1.1 	A bill for an act
1.2 	relating to taxation; property; repealing the Iron Range fiscal disparities program; 
1.3 	correcting cross-references; amending Minnesota Statutes 2012, sections 
1.4 	134.34, subdivision 4; 270C.89, subdivision 2; 275.011, subdivision 1; 275.025, 
1.5 	subdivisions 1, 2; 275.065, subdivision 3; 278.14, subdivision 1; 428A.05; 
1.6 	465.82, subdivision 2; 469.175, subdivision 6; 469.177, subdivision 3; 469.1813, 
1.7 	subdivision 2; 477A.011, subdivisions 20, 27, 32, 35; repealing Minnesota 
1.8 	Statutes 2012, sections 276A.01; 276A.02; 276A.03; 276A.04; 276A.05; 
1.9 	276A.06; 276A.07; 276A.08; 276A.09.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	Section 1. Minnesota Statutes 2012, section 134.34, subdivision 4, is amended to read:
1.12 		Subd. 4.Limitation. (a) For calendar year 2010 and later, a regional library 
1.13 	basic system support grant shall not be made to a regional public library system for a 
1.14 	participating city or county which decreases the dollar amount provided for support for 
1.15 	operating purposes of public library service below the amount provided by it for the 
1.16 	second, or third preceding year, whichever is less. For purposes of this subdivision and 
1.17 	subdivision 1, any funds provided under section 473.757, subdivision 2, for extending 
1.18 	library hours of operation shall not be considered amounts provided by a city or county for 
1.19 	support for operating purposes of public library service. This subdivision shall not apply 
1.20 	to participating cities or counties where the adjusted net tax capacity of that city or county 
1.21 	has decreased, if the dollar amount of the reduction in support is not greater than the dollar 
1.22 	amount by which support would be decreased if the reduction in support were made in 
1.23 	direct proportion to the decrease in adjusted net tax capacity.
1.24 	(b) For calendar year 2009 and later, in any calendar year in which a city's or 
1.25 	county's aid under sections 477A.011 to 477A.014 or credit reimbursement under section 
2.1 	273.1384 is reduced after the city or county has certified its levy payable in that year, it 
2.2 	may reduce its local support by the lesser of:
2.3 	(1) ten percent; or
2.4 	(2) a percent equal to the ratio of the aid and credit reimbursement reductions to the 
2.5 	city's or county's revenue base, based on aids certified for the current calendar year. For 
2.6 	calendar year 2009 only, the reduction under this paragraph shall be based on 2008 aid and 
2.7 	credit reimbursement reductions under the December 2008 unallotment, as well as any 
2.8 	aid and credit reimbursement reductions in calendar year 2009. For pay 2009 only, the 
2.9 	commissioner of revenue will calculate the reductions under this paragraph and certify 
2.10 	them to the commissioner of education within 15 days of May 17, 2009.
2.11 	(c) For taxes payable in 2010 and later, in any payable year in which the total 
2.12 	amounts certified for city or county aids under sections 477A.011 to 477A.014 are less 
2.13 	than the total amounts paid under those sections in the previous calendar year, a city or 
2.14 	county may reduce its local support by the lesser of:
2.15 	(1) ten percent; or
2.16 	(2) a percent equal to the ratio of:
2.17 	(i) the difference between (A) the sum of the aid it was paid under sections 
2.18 	477A.011 to 477A.014 and the credit reimbursement it received under section 273.1384 
2.19 	in the previous calendar year and (B) the sum of the aid it is certified to be paid in the 
2.20 	current calendar year under sections 477A.011 to 477A.014 and the credit reimbursement 
2.21 	estimated to be paid under section 273.1384; to
2.22 	(ii) its revenue base for the previous year, based on aids actually paid in the previous 
2.23 	calendar year. The commissioner of revenue shall calculate the percent aid cut for each 
2.24 	county and city under this paragraph and certify the percentage cuts to the commissioner 
2.25 	of education by August 1 of the year prior to the year in which the reduced aids and 
2.26 	credit reimbursements are to be paid. The percentage of reduction related to reductions 
2.27 	to credit reimbursements under section 273.1384 shall be based on the best estimation 
2.28 	available as of July 30.
2.29 	(d) Notwithstanding paragraph (a), (b), or (c), no city or county shall reduce its 
2.30 	support for public libraries below the minimum level specified in subdivision 1.
2.31 	(e) For purposes of this subdivision, "revenue base" means the sum of:
2.32 	(1) its levy for taxes payable in the current calendar year, including the levy on 
2.33 	the fiscal disparities distribution under section ~~276A.06, subdivision 3, paragraph (a),~~ 
2.34 	~~or~~473F.08, subdivision 3, paragraph (a);
2.35 	(2) its aid under sections 477A.011 to 477A.014 in the current calendar year; and
2.36 	(3) its taconite aid in the current calendar year under sections 298.28 and 298.282.

