1.1                          A bill for an act 
  1.2             relating to the financing and operation of state and 
  1.3             local government; providing property tax class rate 
  1.4             reform; providing for education financing; providing 
  1.5             for calculation of rent constituting property taxes; 
  1.6             providing increased property tax refunds for 
  1.7             homeowners; changing truth-in-taxation requirements; 
  1.8             providing for joint truth-in-taxation hearings; 
  1.9             imposing levy limits on cities and counties for taxes 
  1.10            levied in 1997 and 1998; changing fiscal note 
  1.11            requirements for state mandates; providing for 
  1.12            reimbursement for costs of state mandates; requiring 
  1.13            periodic review of administrative rules; reducing or 
  1.14            repealing certain corporate taxes; imposing a business 
  1.15            activity tax; making miscellaneous property tax 
  1.16            changes; providing procedures for the apportionment of 
  1.17            a local government unit; providing for increase in 
  1.18            city aid base; changing tax increment financing 
  1.19            provisions; providing for heritage and historic 
  1.20            subdistricts; authorizing certain tax increment 
  1.21            districts; exempting certain tax increment districts 
  1.22            from certain requirements; authorizing local tax 
  1.23            levies, abatements, and assessments; conforming 
  1.24            certain income tax laws with changes in federal law; 
  1.25            modifying certain income tax definitions and formulas; 
  1.26            providing income tax credits; imposing the sales tax 
  1.27            on certain tangible personal property and services; 
  1.28            modifying the application of sales and excise taxes; 
  1.29            exempting certain purchases from the sales tax; 
  1.30            authorizing the city of Willmar to impose sales and 
  1.31            excise taxes; modifying waste management tax and 
  1.32            taconite tax provisions; increasing the budget 
  1.33            reserve; revising the law governing regional 
  1.34            development commissions; requiring a study; requiring 
  1.35            reports; appropriating money; amending Minnesota 
  1.36            Statutes 1996, sections 16A.152, subdivision 2; 93.41; 
  1.37            103D.905, subdivisions 4, 5, and by adding a 
  1.38            subdivision; 115A.554; 124.195, subdivisions 7 and 10; 
  1.39            124.239, subdivision 5, and by adding subdivisions; 
  1.40            124.2716, subdivision 3; 124.2727, subdivision 6b; 
  1.41            124.312, subdivisions 4 and 5; 124.314, subdivision 2; 
  1.42            124.83, subdivision 4; 124.95, subdivisions 1 and 4; 
  1.43            124A.23, subdivision 1; 216B.16, by adding a 
  1.44            subdivision; 270B.01, subdivision 8; 272.02, 
  1.45            subdivision 1; 273.11, subdivisions 1 and 16; 273.112, 
  1.46            subdivisions 1, 2, 3, and 4; 273.12; 273.124, by 
  2.1             adding a subdivision; 273.13, subdivisions 22, 23, 24, 
  2.2             25, and 31; 273.1398, subdivisions 4 and 8; 273.1399, 
  2.3             subdivision 6, and by adding a subdivision; 275.065, 
  2.4             subdivisions 1, 3, 5a, 6, 8, and by adding 
  2.5             subdivisions; 275.16; 276.04, subdivision 2; 281.13; 
  2.6             281.23, subdivision 6, and by adding a subdivision; 
  2.7             281.273; 281.276; 282.01, subdivision 8; 282.04, 
  2.8             subdivision 1; 287.22; 289A.02, subdivision 7; 290.01, 
  2.9             subdivisions 19, 19a, 19b, 19c, 19d, 19f, 19g, 31, and 
  2.10            by adding a subdivision; 290.014, subdivisions 2 and 
  2.11            3; 290.015, subdivisions 3 and 5; 290.06, subdivisions 
  2.12            1, 2c, 22, and by adding a subdivision; 290.068, 
  2.13            subdivision 1; 290.0922, subdivision 1; 290.17, 
  2.14            subdivision 1; 290.191, subdivision 4; 290.371, 
  2.15            subdivision 2; 290.9725; 290.9727, subdivision 1; 
  2.16            290.9728, subdivision 1; 290A.03, subdivisions 11 and 
  2.17            13; 290A.04, subdivisions 2 and 6; 290A.19; 291.005, 
  2.18            subdivision 1; 296.141, subdivision 4; 296.18, 
  2.19            subdivision 1; 297A.01, subdivisions 3, 4, 7, 11, 15, 
  2.20            and 16; 297A.09; 297A.15, subdivision 7; 297A.25, 
  2.21            subdivisions 2, 7, 11, 16, 56, 59, and by adding 
  2.22            subdivisions; 297A.44, subdivision 1; 297B.01, 
  2.23            subdivisions 7 and 8; 297E.04, subdivision 3; 298.24, 
  2.24            subdivision 1; 298.296, subdivision 4; 298.75, 
  2.25            subdivisions 1, 4, and by adding a subdivision; 
  2.26            308A.705, subdivision 1; 325D.33, subdivision 3; 
  2.27            349.12, subdivision 26a; 349.163, subdivision 8; 
  2.28            373.01, subdivision 1; 373.40, subdivision 7; 375.192, 
  2.29            subdivision 2; 383A.75, subdivision 3; 462.381; 
  2.30            462.383; 462.384, subdivision 5; 462.385, subdivisions 
  2.31            1 and 3; 462.386, subdivision 1; 462.387; 462.388; 
  2.32            462.389, subdivisions 1, 3, and 4; 462.39, 
  2.33            subdivisions 2 and 3; 462.391, subdivision 5, and by 
  2.34            adding subdivisions; 462.393; 462.394; 462.396, 
  2.35            subdivisions 1, 3, and 4; 462.398; 465.71; 465.81, 
  2.36            subdivisions 1 and 3; 465.82, subdivisions 1, 2, and 
  2.37            by adding a subdivision; 465.87, subdivisions 1a and 
  2.38            2; 465.88; 469.040, subdivision 3, and by adding a 
  2.39            subdivision; 469.169, by adding a subdivision; 
  2.40            469.174, subdivisions 4, 7, 10, 12, 16, 23, 24, and by 
  2.41            adding subdivisions; 469.175, subdivisions 1, 3, 7, 
  2.42            and by adding a subdivision; 469.176, subdivisions 1b, 
  2.43            1e, 4c, 4e, 4j, 5, and by adding a subdivision; 
  2.44            469.1765, subdivisions 2, 3, 4, and 7; 469.177, 
  2.45            subdivision 3; 473.39, by adding a subdivision; 
  2.46            477A.011, subdivision 36; 611.27, subdivision 4; Laws 
  2.47            1992, chapter 511, article 2, section 52; Laws 1993, 
  2.48            chapter 375, articles 7, section 29; and 9, section 
  2.49            45, subdivision 2, 3, 4, and by a adding a 
  2.50            subdivision; Laws 1995, chapters 255, article 3, 
  2.51            section 2, subdivision 1, as amended; 264, article 5, 
  2.52            sections 44, subdivision 4, as amended; 45, 
  2.53            subdivision 1, as amended; proposing coding for new 
  2.54            law in Minnesota Statutes, chapters 3; 14; 124; 273; 
  2.55            275; 290; 458D; 462A; and 469; proposing coding for 
  2.56            new law as Minnesota Statutes, chapter 297F; repealing 
  2.57            Minnesota Statutes 1996, sections 3.982; 116.07, 
  2.58            subdivision 10; 121.904, subdivision 4d; 124.91, 
  2.59            subdivisions 2 and 7; 124.912, subdivisions 2 and 3; 
  2.60            270B.12, subdivision 11; 273.13, subdivision 32; 
  2.61            273.1317; 273.1318; 276.012; 290.0921; 290.0922; 
  2.62            290A.03, subdivisions 12a and 14; 290A.055; 290A.26; 
  2.63            297A.01, subdivisions 20 and 21; 297A.02, subdivision 
  2.64            5; 297A.45; 462.384, subdivision 7; 462.385, 
  2.65            subdivision 2; 462.389, subdivision 5; 462.391, 
  2.66            subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; 462.392; 
  2.67            469.174, subdivision 19; 469.176, subdivision 4b; and 
  2.68            477A.05; Laws 1995, chapter 264, article 4, as amended.
  2.69  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.1                              ARTICLE 1 
  3.2                             PROPERTY TAX 
  3.3                          CLASS RATE REFORM 
  3.4      Section 1.  Minnesota Statutes 1996, section 273.124, is 
  3.5   amended by adding a subdivision to read: 
  3.6      Subd. 19.  [LEASE-PURCHASE PROGRAM.] Qualifying buildings 
  3.7   and appurtenances, together with the land on which they are 
  3.8   located, are classified as homesteads, if the following 
  3.9   qualifications are met: 
  3.10     (1) the property is leased for up to a five-year period by 
  3.11  the occupant under a lease-purchase program administered by the 
  3.12  Minnesota housing finance agency or a housing and redevelopment 
  3.13  authority under sections 469.001 to 469.047; 
  3.14     (2) the occupant's income is no greater than 80 percent of 
  3.15  the county or area median income, adjusted for family size; 
  3.16     (3) the building consists of one or two dwelling units; 
  3.17     (4) the lease agreement provides that part of the lease 
  3.18  payment is escrowed as a nonrefundable down payment on the 
  3.19  housing; 
  3.20     (5) the administering agency verifies the occupant's income 
  3.21  eligibility and certifies to the county assessor that the 
  3.22  occupant meets the income standards; and 
  3.23     (6) the property owner applies to the county assessor by 
  3.24  May 30 of each year. 
  3.25     For purposes of this subdivision, "qualifying buildings and 
  3.26  appurtenances" means a one- or two-unit residential building 
  3.27  which was unoccupied, abandoned, and boarded for at least six 
  3.28  months.  
  3.29     Sec. 2.  [273.126] [QUALIFYING LOW-INCOME RENTAL HOUSING.] 
  3.30     Subdivision 1.  [QUALIFYING RULES.] The market value of a 
  3.31  rental housing unit qualifies for assessment under class 4d if: 
  3.32     (1) it is occupied by individuals meeting the income limits 
  3.33  under subdivision 2; 
  3.34     (2) a rent restriction agreement under subdivision 3 
  3.35  applies; 
  3.36     (3) the unit meets the minimum housing quality standards 
  3.37  under subdivision 4; and 
  4.1      (4) the Minnesota housing finance agency certifies to the 
  4.2   local assessor that the unit qualifies. 
  4.3      Subd. 2.  [INCOME LIMITS.] (a) In order to qualify under 
  4.4   class 4d, a unit must be occupied by an individual or 
  4.5   individuals whose income is at or below 60 percent of the median 
  4.6   area gross income.  If the resident's income met the requirement 
  4.7   when the resident first occupied the unit, the income of the 
  4.8   resident continues to qualify, unless the income exceeds 85 
  4.9   percent of the median area gross income.  
  4.10     (b) For purposes of this section, "median area gross income"
  4.11  means the greater of (1) the median gross income for the area 
  4.12  determined under section 42 of the Internal Revenue Code of 
  4.13  1986, as amended through December 31, 1996, or (2) the median 
  4.14  gross income for the state.  The median gross income must be 
  4.15  adjusted for family size. 
  4.16     (c) Vacant units qualify as meeting the requirements of 
  4.17  this subdivision in the same proportion that total units in the 
  4.18  building are subject to rent restriction agreements under 
  4.19  subdivision 3 and meet minimum housing standards under 
  4.20  subdivision 4.  This paragraph applies only to the extent that 
  4.21  units subject to a rent restriction agreement and meeting the 
  4.22  minimum housing quality standards are vacant. 
  4.23     (d) The owner or manager of the property may comply with 
  4.24  this subdivision by obtaining written statements from the 
  4.25  residents, at least annually, that their incomes are at or below 
  4.26  the limit.  
  4.27     Subd. 3.  [RENT RESTRICTIONS.] (a) In order to qualify 
  4.28  under class 4d, a unit must be subject to a rent restriction 
  4.29  agreement with the housing finance agency for a period of at 
  4.30  least five years.  The agreement must be in effect and apply to 
  4.31  the rents to be charged for the year in which the property taxes 
  4.32  are payable.  The agreement must provide that the restrictions 
  4.33  apply to each year of the period, regardless of whether the unit 
  4.34  is occupied by an individual with qualifying income or whether 
  4.35  class 4d applies.  The rent restriction agreement must provide 
  4.36  for rents for the unit to be no higher than the rents permitted 
  5.1   under section 42 of the Internal Revenue Code of 1986, as 
  5.2   amended through December 31, 1996.  The definition of median 
  5.3   gross income specified in this section applies. 
  5.4      (b) Notwithstanding the maximum rent levels permitted, 20 
  5.5   percent of the units in the metropolitan area and ten percent of 
  5.6   the units in greater Minnesota qualifying under class 4d must be 
  5.7   made available to a family with a section 8 certificate. 
  5.8      Subd. 4.  [MINIMUM HOUSING STANDARDS.] In order to qualify 
  5.9   under class 4d, a unit must be certified by the housing finance 
  5.10  agency to meet the minimum housing standards established under 
  5.11  section 462A.071. 
  5.12     Subd. 5.  [MONITORING RENT LEVELS.] The housing finance 
  5.13  agency is directed to monitor changes in rent levels and the use 
  5.14  of section 8 certificates in units qualifying under class 4d. 
  5.15     Subd. 6.  [PENALTIES.] Notwithstanding the provisions of 
  5.16  section 273.01, 274.01, or any other law, if the Minnesota 
  5.17  housing finance agency notifies the assessor that the provisions 
  5.18  of this section have not been met for any period during which a 
  5.19  unit was classified under class 4d, a penalty is imposed as 
  5.20  provided in section 462A.071, subdivision 8.  
  5.21     Sec. 3.  Minnesota Statutes 1996, section 273.13, 
  5.22  subdivision 22, is amended to read: 
  5.23     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
  5.24  23, real estate which is (i) residential and used for homestead 
  5.25  purposes; and (ii) other residential real estate containing one 
  5.26  unit, other than seasonal residential, and recreational; and 
  5.27  (iii) a dwelling, garage, and surrounding one acre of property 
  5.28  on a nonhomestead farm classified under subdivision 23, 
  5.29  paragraph (b), is class 1.  The market value of class 1a 
  5.30  property must be determined based upon the value of the house, 
  5.31  garage, and land.  
  5.32     For taxes payable in 1998 and thereafter, the first 
  5.33  ~~$72,000~~ $75,000 of market value of class 1a property has a net 
  5.34  class rate of one percent of its market value ~~and a gross class~~ 
  5.35  ~~rate of 2.17 percent of its market value.  For taxes payable in~~ 
  5.36  ~~1992,~~; and the market value of class 1a property that 
  6.1   exceeds ~~$72,000 but does not exceed $115,000~~ $75,000 has a class 
  6.2   rate of two percent of its market value~~; and the market value of~~ 
  6.3   ~~class 1a property that exceeds $115,000 has a class rate of 2.5~~ 
  6.4   ~~percent of its market value.  For taxes payable in 1993 and~~ 
  6.5   ~~thereafter, the market value of class 1a property that exceeds~~ 
  6.6   ~~$72,000 has a class rate of two percent~~. 
  6.7      (b) Class 1b property includes homestead real estate or 
  6.8   homestead manufactured homes used for the purposes of a 
  6.9   homestead by 
  6.10     (1) any blind person, or the blind person and the blind 
  6.11  person's spouse; or 
  6.12     (2) any person, hereinafter referred to as "veteran," who: 
  6.13     (i) served in the active military or naval service of the 
  6.14  United States; and 
  6.15     (ii) is entitled to compensation under the laws and 
  6.16  regulations of the United States for permanent and total 
  6.17  service-connected disability due to the loss, or loss of use, by 
  6.18  reason of amputation, ankylosis, progressive muscular 
  6.19  dystrophies, or paralysis, of both lower extremities, such as to 
  6.20  preclude motion without the aid of braces, crutches, canes, or a 
  6.21  wheelchair; and 
  6.22     (iii) has acquired a special housing unit with special 
  6.23  fixtures or movable facilities made necessary by the nature of 
  6.24  the veteran's disability, or the surviving spouse of the 
  6.25  deceased veteran for as long as the surviving spouse retains the 
  6.26  special housing unit as a homestead; or 
  6.27     (3) any person who: 
  6.28     (i) is permanently and totally disabled and 
  6.29     (ii) receives 90 percent or more of total income from 
  6.30     (A) aid from any state as a result of that disability; or 
  6.31     (B) supplemental security income for the disabled; or 
  6.32     (C) workers' compensation based on a finding of total and 
  6.33  permanent disability; or 
  6.34     (D) social security disability, including the amount of a 
  6.35  disability insurance benefit which is converted to an old age 
  6.36  insurance benefit and any subsequent cost of living increases; 
  7.1   or 
  7.2      (E) aid under the federal Railroad Retirement Act of 1937, 
  7.3   United States Code Annotated, title 45, section 228b(a)5; or 
  7.4      (F) a pension from any local government retirement fund 
  7.5   located in the state of Minnesota as a result of that 
  7.6   disability; or 
  7.7      (G) pension, annuity, or other income paid as a result of 
  7.8   that disability from a private pension or disability plan, 
  7.9   including employer, employee, union, and insurance plans and 
  7.10     (iii) has household income as defined in section 290A.03, 
  7.11  subdivision 5, of $50,000 or less; or 
  7.12     (4) any person who is permanently and totally disabled and 
  7.13  whose household income as defined in section 290A.03, 
  7.14  subdivision 5, is 150 percent or less of the federal poverty 
  7.15  level. 
  7.16     Property is classified and assessed under clause (4) only 
  7.17  if the government agency or income-providing source certifies, 
  7.18  upon the request of the homestead occupant, that the homestead 
  7.19  occupant satisfies the disability requirements of this paragraph.
  7.20     Property is classified and assessed pursuant to clause (1) 
  7.21  only if the commissioner of economic security certifies to the 
  7.22  assessor that the homestead occupant satisfies the requirements 
  7.23  of this paragraph.  
  7.24     Permanently and totally disabled for the purpose of this 
  7.25  subdivision means a condition which is permanent in nature and 
  7.26  totally incapacitates the person from working at an occupation 
  7.27  which brings the person an income.  The first $32,000 market 
  7.28  value of class 1b property has a net class rate of .45 percent 
  7.29  of its market value and a gross class rate of .87 percent of its 
  7.30  market value.  The remaining market value of class 1b property 
  7.31  has a gross or net class rate using the rates for class 1 or 
  7.32  class 2a property, whichever is appropriate, of similar market 
  7.33  value.  
  7.34     (c) Class 1c property is commercial use real property that 
  7.35  abuts a lakeshore line and is devoted to temporary and seasonal 
  7.36  residential occupancy for recreational purposes but not devoted 
  8.1   to commercial purposes for more than 250 days in the year 
  8.2   preceding the year of assessment, and that includes a portion 
  8.3   used as a homestead by the owner, which includes a dwelling 
  8.4   occupied as a homestead by a shareholder of a corporation that 
  8.5   owns the resort or a partner in a partnership that owns the 
  8.6   resort, even if the title to the homestead is held by the 
  8.7   corporation or partnership.  For purposes of this clause, 
  8.8   property is devoted to a commercial purpose on a specific day if 
  8.9   any portion of the property, excluding the portion used 
  8.10  exclusively as a homestead, is used for residential occupancy 
  8.11  and a fee is charged for residential occupancy.  In order for a 
  8.12  property to be classified as class 1c, at least 40 percent of 
  8.13  the annual gross lodging receipts related to the property must 
  8.14  be from business conducted between Memorial Day weekend and 
  8.15  Labor Day weekend, and at least 60 percent of all bookings by 
  8.16  lodging guests during the year must be for periods of at least 
  8.17  three consecutive nights.  Class 1c property has a class rate of 
  8.18  one percent of total market value ~~for taxes payable in 1993 and~~ 
  8.19  ~~thereafter~~ with the following limitation:  the area of the 
  8.20  property must not exceed 100 feet of lakeshore footage for each 
  8.21  cabin or campsite located on the property up to a total of 800 
  8.22  feet and 500 feet in depth, measured away from the lakeshore.  
  8.23     Sec. 4.  Minnesota Statutes 1996, section 273.13, 
  8.24  subdivision 23, is amended to read: 
  8.25     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
  8.26  land including any improvements that is homesteaded.  The market 
  8.27  value of the house and garage and immediately surrounding one 
  8.28  acre of land has the same class rates as class 1a property under 
  8.29  subdivision 22.  The value of the remaining land including 
  8.30  improvements up to $115,000 has a net class rate of .45 percent 
  8.31  of market value and a gross class rate of 1.75 percent of market 
  8.32  value.  The remaining value of class 2a property over $115,000 
  8.33  of market value that does not exceed 320 acres has a net class 
  8.34  rate of one percent of market value, and a gross class rate of 
  8.35  2.25 percent of market value.  The remaining property over the 
  8.36  $115,000 market value in excess of 320 acres has a class rate of 
  9.1   1.5 percent of market value, and a gross class rate of 2.25 
  9.2   percent of market value.  
  9.3      (b) Class 2b property is (1) real estate, rural in 
  9.4   character and used exclusively for growing trees for timber, 
  9.5   lumber, and wood and wood products; (2) real estate that is not 
  9.6   improved with a structure and is used exclusively for growing 
  9.7   trees for timber, lumber, and wood and wood products, if the 
  9.8   owner has participated or is participating in a cost-sharing 
  9.9   program for afforestation, reforestation, or timber stand 
  9.10  improvement on that particular property, administered or 
  9.11  coordinated by the commissioner of natural resources; (3) real 
  9.12  estate that is nonhomestead agricultural land; or (4) a landing 
  9.13  area or public access area of a privately owned public use 
  9.14  airport.  Class 2b property has a net class rate of 1.5 percent 
  9.15  of market value, and a gross class rate of 2.25 percent of 
  9.16  market value.  
  9.17     (c) Agricultural land as used in this section means 
  9.18  contiguous acreage of ten acres or more, primarily used during 
  9.19  the preceding year for agricultural purposes.  Agricultural use 
  9.20  may include pasture, timber, waste, unusable wild land, and land 
  9.21  included in state or federal farm or conservation programs.  
  9.22  "Agricultural purposes" as used in this section means the 
  9.23  raising or cultivation of agricultural products.  Land enrolled 
  9.24  in the Reinvest in Minnesota program under sections 103F.505 to 
  9.25  103F.531 or the federal Conservation Reserve Program as 
  9.26  contained in Public Law Number 99-198, and consisting of a 
  9.27  minimum of ten contiguous acres, shall be classified as 
  9.28  agricultural.  Agricultural classification for property shall be 
  9.29  determined with respect to the use of the whole parcel, and not 
  9.30  based upon the market value of any residential structures on the 
  9.31  parcel or contiguous parcels under the same ownership. 
  9.32     (d) Real estate of less than ten acres used principally for 
  9.33  raising or cultivating agricultural products, shall be 
  9.34  considered as agricultural land, if it is not used primarily for 
  9.35  residential purposes.  
  9.36     (e) The term "agricultural products" as used in this 
 10.1   subdivision includes:  
 10.2      (1) livestock, dairy animals, dairy products, poultry and 
 10.3   poultry products, fur-bearing animals, horticultural and nursery 
 10.4   stock described in sections 18.44 to 18.61, fruit of all kinds, 
 10.5   vegetables, forage, grains, bees, and apiary products by the 
 10.6   owner; 
 10.7      (2) fish bred for sale and consumption if the fish breeding 
 10.8   occurs on land zoned for agricultural use; 
 10.9      (3) the commercial boarding of horses if the boarding is 
 10.10  done in conjunction with raising or cultivating agricultural 
 10.11  products as defined in clause (1); 
 10.12     (4) property which is owned and operated by nonprofit 
 10.13  organizations used for equestrian activities, excluding racing; 
 10.14  and 
 10.15     (5) game birds and waterfowl bred and raised for use on a 
 10.16  shooting preserve licensed under section 97A.115.  
 10.17     (f) If a parcel used for agricultural purposes is also used 
 10.18  for commercial or industrial purposes, including but not limited 
 10.19  to:  
 10.20     (1) wholesale and retail sales; 
 10.21     (2) processing of raw agricultural products or other goods; 
 10.22     (3) warehousing or storage of processed goods; and 
 10.23     (4) office facilities for the support of the activities 
 10.24  enumerated in clauses (1), (2), and (3), 
 10.25  the assessor shall classify the part of the parcel used for 
 10.26  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 10.27  appropriate, and the remainder in the class appropriate to its 
 10.28  use.  The grading, sorting, and packaging of raw agricultural 
 10.29  products for first sale is considered an agricultural purpose.  
 10.30  A greenhouse or other building where horticultural or nursery 
 10.31  products are grown that is also used for the conduct of retail 
 10.32  sales must be classified as agricultural if it is primarily used 
 10.33  for the growing of horticultural or nursery products from seed, 
 10.34  cuttings, or roots and occasionally as a showroom for the retail 
 10.35  sale of those products.  Use of a greenhouse or building only 
 10.36  for the display of already grown horticultural or nursery 
 11.1   products does not qualify as an agricultural purpose.  
 11.2      The assessor shall determine and list separately on the 
 11.3   records the market value of the homestead dwelling and the one 
 11.4   acre of land on which that dwelling is located.  If any farm 
 11.5   buildings or structures are located on this homesteaded acre of 
 11.6   land, their market value shall not be included in this separate 
 11.7   determination.  
 11.8      (g) To qualify for classification under paragraph (b), 
 11.9   clause (4), a privately owned public use airport must be 
 11.10  licensed as a public airport under section 360.018.  For 
 11.11  purposes of paragraph (b), clause (4), "landing area" means that 
 11.12  part of a privately owned public use airport properly cleared, 
 11.13  regularly maintained, and made available to the public for use 
 11.14  by aircraft and includes runways, taxiways, aprons, and sites 
 11.15  upon which are situated landing or navigational aids.  A landing 
 11.16  area also includes land underlying both the primary surface and 
 11.17  the approach surfaces that comply with all of the following:  
 11.18     (i) the land is properly cleared and regularly maintained 
 11.19  for the primary purposes of the landing, taking off, and taxiing 
 11.20  of aircraft; but that portion of the land that contains 
 11.21  facilities for servicing, repair, or maintenance of aircraft is 
 11.22  not included as a landing area; 
 11.23     (ii) the land is part of the airport property; and 
 11.24     (iii) the land is not used for commercial or residential 
 11.25  purposes. 
 11.26  The land contained in a landing area under paragraph (b), clause 
 11.27  (4), must be described and certified by the commissioner of 
 11.28  transportation.  The certification is effective until it is 
 11.29  modified, or until the airport or landing area no longer meets 
 11.30  the requirements of paragraph (b), clause (4).  For purposes of 
 11.31  paragraph (b), clause (4), "public access area" means property 
 11.32  used as an aircraft parking ramp, apron, or storage hangar, or 
 11.33  an arrival and departure building in connection with the airport.
 11.34     (h) A structure is classified as an agricultural building 
 11.35  if all of the following criteria are met: 
 11.36     (1) the structure is located on property that is classified 
 12.1   as agricultural property under this subdivision; 
 12.2      (2) the structure is occupied exclusively by seasonal farm 
 12.3   workers during the time when they work on that farm, and the 
 12.4   occupants are not charged rent for the privilege of occupying 
 12.5   the property, provided that use of the structure for storage of 
 12.6   farm equipment and produce does not disqualify the property from 
 12.7   classification under this paragraph; 
 12.8      (3) the owners of the property are required to provide 
 12.9   housing for the workers under state or federal law; 
 12.10     (4) the structure meets all applicable health and safety 
 12.11  requirements; and 
 12.12     (5) the structure is not saleable as residential property 
 12.13  because it does not comply with local ordinances relating to 
 12.14  location in relation to streets or roads. 
 12.15     Sec. 5.  Minnesota Statutes 1996, section 273.13, 
 12.16  subdivision 24, is amended to read: 
 12.17     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 12.18  property and utility real and personal property, except class 5 
 12.19  property as identified in subdivision 31, clause (1), is class 
 12.20  3a.  It has a class rate of ~~three~~ 2.5 percent of the first 
 12.21  ~~$100,000~~ $200,000 of market value for taxes payable in ~~1993~~ 1998 
 12.22  and thereafter, and ~~5.06~~ four percent of the market value over 
 12.23  ~~$100,000~~ $200,000 for taxes payable in 1998 and thereafter, 
 12.24  except as provided in paragraph (b), (c), or (d).  In the case 
 12.25  of state-assessed commercial, industrial, and utility property 
 12.26  owned by one person or entity, only one parcel has a reduced 
 12.27  class rate on the first ~~$100,000~~ $200,000 of market value.  In 
 12.28  the case of other commercial, industrial, and utility property 
 12.29  owned by one person or entity, only one parcel in each county 
 12.30  has a reduced class rate on the first ~~$100,000~~ $200,000 of 
 12.31  market value, except that: 
 12.32     (1) if the market value of the parcel is less than 
 12.33  ~~$100,000~~ $200,000, and additional parcels are owned by the same 
 12.34  person or entity in the same city or town within that county, 
 12.35  the reduced class rate shall be applied up to a combined total 
 12.36  market value of ~~$100,000~~ $200,000 for all parcels owned by the 
 13.1   same person or entity in the same city or town within the 
 13.2   county; 
 13.3      (2) in the case of grain, fertilizer, and feed elevator 
 13.4   facilities, as defined in section 18C.305, subdivision 1, or 
 13.5   232.21, subdivision 8, the limitation to one parcel per owner 
 13.6   per county for the reduced class rate shall not apply, but there 
 13.7   shall be a limit of ~~$100,000~~ $200,000 of preferential value per 
 13.8   site of contiguous parcels owned by the same person or entity.  
 13.9   Only the value of the elevator portion of each parcel shall 
 13.10  qualify for treatment under this clause.  For purposes of this 
 13.11  subdivision, contiguous parcels include parcels separated only 
 13.12  by a railroad or public road right-of-way; and 
 13.13     (3) in the case of property owned by a nonprofit charitable 
 13.14  organization that qualifies for tax exemption under section 
 13.15  501(c)(3) of the Internal Revenue Code of 1986, as amended 
 13.16  through December 31, 1993, if the property is used as a business 
 13.17  incubator, the limitation to one parcel per owner per county for 
 13.18  the reduced class rate shall not apply, provided that the 
 13.19  reduced rate applies only to the first ~~$100,000~~ $200,000 of 
 13.20  value per parcel owned by the organization.  As used in this 
 13.21  clause, a "business incubator" is a facility used for the 
 13.22  development of nonretail businesses, offering access to 
 13.23  equipment, space, services, and advice to the tenant businesses, 
 13.24  for the purpose of encouraging economic development, 
 13.25  diversification, and job creation in the area served by the 
 13.26  organization. 
 13.27     To receive the reduced class rate on additional parcels 
 13.28  under clause (1), (2), or (3), the taxpayer must notify the 
 13.29  county assessor that the taxpayer owns more than one parcel that 
 13.30  qualifies under clause (1), (2), or (3). 
 13.31     (b) Employment property defined in section 469.166, during 
 13.32  the period provided in section 469.170, shall constitute class 
 13.33  3b and has a class rate of 2.3 percent of the first $50,000 of 
 13.34  market value and 3.6 percent of the remainder, except that for 
 13.35  employment property located in a border city enterprise zone 
 13.36  designated pursuant to section 469.168, subdivision 4, paragraph 
 14.1   (c), the class rate of the first $100,000 of market value and 
 14.2   the class rate of the remainder is determined under paragraph 
 14.3   (a), unless the governing body of the city designated as an 
 14.4   enterprise zone determines that a specific parcel shall be 
 14.5   assessed pursuant to the first clause of this sentence.  The 
 14.6   governing body may provide for assessment under the first clause 
 14.7   of the preceding sentence only for property which is located in 
 14.8   an area which has been designated by the governing body for the 
 14.9   receipt of tax reductions authorized by section 469.171, 
 14.10  subdivision 1. 
 14.11     (c) ~~Structures which are (i) located on property classified~~ 
 14.12  ~~as class 3a, (ii) constructed under an initial building permit~~ 
 14.13  ~~issued after January 2, 1996, (iii) located in a transit zone as~~ 
 14.14  ~~defined under section 473.3915, subdivision 3, (iv) located~~ 
 14.15  ~~within the boundaries of a school district, and (v) not~~ 
 14.16  ~~primarily used for retail or transient lodging purposes, shall~~ 
 14.17  ~~have a class rate of four percent on that portion of the market~~ 
 14.18  ~~value in excess of $100,000 and any market value under $100,000~~ 
 14.19  ~~that does not qualify for the three percent class rate under~~ 
 14.20  ~~paragraph (a).  As used in item (v), a structure is primarily~~ 
 14.21  ~~used for retail or transient lodging purposes if over 50 percent~~ 
 14.22  ~~of its square footage is used for those purposes.  The four~~ 
 14.23  ~~percent rate shall also apply to improvements to existing~~ 
 14.24  ~~structures that meet the requirements of items (i) to (v) if the~~ 
 14.25  ~~improvements are constructed under an initial building permit~~ 
 14.26  ~~issued after January 2, 1996, even if the remainder of the~~ 
 14.27  ~~structure was constructed prior to January 2, 1996.  For the~~ 
 14.28  ~~purposes of this paragraph, a structure shall be considered to~~ 
 14.29  ~~be located in a transit zone if any portion of the structure~~ 
 14.30  ~~lies within the zone.  If any property once eligible for~~ 
 14.31  ~~treatment under this paragraph ceases to remain eligible due to~~ 
 14.32  ~~revisions in transit zone boundaries, the property shall~~ 
 14.33  ~~continue to receive treatment under this paragraph for a period~~ 
 14.34  ~~of three years.~~  Qualified property used as a golf course is 
 14.35  class 3d.  Property qualifies under this paragraph if: 
 14.36     (1) any portion of the property is located within a county 
 15.1   in which is located a golf course owned by a municipality or 
 15.2   county; and 
 15.3      (2) it is open to the public without membership 
 15.4   requirements. 
 15.5      The class rate of property assessed under this paragraph is 
 15.6   two percent.  A structure used as a clubhouse, restaurant, or 
 15.7   place of refreshment in conjunction with the golf course is 
 15.8   classified as class 3a property. 
 15.9      Sec. 6.  Minnesota Statutes 1996, section 273.13, 
 15.10  subdivision 25, is amended to read: 
 15.11     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 15.12  estate containing four or more units and used or held for use by 
 15.13  the owner or by the tenants or lessees of the owner as a 
 15.14  residence for rental periods of 30 days or more.  Class 4a also 
 15.15  includes hospitals licensed under sections 144.50 to 144.56, 
 15.16  other than hospitals exempt under section 272.02, and contiguous 
 15.17  property used for hospital purposes, without regard to whether 
 15.18  the property has been platted or subdivided.  ~~Class 4a property~~ 
 15.19  ~~in a city with a population of 5,000 or less, that is (1)~~ 
 15.20  ~~located outside of the metropolitan area, as defined in section~~ 
 15.21  ~~473.121, subdivision 2, or outside any county contiguous to the~~ 
 15.22  ~~metropolitan area, and (2) whose city boundary is at least 15~~ 
 15.23  ~~miles from the boundary of any city with a population greater~~ 
 15.24  ~~than 5,000 has a class rate of 2.3 percent of market value for~~ 
 15.25  ~~taxes payable in 1996 and thereafter.  All other~~ Class 4a 
 15.26  property has a class rate of ~~3.4~~ 2.5 percent of market value for 
 15.27  taxes payable in ~~1996~~ 1998 and thereafter.  ~~For purposes of this~~ 
 15.28  ~~paragraph, population has the same meaning given in section~~ 
 15.29  ~~477A.011, subdivision 3.~~ 
 15.30     (b) Class 4b includes: 
 15.31     (1) residential real estate containing ~~less than four~~ two 
 15.32  or three units, other than seasonal residential, and 
 15.33  recreational; 
 15.34     (2) manufactured homes not classified under any other 
 15.35  provision; 
 15.36     (3) ~~a dwelling, garage, and surrounding one acre of~~ 
 16.1   ~~property on a nonhomestead farm classified under subdivision 23,~~ 
 16.2   ~~paragraph (b)~~ unimproved property that is classified residential 
 16.3   as determined under section 273.13, subdivision 33.  
 16.4      Class 4b property has a class rate of ~~2.8 percent of market~~ 
 16.5   ~~value for taxes payable in 1992, 2.5 percent of market value for~~ 
 16.6   ~~taxes payable in 1993, and 2.3~~ 2.0 percent of market value for 
 16.7   taxes payable in ~~1994~~ 1998, and thereafter. 
 16.8      (c) Class 4c property includes: 
 16.9      (1) ~~a structure that is:~~  
 16.10     ~~(i) situated on real property that is used for housing for~~ 
 16.11  ~~the elderly or for low- and moderate-income families as defined~~ 
 16.12  ~~in Title II, as amended through December 31, 1990, of the~~ 
 16.13  ~~National Housing Act or the Minnesota housing finance agency law~~ 
 16.14  ~~of 1971, as amended, or rules promulgated by the agency and~~ 
 16.15  ~~financed by a direct federal loan or federally insured loan made~~ 
 16.16  ~~pursuant to Title II of the Act; or~~ 
 16.17     ~~(ii) situated on real property that is used for housing the~~ 
 16.18  ~~elderly or for low- and moderate-income families as defined by~~ 
 16.19  ~~the Minnesota housing finance agency law of 1971, as amended, or~~ 
 16.20  ~~rules adopted by the agency pursuant thereto and financed by a~~ 
 16.21  ~~loan made by the Minnesota housing finance agency pursuant to~~ 
 16.22  ~~the provisions of the act.~~  
 16.23     ~~This clause applies only to property of a nonprofit or~~ 
 16.24  ~~limited dividend entity.  Property is classified as class 4c~~ 
 16.25  ~~under this clause for 15 years from the date of the completion~~ 
 16.26  ~~of the original construction or substantial rehabilitation, or~~ 
 16.27  ~~for the original term of the loan.~~  
 16.28     ~~(2) a structure that is:~~ 
 16.29     ~~(i) situated upon real property that is used for housing~~ 
 16.30  ~~lower income families or elderly or handicapped persons, as~~ 
 16.31  ~~defined in section 8 of the United States Housing Act of 1937,~~ 
 16.32  ~~as amended; and~~ 
 16.33     ~~(ii) owned by an entity which has entered into a housing~~ 
 16.34  ~~assistance payments contract under section 8 which provides~~ 
 16.35  ~~assistance for 100 percent of the dwelling units in the~~ 
 16.36  ~~structure, other than dwelling units intended for management or~~ 
 17.1   ~~maintenance personnel.  Property is classified as class 4c under~~ 
 17.2   ~~this clause for the term of the housing assistance payments~~ 
 17.3   ~~contract, including all renewals, or for the term of its~~ 
 17.4   ~~permanent financing, whichever is shorter; and~~ 
 17.5      ~~(3) a qualified low-income building as defined in section~~ 
 17.6   ~~42(c)(2) of the Internal Revenue Code of 1986, as amended~~ 
 17.7   ~~through December 31, 1990, that (i) receives a low-income~~ 
 17.8   ~~housing credit under section 42 of the Internal Revenue Code of~~ 
 17.9   ~~1986, as amended through December 31, 1990; or (ii) meets the~~ 
 17.10  ~~requirements of that section and receives public financing,~~ 
 17.11  ~~except financing provided under sections 469.174 to 469.179,~~ 
 17.12  ~~which contains terms restricting the rents; or (iii) meets the~~ 
 17.13  ~~requirements of section 273.1317.  Classification pursuant to~~ 
 17.14  ~~this clause is limited to a term of 15 years.  The public~~ 
 17.15  ~~financing received must be from at least one of the following~~ 
 17.16  ~~sources:  government issued bonds exempt from taxes under~~ 
 17.17  ~~section 103 of the Internal Revenue Code of 1986, as amended~~ 
 17.18  ~~through December 31, 1993, the proceeds of which are used for~~ 
 17.19  ~~the acquisition or rehabilitation of the building; programs~~ 
 17.20  ~~under section 221(d)(3), 202, or 236, of Title II of the~~ 
 17.21  ~~National Housing Act; rental housing program funds under Section~~ 
 17.22  ~~8 of the United States Housing Act of 1937 or the market rate~~ 
 17.23  ~~family graduated payment mortgage program funds administered by~~ 
 17.24  ~~the Minnesota housing finance agency that are used for the~~ 
 17.25  ~~acquisition or rehabilitation of the building; public financing~~ 
 17.26  ~~provided by a local government used for the acquisition or~~ 
 17.27  ~~rehabilitation of the building, including grants or loans from~~ 
 17.28  ~~federal community development block grants, HOME block grants,~~ 
 17.29  ~~or residential rental bonds issued under chapter 474A; or other~~ 
 17.30  ~~rental housing program funds provided by the Minnesota housing~~ 
 17.31  ~~finance agency for the acquisition or rehabilitation of the~~ 
 17.32  ~~building.~~ 
 17.33     ~~For all properties described in clauses (1), (2), and (3)~~ 
 17.34  ~~and in paragraph (d), the market value determined by the~~ 
 17.35  ~~assessor must be based on the normal approach to value using~~ 
 17.36  ~~normal unrestricted rents unless the owner of the property~~ 
 18.1   ~~elects to have the property assessed under Laws 1991, chapter~~ 
 18.2   ~~291, article 1, section 55.  If the owner of the property elects~~ 
 18.3   ~~to have the market value determined on the basis of the actual~~ 
 18.4   ~~restricted rents, as provided in Laws 1991, chapter 291, article~~ 
 18.5   ~~1, section 55, the property will be assessed at the rate~~ 
 18.6   ~~provided for class 4a or class 4b property, as appropriate.~~  
 18.7   ~~Properties described in clauses (1)(ii), (3), and (4) may apply~~ 
 18.8   ~~to the assessor for valuation under Laws 1991, chapter 291,~~ 
 18.9   ~~article 1, section 55.  The land on which these structures are~~ 
 18.10  ~~situated has the class rate given in paragraph (b) if the~~ 
 18.11  ~~structure contains fewer than four units, and the class rate~~ 
 18.12  ~~given in paragraph (a) if the structure contains four or more~~ 
 18.13  ~~units.  This clause applies only to the property of a nonprofit~~ 
 18.14  ~~or limited dividend entity.~~  
 18.15     ~~(4) a parcel of land, not to exceed one acre, and its~~ 
 18.16  ~~improvements or a parcel of unimproved land, not to exceed one~~ 
 18.17  ~~acre, if it is owned by a neighborhood real estate trust and at~~ 
 18.18  ~~least 60 percent of the dwelling units, if any, on all land~~ 
 18.19  ~~owned by the trust are leased to or occupied by lower income~~ 
 18.20  ~~families or individuals.  This clause does not apply to any~~ 
 18.21  ~~portion of the land or improvements used for nonresidential~~ 
 18.22  ~~purposes.  For purposes of this clause, a lower income family is~~ 
 18.23  ~~a family with an income that does not exceed 65 percent of the~~ 
 18.24  ~~median family income for the area, and a lower income individual~~ 
 18.25  ~~is an individual whose income does not exceed 65 percent of the~~ 
 18.26  ~~median individual income for the area, as determined by the~~ 
 18.27  ~~United States Secretary of Housing and Urban Development.  For~~ 
 18.28  ~~purposes of this clause, "neighborhood real estate trust" means~~ 
 18.29  ~~an entity which is certified by the governing body of the~~ 
 18.30  ~~municipality in which it is located to have the following~~ 
 18.31  ~~characteristics:~~ 
 18.32     ~~(a) it is a nonprofit corporation organized under chapter~~ 
 18.33  ~~317A;~~ 
 18.34     ~~(b) it has as its principal purpose providing housing for~~ 
 18.35  ~~lower income families in a specific geographic community~~ 
 18.36  ~~designated in its articles or bylaws;~~ 
 19.1      ~~(c) it limits membership with voting rights to residents of~~ 
 19.2   ~~the designated community; and~~ 
 19.3      ~~(d) it has a board of directors consisting of at least~~ 
 19.4   ~~seven directors, 60 percent of whom are members with voting~~ 
 19.5   ~~rights and, to the extent feasible, 25 percent of whom are~~ 
 19.6   ~~elected by resident members of buildings owned by the trust; and~~ 
 19.7      ~~(5)~~ except as provided in subdivision 22, paragraph (c), 
 19.8   real property devoted to temporary and seasonal residential 
 19.9   occupancy for recreation purposes, including real property 
 19.10  devoted to temporary and seasonal residential occupancy for 
 19.11  recreation purposes and not devoted to commercial purposes for 
 19.12  more than 250 days in the year preceding the year of 
 19.13  assessment.  For purposes of this clause, property is devoted to 
 19.14  a commercial purpose on a specific day if any portion of the 
 19.15  property is used for residential occupancy, and a fee is charged 
 19.16  for residential occupancy.  In order for a property to be 
 19.17  classified as class 4c, at least 40 percent of the annual gross 
 19.18  lodging receipts related to the property must be from business 
 19.19  conducted between Memorial Day weekend and Labor Day weekend and 
 19.20  at least 60 percent of all bookings by lodging guests during the 
 19.21  year must be for periods of at least three consecutive nights.  
 19.22  Class 4c also includes commercial use real property used 
 19.23  exclusively for recreational purposes in conjunction with class 
 19.24  4c property devoted to temporary and seasonal residential 
 19.25  occupancy for recreational purposes, up to a total of two acres, 
 19.26  provided the property is not devoted to commercial recreational 
 19.27  use for more than 250 days in the year preceding the year of 
 19.28  assessment and is located within two miles of the class 4c 
 19.29  property with which it is used.  Class 4c property classified in 
 19.30  this clause also includes the remainder of class 1c resorts.  
 19.31  Owners of real property devoted to temporary and seasonal 
 19.32  residential occupancy for recreation purposes and all or a 
 19.33  portion of which was devoted to commercial purposes for not more 
 19.34  than 250 days in the year preceding the year of assessment 
 19.35  desiring classification as class 1c or 4c, must submit a 
 19.36  declaration to the assessor designating the cabins or units 
 20.1   occupied for 250 days or less in the year preceding the year of 
 20.2   assessment by January 15 of the assessment year.  Those cabins 
 20.3   or units and a proportionate share of the land on which they are 
 20.4   located will be designated class 1c or 4c as otherwise 
 20.5   provided.  The remainder of the cabins or units and a 
 20.6   proportionate share of the land on which they are located will 
 20.7   be designated as class 3a.  The first $100,000 of the market 
 20.8   value of the remainder of the cabins or units and a 
 20.9   proportionate share of the land on which they are located shall 
 20.10  have a class rate of three percent.  The owner of property 
 20.11  desiring designation as class 1c or 4c property must provide 
 20.12  guest registers or other records demonstrating that the units 
 20.13  for which class 1c or 4c designation is sought were not occupied 
 20.14  for more than 250 days in the year preceding the assessment if 
 20.15  so requested.  The portion of a property operated as a (1) 
 20.16  restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
 20.17  facility operated on a commercial basis not directly related to 
 20.18  temporary and seasonal residential occupancy for recreation 
 20.19  purposes shall not qualify for class 1c or 4c; 
 20.20     ~~(6)~~ (2) real property up to a maximum of one acre of land 
 20.21  owned by a nonprofit community service oriented organization; 
 20.22  provided that the property is not used for a revenue-producing 
 20.23  activity for more than six days in the calendar year preceding 
 20.24  the year of assessment and the property is not used for 
 20.25  residential purposes on either a temporary or permanent basis.  
 20.26  For purposes of this clause, a "nonprofit community service 
 20.27  oriented organization" means any corporation, society, 
 20.28  association, foundation, or institution organized and operated 
 20.29  exclusively for charitable, religious, fraternal, civic, or 
 20.30  educational purposes, and which is exempt from federal income 
 20.31  taxation pursuant to section 501(c)(3), (10), or (19) of the 
 20.32  Internal Revenue Code of 1986, as amended through December 31, 
 20.33  1990.  For purposes of this clause, "revenue-producing 
 20.34  activities" shall include but not be limited to property or that 
 20.35  portion of the property that is used as an on-sale intoxicating 
 20.36  liquor or 3.2 percent malt liquor establishment licensed under 
 21.1   chapter 340A, a restaurant open to the public, bowling alley, a 
 21.2   retail store, gambling conducted by organizations licensed under 
 21.3   chapter 349, an insurance business, or office or other space 
 21.4   leased or rented to a lessee who conducts a for-profit 
 21.5   enterprise on the premises.  Any portion of the property which 
 21.6   is used for revenue-producing activities for more than six days 
 21.7   in the calendar year preceding the year of assessment shall be 
 21.8   assessed as class 3a.  The use of the property for social events 
 21.9   open exclusively to members and their guests for periods of less 
 21.10  than 24 hours, when an admission is not charged nor any revenues 
 21.11  are received by the organization shall not be considered a 
 21.12  revenue-producing activity; 
 21.13     ~~(7)~~ (3) post-secondary student housing of not more than one 
 21.14  acre of land that is owned by a nonprofit corporation organized 
 21.15  under chapter 317A and is used exclusively by a student 
 21.16  cooperative, sorority, or fraternity for on-campus housing or 
 21.17  housing located within two miles of the border of a college 
 21.18  campus; and 
 21.19     ~~(8)~~ (4) manufactured home parks as defined in section 
 21.20  327.14, subdivision 3. 
 21.21     Class 4c property has a class rate of ~~2.3~~ 2.0 percent of 
 21.22  market value, except that ~~(i)~~ for each parcel of seasonal 
 21.23  residential recreational property not used for commercial 
 21.24  purposes under clause ~~(5)~~ (1) the first ~~$72,000~~ $75,000 of 
 21.25  market value on each parcel has a class rate of ~~1.75 percent for~~ 
 21.26  ~~taxes payable in 1997 and~~ 1.5 percent for taxes payable in 1998 
 21.27  and thereafter, and the market value of each parcel that 
 21.28  exceeds ~~$72,000~~ $75,000 has a class rate of 2.5 percent~~, and~~ 
 21.29  ~~(ii) manufactured home parks assessed under clause (8) have a~~ 
 21.30  ~~class rate of two percent for taxes payable in 1996, and~~ 
 21.31  ~~thereafter~~. 
 21.32     (d) Class 4d property ~~includes:~~ 
 21.33     ~~(1) a structure that is:~~ 
 21.34     ~~(i) situated on real property that is used for housing for~~ 
 21.35  ~~the elderly or for low and moderate income families as defined~~ 
 21.36  ~~by the Farmers Home Administration;~~ 
 22.1      ~~(ii) located in a municipality of less than 10,000~~ 
 22.2   ~~population; and~~ 
 22.3      ~~(iii) financed by a direct loan or insured loan from the~~ 
 22.4   ~~Farmers Home Administration.  Property is classified under this~~ 
 22.5   ~~clause for 15 years from the date of the completion of the~~ 
 22.6   ~~original construction or for the original term of the loan.~~  
 22.7      ~~The class rates in paragraph (c), clauses (1), (2), and (3)~~ 
 22.8   ~~and this clause apply to the properties described in them, only~~ 
 22.9   ~~in proportion to occupancy of the structure by elderly or~~ 
 22.10  ~~handicapped persons or low and moderate income families as~~ 
 22.11  ~~defined in the applicable laws unless construction of the~~ 
 22.12  ~~structure had been commenced prior to January 1, 1984; or the~~ 
 22.13  ~~project had been approved by the governing body of the~~ 
 22.14  ~~municipality in which it is located prior to June 30, 1983; or~~ 
 22.15  ~~financing of the project had been approved by a federal or state~~ 
 22.16  ~~agency prior to June 30, 1983.  For those properties, 4c or 4d~~ 
 22.17  ~~classification is available only for those units meeting the~~ 
 22.18  ~~requirements of section 273.1318.~~ 
 22.19     ~~Classification under this clause is only available to~~ 
 22.20  ~~property of a nonprofit or limited dividend entity.~~ 
 22.21     ~~In the case of a structure financed or refinanced under any~~ 
 22.22  ~~federal or state mortgage insurance or direct loan program~~ 
 22.23  ~~exclusively for housing for the elderly or for housing for the~~ 
 22.24  ~~handicapped, a unit shall be considered occupied so long as it~~ 
 22.25  ~~is actually occupied by an elderly or handicapped person or, if~~ 
 22.26  ~~vacant, is held for rental to an elderly or handicapped person.~~ 
 22.27     ~~(2) For taxes payable in 1992, 1993, and 1994, only,~~ 
 22.28  ~~buildings and appurtenances, together with the land upon which~~ 
 22.29  ~~they are located, leased by the occupant under the community~~ 
 22.30  ~~lending model lease-purchase mortgage loan program administered~~ 
 22.31  ~~by the Federal National Mortgage Association, provided the~~ 
 22.32  ~~occupant's income is no greater than 60 percent of the county or~~ 
 22.33  ~~area median income, adjusted for family size and the building~~ 
 22.34  ~~consists of existing single family or duplex housing.  The lease~~ 
 22.35  ~~agreement must provide for a portion of the lease payment to be~~ 
 22.36  ~~escrowed as a nonrefundable down payment on the housing.  To~~ 
 23.1   ~~qualify under this clause, the taxpayer must apply to the county~~ 
 23.2   ~~assessor by May 30 of each year.  The application must be~~ 
 23.3   ~~accompanied by an affidavit or other proof required by the~~ 
 23.4   ~~assessor to determine qualification under this clause.~~ 
 23.5      ~~(3) Qualifying buildings and appurtenances, together with~~ 
 23.6   ~~the land upon which they are located, leased for a period of up~~ 
 23.7   ~~to five years by the occupant under a lease-purchase program~~ 
 23.8   ~~administered by the Minnesota housing finance agency or a~~ 
 23.9   ~~housing and redevelopment authority authorized under sections~~ 
 23.10  ~~469.001 to 469.047, provided the occupant's income is no greater~~ 
 23.11  ~~than 80 percent of the county or area median income, adjusted~~ 
 23.12  ~~for family size, and the building consists of two or less~~ 
 23.13  ~~dwelling units.  The lease agreement must provide for a portion~~ 
 23.14  ~~of the lease payment to be escrowed as a nonrefundable down~~ 
 23.15  ~~payment on the housing.  The administering agency shall verify~~ 
 23.16  ~~the occupants income eligibility and certify to the county~~ 
 23.17  ~~assessor that the occupant meets the income criteria under this~~ 
 23.18  ~~paragraph.  To qualify under this clause, the taxpayer must~~ 
 23.19  ~~apply to the county assessor by May 30 of each year.  For~~ 
 23.20  ~~purposes of this section, "qualifying buildings and~~ 
 23.21  ~~appurtenances" shall be defined as one or two unit residential~~ 
 23.22  ~~buildings which are unoccupied and have been abandoned and~~ 
 23.23  ~~boarded for at least six months~~ is qualifying low-income rental 
 23.24  housing certified to the assessor by the housing finance agency 
 23.25  under sections 273.126 and 462A.071.  Class 4d includes land in 
 23.26  proportion to the total market value of the building that is 
 23.27  qualifying low-income rental housing.  For all properties 
 23.28  qualifying as class 4d, the market value determined by the 
 23.29  assessor must be based on the normal approach to value using 
 23.30  normal unrestricted rents. 
 23.31     Class 4d property has a class rate of ~~two~~ one percent of 
 23.32  market value ~~except that property classified under clause (3),~~ 
 23.33  ~~shall have the same class rate as class 1a property~~. 
 23.34     ~~(e) Residential rental property that would otherwise be~~ 
 23.35  ~~assessed as class 4 property under paragraph (a); paragraph (b),~~ 
 23.36  ~~clauses (1) and (3); paragraph (c), clause (1), (2), (3), or~~ 
 24.1   ~~(4), is assessed at the class rate applicable to it under~~ 
 24.2   ~~Minnesota Statutes 1988, section 273.13, if it is found to be a~~ 
 24.3   ~~substandard building under section 273.1316.  Residential rental~~ 
 24.4   ~~property that would otherwise be assessed as class 4 property~~ 
 24.5   ~~under paragraph (d) is assessed at 2.3 percent of market value~~ 
 24.6   ~~if it is found to be a substandard building under section~~ 
 24.7   ~~273.1316.~~ 
 24.8      ~~(f) Class 4e property consists of the residential portion~~ 
 24.9   ~~of any structure located within a city that was converted from~~ 
 24.10  ~~nonresidential use to residential use, provided that:~~ 
 24.11     ~~(1) the structure had formerly been used as a warehouse;~~ 
 24.12     ~~(2) the structure was originally constructed prior to 1940;~~ 
 24.13     ~~(3) the conversion was done after December 31, 1995, but~~ 
 24.14  ~~before January 1, 2003; and~~ 
 24.15     ~~(4) the conversion involved an investment of at least~~ 
 24.16  ~~$25,000 per residential unit.~~ 
 24.17     ~~Class 4e property has a class rate of 2.3 percent, provided~~ 
 24.18  ~~that a structure is eligible for class 4e classification only in~~ 
 24.19  ~~the 12 assessment years immediately following the conversion.~~ 
 24.20     Sec. 7.  Minnesota Statutes 1996, section 273.13, 
 24.21  subdivision 31, is amended to read: 
 24.22     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 24.23     (1) tools, implements, and machinery of an electric 
 24.24  generating, transmission, or distribution system or a pipeline 
 24.25  system transporting or distributing water, gas, crude oil, or 
 24.26  petroleum products or mains and pipes used in the distribution 
 24.27  of steam or hot or chilled water for heating or cooling 
 24.28  buildings, which are fixtures; 
 24.29     (2) unmined iron ore and low-grade iron-bearing formations 
 24.30  as defined in section 273.14; and 
 24.31     (3) all other property not otherwise classified. 
 24.32     Class 5 property has a class rate of ~~5.06~~ 4.0 percent of 
 24.33  market value for taxes payable in 1998 and thereafter. 
 24.34     Sec. 8.  Minnesota Statutes 1996, section 273.1398, 
 24.35  subdivision 4, is amended to read: 
 24.36     Subd. 4.  [DISPARITY REDUCTION CREDIT.] (a) Beginning with 
 25.1   taxes payable in 1989, class 4a, class 3a, and class 3b property 
 25.2   qualifies for a disparity reduction credit if:  (1) the property 
 25.3   is located in a border city that has an enterprise zone 
 25.4   designated pursuant to section 469.168, subdivision 4; (2) the 
 25.5   property is located in a city with a population greater than 
 25.6   2,500 and less than 35,000 according to the 1980 decennial 
 25.7   census; (3) the city is adjacent to a city in another state or 
 25.8   immediately adjacent to a city adjacent to a city in another 
 25.9   state; and (4) the adjacent city in the other state has a 
 25.10  population of greater than 5,000 and less than 75,000.  
 25.11     (b) The credit is an amount sufficient to reduce (i) the 
 25.12  taxes levied on class 4a property to 2.3 percent of the 
 25.13  property's market value and (ii) the tax on class 3a and class 
 25.14  3b property to ~~3.3~~ 2.3 percent of market value.  
 25.15     (c) The county auditor shall annually certify the costs of 
 25.16  the credits to the department of revenue.  The department shall 
 25.17  reimburse local governments for the property taxes foregone as 
 25.18  the result of the credits in proportion to their total levies. 
 25.19     Sec. 9.  [462A.071] [CERTIFICATION OF HOUSING QUALIFYING 
 25.20  FOR REDUCED PROPERTY TAX RATE.] 
 25.21     Subdivision 1.  [CERTIFICATION.] By June 30 of each year, 
 25.22  the agency must certify to local assessors the units of 
 25.23  low-income rental properties that qualify for class 4d under 
 25.24  sections 273.126 and 273.13.  In making these certifications, 
 25.25  the agency may rely on the application and supporting 
 25.26  information supplied by the property owner as to compliance with 
 25.27  the income limits under section 273.126, subdivision 2, and 
 25.28  satisfaction of the minimum housing quality standards under 
 25.29  subdivision 4. 
 25.30     Subd. 2.  [APPLICATION.] (a) In order to qualify for 
 25.31  certification under subdivision 1, the owner or manager of the 
 25.32  property must annually apply to the agency.  The application 
 25.33  must be in the form prescribed by the agency, contain the 
 25.34  information required by the agency, and be submitted by the date 
 25.35  and time specified by the agency. 
 25.36     (b) Each application must include: 
 26.1      (1) the property tax identification number; 
 26.2      (2) the number, type, and size of units the applicant seeks 
 26.3   to qualify as low-income housing under class 4d; 
 26.4      (3) the number, type, and size of units in the property for 
 26.5   which the applicant is not seeking qualification, if any; 
 26.6      (4) a certification that the property has been inspected by 
 26.7   a qualified inspector within the past three years and meets the 
 26.8   minimum housing quality standards or is exempt from the 
 26.9   inspection requirement under subdivision 4; 
 26.10     (5) a statement indicating the building is in compliance 
 26.11  with the income limits; 
 26.12     (6) an executed agreement to restrict rents meeting the 
 26.13  requirements specified by the agency or executed leases for the 
 26.14  units for which qualification as low-income housing as class 4d 
 26.15  under section 273.13 is sought and the rent schedule; and 
 26.16     (7) any additional information the agency deems appropriate 
 26.17  to require. 
 26.18     (c) The applicant must pay a per-unit application fee to be 
 26.19  set by the agency.  The application fee charged by the agency 
 26.20  must approximately equal the costs of processing and reviewing 
 26.21  the applications.  The fee must be deposited in the general fund.
 26.22     Subd. 3.  [AGREEMENT TO RESTRICT RENTS.] The agency may 
 26.23  prescribe one or more standard form agreements to restrict rents 
 26.24  that meet the requirements of section 273.126, subdivision 3.  
 26.25  The agreements must be in recordable form.  The agency may 
 26.26  require applicants to execute a rent restriction agreement in 
 26.27  this form as a condition of entering an agreement to restrict 
 26.28  rents. 
 26.29     Subd. 4.  [MINIMUM HOUSING QUALITY STANDARDS.] (a) To 
 26.30  qualify for taxation under class 4d under section 273.13, a unit 
 26.31  must meet both the housing maintenance code of the local unit of 
 26.32  government in which the unit is located, if such a code has been 
 26.33  adopted, and the housing quality standards adopted by the United 
 26.34  States Department of Housing and Urban Development. 
 26.35     (b) In order to meet the minimum housing quality standards, 
 26.36  a building must be inspected by an independent designated 
 27.1   inspector at least once every three years.  The inspector must 
 27.2   certify that the building complies with the minimum standards.  
 27.3   The property owner must pay the cost of the inspection. 
 27.4      (c) The agency may exempt from the inspection requirement 
 27.5   housing units that are financed by a governmental entity and 
 27.6   subject to regular inspection or other compliance checks with 
 27.7   regard to minimum housing quality.  Written certification must 
 27.8   be supplied to show that these exempt units have been inspected 
 27.9   within the last three years and comply with the requirements 
 27.10  under the public financing or local requirements. 
 27.11     Subd. 5.  [HOUSING INSPECTORS.] (a) Housing inspections 
 27.12  required by this section may be conducted only by persons 
 27.13  designated by the agency.  The agency may designate one or more 
 27.14  persons to conduct inspections for all or part of the state.  A 
 27.15  designated inspector may charge a fee for an inspection up to a 
 27.16  maximum amount approved by the agency.  The inspector must be 
 27.17  independent of the owner or manager of the inspected property. 
 27.18     (b) The agency must maintain a list of persons eligible to 
 27.19  conduct housing inspections under this section. 
 27.20     Subd. 6.  [SECTION 8 AND TAX CREDIT UNITS.] (a) The agency 
 27.21  may deem units as meeting the requirements of section 273.126 
 27.22  and this section, if the units either: 
 27.23     (1) are subject to a housing assistance payments contract 
 27.24  under section 8 of the United States Housing Act of 1937, as 
 27.25  amended; or 
 27.26     (2) are rent and income restricted units of a qualified 
 27.27  low-income housing project receiving tax credits under section 
 27.28  42(g) of the Internal Revenue Code of 1986, as amended. 
 27.29     (b) The agency may certify these deemed units under 
 27.30  subdivision 1 based on a simplified application procedure that 
 27.31  verifies the unit's qualifications under paragraph (a). 
 27.32     Subd. 7.  [MONITORING COMPLIANCE.] (a) The agency must 
 27.33  monitor compliance by building owners with the requirements of 
 27.34  section 273.126 and this section.  The agency must annually 
 27.35  conduct on-site examinations of a sample of the buildings 
 27.36  receiving class 4d taxation to monitor compliance.  The agency 
 28.1   may contract with third parties to monitor compliance. 
 28.2      (b) An inspector, designated by the agency under 
 28.3   subdivision 5, shall notify the agency if, in conducting an 
 28.4   inspection under subdivision 4, the inspector finds that: 
 28.5      (1) a unit is receiving class 4d taxation; 
 28.6      (2) the unit is not in compliance with the requirements of 
 28.7   subdivision 4; and 
 28.8      (3) the owner or manager fails or refuses to cure the 
 28.9   violations within a reasonable time after receiving notification 
 28.10  of the violation. 
 28.11     Subd. 8.  [PENALTIES.] (a) The penalties provided by this 
 28.12  subdivision apply to each unit that received class 4d taxation 
 28.13  for a year and failed to meet the requirements of section 
 28.14  273.126 and this section. 
 28.15     (b) If the owner or manager does not comply with the rent 
 28.16  restriction agreement, or does not comply with the income 
 28.17  restrictions or minimum housing quality standards, a penalty 
 28.18  applies equal to the increased taxes that would have been 
 28.19  imposed if the property had not been classified under class 4d 
 28.20  for the year in which restrictions were violated. 
 28.21     (c) If the agency finds that the violations were 
 28.22  inadvertent and insubstantial, a penalty of $....... per unit 
 28.23  per year applies in lieu of the penalty specified under 
 28.24  paragraph (b).  In order to qualify under this paragraph, 
 28.25  violations of the minimum housing quality standards must be 
 28.26  corrected within a reasonable period of time and rent charged in 
 28.27  excess of the agreement must be rebated to the tenants. 
 28.28     (d) The agency may abate the penalties under this 
 28.29  subdivision for reasonable cause. 
 28.30     (e) Penalties assessed under paragraph (c) are payable to 
 28.31  the agency and must be deposited in the general fund.  If an 
 28.32  owner or manager fails to timely pay a penalty imposed under 
 28.33  paragraph (c), the agency may choose to: 
 28.34     (1) impose the penalty under paragraph (b); or 
 28.35     (2) certify the penalty under paragraph (c) to the auditor 
 28.36  for collection as additional taxes. 
 29.1   The agency shall certify to the county auditor penalties 
 29.2   assessed under paragraph (b) and clause (2).  The auditor shall 
 29.3   impose and collect the certified penalties as additional taxes 
 29.4   which will be distributed to taxing districts in the same manner 
 29.5   as property taxes on the property. 
 29.6      Subd. 9.  [TAX COURT REVIEW.] (a) An owner may appeal to 
 29.7   tax court as provided in section 271.06: 
 29.8      (1) a denial of a request for certification of a property 
 29.9   as qualifying for class 4d taxation; 
 29.10     (2) imposition of a penalty under this section; or 
 29.11     (3) denial of a request to abate a penalty. 
 29.12     (b) The county attorney shall represent the public in 
 29.13  opposing the appeal. 
 29.14     Subd. 10.  [RULEMAKING.] (a) The agency may adopt 
 29.15  administrative rules under chapter 14 to carry out the 
 29.16  provisions of this section, including establishing standards for 
 29.17  abating penalties, violations that are inadvertent and 
 29.18  insubstantial, selection of inspectors, selection of persons to 
 29.19  monitor compliance, establishing rent restriction agreement 
 29.20  terms, or any other purpose. 
 29.21     (b) The agency may adopt emergency rules under chapter 14.  
 29.22  Any emergency rules adopted under this authority expire on 
 29.23  January 1, 1999. 
 29.24     Sec. 10.  Minnesota Statutes 1996, section 469.040, is 
 29.25  amended by adding a subdivision to read: 
 29.26     Subd. 1a.  [LIMITS FOR EXEMPT HOUSING PROJECTS.] (a) The 
 29.27  provisions of this subdivision apply to housing projects and 
 29.28  housing development projects acquired, constructed, financed, or 
 29.29  refinanced after December 31, 1997. 
 29.30     (b) For a project to qualify for the property tax exemption 
 29.31  under this section, the authority must establish income 
 29.32  guidelines meeting the requirements of paragraph (c) and rent 
 29.33  restrictions under paragraph (d). 
 29.34     (c) The housing authority must establish and make good 
 29.35  faith efforts to abide by one of the following income limits for 
 29.36  the housing project: 
 30.1      (1) at least 20 percent of the housing units are occupied 
 30.2   by individuals whose incomes are 50 percent or less of the area 
 30.3   median gross income; or 
 30.4      (2) at least 40 percent of the housing units are occupied 
 30.5   by individuals whose incomes are 60 percent or less of the area 
 30.6   median gross income. 
 30.7      For purposes of this paragraph, the terms defined in 
 30.8   section 42 of the Internal Revenue Code of 1986 apply, except 
 30.9   "median area gross income" means the greater of (1) the median 
 30.10  gross income for the area determined under section 42 of the 
 30.11  Internal Revenue Code of 1986, as amended, or (2) the median 
 30.12  gross income for the state. 
 30.13     (d) The provisions of this subdivision do not apply to all 
 30.14  or part of a housing project that is subject to the requirements 
 30.15  of section 5 of the United States Housing Act of 1937.  
 30.16     Sec. 11.  Minnesota Statutes 1996, section 469.040, 
 30.17  subdivision 3, is amended to read: 
 30.18     Subd. 3.  [STATEMENT FILED WITH ASSESSOR; PERCENTAGE TAX ON 
 30.19  RENTALS.] Notwithstanding the provisions of subdivision 1, after 
 30.20  a housing project or a housing development project carried on 
 30.21  under sections 469.016 to 469.026 has become occupied, in whole 
 30.22  or in part, an authority shall file with the assessor, on or 
 30.23  before April 15 of each year, a statement of the aggregate 
 30.24  shelter rentals of that project collected during the preceding 
 30.25  calendar year.  Unless a greater amount has been agreed upon 
 30.26  between the authority and the governing body or bodies for which 
 30.27  the authority was created, in whose jurisdiction the project is 
 30.28  located, five percent of the aggregate shelter rentals shall be 
 30.29  charged to the authority as a service charge for the services 
 30.30  and facilities to be furnished with respect to that project.  
 30.31  The service charge shall be collected from the authority in the 
 30.32  manner provided by law for the assessment and collection of 
 30.33  taxes.  The amount so collected shall be distributed to the 
 30.34  several taxing bodies in the same proportion as the tax rate of 
 30.35  each bears to the total tax rate of those taxing bodies.  The 
 30.36  governing body or bodies for which the authority has been 
 31.1   created, in whose jurisdiction the project is located, may agree 
 31.2   with the authority for the payment of a service charge for a 
 31.3   housing project or a housing development project in an amount 
 31.4   greater than five percent of the aggregate annual shelter 
 31.5   rentals of any project, upon the basis of shelter rentals or 
 31.6   upon another basis agreed upon.  The service charge may not 
 31.7   exceed the amount which would be payable in taxes were the 
 31.8   property not exempt.  If such an agreement is made, the service 
 31.9   charge so agreed upon shall be collected and distributed in the 
 31.10  manner above provided.  If the project has become occupied, or 
 31.11  if the land upon which the project is to be constructed has been 
 31.12  acquired, the agreement shall specify the location of the 
 31.13  project for which the agreement is made.  "Shelter rental" means 
 31.14  the total rentals of a housing project exclusive of any charge 
 31.15  for utilities and special services such as heat, water, 
 31.16  electricity, gas, sewage disposal, or garbage removal.  "Service 
 31.17  charge" means payment in lieu of taxes.  The records of each 
 31.18  ~~housing~~ project shall be open to inspection by the proper 
 31.19  assessing officer. 
 31.20     Sec. 12.  [TEMPORARY EXEMPTIONS FROM INSPECTION 
 31.21  REQUIREMENTS.] 
 31.22     (a) The Minnesota housing finance agency may provide a 
 31.23  temporary exemption to the inspection requirement under 
 31.24  Minnesota Statutes, sections 273.126, subdivision 4, and 
 31.25  462A.071, if the agency finds that: 
 31.26     (1) the property owner made a good faith effort to obtain 
 31.27  an inspection; and 
 31.28     (2) the owner was unable to obtain an inspection in time to 
 31.29  apply because the designated inspectors were unable to conduct 
 31.30  all the requested inspections. 
 31.31     (b) If a unit that is exempted under this section does not 
 31.32  ultimately obtain a certification from a designated inspector 
 31.33  that it is in compliance with the minimum housing quality 
 31.34  standards, the additional taxes under Minnesota Statutes, 
 31.35  section 273.126, subdivision 5, apply. 
 31.36     (c) Procedures or rules for granting exemptions under this 
 32.1   section are not subject to the administrative rulemaking under 
 32.2   Minnesota Statutes, chapter 14. 
 32.3      (d) The authority under this section expires December 31, 
 32.4   2000. 
 32.5      Sec. 13.  [APPROPRIATION.] 
 32.6      $450,000 is appropriated for fiscal years 1998 and 1999 
 32.7   from the general fund to the housing finance agency for purposes 
 32.8   of administering the certification of qualifying low-income 
 32.9   residential properties for property taxation under class 4d. 
 32.10     Sec. 14.  [REPEALER.] 
 32.11     Minnesota Statutes 1996, sections 273.13, subdivision 32; 
 32.12  273.1317; and 273.1318, are repealed. 
 32.13     Sec. 15.  [EFFECTIVE DATE.] 
 32.14     Sections 1, 2, and 14 are effective for property taxes 
 32.15  payable in 1999 and thereafter.  Sections 3 to 8 are effective 
 32.16  for taxes payable in 1998 and thereafter, except the low-income 
 32.17  housing provisions in class 4c and 4d are effective for taxes 
 32.18  payable in 1999 and thereafter.  Sections 9 and 12 are effective 
 32.19  the day following final enactment.  Sections 10 and 11 are 
 32.20  effective August 1, 1997. 
 32.21                             ARTICLE 2 
 32.22                         EDUCATION FINANCE 
 32.23     Section 1.  Minnesota Statutes 1996, section 124.239, is 
 32.24  amended by adding a subdivision to read: 
 32.25     Subd. 4a.  [ALTERNATIVE FACILITIES REVENUE.] A district's 
 32.26  alternative facilities revenue for a fiscal year equals its 
 32.27  costs related to an approved facility plan as follows: 
 32.28     (1) if the district has indicated to the commissioner that 
 32.29  bonds will be issued, the principal and interest payments on 
 32.30  outstanding bonds issued according to subdivision 3; or 
 32.31     (2) if the district has indicated to the commissioner that 
 32.32  the plan will be funded on a pay-as-you-go basis, the district's 
 32.33  costs according to the schedule approved in the plan. 
 32.34     Sec. 2.  Minnesota Statutes 1996, section 124.239, 
 32.35  subdivision 5, is amended to read: 
 32.36     Subd. 5.  [LEVY AUTHORIZED.] ~~A district, after local board~~ 
 33.1   ~~approval, may levy for costs related to an approved facility~~ 
 33.2   ~~plan as follows:~~  
 33.3      ~~(a) if the district has indicated to the commissioner that~~ 
 33.4   ~~bonds will be issued, the district may levy for the principal~~ 
 33.5   ~~and interest payments on outstanding bonds issued according to~~ 
 33.6   ~~subdivision 3; or~~ 
 33.7      ~~(b) if the district has indicated to the commissioner that~~ 
 33.8   ~~the plan will be funded through levy, the district may levy~~ 
 33.9   ~~according to the schedule approved in the plan.~~  To obtain 
 33.10  alternative facilities revenue, a school district may levy an 
 33.11  amount equal to the district's alternative facilities revenue as 
 33.12  defined in subdivision 4a, multiplied by the lesser of one, or 
 33.13  the ratio of the quotient derived by dividing the adjusted net 
 33.14  tax capacity of the district for the year before the year the 
 33.15  levy is certified by the actual pupil units in the district for 
 33.16  the school year to which the levy is attributable, to the 
 33.17  equalizing factor under section 124A.02. 
 33.18     Sec. 3.  Minnesota Statutes 1996, section 124.239, is 
 33.19  amended by adding a subdivision to read: 
 33.20     Subd. 5a.  [ALTERNATIVE FACILITIES AID.] A district's 
 33.21  alternative facilities aid is the difference between its 
 33.22  alternative facilities revenue and its alternative facilities 
 33.23  levy.  If a district does not levy the entire amount permitted, 
 33.24  alternative facilities aid must be reduced in proportion to the 
 33.25  actual amount levied. 
 33.26     Sec. 4.  Minnesota Statutes 1996, section 124.2716, 
 33.27  subdivision 3, is amended to read: 
 33.28     Subd. 3.  [EXTENDED DAY LEVY.] To obtain extended day 
 33.29  revenue, a school district may levy an amount equal to the 
 33.30  district's extended day revenue as defined in subdivision 2 
 33.31  multiplied by the lesser of one, or the ratio of the quotient 
 33.32  derived by dividing the adjusted net tax capacity of the 
 33.33  district for the year before the year the levy is certified by 
 33.34  the actual pupil units in the district for the school year to 
 33.35  which the levy is attributable, to ~~$3,700~~ the equalizing factor 
 33.36  under section 124A.02.  
 34.1      Sec. 5.  Minnesota Statutes 1996, section 124.2727, 
 34.2   subdivision 6b, is amended to read: 
 34.3      Subd. 6b.  [DISTRICT COOPERATION LEVY.] To receive district 
 34.4   cooperation revenue, a district may levy an amount equal to the 
 34.5   district's cooperation revenue multiplied by the lesser of one, 
 34.6   or the ratio of the quotient derived by dividing the adjusted 
 34.7   net tax capacity of the district for the year preceding the year 
 34.8   the levy is certified by the actual pupil units in the district 
 34.9   for the school year to which the levy is attributable 
 34.10  to ~~$3,500~~ the equalizing factor under section 124A.02. 
 34.11     Sec. 6.  Minnesota Statutes 1996, section 124.312, 
 34.12  subdivision 4, is amended to read: 
 34.13     Subd. 4.  [INTEGRATION REVENUE.] For fiscal year ~~1996~~ 1999 
 34.14  and later fiscal years, integration revenue equals ~~the sum of~~ 
 34.15  integration aid ~~and integration levy under section 124.912,~~ 
 34.16  ~~subdivision 2~~. 
 34.17     Sec. 7.  Minnesota Statutes 1996, section 124.312, 
 34.18  subdivision 5, is amended to read: 
 34.19     Subd. 5.  [INTEGRATION AID.] For fiscal year ~~1996~~ 1999 and 
 34.20  later fiscal years integration aid equals the following amounts: 
 34.21     (1) for independent school district No. 709, Duluth, 
 34.22  ~~$1,385,000~~ $2,045,000 plus $58 times its actual pupil units for 
 34.23  that fiscal year; 
 34.24     (2) for independent school district No. 625, St. Paul, 
 34.25  $8,090,700 plus $197 times its actual pupil units for that 
 34.26  fiscal year; and 
 34.27     (3) for special school district No. 1, Minneapolis, 
 34.28  $9,368,300 plus $197 times its actual pupil units for that 
 34.29  fiscal year. 
