1.1                          A bill for an act 
  1.2             relating to financing and operation of state and local 
  1.3             government; making policy, technical, administrative, 
  1.4             enforcement, collection, refund, and other changes to 
  1.5             income, franchise, property, sales and use, estate, 
  1.6             health care provider, cigarette and tobacco products, 
  1.7             insurance premiums, aggregate removal, mortgage 
  1.8             registry, occupation, net proceeds, and production 
  1.9             taxes, and other taxes and tax-related provisions; 
  1.10            establishing a regional investment credit; 
  1.11            establishing a credit for carsharing; providing an 
  1.12            income tax checkoff; providing a refund for transit 
  1.13            passes; changing the rent credit calculation; 
  1.14            authorizing sales tax exemptions; authorizing local 
  1.15            government sales taxes; repealing the sunset of sales 
  1.16            tax on alcoholic beverages and rental cars; 
  1.17            authorizing distributions of tax proceeds; changing 
  1.18            provisions relating to fiscal disparities, education 
  1.19            financing, state debt collection procedures, 
  1.20            sustainable forest incentives programs, business 
  1.21            subsidy, and tax data provisions; conforming 
  1.22            provisions to certain changes in federal law; changing 
  1.23            powers and duties of certain local governments and 
  1.24            authorities and state departments or agencies; 
  1.25            providing for payments of certain aids and 
  1.26            reimbursements to local units of government; providing 
  1.27            for certain school levies; providing for issuance of 
  1.28            obligations by local governments, and use of the 
  1.29            proceeds of the debt; authorizing certain joint 
  1.30            ventures to provide utility services; authorizing use 
  1.31            of nonprofit organizations to manage certain 
  1.32            enterprises; requiring transfer of a parking facility; 
  1.33            changing tax increment financing provisions, and 
  1.34            providing authorities to certain districts; changing 
  1.35            provisions relating to certificates of title of motor 
  1.36            vehicles and manufactured homes; requiring a state 
  1.37            aviation plan; authorizing establishment of an 
  1.38            International Economic Development Zone and providing 
  1.39            for tax incentives; regulating tax preparers; imposing 
  1.40            requirement on vendors that contract with the state to 
  1.41            collect sales taxes; changing electronic filing 
  1.42            provisions; prohibiting misrepresentation of 
  1.43            employment; providing for filling of vacancies on the 
  1.44            Tax Court; establishing biotechnology and health 
  1.45            science industry grants; imposing requirements related 
  1.46            to JOBZ; providing for studies and reports; providing 
  2.1             penalties; creating an education reserve account; 
  2.2             providing for allocation and transfers of funds; 
  2.3             appropriating money; amending Minnesota Statutes 2002, 
  2.4             sections 15.06, subdivision 6; 16D.10; 116J.993, 
  2.5             subdivision 3, by adding a subdivision; 116J.994, 
  2.6             subdivision 5, by adding a subdivision; 123B.53, by 
  2.7             adding a subdivision; 123B.55; 123B.71, subdivision 9; 
  2.8             126C.17, subdivision 6, by adding subdivisions; 
  2.9             161.1231, by adding a subdivision; 168A.02, 
  2.10            subdivision 2; 168A.05, subdivision 1b; 168A.11, 
  2.11            subdivisions 1, 2, by adding a subdivision; 174.03, by 
  2.12            adding a subdivision; 270.02, subdivision 3; 270.65; 
  2.13            270.69, subdivision 4; 270B.01, subdivision 8; 
  2.14            270B.12, subdivision 9; 272.01, subdivision 2; 272.02, 
  2.15            subdivisions 1a, 7, 22, by adding subdivisions; 
  2.16            272.029, subdivisions 4, 6; 273.11, by adding 
  2.17            subdivisions; 273.112, subdivision 3; 273.124, 
  2.18            subdivision 8; 273.1384, subdivision 3; 273.19, 
  2.19            subdivision 1a; 274.14; 275.065, subdivision 1a; 
  2.20            275.07, subdivisions 1, 4; 276.04, subdivision 2; 
  2.21            278.03, subdivision 1; 279.01, subdivision 1, by 
  2.22            adding a subdivision; 282.016; 282.21; 282.224; 
  2.23            282.301; 287.04; 289A.08, subdivision 1; 289A.12, 
  2.24            subdivision 3; 289A.20, subdivision 2; 289A.31, 
  2.25            subdivision 2; 289A.37, subdivision 5; 289A.38, 
  2.26            subdivision 6; 289A.39, subdivision 1; 289A.56, by 
  2.27            adding a subdivision; 289A.60, subdivision 6; 290.05, 
  2.28            subdivision 1; 290.06, subdivisions 22, 28, by adding 
  2.29            subdivisions; 290.0674, subdivision 2; 290.091, 
  2.30            subdivision 3; 290.10; 290.17, subdivision 4; 290.191, 
  2.31            subdivisions 1, 2, 3, 5, by adding a subdivision; 
  2.32            290.92, subdivisions 1, 4b; 290.9705, subdivision 1; 
  2.33            290A.03, subdivision 11, by adding a subdivision; 
  2.34            290A.19; 290C.05; 295.50, subdivision 4; 296A.22, by 
  2.35            adding a subdivision; 297A.61, by adding a 
  2.36            subdivision; 297A.67, by adding subdivisions; 297A.68, 
  2.37            subdivisions 4, 19, by adding subdivisions; 297A.70, 
  2.38            by adding a subdivision; 297A.71, by adding 
  2.39            subdivisions; 297A.75, subdivisions 1, 2; 297A.87, 
  2.40            subdivisions 2, 3; 297A.99, subdivisions 1, 2, 3; 
  2.41            297F.01, by adding a subdivision; 297F.09, by adding a 
  2.42            subdivision; 297I.01, by adding subdivisions; 297I.05, 
  2.43            subdivisions 4, 5, by adding a subdivision; 298.001, 
  2.44            by adding subdivisions; 298.01, subdivisions 3, 3a, 4; 
  2.45            298.015, subdivisions 1, 2; 298.016, subdivision 4; 
  2.46            298.018, as amended; 298.24, subdivision 1; 298.28, 
  2.47            subdivisions 9a, 9b, 10; 298.2961, by adding a 
  2.48            subdivision; 298.75, subdivision 2; 325D.33, 
  2.49            subdivision 6; 428A.101; 428A.21; 452.25, subdivision 
  2.50            3; 462A.071, subdivision 6; 469.034, subdivision 2; 
  2.51            469.1734, subdivision 6; 469.174, by adding a 
  2.52            subdivision; 469.176, by adding subdivisions; 
  2.53            469.1761, by adding a subdivision; 469.1792, as 
  2.54            amended; 471.342, subdivisions 3, 5, by adding a 
  2.55            subdivision; 473.39, by adding a subdivision; 473.843, 
  2.56            subdivisions 3, 5; 473F.02, subdivision 7; 473F.08, by 
  2.57            adding subdivisions; 474A.131, subdivision 1; 475.52, 
  2.58            subdivisions 1, 3, 4; 477A.011, subdivision 3; 
  2.59            477A.016; 477A.11, subdivision 4, by adding a 
  2.60            subdivision; 477A.12, subdivisions 1, 2; 477A.14, 
  2.61            subdivision 1; 480B.01, subdivisions 1, 10; 504B.215, 
  2.62            by adding a subdivision; Minnesota Statutes 2003 
  2.63            Supplement, sections 116J.994, subdivisions 4, 9; 
  2.64            123B.53, subdivision 4; 126C.17, subdivisions 7, 9; 
  2.65            168A.05, subdivision 1a; 270.30, subdivision 8; 
  2.66            270B.12, subdivision 13; 272.02, subdivisions 47, 56; 
  2.67            273.11, subdivision 1a; 273.124, subdivision 1; 
  2.68            273.13, subdivisions 23, 25; 274.014, subdivision 3; 
  2.69            275.025, subdivision 1; 275.065, subdivision 3; 
  2.70            276.112; 289A.02, subdivision 7; 289A.08, subdivision 
  2.71            16; 289A.19, subdivision 4; 289A.20, subdivision 4; 
  3.1             289A.40, subdivision 2; 290.01, subdivisions 7, 19, 
  3.2             19a, 19b, 19c, 19d, 31; 290.06, subdivision 2c; 
  3.3             290.0674, subdivision 1; 290.091, subdivision 2; 
  3.4             290A.03, subdivision 15; 290C.10; 291.005, subdivision 
  3.5             1; 297A.668, subdivisions 1, 3, 5; 297A.669, 
  3.6             subdivision 16; 297A.68, subdivisions 2, 5, 39; 
  3.7             297A.70, subdivision 8; 297A.99, subdivision 5, 12; 
  3.8             297B.03; 297F.08, subdivision 12; 297F.09, 
  3.9             subdivisions 1, 2; 298.223, subdivision 1; 298.27; 
  3.10            298.75, subdivision 1; 349.12, subdivision 25; 373.01, 
  3.11            subdivision 3; 373.40, subdivision 1; 403.21, 
  3.12            subdivision 8; 403.27, subdivisions 1, 3; 403.31, 
  3.13            subdivision 6; 410.32; 412.301; 469.174, subdivision 
  3.14            10; 469.175, subdivisions 1, 4, 6; 469.176, 
  3.15            subdivision 1c; 469.310, subdivision 11; 469.330, 
  3.16            subdivision 11; 469.335; 469.337; 475.521, subdivision 
  3.17            4; 475.58, subdivision 3b; 477A.011, subdivisions 34, 
  3.18            36; 477A.013, subdivisions 8, 9; 477A.03, subdivisions 
  3.19            2a, 2b; Laws 1986, chapter 379, section 1; Laws 1986, 
  3.20            chapter 379, section 2, subdivision 1; Laws 1991, 
  3.21            chapter 291, article 8, section 27, subdivision 4; 
  3.22            Laws 1991, chapter 291, article 8, section 27, 
  3.23            subdivision 5; Laws 1996, chapter 471, article 2, 
  3.24            section 29; Laws 1998, chapter 389, article 3, section 
  3.25            41; Laws 1998, chapter 389, article 3, section 42, 
  3.26            subdivision 2, as amended; Laws 1998, chapter 389, 
  3.27            article 8, section 43, subdivision 3; Laws 1998, 
  3.28            chapter 389, article 8, section 43, subdivision 4; 
  3.29            Laws 1998, chapter 389, article 11, section 19, 
  3.30            subdivision 3; Laws 1998, chapter 389, article 11, 
  3.31            section 24, subdivision 1; Laws 1998, chapter 389, 
  3.32            article 11, section 24, subdivision 2; Laws 1999, 
  3.33            chapter 243, article 4, section 18, subdivision 1; 
  3.34            Laws 1999, chapter 243, article 4, section 18, 
  3.35            subdivision 3; Laws 1999, chapter 243, article 4, 
  3.36            section 18, subdivision 4; Laws 2001, First Special 
  3.37            Session chapter 5, article 12, section 67; Laws 2001, 
  3.38            First Special Session chapter 5, article 12, section 
  3.39            95; Laws 2002, chapter 377, article 12, section 16, 
  3.40            subdivision 1; Laws 2003, chapter 127, article 12, 
  3.41            section 38; Laws 2003, First Special Session chapter 
  3.42            21, article 4, section 12, subdivision 11; Laws 2003, 
  3.43            First Special Session chapter 21, article 5, section 
  3.44            13; Laws 2003, First Special Session chapter 21, 
  3.45            article 6, section 9; proposing coding for new law in 
  3.46            Minnesota Statutes, chapters 174; 270; 273; 278; 290; 
  3.47            290C; 297F; 298; 325D; 325F; 469; 473; repealing 
  3.48            Minnesota Statutes 2002, sections 273.19, subdivision 
  3.49            5; 274.05; 275.15; 283.07; 289A.26, subdivision 2a; 
  3.50            289A.60, subdivision 21; 290.191, subdivision 4; 
  3.51            295.55, subdivision 4; 295.60, subdivision 4; 297a.99, 
  3.52            subdivision 13; 297E.12, subdivision 10; 297F.09, 
  3.53            subdivision 7; 297G.09, subdivision 6; 297I.35, 
  3.54            subdivision 2; 297I.85, subdivision 7; 298.01, 
  3.55            subdivisions 3c, 3d, 4d, 4e; 298.017; Minnesota 
  3.56            Statutes 2003 Supplement, sections 270.30, subdivision 
  3.57            1; 298.227; Laws 1975, chapter 287, section 5; Laws 
  3.58            2003, chapter 127, article 9, section 9, subdivision 
  3.59            4; Minnesota Rules, parts 8093.2000; 8093.3000; 
  3.60            8130.0110, subpart 4; 8130.0200, subparts 5, 6; 
  3.61            8130.0400, subpart 9; 8130.1200, subparts 5, 6; 
  3.62            8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 
  3.63            1, 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 
  3.64            8130.5200; 8130.5600, subpart 3; 8130.5800, subpart 5; 
  3.65            8130.7300, subpart 5; 8130.8800, subpart 4. 
  3.66  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.67                             ARTICLE 1
  3.68                             INCOME TAX
  4.1      Section 1.  Minnesota Statutes 2003 Supplement, section 
  4.2   289A.02, subdivision 7, is amended to read: 
  4.3      Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
  4.4   defined otherwise, "Internal Revenue Code" means the Internal 
  4.5   Revenue Code of 1986, as amended through ~~June 15, 2003~~ November 
  4.6   11, 2003. 
  4.7      <h>[EFFECTIVE DATE.]</h> This section is effective for actions 
  4.8   required on or after November 11, 2003. 
  4.9      Sec. 2.  Minnesota Statutes 2002, section 289A.08, 
  4.10  subdivision 1, is amended to read: 
  4.11     Subdivision 1.  [GENERALLY; INDIVIDUALS.] (a) A taxpayer 
  4.12  must file a return for each taxable year the taxpayer is 
  4.13  required to file a return under section 6012 of the Internal 
  4.14  Revenue Code, except that: 
  4.15     (1) an individual who is not a Minnesota resident for any 
  4.16  part of the year is not required to file a Minnesota income tax 
  4.17  return if the individual's gross income derived from Minnesota 
  4.18  sources as determined under sections 290.081, paragraph (a), and 
  4.19  290.17, is less than the filing requirements for a single 
  4.20  individual who is a full year resident of Minnesota; and 
  4.21     (2) an individual who is a Minnesota resident is not 
  4.22  required to file a Minnesota income tax return if the 
  4.23  individual's gross income derived from Minnesota sources as 
  4.24  determined under section 290.17, less the amount of the 
  4.25  individual's gross income that consists of compensation paid to 
  4.26  members of the armed forces of the United States or United 
  4.27  Nations for active duty performed outside Minnesota, is less 
  4.28  than the filing requirements for a single individual who is a 
  4.29  full-year resident of Minnesota. 
  4.30     (b) The decedent's final income tax return, and other 
  4.31  income tax returns for prior years where the decedent had gross 
  4.32  income in excess of the minimum amount at which an individual is 
  4.33  required to file and did not file, must be filed by the 
  4.34  decedent's personal representative, if any.  If there is no 
  4.35  personal representative, the return or returns must be filed by 
  4.36  the transferees, as defined in section 289A.38, subdivision 13, 
  5.1   who receive property of the decedent. 
  5.2      (c) The term "gross income," as it is used in this section, 
  5.3   has the same meaning given it in section 290.01, subdivision 20. 
  5.4      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
  5.5   years beginning after December 31, 2003. 
  5.6      Sec. 3.  Minnesota Statutes 2002, section 289A.39, 
  5.7   subdivision 1, is amended to read: 
  5.8      Subdivision 1.  [EXTENSIONS FOR SERVICE MEMBERS.] (a) The 
  5.9   limitations of time provided by this chapter, chapter 290 
  5.10  relating to income taxes, chapter 271 relating to the Tax Court 
  5.11  for filing returns, paying taxes, claiming refunds, commencing 
  5.12  action thereon, appealing to the Tax Court from orders relating 
  5.13  to income taxes, and the filing of petitions under chapter 278 
  5.14  that would otherwise be due ~~May 15, 1996~~ May 1, 2004, and 
  5.15  appealing to the Supreme Court from decisions of the Tax Court 
  5.16  relating to income taxes are extended, as provided in section 
  5.17  7508 of the Internal Revenue Code. 
  5.18     (b) If a member of the National Guard or reserves is called 
  5.19  to active duty in the armed forces, the limitations of time 
  5.20  provided by this chapter and chapters 290 and 290A relating to 
  5.21  income taxes and claims for property tax refunds are extended by 
  5.22  the following period of time: 
  5.23     (1) in the case of an individual whose active service is in 
  5.24  the United States, six months; or 
  5.25     (2) in the case of an individual whose active service 
  5.26  includes service abroad, the period of initial service plus six 
  5.27  months. 
  5.28     Nothing in this paragraph reduces the time within which an 
  5.29  act is required or permitted under paragraph (a). 
  5.30     (c) If an individual entitled to the benefit of paragraph 
  5.31  (a) files a return during the period disregarded under paragraph 
  5.32  (a), interest must be paid on an overpayment or refundable 
  5.33  credit from the due date of the return, notwithstanding section 
  5.34  289A.56, subdivision 2.  
  5.35     (d) The provisions of this subdivision apply to the spouse 
  5.36  of an individual entitled to the benefits of this subdivision 
  6.1   with respect to a joint return filed by the spouses.  
  6.2      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
  6.3   years beginning after December 31, 2002, and for property taxes 
  6.4   payable after 2003. 
  6.5      Sec. 4.  Minnesota Statutes 2003 Supplement, section 
  6.6   290.01, subdivision 7, is amended to read: 
  6.7      Subd. 7.  [RESIDENT.] (a) The term "resident" means any 
  6.8   individual domiciled in Minnesota, except that an individual is 
  6.9   not a "resident" for the period of time that the individual is 
  6.10  ~~either:~~ 
  6.11     ~~(1) on active duty stationed outside of Minnesota while in~~ 
  6.12  ~~the armed forces of the United States or the United Nations; or~~ 
  6.13     ~~(2)~~ a "qualified individual" as defined in section 
  6.14  911(d)(1) of the Internal Revenue Code, if the qualified 
  6.15  individual notifies the county within three months of moving out 
  6.16  of the country that homestead status be revoked for the 
  6.17  Minnesota residence of the qualified individual, and the 
  6.18  property is not classified as a homestead while the individual 
  6.19  remains a qualified individual. 
  6.20     (b) "Resident" also means any individual domiciled outside 
  6.21  the state who maintains a place of abode in the state and spends 
  6.22  in the aggregate more than one-half of the tax year in 
  6.23  Minnesota, unless: 
  6.24     (1) the individual or the spouse of the individual is in 
  6.25  the armed forces of the United States; or 
  6.26     (2) the individual is covered under the reciprocity 
  6.27  provisions in section 290.081. 
  6.28     For purposes of this subdivision, presence within the state 
  6.29  for any part of a calendar day constitutes a day spent in the 
  6.30  state.  Individuals shall keep adequate records to substantiate 
  6.31  the days spent outside the state. 
  6.32     The term "abode" means a dwelling maintained by an 
  6.33  individual, whether or not owned by the individual and whether 
  6.34  or not occupied by the individual, and includes a dwelling place 
  6.35  owned or leased by the individual's spouse. 
  6.36     (c) Neither the commissioner nor any court shall consider 
  7.1   charitable contributions made by an individual within or without 
  7.2   the state in determining if the individual is domiciled in 
  7.3   Minnesota. 
  7.4      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
  7.5   years beginning after December 31, 2003. 
  7.6      Sec. 5.  Minnesota Statutes 2003 Supplement, section 
  7.7   290.01, subdivision 19, is amended to read: 
  7.8      Subd. 19.  [NET INCOME.] The term "net income" means the 
  7.9   federal taxable income, as defined in section 63 of the Internal 
  7.10  Revenue Code of 1986, as amended through the date named in this 
  7.11  subdivision, incorporating any elections made by the taxpayer in 
  7.12  accordance with the Internal Revenue Code in determining federal 
  7.13  taxable income for federal income tax purposes, and with the 
  7.14  modifications provided in subdivisions 19a to 19f. 
  7.15     In the case of a regulated investment company or a fund 
  7.16  thereof, as defined in section 851(a) or 851(g) of the Internal 
  7.17  Revenue Code, federal taxable income means investment company 
  7.18  taxable income as defined in section 852(b)(2) of the Internal 
  7.19  Revenue Code, except that:  
  7.20     (1) the exclusion of net capital gain provided in section 
  7.21  852(b)(2)(A) of the Internal Revenue Code does not apply; 
  7.22     (2) the deduction for dividends paid under section 
  7.23  852(b)(2)(D) of the Internal Revenue Code must be applied by 
  7.24  allowing a deduction for capital gain dividends and 
  7.25  exempt-interest dividends as defined in sections 852(b)(3)(C) 
  7.26  and 852(b)(5) of the Internal Revenue Code; and 
  7.27     (3) the deduction for dividends paid must also be applied 
  7.28  in the amount of any undistributed capital gains which the 
  7.29  regulated investment company elects to have treated as provided 
  7.30  in section 852(b)(3)(D) of the Internal Revenue Code.  
  7.31     The net income of a real estate investment trust as defined 
  7.32  and limited by section 856(a), (b), and (c) of the Internal 
  7.33  Revenue Code means the real estate investment trust taxable 
  7.34  income as defined in section 857(b)(2) of the Internal Revenue 
  7.35  Code.  
  7.36     The net income of a designated settlement fund as defined 
  8.1   in section 468B(d) of the Internal Revenue Code means the gross 
  8.2   income as defined in section 468B(b) of the Internal Revenue 
  8.3   Code. 
  8.4      The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
  8.5   1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
  8.6   1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
  8.7   Protection Act, Public Law 104-188, the provisions of Public Law 
  8.8   104-117, the provisions of sections 313(a) and (b)(1), 602(a), 
  8.9   913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 
  8.10  1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 
  8.11  and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 
  8.12  1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 
  8.13  105-34, the provisions of section 6010 of the Internal Revenue 
  8.14  Service Restructuring and Reform Act of 1998, Public Law 
  8.15  105-206, the provisions of section 4003 of the Omnibus 
  8.16  Consolidated and Emergency Supplemental Appropriations Act, 
  8.17  1999, Public Law 105-277, and the provisions of section 318 of 
  8.18  the Consolidated Appropriation Act of 2001, Public Law 106-554, 
  8.19  shall become effective at the time they become effective for 
  8.20  federal purposes. 
  8.21     The Internal Revenue Code of 1986, as amended through 
  8.22  December 31, 1996, shall be in effect for taxable years 
  8.23  beginning after December 31, 1996. 
  8.24     The provisions of sections 202(a) and (b), 221(a), 225, 
  8.25  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
  8.26  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
  8.27  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
  8.28  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
  8.29  of the Taxpayer Relief Act of 1997, Public Law 105-34, the 
  8.30  provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 
  8.31  and 7003 of the Internal Revenue Service Restructuring and 
  8.32  Reform Act of 1998, Public Law 105-206, the provisions of 
  8.33  section 3001 of the Omnibus Consolidated and Emergency 
  8.34  Supplemental Appropriations Act, 1999, Public Law 105-277, the 
  8.35  provisions of section 3001 of the Miscellaneous Trade and 
  8.36  Technical Corrections Act of 1999, Public Law 106-36, ~~and~~ the 
  9.1   provisions of section 316 of the Consolidated Appropriation Act 
  9.2   of 2001, Public Law 106-554, and the provision of section 101 of 
  9.3   the Military Family Tax Relief Act of 2003, Public Law 108-121, 
  9.4   shall become effective at the time they become effective for 
  9.5   federal purposes. 
  9.6      The Internal Revenue Code of 1986, as amended through 
  9.7   December 31, 1997, shall be in effect for taxable years 
  9.8   beginning after December 31, 1997. 
  9.9      The provisions of sections 5002, 6009, 6011, and 7001 of 
  9.10  the Internal Revenue Service Restructuring and Reform Act of 
  9.11  1998, Public Law 105-206, the provisions of section 9010 of the 
  9.12  Transportation Equity Act for the 21st Century, Public Law 
  9.13  105-178, the provisions of sections 1004, 4002, and 5301 of the 
  9.14  Omnibus Consolidation and Emergency Supplemental Appropriations 
  9.15  Act, 1999, Public Law 105-277, the provision of section 303 of 
  9.16  the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
  9.17  105-369, the provisions of sections 532, 534, 536, 537, and 538 
  9.18  of the Ticket to Work and Work Incentives Improvement Act of 
  9.19  1999, Public Law 106-170, the provisions of the Installment Tax 
  9.20  Correction Act of 2000, Public Law 106-573, and the provisions 
  9.21  of section 309 of the Consolidated Appropriation Act of 2001, 
  9.22  Public Law 106-554, shall become effective at the time they 
  9.23  become effective for federal purposes. 
  9.24     The Internal Revenue Code of 1986, as amended through 
  9.25  December 31, 1998, shall be in effect for taxable years 
  9.26  beginning after December 31, 1998.  
  9.27     The provisions of the FSC Repeal and Extraterritorial 
  9.28  Income Exclusion Act of 2000, Public Law 106-519, and the 
  9.29  provision of section 412 of the Job Creation and Worker 
  9.30  Assistance Act of 2002, Public Law 107-147, shall become 
  9.31  effective at the time it became effective for federal purposes. 
  9.32     The Internal Revenue Code of 1986, as amended through 
  9.33  December 31, 1999, shall be in effect for taxable years 
  9.34  beginning after December 31, 1999.  The provisions of sections 
  9.35  306 and 401 of the Consolidated Appropriation Act of 2001, 
  9.36  Public Law 106-554, and the provision of section 632(b)(2)(A) of 
 10.1   the Economic Growth and Tax Relief Reconciliation Act of 2001, 
 10.2   Public Law 107-16, and provisions of sections 101 and 402 of the 
 10.3   Job Creation and Worker Assistance Act of 2002, Public Law 
 10.4   107-147, shall become effective at the same time it became 
 10.5   effective for federal purposes. 
 10.6      The Internal Revenue Code of 1986, as amended through 
 10.7   December 31, 2000, shall be in effect for taxable years 
 10.8   beginning after December 31, 2000.  The provisions of sections 
 10.9   659a and 671 of the Economic Growth and Tax Relief 
 10.10  Reconciliation Act of 2001, Public Law 107-16, the provisions of 
 10.11  sections 104, 105, and 111 of the Victims of Terrorism Tax 
 10.12  Relief Act of 2001, Public Law 107-134, ~~and~~ the provisions of 
 10.13  sections 201, 403, 413, and 606 of the Job Creation and Worker 
 10.14  Assistance Act of 2002, Public Law 107-147, and the provision of 
 10.15  section 102 of the Military Family Tax Relief Act of 2003, 
 10.16  Public Law 108-121, shall become effective at the same time it 
 10.17  became effective for federal purposes. 
 10.18     The Internal Revenue Code of 1986, as amended through March 
 10.19  15, 2002, shall be in effect for taxable years beginning after 
 10.20  December 31, 2001. 
 10.21     The provisions of sections 101 and 102 of the Victims of 
 10.22  Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 
 10.23  become effective at the same time it becomes effective for 
 10.24  federal purposes. 
 10.25     The Internal Revenue Code of 1986, as amended through June 
 10.26  15, 2003, shall be in effect for taxable years beginning after 
 10.27  December 31, 2002.  The provisions of section 201 of the Jobs 
 10.28  and Growth Tax Relief and Reconciliation Act of 2003, ~~H.R. 2, if~~ 
 10.29  ~~it is enacted into law~~ Public Law 108-27, and the provisions of 
 10.30  sections 103, 106, 108, 109, and 110 of the Military Family Tax 
 10.31  Relief Act of 2003, Public Law 108-121, are effective at the 
 10.32  same time it became effective for federal purposes. 
 10.33     The Internal Revenue Code of 1986, as amended through 
 10.34  November 11, 2003, shall be in effect for taxable years 
 10.35  beginning after December 31, 2003. 
 10.36     Except as otherwise provided, references to the Internal 
 11.1   Revenue Code in subdivisions 19a to 19g mean the code in effect 
 11.2   for purposes of determining net income for the applicable year. 
 11.3      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 11.4   following final enactment. 
 11.5      Sec. 6.  Minnesota Statutes 2003 Supplement, section 
 11.6   290.01, subdivision 19a, is amended to read: 
 11.7      Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 11.8   individuals, estates, and trusts, there shall be added to 
 11.9   federal taxable income: 
 11.10     (1)(i) interest income on obligations of any state other 
 11.11  than Minnesota or a political or governmental subdivision, 
 11.12  municipality, or governmental agency or instrumentality of any 
 11.13  state other than Minnesota exempt from federal income taxes 
 11.14  under the Internal Revenue Code or any other federal statute; 
 11.15  and 
 11.16     (ii) exempt-interest dividends as defined in section 
 11.17  852(b)(5) of the Internal Revenue Code, except the portion of 
 11.18  the exempt-interest dividends derived from interest income on 
 11.19  obligations of the state of Minnesota or its political or 
 11.20  governmental subdivisions, municipalities, governmental agencies 
 11.21  or instrumentalities, but only if the portion of the 
 11.22  exempt-interest dividends from such Minnesota sources paid to 
 11.23  all shareholders represents 95 percent or more of the 
 11.24  exempt-interest dividends that are paid by the regulated 
 11.25  investment company as defined in section 851(a) of the Internal 
 11.26  Revenue Code, or the fund of the regulated investment company as 
 11.27  defined in section 851(g) of the Internal Revenue Code, making 
 11.28  the payment; and 
 11.29     (iii) for the purposes of items (i) and (ii), interest on 
 11.30  obligations of an Indian tribal government described in section 
 11.31  7871(c) of the Internal Revenue Code shall be treated as 
 11.32  interest income on obligations of the state in which the tribe 
 11.33  is located; 
 11.34     (2) the amount of income taxes paid or accrued within the 
 11.35  taxable year under this chapter and income taxes paid to any 
 11.36  other state or to any province or territory of Canada, to the 
 12.1   extent allowed as a deduction under section 63(d) of the 
 12.2   Internal Revenue Code, but the addition may not be more than the 
 12.3   amount by which the itemized deductions as allowed under section 
 12.4   63(d) of the Internal Revenue Code exceeds the amount of the 
 12.5   standard deduction as defined in section 63(c) of the Internal 
 12.6   Revenue Code.  For the purpose of this paragraph, the 
 12.7   disallowance of itemized deductions under section 68 of the 
 12.8   Internal Revenue Code of 1986, income tax is the last itemized 
 12.9   deduction disallowed; 
 12.10     (3) the capital gain amount of a lump sum distribution to 
 12.11  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 12.12  Reform Act of 1986, Public Law 99-514, applies; 
 12.13     (4) the amount of income taxes paid or accrued within the 
 12.14  taxable year under this chapter and income taxes paid to any 
 12.15  other state or any province or territory of Canada, to the 
 12.16  extent allowed as a deduction in determining federal adjusted 
 12.17  gross income.  For the purpose of this paragraph, income taxes 
 12.18  do not include the taxes imposed by sections 290.0922, 
 12.19  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 12.20     (5) the amount of expense, interest, or taxes disallowed 
 12.21  pursuant to section 290.10; 
 12.22     (6) the amount of a partner's pro rata share of net income 
 12.23  which does not flow through to the partner because the 
 12.24  partnership elected to pay the tax on the income under section 
 12.25  6242(a)(2) of the Internal Revenue Code; ~~and~~ 
 12.26     (7) 80 percent of the depreciation deduction allowed under 
 12.27  section 168(k) of the Internal Revenue Code.  For purposes of 
 12.28  this clause, if the taxpayer has an activity that in the taxable 
 12.29  year generates a deduction for depreciation under section 168(k) 
 12.30  and the activity generates a loss for the taxable year that the 
 12.31  taxpayer is not allowed to claim for the taxable year, "the 
 12.32  depreciation allowed under section 168(k)" for the taxable year 
 12.33  is limited to excess of the depreciation claimed by the activity 
 12.34  under section 168(k) over the amount of the loss from the 
 12.35  activity that is not allowed in the taxable year.  In succeeding 
 12.36  taxable years when the losses not allowed in the taxable year 
 13.1   are allowed, the depreciation under section 168(k) is allowed; 
 13.2      (8) the amount of mortgage interest paid on a residential 
 13.3   home with a market value greater than $500,000 as determined 
 13.4   under section 273.11, that exceeds $25,000 to the extent 
 13.5   deducted from federal taxable income; and 
 13.6      (9) the amount of expenses disallowed under section 290.10, 
 13.7   subdivision 2. 
 13.8      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 13.9   years beginning after December 31, 2003. 
 13.10     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
 13.11  290.01, subdivision 19b, is amended to read: 
 13.12     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 13.13  individuals, estates, and trusts, there shall be subtracted from 
 13.14  federal taxable income: 
 13.15     (1) interest income on obligations of any authority, 
 13.16  commission, or instrumentality of the United States to the 
 13.17  extent includable in taxable income for federal income tax 
 13.18  purposes but exempt from state income tax under the laws of the 
 13.19  United States; 
 13.20     (2) if included in federal taxable income, the amount of 
 13.21  any overpayment of income tax to Minnesota or to any other 
 13.22  state, for any previous taxable year, whether the amount is 
 13.23  received as a refund or as a credit to another taxable year's 
 13.24  income tax liability; 
 13.25     (3) the amount paid to others, less the amount used to 
 13.26  claim the credit allowed under section 290.0674, not to exceed 
 13.27  $1,625 for each qualifying child in grades kindergarten to 6 and 
 13.28  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 13.29  textbooks, and transportation of each qualifying child in 
 13.30  attending an elementary or secondary school situated in 
 13.31  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 13.32  wherein a resident of this state may legally fulfill the state's 
 13.33  compulsory attendance laws, which is not operated for profit, 
 13.34  and which adheres to the provisions of the Civil Rights Act of 
 13.35  1964 and chapter 363A.  For the purposes of this clause, 
 13.36  "tuition" includes fees or tuition as defined in section 
 14.1   290.0674, subdivision 1, clause (1).  As used in this clause, 
 14.2   "textbooks" includes books and other instructional materials and 
 14.3   equipment purchased or leased for use in elementary and 
 14.4   secondary schools in teaching only those subjects legally and 
 14.5   commonly taught in public elementary and secondary schools in 
 14.6   this state.  Equipment expenses qualifying for deduction 
 14.7   includes expenses as defined and limited in section 290.0674, 
 14.8   subdivision 1, clause (3).  "Textbooks" does not include 
 14.9   instructional books and materials used in the teaching of 
 14.10  religious tenets, doctrines, or worship, the purpose of which is 
 14.11  to instill such tenets, doctrines, or worship, nor does it 
 14.12  include books or materials for, or transportation to, 
 14.13  extracurricular activities including sporting events, musical or 
 14.14  dramatic events, speech activities, driver's education, or 
 14.15  similar programs.  For purposes of the subtraction provided by 
 14.16  this clause, "qualifying child" has the meaning given in section 
 14.17  32(c)(3) of the Internal Revenue Code; 
 14.18     (4) income as provided under section 290.0802; 
 14.19     (5) to the extent included in federal adjusted gross 
 14.20  income, income realized on disposition of property exempt from 
 14.21  tax under section 290.491; 
 14.22     (6) to the extent included in federal taxable income, 
 14.23  postservice benefits for youth community service under section 
 14.24  124D.42 for volunteer service under United States Code, title 
 14.25  42, sections 12601 to 12604; 
 14.26     (7) to the extent not deducted in determining federal 
 14.27  taxable income by an individual who does not itemize deductions 
 14.28  for federal income tax purposes for the taxable year, an amount 
 14.29  equal to 50 percent of the excess of charitable contributions 
 14.30  allowable as a deduction for the taxable year under section 
 14.31  170(a) of the Internal Revenue Code over $500; 
 14.32     (8) for taxable years beginning before January 1, 2008, the 
 14.33  amount of the federal small ethanol producer credit allowed 
 14.34  under section 40(a)(3) of the Internal Revenue Code which is 
 14.35  included in gross income under section 87 of the Internal 
 14.36  Revenue Code; 
 15.1      (9) for individuals who are allowed a federal foreign tax 
 15.2   credit for taxes that do not qualify for a credit under section 
 15.3   290.06, subdivision 22, an amount equal to the carryover of 
 15.4   subnational foreign taxes for the taxable year, but not to 
 15.5   exceed the total subnational foreign taxes reported in claiming 
 15.6   the foreign tax credit.  For purposes of this clause, "federal 
 15.7   foreign tax credit" means the credit allowed under section 27 of 
 15.8   the Internal Revenue Code, and "carryover of subnational foreign 
 15.9   taxes" equals the carryover allowed under section 904(c) of the 
 15.10  Internal Revenue Code minus national level foreign taxes to the 
 15.11  extent they exceed the federal foreign tax credit; 
 15.12     (10) in each of the five tax years immediately following 
 15.13  the tax year in which an addition is required under subdivision 
 15.14  19a, clause (7), an amount equal to one-fifth of the delayed 
 15.15  depreciation.  For purposes of this clause, "delayed 
 15.16  depreciation" means the amount of the addition made by the 
 15.17  taxpayer under subdivision 19a, clause (7), minus the positive 
 15.18  value of any net operating loss under section 172 of the 
 15.19  Internal Revenue Code generated for the tax year of the 
 15.20  addition.  The resulting delayed depreciation cannot be less 
 15.21  than zero; ~~and~~ 
 15.22     (11) job opportunity building zone income as provided under 
 15.23  section 469.316; 
 15.24     (12) to the extent included in federal taxable income, an 
 15.25  amount, not to exceed $10,000, equal to an individual's 
 15.26  unreimbursed expenses for travel, lodging, and lost wages net of 
 15.27  sick pay related to the individual's donation of one or more of 
 15.28  the individual's organs to another person for human organ 
 15.29  transplantation.  For purposes of determining the extent to 
 15.30  which expenses are included in federal taxable income, expenses 
 15.31  qualifying under this paragraph are the first expenses 
 15.32  considered in determining the medical expense deduction allowed 
 15.33  under section 213 of the Internal Revenue Code.  For purposes of 
 15.34  this clause, "organ" means all or part of an individual's liver, 
 15.35  pancreas, kidney, intestine, lung, or bone marrow, and "human 
 15.36  organ transplantation" means the medical procedure by which 
 16.1   transfer of a human organ is made from the body of one person to 
 16.2   the body of another person.  An individual may claim the 
 16.3   subtraction in this clause for each instance of organ donation 
 16.4   for transplantation, during the taxable year in which the 
 16.5   expenses or lost wages occur; 
 16.6      (13) the amount of compensation paid to members of the 
 16.7   Minnesota National Guard or other reserve components of the 
 16.8   United States military for active service performed in 
 16.9   Minnesota, excluding compensation for services performed under 
 16.10  the Active Guard Reserve (AGR) program.  For purposes of this 
 16.11  clause, "active service" means (i) state active service as 
 16.12  defined in section 190.05, subdivision 5a, clause (1); (ii) 
 16.13  federally funded state active service as defined in section 
 16.14  190.05, subdivision 5b; or (iii) federal active service as 
 16.15  defined in section 190.05, subdivision 5c, but "active service" 
 16.16  excludes services performed exclusively for purposes of basic 
 16.17  combat training, advanced individual training, annual training, 
 16.18  and periodic inactive duty training; special training 
 16.19  periodically made available to reserve members; and service 
 16.20  performed in accordance with section 190.08, subdivision 3; and 
 16.21     (14) the amount of compensation paid to members of the 
 16.22  armed forces of the United States or United Nations for active 
 16.23  duty performed outside Minnesota. 
 16.24     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 16.25  years beginning after December 31, 2003. 
 16.26     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
 16.27  290.01, subdivision 19c, is amended to read: 
 16.28     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 16.29  INCOME.] For corporations, there shall be added to federal 
 16.30  taxable income: 
 16.31     (1) the amount of any deduction taken for federal income 
 16.32  tax purposes for income, excise, or franchise taxes based on net 
 16.33  income or related minimum taxes, including but not limited to 
 16.34  the tax imposed under section 290.0922, paid by the corporation 
 16.35  to Minnesota, another state, a political subdivision of another 
 16.36  state, the District of Columbia, or any foreign country or 
 17.1   possession of the United States; 
 17.2      (2) interest not subject to federal tax upon obligations 
 17.3   of:  the United States, its possessions, its agencies, or its 
 17.4   instrumentalities; the state of Minnesota or any other state, 
 17.5   any of its political or governmental subdivisions, any of its 
 17.6   municipalities, or any of its governmental agencies or 
 17.7   instrumentalities; the District of Columbia; or Indian tribal 
 17.8   governments; 
 17.9      (3) exempt-interest dividends received as defined in 
 17.10  section 852(b)(5) of the Internal Revenue Code; 
 17.11     (4) the amount of any net operating loss deduction taken 
 17.12  for federal income tax purposes under section 172 or 832(c)(10) 
 17.13  of the Internal Revenue Code or operations loss deduction under 
 17.14  section 810 of the Internal Revenue Code; 
 17.15     (5) the amount of any special deductions taken for federal 
 17.16  income tax purposes under sections 241 to 247 of the Internal 
 17.17  Revenue Code; 
 17.18     (6) losses from the business of mining, as defined in 
 17.19  section 290.05, subdivision 1, clause (a), that are not subject 
 17.20  to Minnesota income tax; 
 17.21     (7) the amount of any capital losses deducted for federal 
 17.22  income tax purposes under sections 1211 and 1212 of the Internal 
 17.23  Revenue Code; 
 17.24     (8) the exempt foreign trade income of a foreign sales 
 17.25  corporation under sections 921(a) and 291 of the Internal 
 17.26  Revenue Code; 
 17.27     (9) the amount of percentage depletion deducted under 
 17.28  sections 611 through 614 and 291 of the Internal Revenue Code; 
 17.29     (10) for certified pollution control facilities placed in 
 17.30  service in a taxable year beginning before December 31, 1986, 
 17.31  and for which amortization deductions were elected under section 
 17.32  169 of the Internal Revenue Code of 1954, as amended through 
 17.33  December 31, 1985, the amount of the amortization deduction 
 17.34  allowed in computing federal taxable income for those 
 17.35  facilities; 
 17.36     (11) the amount of any deemed dividend from a foreign 
 18.1   operating corporation determined pursuant to section 290.17, 
 18.2   subdivision 4, paragraph (g); 
 18.3      (12) the amount of any environmental tax paid under section 
 18.4   59(a) of the Internal Revenue Code; 
 18.5      (13) the amount of a partner's pro rata share of net income 
 18.6   which does not flow through to the partner because the 
 18.7   partnership elected to pay the tax on the income under section 
 18.8   6242(a)(2) of the Internal Revenue Code; 
 18.9      (14) the amount of net income excluded under section 114 of 
 18.10  the Internal Revenue Code; 
 18.11     (15) any increase in subpart F income, as defined in 
 18.12  section 952(a) of the Internal Revenue Code, for the taxable 
 18.13  year when subpart F income is calculated without regard to the 
 18.14  provisions of section 614 of Public Law 107-147; ~~and~~ 
 18.15     (16) 80 percent of the depreciation deduction allowed under 
 18.16  section 168(k) of the Internal Revenue Code.  For purposes of 
 18.17  this clause, if the taxpayer has an activity that in the taxable 
 18.18  year generates a deduction for depreciation under section 168(k) 
 18.19  and the activity generates a loss for the taxable year that the 
 18.20  taxpayer is not allowed to claim for the taxable year, "the 
 18.21  depreciation allowed under section 168(k)" for the taxable year 
 18.22  is limited to excess of the depreciation claimed by the activity 
 18.23  under section 168(k) over the amount of the loss from the 
 18.24  activity that is not allowed in the taxable year.  In succeeding 
 18.25  taxable years when the losses not allowed in the taxable year 
 18.26  are allowed, the depreciation under section 168(k) is allowed; 
 18.27  and 
 18.28     (17) the amount of expenses disallowed under section 
 18.29  290.10, subdivision 2. 
 18.30     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 18.31  years beginning after December 31, 2003. 
 18.32     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 18.33  290.01, subdivision 31, is amended to read: 
 18.34     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 18.35  defined otherwise, "Internal Revenue Code" means the Internal 
 18.36  Revenue Code of 1986, as amended through ~~June 15, 2003~~ December 
 19.1   31, 2003. 
 19.2      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 19.3   following final enactment except the changes incorporated by 
 19.4   federal changes are effective at the same times as the changes 
 19.5   were effective for federal purposes. 
 19.6      Sec. 10.  Minnesota Statutes 2002, section 290.05, 
 19.7   subdivision 1, is amended to read: 
 19.8      Subdivision 1.  [EXEMPT ENTITIES.] The following 
 19.9   corporations, individuals, estates, trusts, and organizations 
 19.10  shall be exempted from taxation under this chapter, provided 
 19.11  that every such person or corporation claiming exemption under 
 19.12  this chapter, in whole or in part, must establish to the 
 19.13  satisfaction of the commissioner the taxable status of any 
 19.14  income or activity: 
 19.15     (a) corporations, individuals, estates, and trusts engaged 
 19.16  in the business of mining or producing iron ore and other ores 
 19.17  the mining or production of which is subject to the occupation 
 19.18  tax imposed by section 298.01; but if any such corporation, 
 19.19  individual, estate, or trust engages in any other business or 
 19.20  activity or has income from any property not used in such 
 19.21  business it shall be subject to this tax computed on the net 
 19.22  income from such property or such other business or activity.  
 19.23  Royalty shall not be considered as income from the business of 
 19.24  mining or producing iron ore within the meaning of this section; 
 19.25     (b) the United States of America, the state of Minnesota or 
 19.26  any political subdivision of either agencies or 
 19.27  instrumentalities, whether engaged in the discharge of 
 19.28  governmental or proprietary functions; ~~and~~ 
 19.29     (c) any insurance company; and 
 19.30     (d) a corporation engaged in the business of operating a 
 19.31  personal rapid transit system, as defined in section 297A.61, 
 19.32  subdivision 37, in this state, independent of any government 
 19.33  subsidies, but if the corporation engages in any other business 
 19.34  or activity or has income from any property not used in the 
 19.35  business of operating a personal rapid transit system, it is 
 19.36  subject to this tax computed on the net income from the property 
 20.1   or business or activity. 
 20.2      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 20.3   years beginning after December 31, 2008. 
 20.4      Sec. 11.  Minnesota Statutes 2003 Supplement, section 
 20.5   290.06, subdivision 2c, is amended to read: 
 20.6      Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 20.7   AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 20.8   married individuals filing joint returns and surviving spouses 
 20.9   as defined in section 2(a) of the Internal Revenue Code must be 
 20.10  computed by applying to their taxable net income the following 
 20.11  schedule of rates: 
 20.12     (1) On the first $25,680, 5.35 percent; 
 20.13     (2) On all over $25,680, but not over $102,030, 7.05 
 20.14  percent; 
 20.15     (3) On all over $102,030, ~~7.85~~ 8.0 percent. 
 20.16     Married individuals filing separate returns, estates, and 
 20.17  trusts must compute their income tax by applying the above rates 
 20.18  to their taxable income, except that the income brackets will be 
 20.19  one-half of the above amounts.  
 20.20     (b) The income taxes imposed by this chapter upon unmarried 
 20.21  individuals must be computed by applying to taxable net income 
 20.22  the following schedule of rates: 
 20.23     (1) On the first $17,570, 5.35 percent; 
 20.24     (2) On all over $17,570, but not over $57,710, 7.05 
 20.25  percent; 
 20.26     (3) On all over $57,710, ~~7.85~~ 8.0 percent. 
 20.27     (c) The income taxes imposed by this chapter upon unmarried 
 20.28  individuals qualifying as a head of household as defined in 
 20.29  section 2(b) of the Internal Revenue Code must be computed by 
 20.30  applying to taxable net income the following schedule of rates: 
 20.31     (1) On the first $21,630, 5.35 percent; 
 20.32     (2) On all over $21,630, but not over $86,910, 7.05 
 20.33  percent; 
 20.34     (3) On all over $86,910, ~~7.85~~ 8.0 percent. 
 20.35     (d) In lieu of a tax computed according to the rates set 
 20.36  forth in this subdivision, the tax of any individual taxpayer 
 21.1   whose taxable net income for the taxable year is less than an 
 21.2   amount determined by the commissioner must be computed in 
 21.3   accordance with tables prepared and issued by the commissioner 
 21.4   of revenue based on income brackets of not more than $100.  The 
 21.5   amount of tax for each bracket shall be computed at the rates 
 21.6   set forth in this subdivision, provided that the commissioner 
 21.7   may disregard a fractional part of a dollar unless it amounts to 
 21.8   50 cents or more, in which case it may be increased to $1. 
 21.9      (e) An individual who is not a Minnesota resident for the 
 21.10  entire year must compute the individual's Minnesota income tax 
 21.11  as provided in this subdivision.  After the application of the 
 21.12  nonrefundable credits provided in this chapter, the tax 
 21.13  liability must then be multiplied by a fraction in which:  
 21.14     (1) the numerator is the individual's Minnesota source 
 21.15  federal adjusted gross income as defined in section 62 of the 
 21.16  Internal Revenue Code and increased by the additions required 
 21.17  under section 290.01, subdivision 19a, clauses (1), (5), and 
 21.18  (6), and reduced by the subtraction under section 290.01, 
 21.19  subdivision 19b, clause (11), and the Minnesota assignable 
 21.20  portion of the subtraction for United States government interest 
 21.21  under section 290.01, subdivision 19b, clause (1), after 
 21.22  applying the allocation and assignability provisions of section 
 21.23  290.081, clause (a), or 290.17; and 
 21.24     (2) the denominator is the individual's federal adjusted 
 21.25  gross income as defined in section 62 of the Internal Revenue 
 21.26  Code of 1986, increased by the amounts specified in section 
 21.27  290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 
 21.28  by the amounts specified in section 290.01, subdivision 19b, 
 21.29  clauses (1) and (11). 
 21.30     <h>[EFFECTIVE DATE.]</h> This section is effective only if 
 21.31  sections 16 and 17 of this article are enacted for taxable years 
 21.32  beginning after December 31, 2004. 
 21.33     Sec. 12.  Minnesota Statutes 2002, section 290.06, 
 21.34  subdivision 28, is amended to read: 
 21.35     Subd. 28.  [~~CREDIT~~ REFUNDS FOR TRANSIT PASSES.] ~~A taxpayer~~ 
 21.36  (a) An employer may ~~take a credit against the tax due under this~~ 
 22.1   ~~chapter~~ claim a refund equal to 30 percent of the expense 
 22.2   incurred by the ~~taxpayer~~ employer to provide transit passes, for 
 22.3   use in Minnesota, to employees of the taxpayer.  
 22.4      (b) As used in this subdivision, the following terms have 
 22.5   the meanings given: 
 22.6      (1) "employer" means an individual or entity subject to tax 
 22.7   under this chapter or an entity that is exempt from taxation 
 22.8   under section 290.05, but excluding entities enumerated in 
 22.9   section 290.05, subdivision 1, paragraph (b); and 
 22.10     (2) "transit pass" has the meaning given in section 
 22.11  132(f)(5)(A) of the Internal Revenue Code.  
 22.12     (c) If the ~~taxpayer~~ employer purchases the transit passes 
 22.13  from the transit system operator, and resells them to the 
 22.14  employees, the ~~credit~~ refund is based on the amount of the 
 22.15  difference between the price paid for the passes by the employer 
 22.16  and the amount charged to employees. 
 22.17     (d) The commissioner shall prescribe the forms for and the 
 22.18  manner in which the refund may be claimed.  The commissioner 
 22.19  must provide for paying refunds at least quarterly.  The 
 22.20  commissioner may set a minimum amount of qualifying expenses 
 22.21  that must be incurred before a refund may be claimed. 
 22.22     (e) An amount sufficient to pay the refunds required by 
 22.23  this subdivision is appropriated to the commissioner of revenue. 
 22.24     <h>[EFFECTIVE DATE.]</h> This section is effective for transit 
 22.25  passes purchased after December 31, 2004. 
 22.26     Sec. 13.  Minnesota Statutes 2002, section 290.06, is 
 22.27  amended by adding a subdivision to read: 
 22.28     Subd. 32.  [REGIONAL INVESTMENT CREDIT.] (a) A credit is 
 22.29  allowed against the tax imposed by this chapter for investment 
 22.30  in a qualifying regional angel investment network fund.  The 
 22.31  credit equals 25 percent of the taxpayer's investment made in 
 22.32  the fund for the taxable year, but not to exceed the lesser of: 
 22.33     (1) the liability for tax under this chapter; or 
 22.34     (2) the amount of the certificate under paragraph (c) 
 22.35  provided to the taxpayer by the fund. 
 22.36     (b) For purposes of this subdivision, a regional angel 
 23.1   investment network fund means a pool investment fund that: 
 23.2      (1) is organized as a limited liability company and 
 23.3   consists of members who are accredited investors within the 
 23.4   meaning of Regulation D of the Securities and Exchange 
 23.5   Commission, Code of Federal Regulations, title 17, section 
 23.6   230.501(a); and 
 23.7      (2) primarily makes equity investments in emerging and 
 23.8   expanding small businesses as defined by the Small Business 
 23.9   Administration, or cooperative associations as defined in 
 23.10  chapter 308B, that are located in local communities in Minnesota 
 23.11  outside of the metropolitan area as defined in section 473.121, 
 23.12  subdivision 2, and does not make investments in residential real 
 23.13  estate. 
 23.14     (c) Regional angel investment network funds may apply to 
 23.15  the commissioner of employment and economic development for 
 23.16  certification as a qualifying regional angel investment network 
 23.17  fund.  The application must be in the form and made under 
 23.18  procedures specified by the commissioner of employment and 
 23.19  economic development.  The commissioner of employment and 
 23.20  economic development may certify up to ten qualifying funds and 
 23.21  provide certificates entitling investors in the funds to credits 
 23.22  under this subdivision of up to $250,000 for each fund.  The 
 23.23  commissioner of employment and economic development must not 
 23.24  issue a total amount of certificates for all funds of more than 
 23.25  $2,500,000.  In awarding certificates under this paragraph, the 
 23.26  commissioner of employment and economic development shall 
 23.27  generally award them to qualified applicants in the order in 
 23.28  which the applications are received, but shall also seek to 
 23.29  certify funds that are broadly dispersed across the entire state 
 23.30  outside of the metropolitan area, as defined in section 473.121, 
 23.31  subdivision 2. 
 23.32     (d) The commissioner of revenue may require a taxpayer to 
 23.33  provide a copy of the credit certificate under paragraph (c) to 
 23.34  verify the taxpayer's entitlement to a credit under this 
 23.35  subdivision. 
 23.36     (e) If the amount of the credit under this subdivision for 
 24.1   any taxable year exceeds the limitation under paragraph (a), 
 24.2   clause (1), the excess is a credit carryover to each of the 15 
 24.3   succeeding taxable years.  The entire amount of the excess 
 24.4   unused credit for the taxable year must be carried first to the 
 24.5   earliest of the taxable years to which the credit may be carried 
 24.6   and then to each successive year to which the credit may be 
 24.7   carried.  The amount of the unused credit which may be added 
 24.8   under this paragraph may not exceed the taxpayer's liability for 
 24.9   tax for the taxable year. 
 24.10     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 24.11  following final enactment, for taxable years beginning after 
 24.12  December 31, 2004.  It applies to investments made after the 
 24.13  fund has been certified by the commissioner of employment and 
 24.14  economic development. 
 24.15     Sec. 14.  Minnesota Statutes 2002, section 290.06, is 
 24.16  amended by adding a subdivision to read: 
 24.17     Subd. 33.  [CARSHARING CREDIT.] (a) For purposes of this 
 24.18  subdivision, a "carsharing organization"  means an organization 
 24.19  that:  
 24.20     (1) is described in section 501(c) of the Internal Revenue 
 24.21  Code; 
 24.22     (2) is comprised of members who purchase the use of a motor 
 24.23  vehicle from the organization; 
 24.24     (3) owns or leases a fleet of motor vehicles that are 
 24.25  available to members of the organization to pay for the use of a 
 24.26  vehicle on an hourly or per trip basis; and 
 24.27     (4) does not assign exclusive rights of use of specific 
 24.28  vehicles to individual members or allow individual members to 
 24.29  keep a vehicle in the member's sole possession.  
 24.30     (b) A taxpayer may take a credit against the tax due under 
 24.31  this chapter for the expenses incurred by the taxpayer to 
 24.32  purchase a membership and pay monthly dues to a carsharing 
 24.33  organization or to provide memberships and pay monthly dues to a 
 24.34  carsharing organization for employees of the taxpayer.  The 
 24.35  amount of the credit is equal to the lesser of the actual cost 
 24.36  of the membership fee and the monthly dues, or $390.  If an 
 25.1   employer purchases the membership or pays the monthly dues to 
 25.2   the nonprofit carsharing organization and resells the membership 
 25.3   to its employees or charges the monthly dues to its employees, 
 25.4   the credit allowed to the employer is the amount of the 
 25.5   difference between the amount paid by the employer and the 
 25.6   amount charged to the employee. 
 25.7      (c) A taxpayer who owns a parking facility that charges 
 25.8   customers an amount to park vehicles at the facility and 
 25.9   provides dedicated parking space at no charge to a nonprofit 
 25.10  carsharing organization to park the motor vehicles that are used 
 25.11  by the members of the organization on an hourly or per-trip 
 25.12  basis, may take a credit against the tax due under this chapter 
 25.13  for the value of the dedicated parking space provided to the 
 25.14  nonprofit carsharing organization.  The value of the dedicated 
 25.15  parking space is equal to the lowest amount charged to customers 
 25.16  who pay to park at the facility calculated on an hourly, daily, 
 25.17  or other long-term rate that results in the lowest total cost. 
 25.18     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 25.19  years beginning after December 31, 2004. 
 25.20     Sec. 15.  Minnesota Statutes 2002, section 290.0674, 
 25.21  subdivision 2, is amended to read: 
 25.22     Subd. 2.  [LIMITATIONS.] (a) For claimants with income not 
 25.23  greater than $33,500, the maximum credit allowed is $1,000 ~~per~~ 
 25.24  multiplied by the number of claimant's qualifying ~~child and~~ 
 25.25  ~~$2,000 per family~~ children in grades kindergarten through grade 
 25.26  12.  No credit is allowed for education-related expenses for 
 25.27  claimants with income greater than $37,500.  The maximum credit 
 25.28  per ~~child~~ claimant is reduced by $1 for each $4 of household 
 25.29  income over $33,500, ~~and the maximum credit per family is~~ 
 25.30  ~~reduced by $2 for each $4 of household income over $33,500,~~ but 
 25.31  in no case is the credit less than zero. 
 25.32     For purposes of this section "income" has the meaning given 
 25.33  in section 290.067, subdivision 2a.  In the case of a married 
 25.34  claimant, a credit is not allowed unless a joint income tax 
 25.35  return is filed. 
 25.36     (b) For a nonresident or part-year resident, the credit 
 26.1   determined under subdivision 1 and the maximum credit amount in 
 26.2   paragraph (a) must be allocated using the percentage calculated 
 26.3   in section 290.06, subdivision 2c, paragraph (e). 
 26.4      <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 26.5   beginning after December 31, 2004. 
 26.6      Sec. 16.  Minnesota Statutes 2003 Supplement, section 
 26.7   290.091, subdivision 2, is amended to read: 
 26.8      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 26.9   this section, the following terms have the meanings given: 
 26.10     (a) "Alternative minimum taxable income" means the sum of 
 26.11  the following for the taxable year: 
 26.12     (1) the taxpayer's federal alternative minimum taxable 
 26.13  income as defined in section 55(b)(2) of the Internal Revenue 
 26.14  Code; 
 26.15     (2) the taxpayer's itemized deductions allowed in computing 
 26.16  federal alternative minimum taxable income, but excluding: 
 26.17     (i) the charitable contribution deduction under section 170 
 26.18  of the Internal Revenue Code ~~to the extent that the deduction~~ 
 26.19  ~~exceeds 1.0 percent of adjusted gross income, as defined in~~ 
 26.20  ~~section 62 of the Internal Revenue Code~~; 
 26.21     (ii) the medical expense deduction; 
 26.22     (iii) the casualty, theft, and disaster loss deduction; ~~and~~ 
 26.23     (iv) the impairment-related work expenses of a disabled 
 26.24  person; and 
 26.25     (v) the amount of the exemption allowed the taxpayer under 
 26.26  section 151(c) of the Internal Revenue Code; 
 26.27     (3) for depletion allowances computed under section 613A(c) 
 26.28  of the Internal Revenue Code, with respect to each property (as 
 26.29  defined in section 614 of the Internal Revenue Code), to the 
 26.30  extent not included in federal alternative minimum taxable 
 26.31  income, the excess of the deduction for depletion allowable 
 26.32  under section 611 of the Internal Revenue Code for the taxable 
 26.33  year over the adjusted basis of the property at the end of the 
 26.34  taxable year (determined without regard to the depletion 
 26.35  deduction for the taxable year); 
 26.36     (4) to the extent not included in federal alternative 
 27.1   minimum taxable income, the amount of the tax preference for 
 27.2   intangible drilling cost under section 57(a)(2) of the Internal 
 27.3   Revenue Code determined without regard to subparagraph (E); 
 27.4      (5) to the extent not included in federal alternative 
 27.5   minimum taxable income, the amount of interest income as 
 27.6   provided by section 290.01, subdivision 19a, clause (1); and 
 27.7      (6) the amount of addition required by section 290.01, 
 27.8   subdivision 19a, clause (7); 
 27.9      less the sum of the amounts determined under the following: 
 27.10     (1) interest income as defined in section 290.01, 
 27.11  subdivision 19b, clause (1); 
 27.12     (2) an overpayment of state income tax as provided by 
 27.13  section 290.01, subdivision 19b, clause (2), to the extent 
 27.14  included in federal alternative minimum taxable income; 
 27.15     (3) the amount of investment interest paid or accrued 
 27.16  within the taxable year on indebtedness to the extent that the 
 27.17  amount does not exceed net investment income, as defined in 
 27.18  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 27.19  not include amounts deducted in computing federal adjusted gross 
 27.20  income; and 
 27.21     (4) amounts subtracted from federal taxable income as 
 27.22  provided by section 290.01, subdivision 19b, clauses (10) ~~and~~ 
 27.23  ~~(11)~~ to (12). 
 27.24     In the case of an estate or trust, alternative minimum 
 27.25  taxable income must be computed as provided in section 59(c) of 
 27.26  the Internal Revenue Code. 
 27.27     (b) "Investment interest" means investment interest as 
 27.28  defined in section 163(d)(3) of the Internal Revenue Code. 
 27.29     (c) "Tentative minimum tax" equals 6.4 percent of 
 27.30  alternative minimum taxable income after subtracting the 
 27.31  exemption amount determined under subdivision 3. 
 27.32     (d) "Regular tax" means the tax that would be imposed under 
 27.33  this chapter (without regard to this section and section 
 27.34  290.032), reduced by the sum of the nonrefundable credits 
 27.35  allowed under this chapter.  
 27.36     (e) "Net minimum tax" means the minimum tax imposed by this 
 28.1   section. 
 28.2      <h>[EFFECTIVE DATE.]</h> This section is effective only if 
 28.3   sections 11 and 17 of this article are enacted for taxable years 
 28.4   beginning after December 31, 2004. 
 28.5      Sec. 17.  Minnesota Statutes 2002, section 290.091, 
 28.6   subdivision 3, is amended to read: 
 28.7      Subd. 3.  [EXEMPTION AMOUNT.] (a) For purposes of computing 
 28.8   the alternative minimum tax, the exemption amount is ~~the~~ 
 28.9   ~~exemption determined under section 55(d) of the Internal Revenue~~ 
 28.10  ~~Code, as amended through December 31, 1992, except that~~ 
 28.11  ~~alternative minimum taxable income as determined under this~~ 
 28.12  ~~section must be substituted in the computation of the phase out~~ 
 28.13  ~~under section 55(d)(3)~~ $66,300 for married individuals filing 
 28.14  joint returns; and $33,150 for married individuals filing 
 28.15  separate returns, single individuals, and head of household 
 28.16  filers. 
 28.17     (b) The exemption amount determined under this subdivision 
 28.18  is reduced by an amount equal to 25 percent of the amount by 
 28.19  which the alternative minimum income exceeds $248,600 for 
 28.20  married individuals filing joint returns; and $124,300 for 
 28.21  married individuals filing separate returns, single individuals, 
 28.22  and head of household filers. 
 28.23     (c) For taxable years beginning after December 31, 2005, 
 28.24  the exemption amounts under paragraph (a), and the income 
 28.25  amounts in paragraph (b), must be adjusted for inflation.  The 
 28.26  commissioner shall make the inflation adjustments in accordance 
 28.27  with section 1(f) of the Internal Revenue Code except that for 
 28.28  the purposes of this subdivision the percentage increase must be 
 28.29  determined from the year starting September 1, 2004, and ending 
 28.30  August 31, 2005, as the base year for adjusting for inflation 
 28.31  for the tax year beginning after December 31, 2005.  The 
 28.32  determination of the commissioner under this subdivision is not 
 28.33  a rule under the Administrative Procedure Act. 
 28.34     <h>[EFFECTIVE DATE.]</h> This section is effective only if 
 28.35  sections 11 and 16 of this article are enacted for taxable years 
 28.36  beginning after December 31, 2004. 
 29.1      Sec. 18.  Minnesota Statutes 2002, section 290.10, is 
 29.2   amended to read: 
 29.3      290.10 [NONDEDUCTIBLE ITEMS.] 
 29.4      Subdivision 1.  [EXPENSES, INTEREST, AND TAXES.] Except as 
 29.5   provided in section 290.17, subdivision 4, paragraph (i), in 
 29.6   computing the net income of a taxpayer no deduction shall in any 
 29.7   case be allowed for expenses, interest and taxes connected with 
 29.8   or allocable against the production or receipt of all income not 
 29.9   included in the measure of the tax imposed by this chapter, 
 29.10  except that for corporations engaged in the business of mining 
 29.11  or producing iron ore, the mining of which is subject to the 
 29.12  occupation tax imposed by section 298.01, subdivision 4, this 
 29.13  shall not prevent the deduction of expenses and other items to 
 29.14  the extent that the expenses and other items are allowable under 
 29.15  this chapter and are not deductible, capitalizable, retainable 
 29.16  in basis, or taken into account by allowance or otherwise in 
 29.17  computing the occupation tax and do not exceed the amounts taken 
 29.18  for federal income tax purposes for that year.  Occupation taxes 
 29.19  imposed under chapter 298, royalty taxes imposed under chapter 
 29.20  299, or depletion expenses may not be deducted under this clause.
 29.21     Subd. 2.  [FINES, PENALTIES, DAMAGES, AND EXPENSES.] (a) No 
 29.22  deduction from taxable income for a trade or business expense 
 29.23  under section 162(a) of the Internal Revenue Code shall be 
 29.24  allowed for any fine, penalty, damages, or expenses paid to: 
 29.25     (1) the government of the United States, a state, a 
 29.26  territory or possession of the United States, the District of 
 29.27  Columbia, or the Commonwealth of Puerto Rico; 
 29.28     (2) the government of a foreign country; or 
 29.29     (3) a political subdivision of, or corporation or other 
 29.30  entity serving as an agency or instrumentality of, any 
 29.31  government described in clause (1) or (2). 
 29.32     (b) For purposes of this subdivision, "fine, penalty, 
 29.33  damages, or expenses" include, but are not limited to, any 
 29.34  amount: 
 29.35     (1) paid pursuant to a conviction or a plea of guilty or 
 29.36  nolo contendere for any crime in a criminal proceeding; 
 30.1      (2) paid as a civil penalty imposed by federal, state, or 
 30.2   local law, including tax penalties and interest; 
 30.3      (3) paid in settlement of the taxpayer's actual or 
 30.4   potential liability for a civil or criminal fine or penalty; 
 30.5      (4) forfeited as collateral posted in connection with a 
 30.6   proceeding that could result in imposition of a fine or penalty; 
 30.7   or 
 30.8      (5) legal fees and related expenses paid or incurred in the 
 30.9   prosecution or civil action arising from a violation of the law 
 30.10  imposing the fine or civil penalty, court costs assessed against 
 30.11  the taxpayer, or stenographic and printing charges, compensatory 
 30.12  damages, punitive damages, or restitution. 
 30.13     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 30.14  years beginning after December 31, 2003. 
 30.15     Sec. 19.  Minnesota Statutes 2002, section 290.191, 
 30.16  subdivision 2, is amended to read: 
 30.17     Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
 30.18  Except for those trades or businesses required to use a 
 30.19  different formula under subdivision 3 or section 290.36, and for 
 30.20  those trades or businesses that receive permission to use some 
 30.21  other method under section 290.20 ~~or under subdivision 4~~, a 
 30.22  trade or business required to apportion its net income must 
 30.23  apportion its income to this state on the basis of ~~the~~ 
 30.24  ~~percentage obtained by taking the sum of:~~  
 30.25     ~~(1) 75 percent of~~ the percentage which the sales made 
 30.26  within this state in connection with the trade or business 
 30.27  during the tax period are of the total sales wherever made in 
 30.28  connection with the trade or business during the tax period~~;~~. 
 30.29     ~~(2) 12.5 percent of the percentage which the total tangible~~ 
 30.30  ~~property used by the taxpayer in this state in connection with~~ 
 30.31  ~~the trade or business during the tax period is of the total~~ 
 30.32  ~~tangible property, wherever located, used by the taxpayer in~~ 
 30.33  ~~connection with the trade or business during the tax period; and~~ 
 30.34     ~~(3) 12.5 percent of the percentage which the taxpayer's~~ 
 30.35  ~~total payrolls paid or incurred in this state or paid in respect~~ 
 30.36  ~~to labor performed in this state in connection with the trade or~~ 
 31.1   ~~business during the tax period are of the taxpayer's total~~ 
 31.2   ~~payrolls paid or incurred in connection with the trade or~~ 
 31.3   ~~business during the tax period.~~  
 31.4      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 31.5   years beginning after December 31, 2004, only if section 21 of 
 31.6   this article is enacted. 
 31.7      Sec. 20.  Minnesota Statutes 2002, section 290.191, 
 31.8   subdivision 3, is amended to read: 
 31.9      Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
 31.10  INSTITUTIONS.] Except for an investment company required to 
 31.11  apportion its income under section 290.36, a financial 
 31.12  institution that is required to apportion its net income must 
 31.13  apportion its net income to this state on the basis of the 
 31.14  percentage ~~obtained by taking the sum of:~~  
 31.15     ~~(1) 75 percent of the percentage~~ which the receipts from 
 31.16  within this state in connection with the trade or business 
 31.17  during the tax period are of the total receipts in connection 
 31.18  with the trade or business during the tax period, from wherever 
 31.19  derived~~;~~. 
 31.20     ~~(2) 12.5 percent of the percentage which the sum of the~~ 
 31.21  ~~total tangible property used by the taxpayer in this state and~~ 
 31.22  ~~the intangible property owned by the taxpayer and attributed to~~ 
 31.23  ~~this state in connection with the trade or business during the~~ 
 31.24  ~~tax period is of the sum of the total tangible property,~~ 
 31.25  ~~wherever located, used by the taxpayer and the intangible~~ 
 31.26  ~~property owned by the taxpayer and attributed to all states in~~ 
 31.27  ~~connection with the trade or business during the tax period; and~~ 
 31.28     ~~(3) 12.5 percent of the percentage which the taxpayer's~~ 
 31.29  ~~total payrolls paid or incurred in this state or paid in respect~~ 
 31.30  ~~to labor performed in this state in connection with the trade or~~ 
 31.31  ~~business during the tax period are of the taxpayer's total~~ 
 31.32  ~~payrolls paid or incurred in connection with the trade or~~ 
 31.33  ~~business during the tax period.~~ 
 31.34     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 31.35  years beginning after December 31, 2004, only if section 21 of 
 31.36  this article is enacted. 
 32.1      Sec. 21.  Minnesota Statutes 2002, section 290.191, 
 32.2   subdivision 5, is amended to read: 
 32.3      Subd. 5.  [DETERMINATION OF SALES FACTOR.] For purposes of 
 32.4   this section, the following rules apply in determining the sales 
 32.5   factor.  
 32.6      (a) The sales factor includes all sales, gross earnings, or 
 32.7   receipts received in the ordinary course of the business, except 
 32.8   that the following types of income are not included in the sales 
 32.9   factor: 
 32.10     (1) interest; 
 32.11     (2) dividends; 
 32.12     (3) sales of capital assets as defined in section 1221 of 
 32.13  the Internal Revenue Code; 
 32.14     (4) sales of property used in the trade or business, except 
 32.15  sales of leased property of a type which is regularly sold as 
 32.16  well as leased; 
 32.17     (5) sales of debt instruments as defined in section 
 32.18  1275(a)(1) of the Internal Revenue Code or sales of stock; and 
 32.19     (6) royalties, fees, or other like income of a type which 
 32.20  qualify for a subtraction from federal taxable income under 
 32.21  section 290.01, subdivision 19(d)(11).  
 32.22     (b) Sales of tangible personal property are made within 
 32.23  this state if the property is received by a purchaser at a point 
 32.24  within this state, and the taxpayer is taxable in this state, 
 32.25  regardless of the f.o.b. point, other conditions of the sale, or 
 32.26  the ultimate destination of the property. 
 32.27     (c) Tangible personal property delivered to a common or 
 32.28  contract carrier or foreign vessel for delivery to a purchaser 
 32.29  in another state or nation is a sale in that state or nation, 
 32.30  regardless of f.o.b. point or other conditions of the sale.  If 
 32.31  the taxpayer is not taxable in the state of the delivery and the 
 32.32  property is shipped from an office, factory, warehouse, or other 
 32.33  place of storage in this state, sales of tangible personal 
 32.34  property outside this state are attributed to this state 
 32.35  regardless of the terms of shipping, delivery, or other 
 32.36  conditions of sale. 
 33.1      (d) Notwithstanding paragraphs (b) and (c), when 
 33.2   intoxicating liquor, wine, fermented malt beverages, cigarettes, 
 33.3   or tobacco products are sold to a purchaser who is licensed by a 
 33.4   state or political subdivision to resell this property only 
 33.5   within the state of ultimate destination, the sale is made in 
 33.6   that state.  
 33.7      (e) Sales made by or through a corporation that is 
 33.8   qualified as a domestic international sales corporation under 
 33.9   section 992 of the Internal Revenue Code are not considered to 
 33.10  have been made within this state.  
 33.11     (f) Sales, rents, royalties, and other income in connection 
 33.12  with real property is attributed to the state in which the 
 33.13  property is located.  
 33.14     (g) Receipts from the lease or rental of tangible personal 
 33.15  property, including finance leases and true leases, must be 
 33.16  attributed to this state if the property is located in this 
 33.17  state and to other states if the property is not located in this 
 33.18  state.  Receipts from the lease or rental of moving property 
 33.19  including, but not limited to, motor vehicles, rolling stock, 
 33.20  aircraft, vessels, or mobile equipment are included in the 
 33.21  numerator of the receipts factor to the extent that the property 
 33.22  is used in this state.  The extent of the use of moving property 
 33.23  is determined as follows: 
 33.24     (1) A motor vehicle is used wholly in the state in which it 
 33.25  is registered.  
 33.26     (2) The extent that rolling stock is used in this state is 
 33.27  determined by multiplying the receipts from the lease or rental 
 33.28  of the rolling stock by a fraction, the numerator of which is 
 33.29  the miles traveled within this state by the leased or rented 
 33.30  rolling stock and the denominator of which is the total miles 
 33.31  traveled by the leased or rented rolling stock. 
 33.32     (3) The extent that an aircraft is used in this state is 
 33.33  determined by multiplying the receipts from the lease or rental 
 33.34  of the aircraft by a fraction, the numerator of which is the 
 33.35  number of landings of the aircraft in this state and the 
 33.36  denominator of which is the total number of landings of the 
 34.1   aircraft. 
 34.2      (4) The extent that a vessel, mobile equipment, or other 
 34.3   mobile property is used in the state is determined by 
 34.4   multiplying the receipts from the lease or rental of the 
 34.5   property by a fraction, the numerator of which is the number of 
 34.6   days during the taxable year the property was in this state and 
 34.7   the denominator of which is the total days in the taxable year.  
 34.8      (h) Royalties and other income not described in paragraph 
 34.9   (a), clause (6), received for the use of or for the privilege of 
 34.10  using intangible property, including patents, know-how, 
 34.11  formulas, designs, processes, patterns, copyrights, trade names, 
 34.12  service names, franchises, licenses, contracts, customer lists, 
 34.13  or similar items, must be attributed to the state in which the 
 34.14  property is used by the purchaser.  If the property is used in 
 34.15  more than one state, the royalties or other income must be 
 34.16  apportioned to this state pro rata according to the portion of 
 34.17  use in this state.  If the portion of use in this state cannot 
 34.18  be determined, the royalties or other income must be excluded 
 34.19  from both the numerator and the denominator.  Intangible 
 34.20  property is used in this state if the purchaser uses the 
 34.21  intangible property or the rights therein in the regular course 
 34.22  of its business operations in this state, regardless of the 
 34.23  location of the purchaser's customers. 
 34.24     (i) Sales of intangible property are made within the state 
 34.25  in which the property is used by the purchaser.  If the property 
 34.26  is used in more than one state, the sales must be apportioned to 
 34.27  this state pro rata according to the portion of use in this 
 34.28  state.  If the portion of use in this state cannot be 
 34.29  determined, the sale must be excluded from both the numerator 
 34.30  and the denominator of the sales factor.  Intangible property is 
 34.31  used in this state if the purchaser used the intangible property 
 34.32  in the regular course of its business operations in this state. 
 34.33     (j) Receipts from the performance of services must be 
 34.34  attributed to the state where the services are received.  For 
 34.35  the purposes of this section, receipts from the performance of 
 34.36  services provided to a corporation, partnership, or trust may 
 35.1   only be attributed to a state where it has a fixed place of 
 35.2   doing business.  If the state where the services are received is 
 35.3   not readily determinable or is a state where the corporation, 
 35.4   partnership, or trust receiving the service does not have a 
 35.5   fixed place of doing business, the services shall be deemed to 
 35.6   be received at the location of the office of the customer from 
 35.7   which the services were ordered in the regular course of the 
 35.8   customer's trade or business.  If the ordering office cannot be 
 35.9   determined, the services shall be deemed to be received at the 
 35.10  office of the customer to which the services are billed.  If the 
 35.11  taxpayer is not taxable in the state of the purchaser, the sale 
 35.12  is attributed to this state if the greater proportion of the 
 35.13  service is performed in this state. 
 35.14     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 35.15  years beginning after December 31, 2003, only if sections 19 and 
 35.16  20 of this article are enacted. 
 35.17     Sec. 22.  [290.433] [GLOBAL WAR ON TERRORISM CHECKOFF.] 
 35.18     Every individual who files an income tax return or property 
 35.19  tax refund claim, and every corporation that files an income tax 
 35.20  return, may designate on their return that $1 or more shall be 
 35.21  added to the tax or deducted from the refund that would 
 35.22  otherwise be payable by or to that individual or corporation and 
 35.23  paid into an account to be established for the purpose of paying 
 35.24  bonuses to residents of this state who are veterans of the 
 35.25  global war on terrorism.  The commissioner shall, on the income 
 35.26  tax returns and the property tax refund claim form, notify 
 35.27  filers of their right to designate that a portion of their tax 
 35.28  or refund shall be paid into the account for veterans of the 
 35.29  global war on terrorism.  The amounts designated under this 
 35.30  section shall be annually appropriated to the commissioner of 
 35.31  the Department of Veterans Affairs to pay bonuses to veterans of 
 35.32  the global war on terrorism as determined by law.  All interest 
 35.33  earned on money accrued shall be credited to the account by the 
 35.34  commissioner of finance. 
 35.35     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 35.36  years beginning after December 31, 2003, and for property tax 
 36.1   refund claims for property taxes payable after December 31, 2003.
 36.2      Sec. 23.  Minnesota Statutes 2002, section 290.92, 
 36.3   subdivision 4b, is amended to read: 
 36.4      Subd. 4b.  [WITHHOLDING BY PARTNERSHIPS.] (a) A partnership 
 36.5   shall deduct and withhold a tax as provided in paragraph (b) for 
 36.6   nonresident individual partners based on their distributive 
 36.7   shares of partnership income for a taxable year of the 
 36.8   partnership. 
