1.1 	A bill for an act
1.2 	relating to taxation; property; reinstating the
1.3 	low-income apartment property class; providing for
1.4 	certifications of housing qualifying for the reduced
1.5 	property class rate; providing civil penalties;
1.6 	authorizing rulemaking; allowing exemption from formal
1.7 	rulemaking for one year; amending Minnesota Statutes
1.8 	2004, section 273.13, subdivision 25; proposing coding
1.9 	for new law in Minnesota Statutes, chapters 273, 462A.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	Section 1. [273.126] QUALIFYING LOW-INCOME RENTAL
1.12 	HOUSING.
1.13 		Subdivision 1.Qualifying rules. The market value of a
1.14 	rental housing unit qualifies for assessment under class 4d if:
1.15 	(1) it is occupied by individuals meeting the income limits
1.16 	under subdivision 2;
1.17 	(2) a rent restriction agreement under subdivision 3
1.18 	applies;
1.19 	(3) the unit meets the minimum housing quality standards
1.20 	under subdivision 4; and 
1.21 	(4) the Minnesota Housing Finance Agency certifies to the
1.22 	local assessor that the unit qualifies.
1.23 		Subd. 2.Income limits. (a) In order to qualify under
1.24 	class 4d, a unit must be occupied by an individual or
1.25 	individuals whose income is at or below 60 percent of the median
1.26 	area gross income.  If the resident's income met the requirement
1.27 	when the resident first occupied the unit, the income of the
2.1 	resident continues to qualify.  If an individual first occupied
2.2 	a unit before January 1, 2006, the individual's income for
2.3 	purposes of the preceding sentence is the income for calendar
2.4 	year 2005.
2.5 	(b) For purposes of this section, "median area gross income"
2.6 	means the median gross income for the area determined under
2.7 	section 42 of the Internal Revenue Code of 1986, as amended
2.8 	through December 31, 2004.
2.9 	(c) The median gross income must be adjusted for family
2.10 	size.
2.11 	(d) Vacant units qualify as meeting the requirements of
2.12 	this subdivision in the same proportion that total units in the
2.13 	building are subject to rent restriction agreements under
2.14 	subdivision 3 and meet minimum housing standards under
2.15 	subdivision 4.  This paragraph applies only to the extent that
2.16 	units subject to a rent restriction agreement and meeting the
2.17 	minimum housing quality standards are vacant.
2.18 	(e) The owner or manager of the property may comply with
2.19 	this subdivision by obtaining written statements from the
2.20 	residents that their incomes are at or below the limit.
2.21 		Subd. 3.Rent restrictions. (a) In order to qualify
2.22 	under class 4d, a unit must be subject to a rent restriction
2.23 	agreement with the Minnesota Housing Finance Agency for at least
2.24 	five years.  The agreement must be in effect and apply to the
2.25 	rents to be charged for the year in which the property taxes are
2.26 	payable.  The agreement must provide that the restrictions apply
2.27 	to each year of the period, regardless of whether the unit is
2.28 	occupied by an individual with qualifying income or whether
2.29 	class 4d applies.  The rent restriction agreement must provide
2.30 	for rents for the unit to be no higher than 30 percent of 60
2.31 	percent of the median gross income.  The definition of median
2.32 	gross income specified in this section applies.  "Rent" means
2.33 	"gross rent" as defined in section 42(g)(2)(B) of the Internal
2.34 	Revenue Code of 1986, as amended through December 31, 2004.
2.35 	(b) Notwithstanding the maximum rent levels permitted, 20
2.36 	percent of the units in the metropolitan area and ten percent of
3.1 	the units in greater Minnesota qualifying under class 4d must be
3.2 	made available to a family with a section 8 certificate or
3.3 	voucher.  For applications for class 4d made before July 1,
3.4 	2004, the required percent of units for an applicant is
3.5 	increased to 40 percent and the maximum rent that may be charged
3.6 	on a unit occupied by a family with a section 8 certificate or
3.7 	voucher is limited to the fair market rent for the area, as
3.8 	established by the United States Department of Housing and Urban
3.9 	Development, if within the five-year period ending January 2 of
3.10 	the assessment year:
3.11 	(1) 40 percent or more of the units in the project or
3.12 	development were covered by a section 8 project-based housing
3.13 	assistance contract and the contract has been canceled or no
3.14 	longer applies; or 
3.15 	(2) the units were in a project or development financed
3.16 	with a direct federal loan or federally insured loan made
3.17 	pursuant to Title II of the National Housing Act and the loan
3.18 	has been paid or prepaid, eliminating the restrictions on rents
3.19 	under Title II of the National Housing Act.
