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Minnesota Legislature

Office of the Revisor of Statutes

127A.48 ADJUSTMENT OF NET TAX CAPACITY.
    Subdivision 1. Computation. The Department of Revenue must annually conduct an
assessment/sales ratio study of the taxable property in each school district in accordance with the
procedures in subdivisions 2 and 3. Based upon the results of this assessment/sales ratio study, the
Department of Revenue must determine an aggregate equalized net tax capacity for the various
classes of taxable property in each district, which tax capacity shall be designated as the adjusted
net tax capacity. The adjusted net tax capacities shall be determined using the net tax capacity
percentages in effect for the assessment year following the assessment year of the study. The
Department of Revenue must make whatever estimates are necessary to account for changes in
the classification system. The Department of Revenue may incur the expense necessary to make
the determinations. The commissioner of revenue may reimburse any county or governmental
official for requested services performed in ascertaining the adjusted net tax capacity. On or before
March 15 annually, the Department of Revenue shall file with the chair of the Tax Committee
of the house of representatives and the chair of the Committee on Taxes and Tax laws of the
senate a report of adjusted net tax capacities. On or before June 15 annually, the Department of
Revenue shall file its final report on the adjusted net tax capacities established by the previous
year's assessments and the current year's net tax capacity percentages with the commissioner of
education and each county auditor for those districts for which the auditor has the responsibility
for determination of local tax rates. A copy of the report so filed shall be mailed to the clerk of
each district involved and to the county assessor or supervisor of assessments of the county
or counties in which each district is located.
    Subd. 2. Methodology. In making its annual assessment/sales ratio studies, the Department
of Revenue must use a methodology consistent with the most recent Standard on Assessment
Ratio Studies published by the assessment standards committee of the International Association
of Assessing Officers. The commissioner of revenue shall supplement this general methodology
with specific procedures necessary for execution of the study in accordance with other Minnesota
laws impacting the assessment/sales ratio study. The commissioner shall document these specific
procedures in writing and shall publish the procedures in the State Register, but these procedures
will not be considered "rules" pursuant to the Minnesota Administrative Procedure Act. For
purposes of this section, sections 270.12, subdivision 2, clause (8), and 278.05, subdivision 4,
the commissioner of revenue shall exclude from the assessment/sales ratio study the sale of any
nonagricultural property which does not contain an improvement, if (1) the statutory basis on
which the property's taxable value as most recently assessed is less than market value as defined
in section 273.11, or (2) the property has undergone significant physical change or a change of use
since the most recent assessment.
    Subd. 3. Agricultural lands. For purposes of determining the adjusted net tax capacity of
agricultural lands for the calculation of adjusted net tax capacities, the market value of agricultural
lands must be the price for which the property would sell in an arm's-length transaction.
    Subd. 4. Forced sales. The commissioner of revenue may include forced sales in the
assessment/sales ratio studies if it is determined by the commissioner of revenue that these forced
sales indicate true market value.
    Subd. 5. Stipulated values and abatements. The estimated market value to be used in
calculating sales ratios must be the value established by the assessor before any stipulations
resulting from appeals by property owners and before any abatement unless the abatement was
granted for the purpose of correcting mere clerical errors.
    Subd. 6. Sales of industrial property. Separate sales ratios must be calculated for
commercial property and for industrial property. These two classes shall be combined only in
jurisdictions in which there is not an adequate sample of sales in each class.
    Subd. 7. Adjusted net tax capacity; growth limit. In the calculation of adjusted net tax
capacities for 1987 and each year thereafter, the commissioner of revenue shall not increase the
adjusted net tax capacity of taxable property for any district over the adjusted net tax capacity
established and filed with the commissioner for the immediately preceding year by more than the
greater of (1) 19 percent of the certified adjusted net tax capacity established and filed with the
commissioner of education for the year immediately preceding, or (2) 40 percent of the difference
between the district's total adjusted net tax capacity for the current year calculated without the
application of this subdivision and the district's certified adjusted net tax capacity established and
filed with the commissioner for the immediately preceding year.
    Subd. 8. Decrease in iron ore net tax capacity. If in any year the net tax capacity of iron
ore property, as defined in section 273.13, subdivision 31, in any district is less than the net tax
capacity of such property in the preceding year, the commissioner of revenue shall redetermine
for all purposes the adjusted net tax capacity of the preceding year taking into account only the
decrease in net tax capacity of iron ore property as defined in section 273.13, subdivision 31. If
subdivision 7, clause (1), is applicable to the district, the decrease in iron ore property shall be
applied to the adjusted net tax capacity as limited therein. In all other respects, the provisions of
clause (1) shall apply.
    Subd. 9. Captured tax capacity adjustment. In calculating adjusted net tax capacity, the
commissioner of revenue shall increase the adjusted net tax capacity of a district containing a tax
increment financing district for which an election is made under section 469.1782, subdivision 1,
clause (1). The amount of the increase equals the captured net tax capacity of the tax increment
financing district in the year preceding the first taxes payable year in which the special law
permits collection beyond that permitted by the general law duration limit that otherwise would
apply. The addition applies beginning for aid and levy for the first taxes payable year in which the
special law permits collection of increment beyond that permitted by the general law duration
limit that otherwise would apply. The addition continues to apply for each taxes payable year the
district remains in effect.