 34.30     Sec. 8.  Minnesota Statutes 1996, section 124.314, 
 34.31  subdivision 2, is amended to read: 
 34.32     Subd. 2.  [LEVY.] For fiscal year ~~1996~~ 1999 and thereafter, 
 34.33  a school district's targeted needs levy equals ~~the sum of its~~ 
 34.34  ~~integration levy under section 124.912, subdivision 2, and~~ that 
 34.35  portion of its special education levy attributed to the limited 
 34.36  English proficiency program. 
 35.1      Sec. 9.  Minnesota Statutes 1996, section 124.83, 
 35.2   subdivision 4, is amended to read: 
 35.3      Subd. 4.  [HEALTH AND SAFETY LEVY.] To receive health and 
 35.4   safety revenue, a district may levy an amount equal to the 
 35.5   district's health and safety revenue as defined in subdivision 3 
 35.6   multiplied by the lesser of one, or the ratio of the quotient 
 35.7   derived by dividing the adjusted net tax capacity of the 
 35.8   district for the year preceding the year the levy is certified 
 35.9   by the actual pupil units in the district for the school year to 
 35.10  which the levy is attributable, to ~~$4,707.50~~ the equalizing 
 35.11  factor under section 124A.02. 
 35.12     Sec. 10.  [124.913] [LEASE PURCHASE; INSTALLMENT BUYS.] 
 35.13     Subdivision 1.  [LEASE PURCHASE; INSTALLMENT BUYS.] (a) 
 35.14  Upon application to, and approval by, the commissioner in 
 35.15  accordance with the procedures and limits in section 124.91, 
 35.16  subdivision 1, a district, as defined in this subdivision, may: 
 35.17     (1) purchase real or personal property under an installment 
 35.18  contract; or 
 35.19     (2) may lease real or personal property with an option to 
 35.20  purchase under a lease purchase agreement, by which installment 
 35.21  contract or lease purchase agreement title is kept by the seller 
 35.22  or vendor or assigned to a third party as security for the 
 35.23  purchase price, including interest, if any. 
 35.24     (b) The obligation created by the installment contract or 
 35.25  the lease purchase agreement must not be included in the 
 35.26  calculation of net debt for purposes of section 475.53, and does 
 35.27  not constitute debt under other law.  An election is not 
 35.28  required in connection with the execution of the installment 
 35.29  contract or the lease purchase agreement. 
 35.30     (c) The proceeds of the revenue authorized by this section 
 35.31  must not be used to acquire a facility to be primarily used for 
 35.32  athletic or school administration purposes. 
 35.33     (d) For purposes of this subdivision, "district" means: 
 35.34     (1) a school district required to have a comprehensive plan 
 35.35  for the elimination of segregation whose plan has been 
 35.36  determined by the commissioner to be in compliance with the 
 36.1   state board of education rules relating to equality of 
 36.2   educational opportunity and school desegregation; or 
 36.3      (2) a school district that participates in a joint program 
 36.4   for interdistrict desegregation with a district defined in 
 36.5   clause (1), if the facility acquired under this subdivision is 
 36.6   to be primarily used for the joint program. 
 36.7      (e) Notwithstanding section 124.91, subdivision 1, the 
 36.8   prohibition against a levy by a district to lease or rent a 
 36.9   district-owned building to itself does not apply to levies 
 36.10  otherwise authorized by this subdivision. 
 36.11     (f) For the purposes of this subdivision, any references in 
 36.12  section 124.91, subdivision 1, to building or land shall include 
 36.13  personal property. 
 36.14     Subd. 2.  [LEASE PURCHASE; INSTALLMENT BUYS REVENUE.] A 
 36.15  district's lease purchase and installment buys revenue for a 
 36.16  fiscal year equals the amount needed to make payments required 
 36.17  by a lease purchase agreement, installment purchase agreement, 
 36.18  or other deferred payment agreement: 
 36.19     (1) that was authorized by Minnesota Statutes 1989 
 36.20  Supplement, section 465.71, if: 
 36.21     (i) the agreement was approved by the commissioner before 
 36.22  July 1, 1990, according to Minnesota Statutes 1989 Supplement, 
 36.23  section 275.125, subdivision 11d; or 
 36.24     (ii) the district levied in 1989 for the payments; or 
 36.25     (2) authorized by subdivision 1, or Minnesota Statutes 
 36.26  1996, section 124.91, subdivision 7. 
 36.27     Subd. 3.  [LEASE PURCHASE AND INSTALLMENT BUYS LEVY.] To 
 36.28  receive lease purchase and installment buys revenue, a school 
 36.29  district may levy an amount equal to the district's lease 
 36.30  purchase and installment buys revenue as defined in subdivision 
 36.31  2, multiplied by the lesser of one, or the ratio of the quotient 
 36.32  derived by dividing the adjusted net tax capacity of the 
 36.33  district for the year before the year the levy is certified by 
 36.34  the actual pupil units in the district for the school year to 
 36.35  which the levy is attributable, to the equalizing factor under 
 36.36  section 124A.02. 
 37.1      Subd. 4.  [LEASE PURCHASE AND INSTALLMENT BUYS AID.] A 
 37.2   district's lease purchase and installment buys aid is the 
 37.3   difference between its lease purchase and installment buys 
 37.4   revenue and its lease purchase and installment buys levy.  If a 
 37.5   district does not levy the entire amount permitted, lease 
 37.6   purchase and installment buys aid must be reduced in proportion 
 37.7   to the actual amount levied. 
 37.8      Sec. 11.  Minnesota Statutes 1996, section 124.95, 
 37.9   subdivision 1, is amended to read: 
 37.10     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 37.11  section, the eligible debt service revenue of a district is 
 37.12  defined as follows: 
 37.13     (1) the amount needed to produce between five and six 
 37.14  percent in excess of the amount needed to meet when due the 
 37.15  principal and interest payments on the obligations of the 
 37.16  district for eligible projects according to subdivision 2, 
 37.17  including the amounts necessary for repayment of energy loans 
 37.18  according to section 216C.37 or sections 298.292 to 298.298, 
 37.19  debt service loans and capital loans, ~~lease purchase payments~~ 
 37.20  ~~under section 124.91, subdivisions 2 and 3, alternative~~ 
 37.21  ~~facilities levies under section 124.239, subdivision 5,~~ minus 
 37.22     (2) the amount of debt service excess levy reduction for 
 37.23  that school year calculated according to the procedure 
 37.24  established by the commissioner. 
 37.25     (b) The obligations in this paragraph are excluded from 
 37.26  eligible debt service revenue: 
 37.27     (1) obligations under section 124.2445; 
 37.28     (2) the part of debt service principal and interest paid 
 37.29  from the taconite environmental protection fund or northeast 
 37.30  Minnesota economic protection trust; 
 37.31     (3) obligations issued under Laws 1991, chapter 265, 
 37.32  article 5, section 18, as amended by Laws 1992, chapter 499, 
 37.33  article 5, section 24; and 
 37.34     (4) obligations under section 124.2455. 
 37.35     (c) For purposes of this section, if a preexisting school 
 37.36  district reorganized under section 122.22, 122.23, or 122.241 to 
 38.1   122.248 is solely responsible for retirement of the preexisting 
 38.2   district's bonded indebtedness, capital loans or debt service 
 38.3   loans, debt service equalization aid must be computed separately 
 38.4   for each of the preexisting school districts. 
 38.5      Sec. 12.  Minnesota Statutes 1996, section 124.95, 
 38.6   subdivision 4, is amended to read: 
 38.7      Subd. 4.  [EQUALIZED DEBT SERVICE LEVY.] To obtain debt 
 38.8   service equalization revenue, a district must levy an amount not 
 38.9   to exceed the district's debt service equalization revenue times 
 38.10  the lesser of one or the ratio of: 
 38.11     (1) the quotient derived by dividing the adjusted net tax 
 38.12  capacity of the district for the year before the year the levy 
 38.13  is certified by the actual pupil units in the district for the 
 38.14  school year ending in the year prior to the year the levy is 
 38.15  certified; to 
 38.16     (2) ~~$4,707.50~~ the equalizing factor under section 124A.02. 
 38.17     Sec. 13.  Minnesota Statutes 1996, section 124A.23, 
 38.18  subdivision 1, is amended to read: 
 38.19     Subdivision 1.  [GENERAL EDUCATION TAX RATE.] The 
 38.20  commissioner shall establish the general education tax rate by 
 38.21  July 1 of each year for levies payable in the following year.  
 38.22  The general education tax capacity rate shall be a rate, rounded 
 38.23  up to the nearest tenth of a percent, that, when applied to the 
 38.24  adjusted net tax capacity for all districts, raises the amount 
 38.25  specified in this subdivision.  The general education tax rate 
 38.26  shall be the rate that raises ~~$1,054,000,000 for fiscal year~~ 
 38.27  ~~1996 and~~ $1,359,000,000 for fiscal year ~~1997~~ 1998 and 
 38.28  $1,103,000,000 for fiscal year 1999 and later fiscal years.  The 
 38.29  general education tax rate may not be changed due to changes or 
 38.30  corrections made to a district's adjusted net tax capacity after 
 38.31  the tax rate has been established.  
 38.32     Sec. 14.  [MORATORIUM ON REFERENDUM INCREASES.] 
 38.33     A school district may not conduct an election in 1997 under 
 38.34  Minnesota Statutes, section 124A.03, subdivision 2 or 2b, for 
 38.35  property taxes payable in 1998, except that an election may be 
 38.36  conducted under section 124A.03, subdivision 2, paragraph (c), 
 39.1   on the question of revoking or reducing an increased levy amount.
 39.2      Sec. 15.  [1997 REFERENDUM APPROVAL.] 
 39.3      (a) Notwithstanding section 14 or any other law to the 
 39.4   contrary, the commissioner of children, families, and learning 
 39.5   may authorize referendum levy elections under Minnesota 
 39.6   Statutes, section 124A.03, or any successor section for 1997 
 39.7   taxes payable in 1998 only as provided in this section. 
 39.8      (b) The aggregate amount of referendum levies authorized by 
 39.9   the commissioner may not exceed $10,000,000. 
 39.10     (c) A school district that desires to hold an election 
 39.11  under Minnesota Statutes, section 124A.03, must submit an 
 39.12  application to the commissioner by August 1, 1997. 
 39.13     (d) The commissioner shall prioritize applications and 
 39.14  grant authority to hold an election to districts in the 
 39.15  following order: 
 39.16     (1) districts that are in statutory operating debt and have 
 39.17  an approved plan or have received an extension from the 
 39.18  department to file a plan to eliminate the statutory operating 
 39.19  debt; 
 39.20     (2) districts that have referendum levy authority expiring 
 39.21  in fiscal year 1998 or that have a documented hardship; and 
 39.22     (3) all other districts. 
 39.23     (e) The commissioner must approve, deny, or modify each 
 39.24  district's application for referendum levy authority by August 
 39.25  31, 1997. 
 39.26     Sec. 16.  [REPEALER.] 
 39.27     Minnesota Statutes 1996, sections 124.91, subdivisions 2 
 39.28  and 7; and 124.912, subdivisions 2 and 3, are repealed. 
 39.29     Sec. 17.  [EFFECTIVE DATE.] 
 39.30     This article is effective for taxes payable in 1998 and 
 39.31  thereafter, and aids payable in fiscal year 1999 and thereafter. 
 39.32                             ARTICLE 3 
 39.33                        PROPERTY TAX REFUND 
 39.34     Section 1.  Minnesota Statutes 1996, section 290A.03, 
 39.35  subdivision 11, is amended to read: 
 39.36     Subd. 11.  [RENT CONSTITUTING PROPERTY TAXES.] "Rent 
 40.1   constituting property taxes" means ~~the amount of gross rent~~ 
 40.2   ~~actually paid in cash, or its equivalent, which is attributable~~ 
 40.3   ~~(a) to the property tax paid on the unit or (b) to the amount~~ 20 
 40.4   percent of the gross rent actually paid in cash, or its 
 40.5   equivalent, or the portion of rent paid in lieu of property 
 40.6   taxes, in any calendar year by a claimant for the right of 
 40.7   occupancy of the claimant's Minnesota homestead in the calendar 
 40.8   year, and which rent constitutes the basis, in the succeeding 
 40.9   calendar year of a claim for relief under this chapter by the 
 40.10  claimant.  ~~The amount of rent attributable to property taxes~~ 
 40.11  ~~paid or payments in lieu made on the unit shall be determined by~~ 
 40.12  ~~multiplying the gross rent paid by the claimant for the calendar~~ 
 40.13  ~~year for the unit by a fraction, the numerator of which is the~~ 
 40.14  ~~net tax on the property where the unit is located and the~~ 
 40.15  ~~denominator of which is the total scheduled rent.  In no case~~ 
 40.16  ~~may the rent constituting property taxes exceed 50 percent of~~ 
 40.17  ~~the gross rent paid by the claimant during that calendar year.~~  
 40.18  ~~In the case of a claimant who resides in a unit for which (1) a~~ 
 40.19  ~~rent subsidy is paid to, or for, the claimant based on the~~ 
 40.20  ~~income of the claimant or the claimant's family, or (2) a~~ 
 40.21  ~~subsidy is paid to a public housing authority that owns or~~ 
 40.22  ~~operates the claimant's rental unit, pursuant to United States~~ 
 40.23  ~~Code, title 42, section 1437c, 20 percent of gross rent actually~~ 
 40.24  ~~paid in cash or its equivalent shall be the claimant's "rent~~ 
 40.25  ~~constituting property taxes paid."  For purposes of this~~ 
 40.26  ~~subdivision, "rent subsidy" does not include any housing~~ 
 40.27  ~~assistance received under aid to families with dependent~~ 
 40.28  ~~children, general assistance, Minnesota supplemental assistance,~~ 
 40.29  ~~supplemental security income, or similar income maintenance~~ 
 40.30  ~~programs.~~ 
 40.31     Sec. 2.  Minnesota Statutes 1996, section 290A.03, 
 40.32  subdivision 13, is amended to read: 
 40.33     Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
 40.34  payable" means the property tax exclusive of special 
 40.35  assessments, penalties, and interest payable on a claimant's 
 40.36  homestead before reductions made under section 273.13 but after 
 41.1   deductions made under sections 273.135, 273.1391, 273.42, 
 41.2   subdivision 2, and any other state paid property tax credits in 
 41.3   any calendar year.  In the case of a claimant who makes ground 
 41.4   lease payments, "property taxes payable" includes the amount of 
 41.5   the payments directly attributable to the property taxes 
 41.6   assessed against the parcel on which the house is located.  No 
 41.7   apportionment or reduction of the "property taxes payable" shall 
 41.8   be required for the use of a portion of the claimant's homestead 
 41.9   for a business purpose if the claimant does not deduct any 
 41.10  business depreciation expenses for the use of a portion of the 
 41.11  homestead in the determination of federal adjusted gross 
 41.12  income.  For homesteads which are manufactured homes as defined 
 41.13  in section 273.125, subdivision 8, and for homesteads which are 
 41.14  park trailers taxed as manufactured homes under section 168.012, 
 41.15  subdivision 9, "property taxes payable" ~~shall~~ also include ~~the~~ 
 41.16  ~~amount~~ 20 percent of the gross rent paid in the preceding year 
 41.17  for the site on which the homestead is located~~, which is~~ 
 41.18  ~~attributable to the net tax paid on the site.  The amount~~ 
 41.19  ~~attributable to property taxes shall be determined by~~ 
 41.20  ~~multiplying the net tax on the parcel by a fraction, the~~ 
 41.21  ~~numerator of which is the gross rent paid for the calendar year~~ 
 41.22  ~~for the site and the denominator of which is the gross rent paid~~ 
 41.23  ~~for the calendar year for the parcel~~.  When a homestead is owned 
 41.24  by two or more persons as joint tenants or tenants in common, 
 41.25  such tenants shall determine between them which tenant may claim 
 41.26  the property taxes payable on the homestead.  If they are unable 
 41.27  to agree, the matter shall be referred to the commissioner of 
 41.28  revenue whose decision shall be final.  Property taxes are 
 41.29  considered payable in the year prescribed by law for payment of 
 41.30  the taxes. 
 41.31     In the case of a claim relating to "property taxes 
 41.32  payable," the claimant must have owned and occupied the 
 41.33  homestead on January 2 of the year in which the tax is payable 
 41.34  and (i) the property must have been classified as homestead 
 41.35  property pursuant to section 273.13, subdivision 22 or 23, on or 
 41.36  before December 15 of the assessment year to which the "property 
 42.1   taxes payable" relate; or (ii) the claimant must provide 
 42.2   documentation from the local assessor that application for 
 42.3   homestead classification has been made on or before December 15 
 42.4   of the year in which the "property taxes payable" were payable 
 42.5   and that the assessor has approved the application. 
 42.6      Sec. 3.  Minnesota Statutes 1996, section 290A.04, 
 42.7   subdivision 2, is amended to read: 
 42.8      Subd. 2.  [HOMEOWNERS.] A claimant whose property taxes 
 42.9   payable are in excess of the percentage of the household income 
 42.10  stated below shall pay an amount equal to the percent of income 
 42.11  shown for the appropriate household income level along with the 
 42.12  percent to be paid by the claimant of the remaining amount of 
 42.13  property taxes payable.  The state refund equals the amount of 
 42.14  property taxes payable that remain, up to the state refund 
 42.15  amount shown below.  
 42.16                        ~~Percent~~           ~~Percent~~    ~~Maximum~~
 42.17  ~~Household Income~~     ~~of Income~~          ~~Paid by~~     ~~State~~
 42.18                                          ~~Claimant~~    ~~Refund~~
 42.19      ~~$0 to 1,029~~     ~~1.2 percent~~        ~~18 percent~~   ~~$440~~
 42.20   ~~1,030 to 2,059~~     ~~1.3 percent~~        ~~18 percent~~   ~~$440~~
 42.21   ~~2,060 to 3,099~~     ~~1.4 percent~~        ~~20 percent~~   ~~$440~~
 42.22   ~~3,100 to 4,129~~     ~~1.6 percent~~        ~~20 percent~~   ~~$440~~
 42.23   ~~4,130 to 5,159~~     ~~1.7 percent~~        ~~20 percent~~   ~~$440~~
 42.24   ~~5,160 to 7,229~~     ~~1.9 percent~~        ~~25 percent~~   ~~$440~~
 42.25   ~~7,230 to 8,259~~     ~~2.1 percent~~        ~~25 percent~~   ~~$440~~
 42.26   ~~8,260 to 9,289~~     ~~2.2 percent~~        ~~25 percent~~   ~~$440~~
 42.27   ~~9,290 to 10,319~~    ~~2.3 percent~~        ~~30 percent~~   ~~$440~~
 42.28  ~~10,320 to 11,349~~    ~~2.4 percent~~        ~~30 percent~~   ~~$440~~
 42.29  ~~11,350 to 12,389~~    ~~2.5 percent~~        ~~30 percent~~   ~~$440~~
 42.30  ~~12,390 to 14,449~~    ~~2.6 percent~~        ~~30 percent~~   ~~$440~~
 42.31  ~~14,450 to 15,479~~    ~~2.8 percent~~        ~~35 percent~~   ~~$440~~
 42.32  ~~15,480 to 16,509~~    ~~3.0 percent~~        ~~35 percent~~   ~~$440~~
 42.33  ~~16,510 to 17,549~~    ~~3.2 percent~~        ~~40 percent~~   ~~$440~~
 42.34  ~~17,550 to 21,669~~    ~~3.3 percent~~        ~~40 percent~~   ~~$440~~
 42.35  ~~21,670 to 24,769~~    ~~3.4 percent~~        ~~45 percent~~   ~~$440~~
 42.36  ~~24,770 to 30,959~~    ~~3.5 percent~~        ~~45 percent~~   ~~$440~~
 42.37  ~~30,960 to 36,119~~    ~~3.5 percent~~        ~~45 percent~~   ~~$440~~
 42.38  ~~36,120 to 41,279~~    ~~3.7 percent~~        ~~50 percent~~   ~~$440~~
 42.39  ~~41,280 to 58,829~~    ~~4.0 percent~~        ~~50 percent~~   ~~$440~~
 42.40  ~~58,830 to 59,859~~    ~~4.0 percent~~        ~~50 percent~~   ~~$310~~
 42.41  ~~59,860 to 60,889~~    ~~4.0 percent~~        ~~50 percent~~   ~~$210~~
 42.42  ~~60,890 to 61,929~~    ~~4.0 percent~~        ~~50 percent~~   ~~$100~~ 
 42.43                        Percent           Percent    Maximum
 42.44  Household Income     of Income          Paid by     State
 42.45                                          Claimant    Refund
 42.46      $0 to 2,239     1.0 percent         6 percent   $1,500
 42.47   2,240 to 4,499     1.2 percent         8 percent   $1,500
 42.48   4,500 to 5,619     1.4 percent         8 percent   $1,500
 42.49   5,620 to 7,879     1.4 percent        14 percent   $1,500
 42.50   7,880 to 10,119    1.6 percent        14 percent   $1,500
 42.51  10,120 to 12,359    1.8 percent        20 percent   $1,500
 42.52  12,360 to 15,739    2.0 percent        20 percent   $1,500
 42.53  15,740 to 17,979    2.1 percent        25 percent   $1,500
 42.54  17,980 to 23,599    2.2 percent        31 percent   $1,500
 42.55  23,600 to 74,999    2.2 percent        36 percent   $1,500
 43.1   75,000 to 76,999    3.1 percent        50 percent   $1,500
 43.2   77,000 to 77,999    4.0 percent        50 percent   $1,000
 43.3   78,000 to 78,999    4.0 percent        50 percent   $  500
 43.4   79,000 to 79,999    4.0 percent        50 percent   $  250 
 43.5      The payment made to a claimant shall be the amount of the 
 43.6   state refund calculated under this subdivision.  No payment is 
 43.7   allowed if the claimant's household income is ~~$61,930~~ $80,000 or 
 43.8   more. 
 43.9      Sec. 4.  Minnesota Statutes 1996, section 290A.04, 
 43.10  subdivision 6, is amended to read: 
 43.11     Subd. 6.  [INFLATION ADJUSTMENT.] Beginning for property 
 43.12  tax refunds payable in calendar year ~~1996~~ 1998, the commissioner 
 43.13  shall annually adjust the dollar amounts of the income 
 43.14  thresholds and the maximum refunds under subdivisions 2 and 2a 
 43.15  for inflation.  The commissioner shall make the inflation 
 43.16  adjustments in accordance with section 290.06, subdivision 2d, 
 43.17  except that for purposes of this subdivision the percentage 
 43.18  increase shall be determined from the year ending on August 31, 
 43.19  1994, to the year ending on August 31 of the year preceding that 
 43.20  in which the refund is payable.  The commissioner shall not 
 43.21  adjust the dollar amounts under subdivision 2 for refunds that 
 43.22  are payable in calendar year 1998.  Beginning for refunds 
 43.23  payable in 1999, the base year for adjustments of the dollar 
 43.24  amounts in subdivision 2 is the year ending August 31, 1997.  
 43.25  The commissioner shall use the appropriate percentage increase 
 43.26  to annually adjust the income thresholds and maximum refunds 
 43.27  under subdivisions 2 and 2a for inflation without regard to 
 43.28  whether or not the income tax brackets are adjusted for 
 43.29  inflation in that year.  The commissioner shall round the 
 43.30  thresholds and the maximum amounts, as adjusted to the nearest 
 43.31  $10 amount.  If the amount ends in $5, the commissioner shall 
 43.32  round it up to the next $10 amount.  
 43.33     The commissioner shall annually announce the adjusted 
 43.34  refund schedule at the same time provided under section 290.06.  
 43.35  The determination of the commissioner under this subdivision is 
 43.36  not a rule under the administrative procedure act. 
 43.37     Sec. 5.  Minnesota Statutes 1996, section 290A.19, is 
 44.1   amended to read: 
 44.2      290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 
 44.3   CERTIFICATE.] 
 44.4      ~~(a)~~ The owner or managing agent of any property for which 
 44.5   rent is paid for occupancy as a homestead must furnish a 
 44.6   certificate of rent ~~constituting property tax~~ paid to a person 
 44.7   who is a renter on December 31, in the form prescribed by the 
 44.8   commissioner.  If the renter moves before December 31, the owner 
 44.9   or managing agent may give the certificate to the renter at the 
 44.10  time of moving, or mail the certificate to the forwarding 
 44.11  address if an address has been provided by the renter.  The 
 44.12  certificate must be made available to the renter before February 
 44.13  1 of the year following the year in which the rent was paid.  
 44.14  The owner or managing agent must retain a duplicate of each 
 44.15  certificate or an equivalent record showing the same information 
 44.16  for a period of three years.  The duplicate or other record must 
 44.17  be made available to the commissioner upon request.  For the 
 44.18  purposes of this section, "owner" includes a park owner as 
 44.19  defined under section 327C.01, subdivision 6, and "property" 
 44.20  includes a lot as defined under section 327C.01, subdivision 3. 
 44.21     ~~(b) The certificate of rent constituting property taxes~~ 
 44.22  ~~must include the address of the property, including the county,~~ 
 44.23  ~~and the property tax parcel identification number and any~~ 
 44.24  ~~additional information that the commissioner determines is~~ 
 44.25  ~~appropriate.~~ 
 44.26     ~~(c) If the owner or managing agent fails to provide the~~ 
 44.27  ~~renter with a certificate of rent constituting property taxes,~~ 
 44.28  ~~the commissioner shall allocate the net tax on the building to~~ 
 44.29  ~~the unit on a square footage basis or other appropriate basis as~~ 
 44.30  ~~the commissioner determines.  The renter shall supply the~~ 
 44.31  ~~commissioner with a statement from the county treasurer that~~ 
 44.32  ~~gives the amount of property tax on the parcel, the address and~~ 
 44.33  ~~property tax parcel identification number of the property, and~~ 
 44.34  ~~the number of units in the building.~~ 
 44.35     ~~(d) By January 31 of the year following the year in which~~ 
 44.36  ~~the rent was collected, each owner or managing agent shall~~ 
 45.1   ~~report to the commissioner on a form prescribed by the~~ 
 45.2   ~~commissioner the net tax pertaining to the rental residential~~ 
 45.3   ~~part of the property, the total scheduled rent, and the fraction~~ 
 45.4   ~~computed under section 290A.03, subdivision 11.  A copy of the~~ 
 45.5   ~~property tax statement for taxes payable in that year must be~~ 
 45.6   ~~attached.~~ 
 45.7      Sec. 6.  [REPEALER.] 
 45.8      (a) Minnesota Statutes 1996, sections 270B.12, subdivision 
 45.9   11; 276.012; 290A.055; and 290A.26; and Laws 1995, chapter 264, 
 45.10  article 4, as amended by Laws 1996, chapter 471, article 3, are 
 45.11  repealed.  Notwithstanding Minnesota Statutes, section 645.34, 
 45.12  the sections of statutes amended by the repealed Laws 1995, 
 45.13  chapter 264, article 4, as amended by Laws 1996, chapter 471, 
 45.14  article 3, remain in effect.  
 45.15     (b) Minnesota Statutes 1996, sections 290A.03, subdivisions 
 45.16  12a and 14, are repealed. 
 45.17     Sec. 7.  [EFFECTIVE DATE.] 
 45.18     Sections 1 to 5 and 6, paragraph (b), are effective for 
 45.19  refunds based on property taxes payable in 1998 and rent paid in 
 45.20  1997 and following years.  Section 6, paragraph (a), is 
 45.21  effective the day following final enactment. 
 45.22                             ARTICLE 4
 45.23                      TAX INCREMENT FINANCING 
 45.24     Section 1.  Minnesota Statutes 1996, section 273.1399, 
 45.25  subdivision 6, is amended to read: 
 45.26     Subd. 6.  [EXEMPT DISTRICTS.] (a) The provisions of this 
 45.27  section do not apply to exempt tax increment financing districts 
 45.28  as specified by this subdivision. 
 45.29     (b) A tax increment financing district for an ethanol 
 45.30  production facility that satisfies all of the following 
 45.31  requirements is exempt: 
 45.32     (1) The district is an economic development district, that 
 45.33  qualifies under section 469.176, subdivision 4c, paragraph (a), 
 45.34  clause (1). 
 45.35     (2) The facility is certified by the commissioner of 
 45.36  agriculture to qualify for state payments for ethanol 
 46.1   development under section 41A.09 to the extent funds are 
 46.2   available. 
 46.3      (3) Increments from the district are used only to finance 
 46.4   the qualifying ethanol development project located in the 
 46.5   district or to pay for administrative costs of the district. 
 46.6      (4) The district is located outside of the seven-county 
 46.7   metropolitan area, as defined in section 473.121. 
 46.8      (5) The tax increment financing plan was approved by a 
 46.9   resolution of the county board. 
 46.10     (6) The exemption provided by this paragraph applies until 
 46.11  the first year after the total amount of increment for the 
 46.12  district exceeds $1,500,000.  The county auditor shall notify 
 46.13  the commissioner of revenue of the expiration of the exemption 
 46.14  by June 1 of the year in which the auditor projects the revenues 
 46.15  from increments will exceed $1,500,000.  On or before the 
 46.16  expiration of the exemption, the municipality may elect to make 
 46.17  a qualifying local contribution under paragraph (d) in lieu of 
 46.18  the state aid reduction. 
 46.19     (c) A qualified housing district is exempt. 
 46.20     (d)(1) A district is exempt if the municipality elects at 
 46.21  the time of approving the tax increment financing plan for the 
 46.22  district to make a qualifying local contribution.  To qualify 
 46.23  for the exemption in each year, the authority or the 
 46.24  municipality must make a qualifying local contribution equal to 
 46.25  the listed percentages of increment from the district or 
 46.26  subdistrict: 
 46.27     (A) for an economic development district, a housing 
 46.28  district, or a renewal and renovation district, ten percent; 
 46.29     (B) for a redevelopment district, a mined underground space 
 46.30  district, or a hazardous substance subdistrict, ~~or a soils~~ 
 46.31  ~~condition district,~~ five percent. 
 46.32     (2) If the municipality elects to make a qualifying 
 46.33  contribution and fails to make the required contribution for a 
 46.34  year, the state aid reduction applies for the year.  The state 
 46.35  aid reduction equals the greater of (A) the required local 
 46.36  contribution or (B) the amount of the aid reduction that applies 
 47.1   under subdivision 3.  For a district exempt under paragraph (b), 
 47.2   no qualifying local contribution is required for years in which 
 47.3   the district is exempt. 
 47.4      (3)(A) If the sum of required local contributions for all 
 47.5   districts in the municipality exceeds two percent of city net 
 47.6   tax capacity as defined in section 477A.011, subdivision 20, for 
 47.7   a year, the municipality's total required local contribution for 
 47.8   that year is limited to two percent of net tax capacity to 
 47.9   qualify for the exemption under this subdivision.  The 
 47.10  municipality may allocate the contribution among the districts 
 47.11  on which it has made elections as it determines appropriate. 
 47.12     (B) If a municipality makes an election under this 
 47.13  subdivision for a district in a year in which item (A) applies, 
 47.14  a minimum annual qualifying contribution must be made for the 
 47.15  district equal to the lesser of 0.25 percent of city net tax 
 47.16  capacity or three percent of increment revenues.  This minimum 
 47.17  contribution applies for the life of the district for each year 
 47.18  that the restriction in item (A) applies and is in addition to 
 47.19  the contribution required by item (A). 
 47.20     (4) The amount of the local contribution must be made out 
 47.21  of unrestricted money of the authority or municipality, such as 
 47.22  the general fund, a property tax levy, or a federal or a state 
 47.23  grant-in-aid which may be spent for general government 
 47.24  purposes.  The local contribution may not be made, directly or 
 47.25  indirectly, with tax increments or developer payments as defined 
 47.26  under section 469.1766.  The local contribution must be used to 
 47.27  pay project costs and cannot be used for general government 
 47.28  purposes or for improvements or costs that the authority or 
 47.29  municipality planned to incur absent the project.  The authority 
 47.30  or municipality may request contributions from other local 
 47.31  government entities that will benefit from the district's 
 47.32  activities.  These contributions reduce the local contribution 
 47.33  required of the municipality or authority by this paragraph.  
 47.34  Cities, counties, towns, and schools may contribute to paying 
 47.35  these costs, notwithstanding any other law to the contrary. 
 47.36     (5) The municipality may make a local contribution in 
 48.1   excess of the required contribution for a year.  If it does so, 
 48.2   the municipality may credit the excess to a local contribution 
 48.3   account for the district.  The balance in the account may be 
 48.4   used to meet the requirements for qualifying local contributions 
 48.5   for later years.  No interest or investment earnings may be 
 48.6   credited or imputed to the account, except those (A) actually 
 48.7   paid by the municipality out of its unrestricted funds or by 
 48.8   another person or entity, other than a developer as used in 
 48.9   section 469.1766, and (B) used as required for a qualifying 
 48.10  local contribution. 
 48.11     (6) If the state contributes to the project costs through a 
 48.12  direct grant or similar incentive, the required local 
 48.13  contribution is reduced by one-half of the dollar amount of the 
 48.14  state grant or other similar incentive. 
 48.15     (e) A heritage and historic subdistrict is exempt. 
 48.16     Sec. 2.  Minnesota Statutes 1996, section 273.1399, is 
 48.17  amended by adding a subdivision to read: 
 48.18     Subd. 9.  [ELECTION TO APPLY LOCAL CONTRIBUTION.] A 
 48.19  district is exempt regardless of the date of its creation if the 
 48.20  municipality files with the county auditor no later than 
 48.21  December 1, 1997, a statement that it elects to make a 
 48.22  qualifying contribution under subdivision 6, paragraph (d), and 
 48.23  annually thereafter makes the required contribution. 
 48.24     Sec. 3.  Minnesota Statutes 1996, section 469.174, 
 48.25  subdivision 4, is amended to read: 
 48.26     Subd. 4.  [CAPTURED NET TAX CAPACITY.] "Captured net tax 
 48.27  capacity" means the amount by which the current net tax capacity 
 48.28  of a tax increment financing district or an extended subdistrict 
 48.29  exceeds the original net tax capacity, including the value of 
 48.30  property normally taxable as personal property by reason of its 
 48.31  location on or over property owned by a tax-exempt entity.  In 
 48.32  the case of a ~~hazardous substance~~ subdistrict, except an 
 48.33  extended subdistrict, "captured net tax capacity" means the 
 48.34  amount, if any, by which the lesser of (1) the original net tax 
 48.35  capacity or (2) the current net tax capacity of the portion of 
 48.36  the tax increment financing district overlying the subdistrict 
 49.1   exceeds the original net tax capacity of the subdistrict. 
 49.2      Sec. 4.  Minnesota Statutes 1996, section 469.174, 
 49.3   subdivision 7, is amended to read: 
 49.4      Subd. 7.  [ORIGINAL NET TAX CAPACITY.] (a) Except as 
 49.5   provided in paragraph (b), "original net tax capacity" means the 
 49.6   tax capacity of all taxable real property within a tax increment 
 49.7   financing district as certified by the commissioner of revenue 
 49.8   for the previous assessment year, provided that the request by 
 49.9   an authority for certification of a new tax increment financing 
 49.10  district or for the expansion of an existing district has been 
 49.11  made to the county auditor by June 30.  The original tax 
 49.12  capacity of districts for which requests are filed after June 30 
 49.13  has an original tax capacity based on the current assessment 
 49.14  year.  In any case, the original tax capacity must be determined 
 49.15  together with subsequent adjustments as set forth in section 
 49.16  469.177, subdivisions 1 and 4.  In determining the original net 
 49.17  tax capacity the net tax capacity of real property exempt from 
 49.18  taxation at the time of the request shall be zero, except for 
 49.19  real property which is tax exempt by reason of public ownership 
 49.20  by the requesting authority and which has been publicly owned 
 49.21  for less than one year prior to the date of the request for 
 49.22  certification, in which event the net tax capacity of the 
 49.23  property shall be the net tax capacity as most recently 
 49.24  determined by the commissioner of revenue.  
 49.25     (b) The original net tax capacity of any designated 
 49.26  hazardous substance site or hazardous substance subdistrict 
 49.27  shall be determined as of the date the authority certifies to 
 49.28  the county auditor that the authority has entered a 
 49.29  redevelopment or other agreement for the removal actions or 
 49.30  remedial actions specified in a development response action 
 49.31  plan, or otherwise provided funds to finance the development 
 49.32  response action plan.  The original net tax capacity equals (i) 
 49.33  the net tax capacity of the parcel or parcels in the site or 
 49.34  hazardous substance subdistrict, as most recently determined by 
 49.35  the commissioner of revenue, less (ii) the estimated costs of 
 49.36  the removal actions and remedial actions as specified in a 
 50.1   development response action plan to be undertaken with respect 
 50.2   to the parcel or parcels, (iii) but not less than zero. 
 50.3      (c) The original net tax capacity of a hazardous substance 
 50.4   site or hazardous substance subdistrict shall be increased by 
 50.5   the amount by which it was reduced pursuant to paragraph (b), 
 50.6   clause (ii), upon certification by the municipality that the 
 50.7   cost of the removal and remedial actions specified in the 
 50.8   development response action plan, except for long-term 
 50.9   monitoring and similar activities, have been paid or reimbursed. 
 50.10     (d) For purposes of this subdivision, "real property" shall 
 50.11  include any property normally taxable as personal property by 
 50.12  reason of its location on or over publicly owned property.  
 50.13     (e) The original net tax capacity of a heritage and 
 50.14  historic subdistrict shall be determined as of the date the 
 50.15  authority requests certification of the subdistrict.  The 
 50.16  original net tax capacity equals (1) the net tax capacity of the 
 50.17  parcel or parcels in the heritage and historic subdistrict, as 
 50.18  most recently determined by the commissioner of revenue, less 
 50.19  (2) the estimated costs as specified in the tax increment 
 50.20  financing plan to be undertaken with respect to the parcel or 
 50.21  parcels, (3) but not less than zero.  
 50.22     (f) The original net tax capacity of a heritage and 
 50.23  historic subdistrict shall be increased by the amount by which 
 50.24  it was reduced pursuant to paragraph (e), clause (2), upon 
 50.25  certification by the municipality that the costs specified in 
 50.26  the tax increment financing plan have been paid or reimbursed. 
 50.27     Sec. 5.  Minnesota Statutes 1996, section 469.174, 
 50.28  subdivision 10, is amended to read: 
 50.29     Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
 50.30  district" means a type of tax increment financing district 
 50.31  consisting of a project, or portions of a project, within which 
 50.32  the authority finds by resolution that one of the following 
 50.33  conditions, reasonably distributed throughout the district, 
 50.34  exists: 
 50.35     (1) parcels consisting of 70 percent of the area of the 
 50.36  district are occupied by buildings, streets, utilities, or other 
 51.1   improvements and more than 50 percent of the buildings, not 
 51.2   including outbuildings, are structurally substandard to a degree 
 51.3   requiring substantial renovation or clearance; ~~or~~ 
 51.4      (2) the property consists of vacant, unused, underused, 
 51.5   inappropriately used, or infrequently used railyards, rail 
 51.6   storage facilities, or excessive or vacated railroad 
 51.7   rights-of-way; or 
 51.8      (3) the presence of hazardous substances, pollution, or 
 51.9   contaminants will require removal or remediation action, and 
 51.10  with respect to each parcel in the proposed district either: 
 51.11     (i) the estimated cost of the proposed removal and 
 51.12  remediation action exceeds the fair market value of the land 
 51.13  before completion of the preparation; or 
 51.14     (ii) the estimated cost of the proposed removal or 
 51.15  remediation action exceeds $2 per square foot for the area of 
 51.16  the parcel. 
 51.17     (b) For purposes of this subdivision, "structurally 
 51.18  substandard" shall mean containing defects in structural 
 51.19  elements or a combination of deficiencies in essential utilities 
 51.20  and facilities, light and ventilation, fire protection including 
 51.21  adequate egress, layout and condition of interior partitions, or 
 51.22  similar factors, which defects or deficiencies are of sufficient 
 51.23  total significance to justify substantial renovation or 
 51.24  clearance.  
 51.25     A building is not structurally substandard if it is in 
 51.26  compliance with the building code applicable to new buildings or 
 51.27  could be modified to satisfy the building code at a cost of less 
 51.28  than 15 percent of the cost of constructing a new structure of 
 51.29  the same square footage and type on the site.  The municipality 
 51.30  may find that a building is not disqualified as structurally 
 51.31  substandard under the preceding sentence on the basis of 
 51.32  reasonably available evidence, such as the size, type, and age 
 51.33  of the building, the average cost of plumbing, electrical, or 
 51.34  structural repairs, or other similar reliable evidence.  If the 
 51.35  evidence supports a reasonable conclusion that the building is 
 51.36  not disqualified as structurally substandard, the municipality 
 52.1   may make such a determination without an interior inspection or 
 52.2   an independent, expert appraisal of the cost of repair and 
 52.3   rehabilitation of the building. 
 52.4      A parcel is deemed to be occupied by a structurally 
 52.5   substandard building for purposes of the finding under paragraph 
 52.6   (a) if all of the following conditions are met: 
 52.7      (1) the parcel was occupied by a substandard building 
 52.8   within three years of the filing of the request for 
 52.9   certification of the parcel as part of the district with the 
 52.10  county auditor; 
 52.11     (2) the substandard building was demolished or removed by 
 52.12  the authority or the demolition or removal was financed by the 
 52.13  authority or was done by a developer under a development 
 52.14  agreement with the authority; 
 52.15     (3) the authority found by resolution before the demolition 
 52.16  or removal that the parcel was occupied by a structurally 
 52.17  substandard building and that after demolition and clearance the 
 52.18  authority intended to include the parcel within a district; and 
 52.19     (4) upon filing the request for certification of the tax 
 52.20  capacity of the parcel as part of a district, the authority 
 52.21  notifies the county auditor that the original tax capacity of 
 52.22  the parcel must be adjusted as provided by section 469.177, 
 52.23  subdivision 1, paragraph (h). 
 52.24     (c) For purposes of this subdivision, a parcel is not 
 52.25  occupied by buildings, streets, utilities, or other improvements 
 52.26  unless 15 percent of the area of the parcel contains 
 52.27  improvements. 
 52.28     (d) For districts consisting of two or more noncontiguous 
 52.29  areas, each area must qualify as a redevelopment district under 
 52.30  paragraph (a) to be included in the district, and the entire 
 52.31  area of the district must satisfy paragraph (a). 
 52.32     (e) The proposed removal or remediation action supporting 
 52.33  the creation of a district under paragraph (a), clause (3), must 
 52.34  be specified in a development action response plan to satisfy 
 52.35  the requirements of paragraph (a), clause (3). 
 52.36     Sec. 6.  Minnesota Statutes 1996, section 469.174, 
 53.1   subdivision 12, is amended to read: 
 53.2      Subd. 12.  [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 
 53.3   development district" means a type of tax increment financing 
 53.4   district which consists of any project, or portions of a 
 53.5   project, not meeting the requirements found in the definition of 
 53.6   redevelopment district, renewal and renovation district, ~~soils~~ 
 53.7   ~~condition district,~~ mined underground space development 
 53.8   district, or housing district, but which the authority finds to 
 53.9   be in the public interest because: 
 53.10     (1) it will discourage commerce, industry, or manufacturing 
 53.11  from moving their operations to another state or municipality; 
 53.12  or 
 53.13     (2) it will result in increased employment in the state; or 
 53.14     (3) it will result in preservation and enhancement of the 
 53.15  tax base of the state. 
 53.16     Sec. 7.  Minnesota Statutes 1996, section 469.174, 
 53.17  subdivision 16, is amended to read: 
 53.18     Subd. 16.  [DESIGNATED HAZARDOUS SUBSTANCE SITE.] 
 53.19  "Designated hazardous substance site" means any parcel or 
 53.20  parcels with respect to which the authority has certified to the 
 53.21  county auditor that the authority has entered into a 
 53.22  redevelopment or other agreement providing for the removal 
 53.23  actions or remedial actions specified in a development response 
 53.24  action plan or the authority will use other available money, 
 53.25  including without limitation tax increments, to finance the 
 53.26  removal or remedial actions.  A parcel described in the plan or 
 53.27  plan amendment may be designated for inclusion in the hazardous 
 53.28  substance subdistrict prior to approval of the development 
 53.29  action response plan on the basis of the reasonable expectation 
 53.30  of the municipality.  Such parcel may not be certified as part 
 53.31  of the hazardous substance subdistrict until the development 
 53.32  action response plan has been approved. 
 53.33     Sec. 8.  Minnesota Statutes 1996, section 469.174, 
 53.34  subdivision 23, is amended to read: 
 53.35     Subd. 23.  [HAZARDOUS SUBSTANCE SUBDISTRICT.] "Hazardous 
 53.36  substance subdistrict" ~~or "subdistrict"~~ means a hazardous 
 54.1   substance subdistrict created under section 469.175, subdivision 
 54.2   7. 
 54.3      Sec. 9.  Minnesota Statutes 1996, section 469.174, 
 54.4   subdivision 24, is amended to read: 
 54.5      Subd. 24.  [EXTENDED SUBDISTRICT.] "Extended subdistrict" 
 54.6   means a hazardous substance subdistrict or a heritage and 
 54.7   historic subdistrict, but only for any period during which the 
 54.8   subdistrict remains in effect after the overlying tax increment 
 54.9   district has terminated. 
 54.10     Sec. 10.  Minnesota Statutes 1996, section 469.174, is 
 54.11  amended by adding a subdivision to read: 
 54.12     Subd. 25.  [HERITAGE AND HISTORIC SUBDISTRICT.] "Heritage 
 54.13  and historic subdistrict" means a heritage and historic 
 54.14  subdistrict created under section 469.175, subdivision 9. 
 54.15     Sec. 11.  Minnesota Statutes 1996, section 469.174, is 
 54.16  amended by adding a subdivision to read: 
 54.17     Subd. 26.  [SUBDISTRICT.] "Subdistrict" means either a 
 54.18  hazardous substance subdistrict or a heritage and historic 
 54.19  subdistrict. 
 54.20     Sec. 12.  Minnesota Statutes 1996, section 469.175, 
 54.21  subdivision 1, is amended to read: 
 54.22     Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] (a) A tax 
 54.23  increment financing plan shall contain:  
 54.24     (1) a statement of objectives of an authority for the 
 54.25  improvement of a project; 
 54.26     (2) a statement as to the development program for the 
 54.27  project, including the property within the project, if any, that 
 54.28  the authority intends to acquire; 
 54.29     (3) a list of any development activities that the plan 
 54.30  proposes to take place within the project, for which contracts 
 54.31  have been entered into at the time of the preparation of the 
 54.32  plan, including the names of the parties to the contract, the 
 54.33  activity governed by the contract, the cost stated in the 
 54.34  contract, and the expected date of completion of that activity; 
 54.35     (4) identification or description of the type of any other 
 54.36  specific development reasonably expected to take place within 
 55.1   the project, and the date when the development is likely to 
 55.2   occur; 
 55.3      (5) estimates of the following:  
 55.4      (i) cost of the project, including administration expenses; 
 55.5      (ii) amount of bonded indebtedness to be incurred; 
 55.6      (iii) sources of revenue to finance or otherwise pay public 
 55.7   costs; 
 55.8      (iv) the most recent net tax capacity of taxable real 
 55.9   property within the tax increment financing district and within 
 55.10  any subdistrict; 
 55.11     (v) the estimated captured net tax capacity of the tax 
 55.12  increment financing district at completion; and 
 55.13     (vi) the duration of the tax increment financing district's 
 55.14  and any subdistrict's existence; 
 55.15     (6) statements of the authority's alternate estimates of 
 55.16  the impact of tax increment financing on the net tax capacities 
 55.17  of all taxing jurisdictions in which the tax increment financing 
 55.18  district is located in whole or in part.  For purposes of one 
 55.19  statement, the authority shall assume that the estimated 
 55.20  captured net tax capacity would be available to the taxing 
 55.21  jurisdictions without creation of the district, and for purposes 
 55.22  of the second statement, the authority shall assume that none of 
 55.23  the estimated captured net tax capacity would be available to 
 55.24  the taxing jurisdictions without creation of the district or 
 55.25  subdistrict; 
 55.26     (7) identification and description of studies and analyses 
 55.27  used to make the determination set forth in subdivision 3, 
 55.28  clause (2); and 
 55.29     (8) identification of all parcels to be included in the 
 55.30  district or any subdistrict. 
 55.31     (b) For a housing district, redevelopment district, or a 
 55.32  ~~hazardous substance~~ subdistrict, the authority may elect in the 
 55.33  tax increment financing plan to provide for the identification 
 55.34  of a minimum market value in the plan, development agreement, or 
 55.35  assessment agreement, and provide that increment is first 
 55.36  received by the authority when (1) the market value of the 
 56.1   improvements as determined by the assessor reaches or exceeds 
 56.2   the minimum market value, or (2) four years has elapsed from the 
 56.3   date of certification of the original net tax capacity of the 
 56.4   taxable real property in the district or subdistrict by the 
 56.5   county auditor, whichever is earlier. 
 56.6      Sec. 13.  Minnesota Statutes 1996, section 469.175, 
 56.7   subdivision 3, is amended to read: 
 56.8      Subd. 3.  [MUNICIPALITY APPROVAL.] A county auditor shall 
 56.9   not certify the original net tax capacity of a tax increment 
 56.10  financing district until the tax increment financing plan 
 56.11  proposed for that district has been approved by the municipality 
 56.12  in which the district is located.  If an authority that proposes 
 56.13  to establish a tax increment financing district and the 
 56.14  municipality are not the same, the authority shall apply to the 
 56.15  municipality in which the district is proposed to be located and 
 56.16  shall obtain the approval of its tax increment financing plan by 
 56.17  the municipality before the authority may use tax increment 
 56.18  financing.  The municipality shall approve the tax increment 
 56.19  financing plan only after a public hearing thereon after 
 56.20  published notice in a newspaper of general circulation in the 
 56.21  municipality at least once not less than ten days nor more than 
 56.22  30 days prior to the date of the hearing.  The published notice 
 56.23  must include a map of the area of the district from which 
 56.24  increments may be collected and, if the project area includes 
 56.25  additional area, a map of the project area in which the 
 56.26  increments may be expended.  The hearing may be held before or 
 56.27  after the approval or creation of the project or it may be held 
 56.28  in conjunction with a hearing to approve the project.  Before or 
 56.29  at the time of approval of the tax increment financing plan, the 
 56.30  municipality shall make the following findings, and shall set 
 56.31  forth in writing the reasons and supporting facts for each 
 56.32  determination: 
 56.33     (1) that the proposed tax increment financing district is a 
 56.34  redevelopment district, a renewal or renovation district, a 
 56.35  mined underground space development district, a housing 
 56.36  district, ~~a soils condition district,~~ or an economic development 
 57.1   district; if the proposed district is a redevelopment district 
 57.2   or a renewal or renovation district, the reasons and supporting 
 57.3   facts for the determination that the district meets the criteria 
 57.4   of section 469.174, subdivision 10, paragraph (a), clauses (1) 
 57.5   and (2), or subdivision 10a, must be retained and made available 
 57.6   to the public by the authority until the district has been 
 57.7   terminated. 
 57.8      (2) that the proposed development or redevelopment, in the 
 57.9   opinion of the municipality, would not reasonably be expected to 
 57.10  occur solely through private investment within the reasonably 
 57.11  foreseeable future and that the increased market value of the 
 57.12  site that could reasonably be expected to occur without the use 
 57.13  of tax increment financing would be less than the increase in 
 57.14  the market value estimated to result from the proposed 
 57.15  development after subtracting the present value of the projected 
 57.16  tax increments for the maximum duration of the district 
 57.17  permitted by the plan.  The requirements of this clause do not 
 57.18  apply if the district is a qualified housing district, as 
 57.19  defined in section 273.1399, subdivision 1. 
 57.20     (3) that the tax increment financing plan conforms to the 
 57.21  general plan for the development or redevelopment of the 
 57.22  municipality as a whole. 
 57.23     (4) that the tax increment financing plan will afford 
 57.24  maximum opportunity, consistent with the sound needs of the 
 57.25  municipality as a whole, for the development or redevelopment of 
 57.26  the project by private enterprise. 
 57.27     (5) that the municipality elects the method of tax 
 57.28  increment computation set forth in section 469.177, subdivision 
 57.29  3, clause (b), if applicable. 
 57.30     When the municipality and the authority are not the same, 
 57.31  the municipality shall approve or disapprove the tax increment 
 57.32  financing plan within 60 days of submission by the authority, or 
 57.33  the plan shall be deemed approved.  When the municipality and 
 57.34  the authority are not the same, the municipality may not amend 
 57.35  or modify a tax increment financing plan except as proposed by 
 57.36  the authority pursuant to subdivision 4.  Once approved, the 
 58.1   determination of the authority to undertake the project through 
 58.2   the use of tax increment financing and the resolution of the 
 58.3   governing body shall be conclusive of the findings therein and 
 58.4   of the public need for the financing. 
 58.5      Sec. 14.  Minnesota Statutes 1996, section 469.175, 
 58.6   subdivision 7, is amended to read: 
 58.7      Subd. 7.  [CREATION OF HAZARDOUS SUBSTANCE SUBDISTRICT; 
 58.8   RESPONSE ACTIONS.] (a) An authority which is creating or has 
 58.9   created a tax increment financing district may establish within 
 58.10  the district a hazardous substance subdistrict upon the notice 
 58.11  and after the discussion, public hearing, and findings required 
 58.12  for approval of or modification to the original plan.  The 
 58.13  geographic area of the hazardous substance subdistrict is made 
 58.14  up of any parcels in the district designated for inclusion by 
 58.15  the municipality or authority that are designated hazardous 
 58.16  substance sites, and any additional parcels in the district 
 58.17  designated for inclusion that are contiguous to the hazardous 
 58.18  substance sites, including parcels that are contiguous to the 
 58.19  site except for the interposition of a right-of-way.  Before or 
 58.20  at the time of approval of the tax increment financing plan or 
 58.21  plan modification providing for the creation of the hazardous 
 58.22  substance subdistrict, the authority must make the findings 
 58.23  under paragraphs (b) to (d), and set forth in writing the 
 58.24  reasons and supporting facts for each. 
 58.25     (b) Development or redevelopment of the site, in the 
 58.26  opinion of the authority, would not reasonably be expected to 
 58.27  occur solely through private investment and tax increment 
 58.28  otherwise available, and therefore the hazardous substance 
 58.29  district is deemed necessary. 
 58.30     (c) Other parcels that are not designated hazardous 
 58.31  substance sites are expected to be developed together with a 
 58.32  designated hazardous substance site.  
 58.33     (d) The hazardous substance subdistrict is not larger than, 
 58.34  and the period of time during which increments are elected to be 
 58.35  received is not longer than, that which is necessary in the 
 58.36  opinion of the authority to provide for the additional costs due 
 59.1   to the designated hazardous substance site. 
 59.2      (e) Upon request by an authority that has incurred expenses 
 59.3   for removal or remedial actions to implement a development 
 59.4   response action plan, the attorney general may: 
 59.5      (1) bring a civil action on behalf of the authority to 
 59.6   recover the expenses, including administrative costs and 
 59.7   litigation expenses, under section 115B.04 or other law; or 
 59.8      (2) assist the authority in bringing an action as described 
 59.9   in clause (1), by providing legal and technical advice, 
 59.10  intervening in the action, or other appropriate assistance. 
 59.11  The decision to participate in any action to recover expenses is 
 59.12  at the discretion of the attorney general. 
 59.13     (f) If the attorney general brings an action as provided in 
 59.14  paragraph (e), clause (1), the authority shall certify its 
 59.15  reasonable and necessary expenses incurred to implement the 
 59.16  development response action plan and shall cooperate with the 
 59.17  attorney general as required to effectively pursue the action.  
 59.18  The certification by the authority is prima facie evidence that 
 59.19  the expenses are reasonable and necessary.  The attorney general 
 59.20  may deduct litigation expenses incurred by the attorney general 
 59.21  from any amounts recovered in an action brought under paragraph 
 59.22  (e), clause (1).  The authority shall reimburse the attorney 
 59.23  general for litigation expenses not recovered in an action under 
 59.24  paragraph (e), clause (1), but only from the additional tax 
 59.25  increment required to be used as described in section 469.176, 
 59.26  subdivision 4e.  The authority must reimburse the attorney 
 59.27  general for litigation expenses incurred to assist in bringing 
 59.28  an action under paragraph (e), clause (2), but only from amounts 
 59.29  recovered by the authority in an action or, if the amounts are 
 59.30  insufficient, from the additional tax increment required to be 
 59.31  used as described in section 469.176, subdivision 4e.  All money 
 59.32  recovered or paid to the attorney general for litigation 
 59.33  expenses under this paragraph shall be paid to the general fund 
 59.34  of the state for deposit to the account of the attorney 
 59.35  general.  For the purposes of this section, "litigation 
 59.36  expenses" means attorney fees and costs of discovery and other 
 60.1   preparation for litigation. 
 60.2      (g) The authority shall reimburse the pollution control 
 60.3   agency for its administrative expenses incurred to review and 
 60.4   approve a development action response plan.  The authority must 
 60.5   reimburse the pollution control agency for expenses incurred for 
 60.6   any services rendered to the attorney general to support the 
 60.7   attorney general in actions brought or assistance provided under 
 60.8   paragraph (e), but only from amounts recovered by the authority 
 60.9   in an action brought under paragraph (e) or from the additional 
 60.10  tax increment required to be used as described in section 
 60.11  469.176, subdivision 4e.  All money paid to the pollution 
 60.12  control agency under this paragraph shall be deposited in the 
 60.13  environmental response, compensation and compliance fund. 
 60.14     (h) Actions taken by an authority consistent with a 
 60.15  development response action plan are deemed to be authorized 
 60.16  response actions for the purpose of section 115B.17, subdivision 
 60.17  12.  An authority that takes actions consistent with a 
 60.18  development response action plan qualifies for the defenses 
 60.19  available under sections 115B.04, subdivision 11, and 115B.05, 
 60.20  subdivision 9. 
 60.21     (i) All money recovered by an authority in an action 
 60.22  brought under paragraph (e) in excess of the amounts paid to the 
 60.23  attorney general and the pollution control agency must be 
 60.24  treated as excess increments and be distributed as provided in 
 60.25  section 469.176, subdivision 2, clause (4), to the extent the 
 60.26  removal and remedial actions were initially financed with 
 60.27  increment revenues. 
 60.28     Sec. 15.  Minnesota Statutes 1996, section 469.175, is 
 60.29  amended by adding a subdivision to read: 
 60.30     Subd. 9.  [CREATION OF HERITAGE AND HISTORIC 
 60.31  SUBDISTRICT.] (a) An authority which is creating or has created 
 60.32  a tax increment financing district may establish within the 
 60.33  district a heritage and historic subdistrict upon the notice and 
 60.34  after discussion, public hearing, and findings required for 
 60.35  approval of or modification to the original plan.  The 
 60.36  geographic area of the subdistrict shall include only those 
 61.1   parcels in the district which, in whole or in part, either: 
 61.2      (1) are listed in the National Register of Historic Places 
 61.3   maintained by the Department of Interior pursuant to the 
 61.4   National Historic Preservation Act of 1966; 
 61.5      (2) contain a certified historic structure as defined in 
 61.6   section 47(c)(3)(A) of the Internal Revenue Code which has been 
 61.7   certified by the Secretary of the Interior; or 
 61.8      (3) are located in a certified local district as designated 
 61.9   by either a certified local government or a historic 
 61.10  preservation commission pursuant to the National Historic 
 61.11  Preservation Act of 1966 and whose designation is also approved 
 61.12  by the state historic preservation officer. 
 61.13     Before or at the time of approval of the tax increment 
 61.14  financing plan or plan modification providing for the creation 
 61.15  of the heritage and historic subdistrict, the authority must 
 61.16  make the findings under paragraphs (b) and (c), and set forth in 
 61.17  writing the reasons and supporting facts for each. 
 61.18     (b) Development or redevelopment of the heritage and 
 61.19  historic subdistrict, in the opinion of the authority, would not 
 61.20  reasonably be expected to occur solely through private 
 61.21  investment and tax increment otherwise available, and therefore 
 61.22  the heritage and historic subdistrict is deemed necessary. 
 61.23     (c) The heritage and historic subdistrict is not larger 
 61.24  than, and the period of time during which increments are elected 
 61.25  to be received is not longer than, that which is necessary in 
 61.26  the opinion of the authority to provide for the additional costs 
 61.27  due to the designated heritage and historic subdistrict. 
 61.28     (d) Each parcel in a heritage and historic subdistrict must 
 61.29  comply with the requirements of paragraph (a) for the duration 
 61.30  of the heritage and historic subdistrict. 
 61.31     Sec. 16.  Minnesota Statutes 1996, section 469.176, 
 61.32  subdivision 1b, is amended to read: 
 61.33     Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
 61.34  shall in any event be paid to the authority 
 61.35     (1) after 25 years from date of receipt by the authority of 
 61.36  the first tax increment for a mined underground space 
 62.1   development district, 
 62.2      (2) after 15 years after receipt by the authority of the 
 62.3   first increment for a renewal and renovation district, 
 62.4      (3) ~~after 12 years from approval of the tax increment~~ 
 62.5   ~~financing plan for a soils condition district,~~ 
 62.6      ~~(4)~~ after nine years from the date of the receipt, or 11 
 62.7   years from approval of the tax increment financing plan, 
 62.8   whichever is less, for an economic development district, 
 62.9      ~~(5)~~ (4) for a housing district or a redevelopment district, 
 62.10  after 20 years from the date of receipt by the authority of the 
 62.11  first tax increment by the authority pursuant to section 
 62.12  469.175, subdivision 1, paragraph (b); or, if no provision is 
 62.13  made under section 469.175, subdivision 1, paragraph (b), after 
 62.14  25 years from the date of receipt by the authority of the first 
 62.15  increment. 
 62.16     (b) For purposes of determining a duration limit under this 
 62.17  subdivision or subdivision 1e that is based on the receipt of an 
 62.18  increment, any increments from taxes payable in the year in 
 62.19  which the district terminates shall be paid to the authority.  
 62.20  This paragraph does not affect a duration limit calculated from 
 62.21  the date of approval of the tax increment financing plan or 
 62.22  based on the recovery of costs or to a duration limit under 
 62.23  subdivision 1c.  This paragraph does not supersede the 
 62.24  restrictions on payment of delinquent taxes in subdivision 
 62.25  1f.  For purposes of determining a durational limit under this 
 62.26  subdivision that is based on first receipt of tax increment, any 
 62.27  increment received based on the captured net tax capacity of a 
 62.28  hazardous substance subdistrict shall be disregarded. 
 62.29     Sec. 17.  Minnesota Statutes 1996, section 469.176, 
 62.30  subdivision 1e, is amended to read: 
 62.31     Subd. 1e.  [DURATION LIMITS; HAZARDOUS SUBSTANCE 
 62.32  SUBDISTRICTS.] If a parcel of a district is part of a designated 
 62.33  hazardous substance site or a hazardous substance subdistrict, 
 62.34  tax increment may be paid to the authority from the parcel for 
 62.35  longer than the period otherwise provided by subdivisions 1 to 
 62.36  1f for the overlying district.  The extended period for 
 63.1   collection of tax increment begins on the date of receipt of the 
 63.2   first tax increment from the parcel that is received after the 
 63.3   date of certification to the county auditor described in section 
 63.4   469.174, subdivision 7, paragraph (b), and is either the first 
 63.5   tax increment received from the parcel or more than any tax 
 63.6   increment received from the parcel before the date of the 
 63.7   certification under section 469.174, subdivision 7, paragraph 
 63.8   (b)~~, and received after the date of certification to the county~~ 
 63.9   ~~auditor described in section 469.174, subdivision 7, paragraph~~ 
 63.10  ~~(b)~~.  The extended period for collection of tax increment is the 
 63.11  lesser of:  (1) 25 years from the date of commencement of the 
 63.12  extended period or 20 years if the authority elects under 
 63.13  section 469.175, subdivision 1, paragraph (b), to defer receipt 
 63.14  of the first increment; or (2) the period necessary to recover 
 63.15  the costs of removal actions or remedial actions specified in a 
 63.16  development response action plan. 
 63.17     Sec. 18.  Minnesota Statutes 1996, section 469.176, 
 63.18  subdivision 4c, is amended to read: 
 63.19     Subd. 4c.  [ECONOMIC DEVELOPMENT DISTRICTS.] (a) Revenue 
 63.20  derived from tax increment from an economic development district 
 63.21  may not be used to provide improvements, loans, subsidies, 
 63.22  grants, interest rate subsidies, or assistance in any form to 
 63.23  developments consisting of buildings and ancillary facilities, 
 63.24  if more than 15 percent of the buildings and facilities 
 63.25  (determined on the basis of square footage) are used for a 
 63.26  purpose other than:  
 63.27     (1) the manufacturing or production of tangible personal 
 63.28  property, including processing resulting in the change in 
 63.29  condition of the property; 
 63.30     (2) warehousing, storage, and distribution of tangible 
 63.31  personal property, excluding retail sales; 
 63.32     (3) research and development related to the activities 
 63.33  listed in clause (1) or (2); 
 63.34     (4) telemarketing if that activity is the exclusive use of 
 63.35  the property; 
 63.36     (5) tourism facilities; or 
 64.1      (6) space necessary for and related to the activities 
 64.2   listed in clauses (1) to (5).  
 64.3      (b) Notwithstanding the provisions of this subdivision, 
 64.4   revenue derived from tax increment from an economic development 
 64.5   district may be used to pay for site preparation and public 
 64.6   improvements, if the following conditions are met: 
 64.7      (1) bedrock soils conditions are present in 80 percent or 
 64.8   more of the acreage of the district; 
 64.9      (2) the estimated cost of physical preparation of the site 
 64.10  exceeds the fair market value of the land before completion of 
 64.11  the preparation; and 
 64.12     (3) revenues from tax increments are expended only for the 
 64.13  additional costs of preparing the site because of unstable soils 
 64.14  and the bedrock soils condition, the additional cost of 
 64.15  installing public improvements because of unstable soils or the 
 64.16  bedrock soils condition, and reasonable administrative costs. 
 64.17     (c) Notwithstanding the provisions of this subdivision, 
 64.18  revenues derived from tax increment from an economic development 
 64.19  district may be used to provide improvements, loans, subsidies, 
 64.20  grants, interest rate subsidies, or assistance in any form for 
 64.21  up to 5,000 square feet of any separately owned commercial 
 64.22  facility located within the municipal jurisdiction of a home 
 64.23  rule charter or statutory city that has a population of 5,000 or 
 64.24  less and that is located ten miles or more from a city that has 
 64.25  a population of 10,000 or more. 
 64.26     Sec. 19.  Minnesota Statutes 1996, section 469.176, 
 64.27  subdivision 4e, is amended to read: 
 64.28     Subd. 4e.  [HAZARDOUS SUBSTANCE SUBDISTRICTS.] The 
 64.29  additional tax increment received by the municipality from a 
 64.30  hazardous substance subdistrict as a result of a reduction in 
 64.31  original net tax capacity pursuant to section 469.174, 
 64.32  subdivision 7, paragraph (b), or as a result of the extension of 
 64.33  the period for collection of tax increment from a hazardous 
 64.34  substance site or hazardous substance subdistrict provided for 
 64.35  in subdivision 1, paragraph (g), may be used only to pay or 
 64.36  reimburse the costs of:  (1) removal actions or remedial actions 
 65.1   with respect to hazardous substances or pollutants or 
 65.2   contaminants or petroleum releases affecting or which may affect 
 65.3   the designated hazardous substance site; (2) pollution testing, 
 65.4   demolition, and soil compaction correction necessitated by the 
 65.5   development response action plan for the designated hazardous 
 65.6   substance site; (3) purchase of environmental insurance or 
 65.7   deposits to a guaranty fund, relating only to liability or 
 65.8   response costs for land in the hazardous substance subdistrict; 
 65.9   and (4) related administrative and legal costs, including costs 
 65.10  of review and approval of development response action plans by 
 65.11  the pollution control agency and litigation expenses of the 
 65.12  attorney general. 
 65.13     Sec. 20.  Minnesota Statutes 1996, section 469.176, 
 65.14  subdivision 4j, is amended to read: 
 65.15     Subd. 4j.  [REDEVELOPMENT DISTRICTS.] At least 90 percent 
 65.16  of the revenues derived from tax increments from a redevelopment 
 65.17  district or renewal and renovation district must be used to 
 65.18  finance the cost of correcting conditions that allow designation 
 65.19  of redevelopment and renewal and renovation districts under 
 65.20  section 469.174.  These costs include, but are not limited to, 
 65.21  acquiring properties containing structurally substandard 
 65.22  buildings or improvements or hazardous substances, pollution, or 
 65.23  contaminants, acquiring adjacent parcels necessary to provide a 
 65.24  site of sufficient size to permit development, demolition and 
 65.25  rehabilitation of structures, clearing of the land, the removal 
 65.26  of hazardous substances or remediation necessary to development 
 65.27  of the land, and installation of utilities, roads, sidewalks, 
 65.28  and parking facilities for the site.  The allocated 
 65.29  administrative expenses of the authority, including the cost of 
 65.30  preparation of the development action response plan, may be 
 65.31  included in the qualifying costs. 
 65.32     Sec. 21.  Minnesota Statutes 1996, section 469.176, is 
 65.33  amended by adding a subdivision to read: 
 65.34     Subd. 4k.  [HERITAGE AND HISTORIC SUBDISTRICTS.] The tax 
 65.35  increment received by the municipality from a heritage and 
 65.36  historic subdistrict may be used only to pay or reimburse the 
 66.1   costs of activities within the subdistrict that are: 
 66.2      (1) described in subdivision 4e; 
 66.3      (2) described in subdivision 4j; or 
 66.4      (3) capital expenditures of a type that would be eligible 
 66.5   for a rehabilitation credit, as defined in section 47 of the 
 66.6   Internal Revenue Code, regardless of whether the project is 
 66.7   eligible for a credit or a credit is actually utilized.  If a 
 66.8   credit is not applied for, the municipality shall review the 
 66.9   eligible capital expenditures and determine whether they meet 
 66.10  the requirements applicable under section 47 of the Internal 
 66.11  Revenue Code.  In making this determination, the municipality 
 66.12  shall consult with any applicable historic preservation 
 66.13  commission and the determination shall be approved by the state 
 66.14  historic preservation officer.  The tax increment financing plan 
 66.15  shall identify those section 47 eligible expenditures which may 
 66.16  be paid from tax increments. 
 66.17     Sec. 22.  Minnesota Statutes 1996, section 469.176, 
 66.18  subdivision 5, is amended to read: 
 66.19     Subd. 5.  [REQUIREMENT FOR AGREEMENTS.] No more than 25 
 66.20  percent, by acreage, of the property to be acquired within a 
 66.21  project which contains a redevelopment district, or ten percent, 
 66.22  by acreage, of the property to be acquired within a project 
 66.23  which contains a housing or economic development district, as 
 66.24  set forth in the tax increment financing plan, shall at any time 
 66.25  be owned by an authority as a result of acquisition with the 
 66.26  proceeds of bonds issued pursuant to section 469.178 to which 
 66.27  tax increment from the property acquired is pledged unless prior 
 66.28  to acquisition in excess of the percentages, the authority has 
 66.29  concluded an agreement for the development or redevelopment of 
 66.30  the property acquired and which provides recourse for the 
 66.31  authority should the development or redevelopment not be 
 66.32  completed.  This subdivision does not apply to a parcel of a 
 66.33  district that is a designated hazardous substance site 
 66.34  established under section 469.174, subdivision 16, or part of a 
 66.35  hazardous substance subdistrict established under section 
 66.36  469.175, subdivision 7, or part of a heritage and historic 
 67.1   subdistrict established under section 469.175, subdivision 9.  
 67.2      Sec. 23.  [469.1764] [EXPENDITURES ON ACTIVITIES WITHIN TAX 
 67.3   INCREMENT DISTRICT.] 
 67.4      For purposes of sections 469.174 to 469.179, with respect 
 67.5   to any project for which certification of a tax increment 
 67.6   district was requested prior to August 1, 1979, any expenditure 
 67.7   made to finance a treatment works facility, water tower, or 
 67.8   other waterworks facility, an electric generation facility, or 
 67.9   any other public utility facility located outside of a tax 
 67.10  increment district and reasonably allocated to users within a 
 67.11  tax increment district or project for which certification was 
 67.12  requested prior to August 1, 1979, shall be deemed to have been 
 67.13  expended on activities in the tax increment district or project 
 67.14  area. 
 67.15     Sec. 24.  Minnesota Statutes 1996, section 469.1765, 
 67.16  subdivision 2, is amended to read: 
 67.17     Subd. 2.  [ELIGIBLE PERSON.] The authority may agree to 
 67.18  pledge money in the guaranty fund to indemnify a person whose 
 67.19  liability arises out of use, ownership, occupancy, or financing 
 67.20  of a property in the hazardous substance subdistrict or district.
 67.21     Sec. 25.  Minnesota Statutes 1996, section 469.1765, 
 67.22  subdivision 3, is amended to read: 
 67.23     Subd. 3.  [TERMS OF INDEMNITY.] The authority shall 
 67.24  determine by resolution or by agreement with the person the 
 67.25  terms and conditions under which money in the guaranty fund will 
 67.26  be used to indemnify or hold harmless the person.  The authority 
 67.27  may not agree to indemnify a person from liability for 
 67.28  contamination caused by the person.  The maximum amount that may 
 67.29  be paid from the guaranty fund with respect to properties within 
 67.30  a hazardous substance subdistrict or district is one-half of the 
 67.31  remediation and removal costs.  The maximum duration of an 
 67.32  indemnification agreement is 25 years.  An indemnification 
 67.33  agreement is subject to any other restrictions provided by this 
 67.34  section or other law. 
 67.35     Sec. 26.  Minnesota Statutes 1996, section 469.1765, 
 67.36  subdivision 4, is amended to read: 
 68.1      Subd. 4.  [FUNDING.] (a) Revenues derived from tax 
 68.2   increments and any other money available to the authority may be 
 68.3   deposited in the guaranty fund.  The municipality may 
 68.4   appropriate money to the authority to be deposited in the 
 68.5   guaranty fund. 
 68.6      (b) If a guaranty fund is established that applies to 
 68.7   property located in more than one tax increment financing 
 68.8   district or hazardous substance subdistrict, the authority shall 
 68.9   establish separate accounts for each hazardous substance 
 68.10  subdistrict and district.  The authority shall deposit all 
 68.11  revenues derived from tax increments from a hazardous substance 
 68.12  subdistrict or district in the account for that hazardous 
 68.13  substance subdistrict or district, except the following amounts 
 68.14  may be deposited in a general or other account:  (1) the portion 
 68.15  of revenue derived increments from a district, subject to 
 68.16  section 469.1763, that may be spent on activities outside of the 
 68.17  district, or (2) up to 25 percent of the revenues derived from 
 68.18  increments from districts that are not subject to section 
 68.19  469.1763 and which may be deposited in the guaranty fund under 
 68.20  the applicable tax increment financing plans.  Investment 
 68.21  earnings of money in an account must be credited to that account.
 68.22     (c) The only money which may be pledged to indemnify or 
 68.23  hold harmless a person from liability are amounts either in the 
 68.24  account for the hazardous substance subdistrict or district in 
 68.25  which the property out of which the liability arose is located 
 68.26  or in an account not dedicated to a specific hazardous substance 
 68.27  subdistrict or district. 
 68.28     Sec. 27.  Minnesota Statutes 1996, section 469.1765, 
 68.29  subdivision 7, is amended to read: 
 68.30     Subd. 7.  [FINAL DISPOSITION OF FUNDS.] At the end of the 
 68.31  period of the indemnification, all unencumbered money in the 
 68.32  guaranty fund for the hazardous substance subdistrict or 
 68.33  district must be treated as an excess increment and distributed 
 68.34  under the provisions of section 469.176, subdivision 2, 
 68.35  paragraph (a), clause (4).  If the municipality contributed 
 68.36  money to the account, other than revenues derived from 
 69.1   increments, the authority may deduct and pay to the municipality 
 69.2   a proportionate share of the unencumbered money in the account 
 69.3   before the money is distributed as an excess increment.  The 
 69.4   proportionate share is determined based on the amount of 
 69.5   contributions of nonincrements to the account relative to total 
 69.6   contributions, including increments, to the account. 
 69.7      Sec. 28.  Minnesota Statutes 1996, section 469.177, 
 69.8   subdivision 3, is amended to read: 
 69.9      Subd. 3.  [TAX INCREMENT, RELATIONSHIP TO CHAPTERS 276A AND 
 69.10  473F.] (a) Unless the governing body elects pursuant to clause 
 69.11  (b) the following method of computation shall apply to a 
 69.12  district other than an economic development district for which 
 69.13  the request for certification was made after June 30, 1997: 
 69.14     (1) The original net tax capacity and the current net tax 
 69.15  capacity shall be determined before the application of the 
 69.16  fiscal disparity provisions of chapter 276A or 473F.  Where the 
 69.17  original net tax capacity is equal to or greater than the 
 69.18  current net tax capacity, there is no captured net tax capacity 
 69.19  and no tax increment determination.  Where the original net tax 
 69.20  capacity is less than the current net tax capacity, the 
 69.21  difference between the original net tax capacity and the current 
 69.22  net tax capacity is the captured net tax capacity.  This amount 
 69.23  less any portion thereof which the authority has designated, in 
 69.24  its tax increment financing plan, to share with the local taxing 
 69.25  districts is the retained captured net tax capacity of the 
 69.26  authority.  
 69.27     (2) The county auditor shall exclude the retained captured 
 69.28  net tax capacity of the authority from the net tax capacity of 
 69.29  the local taxing districts in determining local taxing district 
 69.30  tax rates.  The local tax rates so determined are to be extended 
 69.31  against the retained captured net tax capacity of the authority 
 69.32  as well as the net tax capacity of the local taxing districts.  
 69.33  The tax generated by the extension of the lesser of (A) the 
 69.34  local taxing district tax rates or (B) the original local tax 
 69.35  rate to the retained captured net tax capacity of the authority 
 69.36  is the tax increment of the authority.  
 70.1      (b) The following method of computation applies to any 
 70.2   economic development district for which the request for 
 70.3   certification was made after June 30, 1997, and to any other 
 70.4   district for which the governing body ~~may~~, by resolution 
 70.5   approving the tax increment financing plan pursuant to section 
 70.6   469.175, subdivision 3, ~~elect the following method of~~ 
 70.7   ~~computation~~ elects: 
 70.8      (1) The original net tax capacity shall be determined 
 70.9   before the application of the fiscal disparity provisions of 
 70.10  chapter 276A or 473F.  The current net tax capacity shall 
 70.11  exclude any fiscal disparity commercial-industrial net tax 
 70.12  capacity increase between the original year and the current year 
 70.13  multiplied by the fiscal disparity ratio determined pursuant to 
 70.14  section 276A.06, subdivision 7, or 473F.08, subdivision 6.  
 70.15  Where the original net tax capacity is equal to or greater than 
 70.16  the current net tax capacity, there is no captured net tax 
 70.17  capacity and no tax increment determination.  Where the original 
 70.18  net tax capacity is less than the current net tax capacity, the 
 70.19  difference between the original net tax capacity and the current 
 70.20  net tax capacity is the captured net tax capacity.  This amount 
 70.21  less any portion thereof which the authority has designated, in 
 70.22  its tax increment financing plan, to share with the local taxing 
 70.23  districts is the retained captured net tax capacity of the 
 70.24  authority.  
