1.1 	A bill for an act
1.2 	relating to public finance; authorizing purchases of
1.3 	certain guaranteed investment contracts; authorizing a
1.4 	special levy; modifying the authority of cities and
1.5 	counties to finance purchases of computers and related
1.6 	items; extending the term of certain notes; clarifying
1.7 	the financing of conservation easements; extending
1.8 	sunsets on establishment of special service districts
1.9 	and housing improvement areas; providing for financing
1.10 	of certain improvements; extending the maximum
1.11 	maturity of certain bonds; revising time for certain
1.12 	notices of issues; exempting obligations issued to pay
1.13 	judgments from net debt limits; modifying the
1.14 	authority to finance street reconstruction; modifying
1.15 	limits on city capital improvement bonds and enabling
1.16 	certain towns to issue bonds under a capital
1.17 	improvement plan; modifying certain tax increment
1.18 	financing provisions; providing a bidding exception;
1.19 	increasing reserve from public facilities pool for
1.20 	certain purposes; providing for payment of certain
1.21 	refunding bonds; abolishing the housing bond credit
1.22 	enhancement program and providing for debt service on
1.23 	the bonds; authorizing a tax abatement extension;
1.24 	providing for an international economic development
1.25 	zone; providing tax incentives; requiring a report;
1.26 	appropriating money for certain refunds; amending
1.27 	Minnesota Statutes 2004, sections 13.55, by adding a
1.28 	subdivision; 116J.556; 118A.05, subdivision 5; 272.02,
1.29 	by adding a subdivision; 275.70, subdivision 5;
1.30 	290.01, subdivisions 19b, 29; 290.06, subdivision 2c,
1.31 	by adding a subdivision; 290.067, subdivision 1;
1.32 	290.0671, subdivision 1; 290.091, subdivision 2;
1.33 	290.0921, subdivision 3; 290.0922, subdivisions 2, 3;
1.34 	297A.68, by adding a subdivision; 343.11; 373.01,
1.35 	subdivision 3; 373.40, subdivision 1; 410.32; 412.301;
1.36 	428A.101; 428A.21; 469.015, subdivision 4; 469.034,
1.37 	subdivision 2; 469.158; 469.174, subdivisions 11, 25;
1.38 	469.175, subdivisions 1, 4a, 6; 469.176, subdivisions
1.39 	2, 4d; 469.1761, subdivisions 1, 3; 469.1763,
1.40 	subdivision 6; 469.177, subdivision 1; 469.1771,
1.41 	subdivision 5; 469.178, subdivision 1; 469.1813,
1.42 	subdivisions 1, 6; 473.197, subdivision 4; 473.39,
1.43 	subdivision 1f, by adding a subdivision; 474A.061,
1.44 	subdivision 2c; 474A.131, subdivision 1; 475.51,
1.45 	subdivision 4; 475.52, subdivisions 1, 3, 4; 475.521,
1.46 	subdivisions 1, 2, 3, 4; Laws 1996, chapter 412,
2.1 	article 5, section 24; Laws 2003, chapter 127, article
2.2 	12, section 38; proposing coding for new law in
2.3 	Minnesota Statutes, chapters 428A; 452; 469; repealing
2.4 	Minnesota Statutes 2004, sections 469.176, subdivision
2.5 	1; 469.1766; 473.197, subdivisions 1, 2, 3, 5; Laws
2.6 	1998, chapter 389, article 11, section 19, subdivision
2.7 	3.
2.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.9 	ARTICLE 1
2.10 	PUBLIC FINANCE

2.11 	Section 1. Minnesota Statutes 2004, section 13.55, is
2.12 	amended by adding a subdivision to read:
2.13 		Subd. 4.City of st. paul data. (a) For purposes of this
2.14 	subdivision, "nonprofit organization" means the nonprofit
2.15 	organization with which the city of St. Paul contracts to market
2.16 	and promote the city as a tourist or convention center.
2.17 	(b) Data collected, received, created, or maintained by the
2.18 	nonprofit organization in the course of preparing or submitting
2.19 	any responses to requests for proposals or requests for bids
2.20 	relating to events hosted, conducted, or sponsored by the
2.21 	nonprofit organization is classified as nonpublic data under
2.22 	section 13.02, subdivision 9; or private data under section
2.23 	13.02, subdivision 12, until the time provided in subdivision 2,
2.24 	paragraph (a) or (b), of this section.  The nonprofit
2.25 	organization is a "civic center authority" for purposes of this
2.26 	section.

2.27 	Sec. 2. Minnesota Statutes 2004, section 118A.05,
2.28 	subdivision 5, is amended to read:
2.29 		Subd. 5.Guaranteed investment contracts.  Agreements or
2.30 	contracts for guaranteed investment contracts may be entered
2.31 	into if they are issued or guaranteed by United States
2.32 	commercial banks, domestic branches of foreign banks, United
2.33 	States insurance companies, or their Canadian subsidiaries, or
2.34 	the domestic affiliates of any of the foregoing.  The credit
2.35 	quality of the issuer's or guarantor's short- and long-term
2.36 	unsecured debt must be rated in one of the two highest
2.37 	categories by a nationally recognized rating agency.  Should the
2.38 	issuer's or guarantor's credit quality be downgraded below "A",
2.39 	the government entity must have withdrawal rights.

3.1 	Sec. 3. Minnesota Statutes 2004, section 275.70,
3.2 	subdivision 5, is amended to read:
3.3 		Subd. 5.Special levies.  "Special levies" means those
3.4 	portions of ad valorem taxes levied by a local governmental unit
3.5 	for the following purposes or in the following manner:
3.6 	(1) to pay the costs of the principal and interest on
3.7 	bonded indebtedness or to reimburse for the amount of liquor
3.8 	store revenues used to pay the principal and interest due on
3.9 	municipal liquor store bonds in the year preceding the year for
3.10 	which the levy limit is calculated;
3.11 	(2) to pay the costs of principal and interest on
3.12 	certificates of indebtedness issued for any corporate purpose
3.13 	except for the following:
3.14 	(i) tax anticipation or aid anticipation certificates of
3.15 	indebtedness;
3.16 	(ii) certificates of indebtedness issued under sections
3.17 	298.28 and 298.282;
3.18 	(iii) certificates of indebtedness used to fund current
3.19 	expenses or to pay the costs of extraordinary expenditures that
3.20 	result from a public emergency; or
3.21 	(iv) certificates of indebtedness used to fund an
3.22 	insufficiency in tax receipts or an insufficiency in other
3.23 	revenue sources;
3.24 	(3) to provide for the bonded indebtedness portion of
3.25 	payments made to another political subdivision of the state of
3.26 	Minnesota;
3.27 	(4) to fund payments made to the Minnesota State Armory
3.28 	Building Commission under section 193.145, subdivision 2, to
3.29 	retire the principal and interest on armory construction bonds;
3.30 	(5) property taxes approved by voters which are levied
3.31 	against the referendum market value as provided under section
3.32 	275.61;
3.33 	(6) to fund matching requirements needed to qualify for
3.34 	federal or state grants or programs to the extent that either
3.35 	(i) the matching requirement exceeds the matching requirement in
3.36 	calendar year 2001, or (ii) it is a new matching requirement
4.1 	that did not exist prior to 2002;
4.2 	(7) to pay the expenses reasonably and necessarily incurred
4.3 	in preparing for or repairing the effects of natural disaster
4.4 	including the occurrence or threat of widespread or severe
4.5 	damage, injury, or loss of life or property resulting from
4.6 	natural causes, in accordance with standards formulated by the
4.7 	Emergency Services Division of the state Department of Public
4.8 	Safety, as allowed by the commissioner of revenue under section
4.9 	275.74, subdivision 2;
4.10 	(8) pay amounts required to correct an error in the levy
4.11 	certified to the county auditor by a city or county in a levy
4.12 	year, but only to the extent that when added to the preceding
4.13 	year's levy it is not in excess of an applicable statutory,
4.14 	special law or charter limitation, or the limitation imposed on
4.15 	the governmental subdivision by sections 275.70 to 275.74 in the
4.16 	preceding levy year;
4.17 	(9) to pay an abatement under section 469.1815;
4.18 	(10) to pay any costs attributable to increases in the
4.19 	employer contribution rates under chapter 353 that are effective
4.20 	after June 30, 2001;
4.21 	(11) to pay the operating or maintenance costs of a county
4.22 	jail as authorized in section 641.01 or 641.262, or of a
4.23 	correctional facility as defined in section 241.021, subdivision
4.24 	1, paragraph (f), to the extent that the county can demonstrate
4.25 	to the commissioner of revenue that the amount has been included
4.26 	in the county budget as a direct result of a rule, minimum
4.27 	requirement, minimum standard, or directive of the Department of
4.28 	Corrections, or to pay the operating or maintenance costs of a
4.29 	regional jail as authorized in section 641.262.  For purposes of
4.30 	this clause, a district court order is not a rule, minimum
4.31 	requirement, minimum standard, or directive of the Department of
4.32 	Corrections.  If the county utilizes this special levy, except
4.33 	to pay operating or maintenance costs of a new regional jail
4.34 	facility under sections 641.262 to 641.264 which will not
4.35 	replace an existing jail facility, any amount levied by the
4.36 	county in the previous levy year for the purposes specified
5.1 	under this clause and included in the county's previous year's
5.2 	levy limitation computed under section 275.71, shall be deducted
5.3 	from the levy limit base under section 275.71, subdivision 2,
5.4 	when determining the county's current year levy limitation.  The
5.5 	county shall provide the necessary information to the
5.6 	commissioner of revenue for making this determination;
5.7 	(12) to pay for operation of a lake improvement district,
5.8 	as authorized under section 103B.555.  If the county utilizes
5.9 	this special levy, any amount levied by the county in the
5.10 	previous levy year for the purposes specified under this clause
5.11 	and included in the county's previous year's levy limitation
5.12 	computed under section 275.71 shall be deducted from the levy
5.13 	limit base under section 275.71, subdivision 2, when determining
5.14 	the county's current year levy limitation.  The county shall
5.15 	provide the necessary information to the commissioner of revenue
5.16 	for making this determination;
5.17 	(13) to repay a state or federal loan used to fund the
5.18 	direct or indirect required spending by the local government due
5.19 	to a state or federal transportation project or other state or
5.20 	federal capital project.  This authority may only be used if the
5.21 	project is not a local government initiative;
5.22 	(14) to pay for court administration costs as required
5.23 	under section 273.1398, subdivision 4b, less the (i) county's
5.24 	share of transferred fines and fees collected by the district
5.25 	courts in the county for calendar year 2001 and (ii) the aid
5.26 	amount certified to be paid to the county in 2004 under section
5.27 	273.1398, subdivision 4c; however, for taxes levied to pay for
5.28 	these costs in the year in which the court financing is
5.29 	transferred to the state, the amount under this clause is
5.30 	limited to the amount of aid the county is certified to receive
5.31 	under section 273.1398, subdivision 4a; ~~and~~ 
5.32 	(15) to fund a police or firefighters relief association as
5.33 	required under section 69.77 to the extent that the required
5.34 	amount exceeds the amount levied for this purpose in 2001; and 
5.35 	(16) for purposes of a storm sewer improvement district,
5.36 	pursuant to section 444.20.

6.1 	Sec. 4. Minnesota Statutes 2004, section 343.11, is
6.2 	amended to read:
6.3 	343.11 ACQUISITION OF PROPERTY, APPROPRIATIONS.
6.4 	Every county and district society for the prevention of
6.5 	cruelty to animals may acquire, by purchase, gift, grant, or
6.6 	devise, and hold, use, or convey, real estate and personal
6.7 	property, and lease, mortgage, sell, or use the same in any
6.8 	manner conducive to its interest, to the same extent as natural
6.9 	persons.  The county board of any county, or the council of any
6.10 	city, in which such societies exist, may, in its discretion,
6.11 	appropriate for the maintenance and support of such societies in
6.12 	the transaction of the work for which they are organized, any
6.13 	sums of money not otherwise appropriated, not to exceed in any
6.14 	one year the sum of $4,800 or the sum of ~~50 cents~~ $1 per capita
6.15 	based upon the county's or city's population as of the most
6.16 	recent federal census, whichever is greater; provided, that no
6.17 	part of the appropriation shall be expended for the payment of
6.18 	the salary of any officer of the society.

6.19 	EFFECTIVE DATE. This section is effective January 1, 2006.

6.20 	Sec. 5. Minnesota Statutes 2004, section 373.01,
6.21 	subdivision 3, is amended to read:
6.22 		Subd. 3.Capital notes. (a) A county board may, by
6.23 	resolution and without referendum, issue capital notes subject
6.24 	to the county debt limit to purchase capital equipment useful
6.25 	for county purposes that has an expected useful life at least
6.26 	equal to the term of the notes.  The notes shall be payable in
6.27 	not more than ~~five~~ ten years and shall be issued on terms and in
6.28 	a manner the board determines.  A tax levy shall be made for
6.29 	payment of the principal and interest on the notes, in
6.30 	accordance with section 475.61, as in the case of bonds.
6.31 	(b) For purposes of this subdivision, "capital equipment"
6.32 	means:
6.33 	(1) public safety, ambulance, road construction or
6.34 	maintenance, and medical equipment~~,~~;and
6.35 	(2) computer hardware and ~~original operating system~~ 
6.36 	software, whether bundled with machinery or equipment or
7.1 	unbundled. ~~The authority to issue capital notes for original~~
7.2 	~~operating systems software expires on July 1, 2005.~~

7.3 	Sec. 6. Minnesota Statutes 2004, section 373.40,
7.4 	subdivision 1, is amended to read:
7.5 		Subdivision 1.Definitions.  For purposes of this
7.6 	section, the following terms have the meanings given.
7.7 	(a) "Bonds" means an obligation as defined under section
7.8 	475.51.
7.9 	(b) "Capital improvement" means acquisition or betterment
7.10 	of public lands, ~~development rights in the form of conservation~~
7.11 	~~easements under chapter 84C,~~buildings, or other improvements
7.12 	within the county for the purpose of a county courthouse,
7.13 	administrative building, health or social service facility,
7.14 	correctional facility, jail, law enforcement center, hospital,
7.15 	morgue, library, park, qualified indoor ice arena, ~~and~~ roads and
7.16 	bridges, and the acquisition of development rights in the form
7.17 	of conservation easements under chapter 84C.  An improvement
7.18 	must have an expected useful life of five years or more to
7.19 	qualify.  "Capital improvement" does not include light rail
7.20 	transit or any activity related to it or a recreation or sports
7.21 	facility building (such as, but not limited to, a gymnasium, ice
7.22 	arena, racquet sports facility, swimming pool, exercise room or
7.23 	health spa), unless the building is part of an outdoor park
7.24 	facility and is incidental to the primary purpose of outdoor
7.25 	recreation.
7.26 	(c) "Commissioner" means the commissioner of employment and
7.27 	economic development.
7.28 	(d) "Metropolitan county" means a county located in the
7.29 	seven-county metropolitan area as defined in section 473.121 or
7.30 	a county with a population of 90,000 or more.
7.31 	(e) "Population" means the population established by the
7.32 	most recent of the following (determined as of the date the
7.33 	resolution authorizing the bonds was adopted):
7.34 	(1) the federal decennial census,
7.35 	(2) a special census conducted under contract by the United
7.36 	States Bureau of the Census, or
8.1 	(3) a population estimate made either by the Metropolitan
8.2 	Council or by the state demographer under section 4A.02.
8.3 	(f) "Qualified indoor ice arena" means a facility that
8.4 	meets the requirements of section 373.43.
8.5 	(g) "Tax capacity" means total taxable market value, but
8.6 	does not include captured market value.

8.7 	Sec. 7. Minnesota Statutes 2004, section 410.32, is
8.8 	amended to read:
8.9 	410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL
8.10 	EQUIPMENT.
8.11 	(a) Notwithstanding any contrary provision of other law or
8.12 	charter, a home rule charter city may, by resolution and without
8.13 	public referendum, issue capital notes subject to the city debt
8.14 	limit to purchase capital equipment.
8.15 	(b) For purposes of this section, "capital equipment" means:
8.16 	(1) public safety equipment, ambulance and other medical
8.17 	equipment, road construction and maintenance equipment, and
8.18 	other capital equipment;and
8.19 	(2) computer hardware and ~~original operating system~~ 
8.20 	software, ~~provided~~ whether bundled with machinery or equipment
8.21 	or unbundled.
8.22 	(c) The equipment or software ~~has~~ must have an expected
8.23 	useful life at least as long as the term of the notes. ~~The~~
8.24 	~~authority to issue capital notes for original operating system~~
8.25 	~~software expires on July 1, 2005.~~
8.26 	(d) The notes shall be payable in not more than ~~five~~ ten 
8.27 	years and be issued on terms and in the manner the city
8.28 	determines.  The total principal amount of the capital notes
8.29 	issued in a fiscal year shall not exceed 0.03 percent of the
8.30 	market value of taxable property in the city for that year.
8.31 	(e) A tax levy shall be made for the payment of the
8.32 	principal and interest on the notes, in accordance with section
8.33 	475.61, as in the case of bonds.
8.34 	(f) Notes issued under this section shall require an
8.35 	affirmative vote of two-thirds of the governing body of the city.
8.36 	(g) Notwithstanding a contrary provision of other law or
9.1 	charter, a home rule charter city may also issue capital notes
9.2 	subject to its debt limit in the manner and subject to the
9.3 	limitations applicable to statutory cities pursuant to section
9.4 	412.301.

9.5 	Sec. 8. Minnesota Statutes 2004, section 412.301, is
9.6 	amended to read:
9.7 	412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.
9.8 	(a) The council may issue certificates of indebtedness or
9.9 	capital notes subject to the city debt limits to
9.10 	purchase capital equipment.
9.11 	(b) For purposes of this section, "capital equipment" means:
9.12 	(1) public safety equipment, ambulance and other medical 
9.13 	equipment, road construction ~~or~~ and maintenance equipment, and
9.14 	other capital equipment;and
9.15 	(2) computer hardware and ~~original operating system~~ 
9.16 	software, ~~provided~~ whether bundled with machinery or equipment
9.17 	or unbundled.
9.18 	(c) The equipment or software ~~has~~ must have an expected
9.19 	useful life at least as long as the terms of the certificates or
9.20 	notes. ~~The authority to issue capital notes for original~~
9.21 	~~operating system software expires on July 1, 2005.~~
9.22 	(d) Such certificates or notes shall be payable in not more
9.23 	than ~~five~~ ten years and shall be issued on such terms and in
9.24 	such manner as the council may determine.
9.25 	(e) If the amount of the certificates or notes to be issued
9.26 	to finance any such purchase exceeds 0.25 percent of the market
9.27 	value of taxable property in the city, they shall not be issued
9.28 	for at least ten days after publication in the official
9.29 	newspaper of a council resolution determining to issue them; and
9.30 	if before the end of that time, a petition asking for an
9.31 	election on the proposition signed by voters equal to ten
9.32 	percent of the number of voters at the last regular municipal
9.33 	election is filed with the clerk, such certificates or notes
9.34 	shall not be issued until the proposition of their issuance has
9.35 	been approved by a majority of the votes cast on the question at
9.36 	a regular or special election.
10.1 	(f) A tax levy shall be made for the payment of the
10.2 	principal and interest on such certificates or notes, in
10.3 	accordance with section 475.61, as in the case of bonds.

10.4 	Sec. 9. Minnesota Statutes 2004, section 428A.101, is
10.5 	amended to read:
10.6 	428A.101 DEADLINE FOR SPECIAL SERVICE DISTRICT UNDER
10.7 	GENERAL LAW.
10.8 	The establishment of a new special service district after
10.9 	June 30, ~~2005~~ 2009, requires enactment of a special law
10.10 	authorizing the establishment.

10.11 	Sec. 10. [428A.102] NOTIFICATION.
10.12 	By the last day of the calendar year in which a special
10.13 	service district is established, the city shall file a copy of
10.14 	the ordinance establishing the district with the Office of State
10.15 	Auditor.  Cities establishing districts before the effective
10.16 	date of this section must file a copy of the ordinance by
10.17 	December 31, 2005.

10.18 	Sec. 11. Minnesota Statutes 2004, section 428A.21, is
10.19 	amended to read:
10.20 	428A.21 SUNSET.
10.21 	No new housing improvement areas may be established under
10.22 	sections 428A.11 to 428A.20 after June 30, ~~2005~~ 2009.  After
10.23 	June 30, ~~2005~~ 2009, a city may establish a housing improvement
10.24 	area, provided that it receives enabling legislation authorizing
10.25 	the establishment of the area.

10.26 	Sec. 12. [428A.22] NOTIFICATION.
10.27 	By the last day of the calendar year in which a housing
10.28 	improvement district is established, the city shall file a copy
10.29 	of the ordinance establishing the district with the Office of
10.30 	State Auditor.  Cities establishing districts before the
10.31 	effective date of this section must file a copy of the ordinance
10.32 	by December 31, 2005.

