of the project upon land that is either owned by the authority 
        for redevelopment purposes or not owned by the authority at the 
        time of the contract but the contract provides for the 
        conveyance or lease to the authority of the project or 
        improvements upon completion of construction; 
           (2) with respect to a structured parking facility:  
           (i) constructed in conjunction with, and directly above or 
        below, a development; and 
           (ii) financed with the proceeds of tax increment or parking 
        ramp general obligation or revenue bonds; and 
           (3) in the case of any building in which at least 75 
        percent of the useable square footage constitutes a housing 
        development project if: 
           (i) the project is financed with the proceeds of bonds 
        issued under section 469.034 or from nongovernmental sources; 
           (ii) the project is either located on land that is owned or 
        is being acquired by the authority only for development 
        purposes, or is not owned by the authority at the time the 
        contract is entered into but the contract provides for 
        conveyance or lease to the authority of the project or 
        improvements upon completion of construction; and 
           (iii) the authority finds and determines that elimination 
        of the public bidding requirements is necessary in order for the 
        housing development project to be economical and feasible. 
           (b) An authority need not require a performance bond for 
        the following projects: 
           (1) a contract described in paragraph (a), clause (1); 
           (2) a construction change order for a housing project in 
        which 30 percent of the construction has been completed; 
           (3) a construction contract for a single-family housing 
        project in which the authority acts as the general construction 
        contractor; or 
           (4) a services or materials contract for a housing project. 
           For purposes of this paragraph, "services or materials 
        contract" does not include construction contracts. 
           Sec. 23.  Minnesota Statutes 1996, section 469.169, is 
        amended by adding a subdivision to read: 
           Subd. 13.  [ADDITIONAL ENTERPRISE ZONE ALLOCATIONS.] In 
        addition to tax reductions authorized in subdivisions 7, 8, 9, 
        10, and 11, the commissioner may allocate $500,000 for tax 
        reductions pursuant to enterprise zone designations, as 
        designated in Laws 1997, chapter 231, article 16, section 26.  
        Allocations made under this subdivision may be used for tax 
        reductions as provided in section 469.171, or other offsets of 
        taxes imposed on or remitted by businesses located in the 
        enterprise zone, but only if the municipality determines that 
        the granting of the tax reduction or offset is necessary in 
        order to retain a business within or attract a business to the 
        enterprise zone.  Limitations on allocations under subdivision 7 
        do not apply to this allocation. 
           Sec. 24.  Minnesota Statutes 1996, section 469.303, is 
        amended to read: 
           469.303 [ELIGIBILITY REQUIREMENTS.] 
           An area within the city is eligible for designation as an 
        enterprise zone if the area (1) includes census tracts eligible 
        for a federal empowerment zone or enterprise community as 
        defined by the United States Department of Housing and Urban 
        Development under Public Law Number 103-66, notwithstanding the 
        maximum zone population standard under the federal empowerment 
        zone program for cities with a population under 500,000 or, (2) 
        is an area within a city of the second class that is designated 
        as an economically depressed area by the United States 
        Department of Commerce, or (3) includes property located in St. 
        Paul in a transit zone as defined in section 473.3915, 
        subdivision 3. 
           Sec. 25.  Laws 1997, chapter 105, section 3, as amended by 
        Laws 1997, Second Special Session chapter 2, section 23, is 
        amended to read: 
           Sec. 3.  [TEMPORARY WAIVER OF FEES, ASSESSMENTS, OR TAXES.] 
           Subdivision 1.  [FEES.] Notwithstanding any law to the 
        contrary, for fiscal years 1997 and 1998, an agency, with the 
        approval of the governor, may waive fees that would otherwise be 
        charged for agency services.  The waiver of fees must be 
        confined to geographic areas affected by flooding within 
        counties included in a federal disaster declaration and to the 
        minimum periods of times necessary to deal with the emergency 
        situation.  The agency must promptly report the reasons for and 
        the impact of any suspended fees to the chairs of the 
        legislative committees that oversee the policy and budgetary 
        affairs of the agency.  This subdivision expires February 1, 
        1998. 