3.20 	(c) The rent restriction agreement runs with the land and
3.21 	binds any successor to title to the property without regard to
3.22 	whether the successor had actual notice or knowledge of the
3.23 	agreement.  The owner must promptly record the agreement in the
3.24 	office of the county recorder or must file it in the office of
3.25 	the registrar of titles in the county where the property is
3.26 	located.  If the agreement is not recorded, class 4d does not
3.27 	apply to the property.
3.28 		Subd. 4.Minimum housing standards. In order to qualify
3.29 	under class 4d, a unit must be certified by the Minnesota
3.30 	Housing Finance Agency to meet the minimum housing standards
3.31 	established under section 462A.071.
3.32 		Subd. 5.Monitoring rent levels. The Minnesota Housing
3.33 	Finance Agency is directed to monitor changes in rent levels and
3.34 	the use of section 8 certificates in units qualifying under
3.35 	class 4d.
3.36 		Subd. 6.Penalties. Notwithstanding the provisions of
4.1 	section 273.01 or 274.01 or any other law, if the Minnesota
4.2 	Housing Finance Agency notifies the assessor that the provisions
4.3 	of this section have not been met for any period during which a
4.4 	unit was classified under class 4d, a penalty is imposed as
4.5 	provided in section 462A.071, subdivision 8.
4.6 	
EFFECTIVE DATE. This section is effective for assessment
4.7 	year 2006 and thereafter, for taxes payable in 2007 and
4.8 	thereafter.

4.9 	Sec. 2. Minnesota Statutes 2004, section 273.13,
4.10 	subdivision 25, is amended to read:
4.11 		Subd. 25.Class 4.  (a) Class 4a is residential real
4.12 	estate containing four or more units and used or held for use by
4.13 	the owner or by the tenants or lessees of the owner as a
4.14 	residence for rental periods of 30 days or more, excluding a
4.15 	property qualifying for class 4d.  Class 4a also includes
4.16 	hospitals licensed under sections 144.50 to 144.56, other than
4.17 	hospitals exempt under section 272.02, and contiguous property
4.18 	used for hospital purposes, without regard to whether the
4.19 	property has been platted or subdivided.  The market value of
4.20 	class 4a property has a class rate of ~~1.8 percent for taxes~~
4.21 	~~payable in 2002, 1.5 percent for taxes payable in 2003, and~~ 1.25
4.22 	percent ~~for taxes payable in 2004 and thereafter, except that~~
4.23 	~~class 4a property consisting of a structure for which~~
4.24 	~~construction commenced after June 30, 2001, has a class rate of~~
4.25 	~~1.25 percent of market value for taxes payable in 2003 and~~
4.26 	~~subsequent years~~.
4.27 	(b) Class 4b includes:
4.28 	(1) residential real estate containing less than four units
4.29 	that does not qualify as class 4bb, other than seasonal
4.30 	residential recreational property;
4.31 	(2) manufactured homes not classified under any other
4.32 	provision;
4.33 	(3) a dwelling, garage, and surrounding one acre of
4.34 	property on a nonhomestead farm classified under subdivision 23,
4.35 	paragraph (b) containing two or three units; and
4.36 	(4) unimproved property that is classified residential as
5.1 	determined under subdivision 33.
5.2 	The market value of class 4b property has a class rate of
5.3 	1.5 percent for taxes payable in 2002, and 1.25 percent for
5.4 	taxes payable in 2003 and thereafter.
