1.1 	A bill for an act
1.2 	relating to transportation; requiring property appraisals by the Department 
1.3 	of Transportation; amending Minnesota Statutes 2004, sections 117.036, 
1.4 	subdivisions 2, 3, by adding a subdivision; 273.11, by adding a subdivision.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. Minnesota Statutes 2004, section 117.036, is amended by adding a 
1.7 	subdivision to read:
1.8 		Subd. 1a.Department of Transportation appraisal. (a) If any publicly available 
1.9 	report, project plan, or other document produced by the Department of Transportation 
1.10 	identifies property proposed to be acquired for a transportation project, including 
1.11 	alternative transportation routes, upon request by the property owner the commissioner 
1.12 	of transportation shall obtain at least one appraisal of each parcel of land that is or could 
1.13 	be identified within the report, project plan, or other document. The appraisal must be 
1.14 	obtained in conjunction with the publication of the report, project plan, or other document. 
1.15 	To the extent that it is practicable for the property owner, each appraisal shall include only 
1.16 	the portion of the property proposed to be acquired. In making the appraisal, the appraiser 
1.17 	must confer with one or more of the owners of the property, if reasonably possible.
1.18 	(b) If the Department of Transportation obtains an appraisal more than 12 months 
1.19 	before negotiation for direct purchase under subdivision 3, it must be replaced by an 
1.20 	adjusted appraisal. The adjusted appraisal is equal to the appraised property value plus the 
1.21 	increase in value from the quarter and year of the appraisal to the most recent quarter and 
1.22 	year for which data is available, using the house price index for the state of Minnesota as 
1.23 	published by the United States Department of Housing and Urban Development, Office of 
1.24 	Federal Housing Enterprise Oversight. The adjusted appraisal must be used in lieu of the 
2.1 	appraisal for the purposes of negotiation for direct purchase or any subsequent eminent 
2.2 	domain proceedings. Nothing in this subdivision prevents a new appraisal from being 
2.3 	obtained by the commissioner of transportation or the owner.

2.4 	Sec. 2. Minnesota Statutes 2004, section 117.036, subdivision 2, is amended to read:
2.5 		Subd. 2.Appraisal. (a) Before commencing an eminent domain proceeding under 
2.6 	this chapter, the acquiring authority must obtain at least one appraisal for the property 
2.7 	proposed to be acquired if one has not been obtained under subdivision 1a. In making the 
2.8 	appraisal, the appraiser must confer with one or more of the owners of the property, if 
2.9 	reasonably possible. At least 20 days before presenting a petition under section  117.055, 
2.10 	the acquiring authority must provide the owner with a copy of the appraisal or adjusted 
2.11 	appraisal and inform the owner of the owner's right to obtain an appraisal under this 
2.12 	section. 
2.13 	(b) The owner may obtain an appraisal by a qualified appraiser of the property 
2.14 	proposed to be acquired. The owner is entitled to reimbursement for the reasonable costs 
2.15 	of the appraisal from the acquiring authority up to a maximum of $1,500 within 30 
2.16 	days after the owner submits to the acquiring authority the information necessary for 
2.17 	reimbursement, provided that the owner does so within 60 days after the owner receives 
2.18 	the appraisal or adjusted appraisal from the authority under paragraph (a).

2.19 	Sec. 3. Minnesota Statutes 2004, section 117.036, subdivision 3, is amended to read:
2.20 		Subd. 3.Negotiation. In addition to the appraisal requirements under subdivision 
2.21 	2, before commencing an eminent domain proceeding, the acquiring authority must 
2.22 	make a good faith attempt to negotiate personally with the owner of the property in 
2.23 	order to acquire the property by direct purchase instead of the use of eminent domain 
2.24 	proceedings. In making this negotiation, the acquiring authority must consider the 
2.25 	appraisals in its possession, excluding any appraisal that was subsequently replaced by an 
2.26 	adjusted appraisal under subdivision 1a, and other information that may be relevant to a 
2.27 	determination of damages under this chapter.

2.28 	Sec. 4. Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision to 
2.29 	read:
2.30 		Subd. 23.Valuation of property; future transportation uses; capital gains 
2.31 	exemption. (a) The commissioner of transportation shall notify the assessor of each 
2.32 	county where the Department of Transportation has identified property proposed to 
2.33 	be acquired for a transportation project, including alternative transportation routes as 
3.1 	provided under section 117.036, subdivision 1a. The certification shall contain a detailed 
3.2 	listing of the specific parcels of property, or portions of the parcels that may be acquired 
3.3 	for the project or route, and the anticipated number of years before each of the parcels will 
3.4 	be acquired. The Department of Transportation must make information available to the 
3.5 	assessor to ensure that the parcels have been properly identified.
3.6 	(b) Based upon the certification under paragraph (a), the assessor shall establish the 
3.7 	market value for tax purposes for each of the parcels of property as follows: (1) determine 
3.8 	the estimated market value of the property in the same manner as other similar property; 
3.9 	and (2) reduce the value in clause (1) by a uniform percentage each year so that at the end 
3.10 	of the number of years of the timeline for that specific parcel certified under paragraph (a), 
3.11 	the property's market value for tax purposes will be equal to 50 percent of the estimated 
3.12 	market value. If the property is subject to limited market value under subdivision 1a, the 
3.13 	adjustment under clause (2) shall be made to the property's limited market value.
3.14 	(c) Capital gains on property sold pursuant to this section are exempt from income 
3.15 	tax under chapter 290.