           Subd. 2.  [SOLID WASTE GENERATOR ASSESSMENTS AND SOLID 
        WASTE MANAGEMENT TAXES.] Notwithstanding any law to the 
        contrary, the waiver authority provided in subdivision 1 is also 
        extended to the commissioner of revenue in relation to the solid 
        waste generator assessment under Minnesota Statutes, section 
        116.07, subdivision 10, and the solid waste management taxes 
        under Laws 1997, chapter 231, article 13, for construction 
        debris generated from repair and demolition activities in the 
        area designated under Presidential Declaration of Major 
        Disaster, DR-1175, and disposed of in a waste management 
        facility designated by the commissioner of the pollution control 
        agency.  The commissioner of revenue's authority under this 
        subdivision to waive the assessment and tax expires for waste 
        transported to the designated facilities after December 31, 1997 
        June 30, 1998, including waste transported to a landfill that is 
        limited by permit exclusively to the disposal of flood debris.  
        The waiver authority granted to the commissioner of revenue is 
        retroactive to April 1, 1997. 
           Sec. 26.  Laws 1997, chapter 225, article 2, section 64, is 
        amended to read: 
           Sec. 64.  [EFFECTIVE DATE.] 
           Section 8 is effective for payments made for MinnesotaCare 
        services on or after July 1, 1996.  Section 23 is effective the 
        day following final enactment.  Section 46 is effective January 
        1, 1998, and applies to high deductible health plans issued or 
        renewed on or after that date. 
           Sec. 27.  Laws 1997, chapter 231, article 5, section 18, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COMMISSION RESPONSIBILITIES.] (a) The 
        legislative coordinating commission shall prepare studies of 
        business taxation and the taxation of telecommunications 
        services during the 1997-98 1998 interim and the 1999 
        legislative session, as provided by this section.  The 
        commission is responsible for managing any contracts under this 
        section and for preparing the studies.  It may delegate any or 
        all of its responsibilities under this section to the 
        legislative commission on planning and fiscal policy. 
           (b) For the business tax study under subdivision 2, the 
        commission may appoint a formal or informal bipartisan working 
        group of house and senate members to oversee and coordinate the 
        study. 
           (c) For the study of the taxation of telecommunications 
        services under subdivision 4, the commission shall appoint a 
        bipartisan working group that includes house and senate members 
        and members of the public, at least two of whom are 
        representatives of Internet service businesses who are 
        knowledgeable about the technologies and practices of the 
        Internet and at least two of whom are the representatives of 
        businesses that conduct commerce on the Internet. 
           Sec. 28.  Laws 1997, chapter 231, article 13, section 19, 
        is amended to read: 
           Sec. 19.  [MORATORIUM.] 
           The commissioner of revenue shall not initiate or continue 
        any action to collect any underpayment from political 
        subdivisions, or to reimburse any overpayment to any political 
        subdivisions, of sales or use taxes on solid waste management 
        services under Minnesota Statutes, section 297A.45,.  The 
        moratorium is effective for the period from January 1, 1990, 
        through December 31, 1996 1997. 
           Sec. 29.  [SPECIAL PREMIUM TAX PAYMENT.] 
           Health maintenance organizations, community integrated 
        service networks, and nonprofit health service plan corporations 
        that have met the cost containment goals established in 
        Minnesota Statutes, section 62J.04, in the individual and small 
        employer market for calendar year 1996 shall pay a special, 
        one-time 1999 premium tax payment.  The tax payment must be 
        based on an amount equal to one percent of gross premiums less 
        return premiums on all direct business received by the insurer 
        in this state, or by its agents for it, in cash or otherwise 
        after March 30, 1997, and before January 1, 1998.  Payment of 
        the tax under this section is due January 2, 1999.  Provisions 
        relating to the payment, assessment, and collection of the tax 
        assessed under Minnesota Statutes, section 60A.15, shall apply 
        to the special tax payment assessed under this section. 
           Sec. 30.  [PRIVATE SALE OF SURPLUS LAND; RED LAKE COUNTY.] 
           (a) Notwithstanding Minnesota Statutes, sections 92.45, 
        94.09, and 94.10, the commissioner of natural resources may sell 
        by private sale to the adjacent land owner, for a consideration 
        equal to the appraised value, the surplus land bordering public 
        water that is described in paragraph (c), under the remaining 
        provisions of Minnesota Statutes, chapter 94. 
           (b) The conveyance shall be in a form approved by the 
        attorney general. 
           (c) The land that may be sold is located in Red Lake 
        county, consists of about 50 acres, and is described as follows: 
           (1) Government lot 5, section 25, Township 152 North, Range 
        40 West; 
           (2) Government lot 7, section 25, Township 152 North, Range 
        40 West. 
           (d) The commissioner has determined that the land is no 
        longer needed for any natural resource purpose and that the 
        state's land management interests would best be served if the 
        land was returned to private ownership. 