3.1 	Sec. 2. Minnesota Statutes 2012, section 270C.89, subdivision 2, is amended to read:
3.2 		Subd. 2.Final report. The final abstract of assessments after adjustments by the 
3.3 	State Board of Equalization and inclusion of any omitted property shall be submitted to 
3.4 	the commissioner on or before September 1 of each calendar year. The final abstract 
3.5 	must separately report the captured tax capacity of tax increment financing districts 
3.6 	under section 469.177, subdivision 2, the areawide net tax capacity contribution values 
3.7 	determined under ~~sections 276A.05, subdivision 1, and~~ section473F.07, subdivision 1, 
3.8 	and the value subject to the power line credit under section 273.42.

3.9 	Sec. 3. Minnesota Statutes 2012, section 275.011, subdivision 1, is amended to read:
3.10 		Subdivision 1.Determination of levy limit. The property tax levied for any 
3.11 	purpose under a special law that is not codified in Minnesota Statutes or a city charter 
3.12 	provision and that is subject to a mill rate limitation imposed by the special law or city 
3.13 	charter provision, excluding levies subject to mill rate limitations that use adjusted 
3.14 	assessed values determined by the commissioner of revenue under section 124.2131, must 
3.15 	not exceed the following amount for the years specified:
3.16 	(a) for taxes payable in 1988, the product of the applicable mill rate limitation 
3.17 	imposed by special law or city charter provision multiplied by the total assessed valuation 
3.18 	of all taxable property subject to the tax as adjusted by the provisions of Minnesota 
3.19 	Statutes 1986, sections 272.64; 273.13, subdivision 7a; and 275.49;
3.20 	(b) for taxes payable in 1989, the product of (1) the property tax levy limitation for 
3.21 	the taxes payable year 1988 determined under clause (a) multiplied by (2) an index for 
3.22 	market valuation changes equal to the assessment year 1988 total market valuation of all 
3.23 	taxable property subject to the tax divided by the assessment year 1987 total market 
3.24 	valuation of all taxable property subject to the tax; and
3.25 	(c) for taxes payable in 1990 and subsequent years, the product of (1) the property 
3.26 	tax levy limitation for the previous year determined pursuant to this subdivision multiplied 
3.27 	by (2) an index for market valuation changes equal to the total market valuation of all 
3.28 	taxable property subject to the tax for the current assessment year divided by the total 
3.29 	market valuation of all taxable property subject to the tax for the previous assessment year.
3.30 	For the purpose of determining the property tax levy limitation for the taxes payable 
3.31 	year 1988 and subsequent years under this subdivision, "total market valuation" means 
3.32 	the total market valuation of all taxable property subject to the tax without valuation 
3.33 	adjustments for fiscal disparities (~~chapters 276A and~~ chapter 473F), tax increment 
3.34 	financing (sections 469.174 to 469.179), or powerline credit (section 273.425).

4.1 	EFFECTIVE DATE. This section is effective for taxes payable in 2014 and 
4.2 	thereafter.

4.3 	Sec. 4. Minnesota Statutes 2012, section 275.025, subdivision 1, is amended to read:
4.4 		Subdivision 1.Levy amount. The state general levy is levied against 
4.5 	commercial-industrial property and seasonal residential recreational property, as defined 
4.6 	in this section. The state general levy base amount is $592,000,000 for taxes payable in 
4.7 	2002. For taxes payable in subsequent years, the levy base amount is increased each year 
4.8 	by multiplying the levy base amount for the prior year by the sum of one plus the rate of 
4.9 	increase, if any, in the implicit price deflator for government consumption expenditures 
4.10 	and gross investment for state and local governments prepared by the Bureau of Economic 
4.11 	Analysts of the United States Department of Commerce for the 12-month period ending 
4.12 	March 31 of the year prior to the year the taxes are payable. The tax under this section is 
4.13 	not treated as a local tax rate under section 469.177 and is not the levy of a governmental 
4.14 	unit under ~~chapters 276A and~~ chapter 473F.
4.15 	The commissioner shall increase or decrease the preliminary or final rate for a year 
4.16 	as necessary to account for errors and tax base changes that affected a preliminary or final 
4.17 	rate for either of the two preceding years. Adjustments are allowed to the extent that the 
4.18 	necessary information is available to the commissioner at the time the rates for a year must 
4.19 	be certified, and for the following reasons:
4.20 	(1) an erroneous report of taxable value by a local official;
4.21 	(2) an erroneous calculation by the commissioner; and
4.22 	(3) an increase or decrease in taxable value for commercial-industrial or seasonal 
4.23 	residential recreational property reported on the abstracts of tax lists submitted under 
4.24 	section 275.29 that was not reported on the abstracts of assessment submitted under 
4.25 	section 270C.89 for the same year.
4.26 	The commissioner may, but need not, make adjustments if the total difference in the tax 
4.27 	levied for the year would be less than $100,000.

