1.1                          A bill for an act 
  1.2             relating to taxation; property; reducing the class 
  1.3             rate on certain seasonal recreational property; 
  1.4             retroactively allowing the rebate for 1997 property 
  1.5             taxes to owners of certain seasonal residential 
  1.6             recreational property; amending Minnesota Statutes 
  1.7             1996, section 273.1398, subdivision 1a; Minnesota 
  1.8             Statutes 1997 Supplement, section 273.13, subdivision 
  1.9             25, as amended; Laws 1997, chapter 231, article 1, 
  1.10            section 16, as amended. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1997 Supplement, section 
  1.13  273.13, subdivision 25, as amended by Laws 1997, Third Special 
  1.14  Session chapter 3, section 28, is amended to read: 
  1.15     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
  1.16  estate containing four or more units and used or held for use by 
  1.17  the owner or by the tenants or lessees of the owner as a 
  1.18  residence for rental periods of 30 days or more.  Class 4a also 
  1.19  includes hospitals licensed under sections 144.50 to 144.56, 
  1.20  other than hospitals exempt under section 272.02, and contiguous 
  1.21  property used for hospital purposes, without regard to whether 
  1.22  the property has been platted or subdivided.  Class 4a property 
  1.23  in a city with a population of 5,000 or less, that is (1) 
  1.24  located outside of the metropolitan area, as defined in section 
  1.25  473.121, subdivision 2, or outside any county contiguous to the 
  1.26  metropolitan area, and (2) whose city boundary is at least 15 
  1.27  miles from the boundary of any city with a population greater 
  1.28  than 5,000 has a class rate of 2.3 percent of market value.  All 
  2.1   other class 4a property has a class rate of 2.9 percent of 
  2.2   market value.  For purposes of this paragraph, population has 
  2.3   the same meaning given in section 477A.011, subdivision 3. 
  2.4      (b) Class 4b includes: 
  2.5      (1) residential real estate containing less than four units 
  2.6   that does not qualify as class 4bb, other than seasonal 
  2.7   residential, and recreational; 
  2.8      (2) manufactured homes not classified under any other 
  2.9   provision; 
  2.10     (3) a dwelling, garage, and surrounding one acre of 
  2.11  property on a nonhomestead farm classified under subdivision 23, 
  2.12  paragraph (b) containing two or three units; 
  2.13     (4) unimproved property that is classified residential as 
  2.14  determined under section 273.13, subdivision 33.  
  2.15     Class 4b property has a class rate of 2.1 percent of market 
  2.16  value.  
  2.17     (c) Class 4bb includes: 
  2.18     (1) nonhomestead residential real estate containing one 
  2.19  unit, other than seasonal residential, and recreational; and 
  2.20     (2) a single family dwelling, garage, and surrounding one 
  2.21  acre of property on a nonhomestead farm classified under 
  2.22  subdivision 23, paragraph (b). 
  2.23     Class 4bb has a class rate of 1.9 percent on the first 
  2.24  $75,000 of market value and a class rate of 2.1 percent of its 
  2.25  market value that exceeds $75,000. 
  2.26     Property that has been classified as seasonal recreational 
  2.27  residential property at any time during which it has been owned 
  2.28  by the current owner or spouse of the current owner does not 
  2.29  qualify for class 4bb. 
  2.30     (d) Class 4c property includes: 
  2.31     (1) except as provided in subdivision 22, paragraph (c), 
  2.32  real property devoted to temporary and seasonal residential 
  2.33  occupancy for recreation purposes, including real property 
  2.34  devoted to temporary and seasonal residential occupancy for 
  2.35  recreation purposes and not devoted to commercial purposes for 
  2.36  more than 250 days in the year preceding the year of 
  3.1   assessment.  For purposes of this clause, property is devoted to 
  3.2   a commercial purpose on a specific day if any portion of the 
  3.3   property is used for residential occupancy, and a fee is charged 
  3.4   for residential occupancy.  In order for a property to be 
  3.5   classified as class 4c, seasonal recreational residential for 
  3.6   commercial purposes, at least 40 percent of the annual gross 
  3.7   lodging receipts related to the property must be from business 
  3.8   conducted between Memorial Day weekend and Labor Day weekend and 
  3.9   at least 60 percent of all bookings by lodging guests during the 
  3.10  year must be for periods of at least two consecutive nights.  