 36.9      (b) The amount of tax withheld is determined by multiplying 
 36.10  the partner's distributive share allocable to Minnesota under 
 36.11  section 290.17, paid or credited during the taxable year by the 
 36.12  highest rate used to determine the income tax liability for an 
 36.13  individual under section 290.06, subdivision 2c, except that the 
 36.14  amount of tax withheld may be determined by the commissioner if 
 36.15  the partner submits a withholding exemption certificate under 
 36.16  subdivision 5. 
 36.17     (c) The commissioner may reduce or abate the tax withheld 
 36.18  under this subdivision if the partnership had reasonable cause 
 36.19  to believe that no tax was due under this section. 
 36.20     (d) Notwithstanding paragraph (a), a partnership is not 
 36.21  required to deduct and withhold tax for a nonresident partner if:
 36.22     (1) the partner elects to have the tax due paid as part of 
 36.23  the partnership's composite return under section 289A.08, 
 36.24  subdivision 7; 
 36.25     (2) the partner has Minnesota assignable federal adjusted 
 36.26  gross income from the partnership of less than $1,000; or 
 36.27     (3) the partnership is liquidated or terminated, the income 
 36.28  was generated by a transaction related to the termination or 
 36.29  liquidation, and no cash or other property was distributed in 
 36.30  the current or prior taxable year; ~~or~~ 
 36.31     (4) the distributive shares of partnership income are 
 36.32  attributable to: 
 36.33     (i) income required to be recognized because of discharge 
 36.34  of indebtedness; 
 36.35     (ii) income recognized because of a sale, exchange, or 
 36.36  other disposition of real estate, depreciable property, or 
 37.1   property described in section 179 of the Internal Revenue Code; 
 37.2   or 
 37.3      (iii) income recognized on the sale, exchange, or other 
 37.4   disposition of any property that has been the subject of a basis 
 37.5   reduction pursuant to section 108, 734, 743, 754, or 1017 of the 
 37.6   Internal Revenue Code 
 37.7   to the extent that the income does not include cash received or 
 37.8   receivable or, if there is cash received or receivable, to the 
 37.9   extent that the cash is required to be used to pay indebtedness 
 37.10  by the partnership or a secured debt on partnership property; or 
 37.11     (5) the partnership is a publicly traded partnership, as 
 37.12  defined in section 7704(b) of the Internal Revenue Code. 
 37.13     (e) For purposes of subdivision 6a, and sections 289A.09, 
 37.14  subdivision 2, 289A.20, subdivision 2, paragraph (c), 289A.50, 
 37.15  289A.56, 289A.60, and 289A.63, a partnership is considered an 
 37.16  employer.  
 37.17     (f) To the extent that income is exempt from withholding 
 37.18  under paragraph (d), clause (4), the commissioner has a lien in 
 37.19  an amount up to the amount that would be required to be withheld 
 37.20  with respect to the income of the partner attributable to the 
 37.21  partnership interest, but for the application of paragraph (d), 
 37.22  clause (4).  The lien arises under section 270.69 from the date 
 37.23  of assessment of the tax against the partner, and attaches to 
 37.24  that partner's share of the profits and any other money due or 
 37.25  to become due to that partner in respect of the partnership.  
 37.26  Notice of the lien may be sent by mail to the partnership, 
 37.27  without the necessity for recording the lien.  The notice has 
 37.28  the force and effect of a levy under section 270.70, and is 
 37.29  enforceable against the partnership in the manner provided by 
 37.30  that section.  Upon payment in full of the liability subsequent 
 37.31  to the notice of lien, the partnership must be notified that the 
 37.32  lien has been satisfied.  
 37.33     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 37.34  years beginning after December 31, 2003. 
 37.35     Sec. 24.  Minnesota Statutes 2002, section 290A.03, 
 37.36  subdivision 11, is amended to read: 
 38.1      Subd. 11.  [RENT CONSTITUTING PROPERTY TAXES.] "Rent 
 38.2   constituting property taxes" means ~~19~~ 17 percent of the gross 
 38.3   rent actually paid in cash, or its equivalent, or the portion of 
 38.4   rent paid in lieu of property taxes, in any calendar year by a 
 38.5   claimant for the right of occupancy of the claimant's Minnesota 
 38.6   homestead in the calendar year, and which rent constitutes the 
 38.7   basis, in the succeeding calendar year of a claim for relief 
 38.8   under this chapter by the claimant.  
 38.9      If the amount of rent paid by the claimant for actual 
 38.10  property taxes paid on the unit exceeds 17 percent of rent paid, 
 38.11  the amount of rent constituting property taxes shall be 
 38.12  determined by multiplying the gross rent paid by the claimant 
 38.13  for the calendar year for the unit by a fraction, the numerator 
 38.14  of which is the net tax on the property where the unit is 
 38.15  located and the denominator of which is the total scheduled 
 38.16  rent.  In no case may the rent constituting property taxes 
 38.17  exceed 50 percent of the gross rent paid by the claimant during 
 38.18  that calendar year. 
 38.19     <h>[EFFECTIVE DATE.]</h> This section is effective for property 
 38.20  taxes payable in 2004 and thereafter, and for refund claims 
 38.21  based on property taxes payable in 2004 and thereafter. 
 38.22     Sec. 25.  Minnesota Statutes 2002, section 290A.03, is 
 38.23  amended by adding a subdivision to read: 
 38.24     Subd. 11a.  [TOTAL SCHEDULED RENT.] "Total scheduled rent" 
 38.25  means the sum of the monthly rents assigned to the residential 
 38.26  rental units in the property multiplied by 12.  The assigned 
 38.27  rents are the rents effective on April 15 for taxes payable in 
 38.28  2004 and thereafter.  In determining total scheduled rent, no 
 38.29  deduction is allowed for vacant units, uncollected rent, or 
 38.30  reduced cash rents in units occupied by employees or agents of 
 38.31  the property owner. 
 38.32     <h>[EFFECTIVE DATE.]</h> This section is effective for rent paid 
 38.33  on and after January 1, 2004. 
 38.34     Sec. 26.  Minnesota Statutes 2003 Supplement, section 
 38.35  290A.03, subdivision 15, is amended to read: 
 38.36     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 39.1   means the Internal Revenue Code of 1986, as amended through ~~June~~ 
 39.2   ~~15, 2003~~ November 11, 2003. 
 39.3      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 39.4   following final enactment except the changes to household income 
 39.5   generated by federal changes to federal adjusted gross income 
 39.6   are effective at the same time federal changes are effective. 
 39.7      Sec. 27.  Minnesota Statutes 2002, section 290A.19, is 
 39.8   amended to read: 
 39.9      290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 
 39.10  CERTIFICATE.] 
 39.11     The owner or managing agent of any property for which rent 
 39.12  is paid for occupancy as a homestead must furnish a certificate 
 39.13  of rent paid to a person who is a renter on December 31, in the 
 39.14  form prescribed by the commissioner.  The certificate of rent 
 39.15  paid must show the calculation of rent constituting property 
 39.16  taxes as provided in section 290A.03, subdivisions 11 and 11a.  
 39.17  If the renter moves before December 31, the owner or managing 
 39.18  agent may give the certificate to the renter at the time of 
 39.19  moving, or mail the certificate to the forwarding address if an 
 39.20  address has been provided by the renter.  The certificate must 
 39.21  be made available to the renter before February 1 of the year 
 39.22  following the year in which the rent was paid.  The owner or 
 39.23  managing agent must retain a duplicate of each certificate or an 
 39.24  equivalent record showing the same information for a period of 
 39.25  three years.  The duplicate or other record must be made 
 39.26  available to the commissioner upon request.  For the purposes of 
 39.27  this section, "owner" includes a park owner as defined under 
 39.28  section 327C.01, subdivision 6, and "property" includes a lot as 
 39.29  defined under section 327C.01, subdivision 3. 
 39.30     <h>[EFFECTIVE DATE.]</h> This section is effective for 
 39.31  certificates of rent paid furnished for rent paid on and after 
 39.32  January 1, 2004. 
 39.33     Sec. 28.  Minnesota Statutes 2003 Supplement, section 
 39.34  291.005, subdivision 1, is amended to read: 
 39.35     Subdivision 1.  Unless the context otherwise clearly 
 39.36  requires, the following terms used in this chapter shall have 
 40.1   the following meanings: 
 40.2      (1) "Federal gross estate" means the gross estate of a 
 40.3   decedent as valued and otherwise determined for federal estate 
 40.4   tax purposes by federal taxing authorities pursuant to the 
 40.5   provisions of the Internal Revenue Code. 
 40.6      (2) "Minnesota gross estate" means the federal gross estate 
 40.7   of a decedent after (a) excluding therefrom any property 
 40.8   included therein which has its situs outside Minnesota, and (b) 
 40.9   including therein any property omitted from the federal gross 
 40.10  estate which is includable therein, has its situs in Minnesota, 
 40.11  and was not disclosed to federal taxing authorities.  
 40.12     (3) "Personal representative" means the executor, 
 40.13  administrator or other person appointed by the court to 
 40.14  administer and dispose of the property of the decedent.  If 
 40.15  there is no executor, administrator or other person appointed, 
 40.16  qualified, and acting within this state, then any person in 
 40.17  actual or constructive possession of any property having a situs 
 40.18  in this state which is included in the federal gross estate of 
 40.19  the decedent shall be deemed to be a personal representative to 
 40.20  the extent of the property and the Minnesota estate tax due with 
 40.21  respect to the property. 
 40.22     (4) "Resident decedent" means an individual whose domicile 
 40.23  at the time of death was in Minnesota. 
 40.24     (5) "Nonresident decedent" means an individual whose 
 40.25  domicile at the time of death was not in Minnesota. 
 40.26     (6) "Situs of property" means, with respect to real 
 40.27  property, the state or country in which it is located; with 
 40.28  respect to tangible personal property, the state or country in 
 40.29  which it was normally kept or located at the time of the 
 40.30  decedent's death; and with respect to intangible personal 
 40.31  property, the state or country in which the decedent was 
 40.32  domiciled at death. 
 40.33     (7) "Commissioner" means the commissioner of revenue or any 
 40.34  person to whom the commissioner has delegated functions under 
 40.35  this chapter. 
 40.36     (8) "Internal Revenue Code" means the United States 
 41.1   Internal Revenue Code of 1986, as amended through ~~December 31,~~ 
 41.2   ~~2002~~ November 11, 2003. 
 41.3      <h>[EFFECTIVE DATE.]</h> This section is effective for estates of 
 41.4   decedents dying after January 31, 2003. 
 41.5      Sec. 29.  [DISTRIBUTION.] 
 41.6      For the fiscal year beginning July 1, 2005, the revenue 
 41.7   collected under Minnesota Statutes, section 290.01, subdivision 
 41.8   19a, clause (8), for taxable years beginning after December 31, 
 41.9   2003, and before January 1, 2005, is appropriated to each of the 
 41.10  listed agencies in the designated percentages and must be used 
 41.11  only for the following programs:  (a) Department of Human 
 41.12  Services, (1) emergencies service programs under Laws 1997, 
 41.13  chapter 162, article 3, five percent; (2) transitional housing 
 41.14  operations under Minnesota Statutes, section 119A.43, 25 
 41.15  percent; (3) transitional housing operations targeted to 
 41.16  unaccompanied youth under Minnesota Statutes, section 119A.43, 
 41.17  five percent; (b) Minnesota Housing Finance Agency, (1) 
 41.18  Minnesota housing trust fund, under Minnesota Statutes, section 
 41.19  462A.201, 30 percent; (2) rental housing under Minnesota 
 41.20  Statutes, section 462A.2097, ten percent; (3) family homeless 
 41.21  prevention and assistance program, under Minnesota Statutes, 
 41.22  section 462A.204, 25 percent. 
 41.23     Sec. 30.  [STUDY; CORPORATE FRANCHISE TAX.] 
 41.24     The commissioners of the Departments of Finance and Revenue 
 41.25  shall conduct a comprehensive study to identify the reasons for 
 41.26  the decline in corporate tax receipts.  The study shall include 
 41.27  an analysis of the current and future effect of existing 
 41.28  corporate tax provisions, both independently and interactively 
 41.29  with other provisions; how tax provisions are changing business 
 41.30  practices; and the impact of outsourcing or relocation of 
 41.31  business operations and jobs.  On or before February 1, 2005, 
 41.32  the commissioners shall report to the chairpersons of the house 
 41.33  and senate tax committees the results of the study and shall 
 41.34  include recommendations for changes to the tax laws that would 
 41.35  reduce tax incentives for businesses to outsource or relocate 
 41.36  business operations or jobs. 
 42.1      Sec. 31.  [REPEALER.] 
 42.2      Minnesota Statutes 2002, section 290.191, subdivision 4, is 
 42.3   repealed. 
 42.4      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
 42.5   years beginning after December 31, 2003. 
 42.6                              ARTICLE 2
 42.7                              SALES TAX
 42.8      Section 1.  Minnesota Statutes 2002, section 297A.61, is 
 42.9   amended by adding a subdivision to read: 
 42.10     Subd. 37.  [PERSONAL RAPID TRANSIT SYSTEM.] "Personal rapid 
 42.11  transit system" means a transportation system of small, 
 42.12  computer-controlled vehicles, transporting one to three 
 42.13  passengers on elevated guideways in a transportation network 
 42.14  operating on demand and nonstop directly to any stations in the 
 42.15  network.  The system shall provide service on a regular and 
 42.16  continuing basis and operate independent of any government 
 42.17  subsidies. 
 42.18     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 42.19  purchases made after June 30, 2008. 
 42.20     Sec. 2.  Minnesota Statutes 2002, section 297A.67, is 
 42.21  amended by adding a subdivision to read: 
 42.22     Subd. 32.  [GEOTHERMAL EQUIPMENT.] The loop field 
 42.23  collection system and the heat pump of a geothermal heating and 
 42.24  cooling system is exempt.  
 42.25     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 42.26  purchases occurring on and after July 1, 2004. 
 42.27     Sec. 3.  Minnesota Statutes 2002, section 297A.67, is 
 42.28  amended by adding a subdivision to read: 
 42.29     Subd. 33.  [BIOMASS FUEL STOVES.] Stoves designed to burn 
 42.30  fuel pellets made from biomass materials are exempt. 
 42.31     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 42.32  purchases made after June 30, 2004. 
 42.33     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
 42.34  297A.68, subdivision 5, is amended to read: 
 42.35     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
 42.36  exempt.  The tax must be imposed and collected as if the rate 
 43.1   under section 297A.62, subdivision 1, applied, and then refunded 
 43.2   in the manner provided in section 297A.75. 
 43.3      "Capital equipment" means machinery and equipment purchased 
 43.4   or leased, and used in this state by the purchaser or lessee 
 43.5   primarily for manufacturing, fabricating, mining, or refining 
 43.6   tangible personal property to be sold ultimately at retail if 
 43.7   the machinery and equipment are essential to the integrated 
 43.8   production process of manufacturing, fabricating, mining, or 
 43.9   refining.  Capital equipment also includes machinery and 
 43.10  equipment used to electronically transmit results retrieved by a 
 43.11  customer of an on-line computerized data retrieval system. 
 43.12     (b) Capital equipment includes, but is not limited to: 
 43.13     (1) machinery and equipment used to operate, control, or 
 43.14  regulate the production equipment; 
 43.15     (2) machinery and equipment used for research and 
 43.16  development, design, quality control, and testing activities; 
 43.17     (3) environmental control devices that are used to maintain 
 43.18  conditions such as temperature, humidity, light, or air pressure 
 43.19  when those conditions are essential to and are part of the 
 43.20  production process; 
 43.21     (4) materials and supplies used to construct and install 
 43.22  machinery or equipment; 
 43.23     (5) repair and replacement parts, including accessories, 
 43.24  whether purchased as spare parts, repair parts, or as upgrades 
 43.25  or modifications to machinery or equipment; 
 43.26     (6) materials used for foundations that support machinery 
 43.27  or equipment; 
 43.28     (7) materials used to construct and install special purpose 
 43.29  buildings used in the production process; 
 43.30     (8) ready-mixed concrete equipment in which the ready-mixed 
 43.31  concrete is mixed as part of the delivery process regardless if 
 43.32  mounted on a chassis and leases of ready-mixed concrete trucks; 
 43.33  and 
 43.34     (9) machinery or equipment used for research, development, 
 43.35  design, or production of computer software.  
 43.36     (c) Capital equipment does not include the following: 
 44.1      (1) motor vehicles taxed under chapter 297B; 
 44.2      (2) machinery or equipment used to receive or store raw 
 44.3   materials; 
 44.4      (3) building materials, except for materials included in 
 44.5   paragraph (b), clauses (6) and (7); 
 44.6      (4) machinery or equipment used for nonproduction purposes, 
 44.7   including, but not limited to, the following:  plant security, 
 44.8   fire prevention, first aid, and hospital stations; support 
 44.9   operations or administration; pollution control; and plant 
 44.10  cleaning, disposal of scrap and waste, plant communications, 
 44.11  space heating, cooling, lighting, or safety; 
 44.12     (5) farm machinery and aquaculture production equipment as 
 44.13  defined by section 297A.61, subdivisions 12 and 13; 
 44.14     (6) machinery or equipment purchased and installed by a 
 44.15  contractor as part of an improvement to real property; or 
 44.16     (7) any other item that is not essential to the integrated 
 44.17  process of manufacturing, fabricating, mining, or refining. 
 44.18     (d) For purposes of this subdivision: 
 44.19     (1) "Equipment" means independent devices or tools separate 
 44.20  from machinery but essential to an integrated production 
 44.21  process, including computers and computer software, used in 
 44.22  operating, controlling, or regulating machinery and equipment; 
 44.23  and any subunit or assembly comprising a component of any 
 44.24  machinery or accessory or attachment parts of machinery, such as 
 44.25  tools, dies, jigs, patterns, and molds.  
 44.26     (2) "Fabricating" means to make, build, create, produce, or 
 44.27  assemble components or property to work in a new or different 
 44.28  manner. 
 44.29     (3) "Integrated production process" means a process or 
 44.30  series of operations through which tangible personal property is 
 44.31  manufactured, fabricated, mined, or refined.  For purposes of 
 44.32  this clause, (i) manufacturing begins with the removal of raw 
 44.33  materials from inventory and ends when the last process prior to 
 44.34  loading for shipment has been completed; (ii) fabricating begins 
 44.35  with the removal from storage or inventory of the property to be 
 44.36  assembled, processed, altered, or modified and ends with the 
 45.1   creation or production of the new or changed product; (iii) 
 45.2   mining begins with the removal of overburden from the site of 
 45.3   the ores, minerals, stone, peat deposit, or surface materials 
 45.4   and ends when the last process before stockpiling is completed; 
 45.5   and (iv) refining begins with the removal from inventory or 
 45.6   storage of a natural resource and ends with the conversion of 
 45.7   the item to its completed form. 
 45.8      (4) "Machinery" means mechanical, electronic, or electrical 
 45.9   devices, including computers and computer software, that are 
 45.10  purchased or constructed to be used for the activities set forth 
 45.11  in paragraph (a), beginning with the removal of raw materials 
 45.12  from inventory through completion of the product, including 
 45.13  packaging of the product. 
 45.14     (5) "Machinery and equipment used for pollution control" 
 45.15  means machinery and equipment used solely to eliminate, prevent, 
 45.16  or reduce pollution resulting from an activity described in 
 45.17  paragraph (a).  
 45.18     (6) "Manufacturing" means an operation or series of 
 45.19  operations where raw materials are changed in form, composition, 
 45.20  or condition by machinery and equipment and which results in the 
 45.21  production of a new article of tangible personal property.  For 
 45.22  purposes of this subdivision, "manufacturing" includes the 
 45.23  generation of electricity or steam to be sold at retail. 
 45.24     (7) "Mining" means the extraction of minerals, ores, stone, 
 45.25  or peat. 
 45.26     (8) "On-line data retrieval system" means a system whose 
 45.27  cumulation of information is equally available and accessible to 
 45.28  all its customers. 
 45.29     (9) "Primarily" means machinery and equipment used 50 
 45.30  percent or more of the time in an activity described in 
 45.31  paragraph (a). 
 45.32     (10) "Refining" means the process of converting a natural 
 45.33  resource to an intermediate or finished product, including the 
 45.34  treatment of water to be sold at retail. 
 45.35     (11) This subdivision does not apply to telecommunications 
 45.36  equipment as provided in subdivision 35, and does not apply to 
 46.1   wire, cable, fiber, poles, or conduit for telecommunications 
 46.2   services. 
 46.3      <h>[EFFECTIVE DATE.]</h> This section is effective for purchases 
 46.4   made after July 31, 2001. 
 46.5      Sec. 5.  Minnesota Statutes 2002, section 297A.68, 
 46.6   subdivision 19, is amended to read: 
 46.7      Subd. 19.  [PETROLEUM PRODUCTS.] The following petroleum 
 46.8   products are exempt: 
 46.9      (1) products upon which a tax has been imposed and paid 
 46.10  under chapter 296A, and for which no refund has been or will be 
 46.11  allowed because the buyer used the fuel for nonhighway use; 
 46.12     (2) products that are used in the improvement of 
 46.13  agricultural land by constructing, maintaining, and repairing 
 46.14  drainage ditches, tile drainage systems, grass waterways, water 
 46.15  impoundment, and other erosion control structures; 
 46.16     (3) products purchased by a transit system receiving 
 46.17  financial assistance under section 174.24, 256B.0625, 
 46.18  subdivision 17, or 473.384; 
 46.19     (4) products purchased by an ambulance service licensed 
 46.20  under chapter 144E; 
 46.21     (5) products used in a passenger snowmobile, as defined in 
 46.22  section 296A.01, subdivision 39, for off-highway business use as 
 46.23  part of the operations of a resort as provided under section 
 46.24  296A.16, subdivision 2, clause (2); ~~or~~ 
 46.25     (6) products purchased by a state or a political 
 46.26  subdivision of a state for use in motor vehicles exempt from 
 46.27  registration under section 168.012, subdivision 1, paragraph 
 46.28  (b); or 
 46.29     (7) products purchased for use as fuel for a commuter rail 
 46.30  system operating under sections 174.80 to 174.90.  The tax must 
 46.31  be imposed and collected as if the rate under section 297A.62, 
 46.32  subdivision 1, applied, and then refunded in the manner provided 
 46.33  in section 297A.75. 
 46.34     <h>[EFFECTIVE DATE.]</h> This section is effective for purchases 
 46.35  made after June 30, 2004. 
 46.36     Sec. 6.  Minnesota Statutes 2002, section 297A.68, is 
 47.1   amended by adding a subdivision to read: 
 47.2      Subd. 40.  [MOVIES AND TELEVISION; INPUTS TO PRODUCTION.] 
 47.3   The sale of tangible personal property primarily used or 
 47.4   consumed directly in the preproduction, production, and 
 47.5   postproduction of movies and television shows that are produced 
 47.6   for domestic and international commercial distribution are 
 47.7   exempt. "Preproduction" and "production" include all the 
 47.8   activities related to the preparation of shooting and the 
 47.9   shooting of movies and television shows, including film 
 47.10  processing.  Equipment rented for preproduction and production 
 47.11  activities are exempt.  "Postproduction" includes all activities 
 47.12  related to editing and finishing of the movie or television 
 47.13  show.  This exemption does not apply to tangible personal 
 47.14  property or services used primarily in administration, general 
 47.15  management, or marketing.  Machinery and equipment purchased for 
 47.16  use in producing movies and television shows, fuel, electricity, 
 47.17  gas, or steam used for space heating and lighting, food, 
 47.18  lodging, and any property or service for the personal use of any 
 47.19  individual are not exempt under this subdivision. 
 47.20     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 47.21  purchases made after June 30, 2004. 
 47.22     Sec. 7.  Minnesota Statutes 2002, section 297A.68, is 
 47.23  amended by adding a subdivision to read: 
 47.24     Subd. 41.  [PERSONAL RAPID TRANSIT SYSTEM.] (a) Machinery, 
 47.25  equipment, and supplies purchased or leased, and used by the 
 47.26  purchaser or lessee in this state directly in the provision of a 
 47.27  personal rapid transit system as defined in section 297A.61, 
 47.28  subdivision 37, are exempt.  Machinery, equipment, and supplies 
 47.29  that qualify for this exemption include, but are not limited to, 
 47.30  the following: 
 47.31     (1) vehicles, guideways, and related parts used directly in 
 47.32  the transit system; 
 47.33     (2) computers and equipment used primarily for operating, 
 47.34  controlling, and regulating the system; 
 47.35     (3) machinery, equipment, furniture, and fixtures necessary 
 47.36  for the functioning of system stations; 
 48.1      (4) machinery, equipment, implements, tools, and supplies 
 48.2   used to maintain vehicles, guideways, and stations; and 
 48.3      (5) electricity and other fuels used in the provision of 
 48.4   the transit service, including heating, cooling, and lighting of 
 48.5   system stations. 
 48.6      (b) This exemption does not include machinery, equipment, 
 48.7   and supplies used for support and administration operations. 
 48.8      <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 48.9   purchases made after June 30, 2008. 
 48.10     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
 48.11  297A.70, subdivision 8, is amended to read: 
 48.12     Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
 48.13  SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 
 48.14  but not limited to, end user equipment used for construction, 
 48.15  ownership, operation, maintenance, and enhancement of ~~the~~ 
 48.16  ~~backbone system of the~~ a regionwide or statewide public safety 
 48.17  radio communication system established under sections 403.21 to 
 48.18  403.34, are exempt.  ~~For purposes of this subdivision, backbone~~ 
 48.19  ~~system is defined in section 403.21, subdivision 9.  This~~ 
 48.20  ~~subdivision is effective for purchases, sales, storage, use, or~~ 
 48.21  ~~consumption occurring before August 1, 2005, in the counties of~~ 
 48.22  ~~Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.~~ 
 48.23     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 48.24  purchases made on and after July 1, 2004. 
 48.25     Sec. 9.  Minnesota Statutes 2002, section 297A.70, is 
 48.26  amended by adding a subdivision to read: 
 48.27     Subd. 17.  [DONATED MEALS.] Meals that are normally sold at 
 48.28  retail in the ordinary business activities of the taxpayer are 
 48.29  exempt if the meals are donated to a nonprofit group as defined 
 48.30  in subdivision 4 for fund-raising purposes. 
 48.31     <h>[EFFECTIVE DATE.]</h> This section is effective for donations 
 48.32  made after June 30, 2004. 
 48.33     Sec. 10.  Minnesota Statutes 2002, section 297A.71, is 
 48.34  amended by adding a subdivision to read: 
 48.35     Subd. 33.  [COMMUTER RAIL MATERIAL, SUPPLIES, AND 
 48.36  EQUIPMENT.] Materials and supplies consumed in, and equipment 
 49.1   incorporated in the construction, equipment, or improvement of a 
 49.2   commuter rail transportation system operated under sections 
 49.3   174.80 and 174.90 are exempt.  This exemption includes railroad 
 49.4   cars and engines and related equipment. 
 49.5      <h>[EFFECTIVE DATE.]</h> This section is effective for purchases 
 49.6   made after June 30, 2004. 
 49.7      Sec. 11.  Minnesota Statutes 2002, section 297A.71, is 
 49.8   amended by adding a subdivision to read: 
 49.9      Subd. 34.  [WASTE RECOVERY FACILITY.] Materials and 
 49.10  supplies used or consumed in, and equipment incorporated into, 
 49.11  the construction, improvement, or expansion of a waste-to-energy 
 49.12  resource recovery facility are exempt if the facility uses 
 49.13  biomass or mixed municipal solid waste as a primary fuel to 
 49.14  generate steam or electricity. 
 49.15     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 49.16  purchases made after June 30, 2004. 
 49.17     Sec. 12.  Minnesota Statutes 2002, section 297A.71, is 
 49.18  amended by adding a subdivision to read: 
 49.19     Subd. 35.  [PERSONAL RAPID TRANSIT SYSTEM.] Materials and 
 49.20  supplies used or consumed in, and equipment incorporated into 
 49.21  the construction, expansion, or improvement of a personal rapid 
 49.22  transit system as defined in section 297A.61, subdivision 37, 
 49.23  are exempt. 
 49.24     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 49.25  purchases made after June 30, 2008. 
 49.26     Sec. 13.  Minnesota Statutes 2002, section 297A.71, is 
 49.27  amended by adding a subdivision to read: 
 49.28     Subd. 36.  [ST. MARY'S DULUTH CLINIC HEALTH 
 49.29  SYSTEM.] Materials and supplies used or consumed in and 
 49.30  equipment incorporated into the construction of the hospital 
 49.31  portion of the St. Mary's Duluth Clinic Health System are exempt.
 49.32     <h>[EFFECTIVE DATE.]</h> This section is effective for purchases 
 49.33  made on or after July 1, 2004, and on or before December 31, 
 49.34  2006. 
 49.35     Sec. 14.  Minnesota Statutes 2002, section 297A.75, 
 49.36  subdivision 1, is amended to read: 
 50.1      Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
 50.2   receipts from the sale of the following exempt items must be 
 50.3   imposed and collected as if the sale were taxable and the rate 
 50.4   under section 297A.62, subdivision 1, applied.  The exempt items 
 50.5   include: 
 50.6      (1) capital equipment exempt under section 297A.68, 
 50.7   subdivision 5; 
 50.8      (2) building materials for an agricultural processing 
 50.9   facility exempt under section 297A.71, subdivision 13; 
 50.10     (3) building materials for mineral production facilities 
 50.11  exempt under section 297A.71, subdivision 14; 
 50.12     (4) building materials for correctional facilities under 
 50.13  section 297A.71, subdivision 3; 
 50.14     (5) building materials used in a residence for disabled 
 50.15  veterans exempt under section 297A.71, subdivision 11; 
 50.16     (6) chair lifts, ramps, elevators, and associated building 
 50.17  materials exempt under section 297A.71, subdivision 12; 
 50.18     (7) building materials for the Long Lake Conservation 
 50.19  Center exempt under section 297A.71, subdivision 17; 
 50.20     (8) materials, supplies, fixtures, furnishings, and 
 50.21  equipment for a county law enforcement and family service center 
 50.22  under section 297A.71, subdivision 26; ~~and~~ 
 50.23     (9) materials and supplies for qualified low-income housing 
 50.24  under section 297A.71, subdivision 23; and 
 50.25     (10) fuel purchased for commuter rail systems under section 
 50.26  297A.68, subdivision 19, clause (7). 
 50.27     <h>[EFFECTIVE DATE.]</h> This section is effective for purchases 
 50.28  made after June 30, 2004. 
 50.29     Sec. 15.  Minnesota Statutes 2002, section 297A.75, 
 50.30  subdivision 2, is amended to read: 
 50.31     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
 50.32  forms prescribed by the commissioner, a refund equal to the tax 
 50.33  paid on the gross receipts of the exempt items must be paid to 
 50.34  the applicant.  Only the following persons may apply for the 
 50.35  refund: 
 50.36     (1) for subdivision 1, clauses (1) to (3), the applicant 
 51.1   must be the purchaser; 
 51.2      (2) for subdivision 1, clauses (4), (7), and (8), the 
 51.3   applicant must be the governmental subdivision; 
 51.4      (3) for subdivision 1, clause (5), the applicant must be 
 51.5   the recipient of the benefits provided in United States Code, 
 51.6   title 38, chapter 21; 
 51.7      (4) for subdivision 1, clause (6), the applicant must be 
 51.8   the owner of the homestead property; ~~and~~ 
 51.9      (5) for subdivision 1, clause (9), the owner of the 
 51.10  qualified low-income housing project; and 
 51.11     (6) for subdivision 1, clause (10), the operator of the 
 51.12  commuter rail system. 
 51.13     <h>[EFFECTIVE DATE.]</h> This section is effective for purchases 
 51.14  made after June 30, 2004. 
 51.15     Sec. 16.  Minnesota Statutes 2002, section 297A.87, 
 51.16  subdivision 2, is amended to read: 
 51.17     Subd. 2.  [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The 
 51.18  operator of an event under subdivision 1 shall obtain one of the 
 51.19  following from a person who wishes to do business as a seller at 
 51.20  the event: 
 51.21     (1) evidence that the person holds a valid seller's permit 
 51.22  under section 297A.84; ~~or~~ 
 51.23     (2) a written statement that the person is not offering for 
 51.24  sale any item that is taxable under this chapter; or 
 51.25     (3) a written statement that this is the only selling event 
 51.26  that the person will be participating in for that calendar year, 
 51.27  that the person will be participating for three or fewer days, 
 51.28  and that the person will make $500 or less in total sales in the 
 51.29  calendar year.  The written statement shall include the person's 
 51.30  name, address, and telephone number. 
 51.31     (b) The operator shall require the evidence or statement as 
 51.32  a prerequisite to participating in the event as a seller. 
 51.33     <h>[EFFECTIVE DATE.]</h> This section is effective for selling 
 51.34  events occurring after June 15, 2004. 
 51.35     Sec. 17.  Minnesota Statutes 2002, section 297A.87, 
 51.36  subdivision 3, is amended to read: 
 52.1      Subd. 3.  [OCCASIONAL SALE PROVISIONS ~~NOT~~ APPLICABLE UNDER 
 52.2   LIMITED CIRCUMSTANCES.] The isolated and occasional 
 52.3   sale ~~provisions~~ provision under section 297A.67, subdivision 23, 
 52.4   ~~or~~ applies, provided that the seller only participates for three 
 52.5   or fewer days in one event per calendar year, makes $500 or less 
 52.6   in sales in the calendar year, and provides the written 
 52.7   statement required in subdivision 2, paragraph (a), clause (3).  
 52.8   The isolated and occasional sales provision under section 
 52.9   297A.68, subdivision 25, ~~do~~ does not apply to a seller at an 
 52.10  event under this section. 
 52.11     <h>[EFFECTIVE DATE.]</h> This section is effective for selling 
 52.12  events occurring after June 15, 2004. 
 52.13     Sec. 18.  Minnesota Statutes 2002, section 297A.99, 
 52.14  subdivision 1, is amended to read: 
 52.15     Subdivision 1.  [CITIES OF THE FIRST CLASS; AUTHORIZATION; 
 52.16  SCOPE.] (a) A ~~political subdivision of this state~~ city of the 
 52.17  first class, as defined in section 410.01, may, by ordinance, 
 52.18  impose a general sales tax ~~if permitted by special law or if the~~ 
 52.19  ~~political subdivision enacted and imposed the tax before the~~ 
 52.20  ~~effective date of section 477A.016 and its predecessor provision~~ 
 52.21  at a rate of tax of one-half of one percent, except the city of 
 52.22  Duluth may impose a tax at a rate not to exceed one percent.  A 
 52.23  city of the first class may, by ordinance, extend the time to 
 52.24  impose a sales tax that was enacted before July 1, 2004. 
 52.25     (b) ~~This section governs the imposition of a general sales~~ 
 52.26  ~~tax by the political subdivision.  The provisions of this~~ 
 52.27  ~~section preempt the provisions of any special law:~~ 
 52.28     ~~(1) enacted before June 2, 1997, or~~ 
 52.29     ~~(2) enacted on or after June 2, 1997, that does not~~ 
 52.30  ~~explicitly exempt the special law provision from this section's~~ 
 52.31  ~~rules by reference~~ The provisions of subdivisions 4 through 12 
 52.32  apply to a tax imposed under this subdivision. 
 52.33     (c) ~~This section does not apply to or preempt a sales tax~~ 
 52.34  ~~on motor vehicles or~~ A city of the first class may impose, by 
 52.35  ordinance, a special excise tax on motor vehicles of up to $20 
 52.36  per motor vehicle purchased or acquired from any person engaged 
 53.1   in the business of selling motor vehicles within the city. 
 53.2      <h>[EFFECTIVE DATE.]</h> This section is effective on and after 
 53.3   July 1, 2004. 
 53.4      Sec. 19.  Minnesota Statutes 2002, section 297A.99, 
 53.5   subdivision 2, is amended to read: 
 53.6      Subd. 2.  [~~LOCAL RESOLUTION BEFORE APPLICATION FOR~~ CITIES 
 53.7   OF THE SECOND AND THIRD CLASS; AUTHORITY; SCOPE.] ~~Before the~~ 
 53.8   ~~governing body of a political subdivision requests legislative~~ 
 53.9   ~~approval of a special law for a local sales tax that is~~ 
 53.10  ~~administered under this section, it shall adopt a resolution~~ 
 53.11  ~~indicating its approval of the tax.  The resolution must~~ 
 53.12  ~~include, at a minimum, information on the proposed tax rate, how~~ 
 53.13  ~~the revenues will be used, the total revenue that will be raised~~ 
 53.14  ~~before the tax expires, and the estimated length of time that~~ 
 53.15  ~~the tax will be in effect.  This subdivision applies to local~~ 
 53.16  ~~laws enacted after June 30, 1998.~~ (a) Subject to the limitations 
 53.17  in paragraphs (b) to (d), a city of the second or third class, 
 53.18  as defined in section 410.01, may, by ordinance, impose a 
 53.19  general sales tax at a rate of one-half of one percent, and may 
 53.20  extend the time to impose a sales tax that was enacted prior to 
 53.21  July 1, 2004. 
 53.22     (b) The proceeds of a tax imposed or extended under this 
 53.23  subdivision must be dedicated exclusively to payment of the cost 
 53.24  of a specific capital improvement that provides a benefit to the 
 53.25  city and to the county, region, or territory beyond the city 
 53.26  boundaries, and must be an improvement in at least one of the 
 53.27  following areas: 
 53.28     (1) regional convention or civic centers; 
 53.29     (2) regional airports; 
 53.30     (3) public libraries; 
 53.31     (4) the city's matching funds requirement for major capital 
 53.32  infrastructure improvements to arterial roads, bridges, or 
 53.33  railroads; 
 53.34     (5) public safety equipment or facilities for dispatching, 
 53.35  communications, computers, or training; or 
 53.36     (6) flood control or protection. 
 54.1      (c) Prior to imposition of the tax, the city must provide 
 54.2   to the commissioner information that shows the tax will fund an 
 54.3   improvement that meets the requirements of paragraph (b). 
 54.4      (d) If the city passes an ordinance to impose the tax, the 
 54.5   ordinance must be published for two consecutive weeks in a 
 54.6   newspaper of general circulation within the city.  The ordinance 
 54.7   is not effective until it has been submitted to the voters of 
 54.8   the city at a general election and a majority of votes cast on 
 54.9   the question of approving the tax are in the affirmative.  
 54.10     <h>[EFFECTIVE DATE.]</h> This section is effective on and after 
 54.11  July 1, 2004. 
 54.12     Sec. 20.  Minnesota Statutes 2002, section 297A.99, 
 54.13  subdivision 3, is amended to read: 
 54.14     Subd. 3.  [~~REQUIREMENTS FOR ADOPTION, USE, TERMINATION~~ 
 54.15  SPECIAL LAW; LOCAL RESOLUTION; REFERENDUM.] (a) ~~Imposition of a~~ 
 54.16  ~~local sales tax is subject to approval by voters of the~~ 
 54.17  ~~political subdivision at a general election~~ A city of the second 
 54.18  or third class that proposes to adopt a sales tax to pay for the 
 54.19  costs of a project that is not included in subdivision 2, and 
 54.20  cities of the fourth class and counties may impose a general 
 54.21  sales tax if permitted by special law.  
 54.22     (b) ~~The proceeds of the tax must be dedicated exclusively~~ 
 54.23  ~~to payment of the cost of a specific capital improvement which~~ 
 54.24  ~~is designated at least 90 days before the referendum on~~ 
 54.25  ~~imposition of the tax is conducted~~ Before the governing body of 
 54.26  a city or county requests legislative approval of a special law 
 54.27  for a local sales tax that is administered under this section, 
 54.28  it shall adopt a resolution indicating its approval of the tax.  
 54.29  The resolution must include, at a minimum, information on the 
 54.30  proposed tax rate, how the revenues will be used, the total 
 54.31  revenue that will be raised before the tax expires, and the 
 54.32  estimated length of time that the tax will be in effect. 
 54.33     (c) ~~The tax must terminate after the improvement designated~~ 
 54.34  ~~under paragraph (b) has been completed~~ Imposition of a local 
 54.35  sales tax under this subdivision is subject to approval by 
 54.36  voters of the city or county at a general election. 
 55.1      (d) ~~After a sales tax imposed by a political subdivision~~ 
 55.2   ~~has expired or been terminated, the political subdivision is~~ 
 55.3   ~~prohibited from imposing a local sales tax for a period of one~~ 
 55.4   ~~year.  Notwithstanding subdivision 13, this paragraph applies to~~ 
 55.5   ~~all local sales taxes in effect at the time of or imposed after~~ 
 55.6   ~~May 26, 1999~~ The proceeds of the tax must be dedicated 
 55.7   exclusively to payment of the cost of a specific capital 
 55.8   improvement which is designated at least 90 days before the 
 55.9   referendum on imposition of the tax is conducted.  
 55.10     (e) The tax must terminate after the improvement designated 
 55.11  under paragraph (d) has been completed. 
 55.12     <h>[EFFECTIVE DATE.]</h> This section is effective on and after 
 55.13  July 1, 2004. 
 55.14     Sec. 21.  Minnesota Statutes 2003 Supplement, section 
 55.15  297A.99, subdivision 5, is amended to read: 
 55.16     Subd. 5.  [TAX RATE.] (a) The tax rate is as specified in 
 55.17  subdivision 1 or 2, or in the special law authorization and as 
 55.18  imposed by the political subdivision. 
 55.19     (b) The full political subdivision rate applies to any 
 55.20  sales that are taxed at a state rate, and the political 
 55.21  subdivision must not have more than one local sales tax rate or 
 55.22  more than one local use tax rate.  This paragraph does not apply 
 55.23  to sales or use taxes imposed on electricity, piped natural or 
 55.24  artificial gas, or other heating fuels delivered by the seller, 
 55.25  or the retail sale or transfer of motor vehicles, aircraft, 
 55.26  watercraft, modular homes, manufactured homes, or mobile homes. 
 55.27     <h>[EFFECTIVE DATE.]</h> This section is effective on and after 
 55.28  July 1, 2004. 
 55.29     Sec. 22.  Minnesota Statutes 2003 Supplement, section 
 55.30  297A.99, subdivision 12, is amended to read: 
 55.31     Subd. 12.  [EFFECTIVE DATES; NOTIFICATION.] (a) A political 
 55.32  subdivision may impose a tax under this section starting only on 
 55.33  the first day of a calendar ~~quarter~~ year.  A political 
 55.34  subdivision may repeal a tax under this section stopping only on 
 55.35  the last day of a calendar quarter. 
 55.36     (b) The political subdivision shall notify the commissioner 
 56.1   of revenue at least 90 days before imposing, changing the rate 
 56.2   of, or repealing a tax under this section. 
 56.3      (c) The political subdivision shall change the rate of tax 
 56.4   imposed under this section starting only on the first day of a 
 56.5   calendar quarter, and only after the commissioner has notified 
 56.6   sellers at least 60 days prior to the change. 
 56.7      (d) The political subdivision shall apply the rate change 
 56.8   for sales tax imposed under this section to purchases from 
 56.9   printed catalogs, wherein the purchaser computed the tax based 
 56.10  upon local tax rates published in the catalog, starting only on 
 56.11  the first day of a calendar quarter, and only after the 
 56.12  commissioner has notified sellers at least 120 days prior to the 
 56.13  change. 
 56.14     (e) The political subdivision shall apply local 
 56.15  jurisdiction boundary changes to taxes imposed under this 
 56.16  section starting only on the first day of a calendar quarter, 
 56.17  and only after the commissioner has notified sellers at least 60 
 56.18  days prior to the change. 
 56.19     <h>[EFFECTIVE DATE.]</h> This section is effective on and after 
 56.20  July 1, 2004. 
 56.21     Sec. 23.  Minnesota Statutes 2003 Supplement, section 
 56.22  297B.03, is amended to read: 
 56.23     297B.03 [EXEMPTIONS.] 
 56.24     There is specifically exempted from the provisions of this 
 56.25  chapter and from computation of the amount of tax imposed by it 
 56.26  the following:  
 56.27     (1) purchase or use, including use under a lease purchase 
 56.28  agreement or installment sales contract made pursuant to section 
 56.29  465.71, of any motor vehicle by the United States and its 
 56.30  agencies and instrumentalities and by any person described in 
 56.31  and subject to the conditions provided in section 297A.67, 
 56.32  subdivision 11; 
 56.33     (2) purchase or use of any motor vehicle by any person who 
 56.34  was a resident of another state or country at the time of the 
 56.35  purchase and who subsequently becomes a resident of Minnesota, 
 56.36  provided the purchase occurred more than 60 days prior to the 
 57.1   date such person began residing in the state of Minnesota and 
 57.2   the motor vehicle was registered in the person's name in the 
 57.3   other state or country; 
 57.4      (3) purchase or use of any motor vehicle by any person 
 57.5   making a valid election to be taxed under the provisions of 
 57.6   section 297A.90; 
 57.7      (4) purchase or use of any motor vehicle previously 
 57.8   registered in the state of Minnesota when such transfer 
 57.9   constitutes a transfer within the meaning of section 118, 331, 
 57.10  332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
 57.11  1563(a) of the Internal Revenue Code of 1986, as amended through 
 57.12  December 31, 1999; 
 57.13     (5) purchase or use of any vehicle owned by a resident of 
 57.14  another state and leased to a Minnesota based private or for 
 57.15  hire carrier for regular use in the transportation of persons or 
 57.16  property in interstate commerce provided the vehicle is titled 
 57.17  in the state of the owner or secured party, and that state does 
 57.18  not impose a sales tax or sales tax on motor vehicles used in 
 57.19  interstate commerce; 
 57.20     (6) purchase or use of a motor vehicle by a private 
 57.21  nonprofit or public educational institution for use as an 
 57.22  instructional aid in automotive training programs operated by 
 57.23  the institution.  "Automotive training programs" includes motor 
 57.24  vehicle body and mechanical repair courses but does not include 
 57.25  driver education programs; 
 57.26     (7) purchase of a motor vehicle for use as an ambulance by 
 57.27  an ambulance service licensed under section 144E.10; 
 57.28     (8) purchase of a motor vehicle by or for a public library, 
 57.29  as defined in section 134.001, subdivision 2, as a bookmobile or 
 57.30  library delivery vehicle; 
 57.31     (9) purchase of a ready-mixed concrete truck; 
 57.32     (10) purchase or use of a motor vehicle by a town for use 
 57.33  exclusively for road maintenance, including snowplows and dump 
 57.34  trucks, but not including automobiles, vans, or pickup trucks; 
 57.35     (11) purchase or use of a motor vehicle by a corporation, 
 57.36  society, association, foundation, or institution organized and 
 58.1   operated exclusively for charitable, religious, or educational 
 58.2   purposes, except a public school, university, or library, but 
 58.3   only if the vehicle is: 
 58.4      (i) a truck, as defined in section 168.011, a bus, as 
 58.5   defined in section 168.011, or a passenger automobile, as 
 58.6   defined in section 168.011, if the automobile is designed and 
 58.7   used for carrying more than nine persons including the driver; 
 58.8   and 
 58.9      (ii) intended to be used primarily to transport tangible 
 58.10  personal property or individuals, other than employees, to whom 
 58.11  the organization provides service in performing its charitable, 
 58.12  religious, or educational purpose; 
 58.13     (12) purchase of a motor vehicle for use by a transit 
 58.14  provider exclusively to provide transit service is exempt if the 
 58.15  transit provider is either (i) receiving financial assistance or 
 58.16  reimbursement under section 174.24 or 473.384, or (ii) operating 
 58.17  under section 174.29, 473.388, or 473.405; 
 58.18     (13) purchase or use of a motor vehicle by a qualified 
 58.19  business, as defined in section 469.310, located in a job 
 58.20  opportunity building zone, if the motor vehicle is principally 
 58.21  garaged in the job opportunity building zone and is primarily 
 58.22  used as part of or in direct support of the person's operations 
 58.23  carried on in the job opportunity building zone.  The exemption 
 58.24  under this clause applies to sales, if the purchase was made and 
 58.25  delivery received during the duration of the job opportunity 
 58.26  building zone.  The exemption under this clause also applies to 
 58.27  any local sales and use tax; 
 58.28     (14) purchase or use after June 30, 2004, and before July 
 58.29  1, 2007, of a motor vehicle by a state agency or political 
 58.30  subdivision, provided that the motor vehicle has a fuel 
 58.31  efficiency greater than 45 miles per gallon in highway use, and 
 58.32  greater than 35 miles per gallon in city use, as certified by 
 58.33  the United States Environmental Protection Agency. 
 58.34     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 58.35  transfers made after June 30, 2004, and before July 1, 2007. 
 58.36     Sec. 24.  Minnesota Statutes 2002, section 477A.016, is 
 59.1   amended to read: 
 59.2      477A.016 [NEW TAXES PROHIBITED.] 
 59.3      No county, city, town or other taxing authority shall 
 59.4   ~~increase a present tax or~~ impose a ~~new~~ tax on ~~sales or~~ income.  
 59.5      <h>[EFFECTIVE DATE.]</h> This section is effective on and after 
 59.6   July 1, 2004. 
 59.7      Sec. 25.  Laws 1986, chapter 379, section 1, is amended to 
 59.8   read: 
 59.9      Section 1.  [CITY OF ST. CLOUD; LIQUOR AND FOOD TAX.] 
 59.10     Subdivision 1.  [LIQUOR AND FOOD TAX AUTHORIZED.] 
 59.11  Notwithstanding Minnesota Statutes, section 477A.016, or any 
 59.12  ordinance, city charter, or other provision of law, the city of 
 59.13  St. Cloud may, by ordinance, impose a sales tax supplemental to 
 59.14  the general sales tax imposed in Minnesota Statutes, chapter 
 59.15  297A, the proceeds of which shall be used in accordance with 
 59.16  subdivision 2.  The tax imposed by the city may ~~be~~ not ~~more than~~ 
 59.17  ~~one~~ exceed two percent on the gross receipts from all retail 
 59.18  on-sales of intoxicating liquor and fermented malt beverages 
 59.19  sold at licensed on-sale liquor establishments located within 
 59.20  its geographic boundaries, or not more than ~~one~~ two percent on 
 59.21  the gross receipts from the retail sale of food and beverages 
 59.22  not subject to the liquor tax by a restaurant or place of 
 59.23  refreshment located within its geographic boundaries, or both.  
 59.24  For purposes of this act, the city shall define the terms 
 59.25  "restaurant" and "place of refreshment" by resolution.  The 
 59.26  governing body of the city may adopt an ordinance establishing a 
 59.27  convention center taxing district.  The ordinance shall describe 
 59.28  with particularity the area within the city to be included in 
 59.29  the district.  If the city establishes a convention center 
 59.30  taxing district, the sales taxes authorized under this 
 59.31  subdivision may be imposed only upon the sales occurring at 
 59.32  on-sale liquor establishments, restaurants, or other places of 
 59.33  refreshment located within the district.  The city may impose a 
 59.34  tax at a rate that is greater than one percent, not to exceed 
 59.35  two percent, only after the approval of the voters of the city 
 59.36  at the next general election. 
 60.1      Subd. 2.  [USE OF PROCEEDS OF LIQUOR AND FOOD TAX.] The 
 60.2   proceeds of any tax imposed under subdivision 1 shall be used by 
 60.3   the city to pay all or a portion of the expenses of constructing 
 60.4   a convention center facility ~~or~~ and related facilities, and the 
 60.5   municipal athletic complex.  Authorized expenses include, but 
 60.6   are not limited to, securing or paying debt service on bonds or 
 60.7   other obligations issued to finance the construction of a 
 60.8   convention center facility ~~or~~ and related facilities, and the 
 60.9   municipal athletic complex.  For the purposes of this act, 
 60.10  "related facilities" means all publicly owned real or personal 
 60.11  property that the governing body of the city determines will be 
 60.12  necessary to facilitate the use of the ~~convention center~~ 
 60.13  facilities including, but not limited to, parking, skyways, 
 60.14  lighting, and landscaping. 
 60.15     Subd. 3.  [EXPIRATION OF TAXING AUTHORITY.] The authority 
 60.16  granted by subdivision 1 to the city to impose a liquor and food 
 60.17  tax shall expire when the principal and interest on any bonds or 
 60.18  other obligations issued to finance construction of a convention 
 60.19  center facility ~~or~~ and related facilities, and municipal 
 60.20  athletic complex have been paid or at an earlier time as the 
 60.21  city shall, by ordinance, determine.  
 60.22     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 60.23  compliance by the city of St. Cloud with Minnesota Statutes, 
 60.24  section 645.021, subdivision 3. 
 60.25     Sec. 26.  Laws 1986, chapter 379, section 2, subdivision 1, 
 60.26  is amended to read: 
 60.27     Subdivision 1.  [ADDITIONAL TAX AUTHORIZED.] 
 60.28  Notwithstanding Minnesota Statutes, section 477A.016, or any 
 60.29  ordinance, city charter, or other provision of law, the city of 
 60.30  St. Cloud may, by ordinance, impose a tax at a rate not to 
 60.31  exceed ~~two~~ three percent in addition to the tax authorized under 
 60.32  Laws 1979, chapter 197, on the gross receipts from the 
 60.33  furnishing for consideration of lodging at a hotel, motel, 
 60.34  rooming house, tourist court, or resort other than the renting 
 60.35  or leasing of it for a continuous period of 30 days or 
 60.36  more.  The city may impose a tax at a rate that is greater than 
 61.1   two percent, not to exceed three percent, only after the 
 61.2   approval of the voters of the city at the next general election. 
 61.3      <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 61.4   compliance by the city of St. Cloud with Minnesota Statutes, 
 61.5   section 645.021, subdivision 3. 
 61.6      Sec. 27.  Laws 1991, chapter 291, article 8, section 27, 
 61.7   subdivision 4, is amended to read: 
 61.8      Subd. 4.  [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 
 61.9   LIMITATION.] The authority granted by subdivisions 1 and 2 to 
 61.10  the city to impose a sales tax and an excise tax shall expire 
 61.11  when the principal and interest on any bonds or obligations 
 61.12  issued to finance construction of Riverfront 2000 and related 
 61.13  facilities have been paid or at an earlier time as the city 
 61.14  shall, by ordinance, determine.  ~~The total capital,~~ 
 61.15  ~~administrative, and operating expenditures payable from bond~~ 
 61.16  ~~proceeds and revenues received from the taxes authorized by~~ 
 61.17  ~~subdivisions 1 and 2, excluding investment earnings on bond~~ 
 61.18  ~~proceeds and revenues, shall not exceed $25,000,000 for~~ 
 61.19  ~~Riverfront 2000 and related facilities.~~ 
 61.20     <h>[EFFECTIVE DATE.]</h> This section is effective upon compliance 
 61.21  by the city of Mankato with Minnesota Statutes, section 645.021, 
 61.22  subdivision 3. 
 61.23     Sec. 28.  Laws 1991, chapter 291, article 8, section 27, 
 61.24  subdivision 5, is amended to read: 
 61.25     Subd. 5.  [BONDS.] The city of Mankato may issue general 
 61.26  obligation bonds of the city in an aggregate amount not to 
 61.27  exceed $25,000,000 for Riverfront 2000 and related facilities, 
 61.28  without election under Minnesota Statutes, chapter 475, on the 
 61.29  question of issuance of the bonds or a tax to pay them.  The 
 61.30  debt represented by bonds issued for Riverfront 2000 and related 
 61.31  facilities shall not be included in computing any debt 
 61.32  limitations applicable to the city of Mankato, and the levy of 
 61.33  taxes required by section 475.61 to pay principal of and 
 61.34  interest on the bonds shall not be subject to any levy 
 61.35  limitation or be included in computing or applying any levy 
 61.36  limitation applicable to the city. 
 62.1      <h>[EFFECTIVE DATE.]</h> This section is effective upon compliance 
 62.2   by the city of Mankato with Minnesota Statutes, section 645.021, 
 62.3   subdivision 3. 
 62.4      Sec. 29.  Laws 1996, chapter 471, article 2, section 29, is 
 62.5   amended to read: 
 62.6      Sec. 29.  [CITY OF HERMANTOWN; SALES AND USE TAX.] 
 62.7      Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] (a) 
 62.8   Notwithstanding Minnesota Statutes, section 477A.016, or any 
 62.9   other contrary provision of law, ordinance, or city charter, the 
 62.10  city of Hermantown may, by ordinance, impose an additional sales 
 62.11  and use tax of up to one percent on sales ~~transactions~~, storage, 
 62.12  and use taxable pursuant to Minnesota Statutes, chapter 297A, 
 62.13  that occur within the city. 
 62.14     (b) The proceeds of the first one-half of one percent of 
 62.15  tax imposed under this section must be used ~~to meet the costs of~~ 
 62.16  by the city for the following projects: 
 62.17     (1) extending a sewer interceptor line; 
 62.18     (2) construction of a booster pump station, reservoirs, and 
 62.19  related improvements to the water system; and 
 62.20     (3) construction of a police and fire station. 
 62.21     (c) Revenues received from the remaining one-half of one 
 62.22  percent of the tax authorized under this section must be used by 
 62.23  the city to pay all or part of the capital and administrative 
 62.24  costs of developing, acquiring, constructing, and initially 
 62.25  furnishing and equipping for the following projects: 
 62.26     (1) construction of a community recreation center; 
 62.27     (2) completion of a civic center services complex; 
 62.28     (3) construction and relocation of a new public works 
 62.29  facility; 
 62.30     (4) construction of roads, street improvements, and other 
 62.31  traffic control measures within the city; and 
 62.32     (5) acquisition, construction, and improvement of parks and 
 62.33  trails within the city. 
 62.34     (d) Authorized expenses include, but are not limited to, 
 62.35  acquiring property, paying construction, administrative, and 
 62.36  operating expenses related to the development of the projects 
 63.1   listed in paragraph (c), paying debt service on bonds or other 
 63.2   obligations, including lease obligations, issued to finance 
 63.3   construction, expansion, or improvement of the projects listed 
 63.4   in paragraph (c), and other compatible uses, including but not 
 63.5   limited to, parking, lighting, and landscaping. 
 63.6      Subd. 2.  [REFERENDUM.] (a) If the Hermantown city council 
 63.7   proposes to impose the sales tax authorized by this section, it 
 63.8   shall conduct a referendum on the issue. 
 63.9      (b) If the Hermantown city council initially imposes the 
 63.10  tax at a rate that is less than one percent and proposes 
 63.11  increasing the tax rate at a later date up to the full one 
 63.12  percent, it shall conduct a referendum on the increase. 
 63.13     (c) The question of imposing or increasing the tax must be 
 63.14  submitted to the voters at a special or general election.  The 
 63.15  tax may not be imposed unless a majority of votes cast on the 
 63.16  question of imposing the tax are in the affirmative.  The 
 63.17  commissioner of revenue shall prepare a suggested form of 
 63.18  question to be presented at the election.  This subdivision 
 63.19  applies notwithstanding any city charter provision to the 
 63.20  contrary. 
 63.21     Subd. 3.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION OF 
 63.22  TAXES.] A sales tax imposed under this section must be reported 
 63.23  and paid to the commissioner of revenue with the state sales 
 63.24  taxes, and be subject to the same penalties, interest, and 
 63.25  enforcement provisions.  The proceeds of the tax, less refunds 
 63.26  and a proportionate share of the cost of collection, shall be 
 63.27  remitted at least quarterly to the city.  The commissioner shall 
 63.28  deduct from the proceeds remitted an amount that equals the 
 63.29  indirect statewide cost as well as the direct and indirect 
 63.30  department costs necessary to administer, audit, and collect the 
 63.31  tax.  The amount deducted shall be deposited in the state 
 63.32  general fund. 
 63.33     Subd. 3a.  [BONDING AUTHORITY.] (a) The city may issue 
 63.34  general obligation bonds under Minnesota Statutes, chapter 475, 
 63.35  to finance the costs in subdivision 1, paragraph (c).  The total 
 63.36  amount of bonds issued for the projects under subdivision 1, 
 64.1   paragraph (c), may not exceed $12,900,000 in the aggregate.  An 
 64.2   election to approve the bonds is not required. 
 64.3      (b) The bonds are not included in computing any debt 
 64.4   limitation applicable to the city and the levy of taxes under 
 64.5   Minnesota Statutes, section 475.61, to pay principal of and 
 64.6   interest on the bonds is not subject to any levy limitation. 
 64.7      (c) The taxes authorized under this section may be pledged 
 64.8   to and used for the payment of the bonds and any bonds issued to 
 64.9   refund them. 
 64.10     Subd. 4.  [TERMINATION.] The portion of the tax authorized 
 64.11  ~~under this section~~ to finance the improvements described in 
 64.12  subdivision 1, paragraph (b), terminates at the later of (1) ten 
 64.13  years after the date of initial imposition of the tax, or (2) on 
 64.14  the first day of the second month next succeeding a 
 64.15  determination by the city council that sufficient funds have 
 64.16  been received from that portion of the tax dedicated to finance 
 64.17  ~~the~~ those improvements ~~described in subdivision 1, clauses (1)~~ 
 64.18  ~~to (3),~~ and to prepay or retire at maturity the principal, 
 64.19  interest, and premium due on any bonds issued for the 
 64.20  improvements.  The portion of the tax authorized to finance the 
 64.21  improvements described in subdivision 1, paragraph (c), 
 64.22  terminates when the revenues raised are sufficient to finance 
 64.23  those improvements, up to an amount equal to $12,900,000 plus 
 64.24  any interest, premium, and other costs associated with the bonds 
 64.25  issued under subdivision 3a.  The city council may terminate 
 64.26  this portion of the tax earlier.  Any funds remaining after 
 64.27  completion of the improvements and retirement or redemption of 
 64.28  the bonds may be placed in the general fund of the city. 
 64.29     ~~Subd. 5.  [LOCAL APPROVAL; EFFECTIVE DATE.] This section is~~ 
 64.30  ~~effective the day after final enactment, upon compliance with~~ 
 64.31  ~~Minnesota Statutes, section 645.021, subdivision 3, by the city~~ 
 64.32  ~~of Hermantown.~~ 
 64.33     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 64.34  the governing body of the city of Hermantown and its chief 
 64.35  clerical officer comply with Minnesota Statutes, section 
 64.36  645.021, subdivisions 2 and 3. 
 65.1      Sec. 30.  Laws 1998, chapter 389, article 8, section 43, 
 65.2   subdivision 3, is amended to read: 
 65.3      Subd. 3.  [USE OF REVENUES.] Revenues received from the 
 65.4   taxes authorized by subdivisions 1 and 2 must be used by the 
 65.5   city to pay for the cost of collecting and administering the 
 65.6   taxes and to pay for the following projects: 
 65.7      (1) transportation infrastructure improvements including 
 65.8   ~~both~~ regional highway and airport improvements; 
 65.9      (2) improvements to the civic center complex; 
 65.10     (3) a municipal water, sewer, and storm sewer project 
 65.11  necessary to improve regional ground water quality; and 
 65.12     (4) construction of a regional recreation and sports center 
 65.13  and ~~associated~~ other higher education facilities available for 
 65.14  both community and student use~~, located at or adjacent to the~~ 
 65.15  ~~Rochester center~~. 
 65.16  The total amount of capital expenditures or bonds for these 
 65.17  projects that may be paid from the revenues raised from the 
 65.18  taxes authorized in this section may not exceed 
 65.19  ~~$71,500,000~~ $111,500,000.  The total amount of capital 
 65.20  expenditures or bonds for the project in clause (4) that may be 
 65.21  paid from the revenues raised from the taxes authorized in this 
 65.22  section may not exceed ~~$20,000,000~~ $28,000,000. 
 65.23     Sec. 31.  Laws 1998, chapter 389, article 8, section 43, 
 65.24  subdivision 4, is amended to read: 
 65.25     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
 65.26  under Minnesota Statutes, chapter 475, to finance the capital 
 65.27  expenditure and improvement projects.  An election to approve 
 65.28  the bonds under Minnesota Statutes, section 475.58, may be held 
 65.29  in combination with the election to authorize imposition of the 
 65.30  tax under subdivision 1.  Whether to permit imposition of the 
 65.31  tax and issuance of bonds may be posed to the voters as a single 
 65.32  question.  The question must state that the sales tax revenues 
 65.33  are pledged to pay the bonds, but that the bonds are general 
 65.34  obligations and will be guaranteed by the city's property taxes. 
 65.35     (b) The issuance of bonds under this subdivision is not 
 65.36  subject to Minnesota Statutes, section 275.60. 
 66.1      (c) The bonds are not included in computing any debt 
 66.2   limitation applicable to the city, and the levy of taxes under 
 66.3   Minnesota Statutes, section 475.61, to pay principal of and 
 66.4   interest on the bonds is not subject to any levy limitation. 
 66.5   The aggregate principal amount of bonds, plus the aggregate of 
 66.6   the taxes used directly to pay eligible capital expenditures and 
 66.7   improvements may not exceed ~~$71,500,000~~ $111,500,000, plus an 
 66.8   amount equal to the costs related to issuance of the bonds. 
 66.9      (d) The taxes may be pledged to and used for the payment of 
 66.10  the bonds and any bonds issued to refund them, only if the bonds 
 66.11  and any refunding bonds are general obligations of the city. 
 66.12     Sec. 32.  Laws 1999, chapter 243, article 4, section 18, 
 66.13  subdivision 1, is amended to read:  
 66.14     Subdivision 1.  [SALES AND USE TAX.] (a) Notwithstanding 
 66.15  Minnesota Statutes, section ~~297A.48, subdivision 1a,~~ 477A.016, 
 66.16  or any other provision of law, ordinance, or city charter, if 
 66.17  approved by the city voters at the first municipal general 
 66.18  election held after the date of final enactment of this act or 
 66.19  at a special election held November 2, 1999, the city of Proctor 
 66.20  may impose by ordinance a sales and use tax of up to one-half of 
 66.21  one percent for the purposes specified in subdivision 3, 
 66.22  paragraph (a).  The provisions of Minnesota Statutes, 
 66.23  section ~~297A.48~~ 297A.99, govern the imposition, administration, 
 66.24  collection, and enforcement of the tax authorized under this 
 66.25  subdivision. 
 66.26     (b) The city of Proctor may impose by ordinance an 
 66.27  additional sales and use tax of up to one-half of one percent if 
 66.28  approved by the city voters at a general election or at a 
 66.29  special election held for this purpose.  The revenues received 
 66.30  from this additional tax must be used for the purposes specified 
 66.31  in subdivision 3, paragraph (b).  
 66.32     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 66.33  following final enactment, upon compliance by the city of 
 66.34  Proctor with Minnesota Statutes, section 645.021, subdivision 3. 
 66.35     Sec. 33.  Laws 1999, chapter 243, article 4, section 18, 
 66.36  subdivision 3, is amended to read:  
 67.1      Subd. 3.  [USE OF REVENUES.] (a) Revenues received from 
 67.2   taxes authorized by subdivisions 1, paragraph (a), and 2 must be 
 67.3   used by the city to pay the cost of collecting the taxes and to 
 67.4   pay for construction and improvement of the following city 
 67.5   facilities: 
 67.6      (1) streets; and 
 67.7      (2) constructing and equipping the Proctor community 
 67.8   activity center. 
 67.9      Authorized expenses include, but are not limited to, 
 67.10  acquiring property, paying construction and operating expenses 
 67.11  related to the development of an authorized facility, and paying 
 67.12  debt service on bonds or other obligations, including lease 
 67.13  obligations, issued to finance the construction, expansion, or 
 67.14  improvement of an authorized facility.  The capital expenses for 
 67.15  all projects authorized under this paragraph that may be paid 
 67.16  with these taxes is limited to $3,600,000, plus an amount equal 
 67.17  to the costs related to issuance of the bonds. 
 67.18     (b) Revenues received from taxes authorized by subdivision 
 67.19  1, paragraph (b), must be used by the city to pay the cost of 
 67.20  collecting the taxes and for construction and improvements of 
 67.21  city streets, public utilities, sidewalks, bikeways, and trails. 
 67.22     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 67.23  following final enactment, upon compliance by the city of 
 67.24  Proctor with Minnesota Statutes, section 645.021, subdivision 3. 
 67.25     Sec. 34.  Laws 1999, chapter 243, article 4, section 18, 
 67.26  subdivision 4, is amended to read:  
 67.27     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
 67.28  under Minnesota Statutes, chapter 475, to finance the capital 
 67.29  expenditure and improvement projects described in subdivision 
 67.30  3.  An election to approve the bonds under Minnesota Statutes, 
 67.31  section 475.58, is not required. 
 67.32     (b) The issuance of bonds under this subdivision is not 
 67.33  subject to Minnesota Statutes, sections 275.60 and ~~279.61~~ 275.61.
 67.34     (c) The bonds are not included in computing any debt 
 67.35  limitation applicable to the city, and the levy of taxes under 
 67.36  Minnesota Statutes, section 475.61, to pay principal of and 
 68.1   interest on the bonds is not subject to any levy limitation.  
 68.2      (d) For projects described in subdivision 3, paragraph (a), 
 68.3   the aggregate principal amount of bonds, plus the aggregate of 
 68.4   the taxes used directly to pay eligible capital expenditures and 
 68.5   improvements, may not exceed $3,600,000, plus an amount equal to 
 68.6   the costs related to issuance of the bonds, including interest 
 68.7   on the bonds.  For projects described in subdivision 3, 
 68.8   paragraph (b), the aggregate principal amount of bonds may not 
 68.9   exceed $7,200,000, plus an amount equal to the costs related to 
 68.10  issuance of the bonds, including interest on the bonds.  
 68.11     (e) The sales and use and excise taxes authorized in this 
 68.12  section may be pledged to and used for the payment of the bonds 
 68.13  and any bonds issued to refund them only if the bonds and any 
 68.14  refunding bonds are general obligations of the city. 
 68.15     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 68.16  following final enactment, upon compliance by the city of 
 68.17  Proctor with Minnesota Statutes, section 645.021, subdivision 3. 
 68.18     Sec. 35.  Laws 2001, First Special Session chapter 5, 
 68.19  article 12, section 67, the effective date, is amended to read: 
 68.20     <h>[EFFECTIVE DATE.]</h> This section is effective for purchases 
 68.21  and sales made after June 30, 2001, and before ~~January 1, 2003~~ 
 68.22  July 1, 2006. 
 68.23     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 68.24  following final enactment. 
 68.25     Sec. 36.  Laws 2001, First Special Session chapter 5, 
 68.26  article 12, section 95, is amended to read: 
 68.27     Sec. 95.  [REPEALER.] 
 68.28     (a) Minnesota Statutes 2000, sections 297A.61, subdivision 
 68.29  16; 297A.68, subdivision 21; and 297A.71, subdivisions 2 and 16, 
 68.30  are repealed effective for sales and purchases occurring after 
 68.31  June 30, 2001, except that the repeal of section 297A.61, 
 68.32  subdivision 16, paragraph (d), is effective for sales and 
 68.33  purchases occurring after July 31, 2001. 
 68.34     ~~(b) Minnesota Statutes 2000, sections 297A.62, subdivision~~ 
 68.35  ~~2, and 297A.64, subdivision 1, are repealed effective for sales~~ 
 68.36  ~~and purchases made after December 31, 2005.~~ 
 69.1      ~~(c)~~ (b) Minnesota Statutes 2000, section 297A.71, 
 69.2   subdivision 15, is repealed effective for sales and purchases 
 69.3   made after June 30, 2002. 
 69.4      ~~(d)~~ (c) Minnesota Statutes 2000, section 289A.60, 
 69.5   subdivision 15, is repealed effective for liabilities after 
 69.6   January 1, 2003. 
 69.7      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 69.8   following final enactment. 
 69.9      Sec. 37.  Laws 2002, chapter 377, article 12, section 16, 
 69.10  subdivision 1, is amended to read: 
 69.11     Subdivision 1.  [NONPROFIT CORPORATION MAY BE ESTABLISHED.] 
 69.12  The city of Thief River Falls may incorporate or authorize the 
 69.13  incorporation of a nonprofit corporation to operate a community 
 69.14  or regional center in the city.  A nonprofit corporation 
 69.15  incorporated under this section is exempt from payment of sales 
 69.16  and use tax on materials, equipment, and supplies consumed or 
 69.17  incorporated into the construction of the community or regional 
 69.18  center.  The exemption under this section applies to purchases 
 69.19  by the nonprofit corporation, a contractor, subcontractor, or 
 69.20  builder.  A contractor, subcontractor, or builder that does not 
 69.21  pay sales tax on purchases for construction of the community or 
 69.22  regional center shall not charge sales or use tax to the 
 69.23  nonprofit corporation. The nonprofit corporation may file a 
 69.24  claim for refund for any sales taxes paid on the construction 
 69.25  costs of the community or regional center, and the commissioner 
 69.26  of revenue shall pay the refunded amount directly to the 
 69.27  nonprofit corporation. 
 69.28     <h>[EFFECTIVE DATE.]</h> This section is effective retroactively 
 69.29  for purchases made on and after July 1, 2002. 
 69.30     Sec. 38.  [CITY OF ALBERT LEA; SALES AND USE TAX.] 
 69.31     Subdivision 1.  [SALES AND USE TAX 
 69.32  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
 69.33  477A.016, or any other provision of law, ordinance, or city 
 69.34  charter, the city of Albert Lea may, by ordinance, impose a 
 69.35  sales and use tax of one-half of one percent for the purposes 
 69.36  specified in subdivision 2.  The provisions of Minnesota 
 70.1   Statutes, section 297A.99, govern the imposition, 
 70.2   administration, collection, and enforcement of the tax 
 70.3   authorized under this subdivision. 
 70.4      Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
 70.5   imposed under this section shall be used to pay for lake 
 70.6   improvement projects as detailed in the Shell Rock River 
 70.7   watershed plan. 
 70.8      Subd. 3.  [REFERENDUM.] If the Albert Lea City Council 
 70.9   proposes to impose the tax authorized by this section, the 
 70.10  question of imposing the tax must be submitted to the voters at 
 70.11  the next general election. 
 70.12     Subd. 4.  [TERMINATION OF TAXES.] The taxes imposed under 
 70.13  this section expire at the earlier of (1) ten years after the 
 70.14  taxes are first imposed, or (2) when the city council first 
 70.15  determines that the amount of revenues raised to pay for the 
 70.16  projects under subdivision 2, shall meet or exceed the sum of 
 70.17  $15,000,000.  Any funds remaining after completion of the 
 70.18  projects may be placed in the general fund of the city. 
 70.19     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 70.20  compliance by the governing body of the city of Albert Lea with 
 70.21  Minnesota Statutes, section 645.021, subdivision 3. 
 70.22     Sec. 39.  [CITY OF BEAVER BAY; TAXES AUTHORIZED.] 
 70.23     Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
 70.24  Minnesota Statutes, section 477A.016, or any other provision of 
 70.25  law or ordinance, if approved by the voters of the city at the 
 70.26  next general election held after the date of final enactment of 
 70.27  this act, the city of Beaver Bay may impose by ordinance a sales 
 70.28  and use tax at a rate of up to one percent for the purposes 
 70.29  specified in subdivision 2.  The provisions of Minnesota 
 70.30  Statutes, section 297A.99, govern the imposition, 
 70.31  administration, collection, and enforcement of the tax 
 70.32  authorized under this subdivision. 
 70.33     Subd. 2.  [USE OF REVENUES.] The revenues received from 
 70.34  taxes authorized by subdivision 1 must be used to pay the bonded 
 70.35  indebtedness on the city community building and to provide 
 70.36  funding for recreational facilities, the upgrading of the water 
 71.1   and sewer system, upgrading and replacement of fire equipment, 
 71.2   and improvement of streets. 
 71.3      Subd. 3.  [TERMINATION OF TAXES.] The authority granted 
 71.4   under subdivision 1 to the city of Beaver Bay to impose sales 
 71.5   and use taxes expires when the city council determines that the 
 71.6   amount of revenue received to pay the costs of the projects 
 71.7   described in subdivision 2 shall meet or exceed $1,500,000.  Any 
 71.8   funds remaining after completion of the projects may be placed 
 71.9   in the general fund of the city.  The tax imposed under 
 71.10  subdivision 1 may expire at an earlier time if the city so 
 71.11  determines by ordinance. 
 71.12     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 71.13  the governing body of the city of Beaver Bay and its chief 
 71.14  clerical officer timely comply with Minnesota Statutes, section 
 71.15  645.021, subdivisions 2 and 3. 
 71.16     Sec. 40.  [CITY OF BEMIDJI.] 
 71.17     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
 71.18  Notwithstanding Minnesota Statutes, section 477A.016, or any 
 71.19  other provision of law, ordinance, or city charter, pursuant to 
 71.20  the approval of the city voters at the general election held on 
 71.21  November 5, 2002, the city of Bemidji may impose by ordinance a 
 71.22  sales and use tax of one-half of one percent for the purposes 
 71.23  specified in subdivision 2.  The provisions of Minnesota 
 71.24  Statutes, section 297A.99, govern the imposition, 
 71.25  administration, collection, and enforcement of the tax 
 71.26  authorized under this subdivision. 
 71.27     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
 71.28  authorized by subdivision 1 must be used for the cost of 
 71.29  collecting and administering the tax and to pay all or part of 
 71.30  the capital or administrative costs of the acquisition, 
 71.31  construction, and improvement of parks and trails within the 
 71.32  city, as provided for in the city of Bemidji's parks, open 
 71.33  space, and trail system plan, adopted by the Bemidji City 
 71.34  Council on November 21, 2001.  Authorized expenses include, but 
 71.35  are not limited to, acquiring property, paying construction 
 71.36  expenses related to the development of these facilities and 
 72.1   improvements, and securing and paying debt service on bonds or 
 72.2   other obligations issued to finance acquisition, construction, 
 72.3   improvement, or development of parks and trails within the city 
 72.4   of Bemidji. 
 72.5      Subd. 3.  [BONDS.] Pursuant to the approval of the city 
 72.6   voters at the general election held on November 5, 2002, the 
 72.7   city of Bemidji may issue, without an additional election, 
 72.8   general obligation bonds of the city in an amount not to exceed 
 72.9   $9,826,000 to pay capital and administrative expenses for the 
 72.10  acquisition, construction, improvement, and development of parks 
 72.11  and trails as specified in subdivision 2.  The debt represented 
 72.12  by the bonds must not be included in computing any debt 
 72.13  limitations applicable to the city, and the levy of taxes 
 72.14  required by Minnesota Statutes, section 475.61, to pay the 
 72.15  principal of any interest on the bonds must not be subject to 
 72.16  any levy limitations or be included in computing or applying any 
 72.17  levy limitation applicable to the city. 
 72.18     Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
 72.19  subdivision 1 expires when the Bemidji City Council determines 
 72.20  that the amount described in subdivision 3 has been received 
 72.21  from the tax to finance the capital and administrative costs for 
 72.22  acquisition, construction, improvement, and development of parks 
 72.23  and trails and to repay or retire at maturity the principal, 
 72.24  interest, and premium due on any bonds issued for the park and 
 72.25  trail improvements under subdivision 3.  Any funds remaining 
 72.26  after completion of the park and trail improvements and 
 72.27  retirement or redemption of the bonds may be placed in the 
 72.28  general fund of the city.  The tax imposed under subdivision 1 
 72.29  may expire at an earlier time if the city so determines by 
 72.30  ordinance. 
 72.31     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 72.32  compliance by the governing body of the city of Bemidji with 
 72.33  Minnesota Statutes, section 645.021, subdivision 3. 
 72.34     Sec. 41.  [CITY OF CLOQUET; TAXES AUTHORIZED.] 
 72.35     Subdivision 1.  [SALES AND USE TAX.] Notwithstanding 
 72.36  Minnesota Statutes, section 477A.016, or any other provision of 
 73.1   law, ordinance, or city charter, if approved by the voters 
 73.2   pursuant to Minnesota Statutes, section 297A.99, the city of 
 73.3   Cloquet may impose by ordinance a sales and use tax of up to 
 73.4   one-half of one percent for the purpose specified in subdivision 
 73.5   3.  The provisions of Minnesota Statutes, section 297A.99, 
 73.6   govern the imposition, administration, collection, and 
 73.7   enforcement of the tax authorized under this subdivision. 