 70.25     (2) The county auditor shall exclude the retained captured 
 70.26  net tax capacity of the authority from the net tax capacity of 
 70.27  the local taxing districts in determining local taxing district 
 70.28  tax rates.  The local tax rates so determined are to be extended 
 70.29  against the retained captured net tax capacity of the authority 
 70.30  as well as the net tax capacity of the local taxing districts.  
 70.31  The tax generated by the extension of the lesser of (A) the 
 70.32  local taxing district tax rates or (B) the original local tax 
 70.33  rate to the retained captured net tax capacity of the authority 
 70.34  is the tax increment of the authority.  
 70.35     (3) An election by the governing body pursuant to paragraph 
 70.36  (b) shall be submitted to the county auditor by the authority at 
 71.1   the time of the request for certification pursuant to 
 71.2   subdivision 1. 
 71.3      (c) The method of computation of tax increment applied to a 
 71.4   district pursuant to paragraph (a) or (b) shall remain the same 
 71.5   for the duration of the district, except that the governing body 
 71.6   may elect to change its election from the method of computation 
 71.7   in paragraph (a) to the method in paragraph (b). 
 71.8      Sec. 29.  Laws 1995, chapter 264, article 5, section 44, 
 71.9   subdivision 4, as amended by Laws 1996, chapter 471, article 7, 
 71.10  section 21, is amended to read: 
 71.11     Subd. 4.  [AUTHORITY.] For housing replacement projects in 
 71.12  the city of Crystal, "authority" means the Crystal economic 
 71.13  development authority.  For housing replacement projects in the 
 71.14  city of Fridley, "authority" means the housing and redevelopment 
 71.15  authority in and for the city of Fridley or a successor in 
 71.16  interest.  For housing replacement projects in the city of 
 71.17  Minneapolis, "authority" means the Minneapolis community 
 71.18  development agency.  For housing replacement projects in the 
 71.19  city of St. Paul, "authority" means the St. Paul housing and 
 71.20  redevelopment authority.  For housing replacement projects in 
 71.21  the city of Duluth, "authority" means the Duluth economic 
 71.22  development authority.  For housing replacement projects in the 
 71.23  city of Richfield, "authority" is the authority as defined in 
 71.24  Minnesota Statutes, section 469.174, subdivision 2, that is 
 71.25  designated by the governing body of the city of Richfield.  For 
 71.26  housing replacement projects in the city of Columbia Heights, 
 71.27  "authority" is the authority as defined in Minnesota Statutes, 
 71.28  section 469.174, subdivision 2, that is designated by the 
 71.29  governing body of the city of Columbia Heights. 
 71.30     Sec. 30.  Laws 1995, chapter 264, article 5, section 45, 
 71.31  subdivision 1, as amended by Laws 1996, chapter 471, article 7, 
 71.32  section 22, is amended to read: 
 71.33     Subdivision 1.  [CREATION OF PROJECTS.] (a) An authority 
 71.34  may create a housing replacement project under sections 44 to 
 71.35  47, as provided in this section. 
 71.36     (b) For the cities of Crystal, Fridley, ~~and~~ Richfield, and 
 72.1   Columbia Heights, the authority may designate up to 50 parcels 
 72.2   in the city to be included in a housing replacement district.  
 72.3   No more than ten parcels may be included in year one of the 
 72.4   district, with up to ten additional parcels added to the 
 72.5   district in each of the following nine years.  For the cities of 
 72.6   Minneapolis, St. Paul, and Duluth, each authority may designate 
 72.7   up to 100 parcels in the city to be included in a housing 
 72.8   replacement district over the life of the district.  The only 
 72.9   parcels that may be included in a district are (1) vacant sites, 
 72.10  (2) parcels containing vacant houses, or (3) parcels containing 
 72.11  houses that are structurally substandard, as defined in 
 72.12  Minnesota Statutes, section 469.174, subdivision 10.  
 72.13     (c) The city in which the authority is located must pay at 
 72.14  least 25 percent of the housing replacement project costs from 
 72.15  its general fund, a property tax levy, or other unrestricted 
 72.16  money, not including tax increments. 
 72.17     (d) The housing replacement district plan must have as its 
 72.18  sole object the acquisition of parcels for the purpose of 
 72.19  preparing the site to be sold for market rate housing.  As used 
 72.20  in this section, "market rate housing" means housing that has a 
 72.21  market value that does not exceed 150 percent of the average 
 72.22  market value of single-family housing in that municipality. 
 72.23     Sec. 31.  [CITY OF BROOKLYN CENTER; USE OF TAX INCREMENT 
 72.24  FINANCING.] 
 72.25     Subdivision 1.  [APPLICATION OF TIME LIMIT.] For tax 
 72.26  increment financing district number 3, established on December 
 72.27  19, 1994, by Brooklyn Center Resolution No. 94-273, Minnesota 
 72.28  Statutes, section 469.1763, subdivision 3, applies to the 
 72.29  district by permitting a period of ten years for commencement of 
 72.30  activities within the district. 
 72.31     Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
 72.32  approval by the governing body of the city of Brooklyn Center 
 72.33  and compliance with Minnesota Statutes, section 645.021, 
 72.34  subdivision 3. 
 72.35     Sec. 32.  [CITY OF BUFFALO LAKE; TAX INCREMENT FINANCING 
 72.36  DISTRICT.] 
 73.1      Subdivision 1.  [EXTENSION OF TIME FOR 
 73.2   CERTIFICATION.] Notwithstanding the provisions of Minnesota 
 73.3   Statutes, section 273.1399, subdivision 6, paragraph (b), clause 
 73.4   (2), tax increment financing district 1-1 in the city of Buffalo 
 73.5   Lake is an exempt district under Minnesota Statutes, section 
 73.6   273.1399, paragraph (b), if the facility is certified by the 
 73.7   commissioner of agriculture by December 31, 1998. 
 73.8      Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
 73.9   approval by the governing body of the city of Buffalo Lake and 
 73.10  compliance with Minnesota Statutes, section 645.021, subdivision 
 73.11  3. 
 73.12     Sec. 33.  [CITY OF FOLEY; TAX INCREMENT FINANCING 
 73.13  EXPENDITURES.] 
 73.14     Subdivision 1.  [AUTHORIZATION.] Notwithstanding any law to 
 73.15  the contrary, expenditures by the city of Foley before January 
 73.16  1, 1998, of revenue derived from tax increment financing 
 73.17  district number 1 to finance a wastewater treatment facility 
 73.18  located outside of the district are authorized expenditures of 
 73.19  that revenue.  
 73.20     Subd. 2.  [EFFECTIVE DATE; APPLICABILITY.] Pursuant to 
 73.21  Minnesota Statutes, section 645.023, subdivision 1, paragraph 
 73.22  (a), this section is effective without local approval the day 
 73.23  following final enactment and, subject to the limitation in 
 73.24  subdivision 1, applies to revenues expended before and after the 
 73.25  effective date. 
 73.26     Sec. 34.  [CITY OF GAYLORD; TIF DISTRICT EXTENSION AND 
 73.27  EXPANSION.] 
 73.28     Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
 73.29  provisions of Minnesota Statutes, section 469.176, subdivision 
 73.30  1c, the city of Gaylord may, by resolution, extend the duration 
 73.31  of a tax increment financing district originally certified in 
 73.32  1978.  The city may not extend the duration beyond December 31, 
 73.33  2018. 
 73.34     Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
 73.35  approval by the governing body of the city of Gaylord and 
 73.36  compliance with the requirements of Minnesota Statutes, sections 
 74.1   469.1782 and 645.021, subdivision 3. 
 74.2      Sec. 35.  [CITY OF MINNETONKA; HOUSING DEVELOPMENT 
 74.3   ACCOUNT.] 
 74.4      Subdivision 1.  [DEPOSITS IN ACCOUNT.] The Minnetonka 
 74.5   economic development authority may deposit the balance of 
 74.6   revenues derived from tax increment from housing tax increment 
 74.7   financing district No. 1 in the housing development account of 
 74.8   the authority.  These increments may be expended for housing 
 74.9   activities in accordance with the tax increment financing plan, 
 74.10  if before depositing the increments or making any expenditures 
 74.11  for housing activities under this section, the authority and 
 74.12  city: 
 74.13     (1) elect, by resolution, to decertify housing tax 
 74.14  increment financing district No. 1 as of December 31, 1997; and 
 74.15     (2) identify in the plan the housing activities that will 
 74.16  be assisted by the housing development account.  
 74.17     The election to decertify and any necessary plan amendment 
 74.18  may be approved before or after the effective date of this 
 74.19  section. 
 74.20     Subd. 2.  [PERMITTED HOUSING ACTIVITIES.] For the purposes 
 74.21  of this section, housing activities:  
 74.22     (1) may include rehabilitation, acquisition, demolition, 
 74.23  and financing of new or existing single family or multifamily 
 74.24  housing and public improvements directly related to such 
 74.25  activities, together with other related activities specified in 
 74.26  the housing action plan approved by the city or the authority in 
 74.27  compliance with Minnesota Statutes, sections 473.25 to 473.254; 
 74.28     (2) may be located anywhere within the city without regard 
 74.29  to the boundaries of any tax increment financing district or 
 74.30  project area; and 
 74.31     (3) for rental and owner-occupied housing, must meet the 
 74.32  income, rent, or sales price limitations established from time 
 74.33  to time by the metropolitan council under Minnesota Statutes, 
 74.34  sections 473.25 to 473.254. 
 74.35     Subd. 3.  [SEPARATE ACCOUNT REQUIRED.] Tax increment to be 
 74.36  expended for housing activities under this section must be 
 75.1   segregated by the authority into a special housing development 
 75.2   account on its official books and records.  The account may also 
 75.3   receive funds from other public and private sources. 
 75.4      Subd. 4.  [EFFECTIVE DATE.] This section is effective upon 
 75.5   approval by the governing body of the city of Minnetonka and 
 75.6   compliance with Minnesota Statutes, section 645.021, subdivision 
 75.7   3. 
 75.8      Sec. 36.  [CITY OF MINNEAPOLIS; HOUSING TRANSITION 
 75.9   DISTRICT; DEFINITIONS.] 
 75.10     Subdivision 1.  [APPLICABILITY.] As used in sections 36 to 
 75.11  39, the terms defined in this section have the meanings given 
 75.12  them.  
 75.13     Subd. 2.  [AUTHORITY.] "Authority" or "authorities" means 
 75.14  the Minneapolis public housing authority and the Minneapolis 
 75.15  community development agency if and to the extent that the 
 75.16  governing body has delegated to either the powers and duties 
 75.17  related to the housing transition district under section 37, 
 75.18  subdivision 4, paragraph (b). 
 75.19     Subd. 3.  [CAPTURED NET TAX CAPACITY.] "Captured net tax 
 75.20  capacity" means the amount by which the current net tax capacity 
 75.21  of the housing transition district exceeds the original net tax 
 75.22  capacity, including the value of property normally taxable as 
 75.23  personal property by reason of its location on or over property 
 75.24  owned by a tax exempt entity. 
 75.25     Subd. 4.  [CITY.] "City" means the city of Minneapolis. 
 75.26     Subd. 5.  [CONSENT DECREE.] "Consent decree" means the 
 75.27  order of the United States District Court issued in connection 
 75.28  with <i>Hollman et al. vs. Cisneros et al.,</i> United States District 
 75.29  Court, Civil Case 4-92-712, as may be amended from time to time. 
 75.30     Subd. 6.  [COUNTY AUDITOR.] "County auditor" means the 
 75.31  county auditor of Hennepin county. 
 75.32     Subd. 7.  [GOVERNING BODY.] "Governing body" means the city 
 75.33  council of the city. 
 75.34     Subd. 8.  [HOUSING TRANSITION DISTRICT; DISTRICT.] "Housing 
 75.35  transition district" or "district" means a geographic area 
 75.36  within the city designated by the governing body containing or 
 76.1   which contained public housing structures scheduled for 
 76.2   demolition or demolished in accordance with the terms of the 
 76.3   consent decree. 
 76.4      Subd. 9.  [NONTAXABLE PARCEL.] "Nontaxable parcel" means a 
 76.5   parcel to be included within the housing transition district 
 76.6   which at the time of certification is not subject to property 
 76.7   taxation by reason of public ownership. 
 76.8      Subd. 10.  [ORIGINAL NET TAX CAPACITY.] (a) With respect to 
 76.9   nontaxable parcels within the district, "original net tax 
 76.10  capacity" means zero. 
 76.11     (b) With respect to taxable parcels within the district, 
 76.12  "original net tax capacity" means the net tax capacity of the 
 76.13  parcels as certified by the commissioner of revenue for the 
 76.14  appropriate assessment year.  When a taxable parcel has been 
 76.15  assigned an original net tax capacity by the county auditor 
 76.16  pursuant to this paragraph, and a structure upon the parcel is 
 76.17  later demolished, the original net tax capacity of the parcel 
 76.18  must be reduced to the net tax capacity of the land only as 
 76.19  certified by the commissioner of revenue for the appropriate 
 76.20  assessment year.  For purposes of this subdivision, the 
 76.21  appropriate assessment year is the previous assessment year if a 
 76.22  request by the authority for certification has been made to the 
 76.23  county auditor by June 30.  If the request for certification is 
 76.24  filed after June 30, the appropriate assessment year is the 
 76.25  current assessment year. 
 76.26     Subd. 11.  [PARCEL.] "Parcel" means a tract or plat of land 
 76.27  established prior to the certification of the district as a 
 76.28  single unit for purposes of assessment. 
 76.29     Subd. 12.  [PREEXISTING DISTRICT.] "Preexisting district" 
 76.30  means any tax increment district within which is located a 
 76.31  parcel proposed to be included within the housing transition 
 76.32  district. 
 76.33     Subd. 13.  [TAXABLE PARCEL.] "Taxable parcel" means a 
 76.34  parcel to be included within the housing transition district 
 76.35  which is subject to property taxation at the time of 
 76.36  certification. 
 77.1      Sec. 37.  [ESTABLISHMENT OF HOUSING TRANSITION DISTRICT.] 
 77.2      Subdivision 1.  [CREATION.] The governing body may 
 77.3   establish a housing transition district within the city.  The 
 77.4   parcels included within the district need not be contiguous but 
 77.5   must all be designated and included at the time the district is 
 77.6   initially established.  Parcels must not be added to the 
 77.7   district after its initial certification. 
 77.8      Subd. 2.  [TAX INCREMENT.] (a) Upon request of the 
 77.9   authority, the county auditor shall certify the original net tax 
 77.10  capacity of the district and shall certify in each year 
 77.11  thereafter the amount by which the original net tax capacity 
 77.12  increases as a result of the conditions described in Minnesota 
 77.13  Statutes, section 469.177, subdivision 4, or decreases as a 
 77.14  result of the conditions described in Minnesota Statutes, 
 77.15  section 469.177, subdivision 1, paragraph (g), or section 36, 
 77.16  subdivision 10, paragraph (b).  No other changes shall be made 
 77.17  in original net tax capacity once certified by the county 
 77.18  auditor. 
 77.19     (b) The provisions of Minnesota Statutes, section 469.177, 
 77.20  subdivisions 1a and 3 to 10, apply to the computation of tax 
 77.21  increment for the housing transition district created under 
 77.22  sections 36 to 39. 
 77.23     (c) If an authority's request for certification includes 
 77.24  nontaxable parcels then within a preexisting district, the 
 77.25  county auditor shall remove the parcels from the preexisting 
 77.26  district.  If an authority's request for certification includes 
 77.27  taxable parcels then within a preexisting district, the county 
 77.28  auditor shall allocate all taxes derived from the captured net 
 77.29  tax capacity attributable thereto to the preexisting district 
 77.30  and shall not make the original net tax capacity adjustments 
 77.31  described in section 36, subdivision 10, paragraph (b). 
 77.32     Subd. 3.  [HOUSING TRANSITION DISTRICT PLAN.] To establish 
 77.33  a housing transition district, the governing body shall adopt a 
 77.34  housing transition district plan which constitutes a tax 
 77.35  increment financing plan, as used in those provisions of 
 77.36  Minnesota Statutes, sections 469.174 to 469.1781, made 
 78.1   applicable by section 39, and contains the following: 
 78.2      (1) a general description of the plans for development of 
 78.3   the district; 
 78.4      (2) a description of the parcels to be included in the 
 78.5   district, including such information regarding each as shall 
 78.6   establish that the district meets the conditions described in 
 78.7   section 36, subdivision 8; 
 78.8      (3) the most recent net tax capacity of each parcel 
 78.9   included in the district; 
 78.10     (4) a budget containing estimated tax increment collections 
 78.11  and expenditures as authorized or permitted by sections 36 to 
 78.12  39; 
 78.13     (5) estimates of the sources of revenue, public and 
 78.14  private, other than tax increment, to pay estimated or budgeted 
 78.15  costs; 
 78.16     (6) statements of the alternate estimated impacts of the 
 78.17  housing transition district on the net tax capacities of all 
 78.18  taxing jurisdictions in which the housing transition district is 
 78.19  located in whole or in part.  For purposes of one statement, the 
 78.20  statement shall assume that the estimated captured net tax 
 78.21  capacity would be available to the taxing jurisdictions without 
 78.22  creation of the housing transition district, and for purposes of 
 78.23  the second statement, it shall be assumed that none of the 
 78.24  estimated captured net tax capacity would be available to the 
 78.25  taxing jurisdictions without creation of the housing transition 
 78.26  district. 
 78.27     Subd. 4.  [PROCEDURE.] (a) The provisions of Minnesota 
 78.28  Statutes, section 469.175, subdivisions 3, 5, 6, and 6a, apply 
 78.29  to the establishment and operation of the housing transition 
 78.30  district created under sections 36 to 39, except the 
 78.31  determinations required by Minnesota Statutes, section 469.175, 
 78.32  subdivision 3, clauses (1) and (2), are not required. 
 78.33     (b) Upon approval of the housing transition district plan, 
 78.34  the governing body shall delegate to one or both of the 
 78.35  authorities the powers and duties regarding the implementation 
 78.36  and administration of the housing transition district as it 
 79.1   determines appropriate. 
 79.2      Sec. 38.  [LIMITATIONS.] 
 79.3      Subdivision 1.  [DURATION.] Tax increment generated by the 
 79.4   district must cease to be paid to the authority after the 
 79.5   expiration of 20 years from the receipt by the authority of the 
 79.6   first tax increment from the district. 
 79.7      Subd. 2.  [USE.] (a) All tax increment received by the 
 79.8   authority from the district shall be used in accordance with the 
 79.9   housing transition district plan. 
 79.10     (b) Tax increment may be used to pay the costs of: 
 79.11     (1) acquiring title to or an ownership interest in any 
 79.12  property within the district; 
 79.13     (2) relocating owners of or tenants in any property within 
 79.14  the district; 
 79.15     (3) demolishing all or a part of any structures or other 
 79.16  improvements within the district; 
 79.17     (4) site preparation, soil correction, and infrastructure 
 79.18  improvements within the district; 
 79.19     (5) rehabilitating or constructing any housing structures 
 79.20  or other improvements within the district; 
 79.21     (6) constructing public improvements associated with 
 79.22  development within the district; 
 79.23     (7) making loans or grants to public or private entities in 
 79.24  order to facilitate development within the district; and 
 79.25     (8) administering the creation and operation of the 
 79.26  district or the implementation of the consent decree, including 
 79.27  reimbursement for costs previously incurred or advanced and not 
 79.28  reimbursed. 
 79.29     (c) The authority may pay the costs authorized by this 
 79.30  subdivision, directly, through the issuance and sale of 
 79.31  obligations pursuant to Minnesota Statutes, section 469.178, by 
 79.32  means of loans or grants to the current or future owners of 
 79.33  property within the district, or through the exercise of any 
 79.34  authority contained in Minnesota Statutes, sections 469.001 to 
 79.35  469.047. 
 79.36     Sec. 39.  [APPLICABILITY OF OTHER LAWS.] 
 80.1      Minnesota Statutes, section 273.1399, does not apply to the 
 80.2   housing transition district or tax increment generated pursuant 
 80.3   to sections 36 to 39.  Minnesota Statutes, sections 469.174 to 
 80.4   469.179, shall apply to the housing transition district or tax 
 80.5   increment generated pursuant to sections 36 to 39 only to the 
 80.6   extent specified in sections 36 to 39.  The housing transition 
 80.7   district shall not have a longer duration than permitted by 
 80.8   general law for purposes of Minnesota Statutes, section 469.1782.
 80.9      Sec. 40.  [CITIES OF MINNEAPOLIS AND ST. PAUL; TAX 
 80.10  INCREMENT DISTRICT.] 
 80.11     Subdivision 1.  [AUTHORIZATION.] (a) The city of 
 80.12  Minneapolis and the city of St. Paul may each establish a 
 80.13  project to be known as the southeast Minneapolis and west St. 
 80.14  Paul industrial area, referred to in this section as "the SEMI 
 80.15  area project."  As used in this section, "the SEMI area" is an 
 80.16  area that is bounded on the north by Rollins Avenue to 17th 
 80.17  Avenue Southeast to Elm Street Southeast extended to the north 
 80.18  line of the Burlington Northern (Burlington/Santa Fe) 
 80.19  right-of-way extended to Minnesota Highway 280, on the east by 
 80.20  Minnesota Highway 280, on the south by University Avenue, and on 
 80.21  the west by Oak Street to Eighth Street Southwest to 15th Avenue 
 80.22  Southeast to Rollins Avenue.  Any parcel that is partially or 
 80.23  wholly situated in the SEMI area in the city of Minneapolis may 
 80.24  be included in one or more redevelopment tax increment financing 
 80.25  districts of the city of Minneapolis if the request for 
 80.26  certification of the district is submitted to the Hennepin 
 80.27  county auditor by December 31, 2018.  Any parcel that is 
 80.28  partially or wholly situated in the SEMI area in the city of St. 
 80.29  Paul may be included in one or more redevelopment tax increment 
 80.30  financing districts of the city of St. Paul if the request for 
 80.31  certification of the district is submitted to the Ramsey county 
 80.32  auditor by December 31, 2018. 
 80.33     (b) Minnesota Statutes, section 469.176, subdivision 4i, 
 80.34  does not apply to any tax increment financing district in the 
 80.35  SEMI area, regardless of when the request for certification of 
 80.36  the district was made, including requests made before the date 
 81.1   of final enactment of this act.  Minnesota Statutes, section 
 81.2   469.1763, subdivision 3, applies to any such district by 
 81.3   imposing a ten-year limit rather than a five-year limit for 
 81.4   commencement of activities within the district. 
 81.5      Subd. 2.  [EXPENDITURES OUTSIDE DISTRICT.] For each tax 
 81.6   increment financing district in the SEMI area, all tax increment 
 81.7   revenue derived from the parcels in the SEMI area must be 
 81.8   expended on activities in the SEMI area in either city or to pay 
 81.9   debt service on bonds issued by either city, the Minneapolis 
 81.10  community development agency, or the St. Paul housing and 
 81.11  redevelopment authority, to the extent that the proceeds of the 
 81.12  bonds were used to finance activities in the SEMI area or to 
 81.13  pay, or secure payment of, debt service on credit-enhanced bonds 
 81.14  issued by either city, the Minneapolis community development 
 81.15  agency, or the St. Paul housing and redevelopment authority. 
 81.16     Subd. 3.  [POWERS.] (a) Either the city of Minneapolis or 
 81.17  the city of St. Paul may exercise any powers in the SEMI area as 
 81.18  provided to the Minneapolis community development agency or the 
 81.19  city of Minneapolis in Laws 1980, chapter 595, as amended. 
 81.20     (b) The cities and the agency may not make a final decision 
 81.21  on the location, capacity, and design of roadways within the 
 81.22  SEMI area until the alternative urban areawide review process 
 81.23  has been completed and adverse impacts upon the residential 
 81.24  neighborhoods surrounding the area have been mitigated or a plan 
 81.25  for mitigation has been adopted by the cities and agencies 
 81.26  involved in the project. 
 81.27     Subd. 4.  [EFFECTIVE DATE.] This section is effective for 
 81.28  the city of Minneapolis upon compliance by the governing body of 
 81.29  the city with Minnesota Statutes, section 645.021, subdivision 
 81.30  3.  This section is effective for the city of St. Paul upon 
 81.31  compliance by the governing body of the city with Minnesota 
 81.32  Statutes, section 645.021, subdivision 3. 
 81.33     Sec. 41.  [CITY OF NEW BRIGHTON; TAX INCREMENT DISTRICTS.] 
 81.34     Subdivision 1.  [AUTHORIZATION.] (a) The city of New 
 81.35  Brighton may establish a project to be known as the northwest 
 81.36  quadrant area project and a project to be known as the central 
 82.1   redevelopment area project. 
 82.2      (b) As used in this section, "the northwest quadrant area" 
 82.3   is the area in the city of New Brighton that is bounded on the 
 82.4   north by the south boundary line of tax increment district 
 82.5   number 8 extended to Long Lake regional park, on the east by 
 82.6   I-35W, on the south by I-694, and on the west by Long Lake 
 82.7   regional park, and "the central redevelopment area" is the area 
 82.8   that is bounded on the north and west by Old Highway 8, on the 
 82.9   east by 5th Avenue N.W., and on the south by 1st Street N.W.  
 82.10     (c) Any parcel that is partially or wholly situated in the 
 82.11  northwest quadrant area or the central redevelopment area may be 
 82.12  included in one or more redevelopment tax increment financing 
 82.13  districts within the area if the request for certification of 
 82.14  the district is submitted to the Ramsey county auditor by 
 82.15  December 31, 2018. 
 82.16     (d) For any district described in this section, Minnesota 
 82.17  Statutes, section 469.1763, subdivision 3, applies by imposing a 
 82.18  ten-year limit rather a five-year limit for commencement of 
 82.19  activities within the district. 
 82.20     Subd. 2.  [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 
 82.21  increment financing district in the northwest quadrant area 
 82.22  project, all tax increment revenue derived from the parcels in 
 82.23  the northwest quadrant area project must be expended on 
 82.24  activities in the northwest quadrant area project, or to pay 
 82.25  debt service on bonds issued by the city or the New Brighton 
 82.26  economic development authority, to the extent that the proceeds 
 82.27  of the bonds were used to finance activities in the northwest 
 82.28  quadrant area project or to pay, or secure payment of, debt 
 82.29  service on credit enhanced bonds issued by the city or the New 
 82.30  Brighton economic development authority. 
 82.31     (b) For each tax increment financing district in the 
 82.32  central redevelopment area project, all tax increment revenue 
 82.33  derived from the parcels in the central redevelopment area 
 82.34  project must be expended on activities in the central 
 82.35  redevelopment area project or to pay debt service on bonds 
 82.36  issued by the city or the New Brighton economic development 
 83.1   authority, to the extent that the proceeds of the bonds were 
 83.2   used to finance activities in the central redevelopment area 
 83.3   project or to pay, or secure payment of, debt service on credit 
 83.4   enhanced bonds issued by the city or the New Brighton economic 
 83.5   development authority. 
 83.6      Subd. 3.  [EFFECTIVE DATE.] This section is effective upon 
 83.7   approval by the governing body of the city of New Brighton and 
 83.8   compliance with Minnesota Statutes, section 645.021, subdivision 
 83.9   3. 
 83.10     Sec. 42.  [STEVENS COUNTY; TAX INCREMENT FINANCING DISTRICT 
 83.11  EXTENSION.] 
 83.12     Subdivision 1.  [DURATION EXTENSION.] The Stevens county 
 83.13  housing and redevelopment authority may amend the tax increment 
 83.14  financing plan for economic development financing district 
 83.15  number 1-1 to extend the duration of the district.  The duration 
 83.16  of the district may be extended until December 31, 2008. 
 83.17     Subd. 2.  [EFFECTIVE DATE.] The section is effective upon 
 83.18  compliance by the governing body of Stevens county with 
 83.19  Minnesota Statutes, sections 645.021, subdivision 3, and 
 83.20  469.1782, subdivision 2. 
 83.21     Sec. 43.  [TOWN OF WHITE; ECONOMIC DEVELOPMENT.] 
 83.22     Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
 83.23  provisions of Minnesota Statutes, section 469.176, subdivision 
 83.24  1b, upon approval of the governing body of the town of White by 
 83.25  resolution, the duration of tax increment financing districts 
 83.26  numbers 1 and 2 of the joint east range economic development 
 83.27  authority shall be extended to December 31, 2017.  
 83.28     Subd. 2.  [SPECIAL RULES.] (a) Tax increment financing 
 83.29  districts numbers 1 and 2 of the joint east range economic 
 83.30  development authority are subject to Minnesota Statutes, 
 83.31  sections 469.174 to 469.179, except as provided in this 
 83.32  subdivision. 
 83.33     (b) Minnesota Statutes, sections 273.1399, and 469.1782, 
 83.34  subdivision 1, do not apply. 
 83.35     (c) Notwithstanding Minnesota Statutes, section 469.176, 
 83.36  subdivision 1, tax increment revenue generated from each 
 84.1   district may be paid to the authority until the earlier of (1) 
 84.2   December 31, 2017; or (2) the date upon which all contractual 
 84.3   obligations of the authority for the reimbursement of project 
 84.4   costs have terminated. 
 84.5      (d) The application of Minnesota Statutes, section 
 84.6   469.1763, is modified to permit the use of increments from 
 84.7   either district to be used to pay any promissory notes issued in 
 84.8   connection with either district. 
 84.9      Subd. 3.  [EFFECTIVE DATE.] This section is effective upon 
 84.10  compliance by the governing bodies of the town of White, the 
 84.11  county of St. Louis, and independent school district No. 2711 
 84.12  with Minnesota Statutes, sections 469.1782, subdivision 2, and 
 84.13  645.021, subdivision 2. 
 84.14     Sec. 44.  [CITY OF DEEPHAVEN; TAX INCREMENT FINANCING.] 
 84.15     Subdivision 1.  [AUTHORIZATION OF 
 84.16  EXPENDITURES.] Notwithstanding any law to the contrary, the city 
 84.17  of Deephaven may expend revenues derived from tax increment 
 84.18  financing district number 1-1 that are available and 
 84.19  unencumbered on the date of enactment of this act to finance a 
 84.20  public improvement located outside of the district.  The public 
 84.21  improvement must be included in the tax increment plan prior to 
 84.22  January 1, 1997. 
 84.23     Subd. 2.  [EFFECTIVE DATE.] This section is effective the 
 84.24  day upon approval by the governing body of the city of Deephaven 
 84.25  and compliance with Minnesota Statutes, section 645.021, 
 84.26  subdivision 3, and applies to revenues expended after the date 
 84.27  of final enactment. 
 84.28     Sec. 45.  [REPEALER.] 
 84.29     Minnesota Statutes 1996, sections 469.174, subdivision 19; 
 84.30  and 469.176, subdivision 4b, are repealed. 
 84.31     Sec. 46.  [EFFECTIVE DATE.] 
 84.32     Sections 1, 3, 4, 7 to 12, 14, 15, 19, 21, the relevant 
 84.33  part of 22, and 24 to 27 are effective for heritage and historic 
 84.34  subdistricts created after May 31, 1997. 
 84.35     Sections 2, 16, paragraph (b), 17, 20, the portion of 22 
 84.36  not specific to heritage and historic subdistricts, and 23 apply 
 85.1   to all tax increment districts, whenever certified, insofar as 
 85.2   the underlying law applies to them, and any uses of tax 
 85.3   increment expended prior to the date of enactment of this act 
 85.4   which are in compliance with the provisions of those sections 
 85.5   are deemed valid.  
 85.6      Sections 5, 6, 13, 16 as related to soils conditions 
 85.7   districts, and 45 are effective for districts for which 
 85.8   certification is requested after June 30, 1997.  Soils condition 
 85.9   districts for which certification is requested before that date 
 85.10  will continue to be subject to the provisions of Minnesota 
 85.11  Statutes 1996, sections 469.174, subdivision 19; and 469.176, 
 85.12  subdivisions 1b and 4b, for the duration of their existence. 
 85.13     Sections 29 and 30 are effective upon approval by the 
 85.14  governing body of the city of Columbia Heights and compliance 
 85.15  with Minnesota Statutes, section 645.021, subdivision 3. 
 85.16     Sections 36 to 39 are effective the day following final 
 85.17  enactment and upon approval by the governing body of the city of 
 85.18  Minneapolis and compliance with Minnesota Statutes, section 
 85.19  645.021, subdivision 3. 
 85.20                             ARTICLE 5
 85.21                   TRUTH IN TAXATION/LEVY LIMITS
 85.22     Section 1.  Minnesota Statutes 1996, section 275.065, 
 85.23  subdivision 1, is amended to read: 
 85.24     Subdivision 1.  [PROPOSED LEVY.] (a) Notwithstanding any 
 85.25  law or charter to the contrary, on or before September 15, each 
 85.26  taxing authority, other than a school district, shall adopt a 
 85.27  proposed budget and shall certify to the county auditor the 
 85.28  proposed or, in the case of a town, the final property tax levy 
 85.29  for taxes payable in the following year. 
 85.30     (b) On or before September 30, each school district shall 
 85.31  certify to the county auditor the proposed property tax levy for 
 85.32  taxes payable in the following year.  The school district ~~may~~ 
 85.33  shall certify the proposed levy as: 
 85.34     (1) ~~a specific dollar amount; or~~ the state general 
 85.35  education levy amount as prescribed under section 124A.23, 
 85.36  subdivision 2; and 
 86.1      (2) ~~an amount equal to~~ the sum of the remaining school 
 86.2   levies, or the maximum levy limitation certified by the 
 86.3   commissioner of children, families, and learning ~~to the county~~ 
 86.4   ~~auditor~~ according to section 124.918, subdivision 1, less the 
 86.5   state general education levy amount under clause (1). 
 86.6      (c) If the board of estimate and taxation or any similar 
 86.7   board that establishes maximum tax levies for taxing 
 86.8   jurisdictions within a first class city certifies the maximum 
 86.9   property tax levies for funds under its jurisdiction by charter 
 86.10  to the county auditor by September 15, the city shall be deemed 
 86.11  to have certified its levies for those taxing jurisdictions. 
 86.12     (d) For purposes of this section, "taxing authority" 
 86.13  includes all home rule and statutory cities, towns, counties, 
 86.14  school districts, and special taxing districts as defined in 
 86.15  section 275.066.  Intermediate school districts that levy a tax 
 86.16  under chapter 124 or 136D, joint powers boards established under 
 86.17  sections 124.491 to 124.495, and common school districts No. 
 86.18  323, Franconia, and No. 815, Prinsburg, are also special taxing 
 86.19  districts for purposes of this section.  
 86.20     Sec. 2.  Minnesota Statutes 1996, section 275.065, 
 86.21  subdivision 3, is amended to read: 
 86.22     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
 86.23  county auditor shall prepare and the county treasurer shall 
 86.24  deliver after November 10 and on or before November 24 each 
 86.25  year, by first class mail to each taxpayer at the address listed 
 86.26  on the county's current year's assessment roll, a notice of 
 86.27  proposed property taxes ~~and, in the case of a town, final~~ 
 86.28  ~~property taxes~~.  
 86.29     (b) The commissioner of revenue shall prescribe the form of 
 86.30  the notice. 
 86.31     (c) The notice must inform taxpayers that it contains the 
 86.32  amount of property taxes each taxing authority ~~other than a town~~ 
 86.33  proposes to collect for taxes payable the following year ~~and,~~ 
 86.34  ~~for a town, the amount of its final levy~~.  ~~It~~ In the case of a 
 86.35  town, or in the case of the state general education portion of 
 86.36  the school district levy, the final tax amount will be its 
 87.1   proposed tax.  The notice must clearly state that each taxing 
 87.2   authority, including regional library districts established 
 87.3   under section 134.201, and including the metropolitan taxing 
 87.4   districts as defined in paragraph (i), but excluding all other 
 87.5   special taxing districts and towns, will hold a public meeting 
 87.6   to receive public testimony on the proposed budget and proposed 
 87.7   or final property tax levy, or, in case of a school district, on 
 87.8   the current budget and proposed property tax levy.  It must 
 87.9   clearly state the time and place of each taxing authority's 
 87.10  meeting and an address where comments will be received by mail.  
 87.11     (d) The notice must state for each parcel: 
 87.12     (1) the market value of the property as determined under 
 87.13  section 273.11, and used for computing property taxes payable in 
 87.14  the following year and for taxes payable in the current year; 
 87.15  and, in the case of residential property, whether the property 
 87.16  is classified as homestead or nonhomestead.  The notice must 
 87.17  clearly inform taxpayers of the years to which the market values 
 87.18  apply and that the values are final values; 
 87.19     (2) the items listed below, shown separately by county, 
 87.20  city or town, ~~school district excess referenda levy~~ state 
 87.21  general education tax, remaining school district levy, ~~regional~~ 
 87.22  ~~library district, if in existence, the total of the metropolitan~~ 
 87.23  ~~special taxing districts as defined in paragraph (i)~~ and the sum 
 87.24  of the ~~remaining~~ special taxing districts, and as a total of ~~the~~ 
 87.25  all taxing authorities~~, including all special taxing districts,~~ 
 87.26  ~~the proposed or, for a town, final net tax on the property for~~ 
 87.27  ~~taxes payable the following year and the actual tax for taxes~~ 
 87.28  ~~payable the current year.~~: 
 87.29     (i) the actual tax for taxes payable in the current year; 
 87.30     (ii) the tax change due to spending factors, defined as the 
 87.31  proposed tax minus the constant spending tax amount; 
 87.32     (iii) the tax change due to other factors, defined as the 
 87.33  constant spending tax amount minus the actual current year tax; 
 87.34  and 
 87.35     (iv) the proposed tax amount. 
 87.36     In the case of a town or the state general education tax, 
 88.1   the final tax shall also be its proposed tax.  If a school 
 88.2   district has certified under section 124A.03, subdivision 2, 
 88.3   that a referendum will be held in the school district at the 
 88.4   November general election, the county auditor must note next to 
 88.5   the school district's proposed amount that a referendum is 
 88.6   pending and that, if approved by the voters, the tax amount may 
 88.7   be higher than shown on the notice.  ~~For the purposes of this~~ 
 88.8   ~~subdivision, "school district excess referenda levy" means~~ 
 88.9   ~~school district taxes for operating purposes approved at~~ 
 88.10  ~~referendums, including those taxes based on net tax capacity as~~ 
 88.11  ~~well as those based on market value.  "School district excess~~ 
 88.12  ~~referenda levy" does not include school district taxes for~~ 
 88.13  ~~capital expenditures approved at referendums or school district~~ 
 88.14  ~~taxes to pay for the debt service on bonds approved at~~ 
 88.15  ~~referenda.~~  In the case of the city of Minneapolis, the levy for 
 88.16  the Minneapolis library board and the levy for Minneapolis park 
 88.17  and recreation shall be ~~listed separately from the remaining~~ 
 88.18  ~~amount of the city's levy~~ considered as special taxing district 
 88.19  levies for the purposes of this subdivision.  In the case of a 
 88.20  parcel where tax increment or the fiscal disparities areawide 
 88.21  tax under chapter 276A or 473F applies, the proposed tax levy on 
 88.22  the captured value or the proposed tax levy on the tax capacity 
 88.23  subject to the areawide tax must each be stated separately and 
 88.24  not included in the sum of the special taxing districts; and 
 88.25     (3) the increase or decrease ~~in the amounts in clause (2)~~ 
 88.26  ~~from~~ between the total taxes payable in the current year ~~to~~ and 
 88.27  the total proposed ~~or, for a town, final taxes payable the~~ 
 88.28  ~~following year~~ taxes, expressed ~~as a dollar amount and~~ as a 
 88.29  percentage. 
 88.30     (e) The notice must clearly state that the proposed or 
 88.31  final taxes do not include the following: 
 88.32     (1) special assessments; 
 88.33     (2) levies approved by the voters after the date the 
 88.34  proposed taxes are certified, including bond referenda, school 
 88.35  district levy referenda, and levy limit increase referenda; 
 88.36     (3) amounts necessary to pay cleanup or other costs due to 
 89.1   a natural disaster occurring after the date the proposed taxes 
 89.2   are certified; 
 89.3      (4) amounts necessary to pay tort judgments against the 
 89.4   taxing authority that become final after the date the proposed 
 89.5   taxes are certified; and 
 89.6      (5) the contamination tax imposed on properties which 
 89.7   received market value reductions for contamination. 
 89.8      (f) Except as provided in subdivision 7, failure of the 
 89.9   county auditor to prepare or the county treasurer to deliver the 
 89.10  notice as required in this section does not invalidate the 
 89.11  proposed or final tax levy or the taxes payable pursuant to the 
 89.12  tax levy. 
 89.13     (g) If the notice the taxpayer receives under this section 
 89.14  lists the property as nonhomestead and the homeowner provides 
 89.15  satisfactory documentation to the county assessor that the 
 89.16  property is owned and used as the owner's homestead, the 
 89.17  assessor shall reclassify the property to homestead for taxes 
 89.18  payable in the following year. 
 89.19     (h) In the case of class 4 residential property used as a 
 89.20  residence for lease or rental periods of 30 days or more, the 
 89.21  taxpayer must either: 
 89.22     (1) mail or deliver a copy of the notice of proposed 
 89.23  property taxes to each tenant, renter, or lessee; or 
 89.24     (2) post a copy of the notice in a conspicuous place on the 
 89.25  premises of the property.  
 89.26     The notice must be mailed or posted by the taxpayer by 
 89.27  November 27 or within three days of receipt of the notice, 
 89.28  whichever is later.  A taxpayer may notify the county treasurer 
 89.29  of the address of the taxpayer, agent, caretaker, or manager of 
 89.30  the premises to which the notice must be mailed in order to 
 89.31  fulfill the requirements of this paragraph. 
 89.32     (i) For purposes of this subdivision, subdivisions 5a and 
 89.33  6, "metropolitan special taxing districts" means the following 
 89.34  taxing districts in the seven-county metropolitan area that levy 
 89.35  a property tax for any of the specified purposes listed below: 
 89.36     (1) metropolitan council under section 473.132, 473.167, 
 90.1   473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
 90.2      (2) metropolitan airports commission under section 473.667, 
 90.3   473.671, or 473.672; and 
 90.4      (3) metropolitan mosquito control commission under section 
 90.5   473.711. 
 90.6      For purposes of this section, any levies made by the 
 90.7   regional rail authorities in the county of Anoka, Carver, 
 90.8   Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
 90.9   398A shall be included with the appropriate county's levy and 
 90.10  shall be discussed at that county's public hearing. 
 90.11     ~~(j) For taxes levied in 1996, payable in 1997 only, in the~~ 
 90.12  ~~case of a statutory or home rule charter city or town that~~ 
 90.13  ~~exercises the local levy option provided in section 473.388,~~ 
 90.14  ~~subdivision 7, the notice of its proposed taxes may include a~~ 
 90.15  ~~statement of the amount by which its proposed tax increase for~~ 
 90.16  ~~taxes payable in 1997 is attributable to its exercise of that~~ 
 90.17  ~~option, together with a statement that the levy of the~~ 
 90.18  ~~metropolitan council was decreased by a similar amount because~~ 
 90.19  ~~of the exercise of that option.~~ 
 90.20     Sec. 3.  Minnesota Statutes 1996, section 275.065, is 
 90.21  amended by adding a subdivision to read: 
 90.22     Subd. 3a.  [CONSTANT SPENDING LEVY AMOUNT.] (a) For 
 90.23  purposes of this section, "constant spending levy amount" for a 
 90.24  county, city, town, or special taxing district means the 
 90.25  property tax levy that the taxing authority would need to levy 
 90.26  so that the sum of its levy, including its fiscal disparities 
 90.27  distribution levy under section 276A.06, subdivision 3, clause 
 90.28  (a), or 473F.08, subdivision 3, clause (a), plus its property 
 90.29  tax aid amounts would remain constant from the current year to 
 90.30  the proposed year, taking into account the fiscal disparities 
 90.31  distribution levy amounts and the property tax aid amounts that 
 90.32  have been certified for the proposed year.  For the purposes of 
 90.33  this paragraph, property tax aids include homestead and 
 90.34  agricultural credit aid under section 273.1398, subdivision 2, 
 90.35  local government aid under section 477A.013, local performance 
 90.36  aid under section 477A.05, county criminal justice aid under 
 91.1   section 477A.0121, and family preservation aid under section 
 91.2   477A.0122. 
 91.3      (b) For school districts, for the state education tax, 
 91.4   "constant spending levy amount" means the general education levy 
 91.5   that would be computed for the district using the current year's 
 91.6   state general education levy amount and the proposed year's 
 91.7   adjusted net tax capacity.  In order to make this calculation, 
 91.8   the commissioner of children, families, and learning shall 
 91.9   recalculate the statewide general education tax rate using the 
 91.10  current year's levy data, except the tax base shall be the 
 91.11  proposed year's adjusted net tax capacity.  For the remaining 
 91.12  school district levies, the commissioner shall compute the 
 91.13  constant spending levy amount by separately calculating each 
 91.14  program levy using the current year's revenue per pupil unit and 
 91.15  the proposed year's tax base, pupil units, and aid amounts, and 
 91.16  adding the resulting amounts.  In no case shall the constant 
 91.17  spending levy amount be less than $0.  The commissioner shall 
 91.18  also determine the apportionment of the fiscal disparities 
 91.19  distribution levy between the general education levy and the 
 91.20  remaining school district levies.  On or before September 30 
 91.21  annually, the commissioner must report to the county auditor 
 91.22  each school district's constant spending state general education 
 91.23  levy and its constant spending levy amount for the remaining 
 91.24  school district levies.  
 91.25     Sec. 4.  Minnesota Statutes 1996, section 275.065, 
 91.26  subdivision 5a, is amended to read: 
 91.27     Subd. 5a.  [PUBLIC ADVERTISEMENT.] (a) A city that has a 
 91.28  population of more than 2,500, county, a metropolitan special 
 91.29  taxing district as defined in subdivision 3, paragraph (i), a 
 91.30  regional library district established under section 134.201, or 
 91.31  school district shall advertise in a newspaper a notice of its 
 91.32  intent to adopt a budget and property tax levy or, in the case 
 91.33  of a school district, to review its current budget and proposed 
 91.34  property taxes payable in the following year, at a public 
 91.35  hearing.  The notice must be published not less than two 
 91.36  business days nor more than six business days before the hearing.
 92.1      The advertisement must be at least one-eighth page in size 
 92.2   of a standard-size or a tabloid-size newspaper.  The 
 92.3   advertisement must not be placed in the part of the newspaper 
 92.4   where legal notices and classified advertisements appear.  The 
 92.5   advertisement must be published in an official newspaper of 
 92.6   general circulation in the taxing authority.  The newspaper 
 92.7   selected must be one of general interest and readership in the 
 92.8   community, and not one of limited subject matter.  The 
 92.9   advertisement must appear in a newspaper that is published at 
 92.10  least once per week.  
 92.11     For purposes of this section, the metropolitan special 
 92.12  taxing district's advertisement must only be published in the 
 92.13  Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 
 92.14     (b) The advertisement for school districts, metropolitan 
 92.15  special taxing districts, and regional library districts must be 
 92.16  in the following form, except that the notice for a school 
 92.17  district may include references to the current budget in regard 
 92.18  to proposed property taxes. 
 92.19                             "NOTICE OF
 92.20                      PROPOSED PROPERTY TAXES
 92.21            (~~City/County/~~School District/Metropolitan
 92.22                  Special Taxing District/Regional
 92.23                   Library District) of .........
 92.24  The governing body of ........ will soon hold budget hearings 
 92.25  and vote on the property taxes for (~~city/county/~~metropolitan 
 92.26  special taxing district/regional library district services that 
 92.27  will be provided in ~~199_~~ (year)/school district services that 
 92.28  will be provided in ~~199_~~ (year) and ~~199_~~ (year)). 
 92.29                     NOTICE OF PUBLIC HEARING: 
 92.30  All concerned citizens are invited to attend a public hearing 
 92.31  and express their opinions on the proposed (~~city/county/~~school 
 92.32  district/metropolitan special taxing district/regional library 
 92.33  district) budget and property taxes, or in the case of a school 
 92.34  district, its current budget and proposed property taxes, 
 92.35  payable in the following year.  The hearing will be held on 
 92.36  (Month/Day/Year) at (Time) at (Location, Address)." 
 93.1      (c) The advertisement for cities and counties must be in 
 93.2   the following form. 
 93.3                        "NOTICE OF PROPOSED
 93.4                  TOTAL BUDGET AND PROPERTY TAXES
 93.5   The (city/county) governing body or board of commissioners will 
 93.6   hold a public hearing to discuss the budget and to vote on the 
 93.7   amount of property taxes to collect for services the 
 93.8   (city/county) will provide in (year). 
 93.9      
 93.10  SPENDING:  The total budget amounts below compare 
 93.11  (city's/county's) (year) total actual budget with the amount the 
 93.12  (city/county) proposes to spend in (year). 
 93.13     
 93.14  (Year) Total          Proposed (Year)          Change from
 93.15  Actual Budget             Budget               (Year)-(Year)
 93.16     
 93.17    $.......              $.......                ...%
 93.18     
 93.19  TAXES:  The property tax amounts below compare that portion of 
 93.20  the current budget levied in property taxes in (city/county) for 
 93.21  (year) with the property taxes the (city/county) proposes to 
 93.22  collect in (year). 
 93.23     
 93.24  (Year) Property       Proposed (Year)          Change from
 93.25      Taxes              Property Taxes         (Year)-(Year)
 93.26     
 93.27    $.......              $.......               ...% 
 93.28     
 93.29                    ATTEND THE PUBLIC HEARING
 93.30  All (city/county) residents are invited to attend the public 
 93.31  hearing of the (city/county) to express your opinions on the 
 93.32  budget and the proposed amount of (year) property taxes.  The 
 93.33  hearing will be held on: 
 93.34                      (Month/Day/Year/Time)
 93.35                        (Location/Address)
 93.36  If the discussion of the budget cannot be completed, a time and 
 94.1   place for continuing the discussion will be announced at the 
 94.2   hearing.  You are also invited to send your written comments to: 
 94.3                           (City/County)
 94.4                        (Location/Address)"
 94.5      (d) For purposes of this subdivision, the budget amounts 
 94.6   listed on the advertisement mean: 
 94.7      (1) for cities, the total government fund expenditures, as 
 94.8   defined by the state auditor under section 471.6965, less any 
 94.9   expenditures for improvements or services that are specially 
 94.10  assessed or charged under chapter 429, 430, 435, or the 
 94.11  provisions of any other law or charter; and 
 94.12     (2) for counties, the total government fund expenditures, 
 94.13  as defined by the state auditor under section 375.169, less any 
 94.14  expenditures for direct payments to recipients or providers for 
 94.15  the human service aids listed in section 273.1398, subdivision 
 94.16  1, paragraph (i). 
 94.17     ~~(c)~~ (e) A city with a population of over 500 but not more 
 94.18  than 2,500 must advertise by posted notice as defined in section 
 94.19  645.12, subdivision 1.  The advertisement must be posted at the 
 94.20  time provided in paragraph (a).  It must be in the form required 
 94.21  in paragraph (b). 
 94.22     ~~(d)~~ (f) For purposes of this subdivision, the population of 
 94.23  a city is the most recent population as determined by the state 
 94.24  demographer under section 4A.02. 
 94.25     ~~(e)~~ (g) The commissioner of revenue, subject to the 
 94.26  approval of the chairs of the house and senate tax committees, 
 94.27  shall prescribe the form and format of the advertisement. 
 94.28     ~~(f) For calendar year 1993, each taxing authority required~~ 
 94.29  ~~to publish an advertisement must include on the advertisement a~~ 
 94.30  ~~statement that information on the increases or decreases of the~~ 
 94.31  ~~total budget, including employee and independent contractor~~ 
 94.32  ~~compensation in the prior year, current year, and proposed~~ 
 94.33  ~~budget year will be discussed at the hearing.~~ 
 94.34     ~~(g) Notwithstanding paragraph (f), for 1993, the~~ 
 94.35  ~~commissioner of revenue shall prescribe the form, format, and~~ 
 94.36  ~~content of an advertisement comparing current and proposed~~ 
 95.1   ~~expense budgets for the metropolitan council, the metropolitan~~ 
 95.2   ~~airports commission, and the metropolitan mosquito control~~ 
 95.3   ~~commission.  The expense budget must include occupancy,~~ 
 95.4   ~~personnel, contractual and capital improvement expenses.  The~~ 
 95.5   ~~form, format, and content of the advertisement must be approved~~ 
 95.6   ~~by the chairs of the house and senate tax committees prior to~~ 
 95.7   ~~publication.~~ 
 95.8      Sec. 5.  Minnesota Statutes 1996, section 275.065, 
 95.9   subdivision 6, is amended to read: 
 95.10     Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
 95.11  (a) For purposes of this section, the following terms shall have 
 95.12  the meanings given: 
 95.13     (1) "Initial hearing" means the first and primary hearing 
 95.14  held to discuss the taxing authority's proposed budget and 
 95.15  proposed property tax levy for taxes payable in the following 
 95.16  year, or, for school districts, the current budget and the 
 95.17  proposed property tax levy for taxes payable in the following 
 95.18  year. 
 95.19     (2) "Continuation hearing" means a hearing held to complete 
 95.20  the initial hearing, if the initial hearing is not completed on 
 95.21  its scheduled date. 
 95.22     (3) "Subsequent hearing" means the hearing held to adopt 
 95.23  the taxing authority's final property tax levy, and, in the case 
 95.24  of taxing authorities other than school districts, the final 
 95.25  budget, for taxes payable in the following year. 
 95.26     (b) Between November 29 and December 20, the governing 
 95.27  bodies of a city that has a population over 500, county, 
 95.28  metropolitan special taxing districts as defined in subdivision 
 95.29  3, paragraph (i), and regional library districts shall each hold 
 95.30  ~~a~~ an initial public hearing to discuss and seek public comment 
 95.31  on its final budget and property tax levy for taxes payable in 
 95.32  the following year, and the governing body of the school 
 95.33  district shall hold ~~a~~ an initial public hearing to review its 
 95.34  current budget and proposed property tax levy for taxes payable 
 95.35  in the following year.  The metropolitan special taxing 
 95.36  districts shall be required to hold only a single joint initial 
 96.1   public hearing, the location of which will be determined by the 
 96.2   affected metropolitan agencies. 
 96.3      (c) The initial hearing must be held after 5:00 p.m. if 
 96.4   scheduled on a day other than Saturday.  No initial hearing may 
 96.5   be held on a Sunday.  
 96.6      (d) At the initial hearing under this subdivision, the 
 96.7   percentage increase in property taxes proposed by the taxing 
 96.8   authority, if any, and the specific purposes for which property 
 96.9   tax revenues are being increased must be discussed.  During the 
 96.10  discussion, the governing body shall hear comments regarding a 
 96.11  proposed increase and explain the reasons for the proposed 
 96.12  increase.  The public shall be allowed to speak and to ask 
 96.13  questions. 
 96.14     (e) If the initial hearing is not completed on its 
 96.15  scheduled date, the taxing authority must announce, prior to 
 96.16  adjournment of the hearing, the date, time, and place for the 
 96.17  continuation of the hearing.  The continuation hearing must be 
 96.18  held at least five business days but no more than 14 business 
 96.19  days after the initial hearing.  A continuation hearing may not 
 96.20  be held later than December 20.  A continuation hearing must be 
 96.21  held after 5:00 p.m. if scheduled on a day other than Saturday.  
 96.22  No continuation hearing may be held on a Sunday. 
 96.23     (f) The governing body of a county shall hold its initial 
 96.24  hearing on the second Tuesday in December each year, and may 
 96.25  hold additional initial hearings on other dates before December 
 96.26  20 if necessary for the convenience of county residents.  If the 
 96.27  county needs a continuation of its hearing, the continuation 
 96.28  hearing shall be held on the third Tuesday in December.  If the 
 96.29  third Tuesday in December falls on December 21, the county's 
 96.30  continuation hearing shall be held on Monday, December 20.  
 96.31     (g) The metropolitan special taxing districts shall hold a 
 96.32  joint initial public hearing on the first Monday of December.  A 
 96.33  continuation hearing, if necessary, shall be held on the second 
 96.34  Monday of December. 
 96.35     (h) The county auditor shall provide for the coordination 
 96.36  of initial and continuation hearing dates for all school 
 97.1   districts and cities within the county to prevent conflicts 
 97.2   under paragraphs (i) and (j). 
 97.3      (i) By August 10, each school board and the board of the 
 97.4   regional library district shall certify to the county auditors 
 97.5   of the counties in which the school district or regional library 
 97.6   district is located the dates on which it elects to hold its 
 97.7   initial hearing and any continuation hearing.  If a school board 
 97.8   or regional library district does not certify these dates by 
 97.9   August 10, the auditor will assign the initial and continuation 
 97.10  hearing dates.  The dates elected or assigned must not conflict 
 97.11  with the initial and continuation hearing dates of the county or 
 97.12  the metropolitan special taxing districts.  
 97.13     (j) By August 20, the county auditor shall notify the 
 97.14  clerks of the cities within the county of the dates on which 
 97.15  school districts and regional library districts have elected to 
 97.16  hold their initial and continuation hearings.  At the time a 
 97.17  city certifies its proposed levy under subdivision 1 it shall 
 97.18  certify the dates on which it elects to hold its initial hearing 
 97.19  and any continuation hearing.  If a city does not certify these 
 97.20  dates by September 15, the auditor will assign the initial and 
 97.21  continuation hearing dates.  The dates elected or assigned must 
 97.22  not conflict with the initial and continuation hearing dates of 
 97.23  the county, metropolitan special taxing districts, regional 
 97.24  library districts, or school districts within which the city is 
 97.25  located.  This paragraph does not apply to cities of 500 
 97.26  population or less. 
 97.27     (k) The county initial hearing date and the city, 
 97.28  metropolitan special taxing district, regional library district, 
 97.29  and school district initial hearing dates must be designated on 
 97.30  the notices required under subdivision 3.  The continuation 
 97.31  hearing dates need not be stated on the notices.  
 97.32     (l) At a subsequent hearing, each county, school district, 
 97.33  city over 500 population, and metropolitan special taxing 
 97.34  district may amend its proposed property tax levy and must adopt 
 97.35  a final property tax levy.  Each county, city over 500 
 97.36  population, and metropolitan special taxing district may also 
 98.1   amend its proposed budget and must adopt a final budget at the 
 98.2   subsequent hearing.  The final property tax levy must be adopted 
 98.3   prior to adopting the final budget.  A school district is not 
 98.4   required to adopt its final budget at the subsequent hearing.  
 98.5   The subsequent hearing of a taxing authority must be held on a 
 98.6   date subsequent to the date of the taxing authority's initial 
 98.7   public hearing~~, or subsequent to the date of its continuation~~ 
 98.8   ~~hearing~~.  If a continuation hearing is held, the subsequent 
 98.9   hearing must be held either immediately following the 
 98.10  continuation hearing or on a date subsequent to the continuation 
 98.11  hearing.  The subsequent hearing may be held at a regularly 
 98.12  scheduled board or council meeting or at a special meeting 
 98.13  scheduled for the purposes of the subsequent hearing.  The 
 98.14  subsequent hearing of a taxing authority does not have to be 
 98.15  coordinated by the county auditor to prevent a conflict with an 
 98.16  initial hearing, a continuation hearing, or a subsequent hearing 
 98.17  of any other taxing authority.  All subsequent hearings must be 
 98.18  held prior to five working days after December 20 of the levy 
 98.19  year.  The date, time, and place of the subsequent hearing must 
 98.20  be announced at the initial public hearing or at the 
 98.21  continuation hearing. 
 98.22     (m) The property tax levy certified under section 275.07 by 
 98.23  a city of any population, county, metropolitan special taxing 
 98.24  district, regional library district, or school district must not 
 98.25  exceed the proposed levy determined under subdivision 1, except 
 98.26  by an amount up to the sum of the following amounts: 
 98.27     (1) the amount of a school district levy whose voters 
 98.28  approved a referendum to increase taxes under section 124.82, 
 98.29  subdivision 3, 124A.03, subdivision 2, or 124B.03, subdivision 
 98.30  2, after the proposed levy was certified; 
 98.31     (2) the amount of a city or county levy approved by the 
 98.32  voters after the proposed levy was certified; 
 98.33     (3) the amount of a levy to pay principal and interest on 
 98.34  bonds approved by the voters under section 475.58 after the 
 98.35  proposed levy was certified; 
 98.36     (4) the amount of a levy to pay costs due to a natural 
 99.1   disaster occurring after the proposed levy was certified, if 
 99.2   that amount is approved by the commissioner of revenue under 
 99.3   subdivision 6a; 
 99.4      (5) the amount of a levy to pay tort judgments against a 
 99.5   taxing authority that become final after the proposed levy was 
 99.6   certified, if the amount is approved by the commissioner of 
 99.7   revenue under subdivision 6a; 
 99.8      (6) the amount of an increase in levy limits certified to 
 99.9   the taxing authority by the commissioner of children, families, 
 99.10  and learning or the commissioner of revenue after the proposed 
 99.11  levy was certified; and 
 99.12     (7) the amount required under section 124.755. 
 99.13     ~~At the hearing under this subdivision, the percentage~~ 
 99.14  ~~increase in property taxes proposed by the taxing authority, if~~ 
 99.15  ~~any, and the specific purposes for which property tax revenues~~ 
 99.16  ~~are being increased must be discussed.~~  
 99.17     ~~During the discussion, the governing body shall hear~~ 
 99.18  ~~comments regarding a proposed increase and explain the reasons~~ 
 99.19  ~~for the proposed increase.  The public shall be allowed to speak~~ 
 99.20  ~~and to ask questions.  At the subsequent hearing held as~~ 
 99.21  ~~provided in this subdivision, the governing body, other than the~~ 
 99.22  ~~governing body of a school district, shall adopt its final~~ 
 99.23  ~~property tax levy prior to adopting its final budget.~~ 
 99.24     ~~If the hearing is not completed on its scheduled date, the~~ 
 99.25  ~~taxing authority must announce, prior to adjournment of the~~ 
 99.26  ~~hearing, the date, time, and place for the continuation of the~~ 
 99.27  ~~hearing.  The continued hearing must be held at least five~~ 
 99.28  ~~business days but no more than 14 business days after the~~ 
 99.29  ~~original hearing.~~ 
 99.30     ~~The hearing must be held after 5:00 p.m. if scheduled on a~~ 
 99.31  ~~day other than Saturday.  No hearing may be held on a Sunday.~~  
 99.32  ~~The governing body of a county shall hold a hearing on the~~ 
 99.33  ~~second Tuesday in December each year, and may hold additional~~ 
 99.34  ~~hearings on other dates before December 20 if necessary for the~~ 
 99.35  ~~convenience of county residents.  If the county needs a~~ 
 99.36  ~~continuation of its hearing, the continued hearing shall be held~~ 
100.1   ~~on the third Tuesday in December.  If the third Tuesday in~~ 
100.2   ~~December falls on December 21, the county's continuation hearing~~ 
100.3   ~~shall be held on Monday, December 20.  The county auditor shall~~ 
100.4   ~~provide for the coordination of hearing dates for all cities and~~ 
100.5   ~~school districts within the county.~~ 
100.6      ~~The metropolitan special taxing districts shall hold a~~ 
100.7   ~~joint public hearing on the first Monday of December.  A~~ 
100.8   ~~continuation hearing, if necessary, shall be held on the second~~ 
100.9   ~~Monday of December.~~ 
100.10     ~~By August 10, each school board and the board of the~~ 
100.11  ~~regional library district shall certify to the county auditors~~ 
100.12  ~~of the counties in which the school district or regional library~~ 
100.13  ~~district is located the dates on which it elects to hold its~~ 
100.14  ~~hearings and any continuations.  If a school board or regional~~ 
100.15  ~~library district does not certify the dates by August 10, the~~ 
100.16  ~~auditor will assign the hearing date.  The dates elected or~~ 
100.17  ~~assigned must not conflict with the hearing dates of the county~~ 
100.18  ~~or the metropolitan special taxing districts.  By August 20, the~~ 
100.19  ~~county auditor shall notify the clerks of the cities within the~~ 
100.20  ~~county of the dates on which school districts and regional~~ 
100.21  ~~library districts have elected to hold their hearings.  At the~~ 
100.22  ~~time a city certifies its proposed levy under subdivision 1 it~~ 
100.23  ~~shall certify the dates on which it elects to hold its hearings~~ 
100.24  ~~and any continuations.  For its initial hearing and for the~~ 
100.25  ~~subsequent hearing at which the final property tax levy will be~~ 
100.26  ~~adopted, the city must not select dates that conflict with the~~ 
100.27  ~~county hearing dates, metropolitan special taxing district~~ 
100.28  ~~dates, or with those elected by or assigned to the school~~ 
100.29  ~~districts or regional library district in which the city is~~ 
100.30  ~~located.  For continuation hearings, the city may select dates~~ 
100.31  ~~that conflict with other taxing authorities' dates if the city~~ 
100.32  ~~deems it necessary.~~ 
100.33     ~~The county hearing dates and the city, metropolitan special~~ 
100.34  ~~taxing district, regional library district, and school district~~ 
100.35  ~~hearing dates must be designated on the notices required under~~ 
100.36  ~~subdivision 3.  The continuation dates need not be stated on the~~ 
101.1   ~~notices.~~  
101.2      (n) This subdivision does not apply to towns and special 
101.3   taxing districts other than regional library districts and 
101.4   metropolitan special taxing districts. 
101.5      (o) Notwithstanding the requirements of this section, the 
101.6   employer is required to meet and negotiate over employee 
101.7   compensation as provided for in chapter 179A.  
101.8      Sec. 6.  Minnesota Statutes 1996, section 275.065, is 
101.9   amended by adding a subdivision to read: 
101.10     Subd. 6b.  [JOINT PUBLIC HEARINGS.] Notwithstanding any 
101.11  other provision of law, any city with a population of 10,000 and 
101.12  over, may conduct a more comprehensive public hearing than is 
101.13  contained in subdivision 6 by including a board member from the 
101.14  county, a board member from the school district located within 
101.15  the city's boundary, and a representative of the metropolitan 
101.16  council, if the city is in the metropolitan area, as defined in 
101.17  section 473.121, subdivision 2, at the city's public hearing.  
101.18  All provisions regarding the public hearings under subdivision 6 
101.19  are applicable to the joint public hearings under this 
101.20  subdivision. 
101.21     Upon the adoption of a resolution by the governing body of 
101.22  the city to hold a joint hearing, the city shall notify the 
101.23  county, the school district, and the metropolitan council if the 
101.24  city is in the metropolitan area, of the decision to hold a 
101.25  joint public hearing and request a board member from each of 
101.26  those taxing authorities, and the member or the designee of the 
101.27  metropolitan council if applicable, to be at the joint hearing.  
101.28  If the city is located in more than one county, the city may 
101.29  choose to request a county board member from each county or only 
101.30  from the county containing the majority of the city's market 
101.31  value.  If more than one school district is partially or totally 
101.32  located within the city, the city may choose to request a school 
101.33  district board member from each school district, or a board 
101.34  member only from the school district containing the majority of 
101.35  the city's market value.  If, as a result of requests under this 
101.36  subdivision, there are not sufficient board members in the 
102.1   county or the school district to attend the joint hearing, the 
102.2   county or school district may send a nonelected person working 
102.3   for its taxing authority to speak on the authority's behalf.  
102.4   The city may also invite each state senator and representative 
102.5   who represents the city, or a portion of the city, to come to 
102.6   the joint hearing. 
102.7      The primary purpose of the joint hearing is to discuss the 
102.8   city's budget and property tax levy.  The county and school 
102.9   district officials, and metropolitan council representative, if 
102.10  the city is in the metropolitan area, should be prepared to 
102.11  answer questions relevant to its budget and levy and the effect 
102.12  that its levy has on the property owners in the city. 
102.13     If a city conducts a hearing under this subdivision, this 
102.14  hearing is in lieu of the initial hearing required under 
102.15  subdivision 6.  However, the city is still required to adopt its 
102.16  proposed property tax levy at a subsequent hearing as provided 
102.17  under subdivision 6.  The hearings under this subdivision do not 
102.18  relieve a county, school district, or the metropolitan council 
102.19  of the requirement to hold its individual hearing under 
102.20  subdivision 6. 
102.21     Sec. 7.  Minnesota Statutes 1996, section 275.065, 
102.22  subdivision 8, is amended to read: 
102.23     Subd. 8.  [HEARING.] Notwithstanding any other provision of 
102.24  law, Ramsey county, the city of St. Paul, and independent school 
102.25  district No. 625 are authorized to and shall hold their initial 
102.26  public hearing jointly.  The hearing must be held on the second 
102.27  Tuesday of December each year.  The advertisement required in 
102.28  subdivision 5a may be a joint advertisement.  The hearing is 
102.29  otherwise subject to the requirements of this section. 
102.30     Ramsey county is authorized to hold an additional initial 
102.31  hearing or hearings as provided under this section, provided 
102.32  that any additional hearings must not conflict with the initial 
102.33  or continuation hearing dates of the other taxing districts.  
102.34  However, if Ramsey county elects not to hold such 
102.35  additional initial hearing or hearings, the joint initial 
102.36  hearing required by this subdivision must be held in a St. Paul 
103.1   location convenient to residents of Ramsey county. 
103.2      Sec. 8.  Minnesota Statutes 1996, section 275.16, is 
103.3   amended to read: 
103.4      275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.] 
103.5      If any such municipality shall return to the county auditor 
103.6   a levy greater than permitted by chapters 124, 124A, 124B, 136C, 
103.7   ~~and~~ 136D, ~~and~~ sections 275.124 to 275.16, and sections 275.70 to 
103.8   275.74, such county auditor shall extend only such amount of 
103.9   taxes as the limitations herein prescribed will permit; 
103.10  provided, if such levy shall include any levy for the payment of 
103.11  bonded indebtedness or judgments, such levies for bonded 
103.12  indebtedness or judgments shall be extended in full, and the 
103.13  remainder of the levies shall be reduced so that the total 
103.14  thereof, including levies for bonds and judgments, shall not 
103.15  exceed such amount as the limitations herein prescribed will 
103.16  permit.  
103.17     Sec. 9.  [275.70] [LEVY LIMITATIONS; DEFINITIONS.] 
103.18     Subdivision 1.  [APPLICATION.] For the purposes of sections 
103.19  275.70 to 275.74, the following terms shall have these meanings, 
103.20  unless provided otherwise. 
103.21     Subd. 2.  [IMPLICIT PRICE DEFLATOR.] "Implicit price 
103.22  deflator" means the implicit price deflator for government 
103.23  purchases of goods and services for state and local governments 
103.24  prepared by the bureau of economic analysis of the United States 
103.25  Department of Commerce for the 12-month period ending in June of 
103.26  the levy year. 
103.27     Subd. 3.  [LOCAL GOVERNMENTAL UNIT.] "Local governmental 
103.28  unit" means a county or a statutory or home rule charter city. 
103.29     Subd. 4.  [POPULATION; NUMBER OF HOUSEHOLDS.] "Population" 
103.30  or "number of households" means the population or number of 
103.31  households for the local governmental unit as established by the 
103.32  last federal census, by a census taken under section 275.14, or 
103.33  by an estimate made by the metropolitan council or by the state 
103.34  demographer under section 4A.02, whichever is most recent as to 
103.35  the stated date of the count or estimate up to and including 
103.36  July 1 of the current levy year. 
104.1      Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
104.2   portions of ad valorem taxes levied by a local governmental unit 
104.3   for the following purposes or in the following manner: 
104.4      (1) to pay the costs of the principal and interest on 
104.5   bonded indebtedness or to reimburse for the amount of liquor 
104.6   store revenues used to pay the principal and interest due on 
104.7   municipal liquor store bonds in the year preceding the year for 
104.8   which the levy limit is calculated; 
104.9      (2) to pay the costs of principal and interest on 
104.10  certificates of indebtedness issued for any corporate purpose 
104.11  except for the following: 
104.12     (i) tax anticipation or aid anticipation certificates of 
104.13  indebtedness; 
104.14     (ii) certificates of indebtedness issued under sections 
104.15  298.28 and 298.282; 
104.16     (iii) certificates of indebtedness used to fund current 
104.17  expenses or to pay the costs of extraordinary expenditures that 
104.18  result from a public emergency; or 
104.19     (iv) certificates of indebtedness used to fund an 
104.20  insufficiency in tax receipts or an insufficiency in other 
104.21  revenue sources; 
104.22     (3) to provide for the bonded indebtedness portion of 
104.23  payments made to another political subdivision of the state of 
104.24  Minnesota; 
104.25     (4) to fund payments made to the Minnesota state armory 
104.26  building commission under section 193.145, subdivision 2, to 
104.27  retire the principal and interest on armory construction bonds; 
104.28  and 
104.29     (5) property taxes approved by voters which are levied 
104.30  against the referendum market value as provided under section 
104.31  275.61. 
104.32     Sec. 10.  [275.71] [LEVY LIMITS.] 
104.33     Subdivision 1.  [LIMIT ON LEVIES.] Notwithstanding any 
104.34  other provision of law or municipal charter to the contrary 
104.35  which authorizes ad valorem taxes in excess of the limits 
104.36  established by sections 275.70 to 275.74, the provision of this 
105.1   section shall apply to taxes levied in 1997 and 1998 only by 
105.2   local governmental units for all purposes other than those for 
105.3   which special levies and special assessments are made. 
105.4      Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
105.5   local governmental unit for taxes levied in 1997 shall be equal 
105.6   to the sum of: 
105.7      (1) the amount the local governmental unit levied in 1996, 
105.8   less any amount levied for debt, as reported to the department 
105.9   of revenue under section 275.62, subdivision 1, clause (1), and 
105.10  less any tax levied in 1996 against market value as provided for 
105.11  in section 275.61; 
105.12     (2) the amount of aids the local governmental unit was 
105.13  certified to receive in calendar year 1997 under sections 
105.14  477A.011 to 477A.03 before any reductions for state tax 
105.15  increment financing aid under section 273.1399, subdivision 5; 
105.16     (3) the amount of homestead and agricultural credit aid the 
105.17  local governmental unit was certified to receive under section 
105.18  273.1398 in calendar year 1997 before any reductions for tax 
105.19  increment financing aid under section 273.1399, subdivision 5; 
105.20     (4) the amount of local performance aid the local 
105.21  governmental unit was certified to receive in calendar year 1997 
105.22  under section 477A.05; and 
105.23     (5) the amount of any payments certified to the local 
105.24  government unit in 1997 under sections 298.28 and 298.282. 
105.25     If a governmental unit was not required to report under 
105.26  section 275.62 for taxes levied in 1997, the commissioner shall 
105.27  request information on levies used for debt from the local 
105.28  governmental unit and adjust its levy limit base accordingly. 
105.29     (b) The levy limit base for a local governmental unit for 
105.30  taxes levied in 1998 is limited to its adjusted levy limit base 
105.31  in the previous year, subject to any adjustments under section 
105.32  275.72. 
105.33     Subd. 3.  [ADJUSTED LEVY LIMIT BASE.] For taxes levied in 
105.34  1997 and 1998, the adjusted levy limit is equal to the levy 
105.35  limit base computed under subdivision 2, increased by: 
105.36     (1) a percentage equal to the percentage growth in the 
106.1   implicit price deflator; and 
106.2      (2) a percentage equal to the percentage increase in number 
106.3   of households, if any, for the most recent 12-month period for 
106.4   which data is available. 
106.5      Subd. 4.  [PROPERTY TAX LEVY LIMIT.] For taxes levied in 
106.6   1997 and 1998, the property tax levy limit for a local 
106.7   governmental unit is equal to its adjusted levy limit base 
106.8   determined under subdivision 3, reduced by the sum of (a) the 
106.9   total amount of aids that the local governmental unit is 
106.10  certified to receive under sections 477A.011 to 477A.014, (b) 
106.11  homestead and agricultural aids it is certified to receive under 
106.12  section 273.1398, (c) local performance aid it is certified to 
106.13  receive under section 477A.05, and (d) taconite aids under 
106.14  sections 298.28 and 298.282 including any aid which was required 
106.15  to be placed in a special fund for expenditure in the next 
106.16  succeeding year. 
106.17     Subd. 5.  [LEVIES IN EXCESS OF LEVY LIMITS.] If the levy 
106.18  made by a city exceeds the levy limit provided in sections 
106.19  275.70 to 275.74, except when the excess levy is due to the 
106.20  rounding of the rate in accordance with section 275.28, the 
106.21  county auditor shall only extend the amount of taxes permitted 
106.22  under sections 275.70 to 275.73, as provided for in section 
106.23  275.16. 
106.24     Sec. 11.  [275.72] [LEVY LIMIT ADJUSTMENTS FOR 
106.25  CONSOLIDATION AND ANNEXATION.] 
106.26     Subdivision 1.  [ADJUSTMENTS FOR CONSOLIDATION.] If all of 
106.27  the area included in two or more local governmental units is 
106.28  consolidated, merged, or otherwise combined to constitute a 
106.29  single governmental unit, the levy limit base for the resulting 
106.30  governmental unit in the first levy year in which the 
106.31  consolidation is effective shall be equal to (a) the highest tax 
106.32  rate in any of the merging governmental units in the previous 
106.33  year multiplied by the net tax capacity of all the merging 
106.34  governmental units in the previous year, minus (b) the sum of 
106.35  all levies in the merging governmental units in the previous 
106.36  year that qualify as special levies under section 275.70, 
107.1   subdivision 3. 
107.2      Subd. 2.  [ADJUSTMENTS FOR ANNEXATION.] If a local 
107.3   governmental unit increases its tax base through annexation of 
107.4   an area which is not the area of an entire local governmental 
107.5   unit, the levy limit base of the local governmental unit in the 
107.6   first year in which the annexation is effective shall be equal 
107.7   to its adjusted levy limit base from the previous year 
107.8   multiplied by the ratio of the net tax capacity in the local 
107.9   governmental unit after the annexation compared to its net tax 
107.10  capacity before the annexation. 
107.11     Subd. 3.  [TRANSFER OF GOVERNMENTAL FUNCTIONS.] If a 
107.12  function or service of one local governmental unit is 
107.13  transferred to another local governmental unit, the levy limits 
107.14  established under section 275.71 shall be adjusted by the 
107.15  commissioner of revenue in such manner so as to fairly and 
107.16  equitably reflect the reduced or increased property tax burden 
107.17  resulting from the transfer.  The aggregate of the adjusted 
107.18  limitations shall not exceed the aggregate of the limitations 
107.19  prior to adjustment. 
107.20     Subd. 4.  [EFFECTIVE DATE FOR LEVY LIMITS PURPOSES.] 
107.21  Annexations, mergers, and shifts in services and functional 
107.22  responsibilities that are effective by June 30 of the levy year 
107.23  are included in the calculation of the levy limit for that levy 
107.24  year.  Annexations, mergers, and shifts in services and 
107.25  functional responsibilities that are effective after June 30 of 
107.26  a levy year are not included in the calculation of the levy 
107.27  limit until the subsequent levy year. 
