Journal of the House - 109th Day - Wednesday, April 30, 2008

A quorum was present.

Beard, Hornstein and Moe were excused.

The Chief Clerk proceeded to read the Journal of the preceding day. Norton moved that further reading of the Journal be suspended and that the Journal be approved as corrected by the Chief Clerk. The motion prevailed.

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REPORTS OF CHIEF CLERK

S. F. No. 3096 and H. F. No. 3669, which had been referred to the Chief Clerk for comparison, were examined and found to be identical with certain exceptions.

SUSPENSION OF RULES

Kalin moved that the rules be so far suspended that S. F. No. 3096 be substituted for H. F. No. 3669 and that the House File be indefinitely postponed. The motion prevailed.

S. F. No. 3189 and H. F. No. 3490, which had been referred to the Chief Clerk for comparison, were examined and found to be identical.

Bigham moved that S. F. No. 3189 be substituted for H. F. No. 3490 and that the House File be indefinitely postponed. The motion prevailed.

S. F. No. 3486 and H. F. No. 3873, which had been referred to the Chief Clerk for comparison, were examined and found to be identical with certain exceptions.

SUSPENSION OF RULES

Rukavina moved that the rules be so far suspended that S. F. No. 3486 be substituted for H. F. No. 3873 and that the House File be indefinitely postponed. The motion prevailed.

S. F. No. 3715 and H. F. No. 4014, which had been referred to the Chief Clerk for comparison, were examined and found to be identical.

Fritz moved that S. F. No. 3715 be substituted for H. F. No. 4014 and that the House File be indefinitely postponed. The motion prevailed.

REPORTS OF STANDING COMMITTEES AND DIVISIONS

Carlson from the Committee on Finance to which was referred:

H. F. No. 863, A bill for an act relating to global warming and the environment; requiring adoption of California standards regarding low emission vehicles; providing for updates to the standards as necessary to comply with the federal Clean Air Act; amending Minnesota Statutes 2006, section 116.07, subdivision 2.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 2006, section 116.07, subdivision 2, is amended to read:

Subd. 2. Adoption of standards. (a) The Pollution Control Agency shall improve air quality by promoting, in the most practicable way possible, the use of energy sources and waste disposal methods which produce or emit the least air contaminants consistent with the agency's overall goal of reducing all forms of pollution. The agency shall

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also adopt standards of air quality, including maximum allowable standards of emission of air contaminants from motor vehicles, recognizing that due to variable factors, no single standard of purity of air is applicable to all areas of the state. In adopting standards the Pollution Control Agency shall give due recognition to the fact that the quantity or characteristics of air contaminants or the duration of their presence in the atmosphere, which may cause air pollution in one area of the state, may cause less or not cause any air pollution in another area of the state, and it shall take into consideration in this connection such factors, including others which it may deem proper, as existing physical conditions, zoning classifications, topography, prevailing wind directions and velocities, and the fact that a standard of air quality which may be proper as to an essentially residential area of the state, may not be proper as to a highly developed industrial area of the state. Such standards of air quality shall be premised upon scientific knowledge of causes as well as effects based on technically substantiated criteria and commonly accepted practices. No local government unit shall set standards of air quality which are more stringent than those set by the Pollution Control Agency.

(b) The Pollution Control Agency shall adopt rules, as authorized under the federal Clean Air Act, United States Code, title 42, section 7507, to regulate emission standards of motor vehicles sold in this state. The rules:

(1) must be adopted under section 14.388, subdivision 1, clause (3);

(2) except as provided in clauses (3) to (5), must be identical to and must incorporate by reference the California low emission vehicle regulations adopted by the California Air Resources Board under the California Code of Regulations, title 13, sections 1900 to 2235;

(3) must not include the zero emission vehicle standards contained in California Code of Regulations, title 13, section 1962;

(4) must not include the 15-year or 150,000-mile extended warranty specified in California Code of Regulations, title 13, section 1962, for partial zero emission vehicles, provided that partial zero emission vehicles delivered for sale to Minnesota are equipped with the same quality components as partial zero emission vehicles supplied to areas where the full 15-year or 150,000-mile warranty remains in effect. This section does not amend the requirements of California Code of Regulations, title 13, section 1962, that indicate the warranty period for a zero emission energy storage device used for traction power will be ten years;

(5) must not include any fuel standards set forth in California Code of Regulations, title 13, sections 2250 et. seq.;

(6) must be amended as necessary in a timely fashion to minimize the time during which Minnesota's rules are not identical with California's regulations, as required under United States Code, title 42, section 7507. Amendments under this clause must be made under section 14.388, subdivision 1, clause (3); and

(7) must state that each section of the rules is severable, and that if any section is held invalid, the remainder will continue in full force and effect.

If the California emission standards referred to under this section are extended to off-road vehicles or engines including, but not limited to, all-terrain vehicles, snowmobiles, boats, aircraft, lawnmowers, tractors, farm machinery, or construction equipment, this section is no longer effective, and Minnesota reverts to the federal motor vehicle emissions standards by operation of law without requiring further executive or legislative branch action.

Any portion of California's regulations requiring a federal waiver under the Clean Air Act in order to become effective may not be enforced in Minnesota unless and until California receives the requisite federal waiver.

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At least 30 days prior to beginning to adopt rules under this paragraph, the commissioner of the Pollution Control Agency must notify the governor, commissioner of agriculture, commissioner of commerce, and chairs and ranking minority members of the senate and house of representatives committees with primary jurisdiction over agricultural policy and finance, environmental policy and finance, and commerce policy and finance of the commissioner's intention to adopt rules under this paragraph.

Beginning January 1, 2009, and each year thereafter, the commissioner must submit to the governor, commissioner of agriculture, commissioner of commerce, and chairs and ranking minority members of the senate and house of representatives committees with primary jurisdiction over agricultural policy and finance, environmental policy and finance, and commerce policy and finance a report containing the following information, to the extent it is available:

(1) for each motor vehicle manufacturer:

(i) the makes and models of flexible fuel vehicles offered for sale in Minnesota; and

(ii) the percentage of flexible fuel vehicles offered for sale in Minnesota that are engineered for optimal performance using E85; and

(2) for each of the 50 states:

(i) the number of E85 pumps operating;

(ii) gross sales of E85; and

(iii) the market share of E85 as a proportion of total fuel purchased for motor vehicle use.

(c) The Pollution Control Agency shall promote solid waste disposal control by encouraging the updating of collection systems, elimination of open dumps, and improvements in incinerator practices. The agency shall also adopt standards for the control of the collection, transportation, storage, processing, and disposal of solid waste and sewage sludge for the prevention and abatement of water, air, and land pollution, recognizing that due to variable factors, no single standard of control is applicable to all areas of the state. In adopting standards, the Pollution Control Agency shall give due recognition to the fact that elements of control which may be reasonable and proper in densely populated areas of the state may be unreasonable and improper in sparsely populated or remote areas of the state, and it shall take into consideration in this connection such factors, including others which it may deem proper, as existing physical conditions, topography, soils and geology, climate, transportation, and land use. Such standards of control shall be premised on technical criteria and commonly accepted practices.

(d) The Pollution Control Agency shall also adopt standards describing the maximum levels of noise in terms of sound pressure level which may occur in the outdoor atmosphere, recognizing that due to variable factors no single standard of sound pressure is applicable to all areas of the state. Such standards shall give due consideration to such factors as the intensity of noises, the types of noises, the frequency with which noises recur, the time period for which noises continue, the times of day during which noises occur, and such other factors as could affect the extent to which noises may be injurious to human health or welfare, animal or plant life, or property, or could interfere unreasonably with the enjoyment of life or property. In adopting standards, the Pollution Control Agency shall give due recognition to the fact that the quantity or characteristics of noise or the duration of its presence in the outdoor atmosphere, which may cause noise pollution in one area of the state, may cause less or not cause any noise pollution in another area of the state, and it shall take into consideration in this connection such factors, including others which it may deem proper, as existing physical conditions, zoning classifications, topography, meteorological conditions and the fact that a standard which may be proper in an essentially residential area of the state, may not be proper as to a highly developed industrial area of the state. Such noise standards shall be premised upon scientific

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knowledge as well as effects based on technically substantiated criteria and commonly accepted practices. No local governing unit shall set standards describing the maximum levels of sound pressure which are more stringent than those set by the Pollution Control Agency.

(e) The Pollution Control Agency shall adopt standards for the identification of hazardous waste and for the management, identification, labeling, classification, storage, collection, transportation, processing, and disposal of hazardous waste, recognizing that due to variable factors, a single standard of hazardous waste control may not be applicable to all areas of the state. In adopting standards, the Pollution Control Agency shall recognize that elements of control which may be reasonable and proper in densely populated areas of the state may be unreasonable and improper in sparsely populated or remote areas of the state. The agency shall consider existing physical conditions, topography, soils, and geology, climate, transportation and land use. Standards of hazardous waste control shall be premised on technical knowledge, and commonly accepted practices. Hazardous waste generator licenses may be issued for a term not to exceed five years. No local government unit shall set standards of hazardous waste control which are in conflict or inconsistent with those set by the Pollution Control Agency.

A person who generates less than 100 kilograms of hazardous waste per month is exempt from the following agency hazardous waste rules:

(1) rules relating to transportation, manifesting, storage, and labeling for photographic fixer and X-ray negative wastes that are hazardous solely because of silver content; and

(2) any rule requiring the generator to send to the agency or commissioner a copy of each manifest for the transportation of hazardous waste for off-site treatment, storage, or disposal, except that counties within the metropolitan area may require generators to provide manifests.

Nothing in this paragraph exempts the generator from the agency's rules relating to on-site accumulation or outdoor storage. A political subdivision or other local unit of government may not adopt management requirements that are more restrictive than this paragraph.

EFFECTIVE DATE. This section is effective July 1, 2009.

Sec. 2. STUDY.

The commissioner of the Pollution Control Agency shall issue a request for proposals from academic institutions within the state to complete a study regarding the implementation of this act. The study must be submitted to the legislature by February 1, 2009. The study must address the following:

(1) the differences between California low emission vehicle (LEV) regulations and federal regulations;

(2) a summary of the numbers of flexible fuel vehicles (FFV's) sold and the amount of E85 fuel used in California and other states that have adopted the California LEV regulations, compared with the numbers of FFV's sold and the amount ot E85 fuel used in states utilizing federal regulations. The summary should be based on the ratio of FFV's to gasoline vehicles;

(3) any negative impact that the California standards would have on the availability of the purchase of FFV's and E85 in Minnesota;

(4) recommendations as to how an automaker would certify that E85 is being used in FFV's;

(5) an analysis of the extent that California uses survey reports to determine E85 use in FFV's;

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(6) an analysis of using the GM On-Star and similar computer systems to determine E85 use in FFV's, including the ability of the system to collect the data, the current availability of On-Star type systems on FFV's and the cost of adding the technology on those vehicles, and whether collection of the data violates state privacy laws;

(7) a summary of national use of high occupancy vehicle (HOV) lanes by vehicles that operate on alternative fuels, including whether FFV's are permitted to use HOV lanes and any difficulties in determining the type of fuel being used;

(8) a review of the evolution of the California LEV regulations and any planned future changes, including:

(i) how those changes impact the availability of FFV's and whether they encourage broader use of renewable fuels;

(ii) a summary of past, present, and future biofuel use; and

(iii) a summary of California's transportation planning, including any anticipated reliance on particular transportation components, such as all-electric vehicles, use of biodiesel and ethanol fuels, and the like; and

(9) an analysis of California vehicle and gasoline test methodology and certifications, including:

(i) whether FFV's are tested on gasoline grades sold in Minnesota;

(ii) why FFV's are not tested on E85;

(iii) what are lifecycle emission impacts associated with E85 use;

(iv) how California gasoline differs from that of other regions and federally reformulated gasoline;

(v) what are the emission impacts of using Minnesota gasoline in California-certified vehicles, compared with modeled emission impacts; and

(vi) the impact on Minnesota air pollution if California LEV standards are adopted, given that California is NOx-limited for ground-level ozone formation and Minnesota is a VOC-limited air shed.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 3. ADOPTION.

The rules under section 1 must be adopted and made effective by September 30, 2009, and shall be effective for motor vehicles with a model year of 2013 and later. The rules adopted under section 1 do not affect collector vehicles or street rods under Minnesota Statutes, section 168.10."

Delete the title and insert:

"A bill for an act relating to air pollution; requiring adoption of emission standards for motor vehicles; providing for updates as necessary to comply with the Clean Air Act; requiring reports and a study; amending Minnesota Statutes 2006, section 116.07, subdivision 2."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Ways and Means.

The report was adopted.

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Carlson from the Committee on Finance to which was referred:

H. F. No. 2291, A bill for an act relating to education finance; providing full funding for Telecommunications /Internet access equity aid; appropriating money.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 2006, section 120B.36, as amended by Laws 2007 chapter 14, article 2, section 11, is amended to read:

120B.36 SCHOOL ACCOUNTABILITY; APPEALS PROCESS.

Subdivision 1. School performance report cards. (a) The commissioner shall use objective criteria based on levels of student performance to report at least student academic performance, school safety, two separate student-to-teacher ratios that clearly indicate the definition of teacher consistent with sections 122A.06 and 122A.15 for purposes of determining these ratios, and staff characteristics, with a value-added component added no later than the 2008-2009 school year. The report must indicate a school's adequate yearly progress status, and must not set any designations applicable to high- and low-performing schools due solely to adequate yearly progress status.

(b) The commissioner shall develop, annually update, and post on the department Web site school performance report cards.

(c) The commissioner must make available the first performance report cards by November 2003, and during the beginning of each school year thereafter.

(d) A school or district may appeal its adequate yearly progress or other status determination in writing to the commissioner within 30 days of receiving the notice of its status. determination. The commissioner must give the affected school or school district notice and the opportunity for a hearing before an appeals advisory committee within 30 days after the commissioner receives the written appeal. The commissioner must notify the school or district of the date, time, and place of the hearing at least 21 days before the hearing date. Within 30 days after the hearing, the appeals advisory committee must submit a written recommendation to the commissioner regarding whether to grant or deny the appeal and include the reasons for its recommendation. The commissioner must finally decide an appeal based on an objective evaluation and must make and transmit to the school or district the commissioner's evaluation and final decision within 15 days of receiving the advisory committee recommendation. The commissioner, after consulting with the appeals advisory committee, may postpone the hearing date under special circumstances. The appeals advisory committee is composed of five members:

(1) a representative of a statewide professional teachers organization selected by the organization;

(2) a representative of a statewide organization of school administrators selected by the organization;

(3) a representative of a statewide parent and teachers organization selected by the organization;

(4) a representative of a statewide commerce organization having a significant interest in kindergarten through grade 12 education selected by the organization; and

(5) a representative of a statewide school boards association selected by the organization.

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Membership terms and removal of members are governed by section 15.059, except that the terms are three years. The commissioner may reimburse members for expenses under section 15.059 only if federal funding is available for this purpose. The appeals advisory committee does not expire.

The commissioner must seek the advice of the appeals advisory committee before deciding an appeal. The commissioner's decision to uphold or deny an appeal is final.

(e) School performance report cards data are nonpublic data under section 13.02, subdivision 9, until not later than ten days after the appeal procedure described in paragraph (d) concludes. The department shall annually post school performance report cards to its public Web site no later than September 1.

Subd. 1a. GRAD test appeals. (a) Consistent with this subdivision, the commissioner must collaborate with high school teachers, high school administrators, parents of high school students, school district assessment directors, higher education faculty with expertise in kindergarten through grade 12 education and assessment, and other interested experts and stakeholders to establish a timely, transparent, and data-based appeals process that allows school districts, at their discretion, to grant a diploma to high school seniors in the 2008-2009, 2009-2010, and 2010-2011 school years who do not receive a passing score on the state reading or mathematics GRAD test.

(b) A high school student in the 2008-2009, 2009-2010, or 2010-2011 school year who does not receive a passing score on the state reading or mathematics GRAD test by April of the student's senior year may appeal to the chief administrator of the high school where the student is enrolled, in the form and manner the commissioner determines, requesting that the school district grant the student a high school diploma without passing the reading or mathematics GRAD test. The high school administrator, in collaboration with teachers and other school staff selected by the administrator, must formally decide whether or not to grant the student a high school diploma based on multiple, well-understood measures of student learning that measurement experts have determined to be valid and reliable and that are available to the educators deciding whether or not to grant the student's request. School district officials must use the data that form the bases of the student appeals under this subdivision, where appropriate, to revise district curriculum to ensure that all students have an equal opportunity to learn and provide appropriate academic intervention and remediation to students who fail to pass the state's reading or mathematics GRAD test.

(c) The commissioner must evaluate the effectiveness and impact of the appeals process and recommend to the legislature by February 1, 2011, whether or not to continue the appeals process under this subdivision. If the commissioner recommends continuing this process, the commissioner also must recommend student performance levels for the state reading and mathematics GRAD tests and the appropriate indicators for school districts to consider in deciding whether or not to grant a diploma to high school seniors who do not receive a passing score on the state reading or mathematics GRAD test.

Subd. 2. Adequate yearly progress data. All data the department receives, collects, or creates for purposes of determining adequate yearly progress designations under Public Law 107-110, section 1116, are nonpublic data under section 13.02, subdivision 9, until not later than ten days after the appeal procedure described in subdivision 1, paragraph (d), concludes. Districts must provide parents sufficiently detailed summary data to permit parents to appeal under Public Law 107-110, section 1116(b)(2). The department shall annually post adequate yearly progress data to its public Web site no later than September 1.

Sec. 2. DEPARTMENT OF EDUCATION REPORT.

The Department of Education must submit a report to the education committees of the legislature by January 15, 2009, analyzing existing stand-alone school district reporting requirements and recommend the elimination of any district reports that are duplicative of other data already collected by the department."

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Delete the title and insert:

"A bill for an act relating to education; modifying provisions governing appeals of graduation test scores; amending Minnesota Statutes 2006, section 120B.36, as amended."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Ways and Means.

The report was adopted.

Solberg from the Committee on Ways and Means to which was referred:

H. F. No. 2351, A bill for an act relating to telecommunications; requiring a study of the impact of state video franchising in states that have enacted such legislation; appropriating money.

Reported the same back with the recommendation that the bill pass.

The report was adopted.

Lenczewski from the Committee on Taxes to which was referred:

H. F. No. 3149, A bill for an act relating to taxation; making policy, technical, administrative, and clarifying changes to various taxes and fees and related provisions; changing provisions relating to government data practices and debt collection; providing for compliance with job opportunity building zone requirements; amending Minnesota Statutes 2006, sections 13.51, subdivision 3; 13.585, subdivision 5; 16D.02, subdivisions 3, 6; 16D.04, subdivision 2; 163.051, subdivision 5; 270A.08, subdivision 1; 270C.33, subdivision 5; 270C.56, subdivision 1; 272.02, subdivisions 13, 20, 21, 27, 31, 38, 49; 272.03, subdivision 3, by adding a subdivision; 273.11, subdivision 8; 273.124, subdivisions 6, 13, 21; 273.128, subdivision 1; 273.13, subdivisions 22, 23, 25, 33; 274.01, subdivision 3; 274.014, subdivision 3; 276.04, subdivision 2; 287.20, subdivisions 3a, 9, by adding a subdivision; 289A.18, subdivision 1; 289A.55, by adding a subdivision; 289A.60, by adding a subdivision; 290.01, subdivision 6b; 290.068, subdivision 3; 290.07, subdivision 1; 290.21, subdivision 4; 290.92, subdivision 26; 290B.04, subdivision 1; 295.50, subdivision 4; 295.52, subdivision 4; 295.53, subdivision 4a; 296A.07, subdivision 4; 296A.08, subdivision 3; 296A.16, subdivision 2; 297A.61, subdivisions 22, 29; 297A.665; 297A.67, subdivision 7; 297A.995, subdivision 10, by adding subdivisions; 297B.01, subdivision 7; 297B.03; 297F.01, subdivision 8; 297F.21, subdivision 1; 297G.01, subdivision 9; 297H.09; 297I.05, subdivision 12; 469.040, subdivision 4; 469.174, subdivision 10b; 469.177, subdivision 1c; 469.319; 477A.03, subdivision 2a; Minnesota Statutes 2007 Supplement, sections 115A.1314, subdivision 2; 273.1231, subdivision 7, by adding a subdivision; 273.1232, subdivision 1; 273.1233, subdivisions 1, 3; 273.1234; 273.1235, subdivisions 1, 3; proposing coding for new law in Minnesota Statutes, chapters 273; 469; repealing Minnesota Statutes 2006, section 477A.014, subdivision 5; Minnesota Statutes 2007 Supplement, section 477A.014, subdivision 4; Minnesota Rules, parts 8031.0100, subpart 3; 8093.2100.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

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"ARTICLE 1

HOMESTEAD CREDIT STATE REFUND

Section 1. Minnesota Statutes 2006, section 273.1384, subdivision 1, is amended to read:

Subdivision 1. Residential homestead market value credit. (a) Each county auditor shall determine a homestead credit for each class 1a, 1b, and 2a homestead property within the county equal to 0.4 percent of the first $76,000 of market value of the property minus .09 percent of the market value in excess of $76,000. The credit amount may not be less than zero. In the case of an agricultural or resort homestead, only the market value of the house, garage, and immediately surrounding one acre of land is eligible in determining the property's homestead credit. In the case of a property that is classified as part homestead and part nonhomestead, (i) the credit shall apply only to the homestead portion of the property, but (ii) if a portion of a property is classified as nonhomestead solely because not all the owners occupy the property, not all the owners have qualifying relatives occupying the property, or solely because not all the spouses of owners occupy the property, the credit amount shall be initially computed as if that nonhomestead portion were also in the homestead class and then prorated to the owner-occupant's percentage of ownership. For the purpose of this section, when an owner-occupant's spouse does not occupy the property, the percentage of ownership for the owner-occupant spouse is one-half of the couple's ownership percentage.

(b) For property taxes payable in 2009 and thereafter, the county auditor shall determine the amount of the homestead credit under paragraph (a) and this paragraph. The county auditor shall report the amount of the credit to the taxpayer on the property tax statement or in another manner, as authorized by the commissioner of revenue. The amount of the credit allowed for the property taxes payable year is to be computed as the following percentage of the credit amount under paragraph (a):

(1) for property taxes payable in 2009, 100 percent;

(2) for property taxes payable in 2010, 60 percent;

(3) for property taxes payable in 2011, 45 percent;

(4) for property taxes payable in 2012, 30 percent;

(5) for property taxes payable in 2013, 15 percent; and

(6) for property taxes payable in 2014 or thereafter, no credit is allowed.

EFFECTIVE DATE. This section is effective beginning for property taxes payable in 2009.

Sec. 2. Minnesota Statutes 2006, section 276.04, subdivision 2, as amended by Laws 2008, chapter 154, article 2, section 19, is amended to read:

Subd. 2. Contents of tax statements. (a) The treasurer shall provide for the printing of the tax statements. The commissioner of revenue shall prescribe the form of the property tax statement and its contents. The statement must contain a tabulated statement of the dollar amount due to each taxing authority and the amount of the state tax from the parcel of real property for which a particular tax statement is prepared. The dollar amounts attributable to the county, the state tax, the voter approved school tax, the other local school tax, the township or municipality, and the total of the metropolitan special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must be separately stated. The amounts due all other special taxing districts, if any, may be aggregated except that any levies made by the regional rail authorities in the county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A shall be listed on a separate line directly under the appropriate county's levy. If the

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county levy under this paragraph includes an amount for a lake improvement district as defined under sections 103B.501 to 103B.581, the amount attributable for that purpose must be separately stated from the remaining county levy amount. In the case of Ramsey County, if the county levy under this paragraph includes an amount for public library service under section 134.07, the amount attributable for that purpose may be separated from the remaining county levy amount. The amount of the tax on homesteads qualifying under the senior citizens' property tax deferral program under chapter 290B is the total amount of property tax before subtraction of the deferred property tax amount. The amount of the tax on contamination value imposed under sections 270.91 to 270.98, if any, must also be separately stated. The dollar amounts, including the dollar amount of any special assessments, may be rounded to the nearest even whole dollar. For purposes of this section whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar. The amount of market value excluded under section 273.11, subdivision 16, if any, must also be listed on the tax statement.

(b) The property tax statements for manufactured homes and sectional structures taxed as personal property shall contain the same information that is required on the tax statements for real property.

(c) Real and personal property tax statements must contain the following information in the order given in this paragraph. The information must contain the current year tax information in the right column with the corresponding information for the previous year in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's taxable market value after reductions under section 273.11, subdivisions 1a and 16;

(3) ~~the property's gross tax, before credits;~~ any items required by the commissioner of revenue under section 273.1384, subdivision 1, paragraph (b); and

~~(4) for homestead residential and agricultural properties, the credits under section 273.1384;~~

(5) any credits received under sections 273.119; 273.123; 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received under section 273.135 must be separately stated and identified as "taconite tax relief"; and

~~(6)~~ (4) the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county agrees, a taxing district may include a notice with the property tax statement notifying taxpayers when the taxing district will begin its budget deliberations for the current year, and encouraging taxpayers to attend the hearings. If the county allows notices to be included in the envelope containing the property tax statement, and if more than one taxing district relative to a given property decides to include a notice with the tax statement, the county treasurer or auditor must coordinate the process and may combine the information on a single announcement.

EFFECTIVE DATE. This section is effective for taxes payable in 2009 and thereafter.

Sec. 3. Minnesota Statutes 2006, section 290.01, subdivision 19a, as amended by Laws 2008, chapter 154, article 3, section 2, and Laws 2008, chapter 154, article 4, section 3, is amended to read:

Subd. 19a. Additions to federal taxable income. For individuals, estates, and trusts, there shall be added to federal taxable income:

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(1)(i) interest income on obligations of any state other than Minnesota or a political or governmental subdivision, municipality, or governmental agency or instrumentality of any state other than Minnesota exempt from federal income taxes under the Internal Revenue Code or any other federal statute; and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue Code, except the portion of the exempt-interest dividends derived from interest income on obligations of the state of Minnesota or its political or governmental subdivisions, municipalities, governmental agencies or instrumentalities, but only if the portion of the exempt-interest dividends from such Minnesota sources paid to all shareholders represents 95 percent or more of the exempt-interest dividends that are paid by the regulated investment company as defined in section 851(a) of the Internal Revenue Code, or the fund of the regulated investment company as defined in section 851(g) of the Internal Revenue Code, making the payment; and

(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal government described in section 7871(c) of the Internal Revenue Code shall be treated as interest income on obligations of the state in which the tribe is located;

(2) the amount of (i) income or sales and use taxes paid or accrued within the taxable year under this chapter and the amount of taxes based on net income paid or sales and use taxes paid to any other state or to any province or territory of Canada, and (ii) the amount of real and personal property taxes paid or accrued within the taxable year, to the extent allowed as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not be more than the amount by which the itemized deductions as allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the disallowance of itemized deductions under section 68 of the Internal Revenue Code of 1986, income or sales and use tax is the last itemized deduction disallowed, real property tax is the second to last itemized deduction disallowed, and personal property tax is the third to last itemized deduction disallowed;

(3) the capital gain amount of a lump sum distribution to which the special tax under section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the taxable year under this chapter and taxes based on net income paid to any other state or any province or territory of Canada, to the extent allowed as a deduction in determining federal adjusted gross income. For the purpose of this paragraph, income taxes do not include the taxes imposed by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;

(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10 other than expenses or interest used in computing net interest income for the subtraction allowed under subdivision 19b, clause (1);

(6) the amount of a partner's pro rata share of net income which does not flow through to the partner because the partnership elected to pay the tax on the income under section 6242(a)(2) of the Internal Revenue Code;

(7) 80 percent of the depreciation deduction allowed under section 168(k) of the Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that in the taxable year generates a deduction for depreciation under section 168(k) and the activity generates a loss for the taxable year that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is limited to excess of the depreciation claimed by the activity under section 168(k) over the amount of the loss from the activity that is not allowed in the taxable year. In succeeding taxable years when the losses not allowed in the taxable year are allowed, the depreciation under section 168(k) is allowed;

(8) 80 percent of the amount by which the deduction allowed by section 179 of the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended through December 31, 2003;

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(9) to the extent deducted in computing federal taxable income, the amount of the deduction allowable under section 199 of the Internal Revenue Code;

(10) the exclusion allowed under section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;

(11) the amount of expenses disallowed under section 290.10, subdivision 2;

(12) for taxable years beginning after December 31, 2006, and before January 1, 2008, the amount deducted for qualified tuition and related expenses under section 222 of the Internal Revenue Code, to the extent deducted from gross income; and

(13) for taxable years beginning after December 31, 2006, and before January 1, 2008, the amount deducted for certain expenses of elementary and secondary school teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted from gross income.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2008.