           Sec. 31.  [EXCHANGE OF LAKESHORE LEASED LOTS.] 
           Subdivision 1.  [ANALYSIS OF LOTS.] By January 15, 1999, 
        the commissioner of natural resources must submit a report to 
        the chairs of the senate and house environment and natural 
        resources committees, the house environment, natural resources, 
        and agriculture finance committee, the senate environment and 
        agriculture budget division, the senate children, families and 
        learning committee, and the house education committee.  The 
        report must provide the results of the field inspection required 
        by this section, recommendations on appropriations needed to 
        accomplish the purposes of this section, and additional 
        recommendations on methods to preserve public lakeshore in the 
        state.  The commissioner must conduct a field inspection of all 
        lands leased pursuant to Minnesota Statutes, section 92.46, 
        subdivision 1.  The commissioner must identify all lots within 
        the following classifications: 
           (1) the lot contains all or part of an unusual resource, 
        such as a historical or archaeological site, or a sensitive 
        ecological resource, or contains unique habitat, or has a high 
        scenic value; 
           (2) the lot provides access for adjacent state land; or 
           (3) the lot is part of the trust land in Horseshoe Bay, as 
        referenced in Laws 1997, chapter 216, section 151. 
           Subd. 2.  [EXCHANGE OF COUNTY LAKESHORE LAND FOR LEASED 
        LAKESHORE LOTS.] (a) For the purposes of this section: 
           (1) "county land" includes, but is not limited to, 
        tax-forfeited land administered by any county; and 
           (2) "leased lakeshore lots" means lands leased by the state 
        pursuant to Minnesota Statutes, section 92.46, subdivision 1. 
           (b) By June 1, 1999, a county board with leased lakeshore 
        lots must petition the land exchange board with a plan for an 
        exchange of county land for leased lakeshore lots in the county 
        that are not listed by the commissioner pursuant to subdivision 
        1.  Notwithstanding Minnesota Statutes, section 94.342, the land 
        proposed for the exchange must be land bordering on or adjacent 
        to meandered or other public waters.  A county board proposing 
        an exchange under this section may include tax-forfeited land 
        administered by another county in the proposal with the consent 
        of that county board.  
           (c) In determining the value of the leased lakeshore lots 
        for purposes of the exchange, the land exchange board must 
        review an appraisal of each lot prepared by an appraiser 
        licensed by the commissioner of commerce.  The selection of the 
        appraiser must be agreed to by the commissioner of natural 
        resources and the county board of the county containing the 
        leased lakeshore lot.  The commissioner of natural resources 
        must pay the costs of appraisal and may recover these costs as 
        provided in this section.  The commissioner must submit 
        appraisals under this paragraph to the land exchange board by 
        June 1, 1999.  
           (d) The land exchange board must determine whether the land 
        offered for exchange by a county under this section is lakeshore 
        of substantially equal value to the leased lakeshore lots 
        included in the county's petition.  In making this 
        determination, the land exchange board must review an appraisal 
        of the land offered for exchange prepared by an appraiser 
        licensed by the commissioner of commerce.  The selection of the 
        appraiser must be agreed to by the commissioner of natural 
        resources and the county board of the county containing the 
        leased lakeshore lots.  The county must pay the costs of this 
        appraisal and may recover those costs as provided in this 
        section.  
           (e) Before the proposed exchange may be submitted to the 
        land exchange board, the commissioner of natural resources must 
        ensure that, whenever possible, state lands are added to the 
        leased lakeshore lots when necessary to provide conformance with 
        zoning requirements.  The lands added to the leased lakeshore 
        lots must be included in the appraised value of the lots.  If 
        the commissioner is unable to add the necessary land to a lot, 
        the lot shall be treated as if purchased at the time the state 
        first leased the site, for the purposes of local zoning 
        ordinances at the time of sale of the lot by the county.  
           (f) The land exchange board must determine whether the lots 
        are of substantially equal value and may approve the exchange, 
        notwithstanding the requirements of Minnesota Statutes, sections 
        94.342 to 94.347, relating to the approval process.  If the 
        board approves the exchange, the commissioner must exchange the 
        leased lakeshore lots for the county lands, subject to the 
        requirements of the Minnesota Constitution, article XI, section 
        10, relating to the reservation of mineral and water power 
        rights.  
