SF 1701

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 03/19/2012 11:55am

A bill for an act
relating to restaurants; expanding the sales tax exemption for certain meals
and drinks; expanding the capital equipment exemption; providing for the
application of gratuities in calculating the minimum wage; modifying the
calculation of unemployment taxes; modifying license fees; authorizing the
delegation agreement between the commissioner of health and local governments
to specify fees to be charged; amending Minnesota Statutes 2010, sections
145A.07, subdivision 3; 157.16, subdivision 3; 177.24, subdivisions 1, 2;
268.035, subdivision 24; 297A.68, subdivision 5, by adding subdivisions;
327.15, subdivision 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 145A.07, subdivision 3, is amended to
read:

Subd. 3.

Terms of agreements.

(a) Agreements authorized under this section must
be in writing and signed by the delegating authority and the designated agent.

(b) The agreement must list criteria the delegating authority will use to determine if
the designated agent's performance meets appropriate standards and is sufficient to replace
performance by the delegating authority.

(c) The agreement may specify minimum staff requirements and qualifications, set
procedures for the assessment of costs, and provide for termination procedures if the
delegating authority finds that the designated agent fails to comply with the agreement. new text begin
The agreement may specify fees to be charged by the designated agent for the provision
of licensing, inspection, or enforcement duties under chapter 157 and sections 327.14 to
327.28. The fees must not exceed the costs, including overhead costs, to the designated
agent for the performance of these duties. The fees collected must not be used for any
other purpose than the purpose for which the fee is collected.
new text end

(d) A designated agent must not perform licensing, inspection, or enforcement duties
under the agreement in territory outside its jurisdiction unless approved by the governing
body for that territory through a separate agreement.

(e) The scope of agreements established under this section is limited to duties and
responsibilities agreed upon by the parties. The agreement may provide for automatic
renewal and for notice of intent to terminate by either party.

(f) During the life of the agreement, the delegating authority shall not perform duties
that the designated agent is required to perform under the agreement, except inspections
necessary to determine compliance with the agreement and this section or as agreed to
by the parties.

(g) The delegating authority shall consult with, advise, and assist a designated agent
in the performance of its duties under the agreement.

(h) This section does not alter the responsibility of the delegating authority for
the performance of duties specified in law.

Sec. 2.

Minnesota Statutes 2010, section 157.16, subdivision 3, is amended to read:

Subd. 3.

Establishment fees; definitions.

(a) The following fees are required
for food and beverage service establishments, youth camps, hotels, motels, lodging
establishments, public pools, and resorts licensed under this chapter. Food and beverage
service establishments must pay the highest applicable fee under paragraph (d), clause
(1), (2), (3), or (4), and establishments serving alcohol must pay the highest applicable
fee under paragraph (d), clause (6) or (7). The license fee for new operators previously
licensed under this chapter for the same calendar year is one-half of the appropriate annual
license fee, plus any penalty that may be required. The license fee for operators opening
on or after October 1 is one-half of the appropriate annual license fee, plus any penalty
that may be required.

(b) All food and beverage service establishments, except special event food stands,
and all hotels, motels, lodging establishments, public pools, and resorts shall pay an
annual base fee of $150.

(c) A special event food stand shall pay a flat fee of $50 annually. "Special event
food stand" means a fee category where food is prepared or served in conjunction with
celebrations, county fairs, or special events from a special event food stand as defined
in section 157.15.

(d) In addition to the base fee in paragraph (b), each food and beverage service
establishment, other than a special event food stand and a school concession stand, and
each hotel, motel, lodging establishment, public pool, and resort shall pay an additional
annual fee for each fee category, additional food service, or required additional inspection
specified in this paragraph:

(1) Limited food menu selection, $60. "Limited food menu selection" means a fee
category that provides one or more of the following:

(i) prepackaged food that receives heat treatment and is served in the package;

(ii) frozen pizza that is heated and served;

(iii) a continental breakfast such as rolls, coffee, juice, milk, and cold cereal;

(iv) soft drinks, coffee, or nonalcoholic beverages; or

(v) cleaning for eating, drinking, or cooking utensils, when the only food served
is prepared off site.

(2) Small establishment, including boarding establishments, $120. "Small
establishment" means a fee category that has no salad bar and meets one or more of
the following:

(i) possesses food service equipment that consists of no more than a deep fat fryer, a
grill, two hot holding containers, and one or more microwave ovens;

(ii) serves dipped ice cream or soft serve frozen desserts;

(iii) serves breakfast in an owner-occupied bed and breakfast establishment;

(iv) is a boarding establishment; or

(v) meets the equipment criteria in clause (3), item (i) or (ii), and has a maximum
patron seating capacity of not more than 50.