Sec. 4. Minnesota Statutes 2006, section 290A.03, subdivision 13, is amended to read:

Subd. 13. Property taxes payable. "Property taxes payable" means the property tax exclusive of special assessments, penalties, and interest payable on a claimant's homestead after deductions made under sections 273.135, ~~273.1384,~~ 273.1391, 273.42, subdivision 2, and any other state paid property tax credits in any calendar year, and after any refund claimed and allowable under section 290A.04, subdivision 2h, that is first payable in the year that the property tax is payable. Beginning for property taxes payable in 2009, the amount of the credit under section 273.1384, subdivision 1, must not be deducted in computing property taxes payable. In the case of a claimant who makes ground lease payments, "property taxes payable" includes the amount of the payments directly attributable to the property taxes assessed against the parcel on which the house is located. No apportionment or reduction of the "property taxes payable" shall be required for the use of a portion of the claimant's homestead for a business purpose if the claimant does not deduct any business depreciation expenses for the use of a portion of the homestead in the determination of federal adjusted gross income. For homesteads which are manufactured homes as defined in section 273.125, subdivision 8, and for homesteads which are park trailers taxed as manufactured homes under section 168.012, subdivision 9, "property taxes payable" shall also include 19 percent of the gross rent paid in the preceding year for the site on which the homestead is located. When a homestead is owned by two or more persons as joint tenants or tenants in common, such tenants shall determine between them which tenant may claim the property taxes payable on the homestead. If they are unable to agree, the matter shall be referred to the commissioner of revenue whose decision shall be final. Property taxes are considered payable in the year prescribed by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have owned and occupied the homestead on January 2 of the year in which the tax is payable and (i) the property must have been classified as homestead property pursuant to section 273.124, on or before December 15 of the assessment year to which the "property taxes payable" relate; or (ii) the claimant must provide documentation from the local assessor that application for homestead classification has been made on or before December 15 of the year in which the "property taxes payable" were payable and that the assessor has approved the application.

EFFECTIVE DATE. This section is effective beginning for refund claims based on property taxes payable in 2009.

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Sec. 5. Minnesota Statutes 2006, section 290A.04, subdivision 2h, is amended to read:

Subd. 2h. Additional refund. (a) If the gross property taxes payable on a homestead increase more than 12 percent over the property taxes payable in the prior year on the same property that is owned and occupied by the same owner on January 2 of both years, and the amount of that increase is $100 or more, a claimant who is a homeowner shall be allowed an additional refund equal to 60 percent of the amount of the increase over the greater of 12 percent of the prior year's property taxes payable or $100. This subdivision shall not apply to any increase in the gross property taxes payable attributable to improvements made to the homestead after the assessment date for the prior year's taxes. This subdivision shall not apply to any increase in the gross property taxes payable attributable to the termination of valuation exclusions under section 273.11, subdivision 16, or to the reduction in and elimination of the homestead market value credit under section 273.1384, subdivision 1, paragraph (b).

The maximum refund allowed under this subdivision is $1,000.

(b) For purposes of this subdivision "gross property taxes payable" means property taxes payable determined without regard to the refund allowed under this subdivision.

(c) In addition to the other proofs required by this chapter, each claimant under this subdivision shall file with the property tax refund return a copy of the property tax statement for taxes payable in the preceding year or other documents required by the commissioner.

(d) Upon request, the appropriate county official shall make available the names and addresses of the property taxpayers who may be eligible for the additional property tax refund under this section. The information shall be provided on a magnetic computer disk. The county may recover its costs by charging the person requesting the information the reasonable cost for preparing the data. The information may not be used for any purpose other than for notifying the homeowner of potential eligibility and assisting the homeowner, without charge, in preparing a refund claim.

EFFECTIVE DATE. This section is effective for claims based on property taxes payable in 2009 and thereafter.

Sec. 6. Minnesota Statutes 2006, section 290A.04, is amended by adding a subdivision to read:

Subd. 2k. Homestead credit state refund. (a) A claimant who is a homeowner is entitled to a state refund of the amount of the property taxes payable in excess of two percent of the claimant's household income, based on the percentage and maximum for the appropriate household income level shown below. The refund amount determined from the table must be reduced further by the amount of the homestead market value credit under section 273.1384, subdivision 1, paragraph (b), but not to an amount that is less than zero.

Household Income Refund Percentage Maximum State Refund

0 to $5,399 90 percent $2,500

5,400 to 18,899 85 percent 2,500

18,900 to 26,999 80 percent 2,500

27,000 to 32,399 70 percent 2,500

32,400 to 37,799 65 percent 2,500

37,800 to 45,899 60 percent 2,500

45,900 to 64,699 55 percent 2,500

64,700 to 80,899 50 percent 2,300

80,900 to 94,399 45 percent 2,100

94,400 to 99,299 40 percent 1,900

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99,300 to 104,099 35 percent 1,700

104,100 to 115,599 30 percent 1,500

115,600 to 127,199 25 percent 1,250

127,200 to 134,099 25 percent 1,000

134,100 to 138,799 25 percent 750

138,800 to 144,399 25 percent 500

144,400 to 200,000 25 percent 250

(b) No payment is allowed under paragraph (a) if the claimant's household income is more than $200,000.

EFFECTIVE DATE. This section is effective beginning for claims based on property taxes payable in 2009.

Sec. 7. Minnesota Statutes 2006, section 290A.04, is amended by adding a subdivision to read:

Subd. 2l. Revenue neutrality. (a) No later than August 1st of each year, beginning in 2010, the commissioner must calculate the amount of revenue estimated to be raised in the next fiscal year through the phaseout of the residential homestead market value credit in section 273.1384, subdivision 1, paragraph (b), and the disallowance of the deduction of real and personal property taxes in section 290.01, subdivision 19a, clause (2). The commissioner must also estimate the total amount estimated to be paid to homeowners in refunds based on taxes payable in the next calendar year under the homestead credit state refund in subdivision 2k, and the amount that would have been paid in refunds based on taxes payable in the next calendar year under the homeowner property tax refund if section 290A.04, subdivision 2, had not been repealed.

(b) If the commissioner estimates that more revenue will be raised in the next fiscal year through the phaseout of the residential homestead market value credit and the disallowance of the real and personal property tax deduction than will be paid in increased refunds under the homestead credit state refund as compared with the repealed homeowner property tax refund, and if the revenue raised exceeds the additional refunds to be paid by more than $5,000,000, then the commissioner must adjust the maximum refunds allowed under subdivision 2k for refunds based on taxes payable in the next calendar year. The adjustment applies to the maximum refunds after the inflation adjustment provided in subdivision 4. The commissioner must adjust the maximum refunds for all income ranges proportionately, rounded to the nearest $10 amount as provided in subdivision 4, paragraph (b), so that the amount estimated to be paid in refunds based on taxes payable in the next calendar year approximates but does not exceed the revenue estimated to be raised through the phaseout of the residential homestead market value credit and the disallowance of the real and personal property tax deduction in the next fiscal year. The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.

EFFECTIVE DATE. This section is effective the day following final enactment, for refunds based on property taxes payable in 2011 and following years.

Sec. 8. Minnesota Statutes 2006, section 290A.04, subdivision 3, is amended to read:

Subd. 3. Table. The commissioner of revenue shall construct and make available to taxpayers a comprehensive table showing the ~~property taxes to be paid and~~ refund allowed at various levels of income ~~and assessment~~. The table shall follow the schedule of income percentages, maximums and other provisions specified in ~~subdivision 2~~ this section, except that the commissioner may graduate the transition between income brackets. All refunds shall be computed in accordance with tables prepared and issued by the commissioner of revenue.

The commissioner shall include on the form an appropriate space or method for the claimant to identify if the property taxes paid are for a manufactured home, as defined in section 273.125, subdivision 8, paragraph (c), or a park trailer taxed as a manufactured home under section 168.012, subdivision 9.

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Sec. 9. Minnesota Statutes 2006, section 290A.04, subdivision 4, is amended to read:

Subd. 4. Inflation adjustment. (a) Beginning for property tax refunds payable in calendar year ~~2002~~ 2010, the commissioner shall annually adjust the dollar amounts of the income thresholds and the maximum refunds under ~~subdivisions 2 and 2a~~ subdivision 2k for inflation. The commissioner shall make the inflation adjustments in accordance with section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision the percentage increase shall be determined from the year ending on June 30, ~~2000~~ 2008, to the year ending on June 30 of the year preceding that in which the refund is payable. The commissioner shall use the appropriate percentage increase to annually adjust the income thresholds and maximum refunds under ~~subdivisions 2 and 2a~~ subdivision 2k for inflation without regard to whether or not the income tax brackets are adjusted for inflation in that year. The commissioner shall round the thresholds and the maximum amounts, as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall round it up to the next $10 amount.

The commissioner shall annually announce the adjusted refund schedule at the same time provided under section 290.06. The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.

(b) Beginning for property tax refunds payable in calendar year 2002, the commissioner shall annually adjust the dollar amounts of the income thresholds and the maximum refunds under subdivision 2a for inflation. The commissioner shall make the inflation adjustments in accordance with section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision the percentage increase shall be determined from the year ending on June 30, 2000, to the year ending on June 30 of the year preceding that in which the refund is payable. The commissioner shall use the appropriate percentage increase to annually adjust the income thresholds and maximum refunds under subdivision 2a for inflation without regard to whether or not the income tax brackets are adjusted for inflation in that year. The commissioner shall round the thresholds and the maximum amounts, as adjusted to the nearest $10 amount. If the amount ends in $5, the commissioner shall round it up to the next $10 amount. The commissioner shall annually announce the adjusted refund schedule at the same time provided under section 290.06. The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.

EFFECTIVE DATE. This section is effective beginning for claims based on property taxes payable in 2010.

Sec. 10. REPEALER.

Minnesota Statutes 2006, section 290A.04, subdivisions 2 and 2b, are repealed.

EFFECTIVE DATE. This section is effective for claims based on property taxes payable in 2009 and thereafter.

ARTICLE 2

AIDS TO LOCAL GOVERNMENTS

Section 1. Minnesota Statutes 2006, section 477A.011, subdivision 34, is amended to read:

Subd. 34. City revenue need. (a) For a city with a population equal to or greater than 2,500, "city revenue need" is the sum of (1) 5.0734098 times the pre-1940 housing percentage; plus (2) 19.141678 times the population decline percentage; plus (3) 2504.06334 times the road accidents factor; plus (4) 355.0547; minus (5) the metropolitan area factor; minus (6) 49.10638 times the household size.

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(b) For a city with a population less than 2,500, "city revenue need" is the sum of (1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times the commercial industrial percentage; plus (3) 3.16042 times the population decline percentage; plus (4) 1.206 times the transformed population; minus (5) 62.772.

(c) For a city with a population of 2,500 or more and a population in one of the most recently available five years that was less than 2,500, "city revenue need" is the sum of (1) its city revenue need calculated under paragraph (a) multiplied by its transition factor; plus (2) its city revenue need calculated under the formula in paragraph (b) multiplied by the difference between one and its transition factor. For purposes of this paragraph, a city's "transition factor" is equal to 0.2 multiplied by the number of years that the city's population estimate has been 2,500 or more. This provision only applies for aids payable in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500. It applies to any city for aids payable in 2009 and thereafter. The city revenue need under this paragraph may not be less than 290.

(d) The city revenue need cannot be less than zero.

(e) For aids certified in 2010 and subsequent years, the city revenue need is equal to the average of (1) the city's revenue need calculated under paragraphs (a) to (d) based on data available by January 1 in the year the aid is certified, and (2) its revenue need calculated under paragraphs (a) to (d) based on data available by January 1 in the previous year.

~~(e)~~ (f) For calendar year 2005 and subsequent years, the city revenue need for a city, as determined in paragraphs (a) to ~~(d)~~ (e), is multiplied by the ratio of the annual implicit price deflator for government consumption expenditures and gross investment for state and local governments as prepared by the United States Department of Commerce, for the most recently available year to the 2003 implicit price deflator for state and local government purchases.

EFFECTIVE DATE. This section is effective for aids payable in calendar year 2009 and thereafter.

Sec. 2. Minnesota Statutes 2006, section 477A.011, subdivision 36, as amended by Laws 2008, chapter 154, article 1, section 1, is amended to read:

Subd. 36. City aid base. (a) Except as otherwise provided in this subdivision, "city aid base" is zero.

(b) The city aid base for any city with a population less than 500 is increased by $40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $40,000 for aids payable in calendar year 1995 only, provided that:

(i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;

(ii) the city portion of the tax capacity rate exceeds 100 percent; and

(iii) its city aid base is less than $60 per capita.

(c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:

(i) the city has a population in 1994 of 2,500 or more;

(ii) the city is located in a county, outside of the metropolitan area, which contains a city of the first class;

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(iii) the city's net tax capacity used in calculating its 1996 aid under section 477A.013 is less than $400 per capita; and

(iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of property located in the city is classified as railroad property.

(d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:

(i) the city was incorporated as a statutory city after December 1, 1993;

(ii) its city aid base does not exceed $5,600; and

(iii) the city had a population in 1996 of 5,000 or more.

(e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:

~~(i) the city had a population in 1996 of at least 50,000;~~

~~(ii) its population had increased by at least 40 percent in the ten-year period ending in 1996; and~~

~~(iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.~~

~~(f)~~ (e) The city aid base for a city is increased by $150,000 for aids payable in 2000 and thereafter, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only, provided that:

(1) the city has a population that is greater than 1,000 and less than 2,500;

(2) its commercial and industrial percentage for aids payable in 1999 is greater than 45 percent; and

(3) the total market value of all commercial and industrial property in the city for assessment year 1999 is at least 15 percent less than the total market value of all commercial and industrial property in the city for assessment year 1998.

~~(g)~~ (f) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:

(1) the city had a population in 1997 of 2,500 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section 477A.013 is less than $650 per capita;

(3) the pre-1940 housing percentage of the city used in calculating 1999 aid under section 477A.013 is greater than 12 percent;

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(4) the 1999 local government aid of the city under section 477A.013 is less than 20 percent of the amount that the formula aid of the city would have been if the need increase percentage was 100 percent; and

(5) the city aid base of the city used in calculating aid under section 477A.013 is less than $7 per capita.

~~(h)~~ (g) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:

(1) the city has a population in 1997 of 2,000 or more;

(2) the net tax capacity of the city used in calculating its 1999 aid under section 477A.013 is less than $455 per capita;

(3) the net levy of the city used in calculating 1999 aid under section 477A.013 is greater than $195 per capita; and

(4) the 1999 local government aid of the city under section 477A.013 is less than 38 percent of the amount that the formula aid of the city would have been if the need increase percentage was 100 percent.

~~(i)~~ (h) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:

(1) the city has a population in 1998 that is greater than 200 but less than 500;

(2) the city's revenue need used in calculating aids payable in 2000 was greater than $200 per capita;

(3) the city net tax capacity for the city used in calculating aids available in 2000 was equal to or less than $200 per capita;

(4) the city aid base of the city used in calculating aid under section 477A.013 is less than $65 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

~~(j)~~ (i) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:

(1) the city had a population in 1998 that is greater than 200 but less than 500;

(2) the city's commercial industrial percentage used in calculating aids payable in 2000 was less than ten percent;

(3) more than 25 percent of the city's population was 60 years old or older according to the 1990 census;

(4) the city aid base of the city used in calculating aid under section 477A.013 is less than $15 per capita; and

(5) the city's formula aid for aids payable in 2000 was greater than zero.

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~~(k)~~ (j) The city aid base for a city is increased by $45,000 in 2001 and thereafter and by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002 only, provided that:

(1) the net tax capacity of the city used in calculating its 2000 aid under section 477A.013 is less than $810 per capita;

(2) the population of the city declined more than two percent between 1988 and 1998;

(3) the net levy of the city used in calculating 2000 aid under section 477A.013 is greater than $240 per capita; and

(4) the city received less than $36 per capita in aid under section 477A.013, subdivision 9, for aids payable in 2000.

~~(l)~~ (k) The city aid base for a city with a population of 10,000 or more which is located outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to the lesser of:

(1)(i) the total population of the city, as determined by the United States Bureau of the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or

(2) $2,500,000.

~~(m)~~ (l) The city aid base is increased by $50,000 in 2002 and thereafter, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:

(1) the city is located in the seven-county metropolitan area;

(2) its population in 2000 is between 10,000 and 20,000; and

(3) its commercial industrial percentage, as calculated for city aid payable in 2001, was greater than 25 percent.

~~(n)~~ (m) The city aid base for a city is increased by $150,000 in calendar years 2002 to 2011 and by an additional $75,000 in calendar years 2009 to 2014 and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2002 only and by $75,000 in calendar year 2009 only, provided that:

(1) the city had a population of at least 3,000 but no more than 4,000 in 1999;

(2) its home county is located within the seven-county metropolitan area;

(3) its pre-1940 housing percentage is less than 15 percent; and

(4) its city net tax capacity per capita for taxes payable in 2000 is less than $900 per capita.

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~~(o)~~ (n) The city aid base for a city is increased by $200,000 beginning in calendar year 2003 and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only, provided that the city qualified for an increase in homestead and agricultural credit aid under Laws 1995, chapter 264, article 8, section 18.

~~(p)~~ (o) The city aid base for a city is increased by $200,000 in 2004 only and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, is also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear dry cask storage facility.

~~(q)~~ (p) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the maximum total aid it may receive under section 477A.013, subdivision 9, is also increased by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by more than 40 percent between 1990 and 2000.

~~(r)~~ (q) The city aid base for a city is increased by $30,000 in 2009 and thereafter and the maximum total aid it may receive under section 477A.013, subdivision 9, is also increased by $25,000 in calendar year 2006 only if the city had a population in 2003 of at least 1,000 and has a state park for which the city provides rescue services and which comprised at least 14 percent of the total geographic area included within the city boundaries in 2000.

(s) The city aid base for a city with a population less than 5,000 is increased in 2006 and thereafter and the minimum and maximum amount of total aid it may receive under this section is also increased in calendar year 2006 only by an amount equal to $6 multiplied by its population.

~~(t)~~ (r) The city aid base for a city is increased by $80,000 in 2009 and thereafter and the minimum and maximum amount of total aid it may receive under section 477A.013, subdivision 9, is also increased by $80,000 in calendar year 2009 only, if:

(1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed to be placed in trust status as tax-exempt Indian land;

(2) the placement of the land is being challenged administratively or in court; and

(3) due to the challenge, the land proposed to be placed in trust is still on the tax rolls as of May 1, 2006.

~~(u)~~ (s) The city aid base for a city is increased by $100,000 in 2007 and thereafter and the minimum and maximum total amount of aid it may receive under this section is also increased in calendar year 2007 only, provided that:

(1) the city has a 2004 estimated population greater than 200 but less than 2,000;

(2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;

(3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids payable in 2006 was greater than 110 percent; and

(4) it is located in a county where at least 15,000 acres of land are classified as tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.

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~~(v)~~ (t) The city aid base for a city is increased by $30,000 in 2009 only, and the maximum total aid it may receive under section 477A.013, subdivision 9, is also increased by $30,000 in calendar year 2009, only if the city had a population in 2005 of less than 3,000 and the city's boundaries as of 2007 were formed by the consolidation of two cities and one township in 2002.

(u) The city aid base for a city is increased by $100,000 in 2009 and thereafter, and the maximum total aid it may receive under section 477A.013, subdivision 9, is also increased by $100,000 in calendar year 2009 only, if the city had a city net tax capacity for aids payable in 2007 of less than $150 per capita and the city experienced flooding on March 14, 2007, that resulted in evacuation of at least 40 homes.

(v) The city aid base for a city is increased by $200,000 in 2009 to 2013, and the maximum total aid it may receive under section 477A.013, subdivision 9, is also increased by $200,000 in calendar year 2009 only, if the city:

(1) is located outside of the Minneapolis-St. Paul standard metropolitan statistical area;

(2) has a 2005 population greater than 7,000 but less than 8,000; and

(3) has a 2005 net tax capacity per capita of less than $500.

(w) The city aid base is increased by $80,000 in calendar years 2009 to 2018 and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, is increased by $80,000 in calendar year 2009 only, provided that:

(1) the city is located in the seven-county metropolitan area;

(2) its population in 2006 is less than 200; and

(3) the percentage of its housing stock built before 1940, according to the 2000 United States Census, is greater than 40 percent.

(x) The city aid base for a city is increased by $100,000 in 2009 and thereafter and the minimum and maximum total amount of aid it may receive under this section is also increased by $100,000 in calendar year 2009 only, provided that:

(1) the city is located in the metropolitan area and its 2006 population is less than 2,500;

(2) at least 25 percent of its housing was built before 1940 and at least 50 percent of its housing is rental housing, according to the 2000 United States census;

(3) the median household income in the city is 80 percent or less than the median household income in the metropolitan area and 50 percent or less than the median household income for all cities contiguous to that city, according to the 2000 United States Census; and

(4) at least 60 percent of the land and water acres in the city are classified as tax-exempt property, according to its 2008 planning document.

(y) The city aid base is increased by $90,000 in calendar year 2009 only and the minimum and maximum total amount of aid it may receive under section 477A.013, subdivision 9, is also increased by $90,000 in calendar year 2009 only, provided that the city is located in the seven-county metropolitan area, has a 2006 population between 5,000 and 7,000 and has a 1997 population of over 7,000.

EFFECTIVE DATE. This section is effective for aids payable in calendar year 2009 and thereafter.

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Sec. 3. Minnesota Statutes 2006, section 477A.011, is amended by adding a subdivision to read:

Subd. 41. Small city aid base. (a) "Small city aid base" for a city with a population less than 5,000 is equal to $9 multiplied by its population. The small city aid base for all other cities is equal to zero.

(b) For calendar year 2010 and subsequent years, the small city aid base for a city, as determined in paragraph (a), is multiplied by the ratio of the annual implicit price deflator for government consumption expenditures and gross investment for state and local governments as prepared by the United States Department of Commerce for the most recently available year to the 2007 implicit price deflator for state and local government purchases.

EFFECTIVE DATE. This section is effective for aids payable in calendar year 2009 and thereafter.

Sec. 4. Minnesota Statutes 2006, section 477A.011, is amended by adding a subdivision to read:

Subd. 42. City jobs base. (a) "City jobs base" for a city with a population of 5,000 or more is equal to the product of (1) $30, (2) the number of jobs per capita in the city, and (3) its population. For cities with a population less than 5,000, the city jobs base is equal to zero. For a city receiving aid under section 477A.011, subdivision 36, paragraph (l), its city jobs base is reduced by the lesser of one-half of the amount of aid received under that paragraph or $1,200,000. No city's jobs base may exceed $5,000,000 under this paragraph.

(b) For calendar year 2010 and subsequent years, the city jobs base for a city, as determined in paragraph (a), is multiplied by the ratio of the annual implicit price deflator for government consumption expenditures and gross investment for state and local governments as prepared by the United States Department of Commerce for the most recently available year to the 2007 implicit price deflator for state and local government purchases.

(c) For purposes of this subdivision, "jobs per capita in the city" means (1) the average annual number of employees in the city based on the data from the Quarterly Census of Employment and Wages, as reported by the Department of Employment and Economic Development, for the most recent calendar year available as of January 1 of the year in which the aid is calculated, divided by (2) the city's population for the same calendar year as the employment data.

EFFECTIVE DATE. This section is effective for aids payable in calendar year 2009 and thereafter.

Sec. 5. Minnesota Statutes 2006, section 477A.0124, subdivision 5, is amended to read:

Subd. 5. County transition aid. (a) ~~For 2005, a county is eligible for transition aid equal to the amount, if any, by which:~~

~~(1) the difference between:~~

~~(i) the aid the county received under subdivision 1 in 2004, divided by the total aid paid to all counties under subdivision 1, multiplied by $205,000,000; and~~

~~(ii) the amount of aid the county is certified to receive in 2005 under subdivisions 3 and 4;~~

~~exceeds:~~

~~(2) three percent of the county's adjusted net tax capacity.~~

~~A county's aid under this paragraph may not be less than zero.~~

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~~(b) In 2006, a county is eligible to receive two-thirds of the transition aid it received in 2005.~~

~~(c) In 2007,~~ For 2009 and each year thereafter, a county is eligible to receive ~~one-third of~~ the transition aid it received in ~~2005~~ 2007.

~~(d) No county shall receive aid under this subdivision after 2007.~~

(b) In 2009 only, a county with (1) a 2006 population less than 30,000, and (2) an average Part I crimes per capita greater than 3.9 percent based on factors used in determining county program aid payable in 2008, shall receive $100,000.

(c) For aids payable in 2009, 2010, and 2011 only, $250,000 each year shall be distributed to any county in which (1) the 2006 estimated population exceeds 30,000, and (2) the 2006 percentage of households receiving food stamps exceeds 15 percent, based on data used in computing county program aids for aids payable in 2008 and the 2006 estimated household count according to the state demographer. The aid must be used to meet the county's cost of out-of-home placement programs.

EFFECTIVE DATE. This section is effective for aids payable in 2009 and thereafter.

Sec. 6. Minnesota Statutes 2006, section 477A.013, subdivision 1, is amended to read:

Subdivision 1. Towns. ~~In 2002, no~~ In calendar year 2009 and subsequent years, each organized town is eligible for a distribution under this subdivision equal to $100 plus the product of the town aid factor multiplied by its population. Each county with one or more unorganized townships shall receive $100 plus the product of the town aid factor multiplied by the total population in all unorganized townships in the county.

The "town aid factor" is the same for all towns and must be calculated by the Department of Revenue so that the total aid under this subdivision equals the total amount available for aid under section 477A.03.

EFFECTIVE DATE. This section is effective for aids payable in calendar year 2009 and thereafter.

Sec. 7. Minnesota Statutes 2006, section 477A.013, subdivision 8, as amended by Laws 2008, chapter 154, article 1, section 2, is amended to read:

Subd. 8. City formula aid. In calendar year ~~2004~~ 2009 and subsequent years, the formula aid for a city is equal to the sum of (1) its city jobs base, (2) its small city aid base, and (3) the need increase percentage multiplied by the difference between ~~(1)~~ (i) the city's revenue need multiplied by its population, and ~~(2)~~ (ii) the sum of the city's net tax capacity multiplied by the tax effort rate.

No city may have a formula aid amount less than zero. The need increase percentage must be the same for all cities.

The applicable need increase percentage must be calculated by the Department of Revenue so that the total of the aid under subdivision 9 equals the total amount available for aid under section 477A.03 ~~after the subtraction under section 477A.014, subdivisions 4 and 5~~. For aids payable in 2009 only, a city's revenue need, population, net tax capacity, and tax effort rate will be based on the data available for calculating these factors for aids payable in 2008.

EFFECTIVE DATE. This section is effective for aids payable in calendar year 2009 and thereafter.