107.28     Sec. 12.  [275.74] [STATE REGULATION OF LEVIES.] 
107.29     The commissioner of revenue shall make all necessary 
107.30  calculations for determining levy limits for local governmental 
107.31  units and notify the affected governmental units of their levy 
107.32  limits directly by August 1 of each levy year.  In addition, the 
107.33  commissioner of revenue shall notify all county auditors of the 
107.34  levy limits imposed on local governmental units located within 
107.35  their boundaries so that they may fix the levies as required in 
107.36  section 275.16.  The local governmental units shall provide the 
108.1   commissioner of revenue with all information that the 
108.2   commissioner deems necessary to make the calculations provided 
108.3   for in sections 275.70 to 275.73. 
108.4      Sec. 13.  Minnesota Statutes 1996, section 276.04, 
108.5   subdivision 2, is amended to read: 
108.6      Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
108.7   shall provide for the printing of the tax statements.  The 
108.8   commissioner of revenue shall prescribe the form of the property 
108.9   tax statement and its contents.  The statement must contain a 
108.10  tabulated statement of the dollar amount due to each taxing 
108.11  authority and the state from the parcel of real property for 
108.12  which a particular tax statement is prepared.  The dollar 
108.13  amounts due the county, state general education tax, the 
108.14  remaining school district amount, township or municipality, and 
108.15  the total of the metropolitan special taxing districts as 
108.16  defined in section 275.065, subdivision 3, paragraph (i), ~~school~~ 
108.17  ~~district excess referenda levy, remaining school district levy,~~ 
108.18  ~~and the total of other voter approved referenda levies based on~~ 
108.19  ~~market value under section 275.61~~ must be separately stated.  
108.20  The amounts due all other special taxing districts, if any, may 
108.21  be aggregated.  ~~For the purposes of this subdivision, "school~~ 
108.22  ~~district excess referenda levy" means school district taxes for~~ 
108.23  ~~operating purposes approved at referenda, including those taxes~~ 
108.24  ~~based on net tax capacity as well as those based on market~~ 
108.25  ~~value. "School district excess referenda levy" does not include~~ 
108.26  ~~school district taxes for capital expenditures approved at~~ 
108.27  ~~referendums or school district taxes to pay for the debt service~~ 
108.28  ~~on bonds approved at referenda.~~  The amount of the tax on 
108.29  contamination value imposed under sections 270.91 to 270.98, if 
108.30  any, must also be separately stated.  The dollar amounts, 
108.31  including the dollar amount of any special assessments, may be 
108.32  rounded to the nearest even whole dollar.  For purposes of this 
108.33  section whole odd-numbered dollars may be adjusted to the next 
108.34  higher even-numbered dollar.  The amount of market value 
108.35  excluded under section 273.11, subdivision 16, if any, must also 
108.36  be listed on the tax statement.  The statement shall include the 
109.1   following ~~sentence~~ sentences, printed in upper case letters in 
109.2   boldface print:  "EVEN THOUGH THE STATE OF MINNESOTA DOES NOT 
109.3   RECEIVE ANY PROPERTY TAX REVENUES, IT DETERMINES THE AMOUNT OF 
109.4   THE GENERAL EDUCATION TAX LEVY.  THE STATE OF MINNESOTA REDUCES 
109.5   YOUR PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS TO LOCAL 
109.6   UNITS OF GOVERNMENT."  
109.7      (b) The property tax statements for manufactured homes and 
109.8   sectional structures taxed as personal property shall contain 
109.9   the same information that is required on the tax statements for 
109.10  real property.  
109.11     (c) Real and personal property tax statements must contain 
109.12  the following information in the order given in this paragraph.  
109.13  The information must contain the current year tax information in 
109.14  the right column with the corresponding information for the 
109.15  previous year in a column on the left: 
109.16     (1) the property's estimated market value under section 
109.17  273.11, subdivision 1; 
109.18     (2) the property's taxable market value after reductions 
109.19  under section 273.11, subdivisions 1a and 16; 
109.20     (3) the property's gross tax, calculated by ~~multiplying the~~ 
109.21  ~~property's gross tax capacity times the total local tax rate and~~ 
109.22  adding the property's total property tax to ~~the result~~ the sum 
109.23  of the aids enumerated in clause (4); 
109.24     (4) a total of the following aids: 
109.25     (i) education aids payable under chapters 124 and 124A; 
109.26     (ii) local government aids for cities, towns, and counties 
109.27  under chapter 477A; and 
109.28     (iii) disparity reduction aid under section 273.1398; 
109.29     ~~(5) for homestead residential and agricultural properties,~~ 
109.30  ~~the homestead and agricultural credit aid apportioned to the~~ 
109.31  ~~property.  This amount is obtained by multiplying the total~~ 
109.32  ~~local tax rate by the difference between the property's gross~~ 
109.33  ~~and net tax capacities under section 273.13.  This amount must~~ 
109.34  ~~be separately stated and identified as "homestead and~~ 
109.35  ~~agricultural credit."  For purposes of comparison with the~~ 
109.36  ~~previous year's amount for the statement for taxes payable in~~ 
110.1   ~~1990, the statement must show the homestead credit for taxes~~ 
110.2   ~~payable in 1989 under section 273.13, and the agricultural~~ 
110.3   ~~credit under section 273.132 for taxes payable in 1989;~~ 
110.4      ~~(6)~~ (5) any credits received under sections 273.119; 
110.5   273.123; 273.135; 273.1391; 273.1398, subdivision 4; 469.171; 
110.6   and 473H.10, except that the amount of credit received under 
110.7   section 273.135 must be separately stated and identified as 
110.8   "taconite tax relief"; and 
110.9      ~~(7)~~ (6) the net tax payable in the manner required in 
110.10  paragraph (a). 
110.11     (d) If the county uses envelopes for mailing property tax 
110.12  statements and if the county agrees, a taxing district may 
110.13  include a notice with the property tax statement notifying 
110.14  taxpayers when the taxing district will begin its budget 
110.15  deliberations for the current year, and encouraging taxpayers to 
110.16  attend the hearings.  If the county allows notices to be 
110.17  included in the envelope containing the property tax statement, 
110.18  and if more than one taxing district relative to a given 
110.19  property decides to include a notice with the tax statement, the 
110.20  county treasurer or auditor must coordinate the process and may 
110.21  combine the information on a single announcement.  
110.22     The commissioner of revenue shall certify to the county 
110.23  auditor the actual or estimated aids enumerated in ~~clauses (3)~~ 
110.24  ~~and~~ clause (4) that local governments will receive in the 
110.25  following year.  ~~In the case of a county containing a city of~~ 
110.26  ~~the first class, for taxes levied in 1991, and for all counties~~ 
110.27  ~~for taxes levied in 1992 and thereafter,~~ The commissioner must 
110.28  certify this amount by September 1 of each year.  
110.29     Sec. 14.  Minnesota Statutes 1996, section 383A.75, 
110.30  subdivision 3, is amended to read: 
110.31     Subd. 3.  [DUTIES.] The committee is authorized to and 
110.32  shall meet from time to time to make appropriate recommendations 
110.33  for the efficient and effective use of property tax dollars 
110.34  raised by the jurisdictions for programs, buildings, and 
110.35  operations.  In addition, the committee shall: 
110.36     (1) identify trends and factors likely to be driving budget 
111.1   outcomes over the next five years with recommendations for how 
111.2   the jurisdictions should manage those trends and factors to 
111.3   increase efficiency and effectiveness; 
111.4      (2) agree, by ~~September~~ October 1 of each year, on the 
111.5   appropriate level of overall property tax levy for the three 
111.6   jurisdictions and publicly report such to the governing bodies 
111.7   of each jurisdiction for ratification or modification by 
111.8   resolution; 
111.9      (3) plan for the joint truth-in-taxation hearings under 
111.10  section 275.065, subdivision 8; and 
111.11     (4) identify, by December 31 of each year, areas of the 
111.12  budget to be targeted in the coming year for joint review to 
111.13  improve services or achieve efficiencies. 
111.14     In carrying out its duties, the committee shall consult 
111.15  with public employees of each jurisdiction and with other 
111.16  stakeholders of the city, county, and school district, as 
111.17  appropriate. 
111.18     Sec. 15.  Laws 1993, chapter 375, article 7, section 29, is 
111.19  amended to read: 
111.20     Sec. 29.  [EFFECTIVE DATE.] 
111.21     Sections 1, 6 to 8, 13, 15 to 25, 27, and 28 are effective 
111.22  for taxes levied in 1993, payable in 1994 and thereafter.  
111.23     Section 3, subdivision 5, and the provisions of sections 9 
111.24  to 11 relating to regional library districts are effective for 
111.25  property taxes levied in 1994, payable in 1995, and thereafter.  
111.26  The other provisions of sections 9 to 11 are effective for 
111.27  property taxes levied in 1993, payable in 1994 and thereafter.  
111.28     Sections 12 and 14 are effective the day following final 
111.29  enactment and without local approval, as provided in Minnesota 
111.30  Statutes, section 645.023, subdivision 1, clause (a)~~, and shall~~ 
111.31  ~~expire after December 31, 1997~~.  
111.32     Section 26 is effective beginning with aids payable in 
111.33  calendar year 1993. 
111.34     Sec. 16.  [EFFECTIVE DATE.] 
111.35     Sections 1 to 3 are effective for notices prepared 
111.36  beginning in 1997 for taxes payable in 1998 and thereafter. 
112.1      Section 4 is effective for newspaper advertisements 
112.2   prepared beginning in 1997 for taxes payable in 1998, and 
112.3   thereafter. 
112.4      Sections 5 to 7 are effective for hearings held in 1997 and 
112.5   thereafter. 
112.6      Sections 8 to 12 are effective for property taxes levied in 
112.7   1997 and 1998, payable in 1998 and 1999 only. 
112.8      Section 13 is effective for property tax statements 
112.9   prepared in 1998 and thereafter. 
112.10                             ARTICLE 6
112.11                           STATE MANDATES
112.12     Section 1.  [3.986] [DEFINITIONS.] 
112.13     Subdivision 1.  [SCOPE.] The terms used in sections 3.986 
112.14  to 3.989 have the meanings given them in this section. 
112.15     Subd. 2.  [LOCAL FISCAL IMPACT.] (a) "Local fiscal impact" 
112.16  means increased or decreased costs or revenues that a political 
112.17  subdivision would incur as a result of a law enacted after June 
112.18  30, 1997, or rule proposed after June 30, 1998: 
112.19     (1) that mandates a new program, eliminates an existing 
112.20  mandated program, requires an increased level of service of an 
112.21  existing program, or permits a decreased level of service in an 
112.22  existing mandated program; 
112.23     (2) that implements or interprets federal law and, by its 
112.24  implementation or interpretation, increases or decreases program 
112.25  or service levels beyond the level required by the federal law; 
112.26     (3) that implements or interprets a statute or amendment 
112.27  adopted or enacted pursuant to the approval of a statewide 
112.28  ballot measure by the voters and, by its implementation or 
112.29  interpretation, increases or decreases program or service levels 
112.30  beyond the levels required by the ballot measure; 
112.31     (4) that removes an option previously available to 
112.32  political subdivisions, or adds an option previously unavailable 
112.33  to political subdivisions, thus requiring higher program or 
112.34  service levels or permitting lower program or service levels, or 
112.35  prohibits a specific activity and so forces political 
112.36  subdivisions to use a more costly alternative to provide a 
113.1   mandated program or service; 
113.2      (5) that requires that an existing program or service be 
113.3   provided in a shorter time period and thus increases the cost of 
113.4   the program or service, or permits an existing mandated program 
113.5   or service to be provided in a longer time period, thus 
113.6   permitting a decrease in the cost of the program or service; 
113.7      (6) that adds new requirements to an existing optional 
113.8   program or service and thus increases the cost of the program or 
113.9   service because the political subdivisions have no reasonable 
113.10  alternative other than to continue the optional program; 
113.11     (7) that affects local revenue collections by changes in 
113.12  property or sales and use tax exemptions; 
113.13     (8) that requires costs previously incurred at local option 
113.14  that have subsequently been mandated by the state; or 
113.15     (9) that requires payment of a new fee or increases the 
113.16  amount of an existing fee, or permits the elimination or 
113.17  decrease of an existing fee mandated by the state. 
113.18     (b) When state law is intended to achieve compliance with 
113.19  federal law or court orders, state mandates shall be determined 
113.20  as follows: 
113.21     (1) if the federal law or court order is discretionary, the 
113.22  state law is a state mandate; 
113.23     (2) if the state law exceeds what is required by the 
113.24  federal law or court order, only the provisions of the state law 
113.25  that exceed the federal requirements are a state mandate; and 
113.26     (3) if the state law does not exceed what is required by 
113.27  the federal statute or regulation or court order, the state law 
113.28  is not a state mandate. 
113.29     Subd. 3.  [MANDATE.] A "mandate" is a requirement imposed 
113.30  upon a political subdivision in a law by a state agency or by 
113.31  judicial authority that, if not complied with, results in: 
113.32     (1) civil liability; 
113.33     (2) criminal penalty; or 
113.34     (3) administrative sanctions such as reduction or loss of 
113.35  funding. 
113.36     Subd. 4.  [POLITICAL SUBDIVISION.] A "political 
114.1   subdivision" is a county, home rule charter or statutory city, 
114.2   town, or other taxing district or municipal corporation. 
114.3      Subd. 5.  [REQUIRING AN INCREASED LEVEL OF 
114.4   SERVICE.] "Requiring an increased level of service" includes 
114.5   requiring that an existing service be provided in a shorter time.
114.6      Sec. 2.  [3.987] [LOCAL IMPACT TO NOTES FOR STATE-MANDATED 
114.7   ACTIONS.] 
114.8      Subdivision 1.  [LOCAL IMPACT NOTES.] The commissioner of 
114.9   finance shall coordinate the development of a local impact note 
114.10  for any proposed legislation or rule proposed after June 30, 
114.11  1998, upon request of the chair or the ranking minority member 
114.12  of either legislative tax committee.  The local impact note must 
114.13  be prepared as provided in section 3.98, subdivision 2, and made 
114.14  available to the public upon request.  If the action is among 
114.15  the exceptions listed in section 3.988, a local impact note need 
114.16  not be requested nor prepared.  The commissioner shall make a 
114.17  reasonable and timely estimate of the local fiscal impact on 
114.18  each type of political subdivision that would result from the 
114.19  proposed legislation.  The commissioner of finance may require 
114.20  any political subdivision or the commissioner of an 
114.21  administrative agency of the state to supply in a timely manner 
114.22  any information determined to be necessary to determine local 
114.23  fiscal impact.  The political subdivision, its representative 
114.24  association, or commissioner shall convey the requested 
114.25  information to the commissioner of finance with a signed 
114.26  statement to the effect that the information is accurate and 
114.27  complete to the best of its ability.  The political subdivision, 
114.28  its representative association, or commissioner, when requested, 
114.29  shall update its determination of local fiscal impact based on 
114.30  actual cost or revenue figures, improved estimates, or both. 
114.31     Subd. 2.  [MANDATE EXPLANATIONS.] Any bill introduced in 
114.32  the legislature after June 30, 1997, that seeks to impose 
114.33  program or financial mandates on political subdivisions must 
114.34  include an attachment from the author that gives appropriate 
114.35  responses to the following guidelines.  It must state and list: 
114.36     (1) the policy goals that are sought to be attained, the 
115.1   performance standards that are to be imposed, and an explanation 
115.2   why the goals and standards will best be served by requiring 
115.3   compliance by political subdivisions; 
115.4      (2) performance standards that will allow political 
115.5   subdivisions flexibility and innovation of method in achieving 
115.6   those goals; 
115.7      (3) the reasons for each prescribed standard and the 
115.8   process by which each standard governs input such as staffing 
115.9   and other administrative aspects of the program; 
115.10     (4) the sources of additional revenue, in addition to 
115.11  existing funding for similar programs, that are directly linked 
115.12  to imposition of the mandates that will provide adequate and 
115.13  stable funding for their requirements; 
115.14     (5) what input has been obtained to ensure that the 
115.15  implementing agencies have the capacity to carry out the 
115.16  delegated responsibilities; and 
115.17     (6) the reasons why less intrusive measures such as 
115.18  financial incentives or voluntary compliance would not yield the 
115.19  equity, efficiency, or desired level of statewide uniformity in 
115.20  the proposed program. 
115.21     Subd. 3.  [LOCAL INVOLVEMENT; LAWS.] Any bill introduced in 
115.22  the legislature after June 30, 1997, that seeks to impose a 
115.23  program or financial mandate on political subdivisions must 
115.24  include an attachment prepared by the author that describes the 
115.25  efforts put forth, if any, to involve political subdivisions in 
115.26  the creation or development of the proposed mandate. 
115.27     Subd. 4.  [NO MANDATE RESTRICTION.] Except as specifically 
115.28  provided by this act, nothing in this act restricts or 
115.29  eliminates the authority of the state to create or impose 
115.30  programs by law upon political subdivisions. 
115.31     Sec. 3.  [3.988] [EXCEPTIONS TO LOCAL IMPACT NOTES.] 
115.32     Subdivision 1.  [COSTS RESULTING FROM INFLATION.] A local 
115.33  impact note need not be prepared for increases in the cost of 
115.34  providing an existing service if the increases result directly 
115.35  from inflation.  "Resulting directly from inflation" means 
115.36  attributable to maintaining an existing level of service rather 
116.1   than increasing the level of service.  A cost-of-living increase 
116.2   in welfare benefits is an example of a cost resulting directly 
116.3   from inflation. 
116.4      Subd. 2.  [MISCELLANEOUS EXCEPTIONS.] A local impact note 
116.5   or an attachment as provided in section 3.987, subdivision 2, 
116.6   need not be prepared if the law: 
116.7      (1) provides only clarifying or conforming, nonsubstantive 
116.8   charges on local government; 
116.9      (2) imposes additional net local costs that are minor and 
116.10  do not cause a financial burden on local government; 
116.11     (3) is a law enacted before July 1, 1997; 
116.12     (4) implements something other than a law, such as a 
116.13  federal, court, or voter-approved mandate; 
116.14     (5) requires the holding of elections; 
116.15     (6) insures due process or equal protection; 
116.16     (7) provides for the notification and conduct of public 
116.17  meetings; 
116.18     (8) establishes the procedures for administrative and 
116.19  judicial review of actions taken by political subdivisions; 
116.20     (9) protects the public from malfeasance, misfeasance, or 
116.21  nonfeasance by officials of political subdivisions; 
116.22     (10) relates directly to financial administration, 
116.23  including the administrative costs associated with the levy, 
116.24  assessment, and collection of taxes; 
116.25     (11) relates directly to the preparation and submission of 
116.26  financial audits necessary to the administration of state laws; 
116.27  or 
116.28     (12) requires uniform standards to apply to public and 
116.29  private institutions without differentiation. 
116.30     Sec. 4.  [14.431] [PERIODIC REVIEW OF ADMINISTRATIVE 
116.31  RULES.] 
116.32     Subdivision 1.  [DEFINITIONS.] The terms defined in section 
116.33  3.986, subdivision 1, apply to this section. 
116.34     Subd. 2.  [SIGNIFICANT FINANCIAL IMPACT.] The commissioner 
116.35  of finance shall review, every five years, rules adopted after 
116.36  June 30, 1997, that have significant financial impact upon 
117.1   political subdivisions.  In this section, "significant financial 
117.2   impact" means requiring local political subdivisions to expand 
117.3   existing services, employ additional personnel, or increase 
117.4   local expenditures.  The commissioner shall determine the costs 
117.5   and benefits of each rulemaking and submit a report to the 
117.6   legislative coordinating commission with its opinion, if any, 
117.7   for the continuation, modification, or elimination of the rules 
117.8   in the rulemaking.  
117.9      Sec. 5.  Minnesota Statutes 1996, section 273.1398, 
117.10  subdivision 8, is amended to read: 
117.11     Subd. 8.  [APPROPRIATION.] (a) An amount sufficient to pay 
117.12  the aids and credits provided under this section for school 
117.13  districts, intermediate school districts, or any group of school 
117.14  districts levying as a single taxing entity, is annually 
117.15  appropriated from the general fund to the commissioner of 
117.16  children, families, and learning.  An amount sufficient to pay 
117.17  the aids and credits provided under this section for counties, 
117.18  cities, towns, and special taxing districts is annually 
117.19  appropriated from the general fund to the commissioner of 
117.20  revenue.  A jurisdiction's aid amount may be increased or 
117.21  decreased based on any prior year adjustments for homestead 
117.22  credit or other property tax credit or aid programs. 
117.23     (b) The commissioner of finance shall bill the commissioner 
117.24  of revenue for the cost of preparation of local impact notes as 
117.25  required by section 3.987 only to the extent to which those 
117.26  costs exceed those costs incurred in fiscal year 1997 and for 
117.27  any other new costs attributable to the local impact note 
117.28  function required by section 3.987, not to exceed $50,000 in 
117.29  fiscal year 1998 and thereafter. 
117.30     The commissioner of revenue shall deduct the amount billed 
117.31  under this paragraph from aid payments to be made to cities and 
117.32  counties under subdivision 2 on a pro rata basis. 
117.33     Sec. 6.  [STUDY REQUIRED.] 
117.34     The department of finance shall study and make 
117.35  recommendations on the most effective means of implementing the 
117.36  review required under section 4.  The department shall report on 
118.1   the conclusions of the study to the senate and house committees 
118.2   on taxes by January 15, 1998. 
118.3      Sec. 7.  [REPEALER.] 
118.4      Minnesota Statutes 1996, section 3.982, is repealed. 
118.5                              ARTICLE 7
118.6                        BUSINESS ACTIVITY TAX
118.7      Section 1.  Minnesota Statutes 1996, section 290.06, 
118.8   subdivision 1, is amended to read: 
118.9      Subdivision 1.  [COMPUTATION, CORPORATIONS.] The franchise 
118.10  tax imposed upon corporations shall be computed by applying to 
118.11  their taxable income the rate of ~~9.8~~ 7.5 percent. 
118.12     Sec. 2.  [290.9401] [BUSINESS ACTIVITY TAX IMPOSED.] 
118.13     In addition to the taxes imposed by this chapter, a tax 
118.14  applies to a firm's tax base at a rate of .45 percent for 
118.15  taxable years beginning after December 31, 1997, and before 
118.16  January 1, 1999, and .55 percent for taxable years beginning 
118.17  after December 31, 1998. 
118.18     Sec. 3.  [290.9402] [DEFINITIONS.] 
118.19     Subdivision 1.  [SCOPE.] For purposes of sections 290.9401 
118.20  to 290.9407, the following terms have the meanings given. 
118.21     Subd. 2.  [BUSINESS ACTIVITY.] "Business activity" means 
118.22  sale or rental of property or the performance of services in 
118.23  this state to realize a gain, benefit, or advantage, whether 
118.24  direct or indirect.  Business activity includes activity in 
118.25  intrastate, interstate, and foreign commerce.  It does not 
118.26  include services provided by an employee to the employee's 
118.27  employer, service as the director of a corporation, or a casual 
118.28  transaction.  Although an activity may be incidental to another 
118.29  of the firm's business activities, each activity is a business 
118.30  activity for purposes of the tax. 
118.31     Subd. 3.  [BUSINESS INCOME.] "Business income" means net 
118.32  income.  For a firm other than a corporation, net income is 
118.33  limited to the portion derived from business activity. 
118.34     Subd. 4.  [CASUAL TRANSACTION.] "Casual transaction" means 
118.35  a transaction that (1) is not made in the ordinary course of 
118.36  repeated or successive transactions of a like character by the 
119.1   firm, and (2) is not incidental to the firm's regular business 
119.2   activity. 
119.3      Subd. 5.  [COMPENSATION.] (a) "Compensation" means all 
119.4   payments made to or for the benefit of employees, officers, or 
119.5   directors of the firm. 
119.6      (b) Compensation specifically includes, but is not limited 
119.7   to: 
119.8      (1) wages, salaries, bonuses, commissions, and other 
119.9   payments to employees, officers, or directors; 
119.10     (2) payments to state and federal unemployment compensation 
119.11  funds; 
119.12     (3) payments, including self-insurance, for workers' 
119.13  compensation; 
119.14     (4) payments to individuals not currently working; 
119.15     (5) payments to dependents and heirs of individuals because 
119.16  of current or past labor service provided by those individuals; 
119.17     (6) payments to a pension, retirement, profit-sharing, or 
119.18  deferred compensation program; and 
119.19     (7) payments for insurance, including self-insurance, for 
119.20  which employees are beneficiaries, including payments for health 
119.21  and welfare and noninsured benefit plans and payment of fees for 
119.22  administration of plans. 
119.23     (c) Compensation does not include: 
119.24     (1) discounts on the price of the firm's merchandise or 
119.25  services sold to employees, officers, or directors that are not 
119.26  available to other customers; or 
119.27     (2) payments to independent contractors. 
119.28     Subd. 6.  [FIRM.] "Firm" means a corporation, individual, 
119.29  partnership, limited liability company, trust, nonprofit 
119.30  corporation, joint venture, association, receiver, estate, or 
119.31  other person engaged in business activity. 
119.32     Subd. 7.  [PROPERTY.] "Property" includes all property, 
119.33  whether tangible or intangible, or whether real, personal, or 
119.34  mixed. 
119.35     Sec. 4.  [290.9403] [BUSINESSES SUBJECT TO TAX.] 
119.36     Subdivision 1.  [TAXABLE BUSINESSES.] The tax imposed by 
120.1   sections 290.9401 to 290.9407 applies to a firm engaged in 
120.2   business activity in Minnesota, unless an exemption under 
120.3   subdivisions 2 to 4 applies. 
120.4      Subd. 2.  [FOREIGN INSURANCE COMPANIES.] An insurance 
120.5   company as defined in section 290.05, subdivision 1, clause (c), 
120.6   is exempt. 
120.7      Subd. 3.  [GOVERNMENT ENTITIES.] A governmental entity, as 
120.8   defined in section 290.05, subdivision 1, clause (b), is exempt. 
120.9      Subd. 4.  [OTHER EXEMPT ENTITIES.] An organization exempt 
120.10  from taxation under Subchapter F of the Internal Revenue Code is 
120.11  exempt, except to the extent of tax base from activities 
120.12  generating: 
120.13     (1) unrelated business income, as defined in sections 511 
120.14  to 515 of the Internal Revenue Code; 
120.15     (2) taxable income of farmers' cooperatives under section 
120.16  521 of the Internal Revenue Code; 
120.17     (3) taxable income of political organizations under section 
120.18  527 of the Internal Revenue Code; and 
120.19     (4) taxable income of homeowners associations under section 
120.20  528 of the Internal Revenue Code. 
120.21     Sec. 5.  [290.9404] [TAX BASE.] 
120.22     Subdivision 1.  [GENERAL RULE.] The tax base of a firm for 
120.23  the taxable year equals the sum of the firm's business income 
120.24  and the amounts in subdivision 2, less: 
120.25     (1) the amounts in subdivision 3; 
120.26     (2) the capital acquisition deduction under subdivision 4; 
120.27  and 
120.28     (3) the exemption amount under subdivision 5. 
120.29     All amounts are the amounts paid or accrued for the taxable 
120.30  year under the firm's method of accounting for federal income 
120.31  tax purposes. 
120.32     Subd. 2.  [ADDITIONS.] The following amounts are added to 
120.33  business income to determine tax base: 
120.34     (1) the amount of the additions to federal taxable income 
120.35  under section 290.01, subdivision 19c, clauses (1) to (5), (8), 
120.36  (10), and (11); and 
121.1      (2) the amount of the following, to the extent deducted or 
121.2   excluded in computing federal taxable income and not added under 
121.3   clause (1): 
121.4      (i) depreciation, amortization, or immediate or accelerated 
121.5   write-off of the cost of tangible assets; 
121.6      (ii) royalties; 
121.7      (iii) dividends, except dividends representing reduction of 
121.8   premiums to policyholders of insurance companies; and 
121.9      (iv) interest including amounts paid, credited, or reserved 
121.10  by insurance companies as amounts necessary to fulfill the 
121.11  policy and other contract liability requirements of sections 805 
121.12  and 809 of the Internal Revenue Code; 
121.13     (3) the amount of compensation; and 
121.14     (4) capital gains of individuals from business activity to 
121.15  the extent excluded in computing federal taxable income. 
121.16     Subd. 3.  [SUBTRACTIONS.] To the extent included in federal 
121.17  taxable income, the following amounts are subtracted from income 
121.18  to determine tax base: 
121.19     (1) dividends received or deemed received, including the 
121.20  foreign dividend gross-up; 
121.21     (2) interest except amounts paid, credited, or reserved by 
121.22  insurance companies as amounts necessary to fulfill the policy 
121.23  and other contract liability requirements of sections 805 and 
121.24  809 of the Internal Revenue Code; 
121.25     (3) royalties; and 
121.26     (4) any capital loss not deducted in computing federal 
121.27  taxable income. 
121.28     Subd. 4.  [CAPITAL ACQUISITION DEDUCTION.] (a) The capital 
121.29  acquisition deduction equals the amount paid or accrued for the 
121.30  taxable year of the cost of tangible assets qualifying for 
121.31  depreciation, amortization, or immediate or accelerated 
121.32  deduction under the Internal Revenue Code.  Costs include 
121.33  fabrication and installation costs.  The deduction is the full 
121.34  amount paid or accrued, regardless of the amount allowed by 
121.35  federal law for the taxable year. 
121.36     (b) If the capital acquisition deduction exceeds the net 
122.1   amount under subdivisions 1 to 3 for the taxable year, the rest 
122.2   is a carryover capital acquisition deduction to the next three 
122.3   taxable years.  The entire amount must be taken in the earliest 
122.4   of the taxable years to which it may be carried. 
122.5      Subd. 5.  [EXEMPTION.] The exemption amount is $500,000.  
122.6   The exemption must be deducted after computation of tax base 
122.7   under subdivisions 1 to 4, but before apportionment under 
122.8   section 290.9405 for multistate businesses. 
122.9      Subd. 6.  [SPECIAL RULES FOR FINANCIAL INSTITUTIONS.] The 
122.10  tax base of a financial institution is the amount calculated 
122.11  under subdivisions 1 to 4, except that the addition under 
122.12  subdivision 2, clause (2), item (iv), and the subtraction under 
122.13  subdivision 3, clause (2), do not apply. 
122.14     Sec. 6.  [290.9405] [MULTISTATE FIRMS.] 
122.15     Subdivision 1.  [SCOPE.] The tax base of a firm from 
122.16  business activity carried on partly within and partly without 
122.17  Minnesota must be apportioned to Minnesota as provided in this 
122.18  section. 
122.19     Subd. 2.  [DEFINITIONS.] The definitions under section 
122.20  290.191 apply for purposes of this section. 
122.21     Subd. 3.  [APPORTIONMENT FORMULA.] (a) A firm must 
122.22  apportion its tax base to Minnesota as follows.  The total tax 
122.23  base, after deducting the capital acquisition deduction and 
122.24  exemption, must be multiplied by the percentage that the firm's 
122.25  sales made within Minnesota during the taxable year are of the 
122.26  firm's total sales wherever made. 
122.27     (b) A financial institution must apportion its tax base 
122.28  under paragraph (a) using the receipts factor for financial 
122.29  institutions. 
122.30     Subd. 4.  [RULES FOR UNITARY BUSINESSES.] (a) If a business 
122.31  activity conducted wholly within this state or partly within 
122.32  this state is part of a unitary business, the entire tax base of 
122.33  the unitary business is subject to apportionment under this 
122.34  section.  The provisions of section 290.17 apply to determine if 
122.35  a business activity is part of a unitary business. 
122.36     (b) Each firm that is part of a unitary business must file 
123.1   combined reports as the commissioner determines.  On the 
123.2   reports, all intercompany transactions between domestic firms 
123.3   that are part of the unitary business must be eliminated.  The 
123.4   entire tax base of the unitary business must be apportioned 
123.5   among the firms by using each firm's Minnesota sales factor in 
123.6   the numerator of the apportionment formula and the total sales 
123.7   factor of all firms in the unitary business in the denominator 
123.8   of the apportionment formula. 
123.9      (c) The tax base and apportionment factors of foreign firms 
123.10  which are part of a unitary business are not included in the tax 
123.11  base and apportionment factors of the unitary business.  A 
123.12  foreign firm must file on a separate return basis. 
123.13     Sec. 7.  [290.9406] [CREDITS.] 
123.14     Subdivision 1.  [INSURANCE PREMIUMS TAX.] The amount of 
123.15  premiums tax paid by the firm under sections 60A.15 and 299F.21 
123.16  to 299F.26 during the taxable year is a credit against the tax 
123.17  under section 290.9401. 
123.18     Subd. 2.  [MINNESOTACARE TAX.] The amount of gross revenue 
123.19  tax paid by the firm under sections 295.50 to 295.58 during the 
123.20  taxable year is a credit against the tax under section 290.9401. 
123.21     Sec. 8.  [290.9407] [ADMINISTRATION.] 
123.22     The commissioner of revenue shall prescribe forms and 
123.23  instructions for payment of the tax.  The tax is due and payable 
123.24  at the same times and under the same rules provided for the 
123.25  franchise tax on corporations. 
123.26     Sec. 9.  [REPEALER.] 
123.27     Minnesota Statutes 1996, sections 290.0921; and 290.0922, 
123.28  are repealed. 
123.29     Sec. 10.  [EFFECTIVE DATE.] 
123.30     This article is effective for taxable years beginning after 
123.31  December 31, 1997. 
123.32                             ARTICLE 8
123.33                     PROPERTY TAX MISCELLANEOUS
123.34     Section 1.  Minnesota Statutes 1996, section 93.41, is 
123.35  amended to read: 
123.36     93.41 [STATE-OWNED IRON-BEARING MATERIALS.] 
124.1      Subdivision 1.  [USE FOR ROAD CONSTRUCTION AND OTHER 
124.2   PURPOSES.] In case the commissioner of natural resources shall 
124.3   determine that any paint rock, taconite, or other iron-bearing 
124.4   material belonging to the state ~~and containing not more than 45~~ 
124.5   ~~percent dried iron by analysis~~ is needed and suitable for use in 
124.6   the construction or maintenance of any road, tailings basin, 
124.7   settling basin, dike, dam, bank fill, or other works on public 
124.8   or private property, and that such use would be in the best 
124.9   interests of the public, the commissioner may authorize the 
124.10  disposal of such material therefor as hereinafter provided.  
124.11     Subd. 2.  [MATERIALS SUBJECT TO STATE IRON ORE MINING 
124.12  LEASE.] If such material is subject to an existing state iron 
124.13  ore mining lease or located on property subject to an existing 
124.14  state iron ore mining lease, the commissioner, by written 
124.15  agreement with the holder of the lease, may authorize the use of 
124.16  the material for any purpose specified in subdivision 1 that 
124.17  will facilitate the mining and disposal of the iron ore therein 
124.18  on such terms as the commissioner may prescribe consistent with 
124.19  the interests of the state, or may authorize the holder of the 
124.20  lease to dispose of the material otherwise for any purpose 
124.21  specified in subdivision 1 upon payment of an amount therefor 
124.22  equivalent to the royalty that would be payable under the terms 
124.23  of the lease if the material were shipped or otherwise disposed 
124.24  of as iron ore, but not less than the applicable minimum rate 
124.25  prescribed by section 93.20.  
124.26     Subd. 3.  [ISSUANCE OF LEASES, ROYALTIES.] If such 
124.27  material, whether in the ground or in stockpile, is not subject 
124.28  to an existing lease, the commissioner may issue leases for the 
124.29  taking and removal thereof for the purposes specified in 
124.30  subdivision 1 in like manner as provided by section 92.50 for 
124.31  leases for the taking and removal of sand, gravel, and other 
124.32  materials specified in said section, and subject to all the 
124.33  provisions thereof, so far as applicable~~; provided, that the~~ 
124.34  ~~amount payable for such material shall be at least equivalent to~~ 
124.35  ~~the minimum royalty that would be payable therefor under the~~ 
124.36  ~~provisions of section 93.20~~.  
125.1      Subd. 4.  [SALE OF STOCKPILED IRON-BEARING MATERIAL IN 
125.2   PLACE.] If such material is in stockpile and is not subject to 
125.3   an existing lease, the commissioner may sell stockpiled 
125.4   iron-bearing material in place.  The sale must be to a person 
125.5   holding an interest in the surface of the property upon which 
125.6   the stockpile is located or to a person holding an interest in 
125.7   publicly or privately owned stockpiled iron-bearing material 
125.8   located in the same stockpile.  
125.9      Sec. 2.  Minnesota Statutes 1996, section 103D.905, 
125.10  subdivision 4, is amended to read: 
125.11     Subd. 4.  [BOND FUND.] A bond fund consists of the proceeds 
125.12  of special assessments, storm water charges, loan repayments, 
125.13  and ad valorem tax levies pledged by the watershed district for 
125.14  the payment of bonds or notes issued by the watershed district 
125.15  ~~secured by the property of the watershed district that is~~ 
125.16  ~~producing or is likely to produce a regular income~~.  The bond 
125.17  fund is to be used for the payment of the ~~purchase price of the~~ 
125.18  ~~property or the value of the property as determined by the court~~ 
125.19  ~~in proper proceedings and for the improvement and development of~~ 
125.20  ~~the property~~ principal of, premium or administrative surcharge, 
125.21  if any, and interest on the bonds and notes issued by the 
125.22  watershed district and for payments required to be made to the 
125.23  federal government under section 148(f) of the Internal Revenue 
125.24  Code of 1986, as amended through December 31, 1996.  
125.25     Sec. 3.  Minnesota Statutes 1996, section 103D.905, 
125.26  subdivision 5, is amended to read: 
125.27     Subd. 5.  [CONSTRUCTION OR IMPLEMENTATION FUND.] (a) A 
125.28  construction or implementation fund consists of:  
125.29     (1) the proceeds of watershed district bonds or notes or of 
125.30  the sale of county bonds; 
125.31     (2) construction or implementation loans from the pollution 
125.32  control agency under sections 103F.701 to 103F.761, or from any 
125.33  agency of the federal government; and 
125.34     (3) special assessments, storm water charges, loan 
125.35  repayments, and ad valorem tax levies levied or to be levied to 
125.36  supply funds for the construction or implementation of the 
126.1   projects of the watershed district, including reservoirs, 
126.2   ditches, dikes, canals, channels, storm water facilities, sewage 
126.3   treatment facilities, wells, and other works, and the expenses 
126.4   incident to and connected with the construction or 
126.5   implementation. 
126.6      (b) Construction or implementation loans from the pollution 
126.7   control agency under sections 103F.701 to 103F.761, or from an 
126.8   agency of the federal government may be repaid from ~~money~~ 
126.9   ~~collected by~~ the proceeds of watershed district bonds or notes 
126.10  or from the collections of storm water charges, loan repayments, 
126.11  ad valorem tax levies, or special assessments on properties 
126.12  benefited by the project.  
126.13     Sec. 4.  Minnesota Statutes 1996, section 103D.905, is 
126.14  amended by adding a subdivision to read: 
126.15     Subd. 9.  [PROJECT TAX LEVY.] In addition to other tax 
126.16  levies provided in this section or in any other law, a watershed 
126.17  district may levy a tax: 
126.18     (1) to pay the costs of projects undertaken by the 
126.19  watershed district which are to be funded, in whole or in part, 
126.20  with the proceeds of grants or construction or implementation 
126.21  loans under sections 103F.701 to 103F.761; 
126.22     (2) to pay the principal of, or premium or administrative 
126.23  surcharge, if any, and interest on, the bonds and notes issued 
126.24  by the watershed district pursuant to section 103F.725; or 
126.25     (3) to repay the construction or implementation loans under 
126.26  sections 103F.701 to 103F.761. 
126.27     Taxes levied with respect to payment of bonds and notes 
126.28  shall comply with section 475.61. 
126.29     Sec. 5.  Minnesota Statutes 1996, section 216B.16, is 
126.30  amended by adding a subdivision to read: 
126.31     Subd. 6d.  [WIND ENERGY; PROPERTY TAX.] The commission 
126.32  shall require a public utility that is purchasing electricity 
126.33  from a wind generation facility installed after June 1, 1991, 
126.34  and before December 31, 2002, to either:  (1) pay all property 
126.35  taxes on the facility directly to the county treasurer of the 
126.36  county in which the facility is located; or (2) pay to the owner 
127.1   of the facility the amount of property taxes due on the facility 
127.2   at least 15 days prior to the due dates under sections 277.01 
127.3   and 279.01.  The commission shall permit a public utility that 
127.4   is purchasing electricity from a wind generation facility 
127.5   installed after June 1, 1991, and before December 31, 2002, to 
127.6   recover in the public utility's rates all property tax payments 
127.7   made directly to the county or to the owner of the facility as 
127.8   provided in this subdivision. 
127.9      Sec. 6.  Minnesota Statutes 1996, section 272.02, 
127.10  subdivision 1, is amended to read: 
127.11     Subdivision 1.  All property described in this section to 
127.12  the extent herein limited shall be exempt from taxation: 
127.13     (1) All public burying grounds. 
127.14     (2) All public schoolhouses. 
127.15     (3) All public hospitals. 
127.16     (4) All academies, colleges, and universities, and all 
127.17  seminaries of learning. 
127.18     (5) All churches, church property, and houses of worship. 
127.19     (6) Institutions of purely public charity except parcels of 
127.20  property containing structures and the structures described in 
127.21  section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 
127.22  and (3), or paragraph (d), other than those that qualify for 
127.23  exemption under clause (25). 
127.24     (7) All public property exclusively used for any public 
127.25  purpose. 
127.26     (8) Except for the taxable personal property enumerated 
127.27  below, all personal property and the property described in 
127.28  section 272.03, subdivision 1, paragraphs (c) and (d), shall be 
127.29  exempt.  
127.30     The following personal property shall be taxable:  
127.31     (a) personal property which is part of an electric 
127.32  generating, transmission, or distribution system or a pipeline 
127.33  system transporting or distributing water, gas, crude oil, or 
127.34  petroleum products or mains and pipes used in the distribution 
127.35  of steam or hot or chilled water for heating or cooling 
127.36  buildings and structures; 
128.1      (b) railroad docks and wharves which are part of the 
128.2   operating property of a railroad company as defined in section 
128.3   270.80; 
128.4      (c) personal property defined in section 272.03, 
128.5   subdivision 2, clause (3); 
128.6      (d) leasehold or other personal property interests which 
128.7   are taxed pursuant to section 272.01, subdivision 2; 273.124, 
128.8   subdivision 7; or 273.19, subdivision 1; or any other law 
128.9   providing the property is taxable as if the lessee or user were 
128.10  the fee owner; 
128.11     (e) manufactured homes and sectional structures, including 
128.12  storage sheds, decks, and similar removable improvements 
128.13  constructed on the site of a manufactured home, sectional 
128.14  structure, park trailer or travel trailer as provided in section 
128.15  273.125, subdivision 8, paragraph (f); and 
128.16     (f) flight property as defined in section 270.071.  
128.17     (9) Personal property used primarily for the abatement and 
128.18  control of air, water, or land pollution to the extent that it 
128.19  is so used, and real property which is used primarily for 
128.20  abatement and control of air, water, or land pollution as part 
128.21  of an agricultural operation, as a part of a centralized 
128.22  treatment and recovery facility operating under a permit issued 
128.23  by the Minnesota pollution control agency pursuant to chapters 
128.24  115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
128.25  and 7045.0020 to 7045.1260, as a wastewater treatment facility 
128.26  and for the treatment, recovery, and stabilization of metals, 
128.27  oils, chemicals, water, sludges, or inorganic materials from 
128.28  hazardous industrial wastes, or as part of an electric 
128.29  generation system.  For purposes of this clause, personal 
128.30  property includes ponderous machinery and equipment used in a 
128.31  business or production activity that at common law is considered 
128.32  real property. 
128.33     Any taxpayer requesting exemption of all or a portion of 
128.34  any real property or any equipment or device, or part thereof, 
128.35  operated primarily for the control or abatement of air or water 
128.36  pollution shall file an application with the commissioner of 
129.1   revenue.  The equipment or device shall meet standards, rules, 
129.2   or criteria prescribed by the Minnesota pollution control 
129.3   agency, and must be installed or operated in accordance with a 
129.4   permit or order issued by that agency.  The Minnesota pollution 
129.5   control agency shall upon request of the commissioner furnish 
129.6   information or advice to the commissioner.  On determining that 
129.7   property qualifies for exemption, the commissioner shall issue 
129.8   an order exempting the property from taxation.  The equipment or 
129.9   device shall continue to be exempt from taxation as long as the 
129.10  permit issued by the Minnesota pollution control agency remains 
129.11  in effect. 
129.12     (10) Wetlands.  For purposes of this subdivision, 
129.13  "wetlands" means:  (i) land described in section 103G.005, 
129.14  subdivision 15a; (ii) land which is mostly under water, produces 
129.15  little if any income, and has no use except for wildlife or 
129.16  water conservation purposes, provided it is preserved in its 
129.17  natural condition and drainage of it would be legal, feasible, 
129.18  and economically practical for the production of livestock, 
129.19  dairy animals, poultry, fruit, vegetables, forage and grains, 
129.20  except wild rice; or (iii) land in a wetland preservation area 
129.21  under sections 103F.612 to 103F.616.  "Wetlands" under items (i) 
129.22  and (ii) include adjacent land which is not suitable for 
129.23  agricultural purposes due to the presence of the wetlands, but 
129.24  do not include woody swamps containing shrubs or trees, wet 
129.25  meadows, meandered water, streams, rivers, and floodplains or 
129.26  river bottoms.  Exemption of wetlands from taxation pursuant to 
129.27  this section shall not grant the public any additional or 
129.28  greater right of access to the wetlands or diminish any right of 
129.29  ownership to the wetlands. 
129.30     (11) Native prairie.  The commissioner of the department of
129.31  natural resources shall determine lands in the state which are 
129.32  native prairie and shall notify the county assessor of each 
129.33  county in which the lands are located.  Pasture land used for 
129.34  livestock grazing purposes shall not be considered native 
129.35  prairie for the purposes of this clause.  Upon receipt of an 
129.36  application for the exemption provided in this clause for lands 
130.1   for which the assessor has no determination from the 
130.2   commissioner of natural resources, the assessor shall refer the 
130.3   application to the commissioner of natural resources who shall 
130.4   determine within 30 days whether the land is native prairie and 
130.5   notify the county assessor of the decision.  Exemption of native 
130.6   prairie pursuant to this clause shall not grant the public any 
130.7   additional or greater right of access to the native prairie or 
130.8   diminish any right of ownership to it. 
130.9      (12) Property used in a continuous program to provide 
130.10  emergency shelter for victims of domestic abuse, provided the 
130.11  organization that owns and sponsors the shelter is exempt from 
130.12  federal income taxation pursuant to section 501(c)(3) of the 
130.13  Internal Revenue Code of 1986, as amended through December 31, 
130.14  1992, notwithstanding the fact that the sponsoring organization 
130.15  receives funding under section 8 of the United States Housing 
130.16  Act of 1937, as amended. 
130.17     (13) If approved by the governing body of the municipality 
130.18  in which the property is located, property not exceeding one 
130.19  acre which is owned and operated by any senior citizen group or 
130.20  association of groups that in general limits membership to 
130.21  persons age 55 or older and is organized and operated 
130.22  exclusively for pleasure, recreation, and other nonprofit 
130.23  purposes, no part of the net earnings of which inures to the 
130.24  benefit of any private shareholders; provided the property is 
130.25  used primarily as a clubhouse, meeting facility, or recreational 
130.26  facility by the group or association and the property is not 
130.27  used for residential purposes on either a temporary or permanent 
130.28  basis. 
130.29     (14) To the extent provided by section 295.44, real and 
130.30  personal property used or to be used primarily for the 
130.31  production of hydroelectric or hydromechanical power on a site 
130.32  owned by the state or a local governmental unit which is 
130.33  developed and operated pursuant to the provisions of section 
130.34  103G.535. 
130.35     (15) If approved by the governing body of the municipality 
130.36  in which the property is located, and if construction is 
131.1   commenced after June 30, 1983:  
131.2      (a) a "direct satellite broadcasting facility" operated by 
131.3   a corporation licensed by the federal communications commission 
131.4   to provide direct satellite broadcasting services using direct 
131.5   broadcast satellites operating in the 12-ghz. band; and 
131.6      (b) a "fixed satellite regional or national program service 
131.7   facility" operated by a corporation licensed by the federal 
131.8   communications commission to provide fixed satellite-transmitted 
131.9   regularly scheduled broadcasting services using satellites 
131.10  operating in the 6-ghz. band. 
131.11  An exemption provided by clause (15) shall apply for a period 
131.12  not to exceed five years.  When the facility no longer qualifies 
131.13  for exemption, it shall be placed on the assessment rolls as 
131.14  provided in subdivision 4.  Before approving a tax exemption 
131.15  pursuant to this paragraph, the governing body of the 
131.16  municipality shall provide an opportunity to the members of the 
131.17  county board of commissioners of the county in which the 
131.18  facility is proposed to be located and the members of the school 
131.19  board of the school district in which the facility is proposed 
131.20  to be located to meet with the governing body.  The governing 
131.21  body shall present to the members of those boards its estimate 
131.22  of the fiscal impact of the proposed property tax exemption.  
131.23  The tax exemption shall not be approved by the governing body 
131.24  until the county board of commissioners has presented its 
131.25  written comment on the proposal to the governing body or 30 days 
131.26  have passed from the date of the transmittal by the governing 
131.27  body to the board of the information on the fiscal impact, 
131.28  whichever occurs first. 
131.29     (16) Real and personal property owned and operated by a 
131.30  private, nonprofit corporation exempt from federal income 
131.31  taxation pursuant to United States Code, title 26, section 
131.32  501(c)(3), primarily used in the generation and distribution of 
131.33  hot water for heating buildings and structures.  
131.34     (17) Notwithstanding section 273.19, state lands that are 
131.35  leased from the department of natural resources under section 
131.36  92.46. 
132.1      (18) Electric power distribution lines and their 
132.2   attachments and appurtenances, that are used primarily for 
132.3   supplying electricity to farmers at retail.  
132.4      (19) Transitional housing facilities.  "Transitional 
132.5   housing facility" means a facility that meets the following 
132.6   requirements.  (i) It provides temporary housing to individuals, 
132.7   couples, or families.  (ii) It has the purpose of reuniting 
132.8   families and enabling parents or individuals to obtain 
132.9   self-sufficiency, advance their education, get job training, or 
132.10  become employed in jobs that provide a living wage.  (iii) It 
132.11  provides support services such as child care, work readiness 
132.12  training, and career development counseling; and a 
132.13  self-sufficiency program with periodic monitoring of each 
132.14  resident's progress in completing the program's goals.  (iv) It 
132.15  provides services to a resident of the facility for at least 
132.16  three months but no longer than three years, except residents 
132.17  enrolled in an educational or vocational institution or job 
132.18  training program.  These residents may receive services during 
132.19  the time they are enrolled but in no event longer than four 
132.20  years.  (v) It is owned and operated or under lease from a unit 
132.21  of government or governmental agency under a property 
132.22  disposition program and operated by one or more organizations 
132.23  exempt from federal income tax under section 501(c)(3) of the 
132.24  Internal Revenue Code of 1986, as amended through December 31, 
132.25  1992.  This exemption applies notwithstanding the fact that the 
132.26  sponsoring organization receives financing by a direct federal 
132.27  loan or federally insured loan or a loan made by the Minnesota 
132.28  housing finance agency under the provisions of either Title II 
132.29  of the National Housing Act or the Minnesota housing finance 
132.30  agency law of 1971 or rules promulgated by the agency pursuant 
132.31  to it, and notwithstanding the fact that the sponsoring 
132.32  organization receives funding under Section 8 of the United 
132.33  States Housing Act of 1937, as amended. 
132.34     (20) Real and personal property, including leasehold or 
132.35  other personal property interests, owned and operated by a 
132.36  corporation if more than 50 percent of the total voting power of 
133.1   the stock of the corporation is owned collectively by:  (i) the 
133.2   board of regents of the University of Minnesota, (ii) the 
133.3   University of Minnesota Foundation, an organization exempt from 
133.4   federal income taxation under section 501(c)(3) of the Internal 
133.5   Revenue Code of 1986, as amended through December 31, 1992, and 
133.6   (iii) a corporation organized under chapter 317A, which by its 
133.7   articles of incorporation is prohibited from providing pecuniary 
133.8   gain to any person or entity other than the regents of the 
133.9   University of Minnesota; which property is used primarily to 
133.10  manage or provide goods, services, or facilities utilizing or 
133.11  relating to large-scale advanced scientific computing resources 
133.12  to the regents of the University of Minnesota and others. 
133.13     (21)(a) Small scale wind energy conversion systems~~, as~~ 
133.14  ~~defined in section 216C.06, subdivision 12,~~ installed after 
133.15  January 1, 1991, and ~~before January 2, 1995, and~~ used as an 
133.16  electric power source~~,~~ are exempt.  ~~(b)~~ "Small scale wind energy 
133.17  conversion systems" are wind energy conversion systems, as 
133.18  defined in section 216C.06, subdivision 12, ~~installed after~~ 
133.19  ~~January 1, 1995,~~ including the foundation or support pad, which 
133.20  are (i) used as an electric power source; (ii) located within 
133.21  one county and owned by the same owner; and (iii) produce two 
133.22  megawatts or less of electricity as measured by nameplate 
133.23  ratings~~, are exempt~~. 
133.24     ~~(c)~~ (b) Medium scale wind energy conversion systems~~, as~~ 
133.25  ~~defined in section 216C.06, subdivision 12,~~ installed after 
133.26  January 1, ~~1995~~ 1991, ~~and used as an electric power source but~~ 
133.27  ~~not exempt under item (b),~~ are treated as follows:  (i) the 
133.28  foundation and support pad are taxable; (ii) the associated 
133.29  supporting and protective structures are exempt for the first 
133.30  five assessment years after they have been constructed, and 
133.31  thereafter, 30 percent of the market value of the associated 
133.32  supporting and protective structures are taxable; and (iii) the 
133.33  turbines, blades, transformers, and its related equipment, are 
133.34  exempt.  "Medium scale wind energy conversion systems" are wind 
133.35  energy conversion systems as defined in section 216C.06, 
133.36  subdivision 12, including the foundation or support pad, which 
134.1   are:  (i) used as an electric power source; (ii) located within 
134.2   one county and owned by the same owner; and (iii) produce more 
134.3   than two but equal to or less than 12 megawatts of energy as 
134.4   measured by nameplate ratings. 
134.5      (c) Large scale wind energy conversion systems installed 
134.6   after January 1, 1991, are treated as follows:  25 percent of 
134.7   the market value of all property is taxable, including (i) the 
134.8   foundation and support pad; (ii) the associated supporting and 
134.9   protective structures; and (iii) the turbines, blades, 
134.10  transformers, and its related equipment.  "Large scale wind 
134.11  energy conversion systems" are wind energy conversion systems as 
134.12  defined in section 216C.06, subdivision 12, including the 
134.13  foundation or support pad, which are:  (i) used as an electric 
134.14  power source; and (ii) produce more than 12 megawatts of energy 
134.15  as measured by nameplate ratings. 
134.16     (22) Containment tanks, cache basins, and that portion of 
134.17  the structure needed for the containment facility used to 
134.18  confine agricultural chemicals as defined in section 18D.01, 
134.19  subdivision 3, as required by the commissioner of agriculture 
134.20  under chapter 18B or 18C. 
134.21     (23) Photovoltaic devices, as defined in section 216C.06, 
134.22  subdivision 13, installed after January 1, 1992, and used to 
134.23  produce or store electric power. 
134.24     (24) Real and personal property owned and operated by a 
134.25  private, nonprofit corporation exempt from federal income 
134.26  taxation pursuant to United States Code, title 26, section 
134.27  501(c)(3), primarily used for an ice arena or ice rink, and used 
134.28  primarily for youth and high school programs. 
134.29     (25) A structure that is situated on real property that is 
134.30  used for: 
134.31     (i) housing for the elderly or for low- and moderate-income 
134.32  families as defined in Title II of the National Housing Act, as 
134.33  amended through December 31, 1990, and funded by a direct 
134.34  federal loan or federally insured loan made pursuant to Title II 
134.35  of the act; or 
134.36     (ii) housing lower income families or elderly or 
135.1   handicapped persons, as defined in Section 8 of the United 
135.2   States Housing Act of 1937, as amended. 
135.3      In order for a structure to be exempt under (i) or (ii), it 
135.4   must also meet each of the following criteria: 
135.5      (A) is owned by an entity which is operated as a nonprofit 
135.6   corporation organized under chapter 317A; 
135.7      (B) is owned by an entity which has not entered into a 
135.8   housing assistance payments contract under Section 8 of the 
135.9   United States Housing Act of 1937, or, if the entity which owns 
135.10  the structure has entered into a housing assistance payments 
135.11  contract under Section 8 of the United States Housing Act of 
135.12  1937, the contract provides assistance for less than 90 percent 
135.13  of the dwelling units in the structure, excluding dwelling units 
135.14  intended for management or maintenance personnel; 
135.15     (C) operates an on-site congregate dining program in which 
135.16  participation by residents is mandatory, and provides assisted 
135.17  living or similar social and physical support services for 
135.18  residents; and 
135.19     (D) was not assessed and did not pay tax under chapter 273 
135.20  prior to the 1991 levy, while meeting the other conditions of 
135.21  this clause. 
135.22     An exemption under this clause remains in effect for taxes 
135.23  levied in each year or partial year of the term of its permanent 
135.24  financing. 
135.25     (26) Real and personal property that is located in the 
135.26  Superior National Forest, and owned or leased and operated by a 
135.27  nonprofit organization that is exempt from federal income 
135.28  taxation under section 501(c)(3) of the Internal Revenue Code of 
135.29  1986, as amended through December 31, 1992, and primarily used 
135.30  to provide recreational opportunities for disabled veterans and 
135.31  their families. 
135.32     (27) Manure pits and appurtenances, which may include 
135.33  slatted floors and pipes, installed or operated in accordance 
135.34  with a permit, order, or certificate of compliance issued by the 
135.35  Minnesota pollution control agency.  The exemption shall 
135.36  continue for as long as the permit, order, or certificate issued 
136.1   by the Minnesota pollution control agency remains in effect. 
136.2      (28) Notwithstanding clause (8), item (a), attached 
136.3   machinery and other personal property which is part of a 
136.4   facility containing a cogeneration system as described in 
136.5   section 216B.166, subdivision 2, paragraph (a), if the 
136.6   cogeneration system has met the following criteria:  (i) the 
136.7   system utilizes natural gas as a primary fuel and the 
136.8   cogenerated steam initially replaces steam generated from 
136.9   existing thermal boilers utilizing coal; (ii) the facility 
136.10  developer is selected as a result of a procurement process 
136.11  ordered by the public utilities commission; and (iii) 
136.12  construction of the facility is commenced after July 1, 1994, 
136.13  and before July 1, 1997. 
136.14     (29) Real property acquired by a home rule charter city, 
136.15  statutory city, county, town, or school district under a lease 
136.16  purchase agreement or an installment purchase contract during 
136.17  the term of the lease purchase agreement as long as and to the 
136.18  extent that the property is used by the city, county, town, or 
136.19  school district and devoted to a public use and to the extent it 
136.20  is not subleased to any private individual, entity, association, 
136.21  or corporation in connection with a business or enterprise 
136.22  operated for profit. 
136.23     (30) Notwithstanding clause (8), item (a), attached 
136.24  machinery and other personal property that is part of a system 
136.25  that generates biomass electric energy that satisfies the 
136.26  mandate established in section 216B.2424 or energy produced from 
136.27  wood waste, as well as transmission lines exclusively used to 
136.28  transmit such energy. 
136.29     Sec. 7.  Minnesota Statutes 1996, section 273.11, 
136.30  subdivision 16, is amended to read: 
136.31     Subd. 16.  [VALUATION EXCLUSION FOR CERTAIN IMPROVEMENTS.] 
136.32  Improvements to homestead property made before January 2, 2003, 
136.33  shall be fully or partially excluded from the value of the 
136.34  property for assessment purposes provided that (1) the house is 
136.35  at least 35 years old at the time of the improvement and (2) 
136.36  either 
137.1      (a) the assessor's estimated market value of the house on 
137.2   January 2 of the current year is equal to or less than $150,000, 
137.3   or 
137.4      (b) if the estimated market value of the house is over 
137.5   $150,000 market value but is less than $300,000 on January 2 of 
137.6   the current year, the property qualifies if 
137.7      (i) it is located in a city or town in which 50 percent or 
137.8   more of the owner-occupied housing units were constructed before 
137.9   1960 based upon the 1990 federal census, and 
137.10     (ii) the city or town's median family income based upon the 
137.11  1990 federal census is less than the statewide median family 
137.12  income based upon the 1990 federal census, or 
137.13     (c) if the estimated market value of the house is $300,000 
137.14  or more on January 2 of the current year, the property qualifies 
137.15  if 
137.16     (i) it is located in a city or town in which 45 percent or 
137.17  more of the homes were constructed before 1940 based upon the 
137.18  1990 federal census, and 
137.19     (ii) it is located in a city or town in which 45 percent or 
137.20  more of the housing units were rental based upon the 1990 
137.21  federal census, and 
137.22     (iii) the city or town's median value of owner-occupied 
137.23  housing units based upon the 1990 federal census is less than 
137.24  the statewide median value of owner-occupied housing units based 
137.25  upon the 1990 federal census. 
137.26     For purposes of determining this eligibility, "house" means 
137.27  land and buildings.  
137.28     The age of a residence is the ~~number of years that the~~ 
137.29  ~~residence has existed at its present site~~ original year of its 
137.30  construction.  In the case of a residence that is relocated, the 
137.31  only improvements eligible for exclusion under this subdivision 
137.32  are (1) those for which building permits were issued to the 
137.33  homeowner after the residence was relocated to its present site, 
137.34  and (2) those undertaken during or after the year the residence 
137.35  is initially occupied by the homeowner, excluding any market 
137.36  value increase relating to basic improvements that are necessary 
138.1   to make the residence functional at its present site.  In the 
138.2   case of an owner-occupied duplex or triplex, the improvement is 
138.3   eligible regardless of which portion of the property was 
138.4   improved. 
138.5      If the property lies in a jurisdiction which is subject to 
138.6   a building permit process, a building permit must have been 
138.7   issued prior to commencement of the improvement.  Any 
138.8   improvement must add at least $1,000 to the value of the 
138.9   property to be eligible for exclusion under this subdivision.  
138.10  Only improvements to the structure which is the residence of the 
138.11  qualifying homesteader or construction of or improvements to no 
138.12  more than one two-car garage per residence qualify for the 
138.13  provisions of this subdivision.  If an improvement was begun 
138.14  between January 2, 1992, and January 2, 1993, any value added 
138.15  from that improvement for the January 1994 and subsequent 
138.16  assessments shall qualify for exclusion under this subdivision 
138.17  provided that a building permit was obtained for the improvement 
138.18  between January 2, 1992, and January 2, 1993.  Whenever a 
138.19  building permit is issued for property currently classified as 
138.20  homestead, the issuing jurisdiction shall notify the property 
138.21  owner of the possibility of valuation exclusion under this 
138.22  subdivision.  The assessor shall require an application, 
138.23  including documentation of the age of the house from the owner, 
138.24  if unknown by the assessor.  The application may be filed 
138.25  subsequent to the date of the building permit provided that the 
138.26  application must be filed within three years of the date the 
138.27  building permit was issued for the improvement.  If the property 
138.28  lies in a jurisdiction which is not subject to a building permit 
138.29  process, the application must be filed within three years of the 
138.30  date the improvement was made.  The assessor may require proof 
138.31  from the taxpayer of the date the improvement was made.  
138.32  Applications must be received prior to July 1 of any year in 
138.33  order to be effective for taxes payable in the following year. 
138.34     No exclusion may be granted for an improvement by a local 
138.35  board of review or county board of equalization and no abatement 
138.36  of the taxes for qualifying improvements may be granted by the 
139.1   county board unless (1) a building permit was issued prior to 
139.2   the commencement of the improvement if the jurisdiction requires 
139.3   a building permit, and (2) an application was completed. 
139.4      The assessor shall note the qualifying value of each 
139.5   improvement on the property's record, and the sum of those 
139.6   amounts shall be subtracted from the value of the property in 
139.7   each year for ten years after the improvement has been made, at 
139.8   which time an amount equal to 20 percent of the qualifying value 
139.9   shall be added back in each of the five subsequent assessment 
139.10  years.  If an application is filed after the first assessment 
139.11  date at which an improvement could have been subject to the 
139.12  valuation exclusion under this subdivision, the ten-year period 
139.13  during which the value is subject to exclusion is reduced by the 
139.14  number of years that have elapsed since the property would have 
139.15  qualified initially.  The valuation exclusion shall terminate 
139.16  whenever (1) the property is sold, or (2) the property is 
139.17  reclassified to a class which does not qualify for treatment 
139.18  under this subdivision.  Improvements made by an occupant who is 
139.19  the purchaser of the property under a conditional purchase 
139.20  contract do not qualify under this subdivision unless the seller 
139.21  of the property is a governmental entity.  The qualifying value 
139.22  of the property shall be computed based upon the increase from 
139.23  that structure's market value as of January 2 preceding the 
139.24  acquisition of the property by the governmental entity. 
139.25     The total qualifying value for a homestead may not exceed 
139.26  $50,000.  The total qualifying value for a homestead with a 
139.27  house that is less than 70 years old may not exceed $25,000.  
139.28  The term "qualifying value" means the increase in estimated 
139.29  market value resulting from the improvement if the improvement 
139.30  occurs when the house is at least 70 years old, or one-half of 
139.31  the increase in estimated market value resulting from the 
139.32  improvement otherwise.  The $25,000 and $50,000 maximum 
139.33  qualifying value under this subdivision may result from up to 
139.34  three separate improvements to the homestead.  The application 
139.35  shall state, in clear language, that if more than three 
139.36  improvements are made to the qualifying property, a taxpayer may 
140.1   choose which three improvements are eligible, provided that 
140.2   after the taxpayer has made the choice and any valuation 
140.3   attributable to those improvements has been excluded from 
140.4   taxation, no further changes can be made by the taxpayer. 
140.5      If 50 percent or more of the square footage of a structure 
140.6   is voluntarily razed or removed, the valuation increase 
140.7   attributable to any subsequent improvements to the remaining 
140.8   structure does not qualify for the exclusion under this 
140.9   subdivision.  If a structure is unintentionally or accidentally 
140.10  destroyed by a natural disaster, the property is eligible for an 
140.11  exclusion under this subdivision provided that the structure was 
140.12  not completely destroyed.  The qualifying value on property 
140.13  destroyed by a natural disaster shall be computed based upon the 
140.14  increase from that structure's market value as determined on 
140.15  January 2 of the year in which the disaster occurred.  A 
140.16  property receiving benefits under the homestead disaster 
140.17  provisions under section 273.123 is not disqualified from 
140.18  receiving an exclusion under this subdivision.  If any 
140.19  combination of improvements made to a structure after January 1, 
140.20  1993, increases the size of the structure by 100 percent or 
140.21  more, the valuation increase attributable to the portion of the 
140.22  improvement that causes the structure's size to exceed 100 
140.23  percent does not qualify for exclusion under this subdivision. 
140.24     Sec. 8.  Minnesota Statutes 1996, section 273.112, 
140.25  subdivision 1, is amended to read: 
140.26     Subdivision 1.  This section may be cited as the "Minnesota 
140.27  ~~open~~ recreational and social space property tax law."  
140.28     Sec. 9.  Minnesota Statutes 1996, section 273.112, 
140.29  subdivision 2, is amended to read: 
140.30     Subd. 2.  The present general system of ad valorem property 
140.31  taxation in the state of Minnesota does not provide an equitable 
140.32  basis for the taxation of certain private ~~outdoor~~ recreational, 
140.33  social, open space and park land property and has resulted in 
140.34  excessive taxes on some of these lands.  Therefore, it is hereby 
140.35  declared that the public policy of this state would be best 
140.36  served by equalizing tax burdens upon private ~~outdoor~~, 
141.1   recreational, social, open space and park land within this state 
141.2   through appropriate taxing measures to encourage private 
141.3   development of these lands which would otherwise not occur or 
141.4   have to be provided by governmental authority.  
141.5      Sec. 10.  Minnesota Statutes 1996, section 273.112, 
141.6   subdivision 3, is amended to read: 
141.7      Subd. 3.  Real estate shall be entitled to valuation and 
141.8   tax deferment under this section only if it is: 
141.9      (a) actively and exclusively devoted to golf, skiing, lawn 
141.10  bowling, croquet, or archery or firearms range recreational use 
141.11  or ~~uses and~~ other recreational or social uses carried on at the 
141.12  establishment; 
141.13     (b) five acres in size or more, except in the case of a 
141.14  lawn bowling or croquet green or an archery or firearms range or 
141.15  an establishment actively and exclusively devoted to indoor 
141.16  fitness, health, social, recreational, and related uses in which 
141.17  the establishment is owned and operated by a not-for-profit 
141.18  corporation; 
141.19     (c)(1) operated by private individuals or, in the case of a 
141.20  lawn bowling or croquet green, by private individuals or 
141.21  corporations, and open to the public; or 
141.22     (2) operated by firms or corporations for the benefit of 
141.23  employees or guests; or 
141.24     (3) operated by private clubs having a membership of 50 or 
141.25  more or open to the public, provided that the club does not 
141.26  discriminate in membership requirements or selection on the 
141.27  basis of sex or marital status; and 
141.28     (d) made available~~, in the case of real estate devoted to~~ 
141.29  ~~golf,~~ for use without discrimination on the basis of sex during 
141.30  the time when the facility is open to use by the public or by 
141.31  members, except that use for golf may be restricted on the basis 
141.32  of sex no more frequently than one, or part of one, weekend each 
141.33  calendar month for each sex and no more than two, or part of 
141.34  two, weekdays each week for each sex.  
141.35     If a golf club membership allows use of golf course 
141.36  facilities by more than one adult per membership, the use must 
142.1   be equally available to all adults entitled to use of the golf 
142.2   course under the membership, except that use may be restricted 
142.3   on the basis of sex as permitted in this section.  Memberships 
142.4   that permit play during restricted times may be allowed only if 
142.5   the restricted times apply to all adults using the membership.  
142.6   A golf club may not offer a membership or golfing privileges to 
142.7   a spouse of a member that provides greater or less access to the 
142.8   golf course than is provided to that person's spouse under the 
142.9   same or a separate membership in that club, except that the 
142.10  terms of a membership may provide that one spouse may have no 
142.11  right to use the golf course at any time while the other spouse 
142.12  may have either limited or unlimited access to the golf course.  
142.13     A golf club may have or create an individual membership 
142.14  category which entitles a member for a reduced rate to play 
142.15  during restricted hours as established by the club.  The club 
142.16  must have on record a written request by the member for such 
142.17  membership.  
142.18     A golf club that has food or beverage facilities or 
142.19  services must allow equal access to those facilities and 
142.20  services for both men and women members in all membership 
142.21  categories at all times.  Nothing in this paragraph shall be 
142.22  construed to require service or access to facilities to persons 
142.23  under the age of 21 years or require any act that would violate 
142.24  law or ordinance regarding sale, consumption, or regulation of 
142.25  alcoholic beverages. 
142.26     For purposes of this subdivision and subdivision 7a, 
142.27  discrimination means a pattern or course of conduct and not 
142.28  linked to an isolated incident. 
142.29     Sec. 11.  Minnesota Statutes 1996, section 273.112, 
142.30  subdivision 4, is amended to read: 
142.31     Subd. 4.  The value of any real estate described in 
142.32  subdivision 3 shall upon timely application by the owner, in the 
142.33  manner provided in subdivision 6, be determined solely with 
142.34  reference to its appropriate private ~~outdoor~~, 
142.35  recreational, social, open space and park land classification 
142.36  and value notwithstanding sections 272.03, subdivision 8, and 
143.1   273.11.  In determining such value for ad valorem tax purposes 
143.2   the assessor shall not consider the value such real estate would 
143.3   have if it were converted to commercial, industrial, residential 
143.4   or seasonal residential use. 
143.5      Sec. 12.  [273.1651] [TAXATION AND FORFEITURE OF STOCKPILED 
143.6   METALLIC MINERALS MATERIAL.] 
143.7      Subdivision 1.  [DEFINITION.] "Stockpiled metallic minerals 
143.8   material" for purposes of this section, means surface 
143.9   overburden, rock, lean ore, tailings, or other material that has 
143.10  been removed from the ground and deposited elsewhere on the 
143.11  surface in the process of iron ore, taconite, or other metallic 
143.12  minerals mining, or in the process of beneficiation.  Stockpiled 
143.13  metallic minerals material does not include processed metallic 
143.14  minerals concentrates in the form of pellets, chips, briquettes, 
143.15  fines, or other form, which have been prepared for or are in the 
143.16  process of shipment. 
143.17     Subd. 2.  [PURPOSE.] The purpose of this section is to 
143.18  clarify the ownership of stockpiled metallic minerals material 
143.19  in this state.  Depending on the intent of the person who 
143.20  extracted the material from the ground, stockpiled metallic 
143.21  minerals material may or may not be owned separately and apart 
143.22  from the fee title to the surface of the real property.  The 
143.23  legislature finds that the uncertainty of ownership of 
143.24  stockpiled metallic minerals material located on real property 
143.25  that becomes tax forfeited has created a burden on the public 
143.26  owner of the surface of the real property and an impediment to 
143.27  productive management or use of a public resource. 
143.28     Subd. 3.  [TAXATION AND FORFEITURE.] From and after the 
143.29  effective date of this section, for purposes of taxation, the 
143.30  definition of "real property," as contained in section 272.03, 
143.31  subdivision 1, includes stockpiled metallic minerals material.  
143.32  Nothing in this subdivision shall be construed to subject 
143.33  stockpiled metallic minerals material to the general property 
143.34  tax when the stockpiled metallic minerals material is exempt 
143.35  from the general property tax pursuant to section 298.015 or 
143.36  298.25.  If the surface of the real property forfeits for 
144.1   delinquent taxes, stockpiled metallic minerals material located 
144.2   on the real property forfeits with the surface of the property. 
144.3      Subd. 4.  [PRIOR FORFEITURE.] Stockpiled metallic minerals 
144.4   material located on real property that forfeited prior to the 
144.5   effective date of this section or forfeits due to a judgment for 
144.6   delinquent taxes issued prior to the effective date of this 
144.7   section shall be assessed and taxed as real property.  The tax 
144.8   applies only to stockpiled metallic minerals material located on 
144.9   real property that remains in the ownership of the state or a 
144.10  political subdivision of the state.  The tax shall be based on 
144.11  the market value of the rental of the property for storage of 
144.12  stockpiled metallic minerals material. 
144.13     Subd. 5.  [EXCEPTIONS; TAX LAWS.] (a) The tax imposed 
144.14  pursuant to this section shall not be imposed on the following: 
144.15     (1) stockpiled metallic minerals material valued and taxed 
144.16  under other laws relating to the taxation of minerals, gas, 
144.17  coal, oil, or other similar interests; 
144.18     (2) stockpiled metallic minerals material that is exempt 
144.19  from taxation pursuant to constitutional or related statutory 
144.20  provisions; or 
144.21     (3) stockpiled metallic minerals material that is owned by 
144.22  the state.  
144.23     (b) All laws for the enforcement of taxes on real property 
144.24  shall apply to the tax imposed pursuant to this section on 
144.25  stockpiled metallic minerals material. 
144.26     Subd. 6.  [FEE OWNER.] For purposes of section 276.041, the 
144.27  owner of stockpiled metallic minerals material is a fee owner. 
144.28     Sec. 13.  Minnesota Statutes 1996, section 281.13, is 
144.29  amended to read: 
144.30     281.13 [NOTICE OF EXPIRATION OF REDEMPTION.] 
144.31     Every person holding a tax certificate after expiration of 
144.32  three years, or the redemption period specified in section 
144.33  281.17 if shorter, after the date of the tax sale under which 
144.34  the same was issued, may present such certificate to the county 
144.35  auditor; and thereupon the auditor shall prepare, under the 
144.36  auditor's hand and official seal, a notice, directed to the 
145.1   person or persons in whose name such lands are assessed, 
145.2   specifying the description thereof, the amount for which the 
145.3   same was sold, the amount required to redeem the same, exclusive 
145.4   of the costs to accrue upon such notice, and the time when the 
145.5   redemption period will expire.  If, at the time when any tax 
145.6   certificate is so presented, such lands are assessed in the name 
145.7   of the holder of the certificate, such notice shall be directed 
145.8   also to the person or persons in whose name title in fee of such 
145.9   land appears of record in the office of the county recorder.  
145.10  The auditor shall deliver such notice to the party applying 
145.11  therefor, who shall deliver it to the sheriff of the proper 
145.12  county or any other person not less than 18 years of age for 
145.13  service.  Within 20 days after receiving it, the sheriff or 
145.14  other person serving the notice shall serve such notice upon the 
145.15  persons to whom it is directed, if to be found in the ~~sheriff's~~ 
145.16  county, in the manner prescribed for serving a summons in a 
145.17  civil action; if not so found, then upon the person in 
145.18  possession of the land, and make return thereof to the auditor.  
145.19  In the case of land held in joint tenancy the notice shall be 
145.20  served upon each joint tenant.  If one or more of the persons to 
145.21  whom the notice is directed cannot be found in the county, and 
145.22  there is no one in possession of the land, of each of which 
145.23  facts the return of the sheriff or other person serving the 
145.24  notice so specifying shall be prima facie evidence, service 
145.25  shall be made upon those persons that can be found and service 
145.26  shall also be made by two weeks' published notice, proof of 
145.27  which publication shall be filed with the auditor. 
145.28     When the records in the office of the county recorder show 
145.29  that any lot or tract of land is encumbered by an unsatisfied 
145.30  mortgage or other lien, and show the post office address of the 
145.31  mortgagee or lienee, or if the same has been assigned, the post 
145.32  office address of the assignee, the person holding such tax 
145.33  certificate shall serve a copy of such notice upon such 
145.34  mortgagee, lienee, or assignee by certified mail addressed to 
145.35  such mortgagee, lienee, or assignee at the post office address 
145.36  of the mortgagee, lienee, or assignee as disclosed by the 
146.1   records in the office of the county recorder, at least 60 days 
146.2   prior to the time when the redemption period will expire. 
146.3      The notice herein provided for shall be sufficient if 
146.4   substantially in the following form: 
146.5                 "NOTICE OF EXPIRATION OF REDEMPTION 
146.6      Office of the County Auditor 
146.7      County of ......................., State of Minnesota. 
146.8      To .............................. 
146.9      You are hereby notified that the following described piece 
146.10  or parcel of land, situated in the county of 
146.11  ......................., and State of Minnesota, and known and 
146.12  described as follows:  ......... 
146.13  ............................................................ 
146.14  .........., is now assessed in your name; that on the 
146.15  ........................ day of May, ....................., at 
146.16  the sale of land pursuant to the real estate tax judgment, duly 
146.17  given and made in and by the district court in and for said 
146.18  county of ......................................, on the 
146.19  ................................. day of March, .............., 
146.20  in proceedings to enforce the payment of taxes delinquent upon 
146.21  real estate for the year .............. for said county of 
146.22  ........... ......................., the above described piece 
146.23  or parcel of land was sold for the sum of $............., and 
146.24  the amount required to redeem such piece or parcel of land from 
146.25  such sale, exclusive of the cost to accrue upon this notice, is 
146.26  the sum of $............, and interest at the rate of 
146.27  ............... percent per annum from said 
146.28  ............................. day of ......................, 
146.29  ..................., to the day such redemption is made, and 
146.30  that the tax certificate has been presented to me by the holder 
146.31  thereof, and the time for redemption of such piece or parcel of 
146.32  land from such sale will expire 60 days after the service of 
146.33  this notice and proof thereof has been filed in my office. 