(3) Medium establishment, $310. "Medium establishment" means a fee category
that meets one or more of the following:

(i) possesses food service equipment that includes a range, oven, steam table, salad
bar, or salad preparation area;

(ii) possesses food service equipment that includes more than one deep fat fryer,
one grill, or two hot holding containers; or

(iii) is an establishment where food is prepared at one location and served at one or
more separate locations.

Establishments meeting criteria in clause (2), item (v), are not included in this fee
category.

(4) Large establishment, $540. "Large establishment" means either:

(i) a fee category that (A) meets the criteria in clause (3), items (i) or (ii), for a
medium establishment, (B) seats more than 175 people, and (C) offers the full menu
selection an average of five or more days a week during the weeks of operation; or

(ii) a fee category that (A) meets the criteria in clause (3), item (iii), for a medium
establishment, and (B) prepares and serves 500 or more meals per day.

(5) Other food and beverage service, including food carts, mobile food units,
seasonal temporary food stands, and seasonal permanent food stands, $60.

(6) Beer or wine table service, $60. "Beer or wine table service" means a fee
category where the only alcoholic beverage service is beer or wine, served to customers
seated at tables.

(7) Alcoholic beverage service, other than beer or wine table service, $165.

"Alcohol beverage service, other than beer or wine table service" means a fee
category where alcoholic mixed drinks are served or where beer or wine are served from
a bar.

(8) Lodging per sleeping accommodation unit, $10, including hotels, motels,
lodging establishments, and resorts, up to a maximum of $1,000. "Lodging per sleeping
accommodation unit" means a fee category including the number of guest rooms, cottages,
or other rental units of a hotel, motel, lodging establishment, or resort; or the number of
beds in a dormitory.

(9) First public pool, $325; each additional public pool, $175. "Public pool" means a
fee category that has the meaning given in section 144.1222, subdivision 4.

(10) First spa, $175; each additional spa, $100. "Spa pool" means a fee category that
has the meaning given in Minnesota Rules, part 4717.0250, subpart 9.

(11) deleted text begin Private sewer or water, $60 deleted text end new text begin Individual private sewer, $30; individual private
water, $30 new text end . "Individual private water" means a fee category with a water supply other
than a deleted text begin community deleted text end public water supply as defined in deleted text begin Minnesota Rules, chapter 4720 deleted text end new text begin
section 144.382, subdivision 4 new text end . "Individual private sewer" means a fee category with an
individual sewage treatment system which uses subsurface treatment and disposal.

(12) Additional food service, $150. "Additional food service" means a location at
a food service establishment, other than the primary food preparation and service area,
used to prepare or serve food to the public. Additional food service does not apply to
school concession stands.

(13) Additional inspection fee, $360. "Additional inspection fee" means a fee to
conduct the second inspection each year for elementary and secondary education facility
school lunch programs when required by the Richard B. Russell National School Lunch
Act.

(e) A fee for review of construction plans must accompany the initial license
application for restaurants, hotels, motels, lodging establishments, resorts, seasonal food
stands, and mobile food units. The fee for this construction plan review is as follows:

Service Area	Type	Fee
Food	limited food menu	$275
	small establishment	$400
	medium establishment	$450
	large food establishment	$500
	additional food service	$150
Transient food service	food cart	$250
	seasonal permanent food stand	$250
	seasonal temporary food stand	$250
	mobile food unit	$350
Alcohol	beer or wine table service	$150
	alcohol service from bar	$250
Lodging	less than 25 rooms	$375
	25 to less than 100 rooms	$400
	100 rooms or more	$500
	less than five cabins	$350
	five to less than ten cabins	$400
	ten cabins or more	$450

(f) When existing food and beverage service establishments, hotels, motels, lodging
establishments, resorts, seasonal food stands, and mobile food units are extensively
remodeled, a fee must be submitted with the remodeling plans. The fee for this
construction plan review is as follows:

Service Area	Type	Fee
Food	limited food menu	$250
	small establishment	$300
	medium establishment	$350
	large food establishment	$400
	additional food service	$150
Transient food service	food cart	$250
	seasonal permanent food stand	$250
	seasonal temporary food stand	$250
	mobile food unit	$250
Alcohol	beer or wine table service	$150
	alcohol service from bar	$250
Lodging	less than 25 rooms	$250
	25 to less than 100 rooms	$300
	100 rooms or more	$450
	less than five cabins	$250
	five to less than ten cabins	$350
	ten cabins or more	$400

(g) Special event food stands are not required to submit construction or remodeling
plans for review.

(h) Youth camps shall pay an annual single fee for food and lodging as follows:

(1) camps with up to 99 campers, $325;

(2) camps with 100 to 199 campers, $550; and

(3) camps with 200 or more campers, $750.