4.28 	EFFECTIVE DATE. This section is effective for taxes payable in 2014 and 
4.29 	thereafter.

4.30 	Sec. 5. Minnesota Statutes 2012, section 275.025, subdivision 2, is amended to read:
4.31 		Subd. 2.Commercial-industrial tax capacity. For the purposes of this section, 
4.32 	"commercial-industrial tax capacity" means the tax capacity of all taxable property 
4.33 	classified as class 3 or class 5(1) under section 273.13, except for electric generation 
5.1 	attached machinery under class 3 and property described in section 473.625. County 
5.2 	commercial-industrial tax capacity amounts are not adjusted for the captured net tax 
5.3 	capacity of a tax increment financing district under section 469.177, subdivision 2, the 
5.4 	net tax capacity of transmission lines deducted from a local government's total net tax 
5.5 	capacity under section 273.425, or fiscal disparities contribution and distribution net 
5.6 	tax capacities under chapter ~~276A or~~ 473F.

5.7 	EFFECTIVE DATE. This section is effective for taxes payable in 2014 and 
5.8 	thereafter.

5.9 	Sec. 6. Minnesota Statutes 2012, section 275.065, subdivision 3, is amended to read:
5.10 		Subd. 3.Notice of proposed property taxes. (a) The county auditor shall prepare 
5.11 	and the county treasurer shall deliver after November 10 and on or before November 24 
5.12 	each year, by first class mail to each taxpayer at the address listed on the county's current 
5.13 	year's assessment roll, a notice of proposed property taxes. Upon written request by 
5.14 	the taxpayer, the treasurer may send the notice in electronic form or by electronic mail 
5.15 	instead of on paper or by ordinary mail.
5.16 	(b) The commissioner of revenue shall prescribe the form of the notice.
5.17 	(c) The notice must inform taxpayers that it contains the amount of property taxes 
5.18 	each taxing authority proposes to collect for taxes payable the following year. In the case of 
5.19 	a town, or in the case of the state general tax, the final tax amount will be its proposed tax. 
5.20 	The notice must clearly state for each city that has a population over 500, county, school 
5.21 	district, regional library authority established under section 134.201, and metropolitan 
5.22 	taxing districts as defined in paragraph (i), the time and place of a meeting for each taxing 
5.23 	authority in which the budget and levy will be discussed and public input allowed, prior to 
5.24 	the final budget and levy determination. The taxing authorities must provide the county 
5.25 	auditor with the information to be included in the notice on or before the time it certifies 
5.26 	its proposed levy under subdivision 1. The public must be allowed to speak at that 
5.27 	meeting, which must occur after November 24 and must not be held before 6:00 p.m. It 
5.28 	must provide a telephone number for the taxing authority that taxpayers may call if they 
5.29 	have questions related to the notice and an address where comments will be received by 
5.30 	mail, except that no notice required under this section shall be interpreted as requiring the 
5.31 	printing of a personal telephone number or address as the contact information for a taxing 
5.32 	authority. If a taxing authority does not maintain public offices where telephone calls can 
5.33 	be received by the authority, the authority may inform the county of the lack of a public 
5.34 	telephone number and the county shall not list a telephone number for that taxing authority.
5.35 	(d) The notice must state for each parcel:
6.1 	(1) the market value of the property as determined under section 273.11, and used 
6.2 	for computing property taxes payable in the following year and for taxes payable in the 
6.3 	current year as each appears in the records of the county assessor on November 1 of the 
6.4 	current year; and, in the case of residential property, whether the property is classified as 
6.5 	homestead or nonhomestead. The notice must clearly inform taxpayers of the years to 
6.6 	which the market values apply and that the values are final values;
6.7 	(2) the items listed below, shown separately by county, city or town, and state general 
6.8 	tax, net of the residential and agricultural homestead credit under section 273.1384, voter 
6.9 	approved school levy, other local school levy, and the sum of the special taxing districts, 
6.10 	and as a total of all taxing authorities:
6.11 	(i) the actual tax for taxes payable in the current year; and
6.12 	(ii) the proposed tax amount.
6.13 	If the county levy under clause (2) includes an amount for a lake improvement 
6.14 	district as defined under sections 103B.501 to 103B.581, the amount attributable for that 
6.15 	purpose must be separately stated from the remaining county levy amount.
6.16 	In the case of a town or the state general tax, the final tax shall also be its proposed 
6.17 	tax unless the town changes its levy at a special town meeting under section 365.52. If a 
6.18 	school district has certified under section 126C.17, subdivision 9, that a referendum will 
6.19 	be held in the school district at the November general election, the county auditor must 
6.20 	note next to the school district's proposed amount that a referendum is pending and that, if 
6.21 	approved by the voters, the tax amount may be higher than shown on the notice. In the 
6.22 	case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be 
6.23 	listed separately from the remaining amount of the city's levy. In the case of the city of 
6.24 	St. Paul, the levy for the St. Paul Library Agency must be listed separately from the 
6.25 	remaining amount of the city's levy. In the case of Ramsey County, any amount levied 
6.26 	under section 134.07 may be listed separately from the remaining amount of the county's 
6.27 	levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax 
6.28 	under chapter ~~276A or~~ 473F applies, the proposed tax levy on the captured value or the 
6.29 	proposed tax levy on the tax capacity subject to the areawide tax must each be stated 
6.30 	separately and not included in the sum of the special taxing districts; and
6.31 	(3) the increase or decrease between the total taxes payable in the current year and 
6.32 	the total proposed taxes, expressed as a percentage.
6.33 	For purposes of this section, the amount of the tax on homesteads qualifying under 
6.34 	the senior citizens' property tax deferral program under chapter 290B is the total amount 
6.35 	of property tax before subtraction of the deferred property tax amount.
7.1 	(e) The notice must clearly state that the proposed or final taxes do not include 
7.2 	the following:
7.3 	(1) special assessments;
7.4 	(2) levies approved by the voters after the date the proposed taxes are certified, 
7.5 	including bond referenda and school district levy referenda;
7.6 	(3) a levy limit increase approved by the voters by the first Tuesday after the first 
7.7 	Monday in November of the levy year as provided under section 275.73;
7.8 	(4) amounts necessary to pay cleanup or other costs due to a natural disaster 
7.9 	occurring after the date the proposed taxes are certified;
7.10 	(5) amounts necessary to pay tort judgments against the taxing authority that become 
7.11 	final after the date the proposed taxes are certified; and
7.12 	(6) the contamination tax imposed on properties which received market value 
7.13 	reductions for contamination.
7.14 	(f) Except as provided in subdivision 7, failure of the county auditor to prepare or 
7.15 	the county treasurer to deliver the notice as required in this section does not invalidate the 
7.16 	proposed or final tax levy or the taxes payable pursuant to the tax levy.
7.17 	(g) If the notice the taxpayer receives under this section lists the property as 
7.18 	nonhomestead, and satisfactory documentation is provided to the county assessor by the 
7.19 	applicable deadline, and the property qualifies for the homestead classification in that 
7.20 	assessment year, the assessor shall reclassify the property to homestead for taxes payable 
7.21 	in the following year.
7.22 	(h) In the case of class 4 residential property used as a residence for lease or rental 
7.23 	periods of 30 days or more, the taxpayer must either:
7.24 	(1) mail or deliver a copy of the notice of proposed property taxes to each tenant, 
7.25 	renter, or lessee; or
7.26 	(2) post a copy of the notice in a conspicuous place on the premises of the property.
7.27 	The notice must be mailed or posted by the taxpayer by November 27 or within 
7.28 	three days of receipt of the notice, whichever is later. A taxpayer may notify the county 
7.29 	treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to 
7.30 	which the notice must be mailed in order to fulfill the requirements of this paragraph.
7.31 	(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing 
7.32 	districts" means the following taxing districts in the seven-county metropolitan area that 
7.33 	levy a property tax for any of the specified purposes listed below:
7.34 	(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325, 
7.35 	473.446, 473.521, 473.547, or 473.834;
8.1 	(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672; 
8.2 	and
8.3 	(3) Metropolitan Mosquito Control Commission under section 473.711.
8.4 	For purposes of this section, any levies made by the regional rail authorities in the 
8.5 	county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
8.6 	398A shall be included with the appropriate county's levy.
8.7 	(j) The governing body of a county, city, or school district may, with the consent 
8.8 	of the county board, include supplemental information with the statement of proposed 
8.9 	property taxes about the impact of state aid increases or decreases on property tax 
8.10 	increases or decreases and on the level of services provided in the affected jurisdiction. 
8.11 	This supplemental information may include information for the following year, the current 
8.12 	year, and for as many consecutive preceding years as deemed appropriate by the governing 
8.13 	body of the county, city, or school district. It may include only information regarding:
8.14 	(1) the impact of inflation as measured by the implicit price deflator for state and 
8.15 	local government purchases;
8.16 	(2) population growth and decline;
8.17 	(3) state or federal government action; and
8.18 	(4) other financial factors that affect the level of property taxation and local services 
8.19 	that the governing body of the county, city, or school district may deem appropriate to 
8.20 	include.
8.21 	The information may be presented using tables, written narrative, and graphic 
8.22 	representations and may contain instruction toward further sources of information or 
8.23 	opportunity for comment.