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Sec. 8. Minnesota Statutes 2006, section 477A.013, subdivision 9, as amended by Laws 2008, chapter 154, article 1, section 3, is amended to read:

Subd. 9. City aid distribution. (a) In calendar year 2009 and thereafter, each city shall receive an aid distribution equal to the sum of (1) the city formula aid under subdivision 8, and (2) its city aid base~~, and (3) one-half of the difference between its total aid in the previous year under this subdivision and its city aid base in the previous year~~.

(b) For aids payable in 2010 and thereafter, each city shall receive an aid distribution equal to (1) the city aid formula under subdivision 8, (2) its city aid base, and (3) its formula aid under subdivision 8 in the previous year, prior to any adjustments under this subdivision 2009 only, the total aid for any city shall not exceed the sum of (1) 40 percent of the city's net levy for the year prior to the aid distribution, plus (2) its total aid in the previous year.

(c) For aids payable in ~~2009~~ 2010 and thereafter, the total aid for any city shall not exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total aid for any city with a population of 2,500 or more may not be less than its total aid under this section in the previous year minus the lesser of $15 multiplied by its population, or ten percent of its net levy in the year prior to the aid distribution.

(d) For aids payable in ~~2009~~ 2010 and thereafter, the total aid for a city with a population less than 2,500 must not be less than the amount it was certified to receive in the previous year minus the lesser of $15 multiplied by its population, or five percent of its 2003 certified aid amount. For aids payable in 2009 only the total aid for a city with a population less than 2,500 must not be less than what it received under this section in the previous year unless its total aid in calendar year 2008 was aid under section 477A.011, subdivision 36, paragraph (s), in which case its minimum aid is zero.

(e) If a city's net tax capacity used in calculating aid under this section has decreased in any year by more than 25 percent from its net tax capacity in the previous year due to property becoming tax-exempt Indian land, the city's maximum allowed aid increase under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease resulting from the property becoming tax exempt.

EFFECTIVE DATE. This section is effective for aids payable in calendar year 2009 and thereafter.

Sec. 9. Minnesota Statutes 2006, section 477A.03, is amended to read:

477A.03 APPROPRIATION.

Subd. 2. Annual appropriation. A sum sufficient to discharge the duties imposed by sections 477A.011 to 477A.014 is annually appropriated from the general fund to the commissioner of revenue.

Subd. 2a. Cities. For aids payable in ~~2004~~ 2009 and thereafter, the total ~~aids~~ aid paid under section 477A.013, subdivision 9, ~~are limited to $429,000,000~~ is $534,148,487. For aids payable in 2005, the total aids paid under section 477A.013, subdivision 9, are limited to $437,052,000. For aids payable in 2006 and thereafter, the total aids paid under section 477A.013, subdivision 9, is limited to $485,052,000 2009 only, an additional $1,000,000 shall be retained by the commissioner and used to make payments under section 10.

Subd. 2b. Counties. (a) ~~For aids payable in calendar year 2005 and thereafter, the total aids paid to counties under section 477A.0124, subdivision 3, are limited to $100,500,000.~~ For aids payable in 2009 and thereafter, the total aid payable under section 477A.0124, subdivision 3, is $110,500,000 minus one-half of the total aid amount determined under section 477A.0124, subdivision 5, paragraph (a). Each calendar year, $500,000 shall be retained

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by the commissioner of revenue to make reimbursements to the commissioner of finance for payments made under section 611.27. For calendar year 2004, the amount shall be in addition to the payments authorized under section 477A.0124, subdivision 1. For calendar year 2005 and subsequent years, the amount shall be deducted from the appropriation under this paragraph. The reimbursements shall be to defray the additional costs associated with court-ordered counsel under section 611.27. Any retained amounts not used for reimbursement in a year shall be included in the next distribution of county need aid that is certified to the county auditors for the purpose of property tax reduction for the next taxes payable year.

(b) For aids payable in ~~2005~~ 2009 and thereafter, the total ~~aids~~ aid under section 477A.0124, subdivision 4, ~~are limited to $105,000,000~~ is $115,132,923 minus one-half of the total aid amount determined under section 477A.0124, subdivision 5, paragraph (a). ~~For aids payable in 2006 and thereafter, the total aid under section 477A.0124, subdivision 4, is limited to $105,132,923.~~ The commissioner of finance shall bill the commissioner of revenue for the cost of preparation of local impact notes as required by section 3.987, not to exceed $207,000 in fiscal year 2004 and thereafter. The commissioner of education shall bill the commissioner of revenue for the cost of preparation of local impact notes for school districts as required by section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner of revenue shall deduct the amounts billed under this paragraph from the appropriation under this paragraph. The amounts deducted are appropriated to the commissioner of finance and the commissioner of education for the preparation of local impact notes.

Subd. 2c. Towns. For aids payable in 2009 and thereafter, the total aid under section 477A.013, subdivision 1, is $3,000,000.

EFFECTIVE DATE. This section is effective for aids payable in calendar year 2009 and thereafter.

Sec. 10. CITY FORECLOSURE GRANTS.

For calendar 2009 only, a city with a concentration of foreclosures within the city or within a zip code area of a city in calendar year 2007 may receive a grant under this section. A "concentration of foreclosures" means that the percent of housing in foreclosure within the area is at least 50 percent higher than the average percent of housing in foreclosure in the metropolitan area, as defined in Minnesota Statutes, section 473.121, subdivision 2. The city must apply to the commissioner of revenue by December 30, 2008, on the form prescribed by the commissioner. The grant will be paid with other aids paid in calendar year 2009, as prescribed in Minnesota Statutes, section 477A.015.

The commissioner of revenue shall consult with the commissioner of the Housing Finance Agency to develop a form for cities to use when applying for grants under this section and to determine whether applications qualify. The appropriation for the grants under Minnesota Statutes, section 477A.03, shall be divided between successful applicants based on the number of foreclosures in the area meeting the concentration criteria. No city may receive a grant of more than $250,000. All decisions by the commissioner regarding grant qualification and amount shall be final. The grant must be used to fund inspection and public safety costs associated with housing foreclosures.

EFFECTIVE DATE. This section is effective for grants made in calendar year 2009.

Sec. 11. STUDY OF AIDS TO LOCAL GOVERNMENTS.

The chairs of the senate and house of representatives committees with jurisdiction over taxes shall each appoint five members to a study group of the tax committees to examine the current system of aids to local governments and make recommendations on improvements to the system. Of the five members appointed by each chair, two must be members of the tax committee, one of whom is a majority party member and one of whom is a minority party member. The remaining members must represent local units of government. The chairs of the divisions of the tax committees having jurisdiction over property taxes shall also be members and shall serve as cochairs of the study group. The study shall include, but not be limited to, consideration of existing disparities in the distribution of local

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government aid, the relationship of need for city aid to other sources of revenue such as local sales taxes, an analysis of current law need and capacity factors as well as alternative need factors, alternative analytical methods for determining correlations between factors and need, the formula used to calculate aid for small cities, and volatility in the local government aid distribution. The group must report on its specific recommendations to the legislature by December 15, 2010.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 12. REPEALER.

Minnesota Statutes 2006, section 477A.014, subdivision 5, and Minnesota Statutes 2007 Supplement, section 477A.014, subdivision 4, are repealed.

EFFECTIVE DATE. This section is effective for aid payable in 2009 and thereafter.

ARTICLE 3

INCOME AND ESTATE TAXES

Section 1. Minnesota Statutes 2006, section 270C.56, subdivision 3, is amended to read:

Subd. 3. Procedure for assessment. The commissioner may assess liability for the taxes described in subdivision 1 against a person liable under this section. The assessment may be based upon information available to the commissioner. It must be made within the prescribed period of limitations for assessing the underlying tax, or within one year after the date of an order assessing underlying tax, whichever period expires later. An order assessing personal liability under this section is reviewable under section 270C.35 and is appealable to Tax Court. If any portion of the liability shown on the order is paid after the time for appealing the order has expired, a claim for refund may be made, but only if filed within 120 days after the first payment of the liability.

If a person has been assessed under this section for an amount for a given period and the time for appeal has expired or there has been a final determination that the person is liable, collection action is not stayed pursuant to section 270C.33, subdivision 5, for subsequent assessments of additional amounts for the same person for the same period and tax type.

EFFECTIVE DATE. This section is effective for orders issued on or after the day following final enactment.

Sec. 2. Minnesota Statutes 2006, section 289A.19, subdivision 2, is amended to read:

Subd. 2. Corporate franchise and mining company taxes. Corporations or mining companies shall receive an extension of seven months or the amount of time granted by the Internal Revenue Service, whichever is longer, for filing the return of a corporation subject to tax under chapter 290 or for filing the return of a mining company subject to tax under sections 298.01 and 298.015. Interest on any balance of tax not paid when the regularly required return is due must be paid at the rate specified in section 270C.40, from the date such payment should have been made if no extension was granted, until the date of payment of such tax.

If a corporation or mining company does not:

(1) pay at least 90 percent of the amount of tax shown on the return on or before the regular due date of the return, the penalty prescribed by section 289A.60, subdivision 1, shall be imposed on the unpaid balance of tax; or

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(2) pay the balance due shown on the regularly required return on or before the extended due date of the return, the penalty prescribed by section 289A.60, subdivision 1, shall be imposed on the unpaid balance of tax from the original due date of the return.

EFFECTIVE DATE. This section is effective the day following final enactment and applies to any federal extension that allows filing after that date.

Sec. 3. Minnesota Statutes 2006, section 289A.19, is amended by adding a subdivision to read:

Subd. 7. Federal extensions. When an extension of time to file a partnership or S corporation tax return is granted by the Internal Revenue Service, the commissioner shall grant an automatic extension to file the comparable Minnesota return for that period. An extension granted under this subdivision does not affect the due date for making payments of tax.

EFFECTIVE DATE. This section is effective the day following final enactment and applies to any federal extension that allows filing after that date.

Sec. 4. Minnesota Statutes 2006, section 289A.40, subdivision 1, is amended to read:

Subdivision 1. Time limit; generally. Unless otherwise provided in this chapter, a claim for a refund of an overpayment of state tax must be filed within the latest of the following time periods that apply:

(1) 3-1/2 years from the date prescribed for filing the return, plus any extension of time granted for filing the return, but only if filed within the extended time,; or

(2) one year from the date of an order assessing tax under section 270C.33 or an order determining an appeal under section 270C.35, subdivision 8, or one year from the date of a return made by the commissioner under section 270C.33, subdivision 3, upon payment in full of the tax, penalties, and interest shown on the order or return made by the commissioner~~, whichever period expires later~~. Claims for refund, except for taxes under chapter 297A, filed after the 3-1/2 year period but within the one-year period are limited to the amount of the tax, penalties, and interest on the order or return made by the commissioner and to issues determined by the order or return made by the commissioner. In the case of assessments under section 289A.38, subdivision 5 or 6, claims for refund under chapter 297A filed after the 3-1/2 year period but within the one-year period are limited to the amount of the tax, penalties, and interest on the order or return made by the commissioner that are due for the period before the 3-1/2 year period.; or

(3) 120 days after the first payment of any portion of a tax liability shown on a return made by the commissioner under section 270C.33, subdivision 3, or shown on an order of assessment where no return has been filed under section 270C.33, subdivision 4, paragraph (a), clause (2). Claims for refund filed after the 3-1/2 year period and the one-year period but within the 120-day period are limited to the amount paid during the 120-day period. This clause does not apply to returns or orders which have previously been the subject of a denied claim for refund or an administrative appeal.

EFFECTIVE DATE. The right to file a claim for refund under this section is effective July 1, 2008. For claims filed before October 31, 2008, this section is effective retroactively to payments made after December 31, 2007.

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Sec. 5. Minnesota Statutes 2006, section 290.01, subdivision 29, is amended to read:

Subd. 29. Taxable income. The term "taxable income" means:

(1) for individuals, estates, and trusts, the same as taxable net income;

(2) for corporations, the taxable net income less

(i) the net operating loss deduction under section 290.095;

(ii) the dividends received deduction under section 290.21, subdivision 4;

(iii) the exemption for operating in a job opportunity building zone under section 469.317;

(iv) the exemption for operating in a biotechnology and health sciences industry zone under section 469.337; and

(v) the exemption for operating in an international economic development zone under section 469.326; plus

(vi) Minnesota development subsidies.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2008.

Sec. 6. Minnesota Statutes 2006, section 290.01, is amended by adding a subdivision to read:

Subd. 33. Minnesota development subsidies. (a) "Minnesota development subsidies" means the greater of the following amounts:

(1) one-half of the amount deducted by the taxpayer in computing federal taxable income for the taxable year, as property taxes, business expenses or otherwise, that is attributable to property taxes paid by the taxpayer, either directly or indirectly through a lease or otherwise, on property located in a tax increment financing district, as defined in section 469.174, or that receives an abatement under sections 469.1813 to 469.1815, if the owner of the property or a related party has entered a development or similar agreement with respect to the increment district or derives a benefit from the abatement by its property having access to or use of public improvements financed with the abatement or otherwise; or

(2) the amount of payments received by the taxpayer under a development or similar agreement that provides for payments or reimbursements from the proceeds of increments from a tax increment financing district or from an abatement under sections 469.1813 to 469.1815, but excluding reimbursements under a development action response plan, as defined in section 469.174, subdivision 17, to pay for its costs incurred to fund removal or remedial actions.

(b) For purposes of this subdivision, "tax increment financing district" excludes:

(1) a housing district, as defined in section 469.174, subdivision 11;

(2) a soils condition district, as defined in section 469.174, subdivision 19; and

(3) a hazardous substance subdistrict, as defined in section 469.174, subdivision 23.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2008.

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Sec. 7. Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision to read:

Subd. 35. Investment tax credit. (a) A credit is allowed against the tax imposed by this chapter for a qualified taxpayer's investment in a qualified new business venture. The credit equals 25 percent of the taxpayer's investment made in the business, but may not exceed the least of:

(1) the liability for tax under this chapter, including the alternative minimum taxes in sections 290.091 and 290.0921;

(2) $25,000 for an individual not part of a partnership; or

(3) $300,000 for a pass-through entity or C corporation.

(b) For purposes of this subdivision, "qualified taxpayer" means:

(1) an accredited investor within the meaning of Regulation D of the Securities and Exchange Commission, Code of Federal Regulations, title 17, section 230.501(a), whether part of a pass-through entity or not; and

(2) an accredited investor who does not own, control, or hold power to vote 20 percent or more of the outstanding securities of the qualified business venture in which the eligible investment is proposed.

(c) For purposes of this paragraph, "commissioner" means the commissioner of employment and economic development. Qualified taxpayers must apply to the commissioner for certification. The application must be in the form and made under the procedures specified by the commissioner. The commissioner may provide certificates entitling qualified taxpayers to tax credits under this subdivision. The maximum amount of credits for which the commissioner may issue certificates in each taxable year is $2,000,000 for qualified business ventures in a qualified high technology field, as defined in paragraph (g), $2,000,000 for qualified business ventures in biotechnology and medical devices, as defined in paragraph (h), and $2,000,000 for qualified business ventures in qualified green manufacturing, as defined in paragraph (i). In awarding certificates under this paragraph, the commissioner must award them to qualified taxpayers in the order in which the applications are received in each of the categories.

(d) Each pass-through entity must provide each investor a statement indicating the investor's share of the credit amount certified to the pass-through entity under paragraph (c) based on its share of the pass-through entity's assets. The credit shall not exceed $25,000 for each individual part of a pass-through entity.

(e) If the amount of the credit under this subdivision in any taxable year exceeds the limitation under paragraph (a), clause (1), the excess is a credit carryover to each of the ten succeeding years but may not exceed $25,000 for an individual not part of a partnership and $300,000 for a pass-through entity or C corporation. The entire amount of the excess unused credit must be carried first to the earliest of the taxable years to which the credit may be carried, and then to each successive year to which the credit may be carried. The amount of the unused credit that may be added under this paragraph may not exceed the taxpayer's liability for tax less the credit for the taxable year.

(f) Unless otherwise provided under the rules of the Department of Employment and Economic Development, a business is a qualified business venture for purposes of this subdivision only if the business satisfies all of the following conditions:

(1) the business has its headquarters in Minnesota;

(2) at least 51 percent of the business's employees are employed in Minnesota;

(3) the business is engaged in, or is committed to engage in:

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(i) using advanced technology to add value to a product, process, or service in a qualified high technology field or qualified biotechnology or medical device field;

(ii) conducting research in and development of a product, process, or service in a qualified high technology field or qualified biotechnology or medical device field; or

(iii) developing a new product, process, or service in a qualified high technology field or qualified biotechnology or medical device field;

(4) the business is not engaged in real estate development, insurance, banking, lending, lobbying, political consulting, information technology consulting, wholesale or retail trade, leisure, hospitality, transportation, construction, ethanol production from corn, or professional services provided by attorneys, accountants, business consultants, physicians, or health care consultants;

(5) the business has fewer than 25 employees;

(6) the business has not been in operation for more than ten consecutive years;

(7) the business has not received more than $1,000,000 in investments that have qualified for and received tax credits under this section;

(8) the business has less than $1,000,000 in annual gross sales receipts;

(9) the business is not a subsidiary or an affiliate of a business that employs more than 100 employees or has gross sales receipts for the previous year of more than $1,000,000, computed by aggregating all of the employees and gross sales receipts of the business entities affiliated with the business; and

(10) the business has not received private equity investments of more than $2,000,000.

(g) For purposes of this subdivision, "qualified high technology field" includes, but is not limited to, aerospace, agricultural processing, alternative energy, environmental engineering, food technology, cellulosic ethanol, information technology, green manufacturing, materials science technology, nanotechnology, and telecommunications, but excludes business qualifying under the definitions in paragraphs (h) and (i).

(h) For purposes of this subdivision, "qualified biotechnology or medical device field" means the business of manufacturing, processing, assembling, researching or developing biotechnology or medical device products, including biotechnology and device products used in agriculture.

(i) For purposes of this subdivision, "qualified green manufacturing" means a business whose primary business activity is production of products, processes, methods, technologies, or services intended to do one or more of the following:

(1) to increase the use of energy from renewable sources, as defined in section 216B.1691;

(2) to increase the energy efficiency of the electric utility infrastructure system or to increase energy conservation related to electricity use, as provided in sections 216B.2401 and 216B.241;

(3) to reduce greenhouse gas emissions, as defined in section 216H.01, subdivision 2, or to mitigate greenhouse gas emissions through, but not limited to, carbon capture, storage, or sequestration;

(4) to monitor, protect, restore, and preserve the quality of surface waters; and

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(5) to expand use of biofuels, including expanding the feasibility or reducing the cost of producing biofuels or the types of equipment, machinery, and vehicles that can use biofuels.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2007.

Sec. 8. Minnesota Statutes 2006, section 290.068, subdivision 1, is amended to read:

Subdivision 1. Credit allowed. A corporation, other than a corporation treated as an "S" corporation under section 290.9725, is allowed a credit against the portion of the franchise tax computed under section 290.06, subdivision 1, for the taxable year equal to:

(a) 5 3 percent of the first $2,000,000 of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount; and

(b) ~~2.5~~ 1.5 percent on all of such excess expenses over $2,000,000.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2007.

Sec. 9. Minnesota Statutes 2006, section 290.068, subdivision 3, is amended to read:

Subd. 3. Limitation; carryover. (a)(1) The credit, other than the special credit under subdivision 7, for the taxable year shall not exceed the liability for tax. "Liability for tax" for purposes of this section means the tax imposed under this chapter for the taxable year reduced by the sum of the nonrefundable credits allowed under this chapter.

(2) In the case of a corporation which is a partner in a partnership, the credit, other than the special credit under subdivision 7, allowed for the taxable year shall not exceed the lesser of the amount determined under clause (1) for the taxable year or an amount (separately computed with respect to the corporation's interest in the trade or business or entity) equal to the amount of tax attributable to that portion of taxable income which is allocable or apportionable to the corporation's interest in the trade or business or entity.

(b) If the amount of the credit determined under this section, other than the special credit under subdivision 7, for any taxable year exceeds the limitation under clause (a), the excess shall be a research credit carryover to each of the 15 succeeding taxable years. The entire amount of the excess unused credit for the taxable year shall be carried first to the earliest of the taxable years to which the credit may be carried and then to each successive year to which the credit may be carried. The amount of the unused credit which may be added under this clause shall not exceed the taxpayer's liability for tax less the research credit for the taxable year.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2007.

Sec. 10. Minnesota Statutes 2006, section 290.068, is amended by adding a subdivision to read:

Subd. 7. Special credit; small businesses. (a) A qualified business is allowed a tax credit equal to 20 percent of qualified research expenditures incurred for the taxable year or the amount of tax credit certificates issued under paragraph (e), whichever is less.

(b) For purposes of this subdivision and subdivision 8, a "qualified business" is a corporation, individual, or partnership that:

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(1) had no more than 25 full-time equivalent employees in this state during the preceding taxable year; and

(2) is engaged in or is committed to engage in a qualified high technology field.

(c) For purposes of applying the requirement under paragraph (b), clause (1), all of the employees of the unitary business, as that term is used in section 290.17, subdivision 4, must be taken into account and "full-time equivalent" has the meaning given in section 469.318, subdivision 2.

(d) For purposes of this subdivision, "qualified high technology field" includes but is not limited to aerospace, agricultural processing, alternative energy, biotechnology, defense, drug delivery, environmental engineering, food technology, cellulosic ethanol, information technology, green manufacturing, materials science technology, medical devices, nanotechnology, pharmaceutical technology, and telecommunications. Unless otherwise provided under the rules of the Department of Employment and Economic Development, a business is a qualified business venture for purposes of this subdivision only if the business satisfies all of the following conditions:

(1) the business has its headquarters in Minnesota;

(2) at least 51 percent of the business's employees are employed in Minnesota;

(3) the business is engaged in, or is committed to engage in:

(i) using advanced technology to add value to a product, process, or service in a qualified high technology field;

(ii) conducting research in and development of a product, process, or service in a qualified high technology field; or

(iii) developing a new product, process, or service in a qualified high technology field;

(5) the business has not been in operation for more than ten consecutive years; and

(6) the business had less than $1,000,000 in annual gross sales receipts in the preceding taxable year.

(e) For purposes of this paragraph, "commissioner" means the commissioner of employment and economic development. Qualified businesses must apply to the commissioner for certification. The application must be in the form and made under the procedures specified by the commissioner. The commissioner may provide certificates entitling qualified taxpayers to tax credits under this subdivision. The maximum amount of credits for which the commissioner may issue certificates in each taxable year is $3,000,000. In awarding certificates under this paragraph, the commissioner must award them to qualified taxpayers in the order in which the applications are received.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2007.

Sec. 11. Minnesota Statutes 2006, section 290.068, is amended by adding a subdivision to read:

Subd. 8. Special credit; appropriation. (a) If the amount of the special credit under subdivision 7 for any taxable year exceeds the liability for tax, the commissioner shall refund the excess to the taxpayer.

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(b) An amount sufficient to pay the refunds required by this subdivision is annually appropriated to the commissioner of revenue from the general fund.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2007.

Sec. 12. Minnesota Statutes 2006, section 290.091, subdivision 2, as amended by Laws 2008, chapter 154, article 4, section 7, is amended to read:

Subd. 2. Definitions. For purposes of the tax imposed by this section, the following terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section 55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code:;

~~(A) for taxable years beginning before January 1, 2006, to the extent that the deduction exceeds 1.0 percent of adjusted gross income;~~

~~(B) for taxable years beginning after December 31, 2005, to the full extent of the deduction.~~

~~For purposes of this clause, "adjusted gross income" has the meaning given in section 62 of the Internal Revenue Code;~~

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue Code, with respect to each property (as defined in section 614 of the Internal Revenue Code), to the extent not included in federal alternative minimum taxable income, the excess of the deduction for depletion allowable under section 611 of the Internal Revenue Code for the taxable year over the adjusted basis of the property at the end of the taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7) to (9), (11), and (12);

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less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision 19b, clause (2), to the extent included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued within the taxable year on indebtedness to the extent that the amount does not exceed net investment income, as defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted in computing federal adjusted gross income; and

(4) amounts subtracted from federal taxable income as provided by section 290.01, subdivision 19b, clauses (6) and (9) to (16).

In the case of an estate or trust, alternative minimum taxable income must be computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of the Internal Revenue Code.

(c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable income after subtracting the exemption amount determined under subdivision 3.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed under this chapter.

(e) "Net minimum tax" means the minimum tax imposed by this section.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2007.

Sec. 13. Minnesota Statutes 2006, section 290.92, subdivision 1, is amended to read:

Subdivision 1. Definitions. (1) Wages. For purposes of this section, the term "wages" means the same as that term is defined in section 3401(a) and (f) of the Internal Revenue Code, except that provisions of section 530 of Public Law 95-600, as amended, do not apply.

(2) Payroll period. For purposes of this section the term "payroll period" means a period for which a payment of wages is ordinarily made to the employee by the employee's employer, and the term "miscellaneous payroll period" means a payroll period other than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll period.

(3) Employee. For purposes of this section the term "employee" means any resident individual performing services for an employer, either within or without, or both within and without the state of Minnesota, and every nonresident individual performing services within the state of Minnesota, the performance of which services constitute, establish, and determine the relationship between the parties as that of employer and employee. As used in the preceding sentence, the term "employee" includes an officer of a corporation, and an officer, employee, or elected official of the United States, a state, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing.

(4) Employer. For purposes of this section the term "employer" means any person, including individuals, fiduciaries, estates, trusts, partnerships, limited liability companies, and corporations transacting business in or deriving any income from sources within the state of Minnesota for whom an individual performs or performed any

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service, of whatever nature, as the employee of such person, except that if the person for whom the individual performs or performed the services does not have control of the payment of the wages for such services, the term "employer," except for purposes of paragraph (1), means the person having control of the payment of such wages. As used in the preceding sentence, the term "employer" includes any corporation, individual, estate, trust, or organization which is exempt from taxation under section 290.05 and further includes, but is not limited to, officers of corporations who have control, either individually or jointly with another or others, of the payment of the wages.

(5) Number of withholding exemptions claimed. For purposes of this section, the term "number of withholding exemptions claimed" means the number of withholding exemptions claimed in a withholding exemption certificate in effect under subdivision 5, except that if no such certificate is in effect, the number of withholding exemptions claimed shall be considered to be zero.

EFFECTIVE DATE. This section is effective for wages paid after December 31, 2008.

Sec. 14. Minnesota Statutes 2006, section 291.03, subdivision 1, is amended to read:

Subdivision 1. Tax amount. The tax imposed shall be an amount equal to the proportion of the maximum credit for state death taxes computed under section 2011 of the Internal Revenue Code, as amended through December 31, 2000, but using Minnesota adjusted taxable estate instead of federal adjusted taxable estate, as the Minnesota gross estate bears to the value of the federal gross estate. The tax determined under this paragraph shall not be greater than the amount computed by applying the rates and brackets under section 2001(c) of the Internal Revenue Code to the sum of the Minnesota adjusted ~~gross~~ taxable estate and ~~subtracting~~ adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue Code, and then subtracting the federal credit allowed under section 2010 of the Internal Revenue Code of 1986, as amended through December 31, 2000. For the purposes of this section, expenses which are deducted for federal income tax purposes under section 642(g) of the Internal Revenue Code as amended through December 31, 2002, are not allowable in computing the tax under this chapter.

EFFECTIVE DATE. This section is effective retroactively as a clarification and applies to estates of decedents dying after December 31, 2005.

Sec. 15. REPEALER.

Minnesota Statutes 2006, section 290.191, subdivision 4, is repealed.

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2008.

ARTICLE 4

LOCAL DEVELOPMENT

Section 1. [116J.8732] SEED CAPITAL INVESTMENT CREDIT; COMMISSIONER'S RESPONSIBILITIES.

Subdivision 1. Scope. This section establishes rules that businesses must satisfy to qualify for the seed capital investment credit under section 290.06, subdivision 34, and the commissioner's responsibility for certifying the qualifying businesses.

