1.1                          A bill for an act 
  1.2             relating to taxation; providing a rental tax equity 
  1.3             pilot project in the metropolitan area; appropriating 
  1.4             money. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [RENTAL TAX EQUITY; METROPOLITAN AREA PILOT 
  1.7   PROJECT.] 
  1.8      Subdivision 1.  [PILOT; TERM.] A pilot project for rental 
  1.9   tax equity in the cities located within the metropolitan area 
  1.10  defined in Minnesota Statutes, section 473.121, subdivision 2, 
  1.11  is established for property taxes payable in 1996 and 1997.  The 
  1.12  program is available to owners of single- and two-family 
  1.13  nonhomestead residential property. 
  1.14     Subd. 2.  [DEFINITION.] For the purpose of this section, 
  1.15  the term "city" means the city where the property that may be 
  1.16  eligible for the property tax credit provided by this section is 
  1.17  located. 
  1.18     Subd. 3.  [PRIMARY OBJECTIVE.] The pilot project's primary 
  1.19  objective is to help stabilize costs for the conscientious, 
  1.20  industrious landlord who is already providing safe, decent, and 
  1.21  affordable housing.  The property tax reduction provided by the 
  1.22  program is intended to give an incentive to other landlords to 
  1.23  improve their tenant-occupied property and still offer 
  1.24  affordable housing. 
  1.25     Subd. 4.  [PROPERTY TAX TREATMENT.] (a) Single- and 
  2.1   two-family nonhomestead residential property located in cities 
  2.2   within the metropolitan area defined in Minnesota Statutes, 
  2.3   section 473.121, subdivision 2, and existing on the effective 
  2.4   date of this section, that is classified under Minnesota 
  2.5   Statutes, section 273.13, subdivision 25, paragraph (b), clause 
  2.6   (1), and that meets the requirements of this section, are 
  2.7   eligible for the property tax credit under subdivision 9. 
  2.8      (b) The program is not a housing or building code 
  2.9   enforcement program.  
  2.10     (c) Participation in the program is voluntary. 
  2.11     Subd. 5.  [NOTIFICATION TO OWNERS.] The city shall notify 
  2.12  the owner of each single- and two-family nonhomestead 
  2.13  residential property and apartment located in the city that the 
  2.14  property may be eligible to receive a property tax credit as 
  2.15  provided in this section. 
  2.16     Subd. 6.  [PROGRAM STEPS.] (a) A landlord who owns eligible 
  2.17  property and who wishes to participate must arrange for a 
  2.18  certified evaluator who is licensed by the city to evaluate the 
  2.19  property. 
  2.20     (b) The landlord must notify the tenant of the evaluation 
  2.21  so that the tenant may be present if the tenant wishes. 
  2.22     (c) The evaluator must evaluate the property using program 
  2.23  guidelines adopted by resolution of the city council prior to 
  2.24  implementation of the program under this section. 
  2.25     (d) If the evaluator determines that repairs are necessary, 
  2.26  the landlord must make the repairs and call for a reinspection 
  2.27  by the evaluator.  If the evaluator identifies life or safety 
  2.28  hazards, the evaluator must notify appropriate city officials, 
  2.29  who shall take immediate action to require and enforce repair of 
  2.30  the life or safety hazard items. 
  2.31     (e) The evaluator must reinspect the property to see if the 
  2.32  program guidelines have been followed. 
  2.33     (f) The evaluator must submit a report on the property's 
  2.34  evaluation to the appropriate city officials, the landlord, and 
  2.35  the tenant.  A filing fee must be paid at the time the report is 
  2.36  submitted to the city. 
  3.1      (g) Appropriate city officials must review the report and 
  3.2   approve it or issue orders for further repair.  In so doing, 
  3.3   city staff members may make an on-site review.  The landlord may 
  3.4   withdraw from the program at any time without making required 
  3.5   repairs except those for life or safety hazards, which may be 
  3.6   otherwise required.  Property for which the evaluator's report 
  3.7   is approved must be certified by the appropriate city officials 
  3.8   to the county assessor.  A city must limit the number of 
  3.9   qualifying properties so that the credit payable under 
  3.10  subdivision 9 for that city will not, in the city's estimate, 
  3.11  exceed the amount allocated to the city for each year. 
  3.12     (h) An owner who chooses to participate must complete an 
  3.13  application for certification by November 1, preceding the year 
  3.14  in which taxes are payable.  
  3.15     (i) An owner may apply this program to no more than two 
  3.16  nonhomestead, single- or two-family, tenant-occupied properties. 
  3.17     Subd. 7.  [APPEALS.] (a) The board of equalization must 
  3.18  serve as a board of review to hear appeals relating to the value 
  3.19  of improvements and properties.  Procedures for board actions 
  3.20  and for appeals from board decisions are as provided for other 
  3.21  matters decided by the board of equalization.  