10.33 	Sec. 13. [452.26] UTILITY JOINT VENTURE.
10.34 	To provide reduced cost financing or to otherwise help in
10.35 	carrying out its functions, a municipal gas agency created under
10.36 	chapter 453A and any municipal utility authorized to provide gas
11.1 	facilities or services may enter into a joint venture that was
11.2 	incorporated before June 30, 2004, under section 452.25.  The
11.3 	joint venture, and any municipal gas agency which is a member of
11.4 	the joint venture, may provide gas utility service.

11.5 	EFFECTIVE DATE. This section is effective the day
11.6 	following final enactment.

11.7 	Sec. 14. Minnesota Statutes 2004, section 469.015,
11.8 	subdivision 4, is amended to read:
11.9 		Subd. 4.Exceptions.  (a) An authority need not require
11.10 	competitive bidding in the following circumstances:
11.11 	(1) in the case of a contract for the acquisition of a
11.12 	low-rent housing project:
11.13 	(i) for which financial assistance is provided by the
11.14 	federal government;
11.15 	(ii) which does not require any direct loan or grant of
11.16 	money from the municipality as a condition of the federal
11.17 	financial assistance; and
11.18 	(iii) for which the contract provides for the construction
11.19 	of the project upon land that is either owned by the authority
11.20 	for redevelopment purposes or not owned by the authority at the
11.21 	time of the contract but the contract provides for the
11.22 	conveyance or lease to the authority of the project or
11.23 	improvements upon completion of construction;
11.24 	(2) with respect to a structured parking facility:
11.25 	(i) constructed in conjunction with, and directly above or
11.26 	below, a development; and
11.27 	(ii) financed with the proceeds of tax increment or parking
11.28 	ramp general obligation or revenue bonds; ~~and~~ 
11.29 	(3) until August 1, 2009, with respect to a facility built
11.30 	for the purpose of facilitating the operation of public transit
11.31 	or encouraging its use:
11.32 	(i) constructed in conjunction with, and directly above or
11.33 	below, a development; and 
11.34 	(ii) financed with the proceeds of parking ramp general
11.35 	obligation or revenue bonds or with at least 60 percent of the
11.36 	construction cost being financed with funding provided by the
12.1 	federal government; and 
12.2 	(4) in the case of any building in which at least 75
12.3 	percent of the usable square footage constitutes a housing
12.4 	development project if:
12.5 	(i) the project is financed with the proceeds of bonds
12.6 	issued under section 469.034 or from nongovernmental sources;
12.7 	(ii) the project is either located on land that is owned or
12.8 	is being acquired by the authority only for development
12.9 	purposes, or is not owned by the authority at the time the
12.10 	contract is entered into but the contract provides for
12.11 	conveyance or lease to the authority of the project or
12.12 	improvements upon completion of construction; and
12.13 	(iii) the authority finds and determines that elimination
12.14 	of the public bidding requirements is necessary in order for the
12.15 	housing development project to be economical and feasible.
12.16 	(b) An authority need not require a performance bond for
12.17 	the following projects:
12.18 	(1) a contract described in paragraph (a), clause (1);
12.19 	(2) a construction change order for a housing project in
12.20 	which 30 percent of the construction has been completed;
12.21 	(3) a construction contract for a single-family housing
12.22 	project in which the authority acts as the general construction
12.23 	contractor; or
12.24 	(4) a services or materials contract for a housing project.
12.25 	For purposes of this paragraph, "services or materials
12.26 	contract" does not include construction contracts.

12.27 	Sec. 15. Minnesota Statutes 2004, section 469.034,
12.28 	subdivision 2, is amended to read:
12.29 		Subd. 2.General obligation revenue bonds.  (a) An
12.30 	authority may pledge the general obligation of the general
12.31 	jurisdiction governmental unit as additional security for bonds
12.32 	payable from income or revenues of the project or the
12.33 	authority.  The authority must find that the pledged revenues
12.34 	will equal or exceed 110 percent of the principal and interest
12.35 	due on the bonds for each year.  The proceeds of the bonds must
12.36 	be used for a qualified housing development project or
13.1 	projects.  The obligations must be issued and sold in the manner
13.2 	and following the procedures provided by chapter 475, except the
13.3 	obligations are not subject to approval by the electors,and the
13.4 	maturities may extend to not more than ~~30~~ 35 years ~~from the~~
13.5 	~~estimated date of completion of the project~~ for obligations sold
13.6 	to finance housing for the elderly and 40 years for other
13.7 	obligations issued under this subdivision.  The authority is the
13.8 	municipality for purposes of chapter 475.
13.9 	(b) The principal amount of the issue must be approved by
13.10 	the governing body of the general jurisdiction governmental unit
13.11 	whose general obligation is pledged.  Public hearings must be
13.12 	held on issuance of the obligations by both the authority and
13.13 	the general jurisdiction governmental unit.  The hearings must
13.14 	be held at least 15 days, but not more than 120 days, before the
13.15 	sale of the obligations.
13.16 	(c) The maximum amount of general obligation bonds that may
13.17 	be issued and outstanding under this section equals the greater
13.18 	of (1) one-half of one percent of the taxable market value of
13.19 	the general jurisdiction governmental unit whose general
13.20 	obligation ~~which includes a tax on property~~ is pledged, or (2)
13.21 	$3,000,000.  In the case of county or multicounty general
13.22 	obligation bonds, the outstanding general obligation bonds of
13.23 	all cities in the county or counties issued under this
13.24 	subdivision must be added in calculating the limit under clause
13.25 	(1).
13.26 	(d) "General jurisdiction governmental unit" means the city
13.27 	in which the housing development project is located.  In the
13.28 	case of a county or multicounty authority, the county or
13.29 	counties may act as the general jurisdiction governmental unit.
13.30 	In the case of a multicounty authority, the pledge of the
13.31 	general obligation is a pledge of a tax on the taxable property
13.32 	in each of the counties.
13.33 	(e) "Qualified housing development project" means a housing
13.34 	development project providing housing either for the elderly or
13.35 	for individuals and families with incomes not greater than 80
13.36 	percent of the median family income as estimated by the United
14.1 	States Department of Housing and Urban Development for the
14.2 	standard metropolitan statistical area or the nonmetropolitan
14.3 	county in which the project is located~~, and will~~ .  The project
14.4 	must be owned for the term of the bonds either by the
14.5 	authority ~~for the term of the bonds.~~or by a limited partnership
14.6 	or other entity in which the authority or another entity under
14.7 	the sole control of the authority is the sole general partner
14.8 	and the partnership or other entity must receive (1) an
14.9 	allocation from the Department of Finance or an entitlement
14.10 	issuer of tax-exempt bonding authority for the project and a
14.11 	preliminary determination by the Minnesota Housing Finance
14.12 	Agency or the applicable suballocator of tax credits that the
14.13 	project will qualify for four percent low-income housing tax
14.14 	credits or (2) a reservation of nine percent low-income housing
14.15 	tax credits from the Minnesota Housing Finance Agency or a
14.16 	suballocator of tax credits for the project.A qualified
14.17 	housing development project may admit nonelderly individuals and
14.18 	families with higher incomes if:
14.19 	(1) three years have passed since initial occupancy;
14.20 	(2) the authority finds the project is experiencing
14.21 	unanticipated vacancies resulting in insufficient revenues,
14.22 	because of changes in population or other unforeseen
14.23 	circumstances that occurred after the initial finding of
14.24 	adequate revenues; and
14.25 	(3) the authority finds a tax levy or payment from general
14.26 	assets of the general jurisdiction governmental unit will be
14.27 	necessary to pay debt service on the bonds if higher income
14.28 	individuals or families are not admitted.

14.29 	Sec. 16. Minnesota Statutes 2004, section 469.158, is
14.30 	amended to read:
14.31 	469.158 MANNER OF ISSUANCE OF BONDS; INTEREST RATE.
14.32 	Bonds authorized under sections 469.152 to 469.165 must be
14.33 	issued in accordance with the provisions of chapter 475 relating
14.34 	to bonds payable from income of revenue producing conveniences,
14.35 	except that public sale is not required, the provisions of
14.36 	sections 475.62 and 475.63 do not apply, and the bonds may
15.1 	mature at the time or times, in the amount or amounts, within ~~30~~ 
15.2 	40 years from date of issue, and may be sold at a price equal to
15.3 	the percentage of the par value thereof, plus accrued interest,
15.4 	and bearing interest at the rate or rates agreed by the
15.5 	contracting party, the purchaser, and the municipality or
15.6 	redevelopment agency, notwithstanding any limitation of interest
15.7 	rate or cost or of the amounts of annual maturities contained in
15.8 	any other law.  Bonds issued to refund bonds previously issued
15.9 	pursuant to sections 469.152 to 469.165 may be issued in amounts
15.10 	determined by the municipality or redevelopment agency
15.11 	notwithstanding the provisions of section 475.67, subdivision 3.

15.12 	Sec. 17. Minnesota Statutes 2004, section 469.1813,
15.13 	subdivision 1, is amended to read:
15.14 		Subdivision 1.Authority.  The governing body of a
15.15 	political subdivision may grant an abatement of the taxes
15.16 	imposed by the political subdivision on a parcel of property, or
15.17 	defer the payments of the taxes and abate the interest and
15.18 	penalty that otherwise would apply, if:
15.19 	(a) it expects the benefits to the political subdivision of
15.20 	the proposed abatement agreement to at least equal the costs to
15.21 	the political subdivision of the proposed agreement or intends
15.22 	the abatement to phase in a property tax increase, as provided
15.23 	in clause (b)(7); and
15.24 	(b) it finds that doing so is in the public interest
15.25 	because it will:
15.26 	(1) increase or preserve tax base;
15.27 	(2) provide employment opportunities in the political
15.28 	subdivision;
15.29 	(3) provide or help acquire or construct public facilities;
15.30 	(4) help redevelop or renew blighted areas;
15.31 	(5) help provide access to services for residents of the
15.32 	political subdivision;
15.33 	(6) finance or provide public infrastructure; ~~or~~ 
15.34 	(7) phase in a property tax increase on the parcel
15.35 	resulting from an increase of 50 percent or more in one year on
15.36 	the estimated market value of the parcel, other than increase
16.1 	attributable to improvement of the parcel; or 
16.2 	(8) finance historic or heritage preservation.

16.3 	Sec. 18. Minnesota Statutes 2004, section 469.1813,
16.4 	subdivision 6, is amended to read:
16.5 		Subd. 6.Duration limit.  (a) A political subdivision may
16.6 	grant an abatement for a period no longer than ~~ten~~ 15 years,
16.7 	except as provided under paragraph (b).  The subdivision may
16.8 	specify in the abatement resolution a shorter duration.  If the
16.9 	resolution does not specify a period of time, the abatement is
16.10 	for eight years.  If an abatement has been granted to a parcel
16.11 	of property and the period of the abatement has expired, the
16.12 	political subdivision that granted the abatement may not grant
16.13 	another abatement for eight years after the expiration of the
16.14 	first abatement.  This prohibition does not apply to
16.15 	improvements added after and not subject to the first abatement.
16.16 	(b) A political subdivision proposing to abate taxes for a
16.17 	parcel may request, in writing, that the other political
16.18 	subdivisions in which the parcel is located grant an abatement
16.19 	for the property.  If one of the other political subdivisions
16.20 	declines, in writing, to grant an abatement or if 90 days pass
16.21 	after receipt of the request to grant an abatement without a
16.22 	written response from one of the political subdivisions, the
16.23 	duration limit for an abatement for the parcel by the requesting
16.24 	political subdivision and any other participating political
16.25 	subdivision is increased to ~~15~~ 20 years.  If the political
16.26 	subdivision which declined to grant an abatement later grants an
16.27 	abatement for the parcel, the ~~15-year~~ 20-year duration limit is
16.28 	reduced by one year for each year that the declining political
16.29 	subdivision grants an abatement for the parcel during the period
16.30 	of the abatement granted by the requesting political
16.31 	subdivision.  The duration limit may not be reduced below the
16.32 	limit under paragraph (a).

16.33 	Sec. 19. Minnesota Statutes 2004, section 473.197,
16.34 	subdivision 4, is amended to read:
16.35 		Subd. 4.Debt reserve; levy.  To provide money to pay
16.36 	debt service on bonds issued under the credit enhancement
17.1 	program ~~if pledged revenues are insufficient to pay debt service~~ 
17.2 	in repealed subdivision 1 of Minnesota Statutes 2004, section
17.3 	473.197, the council must maintain a debt reserve fund ~~in the~~
17.4 	~~manner and with the effect provided by section 118A.04 for~~
17.5 	~~public funds~~ until such a reserve is no longer pledged or
17.6 	otherwise needed to pay debt service on such bonds. ~~To provide~~
17.7 	~~funds for the debt reserve fund, the council may use up to~~
17.8 	~~$3,000,000 of the proceeds of solid waste bonds issued by the~~
17.9 	~~council under section 473.831 before its repeal.  To provide~~
17.10 	~~additional funds for the debt reserve fund, the council may levy~~
17.11 	~~a tax on all taxable property in the metropolitan area and must~~
17.12 	~~levy the tax~~ If sums in the debt reserve fund are insufficient
17.13 	to cure any deficiency in the debt service fund established for
17.14 	the bonds, the council must levy a tax on all taxable property
17.15 	in the metropolitan area in the amount needed to cure the
17.16 	deficiency.  The tax authorized by this section does not affect
17.17 	the amount or rate of taxes that may be levied by the council
17.18 	for other purposes and is not subject to limit as to rate or
17.19 	amount.

17.20 	Sec. 20. Minnesota Statutes 2004, section 473.39,
17.21 	subdivision 1f, is amended to read:
17.22 		Subd. 1f.Prohibition of certain obligations. For
17.23 	certificates of indebtedness, bonds, or other obligations
17.24 	authorized by the legislature prior to January 1, 2005, to be
17.25 	issued under this section,the council may not issue such 
17.26 	obligations for construction of light rail transit in the
17.27 	Hiawatha corridor.

17.28 	Sec. 21. Minnesota Statutes 2004, section 473.39, is
17.29 	amended by adding a subdivision to read:
17.30 		Subd. 1k.Obligations. After July 1, 2005, in addition
17.31 	to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i,
17.32 	and 1j, the council may issue certificates of indebtedness,
17.33 	bonds, or other obligations under this section in an amount not
17.34 	exceeding $64,000,000 for capital expenditures as prescribed in
17.35 	the council's regional transit master plan and transit capital
17.36 	improvement program and for related costs, including the costs
18.1 	of issuance and sale of the obligations.

18.2 	Sec. 22. Minnesota Statutes 2004, section 474A.061,
18.3 	subdivision 2c, is amended to read:
18.4 		Subd. 2c.Public facilities pool allocation.  From the
18.5 	beginning of the calendar year and continuing for a period of
18.6 	120 days, the commissioner shall reserve ~~$3,000,000~~ $5,000,000 
18.7 	of the available bonding authority from the public facilities
18.8 	pool for applications for public facilities projects to be
18.9 	financed by the Western Lake Superior Sanitary District.
18.10 	Commencing on the second Tuesday in January and continuing on
18.11 	each Monday through the last Monday in July, the commissioner
18.12 	shall allocate available bonding authority from the public
18.13 	facilities pool to applications for eligible public facilities
18.14 	projects received on or before the Monday of the preceding
18.15 	week.  If there are two or more applications for public
18.16 	facilities projects from the pool and there is insufficient
18.17 	available bonding authority to provide allocations for all
18.18 	projects in any one week, the available bonding authority shall
18.19 	be awarded by lot unless otherwise agreed to by the respective
18.20 	issuers.

18.21 	Sec. 23. Minnesota Statutes 2004, section 474A.131,
18.22 	subdivision 1, is amended to read:
18.23 		Subdivision 1.Notice of issue.  Each issuer that issues
18.24 	bonds with an allocation received under this chapter shall
18.25 	provide a notice of issue to the department on forms provided by
18.26 	the department stating:
18.27 	(1) the date of issuance of the bonds;
18.28 	(2) the title of the issue;
18.29 	(3) the principal amount of the bonds;
18.30 	(4) the type of qualified bonds under federal tax law;
18.31 	(5) the dollar amount of the bonds issued that were subject
18.32 	to the annual volume cap; and
18.33 	(6) for entitlement issuers, whether the allocation is from
18.34 	current year entitlement authority or is from carryforward
18.35 	authority.
18.36 	For obligations that are issued as a part of a series of
19.1 	obligations, a notice must be provided for each series.  A
19.2 	penalty of one-half of the amount of the application deposit not
19.3 	to exceed $5,000 shall apply to any issue of obligations for
19.4 	which a notice of issue is not provided to the department within
19.5 	five business days after issuance or before ~~the last Monday~~ 4:30
19.6 	p.m. on the last business day in December, whichever occurs
19.7 	first.  Within 30 days after receipt of a notice of issue the
19.8 	department shall refund a portion of the application deposit
19.9 	equal to one percent of the amount of the bonding authority
19.10 	actually issued if a one percent application deposit was made,
19.11 	or equal to two percent of the amount of the bonding authority
19.12 	actually issued if a two percent application deposit was made,
19.13 	less any penalty amount.

19.14 	Sec. 24. Minnesota Statutes 2004, section 475.51,
19.15 	subdivision 4, is amended to read:
19.16 		Subd. 4.Net debt.  "Net debt" means the amount remaining
19.17 	after deducting from its gross debt the amount of current
19.18 	revenues which are applicable within the current fiscal year to
19.19 	the payment of any debt and the aggregate of the principal of
19.20 	the following:
19.21 	(1) Obligations issued for improvements which are payable
19.22 	wholly or partly from the proceeds of special assessments levied
19.23 	upon property specially benefited thereby, including those which
19.24 	are general obligations of the municipality issuing them, if the
19.25 	municipality is entitled to reimbursement in whole or in part
19.26 	from the proceeds of the special assessments.
19.27 	(2) Warrants or orders having no definite or fixed maturity.
19.28 	(3) Obligations payable wholly from the income from revenue
19.29 	producing conveniences.
19.30 	(4) Obligations issued to create or maintain a permanent
19.31 	improvement revolving fund.
19.32 	(5) Obligations issued for the acquisition, and betterment
19.33 	of public waterworks systems, and public lighting, heating or
19.34 	power systems, and of any combination thereof or for any other
19.35 	public convenience from which a revenue is or may be derived.
19.36 	(6) Debt service loans and capital loans made to a school
20.1 	district under the provisions of sections 126C.68 and 126C.69.
20.2 	(7) Amount of all money and the face value of all
20.3 	securities held as a debt service fund for the extinguishment of
20.4 	obligations other than those deductible under this subdivision.
20.5 	(8) Obligations to repay loans made under section 216C.37.
20.6 	(9) Obligations to repay loans made from money received
20.7 	from litigation or settlement of alleged violations of federal
20.8 	petroleum pricing regulations.
20.9 	(10) Obligations issued to pay pension fund liabilities
20.10 	under section 475.52, subdivision 6, or any charter authority.
20.11 	(11) Obligations issued to pay judgments against the
20.12 	municipality under section 475.52, subdivision 6, or any charter
20.13 	authority.
20.14 	(12) All other obligations which under the provisions of
20.15 	law authorizing their issuance are not to be included in
20.16 	computing the net debt of the municipality.

20.17 	Sec. 25. Minnesota Statutes 2004, section 475.52,
20.18 	subdivision 1, is amended to read:
20.19 		Subdivision 1.Statutory cities.  Any statutory city may
20.20 	issue bonds or other obligations for the acquisition or
20.21 	betterment of public buildings, means of garbage disposal,
20.22 	hospitals, nursing homes, homes for the aged, schools,
20.23 	libraries, museums, art galleries, parks, playgrounds, stadia,
20.24 	sewers, sewage disposal plants, subways, streets, sidewalks,
20.25 	warning systems; for any utility or other public convenience
20.26 	from which a revenue is or may be derived; for a permanent
20.27 	improvement revolving fund; for changing, controlling or
20.28 	bridging streams and other waterways; for the acquisition and
20.29 	betterment of bridges and roads within two miles of the
20.30 	corporate limits;for the acquisition of development rights in
20.31 	the form of conservation easements under chapter 84C; and for
20.32 	acquisition of equipment for snow removal, street construction
20.33 	and maintenance, or fire fighting.  Without limitation by the
20.34 	foregoing the city may issue bonds to provide money for any
20.35 	authorized corporate purpose except current expenses.

20.36 	Sec. 26. Minnesota Statutes 2004, section 475.52,
21.1 	subdivision 3, is amended to read:
21.2 		Subd. 3.Counties.  Any county may issue bonds for the
21.3 	acquisition or betterment of courthouses, county administrative
21.4 	buildings, health or social service facilities, correctional
21.5 	facilities, law enforcement centers, jails, morgues, libraries,
21.6 	parks, and hospitals, for roads and bridges within the county or
21.7 	bordering thereon and for road equipment and machinery and for
21.8 	ambulances and related equipment;for the acquisition of
21.9 	development rights in the form of conservation easements under
21.10 	chapter 84C, and for capital equipment for the administration
21.11 	and conduct of elections providing the equipment is uniform
21.12 	countywide, except that the power of counties to issue bonds in
21.13 	connection with a library shall not exist in Hennepin County.