    Subd. 10. Adjusted net tax capacity; appeals. If a district, within 30 days after receipt of
a copy of a report filed with the commissioner made pursuant to subdivisions 1 to 6 or 8, is of
the opinion that the commissioner of revenue has made an error in the determination of the
district's market value, it may appeal from the report or portion thereof relating to the district to
the commissioner of revenue for a review and determination of the matters contained in the
appeal. The commissioner of revenue shall advise the district of the determination within 30 days.
If the district wishes to appeal the determination of the commissioner of revenue, it must file a
notice of appeal with the Tax Court, as provided in subdivisions 11 to 16 within ten days of the
notice of determination from the commissioner of revenue.
    Subd. 11. Notice of appeal. The district must file with the court administrator of the Tax
Court a notice of appeal from the determination of the commissioner of revenue fixing the market
value of the district, and such notice must show the basis of the alleged error. A copy of the
notice of appeal must be served upon the commissioner of revenue, and proof of service must be
filed with the court administrator.
    Subd. 12. Hearing. Upon receipt of the notice of appeal the Tax Court must review the
notice of appeal and determine whether it appears from the allegations and proofs therein
contained that an error has been made in the determination by the commissioner of revenue of the
market value of the property in the school district. If the court finds it probable that such an error
has been made, it must notice the matter for hearing; otherwise, it must dismiss the appeal and
notify the parties thereof. Hearings must be set and held in the same manner as other hearings
of the Tax Court are set and heard, except that an appeal filed under subdivision 10 must take
precedence over other appeals pending before the court. The attorney general shall represent the
commissioner of revenue. The Administrative Procedure Act, sections 14.09 to 14.28, 14.38,
14.44 to 14.45, and 14.57 to 14.69, shall apply to hearings insofar as it is applicable.
    Subd. 13. Tax Court determination. The Tax Court shall hear, consider, and determine
such appeal, de novo upon the issues made by the notice of appeal, if a hearing has been
granted thereon. At the conclusion of the hearing, the court must: (1) file findings of fact, or (2)
refer the issues to the commissioner of revenue with instructions and recommendations for a
determination and correction of the market value of the appealing district. The decision of the Tax
Court, if it decides the matter de novo, shall have the same force and effect as a determination
by the commissioner of revenue in the first instance under this section, and the commissioner
of revenue must be notified thereof. If the matter is rereferred to the commissioner of revenue,
a redetermination by the commissioner of revenue in accordance with the recommendations of
the Tax Court must likewise have the same force and effect as a determination by it in the first
instance under this section.
    Subd. 14. Hearing examiner. In addition to the powers and duties of the Tax Court as
prescribed by chapter 271, any hearing ordered pursuant to this section may be heard by a
hearing examiner in lieu of one or more judges of the Tax Court. If a hearing is conducted by a
hearing examiner, such hearing examiner shall exercise the same powers conferred by law upon
one or more judges of the Tax Court. The hearing examiner shall report to the court. The court
is authorized to make findings of fact based on the report of the hearing examiner in the same
manner as is required by these provisions when the hearing is conducted by the court. The Tax
Court may employ hearing examiners upon such terms and conditions as it shall prescribe. A
hearing examiner so appointed shall be in the unclassified service of the state.
    Subd. 15. Limitation of appeals. A decision of the Tax Court pursuant to the terms
hereof shall be final and shall not be subject to review by any court, except upon certiorari to
the Supreme Court.
    Subd. 16. Aids pending appeals. During the pendency of any appeal from the commissioner
of revenue evaluation, state aids to the appealing district must be paid on the basis of the
evaluation subject to adjustment upon final determination of the appeal.
History: Ex1971 c 31 art 20 s 3; 1973 c 582 s 3; 1973 c 683 s 5-10,27; 1974 c 521 s 22,23;
1975 c 432 s 25-33; 1976 c 134 s 78; 1976 c 239 s 35; 1976 c 271 s 44-46; 1977 c 307 s 29; 1977
c 423 art 3 s 1,2; art 4 s 1; 1977 c 447 art 1 s 8-15,17; 1978 c 706 s 32; 1978 c 733 s 20,21; 1978
c 764 s 46-51; 1978 c 767 s 1; 1979 c 334 art 1 s 7-11; art 3 s 4,5; 1980 c 429 s 1; 1980 c 443 s 1;
1980 c 509 s 33; 1980 c 607 art 4 s 1; art 7 s 8; 1980 c 609 art 1 s 7; 1981 c 358 art 1 s 18,19,48;
1982 c 424 s 130; 1984 c 502 art 11 s 1; 1Sp1985 c 14 art 3 s 1; art 4 s 18; 1986 c 444; 1Sp1986
c 1 art 4 s 9; 1Sp1986 c 3 art 1 s 82; 1987 c 268 art 6 s 3; art 7 s 3-10; 1987 c 384 art 2 s 1; 1988
c 719 art 5 s 2,84; 1989 c 329 art 13 s 1; art 13 s 20; 1Sp1989 c 1 art 2 s 11; art 9 s 1; 1992 c 511
art 2 s 5; 1992 c 556 s 1; 1993 c 224 art 1 s 4; 1994 c 416 art 1 s 4; 1995 c 233 art 2 s 56; 1995 c
264 art 5 s 1; 1Sp1995 c 3 art 16 s 13; 1998 c 397 art 4 s 39-47,51; art 11 s 3; 2003 c 130 s 12