5.5 	(c) Class 4bb includes:
5.6 	(1) nonhomestead residential real estate containing one
5.7 	unit, other than seasonal residential recreational property; and
5.8 	(2) a single family dwelling, garage, and surrounding one
5.9 	acre of property on a nonhomestead farm classified under
5.10 	subdivision 23, paragraph (b).
5.11 	Class 4bb property has the same class rates as class 1a
5.12 	property under subdivision 22.
5.13 	Property that has been classified as seasonal residential
5.14 	recreational property at any time during which it has been owned
5.15 	by the current owner or spouse of the current owner does not
5.16 	qualify for class 4bb.
5.17 	(d) Class 4c property includes:
5.18 	(1) except as provided in subdivision 22, paragraph (c),
5.19 	real property devoted to temporary and seasonal residential
5.20 	occupancy for recreation purposes, including real property
5.21 	devoted to temporary and seasonal residential occupancy for
5.22 	recreation purposes and not devoted to commercial purposes for
5.23 	more than 250 days in the year preceding the year of
5.24 	assessment.  For purposes of this clause, property is devoted to
5.25 	a commercial purpose on a specific day if any portion of the
5.26 	property is used for residential occupancy, and a fee is charged
5.27 	for residential occupancy.  In order for a property to be
5.28 	classified as class 4c, seasonal residential recreational for
5.29 	commercial purposes, at least 40 percent of the annual gross
5.30 	lodging receipts related to the property must be from business
5.31 	conducted during 90 consecutive days and either (i) at least 60
5.32 	percent of all paid bookings by lodging guests during the year
5.33 	must be for periods of at least two consecutive nights; or (ii)
5.34 	at least 20 percent of the annual gross receipts must be from
5.35 	charges for rental of fish houses, boats and motors,
5.36 	snowmobiles, downhill or cross-country ski equipment, or charges
6.1 	for marina services, launch services, and guide services, or the
6.2 	sale of bait and fishing tackle.  For purposes of this
6.3 	determination, a paid booking of five or more nights shall be
6.4 	counted as two bookings.  Class 4c also includes commercial use
6.5 	real property used exclusively for recreational purposes in
6.6 	conjunction with class 4c property devoted to temporary and
6.7 	seasonal residential occupancy for recreational purposes, up to
6.8 	a total of two acres, provided the property is not devoted to
6.9 	commercial recreational use for more than 250 days in the year
6.10 	preceding the year of assessment and is located within two miles
6.11 	of the class 4c property with which it is used.  Class 4c
6.12 	property classified in this clause also includes the remainder
6.13 	of class 1c resorts provided that the entire property including
6.14 	that portion of the property classified as class 1c also meets
6.15 	the requirements for class 4c under this clause; otherwise the
6.16 	entire property is classified as class 3.  Owners of real
6.17 	property devoted to temporary and seasonal residential occupancy
6.18 	for recreation purposes and all or a portion of which was
6.19 	devoted to commercial purposes for not more than 250 days in the
6.20 	year preceding the year of assessment desiring classification as
6.21 	class 1c or 4c, must submit a declaration to the assessor
6.22 	designating the cabins or units occupied for 250 days or less in
6.23 	the year preceding the year of assessment by January 15 of the
6.24 	assessment year.  Those cabins or units and a proportionate
6.25 	share of the land on which they are located will be designated
6.26 	class 1c or 4c as otherwise provided.  The remainder of the
6.27 	cabins or units and a proportionate share of the land on which
6.28 	they are located will be designated as class 3a.  The owner of
6.29 	property desiring designation as class 1c or 4c property must
6.30 	provide guest registers or other records demonstrating that the
6.31 	units for which class 1c or 4c designation is sought were not
6.32 	occupied for more than 250 days in the year preceding the
6.33 	assessment if so requested.  The portion of a property operated
6.34 	as a (1) restaurant, (2) bar, (3) gift shop, and (4) other
6.35 	nonresidential facility operated on a commercial basis not
6.36 	directly related to temporary and seasonal residential occupancy
7.1 	for recreation purposes shall not qualify for class 1c or 4c;
7.2 	(2) qualified property used as a golf course if:
7.3 	(i) it is open to the public on a daily fee basis.  It may
7.4 	charge membership fees or dues, but a membership fee may not be
7.5 	required in order to use the property for golfing, and its green
7.6 	fees for golfing must be comparable to green fees typically
7.7 	charged by municipal courses; and
7.8 	(ii) it meets the requirements of section 273.112,
7.9 	subdivision 3, paragraph (d).