8.24 	EFFECTIVE DATE. This section is effective for taxes payable in 2014 and 
8.25 	thereafter.

8.26 	Sec. 7. Minnesota Statutes 2012, section 278.14, subdivision 1, is amended to read:
8.27 		Subdivision 1.Applicability. A county must pay a refund of a mistakenly billed 
8.28 	tax as provided in this section. As used in this section, "mistakenly billed tax" means an 
8.29 	amount of property tax that was billed, to the extent the amount billed exceeds the accurate 
8.30 	tax amount due to a misclassification of the owner's property under section 273.13 or a 
8.31 	mathematical error in the calculation of the tax on the owner's property, together with 
8.32 	any penalty or interest paid on that amount. This section applies only to taxes payable 
8.33 	in the current year and the two prior years. As used in this section, "mathematical error" 
8.34 	is limited to an error in:
9.1 	(1) converting the market value of a property to tax capacity or to a referendum 
9.2 	market value;
9.3 	(2) application of the tax rate as computed by the auditor under sections 275.08, 
9.4 	subdivisions 1b, 1c, and 1d; ~~276A.06, subdivisions 4 and 5;~~ and 473F.07, subdivisions 4 
9.5 	and 5, to the property's tax capacity or referendum market value; or
9.6 	(3) calculation of or eligibility for a credit.
9.7 	The remedy provided under this section does not apply to a misclassification under 
9.8 	section 273.13 that is due to the failure of the property owner to apply for the correct 
9.9 	classification as required by law.