146.34     Witness my hand and official seal this 
146.35  ............................  day of ................, 
146.36  ................. 
147.1      ................. 
147.2      (OFFICIAL SEAL) 
147.3      County Auditor of 
147.4      ...................... County, Minnesota." 
147.5      Sec. 14.  Minnesota Statutes 1996, section 281.23, is 
147.6   amended by adding a subdivision to read: 
147.7      Subd. 5a.  [DEFINITION.] In this subdivision, "occupied 
147.8   parcel" means a parcel containing a structure subject to 
147.9   property taxation. 
147.10     Sec. 15.  Minnesota Statutes 1996, section 281.23, 
147.11  subdivision 6, is amended to read: 
147.12     Subd. 6.  [SERVICE ~~BY SHERIFF~~ OF NOTICE.] (a) Forthwith 
147.13  after the commencement of such publication or mailing the county 
147.14  auditor shall deliver to the sheriff of the county or any other 
147.15  person not less than 18 years of age a sufficient number of 
147.16  copies of such notice of expiration of redemption for service 
147.17  upon the persons in possession of all parcels of such land as 
147.18  are actually occupied and documentation if the certified mail 
147.19  notice was returned as undeliverable or the notice was not 
147.20  mailed to the address associated with the property.  Within 30 
147.21  days after receipt thereof, the sheriff or other person serving 
147.22  the notice shall make such investigation as may be necessary to 
147.23  ascertain whether or not the parcels covered by such notice are 
147.24  actually occupied ~~or not~~ parcels, and shall serve a copy of such 
147.25  notice of expiration of redemption upon the person in possession 
147.26  of each parcel found to be ~~so~~ an occupied parcel, in the manner 
147.27  prescribed for serving summons in a civil action.  The 
147.28  sheriff or other person serving the notice shall make prompt 
147.29  return to the auditor as to all notices so served and as to all 
147.30  parcels found vacant and unoccupied.  Such return shall be made 
147.31  upon a copy of such notice and shall be prima facie evidence of 
147.32  the facts therein stated. 
147.33     ~~Unless compensation for such services is otherwise provided~~ 
147.34  ~~by law,~~ If the notice is served by the sheriff, the sheriff 
147.35  shall receive from the county, in addition to other compensation 
147.36  prescribed by law, such fees and mileage for service on persons 
148.1   in possession as are prescribed by law for such service in other 
148.2   cases, and shall also receive such compensation for making 
148.3   investigation and return as to vacant and unoccupied lands as 
148.4   the county board may fix, subject to appeal to the district 
148.5   court as in case of other claims against the county.  As to 
148.6   either service upon persons in possession or return as to vacant 
148.7   lands, the sheriff shall charge mileage only for one trip if the 
148.8   occupants of more than two tracts are served simultaneously, and 
148.9   in such case mileage shall be prorated and charged equitably 
148.10  against all such owners. 
148.11     (b) The secretary of state shall receive sheriff's service 
148.12  for all out-of-state interests. 
148.13     Sec. 16.  Minnesota Statutes 1996, section 281.273, is 
148.14  amended to read: 
148.15     281.273 [EXPIRATION OF TIME OF REDEMPTION ON LANDS OWNED BY 
148.16  PERSONS IN MILITARY SERVICE.] 
148.17     When a county sheriff or other person serves notice of 
148.18  expiration of the time for redemption of any parcel of real 
148.19  property from delinquent taxes upon any occupant of the real 
148.20  property, the sheriff or other person shall inquire of the 
148.21  occupant and otherwise as the sheriff or other person may deem 
148.22  proper whether the real property was owned and occupied for 
148.23  dwelling, professional, business or agricultural purposes by a 
148.24  person in the military service of the United States as defined 
148.25  in the Soldiers' and Sailors' Civil Relief Act of 1940, as 
148.26  amended, or the person's dependents at the commencement of the 
148.27  period of military service.  On finding that the real property 
148.28  is so owned, the sheriff or other person shall make a 
148.29  certificate to the county auditor, setting forth the description 
148.30  of the property, the name of the owner, the particulars of the 
148.31  owner's military service so far as ascertained or claimed, and 
148.32  the names and addresses of the persons of whom the sheriff or 
148.33  other person made inquiry.  The certificate shall be filed with 
148.34  the county auditor and shall be prima facie evidence of the 
148.35  facts stated.  If the real property described in the certificate 
148.36  becomes forfeited to the state, it shall be withheld from sale 
149.1   or conveyance as tax-forfeited property in accordance with and 
149.2   subject to the provisions of the Soldiers' and Sailors' Civil 
149.3   Relief Act of 1940, as amended, except that the requirement in 
149.4   United States Code, title 50, section 560, that the property be 
149.5   occupied by the dependent or employee of the person in military 
149.6   service does not apply.  The period of withholding from sale or 
149.7   conveyance shall be no longer than is required by that act.  If 
149.8   upon further investigation the sheriff or other person finds at 
149.9   any time that the certificate is erroneous in any particular, 
149.10  the sheriff or other person shall file a supplemental 
149.11  certificate referring to the matter in error and stating the 
149.12  facts as found.  The supplemental certificate shall be prima 
149.13  facie evidence of the facts stated, and shall supersede any 
149.14  prior certificate so far as in conflict therewith.  If it 
149.15  appears from the supplemental certificate that the owner of the 
149.16  real property affected is not entitled to have the same withheld 
149.17  from sale under the Soldiers' and Sailors' Civil Relief Act of 
149.18  1940, as amended, the property shall not be withheld from sale 
149.19  further under this section.  
149.20     Sec. 17.  Minnesota Statutes 1996, section 281.276, is 
149.21  amended to read: 
149.22     281.276 [RETURN ~~OF SHERIFF~~ MUST SHOW MILITARY SERVICE.] 
149.23     Unless a ~~sheriff's~~ certificate showing military service is 
149.24  filed as required by section 281.273, it shall be presumed that 
149.25  the owner of the property described in the notice of expiration 
149.26  of the time for redemption from delinquent taxes is not in such 
149.27  service.  The filing of the ~~sheriff's~~ certificate provided for 
149.28  in section 281.273 shall not affect the forfeiture of the real 
149.29  property described in such notice of the expiration of the time 
149.30  for redemption from delinquent taxes or their proceedings 
149.31  relating thereto except as expressly herein provided. 
149.32     Sec. 18.  Minnesota Statutes 1996, section 282.01, 
149.33  subdivision 8, is amended to read: 
149.34     Subd. 8.  [MINERALS IN TAX-FORFEITED LAND AND TAX-FORFEITED 
149.35  STOCKPILED METALLIC MINERALS MATERIAL SUBJECT TO MINING; 
149.36  PROCEDURES.] In case the commissioner of natural resources shall 
150.1   notify the county auditor of any county in writing that the 
150.2   minerals in any tax-forfeited land or tax-forfeited stockpiled 
150.3   metallic minerals material located on tax-forfeited land in such 
150.4   county have been designated as a mining unit as provided by law, 
150.5   or that such minerals or tax-forfeited stockpiled metallic 
150.6   minerals material are subject to a mining permit or lease issued 
150.7   therefor as provided by law, the surface of such tax-forfeited 
150.8   land shall be subject to disposal and use for mining purposes 
150.9   pursuant to such designation, permit, or lease, and shall be 
150.10  withheld from sale or lease by the county auditor until the 
150.11  commissioner shall notify the county auditor that such land has 
150.12  been removed from the list of mining units or that any mining 
150.13  permit or lease theretofore issued thereon is no longer in 
150.14  force; provided, that the surface of such tax-forfeited land may 
150.15  be leased by the county auditor as provided by law, with the 
150.16  written approval of the commissioner, subject to disposal and 
150.17  use for mining purposes as herein provided and to any special 
150.18  conditions relating thereto that the commissioner may prescribe, 
150.19  also subject to cancellation for mining purposes on three months 
150.20  written notice from the commissioner to the county auditor. 
150.21     Sec. 19.  Minnesota Statutes 1996, section 282.04, 
150.22  subdivision 1, is amended to read: 
150.23     Subdivision 1.  [TIMBER SALES; LAND LEASES AND USES.] (a) 
150.24  The county auditor may sell timber upon any tract that may be 
150.25  approved by the natural resources commissioner.  Such sale of 
150.26  timber shall be made for cash at not less than the appraised 
150.27  value determined by the county board to the highest bidder after 
150.28  not less than one week's published notice in an official paper 
150.29  within the county.  Any timber offered at such public sale and 
150.30  not sold may thereafter be sold at private sale by the county 
150.31  auditor at not less than the appraised value thereof, until such 
150.32  time as the county board may withdraw such timber from sale.  
150.33  The appraised value of the timber and the forestry practices to 
150.34  be followed in the cutting of said timber shall be approved by 
150.35  the commissioner of natural resources.  
150.36     (b) Payment of the full sale price of all timber sold on 
151.1   tax-forfeited lands shall be made in cash at the time of the 
151.2   timber sale, except in the case of oral or sealed bid auction 
151.3   sales, the down payment shall be no less than 15 percent of the 
151.4   appraised value, and the balance shall be paid prior to entry.  
151.5   In the case of auction sales that are partitioned and sold as a 
151.6   single sale with predetermined cutting blocks, the down payment 
151.7   shall be no less than 15 percent of the appraised price of the 
151.8   entire timber sale which may be held until the satisfactory 
151.9   completion of the sale or applied in whole or in part to the 
151.10  final cutting block.  The value of each separate block must be 
151.11  paid in full before any cutting may begin in that block.  With 
151.12  the permission of the county administrator the purchaser may 
151.13  enter unpaid blocks and cut necessary timber incidental to 
151.14  developing logging roads as may be needed to log other blocks 
151.15  provided that no timber may be removed from an unpaid block 
151.16  until separately scaled and paid for.  
151.17     (c) The county board may require final settlement on the 
151.18  basis of a scale of cut products.  Any parcels of land from 
151.19  which timber is to be sold by scale of cut products shall be so 
151.20  designated in the published notice of sale above mentioned, in 
151.21  which case the notice shall contain a description of such 
151.22  parcels, a statement of the estimated quantity of each species 
151.23  of timber thereon and the appraised price of each specie of 
151.24  timber for 1,000 feet, per cord or per piece, as the case may 
151.25  be.  In such cases any bids offered over and above the appraised 
151.26  prices shall be by percentage, the percent bid to be added to 
151.27  the appraised price of each of the different species of timber 
151.28  advertised on the land.  The purchaser of timber from such 
151.29  parcels shall pay in cash at the time of sale at the rate bid 
151.30  for all of the timber shown in the notice of sale as estimated 
151.31  to be standing on the land, and in addition shall pay at the 
151.32  same rate for any additional amounts which the final scale shows 
151.33  to have been cut or was available for cutting on the land at the 
151.34  time of sale under the terms of such sale.  Where the final 
151.35  scale of cut products shows that less timber was cut or was 
151.36  available for cutting under terms of such sale than was 
152.1   originally paid for, the excess payment shall be refunded from 
152.2   the forfeited tax sale fund upon the claim of the purchaser, to 
152.3   be audited and allowed by the county board as in case of other 
152.4   claims against the county.  No timber, except hardwood pulpwood, 
152.5   may be removed from such parcels of land or other designated 
152.6   landings until scaled by a person or persons designated by the 
152.7   county board and approved by the commissioner of natural 
152.8   resources.  Landings other than the parcel of land from which 
152.9   timber is cut may be designated for scaling by the county board 
152.10  by written agreement with the purchaser of the timber.  The 
152.11  county board may, by written agreement with the purchaser and 
152.12  with a consumer designated by the purchaser when the timber is 
152.13  sold by the county auditor, and with the approval of the 
152.14  commissioner of natural resources, accept the consumer's scale 
152.15  of cut products delivered at the consumer's landing.  No timber 
152.16  shall be removed until fully paid for in cash.  Small amounts of 
152.17  timber not exceeding $3,000 in appraised valuation may be sold 
152.18  for not less than the full appraised value at private sale to 
152.19  individual persons without first publishing notice of sale or 
152.20  calling for bids, provided that in case of such sale involving a 
152.21  total appraised value of more than $200 the sale shall be made 
152.22  subject to final settlement on the basis of a scale of cut 
152.23  products in the manner above provided and not more than two such 
152.24  sales, directly or indirectly to any individual shall be in 
152.25  effect at one time. 
152.26     (d) As directed by the county board, the county auditor may 
152.27  lease tax-forfeited land to individuals, corporations or 
152.28  organized subdivisions of the state at public or private vendue, 
152.29  and at such prices and under such terms as the county board may 
152.30  prescribe, for use as cottage and camp sites and for 
152.31  agricultural purposes and for the purpose of taking and removing 
152.32  of hay, stumpage, sand, gravel, clay, rock, marl, and black dirt 
152.33  therefrom, and for garden sites and other temporary uses 
152.34  provided that no leases shall be for a period to exceed ten 
152.35  years; provided, further that any leases involving a 
152.36  consideration of more than $1,500 per year, except to an 
153.1   organized subdivision of the state shall first be offered at 
153.2   public sale in the manner provided herein for sale of timber.  
153.3   Upon the sale of any such leased land, it shall remain subject 
153.4   to the lease for not to exceed one year from the beginning of 
153.5   the term of the lease.  Any rent paid by the lessee for the 
153.6   portion of the term cut off by such cancellation shall be 
153.7   refunded from the forfeited tax sale fund upon the claim of the 
153.8   lessee, to be audited and allowed by the county board as in case 
153.9   of other claims against the county. 
153.10     (e) As directed by the county board, the county auditor may 
153.11  lease tax-forfeited land to individuals, corporations, or 
153.12  organized subdivisions of the state at public or private vendue, 
153.13  at such prices and under such terms as the county board may 
153.14  prescribe, for the purpose of taking and removing for use for 
153.15  road construction and other purposes tax-forfeited stockpiled 
153.16  iron-bearing material.  The county auditor must determine that 
153.17  the material is needed and suitable for use in the construction 
153.18  or maintenance of a road, tailings basin, settling basin, dike, 
153.19  dam, bank fill, or other works on public or private property, 
153.20  and that the use would be in the best interests of the public.  
153.21  No lease shall exceed ten years.  The use of a stockpile for 
153.22  these purposes must first be approved by the commissioner of 
153.23  natural resources.  The request shall be deemed approved unless 
153.24  the requesting county is notified to the contrary by the 
153.25  commissioner of natural resources within six months after 
153.26  receipt of a request for approval for use of a stockpile.  Once 
153.27  use of a stockpile has been approved, the county may continue to 
153.28  lease it for these purposes until approval is withdrawn by the 
153.29  commissioner of natural resources. 
153.30     (f) The county auditor, with the approval of the county 
153.31  board is authorized to grant permits, licenses, and leases to 
153.32  tax-forfeited lands for the depositing of stripping, lean ores, 
153.33  tailings, or waste products from mines or ore milling plants, 
153.34  upon such conditions and for such consideration and for such 
153.35  period of time, not exceeding 15 years, as the county board may 
153.36  determine; said permits, licenses, or leases to be subject to 
154.1   approval by the commissioner of natural resources. 
154.2      (g) Any person who removes any timber from tax-forfeited 
154.3   land before said timber has been scaled and fully paid for as 
154.4   provided in this subdivision is guilty of a misdemeanor. 
154.5      (h) The county auditor may, with the approval of the county 
154.6   board, and without first offering at public sale, grant leases, 
154.7   for a term not exceeding 25 years, for the removal of peat from 
154.8   tax-forfeited lands upon such terms and conditions as the county 
154.9   board may prescribe.  Any lease for the removal of peat from 
154.10  tax-forfeited lands must first be reviewed and approved by the 
154.11  commissioner of natural resources if the lease covers 320 or 
154.12  more acres.  No lease for the removal of peat shall be made by 
154.13  the county auditor pursuant to this section without first 
154.14  holding a public hearing on the auditor's intention to lease.  
154.15  One printed notice in a legal newspaper in the county at least 
154.16  ten days before the hearing, and posted notice in the courthouse 
154.17  at least 20 days before the hearing shall be given of the 
154.18  hearing. 
154.19     Sec. 20.  Minnesota Statutes 1996, section 373.40, 
154.20  subdivision 7, is amended to read: 
154.21     Subd. 7.  [REPEALER.] This section is repealed effective 
154.22  for bonds issued after July 1, ~~1998~~ 2003, but continues to apply 
154.23  to bonds issued before that date. 
154.24     Sec. 21.  Minnesota Statutes 1996, section 375.192, 
154.25  subdivision 2, is amended to read: 
154.26     Subd. 2.  [PROCEDURE, CONDITIONS.] Upon written application 
154.27  by the owner of any property, the county board may grant the 
154.28  reduction or abatement of estimated market valuation or taxes 
154.29  and of any costs, penalties, or interest on them as the board 
154.30  deems just and equitable and order the refund in whole or part 
154.31  of any taxes, costs, penalties, or interest which have been 
154.32  erroneously or unjustly paid.  No reduction or abatement may be 
154.33  granted on the basis of providing an incentive for economic 
154.34  development or redevelopment.  Except as provided in section 
154.35  375.194, the county board is authorized to consider and grant 
154.36  reductions or abatements on applications only as they relate to 
155.1   taxes payable in the current year and the two prior years; 
155.2   provided that reductions or abatements for the two prior years 
155.3   shall be considered or granted only for (i) clerical errors, or 
155.4   (ii) when the taxpayer fails to file for a reduction or an 
155.5   adjustment due to hardship, as determined by the county board.  
155.6   The application must include the social security number of the 
155.7   applicant.  The social security number is private data on 
155.8   individuals as defined by section 13.02, subdivision 12.  All 
155.9   applications must be approved by the county assessor, or, if the 
155.10  property is located in a city of the first or second class 
155.11  having a city assessor, by the city assessor, and by the county 
155.12  auditor before consideration by the county board, except that 
155.13  the part of the application which is for the abatement of 
155.14  penalty or interest must be approved by the county treasurer and 
155.15  county auditor.  Approval by the county or city assessor is not 
155.16  required for abatements of penalty or interest.  No reduction, 
155.17  abatement, or refund of any special assessments made or levied 
155.18  by any municipality for local improvements shall be made unless 
155.19  it is also approved by the board of review or similar taxing 
155.20  authority of the municipality.  Before taking action on any 
155.21  reduction or abatement where the reduction of taxes, costs, 
155.22  penalties, and interest exceed $10,000, the county board shall 
155.23  give 20 days' notice to the school board and the municipality in 
155.24  which the property is located.  The notice must describe the 
155.25  property involved, the actual amount of the reduction being 
155.26  sought, and the reason for the reduction.  If the school board 
155.27  or the municipality object to the granting of the reduction or 
155.28  abatement, the county board must refer the abatement or 
155.29  reduction to the commissioner of revenue with its 
155.30  recommendation.  The commissioner shall consider the abatement 
155.31  or reduction under section 270.07, subdivision 1.  
155.32     An appeal may not be taken to the tax court from any order 
155.33  of the county board made in the exercise of the discretionary 
155.34  authority granted in this section.  
155.35     The county auditor shall notify the commissioner of revenue 
155.36  of all abatements resulting from the erroneous classification of 
156.1   real property, for tax purposes, as nonhomestead property.  For 
156.2   the abatements relating to the current year's tax processed 
156.3   through June 30, the auditor shall notify the commissioner on or 
156.4   before July 31 of that same year of all abatement applications 
156.5   granted.  For the abatements relating to the current year's tax 
156.6   processed after June 30 through the balance of the year, the 
156.7   auditor shall notify the commissioner on or before the following 
156.8   January 31 of all applications granted.  The county auditor 
156.9   shall submit a form containing the social security number of the 
156.10  applicant and such other information the commissioner prescribes.
156.11     Sec. 22.  Minnesota Statutes 1996, section 465.71, is 
156.12  amended to read: 
156.13     465.71 [INSTALLMENT AND LEASE PURCHASES; CITIES; COUNTIES; 
156.14  SCHOOL DISTRICTS.] 
156.15     A home rule charter city, statutory city, county, town, or 
156.16  school district may purchase personal property under an 
156.17  installment contract, or lease real or personal property with an 
156.18  option to purchase under a lease-purchase agreement, by which 
156.19  contract or agreement title is retained by the seller or vendor 
156.20  or assigned to a third party as security for the purchase price, 
156.21  including interest, if any, but such purchases are subject to 
156.22  statutory and charter provisions applicable to the purchase of 
156.23  real or personal property.  For purposes of the bid requirements 
156.24  contained in section 471.345, "the amount of the contract" shall 
156.25  include the total of all lease payments for the entire term of 
156.26  the lease under a lease-purchase agreement.  The obligation 
156.27  created by a lease-purchase agreement for personal property or a 
156.28  lease-purchase agreement for real property if the amount of the 
156.29  contract for purchase of the real property is less than 
156.30  $1,000,000 shall not be included in the calculation of net debt 
156.31  for purposes of section 475.53, and shall not constitute debt 
156.32  under any other statutory provision.  No election shall be 
156.33  required in connection with the execution of a lease-purchase 
156.34  agreement authorized by this section.  The city, county, town, 
156.35  or school district must have the right to terminate a lease- 
156.36  purchase agreement at the end of any fiscal year during its term.
157.1      Sec. 23.  Minnesota Statutes 1996, section 465.81, 
157.2   subdivision 1, is amended to read: 
157.3      Subdivision 1.  [SCOPE.] Sections 465.81 to 465.87 
157.4   establish procedures to be used by counties, cities, or towns 
157.5   that adopt by resolution an agreement providing a plan to 
157.6   provide combined services during an initial cooperation period 
157.7   that may not exceed two years and then: 
157.8      (1) to merge into a single unit of government over the 
157.9   succeeding two-year period; or 
157.10     (2) to agree to apportion the entire area of at least one 
157.11  local government unit between or among two or more local 
157.12  government units contiguous to the unit to be apportioned, 
157.13  resulting in the elimination of at least one local government 
157.14  unit over the succeeding two years.  
157.15     Sec. 24.  Minnesota Statutes 1996, section 465.81, 
157.16  subdivision 3, is amended to read: 
157.17     Subd. 3.  [COMBINATION REQUIREMENTS.] Counties may combine 
157.18  with one or more other counties.  Cities may combine with one or 
157.19  more other cities or with one or more towns.  Towns may combine 
157.20  with one or more other towns or with one or more cities.  Units 
157.21  that combine must be contiguous.  A county, through the adoption 
157.22  of a resolution by all county boards that are affected by the 
157.23  combination, may apportion its territory between or among two or 
157.24  more counties contiguous to the county that is to be 
157.25  apportioned.  A city, through the adoption of a resolution by 
157.26  all city councils that are affected by the combination, may 
157.27  apportion its territory between or among two or more cities 
157.28  contiguous to the city that is to be apportioned.  A township, 
157.29  through the adoption of a resolution by all town boards or city 
157.30  councils that are affected by the combination, may apportion its 
157.31  territory between or among two or more townships or cities 
157.32  contiguous to the township that is to be apportioned. 
157.33     Sec. 25.  Minnesota Statutes 1996, section 465.82, 
157.34  subdivision 1, is amended to read: 
157.35     Subdivision 1.  [ADOPTION AND STATE AGENCY REVIEW.] Each 
157.36  governing body that proposes to ~~combine~~ take part in a 
158.1   combination under sections 465.81 to 465.87 must ~~adopt~~ by 
158.2   resolution adopt a plan for cooperation and combination.  The 
158.3   plan must address each item in this section.  The plan must be 
158.4   specific for any item that will occur within three years and may 
158.5   be general or set forth alternative proposals for an item that 
158.6   will occur more than three years in the future.  The plan must 
158.7   be submitted to the board of government innovation and 
158.8   cooperation for review and comment.  For a metropolitan area 
158.9   local government unit, the plan must also be submitted to the 
158.10  metropolitan council for review and comment.  The council may 
158.11  point out any resources or technical assistance it may be able 
158.12  to provide a governing body submitting a plan under this 
158.13  subdivision.  Significant modifications and specific resolutions 
158.14  of items must be submitted to the board and council, if 
158.15  appropriate, for review and comment.  In the official newspaper 
158.16  of each local government unit ~~proposed for~~ proposing to take 
158.17  part in the combination, the governing body ~~must~~ shall publish 
158.18  at least a summary of the adopted plans, each significant 
158.19  modification and resolution of items, and, if appropriate, the 
158.20  results of each board and council~~, if appropriate,~~ review and 
158.21  comment.  If a territory of a unit is to be apportioned between 
158.22  or among two or more units contiguous to the unit that is to be 
158.23  apportioned, the plan must specify the area that will become a 
158.24  part of each remaining unit. 
158.25     Sec. 26.  Minnesota Statutes 1996, section 465.82, 
158.26  subdivision 2, is amended to read: 
158.27     Subd. 2.  [CONTENTS OF PLAN.] The plan must state:  
158.28     (1) the specific cooperative activities the units will 
158.29  engage in during the first two years of the venture; 
158.30     (2) the steps to be taken to effect the merger of the 
158.31  governmental units, with completion no later than four years 
158.32  after the process begins; 
158.33     (3) the steps by which a single governing body will be 
158.34  created or, when the entire territory of a unit will be 
158.35  apportioned between or among two or more units contiguous to the 
158.36  unit that is to be apportioned, the steps to be taken by the 
159.1   governing bodies of the remaining units to provide for 
159.2   representation of the residents of the apportioned unit; 
159.3      (4) changes in services provided, facilities used, and 
159.4   administrative operations and staffing required to effect the 
159.5   preliminary cooperative activities and the final merger, and a 
159.6   two-, five-, and ten-year projection of expenditures for each 
159.7   unit if it combined and if it remained separate; 
159.8      (5) treatment of employees of the merging governmental 
159.9   units, specifically including provisions for reassigning 
159.10  employees, dealing with ~~unions~~ exclusive representatives, and 
159.11  providing financial incentives to encourage early retirements; 
159.12     (6) financial arrangements for the merger, specifically 
159.13  including responsibility for debt service on outstanding 
159.14  obligations of the merging ~~entities~~ units; 
159.15     (7) one- and two-year impact ~~analysis~~ analyses, prepared by 
159.16  the granting state agency at the request of the local government 
159.17  unit, of major state aid revenues received for each unit if it 
159.18  combined and if it remained separate~~.  This would also include~~, 
159.19  including an impact analysis, prepared by the department of 
159.20  revenue, of any property tax revenue implications~~, if any,~~ 
159.21  associated with tax increment financing districts and fiscal 
159.22  disparities under chapter 276A or 473F resulting from the 
159.23  merger; 
159.24     (8) procedures for a referendum to be held before the 
159.25  proposed combination to approve combining the local government 
159.26  units, specifically stating whether a majority of those voting 
159.27  in each district proposed for combination or a majority of those 
159.28  voting on the question in the entire area proposed for 
159.29  combination ~~would be~~ is needed to pass the referendum; and 
159.30     (9) a time schedule for implementation. 
159.31     Notwithstanding clause (3) or any other law to the 
159.32  contrary, all current members of the governing bodies of the 
159.33  local ~~governmental~~ government units that propose to combine 
159.34  under sections 465.81 to 465.88 may serve on the initial 
159.35  governing body of the combined unit until a gradual reduction in 
159.36  membership is achieved by foregoing election of new members when 
160.1   terms expire until the number permitted by other law is reached. 
160.2      Sec. 27.  Minnesota Statutes 1996, section 465.82, is 
160.3   amended by adding a subdivision to read: 
160.4      Subd. 3.  [INTERIM GOVERNING BODY.] The plan for 
160.5   cooperation and combination adopted in accordance with 
160.6   subdivision 1 may establish an interim governing body to act on 
160.7   behalf of the new local government unit before the effective 
160.8   date of the combination.  If established, the interim governing 
160.9   body must consist of at least a majority of the elected 
160.10  officials from each local government unit taking part in the 
160.11  combination.  If the plan establishes an interim governing body, 
160.12  the governing body of each unit taking part in the combination 
160.13  shall appoint its representatives to serve on the interim 
160.14  governing body.  An interim governing body may not take any 
160.15  official action on behalf of the new local government unit 
160.16  before approval of the combination through the referendum 
160.17  required by section 465.84.  After approval of the combination 
160.18  through the referendum, and before the effective date of the 
160.19  combination, an interim governing body may exercise all 
160.20  statutory authority of the governing body of the new local 
160.21  government unit, including the authority to enter into contracts 
160.22  and adopt policies and local ordinances. 
160.23     Sec. 28.  Minnesota Statutes 1996, section 465.87, 
160.24  subdivision 1a, is amended to read: 
160.25     Subd. 1a.  [ADDITIONAL ELIGIBILITY.] A local government 
160.26  unit is eligible to apply for aid under this section if it has 
160.27  combined with another unit of government in accordance with any 
160.28  process within chapter 414 that results in the elimination of at 
160.29  least one local government unit and a copy of the municipal 
160.30  board's order or orders combining the ~~two~~ units of government is 
160.31  forwarded to the board.  If the municipal board issues two or 
160.32  more orders within 30 days for the annexation of the area of an 
160.33  entire township by two or more cities contiguous to the 
160.34  township, the cities subject to the board's order are eligible 
160.35  to receive pro rata shares, on the basis of their populations, 
160.36  of the total amount of cooperation and combination aid all 
161.1   participating units of government would be eligible to receive 
161.2   under subdivision 2.  If two units of government cooperate in 
161.3   the orderly annexation of the entire area of a third unit of 
161.4   government which has a population of at least 8,000 people, the 
161.5   two units of government are each eligible for the amount of aid 
161.6   specified in subdivision 2.  
161.7      Sec. 29.  Minnesota Statutes 1996, section 465.87, 
161.8   subdivision 2, is amended to read: 
161.9      Subd. 2.  [AMOUNT OF AID.] The annual amount of aid to be 
161.10  paid to each eligible local government unit may not exceed the 
161.11  following per capita amounts, based on the combined population 
161.12  of the units, as estimated by the state demographer, or 
161.13  $100,000, whichever is less. 
161.14        Combined Population                   Aid
161.15         after Combination                 Per Capita
161.16               0 -  2,500                     $25 
161.17           2,500 -  5,000                      20 
161.18           5,000 - 20,000                      15
161.19              over 20,000                      10
161.20  If two or more units are eligible for a single award under this 
161.21  subdivision, the award must be divided among the units in pro 
161.22  rata shares based on each unit's population.  Payments must be 
161.23  made on the dates provided for payments of local government aid 
161.24  under section 477A.013, beginning in the year during which 
161.25  substantial cooperative activities under the plan initially 
161.26  occur, unless those activities begin after July 1, in which case 
161.27  the initial aid payment must be made in the following calendar 
161.28  year.  Payments to a local government unit that qualifies for 
161.29  aid under subdivision 1a must be made on the dates provided for 
161.30  payments of local government aids under section 477A.013, 
161.31  beginning in the calendar year during which a combination in any 
161.32  form is expected to be ordered by the Minnesota municipal board 
161.33  as evidenced in a resolution adopted by July 1 by the affected 
161.34  local government units declaring their intent to combine.  The 
161.35  resolutions must certify that the combination agreement 
161.36  addressing all issues relative to the combination is 
162.1   substantially complete.  The total amount of aid paid may not 
162.2   exceed the amount appropriated to the board for purposes of this 
162.3   section. 
162.4      Sec. 30.  Minnesota Statutes 1996, section 465.88, is 
162.5   amended to read: 
162.6      465.88 [PLANNING AID FOR CONSOLIDATION STUDIES.] 
162.7      Two or more local units of government with a combined 
162.8   population of ~~2,500~~ 15,000 or less based on the most recent 
162.9   decennial census may apply to the board for aid to assist in the 
162.10  study of a possible consolidation or combination.  To be 
162.11  eligible for receipt of aid under this section, the ~~two~~ local 
162.12  units of government must be subject to a municipal board ~~motion~~ 
162.13  proceeding to form a consolidation commission under section 
162.14  414.041, subdivision 2, or the governing bodies of the local 
162.15  units of government must have approved a resolution expressing 
162.16  their intent to develop and submit a combination plan for 
162.17  consideration by the board.  The application must be on a form 
162.18  prescribed by the board and must provide a proposed budget 
162.19  detailing how the requested aid ~~shall~~ is to be used.  The 
162.20  governing bodies of the local units of government ~~must~~ shall 
162.21  also approve resolutions certifying that the requested aid is 
162.22  essential for paying a portion of the costs associated with the 
162.23  consolidation or combination study.  The board may grant up to 
162.24  $10,000 in aid for each application received.  Two or more local 
162.25  government units with a combined population of at least 2,500 
162.26  but not greater than 15,000, based on the most recent decennial 
162.27  census, must agree to provide at least $1 for the study of a 
162.28  possible consolidation or combination for each dollar of aid 
162.29  granted by the board under this section. 
162.30     Sec. 31.  Minnesota Statutes 1996, section 477A.011, 
162.31  subdivision 36, is amended to read: 
162.32     Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
162.33  paragraphs (b) ~~and~~, (c), and (d), "city aid base" means, for 
162.34  each city, the sum of the local government aid and equalization 
162.35  aid it was originally certified to receive in calendar year 1993 
162.36  under Minnesota Statutes 1992, section 477A.013, subdivisions 3 
163.1   and 5, and the amount of disparity reduction aid it received in 
163.2   calendar year 1993 under Minnesota Statutes 1992, section 
163.3   273.1398, subdivision 3. 
163.4      (b) For aids payable in 1996 and thereafter, a city that in 
163.5   1992 or 1993 transferred an amount from governmental funds to 
163.6   its sewer and water fund, which amount exceeded its net levy for 
163.7   taxes payable in the year in which the transfer occurred, has a 
163.8   "city aid base" equal to the sum of (i) its city aid base, as 
163.9   calculated under paragraph (a), and (ii) one-half of the 
163.10  difference between its city aid distribution under section 
163.11  477A.013, subdivision 9, for aids payable in 1995 and its city 
163.12  aid base for aids payable in 1995. 
163.13     (c) The city aid base for any city with a population less 
163.14  than 500 is increased by $40,000 for aids payable in calendar 
163.15  year 1995 and thereafter, and the maximum amount of total aid it 
163.16  may receive under section 477A.013, subdivision 9, paragraph 
163.17  (c), is also increased by $40,000 for aids payable in calendar 
163.18  year 1995 only, provided that: 
163.19     (i) the average total tax capacity rate for taxes payable 
163.20  in 1995 exceeds 200 percent; 
163.21     (ii) the city portion of the tax capacity rate exceeds 100 
163.22  percent; and 
163.23     (iii) its city aid base is less than $60 per capita. 
163.24     (d) The city aid base for a city is increased by $20,000 in 
163.25  1998 and thereafter and the maximum amount of total aid it may 
163.26  receive under section 477A.013, subdivision 9, paragraph (c), is 
163.27  also increased by $20,000 in calendar year 1997 only, provided 
163.28  that: 
163.29     (i) the city has a population in 1994 of 2,500 or more; 
163.30     (ii) the city is located in a county, outside of the 
163.31  metropolitan area, which contains a city of the first class; 
163.32     (iii) the city's net tax capacity used in calculating its 
163.33  1996 aid under section 477A.013 is less than $400 per capita; 
163.34  and 
163.35     (iv) at least four percent of the total net tax capacity, 
163.36  for taxes payable in 1996, of property located in the city is 
164.1   classified as railroad property. 
164.2      Sec. 32.  Minnesota Statutes 1996, section 611.27, 
164.3   subdivision 4, is amended to read: 
164.4      Subd. 4.  [COUNTY PORTION OF COSTS.] That portion of 
164.5   subdivision 1 directing counties to pay the costs of public 
164.6   defense service shall not be in effect ~~between~~ after January 1, 
164.7   1995~~, and July 1, 1997~~.  This subdivision only relates to costs 
164.8   associated with felony, gross misdemeanor, juvenile, and 
164.9   misdemeanor public defense services.  Notwithstanding the 
164.10  provisions of this subdivision, in the first, fifth, seventh, 
164.11  ninth, and tenth judicial districts, the cost of juvenile and 
164.12  misdemeanor public defense services for cases opened prior to 
164.13  January 1, 1995, shall remain the responsibility of the 
164.14  respective counties in those districts, even though the cost of 
164.15  these services may occur after January 1, 1995. 
164.16     Sec. 33.  Laws 1992, chapter 511, article 2, section 52, is 
164.17  amended to read: 
164.18     Sec. 52.  [WATERSHED DISTRICT LEVIES.] 
164.19     (a) The Nine Mile Creek watershed district, the 
164.20  Riley-Purgatory Bluff Creek watershed district, the Minnehaha 
164.21  Creek watershed district, the Coon Creek watershed district, and 
164.22  the Lower Minnesota River watershed district may levy in 1992 
164.23  and thereafter a tax not to exceed $200,000 on property within 
164.24  the district for the administrative fund.  The levy authorized 
164.25  under this section is in lieu of section 103D.905, subdivision 
164.26  3.  The administrative fund shall be used for the purposes 
164.27  contained in Minnesota Statutes, section 103D.905, subdivision 
164.28  3.  The board of managers shall make the levy for the 
164.29  administrative fund in accordance with Minnesota Statutes, 
164.30  section 103D.915. 
164.31     (b) The Wild Rice watershed district may levy, for taxes 
164.32  payable in 1993, 1994, 1995, 1996, ~~and~~ 1997, 1998, 1999, 2000, 
164.33  2001, and 2002, an ad valorem tax not to exceed $200,000 on 
164.34  property within the district for the administrative fund.  The 
164.35  additional $75,000 above the amount authorized in Minnesota 
164.36  Statutes, section 103D.905, subdivision 3, must be used for 
165.1   costs incurred in connection with the development and 
165.2   maintenance of cost-sharing projects with the United States Army 
165.3   Corps of Engineers.  The board of managers shall make the levy 
165.4   for the administrative fund in accordance with Minnesota 
165.5   Statutes, section 103D.915. 
165.6      Sec. 34.  [TEMPORARY EXTENSION OF TAX ABATEMENT AUTHORITY.] 
165.7      Upon written application of the owner of a qualified 
165.8   property, the governing body of a county that contains a city of 
165.9   the first class may grant the reduction or abatement of 
165.10  estimated market valuation or taxes and of any costs, penalties, 
165.11  or interest on them as the governing body deems just and 
165.12  equitable as it relates to taxes payable in 1992, 1993, and 
165.13  1994.  As used in this section, a qualified property is a 
165.14  property that meets all of the following requirements: 
165.15     (1) it is a class C commercial office building constructed 
165.16  before 1930, that has less than 200,000 square feet in area, and 
165.17  contains asbestos; 
165.18     (2) it has a downtown skyway system connection that was 
165.19  financed by municipal revenue bonds; 
165.20     (3) it is in the process of tax forfeiture; and 
165.21     (4) its market value declined by more than 70 percent 
165.22  between 1991 and 1996. 
165.23     The authority to grant abatements under this section 
165.24  terminates on December 31, 1997. 
165.25     Sec. 35.  [BROOKLYN PARK; CERTIFICATION OF CHARGES; 
165.26  DEFINITIONS.] 
165.27     Subdivision 1.  [SCOPE.] For the purpose of sections 36 and 
165.28  37, the terms defined in this section have the meanings given 
165.29  them. 
165.30     Subd. 2.  [ASSOCIATION.] "Association" has the meaning 
165.31  given it in Minnesota Statutes, section 515B.1-103, paragraph 
165.32  (4). 
165.33     Subd. 3.  [AUTHORITY.] "Authority" means the Brooklyn Park 
165.34  economic development authority. 
165.35     Subd. 4.  [COMMON ELEMENTS.] "Common elements" has the 
165.36  meaning given it in Minnesota Statutes, section 515B.1-103, 
166.1   paragraph (7). 
166.2      Subd. 5.  [COMMON ELEMENT IMPROVEMENTS.] "Common element 
166.3   improvements" means any physical repair, replacement, or 
166.4   modification of, or addition to, the common elements of a common 
166.5   interest community. 
166.6      Subd. 6.  [COMMON INTEREST COMMUNITY.] "Common interest 
166.7   community" has the meaning given it in Minnesota Statutes, 
166.8   section 515B.1-103, paragraph (10). 
166.9      Subd. 7.  [UNIT.] "Unit" has the meaning given it in 
166.10  Minnesota Statutes, section 515B.1-103, paragraph (33). 
166.11     Subd. 8.  [UNIT OWNER.] "Unit owner" has the meaning given 
166.12  it in Minnesota Statutes, section 515B.1-103, paragraph (35). 
166.13     Sec. 36.  [AUTHORITY GRANTED.] 
166.14     If: 
166.15     (1) the authority lends or agrees to lend funds to an 
166.16  association for the provision or construction of common element 
166.17  improvements; 
166.18     (2) the association has duly levied common expense 
166.19  assessments against the units in order to provide the 
166.20  association with funds to: 
166.21     (i) pay principal and interest on the loan; 
166.22     (ii) provide coverage in excess of principal and interest 
166.23  payments on the loan; 
166.24     (iii) create or replenish reserve funds pledged as security 
166.25  for the loan; or 
166.26     (iv) pay expenses related to the loan or the assessments 
166.27  that are identified in the loan agreement between the authority 
166.28  and the association; 
166.29     (3) a unit owner has become delinquent in the payment of 
166.30  any assessment installment; and 
166.31     (4) the association has declared the entire amount of the 
166.32  assessment due and owing pursuant to Minnesota Statutes, section 
166.33  515B.3-115, paragraph (k), then 
166.34  the authority may certify the delinquent assessment, together 
166.35  with interest and penalties, to the county auditor for 
166.36  collection to the same extent and in the same manner provided by 
167.1   law for the assessment and collection of real estate taxes. 
167.2      Sec. 37.  [DISCLOSURE REQUIRED.] 
167.3      For any common interest community located in the city of 
167.4   Brooklyn Park, the disclosure statement required under Minnesota 
167.5   Statutes, section 515B.4-102, must include a description of the 
167.6   potential applicability and consequences of section 36. 
167.7      Sec. 38.  [CITY OF DULUTH; REASSESSMENTS OF CANCELED 
167.8   SPECIAL ASSESSMENTS.] 
167.9      Subdivision 1.  [AUTHORIZATION.] Notwithstanding any law, 
167.10  city charter provision, or ordinance to the contrary, if a 
167.11  parcel of tax-forfeited land located in the city of Duluth is 
167.12  returned to private ownership and the parcel is benefited by an 
167.13  improvement for which special assessments were canceled because 
167.14  of the forfeiture, the city council may, upon notice and hearing 
167.15  as provided for in the original assessment, make a reassessment 
167.16  or a new assessment as to the parcel in an amount equal to the 
167.17  amount remaining unpaid on the original assessment. 
167.18     Subd. 2.  [LOCAL APPROVAL REQUIRED.] This section is 
167.19  effective upon approval by the governing body of the city of 
167.20  Duluth and compliance with Minnesota Statutes, section 645.021, 
167.21  subdivision 3. 
167.22     Sec. 39.  [FLOODWOOD JOINT RECREATION BOARD TAX.] 
167.23     Subdivision 1.  [LEVY AUTHORIZATION.] Each year, the 
167.24  Floodwood joint recreation board may levy a tax not to exceed 
167.25  $25,000 on the value of property situated in the territory of 
167.26  independent school district No. 698 in accordance with this 
167.27  section.  Property in territory in the school district may be 
167.28  made subject to the tax permitted by this section by the 
167.29  agreement of the governing body or town board of the city or 
167.30  town where it is located.  The agreement may be by resolution of 
167.31  a governing body or town board or by a joint powers agreement 
167.32  pursuant to Minnesota Statutes, section 471.59.  If levied, the 
167.33  tax is in addition to all other taxes on the property subject to 
167.34  it permitted to be levied for park and recreation purposes by 
167.35  the cities and towns other than for the support of the joint 
167.36  recreation board.  It shall be disregarded in the calculation of 
168.1   all other mill rate or per capita tax levy limitations imposed 
168.2   by law or charter upon them.  A city or town may withdraw its 
168.3   agreement to future taxes by notice to the recreation board and 
168.4   the county auditor unless provided otherwise by a joint powers 
168.5   agreement.  The tax shall be collected by the applicable county 
168.6   auditor and treasurer and paid directly to the Floodwood joint 
168.7   recreation board.  
168.8      Subd. 2.  [LOCAL APPROVAL.] This section is effective in 
168.9   the city of Floodwood, the towns of Arrowhead, Fine Lakes, 
168.10  Floodwood, Halden, Van Buren, Cedar Valley, Prairie Lake, and 
168.11  Unorganized Township 52-21 in St. Louis county, and Unorganized 
168.12  Township 52-22 in Aitkin county the day after compliance with 
168.13  Minnesota Statutes, section 645.021, subdivision 3, by the 
168.14  governing body of each.  This section is effective for each 
168.15  city, town, and unorganized township regardless of the action of 
168.16  the others.  
168.17     Approval of this section is not agreement to be subject to 
168.18  the tax permitted by it.  Agreement to the tax must be by 
168.19  separate action in accordance with subdivision 1. 
168.20     Sec. 40.  [MINNEAPOLIS UTILITY CHARGE ASSESSMENTS.] 
168.21     Subdivision 1.  [BECOMES LIEN WHEN DELINQUENT.] An 
168.22  assessment by the city of Minneapolis for delinquent utility 
168.23  charges, and interest and penalties on the charges under 
168.24  Minnesota Statutes, section 272.32; Laws 1969, chapter 499; Laws 
168.25  1973, chapter 320; or Laws 1994, chapter 587, article 9, section 
168.26  4, with accruing interest, is a lien upon all property included 
168.27  in the assessment, concurrent with general taxes, from the date 
168.28  the utility charges become delinquent, regardless of the date 
168.29  the assessment is levied.  The time of effect of a lien attached 
168.30  for delinquent utility charge assessments supersedes any 
168.31  contrary law in Minnesota Statutes, section 272.32 or 429.061. 
168.32     Subd. 2.  [WHEN DELINQUENT; STATEMENT REQUIRED.] Utility 
168.33  charges become delinquent for purposes of this section when they 
168.34  are set forth in a statement sent by the city of Minneapolis to 
168.35  the address of the property subject to the utility charges and 
168.36  the last known address of the owner of the property and are not 
169.1   paid in full on or before the due date stated in the statement.  
169.2   Upon request, the utility billing department shall provide a 
169.3   written statement with the total cumulative accounting of all 
169.4   levied and pending utility charges within ten working days of 
169.5   the request.  Pending charges shall not be valid against third 
169.6   parties who rely upon the written statement or if the written 
169.7   statement is not provided within the requisite time period. 
169.8      Subd. 3.  [UTILITY CHARGES DEFINED.] "Utility charges," in 
169.9   this section, includes all fees, taxes, special charges, or 
169.10  other charges imposed by the city of Minneapolis in connection 
169.11  with the provision of services for sewer, water, solid waste 
169.12  collection and management, nuisance abatement, or other services 
169.13  or improvements specified in Minnesota Statutes, section 
169.14  429.101; Laws 1969, chapter 499; and Laws 1973, chapter 320.  
169.15     Subd. 4.  [NOT CONVEYANCES.] The statement issued by the 
169.16  city of Minneapolis for utility charges or any instrument in 
169.17  writing created in connection with any assessment for delinquent 
169.18  utility charges subject to this section are not conveyances as 
169.19  defined in Minnesota Statutes, section 507.01, and are not 
169.20  subject to the requirements of Minnesota Statutes, chapter 507, 
169.21  regarding conveyances of real estate. 
169.22     Sec. 41.  [SAUK RIVER WATERSHED DISTRICT.] 
169.23     Subdivision 1.  [LEVY AUTHORIZATION.] Notwithstanding 
169.24  Minnesota Statutes, section 103D.905, subdivision 3, the Sauk 
169.25  River watershed district may levy up to $150,000 for its 
169.26  administrative fund for taxes levied in 1997, payable in 1998. 
169.27     Subd. 2.  [EFFECTIVE DATE.] Pursuant to Minnesota Statutes, 
169.28  section 645.023, subdivision 1, this section is effective 
169.29  without local approval the day following final enactment. 
169.30     Sec. 42.  [VIRGINIA AREA AMBULANCE DISTRICT.] 
169.31     Subdivision 1.  [AGREEMENT; POWERS; GENERAL 
169.32  DESCRIPTION.] (a) The cities of Virginia, Mountain Iron, 
169.33  Eveleth, Leonidas, Iron Junction, and Gilbert, and the towns of 
169.34  Pike, Clinton, McDavitt, Colvin, Sandy, Cherry, Ellsburg, Wouri, 
169.35  Lavell, Fayal, Cotton, and Embarrass may by resolution of their 
169.36  city councils and town boards establish the Virginia area 
170.1   ambulance district. 
170.2      (b) The St. Louis county board may by resolution provide 
170.3   that property located in unorganized townships described in 
170.4   clauses (1) to (7) may be included within the district: 
170.5      (1) Township 61 North, Range 17 West; 
170.6      (2) Township 59 North, Ranges 16 and 18 West; 
170.7      (3) Township 56 North, Range 16 West; 
170.8      (4) Township 60 North, Range 18 West; 
170.9      (5) Township 55 North, Range 15; 
170.10     (6) Township 56, Range 17; and 
170.11     (7) Township 57, Range 16.  
170.12     (c) The district shall make payments of the proceeds of the 
170.13  tax authorized in this section to the city of Virginia, which 
170.14  shall provide ambulance services throughout the district and may 
170.15  exercise all the powers of the cities and towns that relate to 
170.16  ambulance service anywhere within its territory.  
170.17     (d) Any other contiguous town or home rule charter or 
170.18  statutory city may join the district with the agreement of the 
170.19  cities and towns that comprise the district at the time of its 
170.20  application to join.  Action to join the district may be taken 
170.21  by the city council or town board of the city or town.  
170.22     Subd. 2.  [BOARD.] The district shall be governed by a 
170.23  board composed of one member appointed by the city council or 
170.24  town board of each city and town in the district.  A district 
170.25  board member may, but is not required to, be a member of a city 
170.26  council or town board.  Except as provided in this section, 
170.27  members shall serve two-year terms ending the first Monday in 
170.28  January and until their successors are appointed and qualified.  
170.29  Of the members first appointed, as far as possible, the terms of 
170.30  one-half shall expire on the first Monday in January in the 
170.31  first year following appointment and one-half the first Monday 
170.32  in January in the second year.  The terms of those initially 
170.33  appointed must be determined by lot.  If an additional member is 
170.34  added because an additional city or town joins the district, the 
170.35  member's term must be fixed so that, as far as possible, the 
170.36  terms of one-half of all the members expire on the same date. 
171.1      Subd. 3.  [TAX.] The district may impose a property tax on 
171.2   real and personal property in the district in an amount 
171.3   sufficient to discharge its operating expenses and debt payable 
171.4   in each year but not to exceed .0528 percent of the district's 
171.5   taxable market value.  The St. Louis county auditor shall 
171.6   collect the tax and distribute it to the Virginia area ambulance 
171.7   district. 
171.8      Subd. 4.  [EXPENDITURES.] The taxes collected under 
171.9   subdivision 3 shall be used for licensed ambulance services and 
171.10  first responders.  Licensed ambulance services shall receive 80 
171.11  percent of the available funds and first responders shall 
171.12  receive 20 percent of the available funds.  The amounts 
171.13  allocated to first responders shall be used for education, 
171.14  training, and reimbursement for their allowable expenses.  Only 
171.15  education and training that meets the recognized education and 
171.16  training guidelines set by the emergency medical services 
171.17  regulatory board under Minnesota Statutes, chapter 144E, shall 
171.18  be reimbursable under this subdivision. 
171.19     Subd. 5.  [PUBLIC INDEBTEDNESS.] The district may incur 
171.20  debt in the manner provided for a municipality by Minnesota 
171.21  Statutes, chapter 475, when necessary to accomplish a duty 
171.22  charged to it. 
171.23     Subd. 6.  [WITHDRAWAL.] Upon two years' notice, a city or 
171.24  town may withdraw from the district.  Its territory shall remain 
171.25  subject to taxation for debt incurred prior to its withdrawal 
171.26  under Minnesota Statutes, chapter 475. 
171.27     Subd. 7.  [EFFECTIVE DATE.] This section is effective (1) 
171.28  in the cities of Virginia, Mountain Iron, Eveleth, Leonidas, 
171.29  Iron Junction, and Gilbert, and the towns of Pike, Clinton, 
171.30  McDavitt, Colvin, Sandy, Cherry, Ellsburg, Wouri, Lavell, Fayal, 
171.31  Cotton, and Embarrass, the day after compliance with Minnesota 
171.32  Statutes, section 645.021, subdivision 2, by the governing body 
171.33  of each, and (2) for unorganized townships described in 
171.34  subdivision 1, paragraph (b), clauses (1) to (7), the day after 
171.35  compliance with Minnesota Statutes, section 645.021, subdivision 
171.36  2, by the St. Louis county board, provided that the district 
172.1   must be established by September 1, 2000.  Any of the cities, 
172.2   towns, and unorganized townships listed in subdivision 1 that do 
172.3   not join the district initially may join the district after its 
172.4   establishment. 
172.5      Sec. 43.  [JOINT DITCH NO. 1, CHISAGO AND WASHINGTON 
172.6   COUNTIES.] 
172.7      Subdivision 1.  [ABANDONMENT.] Notwithstanding Minnesota 
172.8   Statutes, section 103E.811, the counties of Chisago and 
172.9   Washington may, after making a determination that joint ditch 
172.10  no. 1 is not of public benefit and utility, order its 
172.11  abandonment. 
172.12     Subd. 2.  [LEVY.] Notwithstanding Minnesota Statutes, 
172.13  section 103E.725, Chisago and Washington counties may levy an ad 
172.14  valorem tax for the purposes of subdivision 1. 
172.15     Sec. 44.  [WASHINGTON COUNTY; LEVY TO FUND THE COUNTY 
172.16  HOUSING AND REDEVELOPMENT AUTHORITY.] 
172.17     Subdivision 1.  [AUTHORIZATION.] In addition to all other 
172.18  levies authorized by law, Washington county may levy an amount 
172.19  not to exceed $2,000,000 in 1997 for taxes payable in 1998 only, 
172.20  and transfer the proceeds of the levy to the Washington county 
172.21  housing and redevelopment authority to be used to support the 
172.22  activities of the authority in the city of Landfall. 
172.23     Subd. 2.  [LOCAL APPROVAL.] This section is effective upon 
172.24  approval by the governing body of Washington county and 
172.25  compliance with Minnesota Statutes, section 645.021, subdivision 
172.26  3. 
172.27     Sec. 45.  [REPORT; ELDERLY ASSISTED LIVING CARE 
172.28  FACILITIES.] 
172.29     The department of revenue shall conduct a survey with all 
172.30  county assessors and with representatives of elderly assisted 
172.31  living care facilities of the tax status of all elderly assisted 
172.32  living care facilities located in the state, and report to the 
172.33  chairs of the house and senate tax committees by February 1, 
172.34  1998, on its findings.  The department shall include in the 
172.35  survey a request for an estimate of the amount of charitable 
172.36  contributions, including, but not limited to, the value of any 
173.1   public benefit such as the prevention or delay of nursing home 
173.2   placement and the effect of taxation on the development of 
173.3   housing for low- and moderate-income elderly persons for each 
173.4   elderly assisted living care facility and the relative portion 
173.5   of those charitable contributions to the total operating costs 
173.6   of the elderly assisted living care facility.  As used in this 
173.7   section, "elderly assisted living facility property" means 
173.8   residential real estate containing more than one unit held for 
173.9   use by the tenants or lessees as a residence for periods of 30 
173.10  days or more, along with community rooms, lounges, activity 
173.11  rooms, and related facilities, designed to meet the housing, 
173.12  health, and financial security needs of the elderly.  The real 
173.13  estate may be owned by an individual, partnership, limited 
173.14  partnership, for-profit corporation, or nonprofit corporation 
173.15  exempt from federal income taxation under United States Code, 
173.16  title 26, section 501(c)(3), or related sections.  An admission 
173.17  or initiation fee may be required of tenants.  Monthly charges 
173.18  may include charges for the residential unit, meals, 
173.19  housekeeping, utilities, social programs, a health care alert 
173.20  system, or any combination of them.  On-site health care may be 
173.21  provided by in-house staff or an outside health care provider. 
173.22     Sec. 46.  [AID INCREASE.] 
173.23     Calendar year 1998 aids to counties and cities under 
173.24  Minnesota Statutes 1996, section 273.1398, subdivision 2, shall 
173.25  be permanently increased by the amount of the appropriation 
173.26  provided under Laws 1996, chapter 471, article 3, section 48, 
173.27  subdivision 5. 
173.28     Sec. 47.  [REPEALER.] 
173.29     Minnesota Statutes 1996, section 477A.05, is repealed. 
173.30     Sec. 48.  [EFFECTIVE DATE.] 
173.31     Sections 2 to 4 are effective the day following final 
173.32  enactment.  
173.33     Sections 6 and 8 to 11 are effective for taxes levied in 
173.34  1997, payable in 1998, and thereafter. 
173.35     Section 7 is effective beginning with the 1997 assessment 
173.36  and ending with the 2002 assessment, for qualifying improvements 
174.1   made after January 2, 1993, to a residence that has been 
174.2   relocated; provided, that any residence that originally 
174.3   qualifies in that time period will be allowed to receive the 
174.4   benefits provided under section 7 for the full ten-year time 
174.5   period.  In order to qualify for a market value exclusion under 
174.6   Minnesota Statutes, section 273.11, subdivision 10, for the 1997 
174.7   assessment for improvements made to a relocated residence, a 
174.8   homeowner must notify the assessor by June 1, 1997. 
174.9      Sections 31, 46, and 47 are effective for aids paid in 1998 
174.10  and thereafter. 
174.11     Sections 35 to 37 are effective the day after the governing 
174.12  body of Brooklyn Park complies with Minnesota Statutes, section 
174.13  645.021, subdivision 3. 
174.14                             ARTICLE 9
174.15                           FEDERAL UPDATE
174.16     Section 1.  Minnesota Statutes 1996, section 289A.02, 
174.17  subdivision 7, is amended to read: 
174.18     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
174.19  defined otherwise, "Internal Revenue Code" means the Internal 
174.20  Revenue Code of 1986, as amended through ~~March 22~~ December 31, 
174.21  1996, and includes the provisions of section 1(a) and (b) of 
174.22  Public Law Number 104-117. 
174.23     Sec. 2.  Minnesota Statutes 1996, section 290.01, 
174.24  subdivision 19, is amended to read: 
174.25     Subd. 19.  [NET INCOME.] The term "net income" means the 
174.26  federal taxable income, as defined in section 63 of the Internal 
174.27  Revenue Code of 1986, as amended through the date named in this 
174.28  subdivision, incorporating any elections made by the taxpayer in 
174.29  accordance with the Internal Revenue Code in determining federal 
174.30  taxable income for federal income tax purposes, and with the 
174.31  modifications provided in subdivisions 19a to 19f. 
174.32     In the case of a regulated investment company or a fund 
174.33  thereof, as defined in section 851(a) or 851(h) of the Internal 
174.34  Revenue Code, federal taxable income means investment company 
174.35  taxable income as defined in section 852(b)(2) of the Internal 
174.36  Revenue Code, except that:  
175.1      (1) the exclusion of net capital gain provided in section 
175.2   852(b)(2)(A) of the Internal Revenue Code does not apply; ~~and~~ 
175.3      (2) the deduction for dividends paid under section 
175.4   852(b)(2)(D) of the Internal Revenue Code must be applied by 
175.5   allowing a deduction for capital gain dividends and 
175.6   exempt-interest dividends as defined in sections 852(b)(3)(C) 
175.7   and 852(b)(5) of the Internal Revenue Code; and 
175.8      (3) the deduction for dividends paid must also be applied 
175.9   in the amount of any undistributed capital gains which the 
175.10  regulated investment company elects to have treated as provided 
175.11  in section 852(b)(3)(D) of the Internal Revenue Code.  
175.12     The net income of a real estate investment trust as defined 
175.13  and limited by section 856(a), (b), and (c) of the Internal 
175.14  Revenue Code means the real estate investment trust taxable 
175.15  income as defined in section 857(b)(2) of the Internal Revenue 
175.16  Code.  
175.17     The net income of a designated settlement fund as defined 
175.18  in section 468B(d) of the Internal Revenue Code means the gross 
175.19  income as defined in section 468B(b) of the Internal Revenue 
175.20  Code. 
175.21     The Internal Revenue Code of 1986, as amended through 
175.22  December 31, 1986, shall be in effect for taxable years 
175.23  beginning after December 31, 1986.  The provisions of sections 
175.24  10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 
175.25  10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 
175.26  Omnibus Budget Reconciliation Act of 1987, Public Law Number 
175.27  100-203, the provisions of sections 1001, 1002, 1003, 1004, 
175.28  1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 
175.29  1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 
175.30  6277, and 6282 of the Technical and Miscellaneous Revenue Act of 
175.31  1988, Public Law Number 100-647, ~~and~~ the provisions of sections 
175.32  7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 
175.33  1989, Public Law Number 101-239, and the provisions of sections 
175.34  1305, 1704(r), and 1704(e)(1) of the Small Business Job 
175.35  Protection Act, Public Law Number 104-188, shall be effective at 
175.36  the time they become effective for federal income tax purposes.  
176.1      The Internal Revenue Code of 1986, as amended through 
176.2   December 31, 1987, shall be in effect for taxable years 
176.3   beginning after December 31, 1987.  The provisions of sections 
176.4   4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 
176.5   6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 
176.6   6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 
176.7   Act of 1988, Public Law Number 100-647, the provisions of 
176.8   sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 
176.9   of 1989, Public Law Number 101-239, and the provisions of 
176.10  section 11702 of the Revenue Reconciliation Act of 1990, Public 
176.11  Law Number 101-508, shall become effective at the time they 
176.12  become effective for federal tax purposes.  
176.13     The Internal Revenue Code of 1986, as amended through 
176.14  December 31, 1988, shall be in effect for taxable years 
176.15  beginning after December 31, 1988.  The provisions of sections 
176.16  7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 
176.17  7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 
176.18  7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 
176.19  Reconciliation Act of 1989, Public Law Number 101-239, the 
176.20  provision of section 1401 of the Financial Institutions Reform, 
176.21  Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 
176.22  ~~and~~ the provisions of sections 11701 and 11703 of the Revenue 
176.23  Reconciliation Act of 1990, Public Law Number 101-508, and the 
176.24  provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 
176.25  Small Business Job Protection Act, Public Law Number 104-188, 
176.26  shall become effective at the time they become effective for 
176.27  federal tax purposes.  
176.28     The Internal Revenue Code of 1986, as amended through 
176.29  December 31, 1989, shall be in effect for taxable years 
176.30  beginning after December 31, 1989.  The provisions of sections 
176.31  11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 
176.32  the Revenue Reconciliation Act of 1990, Public Law Number 
176.33  101-508, and the provisions of sections 13224 and 13261 of the 
176.34  Omnibus Budget Reconciliation Act of 1993, Public Law Number 
176.35  103-66, shall become effective at the time they become effective 
176.36  for federal purposes.  
177.1      The Internal Revenue Code of 1986, as amended through 
177.2   December 31, 1990, shall be in effect for taxable years 
177.3   beginning after December 31, 1990. 
177.4      The provisions of section 13431 of the Omnibus Budget 
177.5   Reconciliation Act of 1993, Public Law Number 103-66, shall 
177.6   become effective at the time they became effective for federal 
177.7   purposes.  
177.8      The Internal Revenue Code of 1986, as amended through 
177.9   December 31, 1991, shall be in effect for taxable years 
177.10  beginning after December 31, 1991.  
177.11     The provisions of sections 1936 and 1937 of the 
177.12  Comprehensive National Energy Policy Act of 1992, Public Law 
177.13  Number 102-486, and the provisions of sections 13101, 13114, 
177.14  13122, 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of 
177.15  the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
177.16  103-66, shall become effective at the time they become effective 
177.17  for federal purposes.  
177.18     The Internal Revenue Code of 1986, as amended through 
177.19  December 31, 1992, shall be in effect for taxable years 
177.20  beginning after December 31, 1992.  
177.21     The provisions of sections 13116, 13121, 13206, 13210, 
177.22  13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 
177.23  the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
177.24  103-66, and the provisions of sections 1703(a), 1703(d), 
177.25  1703(i), 1703(l), and 1703(m) of the Small Business Job 
177.26  Protection Act, Public Law Number 104-188, shall become 
177.27  effective at the time they become effective for federal purposes.
177.28     The Internal Revenue Code of 1986, as amended through 
177.29  December 31, 1993, shall be in effect for taxable years 
177.30  beginning after December 31, 1993. 
177.31     The provision of section 741 of Legislation to Implement 
177.32  Uruguay Round of General Agreement on Tariffs and Trade, Public 
177.33  Law Number 103-465, ~~and~~ the provisions of sections 1, 2, and 3, 
177.34  of the Self-Employed Health Insurance Act of 1995, Public Law 
177.35  Number 104-7, the provision of section 501(b)(2) of the Health 
177.36  Insurance Portability and Accountability Act, Public Law Number 
178.1   104-191, and the provisions of sections 1604 and 1704(p)(1) and 
178.2   (2) of the Small Business Job Protection Act, Public Law Number 
178.3   104-188, shall become effective at the time they become 
178.4   effective for federal purposes. 
178.5      The Internal Revenue Code of 1986, as amended through 
178.6   December 31, 1994, shall be in effect for taxable years 
178.7   beginning after December 31, 1994. 
178.8      The provisions of sections 1119(a), 1120, 1121, 1202(a), 
178.9   1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 
178.10  Business Job Protection Act, Public Law Number 104-188, and the 
178.11  provision of section 511 of the Health Insurance Portability and 
178.12  Accountability Act, Public Law Number 104-191, shall become 
178.13  effective at the time they become effective for federal purposes.
178.14     The Internal Revenue Code of 1986, as amended through March 
178.15  22, 1996, is in effect for taxable years beginning after 
178.16  December 31, 1995. 
178.17     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
178.18  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
178.19  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
178.20  Protection Act, Public Law Number 104-188, and the provisions of 
178.21  Public Law Number 104-117 become effective at the time they 
178.22  become effective for federal purposes. 
178.23     The Internal Revenue Code of 1986, as amended through 
178.24  December 31, 1996, shall be in effect for taxable years 
178.25  beginning after December 31, 1996. 
178.26     Except as otherwise provided, references to the Internal 
178.27  Revenue Code in subdivisions 19a to 19g mean the code in effect 
178.28  for purposes of determining net income for the applicable year. 
178.29     Sec. 3.  Minnesota Statutes 1996, section 290.01, 
178.30  subdivision 19a, is amended to read: 
178.31     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
178.32  individuals, estates, and trusts, there shall be added to 
178.33  federal taxable income: 
178.34     (1)(i) interest income on obligations of any state other 
178.35  than Minnesota or a political or governmental subdivision, 
178.36  municipality, or governmental agency or instrumentality of any 
179.1   state other than Minnesota exempt from federal income taxes 
179.2   under the Internal Revenue Code or any other federal statute, 
179.3   and 
179.4      (ii) exempt-interest dividends as defined in section 
179.5   852(b)(5) of the Internal Revenue Code, except the portion of 
179.6   the exempt-interest dividends derived from interest income on 
179.7   obligations of the state of Minnesota or its political or 
179.8   governmental subdivisions, municipalities, governmental agencies 
179.9   or instrumentalities, but only if the portion of the 
179.10  exempt-interest dividends from such Minnesota sources paid to 
179.11  all shareholders represents 95 percent or more of the 
179.12  exempt-interest dividends that are paid by the regulated 
179.13  investment company as defined in section 851(a) of the Internal 
179.14  Revenue Code, or the fund of the regulated investment company as 
179.15  defined in section 851(h) of the Internal Revenue Code, making 
179.16  the payment; and 
179.17     (iii) for the purposes of items (i) and (ii), interest on 
179.18  obligations of an Indian tribal government described in section 
179.19  7871(c) of the Internal Revenue Code shall be treated as 
179.20  interest income on obligations of the state in which the tribe 
179.21  is located; 
179.22     (2) the amount of income taxes paid or accrued within the 
179.23  taxable year under this chapter and income taxes paid to any 
179.24  other state or to any province or territory of Canada, to the 
179.25  extent allowed as a deduction under section 63(d) of the 
179.26  Internal Revenue Code, but the addition may not be more than the 
179.27  amount by which the itemized deductions as allowed under section 
179.28  63(d) of the Internal Revenue Code exceeds the amount of the 
179.29  standard deduction as defined in section 63(c) of the Internal 
179.30  Revenue Code.  For the purpose of this paragraph, the 
179.31  disallowance of itemized deductions under section 68 of the 
179.32  Internal Revenue Code of 1986, income tax is the last itemized 
179.33  deduction disallowed; 
179.34     (3) the capital gain amount of a lump sum distribution to 
179.35  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
179.36  Reform Act of 1986, Public Law Number 99-514, applies; ~~and~~ 
180.1      (4) the amount of income taxes paid or accrued within the 
180.2   taxable year under this chapter and income taxes paid to any 
180.3   other state or any province or territory of Canada, to the 
180.4   extent allowed as a deduction in determining federal adjusted 
180.5   gross income.  For the purpose of this paragraph, income taxes 
180.6   do not include the taxes imposed by sections 290.0922, 
180.7   subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729~~.~~; 
180.8      (5) the amount of loss or expense included in federal 
180.9   taxable income under section 1366 of the Internal Revenue Code 
180.10  flowing from a corporation that has a valid election in effect 
180.11  for the taxable year under section 1362 of the Internal Revenue 
180.12  Code, but which is not allowed to be an "S" corporation under 
180.13  section 290.9725; and 
180.14     (6) the amount of any distributions in cash or property 
180.15  made to a shareholder during the taxable year by a corporation 
180.16  that has a valid election in effect for the taxable year under 
180.17  section 1362 of the Internal Revenue code, but which is not 
180.18  allowed to be an "S" corporation under section 290.9725 to the 
180.19  extent not already included in federal taxable income under 
180.20  section 1368 of the Internal Revenue Code. 
180.21     Sec. 4.  Minnesota Statutes 1996, section 290.01, 
180.22  subdivision 19b, is amended to read: 
180.23     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
180.24  individuals, estates, and trusts, there shall be subtracted from 
180.25  federal taxable income: 
180.26     (1) interest income on obligations of any authority, 
180.27  commission, or instrumentality of the United States to the 
180.28  extent includable in taxable income for federal income tax 
180.29  purposes but exempt from state income tax under the laws of the 
180.30  United States; 
180.31     (2) if included in federal taxable income, the amount of 
180.32  any overpayment of income tax to Minnesota or to any other 
180.33  state, for any previous taxable year, whether the amount is 
180.34  received as a refund or as a credit to another taxable year's 
180.35  income tax liability; 
180.36     (3) the amount paid to others not to exceed $650 for each 
181.1   dependent in grades kindergarten to 6 and $1,000 for each 
181.2   dependent in grades 7 to 12, for tuition, textbooks, and 
181.3   transportation of each dependent in attending an elementary or 
181.4   secondary school situated in Minnesota, North Dakota, South 
181.5   Dakota, Iowa, or Wisconsin, wherein a resident of this state may 
181.6   legally fulfill the state's compulsory attendance laws, which is 
181.7   not operated for profit, and which adheres to the provisions of 
181.8   the Civil Rights Act of 1964 and chapter 363.  As used in this 
181.9   clause, "textbooks" includes books and other instructional 
181.10  materials and equipment used in elementary and secondary schools 
181.11  in teaching only those subjects legally and commonly taught in 
181.12  public elementary and secondary schools in this state.  
181.13  "Textbooks" does not include instructional books and materials 
181.14  used in the teaching of religious tenets, doctrines, or worship, 
181.15  the purpose of which is to instill such tenets, doctrines, or 
181.16  worship, nor does it include books or materials for, or 
181.17  transportation to, extracurricular activities including sporting 
181.18  events, musical or dramatic events, speech activities, driver's 
181.19  education, or similar programs.  In order to qualify for the 
181.20  subtraction under this clause the taxpayer must elect to itemize 
181.21  deductions under section 63(e) of the Internal Revenue Code; 
181.22     (4) to the extent included in federal taxable income, 
181.23  distributions from a qualified governmental pension plan, an 
181.24  individual retirement account, simplified employee pension, or 
181.25  qualified plan covering a self-employed person that represent a 
181.26  return of contributions that were included in Minnesota gross 
181.27  income in the taxable year for which the contributions were made 
181.28  but were deducted or were not included in the computation of 
181.29  federal adjusted gross income.  The distribution shall be 
181.30  allocated first to return of contributions until the 
181.31  contributions included in Minnesota gross income have been 
181.32  exhausted.  This subtraction applies only to contributions made 
181.33  in a taxable year prior to 1985; 
181.34     (5) income as provided under section 290.0802; 
181.35     (6) the amount of unrecovered accelerated cost recovery 
181.36  system deductions allowed under subdivision 19g; 
182.1      (7) to the extent included in federal adjusted gross 
182.2   income, income realized on disposition of property exempt from 
182.3   tax under section 290.491; 
182.4      (8) to the extent not deducted in determining federal 
182.5   taxable income, the amount paid for health insurance of 
182.6   self-employed individuals as determined under section 162(l) of 
182.7   the Internal Revenue Code, except that the 25 percent limit does 
182.8   not apply.  If the taxpayer deducted insurance payments under 
182.9   section 213 of the Internal Revenue Code of 1986, the 
182.10  subtraction under this clause must be reduced by the lesser of: 
182.11     (i) the total itemized deductions allowed under section 
182.12  63(d) of the Internal Revenue Code, less state, local, and 
182.13  foreign income taxes deductible under section 164 of the 
182.14  Internal Revenue Code and the standard deduction under section 
182.15  63(c) of the Internal Revenue Code; or 
182.16     (ii) the lesser of (A) the amount of insurance qualifying 
182.17  as "medical care" under section 213(d) of the Internal Revenue 
182.18  Code to the extent not deducted under section 162(1) of the 
182.19  Internal Revenue Code or excluded from income or (B) the total 
182.20  amount deductible for medical care under section 213(a); ~~and~~ 
182.21     (9) the exemption amount allowed under Laws 1995, chapter 
182.22  255, article 3, section 2, subdivision 3~~.~~; and 
182.23     (10) the amount of income or gain included in federal 
182.24  taxable income under section 1366 of the Internal Revenue Code 
182.25  flowing from a corporation that has a valid election in effect 
182.26  for the taxable year under section 1362 of the Internal Revenue 
182.27  Code which is not allowed to be an "S" corporation under section 
182.28  290.9725. 
182.29     Sec. 5.  Minnesota Statutes 1996, section 290.01, 
182.30  subdivision 19f, is amended to read: 
182.31     Subd. 19f.  [BASIS MODIFICATIONS AFFECTING GAIN OR LOSS ON 
182.32  DISPOSITION OF PROPERTY.] (a) For individuals, estates, and 
182.33  trusts, the basis of property is its adjusted basis for federal 
182.34  income tax purposes except as set forth in paragraphs (f) ~~and~~, 
182.35  (g) and (m).  For corporations, the basis of property is its 
182.36  adjusted basis for federal income tax purposes, without regard 
183.1   to the time when the property became subject to tax under this 
183.2   chapter or to whether out-of-state losses or items of tax 
183.3   preference with respect to the property were not deductible 
183.4   under this chapter, except that the modifications to the basis 
183.5   for federal income tax purposes set forth in paragraphs (b) to 
183.6   (j) are allowed to corporations, and the resulting modifications 
183.7   to federal taxable income must be made in the year in which gain 
183.8   or loss on the sale or other disposition of property is 
183.9   recognized. 
183.10     (b) The basis of property shall not be reduced to reflect 
183.11  federal investment tax credit.  
183.12     (c) The basis of property subject to the accelerated cost 
183.13  recovery system under section 168 of the Internal Revenue Code 
183.14  shall be modified to reflect the modifications in depreciation 
183.15  with respect to the property provided for in subdivision 19e.  
183.16  For certified pollution control facilities for which 
183.17  amortization deductions were elected under section 169 of the 
183.18  Internal Revenue Code of 1954, the basis of the property must be 
183.19  increased by the amount of the amortization deduction not 
183.20  previously allowed under this chapter. 
183.21     (d) For property acquired before January 1, 1933, the basis 
183.22  for computing a gain is the fair market value of the property as 
183.23  of that date.  The basis for determining a loss is the cost of 
183.24  the property to the taxpayer less any depreciation, 
183.25  amortization, or depletion, actually sustained before that 
183.26  date.  If the adjusted cost exceeds the fair market value of the 
183.27  property, then the basis is the adjusted cost regardless of 
183.28  whether there is a gain or loss.  
183.29     (e) The basis is reduced by the allowance for amortization 
183.30  of bond premium if an election to amortize was made pursuant to 
183.31  Minnesota Statutes 1986, section 290.09, subdivision 13, and the 
183.32  allowance could have been deducted by the taxpayer under this 
183.33  chapter during the period of the taxpayer's ownership of the 
183.34  property.  
183.35     (f) For assets placed in service before January 1, 1987, 
183.36  corporations, partnerships, or individuals engaged in the 
184.1   business of mining ores other than iron ore or taconite 
184.2   concentrates subject to the occupation tax under chapter 298 
184.3   must use the occupation tax basis of property used in that 
184.4   business. 
184.5      (g) For assets placed in service before January 1, 1990, 
184.6   corporations, partnerships, or individuals engaged in the 
184.7   business of mining iron ore or taconite concentrates subject to 
184.8   the occupation tax under chapter 298 must use the occupation tax 
184.9   basis of property used in that business.  
184.10     (h) In applying the provisions of sections 301(c)(3)(B), 
184.11  312(f) and (g), and 316(a)(1) of the Internal Revenue Code, the 
184.12  dates December 31, 1932, and January 1, 1933, shall be 
184.13  substituted for February 28, 1913, and March 1, 1913, 
184.14  respectively.  
184.15     (i) In applying the provisions of section 362(a) and (c) of 
184.16  the Internal Revenue Code, the date December 31, 1956, shall be 
184.17  substituted for June 22, 1954.  
184.18     (j) The basis of property shall be increased by the amount 
184.19  of intangible drilling costs not previously allowed due to 
184.20  differences between this chapter and the Internal Revenue Code.  
184.21     (k) The adjusted basis of any corporate partner's interest 
184.22  in a partnership is the same as the adjusted basis for federal 
184.23  income tax purposes modified as required to reflect the basis 
184.24  modifications set forth in paragraphs (b) to (j).  The adjusted 
184.25  basis of a partnership in which the partner is an individual, 
184.26  estate, or trust is the same as the adjusted basis for federal 
184.27  income tax purposes modified as required to reflect the basis 
184.28  modifications set forth in paragraphs (f) and (g).  
184.29     (l) The modifications contained in paragraphs (b) to (j) 
184.30  also apply to the basis of property that is determined by 
184.31  reference to the basis of the same property in the hands of a 
184.32  different taxpayer or by reference to the basis of different 
184.33  property.  