 73.8      Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
 73.9   Minnesota Statutes, section 477A.016, or any other provision of 
 73.10  law, ordinance, or city charter, the city of Cloquet may impose 
 73.11  by ordinance, for the purposes specified in subdivision 3, an 
 73.12  excise tax of up to $20 per motor vehicle, as defined by 
 73.13  ordinance, purchased or acquired from any person engaged within 
 73.14  the city in the business of selling motor vehicles at retail. 
 73.15     Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
 73.16  authorized by subdivisions 1 and 2 must be used by the city to 
 73.17  pay the cost of collecting the taxes and to pay for the 
 73.18  following projects: 
 73.19     (1) construction and implementation of riverfront task 
 73.20  force park improvements including Veteran's Park; 
 73.21     (2) extension of water and sewer lines and other 
 73.22  improvements to city infrastructure necessary for construction 
 73.23  of a city industrial park; and 
 73.24     (3) costs associated with the closure of the Cloquet 
 73.25  Municipal Landfill. 
 73.26     Authorized expenses include, but are not limited to, 
 73.27  acquiring property and paying construction expenses related to 
 73.28  these improvements, and paying debt service on bonds or other 
 73.29  obligations issued to finance acquisition and construction of 
 73.30  these improvements. 
 73.31     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
 73.32  under Minnesota Statutes, chapter 475, to pay capital and 
 73.33  administrative expenses for the improvements described in 
 73.34  subdivision 3 in an amount that does not exceed $7,000,000.  An 
 73.35  election to approve the bonds under Minnesota Statutes, section 
 73.36  475.58, is not required. 
 74.1      (b) The issuance of bonds under this subdivision is not 
 74.2   subject to Minnesota Statutes, sections 275.60 and 275.61. 
 74.3      (c) The debt represented by the bonds is not included in 
 74.4   computing any debt limitation applicable to the city, and any 
 74.5   levy of taxes under Minnesota Statutes, section 475.61, to pay 
 74.6   principal of and interest on the bonds is not subject to any 
 74.7   levy limitation.  
 74.8      Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
 74.9   subdivisions 1 and 2 expire at the earlier of (1) 14 years, or 
 74.10  (2) when the city council determines that sufficient funds have 
 74.11  been received from the taxes to finance the capital and 
 74.12  administrative costs of the improvements described in 
 74.13  subdivision 3, plus the additional amount needed to pay the 
 74.14  costs related to issuance of bonds under subdivision 4, 
 74.15  including interest on the bonds.  Any funds remaining after 
 74.16  completion of the project and retirement or redemption of the 
 74.17  bonds may be placed in the general fund of the city.  The taxes 
 74.18  imposed under subdivisions 1 and 2 may expire at an earlier time 
 74.19  if the city so determines by ordinance. 
 74.20     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 74.21  the governing body of the city of Cloquet and its chief clerical 
 74.22  officer timely comply with Minnesota Statutes, section 645.021, 
 74.23  subdivisions 2 and 3. 
 74.24     Sec. 42.  [CITY OF CLEARWATER.] 
 74.25     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
 74.26  Notwithstanding Minnesota Statutes, section 477A.016, or any 
 74.27  other provision of law, ordinance, or city charter, pursuant to 
 74.28  the approval of the city voters at the next general election or 
 74.29  at a special election held for this purpose, the city of 
 74.30  Clearwater may impose by ordinance a sales and use tax of 
 74.31  one-half of one percent for the purposes specified in 
 74.32  subdivision 2.  The provisions of Minnesota Statutes, section 
 74.33  297A.99, govern the imposition, administration, collection, and 
 74.34  enforcement of the tax authorized under this subdivision. 
 74.35     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
 74.36  authorized by subdivision 1 must be used for the cost of 
 75.1   collecting and administering the tax and to pay all or part of 
 75.2   the capital or administrative costs of the development, 
 75.3   acquisition, construction, and improvement of parks, trails, 
 75.4   parkland, open space, and land and buildings for a regional 
 75.5   community and recreation center.  Authorized expenses include, 
 75.6   but are not limited to, acquiring property, paying construction 
 75.7   expenses related to the development of these facilities and 
 75.8   improvements, and securing and paying debt service on bonds or 
 75.9   other obligations issued to finance acquisition, construction, 
 75.10  improvement, or development. 
 75.11     Subd. 3.  [BONDS.] Pursuant to the approval of the city 
 75.12  voters to impose the tax authorized in subdivision 1, the city 
 75.13  of Clearwater may issue without an additional election general 
 75.14  obligation bonds of the city in an amount not to exceed 
 75.15  $3,000,000 to pay capital and administrative expenses for the 
 75.16  acquisition, construction, improvement, and development of the 
 75.17  projects specified in subdivision 2.  The debt represented by 
 75.18  the bonds must not be included in computing any debt limitations 
 75.19  applicable to the city, and the levy of taxes required by 
 75.20  Minnesota Statutes, section 475.61, to pay the principal or any 
 75.21  interest on the bonds must not be subject to any levy 
 75.22  limitations or be included in computing or applying any levy 
 75.23  limitation applicable to the city. 
 75.24     Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
 75.25  subdivision 1 expires when the Clearwater City Council 
 75.26  determines that the amount described in subdivision 3 has been 
 75.27  received from the tax to finance the capital and administrative 
 75.28  costs for acquisition, construction, improvement, and 
 75.29  development of the projects specified in subdivision 2 and to 
 75.30  repay or retire at maturity the principal, interest, and premium 
 75.31  due on any bonds issued for the projects under subdivision 3.  
 75.32  Any funds remaining after completion of the projects specified 
 75.33  in subdivision 2 and retirement or redemption of the bonds may 
 75.34  be placed in the general fund of the city.  The tax imposed 
 75.35  under subdivision 1 may expire at an earlier time if the city so 
 75.36  determines by ordinance. 
 76.1      <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 76.2   compliance by the governing body of the city of Clearwater with 
 76.3   Minnesota Statutes, section 645.021, subdivision 3. 
 76.4      Sec. 43.  [CITY OF MEDFORD; SALES AND USE TAX.] 
 76.5      Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
 76.6   Notwithstanding Minnesota Statutes, section 477A.016, or any 
 76.7   other provision of law, ordinance, or city charter, the city of 
 76.8   Medford may, by ordinance, impose a sales and use tax of 
 76.9   one-half of one percent for the purposes specified in 
 76.10  subdivision 2.  Except as otherwise specifically provided, the 
 76.11  provisions of Minnesota Statutes, section 297A.99, govern the 
 76.12  imposition, administration, collection, and enforcement of the 
 76.13  tax authorized under this subdivision. 
 76.14     Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
 76.15  imposed under this section must be used to pay up to $5,000,000 
 76.16  in costs related to improving the city's wastewater system and 
 76.17  wastewater treatment plant. 
 76.18     Subd. 3.  [REFERENDUM.] If the Medford City Council 
 76.19  proposes to impose the tax authorized by this section, the 
 76.20  question of imposing the tax must be submitted to the voters at 
 76.21  the next general election.  The tax may not be imposed unless 
 76.22  the majority of votes cast on the question of imposing the tax 
 76.23  are in the affirmative.  The commissioner of revenue shall 
 76.24  prepare a suggested form of the question to be presented at the 
 76.25  election.  The question must state that the sales tax revenues 
 76.26  would be pledged to pay any bonds issued under subdivision 4 and 
 76.27  that these bonds are guaranteed by the city's property taxes. 
 76.28     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
 76.29  under Minnesota Statutes, chapter 475, to finance the capital 
 76.30  expenditure and improvement projects authorized under 
 76.31  subdivision 2.  The total amount of bonds issued for the 
 76.32  projects listed in subdivision 2 may not exceed $5,000,000 in 
 76.33  aggregate.  An election to approve the bonds, as required under 
 76.34  Minnesota Statutes, section 475.58, is not required. 
 76.35     (b) The issuance of the bonds under this subdivision is not 
 76.36  subject to Minnesota Statutes, sections 275.60 and 275.61. 
 77.1      (c) The bonds are not included in computing any debt 
 77.2   limitation applicable to the city, and the levy of taxes under 
 77.3   Minnesota Statutes, section 475.61, to pay the principal of and 
 77.4   interest on the bonds is not subject to any levy limitation. 
 77.5      (d) The taxes authorized under this section may be pledged 
 77.6   to and used for the payment of the bonds and any bonds issued to 
 77.7   refund them only if the bonds and any refunding bonds are 
 77.8   general obligations of the city. 
 77.9      Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
 77.10  this section expire at the earlier of (1) 20 years after the 
 77.11  taxes are first imposed, or (2) when the city council first 
 77.12  determines that the amount of revenues raised to pay for the 
 77.13  projects under subdivision 2 shall meet or exceed the sum of 
 77.14  $5,000,000, plus an amount equal to the costs related to the 
 77.15  issuance of bonds under subdivision 4.  Any funds remaining 
 77.16  after completion of the projects and retirement or redemption of 
 77.17  the bonds may be placed in the general funds of the city. 
 77.18     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 77.19  compliance with the governing body of the city of Medford with 
 77.20  Minnesota Statutes, section 645.021, subdivision 3. 
 77.21     Sec. 44.  [CITY OF PARK RAPIDS.] 
 77.22     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
 77.23  Notwithstanding Minnesota Statutes, section 477A.016, or any 
 77.24  other provision of law, ordinance, or city charter, pursuant to 
 77.25  the approval of the city voters at the next general election or 
 77.26  at a special election held for this purpose, the city of Park 
 77.27  Rapids may impose by ordinance a sales and use tax of one 
 77.28  percent for the purposes specified in subdivision 2.  The 
 77.29  provisions of Minnesota Statutes, section 297A.99, govern the 
 77.30  imposition, administration, collection, and enforcement of the 
 77.31  tax authorized under this subdivision. 
 77.32     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
 77.33  authorized by subdivision 1 must be used for the cost of 
 77.34  collecting and administering the tax and to pay all or part of 
 77.35  the capital or administrative costs of the development, 
 77.36  acquisition, construction, and improvement of the following 
 78.1   projects:  
 78.2      (1) two-thirds of the cost of construction and operation of 
 78.3   a community center that may include a senior citizen center, 
 78.4   fitness center, swimming pool, meeting rooms, indoor track, and 
 78.5   racquetball, basketball, and tennis courts, provided that an 
 78.6   amount equal to one-third of the cost of construction is 
 78.7   received from private sources; 
 78.8      (2) capital improvement projects including, but not limited 
 78.9   to, installation of water, sewer, storm sewer, street 
 78.10  improvements, new city water tower and well, costs related to 
 78.11  improvements to marked trunk highway 34; and 
 78.12     (3) park improvements. 
 78.13     Authorized expenses include, but are not limited to, 
 78.14  acquiring property, paying construction expenses related to the 
 78.15  development of these facilities and improvements, and securing 
 78.16  and paying debt service on bonds or other obligations issued to 
 78.17  finance acquisition, construction, improvement, or development. 
 78.18     Subd. 3.  [BONDS.] Pursuant to the approval of the city 
 78.19  voters to impose the tax authorized in subdivision 1, the city 
 78.20  of Park Rapids may issue without an additional election general 
 78.21  obligation bonds of the city to pay capital and administrative 
 78.22  expenses for the acquisition, construction, improvement, and 
 78.23  development of the projects specified in subdivision 2.  The 
 78.24  debt represented by the bonds must not be included in computing 
 78.25  any debt limitations applicable to the city, and the levy of 
 78.26  taxes required by Minnesota Statutes, section 475.61, to pay the 
 78.27  principal or any interest on the bonds must not be subject to 
 78.28  any levy limitations or be included in computing or applying any 
 78.29  levy limitation applicable to the city. 
 78.30     Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
 78.31  subdivision 1 expires the earlier of July 1, 2023, or when the 
 78.32  city council determines that sufficient revenues have been 
 78.33  received to retire the bonds in subdivision 3.  Any funds 
 78.34  remaining after completion of the projects specified in 
 78.35  subdivision 2 and retirement or redemption of the bonds may be 
 78.36  placed in the general fund of the city.  The tax imposed under 
 79.1   subdivision 1 may expire at an earlier time if the city so 
 79.2   determines by ordinance. 
 79.3      <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 79.4   compliance by the governing body of the city of Park Rapids with 
 79.5   Minnesota Statutes, section 645.021, subdivision 3. 
 79.6      Sec. 45.  [CITY OF PROCTOR; LODGING TAX.] 
 79.7      The city of Proctor may use up to ten percent of the 
 79.8   revenues received from the lodging tax imposed by the city under 
 79.9   Minnesota Statutes, section 469.190, for preservation of the 
 79.10  Caboose and the Baldwin Locomotive, Class M3 Mallet, Number 225, 
 79.11  donated to the city by the Duluth, Missabe and Iron Range 
 79.12  Railway Company, and the F-101F aircraft, serial number 59-0407, 
 79.13  donated to the city by the Department of the Air Force. 
 79.14     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 79.15  following final enactment. 
 79.16     Sec. 46.  [ST. CLOUD AREA CITIES; SALES AND USE TAX 
 79.17  AUTHORIZED.] 
 79.18     Subdivision 1.  [SALES AND USE TAX 
 79.19  AUTHORIZED.] Notwithstanding Minnesota Statutes, sections 
 79.20  297A.99, subdivision 3, paragraph (d), and 477A.016, or any 
 79.21  other provision of law, ordinance, or city charter, each of the 
 79.22  cities of St. Cloud, Sartell, Sauk Rapids, St. Augusta, St. 
 79.23  Joseph, and Waite Park may impose by ordinance a sales and use 
 79.24  tax at the rate of one-half of one percent for the purposes 
 79.25  specified in subdivision 2, pursuant to the approval of the 
 79.26  voters of that city at the next general election.  The 
 79.27  provisions of Minnesota Statutes, section 297A.99, except 
 79.28  subdivision 3, paragraph (d), govern the imposition, 
 79.29  administration, collection, and enforcement of the tax 
 79.30  authorized under this subdivision. 
 79.31     Subd. 2.  [USE OF REVENUES.] (a) Revenues received from the 
 79.32  tax authorized by subdivision 1 must be used for the cost of 
 79.33  collecting and administering the tax and to pay all or part of 
 79.34  the capital or administrative costs of the development, 
 79.35  acquisition, construction, improvement, and securing and paying 
 79.36  debt service on bonds or other obligations issued to finance the 
 80.1   following regional projects: 
 80.2      (1) St. Cloud Regional Airport; 
 80.3      (2) major transportation improvements; 
 80.4      (3) arts, libraries, and community centers; 
 80.5      (4) acquisition and improvement of park land and open 
 80.6   space; and 
 80.7      (5) St. Cloud Civic Center remodeling and expansion, not to 
 80.8   exceed $20,000,000 from the amount allocated to St. Cloud under 
 80.9   subdivision 3, clause (2).  
 80.10     (b) The revenues returned to each city under subdivision 3 
 80.11  may only be used to fund projects that have been approved by 
 80.12  voters at the referendum authorizing this tax. 
 80.13     Subd. 3.  [ALLOCATION OF SALES AND USE TAX REVENUES TO 
 80.14  CITIES.] Revenues collected from the taxes authorized by 
 80.15  subdivision 1, after paying the cost of collecting and 
 80.16  administering the tax, shall be allocated to cities imposing the 
 80.17  tax as follows: 
 80.18     (1) the first $900,000 of revenues collected annually, 
 80.19  indexed annually to the Consumer Price Index, to the city of St. 
 80.20  Cloud for expansion of the St. Cloud Civic Center or the 
 80.21  construction and relocation of the Great River Regional Library; 
 80.22  and 
 80.23     (2) the revenues collected from the taxes imposed under 
 80.24  subdivision 1 that exceed the amount needed to meet the 
 80.25  obligations under clause (1) in any year shall be returned to 
 80.26  the cities pursuant to a joint powers agreement allocating sales 
 80.27  tax revenues among the cities. 
 80.28     Subd. 4.  [ST. CLOUD BONDING AUTHORIZED.] Pursuant to the 
 80.29  approval of the city voters to impose the tax authorized in 
 80.30  subdivision 1, the city of St. Cloud may issue without an 
 80.31  additional election, general obligation bonds of the city not to 
 80.32  exceed $80,000,000 to pay the costs of the projects specified in 
 80.33  subdivision 2.  The debt represented by the bonds must not be 
 80.34  included in computing any debt limitations applicable to the 
 80.35  city, and the levy of taxes required by Minnesota Statutes, 
 80.36  section 475.61, to pay the principal or any interest on the 
 81.1   bonds must not be subject to any levy limitations or be included 
 81.2   in computing or applying any levy limitation applicable to the 
 81.3   city. 
 81.4      Subd. 5.  [TERMINATION OF TAX.] The tax imposed in the city 
 81.5   of St. Cloud under subdivision 1 expires when the city council 
 81.6   determines that sufficient funds have been collected from the 
 81.7   tax to retire or redeem the bonds authorized under subdivision 
 81.8   3.  The taxes imposed in the cities of Sartell, Sauk Rapids, St. 
 81.9   Augusta, St. Joseph, and Waite Park expire when the projects 
 81.10  authorized under subdivision 2 have been completed, but no later 
 81.11  than 20 years after the date the tax is first imposed.  Any 
 81.12  funds remaining after completion of the projects specified in 
 81.13  subdivision 2 and retirement or redemption of the bonds may be 
 81.14  placed in the general fund of the city.  The tax imposed under 
 81.15  subdivision 1 may expire at an earlier time if the city so 
 81.16  determines by ordinance. 
 81.17     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 81.18  compliance by the governing body of the city with Minnesota 
 81.19  Statutes, section 645.021, subdivision 3, for sales and 
 81.20  purchases on and after January 1, 2006. 
 81.21     Sec. 47.  [SALES AND USE TAX COMPLIANCE GAP.] 
 81.22     The commissioner must reduce the amount of the compliance 
 81.23  gap in the payment of sales and use tax by 25 percent before 
 81.24  December 31, 2006; and must reduce the compliance gap in the 
 81.25  payment of sales and use tax by an additional 25 percent before 
 81.26  December 31, 2008.  The commissioner must establish an effective 
 81.27  method to allow individuals who purchase taxable products or 
 81.28  services and have not paid the tax at the time of the purchase 
 81.29  to pay the tax.  The commissioner must advise residents of this 
 81.30  state how to pay sales and use tax. 
 81.31     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 81.32  following final enactment. 
 81.33     Sec. 48.  [WAITE PARK; LOCAL SALES TAX AUTHORIZED.] 
 81.34     Notwithstanding Minnesota Statutes, section 477A.016, or 
 81.35  any other provision of law, ordinance, or charter, the city of 
 81.36  Waite Park may impose a sales and use tax of one-half of one 
 82.1   percent pursuant to approval of the city voters at an election 
 82.2   held in November 2003. 
 82.3      Revenues from the tax imposed under this section must be 
 82.4   used for the purposes listed in Laws 2002, chapter 377, article 
 82.5   11, section 2, subdivision 2, and approved by the voters in the 
 82.6   November 2003 referendum.  The amount of revenues collected from 
 82.7   this tax which may be spent for airport costs under Laws 2002, 
 82.8   chapter 377, article 11, section 2, subdivision 2, paragraph 
 82.9   (a), is limited to $25,000 for each quarter in which the tax is 
 82.10  imposed with the remainder returned to the city to be spent on 
 82.11  the other allowed uses. 
 82.12     The tax under this section shall be imposed beginning July 
 82.13  1, 2004, and shall expire at the same time as the taxes imposed 
 82.14  under Laws 2002, chapter 377, article 11, section 2. 
 82.15     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 82.16  following final enactment, upon compliance of the governing body 
 82.17  of the city of Waite Park with Minnesota Statutes, section 
 82.18  645.021, subdivision 3. 
 82.19     Sec. 49.  [CITY OF WASECA; SALES AND USE TAX.] 
 82.20     Subdivision 1.  [SALES AND USE TAX 
 82.21  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
 82.22  477A.016, or any other provision of law, ordinance, or city 
 82.23  charter, the city of Waseca may, by ordinance, impose a sales 
 82.24  and use tax of one-half of one percent for the purposes 
 82.25  specified in subdivision 2.  The provisions of Minnesota 
 82.26  Statutes, section 297A.99, govern the imposition, 
 82.27  administration, collection, and enforcement of the tax 
 82.28  authorized under this subdivision. 
 82.29     Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
 82.30  imposed under this section must be used to pay for up to 
 82.31  $1,820,000 in costs related to one or more of the following 
 82.32  capital projects as described in the referendum in subdivision 3:
 82.33     (1) water quality and lake improvements; 
 82.34     (2) community center improvements; 
 82.35     (3) an industrial incubator; and 
 82.36     (4) downtown improvements, including a theatre and blighted 
 83.1   property acquisition. 
 83.2      Subd. 3.  [REFERENDUM.] If the Waseca city council proposes 
 83.3   to impose the tax authorized by this section, the question of 
 83.4   imposing the tax must be submitted to the voters at the next 
 83.5   general election.  The tax may not be imposed unless the 
 83.6   majority of votes cast on the question of imposing the tax are 
 83.7   in the affirmative.  The specific projects to be funded by the 
 83.8   tax must be identified at least 90 days before the referendum is 
 83.9   held and included in the question presented at the election.  
 83.10  The question must state that the sales tax revenues would be 
 83.11  pledged to pay any bonds issued under subdivision 4 and that 
 83.12  these bonds are guaranteed by the city's property taxes. 
 83.13     Subd. 4.  [BONDING AUTHORITY.] The city may issue bonds 
 83.14  under Minnesota Statutes, chapter 475, to finance the capital 
 83.15  expenditure and improvement projects authorized under 
 83.16  subdivision 2 and approved under subdivision 3.  The total 
 83.17  amount of bonds issued for the projects approved in subdivision 
 83.18  3 may not exceed $1,820,000 in aggregate.  An election to 
 83.19  approve the bonds, as required under Minnesota Statutes, section 
 83.20  475.58, is not required. 
 83.21     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
 83.22  this section expire at the earlier of (1) ten years after the 
 83.23  taxes are first imposed, or (2) when the city council first 
 83.24  determines that the amount of revenues raised is sufficient to 
 83.25  finance the capital projects approved under subdivision 3 and to 
 83.26  prepay or retire at maturity the principal, interest, and 
 83.27  premium due on any bonds issued under subdivision 4.  Any funds 
 83.28  remaining after completion of the projects may be placed in the 
 83.29  general funds of the city. 
 83.30     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 83.31  compliance with the governing body of the city of Waseca with 
 83.32  Minnesota Statutes, section 645.021, subdivision 3. 
 83.33     Sec. 50.  [CITY OF WINONA.] 
 83.34     Subdivision 1.  [SALES AND USE TAX 
 83.35  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
 83.36  477A.016, or any other provision of law, ordinance, or city 
 84.1   charter, if approved by the voters pursuant to Minnesota 
 84.2   Statutes, section 297A.99, the city of Winona may impose by 
 84.3   ordinance a sales and use tax of one-half of one percent for the 
 84.4   purposes specified in subdivision 3.  The provisions of 
 84.5   Minnesota Statutes, section 297A.99, govern the imposition, 
 84.6   administration, collection, and enforcement of the tax 
 84.7   authorized under this subdivision. 
 84.8      Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
 84.9   Minnesota Statutes, section 477A.016, or any other provision of 
 84.10  law, ordinance, or city charter, the city of Winona may impose 
 84.11  by ordinance, for the purposes specified in subdivision 3, an 
 84.12  excise tax of up to $20 per motor vehicle, as defined by 
 84.13  ordinance, purchased or acquired from any person engaged within 
 84.14  the city in the business of selling motor vehicles at retail. 
 84.15     Subd. 3.  [USE OF REVENUES.] Revenues received from the 
 84.16  taxes authorized by subdivisions 1 and 2 must be dedicated to 
 84.17  pay all or part of the capital or administrative costs of 
 84.18  transportation projects or transportation improvements located 
 84.19  within the city, and to pay the cost of collecting and 
 84.20  administering the tax.  Authorized expenses include, but are not 
 84.21  limited to, acquiring property and paying construction and 
 84.22  engineering expenses related to the improvements. 
 84.23     Subd. 4.  [TERMINATION OF TAX.] The taxes imposed under 
 84.24  subdivisions 1 and 2 expire when the Winona City Council 
 84.25  determines that sufficient funds have been received from the tax 
 84.26  to pay the costs of the transportation projects or improvements 
 84.27  to which the tax was dedicated or ten years after imposition of 
 84.28  the tax, whichever is earlier.  Any funds remaining after 
 84.29  completion of the transportation project or transportation 
 84.30  improvements may be placed in a capital project fund of the city.
 84.31  The tax imposed under subdivisions 1 and 2 may expire at an 
 84.32  earlier time if the city so determines by ordinance. 
 84.33     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 84.34  compliance by the governing body of the city of Winona with 
 84.35  Minnesota Statutes, section 645.021, subdivision 3. 
 84.36     Sec. 51.  [DISTRIBUTION.] 
 85.1      For revenues from sales after December 31, 2005, and before 
 85.2   January 1, 2007, 70 percent of all revenues, including penalties 
 85.3   and interest, derived from the tax imposed under Minnesota 
 85.4   Statutes, section 297A.62, subdivision 2, are appropriated to 
 85.5   the commissioner of revenue for distribution to counties as 
 85.6   provided in this section.  For sales after December 31, 2006, 
 85.7   the total amount distributed under this section for each year is 
 85.8   the same amount that was distributed for sales in 2006.  Fifty 
 85.9   percent of the revenue must be allocated among all counties on a 
 85.10  per capita basis and 50 percent of the revenue must be allocated 
 85.11  to the county where the retail sale was made.  The commissioner 
 85.12  shall determine the county in which a retail sale was made by 
 85.13  using zip codes.  The commissioner shall distribute the revenue 
 85.14  to counties on or before the last day of each calendar quarter. 
 85.15  The revenue distributed to counties must be used to reduce 
 85.16  property taxes.  To qualify for this distribution, a county must 
 85.17  certify to the commissioner of revenue that it has increased its 
 85.18  funding for chemical dependency treatment programs that tend to 
 85.19  reduce the burden of property taxation caused by individuals who 
 85.20  are chemically dependent.  The amount of the increase must be at 
 85.21  least ten percent of the amount to be distributed. 
 85.22     <h>[EFFECTIVE DATE.]</h> This section is effective for sales made 
 85.23  after December 31, 2005. 
 85.24     Sec. 52.  [REPEALER.] 
 85.25     Minnesota Statutes 2002, section 297A.99, subdivision 13, 
 85.26  is repealed effective July 1, 2004. 
 85.27                             ARTICLE 3
 85.28                           PROPERTY TAXES
 85.29     Section 1.  Minnesota Statutes 2002, section 123B.53, is 
 85.30  amended by adding a subdivision to read: 
 85.31     Subd. 1a.  [DEBT SERVICE LEVIES; CHOICE OF TAX BASE.] A 
 85.32  school board may by resolution elect to levy the debt service 
 85.33  for a bond issued after July 1, 2004, against the referendum 
 85.34  market value of the district, as defined under section 126C.01, 
 85.35  subdivision 3, rather than the net tax capacity of the district, 
 85.36  except that for purposes of this subdivision, noncommercial 4c(1)
 86.1   property under section 273.13 is valued at its market value.  A 
 86.2   resolution to levy against referendum market value must be 
 86.3   passed at an open meeting of the board, at least 60 days prior 
 86.4   to the referendum election. 
 86.5      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 86.6   following final enactment.  
 86.7      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
 86.8   123B.53, subdivision 4, is amended to read: 
 86.9      Subd. 4.  [DEBT SERVICE EQUALIZATION REVENUE.] (a) The debt 
 86.10  service equalization revenue of a district equals the sum of the 
 86.11  first tier debt service equalization revenue and the second tier 
 86.12  debt service equalization revenue. 
 86.13     (b) The first tier debt service equalization revenue of a 
 86.14  district equals the greater of zero or the eligible debt service 
 86.15  revenue minus the amount raised by a levy of 15 percent times 
 86.16  the adjusted net tax capacity of the district minus the second 
 86.17  tier debt service equalization revenue of the district. 
 86.18     (c) The second tier debt service equalization revenue of a 
 86.19  district equals the greater of zero or the eligible debt service 
 86.20  revenue, excluding alternative facilities levies under section 
 86.21  123B.59, subdivision 5, minus the amount raised by a levy of 25 
 86.22  percent times the adjusted net tax capacity of the district. 
 86.23     (d) Debt service equalization revenue is determined as 
 86.24  provided under this subdivision regardless of whether the debt 
 86.25  service is being levied against net tax capacity or referendum 
 86.26  market value. 
 86.27     <h>[EFFECTIVE DATE.]</h> This section is effective July 1, 2004. 
 86.28     Sec. 3.  Minnesota Statutes 2002, section 123B.55, is 
 86.29  amended to read: 
 86.30     123B.55 [DEBT SERVICE LEVY.] 
 86.31     Subdivision 1.  [LEVY AMOUNT.] A district may levy the 
 86.32  amounts necessary to make payments for bonds issued and for 
 86.33  interest on them, including the bonds and interest on them, 
 86.34  issued as authorized by Minnesota Statutes 1974, section 
 86.35  275.125, subdivision 3, clause (7)(C); and the amounts necessary 
 86.36  for repayment of debt service loans and capital loans, minus the 
 87.1   amount of debt service equalization revenue of the district. 
 87.2      Subd. 2.  [AID APPORTIONMENT.] A district's debt service 
 87.3   equalization aid shall be apportioned between the net tax 
 87.4   capacity debt service levy and the referendum market value debt 
 87.5   service levy in the same proportions as eligible debt service 
 87.6   revenues resulting from bonds issued against net tax capacity 
 87.7   are to eligible debt service revenues resulting from bonds 
 87.8   issued against referendum market value. 
 87.9      Subd. 3.  [NET TAX CAPACITY DEBT SERVICE LEVY.] The levy 
 87.10  amount determined under subdivision 1, plus the eligible debt 
 87.11  service revenues resulting from bonds issued against net tax 
 87.12  capacity, minus the debt service equalization aid apportioned to 
 87.13  the net tax capacity debt service levy, must be levied against 
 87.14  the net tax capacity of the district as determined under section 
 87.15  273.13 and must be included with the other net tax capacity 
 87.16  levies certified to the county auditor under section 275.07. 
 87.17     Subd. 4.  [REFERENDUM MARKET VALUE DEBT SERVICE LEVY.] The 
 87.18  eligible debt service revenues resulting from bonds issued 
 87.19  against referendum market value, minus the debt service 
 87.20  equalization aid apportioned to the referendum market value debt 
 87.21  service levy, must be levied against the referendum market value 
 87.22  of the district as defined in section 126C.01, subdivision 3, 
 87.23  and must be separately certified to the county auditor under 
 87.24  section 275.07. 
 87.25     <h>[EFFECTIVE DATE.]</h> This section is effective beginning with 
 87.26  taxes payable in 2005. 
 87.27     Sec. 4.  Minnesota Statutes 2002, section 123B.71, 
 87.28  subdivision 9, is amended to read: 
 87.29     Subd. 9.  [INFORMATION REQUIRED.] A school board proposing 
 87.30  to construct a facility described in subdivision 8 shall submit 
 87.31  to the commissioner a proposal containing information including 
 87.32  at least the following: 
 87.33     (1) the geographic area and population to be served, 
 87.34  preschool through grade 12 student enrollments for the past five 
 87.35  years, and student enrollment projections for the next five 
 87.36  years; 
 88.1      (2) a list of existing facilities by year constructed, 
 88.2   their uses, and an assessment of the extent to which alternate 
 88.3   facilities are available within the school district boundaries 
 88.4   and in adjacent school districts; 
 88.5      (3) a list of the specific deficiencies of the facility 
 88.6   that demonstrate the need for a new or renovated facility to be 
 88.7   provided, and a list of the specific benefits that the new or 
 88.8   renovated facility will provide to the students, teachers, and 
 88.9   community users served by the facility; 
 88.10     (4) the relationship of the project to any priorities 
 88.11  established by the school district, educational cooperatives 
 88.12  that provide support services, or other public bodies in the 
 88.13  service area; 
 88.14     (5) a specification of how the project will increase 
 88.15  community use of the facility and whether and how the project 
 88.16  will increase collaboration with other governmental or nonprofit 
 88.17  entities; 
 88.18     (6) a description of the project, including the 
 88.19  specification of site and outdoor space acreage and square 
 88.20  footage allocations for classrooms, laboratories, and support 
 88.21  spaces; estimated expenditures for the major portions of the 
 88.22  project; and the dates the project will begin and be completed; 
 88.23     (7) a specification of the source of financing the project; 
 88.24  the scheduled date for a bond issue or school board action; a 
 88.25  schedule of payments, including debt service equalization aid; 
 88.26  whether the debt service will be levied against net tax capacity 
 88.27  or referendum market value; and the effect of a bond issue on 
 88.28  local property taxes by the property class and valuation; 
 88.29     (8) an analysis of how the proposed new or remodeled 
 88.30  facility will affect school district operational or 
 88.31  administrative staffing costs, and how the district's operating 
 88.32  budget will cover any increased operational or administrative 
 88.33  staffing costs; 
 88.34     (9) a description of the consultation with local or state 
 88.35  road and transportation officials on school site access and 
 88.36  safety issues, and the ways that the project will address those 
 89.1   issues; 
 89.2      (10) a description of how indoor air quality issues have 
 89.3   been considered and a certification that the architects and 
 89.4   engineers designing the facility will have professional 
 89.5   liability insurance; 
 89.6      (11) as required under section 123B.72, for buildings 
 89.7   coming into service after July 1, 2002, a certification that the 
 89.8   plans and designs for the extensively renovated or new 
 89.9   facility's heating, ventilation, and air conditioning systems 
 89.10  will meet or exceed code standards; will provide for the 
 89.11  monitoring of outdoor airflow and total airflow of ventilation 
 89.12  systems; and will provide an indoor air quality filtration 
 89.13  system that meets ASHRAE standard 52.1; 
 89.14     (12) a specification of any desegregation requirements that 
 89.15  cannot be met by any other reasonable means; and 
 89.16     (13) a specification, if applicable, of how the facility 
 89.17  will utilize environmentally sustainable school facility design 
 89.18  concepts. 
 89.19     <h>[EFFECTIVE DATE.]</h> This section is effective July 1, 2004. 
 89.20     Sec. 5.  Minnesota Statutes 2002, section 126C.17, 
 89.21  subdivision 6, is amended to read: 
 89.22     Subd. 6.  [REFERENDUM EQUALIZATION LEVY.] (a) For fiscal 
 89.23  year 2003 ~~and later~~ through 2006, a district's referendum 
 89.24  equalization levy equals the sum of the first tier referendum 
 89.25  equalization levy and the second tier referendum equalization 
 89.26  levy. 
 89.27     (b) A district's first tier referendum equalization levy 
 89.28  equals the district's first tier referendum equalization revenue 
 89.29  times the lesser of one or the ratio of the district's 
 89.30  referendum market value per resident marginal cost pupil unit to 
 89.31  $476,000. 
 89.32     (c) A district's second tier referendum equalization levy 
 89.33  equals the district's second tier referendum equalization 
 89.34  revenue times the lesser of one or the ratio of the district's 
 89.35  referendum market value per resident marginal cost pupil unit to 
 89.36  $270,000. 
 90.1      Sec. 6.  Minnesota Statutes 2002, section 126C.17, is 
 90.2   amended by adding a subdivision to read: 
 90.3      Subd. 6a.  [LOCAL EFFORT LEVEL.] (a) For fiscal year 2007 
 90.4   and later, a district's local effort level equals the sum of the 
 90.5   first tier referendum equalization level and the second tier 
 90.6   referendum local effort level. 
 90.7      (b) A district's first tier referendum local effort level 
 90.8   equals the district's first tier referendum equalization revenue 
 90.9   times the lesser of one or the ratio of the district's 
 90.10  referendum market value per resident marginal cost pupil unit to 
 90.11  $476,000. 
 90.12     (c) A district's second tier referendum local effort level 
 90.13  equals the district's second tier referendum equalization 
 90.14  revenue times the lesser of one or the ratio of the district's 
 90.15  referendum market value per resident marginal cost pupil unit to 
 90.16  $270,000. 
 90.17     Sec. 7.  Minnesota Statutes 2002, section 126C.17, is 
 90.18  amended by adding a subdivision to read: 
 90.19     Subd. 6b.  [LOCAL EFFORT REVENUE.] (a) For fiscal years 
 90.20  2007 and later, a school district's local effort revenue is 
 90.21  equal to its local effort level for that year. 
 90.22     (b) For referenda authorized under subdivision 9 prior to 
 90.23  June 30, 2005, a school district's local effort revenue must be 
 90.24  levied against the district's referendum market value according 
 90.25  to subdivision 10. 
 90.26     (c) For referenda authorized or renewed under subdivision 9 
 90.27  after June 30, 2005, that have been approved to be levied 
 90.28  against referendum market value, the local effort revenue must 
 90.29  be levied against the district's referendum market value 
 90.30  according to subdivision 10. 
 90.31     (d) For referenda authorized or renewed under subdivision 9 
 90.32  after June 30, 2005, that have been approved to be imposed as a 
 90.33  school referendum tax according to section 290.0621, the local 
 90.34  effort revenue must be raised as a tax against income liability 
 90.35  according to section 290.0621. 
 90.36     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
 91.1   126C.17, subdivision 7, is amended to read: 
 91.2      Subd. 7.  [REFERENDUM EQUALIZATION AID.] (a) For fiscal 
 91.3   years 2004 through 2006, a district's referendum equalization 
 91.4   aid equals the difference between its referendum equalization 
 91.5   revenue and levy.  For fiscal years 2007 and later, a district's 
 91.6   referendum equalization aid equals the difference between its 
 91.7   referendum equalization revenue and its local effort revenue. 
 91.8      (b) If a district's actual levy for first or second tier 
 91.9   referendum equalization revenue in fiscal years 2004 through 
 91.10  2006 is less than its maximum levy limit for that tier, aid 
 91.11  shall be proportionately reduced.  If a district's actual local 
 91.12  effort revenue for first or second tier referendum equalization 
 91.13  revenue in fiscal years 2007 and later is less than its maximum 
 91.14  local effort revenue limit for that tier, aid shall be 
 91.15  proportionately reduced. 
 91.16     (c) Notwithstanding paragraph (a), the referendum 
 91.17  equalization aid for a district, where the referendum 
 91.18  equalization aid under paragraph (a) exceeds 90 percent of the 
 91.19  referendum revenue, must not exceed 18.6 percent of the formula 
 91.20  allowance times the district's resident marginal cost pupil 
 91.21  units.  For fiscal years 2004 through 2006, a district's 
 91.22  referendum levy is increased by the amount of any reduction in 
 91.23  referendum aid under this paragraph.  For fiscal years 2007 and 
 91.24  later, a district's local effort level is increased by the 
 91.25  amount of any reduction in referendum aid under this paragraph. 
 91.26     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 91.27  126C.17, subdivision 9, is amended to read: 
 91.28     Subd. 9.  [REFERENDUM REVENUE.] (a) The revenue authorized 
 91.29  by section 126C.10, subdivision 1, may be increased in the 
 91.30  amount approved by the voters of the district at a referendum 
 91.31  called for the purpose.  The referendum may be called by the 
 91.32  board or shall be called by the board upon written petition of 
 91.33  qualified voters of the district.  The referendum must be 
 91.34  conducted one or two calendar years before the increased levy 
 91.35  authority, if approved, first becomes payable.  Only one 
 91.36  election to approve an increase may be held in a calendar year.  
 92.1   Unless the referendum is conducted by mail under paragraph (g), 
 92.2   the referendum must be held on the first Tuesday after the first 
 92.3   Monday in November.  The ballot must state the maximum amount of 
 92.4   the increased revenue per resident marginal cost pupil unit~~, the~~ 
 92.5   ~~estimated referendum tax rate as a percentage of referendum~~ 
 92.6   ~~market value in the first year it is to be levied, and that the~~ 
 92.7   ~~revenue must be used to finance school operations~~.  The ballot 
 92.8   may state a schedule, determined by the board, of increased 
 92.9   revenue per resident marginal cost pupil unit that differs from 
 92.10  year to year over the number of years for which the increased 
 92.11  revenue is authorized.  ~~If the ballot contains a schedule~~ 
 92.12  ~~showing different amounts, it must also indicate the estimated~~ 
 92.13  ~~referendum tax rate as a percent of referendum market value for~~ 
 92.14  ~~the amount specified for the first year and for the maximum~~ 
 92.15  ~~amount specified in the schedule.~~  The ballot, including a 
 92.16  ballot on the question to revoke or reduce the increased revenue 
 92.17  amount under paragraph (c), must abbreviate the term "per 
 92.18  resident marginal cost pupil unit" as "per pupil unit."  The 
 92.19  ballot may state that existing referendum ~~levy~~ taxing authority 
 92.20  is expiring.  In this case, if the referendum authority is based 
 92.21  on a property tax levy, the ballot may also compare the proposed 
 92.22  levy authority to the existing expiring levy authority, and 
 92.23  express the proposed increase as the amount, if any, over the 
 92.24  expiring referendum levy authority.  The ballot must designate 
 92.25  the specific number of years, not to exceed ten, for which the 
 92.26  referendum authorization applies.  The notice required under 
 92.27  section 275.60 may be modified to read, in cases of renewing 
 92.28  existing levies: 
 92.29     "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
 92.30     FOR A PROPERTY TAX INCREASE." 
 92.31     If the referendum is on a proposed income tax under section 
 92.32  290.0621, the notice must read: 
 92.33     "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
 92.34  FOR AN INCOME TAX INCREASE." 
 92.35     The ballot may contain a textual portion with the 
 92.36  information required in this subdivision and a question stating 
 93.1   substantially the following:  
 93.2      "Shall the increase in the revenue proposed by (petition 
 93.3   to) the board of ........., School District No. .., be approved?"
 93.4      If approved, an amount equal to the approved revenue per 
 93.5   resident marginal cost pupil unit times the resident marginal 
 93.6   cost pupil units for the school year beginning in the year after 
 93.7   the levy is certified or the income tax is imposed shall be 
 93.8   authorized for certification for the number of years approved, 
 93.9   if applicable, or until revoked or reduced by the voters of the 
 93.10  district at a subsequent referendum.  A referendum may be 
 93.11  conducted on the question of converting an existing referendum 
 93.12  property tax levy to a school referendum income tax to be 
 93.13  imposed under section 290.0621. 
 93.14     (b) The board must prepare and deliver by first class mail 
 93.15  at least 15 days but no more than 30 days before the day of the 
 93.16  referendum to each taxpayer a notice of the referendum and the 
 93.17  proposed revenue increase.  The board need not mail more than 
 93.18  one notice to any taxpayer.  For the purpose of giving mailed 
 93.19  notice under this subdivision for a referendum based on a 
 93.20  property tax levy, owners must be those shown to be owners on 
 93.21  the records of the county auditor or, in any county where tax 
 93.22  statements are mailed by the county treasurer, on the records of 
 93.23  the county treasurer.  Every property owner whose name does not 
 93.24  appear on the records of the county auditor or the county 
 93.25  treasurer is deemed to have waived this mailed notice unless the 
 93.26  owner has requested in writing that the county auditor or county 
 93.27  treasurer, as the case may be, include the name on the records 
 93.28  for this purpose.  The notice for a referendum based on a 
 93.29  property tax levy must project the anticipated amount of tax 
 93.30  increase in annual dollars ~~and annual percentage~~ for typical 
 93.31  residential homesteads, agricultural homesteads, apartments, and 
 93.32  commercial-industrial property within the school district.  For 
 93.33  the purpose of giving mailed notice under this subdivision, for 
 93.34  a referendum based on an income tax under section 290.0621, 
 93.35  taxpayers must be those shown to be domiciled in the school 
 93.36  district as indicated on the space which must be provided for 
 94.1   this information on the Minnesota individual income tax form for 
 94.2   the taxable year ending before the calendar year when the 
 94.3   referendum is conducted.  Every individual whose domicile is in 
 94.4   the school district whose name does not appear on the income tax 
 94.5   return as having a domicile in the district is deemed to have 
 94.6   waived this mailed notice unless the individual has requested in 
 94.7   writing that the county auditor or county treasurer, as the case 
 94.8   may be, include the individual's name on the records for this 
 94.9   purpose.  The notice must project the anticipated amount of tax 
 94.10  increase in annual dollars and annual percentage for typical 
 94.11  family incomes within the school district. 
 94.12     The notice for a referendum based on a property tax levy 
 94.13  may state that an existing referendum levy is expiring and 
 94.14  project the anticipated amount of increase over the existing 
 94.15  referendum levy in the first year, if any, in annual dollars ~~and~~ 
 94.16  ~~annual percentage~~ for typical residential homesteads, 
 94.17  agricultural homesteads, apartments, and commercial-industrial 
 94.18  property within the district. 
 94.19     The notice must include the following statement:  "Passage 
 94.20  of this referendum will result in an increase in your property 
 94.21  taxes."  However, in cases of renewing existing levies, the 
 94.22  notice may include the following statement:  "Passage of this 
 94.23  referendum may result in an increase in your property taxes." 
 94.24     The notice for a referendum based on income tax may state 
 94.25  that an existing income tax referendum authority is expiring and 
 94.26  project the anticipated amount of increase over the existing 
 94.27  referendum levy in the first year, if any, in annual dollars and 
 94.28  annual percentage for typical family incomes within the district.
 94.29     The notice must include the following statement:  "Passage 
 94.30  of this referendum will result in an increase in your personal 
 94.31  income taxes."  However, in cases of renewing existing income 
 94.32  tax referendum authorities, the notice may include the following 
 94.33  statement:  "Passage of this referendum may result in an 
 94.34  increase in your personal income taxes." 
 94.35     (c) A referendum on the question of revoking or reducing 
 94.36  the increased revenue amount authorized pursuant to paragraph 
 95.1   (a) may be called by the board and shall be called by the board 
 95.2   upon the written petition of qualified voters of the district.  
 95.3   A referendum to revoke or reduce the revenue amount must state 
 95.4   the amount per resident marginal cost pupil unit by which the 
 95.5   authority is to be reduced.  Revenue authority approved by the 
 95.6   voters of the district pursuant to paragraph (a) must be 
 95.7   available to the school district at least once before it is 
 95.8   subject to a referendum on its revocation or reduction for 
 95.9   subsequent years.  Only one revocation or reduction referendum 
 95.10  may be held to revoke or reduce referendum revenue for any 
 95.11  specific year and for years thereafter. 
 95.12     (d) A petition authorized by paragraph (a) or (c) is 
 95.13  effective if signed by a number of qualified voters in excess of 
 95.14  15 percent of the registered voters of the district on the day 
 95.15  the petition is filed with the board.  A referendum invoked by 
 95.16  petition must be held on the date specified in paragraph (a). 
 95.17     (e) The approval of 50 percent plus one of those voting on 
 95.18  the question is required to pass a referendum authorized by this 
 95.19  subdivision. 
 95.20     (f) At least 15 days before the day of the referendum, the 
 95.21  district must submit a copy of the notice required under 
 95.22  paragraph (b) to the commissioner and to the county auditor of 
 95.23  each county in which the district is located.  Within 15 days 
 95.24  after the results of the referendum have been certified by the 
 95.25  board, or in the case of a recount, the certification of the 
 95.26  results of the recount by the canvassing board, the district 
 95.27  must notify the commissioner of the results of the referendum. 
 95.28     <h>[EFFECTIVE DATE.]</h> This section is effective for referenda 
 95.29  conducted on or after July 1, 2004. 
 95.30     Sec. 10.  Minnesota Statutes 2002, section 168A.05, 
 95.31  subdivision 1b, is amended to read: 
 95.32     Subd. 1b.  [MANUFACTURED HOME; EXEMPTION.] The provisions 
 95.33  of subdivision 1a shall not apply to (1) a manufactured home 
 95.34  which is sold or otherwise disposed of pursuant to section 
 95.35  504B.271 by the owner of a manufactured home park as defined in 
 95.36  section 327.14, subdivision 3, or (2) a manufactured home which 
 96.1   is sold pursuant to section 504B.265 by the owner of a 
 96.2   manufactured home park.  No county auditor or treasurer shall 
 96.3   require a manufactured home park owner to satisfy the delinquent 
 96.4   or current year's personal property taxes owed as condition of 
 96.5   the title transfer to the park owner.  
 96.6      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 96.7   following final enactment. 
 96.8      Sec. 11.  [174.11] [COMMISSIONER TO NOTIFY COUNTY AUDITOR 
 96.9   OF PROPERTY ACQUISITIONS.] 
 96.10     Upon acquisition of any taxable real property, the 
 96.11  commissioner must notify the county auditor of the county where 
 96.12  the property is located that the property has been acquired. 
 96.13     Sec. 12.  Minnesota Statutes 2002, section 272.02, 
 96.14  subdivision 22, is amended to read: 
 96.15     Subd. 22.  [WIND ENERGY CONVERSION SYSTEMS.] All real and 
 96.16  personal property of a wind energy conversion system as defined 
 96.17  in section 272.029, subdivision 2, is exempt from property tax 
 96.18  except that the land on which the property is located remains 
 96.19  taxable.  If approved by the county where the property is 
 96.20  located, the value of the land on which the wind energy 
 96.21  conversion system is located shall not be increased or 
 96.22  decreased, but shall be valued in the same manner as similar 
 96.23  land that has not been improved with a wind energy conversion 
 96.24  system.  The land shall be classified based on the most probable 
 96.25  use of the property if it were not improved with a wind energy 
 96.26  conversion system. 
 96.27     <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
 96.28  year 2004 and thereafter, for taxes payable in 2005 and 
 96.29  thereafter. 
 96.30     Sec. 13.  Minnesota Statutes 2003 Supplement, section 
 96.31  272.02, subdivision 47, is amended to read: 
 96.32     Subd. 47.  [POULTRY LITTER BIOMASS GENERATION FACILITY; 
 96.33  PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
 96.34  attached machinery and other personal property which is part of 
 96.35  an electrical generating facility that meets the requirements of 
 96.36  this subdivision is exempt.  At the time of construction, the 
 97.1   facility must: 
 97.2      (1) be designed to utilize poultry litter as a primary fuel 
 97.3   source; and 
 97.4      (2) be constructed for the purpose of generating power at 
 97.5   the facility that will be sold pursuant to a contract approved 
 97.6   by the Public Utilities Commission in accordance with the 
 97.7   biomass mandate imposed under section 216B.2424. 
 97.8      Construction of the facility must be commenced after 
 97.9   January 1, 2003, and before December 31, ~~2003~~ 2004.  Property 
 97.10  eligible for this exemption does not include electric 
 97.11  transmission lines and interconnections or gas pipelines and 
 97.12  interconnections appurtenant to the property or the facility. 
 97.13     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
 97.14  levied in 2004, payable in 2005, and thereafter. 
 97.15     Sec. 14.  Minnesota Statutes 2003 Supplement, section 
 97.16  272.02, subdivision 56, is amended to read: 
 97.17     Subd. 56.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 97.18  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
 97.19  attached machinery and other personal property which is part of 
 97.20  a combined-cycle combustion-turbine electric generation facility 
 97.21  that exceeds ~~550~~ 300 megawatts of installed capacity and that 
 97.22  meets the requirements of this subdivision is exempt.  At the 
 97.23  time of construction, the facility must: 
 97.24     (1) be designed to utilize natural gas as a primary fuel; 
 97.25     (2) not be owned by a public utility as defined in section 
 97.26  216B.02, subdivision 4; 
 97.27     (3) be located within five miles of an existing natural gas 
 97.28  pipeline and within four miles of an existing electrical 
 97.29  transmission substation; 
 97.30     (4) be located outside the metropolitan area as defined 
 97.31  under section 473.121, subdivision 2; and 
 97.32     (5) be designed to provide energy and ancillary services 
 97.33  and have received a certificate of need under section 216B.243. 
 97.34     (b) Construction of the facility must be commenced after 
 97.35  January 1, 2004, and before January 1, 2007, except that 
 97.36  property eligible for this exemption includes any expansion of 
 98.1   the facility that also meets the requirements of paragraph (a), 
 98.2   clauses (1) to (5), without regard to the date that construction 
 98.3   of the expansion commences.  Property eligible for this 
 98.4   exemption does not include electric transmission lines and 
 98.5   interconnections or gas pipelines and interconnections 
 98.6   appurtenant to the property or the facility. 
 98.7      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
 98.8   levied in 2005, payable in 2006, and thereafter. 
 98.9      Sec. 15.  Minnesota Statutes 2002, section 272.02, is 
 98.10  amended by adding a subdivision to read: 
 98.11     Subd. 68.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 98.12  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
 98.13  attached machinery and other personal property which is part of 
 98.14  a simple-cycle combustion-turbine electric generation facility 
 98.15  that exceeds 290 megawatts of installed capacity and that meets 
 98.16  the requirements of this subdivision is exempt.  At the time of 
 98.17  construction, the facility must: 
 98.18     (1) be designed to utilize natural gas as a primary fuel; 
 98.19     (2) not be owned by a public utility as defined in section 
 98.20  216B.02, subdivision 4; 
 98.21     (3) be located within five miles of an existing natural gas 
 98.22  pipeline and within five miles of an existing electrical 
 98.23  transmission substation; 
 98.24     (4) be located outside the metropolitan area as defined 
 98.25  under section 473.121, subdivision 2; 
 98.26     (5) be designed to provide peaking capacity energy and 
 98.27  ancillary services and have satisfied all of the requirements 
 98.28  under section 216B.243; and 
 98.29     (6) have received, by resolution, the approval from the 
 98.30  governing body of the county, city, and school district in which 
 98.31  the proposed facility is to be located for the exemption of 
 98.32  personal property under this subdivision. 
 98.33     (b) Construction of the facility must be commenced after 
 98.34  January 1, 2005, and before January 1, 2009.  Property eligible 
 98.35  for this exemption does not include electric transmission lines 
 98.36  and interconnections or gas pipelines and interconnections 
 99.1   appurtenant to the property or the facility. 
 99.2      <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
 99.3   year 2006, taxes payable in 2007, and thereafter. 
 99.4      Sec. 16.  Minnesota Statutes 2002, section 272.02, is 
 99.5   amended by adding a subdivision to read: 
 99.6      Subd. 69.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 99.7   PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 99.8   machinery and other personal property which is part of a 
 99.9   simple-cycle, combustion-turbine electric generation facility 
 99.10  that exceeds 300 megawatts of installed capacity and that meets 
 99.11  the requirements of this subdivision is exempt.  At the time of 
 99.12  the construction, the facility must: 
 99.13     (1) be designed to utilize natural gas as a primary fuel; 
 99.14     (2) be owned by a public utility as defined in section 
 99.15  216B.02, subdivision 4, and be located at or interconnected with 
 99.16  an existing generating plant of the utility; 
 99.17     (3) be designed to provide peaking, emergency backup, or 
 99.18  contingency services; 
 99.19     (4) satisfy a resource need identified in an approved 
 99.20  integrated resource plan filed under section 216B.2422; and 
 99.21     (5) have received, by resolution, the approval from the 
 99.22  governing body of the county and the city for the exemption of 
 99.23  personal property under this subdivision. 
 99.24     Construction of the facility must be commenced after 
 99.25  January 1, 2004, and before January 1, 2006.  Property eligible 
 99.26  for this exemption does not include electric transmission lines 
 99.27  and interconnections or gas pipelines and interconnections 
 99.28  appurtenant to the property or the facility. 
 99.29     <h>[EFFECTIVE DATE.]</h> This section is effective beginning with 
 99.30  assessment year 2005, for taxes payable in 2006, and thereafter. 
 99.31     Sec. 17.  Minnesota Statutes 2002, section 272.02, is 
 99.32  amended by adding a subdivision to read: 
 99.33     Subd. 70.  [ELECTRIC GENERATION FACILITY PERSONAL 
 99.34  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), and 
 99.35  section 453.54, subdivision 20, attached machinery and other 
 99.36  personal property which is part of an electric generation 
100.1   facility that exceeds 150 megawatts of installed capacity and 
100.2   meets the requirements of this subdivision is exempt.  At the 
100.3   time of construction, the facility must: 
100.4      (1) be designed to utilize natural gas as a primary fuel; 
100.5      (2) be owned and operated by a municipal power agency as 
100.6   defined in section 453.52, subdivision 8; 
100.7      (3) have received the certificate of need under section 
100.8   216B.243; 
100.9      (4) be located outside the metropolitan area as defined 
100.10  under section 473.121, subdivision 2; and 
100.11     (5) be designed to be a combined-cycle facility, although 
100.12  initially the facility will be operated as a simple-cycle 
100.13  combustion turbine. 
100.14     (b) To qualify under this subdivision, an agreement must be 
100.15  negotiated between the municipal power agency and the host city, 
100.16  for a payment in lieu of property taxes to the host city. 
100.17     (c) Construction of the facility must be commenced after 
100.18  January 1, 2004, and before January 1, 2006.  Property eligible 
100.19  for this exemption does not include electric transmission lines 
100.20  and interconnections or gas pipelines and interconnections 
100.21  appurtenant to the property or the facility. 
100.22     <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
100.23  year 2005, taxes payable in 2006, and thereafter. 
100.24     Sec. 18.  Minnesota Statutes 2002, section 272.02, is 
100.25  amended by adding a subdivision to read: 
100.26     Subd. 71.  [BIOMASS ELECTRIC GENERATION FACILITY; PERSONAL 
100.27  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
100.28  attached machinery and other personal property which is a part 
100.29  of an electric generation facility, including remote boilers 
100.30  that comprise part of the district heating system, generating up 
100.31  to 30 megawatts of installed capacity and that meets the 
100.32  requirements of this subdivision is exempt.  At the time of 
100.33  construction, the facility must: 
100.34     (1) be designed to utilize a minimum 90 percent waste 
100.35  biomass as a fuel; 
100.36     (2) not be owned by a public utility as defined in section 
101.1   216B.02, subdivision 4; 
101.2      (3) be located within a city of the first class and have 
101.3   its primary location at a former garbage transfer station; and 
101.4      (4) be designed to have capability to provide baseload 
101.5   energy and district heating. 
101.6      (b) Construction of the facility must be commenced after 
101.7   January 1, 2004, and before January 1, 2008.  Property eligible 
101.8   for this exemption does not include electric transmission lines 
101.9   and interconnections or gas pipelines and interconnections 
101.10  appurtenant to the property or the facility. 
101.11     <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
101.12  year 2005, taxes payable in 2006, and thereafter. 
101.13     Sec. 19.  Minnesota Statutes 2002, section 272.02, is 
101.14  amended by adding a subdivision to read: 
101.15     Subd. 72.  [ELECTRIC GENERATION FACILITY; PERSONAL 
101.16  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
101.17  attached machinery and other personal property that is part of 
101.18  either a simple-cycle, combustion-turbine electric generation 
101.19  facility that equals or exceeds 150 megawatts of installed 
101.20  capacity, or a combined-cycle, combustion-turbine electric 
101.21  generation facility that equals or exceeds 225 megawatts of 
101.22  installed capacity, and that in either case meets the 
101.23  requirements of this subdivision, is exempt.  At the time of 
101.24  construction, the facility must: 
101.25     (1) be designed to utilize natural gas as a primary fuel; 
101.26     (2) not be owned by a public utility as defined in section 
101.27  216B.02, subdivision 4; 
101.28     (3) be located in a metropolitan county defined in section 
101.29  473.121, subdivision 4, that has a population greater than 
101.30  190,000 and less than 225,000 in the most recent federal 
101.31  decennial census, within one mile of an existing natural gas 
101.32  pipeline, and within one mile of an existing electrical 
101.33  transmission substation; and 
101.34     (4) be designed to provide energy and ancillary services 
101.35  and have received a certificate of need under section 216B.243. 
101.36     (b) Construction of the facility must be commenced after 
102.1   January 1, 2005, and before January 1, 2008.  Property eligible 
102.2   for this exemption does not include electric transmission lines 
102.3   and interconnections or gas pipelines and interconnections 
102.4   appurtenant to the property or the facility. 
102.5      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
102.6   levied in 2005, payable in 2006, and thereafter. 
102.7      Sec. 20.  Minnesota Statutes 2002, section 272.02, is 
102.8   amended by adding a subdivision to read: 
102.9      Subd. 73.  [PERSONAL RAPID TRANSIT SYSTEM.] All property 
102.10  used in the operation and support of a personal rapid transit 
102.11  system as defined in section 297A.61, subdivision 37, that 
102.12  provides service to the public on a regular and continuing 
102.13  basis, is exempt, provided that it is operated independent of 
102.14  any government subsidies. 
102.15     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
102.16  payable in 2005 and subsequent years. 
102.17     Sec. 21.  Minnesota Statutes 2002, section 272.029, 
102.18  subdivision 4, is amended to read: 
102.19     Subd. 4.  [REPORTS.] (a) An owner of a wind energy 
102.20  conversion system subject to tax under subdivision 3 shall file 
102.21  a report with the commissioner of revenue annually on or before 
102.22  ~~March 1~~ February 1 detailing the amount of electricity in 
102.23  kilowatt-hours that was produced by the wind energy conversion 
102.24  system for the previous calendar year.  The commissioner shall 
102.25  prescribe the form of the report.  The report must contain the 
102.26  information required by the commissioner to determine the tax 
102.27  due to each county under this section for the current year.  If 
102.28  an owner of a wind energy conversion system subject to taxation 
102.29  under this section fails to file the report by the due date, the 
102.30  commissioner of revenue shall determine the tax based upon the 
102.31  nameplate capacity of the system multiplied by a capacity factor 
102.32  of 40 percent. 
102.33     (b) On or before ~~March 31~~ February 28, the commissioner of 
102.34  revenue shall notify the owner of the wind energy conversion 
102.35  systems of the tax due to each county for the current year and 
102.36  shall certify to the county auditor of each county in which the 
103.1   systems are located the tax due from each owner for the current 
103.2   year. 
103.3      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
103.4   payable in 2005 and thereafter. 
103.5      Sec. 22.  Minnesota Statutes 2002, section 272.029, 
103.6   subdivision 6, is amended to read: 
103.7      Subd. 6.  [DISTRIBUTION OF REVENUES.] Revenues from the 
103.8   taxes imposed under subdivision 5 must be part of the settlement 
103.9   between the county treasurer and the county auditor under 
103.10  section 276.09.  The revenue must be distributed by the county 
103.11  auditor or the county treasurer to all local taxing 
103.12  jurisdictions in which the wind energy conversion system is 
103.13  located, in the same proportion that each of the taxing 
103.14  jurisdiction's ~~current~~ previous year's net tax capacity based 
103.15  tax rate is to the ~~current~~ previous year's total local net tax 
103.16  capacity based rate. 
103.17     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
103.18  payable in 2004 and thereafter. 
103.19     Sec. 23.  Minnesota Statutes 2003 Supplement, section 
103.20  273.11, subdivision 1a, is amended to read: 
103.21     Subd. 1a.  [LIMITED MARKET VALUE.] In the case of: 
103.22     (1) all property classified as agricultural homestead or 
103.23  nonhomestead, residential homestead or nonhomestead, timber, ~~or~~ 
103.24  noncommercial seasonal residential recreational, or class 1c 
103.25  resort property; and 
103.26     (2) property classified as commercial-industrial that has a 
103.27  total market value less than $500,000, the assessor shall 
103.28  compare the value with the taxable portion of the value 
103.29  determined in the preceding assessment except that for class 1c 
103.30  resort property for assessment year 2004, the assessor shall 
103.31  determine the limited market value as provided in subdivision 1b.
103.32     ~~For assessment year 2002, the amount of the increase shall~~ 
103.33  ~~not exceed the greater of (1) ten percent of the value in the~~ 
103.34  ~~preceding assessment, or (2) 15 percent of the difference~~ 
103.35  ~~between the current assessment and the preceding assessment.~~ 
103.36     For assessment year 2003 and thereafter, the amount of the 
104.1   increase shall not exceed the greater of (1) 12 percent of the 
104.2   value in the preceding assessment, or (2) 20 percent of the 
104.3   difference between the current assessment and the preceding 
104.4   assessment. 
104.5      ~~For assessment year 2004, the amount of the increase shall~~ 
104.6   ~~not exceed the greater of (1) 15 percent of the value in the~~ 
104.7   ~~preceding assessment, or (2) 25 percent of the difference~~ 
104.8   ~~between the current assessment and the preceding assessment.~~ 
104.9      ~~For assessment year 2005, the amount of the increase shall~~ 
104.10  ~~not exceed the greater of (1) 15 percent of the value in the~~ 
104.11  ~~preceding assessment, or (2) 33 percent of the difference~~ 
104.12  ~~between the current assessment and the preceding assessment.~~  
104.13     ~~For assessment year 2006, the amount of the increase shall~~ 
104.14  ~~not exceed the greater of (1) 15 percent of the value in the~~ 
104.15  ~~preceding assessment, or (2) 50 percent of the difference~~ 
104.16  ~~between the current assessment and the preceding assessment.~~ 
104.17     This limitation shall not apply to increases in value due 
104.18  to improvements.  For purposes of this subdivision, the term 
104.19  "assessment" means the value prior to any exclusion under 
104.20  subdivision 16. 
104.21     ~~The provisions of this subdivision shall be in effect~~ 
104.22  ~~through assessment year 2006 as provided in this subdivision.~~ 
104.23     For purposes of this subdivision and subdivision 1b, "class 
104.24  1c resort property" includes the portion of the property 
104.25  classified class 1a or 1b homestead, the portion of the property 
104.26  classified 1c, plus any remaining portion of the resort that is 
104.27  classified 4c under section 273.13, subdivision 25, paragraph 
104.28  (d), clause (1). 
104.29     For purposes of the assessment/sales ratio study conducted 
104.30  under section 127A.48, and the computation of state aids paid 
104.31  under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 
104.32  477A, market values and net tax capacities determined under this 
104.33  subdivision and subdivision 16, shall be used. 
104.34     In the case of commercial-industrial property that 
104.35  qualifies under clause (2) of the first paragraph of this 
104.36  subdivision, for the first assessment year when the total market 
105.1   value of the property exceeds $500,000, 33 percent of the 
105.2   difference between the current assessment and the preceding 
105.3   assessment must be added to the limited market value.  For the 
105.4   next assessment year, 50 percent of the difference between the 
105.5   current assessment and the preceding assessment must be added to 
105.6   the limited market value.  In the third assessment year after 
105.7   the total market value of the property initially exceeds 
105.8   $500,000, this subdivision will no longer apply to the property. 
105.9      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
105.10  following final enactment for assessment year 2004, and 
105.11  thereafter. 
105.12     Sec. 24.  Minnesota Statutes 2002, section 273.11, is 
105.13  amended by adding a subdivision to read: 
105.14     Subd. 1b.  [CLASS 1C RESORTS; 2004 ASSESSMENT ONLY.] For 
105.15  assessment year 2004, the valuation increase on class 1c resort 
105.16  property shall not exceed the greater of (1) 15 percent of the 
105.17  value of its 2002 assessment, or (2) 25 percent of the 
105.18  difference in value between its 2004 assessment and its 2002 
105.19  assessment.  The valuation increase on class 1c resort property 
105.20  for the 2005 and 2006 assessment years shall be determined based 
105.21  upon the schedule contained in subdivision 1a.  
105.22     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
105.23  following final enactment. 
105.24     Sec. 25.  Minnesota Statutes 2002, section 273.11, is 
105.25  amended by adding a subdivision to read: 
105.26     Subd. 21.  [VALUATION EXCLUSION FOR SEWAGE TREATMENT SYSTEM 
105.27  IMPROVEMENTS.] Owners of property classified as class 1a, 1b, 
105.28  1c, 2a, 4b, 4bb, or noncommercial 4c under section 273.13 may 
105.29  apply for a valuation exclusion under this subdivision, provided 
105.30  that the property is located in a county which has authorized 
105.31  valuation exclusions under this subdivision, and provided that 
105.32  the following conditions are met: 
105.33     (1) a notice of noncompliance has been issued by a licensed 
105.34  compliance inspector with regard to the individual sewage 
105.35  treatment system serving the property under section 115.55, 
105.36  subdivision 5b; 
106.1      (2) the owner of the property furnishes documentation to 
106.2   the satisfaction of the assessor that the property's individual 
106.3   sewage treatment system has been replaced or refurbished, 
106.4   including replacement of the individual system with a community 
106.5   or cluster system, between May 1, 2004, and December 31, 2006; 
106.6   and 
106.7      (3) a certificate of compliance has been issued for the new 
106.8   or refurbished system under section 115.55, subdivision 5. 
106.9      Application must be made to the assessor on a form 
106.10  prescribed by the commissioner of revenue.  Property meeting the 
106.11  requirements of this subdivision is eligible for a valuation 
106.12  exclusion equal to 50 percent of the actual costs incurred, to a 
106.13  maximum exclusion of $7,500, for a period of five years, after 
106.14  which the amount of the exclusion will be added to the estimated 
106.15  market value of the property.  The valuation exclusion 
106.16  terminates upon the sale of the property.  If a property owner 
106.17  applies for exclusion under this subdivision between January 1 
106.18  and June 30 of any year, the exclusion first applies for taxes 
106.19  payable in the following year.  If a property owner applies for 
106.20  exclusion under this subdivision between July 1 and December 31 
106.21  of any year, the exclusion first applies for taxes payable in 
106.22  the second following year. 
106.23     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
106.24  payable in 2005 and subsequent years. 
106.25     Sec. 26.  Minnesota Statutes 2002, section 273.11, is 
106.26  amended by adding a subdivision to read: 
106.27     Subd. 22.  [VALUATION EXCLUSION FOR LEAD HAZARD REDUCTION.] 
106.28  Owners of property classified as class 1a, 1b, 1c, 2a, 4b, or 
106.29  4bb under section 273.13 may apply for a valuation exclusion for 
106.30  lead hazard reduction, provided that the property is located in 
106.31  a city which has authorized valuation exclusions under this 
106.32  subdivision.  A city which authorizes valuation exclusions under 
106.33  this subdivision must establish guidelines for qualifying lead 
106.34  hazard reduction projects and must designate an agency within 
106.35  the city to issue certificates of completion of qualifying 
106.36  projects.  For purposes of this subdivision, "lead hazard 
107.1   reduction" has the same meaning as in section 144.9501, 
107.2   subdivision 17. 
107.3      The property owner must obtain a certificate from the city 
107.4   stating that the project has been completed and stating the cost 
107.5   incurred by the owner in completing the project.  Only projects 
107.6   originating after April 30, 2004, may qualify for exclusion 
107.7   under this subdivision.  The property owner shall apply for a 
107.8   valuation exclusion to the assessor on a form prescribed by the 
107.9   commissioner of revenue. 
107.10     A qualifying property is eligible for a valuation exclusion 
107.11  equal to 50 percent of the actual costs incurred, to a maximum 
107.12  exclusion of $15,000, for a period of five years, after which 
107.13  the amount of the exclusion will be added to the estimated 
107.14  market value of the property.  The valuation exclusion shall 
107.15  terminate upon the sale of the property.  If a property owner 
107.16  applies for exclusion under this subdivision between January 1 
107.17  and June 30 of any year, the exclusion shall first apply for 
107.18  taxes payable in the following year.  If a property owner 
107.19  applies for exclusion under this subdivision between July 1 and 
107.20  December 31 of any year, the exclusion shall first apply for 
107.21  taxes payable in the second following year. 
107.22     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
107.23  payable in 2005 and subsequent years. 
107.24     Sec. 27.  [273.1115] [AGGREGATE RESOURCE PRESERVATION 
107.25  PROPERTY TAX LAW.] 
107.26     Subdivision 1.  [REQUIREMENTS.] Real estate is entitled to 
107.27  valuation under this section only if all of the following 
107.28  requirements are met: 
107.29     (1) the property is classified 1a, 1b, 2a, or 2b property 
107.30  under section 273.13, subdivisions 22 and 23; 
107.31     (2) the property is at least ten contiguous acres, when the 
107.32  application is filed under subdivision 2; 
107.33     (3) the owner has filed a completed application for 
107.34  deferment as specified in subdivision 2 with the county assessor 
107.35  in the county in which the property is located; 
107.36     (4) there are no delinquent taxes on the property; and 
108.1      (5) a covenant on the land restricts its use as provided in 
108.2   subdivision 2, clause (4). 
108.3      Subd. 2.  [APPLICATION.] Application for valuation 
108.4   deferment under this section must be filed by May 1 of the 
108.5   assessment year.  Any application filed and granted continues in 
108.6   effect for subsequent years until the property no longer 
108.7   qualifies, provided that supplemental affidavits under 
108.8   subdivision 6 are timely filed.  The application must be filed 
108.9   with the assessor of the county in which the real property is 
108.10  located on such form as may be prescribed by the commissioner of 
108.11  revenue.  The application must be executed and acknowledged in 
108.12  the manner required by law to execute and acknowledge a deed and 
108.13  must contain at least the following information and any other 
108.14  information the commissioner deems necessary: 
108.15     (1) the legal description of the area; 
108.16     (2) the name and address of owner; 
108.17     (3) a copy of the affidavit filed under section 273.13, 
108.18  subdivision 23, paragraph (h), in the case of property 
108.19  classified class 2b, clause (5); or in the case of property 
108.20  classified 1a, 1b, 2a, and 2b, clauses (1) to (3), the 
108.21  application must include a similar document with the same 
108.22  information as contained in the affidavit under section 273.13, 
108.23  subdivision 23, paragraph (h); and 
108.24     (4) a statement of proof from the owner that the land 
108.25  contains a restrictive covenant limiting its use for the 
108.26  property's surface to that which exists on the date of the 
108.27  application and limiting its future use to the preparation and 
108.28  removal of the aggregate commercial deposit under its surface. 
108.29     To qualify under this clause, the covenant must be binding 
108.30  on the owner or the owner's successor or assignee, and run with 
108.31  the land, except as provided in subdivision 4 allowing for the 
108.32  cancellation of the covenant under certain conditions. 
108.33     Subd. 3.  [DETERMINATION OF VALUE.] Upon timely application 
108.34  by the owner as provided in subdivision 2, notwithstanding 
108.35  sections 272.03, subdivision 8, and 273.11, the value of any 
108.36  qualifying land described in subdivision 2 must be valued as if 
109.1   it were agricultural property, using a per acre valuation equal 
109.2   to the current year's per acre valuation of agricultural land in 
109.3   the county.  The assessor shall not consider any additional 
109.4   value resulting from potential alternative and future uses of 
109.5   the property.  The buildings located on the land shall be valued 
109.6   by the assessor in the normal manner. 
109.7      Subd. 4.  [CANCELLATION OF COVENANT.] The covenant required 
109.8   under subdivision 2 may be canceled in two ways:  
109.9      (1) by the owner beginning with the next subsequent 
109.10  assessment year provided that the additional taxes as determined 
109.11  under subdivision 5 are paid by the owner at the time of 
109.12  cancellation; and 
109.13     (2) by the city or town in which the property is located 
109.14  beginning with the next subsequent assessment year, if the city 
109.15  council or town board: 
109.16     (i) changes the conditional use of the property; 
109.17     (ii) revokes the mining permit; or 
109.18     (iii) changes the zoning to disallow mining.  
109.19     No additional taxes are imposed on the property under this 
109.20  clause. 
109.21     Subd. 4a.  [COUNTY TERMINATION.] Within two years of the 
109.22  effective date of this section, a county may, following notice 
109.23  and public hearing, terminate application of this section in the 
109.24  county.  The termination is effective upon adoption of a 
109.25  resolution of the county board.  A termination applies 
109.26  prospectively and does not affect property enrolled under this 
109.27  section prior to the termination date.  A county may reauthorize 
109.28  application of this section by a resolution of the county board 
109.29  revoking the termination. 
109.30     Subd. 5.  [ADDITIONAL TAXES.] When real property which has 
109.31  been valued and assessed under this section no longer qualifies, 
109.32  the portion of the land classified under subdivision 1, clause 
109.33  (1), is subject to additional taxes.  The additional tax amount 
109.34  is determined by: 
109.35     (1) computing the difference between (i) the current year's 
109.36  taxes determined in accordance with subdivision 5, and (ii) an 
110.1   amount as determined by the assessor based upon the property's 
110.2   current year's estimated market value of like real estate at its 
110.3   highest and best use and the appropriate local tax rate; and 
110.4      (2) multiplying the amount determined in clause (1) by the 
110.5   number of years the land was in the program under this section.  
110.6      The current year's estimated market value as determined by 
110.7   the assessor must not exceed the market value that would result 
110.8   if the property was sold in an arms-length transaction and must 
110.9   not be greater than it would have been had the actual bona fide 
110.10  sale price of the property been used in lieu of that market 
110.11  value.  The additional taxes must be extended against the 
110.12  property on the tax list for the current year, except that 
110.13  interest or penalties must not be levied on such additional 
110.14  taxes if timely paid. 
110.15     The additional tax under this subdivision must not be 
110.16  imposed on that portion of the property which has actively been 
110.17  mined and has been removed from the program based upon the 
110.18  supplemental affidavits filed under subdivision 6. 
110.19     Subd. 6.  [SUPPLEMENTAL AFFIDAVITS; MINING ACTIVITY ON 
110.20  LAND.] When any portion of the property begins to be actively 
110.21  mined, the owner must file a supplemental affidavit within 60 
110.22  days from the day any aggregate is removed stating the number of 
110.23  acres of the property that is actively being mined.  The acres 
110.24  actively being mined shall be (1) valued and classified under 
110.25  section 273.13, subdivision 24, in the next subsequent 
110.26  assessment year, and (2) removed from the aggregate resource 
110.27  preservation property tax program under this section.  The 
110.28  additional taxes under subdivision 5 must not be imposed on the 
110.29  acres that are actively being mined and have been removed from 
110.30  the program under this section. 
110.31     Copies of the original affidavit and all supplemental 
110.32  affidavits must be filed with the county assessor, the local 
110.33  zoning administrator, and the Department of Natural Resources, 
110.34  Division of Land and Minerals.  A supplemental affidavit must be 
110.35  filed each time a subsequent portion of the property is actively 
110.36  mined, provided that the minimum acreage change is five acres, 
111.1   even if the actual mining activity constitutes less than five 
111.2   acres.  Failure to file the affidavits timely shall result in 
111.3   the property losing its valuation deferment under this section, 
111.4   and additional taxes must be imposed as calculated under 
111.5   subdivision 5. 
111.6      Subd. 7.  [LIEN.] The additional tax imposed by this 
111.7   section is a lien upon the property assessed to the same extent 
111.8   and for the same duration as other taxes imposed upon property 
111.9   within this state and, when collected, must be distributed in 
111.10  the manner provided by law for the collection and distribution 
111.11  of other property taxes. 
111.12     Subd. 8.  [CONTINUATION OF TAX TREATMENT UPON SALE.] When 
111.13  real property qualifying under subdivision 1 is sold, additional 
111.14  taxes must not be extended against the property if the property 
111.15  continues to qualify under subdivision 1, and the new owner 
111.16  files an application with the assessor for continued deferment 
111.17  within 30 days after the sale. 
111.18     Subd. 9.  [DEFINITIONS.] For purposes of this section, 
111.19  "commercial aggregate deposit" and "actively mined" have the 
111.20  meanings given them in section 273.13, subdivision 23, paragraph 
111.21  (h). 
111.22     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
111.23  levied in 2004, payable in 2005, and thereafter, except that for 
111.24  the 2004 assessment year, the application date under subdivision 
111.25  4 shall be September 1, 2004, and subdivision 4a is effective 
111.26  the day following final enactment. 
111.27     Sec. 28.  [273.1116] [HOMESTEAD RESORTS; VALUATION AND 
111.28  DEFERMENT.] 
111.29     Subdivision 1.  [REQUIREMENTS.] Real property qualifying 
111.30  for classification as class 1c under section 273.13, subdivision 
111.31  22, paragraph (c), is entitled to valuation and tax deferment 
111.32  under this section, provided that if part of a resort is not 
111.33  classified as class 1c, only that portion of the value of the 
111.34  property that is classified as class 1c property qualifies under 
111.35  this section. 