21.14 	Sec. 27. Minnesota Statutes 2004, section 475.52,
21.15 	subdivision 4, is amended to read:
21.16 		Subd. 4.Towns.  Any town may issue bonds for the
21.17 	acquisition and betterment of town halls, town roads and
21.18 	bridges, nursing homes and homes for the aged, and for
21.19 	acquisition of equipment for snow removal, road construction or
21.20 	maintenance, and fire fighting;for the acquisition of
21.21 	development rights in the form of conservation easements under
21.22 	chapter 84C;and for the acquisition and betterment of any
21.23 	buildings to house and maintain town equipment.

21.24 	Sec. 28. Minnesota Statutes 2004, section 475.521,
21.25 	subdivision 1, is amended to read:
21.26 		Subdivision 1.Definitions.  For purposes of this
21.27 	section, the following terms have the meanings given.
21.28 	(a) "Bonds" mean an obligation defined under section 475.51.
21.29 	(b) "Capital improvement" means acquisition or betterment
21.30 	of public lands, buildings or other improvements for the purpose
21.31 	of a city hall, town hall, library,public safety facility, and
21.32 	public works facility.  An improvement must have an expected
21.33 	useful life of five years or more to qualify.  Capital
21.34 	improvement does not include light rail transit or any activity
21.35 	related to it, or a park, ~~library,~~road, bridge, administrative
21.36 	building other than a city or town hall, or land for any of
22.1 	those facilities.
22.2 	(c) ~~"City"~~ "Municipality" means a home rule charter or
22.3 	statutory city or a town described in section 368.01,
22.4 	subdivision 1 or 1a.

22.5 	Sec. 29. Minnesota Statutes 2004, section 475.521,
22.6 	subdivision 2, is amended to read:
22.7 		Subd. 2.Election requirement.  (a) Bonds issued by a
22.8 	~~city~~ municipality to finance capital improvements under an
22.9 	approved capital improvements plan are not subject to the
22.10 	election requirements of section 475.58. ~~The bonds are subject~~
22.11 	~~to the net debt limits under section 475.53.~~The bonds must be
22.12 	approved by an affirmative vote of three-fifths of the members
22.13 	of a five-member ~~city council~~ governing body.  In the case of
22.14 	a ~~city council~~ governing body having more or less than five
22.15 	members, the bonds must be approved by a vote of at least
22.16 	two-thirds of the ~~city council~~ members of the governing body.
22.17 	(b) Before the issuance of bonds qualifying under this
22.18 	section, the ~~city~~ municipality must publish a notice of its
22.19 	intention to issue the bonds and the date and time of the
22.20 	hearing to obtain public comment on the matter.  The notice must
22.21 	be published in the official newspaper of the ~~city~~ municipality 
22.22 	or in a newspaper of general circulation in the ~~city~~ 
22.23 	municipality.  Additionally, the notice may be posted on the
22.24 	official Web site, if any, of the ~~city~~ municipality.  The notice
22.25 	must be published at least 14 but not more than 28 days before
22.26 	the date of the hearing.
22.27 	(c) A ~~city~~ municipality may issue the bonds only after
22.28 	obtaining the approval of a majority of the voters voting on the
22.29 	question of issuing the obligations, if a petition requesting a
22.30 	vote on the issuance is signed by voters equal to five percent
22.31 	of the votes cast in the ~~city~~ municipality in the last general
22.32 	election and is filed with the ~~city~~ clerk within 30 days after
22.33 	the public hearing.  The commissioner of revenue shall prepare a
22.34 	suggested form of the question to be presented at the election.

22.35 	Sec. 30. Minnesota Statutes 2004, section 475.521,
22.36 	subdivision 3, is amended to read:
23.1 		Subd. 3.Capital improvement plan.  (a) A ~~city~~ 
23.2 	municipality may adopt a capital improvement plan.  The plan
23.3 	must cover at least a five-year period beginning with the date
23.4 	of its adoption.  The plan must set forth the estimated
23.5 	schedule, timing, and details of specific capital improvements
23.6 	by year, together with the estimated cost, the need for the
23.7 	improvement, and sources of revenue to pay for the improvement.
23.8 	In preparing the capital improvement plan, the ~~city council~~ 
23.9 	governing body must consider for each project and for the
23.10 	overall plan:
23.11 	(1) the condition of the ~~city's~~ municipality's existing
23.12 	infrastructure, including the projected need for repair or
23.13 	replacement;
23.14 	(2) the likely demand for the improvement;
23.15 	(3) the estimated cost of the improvement;
23.16 	(4) the available public resources;
23.17 	(5) the level of overlapping debt in the ~~city~~ municipality;
23.18 	(6) the relative benefits and costs of alternative uses of
23.19 	the funds;
23.20 	(7) operating costs of the proposed improvements; and
23.21 	(8) alternatives for providing services most efficiently
23.22 	through shared facilities with other ~~cities~~ municipalities or
23.23 	local government units.
23.24 	(b) The capital improvement plan and annual amendments to
23.25 	it must be approved by the ~~city council~~ governing body after
23.26 	public hearing.

23.27 	Sec. 31. Minnesota Statutes 2004, section 475.521,
23.28 	subdivision 4, is amended to read:
23.29 		Subd. 4.Limitations on amount.  A ~~city~~ municipality may
23.30 	not issue bonds under this section if the maximum amount of
23.31 	principal and interest to become due in any year on all the
23.32 	outstanding bonds issued under this section, including the bonds
23.33 	to be issued, will equal or exceed ~~0.05367~~ 0.16 percent of the 
23.34 	taxable market value of property in the ~~county~~ municipality.
23.35 	Calculation of the limit must be made using the taxable market
23.36 	value for the taxes payable year in which the obligations are
24.1 	issued and sold. In the case of a municipality with a
24.2 	population of 2,500 or more, the bonds are subject to the net
24.3 	debt limits under section 475.53.  In the case of a shared
24.4 	facility in which more than one municipality participates, upon
24.5 	compliance by each participating municipality with the
24.6 	requirements of subdivision 2, the limitations in this
24.7 	subdivision and the net debt represented by the bonds shall be
24.8 	allocated to each participating municipality in proportion to
24.9 	its required financial contribution to the financing of the
24.10 	shared facility, as set forth in the joint powers agreement
24.11 	relating to the shared facility.This section does not limit
24.12 	the authority to issue bonds under any other special or general
24.13 	law.

24.14 	Sec. 32. Laws 1996, chapter 412, article 5, section 24, is
24.15 	amended to read:

24.16 	Sec. 24. BONDS PAID FROM TACONITE PRODUCTION TAX
24.17 	REVENUES.
 24.18 		Subdivision 1.Refunding bonds. The appropriation of
24.19 	funds from the distribution of taconite production tax revenues
24.20 	to the taconite environmental protection tax fund and the
24.21 	northeast Minnesota economic protection fund made by Laws 1988,
24.22 	chapter 718, article 7, sections 62 and 63, Laws 1989, chapter
24.23 	329, article 5, section 20, Laws 1990, chapter 604, article 8,
24.24 	section 13, Laws 1992, chapter 499, article 5, section 29, ~~and~~
24.25 	~~by sections 18 to 20~~ Laws 1996, chapter 412, article 5, sections
24.26 	20 to 22, and Laws 2000, chapter 489, article 5, sections 24 to
24.27 	26, shall continue to apply to bonds issued under Minnesota
24.28 	Statutes, chapter 475, to refund bonds originally issued
24.29 	pursuant to those chapters.
24.30 		Subd. 2.Local payments. School districts that are
24.31 	required in Laws 1988, chapter 718, article 7, sections 62 and
24.32 	63, Laws 1989, chapter 329, article 5, section 20, Laws 1990,
24.33 	chapter 604, article 8, section 13, Laws 1992, chapter 499,
24.34 	article 5, section 29, ~~and by sections 18 to 20~~ Laws 1996,
24.35 	chapter 412, article 5, sections 20 to 22, and Laws 2000,
24.36 	chapter 489, article 5, sections 24 to 26, to impose levies to
25.1 	pay debt service on the bonds issued under those provisions to
25.2 	the extent the principal and interest on the bonds is not paid
25.3 	by distributions from the taconite environmental protection fund
25.4 	and the northeast Minnesota economic protection trust, may pay
25.5 	their portion of the principal and interest from any funds
25.6 	available to them.  To the extent a school district uses funds
25.7 	other than the proceeds of a property tax levy to pay its share
25.8 	of the principal and interest on the bonds, the requirement to
25.9 	impose a property tax to pay the local share does not apply to
25.10 	the school district.

25.11 	Sec. 33. Laws 2003, chapter 127, article 12, section 38,
25.12 	is amended to read:
25.13 	Sec. 38~~MEMBERS MUST~~ AUTHORITY TO LEVY TAXES ~~FOR~~
25.14 	~~AUTHORITY~~.
 25.15 	~~(a) A member shall, at the request of the authority, levy a~~
25.16 	~~tax in any year for the benefit of the authority.~~The authority
25.17 	is a special taxing district as defined in Minnesota Statutes,
25.18 	section 275.066, clause (13), with the power to adopt and
25.19 	certify a property tax levy to the county auditor.  The
25.20 	authority may levy a tax in any year for the benefit of the
25.21 	authority.The tax ~~is,~~for each member~~,~~is a pro rata portion
25.22 	of the total amount of tax requested by the authority based on
25.23 	the taxable market value within ~~a~~ the member's jurisdiction, but
25.24 	in no event may the tax in any year exceed 0.01813 percent of
25.25 	taxable market value.  For purposes of this section, "taxable
25.26 	market value" has the meaning as given in Minnesota Statutes,
25.27 	section 273.032.
25.28 	~~(b) The treasurer of each member city or town shall, within~~
25.29 	~~15 days after receiving the property tax settlements from the~~
25.30 	~~county treasurer, pay to the treasurer of the authority the~~
25.31 	~~amount collected for this purpose.  The money must be used by~~
25.32 	~~the authority for the purposes provided by sections 35 to 41.~~

25.33 	EFFECTIVE DATE. This section is effective for taxes
25.34 	levied in 2005, payable in 2006, and thereafter.

25.35 	Sec. 34. CITY OF BEMIDJI; DURATION EXTENSION FOR TAX
25.36 	ABATEMENT.
 26.1 	Notwithstanding the limitation in Minnesota Statutes,
26.2 	section 469.1813, subdivision 6, the city of Bemidji may extend
26.3 	the duration of the tax abatement given to support development
26.4 	within the fairgrounds district of the city for an additional
26.5 	four years beyond the duration permitted under that section.

26.6 	Sec. 35. TOWN OF WHITE; OBLIGATIONS AUTHORIZED.
 26.7 		Subdivision 1.Obligations. Notwithstanding any
26.8 	provision of law or charter to the contrary, the town of White
26.9 	may pledge its general obligation, as defined in Minnesota
26.10 	Statutes, section 475.51, subdivision 10, to secure the
26.11 	financing of local improvements as provided in this section.
26.12 		Subd. 2.Special rules. (a) The obligations are subject
26.13 	to the provisions of Minnesota Statutes, chapter 429, except as
26.14 	provided in this subdivision.
26.15 	(b) The obligations must be issued to finance:
26.16 	(1) the cost of local improvements described in Minnesota
26.17 	Statutes, section 429.021, located within the area referred to
26.18 	in Laws 2003, chapter 119, section 2;
26.19 	(2) any reserves required to market the obligation; and 
26.20 	(3) the costs of issuing the obligations.
26.21 	(c) The obligations must be additionally secured by special
26.22 	assessments levied or to be levied by the city of Biwabik within
26.23 	the area referred to in paragraph (b).
26.24 	(d) The pledge of special assessments by the city of
26.25 	Biwabik for the payment of the obligations must be made by
26.26 	written agreement by and between the town of White and the city
26.27 	of Biwabik and must be filed with the county auditor.
26.28 	(e) Notwithstanding Minnesota Statutes, section 475.58, no
26.29 	election is required to approve the obligations.
26.30 	(f) The obligations are not included in computing any debt
26.31 	limitation applicable to the town of White or the city of
26.32 	Biwabik, and the levy of taxes under Minnesota Statutes, section
26.33 	475.61, to pay principal of and interest on the obligations is
26.34 	not subject to any levy limitation.
26.35 	
EFFECTIVE DATE. This section is effective upon local
26.36 	approval by the town of White and the city of Biwabik in
27.1 	compliance with the requirements of Minnesota Statutes, section
27.2 	645.021.

27.3 	Sec. 36. SAUK RIVER WATERSHED DISTRICT.
 27.4 	Notwithstanding Minnesota Statutes, section 103D.905,
27.5 	subdivision 3, the Sauk River Watershed District may annually
27.6 	levy an additional amount up to $100,000 for its general fund.

27.7 	EFFECTIVE DATE. This section is effective, without local
27.8 	approval, beginning with the taxes levied in 2005, payable in
27.9 	2006.

27.10 	Sec. 37. DEFINITIONS.
 27.11 		Subdivision 1.Application. For the purposes of sections
27.12 	37 to 40, the terms defined in this section have the meanings
27.13 	given them.
27.14 		Subd. 2.City. "City" means the city of St. Paul, its
27.15 	mayor, city council, and any other board, authority, commission,
27.16 	or officer authorized by law, charter, or ordinance to exercise
27.17 	city powers of the nature referred to in sections 37 to 40.
27.18 		Subd. 3.Rivercentre complex. "RiverCentre complex"
27.19 	means collectively the auditorium, convention, conference and
27.20 	education center, arena, and parking ramp facilities presently
27.21 	and commonly known as the Roy Wilkins Auditorium, St. Paul
27.22 	RiverCentre, Xcel Energy Center, and RiverCentre Parking Ramp,
27.23 	including all property, real or personal, tangible or
27.24 	intangible, located in the city, intended to be used as part of
27.25 	the RiverCentre complex or additions to or extensions of it.

27.26 	Sec. 38. ST. PAUL; CREATION OF NONPROFIT ORGANIZATION.
 27.27 		Subdivision 1.Authority to create a nonprofit
27.28 	organization. As required under Minnesota Statutes, section
27.29 	465.717, and notwithstanding any other law, city charter
27.30 	provision, or ordinance to the contrary, the city of St. Paul
27.31 	may participate in the creation of a nonprofit organization for
27.32 	the purposes provided sections 37 to 40.
27.33 		Subd. 2.Governing board; appointment process. (a) The
27.34 	mayor of the city, subject to approval by the city council,
27.35 	shall appoint a majority of the members of the governing board
27.36 	of the nonprofit organization performing all or a part of the
28.1 	activities necessary to carry out the purposes specified in
28.2 	sections 37 to 40.  The mayor of the city may designate any
28.3 	officer or employee of the city to serve as a member of the
28.4 	governing board of any nonprofit organization.
28.5 	(b) In addition to the appointments made by the mayor under
28.6 	paragraph (a), the mayor of the city shall designate three
28.7 	members of the city council to serve on the governing board of
28.8 	the nonprofit organization.
28.9 	(c) Notwithstanding any provision contained in the articles
28.10 	of incorporation and bylaws of the nonprofit organization, any
28.11 	member of the governing board appointed by the mayor may be
28.12 	removed only by the mayor of the city for cause.
28.13 		Subd. 3.President. The governing board of the nonprofit
28.14 	organization shall select, subject to the approval of the mayor
28.15 	of the city, a president to serve as chief executive officer and
28.16 	general manager of the nonprofit organization.
28.17 		Subd. 4.Conflicts of interest. The procedures in
28.18 	Minnesota Statutes, section 317A.255, subdivision 1, paragraph
28.19 	(b), relating to director conflicts of interest, are not
28.20 	required if the contract or other transaction is between the
28.21 	city and the nonprofit organization.

28.22 	Sec. 39. RIVERCENTRE MANAGEMENT; OPERATIONS CONTRACT.
 28.23 		Subdivision 1.Authority to contract with nonprofit
28.24 	organization. The city may enter into an agreement with the
28.25 	nonprofit organization created in section 38 to equip, maintain,
28.26 	manage, and operate all or a portion of the RiverCentre complex
28.27 	and to manage and operate a convention bureau to market and
28.28 	promote the city as a tourist or convention center.  Except as
28.29 	otherwise provided in sections 37 to 40, the nonprofit
28.30 	organization may only contract and utilize and expend funds for
28.31 	these purposes under the direction of its governing board,
28.32 	subject to the accounting, financial reporting, and other
28.33 	conditions that the city may prescribe in a contract made under
28.34 	sections 37 to 40 between the city and the nonprofit
28.35 	organization.  The nonprofit organization may use the services
28.36 	of the office of the city attorney and the city's purchasing
29.1 	department.  All activities performed to carry out these
29.2 	purposes are deemed to be for a public purpose.
29.3 	Subd. 2.[BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX
29.4 	EXEMPTIONS PRESERVED.] (a) The city must protect the rights of
29.5 	holders of bonds issued for the RiverCentre complex, including
29.6 	preserving the tax-exempt status of the bonds.
29.7 	(b) The use and operation of the RiverCentre complex by the
29.8 	nonprofit organization with which the city contracts under
29.9 	sections 37 to 40 is a use, lease, or occupancy for public,
29.10 	governmental, and municipal purposes, and the complex is exempt
29.11 	from taxation by the state or any political subdivision of the
29.12 	state during such use, to the extent it would be exempt if the
29.13 	complex was equipped, maintained, managed, and operated by the
29.14 	city.
29.15 	(c) Gross receipts of tickets and admissions to events at
29.16 	the RiverCentre complex sponsored by the nonprofit organization
29.17 	created in section 38 do not qualify for the sales tax exemption
29.18 	under Minnesota Statutes, section 297A.70, subdivision 10.
29.19 		Subd. 3.Applicable general laws. The following statutes
29.20 	apply to the nonprofit organization with which the city
29.21 	contracts under sections 37 to 40 the same as they apply to the
29.22 	city:
29.23 	(a) Minnesota Statutes, chapter 13D, the Minnesota Open
29.24 	Meeting Law; and 
29.25 	(b) Minnesota Statutes, chapter 13, the Government Data
29.26 	Practices Act.
29.27 		Subd. 4.Succession. The nonprofit organization with
29.28 	which the city contracts under this act is the successor to all
29.29 	powers, rights, assets, privileges, and interests held and
29.30 	enjoyed by the RiverCentre authority on the effective date of
29.31 	sections 37 to 40, and established by the provisions of Laws
29.32 	1967, chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and
29.33 	3, clause (3), as amended; Laws 1982, chapter 523, article 25,
29.34 	sections 4 and 5, as amended; Laws 1998, chapter 404, sections
29.35 	81 and 82; and Minnesota Statutes, section 297A.98.  On the
29.36 	effective date of the contract between the city and the
30.1 	nonprofit organization authorized by sections 37 to 40, the
30.2 	RiverCentre authority ceases to exist for only so long as the
30.3 	contract is in effect, and all other laws or provisions
30.4 	specifically relating to the RiverCentre authority and the
30.5 	RiverCentre complex that are not otherwise referenced in
30.6 	sections 37 to 40, do not apply to the nonprofit organization.

30.7 	Sec. 40. LIABILITY.
 30.8 	The nonprofit organization with which the city contracts
30.9 	under sections 37 to 40 is a "municipality," and the officers,
30.10 	directors, employees, and agents of the nonprofit organization
30.11 	are "employees, officers, or agents," under Minnesota Statutes,
30.12 	chapter 466, relating to tort liability.  The city must defend,
30.13 	save harmless, and indemnify the nonprofit organization,
30.14 	including the nonprofit's officers, directors, employees, and
30.15 	agents, against any claim or demand arising out of the nonprofit
30.16 	organization's performance under the contract.

30.17 	Sec. 41. APPLICATION.
 30.18 	Sections 19, 20, 21, and 42 apply in the counties of Anoka,
30.19 	Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.

30.20 	Sec. 42. REPEALER.
 30.21 	Minnesota Statutes 2004, section 473.197, subdivisions 1,
30.22 	2, 3, and 5, are repealed.

30.23 	Sec. 43. EFFECTIVE DATE.
 30.24 	(a) Sections 1 and 37 to 40 are effective the day after the
30.25 	city council and the chief clerical officer of the city of St.
30.26 	Paul have timely completed their compliance with Minnesota
30.27 	Statutes, section 645.023, subdivisions 2 and 3.
30.28 	(b) Except as otherwise provided, this article is effective
30.29 	the day following final enactment.