184.34     (m) If a corporation has a valid election in effect for the 
184.35  taxable year under section 1362 of the Internal Revenue Code, 
184.36  but is not allowed to be an "S" corporation under section 
185.1   290.9725, and the corporation is liquidated or the individual 
185.2   shareholder disposes of the stock and there is no capital loss 
185.3   reflected in federal adjusted gross income because of the fact 
185.4   that corporate losses have exhausted the shareholders' basis for 
185.5   federal purposes, the shareholders shall be entitled to a 
185.6   capital loss commensurate to their Minnesota basis for the stock.
185.7      Sec. 6.  Minnesota Statutes 1996, section 290.01, 
185.8   subdivision 19g, is amended to read: 
185.9      Subd. 19g.  [ACRS MODIFICATION FOR INDIVIDUALS.] (a) An 
185.10  individual is allowed a subtraction from federal taxable income 
185.11  for the amount of accelerated cost recovery system deductions 
185.12  that were added to federal adjusted gross income in computing 
185.13  Minnesota gross income for taxable year 1981, 1982, 1983, or 
185.14  1984 and that were not deducted in a later taxable year.  The 
185.15  deduction is allowed beginning in the first taxable year after 
185.16  the entire allowable deduction for the property has been allowed 
185.17  under federal law or the first taxable year beginning after 
185.18  December 31, 1987, whichever is later.  The amount of the 
185.19  deduction is computed by deducting the amount added to federal 
185.20  adjusted gross income in computing Minnesota gross income (less 
185.21  any deduction allowed under Minnesota Statutes 1986, section 
185.22  290.01, subdivision 20f) in equal annual amounts over five years.
185.23     (b) In the event of a sale or exchange of the property, a 
185.24  deduction is allowed equal to the lesser of (1) the remaining 
185.25  amount that would be allowed as a deduction under paragraph (a) 
185.26  or (2) the amount of capital gain recognized and the amount of 
185.27  cost recovery deductions that were subject to recapture under 
185.28  sections 1245 and 1250 of the Internal Revenue Code of 1986 for 
185.29  the taxable year. 
185.30     (c) In the case of a corporation ~~electing S corporation~~ 
185.31  ~~status under section 1362 of the Internal Revenue Code~~ treated 
185.32  as an "S" corporation under section 290.9725, the amount of the 
185.33  corporation's cost recovery allowances that have been deducted 
185.34  in computing federal tax, but have been added to federal taxable 
185.35  income or not deducted in computing tax under this chapter as a 
185.36  result of the application of subdivision 19e, paragraphs (a) and 
186.1   (c) or Minnesota Statutes 1986, section 290.09, subdivision 7, 
186.2   is allowed as a deduction to the shareholders under the 
186.3   provisions of paragraph (a). 
186.4      Sec. 7.  Minnesota Statutes 1996, section 290.01, 
186.5   subdivision 31, is amended to read: 
186.6      Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
186.7   defined otherwise, "Internal Revenue Code" means the Internal 
186.8   Revenue Code of 1986, as amended through ~~March 22~~ December 31, 
186.9   1996, and includes the provisions of section 1(a) and (b) of 
186.10  Public Law Number 104-117. 
186.11     Sec. 8.  Minnesota Statutes 1996, section 290.014, 
186.12  subdivision 2, is amended to read: 
186.13     Subd. 2.  [NONRESIDENT INDIVIDUALS.] Except as provided in 
186.14  section 290.015, a nonresident individual is subject to the 
186.15  return filing requirements and to tax as provided in this 
186.16  chapter to the extent that the income of the nonresident 
186.17  individual is: 
186.18     (1) allocable to this state under section 290.17, 290.191, 
186.19  or 290.20; 
186.20     (2) taxed to the individual under the Internal Revenue Code 
186.21  (or not taxed under the Internal Revenue Code by reason of its 
186.22  character but of a character which is taxable under this 
186.23  chapter) in the individual's capacity as a beneficiary of an 
186.24  estate with income allocable to this state under section 290.17, 
186.25  290.191, or 290.20 and the income, taking into account the 
186.26  income character provisions of section 662(b) of the Internal 
186.27  Revenue Code, would be allocable to this state under section 
186.28  290.17, 290.191, or 290.20 if realized by the individual 
186.29  directly from the source from which realized by the estate; 
186.30     (3) taxed to the individual under the Internal Revenue Code 
186.31  (or not taxed under the Internal Revenue Code by reason of its 
186.32  character but of a character that is taxable under this chapter) 
186.33  in the individual's capacity as a beneficiary or grantor or 
186.34  other person treated as a substantial owner of a trust with 
186.35  income allocable to this state under section 290.17, 290.191, or 
186.36  290.20 and the income, taking into account the income character 
187.1   provisions of section 652(b), 662(b), or 664(b) of the Internal 
187.2   Revenue Code, would be allocable to this state under section 
187.3   290.17, 290.191, or 290.20 if realized by the individual 
187.4   directly from the source from which realized by the trust; 
187.5      (4) taxed to the individual under the Internal Revenue Code 
187.6   (or not taxed under the Internal Revenue Code by reason of its 
187.7   character but of a character which is taxable under this 
187.8   chapter) in the individual's capacity as a limited or general 
187.9   partner in a partnership with income allocable to this state 
187.10  under section 290.17, 290.191, or 290.20 and the income, taking 
187.11  into account the income character provisions of section 702(b) 
187.12  of the Internal Revenue Code, would be allocable to this state 
187.13  under section 290.17, 290.191, or 290.20 if realized by the 
187.14  individual directly from the source from which realized by the 
187.15  partnership; or 
187.16     (5) taxed to the individual under the Internal Revenue Code 
187.17  (or not taxed under the Internal Revenue Code by reason of its 
187.18  character but of a character which is taxable under this 
187.19  chapter) in the individual's capacity as a shareholder of a 
187.20  corporation ~~having a valid election in effect under section 1362~~ 
187.21  ~~of the Internal Revenue Code~~ treated as an "S" corporation under 
187.22  section 290.9725, and income allocable to this state under 
187.23  section 290.17, 290.191, or 290.20 and the income, taking into 
187.24  account the income character provisions of section 1366(b) of 
187.25  the Internal Revenue Code, would be allocable to this state 
187.26  under section 290.17, 290.191, or 290.20 if realized by the 
187.27  individual directly from the source from which realized by the 
187.28  corporation. 
187.29     Sec. 9.  Minnesota Statutes 1996, section 290.014, 
187.30  subdivision 3, is amended to read: 
187.31     Subd. 3.  [TRUSTS AND ESTATES.] Except as provided in 
187.32  section 290.015, a trust or estate, whether resident or 
187.33  nonresident, is subject to the return filing requirements and to 
187.34  tax as provided in this chapter to the extent that the income of 
187.35  the trust or estate is: 
187.36     (1) allocable to this state under section 290.17, 290.191, 
188.1   or 290.20; 
188.2      (2) taxed to the trust or estate under the Internal Revenue 
188.3   Code (or not taxed under the Internal Revenue Code by reason of 
188.4   its character but of a character which is taxable under this 
188.5   chapter) in its capacity as a beneficiary of a trust or estate 
188.6   with income allocable to this state under section 290.17, 
188.7   290.191, or 290.20 and the income, taking into account the 
188.8   income character provisions of section 662(b) of the Internal 
188.9   Revenue Code, would be allocable to this state under section 
188.10  290.17, 290.191, or 290.20 if realized by the trust or 
188.11  beneficiary estate directly from the source from which realized 
188.12  by the distributing estate; 
188.13     (3) taxed to the trust or estate under the Internal Revenue 
188.14  Code (or not taxed under the Internal Revenue Code by reason of 
188.15  its character but of a character which is taxable under this 
188.16  chapter) in its capacity as a beneficiary or grantor or other 
188.17  person treated as a substantial owner of a trust with income 
188.18  allocable to this state under section 290.17, 290.191, or 290.20 
188.19  and the income, taking into account the income character 
188.20  provisions of section 652(b), 662(b), or 664(b) of the Internal 
188.21  Revenue Code, would be allocable to this state under section 
188.22  290.17, 290.191, or 290.20 if realized by the beneficiary trust 
188.23  or estate directly from the source from which realized by the 
188.24  distributing trust; 
188.25     (4) taxed to the trust or estate under the Internal Revenue 
188.26  Code (or not taxed under the Internal Revenue Code by reason of 
188.27  its character but of a character which is taxable under this 
188.28  chapter) in its capacity as a limited or general partner in a 
188.29  partnership with income allocable to this state under section 
188.30  290.17, 290.191, or 290.20 and the income, taking into account 
188.31  the income character provisions of section 702(b) of the 
188.32  Internal Revenue Code, would be allocable to this state under 
188.33  section 290.17, 290.191, or 290.20 if realized by the trust or 
188.34  estate directly from the source from which realized by the 
188.35  partnership; or 
188.36     (5) taxed to the trust or estate under the Internal Revenue 
189.1   Code (or not taxed under the Internal Revenue Code by reason of 
189.2   its character but of a character which is taxable under this 
189.3   chapter) in its capacity as a shareholder of a 
189.4   corporation ~~having a valid election in effect under section 1362~~ 
189.5   ~~of the Internal Revenue Code~~ treated as an "S" corporation under 
189.6   section 290.9725, and income allocable to this state under 
189.7   section 290.17, 290.191, or 290.20 and the income, taking into 
189.8   account the income character provisions of section 1366(b) of 
189.9   the Internal Revenue Code, would be allocable to this state 
189.10  under section 290.17, 290.191, or 290.20 if realized by the 
189.11  trust or estate directly from the source from which realized by 
189.12  the corporation. 
189.13     Sec. 10.  Minnesota Statutes 1996, section 290.015, 
189.14  subdivision 3, is amended to read: 
189.15     Subd. 3.  [EXCEPTIONS.] (a) A person is not subject to tax 
189.16  under this chapter if the person is engaged in the business of 
189.17  selling tangible personal property and taxation of that person 
189.18  under this chapter is precluded by Public Law Number 86-272, 
189.19  United States Code, title 15, sections 381 to 384, or would be 
189.20  so precluded except for the fact that the person stored tangible 
189.21  personal property in a state licensed facility under chapter 231.
189.22     (b) Ownership of an interest in the following types of 
189.23  property (including those contacts with this state reasonably 
189.24  required to evaluate and complete the acquisition or disposition 
189.25  of the property, the servicing of the property or the income 
189.26  from it, the collection of income from the property, or the 
189.27  acquisition or liquidation of collateral relating to the 
189.28  property) shall not be a factor in determining whether the owner 
189.29  is subject to tax under this chapter: 
189.30     (1) an interest in a real estate mortgage investment 
189.31  conduit, a real estate investment trust, a financial asset 
189.32  securitization investment trust, or a regulated investment 
189.33  company or a fund of a regulated investment company, as those 
189.34  terms are defined in the Internal Revenue Code; 
189.35     (2) an interest in money market instruments or securities 
189.36  as defined in section 290.191, subdivision 6, paragraphs (c) and 
190.1   (d); 
190.2      (3) an interest in a loan-backed, mortgage-backed, or 
190.3   receivable-backed security representing either:  (i) ownership 
190.4   in a pool of promissory notes, mortgages, or receivables or 
190.5   certificates of interest or participation in such notes, 
190.6   mortgages, or receivables, or (ii) debt obligations or equity 
190.7   interests which provide for payments in relation to payments or 
190.8   reasonable projections of payments on the notes, mortgages, or 
190.9   receivables; 
190.10     (4) an interest acquired from a person in assets described 
190.11  in section 290.191, subdivision 11, paragraphs (e) to (l), 
190.12  subject to the provisions of paragraph (c), clause (2)(A); 
190.13     (5) an interest acquired from a person in the right to 
190.14  service, or collect income from any assets described in section 
190.15  290.191, subdivision 11, paragraphs (e) to (l), subject to the 
190.16  provisions of paragraph (c), clause (2)(A); 
190.17     (6) an interest acquired from a person in a funded or 
190.18  unfunded agreement to extend or guarantee credit whether 
190.19  conditional, mandatory, temporary, standby, secured, or 
190.20  otherwise, subject to the provisions of paragraph (c), clause 
190.21  (2)(A); 
190.22     (7) an interest of a person other than an individual, 
190.23  estate, or trust, in any intangible, tangible, real, or personal 
190.24  property acquired in satisfaction, whether in whole or in part, 
190.25  of any asset embodying a payment obligation which is in default, 
190.26  whether secured or unsecured, the ownership of an interest in 
190.27  which would be exempt under the preceding provisions of this 
190.28  subdivision, provided the property is disposed of within a 
190.29  reasonable period of time; or 
190.30     (8) amounts held in escrow or trust accounts, pursuant to 
190.31  and in accordance with the terms of property described in this 
190.32  subdivision. 
190.33     (c)(1) For purposes of paragraph (b), clauses (4) to (6), 
190.34  an interest in the type of assets or credit agreements described 
190.35  is deemed to exist at the time the owner becomes legally 
190.36  obligated, conditionally or unconditionally, to fund, acquire, 
191.1   renew, extend, amend, or otherwise enter into the credit 
191.2   arrangement. 
191.3      (2)(A) An owner has acquired an interest from a person in 
191.4   paragraph (b), clauses (4) to (6), assets if:  
191.5      (i) the owner at the time of the acquisition of the asset 
191.6   does not own, directly or indirectly, 15 percent or more of the 
191.7   outstanding stock or in the case of a partnership 15 percent or 
191.8   more of the capital or profit interests of the person from whom 
191.9   it acquired the asset; 
191.10     (ii) the person from whom the owner acquired the asset 
191.11  regularly sells, assigns, or transfers interests in paragraph 
191.12  (b), clauses (4) to (6), assets during the 12 calendar months 
191.13  immediately preceding the month of acquisition to three or more 
191.14  persons; and 
191.15     (iii) the person from whom the owner acquired the asset 
191.16  does not sell, assign, or transfer 75 percent or more of its 
191.17  paragraph (b), clauses (4) to (6), assets during the 12 calendar 
191.18  months immediately preceding the month of acquisition to the 
191.19  owner. 
191.20  For purposes of determining indirect ownership under item (i), 
191.21  the owner is deemed to own all stock, capital, or profit 
191.22  interests owned by another person if the owner directly owns 15 
191.23  percent or more of the stock, capital, or profit interests in 
191.24  the other person.  The owner is also deemed to own through any 
191.25  intermediary parties all stock, capital, and profit interests 
191.26  directly owned by a person to the extent there exists a 15 
191.27  percent or more chain of ownership of stock, capital, or profit 
191.28  interests between the owner, intermediary parties and the person.
191.29     (B) If the owner of the asset is a member of the unitary 
191.30  group, paragraph (b), clauses (4) to (8), do not apply to an 
191.31  interest acquired from another member of the unitary group.  If 
191.32  the interest in the asset was originally acquired from a 
191.33  nonunitary member and at that time qualified as a section 
191.34  290.015, subdivision 3, paragraph (b), asset, the foregoing 
191.35  limitation does not apply. 
191.36     Sec. 11.  Minnesota Statutes 1996, section 290.015, 
192.1   subdivision 5, is amended to read: 
192.2      Subd. 5.  [DETERMINATION AT ENTITY LEVEL.] Determinations 
192.3   under this section with respect to trades or businesses 
192.4   conducted by a partnership, trust, estate, or corporation ~~with~~ 
192.5   ~~an election in effect under section 1362 of the Internal Revenue~~ 
192.6   ~~Code~~ treated as an "S" corporation under section 290.9725, or 
192.7   any other entity, the income of which is or may be taxed to its 
192.8   owners or beneficiaries must be made with respect to the entity 
192.9   carrying on the trade or business and not with respect to owners 
192.10  or beneficiaries of the trade or business, the taxability of 
192.11  which under this chapter must be determined under section 
192.12  290.014.  
192.13     Sec. 12.  Minnesota Statutes 1996, section 290.06, 
192.14  subdivision 22, is amended to read: 
192.15     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
192.16  taxpayer who is liable for taxes on or measured by net income to 
192.17  another state or province or territory of Canada, as provided in 
192.18  paragraphs (b) through (f), upon income allocated or apportioned 
192.19  to Minnesota, is entitled to a credit for the tax paid to 
192.20  another state or province or territory of Canada if the tax is 
192.21  actually paid in the taxable year or a subsequent taxable year.  
192.22  A taxpayer who is a resident of this state pursuant to section 
192.23  290.01, subdivision 7, clause (2), and who is subject to income 
192.24  tax as a resident in the state of the individual's domicile is 
192.25  not allowed this credit unless the state of domicile does not 
192.26  allow a similar credit. 
192.27     (b) For an individual, estate, or trust, the credit is 
192.28  determined by multiplying the tax payable under this chapter by 
192.29  the ratio derived by dividing the income subject to tax in the 
192.30  other state or province or territory of Canada that is also 
192.31  subject to tax in Minnesota while a resident of Minnesota by the 
192.32  taxpayer's federal adjusted gross income, as defined in section 
192.33  62 of the Internal Revenue Code, modified by the addition 
192.34  required by section 290.01, subdivision 19a, clause (1), and the 
192.35  subtraction allowed by section 290.01, subdivision 19b, clause 
192.36  (1), to the extent the income is allocated or assigned to 
193.1   Minnesota under sections 290.081 and 290.17.  
193.2      (c) If the taxpayer is an athletic team that apportions all 
193.3   of its income under section 290.17, subdivision 5, paragraph 
193.4   (c), the credit is determined by multiplying the tax payable 
193.5   under this chapter by the ratio derived from dividing the total 
193.6   net income subject to tax in the other state or province or 
193.7   territory of Canada by the taxpayer's Minnesota taxable income. 
193.8      (d) The credit determined under paragraph (b) or (c) shall 
193.9   not exceed the amount of tax so paid to the other state or 
193.10  province or territory of Canada on the gross income earned 
193.11  within the other state or province or territory of Canada 
193.12  subject to tax under this chapter, nor shall the allowance of 
193.13  the credit reduce the taxes paid under this chapter to an amount 
193.14  less than what would be assessed if such income amount was 
193.15  excluded from taxable net income. 
193.16     (e) In the case of the tax assessed on a lump sum 
193.17  distribution under section 290.032, the credit allowed under 
193.18  paragraph (a) is the tax assessed by the other state or province 
193.19  or territory of Canada on the lump sum distribution that is also 
193.20  subject to tax under section 290.032, and shall not exceed the 
193.21  tax assessed under section 290.032.  To the extent the total 
193.22  lump sum distribution defined in section 290.032, subdivision 1, 
193.23  includes lump sum distributions received in prior years or is 
193.24  all or in part an annuity contract, the reduction to the tax on 
193.25  the lump sum distribution allowed under section 290.032, 
193.26  subdivision 2, includes tax paid to another state that is 
193.27  properly apportioned to that distribution. 
193.28     (f) If a Minnesota resident reported an item of income to 
193.29  Minnesota and is assessed tax in such other state or province or 
193.30  territory of Canada on that same income after the Minnesota 
193.31  statute of limitations has expired, the taxpayer shall receive a 
193.32  credit for that year under paragraph (a), notwithstanding any 
193.33  statute of limitations to the contrary.  The claim for the 
193.34  credit must be submitted within one year from the date the taxes 
193.35  were paid to the other state or province or territory of 
193.36  Canada.  The taxpayer must submit sufficient proof to show 
194.1   entitlement to a credit. 
194.2      (g) For the purposes of this subdivision, a resident 
194.3   shareholder of a corporation ~~having a valid election in effect~~ 
194.4   ~~under section 1362 of the Internal Revenue Code~~ treated as an "S"
194.5   corporation under section 290.9725, must be considered to have 
194.6   paid a tax imposed on the shareholder in an amount equal to the 
194.7   shareholder's pro rata share of any net income tax paid by the S 
194.8   corporation to another state.  For the purposes of the preceding 
194.9   sentence, the term "net income tax" means any tax imposed on or 
194.10  measured by a corporation's net income. 
194.11     (h) For the purposes of this subdivision, a resident member 
194.12  of a limited liability company taxed as a partnership under the 
194.13  Internal Revenue Code must be considered to have paid a tax 
194.14  imposed on the member in an amount equal to the member's pro 
194.15  rata share of any net income tax paid by the limited liability 
194.16  company to a state that does not measure the income of the 
194.17  member of the limited liability company by reference to the 
194.18  income of the limited liability company.  For purposes of the 
194.19  preceding sentence, the term "net income" tax means any tax 
194.20  imposed on or measured by a limited liability company's net 
194.21  income. 
194.22     Sec. 13.  Minnesota Statutes 1996, section 290.068, 
194.23  subdivision 1, is amended to read: 
194.24     Subdivision 1.  [CREDIT ALLOWED.] A corporation, other than 
194.25  a corporation ~~with a valid election in effect under section 1362~~ 
194.26  ~~of the Internal Revenue Code~~ treated as an "S" corporation under 
194.27  section 290.9725, is allowed a credit against the portion of the 
194.28  franchise tax computed under section 290.06, subdivision 1, for 
194.29  the taxable year equal to: 
194.30     (a) 5 percent of the first $2 million of the excess (if 
194.31  any) of 
194.32     (1) the qualified research expenses for the taxable year, 
194.33  over 
194.34     (2) the base amount; and 
194.35     (b) 2.5 percent on all of such excess expenses over $2 
194.36  million. 
195.1      Sec. 14.  Minnesota Statutes 1996, section 290.0922, 
195.2   subdivision 1, is amended to read: 
195.3      Subdivision 1.  [IMPOSITION.] (a) In addition to the tax 
195.4   imposed by this chapter without regard to this section, the 
195.5   franchise tax imposed on a corporation required to file under 
195.6   section 289A.08, subdivision 3, other than a corporation ~~having~~ 
195.7   ~~a valid election in effect under section 1362 of the Internal~~ 
195.8   ~~Revenue Code~~ treated as an "S" corporation under section 
195.9   290.9725 for the taxable year includes a tax equal to the 
195.10  following amounts: 
195.11       If the sum of the corporation's
195.12  Minnesota property, payrolls, and sales
195.13  or receipts is:                            the tax equals:
195.14             less than $500,000                    $0
195.15     $   500,000 to $   999,999                  $100
195.16     $ 1,000,000 to $ 4,999,999                  $300
195.17     $ 5,000,000 to $ 9,999,999                $1,000 
195.18     $10,000,000 to $19,999,999                $2,000 
195.19     $20,000,000 or more                       $5,000 
195.20     (b) A tax is imposed for each taxable year on a corporation 
195.21  required to file a return under section 289A.12, subdivision 3, 
195.22  that ~~has a valid election in effect for the taxable year under~~ 
195.23  ~~section 1362 of the Internal Revenue Code~~ is treated as an "S" 
195.24  corporation under section 290.9725 and on a partnership required 
195.25  to file a return under section 289A.12, subdivision 3, other 
195.26  than a partnership that derives over 80 percent of its income 
195.27  from farming.  The tax imposed under this paragraph is due on or 
195.28  before the due date of the return for the taxpayer due under 
195.29  section 289A.18, subdivision 1.  The commissioner shall 
195.30  prescribe the return to be used for payment of this tax.  The 
195.31  tax under this paragraph is equal to the following amounts:  
195.32       If the sum of the S corporation's or partnership's 
195.33  Minnesota property, payrolls, and sales
195.34  or receipts is:                        the tax equals:
195.35               less than $500,000                $0 
195.36       $   500,000 to $   999,999              $100 
196.1        $ 1,000,000 to $ 4,999,999              $300 
196.2        $ 5,000,000 to $ 9,999,999            $1,000 
196.3        $10,000,000 to $19,999,999            $2,000 
196.4        $20,000,000 or more                   $5,000 
196.5      Sec. 15.  Minnesota Statutes 1996, section 290.17, 
196.6   subdivision 1, is amended to read: 
196.7      Subdivision 1.  [SCOPE OF ALLOCATION RULES.] (a) The income 
196.8   of resident individuals is not subject to allocation outside 
196.9   this state.  The allocation rules apply to nonresident 
196.10  individuals, estates, trusts, nonresident partners of 
196.11  partnerships, nonresident shareholders of corporations ~~having a~~ 
196.12  ~~valid election in effect under section 1362 of the Internal~~ 
196.13  ~~Revenue Code~~ treated as "S" corporations under section 290.9725, 
196.14  and all corporations not having such an election in effect.  If 
196.15  a partnership or corporation would not otherwise be subject to 
196.16  the allocation rules, but conducts a trade or business that is 
196.17  part of a unitary business involving another legal entity that 
196.18  is subject to the allocation rules, the partnership or 
196.19  corporation is subject to the allocation rules. 
196.20     (b) Expenses, losses, and other deductions (referred to 
196.21  collectively in this paragraph as "deductions") must be 
196.22  allocated along with the item or class of gross income to which 
196.23  they are definitely related for purposes of assignment under 
196.24  this section or apportionment under section 290.191, 290.20, 
196.25  290.35, or 290.36.  Deductions not definitely related to any 
196.26  item or class of gross income are assigned to the taxpayer's 
196.27  domicile. 
196.28     (c) In the case of an individual who is a resident for only 
196.29  part of a taxable year, the individual's income, gains, losses, 
196.30  and deductions from the distributive share of a partnership, S 
196.31  corporation, trust, or estate are not subject to allocation 
196.32  outside this state to the extent of the distributive share 
196.33  multiplied by a ratio, the numerator of which is the number of 
196.34  days the individual was a resident of this state during the tax 
196.35  year of the partnership, S corporation, trust, or estate, and 
196.36  the denominator of which is the number of days in the taxable 
197.1   year of the partnership, S corporation, trust, or estate. 
197.2      Sec. 16.  Minnesota Statutes 1996, section 290.371, 
197.3   subdivision 2, is amended to read: 
197.4      Subd. 2.  [EXEMPTIONS.] A corporation is not required to 
197.5   file a notice of business activities report if:  
197.6      (1) by the end of an accounting period for which it was 
197.7   otherwise required to file a notice of business activities 
197.8   report under this section, it had received a certificate of 
197.9   authority to do business in this state; 
197.10     (2) a timely return has been filed under section 289A.08; 
197.11     (3) the corporation is exempt from taxation under this 
197.12  chapter pursuant to section 290.05; 
197.13     (4) the corporation's activities in Minnesota, or the 
197.14  interests in property which it owns, consist solely of 
197.15  activities or property exempted from jurisdiction to tax under 
197.16  section 290.015, subdivision 3, paragraph (b); or 
197.17     (5) the corporation ~~has a valid election in effect under~~ 
197.18  ~~section 1362 of the Internal Revenue Code~~ is an "S" corporation 
197.19  under section 290.9725. 
197.20     Sec. 17.  Minnesota Statutes 1996, section 290.9725, is 
197.21  amended to read: 
197.22     290.9725 [S CORPORATION.] 
197.23     For purposes of this chapter, the term "S corporation" 
197.24  means any corporation having a valid election in effect for the 
197.25  taxable year under section 1362 of the Internal Revenue Code, 
197.26  except that a corporation which either: 
197.27     (1) is a financial institution to which either section 585 
197.28  or section 593 of the Internal Revenue Code applies; or 
197.29     (2) has a wholly owned subsidiary as described in section 
197.30  362(b)(3) of the Internal Revenue Code which is a financial 
197.31  institution as described above 
197.32  is not an "S" corporation for the purposes of this chapter.  An 
197.33  S corporation shall not be subject to the taxes imposed by this 
197.34  chapter, except the taxes imposed under sections 290.0922, 
197.35  290.92, 290.9727, 290.9728, and 290.9729. 
197.36     Sec. 18.  Minnesota Statutes 1996, section 290.9727, 
198.1   subdivision 1, is amended to read: 
198.2      Subdivision 1.  [TAX IMPOSED.] For ~~a~~ an "S" corporation 
198.3   electing S corporation status pursuant to section 1362 of the 
198.4   Internal Revenue Code after December 31, 1986, and having a 
198.5   recognized built-in gain as defined in section 1374 of the 
198.6   Internal Revenue Code, there is imposed a tax on the taxable 
198.7   income of such S corporation, as defined in this section, at the 
198.8   rate prescribed by section 290.06, subdivision 1.  This 
198.9   subdivision does not apply to any corporation having an S 
198.10  election in effect for each of its taxable years.  An S 
198.11  corporation and any predecessor corporation must be treated as 
198.12  one corporation for purposes of the preceding sentence.  
198.13     Sec. 19.  Minnesota Statutes 1996, section 290.9728, 
198.14  subdivision 1, is amended to read: 
198.15     Subdivision 1.  [TAX IMPOSED.] There is imposed a tax on 
198.16  the taxable income of ~~a~~ an "S" corporation that has:  
198.17     (1) elected S corporation status pursuant to section 1362 
198.18  of the Internal Revenue Code of 1986, as amended through 
198.19  December 31, 1986, before January 1, 1987; 
198.20     (2) a net capital gain for the taxable year (i) in excess 
198.21  of $25,000 and (ii) exceeding 50 percent of the corporation's 
198.22  federal taxable income for the taxable year; and 
198.23     (3) federal taxable income for the taxable year exceeding 
198.24  $25,000.  
198.25     The tax is imposed at the rate prescribed by section 
198.26  290.06, subdivision 1.  For purposes of this section, "federal 
198.27  taxable income" means federal taxable income determined under 
198.28  section 1374(4)(d) of the Internal Revenue Code.  This section 
198.29  does not apply to an S corporation which has had an election 
198.30  under section 1362 of the Internal Revenue Code of 1954, in 
198.31  effect for the three immediately preceding taxable years.  This 
198.32  section does not apply to an S corporation that has been in 
198.33  existence for less than four taxable years and has had an 
198.34  election in effect under section 1362 of the Internal Revenue 
198.35  Code of 1954 for each of the corporation's taxable years.  For 
198.36  purposes of this section, an S corporation and any predecessor 
199.1   corporation are treated as one corporation.  
199.2      Sec. 20.  [290.9743] [ELECTION BY FASIT.] 
199.3      An entity having a valid election as a financial asset 
199.4   securitization investment trust in effect for a taxable year 
199.5   under section 860L(a) of the Internal Revenue Code shall not be 
199.6   subject to the taxes imposed by this chapter, except the tax 
199.7   imposed under section 290.92. 
199.8      Sec. 21.  [290.9744] [FASIT INCOME TAXABLE TO HOLDERS OF 
199.9   INTERESTS.] 
199.10     The income of a financial asset securitization investment 
199.11  trust is taxable to the holders of interests in the financial 
199.12  asset securitization investment trust as provided in sections 
199.13  860H to 860L of the Internal Revenue Code.  The income of the 
199.14  holders must be computed under the provisions of this chapter. 
199.15     Sec. 22.  Minnesota Statutes 1996, section 291.005, 
199.16  subdivision 1, is amended to read: 
199.17     Subdivision 1.  Unless the context otherwise clearly 
199.18  requires, the following terms used in this chapter shall have 
199.19  the following meanings: 
199.20     (1) "Federal gross estate" means the gross estate of a 
199.21  decedent as valued and otherwise determined for federal estate 
199.22  tax purposes by federal taxing authorities pursuant to the 
199.23  provisions of the Internal Revenue Code. 
199.24     (2) "Minnesota gross estate" means the federal gross estate 
199.25  of a decedent after (a) excluding therefrom any property 
199.26  included therein which has its situs outside Minnesota and (b) 
199.27  including therein any property omitted from the federal gross 
199.28  estate which is includable therein, has its situs in Minnesota, 
199.29  and was not disclosed to federal taxing authorities.  
199.30     (3) "Personal representative" means the executor, 
199.31  administrator or other person appointed by the court to 
199.32  administer and dispose of the property of the decedent.  If 
199.33  there is no executor, administrator or other person appointed, 
199.34  qualified, and acting within this state, then any person in 
199.35  actual or constructive possession of any property having a situs 
199.36  in this state which is included in the federal gross estate of 
200.1   the decedent shall be deemed to be a personal representative to 
200.2   the extent of the property and the Minnesota estate tax due with 
200.3   respect to the property. 
200.4      (4) "Resident decedent" means an individual whose domicile 
200.5   at the time of death was in Minnesota. 
200.6      (5) "Nonresident decedent" means an individual whose 
200.7   domicile at the time of death was not in Minnesota. 
200.8      (6) "Situs of property" means, with respect to real 
200.9   property, the state or country in which it is located; with 
200.10  respect to tangible personal property, the state or country in 
200.11  which it was normally kept or located at the time of the 
200.12  decedent's death; and with respect to intangible personal 
200.13  property, the state or country in which the decedent was 
200.14  domiciled at death. 
200.15     (7) "Commissioner" means the commissioner of revenue or any 
200.16  person to whom the commissioner has delegated functions under 
200.17  this chapter. 
200.18     (8) "Internal Revenue Code" means the United States 
200.19  Internal Revenue Code of 1986, as amended through ~~March 22~~ 
200.20  December 31, 1996, and includes the provisions of section 
200.21  1(a)(4) of Public Law Number 104-117. 
200.22     Sec. 23.  [FEDERAL CHANGES.] 
200.23     The changes made by sections 1118(a), 1305, 1603, 1702(e), 
200.24  and 1702(f) of the Small Business Job Protection Act, Public Law 
200.25  Number 104-188, sections 451(a), 451(b), 909, and 910 of the 
200.26  Personal Responsibility and Work Opportunity Reconciliation Act, 
200.27  Public Law Number 104-193, and the federal changes to taxable 
200.28  income of section 2 of this article which affect the Minnesota 
200.29  definition of wages under Minnesota Statutes, section 290.92, 
200.30  subdivision 1, S corporation status under Minnesota Statutes, 
200.31  section 290.9725, unrelated business income tax under Minnesota 
200.32  Statutes, section 290.05, subdivision 3, corporate alternative 
200.33  minimum tax under Minnesota Statutes, section 290.0921, 
200.34  subdivision 3, estate tax under Minnesota Statutes, sections 
200.35  291.005 and 291.03, the Minnesota working family credit under 
200.36  Minnesota Statutes, section 290.0671, subdivision 1, and the 
201.1   definition of income under Minnesota Statutes, section 290A.03, 
201.2   subdivision 3, shall become effective at the same time the 
201.3   changes become effective for federal purposes. 
201.4      Sec. 24.  [INSTRUCTION TO REVISOR.] 
201.5      In the next edition of Minnesota Statutes, the revisor of 
201.6   statutes shall substitute the phrase "Internal Revenue Code of 
201.7   1986, as amended through December 31, 1996," for the words 
201.8   "Internal Revenue Code of 1986, as amended through April 15, 
201.9   1995," wherever the phrase occurs in chapters 290A, 297, 298, 
201.10  and 469. 
201.11     Sec. 25.  [EFFECTIVE DATE.] 
201.12     Sections 3 to 5, 7 to 20 and the provision of section 2 
201.13  dealing with regulated investment companies are effective for 
201.14  tax years beginning after December 31, 1996.  The remainder of 
201.15  this article is effective at the same time and for the same 
201.16  years as the federal changes made in 1996 were effective for 
201.17  federal purposes. 
201.18                             ARTICLE 10
201.19                             INCOME TAX 
201.20     Section 1.  Minnesota Statutes 1996, section 290.01, 
201.21  subdivision 19c, is amended to read: 
201.22     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
201.23  INCOME.] For corporations, there shall be added to federal 
201.24  taxable income: 
201.25     (1) the amount of any deduction taken for federal income 
201.26  tax purposes for income, excise, or franchise taxes based on net 
201.27  income or related minimum taxes paid by the corporation to 
201.28  Minnesota, another state, a political subdivision of another 
201.29  state, the District of Columbia, or any foreign country or 
201.30  possession of the United States; 
201.31     (2) interest not subject to federal tax upon obligations 
201.32  of:  the United States, its possessions, its agencies, or its 
201.33  instrumentalities; the state of Minnesota or any other state, 
201.34  any of its political or governmental subdivisions, any of its 
201.35  municipalities, or any of its governmental agencies or 
201.36  instrumentalities; the District of Columbia; or Indian tribal 
202.1   governments; 
202.2      (3) exempt-interest dividends received as defined in 
202.3   section 852(b)(5) of the Internal Revenue Code; 
202.4      (4) ~~the amount of any windfall profits tax deducted under~~ 
202.5   ~~section 164 or 471 of the Internal Revenue Code;~~ 
202.6      ~~(5)~~ the amount of any net operating loss deduction taken 
202.7   for federal income tax purposes under section 172 or 832(c)(10) 
202.8   of the Internal Revenue Code or operations loss deduction under 
202.9   section 810 of the Internal Revenue Code; 
202.10     ~~(6)~~ (5) the amount of any special deductions taken for 
202.11  federal income tax purposes under sections 241 to 247 of the 
202.12  Internal Revenue Code; 
202.13     ~~(7)~~ (6) losses from the business of mining, as defined in 
202.14  section 290.05, subdivision 1, clause (a), that are not subject 
202.15  to Minnesota income tax; 
202.16     ~~(8)~~ (7) the amount of any capital losses deducted for 
202.17  federal income tax purposes under sections 1211 and 1212 of the 
202.18  Internal Revenue Code; 
202.19     ~~(9)~~ (8) the amount of any charitable contributions deducted 
202.20  for federal income tax purposes under section 170 of the 
202.21  Internal Revenue Code; 
202.22     ~~(10)~~ (9) the exempt foreign trade income of a foreign sales 
202.23  corporation under sections 921(a) and 291 of the Internal 
202.24  Revenue Code; 
202.25     ~~(11)~~ (10) the amount of percentage depletion deducted under 
202.26  sections 611 through 614 and 291 of the Internal Revenue Code; 
202.27     ~~(12)~~ (11) for certified pollution control facilities placed 
202.28  in service in a taxable year beginning before December 31, 1986, 
202.29  and for which amortization deductions were elected under section 
202.30  169 of the Internal Revenue Code of 1954, as amended through 
202.31  December 31, 1985, the amount of the amortization deduction 
202.32  allowed in computing federal taxable income for those 
202.33  facilities; ~~and~~ 
202.34     ~~(13)~~ (12) the amount of any deemed dividend from a foreign 
202.35  operating corporation determined pursuant to section 290.17, 
202.36  subdivision 4, paragraph (g); and 
203.1      (13) the amount of any environmental tax paid under section 
203.2   59(a) of the Internal Revenue Code. 
203.3      Sec. 2.  Minnesota Statutes 1996, section 290.01, 
203.4   subdivision 19d, is amended to read: 
203.5      Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
203.6   TAXABLE INCOME.] For corporations, there shall be subtracted 
203.7   from federal taxable income after the increases provided in 
203.8   subdivision 19c:  
203.9      (1) the amount of foreign dividend gross-up added to gross 
203.10  income for federal income tax purposes under section 78 of the 
203.11  Internal Revenue Code; 
203.12     (2) the amount of salary expense not allowed for federal 
203.13  income tax purposes due to claiming the federal jobs credit 
203.14  under section 51 of the Internal Revenue Code; 
203.15     (3) any dividend (not including any distribution in 
203.16  liquidation) paid within the taxable year by a national or state 
203.17  bank to the United States, or to any instrumentality of the 
203.18  United States exempt from federal income taxes, on the preferred 
203.19  stock of the bank owned by the United States or the 
203.20  instrumentality; 
203.21     (4) amounts disallowed for intangible drilling costs due to 
203.22  differences between this chapter and the Internal Revenue Code 
203.23  in taxable years beginning before January 1, 1987, as follows: 
203.24     (i) to the extent the disallowed costs are represented by 
203.25  physical property, an amount equal to the allowance for 
203.26  depreciation under Minnesota Statutes 1986, section 290.09, 
203.27  subdivision 7, subject to the modifications contained in 
203.28  subdivision 19e; and 
203.29     (ii) to the extent the disallowed costs are not represented 
203.30  by physical property, an amount equal to the allowance for cost 
203.31  depletion under Minnesota Statutes 1986, section 290.09, 
203.32  subdivision 8; 
203.33     (5) the deduction for capital losses pursuant to sections 
203.34  1211 and 1212 of the Internal Revenue Code, except that: 
203.35     (i) for capital losses incurred in taxable years beginning 
203.36  after December 31, 1986, capital loss carrybacks shall not be 
204.1   allowed; 
204.2      (ii) for capital losses incurred in taxable years beginning 
204.3   after December 31, 1986, a capital loss carryover to each of the 
204.4   15 taxable years succeeding the loss year shall be allowed; 
204.5      (iii) for capital losses incurred in taxable years 
204.6   beginning before January 1, 1987, a capital loss carryback to 
204.7   each of the three taxable years preceding the loss year, subject 
204.8   to the provisions of Minnesota Statutes 1986, section 290.16, 
204.9   shall be allowed; and 
204.10     (iv) for capital losses incurred in taxable years beginning 
204.11  before January 1, 1987, a capital loss carryover to each of the 
204.12  five taxable years succeeding the loss year to the extent such 
204.13  loss was not used in a prior taxable year and subject to the 
204.14  provisions of Minnesota Statutes 1986, section 290.16, shall be 
204.15  allowed; 
204.16     (6) an amount for interest and expenses relating to income 
204.17  not taxable for federal income tax purposes, if (i) the income 
204.18  is taxable under this chapter and (ii) the interest and expenses 
204.19  were disallowed as deductions under the provisions of section 
204.20  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
204.21  federal taxable income; 
204.22     (7) in the case of mines, oil and gas wells, other natural 
204.23  deposits, and timber for which percentage depletion was 
204.24  disallowed pursuant to subdivision 19c, clause (11), a 
204.25  reasonable allowance for depletion based on actual cost.  In the 
204.26  case of leases the deduction must be apportioned between the 
204.27  lessor and lessee in accordance with rules prescribed by the 
204.28  commissioner.  In the case of property held in trust, the 
204.29  allowable deduction must be apportioned between the income 
204.30  beneficiaries and the trustee in accordance with the pertinent 
204.31  provisions of the trust, or if there is no provision in the 
204.32  instrument, on the basis of the trust's income allocable to 
204.33  each; 
204.34     (8) for certified pollution control facilities placed in 
204.35  service in a taxable year beginning before December 31, 1986, 
204.36  and for which amortization deductions were elected under section 
205.1   169 of the Internal Revenue Code of 1954, as amended through 
205.2   December 31, 1985, an amount equal to the allowance for 
205.3   depreciation under Minnesota Statutes 1986, section 290.09, 
205.4   subdivision 7; 
205.5      (9) the amount included in federal taxable income 
205.6   attributable to the credits provided in Minnesota Statutes 1986, 
205.7   section 273.1314, subdivision 9, or Minnesota Statutes, section 
205.8   469.171, subdivision 6; 
205.9      (10) amounts included in federal taxable income that are 
205.10  due to refunds of income, excise, or franchise taxes based on 
205.11  net income or related minimum taxes paid by the corporation to 
205.12  Minnesota, another state, a political subdivision of another 
205.13  state, the District of Columbia, or a foreign country or 
205.14  possession of the United States to the extent that the taxes 
205.15  were added to federal taxable income under section 290.01, 
205.16  subdivision 19c, clause (1), in a prior taxable year; 
205.17     (11) the following percentage of royalties, fees, or other 
205.18  like income accrued or received from a foreign operating 
205.19  corporation or a foreign corporation which is part of the same 
205.20  unitary business as the receiving corporation: 
205.21        Taxable Year 
205.22        Beginning After .......... Percentage 
205.23        December 31, 1988 ........ 50 percent 
205.24        December 31, 1990 ........ 80 percent;    
205.25     (12) income or gains from the business of mining as defined 
205.26  in section 290.05, subdivision 1, clause (a), that are not 
205.27  subject to Minnesota franchise tax; 
205.28     (13) the amount of handicap access expenditures in the 
205.29  taxable year which are not allowed to be deducted or capitalized 
205.30  under section 44(d)(7) of the Internal Revenue Code; 
205.31     (14) the amount of qualified research expenses not allowed 
205.32  for federal income tax purposes under section 280C(c) of the 
205.33  Internal Revenue Code, but only to the extent that the amount 
205.34  exceeds the amount of the credit allowed under section 
205.35  290.068; ~~and~~ 
205.36     (15) the amount of salary expenses not allowed for federal 
206.1   income tax purposes due to claiming the Indian employment credit 
206.2   under section 45A(a) of the Internal Revenue Code; and 
206.3      (16) the amount of any refund of environmental taxes paid 
206.4   under section 59(a) of the Internal Revenue Code. 
206.5      Sec. 3.  Minnesota Statutes 1996, section 290.01, is 
206.6   amended by adding a subdivision to read: 
206.7      Subd. 32.  [MARRIED.] A taxpayer is a married taxpayer for 
206.8   purposes of this chapter only if the person is a party to a 
206.9   civil marriage contract, which must be between persons of the 
206.10  opposite sex.  A person is not a married taxpayer for purposes 
206.11  of this chapter if the person is a party to a marriage entered 
206.12  into by persons of the same sex, either under common law or 
206.13  statute, that is recognized by another state or a foreign 
206.14  jurisdiction. 
206.15     Sec. 4.  Minnesota Statutes 1996, section 290.06, 
206.16  subdivision 2c, is amended to read: 
206.17     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
206.18  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
206.19  ~~married~~ individuals ~~filing~~ who are married as defined in section 
206.20  290.01, subdivision 32, and who file joint returns and surviving 
206.21  spouses as defined in section 2(a) of the Internal Revenue Code 
206.22  must be computed by applying to their taxable net income the 
206.23  following schedule of rates: 
206.24     (1) On the first $19,910, 6 percent; 
206.25     (2) On all over $19,910, but not over $79,120, 8 percent; 
206.26     (3) On all over $79,120, 8.5 percent. 
206.27     ~~Married~~ Individuals ~~filing~~ who are married as defined in 
206.28  section 290.01, subdivision 32, and who file separate returns, 
206.29  estates, and trusts must compute their income tax by applying 
206.30  the above rates to their taxable income, except that the income 
206.31  brackets will be one-half of the above amounts.  
206.32     (b) The income taxes imposed by this chapter upon unmarried 
206.33  individuals must be computed by applying to taxable net income 
206.34  the following schedule of rates: 
206.35     (1) On the first $13,620, 6 percent; 
206.36     (2) On all over $13,620, but not over $44,750, 8 percent; 
207.1      (3) On all over $44,750, 8.5 percent. 
207.2      (c) The income taxes imposed by this chapter upon unmarried 
207.3   individuals qualifying as a head of household as defined in 
207.4   section 2(b) of the Internal Revenue Code must be computed by 
207.5   applying to taxable net income the following schedule of rates: 
207.6      (1) On the first $16,770, 6 percent; 
207.7      (2) On all over $16,770, but not over $67,390, 8 percent; 
207.8      (3) On all over $67,390, 8.5 percent. 
207.9      (d) In lieu of a tax computed according to the rates set 
207.10  forth in this subdivision, the tax of any individual taxpayer 
207.11  whose taxable net income for the taxable year is less than an 
207.12  amount determined by the commissioner must be computed in 
207.13  accordance with tables prepared and issued by the commissioner 
207.14  of revenue based on income brackets of not more than $100.  The 
207.15  amount of tax for each bracket shall be computed at the rates 
207.16  set forth in this subdivision, provided that the commissioner 
207.17  may disregard a fractional part of a dollar unless it amounts to 
207.18  50 cents or more, in which case it may be increased to $1. 
207.19     (e) An individual who is not a Minnesota resident for the 
207.20  entire year must compute the individual's Minnesota income tax 
207.21  as provided in this subdivision.  After the application of the 
207.22  nonrefundable credits provided in this chapter, the tax 
207.23  liability must then be multiplied by a fraction in which:  
207.24     (1) The numerator is the individual's Minnesota source 
207.25  federal adjusted gross income as defined in section 62 of the 
207.26  Internal Revenue Code increased by the addition required for 
207.27  interest income from non-Minnesota state and municipal bonds 
207.28  under section 290.01, subdivision 19a, clause (1), after 
207.29  applying the allocation and assignability provisions of section 
207.30  290.081, clause (a), or 290.17; and 
207.31     (2) the denominator is the individual's federal adjusted 
207.32  gross income as defined in section 62 of the Internal Revenue 
207.33  Code of 1986, as amended through April 15, 1995, increased by 
207.34  the addition required for interest income from non-Minnesota 
207.35  state and municipal bonds under section 290.01, subdivision 19a, 
207.36  clause (1). 
208.1      Sec. 5.  Minnesota Statutes 1996, section 290.06, is 
208.2   amended by adding a subdivision to read: 
208.3      Subd. 25.  [CREDIT FOR CONTRIBUTIONS TO HIGHER 
208.4   EDUCATION.] (a) Subject to the applicable limitations provided 
208.5   by this subdivision, individuals may take as a credit against 
208.6   the tax due under this chapter an amount equal to 30 percent of 
208.7   the aggregate amount of charitable contributions made during the 
208.8   taxable year to a nonprofit institution of higher education 
208.9   located within this state or a nonprofit corporation, fund, 
208.10  foundation, trust, or association organized and operated 
208.11  exclusively for the benefit of institutions of higher education 
208.12  located within this state.  For individuals who elect to itemize 
208.13  deductions under section 63(e) of the Internal Revenue Code, the 
208.14  percentage used to calculate the credit is reduced to 21.5 
208.15  percent. 
208.16     (b) The maximum amount allowable as a credit under this 
208.17  subdivision in any taxable year shall not exceed $50 for an 
208.18  individual and $100 for a married couple filing jointly. 
208.19     (c) If the amount of the credit determined under this 
208.20  subdivision for any taxable year exceeds the limitations imposed 
208.21  in this subdivision, the unused portion of the credit cannot be 
208.22  carried to another taxable year.  
208.23     (d) For the purpose of this subdivision, "institution of 
208.24  higher education" means only a nonprofit educational institution 
208.25  located within this state that meets all of the following 
208.26  requirements: 
208.27     (1) it maintains a regular faculty and curriculum and has a 
208.28  regularly enrolled body of students in attendance at the place 
208.29  where it carries on its educational activities; 
208.30     (2) it regularly offers education above the 12th grade; 
208.31     (3) it provides programs of study that meet the needs of 
208.32  students for occupational, general, baccalaureate, or graduate 
208.33  education; and 
208.34     (4) it is recognized by the Minnesota higher education 
208.35  services office as an eligible institution of higher education 
208.36  for purposes of state financial aid under section 136A.101. 
209.1      (e) For the purpose of this subdivision, "institution 
209.2   organized and operated exclusively for the benefit of 
209.3   institutions of higher education" means only nonprofit 
209.4   corporations, funds, foundations, trusts, or associations 
209.5   organized and operated exclusively for the benefit of 
209.6   institutions of higher education located within this state which 
209.7   are controlled or approved and reviewed by the governing board 
209.8   of the institution benefiting from the charitable contribution. 
209.9      Sec. 6.  [290.0621] [LOCAL GOVERNMENT REFERENDUM TAX.] 
209.10     Subdivision 1.  [TAX AUTHORIZED.] In addition to all other 
209.11  taxes imposed by this chapter, a tax is imposed on individuals 
209.12  who reside within the territory of a local unit of government 
209.13  other than a school district in which the voters approved a tax 
209.14  increase at a referendum conducted for that purpose in 1997 or a 
209.15  subsequent year.  The tax is imposed as a percentage of the 
209.16  individual's taxable personal income under this chapter, at the 
209.17  rate approved by the voters in the referendum.  This tax does 
209.18  not apply to referendums on bond issues.  Individuals residing 
209.19  in the local unit of government on the last day of the taxable 
209.20  year are subject to the tax.  A tax imposed under subdivision 1 
209.21  shall be paid together with and subject to the same 
209.22  administration as other taxes imposed under this chapter.  The 
209.23  revenues derived from the tax will be distributed by the 
209.24  commissioner of revenue to the local unit of government that 
209.25  imposed the tax. 
209.26     Subd. 2.  [REFERENDUM.] (a) The tax under subdivision 1 may 
209.27  be imposed at the rate approved by the voters of the local unit 
209.28  of government at a referendum called for the purpose.  The 
209.29  referendum may be called by the governing body of the local unit 
209.30  of government or must be called by the governing body upon 
209.31  written petition of qualified voters of the local unit of 
209.32  government.  The referendum shall be conducted during the 
209.33  calendar year before the tax, if approved, first becomes 
209.34  payable.  Only one election to approve an increase may be held 
209.35  in a calendar year.  Unless the referendum is conducted by mail 
209.36  under paragraph (g), the referendum must be held on the first 
210.1   Tuesday after the first Monday in November.  The ballot shall 
210.2   state the income tax rate as a percentage of taxable personal 
210.3   income.  The ballot shall designate the specific number of 
210.4   years, not to exceed five, for which the authorization shall 
210.5   apply.  The ballot may contain a textual portion with the 
210.6   information required in this subdivision and a question stating 
210.7   substantially the following: 
210.8      "Shall the increase in the revenue proposed by (petition 
210.9   to) the governing body of .........., be approved?" 
210.10     If approved, the tax is authorized for the number of years 
210.11  approved, or until revoked or reduced by the voters of the local 
210.12  unit of government at a subsequent referendum. 
210.13     (b) The governing body of the local unit of government 
210.14  shall prepare and deliver by first class mail at least 15 days 
210.15  but no more than 30 days prior to the day of the referendum to 
210.16  each residential address within the boundaries of the local unit 
210.17  of government a notice of the referendum and the proposed tax 
210.18  increase.  The notice must project the anticipated amount of tax 
210.19  increase in annual dollars and annual percentage for typical 
210.20  family incomes within the local unit of government. 
210.21     The notice must include the following statement:  "Passage 
210.22  of this referendum will result in an increase in your personal 
210.23  income taxes." 
210.24     (c) A referendum on the question of revoking or reducing 
210.25  the increased tax authorized pursuant to paragraph (a) may be 
210.26  called by the governing body and must be called by the governing 
210.27  body upon the written petition of qualified voters of the local 
210.28  unit of government.  A tax approved by the voters pursuant to 
210.29  paragraph (a), must be imposed at least once before it is 
210.30  subject to a referendum on its revocation or reduction for 
210.31  subsequent years.  Only one revocation or reduction referendum 
210.32  may be held to revoke or reduce a tax for any specific year and 
210.33  for years thereafter. 
210.34     (d) A petition authorized by paragraph (a) or (c) shall be 
210.35  effective if signed by a number of qualified voters in excess of 
210.36  15 percent of the registered voters of the local unit of 
211.1   government on the day the petition is filed with the local 
211.2   unit.  A referendum invoked by petition shall be held on the 
211.3   date specified in paragraph (a). 
211.4      (e) The approval of 50 percent plus one of those voting on 
211.5   the question is required to pass a referendum authorized by this 
211.6   subdivision. 
211.7      (f) At least 15 days prior to the day of the referendum, 
211.8   the governing body shall submit a copy of the notice required 
211.9   under paragraph (b) to the commissioner of revenue.  Within 15 
211.10  days after the results of the referendum have been certified by 
211.11  the local unit of government, or in the case of a recount, the 
211.12  certification of the results of the recount by the canvassing 
211.13  board, the governing body shall notify the commissioner of 
211.14  revenue of the results of the referendum. 
211.15     (g) Any referendum under this section held on a day other 
211.16  than the first Tuesday after the first Monday in November must 
211.17  be conducted by mail in accordance with section 204B.46.  
211.18  Notwithstanding paragraph (b), in the case of a referendum 
211.19  conducted by mail under this paragraph, the notice required by 
211.20  paragraph (b) shall be prepared and delivered by first class 
211.21  mail at least 20 days before the referendum. 
211.22     Sec. 7.  [290.0672] [JOB TRAINING PROGRAM CREDIT.] 
211.23     Subdivision 1.  [CREDIT ALLOWED.] (a) A credit is allowed 
211.24  against the tax imposed by section 290.06, subdivision 1, equal 
211.25  to the sum of: 
211.26     (1) placement fees paid to a job training program upon 
211.27  hiring a qualified graduate of the program; and 
211.28     (2) retention fees paid to a job training program for 
211.29  retention of a qualified graduate of the program. 
211.30     (b) The maximum placement fee qualifying for a credit under 
211.31  this section is $8,000 per qualified graduate in the year 
211.32  hired.  The maximum retention fee qualifying for a credit under 
211.33  this section is $6,000 per qualified graduate retained as an 
211.34  employee per year.  Only retention fees paid in the second and 
211.35  third years after the qualified graduate is hired qualify for 
211.36  the credit. 
212.1      (c) A credit is allowed only up to the dollar amount of 
212.2   certificates, issued under subdivision 4, and provided by the 
212.3   job training program to the taxpayer. 
212.4      Subd. 2.  [QUALIFIED JOB TRAINING PROGRAM.] (a) To qualify 
212.5   for credits under this section, a job training program must 
212.6   satisfy the following requirements: 
212.7      (1) It must be operated by a nonprofit corporation that 
212.8   qualifies under section 501(c)(3) of the Internal Revenue Code. 
212.9      (2) The organization must spend at least $5,000 per 
212.10  graduate of the program. 
212.11     (3) The program must provide education and training in: 
212.12     (i) basic skills, such as reading, writing, mathematics, 
212.13  and communications; 
212.14     (ii) thinking skills, such as reasoning, creative thinking, 
212.15  decision making, and problem solving; and 
212.16     (iii) personal qualities, such as responsibility, 
212.17  self-esteem, self-management, honesty, and integrity. 
212.18     (4) The program must provide income supplements, when 
212.19  needed, to participants for housing, counseling, tuition, and 
212.20  other basic needs. 
212.21     (5) The education and training course must last for at 
212.22  least six months. 
212.23     (6) Individuals served by the program must: 
212.24     (i) be 18 years old or older; 
212.25     (ii) have had federal adjusted gross income of no more than 
212.26  $10,000 per year in the last two years; 
212.27     (iii) have assets of no more than $5,000, excluding the 
212.28  value of a homestead; and 
212.29     (iv) not have been claimed as a dependent on the federal 
212.30  tax return of another person in the previous taxable year. 
212.31     (7) The program must charge placement and retention fees 
212.32  that exceed the amount of credit certificates provided to the 
212.33  employer by at least ten percent of wages paid to graduates. 
212.34     (b) The program must be certified by the commissioner of 
212.35  children, families, and learning as meeting the requirements of 
212.36  this subdivision. 
213.1      Subd. 3.  [QUALIFIED GRADUATE.] A qualified graduate is a 
213.2   graduate of a job training program qualifying under subdivision 
213.3   1, who is placed in a job that is located in Minnesota and pays 
213.4   at least $9 per hour or its equivalent.  To qualify for a credit 
213.5   under this section for a retention fee, the job in which the 
213.6   graduate is retained must pay at least $10 per hour.  A 
213.7   business, other than the business that originally hired the 
213.8   graduate, may pay a retention fee for the graduate and qualify 
213.9   for the credit. 
213.10     Subd. 4.  [DUTIES OF PROGRAM.] (a) Each program certified 
213.11  by the commissioner under subdivision 2 must comply with the 
213.12  requirements of this subdivision. 
213.13     (b) Each program must maintain records for each graduate 
213.14  for which the program provides a credit certificate to an 
213.15  employer.  These records must include information sufficient to 
213.16  verify the graduate's eligibility under this section, identify 
213.17  the employer, describe the job including its compensation rate 
213.18  and benefits, and determine the amount of placement and 
213.19  retention fees received. 
213.20     (c) Each program must report to the commissioner of revenue 
213.21  by January 1, 2001, on its use of the credit.  The report must 
213.22  include, at least, information on: 
213.23     (1) the number of graduates placed; 
213.24     (2) demographic information on the graduates; 
213.25     (3) the types of positions in which the graduates are 
213.26  placed, including compensation information; 
213.27     (4) the tenure of graduates at the placed position or in 
213.28  other jobs; 
213.29     (5) the amount of employer fees paid to the program; and 
213.30     (6) the amount of money raised by the program from other 
213.31  sources. 
213.32     (d) The commissioner shall compile and summarize this 
213.33  information and report to the legislature by February 15, 2001.  
213.34     Subd. 5.  [ISSUANCE OF CREDIT CERTIFICATES.] (a) The total 
213.35  amount of credits under this section is limited to $1,700,000 
213.36  for taxable years beginning after December 31, 1996, and before 
214.1   January 1, 2002.  The commissioner may issue under paragraph (b) 
214.2   no more than the specified amount of certificates for taxable 
214.3   years beginning during each calendar year: 
214.4          1997            $200,000
214.5          1998            $400,000
214.6          1999            $600,000
214.7          2000            $340,000
214.8          2001            $160,000
214.9      Unused certificates for a taxable year carry over and may 
214.10  be used for a later taxable year, regardless of whether issued 
214.11  by the commissioner. 
214.12     (b) Upon application, the commissioner of children, 
214.13  families, and learning shall issue certificates to job training 
214.14  programs, certified under subdivision 2, up to the dollar amount 
214.15  available for the taxable year.  The certificates must be in a 
214.16  dollar amount that is no greater than the dollar amount applied 
214.17  for, and reflects the commissioner's estimate of the job 
214.18  training program's projected fees for placements and retentions 
214.19  of qualifying graduates.  The commissioner shall issue the 
214.20  certificates in the order in which applications are received 
214.21  until the available authority has been issued. 
214.22     (c) To the extent available, the job training program must 
214.23  provide to employers of its qualified graduates certificates 
214.24  issued by the commissioner of children, families, and learning 
214.25  under this subdivision. 
214.26     Subd. 6.  [NONREFUNDABLE; CARRYOVER.] (a) The credit for 
214.27  the taxable year may not exceed the liability for tax under 
214.28  section 290.06, subdivision 1, for the taxable year, reduced by 
214.29  the sum of nonrefundable credits allowed under this chapter. 
214.30     (b) If the credit for a taxable year exceeds the limitation 
214.31  under paragraph (a), the excess is a carryover to each of the 
214.32  five succeeding taxable years.  All of the carryover must be 
214.33  carried to the earliest of the taxable years to which it may be 
214.34  carried and then to each later year.  The carryover may not 
214.35  exceed the taxpayer's tax under section 290.06, subdivision 1, 
214.36  for the taxable year after deducting the credit for the taxable 
215.1   year. 
215.2      Subd. 7.  [EXPIRATION.] This section expires effective for 
215.3   taxable years beginning after December 31, 2001. 
215.4      Sec. 8.  [290.0681] [LOW-INCOME HOUSING TAX CREDIT.] 
215.5      Subdivision 1.  [CREDIT ALLOWED.] A taxpayer is allowed a 
215.6   credit against the tax computed under section 290.06 for the 
215.7   taxable year equal to 1.7 percent of the applicable percentage 
215.8   of the qualified basis of each building located in Minnesota for 
215.9   which the taxpayer receives a credit under section 42 of the 
215.10  Internal Revenue Code. 
215.11     Subd. 2.  [FEDERAL LAW APPLICABLE.] For purposes of this 
215.12  section, the determination of: 
215.13     (1) applicable percentage shall be made under section 42(b) 
215.14  of the Internal Revenue Code; 
215.15     (2) qualified basis and qualified low-income building shall 
215.16  be made under section 42(c) of the Internal Revenue Code; 
215.17     (3) eligible basis shall be made under section 42(d) of the 
215.18  Internal Revenue Code; 
215.19     (4) qualified low-income housing project shall be made 
215.20  under section 42(g) of the Internal Revenue Code; 
215.21     (5) recapture of credit shall be made under section 42(j) 
215.22  of the Internal Revenue Code, except that the tax for the 
215.23  taxable year shall be increased under section 42(j)(1) of the 
215.24  Internal Revenue Code, only with respect to credits that were 
215.25  used to reduce state income taxes; and 
215.26     (6) application of at-risk rules shall be made under 
215.27  section 42(k) of the Internal Revenue Code. 
215.28     As provided in section 42(e) of the Internal Revenue Code, 
215.29  rehabilitation expenditures will be treated as a separate new 
215.30  building and their treatment under this section will be the same 
215.31  as in section 42(e) of the Internal Revenue Code.  The 
215.32  definitions and special rules relating to the credit period in 
215.33  section 42(f) of the Internal Revenue code and the definitions 
215.34  and special rules in section 42(i) of the Internal Revenue Code 
215.35  shall be applied for the purposes of this section. 
215.36     The state housing credit ceiling under section 42(h) of the 
216.1   Internal Revenue Code shall be zero for the calendar year 
216.2   immediately following the expiration of the federal low-income 
216.3   housing tax credit program and for any calendar year thereafter, 
216.4   except for the carryover of any credit ceiling amount for 
216.5   certain projects in progress which, at the time of the federal 
216.6   expiration, meet the requirements of section 42 of the Internal 
216.7   Revenue Code. 
216.8      Section 469 of the Internal Revenue Code, relating to 
216.9   passive activity losses and credits, shall be applied in 
216.10  claiming the credit under this section. 
216.11     Subd. 3.  [CARRYOVER; ELIGIBILITY.] A tax credit under this 
216.12  section which exceeds the taxpayer's liability computed under 
216.13  section 290.06 may be used as a credit against the taxpayer's 
216.14  liability under section 290.06 in subsequent years until 
216.15  exhausted.  All claims for a tax credit under this section must 
216.16  be filed on or before the end of the 12th month following the 
216.17  close of the taxable year for which the credit may be claimed.  
216.18  Failure to properly claim the credit shall constitute a waiver 
216.19  of the right to claim the credit.  In order to claim a credit 
216.20  under this section, a taxpayer must claim a credit under section 
216.21  42 of the Internal Revenue Code. 
216.22     Subd. 4.  [TRANSFER OF CREDITS.] All or any portion of tax 
216.23  credits granted under this section may be transferred, sold, or 
216.24  assigned to taxpayers who are eligible for the credit.  An owner 
216.25  or transferee desiring to make a transfer, sale, or assignment 
216.26  shall submit to the commissioner a statement which describes the 
216.27  amount of credit for which the transfer, sale, or assignment of 
216.28  credit is eligible.  The owner shall provide to the commissioner 
216.29  appropriate information so that the low-income housing tax 
216.30  credit can be properly allocated. 
216.31     If recapture of low-income housing tax credits is required 
216.32  under subdivision 2, clause (5), any statement submitted to the 
216.33  commissioner as provided in this section shall include the 
216.34  proportion of the state credit required to be recaptured, the 
216.35  identity of each transferee subject to recapture, and the amount 
216.36  of credit previously transferred to the transferee. 
217.1      Sec. 9.  Minnesota Statutes 1996, section 290.191, 
217.2   subdivision 4, is amended to read: 
217.3      Subd. 4.  [APPORTIONMENT FORMULA FOR CERTAIN MAIL ORDER 
217.4   BUSINESSES.] If the business of a corporation, partnership, or 
217.5   proprietorship consists exclusively of the selling of tangible 
217.6   personal property and services in response to orders received by 
217.7   United States mail ~~or~~, telephone, facsimile, or other electronic 
217.8   media, and 99 percent of the taxpayer's property and payroll is 
217.9   within Minnesota, then the taxpayer may apportion net income to 
217.10  Minnesota based solely upon the percentage that the sales made 
217.11  within this state in connection with its trade or business 
217.12  during the tax period are of the total sales wherever made in 
217.13  connection with the trade or business during the tax period.  
217.14  Property and payroll factors are disregarded.  In determining 
217.15  eligibility for this subdivision:  
217.16     (1) the sale not in the ordinary course of business of 
217.17  tangible or intangible assets used in conducting business 
217.18  activities must be disregarded; and 
217.19     (2) property and payroll at a distribution center outside 
217.20  of Minnesota are disregarded if the sole activity at the 
217.21  distribution center is the filling of orders, and no 
217.22  solicitation of orders occurs at the distribution center. 
217.23     Sec. 10.  Laws 1995, chapter 255, article 3, section 2, 
217.24  subdivision 1, as amended by Laws 1996, chapter 464, article 4, 
217.25  section 1, is amended to read: 
217.26     Subdivision 1.  [URBAN REVITALIZATION AND STABILIZATION 
217.27  ZONES.] (a) By September 1, 1995, the metropolitan council shall 
217.28  designate one or more urban revitalization and stabilization 
217.29  zones in the metropolitan area, as defined in section 473.121, 
217.30  subdivision 2.  The designated zones must contain no more than 
217.31  1,000 single family homes in total.  In designating urban 
217.32  revitalization and stabilization zones, the council shall choose 
217.33  areas that are in transition toward blight and poverty.  The 
217.34  council shall use indicators that evidence increasing 
217.35  neighborhood distress such as declining residential property 
217.36  values, declining resident incomes, declining rates of 
218.1   owner-occupancy, and other indicators of blight and poverty in 
218.2   determining which areas are to be urban revitalization and 
218.3   stabilization zones. 
218.4      (b) An urban revitalization and stabilization zone is 
218.5   created in the geographic area composed entirely of parcels that 
218.6   are in whole or in part located within the 1996 65Ldn contour 
218.7   surrounding the Minneapolis-St. Paul International Airport, or 
218.8   within one mile of the boundaries of the 1996 65Ldn contour.  
218.9   For residents of the zone created under this paragraph, 
218.10  eligibility for the program as provided in subdivision 2 is 
218.11  limited to persons buying and occupying a residence in the zone 
218.12  after June 1, 1996, who have entered into purchase agreements 
218.13  related to those homes before the day following final enactment 
218.14  of this law. 
218.15     Sec. 11.  [EFFECTIVE DATE.] 
218.16     Sections 1, 2, 7, and 9 are effective for taxable years 
218.17  beginning after December 31, 1996. 
218.18     Sections 5 and 6 are effective for taxable years beginning 
218.19  after December 31, 1997. 
218.20     Section 8 is effective for taxable years beginning after 
218.21  December 31, 1997, and before January 1, 1999. 
218.22     Section 10 is effective the day following final enactment. 
218.23                             ARTICLE 11
218.24                       SALES AND EXCISE TAXES
218.25     Section 1.  Minnesota Statutes 1996, section 296.141, 
218.26  subdivision 4, is amended to read: 
218.27     Subd. 4.  [CREDIT OR REFUND OF TAX PAID.] The commissioner 
218.28  shall allow the distributor credit or refund of the tax paid on 
218.29  gasoline and special fuel: 
218.30     (1) exported or sold for export from the state, other than 
218.31  in the supply tank of a motor vehicle or of an aircraft; 
218.32     (2) sold to the United States government to be used 
218.33  exclusively in performing its governmental functions and 
218.34  activities or to any "cost plus a fixed fee" contractor employed 
218.35  by the United States government on any national defense project; 
218.36     (3) if the fuel is placed in a tank used exclusively for 
219.1   residential heating; 
219.2      (4) destroyed by accident while in the possession of the 
219.3   distributor; 
219.4      (5) in error; 
219.5      (6) in the case of gasoline only, sold for storage in an 
219.6   on-farm bulk storage tank, if the tax was not collected on the 
219.7   sale; and 
219.8      ~~(6)~~ (7) in such other cases as the commissioner may permit, 
219.9   not inconsistent with the provisions of this chapter and other 
219.10  laws relating to the gasoline and special fuel excise taxes. 
219.11     Sec. 2.  Minnesota Statutes 1996, section 296.18, 
219.12  subdivision 1, is amended to read: 
219.13     Subdivision 1.  [CLAIM; FUEL USED IN OTHER VEHICLES.] Any 
219.14  person who shall buy and use gasoline for a qualifying purpose 
219.15  other than use in motor vehicles, snowmobiles except as provided 
219.16  in clause (2), or motorboats, or special fuel for a qualifying 
219.17  purpose other than use in licensed motor vehicles, and who shall 
219.18  have paid the Minnesota excise tax directly or indirectly 
219.19  through the amount of the tax being included in the price of the 
219.20  gasoline or special fuel, or otherwise, shall be reimbursed and 
219.21  repaid the amount of the tax paid upon filing with the 
219.22  commissioner a claim in the form and manner prescribed by the 
219.23  commissioner, and containing the information the commissioner 
219.24  shall require.  By signing any such claim which is false or 
219.25  fraudulent, the applicant shall be subject to the penalties 
219.26  provided in this section for knowingly making a false claim.  
219.27  The claim shall set forth the total amount of the gasoline so 
219.28  purchased and used by the applicant other than in motor 
219.29  vehicles, or special fuel so purchased and used by the applicant 
219.30  other than in licensed motor vehicles, and shall state when and 
219.31  for what purpose it was used.  When a claim contains an error in 
219.32  computation or preparation, the commissioner is authorized to 
219.33  adjust the claim in accordance with the evidence shown on the 
219.34  claim or other information available to the commissioner.  The 
219.35  commissioner, on being satisfied that the claimant is entitled 
219.36  to the payments, shall approve the claim and transmit it to the 
220.1   commissioner of finance.  No repayment shall be made unless the 
220.2   claim and invoice shall be filed with the commissioner within 
220.3   one year from the date of the purchase.  The postmark on the 
220.4   envelope in which a written claim is mailed shall determine its 
220.5   date of filing.  The words "gasoline" or "special fuel" as used 
220.6   in this subdivision do not include aviation gasoline or special 
220.7   fuel for aircraft.  Gasoline or special fuel bought and used for 
220.8   a "qualifying purpose" means: 
220.9      (1) Gasoline or special fuel used in carrying on a trade or 
220.10  business, used on a farm situated in Minnesota, and used for a 
220.11  farming purpose.  "Farm" and "farming purpose" have the meanings 
220.12  given them in section 6420(c)(2), (3), and (4) of the Internal 
220.13  Revenue Code of 1986, as amended through December 31, 1988.  
220.14     (2) Gasoline or special fuel used for off-highway business 
220.15  use.  "Off-highway business use" means any use off the public 
220.16  highway by a person in that person's trade, business, or 
220.17  activity for the production of income.  "Off-highway business 
220.18  use" includes: 
220.19     (a) use of a passenger snowmobile off the public highways 
220.20  as part of the operations of a resort as defined in section 
220.21  157.15~~.~~; and 
220.22     (b) use of gasoline or special fuel to operate a power 
220.23  takeoff unit on a vehicle, but not including fuel consumed 
220.24  during idling time. 
220.25     "Off-highway business use" does not include use as a fuel 
220.26  in a motor vehicle which, at the time of use, is registered or 
220.27  is required to be registered for highway use under the laws of 
220.28  any state or foreign country.  
220.29     (3) Gasoline or special fuel placed in the fuel tanks of 
220.30  new motor vehicles, manufactured in Minnesota, and shipped by 
220.31  interstate carrier to destinations in other states or foreign 
220.32  countries. 
220.33     By July 1, 1998, the commissioner shall adopt rules that 
220.34  determine the rates and percentages necessary to develop 
220.35  formulas for calculating and administering the refund under 
220.36  clause (2)(b). 
221.1      Sec. 3.  Minnesota Statutes 1996, section 297A.01, 
221.2   subdivision 3, is amended to read: 
221.3      Subd. 3.  A "sale" and a "purchase" includes, but is not 
221.4   limited to, each of the following transactions: 
221.5      (a) Any transfer of title or possession, or both, of 
221.6   tangible personal property, whether absolutely or conditionally, 
221.7   and the leasing of or the granting of a license to use or 
221.8   consume tangible personal property other than manufactured homes 
221.9   used for residential purposes for a continuous period of 30 days 
221.10  or more, for a consideration in money or by exchange or barter; 
221.11     (b) The production, fabrication, printing, or processing of 
221.12  tangible personal property for a consideration for consumers who 
221.13  furnish either directly or indirectly the materials used in the 
221.14  production, fabrication, printing, or processing; 
221.15     (c) The furnishing, preparing, or serving for a 
221.16  consideration of food, meals, or drinks.  "Sale" or "purchase" 
221.17  does not include: 
221.18     (1) meals or drinks served to patients, inmates, or persons 
221.19  residing at hospitals, sanitariums, nursing homes, senior 
221.20  citizens homes, and correctional, detention, and detoxification 
221.21  facilities; 
221.22     (2) meals or drinks purchased for and served exclusively to 
221.23  individuals who are 60 years of age or over and their spouses or 
221.24  to the handicapped and their spouses by governmental agencies, 
221.25  nonprofit organizations, agencies, or churches or pursuant to 
221.26  any program funded in whole or part through 42 USCA sections 
221.27  3001 through 3045, wherever delivered, prepared or served; or 
221.28     (3) meals and lunches served at public and private schools, 
221.29  universities, or colleges. 
221.30  Notwithstanding section 297A.25, subdivision 2, taxable food or 
221.31  meals include, but are not limited to, the following:  
221.32     (i) ~~heated~~ food or drinks~~;~~ prepared by the retailer for 
221.33  immediate consumption either on or off the retailer's premises.  
221.34  For purposes of this subdivision, "food or drinks prepared for 
221.35  immediate consumption" includes any food product upon which an 
221.36  act of preparation including, but not limited to, cooking, 
222.1   mixing, sandwich making, blending, heating, or pouring has been 
222.2   performed by the retailer so the food product may be immediately 
222.3   consumed by the purchaser.  For purposes of this subdivision, 
222.4   "premises" means the total space and facilities, including 
222.5   buildings, grounds, and parking lots that are made available or 
222.6   that are available for use by the retailer or customer for the 
222.7   purpose of sale or consumption of prepared food and drinks.  
222.8   Food and drinks sold within a building or grounds which require 
222.9   an admission charge for entrance are presumed to be sold for 
222.10  consumption on the premises.  The premises of a caterer is the 
222.11  place where the catered food or drinks are served; 
222.12     ~~(ii) sandwiches prepared by the retailer;~~ 
222.13     ~~(iii) single sales of prepackaged ice cream or ice milk~~ 
222.14  ~~novelties prepared by the retailer;~~ 
222.15     ~~(iv) hand-prepared or dispensed ice cream or ice milk~~ (ii) 
222.16  ice cream, ice milk, or frozen yogurt products including 
222.17  novelties, cones, sundaes, and snow cones, sold in single or 
222.18  individual servings.  For purposes of this subdivision, "single 
222.19  or individual servings" do not include products prepackaged and 
222.20  sold in bulk containers or packaging; 
222.21     ~~(v)~~ (iii) soft drinks and other beverages ~~prepared or~~ 
222.22  ~~served by the retailer;~~ including all carbonated and 
222.23  noncarbonated beverages or drinks sold in liquid form except 
222.24  beverages or drinks which contain a primary dairy product or 
222.25  dairy ingredient base, beverages or drinks containing 15 or more 
222.26  percent fruit juice, or noncarbonated and noneffervescent 
222.27  bottled water sold in individual containers of one-half gallon 
222.28  or more in size; 
222.29     ~~(vi)~~ (iv) gum~~;~~, candy, and candy products, except when sold 
222.30  for fundraising purposes by a nonprofit organization that 
222.31  provides educational and social activities primarily for young 
222.32  people 18 years of age and under; 
222.33     ~~(vii)~~ (v) ice; 
222.34     ~~(viii)~~ (vi) all food sold ~~in~~ from vending machines, 
222.35  pushcarts, lunch carts, motor vehicles, or any other form of 
222.36  vehicle except home delivery vehicles; 
223.1      ~~(ix)~~ (vii) party trays ~~prepared by the retailers~~; ~~and~~ 
223.2      ~~(x)~~ (viii) all meals and single servings of packaged snack 
223.3   food~~, single cans or bottles of pop,~~ sold in restaurants and 
223.4   bars; and 
223.5      (ix) bakery products, sold in single or individual servings.
223.6   For purposes of this subdivision, "single or individual 
223.7   servings" do not include products prepackaged and sold in bulk 
223.8   containers or packaging. 