111.36     Subd. 2.  [DETERMINATION OF VALUE.] Upon timely application 
112.1   by the owner, as provided in subdivision 4, the value of real 
112.2   property described in subdivision 1 must be determined by the 
112.3   assessor solely with reference to its classification value as 
112.4   class 1c property, notwithstanding sections 272.03, subdivision 
112.5   8, and 273.11.  The owner must furnish information on the income 
112.6   generated by the property and other information required by the 
112.7   assessor to determine the value of the property.  The assessor 
112.8   shall not consider any added values resulting from other factors.
112.9      Subd. 3.  [SEPARATE DETERMINATION OF MARKET VALUE AND TAX.] 
112.10  The assessor shall, however, make a separate determination of 
112.11  the market value of the real estate.  The assessor shall record 
112.12  on the property assessment records the tax based upon the 
112.13  appropriate local tax rate applicable to the property in the 
112.14  taxing district. 
112.15     Subd. 4.  [APPLICATION.] Application for deferment of taxes 
112.16  and assessment under this section must be filed by May 1 of the 
112.17  year prior to the year in which the taxes are payable.  The 
112.18  application must be filed with the assessor of the taxing 
112.19  district in which the real property is located on a form 
112.20  prescribed by the commissioner of revenue.  The assessor may 
112.21  require proof by affidavit or otherwise that the property 
112.22  qualifies under subdivision 1.  An application approved by the 
112.23  assessor continues in effect for subsequent years until the 
112.24  property no longer qualifies under subdivision 1. 
112.25     Subd. 5.  [ADDITIONAL TAXES.] When real property valued and 
112.26  assessed under this section no longer qualifies under 
112.27  subdivision 1, the portion no longer qualifying is subject to 
112.28  additional taxes, in the amount equal to the difference between 
112.29  the taxes determined in accordance with subdivision 2, and the 
112.30  amount determined under subdivision 3, provided, however, that 
112.31  the amount determined under subdivision 3 must not be greater 
112.32  than it would have been had the actual bona fide sale price of 
112.33  the real property at an arms-length transaction been used in 
112.34  lieu of the market value determined under subdivision 3.  The 
112.35  additional taxes must be extended against the property on the 
112.36  tax list for the current year, except that no interest or 
113.1   penalties may be levied on the additional taxes if timely paid, 
113.2   and except that the additional taxes must only be levied with 
113.3   respect to the last seven years that the property has been 
113.4   valued and assessed under this section. 
113.5      Subd. 6.  [LIEN.] The tax imposed by this section is a lien 
113.6   on the property assessed to the same extent and for the same 
113.7   duration as other taxes imposed on property within this state.  
113.8   The tax must be annually extended by the county auditor and when 
113.9   payable must be collected and distributed in the manner provided 
113.10  by law for the collection and distribution of other property 
113.11  taxes. 
113.12     Subd. 7.  [SPECIAL LOCAL ASSESSMENTS.] The payment of 
113.13  special local assessments levied after June 30, 2004, for 
113.14  improvements made to any real property described in subdivision 
113.15  2, together with the interest thereon must, on timely 
113.16  application under subdivision 4, be deferred as long as the 
113.17  property qualifies under subdivision 1.  If special assessments 
113.18  against the property have been deferred under this subdivision, 
113.19  the governmental unit shall file with the county recorder in the 
113.20  county in which the property is located a certificate containing 
113.21  the legal description of the affected property and of the amount 
113.22  deferred.  When the property no longer qualifies under 
113.23  subdivision 1, all deferred special assessments plus interest 
113.24  are payable in equal installments spread over the time remaining 
113.25  until the last maturity date of the bonds issued to finance the 
113.26  improvement for which the assessments were levied.  If the bonds 
113.27  have matured, the deferred special assessments plus interest are 
113.28  payable within 90 days.  The provisions of section 429.061, 
113.29  subdivision 2, apply to the collection of these installments.  
113.30  Penalty must not be levied on the special assessments if timely 
113.31  paid. 
113.32     Subd. 8.  [CONTINUATION OF TAX TREATMENT UPON SALE.] When 
113.33  real property qualifying under subdivision 1 is sold, no 
113.34  additional taxes or deferred special assessments plus interest 
113.35  may be extended against the property if: 
113.36     (1) the property continues to qualify pursuant to 
114.1   subdivision 1; and 
114.2      (2) the new owner files an application for continued 
114.3   deferment within 30 days after the sale. 
114.4      Subd. 9.  [APPLICABILITY OF SPECIAL ASSESSMENT PROVISIONS.] 
114.5   This section applies to special local assessments levied after 
114.6   June 30, 2004, and payable in the years thereafter, but shall 
114.7   not apply to any special assessments levied at any time by a 
114.8   county or district court under the provisions of chapter 116A. 
114.9      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
114.10  levied in 2004, payable in 2005, and thereafter.  For 
114.11  applications for taxes payable in 2005 only, the application 
114.12  deadline in subdivision 4 is extended to August 1, 2004. 
114.13     Sec. 29.  Minnesota Statutes 2002, section 273.112, 
114.14  subdivision 3, is amended to read: 
114.15     Subd. 3.  [REQUIREMENTS.] Real estate shall be entitled to 
114.16  valuation and tax deferment under this section only if it is: 
114.17     (a) actively and exclusively devoted to golf, skiing, lawn 
114.18  bowling, croquet, polo, or archery or firearms range 
114.19  recreational use or other recreational uses carried on at the 
114.20  establishment; 
114.21     (b) five acres in size or more, except in the case of a 
114.22  lawn bowling or croquet green or an archery or firearms range; 
114.23     (c)(1) operated by private individuals or, in the case of a 
114.24  lawn bowling or croquet green, by private individuals or 
114.25  corporations, and open to the public; or 
114.26     (2) operated by firms or corporations for the benefit of 
114.27  employees or guests; or 
114.28     (3) operated by private clubs having a membership of 50 or 
114.29  more or open to the public, provided that the club does not 
114.30  discriminate in membership requirements or selection on the 
114.31  basis of sex or marital status; and 
114.32     (d) made available for use in the case of real estate 
114.33  devoted to golf without discrimination on the basis of sex 
114.34  during the time when the facility is open to use by the public 
114.35  or by members, except that use for golf may be restricted on the 
114.36  basis of sex no more frequently than one, or part of one, 
115.1   weekend each calendar month for each sex and no more than two, 
115.2   or part of two, weekdays each week for each sex.  
115.3      If a golf club membership allows use of golf course 
115.4   facilities by more than one adult per membership, the use must 
115.5   be equally available to all adults entitled to use of the golf 
115.6   course under the membership, except that use may be restricted 
115.7   on the basis of sex as permitted in this section.  Memberships 
115.8   that permit play during restricted times may be allowed only if 
115.9   the restricted times apply to all adults using the membership.  
115.10  A golf club may not offer a membership or golfing privileges to 
115.11  a spouse of a member that provides greater or less access to the 
115.12  golf course than is provided to that person's spouse under the 
115.13  same or a separate membership in that club, except that the 
115.14  terms of a membership may provide that one spouse may have no 
115.15  right to use the golf course at any time while the other spouse 
115.16  may have either limited or unlimited access to the golf course.  
115.17     A golf club may have or create an individual membership 
115.18  category which entitles a member for a reduced rate to play 
115.19  during restricted hours as established by the club.  The club 
115.20  must have on record a written request by the member for such 
115.21  membership.  
115.22     A golf club that has food or beverage facilities or 
115.23  services must allow equal access to those facilities and 
115.24  services for both men and women members in all membership 
115.25  categories at all times.  Nothing in this paragraph shall be 
115.26  construed to require service or access to facilities to persons 
115.27  under the age of 21 years or require any act that would violate 
115.28  law or ordinance regarding sale, consumption, or regulation of 
115.29  alcoholic beverages. 
115.30     For purposes of this subdivision and subdivision 7a, 
115.31  discrimination means a pattern or course of conduct and not 
115.32  linked to an isolated incident. 
115.33     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
115.34  levied in 2004, payable in 2005, and thereafter. 
115.35     Sec. 30.  Minnesota Statutes 2003 Supplement, section 
115.36  273.124, subdivision 1, is amended to read: 
116.1      Subdivision 1.  [GENERAL RULE.] (a) Residential real estate 
116.2   that is occupied and used for the purposes of a homestead by its 
116.3   owner, who must be a Minnesota resident, is a residential 
116.4   homestead.  
116.5      Agricultural land, as defined in section 273.13, 
116.6   subdivision 23, that is occupied and used as a homestead by its 
116.7   owner, who must be a Minnesota resident, is an agricultural 
116.8   homestead. 
116.9      Dates for establishment of a homestead and homestead 
116.10  treatment provided to particular types of property are as 
116.11  provided in this section.  
116.12     Property held by a trustee under a trust is eligible for 
116.13  homestead classification if the requirements under this chapter 
116.14  are satisfied. 
116.15     The assessor shall require proof, as provided in 
116.16  subdivision 13, of the facts upon which classification as a 
116.17  homestead may be determined.  Notwithstanding any other law, the 
116.18  assessor may at any time require a homestead application to be 
116.19  filed in order to verify that any property classified as a 
116.20  homestead continues to be eligible for homestead status.  
116.21  Notwithstanding any other law to the contrary, the Department of 
116.22  Revenue may, upon request from an assessor, verify whether an 
116.23  individual who is requesting or receiving homestead 
116.24  classification has filed a Minnesota income tax return as a 
116.25  resident for the most recent taxable year for which the 
116.26  information is available. 
116.27     When there is a name change or a transfer of homestead 
116.28  property, the assessor may reclassify the property in the next 
116.29  assessment unless a homestead application is filed to verify 
116.30  that the property continues to qualify for homestead 
116.31  classification. 
116.32     (b) For purposes of this section, homestead property shall 
116.33  include property which is used for purposes of the homestead but 
116.34  is separated from the homestead by a road, street, lot, 
116.35  waterway, or other similar intervening property.  The term "used 
116.36  for purposes of the homestead" shall include but not be limited 
117.1   to uses for gardens, garages, or other outbuildings commonly 
117.2   associated with a homestead, but shall not include vacant land 
117.3   held primarily for future development.  In order to receive 
117.4   homestead treatment for the noncontiguous property, the owner 
117.5   must use the property for the purposes of the homestead, and 
117.6   must apply to the assessor, both by the deadlines given in 
117.7   subdivision 9.  After initial qualification for the homestead 
117.8   treatment, additional applications for subsequent years are not 
117.9   required. 
117.10     (c) Residential real estate that is occupied and used for 
117.11  purposes of a homestead by a relative of the owner is a 
117.12  homestead but only to the extent of the homestead treatment that 
117.13  would be provided if the related owner occupied the property.  
117.14  For purposes of this paragraph and paragraph (g), "relative" 
117.15  means a parent, stepparent, child, stepchild, grandparent, 
117.16  grandchild, brother, sister, uncle, aunt, nephew, or niece.  
117.17  This relationship may be by blood or marriage.  Property that 
117.18  has been classified as seasonal residential recreational 
117.19  property at any time during which it has been owned by the 
117.20  current owner or spouse of the current owner will not be 
117.21  reclassified as a homestead unless it is occupied as a homestead 
117.22  by the owner; this prohibition also applies to property that, in 
117.23  the absence of this paragraph, would have been classified as 
117.24  seasonal residential recreational property at the time when the 
117.25  residence was constructed.  Neither the related occupant nor the 
117.26  owner of the property may claim a property tax refund under 
117.27  chapter 290A for a homestead occupied by a relative.  In the 
117.28  case of a residence located on agricultural land, only the 
117.29  house, garage, and immediately surrounding one acre of land 
117.30  shall be classified as a homestead under this paragraph, except 
117.31  as provided in paragraph (d). 
117.32     (d) Agricultural property that is occupied and used for 
117.33  purposes of a homestead by a relative of the owner, is a 
117.34  homestead, only to the extent of the homestead treatment that 
117.35  would be provided if the related owner occupied the property, 
117.36  and only if all of the following criteria are met: 
118.1      (1) the relative who is occupying the agricultural property 
118.2   is a son, daughter, grandson, granddaughter, father, or mother 
118.3   of the owner of the agricultural property or a son, daughter, 
118.4   grandson, or granddaughter of the spouse of the owner of the 
118.5   agricultural property; 
118.6      (2) the owner of the agricultural property must be a 
118.7   Minnesota resident; 
118.8      (3) the owner of the agricultural property must not receive 
118.9   homestead treatment on any other agricultural property in 
118.10  Minnesota; and 
118.11     (4) the owner of the agricultural property is limited to 
118.12  only one agricultural homestead per family under this paragraph. 
118.13     Neither the related occupant nor the owner of the property 
118.14  may claim a property tax refund under chapter 290A for a 
118.15  homestead occupied by a relative qualifying under this 
118.16  paragraph.  For purposes of this paragraph, "agricultural 
118.17  property" means the house, garage, other farm buildings and 
118.18  structures, and agricultural land. 
118.19     Application must be made to the assessor by the owner of 
118.20  the agricultural property to receive homestead benefits under 
118.21  this paragraph.  The assessor may require the necessary proof 
118.22  that the requirements under this paragraph have been met. 
118.23     (e) In the case of property owned by a property owner who 
118.24  is married, the assessor must not deny homestead treatment in 
118.25  whole or in part if only one of the spouses occupies the 
118.26  property and the other spouse is absent due to:  (1) marriage 
118.27  dissolution proceedings, (2) legal separation, (3) employment or 
118.28  self-employment in another location, or (4) other personal 
118.29  circumstances causing the spouses to live separately, not 
118.30  including an intent to obtain two homestead classifications for 
118.31  property tax purposes.  To qualify under clause (3), the 
118.32  spouse's place of employment or self-employment must be at least 
118.33  50 miles distant from the other spouse's place of employment, 
118.34  and the homesteads must be at least 50 miles distant from each 
118.35  other.  Homestead treatment, in whole or in part, shall not be 
118.36  denied to the owner's spouse who previously occupied the 
119.1   residence with the owner if the absence of the owner is due to 
119.2   one of the exceptions provided in this paragraph. 
119.3      (f) The assessor must not deny homestead treatment in whole 
119.4   or in part if: 
119.5      (1) in the case of a property owner who is not married, the 
119.6   owner is absent due to residence in a nursing home, boarding 
119.7   care facility, or an elderly assisted living facility property 
119.8   as defined in section 273.13, subdivision 25a, and the property 
119.9   is not otherwise occupied; or 
119.10     (2) in the case of a property owner who is married, the 
119.11  owner or the owner's spouse or both are absent due to residence 
119.12  in a nursing home, boarding care facility, or an elderly 
119.13  assisted living facility property as defined in section 273.13, 
119.14  subdivision 25a, and the property is not occupied or is occupied 
119.15  only by the owner's spouse. 
119.16     (g) If an individual is purchasing property with the intent 
119.17  of claiming it as a homestead and is required by the terms of 
119.18  the financing agreement to have a relative shown on the deed as 
119.19  a co-owner, the assessor shall allow a full homestead 
119.20  classification.  This provision only applies to first-time 
119.21  purchasers, whether married or single, or to a person who had 
119.22  previously been married and is purchasing as a single individual 
119.23  for the first time.  The application for homestead benefits must 
119.24  be on a form prescribed by the commissioner and must contain the 
119.25  data necessary for the assessor to determine if full homestead 
119.26  benefits are warranted. 
119.27     (h) If residential or agricultural real estate is occupied 
119.28  and used for purposes of a homestead by a child of a deceased 
119.29  owner and the property is subject to jurisdiction of probate 
119.30  court, the child shall receive relative homestead classification 
119.31  under paragraph (c) or (d) to the same extent they would be 
119.32  entitled to it if the owner was still living, until the probate 
119.33  is completed.  For purposes of this paragraph, "child" includes 
119.34  a relationship by blood or by marriage. 
119.35     (i) If a single family home, duplex, or triplex classified 
119.36  as either residential homestead or agricultural homestead is 
120.1   also used to provide licensed child care, the portion of the 
120.2   property used for licensed child care must be classified as 
120.3   homestead property. 
120.4      <h>[EFFECTIVE DATE.]</h> This section is effective in assessment 
120.5   year 2004 and thereafter, for taxes payable in 2005, and 
120.6   thereafter. 
120.7      Sec. 31.  Minnesota Statutes 2003 Supplement, section 
120.8   273.13, subdivision 23, is amended to read: 
120.9      Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
120.10  land including any improvements that is homesteaded.  The market 
120.11  value of the house and garage and immediately surrounding one 
120.12  acre of land has the same class rates as class 1a property under 
120.13  subdivision 22.  The value of the remaining land including 
120.14  improvements up to and including $600,000 market value has a net 
120.15  class rate of 0.55 percent of market value.  The remaining 
120.16  property over $600,000 market value has a class rate of one 
120.17  percent of market value. 
120.18     (b) Class 2b property is (1) real estate, rural in 
120.19  character and used exclusively for growing trees for timber, 
120.20  lumber, and wood and wood products; (2) real estate that is not 
120.21  improved with a structure and is used exclusively for growing 
120.22  trees for timber, lumber, and wood and wood products, if the 
120.23  owner has participated or is participating in a cost-sharing 
120.24  program for afforestation, reforestation, or timber stand 
120.25  improvement on that particular property, administered or 
120.26  coordinated by the commissioner of natural resources; (3) real 
120.27  estate that is nonhomestead agricultural land; ~~or~~ (4) a landing 
120.28  area or public access area of a privately owned public use 
120.29  airport; or (5) land with a commercial aggregate deposit that is 
120.30  not actively being mined and is not otherwise classified as 
120.31  class 2a or 2b, clauses (1) to (3).  Class 2b property has a net 
120.32  class rate of one percent of market value. 
120.33     (c) Agricultural land as used in this section means 
120.34  contiguous acreage of ten acres or more, used during the 
120.35  preceding year for agricultural purposes.  "Agricultural 
120.36  purposes" as used in this section means the raising or 
121.1   cultivation of agricultural products.  "Agricultural purposes" 
121.2   also includes enrollment in the Reinvest in Minnesota program 
121.3   under sections 103F.501 to 103F.535 or the federal Conservation 
121.4   Reserve Program as contained in Public Law 99-198 if the 
121.5   property was classified as agricultural (i) under this 
121.6   subdivision for the assessment year 2002 or (ii) in the year 
121.7   prior to its enrollment.  Contiguous acreage on the same parcel, 
121.8   or contiguous acreage on an immediately adjacent parcel under 
121.9   the same ownership, may also qualify as agricultural land, but 
121.10  only if it is pasture, timber, waste, unusable wild land, or 
121.11  land included in state or federal farm programs.  Agricultural 
121.12  classification for property shall be determined excluding the 
121.13  house, garage, and immediately surrounding one acre of land, and 
121.14  shall not be based upon the market value of any residential 
121.15  structures on the parcel or contiguous parcels under the same 
121.16  ownership. 
121.17     (d) Real estate, excluding the house, garage, and 
121.18  immediately surrounding one acre of land, of less than ten acres 
121.19  which is exclusively and intensively used for raising or 
121.20  cultivating agricultural products, shall be considered as 
121.21  agricultural land.  
121.22     Land shall be classified as agricultural even if all or a 
121.23  portion of the agricultural use of that property is the leasing 
121.24  to, or use by another person for agricultural purposes. 
121.25     Classification under this subdivision is not determinative 
121.26  for qualifying under section 273.111. 
121.27     The property classification under this section supersedes, 
121.28  for property tax purposes only, any locally administered 
121.29  agricultural policies or land use restrictions that define 
121.30  minimum or maximum farm acreage. 
121.31     (e) The term "agricultural products" as used in this 
121.32  subdivision includes production for sale of:  
121.33     (1) livestock, dairy animals, dairy products, poultry and 
121.34  poultry products, fur-bearing animals, horticultural and nursery 
121.35  stock, fruit of all kinds, vegetables, forage, grains, bees, and 
121.36  apiary products by the owner; 
122.1      (2) fish bred for sale and consumption if the fish breeding 
122.2   occurs on land zoned for agricultural use; 
122.3      (3) the commercial boarding of horses if the boarding is 
122.4   done in conjunction with raising or cultivating agricultural 
122.5   products as defined in clause (1); 
122.6      (4) property which is owned and operated by nonprofit 
122.7   organizations used for equestrian activities, excluding racing; 
122.8      (5) game birds and waterfowl bred and raised for use on a 
122.9   shooting preserve licensed under section 97A.115; 
122.10     (6) insects primarily bred to be used as food for animals; 
122.11     (7) trees, grown for sale as a crop, and not sold for 
122.12  timber, lumber, wood, or wood products; and 
122.13     (8) maple syrup taken from trees grown by a person licensed 
122.14  by the Minnesota Department of Agriculture under chapter 28A as 
122.15  a food processor. 
122.16     (f) If a parcel used for agricultural purposes is also used 
122.17  for commercial or industrial purposes, including but not limited 
122.18  to:  
122.19     (1) wholesale and retail sales; 
122.20     (2) processing of raw agricultural products or other goods; 
122.21     (3) warehousing or storage of processed goods; and 
122.22     (4) office facilities for the support of the activities 
122.23  enumerated in clauses (1), (2), and (3), 
122.24  the assessor shall classify the part of the parcel used for 
122.25  agricultural purposes as class 1b, 2a, or 2b, whichever is 
122.26  appropriate, and the remainder in the class appropriate to its 
122.27  use.  The grading, sorting, and packaging of raw agricultural 
122.28  products for first sale is considered an agricultural purpose.  
122.29  A greenhouse or other building where horticultural or nursery 
122.30  products are grown that is also used for the conduct of retail 
122.31  sales must be classified as agricultural if it is primarily used 
122.32  for the growing of horticultural or nursery products from seed, 
122.33  cuttings, or roots and occasionally as a showroom for the retail 
122.34  sale of those products.  Use of a greenhouse or building only 
122.35  for the display of already grown horticultural or nursery 
122.36  products does not qualify as an agricultural purpose.  
123.1      The assessor shall determine and list separately on the 
123.2   records the market value of the homestead dwelling and the one 
123.3   acre of land on which that dwelling is located.  If any farm 
123.4   buildings or structures are located on this homesteaded acre of 
123.5   land, their market value shall not be included in this separate 
123.6   determination.  
123.7      (g) To qualify for classification under paragraph (b), 
123.8   clause (4), a privately owned public use airport must be 
123.9   licensed as a public airport under section 360.018.  For 
123.10  purposes of paragraph (b), clause (4), "landing area" means that 
123.11  part of a privately owned public use airport properly cleared, 
123.12  regularly maintained, and made available to the public for use 
123.13  by aircraft and includes runways, taxiways, aprons, and sites 
123.14  upon which are situated landing or navigational aids.  A landing 
123.15  area also includes land underlying both the primary surface and 
123.16  the approach surfaces that comply with all of the following:  
123.17     (i) the land is properly cleared and regularly maintained 
123.18  for the primary purposes of the landing, taking off, and taxiing 
123.19  of aircraft; but that portion of the land that contains 
123.20  facilities for servicing, repair, or maintenance of aircraft is 
123.21  not included as a landing area; 
123.22     (ii) the land is part of the airport property; and 
123.23     (iii) the land is not used for commercial or residential 
123.24  purposes. 
123.25  The land contained in a landing area under paragraph (b), clause 
123.26  (4), must be described and certified by the commissioner of 
123.27  transportation.  The certification is effective until it is 
123.28  modified, or until the airport or landing area no longer meets 
123.29  the requirements of paragraph (b), clause (4).  For purposes of 
123.30  paragraph (b), clause (4), "public access area" means property 
123.31  used as an aircraft parking ramp, apron, or storage hangar, or 
123.32  an arrival and departure building in connection with the airport.
123.33     (h) To qualify for classification under paragraph (b), 
123.34  clause (5), the property must be at least ten contiguous acres 
123.35  in size and the owner of the property must record with the 
123.36  county recorder of the county in which the property is located 
124.1   an affidavit containing: 
124.2      (1) a legal description of the property; 
124.3      (2) a disclosure that the property contains a commercial 
124.4   aggregate deposit that is not actively being mined; 
124.5      (3) documentation that the conditional use under the county 
124.6   or local zoning ordinance of this property is for mining; and 
124.7      (4) documentation that a permit has been issued by the 
124.8   local unit of government or the mining activity is allowed under 
124.9   local ordinance.  The disclosure must include a statement from a 
124.10  registered professional geologist, engineer, or soil scientist 
124.11  delineating the deposit and certifying that it is a commercial 
124.12  aggregate deposit.  
124.13     For purposes of this section and section 273.1115, 
124.14  "commercial aggregate deposit" means a deposit that will yield 
124.15  crushed stone or sand and gravel that is suitable for use as a 
124.16  construction aggregate; and "actively mined" means the removal 
124.17  of top soil and overburden in preparation for excavation or 
124.18  excavation of a commercial deposit. 
124.19     (i) When any portion of the property under this subdivision 
124.20  or section 273.13, subdivision 22, begins to be actively mined, 
124.21  the owner must file a supplemental affidavit within 60 days from 
124.22  the day any aggregate is removed stating the number of acres of 
124.23  the property that is actively being mined.  The acres actively 
124.24  being mined must be (1) valued and classified under section 
124.25  273.13, subdivision 24, in the next subsequent assessment year, 
124.26  and (2) removed from the aggregate resource preservation 
124.27  property tax program under section 273.1115, if the land was 
124.28  enrolled in that program.  Copies of the original affidavit and 
124.29  all supplemental affidavits must be filed with the county 
124.30  assessor, the local zoning administrator, and the Department of 
124.31  Natural Resources, Division of Land and Minerals.  A 
124.32  supplemental affidavit must be filed each time a subsequent 
124.33  portion of the property is actively mined, provided that the 
124.34  minimum acreage change is five acres, even if the actual mining 
124.35  activity constitutes less than five acres.  
124.36     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
125.1   levied in 2004, payable in 2005, and thereafter. 
125.2      Sec. 32.  Minnesota Statutes 2003 Supplement, section 
125.3   273.13, subdivision 25, is amended to read: 
125.4      Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
125.5   estate containing four or more units and used or held for use by 
125.6   the owner or by the tenants or lessees of the owner as a 
125.7   residence for rental periods of 30 days or more.  Class 4a also 
125.8   includes hospitals licensed under sections 144.50 to 144.56, 
125.9   other than hospitals exempt under section 272.02, and contiguous 
125.10  property used for hospital purposes, without regard to whether 
125.11  the property has been platted or subdivided.  The market value 
125.12  of class 4a property has a class rate of 1.8 percent for taxes 
125.13  payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 
125.14  percent for taxes payable in 2004 and thereafter, except that 
125.15  class 4a property consisting of a structure for which 
125.16  construction commenced after June 30, 2001, has a class rate of 
125.17  1.25 percent of market value for taxes payable in 2003 and 
125.18  subsequent years. 
125.19     (b) Class 4b includes: 
125.20     (1) residential real estate containing less than four units 
125.21  that does not qualify as class 4bb, other than seasonal 
125.22  residential recreational property; 
125.23     (2) manufactured homes not classified under any other 
125.24  provision; 
125.25     (3) a dwelling, garage, and surrounding one acre of 
125.26  property on a nonhomestead farm classified under subdivision 23, 
125.27  paragraph (b) containing two or three units; and 
125.28     (4) unimproved property that is classified residential as 
125.29  determined under subdivision 33.  
125.30     The market value of class 4b property has a class rate of 
125.31  1.5 percent for taxes payable in 2002, and 1.25 percent for 
125.32  taxes payable in 2003 and thereafter. 
125.33     (c) Class 4bb includes: 
125.34     (1) nonhomestead residential real estate containing one 
125.35  unit, other than seasonal residential recreational property; and 
125.36     (2) a single family dwelling, garage, and surrounding one 
126.1   acre of property on a nonhomestead farm classified under 
126.2   subdivision 23, paragraph (b). 
126.3      Class 4bb property has the same class rates as class 1a 
126.4   property under subdivision 22. 
126.5      Property that has been classified as seasonal residential 
126.6   recreational property at any time during which it has been owned 
126.7   by the current owner or spouse of the current owner does not 
126.8   qualify for class 4bb. 
126.9      (d) Class 4c property includes: 
126.10     (1) except as provided in subdivision 22, paragraph (c), 
126.11  real property devoted to temporary and seasonal residential 
126.12  occupancy for recreation purposes, including real property 
126.13  devoted to temporary and seasonal residential occupancy for 
126.14  recreation purposes and not devoted to commercial purposes for 
126.15  more than 250 days in the year preceding the year of 
126.16  assessment.  For purposes of this clause, property is devoted to 
126.17  a commercial purpose on a specific day if any portion of the 
126.18  property is used for residential occupancy, and a fee is charged 
126.19  for residential occupancy.  In order for a property to be 
126.20  classified as class 4c, seasonal residential recreational for 
126.21  commercial purposes, at least 40 percent of the annual gross 
126.22  lodging receipts related to the property must be from business 
126.23  conducted during 90 consecutive days and either (i) at least 60 
126.24  percent of all paid bookings by lodging guests during the year 
126.25  must be for periods of at least two consecutive nights; or (ii) 
126.26  at least 20 percent of the annual gross receipts must be from 
126.27  charges for rental of fish houses, boats and motors, 
126.28  snowmobiles, downhill or cross-country ski equipment, or charges 
126.29  for marina services, launch services, and guide services, or the 
126.30  sale of bait and fishing tackle.  For purposes of this 
126.31  determination, a paid booking of five or more nights shall be 
126.32  counted as two bookings.  Class 4c also includes commercial use 
126.33  real property used exclusively for recreational purposes in 
126.34  conjunction with class 4c property devoted to temporary and 
126.35  seasonal residential occupancy for recreational purposes, up to 
126.36  a total of two acres, provided the property is not devoted to 
127.1   commercial recreational use for more than 250 days in the year 
127.2   preceding the year of assessment and is located within two miles 
127.3   of the class 4c property with which it is used.  Class 4c 
127.4   property classified in this clause also includes the remainder 
127.5   of class 1c resorts provided that the entire property including 
127.6   that portion of the property classified as class 1c also meets 
127.7   the requirements for class 4c under this clause; otherwise the 
127.8   entire property is classified as class 3.  Owners of real 
127.9   property devoted to temporary and seasonal residential occupancy 
127.10  for recreation purposes and all or a portion of which was 
127.11  devoted to commercial purposes for not more than 250 days in the 
127.12  year preceding the year of assessment desiring classification as 
127.13  class 1c or 4c, must submit a declaration to the assessor 
127.14  designating the cabins or units occupied for 250 days or less in 
127.15  the year preceding the year of assessment by January 15 of the 
127.16  assessment year.  Those cabins or units and a proportionate 
127.17  share of the land on which they are located will be designated 
127.18  class 1c or 4c as otherwise provided.  The remainder of the 
127.19  cabins or units and a proportionate share of the land on which 
127.20  they are located will be designated as class 3a.  The owner of 
127.21  property desiring designation as class 1c or 4c property must 
127.22  provide guest registers or other records demonstrating that the 
127.23  units for which class 1c or 4c designation is sought were not 
127.24  occupied for more than 250 days in the year preceding the 
127.25  assessment if so requested.  The portion of a property operated 
127.26  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
127.27  nonresidential facility operated on a commercial basis not 
127.28  directly related to temporary and seasonal residential occupancy 
127.29  for recreation purposes shall not qualify for class 1c or 4c; 
127.30     (2) qualified property used as a golf course if: 
127.31     (i) it is open to the public on a daily fee basis.  It may 
127.32  charge membership fees or dues, but a membership fee may not be 
127.33  required in order to use the property for golfing, and its green 
127.34  fees for golfing must be comparable to green fees typically 
127.35  charged by municipal courses; and 
127.36     (ii) it meets the requirements of section 273.112, 
128.1   subdivision 3, paragraph (d). 
128.2      A structure used as a clubhouse, restaurant, or place of 
128.3   refreshment in conjunction with the golf course is classified as 
128.4   class 3a property; 
128.5      (3) real property up to a maximum of one acre of land owned 
128.6   by a nonprofit community service oriented organization; provided 
128.7   that the property is not used for a revenue-producing activity 
128.8   for more than six days in the calendar year preceding the year 
128.9   of assessment and the property is not used for residential 
128.10  purposes on either a temporary or permanent basis.  For purposes 
128.11  of this clause, a "nonprofit community service oriented 
128.12  organization" means any corporation, society, association, 
128.13  foundation, or institution organized and operated exclusively 
128.14  for charitable, religious, fraternal, civic, or educational 
128.15  purposes, and which is exempt from federal income taxation 
128.16  pursuant to section 501(c)(3), (10), or (19) of the Internal 
128.17  Revenue Code of 1986, as amended through December 31, 1990.  For 
128.18  purposes of this clause, "revenue-producing activities" shall 
128.19  include but not be limited to property or that portion of the 
128.20  property that is used as an on-sale intoxicating liquor or 3.2 
128.21  percent malt liquor establishment licensed under chapter 340A, a 
128.22  restaurant open to the public, bowling alley, a retail store, 
128.23  gambling conducted by organizations licensed under chapter 349, 
128.24  an insurance business, or office or other space leased or rented 
128.25  to a lessee who conducts a for-profit enterprise on the 
128.26  premises.  Any portion of the property which is used for 
128.27  revenue-producing activities for more than six days in the 
128.28  calendar year preceding the year of assessment shall be assessed 
128.29  as class 3a.  The use of the property for social events open 
128.30  exclusively to members and their guests for periods of less than 
128.31  24 hours, when an admission is not charged nor any revenues are 
128.32  received by the organization shall not be considered a 
128.33  revenue-producing activity; 
128.34     (4) postsecondary student housing of not more than one acre 
128.35  of land that is owned by a nonprofit corporation organized under 
128.36  chapter 317A and is used exclusively by a student cooperative, 
129.1   sorority, or fraternity for on-campus housing or housing located 
129.2   within two miles of the border of a college campus; 
129.3      (5) manufactured home parks as defined in section 327.14, 
129.4   subdivision 3; 
129.5      (6) real property that is actively and exclusively devoted 
129.6   to indoor fitness, health, social, recreational, and related 
129.7   uses, is owned and operated by a not-for-profit corporation, and 
129.8   is located within the metropolitan area as defined in section 
129.9   473.121, subdivision 2; 
129.10     (7) a leased or privately owned noncommercial aircraft 
129.11  storage hangar not exempt under section 272.01, subdivision 2, 
129.12  and the land on which it is located, provided that: 
129.13     (i) the land is on an airport owned or operated by a city, 
129.14  town, county, Metropolitan Airports Commission, or group 
129.15  thereof; and 
129.16     (ii) the land lease, or any ordinance or signed agreement 
129.17  restricting the use of the leased premise, prohibits commercial 
129.18  activity performed at the hangar. 
129.19     If a hangar classified under this clause is sold after June 
129.20  30, 2000, a bill of sale must be filed by the new owner with the 
129.21  assessor of the county where the property is located within 60 
129.22  days of the sale; and 
129.23     (8) residential real estate, a portion of which is used by 
129.24  the owner for homestead purposes, and that is also a place of 
129.25  lodging, if all of the following criteria are met: 
129.26     (i) rooms are provided for rent to transient guests that 
129.27  generally stay for periods of 14 or fewer days; 
129.28     (ii) meals are provided to persons who rent rooms, the cost 
129.29  of which is incorporated in the basic room rate; 
129.30     (iii) meals are not provided to the general public except 
129.31  for special events on fewer than seven days in the calendar year 
129.32  preceding the year of the assessment; and 
129.33     (iv) the owner is the operator of the property. 
129.34  The market value subject to the 4c classification under this 
129.35  clause is limited to five rental units.  Any rental units on the 
129.36  property in excess of five, must be valued and assessed as class 
130.1   3a.  The portion of the property used for purposes of a 
130.2   homestead by the owner must be classified as class 1a property 
130.3   under subdivision 22. 
130.4      Class 4c property has a class rate of 1.5 percent of market 
130.5   value, except that (i) each parcel of seasonal residential 
130.6   recreational property not used for commercial purposes has the 
130.7   same class rates as class 4bb property, (ii) manufactured home 
130.8   parks assessed under clause (5) have the same class rate as 
130.9   class 4b property, (iii) commercial-use seasonal residential 
130.10  recreational property has a class rate of one percent for the 
130.11  first $500,000 of market value, which includes any market value 
130.12  receiving the one percent rate under subdivision 22, and 1.25 
130.13  percent for the remaining market value, (iv) the market value of 
130.14  property described in clause (4) has a class rate of one 
130.15  percent, (v) the market value of property described in clauses 
130.16  (2) and (6) has a class rate of 1.25 percent, and (vi) that 
130.17  portion of the market value of property in clause (8) qualifying 
130.18  for class 4c property has a class rate of 1.25 percent.  
130.19     (e) Class 4d property is qualifying low-income rental 
130.20  housing certified to the assessor by the Housing Finance Agency 
130.21  under sections 273.126 and 462A.071.  Class 4d includes land in 
130.22  proportion to the total market value of the building that is 
130.23  qualifying low-income rental housing. 
130.24     Class 4d property has a class rate of 0.55 percent for 
130.25  taxes payable in 2006 and thereafter. 
130.26     Sec. 33.  [273.1321] [VALUATION OF LOW-INCOME RENTAL 
130.27  PROPERTY; CAPITALIZED VALUE OF NET OPERATING INCOME.] 
130.28     Subdivision 1.  [REQUIREMENT.] Low-income rental property 
130.29  classified as class 4d under section 273.13, subdivision 25, is 
130.30  entitled to valuation under this section if at least 75 percent 
130.31  of the units in the rental housing property meet any of the 
130.32  following qualifications: 
130.33     (1) the units are subject to a housing assistance payments 
130.34  contract under section 8 of the United States Housing Act of 
130.35  1937, as amended; 
130.36     (2) the units are rent-restricted and income-restricted 
131.1   units of a qualified low-income housing project receiving tax 
131.2   credits under section 42(g) of the Internal Revenue Code of 
131.3   1986, as amended; 
131.4      (3) the units are financed by the Rural Housing Service of 
131.5   the United States Department of Agriculture and receive payments 
131.6   under the rental assistance program pursuant to section 521(a) 
131.7   of the Housing Act of 1949, as amended; or 
131.8      (4) the units are subject to rent and income restrictions 
131.9   under the terms of financial assistance provided to the rental 
131.10  housing property by a federal, state, or local unit of 
131.11  government as evidenced by a document recorded against the 
131.12  property. 
131.13     The restrictions must require assisted units to be occupied 
131.14  by residents whose household income at the time of initial 
131.15  occupancy does not exceed 60 percent of the greater of area or 
131.16  state median income, adjusted for family size, as determined by 
131.17  the United States Department of Housing and Urban Development.  
131.18  The restriction must also require the rents for assisted units 
131.19  to not exceed 30 percent of 60 percent of the greater of area or 
131.20  state median income, adjusted for family size, as determined by 
131.21  the United States Department of Housing and Urban Development. 
131.22     Subd. 2.  [DETERMINATION OF VALUE.] (a) The value of any 
131.23  rental housing property meeting the qualifications of 
131.24  subdivision 1 shall be determined, upon timely application by 
131.25  the owner in the manner provided in subdivision 3, on the basis 
131.26  of the restricted use of the property, notwithstanding sections 
131.27  272.03, subdivision 8, and 273.11, by capitalizing the net 
131.28  operating income prior to the payment of debt service. 
131.29     (b) Net operating income prior to payment of debt service 
131.30  must be the amounts shown in a financial statement prepared by 
131.31  an independent certified public accountant or firm.  The 
131.32  financial statement must show the revenues, expenses, cash 
131.33  flows, assets, liabilities, and net assets for the property for 
131.34  which an application is made under this section. 
131.35     (c) The capitalization rate applied to net operating income 
131.36  shall be established jointly by the commissioner and the Housing 
132.1   Finance Agency based on market data and industry standards.  The 
132.2   commissioner and the Housing Finance Agency shall jointly 
132.3   establish separate rates based on types of rental housing 
132.4   properties and their locations. 
132.5      Subd. 3.  [APPLICATION.] (a) Application for assessment 
132.6   under this section must be filed by February 28 of the levy 
132.7   year, or at a later date the Housing Finance Agency deems 
132.8   practicable.  The application must be filed with the Housing 
132.9   Finance Agency, on a form prescribed by the agency, and must 
132.10  contain the information required by the Housing Finance Agency. 
132.11     (b) Each application must include: 
132.12     (1) the property tax identification number; 
132.13     (2) evidence that the property meets the requirements of 
132.14  subdivision 1; and 
132.15     (3) a true and correct copy of the financial statement 
132.16  related to the property. 
132.17     (c) The applicant must pay an application fee to be set by 
132.18  the Housing Finance Agency.  The application fee charged by the 
132.19  agency must approximately equal the costs of processing and 
132.20  reviewing the applications.  The fee must be deposited in the 
132.21  housing development fund. 
132.22     Subd. 4.  [CERTIFICATION.] By June 1 of each levy year, the 
132.23  Housing Finance Agency must certify to local assessors the 
132.24  valuation, as determined under this section, of rental 
132.25  properties that apply and are qualified for valuation under this 
132.26  section.  In making the certification, the Housing Finance 
132.27  Agency may rely on the application and supporting information 
132.28  supplied by the property owner. 
132.29     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
132.30  levied in 2005, payable in 2006, and thereafter. 
132.31     Sec. 34.  [273.1322] [VACANT COMMERCIAL INDUSTRIAL 
132.32  PROPERTIES.] 
132.33     Subdivision 1.  [AUTHORITY.] A city may establish, by 
132.34  ordinance, a program to encourage redevelopment, provide for 
132.35  better utilization of commercial industrial property, and 
132.36  eliminate blighting influences by revoking the eligibility of 
133.1   individual commercial industrial properties to receive the 
133.2   credit authorized under section 273.1398, subdivision 4.  The 
133.3   program may revoke eligibility only if the property has been 
133.4   vacant, as defined in subdivision 3, clauses (1) to (3), for 
133.5   three or more consecutive years prior to the current assessment 
133.6   year, or under subdivision 3, clause (4), for five or more 
133.7   consecutive years prior to the current assessment year. 
133.8      Subd. 2.  [MINIMUM REQUIREMENTS.] The program must provide: 
133.9      (1) standards for determining whether a property is vacant; 
133.10     (2) written assessment notice by the city or county to the 
133.11  property owner informing the owner that the property's 
133.12  eligibility will be revoked; 
133.13     (3) opportunity for the property owner to appeal the 
133.14  revocation at the board of equalization; 
133.15     (4) timely notice to the county assessor of the property's 
133.16  eligibility revocation, if the city has a city assessor and the 
133.17  city assessor has revoked the property's eligibility; and 
133.18     (5) any other provisions the city determines are necessary 
133.19  or appropriate to the operation of the program to achieve its 
133.20  purposes. 
133.21     Subd. 3.  [DEFINITION OF VACANT.] A program established 
133.22  under this section may provide that a property is vacant if the 
133.23  property is: 
133.24     (1) condemned, dangerous, or having multiple building code 
133.25  violations; 
133.26     (2) condemned and illegally occupied; 
133.27     (3) either occupied or unoccupied, during which time the 
133.28  enforcement officer for the municipality has issued multiple 
133.29  orders to correct nuisance conditions; or 
133.30     (4) unoccupied and not utilized for a commercial or 
133.31  industrial purpose.  
133.32     Subd. 4.  [NOTICE TO PROPERTY OWNER.] The municipality 
133.33  shall give notice to the property owner requiring that any 
133.34  conditions in subdivision 3, clauses (1) to (3), be remedied, 
133.35  and that the property be occupied and used for a commercial or 
133.36  industrial purpose for at least 180 days during the next 
134.1   12-month period, or else the property may cease to be eligible 
134.2   for the credit under section 273.1398, subdivision 4. 
134.3      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
134.4   payable in 2006 and thereafter. 
134.5      Sec. 35.  Minnesota Statutes 2002, section 273.1384, 
134.6   subdivision 3, is amended to read: 
134.7      Subd. 3.  [CREDIT REIMBURSEMENTS.] (a) The county auditor 
134.8   shall determine the tax reductions allowed under this section 
134.9   within the county for each taxes payable year and shall certify 
134.10  that amount to the commissioner of revenue as a part of the 
134.11  abstracts of tax lists submitted by the county auditors under 
134.12  section 275.29.  
134.13     (b) In the case of class 1a, class lc, or class 2a 
134.14  homestead property which is located within a city, the county 
134.15  auditor shall determine whether the net tax on each parcel is 
134.16  less than the applicable percentage of its taxable market value 
134.17  provided in this paragraph for the year.  For taxes payable in 
134.18  2006 and 2007, if the net tax on the property is less than 0.7 
134.19  percent of its taxable market value, the county auditor shall 
134.20  reduce the reimbursement to the county and the city for the 
134.21  credit allowed under subdivision 1 by the amount of the 
134.22  difference.  For taxes payable in 2008 and 2009, if the net tax 
134.23  on the property is less than 0.8 percent of its taxable market 
134.24  value, the county auditor shall reduce the reimbursement to the 
134.25  county and the city for the credit allowed under subdivision 1 
134.26  by the amount of the difference.  For taxes payable in 2010 and 
134.27  2011, if the net tax on the property is less than 0.9 percent of 
134.28  its taxable market value, the county auditor shall reduce the 
134.29  reimbursement to the county and the city for the credit allowed 
134.30  under subdivision 1 by the amount of the difference.  For taxes 
134.31  payable in 2012 and thereafter, if the net tax on the property 
134.32  is less than one percent of its taxable market value, the county 
134.33  auditor shall reduce the reimbursement to the county and the 
134.34  city for the credit allowed under subdivision 1 by the amount of 
134.35  the difference.  The market value credit reimbursement cannot be 
134.36  less than zero.  
135.1      (c) Any prior year adjustments shall also be certified on 
135.2   the abstracts of tax lists.  The commissioner shall review the 
135.3   certifications for accuracy, and may make such changes as are 
135.4   deemed necessary, or return the certification to the county 
135.5   auditor for correction.  If there is no reduction of the 
135.6   reimbursements under paragraph (b), the credits under this 
135.7   section must be used to proportionately reduce the net tax 
135.8   capacity-based property tax payable to each local taxing 
135.9   jurisdiction as provided in section 273.1393.  If there is a 
135.10  reduction under paragraph (b), the reimbursements paid to the 
135.11  city and county must be reduced in proportion to the amount of 
135.12  their levies. 
135.13     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
135.14  levied in 2005, payable in 2006, and thereafter. 
135.15     Sec. 36.  [273.323] [EFFECTIVE DATE FOR RULES FOR VALUATION 
135.16  OF ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.] 
135.17     Rules adopted by the commissioner that prescribe the method 
135.18  of valuing property of electric and transmission pipeline 
135.19  utilities may not take effect before the end of the regular 
135.20  legislative session in the calendar year following adoption of 
135.21  the rules. 
135.22     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
135.23  following final enactment. 
135.24     Sec. 37.  Minnesota Statutes 2003 Supplement, section 
135.25  275.025, subdivision 1, is amended to read: 
135.26     Subdivision 1.  [LEVY AMOUNT.] (a) The state general levy 
135.27  is levied against commercial-industrial property and seasonal 
135.28  residential recreational property, as defined in this section.  
135.29  The state general levy base amount is $592,000,000 for taxes 
135.30  payable in 2002.  For taxes payable in subsequent years on 
135.31  seasonal residential recreational property, the levy base amount 
135.32  is increased each year by multiplying the levy base amount 
135.33  for that class of property for the prior year by the sum of one 
135.34  plus the rate of increase, if any, in the implicit price 
135.35  deflator for government consumption expenditures and gross 
135.36  investment for state and local governments prepared by the 
136.1   Bureau of Economic Analysts of the United States Department of 
136.2   Commerce for the 12-month period ending March 31 of the year 
136.3   prior to the year the taxes are payable.  For taxes payable in 
136.4   2005 and subsequent years on commercial-industrial property, the 
136.5   tax is imposed under this subdivision at the rate of the tax 
136.6   imposed under this subdivision for taxes payable in 2002.  The 
136.7   tax under this section is not treated as a local tax rate under 
136.8   section 469.177 and is not the levy of a governmental unit under 
136.9   chapters 276A and 473F.  
136.10     (b) Beginning with taxes payable in 2007, and in each year 
136.11  thereafter, the commissioner of finance shall deposit in the 
136.12  education reserve account established in section 52, the 
136.13  increased amount of the state general levy for that year over 
136.14  the state general levy base amount for taxes payable in 2002.  
136.15     (c) The commissioner shall increase or decrease the 
136.16  preliminary or final rate for a year as necessary to account for 
136.17  errors and tax base changes that affected a preliminary or final 
136.18  rate for either of the two preceding years.  Adjustments are 
136.19  allowed to the extent that the necessary information is 
136.20  available to the commissioner at the time the rates for a year 
136.21  must be certified, and for the following reasons: 
136.22     (1) an erroneous report of taxable value by a local 
136.23  official; 
136.24     (2) an erroneous calculation by the commissioner; and 
136.25     (3) an increase or decrease in taxable value for 
136.26  commercial-industrial or seasonal residential recreational 
136.27  property reported on the abstracts of tax lists submitted under 
136.28  section 275.29 that was not reported on the abstracts of 
136.29  assessment submitted under section 270.11, subdivision 2, for 
136.30  the same year. 
136.31  The commissioner may, but need not, make adjustments if the 
136.32  total difference in the tax levied for the year would be less 
136.33  than $100,000. 
136.34     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
136.35  payable in 2004 and subsequent years. 
136.36     Sec. 38.  Minnesota Statutes 2003 Supplement, section 
137.1   275.065, subdivision 3, is amended to read: 
137.2      Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
137.3   county auditor shall prepare and the county treasurer shall 
137.4   deliver after November 10 and on or before November 24 each 
137.5   year, by first class mail to each taxpayer at the address listed 
137.6   on the county's current year's assessment roll, a notice of 
137.7   proposed property taxes.  
137.8      (b) The commissioner of revenue shall prescribe the form of 
137.9   the notice. 
137.10     (c) The notice must inform taxpayers that it contains the 
137.11  amount of property taxes each taxing authority proposes to 
137.12  collect for taxes payable the following year.  In the case of a 
137.13  town, or in the case of the state general tax, the final tax 
137.14  amount will be its proposed tax.  In the case of taxing 
137.15  authorities required to hold a public meeting under subdivision 
137.16  6, the notice must clearly state that each taxing authority, 
137.17  including regional library districts established under section 
137.18  134.201, and including the metropolitan taxing districts as 
137.19  defined in paragraph (i), but excluding all other special taxing 
137.20  districts and towns, will hold a public meeting to receive 
137.21  public testimony on the proposed budget and proposed or final 
137.22  property tax levy, or, in case of a school district, on the 
137.23  current budget and proposed property tax levy.  It must clearly 
137.24  state the time and place of each taxing authority's meeting, a 
137.25  telephone number for the taxing authority that taxpayers may 
137.26  call if they have questions related to the notice, and an 
137.27  address where comments will be received by mail.  
137.28     (d) The notice must state for each parcel: 
137.29     (1) the market value of the property as determined under 
137.30  section 273.11, and used for computing property taxes payable in 
137.31  the following year and for taxes payable in the current year as 
137.32  each appears in the records of the county assessor on November 1 
137.33  of the current year; and, in the case of residential property, 
137.34  whether the property is classified as homestead or 
137.35  nonhomestead.  The notice must clearly inform taxpayers of the 
137.36  years to which the market values apply and that the values are 
138.1   final values; 
138.2      (2) the items listed below, shown separately by county, 
138.3   city or town, and state general tax, net of the residential and 
138.4   agricultural homestead credit under section 273.1384, voter 
138.5   approved school levy, other local school levy, and the sum of 
138.6   the special taxing districts, and as a total of all taxing 
138.7   authorities:  
138.8      (i) the actual tax for taxes payable in the current year; 
138.9   and 
138.10     (ii) the proposed tax amount. 
138.11     If the county levy under clause (2) includes an amount for 
138.12  a lake improvement district as defined under sections 103B.501 
138.13  to 103B.581, the amount attributable for that purpose must be 
138.14  separately stated from the remaining county levy amount.  
138.15     In the case of a town or the state general tax, the final 
138.16  tax shall also be its proposed tax unless the town changes its 
138.17  levy at a special town meeting under section 365.52.  If a 
138.18  school district has certified under section 126C.17, subdivision 
138.19  9, that a referendum will be held in the school district at the 
138.20  November general election, the county auditor must note next to 
138.21  the school district's proposed amount that a referendum is 
138.22  pending and that, if approved by the voters, the tax amount may 
138.23  be higher than shown on the notice.  In the case of the city of 
138.24  Minneapolis, the levy for the Minneapolis Library Board and the 
138.25  levy for Minneapolis Park and Recreation shall be listed 
138.26  separately from the remaining amount of the city's levy.  In the 
138.27  case of the city of St. Paul, the levy for the St. Paul Library 
138.28  Agency must be listed separately from the remaining amount of 
138.29  the city's levy.  In the case of Ramsey County, any amount 
138.30  levied under section 134.07 may be listed separately from the 
138.31  remaining amount of the county's levy.  In the case of a parcel 
138.32  where tax increment or the fiscal disparities areawide tax under 
138.33  chapter 276A or 473F applies, the proposed tax levy on the 
138.34  captured value or the proposed tax levy on the tax capacity 
138.35  subject to the areawide tax must each be stated separately and 
138.36  not included in the sum of the special taxing districts; and 
139.1      (3) the increase or decrease between the total taxes 
139.2   payable in the current year and the total proposed taxes, 
139.3   expressed as a percentage. 
139.4      For purposes of this section, the amount of the tax on 
139.5   homesteads qualifying under the senior citizens' property tax 
139.6   deferral program under chapter 290B is the total amount of 
139.7   property tax before subtraction of the deferred property tax 
139.8   amount. 
139.9      (e) The notice must clearly state that the proposed or 
139.10  final taxes do not include the following: 
139.11     (1) special assessments; 
139.12     (2) levies approved by the voters after the date the 
139.13  proposed taxes are certified, including bond referenda and 
139.14  school district levy referenda; 
139.15     (3) a levy limit increase approved by the voters by the 
139.16  first Tuesday after the first Monday in November of the levy 
139.17  year as provided under section 275.73; 
139.18     (4) amounts necessary to pay cleanup or other costs due to 
139.19  a natural disaster occurring after the date the proposed taxes 
139.20  are certified; 
139.21     (5) amounts necessary to pay tort judgments against the 
139.22  taxing authority that become final after the date the proposed 
139.23  taxes are certified; and 
139.24     (6) the contamination tax imposed on properties which 
139.25  received market value reductions for contamination. 
139.26     (f) Except as provided in subdivision 7, failure of the 
139.27  county auditor to prepare or the county treasurer to deliver the 
139.28  notice as required in this section does not invalidate the 
139.29  proposed or final tax levy or the taxes payable pursuant to the 
139.30  tax levy. 
139.31     (g) If the notice the taxpayer receives under this section 
139.32  lists the property as nonhomestead, and satisfactory 
139.33  documentation is provided to the county assessor by the 
139.34  applicable deadline, and the property qualifies for the 
139.35  homestead classification in that assessment year, the assessor 
139.36  shall reclassify the property to homestead for taxes payable in 
140.1   the following year. 
140.2      (h) In the case of class 4 residential property used as a 
140.3   residence for lease or rental periods of 30 days or more, the 
140.4   taxpayer must either: 
140.5      (1) mail or deliver a copy of the notice of proposed 
140.6   property taxes to each tenant, renter, or lessee; or 
140.7      (2) post a copy of the notice in a conspicuous place on the 
140.8   premises of the property.  
140.9      The notice must be mailed or posted by the taxpayer by 
140.10  November 27 or within three days of receipt of the notice, 
140.11  whichever is later.  A taxpayer may notify the county treasurer 
140.12  of the address of the taxpayer, agent, caretaker, or manager of 
140.13  the premises to which the notice must be mailed in order to 
140.14  fulfill the requirements of this paragraph. 
140.15     (i) For purposes of this subdivision, subdivisions 5a and 
140.16  6, "metropolitan special taxing districts" means the following 
140.17  taxing districts in the seven-county metropolitan area that levy 
140.18  a property tax for any of the specified purposes listed below: 
140.19     (1) Metropolitan Council under section 473.132, 473.167, 
140.20  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
140.21     (2) Metropolitan Airports Commission under section 473.667, 
140.22  473.671, or 473.672; and 
140.23     (3) Metropolitan Mosquito Control Commission under section 
140.24  473.711. 
140.25     For purposes of this section, any levies made by the 
140.26  regional rail authorities in the county of Anoka, Carver, 
140.27  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
140.28  398A shall be included with the appropriate county's levy and 
140.29  shall be discussed at that county's public hearing. 
140.30     <h>[EFFECTIVE DATE.]</h> This section is effective for notices for 
140.31  property taxes levied in 2004, payable in 2005, and thereafter. 
140.32     Sec. 39.  Minnesota Statutes 2002, section 276.04, 
140.33  subdivision 2, is amended to read: 
140.34     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
140.35  shall provide for the printing of the tax statements.  The 
140.36  commissioner of revenue shall prescribe the form of the property 
141.1   tax statement and its contents.  The statement must contain a 
141.2   tabulated statement of the dollar amount due to each taxing 
141.3   authority and the amount of the state tax from the parcel of 
141.4   real property for which a particular tax statement is prepared.  
141.5   The dollar amounts attributable to the county, the state tax, 
141.6   the voter approved school tax, the other local school tax, the 
141.7   township or municipality, and the total of the metropolitan 
141.8   special taxing districts as defined in section 275.065, 
141.9   subdivision 3, paragraph (i), must be separately stated.  The 
141.10  amounts due all other special taxing districts, if any, may be 
141.11  aggregated.  If the county levy under this paragraph includes an 
141.12  amount for a lake improvement district as defined under sections 
141.13  103B.501 to 103B.581, the amount attributable for that purpose 
141.14  must be separately stated from the remaining county levy 
141.15  amount.  In the case of Ramsey County, if the county levy under 
141.16  this paragraph includes an amount for public library service 
141.17  under section 134.07, the amount attributable for that purpose 
141.18  may be separately stated from the remaining county levy amount.  
141.19  The amount of the tax on homesteads qualifying under the senior 
141.20  citizens' property tax deferral program under chapter 290B is 
141.21  the total amount of property tax before subtraction of the 
141.22  deferred property tax amount.  The amount of the tax on 
141.23  contamination value imposed under sections 270.91 to 270.98, if 
141.24  any, must also be separately stated.  The dollar amounts, 
141.25  including the dollar amount of any special assessments, may be 
141.26  rounded to the nearest even whole dollar.  For purposes of this 
141.27  section whole odd-numbered dollars may be adjusted to the next 
141.28  higher even-numbered dollar.  The amount of market value 
141.29  excluded under section 273.11, subdivision 16, if any, must also 
141.30  be listed on the tax statement. 
141.31     (b) The property tax statements for manufactured homes and 
141.32  sectional structures taxed as personal property shall contain 
141.33  the same information that is required on the tax statements for 
141.34  real property.  
141.35     (c) Real and personal property tax statements must contain 
141.36  the following information in the order given in this paragraph.  
142.1   The information must contain the current year tax information in 
142.2   the right column with the corresponding information for the 
142.3   previous year in a column on the left: 
142.4      (1) the property's estimated market value under section 
142.5   273.11, subdivision 1; 
142.6      (2) the property's taxable market value after reductions 
142.7   under section 273.11, subdivisions 1a and 16; 
142.8      (3) the property's gross tax, calculated by adding the 
142.9   property's total property tax to the sum of the aids enumerated 
142.10  in clause (4); 
142.11     (4) a total of the following aids: 
142.12     (i) education aids payable under chapters 122A, 123A, 123B, 
142.13  124D, 125A, 126C, and 127A; 
142.14     (ii) local government aids for cities, towns, and counties 
142.15  under chapter 477A; 
142.16     (iii) disparity reduction aid under section 273.1398; and 
142.17     (iv) homestead and agricultural credit aid under section 
142.18  273.1398; 
142.19     (5) for homestead residential and agricultural properties, 
142.20  the credits under section 273.1384; 
142.21     (6) any credits received under sections 273.119; 273.123; 
142.22  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
142.23  473H.10, except that the amount of credit received under section 
142.24  273.135 must be separately stated and identified as "taconite 
142.25  tax relief"; and 
142.26     (7) the net tax payable in the manner required in paragraph 
142.27  (a). 
142.28     (d) If the county uses envelopes for mailing property tax 
142.29  statements and if the county agrees, a taxing district may 
142.30  include a notice with the property tax statement notifying 
142.31  taxpayers when the taxing district will begin its budget 
142.32  deliberations for the current year, and encouraging taxpayers to 
142.33  attend the hearings.  If the county allows notices to be 
142.34  included in the envelope containing the property tax statement, 
142.35  and if more than one taxing district relative to a given 
142.36  property decides to include a notice with the tax statement, the 
143.1   county treasurer or auditor must coordinate the process and may 
143.2   combine the information on a single announcement.  
143.3      The commissioner of revenue shall certify to the county 
143.4   auditor the actual or estimated aids enumerated in clause (4) 
143.5   that local governments will receive in the following year.  The 
143.6   commissioner must certify this amount by January 1 of each year. 
143.7      <h>[EFFECTIVE DATE.]</h> This section is effective for property 
143.8   tax statements for taxes payable in 2005 and thereafter. 
143.9      Sec. 40.  [278.021] [PETITIONS INVOLVING LOW-INCOME RENTAL 
143.10  HOUSING PROPERTY.] 
143.11     Notwithstanding section 278.02, in the case of real 
143.12  property that meets the definition of qualifying low-income 
143.13  housing rental property established in section 273.126, the 
143.14  petition may include any and all such parcels of real property 
143.15  in which the petitioner has an estate, right, title, interest, 
143.16  or lien, except that all such parcels included in the petition 
143.17  must be located in the same county.  Contiguous qualifying 
143.18  low-income rental housing property overlapping county boundaries 
143.19  may be included in the same petition. 
143.20     Sec. 41.  Minnesota Statutes 2002, section 278.03, 
143.21  subdivision 1, is amended to read: 
143.22     Subdivision 1.  [REAL PROPERTY.] ~~In the case of real~~ 
143.23  ~~property,~~ If the proceedings instituted by the filing of the 
143.24  petition have not been completed before the 16th day of May next 
143.25  following the filing or, in the case of class 1c property or 
143.26  class 4c resort property before the 16th day of June for taxes 
143.27  payable in 2005 and 2006 only, the petitioner shall pay to the 
143.28  county treasurer 50 percent of the tax levied for such year 
143.29  against the property involved, unless permission to continue 
143.30  prosecution of the petition without such payment is obtained as 
143.31  herein provided. If the proceedings instituted by the filing of 
143.32  the petition have not been completed by the next October 16, or, 
143.33  in the case of class 1b agricultural homestead, class 2a 
143.34  agricultural homestead, and class 2b(2) agricultural 
143.35  nonhomestead property, November 16, the petitioner shall pay to 
143.36  the county treasurer 50 percent of the unpaid balance of the 
144.1   taxes levied for the year against the property involved if the 
144.2   unpaid balance is $2,000 or less and 80 percent of the unpaid 
144.3   balance if the unpaid balance is over $2,000, unless permission 
144.4   to continue prosecution of the petition without payment is 
144.5   obtained as herein provided.  The petitioner, upon ten days' 
144.6   notice to the county attorney and to the county auditor, given 
144.7   at least ten days prior to the 16th day of May or, in the case 
144.8   of class 1c or class 4c resort property, the 16th day of June 
144.9   for taxes payable in 2005 and 2006 only, or the 16th day of 
144.10  October, or, in the case of class 1b agricultural homestead, 
144.11  class 2a agricultural homestead, and class 2b(2) agricultural 
144.12  nonhomestead property, the 16th day of November, may apply to 
144.13  the court for permission to continue prosecution of the petition 
144.14  without payment; and, if it is made to appear 
144.15     (1) that the proposed review is to be taken in good faith; 
144.16     (2) that there is probable cause to believe that the 
144.17  property may be held exempt from the tax levied or that the tax 
144.18  may be determined to be less than 50 percent of the amount 
144.19  levied; and 
144.20     (3) that it would work a hardship upon petitioner to pay 
144.21  the taxes due, 
144.22     the court may permit the petitioner to continue prosecution 
144.23  of the petition without payment, or may fix a lesser amount to 
144.24  be paid as a condition of continuing the prosecution of the 
144.25  petition. 
144.26     Failure to make payment of the amount required when due 
144.27  shall operate automatically to dismiss the petition and all 
144.28  proceedings thereunder unless the payment is waived by an order 
144.29  of the court permitting the petitioner to continue prosecution 
144.30  of the petition without payment.  The petition shall be 
144.31  automatically reinstated upon payment of the entire tax plus 
144.32  interest and penalty if the payment is made within one year of 
144.33  the dismissal.  The county treasurer shall, upon request of the 
144.34  petitioner, issue duplicate receipts for the tax payment, one of 
144.35  which shall be filed by the petitioner in the proceeding. 
144.36     Sec. 42.  Minnesota Statutes 2002, section 279.01, 
145.1   subdivision 1, is amended to read: 
145.2      Subdivision 1.  [DUE DATES; PENALTIES.] Except as provided 
145.3   in ~~subdivision 3 or 4~~ this section, on May 16 or 21 days after 
145.4   the postmark date on the envelope containing the property tax 
145.5   statement, whichever is later, a penalty shall accrue and 
145.6   thereafter be charged upon all unpaid taxes on real estate on 
145.7   the current lists in the hands of the county treasurer.  The 
145.8   penalty shall be at a rate of two percent on homestead property 
145.9   until May 31 and four percent on June 1.  The penalty on 
145.10  nonhomestead property shall be at a rate of four percent until 
145.11  May 31 and eight percent on June 1.  This penalty shall not 
145.12  accrue until June 1 of each year, or 21 days after the postmark 
145.13  date on the envelope containing the property tax statements, 
145.14  whichever is later, on commercial use real property used for 
145.15  seasonal residential recreational purposes and classified as 
145.16  class 1c or 4c, and on other commercial use real property 
145.17  classified as class 3a, provided that over 60 percent of the 
145.18  gross income earned by the enterprise on the class 3a property 
145.19  is earned during the months of May, June, July, and August.  Any 
145.20  property owner of such class 3a property who pays the first half 
145.21  of the tax due on the property after May 15 and before June 1, 
145.22  or 21 days after the postmark date on the envelope containing 
145.23  the property tax statement, whichever is later, shall attach an 
145.24  affidavit to the payment attesting to compliance with the income 
145.25  provision of this subdivision.  Thereafter, for both homestead 
145.26  and nonhomestead property, on the first day of each month 
145.27  beginning July 1, up to and including October 1 following, an 
145.28  additional penalty of one percent for each month shall accrue 
145.29  and be charged on all such unpaid taxes provided that if the due 
145.30  date was extended beyond May 15 as the result of any delay in 
145.31  mailing property tax statements no additional penalty shall 
145.32  accrue if the tax is paid by the extended due date.  If the tax 
145.33  is not paid by the extended due date, then all penalties that 
145.34  would have accrued if the due date had been May 15 shall be 
145.35  charged.  When the taxes against any tract or lot exceed $50, 
145.36  one-half thereof may be paid prior to May 16 or 21 days after 
146.1   the postmark date on the envelope containing the property tax 
146.2   statement, whichever is later; and, if so paid, no penalty shall 
146.3   attach; the remaining one-half shall be paid at any time prior 
146.4   to October 16 following, without penalty; but, if not so paid, 
146.5   then a penalty of two percent shall accrue thereon for homestead 
146.6   property and a penalty of four percent on nonhomestead 
146.7   property.  Thereafter, for homestead property, on the first day 
146.8   of November an additional penalty of four percent shall accrue 
146.9   and on the first day of December following, an additional 
146.10  penalty of two percent shall accrue and be charged on all such 
146.11  unpaid taxes.  Thereafter, for nonhomestead property, on the 
146.12  first day of November and December following, an additional 
146.13  penalty of four percent for each month shall accrue and be 
146.14  charged on all such unpaid taxes.  If one-half of such taxes 
146.15  shall not be paid prior to May 16 or 21 days after the postmark 
146.16  date on the envelope containing the property tax statement, 
146.17  whichever is later, the same may be paid at any time prior to 
146.18  October 16, with accrued penalties to the date of payment added, 
146.19  and thereupon no penalty shall attach to the remaining one-half 
146.20  until October 16 following.  
146.21     This section applies to payment of personal property taxes 
146.22  assessed against improvements to leased property, except as 
146.23  provided by section 277.01, subdivision 3. 
146.24     A county may provide by resolution that in the case of a 
146.25  property owner that has multiple tracts or parcels with 
146.26  aggregate taxes exceeding $50, payments may be made in 
146.27  installments as provided in this subdivision. 
146.28     The county treasurer may accept payments of more or less 
146.29  than the exact amount of a tax installment due.  If the accepted 
146.30  payment is less than the amount due, payments must be applied 
146.31  first to the penalty accrued for the year the payment is made.  
146.32  Acceptance of partial payment of tax does not constitute a 
146.33  waiver of the minimum payment required as a condition for filing 
146.34  an appeal under section 278.03 or any other law, nor does it 
146.35  affect the order of payment of delinquent taxes under section 
146.36  280.39. 
147.1      Sec. 43.  Minnesota Statutes 2002, section 279.01, is 
147.2   amended by adding a subdivision to read: 
147.3      Subd. 5.  [SEASONAL RESIDENTIAL RECREATIONAL PROPERTY USED 
147.4   FOR COMMERCIAL PURPOSES.] For taxes payable in 2005 and 2006 
147.5   only, in the case of class 1c property and class 4c seasonal 
147.6   residential recreational property used for commercial purposes, 
147.7   no penalties shall accrue to the first one-half property tax 
147.8   payment as provided in this section if paid by June 15.  On June 
147.9   16, a penalty shall accrue and thereafter be charged upon all 
147.10  unpaid taxes.  On class 1c property the penalty is at a rate of 
147.11  two percent until June 31, and four percent on July 1.  On class 
147.12  4c seasonal residential recreational property used for 
147.13  commercial purposes, the penalty is four percent until June 31 
147.14  and eight percent on July 1.  Thereafter, for both class 1c and 
147.15  class 4c seasonal residential recreational property used for 
147.16  commercial purposes, on the first day of September and on the 
147.17  first day of October, an additional penalty of one percent shall 
147.18  accrue and be charged on unpaid taxes.  The remaining one-half 
147.19  property taxes must be paid and penalties accrue as provided in 
147.20  subdivision 1. 
147.21     Sec. 44.  [290.0621] [SCHOOL REFERENDUM TAX.] 
147.22     Subdivision 1.  [IMPOSITION.] In addition to all other 
147.23  taxes imposed by this chapter, a tax is imposed on individuals 
147.24  who are domiciled on the last day of the taxable year within the 
147.25  territory of a school district in which the voters approved an 
147.26  income tax increase at a referendum conducted under section 
147.27  126C.17, subdivision 9, for that purpose in 2005 or a subsequent 
147.28  year.  This tax does not apply to referendums on bond issues.  
147.29  Individuals domiciled in the district on the last day of the 
147.30  taxable year are subject to the tax. 
147.31     Subd. 2.  [RATE.] The commissioner of revenue shall 
147.32  annually determine the rate of the tax imposed under this 
147.33  section as a percentage of the state income tax liability of 
147.34  individuals subject to the tax by each district.  The school 
147.35  referendum tax rate is equal to the ratio of (i) the district's 
147.36  local effort revenue under section 126C.17, subdivision 6b, to 
148.1   (ii) the state income tax liability of all individuals domiciled 
148.2   in the district on the last day of the previous taxable year. 
148.3      Subd. 3.  [REVENUE DISTRIBUTION.] Revenue raised in 
148.4   subdivision 1 must be placed in a special account in the general 
148.5   fund.  The amount necessary to make payments to school districts 
148.6   under this section is annually appropriated from the general 
148.7   fund to the commissioner of education and must be paid to school 
148.8   districts according to section 127A.45. 
148.9      Sec. 45.  Minnesota Statutes 2002, section 462A.071, 
148.10  subdivision 6, is amended to read: 
148.11     Subd. 6.  [SECTION 8, TAX CREDIT, AND RURAL HOUSING SERVICE 
148.12  UNITS.] (a) The agency may deem units as meeting the 
148.13  requirements of section 273.126 and this section, if the units~~:~~ 
148.14     ~~(1) are subject to a housing assistance payments contract~~ 
148.15  ~~under section 8 of the United States Housing Act of 1937, as~~ 
148.16  ~~amended;~~ 
148.17     ~~(2) are rent and income restricted units of a qualified~~ 
148.18  ~~low-income housing project receiving tax credits under section~~ 
148.19  ~~42(g) of the Internal Revenue Code of 1986, as amended; or~~ 
148.20     ~~(3) are financed by the Rural Housing Service of the United~~ 
148.21  ~~States Department of Agriculture and receive payments under the~~ 
148.22  ~~rental assistance program pursuant to section 521(a) of the~~ 
148.23  ~~Housing Act of 1949, as amended~~ meet the requirements provided 
148.24  in section 273.1321, subdivision 1. 
148.25     (b) The agency may certify these deemed units under 
148.26  subdivision 1 based on a simplified application procedure that 
148.27  verifies the unit's qualifications under paragraph (a). 
148.28     Sec. 46.  Minnesota Statutes 2002, section 473F.08, is 
148.29  amended by adding a subdivision to read: 
148.30     Subd. 3c.  [UNCOMPENSATED CARE REIMBURSEMENT.] (a) As used 
148.31  in this subdivision, the following terms have the meanings given 
148.32  in this paragraph. 
148.33     (1) "Uncompensated care" means the sum of (i) the amount 
148.34  that would have been charged by a facility for rendering free or 
148.35  discounted care to persons who cannot afford to pay and for 
148.36  which the facility did not expect payment and (ii) the amount 
149.1   that had been charged by a facility for rendering care to 
149.2   persons and billed to that person or a third-party payer for 
149.3   which the facility expected but did not receive payment.  
149.4   Uncompensated care does not include contractual write-offs. 
149.5      (2) A "qualifying hospital" means a hospital in the area 
149.6   that is: 
149.7      (i) owned or operated by a local unit of government, or 
149.8   formerly owned by a university or is a private nonprofit 
149.9   hospital that leases its building from the county in which it is 
149.10  located; and 
149.11     (ii) has a licensed bed capacity greater than 400.  
149.12     (b) A county that contains a qualifying hospital is 
149.13  eligible for reimbursement of that portion of gross charges for 
149.14  uncompensated care determined by multiplying the hospital's 
149.15  gross charges during the base year by the percentage of 
149.16  uncompensated care provided by the hospital during the base year 
149.17  minus one-half of one percent of those gross charges, dividing 
149.18  the result by two, and adjusting to cost by multiplying that 
149.19  result by the hospital's cost-to-charge ratio during the base 
149.20  year.  By July 15, 2005, and each subsequent year, the county 
149.21  shall notify its county auditor, as well as the administrative 
149.22  auditor, of the amount of qualifying uncompensated care 
149.23  provided, adjusted to cost using the hospital's cost-to-charge 
149.24  ratio, during the 12-month period ending on June 30 of the 
149.25  current year. 
149.26     (c) The amount certified under paragraph (b) shall be 
149.27  certified annually by the county auditor to the administrative 
149.28  auditor as an addition to the county's areawide levy under 
149.29  subdivision 5. 
149.30     (d) The administrative auditor shall pay one-half of the 
149.31  reimbursement to the county auditor of the county that contains 
149.32  the qualifying hospital on or before June 15 and the remaining 
149.33  one-half of the reimbursement on or before November 15.  The 
149.34  county auditor receiving the payment shall disburse the 
149.35  reimbursement to the qualifying hospital within 15 days of 
149.36  receipt of the reimbursement. 
150.1      (e) Prior to the reporting specified in paragraph (b) 
150.2   above, all qualifying hospitals that participate in this program 
150.3   shall agree upon and implement a common standard for reporting 
150.4   uncompensated care, and a common standard for determining 
150.5   eligibility for uncompensated care for all participating 
150.6   hospitals. 
150.7      <h>[EFFECTIVE DATE.]</h> This section is effective for fiscal 
150.8   disparities contribution and distribution tax capacities for 
150.9   taxes payable in 2006 and 2007 only. 
150.10     Sec. 47.  Minnesota Statutes 2002, section 473F.08, is 
150.11  amended by adding a subdivision to read: 
150.12     Subd. 3d.  [HENNEPIN COUNTY PUBLIC DEFENDER COST 
150.13  REIMBURSEMENT.] (a) Hennepin County is eligible for 
150.14  reimbursement of costs incurred by the county under section 
150.15  611.26, subdivision 3a, paragraph (c).  By July 15, 2005, and 
150.16  each subsequent year, the county shall notify the county auditor 
150.17  and the administrative auditor, of the amount of that cost 
150.18  incurred by the county during the 12-month period ending on June 
150.19  30 of the current year. 
150.20     (b) The reimbursement under this subdivision for costs 
150.21  incurred during the 12-month period ending June 30, 2005, is 
150.22  equal to 25 percent of those costs.  The reimbursement under 
150.23  this subdivision for costs incurred during the 12-month period 
150.24  ending June 30, 2006, is equal to 50 percent of those costs.  
150.25     (c) The amount certified under paragraph (b) shall be 
150.26  certified annually by the Hennepin County auditor to the 
150.27  administrative auditor as an addition to the county's areawide 
150.28  levy under subdivision 5. 
150.29     (d) The administrative auditor shall pay one-half of the 
150.30  reimbursement to the Hennepin County auditor on or before June 
150.31  15 and the remaining one-half of the reimbursement on or before 
150.32  November 15. 
150.33     <h>[EFFECTIVE DATE.]</h> This section is effective for fiscal 
150.34  disparities contribution and distribution tax capacities for 
150.35  taxes payable in 2006 and 2007 only. 
150.36     Sec. 48.  Laws 1998, chapter 389, article 3, section 41, is 
151.1   amended to read: 
151.2      Sec. 41.  [SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.] 
151.3      Notwithstanding Minnesota Statutes, chapter 429, a city may 
151.4   defer the payment of any special assessment levied against a 
151.5   property qualifying under section 38 as determined by the city.  
151.6   Any special assessment, the payment of which has been deferred 
151.7   by the city, must be paid in full or a payment agreement may be 
151.8   approved by the city if the ownership of property is transferred 
151.9   to anyone or any entity.  Payment or a payment agreement must be 
151.10  made within 60 days of the transfer of ownership. 
151.11     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
151.12  following final enactment.  
151.13     Sec. 49.  Laws 1998, chapter 389, article 3, section 42, 
151.14  subdivision 2, as amended by Laws 2002, chapter 377, article 4, 
151.15  section 24, is amended to read: 
151.16     Subd. 2.  [RECAPTURE.] (a) Property or any portion thereof 
151.17  qualifying under section 38 is subject to additional taxes if: 
151.18     (1) ownership of the property is transferred to anyone 
151.19  other than the spouse or child of the current owner; 
151.20     (2) the current owner or the spouse or child of the current 
151.21  owner has not conveyed or entered into a contract before July 1, 
151.22  2007, to convey for ownership or public easement rights, (i) a 
151.23  portion of the property to ~~a~~ one or more nonprofit ~~foundation~~ 
151.24  foundations or ~~corporation operating~~ corporations; and (ii) a 
151.25  portion of the property to one or more local governments; and 
151.26  those entities shall separately or jointly operate the property 
151.27  as an art park providing the services included in section 38, 
151.28  clauses (2) to (5), and may also use some of the property for 
151.29  other public purposes as determined by the local governments; or 
151.30     (3) the nonprofit foundation or corporation to which a 
151.31  portion of the property was transferred ceases to provide the 
151.32  services included in section 38, clauses (2) to (5), earlier 
151.33  than ten years following the effective date of the ~~conveyance~~ 
151.34  conveyances or of the execution of the ~~contract~~ contracts to 
151.35  convey. 
151.36     (b) The additional taxes are imposed at the earlier of (1) 
152.1   the year following transfer of ownership to anyone other than 
152.2   the spouse or child of the current owner or a nonprofit 
152.3   foundation or corporation or local government operating the 
152.4   property as an art park and used for other public purposes, or 
152.5   (2) for taxes payable in 2008, or (3) in the event the nonprofit 
152.6   foundation or corporation to which a portion of the property was 
152.7   conveyed ceases to provide the required services within ten 
152.8   years after the conveyance, for taxes payable in the year 
152.9   following the year when it ceased to do so.  