9.10 	Sec. 8. Minnesota Statutes 2012, section 428A.05, is amended to read:
9.11 	428A.05 COLLECTION OF SERVICE CHARGES.
9.12 	Service charges may be imposed on the basis of the net tax capacity of the property 
9.13 	on which the service charge is imposed but must be spread only upon the net tax capacity 
9.14 	of the taxable property located in the geographic area described in the ordinance. Service 
9.15 	charges based on net tax capacity may be payable and collected at the same time and in 
9.16 	the same manner as provided for payment and collection of ad valorem taxes. When made 
9.17 	payable in the same manner as ad valorem taxes, service charges not paid on or before the 
9.18 	applicable due date shall be subject to the same penalty and interest as in the case of ad 
9.19 	valorem tax amounts not paid by the respective due date. The due date for a service charge 
9.20 	payable in the same manner as ad valorem taxes is the due date given in law for the real or 
9.21 	personal property tax for the property on which the service charge is imposed. Service 
9.22 	charges imposed on net tax capacity which are to become payable in the following year 
9.23 	must be certified to the county auditor by the date provided in section 429.061, subdivision 
9.24 	3, for the annual certification of special assessment installments. Other service charges 
9.25 	imposed must be collected as provided by ordinance. Service charges based on net tax 
9.26 	capacity collected under sections 428A.01 to 428A.10 are not included in computations 
9.27 	under section 469.177, chapter ~~276A or~~ 473F, or any other law that applies to general ad 
9.28 	valorem levies. For the purpose of this section, "net tax capacity" means the net tax capacity 
9.29 	most recently determined at the time that tax rates are determined under section 275.08.

9.30 	EFFECTIVE DATE. This section is effective for taxes payable in 2014 and 
9.31 	thereafter.

9.32 	Sec. 9. Minnesota Statutes 2012, section 465.82, subdivision 2, is amended to read:
9.33 		Subd. 2.Contents of plan. The plan must state:
10.1 	(1) the specific cooperative activities the units will engage in during the first two 
10.2 	years of the venture;
10.3 	(2) the steps to be taken to effect the merger of the governmental units, with 
10.4 	completion no later than four years after the process begins;
10.5 	(3) the steps by which a single governing body will be created or, when the entire 
10.6 	territory of a unit will be apportioned between or among two or more units contiguous 
10.7 	to the unit that is to be apportioned, the steps to be taken by the governing bodies of the 
10.8 	remaining units to provide for representation of the residents of the apportioned unit;
10.9 	(4) changes in services provided, facilities used, and administrative operations and 
10.10 	staffing required to effect the preliminary cooperative activities and the final merger, and 
10.11 	a two-, five-, and ten-year projection of expenditures for each unit if it combined and 
10.12 	if it remained separate;
10.13 	(5) treatment of employees of the merging governmental units, specifically including 
10.14 	provisions for reassigning employees, dealing with exclusive representatives, and 
10.15 	providing financial incentives to encourage early retirements;
10.16 	(6) financial arrangements for the merger, specifically including responsibility for 
10.17 	debt service on outstanding obligations of the merging units;
10.18 	(7) one- and two-year impact analyses, prepared by the granting state agency at the 
10.19 	request of the local government unit, of major state aid revenues received for each unit 
10.20 	if it combined and if it remained separate, including an impact analysis, prepared by the 
10.21 	Department of Revenue, of any property tax revenue implications associated with tax 
10.22 	increment financing districts and fiscal disparities under chapter ~~276A or~~ 473F resulting 
10.23 	from the merger;
10.24 	(8) procedures for a referendum to be held before the proposed combination to 
10.25 	approve combining the local government units, specifically stating whether a majority of 
10.26 	those voting in each district proposed for combination or a majority of those voting on the 
10.27 	question in the entire area proposed for combination is needed to pass the referendum; and
10.28 	(9) a time schedule for implementation.
10.29 	Notwithstanding clause (3) or any other law to the contrary, all current members of 
10.30 	the governing bodies of the local government units that propose to combine under sections 
10.31 	465.81 to 465.86 may serve on the initial governing body of the combined unit until a 
10.32 	gradual reduction in membership is achieved by foregoing election of new members when 
10.33 	terms expire until the number permitted by other law is reached.