  3.22     (b) The city may appoint a board of appeals to hear 
  3.23  disputes regarding qualification.  The board shall meet to hear 
  3.24  appeals under this program between November 1 and December 1, 
  3.25  preceding the year in which taxes are payable. 
  3.26     Subd. 8.  [CITY FEES.] The owner must pay the housing 
  3.27  evaluator a fee, as determined by the city, for the initial 
  3.28  inspection and necessary reinspections.  The evaluator must pay 
  3.29  a filing fee, as determined by the city, to file the evaluator's 
  3.30  report.  The evaluator may be reimbursed by the owner for this 
  3.31  fee.  The owner must pay the city a fee, as determined by the 
  3.32  city, to apply for recertification.  If additional inspections 
  3.33  are required, a reinspection fee, as determined by the city, 
  3.34  must be paid by the landlord. 
  3.35     Subd. 9.  [CREDIT AND REIMBURSEMENT.] (a) [CREDIT 
  3.36  PROVIDED.] Property that meets the requirements under this 
  4.1   section is eligible for a property tax credit equal to the 
  4.2   difference between (1) the tax on the property, and (2) the tax 
  4.3   that would be payable if the property were classified under 
  4.4   Minnesota Statutes, section 273.13, subdivision 22, paragraph 
  4.5   (a). 
  4.6      (b) [PROPERTY TAX STATEMENTS.] The property tax statement 
  4.7   provided under Minnesota Statutes, section 276.04, to an owner 
  4.8   of property that receives the credit under this subdivision 
  4.9   shall include information on the amount of the credit given to 
  4.10  the property.  The county treasurer shall notify the 
  4.11  commissioner of revenue on how the county plans to modify the 
  4.12  property tax statements to include the necessary information. 
  4.13     (c) [GENERAL FUND; REPLACEMENT OF REVENUE.] Payment from 
  4.14  the general fund shall be made as provided in this subdivision 
  4.15  for the purpose of replacing revenue lost as a result of the 
  4.16  reduction of property taxes provided in this subdivision. 
  4.17     The county auditor shall certify to the commissioner of 
  4.18  revenue the amount of reduction resulting from this 
  4.19  subdivision.  This certification shall be submitted to the 
  4.20  commissioner of revenue as part of the abstracts of tax lists 
  4.21  required to be filed with the commissioner under the provisions 
  4.22  of Minnesota Statutes, section 275.29.  The commissioner of 
  4.23  revenue shall review the certification to determine its accuracy 
  4.24  and make changes in the certification as necessary or return the 
  4.25  certification to the county auditor for corrections. 
  4.26     Based on current year tax data reported in the abstracts of 
  4.27  tax lists, the commissioner of revenue shall determine the 
  4.28  taxing district distribution of the amounts certified.  The 
  4.29  commissioner of revenue shall pay to each taxing district, other 
  4.30  than school districts, its total payment for the year at the 
  4.31  times provided in Minnesota Statutes, section 473H.10.  The 
  4.32  credit reimbursement to school districts must be certified to 
  4.33  the commissioner of education and paid as provided under 
  4.34  Minnesota Statutes, section 273.1392. 
  4.35     The reimbursement paid under this subdivision shall be made 
  4.36  only in 1996 and 1997 and is limited to $....... in 1996 and 
  5.1   $....... in 1997.  Of that total amount, each city in the 
  5.2   metropolitan area will be eligible for reimbursements for 
  5.3   properties in the city in proportion to that city's share of the 
  5.4   total single- and two-family nonhomestead residential properties 
  5.5   in the metropolitan area.  If a city chooses not to participate 
  5.6   in this program for either year, it shall notify the 
  5.7   commissioner of revenue of its decision by September 1 of the 
  5.8   year before the taxes payable year for which the credits would 
  5.9   have been granted.  The amount of reimbursement for which all 
  5.10  nonparticipating cities would have been eligible shall be made 
  5.11  available proportionately to all participating cities.  No more 
  5.12  than $....... in these reimbursements may be made in any year 
  5.13  for property located in a particular city.  To the extent the 
  5.14  amount of credit originally certified in a city exceeds this 
  5.15  amount, reimbursements to the taxing districts in that city 
  5.16  shall be prorated according to the proportions of their levies 
  5.17  so as not to exceed $....... in any year.  The commissioner of 
  5.18  revenue shall make the determinations required under this 
  5.19  section.  $....... is appropriated from the general fund to the 
  5.20  commissioner of revenue for the biennium ending June 30, 1997, 
  5.21  for purposes of this section. 
  5.22     Subd. 10.  [REPORT TO THE LEGISLATURE.] By January 15, 
  5.23  1997, the city council of each city that has implemented a 
  5.24  program under this section shall provide a report to the 
  5.25  committee on housing and the committee on taxes and tax laws of 
  5.26  the senate and the housing committee and the tax committee of 
  5.27  the house of representatives on the program.  The report must 
  5.28  include the program guidelines, housing costs, rents, and the 
  5.29  extent of participation in the program.