152.10     The county board, with the approval of the city council, 
152.11  shall determine the amount of the additional taxes due on the 
152.12  portion of property which is no longer utilized as an art park; 
152.13  provided, however, that the additional taxes ~~are equal to~~ must 
152.14  not be greater than the difference between the taxes determined 
152.15  on that portion of the property utilized as an art park under 
152.16  sections 39 and 40 and the amount determined under subdivision 1 
152.17  for all years that the property qualified under section 38.  ~~The~~ 
152.18  ~~additional taxes must be extended against the property on the~~ 
152.19  ~~tax list for the current year; provided, however, that~~ No 
152.20  interest or penalties may be levied on the additional ~~taxes if~~ 
152.21  ~~timely paid~~ amount provided that it is paid within 30 days of 
152.22  the county's notice. 
152.23     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
152.24  following final enactment. 
152.25     Sec. 50.  Laws 2003, chapter 127, article 12, section 38, 
152.26  is amended to read: 
152.27     Sec. 38.  [~~MEMBERS MUST~~ AUTHORITY TO LEVY TAXES ~~FOR~~ 
152.28  ~~AUTHORITY~~.] 
152.29     ~~(a) A member shall, at the request of the authority, levy a~~ 
152.30  ~~tax in any year for the benefit of the authority.~~  The authority 
152.31  is a special taxing district as defined in Minnesota Statutes, 
152.32  section 275.066, clause (13), with the power to adopt and 
152.33  certify a property tax levy to the county auditor.  The 
152.34  authority may levy a tax in any year for the benefit of the 
152.35  authority.  The tax ~~is,~~ for each member~~,~~ is a pro rata portion 
152.36  of the total amount of tax requested by the authority based on 
153.1   the taxable market value within ~~a~~ the member's jurisdiction, but 
153.2   in no event may the tax in any year exceed 0.01813 percent of 
153.3   taxable market value.  For purposes of this section, "taxable 
153.4   market value" has the meaning as given in Minnesota Statutes, 
153.5   section 273.032. 
153.6      ~~(b) The treasurer of each member city or town shall, within~~ 
153.7   ~~15 days after receiving the property tax settlements from the~~ 
153.8   ~~county treasurer, pay to the treasurer of the authority the~~ 
153.9   ~~amount collected for this purpose.  The money must be used by~~ 
153.10  ~~the authority for the purposes provided by sections 35 to 41.~~ 
153.11     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
153.12  levied in 2004, payable in 2005, and thereafter. 
153.13     Sec. 51.  Laws 2003, First Special Session chapter 21, 
153.14  article 4, section 12, subdivision 11, is amended to read: 
153.15     Subd. 11.  [EFFECTIVE DATE; LOCAL APPROVAL.] This section 
153.16  is effective the day after the governing body of St. Louis 
153.17  county and its chief clerical officer timely complete their 
153.18  compliance with Minnesota Statutes, section 645.021, 
153.19  subdivisions 2 and 3, provided that the certificate of approval 
153.20  is filed with the secretary of state before January 1, 2006. 
153.21     ~~If effective before September 1, 2003, the first levy is~~ 
153.22  ~~the payable 2004 levy;~~ If effective ~~between September 1, 2003,~~ 
153.23  ~~and~~ before September 1, 2004, the first levy is the payable 2005 
153.24  levy; if effective after August 31, 2004, and before September 
153.25  1, 2005, the first levy is the payable 2006 levy; and if 
153.26  effective after August 31, 2005, the first levy is the payable 
153.27  2007 levy. 
153.28     Sec. 52.  [EDUCATION RESERVE ACCOUNT; APPROPRIATION.] 
153.29     (a) There is created in the state treasury an education 
153.30  reserve account as a special revenue fund for deposit of 
153.31  appropriations and other receipts as provided by law. 
153.32     (b) $26,080,000 is appropriated from the general fund to 
153.33  the education reserve account in fiscal year 2005.  This is a 
153.34  onetime appropriation.  Of this amount, the following amounts 
153.35  are appropriated to the commissioner of education in the fiscal 
153.36  years indicated to supplement the general education aid program 
154.1   under Minnesota Statutes, section 126C.13, subdivision 4: 
154.2      (1) $5,366,000 in fiscal year 2005; 
154.3      (2) $48,000 in fiscal year 2006; and 
154.4      (3) $45,000 in fiscal year 2007. 
154.5      (c) As provided in Minnesota Statutes, section 275.025, 
154.6   subdivision 1, beginning with taxes payable in 2007, the 
154.7   commissioner of finance shall deposit in the education reserve 
154.8   account the increased amount of the state general levy for that 
154.9   year over the state general levy base amount for taxes payable 
154.10  in 2002. 
154.11     (d) Each year, one-half of the annual amount will be 
154.12  deposited in the education reserve account in the state fiscal 
154.13  year corresponding to the first six months of the calendar year, 
154.14  and the other half will be deposited in the state fiscal year 
154.15  corresponding to the last six months of the calendar year.  The 
154.16  amounts in the education reserve account do not lapse or cancel 
154.17  each year, but remain until appropriated by law for education 
154.18  aid or higher education funding. 
154.19     Sec. 53.  [STUDY OF POLLUTION CONTROL EXEMPTION.] 
154.20     The commissioner of revenue must study the application of 
154.21  the property tax exemption provided under Minnesota Statutes, 
154.22  section 272.02, subdivision 10, to personal property used for 
154.23  pollution control as part of an electric generation system.  The 
154.24  commissioner must present a recommendation to the legislature by 
154.25  January 15, 2005, that would limit the exemption to property 
154.26  that is directly and exclusively used for pollution control 
154.27  purposes. 
154.28     Sec. 54.  [SUPPLEMENTARY AID.] 
154.29     (a) If a bill styled as H.F. No. 2028 is enacted at the 
154.30  2004 legislative session and includes provisions authorizing 
154.31  supplementary levy authority for school districts for deferred 
154.32  maintenance and capital projects, that section is repealed. 
154.33     (b) For fiscal years 2006, 2007, and 2008 only, each school 
154.34  district is eligible to receive $12 times the adjusted marginal 
154.35  cost pupil units annually for one or more of the following uses: 
154.36     (1) outstanding disability access projects; 
155.1      (2) onetime health- and safety-related projects that are 
155.2   not eligible for health and safety revenue under Minnesota 
155.3   Statutes, section 123B.57; 
155.4      (3) outstanding construction deficit costs of school 
155.5   facilities shared with the community; 
155.6      (4) utility and other costs of operating a district-owned 
155.7   community center where the district colocates services with 
155.8   other local units of government, in proportion to the amount of 
155.9   time the district uses the facility; 
155.10     (5) the district's share of the costs of building 
155.11  noninstructional facilities that will be operated in cooperation 
155.12  with other local units of government; 
155.13     (6) the cost of leasing school-related storage facilities; 
155.14     (7) the costs associated with leases of administrative and 
155.15  classroom space shared with other school districts or higher 
155.16  education institutions; 
155.17     (8) outstanding building lease levy amounts under Minnesota 
155.18  Statutes, section 126C.40, subdivision 1; outstanding 
155.19  unemployment insurance amount under Minnesota Statutes, section 
155.20  126C.43, subdivision 2; outstanding amount necessary for 
155.21  judgments against the district under Minnesota Statutes, section 
155.22  126C.43, subdivision 3; and additional costs under the safe 
155.23  schools levy under Minnesota Statutes, section 126C.44; 
155.24     (9) a school district whose total concentration of free and 
155.25  reduced price lunch students increased between fiscal year 2003 
155.26  and 2004 may utilize the revenue under this section, according 
155.27  to Minnesota Statutes, section 126C.13, subdivision 5; 
155.28     (10) retired employee health benefits; or 
155.29     (11) other district deferred maintenance projects or 
155.30  capital projects eligible under Minnesota Statutes, section 
155.31  126C.10, subdivision 14. 
155.32     (c) In a form and manner determined by the Department of 
155.33  Education, each district shall submit to the department the aid 
155.34  received under this section for each category in paragraph (a). 
155.35     (d) For each year in which payments to school districts are 
155.36  made under this section, the Department of Education shall make 
156.1   payments to districts using the estimated adjusted marginal cost 
156.2   pupil unit count contained in the preceding year's February 
156.3   forecast for the corresponding fiscal year. 
156.4      (e) In fiscal years 2006, 2007, and 2008, if insufficient 
156.5   aid is appropriated to fund the provisions of this section, each 
156.6   school district may levy an amount equal to the amount by which 
156.7   the appropriation is deficient: 
156.8      (i) for taxes payable in 2006 only, if insufficient aid is 
156.9   provided during the 2005 legislative session for fiscal year 
156.10  2006, each school district may levy an amount equal to the 
156.11  amount by which the appropriation is deficient and may recognize 
156.12  that revenue for fiscal year 2006; 
156.13     (ii) for taxes payable in 2007 only, if insufficient aid is 
156.14  provided during the 2005 or 2006 legislative session for fiscal 
156.15  year 2007, each school district may levy an amount equal to the 
156.16  amount by which the appropriation is deficient and may recognize 
156.17  that revenue for fiscal year 2007; and 
156.18     (iii) for taxes payable in 2008 only, if insufficient aid 
156.19  is provided during the 2007 legislative session for fiscal year 
156.20  2008, each school district may levy an amount equal to the 
156.21  amount by which the appropriation is deficient and may recognize 
156.22  that revenue for fiscal year 2008. 
156.23     <h>[EFFECTIVE DATE.]</h> This section is effective for revenue for 
156.24  fiscal years 2006, 2007, and 2008. 
156.25     Sec. 55.  [PRINSBURG; SPECIAL LEVY AUTHORITY.] 
156.26     Subdivision 1.  [BOARD APPROVAL.] Notwithstanding any law 
156.27  to the contrary, the board of Common School District No. 815, 
156.28  Prinsburg, may continue to operate as a common school district 
156.29  provided that: 
156.30     (1) the district adopts an annual resolution by May 1 of 
156.31  each year declaring that it will be operating for the following 
156.32  school year; 
156.33     (2) for fiscal years 2006 and later, the district's 
156.34  proposed budget for the following year shows that the district 
156.35  will not return to statutory operating debt under Minnesota 
156.36  Statutes, section 123B.81; and 
157.1      (3) the district has passed a referendum under subdivision 
157.2   4 authorizing levy authority for the coming school year. 
157.3      Subd. 2.  [DETERMINATION OF OUTSTANDING OBLIGATIONS.] Prior 
157.4   to exercising the authority to levy under this section, the 
157.5   boards of Common School District No. 815 and Independent School 
157.6   District No. 2180, MACCRAY, must mutually agree to the amount of 
157.7   the outstanding tuition owed by the Prinsburg School District to 
157.8   the MACCRAY School District.  If the districts cannot agree to 
157.9   the amount of the tuition owed, the districts may submit all 
157.10  relevant information to the commissioner of education who shall 
157.11  determine the amount of the obligation owed to the MACCRAY 
157.12  School District. 
157.13     Subd. 3.  [STATUTORY OPERATING DEBT.] For taxes payable in 
157.14  2005, 2006, and 2007, Common School District No. 815, Prinsburg, 
157.15  may levy the amount necessary to eliminate a deficit in the net 
157.16  unappropriated balance in the operating funds of the district, 
157.17  determined as of June 30, 2004, and certified and adjusted by 
157.18  the commissioner.  This levy may also include the amount 
157.19  necessary to eliminate the estimated deficit for fiscal year 
157.20  2005. 
157.21     Subd. 4.  [ANNUAL LEVY AUTHORITY.] (a) Common School 
157.22  District No. 815, Prinsburg, may levy the amount necessary to 
157.23  eliminate any projected deficit in the district's operating 
157.24  budget for the preceding school year, excluding the amounts 
157.25  raised by this subdivision, if the district's voters approve a 
157.26  referendum according to the provisions of this subdivision. 
157.27     (b) The referendum shall be called by the school board.  
157.28  The ballot must state that the annual levy will be the estimated 
157.29  amount necessary to eliminate the previous year's estimated 
157.30  operating deficit.  The ballot must designate the specific 
157.31  number of years, not to exceed five, for which the referendum 
157.32  authorization applies.  The ballot shall state substantially the 
157.33  following: 
157.34     "Shall the increase in the levy proposed by the Board of 
157.35  Prinsburg, Common School District No. 815, be approved?" 
157.36     If approved, the amount necessary to eliminate the previous 
158.1   year's estimated operating deficit may be authorized for 
158.2   certification for the number of years approved. 
158.3      (c) The board must follow the notice provisions of 
158.4   Minnesota Statutes, section 126C.17. 
158.5      (d) This levy is not subject to the property tax 
158.6   recognition shift under Minnesota Statutes, sections 123B.75, 
158.7   subdivision 5, and 127A.441. 
158.8      Subd. 5.  [FISCAL YEAR 2005 ONLY.] Notwithstanding the 
158.9   provisions of this section, for fiscal year 2005 only, Common 
158.10  School District No. 815, Prinsburg, may continue to operate as a 
158.11  common school district upon approval of a referendum under 
158.12  subdivision 4. 
158.13     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
158.14  following final enactment. 
158.15     Sec. 56.  [SAUK RIVER WATERSHED DISTRICT.] 
158.16     Notwithstanding Minnesota Statutes, section 103D.905, 
158.17  subdivision 3, the Sauk River Watershed District may annually 
158.18  levy up to 0.01 percent of taxable market value for its 
158.19  administrative fund. 
158.20     <h>[EFFECTIVE DATE.]</h> This section is effective, without local 
158.21  approval, beginning with the taxes levied in 2004, payable in 
158.22  2005. 
158.23     Sec. 57.  [COMMERCIAL-INDUSTRIAL LAND VALUE TAXATION; LOCAL 
158.24  OPTION.] 
158.25     The governing body of any municipality that has a 
158.26  population in excess of 70,000, or any municipality located in 
158.27  the taconite tax relief area defined in Minnesota Statutes, 
158.28  section 273.134, may by resolution adopt a system of valuing 
158.29  commercial-industrial property in its jurisdiction that is based 
158.30  on the value of the land, not including improvements.  The 
158.31  governing body may make the election under this section if it 
158.32  finds that implementation of the land value system will enhance 
158.33  economic development in the city.  An election under this 
158.34  section must be made by December 31, 2004.  If any municipality 
158.35  makes the election, it must notify the commissioner of revenue 
158.36  of the election and the legislature must enact during the 2005 
159.1   legislative session the legislation necessary to implement the 
159.2   system for taxes levied in 2005, payable in 2006, and thereafter.
159.3      Sec. 58.  [STUDY REQUIRED.] 
159.4      By February 1, 2005, the fiscal staff of the house of 
159.5   representatives and senate shall conduct a study of the 
159.6   metropolitan revenue distribution program contained in Minnesota 
159.7   Statutes, chapter 473F, commonly known as the fiscal disparities 
159.8   program, and shall make a report by March 1, 2005, to the chairs 
159.9   of the house and senate tax committees consisting of the 
159.10  findings of the study and any recommendations resulting from the 
159.11  study.  
159.12     The study shall primarily address the question of whether 
159.13  the program is achieving the purposes for which it was created.  
159.14  Additionally, the study shall address the following questions: 
159.15     (1) How has the program affected property tax disparities 
159.16  across the Twin Cities metropolitan area? 
159.17     (2) Is the formula for contributing tax base to the 
159.18  areawide pool reasonable?  Should certain commercial-industrial 
159.19  tax base continue to be exempt from contribution to the areawide 
159.20  pool, such as tax base in existence prior to 1979, tax base in 
159.21  tax increment financing districts established before 1979, and 
159.22  tax base located at the Minneapolis-St. Paul International 
159.23  Airport?  Should contribution amounts be adjusted for 
159.24  differences in sales ratios between communities? 
159.25     (3) Is the formula for distributing tax base from the 
159.26  areawide pool reasonable?  Should the formula reflect measures 
159.27  of need in addition to population?  Should the distribution 
159.28  formula be based on tax capacity rather than market value? 
159.29     (4) Does the program help promote orderly growth and 
159.30  encourage environmentally sound land use? 
159.31     (5) Does the program reduce competition for 
159.32  commercial-industrial tax base between communities?  Is reduced 
159.33  competition for commercial-industrial tax base desirable? 
159.34     (6) Do local governments derive sufficient tax revenues 
159.35  from commercial-industrial property to cover the costs of 
159.36  providing services to the property, considering the tax base 
160.1   that must be contributed to the areawide pool? 
160.2      (7) Could improvements be made in the administration of the 
160.3   program? 
160.4      <h>[EFFECTIVE DATE.]</h> This section is effective July 1, 2004. 
160.5      Sec. 59.  [TOWNSHIP LEVY ADJUSTMENT FOR WIND ENERGY 
160.6   PRODUCTION TAX; PAYABLE 2004 ONLY.] 
160.7      Notwithstanding the deadlines in Minnesota Statutes, 
160.8   section 275.07, towns located in Lincoln or Pipestone County are 
160.9   authorized to adjust their payable 2004 levy for all or a 
160.10  portion of their estimated wind energy production tax amounts 
160.11  for 2004, as computed by the commissioner of revenue from 
160.12  reports filed under Minnesota Statutes, section 272.029, 
160.13  subdivision 4.  The Lincoln and Pipestone county auditors may 
160.14  adjust the payable 2004 levy certifications under Minnesota 
160.15  Statutes, section 275.07, subdivision 1, based upon the towns 
160.16  that have recertified their levies under this section by March 
160.17  15, 2004. 
160.18     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
160.19  levied in 2003, payable in 2004 only. 
160.20     Sec. 60.  [FEE STUDIES.] 
160.21     Subdivision 1.  [STATE AGENCY FEES.] The commissioner of 
160.22  each state agency that imposes any fee on individuals or 
160.23  businesses in this state must report to the commissioner of 
160.24  revenue by January 15, 2005, on the type and amount of fees 
160.25  imposed, amount and type of fee increases since January 1, 2003, 
160.26  the revenues derived from each fee for each of the most recent 
160.27  four fiscal years, and the use of the revenues from the fees.  
160.28  The commissioner of revenue shall compile this information and 
160.29  provide a comprehensive report on all state agency fees to the 
160.30  finance and tax committees of the senate and the appropriations 
160.31  and tax committees of the house of representatives by February 
160.32  15, 2005. 
160.33     Subd. 2.  [SCHOOL FEES.] By January 15, 2005, the 
160.34  Department of Education shall provide the house and senate 
160.35  education finance divisions and tax committees with a report 
160.36  that examines the total annual fees collected under Minnesota 
161.1   Public School Fee Law, Minnesota Statutes, sections 123B.34 to 
161.2   123B.39, in fiscal years 2002 to 2004.  The report must detail 
161.3   all different types of fees charged to Minnesota students under 
161.4   the law.  The report must report total fees statewide as well as 
161.5   by school district and charter school. 
161.6      Subd. 3.  [CITY FEES.] Each home rule charter or statutory 
161.7   city must report to the commissioner of revenue by January 15, 
161.8   2005, on the type and amount of fees it imposes, amount and type 
161.9   of fee increases since January 1, 2003, the revenues derived 
161.10  from each fee for each of the most recent four calendar years, 
161.11  and the use of the revenues from the fees.  The commissioner of 
161.12  revenue shall compile this information and provide a 
161.13  comprehensive report on all city fees to the finance and tax 
161.14  committees of the senate and the appropriations and tax 
161.15  committees of the house of representatives by February 15, 2005. 
161.16                             ARTICLE 4
161.17                     AIDS TO LOCAL GOVERNMENTS
161.18     Section 1.  Minnesota Statutes 2003 Supplement, section 
161.19  477A.011, subdivision 34, is amended to read: 
161.20     Subd. 34.  [CITY REVENUE NEED.] (a) For a city with a 
161.21  population equal to or greater than 2,500, "city revenue need" 
161.22  is the sum of (1) 5.0734098 times the pre-1940 housing 
161.23  percentage; plus (2) 19.141678 times the population decline 
161.24  percentage; plus (3) 2504.06334 times the road accidents factor; 
161.25  plus (4) 355.0547; minus (5) the metropolitan area factor; minus 
161.26  (6) 49.10638 times the household size. 
161.27     (b) For a city with a population less than 2,500, "city 
161.28  revenue need" is the sum of (1) 2.387 times the pre-1940 housing 
161.29  percentage; plus (2) 2.67591 times the commercial industrial 
161.30  percentage; plus (3) 3.16042 times the population decline 
161.31  percentage; plus (4) 1.206 times the transformed population; 
161.32  minus (5) 62.772. 
161.33     (c) The city revenue need cannot be less than zero. 
161.34     (d) For calendar year 2005 and subsequent years, the city 
161.35  revenue need for a city, as determined in paragraphs (a) to (c), 
161.36  is multiplied by the ratio of the ~~annual~~ most recently available 
162.1   first quarter implicit price deflator for government consumption 
162.2   expenditures and gross investment for state and local 
162.3   governments as prepared by the United States Department of 
162.4   Commerce, ~~for the most recently available year~~ to the ~~2003~~ first 
162.5   quarter 2000 implicit price deflator for state and local 
162.6   government purchases. 
162.7      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
162.8   477A.011, subdivision 36, is amended to read: 
162.9      Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
162.10  provided in this subdivision, "city aid base" is zero. 
162.11     (b) The city aid base for any city with a population less 
162.12  than 500 is increased by $40,000 for aids payable in calendar 
162.13  year 1995 and thereafter, and the maximum amount of total aid it 
162.14  may receive under section 477A.013, subdivision 9, paragraph 
162.15  (c), is also increased by $40,000 for aids payable in calendar 
162.16  year 1995 only, provided that: 
162.17     (i) the average total tax capacity rate for taxes payable 
162.18  in 1995 exceeds 200 percent; 
162.19     (ii) the city portion of the tax capacity rate exceeds 100 
162.20  percent; and 
162.21     (iii) its city aid base is less than $60 per capita. 
162.22     (c) The city aid base for a city is increased by $20,000 in 
162.23  1998 and thereafter and the maximum amount of total aid it may 
162.24  receive under section 477A.013, subdivision 9, paragraph (c), is 
162.25  also increased by $20,000 in calendar year 1998 only, provided 
162.26  that: 
162.27     (i) the city has a population in 1994 of 2,500 or more; 
162.28     (ii) the city is located in a county, outside of the 
162.29  metropolitan area, which contains a city of the first class; 
162.30     (iii) the city's net tax capacity used in calculating its 
162.31  1996 aid under section 477A.013 is less than $400 per capita; 
162.32  and 
162.33     (iv) at least four percent of the total net tax capacity, 
162.34  for taxes payable in 1996, of property located in the city is 
162.35  classified as railroad property. 
162.36     (d) The city aid base for a city is increased by $200,000 
163.1   in 1999 and thereafter and the maximum amount of total aid it 
163.2   may receive under section 477A.013, subdivision 9, paragraph 
163.3   (c), is also increased by $200,000 in calendar year 1999 only, 
163.4   provided that: 
163.5      (i) the city was incorporated as a statutory city after 
163.6   December 1, 1993; 
163.7      (ii) its city aid base does not exceed $5,600; and 
163.8      (iii) the city had a population in 1996 of 5,000 or more. 
163.9      (e) The city aid base for a city is increased by $450,000 
163.10  in 1999 to 2008 and the maximum amount of total aid it may 
163.11  receive under section 477A.013, subdivision 9, paragraph (c), is 
163.12  also increased by $450,000 in calendar year 1999 only, provided 
163.13  that: 
163.14     (i) the city had a population in 1996 of at least 50,000; 
163.15     (ii) its population had increased by at least 40 percent in 
163.16  the ten-year period ending in 1996; and 
163.17     (iii) its city's net tax capacity for aids payable in 1998 
163.18  is less than $700 per capita. 
163.19     (f) ~~Beginning in 2004, the city aid base for a city is~~ 
163.20  ~~equal to the sum of its city aid base in 2003 and the amount of~~ 
163.21  ~~additional aid it was certified to receive under section 477A.06~~ 
163.22  ~~in 2003.  For 2004 only, the maximum amount of total aid a city~~ 
163.23  ~~may receive under section 477A.013, subdivision 9, paragraph~~ 
163.24  ~~(c), is also increased by the amount it was certified to receive~~ 
163.25  ~~under section 477A.06 in 2003.~~ 
163.26     ~~(g)~~ The city aid base for a city is increased by $150,000 
163.27  for aids payable in 2000 and thereafter, and the maximum amount 
163.28  of total aid it may receive under section 477A.013, subdivision 
163.29  9, paragraph (c), is also increased by $150,000 in calendar year 
163.30  2000 only, provided that: 
163.31     (1) the city has a population that is greater than 1,000 
163.32  and less than 2,500; 
163.33     (2) its commercial and industrial percentage for aids 
163.34  payable in 1999 is greater than 45 percent; and 
163.35     (3) the total market value of all commercial and industrial 
163.36  property in the city for assessment year 1999 is at least 15 
164.1   percent less than the total market value of all commercial and 
164.2   industrial property in the city for assessment year 1998. 
164.3      ~~(h)~~ (g) The city aid base for a city is increased by 
164.4   $200,000 in 2000 and thereafter, and the maximum amount of total 
164.5   aid it may receive under section 477A.013, subdivision 9, 
164.6   paragraph (c), is also increased by $200,000 in calendar year 
164.7   2000 only, provided that: 
164.8      (1) the city had a population in 1997 of 2,500 or more; 
164.9      (2) the net tax capacity of the city used in calculating 
164.10  its 1999 aid under section 477A.013 is less than $650 per 
164.11  capita; 
164.12     (3) the pre-1940 housing percentage of the city used in 
164.13  calculating 1999 aid under section 477A.013 is greater than 12 
164.14  percent; 
164.15     (4) the 1999 local government aid of the city under section 
164.16  477A.013 is less than 20 percent of the amount that the formula 
164.17  aid of the city would have been if the need increase percentage 
164.18  was 100 percent; and 
164.19     (5) the city aid base of the city used in calculating aid 
164.20  under section 477A.013 is less than $7 per capita. 
164.21     ~~(i)~~ (h) The city aid base for a city is increased by 
164.22  $102,000 in 2000 and thereafter, and the maximum amount of total 
164.23  aid it may receive under section 477A.013, subdivision 9, 
164.24  paragraph (c), is also increased by $102,000 in calendar year 
164.25  2000 only, provided that: 
164.26     (1) the city has a population in 1997 of 2,000 or more; 
164.27     (2) the net tax capacity of the city used in calculating 
164.28  its 1999 aid under section 477A.013 is less than $455 per 
164.29  capita; 
164.30     (3) the net levy of the city used in calculating 1999 aid 
164.31  under section 477A.013 is greater than $195 per capita; and 
164.32     (4) the 1999 local government aid of the city under section 
164.33  477A.013 is less than 38 percent of the amount that the formula 
164.34  aid of the city would have been if the need increase percentage 
164.35  was 100 percent. 
164.36     ~~(j)~~ (i) The city aid base for a city is increased by 
165.1   $32,000 in 2001 and thereafter, and the maximum amount of total 
165.2   aid it may receive under section 477A.013, subdivision 9, 
165.3   paragraph (c), is also increased by $32,000 in calendar year 
165.4   2001 only, provided that: 
165.5      (1) the city has a population in 1998 that is greater than 
165.6   200 but less than 500; 
165.7      (2) the city's revenue need used in calculating aids 
165.8   payable in 2000 was greater than $200 per capita; 
165.9      (3) the city net tax capacity for the city used in 
165.10  calculating aids available in 2000 was equal to or less than 
165.11  $200 per capita; 
165.12     (4) the city aid base of the city used in calculating aid 
165.13  under section 477A.013 is less than $65 per capita; and 
165.14     (5) the city's formula aid for aids payable in 2000 was 
165.15  greater than zero. 
165.16     ~~(k)~~ (j) The city aid base for a city is increased by $7,200 
165.17  in 2001 and thereafter, and the maximum amount of total aid it 
165.18  may receive under section 477A.013, subdivision 9, paragraph 
165.19  (c), is also increased by $7,200 in calendar year 2001 only, 
165.20  provided that: 
165.21     (1) the city had a population in 1998 that is greater than 
165.22  200 but less than 500; 
165.23     (2) the city's commercial industrial percentage used in 
165.24  calculating aids payable in 2000 was less than ten percent; 
165.25     (3) more than 25 percent of the city's population was 60 
165.26  years old or older according to the 1990 census; 
165.27     (4) the city aid base of the city used in calculating aid 
165.28  under section 477A.013 is less than $15 per capita; and 
165.29     (5) the city's formula aid for aids payable in 2000 was 
165.30  greater than zero. 
165.31     ~~(l)~~ (k) The city aid base for a city is increased by 
165.32  $45,000 in 2001 and thereafter and by an additional $50,000 in 
165.33  calendar years 2002 to 2011, and the maximum amount of total aid 
165.34  it may receive under section 477A.013, subdivision 9, paragraph 
165.35  (c), is also increased by $45,000 in calendar year 2001 only, 
165.36  and by $50,000 in calendar year 2002 only, provided that: 
166.1      (1) the net tax capacity of the city used in calculating 
166.2   its 2000 aid under section 477A.013 is less than $810 per 
166.3   capita; 
166.4      (2) the population of the city declined more than two 
166.5   percent between 1988 and 1998; 
166.6      (3) the net levy of the city used in calculating 2000 aid 
166.7   under section 477A.013 is greater than $240 per capita; and 
166.8      (4) the city received less than $36 per capita in aid under 
166.9   section 477A.013, subdivision 9, for aids payable in 2000. 
166.10  The city aid base for a city described in this paragraph is also 
166.11  increased by $250,000 in calendar years 2005 to 2014, and the 
166.12  maximum amount of total aid it may receive under section 
166.13  477A.013, subdivision 9, paragraph (c), is also increased by 
166.14  $250,000 in calendar year 2005 only. 
166.15     ~~(m)~~ (l) The city aid base for a city with a population of 
166.16  10,000 or more which is located outside of the seven-county 
166.17  metropolitan area is increased in 2002 and thereafter, and the 
166.18  maximum amount of total aid it may receive under section 
166.19  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
166.20  in calendar year 2002 only, by an amount equal to the lesser of: 
166.21     (1)(i) the total population of the city, ~~as determined by~~ 
166.22  ~~the United States Bureau of the Census, in the 2000 census,~~ (ii) 
166.23  minus 5,000, (iii) times 60; or 
166.24     (2) $2,500,000. 
166.25     ~~(n)~~ (m) The city aid base is increased by $50,000 in 2002 
166.26  and thereafter, and the maximum amount of total aid it may 
166.27  receive under section 477A.013, subdivision 9, paragraph (c), is 
166.28  also increased by $50,000 in calendar year 2002 only, provided 
166.29  that: 
166.30     (1) the city is located in the seven-county metropolitan 
166.31  area; 
166.32     (2) its population in 2000 is between 10,000 and 20,000; 
166.33  and 
166.34     (3) its commercial industrial percentage, as calculated for 
166.35  city aid payable in 2001, was greater than 25 percent. 
166.36     ~~(o)~~ (n) The city aid base for a city is increased by 
167.1   $150,000 in calendar years 2002 to 2011 and the maximum amount 
167.2   of total aid it may receive under section 477A.013, subdivision 
167.3   9, paragraph (c), is also increased by $150,000 in calendar year 
167.4   2002 only, provided that: 
167.5      (1) the city had a population of at least 3,000 but no more 
167.6   than 4,000 in 1999; 
167.7      (2) its home county is located within the seven-county 
167.8   metropolitan area; 
167.9      (3) its pre-1940 housing percentage is less than 15 
167.10  percent; and 
167.11     (4) its city net tax capacity per capita for taxes payable 
167.12  in 2000 is less than $900 per capita. 
167.13     ~~(p)~~ (o) The city aid base for a city is increased by 
167.14  $200,000 beginning in calendar year 2003 and the maximum amount 
167.15  of total aid it may receive under section 477A.013, subdivision 
167.16  9, paragraph (c), is also increased by $200,000 in calendar year 
167.17  2003 only, provided that the city qualified for an increase in 
167.18  homestead and agricultural credit aid under Laws 1995, chapter 
167.19  264, article 8, section 18. 
167.20     ~~(q)~~ (p) The city aid base for a city is increased by 
167.21  $200,000 in 2004 only and the maximum amount of total aid it may 
167.22  receive under section 477A.013, subdivision 9, is also increased 
167.23  by $200,000 in calendar year 2004 only, if the city is the site 
167.24  of a nuclear dry cask storage facility. 
167.25     ~~(r)~~ (q) The city aid base for a city is increased by 
167.26  $10,000 in 2004 and thereafter and the maximum total aid it may 
167.27  receive under section 477A.013, subdivision 9, is also increased 
167.28  by $10,000 in calendar year 2004 only, if the city was included 
167.29  in a federal major disaster designation issued on April 1, 1998, 
167.30  and its pre-1940 housing stock was decreased by more than 40 
167.31  percent between 1990 and 2000. 
167.32     (r) The city aid base for a city is increased by $25,000 in 
167.33  2005 only and the maximum total aid it may receive under section 
167.34  477A.013, subdivision 9, is also increased by $25,000 in 2005 
167.35  only, if the city (1) received no aid under section 477A.013 in 
167.36  2004; (2) had a population in 2002 greater than 20,000 and less 
168.1   than 50,000; and (3) had an adjusted net tax capacity of less 
168.2   than $750 per capita for aids payable in 2004. 
168.3      <h>[EFFECTIVE DATE.]</h> This section is effective beginning with 
168.4   aids payable in 2004. 
168.5      Sec. 3.  Minnesota Statutes 2003 Supplement, section 
168.6   477A.013, subdivision 8, is amended to read: 
168.7      Subd. 8.  [CITY FORMULA AID.] In calendar year 2004 and 
168.8   subsequent years, the formula aid for a city is equal to the 
168.9   need increase percentage multiplied by the difference between 
168.10  (1) the city's revenue need multiplied by its population, and 
168.11  (2) ~~the sum of~~ the city's net tax capacity multiplied by the tax 
168.12  effort rate~~, and the taconite aids under sections 298.28 and~~ 
168.13  ~~298.282, multiplied by the following percentages:~~  
168.14     ~~(i) zero percent for aids payable in 2004;~~ 
168.15     ~~(ii) 25 percent for aids payable in 2005;~~ 
168.16     ~~(iii) 50 percent for aids payable in 2006;~~ 
168.17     ~~(iv) 75 percent for aids payable in 2007; and~~ 
168.18     ~~(v) 100 percent for aids payable in 2008 and thereafter~~.  
168.19  No city may have a formula aid amount less than zero.  The need 
168.20  increase percentage must be the same for all cities.  
168.21     The applicable need increase percentage must be calculated 
168.22  by the Department of Revenue so that the total of the aid under 
168.23  subdivision 9 equals the total amount available for aid under 
168.24  section 477A.03 after the subtraction under section 477A.014, 
168.25  subdivisions 4 and 5.  
168.26     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
168.27  477A.013, subdivision 9, is amended to read: 
168.28     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
168.29  2002 and thereafter, each city shall receive an aid distribution 
168.30  equal to the sum of (1) the city formula aid under subdivision 
168.31  8, and (2) its city aid base. 
168.32     (b) ~~The aid for a city in calendar year 2004 shall not~~ 
168.33  ~~exceed the amount of its aid in calendar year 2003 after the~~ 
168.34  ~~reductions under Laws 2003, First Special Session chapter 21,~~ 
168.35  ~~article 5.~~  
168.36     ~~(c) For aids payable in 2005 and thereafter, the total aid~~ 
169.1   ~~for any city shall not exceed the sum of (1) ten percent of the~~ 
169.2   ~~city's net levy for the year prior to the aid distribution plus~~ 
169.3   ~~(2) its total aid in the previous year.~~  For aids payable in 
169.4   2005 and thereafter, the total aid for any city with a 
169.5   population of 2,500 or more may not decrease from its total aid 
169.6   under this section in the previous year by an amount greater 
169.7   than ten percent of its net levy in the year prior to the aid 
169.8   distribution. 
169.9      ~~(d) For aids payable in 2004 only, the total aid for a city~~ 
169.10  ~~with a population less than 2,500 may not be less than the~~ 
169.11  ~~amount it was certified to receive in 2003 minus the greater of~~ 
169.12  ~~(1) the reduction to this aid payment in 2003 under Laws 2003,~~ 
169.13  ~~First Special Session chapter 21, article 5, or (2) five percent~~ 
169.14  ~~of its 2003 aid amount.~~  (c) For aids payable in 2005 and 
169.15  thereafter, the total aid for a city with a population less than 
169.16  2,500 must not be less than the amount it was certified to 
169.17  receive in the previous year minus five percent of its 2003 
169.18  certified aid amount. 
169.19     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
169.20  payable in 2005 and thereafter. 
169.21     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
169.22  477A.03, subdivision 2a, is amended to read: 
169.23     Subd. 2a.  [CITIES.] ~~For aids payable in 2004, the total~~ 
169.24  ~~aids paid under section 477A.013, subdivision 9, are limited to~~ 
169.25  ~~$429,000,000.~~  For aids payable in 2005 ~~and thereafter~~, the 
169.26  total aids paid under section 477A.013, subdivision 9, are 
169.27  increased to ~~$437,052,000~~ $497,052,000.  For aids payable in 
169.28  2006 and subsequent years, the total aids paid under section 
169.29  477A.013, subdivision 9, are increased by $6,000,000 each year 
169.30  until the need increase percentage equals one. 
169.31     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
169.32  payable in 2005 and thereafter. 
169.33     Sec. 6.  Minnesota Statutes 2002, section 477A.11, 
169.34  subdivision 4, is amended to read: 
169.35     Subd. 4.  [OTHER NATURAL RESOURCES LAND.] "Other natural 
169.36  resources land" means~~:~~  
170.1      ~~(1)~~ any other land presently owned in fee title by the 
170.2   state and administered by the commissioner, or any tax-forfeited 
170.3   land, other than platted lots within a city or those lands 
170.4   described under subdivision 3, clause (2), which is owned by the 
170.5   state and administered by the commissioner or by the county in 
170.6   which it is located~~; and~~ 
170.7      ~~(2) land leased by the state from the United States of~~ 
170.8   ~~America through the United States Secretary of Agriculture~~ 
170.9   ~~pursuant to Title III of the Bankhead Jones Farm Tenant Act,~~ 
170.10  ~~which land is commonly referred to as land utilization project~~ 
170.11  ~~land that is administered by the commissioner~~. 
170.12     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
170.13  payable in 2005 and thereafter. 
170.14     Sec. 7.  Minnesota Statutes 2002, section 477A.11, is 
170.15  amended by adding a subdivision to read: 
170.16     Subd. 5.  [LAND UTILIZATION PROJECT LAND.] "Land 
170.17  utilization project land" means land that is leased by the state 
170.18  from the United States through the United States Secretary of 
170.19  Agriculture according to Title III of the Bankhead Jones Farm 
170.20  Tenant Act and that is administered by the commissioner. 
170.21     Sec. 8.  Minnesota Statutes 2002, section 477A.12, 
170.22  subdivision 1, is amended to read: 
170.23     Subdivision 1.  [TYPES OF LAND; PAYMENTS.] (a) As an offset 
170.24  for expenses incurred by counties and towns in support of 
170.25  natural resources lands, the following amounts are annually 
170.26  appropriated to the commissioner of natural resources from the 
170.27  general fund for transfer to the commissioner of revenue.  The 
170.28  commissioner of revenue shall pay the transferred funds to 
170.29  counties as required by sections 477A.11 to 477A.145.  The 
170.30  amounts are: 
170.31     (1) for acquired natural resources land, $3, as adjusted 
170.32  for inflation under section 477A.145, multiplied by the total 
170.33  number of acres of acquired natural resources land or, at the 
170.34  county's option three-fourths of one percent of the appraised 
170.35  value of all acquired natural resources land in the county, 
170.36  whichever is greater; 
171.1      (2) $3, as adjusted for inflation under section 477A.145, 
171.2   multiplied by the total number of acres of land utilization 
171.3   project land; 
171.4      (3) 75 cents, as adjusted for inflation under section 
171.5   477A.145, multiplied by the number of acres of 
171.6   county-administered other natural resources land; and 
171.7      ~~(3)~~ (4) 37.5 cents, as adjusted for inflation under section 
171.8   477A.145, multiplied by the number of acres of 
171.9   commissioner-administered other natural resources land located 
171.10  in each county as of July 1 of each year prior to the payment 
171.11  year. 
171.12     (b) The amount determined under paragraph (a), clause (1), 
171.13  is payable for land that is acquired from a private owner and 
171.14  owned by the Department of Transportation for the purpose of 
171.15  replacing wetland losses caused by transportation projects, but 
171.16  only if the county contains more than 500 acres of such land at 
171.17  the time the certification is made under subdivision 2. 
171.18     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
171.19  payable in 2005 and thereafter. 
171.20     Sec. 9.  Minnesota Statutes 2002, section 477A.12, 
171.21  subdivision 2, is amended to read: 
171.22     Subd. 2.  [PROCEDURE.] Lands for which payments in lieu are 
171.23  made pursuant to section 97A.061, subdivision 3, and Laws 1973, 
171.24  chapter 567, shall not be eligible for payments under this 
171.25  section.  Each county auditor shall certify to the Department of 
171.26  Natural Resources during July of each year prior to the payment 
171.27  year the number of acres of county-administered other natural 
171.28  resources land within the county.  The Department of Natural 
171.29  resources may, in addition to the certification of acreage, 
171.30  require descriptive lists of land so certified.  The 
171.31  commissioner of natural resources shall determine and certify to 
171.32  the commissioner of revenue by March 1 of the payment year:  
171.33     (1) the number of acres and most recent appraised value of 
171.34  acquired natural resources land within each county; 
171.35     (2) the number of acres of commissioner-administered 
171.36  natural resources land within each county; ~~and~~ 
172.1      (3) the number of acres of county-administered other 
172.2   natural resources land within each county, based on the reports 
172.3   filed by each county auditor with the commissioner of natural 
172.4   resources; and 
172.5      (4) the number of acres of land utilization project land 
172.6   within each county and the net proceeds from timber sales on 
172.7   land utilization project lands in each county. 
172.8      The commissioner of transportation shall determine and 
172.9   certify to the commissioner of revenue by March 1 of the payment 
172.10  year the number of acres of land and the appraised value of the 
172.11  land described in subdivision 1, paragraph (b), but only if it 
172.12  exceeds 500 acres. 
172.13     The commissioner of revenue shall determine the 
172.14  distributions provided for in this section using the number of 
172.15  acres and appraised values certified by the commissioner of 
172.16  natural resources and the commissioner of transportation by 
172.17  March 1 of the payment year. 
172.18     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
172.19  payable in 2005 and thereafter. 
172.20     Sec. 10.  Minnesota Statutes 2002, section 477A.14, 
172.21  subdivision 1, is amended to read: 
172.22     Subdivision 1.  [GENERAL DISTRIBUTION.] Except as provided 
172.23  in subdivision 2 or in section 97A.061, subdivision 5, 40 
172.24  percent of the total payment to the county shall be deposited in 
172.25  the county general revenue fund to be used to provide property 
172.26  tax levy reduction.  The remainder shall be distributed by the 
172.27  county in the following priority:  
172.28     (a) 37.5 cents, as adjusted for inflation under section 
172.29  477A.145, for each acre of county-administered other natural 
172.30  resources land shall be deposited in a resource development fund 
172.31  to be created within the county treasury for use in resource 
172.32  development, forest management, game and fish habitat 
172.33  improvement, and recreational development and maintenance of 
172.34  county-administered other natural resources land.  Any county 
172.35  receiving less than $5,000 annually for the resource development 
172.36  fund may elect to deposit that amount in the county general 
173.1   revenue fund; 
173.2      (b) From the funds remaining, within 30 days of receipt of 
173.3   the payment to the county, the county treasurer shall pay each 
173.4   organized township 30 cents, as adjusted for inflation under 
173.5   section 477A.145, for each acre of acquired natural resources 
173.6   land, each acre of land utilization project land, and each acre 
173.7   of land described in section 477A.12, subdivision 1, paragraph 
173.8   (b), and 7.5 cents, as adjusted for inflation under section 
173.9   477A.145, for each acre of other natural resources land located 
173.10  within its boundaries.  Payments for natural resources lands not 
173.11  located in an organized township shall be deposited in the 
173.12  county general revenue fund.  Payments to counties and townships 
173.13  pursuant to this paragraph shall be used to provide property tax 
173.14  levy reduction, except that of the payments for natural 
173.15  resources lands not located in an organized township, the county 
173.16  may allocate the amount determined to be necessary for 
173.17  maintenance of roads in unorganized townships.  Provided that, 
173.18  if the total payment to the county pursuant to section 477A.12 
173.19  is not sufficient to fully fund the distribution provided for in 
173.20  this clause, the amount available shall be distributed to each 
173.21  township and the county general revenue fund on a pro rata 
173.22  basis; and 
173.23     (c) Any remaining funds shall be deposited in the county 
173.24  general revenue fund.  Provided that, if the distribution to the 
173.25  county general revenue fund exceeds $35,000, the excess shall be 
173.26  used to provide property tax levy reduction. 
173.27     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
173.28  payable in 2005 and thereafter. 
173.29     Sec. 11.  Laws 2003, First Special Session chapter 21, 
173.30  article 5, section 13, is amended to read: 
173.31     Sec. 13.  [2004 CITY AID REDUCTIONS.] 
173.32     The commissioner of revenue shall compute an aid reduction 
173.33  amount for 2004 for each city as provided in this section. 
173.34     The initial aid reduction amount for each city is the 
173.35  amount by which the city's aid distribution under Minnesota 
173.36  Statutes, section 477A.013, and related provisions payable in 
174.1   2003 exceeds the city's 2004 distribution under those provisions.
174.2      The minimum aid reduction amount for a city is the amount 
174.3   of its reduction in 2003 under section 12.  If a city receives 
174.4   an increase to its city aid base under Minnesota Statutes, 
174.5   section 477A.011, subdivision 36, its minimum aid reduction is 
174.6   reduced by an equal amount. 
174.7      The maximum aid reduction amount for a city is an amount 
174.8   equal to 14 percent of the city's total 2004 levy plus aid 
174.9   revenue base, except that if the city has a city net tax 
174.10  capacity for aids payable in 2004, as defined in Minnesota 
174.11  Statutes, section 477A.011, subdivision 20, of $700 per capita 
174.12  or less, the maximum aid reduction shall not exceed an amount 
174.13  equal to 13 percent of the city's total 2004 levy plus aid 
174.14  revenue base. 
174.15     If the initial aid reduction amount for a city is less than 
174.16  the minimum aid reduction amount for that city, the final aid 
174.17  reduction amount for the city is the sum of the initial aid 
174.18  reduction amount and the lesser of the amount of the city's 
174.19  payable 2004 reimbursement under Minnesota Statutes, section 
174.20  273.1384, or the difference between the minimum and initial aid 
174.21  reduction amounts for the city, and the amount of the final aid 
174.22  reduction in excess of the initial aid reduction is deducted 
174.23  from the city's reimbursements pursuant to Minnesota Statutes, 
174.24  section 273.1384. 
174.25     If the initial aid reduction amount for a city is greater 
174.26  than the maximum aid reduction amount for the city, the city 
174.27  receives an additional distribution under this section equal to 
174.28  the result of subtracting the maximum aid reduction amount from 
174.29  the initial aid reduction amount.  This distribution shall be 
174.30  paid in equal installments in 2004 on the dates specified in 
174.31  Minnesota Statutes, section 477A.015.  The amount necessary for 
174.32  these additional distributions is appropriated to the 
174.33  commissioner of revenue from the general fund in fiscal year 
174.34  2005. 
174.35     ~~The initial aid reduction is applied to the city's~~ 
174.36  ~~distribution pursuant to Minnesota Statutes, section 477A.013,~~ 
175.1   ~~and any aid reduction in excess of the initial aid reduction is~~ 
175.2   ~~applied to the city's reimbursements pursuant to Minnesota~~ 
175.3   ~~Statutes, section 273.1384.~~ 
175.4      To the extent that sufficient information is available on 
175.5   each payment date in 2004, the commissioner of revenue shall pay 
175.6   the reimbursements reduced under this section in equal 
175.7   installments on the payment dates provided in law. 
175.8      <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
175.9   payable in 2004. 
175.10                             ARTICLE 5
175.11                         LOCAL DEVELOPMENT
175.12     Section 1.  Minnesota Statutes 2002, section 116J.993, 
175.13  subdivision 3, is amended to read: 
175.14     Subd. 3.  [BUSINESS SUBSIDY.] "Business subsidy" or 
175.15  "subsidy" means a state or local government agency grant, 
175.16  contribution of personal property, real property, 
175.17  infrastructure, the principal amount of a loan at rates below 
175.18  those commercially available to the recipient, any reduction or 
175.19  deferral of any tax or any fee, any guarantee of any payment 
175.20  under any loan, lease, or other obligation, or any preferential 
175.21  use of government facilities given to a business. 
175.22     The following forms of financial assistance are not a 
175.23  business subsidy: 
175.24     (1) a business subsidy of less than $25,000; 
175.25     (2) assistance that is generally available to all 
175.26  businesses or to a general class of similar businesses, such as 
175.27  a line of business, size, location, or similar general criteria; 
175.28     (3) public improvements to buildings or lands owned by the 
175.29  state or local government that serve a public purpose and do not 
175.30  principally benefit a single business or defined group of 
175.31  businesses at the time the improvements are made; 
175.32     (4) redevelopment property polluted by contaminants as 
175.33  defined in section 116J.552, subdivision 3; 
175.34     (5) assistance provided for the sole purpose of renovating 
175.35  old or decaying building stock or bringing it up to code and 
175.36  assistance provided for designated historic preservation 
176.1   districts, provided that the assistance is equal to or less than 
176.2   50 percent of the total cost; 
176.3      (6) assistance to provide job readiness and training 
176.4   services if the sole purpose of the assistance is to provide 
176.5   those services, except when such assistance is paid for by 
176.6   expenditures of tax increments under section 469.176, 
176.7   subdivision 4m; 
176.8      (7) assistance for housing; 
176.9      (8) assistance for pollution control or abatement, 
176.10  including assistance for a tax increment financing hazardous 
176.11  substance subdistrict as defined under section 469.174, 
176.12  subdivision 23; 
176.13     (9) assistance for energy conservation; 
176.14     (10) tax reductions resulting from conformity with federal 
176.15  tax law; 
176.16     (11) workers' compensation and unemployment compensation; 
176.17     (12) benefits derived from regulation; 
176.18     (13) indirect benefits derived from assistance to 
176.19  educational institutions; 
176.20     (14) funds from bonds allocated under chapter 474A, bonds 
176.21  issued to refund outstanding bonds, and bonds issued for the 
176.22  benefit of an organization described in section 501(c)(3) of the 
176.23  Internal Revenue Code of 1986, as amended through December 31, 
176.24  1999; 
176.25     (15) assistance for a collaboration between a Minnesota 
176.26  higher education institution and a business; 
176.27     (16) assistance for a tax increment financing soils 
176.28  condition district as defined under section 469.174, subdivision 
176.29  19; 
176.30     (17) redevelopment when the recipient's investment in the 
176.31  purchase of the site and in site preparation is 70 percent or 
176.32  more of the assessor's current year's estimated market value; 
176.33     (18) general changes in tax increment financing law and 
176.34  other general tax law changes of a principally technical nature; 
176.35     (19) federal assistance until the assistance has been 
176.36  repaid to, and reinvested by, the state or local government 
177.1   agency; 
177.2      (20) funds from dock and wharf bonds issued by a seaway 
177.3   port authority; 
177.4      (21) business loans and loan guarantees of $75,000 or less; 
177.5   and 
177.6      (22) federal loan funds provided through the United States 
177.7   Department of Commerce, Economic Development Administration. 
177.8      Sec. 2.  Minnesota Statutes 2002, section 116J.993, is 
177.9   amended by adding a subdivision to read: 
177.10     Subd. 8.  [RESIDENCE.] "Residence" means the place where an 
177.11  individual has established a permanent home from which the 
177.12  individual has no present intention of moving. 
177.13     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
177.14  116J.994, subdivision 4, is amended to read: 
177.15     Subd. 4.  [WAGE AND JOB GOALS.] The subsidy agreement, in 
177.16  addition to any other goals, must include:  (1) goals for the 
177.17  number of jobs created, which may include separate goals for the 
177.18  number of part-time or full-time jobs, or, in cases where job 
177.19  loss is specific and demonstrable, goals for the number of jobs 
177.20  retained; (2) wage goals for any jobs created or retained; and 
177.21  (3) wage goals for any jobs to be enhanced through increased 
177.22  wages.  After a public hearing, if the creation or retention of 
177.23  jobs is determined not to be a goal, the wage and job goals may 
177.24  be set at zero.  The goals for the number of jobs to be created 
177.25  or retained must result in job creation or retention by the 
177.26  recipient within the granting jurisdiction overall. 
177.27     In addition to other specific goal time frames, the wage 
177.28  and job goals must contain specific goals to be attained within 
177.29  two years of the benefit date. 
177.30     <h>[EFFECTIVE DATE.]</h> This section is effective August 1, 2004, 
177.31  and applies to subsidy agreements entered into on or after that 
177.32  date. 
177.33     Sec. 4.  Minnesota Statutes 2002, section 116J.994, 
177.34  subdivision 5, is amended to read: 
177.35     Subd. 5.  [PUBLIC NOTICE AND HEARING.] (a) Before granting 
177.36  a business subsidy that exceeds $500,000 for a state government 
178.1   grantor and $100,000 for a local government grantor, the grantor 
178.2   must provide public notice and a hearing on the subsidy.  A 
178.3   public hearing and notice under this subdivision is not required 
178.4   if a hearing and notice on the subsidy is otherwise required by 
178.5   law. 
178.6      (b) Public notice of a proposed business subsidy under this 
178.7   subdivision by a state government grantor, other than the Iron 
178.8   Range Resources and Rehabilitation Board, must be published in 
178.9   the State Register.  Public notice of a proposed business 
178.10  subsidy under this subdivision by a local government grantor or 
178.11  the Iron Range Resources and Rehabilitation Board must be 
178.12  published in a local newspaper of general circulation.  The 
178.13  public notice must identify the location at which information 
178.14  about the business subsidy, including a summary of the terms of 
178.15  the subsidy, is available.  Published notice should be 
178.16  sufficiently conspicuous in size and placement to distinguish 
178.17  the notice from the surrounding text.  The grantor must make the 
178.18  information available in printed paper copies and, if possible, 
178.19  on the Internet.  The government agency must provide at least a 
178.20  ten-day notice for the public hearing. 
178.21     (c) The public notice must include the date, time, and 
178.22  place of the hearing. 
178.23     (d) The public hearing by a state government grantor other 
178.24  than the Iron Range Resources and Rehabilitation Board must be 
178.25  held in St. Paul. 
178.26     (e) If more than one nonstate grantor provides a business 
178.27  subsidy to the same recipient, the nonstate grantors may 
178.28  designate one nonstate grantor to hold a single public hearing 
178.29  regarding the business subsidies provided by all nonstate 
178.30  grantors.  For the purposes of this paragraph, "nonstate 
178.31  grantor" includes the iron range resources and rehabilitation 
178.32  board. 
178.33     (f) The public notice of any public meeting about a 
178.34  business subsidy agreement, including those required by this 
178.35  subdivision and by subdivision 4, must include notice that a 
178.36  person with residence in or the owner of taxable property in the 
179.1   granting jurisdiction may file a written complaint with the 
179.2   grantor if the grantor fails to comply with sections 116J.993 to 
179.3   116J.995, and that no action may be filed against the grantor 
179.4   for such failure to comply unless a written complaint is filed. 
179.5      Sec. 5.  Minnesota Statutes 2003 Supplement, section 
179.6   116J.994, subdivision 9, is amended to read: 
179.7      Subd. 9.  [COMPILATION AND SUMMARY REPORT.] The Department 
179.8   of Employment and Economic Development must publish a 
179.9   compilation and summary of the results of the reports for the 
179.10  previous calendar year by August 1 of 2004 and every other year 
179.11  thereafter.  The reports of the government agencies to the 
179.12  department and the compilation and summary report of the 
179.13  department must be made available to the public.  The 
179.14  commissioner must make copies of all business subsidy reports 
179.15  submitted by local and state granting agencies available on the 
179.16  department's Web site by October 1 of the year in which they 
179.17  were submitted.  
179.18     The commissioner must coordinate the production of reports 
179.19  so that useful comparisons across time periods and across 
179.20  grantors can be made.  The commissioner may add other 
179.21  information to the report as the commissioner deems necessary to 
179.22  evaluate business subsidies.  Among the information in the 
179.23  summary and compilation report, the commissioner must include: 
179.24     (1) total amount of subsidies awarded in each development 
179.25  region of the state; 
179.26     (2) distribution of business subsidy amounts by size of the 
179.27  business subsidy; 
179.28     (3) distribution of business subsidy amounts by time 
179.29  category; 
179.30     (4) distribution of subsidies by type and by public 
179.31  purpose; 
179.32     (5) percent of all business subsidies that reached their 
179.33  goals; 
179.34     (6) percent of business subsidies that did not reach their 
179.35  goals by two years from the benefit date; 
179.36     (7) total dollar amount of business subsidies that did not 
180.1   meet their goals after two years from the benefit date; 
180.2      (8) percent of subsidies that did not meet their goals and 
180.3   that did not receive repayment; 
180.4      (9) list of recipients that have failed to meet the terms 
180.5   of a subsidy agreement in the past five years and have not 
180.6   satisfied their repayment obligations; 
180.7      (10) number of part-time and full-time jobs within separate 
180.8   bands of wages; and 
180.9      (11) benefits paid within separate bands of wages.  
180.10     Sec. 6.  Minnesota Statutes 2002, section 116J.994, is 
180.11  amended by adding a subdivision to read: 
180.12     Subd. 11.  [ENFORCEMENT.] (a) A person with residence in or 
180.13  an owner of taxable property located in the jurisdiction of the 
180.14  grantor may bring an action for equitable relief arising out of 
180.15  the failure of the grantor to comply with sections 116J.993 to 
180.16  116J.995.  The court may award a prevailing party in an action 
180.17  under this subdivision costs and reasonable attorney fees. 
180.18     (b) Prior to bringing an action, the party must file a 
180.19  written complaint with the grantor stating the alleged violation 
180.20  and proposing a remedy.  The grantor has up to 30 days to reply 
180.21  to the complaint in writing and may take action to comply with 
180.22  sections 116J.993 to 116J.995. 
180.23     (c) The written complaint under this subdivision for 
180.24  failure to comply with subdivisions 1 to 5, must be filed with 
180.25  the grantor within 180 days after approval of the subsidy 
180.26  agreement under subdivision 3, paragraph (d).  An action under 
180.27  this subdivision must be commenced within 30 days following 
180.28  receipt of the grantor's reply, or within 180 days after 
180.29  approval of the subsidy agreement under subdivision 3, paragraph 
180.30  (d), whichever is later. 
180.31     <h>[EFFECTIVE DATE.]</h> This section is effective August 1, 2004, 
180.32  and applies to subsidy agreements entered into on or after that 
180.33  date. 
180.34     Sec. 7.  Minnesota Statutes 2002, section 161.1231, is 
180.35  amended by adding a subdivision to read: 
180.36     Subd. 11.  [TRANSFER OF OWNERSHIP.] The commissioner shall, 
181.1   at the earliest feasible date after receiving payment, transfer 
181.2   ownership of the parking facilities to the city of Minneapolis.  
181.3   The payment must be equal to the amount of state funds spent by 
181.4   the commissioner for construction of the facilities.  Upon 
181.5   assuming ownership of the facilities, the city shall operate the 
181.6   facilities in accordance with the rules adopted by the 
181.7   commissioner under subdivision 2.  Upon assumption of ownership, 
181.8   the city shall assume the authority to collect fees for use of 
181.9   the facilities under subdivision 5.  The commissioner shall take 
181.10  no action under this section that would result in federal 
181.11  sanctions against Minnesota or require the repayment of any 
181.12  state funds to the federal government.  The commissioner shall 
181.13  deposit all money received under this subdivision in the trunk 
181.14  highway fund. 
181.15     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
181.16  the governing body of the city of Minneapolis and its chief 
181.17  clerical officer comply with Minnesota Statutes, section 
181.18  645.021, subdivisions 2 and 3. 
181.19     Sec. 8.  Minnesota Statutes 2002, section 469.034, 
181.20  subdivision 2, is amended to read: 
181.21     Subd. 2.  [GENERAL OBLIGATION REVENUE BONDS.] (a) An 
181.22  authority may pledge the general obligation of the general 
181.23  jurisdiction governmental unit as additional security for bonds 
181.24  payable from income or revenues of the project or the 
181.25  authority.  The authority must find that the pledged revenues 
181.26  will equal or exceed 110 percent of the principal and interest 
181.27  due on the bonds for each year.  The proceeds of the bonds must 
181.28  be used for a qualified housing development project or 
181.29  projects.  The obligations must be issued and sold in the manner 
181.30  and following the procedures provided by chapter 475, except the 
181.31  obligations are not subject to approval by the electors and the 
181.32  maturities may extend to not more than 30 years from the 
181.33  estimated date of completion of the project.  The authority is 
181.34  the municipality for purposes of chapter 475.  
181.35     (b) The principal amount of the issue must be approved by 
181.36  the governing body of the general jurisdiction governmental unit 
182.1   whose general obligation is pledged.  Public hearings must be 
182.2   held on issuance of the obligations by both the authority and 
182.3   the general jurisdiction governmental unit.  The hearings must 
182.4   be held at least 15 days, but not more than 120 days, before the 
182.5   sale of the obligations. 
182.6      (c) The maximum amount of general obligation bonds that may 
182.7   be issued and outstanding under this section equals the greater 
182.8   of (1) one-half of one percent of the taxable market value of 
182.9   the general jurisdiction governmental unit whose general 
182.10  obligation which includes a tax on property is pledged, or (2) 
182.11  $3,000,000.  In the case of county or multicounty general 
182.12  obligation bonds, the outstanding general obligation bonds of 
182.13  all cities in the county or counties issued under this 
182.14  subdivision must be added in calculating the limit under clause 
182.15  (1). 
182.16     (d) "General jurisdiction governmental unit" means the city 
182.17  in which the housing development project is located.  In the 
182.18  case of a county or multicounty authority, the county or 
182.19  counties may act as the general jurisdiction governmental unit.  
182.20  In the case of a multicounty authority, the pledge of the 
182.21  general obligation is a pledge of a tax on the taxable property 
182.22  in each of the counties. 
182.23     (e) "Qualified housing development project" means a housing 
182.24  development project providing housing either for the elderly or 
182.25  for individuals and families with incomes not greater than 80 
182.26  percent of the median family income as estimated by the United 
182.27  States Department of Housing and Urban Development for the 
182.28  standard metropolitan statistical area or the nonmetropolitan 
182.29  county in which the project is located~~, and will~~.  The project 
182.30  must be owned for the term of the bonds either by the authority 
182.31  ~~for the term of the bonds~~ or by a limited partnership or other 
182.32  entity in which the authority or another entity under the sole 
182.33  control of the authority is the sole general partner.  The 
182.34  partnership or other entity must receive either:  (1) an 
182.35  allocation from the Department of Finance or an entitlement 
182.36  issuer of tax-exempt bonding authority for the project and a 
183.1   preliminary determination by the Minnesota Housing Finance 
183.2   Agency or the applicable suballocator of tax credits that the 
183.3   project will qualify for four percent low-income housing tax 
183.4   credits; or (2) a reservation of nine percent low-income housing 
183.5   tax credits from the Minnesota Housing Finance Agency or a 
183.6   suballocator of tax credits for the project.  A qualified 
183.7   housing development project may admit nonelderly individuals and 
183.8   families with higher incomes if: 
183.9      (1) three years have passed since initial occupancy; 
183.10     (2) the authority finds the project is experiencing 
183.11  unanticipated vacancies resulting in insufficient revenues, 
183.12  because of changes in population or other unforeseen 
183.13  circumstances that occurred after the initial finding of 
183.14  adequate revenues; and 
183.15     (3) the authority finds a tax levy or payment from general 
183.16  assets of the general jurisdiction governmental unit will be 
183.17  necessary to pay debt service on the bonds if higher income 
183.18  individuals or families are not admitted. 
183.19     <h>[EFFECTIVE DATE.]</h> This section is effective for bonds 
183.20  issued after the day following final enactment. 
183.21     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
183.22  469.174, subdivision 10, is amended to read: 
183.23     Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
183.24  district" means a type of tax increment financing district 
183.25  consisting of a project, or portions of a project, within which 
183.26  the authority finds by resolution that one or more of the 
183.27  following conditions, reasonably distributed throughout the 
183.28  district, exists: 
183.29     (1) parcels consisting of 70 percent of the area of the 
183.30  district are occupied by buildings, streets, utilities, paved or 
183.31  gravel parking lots, or other similar structures and more than 
183.32  50 percent of the buildings, not including outbuildings, are 
183.33  structurally substandard to a degree requiring substantial 
183.34  renovation or clearance; 
183.35     (2) the property consists of vacant, unused, underused, 
183.36  inappropriately used, or infrequently used railyards, rail 
184.1   storage facilities, or excessive or vacated railroad 
184.2   rights-of-way; 
184.3      (3) tank facilities, or property whose immediately previous 
184.4   use was for tank facilities, as defined in section 115C.02, 
184.5   subdivision 15, if the tank facilities: 
184.6      (i) have or had a capacity of more than 1,000,000 gallons; 
184.7      (ii) are located adjacent to rail facilities; and 
184.8      (iii) have been removed or are unused, underused, 
184.9   inappropriately used, or infrequently used; or 
184.10     (4) a qualifying disaster area, as defined in subdivision 
184.11  10b. 
184.12     (b) For purposes of this subdivision, "structurally 
184.13  substandard" shall mean containing defects in structural 
184.14  elements or a combination of deficiencies in essential utilities 
184.15  and facilities, light and ventilation, fire protection including 
184.16  adequate egress, layout and condition of interior partitions, or 
184.17  similar factors, which defects or deficiencies are of sufficient 
184.18  total significance to justify substantial renovation or 
184.19  clearance.  A building originally constructed for use as a 
184.20  public or private school, 50 percent or more of the square 
184.21  footage of which was constructed 30 or more years before 
184.22  approval of the plan, is deemed to be structurally substandard 
184.23  for purposes of this subdivision, notwithstanding paragraph (c), 
184.24  if the tax increment financing plan provides for demolition or 
184.25  substantial renovation of the building. 
184.26     (c) A building is not structurally substandard if it is in 
184.27  compliance with the building code applicable to new buildings or 
184.28  could be modified to (1) satisfy the building code, plus (2) if 
184.29  the tax increment financing plan provides for demolition or 
184.30  substantial renovation of the building, abate or remove asbestos 
184.31  and lead, at a cost of less than 15 percent of the cost of 
184.32  constructing a new structure of the same square footage and type 
184.33  on the site.  The municipality may find that a building is not 
184.34  disqualified as structurally substandard under the preceding 
184.35  sentence on the basis of reasonably available evidence, such as 
184.36  the size, type, and age of the building, the average cost of 
185.1   plumbing, electrical, or structural repairs, or other similar 
185.2   reliable evidence.  The municipality may not make such a 
185.3   determination without an interior inspection of the property, 
185.4   but need not have an independent, expert appraisal prepared of 
185.5   the cost of repair and rehabilitation of the building.  An 
185.6   interior inspection of the property is not required, if the 
185.7   municipality finds that (1) the municipality or authority is 
185.8   unable to gain access to the property after using its best 
185.9   efforts to obtain permission from the party that owns or 
185.10  controls the property; and (2) the evidence otherwise supports a 
185.11  reasonable conclusion that the building is structurally 
185.12  substandard.  Items of evidence that support such a conclusion 
185.13  include recent fire or police inspections, on-site property tax 
185.14  appraisals or housing inspections, exterior evidence of 
185.15  deterioration, or other similar reliable evidence.  Written 
185.16  documentation of the findings and reasons why an interior 
185.17  inspection was not conducted must be made and retained under 
185.18  section 469.175, subdivision 3, clause (1).  Failure of a 
185.19  building to be disqualified under the provisions of this 
185.20  paragraph is a necessary, but not a sufficient, condition to 
185.21  determining that the building is substandard.  
185.22     (d) A parcel is deemed to be occupied by a structurally 
185.23  substandard building for purposes of the finding under paragraph 
185.24  (a) if all of the following conditions are met: 
185.25     (1) the parcel was occupied by a substandard building 
185.26  within three years of the filing of the request for 
185.27  certification of the parcel as part of the district with the 
185.28  county auditor; 
185.29     (2) the substandard building was demolished or removed by 
185.30  the authority or the demolition or removal was financed by the 
185.31  authority or was done by a developer under a development 
185.32  agreement with the authority; 
185.33     (3) the authority found by resolution before the demolition 
185.34  or removal that the parcel was occupied by a structurally 
185.35  substandard building and that after demolition and clearance the 
185.36  authority intended to include the parcel within a district; and 
186.1      (4) upon filing the request for certification of the tax 
186.2   capacity of the parcel as part of a district, the authority 
186.3   notifies the county auditor that the original tax capacity of 
186.4   the parcel must be adjusted as provided by section 469.177, 
186.5   subdivision 1, paragraph (f). 
186.6      (e) For purposes of this subdivision, a parcel is not 
186.7   occupied by buildings, streets, utilities, paved or gravel 
186.8   parking lots, or other similar structures unless 15 percent of 
186.9   the area of the parcel contains buildings, streets, utilities, 
186.10  paved or gravel parking lots, or other similar structures. 
186.11     (f) For districts consisting of two or more noncontiguous 
186.12  areas, each area must qualify as a redevelopment district under 
186.13  paragraph (a) to be included in the district, and the entire 
186.14  area of the district must satisfy paragraph (a). 
186.15     <h>[EFFECTIVE DATE.]</h> This section is effective for districts 
186.16  for which the request for certification was made after June 30, 
186.17  2004. 
186.18     Sec. 10.  Minnesota Statutes 2002, section 469.174, is 
186.19  amended by adding a subdivision to read: 
186.20     Subd. 30.  [URBAN RENEWAL AREA.] "Urban renewal area" means 
186.21  a contiguous geographic area designated within a project and 
186.22  within which all parcels must be eligible for inclusion in a 
186.23  redevelopment, renewal and renovation, or soils condition 
186.24  district or are currently located within a redevelopment, 
186.25  renewal and renovation, or soils condition district certified 
186.26  within ten years before or after the date of approval of the 
186.27  urban renewal area by the city or county, whichever is later.  
186.28  In determining eligibility for inclusion in a district, each 
186.29  parcel may only be considered as a part of one district. 
186.30     <h>[EFFECTIVE DATE.]</h> This section is effective for urban 
186.31  renewal areas established on or after the date of final 
186.32  enactment. 
186.33     Sec. 11.  Minnesota Statutes 2003 Supplement, section 
186.34  469.175, subdivision 1, is amended to read: 
186.35     Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] A tax 
186.36  increment financing plan shall contain:  
187.1      (1) a statement of objectives of an authority for the 
187.2   improvement of a project; 
187.3      (2) a statement as to the development program for the 
187.4   project, including the property within the project, if any, that 
187.5   the authority intends to acquire; 
187.6      (3) a list of any development activities that the plan 
187.7   proposes to take place within the project, for which contracts 
187.8   have been entered into at the time of the preparation of the 
187.9   plan, including the names of the parties to the contract, the 
187.10  activity governed by the contract, the cost stated in the 
187.11  contract, and the expected date of completion of that activity; 
187.12     (4) identification or description of the type of any other 
187.13  specific development reasonably expected to take place within 
187.14  the project, and the date when the development is likely to 
187.15  occur; 
187.16     (5) estimates of the following:  
187.17     (i) cost of the project, including administrative expenses, 
187.18  except that if part of the cost of the project is paid or 
187.19  financed with increment from the tax increment financing 
187.20  district, the tax increment financing plan for the district must 
187.21  contain an estimate of the amount of the cost of the project, 
187.22  including administrative expenses, that will be paid or financed 
187.23  with tax increments from the district; 
187.24     (ii) amount of bonded indebtedness to be incurred; 
187.25     (iii) sources of revenue to finance or otherwise pay public 
187.26  costs; 
187.27     (iv) the most recent net tax capacity of taxable real 
187.28  property within the tax increment financing district and within 
187.29  any subdistrict; 
187.30     (v) the estimated captured net tax capacity of the tax 
187.31  increment financing district at completion; and 
187.32     (vi) the duration of the tax increment financing district's 
187.33  and any subdistrict's existence; 
187.34     (6) statements of the authority's alternate estimates of 
187.35  the impact of tax increment financing on the net tax capacities 
187.36  of all taxing jurisdictions in which the tax increment financing 
188.1   district is located in whole or in part.  For purposes of one 
188.2   statement, the authority shall assume that the estimated 
188.3   captured net tax capacity would be available to the taxing 
188.4   jurisdictions without creation of the district, and for purposes 
188.5   of the second statement, the authority shall assume that none of 
188.6   the estimated captured net tax capacity would be available to 
188.7   the taxing jurisdictions without creation of the district or 
188.8   subdistrict; 
188.9      (7) identification and description of studies and analyses 
188.10  used to make the determination set forth in subdivision 3, 
188.11  clause (2); ~~and~~ 
188.12     (8) identification of all parcels to be included in the 
188.13  district or any subdistrict; and 
188.14     (9) identification of any job training costs intended to be 
188.15  paid by use of tax increments, including the name of the 
188.16  employer whose employees will be trained and the nature and cost 
188.17  of the training.  The plan is not required to identify the 
188.18  provider of the job training. 
188.19     <h>[EFFECTIVE DATE.]</h> This section applies to districts for 
188.20  which the request for certification was made after July 31, 
188.21  1979, and is effective for tax increment financing plans 
188.22  approved after June 30, 2004.  
188.23     Sec. 12.  Minnesota Statutes 2003 Supplement, section 
188.24  469.175, subdivision 4, is amended to read: 
188.25     Subd. 4.  [MODIFICATION OF PLAN.] (a) A tax increment 
188.26  financing plan may be modified by an authority. 
188.27     (b) The authority may make the following modifications only 
188.28  upon the notice and after the discussion, public hearing, and 
188.29  findings required for approval of the original plan: 
188.30     (1) any reduction or enlargement of geographic area of the 
188.31  project or tax increment financing district that does not meet 
188.32  the requirements of paragraph (e); 
188.33     (2) increase in amount of bonded indebtedness to be 
188.34  incurred; 
188.35     (3) a determination to capitalize interest on the debt if 
188.36  that determination was not a part of the original plan, or to 
189.1   increase or decrease the amount of interest on the debt to be 
189.2   capitalized; 
189.3      (4) increase in the portion of the captured net tax 
189.4   capacity to be retained by the authority; 
189.5      (5) increase in the estimate of the cost of the project, 
189.6   including administrative expenses, that will be paid or financed 
189.7   with tax increment from the district; ~~or~~ 
189.8      (6) designation of additional property to be acquired by 
189.9   the authority; or 
189.10     (7) a decision to pay for job training for employees of a 
189.11  business located in the district that was not a part of the 
189.12  original plan. 
189.13     (c) If an authority changes the type of district to another 
189.14  type of district, this change is not a modification but requires 
189.15  the authority to follow the procedure set forth in sections 
189.16  469.174 to 469.179 for adoption of a new plan, including 
189.17  certification of the net tax capacity of the district by the 
189.18  county auditor.  
189.19     (d) If a redevelopment district or a renewal and renovation 
189.20  district is enlarged, the reasons and supporting facts for the 
189.21  determination that the addition to the district meets the 
189.22  criteria of section 469.174, subdivision 10, paragraph (a), 
189.23  clauses (1) and (2), or subdivision 10a, must be documented.  
189.24     (e) The requirements of paragraph (b) do not apply if (1) 
189.25  the only modification is elimination of parcels from the project 
189.26  or district and (2)(A) the current net tax capacity of the 
189.27  parcels eliminated from the district equals or exceeds the net 
189.28  tax capacity of those parcels in the district's original net tax 
189.29  capacity or (B) the authority agrees that, notwithstanding 
189.30  section 469.177, subdivision 1, the original net tax capacity 
189.31  will be reduced by no more than the current net tax capacity of 
189.32  the parcels eliminated from the district.  The authority must 
189.33  notify the county auditor of any modification that reduces or 
189.34  enlarges the geographic area of a district or a project area.  
189.35     (f) The geographic area of a tax increment financing 
189.36  district may be reduced, but shall not be enlarged after five 
190.1   years following the date of certification of the original net 
190.2   tax capacity by the county auditor or after August 1, 1984, for 
190.3   tax increment financing districts authorized prior to August 1, 
190.4   1979. 
190.5      <h>[EFFECTIVE DATE.]</h> This section is effective for districts 
190.6   for which the request for certification was made after July 31, 
190.7   1979, and is effective for modifications made after June 30, 
190.8   2004. 
190.9      Sec. 13.  Minnesota Statutes 2003 Supplement, section 
190.10  469.175, subdivision 6, is amended to read: 
190.11     Subd. 6.  [ANNUAL FINANCIAL REPORTING.] (a) The state 
190.12  auditor shall develop a uniform system of accounting and 
190.13  financial reporting for tax increment financing districts.  The 
190.14  system of accounting and financial reporting shall, as nearly as 
190.15  possible: 
190.16     (1) provide for full disclosure of the sources and uses of 
190.17  public funds in the district; 
190.18     (2) permit comparison and reconciliation with the affected 
190.19  local government's accounts and financial reports; 
190.20     (3) permit auditing of the funds expended on behalf of a 
190.21  district, including a single district that is part of a 
190.22  multidistrict project or that is funded in part or whole through 
190.23  the use of a development account funded with tax increments from 
190.24  other districts or with other public money; 
190.25     (4) be consistent with generally accepted accounting 
190.26  principles. 