Subd. 2. Definitions. (a) For purposes of this section and section 290.06, subdivision 34, the following terms have the meanings given.

(b) "Border city" means a city qualifying to designate a border city development zone under section 469.1731.

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(c) "Pass-through entity" means a corporation that for the applicable tax year is treated as an S corporation or a general partnership, limited partnership, limited liability partnership, trust, or limited liability company and which for the applicable taxable year is not taxed as a corporation under chapter 290.

(d) "Primary sector business" means a qualified business that through the employment of knowledge or labor adds value to a product, process, or service and increases revenues to a Minnesota business generated by sales of products or services to customers outside of the state or increases revenues to a qualified business the customers of which previously were unable to acquire, or had limited availability of the product or service from a Minnesota provider.

(e) "Qualified business" means a business certified by the commissioner as meeting the requirements of subdivision 3.

Subd. 3. Qualified business. (a) The commissioner shall certify whether a business that has requested to become a qualified business meets the requirements of paragraph (b).

(b) For purposes of this section, a qualified business must be a primary sector business, other than a real estate investment trust, that:

(1) is incorporated or its satellite operation is incorporated as a for-profit corporation or is a partnership, limited partnership, limited liability company, limited liability partnership, or joint venture;

(2) is in compliance with the requirements for filings with the commissioner of commerce under the securities laws of this state;

(3) has Minnesota residents as a majority of its employees in its principal office or the satellite operation, which is located in a border city;

(4) has its principal office in a border city and has the majority of its business activity performed in a border city, except sales activity, or has a significant operation in a border city that has or is projected to have more than ten employees or $150,000 of sales annually; and

(5) relies on innovation, research, or the development of new products and processes in its plans for growth and profitability.

(d) A qualified business may apply to the commissioner for a recertification. Only one recertification is available to a qualified business. The application for recertification must be filed with the commissioner within 90 days before the original certification expiration date. The recertification issued by the director must comply with the provisions of paragraph (e).

(e) The commissioner shall issue a certification letter to a business the commissioner determines is a qualified business. The certification letter must include:

(1) the certification effective date; and

(2) the certification expiration date, which may not be more than four years from the certification effective date.

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Subd. 4. Seed capital investment credit reporting. Within 30 days after the date that an investment in a qualified business is purchased, the qualified business shall file with the commissioner and the commissioner of revenue and provide to the investor completed forms prescribed by the commissioner of revenue that show as to each investment in the qualified business the following:

(1) the name, address, and Social Security number of the taxpayer who made the investment; and

(2) the dollar amount paid for the investment by the taxpayer.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 2. Minnesota Statutes 2006, section 216B.1612, is amended by adding a subdivision to read:

Subd. 9. Local government and political subdivision powers. A Minnesota political subdivision or local government may plan, develop, purchase, acquire, construct, and own a C-BED project and may sell output from that project as provided for in this section. A Minnesota political subdivision or local government may operate, maintain, improve, and expand the C-BED project subject to any restrictions in this section.

Sec. 3. [216F.09] COUNTY; WIND ENERGY CONVERSION SYSTEM.

A county may own, construct, acquire, purchase, issue bonds and certificates of indebtedness for, maintain, and operate a wind energy conversion system, or a portion of a wind energy conversion system. A county may purchase and sell electricity from a wind energy conversion system only at wholesale on terms and conditions as the county board deems is in the best interests of the public. With respect to any wind energy conversion system, or any portion of a wind energy conversion system, a county may exercise the powers granted to a municipal power agency and to a city under sections 453.52, subdivisions 1, 6, and 9; 453.54, subdivision 10; 453.58, subdivision 4; and 453.59, except that output from that wind energy conversion system may not be sold, transmitted, or distributed at retail, or provided for end use from an offsite facility by the county. A county's onsite generation authorized under this subdivision is limited to a total of ten megawatts. Nothing in this section modifies the exclusive service territories or exclusive right to serve as provided in sections 216B.37 to 216B.43.

Sec. 4. Minnesota Statutes 2007 Supplement, section 268.19, subdivision 1, is amended to read:

Subdivision 1. Use of data. (a) Except as provided by this section, data gathered from any person under the administration of the Minnesota Unemployment Insurance Law are private data on individuals or nonpublic data not on individuals as defined in section 13.02, subdivisions 9 and 12, and may not be disclosed except according to a district court order or section 13.05. A subpoena is not considered a district court order. These data may be disseminated to and used by the following agencies without the consent of the subject of the data:

(1) state and federal agencies specifically authorized access to the data by state or federal law;

(2) any agency of any other state or any federal agency charged with the administration of an unemployment insurance program;

(3) any agency responsible for the maintenance of a system of public employment offices for the purpose of assisting individuals in obtaining employment;

(4) the public authority responsible for child support in Minnesota or any other state in accordance with section 256.978;

(5) human rights agencies within Minnesota that have enforcement powers;

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(6) the Department of Revenue to the extent necessary for its duties under Minnesota laws;

(7) public and private agencies responsible for administering publicly financed assistance programs for the purpose of monitoring the eligibility of the program's recipients;

(8) the Department of Labor and Industry and the Division of Insurance Fraud Prevention in the Department of Commerce for uses consistent with the administration of their duties under Minnesota law;

(9) local and state welfare agencies for monitoring the eligibility of the data subject for assistance programs, or for any employment or training program administered by those agencies, whether alone, in combination with another welfare agency, or in conjunction with the department or to monitor and evaluate the statewide Minnesota family investment program by providing data on recipients and former recipients of food stamps or food support, cash assistance under chapter 256, 256D, 256J, or 256K, child care assistance under chapter 119B, or medical programs under chapter 256B, 256D, or 256L;

(10) local and state welfare agencies for the purpose of identifying employment, wages, and other information to assist in the collection of an overpayment debt in an assistance program;

(11) local, state, and federal law enforcement agencies for the purpose of ascertaining the last known address and employment location of an individual who is the subject of a criminal investigation;

(12) the United States Citizenship and Immigration Services has access to data on specific individuals and specific employers provided the specific individual or specific employer is the subject of an investigation by that agency;

(13) the Department of Health for the purposes of epidemiologic investigations; ~~and~~

(14) the Department of Corrections for the purpose of postconfinement employment tracking of individuals who had been committed to the custody of the commissioner of corrections.; and

(15) the state auditor to the extent necessary to conduct audits of job opportunity building zones as required under section 469.3201.

(b) Data on individuals and employers that are collected, maintained, or used by the department in an investigation under section 268.182 are confidential as to data on individuals and protected nonpublic data not on individuals as defined in section 13.02, subdivisions 3 and 13, and must not be disclosed except under statute or district court order or to a party named in a criminal proceeding, administrative or judicial, for preparation of a defense.

(c) Data gathered by the department in the administration of the Minnesota unemployment insurance program must not be made the subject or the basis for any suit in any civil proceedings, administrative or judicial, unless the action is initiated by the department.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 5. Minnesota Statutes 2006, section 270B.15, is amended to read:

270B.15 DISCLOSURE TO LEGISLATIVE AUDITOR AND STATE AUDITOR.

(a) Returns and return information must be disclosed to the legislative auditor to the extent necessary for the legislative auditor to carry out sections 3.97 to 3.979.

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(b) The commissioner must disclose return information, including the report required under section 289A.12, subdivision 15, to the state auditor to the extent necessary to conduct audits of job opportunity building zones as required under section 469.3201.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 6. Minnesota Statutes 2006, section 289A.12, is amended by adding a subdivision to read:

Subd. 15. Report of job opportunity zone benefits; penalty for failure to file report. (a) By October 15 of each year, every qualified business, as defined under section 469.310, subdivision 11, must file with the commissioner, on a form prescribed by the commissioner, a report listing the tax benefits under section 469.315 received by the business for the previous year.

(b) The commissioner shall send notice to each business that fails to timely submit the report required under paragraph (a). The notice shall demand that the business submit the report within 60 days. Where good cause exists, the commissioner may extend the period for submitting the report as long as a request for extension is filed by the business before the expiration of the 60-day period. The commissioner shall notify the commissioner of the Department of Employment and Economic Development and the appropriate job opportunity subzone administrator whenever notice is sent to a business under this paragraph.

(c) A business that fails to submit the report as required under paragraph (b) is no longer a qualified business under section 469.310, subdivision 11, and is subject to the repayment provisions of section 469.319.

EFFECTIVE DATE. This section is effective beginning with reports required to be filed October 15, 2008.

Sec. 7. Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision to read:

Subd. 34. Seed capital investment credit. (a) An individual, estate, or trust is allowed a credit against the tax imposed by this chapter for investments in a qualifying business certified under section 116J.8732, subdivision 3. The credit equals 45 percent of the amount invested by the taxpayer in qualified businesses during the taxable year. The credit must not exceed $112,500 for each taxable year.

(b) A pass-through entity that invests in a qualified business must be considered to be the taxpayer for purposes of the investment limitations in this subdivision and the amount of the credit allowed with respect to a pass-through entity's investment in a qualified business must be determined at the pass-through entity level. The amount of the total credit determined at the pass-through entity level must be allowed to the members in proportion to their respective interests in the pass-through entity.

(c) An investment made in a qualified business from the assets of a retirement plan is deemed to be the retirement plan participant's investment for the purpose of this subdivision if a separate account is maintained for the plan participant and the participant directly controls where the account assets are invested.

(d) The investment must be made on or after the certification effective date and must be at risk in the business to be eligible for the tax credit under this subdivision. An investment for which a credit is received under this subdivision must remain in the qualified business for at least three years. Investments placed in escrow do not qualify for the credit.

(e) The entire amount of an investment for which a credit is claimed under this subdivision must be expended by the qualified business for plant, equipment, research and development, marketing and sales activity, or working capital for the qualified business.

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(f) A taxpayer who owns a controlling interest in the qualified business or who receives more than 50 percent of the taxpayer's gross annual income from the qualified business is not entitled to a credit under this subdivision. A member of the immediate family of a taxpayer disqualified by this subdivision is not entitled to the credit under this subdivision. For purposes of this subdivision, "immediate family" means the taxpayer's spouse, parent, sibling, or child or the spouse of any such person.

(g) The commissioner may disallow any credit otherwise allowed under this subdivision if any representation by a business in the application for certification as a qualified business proves to be false or if the taxpayer or qualified business fails to satisfy any conditions under this subdivision or section 116J.8732 or any conditions consistent with those requirements otherwise determined by the commissioner. The commissioner has four years after the due date of the return or after the return was filed, whichever period expires later, to audit the credit and assess additional tax that may be found due to failure to comply with the provisions of this subdivision and section 116J.8732. The amount of any credit disallowed by the commissioner that reduced the taxpayer's income tax liability for any or all applicable tax years, plus penalty and interest as provided under chapter 289A, must be paid by the taxpayer.

(h) If the amount of the credit under this subdivision for any taxable year exceeds the limitations under paragraph (a), the excess is a credit carryover to each of the four succeeding taxable years. The entire amount of the excess unused credit for the taxable year must be carried first to the earliest of the taxable years to which the credit may be carried. The amount of the unused credit that may be added under this paragraph may not exceed the taxpayer's liability for tax, less the credit for the taxable year. Each year, the aggregate amount of seed capital investment tax credit allowed for investments under this subdivision is limited to allocations that a border city has available for tax reductions in border city enterprise zones under section 469.169. The city must annually notify the commissioner of the amount of its section 469.169 allocations that it wishes to use to provide credits under this paragraph and the commissioner, after verifying the available allocation, shall implement the limit under this paragraph. If investments in qualified businesses reported to the commissioner exceed the limit on credits for investments imposed by this subdivision, the credit must be allowed to taxpayers in the chronological order of their investments in qualified businesses as determined from the forms filed under section 116J.8732.

EFFECTIVE DATE. This section is effective July 1, 2008, for taxable years beginning after December 31, 2007, and only applies to investments made after the qualified business has been certified by the commissioner of employment and economic development.

Sec. 8. [373.48] FINANCING ENERGY PURCHASE CONTRACTS AND PARTICIPATION IN GENERATION AND TRANSMISSION PROJECTS.

Subdivision 1. Definitions. For the purpose of this section, "project" means a facility that generates electricity from renewable energy sources listed in section 216B.1691, subdivision 1, paragraph (a), clause (1).

Subd. 2. Energy purchase contracts; generation projects. A county may, for itself or in cooperation with other counties, enter into agreements for the purchase of electrical energy from one or more projects, and may enter into agreements with a utility for the purchase and sale of the electrical energy so purchased. Agreements may be for a term of one year to 20 years. A county may also acquire an ownership interest in a project and may enter into agreements for the purchase and sale of electrical energy produced. A county may not sell, transmit, or distribute the electrical energy at retail or provide for end use from an offsite facility by the county or counties of the electrical energy. A county's onsite generation authorized under this subdivision is limited to a total of ten megawatts. Nothing in this section modifies the exclusive service territories or exclusive right to serve as provided in sections 216B.37 to 216B.43. The energy to be purchased by a county under agreements entered into under this section and the energy produced by the county's interest in projects shall not in any year exceed the total amount of energy used by the county for its own facilities in the immediately preceding year, regardless of the source from which energy was obtained.

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Subd. 3. Joint purchase of energy and acquisition of generation projects; financing. A county may enter into agreements under section 471.59 with other counties for joint purchase of energy or joint acquisition of interests in projects. A county may annually levy an ad valorem tax for the purpose of paying the cost of energy purchased or acquiring interests in projects in an amount not exceeding 0.015 percent of the market value of taxable property in the county. A county that enters into a multiyear agreement for purchase of energy or acquires an interest in a project may finance the estimated cost of the energy to be purchased during the term of the agreement or the cost to the county of the interest in the project by the issuance of general obligation bonds of the county, provided that the annual debt service on all bonds issued under this section, together with the amounts to be paid by the county in any year for the purchase of energy under agreements entered into under this section, shall not exceed the amount of taxes authorized by this section. An agreement entered into under section 471.59 as provided by this section may provide that each county shall issue bonds to pay their respective shares of the cost of the projects, or that one of the counties shall issue bonds to pay the full costs of the project, and that the other participating counties shall levy the tax authorized under this subdivision and pledge the collections of the tax to the county that issues the bonds. Bonds issued under this section may be issued without an election and shall not constitute net debt of any participating county.

Sec. 9. Minnesota Statutes 2006, section 383E.20, is amended to read:

383E.20 BONDING FOR COUNTY LIBRARY BUILDINGS.

The Anoka County Board may, by resolution adopted by a four-sevenths vote, issue and sell general obligation bonds of the county in the manner provided in chapter 475 to acquire, better, and construct county library buildings. The bonds shall not be subject to the requirements of sections 475.57 to 475.59. The maturity years and amounts and interest rates of each series of bonds shall be fixed so that the maximum amount of principal and interest to become due in any year, on the bonds of that series and of all outstanding series issued by or for the purposes of libraries, shall not exceed an amount equal to ~~the lesser of (i)~~ .01 percent of the taxable market value of all taxable property in the county, excluding any taxable property taxed by any city for the support of any free public library~~, or (ii) $1,250,000~~. When the tax levy authorized in this section is collected, it shall be appropriated and credited to a debt service fund for the bonds. The tax levy for the debt service fund under section 475.61 shall be reduced by the amount available or reasonably anticipated to be available in the fund to make payments otherwise payable from the levy pursuant to section 475.61.

EFFECTIVE DATE. This section is effective the day after the governing body of Anoka County and its chief clerical officer timely complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Sec. 10. Minnesota Statutes 2006, section 469.033, subdivision 6, is amended to read:

Subd. 6. Operation area as taxing district, special tax. All of the territory included within the area of operation of any authority shall constitute a taxing district for the purpose of levying and collecting special benefit taxes as provided in this subdivision. All of the taxable property, both real and personal, within that taxing district shall be deemed to be benefited by projects to the extent of the special taxes levied under this subdivision. Subject to the consent by resolution of the governing body of the city in and for which it was created, an authority may levy a tax upon all taxable property within that taxing district. The tax shall be extended, spread, and included with and as a part of the general taxes for state, county, and municipal purposes by the county auditor, to be collected and enforced therewith, together with the penalty, interest, and costs. As the tax, including any penalties, interest, and costs, is collected by the county treasurer it shall be accumulated and kept in a separate fund to be known as the "housing and redevelopment project fund." The money in the fund shall be turned over to the authority at the same time and in the same manner that the tax collections for the city are turned over to the city, and shall be expended

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only for the purposes of sections 469.001 to 469.047. It shall be paid out upon vouchers signed by the chair of the authority or an authorized representative. The amount of the levy shall be an amount approved by the governing body of the city, but shall not exceed ~~0.0144~~ 0.02 percent of taxable market value ~~for the current levy year, notwithstanding section 273.032~~. The authority shall each year formulate and file a budget in accordance with the budget procedure of the city in the same manner as required of executive departments of the city or, if no budgets are required to be filed, by August 1. The amount of the tax levy for the following year shall be based on that budget.

EFFECTIVE DATE. This section is effective for property taxes payable in 2009.

Sec. 11. Minnesota Statutes 2006, section 469.177, is amended by adding a subdivision to read:

Subd. 13. Correction of errors. (a) If the county auditor, as a result of an error or mistake, decertifies a district, fails to certify a district, incorrectly certifies a district, or otherwise fails to correctly compute the amount of increment, the county auditor may undertake one or more of the following actions to correct the error or mistake:

(1) certify the original tax capacity of the affected parcels at the appropriate value for a later taxes payable year and extend the duration of the district, in whole or in part, to compensate;

(2) recertify the affected parcels and extend duration of the district, in whole or in part, to compensate;

(3) recertify or correct the original tax capacity rate for the district; or

(4) take other appropriate action so that the amount of increment compensates for or offsets the error or mistake and correctly reflects application of the law.

(b) At least 30 days before exercising authority under this subdivision, the county auditor must notify the authority and the municipality, in writing, of the intent to do so, including supporting information to describe reason for the proposed action. The authority and municipality may waive the time requirement of this paragraph. If the city or the authority objects before expiration of the 30-day period, the matter must be submitted to the commissioner of revenue for a decision or resolution of the dispute. The commissioner of revenue shall consult with the Office of the State Auditor before making a decision.

(c) The county auditor must notify the commissioner of revenue and the Office of the State Auditor of corrections made under this subdivision. The notification must be made in the form and manner and at the time prescribed by the commissioner. The commissioner shall incorporate the corrections in the tax increment financing district tax list supplement, as appropriate.

EFFECTIVE DATE. This section is effective the day following final enactment and applies to all tax increment financing districts, regardless of when the request for certification was made.

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Sec. 12. Minnesota Statutes 2006, section 469.312, is amended by adding a subdivision to read:

Subd. 6. Termination of designation of qualified business. No person will be deemed to be a qualified business eligible for the benefits provided in sections 469.310 to 469.320 unless the person has entered into a business subsidy agreement with a local government unit as provided in section 469.310, subdivision 11, prior to June 1, 2008.

Sec. 13. Minnesota Statutes 2006, section 469.319, is amended to read:

469.319 REPAYMENT OF TAX BENEFITS BY BUSINESSES THAT NO LONGER OPERATE IN A ZONE.

Subdivision 1. Repayment obligation. A business must repay the ~~amount of the~~ total tax ~~reduction~~ benefits listed in section 469.315 ~~and any refund under section 469.318 in excess of tax liability,~~ received during the two years immediately before it (1) ceased to ~~operate in the zone, if the business:~~

~~(1) received tax reductions authorized by section 469.315; and~~

(2)(i) did not meet the goals specified in an agreement entered into with the applicant that states any obligation the qualified business must fulfill in order to be eligible for tax benefits. The commissioner of employment and economic development may extend for up to one year the period for meeting any goals provided in an agreement. The applicant may extend the period for meeting other goals by documenting in writing the reason for the extension and attaching a copy of the document to its next annual report to the commissioner of employment and economic development; or

~~(ii) ceased to operate its facility located within the job opportunity building zone~~ perform a substantial level of activities described in the business subsidy agreement, or (2) otherwise ~~ceases~~ ceased to be ~~or is not~~ a qualified business, other than those subject to the provisions of section 469.3191.

Subd. 1a. Repayment obligation of businesses not operating in zone. Persons that receive benefits without operating a business in a zone are subject to repayment under this section if the business for which those benefits relate is subject to repayment under this section. Such persons are deemed to have ceased performing in the zone on the same day that the qualified business for which the benefits relate becomes subject to repayment under subdivision 1.

Subd. 2. Definitions. (a) For purposes of this section, the following terms have the meanings given.

(b) "Business" means any person ~~who~~ that received tax benefits enumerated in section 469.315.

(d) "Persons that receive benefits without operating a business in a zone" means persons that claim benefits under section 469.316, subdivision 2 or 4, as well as persons that own property leased by a qualified business and are eligible for benefits under section 272.02, subdivision 64, or 297A.68, subdivision 37, paragraph (b).

Subd. 3. Disposition of repayment. The repayment must be paid to the state to the extent it represents a state tax reduction and to the county to the extent it represents a property tax reduction. Any amount repaid to the state must be deposited in the general fund. Any amount repaid to the county for the property tax exemption must be distributed to the ~~local governments~~ taxing authorities with authority to levy taxes in the zone in the same manner provided for distribution of payment of delinquent property taxes. Any repayment of local sales taxes must be repaid to the commissioner for distribution to the city or county imposing the local sales tax.

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Subd. 4. Repayment procedures. (a) For the repayment of taxes imposed under chapter 290 or 297A or local taxes collected pursuant to section 297A.99, a business must file an amended return with the commissioner of revenue and pay any taxes required to be repaid within 30 days after ~~ceasing to do business in the zone~~ becoming subject to repayment under this section. The amount required to be repaid is determined by calculating the tax for the period or periods for which repayment is required without regard to the exemptions and credits allowed under section 469.315.

(b) For the repayment of taxes imposed under chapter 297B, a business must pay any taxes required to be repaid to the motor vehicle registrar, as agent for the commissioner of revenue, within 30 days after ~~ceasing to do business in the zone~~ becoming subject to repayment under this section.

(c) For the repayment of property taxes, the county auditor shall prepare a tax statement for the business, applying the applicable tax extension rates for each payable year and provide a copy to the business and to the taxpayer of record. The business must pay the taxes to the county treasurer within 30 days after receipt of the tax statement. The business or the taxpayer of record may appeal the valuation and determination of the property tax to the Tax Court within 30 days after receipt of the tax statement.

(d) The provisions of chapters 270C and 289A relating to the commissioner's authority to audit, assess, and collect the tax and to hear appeals are applicable to the repayment required under paragraphs (a) and (b). The commissioner may impose civil penalties as provided in chapter 289A, and the additional tax and penalties are subject to interest at the rate provided in section 270C.40, from 30 days after ~~ceasing to do business in the job opportunity building zone~~ becoming subject to repayment under this section until the date the tax is paid.

(e) If a property tax is not repaid under paragraph (c), the county treasurer shall add the amount required to be repaid to the property taxes assessed against the property for payment in the year following the year in which the ~~treasurer discovers that the business ceased to operate in the job opportunity building zone~~ auditor provided the statement under paragraph (c).

(f) For determining the tax required to be repaid, a ~~tax~~ reduction of a state or local sales or use tax is deemed to have been received on the date that the ~~tax would have been due if the taxpayer had not been entitled to the exemption or on the date a refund was issued for a refundable tax credit.~~ good or service was purchased or first put to a taxable use. In the case of an income tax or franchise tax, including the credit payable under section 469.318, a reduction of tax is deemed to have been received for the two most recent tax years that have ended prior to the date that the business became subject to repayment under this section. In the case of a property tax, a reduction of tax is deemed to have been received for the taxes payable in the year that the business became subject to repayment under this section and for the taxes payable in the prior year.

(g) The commissioner may assess the repayment of taxes under paragraph (d) any time within two years after the business ~~ceases to operate in the job opportunity building zone~~ becomes subject to repayment under subdivision 1, or within any period of limitations for the assessment of tax under section 289A.38, whichever period is later. The county auditor may send the statement under paragraph (c) any time within three years after the business becomes subject to repayment under subdivision 1.

(h) A business is not entitled to any income tax or franchise tax benefits, including refundable credits, for any part of the year in which the business becomes subject to repayment under this section nor for any year thereafter. Property is not exempt from tax under section 272.02, subdivision 64, for any taxes payable in the year following the year in which the property became subject to repayment under this section nor for any year thereafter. A business is not eligible for any sales tax benefits beginning with goods or services purchased or first put to a taxable use on the day that the business becomes subject to repayment under this section.

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Subd. 5. Waiver authority. (a) The commissioner may waive all or part of a repayment required under subdivision 1, if the commissioner, in consultation with the commissioner of employment and economic development and appropriate officials from the local government units in which the qualified business is located, determines that requiring repayment of the tax is not in the best interest of the state or the local government units and the business ceased operating as a result of circumstances beyond its control including, but not limited to:

(1) a natural disaster;

(2) unforeseen industry trends; or

(3) loss of a major supplier or customer.

(b)(1) The commissioner shall waive repayment required under subdivision 1a if the commissioner has waived repayment by the operating business under subdivision 1, unless the person that received benefits without having to operate a business in the zone was a contributing factor in the qualified business becoming subject to repayment under subdivision 1;

(2) the commissioner shall waive the repayment required under subdivision 1a, even if the repayment has not been waived for the operating business if:

(i) the person that received benefits without having to operate a business in the zone and the business that operated in the zone are not related parties as defined in section 267(b) of the Internal Revenue Code of 1986, as amended through December 31, 2007; and

(ii) actions of the person were not a contributing factor in the qualified business becoming subject to repayment under subdivision 1.

Subd. 6. Reconciliation. Where this section is inconsistent with section 116J.994, subdivision 3, paragraph (e), or 6, or any other provisions of sections 116J.993 to 116J.995, this section prevails.

EFFECTIVE DATE. The amendment to subdivision 4, paragraph (c), of this section is effective the day following final enactment. The amendment to subdivision 4, paragraph (f), is effective retroactively from January 1, 2008, and applies to all businesses that become subject to this section in 2008. The rest of this section is effective retroactively from January 1, 2004, except that for violations that occur before the day following final enactment, this section does not apply if the business has repaid the benefits or the commissioner has granted a waiver.

Sec. 14. [469.3191] BREACH OF AGREEMENTS BY BUSINESSES THAT CONTINUE TO OPERATE IN ZONE.

(a) A "business in violation of its business subsidy agreement but not subject to section 469.319" means a business that is operating in violation of the business subsidy agreement but maintains a level of operations in the zone that does not subject it to the repayment provisions of section 469.319, subdivision 1, clause (1).

(b) A business described in paragraph (a) that does not sign a new or amended business subsidy agreement, as authorized under paragraph (h), is subject to repayment of benefits under section 469.319 from the day that it ceases to perform in the zone a substantial level of activities described in the business subsidy agreement.

(c) A business described in paragraph (a) ceases being a qualified business after the last day that it has to meet the goals stated in the agreement.

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(d) A business is not entitled to any income tax or franchise tax benefits, including refundable credits, for any part of the year in which the business is no longer a qualified business under paragraph (c), and thereafter. A business is not eligible for sales tax benefits beginning with goods or services purchased or put to a taxable use on the day that it is no longer a qualified business under paragraph (c). Property is not exempt from tax under section 272.02, subdivision 64, for any taxes payable in the year following the year in which the business is no longer a qualified business under paragraph (c), and thereafter.

(e) A business described in paragraph (a) that wants to resume eligibility for benefits under section 469.315 must request that the commissioner of employment and economic development determine the length of time that the business is ineligible for benefits. The commissioner shall determine the length of ineligibility by applying the proportionate level of performance under the agreement to the total duration of the zone as measured from the date that the business subsidy agreement was executed. The length of time must not be less than one full year for each tax benefit listed in section 469.315. The commissioner of employment and economic development and the appropriate local government officials shall consult with the commissioner of revenue to ensure that the period of ineligibility includes at least one full year of benefits for each tax.