10.34 	EFFECTIVE DATE. This section is effective for taxes payable in 2014 and 
10.35 	thereafter.

11.1 	Sec. 10. Minnesota Statutes 2012, section 469.175, subdivision 6, is amended to read:
11.2 		Subd. 6.Annual financial reporting. (a) The state auditor shall develop a uniform 
11.3 	system of accounting and financial reporting for tax increment financing districts. The 
11.4 	system of accounting and financial reporting shall, as nearly as possible:
11.5 	(1) provide for full disclosure of the sources and uses of tax increments of the district;
11.6 	(2) permit comparison and reconciliation with the affected local government's 
11.7 	accounts and financial reports;
11.8 	(3) permit auditing of the funds expended on behalf of a district, including a single 
11.9 	district that is part of a multidistrict project or that is funded in part or whole through 
11.10 	the use of a development account funded with tax increments from other districts or 
11.11 	with other public money;
11.12 	(4) be consistent with generally accepted accounting principles.
11.13 	(b) The authority must annually submit to the state auditor a financial report 
11.14 	in compliance with paragraph (a). Copies of the report must also be provided to the 
11.15 	county auditor and to the governing body of the municipality, if the authority is not 
11.16 	the municipality. To the extent necessary to permit compliance with the requirement 
11.17 	of financial reporting, the county and any other appropriate local government unit or 
11.18 	private entity must provide the necessary records or information to the authority or the 
11.19 	state auditor as provided by the system of accounting and financial reporting developed 
11.20 	pursuant to paragraph (a). The authority must submit the annual report for a year on or 
11.21 	before August 1 of the next year.
11.22 	(c) The annual financial report must also include the following items:
11.23 	(1) the original net tax capacity of the district and any subdistrict under section 
11.24 	469.177, subdivision 1;
11.25 	(2) the net tax capacity for the reporting period of the district and any subdistrict;
11.26 	(3) the captured net tax capacity of the district;
11.27 	(4) any fiscal disparity deduction from the captured net tax capacity under section 
11.28 	469.177, subdivision 3;
11.29 	(5) the captured net tax capacity retained for tax increment financing under section 
11.30 	469.177, subdivision 2, paragraph (a), clause (1);
11.31 	(6) any captured net tax capacity distributed among affected taxing districts under 
11.32 	section 469.177, subdivision 2, paragraph (a), clause (2);
11.33 	(7) the type of district;
11.34 	(8) the date the municipality approved the tax increment financing plan and the 
11.35 	date of approval of any modification of the tax increment financing plan, the approval of 
12.1 	which requires notice, discussion, a public hearing, and findings under subdivision 4, 
12.2 	paragraph (a);
12.3 	(9) the date the authority first requested certification of the original net tax capacity 
12.4 	of the district and the date of the request for certification regarding any parcel added 
12.5 	to the district;
12.6 	(10) the date the county auditor first certified the original net tax capacity of the 
12.7 	district and the date of certification of the original net tax capacity of any parcel added 
12.8 	to the district;
12.9 	(11) the month and year in which the authority has received or anticipates it will 
12.10 	receive the first increment from the district;
12.11 	(12) the date the district must be decertified;
12.12 	(13) for the reporting period and prior years of the district, the actual amount 
12.13 	received from, at least, the following categories:
12.14 	(i) tax increments paid by the captured net tax capacity retained for tax increment 
12.15 	financing under section 469.177, subdivision 2, paragraph (a), clause (1), but excluding 
12.16 	any excess taxes;
12.17 	(ii) tax increments that are interest or other investment earnings on or from tax 
12.18 	increments;
12.19 	(iii) tax increments that are proceeds from the sale or lease of property, tangible or 
12.20 	intangible, purchased by the authority with tax increments;
12.21 	(iv) tax increments that are repayments of loans or other advances made by the 
12.22 	authority with tax increments;
12.23 	(v) bond proceeds; and
12.24 	(vi) the market value homestead credit paid to the authority under section 273.1384;
12.25 	(14) for the reporting period and for the prior years of the district, the actual amount 
12.26 	expended for, at least, the following categories:
12.27 	(i) acquisition of land and buildings through condemnation or purchase;
12.28 	(ii) site improvements or preparation costs;
12.29 	(iii) installation of public utilities, parking facilities, streets, roads, sidewalks, or 
12.30 	other similar public improvements;
12.31 	(iv) administrative costs, including the allocated cost of the authority; and
12.32 	(v) for housing districts, construction of affordable housing;
12.33 	(15) the amount of any payments for activities and improvements located outside of 
12.34 	the district that are paid for or financed with tax increments;
12.35 	(16) the amount of payments of principal and interest that are made during the 
12.36 	reporting period on any nondefeased:
13.1 	(i) general obligation tax increment financing bonds; and
13.2 	(ii) other tax increment financing bonds, including pay-as-you-go contracts and notes;
13.3 	(17) the principal amount, at the end of the reporting period, of any nondefeased:
13.4 	(i) general obligation tax increment financing bonds; and
13.5 	(ii) other tax increment financing bonds, including pay-as-you-go contracts and notes;
13.6 	(18) the amount of principal and interest payments that are due for the current 
13.7 	calendar year on any nondefeased:
13.8 	(i) general obligation tax increment financing bonds; and
13.9 	(ii) other tax increment financing bonds, including pay-as-you-go contracts and notes;
13.10 	(19) if the fiscal disparities contribution under chapter ~~276A or~~ 473F for the district 
13.11 	is computed under section 469.177, subdivision 3, paragraph (a), the amount of total 
13.12 	increased property taxes to be paid from outside the tax increment financing district; and
13.13 	(20) any additional information the state auditor may require.
13.14 	(d) The reporting requirements imposed by this subdivision apply to districts 
13.15 	certified before, on, and after August 1, 1979.