190.27     (b) The authority must annually submit to the state auditor 
190.28  a financial report in compliance with paragraph (a).  Copies of 
190.29  the report must also be provided to the county auditor and to 
190.30  the governing body of the municipality, if the authority is not 
190.31  the municipality.  To the extent necessary to permit compliance 
190.32  with the requirement of financial reporting, the county and any 
190.33  other appropriate local government unit or private entity must 
190.34  provide the necessary records or information to the authority or 
190.35  the state auditor as provided by the system of accounting and 
190.36  financial reporting developed pursuant to paragraph (a).  The 
191.1   authority must submit the annual report for a year on or before 
191.2   August 1 of the next year. 
191.3      (c) The annual financial report must also include the 
191.4   following items: 
191.5      (1) the original net tax capacity of the district and any 
191.6   subdistrict under section 469.177, subdivision 1; 
191.7      (2) the net tax capacity for the reporting period of the 
191.8   district and any subdistrict; 
191.9      (3) the captured net tax capacity of the district; 
191.10     (4) any fiscal disparity deduction from the captured net 
191.11  tax capacity under section 469.177, subdivision 3; 
191.12     (5) the captured net tax capacity retained for tax 
191.13  increment financing under section 469.177, subdivision 2, 
191.14  paragraph (a), clause (1); 
191.15     (6) any captured net tax capacity distributed among 
191.16  affected taxing districts under section 469.177, subdivision 2, 
191.17  paragraph (a), clause (2); 
191.18     (7) the type of district; 
191.19     (8) the date the municipality approved the tax increment 
191.20  financing plan and the date of approval of any modification of 
191.21  the tax increment financing plan, the approval of which requires 
191.22  notice, discussion, a public hearing, and findings under 
191.23  subdivision 4, paragraph (a); 
191.24     (9) the date the authority first requested certification of 
191.25  the original net tax capacity of the district and the date of 
191.26  the request for certification regarding any parcel added to the 
191.27  district; 
191.28     (10) the date the county auditor first certified the 
191.29  original net tax capacity of the district and the date of 
191.30  certification of the original net tax capacity of any parcel 
191.31  added to the district; 
191.32     (11) the month and year in which the authority has received 
191.33  or anticipates it will receive the first increment from the 
191.34  district; 
191.35     (12) the date the district must be decertified; 
191.36     (13) for the reporting period and prior years of the 
192.1   district, the actual amount received from, at least, the 
192.2   following categories: 
192.3      (i) tax increments paid by the captured net tax capacity 
192.4   retained for tax increment financing under section 469.177, 
192.5   subdivision 2, paragraph (a), clause (1), but excluding any 
192.6   excess taxes; 
192.7      (ii) tax increments that are interest or other investment 
192.8   earnings on or from tax increments; 
192.9      (iii) tax increments that are proceeds from the sale or 
192.10  lease of property, tangible or intangible, purchased by the 
192.11  authority with tax increments; 
192.12     (iv) tax increments that are repayments of loans or other 
192.13  advances made by the authority with tax increments; 
192.14     (v) bond or loan proceeds; 
192.15     (vi) special assessments; 
192.16     (vii) grants; and 
192.17     (viii) transfers from funds not exclusively associated with 
192.18  the district; 
192.19     (14) for the reporting period and for the prior years of 
192.20  the district, the actual amount expended for, at least, the 
192.21  following categories: 
192.22     (i) acquisition of land and buildings through condemnation 
192.23  or purchase; 
192.24     (ii)  site improvements or preparation costs; 
192.25     (iii) installation of public utilities, parking facilities, 
192.26  streets, roads, sidewalks, or other similar public improvements; 
192.27     (iv) administrative costs, including the allocated cost of 
192.28  the authority; 
192.29     (v) public park facilities, facilities for social, 
192.30  recreational, or conference purposes, or other similar public 
192.31  improvements; ~~and~~ 
192.32     (vi) transfers to funds not exclusively associated with the 
192.33  district; and 
192.34     (vii) job training as permitted under section 469.176, 
192.35  subdivision 4m; 
192.36     (15) for properties sold to developers, the total cost of 
193.1   the property to the authority and the price paid by the 
193.2   developer; 
193.3      (16) the amount of any payments and the value of any 
193.4   in-kind benefits, such as physical improvements and the use of 
193.5   building space, that are paid or financed with tax increments 
193.6   and are provided to another governmental unit other than the 
193.7   municipality during the reporting period; 
193.8      (17) the amount of any payments for activities and 
193.9   improvements located outside of the district that are paid for 
193.10  or financed with tax increments; 
193.11     (18) the amount of payments of principal and interest that 
193.12  are made during the reporting period on any nondefeased: 
193.13     (i) general obligation tax increment financing bonds; 
193.14     (ii) other tax increment financing bonds; and 
193.15     (iii) notes and pay-as-you-go contracts; 
193.16     (19) the principal amount, at the end of the reporting 
193.17  period, of any nondefeased: 
193.18     (i) general obligation tax increment financing bonds; 
193.19     (ii) other tax increment financing bonds; and 
193.20     (iii) notes and pay-as-you-go contracts; 
193.21     (20) the amount of principal and interest payments that are 
193.22  due for the current calendar year on any nondefeased: 
193.23     (i) general obligation tax increment financing bonds; 
193.24     (ii) other tax increment financing bonds; and 
193.25     (iii) notes and pay-as-you-go contracts; 
193.26     (21) if the fiscal disparities contribution under chapter 
193.27  276A or 473F for the district is computed under section 469.177, 
193.28  subdivision 3, paragraph (a), the amount of increased property 
193.29  taxes imposed on other properties in the municipality that 
193.30  approved the tax increment financing plan as a result of the 
193.31  fiscal disparities contribution; 
193.32     (22) whether the tax increment financing plan or other 
193.33  governing document permits increment revenues to be expended: 
193.34     (i) to pay bonds, the proceeds of which were or may be 
193.35  expended on activities outside of the district; 
193.36     (ii) for deposit into a common bond fund from which money 
194.1   may be expended on activities located outside of the district; 
194.2   or 
194.3      (iii) to otherwise finance activities located outside of 
194.4   the tax increment financing district; 
194.5      (23) the estimate, if any, contained in the tax increment 
194.6   financing plan of the amount of the cost of the project, 
194.7   including administrative expenses, that will be paid or financed 
194.8   with tax increment; and 
194.9      (24) any additional information the state auditor may 
194.10  require. 
194.11     (d) The commissioner of revenue shall prescribe the method 
194.12  of calculating the increased property taxes under paragraph (c), 
194.13  clause (21), and the form of the statement disclosing this 
194.14  information on the annual statement under subdivision 5. 
194.15     (e) The reporting requirements imposed by this subdivision 
194.16  apply to districts certified before, on, and after August 1, 
194.17  1979. 
194.18     <h>[EFFECTIVE DATE.]</h> This section is effective for reports 
194.19  filed in 2005 and thereafter. 
194.20     Sec. 14.  Minnesota Statutes 2003 Supplement, section 
194.21  469.176, subdivision 1c, is amended to read: 
194.22     Subd. 1c.  [DURATION LIMITS; PRE-1979 DISTRICTS.] (a) For 
194.23  tax increment financing districts created prior to August 1, 
194.24  1979, no tax increment shall be paid to the authority after 
194.25  April 1, 2001, or the term of a nondefeased bond or obligation 
194.26  outstanding on April 1, 1990, secured by increments from the 
194.27  district or project area, whichever time is greater, provided 
194.28  that in no case will a tax increment be paid to an authority 
194.29  after August 1, 2009, from such a district.  If a district's 
194.30  termination date is extended beyond April 1, 2001, because bonds 
194.31  were outstanding on April 1, 1990, with maturities extending 
194.32  beyond April 1, 2001, the following restrictions apply.  No 
194.33  increment collected from the district may be expended after 
194.34  April 1, 2001, except to pay or repay: 
194.35     (1) bonds issued before April 1, 1990; 
194.36     (2) bonds issued to refund the principal of the outstanding 
195.1   bonds and pay associated issuance costs; 
195.2      (3) administrative expenses of the district required to be 
195.3   paid under section 469.176, subdivision 4h, paragraph (a); 
195.4      (4) transfers of increment permitted under section 
195.5   469.1763, subdivision 6; ~~and~~ 
195.6      (5) any advance or payment made by the municipality or the 
195.7   authority after June 1, 2002, to pay any bonds listed in clause 
195.8   (1) or (2); and 
195.9      (6) amounts authorized under paragraph (d). 
195.10     (b) Each year, any increments from a district subject to 
195.11  this subdivision must be first applied to pay obligations listed 
195.12  under paragraph (a), clauses (1) and (2), and administrative 
195.13  expenses under paragraph (a), clause (3).  Any remaining 
195.14  increments may be used for transfers of increments permitted 
195.15  under section 469.1763, subdivision 6, and to make payments 
195.16  under ~~paragraph~~ paragraphs (a), clause (5), and (d). 
195.17     (c) When sufficient money has been received to pay in full 
195.18  or defease obligations under paragraph (a), clauses (1), (2), 
195.19  and (5), and no spending is permitted by paragraph (d) for the 
195.20  year, the tax increment project or district must be decertified. 
195.21     (d) In addition to the expenditures authorized under 
195.22  paragraph (a), clauses (1) to (5), a city may expend increments 
195.23  from a tax increment financing district subject to this 
195.24  subdivision after April 1, 2001, if all of the following 
195.25  conditions are met: 
195.26     (1) the captured tax capacity for all tax increment 
195.27  financing districts constituted less than six percent of the 
195.28  city's total tax capacity for taxes payable in 2003; and 
195.29     (2) the population of the city exceeds 50,000. 
195.30     <h>[EFFECTIVE DATE.]</h> This section is effective for tax 
195.31  increment financing districts for which the request for 
195.32  certification was made before August 1, 1979. 
195.33     Sec. 15.  Minnesota Statutes 2002, section 469.176, is 
195.34  amended by adding a subdivision to read: 
195.35     Subd. 4m.  [USE OF INCREMENTS FOR JOB 
195.36  TRAINING.] Notwithstanding the limits on use of increments in 
196.1   subdivision 4, 4b, 4c, or 4j, increments may be expended for job 
196.2   training that is intended to result in new job growth within a 
196.3   tax increment financing district.  The authority may expend 
196.4   increments directly for the cost of the job training or may 
196.5   reimburse an employer located within the district or a 
196.6   municipality in which the district is located for job training 
196.7   expenditures.  Increments may be expended only for job training 
196.8   programs that are approved for this purpose by the local 
196.9   workforce council established under section 268.666 that has 
196.10  jurisdiction over the workforce service area that includes the 
196.11  tax increment financing district.  For purposes of section 
196.12  469.1763, increments expended under this subdivision are 
196.13  considered to be expended on activities in the district.  
196.14     <h>[EFFECTIVE DATE.]</h> This section is effective for districts 
196.15  for which the request for certification was made after July 31, 
196.16  1979, provided that districts for which the request for 
196.17  certification was made before the effective date of this act 
196.18  must modify their plans to provide for this expenditure. 
196.19     Sec. 16.  Minnesota Statutes 2002, section 469.176, is 
196.20  amended by adding a subdivision to read: 
196.21     Subd. 8.  [URBAN RENEWAL AREA.] (a) An authority may create 
196.22  an urban renewal area only upon the notice and after the 
196.23  discussion, public hearing, and findings required for approval 
196.24  of the original project.  In addition, the authority must obtain 
196.25  written approval from the county in which the urban renewal area 
196.26  is to be located.  After approval by the city and county, the 
196.27  authority shall notify the commissioner of revenue of the 
196.28  approved urban renewal area. 
196.29     (b) All provisions of sections 469.174 through 469.1799 
196.30  apply except: 
196.31     (1) the five-year rule under section 469.1763, subdivision 
196.32  3, is extended to ten years; 
196.33     (2) the limitation on spending increment outside of the 
196.34  district under section 469.1763, subdivision 2, does not apply, 
196.35  provided that increments may only be expended on improvements or 
196.36  activities within the urban renewal area, and increments from a 
197.1   soils condition district must be expended as provided under 
197.2   subdivision 4b; and 
197.3      (3) the local tax rate certification required under section 
197.4   469.177, subdivision 1a, does not apply. 
197.5      <h>[EFFECTIVE DATE.]</h> This section is effective for urban 
197.6   renewal areas established on or after the date of final 
197.7   enactment. 
197.8      Sec. 17.  Minnesota Statutes 2002, section 469.1761, is 
197.9   amended by adding a subdivision to read: 
197.10     Subd. 3a.  [MIXED-INCOME OCCUPANCY PROJECTS.] (a) 
197.11  Notwithstanding the income requirements in subdivisions 2 and 3, 
197.12  or section 469.174, subdivision 11, an authority may create 
197.13  housing districts for developments that contain both 
197.14  owner-occupied and residential rental units for mixed-income 
197.15  occupancy.  Such a district consists of a project, or a portion 
197.16  of a project, intended for occupancy, in part, by persons of low 
197.17  and moderate income as defined in chapter 462A, title II, of the 
197.18  National Housing Act of 1934; the National Housing Act of 1959; 
197.19  the United States Housing Act of 1937, as amended; title V of 
197.20  the Housing Act of 1949, as amended; any other similar present 
197.21  or future federal, state, or municipal legislation, or the 
197.22  regulations promulgated under any of those acts, as further 
197.23  specified in this section.  Twenty percent of the units in the 
197.24  development in the housing district must be occupied by 
197.25  individuals whose family income is equal to or less than 50 
197.26  percent of area median gross income, and an additional 60 
197.27  percent of the units in the development in the housing district 
197.28  must be occupied by individuals whose family income is equal to 
197.29  or less than 115 percent of area median gross income.  Twenty 
197.30  percent of the units in the development in the housing district 
197.31  are not required to be subject to any income limitations. 
197.32     (b) For purposes of this subdivision, "family income" means 
197.33  the median gross income for the area as determined under section 
197.34  42 of the Internal Revenue Code of 1986, as amended.  The income 
197.35  requirements of this subdivision are satisfied if the sum of 
197.36  qualified owner-occupied units and qualified residential rental 
198.1   units equals the required total number of qualified units.  
198.2   Owner-occupied units must be initially purchased and occupied by 
198.3   individuals whose family income satisfies the income 
198.4   requirements of this subdivision.  For residential rental 
198.5   property, the income requirements of this subdivision apply for 
198.6   the duration of the tax increment district.  
198.7      (c) The development in the housing district, but not the 
198.8   project, does not qualify under this subdivision if the fair 
198.9   market value of the improvements that are constructed for 
198.10  commercial uses or for uses other than owner-occupied and rental 
198.11  mixed-income housing consists of more than 20 percent of the 
198.12  total fair market value of the planned improvements in the 
198.13  development plan or agreement.  The fair market value of the 
198.14  improvements may be determined using the cost of construction, 
198.15  capitalized income, or other appropriate method of estimating 
198.16  market value. 
198.17     <h>[EFFECTIVE DATE.]</h> This section is effective for districts 
198.18  for which certification is requested after July 31, 2004. 
198.19     Sec. 18.  Minnesota Statutes 2002, section 469.1792, as 
198.20  amended by Laws 2003, chapter 127, is amended to read: 
198.21     469.1792 [SPECIAL DEFICIT AUTHORITY.] 
198.22     Subdivision 1.  [SCOPE.] This section applies only to an 
198.23  authority with a preexisting district for which: 
198.24     (1) the increments from the district were insufficient to 
198.25  pay preexisting obligations as a result of the class rate 
198.26  changes or the elimination of the state-determined general 
198.27  education property tax levy under this act, or both; ~~or~~ 
198.28     (2)(i) the development authority has a binding contract, 
198.29  entered into before August 1, 2001, with a person requiring the 
198.30  authority to pay to the person an amount that may not exceed the 
198.31  increment from the district or a specific development within the 
198.32  district; and 
198.33     (ii) the authority is unable to pay the full amount under 
198.34  the contract from the pledged increments or other increments 
198.35  from the district that would have been due if the class rate 
198.36  changes or elimination of the state-determined general education 
199.1   property tax levy or both had not been made under Laws 2001, 
199.2   First Special Session chapter 5; 
199.3      (3) the authority amends its tax increment financing plan 
199.4   to establish an affordable housing account to which increments 
199.5   are pledged; or 
199.6      (4) the authority amends its tax increment financing plan 
199.7   to establish a hazardous substance, pollutant, or contaminant 
199.8   remediation account to which increments are pledged. 
199.9      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
199.10  the following terms have the meanings given. 
199.11     (b) "Affordable housing account" means an account in which 
199.12  increment is deposited solely for affordable housing activities 
199.13  as defined in section 469.174, subdivision 11.  
199.14     (c) "Hazardous substance, pollutant, or contaminant 
199.15  remediation account" means an account in which increment is 
199.16  deposited solely for removal or remediation activities described 
199.17  in section 469.174, subdivisions 16 to 19.  
199.18     ~~(b)~~ (d) "Preexisting district" means a tax increment 
199.19  financing district for which the request for certification was 
199.20  made before August 1, 2001. 
199.21     ~~(c)~~ (e) "Preexisting obligation" means a bond or binding 
199.22  contract that: 
199.23     (1)(i) was issued or approved before August 1, 2001, or was 
199.24  issued pursuant to a binding contract entered into before July 
199.25  1, 2001; or 
199.26     (ii) was issued to refinance an obligation under item (i), 
199.27  if the refinancing does not increase the present value of the 
199.28  debt service; and 
199.29     (2) is secured by increments from a preexisting district. 
199.30     Subd. 3.  [ACTIONS AUTHORIZED.] (a) An authority with a 
199.31  district qualifying under this section may take either or both 
199.32  of the following actions for any or all of its preexisting 
199.33  districts: 
199.34     (1) the authority may elect that the original local tax 
199.35  rate under section 469.177, subdivision 1a, does not apply to 
199.36  the district; and 
200.1      (2) the authority may elect the fiscal disparities 
200.2   contribution will be computed under section 469.177, subdivision 
200.3   3, paragraph (a), regardless of the election that was made for 
200.4   the district or if the district is an economic development 
200.5   district for which the request for certification was made after 
200.6   June 30, 1997. 
200.7      (b) The authority may take action under this subdivision 
200.8   only after the municipality approves the action, by resolution, 
200.9   after notice and public hearing in the manner provided under 
200.10  section 469.175, subdivision 3.  To be effective for taxes 
200.11  payable in the following year, the resolution must be adopted 
200.12  and the county auditor must be notified of the adoption on or 
200.13  before July 1. 
200.14     Subd. 4.  [EXPENDITURES FROM AFFORDABLE HOUSING 
200.15  ACCOUNTS.] Increment from an affordable housing account may be 
200.16  spent by an authority anywhere within its area of operation.  
200.17  Notwithstanding the definition of a project under section 
200.18  469.174, increments may be spent to assist housing that meets 
200.19  the requirements under section 469.1761.  The limitation imposed 
200.20  by section 469.1763, subdivision 2, does not apply to any 
200.21  transfers of increment to the affordable housing account to the 
200.22  extent that the amount transferred to the account under this 
200.23  subdivision does not exceed ten percent of the revenue derived 
200.24  from tax increments paid by properties in the district in the 
200.25  year. 
200.26     Subd. 5.  [EXPENDITURES FROM HAZARDOUS SUBSTANCE, 
200.27  POLLUTANT, OR CONTAMINANT REMEDIATION ACCOUNT.] Increment from a 
200.28  hazardous substance, pollutant, or contaminant remediation 
200.29  account may be spent by an authority anywhere within its area of 
200.30  operation.  Notwithstanding the definition of a project under 
200.31  section 469.174, increments may be expended to remediation and 
200.32  removal activities that meet the requirements of section 
200.33  469.176, subdivision 4b or 4e.  The limitation imposed by 
200.34  section 469.1763, subdivision 2, does not apply to any transfers 
200.35  of increment to the hazardous substance, pollutant, or 
200.36  contaminant remediation account to the extent that the amount 
201.1   transferred to the account under this subdivision does not 
201.2   exceed ten percent of the revenue derived from tax increments 
201.3   paid by properties in the district in the year. 
201.4      <h>[EFFECTIVE DATE.]</h> This section is effective for actions 
201.5   taken and resolutions approved after June 30, 2004. 
201.6      Sec. 19.  Minnesota Statutes 2003 Supplement, section 
201.7   469.310, subdivision 11, is amended to read: 
201.8      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
201.9   means a person carrying on a trade or business at a place of 
201.10  business located within a job opportunity building zone. 
201.11     (b) A person that relocates a trade or business from 
201.12  outside a job opportunity building zone into a zone is not a 
201.13  qualified business, unless the business: 
201.14     (1)(i) increases full-time employment in the first full 
201.15  year of operation within the job opportunity building zone by at 
201.16  least 20 percent measured relative to the operations that were 
201.17  relocated and maintains the required level of employment for 
201.18  each year the zone designation applies; or 
201.19     (ii) makes a capital investment in the property located 
201.20  within a zone equivalent to ten percent of the gross revenues of 
201.21  operation that were relocated in the immediately preceding 
201.22  taxable year; and 
201.23     (2) enters a binding written agreement with the 
201.24  commissioner that: 
201.25     (i) pledges the business will meet the requirements of 
201.26  clause (1); 
201.27     (ii) provides for repayment of all tax benefits enumerated 
201.28  under section 469.315 to the business under the procedures in 
201.29  section 469.319, if the requirements of clause (1) are not met 
201.30  for the taxable year or for taxes payable during the year in 
201.31  which the requirements were not met; and 
201.32     (iii) contains any other terms the commissioner determines 
201.33  appropriate. 
201.34     (c) A business is not a qualified business if at its 
201.35  location or locations in the zone, the business is primarily 
201.36  engaged in making retail sales to purchasers who are physically 
202.1   present at the business's zone location.  
202.2      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
202.3   following final enactment and applies to any business entering a 
202.4   business subsidy agreement for a job opportunity development 
202.5   zone after that date. 
202.6      Sec. 20.  Laws 1998, chapter 389, article 11, section 19, 
202.7   subdivision 3, is amended to read: 
202.8      Subd. 3.  [DURATION OF DISTRICT.] Notwithstanding the 
202.9   provisions of Minnesota Statutes, section 469.176, subdivision 
202.10  1b, no tax increment may be paid to the authority or the city 
202.11  after ~~18 years from the date of receipt by the authority of the~~ 
202.12  ~~first increment generated from the final phase of~~ 
202.13  ~~redevelopment.  In no case may increments be paid to the~~ 
202.14  ~~authority after~~ 30 years from approval of the tax increment 
202.15  plan.  ~~"Final phase of redevelopment" means that phase of~~ 
202.16  ~~redevelopment activity which completes the rehabilitation of the~~ 
202.17  ~~Lake Street site.~~ 
202.18     <h>[EFFECTIVE DATE.]</h> This section is effective upon compliance 
202.19  with Minnesota Statutes, sections 469.1782, subdivision 2, and 
202.20  645.021, subdivision 2. 
202.21     Sec. 21.  Laws 1998, chapter 389, article 11, section 24, 
202.22  subdivision 1, is amended to read: 
202.23     Subdivision 1.  [SPECIAL RULES.] (a) If the city elects 
202.24  upon the adoption of the tax increment financing plan for the 
202.25  district, the rules under this section apply to one or more 
202.26  redevelopment ~~or soils condition~~ tax increment financing 
202.27  districts established by the city of New Brighton or a 
202.28  development authority of the city in the area bounded on the 
202.29  north by the south boundary line of tax increment district 
202.30  number 8 extended to Long Lake regional park, on the east by 
202.31  interstate highway 35W, on the south by interstate highway 694, 
202.32  and on the west by Long Lake regional park. 
202.33     (b) ~~The five-year rule under Minnesota Statutes, section~~ 
202.34  ~~469.1763, subdivision 3, is extended to nine years for the~~ 
202.35  ~~district.~~ 
202.36     ~~(c)~~ The limitations on spending increment outside of the 
203.1   district under Minnesota Statutes, section 469.1763, subdivision 
203.2   2, do not apply, but the following limitations apply: 
203.3      (1) increments may only be expended on improvements or 
203.4   activities within the area defined in paragraph (a); and 
203.5      (2) increment from the area described in paragraph (d) must 
203.6   be expended within the area or for administrative expenses, 
203.7   sanitary sewer relocation, and the cost of road improvements 
203.8   that are a direct result of development occurring within that 
203.9   area. 
203.10     (c) The certified original local tax rate for the district 
203.11  under Minnesota Statutes, section 469.177, subdivision 1a, does 
203.12  not apply. 
203.13     (d) The requirements for qualifying a redevelopment 
203.14  district under Minnesota Statutes, section 469.174, subdivision 
203.15  10, do not apply to the parcels identified as 20-30-23-14-0004, 
203.16  20-30-23-14-0003, 20-30-23-41-0001, 21-30-23-32-0009, 
203.17  21-30-23-32-0010, 20-30-23-41-0015, 20-30-23-41-0003, 
203.18  21-30-23-32-0013, 20-30-23-41-0004, 20-30-23-41-0016, 
203.19  20-30-23-41-0005, 20-30-23-41-0006, 20-30-23-41-0007, 
203.20  20-30-23-41-0014, 20-30-23-41-0010, and 20-30-23-44-0002, or to 
203.21  railroad property in the district.  The area of each parcel and 
203.22  the railroad property shall be deemed eligible for the purpose 
203.23  of qualifying for inclusion in a redevelopment district. 
203.24     Sec. 22.  Laws 1998, chapter 389, article 11, section 24, 
203.25  subdivision 2, is amended to read: 
203.26     Subd. 2.  [EXPIRATION.] ~~(a) The exception from the~~ 
203.27  ~~limitations of Minnesota Statutes, section 469.1763, subdivision~~ 
203.28  ~~2, expires 18 years after the receipt of the first increment~~ 
203.29  ~~from a district to which the city has elected that this section~~ 
203.30  ~~applies.~~ 
203.31     ~~(b)~~ The authority to approve tax increment financing plans 
203.32  to establish a tax increment financing district or districts 
203.33  under this section expires on December 31, ~~2008~~ 2013. 
203.34     <h>[EFFECTIVE DATE.]</h> This section is effective upon approval 
203.35  by the governing bodies of the city of New Brighton and Ramsey 
203.36  County and upon compliance by the city with Minnesota Statutes, 
204.1   section 645.021, subdivision 3. 
204.2      Sec. 23.  [ANOKA COUNTY REGIONAL RAILROAD AUTHORITY 
204.3   POWERS.] 
204.4      Subdivision 1.  [ECONOMIC DEVELOPMENT POWERS AND 
204.5   DUTIES.] The Anoka County Regional Railroad Authority may 
204.6   exercise any of the powers and duties of an economic development 
204.7   authority under Minnesota Statutes, sections 469.090, 469.098, 
204.8   and 469.101 to 469.106.  The Anoka County Regional Railroad 
204.9   Authority may exercise the powers under Minnesota Statutes, 
204.10  sections 469.001 to 469.047, for the purpose of transit-oriented 
204.11  development, except that the Anoka County Regional Railroad 
204.12  Authority must not exercise the power to tax under Minnesota 
204.13  Statutes, section 469.033, subdivision 6.  In applying Minnesota 
204.14  Statutes, sections 469.001 to 469.047, 469.090, 469.098, and 
204.15  469.101 to 469.106, to the Anoka County Regional Railroad 
204.16  Authority, the county is considered to be the city and the 
204.17  county board is considered to be the city council. 
204.18     Subd. 2.  [RELATION TO LOCAL AUTHORITIES.] Nothing in 
204.19  subdivision 1 shall change or impair the powers or duties of a 
204.20  city, town, municipal housing and redevelopment authority, or 
204.21  municipal economic development authority. 
204.22     Subd. 3.  [LOCAL APPROVAL.] If any economic development 
204.23  project is constructed in the county pursuant to the 
204.24  authorization in this section, the project must be approved by 
204.25  the governing body of each city or town within which the project 
204.26  will be constructed. 
204.27     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
204.28  the governing body of the Anoka County Regional Railroad 
204.29  Authority and its chief clerical officer timely complete their 
204.30  compliance with Minnesota Statutes, section 645.021, 
204.31  subdivisions 2 and 3. 
204.32     Sec. 24.  [CITY OF DETROIT LAKES; REDEVELOPMENT TAX 
204.33  INCREMENT FINANCING DISTRICT.] 
204.34     Subdivision 1.  [AUTHORIZATION.] At the election of the 
204.35  governing body of the city of Detroit Lakes, upon adoption of 
204.36  the tax increment financing plan for the district described in 
205.1   this section, the rules provided under this section apply to 
205.2   each such district. 
205.3      Subd. 2.  [DEFINITION.] In this section, "district" means a 
205.4   redevelopment district established by the city of Detroit Lakes 
205.5   or the Detroit Lakes Development Authority within the following 
205.6   area:  
205.7   Beginning at the intersection of Washington Avenue and the 
205.8   Burlington Northern Santa Fe Railroad then east to the 
205.9   intersection of Roosevelt Avenue then south to the intersection 
205.10  of Highway 10/Frazee Street then west to the intersection of 
205.11  Frazee Street and the alley that parallels Washington Avenue 
205.12  then north to the point of beginning. 
205.13     More than one district may be created under this act. 
205.14     Subd. 3.  [QUALIFICATION AS REDEVELOPMENT DISTRICT; SPECIAL 
205.15  RULES.] The district shall be a redevelopment district under 
205.16  Minnesota Statutes, section 469.174, subdivision 10.  All 
205.17  buildings that are removed to facilitate the Highway 10 
205.18  Realignment Project are deemed to be "structurally 
205.19  substandard."  The three-year limit after demolition of the 
205.20  buildings to request tax increment financing certification 
205.21  provided in Minnesota Statutes, section 469.174, subdivision 10, 
205.22  paragraph (d), clause (1), does not apply. 
205.23     Subd. 4.  [EXPIRATION.] The authority to approve tax 
205.24  increment financing plans to establish a tax increment financing 
205.25  redevelopment district subject to this section expires on 
205.26  December 31, 2014. 
205.27     Subd. 5.  [EFFECTIVE DATE.] This section is effective upon 
205.28  approval of the governing body of the city of Detroit Lakes and 
205.29  compliance with Minnesota Statutes, section 645.021, subdivision 
205.30  3. 
205.31     Sec. 25.  [CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX 
205.32  INCREMENT FINANCING DISTRICTS.] 
205.33     Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
205.34  mileage limitation in Minnesota Statutes, section 469.174, 
205.35  subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco 
205.36  are deemed to be small cities for purposes of Minnesota 
206.1   Statutes, sections 469.174 to 469.1799, as long as they do not 
206.2   exceed the population limit in that section. 
206.3      Subd. 2.  [LOCAL APPROVAL.] This section is effective for 
206.4   each of the cities of Elgin, Eyota, Byron, and Oronoco upon 
206.5   approval of that city's governing body and compliance with 
206.6   Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
206.7      Sec. 26.  [CITY OF BROOKLYN CENTER; EXTENSION OF TIME TO 
206.8   EXPEND TAX INCREMENT.] 
206.9      For tax increment financing district number 3, established 
206.10  on December 19, 1994, by Brooklyn Center Resolution No. 94-273, 
206.11  Minnesota Statutes, section 469.1763, subdivision 3, applies to 
206.12  the district by permitting a period of 13 years for commencement 
206.13  of activities within the district. 
206.14     <h>[EFFECTIVE DATE.]</h> This section is effective upon approval 
206.15  by the governing body of the city of Brooklyn Center and 
206.16  compliance with Minnesota Statutes, section 645.021, subdivision 
206.17  3. 
206.18     Sec. 27.  [CITY OF FAIRMONT; TAX INCREMENT FINANCING 
206.19  DISTRICT.] 
206.20     Subdivision 1.  [AUTHORITY TO REDUCE ORIGINAL VALUE.] The 
206.21  city of Fairmont may elect to reduce the original tax capacity 
206.22  of a previously tax-exempt parcel, consisting of property 
206.23  formerly owned by the United States Post Office, in tax 
206.24  increment financing district No. 20, to the value of the land. 
206.25     Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
206.26  compliance by the city of Fairmont with the requirements of 
206.27  Minnesota Statutes, section 645.021. 
206.28     Sec. 28.  [CITY OF FERGUS FALLS; ECONOMIC DEVELOPMENT 
206.29  PROPERTY.] 
206.30     The provisions of Minnesota Statutes, section 272.02, 
206.31  subdivision 39, apply to property located in the city of Fergus 
206.32  Falls as if the city had a population of 5,000 or less. 
206.33     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
206.34  levied in 2004, payable in 2005, and thereafter. 
206.35     Sec. 29.  [CITY OF MINNEAPOLIS; SPECIAL SERVICE DISTRICTS; 
206.36  MANAGEMENT BY NONPROFIT CORPORATIONS.] 
207.1      The city of Minneapolis may elect, in the establishment of 
207.2   a special service district, to provide that the activities of 
207.3   the special service district may be managed by a nonprofit 
207.4   corporation created to assist and act on behalf of the city in 
207.5   implementing and providing services as authorized by Minnesota 
207.6   Statutes, section 428A.02.  The ordinance establishing the 
207.7   district may not be adopted until the city certifies that no 
207.8   current city employee is able and available to perform the 
207.9   services called for by the contract and until that certification 
207.10  is verified at the public hearing on the ordinance. 
207.11     If the city intends to contract with a nonprofit 
207.12  corporation to manage a special service district, the notice of 
207.13  the hearing on the ordinance relating to creation of the 
207.14  district must include a statement of that intent, and 
207.15  certification that no city employee is able and available to 
207.16  perform the service that would be provided within the special 
207.17  service district. 
207.18     <h>[EFFECTIVE DATE.]</h> This section is effective for public 
207.19  hearings on ordinances conducted after June 30, 2004, but only 
207.20  after approval by the governing body of the city of Minneapolis 
207.21  and compliance with Minnesota Statutes, section 645.021, 
207.22  subdivision 3. 
207.23     Sec. 30.  [CITY OF ST. MICHAEL; TAX INCREMENT FINANCING 
207.24  DISTRICT.] 
207.25     Subdivision 1.  [ESTABLISHMENT OF DISTRICT.] The city of St.
207.26  Michael may establish a redevelopment tax increment financing 
207.27  district subject to Minnesota Statutes, sections 469.174 to 
207.28  469.179, except as provided in this section.  The district must 
207.29  be established within an area that includes the downtown and 
207.30  town center areas as designated by the city as well as all 
207.31  parcels adjacent to marked Trunk Highway 241 within the city. 
207.32     Subd. 2.  [SPECIAL RULES.] (a) Notwithstanding the 
207.33  requirements of Minnesota Statutes, section 469.174, subdivision 
207.34  10, the district may be established and operated as a 
207.35  redevelopment district. 
207.36     (b) Notwithstanding the restrictions of Minnesota Statutes, 
208.1   sections 469.176, subdivisions 4 and 4j, and 469.1763, 
208.2   subdivision 2, revenues derived from tax increments from the 
208.3   district created under this section may be used to meet the cost 
208.4   of land acquisition, removal of buildings in the right-of-way 
208.5   acquisition area, and other costs incurred by the city of St. 
208.6   Michael in the expansion and improvement of marked Trunk Highway 
208.7   241 within the city. 
208.8      (c) Minnesota Statutes, section 469.176, subdivision 5, 
208.9   does not apply to the district. 
208.10     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
208.11  the governing body of the city of St. Michael complies with 
208.12  Minnesota Statutes, section 645.021, subdivision 3. 
208.13     Sec. 31.  [WABASHA TAX INCREMENT FINANCING DISTRICT.] 
208.14     Subdivision 1.  [DISTRICT EXTENSION.] The governing body of 
208.15  the city of Wabasha may elect to extend the duration of its 
208.16  redevelopment tax increment financing district number 3 by up to 
208.17  five additional years. 
208.18     Subd. 2.  [FIVE-YEAR RULE.] The requirements of Minnesota 
208.19  Statutes, section 469.1763, subdivision 3, that activities must 
208.20  be undertaken within a five-year period from the date of 
208.21  certification of a tax increment financing district must be 
208.22  considered to be met for the city of Wabasha redevelopment tax 
208.23  increment district number 3, if the activities are undertaken 
208.24  within ten years from the date of certification of the district. 
208.25     Subd. 3.  [NATIONAL EAGLE CENTER.] Notwithstanding the 
208.26  provisions of Minnesota Statutes, section 469.176, subdivision 
208.27  4l, or any other law, the city of Wabasha may spend the proceeds 
208.28  of tax increment bonds issued prior to January 1, 2000, to pay 
208.29  the costs of acquiring and constructing a National Eagle Center 
208.30  in the city.  The city of Wabasha may also use tax increment 
208.31  from its tax increment districts to pay the debt service on such 
208.32  bonds, or any bonds issued to refund such bonds, subject to 
208.33  legal restrictions on the pooling of tax increment. 
208.34     <h>[EFFECTIVE DATE.]</h> Subdivision 1 is effective upon 
208.35  compliance with the provisions of Minnesota Statutes, sections 
208.36  469.1782, subdivision 2, and 645.021.  Subdivisions 2 and 3 are 
209.1   effective upon compliance by the governing body of the city of 
209.2   Wabasha with the provisions of Minnesota Statutes, section 
209.3   645.021. 
209.4      Sec. 32.  [JOBZ EXPENDITURE LIMITATIONS; AUDITS.] 
209.5      Subdivision 1.  [DETERMINATION OF TAX EXPENDITURES.] By 
209.6   September 1, 2004, the commissioner of revenue, with the 
209.7   assistance of the commissioner of employment and economic 
209.8   development, must estimate the total amount of tax expenditures 
209.9   projected to have been obligated for all job opportunity 
209.10  building zone projects that have been approved before June 1, 
209.11  2004.  If the commissioner of revenue determines that the 
209.12  estimated amount of tax expenditures for fiscal years 2005-2007 
209.13  exceeds $13,780,000, the commissioner of revenue must inform the 
209.14  chairs of the house of representatives and senate tax committees.
209.15     Subd. 2.  [AUDITS.] The Tax Increment Financing, Investment 
209.16  and Finance Division of the Office of the State Auditor must 
209.17  annually audit the creation and operation of all job opportunity 
209.18  building zones and business subsidy agreements entered into 
209.19  under Minnesota Statutes, sections 469.310 to 469.320. 
209.20                             ARTICLE 6
209.21                           PUBLIC FINANCE
209.22     Section 1.  Minnesota Statutes 2003 Supplement, section 
209.23  373.01, subdivision 3, is amended to read: 
209.24     Subd. 3.  [CAPITAL NOTES.] (a) A county board may, by 
209.25  resolution and without referendum, issue capital notes subject 
209.26  to the county debt limit to purchase capital equipment useful 
209.27  for county purposes that has an expected useful life at least 
209.28  equal to the term of the notes.  The notes shall be payable in 
209.29  not more than five years and shall be issued on terms and in a 
209.30  manner the board determines.  A tax levy shall be made for 
209.31  payment of the principal and interest on the notes, in 
209.32  accordance with section 475.61, as in the case of bonds. 
209.33     (b) For purposes of this subdivision, "capital equipment" 
209.34  means: 
209.35     (1) public safety, ambulance, road construction or 
209.36  maintenance, and medical equipment~~,~~; and 
210.1      (2) computer hardware and ~~original operating system~~ 
210.2   software, whether bundled with machinery or equipment or 
210.3   unbundled, together with application development services and 
210.4   training related to the use of the computer. 
210.5      (c) The authority to issue capital notes for ~~original~~ 
210.6   ~~operating systems~~ computer software and related services expires 
210.7   on July 1, 2005. 
210.8      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
210.9   373.40, subdivision 1, is amended to read: 
210.10     Subdivision 1.  [DEFINITIONS.] For purposes of this 
210.11  section, the following terms have the meanings given. 
210.12     (a) "Bonds" means an obligation as defined under section 
210.13  475.51. 
210.14     (b) "Capital improvement" means acquisition or betterment 
210.15  of public lands, ~~development rights in the form of conservation~~ 
210.16  ~~easements under chapter 84C,~~ buildings, or other improvements 
210.17  within the county for the purpose of a county courthouse, 
210.18  administrative building, health or social service facility, 
210.19  correctional facility, jail, law enforcement center, hospital, 
210.20  morgue, library, park, qualified indoor ice arena, and roads and 
210.21  bridges, and the acquisition of development rights in the form 
210.22  of conservation easements under chapter 84C.  An improvement 
210.23  must have an expected useful life of five years or more to 
210.24  qualify.  "Capital improvement" does not include light rail 
210.25  transit or any activity related to it or a recreation or sports 
210.26  facility building (such as, but not limited to, a gymnasium, ice 
210.27  arena, racquet sports facility, swimming pool, exercise room or 
210.28  health spa), unless the building is part of an outdoor park 
210.29  facility and is incidental to the primary purpose of outdoor 
210.30  recreation. 
210.31     (c) "Commissioner" means the commissioner of employment and 
210.32  economic development. 
210.33     (d) "Metropolitan county" means a county located in the 
210.34  seven-county metropolitan area as defined in section 473.121 or 
210.35  a county with a population of 90,000 or more. 
210.36     (e) "Population" means the population established by the 
211.1   most recent of the following (determined as of the date the 
211.2   resolution authorizing the bonds was adopted): 
211.3      (1) the federal decennial census, 
211.4      (2) a special census conducted under contract by the United 
211.5   States Bureau of the Census, or 
211.6      (3) a population estimate made either by the metropolitan 
211.7   council or by the state demographer under section 4A.02. 
211.8      (f) "Qualified indoor ice arena" means a facility that 
211.9   meets the requirements of section 373.43. 
211.10     (g) "Tax capacity" means total taxable market value, but 
211.11  does not include captured market value. 
211.12     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
211.13  403.21, subdivision 8, is amended to read: 
211.14     Subd. 8.  [SUBSYSTEMS.] "Subsystems" or "public safety 
211.15  radio subsystems" means systems identified in the plan or a plan 
211.16  developed under section 403.36 as subsystems interconnected by 
211.17  the first and third phase backbone ~~in subsequent phases~~ and 
211.18  operated by local government units for their own internal 
211.19  operations. 
211.20     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
211.21  403.27, subdivision 1, is amended to read: 
211.22     Subdivision 1.  [AUTHORIZATION.] After consulting with the 
211.23  commissioner of finance, the council, if requested by a vote of 
211.24  at least two-thirds of all of the members of the Public Safety 
211.25  Radio Communication System Planning Committee established under 
211.26  section 403.36, may, by resolution, authorize the issuance of 
211.27  its revenue bonds for any of the following purposes to: 
211.28     (1) provide funds for regionwide mutual aid and emergency 
211.29  medical services communications; 
211.30     (2) provide funds for the elements of the first phase of 
211.31  the regionwide public safety radio communications system that 
211.32  the board determines are of regionwide benefit and support 
211.33  mutual aid and emergency medical services communication 
211.34  including, but not limited to, costs of master controllers of 
211.35  the backbone; 
211.36     (3) provide money for the second phase of the public safety 
212.1   radio communication system; 
212.2      (4) provide money for the third phase of the public safety 
212.3   radio communication system; 
212.4      (5) to the extent money is available after meeting the 
212.5   needs described in clauses (1) to (3), provide money to 
212.6   reimburse local units of government for amounts expended for 
212.7   capital improvements to the first phase system previously paid 
212.8   for by the local government units; ~~or~~ 
212.9      (6) to the extent money is available after meeting the 
212.10  needs described in clauses (1) to (5), provide money for 
212.11  assistance to a local government unit for up to 50 percent of 
212.12  the cost of building a subsystem in the southeast or central 
212.13  districts of the State Patrol; or 
212.14     (7) refund bonds issued under this section. 
212.15     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
212.16  403.27, subdivision 3, is amended to read: 
212.17     Subd. 3.  [LIMITATIONS.] (a) The principal amount of the 
212.18  bonds issued pursuant to subdivision 1, exclusive of any 
212.19  original issue discount, shall not exceed the amount of 
212.20  $10,000,000 plus the amount the council determines necessary to 
212.21  pay the costs of issuance, fund reserves, debt service, and pay 
212.22  for any bond insurance or other credit enhancement. 
212.23     (b) In addition to the amount authorized under paragraph 
212.24  (a), the council may issue bonds under subdivision 1 in a 
212.25  principal amount of $3,306,300, plus the amount the council 
212.26  determines necessary to pay the cost of issuance, fund reserves, 
212.27  debt service, and any bond insurance or other credit 
212.28  enhancement.  The proceeds of bonds issued under this paragraph 
212.29  may not be used to finance portable or subscriber radio sets. 
212.30     (c) In addition to the amount authorized under paragraphs 
212.31  (a) and (b), the council may issue bonds under subdivision 1 in 
212.32  a principal amount of $18,000,000, plus the amount the council 
212.33  determines necessary to pay the costs of issuance, fund 
212.34  reserves, debt service, and any bond insurance or other credit 
212.35  enhancement.  The proceeds of bonds issued under this paragraph 
212.36  must be used to pay up to 50 percent of the cost to a local 
213.1   government unit of building a subsystem identified in the plan 
213.2   adopted under section 403.23, subdivision 2, and may not be used 
213.3   to finance portable or subscriber radio sets.  The bond proceeds 
213.4   may be used to make improvements to an existing 800 MHz radio 
213.5   system that will interoperate with the regionwide public safety 
213.6   radio communication system, provided that the improvements 
213.7   conform to the board's plan and technical standards.  The 
213.8   council must time the sale and issuance of the bonds so that the 
213.9   debt service on the bonds can be covered by the additional 
213.10  revenue that will become available in the fiscal year ending 
213.11  June 30, 2005, generated under section 403.11 and appropriated 
213.12  under section 403.30.  
213.13     (d) In addition to the amount authorized under paragraphs 
213.14  (a) to (c), the council may issue bonds under subdivision 1 in a 
213.15  principal amount of up to $27,000,000, plus the amount the 
213.16  council determines necessary to pay the costs of issuance, fund 
213.17  reserves, debt service, and any bond insurance or other credit 
213.18  enhancement.  The proceeds of bonds issued under this paragraph 
213.19  are appropriated to the commissioner of public safety for phase 
213.20  three of the public safety radio communication system.  In 
213.21  anticipation of the receipt by the commissioner of public safety 
213.22  of the bond proceeds, the Metropolitan Radio Board may advance 
213.23  money from its operating appropriation to the commissioner of 
213.24  public safety to pay for design and preliminary engineering for 
213.25  phase three.  The commissioner of public safety must return 
213.26  these amounts to the Metropolitan Radio Board when the bond 
213.27  proceeds are received. 
213.28     (e) In addition to the amount authorized under paragraphs 
213.29  (a) to (d), the council may issue bonds under subdivision 1 in a 
213.30  principal amount of up to $9,500,000, plus the amount the 
213.31  council determines necessary to pay the costs of issuance, fund 
213.32  reserves, debt service, and any bond insurance or other credit 
213.33  enhancement.  The proceeds of bonds issued under this paragraph 
213.34  are appropriated to the commissioner of public safety for the 
213.35  purpose of subdivision 1, clause (6), provided that the proceeds 
213.36  may not be used to finance portable or subscriber radio sets. 
214.1      Sec. 6.  Minnesota Statutes 2003 Supplement, section 
214.2   403.31, subdivision 6, is amended to read: 
214.3      Subd. 6.  [OPERATING COSTS OF PHASES THREE TO SIX.] (a) The 
214.4   ongoing costs of the commissioner in operating phases three to 
214.5   six of the statewide public safety radio communication system 
214.6   shall be allocated among and paid by the following users, all in 
214.7   accordance with the statewide public safety radio communication 
214.8   system plan developed by the planning committee under section 
214.9   403.36: 
214.10     (1) the state of Minnesota for its operations using the 
214.11  system; 
214.12     (2) all local government units using the system; and 
214.13     (3) other eligible users of the system. 
214.14     (b) Each local government and other eligible users of 
214.15  phases three to six of the system shall pay to the commissioner 
214.16  all sums charged under this section, at the times and in the 
214.17  manner determined by the commissioner.  The governing body of 
214.18  each local government shall take all action that may be 
214.19  necessary to provide the funds required for these payments and 
214.20  to make the payments when due.  
214.21     (c) If the governing body of any local government using 
214.22  phase three, four, five, or six of the system fails to meet any 
214.23  payment to the commissioner under this subdivision when due, the 
214.24  commissioner may certify to the auditor of the county in which 
214.25  the government unit is located the amount required for payment 
214.26  of the amount due with interest at six percent per year.  The 
214.27  auditor shall levy and extend the amount due, with interest, as 
214.28  a tax upon all taxable property in the government unit for the 
214.29  next calendar year, free from any existing limitations imposed 
214.30  by law or charter.  This tax shall be collected in the same 
214.31  manner as the general taxes of the government unit, and the 
214.32  proceeds of the tax, when collected, shall be paid by the county 
214.33  treasurer to the commissioner and credited to the government 
214.34  unit for which the tax was levied. 
214.35     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
214.36  410.32, is amended to read: 
215.1      410.32 [CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL 
215.2   EQUIPMENT.] 
215.3      (a) Notwithstanding any contrary provision of other law or 
215.4   charter, a home rule charter city may, by resolution and without 
215.5   public referendum, issue capital notes subject to the city debt 
215.6   limit to purchase capital equipment. 
215.7      (b) For purposes of this section, "capital equipment" means:
215.8      (1) public safety equipment, ambulance and other medical 
215.9   equipment, road construction and maintenance equipment, and 
215.10  other capital equipment; and 
215.11     (2) computer hardware and ~~original operating system~~ 
215.12  software, ~~provided~~ whether bundled with machinery or equipment 
215.13  or unbundled, together with application development services and 
215.14  training related to the use of the computer. 
215.15     (c) The equipment or software ~~has~~ must have an expected 
215.16  useful life at least as long as the term of the notes. 
215.17     (d) The authority to issue capital notes for ~~original~~ 
215.18  ~~operating system~~ computer software and related services expires 
215.19  on July 1, 2005. 
215.20     (e) The notes shall be payable in not more than five years 
215.21  and be issued on terms and in the manner the city determines.  
215.22  The total principal amount of the capital notes issued in a 
215.23  fiscal year shall not exceed 0.03 percent of the market value of 
215.24  taxable property in the city for that year. 
215.25     (f) A tax levy shall be made for the payment of the 
215.26  principal and interest on the notes, in accordance with section 
215.27  475.61, as in the case of bonds. 
215.28     (g) Notes issued under this section shall require an 
215.29  affirmative vote of two-thirds of the governing body of the city.
215.30     (h) Notwithstanding a contrary provision of other law or 
215.31  charter, a home rule charter city may also issue capital notes 
215.32  subject to its debt limit in the manner and subject to the 
215.33  limitations applicable to statutory cities pursuant to section 
215.34  412.301. 
215.35     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
215.36  412.301, is amended to read: 
216.1      412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 
216.2      (a) The council may issue certificates of indebtedness or 
216.3   capital notes subject to the city debt limits to 
216.4   purchase capital equipment. 
216.5      (b) For purposes of this section, "capital equipment" means:
216.6      (1) public safety equipment, ambulance and other medical 
216.7   equipment, road construction ~~or~~ and maintenance equipment, and 
216.8   other capital equipment; and 
216.9      (2) computer hardware and ~~original operating system~~ 
216.10  software, ~~provided~~ whether bundled with machinery or equipment 
216.11  or unbundled, together with application development services and 
216.12  training related to the use of the computer.  
216.13     (c) The equipment or software ~~has~~ must have an expected 
216.14  useful life at least as long as the terms of the certificates or 
216.15  notes. 
216.16     (d) The authority to issue capital notes for ~~original~~ 
216.17  ~~operating system~~ computer software and related services expires 
216.18  on July 1, 2005. 
216.19     (e) Such certificates or notes shall be payable in not more 
216.20  than ~~five~~ ten years and shall be issued on such terms and in 
216.21  such manner as the council may determine. 
216.22     (f) If the amount of the certificates or notes to be issued 
216.23  to finance any such purchase exceeds 0.25 percent of the market 
216.24  value of taxable property in the city, they shall not be issued 
216.25  for at least ten days after publication in the official 
216.26  newspaper of a council resolution determining to issue them; and 
216.27  if before the end of that time, a petition asking for an 
216.28  election on the proposition signed by voters equal to ten 
216.29  percent of the number of voters at the last regular municipal 
216.30  election is filed with the clerk, such certificates or notes 
216.31  shall not be issued until the proposition of their issuance has 
216.32  been approved by a majority of the votes cast on the question at 
216.33  a regular or special election. 
216.34     (g) A tax levy shall be made for the payment of the 
216.35  principal and interest on such certificates or notes, in 
216.36  accordance with section 475.61, as in the case of bonds. 
217.1      Sec. 9.  Minnesota Statutes 2002, section 428A.101, is 
217.2   amended to read: 
217.3      428A.101 [SPECIAL SERVICE DISTRICT; SUNSET OF 
217.4   SELF-EXECUTING PROVISIONS.] 
217.5      The establishment of a new special service district after 
217.6   June 30, ~~2005~~ 2009, requires enactment of a special law 
217.7   authorizing the establishment. 
217.8      Sec. 10.  Minnesota Statutes 2002, section 428A.21, is 
217.9   amended to read: 
217.10     428A.21 [SUNSET.] 
217.11     No new housing improvement areas may be established under 
217.12  sections 428A.11 to 428A.20 after June 30, ~~2005~~ 2009.  After 
217.13  June 30, ~~2005~~ 2009, a city may establish a housing improvement 
217.14  area, provided that it receives enabling legislation authorizing 
217.15  the establishment of the area. 
217.16     Sec. 11.  Minnesota Statutes 2002, section 452.25, 
217.17  subdivision 3, is amended to read: 
217.18     Subd. 3.  [AUTHORITY.] (a) Upon the approval of its elected 
217.19  utilities commission or, if there be none, its city council, a 
217.20  municipal utility may enter into a joint venture with other 
217.21  municipal utilities, municipal power agencies, cooperative 
217.22  associations, ~~or~~ investor-owned utilities, or other private 
217.23  investors to provide utility services.  Retail electric utility 
217.24  services provided by a joint venture must be within the 
217.25  boundaries of each utility's exclusive electric service 
217.26  territory as shown on the map of service territories maintained 
217.27  by the department of commerce.  The terms and conditions of the 
217.28  joint venture are subject to ratification by the governing 
217.29  bodies of the respective utilities and may include the formation 
217.30  of a corporate or other separate legal entity with an 
217.31  administrative and governance structure independent of the 
217.32  respective utilities. 
217.33     (b) A corporate or other separate legal entity, if formed: 
217.34     (1) has the authority and legal capacity and, in the 
217.35  exercise of the joint venture, the powers, privileges, 
217.36  responsibilities, and duties authorized by this section; 
218.1      (2) is subject to the laws and rules applicable to the 
218.2   organization, internal governance, and activities of the entity; 
218.3      (3) in connection with its property and affairs and in 
218.4   connection with property within its control, may exercise any 
218.5   and all powers that may be exercised by a natural person or a 
218.6   private corporation or other private legal entity in connection 
218.7   with similar property and affairs; 
218.8      (4) a joint venture that does not include an investor-owned 
218.9   utility may elect to be deemed a municipal utility or a 
218.10  cooperative association for purposes of chapter 216B or other 
218.11  federal or state law regulating utility operations; and 
218.12     (5) for a joint venture that includes an investor-owned 
218.13  utility, the commission has authority over the activities, 
218.14  services, and rates of the joint venture, and may exercise that 
218.15  authority, to the same extent the commission has authority over 
218.16  the activities, services, and rates of the investor-owned 
218.17  utility itself. 
218.18     (c) Any corporation, if formed, must comply with section 
218.19  465.719, subdivisions 9, 10, 11, 12, 13, and 14.  The term 
218.20  "political subdivision," as it is used in section 465.719, shall 
218.21  refer to the city council of a city.  In this paragraph, 
218.22  "corporation" means a corporation organized under chapters 302A 
218.23  and 317A. 
218.24     Sec. 12.  Minnesota Statutes 2002, section 469.034, 
218.25  subdivision 2, is amended to read: 
218.26     Subd. 2.  [GENERAL OBLIGATION REVENUE BONDS.] (a) An 
218.27  authority may pledge the general obligation of the general 
218.28  jurisdiction governmental unit as additional security for bonds 
218.29  payable from income or revenues of the project or the 
218.30  authority.  The authority must find that the pledged revenues 
218.31  will equal or exceed 110 percent of the principal and interest 
218.32  due on the bonds for each year.  The proceeds of the bonds must 
218.33  be used for a qualified housing development project or 
218.34  projects.  The obligations must be issued and sold in the manner 
218.35  and following the procedures provided by chapter 475, except the 
218.36  obligations are not subject to approval by the electors, and the 
219.1   maturities may extend to not more than 30 years from the 
219.2   estimated date of completion of the project for obligations sold 
219.3   to finance housing for the elderly and 40 years for other 
219.4   obligations issued under this subdivision.  The authority is the 
219.5   municipality for purposes of chapter 475.  
219.6      (b) The principal amount of the issue must be approved by 
219.7   the governing body of the general jurisdiction governmental unit 
219.8   whose general obligation is pledged.  Public hearings must be 
219.9   held on issuance of the obligations by both the authority and 
219.10  the general jurisdiction governmental unit.  The hearings must 
219.11  be held at least 15 days, but not more than 120 days, before the 
219.12  sale of the obligations. 
219.13     (c) The maximum amount of general obligation bonds that may 
219.14  be issued and outstanding under this section equals the greater 
219.15  of (1) one-half of one percent of the taxable market value of 
219.16  the general jurisdiction governmental unit whose general 
219.17  obligation which includes a tax on property is pledged, or (2) 
219.18  $3,000,000.  In the case of county or multicounty general 
219.19  obligation bonds, the outstanding general obligation bonds of 
219.20  all cities in the county or counties issued under this 
219.21  subdivision must be added in calculating the limit under clause 
219.22  (1). 
219.23     (d) "General jurisdiction governmental unit" means the city 
219.24  in which the housing development project is located.  In the 
219.25  case of a county or multicounty authority, the county or 
219.26  counties may act as the general jurisdiction governmental unit.  
219.27  In the case of a multicounty authority, the pledge of the 
219.28  general obligation is a pledge of a tax on the taxable property 
219.29  in each of the counties. 
219.30     (e) "Qualified housing development project" means a housing 
219.31  development project providing housing either for the elderly or 
219.32  for individuals and families with incomes not greater than 80 
219.33  percent of the median family income as estimated by the United 
219.34  States Department of Housing and Urban Development for the 
219.35  standard metropolitan statistical area or the nonmetropolitan 
219.36  county in which the project is located, and will be owned by the 
220.1   authority for the term of the bonds.  A qualified housing 
220.2   development project may admit nonelderly individuals and 
220.3   families with higher incomes if: 
220.4      (1) three years have passed since initial occupancy; 
220.5      (2) the authority finds the project is experiencing 
220.6   unanticipated vacancies resulting in insufficient revenues, 
220.7   because of changes in population or other unforeseen 
220.8   circumstances that occurred after the initial finding of 
220.9   adequate revenues; and 
220.10     (3) the authority finds a tax levy or payment from general 
220.11  assets of the general jurisdiction governmental unit will be 
220.12  necessary to pay debt service on the bonds if higher income 
220.13  individuals or families are not admitted. 
220.14     Sec. 13.  Minnesota Statutes 2002, section 471.342, is 
220.15  amended by adding a subdivision to read: 
220.16     Subd. 2a.  [WATER SUBMETERING.] In this section, "water 
220.17  submetering" means metering devices in multifamily dwellings and 
220.18  related services, which detect water leaks and monitor water 
220.19  usage of specific units or areas. 
220.20     Sec. 14.  Minnesota Statutes 2002, section 471.342, 
220.21  subdivision 3, is amended to read: 
220.22     Subd. 3.  [PROGRAM AUTHORITY.] A city may establish an 
220.23  inflow and infiltration prevention program and a water 
220.24  submetering program and provide loans and grants to property 
220.25  owners to assist the owners in financing the cost of abating 
220.26  inflow and infiltration and water conservation and leak 
220.27  detection on their property.  
220.28     Sec. 15.  Minnesota Statutes 2002, section 471.342, 
220.29  subdivision 5, is amended to read: 
220.30     Subd. 5.  [PROGRAM FINANCING.] The city may finance the 
220.31  ~~program~~ programs with federal, state, private, or city funds.  
220.32  City funds include, but are not limited to, general fund 
220.33  appropriations, sanitary or storm sewer utility funds, and fees 
220.34  or charges.  A city may also issue revenue obligations payable 
220.35  solely from fees and charges imposed for program costs and loan 
220.36  repayments to finance the programs. 
221.1      Sec. 16.  Minnesota Statutes 2002, section 473.39, is 
221.2   amended by adding a subdivision to read: 
221.3      Subd. 1k.  [OBLIGATIONS.] After July 1, 2004, in addition 
221.4   to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 
221.5   and 1j, the council may issue certificates of indebtedness, 
221.6   bonds, or other obligations under this section in an amount not 
221.7   exceeding $32,000,000 for capital expenditures as prescribed in 
221.8   the council's regional transit master plan and transit capital 
221.9   improvement program and for related costs, including the costs 
221.10  of issuance and sale of the obligations. 
221.11     Sec. 17.  Minnesota Statutes 2002, section 474A.131, 
221.12  subdivision 1, is amended to read: 
221.13     Subdivision 1.  [NOTICE OF ISSUE.] Each issuer that issues 
221.14  bonds with an allocation received under this chapter shall 
221.15  provide a notice of issue to the department on forms provided by 
221.16  the department stating: 
221.17     (1) the date of issuance of the bonds; 
221.18     (2) the title of the issue; 
221.19     (3) the principal amount of the bonds; 
221.20     (4) the type of qualified bonds under federal tax law; 
221.21     (5) the dollar amount of the bonds issued that were subject 
221.22  to the annual volume cap; and 
221.23     (6) for entitlement issuers, whether the allocation is from 
221.24  current year entitlement authority or is from carryforward 
221.25  authority. 
221.26     For obligations that are issued as a part of a series of 
221.27  obligations, a notice must be provided for each series.  A 
221.28  penalty of one-half of the amount of the application deposit not 
221.29  to exceed $5,000 shall apply to any issue of obligations for 
221.30  which a notice of issue is not provided to the department within 
221.31  five business days after issuance or before ~~the last Monday~~ 4:30 
221.32  p.m. on the last business day in December, whichever occurs 
221.33  first.  Within 30 days after receipt of a notice of issue the 
221.34  department shall refund a portion of the application deposit 
221.35  equal to one percent of the amount of the bonding authority 
221.36  actually issued if a one percent application deposit was made, 
222.1   or equal to two percent of the amount of the bonding authority 
222.2   actually issued if a two percent application deposit was made, 
222.3   less any penalty amount. 
222.4      Sec. 18.  Minnesota Statutes 2002, section 475.52, 
222.5   subdivision 1, is amended to read: 
222.6      Subdivision 1.  [STATUTORY CITIES.] Any statutory city may 
222.7   issue bonds or other obligations for the acquisition or 
222.8   betterment of public buildings, means of garbage disposal, 
222.9   hospitals, nursing homes, homes for the aged, schools, 
222.10  libraries, museums, art galleries, parks, playgrounds, stadia, 
222.11  sewers, sewage disposal plants, subways, streets, sidewalks, 
222.12  warning systems; for any utility or other public convenience 
222.13  from which a revenue is or may be derived; for a permanent 
222.14  improvement revolving fund; for changing, controlling or 
222.15  bridging streams and other waterways; for the acquisition and 
222.16  betterment of bridges and roads within two miles of the 
222.17  corporate limits; for the acquisition of development rights in 
222.18  the form of conservation easements under chapter 84C; and for 
222.19  acquisition of equipment for snow removal, street construction 
222.20  and maintenance, or fire fighting.  Without limitation by the 
222.21  foregoing the city may issue bonds to provide money for any 
222.22  authorized corporate purpose except current expenses. 
222.23     Sec. 19.  Minnesota Statutes 2002, section 475.52, 
222.24  subdivision 3, is amended to read: 
222.25     Subd. 3.  [COUNTIES.] Any county may issue bonds for the 
222.26  acquisition or betterment of courthouses, county administrative 
222.27  buildings, health or social service facilities, correctional 
222.28  facilities, law enforcement centers, jails, morgues, libraries, 
222.29  parks, and hospitals, for roads and bridges within the county or 
222.30  bordering thereon and for road equipment and machinery and for 
222.31  ambulances and related equipment, for the acquisition of 
222.32  development rights in the form of conservation easements under 
222.33  chapter 84C, and for capital equipment for the administration 
222.34  and conduct of elections providing the equipment is uniform 
222.35  countywide, except that the power of counties to issue bonds in 
222.36  connection with a library shall not exist in Hennepin County. 
223.1      Sec. 20.  Minnesota Statutes 2002, section 475.52, 
223.2   subdivision 4, is amended to read: 
223.3      Subd. 4.  [TOWNS.] Any town may issue bonds for the 
223.4   acquisition and betterment of town halls, town roads and 
223.5   bridges, nursing homes and homes for the aged, and for 
223.6   acquisition of equipment for snow removal, road construction or 
223.7   maintenance, and fire fighting, for the acquisition of 
223.8   development rights in the form of conservation easements under 
223.9   chapter 84C, and for the acquisition and betterment of any 
223.10  buildings to house and maintain town equipment. 
223.11     Sec. 21.  Minnesota Statutes 2003 Supplement, section 
223.12  475.521, subdivision 4, is amended to read: 
223.13     Subd. 4.  [LIMITATIONS ON AMOUNT.] A city may not issue 
223.14  bonds under this section if the maximum amount of principal and 
223.15  interest to become due in any year on all the outstanding bonds 
223.16  issued under this section, including the bonds to be issued, 
223.17  will equal or exceed ~~0.05367~~ 0.16 percent of the taxable market 
223.18  value of property in the ~~county~~ city for a city that has a 
223.19  population less than 2,500 and 0.05367 percent of the taxable 
223.20  market value of property in the city for a city that has a 
223.21  population of 2,500 or more.  Calculation of the limit must be 
223.22  made using the taxable market value for the taxes payable year 
223.23  in which the obligations are issued and sold.  This section does 
223.24  not limit the authority to issue bonds under any other special 
223.25  or general law. 
223.26     Sec. 22.  Minnesota Statutes 2003 Supplement, section 
223.27  475.58, subdivision 3b, is amended to read: 
223.28     Subd. 3b.  [STREET RECONSTRUCTION.] (a) A municipality may, 
223.29  without regard to the election requirement under subdivision 1, 
223.30  issue and sell obligations for street reconstruction, if the 
223.31  following conditions are met: 
223.32     (1) the streets are reconstructed under a street 
223.33  reconstruction plan that describes the streets to be 
223.34  reconstructed, the estimated costs, and any planned 
223.35  reconstruction of other streets in the municipality over the 
223.36  next five years, and the plan and issuance of the obligations 
224.1   has been approved by a vote of all of the members of the 
224.2   governing body following a public hearing for which notice has 
224.3   been published in the official newspaper at least ten days but 
224.4   not more than 28 days prior to the hearing; and 
224.5      (2) if a petition requesting a vote on the issuance is 
224.6   signed by voters equal to five percent of the votes cast in the 
224.7   last municipal general election and is filed with the municipal 
224.8   clerk within 30 days of the public hearing, the municipality may 
224.9   issue the bonds only after obtaining the approval of a majority 
224.10  of the voters voting on the question of the issuance of the 
224.11  obligations. 
224.12     (b) Obligations issued under this subdivision are subject 
224.13  to the debt limit of the municipality and are not excluded from 
224.14  net debt under section 475.51, subdivision 4. 
224.15     (c) For purposes of this subdivision, street reconstruction 
224.16  includes utility replacement and relocation and other activities 
224.17  incidental to the street reconstruction, ~~but~~ turn lanes, and 
224.18  other improvements having a substantial public safety function 
224.19  and realignments, other modifications to intersect with state 
224.20  and county roads, and the local share of state and county road 
224.21  projects. 
224.22     (d) Except in the case of turn lanes, safety improvements, 
224.23  intersection modifications, and the local share of state and 
224.24  county road projects, street reconstruction does not include the 
224.25  portion of project cost allocable to widening a street or adding 
224.26  curbs and gutters where none previously existed. 
224.27     Sec. 23.  Minnesota Statutes 2002, section 504B.215, is 
224.28  amended by adding a subdivision to read: 
224.29     Subd. 5.  [UTILITY CHARGES.] (a) Where submetering, as 
224.30  defined in section 471.342, subdivision 2a, is installed, 
224.31  metering equipment must comply with safety and technical 
224.32  standards established by the American Water Works Association, 
224.33  and must be installed in accordance with manufacturer's 
224.34  instructions and applicable code. 
224.35     (b) Where tenants are billed separately from rent for 
224.36  utilities, the person or entity billing the tenants may not 
225.1   collect in the aggregate more than the amount billed by the 
225.2   utility for the utility service provided.  The person or entity 
225.3   may not collect from tenants as part of utility charges, 
225.4   administrative, capital, or other expenses related to the 
225.5   provision of utility service.  Such expenses include, but are 
225.6   not limited to, purchase and installation of submeters, 
225.7   connection, disconnection, reconnection, billing, or other 
225.8   servicing charges and late payment charges.  
225.9      (c) The rate for utility service charged to tenants must be 
225.10  the same rate that the bill payer of record is charged by the 
225.11  utility.  Recovery by the bill payer of record from the tenants 
225.12  of any fixed monthly or periodic charges shall be made on a pro 
225.13  rata basis. 
225.14     (d) Upon a resident's request, an owner must provide a copy 
225.15  of any bills received from the utility showing the billed rate 
225.16  and total consumption and any bills, statements, or other 
225.17  documentation of rates and consumption provided by any third 
225.18  party to an owner during the prior 12 months. 
225.19     (e) Any violation of this subdivision shall be considered a 
225.20  violation of sections 325F.69 and 325D.44. 
225.21     Sec. 24.  [CITY OF ST. PAUL; RIVERCENTRE COMPLEX 
225.22  OPERATION.] 
225.23     Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
225.24  section, the terms defined in this subdivision have the meanings 
225.25  given them. 
225.26     (b) "City" means the city of St. Paul, its mayor, city 
225.27  council, and any other board, authority, commission, or officer 
225.28  authorized by law, charter, or ordinance to exercise city powers 
225.29  of the nature referred to in this section. 
225.30     (c) "RiverCentre complex" means collectively the 
225.31  auditorium, convention, conference and education center, arena, 
225.32  and parking ramp facilities presently and commonly known as the 
225.33  Roy Wilkins Auditorium, St. Paul RiverCentre, Xcel Energy 
225.34  Center, and RiverCentre Parking Ramp, including all property, 
225.35  real or personal, tangible or intangible, located in the city, 
225.36  intended to be used as part of the RiverCentre complex or 
226.1   additions to or extensions of it. 
226.2      Subd. 2.  [CREATION OF NONPROFIT ORGANIZATION.] As required 
226.3   under Minnesota Statutes, section 465.717, and notwithstanding 
226.4   any other law, city charter provision, or ordinance to the 
226.5   contrary, the city of St. Paul may participate in the creation 
226.6   of a nonprofit organization for the purposes provided in this 
226.7   section. 
226.8      Subd. 3.  [GOVERNING BOARD.] (a) The mayor of the city, 
226.9   subject to approval by the city council, shall appoint a 
226.10  majority of the members of the governing board of the nonprofit 
226.11  organization performing all or a part of the activities 
226.12  necessary to carry out the purposes specified in this section.  
226.13  The mayor may designate any officer or employee of the city to 
226.14  serve as a member of the governing board of any nonprofit 
226.15  organization. 
226.16     (b) In addition to the appointments made by the mayor under 
226.17  paragraph (a), the mayor shall designate two members of the city 
226.18  council to serve on the governing board of the nonprofit 
226.19  organization. 
226.20     (c) Notwithstanding any provision contained in the articles 
226.21  of incorporation and bylaws of the nonprofit organization, any 
226.22  member of the governing board appointed by the mayor may be 
226.23  removed only by the mayor. 
226.24     (d) The governing board of the nonprofit organization shall 
226.25  select, subject to the approval of the mayor, a president to 
226.26  serve as chief executive officer and general manager of the 
226.27  nonprofit organization. 
226.28     (e) The procedures in Minnesota Statutes, section 317A.255, 
226.29  subdivision 1, paragraph (b), relating to director conflicts of 
226.30  interest, are not required if the contract or other transaction 
226.31  is between the city and the nonprofit organization. 
226.32     Subd. 4.  [RIVERCENTRE MANAGEMENT; AUTHORITY TO CONTRACT 
226.33  WITH NONPROFIT ORGANIZATION.] The city may enter into an 
226.34  agreement with the nonprofit organization created in subdivision 
226.35  2 to equip, maintain, manage, and operate all or a portion of 
226.36  the RiverCentre complex and to manage and operate a convention 
227.1   bureau to market and promote the city as a tourist or convention 
227.2   center.  Except as otherwise provided in this section, the 
227.3   nonprofit organization may only contract and utilize and expend 
227.4   funds for these purposes under the direction of its governing 
227.5   board, subject to the accounting, financial reporting, and other 
227.6   conditions that the city may prescribe in a contract made under 
227.7   this section between the city and the nonprofit organization.  
227.8   The nonprofit organization may use the services of the office of 
227.9   the city attorney and the city's purchasing department.  All 
227.10  activities performed to carry out these purposes are deemed to 
227.11  be for a public purpose. 
227.12     Subd. 5.  [BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX 
227.13  EXEMPTIONS PRESERVED.] (a) The city must protect the rights of 
227.14  holders of bonds issued for the RiverCentre complex, including 
227.15  preserving the tax-exempt status of the bonds. 
227.16     (b) The use and operation of the RiverCentre complex by the 
227.17  nonprofit organization with which the city contracts under this 
227.18  act is a use, lease, or occupancy for public, governmental, and 
227.19  municipal purposes, and the complex is exempt from taxation by 
227.20  the state or any political subdivision of the state during such 
227.21  use, to the extent it would be exempt if the complex was 
227.22  equipped, maintained, managed, and operated by the city. 
227.23     (c) Gross receipts of tickets and admissions to events at 
227.24  the RiverCentre complex sponsored by the nonprofit organization 
227.25  created in section 2 do not qualify for the sales tax exemption 
227.26  under Minnesota Statutes, section 297A.70, subdivision 10. 
227.27     Subd. 6.  [APPLICABLE GENERAL LAWS.] The following statutes 
227.28  apply to the nonprofit organization with which the city 
227.29  contracts under this section the same as they apply to the city, 
227.30  to the extent practicable: 
227.31     (1) Minnesota Statutes, chapter 13D, the Minnesota Open 
227.32  Meeting Law; and 
227.33     (2) Minnesota Statutes, chapter 13, the Government Data 
227.34  Practices Act. 
227.35     Subd. 7.  [SUCCESSION.] The nonprofit organization with 
227.36  which the city contracts under this section is the successor to 
228.1   all powers, rights, assets, privileges, and interests held and 
228.2   enjoyed by the RiverCentre authority on the effective date of 
228.3   this section, and established by the provisions of Laws 1967, 
228.4   chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and 3, 
228.5   clause (3), as amended; Laws 1982, chapter 523, article 25, 
228.6   sections 4 and 5, as amended; Laws 1998, chapter 404, sections 
228.7   81 and 82; and Minnesota Statutes, section 297A.98.  On the 
228.8   effective date of the contract between the city and the 
228.9   nonprofit organization authorized by this section, the 
228.10  RiverCentre authority ceases to exist for only so long as the 
228.11  contract is in effect, and all other laws or provisions 
228.12  specifically relating to the RiverCentre authority and the 
228.13  RiverCentre complex that are not otherwise referenced in this 
228.14  section, do not apply to the nonprofit organization. 
228.15     Subd. 8.  [LIABILITY.] The nonprofit organization with 
228.16  which the city contracts under this section is a "municipality," 
228.17  and the officers, directors, employees, and agents of the 
228.18  nonprofit organization are "employees, officers, or agents," 
228.19  under Minnesota Statutes, chapter 466, relating to tort 
228.20  liability.  The city must defend, save harmless, and indemnify 
228.21  the nonprofit organization, including the nonprofit's officers, 
228.22  directors, employees, and agents, against any claim or demand 
228.23  arising out of the nonprofit organization's performance under 
228.24  the contract. 
228.25     <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
228.26  the city council and the chief clerical officer of the city of 
228.27  St. Paul have timely completed their compliance with Minnesota 
228.28  Statutes, section 645.023, subdivisions 2 and 3. 
228.29     Sec. 25.  [TRANSFER OF MHFA BONDING AUTHORITY TO HESO.] 
228.30     Notwithstanding Minnesota Statutes, section 474A.03, 
228.31  subdivision 2a, clause (b), the Minnesota Housing Finance Agency 
228.32  may enter into an agreement with the Higher Education Services 
228.33  Office under which the Higher Education Services Office issues 
228.34  qualified student loan bonds, up to $50,000,000 of which are 
228.35  issued pursuant to bonding authority allocated to the Minnesota 
228.36  Housing Finance Agency in 2004 under Minnesota Statutes, section 
229.1   474A.03, subdivision 2a, clause (a).  This amount is in addition 
229.2   to the bonding authority otherwise allocated to the Higher 
229.3   Education Services Office under Minnesota Statutes, chapter 
229.4   474A.  Notwithstanding Minnesota Statutes, section 474A.04, 
229.5   subdivision 1a, 474A.061, or 474A.091, subdivision 2, bonding 
229.6   authority carried forward by the Minnesota Housing Financing 
229.7   Agency from its allocation for 2004 under Minnesota Statutes, 
229.8   section 474A.03, subdivision 2a, clause (b), are exempt from the 
229.9   requirement that the bonding authority be permanently issued by 
229.10  December 31 of the next succeeding calendar year. 
229.11     Sec. 26.  [APPLICATION.] 
229.12     Section 16 applies in the counties of Anoka, Carver, 
229.13  Dakota, Hennepin, Ramsey, Scott, and Washington. 
229.14     Sec. 27.  [EFFECTIVE DATE.] 
229.15     Except as provided in section 24, this article is effective 
229.16  the day following final enactment. 
229.17                             ARTICLE 7
229.18              INTERNATIONAL ECONOMIC DEVELOPMENT ZONE
229.19     Section 1.  Minnesota Statutes 2002, section 174.03, is 
229.20  amended by adding a subdivision to read: 
229.21     Subd. 2a.  [STATE AVIATION PLAN.] (a) Each revision of the 
229.22  state transportation plan must include a chapter setting out a 
229.23  state aviation plan.  The plan must include the following: 
229.24     (1) an analysis of the projected commercial aviation needs 
229.25  of the state over the next 20 years; 
229.26     (2) a description of the present capacity, function, and 
229.27  levels of activity at each commercial service airport as 
229.28  designated by the Federal Aviation Administration, each airport 
229.29  that the commissioner determines is likely to become a 
229.30  commercial service airport in the next 20 years, and any other 
229.31  airport that the commissioner determines should be included by 
229.32  reason of commercial passenger or cargo service levels; and 
229.33     (3) a description of the capacity, function, and levels of 
229.34  activity that each airport identified in clause (2) must have in 
229.35  order to carry out the plan's goal and objectives and meet the 
229.36  needs described under clause (1). 
230.1      (b) In assessing aviation needs and the capacity, function, 
230.2   and level of activity at any airport, the plan must consider 
230.3   both commercial passenger service and cargo service. 
230.4      Sec. 2.  [174.032] [ADVISORY COUNCIL ON AVIATION PLANNING.] 
230.5      Subdivision 1.  [ADVISORY COUNCIL CREATED.] (a) The 
230.6   commissioner shall create an Advisory Council on Aviation 
230.7   Planning to advise the commissioner on the aviation chapter of 
230.8   the state transportation plan.  The council consists of the 
230.9   following members appointed by the commissioner: 
230.10     (1) one member of the Metropolitan Airports Commission; 
230.11     (2) one representative of major commercial airlines; 
230.12     (3) one representative of independent pilots who fly for 
230.13  small business; 
230.14     (4) one representative of the air cargo industry; 
230.15     (5) two representatives of the business community unrelated 
230.16  to aviation, one of whom must reside within the seven-county 
230.17  metropolitan area and one of whom must reside outside that area; 
230.18     (6) one representative of environmental interests; 
230.19     (7) one employee of the Department of Transportation's 
230.20  Office of Aeronautics; 
230.21     (8) two representatives of neighborhoods that are 
230.22  significantly affected by airplane noise; and 
230.23     (9) one representative of tier-two airports (St. Cloud, 
230.24  Duluth, Willmar, and Rochester). 
230.25     (b) Members of the advisory council serve at the pleasure 
230.26  of the appointing authority.  Members shall serve without 
230.27  compensation. 
230.28     Subd. 2.  [ADVISORY COUNCIL DUTIES.] (a) The Advisory 
230.29  Council on Aviation Planning shall advise the commissioner on 
230.30  the aviation planning chapter of the state transportation plan 
230.31  required under section 174.03, subdivision 2a.  In carrying out 
230.32  these duties the advisory council shall prepare an initial draft 
230.33  of the chapter and submit it to the commissioner, revise the 
230.34  draft if so requested by the commissioner, and comment to the 
230.35  commissioner on any revisions to the draft the commissioner 
230.36  makes.  In drafting the chapter the council shall consider: 
231.1      (1) present and anticipated capacity needs of commercial 
231.2   service airports, including limitations on expanding the 
231.3   capacity of individual commercial service airports imposed by 
231.4   state or local regulations, safety or environmental concerns, 
231.5   and land uses near the airport that are incompatible with 
231.6   airport operations; 
231.7      (2) the needs of Minnesota residents and businesses for 
231.8   passenger and cargo service, from both a statewide and regional 
231.9   perspective; 
231.10     (3) anticipated changes in commercial aircraft types and 
231.11  characteristics; 
231.12     (4) noise and other environmental impacts of aviation at 
231.13  commercial service airports; 
231.14     (5) trends in the aviation and airline industries; and 
231.15     (6) relationship between aviation and other forms of 
231.16  transportation covered by the state transportation plan. 
231.17     (b) The advisory council may also make recommendations to 
231.18  the commissioner, the Metropolitan Airports Commission, and the 
231.19  legislature concerning the policy steps needed to implement the 
231.20  chapter. 