(f) The length of ineligibility determined under paragraph (e) must be applied by reducing the zone duration for the property by the duration of the ineligibility.

(g) The zone duration of property that has been adjusted under paragraph (f) must not be altered again to permit the business additional benefits under section 469.315.

(h) A business described in paragraph (a) becomes eligible for benefits available under section 469.315 by entering into a new or amended business subsidy agreement with the appropriate local government unit. The new or amended agreement must cover a period beginning from the date of ineligibility under the original business subsidy agreement, through the zone duration determined by the commissioner under paragraph (f). No exemption of property taxes under section 272.02, subdivision 64, is available under the new or amended agreement for property taxes due or paid before the date of the final execution of the new or amended agreement, but unpaid taxes due after that date need not be paid.

(i) A business that violates the terms of an agreement authorized under paragraph (h) is permanently barred from seeking benefits under section 469.315 and is subject to the repayment provisions under section 469.319 effective from the day that the business ceases to operate as a qualified business in the zone under the second agreement.

EFFECTIVE DATE. This section is effective retroactively from January 1, 2004. For violations that occur before the day following final enactment, this section does not apply if the business has repaid the benefits or the commissioner has granted a waiver.

Sec. 15. [469.3192] PROHIBITION AGAINST AMENDMENTS TO BUSINESS SUBSIDY AGREEMENT.

Except as authorized under section 469.3191, under no circumstance shall terms of any agreement required as a condition for eligibility for benefits listed under section 469.315 be amended to change job creation, job retention, or wage goals included in the agreement.

EFFECTIVE DATE. This section is effective the day following final enactment and applies to all agreements executed before, on, or after the effective date.

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Sec. 16. [469.3193] CERTIFICATION OF CONTINUING ELIGIBILITY FOR JOBZ BENEFITS.

(a) By December 1 of each year, every qualified business must certify to the commissioner of revenue, on a form prescribed by the commissioner of revenue, whether it is in compliance with any agreement required as a condition for eligibility for benefits listed under section 469.315. A business that fails to submit the certification, or any business, including those still operating in the zone, that submits a certification that the commissioner of revenue later determines materially misrepresents the business's compliance with the agreement, is subject to the repayment provisions under section 469.319 from January 1 of the year in which the report is due or the date that the business became subject to section 469.319, whichever is earlier. Any such business is permanently barred from obtaining benefits under section 469.315. For purposes of this section, the bar applies to an entity and also applies to any individuals or entities that have an ownership interest of at least 20 percent of the entity.

(b) Before the sanctions under paragraph (a) apply to a business that fails to submit the certification, the commissioner of revenue shall send notice to the business, demanding that the certification be submitted within 30 days and advising the business of the consequences for failing to do so. The commissioner of revenue shall notify the commissioner of employment and economic development and the appropriate job opportunity subzone administrator whenever notice is sent to a business under this paragraph.

(d) The commissioner of revenue shall promptly notify the commissioner of employment and economic development of all businesses that certify that they are not in compliance with the terms of their business subsidy agreement and all businesses that fail to file the certification.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 17. Minnesota Statutes 2006, section 469.3201, is amended to read:

469.3201 ~~JOBZ EXPENDITURE LIMITATIONS; AUDITS~~ STATE AUDITOR; AUDITS OF JOB OPPORTUNITY BUILDING ZONES AND BUSINESS SUBSIDY AGREEMENTS.

The ~~Tax Increment Financing, Investment and Finance Division of the~~ Office of the State Auditor must annually audit the creation and operation of all job opportunity building zones and business subsidy agreements entered into under Minnesota Statutes, sections 469.310 to 469.320. To the extent necessary to perform this audit, the state auditor may request from the commissioner of revenue tax return information of taxpayers who are eligible to receive tax benefits authorized under section 469.315. To the extent necessary to perform this audit, the state auditor may request from the commissioner of employment and economic development wage detail report information required under section 268.044 of taxpayers eligible to receive tax benefits authorized under section 469.315.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 18. Minnesota Statutes 2006, section 473.39, is amended by adding a subdivision to read:

Subd. 1n. Obligations. After July 1, 2008, in addition to other authority in this section, the council may issue certificates of indebtedness, bonds, or other obligations under this section in an amount not exceeding $33,000,000 for capital expenditures as prescribed in the council's regional transit master plan and transit capital improvement program and for related costs, including the costs of issuance and sale of the obligations.

EFFECTIVE DATE. This section is effective July 1, 2008, and applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.

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Sec. 19. Laws 1995, chapter 264, article 5, section 46, subdivision 2, is amended to read:

Subd. 2. Limitation on use of tax increments. (a) All revenues derived from tax increments must be used in accordance with the housing replacement district plan. The revenues must be used solely to pay the costs of site acquisition, relocation, demolition of existing structures, site preparation, and pollution abatement on parcels identified in the housing replacement district plan, as well as public improvements and administrative costs directly related to those parcels.

(b) Notwithstanding paragraph (a), the city of Minneapolis may use revenues derived from tax increments from its housing replacement district for activities related to parcels not identified in the housing replacement plan, but which would qualify for inclusion under section 45, subdivision 1, paragraph (b), clauses (1) to (3).

(c) Notwithstanding paragraph (a), or any other provisions of sections 44 to 47, the Crystal Economic Development Authority may use revenues derived from tax increments from its housing replacement districts numbers one and two as if those districts were housing districts under Minnesota Statutes, section 469.174, subdivision 11, provided that eligible activities may be located anywhere in the city without regard to the boundaries of housing replacement district numbers one and two or any project area.

EFFECTIVE DATE. This section applies to revenues from the housing replacement districts, regardless of when they were received, and is effective the day following final enactment and for the city of Minneapolis, upon compliance by the governing body of the city of Minneapolis with Minnesota Statutes, section 645.021, subdivision 3, and, for the city of Crystal, upon compliance by the governing body of the city of Crystal with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 20. Laws 2003, chapter 127, article 10, section 31, subdivision 1, is amended to read:

Subdivision 1. District extension. ~~(a)~~ The governing body of the city of Hopkins may elect to extend the duration of its redevelopment tax increment financing district 2-11 by up to four additional years.

(b) Notwithstanding any law to the contrary, effective upon approval of this subdivision, no increments may be spent on activities located outside of the area of the district, other than to pay administrative expenses.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 21. Laws 2006, chapter 259, article 10, section 14, subdivision 1, is amended to read:

Subdivision 1. Definitions. (a) "City" means the city of Minneapolis.

(b) "Homeless assistance tax increment district" means a contiguous area of the city that:

(1) is no larger than ~~six~~ eight acres;

(2) is located within the boundaries of a city municipal development district; and

(3) contains at least two shelters for homeless persons that have been owned or operated by nonprofit corporations that (i) are qualified charitable organizations under section 501(c)(3) of the United States Internal Revenue Code, (ii) have operated such homeless facilities within the district for at least five years, and (iii) have been recipients of emergency services grants under Minnesota Statutes, section 256E.36.

EFFECTIVE DATE. This section is effective upon compliance by the city of Minneapolis with Minnesota Statutes, section 645.021.

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Sec. 22. Laws 2008, chapter 154, article 9, section 23, is amended to read:

Sec. 23. CITY OF FRIDLEY; TAX INCREMENT FINANCING DISTRICT; SPECIAL RULES.

(a) If the city elects upon the adoption of a tax increment financing plan for a district, the rules under this section apply to a redevelopment tax increment financing district established by the city of Fridley or the housing and redevelopment authority of the city. The redevelopment tax increment district includes the following parcels and adjacent railroad property and shall be referred to as the Northstar Transit Station District: parcel numbers 223024120010, 223024120009, 223024120017, 223024120016, 223024120018, 223024120012, 223024120011, 223024120005, 223024120004, 223024120003, 223024120013, 223024120008, 223024120007, 223024120006, 223024130005, 223024130010, 223024130011, 223024130003, 153024440039, 153024440037, 153024440041, 153024440042, 223024110013, 223024110016, 223024110017, 223024140008, 223024130002, 223024420004, 223024410002, 223024410003, 223024110008, 223024110007, 223024110019, 223024110018, 223024110003, 223024140003, 223024140009, 223024140002, 223024140010, and 223024410007.

(b) The requirements for qualifying a redevelopment tax increment district under Minnesota Statutes, section 469.174, subdivision 10, do not apply to the parcels located within the Northstar Transit Station District, which are deemed eligible for inclusion in a redevelopment tax increment district.

(c) In addition to the costs permitted by Minnesota Statutes, section 469.176, subdivision 4j, eligible expenditures within the Northstar Transit Station District include those costs necessary to provide for the construction and land acquisition for a tunnel under the Burlington Northern Santa Fe railroad tracks to allow access to the Northstar Commuter Rail.

(d) Notwithstanding the provisions of Minnesota Statutes, section 469.1763, subdivision 2, the city of Fridley may expend increments generated from its tax increment financing districts Nos. 11, 12, and 13 for costs permitted by paragraph (c) and Minnesota Statutes, section 469.176, subdivision 4j, outside the boundaries of tax increment financing districts Nos. 11, 12, and 13, but only within the Northstar Transit Station District.

(e) The five-year rule under Minnesota Statutes, section 469.1763, subdivision 3, does not apply to the Northstar Transit Station District or to tax increment financing districts Nos. 11, 12, and 13.

(f) The use of revenues for decertification under Minnesota Statutes, section 469.1763, subdivision 4, does not apply to tax increment financing districts Nos. 11, 12, and 13.

EFFECTIVE DATE. This section is effective upon approval by the governing body of the city of Fridley and upon compliance by the city with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 23. Laws 2008, chapter 154, article 9, section 24, is amended to read:

Sec. 24. CITY OF NEW BRIGHTON; TAX INCREMENT FINANCING~~; EXPENDITURES OUTSIDE DISTRICT~~.

Subdivision 1. Expenditures outside district. Notwithstanding the provisions of Minnesota Statutes, section 469.1763, subdivision 2, the city of New Brighton may expend increments generated from its tax increment financing district No. 26 to facilitate eligible activities as permitted by Minnesota Statutes, section 469.176, subdivision 4e, outside the boundaries of tax increment financing district No. 26, but only within the area described in Laws 1998, chapter 389, article 11, section 24, subdivision 1, and commonly referred to as the Northwest Quadrant. Minnesota Statutes, section 469.1763, subdivisions 3 and 4, do not apply to expenditures permitted by this section.

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Subd. 2. District duration extension. Notwithstanding the provisions of Minnesota Statutes, section 469.176, subdivision 1b, or any other law to the contrary, the duration limits that apply to redevelopment tax increment financing districts numbers 31 and 32 established under Laws 1998, chapter 389, article 11, section 24, and hazardous substance subdistricts numbers 31A and 32A established under Minnesota Statutes, sections 469.174 to 469.1799, are extended by four years.

EFFECTIVE DATE. This section is effective upon approval by the governing body of the city of New Brighton and compliance by the city with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 24. CITY OF AUSTIN; TAX INCREMENT FINANCING AUTHORITY.

Notwithstanding the requirements of Minnesota Statutes, section 469.1763, subdivision 3, that activities must be undertaken within a five-year period from the date of certification of tax increment financing district and notwithstanding the provisions of any other law, the governing body of the city of Austin may use tax increments from its Tax Increment Financing District No. 9 to reimburse the city's housing and redevelopment authority for money spent disposing of soils and debris in the tax increment financing district, as required by the Minnesota Pollution Control Agency.

EFFECTIVE DATE. This section is effective upon compliance by the governing body of the city of Austin with the requirements of Minnesota Statutes, section 645.021.

Sec. 25. BLOOMINGTON TAX INCREMENT FINANCING; FIVE-YEAR RULE.

The requirements of Minnesota Statutes, section 469.1763, subdivision 3, that activities must be undertaken within a five-year period from the date of certification of a tax increment financing district, are increased to a ten-year period for the Port Authority of the City of Bloomington's Tax Increment Financing District No. 1-I, Bloomington Central Station.

EFFECTIVE DATE. This section is effective upon compliance by the governing body of the Port Authority of the City of Bloomington with the requirements of Minnesota Statutes, section 645.021.

Sec. 26. CITY OF DULUTH; EXTENSION OF TIME FOR ACTIVITY IN TAX INCREMENT FINANCING DISTRICT NO. 20.

The requirements of Minnesota Statutes, section 469.1763, subdivision 3, that activities must be undertaken within a five-year period from the date of certification of a tax increment financing district, must be considered to be met for Duluth Economic Development Authority Tax Increment Financing District No. 20 if the activities are undertaken within ten years from the date of certification of the district.

EFFECTIVE DATE. This section is effective upon compliance by the governing body of the city of Duluth with the requirements of Minnesota Statutes, section 645.021.

Sec. 27. CITY OF DULUTH; EXTENSION OF TIME FOR ACTIVITY IN TAX INCREMENT FINANCING DISTRICT NO. 21.

The requirements of Minnesota Statutes, section 469.1763, subdivision 3, that activities must be undertaken within a five-year period from the date of certification of a tax increment financing district, must be considered to be met for Duluth Economic Development Authority Tax Increment Financing District No. 21 if the activities are undertaken within ten years from the date of certification of the district.

EFFECTIVE DATE. This section is effective upon compliance by the governing body of the city of Duluth with the requirements of Minnesota Statutes, section 645.021.

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Sec. 28. CITY OF WELLS; DISPOSITION OF TIF REVENUES.

Notwithstanding the provisions of Minnesota Statutes, section 469.174, subdivision 25, the following are deemed not to be "increments," "tax increments," or "revenues derived from tax increment" for purposes of the redevelopment district in the city of Wells, identified as Downtown Development Program 1, for amounts received after decertification of the district:

(1) rents paid by private tenants for use of a building acquired in whole or in part with tax increments; and

(2) proceeds from the sale of the building.

EFFECTIVE DATE. This section is effective upon compliance by the governing body of the city of Wells with the requirements of Minnesota Statutes, section 645.021.

Sec. 29. MULTICOUNTY HOUSING AND REDEVELOPMENT AUTHORITY LEVY AUTHORITY.

Notwithstanding Minnesota Statutes, section 469.033, subdivision 6, or any other law to the contrary, the governing body of the Northwest Minnesota Multicounty Housing and Redevelopment Authority, upon approval by a two-thirds majority of all its members, may levy an amount not to exceed 25 percent of the total levy permitted under Minnesota Statutes, section 469.033, subdivision 6, without approval of that levy by the governing body of the city or county within which the authority operates. The authority to levy the remainder of the total levy permitted under that provision remains subject to approval by the governing body of the city or county. For purposes of the levy authorized under this section only, the Northwest Minnesota Multicounty Housing and Redevelopment Authority is considered a special taxing jurisdiction as provided in Minnesota Statutes, section 275.066.

EFFECTIVE DATE. This section is effective for taxes levied in 2008, payable in 2009, and is repealed effective for taxes levied in 2013, payable in 2014, and thereafter.

Sec. 30. CITY OF OAKDALE; ORIGINAL TAX CAPACITY.

(a) The provisions of this section apply to redevelopment tax increment financing districts created by the Housing and Redevelopment Authority in and for the city of Oakdale in the areas comprised of the parcels with the following parcel identification numbers: (1) 3102921320053; 3102921320054; 3102921320055; 3102921320056; 3102921320057; 3102921320058; 3102921320062; 3102921320063; 3102921320059; 3102921320060; and 3102921320061; and (2) 3102921330005 and 3102921330004.

(b) For a district subject to this section, the Housing and Redevelopment Authority may, when requesting certification of the original tax capacity of the district under Minnesota Statutes, section 469.177, elect to have the original tax capacity of the district be certified as the tax capacity of the land.

EFFECTIVE DATE; LOCAL APPROVAL. This section is effective upon approval by the governing body of the city of Oakdale and compliance with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 31. DEED GRANTS.

$1,500,000 is appropriated to the commissioner of the Department of Employment and Economic Development from the general fund for fiscal year 2009 for the purpose of making grants of $750,000 each to the cities of Minneapolis and Saint Paul for capital improvements or related costs of the Target Center and RiverCentre facilities.

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ARTICLE 5

PROPERTY TAXES

Section 1. Minnesota Statutes 2006, section 216B.1646, is amended to read:

216B.1646 RATE ~~REDUCTION~~ ADJUSTMENT; PROPERTY TAX ~~REDUCTION~~ CHANGE.

(a) The commission shall, by any method the commission finds appropriate, ~~reduce~~ adjust the rates each ~~electric~~ utility subject to rate regulation by the commission charges its customers to reflect, on an ongoing basis, the amount by which each utility's property tax, including the state general tax, if applicable, on the personal property of its electric system ~~from taxes payable in 2001 to taxes payable in 2002 is reduced~~ or pipeline system transporting or distributing natural gas is changed under this act. The commission must ensure that, to the extent feasible, each dollar of personal property tax ~~reduction allocated to Minnesota consumers retroactive to January 1, 2002,~~ change in taxes payable in 2009 and subsequent years results in a dollar of ~~savings~~ adjustment to the utility's ~~customers~~ rates. ~~A utility may voluntarily pass on any additional property tax savings allocated in the same manner as approved by the commission under this paragraph.~~ The adjustment under this paragraph is outside of a general rate case proceeding under section 216B.16.

(b) ~~By April 10, 2002,~~ Each utility ~~shall~~ may submit a filing to the commission containing:

(1) certified information regarding the utility's property tax ~~savings~~ change allocated to Minnesota retail customers; and

(2) a proposed method of ~~passing these savings on~~ adjusting rates to Minnesota retail customers.

The utility shall provide the information in clause (1) to the commissioner of revenue at the same time. The commissioner shall notify the commission within 30 days as to the accuracy of the property tax data submitted by the utility.

(c) For purposes of this section, "personal property" means tools, implements, and machinery of the generating plant. It does not apply to transformers, transmission lines, distribution lines, or any other tools, implements, and machinery that are part of an electric substation, wherever located an electric system or of a pipeline system transporting or distributing natural gas.

Sec. 2. Minnesota Statutes 2006, section 270C.85, subdivision 2, is amended to read:

Subd. 2. Powers and duties. The commissioner shall have and exercise the following powers and duties in administering the property tax laws.

(a) Confer with, advise, and give the necessary instructions and directions to local assessors and local boards of review throughout the state as to their duties under the laws of the state.

(b) Direct proceedings, actions, and prosecutions to be instituted to enforce the laws relating to the liability and punishment of public officers and officers and agents of corporations for failure or negligence to comply with the provisions of the property tax laws, and cause complaints to be made against local assessors, members of boards of equalization, members of boards of review, or any other assessing or taxing officer, to the proper authority, for their removal from office for misconduct or negligence of duty.

(c) Require county attorneys to assist in the commencement of prosecutions in actions or proceedings for removal, forfeiture, and punishment, for violation of the property tax laws in their respective districts or counties.

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(d) Require town, city, county, and other public officers to report information as to the assessment of property, and such other information as may be needful in the work of the commissioner, in such form as the commissioner may prescribe.

(e) Transmit to the governor, on or before the third Monday in December of each even-numbered year, and to each member of the legislature, on or before November 15 of each even-numbered year, the report of the department for the preceding years, showing all the taxable property subject to the property tax laws and the value of the same, in tabulated form.

(f) Inquire into the methods of assessment and taxation and ascertain whether the assessors faithfully discharge their duties.

(g) Assist local assessors in determining the estimated market value of industrial special-use property. For purposes of this paragraph, "industrial special-use property" means property that:

(1) is designed and equipped for a particular type of industry;

(2) is not easily adapted to some other use due to the unique nature of the facilities;

(3) has facilities totaling at least 75,000 square feet in size; and

(4) has a total estimated market value of $10,000,000 or greater based on the assessor's preliminary determination.

EFFECTIVE DATE. This section is effective for assessment year 2009 and thereafter, for taxes payable in 2010 and thereafter.

Sec. 3. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision to read:

Subd. 85. Fergus Falls historical zone. (a) Property located in the area of the campus of the former state regional treatment center in the city of Fergus Falls, including the five buildings and associated land that were acquired by the city prior to January 1, 2007, is exempt from ad valorem taxes levied under chapter 275.

(b) The exemption applies for 15 calendar years from the date specified by resolution of the governing body of the city of Fergus Falls. For the final three assessment years of the duration limit, the exemption applies to the following percentages of estimated market value of the property:

(1) for the third to the last assessment year of the duration, 75 percent;

(2) for the second to the last assessment year of the duration, 50 percent; and

(3) for the last assessment year of the duration, 25 percent.

EFFECTIVE DATE. This section is effective for property taxes payable in 2009 and thereafter.

Sec. 4. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision to read:

Subd. 86. Electric generation facility; personal property. (a) Notwithstanding subdivision 9, paragraph (a), attached machinery and other personal property which is part of a simple-cycle combustion-turbine electric generation facility that exceeds 150 megawatts of installed capacity and that meets the requirements of this subdivision is exempt. At the time of construction, the facility must:

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(1) utilize natural gas as a primary fuel;

(2) be owned by an electric generation and transmission cooperative;

(3) be located within one mile of an existing 16-inch natural gas pipeline and a 69-kilovolt and a 230-kilovolt high-voltage electric transmission line;

(4) be designed to provide peaking, emergency backup, or contingency services;

(5) have received a certificate of need under section 216B.243 demonstrating demand for its capacity; and

(6) have received by resolution the approval from the governing bodies of the county and the city in which the proposed facility is to be located for the exemption of personal property under this subdivision.

(b) Construction of the facility must be commenced after January 1, 2008, and before January 1, 2012. Property eligible for this exemption does not include electric transmission lines and interconnections or gas pipelines and interconnections appurtenant to the property or the facility.

EFFECTIVE DATE. This section is effective for the 2008 assessment payable in 2009 and thereafter.

Sec. 5. [273.0645] COMMISSIONER REVIEW OF LOCAL ASSESSMENT PRACTICES.

The commissioner of revenue must review the assessment practices in a taxing jurisdiction if requested in writing by a qualifying number of property owners in that taxing jurisdiction. The request must be signed by the greater of:

(1) one percent of the property owners; or

(2) five property owners.

The request must identify the city, town, or county and describe why a review is sought for that taxing jurisdiction. The commissioner must conduct the review in a reasonable amount of time and report the findings to the county board of the affected county, to the affected city council or town board, if the review is for a specific city or town, and to the property owner designated in the request as the person to receive the report on behalf of all the property owners who signed the request. The commissioner must also provide the report electronically to all property owners who signed the request and provided an e-mail address in order to receive the report electronically.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 6. Minnesota Statutes 2006, section 273.11, subdivision 1, is amended to read:

Subdivision 1. Generally. Except as provided in this section or section 273.17, subdivision 1, all property shall be valued at its market value. The market value as determined pursuant to this section shall be stated such that any amount under $100 is rounded up to $100 and any amount exceeding $100 shall be rounded to the nearest $100. In estimating and determining such value, the assessor shall not adopt a lower or different standard of value because the same is to serve as a basis of taxation, nor shall the assessor adopt as a criterion of value the price for which such property would sell at a forced sale, or in the aggregate with all the property in the town or district; but the assessor shall value each article or description of property by itself, and at such sum or price as the assessor believes the same to be fairly worth in money. The assessor shall take into account the effect on the market value of property of environmental factors in the vicinity of the property, and the market value effect of foreclosed property on all property in the vicinity due to the foreclosures. In assessing any tract or lot of real property, the value of the land,

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exclusive of structures and improvements, shall be determined, and also the value of all structures and improvements thereon, and the aggregate value of the property, including all structures and improvements, excluding the value of crops growing upon cultivated land. In valuing real property upon which there is a mine or quarry, it shall be valued at such price as such property, including the mine or quarry, would sell for at a fair, voluntary sale, for cash, if the material being mined or quarried is not subject to taxation under section 298.015 and the mine or quarry is not exempt from the general property tax under section 298.25. In valuing real property which is vacant, platted property shall be assessed as provided in subdivision 14. All property, or the use thereof, which is taxable under section 272.01, subdivision 2, or 273.19, shall be valued at the market value of such property and not at the value of a leasehold estate in such property, or at some lesser value than its market value.

EFFECTIVE DATE. This section is effective for the 2009 assessment and thereafter.

Sec. 7. Minnesota Statutes 2006, section 273.11, subdivision 1a, is amended to read:

Subd. 1a. Limited market value. In the case of all property classified as agricultural homestead or nonhomestead, residential homestead or nonhomestead, timber, or noncommercial seasonal residential recreational, the assessor shall compare the value with the taxable portion of the value determined in the preceding assessment.

For assessment years 2004, 2005, and 2006, the amount of the increase shall not exceed the greater of (1) 15 percent of the value in the preceding assessment, or (2) 25 percent of the difference between the current assessment and the preceding assessment.

For assessment ~~year~~ years 2007 through 2009, the amount of the increase shall not exceed the greater of (1) 15 percent of the value in the preceding assessment, or (2) 33 percent of the difference between the current assessment and the preceding assessment.

For assessment year ~~2008~~ 2010, the amount of the increase shall not exceed the greater of (1) 15 percent of the value in the preceding assessment, or (2) 50 percent of the difference between the current assessment and the preceding assessment.

This limitation shall not apply to increases in value due to improvements. For purposes of this subdivision, the term "assessment" means the value prior to any exclusion under subdivision 16.

The provisions of this subdivision shall be in effect through assessment year ~~2008~~ 2010 as provided in this subdivision.

For purposes of the assessment/sales ratio study conducted under section 127A.48, and the computation of state aids paid under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 477A, market values and net tax capacities determined under this subdivision and subdivision 16, shall be used.

EFFECTIVE DATE. This section is effective for assessment year 2008 and thereafter, for taxes payable in 2009 and thereafter.

Sec. 8. Minnesota Statutes 2006, section 273.11, subdivision 14b, is amended to read:

Subd. 14b. Vacant land platted on or after August 1, 2001~~; located in nonmetropolitan counties~~. (a) All land platted on or after (i) August 1, 2001, and located in a nonmetropolitan county, or (ii) August 1, 2008, and located in a metropolitan county, and not improved with a permanent structure, shall be assessed as provided in this subdivision. The assessor shall determine the market value of each individual lot based upon the highest and best use of the property as unplatted land. In establishing the market value of the property, the assessor shall consider the sale price of the unplatted land or comparable sales of unplatted land of similar use and similar availability of public utilities.

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(b) The market value determined in paragraph (a) shall be increased as follows for each of the seven assessment years immediately following the final approval of the plat: one-seventh of the difference between the property's unplatted market value as determined under paragraph (a) and the market value based upon the highest and best use of the land as platted property shall be added in each of the seven subsequent assessment years.

(c) Any increase in market value after the first assessment year following the plat's final approval shall be added to the property's market value in the next assessment year. Notwithstanding paragraph (b), if the property is sold or transferred, or construction begins before the expiration of the seven years in paragraph (b), that lot shall be eligible for revaluation in the next assessment year. The market value of a platted lot determined under this subdivision shall not exceed the value of that lot based upon the highest and best use of the property as platted land.

EFFECTIVE DATE. This section is effective for taxes payable in 2009 and thereafter.

Sec. 9. Minnesota Statutes 2006, section 273.11, is amended by adding a subdivision to read:

Subd. 14c. Vacant land platted on or after August 1, 2001, and prior to August 1, 2008; located in metropolitan county; phase-in readjusted. (a) All land platted on or after August 1, 2001, and prior to August 1, 2008, located in a metropolitan county and not improved with a structure shall be eligible for the phase-in assessment schedule under this section. Based upon the assessor's records, the assessor shall obtain the estimated market value of each individual lot based upon the highest and best use of the property as unplatted land for the assessment year that the property was platted. In establishing the market value of the property, the assessor shall have considered the sale price of the unplatted land or comparable sales of unplatted land of similar use and similar availability of public utilities.