(i) A youth camp which pays fees under paragraph (d) is not required to pay fees
under paragraph (h).

Sec. 3.

Minnesota Statutes 2010, section 177.24, subdivision 1, is amended to read:

Subdivision 1.

Amount.

(a) For purposes of this subdivision, the terms defined in
this paragraph have the meanings given them.

(1) "Large employer" means an enterprise whose annual gross volume of sales
made or business done is not less than $625,000 (exclusive of excise taxes at the retail
level that are separately stated) and covered by the Minnesota Fair Labor Standards Act,
sections 177.21 to 177.35.

(2) "Small employer" means an enterprise whose annual gross volume of sales made
or business done is less than $625,000 (exclusive of excise taxes at the retail level that
are separately stated) and covered by the Minnesota Fair Labor Standards Act, sections
177.21 to 177.35.

(b) Except as otherwise provided in sections 177.21 to 177.35, every large employer
must pay each employee wages at a rate of at least $5.15 an hour beginning September
1, 1997, and at a rate of at least $6.15 an hour beginning August 1, 2005. Every small
employer must pay each employee at a rate of at least $4.90 an hour beginning January 1,
1998, and at a rate of at least $5.25 an hour beginning August 1, 2005.

(c) Notwithstanding paragraph (b), during the first 90 consecutive days of
employment, an employer may pay an employee under the age of 20 years a wage of $4.90
an hour. No employer may take any action to displace any employee, including a partial
displacement through a reduction in hours, wages, or employment benefits, in order to
hire an employee at the wage authorized in this paragraph.

new text begin (d) Notwithstanding paragraph (b) and subdivision 2, every large employer must
pay an employee receiving gratuities at a rate that is the greater of: (i) at least $6.55 per
hour; or (ii) at least $7.25 per hour if the employee does not earn sufficient gratuities
during the pay period so that the sum of $6.55 per hour and gratuities received is at least
$12 per hour for the pay period.
new text end

Sec. 4.

Minnesota Statutes 2010, section 177.24, subdivision 2, is amended to read:

Subd. 2.

Gratuities not applied.

new text begin Except as provided in section 177.24, subdivision
1, paragraph (d), new text end no employer may directly or indirectly credit, apply, or utilize gratuities
towards payment of the minimum wage set by this section or federal law.

Sec. 5.

Minnesota Statutes 2010, section 268.035, subdivision 24, is amended to read:

Subd. 24.

Taxable wages.

(a) "Taxable wages" means those wages paid to an
employee in covered employment each calendar year up to an amount equal to 60 percent
of the state's average annual wage, rounded to the nearest $1,000. new text begin For the purpose of
this subdivision, taxable wages does not include income from tips or gratuities paid to
an employee by a customer of an employer that is greater than or equal to two times the
applicable minimum wage rate.
new text end

(b) Taxable wages includes the amount of wages paid for covered employment by
the employer's predecessor when there has been an experience rating history transfer
under section 268.051, subdivision 4.

Sec. 6.

Minnesota Statutes 2010, section 297A.68, is amended by adding a subdivision
to read:

new text begin Subd. 42. new text end

new text begin Complimentary meals and beverages. new text end

new text begin Meals, nonalcoholic beverages,
and alcoholic beverages provided by a restaurant as defined under section 157.15,
subdivision 12, to a customer at no cost to the customer are exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 7.

Minnesota Statutes 2010, section 297A.68, is amended by adding a subdivision
to read:

new text begin Subd. 43. new text end

new text begin Employee food and drink. new text end

new text begin Prepared food and drinks purchased for
and served to employees of restaurants defined under section 157.15, subdivision 12,
are exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 8.

Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to read:

Subd. 5.

Capital equipment.

(a) Capital equipment is exempt. The tax must be
imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and
then refunded in the manner provided in section 297A.75.

"Capital equipment" means machinery and equipment purchased or leased, and used
in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
or refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment
used primarily to electronically transmit results retrieved by a customer of an online
computerized data retrieval system new text begin and machinery and equipment used by restaurants in
the furnishing, preparing, or serving of prepared foods as defined in section 297A.61,
subdivision 31 new text end .