           Subd. 3.  [COUNTY SALE.] Notwithstanding Minnesota 
        Statutes, section 282.018, or any other law to the contrary, a 
        county board must offer land that it has acquired through an 
        exchange under this section for sale to the lessee of the land 
        within 90 days from the date of acquisition for the value of the 
        land as determined by the county board.  The county board may 
        include the cost of appraisal of the county land for the 
        purposes of this section in the value of the land.  If the 
        lessee does not elect to purchase the land, the county board may 
        sell the land by public sale at the expiration of the lease term 
        for no less than the value of the land as determined by the 
        county board, including the cost of appraisal required by this 
        section, and the value of improvements to the land.  The county 
        board must reimburse the lessee for the value of the 
        improvements to the land and the county may retain a sum from 
        the proceeds of the sale equivalent to the cost of appraisal.  
        The county board must reimburse the commissioner of natural 
        resources for the costs of appraisal under subdivision 2, 
        paragraph (c), from the proceeds of the sale. 
           Subd. 4.  [COUNTY ENVIRONMENTAL TRUST 
        FUND.] Notwithstanding the provisions of Minnesota Statutes, 
        chapter 282, and any other law relating to the apportionment of 
        proceeds from the sale of tax-forfeited land, and except as 
        otherwise provided in this section, a county board must deposit 
        the money received from the sale of land under subdivision 3 
        into an environmental trust fund established by the county under 
        this subdivision.  The principal from the sale of the land may 
        not be expended, and the county board may spend interest earned 
        on the principal only for purposes related to the improvement of 
        natural resources.  To the extent money received from the sale 
        is attributable to tax-forfeited land from another county, the 
        money must be deposited in an environmental trust fund 
        established under this section by that county board. 
           Subd. 5.  [NOTICE.] The commissioner must mail notice of 
        this section to each lessee of a leased lakeshore lot and to 
        each affected county board by July 1, 1998. 
           Sec. 32.  [STATE PAYMENT OF CITY OF ADA AND EAST GRAND 
        FORKS DEBT OBLIGATION UPON DEFAULT; REPAYMENT; STATE OBLIGATION 
        NOT DEBT.] 
           Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
        section, the following terms have the meanings given. 
           (b) "Debt obligation" means: 
           (1) for the city of Ada, a loan from the Federal Emergency 
        Management Agency under its community disaster loan program to 
        the city in the amount of approximately $1,423,000, to cover 
        operating losses for a publicly owned health care facility that 
        was damaged in the spring floods of 1997; and 
           (2) for the city of East Grand Forks, a loan from the 
        Federal Emergency Management Agency under its community disaster 
        loan program to the city in the amount of approximately 
        $2,907,000. 
           (c) "City" means the city of Ada or the city of East Grand 
        Forks, as applicable for the loan. 
           Subd. 2.  [NOTIFICATIONS; PAYMENT; APPROPRIATION.] (a) If 
        the city believes that it may be unable to make a principal or 
        interest payment on any outstanding debt obligation on the date 
        that payment is due, it must notify the commissioner of finance 
        of that fact as soon as possible, but not less than 15 working 
        days before the date that principal or interest payment is due.  
        The notice must identify the debt obligation issue in question, 
        the date the payment is due, the amount of principal and 
        interest due on the payment date, the amount of principal or 
        interest that the city will be unable to repay on that date, the 
        paying agent for the debt obligation, the wire transfer 
        instructions to transfer funds to that paying agent, and an 
        indication as to whether a payment is being requested by the 
        city under this section.  If a paying agent becomes aware of a 
        potential default, it shall inform the commissioner of finance 
        of that fact. 
           (b) Except as provided in subdivision 9, upon receipt of a 
        notice from the city, which must include a final figure as to 
        the amount due that the city will be unable to repay on the date 
        due, the commissioner of finance shall issue a warrant to pay to 
        the paying agent for the debt obligation the specified amount on 
        or before the date due.  The amounts needed for the purposes of 
        this subdivision are annually appropriated to the commissioner 
        of finance from the state general fund. 
           Subd. 3.  [CITY BOUND; INTEREST RATE ON STATE PAID AMOUNT.] 
        If, at the request of the city, the state has paid part or all 
        of the principal or interest due on the city's debt obligation 
        on a specific date, the city is bound by all provisions of this 
        section and the amount paid shall bear taxable interest from the 
        date paid until the date of repayment at the state treasurer's 
        invested cash rate as it is certified by the commissioner of 
        finance.  Interest only accrues on the amounts paid and 
        outstanding less the reduction in aid under subdivision 4 and 
        other payments received from the city. 