231.21     Subd. 3.  [TERM OF COUNCIL; EXPIRATION; RECONVENING.] (a) 
231.22  The commissioner shall appoint the first advisory council by 
231.23  July 1, 2004.  The council shall submit any recommendations it 
231.24  makes to the legislature by January 15, 2005.  The terms of all 
231.25  members of the advisory council serving on July 1, 2004, expire 
231.26  on January 1, 2006. 
231.27     (b) The commissioner shall appoint and convene a new 
231.28  advisory council not less than two years before the date on 
231.29  which each revision of the state transportation plan is required 
231.30  under section 174.03, subdivision 1a.  Each such advisory 
231.31  council must consist of members as prescribed in subdivision 1, 
231.32  who shall serve on the same terms as set forth under subdivision 
231.33  1.  Each such advisory council expires on the date on which the 
231.34  revision of the state transportation plan becomes final. 
231.35     Sec. 3.  Minnesota Statutes 2002, section 290.06, is 
231.36  amended by adding a subdivision to read: 
232.1      Subd. 32.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE JOB 
232.2   CREDIT.] A taxpayer that is a qualified business, as defined in 
232.3   section 469.321, subdivision 6, is allowed a credit as 
232.4   determined under section 469.327 against the tax imposed by this 
232.5   chapter. 
232.6      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
232.7   years beginning after December 31, 2004. 
232.8      Sec. 4.  [290.0681] [INTERNATIONAL ECONOMIC DEVELOPMENT 
232.9   ZONE INVESTMENT CREDIT.] 
232.10     A person is allowed a credit against the taxes imposed 
232.11  under this chapter in an amount equal to 50 percent of the 
232.12  amount of qualifying investment.  A qualifying investment is an 
232.13  amount invested in a regional distribution center, as developed 
232.14  pursuant to section 469.322.  Unused portions of the credit may 
232.15  be carried over for five years. 
232.16     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
232.17  years beginning after December 31, 2004. 
232.18     Sec. 5.  Minnesota Statutes 2002, section 290.191, is 
232.19  amended by adding a subdivision to read: 
232.20     Subd. 4a.  [APPORTIONMENT FORMULA FOR CERTAIN QUALIFIED 
232.21  BUSINESSES.] (a) If the business of a corporation, partnership, 
232.22  or proprietorship is a qualified business under section 469.321, 
232.23  and has operations only within the international economic 
232.24  development zone, then the taxpayer may apportion net income to 
232.25  Minnesota based solely upon the percentage that the sales made 
232.26  within this state in connection with its trade or business 
232.27  during the tax period are of the total sales wherever made in 
232.28  connection with the trade or business during the tax period.  
232.29  Property and payroll factors are disregarded. 
232.30     (b) If the taxpayer has operations both within the 
232.31  international economic development zone and outside of the 
232.32  international economic development zone, income will be 
232.33  apportioned to Minnesota under the formula in subdivision 2, 
232.34  except that only the Minnesota sales of the facility or 
232.35  facilities located in the international economic development 
232.36  zone will be included in the taxpayer's factors.  Property and 
233.1   payroll factors of the facility or facilities located in the 
233.2   international economic development zone are disregarded. 
233.3      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
233.4   years beginning after December 31, 2004. 
233.5      Sec. 6.  Minnesota Statutes 2002, section 297A.68, is 
233.6   amended by adding a subdivision to read: 
233.7      Subd. 40.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONES.] (a) 
233.8   Purchases of tangible personal property or taxable services by a 
233.9   qualified business, as defined in section 469.321, are exempt if 
233.10  the property or services are primarily used or consumed in an 
233.11  international economic development zone designated under section 
233.12  469.322. 
233.13     (b) Purchase and use of construction materials and supplies 
233.14  for construction of improvements to real property in an 
233.15  international economic development zone are exempt if the 
233.16  improvements after completion of construction are to be used in 
233.17  the conduct of a qualified business, as defined in section 
233.18  469.321.  This exemption applies regardless of whether the 
233.19  purchases are made by the business or a contractor. 
233.20     (c) The exemptions under this subdivision apply to a local 
233.21  sales and use tax, regardless of whether the local tax is 
233.22  imposed on sales taxable under this chapter or in another law, 
233.23  ordinance, or charter provision. 
233.24     (d) This subdivision applies to sales, if the purchase was 
233.25  made and delivery received during the period provided under 
233.26  section 469.324, subdivision 2. 
233.27     <h>[EFFECTIVE DATE.]</h> This section is effective for sales made 
233.28  on or after the day following final enactment. 
233.29     Sec. 7.  [469.321] [DEFINITIONS.] 
233.30     Subdivision 1.  [SCOPE.] For purposes of sections 469.321 
233.31  to 469.328, the following terms have the meanings given. 
233.32     Subd. 2.  [FOREIGN TRADE ZONE.] "Foreign trade zone" means 
233.33  a foreign trade zone designated pursuant to United States Code, 
233.34  title 19, section 81b, for the right to use the powers provided 
233.35  in United States Code, title 19, sections 81a to 81u, or a 
233.36  subzone authorized by the foreign trade zone. 
234.1      Subd. 3.  [FOREIGN TRADE ZONE AUTHORITY.] "Foreign trade 
234.2   zone authority" means the Greater Metropolitan Foreign Trade 
234.3   Zone Commission number 119, a joint powers authority created by 
234.4   the county of Hennepin, the cities of Minneapolis and 
234.5   Bloomington, and the Metropolitan Airports Commission, under the 
234.6   authority of section 469.059, 469.101, or 471.59, which includes 
234.7   any other political subdivisions that enter into the authority 
234.8   after its creation. 
234.9      Subd. 4.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE.] An 
234.10  "international economic development zone" or "zone" is a zone so 
234.11  designated under section 469.322. 
234.12     Subd. 5.  [PERSON.] "Person" includes an individual, 
234.13  corporation, partnership, limited liability company, 
234.14  association, or any other entity. 
234.15     Subd. 6.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
234.16  means a person carrying on a trade or business at a place of 
234.17  business located within an international economic development 
234.18  zone that is: 
234.19     (1) engaged in the furtherance of international export or 
234.20  import of goods; and 
234.21     (2) certified by the foreign trade zone authority as a 
234.22  trade or business that furthers the purpose of developing 
234.23  international distribution capacity and capability. 
234.24     (b) A person that relocates a trade or business from within 
234.25  Minnesota but outside an international economic development zone 
234.26  into an international economic development zone is not a 
234.27  qualified business, unless the business: 
234.28     (1)(i) increases full-time employment in the first full 
234.29  year of operation within the international economic development 
234.30  zone by at least 20 percent measured relative to the operations 
234.31  that were relocated and maintains the required level of 
234.32  employment for each year that tax incentives under section 
234.33  469.324 are claimed; or 
234.34     (ii) makes a capital investment in the property located 
234.35  within a zone equal to at least ten percent of the gross 
234.36  revenues of the operations that were relocated in the 
235.1   immediately proceeding taxable year; and 
235.2      (2) enters a binding written agreement with the foreign 
235.3   trade zone authority that: 
235.4      (i) pledges that the business will meet the requirements of 
235.5   clause (1); 
235.6      (ii) provides for repayment of all tax benefits enumerated 
235.7   under section 469.324 to the business under the procedures in 
235.8   section 469.328, if the requirements of clause (1) are not met 
235.9   for the taxable year or for taxes payable during a year in which 
235.10  the requirements were not met; and 
235.11     (iii) contains any other terms the foreign trade zone 
235.12  authority determines appropriate. 
235.13     Clause (1) of this paragraph does not apply to a freight 
235.14  forwarder. 
235.15     (c) A qualified business must pay each employee total 
235.16  compensation, including benefits not mandated by law, that on an 
235.17  annualized basis is equal to at least 110 percent of the federal 
235.18  poverty guidelines for a family of four. 
235.19     Subd. 7.  [REGIONAL DISTRIBUTION CENTER.] A "regional 
235.20  distribution center" is a distribution center developed within a 
235.21  foreign trade zone.  The regional distribution center must have 
235.22  as its primary purpose to facilitate gathering of freight for 
235.23  the purpose of centralizing the functions necessary for the 
235.24  shipment of freight in international commerce, including, but 
235.25  not limited to, security and customs functions. 
235.26     Subd. 8.  [RELOCATE.] (a) "Relocate" means that a trade or 
235.27  business: 
235.28     (1) ceases one or more operations or functions at another 
235.29  location in Minnesota and begins performing substantially the 
235.30  same operations or functions at a location in an international 
235.31  economic development zone; or 
235.32     (2) reduces employment at another location in Minnesota 
235.33  during a period starting one year before and ending one year 
235.34  after it begins operations in an international economic 
235.35  development zone and its employees in the international economic 
235.36  development zone are engaged in the same line of business as the 
236.1   employees at the location where it reduced employment. 
236.2      (b) "Relocate" does not include an expansion by a business 
236.3   that establishes a new facility that does not replace or 
236.4   supplant an existing operation or employment, in whole or in 
236.5   part. 
236.6      (c) "Trade or business" includes any business entity that 
236.7   is substantially similar in operation or ownership to the 
236.8   business entity seeking to be a qualified business under this 
236.9   section. 
236.10     Subd. 9.  [FREIGHT FORWARDER.] "Freight forwarder" is a 
236.11  business that, for compensation, ensures that goods produced or 
236.12  sold by another business move from point of origin to point of 
236.13  destination. 
236.14     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
236.15  following final enactment. 
236.16     Sec. 8.  [469.322] [DESIGNATION OF INTERNATIONAL ECONOMIC 
236.17  DEVELOPMENT ZONE.] 
236.18     (a) An area designated as a foreign trade zone may be 
236.19  designated by the foreign trade zone authority as an 
236.20  international economic development zone if within the zone a 
236.21  regional distribution center is being developed pursuant to 
236.22  section 469.323.  The zone must be not less than 500 acres and 
236.23  not more than 1,000 acres in size. 
236.24     (b) In making the designation, the foreign trade zone 
236.25  authority, in consultation with the Minnesota Department of 
236.26  Transportation and the Metropolitan Council, shall consider 
236.27  access to major transportation routes, consistency with current 
236.28  state transportation and air cargo planning, adequacy of the 
236.29  size of the site, access to airport facilities, present and 
236.30  future capacity at the designated airport, the capability to 
236.31  meet integrated present and future air cargo, security, and 
236.32  inspection services, and access to other infrastructure and 
236.33  financial incentives.  The border of the international economic 
236.34  development zone must be no more than 60 miles distant or 90 
236.35  minutes drive time from the border of the Minneapolis-St. Paul 
236.36  International Airport.  The county in which the zone is located 
237.1   must be a member of the foreign trade zone authority. 
237.2      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
237.3   following final enactment. 
237.4      Sec. 9.  [469.323] [FOREIGN TRADE ZONE AUTHORITY POWERS.] 
237.5      Subdivision 1.  [DEVELOPMENT OF REGIONAL DISTRIBUTION 
237.6   CENTER.] The foreign trade zone authority is responsible for 
237.7   creating a development plan for the regional distribution 
237.8   center.  The regional distribution center must be developed with 
237.9   the purpose of expanding, on a regional basis, international 
237.10  distribution capacity and capability.  The foreign trade zone 
237.11  authority shall consult with municipalities that have indicated 
237.12  to the authority an interest in locating the international 
237.13  economic development zone within their boundaries and a 
237.14  willingness to establish a tax increment financing district 
237.15  coterminous with the boundaries of the zone, as well as 
237.16  interested businesses, potential financiers, and appropriate 
237.17  state and federal agencies. 
237.18     Subd. 2.  [BUSINESS PLAN.] Before designation of an 
237.19  international economic development zone under section 469.322, 
237.20  the governing body of the foreign trade zone authority shall 
237.21  prepare a business plan.  The plan must include an analysis of 
237.22  the economic feasibility of the regional distribution center 
237.23  once it becomes operational and of the operations of freight 
237.24  forwarders and other businesses that choose to locate within the 
237.25  boundaries of the zone.  The analysis must provide profitability 
237.26  models that: 
237.27     (1) include the benefits of the incentives; 
237.28     (2) estimate the amount of time needed to achieve 
237.29  profitability; and 
237.30     (3) analyze the length of time incentives will be necessary 
237.31  to the economic viability of the regional distribution center. 
237.32     If the governing body of the foreign trade authority 
237.33  determines that the models do not establish the economic 
237.34  feasibility of the project, the regional distribution center 
237.35  does not meet the development requirements of this section and 
237.36  section 469.322. 
238.1      Subd. 3.  [PORT AUTHORITY POWERS.] The governing body of 
238.2   the foreign trade zone authority may establish a port authority 
238.3   that has the same powers as a port authority established under 
238.4   section 469.049.  If the foreign trade zone authority 
238.5   establishes a port authority, the governing body of the foreign 
238.6   trade zone authority may exercise all powers granted to a city 
238.7   by sections 469.048 to 469.068 within the area of the 
238.8   international economic development zone, except it may not 
238.9   impose or request imposition of a property tax levy under 
238.10  section 469.053 by any city. 
238.11     Subd. 4.  [BUSINESS SUBSIDY LAW.] Tax exemptions, job 
238.12  credits, and tax increment financing provided under this section 
238.13  are business subsidies for the purpose of sections 116J.993 to 
238.14  116J.995. 
238.15     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
238.16  following final enactment. 
238.17     Sec. 10.  [469.324] [TAX INCENTIVES IN INTERNATIONAL 
238.18  ECONOMIC DEVELOPMENT ZONE.] 
238.19     Subdivision 1.  [AVAILABILITY.] Qualified businesses that 
238.20  operate in an international economic development zone, 
238.21  individuals who invest in a regional distribution center, or 
238.22  qualified businesses that operate in an international economic 
238.23  development zone qualify for: 
238.24     (1) investment tax credits as provided under section 
238.25  290.0681; 
238.26     (2) special apportionment formula for corporate franchise 
238.27  taxes as provided under section 290.191, subdivision 4a; 
238.28     (3) exemption from the state sales and use tax and any 
238.29  local sales and use taxes on qualifying purchases as provided in 
238.30  section 297A.68, subdivision 40; 
238.31     (4) the jobs credit allowed under section 469.327; and 
238.32     (5) tax increment financing as provided in this chapter. 
238.33     Subd. 2.  [DURATION.] (a) Except as provided in paragraph 
238.34  (b), the tax incentives described in subdivision 1, clauses (1), 
238.35  (2), and (4), are available for no more than 12 consecutive 
238.36  taxable years for any taxpayer that claims them.  The tax 
239.1   incentives described in subdivision 1, clause (3), are available 
239.2   for each taxpayer that claims them for taxes otherwise payable 
239.3   on transactions during a period of 12 years from the date when 
239.4   the first exemption is claimed by that taxpayer under each 
239.5   exemption.  No exemptions described in subdivision 1, clauses 
239.6   (1) to (4), are available after December 31, 2020. 
239.7      (b) For taxpayers that are freight forwarders, the 
239.8   durations provided under paragraph (a) are reduced to six years. 
239.9      Subd. 3.  [QUALIFICATION.] To receive the tax incentives 
239.10  under this section, a qualified business must, by December 31 of 
239.11  each year, certify to the commissioner of revenue the percentage 
239.12  of its business activity within the zone that constitutes 
239.13  international business activity for the year, measured by value 
239.14  or volume of activity.  If the percentage is less than 100 
239.15  percent, the amount of the tax benefits provided under sections 
239.16  290.06, subdivision 32, 290.0681, and 469.327 are reduced in 
239.17  proportion to the percentage of business activity that is not 
239.18  international business activity.  The commissioner of revenue 
239.19  may audit the business activities of a qualifying business to 
239.20  determine its eligibility for tax benefits under this section. 
239.21     Sec. 11.  [469.327] [JOBS CREDIT.] 
239.22     Subdivision 1.  [CREDIT ALLOWED.] A qualified business is 
239.23  allowed a credit against the taxes imposed under chapter 290.  
239.24  The credit equals seven percent of the: 
239.25     (1) lesser of: 
239.26     (i) zone payroll for the taxable year, less the zone 
239.27  payroll for the base year; or 
239.28     (ii) total Minnesota payroll for the taxable year, less 
239.29  total Minnesota payroll for the base year; minus 
239.30     (2) $30,000 multiplied by the number of full-time 
239.31  equivalent employees that the qualified business employs in the 
239.32  international economic development zone for the taxable year, 
239.33  minus the number of full-time equivalent employees the business 
239.34  employed in the zone in the base year, but not less than zero. 
239.35     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
239.36  the following terms have the meanings given. 
240.1      (b) "Base year" means the taxable year beginning during the 
240.2   calendar year prior to the calendar year in which the zone 
240.3   designation took effect. 
240.4      (c) "Full-time equivalent employees" means the equivalent 
240.5   of annualized expected hours of work equal to 2,080 hours. 
240.6      (d) "Minnesota payroll" means the wages or salaries 
240.7   attributed to Minnesota under section 290.191, subdivision 12, 
240.8   for the qualified business or the unitary business of which the 
240.9   qualified business is a part, whichever is greater. 
240.10     (e) "Zone payroll" means wages or salaries used to 
240.11  determine the zone payroll factor for the qualified business, 
240.12  less the amount of compensation attributable to any employee 
240.13  that exceeds $70,000. 
240.14     Subd. 3.  [INFLATION ADJUSTMENT.] For taxable years 
240.15  beginning after December 31, 2005, the dollar amounts in 
240.16  subdivision 1, clause (2), and subdivision 2, paragraph (e), are 
240.17  annually adjusted for inflation.  The commissioner of revenue 
240.18  shall adjust the amounts by the percentage determined under 
240.19  section 290.06, subdivision 2d, for the taxable year. 
240.20     Subd. 4.  [REFUNDABLE.] If the amount of the credit exceeds 
240.21  the liability for tax under chapter 290, the commissioner of 
240.22  revenue shall refund the excess to the qualified business. 
240.23     Subd. 5.  [APPROPRIATION.] An amount sufficient to pay the 
240.24  refunds authorized by this section is appropriated to the 
240.25  commissioner of revenue from the general fund. 
240.26     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
240.27  years beginning after December 31, 2004. 
240.28     Sec. 12.  [469.328] [REPAYMENT OF TAX BENEFITS.] 
240.29     Subdivision 1.  [REPAYMENT OBLIGATION.] A person must repay 
240.30  the amount of the tax reduction received under section 469.324, 
240.31  subdivision 1, clauses (1) to (4), and refund received under 
240.32  section 469.327, during the two years immediately before it 
240.33  ceased to operate in the zone, if the person ceased to operate 
240.34  its facility located within the zone or otherwise ceases to be 
240.35  or is not a qualified business. 
240.36     Subd. 2.  [DISPOSITION OF REPAYMENT.] The repayment must be 
241.1   paid to the state to the extent it represents a state tax 
241.2   reduction.  Any amount repaid to the state must be deposited in 
241.3   the general fund.  Any repayment of local sales or use taxes 
241.4   must be repaid to the jurisdiction imposing the local sales or 
241.5   use tax. 
241.6      Subd. 3.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
241.7   taxes imposed under chapter 290 or 297A or local taxes collected 
241.8   pursuant to section 297A.99, a person must file an amended 
241.9   return with the commissioner of revenue and pay any taxes 
241.10  required to be repaid within 30 days after ceasing to be a 
241.11  qualified business.  The amount required to be repaid is 
241.12  determined by calculating the tax for the period for which 
241.13  repayment is required without regard to the tax reductions 
241.14  allowed under section 469.324. 
241.15     (b) The provisions of chapters 270 and 289A relating to the 
241.16  commissioner of revenue's authority to audit, assess, and 
241.17  collect the tax and to hear appeals are applicable to the 
241.18  repayment required under paragraph (a).  The commissioner may 
241.19  impose civil penalties as provided in chapter 289A, and the 
241.20  additional tax and penalties are subject to interest at the rate 
241.21  provided in section 270.75, from 30 days after ceasing to do 
241.22  business in the zone until the date the tax is paid. 
241.23     (c) For determining the tax required to be repaid, a tax 
241.24  reduction is deemed to have been received on the date that the 
241.25  tax would have been due if the person had not been entitled to 
241.26  the tax reduction. 
241.27     (d) The commissioner of revenue may assess the repayment of 
241.28  taxes under paragraph (b) at any time within two years after the 
241.29  person ceases to be a qualified business, or within any period 
241.30  of limitations for the assessment of tax under section 289A.38, 
241.31  whichever is later. 
241.32     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
241.33  following final enactment. 
241.34     Sec. 13.  [DEPARTMENT OF EMPLOYMENT AND ECONOMIC 
241.35  DEVELOPMENT STUDY; INTERNATIONAL AIR FREIGHT.] 
241.36     The commissioner of employment and economic development 
242.1   must study and analyze the issue of whether the state would 
242.2   benefit from more than one international economic development 
242.3   zone as defined in Minnesota Statutes, section 469.321.  The 
242.4   commissioner shall solicit input on the issue from businesses, 
242.5   communities, and economic development organizations.  The 
242.6   commissioner must report the results of the study and analysis 
242.7   to the committees of the legislature having jurisdiction over 
242.8   economic development issues by December 1, 2004, along with any 
242.9   legislative recommendations. 
242.10                             ARTICLE 8
242.11                           MISCELLANEOUS
242.12     Section 1.  Minnesota Statutes 2002, section 15.06, 
242.13  subdivision 6, is amended to read: 
242.14     Subd. 6.  [GENERAL POWERS OF COMMISSIONERS.] Except as 
242.15  otherwise expressly provided by law, a commissioner shall have 
242.16  the following powers: 
242.17     (1) to delegate to any subordinate employee the exercise of 
242.18  specified statutory powers or duties as the commissioner may 
242.19  deem advisable, subject to the commissioner's control; provided, 
242.20  that every delegation shall be made by written order, filed with 
242.21  the secretary of state; and further provided that only a deputy 
242.22  commissioner may have all the powers or duties of the 
242.23  commissioner.  A commissioner who delegates the exercise of 
242.24  identical powers or duties to ten or more subordinate employees, 
242.25  may combine the delegation to these employees in one written 
242.26  order.  A delegation of authority granted by a commissioner 
242.27  remains in effect until revoked by the commissioner, revoked by 
242.28  a successor commissioner, or termination of the employees' 
242.29  employment.  A successor commissioner may continue to grant the 
242.30  same delegations of authority that were granted by a previous 
242.31  commissioner, by issuing a written order that is filed with the 
242.32  secretary of state and lists the names of the subordinate 
242.33  employees that have orders of delegations of authority, the date 
242.34  the order was signed, and the date the order was filed with the 
242.35  secretary of state; 
242.36     (2) to appoint all subordinate employees and to prescribe 
243.1   their duties; provided, that all departments and agencies shall 
243.2   be subject to the provisions of chapter 43A; 
243.3      (3) with the approval of the commissioner of 
243.4   administration, to organize the department or agency as deemed 
243.5   advisable in the interest of economy and efficiency; and 
243.6      (4) to prescribe procedures for the internal management of 
243.7   the department or agency to the extent that the procedures do 
243.8   not directly affect the rights of or procedure available to the 
243.9   public. 
243.10     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
243.11  following final enactment. 
243.12     Sec. 2.  Minnesota Statutes 2002, section 168A.02, 
243.13  subdivision 2, is amended to read: 
243.14     Subd. 2.  [NO VEHICLE REGISTRATION WITHOUT TITLE.] The 
243.15  department shall not register or renew the registration of a 
243.16  vehicle for which a certificate of title is required unless a 
243.17  certificate of title has been issued to the owner ~~or~~, an 
243.18  application therefor has been delivered to and approved by the 
243.19  department, or the vehicle has a Minnesota certificate of title 
243.20  and is being held for resale by a dealer under section 168A.11. 
243.21     Sec. 3.  Minnesota Statutes 2002, section 168A.11, 
243.22  subdivision 1, is amended to read: 
243.23     Subdivision 1.  [~~APPLICATION~~ REQUIREMENTS UPON SUBSEQUENT 
243.24  TRANSFER.] (a) ~~If~~ A dealer who buys a vehicle and holds it for 
243.25  resale ~~and procures the certificate of title from the owner, and~~ 
243.26  ~~complies with subdivision 2 hereof, the dealer~~ need not apply 
243.27  for a certificate of title~~, but~~.  Upon transferring the vehicle 
243.28  to another person, other than by the creation of a security 
243.29  interest, the dealer shall promptly execute the assignment and 
243.30  warranty of title by a dealer, showing the names and addresses 
243.31  of the transferee and of any secured party holding a security 
243.32  interest created or reserved at the time of the resale, and the 
243.33  date of the security agreement in the spaces provided therefor 
243.34  on the certificate of title or secure reassignment. 
243.35     (b) If a dealer elects to apply for a certificate of title 
243.36  on a vehicle held for resale, the dealer need not register the 
244.1   vehicle but shall pay one month's registration tax.  If a dealer 
244.2   elects to apply for a certificate of title on a vehicle held for 
244.3   resale, the department shall not place any legend on the title 
244.4   that no motor vehicle sales tax was paid by the dealer, but may 
244.5   indicate on the title whether the vehicle is a new or used 
244.6   vehicle. 
244.7      (c) With respect to motor vehicles subject to the 
244.8   provisions of section 325E.15, the dealer shall also, in the 
244.9   space provided therefor on the certificate of title or secure 
244.10  reassignment, state the true cumulative mileage registered on 
244.11  the odometer or that the exact mileage is unknown if the 
244.12  odometer reading is known by the transferor to be different from 
244.13  the true mileage.  
244.14     ~~(c)~~ (d) The transferee shall complete the application for 
244.15  title section on the certificate of title or separate title 
244.16  application form prescribed by the department.  The dealer shall 
244.17  mail or deliver the certificate to the registrar or deputy 
244.18  registrar with the transferee's application for a new 
244.19  certificate and appropriate taxes and fees, within ten business 
244.20  days. 
244.21     (e) With respect to vehicles sold to buyers who will remove 
244.22  the vehicle from this state, the dealer shall remove any license 
244.23  plates from the vehicle, issue a 31-day temporary permit 
244.24  pursuant to section 168.091, and notify the registrar within 48 
244.25  hours of the sale that the vehicle has been removed from this 
244.26  state.  The notification must be made in an electronic format 
244.27  prescribed by the registrar.  The dealer may contract with a 
244.28  deputy registrar for the notification of sale to an out-of-state 
244.29  buyer.  The deputy registrar may charge a fee not to exceed $7 
244.30  per transaction to provide this service. 
244.31     Sec. 4.  Minnesota Statutes 2002, section 168A.11, 
244.32  subdivision 2, is amended to read: 
244.33     Subd. 2.  [~~PURCHASE RECEIPT~~ NOTIFICATION ON VEHICLE HELD 
244.34  FOR RESALE.] ~~A dealer, on buying a vehicle for which the seller~~ 
244.35  ~~does not present a certificate of title, shall at the time of~~ 
244.36  ~~taking delivery of the vehicle execute a purchase receipt for~~ 
245.1   ~~the vehicle in a format designated by the department, and~~ 
245.2   ~~deliver a copy to the seller.  In a format and at a time~~ 
245.3   ~~prescribed by the registrar, the dealer shall notify the~~ 
245.4   ~~registrar that the vehicle is being held for resale by the~~ 
245.5   ~~dealer.~~  Within 48 hours of acquiring a vehicle titled and 
245.6   registered in Minnesota, a dealer shall notify the registrar 
245.7   that the dealership is holding the vehicle for resale.  The 
245.8   notification must be made electronically as prescribed by the 
245.9   registrar.  The dealer may contract this service to a deputy 
245.10  registrar and the registrar may charge a fee not to exceed $7 
245.11  per transaction to provide this service. 
245.12     Sec. 5.  Minnesota Statutes 2002, section 168A.11, is 
245.13  amended by adding a subdivision to read: 
245.14     Subd. 4.  [CENTRALIZED RECORD KEEPING.] Three or more new 
245.15  motor vehicle dealers under common management or control may 
245.16  designate to the department in writing a single location for 
245.17  maintaining the records required by this section that are more 
245.18  than 12 months old.  The records must be open to inspection by a 
245.19  representative of the department or a peace officer during 
245.20  reasonable business hours.  The location must be at the 
245.21  established place of business of one of the affiliated dealers 
245.22  or at a location within Minnesota not further than 25 miles from 
245.23  the established place of business of one of the affiliated 
245.24  dealers. 
245.25     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
245.26  270.30, subdivision 8, is amended to read: 
245.27     Subd. 8.  [EXEMPTIONS~~; ENFORCEMENT PROVISIONS~~.] The 
245.28  provisions of ~~subdivisions 6 and 7~~ this section, except for 
245.29  subdivision 4, do not apply to: 
245.30     (1) an attorney admitted to practice under section 481.01; 
245.31     (2) a certified public accountant holding a certificate 
245.32  under section 326A.04 or a person issued a permit to practice 
245.33  under section 326A.05; 
245.34     (3) a person designated as a registered accounting 
245.35  practitioner under Minnesota Rules, part 1105.6600, or a 
245.36  registered accounting practitioner firm issued a permit under 
246.1   Minnesota Rules, part 1105.7100; 
246.2      (4) an enrolled agent who has passed the special enrollment 
246.3   examination administered by the Internal Revenue Service; ~~and~~ 
246.4      (5) any fiduciary, or the regular employees of a fiduciary, 
246.5   while acting on behalf of the fiduciary estate, the testator, 
246.6   trustor, grantor, or beneficiaries of them; 
246.7      (6) a tax preparer who provides tax preparation services 
246.8   for fewer than six clients in a calendar year; 
246.9      (7) a person who provides tax preparation services to a 
246.10  spouse, parent, grandparent, child, or sibling; and 
246.11     (8) an employee who provides tax preparation services for 
246.12  an employer. 
246.13     Sec. 7.  [270.772] [MINIMUM DOLLAR REQUIREMENT FOR 
246.14  ELECTRONIC PAYMENT OF TAXES AND FEES.] 
246.15     Unless a requirement to make payments electronically 
246.16  regardless of dollar amount is provided for by law for a 
246.17  specific type of tax, fee, or surcharge, or for a group of 
246.18  taxpayers or payors, payments of every tax, fee, or surcharge 
246.19  administered by and payable to the commissioner in a calendar 
246.20  year, including deposits and estimated payments, must be 
246.21  remitted electronically if the liability of the taxpayer or 
246.22  payor for the tax, fee, or surcharge in the preceding fiscal 
246.23  year ending June 30 is $20,000 or more.  This section does not 
246.24  apply to individual income, estate, and airflight property taxes.
246.25     <h>[EFFECTIVE DATE.]</h> This section is effective for payments 
246.26  due in calendar year 2005, and in calendar years thereafter, 
246.27  based on liabilities incurred in fiscal year ending June 30, 
246.28  2004, and in fiscal years thereafter. 
246.29     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
246.30  289A.08, subdivision 16, is amended to read: 
246.31     Subd. 16.  [TAX REFUND OR RETURN PREPARERS; ELECTRONIC 
246.32  FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return 
246.33  preparer," as defined in section 289A.60, subdivision 13, 
246.34  paragraph (g), who prepared more than 500 Minnesota individual 
246.35  income tax returns for the prior calendar year must file all 
246.36  Minnesota individual income tax returns prepared for the current 
247.1   calendar year by electronic means.  "Tax refund or return 
247.2   preparer" does not include (i) an organization that meets the 
247.3   requirements of section 501(c)(3) of the Internal Revenue Code 
247.4   or (ii) an individual hired by such an organization for the 
247.5   purpose of preparing tax returns. 
247.6      (b) For tax returns prepared for the tax year beginning in 
247.7   2001, the "500" in paragraph (a) is reduced to 250. 
247.8      (c) For tax returns prepared for tax years beginning after 
247.9   December 31, 2001, the "500" in paragraph (a) is reduced to 100. 
247.10     (d) Paragraph (a) does not apply to a return if the 
247.11  taxpayer has indicated on the return that the taxpayer did not 
247.12  want the return filed by electronic means. 
247.13     (e) For each return that is not filed electronically by a 
247.14  tax refund or return preparer under this subdivision, including 
247.15  returns filed under paragraph (d), a paper filing fee of $5 is 
247.16  imposed upon the preparer.  The fee is collected from the 
247.17  preparer in the same manner as income tax.  The fee does not 
247.18  apply to returns that the commissioner requires to be filed in 
247.19  paper form. 
247.20     <h>[EFFECTIVE DATE.]</h> This section is effective for returns 
247.21  filed for tax years beginning after December 31, 2003. 
247.22     Sec. 9.  Minnesota Statutes 2002, section 289A.12, 
247.23  subdivision 3, is amended to read: 
247.24     Subd. 3.  [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 
247.25  AND S CORPORATIONS.] (a) Partnerships must file a return with 
247.26  the commissioner for each taxable year.  The return must conform 
247.27  to the requirements of section 290.311, and must include the 
247.28  names and addresses of the partners entitled to a distributive 
247.29  share in their taxable net income, gain, loss, or credit, and 
247.30  the amount of the distributive share to which each is entitled.  
247.31  A partnership required to file a return for a partnership 
247.32  taxable year must furnish a copy of the information required to 
247.33  be shown on the return to a person who is a partner at any time 
247.34  during the taxable year, on or before the day on which the 
247.35  return for the taxable year was filed.  A partnership with more 
247.36  than 100 partners that is required to file a federal partnership 
248.1   return electronically under Code of Federal Regulations, title 
248.2   26, section 301.6011-3 (2003), must also file the return due 
248.3   under this section electronically.  If a return required to be 
248.4   filed electronically is filed on paper, the return is still 
248.5   valid but a penalty of $50 for each partner over 100 partners is 
248.6   imposed for failing to file electronically.  The commissioner 
248.7   may waive the penalty if the partnership can demonstrate that 
248.8   filing the return electronically creates a hardship. 
248.9      (b) The fiduciary of an estate or trust making the return 
248.10  required to be filed under section 289A.08, subdivision 2, for a 
248.11  taxable year must give a beneficiary who receives a distribution 
248.12  from the estate or trust with respect to the taxable year or to 
248.13  whom any item with respect to the taxable year is allocated, a 
248.14  statement containing the information required to be shown on the 
248.15  return, on or before the date on which the return was filed. 
248.16     (c) An S corporation must file a return with the 
248.17  commissioner for a taxable year during which an election under 
248.18  section 290.9725 is in effect, stating specifically the names 
248.19  and addresses of the persons owning stock in the corporation at 
248.20  any time during the taxable year, the number of shares of stock 
248.21  owned by a shareholder at all times during the taxable year, the 
248.22  shareholder's pro rata share of each item of the corporation for 
248.23  the taxable year, and other information the commissioner 
248.24  requires.  An S corporation required to file a return under this 
248.25  paragraph for any taxable year must furnish a copy of the 
248.26  information shown on the return to the person who is a 
248.27  shareholder at any time during the taxable year, on or before 
248.28  the day on which the return for the taxable year was filed. 
248.29     (d) The partnership or S corporation return must be signed 
248.30  by someone designated by the partnership or S corporation. 
248.31     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
248.32  years beginning after December 31, 2003. 
248.33     Sec. 10.  Minnesota Statutes 2002, section 289A.20, 
248.34  subdivision 2, is amended to read: 
248.35     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
248.36  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
249.1   WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
249.2   (a) A tax required to be deducted and withheld during the 
249.3   quarterly period must be paid on or before the last day of the 
249.4   month following the close of the quarterly period, unless an 
249.5   earlier time for payment is provided.  A tax required to be 
249.6   deducted and withheld from compensation of an entertainer and 
249.7   from a payment to an out-of-state contractor must be paid on or 
249.8   before the date the return for such tax must be filed under 
249.9   section 289A.18, subdivision 2.  Taxes required to be deducted 
249.10  and withheld by partnerships and S corporations must be paid on 
249.11  or before the date the return must be filed under section 
249.12  289A.18, subdivision 2. 
249.13     (b) An employer who, during the previous quarter, withheld 
249.14  more than $1,500 of tax under section 290.92, subdivision 2a or 
249.15  3, or 290.923, subdivision 2, must deposit tax withheld under 
249.16  those sections with the commissioner within the time allowed to 
249.17  deposit the employer's federal withheld employment taxes under 
249.18  Code of Federal Regulations, title 26, section 31.6302-1, as 
249.19  amended through December 31, 2001, without regard to the safe 
249.20  harbor or de minimis rules in subparagraph (f) or the one-day 
249.21  rule in subsection (c), clause (3).  Taxpayers must submit a 
249.22  copy of their federal notice of deposit status to the 
249.23  commissioner upon request by the commissioner. 
249.24     (c) The commissioner may prescribe by rule other return 
249.25  periods or deposit requirements.  In prescribing the reporting 
249.26  period, the commissioner may classify payors according to the 
249.27  amount of their tax liability and may adopt an appropriate 
249.28  reporting period for the class that the commissioner judges to 
249.29  be consistent with efficient tax collection.  In no event will 
249.30  the duration of the reporting period be more than one year. 
249.31     (d) If less than the correct amount of tax is paid to the 
249.32  commissioner, proper adjustments with respect to both the tax 
249.33  and the amount to be deducted must be made, without interest, in 
249.34  the manner and at the times the commissioner prescribes.  If the 
249.35  underpayment cannot be adjusted, the amount of the underpayment 
249.36  will be assessed and collected in the manner and at the times 
250.1   the commissioner prescribes. 
250.2      (e) ~~If the aggregate amount of the tax withheld during a~~ 
250.3   ~~fiscal year ending June 30 under section 290.92, subdivision 2a~~ 
250.4   ~~or 3, is equal to or exceeds the amounts established for~~ 
250.5   ~~remitting federal withheld taxes pursuant to the regulations~~ 
250.6   ~~promulgated under section 6302(h) of the Internal Revenue Code,~~ 
250.7   ~~the employer must remit each required deposit for wages paid in~~ 
250.8   ~~the subsequent calendar year by electronic means.~~ 
250.9      ~~(f)~~ A third-party bulk filer as defined in section 290.92, 
250.10  subdivision 30, paragraph (a), clause (2), who remits 
250.11  withholding deposits must remit all deposits by electronic means 
250.12  ~~as provided in paragraph (e)~~, regardless of the aggregate amount 
250.13  of tax withheld during a fiscal year for all of the employers.  
250.14     <h>[EFFECTIVE DATE.]</h> This section is effective for payments 
250.15  due in calendar year 2005, and in calendar years thereafter, 
250.16  based upon liabilities incurred in fiscal year ending June 30, 
250.17  2004, and in fiscal years thereafter. 
250.18     Sec. 11.  Minnesota Statutes 2003 Supplement, section 
250.19  289A.20, subdivision 4, is amended to read: 
250.20     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
250.21  chapter 297A are due and payable to the commissioner monthly on 
250.22  or before the 20th day of the month following the month in which 
250.23  the taxable event occurred, or following another reporting 
250.24  period as the commissioner prescribes or as allowed under 
250.25  section 289A.18, subdivision 4, paragraph (f) or (g), except 
250.26  that use taxes due on an annual use tax return as provided under 
250.27  section 289A.11, subdivision 1, are payable by April 15 
250.28  following the close of the calendar year. 
250.29     (b) A vendor having a liability of $120,000 or more during 
250.30  a fiscal year ending June 30 must remit the June liability for 
250.31  the next year in the following manner: 
250.32     (1) Two business days before June 30 of the year, the 
250.33  vendor must remit 85 percent of the estimated June liability to 
250.34  the commissioner.  
250.35     (2) On or before August 20 of the year, the vendor must pay 
250.36  any additional amount of tax not remitted in June. 
251.1      ~~(c) A vendor having a liability of $120,000 or more during~~ 
251.2   ~~a fiscal year ending June 30 must remit all liabilities on~~ 
251.3   ~~returns due for periods beginning in the subsequent calendar~~ 
251.4   ~~year by electronic means on or before the 20th day of the month~~ 
251.5   ~~following the month in which the taxable event occurred, or on~~ 
251.6   ~~or before the 20th day of the month following the month in which~~ 
251.7   ~~the sale is reported under section 289A.18, subdivision 4,~~ 
251.8   ~~except for 85 percent of the estimated June liability, which is~~ 
251.9   ~~due two business days before June 30.  The remaining amount of~~ 
251.10  ~~the June liability is due on August 20.~~  
251.11     <h>[EFFECTIVE DATE.]</h> This section is effective for payments 
251.12  due in calendar year 2005, and in calendar years thereafter, 
251.13  based upon liabilities incurred in fiscal year ending June 30, 
251.14  2004, and in fiscal years thereafter. 
251.15     Sec. 12.  Minnesota Statutes 2002, section 297F.01, is 
251.16  amended by adding a subdivision to read: 
251.17     Subd. 10a.  [OUT-OF-STATE RETAILER.] "Out-of-state retailer"
251.18  means a person engaged outside of this state in the business of 
251.19  selling, or offering to sell, cigarettes or tobacco products to 
251.20  consumers located in this state. 
251.21     Sec. 13.  [297F.031] [REGISTRATION REQUIREMENT.] 
251.22     Prior to making delivery sales or shipping cigarettes or 
251.23  tobacco products in connection with any sales, an out-of-state 
251.24  retailer shall file with the Department of Revenue a statement 
251.25  setting forth the out-of-state retailer's name, trade name, and 
251.26  the address of the out-of-state retailer's principal place of 
251.27  business and any other place of business. 
251.28     Sec. 14.  Minnesota Statutes 2002, section 297F.09, is 
251.29  amended by adding a subdivision to read: 
251.30     Subd. 4a.  [REPORTING REQUIREMENTS.] No later than the 18th 
251.31  day of each calendar month, an out-of-state retailer that has 
251.32  made a delivery of cigarettes or tobacco products or shipped or 
251.33  delivered cigarettes or tobacco products into the state in a 
251.34  delivery sale in the previous calendar month shall file with the 
251.35  Department of Revenue reports in the form and in the manner 
251.36  prescribed by the commissioner of revenue that provides for each 
252.1   delivery sale, the name and address of the purchaser and the 
252.2   brand or brands and quantity of cigarettes or tobacco products 
252.3   sold.  A tobacco retailer that meets the requirements of United 
252.4   States Code, title 15, section 375 et seq. satisfies the 
252.5   requirements of this subdivision. 
252.6      Sec. 15.  Minnesota Statutes 2002, section 297I.01, is 
252.7   amended by adding a subdivision to read: 
252.8      Subd. 6a.  [DIRECT BUSINESS.] (a) "Direct business" means 
252.9   all insurance provided by an insurance company or its agents, 
252.10  and specifically includes stop-loss insurance purchased in 
252.11  connection with a self-insurance plan for employee health 
252.12  benefits or for other purposes, but excludes: 
252.13     (1) reinsurance in which an insurance company assumes the 
252.14  liability of another insurance company; and 
252.15     (2) self-insurance. 
252.16     (b) For purposes of this subdivision, an insurance company 
252.17  includes a nonprofit health service corporation, health 
252.18  maintenance organization, and community integrated service 
252.19  network. 
252.20     <h>[EFFECTIVE DATE.]</h> This section is effective for insurance 
252.21  premiums received after December 31, 2004. 
252.22     Sec. 16.  Minnesota Statutes 2002, section 297I.05, 
252.23  subdivision 4, is amended to read: 
252.24     Subd. 4.  [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 
252.25  TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 
252.26  tax is imposed on mutual insurance companies that sell both 
252.27  property and casualty ~~companies~~ insurance that had total assets 
252.28  greater than $5,000,000 at the end of the calendar year but that 
252.29  had total assets less than $1,600,000,000 on December 31, 1989.  
252.30  The rate of tax is equal to~~:~~ 
252.31     ~~(1) two percent of gross premiums less return premiums on~~ 
252.32  ~~all direct business received by the insurer or agents of the~~ 
252.33  ~~insurer in Minnesota for life insurance, in cash or otherwise,~~ 
252.34  ~~during the year; and~~ 
252.35     ~~(2)~~ 1.26 percent of gross premiums less return premiums on 
252.36  all ~~other~~ direct business received by the insurer or agents of 
253.1   the insurer in Minnesota, in cash or otherwise, during the year, 
253.2   except for life insurance as provided in subdivision 14. 
253.3      <h>[EFFECTIVE DATE.]</h> This section is effective for premiums 
253.4   received after December 31, 2004. 
253.5      Sec. 17.  Minnesota Statutes 2002, section 297I.05, is 
253.6   amended by adding a subdivision to read: 
253.7      Subd. 14.  [LIFE INSURANCE.] A tax is imposed on life 
253.8   insurance.  The rate of tax equals 1.50 percent of gross 
253.9   premiums less return premiums on all direct business received by 
253.10  the insurer or agents of the insurer in Minnesota for life 
253.11  insurance, in cash or otherwise, during the year. 
253.12     <h>[EFFECTIVE DATE.]</h> This section is effective for premiums 
253.13  received after December 31, 2004. 
253.14     Sec. 18.  Minnesota Statutes 2002, section 298.01, 
253.15  subdivision 3, is amended to read: 
253.16     Subd. 3.  [OCCUPATION TAX; OTHER ORES.] Every person 
253.17  engaged in the business of mining or producing ores in this 
253.18  state, except iron ore or taconite concentrates, shall pay an 
253.19  occupation tax to the state of Minnesota as provided in this 
253.20  subdivision.  The tax is determined in the same manner as the 
253.21  tax imposed by section 290.02, except that sections 290.05, 
253.22  subdivision 1, clause (a), ~~and~~ 290.17, subdivision 4, and 
253.23  290.191, subdivision 2, do not apply.  A person subject to 
253.24  occupation tax under this section shall apportion its net income 
253.25  on the basis of the percentage obtained by taking the sum of: 
253.26     (1) 75 percent of the percentage which the sales made 
253.27  within this state in connection with the trade or business 
253.28  during the tax period are of the total sales wherever made in 
253.29  connection with the trade or business during the tax period; 
253.30     (2) 12.5 percent of the percentage which the total tangible 
253.31  property used by the taxpayer in this state in connection with 
253.32  the trade or business during the tax period is of the total 
253.33  tangible property, wherever located, used by the taxpayer in 
253.34  connection with the trade or business during the tax period; and 
253.35     (3) 12.5 percent of the percentage which the taxpayer's 
253.36  total payrolls paid or incurred in this state or paid in respect 
254.1   to labor performed in this state in connection with the trade or 
254.2   business during the tax period are of the taxpayer's total 
254.3   payrolls paid or incurred in connection with the trade or 
254.4   business during the tax period.  
254.5      The tax is in addition to all other taxes. 
254.6      <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
254.7   beginning after December 31, 2004. 
254.8      Sec. 19.  Minnesota Statutes 2002, section 298.01, 
254.9   subdivision 4, is amended to read: 
254.10     Subd. 4.  [OCCUPATION TAX; IRON ORE; TACONITE 
254.11  CONCENTRATES.] A person engaged in the business of mining or 
254.12  producing of iron ore, taconite concentrates or direct reduced 
254.13  ore in this state shall pay an occupation tax to the state of 
254.14  Minnesota.  The tax is determined in the same manner as the tax 
254.15  imposed by section 290.02, except that sections 290.05, 
254.16  subdivision 1, clause (a), ~~and~~ 290.17, subdivision 4, and 
254.17  290.191, subdivision 2, do not apply.  A person subject to 
254.18  occupation tax under this section shall apportion its net income 
254.19  on the basis of the percentage obtained by taking the sum of: 
254.20     (1) 75 percent of the percentage which the sales made 
254.21  within this state in connection with the trade or business 
254.22  during the tax period are of the total sales wherever made in 
254.23  connection with the trade or business during the tax period; 
254.24     (2) 12.5 percent of the percentage which the total tangible 
254.25  property used by the taxpayer in this state in connection with 
254.26  the trade or business during the tax period is of the total 
254.27  tangible property, wherever located, used by the taxpayer in 
254.28  connection with the trade or business during the tax period; and 
254.29     (3) 12.5 percent of the percentage which the taxpayer's 
254.30  total payrolls paid or incurred in this state or paid in respect 
254.31  to labor performed in this state in connection with the trade or 
254.32  business during the tax period are of the taxpayer's total 
254.33  payrolls paid or incurred in connection with the trade or 
254.34  business during the tax period.  
254.35     The tax is in addition to all other taxes. 
254.36     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
255.1   beginning after December 31, 2004. 
255.2      Sec. 20.  [325D.125] [EMPLOYERS NOT TO MISREPRESENT STATUS 
255.3   OF EMPLOYEES.] 
255.4      Subdivision 1.  [MISREPRESENTATION PROHIBITED.] No employer 
255.5   shall misrepresent the nature of its employment relationship 
255.6   with its employees to any federal, state, or local government 
255.7   unit, to other employers or to its employees.  An employer 
255.8   misrepresents the nature of its employment relationship with its 
255.9   employees if it makes any statement regarding the nature of the 
255.10  relationship that the employer does not in good faith believe to 
255.11  be true or if it fails to report individuals as employees when 
255.12  legally required to do so. 
255.13     Subd. 2.  [EMPLOYEE COERCION PROHIBITED.] No employer shall 
255.14  require or request any employee to enter into any agreement, or 
255.15  sign any document, that results in misclassification of the 
255.16  employee as an independent contractor or otherwise does not 
255.17  accurately reflect the employment relationship with the employer.
255.18     Subd. 3.  [VIOLATIONS.] Any court finding any person guilty 
255.19  of violating this section shall transmit a copy of the 
255.20  documentation of the finding of guilt to the commissioner of 
255.21  labor and industry.  The commissioner of labor and industry 
255.22  shall report the finding of guilt to relevant state and federal 
255.23  agencies, including at least the commissioner of commerce, the 
255.24  commissioner of economic security, the commissioner of revenue, 
255.25  the federal Internal Revenue Service, and the United States 
255.26  Department of Labor. 
255.27     Sec. 21.  [325F.781] [REQUIREMENTS; TOBACCO PRODUCT 
255.28  DELIVERY SALES.] 
255.29     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
255.30  section, the following terms have the meanings given, unless the 
255.31  language or context clearly provides otherwise. 
255.32     (b) "Consumer" means an individual who purchases, receives, 
255.33  or possesses tobacco products for personal consumption and not 
255.34  for resale. 
255.35     (c) "Delivery sale" means: 
255.36     (1) a sale of tobacco products to a consumer in this state 
256.1   when: 
256.2      (i) the purchaser submits the order for the sale by means 
256.3   of a telephonic or other method of voice transmission, the mail 
256.4   or any other delivery service, or the Internet or other on-line 
256.5   service; or 
256.6      (ii) the tobacco products are delivered by use of the mail 
256.7   or other delivery service; or 
256.8      (2) a sale of tobacco products that satisfies the criteria 
256.9   in clause (1), item (i), regardless of whether the seller is 
256.10  located inside or outside of the state. 
256.11     A sale of tobacco products to an individual in this state 
256.12  must be treated as a sale to a consumer, unless the individual 
256.13  is licensed as a distributor or retailer of tobacco products. 
256.14     (d) "Delivery service" means a person, including the United 
256.15  States Postal Service, that is engaged in the commercial 
256.16  delivery of letters, packages, or other containers. 
256.17     (e) "Distributor" means a person, whether located inside or 
256.18  outside of this state, other than a retailer, who sells or 
256.19  distributes tobacco products in the state.  Distributor does not 
256.20  include a tobacco products manufacturer, export warehouse 
256.21  proprietor, or importer with a valid permit under United States 
256.22  Code, title 26, section 5712 (1997), if the person sells or 
256.23  distributes tobacco products in this state only to distributors 
256.24  who hold valid and current licenses under the laws of a state, 
256.25  or to an export warehouse proprietor or another manufacturer.  
256.26  Distributor does not include a common or contract carrier that 
256.27  is transporting tobacco products under a proper bill of lading 
256.28  or freight bill that states the quantity, source, and 
256.29  destination of tobacco products, or a person who ships tobacco 
256.30  products through this state by common or contract carrier under 
256.31  a bill of lading or freight bill. 
256.32     (f) "Retailer" means a person, whether located inside or 
256.33  outside this state, who sells or distributes tobacco products to 
256.34  a consumer in this state. 
256.35     (g) "Tobacco products" means: 
256.36     (1) cigarettes, as defined in section 297F.01, subdivision 
257.1   3; and 
257.2      (2) smokeless tobacco as defined in section 325F.76. 
257.3      Subd. 2.  [REQUIREMENTS FOR ACCEPTING ORDER FOR DELIVERY 
257.4   SALE.] (a) This subdivision applies to acceptance of an order 
257.5   for a delivery sale of tobacco products. 
257.6      (b) When accepting the first order for a delivery sale from 
257.7   a consumer, the tobacco retailer shall obtain the following 
257.8   information from the person placing the order: 
257.9      (1) a copy of a valid government-issued document that 
257.10  provides the person's name, current address, photograph, and 
257.11  date of birth; and 
257.12     (2) an original written statement signed by the person 
257.13  documenting that the person: 
257.14     (i) is of legal age to purchase tobacco products in the 
257.15  state; 
257.16     (ii) has made a choice whether to receive mailings from a 
257.17  tobacco retailer; 
257.18     (iii) understands that providing false information may be a 
257.19  violation of law; and 
257.20     (iv) understands that it is a violation of law to purchase 
257.21  tobacco products for subsequent resale or for delivery to 
257.22  persons who are under the legal age to purchase tobacco products.
257.23     (c) If an order is made as a result of advertisement over 
257.24  the Internet, the tobacco retailer shall request the e-mail 
257.25  address of the purchaser and shall receive payment by credit 
257.26  card or check prior to shipping. 
257.27     (d) Prior to shipping the tobacco products, the tobacco 
257.28  retailer shall verify the information provided under paragraph 
257.29  (b) against a commercially available database.  Any such 
257.30  database or databases may also include age and identity 
257.31  information from other government or validated commercial 
257.32  sources, if that additional information is regularly used by 
257.33  government and businesses for the purpose of identity 
257.34  verification and authentication, and if the additional 
257.35  information is used only to supplement and not to replace the 
257.36  government-issued identification data in the age and identity 
258.1   verification process. 
258.2      Subd. 3.  [REQUIREMENTS FOR SHIPPING A DELIVERY SALE.] (a) 
258.3   This subdivision applies to a tobacco retailer shipping tobacco 
258.4   products pursuant to a delivery sale. 
258.5      (b) The tobacco retailer shall clearly mark the outside of 
258.6   the package of tobacco products to be shipped "tobacco products -
258.7   adult signature required" and to show the name of the tobacco 
258.8   retailer. 
258.9      (c) The tobacco retailer shall utilize a delivery service 
258.10  that imposes the following requirements: 
258.11     (1) an adult must sign for the delivery; and 
258.12     (2) the person signing for the delivery must show valid 
258.13  government-issued identification that contains a photograph of 
258.14  the person signing for the delivery and indicates that the 
258.15  person signing for the delivery is of legal age to purchase 
258.16  tobacco products and resides at the delivery address. 
258.17     (d) The retailer must provide delivery instructions that 
258.18  clearly indicate the requirements of this subdivision and must 
258.19  declare that state law requires compliance with the requirements.
258.20     (e) No criminal penalty may be imposed on a person for a 
258.21  violation of this section other than a violation described in 
258.22  paragraph (f) or (g).  Whenever it appears to the commissioner 
258.23  that any person has engaged in any act or practice constituting 
258.24  a violation of this section, and the violation is not within two 
258.25  years of any previous violation of this section, the 
258.26  commissioner shall issue and cause to be served upon the person 
258.27  an order requiring the person to cease and desist from violating 
258.28  this section.  The order must give reasonable notice of the 
258.29  rights of the person to request a hearing and must state the 
258.30  reason for the entry of the order.  Unless otherwise agreed 
258.31  between the parties, a hearing shall be held not later than 
258.32  seven days after the request for the hearing is received by the 
258.33  commissioner after which and within 20 days after the receipt of 
258.34  the administrative law judge's report and subsequent exceptions 
258.35  and argument, the commissioner shall issue an order vacating the 
258.36  cease and desist order, modifying it, or making it permanent as 
259.1   the facts require.  If no hearing is requested within 30 days of 
259.2   the service of the order, the order becomes final and remains in 
259.3   effect until modified or vacated by the commissioner.  All 
259.4   hearings shall be conducted in accordance with the provisions of 
259.5   chapter 14.  If the person to whom a cease and desist order is 
259.6   issued fails to appear at the hearing after being duly notified, 
259.7   the person shall be deemed in default, and the proceeding may be 
259.8   determined against the person upon consideration of the cease 
259.9   and desist order, the allegations of which may be deemed to be 
259.10  true. 
259.11     (f) Any person who violates this section within two years 
259.12  of a violation for which a cease and desist order was issued 
259.13  under paragraph (e), is guilty of a misdemeanor. 
259.14     (g) Any person who commits a third or subsequent violation 
259.15  of this section, including a violation for which a cease and 
259.16  desist order was issued under paragraph (c), within any 
259.17  subsequent two-year period is guilty of a gross misdemeanor. 
259.18     Subd. 4.  [COMMON CARRIERS.] This section may not be 
259.19  construed as imposing liability upon any common carrier, or 
259.20  officers or employees of the common carrier, when acting within 
259.21  the scope of business of the common carrier. 
259.22     Subd. 5.  [REGISTRATION REQUIREMENT.] Prior to making 
259.23  delivery sales or shipping tobacco products in connection with 
259.24  any sales, an out-of-state retailer must meet the requirements 
259.25  of section 297F.031. 
259.26     Subd. 6.  [COLLECTION OF TAXES.] (a) Prior to shipping any 
259.27  tobacco products to a purchaser in this state, the out of state 
259.28  retailer shall comply with all requirements of chapter 297F and 
259.29  shall ensure that all state excise taxes and fees that apply to 
259.30  such tobacco products have been collected and paid to the state 
259.31  and that all related state excise tax stamps or other indicators 
259.32  of state excise tax payment have been properly affixed to those 
259.33  tobacco products. 
259.34     (b) In addition to any penalties under chapter 297F, a 
259.35  distributor who fails to pay any tax due according to paragraph 
259.36  (a) shall pay, in addition to any other penalty, a penalty of 50 
260.1   percent of the tax due but unpaid. 
260.2      Subd. 7.  [APPLICATION OF STATE LAWS.] All state laws that 
260.3   apply to in-state tobacco product retailers shall apply to 
260.4   Internet and mail-order sellers that sell into this state. 
260.5      Subd. 8.  [FORFEITURE.] Any tobacco product sold or 
260.6   attempted to be sold in a delivery sale that does not meet the 
260.7   requirements of this section is deemed to be contraband and is 
260.8   subject to forfeiture in the same manner as and in accordance 
260.9   with the provisions of section 297F.21. 
260.10     Subd. 9.  [CIVIL PENALTIES.] A tobacco retailer or 
260.11  distributor who violates this section or rules adopted under 
260.12  this section is subject to the following fines: 
260.13     (1) for the first violation, a fine of not more than 
260.14  $1,000; and 
260.15     (2) for the second and any subsequent violation, a fine of 
260.16  not more than $5,000. 
260.17     Subd. 10.  [ENFORCEMENT.] The attorney general may bring an 
260.18  action to enforce this section and may seek injunctive relief, 
260.19  including a preliminary or final injunction, and fines, 
260.20  penalties, and equitable relief and may seek to prevent or 
260.21  restrain actions in violation of this section by any person or 
260.22  any person controlling such person.  In addition, a violation of 
260.23  this section is a violation of the Unlawful Trade Practices Act, 
260.24  sections 325D.09 to 325D.16. 
260.25     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
260.26  following final enactment. 
260.27     Sec. 22.  Minnesota Statutes 2003 Supplement, section 
260.28  469.335, is amended to read: 
260.29     469.335 [APPLICATION FOR TAX BENEFITS.] 
260.30     (a) To claim a tax credit or exemption against a state tax 
260.31  under section 469.336, clauses (2) through (5), a business must 
260.32  apply to the commissioner for a tax credit certificate.  As a 
260.33  condition of its application, the business must agree to furnish 
260.34  information to the commissioner that is sufficient to verify the 
260.35  eligibility for any credits or exemptions claimed.  The total 
260.36  amount of the state tax credits and exemptions allowed for the 
261.1   specified period may not exceed the amount of the tax credit 
261.2   certificates provided by the commissioner to the business.  The 
261.3   commissioner must verify to the commissioner of revenue the 
261.4   amount of tax exemptions or credits for which each business is 
261.5   eligible. 
261.6      (b) A tax credit certificate issued under this section may 
261.7   specify the particular tax exemptions or credits against a state 
261.8   tax that the qualified business is eligible to claim under 
261.9   section 469.336, clauses (2) through (5), and the amount of each 
261.10  exemption or credit allowed. 
261.11     (c) The commissioner may issue $1,000,000 of tax credits or 
261.12  exemptions in fiscal year 2004.  ~~Any tax credits or exemptions~~ 
261.13  ~~not awarded in fiscal year 2004 may be awarded in fiscal year~~ 
261.14  ~~2005.~~  The commissioner may not award any additional tax credits 
261.15  after June 30, 2004. 
261.16     (d) A qualified business must use the tax credits or tax 
261.17  exemptions granted under this section by the later of the end of 
261.18  the state fiscal year or the taxpayer's tax year in which the 
261.19  credits or exemptions are granted. 
261.20     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
261.21  following final enactment. 
261.22     Sec. 23.  [469.342] [BIOTECHNOLOGY AND HEALTH SCIENCES 
261.23  INDUSTRY GRANTS.] 
261.24     Subdivision 1.  [GRANT ELIGIBILITY.] The commissioner shall 
261.25  make grants to eligible businesses in the biotechnology and 
261.26  health sciences industry to support the startup and growth of 
261.27  biotechnology and health sciences businesses.  An eligible 
261.28  business is a business that: 
261.29     (1) is engaged primarily in: 
261.30     (i) researching, developing, and/or manufacturing a 
261.31  biotechnology product or service or a biotechnology-related 
261.32  health sciences product or service; 
261.33     (ii) researching, developing, and/or manufacturing a 
261.34  biotechnology medical device product or service or a 
261.35  biotechnology-related medical device product or service; or 
261.36     (iii) promoting, supplying, or servicing businesses 
262.1   involved in clause (1) or (2), if the business derives more than 
262.2   50 percent of its gross receipts from those activities; 
262.3      (2) pledges that the business will increase full-time 
262.4   employment in high-paying jobs by at least 20 percent in the 
262.5   first full year of operation after a grant is awarded; 
262.6      (3) shows a viable link between a higher education/research 
262.7   institution and the business activities of the biotechnology or 
262.8   health sciences business; and 
262.9      (4) agrees to treat a grant awarded under this section as a 
262.10  business subsidy under sections 116J.993 to 116J.995, and to 
262.11  comply with the requirements of that law. 
262.12     Subd. 2.  [AMOUNT AND LIMITATIONS OF GRANTS.] The 
262.13  commissioner may award grants in fiscal year 2007.  The total of 
262.14  the grants in aggregate may not exceed $5,000,000. 
262.15     Subd. 3.  [APPLICATION AND AWARD OF GRANTS.] A 
262.16  biotechnology and health sciences business must apply for grants 
262.17  under this section following the procedures established by the 
262.18  commissioner.  To be eligible for a grant, a business must 
262.19  demonstrate to the commissioner that it meets the requirements 
262.20  under subdivision 1, and provide any information required by the 
262.21  commissioner to determine eligibility.  All applications must be 
262.22  received on or before October 1 of each year that grants may be 
262.23  awarded, and the commissioner must advise each applicant on or 
262.24  before December 31 of that year that a grant is awarded or an 
262.25  explanation why a grant is not awarded. 
262.26     <h>[EFFECTIVE DATE.]</h> This section is effective July 1, 2004. 
262.27     Sec. 24.  [473.24] [POPULATION ESTIMATES.] 
262.28     (a) The Metropolitan Council shall prepare an estimate of 
262.29  population and of the number of households for each city and 
262.30  town in the metropolitan area annually and convey the estimates 
262.31  to the governing body of each city or town by June 1 of each 
262.32  year.  In the case of a city or town that is located partly 
262.33  within and partly without the metropolitan area, the 
262.34  Metropolitan Council shall estimate the proportion of the total 
262.35  population and number of households that reside within the 
262.36  area.  The Metropolitan Council may prepare an estimate of the 
263.1   population and of the number of households for any other 
263.2   political subdivision located in the metropolitan area. 
263.3      (b) A governing body of a city or town may challenge an 
263.4   estimate made under this section by making its specific 
263.5   objections to the Metropolitan Council by June 24.  If the 
263.6   challenge does not result in an acceptable estimate, the 
263.7   governing body may have a special census conducted by the United 
263.8   States Bureau of the Census.  The Metropolitan Council shall 
263.9   certify the population estimates to the commissioner of revenue 
263.10  by July 15.  The political subdivision must notify the 
263.11  Metropolitan Council on or before July 1 of its intent to have 
263.12  the special census conducted.  The political subdivision must 
263.13  bear all costs of the special census.  Results of the special 
263.14  census must be received by the Metropolitan Council by the next 
263.15  May 15 to be used in that year's June 1 estimate under this 
263.16  section. 
263.17     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
263.18  following final enactment. 
263.19     Sec. 25.  Minnesota Statutes 2002, section 473.843, 
263.20  subdivision 3, is amended to read: 
263.21     Subd. 3.  [PAYMENT OF FEE.] On or before the 20th day of 
263.22  each month each operator shall pay the fee due under this 
263.23  section for the previous month, using a form provided by the 
263.24  commissioner of revenue.  
263.25     ~~An operator having a fee of $120,000 or more during a~~ 
263.26  ~~fiscal year ending June 30 must pay all fees in the subsequent~~ 
263.27  ~~calendar year by electronic means.~~ 
263.28     <h>[EFFECTIVE DATE.]</h> This section is effective for payments 
263.29  due in calendar year 2005, and in calendar years thereafter, 
263.30  based upon liabilities incurred in fiscal year ending June 30, 
263.31  2004, and in fiscal years thereafter. 
263.32     Sec. 26.  Minnesota Statutes 2002, section 473F.02, 
263.33  subdivision 7, is amended to read: 
263.34     Subd. 7.  [POPULATION.] "Population" means the most recent 
263.35  estimate of the population of a municipality made by the 
263.36  Metropolitan Council under section 473.24 and filed with the 
264.1   commissioner of revenue as of July ~~1~~ 15 of the year in which a 
264.2   municipality's distribution net tax capacity is calculated.  ~~The~~ 
264.3   ~~council shall annually estimate the population of each~~ 
264.4   ~~municipality as of a date which it determines and, in the case~~ 
264.5   ~~of a municipality which is located partly within and partly~~ 
264.6   ~~without the area, the proportion of the total which resides~~ 
264.7   ~~within the area, and shall promptly thereafter file its~~ 
264.8   ~~estimates with the commissioner of revenue.~~ 
264.9      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
264.10  following final enactment. 
264.11     Sec. 27.  Minnesota Statutes 2002, section 477A.011, 
264.12  subdivision 3, is amended to read: 
264.13     Subd. 3.  [POPULATION.] "Population" means the 
264.14  population estimated or established as of July ~~1~~ 15 in an aid 
264.15  calculation year by the most recent federal census, by a special 
264.16  census conducted under contract with the United States Bureau of 
264.17  the Census, by a population estimate made by the Metropolitan 
264.18  Council, or by a population estimate of the state demographer 
264.19  made pursuant to section 4A.02, whichever is the most recent as 
264.20  to the stated date of the count or estimate for the preceding 
264.21  calendar year, and which has been certified to the commissioner 
264.22  of revenue on or before July 15 of the aid calculation year.  
264.23  The term "per capita" refers to population as defined by this 
264.24  subdivision.  No changes in population will be recognized for 
264.25  the purposes of sections 477A.011 to 477A.014 after July 15 of 
264.26  the aid calculation year.  Clerical errors in the certification 
264.27  or use of the estimates and counts established as of July 15 in 
264.28  the aid calculation year are subject to correction within the 
264.29  time periods allowed under section 477A.014. 
264.30     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
264.31  following final enactment. 
264.32     Sec. 28.  Minnesota Statutes 2002, section 480B.01, 
264.33  subdivision 1, is amended to read: 
264.34     Subdivision 1.  [JUDICIAL VACANCIES.] If a judge of the 
264.35  district court ~~or~~, Workers' Compensation Court of Appeals, or 
264.36  Tax Court dies, resigns, retires, or is removed during the 
265.1   judge's term of office, or if a new district ~~or~~, Workers' 
265.2   Compensation Court of Appeals, or Tax Court judgeship is 
265.3   created, the resulting vacancy must be filled by the governor as 
265.4   provided in this section. 
265.5      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
265.6   following final enactment. 
265.7      Sec. 29.  Minnesota Statutes 2002, section 480B.01, 
265.8   subdivision 10, is amended to read: 
265.9      Subd. 10.  [NOTICE TO THE PUBLIC.] Upon receiving notice 
265.10  from the governor that a judicial vacancy has occurred or will 
265.11  occur on a specified date, the chair shall provide notice of the 
265.12  following information: 
265.13     (1) the office that is or will be vacant; 
265.14     (2) that applications from qualified persons or on behalf 
265.15  of qualified persons are being accepted by the commission; 
265.16     (3) that application forms may be obtained from the 
265.17  governor or the commission at a named address; and 
265.18     (4) that application forms must be returned to the 
265.19  commission by a named date.  
265.20     For a district court vacancy, the notice must be made 
265.21  available to attorney associations in the judicial district 
265.22  where the vacancy has occurred or will occur and to at least one 
265.23  newspaper of general circulation in each county in the 
265.24  district.  For a Workers' Compensation Court of Appeals or Tax 
265.25  Court vacancy, the notice must be given to state attorney 
265.26  associations and all forms of the public media. 
265.27     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
265.28  following final enactment. 
265.29     Sec. 30.  [COMPACTS; RETALIATORY TAXES.] 
265.30     The commissioner is authorized to enter into compact 
265.31  agreements with other states for the purpose of eliminating 
265.32  retaliatory insurance premiums tax provisions between this state 
265.33  and other states.  The commissioner shall report to the 
265.34  chairpersons of the house and senate tax committees, on or 
265.35  before February 1, 2005, on the actions the commissioner has 
265.36  taken to enter into compact agreements with other states. 
266.1      Sec. 31.  [APPROPRIATION.] 
266.2      (a) The amounts necessary to award grants as provided in 
266.3   Minnesota Statutes, section 469.342, shall be appropriated to 
266.4   the commissioner of employment and economic development from the 
266.5   general fund. 
266.6      (b) $3,000,000 is appropriated to the Department of Revenue 
266.7   from fiscal year 2005 and each year thereafter, in addition to 
266.8   any other appropriation provided under law.  This money must be 
266.9   used for operation of the department. 
266.10     Sec. 32.  [REPEALER.] 
266.11     (a) Minnesota Statutes 2002, sections 289A.26, subdivision 
266.12  2a; 289A.60, subdivision 21; 295.55, subdivision 4; 295.60, 
266.13  subdivision 4; 297F.09, subdivision 7; 297G.09, subdivision 6; 
266.14  297I.35, subdivision 2; and 297I.85, subdivision 7, are repealed.
266.15     (b) Minnesota Statutes 2003 Supplement, section 270.30, 
266.16  subdivision 1, is repealed. 
266.17     <h>[EFFECTIVE DATE.]</h> Paragraph (a) of this section is 
266.18  effective for payments due in calendar year 2005, and in 
266.19  calendar years thereafter, based upon liabilities incurred in 
266.20  fiscal year ending June 30, 2004, and in fiscal years 
266.21  thereafter.  Paragraph (b) is effective the day following final 
266.22  enactment. 
266.23                             ARTICLE 9
266.24              DEPARTMENT OF REVENUE POLICY PROVISIONS
266.25     Section 1.  Minnesota Statutes 2002, section 16D.10, is 
266.26  amended to read: 
266.27     16D.10 [CASE REVIEWER.] 
266.28     Subdivision 1.  [DUTIES.] The commissioner shall make a 
266.29  case reviewer available to debtors.  The reviewer must be 
266.30  available to answer a debtor's questions concerning the 
266.31  collection process and to review the collection activity taken.  
266.32  If the reviewer reasonably believes that the particular action 
266.33  being taken is unreasonable or unfair, the reviewer may make 
266.34  recommendations to the commissioner in regard to the collection 
266.35  action.  
266.36     Subd. 2.  [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On 
267.1   application filed by a debtor with the case reviewer, in the 
267.2   form, manner, and in the time prescribed by the commissioner, 
267.3   and after thorough investigation, the case reviewer may issue a 
267.4   debtor assistance order if, in the determination of the case 
267.5   reviewer, the manner in which the state debt collection laws are 
267.6   being administered is creating or will create an unjust and 
267.7   inequitable result for the debtor.  Debtor assistance orders are 
267.8   governed by the provisions relating to taxpayer assistance 
267.9   orders under section 270.273. 
267.10     Subd. 3.  [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.] 
267.11  All duties and authority of the case reviewer under subdivisions 
267.12  1 and 2 are transferred to the taxpayer rights advocate. 
267.13     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
267.14  following final enactment. 
267.15     Sec. 2.  Minnesota Statutes 2002, section 270.02, 
267.16  subdivision 3, is amended to read: 
267.17     Subd. 3.  [POWERS, ORGANIZATION, ASSISTANTS.] Subject to 
267.18  the provisions of this chapter and other applicable laws the 
267.19  commissioner shall have power to organize the department with 
267.20  such divisions and other agencies as the commissioner deems 
267.21  necessary and to appoint one deputy commissioner, a department 
267.22  secretary, directors of divisions, and such other officers, 
267.23  employees, and agents as the commissioner may deem necessary to 
267.24  discharge the functions of the department, define the duties of 
267.25  such officers, employees, and agents, and delegate to them any 
267.26  of the commissioner's powers or duties, subject to the 
267.27  commissioner's control and under such conditions as the 
267.28  commissioner may prescribe.  Appointments to exercise delegated 
267.29  power to sign documents which require the signature of the 
267.30  commissioner or a delegate by law shall be by written order 
267.31  filed with the secretary of state as provided under section 
267.32  15.06, subdivision 6.  The delegations of authority granted by 
267.33  the commissioner remain in effect until revoked by the 
267.34  commissioner or a successor commissioner. 
267.35     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
267.36  following final enactment. 
268.1      Sec. 3.  [270.0611] [SUFFICIENCY OF NOTICE OF DETERMINATION 
268.2   OR ACTION OF COMMISSIONER OF REVENUE.] 
268.3      When a method of notification of a written determination or 
268.4   action of the commissioner is not specifically provided for by 
268.5   law, notice of the determination or action sent postage prepaid 
268.6   by United States mail to the taxpayer or other person affected 
268.7   by the determination or action at the taxpayer's or person's 
268.8   last known address is sufficient.  If the taxpayer or person 
268.9   being notified is deceased or is under a legal disability, or if 
268.10  a corporation being notified has terminated its existence, 
268.11  notice to the last known address of the taxpayer, person, or 
268.12  corporation is sufficient, unless the department has been 
268.13  provided with a new address by a party authorized to receive 
268.14  notices from the commissioner. 
268.15     <h>[EFFECTIVE DATE.]</h> This section is effective for notices 
268.16  sent on or after the day following final enactment. 
268.17     Sec. 4.  Minnesota Statutes 2002, section 270.69, 
268.18  subdivision 4, is amended to read: 
268.19     Subd. 4.  [PERIOD OF LIMITATIONS.] The lien imposed by this 
268.20  section shall, notwithstanding any other provision of law to the 
268.21  contrary, be enforceable from the time the lien arises and for 
268.22  ten years from the date of filing the notice of lien, which must 
268.23  be filed by the commissioner within five years after the date of 
268.24  assessment of the tax or final administrative or judicial 
268.25  determination of the assessment.  A notice of lien filed in one 
268.26  county may be transcribed to the secretary of state or to any 
268.27  other county within ten years after the date of its filing, but 
268.28  the transcription shall not extend the period during which the 
268.29  lien is enforceable.  A notice of lien may be renewed by the 
268.30  commissioner before the expiration of the ten-year period for an 
268.31  additional ten years.  The taxpayer must receive written notice 
268.32  of the renewal. 
268.33     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
268.34  following final enactment. 
268.35     Sec. 5.  Minnesota Statutes 2002, section 270B.01, 
268.36  subdivision 8, is amended to read: 
269.1      Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
269.2   chapter only, unless expressly stated otherwise, "Minnesota tax 
269.3   laws" means: 
269.4      (1) the taxes, refunds, and fees administered by or paid to 
269.5   the commissioner under chapters 115B (except taxes imposed under 
269.6   sections 115B.21 to 115B.24), 289A (except taxes imposed under 
269.7   sections 298.01, 298.015, and 298.24), 290, 290A, 291, 295, 
269.8   297A, and 297H, or any similar Indian tribal tax administered by 
269.9   the commissioner pursuant to any tax agreement between the state 
269.10  and the Indian tribal government, and includes any laws for the 
269.11  assessment, collection, and enforcement of those taxes, refunds, 
269.12  and fees; and 
269.13     (2) section 273.1315. 
269.14     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
269.15  following final enactment. 
269.16     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
269.17  270B.12, subdivision 13, is amended to read: 
269.18     Subd. 13.  [COUNTY ASSESSORS; CLASS 1B HOMESTEADS.] The 
269.19  commissioner may disclose to a county assessor, and to the 
269.20  assessor's designated agents or employees, a listing of parcels 
269.21  of property qualifying for the class 1b property tax 
269.22  classification under section 273.13, subdivision 22, and the 
269.23  names and addresses of qualified applicants. 
269.24     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
269.25  following final enactment. 
269.26     Sec. 7.  Minnesota Statutes 2002, section 289A.31, 
269.27  subdivision 2, is amended to read: 
269.28     Subd. 2.  [JOINT INCOME TAX RETURNS.] (a) If a joint income 
269.29  tax return is made by a husband and wife, the liability for the 
269.30  tax is joint and several.  A spouse who qualifies for relief 
269.31  from a liability attributable to an underpayment under section 
269.32  6015(b) of the Internal Revenue Code is relieved of the state 
269.33  income tax liability on the underpayment.  
269.34     (b) In the case of individuals who were a husband and wife 
269.35  prior to the dissolution of their marriage or their legal 
269.36  separation, or prior to the death of one of the individuals, for 
270.1   tax liabilities reported on a joint or combined return, the 
270.2   liability of each person is limited to the proportion of the tax 
270.3   due on the return that equals that person's proportion of the 
270.4   total tax due if the husband and wife filed separate returns for 
270.5   the taxable year.  This provision is effective only when the 
270.6   commissioner receives written notice of the marriage 
270.7   dissolution, legal separation, or death of a spouse from the 
270.8   husband or wife.  No refund may be claimed by an ex-spouse, 
270.9   legally separated or widowed spouse for any taxes paid more than 
270.10  60 days before receipt by the commissioner of the written notice.
270.11     (c) A request for calculation of separate liability 
270.12  pursuant to paragraph (b) for taxes reported on a return must be 
270.13  made within six years after the due date of the return.  For 
270.14  calculation of separate liability for taxes assessed by the 
270.15  commissioner under section 289A.35 or 289A.37, the request must 
270.16  be made within six years after the date of assessment.  The 
270.17  commissioner is not required to calculate separate liability if 
270.18  the remaining unpaid liability for which recalculation is 
270.19  requested is $100 or less. 
270.20     <h>[EFFECTIVE DATE.]</h> This section is effective for requests 
270.21  for relief made on or after the day following final enactment. 
270.22     Sec. 8.  Minnesota Statutes 2002, section 289A.56, is 
270.23  amended by adding a subdivision to read: 
270.24     Subd. 7.  [BIOTECHNOLOGY AND BORDER CITY ZONE 
270.25  REFUNDS.] Notwithstanding subdivision 3, for refunds payable 
270.26  under sections 297A.68, subdivision 38, and 469.1734, 
270.27  subdivision 6, interest is computed from 90 days after the 
270.28  refund claim is filed with the commissioner. 
270.29     <h>[EFFECTIVE DATE.]</h> This section is effective for refund 
270.30  claims filed on or after July 1, 2004. 