7.10 	A structure used as a clubhouse, restaurant, or place of
7.11 	refreshment in conjunction with the golf course is classified as
7.12 	class 3a property;
7.13 	(3) real property up to a maximum of one acre of land owned
7.14 	by a nonprofit community service oriented organization; provided
7.15 	that the property is not used for a revenue-producing activity
7.16 	for more than six days in the calendar year preceding the year
7.17 	of assessment and the property is not used for residential
7.18 	purposes on either a temporary or permanent basis.  For purposes
7.19 	of this clause, a "nonprofit community service oriented
7.20 	organization" means any corporation, society, association,
7.21 	foundation, or institution organized and operated exclusively
7.22 	for charitable, religious, fraternal, civic, or educational
7.23 	purposes, and which is exempt from federal income taxation
7.24 	pursuant to section 501(c)(3), (10), or (19) of the Internal
7.25 	Revenue Code of 1986, as amended through December 31, 1990.  For
7.26 	purposes of this clause, "revenue-producing activities" shall
7.27 	include but not be limited to property or that portion of the
7.28 	property that is used as an on-sale intoxicating liquor or 3.2
7.29 	percent malt liquor establishment licensed under chapter 340A, a
7.30 	restaurant open to the public, bowling alley, a retail store,
7.31 	gambling conducted by organizations licensed under chapter 349,
7.32 	an insurance business, or office or other space leased or rented
7.33 	to a lessee who conducts a for-profit enterprise on the
7.34 	premises.  Any portion of the property which is used for
7.35 	revenue-producing activities for more than six days in the
7.36 	calendar year preceding the year of assessment shall be assessed
8.1 	as class 3a.  The use of the property for social events open
8.2 	exclusively to members and their guests for periods of less than
8.3 	24 hours, when an admission is not charged nor any revenues are
8.4 	received by the organization shall not be considered a
8.5 	revenue-producing activity;
8.6 	(4) postsecondary student housing of not more than one acre
8.7 	of land that is owned by a nonprofit corporation organized under
8.8 	chapter 317A and is used exclusively by a student cooperative,
8.9 	sorority, or fraternity for on-campus housing or housing located
8.10 	within two miles of the border of a college campus;
8.11 	(5) manufactured home parks as defined in section 327.14,
8.12 	subdivision 3;
8.13 	(6) real property that is actively and exclusively devoted
8.14 	to indoor fitness, health, social, recreational, and related
8.15 	uses, is owned and operated by a not-for-profit corporation, and
8.16 	is located within the metropolitan area as defined in section
8.17 	473.121, subdivision 2;
8.18 	(7) a leased or privately owned noncommercial aircraft
8.19 	storage hangar not exempt under section 272.01, subdivision 2,
8.20 	and the land on which it is located, provided that:
8.21 	(i) the land is on an airport owned or operated by a city,
8.22 	town, county, Metropolitan Airports Commission, or group
8.23 	thereof; and
8.24 	(ii) the land lease, or any ordinance or signed agreement
8.25 	restricting the use of the leased premise, prohibits commercial
8.26 	activity performed at the hangar.
8.27 	If a hangar classified under this clause is sold after June
8.28 	30, 2000, a bill of sale must be filed by the new owner with the
8.29 	assessor of the county where the property is located within 60
8.30 	days of the sale; and
8.31 	(8) residential real estate, a portion of which is used by
8.32 	the owner for homestead purposes, and that is also a place of
8.33 	lodging, if all of the following criteria are met:
8.34 	(i) rooms are provided for rent to transient guests that
8.35 	generally stay for periods of 14 or fewer days;
8.36 	(ii) meals are provided to persons who rent rooms, the cost
9.1 	of which is incorporated in the basic room rate;
9.2 	(iii) meals are not provided to the general public except
9.3 	for special events on fewer than seven days in the calendar year
9.4 	preceding the year of the assessment; and
9.5 	(iv) the owner is the operator of the property.