           Subd. 4.  [PLEDGE OF CITY'S FULL FAITH AND CREDIT.] If, at 
        the request of the city, the state has paid part or all of the 
        principal or interest due on the city's debt obligation on a 
        specific date, the pledge of the full faith and credit and 
        unlimited taxing powers of the city to repay the principal and 
        interest due on those debt obligations, without an election or 
        the requirement of a further authorization, becomes a pledge of 
        the full faith and credit and unlimited taxing powers of the 
        city to repay to the state the amount paid, with interest.  
        Amounts paid by the state shall be repaid in the order in which 
        the state payments were made. 
           Subd. 5.  [AID REDUCTION FOR REPAYMENT.] Except as provided 
        in this subdivision, the state shall reduce the state aid 
        payable to the city under chapters 273, 469, and 477A, according 
        to a schedule determined by the commissioner of finance, by the 
        amount paid by the state under this section on behalf of the 
        city, plus the interest due on it, and the amount reduced shall 
        revert from the appropriate account to the state general fund.  
        Payments from any federal aid payments shall not be reduced.  
        The amount of aids to be reduced are decreased by any amounts 
        repaid to the state by the city from other revenue sources. 
           Subd. 6.  [TAX LEVY FOR REPAYMENT.] (a) With the approval 
        of the commissioner of finance, the city may levy in the year 
        the state makes a payment under this section an amount up to the 
        amount necessary to provide funds for the repayment of the 
        amount paid by the state plus interest through the date of 
        estimated repayment by the city.  The proceeds of this levy may 
        be used only for this purpose unless they are in excess of the 
        amount actually due, in which case the excess shall be used to 
        repay other state payments made under this section or shall be 
        deposited in the debt redemption fund of the city.  This levy is 
        an increase in the levy limits of the city for purposes of 
        Minnesota Statutes, section 275.065, subdivision 6.  The amount 
        of aids to be reduced to repay the state are decreased by the 
        amount levied. 
           (b) If the state is not repaid in full for a payment made 
        under this section by November 30 of the calendar year following 
        the year in which the state makes the payment, the commissioner 
        of finance shall require the city to certify a property tax levy 
        in an amount up to the amount necessary to provide funds for 
        repayment of the amount paid by the state plus interest through 
        the date of estimated repayment by the city.  To prevent undue 
        hardship, the commissioner may allow the city to certify the 
        levy over a five-year period.  The proceeds of the levy may be 
        used only for this purpose unless they are in excess of the 
        amount actually due, in which case the excess must be used to 
        repay other state payments made under this section or must be 
        deposited in the debt redemption fund of the city.  This levy is 
        an increase in the levy limits of the city for purposes of 
        Minnesota Statutes, section 275.065, subdivision 6.  If the 
        commissioner orders the city to levy, the amount of aids reduced 
        to repay the state is decreased by the amount levied.  A levy 
        under this subdivision must be explained as a specific increase 
        at the meeting required under Minnesota Statutes, section 
        275.065, subdivision 6. 
           Subd. 7.  [ELECTION AS TO MANDATORY APPLICATION.] The city 
        may covenant and obligate itself, prior to incurring a debt 
        obligation, to notify the commissioner of finance of a potential 
        default and to use the provisions of this section to guarantee 
        payment of the principal and interest on those debt obligations 
        when due.  If the city obligates itself to be bound by this 
        section, it shall covenant to deposit with the paying agent 
        three business days prior to the date on which a payment is due 
        an amount sufficient to make that payment or to notify the 
        commissioner of finance under subdivision 1 that it will be 
        unable to make all or a portion of that payment.  The city shall 
        include a provision in its agreement with the paying agent for 
        that issue that requires the paying agent to inform the 
        commissioner of finance if it becomes aware of a potential 
        default in the payment of principal or interest on that issue or 
        if, on the day two business days prior to the date a payment is 
        due on that issue, there are insufficient funds to make the 
        payment on deposit with the paying agent.  If the city either 
        covenants to be bound by this section or accepts state payments 
        under this section to prevent a default on debt obligations, the 
        provisions of this section are binding as to that issue as long 
        as any debt obligation of that issue remains outstanding.  