30.30 	ARTICLE 2
30.31 	TAX INCREMENT FINANCING

30.32 	Section 1. Minnesota Statutes 2004, section 116J.556, is
30.33 	amended to read:
30.34 	116J.556 LOCAL MATCH REQUIREMENT.
30.35 	~~(a)~~ In order to qualify for a grant under sections 116J.551
30.36 	to 116J.557, the municipality must pay for at least one-quarter
31.1 	of the project costs as a local match.  The municipality shall
31.2 	pay an amount of the project costs equal to at least 12 percent
31.3 	of the cleanup costs from the municipality's general fund, a
31.4 	property tax levy for that purpose, or other unrestricted money
31.5 	available to the municipality (excluding tax increments).  These
31.6 	unrestricted moneys may be spent for project costs, other than
31.7 	cleanup costs, and qualify for the local match payment equal to
31.8 	12 percent of cleanup costs.  The rest of the local match may be
31.9 	paid with tax increments, regional, state, or federal money
31.10 	available for the redevelopment of brownfields or any other
31.11 	money available to the municipality.
31.12 	~~(b) If the development authority establishes a tax~~
31.13 	~~increment financing district or hazardous substance subdistrict~~
31.14 	~~on the site to pay for part of the local match requirement, the~~
31.15 	~~district or subdistrict must be decertified when an amount of~~
31.16 	~~tax increments equal to no more than three times the costs of~~
31.17 	~~implementing the response action plan for the site and the~~
31.18 	~~administrative costs for the district or subdistrict have been~~
31.19 	~~received, after deducting the amount of the state grant.~~

31.20 	EFFECTIVE DATE. This section is effective the day
31.21 	following final enactment.

31.22 	Sec. 2. Minnesota Statutes 2004, section 469.174,
31.23 	subdivision 11, is amended to read:
31.24 		Subd. 11.Housing district.  "Housing district" means a
31.25 	type of tax increment financing district which consists of a
31.26 	project, or a portion of a project, intended for occupancy, in
31.27 	part, by persons or families of low and moderate income, as
31.28 	defined in chapter 462A, Title II of the National Housing Act of
31.29 	1934, the National Housing Act of 1959, the United States
31.30 	Housing Act of 1937, as amended, Title V of the Housing Act of
31.31 	1949, as amended, any other similar present or future federal,
31.32 	state, or municipal legislation, or the regulations promulgated
31.33 	under any of those acts~~.  A district does not qualify as a~~
31.34 	~~housing district under this subdivision if the fair market value~~
31.35 	~~of the improvements which are constructed in the district for~~
31.36 	~~commercial uses or for uses other than low and moderate income~~
32.1 	~~housing consists of more than 20 percent of the total fair~~
32.2 	~~market value of the planned improvements in the development plan~~
32.3 	~~or agreement.  The fair market value of the improvements may be~~
32.4 	~~determined using the cost of construction, capitalized income,~~
32.5 	~~or other appropriate method of estimating market value~~ , and that
32.6 	satisfies the requirements of section 469.1761.  Housing project
32.7 	means a project, or a portion of a project, that meets all of
32.8 	the qualifications of a housing district under this subdivision,
32.9 	whether or not actually established as a housing district.
32.10 	
EFFECTIVE DATE. This section is effective for districts
32.11 	for which the request for certification was filed with the
32.12 	county auditor after October 5, 1989, except (1) the new
32.13 	language is effective for requests for certification made after
32.14 	June 30, 2005, and (2) the fair market value of the improvements
32.15 	which are constructed for commercial uses in a district for
32.16 	which the request for certification was filed with the county
32.17 	auditor after October 5, 1989, and before July 1, 2005, may not
32.18 	exceed more than 20 percent of total fair market value of the
32.19 	planned improvements in the development plan or agreement.

32.20 	Sec. 3. Minnesota Statutes 2004, section 469.174,
32.21 	subdivision 25, is amended to read:
32.22 		Subd. 25.Increment.  "Increment," "tax increment," "tax
32.23 	increment revenues," "revenues derived from tax increment," and
32.24 	other similar terms for a district include:
32.25 	(1) taxes paid by the captured net tax capacity, but
32.26 	excluding any excess taxes, as computed under section 469.177;
32.27 	(2) the proceeds from the sale or lease of property,
32.28 	tangible or intangible, to the extent the property was purchased
32.29 	by the authority with tax increments;
32.30 	(3) principal and interest received on loans or other
32.31 	advances made by the authority with tax increments; ~~and~~ 
32.32 	(4) interest or other investment earnings on or from tax
32.33 	increments;
32.34 	(5) repayments or return of tax increments made to the
32.35 	authority under agreements for districts for which the request
32.36 	for certification was made after August 1, 1993; and 
33.1 	(6) the market value homestead credit paid to the authority
33.2 	under section 273.1384.
33.3 	
EFFECTIVE DATE. This section is effective for tax
33.4 	increment financing districts, regardless of when the request
33.5 	for certification was made, including districts for which the
33.6 	request for certification was made before August 1, 1979,
33.7 	provided that the amendment to clause (2) applies only to the
33.8 	extent that the underlying provisions of clause (2) apply to the
33.9 	district and to the sale or lease under prior law.  This
33.10 	effective date does not affect the application of clause (1),
33.11 	(3), or (4).

33.12 	Sec. 4. Minnesota Statutes 2004, section 469.175,
33.13 	subdivision 1, is amended to read:
33.14 		Subdivision 1.Tax increment financing plan.  A tax
33.15 	increment financing plan shall contain:
33.16 	(1) a statement of objectives of an authority for the
33.17 	improvement of a project;
33.18 	(2) a statement as to the development program for the
33.19 	project, including the property within the project, if any, that
33.20 	the authority intends to acquire, identified by parcel number,
33.21 	identifiable property name, block, or other appropriate means
33.22 	indicating the area in which the authority intends to acquire
33.23 	properties;
33.24 	(3) a list of any development activities that the plan
33.25 	proposes to take place within the project, for which contracts
33.26 	have been entered into at the time of the preparation of the
33.27 	plan, including the names of the parties to the contract, the
33.28 	activity governed by the contract, the cost stated in the
33.29 	contract, and the expected date of completion of that activity;
33.30 	(4) identification or description of the type of any other
33.31 	specific development reasonably expected to take place within
33.32 	the project, and the date when the development is likely to
33.33 	occur;
33.34 	(5) estimates of the following:
33.35 	(i) cost of the project, including administrative expenses,
33.36 	except that if part of the cost of the project is paid or
34.1 	financed with increment from the tax increment financing
34.2 	district, the tax increment financing plan for the district must
34.3 	contain an estimate of the amount of the cost of the project,
34.4 	including administrative expenses, that will be paid or financed
34.5 	with tax increments from the district;
34.6 	(ii) amount of bonded indebtedness to be incurred;
34.7 	(iii) sources of revenue to finance or otherwise pay public
34.8 	costs;
34.9 	(iv) the most recent net tax capacity of taxable real
34.10 	property within the tax increment financing district and within
34.11 	any subdistrict;
34.12 	(v) the estimated captured net tax capacity of the tax
34.13 	increment financing district at completion; and
34.14 	(vi) the duration of the tax increment financing district's
34.15 	and any subdistrict's existence;
34.16 	(6) statements of the authority's alternate estimates of
34.17 	the impact of tax increment financing on the net tax capacities
34.18 	of all taxing jurisdictions in which the tax increment financing
34.19 	district is located in whole or in part.  For purposes of one
34.20 	statement, the authority shall assume that the estimated
34.21 	captured net tax capacity would be available to the taxing
34.22 	jurisdictions without creation of the district, and for purposes
34.23 	of the second statement, the authority shall assume that none of
34.24 	the estimated captured net tax capacity would be available to
34.25 	the taxing jurisdictions without creation of the district or
34.26 	subdistrict;
34.27 	(7) identification and description of studies and analyses
34.28 	used to make the determination set forth in subdivision 3,
34.29 	clause (2); and
34.30 	(8) identification of all parcels to be included in the
34.31 	district or any subdistrict.
34.32 	
EFFECTIVE DATE. This section is effective for tax
34.33 	increment financing plans and amendments to tax increment
34.34 	financing plans approved after June 30, 2005.

34.35 	Sec. 5. Minnesota Statutes 2004, section 469.175,
34.36 	subdivision 4a, is amended to read:
35.1 		Subd. 4a.Filing plan with state.  (a) The authority must
35.2 	file a copy of the tax increment financing plan and amendments
35.3 	to the plan with the commissioner of revenue and the state
35.4 	auditor.  The authority must also file a copy of the development
35.5 	plan or the project plan for the project area with the
35.6 	commissioner of revenue~~.  The commissioner of revenue shall~~
35.7 	~~provide a copy of a plan to the state auditor upon request~~ and
35.8 	the state auditor.
35.9 	(b) Filing under this subdivision must be made within 60
35.10 	days after the latest of:
35.11 	(1) the filing of the request for certification of the
35.12 	district;
35.13 	(2) approval of the plan by the municipality; or
35.14 	(3) adoption of the plan by the authority.
35.15 	
EFFECTIVE DATE. This section is effective for plans and
35.16 	amendments approved after June 30, 2005.

35.17 	Sec. 6. Minnesota Statutes 2004, section 469.175,
35.18 	subdivision 6, is amended to read:
35.19 		Subd. 6.Annual financial reporting.  (a) The state
35.20 	auditor shall develop a uniform system of accounting and
35.21 	financial reporting for tax increment financing districts.  The
35.22 	system of accounting and financial reporting shall, as nearly as
35.23 	possible:
35.24 	(1) provide for full disclosure of the sources and uses of
35.25 	public funds in the district;
35.26 	(2) permit comparison and reconciliation with the affected
35.27 	local government's accounts and financial reports;
35.28 	(3) permit auditing of the funds expended on behalf of a
35.29 	district, including a single district that is part of a
35.30 	multidistrict project or that is funded in part or whole through
35.31 	the use of a development account funded with tax increments from
35.32 	other districts or with other public money;
35.33 	(4) be consistent with generally accepted accounting
35.34 	principles.
35.35 	(b) The authority must annually submit to the state auditor
35.36 	a financial report in compliance with paragraph (a).  Copies of
36.1 	the report must also be provided to the county auditor and to
36.2 	the governing body of the municipality, if the authority is not
36.3 	the municipality.  To the extent necessary to permit compliance
36.4 	with the requirement of financial reporting, the county and any
36.5 	other appropriate local government unit or private entity must
36.6 	provide the necessary records or information to the authority or
36.7 	the state auditor as provided by the system of accounting and
36.8 	financial reporting developed pursuant to paragraph (a).  The
36.9 	authority must submit the annual report for a year on or before
36.10 	August 1 of the next year.
36.11 	(c) The annual financial report must also include the
36.12 	following items:
36.13 	(1) the original net tax capacity of the district and any
36.14 	subdistrict under section 469.177, subdivision 1;
36.15 	(2) the net tax capacity for the reporting period of the
36.16 	district and any subdistrict;
36.17 	(3) the captured net tax capacity of the district;
36.18 	(4) any fiscal disparity deduction from the captured net
36.19 	tax capacity under section 469.177, subdivision 3;
36.20 	(5) the captured net tax capacity retained for tax
36.21 	increment financing under section 469.177, subdivision 2,
36.22 	paragraph (a), clause (1);
36.23 	(6) any captured net tax capacity distributed among
36.24 	affected taxing districts under section 469.177, subdivision 2,
36.25 	paragraph (a), clause (2);
36.26 	(7) the type of district;
36.27 	(8) the date the municipality approved the tax increment
36.28 	financing plan and the date of approval of any modification of
36.29 	the tax increment financing plan, the approval of which requires
36.30 	notice, discussion, a public hearing, and findings under
36.31 	subdivision 4, paragraph (a);
36.32 	(9) the date the authority first requested certification of
36.33 	the original net tax capacity of the district and the date of
36.34 	the request for certification regarding any parcel added to the
36.35 	district;
36.36 	(10) the date the county auditor first certified the
37.1 	original net tax capacity of the district and the date of
37.2 	certification of the original net tax capacity of any parcel
37.3 	added to the district;
37.4 	(11) the month and year in which the authority has received
37.5 	or anticipates it will receive the first increment from the
37.6 	district;
37.7 	(12) the date the district must be decertified;
37.8 	(13) for the reporting period and prior years of the
37.9 	district, the actual amount received from, at least, the
37.10 	following categories:
37.11 	(i) tax increments paid by the captured net tax capacity
37.12 	retained for tax increment financing under section 469.177,
37.13 	subdivision 2, paragraph (a), clause (1), but excluding any
37.14 	excess taxes;
37.15 	(ii) tax increments that are interest or other investment
37.16 	earnings on or from tax increments;
37.17 	(iii) tax increments that are proceeds from the sale or
37.18 	lease of property, tangible or intangible, purchased by the
37.19 	authority with tax increments;
37.20 	(iv) tax increments that are repayments of loans or other
37.21 	advances made by the authority with tax increments;
37.22 	(v) bond or loan proceeds;
37.23 	(vi) special assessments;
37.24 	(vii) grants; ~~and~~ 
37.25 	(viii) transfers from funds not exclusively associated with
37.26 	the district; and 
37.27 	(ix) the market value homestead credit paid to the
37.28 	authority under section 273.1384;
37.29 	(14) for the reporting period and for the prior years of
37.30 	the district, the actual amount expended for, at least, the
37.31 	following categories:
37.32 	(i) acquisition of land and buildings through condemnation
37.33 	or purchase;
37.34 	(ii) site improvements or preparation costs;
37.35 	(iii) installation of public utilities, parking facilities,
37.36 	streets, roads, sidewalks, or other similar public improvements;
38.1 	(iv) administrative costs, including the allocated cost of
38.2 	the authority;
38.3 	(v) public park facilities, facilities for social,
38.4 	recreational, or conference purposes, or other similar public
38.5 	improvements; and
38.6 	(vi) transfers to funds not exclusively associated with the
38.7 	district;
38.8 	(15) ~~for properties sold to developers, the total cost of~~
38.9 	~~the property to the authority and the price paid by the~~
38.10 	~~developer;~~
38.11 	~~(16) the amount of any payments and the value of any~~
38.12 	~~in-kind benefits, such as physical improvements and the use of~~
38.13 	~~building space, that are paid or financed with tax increments~~
38.14 	~~and are provided to another governmental unit other than the~~
38.15 	~~municipality during the reporting period;~~
38.16 	~~(17)~~ the amount of any payments for activities and
38.17 	improvements located outside of the district that are paid for
38.18 	or financed with tax increments;
38.19 	~~(18)~~ (16) the amount of payments of principal and interest
38.20 	that are made during the reporting period on any nondefeased:
38.21 	(i) general obligation tax increment financing bonds;
38.22 	(ii) other tax increment financing bonds; and
38.23 	(iii) notes and pay-as-you-go contracts;
38.24 	~~(19)~~ (17) the principal amount, at the end of the reporting
38.25 	period, of any nondefeased:
38.26 	(i) general obligation tax increment financing bonds;
38.27 	(ii) other tax increment financing bonds; and
38.28 	(iii) notes and pay-as-you-go contracts;
38.29 	~~(20)~~ (18) the amount of principal and interest payments
38.30 	that are due for the current calendar year on any nondefeased:
38.31 	(i) general obligation tax increment financing bonds;
38.32 	(ii) other tax increment financing bonds; and
38.33 	(iii) notes and pay-as-you-go contracts;
38.34 	~~(21)~~ (19) if the fiscal disparities contribution under
38.35 	chapter 276A or 473F for the district is computed under section
38.36 	469.177, subdivision 3, paragraph (a), the amount of increased
39.1 	property taxes imposed on other properties in the municipality
39.2 	that approved the tax increment financing plan as a result of
39.3 	the fiscal disparities contribution;
39.4 	~~(22) whether the tax increment financing plan or other~~
39.5 	~~governing document permits increment revenues to be expended:~~
39.6 	~~(i) to pay bonds, the proceeds of which were or may be~~
39.7 	~~expended on activities outside of the district;~~
39.8 	~~(ii) for deposit into a common bond fund from which money~~
39.9 	~~may be expended on activities located outside of the district;~~
39.10 	~~or~~ 
39.11 	~~(iii) to otherwise finance activities located outside of~~
39.12 	~~the tax increment financing district;~~
39.13 	~~(23)~~ (20) the estimate, if any, contained in the tax
39.14 	increment financing plan of the amount of the cost of the
39.15 	project, including administrative expenses, that will be paid or
39.16 	financed with tax increment; and
39.17 	~~(24)~~ (21) any additional information the state auditor may
39.18 	require.
39.19 	(d) The commissioner of revenue shall prescribe the method
39.20 	of calculating the increased property taxes under paragraph (c),
39.21 	clause ~~(21)~~ (19), and the form of the statement disclosing this
39.22 	information on the annual statement under subdivision 5.
39.23 	(e) The reporting requirements imposed by this subdivision
39.24 	apply to districts certified before, on, and after August 1,
39.25 	1979.
39.26 	
EFFECTIVE DATE. This section is effective for reports
39.27 	required to be filed after December 31, 2005.

39.28 	Sec. 7. Minnesota Statutes 2004, section 469.176,
39.29 	subdivision 2, is amended to read:
39.30 		Subd. 2.Excess increments.  (a) The authority shall
39.31 	annually determine the amount of excess increments for a
39.32 	district, if any.  This determination must be based on the tax
39.33 	increment financing plan in effect on December 31 of the year
39.34 	and the increments and other revenues received as of December 31
39.35 	of the year. The authority must spend or return the excess
39.36 	increments under paragraph (c) within nine months after the end
40.1 	of the year.
40.2 	(b) For purposes of this subdivision, "excess increments"
40.3 	equals the excess of:
40.4 	(1) total increments collected from the district since its
40.5 	certification, reduced by any excess increments paid under
40.6 	paragraph (c), clause (4), for a prior year, over
40.7 	(2) the total costs authorized by the tax increment
40.8 	financing plan to be paid with increments from the district,
40.9 	reduced, but not below zero, by the sum of:
40.10 	(i) the amounts of those authorized costs that have been
40.11 	paid from sources other than tax increments from the district;
40.12 	(ii) revenues, other than tax increments from the district,
40.13 	that are dedicated for or otherwise required to be used to pay
40.14 	those authorized costs and that the authority has received and
40.15 	that are not included in item (i); ~~and~~ 
40.16 	(iii) the amount of principal and interest obligations due
40.17 	on outstanding bonds after December 31 of the year and not
40.18 	prepaid under paragraph (c) in a prior year; and 
40.19 	(iv) increased by the sum of the transfers of increments
40.20 	made under section 469.1763, subdivision 6, to reduce deficits
40.21 	in other districts made by December 31 of the year.
40.22 	(c) The authority shall use excess increment only to do one
40.23 	or more of the following:
40.24 	(1) prepay any outstanding bonds;
40.25 	(2) discharge the pledge of tax increment for any
40.26 	outstanding bonds;
40.27 	(3) pay into an escrow account dedicated to the payment of
40.28 	any outstanding bonds; or
40.29 	(4) return the excess amount to the county auditor who
40.30 	shall distribute the excess amount to the city or town, county,
40.31 	and school district in which the tax increment financing
40.32 	district is located in direct proportion to their respective
40.33 	local tax rates.
40.34 	(d) For purposes of a district for which the request for
40.35 	certification was made prior to August 1, 1979, excess
40.36 	increments equal the amount of increments on hand on December
41.1 	31, less the principal and interest obligations due on
41.2 	outstanding bonds or advances, qualifying under subdivision 1c,
41.3 	clauses (1), (2), and (5), after December 31 of the year and not
41.4 	prepaid under paragraph (c).
41.5 	(e) The county auditor must report to the commissioner of
41.6 	education the amount of any excess tax increment distributed to
41.7 	a school district within 30 days of the distribution.
41.8 	(f) For purposes of this subdivision, "outstanding bonds"
41.9 	means bonds which are secured by increments from the district.
41.10 	
EFFECTIVE DATE. This section is effective for districts,
41.11 	regardless of when the request for certification was made, and
41.12 	applies to calculations of excess increments beginning in
41.13 	calendar year 2005.

41.14 	Sec. 8. Minnesota Statutes 2004, section 469.176,
41.15 	subdivision 4d, is amended to read:
41.16 		Subd. 4d.Housing districts.  Revenue derived from tax
41.17 	increment from a housing district must be used solely to finance
41.18 	the cost of housing projects as defined in ~~section~~ sections 
41.19 	469.174, subdivision 11, and 469.1761.  The cost of public
41.20 	improvements directly related to the housing projects and the
41.21 	allocated administrative expenses of the authority may be
41.22 	included in the cost of a housing project.
41.23 	
EFFECTIVE DATE. This section is effective for all
41.24 	districts to which the provisions of Minnesota Statutes, section
41.25 	469.1761, apply.

41.26 	Sec. 9. Minnesota Statutes 2004, section 469.1761,
41.27 	subdivision 1, is amended to read:
41.28 		Subdivision 1.Requirement imposed. (a) In order for a
41.29 	tax increment financing district to qualify as a housing
41.30 	district~~,~~:
41.31 	(1) the income limitations provided in this section must be
41.32 	satisfied; and 
41.33 	(2) no more than 20 percent of the square footage of
41.34 	buildings that receive assistance from tax increments may
41.35 	consist of commercial, retail, or other nonresidential uses.
41.36 	(b) The requirements imposed by this section apply to
42.1 	~~residential~~ property receiving assistance financed with tax
42.2 	increments, including interest reduction, land transfers at less
42.3 	than the authority's cost of acquisition, utility service or
42.4 	connections, roads, parking facilities,or other subsidies.  The
42.5 	provisions of this section do not apply to districts located in
42.6 	a targeted area as defined in section 462C.02, subdivision 9,
42.7 	clause (e).
42.8 	
EFFECTIVE DATE. This section is effective for districts
42.9 	for which the request for certification was made after June 30,
42.10 	2005.