9.6 	The market value subject to the 4c classification under this
9.7 	clause is limited to five rental units.  Any rental units on the
9.8 	property in excess of five, must be valued and assessed as class
9.9 	3a.  The portion of the property used for purposes of a
9.10 	homestead by the owner must be classified as class 1a property
9.11 	under subdivision 22.
9.12 	Class 4c property has a class rate of 1.5 percent of market
9.13 	value, except that (i) each parcel of seasonal residential
9.14 	recreational property not used for commercial purposes has the
9.15 	same class rates as class 4bb property, (ii) manufactured home
9.16 	parks assessed under clause (5) have the same class rate as
9.17 	class 4b property, (iii) commercial-use seasonal residential
9.18 	recreational property has a class rate of one percent for the
9.19 	first $500,000 of market value, which includes any market value
9.20 	receiving the one percent rate under subdivision 22, and 1.25
9.21 	percent for the remaining market value, (iv) the market value of
9.22 	property described in clause (4) has a class rate of one
9.23 	percent, (v) the market value of property described in clauses
9.24 	(2) and (6) has a class rate of 1.25 percent, and (vi) that
9.25 	portion of the market value of property in clause (8) qualifying
9.26 	for class 4c property has a class rate of 1.25 percent.
9.27 	(e) Class 4d property is qualifying low-income rental
9.28 	housing certified to the assessor by the Minnesota Housing
9.29 	Finance Agency under sections 273.126 and 462A.071.  Class 4d
9.30 	includes land in proportion to the total market value of the
9.31 	building that is qualifying low-income rental housing.  For all
9.32 	properties qualifying as class 4d, the market value determined
9.33 	by the assessor must be based on the normal approach to value
9.34 	using normal unrestricted rents.
9.35 	Class 4d property has a class rate of 0.55 percent of
9.36 	market value.
10.1 	
EFFECTIVE DATE. This section is effective for assessment
10.2 	year 2006 and thereafter, for taxes payable in 2007 and
10.3 	thereafter.

10.4 	Sec. 3. [462A.071] CERTIFICATION OF HOUSING QUALIFYING
10.5 	FOR REDUCED PROPERTY CLASS RATE.
10.6 		Subdivision 1.Certification. By June 30 of each year,
10.7 	the agency must certify to local assessors the units of
10.8 	low-income rental properties that qualify for class 4d under
10.9 	sections 273.126 and 273.13, subdivision 25.  In making these
10.10 	certifications, the agency may rely on the application and
10.11 	supporting information supplied by the property owner as to
10.12 	compliance with the income limits under section 273.126,
10.13 	subdivision 2, and satisfaction of the minimum housing quality
10.14 	standards under section 273.126, subdivision 4.
10.15 		Subd. 2.Application. (a) In order to qualify for
10.16 	certification under subdivision 1, the owner or manager of the
10.17 	property must annually apply to the agency.  The application
10.18 	must be in the form prescribed by the agency, contain the
10.19 	information required by the agency, and be submitted by the date
10.20 	and time specified by the agency.
10.21 	(b) Each application must include:
10.22 	(1) the property tax identification number;
10.23 	(2) the number, type, and size of units the applicant seeks
10.24 	to qualify as low-income housing under class 4d;
10.25 	(3) the number, type, and size of units in the property for
10.26 	which the applicant is not seeking qualification, if any;
10.27 	(4) a certification that the property has been inspected by
10.28 	a qualified inspector within the past three years and meets the
10.29 	minimum housing quality standards or is exempt from the
10.30 	inspection requirement under subdivision 4;
10.31 	(5) a statement indicating the qualifying units in
10.32 	compliance with the income limits;
10.33 	(6) an executed agreement to restrict rents meeting the
10.34 	requirements specified by the agency or executed leases for the
10.35 	units for which qualification as low-income housing as class 4d
10.36 	under section 273.13 is sought and the rent schedule; and 
11.1 	(7) any additional information the agency deems appropriate
11.2 	to require.