13.16 	EFFECTIVE DATE. This section is effective for taxes payable in 2014 and 
13.17 	thereafter.

13.18 	Sec. 11. Minnesota Statutes 2012, section 469.177, subdivision 3, is amended to read:
13.19 		Subd. 3.Tax increment, relationship to ~~chapters 276A and~~ chapter 473F. (a) 
13.20 	Unless the governing body elects pursuant to paragraph (b) the following method of 
13.21 	computation shall apply to a district other than an economic development district for 
13.22 	which the request for certification was made after June 30, 1997:
13.23 	(1) The original net tax capacity and the current net tax capacity shall be determined 
13.24 	before the application of the fiscal disparity provisions of chapter ~~276A or~~ 473F. Where 
13.25 	the original net tax capacity is equal to or greater than the current net tax capacity, there is 
13.26 	no captured net tax capacity and no tax increment determination. Where the original net 
13.27 	tax capacity is less than the current net tax capacity, the difference between the original 
13.28 	net tax capacity and the current net tax capacity is the captured net tax capacity. This 
13.29 	amount less any portion thereof which the authority has designated, in its tax increment 
13.30 	financing plan, to share with the local taxing districts is the retained captured net tax 
13.31 	capacity of the authority.
13.32 	(2) The county auditor shall exclude the retained captured net tax capacity of the 
13.33 	authority from the net tax capacity of the local taxing districts in determining local taxing 
13.34 	district tax rates. The local tax rates so determined are to be extended against the retained 
13.35 	captured net tax capacity of the authority as well as the net tax capacity of the local taxing 
14.1 	districts. The tax generated by the extension of the lesser of (A) the local taxing district 
14.2 	tax rates or (B) the original local tax rate to the retained captured net tax capacity of the 
14.3 	authority is the tax increment of the authority.
14.4 	(b) The following method of computation applies to any economic development 
14.5 	district for which the request for certification was made after June 30, 1997, and to any 
14.6 	other district for which the governing body, by resolution approving the tax increment 
14.7 	financing plan pursuant to section 469.175, subdivision 3, elects:
14.8 	(1) The original net tax capacity shall be determined before the application of the 
14.9 	fiscal disparity provisions of chapter ~~276A or~~ 473F. The current net tax capacity shall 
14.10 	exclude any fiscal disparity commercial-industrial net tax capacity increase between 
14.11 	the original year and the current year multiplied by the fiscal disparity ratio determined 
14.12 	pursuant to section~~276A.06, subdivision 7, or~~473F.08, subdivision 6. Where the original 
14.13 	net tax capacity is equal to or greater than the current net tax capacity, there is no captured 
14.14 	net tax capacity and no tax increment determination. Where the original net tax capacity is 
14.15 	less than the current net tax capacity, the difference between the original net tax capacity 
14.16 	and the current net tax capacity is the captured net tax capacity. This amount less any 
14.17 	portion thereof which the authority has designated, in its tax increment financing plan, to 
14.18 	share with the local taxing districts is the retained captured net tax capacity of the authority.
14.19 	(2) The county auditor shall exclude the retained captured net tax capacity of the 
14.20 	authority from the net tax capacity of the local taxing districts in determining local taxing 
14.21 	district tax rates. The local tax rates so determined are to be extended against the retained 
14.22 	captured net tax capacity of the authority as well as the net tax capacity of the local taxing 
14.23 	districts. The tax generated by the extension of the lesser of (A) the local taxing district 
14.24 	tax rates or (B) the original local tax rate to the retained captured net tax capacity of the 
14.25 	authority is the tax increment of the authority.
14.26 	(3) An election by the governing body pursuant to paragraph (b) shall be submitted 
14.27 	to the county auditor by the authority at the time of the request for certification pursuant to 
14.28 	subdivision 1.
14.29 	(c) The method of computation of tax increment applied to a district pursuant to 
14.30 	paragraph (a) or (b) shall remain the same for the duration of the district, except that 
14.31 	the governing body may elect to change its election from the method of computation in 
14.32 	paragraph (a) to the method in paragraph (b).