42.11 	Sec. 10. Minnesota Statutes 2004, section 469.1761,
42.12 	subdivision 3, is amended to read:
42.13 		Subd. 3.Rental property.  For residential rental
42.14 	property, the property must satisfy the income requirements for
42.15 	a qualified residential rental project as defined in section
42.16 	142(d) of the Internal Revenue Code. ~~A property also satisfies~~
42.17 	~~the requirements of section 142(d) if 50 percent of the~~
42.18 	~~residential units in the project are occupied by individuals~~
42.19 	~~whose income is 80 percent or less of area median gross income.~~
42.20 	The requirements of this subdivision apply for the duration of
42.21 	the tax increment financing district.
42.22 	
EFFECTIVE DATE. This section is effective for districts
42.23 	for which the request for certification was made after June 30,
42.24 	2004.

42.25 	Sec. 11. Minnesota Statutes 2004, section 469.1763,
42.26 	subdivision 6, is amended to read:
42.27 		Subd. 6.Pooling permitted for deficits.  (a) This
42.28 	subdivision applies only to districts for which the request for
42.29 	certification was made before August 1, 2001, and without regard
42.30 	to whether the request for certification was made prior to
42.31 	August 1, 1979.
42.32 	(b) The municipality for the district may transfer
42.33 	available increments from another tax increment financing
42.34 	district located in the municipality, if the transfer is
42.35 	necessary to eliminate a deficit in the district to which the
42.36 	increments are transferred.  A deficit in the district for
43.1 	purposes of this subdivision means the lesser of the following
43.2 	two amounts:
43.3 	(1)(i) the amount due during the calendar year to pay
43.4 	preexisting obligations of the district; minus
43.5 	(ii) the total increments collected or to be collected from
43.6 	properties located within the district that are available for
43.7 	the calendar year including amounts collected in prior years
43.8 	that are currently available; plus
43.9 	(iii) total increments from properties located in other
43.10 	districts in the municipality including amounts collected in
43.11 	prior years that are available to be used to meet the district's
43.12 	obligations under this section, excluding this subdivision, or
43.13 	other provisions of law (but excluding a special tax under
43.14 	section 469.1791 and the grant program under Laws 1997, chapter
43.15 	231, article 1, section 19, or Laws 2001, First Special Session
43.16 	chapter 5); or
43.17 	(2) the reduction in increments collected from properties
43.18 	located in the district for the calendar year as a result of the
43.19 	changes in class rates in Laws 1997, chapter 231, article 1;
43.20 	Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243,
43.21 	and Laws 2001, First Special Session chapter 5, or the
43.22 	elimination of the general education tax levy under Laws 2001,
43.23 	First Special Session chapter 5.
43.24 	The authority may compute the deficit amount under clause
43.25 	(1) only (without regard to the limit under clause (2)) if the
43.26 	authority makes an irrevocable commitment, by resolution, to use
43.27 	increments from the district to which increments are to be
43.28 	transferred and any transferred increments only to pay
43.29 	preexisting obligations and administrative expenses for the
43.30 	district that are required to be paid under section 469.176,
43.31 	subdivision 4h, paragraph (a).
43.32 	(c) A preexisting obligation means:
43.33 	(1) bonds issued and sold before August 1, 2001, or bonds
43.34 	issued pursuant to a binding contract requiring the issuance of
43.35 	bonds entered into before July 1, 2001, and bonds issued to
43.36 	refund such bonds or to reimburse expenditures made in
44.1 	conjunction with a signed contractual agreement entered into
44.2 	before August 1, 2001, to the extent that the bonds are secured
44.3 	by a pledge of increments from the tax increment financing
44.4 	district; and
44.5 	(2) binding contracts entered into before August 1, 2001,
44.6 	to the extent that the contracts require payments secured by a
44.7 	pledge of increments from the tax increment financing district.
44.8 	(d) The municipality may require a development authority,
44.9 	other than a seaway port authority, to transfer available
44.10 	increments including amounts collected in prior years that are
44.11 	currently available for any of its tax increment financing
44.12 	districts in the municipality to make up an insufficiency in
44.13 	another district in the municipality, regardless of whether the
44.14 	district was established by the development authority or another
44.15 	development authority.  This authority applies notwithstanding
44.16 	any law to the contrary, but applies only to a development
44.17 	authority that:
44.18 	(1) was established by the municipality; or
44.19 	(2) the governing body of which is appointed, in whole or
44.20 	part, by the municipality or an officer of the municipality or
44.21 	which consists, in whole or part, of members of the governing
44.22 	body of the municipality.  The municipality may use this
44.23 	authority only after it has first used all available increments
44.24 	of the receiving development authority to eliminate the
44.25 	insufficiency and exercised any permitted action under section
44.26 	469.1792, subdivision 3, for preexisting districts of the
44.27 	receiving development authority to eliminate the insufficiency.
44.28 	(e) The authority under this subdivision to spend tax
44.29 	increments outside of the area of the district from which the
44.30 	tax increments were collected:
44.31 	(1) is an exception to the restrictions under section
44.32 	469.176, ~~subdivision~~ subdivisions 4b, 4c, 4d, 4e,4i, and 4j;
44.33 	the expenditure limits under section 469.176, subdivision 1c;
44.34 	and the other provisions of this section~~,~~;and the percentage
44.35 	restrictions under subdivision 2 must be calculated after
44.36 	deducting increments spent under this subdivision from the total
45.1 	increments for the district; and
45.2 	(2) applies notwithstanding the provisions of the Tax
45.3 	Increment Financing Act in effect for districts for which the
45.4 	request for certification was made before June 30, 1982, or any
45.5 	other law to the contrary.
45.6 	(f) If a preexisting obligation requires the development
45.7 	authority to pay an amount that is limited to the increment from
45.8 	the district or a specific development within the district and
45.9 	if the obligation requires paying a higher amount to the extent
45.10 	that increments are available, the municipality may determine
45.11 	that the amount due under the preexisting obligation equals the
45.12 	higher amount and may authorize the transfer of increments under
45.13 	this subdivision to pay up to the higher amount.  The existence
45.14 	of a guarantee of obligations by the individual or entity that
45.15 	would receive the payment under this paragraph is disregarded in
45.16 	the determination of eligibility to pool under this
45.17 	subdivision.  The authority to transfer increments under this
45.18 	paragraph may only be used to the extent that the payment of all
45.19 	other preexisting obligations in the municipality due during the
45.20 	calendar year have been satisfied.
45.21 	(g) For transfers of increments made in calendar year 2005
45.22 	and later, the reduction in increments as a result of the
45.23 	elimination of the general education tax levy for purposes of
45.24 	paragraph (b), clause (2), for a taxes payable year equals the
45.25 	general education tax rate for the school district under
45.26 	Minnesota Statutes 2000, section 273.1382, subdivision 1, for
45.27 	taxes payable in 2001, multiplied by the captured tax capacity
45.28 	of the district for the current taxes payable year.
45.29 	
EFFECTIVE DATE. This section applies to transfers of
45.30 	increments made after the effective date of the original
45.31 	enactment of Minnesota Statutes, section 469.1763, subdivision 6.

45.32 	Sec. 12. Minnesota Statutes 2004, section 469.177,
45.33 	subdivision 1, is amended to read:
45.34 		Subdivision 1.Original net tax capacity.  (a) Upon or
45.35 	after adoption of a tax increment financing plan, the auditor of
45.36 	any county in which the district is situated shall, upon request
46.1 	of the authority, certify the original net tax capacity of the
46.2 	tax increment financing district and that portion of the
46.3 	district overlying any subdistrict as described in the tax
46.4 	increment financing plan and shall certify in each year
46.5 	thereafter the amount by which the original net tax capacity has
46.6 	increased or decreased as a result of a change in tax exempt
46.7 	status of property within the district and any subdistrict,
46.8 	reduction or enlargement of the district or changes pursuant to
46.9 	subdivision 4.
46.10 	(b) If the classification under section 273.13 of property
46.11 	located in a district changes to a classification that has a
46.12 	different assessment ratio, the original net tax capacity of
46.13 	that property must be redetermined at the time when its use is
46.14 	changed as if the property had originally been classified in the
46.15 	same class in which it is classified after its use is changed.
46.16 	(c) The amount to be added to the original net tax capacity
46.17 	of the district as a result of previously tax exempt real
46.18 	property within the district becoming taxable equals the net tax
46.19 	capacity of the real property as most recently assessed pursuant
46.20 	to section 273.18 or, if that assessment was made more than one
46.21 	year prior to the date of title transfer rendering the property
46.22 	taxable, the net tax capacity assessed by the assessor at the
46.23 	time of the transfer.  If improvements are made to tax exempt
46.24 	property after certification of the district and before the
46.25 	parcel becomes taxable, the assessor shall, at the request of
46.26 	the authority, separately assess the estimated market value of
46.27 	the improvements.  If the property becomes taxable, the county
46.28 	auditor shall add to original net tax capacity, the net tax
46.29 	capacity of the parcel, excluding the separately assessed
46.30 	improvements.  If substantial taxable improvements were made to
46.31 	a parcel after certification of the district and if the property
46.32 	later becomes tax exempt, in whole or part, as a result of the
46.33 	authority acquiring the property through foreclosure or exercise
46.34 	of remedies under a lease or other revenue agreement or as a
46.35 	result of tax forfeiture, the amount to be added to the original
46.36 	net tax capacity of the district as a result of the property
47.1 	again becoming taxable is the amount of the parcel's value that
47.2 	was included in original net tax capacity when the parcel was
47.3 	first certified.  The amount to be added to the original net tax
47.4 	capacity of the district as a result of enlargements equals the
47.5 	net tax capacity of the added real property as most recently
47.6 	certified by the commissioner of revenue as of the date of
47.7 	modification of the tax increment financing plan pursuant to
47.8 	section 469.175, subdivision 4.
47.9 	(d) If the net tax capacity of a property increases because
47.10 	the property no longer qualifies under the Minnesota
47.11 	Agricultural Property Tax Law, section 273.111; the Minnesota
47.12 	Open Space Property Tax Law, section 273.112; or the
47.13 	Metropolitan Agricultural Preserves Act, chapter 473H, or
47.14 	because platted, unimproved property is improved or ~~three years~~
47.15 	~~pass~~ market value is increased after approval of the plat under
47.16 	section 273.11, subdivision ~~1~~ 14, 14a, or 14b, the increase in
47.17 	net tax capacity must be added to the original net tax capacity.
47.18 	(e) The amount to be subtracted from the original net tax
47.19 	capacity of the district as a result of previously taxable real
47.20 	property within the district becoming tax exempt, or a reduction
47.21 	in the geographic area of the district, shall be the amount of
47.22 	original net tax capacity initially attributed to the property
47.23 	becoming tax exempt or being removed from the district.  If the
47.24 	net tax capacity of property located within the tax increment
47.25 	financing district is reduced by reason of a court-ordered
47.26 	abatement, stipulation agreement, voluntary abatement made by
47.27 	the assessor or auditor or by order of the commissioner of
47.28 	revenue, the reduction shall be applied to the original net tax
47.29 	capacity of the district when the property upon which the
47.30 	abatement is made has not been improved since the date of
47.31 	certification of the district and to the captured net tax
47.32 	capacity of the district in each year thereafter when the
47.33 	abatement relates to improvements made after the date of
47.34 	certification.  The county auditor may specify reasonable form
47.35 	and content of the request for certification of the authority
47.36 	and any modification thereof pursuant to section 469.175,
48.1 	subdivision 4.
48.2 	(f) If a parcel of property contained a substandard
48.3 	building that was demolished or removed and if the authority
48.4 	elects to treat the parcel as occupied by a substandard building
48.5 	under section 469.174, subdivision 10, paragraph (b), the
48.6 	auditor shall certify the original net tax capacity of the
48.7 	parcel using the greater of (1) the current net tax capacity of
48.8 	the parcel, or (2) the estimated market value of the parcel for
48.9 	the year in which the building was demolished or removed, but
48.10 	applying the class rates for the current year.
48.11 	(g) For a redevelopment district qualifying under section
48.12 	469.174, subdivision 10, paragraph (a), clause (4), as a
48.13 	qualified disaster area, the auditor shall certify the value of
48.14 	the land as the original tax capacity for any parcel in the
48.15 	district that contains a building that suffered substantial
48.16 	damage as a result of the disaster or emergency.
48.17 	
EFFECTIVE DATE. This section is effective for land
48.18 	platted on or after August 1, 1991.

48.19 	Sec. 13. Minnesota Statutes 2004, section 469.1771,
48.20 	subdivision 5, is amended to read:
48.21 		Subd. 5.Disposition of payments.  If the authority does
48.22 	not have sufficient increments or other available money to make
48.23 	a payment required by this section, the municipality that
48.24 	approved the district must use any available money to make the
48.25 	payment including the levying of property taxes.  Money received
48.26 	by the county auditor under this section must be distributed as
48.27 	excess increments under section 469.176, subdivision 2,
48.28 	paragraph ~~(a)~~ (c), clause (4), except that if the county auditor
48.29 	receives the payment after (1) 60 days from a municipality's
48.30 	receipt of the state auditor's notification under subdivision 1,
48.31 	paragraph (c), of noncompliance requiring the payment, or (2)
48.32 	the commencement of an action by the county attorney to compel
48.33 	the payment, then no distributions may be made to the
48.34 	municipality that approved the tax increment financing district.
48.35 	
EFFECTIVE DATE. This section is effective at the same
48.36 	time as the amendments to Minnesota Statutes, section 469.176,
49.1 	subdivision 2, by Laws 2003, chapter 127, article 10, section 11.

49.2 	Sec. 14. Minnesota Statutes 2004, section 469.178,
49.3 	subdivision 1, is amended to read:
49.4 		Subdivision 1.Generally.  Notwithstanding any other law,
49.5 	no bonds, payment for which tax increment is pledged, shall be
49.6 	issued in connection with any project for which tax increment
49.7 	financing has been undertaken except as authorized in this
49.8 	section.  The proceeds from the bonds shall be used only in
49.9 	accordance with section 469.176, ~~subdivision~~ subdivisions 4 to
49.10 	4l, as if the proceeds were tax increment, except that a tax
49.11 	increment financing plan need not be adopted for any project for
49.12 	which tax increment financing has been undertaken prior to
49.13 	August 1, 1979, pursuant to laws not requiring a tax increment
49.14 	financing plan.  The bonds are not included for purposes of
49.15 	computing the net debt of any municipality.
49.16 	
EFFECTIVE DATE. This section is effective for tax
49.17 	increment financing districts for which the request for
49.18 	certification was made after August 1, 1979.

49.19 	Sec. 15. EXTENSION OF TIME TO EXPEND TAX INCREMENT.
 49.20 	Notwithstanding any contrary provision of law or charter,
49.21 	for tax increment financing district number 3, established on
49.22 	December 19, 1994, by Brooklyn Center Resolution No. 94-273,
49.23 	Minnesota Statutes, section 469.1763, subdivision 3, applies to
49.24 	the district by permitting a period of 13 years for commencement
49.25 	of activities within the district.

49.26 	EFFECTIVE DATE. This section is effective upon approval
49.27 	by the governing body of the city of Brooklyn Center and
49.28 	compliance with Minnesota Statutes, section 645.021, subdivision
49.29 	3.

49.30 	Sec. 16. FAIRMONT; ABATEMENT AUTHORITY.
 49.31 	The city of Fairmont, Martin County, and Independent School
49.32 	District No. 2752, Fairmont Area Schools, may each grant an
49.33 	abatement under Minnesota Statutes, sections 469.1812 to
49.34 	469.1815, for property located in tax increment financing
49.35 	district No. 20 in the city of Fairmont, notwithstanding any law
49.36 	to the contrary.  The total amount of the abatement for each
50.1 	political subdivision may not exceed the taxes paid by the
50.2 	original tax capacity of the district for each year of its
50.3 	existence.  Notwithstanding Minnesota Statutes, section 471.87,
50.4 	or any other law governing conflicts of interest, a local
50.5 	elected official may have a financial interest in and benefit
50.6 	from the tax abatement authorized in this section if the
50.7 	official discloses the interest and potential benefit on the
50.8 	record, and abstains from voting on the matter.

50.9 	EFFECTIVE DATE. This section is effective the day
50.10 	following final enactment.

50.11 	Sec. 17. WABASHA TAX INCREMENT FINANCING DISTRICT.
 50.12 		Subdivision 1.District extension. The governing body of
50.13 	the city of Wabasha may elect to extend the duration of its
50.14 	redevelopment tax increment financing district number 3 by up to
50.15 	three additional years.
50.16 		Subd. 2.Five-year rule. The requirements of Minnesota
50.17 	Statutes, section 469.1763, subdivision 3, that activities must
50.18 	be undertaken within a five-year period from the date of
50.19 	certification of a tax increment financing district must be
50.20 	considered to be met for the city of Wabasha redevelopment tax
50.21 	increment district number 3, if the activities are undertaken
50.22 	within ten years from the date of certification of the district.
50.23 		Subd. 3.National eagle center. Notwithstanding the
50.24 	provisions of Minnesota Statutes, section 469.176, subdivision
50.25 	4l, or any other law, the city of Wabasha may spend the proceeds
50.26 	of tax increment bonds issued prior to January 1, 2000, to pay
50.27 	the costs of acquiring and constructing a National Eagle Center
50.28 	in the city.  The city of Wabasha may also use tax increment
50.29 	from its tax increment districts to pay the debt service on such
50.30 	bonds, or any bonds issued to refund such bonds, subject to
50.31 	legal restrictions on the pooling of tax increment.  These bonds
50.32 	may not be treated as preexisting obligations under Minnesota
50.33 	Statutes, section 469.1794.
50.34 		Subd. 4.Pooling. Except as otherwise specifically
50.35 	provided in this section, all increments from district number 3
50.36 	must be spent on activities within the district and
51.1 	administrative expenses.
51.2 	
EFFECTIVE DATE. Subdivision 1 is effective upon
51.3 	compliance with Minnesota Statutes, sections 469.1782,
51.4 	subdivision 2, and 645.021.  Subdivisions 2 and 3 are effective
51.5 	upon compliance by the governing body of the city of Wabasha
51.6 	with Minnesota Statutes, section 645.021.

51.7 	Sec. 18. CITY OF RICHFIELD; TAX INCREMENT FINANCING
51.8 	DISTRICT.
 51.9 		Subdivision 1.Authorization. The city of Richfield may
51.10 	create a tax increment financing district consisting of an area
51.11 	lying west of Trunk Highway 77 extending:  to 16th Avenue
51.12 	between Crosstown Highway 62 and 66th Street; to 17th Avenue
51.13 	between 66th and 69th Streets; and to 18th Avenue between 69th
51.14 	and 72nd Streets.  The city or its housing and redevelopment
51.15 	authority may be the authority for the purposes of Minnesota
51.16 	Statutes, sections 469.174 to 469.179.
51.17 		Subd. 2.District is redevelopment district. The
51.18 	redevelopment tax increment district created pursuant to
51.19 	subdivision 1 is deemed to be a redevelopment district and is
51.20 	subject to Minnesota Statutes, sections 469.174 to 469.179,
51.21 	except that:
51.22 	(1) expenditures for activities as defined in Minnesota
51.23 	Statutes, section 469.1763, subdivision 1, paragraph (b),
51.24 	anywhere in the district are deemed to be the costs of
51.25 	correcting conditions that allow the designation of
51.26 	redevelopment districts pursuant to Minnesota Statutes, section
51.27 	469.174, subdivision 10; and 
51.28 	(2) the five-year rule under Minnesota Statutes, section
51.29 	469.1763, subdivision 3, does not apply.
51.30 	
EFFECTIVE DATE. This section is effective upon local
51.31 	approval by the city of Richfield in compliance with Minnesota
51.32 	Statutes, section 645.021.