(b) The market value determined in paragraph (a) plus one-seventh of the difference between the property's unplatted market value as determined under paragraph (a) and the market value based upon the highest and best use of the land as platted property in the current year, multiplied by the number of assessment years since the property was platted, shall be added in each of the subsequent assessment years.

(c) Notwithstanding paragraph (b), if the property is sold or transferred, or construction begins before the expiration of the phase-in in paragraph (b), that lot shall be eligible for revaluation in the next assessment year. The market value of a platted lot determined under this subdivision shall not exceed the value of that lot based upon the highest and best use of the property as platted land.

(d) For purposes of this section, "metropolitan county" means the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.

EFFECTIVE DATE. This section is effective for taxes payable in 2009 and thereafter.

Sec. 10. Minnesota Statutes 2006, section 273.11, is amended by adding a subdivision to read:

Subd. 24. Rural vacant land abutting public waters. (a) Any property that:

(1) is located in a township;

(2) is classified as either (i) agricultural property under section 273.13, subdivision 23, paragraph (b), or (ii) rural vacant land under section 273.13, subdivision 23, paragraph (c), contiguous to agricultural property under the same ownership with at least two-thirds of the acreage used for agricultural purposes;

(3) is not enrolled in the Minnesota agricultural property tax law under section 273.111; and

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(4) abuts public waters in whole or in part,

shall be valued by the assessor on the same basis as rural vacant land of the same quality that does not abut public waters, until some action is taken to develop the land as specified in paragraph (c).

(b) In each assessment year, the assessor shall determine the estimated market value of the property as provided under subdivision 1, taking into consideration its highest and best use. For each year that the property is classified under this subdivision, the property tax statement shall include a notice that the property is being taxed under a reduced valuation that will terminate under certain conditions.

(c) An owner of property meeting the criteria of this subdivision must notify the county assessor within 30 days of applying for a development permit from the county or local zoning board. If development permits are not required, an owner of property meeting the criteria of this subdivision must notify the assessor prior to all or any portion of the property being platted or subdivided.

(d) When any of the conditions specified in paragraph (c) occurs, additional taxes shall be imposed in an amount equal to: (1) the average of the difference between the amount of taxes actually levied on the property in the current year and the two prior years, and the amount of taxes that would have been levied in the current year and the two prior years based on the estimated market value determined under paragraph (b); (2) multiplied by seven or the number of years that the property has qualified under this subdivision, whichever is less. The additional taxes shall be extended against the property on the tax list for the current year, provided that no interest or penalties shall be levied on the additional taxes if timely paid. For purposes of this subdivision, "public waters" means a meandered lake as defined under section 103G.005, subdivision 15, paragraph (a), clause (3).

EFFECTIVE DATE. This section is effective for the 2009 assessment and thereafter.

Sec. 11. Minnesota Statutes 2006, section 273.11, is amended by adding a subdivision to read:

Subd. 25. Limit on taxable valuation; certain restored homes. A homestead property that either (i) has gone through foreclosure or (ii) is located within a disaster or emergency area and sustained physical damage of at least $5,000 in the disaster or emergency is eligible for valuation limitation under this subdivision. To qualify for the limitation, the property must:

(i) have been restored or rebuilt within 18 months of the foreclosure or the disaster or emergency;

(ii) have a gross living area that does not exceed 130 percent of the gross living area prior to the foreclosure or the disaster or emergency; and

(iii) have an estimated market value that exceeds its taxable market value for the assessment year of the foreclosure or the disaster or emergency by at least $20,000, due to the restoration or reconstruction.

In the first assessment year following the restoration or reconstruction, the taxable value shall be equal to three-quarters of its taxable value in the assessment year of the foreclosure or disaster or emergency, plus one-quarter of its current estimated market value. In the second assessment year following the restoration or reconstruction, the taxable value shall be equal to one-half of its taxable value in the assessment year of the foreclosure or disaster or emergency, and one-half of its current estimated market value. In the third assessment year following the restoration or reconstruction, the taxable value shall be equal to one-quarter of its taxable value in the assessment year of the foreclosure or disaster or emergency, and three-quarters of its current estimated market value. For the three assessment years immediately following the restoration or reconstruction, the property is not subject to the valuation limit under subdivision 1a.

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For the purposes of this subdivision:

(i) "disaster or emergency area" means an area in which the president of the United States or the administrator of the Small Business Administration has determined that a disaster exists pursuant to federal law;

(ii) "gone through foreclosure" means that a foreclosure sale has been held and that the person who owned the home prior to the sale did not redeem it from the sale under section 580.23; and

(iii) "gross living area" means the square footage of the home that would customarily be used as living space.

EFFECTIVE DATE. This section is effective for assessment year 2009 and thereafter.

Sec. 12. Minnesota Statutes 2006, section 273.111, subdivision 3, as amended by Laws 2008, chapter 154, article 13, section 26, is amended to read:

Subd. 3. Requirements. (a) Real estate consisting of ~~ten~~ three acres or more or a nursery or greenhouse, and qualifying for classification as class ~~1b,~~ 2a~~, or 2b~~ under section 273.13, shall be entitled to valuation and tax deferment under this section ~~only~~ if it ~~is primarily devoted to agricultural use, and meets the qualifications in subdivision 6, and either~~:

(1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the owner or is real estate which is farmed with the real estate which contains the homestead property; or

(2) has been in possession of the applicant, the applicant's spouse, parent, or sibling, or any combination thereof, for a period of at least seven years prior to application for benefits under the provisions of this section, or is real estate which is farmed with the real estate which qualifies under this clause and is within four townships or cities or combination thereof from the qualifying real estate; or

(3) is the homestead of ~~a shareholder in a family farm corporation as defined in~~ an individual who is part of an entity in compliance with section 500.24~~, notwithstanding the fact that legal title to the real estate may be held in the name of the family farm corporation~~; or

(4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor, partnership, or corporation which also owns the nursery or greenhouse operations on the parcel or parcels, provided that only the acres used to produce nursery stock qualify for treatment under this section.

(b) ~~Valuation of real estate under this section is limited to parcels the ownership of which is in noncorporate entities except for:~~

~~(1) family farm corporations organized pursuant to section 500.24; and~~

~~(2) corporations that derive 80 percent or more of their gross receipts from the wholesale or retail sale of horticultural or nursery stock.~~

~~(c)~~ Land that previously qualified for tax deferment under this section and no longer qualifies because it is not primarily used for agricultural purposes but would otherwise qualify under ~~subdivisions~~ Minnesota Statutes 2006, section 273.111, subdivision 3 ~~and 6~~, for a period of at least three years will not be required to make payment of the previously deferred taxes, notwithstanding the provisions of subdivision 9. Sale of the land prior to the expiration of the three-year period requires payment of deferred taxes as follows: sale in the year the land no longer qualifies requires payment of the current year's deferred taxes plus payment of deferred taxes for the two prior years; sale during the second year the land no longer qualifies requires payment of the current year's deferred taxes plus

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payment of the deferred taxes for the prior year; and sale during the third year the land no longer qualifies requires payment of the current year's deferred taxes. Deferred taxes shall be paid even if the land qualifies pursuant to subdivision 11a. When such property is sold or no longer qualifies under this paragraph, or at the end of the three-year period, whichever comes first, all deferred special assessments plus interest are payable in equal installments spread over the time remaining until the last maturity date of the bonds issued to finance the improvement for which the assessments were levied. If the bonds have matured, the deferred special assessments plus interest are payable within 90 days. The provisions of section 429.061, subdivision 2, apply to the collection of these installments. Penalties are not imposed on any such special assessments if timely paid.

EFFECTIVE DATE. This section is effective for assessment year 2009, taxes payable in 2010 and thereafter.

Sec. 13. Minnesota Statutes 2006, section 273.111, is amended by adding a subdivision to read:

Subd. 3a. Property no longer eligible for deferment. Real estate that qualifies for tax deferment under this section for assessment year 2008, but which does not qualify for the current assessment year due to changes in qualification requirements under this act, shall continue to qualify until the land is sold or transferred, provided that the property continues to meet the requirements of Minnesota Statutes 2006, section 273.111, subdivision 3.

EFFECTIVE DATE. This section is effective for taxes payable in 2010 and thereafter.

Sec. 14. Minnesota Statutes 2006, section 273.111, subdivision 4, is amended to read:

Subd. 4. Determination of value. (a) The value of any real estate described in subdivision 3 shall upon timely application by the owner, in the manner provided in subdivision 8, be determined solely with reference to its appropriate agricultural classification and value notwithstanding sections 272.03, subdivision 8, and 273.11. In determining the value for ad valorem tax purposes, the assessor shall use sales data for agricultural lands located outside the seven metropolitan counties having similar soil types, number of degree days, and other similar agricultural characteristics. Furthermore, the assessor shall not consider any added values resulting from nonagricultural factors. In order to account for the presence of nonagricultural influences that may affect the value of agricultural land, the commissioner of revenue shall develop a fair and uniform method of determining agricultural values for each county in the state that are consistent with this subdivision. The commissioner shall annually assign the resulting values to each county, and these values shall be used as the basis for determining the agricultural value for all properties in the county qualifying for tax deferment under this section.

(b) In the case of property qualifying for tax deferment only under subdivision 3a, the value shall be based on the value in effect for assessment year 2008, multiplied by the ratio of the total taxable market value of all property in the county for the current assessment year divided by the total taxable market value of all property in the county for assessment year 2008.

EFFECTIVE DATE. This section is effective for assessment year 2009 and thereafter.

Sec. 15. Minnesota Statutes 2006, section 273.111, subdivision 8, is amended to read:

Subd. 8. Application. Application for deferment of taxes and assessment under this section shall be filed by May 1 of the year prior to the year in which the taxes are payable. Any application filed hereunder and granted shall continue in effect for subsequent years until the property no longer qualifies. Such application shall be filed with the assessor of the taxing district in which the real property is located on such form as may be prescribed by the commissioner of revenue. The assessor may require proof by affidavit or otherwise that the property qualifies under ~~subdivisions~~ subdivision 3 ~~and 6~~.

EFFECTIVE DATE. This section is effective for taxes payable in 2010 and thereafter.

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Sec. 16. Minnesota Statutes 2006, section 273.111, subdivision 9, is amended to read:

Subd. 9. Additional taxes. When real property which is being, or has been valued and assessed under this section no longer qualifies under ~~subdivisions~~ subdivision 3 ~~and 6~~ or 3a, the portion no longer qualifying shall be subject to additional taxes, in the amount equal to the average difference between the taxes determined in accordance with subdivision 4, and the amount determined under subdivision 5, for the current year and the two preceding years, multiplied by seven or the number of years enrolled under section 273.111, whichever is less. Provided, however, that the amount determined under subdivision 5 shall not be greater than it would have been had the actual bona fide sale price of the real property at an arm's-length transaction been used in lieu of the market value determined under subdivision 5. Such additional taxes shall be extended against the property on the tax list for the current year, provided, however, that no interest or penalties shall be levied on such additional taxes if timely paid~~, and provided further, that such additional taxes shall only be levied with respect to the last three years that the said property has been valued and assessed under this section~~.

EFFECTIVE DATE. This section is effective for taxes payable in 2010 and thereafter.

Sec. 17. Minnesota Statutes 2006, section 273.111, subdivision 11, is amended to read:

Subd. 11. Special local assessments. The payment of special local assessments levied after June 1, 1967, for improvements made to any real property described in subdivision 3 together with the interest thereon shall, on timely application as provided in subdivision 8, be deferred as long as such property meets the conditions contained in ~~subdivisions~~ subdivision 3 ~~and 6~~ or 3a or is transferred to an agricultural preserve under sections 473H.02 to 473H.17. If special assessments against the property have been deferred pursuant to this subdivision, the governmental unit shall file with the county recorder in the county in which the property is located a certificate containing the legal description of the affected property and of the amount deferred. When such property no longer qualifies under ~~subdivisions~~ subdivision 3 ~~and 6~~ or 3a, all deferred special assessments plus interest shall be payable in equal installments spread over the time remaining until the last maturity date of the bonds issued to finance the improvement for which the assessments were levied. If the bonds have matured, the deferred special assessments plus interest shall be payable within 90 days. The provisions of section 429.061, subdivision 2, apply to the collection of these installments. Penalty shall not be levied on any such special assessments if timely paid.

EFFECTIVE DATE. This section is effective for taxes payable in 2010 and thereafter.

Sec. 18. Minnesota Statutes 2006, section 273.111, subdivision 11a, is amended to read:

Subd. 11a. Continuation of tax treatment upon sale. When real property qualifying under ~~subdivisions~~ subdivision 3 ~~and 6~~ is sold, no additional taxes or deferred special assessments plus interest shall be extended against the property provided the property continues to qualify pursuant to ~~subdivisions~~ subdivision 3 ~~and 6~~, and provided the new owner files an application for continued deferment within 30 days after the sale.

~~For purposes of meeting the income requirements of subdivision 6, the property purchased shall be considered in conjunction with other qualifying property owned by the purchaser.~~

EFFECTIVE DATE. This section is effective for taxes payable in 2010 and thereafter.

Sec. 19. [273.1115] AGGREGATE RESOURCE PRESERVATION PROPERTY TAX LAW.

Subdivision 1. Definitions. For purposes of this section, "commercial aggregate deposit" and "actively mined" have the meanings given them in section 273.13, subdivision 23, paragraph (l).

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Subd. 2. Requirement. Real estate is entitled to valuation under this section only if all of the following requirements are met:

(1) the property is classified 1a, 1b, 2a, or 2b property under section 273.13, subdivisions 22 and 23;

(2) the property is at least ten contiguous acres, when the application is filed under subdivision 3;

(3) the owner has filed a completed application for deferment as specified in subdivision 3 with the county assessor in the county in which the property is located;

(4) there are no delinquent taxes on the property; and

(5) a covenant on the land restricts its use as provided in subdivision 3, clause (4).

Subd. 3. Application. Application for valuation deferment under this section must be filed by May 1 of the assessment year. Any application filed and granted continues in effect for subsequent years until the property no longer qualifies, provided that supplemental affidavits under subdivision 8 are timely filed. The application must be filed with the assessor of the county in which the real property is located on such form as may be prescribed by the commissioner of revenue. The application must be executed and acknowledged in the manner required by law to execute and acknowledge a deed and must contain at least the following information and any other information the commissioner deems necessary:

(1) the legal description of the area;

(2) the name and address of owner;

(3) a copy of the affidavit filed under section 273.13, subdivision 23, paragraph (l), when property is classified as:

(i) 1b under section 273.13, subdivision 22, paragraph (b);

(ii) 2a under section 273.13, subdivision 23;

(iii) 2b under section 273.13, subdivision 23; or

(iv) 2e under section 273.13, subdivision 23, paragraph (l).

The application must include a similar document with the same information as contained in the affidavit under section 273.13, subdivision 23, paragraph (l); and

(4) a statement of proof from the owner that the land contains a restrictive covenant limiting its use for the property's surface to that which exists on the date of the application and limiting its future use to the preparation and removal of the commercial aggregate deposit under its surface. To qualify under this clause, the covenant must be binding on the owner or the owner's successor or assignee, and run with the land, except as provided in subdivision 5 allowing for the cancellation of the covenant under certain conditions.

Subd. 4. Determination of value. Upon timely application by the owner as provided in subdivision 3, notwithstanding sections 272.03, subdivision 8, and 273.11, the value of any qualifying land described in subdivision 3 must be valued as if it were agricultural property, using a per acre valuation equal to the current assessment year's average per acre valuation of agricultural land in the county. The assessor shall not consider any additional value resulting from potential alternative and future uses of the property. The buildings located on the land shall be valued by the assessor in the normal manner.

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Subd. 5. Cancellation of covenant. The covenant required under subdivision 3 may be canceled in two ways:

(1) by the owner beginning with the next subsequent assessment year provided that the additional taxes as determined under subdivision 7 are paid by the owner at the time of cancellation; or

(2) by the city or town in which the property is located beginning with the next subsequent assessment year, if the city council or town board:

(i) changes the conditional use of the property;

(ii) revokes the mining permit; or

(iii) changes the zoning to disallow mining.

No additional taxes are imposed on the property under this clause.

Subd. 6. County termination. Within two years of the effective date of this section, a county may, following notice and public hearing, terminate application of this section in the county. The termination is effective upon adoption of a resolution of the county board. A county has 60 days from receipt of the first application for enrollment under this section to notify the applicant and any subsequent applicants of the county's intent to begin the process of terminating application of this section in the county. The county must act on the termination within six months. Upon termination by a vote of the county board, all applications received prior to and during notification of intent to terminate shall be deemed void. If the county board does not act on the termination within six months of notification, all applications for valuation for deferment received shall be deemed eligible for consideration to be enrolled under this section. Following this initial 60-day grace period, a termination applies prospectively and does not affect property enrolled under this section prior to the termination date. A county may reauthorize application of this section by a resolution of the county board revoking the termination.

Subd. 7. Additional taxes. When real property which has been valued and assessed under this section no longer qualifies, the portion of the land classified under subdivision 2, clause (1), is subject to additional taxes. The additional tax amount is determined by:

(1) computing the difference between (i) the current year's taxes determined in accordance with subdivision 4, and (ii) an amount as determined by the assessor based upon the property's current year's estimated market value of like real estate at its highest and best use and the appropriate local tax rate; and

(2) multiplying the amount determined in clause (1) by the number of years the land was in the program under this section. The current year's estimated market value as determined by the assessor must not exceed the market value that would result if the property was sold in an arms-length transaction and must not be greater than it would have been had the actual bona fide sale price of the property been used in lieu of that market value. The additional taxes must be extended against the property on the tax list for the current year, except that interest or penalties must not be levied on these additional taxes if timely paid. The additional tax under this subdivision must not be imposed on that portion of the property which has actively been mined and has been removed from the program based upon the supplemental affidavits filed under subdivision 8.

Subd. 8. Supplemental affidavits; mining activity on land. When any portion of the property begins to be actively mined, the owner must file a supplemental affidavit within 60 days from the day any aggregate is removed stating the number of acres of the property that is actively being mined. The acres actively being mined shall be (1) valued and classified under section 273.13, subdivision 24, in the next subsequent assessment year, and (2) removed from the aggregate resource preservation property tax program under this section. The additional taxes under subdivision 7 must not be imposed on the acres that are actively being mined and have been removed from the

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program under this section. Copies of the original affidavit and all supplemental affidavits must be filed with the county assessor, the local zoning administrator, and the Department of Natural Resources, Division of Land and Minerals. A supplemental affidavit must be filed each time a subsequent portion of the property is actively mined, provided that the minimum acreage change is five acres, even if the actual mining activity constitutes less than five acres. Failure to file the affidavits timely shall result in the property losing its valuation deferment under this section, and additional taxes must be imposed as calculated under subdivision 7.

Subd. 9. Lien. The additional tax imposed by this section is a lien upon the property assessed to the same extent and for the same duration as other taxes imposed upon property within this state and, when collected, must be distributed in the manner provided by law for the collection and distribution of other property taxes.

Subd. 10. Continuation of tax treatment upon sale. When real property qualifying under subdivision 2 is sold, additional taxes must not be extended against the property if the property continues to qualify under subdivision 2, and the new owner files an application with the assessor for continued deferment within 30 days after the sale.

EFFECTIVE DATE. This section is effective for taxes assessed in 2009, payable in 2010, and thereafter, except that for the 2009 assessment year, the application date under subdivision 5 shall be September 1, 2009, and subdivision 6 is effective the day following final enactment.

Sec. 20. [273.113] TAX CREDIT FOR PROPERTY IN BOVINE TUBERCULOSIS MANAGEMENT ZONES.

Subdivision 1. Definition. For the purposes of this section, "bovine tuberculosis management zone" means the area within the ten-mile radius around the five presumptive tuberculosis-positive deer sampled during the fall 2006 hunter-harvested surveillance effort.

Subd. 2. Eligibility; credit on agricultural land; cattle herds. Land classified as class 2a or 2b under section 273.13, subdivision 23, located in a bovine tuberculosis management zone is eligible for a property tax credit if the property owner has eradicated a cattle herd that had been kept on that land for at least part of the year in order to prevent the onset or spread of bovine tuberculosis. The net credit is equal to that portion of the tax relating to the market value of the land on the parcels where the herd had been located after all other applicable credits have been deducted. To initially qualify for the tax credit, the property owner shall file an application with the county by January 2 of the year following the calendar year when the herd was eradicated. The credit must be given for each taxes payable year following the calendar year when the herd was eradicated and must terminate for all taxes payable years beginning after the calendar year when a new herd of cattle was placed on the land or as provided in subdivision 5. The auditor shall indicate the amount of the property tax reduction on the property tax statement of each taxpayer receiving a credit under this section. Notwithstanding section 276.04, subdivision 3, property tax statements of properties eligible for a credit under this section must be mailed no later than April 15.

Subd. 3. Eligibility; credit on hunting land; deer and elk herds. Land located in a bovine tuberculosis management zone that is primarily used for hunting purposes is eligible for a property tax credit if (1) the property owner or the Department of Natural Resources has eradicated the deer and elk herd on that land in order to prevent the onset or spread of bovine tuberculosis, (2) the property owner adheres strictly to the deer and elk feeding ban, and (3) the property owner makes every effort to keep their land free of deer and elk. The net credit is equal to the property tax on the parcel where the herd had been located after all other applicable credits have been deducted. The credit is only on that portion of the tax relating to the market value of the land. To initially qualify for the tax credit, the property owner shall file an application with the county by January 2 of the year following the calendar year when the deer or elk herd was eradicated. To receive the tax credit in subsequent years, the property owner shall file by January 2 of each subsequent year until the state is upgraded to a bovine tuberculosis status of modified accredited advanced. The county board must approve the application before the credit is allowed. The credit is for

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each taxes payable year following the calendar year when the deer or elk herd was eradicated and must terminate as provided in subdivision 5. The auditor shall indicate the amount of the property tax reduction on the property tax statement of each taxpayer receiving a credit under this section. Notwithstanding section 276.04, subdivision 3, property tax statements of properties eligible for a credit under this section must be mailed no later than April 15.

Subd. 4. Reimbursement for lost revenue; appropriations. The county auditor shall certify to the commissioner of revenue, as part of the abstracts of tax lists required to be filed with the commissioner under section 275.29, the amount of tax lost to the county from the property tax credit under this section after all other applicable credits have been deducted. Any prior year adjustments must also be certified in the abstracts of tax lists. The commissioner of revenue shall review the certifications to determine their accuracy. The commissioner may make the changes in the certification that are considered necessary or return a certification to the county auditor for corrections. The commissioner shall reimburse each taxing district for the taxes lost. The payments must be made at the time provided in section 273.1398, subdivision 6, for payment to taxing jurisdictions in the same proportion that the ad valorem tax is distributed. The amount necessary to make the reimbursements under this section is annually appropriated from the general fund to the commissioner of revenue. The credits paid under this section shall be deducted from the tax due on the property as provided in section 273.1393.

Subd. 5. Termination of credit. The credit provided under this section ceases to be available beginning with any assessment year following the date when the United States Department of Agriculture publishes notice in the Federal Register that the state is upgraded to a bovine tuberculosis status of modified accredited advanced.

EFFECTIVE DATE. This section is effective beginning with taxes payable in 2009.

Sec. 21. Minnesota Statutes 2006, section 273.121, as amended by Laws 2008, chapter 154, article 13, section 28, is amended to read:

273.121 VALUATION OF REAL PROPERTY, NOTICE.

Subdivision 1. Notice. Any county assessor or city assessor having the powers of a county assessor, valuing or classifying taxable real property shall in each year notify those persons whose property is to be included on the assessment roll that year if the person's address is known to the assessor, otherwise the occupant of the property. The notice shall be in writing and shall be sent by ordinary mail at least ten days before the meeting of the local board of appeal and equalization under section 274.01 or the review process established under section 274.13, subdivision 1c. Upon written request by the owner of the property, the assessor may send the notice in electronic form or by electronic mail instead of on paper or by ordinary mail. It shall contain: (1) the market value for the current and prior assessment, (2) the limited market value under section 273.11, subdivision 1a, for the current and prior assessment, (3) the qualifying amount of any improvements under section 273.11, subdivision 16, for the current assessment, (4) the market value subject to taxation after subtracting the amount of any qualifying improvements for the current assessment, (5) the classification of the property for the current and prior assessment, (6) a note that if the property is homestead and at least 45 years old, improvements made to the property may be eligible for a valuation exclusion under section 273.11, subdivision 16, (7) the assessor's office address, and (8) the dates, places, and times set for the meetings of the local board of appeal and equalization, the review process established under section 274.13, subdivision 1c, and the county board of appeal and equalization. The commissioner of revenue shall specify the form of the notice. The assessor shall attach to the assessment roll a statement that the notices required by this section have been mailed. Any assessor who is not provided sufficient funds from the assessor's governing body to provide such notices, may make application to the commissioner of revenue to finance such notices. The commissioner of revenue shall conduct an investigation and, if satisfied that the assessor does not have the necessary funds, issue a certification to the commissioner of finance of the amount necessary to provide such notices. The commissioner of finance shall issue a warrant for such amount and shall deduct such amount from any state payment to such county or municipality. The necessary funds to make such payments are hereby appropriated. Failure to receive the notice shall in no way affect the validity of the assessment, the resulting tax, the procedures of any board of review or equalization, or the enforcement of delinquent taxes by statutory means.

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Subd. 2. Availability of data. The notice must state where the information on the property is available, the times when the information may be viewed by the public, and the county's Web site address.

EFFECTIVE DATE. This section is effective for notices prepared in 2009 and thereafter.

Sec. 22. Minnesota Statutes 2006, section 273.124, subdivision 1, is amended to read:

Subdivision 1. General rule. (a) Residential real estate that is occupied and used for the purposes of a homestead by its owner, who must be a Minnesota resident, is a residential homestead.

Agricultural land, as defined in section 273.13, subdivision 23, that is occupied and used as a homestead by its owner, who must be a Minnesota resident, is an agricultural homestead.

Dates for establishment of a homestead and homestead treatment provided to particular types of property are as provided in this section.

Property held by a trustee under a trust is eligible for homestead classification if the requirements under this chapter are satisfied.

The assessor shall require proof, as provided in subdivision 13, of the facts upon which classification as a homestead may be determined. Notwithstanding any other law, the assessor may at any time require a homestead application to be filed in order to verify that any property classified as a homestead continues to be eligible for homestead status. Notwithstanding any other law to the contrary, the Department of Revenue may, upon request from an assessor, verify whether an individual who is requesting or receiving homestead classification has filed a Minnesota income tax return as a resident for the most recent taxable year for which the information is available.

When there is a name change or a transfer of homestead property, the assessor may reclassify the property in the next assessment unless a homestead application is filed to verify that the property continues to qualify for homestead classification.

(b) For purposes of this section, homestead property shall include property which is used for purposes of the homestead but is separated from the homestead by a road, street, lot, waterway, or other similar intervening property. The term "used for purposes of the homestead" shall include but not be limited to uses for gardens, garages, or other outbuildings commonly associated with a homestead, but shall not include vacant land held primarily for future development. In order to receive homestead treatment for the noncontiguous property, the owner must use the property for the purposes of the homestead, and must apply to the assessor, both by the deadlines given in subdivision 9. After initial qualification for the homestead treatment, additional applications for subsequent years are not required.

(c) Residential real estate that is occupied and used for purposes of a homestead by a relative of the owner is a homestead but only to the extent of the homestead treatment that would be provided if the related owner occupied the property. For purposes of this paragraph and paragraph (g), "relative" means a parent, stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew, or niece. This relationship may be by blood or marriage. Property that has been classified as seasonal residential recreational property at any time during which it has been owned by the current owner or spouse of the current owner will not be reclassified as a homestead unless it is occupied as a homestead by the owner; this prohibition also applies to property that, in the absence of this paragraph, would have been classified as seasonal residential recreational property at the time when the residence was constructed. Neither the related occupant nor the owner of the property may claim a property tax refund under chapter 290A for a homestead occupied by a relative. In the case of a residence located on agricultural land, only the house, garage, and immediately surrounding one acre of land shall be classified as a homestead under this paragraph, except as provided in paragraph (d).