  3.11  Class 4c also includes commercial use real property used 
  3.12  exclusively for recreational purposes in conjunction with class 
  3.13  4c property devoted to temporary and seasonal residential 
  3.14  occupancy for recreational purposes, up to a total of two acres, 
  3.15  provided the property is not devoted to commercial recreational 
  3.16  use for more than 250 days in the year preceding the year of 
  3.17  assessment and is located within two miles of the class 4c 
  3.18  property with which it is used.  Class 4c property classified in 
  3.19  this clause also includes the remainder of class 1c resorts.  
  3.20  Owners of real property devoted to temporary and seasonal 
  3.21  residential occupancy for recreation purposes and all or a 
  3.22  portion of which was devoted to commercial purposes for not more 
  3.23  than 250 days in the year preceding the year of assessment 
  3.24  desiring classification as class 1c or 4c, must submit a 
  3.25  declaration to the assessor designating the cabins or units 
  3.26  occupied for 250 days or less in the year preceding the year of 
  3.27  assessment by January 15 of the assessment year.  Those cabins 
  3.28  or units and a proportionate share of the land on which they are 
  3.29  located will be designated class 1c or 4c as otherwise 
  3.30  provided.  The remainder of the cabins or units and a 
  3.31  proportionate share of the land on which they are located will 
  3.32  be designated as class 3a.  The owner of property desiring 
  3.33  designation as class 1c or 4c property must provide guest 
  3.34  registers or other records demonstrating that the units for 
  3.35  which class 1c or 4c designation is sought were not occupied for 
  3.36  more than 250 days in the year preceding the assessment if so 
  4.1   requested.  The portion of a property operated as a (1) 
  4.2   restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
  4.3   facility operated on a commercial basis not directly related to 
  4.4   temporary and seasonal residential occupancy for recreation 
  4.5   purposes shall not qualify for class 1c or 4c; 
  4.6      (2) qualified property used as a golf course if: 
  4.7      (i) any portion of the property is located within a county 
  4.8   that has a population of less than 50,000, or within a county 
  4.9   containing a golf course owned by a municipality, the county, or 
  4.10  a special taxing district; 
  4.11     (ii) it is open to the public on a daily fee basis.  It may 
  4.12  charge membership fees or dues, but a membership fee may not be 
  4.13  required in order to use the property for golfing, and its green 
  4.14  fees for golfing must be comparable to green fees typically 
  4.15  charged by municipal courses; and 
  4.16     (iii) it meets the requirements of section 273.112, 
  4.17  subdivision 3, paragraph (d). 
  4.18     A structure used as a clubhouse, restaurant, or place of 
  4.19  refreshment in conjunction with the golf course is classified as 
  4.20  class 3a property. 
  4.21     (3) real property up to a maximum of one acre of land owned 
  4.22  by a nonprofit community service oriented organization; provided 
  4.23  that the property is not used for a revenue-producing activity 
  4.24  for more than six days in the calendar year preceding the year 
  4.25  of assessment and the property is not used for residential 
  4.26  purposes on either a temporary or permanent basis.  For purposes 
  4.27  of this clause, a "nonprofit community service oriented 
  4.28  organization" means any corporation, society, association, 
  4.29  foundation, or institution organized and operated exclusively 
  4.30  for charitable, religious, fraternal, civic, or educational 
  4.31  purposes, and which is exempt from federal income taxation 
  4.32  pursuant to section 501(c)(3), (10), or (19) of the Internal 
  4.33  Revenue Code of 1986, as amended through December 31, 1990.  For 
  4.34  purposes of this clause, "revenue-producing activities" shall 
  4.35  include but not be limited to property or that portion of the 
  4.36  property that is used as an on-sale intoxicating liquor or 3.2 
  5.1   percent malt liquor establishment licensed under chapter 340A, a 
  5.2   restaurant open to the public, bowling alley, a retail store, 
  5.3   gambling conducted by organizations licensed under chapter 349, 
  5.4   an insurance business, or office or other space leased or rented 
  5.5   to a lessee who conducts a for-profit enterprise on the 
  5.6   premises.  Any portion of the property which is used for 
  5.7   revenue-producing activities for more than six days in the 
  5.8   calendar year preceding the year of assessment shall be assessed 
  5.9   as class 3a.  The use of the property for social events open 
  5.10  exclusively to members and their guests for periods of less than 
  5.11  24 hours, when an admission is not charged nor any revenues are 
  5.12  received by the organization shall not be considered a 
  5.13  revenue-producing activity; 
  5.14     (4) post-secondary student housing of not more than one 
  5.15  acre of land that is owned by a nonprofit corporation organized 
  5.16  under chapter 317A and is used exclusively by a student 
  5.17  cooperative, sorority, or fraternity for on-campus housing or 
  5.18  housing located within two miles of the border of a college 
  5.19  campus; and 
  5.20     (5) manufactured home parks as defined in section 327.14, 
  5.21  subdivision 3. 