51.33 	Sec. 19. CITY OF MOUNDS VIEW; TAX INCREMENT FINANCING
51.34 	DISTRICT.
 51.35 		Subdivision 1.Establishment. The city of Mounds View
51.36 	may establish within the corporate boundaries of the city one or
52.1 	more economic development tax increment financing districts
52.2 	subject to the special rules under subdivision 2.  The districts
52.3 	must be located on property that is currently exempt from
52.4 	taxation and within the area bounded by, and including, on the
52.5 	north County Road J west of Coral Sea Street and 82nd Lane NE
52.6 	east of Coral Sea Street, on the east Coral Sea Street north of
52.7 	82nd Lane NE and Interstate Highway 35W south of 82nd Lane NE,
52.8 	on the south and southwest U.S. Highway 10, and on the west the
52.9 	western boundary of Outlot A, Sysco, according to the recorded
52.10 	plat thereof, and situated in Ramsey County, Minnesota.
52.11 		Subd. 2.Special rules. (a) If the city elects upon the
52.12 	adoption of the tax increment financing plan for the district,
52.13 	the rules under this section apply to the district.
52.14 	(b) The duration limit under Minnesota Statutes, section
52.15 	469.176, subdivision 1b, clause (3), is extended to 25 years
52.16 	after receipt of the first increment.
52.17 	(c) The five-year rule under Minnesota Statutes, section
52.18 	469.1763, subdivision 3, is extended to a ten-year period.
52.19 	(d) The limitations on spending increment outside of the
52.20 	district under Minnesota Statutes, section 469.1763, subdivision
52.21 	2, and on spending increment for developments more than 15
52.22 	percent of the square footage of which is used for purposes
52.23 	other than those listed in Minnesota Statutes, section 469.176,
52.24 	subdivision 4c, do not apply.  Increments may only be expended
52.25 	on costs, improvements, or activities:
52.26 	(1) within the area defined in subdivision 1 and related to
52.27 	development occurring within the area defined in subdivision 1,
52.28 	whether or not included in a tax increment financing district;
52.29 	and 
52.30 	(2) consisting of one or more of the following:
52.31 	(i) acquisition and removal of existing billboards;
52.32 	(ii) acquisition of land and easements, if the parcel is
52.33 	occupied by a building constructed before 1990;
52.34 	(iii) sanitary sewer, sewer, and water improvements;
52.35 	(iv) road improvements;
52.36 	(v) parking, including structured parking; and 
53.1 	(vi) administrative expenses.
53.2 	(e) Notwithstanding paragraph (d), clause (1), increments
53.3 	may be expended on costs, improvements, or activities outside
53.4 	the area defined in subdivision 1, wherever located, whether or
53.5 	not included in a redevelopment tax increment financing
53.6 	district, for sanitary sewer, sewer, and water improvements and
53.7 	improvements to Coral Sea Street, Airport Road, 82nd Lane NE,
53.8 	County Road J, U.S. Highway 10, and Interstate Highway 35W so
53.9 	long as the improvements are related to development within the
53.10 	area defined in subdivision 1.
53.11 	(f) The limitation on the ability to elect the method of
53.12 	computation under Minnesota Statutes, section 469.177,
53.13 	subdivision 3, for an economic development district does not
53.14 	apply and the city or authority may elect the method of
53.15 	computation under paragraph (a) or (b) of section 469.177,
53.16 	subdivision 3.
53.17 		Subd. 3.Expiration. The authority to approve tax
53.18 	increment financing plans to establish a tax increment financing
53.19 	district under this section expires on December 31, 2015.
53.20 	
EFFECTIVE DATE. This section is effective upon approval
53.21 	by the governing body of the city of Mounds View and upon
53.22 	compliance by the city with Minnesota Statutes, sections
53.23 	469.1782, subdivision 2, and 645.021, subdivision 3.

53.24 	Sec. 20. REPEALER.
 53.25 	Minnesota Statutes 2004, sections 469.176, subdivision 1a;
53.26 	and 469.1766; and Laws 1998, chapter 389, article 11, section
53.27 	19, subdivision 3, are repealed.

53.28 	EFFECTIVE DATE. The repeal of Minnesota Statutes, section
53.29 	469.1766, is effective for districts for which the request for
53.30 	certification was made after August 1, 1993.  The repeal of
53.31 	Minnesota Statutes, section 469.176, subdivision 1a, is
53.32 	effective the day following final enactment, provided that
53.33 	Minnesota Statutes, section 469.176, subdivision 1a, is
53.34 	satisfied for any district to which it applies, if bonds have
53.35 	been issued, property acquired, or public improvements
53.36 	constructed before the end of the three-year period, regardless
54.1 	of whether the action was undertaken before or after
54.2 	certification of the district.  The repeal of Laws 1998, chapter
54.3 	389, article 11, section 19, subdivision 3, is effective upon
54.4 	compliance by the city of Minneapolis with Minnesota Statutes,
54.5 	section 645.021, subdivision 2.

54.6 	ARTICLE 3
54.7 	INTERNATIONAL ECONOMIC DEVELOPMENT ZONE

54.8 	Section 1. Minnesota Statutes 2004, section 272.02, is
54.9 	amended by adding a subdivision to read:
54.10 		Subd. 68.International economic development zone
54.11 	property. (a) Improvements to real property, and personal
54.12 	property, classified under section 273.13, subdivision 24, and
54.13 	located within the international economic development zone
54.14 	designated under section 469.322, are exempt from ad valorem
54.15 	taxes levied under chapter 275, if the improvements are:
54.16 	(1) part of a regional distribution center as defined in
54.17 	section 469.321; or 
54.18 	(2) occupied by a qualified business as defined in section
54.19 	469.321, that uses the improvements primarily in freight
54.20 	forwarding operations.
54.21 	(b) The exemption applies beginning for the first
54.22 	assessment year after designation of the international economic
54.23 	development zone.  The exemption applies to each assessment year
54.24 	that begins during the duration of the international economic
54.25 	development zone.  To be exempt under paragraph (a), clause (2),
54.26 	the property must be occupied by July 1 of the assessment year
54.27 	by a qualified business that has signed the business subsidy
54.28 	agreement by July 1 of the assessment year.
54.29 	
EFFECTIVE DATE. This section is effective beginning for
54.30 	property taxes payable in 2008.

54.31 	Sec. 2. Minnesota Statutes 2004, section 290.01,
54.32 	subdivision 19b, is amended to read:
54.33 		Subd. 19b.Subtractions from federal taxable income.  For
54.34 	individuals, estates, and trusts, there shall be subtracted from
54.35 	federal taxable income:
54.36 	(1) interest income on obligations of any authority,
55.1 	commission, or instrumentality of the United States to the
55.2 	extent includable in taxable income for federal income tax
55.3 	purposes but exempt from state income tax under the laws of the
55.4 	United States;
55.5 	(2) if included in federal taxable income, the amount of
55.6 	any overpayment of income tax to Minnesota or to any other
55.7 	state, for any previous taxable year, whether the amount is
55.8 	received as a refund or as a credit to another taxable year's
55.9 	income tax liability;
55.10 	(3) the amount paid to others, less the amount used to
55.11 	claim the credit allowed under section 290.0674, not to exceed
55.12 	$1,625 for each qualifying child in grades kindergarten to 6 and
55.13 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
55.14 	textbooks, and transportation of each qualifying child in
55.15 	attending an elementary or secondary school situated in
55.16 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
55.17 	wherein a resident of this state may legally fulfill the state's
55.18 	compulsory attendance laws, which is not operated for profit,
55.19 	and which adheres to the provisions of the Civil Rights Act of
55.20 	1964 and chapter 363A.  For the purposes of this clause,
55.21 	"tuition" includes fees or tuition as defined in section
55.22 	290.0674, subdivision 1, clause (1).  As used in this clause,
55.23 	"textbooks" includes books and other instructional materials and
55.24 	equipment purchased or leased for use in elementary and
55.25 	secondary schools in teaching only those subjects legally and
55.26 	commonly taught in public elementary and secondary schools in
55.27 	this state.  Equipment expenses qualifying for deduction
55.28 	includes expenses as defined and limited in section 290.0674,
55.29 	subdivision 1, clause (3).  "Textbooks" does not include
55.30 	instructional books and materials used in the teaching of
55.31 	religious tenets, doctrines, or worship, the purpose of which is
55.32 	to instill such tenets, doctrines, or worship, nor does it
55.33 	include books or materials for, or transportation to,
55.34 	extracurricular activities including sporting events, musical or
55.35 	dramatic events, speech activities, driver's education, or
55.36 	similar programs.  For purposes of the subtraction provided by
56.1 	this clause, "qualifying child" has the meaning given in section
56.2 	32(c)(3) of the Internal Revenue Code;
56.3 	(4) income as provided under section 290.0802;
56.4 	(5) to the extent included in federal adjusted gross
56.5 	income, income realized on disposition of property exempt from
56.6 	tax under section 290.491;
56.7 	(6) to the extent included in federal taxable income,
56.8 	postservice benefits for youth community service under section
56.9 	124D.42 for volunteer service under United States Code, title
56.10 	42, sections 12601 to 12604;
56.11 	(7) to the extent not deducted in determining federal
56.12 	taxable income by an individual who does not itemize deductions
56.13 	for federal income tax purposes for the taxable year, an amount
56.14 	equal to 50 percent of the excess of charitable contributions
56.15 	allowable as a deduction for the taxable year under section
56.16 	170(a) of the Internal Revenue Code over $500;
56.17 	(8) for taxable years beginning before January 1, 2008, the
56.18 	amount of the federal small ethanol producer credit allowed
56.19 	under section 40(a)(3) of the Internal Revenue Code which is
56.20 	included in gross income under section 87 of the Internal
56.21 	Revenue Code;
56.22 	(9) for individuals who are allowed a federal foreign tax
56.23 	credit for taxes that do not qualify for a credit under section
56.24 	290.06, subdivision 22, an amount equal to the carryover of
56.25 	subnational foreign taxes for the taxable year, but not to
56.26 	exceed the total subnational foreign taxes reported in claiming
56.27 	the foreign tax credit.  For purposes of this clause, "federal
56.28 	foreign tax credit" means the credit allowed under section 27 of
56.29 	the Internal Revenue Code, and "carryover of subnational foreign
56.30 	taxes" equals the carryover allowed under section 904(c) of the
56.31 	Internal Revenue Code minus national level foreign taxes to the
56.32 	extent they exceed the federal foreign tax credit;
56.33 	(10) in each of the five tax years immediately following
56.34 	the tax year in which an addition is required under subdivision
56.35 	19a, clause (7), an amount equal to one-fifth of the delayed
56.36 	depreciation.  For purposes of this clause, "delayed
57.1 	depreciation" means the amount of the addition made by the
57.2 	taxpayer under subdivision 19a, clause (7), minus the positive
57.3 	value of any net operating loss under section 172 of the
57.4 	Internal Revenue Code generated for the tax year of the
57.5 	addition.  The resulting delayed depreciation cannot be less
57.6 	than zero; ~~and~~ 
57.7 	(11) job opportunity building zone income as provided under
57.8 	section 469.316; and 
57.9 	(12) international economic development zone income as
57.10 	provided under section 469.325.
57.11 	
EFFECTIVE DATE. This section is effective for tax years
57.12 	beginning after December 31, 2006.

57.13 	Sec. 3. Minnesota Statutes 2004, section 290.01,
57.14 	subdivision 29, is amended to read:
57.15 		Subd. 29.Taxable income.  The term "taxable income"
57.16 	means:
57.17 	(1) for individuals, estates, and trusts, the same as
57.18 	taxable net income;
57.19 	(2) for corporations, the taxable net income less
57.20 	(i) the net operating loss deduction under section 290.095;
57.21 	(ii) the dividends received deduction under section 290.21,
57.22 	subdivision 4;
57.23 	(iii) the exemption for operating in a job opportunity
57.24 	building zone under section 469.317; ~~and~~ 
57.25 	(iv) the exemption for operating in a biotechnology and
57.26 	health sciences industry zone under section 469.337; and 
57.27 	(v) the exemption for operating in an international
57.28 	economic development zone under section 469.326.
57.29 	
EFFECTIVE DATE. This section is effective for tax years
57.30 	beginning after December 31, 2006.

57.31 	Sec. 4. Minnesota Statutes 2004, section 290.06,
57.32 	subdivision 2c, is amended to read:
57.33 		Subd. 2c.Schedules of rates for individuals, estates,
57.34 	and trusts.  (a) The income taxes imposed by this chapter upon
57.35 	married individuals filing joint returns and surviving spouses
57.36 	as defined in section 2(a) of the Internal Revenue Code must be
58.1 	computed by applying to their taxable net income the following
58.2 	schedule of rates:
58.3 	(1) On the first $25,680, 5.35 percent;
58.4 	(2) On all over $25,680, but not over $102,030, 7.05
58.5 	percent;
58.6 	(3) On all over $102,030, 7.85 percent.
58.7 	Married individuals filing separate returns, estates, and
58.8 	trusts must compute their income tax by applying the above rates
58.9 	to their taxable income, except that the income brackets will be
58.10 	one-half of the above amounts.
58.11 	(b) The income taxes imposed by this chapter upon unmarried
58.12 	individuals must be computed by applying to taxable net income
58.13 	the following schedule of rates:
58.14 	(1) On the first $17,570, 5.35 percent;
58.15 	(2) On all over $17,570, but not over $57,710, 7.05
58.16 	percent;
58.17 	(3) On all over $57,710, 7.85 percent.
58.18 	(c) The income taxes imposed by this chapter upon unmarried
58.19 	individuals qualifying as a head of household as defined in
58.20 	section 2(b) of the Internal Revenue Code must be computed by
58.21 	applying to taxable net income the following schedule of rates:
58.22 	(1) On the first $21,630, 5.35 percent;
58.23 	(2) On all over $21,630, but not over $86,910, 7.05
58.24 	percent;
58.25 	(3) On all over $86,910, 7.85 percent.
58.26 	(d) In lieu of a tax computed according to the rates set
58.27 	forth in this subdivision, the tax of any individual taxpayer
58.28 	whose taxable net income for the taxable year is less than an
58.29 	amount determined by the commissioner must be computed in
58.30 	accordance with tables prepared and issued by the commissioner
58.31 	of revenue based on income brackets of not more than $100.  The
58.32 	amount of tax for each bracket shall be computed at the rates
58.33 	set forth in this subdivision, provided that the commissioner
58.34 	may disregard a fractional part of a dollar unless it amounts to
58.35 	50 cents or more, in which case it may be increased to $1.
58.36 	(e) An individual who is not a Minnesota resident for the
59.1 	entire year must compute the individual's Minnesota income tax
59.2 	as provided in this subdivision.  After the application of the
59.3 	nonrefundable credits provided in this chapter, the tax
59.4 	liability must then be multiplied by a fraction in which:
59.5 	(1) the numerator is the individual's Minnesota source
59.6 	federal adjusted gross income as defined in section 62 of the
59.7 	Internal Revenue Code and increased by the additions required
59.8 	under section 290.01, subdivision 19a, clauses (1), (5), and
59.9 	(6), and reduced by the subtraction under section 290.01,
59.10 	subdivision 19b, ~~clause~~ clauses (11) and (12), and the Minnesota
59.11 	assignable portion of the subtraction for United States
59.12 	government interest under section 290.01, subdivision 19b,
59.13 	clause (1), after applying the allocation and assignability
59.14 	provisions of section 290.081, clause (a), or 290.17; and
59.15 	(2) the denominator is the individual's federal adjusted
59.16 	gross income as defined in section 62 of the Internal Revenue
59.17 	Code of 1986, increased by the amounts specified in section
59.18 	290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
59.19 	by the amounts specified in section 290.01, subdivision 19b,
59.20 	clauses (1) ~~and~~ ,(11), and (12).
59.21 	
EFFECTIVE DATE. This section is effective for tax years
59.22 	beginning after December 31, 2006.

59.23 	Sec. 5. Minnesota Statutes 2004, section 290.06, is
59.24 	amended by adding a subdivision to read:
59.25 		Subd. 32.International economic development zone job
59.26 	credit. A taxpayer that is a qualified business, as defined in
59.27 	section 469.321, subdivision 6, is allowed a credit as
59.28 	determined under section 469.327 against the tax imposed by this
59.29 	chapter.
59.30 	
EFFECTIVE DATE. This section is effective the day
59.31 	following final enactment.

59.32 	Sec. 6. Minnesota Statutes 2004, section 290.067,
59.33 	subdivision 1, is amended to read:
59.34 		Subdivision 1.Amount of credit.  (a) A taxpayer may take
59.35 	as a credit against the tax due from the taxpayer and a spouse,
59.36 	if any, under this chapter an amount equal to the dependent care
60.1 	credit for which the taxpayer is eligible pursuant to the
60.2 	provisions of section 21 of the Internal Revenue Code subject to
60.3 	the limitations provided in subdivision 2 except that in
60.4 	determining whether the child qualified as a dependent, income
60.5 	received as a Minnesota family investment program grant or
60.6 	allowance to or on behalf of the child must not be taken into
60.7 	account in determining whether the child received more than half
60.8 	of the child's support from the taxpayer, and the provisions of
60.9 	section 32(b)(1)(D) of the Internal Revenue Code do not apply.
60.10 	(b) If a child who has not attained the age of six years at
60.11 	the close of the taxable year is cared for at a licensed family
60.12 	day care home operated by the child's parent, the taxpayer is
60.13 	deemed to have paid employment-related expenses.  If the child
60.14 	is 16 months old or younger at the close of the taxable year,
60.15 	the amount of expenses deemed to have been paid equals the
60.16 	maximum limit for one qualified individual under section 21(c)
60.17 	and (d) of the Internal Revenue Code.  If the child is older
60.18 	than 16 months of age but has not attained the age of six years
60.19 	at the close of the taxable year, the amount of expenses deemed
60.20 	to have been paid equals the amount the licensee would charge
60.21 	for the care of a child of the same age for the same number of
60.22 	hours of care.
60.23 	(c) If a married couple:
60.24 	(1) has a child who has not attained the age of one year at
60.25 	the close of the taxable year;
60.26 	(2) files a joint tax return for the taxable year; and
60.27 	(3) does not participate in a dependent care assistance
60.28 	program as defined in section 129 of the Internal Revenue Code,
60.29 	in lieu of the actual employment related expenses paid for that
60.30 	child under paragraph (a) or the deemed amount under paragraph
60.31 	(b), the lesser of (i) the combined earned income of the couple
60.32 	or (ii) the amount of the maximum limit for one qualified
60.33 	individual under section 21(c) and (d) of the Internal Revenue
60.34 	Code will be deemed to be the employment related expense paid
60.35 	for that child.  The earned income limitation of section 21(d)
60.36 	of the Internal Revenue Code shall not apply to this deemed
61.1 	amount.  These deemed amounts apply regardless of whether any
61.2 	employment-related expenses have been paid.
61.3 	(d) If the taxpayer is not required and does not file a
61.4 	federal individual income tax return for the tax year, no credit
61.5 	is allowed for any amount paid to any person unless:
61.6 	(1) the name, address, and taxpayer identification number
61.7 	of the person are included on the return claiming the credit; or
61.8 	(2) if the person is an organization described in section
61.9 	501(c)(3) of the Internal Revenue Code and exempt from tax under
61.10 	section 501(a) of the Internal Revenue Code, the name and
61.11 	address of the person are included on the return claiming the
61.12 	credit.
61.13 	In the case of a failure to provide the information required
61.14 	under the preceding sentence, the preceding sentence does not
61.15 	apply if it is shown that the taxpayer exercised due diligence
61.16 	in attempting to provide the information required.
61.17 	In the case of a nonresident, part-year resident, or a
61.18 	person who has earned income not subject to tax under this
61.19 	chapter including earned income excluded pursuant to section
61.20 	290.01, subdivision 19b, ~~clause~~ clauses (11) and (12), the
61.21 	credit determined under section 21 of the Internal Revenue Code
61.22 	must be allocated based on the ratio by which the earned income
61.23 	of the claimant and the claimant's spouse from Minnesota sources
61.24 	bears to the total earned income of the claimant and the
61.25 	claimant's spouse.
61.26 	
EFFECTIVE DATE. This section is effective for tax years
61.27 	beginning after December 31, 2006.