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(d) Agricultural property that is occupied and used for purposes of a homestead by a relative of the owner, is a homestead, only to the extent of the homestead treatment that would be provided if the related owner occupied the property, and only if all of the following criteria are met:

(1) the relative who is occupying the agricultural property is a son, daughter, brother, sister, grandson, granddaughter, father, or mother of the owner of the agricultural property or a son, daughter, brother, sister, grandson, or granddaughter of the spouse of the owner of the agricultural property;

(2) the owner of the agricultural property must be a Minnesota resident;

(3) the owner of the agricultural property must not receive homestead treatment on any other agricultural property in Minnesota; and

(4) the owner of the agricultural property is limited to only one agricultural homestead per family under this paragraph.

Neither the related occupant nor the owner of the property may claim a property tax refund under chapter 290A for a homestead occupied by a relative qualifying under this paragraph. For purposes of this paragraph, "agricultural property" means the house, garage, other farm buildings and structures, and agricultural land.

Application must be made to the assessor by the owner of the agricultural property to receive homestead benefits under this paragraph. The assessor may require the necessary proof that the requirements under this paragraph have been met.

(e) In the case of property owned by a property owner who is married, the assessor must not deny homestead treatment in whole or in part if only one of the spouses occupies the property and the other spouse is absent due to: (1) marriage dissolution proceedings, (2) legal separation, (3) employment or self-employment in another location, or (4) other personal circumstances causing the spouses to live separately, not including an intent to obtain two homestead classifications for property tax purposes. To qualify under clause (3), the spouse's place of employment or self-employment must be at least 50 miles distant from the other spouse's place of employment, and the homesteads must be at least 50 miles distant from each other. Homestead treatment, in whole or in part, shall not be denied to the owner's spouse who previously occupied the residence with the owner if the absence of the owner is due to one of the exceptions provided in this paragraph.

(f) The assessor must not deny homestead treatment in whole or in part if:

(1) in the case of a property owner who is not married, the owner is absent due to residence in a nursing home, boarding care facility, or an elderly assisted living facility property as defined in section 273.13, subdivision 25a, and the property is not otherwise occupied; or

(2) in the case of a property owner who is married, the owner or the owner's spouse or both are absent due to residence in a nursing home, boarding care facility, or an elderly assisted living facility property as defined in section 273.13, subdivision 25a, and the property is not occupied or is occupied only by the owner's spouse.

(g) If an individual is purchasing property with the intent of claiming it as a homestead and is required by the terms of the financing agreement to have a relative shown on the deed as a co-owner, the assessor shall allow a full homestead classification. This provision only applies to first-time purchasers, whether married or single, or to a person who had previously been married and is purchasing as a single individual for the first time. The application for homestead benefits must be on a form prescribed by the commissioner and must contain the data necessary for the assessor to determine if full homestead benefits are warranted.

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(h) If residential or agricultural real estate is occupied and used for purposes of a homestead by a child of a deceased owner and the property is subject to jurisdiction of probate court, the child shall receive relative homestead classification under paragraph (c) or (d) to the same extent they would be entitled to it if the owner was still living, until the probate is completed. For purposes of this paragraph, "child" includes a relationship by blood or by marriage.

(i) If a single-family home, duplex, or triplex classified as either residential homestead or agricultural homestead is also used to provide licensed child care, the portion of the property used for licensed child care must be classified as a part of the homestead property.

EFFECTIVE DATE. This section is effective for taxes payable in 2009 and thereafter.

Sec. 23. Minnesota Statutes 2007 Supplement, section 273.124, subdivision 14, is amended to read:

Subd. 14. Agricultural homesteads; special provisions. (a) Real estate of less than ten acres that is the homestead of its owner must be classified as class 2a under section 273.13, subdivision 23, paragraph (a), if:

(1) the parcel on which the house is located is contiguous on at least two sides to (i) agricultural land, (ii) land owned or administered by the United States Fish and Wildlife Service, or (iii) land administered by the Department of Natural Resources on which in lieu taxes are paid under sections 477A.11 to 477A.14;

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least 20 acres;

(3) the noncontiguous land is located not farther than four townships or cities, or a combination of townships or cities from the homestead; and

(4) the agricultural use value of the noncontiguous land and farm buildings is equal to at least 50 percent of the market value of the house, garage, and one acre of land.

Homesteads initially classified as class 2a under the provisions of this paragraph shall remain classified as class 2a, irrespective of subsequent changes in the use of adjoining properties, as long as the homestead remains under the same ownership, the owner owns a noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use value qualifies under clause (4). Homestead classification under this paragraph is limited to property that qualified under this paragraph for the 1998 assessment.

(b)(i) Agricultural property consisting of at least 40 acres shall be classified as the owner's homestead, to the same extent as other agricultural homestead property, if all of the following criteria are met:

(1) the owner, the owner's spouse, the son or daughter of the owner or owner's spouse, the brother or sister of the owner or owner's spouse, or the grandson or granddaughter of the owner or the owner's spouse, is actively farming the agricultural property, either on the person's own behalf as an individual or on behalf of a partnership operating a family farm, family farm corporation, joint family farm venture, or limited liability company of which the person is a partner, shareholder, or member;

(2) both the owner of the agricultural property and the person who is actively farming the agricultural property under clause (1), are Minnesota residents;

(3) neither the owner nor the spouse of the owner claims another agricultural homestead in Minnesota; and

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(4) ~~neither~~ the owner ~~nor~~ and the person actively farming the property ~~lives farther than four townships or cities, or a combination of four townships or cities, from the agricultural property,~~ must live either in the county where the agricultural property is located or in a county contiguous to the county where the agricultural property is located, except that if the owner or the owner's spouse is required to live in employer-provided housing, the owner or owner's spouse, whichever is actively farming the agricultural property, may live ~~more than four townships or cities, or combination of four townships or cities~~ further from the agricultural property than in the county or county contiguous to the property.

The relationship under this paragraph may be either by blood or marriage.

(ii) Real property held by a trustee under a trust is eligible for agricultural homestead classification under this paragraph if the qualifications in clause (i) are met, except that "owner" means the grantor of the trust.

(iii) Property containing the residence of an owner who owns qualified property under clause (i) shall be classified as part of the owner's agricultural homestead, if that property is also used for noncommercial storage or drying of agricultural crops.

(c) Noncontiguous land shall be included as part of a homestead under section 273.13, subdivision 23, paragraph (a), only if the homestead is classified as class 2a and the detached land is located in the same ~~township or city, or not farther than four townships or cities or combination thereof from~~ county or in a county contiguous to the homestead. Any taxpayer of these noncontiguous lands must notify the county assessor that the noncontiguous land is part of the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer must also notify the assessor of the other county.

(d) Agricultural land used for purposes of a homestead and actively farmed by a person holding a vested remainder interest in it must be classified as a homestead under section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a, any other dwellings on the land used for purposes of a homestead by persons holding vested remainder interests who are actively engaged in farming the property, and up to one acre of the land surrounding each homestead and reasonably necessary for the use of the dwelling as a home, must also be assessed class 2a.

(e) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain classified as agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of the April 1997 floods;

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, or Wilkin;

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 1997 assessment year and continue to be used for agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 30 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the 1997 floods, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in dwelling. Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

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(f) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain classified agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of damage caused by a March 29, 1998, tornado;

(2) the property is located in the county of Blue Earth, Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice;

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 1998 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to a March 29, 1998, tornado, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the owner must notify the assessor by December 1, 1998. Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

(g) Agricultural property consisting of at least 40 acres of a family farm corporation, joint family farm venture, family farm limited liability company, or partnership operating a family farm as described under subdivision 8 shall be classified homestead, to the same extent as other agricultural homestead property, if all of the following criteria are met:

(1) a shareholder, member, or partner of that entity is actively farming the agricultural property;

(2) that shareholder, member, or partner who is actively farming the agricultural property is a Minnesota resident;

(3) neither that shareholder, member, or partner, nor the spouse of that shareholder, member, or partner claims another agricultural homestead in Minnesota; and

(4) that shareholder, member, or partner ~~does not live farther than four townships or cities, or a combination of four townships or cities, from the agricultural property~~ lives in the county where the agricultural property is located or in a county contiguous to the county where the property is located.

Homestead treatment applies under this paragraph for property leased to a family farm corporation, joint farm venture, limited liability company, or partnership operating a family farm if legal title to the property is in the name of an individual who is a member, shareholder, or partner in the entity.

(h) To be eligible for the special agricultural homestead under this subdivision, an initial full application must be submitted to the county assessor where the property is located. Owners and the persons who are actively farming the property shall be required to complete only a one-page abbreviated version of the application in each subsequent year provided that none of the following items have changed since the initial application:

(1) the day-to-day operation, administration, and financial risks remain the same;

(2) the owners and the persons actively farming the property continue to live within ~~the four townships or city criteria~~ the county or a contiguous county and are Minnesota residents;

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(3) the same operator of the agricultural property is listed with the Farm Service Agency;

(4) a Schedule F or equivalent income tax form was filed for the most recent year;

(5) the property's acreage is unchanged; and

(6) none of the property's acres have been enrolled in a federal or state farm program since the initial application.

The owners and any persons who are actively farming the property must include the appropriate Social Security numbers, and sign and date the application. If any of the specified information has changed since the full application was filed, the owner must notify the assessor, and must complete a new application to determine if the property continues to qualify for the special agricultural homestead. The commissioner of revenue shall prepare a standard reapplication form for use by the assessors.

(i) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain classified agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of damage caused by the August 2007 floods;

(2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted, Steele, Wabasha, or Winona;

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 2007 assessment year;

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

(5) the owner notifies the county assessor that the relocation was due to the August 2007 floods, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the owner must notify the assessor by December 1, 2008. Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

EFFECTIVE DATE. This section is effective for taxes payable in 2010 and thereafter, except that the provision extending the homestead to brothers and sisters is effective for taxes payable in 2009 and thereafter.

Sec. 24. Minnesota Statutes 2006, section 273.13, subdivision 23, as amended by Laws 2008, chapter 154, article 2, section 12, is amended to read:

Subd. 23. Class 2. (a) ~~Class 2a property is agricultural land including any improvements~~ An agricultural homestead consists of class 2a agricultural land that is homesteaded, along with any class 2b rural vacant land that is contiguous to the class 2a land. The market value of the house and garage and immediately surrounding one acre of land has the same class rates as class 1a or 1b property under subdivision 22. The value of the remaining land including improvements up to the first tier valuation limit of agricultural homestead property has a net class rate of ~~0.55~~ 0.5 percent of market value. The remaining property over the first tier has a class rate of one percent of market value. For purposes of this subdivision, the "first tier valuation limit of agricultural homestead property" and "first tier" means the limit certified under section 273.11, subdivision 23.

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(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that are agricultural land and buildings. Class 2a property has a net class rate of one percent of market value, unless it is part of an agricultural homestead under paragraph (a). Class 2a property may contain an incidental amount of property that would otherwise be classified as 2b, including but not limited to sloughs, wooded wind shelters, acreage abutting ditches, and other similar land impractical for the assessor to value separately from the rest of the property.

(c) Class 2b ~~property is (1)~~ rural vacant land consists of parcels of property, or portions thereof, that are unplatted real estate, rural in character and not used for agricultural purposes, including land used ~~exclusively~~ for growing trees for timber, lumber, and wood and wood products~~; (2) real estate~~ that is not improved with a structure and is used exclusively for growing trees for timber, lumber, and wood and wood products, if the owner has participated or is participating in a cost-sharing program for afforestation, reforestation, or timber stand improvement on that particular property, administered or coordinated by the commissioner of natural resources; (3) real estate that is nonhomestead agricultural land; or (4) a landing area or public access area of a privately owned public use airport, provided that the presence of a minor, ancillary nonresidential structure as defined by the commissioner of revenue does not disqualify the property from classification under this paragraph and provided that any parcel improved with a structure that is not a minor, ancillary nonresidential structure may be split-classified, provided that the acreage assigned to the split parcel with the structure is at least 20 acres. Class 2b property has a net class rate of one percent of market value~~, except that unplatted property described in clause (1) or (2) has a net class rate of .65 percent if it consists~~ unless it is part of an agricultural homestead under paragraph (a), or qualifies as class 2c under paragraph (d).

(d) Class 2c managed forest land consists of no less than ~~ten~~ 20 and no more than 1,920 acres ~~and~~ statewide per taxpayer that is being managed under a forest management plan that meets the requirements of chapter 290C, but is not enrolled in the sustainable forest resource management incentive program. It has a class rate of .65 percent, provided that the owner of the property must apply to the assessor ~~annually~~ to receive the reduced class rate and provide the information required by the assessor to verify that the property qualifies for the reduced rate. The commissioner of natural resources must concur that the land is qualified. The commissioner of natural resources shall annually provide county assessors verification information on a timely basis.

~~(c)~~ (e) Agricultural land as used in this section means ~~contiguous acreage of ten acres or more,~~ property used ~~during the preceding year~~ for agricultural purposes. "Agricultural purposes" as used in this section means the raising or, cultivation, drying, or storage of agricultural products for sale, or the storage of machinery or equipment used in support of agricultural production. For a property to be classified as agricultural based only on the drying or storage of agricultural products, the products being dried or stored must have been produced by the same farm entity as the entity operating the drying or storage facility. "Agricultural purposes" also includes enrollment in the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public Law 99-198 if the property was classified as agricultural (i) under this subdivision for the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage on the same parcel, or contiguous acreage on an immediately adjacent parcel under the same ownership, may also qualify as agricultural land, but only if it is pasture, timber, waste, unusable wild land, or land included in state or federal farm programs. Agricultural classification ~~for property shall be determined excluding the house, garage, and immediately surrounding one acre of land, and~~ shall not be based upon the market value of any residential structures on the parcel or contiguous parcels under the same ownership.

~~(d)~~ (f) Real estate of less than five acres, excluding the house, garage, and immediately surrounding one acre of land, ~~of less than ten acres which is exclusively and intensively used for raising or cultivating agricultural products, shall be considered as agricultural land~~ qualifies as class 2a if:

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(i) the entire parcel is tilled or pastured to produce an agricultural product for sale in three of the last five years;

(ii) the acres are used primarily for drying or storage of grain or storage of machinery or equipment used to support agricultural activities on other parcels of property operated by the same farming entity;

(iii) the land mass contains a nursery, provided only those acres used to produce nursery stock are considered agricultural land;

(iv) the parcel is used exclusively as a livestock or poultry confinement process; or

(v) the parcel is used primarily for market farming; for purposes of this paragraph, "market farming" means the cultivation of one or more fruits or vegetables or production of animal or other agricultural products for sale to local markets by the farmer or an organization with which the farmer is affiliated.

(g) Land shall be classified as agricultural even if all or a portion of the agricultural use of that property is the leasing to, or use by another person for agricultural purposes.

~~Classification under this subdivision is not determinative for qualifying under section 273.111.~~

(h) The property classification under this section supersedes, for property tax purposes only, any locally administered agricultural policies or land use restrictions that define minimum or maximum farm acreage.

~~(e)~~ (i) The term "agricultural products" as used in this subdivision includes production for sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, bees, and apiary products by the owner;

(2) fish bred for sale and consumption if the fish breeding occurs on land zoned for agricultural use;

(3) the commercial boarding of horses if the boarding is done in conjunction with raising or cultivating agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for equestrian activities, excluding racing;

(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, including short rotation woody crops, and not sold for timber, lumber, wood, or wood products; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota Department of Agriculture under chapter 28A as a food processor.

~~(f)~~ (j) If a parcel used for agricultural purposes is also used for commercial or industrial purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

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(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2), and (3),

the assessor shall classify the part of the parcel used for agricultural purposes as class 1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its use. The grading, sorting, and packaging of raw agricultural products for first sale is considered an agricultural purpose. A greenhouse or other building where horticultural or nursery products are grown that is also used for the conduct of retail sales must be classified as agricultural if it is primarily used for the growing of horticultural or nursery products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of those products. Use of a greenhouse or building only for the display of already grown horticultural or nursery products does not qualify as an agricultural purpose.

The assessor shall determine and list separately on the records the market value of the homestead dwelling and the one acre of land on which that dwelling is located. If any farm buildings or structures are located on this homesteaded acre of land, their market value shall not be included in this separate determination.

~~(g)~~ (k) Class 2d airport landing area consists of a landing area or public access area of a privately owned public use airport. To qualify for classification under this paragraph ~~(b), clause (4)~~, a privately owned public use airport must be licensed as a public airport under section 360.018. For purposes of this paragraph ~~(b), clause (4)~~, "landing area" means that part of a privately owned public use airport properly cleared, regularly maintained, and made available to the public for use by aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing or navigational aids. A landing area also includes land underlying both the primary surface and the approach surfaces that comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of the landing, taking off, and taxiing of aircraft; but that portion of the land that contains facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under this paragraph ~~(b), clause (4),~~ must be described and certified by the commissioner of transportation. The certification is effective until it is modified, or until the airport or landing area no longer meets the requirements of this paragraph ~~(b), clause (4)~~. For purposes of this paragraph ~~(b), clause (4)~~, "public access area" means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival and departure building in connection with the airport.

(l) Class 2e consists of land with a commercial aggregate deposit that is actively being mined and is not otherwise classified as class 2a or 2b. To qualify for classification under this paragraph, the property must be at least ten contiguous acres in size and the owner of the property must record with the county recorder of the county in which the property is located an affidavit containing:

(1) a legal description of the property;

(2) a disclosure that the property contains a commercial aggregate deposit that is not actively being mined but is present on the entire parcel enrolled;

(3) documentation that the conditional use under the county or local zoning ordinance of this property is for mining; and

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(4) documentation that a permit has been issued by the local unit of government or the mining activity is allowed under local ordinance. The disclosure must include a statement from a registered professional geologist, engineer, or soil scientist delineating the deposit and certifying that it is a commercial aggregate deposit.

For purposes of this section and section 273.1115, "commercial aggregate deposit" means a deposit that will yield crushed stone or sand and gravel that is suitable for use as a construction aggregate; and "actively mined" means the removal of top soil and overburden in preparation for excavation or excavation of a commercial deposit.

(m) When any portion of the property under this subdivision or subdivision 22 begins to be actively mined, the owner must file a supplemental affidavit within 60 days from the day any aggregate is removed stating the number of acres of the property that is actively being mined. The acres actively being mined must be (1) valued and classified under subdivision 24 in the next subsequent assessment year, and (2) removed from the aggregate resource preservation property tax program under section 273.1115, if the land was enrolled in that program. Copies of the original affidavit and all supplemental affidavits must be filed with the county assessor, the local zoning administrator, and the Department of Natural Resources, Division of Land and Minerals. A supplemental affidavit must be filed each time a subsequent portion of the property is actively mined, provided that the minimum acreage change is five acres, even if the actual mining activity constitutes less than five acres.

EFFECTIVE DATE. The portion of this section reducing the agricultural class rate, and expanding the definition of "agricultural purposes" in paragraph (e) and "agricultural products" in paragraph (h), is effective for taxes payable in 2009 and thereafter. The remainder of the section is effective for taxes payable in 2010 and thereafter.

Sec. 25. Minnesota Statutes 2006, section 273.13, subdivision 24, is amended to read:

Subd. 24. Class 3. (a) Commercial and industrial property and utility real and personal property is class 3a.

(1) Except as otherwise provided, each parcel of commercial, industrial, or utility real property has a class rate of 1.5 percent of the first tier of market value, and 2.0 percent of the remaining market value. In the case of contiguous parcels of property owned by the same person or entity, only the value equal to the first-tier value of the contiguous parcels qualifies for the reduced class rate, except that contiguous parcels owned by the same person or entity shall be eligible for the first-tier value class rate on each separate business operated by the owner of the property, provided the business is housed in a separate structure. For the purposes of this subdivision, the first tier means the first $150,000 of market value. Real property owned in fee by a utility for transmission line right-of-way shall be classified at the class rate for the higher tier.

For purposes of this subdivision, parcels are considered to be contiguous even if they are separated from each other by a road, street, waterway, or other similar intervening type of property. Connections between parcels that consist of power lines or pipelines do not cause the parcels to be contiguous. Property owners who have contiguous parcels of property that constitute separate businesses that may qualify for the first-tier class rate shall notify the assessor by July 1, for treatment beginning in the following taxes payable year.

(2) ~~All~~ Personal property that is~~: (i)~~ part of an electric generation~~, transmission, or distribution~~ system~~; or (ii)~~, including tools, implements, and machinery, has a class rate of 2.4 percent for taxes payable in 2009, and 2.8 percent for taxes payable in 2010 and thereafter.

(3) Personal property that is either: (i) part of a pipeline system transporting or distributing water, gas, crude oil, or petroleum products~~; and (iii) not described in clause (3), and all~~, including tools, implements, and machinery, or (ii) part of an electric transmission or distribution system, including tools, implements, and machinery, has a class rate of 2.0 percent for taxes payable in 2009 and thereafter.

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(4) Railroad operating property has a class rate as provided under clause (1) for the first tier of market value and the remaining market value. In the case of multiple parcels in one county that are owned by one person or entity, only one first tier amount is eligible for the reduced rate.

(3) The entire market value of personal property that is: (i) tools, implements, and machinery of an electric generation, transmission, or distribution system; (ii) tools, implements, and machinery of a pipeline system transporting or distributing water, gas, crude oil, or petroleum products; or (iii) the (5) Personal property consisting of mains and pipes used in the distribution of steam or hot or chilled water for heating or cooling buildings, has a class rate as provided under clause (1) for the remaining market value in excess of the first tier.

(b) Employment property defined in section 469.166, during the period provided in section 469.170, shall constitute class 3b. The class rates for class 3b property are determined under paragraph (a).

EFFECTIVE DATE. This section is effective for taxes payable in 2009 and thereafter.

Sec. 26. Minnesota Statutes 2006, section 273.13, subdivision 25, as amended by Laws 2008, chapter 154, article 2, section 13, is amended to read:

Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more units and used or held for use by the owner or by the tenants or lessees of the owner as a residence for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt under section 272.02, and contiguous property used for hospital purposes, without regard to whether the property has been platted or subdivided. The market value of class 4a property has a class rate of 1.25 percent.

(b) Class 4b ~~includes:~~

~~(1) residential real estate containing less than four units that does not qualify as class 4bb, other than seasonal residential recreational property;~~

~~(2) manufactured homes not classified under any other provision;~~

~~(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm classified under subdivision 23, paragraph (b) containing two or three units; and~~

~~(4)~~ is unimproved property that is classified residential as determined under subdivision 33.

The market value of class 4b property has a class rate of 1.25 percent.

(1) nonhomestead residential real estate containing ~~one unit~~ up to three units, other than seasonal residential recreational property; ~~and~~

(2) a ~~single family~~ dwelling, garage, and surrounding one acre of property on a nonhomestead farm classified under subdivision 23, paragraph (b), containing up to three units; and

(3) manufactured homes not classified under any other provision.

Class 4bb property has the same class rates as class 1a property under subdivision 22.

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Property that has been classified as seasonal residential recreational property at any time during which it has been owned by the current owner or spouse of the current owner does not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), or subdivision 23, paragraph (b), clause (1), real and personal property devoted to temporary and seasonal residential occupancy for recreation purposes, including real and personal property devoted to temporary and seasonal residential occupancy for recreation purposes and not devoted to commercial purposes for more than 250 days in the year preceding the year of assessment. For purposes of this clause, property is devoted to a commercial purpose on a specific day if any portion of the property is used for residential occupancy, and a fee is charged for residential occupancy. Class 4c property must contain three or more rental units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site equipped with water and electrical hookups for recreational vehicles. Class 4c property must provide recreational activities such as renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment; provide marina services, launch services, or guide services; or sell bait and fishing tackle. A camping pad offered for rent by a property that otherwise qualifies for class 4c is also class 4c regardless of the term of the rental agreement, as long as the use of the camping pad does not exceed 250 days. In order for a property to be classified as class 4c, seasonal residential recreational for commercial purposes, at least 40 percent of the annual gross lodging receipts related to the property must be from business conducted during 90 consecutive days and either (i) at least 60 percent of all paid bookings by lodging guests during the year must be for periods of at least two consecutive nights; or (ii) at least 20 percent of the annual gross receipts must be from charges for rental of fish houses, boats and motors, snowmobiles, downhill or cross-country ski equipment, or charges for marina services, launch services, and guide services, or the sale of bait and fishing tackle. For purposes of this determination, a paid booking of five or more nights shall be counted as two bookings. Class 4c also includes commercial use real property used exclusively for recreational purposes in conjunction with class 4c property devoted to temporary and seasonal residential occupancy for recreational purposes, up to a total of two acres, provided the property is not devoted to commercial recreational use for more than 250 days in the year preceding the year of assessment and is located within two miles of the class 4c property with which it is used. Owners of real and personal property devoted to temporary and seasonal residential occupancy for recreation purposes and all or a portion of which was devoted to commercial purposes for not more than 250 days in the year preceding the year of assessment desiring classification as class 4c, must submit a declaration to the assessor designating the cabins or units occupied for 250 days or less in the year preceding the year of assessment by January 15 of the assessment year. Those cabins or units and a proportionate share of the land on which they are located must be designated class 4c as otherwise provided. The remainder of the cabins or units and a proportionate share of the land on which they are located will be designated as class 3a. The owner of property desiring designation as class 4c property must provide guest registers or other records demonstrating that the units for which class 4c designation is sought were not occupied for more than 250 days in the year preceding the assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility operated on a commercial basis not directly related to temporary and seasonal residential occupancy for recreation purposes does not qualify for class 4c;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or dues, but a membership fee may not be required in order to use the property for golfing, and its green fees for golfing must be comparable to green fees typically charged by municipal courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with the golf course is classified as class 3a property;

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(3) real property up to a maximum of three acres of land owned and used by a nonprofit community service oriented organization and that is not used for residential purposes on either a temporary or permanent basis, qualifies for class 4c provided that it meets either of the following:

(i) the property is not used for a revenue-producing activity for more than six days in the calendar year preceding the year of assessment; or

(ii) the organization makes annual charitable contributions and donations at least equal to the property's previous year's property taxes and the property is allowed to be used for public and community meetings or events for no charge, as appropriate to the size of the facility.

For purposes of this clause,

(A) "charitable contributions and donations" has the same meaning as lawful gambling purposes under section 349.12, subdivision 25, excluding those purposes relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;

(B) "property taxes" excludes the state general tax;

(C) a "nonprofit community service oriented organization" means any corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, fraternal, civic, or educational purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), (10), or (19) of the Internal Revenue Code of 1986, as amended through December 31, 1990; and

(D) "revenue-producing activities" shall include but not be limited to property or that portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling alley, a retail store, gambling conducted by organizations licensed under chapter 349, an insurance business, or office or other space leased or rented to a lessee who conducts a for-profit enterprise on the premises.

Any portion of the property qualifying under item (i) which is used for revenue-producing activities for more than six days in the calendar year preceding the year of assessment shall be assessed as class 3a. The use of the property for social events open exclusively to members and their guests for periods of less than 24 hours, when an admission is not charged nor any revenues are received by the organization shall not be considered a revenue-producing activity.