223.9      (d) The granting of the privilege of admission to places of 
223.10  amusement, recreational areas, or athletic events, except a 
223.11  world championship football game sponsored by the national 
223.12  football league, and the privilege of having access to and the 
223.13  use of amusement devices, tanning facilities, reducing salons, 
223.14  steam baths, turkish baths, health clubs, and spas or athletic 
223.15  facilities; 
223.16     (e) The furnishing for a consideration of lodging and 
223.17  related services by a hotel, rooming house, tourist court, motel 
223.18  or trailer camp and of the granting of any similar license to 
223.19  use real property other than the renting or leasing thereof for 
223.20  a continuous period of 30 days or more; 
223.21     (f) The furnishing for a consideration of electricity, gas, 
223.22  water, or steam for use or consumption within this state, or 
223.23  local exchange telephone service, intrastate toll service, and 
223.24  interstate toll service, if that service originates from and is 
223.25  charged to a telephone located in this state.  Furnishing of 
223.26  telephone service obtained by use of a prepaid calling card on 
223.27  which the tax was paid is not a taxable sale under this 
223.28  subdivision.  Telephone service includes paging services and 
223.29  private communication service, as defined in United States Code, 
223.30  title 26, section 4252(d) as amended through December 31, 1991, 
223.31  except for private communication service purchased by an agent 
223.32  acting on behalf of the state lottery.  The furnishing for a 
223.33  consideration of access to telephone services by a hotel to its 
223.34  guests is a sale under this clause.  Sales by municipal 
223.35  corporations in a proprietary capacity are included in the 
223.36  provisions of this clause.  The furnishing of water and sewer 
224.1   services for residential use shall not be considered a sale.  
224.2   The sale of natural gas to be used as a fuel in vehicles 
224.3   propelled by natural gas shall not be considered a sale for the 
224.4   purposes of this section; 
224.5      (g) The furnishing for a consideration of cable television 
224.6   services, including charges for basic service, charges for 
224.7   premium service, and any other charges for any other 
224.8   pay-per-view, monthly, or similar television services; 
224.9      (h) The furnishing for a consideration of parking services, 
224.10  whether on a contractual, hourly, or other periodic basis, 
224.11  except for parking at a meter; 
224.12     (i) The furnishing for a consideration of services listed 
224.13  in this paragraph: 
224.14     (i) laundry and dry cleaning services including cleaning, 
224.15  pressing, repairing, altering, and storing clothes, linen 
224.16  services and supply, cleaning and blocking hats, and carpet, 
224.17  drapery, upholstery, and industrial cleaning.  Laundry and dry 
224.18  cleaning services do not include services provided by coin 
224.19  operated facilities operated by the customer; 
224.20     (ii) motor vehicle washing, waxing, and cleaning services, 
224.21  including services provided by coin-operated facilities operated 
224.22  by the customer, and rustproofing, undercoating, and towing of 
224.23  motor vehicles; 
224.24     (iii) building and residential cleaning, maintenance, and 
224.25  disinfecting and exterminating services; 
224.26     (iv) detective services, security services, burglar, fire 
224.27  alarm, and armored car services; but not including services 
224.28  performed within the jurisdiction they serve by off-duty 
224.29  licensed peace officers as defined in section 626.84, 
224.30  subdivision 1, or services provided by a nonprofit organization 
224.31  for monitoring and electronic surveillance of persons placed on 
224.32  in-home detention pursuant to court order or under the direction 
224.33  of the Minnesota department of corrections; 
224.34     (v) pet grooming services; 
224.35     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
224.36  services; garden planting and maintenance; tree, bush, and shrub 
225.1   pruning, bracing, spraying, and surgery; indoor plant care; 
225.2   tree, bush, shrub and stump removal; and tree trimming for 
225.3   public utility lines.  Services performed under a construction 
225.4   contract for the installation of shrubbery, plants, sod, trees, 
225.5   bushes, and similar items are not taxable; 
225.6      (vii) mixed municipal solid waste management services as 
225.7   described in section 297A.45; 
225.8      (viii) massages, except when provided by a licensed health 
225.9   care facility or professional or upon written referral from a 
225.10  licensed health care facility or professional for treatment of 
225.11  illness, injury, or disease; and 
225.12     (ix) the furnishing for consideration of lodging, board and 
225.13  care services for animals in kennels and other similar 
225.14  arrangements, but excluding veterinary and horse boarding 
225.15  services. 
225.16  The services listed in this paragraph are taxable under section 
225.17  297A.02 if the service is performed wholly within Minnesota or 
225.18  if the service is performed partly within and partly without 
225.19  Minnesota and the greater proportion of the service is performed 
225.20  in Minnesota, based on the cost of performance.  In applying the 
225.21  provisions of this chapter, the terms "tangible personal 
225.22  property" and "sales at retail" include taxable services and the 
225.23  provision of taxable services, unless specifically provided 
225.24  otherwise.  Services performed by an employee for an employer 
225.25  are not taxable under this paragraph.  Services performed by a 
225.26  partnership or association for another partnership or 
225.27  association are not taxable under this paragraph if one of the 
225.28  entities owns or controls more than 80 percent of the voting 
225.29  power of the equity interest in the other entity.  Services 
225.30  performed between members of an affiliated group of corporations 
225.31  are not taxable.  For purposes of this section, "affiliated 
225.32  group of corporations" includes those entities that would be 
225.33  classified as a member of an affiliated group under United 
225.34  States Code, title 26, section 1504, as amended through December 
225.35  31, 1987, and who are eligible to file a consolidated tax return 
225.36  for federal income tax purposes; 
226.1      (j) A "sale" and a "purchase" includes the transfer of 
226.2   computer software, meaning information and directions that 
226.3   dictate the function performed by data processing equipment.  A 
226.4   "sale" and a "purchase" does not include the design, 
226.5   development, writing, translation, fabrication, lease, or 
226.6   transfer for a consideration of title or possession of a custom 
226.7   computer program; and 
226.8      (k) The granting of membership in a club, association, or 
226.9   other organization if: 
226.10     (1) the club, association, or other organization makes 
226.11  available for the use of its members sports and athletic 
226.12  facilities (without regard to whether a separate charge is 
226.13  assessed for use of the facilities); and 
226.14     (2) use of the sports and athletic facilities is not made 
226.15  available to the general public on the same basis as it is made 
226.16  available to members.  
226.17  Granting of membership includes both one-time initiation fees 
226.18  and periodic membership dues.  Sports and athletic facilities 
226.19  include golf courses, tennis, racquetball, handball and squash 
226.20  courts, basketball and volleyball facilities, running tracks, 
226.21  exercise equipment, swimming pools, and other similar athletic 
226.22  or sports facilities.  The provisions of this paragraph do not 
226.23  apply to camps or other recreation facilities owned and operated 
226.24  by an exempt organization under section 501(c)(3) of the 
226.25  Internal Revenue Code of 1986, as amended through December 31, 
226.26  1992, for educational and social activities for young people 
226.27  primarily age 18 and under.  
226.28     Sec. 4.  Minnesota Statutes 1996, section 297A.01, 
226.29  subdivision 4, is amended to read: 
226.30     Subd. 4.  (a) A "retail sale" or "sale at retail" means a 
226.31  sale for any purpose other than resale in the regular course of 
226.32  business.  
226.33     (b) Property utilized by the owner only by leasing such 
226.34  property to others or by holding it in an effort to so lease it, 
226.35  and which is put to no use by the owner other than resale after 
226.36  such lease or effort to lease, shall be considered property 
227.1   purchased for resale.  
227.2      (c) Master computer software programs that are purchased 
227.3   and used to make copies for sale or lease are considered 
227.4   property purchased for resale.  
227.5      (d) Sales of building materials, supplies and equipment to 
227.6   owners, contractors, subcontractors or builders for the erection 
227.7   of buildings or the alteration, repair or improvement of real 
227.8   property are "retail sales" or "sales at retail" in whatever 
227.9   quantity sold and whether or not for purpose of resale in the 
227.10  form of real property or otherwise.  
227.11     (e) A sale of carpeting, linoleum, or other similar floor 
227.12  covering which includes installation of the carpeting, linoleum, 
227.13  or other similar floor covering is a contract for the 
227.14  improvement of real property.  
227.15     (f) A sale of shrubbery, plants, sod, trees, and similar 
227.16  items that includes installation of the shrubbery, plants, sod, 
227.17  trees, and similar items is a contract for the improvement of 
227.18  real property.  
227.19     (g) Aircraft and parts for the repair thereof purchased by 
227.20  a nonprofit, incorporated flying club or association utilized 
227.21  solely by the corporation by leasing such aircraft to 
227.22  shareholders of the corporation shall be considered property 
227.23  purchased for resale.  The leasing of the aircraft to the 
227.24  shareholders by the flying club or association shall be 
227.25  considered a sale.  Leasing of aircraft utilized by a lessee for 
227.26  the purpose of leasing to others, whether or not the lessee also 
227.27  utilizes the aircraft for flight instruction where no separate 
227.28  charge is made for aircraft rental or for charter service, shall 
227.29  be considered a purchase for resale; provided, however, that a 
227.30  proportionate share of the lease payment reflecting use for 
227.31  flight instruction or charter service is subject to tax pursuant 
227.32  to section 297A.14. 
227.33     (h) Tangible personal property that is awarded as prizes 
227.34  shall not be considered property purchased for resale. 
227.35     (i) Tangible personal property that is utilized or employed 
227.36  in the furnishing or providing of services under section 
228.1   297A.01, subdivision 3, paragraph (d), or in conducting lawful 
228.2   gambling under chapter 349 or the state lottery under chapter 
228.3   349A, including property given as promotional items, shall not 
228.4   be considered property purchased for resale.  Machines, 
228.5   equipment, or devices that are used to furnish, provide, or 
228.6   dispense goods or services, including coin-operated devices, 
228.7   shall not be considered property purchased for resale. 
228.8      Sec. 5.  Minnesota Statutes 1996, section 297A.01, 
228.9   subdivision 7, is amended to read: 
228.10     Subd. 7.  "Storage" and "use" do not include the keeping~~,~~ 
228.11  or retaining ~~or exercising of any right or power over~~ in a 
228.12  public warehouse of tangible personal property or tickets or 
228.13  admissions to places of amusement or athletic events when 
228.14  shipped or brought into Minnesota by common carrier, for the 
228.15  purpose of subsequently being transported outside Minnesota and 
228.16  thereafter used solely outside Minnesota, except in the course 
228.17  of interstate commerce~~, or for the purpose of being processed,~~ 
228.18  ~~fabricated or manufactured into, attached to or incorporated~~ 
228.19  ~~into other tangible personal property to be transported outside~~ 
228.20  ~~Minnesota and not thereafter returned to a point within~~ 
228.21  ~~Minnesota, except in the course of interstate commerce~~. 
228.22     Sec. 6.  Minnesota Statutes 1996, section 297A.01, 
228.23  subdivision 11, is amended to read: 
228.24     Subd. 11.  "Tangible personal property" means corporeal 
228.25  personal property of any kind whatsoever, including property 
228.26  which is to become real property as a result of incorporation, 
228.27  attachment, or installation following its acquisition. 
228.28     Personal property does not include: 
228.29     (a) large ponderous machinery and equipment used in a 
228.30  business or production activity which at common law would be 
228.31  considered to be real property; 
228.32     (b) property which is subject to an ad valorem property 
228.33  tax; 
228.34     (c) property described in section 272.02, subdivision 1, 
228.35  clause (8), paragraphs (a) to (d); 
228.36     (d) property described in section 272.03, subdivision 2, 
229.1   clauses (3) and (5). 
229.2      Tangible personal property includes computer software, 
229.3   whether contained on tape, discs, cards, or other 
229.4   devices.  Tangible personal property also includes prepaid 
229.5   telephone calling cards. 
229.6      Sec. 7.  Minnesota Statutes 1996, section 297A.01, 
229.7   subdivision 15, is amended to read: 
229.8      Subd. 15.  "Farm machinery" means new or used machinery, 
229.9   equipment, implements, accessories, and contrivances used 
229.10  directly and principally in the production for sale, but not 
229.11  including the processing, of livestock, dairy animals, dairy 
229.12  products, poultry and poultry products, fruits, 
229.13  vegetables, flowering or ornamental plants including nursery 
229.14  stock, forage, grains and bees and apiary products.  "Farm 
229.15  machinery" includes: 
229.16     (1) machinery for the preparation, seeding or cultivation 
229.17  of soil for growing agricultural crops, as defined in section 
229.18  97A.028, and sod, harvesting and threshing of agricultural 
229.19  products, harvesting or mowing of sod, and certain machinery for 
229.20  dairy, livestock and poultry farms; 
229.21     (2) barn cleaners, milking systems, grain dryers, automatic 
229.22  feeding systems and similar installations, whether or not the 
229.23  equipment is installed by the seller and becomes part of the 
229.24  real property; 
229.25     (3) irrigation equipment sold for exclusively agricultural 
229.26  use, including pumps, pipe fittings, valves, sprinklers and 
229.27  other equipment necessary to the operation of an irrigation 
229.28  system when sold as part of an irrigation system, whether or not 
229.29  the equipment is installed by the seller and becomes part of the 
229.30  real property; 
229.31     (4) logging equipment, including chain saws used for 
229.32  commercial logging; 
229.33     (5) fencing used for the containment of farmed cervidae, as 
229.34  defined in section 17.451, subdivision 2; and 
229.35     (6) primary and backup generator units used to generate 
229.36  electricity for the purpose of operating farm machinery, as 
230.1   defined in this subdivision, or providing light or space heating 
230.2   necessary for the production of livestock, dairy animals, dairy 
230.3   products, or poultry and poultry products.  
230.4      Repair or replacement parts for farm machinery shall not be 
230.5   included in the definition of farm machinery.  
230.6      Tools, shop equipment, grain bins, feed bunks, fencing 
230.7   material except fencing material covered by clause (5), 
230.8   communication equipment and other farm supplies shall not be 
230.9   considered to be farm machinery.  "Farm machinery" does not 
230.10  include motor vehicles taxed under chapter 297B, snowmobiles, 
230.11  snow blowers, lawn mowers except those used in the production of 
230.12  sod for sale, garden-type tractors or garden tillers and the 
230.13  repair and replacement parts for those vehicles and machines. 
230.14     Sec. 8.  Minnesota Statutes 1996, section 297A.01, 
230.15  subdivision 16, is amended to read: 
230.16     Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
230.17  machinery and equipment purchased or leased for use in this 
230.18  state and used by the purchaser or lessee primarily for 
230.19  manufacturing, fabricating, mining, or refining tangible 
230.20  personal property to be sold ultimately at retail and for 
230.21  electronically transmitting results retrieved by a customer of 
230.22  an on-line computerized data retrieval system.  
230.23     (b) Capital equipment includes all machinery and equipment 
230.24  that is essential to the integrated production process.  Capital 
230.25  equipment includes, but is not limited to: 
230.26     (1) machinery and equipment used or required to operate, 
230.27  control, or regulate the production equipment; 
230.28     (2) machinery and equipment used for research and 
230.29  development, design, quality control, and testing activities; 
230.30     (3) environmental control devices that are used to maintain 
230.31  conditions such as temperature, humidity, light, or air pressure 
230.32  when those conditions are essential to and are part of the 
230.33  production process; ~~or~~ 
230.34     (4) materials and supplies necessary to construct and 
230.35  install machinery or equipment~~.~~; 
230.36     (5) repair and replacement parts, including accessories, 
231.1   whether purchased as spare parts, repair parts, or as upgrades 
231.2   or modifications to machinery or equipment; 
231.3      (6) materials used for foundations that support machinery 
231.4   or equipment; or 
231.5      (7) materials used to construct and install special purpose 
231.6   buildings used in the production process. 
231.7      (c) Capital equipment does not include the following: 
231.8      (1) ~~repair or replacement parts, including accessories,~~ 
231.9   ~~whether purchased as spare parts, repair parts, or as upgrades~~ 
231.10  ~~or modifications, and whether purchased before or after the~~ 
231.11  ~~machinery or equipment is placed into service.  Parts or~~ 
231.12  ~~accessories are treated as capital equipment only to the extent~~ 
231.13  ~~that they are a part of and are essential to the operation of~~ 
231.14  ~~the machinery or equipment as initially purchased;~~ 
231.15     ~~(2)~~ motor vehicles taxed under chapter 297B; 
231.16     ~~(3)~~ (2) machinery or equipment used to receive or store raw 
231.17  materials; 
231.18     ~~(4)~~ (3) building materials; 
231.19     ~~(5)~~ (4) machinery or equipment used for nonproduction 
231.20  purposes, including, but not limited to, the following:  
231.21  machinery and equipment used for plant security, fire 
231.22  prevention, first aid, and hospital stations; machinery and 
231.23  equipment used in support operations or for administrative 
231.24  purposes; machinery and equipment used solely for pollution 
231.25  control, prevention, or abatement; and machinery and equipment 
231.26  used in plant cleaning, disposal of scrap and waste, plant 
231.27  communications, space heating, lighting, or safety; 
231.28     ~~(6)~~ (5) "farm machinery" as defined by subdivision 15, and 
231.29  "aquaculture production equipment" as defined by subdivision 19~~,~~ 
231.30  ~~and "replacement capital equipment" as defined by subdivision~~ 
231.31  ~~20~~; or 
231.32     ~~(7)~~ (6) any other item that is not essential to the 
231.33  integrated process of manufacturing, fabricating, mining, or 
231.34  refining. 
231.35     (d) For purposes of this subdivision: 
231.36     (1) "Equipment" means independent devices or tools separate 
232.1   from machinery but essential to an integrated production 
232.2   process, including computers and software, used in operating, 
232.3   controlling, or regulating machinery and equipment; and any 
232.4   subunit or assembly comprising a component of any machinery or 
232.5   accessory or attachment parts of machinery, such as tools, dies, 
232.6   jigs, patterns, and molds. 
232.7      (2) "Fabricating" means to make, build, create, produce, or 
232.8   assemble components or property to work in a new or different 
232.9   manner. 
232.10     (3) "Machinery" means mechanical, electronic, or electrical 
232.11  devices, including computers and software, that are purchased or 
232.12  constructed to be used for the activities set forth in paragraph 
232.13  (a), beginning with the removal of raw materials from inventory 
232.14  through the completion of the product, including packaging of 
232.15  the product. 
232.16     (4) "Manufacturing" means an operation or series of 
232.17  operations where raw materials are changed in form, composition, 
232.18  or condition by machinery and equipment and which results in the 
232.19  production of a new article of tangible personal property.  For 
232.20  purposes of this subdivision, "manufacturing" includes the 
232.21  generation of electricity or steam to be sold at retail. 
232.22     (5) "Mining" means the extraction of minerals, ores, stone, 
232.23  and peat. 
232.24     (6) "On-line data retrieval system" means a system whose 
232.25  cumulation of information is equally available and accessible to 
232.26  all its customers. 
232.27     (7) "Pollution control equipment" means machinery and 
232.28  equipment used to eliminate, prevent, or reduce pollution 
232.29  resulting from an activity described in paragraph (a). 
232.30     (8) "Primarily" means machinery and equipment used 50 
232.31  percent or more of the time in an activity described in 
232.32  paragraph (a). 
232.33     (9) "Refining" means the process of converting a natural 
232.34  resource to a product, including the treatment of water to be 
232.35  sold at retail. 
232.36     (e) For purposes of this subdivision the requirement that 
233.1   the machinery or equipment "must be used by the purchaser or 
233.2   lessee" means that the person who purchases or leases the 
233.3   machinery or equipment must be the one who uses it for the 
233.4   qualifying purpose.  When a contractor buys and installs 
233.5   machinery or equipment as part of an improvement to real 
233.6   property, only the contractor is considered the purchaser. 
233.7      ~~(f) Notwithstanding prior provisions of this subdivision,~~ 
233.8   ~~machinery and equipment purchased or leased to replace machinery~~ 
233.9   ~~and equipment used in the mining or production of taconite shall~~ 
233.10  ~~qualify as capital equipment.~~ 
233.11     Sec. 9.  Minnesota Statutes 1996, section 297A.09, is 
233.12  amended to read: 
233.13     297A.09 [PRESUMPTION OF TAX; BURDEN OF PROOF.] 
233.14     For the purpose of the proper administration of sections 
233.15  297A.01 to 297A.44 and to prevent evasion of the tax, it shall 
233.16  be presumed that all gross receipts are subject to the tax until 
233.17  the contrary is established.  The burden of proving that a sale 
233.18  is not a sale at retail is upon the person who makes the sale, 
233.19  but that person may take from the purchaser, at the time the 
233.20  exempt purchase occurs, an exemption certificate to the effect 
233.21  that the property purchased is for resale or that the sale is 
233.22  otherwise exempt from the application of the tax imposed by 
233.23  sections 297A.01 to 297A.44.  A person asserting a claim that 
233.24  certain sales are exempt, who does not have the required 
233.25  exemption certificates in their possession, shall acquire the 
233.26  certificates within 60 days after receiving written notice from 
233.27  the commissioner that the certificates are required.  If the 
233.28  certificates are not obtained within the 60-day period, the 
233.29  sales are deemed taxable sales under this chapter. 
233.30     Sec. 10.  Minnesota Statutes 1996, section 297A.15, 
233.31  subdivision 7, is amended to read: 
233.32     Subd. 7.  [REFUND; APPROPRIATION; ADULT AND JUVENILE 
233.33  CORRECTIONAL FACILITIES.] ~~(a)~~ If construction materials and 
233.34  supplies described in ~~paragraph (b)~~ section 297A.25, subdivision 
233.35  63, are purchased by a contractor, subcontractor, or builder as 
233.36  part of a lump-sum contract or similar type of contract with a 
234.1   price covering both labor and materials for use in the project, 
234.2   a refund equal to ~~20 percent of~~ the taxes paid by the 
234.3   contractor, subcontractor, or builder must be paid to the 
234.4   governmental subdivision.  The tax must be imposed and collected 
234.5   as if the sales were taxable and the rate under section 297A.02, 
234.6   subdivision 1, applied.  An application for refund must be 
234.7   submitted by the governmental subdivision and must include 
234.8   sufficient information to permit the commissioner to verify the 
234.9   sales taxes paid for the project.  The contractor, 
234.10  subcontractor, or builder must furnish to the governmental 
234.11  subdivision a statement of the cost of the construction 
234.12  materials and supplies and the sales taxes paid on them.  The 
234.13  amount required to make the refunds is annually appropriated to 
234.14  the commissioner.  Interest must be paid on the refund at the 
234.15  rate in section 270.76 from 60 days after the date the refund 
234.16  claim is filed with the commissioner. 
234.17     ~~(b) Construction materials and supplies qualify for the~~ 
234.18  ~~refund under this section if:  (1) the materials and supplies~~ 
234.19  ~~are for use in a project to construct or improve an adult or~~ 
234.20  ~~juvenile correctional facility in a county, home rule charter~~ 
234.21  ~~city, or statutory city, and (2) the project is mandated by~~ 
234.22  ~~state or federal law, rule, or regulation.  The refund applies~~ 
234.23  ~~regardless of whether the materials and supplies are purchased~~ 
234.24  ~~by the city or county, or by a contractor, subcontractor, or~~ 
234.25  ~~builder under a contract with the city or county.~~ 
234.26     Sec. 11.  Minnesota Statutes 1996, section 297A.25, 
234.27  subdivision 2, is amended to read: 
234.28     Subd. 2.  [FOOD PRODUCTS.] The gross receipts from the sale 
234.29  of food products including but not limited to cereal and cereal 
234.30  products, butter, cheese, milk and milk products, oleomargarine, 
234.31  meat and meat products, fish and fish products, eggs and egg 
234.32  products, vegetables and vegetable products, fruit and fruit 
234.33  products, spices and salt, sugar and sugar products, coffee and 
234.34  coffee substitutes, tea, cocoa and cocoa products, and food 
234.35  products which are not taxable pursuant to section 297A.01, 
234.36  subdivision 3, clause (c) are exempt.  ~~This exemption does not~~ 
235.1   ~~include the following:~~  
235.2      ~~(1) candy and candy products, except when sold for~~ 
235.3   ~~fundraising purposes by a nonprofit organization that provides~~ 
235.4   ~~educational and social activities for young people primarily~~ 
235.5   ~~aged 18 and under;~~ 
235.6      ~~(2) carbonated beverages, beverages commonly referred to as~~ 
235.7   ~~soft drinks containing less than 15 percent fruit juice, or~~ 
235.8   ~~bottled water other than noncarbonated and noneffervescent~~ 
235.9   ~~bottled water sold in individual containers of one-half gallon~~ 
235.10  ~~or more in size.~~ 
235.11     Sec. 12.  Minnesota Statutes 1996, section 297A.25, 
235.12  subdivision 7, is amended to read: 
235.13     Subd. 7.  [PETROLEUM PRODUCTS.] The gross receipts from the 
235.14  sale of and storage, use or consumption of the following 
235.15  petroleum products are exempt:  
235.16     (1) products upon which a tax has been imposed and paid 
235.17  under the provisions of chapter 296, and no refund has been or 
235.18  will be allowed because the buyer used the fuel for nonhighway 
235.19  use; 
235.20     (2) products which are used in the improvement of 
235.21  agricultural land by constructing, maintaining, and repairing 
235.22  drainage ditches, tile drainage systems, grass waterways, water 
235.23  impoundment, and other erosion control structures; 
235.24     (3) products purchased by a transit system receiving 
235.25  financial assistance under section 174.24 or 473.384; ~~or~~ 
235.26     (4) products used in a passenger snowmobile, as defined in 
235.27  section 296.01, subdivision 27a, for off-highway business use as 
235.28  part of the operations of a resort as provided under section 
235.29  296.18, subdivision 1, clause (2); or 
235.30     (5) products purchased by a state or a political 
235.31  subdivision of a state for use in motor vehicles exempt from 
235.32  registration under section 168.012, subdivision 1, paragraph (b).
235.33     Sec. 13.  Minnesota Statutes 1996, section 297A.25, 
235.34  subdivision 11, is amended to read: 
235.35     Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
235.36  all sales, including sales in which title is retained by a 
236.1   seller or a vendor or is assigned to a third party under an 
236.2   installment sale or lease purchase agreement under section 
236.3   465.71, of tangible personal property to, and all storage, use 
236.4   or consumption of such property by, the United States and its 
236.5   agencies and instrumentalities, the University of Minnesota, 
236.6   state universities, community colleges, technical colleges, 
236.7   state academies, the Lola and Rudy Perpich Minnesota center for 
236.8   arts education, and school districts are exempt. 
236.9      As used in this subdivision, "school districts" means 
236.10  public school entities and districts of every kind and nature 
236.11  organized under the laws of the state of Minnesota, including, 
236.12  without limitation, school districts, intermediate school 
236.13  districts, education districts, service cooperatives, secondary 
236.14  vocational cooperative centers, special education cooperatives, 
236.15  joint purchasing cooperatives, telecommunication cooperatives, 
236.16  regional management information centers, and any instrumentality 
236.17  of a school district, as defined in section 471.59. 
236.18     Sales exempted by this subdivision include sales under 
236.19  section 297A.01, subdivision 3, paragraph (f), but do not 
236.20  include sales under section 297A.01, subdivision 3, paragraph 
236.21  (j), clause (vii).  
236.22     Sales to veterans homes operated by the veterans homes 
236.23  board of directors or hospitals and nursing homes owned and 
236.24  operated by the state or any of its political subdivisions of 
236.25  the state are exempt under this subdivision.  
236.26     The sales to and exclusively for the use of libraries of 
236.27  books, periodicals, audio-visual materials and equipment, 
236.28  photocopiers for use by the public, and all cataloguing and 
236.29  circulation equipment, and cataloguing and circulation software 
236.30  for library use are exempt under this subdivision.  For purposes 
236.31  of this paragraph "libraries" means libraries as defined in 
236.32  section 134.001, county law libraries under chapter 134A, the 
236.33  state library under section 480.09, and the legislative 
236.34  reference library. 
236.35     Sales of supplies and equipment used in the operation of an 
236.36  ambulance service owned and operated by a political subdivision 
237.1   of the state are exempt under this subdivision provided that the 
237.2   supplies and equipment are used in the course of providing 
237.3   medical care.  Sales to a political subdivision of repair and 
237.4   replacement parts for emergency rescue vehicles and fire trucks 
237.5   and apparatus are exempt under this subdivision.  
237.6      Sales to a political subdivision of machinery and 
237.7   equipment, except for motor vehicles, used directly for mixed 
237.8   municipal solid waste management services at a solid waste 
237.9   disposal facility as defined in section 115A.03, subdivision 10, 
237.10  are exempt under this subdivision.  
237.11     Sales to political subdivisions of chore and homemaking 
237.12  services to be provided to elderly or disabled individuals are 
237.13  exempt. 
237.14     Sales of telephone services to the department of 
237.15  administration that are used to provide telecommunications 
237.16  services through the intertechnologies revolving fund are exempt 
237.17  under this subdivision. 
237.18     Except as provided in subdivision 63, this exemption shall 
237.19  not apply to building, construction or reconstruction materials 
237.20  purchased by a contractor or a subcontractor as a part of a 
237.21  lump-sum contract or similar type of contract with a guaranteed 
237.22  maximum price covering both labor and materials for use in the 
237.23  construction, alteration, or repair of a building or facility.  
237.24  This exemption does not apply to construction materials 
237.25  purchased by tax exempt entities or their contractors to be used 
237.26  in constructing buildings or facilities which will not be used 
237.27  principally by the tax exempt entities. 
237.28     This exemption does not apply to the leasing of a motor 
237.29  vehicle as defined in section 297B.01, subdivision 5, except for 
237.30  leases entered into by the United States or its agencies or 
237.31  instrumentalities.  
237.32     The tax imposed on sales to political subdivisions of the 
237.33  state under this section applies to all political subdivisions 
237.34  other than those explicitly exempted under this subdivision, 
237.35  notwithstanding section 115A.69, subdivision 6, 116A.25, 
237.36  360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
238.1   469.127, 473.448, 473.545, or 473.608 or any other law to the 
238.2   contrary enacted before 1992. 
238.3      Sales exempted by this subdivision include sales made to 
238.4   other states or political subdivisions of other states, if the 
238.5   sale would be exempt from taxation if it occurred in that state, 
238.6   but do not include sales under section 297A.01, subdivision 3, 
238.7   paragraphs (c) and (e). 
238.8      Sec. 14.  Minnesota Statutes 1996, section 297A.25, 
238.9   subdivision 56, is amended to read: 
238.10     Subd. 56.  [FIREFIGHTERS PERSONAL PROTECTIVE EQUIPMENT.] 
238.11  The gross receipts from the sale of and storage, use, or 
238.12  consumption of firefighters personal protective equipment are 
238.13  exempt if purchased by, or if the purchase was authorized by, an 
238.14  organized fire department, fire protection district, or fire 
238.15  company, regularly charged with the responsibility of providing 
238.16  fire protection the state or a political subdivision.  For 
238.17  purposes of this subdivision, "personal protective equipment" 
238.18  includes:  helmets (including face shields, chin straps, and 
238.19  neck liners), bunker coats and pants (including pant 
238.20  suspenders), boots, gloves, head covers or hoods, wildfire 
238.21  jackets, protective coveralls, goggles, self-contained breathing 
238.22  apparatuses, canister filter masks, personal alert safety 
238.23  systems, spanner belts, and all safety equipment required by the 
238.24  Occupational Safety and Health Administration. 
238.25     Sec. 15.  Minnesota Statutes 1996, section 297A.25, 
238.26  subdivision 59, is amended to read: 
238.27     Subd. 59.  [FARM MACHINERY.] ~~From July 1, 1994, until June~~ 
238.28  ~~30, 1997,~~ The gross receipts from the sale of used farm 
238.29  machinery are exempt. 
238.30     Sec. 16.  Minnesota Statutes 1996, section 297A.25, is 
238.31  amended by adding a subdivision to read: 
238.32     Subd. 62.  [HOSPITALS.] The gross receipts from the sale of 
238.33  tangible personal property to, and the storage, use, or 
238.34  consumption of such property by, a hospital are exempt, if the 
238.35  property purchased is to be used for the hospitalization of 
238.36  human beings.  For purposes of this subdivision, "hospital" 
239.1   means a hospital licensed under chapter 144 or a hospital 
239.2   licensed by any other jurisdiction.  This exemption does not 
239.3   apply to purchases made by a clinic, physician's office, or any 
239.4   other medical facility not operating as a hospital, even though 
239.5   the clinic, office, or facility may be owned and operated by a 
239.6   hospital.  Sales exempted by this subdivision do not include 
239.7   sales under section 297A.01, subdivision 3, paragraphs (c), (e), 
239.8   and (i), clause (vii).  This exemption does not apply to 
239.9   building, construction, or reconstruction materials purchased by 
239.10  a contractor or a subcontractor as a part of a lump-sum contract 
239.11  or similar type of contract with a guaranteed maximum price 
239.12  covering both labor and materials for use in the construction, 
239.13  alteration, or repair of a hospital.  This exemption does not 
239.14  apply to construction materials to be used in constructing 
239.15  buildings or facilities which will not be used principally by a 
239.16  hospital.  This exemption does not apply to the leasing of a 
239.17  motor vehicle as defined in section 297B.01, subdivision 5. 
239.18     Sec. 17.  Minnesota Statutes 1996, section 297A.25, is 
239.19  amended by adding a subdivision to read: 
239.20     Subd. 63.  [CONSTRUCTION MATERIALS FOR CORRECTIONAL 
239.21  FACILITIES.] The gross receipts from the sale of and storage, 
239.22  use, or consumption of construction materials and supplies are 
239.23  exempt from the tax imposed under this chapter if purchased for 
239.24  use in a project to construct or improve an adult or juvenile 
239.25  correctional facility in a county, home rule charter city, or 
239.26  statutory city, and if the project is mandated by state or 
239.27  federal law, rule, or regulation.  The exemption applies 
239.28  regardless of whether the materials and supplies are purchased 
239.29  by the city or county, or by a contractor, subcontractor, or 
239.30  builder under a contract with the city or county. 
239.31     Sec. 18.  Minnesota Statutes 1996, section 297A.25, is 
239.32  amended by adding a subdivision to read: 
239.33     Subd. 64.  [CONSTRUCTION MATERIALS; LAKE SUPERIOR 
239.34  CENTER.] Construction materials and supplies are exempt from the 
239.35  tax imposed under this chapter, regardless of whether purchased 
239.36  by the owner, a contractor, or builder, provided the materials 
240.1   and supplies are used or consumed in constructing the Lake 
240.2   Superior Center. 
240.3      Sec. 19. Minnesota Statutes 1996, section 297A.25, is 
240.4   amended by adding a subdivision to read: 
240.5      Subd. 65.  [CONSTRUCTION MATERIALS; SCIENCE 
240.6   MUSEUM.] Construction materials and supplies are exempt from the 
240.7   tax imposed under this chapter, regardless of whether purchased 
240.8   by the owner, a contractor, or builder, provided the materials 
240.9   and supplies are used or consumed in constructing the Science 
240.10  Museum of Minnesota. 
240.11     Sec. 20.  Minnesota Statutes 1996, section 297A.25, is 
240.12  amended by adding a subdivision to read: 
240.13     Subd. 66.  [CONSTRUCTION MATERIALS; BUSINESS INCUBATOR AND 
240.14  INDUSTRIAL PARK FACILITY.] Materials, equipment, and supplies 
240.15  used or consumed in constructing, or incorporated into the 
240.16  construction of, an exempted facility as defined in this 
240.17  subdivision are exempt from the taxes imposed under this chapter 
240.18  and from any sales and use tax imposed by a local unit of 
240.19  government, notwithstanding any ordinance or city charter 
240.20  provision. 
240.21     As used in this subdivision, an "exempted facility" is a 
240.22  facility that includes a business incubator and industrial park 
240.23  that: 
240.24     (1) is owned and operated by a nonprofit charitable 
240.25  organization that qualifies for tax exemption under section 
240.26  501(c)(3) of the Internal Revenue Code; 
240.27     (2) is used for the development of nonretail businesses, 
240.28  offering access to equipment, space, services, and advice to the 
240.29  tenant businesses, for the purpose of encouraging economic 
240.30  development and job creation in the area served by the 
240.31  organization, and emphasizes development of businesses that 
240.32  manufacture products from materials found in the waste stream, 
240.33  or manufacture alternative energy and conservation systems, or 
240.34  make use of emerging environmental technologies; 
240.35     (3) includes in its structure systems of material and 
240.36  energy exchanges that use waste products from one industrial 
241.1   process as sources of energy and material for other processes; 
241.2   and 
241.3      (4) makes use of solar and wind energy technology and 
241.4   incorporates salvaged materials in its construction. 
241.5      Sec. 21.  Minnesota Statutes 1996, section 297A.25, is 
241.6   amended by adding a subdivision to read: 
241.7      Subd. 67.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
241.8   SYSTEM; PRODUCTS AND SERVICES.] The gross receipts from the sale 
241.9   of products and services including end user equipment used for 
241.10  construction, ownership, operation, maintenance, and enhancement 
241.11  of the backbone system of the regionwide public safety radio 
241.12  communication system established under sections 473.891 to 
241.13  473.905, are exempt.  For purposes of this subdivision, backbone 
241.14  system is defined in section 473.891, subdivision 9. 
241.15     Sec. 22.  Minnesota Statutes 1996, section 297A.25, is 
241.16  amended by adding a subdivision to read: 
241.17     Subd. 68.  [ALFALFA PROCESSING FACILITIES CONSTRUCTION 
241.18  MATERIALS.] Purchases of construction materials and supplies are 
241.19  exempt from the sales and use taxes imposed under this chapter, 
241.20  regardless of whether purchased by the owner or a contractor, 
241.21  subcontractor, or builder, if: 
241.22     (1) the materials and supplies are used or consumed in 
241.23  constructing a facility which either (i) develops market-value 
241.24  agricultural products made from alfalfa leaf material, or (ii) 
241.25  produces biomass energy fuel for electricity from alfalfa stems 
241.26  in accordance with the biomass mandate imposed under section 
241.27  216B.2424; and 
241.28     (2) the total capital investment made in the value-added 
241.29  agricultural products and biomass electric generation facilities 
241.30  is at least $50,000,000; or 
241.31     (3) the materials and supplies are used or consumed in 
241.32  constructing, equipping or modifying a district heating and 
241.33  cooling system cogeneration facility that: 
241.34     (i) utilizes wood waste as a primary fuel source; and 
241.35     (ii) satisfies the requirements of the biomass mandate in 
241.36  section 216B.2424, subdivision 5. 
242.1      Sec. 23.  Minnesota Statutes 1996, section 297A.25, is 
242.2   amended by adding a subdivision to read: 
242.3      Subd. 69.  [PHOTOVOLTAIC DEVICES.] The gross receipts from 
242.4   the sale of photovoltaic devices, as defined in section 216C.06, 
242.5   subdivision 13, and the materials used to install, construct, 
242.6   repair, or replace them are exempt. 
242.7      Sec. 24.  Minnesota Statutes 1996, section 297A.25, is 
242.8   amended by adding a subdivision to read: 
242.9      Subd. 70.  [WIND ENERGY CONVERSION SYSTEMS.] The gross 
242.10  receipts from the sale of wind energy conversion systems, as 
242.11  defined in section 216C.06, subdivision 12, and the materials 
242.12  used to manufacture, install, construct, repair, or replace them 
242.13  are exempt if the systems are used as an electric power source. 
242.14     Sec. 25.  Minnesota Statutes 1996, section 297B.01, 
242.15  subdivision 7, is amended to read: 
242.16     Subd. 7.  [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 
242.17  ACQUIRED.] "Sale," "sells," "selling," "purchase," "purchased," 
242.18  or "acquired" means any transfer of title of any motor vehicle, 
242.19  whether absolutely or conditionally, for a consideration in 
242.20  money or by exchange or barter for any purpose other than resale 
242.21  in the regular course of business.  Any motor vehicle utilized 
242.22  by the owner only by leasing such vehicle to others or by 
242.23  holding it in an effort to so lease it, and which is put to no 
242.24  other use by the owner other than resale after such lease or 
242.25  effort to lease, shall be considered property purchased for 
242.26  resale.  The terms also shall include any transfer of title or 
242.27  ownership of a motor vehicle by way of gift or by any other 
242.28  manner or by any other means whatsoever, for or without 
242.29  consideration, except that these terms shall not include: 
242.30     (a) the acquisition of a motor vehicle by inheritance from 
242.31  or by bequest of, a decedent who owned it; 
242.32     (b) the transfer of a motor vehicle which was previously 
242.33  licensed in the names of two or more joint tenants and 
242.34  subsequently transferred without monetary consideration to one 
242.35  or more of the joint tenants; 
242.36     (c) the transfer of a motor vehicle by way of gift between 
243.1   a husband and wife or parent and child; ~~or~~ 
243.2      (d) the voluntary or involuntary transfer of a motor 
243.3   vehicle between a husband and wife in a divorce proceeding~~.~~; or 
243.4      (e) the transfer of a motor vehicle by way of a gift to an 
243.5   organization that is exempt from federal income taxation under 
243.6   section 501(c)(3) of the Internal Revenue Code, as amended 
243.7   through December 31, 1996, when the motor vehicle will be used 
243.8   exclusively (1) for religious, charitable, scientific, public 
243.9   safety testing, literary, or educational purposes; (2) to foster 
243.10  national or international amateur sports competition; or (3) for 
243.11  the prevention of cruelty to children or animals. 
243.12     Sec. 26.  Minnesota Statutes 1996, section 297B.01, 
243.13  subdivision 8, is amended to read: 
243.14     Subd. 8.  [PURCHASE PRICE.] "Purchase price" means the 
243.15  total consideration valued in money for a sale, whether paid in 
243.16  money or otherwise.  The purchase price excludes the amount of a 
243.17  manufacturer's rebate paid or payable to the purchaser.  If a 
243.18  motor vehicle is taken in trade as a credit or as part payment 
243.19  on a motor vehicle taxable under this chapter, the credit or 
243.20  trade-in value allowed by the person selling the motor vehicle 
243.21  shall be deducted from the total selling price to establish the 
243.22  purchase price of the vehicle being sold and the trade-in 
243.23  allowance allowed by the seller shall constitute the purchase 
243.24  price of the motor vehicle accepted as a trade-in.  The purchase 
243.25  price in those instances where the motor vehicle is acquired by 
243.26  gift or by any other transfer for a nominal or no monetary 
243.27  consideration shall also include the average value of similar 
243.28  motor vehicles, established by standards and guides as 
243.29  determined by the motor vehicle registrar.  The purchase price 
243.30  in those instances where a motor vehicle is manufactured by a 
243.31  person who registers it under the laws of this state shall mean 
243.32  the manufactured cost of such motor vehicle and manufactured 
243.33  cost shall mean the amount expended for materials, labor and 
243.34  other properly allocable costs of manufacture, except that in 
243.35  the absence of actual expenditures for the manufacture of a part 
243.36  or all of the motor vehicle, manufactured costs shall mean the 
244.1   reasonable value of the completed motor vehicle.  
244.2      The term "purchase price" shall not include the portion of 
244.3   the value of a motor vehicle due solely to modifications 
244.4   necessary to make the motor vehicle handicapped accessible.  The 
244.5   term "purchase price" shall not include the transfer of a motor 
244.6   vehicle by way of gift between a husband and wife or parent and 
244.7   child, or to a nonprofit organization as provided under section 
244.8   297B.01, paragraph (e), nor shall it include the transfer of a 
244.9   motor vehicle by a guardian to a ward when there is no monetary 
244.10  consideration and the title to such vehicle was registered in 
244.11  the name of the guardian, as guardian, only because the ward was 
244.12  a minor.  There shall not be included in "purchase price" the 
244.13  amount of any tax imposed by the United States upon or with 
244.14  respect to retail sales whether imposed upon the retailer or the 
244.15  consumer.  
244.16     The term "purchase price" shall not include the transfer of 
244.17  a motor vehicle as a gift between a foster parent and foster 
244.18  child.  For purposes of this subdivision, a foster relationship 
244.19  exists, regardless of the age of the child, if (1) a foster 
244.20  parent's home is or was licensed as a foster family home under 
244.21  Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the 
244.22  county verifies that the child was a state ward or in permanent 
244.23  foster care. 
244.24     Sec. 27.  Minnesota Statutes 1996, section 297E.04, 
244.25  subdivision 3, is amended to read: 
244.26     Subd. 3.  [PADDLETICKET CARD MASTER FLARES.] Each sealed 
244.27  grouping of 100 or fewer paddleticket cards must have its own 
244.28  individual master flare.  The manufacturer of the paddleticket 
244.29  cards must affix to or imprint at the bottom of each master 
244.30  flare a bar code that provides: 
244.31     (1) the name of the manufacturer; 
244.32     (2) the first paddleticket card number in the group; 
244.33     (3) the number of paddletickets attached to each 
244.34  paddleticket card in the group; and 
244.35     (4) all other information required by the commissioner.  
244.36  ~~This subdivision applies to paddleticket cards (i) sold by a~~ 
245.1   ~~manufacturer after June 30, 1995, for use or resale in Minnesota~~ 
245.2   ~~or (ii) shipped into or caused to be shipped into Minnesota by a~~ 
245.3   ~~manufacturer after June 30, 1995.  Paddleticket cards that are~~ 
245.4   ~~subject to this subdivision may not have a registration stamp~~ 
245.5   ~~affixed to the master flare.~~ 
245.6      Sec. 28.  Minnesota Statutes 1996, section 349.12, 
245.7   subdivision 26a, is amended to read: 
245.8      Subd. 26a.  [MASTER FLARE.] "Master flare" is the posted 
245.9   display, with registration stamp affixed or bar code imprinted 
245.10  or affixed, that is used in conjunction with sealed groupings of 
245.11  100 or fewer sequentially numbered paddleticket cards. 
245.12     Sec. 29.  Minnesota Statutes 1996, section 349.163, 
245.13  subdivision 8, is amended to read: 
245.14     Subd. 8.  [PADDLETICKET CARD MASTER FLARES.] Each sealed 
245.15  grouping of 100 or fewer paddleticket cards must have its own 
245.16  individual master flare.  The manufacturer must affix to or 
245.17  imprint at the bottom of the master flare a bar code that 
245.18  provides all information required by the commissioner of revenue 
245.19  under section 297E.04, subdivision 3. 
245.20     ~~This subdivision applies to paddleticket cards sold by a~~ 
245.21  ~~manufacturer after June 30, 1995, for use or resale in Minnesota~~ 
245.22  ~~or shipped into or caused to be shipped into Minnesota by a~~ 
245.23  ~~manufacturer after June 30, 1995.  Paddleticket cards which are~~ 
245.24  ~~subject to this subdivision shall not have a registration stamp~~ 
245.25  ~~affixed to the master flare.~~ 
245.26     Sec. 30.  Laws 1993, chapter 375, article 9, section 45, 
245.27  subdivision 2, is amended to read: 
245.28     Subd. 2.  [USE OF REVENUES.] (a) Revenues received from 
245.29  taxes authorized by subdivision 1 shall be used by Cook county 
245.30  to pay the cost of collecting the tax and to pay all or a 
245.31  portion of the costs of expanding and improving the health care 
245.32  facility located in the county and known as North Shore hospital.
245.33  Authorized costs include, but are not limited to, securing or 
245.34  paying debt service on bonds or other obligations issued to 
245.35  finance the expansion and improvement of North Shore hospital.  
245.36  The total capital expenditures payable from bond proceeds, 
246.1   excluding investment earnings on bond proceeds and tax revenues, 
246.2   shall not exceed $4,000,000. 
246.3      (b) Additional revenues received from taxes authorized by 
246.4   subdivision 1 may be used by Cook county to pay all or a portion 
246.5   of the costs of remodeling North Shore care center and providing 
246.6   additional improvements to North Shore hospital.  Authorized 
246.7   costs include, but are not limited to, securing or paying debt 
246.8   service on bonds or other obligations issued to finance the 
246.9   remodeling of North Shore care center and additional 
246.10  improvements to North Shore hospital.  The total capital 
246.11  expenditures payable from bond proceeds, excluding investment 
246.12  earnings on bond proceeds and tax revenues, shall not exceed 
246.13  $2,200,000. 
246.14     Sec. 31.  Laws 1993, chapter 375, article 9, section 45, 
246.15  subdivision 3, is amended to read: 
246.16     Subd. 3.  [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 
246.17  LIMITATION.] The authority granted by subdivision 1 to Cook 
246.18  county to impose a sales tax shall expire when the principal and 
246.19  interest on any bonds or obligations issued under subdivision 4, 
246.20  paragraph (a), to finance the expansion and improvement of North 
246.21  Shore hospital described in subdivision 2, paragraph (a), have 
246.22  been paid, or at an earlier time as the county shall, by 
246.23  resolution, determine.  Any funds remaining after completion of 
246.24  the improvements and retirement or redemption of the bonds may 
246.25  be placed in the general fund of the county. 
246.26     Sec. 32.  Laws 1993, chapter 375, article 9, section 45, 
246.27  subdivision 4, is amended to read: 
246.28     Subd. 4.  [BONDS.] (a) Cook county may issue general 
246.29  obligation bonds in an amount not to exceed $4,000,000 for the 
246.30  expansion and improvement of North Shore hospital~~,~~. 
246.31     (b) Additionally, Cook county may issue general obligation 
246.32  bonds in an amount not to exceed $2,200,000 for the remodeling 
246.33  of North Shore care center and additional improvements to North 
246.34  Shore hospital.  
246.35     (c) The bonds may be issued without election under 
246.36  Minnesota Statutes, chapter 475, on the question of issuance of 
247.1   the bonds or a property tax to pay them.  The debt represented 
247.2   by the bonds ~~issued for the expansion and improvement of North~~ 
247.3   ~~Shore hospital~~ shall not be included in computing any debt 
247.4   limitations applicable to Cook county, and the levy of taxes 
247.5   required by Minnesota Statutes, section 475.61, to pay principal 
247.6   of and interest on the bonds shall not be subject to any levy 
247.7   limitation or be included in computing or applying any levy 
247.8   limitation applicable to the county. 
247.9      Sec. 33.  Laws 1993, chapter 375, article 9, section 45, is 
247.10  amended by adding a subdivision to read: 
247.11     Subd. 5a.  [REFERENDUM.] If the governing body of Cook 
247.12  county intends to use the sales tax proceeds as authorized by 
247.13  subdivision 2, paragraph (b), it shall conduct a referendum on 
247.14  the issue.  The question of so using the tax proceeds must be 
247.15  submitted to the voters at a special or general election.  The 
247.16  tax proceeds may not be used as provided in subdivision 2, 
247.17  paragraph (b), unless a majority of votes cast on the question 
247.18  are in the affirmative.  The commissioner of revenue shall 
247.19  prepare a suggested form of question to be presented at the 
247.20  election.  The referendum must be held at a special or general 
247.21  election before December 1, 1997. 
247.22     Sec. 34.  [CITY OF WILLMAR; TAXES.] 
247.23     Subdivision 1.  [SALES TAX AUTHORIZED.] Notwithstanding 
247.24  Minnesota Statutes, section 477A.016, or any other contrary 
247.25  provision of law, ordinance, or city charter, pursuant to the 
247.26  approval of the city voters at the general election held on 
247.27  November 5, 1996, the city of Willmar may, by ordinance, impose, 
247.28  for the purposes specified in subdivision 4, an additional sales 
247.29  tax of up to one-half of one percent on sales transactions 
247.30  taxable under Minnesota Statutes, chapter 297A, that occur 
247.31  within the city except for sales of major farm equipment subject 
247.32  to the tax under subdivision 2, and may also, by ordinance, 
247.33  impose an additional compensating use tax of up to one-half of 
247.34  one percent on uses of property within the city, the sale of 
247.35  which would be subject to the additional sales tax but for the 
247.36  fact that the property was sold outside the city, provided that 
248.1   the use tax will not apply to use of any item of tangible 
248.2   personal property that has a sales price of less than $1,000. 
248.3      Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
248.4   Minnesota Statutes, section 477A.016, or any other contrary 
248.5   provision of law, ordinance, or city charter, the city of 
248.6   Willmar may, by ordinance, impose, for the purposes specified in 
248.7   subdivision 4, an excise tax of up to $20 per motor vehicle, as 
248.8   defined by ordinance, purchased or acquired from any person 
248.9   engaged within the city in the business of selling motor 
248.10  vehicles at retail, and an excise tax of up to $20 per piece of 
248.11  major farm equipment, as defined by ordinance, purchased or 
248.12  acquired from any person engaged within the city in the business 
248.13  of selling major farm equipment at retail. 
248.14     Subd. 3.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION OF 
248.15  TAXES.] (a) The city may provide for collection and enforcement 
248.16  of the taxes by ordinance or the city may enter into an 
248.17  agreement with the commissioner of revenue, providing for 
248.18  collection of the tax. 
248.19     (b) If the city enters an agreement with the commissioner 
248.20  of revenue for collection of the tax, the sales tax imposed 
248.21  under this section must be reported and paid to the commissioner 
248.22  of revenue with the state sales taxes, and be subject to the 
248.23  same penalties, interest, and enforcement provisions.  The 
248.24  proceeds of the tax, less refunds and a proportionate share of 
248.25  the cost of collection, shall be remitted at least quarterly to 
248.26  the city.  The commissioner shall deduct from the proceeds 
248.27  remitted an amount that equals the direct and indirect 
248.28  department costs necessary to administer, audit, and collect the 
248.29  tax.  The amount deducted shall be deposited in the general fund.
248.30     Subd. 4.  [USE OF REVENUES.] Revenues received from taxes 
248.31  authorized by subdivisions 1 and 2 must be used to pay the costs 
248.32  of collecting the taxes, and to pay all or a part of the capital 
248.33  and administrative costs of the acquisition, construction, 
248.34  improvement, and maintenance of public library facilities, 
248.35  including securing or paying debt service on bonds issued for 
248.36  the project under subdivision 6.  The total capital and 
249.1   administrative expenditures payable from bond proceeds and 
249.2   revenues received from the taxes authorized by subdivisions 1 
249.3   and 2, excluding investment earnings thereon, must not exceed 
249.4   $4,500,000 
249.5      Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
249.6   subdivisions 1 and 2 expire when the city council determines 
249.7   that sufficient funds have been received from the taxes to 
249.8   finance the capital and administrative costs for the 
249.9   acquisition, construction, improvement, and maintenance of 
249.10  public library facilities and to prepay or retire at maturity 
249.11  the principal, interest, and premium due on any bonds issued for 
249.12  the project under subdivision 6.  Any funds remaining after 
249.13  completion of the project and retirement or redemption of the 
249.14  bonds may be placed in the general fund of the city.  The taxes 
249.15  imposed under subdivisions 1 and 2 may expire at an earlier time 
249.16  if the city so determines by ordinance.  
249.17     Subd. 6.  [BONDS.] The city of Willmar, pursuant to the 
249.18  approval of the city voters at the general election held on 
249.19  November 5, 1996, may issue without additional election general 
249.20  obligation bonds of the city in an amount not to exceed 
249.21  $4,500,000 to pay capital and administrative expenses for the 
249.22  acquisition, construction, improvement, and maintenance of 
249.23  public library facilities.  The debt represented by the bonds 
249.24  must not be included in computing any debt limitations 
249.25  applicable to the city, and the levy of taxes required by 
249.26  Minnesota Statutes, section 475.61, to pay the principal of and 
249.27  interest on the bonds must not be subject to any levy limitation 
249.28  or be included in computing or applying any levy limitation 
249.29  applicable to the city.  
249.30     Subd. 7.  [EFFECTIVE DATE.] This section is effective the 
249.31  day after compliance by the governing body of the city of 
249.32  Willmar with Minnesota Statutes, section 645.021, subdivision 3. 
249.33     Sec. 35.  [CITY OF ST. PAUL; USE OF SALES TAX REVENUES.] 
249.34     The revenue derived from the sales tax imposed by the city 
249.35  of St. Paul under Laws 1993, chapter 375, article 9, section 46, 
249.36  that is distributed to the city's cultural STAR program must be 
250.1   awarded through a grant review process as provided in this 
250.2   section.  Eighty percent of the revenue must be annually awarded 
250.3   to nonprofit arts organizations, libraries, and museums that are 
250.4   located in the designated cultural district of downtown St. 
250.5   Paul, and the remaining 20 percent may be awarded to businesses 
250.6   in the cultural district for projects which enhance visitor 
250.7   enjoyment of the district, or to nonprofit arts organizations, 
250.8   libraries, and museums located in St. Paul but outside of the 
250.9   cultural district.  Grants may be used for capital improvements. 
250.10  These restrictions apply to all STAR cultural funds collected 
250.11  after June 30, 1997. 
250.12     Sec. 36.  [STATEMENT OF PURPOSE.] 
250.13     The purpose of section 4, paragraph (i), is to confirm and 
250.14  clarify the original intent of the legislature in enacting an 
250.15  exemption from the sales tax for property to be resold in the 
250.16  normal course of business.  Section 4, paragraph (i), ratifies 
250.17  the existing state interpretation that a resale requires the 
250.18  transfer of title to the property or the complete transfer of 
250.19  possession and control over the property.  This section does not 
250.20  apply to litigation currently pending before the Minnesota 
250.21  Supreme Court. 
250.22     Sec. 37.  [APPLICATION.] 
250.23     Section 21 applies in the counties of Anoka, Carver, 
250.24  Dakota, Hennepin, Ramsey, Scott, and Washington. 
250.25     Sec. 38.  [REPEALER.] 
250.26     Minnesota Statutes 1996, sections 297A.01, subdivision 20; 
250.27  and 297A.02, subdivision 5, are repealed. 
250.28     Sec. 39.  [EFFECTIVE DATE.] 
250.29     Section 1 is effective for gasoline or special fuel 
250.30  purchased after July 1, 1997. 
250.31     Section 2 is effective July 1, 1997, or upon adoption of 
250.32  the corresponding rules, whichever is earlier. 
250.33     Section 3, paragraph (i), item (iv), is effective 
250.34  retroactively to apply to services provided after September 30, 
250.35  1987. 
250.36     The remainder of section 3 and sections 7 to 9, 11, 12, 14, 
251.1   15, and 20 are effective for sales and purchases occurring after 
251.2   June 30, 1997. 
251.3      Section 4, paragraph (h), is effective for sales and 
251.4   purchases made after June 30, 1997. 
251.5      Section 4, paragraph (i), is effective for sales and 
251.6   purchases made after December 31, 1992. 
251.7      Sections 3, paragraph (f), 5, and 6 are effective July 1, 
251.8   1997. 
251.9      Sections 10 and 17 are effective for sales after August 31, 
251.10  1996. 
251.11     Sections 13 and 16 are effective for purchases after 
251.12  December 31, 1995. 
251.13     Section 18 is effective for construction materials and 
251.14  supplies purchased after January 1, 1997. 
251.15     Section 19 is effective for construction materials and 
251.16  supplies purchased after April 30, 1997. 
251.17     Section 21 is effective for sales made after July 31, 1997, 
251.18  and before August 1, 2003. 
251.19     Sections 22 to 24 are effective for sales after May 31, 
251.20  1997. 
251.21     Sections 25 and 26 are effective for transfers of motor 
251.22  vehicles after June 30, 1997. 
251.23     Sections 27 to 29 are effective for sales of paddleticket 
251.24  cards by a manufacturer after June 30, 1997. 
251.25     Sections 30 to 33 are effective the day after compliance by 
251.26  the governing body of Cook county with Minnesota Statutes, 
251.27  section 645.021, subdivision 3. 
251.28                             ARTICLE 12
251.29                       WASTE MANAGEMENT TAXES
251.30     Section 1.  Minnesota Statutes 1996, section 115A.554, is 
251.31  amended to read: 
251.32     115A.554 [AUTHORITY OF SANITARY DISTRICTS.] 
251.33     A sanitary district has the authorities and duties of 
251.34  counties within the district's boundary for purposes of sections 
251.35  115A.0716; 115A.46, subdivisions 4 and 5; 115A.48; 115A.551; 
251.36  115A.552; 115A.553; 115A.919; 115A.929; 115A.93; 115A.96, 
252.1   subdivision 6; 115A.961; 116.072; 375.18, subdivision 14; 
252.2   400.08~~, except subdivision 4, paragraph (b)~~; 400.16; and 400.161.
252.3      Sec. 2.  Minnesota Statutes 1996, section 270B.01, 
252.4   subdivision 8, is amended to read: 
252.5      Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
252.6   chapter only, "Minnesota tax laws" means the taxes administered 
252.7   by or paid to the commissioner under chapters 289A (except taxes 
252.8   imposed under sections 298.01, 298.015, and 298.24), 290, 290A, 
252.9   291, ~~and~~ 297A, and 297F and sections 295.50 to 295.59, or any 
252.10  similar Indian tribal tax administered by the commissioner 
252.11  pursuant to any tax agreement between the state and the Indian 
252.12  tribal government, and includes any laws for the assessment, 
252.13  collection, and enforcement of those taxes.  
252.14     Sec. 3.  Minnesota Statutes 1996, section 297A.01, 
252.15  subdivision 3, is amended to read: 
252.16     Subd. 3.  A "sale" and a "purchase" includes, but is not 
252.17  limited to, each of the following transactions: 
252.18     (a) Any transfer of title or possession, or both, of 
252.19  tangible personal property, whether absolutely or conditionally, 
252.20  and the leasing of or the granting of a license to use or 
252.21  consume tangible personal property other than manufactured homes 
252.22  used for residential purposes for a continuous period of 30 days 
252.23  or more, for a consideration in money or by exchange or barter; 
252.24     (b) The production, fabrication, printing, or processing of 
252.25  tangible personal property for a consideration for consumers who 
252.26  furnish either directly or indirectly the materials used in the 
252.27  production, fabrication, printing, or processing; 
252.28     (c) The furnishing, preparing, or serving for a 
252.29  consideration of food, meals, or drinks.  "Sale" does not 
252.30  include: 
252.31     (1) meals or drinks served to patients, inmates, or persons 
252.32  residing at hospitals, sanitariums, nursing homes, senior 
252.33  citizens homes, and correctional, detention, and detoxification 
252.34  facilities; 
252.35     (2) meals or drinks purchased for and served exclusively to 
252.36  individuals who are 60 years of age or over and their spouses or 
253.1   to the handicapped and their spouses by governmental agencies, 
253.2   nonprofit organizations, agencies, or churches or pursuant to 
253.3   any program funded in whole or part through 42 USCA sections 
253.4   3001 through 3045, wherever delivered, prepared or served; or 
253.5      (3) meals and lunches served at public and private schools, 
253.6   universities, or colleges. 
253.7   Notwithstanding section 297A.25, subdivision 2, taxable food or 
253.8   meals include, but are not limited to, the following:  
253.9      (i) heated food or drinks; 
253.10     (ii) sandwiches prepared by the retailer; 
253.11     (iii) single sales of prepackaged ice cream or ice milk 
253.12  novelties prepared by the retailer; 
253.13     (iv) hand-prepared or dispensed ice cream or ice milk 
253.14  products including cones, sundaes, and snow cones; 
253.15     (v) soft drinks and other beverages prepared or served by 
253.16  the retailer; 
253.17     (vi) gum; 
253.18     (vii) ice; 
253.19     (viii) all food sold in vending machines; 
253.20     (ix) party trays prepared by the retailers; and 
253.21     (x) all meals and single servings of packaged snack food, 
253.22  single cans or bottles of pop, sold in restaurants and bars; 
253.23     (d) The granting of the privilege of admission to places of 
253.24  amusement, recreational areas, or athletic events, except a 
253.25  world championship football game sponsored by the national 
253.26  football league, and the privilege of having access to and the 
253.27  use of amusement devices, tanning facilities, reducing salons, 
253.28  steam baths, turkish baths, health clubs, and spas or athletic 
253.29  facilities; 
253.30     (e) The furnishing for a consideration of lodging and 
253.31  related services by a hotel, rooming house, tourist court, motel 
253.32  or trailer camp and of the granting of any similar license to 
253.33  use real property other than the renting or leasing thereof for 
253.34  a continuous period of 30 days or more; 
253.35     (f) The furnishing for a consideration of electricity, gas, 
253.36  water, or steam for use or consumption within this state, or 
254.1   local exchange telephone service, intrastate toll service, and 
254.2   interstate toll service, if that service originates from and is 
254.3   charged to a telephone located in this state.  Telephone service 
254.4   includes paging services and private communication service, as 
254.5   defined in United States Code, title 26, section 4252(d), except 
254.6   for private communication service purchased by an agent acting 
254.7   on behalf of the state lottery.  The furnishing for a 
254.8   consideration of access to telephone services by a hotel to its 
254.9   guests is a sale under this clause.  Sales by municipal 
254.10  corporations in a proprietary capacity are included in the 
254.11  provisions of this clause.  The furnishing of water and sewer 
254.12  services for residential use shall not be considered a sale.  
254.13  The sale of natural gas to be used as a fuel in vehicles 
254.14  propelled by natural gas shall not be considered a sale for the 
254.15  purposes of this section; 
254.16     (g) The furnishing for a consideration of cable television 
254.17  services, including charges for basic service, charges for 
254.18  premium service, and any other charges for any other 
254.19  pay-per-view, monthly, or similar television services; 
254.20     (h) The furnishing for a consideration of parking services, 
254.21  whether on a contractual, hourly, or other periodic basis, 
254.22  except for parking at a meter; 
254.23     (i) The furnishing for a consideration of services listed 
254.24  in this paragraph: 
254.25     (i) laundry and dry cleaning services including cleaning, 
254.26  pressing, repairing, altering, and storing clothes, linen 
254.27  services and supply, cleaning and blocking hats, and carpet, 
254.28  drapery, upholstery, and industrial cleaning.  Laundry and dry 
254.29  cleaning services do not include services provided by coin 
254.30  operated facilities operated by the customer; 
254.31     (ii) motor vehicle washing, waxing, and cleaning services, 
254.32  including services provided by coin-operated facilities operated 
254.33  by the customer, and rustproofing, undercoating, and towing of 
254.34  motor vehicles; 
254.35     (iii) building and residential cleaning, maintenance, and 
254.36  disinfecting and exterminating services; 
255.1      (iv) detective services, security services, burglar, fire 
255.2   alarm, and armored car services not including services performed 
255.3   within the jurisdiction they serve by off-duty licensed peace 
255.4   officers as defined in section 626.84, subdivision 1; 
255.5      (v) pet grooming services; 
255.6      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
255.7   services; garden planting and maintenance; tree, bush, and shrub 
255.8   pruning, bracing, spraying, and surgery; tree, bush, shrub and 
255.9   stump removal; and tree trimming for public utility lines.  
255.10  Services performed under a construction contract for the 
255.11  installation of shrubbery, plants, sod, trees, bushes, and 
255.12  similar items are not taxable; 
255.13     (vii) ~~mixed municipal solid waste management services as~~ 
255.14  ~~described in section 297A.45;~~ 
255.15     ~~(viii)~~ massages, except when provided by a licensed health 
255.16  care facility or professional or upon written referral from a 
255.17  licensed health care facility or professional for treatment of 
255.18  illness, injury, or disease; and 
255.19     ~~(ix)~~  (viii) the furnishing for consideration of lodging, 
255.20  board and care services for animals in kennels and other similar 
255.21  arrangements, but excluding veterinary and horse boarding 
255.22  services. 
255.23  The services listed in this paragraph are taxable under section 
255.24  297A.02 if the service is performed wholly within Minnesota or 
255.25  if the service is performed partly within and partly without 
255.26  Minnesota and the greater proportion of the service is performed 
255.27  in Minnesota, based on the cost of performance.  In applying the 
255.28  provisions of this chapter, the terms "tangible personal 
255.29  property" and "sales at retail" include taxable services and the 
255.30  provision of taxable services, unless specifically provided 
255.31  otherwise.  Services performed by an employee for an employer 
255.32  are not taxable under this paragraph.  Services performed by a 
255.33  partnership or association for another partnership or 
255.34  association are not taxable under this paragraph if one of the 
255.35  entities owns or controls more than 80 percent of the voting 
255.36  power of the equity interest in the other entity.  Services 
256.1   performed between members of an affiliated group of corporations 
256.2   are not taxable.  For purposes of this section, "affiliated 
256.3   group of corporations" includes those entities that would be 
256.4   classified as a member of an affiliated group under United 
256.5   States Code, title 26, section 1504, and who are eligible to 
256.6   file a consolidated tax return for federal income tax purposes; 
256.7      (j) A "sale" and a "purchase" includes the transfer of 
256.8   computer software, meaning information and directions that 
256.9   dictate the function performed by data processing equipment.  A 
256.10  "sale" and a "purchase" does not include the design, 
256.11  development, writing, translation, fabrication, lease, or 
256.12  transfer for a consideration of title or possession of a custom 
256.13  computer program; and 
256.14     (k) The granting of membership in a club, association, or 
256.15  other organization if: 
256.16     (1) the club, association, or other organization makes 
256.17  available for the use of its members sports and athletic 
256.18  facilities (without regard to whether a separate charge is 
256.19  assessed for use of the facilities); and 
256.20     (2) use of the sports and athletic facilities is not made 
256.21  available to the general public on the same basis as it is made 
256.22  available to members.  
256.23  Granting of membership includes both one-time initiation fees 
256.24  and periodic membership dues.  Sports and athletic facilities 
256.25  include golf courses, tennis, racquetball, handball and squash 
256.26  courts, basketball and volleyball facilities, running tracks, 
256.27  exercise equipment, swimming pools, and other similar athletic 
256.28  or sports facilities.  The provisions of this paragraph do not 
256.29  apply to camps or other recreation facilities owned and operated 
256.30  by an exempt organization under section 501(c)(3) of the 
256.31  Internal Revenue Code of 1986, as amended through December 31, 
256.32  1992, for educational and social activities for young people 
256.33  primarily age 18 and under.  
256.34     Sec. 4.  Minnesota Statutes 1996, section 297A.25, 
256.35  subdivision 11, is amended to read: 
256.36     Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
257.1   all sales, including sales in which title is retained by a 
257.2   seller or a vendor or is assigned to a third party under an 
257.3   installment sale or lease purchase agreement under section 
257.4   465.71, of tangible personal property to, and all storage, use 
257.5   or consumption of such property by, the United States and its 
257.6   agencies and instrumentalities, the University of Minnesota, 
257.7   state universities, community colleges, technical colleges, 
257.8   state academies, the Lola and Rudy Perpich Minnesota center for 
257.9   arts education, and school districts are exempt. 
257.10     As used in this subdivision, "school districts" means 
257.11  public school entities and districts of every kind and nature 
257.12  organized under the laws of the state of Minnesota, including, 
257.13  without limitation, school districts, intermediate school 
257.14  districts, education districts, service cooperatives, secondary 
257.15  vocational cooperative centers, special education cooperatives, 
257.16  joint purchasing cooperatives, telecommunication cooperatives, 
257.17  regional management information centers, and any instrumentality 
257.18  of a school district, as defined in section 471.59. 
257.19     Sales exempted by this subdivision include sales under 
257.20  section 297A.01, subdivision 3, paragraph (f)~~, but do not~~ 
257.21  ~~include sales under section 297A.01, subdivision 3, paragraph~~ 
257.22  ~~(j), clause (vii)~~.  
257.23     Sales to hospitals and nursing homes owned and operated by 
257.24  political subdivisions of the state are exempt under this 
257.25  subdivision.  
257.26     The sales to and exclusively for the use of libraries of 
257.27  books, periodicals, audio-visual materials and equipment, 
257.28  photocopiers for use by the public, and all cataloguing and 
257.29  circulation equipment, and cataloguing and circulation software 
257.30  for library use are exempt under this subdivision.  For purposes 
257.31  of this paragraph "libraries" means libraries as defined in 
257.32  section 134.001, county law libraries under chapter 134A, the 
257.33  state library under section 480.09, and the legislative 
257.34  reference library. 
257.35     Sales of supplies and equipment used in the operation of an 
257.36  ambulance service owned and operated by a political subdivision 
258.1   of the state are exempt under this subdivision provided that the 
258.2   supplies and equipment are used in the course of providing 
258.3   medical care.  Sales to a political subdivision of repair and 
258.4   replacement parts for emergency rescue vehicles and fire trucks 
258.5   and apparatus are exempt under this subdivision.  
258.6      Sales to a political subdivision of machinery and 
258.7   equipment, except for motor vehicles, used directly for mixed 
258.8   municipal solid waste management services at a solid waste 
258.9   disposal facility as defined in section 115A.03, subdivision 10, 
258.10  are exempt under this subdivision.  
258.11     Sales to political subdivisions of chore and homemaking 
258.12  services to be provided to elderly or disabled individuals are 
258.13  exempt. 
258.14     Sales of telephone services to the department of 
258.15  administration that are used to provide telecommunications 
258.16  services through the intertechnologies revolving fund are exempt 
258.17  under this subdivision. 
258.18     This exemption shall not apply to building, construction or 
258.19  reconstruction materials purchased by a contractor or a 
258.20  subcontractor as a part of a lump-sum contract or similar type 
258.21  of contract with a guaranteed maximum price covering both labor 
258.22  and materials for use in the construction, alteration, or repair 
258.23  of a building or facility.  This exemption does not apply to 
258.24  construction materials purchased by tax exempt entities or their 
258.25  contractors to be used in constructing buildings or facilities 
258.26  which will not be used principally by the tax exempt entities. 
258.27     This exemption does not apply to the leasing of a motor 
258.28  vehicle as defined in section 297B.01, subdivision 5, except for 
258.29  leases entered into by the United States or its agencies or 
258.30  instrumentalities.  
258.31     The tax imposed on sales to political subdivisions of the 
258.32  state under this section applies to all political subdivisions 
258.33  other than those explicitly exempted under this subdivision, 
258.34  notwithstanding section 115A.69, subdivision 6, 116A.25, 
258.35  360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
258.36  469.127, 473.448, 473.545, or 473.608 or any other law to the 
259.1   contrary enacted before 1992. 
259.2      Sales exempted by this subdivision include sales made to 
259.3   other states or political subdivisions of other states, if the 
259.4   sale would be exempt from taxation if it occurred in that state, 
259.5   but do not include sales under section 297A.01, subdivision 3, 
259.6   paragraphs (c) and (e). 
259.7      Sec. 5.  Minnesota Statutes 1996, section 297A.25, 
259.8   subdivision 16, is amended to read: 
259.9      Subd. 16.  [SALES TO NONPROFIT GROUPS.] The gross receipts 
259.10  from the sale of tangible personal property to, and the storage, 
259.11  use or other consumption of such property by, any corporation, 
259.12  society, association, foundation, or institution organized and 
259.13  operated exclusively for charitable, religious, or educational 
259.14  purposes if the property purchased is to be used in the 
259.15  performance of charitable, religious, or educational functions, 
259.16  or any senior citizen group or association of groups that in 
259.17  general limits membership to persons who are either (1) age 55 
259.18  or older, or (2) physically disabled, and is organized and 
259.19  operated exclusively for pleasure, recreation, and other 
259.20  nonprofit purposes, no part of the net earnings of which inures 
259.21  to the benefit of any private shareholders, are exempt.  For 
259.22  purposes of this subdivision, charitable purpose includes the 
259.23  maintenance of a cemetery owned by a religious organization.  
259.24  Sales exempted by this subdivision include sales pursuant to 
259.25  section 297A.01, subdivision 3, paragraphs (d) and (f)~~, but do~~ 
259.26  ~~not include sales under section 297A.01, subdivision 3,~~ 
259.27  ~~paragraph (j), clause (vii)~~.  This exemption shall not apply to 
259.28  building, construction, or reconstruction materials purchased by 
259.29  a contractor or a subcontractor as a part of a lump-sum contract 
259.30  or similar type of contract with a guaranteed maximum price 
259.31  covering both labor and materials for use in the construction, 
259.32  alteration, or repair of a building or facility.  This exemption 
259.33  does not apply to construction materials purchased by tax exempt 
259.34  entities or their contractors to be used in constructing 
259.35  buildings or facilities which will not be used principally by 
259.36  the tax exempt entities.  This exemption does not apply to the 
260.1   leasing of a motor vehicle as defined in section 297B.01, 
260.2   subdivision 5. 
260.3      Sec. 6.  Minnesota Statutes 1996, section 297A.44, 
260.4   subdivision 1, is amended to read: 
260.5      Subdivision 1.  (a) Except as provided in paragraphs 
260.6   (b)~~,~~ and (c), ~~and (d),~~ all revenues, including interest and 
260.7   penalties, derived from the excise and use taxes imposed by 
260.8   sections 297A.01 to 297A.44 shall be deposited by the 
260.9   commissioner in the state treasury and credited to the general 
260.10  fund.  
260.11     (b) All excise and use taxes derived from sales and use of 
260.12  property and services purchased for the construction and 
260.13  operation of an agricultural resource project, from and after 
260.14  the date on which a conditional commitment for a loan guaranty 
260.15  for the project is made pursuant to section 41A.04, subdivision 
260.16  3, shall be deposited in the Minnesota agricultural and economic 
260.17  account in the special revenue fund.  The commissioner of 
260.18  finance shall certify to the commissioner the date on which the 
260.19  project received the conditional commitment.  The amount 
260.20  deposited in the loan guaranty account shall be reduced by any 
260.21  refunds and by the costs incurred by the department of revenue 
260.22  to administer and enforce the assessment and collection of the 
260.23  taxes.  
260.24     (c) All revenues, including interest and penalties, derived 
260.25  from the excise and use taxes imposed on sales and purchases 
260.26  included in section 297A.01, subdivision 3, paragraphs (d) and 
260.27  (l), clauses (1) and (2), must be deposited by the commissioner 
260.28  in the state treasury, and credited as follows: 
260.29     (1) first to the general obligation special tax bond debt 
260.30  service account in each fiscal year the amount required by 
260.31  section 16A.661, subdivision 3, paragraph (b); and 
260.32     (2) after the requirements of clause (1) have been met, the 
260.33  balance must be credited to the general fund. 
260.34     ~~(d) The revenues, including interest and penalties, derived~~ 
260.35  ~~from the taxes imposed on solid waste collection services as~~ 
260.36  ~~described in section 297A.45, shall be deposited by the~~ 
261.1   ~~commissioner in the state treasury and credited to the general~~ 
261.2   ~~fund to be used for funding solid waste reduction and recycling~~ 
261.3   ~~programs.~~ 
261.4      Sec. 7.  [297F.01] [SOLID WASTE MANAGEMENT TAX 
261.5   DEFINITIONS.] 
261.6      Subdivision 1.  [SCOPE.] When used in this chapter, the 
261.7   following terms have the meanings given to them in this 
261.8   section.  For terms not defined in this section, the terms 
261.9   defined in section 115A.03 have the meanings given them. 
261.10     Subd. 2.  [COMMERCIAL GENERATOR.] "Commercial generator" 
261.11  means any of the following: 
261.12     (1) an owner or operator of a business, including a 
261.13  home-operated business, industry, church, nursing home, 
261.14  nonprofit organization, school, or any other commercial or 
261.15  institutional enterprise that generates mixed municipal solid 
261.16  waste; or non-mixed municipal solid waste; or 
261.17     (2) any other generator of taxable waste that is not a 
261.18  residential generator defined in subdivision 7. 
261.19     Subd. 3.  [CUBIC YARD.] "Cubic yard" means a cubic yard of 
261.20  non-mixed municipal solid waste that is not compacted. 
261.21     Subd. 4.  [MIXED MUNICIPAL SOLID WASTE.] "Mixed municipal 
261.22  solid waste" means mixed municipal solid waste as defined in 
261.23  section 115A.03, subdivision 21. 