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or regulate the production
equipment;

(2) machinery and equipment used for research and development, design, quality
control, and testing activities;

(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;

(4) materials and supplies used to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment;

(7) materials used to construct and install special purpose buildings used in the
production process;

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
as part of the delivery process regardless if mounted on a chassis, repair parts for
ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development, design, or production
of computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials, except for materials included in paragraph (b), clauses (6)
and (7);

(4) machinery or equipment used for nonproduction purposes, including, but not
limited to, the following: plant security, fire prevention, first aid, and hospital stations;
support operations or administration; pollution control; and plant cleaning, disposal of
scrap and waste, plant communications, space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as defined by section
297A.61, subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;

(7) deleted text begin machinery and equipment used by restaurants in the furnishing, preparing, or
serving of prepared foods as defined in section 297A.61, subdivision 31;
deleted text end

deleted text begin (8) deleted text end machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3, paragraph (g), clause (6), items (i) to (vi) and (viii);

deleted text begin (9) deleted text end new text begin (8) new text end machinery or equipment used in the transportation, transmission, or
distribution of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through
pipes, lines, tanks, mains, or other means of transporting those products. This clause
does not apply to machinery or equipment used to blend petroleum or biodiesel fuel
as defined in section 239.77; or

deleted text begin (10) deleted text end new text begin (9) new text end any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.

(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For
purposes of this clause, (i) manufacturing begins with the removal of raw materials
from inventory and ends when the last process prior to loading for shipment has been
completed; (ii) fabricating begins with the removal from storage or inventory of the
property to be assembled, processed, altered, or modified and ends with the creation
or production of the new or changed product; (iii) mining begins with the removal of
overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
ends when the last process before stockpiling is completed; and (iv) refining begins with
the removal from inventory or storage of a natural resource and ends with the conversion
of the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical devices, including
computers and computer software, that are purchased or constructed to be used for the
activities set forth in paragraph (a), beginning with the removal of raw materials from
inventory through completion of the product, including packaging of the product.

(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).

(6) "Manufacturing" means an operation or series of operations where raw materials
are changed in form, composition, or condition by machinery and equipment and which
results in the production of a new article of tangible personal property. For purposes of
this subdivision, "manufacturing" includes the generation of electricity or steam to be
sold at retail.

(7) "Mining" means the extraction of minerals, ores, stone, or peat.

(8) "Online data retrieval system" means a system whose cumulation of information
is equally available and accessible to all its customers.

(9) "Primarily" means machinery and equipment used 50 percent or more of the time
in an activity described in paragraph (a).

(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.

(11) This subdivision does not apply to telecommunications equipment as
provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
for telecommunications services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2011.
new text end

Sec. 9.

Minnesota Statutes 2010, section 327.15, subdivision 3, is amended to read:

Subd. 3.

Fees, manufactured home parks and recreational camping areas.

(a)
The following fees are required for manufactured home parks and recreational camping
areas licensed under this chapter. Recreational camping areas and manufactured home
parks shall pay the highest applicable base fee under paragraph (b). The license fee for
new operators of a manufactured home park or recreational camping area previously
licensed under this chapter for the same calendar year is one-half of the appropriate annual
license fee, plus any penalty that may be required. The license fee for operators opening
on or after October 1 is one-half of the appropriate annual license fee, plus any penalty
that may be required.

(b) All manufactured home parks and recreational camping areas shall pay the
following annual base fee:

(1) a manufactured home park, $150; and

(2) a recreational camping area with:

(i) 24 or less sites, $50;

(ii) 25 to 99 sites, $212; and

(iii) 100 or more sites, $300.

In addition to the base fee, manufactured home parks and recreational camping areas shall
pay $4 for each licensed site. This paragraph does not apply to special event recreational
camping areas. Operators of a manufactured home park or a recreational camping area
also licensed under section 157.16 for the same location shall pay only one base fee,
whichever is the highest of the base fees found in this section or section 157.16.

(c) In addition to the fee in paragraph (b), each manufactured home park or
recreational camping area shall pay an additional annual fee for each fee category
specified in this paragraph:

(1) Manufactured home parks and recreational camping areas with public swimming
pools and spas shall pay the appropriate fees specified in section 157.16.

(2) Individual private sewer deleted text begin or water, $60 deleted text end new text begin , $30; individual private water, $30 new text end .
"Individual private water" means a fee category with a water supply other than a
deleted text begin community deleted text end public water supply as defined in deleted text begin Minnesota Rules, chapter 4720 deleted text end new text begin section
144.382, subdivision 4 new text end . "Individual private sewer" means a fee category with a subsurface
sewage treatment system which uses subsurface treatment and disposal.

(d) The following fees must accompany a plan review application for initial
construction of a manufactured home park or recreational camping area:

(1) for initial construction of less than 25 sites, $375;

(2) for initial construction of 25 to 99 sites, $400; and

(3) for initial construction of 100 or more sites, $500.

(e) The following fees must accompany a plan review application when an existing
manufactured home park or recreational camping area is expanded:

(1) for expansion of less than 25 sites, $250;

(2) for expansion of 25 to 99 sites, $300; and

(3) for expansion of 100 or more sites, $450.