The organization shall maintain records of its charitable contributions and donations and of public meetings and events held on the property and make them available upon request any time to the assessor to ensure eligibility. An organization meeting the requirement under item (ii) must file an application by May 1 with the assessor for eligibility for the current year's assessment. The commissioner shall prescribe a uniform application form and instructions;

(4) postsecondary student housing of not more than one acre of land that is owned by a nonprofit corporation organized under chapter 317A and is used exclusively by a student cooperative, sorority, or fraternity for on-campus housing or housing located within two miles of the border of a college campus;

(5) manufactured home parks as defined in section 327.14, subdivision 3;

(6) real property that is actively and exclusively devoted to indoor fitness, health, social, recreational, and related uses, is owned and operated by a not-for-profit corporation, and is located within the metropolitan area as defined in section 473.121, subdivision 2;

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(7) a leased or privately owned noncommercial aircraft storage hangar not exempt under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the leased premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be filed by the new owner with the assessor of the county where the property is located within 60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement restricting the use of the premises, prohibiting commercial use or activity performed at the hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead purposes, and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods of 14 or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated in the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer than seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental units. Any rental units on the property in excess of five, must be valued and assessed as class 3a. The portion of the property used for purposes of a homestead by the owner must be classified as class 1a property under subdivision 22.

Class 4c property has a class rate of 1.5 percent of market value, except that (i) each parcel of seasonal residential recreational property not used for commercial purposes has the same class rates as class 4bb property, (ii) manufactured home parks assessed under clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal residential recreational property has a class rate of one percent for the first $500,000 of market value, and 1.25 percent for the remaining market value, (iv) the market value of property described in clause (4) has a class rate of one percent, (v) the market value of property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that portion of the market value of property in clause (9) qualifying for class 4c property has a class rate of 1.25 percent.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion of the units in the building qualify as low-income rental housing units as certified under section 273.128, subdivision 3, only the proportion of qualifying units to the total number of units in the building qualify for class 4d. The remaining portion of the building shall be classified by the assessor based upon its use. Class 4d also includes the same proportion of land as the qualifying low-income rental housing units are to the total units in the building. For all properties qualifying as class 4d, the market value determined by the assessor must be based on the normal approach to value using normal unrestricted rents.

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Class 4d property has a class rate of 0.75 percent.

EFFECTIVE DATE. This section is effective for assessment year 2008 and thereafter, and for taxes payable in 2009 and thereafter.

Sec. 27. Minnesota Statutes 2006, section 273.13, subdivision 33, is amended to read:

Subd. 33. Classification of unimproved property. (a) All real property that is not improved with a structure must be classified according to its current use.

(b) Except as provided in subdivision 23, paragraph (c), real property that is not improved with a structure and for which there is no identifiable current use must be classified according to its highest and best use permitted under the local zoning ordinance. If the ordinance permits more than one use, the land must be classified according to the highest and best use permitted under the ordinance. If no such ordinance exists, the assessor shall consider the most likely potential use of the unimproved land based upon the use made of surrounding land or land in proximity to the unimproved land.

EFFECTIVE DATE. This section is effective for taxes payable in 2009 and thereafter.

Sec. 28. [273.1388] PROPERTY TAX CREDIT FOR LEASED LAND.

Noncommercial seasonal residential recreational property located on land leased from a governmental unit or agency is eligible for a property tax credit equal to 25 percent of the annual lease payment. Eligible taxpayers must file an application with the county auditor prior to November 1 of the year in which the property taxes are payable. The application shall be on a form prescribed by the commissioner of revenue, and must include such evidence as the county deems necessary of the annual lease payment for the period corresponding to the taxes payable year. The county may either pay the credit directly to the property owner or subtract it as a credit on the property tax statement, whichever it considers to be more administratively cost-efficient. If the county makes a direct payment of the credit to the property owner, the county must pay the credit by August 1 of the year in which the taxes are payable or within 45 days of receipt of the application, whichever is later.

EFFECTIVE DATE. This section is effective for taxes payable in 2009 and thereafter.

Sec. 29. Minnesota Statutes 2007 Supplement, section 273.1393, is amended to read:

273.1393 COMPUTATION OF NET PROPERTY TAXES.

Notwithstanding any other provisions to the contrary, "net" property taxes are determined by subtracting the credits in the order listed from the gross tax:

(1) disaster credit as provided in sections 273.1231 to 273.1235;

(2) powerline credit as provided in section 273.42;

(3) agricultural preserves credit as provided in section 473H.10;

(4) enterprise zone credit as provided in section 469.171;

(5) disparity reduction credit;

(6) conservation tax credit as provided in section 273.119;

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(7) homestead and agricultural credits as provided in section 273.1384;

(8) taconite homestead credit as provided in section 273.135; ~~and~~

(9) supplemental homestead credit as provided in section 273.1391; and

(10) bovine tuberculosis management credit as provided in section 273.113.

The combination of all property tax credits must not exceed the gross tax amount.

EFFECTIVE DATE. This section is effective for taxes payable in 2009 and thereafter.

Sec. 30. Minnesota Statutes 2006, section 274.14, is amended to read:

274.14 LENGTH OF SESSION; RECORD.

The board may meet on any ten consecutive meeting days in June, after the second Friday in June. The actual meeting dates must be contained on the valuation notices mailed to each property owner in the county as provided in section 273.121. For this purpose, "meeting days" is defined as any day of the week excluding ~~Saturday and~~ Sunday. At the board's discretion, "meeting days" may include Saturday. No action taken by the county board of review after June 30 is valid, except for corrections permitted in sections 273.01 and 274.01. The county auditor shall keep an accurate record of the proceedings and orders of the board. The record must be published like other proceedings of county commissioners. A copy of the published record must be sent to the commissioner of revenue, with the abstract of assessment required by section 274.16.

For counties that conduct either regular board of review meetings or open book meetings, at least one of the meeting days must include a meeting that does not end before 7:00 p.m. For counties that require taxpayer appointments for the board of review, appointments must include some available times that extend until at least 7:00 p.m. The county may have a Saturday meeting in lieu of, or in addition to, the extended meeting times under this paragraph.

Sec. 31. Minnesota Statutes 2006, section 275.025, subdivision 1, is amended to read:

Subdivision 1. Levy amount. The state general levy is levied against commercial-industrial property and seasonal residential recreational property, as defined in this section. The state general levy base amount is $592,000,000 for taxes payable in 2002. For taxes payable in subsequent years, the levy base amount is increased each year by multiplying the levy base amount for the prior year by the sum of one plus the rate of increase, if any, in the implicit price deflator for government consumption expenditures and gross investment for state and local governments prepared by the Bureau of Economic Analysts of the United States Department of Commerce for the 12-month period ending March 31 of the year prior to the year the taxes are payable. The tax under this section is not treated as a local tax rate under section 469.177 and is not the levy of a governmental unit under chapters 276A and 473F.

In setting the rate, the commissioner shall exclude the tax capacity of property described in section 473.625 from the tax base. The commissioner shall increase or decrease the preliminary or final rate for a year as necessary to account for errors and tax base changes that affected a preliminary or final rate for either of the two preceding years. Adjustments are allowed to the extent that the necessary information is available to the commissioner at the time the rates for a year must be certified, and for the following reasons:

(1) an erroneous report of taxable value by a local official;

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(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal residential recreational property reported on the abstracts of tax lists submitted under section 275.29 that was not reported on the abstracts of assessment submitted under section 270C.89 for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax levied for the year would be less than $100,000.

EFFECTIVE DATE. This section is effective beginning for property taxes payable in 2009.

Sec. 32. Minnesota Statutes 2006, section 275.025, subdivision 2, is amended to read:

Subd. 2. Commercial-industrial tax capacity. For the purposes of this section, "commercial-industrial tax capacity" means the tax capacity of all taxable property classified as class 3 or class 5(1) under section 273.13, except for electric generation attached machinery under class 3 ~~and property described in section 473.625~~. County commercial-industrial tax capacity amounts are not adjusted for the captured net tax capacity of a tax increment financing district under section 469.177, subdivision 2, the net tax capacity of transmission lines deducted from a local government's total net tax capacity under section 273.425, or fiscal disparities contribution and distribution net tax capacities under chapter 276A or 473F.

EFFECTIVE DATE. This section is effective beginning for taxes payable in 2009.

Sec. 33. Minnesota Statutes 2007 Supplement, section 275.065, subdivision 1, is amended to read:

Subdivision 1. Proposed levy. (a) Notwithstanding any law or charter to the contrary, on or before September 15 1, each taxing authority, other than a school district, shall adopt a proposed budget and shall certify to the county auditor the proposed or, in the case of a town, the final property tax levy for taxes payable in the following year.

(b) On or before September 30 15, each school district that has not mutually agreed with its home county to extend this date shall certify to the county auditor the proposed property tax levy for taxes payable in the following year. Each school district that has agreed with its home county to delay the certification of its proposed property tax levy must certify its proposed property tax levy for the following year no later than ~~October 7~~ September 22. The school district shall certify the proposed levy as:

(1) a specific dollar amount by school district fund, broken down between voter-approved and non-voter-approved levies and between referendum market value and tax capacity levies; or

(2) the maximum levy limitation certified by the commissioner of education according to section 126C.48, subdivision 1.

(c) If the board of estimate and taxation or any similar board that establishes maximum tax levies for taxing jurisdictions within a first class city certifies the maximum property tax levies for funds under its jurisdiction by charter to the county auditor by September 15 1, the city shall be deemed to have certified its levies for those taxing jurisdictions.

(d) For purposes of this section, "taxing authority" includes all home rule and statutory cities, towns, counties, school districts, and special taxing districts as defined in section 275.066. Intermediate school districts that levy a tax under chapter 124 or 136D, joint powers boards established under sections 123A.44 to 123A.446, and Common School Districts No. 323, Franconia, and No. 815, Prinsburg, are also special taxing districts for purposes of this section.

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EFFECTIVE DATE. This section is effective for proposed notices and hearings held in 2009 and thereafter, for property taxes payable in 2010 and thereafter.

Sec. 34. Minnesota Statutes 2007 Supplement, section 275.065, subdivision 1a, is amended to read:

Subd. 1a. Overlapping jurisdictions. In the case of a taxing authority lying in two or more counties, the home county auditor shall certify the proposed levy and the proposed local tax rate to the other county auditor by October 5, unless the home county has agreed to delay the certification of its proposed property tax levy, in which case the home county auditor shall certify the proposed levy and the proposed local tax rate to the other county auditor by ~~October 10~~ September 5. The home county auditor must estimate the levy or rate in preparing the notices required in subdivision 3, if the other county has not certified the appropriate information. If requested by the home county auditor, the other county auditor must furnish an estimate to the home county auditor.

EFFECTIVE DATE. This section is effective for proposed notices and hearings held in 2009 and thereafter, for property taxes payable in 2010 and thereafter.

Sec. 35. Minnesota Statutes 2006, section 275.065, subdivision 1c, is amended to read:

Subd. 1c. Levy; shared, merged, consolidated services. If two or more taxing authorities are in the process of negotiating an agreement for sharing, merging, or consolidating services between those taxing authorities at the time the proposed levy is to be certified under subdivision 1, each taxing authority involved in the negotiation shall certify its total proposed levy as provided in that subdivision, including a notification to the county auditor of the specific service involved in the agreement which is not yet finalized. The affected taxing authorities may amend their proposed levies under subdivision 1 until ~~October~~ September 10 for levy amounts relating only to the specific service involved.

EFFECTIVE DATE. This section is effective for proposed notices and hearings held in 2009 and thereafter, for property taxes payable in 2010 and thereafter.

Sec. 36. Minnesota Statutes 2006, section 275.065, is amended by adding a subdivision to read:

Subd. 1d. Failure to certify proposed levy. If a taxing authority fails to certify its proposed levy by the due dates specified under subdivisions 1, 1a, and 1c, the county auditor shall use the authority's previous year's final levy under section 275.07, subdivision 1, for purposes of determining its proposed property tax notices and public advertisements under this section.

EFFECTIVE DATE. This section is effective for notices prepared in 2008, for property taxes payable in 2009 and thereafter.

Sec. 37. Minnesota Statutes 2007 Supplement, section 275.065, subdivision 3, is amended to read:

Subd. 3. Notice of proposed property taxes. (a) The county auditor shall prepare and the county treasurer shall deliver after ~~November 10~~ October 15 and on or before ~~November~~ October 24 each year, by first class mail to each taxpayer at the address listed on the county's current year's assessment roll, a notice of proposed property taxes.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes each taxing authority proposes to collect for taxes payable the following year. In the case of a town, or in the case of the state general tax, the final tax amount will be its proposed tax. In the case of taxing authorities required to hold a public meeting under subdivision 6, the notice must clearly state that each taxing authority, including regional library districts established

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under section 134.201, and including the metropolitan taxing districts as defined in paragraph (i), but excluding all other special taxing districts and towns, will hold a public meeting to receive public testimony on the proposed budget and proposed or final property tax levy, or, in case of a school district, on the current budget and proposed property tax levy. It must clearly state the time and place of each taxing authority's meeting, a telephone number for the taxing authority that taxpayers may call if they have questions related to the notice, and an address where comments will be received by mail.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used for computing property taxes payable in the following year and for taxes payable in the current year as each appears in the records of the county assessor on ~~November~~ October 1 of the current year; and, in the case of residential property, whether the property is classified as homestead or nonhomestead. The notice must clearly inform taxpayers of the years to which the market values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state general tax, net of the residential and agricultural homestead credit under section 273.1384, voter approved school levy, other local school levy, and the sum of the special taxing districts, and as a total of all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) includes an amount for a lake improvement district as defined under sections 103B.501 to 103B.581, the amount attributable for that purpose must be separately stated from the remaining county levy amount.

In the case of a town or the state general tax, the final tax shall also be its proposed tax unless the town changes its levy at a special town meeting under section 365.52. If a school district has certified under section 126C.17, subdivision 9, that a referendum will be held in the school district at the November general election, the county auditor must note next to the school district's proposed amount that a referendum is pending and that, if approved by the voters, the tax amount may be higher than shown on the notice. In the case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be listed separately from the remaining amount of the city's levy. In the case of the city of St. Paul, the levy for the St. Paul Library Agency must be listed separately from the remaining amount of the city's levy. In the case of Ramsey County, any amount levied under section 134.07 may be listed separately from the remaining amount of the county's levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax under chapter 276A or 473F applies, the proposed tax levy on the captured value or the proposed tax levy on the tax capacity subject to the areawide tax must each be stated separately and not included in the sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and the total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under the senior citizens' property tax deferral program under chapter 290B is the total amount of property tax before subtraction of the deferred property tax amount.

(e) The notice must clearly state that the proposed or final taxes do not include the following:

(1) special assessments;

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(2) levies approved by the voters after the date the proposed taxes are certified, including bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first Monday in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster occurring after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value reductions for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or the county treasurer to deliver the notice as required in this section does not invalidate the proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as nonhomestead, and satisfactory documentation is provided to the county assessor by the applicable deadline, and the property qualifies for the homestead classification in that assessment year, the assessor shall reclassify the property to homestead for taxes payable in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant, renter, or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by ~~November~~ October 27 or within three days of receipt of the notice, whichever is later. A taxpayer may notify the county treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to which the notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision, subdivisions 5a and 6, "metropolitan special taxing districts" means the following taxing districts in the seven-county metropolitan area that levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672; and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A shall be included with the appropriate county's levy and shall be discussed at that county's public hearing.

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(j) The governing body of a county, city, or school district may, with the consent of the county board, include supplemental information with the statement of proposed property taxes about the impact of state aid increases or decreases on property tax increases or decreases and on the level of services provided in the affected jurisdiction. This supplemental information may include information for the following year, the current year, and for as many consecutive preceding years as deemed appropriate by the governing body of the county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and local government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services that the governing body of the county, city, or school district may deem appropriate to include.

The information may be presented using tables, written narrative, and graphic representations and may contain instruction toward further sources of information or opportunity for comment.

EFFECTIVE DATE. This section is effective for proposed notices and hearings held in 2009 and thereafter, for property taxes payable in 2010 and thereafter.

Sec. 38. Minnesota Statutes 2006, section 275.065, is amended by adding a subdivision to read:

Subd. 3b. Supplemental notice of proposed levy increases. (a) If a city that has a population of more than 2,500 or a county proposes a levy that would cause a levy plus aid increase greater than the threshold increase calculated under paragraph (b), it shall prepare and deliver by first class mail a supplemental proposed property tax notice to each property taxpayer in the taxing jurisdiction, as described in this subdivision.

(b) The threshold increase in the proposed property tax levy plus aid is equal to the levy plus aid amount in the previous year, multiplied by the sum of (i) one percent, (ii) the percentage growth, if any, in the population in the taxing jurisdiction for the most recent available year, (iii) the percentage increase in the total market value in the taxing jurisdiction due to new construction of commercial and industrial property, and (iv) the percentage increase in the implicit price deflator for government consumption expenditures and gross investment for state and local governments as prepared by the United States Department of Commerce for the most recent 12-month period ending March of the levy year.

(c) The supplemental proposed notice must show the taxing jurisdiction's (1) levy plus aid amount for the previous year, (2) its threshold levy plus aid increase indicating that this increase is calculated to reflect reasonable growth adjusting for population increases, increased demand from new business, and inflation, (3) the aid amount corresponding to the proposed levy year, (4) the proposed property tax increase, and (5) the amount the proposed increase in levy plus aid exceeds the threshold increase. The notice must contain a description of why the jurisdiction needs to raise property taxes above the threshold amount and how the taxing jurisdiction plans to spend the additional revenue.

(d) For purposes of this subdivision, "aid" means county program aid under section 477A.0124 or local government aid under section 477A.013.

EFFECTIVE DATE. This section is effective for taxes payable in 2009 and thereafter.

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Sec. 39. Minnesota Statutes 2006, section 275.065, subdivision 6, is amended to read:

Subd. 6. Public hearing; adoption of budget and levy. (a) For purposes of this section, the following terms shall have the meanings given:

(1) "Initial hearing" means the first and primary hearing held to discuss the taxing authority's proposed budget and proposed property tax levy for taxes payable in the following year, or, for school districts, the current budget and the proposed property tax levy for taxes payable in the following year.

(2) "Continuation hearing" means a hearing held to complete the initial hearing, if the initial hearing is not completed on its scheduled date.

(3) "Subsequent hearing" means the hearing held to adopt the taxing authority's final property tax levy, and, in the case of taxing authorities other than school districts, the final budget, for taxes payable in the following year.

(b) Between November 29 9 and December 20 1, the governing bodies of a city that has a population over 500, county, metropolitan special taxing districts as defined in subdivision 3, paragraph (i), and regional library districts shall each hold an initial public hearing to discuss and seek public comment on its final budget and property tax levy for taxes payable in the following year, and the governing body of the school district shall hold an initial public hearing to review its current budget and proposed property tax levy for taxes payable in the following year. The metropolitan special taxing districts shall be required to hold only a single joint initial public hearing, the location of which will be determined by the affected metropolitan agencies. A city, county, metropolitan special taxing district as defined in subdivision 3, paragraph (i), regional library district established under section 134.201, or school district is not required to hold a public hearing under this subdivision unless its proposed property tax levy for taxes payable in the following year, as certified under subdivision 1, has increased over its final property tax levy for taxes payable in the current year by a percentage that is greater than the percentage increase in the implicit price deflator for government consumption expenditures and gross investment for state and local governments prepared by the Bureau of Economic Analysts of the United States Department of Commerce for the 12-month period ending March 31 of the current year.

(c) The initial hearing must be held after 5:00 p.m. if scheduled on a day other than Saturday. No initial hearing may be held on a Sunday.

(d) At the initial hearing under this subdivision, the percentage increase in property taxes proposed by the taxing authority, if any, and the specific purposes for which property tax revenues are being increased must be discussed. During the discussion, the governing body shall hear comments regarding a proposed increase and explain the reasons for the proposed increase. The public shall be allowed to speak and to ask questions. At the public hearing, the school district must also provide and discuss information on the distribution of its revenues by revenue source, and the distribution of its spending by program area.

(e) If the initial hearing is not completed on its scheduled date, the taxing authority must announce, prior to adjournment of the hearing, the date, time, and place for the continuation of the hearing. The continuation hearing must be held at least five business days but no more than 14 business days after the initial hearing. A continuation hearing may not be held later than December 20 except as provided in paragraphs (f) and (g). A continuation hearing must be held after 5:00 p.m. if scheduled on a day other than Saturday. No continuation hearing may be held on a Sunday.

(f) The governing body of a county shall hold its initial hearing on the ~~first~~ second Thursday in ~~December~~ November each year, and may hold additional initial hearings on other dates before December 20 1 if necessary for the convenience of county residents. If the county needs a continuation of its hearing, the continuation hearing shall be held on the third Tuesday in ~~December. If the third Tuesday in December falls on December 21, the county's continuation hearing shall be held on Monday, December 20~~ November.

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(g) The metropolitan special taxing districts shall hold a joint initial public hearing on the first Wednesday of December. A continuation hearing, if necessary, shall be held on the second Wednesday of December even if that second Wednesday is after December 10.

(h) The county auditor shall provide for the coordination of initial and continuation hearing dates for all school districts and cities within the county to prevent conflicts under clauses (i) and (j).

(i) By August 10, each school board and the board of the regional library district shall certify to the county auditors of the counties in which the school district or regional library district is located the dates on which it elects to hold its initial hearing and any continuation hearing. If a school board or regional library district does not certify these dates by August 10, the auditor will assign the initial and continuation hearing dates. The dates elected or assigned must not conflict with the initial and continuation hearing dates of the county or the metropolitan special taxing districts.

(j) By August 20, the county auditor shall notify the clerks of the cities within the county of the dates on which school districts and regional library districts have elected to hold their initial and continuation hearings. At the time a city certifies its proposed levy under subdivision 1 it shall certify the dates on which it elects to hold its initial hearing and any continuation hearing. Until September 15, the ~~first and~~ second ~~Mondays~~ Monday of December ~~are~~ is reserved for the use of the cities. If a city does not certify its hearing dates by September 15, the auditor shall assign the initial and continuation hearing dates. The dates elected or assigned for the initial hearing must not conflict with the initial hearing dates of the county, metropolitan special taxing districts, regional library districts, or school districts within which the city is located. To the extent possible, the dates of the city's continuation hearing should not conflict with the continuation hearing dates of the county, metropolitan special taxing districts, regional library districts, or school districts within which the city is located. This paragraph does not apply to cities of 500 population or less.

(k) The county initial hearing date and the city, metropolitan special taxing district, regional library district, and school district initial hearing dates must be designated on the notices required under subdivision 3. The continuation hearing dates need not be stated on the notices.

(l) At a subsequent hearing, each county, school district, city over 500 population, and metropolitan special taxing district may amend its proposed property tax levy and must adopt a final property tax levy. Each county, city over 500 population, and metropolitan special taxing district may also amend its proposed budget and must adopt a final budget at the subsequent hearing. The final property tax levy must be adopted prior to adopting the final budget. A school district is not required to adopt its final budget at the subsequent hearing. The subsequent hearing of a taxing authority must be held on a date subsequent to the date of the taxing authority's initial public hearing. If a continuation hearing is held, the subsequent hearing must be held either immediately following the continuation hearing or on a date subsequent to the continuation hearing. The subsequent hearing may be held at a regularly scheduled board or council meeting or at a special meeting scheduled for the purposes of the subsequent hearing. The subsequent hearing of a taxing authority does not have to be coordinated by the county auditor to prevent a conflict with an initial hearing, a continuation hearing, or a subsequent hearing of any other taxing authority. All subsequent hearings must be held prior to five working days after December 20 of the levy year. The date, time, and place of the subsequent hearing must be announced at the initial public hearing or at the continuation hearing.

(m) The property tax levy certified under section 275.07 by a city of any population, county, metropolitan special taxing district, regional library district, or school district must not exceed the proposed levy determined under subdivision 1, except by an amount up to the sum of the following amounts:

(1) the amount of a school district levy whose voters approved a referendum to increase taxes under section 123B.63, subdivision 3, or 126C.17, subdivision 9, after the proposed levy was certified;

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(2) the amount of a city or county levy approved by the voters after the proposed levy was certified;

(3) the amount of a levy to pay principal and interest on bonds approved by the voters under section 475.58 after the proposed levy was certified;

(4) the amount of a levy to pay costs due to a natural disaster occurring after the proposed levy was certified, if that amount is approved by the commissioner of revenue under subdivision 6a;

(5) the amount of a levy to pay tort judgments against a taxing authority that become final after the proposed levy was certified, if the amount is approved by the commissioner of revenue under subdivision 6a;

(6) the amount of an increase in levy limits certified to the taxing authority by the commissioner of education or the commissioner of revenue after the proposed levy was certified; and

(7) the amount required under section 126C.55.

(n) This subdivision does not apply to towns and special taxing districts other than regional library districts and metropolitan special taxing districts.

(o) Notwithstanding the requirements of this section, the employer is required to meet and negotiate over employee compensation as provided for in chapter 179A.

EFFECTIVE DATE. This section is effective for proposed notices and hearings held in 2009 and thereafter, for property taxes payable in 2010 and thereafter.

Sec. 40. Minnesota Statutes 2006, section 275.065, subdivision 8, is amended to read:

Subd. 8. Hearing. Notwithstanding any other provision of law, Ramsey County, the city of St. Paul, and Independent School District No. 625 are authorized to and shall hold their initial public hearing jointly. The hearing must be held on during the week of the second Tuesday of ~~December~~ November each year. The advertisement required in subdivision 5a may be a joint advertisement. The hearing is otherwise subject to the requirements of this section.

Ramsey County is authorized to hold an additional initial hearing or hearings as provided under this section, provided that any additional hearings must not conflict with the initial or continuation hearing dates of the other taxing districts. However, if Ramsey County elects not to hold such additional initial hearing or hearings, the joint initial hearing required by this subdivision must be held in a St. Paul location convenient to residents of Ramsey County.

EFFECTIVE DATE. This section is effective for proposed notices and hearings held in 2009 and thereafter, for property taxes payable in 2010 and thereafter, except that proposed notices and hearings held in 2008 may be held during the week of the second Tuesday of December.

Sec. 41. Minnesota Statutes 2006, section 275.065, subdivision 9, is amended to read:

Subd. 9. Aitkin County and school district hearing. Notwithstanding any other law, Aitkin County and Independent School District No. 1, and the city of Aitkin, or any two of them, may hold their initial public hearing jointly. The hearing must be held on the second Tuesday of ~~December~~ November each year. The advertisement required in subdivision 5a may be a joint advertisement. The hearing is otherwise subject to the requirements of this section.

EFFECTIVE DATE. This section is effective for proposed notices and hearings held in 2009 and thereafter, for property taxes payable in 2010 and thereafter.

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Sec. 42. Minnesota Statutes 2006, section 275.065, subdivision 10, is amended to read:

Subd. 10. Nobles County; joint initial public hearing. Notwithstanding any other law, Nobles County, the city of Worthington, and Independent School District No. 518, Worthington, or any two of them, may hold their initial public hearing jointly. The hearing must be held on the second Tuesday of ~~December~~ November each year. The advertisement required in subdivision 5a may be a joint advertisement. The hearing is otherwise subject to the requirements of this section.

EFFECTIVE DATE. This section is effective for proposed notices and hearings held in 2009 and thereafter, for property taxes payable in 2010 and thereafter.

Sec. 43. Minnesota Statutes 2006, section 282.08, is amended to read:

282.08 APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.

The net proceeds from the sale or rental of any parcel of forfeited land, or from the sale of products from the forfeited land, must be apportioned by the county auditor to the taxing districts interested in the land, as follows:

(1) the portion required to pay any amounts included in the appraised value under section 282.01, subdivision 3, as representing increased value due to any public improvement made after forfeiture of the parcel to the state, but not exceeding the amount certified by the ~~clerk of the municipality~~ appropriate governmental authority must be apportioned to the ~~municipal~~ governmental subdivision entitled to it;

(2) the portion required to pay any amount included in the appraised value under section 282.019, subdivision 5, representing increased value due to response actions taken after forfeiture of the parcel to the state, but not exceeding the amount of expenses certified by the Pollution Control Agency or the commissioner of agriculture, must be apportioned to the agency or the commissioner of agriculture and deposited in the fund from which the expenses were paid;