61.28 	Sec. 7. Minnesota Statutes 2004, section 290.0671,
61.29 	subdivision 1, is amended to read:
61.30 		Subdivision 1.Credit allowed.  (a) An individual is
61.31 	allowed a credit against the tax imposed by this chapter equal
61.32 	to a percentage of earned income.  To receive a credit, a
61.33 	taxpayer must be eligible for a credit under section 32 of the
61.34 	Internal Revenue Code.
61.35 	(b) For individuals with no qualifying children, the credit
61.36 	equals 1.9125 percent of the first $4,620 of earned income.  The
62.1 	credit is reduced by 1.9125 percent of earned income or modified
62.2 	adjusted gross income, whichever is greater, in excess of
62.3 	$5,770, but in no case is the credit less than zero.
62.4 	(c) For individuals with one qualifying child, the credit
62.5 	equals 8.5 percent of the first $6,920 of earned income and 8.5
62.6 	percent of earned income over $12,080 but less than $13,450.
62.7 	The credit is reduced by 5.73 percent of earned income or
62.8 	modified adjusted gross income, whichever is greater, in excess
62.9 	of $15,080, but in no case is the credit less than zero.
62.10 	(d) For individuals with two or more qualifying children,
62.11 	the credit equals ten percent of the first $9,720 of earned
62.12 	income and 20 percent of earned income over $14,860 but less
62.13 	than $16,800.  The credit is reduced by 10.3 percent of earned
62.14 	income or modified adjusted gross income, whichever is greater,
62.15 	in excess of $17,890, but in no case is the credit less than
62.16 	zero.
62.17 	(e) For a nonresident or part-year resident, the credit
62.18 	must be allocated based on the percentage calculated under
62.19 	section 290.06, subdivision 2c, paragraph (e).
62.20 	(f) For a person who was a resident for the entire tax year
62.21 	and has earned income not subject to tax under this chapter,
62.22 	including income excluded under section 290.01, subdivision 19b,
62.23 	clause (11) or (12), the credit must be allocated based on the
62.24 	ratio of federal adjusted gross income reduced by the earned
62.25 	income not subject to tax under this chapter over federal
62.26 	adjusted gross income.
62.27 	(g) For tax years beginning after December 31, 2001, and
62.28 	before December 31, 2004, the $5,770 in paragraph (b), the
62.29 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
62.30 	after being adjusted for inflation under subdivision 7, are each
62.31 	increased by $1,000 for married taxpayers filing joint returns.
62.32 	(h) For tax years beginning after December 31, 2004, and
62.33 	before December 31, 2007, the $5,770 in paragraph (b), the
62.34 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
62.35 	after being adjusted for inflation under subdivision 7, are each
62.36 	increased by $2,000 for married taxpayers filing joint returns.
63.1 	(i) For tax years beginning after December 31, 2007, and
63.2 	before December 31, 2010, the $5,770 in paragraph (b), the
63.3 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
63.4 	after being adjusted for inflation under subdivision 7, are each
63.5 	increased by $3,000 for married taxpayers filing joint returns.
63.6 	For tax years beginning after December 31, 2008, the $3,000 is
63.7 	adjusted annually for inflation under subdivision 7.
63.8 	(j) The commissioner shall construct tables showing the
63.9 	amount of the credit at various income levels and make them
63.10 	available to taxpayers.  The tables shall follow the schedule
63.11 	contained in this subdivision, except that the commissioner may
63.12 	graduate the transition between income brackets.
63.13 	
EFFECTIVE DATE. This section is effective for tax years
63.14 	beginning after December 31, 2006.

63.15 	Sec. 8. Minnesota Statutes 2004, section 290.091,
63.16 	subdivision 2, is amended to read:
63.17 		Subd. 2.Definitions.  For purposes of the tax imposed by
63.18 	this section, the following terms have the meanings given:
63.19 	(a) "Alternative minimum taxable income" means the sum of
63.20 	the following for the taxable year:
63.21 	(1) the taxpayer's federal alternative minimum taxable
63.22 	income as defined in section 55(b)(2) of the Internal Revenue
63.23 	Code;
63.24 	(2) the taxpayer's itemized deductions allowed in computing
63.25 	federal alternative minimum taxable income, but excluding:
63.26 	(i) the charitable contribution deduction under section 170
63.27 	of the Internal Revenue Code to the extent that the deduction
63.28 	exceeds 1.0 percent of adjusted gross income, as defined in
63.29 	section 62 of the Internal Revenue Code;
63.30 	(ii) the medical expense deduction;
63.31 	(iii) the casualty, theft, and disaster loss deduction; and
63.32 	(iv) the impairment-related work expenses of a disabled
63.33 	person;
63.34 	(3) for depletion allowances computed under section 613A(c)
63.35 	of the Internal Revenue Code, with respect to each property (as
63.36 	defined in section 614 of the Internal Revenue Code), to the
64.1 	extent not included in federal alternative minimum taxable
64.2 	income, the excess of the deduction for depletion allowable
64.3 	under section 611 of the Internal Revenue Code for the taxable
64.4 	year over the adjusted basis of the property at the end of the
64.5 	taxable year (determined without regard to the depletion
64.6 	deduction for the taxable year);
64.7 	(4) to the extent not included in federal alternative
64.8 	minimum taxable income, the amount of the tax preference for
64.9 	intangible drilling cost under section 57(a)(2) of the Internal
64.10 	Revenue Code determined without regard to subparagraph (E);
64.11 	(5) to the extent not included in federal alternative
64.12 	minimum taxable income, the amount of interest income as
64.13 	provided by section 290.01, subdivision 19a, clause (1); and
64.14 	(6) the amount of addition required by section 290.01,
64.15 	subdivision 19a, clause (7);
64.16 	less the sum of the amounts determined under the following:
64.17 	(1) interest income as defined in section 290.01,
64.18 	subdivision 19b, clause (1);
64.19 	(2) an overpayment of state income tax as provided by
64.20 	section 290.01, subdivision 19b, clause (2), to the extent
64.21 	included in federal alternative minimum taxable income;
64.22 	(3) the amount of investment interest paid or accrued
64.23 	within the taxable year on indebtedness to the extent that the
64.24 	amount does not exceed net investment income, as defined in
64.25 	section 163(d)(4) of the Internal Revenue Code.  Interest does
64.26 	not include amounts deducted in computing federal adjusted gross
64.27 	income; and
64.28 	(4) amounts subtracted from federal taxable income as
64.29 	provided by section 290.01, subdivision 19b, clauses (10) ~~and~~ ,
64.30 	(11), and (12).
64.31 	In the case of an estate or trust, alternative minimum
64.32 	taxable income must be computed as provided in section 59(c) of
64.33 	the Internal Revenue Code.
64.34 	(b) "Investment interest" means investment interest as
64.35 	defined in section 163(d)(3) of the Internal Revenue Code.
64.36 	(c) "Tentative minimum tax" equals 6.4 percent of
65.1 	alternative minimum taxable income after subtracting the
65.2 	exemption amount determined under subdivision 3.
65.3 	(d) "Regular tax" means the tax that would be imposed under
65.4 	this chapter (without regard to this section and section
65.5 	290.032), reduced by the sum of the nonrefundable credits
65.6 	allowed under this chapter.
65.7 	(e) "Net minimum tax" means the minimum tax imposed by this
65.8 	section.
65.9 	
EFFECTIVE DATE. This section is effective for tax years
65.10 	beginning after December 31, 2006.

65.11 	Sec. 9. Minnesota Statutes 2004, section 290.0921,
65.12 	subdivision 3, is amended to read:
65.13 		Subd. 3.Alternative minimum taxable income.
 65.14 	"Alternative minimum taxable income" is Minnesota net income as
65.15 	defined in section 290.01, subdivision 19, and includes the
65.16 	adjustments and tax preference items in sections 56, 57, 58, and
65.17 	59(d), (e), (f), and (h) of the Internal Revenue Code.  If a
65.18 	corporation files a separate company Minnesota tax return, the
65.19 	minimum tax must be computed on a separate company basis.  If a
65.20 	corporation is part of a tax group filing a unitary return, the
65.21 	minimum tax must be computed on a unitary basis.  The following
65.22 	adjustments must be made.
65.23 	(1) For purposes of the depreciation adjustments under
65.24 	section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code,
65.25 	the basis for depreciable property placed in service in a
65.26 	taxable year beginning before January 1, 1990, is the adjusted
65.27 	basis for federal income tax purposes, including any
65.28 	modification made in a taxable year under section 290.01,
65.29 	subdivision 19e, or Minnesota Statutes 1986, section 290.09,
65.30 	subdivision 7, paragraph (c).
65.31 	For taxable years beginning after December 31, 2000, the
65.32 	amount of any remaining modification made under section 290.01,
65.33 	subdivision 19e, or Minnesota Statutes 1986, section 290.09,
65.34 	subdivision 7, paragraph (c), not previously deducted is a
65.35 	depreciation allowance in the first taxable year after December
65.36 	31, 2000.
66.1 	(2) The portion of the depreciation deduction allowed for
66.2 	federal income tax purposes under section 168(k) of the Internal
66.3 	Revenue Code that is required as an addition under section
66.4 	290.01, subdivision 19c, clause (16), is disallowed in
66.5 	determining alternative minimum taxable income.
66.6 	(3) The subtraction for depreciation allowed under section
66.7 	290.01, subdivision 19d, clause (19), is allowed as a
66.8 	depreciation deduction in determining alternative minimum
66.9 	taxable income.
66.10 	(4) The alternative tax net operating loss deduction under
66.11 	sections 56(a)(4) and 56(d) of the Internal Revenue Code does
66.12 	not apply.
66.13 	(5) The special rule for certain dividends under section
66.14 	56(g)(4)(C)(ii) of the Internal Revenue Code does not apply.
66.15 	(6) The special rule for dividends from section 936
66.16 	companies under section 56(g)(4)(C)(iii) does not apply.
66.17 	(7) The tax preference for depletion under section 57(a)(1)
66.18 	of the Internal Revenue Code does not apply.
66.19 	(8) The tax preference for intangible drilling costs under
66.20 	section 57(a)(2) of the Internal Revenue Code must be calculated
66.21 	without regard to subparagraph (E) and the subtraction under
66.22 	section 290.01, subdivision 19d, clause (4).
66.23 	(9) The tax preference for tax exempt interest under
66.24 	section 57(a)(5) of the Internal Revenue Code does not apply.
66.25 	(10) The tax preference for charitable contributions of
66.26 	appreciated property under section 57(a)(6) of the Internal
66.27 	Revenue Code does not apply.
66.28 	(11) For purposes of calculating the tax preference for
66.29 	accelerated depreciation or amortization on certain property
66.30 	placed in service before January 1, 1987, under section 57(a)(7)
66.31 	of the Internal Revenue Code, the deduction allowable for the
66.32 	taxable year is the deduction allowed under section 290.01,
66.33 	subdivision 19e.
66.34 	For taxable years beginning after December 31, 2000, the
66.35 	amount of any remaining modification made under section 290.01,
66.36 	subdivision 19e, not previously deducted is a depreciation or
67.1 	amortization allowance in the first taxable year after December
67.2 	31, 2004.
67.3 	(12) For purposes of calculating the adjustment for
67.4 	adjusted current earnings in section 56(g) of the Internal
67.5 	Revenue Code, the term "alternative minimum taxable income" as
67.6 	it is used in section 56(g) of the Internal Revenue Code, means
67.7 	alternative minimum taxable income as defined in this
67.8 	subdivision, determined without regard to the adjustment for
67.9 	adjusted current earnings in section 56(g) of the Internal
67.10 	Revenue Code.
67.11 	(13) For purposes of determining the amount of adjusted
67.12 	current earnings under section 56(g)(3) of the Internal Revenue
67.13 	Code, no adjustment shall be made under section 56(g)(4) of the
67.14 	Internal Revenue Code with respect to (i) the amount of foreign
67.15 	dividend gross-up subtracted as provided in section 290.01,
67.16 	subdivision 19d, clause (1), (ii) the amount of refunds of
67.17 	income, excise, or franchise taxes subtracted as provided in
67.18 	section 290.01, subdivision 19d, clause (10), or (iii) the
67.19 	amount of royalties, fees or other like income subtracted as
67.20 	provided in section 290.01, subdivision 19d, clause (11).
67.21 	(14) Alternative minimum taxable income excludes the income
67.22 	from operating in a job opportunity building zone as provided
67.23 	under section 469.317.
67.24 	(15) Alternative minimum taxable income excludes the income
67.25 	from operating in a biotechnology and health sciences industry
67.26 	zone as provided under section 469.337.
67.27 	(16) Alternative minimum taxable income excludes the income
67.28 	from operating in an international economic development zone as
67.29 	provided under section 469.326.
67.30 	Items of tax preference must not be reduced below zero as a
67.31 	result of the modifications in this subdivision.
67.32 	
EFFECTIVE DATE. This section is effective for tax years
67.33 	beginning after December 31, 2006.

67.34 	Sec. 10. Minnesota Statutes 2004, section 290.0922,
67.35 	subdivision 2, is amended to read:
67.36 		Subd. 2.Exemptions.  The following entities are exempt
68.1 	from the tax imposed by this section:
68.2 	(1) corporations exempt from tax under section 290.05;
68.3 	(2) real estate investment trusts;
68.4 	(3) regulated investment companies or a fund thereof; and
68.5 	(4) entities having a valid election in effect under
68.6 	section 860D(b) of the Internal Revenue Code;
68.7 	(5) town and farmers' mutual insurance companies;
68.8 	(6) cooperatives organized under chapter 308A that provide
68.9 	housing exclusively to persons age 55 and over and are
68.10 	classified as homesteads under section 273.124, subdivision 3;
68.11 	~~and~~ 
68.12 	(7) an entity, if for the taxable year all of its property
68.13 	is located in a job opportunity building zone designated under
68.14 	section 469.314 and all of its payroll is a job opportunity
68.15 	building zone payroll under section 469.310; and 
68.16 	(8) an entity, if for the taxable year all of its property
68.17 	is located in an international economic development zone
68.18 	designated under section 469.322, and all of its payroll is
68.19 	international economic development zone payroll under section
68.20 	469.321.
68.21 	Entities not specifically exempted by this subdivision are
68.22 	subject to tax under this section, notwithstanding section
68.23 	290.05.
68.24 	
EFFECTIVE DATE. This section is effective for tax years
68.25 	beginning after December 31, 2006.

68.26 	Sec. 11. Minnesota Statutes 2004, section 290.0922,
68.27 	subdivision 3, is amended to read:
68.28 		Subd. 3.Definitions.  (a) "Minnesota sales or receipts"
68.29 	means the total sales apportioned to Minnesota pursuant to
68.30 	section 290.191, subdivision 5, the total receipts attributed to
68.31 	Minnesota pursuant to section 290.191, subdivisions 6 to 8,
68.32 	and/or the total sales or receipts apportioned or attributed to
68.33 	Minnesota pursuant to any other apportionment formula applicable
68.34 	to the taxpayer.
68.35 	(b) "Minnesota property" means total Minnesota tangible
68.36 	property as provided in section 290.191, subdivisions 9 to 11,
69.1 	any other tangible property located in Minnesota, but does not
69.2 	include property located in a job opportunity building zone
69.3 	designated under section 469.314,or property of a qualified
69.4 	business located in a biotechnology and health sciences industry
69.5 	zone designated under section 469.334, or property of a
69.6 	qualified business located in the international economic
69.7 	development zone designated under section 469.322.  Intangible
69.8 	property shall not be included in Minnesota property for
69.9 	purposes of this section.  Taxpayers who do not utilize tangible
69.10 	property to apportion income shall nevertheless include
69.11 	Minnesota property for purposes of this section.  On a return
69.12 	for a short taxable year, the amount of Minnesota property
69.13 	owned, as determined under section 290.191, shall be included in
69.14 	Minnesota property based on a fraction in which the numerator is
69.15 	the number of days in the short taxable year and the denominator
69.16 	is 365.
69.17 	(c) "Minnesota payrolls" means total Minnesota payrolls as
69.18 	provided in section 290.191, subdivision 12, but does not
69.19 	include job opportunity building zone payrolls under section
69.20 	469.310, subdivision 8, or biotechnology and health sciences
69.21 	industry zone ~~payroll~~ payrolls under section 469.330,
69.22 	subdivision 8, or international economic development zone
69.23 	payrolls under section 469.321, subdivision 9.  Taxpayers who do
69.24 	not utilize payrolls to apportion income shall nevertheless
69.25 	include Minnesota payrolls for purposes of this section.
69.26 	
EFFECTIVE DATE. This section is effective for tax years
69.27 	beginning after December 31, 2006.

69.28 	Sec. 12. Minnesota Statutes 2004, section 297A.68, is
69.29 	amended by adding a subdivision to read:
69.30 		Subd. 40.International economic development zones. (a)
69.31 	Purchases of tangible personal property or taxable services by a
69.32 	qualified business, as defined in section 469.321, are exempt if
69.33 	the property or services are primarily used or consumed in the
69.34 	international economic development zone designated under section
69.35 	469.322.
69.36 	(b) Purchase and use of construction materials, supplies,
70.1 	and equipment incorporated into the construction of improvements
70.2 	to real property in the international economic development zone
70.3 	are exempt if the improvements after completion of construction
70.4 	are to be used as a regional distribution center as defined in
70.5 	section 469.321 or otherwise used in the conduct of freight
70.6 	forwarding activities of a qualified business as defined in
70.7 	section 469.321.  This exemption applies regardless of whether
70.8 	the purchases are made by the business or a contractor.
70.9 	(c) The exemptions under this subdivision apply to a local
70.10 	sales and use tax, regardless of whether the local tax is
70.11 	imposed on sales taxable under this chapter or in another law,
70.12 	ordinance, or charter provision.
70.13 	(d) The exemption in paragraph (a) applies to sales during
70.14 	the duration of the zone, if the purchase was made and delivery
70.15 	received after the business signs the business subsidy agreement
70.16 	required under chapter 469.  The exemption in paragraph (b)
70.17 	applies to sales made before the end of the duration of the
70.18 	zone, if the purchase and delivery were made after June 30, 2006.
70.19 	
EFFECTIVE DATE. This section is effective the day
70.20 	following final enactment.

70.21 	Sec. 13. [469.321] DEFINITIONS.
70.22 		Subdivision 1.Scope. For purposes of sections 469.321
70.23 	to 469.328, the following terms have the meanings given.
70.24 		Subd. 2.Foreign trade zone. "Foreign trade zone" means
70.25 	a foreign trade zone designated pursuant to United States Code,
70.26 	title 19, section 81a, for the right to use the powers provided
70.27 	in United States Code, title 19, sections 81a to 81u, or a
70.28 	subzone authorized by the foreign trade zone.
70.29 		Subd. 3.Foreign trade zone authority. "Foreign trade
70.30 	zone authority" means the Greater Metropolitan Foreign Trade
70.31 	Zone Commission number 119, a joint powers authority created by
70.32 	the county of Hennepin, the cities of Minneapolis and
70.33 	Bloomington, and the Metropolitan Airports Commission, under the
70.34 	authority of section 469.059, 469.101, or 471.59, which includes
70.35 	any other political subdivisions that enter into the authority
70.36 	after its creation.
71.1 		Subd. 4.International economic development zone or
71.2 	zone. An "international economic development zone" or "zone" is
71.3 	a zone so designated under section 469.322.
71.4 		Subd. 5.Person. "Person" includes an individual,
71.5 	corporation, partnership, limited liability company,
71.6 	association, or any other entity.
71.7 		Subd. 6.Qualified business. "Qualified business" means
71.8 	a person who has signed a business subsidy agreement as required
71.9 	under sections 116J.993 to 116J.995 and 469.323, subdivision 4,
71.10 	carrying on a trade or business at a place of business located
71.11 	within the international economic development zone that is:
71.12 	(1)(i) engaged in the furtherance of international export
71.13 	or import of goods as a freight forwarder; and (ii) certified by
71.14 	the foreign trade zone authority as a trade or business that
71.15 	furthers the purpose of developing international distribution
71.16 	capacity and capability; or 
71.17 	(2) the owner or operator of a regional distribution center.
71.18 		Subd. 7.Regional distribution center. A "regional
71.19 	distribution center" is a distribution center developed within a
71.20 	foreign trade zone.  The regional distribution center must have
71.21 	as its primary purpose, the facilitation of the gathering of
71.22 	freight for the purpose of centralizing the functions necessary
71.23 	for the shipment of freight in international commerce,
71.24 	including, but not limited to, security and customs functions.
71.25 		Subd. 8.International economic development zone
71.26 	percentage or zone percentage. "International economic
71.27 	development zone percentage" or "zone percentage" means the
71.28 	following fraction reduced to a percentage:
71.29 	(1) the numerator of the fraction is:
71.30 	(i) the ratio of the taxpayer's property factor under
71.31 	section 290.191 located in the zone for the taxable year which
71.32 	is land, buildings, machinery and equipment, inventories, and
71.33 	other tangible personal property that is a regional distribution
71.34 	center or is used in the furtherance of the taxpayer's freight
71.35 	forwarding operations over the property factor numerator
71.36 	determined under section 290.191, plus 
72.1 	(ii) the ratio of the taxpayer's international economic
72.2 	development zone payroll factor under subdivision 9 over the
72.3 	payroll factor numerator determined under section 290.191; and 
72.4 	(2) the denominator of the fraction is two.
72.5 	When calculating the zone percentage for a business that is
72.6 	part of a unitary business as defined under section 290.17,
72.7 	subdivision 4, the denominator of the payroll and property
72.8 	factors is the Minnesota payroll and property of the unitary
72.9 	business as reported on the combined report under section
72.10 	290.17, subdivision 4, paragraph (j).
72.11 		Subd. 9.International economic development zone payroll
72.12 	factor or international economic development zone payroll.
 72.13 	"International economic development zone payroll factor" or
72.14 	"international economic development zone payroll" is that
72.15 	portion of the payroll factor under section 290.191 used to
72.16 	operate a regional distribution center, or used in the
72.17 	furtherance of the taxpayer's freight forwarding operations that
72.18 	represents:
72.19 	(1) wages or salaries paid to an individual for services
72.20 	performed in the international economic development zone; or 
72.21 	(2) wages or salaries paid to individuals working from
72.22 	offices within the international economic development zone, if
72.23 	their employment requires them to work outside the zone and the
72.24 	work is incidental to the work performed by the individual
72.25 	within the zone.  However, in no case does zone payroll include
72.26 	wages paid for work performed outside the zone of an employee
72.27 	who performs more than ten percent of total services for the
72.28 	employer outside the zone.
72.29 		Subd. 10.Freight forwarder. "Freight forwarder" is a
72.30 	business that, for compensation, ensures that goods produced or
72.31 	sold by another business move from point of origin to point of
72.32 	destination.
72.33 	
EFFECTIVE DATE. This section is effective the day
72.34 	following final enactment.