261.24     Subd. 5.  [NON-MIXED MUNICIPAL SOLID WASTE.] "Non-mixed 
261.25  municipal solid waste" means: 
261.26     (1) infectious waste as defined in section 116.76, 
261.27  subdivision 12; 
261.28     (2) pathological waste as defined in section 116.76, 
261.29  subdivision 14; 
261.30     (3) industrial waste as defined in section 115A.03, 
261.31  subdivision 13a; and 
261.32     (4) construction debris as defined in section 115A.03, 
261.33  subdivision 7. 
261.34     Subd. 6.  [PERIODIC WASTE COLLECTION.] "Periodic waste 
261.35  collection" means each time a waste container is emptied by the 
261.36  person that collects the non-mixed municipal solid waste at the 
262.1   point that the waste has been aggregated for collection by the 
262.2   generator. 
262.3      Subd. 7.  [RESIDENTIAL GENERATOR.] "Residential generator" 
262.4   means any of the following: 
262.5      (1) a detached single family residence that generates mixed 
262.6   municipal solid waste or non-mixed municipal solid waste; 
262.7      (2) a person residing in a manufactured home park that 
262.8   generates mixed municipal solid waste or non-mixed municipal 
262.9   solid waste; 
262.10     (3) a person residing in a building or site containing 
262.11  multiple residences that generates mixed municipal solid waste, 
262.12  including apartment buildings, condominiums, or townhomes, where 
262.13  each residence either:  (i) is separately billed by the waste 
262.14  service provider; or (ii) has separate waste collection for each 
262.15  residence, even if the residence pays to the owner or an 
262.16  association a monthly maintenance fee that includes the expense 
262.17  of waste collection, and the owner or association pays the waste 
262.18  service provider for waste collection in one lump sum; and 
262.19     (4) an owner of a building or site containing multiple 
262.20  residences that generates mixed municipal solid waste or 
262.21  nonmixed municipal solid waste, including apartment buildings, 
262.22  condominiums, or townhomes where no residence has separate trash 
262.23  pickup and no residence is separately billed for such service by 
262.24  the waste service provider. 
262.25     Subd. 8.  [SELF-HAULER.] "Self-hauler" means a person who 
262.26  generates and transports mixed municipal solid waste or 
262.27  non-mixed municipal solid waste generated by that person or 
262.28  another person without compensation. 
262.29     Subd. 9.  [WASTE MANAGEMENT SERVICE PROVIDER.] "Waste 
262.30  management service provider" means the person who directly bills 
262.31  the generator for waste management services.  
262.32     Subd. 10.  [WASTE MANAGEMENT SERVICES.] "Waste management 
262.33  services" means waste collection, transportation, processing, 
262.34  and disposal. 
262.35     Sec. 8.  [297F.02] [RESIDENTIAL GENERATORS.] 
262.36     Subdivision 1.  [IMPOSITION.] (a) A tax is imposed upon 
263.1   each residential generator for mixed municipal solid waste 
263.2   management services received. 
263.3      (b) The tax is imposed upon the political subdivision in 
263.4   those cases where the waste management service provider provides 
263.5   waste management services without charge to a residential 
263.6   generator and there is no other mechanism for collecting the tax 
263.7   from the waste generator.  The political subdivision shall pay 
263.8   an amount of tax for each residential generator of $1.17 per 
263.9   calendar month. 
263.10     (c) The tax is imposed on the person that is billed for the 
263.11  waste management services at buildings or sites that contain 
263.12  multiple residences where the residences are not separately 
263.13  billed for waste management services, and the tax is imposed on 
263.14  the person that is billed for the waste management services at 
263.15  manufactured home parks where residences are not separately 
263.16  billed for waste management services. 
263.17     Subd. 2.  [RATES.] Except as otherwise provided in 
263.18  subdivisions 1 and 3 and in section 297F.05, the amount of the 
263.19  tax is 9.75 percent of the sale price of waste management 
263.20  services paid by the generator each calendar month.  Each waste 
263.21  management service provider shall collect the tax from each 
263.22  residential generator who receives mixed municipal solid waste 
263.23  management services, based on the provider's normal billing 
263.24  cycle. 
263.25     Subd. 3.  [USE OF COLLECTION BAGS AND STICKERS.] When the 
263.26  sale price of a bag, sticker, or other indicia includes mixed 
263.27  municipal solid waste management services, the solid waste 
263.28  management tax on the bags, stickers, and indicia sold by 
263.29  vendors on behalf of a political subdivision or waste hauler, 
263.30  shall be collected when the bag, sticker, or other indicia are 
263.31  sold to the vendor by the political subdivision or waste hauler, 
263.32  and shall be: 
263.33     (1) determined by a method developed by the waste collector 
263.34  or political subdivision and approved by the commissioner of 
263.35  revenue, which yields the equivalent of approximately $1.17 per 
263.36  calendar month per residential generator; or 
264.1      (2) equal to $0.21 for each unit of 35 gallons or less. 
264.2      The solid waste management service and tax under this 
264.3   subdivision shall be included in the price of the bag, sticker, 
264.4   or other indicia. 
264.5      Sec. 9.  [297F.03] [MIXED MUNICIPAL SOLID WASTE COMMERCIAL 
264.6   GENERATORS.] 
264.7      Subdivision 1.  [IMPOSITION.] A tax is imposed upon 
264.8   commercial generators for mixed municipal solid waste management 
264.9   services. 
264.10     Subd. 2.  [RATE.] (a) The rate of the tax for mixed 
264.11  municipal solid waste commercial generators is 17 percent of the 
264.12  sale price of waste management services paid by the generators. 
264.13     (b) For political subdivisions described under section 
264.14  297F.02, subdivision 1, paragraph (b), where the political 
264.15  subdivision chooses to pay as a commercial generator, the price 
264.16  of the waste management service shall equal the market price of 
264.17  the waste management service. 
264.18     Sec. 10.  [297F.04] [NON-MIXED MUNICIPAL SOLID WASTE.] 
264.19     Subdivision 1.  [IMPOSITION.] A tax is imposed upon 
264.20  non-mixed municipal solid waste generators on the waste 
264.21  management of non-mixed municipal solid waste. 
264.22     Subd. 2.  [RATE.] (a) Commercial generators that generate 
264.23  non-mixed municipal solid waste shall pay a solid waste 
264.24  management tax of 60 cents per cubic yard of periodic waste 
264.25  collection capacity purchased by the generator, based on the 
264.26  size of the container for the non-mixed municipal solid waste, 
264.27  the actual volume, or the weight-to-volume conversion schedule 
264.28  in paragraph (c).  However, the tax must be calculated by the 
264.29  waste management service provider using the same method for 
264.30  calculating the waste management service fee so that both are 
264.31  calculated according to container capacity, actual volume, or 
264.32  weight. 
264.33     (b) Notwithstanding section 297F.02, a residential 
264.34  generator that generates non-mixed municipal solid waste shall 
264.35  pay a solid waste management tax in the same manner as provided 
264.36  in paragraph (a). 
265.1      (c) The weight-to-volume conversion schedule for: 
265.2      (1) construction debris as defined in section 115A.03, 
265.3   subdivision 7, is $2 per ton or 60 cents per cubic yard; 
265.4      (2) industrial waste as defined in section 115A.03, 
265.5   subdivision 13a, is 46 cents per ton or 60 cents per cubic yard; 
265.6   and 
265.7      (3) infectious waste as defined in section 116.76, 
265.8   subdivision 12, and pathological wastes as defined in section 
265.9   116.76, subdivision 14, is 60 cents per 150 pounds or 60 cents 
265.10  per cubic yard. 
265.11     Sec. 11.  [297F.05] [SELF-HAULERS.] 
265.12     (a) A self-hauler of mixed municipal solid waste shall pay 
265.13  the tax to the operator of the waste management facility to 
265.14  which the waste is delivered at the rate imposed under section 
265.15  297F.03. 
265.16     (b) A self-hauler of non-mixed municipal solid waste shall 
265.17  pay the tax to the operator of the waste management facility to 
265.18  which the waste is delivered at the rate imposed under section 
265.19  297F.04. 
265.20     (c) The tax imposed on the self-hauler of non-mixed 
265.21  municipal solid waste may be based either on the capacity of the 
265.22  container, the actual volume, or the weight-to-volume conversion 
265.23  schedule in paragraph (d).  However, the tax must be calculated 
265.24  by the operator using the same method for calculating the 
265.25  tipping fee so that both are calculated according to container 
265.26  capacity, actual volume, or weight. 
265.27     (d) The weight-to-volume conversion schedule for: 
265.28     (1) construction debris as defined in section 115A.03, 
265.29  subdivision 7, is $2 per ton; and 
265.30     (2) for industrial waste as defined in section 115A.03, 
265.31  subdivision 13a, is 46 cents per ton, 60 cents per 150 pounds, 
265.32  or 60 cents per cubic yard. 
265.33     Sec. 12.  [297F.06] [EXEMPTIONS.] 
265.34     Subdivision 1.  [CERTAIN SURCHARGES OR FEES.] The amount 
265.35  shown on a property tax statement as a county charge for solid 
265.36  waste services or the amount of a surcharge, fee, or charge 
266.1   established pursuant to section 115A.919, 115A.921, 115A.923, 
266.2   400.08, subdivision 3, 473.811, subdivision 3a, or 473.843 is 
266.3   exempt from the solid waste management tax.  This exemption does 
266.4   not apply when a political subdivision provides service at no 
266.5   charge to the generator and there is no other mechanism under 
266.6   which to bill the generator for the tax.  In these cases, the 
266.7   political subdivision is responsible for paying tax for the 
266.8   generators based on the market price of the services provided.  
266.9      Subd. 2.  [MATERIALS.] The tax is not imposed upon 
266.10  generators for management services to manage the following 
266.11  materials: 
266.12     (1) mixed municipal solid waste and non-mixed municipal 
266.13  solid waste generated outside of Minnesota; 
266.14     (2) recyclable materials that are separated for recycling 
266.15  by the generator, collected separately from other waste, and 
266.16  recycled, to the extent the price of the service for handling 
266.17  recyclable material is separately itemized; 
266.18     (3) recyclable non-mixed municipal solid waste that is 
266.19  separated for recycling by the generator, collected separately 
266.20  from other waste, delivered to a waste facility for the purpose 
266.21  of recycling, and recycled; 
266.22     (4) industrial waste, when it is transported to a facility 
266.23  owned and operated by the same person that generated it; 
266.24     (5) waste from a recycling facility that separates or 
266.25  processes recyclable materials and reduces the volume of the 
266.26  waste by at least 85 percent, provided that the exempted waste 
266.27  is managed separately from other waste; 
266.28     (6) the recyclable materials that are separated from mixed 
266.29  municipal solid waste by the generator, collected and delivered 
266.30  to a waste facility that recycles at least 85 percent of its 
266.31  waste and are collected with mixed municipal solid waste that is 
266.32  segregated in leakproof bags, provided that the mixed municipal 
266.33  solid waste does not exceed five percent of the total weight of 
266.34  the materials delivered to the facility and is ultimately 
266.35  delivered to a waste facility identified as a preferred waste 
266.36  management facility in county solid waste plans under section 
267.1   115A.46; 
267.2      (7) through December 31, 2002, source-separated compostable 
267.3   waste, if the waste is delivered to a facility exempted as 
267.4   described in this clause.  To initially qualify for an 
267.5   exemption, a facility must apply for an exemption in its 
267.6   application for a new or amended solid waste permit to the 
267.7   pollution control agency.  The first time a facility applies to 
267.8   the agency, it must certify in its application that it will 
267.9   comply with the criteria in items (i) to (v) and the 
267.10  commissioner of the agency shall so certify to the commissioner 
267.11  of revenue who must grant the exemption.  For each subsequent 
267.12  calendar year, by October 1 of the preceding year, the facility 
267.13  must apply to the agency for certification to renew its 
267.14  exemption for the following year.  The application must be filed 
267.15  according to the procedures of, and contain the information 
267.16  required by, the agency.  The commissioner of revenue shall 
267.17  grant the exemption if the commissioner of the agency finds and 
267.18  certifies to the commissioner of revenue that based on an 
267.19  evaluation of the composition of incoming waste and residuals 
267.20  and the quality and use of the product: 
267.21     (i) generators separate materials at the source; 
267.22     (ii) the separation is performed in a manner appropriate to 
267.23  the technology specific to the facility that: 
267.24     (A) maximizes the quality of the product; 
267.25     (B) minimizes the toxicity and quantity of residuals; and 
267.26     (C) provides an opportunity for significant improvement in 
267.27  the environmental efficiency of the operation; 
267.28     (iii) the operator of the facility educates generators, in 
267.29  coordination with each county using the facility, about 
267.30  separating the waste to maximize the quality of the waste stream 
267.31  for technology specific to the facility; 
267.32     (iv) process residuals do not exceed 15 percent of the 
267.33  weight of the total material delivered to the facility; and 
267.34     (v) the final product is accepted for use; and 
267.35     (8) waste and waste by-products for which the tax has been 
267.36  paid. 
268.1      Sec. 13.  [297F.07] [PAYMENT.] 
268.2      (a) The waste management service provider shall report the 
268.3   tax on a return prescribed by the commissioner of revenue, and 
268.4   shall remit the tax with the return.  The return and the tax 
268.5   must be filed following the period the tax is billed to the 
268.6   generator.  The waste management service provider shall use the 
268.7   filing cycle and due dates provided for taxes imposed under 
268.8   chapter 297A. 
268.9      (b) The waste hauler or political subdivision that sells 
268.10  bags, stickers, or other indicia to vendors must report and 
268.11  remit the tax imposed by section 297F.02, subdivision 3, on a 
268.12  return prescribed by the commissioner of revenue, and shall 
268.13  remit the tax with the return.  The return and the tax must be 
268.14  filed following the period the bag is sold to the vendor.  The 
268.15  waste management service provider shall use the filing cycle 
268.16  provided for taxes imposed under chapter 297A. 
268.17     (c) Any partial payments received by waste management 
268.18  service providers for waste management services shall be 
268.19  prorated between the tax imposed under section 297F.03 or 
268.20  297F.04 and the service.  On partial payments received for waste 
268.21  management services where the tax is imposed at $1.17 per month 
268.22  under section 297F.02, the tax shall be deemed received by the 
268.23  waste management service provider to the extent the amount 
268.24  collected equals $1.17 or more. 
268.25     Sec. 14.  [297F.08] [ADMINISTRATION AND ENFORCEMENT.] 
268.26     The audit, assessment, refund, penalty, interest, 
268.27  enforcement, collection remedies, appeal, and administrative 
268.28  provisions of chapters 270 and 289A that are applicable to taxes 
268.29  imposed under chapter 297A apply to this chapter. 
268.30     Sec. 15.  [297F.09] [REQUIREMENT AND POTENTIAL LIABILITY OF 
268.31  WASTE MANAGEMENT SERVICE PROVIDERS.] 
268.32     Waste management service providers are required to: 
268.33     (1) separately and accurately state the amount of the tax 
268.34  in the appropriate statement of charges for waste management 
268.35  services, or other statement if there are no charges for waste 
268.36  management services, and in any action to enforce payment on 
269.1   delinquent accounts; 
269.2      (2) accurately account for and remit tax received; and 
269.3      (3) work with the commissioner of revenue to ensure that 
269.4   generators pay the tax. 
269.5      Sec. 16.  [297F.10] [INFORMATION REGARDING THE SOLID WASTE 
269.6   MANAGEMENT TAX.] 
269.7      The director of the office of environmental assistance, 
269.8   after consulting with the commissioner of revenue, the 
269.9   commissioner of the pollution control agency, and waste 
269.10  management service providers, shall develop information 
269.11  regarding the solid waste tax for distribution to waste 
269.12  generators in the state.  The information shall include facts 
269.13  about the substitution of the solid waste tax for the sales tax 
269.14  on solid waste services and the solid waste generator assessment 
269.15  and the purposes for which revenue from the tax will be spent. 
269.16     Sec. 17.  [297F.11] [DEPOSIT OF REVENUES; FUNDING 
269.17  SHORTFALLS.] 
269.18     (a) $22,000,000, or 50 percent, whichever is greater, of 
269.19  the amounts remitted under this chapter must be deposited in the 
269.20  state treasury and credited to the solid waste fund established 
269.21  in section 115B.42. 
269.22     (b) The remainder must be deposited into the general fund. 
269.23     (c) If less than $22,000,000 is projected to be available 
269.24  for new encumbrances in any fiscal year after fiscal year 1999 
269.25  from all existing dedicated revenue sources for landfill cleanup 
269.26  and reimbursement costs under section 115B.39 to 115B.46, by 
269.27  October 1 before the next fiscal year in which the shortfall is 
269.28  projected, the commissioner of the agency shall certify to the 
269.29  commissioner of revenue the amount of the shortfall, and notify 
269.30  persons required to collect and remit the tax.  To provide for 
269.31  the shortfall, the commissioner of revenue shall increase the 
269.32  tax under sections 297F.03 and 297F.04 proportionally for both 
269.33  mixed municipal solid waste and nonmixed municipal solid waste, 
269.34  by an amount sufficient to generate revenue equal to the amount 
269.35  of the shortfall effective the following January 1 and shall 
269.36  provide notice of the increased assessment by November 1 
270.1   following certification to persons who are required to collect 
270.2   and remit the tax under this chapter. 
270.3      The commissioner of revenue shall report to the chairs of 
270.4   the house and senate environment and natural resources 
270.5   committees; the house environment and natural resources finance 
270.6   division; the senate environment and agriculture budget 
270.7   division; the house tax committee and the senate taxes 
270.8   committee; the commissioner of the pollution control agency; and 
270.9   the director of the office environmental assistance on the total 
270.10  tax revenues, including interest and penalties, collected from 
270.11  the taxes imposed under this chapter.  The reports shall be made 
270.12  as follows: 
270.13     (1) a report by May 31, 1998, based upon the revenues 
270.14  collected from January 1, 1998, through April 30, 1998; 
270.15     (2) a report by September 30, 1998, based upon the revenues 
270.16  collected from May 1, 1998, through August 31, 1998; and 
270.17     (3) A report by January 31, 1999, based upon the revenues 
270.18  collected from September 1, 1998, through December 31, 1998. 
270.19     Sec. 18.  [297F.12] [BAD DEBTS.] 
270.20     The remitter of the solid waste tax may offset against the 
270.21  tax payable, with respect to any reporting period, the amount of 
270.22  tax imposed by this chapter previously remitted to the 
270.23  commissioner of revenue which qualified as a bad debt under 
270.24  section 166(a) of the Internal Revenue Code, as amended through 
270.25  December 31, 1993, during such reporting period, but only in 
270.26  proportion to the portion of such debt which became 
270.27  uncollectable. 
270.28     Sec. 19.  [297F.13] [PENALTY FOR USING GENERAL RATE SALES 
270.29  LINE.] 
270.30     If the form prescribed by the commissioner of revenue for 
270.31  remitting the tax is the sales tax return, then the penalty in 
270.32  this section applies.  A penalty is imposed for remitting the 
270.33  solid waste tax using the general rate sales line on the sales 
270.34  tax return.  The penalty is ten percent of the tax the first 
270.35  time and 20 percent for the second and subsequent times. 
270.36     Sec. 20.  [458D.111] [COLLECTION OF SOLID WASTE MANAGEMENT 
271.1   SERVICE CHARGES.] 
271.2      Subdivision 1.  [AUTHORITY.] The board shall have the 
271.3   powers of a county as specified in section 400.08. 
271.4      Subd. 2.  [METHOD OF COLLECTING CERTAIN SERVICE 
271.5   CHARGES.] The board shall determine the method of collecting 
271.6   service charges in a service area by resolution. 
271.7      Subd. 3.  [SERVICE CHARGES ON REAL ESTATE INCLUDING EXEMPT 
271.8   PROPERTY.] In addition to any methods provided in section 
271.9   400.08, the board may assess and collect service charges as 
271.10  follows.  On or before October 15 of each year, the board shall 
271.11  certify to each county auditor an itemized list of solid waste 
271.12  management service charges and a description of parcels of lands 
271.13  against which the charges arise.  It shall be the duty of the 
271.14  county auditors to include the charges upon the tax rolls of the 
271.15  county for the taxes due and payable for the following year.  
271.16  The solid waste management service charge shall be enforced and 
271.17  collected in the manner provided for the enforcement and 
271.18  collection of real property taxes.  The service charges shall be 
271.19  subject to the same penalties, interest, and other conditions 
271.20  provided for the collection of property taxes. 
271.21     Sec. 21.  [MORATORIUM.] 
271.22     The commissioner of revenue shall not initiate or continue 
271.23  any action to collect any underpayment from political 
271.24  subdivisions, or to reimburse any overpayment to any political 
271.25  subdivisions, of taxes on solid waste management services under 
271.26  Minnesota Statutes, section 297A.45, for the period from January 
271.27  1, 1990, through January 1, 1998. 
271.28     Sec. 22.  [REPEALER.] 
271.29     Minnesota Statutes 1996, sections 116.07, subdivision 10; 
271.30  297A.01, subdivision 21; and 297A.45, are repealed. 
271.31     Sec. 23.  [EFFECTIVE DATES.] 
271.32     Sections 1 to 19 and 22 are effective January 1, 1998. 
271.33     Section 21 is effective the day following final enactment. 
271.34                             ARTICLE 13
271.35                         TACONITE TAXATION
271.36     Section 1.  Minnesota Statutes 1996, section 273.11, 
272.1   subdivision 1, is amended to read: 
272.2      Subdivision 1.  [GENERALLY.] Except as provided in this 
272.3   section or section 273.17, subdivision 1, all property shall be 
272.4   valued at its market value.  The market value as determined 
272.5   pursuant to this section shall be stated such that any amount 
272.6   under $100 is rounded up to $100 and any amount exceeding $100 
272.7   shall be rounded to the nearest $100.  In estimating and 
272.8   determining such value, the assessor shall not adopt a lower or 
272.9   different standard of value because the same is to serve as a 
272.10  basis of taxation, nor shall the assessor adopt as a criterion 
272.11  of value the price for which such property would sell at a 
272.12  forced sale, or in the aggregate with all the property in the 
272.13  town or district; but the assessor shall value each article or 
272.14  description of property by itself, and at such sum or price as 
272.15  the assessor believes the same to be fairly worth in money.  The 
272.16  assessor shall take into account the effect on the market value 
272.17  of property of environmental factors in the vicinity of the 
272.18  property.  In assessing any tract or lot of real property, the 
272.19  value of the land, exclusive of structures and improvements, 
272.20  shall be determined, and also the value of all structures and 
272.21  improvements thereon, and the aggregate value of the property, 
272.22  including all structures and improvements, excluding the value 
272.23  of crops growing upon cultivated land.  In valuing real property 
272.24  upon which there is a mine or quarry, it shall be valued at such 
272.25  price as such property, including the mine or quarry, would sell 
272.26  for at a fair, voluntary sale, for cash, if the material being 
272.27  mined or quarried is not subject to taxation under section 
272.28  298.015 and the mine or quarry is not exempt from the general 
272.29  property tax under section 298.25.  In valuing real property 
272.30  which is vacant, platted property shall be assessed as provided 
272.31  in subdivision 14.  All property, or the use thereof, which is 
272.32  taxable under section 272.01, subdivision 2, or 273.19, shall be 
272.33  valued at the market value of such property and not at the value 
272.34  of a leasehold estate in such property, or at some lesser value 
272.35  than its market value. 
272.36     Sec. 2.  Minnesota Statutes 1996, section 273.12, is 
273.1   amended to read: 
273.2      273.12 [ASSESSMENT OF REAL PROPERTY.] 
273.3      It shall be the duty of every assessor and board, in 
273.4   estimating and determining the value of lands for the purpose of 
273.5   taxation, to consider and give due weight to every element and 
273.6   factor affecting the market value thereof, including its 
273.7   location with reference to roads and streets and the location of 
273.8   roads and streets thereon or over the same, and to take into 
273.9   consideration a reduction in the acreage of each tract or lot 
273.10  sufficient to cover the amount of land actually used for any 
273.11  improved public highway and the reduction in area of land caused 
273.12  thereby.  It shall be the duty of every assessor and board, in 
273.13  estimating and determining the value of lands for the purpose of 
273.14  taxation, to consider and give due weight to lands which are 
273.15  comparable in character, quality, and location, to the end that 
273.16  all lands similarly located and improved will be assessed upon a 
273.17  uniform basis and without discrimination and, for agricultural 
273.18  lands, to consider and give recognition to its earning potential 
273.19  as measured by its free market rental rate.  
273.20     When mineral, clay, or gravel deposits exist on a property, 
273.21  and their extent, quality, and costs of extraction are 
273.22  sufficiently well known so as to influence market value, such 
273.23  deposits shall be recognized in valuing the property; except for 
273.24  mineral and energy-resource deposits which are subject to 
273.25  taxation under section 298.015, and except for taconite and 
273.26  iron-sulphide deposits which are exempt from the general 
273.27  property tax under section 298.25. 
273.28     Sec. 3.  Minnesota Statutes 1996, section 298.24, 
273.29  subdivision 1, is amended to read: 
273.30     Subdivision 1.  (a) For concentrate produced in 1992, 1993, 
273.31  1994, and 1995 there is imposed upon taconite and iron 
273.32  sulphides, and upon the mining and quarrying thereof, and upon 
273.33  the production of iron ore concentrate therefrom, and upon the 
273.34  concentrate so produced, a tax of $2.054 per gross ton of 
273.35  merchantable iron ore concentrate produced therefrom.  
273.36     (b) On concentrates produced in 1997 and thereafter, an 
274.1   additional tax is imposed equal to three cents per gross ton of 
274.2   merchantable iron ore concentrate for each one percent that the 
274.3   iron content of the product exceeds 72 percent, when dried at 
274.4   212 degrees Fahrenheit. 
274.5      (c) For concentrates produced in 1996 and subsequent years, 
274.6   the tax rate shall be equal to the preceding year's tax rate 
274.7   plus an amount equal to the preceding year's tax rate multiplied 
274.8   by the percentage increase in the implicit price deflator from 
274.9   the fourth quarter of the second preceding year to the fourth 
274.10  quarter of the preceding year, provided that, for concentrates 
274.11  produced in 1996 only, the increase in the rate of tax imposed 
274.12  under this section over the rate imposed for the previous year 
274.13  may not exceed four cents per ton.  "Implicit price deflator" 
274.14  for the gross national product means the implicit price deflator 
274.15  prepared by the bureau of economic analysis of the United States 
274.16  Department of Commerce.  
274.17     ~~(c)~~ (d) The tax shall be imposed on the average of the 
274.18  production for the current year and the previous two years.  The 
274.19  rate of the tax imposed will be the current year's tax rate.  
274.20  This clause shall not apply in the case of the closing of a 
274.21  taconite facility if the property taxes on the facility would be 
274.22  higher if this clause and section 298.25 were not applicable.  
274.23     ~~(d)~~ (e) If the tax or any part of the tax imposed by this 
274.24  subdivision is held to be unconstitutional, a tax of $2.054 per 
274.25  gross ton of merchantable iron ore concentrate produced shall be 
274.26  imposed.  
274.27     ~~(e)~~ (f) Consistent with the intent of this subdivision to 
274.28  impose a tax based upon the weight of merchantable iron ore 
274.29  concentrate, the commissioner of revenue may indirectly 
274.30  determine the weight of merchantable iron ore concentrate 
274.31  included in fluxed pellets by subtracting the weight of the 
274.32  limestone, dolomite, or olivine derivatives or other basic flux 
274.33  additives included in the pellets from the weight of the 
274.34  pellets.  For purposes of this paragraph, "fluxed pellets" are 
274.35  pellets produced in a process in which limestone, dolomite, 
274.36  olivine, or other basic flux additives are combined with 
275.1   merchantable iron ore concentrate.  No subtraction from the 
275.2   weight of the pellets shall be allowed for binders, mineral and 
275.3   chemical additives other than basic flux additives, or moisture. 
275.4      ~~(f)~~ (g) (1) Notwithstanding any other provision of this 
275.5   subdivision, for the first ~~five years of a plant's production of~~ 
275.6   ~~direct reduced ore, the rate of the tax on direct reduced ore is~~ 
275.7   ~~determined under this paragraph~~ two years of a plant's 
275.8   production of direct reduced ore, no tax is imposed under this 
275.9   section.  As used in this paragraph, "direct reduced ore" is ore 
275.10  that results in a product that has an iron content of at least 
275.11  75 percent.  For the third year of a plant's production of 
275.12  direct reduced ore, the rate to be applied to direct reduced ore 
275.13  is 25 percent of the rate otherwise determined under this 
275.14  subdivision ~~for the first 500,000 of taxable tons for the~~ 
275.15  ~~production year, and 50 percent of the rate otherwise determined~~ 
275.16  ~~for any remainder.  If the taxpayer had no production in the two~~ 
275.17  ~~years prior to the current production year, the tonnage eligible~~ 
275.18  ~~to be taxed at 25 percent of the rate otherwise determined under~~ 
275.19  ~~this subdivision is the first 166,667 tons.  If the taxpayer had~~ 
275.20  ~~some production in the year prior to the current production year~~ 
275.21  ~~but no production in the second prior year, the tonnage eligible~~ 
275.22  ~~to be taxed at 25 percent of the rate otherwise determined under~~ 
275.23  ~~this subdivision is the first 333,333 tons~~.  For the fourth such 
275.24  production year, the rate is 50 percent of the rate otherwise 
275.25  determined under this subdivision; for the fifth such production 
275.26  year, the rate is 75 percent of the rate otherwise determined 
275.27  under this subdivision; and for all subsequent production years, 
275.28  the full rate is imposed. 
275.29     (2) Subject to clause (1), production of direct reduced ore 
275.30  in this state is subject to the tax imposed by this section, but 
275.31  if that production is not produced by a producer of taconite or 
275.32  iron sulfides, the production of taconite or iron sulfides 
275.33  consumed in the production of direct reduced iron in this state 
275.34  is not subject to the tax imposed by this section on taconite or 
275.35  iron sulfides. 
275.36     Sec. 4.  Minnesota Statutes 1996, section 298.296, 
276.1   subdivision 4, is amended to read: 
276.2      Subd. 4.  [TEMPORARY LOAN AUTHORITY.] (a) The board may 
276.3   recommend that up to ~~$10,000,000~~ $7,500,000 from the corpus of 
276.4   the trust may be used for loans as provided in this 
276.5   subdivision.  The money would be available for loans for 
276.6   construction and equipping of facilities constituting (1) a 
276.7   value added iron products plant, which may be either a new plant 
276.8   or a facility incorporated into an existing plant that produces 
276.9   iron upgraded to a minimum of 75 percent iron content or any 
276.10  iron alloy with a total minimum metallic content of 90 percent; 
276.11  or (2) a new mine or minerals processing plant for any mineral 
276.12  subject to the net proceeds tax imposed under section 298.015.  
276.13  A loan under this paragraph may not exceed $5,000,000 for any 
276.14  facility.  
276.15     (b) Additionally, the board must reserve the first 
276.16  $2,000,000 of the net interest, dividends, and earnings arising 
276.17  from the investment of the trust after June 30, 1996, to be used 
276.18  for additional grants for the purposes set forth in paragraph 
276.19  (a).  This amount must be reserved until it is used for the 
276.20  grants or until June 30, 1998, whichever is earlier. 
276.21     (c) Additionally, the board may recommend that up to 
276.22  ~~$3,000,000~~ $5,500,000 from the corpus of the trust may be used 
276.23  for additional grants for the purposes set forth in paragraph 
276.24  (a). 
276.25     (d) The board may require that it receive an equity 
276.26  percentage in any project to which it contributes under this 
276.27  section. 
276.28     (e) The authority to make loans and grants under this 
276.29  subdivision terminates June 30, 1998. 
276.30     Sec. 5.  [USE OF PRODUCTION TAX PROCEEDS.] 
276.31     The amount distributed to the iron range resources and 
276.32  rehabilitation board under Minnesota Statutes, section 298.28, 
276.33  subdivision 7, that is attributable to the tax increase due to 
276.34  the implicit price deflator increase as provided in Minnesota 
276.35  Statutes, section 298.24, subdivision 1, paragraph (c), for 
276.36  concentrates produced in 1997 shall be used by the board to make 
277.1   a grant to the city of Hoyt Lakes to be used for the 
277.2   establishment of an industrial park in the city. 
277.3      Sec. 6.  [EFFECTIVE DATE.] 
277.4      Section 3 is effective for production years beginning after 
277.5   December 31, 1996.  Section 5 is effective the day following 
277.6   final enactment. 
277.7                              ARTICLE 14 
277.8                            BUDGET RESERVE
277.9      Section 1.  Minnesota Statutes 1996, section 16A.152, 
277.10  subdivision 2, is amended to read: 
277.11     Subd. 2.  [ADDITIONAL REVENUES; PRIORITY.] ~~If on the basis~~ 
277.12  ~~of a forecast of general fund revenues and expenditures the~~ 
277.13  ~~commissioner of finance determines that there will be a positive~~ 
277.14  ~~unrestricted budgetary general fund balance at the close of the~~ 
277.15  ~~biennium, the commissioner of finance must allocate money to the~~ 
277.16  ~~budget reserve until the total amount in the account is~~ 
277.17  ~~$270,000,000.  An amount equal to any additional biennial~~ 
277.18  ~~unrestricted budgetary general fund balance made available as~~ 
277.19  ~~the result of a forecast in an odd-numbered calendar year after~~ 
277.20  ~~November 1 is appropriated in January of the following year to~~ 
277.21  ~~reduce the property tax levy recognition percent under section~~ 
277.22  ~~121.904, subdivision 4a, to zero before additional money beyond~~ 
277.23  ~~$270,000,000 is allocated to the budget reserve account.  The~~ 
277.24  ~~amount appropriated is the full amount forecast to be available~~ 
277.25  ~~at the end of the biennium and is not limited to the amount~~ 
277.26  ~~forecast to be available at the end of the current fiscal year.~~ 
277.27  The budget reserve account shall be increased to $522,000,000 on 
277.28  July 1, 1997.  If on the basis of a forecast of general fund 
277.29  revenues and expenditures the commissioner of finance determines 
277.30  that there will be a positive unrestricted budgetary general 
277.31  fund balance at the close of the biennium, the commissioner of 
277.32  finance shall allocate money to the budget reserve until the 
277.33  total amount in the account equals five percent of projected 
277.34  expenditures for the second year of the biennium. 
277.35     The amounts necessary to meet the requirements of this 
277.36  section are appropriated from the general fund. 
278.1      Sec. 2.  Minnesota Statutes 1996, section 124.195, 
278.2   subdivision 7, is amended to read: 
278.3      Subd. 7.  [PAYMENTS TO SCHOOL NONOPERATING FUNDS.] Each 
278.4   fiscal year state general fund payments for a district 
278.5   nonoperating fund shall be made at 85 percent of the estimated 
278.6   entitlement during the fiscal year of the entitlement~~, unless a~~ 
278.7   ~~higher rate has been established according to section 121.904,~~ 
278.8   ~~subdivision 4d~~.  This amount shall be paid in 12 equal monthly 
278.9   installments.  The amount of the actual entitlement, after 
278.10  adjustment for actual data, minus the payments made during the 
278.11  fiscal year of the entitlement shall be paid prior to October 31 
278.12  of the following school year.  The commissioner may make advance 
278.13  payments of homestead and agricultural credit aid for a 
278.14  district's debt service fund earlier than would occur under the 
278.15  preceding schedule if the district submits evidence showing a 
278.16  serious cash flow problem in the fund.  The commissioner may 
278.17  make earlier payments during the year and, if necessary, 
278.18  increase the percent of the entitlement paid to reduce the cash 
278.19  flow problem. 
278.20     Sec. 3.  Minnesota Statutes 1996, section 124.195, 
278.21  subdivision 10, is amended to read: 
278.22     Subd. 10.  [AID PAYMENT PERCENTAGE.] Except as provided in 
278.23  subdivisions 8, 9, and 11, each fiscal year, all education aids 
278.24  and credits in this chapter and chapters 121, 123, 124A, 124B, 
278.25  125, 126, 134, and section 273.1392, shall be paid at 90 percent 
278.26  for districts operating a program under section 121.585 for 
278.27  grades 1 to 12 for all students in the district and 85 percent 
278.28  for other districts of the estimated entitlement during the 
278.29  fiscal year of the entitlement~~, unless a higher rate has been~~ 
278.30  ~~established according to section 121.904, subdivision 4d~~.  
278.31  Districts operating a program under section 121.585 for grades 1 
278.32  to 12 for all students in the district shall receive 85 percent 
278.33  of the estimated entitlement plus an additional amount of 
278.34  general education aid equal to five percent of the estimated 
278.35  entitlement.  For all districts, the final adjustment payment, 
278.36  according to subdivision 6, shall be the amount of the actual 
279.1   entitlement, after adjustment for actual data, minus the 
279.2   payments made during the fiscal year of the entitlement. 
279.3      Sec. 4.  [REPEALER.] 
279.4      Minnesota Statutes 1996, section 121.904, subdivision 4d, 
279.5   is repealed. 
279.6      Sec. 5.  [EFFECTIVE DATE.] 
279.7      Sections 1 to 4 are effective July 1, 1997. 
279.8                              ARTICLE 15
279.9                   REGIONAL DEVELOPMENT COMMISSIONS
279.10     Section 1.  Minnesota Statutes 1996, section 462.381, is 
279.11  amended to read: 
279.12     462.381 [TITLE.] 
279.13     Sections 462.381 to 462.398 may be cited as the "regional 
279.14  development act ~~of 1969~~."  
279.15     Sec. 2.  Minnesota Statutes 1996, section 462.383, is 
279.16  amended to read: 
279.17     462.383 [PURPOSE:  GOVERNMENT COOPERATION AND 
279.18  COORDINATION.] 
279.19     Subdivision 1.  [LEGISLATIVE FINDINGS.] The legislature 
279.20  finds that problems of growth and development in urban and rural 
279.21  regions of the state so transcend the boundary lines of local 
279.22  government units that no single unit can plan for their solution 
279.23  without affecting other units in the region; ~~that various~~ 
279.24  ~~multicounty planning activities conducted under various laws of~~ 
279.25  ~~the United States are presently being conducted in an~~ 
279.26  ~~uncoordinated manner~~ that coordination of multijurisdictional 
279.27  activities is essential to the development and implementation of 
279.28  effective policies and programs; that intergovernmental 
279.29  cooperation ~~on a regional basis~~ is an effective means of pooling 
279.30  the resources of local government to approach common problems; 
279.31  and that the assistance of the state is needed to make the most 
279.32  effective use of local, state, federal, and private programs in 
279.33  serving the citizens of such urban and rural regions.  
279.34     Subd. 2.  [BY CREATING REGIONAL COMMISSION.] It is the 
279.35  purpose of sections 462.381 to 462.398 to ~~facilitate~~ 
279.36  ~~intergovernmental cooperation and to insure the orderly and~~ 
280.1   ~~harmonious coordination of state, federal, and local~~ 
280.2   ~~comprehensive planning and development programs for the solution~~ 
280.3   ~~of economic, social, physical, and governmental problems of the~~ 
280.4   ~~state and its citizens by providing for the creation of regional~~ 
280.5   ~~development commissions~~ authorize the establishment of regional 
280.6   development commissions to work with and on behalf of local 
280.7   units of government to develop plans or implement programs to 
280.8   address economic, social, physical, and governmental concerns of 
280.9   each region of the state.  The commissions may assist with, 
280.10  develop, or implement plans or programs for individual local 
280.11  units of government.  
280.12     Sec. 3.  Minnesota Statutes 1996, section 462.384, 
280.13  subdivision 5, is amended to read: 
280.14     Subd. 5.  [DEVELOPMENT REGION, REGION.] "Development 
280.15  region" or "region" means a geographic region composed of a 
280.16  grouping of counties ~~embodied in an executive order of the~~ 
280.17  ~~governor or~~ as ~~otherwise~~ established by sections 462.381 to 
280.18  462.398.  
280.19     Sec. 4.  Minnesota Statutes 1996, section 462.385, 
280.20  subdivision 1, is amended to read: 
280.21     Subdivision 1.  [BY GOVERNOR'S ORDER; HEARINGS.] 
280.22  Development regions for the state shall ~~be those regions so~~ 
280.23  ~~designated by the governor by executive order.  The order shall~~ 
280.24  ~~provide for public hearings within each proposed region after~~ 
280.25  ~~which any county may request assignment to a region other than~~ 
280.26  ~~that proposed by the order.  If a request for reassignment is~~ 
280.27  ~~unacceptable to the commissioner, the county shall remain in the~~ 
280.28  ~~originally designated region until the next session of the~~ 
280.29  ~~legislature for its review and final assignment.~~ consist of the 
280.30  following counties: 
280.31     Region 1:  Kittson, Roseau, Marshall, Pennington, Red Lake, 
280.32  Polk, and Norman. 
280.33     Region 2:  Lake of the Woods, Beltrami, Mahnomen, 
280.34  Clearwater, and Hubbard. 
280.35     Region 3:  Koochiching, Itasca, St. Louis, Lake, Cook, 
280.36  Aitkin, and Carlton. 
281.1      Region 4:  Clay, Becker, Wilkin, Otter Tail, Grant, 
281.2   Douglas, Traverse, Stevens, and Pope. 
281.3      Region 5:  Cass, Wadena, Crow Wing, Todd, and Morrison. 
281.4      Region 6E:  Kandiyohi, Meeker, Renville, and McLeod. 
281.5      Region 6W:  Big Stone, Swift, Chippewa, Lac Qui Parle, and 
281.6   Yellow Medicine. 
281.7      Region 7E:  Mille Lacs, Kanabec, Pine, Isanti, and Chisago. 
281.8      Region 7W:  Stearns, Benton, Sherburne, and Wright. 
281.9      Region 8:  Lincoln, Lyon, Redwood, Pipestone, Murray, 
281.10  Cottonwood, Rock, Nobles, and Jackson. 
281.11     Region 9:  Sibley, Nicollet, LeSueur, Brown, Blue Earth, 
281.12  Waseca, Watonwan, Martin, and Faribault. 
281.13     Region 10:  Rice, Goodhue, Wabasha, Steele, Dodge, Olmsted, 
281.14  Winona, Freeborn, Mower, Fillmore, and Houston. 
281.15     Region 11:  Anoka, Hennepin, Ramsey, Washington, Carver, 
281.16  Scott, and Dakota. 
281.17     Sec. 5.  Minnesota Statutes 1996, section 462.385, 
281.18  subdivision 3, is amended to read: 
281.19     Subd. 3.  [ONGOING BOUNDARY STUDIES; CHANGES.] ~~The~~ 
281.20  ~~commissioner shall conduct continuous studies and analysis of~~ 
281.21  ~~the boundaries of regions and shall make recommendations for~~ 
281.22  ~~their modification where necessary.~~  Modification of regional 
281.23  boundaries may be initiated by a county~~, a commission, or by the~~ 
281.24  ~~commissioner and will be accomplished in accordance with this~~ 
281.25  ~~section as in the case of initial designation~~ requesting 
281.26  assignment to a region other than that within which it is 
281.27  designated.  If a request for reassignment is unacceptable to 
281.28  the commission whose boundaries would be modified, the county 
281.29  requesting reassignment shall remain in the originally 
281.30  designated region until the legislature determines the final 
281.31  assignment. 
281.32     Sec. 6.  Minnesota Statutes 1996, section 462.386, 
281.33  subdivision 1, is amended to read: 
281.34     Subdivision 1.  [EXCEPTION, WORKING AGREEMENTS.] All 
281.35  coordination, planning, and development regions assisted or 
281.36  created by the state of Minnesota or pursuant to federal 
282.1   legislation shall conform to the regions ~~designated by the~~ 
282.2   ~~executive order~~ except where, after review and approval by the 
282.3   ~~commissioner~~ governor or designee, nonconformance is clearly 
282.4   justified.  The ~~commissioner~~ governor or designee shall develop 
282.5   working agreements with state and federal departments and 
282.6   agencies to insure conformance with this subdivision. 
282.7      Sec. 7.  Minnesota Statutes 1996, section 462.387, is 
282.8   amended to read: 
282.9      462.387 [REGIONAL DEVELOPMENT COMMISSIONS; ESTABLISHMENT.] 
282.10     Subdivision 1.  [PETITION.] Any combination of counties or 
282.11  municipalities representing a majority of the population of the 
282.12  region for which a commission is proposed may petition the 
282.13  ~~commissioner~~ governor or designee by formal resolution setting 
282.14  forth its desire to establish, and the need for, the 
282.15  establishment of a regional development commission.  For 
282.16  purposes of this section the population of a county does not 
282.17  include the population of a municipality within the county. 
282.18     Subd. 1a.  [OPERATING COMMISSION.] Regional development 
282.19  commissions shall be those organizations operating pursuant to 
282.20  sections 462.381 to 462.398 which were formed by formal 
282.21  resolution of local units of government and those which may 
282.22  petition by formal resolution to establish a regional 
282.23  development commission. 
282.24     Subd. 3.  [ESTABLISHMENT.] Upon receipt of a petition as 
282.25  provided in subdivision 1 a regional development commission 
282.26  shall be established by the ~~commissioner~~ governor or designee 
282.27  and ~~the notification of~~ all local government units within the 
282.28  region for which the commission is proposed shall be notified.  
282.29  The notification shall be made within 60 days of 
282.30  the ~~commissioner's~~ governor's receipt of a petition under 
282.31  subdivision 1. 
282.32     Subd. 4.  [SELECTION OF MEMBERSHIP.] The ~~commissioner~~ 
282.33  governor or designee shall call together each of the membership 
282.34  classifications except citizen groups, defined in section 
282.35  462.388, within 60 days of the establishment of a regional 
282.36  development commission for the purpose of selecting the 
283.1   commission membership. 
283.2      Subd. 5.  [NAME OF COMMISSION.] The name of the 
283.3   organization shall be determined by formal resolution of the 
283.4   commission. 
283.5      Sec. 8.  Minnesota Statutes 1996, section 462.388, is 
283.6   amended to read: 
283.7      462.388 [COMMISSION MEMBERSHIP.] 
283.8      Subdivision 1.  [REPRESENTATION OF VARIOUS MEMBERS.] A 
283.9   commission shall consist of the following members: 
283.10     (1) one member from each county board of every county in 
283.11  the development region; 
283.12     (2) one additional county board member from each county of 
283.13  over 100,000 population; 
283.14     (3) the town clerk, town treasurer, or one member of a town 
283.15  board of supervisors from each county containing organized 
283.16  towns; 
283.17     (4) one additional member selected by the county board of 
283.18  any county containing no townships; 
283.19     (5) one mayor or council member from a municipality of 
283.20  under 10,000 population from each county, selected by the mayors 
283.21  of all such municipalities in the county; 
283.22     (6) one mayor or council member from each municipality of 
283.23  over 10,000 in each county; 
283.24     (7) two school board members elected by a majority of the 
283.25  chairs of school boards in the development region; 
283.26     (8) one member from each council of governments; 
283.27     (9) one member appointed by each native American tribal 
283.28  council located in each region; and 
283.29     (10) citizens representing public interests within the 
283.30  region including members of minority groups to be selected after 
283.31  adoption of the bylaws of the commission~~; and~~ 
283.32     ~~(10) the chair, who shall be selected by the commission~~. 
283.33     Subd. 2.  [TERMS, SELECTION METHOD.] The terms of office 
283.34  and method of selection of members ~~other than the chair~~ shall be 
283.35  provided in the bylaws of the commission ~~which shall not be~~ 
283.36  ~~inconsistent with the provisions of subdivision 1~~.  The 
284.1   commission shall adopt rules setting forth its procedures. 
284.2      Subd. 5.  [PER DIEM; BOARD MEMBERS.] Members of the 
284.3   regional commission may receive a per diem of not over ~~$35~~ $50, 
284.4   the amount to be determined by the commission, and shall be 
284.5   reimbursed for their reasonable expenses as determined by the 
284.6   commission.  The commission ~~shall~~ may provide for the election 
284.7   of a board of directors~~, who need not be commission members,~~ and 
284.8   provide, at its discretion, for a per diem of not over ~~$35~~ $50 a 
284.9   day for meetings of the board and expenses.  A member of the 
284.10  board of directors who is a member of the commission shall 
284.11  receive only the per diem payable to board members when meetings 
284.12  of the board of directors and the commission are held on the 
284.13  same day. 
284.14     Sec. 9.  Minnesota Statutes 1996, section 462.389, 
284.15  subdivision 1, is amended to read: 
284.16     Subdivision 1.  [CHAIR.] The chair of the commission shall 
284.17  have been a resident of the region for at least one year and 
284.18  shall be a person experienced in the field of government 
284.19  affairs.  The chair shall preside at the meetings of the 
284.20  commission and board of directors~~, appoint all employees~~ 
284.21  ~~thereof, subject to the approval of the commission,~~ and be 
284.22  responsible for carrying out all policy decisions of the 
284.23  commission.  The chair's expense allowances shall be fixed by 
284.24  the commission.  The term of the first chair shall be one year, 
284.25  and the chair shall serve until a successor is selected and 
284.26  qualifies.  At the expiration of the term of the first chair, 
284.27  the chair shall be elected from the membership of the commission 
284.28  according to procedures established in its bylaws.  
284.29     Sec. 10.  Minnesota Statutes 1996, section 462.389, 
284.30  subdivision 3, is amended to read: 
284.31     Subd. 3.  [EXECUTIVE DIRECTOR.] ~~Upon the recommendation of~~ 
284.32  ~~the chair,~~ The commission may appoint an executive director to 
284.33  serve as the chief administrative officer.  The director may be 
284.34  chosen from among the citizens of the nation at large, and shall 
284.35  be selected on the basis of training and experience in the field 
284.36  of government affairs. 
285.1      Sec. 11.  Minnesota Statutes 1996, section 462.389, 
285.2   subdivision 4, is amended to read: 
285.3      Subd. 4.  [EMPLOYEES.] The commission may ~~prepare, in~~ 
285.4   ~~consultation with the state commissioner of employee relations,~~ 
285.5   ~~and may~~ adopt a ~~merit~~ personnel system for its officers and 
285.6   employees including terms and conditions for the employment, the 
285.7   fixing of compensation, their classification, benefits, and the 
285.8   filing of performance and fidelity bonds, and such policies of 
285.9   insurance as it may deem advisable, the premiums for which, 
285.10  however, shall be paid for by the commission.  Officers and 
285.11  employees are public employees within the meaning of chapter 
285.12  353.  The commission shall make the employer's contributions to 
285.13  pension funds of its employees.  
285.14     Sec. 12.  Minnesota Statutes 1996, section 462.39, 
285.15  subdivision 2, is amended to read: 
285.16     Subd. 2.  [~~FEDERAL~~ REGIONAL PROGRAMS.] The commission is 
285.17  ~~the~~ authorized ~~agency~~ to receive ~~state and federal grants~~ public 
285.18  and private funds for ~~regional~~ purposes ~~from the following~~ 
285.19  ~~programs:~~ 
285.20     ~~(1) Section 403 of the Public Works and Economic~~ 
285.21  ~~Development Act of 1965 (economic development districts);~~ 
285.22     ~~(2) Section 701 of the Housing Act of 1954, as amended~~ 
285.23  ~~(multicounty comprehensive planning);~~ 
285.24     ~~(3) Omnibus Crime Control Act of 1968;~~ 
285.25     ~~and for the following to the extent feasible as determined~~ 
285.26  ~~by the governor:~~ 
285.27     ~~(a) Economic Opportunity Act of 1964;~~ 
285.28     ~~(b) Comprehensive Health Planning Act of 1965;~~ 
285.29     ~~(c) Federal regional manpower planning programs;~~ 
285.30     ~~(d) Resource, conservation, and development districts; or~~ 
285.31     ~~(e) Any state and federal programs providing funds~~ 
285.32  ~~for~~ including, but not limited to program administration, 
285.33  multicounty planning, coordination, and development 
285.34  ~~purposes~~. ~~The director shall, where consistent with state and~~ 
285.35  ~~federal statutes and regulations, review applications for all~~ 
285.36  ~~state and federal regional planning and development grants to a~~ 
286.1   ~~commission.~~ 
286.2      Sec. 13.  Minnesota Statutes 1996, section 462.39, 
286.3   subdivision 3, is amended to read: 
286.4      Subd. 3.  [PLANNING.] The commission ~~shall~~ may prepare and 
286.5   ~~adopt~~ submit for adoption, after appropriate study and such 
286.6   public hearings as may be necessary, ~~a~~ comprehensive ~~development~~ 
286.7   ~~plan~~ plans for local units of government, individually or 
286.8   collectively, within the region.  ~~The plan shall~~ Plans may 
286.9   consist of ~~a compilation of~~ policy statements, goals, standards, 
286.10  programs, and maps prescribing guides for ~~an~~ orderly ~~and~~ 
286.11  ~~economic~~ development~~, public and private, of the region.  The~~ 
286.12  ~~comprehensive development plan~~ within the jurisdiction subject 
286.13  to the plan.  The plans shall recognize and incorporate planning 
286.14  principles which encompass physical, social, or economic needs 
286.15  of the region~~, and those future developments which will have an~~ 
286.16  ~~impact on the entire region including but not limited to such~~ 
286.17  ~~matters as land use, parks and open space land needs, access to~~ 
286.18  ~~direct sunlight for solar energy systems, the necessity for and~~ 
286.19  ~~location of airports, highways, transit facilities, public~~ 
286.20  ~~hospitals, libraries, schools, public and private, housing, and~~ 
286.21  ~~other public buildings~~.  In preparing ~~the~~ development ~~plan~~ plans 
286.22  the commission shall use to the maximum extent feasible the 
286.23  resources studies and data available from other planning 
286.24  agencies within the region, including counties, municipalities, 
286.25  special districts, and subregional planning agencies, and it 
286.26  shall utilize the resources of ~~the director~~ state agencies to 
286.27  the same purpose.  ~~No development plan or portion thereof for~~ 
286.28  ~~the region shall be adopted by the commission until it has been~~ 
286.29  ~~submitted to the director for review and comment and a period of~~ 
286.30  ~~60 days has elapsed after such submission.  When a development~~ 
286.31  ~~plan has been adopted, the commission shall distribute it to all~~ 
286.32  ~~local government units within the region.~~ 
286.33     Sec. 14.  Minnesota Statutes 1996, section 462.391, is 
286.34  amended by adding a subdivision to read: 
286.35     Subd. 1a.  [REVIEW OF LOCAL PLANS.] The commission may 
286.36  review and provide comments and recommendations on local plans 
287.1   or development proposals which in the judgment of the commission 
287.2   have a substantial effect on regional development.  Local units 
287.3   of government may request that a regional commission review, 
287.4   comment, and provide advisory recommendations on local plans or 
287.5   development proposals. 
287.6      Sec. 15.  Minnesota Statutes 1996, section 462.391, is 
287.7   amended by adding a subdivision to read: 
287.8      Subd. 2a.  [STAFF SERVICES.] To avoid duplication of staff 
287.9   for various regional bodies assisted by federal or state 
287.10  government, the commission may provide basic administrative, 
287.11  research, and planning services for all regional planning and 
287.12  development bodies.  The commissions may contract to obtain or 
287.13  perform services with state agencies, for-profit or nonprofit 
287.14  entities, subdistricts organized as the result of federal or 
287.15  state programs, councils of governments organized under section 
287.16  471.59, or any other law, and with local governments. 
287.17     Sec. 16.  Minnesota Statutes 1996, section 462.391, is 
287.18  amended by adding a subdivision to read: 
287.19     Subd. 3a.  [DATA AND INFORMATION.] The commission may be 
287.20  designated as a regional data center providing data collection, 
287.21  storage, analysis, and dissemination to be used by it and other 
287.22  governmental and private users, and may accept gifts or grants 
287.23  to provide this service. 
287.24     Sec. 17.  Minnesota Statutes 1996, section 462.391, 
287.25  subdivision 5, is amended to read: 
287.26     Subd. 5.  [~~URBAN AND RURAL~~ RESEARCH.] Where studies have 
287.27  not been otherwise authorized by law the commission may study 
287.28  the feasibility of programs ~~relating~~ including, but not limited 
287.29  to, water, land use, economic development, ~~minority problems~~ 
287.30  housing, demographics, cultural issues, governmental ~~problems~~ 
287.31  issues, human ~~and~~ services, natural resources, 
287.32  communication, technology, transportation, and other subjects of 
287.33  concern to the citizens of the region, may institute 
287.34  demonstration projects in connection therewith, and may enter 
287.35  into contracts or accept gifts or grants for such purposes as 
287.36  otherwise authorized in sections 462.381 to 462.398.  
288.1      Sec. 18.  Minnesota Statutes 1996, section 462.391, is 
288.2   amended by adding a subdivision to read: 
288.3      Subd. 11.  [PROGRAM OPERATION.] Upon approval of the 
288.4   appropriate authority from local, state, and federal government 
288.5   units, commissions may be regarded as general purpose units of 
288.6   government to receive funds and operate programs on a regional 
288.7   or subregional basis to provide economies of scale or to enhance 
288.8   program efficiency. 
288.9      Sec. 19.  Minnesota Statutes 1996, section 462.391, is 
288.10  amended by adding a subdivision to read: 
288.11     Subd. 12.  [PROPERTY OWNERSHIP.] A commission may buy, 
288.12  lease, acquire, own, hold, improve, and use real or personal 
288.13  property or an interest in property, wherever located in the 
288.14  state for purposes of housing the administrative office of the 
288.15  regional commission. 
288.16     Sec. 20.  Minnesota Statutes 1996, section 462.391, is 
288.17  amended by adding a subdivision to read: 
288.18     Subd. 13.  [PROPERTY DISPOSITION.] A commission may sell, 
288.19  convey, mortgage, create a security interest in, lease, 
288.20  exchange, transfer, or dispose of all or part of its real or 
288.21  personal property or an interest in property, wherever located 
288.22  in the state. 
288.23     Sec. 21.  Minnesota Statutes 1996, section 462.393, is 
288.24  amended to read: 
288.25     462.393 [ANNUAL REPORT TO UNITS, PUBLIC, GOVERNOR, 
288.26  LEGISLATURE.] 
288.27     Subdivision 1.  [CONTENTS.] On or before ~~August~~ September 1 
288.28  of each year, the commission shall prepare a report for the 
288.29  governmental units, the public within the region, the 
288.30  legislature and the governor.  The report shall include: 
288.31     (1) A statement of the commission's receipts and 
288.32  expenditures by category since the preceding report; 
288.33     (2) A detailed budget for the year in which the report is 
288.34  filed and a tentative budget for the following year including an 
288.35  outline of its program for such period; 
288.36     (3) A description of any ~~comprehensive~~ plan adopted in 
289.1   whole or in part for the region; 
289.2      (4) Summaries of any studies and the recommendations 
289.3   resulting therefrom made for the region; 
289.4      (5) A ~~listing of all applications for federal grants or~~ 
289.5   ~~loans made by governmental units within the region together with~~ 
289.6   ~~the action taken by the commission in relation thereto~~ summary 
289.7   of significant accomplishments; 
289.8      (6) A listing of plans of local governmental units 
289.9   submitted to the region, and actions taken in relationship 
289.10  thereto; 
289.11     (7) Recommendations of the commission regarding federal and 
289.12  state programs, cooperation, funding, and legislative needs; and 
289.13     (8) A summary of any audit report made during the previous 
289.14  year ~~by the state auditor~~ relative to the commission.  
289.15     Subd. 2.  [ASSESSMENT EVERY 5 YEARS.] In ~~1981~~ 2001 and 
289.16  every five years thereafter the commission shall review its 
289.17  activities and issue a report assessing its performance in 
289.18  fulfilling the purposes of the regional development act ~~of~~ 
289.19  ~~1969~~.  The report shall ~~state~~ address whether the existence of 
289.20  the commission is in the public welfare and interest.  ~~The~~ 
289.21  ~~report shall be included in the report required by subdivision 1.~~
289.22     Sec. 22.  Minnesota Statutes 1996, section 462.394, is 
289.23  amended to read: 
289.24     462.394 [CITIZEN PARTICIPATION AND ADVISORY COMMITTEES.] 
289.25     The commission may appoint advisory committees of 
289.26  interested and affected citizens to assist in the review of 
289.27  plans, programs, and other matters referred for review by the 
289.28  commission.  Whenever a special advisory committee is required 
289.29  by any federal or state regional program the commission ~~chair~~ 
289.30  shall, as far as practical, appoint such committees as advisory 
289.31  groups to the commission.  Members of the advisory committees 
289.32  shall serve without compensation but shall be reimbursed for 
289.33  their reasonable expenses as determined by the commission.  
289.34     Sec. 23.  Minnesota Statutes 1996, section 462.396, 
289.35  subdivision 1, is amended to read: 
289.36     Subdivision 1.  [GRANTMAKING, TAX LEVY.] The ~~director~~ 
290.1   governor and the legislature shall determine the amount of state 
290.2   assistance and designate an agency to make grants to any 
290.3   commission created under sections 462.381 to 462.398 from 
290.4   appropriations made available for those purposes~~, provided a~~ 
290.5   ~~work program is submitted acceptable to the director~~.  Any 
290.6   regional commission may levy a tax on all taxable property in 
290.7   the region to provide money for the purposes of sections 462.381 
290.8   to 462.398. 
290.9      Sec. 24.  Minnesota Statutes 1996, section 462.396, 
290.10  subdivision 3, is amended to read: 
290.11     Subd. 3.  [GIFTS, GRANTS, LOANS.] The commission is a 
290.12  special purpose unit of government which may accept gifts, apply 
290.13  for and use grants or loans of money or other property from the 
290.14  United States, the state, or any person, local or governmental 
290.15  body for any commission purpose and may enter into agreements 
290.16  required in connection therewith and may hold, use, and dispose 
290.17  of such moneys or property in accordance with the terms of the 
290.18  gift, grant, loan, agreement, or contract relating thereto.  
290.19     For purposes of receipt of state or federal funds for 
290.20  community and economic development, regional commissions shall 
290.21  be considered general purpose units of government. 
290.22     Sec. 25.  Minnesota Statutes 1996, section 462.396, 
290.23  subdivision 4, is amended to read: 
290.24     Subd. 4.  [ACCOUNTING; CHECKS; ANNUAL AUDIT.] The 
290.25  commission shall keep an accurate account of its receipts and 
290.26  disbursement.  Disbursements of funds of the commission shall be 
290.27  made by check signed by the chair or vice-chair or secretary of 
290.28  the commission and countersigned by the executive director or an 
290.29  authorized deputy thereof after such auditing and approval of 
290.30  the expenditure as may be provided by rules of the commission.  
290.31  The state auditor ~~shall~~ may audit the books and accounts of the 
290.32  commission once each year, or as often as funds and personnel of 
290.33  the state auditor permit.  The commission shall pay to the state 
290.34  the total cost and expenses of such examination, including the 
290.35  salaries paid to the auditors while actually engaged in making 
290.36  such examination.  The general fund shall be credited with all 
291.1   collections made for any such examination.  In lieu of an annual 
291.2   audit by the state auditor, the commission ~~may~~ shall contract 
291.3   with a certified public accountant for the annual audit of the 
291.4   books and accounts of the commission.  If a certified public 
291.5   accountant performs the audit, the commission shall send a copy 
291.6   of the audit to the state auditor. 
291.7      Sec. 26.  Minnesota Statutes 1996, section 462.398, is 
291.8   amended to read: 
291.9      462.398 [TERMINATION OF COMMISSION.] 
291.10     Subdivision 1.  [PETITION; POPULATION.] Any combination of 
291.11  counties or municipalities representing a majority of the 
291.12  population of the region for which a commission exists may 
291.13  petition the ~~director~~ governor by formal resolution stating that 
291.14  the existence of the commission is no longer in the public 
291.15  welfare and interest and is not needed to accomplish the 
291.16  purposes of the regional development act ~~of 1969~~.  For purposes 
291.17  of this section the population of a county does not include the 
291.18  population of a municipality within the county.  Any formal 
291.19  resolution adopted by the governing body of a county or 
291.20  municipality for the termination of a commission shall be 
291.21  effective for a period of one year for the purpose of 
291.22  determining the requisite population of the region needed to 
291.23  petition the ~~director~~ governor. 
291.24     Subd. 2.  [HEARINGS; RECOMMENDATION, TERMINATION DATE.] 
291.25  Within 35 days of the ~~receipt~~ filing of the petition, the 
291.26  ~~director~~ governor or designee shall fix a time and place within 
291.27  the region for a hearing.  The director shall give notice of the 
291.28  hearing by publication once each week for two successive weeks 
291.29  before the date of the hearing in a legal newspaper in each of 
291.30  the counties which the commission represents.  The hearing shall 
291.31  be conducted by members of the commission.  If the commission 
291.32  determines that the existence of the commission is no longer in 
291.33  the public welfare and interest and that it is not needed to 
291.34  accomplish the purposes of the regional development act ~~of 1969~~, 
291.35  the commission shall recommend to the ~~director~~ governor or 
291.36  designee that the ~~director~~ governor or designee terminate the 
292.1   commission.  Within 60 days after receipt of the recommendation, 
292.2   the ~~director~~ governor or designee shall terminate the commission 
292.3   by giving notice of the termination to all government units 
292.4   within the region for which the commission was established.  
292.5   Unless otherwise provided by this subdivision, the hearing shall 
292.6   be in accordance with sections 14.001 to 14.69. 
292.7      Subd. 3.  [30 MONTHS BETWEEN PETITIONS.] The 
292.8   ~~director~~ governor or designee shall not accept a petition for 
292.9   termination more than once in 30 months for each regional 
292.10  development commission. 
292.11     Sec. 27.  [REPEALER.] 
292.12     Minnesota Statutes 1996, sections 462.384, subdivision 7; 
292.13  462.385, subdivision 2; 462.389, subdivision 5; 462.391, 
292.14  subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; and 462.392, are 
292.15  repealed. 
292.16                             ARTICLE 16
292.17                           MISCELLANEOUS
292.18     Section 1.  Minnesota Statutes 1996, section 287.22, is 
292.19  amended to read: 
292.20     287.22 [EXCEPTIONS.] 
292.21     The tax imposed by section 287.21 shall not apply to: 
292.22     A.  Any executory contract for the sale of land under which 
292.23  the vendee is entitled to or does take possession thereof, or 
292.24  any assignment or cancellation thereof.  
292.25     B.  Any mortgage or any assignment, extension, partial 
292.26  release, or satisfaction thereof.  
292.27     C.  Any will.  
292.28     D.  Any plat.  
292.29     E.  Any lease.  
292.30     F.  Any deed, instrument, or writing in which the United 
292.31  States or any agency or instrumentality thereof is the grantor, 
292.32  assignor, transferor, conveyor, grantee or assignee. 
292.33     G.  Deeds for cemetery lots.  
292.34     H.  Deeds of distribution by personal representatives.  
292.35     I.  Deeds to or from coowners partitioning undivided 
292.36  interests in the same piece of property. 
293.1      J.  Any deed or other instrument of conveyance issued 
293.2   pursuant to a land exchange under section 92.121 and related 
293.3   laws.  
293.4      K.  A referee's or sheriff's certificate of sale in a 
293.5   mortgage or lien foreclosure sale. 
293.6      L.  A referee's or sheriff's certificate of redemption from 
293.7   a mortgage or lien foreclosure sale issued to the redeeming 
293.8   mortgagor or lienee. 
293.9      M.  A decree of marriage dissolution, as defined in section 
293.10  287.01, subdivision 4, or any deed or other instrument between 
293.11  the parties to the dissolution made pursuant to the terms of the 
293.12  decree. 
293.13     Sec. 2.  Minnesota Statutes 1996, section 298.75, 
293.14  subdivision 1, is amended to read: 
293.15     Subdivision 1.  [DEFINITIONS.] Except as may otherwise be 
293.16  provided, the following words, when used in this section, shall 
293.17  have the meanings herein ascribed to them.  
293.18     (1) "Aggregate material" shall mean nonmetallic natural 
293.19  mineral aggregate including, but not limited to sand, silica 
293.20  sand, gravel, building stone, crushed rock, limestone, and 
293.21  granite.  Aggregate material shall not include dimension stone 
293.22  and dimension granite.  Aggregate material must be measured or 
293.23  weighed after if it has been extracted from the pit, quarry, or 
293.24  deposit.  
293.25     (2) "Person" shall mean any individual, firm, partnership, 
293.26  corporation, organization, trustee, association, or other entity.
293.27     (3) "Operator" shall mean any person engaged in the 
293.28  business of removing aggregate material from the surface or 
293.29  subsurface of the soil, for the purpose of sale, either directly 
293.30  or indirectly, through the use of the aggregate material in a 
293.31  marketable product or service.  
293.32     (4) "Extraction site" shall mean a pit, quarry, or deposit 
293.33  containing aggregate material and any contiguous property to the 
293.34  pit, quarry, or deposit which is used by the operator for 
293.35  stockpiling the aggregate material.  
293.36     (5) "Importer" shall mean any person who buys aggregate 
294.1   material produced from a county not listed in paragraph (6) or 
294.2   another state and causes the aggregate material to be imported 
294.3   into a county in this state which imposes a tax on aggregate 
294.4   material.  
294.5      (6) "County" shall mean the counties of Stearns, Benton, 
294.6   Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, Marshall, 
294.7   Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, Becker, 
294.8   Carlton, Rock, Murray, Wilkin, Big Stone, Sibley, Hennepin, 
294.9   Washington, Chisago, ~~and~~ Ramsey, and Pope.  
294.10     Sec. 3.  Minnesota Statutes 1996, section 298.75, 
294.11  subdivision 4, is amended to read: 
294.12     Subd. 4.  If the county auditor has not received the report 
294.13  by the 15th day after the last day of each calendar quarter from 
294.14  the operator or importer as required by subdivision 3 or has 
294.15  received an erroneous report, the county auditor shall estimate 
294.16  the amount of tax due and notify the operator or importer by 
294.17  registered mail of the amount of tax so estimated within the 
294.18  next 14 days.  An operator or importer may, within 30 days from 
294.19  the date of mailing the notice, and upon payment of the amount 
294.20  of tax determined to be due, file in the office of the county 
294.21  auditor a written statement of objections to the amount of taxes 
294.22  determined to be due.  The statement of objections shall be 
294.23  deemed to be a petition within the meaning of chapter 278, and 
294.24  shall be governed by sections 278.02 to 278.13. 
294.25     Sec. 4.  Minnesota Statutes 1996, section 298.75, is 
294.26  amended by adding a subdivision to read: 
294.27     Subd. 8.  The county auditor or its duly authorized agent 
294.28  may examine records, including computer records, maintained by 
294.29  an importer or operator.  The term "record" includes, but is not 
294.30  limited to, all accounts of an importer or operator.  The county 
294.31  auditor must have access at all reasonable times to inspect and 
294.32  copy all business records related to an importer's or operator's 
294.33  collection, transportation, and disposal of aggregate to the 
294.34  extent necessary to ensure that all aggregate material 
294.35  production taxes required to be paid have been remitted to the 
294.36  county.  The records must be maintained by the importer or 
295.1   operator for no less than six years. 
295.2      Sec. 5.  Minnesota Statutes 1996, section 308A.705, 
295.3   subdivision 1, is amended to read: 
295.4      Subdivision 1.  [DISTRIBUTION OF NET INCOME.] Net income in 
295.5   excess of dividends on capital stock and additions to reserves 
295.6   shall be distributed on the basis of patronage.  A cooperative 
295.7   may establish allocation units, whether the units are 
295.8   functional, divisional, departmental, geographic, or otherwise, 
295.9   and pooling arrangements and may account for and distribute net 
295.10  income on the basis of allocation units and pooling 
295.11  arrangements.  A cooperative may offset the net loss of an 
295.12  allocation unit or pooling arrangement against the net income of 
295.13  other allocation units or pooling arrangements to the extent 
295.14  permitted by section 1388(j) of the Internal Revenue Code of 
295.15  1986, as amended through December 31, 1996. 
295.16     Sec. 6.  Minnesota Statutes 1996, section 325D.33, 
295.17  subdivision 3, is amended to read: 
295.18     Subd. 3.  [REBATES OR CONCESSIONS.] It is unlawful for a 
295.19  wholesaler to offer a rebate in price, to give a rebate in 
295.20  price, to offer a concession of any kind, or to give a 
295.21  concession of any kind in connection with the sale of 
295.22  cigarettes.  For purposes of this chapter, the term "discount" 
295.23  is included in the definition of a rebate.  For purposes of this 
295.24  subdivision, the term "wholesaler" does not include a 
295.25  manufacturer or manufacturer's representative. 
295.26     Sec. 7.  Minnesota Statutes 1996, section 373.01, 
295.27  subdivision 1, is amended to read: 
295.28     Subdivision 1.  [PUBLIC CORPORATION; LISTED POWERS.] Each 
295.29  county is a body politic and corporate and may: 
295.30     (1) Sue and be sued. 
295.31     (2) Acquire and hold real and personal property for the use 
295.32  of the county, and lands sold for taxes as provided by law. 
295.33     (3) Purchase and hold for the benefit of the county real 
295.34  estate sold by virtue of judicial proceedings, to which the 
295.35  county is a party. 
295.36     (4) Sell, lease, and convey real or personal estate owned 
296.1   by the county, and give contracts or options to sell, lease, or 
296.2   convey it, and make orders respecting it as deemed conducive to 
296.3   the interests of the county's inhabitants.  
296.4      No sale, lease, or conveyance of real estate owned by the 
296.5   county, except the lease of a residence acquired for the 
296.6   furtherance of an approved capital improvement project, nor any 
296.7   contract or option for it, shall be valid, without first 
296.8   advertising for bids or proposals in the official newspaper of 
296.9   the county for three consecutive weeks and once in a newspaper 
296.10  of general circulation in the area where the property is 
296.11  located.  The notice shall state the time and place of 
296.12  considering the proposals, contain a legal description of any 
296.13  real estate, and a brief description of any personal property.  
296.14  Leases that do not exceed $15,000 for any one year may be 
296.15  negotiated and are not subject to the competitive bid procedures 
296.16  of this section.  All proposals estimated to exceed $15,000 in 
296.17  any one year shall be considered at the time set for the bid 
296.18  opening, and the one most favorable to the county accepted, but 
296.19  the county board may, in the interest of the county, reject any 
296.20  or all proposals.  Sales of personal property the value of which 
296.21  is estimated to be $15,000 or more shall be made only after 
296.22  advertising for bids or proposals as provided for real estate.  
296.23  Sales of personal property the value of which is estimated to be 
296.24  less than $15,000 may be made either on competitive bids or in 
296.25  the open market, in the discretion of the county board.  
296.26  Notwithstanding anything to the contrary herein, the county may, 
296.27  when acquiring real property for county highway right-of-way, 
296.28  exchange parcels of real property of substantially similar or 
296.29  equal value without advertising for bids.  The estimated values 
296.30  for these parcels shall be determined by the county assessor. 
296.31     If real estate or personal property remains unsold after 
296.32  advertising for and consideration of bids or proposals the 
296.33  county may employ a broker to sell the property.  The broker may 
296.34  sell the property for not less than 90 percent of its appraised 
296.35  market value as determined by the county.  The broker's fee 
296.36  shall be set by agreement with the county but may not exceed ten 
297.1   percent of the sale price and must be paid from the proceeds of 
297.2   the sale. 
297.3      A county or its agent may rent a county-owned residence 
297.4   acquired for the furtherance of an approved capital improvement 
297.5   project subject to the conditions set by the county board and 
297.6   not subject to the conditions for lease otherwise provided by 
297.7   this clause. 
297.8      In no case shall lands be disposed of without there being 
297.9   reserved to the county all iron ore and other valuable minerals 
297.10  in and upon the lands, with right to explore for, mine and 
297.11  remove the iron ore and other valuable minerals, nor shall the 
297.12  minerals and mineral rights be disposed of, either before or 
297.13  after disposition of the surface rights, otherwise than by 
297.14  mining lease, in similar general form to that provided by 
297.15  section 93.20 for mining leases affecting state lands.  The 
297.16  lease shall be for a term not exceeding 50 years, and be issued 
297.17  on a royalty basis, the royalty to be not less than 25 cents per 
297.18  ton of 2,240 pounds, and fix a minimum amount of royalty payable 
297.19  during each year, whether mineral is removed or not.  
297.20  Prospecting options for mining leases may be granted for periods 
297.21  not exceeding one year.  The options shall require, among other 
297.22  things, periodical showings to the county board of the results 
297.23  of exploration work done.  Minerals subject to reservation and 
297.24  lease by a county under this section do not include minerals 
297.25  defined as aggregate material in section 298.75, subdivision 1, 
297.26  clause (1). 
297.27     (5) Make all contracts and do all other acts in relation to 
297.28  the property and concerns of the county necessary to the 
297.29  exercise of its corporate powers. 
297.30     Sec. 8.  Minnesota Statutes 1996, section 469.169, is 
297.31  amended by adding a subdivision to read: 
297.32     Subd. 11.  [ADDITIONAL BORDER CITY ALLOCATIONS.] In 
297.33  addition to tax reductions authorized in subdivisions 7, 8, 9, 
297.34  and 10, the commissioner may allocate $1,500,000 for tax 
297.35  reductions to border city enterprise zones in cities located on 
297.36  the western border of the state.  The commissioner shall make 
298.1   allocations to zones in cities on the western border on a per 
298.2   capita basis.  Allocations made under this subdivision may be 
298.3   used for tax reductions as provided in section 469.171, or other 
298.4   offsets of taxes imposed on or remitted by businesses located in 
298.5   the enterprise zone, but only if the municipality determines 
298.6   that the granting of the tax reduction or offset is necessary in 
298.7   order to retain a business within or attract a business to the 
298.8   zone.  Limitations on allocations under section 469.169, 
298.9   subdivision 7, do not apply to this allocation.  Enterprise 
298.10  zones that receive allocations under this subdivision may 
298.11  continue in effect for purposes of those allocations through 
298.12  December 31, 1998. 
298.13     Sec. 9.  Minnesota Statutes 1996, section 473.39, is 
298.14  amended by adding a subdivision to read: 
298.15     Subd. 1d.  [OBLIGATIONS; 1998-2000.] In addition to the 
298.16  authority in subdivisions 1a, 1b, and 1c, the council may issue 
298.17  certificates of indebtedness, bonds, or other obligations under 
298.18  this section in an amount not exceeding $30,000,000, which may 
298.19  be used for capital expenditures as prescribed in the council's 
298.20  transit capital improvement program and for related costs, 
298.21  including the costs of issuance and sale of the obligations. 
298.22     Sec. 10.  [APPROPRIATION.] 
298.23     $16,600,000 is appropriated in fiscal year 1998 from the 
298.24  general fund to the commissioner of revenue to pay claims filed 
298.25  under the Cambridge Bank Judgment. 
298.26     Sec. 11.  [EFFECTIVE DATE.] 
298.27     Sections 1 and 7 are effective the day following final 
298.28  enactment.  Sections 2 to 4 are effective July 1, 1997, provided 
298.29  that section 2 as it relates only to Carlton county is effective 
298.30  the day after compliance by Carlton county with the requirements 
298.31  of Minnesota Statutes, section 645.021, subdivision 3, and as it 
298.32  relates only to Pope county is effective the day after 
298.33  compliance by Pope county with the requirements of Minnesota 
298.34  Statutes, section 645.021, subdivision 3.