  5.22     Class 4c property has a class rate of 2.1 percent of market 
  5.23  value, except that (i) for each parcel of seasonal residential 
  5.24  recreational property not used for commercial purposes the first 
  5.25  $75,000 of market value has a class rate of ~~1.4~~ 1.25 percent 
  5.26  payable in 1999 and thereafter, and the market value that 
  5.27  exceeds $75,000 has a class rate of ~~2.5~~ 2.0 percent for taxes 
  5.28  payable in 1999, and 1.85 percent for taxes payable in 2000 and 
  5.29  thereafter, and (ii) manufactured home parks assessed under 
  5.30  clause (5) have a class rate of two percent.  
  5.31     (e) Class 4d property is qualifying low-income rental 
  5.32  housing certified to the assessor by the housing finance agency 
  5.33  under sections 273.126 and 462A.071.  Class 4d includes land in 
  5.34  proportion to the total market value of the building that is 
  5.35  qualifying low-income rental housing.  For all properties 
  5.36  qualifying as class 4d, the market value determined by the 
  6.1   assessor must be based on the normal approach to value using 
  6.2   normal unrestricted rents. 
  6.3      Class 4d property has a class rate of one percent of market 
  6.4   value.  
  6.5      (f) Class 4e property consists of the residential portion 
  6.6   of any structure located within a city that was converted from 
  6.7   nonresidential use to residential use, provided that: 
  6.8      (1) the structure had formerly been used as a warehouse; 
  6.9      (2) the structure was originally constructed prior to 1940; 
  6.10     (3) the conversion was done after December 31, 1995, but 
  6.11  before January 1, 2003; and 
  6.12     (4) the conversion involved an investment of at least 
  6.13  $25,000 per residential unit. 
  6.14     Class 4e property has a class rate of 2.3 percent, provided 
  6.15  that a structure is eligible for class 4e classification only in 
  6.16  the 12 assessment years immediately following the conversion. 
  6.17     Sec. 2.  Minnesota Statutes 1996, section 273.1398, 
  6.18  subdivision 1a, is amended to read: 
  6.19     Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
  6.20  1997, the tax base differential is 0.25 percent of the 
  6.21  assessment year 1995 taxable market value of class 4c 
  6.22  noncommercial seasonal recreational residential property up to 
  6.23  $72,000.  
  6.24     (b) For aids payable in 1998, the tax base differential is 
  6.25  0.25 percent of the assessment year 1996 taxable market value of 
  6.26  class 4c noncommercial seasonal recreational residential 
  6.27  property up to $72,000. 
  6.28     (c) For aids payable in 1999, the tax base differential is 
  6.29  0.15 percent of the assessment year 1997 taxable market value of 
  6.30  class 4c noncommercial seasonal recreational residential 
  6.31  property up to $75,000. 
  6.32     (d) For aids payable in 1999, the tax base differential is 
  6.33  0.50 percent of the assessment year 1997 taxable market value of 
  6.34  class 4c noncommercial seasonal recreational residential 
  6.35  property that exceeds $75,000. 
  6.36     (e) For aids payable in 2000, the tax base differential is 
  7.1   0.15 percent of the assessment year 1998 taxable market value of 
  7.2   noncommercial seasonal recreational residential property that 
  7.3   exceeds $75,000. 