11.3 	(c) The applicant must pay a per-unit application fee to be
11.4 	set by the agency.  The application fee charged by the agency
11.5 	must approximately equal the costs of processing and reviewing
11.6 	the applications.  The fee must be deposited in the housing
11.7 	development fund.
11.8 		Subd. 3.Agreement to restrict rents. The agency may
11.9 	prescribe one or more standard form agreements to restrict rents
11.10 	that meet the requirements of section 273.126, subdivision 3.
11.11 	The agreements must be in recordable form.  The agency may
11.12 	require applicants to execute a rent restriction agreement in
11.13 	this form as a condition of entering an agreement to restrict
11.14 	rents.
11.15 		Subd. 4.Minimum housing quality standards. (a) To
11.16 	qualify for taxation under class 4d under section 273.13,
11.17 	subdivision 25, a unit must meet the housing maintenance code of
11.18 	the local unit of government in which the unit is located, if
11.19 	such a code has been adopted, or the housing quality standards
11.20 	adopted by the United States Department of Housing and Urban
11.21 	Development, if no local housing maintenance code has been
11.22 	adopted.
11.23 	(b) In order to meet the minimum housing quality standards,
11.24 	a building must be inspected by an independent designated
11.25 	inspector at least once every three years.  The inspector must
11.26 	certify that the building complies with the minimum standards.
11.27 	The property owner must pay the cost of the inspection.
11.28 	(c) The agency may exempt from the inspection requirement
11.29 	housing units that are financed by a governmental entity and
11.30 	subject to regular inspection or other compliance checks with
11.31 	regard to minimum housing quality.  Written certification must
11.32 	be supplied to show that these exempt units have been inspected
11.33 	within the last three years and comply with the requirements
11.34 	under the public financing or local requirements.
11.35 		Subd. 5.Housing inspectors. (a) Housing inspections
11.36 	required by this section may be conducted only by persons
12.1 	designated by the agency.  The agency may designate one or more
12.2 	persons to conduct inspections for all or part of the state.  A
12.3 	designated inspector may charge a fee for an inspection up to a
12.4 	maximum amount approved by the agency.  The inspector must be
12.5 	independent of the owner or manager of the inspected property.
12.6 	(b) The agency must maintain a list of persons eligible to
12.7 	conduct housing inspections under this section.
12.8 		Subd. 6.Section 8; tax credit; rural housing service
12.9 	units. (a) The agency may deem units as meeting the
12.10 	requirements of section 273.126 and this section if the units:
12.11 	(1) are subject to a housing assistance payments contract
12.12 	under section 8 of the United States Housing Act of 1937, as
12.13 	amended;
12.14 	(2) are rent and income restricted units of a qualified
12.15 	low-income housing project receiving tax credits under section
12.16 	42(g) of the Internal Revenue Code of 1986, as amended through
12.17 	December 31, 2004; or 
12.18 	(3) are financed by the Rural Housing Service of the United
12.19 	States Department of Agriculture and receive payments under the
12.20 	rental assistance program pursuant to section 521(a) of the
12.21 	Housing Act of 1949, as amended.
12.22 	(b) The agency may certify these deemed units under
12.23 	subdivision 1 based on a simplified application procedure that
12.24 	verifies the unit's qualifications under paragraph (a).
12.25 		Subd. 7.Monitoring compliance. (a) The agency must
12.26 	monitor compliance by building owners with the requirements of
12.27 	section 273.126 and this section.  The agency must annually
12.28 	conduct on-site examinations of a sample of the buildings
12.29 	receiving class 4d taxation to monitor compliance.  The agency
12.30 	may contract with third parties to monitor compliance.