14.33 	EFFECTIVE DATE. This section is effective for taxes payable in 2014 and 
14.34 	thereafter.

14.35 	Sec. 12. Minnesota Statutes 2012, section 469.1813, subdivision 2, is amended to read:
15.1 		Subd. 2.Abatement resolution. (a) The governing body of a political subdivision 
15.2 	may grant an abatement only by adopting an abatement resolution, specifying the terms 
15.3 	of the abatement. In the case of a town, the board of supervisors may approve the 
15.4 	abatement resolution. The resolution must also include a specific statement as to the 
15.5 	nature and extent of the public benefits which the governing body expects to result from 
15.6 	the agreement. The resolution may provide that the political subdivision will retain or 
15.7 	transfer to another political subdivision the abatement to pay for all or part of the cost of 
15.8 	acquisition or improvement of public infrastructure, whether or not located on or adjacent 
15.9 	to the parcel for which the tax is abated. The abatement may reduce all or part of the 
15.10 	property tax amount for the political subdivision on the parcel. A political subdivision's 
15.11 	maximum annual amount for a parcel equals its total local tax rate multiplied by the 
15.12 	total net tax capacity of the parcel.
15.13 	(b) The political subdivision may limit the abatement:
15.14 	(1) to a specific dollar amount per year or in total;
15.15 	(2) to the increase in property taxes resulting from improvement of the property;
15.16 	(3) to the increases in property taxes resulting from increases in the market value 
15.17 	or tax capacity of the property;
15.18 	(4) in any other manner the governing body of the subdivision determines is 
15.19 	appropriate; or
15.20 	(5) to the interest and penalty that would otherwise be due on taxes that are deferred.
15.21 	(c) The political subdivision may not abate tax attributable to the areawide tax under 
15.22 	chapter ~~276A or~~ 473F, except as provided in this subdivision.

15.23 	EFFECTIVE DATE. This section is effective for taxes payable in 2014 and 
15.24 	thereafter.

15.25 	Sec. 13. Minnesota Statutes 2012, section 477A.011, subdivision 20, is amended to read:
15.26 		Subd. 20.City net tax capacity. "City net tax capacity" means (1) the net tax 
15.27 	capacity computed using the net tax capacity rates in section 273.13 for taxes payable 
15.28 	in the year of the aid distribution, and the market values, after the exclusion in section 
15.29 	273.13, subdivision 35, for taxes payable in the year prior to the aid distribution plus (2) 
15.30 	a city's fiscal disparities distribution tax capacity under section ~~276A.06, subdivision 2,~~ 
15.31 	~~paragraph (b), or~~473F.08, subdivision 2, paragraph (b), for taxes payable in the year prior 
15.32 	to that for which aids are being calculated. The market value utilized in computing city 
15.33 	net tax capacity shall be reduced by the sum of (1) a city's market value of commercial 
15.34 	industrial property as defined in section ~~276A.01, subdivision 3, or~~473F.02, subdivision 3, 
15.35 	multiplied by the ratio determined pursuant to section ~~276A.06, subdivision 2, paragraph~~ 
16.1 	~~(a), or~~473F.08, subdivision 2, paragraph (a), (2) the market value of the captured value 
16.2 	of tax increment financing districts as defined in section 469.177, subdivision 2, and (3) 
16.3 	the market value of transmission lines deducted from a city's total net tax capacity under 
16.4 	section 273.425. The city net tax capacity will be computed using equalized market values.

16.5 	Sec. 14. Minnesota Statutes 2012, section 477A.011, subdivision 27, is amended to read:
16.6 		Subd. 27.Revenue base. "Revenue base" means the amount levied for taxes 
16.7 	payable in the previous year, including the levy on the fiscal disparity distribution under 
16.8 	section ~~276A.06, subdivision 3, paragraph (a), or~~473F.08, subdivision 3, paragraph (a); 
16.9 	plus the originally certified local government aid in the previous year under sections 
16.10 	477A.011 and 477A.013; and the taconite aids received in the previous year under sections 
16.11 	298.28 and 298.282.

16.12 	Sec. 15. Minnesota Statutes 2012, section 477A.011, subdivision 32, is amended to read:
16.13 		Subd. 32.Commercial industrial percentage. "Commercial industrial percentage" 
16.14 	for a city is 100 times the sum of the estimated market values of all real property in the city 
16.15 	classified as class 3 under section 273.13, subdivision 24, excluding public utility property, 
16.16 	to the total market value of all taxable real and personal property in the city. The market 
16.17 	values are the amounts computed before any adjustments for fiscal disparities under 
16.18 	section ~~276A.06 or~~473F.08. The market values used for this subdivision are not equalized.

16.19 	Sec. 16. Minnesota Statutes 2012, section 477A.011, subdivision 35, is amended to read:
16.20 		Subd. 35.Tax effort rate. "Tax effort rate" means the net levy for all cities divided 
16.21 	by the sum of the city net tax capacity for all cities. For purposes of this section, "net 
16.22 	levy" means the city levy, after all adjustments, used for calculating the local tax rate 
16.23 	under section 275.08 for taxes payable in the year prior to the aid distribution. The fiscal 
16.24 	disparity distribution levy under chapter ~~276A or~~ 473F is included in net levy.

16.25 	Sec. 17.  REPEALER.
 16.26 	Minnesota Statutes 2012, sections 276A.01; 276A.02; 276A.03; 276A.04; 276A.05; 
16.27 	276A.06; 276A.07; 276A.08; and 276A.09, are repealed.