  7.4      Sec. 3.  Laws 1997, chapter 231, article 1, section 16, as 
  7.5   amended by Laws 1997, First Special Session chapter 5, section 
  7.6   35, and Third Special Session chapter 12, section 11, is amended 
  7.7   to read: 
  7.8      Sec. 16.  [PROPERTY TAX REBATE.] 
  7.9      (a) A credit is allowed against the tax imposed under 
  7.10  Minnesota Statutes, chapter 290, to an individual, other than as 
  7.11  a dependent, as defined in sections 151 and 152 of the Internal 
  7.12  Revenue Code, disregarding section 152(b)(3) of the Internal 
  7.13  Revenue Code, equal to 20 percent of the qualified property tax 
  7.14  paid ~~in calendar year 1997~~ before January 1, 1998, for taxes 
  7.15  assessed in 1996.  
  7.16     (b) For property owned and occupied by the taxpayer during 
  7.17  1997, qualified tax means property taxes payable as defined in 
  7.18  Minnesota Statutes, section 290A.03, subdivision 13, assessed in 
  7.19  1996 and payable in 1997, except the requirement that the 
  7.20  taxpayer own and occupy the property on January 2, 1997, does 
  7.21  not apply.  The credit is allowed only to the individual and 
  7.22  spouse, if any, who paid the tax, whether directly, through an 
  7.23  escrow arrangement, or under a contractual agreement for the 
  7.24  purchase or sale of the property.  
  7.25     (c) For a renter, the qualified property tax means the 
  7.26  amount of rent constituting property taxes under Minnesota 
  7.27  Statutes, section 290A.03, subdivision 11, based on rent paid in 
  7.28  1997.  If two or more renters could be claimants under Minnesota 
  7.29  Statutes, chapter 290A with regard to the rent constituting 
  7.30  property taxes, the rules under Minnesota Statutes, section 
  7.31  290A.03, subdivision 8, paragraph (f), applies to determine the 
  7.32  amount of the credit for the individual. 
  7.33     (d) For seasonal residential recreational property not used 
  7.34  for commercial purposes, classified under Minnesota Statutes, 
  7.35  section 273.13, subdivision 25, owned by the taxpayer in 1997, 
  7.36  "qualified property tax" means the property tax exclusive of 
  8.1   special assessments, penalties, and interest.  To qualify, the 
  8.2   property tax must be deductible under section 164 of the 
  8.3   Internal Revenue Code.  In the case of a taxpayer who makes 
  8.4   ground lease payments, "qualified property tax" includes the 
  8.5   amount of the payments directly attributable to property taxes 
  8.6   assessed against the parcel on which the dwelling is located. 
  8.7      ~~(d)~~ (e) For an individual who both owned and rented 
  8.8   principal residences and owned seasonal residential recreational 
  8.9   property in calendar year 1997, qualified taxes are the sum of 
  8.10  the amounts under paragraphs ~~(a)~~ (b), (c), and ~~(b)~~ (d). 
  8.11     ~~(e)~~ (f) If the amount of the credit under this ~~subdivision~~ 
  8.12  section exceeds the taxpayer's tax liability under ~~this~~ 
  8.13  Minnesota Statutes, chapter 290, the commissioner shall refund 
  8.14  the excess. 
  8.15     ~~(f)~~ (g) To claim a credit under this ~~subdivision~~ section, 
  8.16  the taxpayer must attach a copy of the property tax statement 
  8.17  and certificate of rent paid, as applicable, and provide any 
  8.18  additional information the commissioner requires. 
  8.19     ~~(g)~~ (h) An amount sufficient to pay refunds under this 
  8.20  ~~subdivision~~ section is appropriated to the commissioner from the 
  8.21  general fund. 
  8.22     ~~(h)~~ (i) This credit applies to taxable years beginning 
  8.23  after December 31, 1996, and before January 1, 1998. 
  8.24     ~~(i)~~ (j) Payment of the credit under this section is subject 
  8.25  to Minnesota Statutes, chapter 270A, and any other provision 
  8.26  applicable to refunds under Minnesota Statutes, chapter 290.