           Subd. 8.  [MANDATORY PLAN; TECHNICAL ASSISTANCE.] If the 
        state makes payments on behalf of the city under this section or 
        the city defaults in the payment of principal or interest on an 
        outstanding debt obligation, it shall submit a plan to the 
        commissioner of finance for approval specifying the measures it 
        intends to implement to resolve the issues which led to its 
        inability to make the payment and to prevent further defaults.  
        The commissioner shall provide technical assistance to the city 
        in preparing its plan.  If the commissioner determines that the 
        city's plan is not adequate, the commissioner shall notify the 
        city that the plan has been disapproved, the reasons for the 
        disapproval, and that the state shall not make future payments 
        under this section for debt obligations issued after the date 
        specified in that notice until its plan is approved.  The 
        commissioner may also notify the city that until its plan is 
        approved, other aids due the city will be withheld after a date 
        specified in the notice. 
           Subd. 9.  [STATE BOND RATING.] If the commissioner of 
        finance determines that the credit rating of the state would be 
        adversely affected thereby, the commissioner shall not issue 
        warrants under subdivision 2 for the payment of principal or 
        interest on any debt obligations for which the city did not, 
        prior to their issuance, obligate itself to be bound by the 
        provisions of this section. 
           Sec. 33.  [COON RAPIDS BONDING.] 
           Subdivision 1.  [AUTHORITY.] The city of Coon Rapids may 
        issue general obligation bonds under Minnesota Statutes, chapter 
        475, in an amount up to $11,000,000 to finance costs related to 
        the upgrading of the existing state and county bridges and 
        roadways within the project areas of the tax increment financing 
        districts designated 2-2 and 2-3.  No referendum is required on 
        the question of the issuance of bonds under this authority.  The 
        bonds are not included in computing any debt limitations of the 
        city.  The levy of taxes to pay the bonds is not subject to any 
        levy limit. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective the 
        day following final enactment without local approval and applies 
        to the city of Coon Rapids under Minnesota Statutes, section 
        645.023. 
           Sec. 34.  [STUDY OF HOME CARE TAX INCENTIVES.] 
           The commissioners of revenue and human services shall 
        conduct a study on the issue of the effectiveness of tax 
        incentives to encourage people to provide care for elderly or 
        disabled individuals in their homes.  The study must include 
        analysis of the most effective types of incentives and their 
        cost.  The commissioners shall transmit the conclusions of the 
        study in a report to the legislature by January 15, 1999. 
           Sec. 35.  [APPROPRIATIONS.] 
           Subdivision 1.  [BAT STUDY.] $100,000 is appropriated from 
        the general fund for fiscal year 1999 to the legislative 
        coordinating commission to study alternative methods of taxing 
        business.  The appropriations under this section and under Laws 
        1997, chapter 231, article 5, section 18, subdivision 3, are 
        available in fiscal years 2000 and 2001.  
           Subd. 2.  [COST OF ADMINISTERING BILL.] $281,000 is 
        appropriated from the general fund for fiscal year 1999 to the 
        commissioner of revenue for the cost of administering this act, 
        excluding article 1. 
           Subd. 3.  [HOUSING DEVELOPMENT FUND.] In addition to any 
        amount appropriated by other law, $250,000 is appropriated from 
        the general fund to the housing development fund for fiscal year 
        1999, $800,000 for fiscal year 2000, and $800,000 for fiscal 
        year 2001 to provide matching grants for employer contributions 
        for affordable housing under Minnesota Statutes, section 
        462A.2092.  This appropriation is available until expended. 
           Subd. 4.  [TRANSPORTATION.] $1,500,000 is appropriated from 
        the general fund for fiscal year 1999 to the state treasurer for 
        transfer to the transit account in the transportation revolving 
        loan fund established in Minnesota Statutes, section 446A.085, 
        subdivision 3. 
           Sec. 36.  [REPEALER.] 
           (a) Minnesota Statutes 1997 Supplement, sections 3.987, 
        subdivision 3, and 14.431, are repealed. 
           (b) 1998 S.F. No. 3353, section 60, relating to the 
        exchange and sale of certain lakeshore lots, if enacted, is 
        repealed. 
           Sec. 37.  [EFFECTIVE DATE.] 
           Sections 8, 9, 12, 20, 21, 23, 24, 28, and 30 are effective 
        the day following final enactment.  Sections 15 and 25 are 
        effective retroactively to January 1, 1998. 
           Section 16 is effective January 1, 1999. 
           Presented to the governor April 10, 1998 
           Signed by the governor April 21, 1998, 9:28 a.m.

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