12.31 	(b) An inspector designated by the agency under subdivision
12.32 	5 shall notify the agency if, in conducting an inspection under
12.33 	subdivision 4, the inspector finds that:
12.34 	(1) a unit is receiving class 4d taxation;
12.35 	(2) the unit is not in compliance with the requirements of
12.36 	subdivision 4; and 
13.1 	(3) the owner or manager fails or refuses to cure the
13.2 	violations within a reasonable time after receiving notification
13.3 	of the violation.
13.4 		Subd. 8.Penalties. (a) The penalties provided by this
13.5 	subdivision apply to each unit that received class 4d taxation
13.6 	for a year and failed to meet the requirements of section
13.7 	273.126 and this section.
13.8 	(b) If the owner or manager does not comply with the rent
13.9 	restriction agreement or does not comply with the income
13.10 	restrictions, minimum housing quality standards, or the section
13.11 	8 availability requirements, a penalty applies equal to the
13.12 	increased taxes that would have been imposed if the unit had not
13.13 	been classified under class 4d for the year in which
13.14 	restrictions were violated, plus an additional amount equal to
13.15 	ten percent of the increased taxes.  Section 279.03 applies to
13.16 	the amount of increased taxes that would have been imposed if a
13.17 	unit had not been classified under class 4d for the year in
13.18 	which restrictions were violated.
13.19 	(c) If the agency finds that the violations were
13.20 	inadvertent and insubstantial, a penalty of $50 per unit per
13.21 	year applies in lieu of the penalty specified under paragraph
13.22 	(b).  In order to qualify under this paragraph, violations of
13.23 	the minimum housing quality standards must be corrected within a
13.24 	reasonable period of time and rent charged in excess of the
13.25 	agreement must be rebated to the tenants.
13.26 	(d) The agency may abate the penalties under this
13.27 	subdivision for reasonable cause.
13.28 	(e) Penalties assessed under paragraph (c) are payable to
13.29 	the agency and must be deposited in the housing development
13.30 	fund.  If an owner or manager fails to timely pay a penalty
13.31 	imposed under paragraph (c), the agency may choose to:
13.32 	(1) impose the penalty under paragraph (b); or 
13.33 	(2) certify the penalty under paragraph (c) to the auditor
13.34 	for collection as additional taxes. The agency shall certify to
13.35 	the county auditor penalties assessed under this clause and
13.36 	paragraph (b).  The auditor shall impose and collect the
14.1 	certified penalties as additional taxes which will be
14.2 	distributed to taxing districts in the same manner as property
14.3 	taxes on the property.
14.4 		Subd. 9.Tax court review. (a) An owner may appeal to
14.5 	Tax Court as provided in section 271.06:
14.6 	(1) a denial of a request for certification of a property
14.7 	as qualifying for class 4d taxation;
14.8 	(2) the imposition of a penalty under this section; or 
14.9 	(3) a denial of a request to abate a penalty.
14.10 	(b) The county attorney shall represent the public in
14.11 	opposing the appeal.
14.12 		Subd. 10.Interagency contracting authority. The agency
14.13 	may contract with the Department of Revenue or any other state
14.14 	agency or a private entity to carry out administrative functions
14.15 	under this section.
14.16 		Subd. 11.Rulemaking. (a) The agency may adopt
14.17 	administrative rules under chapter 14 to carry out the
14.18 	provisions of this section, including establishing standards for
14.19 	abating penalties, violations that are inadvertent and
14.20 	insubstantial, selection of inspectors, selection of persons to
14.21 	monitor compliance, and establishing rent restriction agreement
14.22 	terms.
14.23 	(b) Pending final rulemaking, and in order to implement
14.24 	this section by January 1, 2006, the agency shall be allowed to
14.25 	make determinations regarding selection of inspectors, rent
14.26 	restriction agreement terms, fees, application information,
14.27 	application deadlines, required documentation, exemptions from
14.28 	inspection requirements, and deeming of eligibility.  Any
14.29 	determinations adopted under this authority expire on January 1,
14.30 	2007.
14.31 	
EFFECTIVE DATE. This section is effective the day
14.32 	following final enactment.