72.35 	Sec. 14. [469.3215] APPLICATION FOR DESIGNATION.
72.36 		Subdivision 1.Who may apply. One or more local
73.1 	government units, or a joint powers board under section 471.59,
73.2 	acting on behalf of two or more units, may apply for designation
73.3 	of an area as an international economic development zone.  All
73.4 	or part of the area proposed for designation as a zone must be
73.5 	located within the boundaries of each of the governmental
73.6 	units.  A local government unit may not submit or have submitted
73.7 	on its behalf more than one application for designation of an
73.8 	international economic development zone.
73.9 		Subd. 2.Application content. (a) The application must
73.10 	include:
73.11 	(1) a resolution or ordinance adopted by each of the cities
73.12 	or towns and the counties in which the zone is located, agreeing
73.13 	to provide all of the local tax exemptions provided under
73.14 	section 469.315;
73.15 	(2) an agreement by the applicant to treat incentives
73.16 	provided under the zone designation as business subsidies under
73.17 	sections 116J.993 to 116J.995 and to comply with the
73.18 	requirements of that law; and 
73.19 	(3) supporting evidence to allow the authority to evaluate
73.20 	the application.
73.21 	(b) Applications must be submitted to the authority no
73.22 	later than December 31, 2005.
73.23 	
EFFECTIVE DATE. This section is effective the day
73.24 	following final enactment.

73.25 	Sec. 15. [469.322] DESIGNATION OF INTERNATIONAL ECONOMIC
73.26 	DEVELOPMENT ZONE.
73.27 	(a) An area designated as a foreign trade zone may be
73.28 	designated by the foreign trade zone authority as an
73.29 	international economic development zone if within the zone a
73.30 	regional distribution center is being developed pursuant to
73.31 	section 469.323.  The zone must consist of contiguous area of
73.32 	not less than 500 acres and not more than 1,000 acres.  The
73.33 	designation authority under this section is limited to one zone.
73.34 	(b) In making the designation, the foreign trade zone
73.35 	authority, in consultation with the Minnesota Department of
73.36 	Transportation, the Minnesota Department of Employment and
74.1 	Economic Development, the Minnesota Department of Revenue, and
74.2 	the Metropolitan Council, shall consider access to major
74.3 	transportation routes, consistency with current state
74.4 	transportation and air cargo planning, adequacy of the size of
74.5 	the site, access to airport facilities, present and future
74.6 	capacity at the designated airport, the capability to meet
74.7 	integrated present and future air cargo, security, and
74.8 	inspection services, and access to other infrastructure and
74.9 	financial incentives to maximize the security, efficiency, and
74.10 	volume of Minnesota's export shipments.  The border of the
74.11 	international economic development zone must be no more than 60
74.12 	miles distant or 90 minutes drive time from the border of the
74.13 	Minneapolis-St. Paul International Airport.
74.14 	(c) Prior to a final site designation, the foreign trade
74.15 	zone authority, in consultation with the applicant, must conduct
74.16 	a transportation impact study based on the regional model and
74.17 	utilizing traffic forecasting and assignments.  The results must
74.18 	be used to evaluate the effects of the proposed use on the
74.19 	transportation system and identify any needed improvements.  If
74.20 	the site is in the metropolitan area the study must also
74.21 	evaluate the effect of the transportation impacts on the
74.22 	Metropolitan Transportation System plan as well as the
74.23 	comprehensive plans of the municipalities that would be
74.24 	affected.  The cost of the study must be paid by the applicant.
74.25 	(d) Final zone designation must be made by June 30, 2006.
74.26 	(e) Duration of the zone is a 12-year period beginning on
74.27 	January 1, 2007.

74.28 	EFFECTIVE DATE. This section is effective the day
74.29 	following final enactment.

74.30 	Sec. 16. [469.323] FOREIGN TRADE ZONE AUTHORITY POWERS.
74.31 		Subdivision 1.Development of regional distribution
74.32 	center. The foreign trade zone authority shall be responsible
74.33 	for creating a development plan for the regional distribution
74.34 	center.  The regional distribution center must be developed with
74.35 	the purpose of expanding, on a regional basis, international
74.36 	distribution capacity and capability.  The foreign trade zone
75.1 	authority shall consult only with municipalities that have
75.2 	indicated to the authority an interest in locating the
75.3 	international economic development zone within their boundaries,
75.4 	as well as interested businesses, potential financiers, and
75.5 	appropriate state and federal agencies.
75.6 		Subd. 2.Business plan. Before designation of an
75.7 	international economic development zone under section 469.322,
75.8 	the governing body of the foreign trade zone authority shall
75.9 	prepare a business plan.  The plan must establish performance
75.10 	goals for the zone.  These goals must set out, at a minimum, the
75.11 	amount of investment, the number of jobs, and the amount of
75.12 	freight handled expected to be attained at the end of three-,
75.13 	five-, and ten-year periods by the zone.  The plan also must
75.14 	include an analysis of the economic feasibility of the regional
75.15 	distribution center once it becomes operational and of the
75.16 	operations of freight forwarders and other businesses that
75.17 	choose to locate within the boundaries of the zone.  The
75.18 	analysis must provide profitability models that:
75.19 	(1) include the benefits of the incentives;
75.20 	(2) estimate the amount of time needed to achieve
75.21 	profitability; and 
75.22 	(3) analyze the length of time incentives will be necessary
75.23 	to the economic viability of the regional distribution center.
75.24 	If the governing body of the foreign trade authority
75.25 	determines that the models do not establish the economic
75.26 	feasibility of the project, the regional distribution center
75.27 	does not meet the development requirements of this section and
75.28 	section 469.322.
75.29 		Subd. 3.Port authority powers. The governing body of
75.30 	the foreign trade zone authority may establish a port authority
75.31 	that has the same powers as a port authority established under
75.32 	section 469.049.  If the foreign trade zone authority
75.33 	establishes a port authority, the governing body of the foreign
75.34 	trade zone authority may exercise all powers granted to a city
75.35 	by sections 469.048 to 469.068 or other law, except the power to
75.36 	levy property taxes under section 469.053.
76.1 		Subd. 4.Business subsidy law. Tax exemptions and job
76.2 	credits provided under this section are business subsidies paid
76.3 	by the affected local government for the purpose of sections
76.4 	116J.871 and 116J.993 to 116J.995.
76.5 	
EFFECTIVE DATE. This section is effective the day
76.6 	following final enactment.

76.7 	Sec. 17. [469.324] TAX INCENTIVES IN INTERNATIONAL
76.8 	ECONOMIC DEVELOPMENT ZONE.
76.9 		Subdivision 1.Availability. Qualified businesses that
76.10 	operate in an international economic development zone,
76.11 	individuals who invest in a regional distribution center or
76.12 	qualified businesses that operate in an international economic
76.13 	development zone, and property located in an international
76.14 	economic development zone qualify for:
76.15 	(1) exemption from individual income taxes as provided
76.16 	under section 469.325;
76.17 	(2) exemption from corporate franchise taxes as provided
76.18 	under section 469.326;
76.19 	(3) exemption from the state sales and use tax and any
76.20 	local sales and use taxes on qualifying purchases as provided in
76.21 	section 297A.68, subdivision 40;
76.22 	(4) exemption from the property tax as provided in section
76.23 	272.02, subdivision 68; and 
76.24 	(5) the jobs credit allowed under section 469.327.

76.25 	Sec. 18. [469.325] INDIVIDUAL INCOME TAX EXEMPTION.
76.26 		Subdivision 1.Application. An individual, estate, or
76.27 	trust operating a trade or business in the international
76.28 	economic development zone, and an individual making a qualifying
76.29 	investment in a qualified business operating in the
76.30 	international economic development zone, qualifies for the
76.31 	exemptions from taxes imposed under chapter 290, as provided in
76.32 	this section.  The exemptions provided under this section apply
76.33 	only to the extent that the income otherwise would be taxable
76.34 	under chapter 290.  Subtractions under this section from federal
76.35 	taxable income, alternative minimum taxable income, or any other
76.36 	base subject to tax are limited to the amount that otherwise
77.1 	would be included in the tax base absent the exemption under
77.2 	this section.  This section applies only to tax years beginning
77.3 	during the duration of the zone.
77.4 		Subd. 2.Rents. An individual, estate, or trust is
77.5 	exempt from the taxes imposed under chapter 290 on net rents
77.6 	derived from real or tangible personal property used by a
77.7 	qualified business and located in the zone for the taxable year
77.8 	in which the zone was designated an international economic
77.9 	development zone.  If tangible personal property was used both
77.10 	within and outside of the zone by the qualified business, the
77.11 	exemption amount for the net rental income must be multiplied by
77.12 	a fraction, the numerator of which is the number of days the
77.13 	property was used in the zone and the denominator of which is
77.14 	the total days the property is rented by a qualified business.
77.15 		Subd. 3.Business income. An individual, estate, or
77.16 	trust is exempt from the taxes imposed under chapter 290 on net
77.17 	income from the operation of a qualified business in the
77.18 	international economic development zone.  If the trade or
77.19 	business is carried on within and outside of the zone and the
77.20 	individual is not a resident of Minnesota, the exemption must be
77.21 	apportioned based on the zone percentage for the taxable year.
77.22 	If the trade or business is carried on within or outside of the
77.23 	zone and the individual is a resident of Minnesota, the
77.24 	exemption must be apportioned based on the zone percentage for
77.25 	the taxable year, except the ratios under section 469.321,
77.26 	subdivision 8, clause (1), items (i) and (ii), must use the
77.27 	denominators of the property and payroll factors determined
77.28 	under section 290.191.  No subtraction is allowed under this
77.29 	section in excess of 20 percent of the sum of the international
77.30 	economic development zone payroll and the adjusted basis of the
77.31 	property at the time that the property is first used in the
77.32 	international economic development zone by the business.
77.33 		Subd. 4.Capital gains. (a) An individual, estate, or
77.34 	trust is exempt from the taxes imposed under chapter 290 on:
77.35 	(1) net gain derived on a sale or exchange of real property
77.36 	located in the international economic development zone and used
78.1 	by a qualified business.  If the property was held by the
78.2 	individual, estate, or trust during a period when the zone was
78.3 	not designated, the gain must be prorated based on the
78.4 	percentage of time, measured in calendar days, that the real
78.5 	property was held by the individual during the period the zone
78.6 	designation was in effect to the total period of time the real
78.7 	property was held by the individual;
78.8 	(2) net gain derived on a sale or exchange of tangible
78.9 	personal property used by a qualified business in the
78.10 	international economic development zone.  If the property was
78.11 	held by the individual, estate, or trust during a period when
78.12 	the zone was not designated, the gain must be prorated based on
78.13 	the percentage of time, measured in calendar days, that the
78.14 	property was held by the individual during the period the zone
78.15 	designation was in effect to the total period of time the
78.16 	property was held by the individual, estate, or trust.  If the
78.17 	tangible personal property was used outside of the zone during
78.18 	the period of the zone's designation, the exemption must be
78.19 	multiplied by a fraction, the numerator of which is the number
78.20 	of days the property was used in the zone during the time of the
78.21 	designation and the denominator of which is the total days the
78.22 	property was held during the time of the designation; and 
78.23 	(3) net gain derived on a sale of an ownership interest in
78.24 	a qualified business operating in the international economic
78.25 	development zone, meeting the requirements of paragraph (b).
78.26 	The exemption on the gain must be multiplied by the zone
78.27 	percentage of the business for the taxable year prior to the
78.28 	sale.
78.29 	(b) A qualified business meets the requirements of
78.30 	paragraph (a), clause (3), if it is a corporation, an S
78.31 	corporation, or a partnership, and for the taxable year its
78.32 	international economic development zone percentage exceeds 25
78.33 	percent.  For purposes of paragraph (a), clause (3), the zone
78.34 	percentage must be calculated by modifying the ratios under
78.35 	section 469.321, subdivision 8, clause (1), items (i) and (ii),
78.36 	to use the denominators of the property and payroll factors
79.1 	determined under section 290.191.  Upon the request of an
79.2 	individual, estate, or trust holding an ownership interest in
79.3 	the entity, the entity must certify to the owner, in writing,
79.4 	the international economic development zone percentage needed to
79.5 	determine the exemption.
79.6 	
EFFECTIVE DATE. This section is effective for tax years
79.7 	beginning after December 31, 2006.

79.8 	Sec. 19. [469.326] CORPORATE FRANCHISE TAX EXEMPTION.
79.9 	(a) A qualified business is exempt from taxation under
79.10 	section 290.02, the alternative minimum tax under section
79.11 	290.0921, and the minimum fee under section 290.0922, on the
79.12 	portion of its income attributable to operations within the
79.13 	international economic development zone.  This exemption is
79.14 	determined as follows:
79.15 	(1) for purposes of the tax imposed under section 290.02,
79.16 	by multiplying its taxable net income by its zone percentage and
79.17 	subtracting the result in determining taxable income;
79.18 	(2) for purposes of the alternative minimum tax under
79.19 	section 290.0921, by multiplying its alternative minimum taxable
79.20 	income by its zone percentage and reducing alternative minimum
79.21 	taxable income by this amount; and 
79.22 	(3) for purposes of the minimum fee under section 290.0922,
79.23 	by excluding property and payroll in the zone from the
79.24 	computations of the fee or by exempting the entity under section
79.25 	290.0922, subdivision 2, clause (8).
79.26 	(b) No subtraction is allowed under this section in excess
79.27 	of 20 percent of the sum of the corporation's international
79.28 	economic development zone payroll and the adjusted basis of the
79.29 	zone property at the time that the property is first used in the
79.30 	international economic development zone by the corporation.
79.31 	(c) This section applies only to tax years beginning during
79.32 	the duration of the international economic development zone.

79.33 	EFFECTIVE DATE. This section is effective for tax years
79.34 	beginning after December 31, 2006.

79.35 	Sec. 20. [469.327] JOBS CREDIT.
79.36 		Subdivision 1.Credit allowed. A qualified business is
80.1 	allowed a credit against the taxes imposed under chapter 290.
80.2 	The credit equals seven percent of the:
80.3 	(1) lesser of:
80.4 	(i) zone payroll for the taxable year, less the zone
80.5 	payroll for the base year; or 
80.6 	(ii) total Minnesota payroll for the taxable year, less
80.7 	total Minnesota payroll for the base year; minus 
80.8 	(2) $30,000 multiplied by the number of full-time
80.9 	equivalent employees that the qualified business employs in the
80.10 	international economic development zone for the taxable year,
80.11 	minus the number of full-time equivalent employees the business
80.12 	employed in the zone in the base year, but not less than zero.
80.13 		Subd. 2.Definitions. (a) For purposes of this section,
80.14 	the following terms have the meanings given.
80.15 	(b) "Base year" means the taxable year beginning during the
80.16 	calendar year in which the zone designation was made under
80.17 	section 469.322, paragraph (d).
80.18 	(c) "Full-time equivalent employees" means the equivalent
80.19 	of annualized expected hours of work equal to 2,080 hours.
80.20 	(d) "Minnesota payroll" means the wages or salaries
80.21 	attributed to Minnesota under section 290.191, subdivision 12,
80.22 	for the qualified business or the unitary business of which the
80.23 	qualified business is a part, whichever is greater.
80.24 	(e) "Zone payroll" means wages or salaries used to
80.25 	determine the zone payroll factor for the qualified business,
80.26 	less the amount of compensation attributable to any employee
80.27 	that exceeds $100,000.
80.28 		Subd. 3.Inflation adjustment. For taxable years
80.29 	beginning after December 31, 2004, the dollar amounts in
80.30 	subdivisions 1, clause (2); and 2, paragraph (e), are annually
80.31 	adjusted for inflation.  The commissioner of revenue shall
80.32 	adjust the amounts by the percentage determined under section
80.33 	290.06, subdivision 2d, for the taxable year.
80.34 		Subd. 4.Refundable. If the amount of the credit exceeds
80.35 	the liability for tax under chapter 290, the commissioner of
80.36 	revenue shall refund the excess to the qualified business.
81.1 		Subd. 5.Appropriation. An amount sufficient to pay the
81.2 	refunds authorized by this section is appropriated to the
81.3 	commissioner of revenue from the general fund.
81.4 	
EFFECTIVE DATE. This section is effective for tax years
81.5 	beginning after December 31, 2006.

81.6 	Sec. 21. [469.328] REPAYMENT OF TAX BENEFITS.
81.7 		Subdivision 1.Repayment obligation. A person must repay
81.8 	the amount of the tax reduction received under section 469.324,
81.9 	subdivision 1, clauses (1) to (5), or credit received under
81.10 	section 469.327, during the two years immediately before it
81.11 	ceased to operate in the zone as a qualified business, if the
81.12 	person ceased to operate its facility located within the zone,
81.13 	ceased to be in compliance with the terms of the business
81.14 	subsidy agreement, or otherwise ceases to be or is not a
81.15 	qualified business.
81.16 		Subd. 2.Disposition of repayment. The repayment must be
81.17 	paid to the state to the extent it represents a state tax
81.18 	reduction and to the county to the extent it represents a
81.19 	property tax reduction.  Any amount repaid to the state must be
81.20 	deposited in the general fund.  Any amount repaid to the county
81.21 	for the property tax exemption must be distributed to the local
81.22 	governments with authority to levy taxes in the zone in the same
81.23 	manner provided for distribution of payment of delinquent
81.24 	property taxes.  Any repayment of local sales or use taxes must
81.25 	be repaid to the jurisdiction imposing the local sales or use
81.26 	tax.
81.27 		Subd. 3.Repayment procedures. (a) For the repayment of
81.28 	taxes imposed under chapter 290 or 297A or local taxes collected
81.29 	pursuant to section 297A.99, a person must file an amended
81.30 	return with the commissioner of revenue and pay any taxes
81.31 	required to be repaid within 30 days after ceasing to be a
81.32 	qualified business.  The amount required to be repaid is
81.33 	determined by calculating the tax for the period for which
81.34 	repayment is required without regard to the tax reductions and
81.35 	credits allowed under section 469.324.
81.36 	(b) For the repayment of property taxes, the county auditor
82.1 	shall prepare a tax statement for the person, applying the
82.2 	applicable tax extension rates for each payable year and provide
82.3 	a copy to the business.  The person must pay the taxes to the
82.4 	county treasurer within 30 days after receipt of the tax
82.5 	statement.  The taxpayer may appeal the valuation and
82.6 	determination of the property tax to the tax court within 30
82.7 	days after receipt of the tax statement.
82.8 	(c) The provisions of chapters 270 and 289A relating to the
82.9 	commissioner of revenue's authority to audit, assess, and
82.10 	collect the tax and to hear appeals are applicable to the
82.11 	repayment required under paragraphs (a) and (b).  The
82.12 	commissioner may impose civil penalties as provided in chapter
82.13 	289A, and the additional tax and penalties are subject to
82.14 	interest at the rate provided in section 270.75, from 30 days
82.15 	after ceasing to do business in the zone until the date the tax
82.16 	is paid.
82.17 	(d) If a property tax is not repaid under paragraph (c),
82.18 	the county treasurer shall add the amount required to be repaid
82.19 	to the property taxes assessed against the property for payment
82.20 	in the year following the year in which the treasurer discovers
82.21 	that the person ceased to operate in the international economic
82.22 	development zone.
82.23 	(e) For determining the tax required to be repaid, a tax
82.24 	reduction is deemed to have been received on the date that the
82.25 	tax would have been due if the person had not been entitled to
82.26 	the tax reduction.
82.27 	(f) The commissioner of revenue may assess the repayment of
82.28 	taxes under paragraph (d) at any time within two years after the
82.29 	person ceases to be a qualified business, or within any period
82.30 	of limitations for the assessment of tax under section 289A.38,
82.31 	whichever is later.
82.32 		Subd. 4.Waiver authority. The commissioner of revenue
82.33 	may waive all or part of a repayment, if, in consultation with
82.34 	the foreign trade zone authority and appropriate officials from
82.35 	the state and local government units, including the commissioner
82.36 	of employment and economic development, determines that
83.1 	requiring repayment of the tax is not in the best interest of
83.2 	the state or local government and the business ceased operating
83.3 	as a result of circumstances beyond its control, including, but
83.4 	not limited to:
83.5 	(1) a natural disaster;
83.6 	(2) unforeseen industry trends; or 
83.7 	(3) loss of a major supplier or customer.
83.8 	
EFFECTIVE DATE. This section is effective the day
83.9 	following final enactment.

83.10 	Sec. 22. [469.329] REPORTING REQUIREMENTS.
83.11 	An applicant receiving designation of an international
83.12 	economic development zone under section 469.322 must annually
83.13 	report to the commissioner of employment and economic
83.14 	development on its progress in meeting the zone performance
83.15 	goals under the business plan for the zone and the applicant's
83.16 	compliance with the business subsidy law under sections 116J.993
83.17 	to 116J.995.

83.18 	EFFECTIVE DATE. This section is effective the day
83.19 	following final enactment.