270.31     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
270.32  290.01, subdivision 19d, is amended to read: 
270.33     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
270.34  TAXABLE INCOME.] For corporations, there shall be subtracted 
270.35  from federal taxable income after the increases provided in 
270.36  subdivision 19c:  
271.1      (1) the amount of foreign dividend gross-up added to gross 
271.2   income for federal income tax purposes under section 78 of the 
271.3   Internal Revenue Code; 
271.4      (2) the amount of salary expense not allowed for federal 
271.5   income tax purposes due to claiming the federal jobs credit 
271.6   under section 51 of the Internal Revenue Code; 
271.7      (3) any dividend (not including any distribution in 
271.8   liquidation) paid within the taxable year by a national or state 
271.9   bank to the United States, or to any instrumentality of the 
271.10  United States exempt from federal income taxes, on the preferred 
271.11  stock of the bank owned by the United States or the 
271.12  instrumentality; 
271.13     (4) amounts disallowed for intangible drilling costs due to 
271.14  differences between this chapter and the Internal Revenue Code 
271.15  in taxable years beginning before January 1, 1987, as follows: 
271.16     (i) to the extent the disallowed costs are represented by 
271.17  physical property, an amount equal to the allowance for 
271.18  depreciation under Minnesota Statutes 1986, section 290.09, 
271.19  subdivision 7, subject to the modifications contained in 
271.20  subdivision 19e; and 
271.21     (ii) to the extent the disallowed costs are not 
271.22  represented by physical property, an amount equal to the 
271.23  allowance for cost depletion under Minnesota Statutes 1986, 
271.24  section 290.09, subdivision 8; 
271.25     (5) the deduction for capital losses pursuant to sections 
271.26  1211 and 1212 of the Internal Revenue Code, except that: 
271.27     (i) for capital losses incurred in taxable years beginning 
271.28  after December 31, 1986, capital loss carrybacks shall not be 
271.29  allowed; 
271.30     (ii) for capital losses incurred in taxable years beginning
271.31  after December 31, 1986, a capital loss carryover to each of the 
271.32  15 taxable years succeeding the loss year shall be allowed; 
271.33     (iii) for capital losses incurred in taxable years 
271.34  beginning before January 1, 1987, a capital loss carryback to 
271.35  each of the three taxable years preceding the loss year, subject 
271.36  to the provisions of Minnesota Statutes 1986, section 290.16, 
272.1   shall be allowed; and 
272.2      (iv) for capital losses incurred in taxable years beginning
272.3   before January 1, 1987, a capital loss carryover to each of the 
272.4   five taxable years succeeding the loss year to the extent such 
272.5   loss was not used in a prior taxable year and subject to the 
272.6   provisions of Minnesota Statutes 1986, section 290.16, shall be 
272.7   allowed; 
272.8      (6) an amount for interest and expenses relating to income 
272.9   not taxable for federal income tax purposes, if (i) the income 
272.10  is taxable under this chapter and (ii) the interest and expenses 
272.11  were disallowed as deductions under the provisions of section 
272.12  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
272.13  federal taxable income; 
272.14     (7) in the case of mines, oil and gas wells, other natural 
272.15  deposits, and timber for which percentage depletion was 
272.16  disallowed pursuant to subdivision 19c, clause ~~(11)~~ (2), a 
272.17  reasonable allowance for depletion based on actual cost.  In the 
272.18  case of leases the deduction must be apportioned between the 
272.19  lessor and lessee in accordance with rules prescribed by the 
272.20  commissioner.  In the case of property held in trust, the 
272.21  allowable deduction must be apportioned between the income 
272.22  beneficiaries and the trustee in accordance with the pertinent 
272.23  provisions of the trust, or if there is no provision in the 
272.24  instrument, on the basis of the trust's income allocable to 
272.25  each; 
272.26     (8) for certified pollution control facilities placed in 
272.27  service in a taxable year beginning before December 31, 1986, 
272.28  and for which amortization deductions were elected under section 
272.29  169 of the Internal Revenue Code of 1954, as amended through 
272.30  December 31, 1985, an amount equal to the allowance for 
272.31  depreciation under Minnesota Statutes 1986, section 290.09, 
272.32  subdivision 7; 
272.33     (9) amounts included in federal taxable income that are due 
272.34  to refunds of income, excise, or franchise taxes based on net 
272.35  income or related minimum taxes paid by the corporation to 
272.36  Minnesota, another state, a political subdivision of another 
273.1   state, the District of Columbia, or a foreign country or 
273.2   possession of the United States to the extent that the taxes 
273.3   were added to federal taxable income under section 290.01, 
273.4   subdivision 19c, clause (1), in a prior taxable year; 
273.5      (10) 80 percent of royalties, fees, or other like income 
273.6   accrued or received from a foreign operating corporation or a 
273.7   foreign corporation which is part of the same unitary business 
273.8   as the receiving corporation; 
273.9      (11) income or gains from the business of mining as defined 
273.10  in section 290.05, subdivision 1, clause (a), that are not 
273.11  subject to Minnesota franchise tax; 
273.12     (12) the amount of handicap access expenditures in the 
273.13  taxable year which are not allowed to be deducted or capitalized 
273.14  under section 44(d)(7) of the Internal Revenue Code; 
273.15     (13) the amount of qualified research expenses not allowed 
273.16  for federal income tax purposes under section 280C(c) of the 
273.17  Internal Revenue Code, but only to the extent that the amount 
273.18  exceeds the amount of the credit allowed under section 
273.19  290.068 or 469.339; 
273.20     (14) the amount of salary expenses not allowed for federal 
273.21  income tax purposes due to claiming the Indian employment credit 
273.22  under section 45A(a) of the Internal Revenue Code; 
273.23     (15) the amount of any refund of environmental taxes paid 
273.24  under section 59A of the Internal Revenue Code; 
273.25     (16) for taxable years beginning before January 1, 2008, 
273.26  the amount of the federal small ethanol producer credit allowed 
273.27  under section 40(a)(3) of the Internal Revenue Code which is 
273.28  included in gross income under section 87 of the Internal 
273.29  Revenue Code; 
273.30     (17) for a corporation whose foreign sales corporation, as 
273.31  defined in section 922 of the Internal Revenue Code, constituted 
273.32  a foreign operating corporation during any taxable year ending 
273.33  before January 1, 1995, and a return was filed by August 15, 
273.34  1996, claiming the deduction under section 290.21, subdivision 
273.35  4, for income received from the foreign operating corporation, 
273.36  an amount equal to 1.23 multiplied by the amount of income 
274.1   excluded under section 114 of the Internal Revenue Code, 
274.2   provided the income is not income of a foreign operating 
274.3   company; 
274.4      (18) any decrease in subpart F income, as defined in 
274.5   section 952(a) of the Internal Revenue Code, for the taxable 
274.6   year when subpart F income is calculated without regard to the 
274.7   provisions of section 614 of Public Law 107-147; and 
274.8      (19) in each of the five tax years immediately following 
274.9   the tax year in which an addition is required under subdivision 
274.10  19c, clause (16), an amount equal to one-fifth of the delayed 
274.11  depreciation.  For purposes of this clause, "delayed 
274.12  depreciation" means the amount of the addition made by the 
274.13  taxpayer under subdivision 19c, clause (16).  The resulting 
274.14  delayed depreciation cannot be less than zero. 
274.15     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
274.16  beginning after December 31, 2003. 
274.17     Sec. 10.  Minnesota Statutes 2002, section 290.9705, 
274.18  subdivision 1, is amended to read: 
274.19     Subdivision 1.  [WITHHOLDING OF PAYMENTS TO OUT-OF-STATE 
274.20  CONTRACTORS.] (a) In this section, "person" means a person, 
274.21  corporation, or cooperative, the state of Minnesota and its 
274.22  political subdivisions, and a city, county, and school district 
274.23  in Minnesota. 
274.24     (b) A person who in the regular course of business is 
274.25  hiring, contracting, or having a contract with a nonresident 
274.26  person or foreign corporation, as defined in Minnesota Statutes 
274.27  1986, section 290.01, subdivision 5, to perform construction 
274.28  work in Minnesota, shall deduct and withhold eight percent of 
274.29  ~~every payment~~ cumulative calendar year payments to the 
274.30  contractor ~~if the contract exceeds or can reasonably be expected~~ 
274.31  ~~to exceed $100,000~~ which exceed $50,000. 
274.32     <h>[EFFECTIVE DATE.]</h> This section is effective for payments 
274.33  made after December 31, 2004. 
274.34     Sec. 11.  Minnesota Statutes 2003 Supplement, section 
274.35  290C.10, is amended to read: 
274.36     290C.10 [WITHDRAWAL PROCEDURES.] 
275.1      An approved claimant under the sustainable forest incentive 
275.2   program for a minimum of four years may notify the commissioner 
275.3   of the intent to terminate enrollment.  Within 90 days of 
275.4   receipt of notice to terminate enrollment, the commissioner 
275.5   shall inform the claimant in writing, acknowledging receipt of 
275.6   this notice and indicating the effective date of termination 
275.7   from the sustainable forest incentive program.  Termination of 
275.8   enrollment in the sustainable forest incentive program occurs on 
275.9   January 1 of the fifth calendar year that begins after receipt 
275.10  by the commissioner of the termination notice.  After the 
275.11  commissioner issues an effective date of termination, a claimant 
275.12  wishing to continue the land's enrollment in the sustainable 
275.13  forest incentive program beyond the termination date must apply 
275.14  for enrollment as prescribed in section 290C.04.  A claimant who 
275.15  withdraws a parcel of land from this program may not reenroll 
275.16  the parcel for a period of three years.  Within 90 days after 
275.17  the termination date, the commissioner shall execute and 
275.18  acknowledge a document releasing the land from the covenant 
275.19  required under this chapter.  The document must be mailed to the 
275.20  claimant and is entitled to be recorded.  The commissioner may 
275.21  allow early withdrawal from the Sustainable Forest Incentive Act 
275.22  without penalty ~~in cases of condemnation~~ when the state of 
275.23  Minnesota, any local government unit, or any other entity which 
275.24  has the right of eminent domain acquires title or possession to 
275.25  the land for a public purpose notwithstanding the provisions of 
275.26  this section.  In the case of such acquisition, the commissioner 
275.27  shall execute and acknowledge a document releasing the land 
275.28  acquired by the state, local government unit, or other entity 
275.29  from the covenant.  All other enrolled land must remain in the 
275.30  program. 
275.31     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
275.32  following final enactment. 
275.33     Sec. 12.  Minnesota Statutes 2002, section 469.1734, 
275.34  subdivision 6, is amended to read: 
275.35     Subd. 6.  [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 
275.36  MATERIALS.] (a) The gross receipts from the sale of machinery 
276.1   and equipment and repair parts are exempt from taxation under 
276.2   chapter 297A, if the machinery and equipment: 
276.3      (1) are used in connection with a trade or business; 
276.4      (2) are placed in service in a city that is authorized to 
276.5   designate a zone under section 469.1731, regardless of whether 
276.6   the machinery and equipment are used in a zone; and 
276.7      (3) have a useful life of 12 months or more. 
276.8      (b) The gross receipts from the sale of construction 
276.9   materials are exempt, if they are used to construct: 
276.10     (1) a facility for use in a trade or business located in a 
276.11  city that is authorized to designate a zone under section 
276.12  469.1731, regardless of whether the facility is located in a 
276.13  zone; or 
276.14     (2) housing that is located in a zone.  
276.15  The exemptions under this paragraph apply regardless of whether 
276.16  the purchase is made by the owner, the user, or a contractor. 
276.17     (c) A purchaser may claim an exemption under this 
276.18  subdivision for tax on the purchases up to, but not exceeding: 
276.19     (1) the amount of the tax credit certificates received from 
276.20  the city, less 
276.21     (2) any tax credit certificates used under the provisions 
276.22  of subdivisions 4 and 5, and section 469.1732, subdivision 2. 
276.23     (d) The tax on sales of items exempted under this 
276.24  subdivision shall be imposed and collected as if the applicable 
276.25  rate under section 297A.62 applied.  Upon application by the 
276.26  purchaser, on forms prescribed by the commissioner, a refund 
276.27  equal to the tax paid shall be paid to the purchaser.  The 
276.28  application must include sufficient information to permit the 
276.29  commissioner to verify the sales tax paid and the eligibility of 
276.30  the claimant to receive the credit.  No more than two 
276.31  applications for refunds may be filed under this subdivision in 
276.32  a calendar year.  The provisions of section 289A.40 apply to the 
276.33  refunds payable under this subdivision.  There is annually 
276.34  appropriated to the commissioner of revenue the amount required 
276.35  to make the refunds, which must be deducted from the amount of 
276.36  the city's allocation under section 469.169, subdivision 12, 
277.1   that remains available and its limitation under section 469.1735.
277.2   The amount to be refunded shall bear interest at the rate in 
277.3   section 270.76 from 90 days after the date the refund claim is 
277.4   filed with the commissioner. 
277.5      <h>[EFFECTIVE DATE.]</h> This section is effective for refund 
277.6   claims filed on or after July 1, 2004. 
277.7      Sec. 13.  Minnesota Statutes 2003 Supplement, section 
277.8   469.310, subdivision 11, is amended to read: 
277.9      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
277.10  means a person carrying on a trade or business at a place of 
277.11  business located within a job opportunity building zone.  A 
277.12  person is a qualified business only on those parcels of land for 
277.13  which it has entered into a business subsidy agreement, as 
277.14  required under section 469.313, with the appropriate local 
277.15  government unit in which the parcels are located. 
277.16     (b) A person that relocates a trade or business from 
277.17  outside a job opportunity building zone into a zone is not a 
277.18  qualified business, unless the business: 
277.19     (1)(i) increases full-time employment in the first full 
277.20  year of operation within the job opportunity building zone by at 
277.21  least 20 percent measured relative to the operations that were 
277.22  relocated and maintains the required level of employment for 
277.23  each year the zone designation applies; or 
277.24     (ii) makes a capital investment in the property located 
277.25  within a zone equivalent to ten percent of the gross revenues of 
277.26  operation that were relocated in the immediately preceding 
277.27  taxable year; and 
277.28     (2) enters a binding written agreement with the 
277.29  commissioner that: 
277.30     (i) pledges the business will meet the requirements of 
277.31  clause (1); 
277.32     (ii) provides for repayment of all tax benefits enumerated 
277.33  under section 469.315 to the business under the procedures in 
277.34  section 469.319, if the requirements of clause (1) are not met 
277.35  for the taxable year or for taxes payable during the year in 
277.36  which the requirements were not met; and 
278.1      (iii) contains any other terms the commissioner determines 
278.2   appropriate. 
278.3      <h>[EFFECTIVE DATE.]</h> This section is effective retroactively 
278.4   from June 9, 2003. 
278.5      Sec. 14.  Minnesota Statutes 2003 Supplement, section 
278.6   469.330, subdivision 11, is amended to read: 
278.7      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
278.8   means a person carrying on a trade or business at a 
278.9   biotechnology and health sciences industry facility located 
278.10  within a biotechnology and health sciences industry zone.  A 
278.11  person is a qualified business only on those parcels of land for 
278.12  which it has entered into a business subsidy agreement, as 
278.13  required under section 469.333, with the appropriate local 
278.14  government unit in which the parcels are located. 
278.15     (b) A person that relocates a biotechnology and health 
278.16  sciences industry facility from outside a biotechnology and 
278.17  health sciences industry zone into a zone is not a qualified 
278.18  business, unless the business: 
278.19     (1)(i) increases full-time employment in the first full 
278.20  year of operation within the biotechnology and health sciences 
278.21  industry zone by at least 20 percent measured relative to the 
278.22  operations that were relocated and maintains the required level 
278.23  of employment for each year the zone designation applies; or 
278.24     (ii) makes a capital investment in the property located 
278.25  within a zone equivalent to ten percent of the gross revenues of 
278.26  operation that were relocated in the immediately preceding 
278.27  taxable year; and 
278.28     (2) enters a binding written agreement with the 
278.29  commissioner that: 
278.30     (i) pledges the business will meet the requirements of 
278.31  clause (1); 
278.32     (ii) provides for repayment of all tax benefits enumerated 
278.33  under section 469.336 to the business under the procedures in 
278.34  section 469.340, if the requirements of clause (1) are not met; 
278.35  and 
278.36     (iii) contains any other terms the commissioner determines 
279.1   appropriate. 
279.2      <h>[EFFECTIVE DATE.]</h> This section is effective retroactively 
279.3   from June 9, 2003. 
279.4      Sec. 15.  Minnesota Statutes 2003 Supplement, section 
279.5   469.337, is amended to read: 
279.6      469.337 [CORPORATE FRANCHISE TAX EXEMPTION.] 
279.7      (a) A qualified business is exempt from taxation under 
279.8   section 290.02, the alternative minimum tax under section 
279.9   290.0921, and the minimum fee under section 290.0922, on the 
279.10  portion of its income attributable to operations of a qualified 
279.11  business within the biotechnology and health sciences industry 
279.12  zone.  This exemption is determined as follows: 
279.13     (1) for purposes of the tax imposed under section 290.02, 
279.14  by multiplying its taxable net income by its zone percentage and 
279.15  subtracting the result in determining taxable income; 
279.16     (2) for purposes of the alternative minimum tax under 
279.17  section 290.0921, by multiplying its alternative minimum taxable 
279.18  income by its zone percentage and reducing alternative minimum 
279.19  taxable income by this amount; and 
279.20     (3) for purposes of the minimum fee under section 290.0922, 
279.21  by excluding zone property and payroll ~~in the zone~~ from the 
279.22  computations of the fee.  The qualified business is exempt from 
279.23  the minimum fee if all of its property is located in the zone 
279.24  and all of its payroll is zone payroll. 
279.25     (b) No subtraction is allowed under this section in excess 
279.26  of 20 percent of the sum of the corporation's biotechnology and 
279.27  health sciences industry zone payroll and the adjusted basis of 
279.28  the property at the time that the property is first used in the 
279.29  biotechnology and health sciences industry zone by the 
279.30  corporation. 
279.31     (c) No reduction in tax is allowed in excess of the amount 
279.32  allocated under section 469.335. 
279.33     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
279.34  beginning after December 31, 2003. 
279.35     Sec. 16.  [REPEALER.] 
279.36     Laws 1975, chapter 287, section 5, and Laws 2003, chapter 
280.1   127, article 9, section 9, subdivision 4, are repealed. 
280.2      <h>[EFFECTIVE DATE.]</h> This section is effective without local 
280.3   approval for taxes payable in 2005 and thereafter. 
280.4                              ARTICLE 10
280.5                         MINERALS; AGGREGATE
280.6      Section 1.  Minnesota Statutes 2002, section 272.02, is 
280.7   amended by adding a subdivision to read: 
280.8      Subd. 68.  [PROPERTY USED IN THE BUSINESS OF MINING SUBJECT 
280.9   TO THE NET PROCEEDS TAX.] The following property used in the 
280.10  business of mining subject to the net proceeds tax under section 
280.11  298.015 is exempt: 
280.12     (1) deposits of ores, metals, and minerals and the lands in 
280.13  which they are contained; 
280.14     (2) all real and personal property used in mining, 
280.15  quarrying, producing, or refining ores, minerals, or metals, 
280.16  including lands occupied by or used in connection with the 
280.17  mining, quarrying, production, or refining facilities; and 
280.18     (3) concentrate or direct reduced ore. 
280.19  This exemption applies for each year that a person subject to 
280.20  tax under section 298.015 uses the property for mining, 
280.21  quarrying, producing, or refining ores, metals, or minerals. 
280.22     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
280.23  payable in 2005 and thereafter. 
280.24     Sec. 2.  Minnesota Statutes 2002, section 290.05, 
280.25  subdivision 1, is amended to read: 
280.26     Subdivision 1.  [EXEMPT ENTITIES.] The following 
280.27  corporations, individuals, estates, trusts, and organizations 
280.28  shall be exempted from taxation under this chapter, provided 
280.29  that every such person or corporation claiming exemption under 
280.30  this chapter, in whole or in part, must establish to the 
280.31  satisfaction of the commissioner the taxable status of any 
280.32  income or activity: 
280.33     (a) corporations, individuals, estates, and trusts engaged 
280.34  in the business of mining or producing iron ore and mining, 
280.35  producing, or refining other ores, metals, and minerals, the 
280.36  mining ~~or~~, production, or refining of which is subject to the 
281.1   occupation tax imposed by section 298.01; but if any such 
281.2   corporation, individual, estate, or trust engages in any other 
281.3   business or activity or has income from any property not used in 
281.4   such business it shall be subject to this tax computed on the 
281.5   net income from such property or such other business or 
281.6   activity.  Royalty shall not be considered as income from the 
281.7   business of mining or producing iron ore within the meaning of 
281.8   this section; 
281.9      (b) the United States of America, the state of Minnesota or 
281.10  any political subdivision of either agencies or 
281.11  instrumentalities, whether engaged in the discharge of 
281.12  governmental or proprietary functions; and 
281.13     (c) any insurance company. 
281.14     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
281.15  years beginning after December 31, 2003. 
281.16     Sec. 3.  Minnesota Statutes 2002, section 290.17, 
281.17  subdivision 4, is amended to read: 
281.18     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
281.19  business conducted wholly within this state or partly within and 
281.20  partly without this state is part of a unitary business, the 
281.21  entire income of the unitary business is subject to 
281.22  apportionment pursuant to section 290.191.  Notwithstanding 
281.23  subdivision 2, paragraph (c), none of the income of a unitary 
281.24  business is considered to be derived from any particular source 
281.25  and none may be allocated to a particular place except as 
281.26  provided by the applicable apportionment formula.  The 
281.27  provisions of this subdivision do not apply to business income 
281.28  subject to subdivision 5, income of an insurance company, ~~or~~ 
281.29  income of an investment company determined under section 290.36, 
281.30  or income of a mine or mineral processing facility subject to 
281.31  tax under section 298.01. 
281.32     (b) The term "unitary business" means business activities 
281.33  or operations which result in a flow of value between them.  The 
281.34  term may be applied within a single legal entity or between 
281.35  multiple entities and without regard to whether each entity is a 
281.36  sole proprietorship, a corporation, a partnership or a trust.  
282.1      (c) Unity is presumed whenever there is unity of ownership, 
282.2   operation, and use, evidenced by centralized management or 
282.3   executive force, centralized purchasing, advertising, 
282.4   accounting, or other controlled interaction, but the absence of 
282.5   these centralized activities will not necessarily evidence a 
282.6   nonunitary business.  Unity is also presumed when business 
282.7   activities or operations are of mutual benefit, dependent upon 
282.8   or contributory to one another, either individually or as a 
282.9   group. 
282.10     (d) Where a business operation conducted in Minnesota is 
282.11  owned by a business entity that carries on business activity 
282.12  outside the state different in kind from that conducted within 
282.13  this state, and the other business is conducted entirely outside 
282.14  the state, it is presumed that the two business operations are 
282.15  unitary in nature, interrelated, connected, and interdependent 
282.16  unless it can be shown to the contrary.  
282.17     (e) Unity of ownership is not deemed to exist when a 
282.18  corporation is involved unless that corporation is a member of a 
282.19  group of two or more business entities and more than 50 percent 
282.20  of the voting stock of each member of the group is directly or 
282.21  indirectly owned by a common owner or by common owners, either 
282.22  corporate or noncorporate, or by one or more of the member 
282.23  corporations of the group.  For this purpose, the term "voting 
282.24  stock" shall include membership interests of mutual insurance 
282.25  holding companies formed under section 60A.077.  
282.26     (f) The net income and apportionment factors under section 
282.27  290.191 or 290.20 of foreign corporations and other foreign 
282.28  entities which are part of a unitary business shall not be 
282.29  included in the net income or the apportionment factors of the 
282.30  unitary business.  A foreign corporation or other foreign entity 
282.31  which is required to file a return under this chapter shall file 
282.32  on a separate return basis.  The net income and apportionment 
282.33  factors under section 290.191 or 290.20 of foreign operating 
282.34  corporations shall not be included in the net income or the 
282.35  apportionment factors of the unitary business except as provided 
282.36  in paragraph (g). 
283.1      (g) The adjusted net income of a foreign operating 
283.2   corporation shall be deemed to be paid as a dividend on the last 
283.3   day of its taxable year to each shareholder thereof, in 
283.4   proportion to each shareholder's ownership, with which such 
283.5   corporation is engaged in a unitary business.  Such deemed 
283.6   dividend shall be treated as a dividend under section 290.21, 
283.7   subdivision 4. 
283.8      Dividends actually paid by a foreign operating corporation 
283.9   to a corporate shareholder which is a member of the same unitary 
283.10  business as the foreign operating corporation shall be 
283.11  eliminated from the net income of the unitary business in 
283.12  preparing a combined report for the unitary business.  The 
283.13  adjusted net income of a foreign operating corporation shall be 
283.14  its net income adjusted as follows: 
283.15     (1) any taxes paid or accrued to a foreign country, the 
283.16  commonwealth of Puerto Rico, or a United States possession or 
283.17  political subdivision of any of the foregoing shall be a 
283.18  deduction; and 
283.19     (2) the subtraction from federal taxable income for 
283.20  payments received from foreign corporations or foreign operating 
283.21  corporations under section 290.01, subdivision 19d, clause (10), 
283.22  shall not be allowed. 
283.23     If a foreign operating corporation incurs a net loss, 
283.24  neither income nor deduction from that corporation shall be 
283.25  included in determining the net income of the unitary business. 
283.26     (h) For purposes of determining the net income of a unitary 
283.27  business and the factors to be used in the apportionment of net 
283.28  income pursuant to section 290.191 or 290.20, there must be 
283.29  included only the income and apportionment factors of domestic 
283.30  corporations or other domestic entities other than foreign 
283.31  operating corporations that are determined to be part of the 
283.32  unitary business pursuant to this subdivision, notwithstanding 
283.33  that foreign corporations or other foreign entities might be 
283.34  included in the unitary business.  
283.35     (i) Deductions for expenses, interest, or taxes otherwise 
283.36  allowable under this chapter that are connected with or 
284.1   allocable against dividends, deemed dividends described in 
284.2   paragraph (g), or royalties, fees, or other like income 
284.3   described in section 290.01, subdivision 19d, clause (10), shall 
284.4   not be disallowed. 
284.5      (j) Each corporation or other entity, except a sole 
284.6   proprietorship, that is part of a unitary business must file 
284.7   combined reports as the commissioner determines.  On the 
284.8   reports, all intercompany transactions between entities included 
284.9   pursuant to paragraph (h) must be eliminated and the entire net 
284.10  income of the unitary business determined in accordance with 
284.11  this subdivision is apportioned among the entities by using each 
284.12  entity's Minnesota factors for apportionment purposes in the 
284.13  numerators of the apportionment formula and the total factors 
284.14  for apportionment purposes of all entities included pursuant to 
284.15  paragraph (h) in the denominators of the apportionment formula. 
284.16     (k) If a corporation has been divested from a unitary 
284.17  business and is included in a combined report for a fractional 
284.18  part of the common accounting period of the combined report:  
284.19     (1) its income includable in the combined report is its 
284.20  income incurred for that part of the year determined by 
284.21  proration or separate accounting; and 
284.22     (2) its sales, property, and payroll included in the 
284.23  apportionment formula must be prorated or accounted for 
284.24  separately. 
284.25     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
284.26  years beginning after December 31, 2003. 
284.27     Sec. 4.  Minnesota Statutes 2002, section 290.191, 
284.28  subdivision 1, is amended to read: 
284.29     Subdivision 1.  [GENERAL RULE.] (a) Except as otherwise 
284.30  provided in section 290.17, subdivision 5, the net income from a 
284.31  trade or business carried on partly within and partly without 
284.32  this state must be apportioned to this state as provided in this 
284.33  section.  To the extent that an entity is exempt from taxation 
284.34  under this chapter as provided in section 290.05, the 
284.35  apportionment factors associated with the entity's exempt 
284.36  activities are excluded from the apportionment formula under 
285.1   this section. 
285.2      (b) For purposes of this section, "state" means a state of 
285.3   the United States, the District of Columbia, the commonwealth of 
285.4   Puerto Rico, or any territory or possession of the United States 
285.5   or any foreign country. 
285.6      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
285.7   years beginning after December 31, 2003. 
285.8      Sec. 5.  Minnesota Statutes 2002, section 297A.68, 
285.9   subdivision 4, is amended to read: 
285.10     Subd. 4.  [TACONITE, OTHER ORES, METALS, OR MINERALS; 
285.11  PRODUCTION MATERIALS.] Mill liners, grinding rods, and grinding 
285.12  balls that are substantially consumed in the production of 
285.13  taconite or other ores, metals, or minerals are exempt when sold 
285.14  to or stored, used, or consumed by persons taxed under the 
285.15  in-lieu provisions of chapter 298.  
285.16     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
285.17  purchases made after June 30, 2005. 
285.18     Sec. 6.  Minnesota Statutes 2002, section 298.001, is 
285.19  amended by adding a subdivision to read: 
285.20     Subd. 9.  [REFINING.] "Refining" means and is limited to 
285.21  refining: 
285.22     (1) of ores, metals, or mineral products, the mining, 
285.23  extraction, or quarrying of which were subject to tax under 
285.24  section 298.015; and 
285.25     (2) carried on by the entity, or an affiliated entity, that 
285.26  mined, extracted, or quarried the metal or mineral products. 
285.27     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
285.28  years beginning after December 31, 2003. 
285.29     Sec. 7.  Minnesota Statutes 2002, section 298.001, is 
285.30  amended by adding a subdivision to read: 
285.31     Subd. 10.  [PRECIOUS MINERALS TAX RELIEF AREA.] The 
285.32  "precious minerals tax relief area" means the area of the 
285.33  following Independent School Districts: 
285.34     (1) No. 166, Cook County; 
285.35     (2) No. 316, Coleraine; 
285.36     (3) No. 318, Grand Rapids; 
286.1      (4) No. 319, Nashwauk-Keewatin; 
286.2      (5) No. 381, Lake Superior; 
286.3      (6) No. 695, Chisholm; 
286.4      (7) No. 696, Ely; 
286.5      (8) No. 701, Hibbing; 
286.6      (9) No. 706, Virginia; 
286.7      (10) No. 712, Mountain Iron-Buhl; 
286.8      (11) No. 2711, Mesabi East; 
286.9      (12) No. 2142, St. Louis County; and 
286.10     (13) No. 2154, Eveleth-Gilbert.  
286.11     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
286.12  years beginning after December 31, 2003.  
286.13     Sec. 8.  Minnesota Statutes 2002, section 298.01, 
286.14  subdivision 3, is amended to read: 
286.15     Subd. 3.  [OCCUPATION TAX; OTHER ORES.] Every person 
286.16  engaged in the business of mining, refining, or producing ores, 
286.17  metals, or minerals in this state, except iron ore or taconite 
286.18  concentrates, shall pay an occupation tax to the state of 
286.19  Minnesota as provided in this subdivision.  For purposes of this 
286.20  subdivision, mining includes the application of 
286.21  hydrometallurgical processes.  The tax is determined in the same 
286.22  manner as the tax imposed by section 290.02, except that 
286.23  sections 290.05, subdivision 1, clause (a), 290.0921, and 
286.24  290.17, subdivision 4, do not apply.  Except as provided in 
286.25  section 290.05, subdivision 1, paragraph (a), the tax is in 
286.26  addition to all other taxes. 
286.27     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
286.28  years beginning after December 31, 2003. 
286.29     Sec. 9.  Minnesota Statutes 2002, section 298.01, 
286.30  subdivision 3a, is amended to read: 
286.31     Subd. 3a.  [GROSS INCOME.] (a) For purposes of determining 
286.32  a person's taxable income under subdivision 3, gross income is 
286.33  determined by the amount of gross proceeds from mining in this 
286.34  state under section 298.016 and includes any gain or loss 
286.35  recognized from the sale or disposition of assets used in the 
286.36  business in this state. 
287.1      (b) In applying section 290.191, subdivision 5, transfers 
287.2   of ores, metals, or minerals that are subject to tax under this 
287.3   chapter are deemed to be sales outside this state if the ores, 
287.4   metals, or minerals are transported out of this state for 
287.5   further processing or refining by the person engaged in mining 
287.6   after the ores, metals, or minerals have been converted to a 
287.7   marketable quality. 
287.8      (c) In applying section 290.191, subdivision 5, transfers 
287.9   of ores, metals, or minerals that are subject to tax under this 
287.10  chapter are deemed to be sales within this state if the ores, 
287.11  metals, or minerals are received by a purchaser at a point 
287.12  within this state, and the taxpayer is taxable in this state, 
287.13  regardless of the f.o.b. point, or other conditions of the sale, 
287.14  or the ultimate destination of the property. 
287.15     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
287.16  years beginning after December 31, 2003. 
287.17     Sec. 10.  Minnesota Statutes 2002, section 298.01, 
287.18  subdivision 4, is amended to read: 
287.19     Subd. 4.  [OCCUPATION TAX; IRON ORE; TACONITE 
287.20  CONCENTRATES.] A person engaged in the business of mining or 
287.21  producing of iron ore, taconite concentrates or direct reduced 
287.22  ore in this state shall pay an occupation tax to the state of 
287.23  Minnesota.  The tax is determined in the same manner as the tax 
287.24  imposed by section 290.02, except that sections 290.05, 
287.25  subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 
287.26  do not apply.  The tax is in addition to all other taxes. 
287.27     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
287.28  years beginning after December 31, 2003. 
287.29     Sec. 11.  Minnesota Statutes 2002, section 298.015, 
287.30  subdivision 1, is amended to read: 
287.31     Subdivision 1.  [TAX IMPOSED.] A person engaged in the 
287.32  business of mining shall pay to the state of Minnesota for 
287.33  distribution as provided in section 298.018 a net proceeds tax 
287.34  equal to ~~two~~ four percent of the net proceeds from mining in 
287.35  Minnesota.  The tax applies to all ~~mineral and energy resources~~ 
287.36  ores, metals, and minerals mined ~~or~~, extracted, produced, or 
288.1   refined within the state of Minnesota except for sand, silica 
288.2   sand, gravel, building stone, crushed rock, limestone, granite, 
288.3   dimension granite, dimension stone, horticultural peat, clay, 
288.4   soil, iron ore, and taconite concentrates.  Except as provided 
288.5   in section 272.02, subdivision 68, the tax is in addition to all 
288.6   other taxes provided for by law.  
288.7      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
288.8   payable in 2005 and thereafter. 
288.9      Sec. 12.  Minnesota Statutes 2002, section 298.015, 
288.10  subdivision 2, is amended to read: 
288.11     Subd. 2.  [NET PROCEEDS.] For purposes of this section, the 
288.12  term "net proceeds" means the gross proceeds from mining, as 
288.13  defined in section 298.016, less the same deductions allowed ~~in~~ 
288.14  ~~section 298.017~~ for purposes of determining taxable income under 
288.15  section 298.01, subdivision 3b.  No other credits or deductions 
288.16  shall apply to this tax ~~except for those provided in section~~ 
288.17  ~~298.017~~.  
288.18     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
288.19  payable in 2005 and thereafter. 
288.20     Sec. 13.  Minnesota Statutes 2002, section 298.016, 
288.21  subdivision 4, is amended to read: 
288.22     Subd. 4.  [DEFINITIONS.] For the purposes of sections 
288.23  298.015 and 298.017, the terms defined in this subdivision have 
288.24  the meaning given them unless the context clearly indicates 
288.25  otherwise.  
288.26     (a) "Metal or mineral products" means all those ~~mineral and~~ 
288.27  ~~energy resources~~ ores, metals, and minerals subject to the tax 
288.28  provided in section 298.015. 
288.29     (b) "Exploration" means activities designed and engaged in 
288.30  to ascertain the existence, location, extent, or quality of any 
288.31  deposit of metal or mineral products prior to the development of 
288.32  a mining site.  
288.33     (c) "Development" means activities designed and engaged in 
288.34  to prepare or develop a potential mining site for mining after 
288.35  the existence of metal or mineral products in commercially 
288.36  marketable quantities has been disclosed including, but not 
289.1   limited to, the clearing of forestation, the building of roads, 
289.2   removal of overburden, or the sinking of shafts.  
289.3      (d) "Research" means activities designed and engaged in to 
289.4   create new or improved methods of mining, producing, processing, 
289.5   beneficiating, smelting, or refining metal or mineral products.  
289.6      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
289.7   years beginning after December 31, 2004. 
289.8      Sec. 14.  Minnesota Statutes 2002, section 298.018, as 
289.9   amended by Laws 2003, First Special Session chapter 21, article 
289.10  11, sections 14, 15, is amended to read: 
289.11     298.018 [DISTRIBUTION OF PROCEEDS.] 
289.12     Subdivision 1.  [WITHIN THE ~~TACONITE~~ PRECIOUS MINERALS 
289.13  ASSISTANCE AREA.] The proceeds of the tax paid under sections 
289.14  298.015 to 298.017 on ores, metals, and minerals ~~and energy~~ 
289.15  ~~resources~~ mined or extracted within the ~~taconite~~ precious 
289.16  minerals assistance area ~~defined in section 273.1341~~, shall be 
289.17  allocated as follows: 
289.18     (1) five percent to the city or town within which the ores, 
289.19  metals, or minerals ~~or energy resources~~ are mined or extracted; 
289.20     (2) ten percent to the taconite municipal aid account to be 
289.21  distributed ~~as provided in section 298.282~~ to qualifying 
289.22  municipalities, as defined in section 298.282 and located in the 
289.23  precious minerals assistance area; 
289.24     (3) ten percent to the school district within which the 
289.25  ores, metals, or minerals ~~or energy resources~~ are mined or 
289.26  extracted; 
289.27     (4) ~~20~~ 30 percent to ~~a group of school districts comprised~~ 
289.28  ~~of those school districts wherein the mineral or energy resource~~ 
289.29  ~~was mined or extracted or in which there is a qualifying~~ 
289.30  ~~municipality as defined by section 273.134, paragraph (b), in~~ 
289.31  ~~direct proportion to school district indexes as follows:  for~~ 
289.32  ~~each school district, its pupil units determined under section~~ 
289.33  ~~126C.05 for the prior school year shall be multiplied by the~~ 
289.34  ~~ratio of the average adjusted net tax capacity per pupil unit~~ 
289.35  ~~for school districts receiving aid under this clause as~~ 
289.36  ~~calculated pursuant to chapters 122A, 126C, and 127A for the~~ 
290.1   ~~school year ending prior to distribution to the adjusted net tax~~ 
290.2   ~~capacity per pupil unit of the district.  Each district shall~~ 
290.3   ~~receive that portion of the distribution which its index bears~~ 
290.4   ~~to the sum of the indices for all school districts that receive~~ 
290.5   ~~the distributions~~ the state general fund to represent the 
290.6   portion of the tax that is in lieu of the state general tax 
290.7   under section 275.025; 
290.8      (5) 20 percent to the county within which the ores, metals, 
290.9   or minerals ~~or energy resources~~ are mined or extracted; 
290.10     (6) ~~20 percent to St. Louis County acting as the counties'~~ 
290.11  ~~fiscal agent to be distributed as provided in sections 273.134~~ 
290.12  ~~to 273.136;~~ 
290.13     ~~(7)~~ five percent to the Iron Range Resources and 
290.14  Rehabilitation Board for the purposes of section 298.22; 
290.15     ~~(8) five~~ (7) ten percent to the Douglas J. Johnson economic 
290.16  protection trust fund; and 
290.17     ~~(9) five~~ (8) ten percent to the taconite environmental 
290.18  protection fund. 
290.19     The proceeds of the tax shall be distributed on July 15 
290.20  each year. 
290.21     Subd. 2.  [OUTSIDE THE ~~TACONITE~~ PRECIOUS MINERALS 
290.22  ASSISTANCE AREA.] The proceeds of the tax paid under sections 
290.23  298.015 to 298.017 on ores, metals, or minerals ~~and energy~~ 
290.24  ~~resources~~ mined or extracted outside of the ~~taconite~~ precious 
290.25  minerals assistance area ~~defined in section 273.1341~~, shall be 
290.26  deposited in the general fund. 
290.27     Subd. 3.  [SEGREGATION OF FUNDS.] The proceeds of the tax 
290.28  allocated under subdivision 1, clauses (2), (6), (7), and (8), 
290.29  including any investment earnings on them, must be segregated 
290.30  and separately accounted for in the respective funds or account 
290.31  to which they are allocated.  These amounts must only be 
290.32  distributed to municipalities within the precious minerals 
290.33  assistance area or used for projects located in the precious 
290.34  minerals assistance area.  
290.35     <h>[EFFECTIVE DATE.]</h> This section is effective for 
290.36  distribution of net proceeds tax revenues made after July 1, 
291.1   2004.  
291.2      Sec. 15.  [298.021] [ROYALTY TAX.] 
291.3      In addition to any other taxes imposed by law, a tax is 
291.4   imposed on a royalty, as defined in section 290.923, subdivision 
291.5   1, paid on ore, other than iron ore, taconite, iron sulphides, 
291.6   or semitaconite.  The tax equals 12 percent of the amount of the 
291.7   royalty paid.  The person paying the royalty shall withhold the 
291.8   tax from the payment and remit the payment to the commissioner 
291.9   at the times and under the procedures provided under section 
291.10  290.923.  The commissioner shall deposit proceeds in the general 
291.11  fund and allocate the proceeds as provided under section 
291.12  298.018, subdivision 1.  
291.13     <h>[EFFECTIVE DATE.]</h> This section is effective for royalties 
291.14  paid after June 30, 2004.  
291.15     Sec. 16.  Minnesota Statutes 2003 Supplement, section 
291.16  298.223, subdivision 1, is amended to read: 
291.17     Subdivision 1.  [CREATION; PURPOSES.] A fund called the 
291.18  taconite environmental protection fund is created for the 
291.19  purpose of reclaiming, restoring and enhancing those areas of 
291.20  northeast Minnesota located within the taconite assistance area 
291.21  defined in section 273.1341, that are adversely affected by the 
291.22  environmentally damaging operations involved in mining taconite 
291.23  and iron ore and producing iron ore concentrate and for the 
291.24  purpose of promoting the economic development of northeast 
291.25  Minnesota.  The taconite environmental protection fund shall be 
291.26  used for the following purposes: 
291.27     (a) to initiate investigations into matters the Iron Range 
291.28  Resources and Rehabilitation Board determines are in need of 
291.29  study and which will determine the environmental problems 
291.30  requiring remedial action; 
291.31     (b) reclamation, restoration, or reforestation of minelands 
291.32  not otherwise provided for by state law; 
291.33     (c) ~~local economic development projects including~~ 
291.34  ~~construction of sewer and water systems, and other~~ public works, 
291.35  including construction of sewer and water systems located within 
291.36  the taconite assistance area defined in section 273.1341; 
292.1      (d) monitoring of mineral industry related health problems 
292.2   among mining employees. 
292.3      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
292.4   following final enactment. 
292.5      Sec. 17.  Minnesota Statutes 2002, section 298.24, 
292.6   subdivision 1, is amended to read: 
292.7      Subdivision 1.  (a) For concentrate produced in 2001, 2002, 
292.8   and 2003, there is imposed upon taconite and iron sulphides, and 
292.9   upon the mining and quarrying thereof, and upon the production 
292.10  of iron ore concentrate therefrom, and upon the concentrate so 
292.11  produced, a tax of $2.103 per gross ton of merchantable iron ore 
292.12  concentrate produced therefrom.  
292.13     (b) For concentrates produced in 2004 and subsequent years, 
292.14  the tax rate shall be equal to the preceding year's tax rate 
292.15  plus an amount equal to the preceding year's tax rate multiplied 
292.16  by the percentage increase in the implicit price deflator from 
292.17  the fourth quarter of the second preceding year to the fourth 
292.18  quarter of the preceding year.  "Implicit price deflator" means 
292.19  the implicit price deflator for the gross domestic product 
292.20  prepared by the Bureau of Economic Analysis of the United States 
292.21  Department of Commerce.  
292.22     (c) On concentrates produced in 1997 and thereafter, an 
292.23  additional tax is imposed equal to three cents per gross ton of 
292.24  merchantable iron ore concentrate for each one percent that the 
292.25  iron content of the product exceeds 72 percent, when dried at 
292.26  212 degrees Fahrenheit. 
292.27     (d) Except for taxes payable in 2004 through 2006, the tax 
292.28  shall be imposed on the average of the production for the 
292.29  current year and the previous two years.  The rate of the tax 
292.30  imposed will be the current year's tax rate.  This clause shall 
292.31  not apply in the case of the closing of a taconite facility if 
292.32  the property taxes on the facility would be higher if this 
292.33  clause and section 298.25 were not applicable.  
292.34     (e) If the tax or any part of the tax imposed by this 
292.35  subdivision is held to be unconstitutional, a tax of $2.103 per 
292.36  gross ton of merchantable iron ore concentrate produced shall be 
293.1   imposed.  
293.2      (f) Consistent with the intent of this subdivision to 
293.3   impose a tax based upon the weight of merchantable iron ore 
293.4   concentrate, the commissioner of revenue may indirectly 
293.5   determine the weight of merchantable iron ore concentrate 
293.6   included in fluxed pellets by subtracting the weight of the 
293.7   limestone, dolomite, or olivine derivatives or other basic flux 
293.8   additives included in the pellets from the weight of the 
293.9   pellets.  For purposes of this paragraph, "fluxed pellets" are 
293.10  pellets produced in a process in which limestone, dolomite, 
293.11  olivine, or other basic flux additives are combined with 
293.12  merchantable iron ore concentrate.  No subtraction from the 
293.13  weight of the pellets shall be allowed for binders, mineral and 
293.14  chemical additives other than basic flux additives, or moisture. 
293.15     (g)(1) Notwithstanding any other provision of this 
293.16  subdivision, for any year before the plant reaches the level of 
293.17  commercial production and for the first two years of a plant's 
293.18  commercial production of direct reduced ore, no tax is imposed 
293.19  under this section.  As used in this paragraph, "commercial 
293.20  production" is production of more than 50,000 tons of direct 
293.21  reduced ore per year, and "direct reduced ore" is ore that 
293.22  results in a product that has an iron content of at least 75 
293.23  percent.  For the third year of a plant's commercial production 
293.24  of direct reduced ore, the rate to be applied to direct reduced 
293.25  ore is 25 percent of the rate otherwise determined under this 
293.26  subdivision.  For the fourth such production year, the rate is 
293.27  50 percent of the rate otherwise determined under this 
293.28  subdivision; for the fifth such production year, the rate is 75 
293.29  percent of the rate otherwise determined under this subdivision; 
293.30  and for all subsequent production years, the full rate is 
293.31  imposed. 
293.32     (2) Subject to clause (1), production of direct reduced ore 
293.33  in this state is subject to the tax imposed by this section, but 
293.34  if that production is not produced by a producer of taconite or 
293.35  iron sulfides, the production of taconite or iron sulfides 
293.36  consumed in the production of direct reduced iron in this state 
294.1   is not subject to the tax imposed by this section on taconite or 
294.2   iron sulfides. 
294.3      (3) Notwithstanding any other provision of this 
294.4   subdivision, no tax is imposed under this section for the first 
294.5   two years of noncommercial production of direct reduced ore. 
294.6      <h>[EFFECTIVE DATE.]</h> This section is effective for direct 
294.7   reduced ore produced after the date of final enactment. 
294.8      Sec. 18.  Minnesota Statutes 2003 Supplement, section 
294.9   298.27, is amended to read: 
294.10     298.27 [COLLECTION AND PAYMENT OF TAX.] 
294.11     The taxes provided by section 298.24 shall be paid directly 
294.12  to each eligible county and the Iron Range Resources and 
294.13  Rehabilitation Board.  The commissioner of revenue shall notify 
294.14  each producer of the amount to be paid each recipient prior to 
294.15  February 15.  Every person subject to taxes imposed by section 
294.16  298.24 shall file a correct report covering the preceding year.  
294.17  The report must contain the information required by the 
294.18  commissioner.  The report shall be filed by each producer on or 
294.19  before February 1.  A remittance equal to 50 percent of the 
294.20  total tax required to be paid hereunder shall be paid on or 
294.21  before February 24.  A remittance equal to 20 percent of the 
294.22  remaining total tax required to be paid hereunder shall be paid 
294.23  on or before the first days of April, May, June, July, and 
294.24  August ~~24~~.  On or before February 25 and August 25, the county 
294.25  auditor shall make distribution of the payments previously 
294.26  received by the county in the manner provided by section 
294.27  298.28.  Reports shall be made and hearings held upon the 
294.28  determination of the tax in accordance with procedures 
294.29  established by the commissioner of revenue.  The commissioner of 
294.30  revenue shall have authority to make reasonable rules as to the 
294.31  form and manner of filing reports necessary for the 
294.32  determination of the tax hereunder, and by such rules may 
294.33  require the production of such information as may be reasonably 
294.34  necessary or convenient for the determination and apportionment 
294.35  of the tax.  All the provisions of the occupation tax law with 
294.36  reference to the assessment and determination of the occupation 
295.1   tax, including all provisions for appeals from or review of the 
295.2   orders of the commissioner of revenue relative thereto, but not 
295.3   including provisions for refunds, are applicable to the taxes 
295.4   imposed by section 298.24 except in so far as inconsistent 
295.5   herewith.  If any person subject to section 298.24 shall fail to 
295.6   make the report provided for in this section at the time and in 
295.7   the manner herein provided, the commissioner of revenue shall in 
295.8   such case, upon information possessed or obtained, ascertain the 
295.9   kind and amount of ore mined or produced and thereon find and 
295.10  determine the amount of the tax due from such person.  There 
295.11  shall be added to the amount of tax due a penalty for failure to 
295.12  report on or before February 1, which penalty shall equal ten 
295.13  percent of the tax imposed and be treated as a part thereof. 
295.14     If any person responsible for making a tax payment at the 
295.15  time and in the manner herein provided fails to do so, there 
295.16  shall be imposed a penalty equal to ten percent of the amount so 
295.17  due, which penalty shall be treated as part of the tax due. 
295.18     In the case of any underpayment of the tax payment required 
295.19  herein, there may be added and be treated as part of the tax due 
295.20  a penalty equal to ten percent of the amount so underpaid. 
295.21     A person having a liability of $120,000 or more during a 
295.22  calendar year must remit all liabilities by means of a funds 
295.23  transfer as defined in section 336.4A-104, paragraph (a).  The 
295.24  funds transfer payment date, as defined in section 336.4A-401, 
295.25  must be on or before the date the tax is due.  If the date the 
295.26  tax is due is not a funds transfer business day, as defined in 
295.27  section 336.4A-105, paragraph (a), clause (4), the payment date 
295.28  must be on or before the funds transfer business day next 
295.29  following the date the tax is due. 
295.30     <h>[EFFECTIVE DATE.]</h> This section is effective for production 
295.31  payable beginning calendar year 2005.  
295.32     Sec. 19.  Minnesota Statutes 2002, section 298.28, 
295.33  subdivision 9a, is amended to read: 
295.34     Subd. 9a.  [~~TACONITE ECONOMIC DEVELOPMENT~~ MINERAL 
295.35  PROCESSING AND ENERGY DEVELOPMENT ASSISTANCE FUND.] (a) 30.1 
295.36  cents per ton for distributions in ~~2002~~ 2005 and thereafter must 
296.1   be paid to the ~~taconite economic development fund~~ mineral 
296.2   processing and energy development assistance fund under section 
296.3   298.2962.  No distribution shall be made under this paragraph in 
296.4   2004 or any subsequent year in which total industry production 
296.5   falls below 30 million tons.  ~~Distribution shall only be made to~~ 
296.6   ~~a taconite producer's fund under section 298.227 if the producer~~ 
296.7   ~~timely pays its tax under section 298.24 by the dates provided~~ 
296.8   ~~under section 298.27, or pursuant to the due dates provided by~~ 
296.9   ~~an administrative agreement with the commissioner.~~ 
296.10     (b) An amount equal to 50 percent of the tax under section 
296.11  298.24 for concentrate sold in the form of pellet chips and 
296.12  fines not exceeding 5/16 inch in size and not including crushed 
296.13  pellets shall be paid to the ~~taconite economic~~ mineral 
296.14  processing and energy development assistance fund under section 
296.15  298.2962.  The amount paid shall not exceed $700,000 annually 
296.16  for all companies.  If the initial amount to be paid to the fund 
296.17  exceeds this amount, each company's payment shall be prorated so 
296.18  the total does not exceed $700,000. 
296.19     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
296.20  following final enactment.  
296.21     Sec. 20.  Minnesota Statutes 2002, section 298.28, 
296.22  subdivision 9b, is amended to read: 
296.23     Subd. 9b.  [TACONITE ENVIRONMENTAL FUND.] Five cents per 
296.24  ton ~~for distributions in 1999, 2000, 2001, 2002, and 2003~~ must 
296.25  be paid to the taconite environmental fund for use under section 
296.26  298.2961, subdivision 4.  
296.27     <h>[EFFECTIVE DATE.]</h> This section is effective for 
296.28  distributions in 2004 and later years. 
296.29     Sec. 21.  Minnesota Statutes 2002, section 298.28, 
296.30  subdivision 10, is amended to read: 
296.31     Subd. 10.  [INCREASE.] Beginning with distributions in ~~2000~~ 
296.32  2005, except for the amount of the revenue increases provided in 
296.33  subdivision 4, paragraph (d), the amount ~~determined under~~ 
296.34  ~~subdivision 9 shall be increased in the same proportion as~~ of 
296.35  increased tax proceeds attributable to the increase in the 
296.36  implicit price deflator as provided in section 298.24, 
297.1   subdivision 1, is distributed to the taconite environmental 
297.2   protection fund under section 298.223.  ~~Beginning with~~ 
297.3   ~~distributions in 2003, the amount determined under subdivision~~ 
297.4   ~~6, paragraph (a), shall be increased in the same proportion as~~ 
297.5   ~~the increase in the implicit price deflator as provided in~~ 
297.6   ~~section 298.24, subdivision 1.~~  
297.7      Sec. 22.  Minnesota Statutes 2002, section 298.2961, is 
297.8   amended by adding a subdivision to read: 
297.9      Subd. 4.  [GRANT AND LOAN FUND.] (a) A fund is established 
297.10  to receive distributions under section 298.28, subdivision 9b, 
297.11  and to make grants or loans as provided in this subdivision.  
297.12  Any grant or loan made under this subdivision must be approved 
297.13  by a majority of the members of the Iron Range Resources and 
297.14  Rehabilitation Board, established under section 298.22. 
297.15     (b) Distributions received in calendar year 2004 are 
297.16  allocated to the city of Virginia for improvements and repairs 
297.17  to the city's steam heating system. 
297.18     (c) Distributions received in calendar year 2005 are 
297.19  allocated to a project of the public utilities commissions of 
297.20  the cities of Hibbing and Virginia to convert their electrical 
297.21  generating plants to the use of biomass products, such as wood. 
297.22     (d) For distributions received in 2006 and later, amounts 
297.23  are to be allocated to joint ventures with mining companies for 
297.24  reclamation of lands containing abandoned or worked out mines to 
297.25  convert these lands to marketable properties for residential, 
297.26  recreational, commercial, or other valuable uses. 
297.27     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
297.28  following final enactment. 
297.29     Sec. 23.  [298.2962] [MINERAL PROCESSING AND ENERGY 
297.30  DEVELOPMENT ASSISTANCE FUND.] 
297.31     Subdivision 1.  [CREATION OF FUND; DEPOSITS.] The amount 
297.32  distributed under section 298.28, subdivision 9a, must be 
297.33  deposited by the commissioner of iron range resources and 
297.34  rehabilitation in a mineral processing and energy development 
297.35  assistance fund, which is created in this section.  In this 
297.36  section, "commissioner" means the commissioner of iron range 
298.1   resources and rehabilitation. 
298.2      Subd. 2.  [USE OF FUND.] The commissioner shall use money 
298.3   in the fund to make grants, loans, or equity investments in 
298.4   mineral processing and energy generating facilities including, 
298.5   but not limited to, taconite processing, direct reduction 
298.6   processing, steel production, and energy generation facilities.  
298.7   Money in the fund may also be used to pay for the costs of 
298.8   carrying out the commissioner's due diligence duties under this 
298.9   section.  Any grant, loan, or equity investment made under this 
298.10  subdivision must be approved by a majority of the members of the 
298.11  Iron Range Resources and Rehabilitation Board. 
298.12     Subd. 3.  [REQUIREMENTS PRIOR TO COMMITTING FUNDS.] The 
298.13  commissioner, prior to making a commitment for a grant, loan, or 
298.14  equity investment must, at a minimum, conduct due diligence 
298.15  research regarding the proposed loan or equity investment, 
298.16  including contracting with professionals as needed to assist in 
298.17  the due diligence. 
298.18     Subd. 4.  [REQUIREMENTS FOR FUND DISBURSEMENTS.] The 
298.19  commissioner may make conditional commitments for grants, loans, 
298.20  or equity investments but disbursements of funds pursuant to a 
298.21  commitment may not be made until commitments for the remainder 
298.22  of a project's funding are made that are satisfactory to the 
298.23  commissioner and disbursements are made from the other 
298.24  commitments sufficient to protect the interests of the state in 
298.25  its loan or investment. 
298.26     Subd. 5.  [COMPANY CONTRIBUTION.] The commissioner may 
298.27  provide grants, loans, or equity investments that match, in a 
298.28  proportion determined by the commissioner, an investment made by 
298.29  the owner of a facility. 
298.30     Sec. 24.  Minnesota Statutes 2003 Supplement, section 
298.31  298.75, subdivision 1, is amended to read: 
298.32     Subdivision 1.  [DEFINITIONS.] Except as may otherwise be 
298.33  provided, the following words, when used in this section, shall 
298.34  have the meanings herein ascribed to them.  
298.35     (1) "Aggregate material" shall mean nonmetallic natural 
298.36  mineral aggregate including, but not limited to sand, silica 
299.1   sand, gravel, crushed rock, limestone, granite, and borrow, but 
299.2   only if the borrow is transported on a public road, street, or 
299.3   highway.  Aggregate material shall not include dimension stone 
299.4   and dimension granite.  Aggregate material must be measured or 
299.5   weighed after it has been extracted from the pit, quarry, or 
299.6   deposit.  
299.7      (2) "Person" shall mean any individual, firm, partnership, 
299.8   corporation, organization, trustee, association, or other entity.
299.9      (3) "Operator" shall mean any person engaged in the 
299.10  business of removing aggregate material from the surface or 
299.11  subsurface of the soil, for the purpose of sale, either directly 
299.12  or indirectly, through the use of the aggregate material in a 
299.13  marketable product or service; except that operator does not 
299.14  include persons engaged in a transaction in which:  (i) the 
299.15  person is allowed to remove or produce aggregate without a 
299.16  mining permit; or (ii) the aggregate is moved within a project's 
299.17  construction limits to other locations within that same 
299.18  project's construction limits.  
299.19     (4) "Extraction site" shall mean a pit, quarry, or deposit 
299.20  containing aggregate material and any contiguous property to the 
299.21  pit, quarry, or deposit which is used by the operator for 
299.22  stockpiling the aggregate material.  
299.23     (5) "Importer" shall mean any person who buys aggregate 
299.24  material produced from a county not listed in paragraph (6) or 
299.25  another state and causes the aggregate material to be imported 
299.26  into a county in this state which imposes a tax on aggregate 
299.27  material.  
299.28     (6) "County" shall mean the counties of Pope, Stearns, 
299.29  Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 
299.30  Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 
299.31  Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 
299.32  Sibley, Hennepin, Washington, Chisago, and Ramsey.  County also 
299.33  means any other county whose board has voted after a public 
299.34  hearing to impose the tax under this section and has notified 
299.35  the commissioner of revenue of the imposition of the tax. 
299.36     (7) "Borrow" shall mean granular borrow, consisting of 
300.1   durable particles of gravel and sand, crushed quarry or mine 
300.2   rock, crushed gravel or stone, or any combination thereof, the 
300.3   ratio of the portion passing the (#200) sieve divided by the 
300.4   portion passing the (1 inch) sieve may not exceed 20 percent by 
300.5   mass. 
300.6      <h>[EFFECTIVE DATE.]</h> This section is effective for aggregate 
300.7   sold, imported, transported, or used from a stockpile after June 
300.8   30, 2004. 
300.9      Sec. 25.  Minnesota Statutes 2002, section 298.75, 
300.10  subdivision 2, is amended to read: 
300.11     Subd. 2.  [TAX IMPOSED.] A county shall impose upon every 
300.12  importer and operator a production tax up to ten cents per cubic 
300.13  yard or up to seven cents per ton of aggregate material removed 
300.14  except that the county board may decide not to impose this tax 
300.15  if it determines that in the previous year operators removed 
300.16  less than 20,000 tons or 14,000 cubic yards of aggregate 
300.17  material from that county.  A county or town may exempt an 
300.18  operator from the tax if the operator has removed less than 
300.19  2,500 tons or 1,750 yards from the county in the year that the 
300.20  tax is due and no other aggregate operator has removed material 
300.21  from the same site in the same year.  The tax shall be imposed 
300.22  on aggregate material produced in the county when the aggregate 
300.23  material is transported from the extraction site or sold.  When 
300.24  aggregate material is stored in a stockpile within the state of 
300.25  Minnesota and a public highway, road or street is not used for 
300.26  transporting the aggregate material, the tax shall be imposed 
300.27  either when the aggregate material is sold, or when it is 
300.28  transported from the stockpile site, or when it is used from the 
300.29  stockpile, whichever occurs first.  The tax shall be imposed on 
300.30  an importer when the aggregate material is imported into the 
300.31  county that imposes the tax.  
300.32     If the aggregate material is transported directly from the 
300.33  extraction site to a waterway, railway, or another mode of 
300.34  transportation other than a highway, road or street, the tax 
300.35  imposed by this section shall be apportioned equally between the 
300.36  county where the aggregate material is extracted and the county 
301.1   to which the aggregate material is originally transported.  If 
301.2   that destination is not located in Minnesota, then the county 
301.3   where the aggregate material was extracted shall receive all of 
301.4   the proceeds of the tax.  
301.5      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
301.6   following final enactment. 
301.7      Sec. 26.  [TRANSITION PROVISION.] 
301.8      Each person with an alternative minimum tax credit on 
301.9   December 31, 2003, pursuant to Minnesota Statutes 2002, section 
301.10  298.01, may take that credit against occupation tax under the 
301.11  provisions of Minnesota Statutes 2002, section 298.01, 
301.12  subdivision 3d or 4e. 
301.13     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
301.14  following final enactment. 
301.15     Sec. 27.  [REPEALER.] 
301.16     (a) Minnesota Statutes 2002, section 298.01, subdivisions 
301.17  3c, 3d, 4d, and 4e, are repealed effective for taxable years 
301.18  beginning after December 31, 2003. 
301.19     (b) Minnesota Statutes 2002, section 298.017, is repealed 
301.20  effective for taxes payable in 2005 and thereafter. 
301.21     (c) Minnesota Statutes 2003 Supplement, section 298.227, is 
301.22  repealed July 1, 2004.  The commissioner of iron range resources 
301.23  and rehabilitation must transfer any unobligated money in the 
301.24  taconite economic development fund on that date to the mineral 
301.25  processing and energy development assistance fund established 
301.26  under Minnesota Statutes, section 298.2962. 
301.27                             ARTICLE 11
301.28                        SALES AND USE TAXES
301.29              DEPARTMENT OF REVENUE TECHNICAL CHANGES
301.30     Section 1.  Minnesota Statutes 2002, section 289A.38, 
301.31  subdivision 6, is amended to read: 
301.32     Subd. 6.  [OMISSION IN EXCESS OF 25 PERCENT.] Additional 
301.33  taxes may be assessed within 6-1/2 years after the due date of 
301.34  the return or the date the return was filed, whichever is later, 
301.35  if: 
301.36     (1) the taxpayer omits from gross income an amount properly 
302.1   includable in it that is in excess of 25 percent of the amount 
302.2   of gross income stated in the return; 
302.3      (2) the taxpayer omits from a sales, use, or withholding 
302.4   tax return an amount of taxes in excess of 25 percent of the 
302.5   taxes reported in the return; or 
302.6      (3) the taxpayer omits from the gross estate assets in 
302.7   excess of 25 percent of the gross estate reported in the return. 
302.8      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
302.9   following final enactment. 
302.10     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
302.11  289A.40, subdivision 2, is amended to read: 
302.12     Subd. 2.  [BAD DEBT LOSS.] If a claim relates to an 
302.13  overpayment because of a failure to deduct a loss due to a bad 
302.14  debt or to a security becoming worthless, the claim is 
302.15  considered timely if filed within seven years from the date 
302.16  prescribed for the filing of the return.  A claim relating to an 
302.17  overpayment of taxes under chapter 297A must be filed within 
302.18  3-1/2 years from the date prescribed for filing the return, plus 
302.19  any extensions granted for filing the return, but only if filed 
302.20  within the extended time.  The refund or credit is limited to 
302.21  the amount of overpayment attributable to the loss.  "Bad debt" 
302.22  for purposes of this subdivision, has the same meaning as that 
302.23  term is used in United States Code, title 26, section 166, 
302.24  except that for a claim relating to an overpayment of taxes 
302.25  under chapter 297A the following are excluded from the 
302.26  calculation of bad debt:  financing charges or interest; sales 
302.27  or use taxes charged on the purchase price; uncollectible 
302.28  amounts on property that remain in the possession of the seller 
302.29  until the full purchase price is paid; expenses incurred in 
302.30  attempting to collect any debt; and repossessed property. 
302.31     <h>[EFFECTIVE DATE.]</h> For claims relating to an overpayment of 
302.32  taxes under chapter 297A, this section is effective for sales 
302.33  and purchases made on or after January 1, 2004; for all other 
302.34  bad debts or claims, this section is effective on or after July 
302.35  1, 2003. 
302.36     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
303.1   297A.668, subdivision 1, is amended to read: 
303.2      Subdivision 1.  [APPLICABILITY.] The provisions of this 
303.3   section apply regardless of the characterization of a product as 
303.4   tangible personal property, a digital good, or a service; but do 
303.5   not apply to telecommunications services~~,~~ or the sales of motor 
303.6   vehicles~~, watercraft, aircraft, modular homes, manufactured~~ 
303.7   ~~homes, or mobile homes~~.  These provisions only apply to 
303.8   determine a seller's obligation to pay or collect and remit a 
303.9   sales or use tax with respect to the seller's sale of a 
303.10  product.  These provisions do not affect the obligation of a 
303.11  seller as purchaser to remit tax on the use of the product. 
303.12     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
303.13  following final enactment. 
303.14     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
303.15  297A.668, subdivision 3, is amended to read: 
303.16     Subd. 3.  [LEASE OR RENTAL OF TANGIBLE PERSONAL PROPERTY.] 
303.17  The lease or rental of tangible personal property, other than 
303.18  property identified in subdivision 4 or 5, shall be sourced as 
303.19  required in paragraphs (a) to (c). 
303.20     (a) For a lease or rental that requires recurring periodic 
303.21  payments, the first periodic payment is sourced the same as a 
303.22  retail sale in accordance with the provisions of subdivision ~~6~~ 2.
303.23  Periodic payments made subsequent to the first payment are 
303.24  sourced to the primary property location for each period covered 
303.25  by the payment.  The primary property location must be as 
303.26  indicated by an address for the property provided by the lessee 
303.27  that is available to the lessor from its records maintained in 
303.28  the ordinary course of business, when use of this address does 
303.29  not constitute bad faith.  The property location must not be 
303.30  altered by intermittent use at different locations, such as use 
303.31  of business property that accompanies employees on business 
303.32  trips and service calls. 
303.33     (b) For a lease or rental that does not require recurring 
303.34  periodic payments, the payment is sourced the same as a retail 
303.35  sale in accordance with the provisions of subdivision 2. 
303.36     (c) This subdivision does not affect the imposition or 
304.1   computation of sales or use tax on leases or rentals based on a 
304.2   lump sum or accelerated basis, or on the acquisition of property 
304.3   for lease. 
304.4      <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
304.5   purchases made on or after January 1, 2004. 
304.6      Sec. 5.  Minnesota Statutes 2003 Supplement, section 
304.7   297A.668, subdivision 5, is amended to read: 
304.8      Subd. 5.  [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 
304.9   including lease or rental, of transportation equipment shall be 
304.10  sourced the same as a retail sale in accordance with the 
304.11  provisions of subdivision 2, notwithstanding the exclusion of 
304.12  lease or rental in subdivision 2. 
304.13     (b) "Transportation equipment" means any of the following: 
304.14     (1) locomotives and railcars that are utilized for the 
304.15  carriage of persons or property in interstate commerce; ~~and/or~~ 
304.16     (2) trucks and truck-tractors with a gross vehicle weight 
304.17  rating (GVWR) of 10,001 pounds or greater, trailers, 
304.18  semitrailers, or passenger buses that are: 
304.19     (i) registered through the international registration plan; 
304.20  and 
304.21     (ii) operated under authority of a carrier authorized and 
304.22  certified by the United States Department of Transportation or 
304.23  another federal authority to engage in the carriage of persons 
304.24  or property in interstate commerce; 
304.25     (3) aircraft that are operated by air carriers authorized 
304.26  and certificated by the United States Department of 
304.27  Transportation or another federal or a foreign authority to 
304.28  engage in the carriage of persons or property in interstate 
304.29  commerce; or 
304.30     (4) containers designed for use on and component parts 
304.31  attached or secured on the transportation equipment described in 
304.32  items (1) through (3).  
304.33     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
304.34  purchases made on or after January 1, 2004. 
304.35     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
304.36  297A.669, subdivision 16, is amended to read: 
305.1      Subd. 16.  [SERVICE ADDRESS.] "Service address," for 
305.2   purposes of this section, means: 
305.3      (1) the location of the telecommunications equipment to 
305.4   which a customer's call is charged and from which the call 
305.5   originates or terminates, regardless of where the call is billed 
305.6   or paid; 
305.7      (2) if the location in ~~paragraph (a)~~ clause (1) is not 
305.8   known, service address means the origination point of the signal 
305.9   of the telecommunications services first identified by either 
305.10  the seller's telecommunications system or in information 
305.11  received by the seller from its service provider, where the 
305.12  system used to transport the signals is not that of the seller; 
305.13  or 
305.14     (3) if the location in ~~paragraphs (a)~~ clauses (1) and 
305.15  ~~(b)~~ (2) is not known, the service address means the location of 
305.16  the customer's place of primary use. 
305.17     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
305.18  purchases made on or after January 1, 2004. 
305.19     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
305.20  297A.68, subdivision 2, is amended to read: 
305.21     Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
305.22  (a) Materials stored, used, or consumed in industrial production 
305.23  of personal property intended to be sold ultimately at retail 
305.24  are exempt, whether or not the item so used becomes an 
305.25  ingredient or constituent part of the property produced.  
305.26  Materials that qualify for this exemption include, but are not 
305.27  limited to, the following: 
305.28     (1) chemicals, including chemicals used for cleaning food 
305.29  processing machinery and equipment; 
305.30     (2) materials, including chemicals, fuels, and electricity 
305.31  purchased by persons engaged in industrial production to treat 
305.32  waste generated as a result of the production process; 
305.33     (3) fuels, electricity, gas, and steam used or consumed in 
305.34  the production process, except that electricity, gas, or steam 
305.35  used for space heating, cooling, or lighting is exempt if (i) it 
305.36  is in excess of the average climate control or lighting for the 
306.1   production area, and (ii) it is necessary to produce that 
306.2   particular product; 
306.3      (4) petroleum products and lubricants; 
306.4      (5) packaging materials, including returnable containers 
306.5   used in packaging food and beverage products; 
306.6      (6) accessory tools, equipment, and other items that are 
306.7   separate detachable units with an ordinary useful life of less 
306.8   than 12 months used in producing a direct effect upon the 
306.9   product; and 
306.10     (7) the following materials, tools, and equipment used in 
306.11  metalcasting:  crucibles, thermocouple protection sheaths and 
306.12  tubes, stalk tubes, refractory materials, molten metal filters 
306.13  and filter boxes, degassing lances, and base blocks. 
306.14     (b) This exemption does not include: 
306.15     (1) machinery, equipment, implements, tools, accessories, 
306.16  appliances, contrivances and furniture and fixtures, except 
306.17  those listed in paragraph (a), clause (6); and 
306.18     (2) petroleum and special fuels used in producing or 
306.19  generating power for propelling ready-mixed concrete trucks on 
306.20  the public highways of this state. 
306.21     (c) Industrial production includes, but is not limited to, 
306.22  research, development, design or production of any tangible 
306.23  personal property, manufacturing, processing (other than by 
306.24  restaurants and consumers) of agricultural products (whether 
306.25  vegetable or animal), commercial fishing, refining, smelting, 
306.26  reducing, brewing, distilling, printing, mining, quarrying, 
306.27  lumbering, generating electricity, the production of road 
306.28  building materials, and the research, development, design, or 
306.29  production of computer software.  Industrial production does not 
306.30  include painting, cleaning, repairing or similar processing of 
306.31  property except as part of the original manufacturing process.  
306.32  Industrial production does not include the furnishing of 
306.33  services listed in section 297A.61, subdivision 3, paragraph 
306.34  (g), clause (6), items (i) to (vi) and (viii). 
306.35     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
306.36  following final enactment. 
307.1      Sec. 8.  Minnesota Statutes 2003 Supplement, section 
307.2   297A.68, subdivision 5, is amended to read: 
307.3      Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
307.4   exempt.  The tax must be imposed and collected as if the rate 
307.5   under section 297A.62, subdivision 1, applied, and then refunded 
307.6   in the manner provided in section 297A.75. 
307.7      "Capital equipment" means machinery and equipment purchased 
307.8   or leased, and used in this state by the purchaser or lessee 
307.9   primarily for manufacturing, fabricating, mining, or refining 
307.10  tangible personal property to be sold ultimately at retail if 
307.11  the machinery and equipment are essential to the integrated 
307.12  production process of manufacturing, fabricating, mining, or 
307.13  refining.  Capital equipment also includes machinery and 
307.14  equipment used primarily to electronically transmit results 
307.15  retrieved by a customer of an on-line computerized data 
307.16  retrieval system. 
307.17     (b) Capital equipment includes, but is not limited to: 
307.18     (1) machinery and equipment used to operate, control, or 
307.19  regulate the production equipment; 
307.20     (2) machinery and equipment used for research and 
307.21  development, design, quality control, and testing activities; 
307.22     (3) environmental control devices that are used to maintain 
307.23  conditions such as temperature, humidity, light, or air pressure 
307.24  when those conditions are essential to and are part of the 
307.25  production process; 
307.26     (4) materials and supplies used to construct and install 
307.27  machinery or equipment; 
307.28     (5) repair and replacement parts, including accessories, 
307.29  whether purchased as spare parts, repair parts, or as upgrades 
307.30  or modifications to machinery or equipment; 
307.31     (6) materials used for foundations that support machinery 
307.32  or equipment; 
307.33     (7) materials used to construct and install special purpose 
307.34  buildings used in the production process; 
307.35     (8) ready-mixed concrete equipment in which the ready-mixed 
307.36  concrete is mixed as part of the delivery process regardless if 
308.1   mounted on a chassis and leases of ready-mixed concrete trucks; 
308.2   and 
308.3      (9) machinery or equipment used for research, development, 
308.4   design, or production of computer software.  
308.5      (c) Capital equipment does not include the following: 
308.6      (1) motor vehicles taxed under chapter 297B; 
308.7      (2) machinery or equipment used to receive or store raw 
308.8   materials; 
308.9      (3) building materials, except for materials included in 
308.10  paragraph (b), clauses (6) and (7); 
308.11     (4) machinery or equipment used for nonproduction purposes, 
308.12  including, but not limited to, the following:  plant security, 
308.13  fire prevention, first aid, and hospital stations; support 
308.14  operations or administration; pollution control; and plant 
308.15  cleaning, disposal of scrap and waste, plant communications, 
308.16  space heating, cooling, lighting, or safety; 
308.17     (5) farm machinery and aquaculture production equipment as 
308.18  defined by section 297A.61, subdivisions 12 and 13; 
308.19     (6) machinery or equipment purchased and installed by a 
308.20  contractor as part of an improvement to real property; ~~or~~ 
308.21     (7) machinery and equipment used by restaurants in the 
308.22  furnishing, preparing, or serving of prepared foods as defined 
308.23  in section 297A.61, subdivision 31; 
308.24     (8) machinery and equipment used to furnish the services 
308.25  listed in section 297A.61, subdivision 3, paragraph (g), clause 
308.26  (6), items (i) to (vi) and (viii); or 
308.27     (9) any other item that is not essential to the integrated 
308.28  process of manufacturing, fabricating, mining, or refining. 
308.29     (d) For purposes of this subdivision: 
308.30     (1) "Equipment" means independent devices or tools separate 
308.31  from machinery but essential to an integrated production 
308.32  process, including computers and computer software, used in 
308.33  operating, controlling, or regulating machinery and equipment; 
308.34  and any subunit or assembly comprising a component of any 
308.35  machinery or accessory or attachment parts of machinery, such as 
308.36  tools, dies, jigs, patterns, and molds.  
309.1      (2) "Fabricating" means to make, build, create, produce, or 
309.2   assemble components or property to work in a new or different 
309.3   manner. 
309.4      (3) "Integrated production process" means a process or 
309.5   series of operations through which tangible personal property is 
309.6   manufactured, fabricated, mined, or refined.  For purposes of 
309.7   this clause, (i) manufacturing begins with the removal of raw 
309.8   materials from inventory and ends when the last process prior to 
309.9   loading for shipment has been completed; (ii) fabricating begins 
309.10  with the removal from storage or inventory of the property to be 
309.11  assembled, processed, altered, or modified and ends with the 
309.12  creation or production of the new or changed product; (iii) 
309.13  mining begins with the removal of overburden from the site of 
309.14  the ores, minerals, stone, peat deposit, or surface materials 
309.15  and ends when the last process before stockpiling is completed; 
309.16  and (iv) refining begins with the removal from inventory or 
309.17  storage of a natural resource and ends with the conversion of 
309.18  the item to its completed form. 
309.19     (4) "Machinery" means mechanical, electronic, or electrical 
309.20  devices, including computers and computer software, that are 
309.21  purchased or constructed to be used for the activities set forth 
309.22  in paragraph (a), beginning with the removal of raw materials 
309.23  from inventory through completion of the product, including 
309.24  packaging of the product. 
309.25     (5) "Machinery and equipment used for pollution control" 
309.26  means machinery and equipment used solely to eliminate, prevent, 
309.27  or reduce pollution resulting from an activity described in 
309.28  paragraph (a).  
309.29     (6) "Manufacturing" means an operation or series of 
309.30  operations where raw materials are changed in form, composition, 
309.31  or condition by machinery and equipment and which results in the 
309.32  production of a new article of tangible personal property.  For 
309.33  purposes of this subdivision, "manufacturing" includes the 
309.34  generation of electricity or steam to be sold at retail. 
309.35     (7) "Mining" means the extraction of minerals, ores, stone, 
309.36  or peat. 
310.1      (8) "On-line data retrieval system" means a system whose 
310.2   cumulation of information is equally available and accessible to 
310.3   all its customers. 
310.4      (9) "Primarily" means machinery and equipment used 50 
310.5   percent or more of the time in an activity described in 
310.6   paragraph (a). 
310.7      (10) "Refining" means the process of converting a natural 
310.8   resource to an intermediate or finished product, including the 
310.9   treatment of water to be sold at retail. 
310.10     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
310.11  following final enactment. 
310.12     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
310.13  297A.68, subdivision 39, is amended to read: 
310.14     Subd. 39.  [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 
310.15  tangible personal property or services is exempt from tax or a 
310.16  tax rate increase for a period of six months from the effective 
310.17  date of the law change that results in the imposition of the tax 
310.18  or the tax rate increase under this chapter if: 
310.19     (1) the act imposing the tax or increasing the tax rate 
310.20  does not have transitional effective date language for existing 
310.21  construction contracts and construction bids; and 
310.22     (2) the requirements of paragraph (b) are met. 
310.23     (b) A sale is tax exempt under paragraph (a) if it meets 
310.24  the requirements of either clause (1) or (2): 
310.25     (1) For a construction contract: 
310.26     (i) the goods or services sold must be used for the 
310.27  performance of a bona fide written lump sum or fixed price 
310.28  construction contract; 
310.29     (ii) the contract must be entered into before the date the 
310.30  goods or services become subject to the sales tax or the tax 
310.31  rate was increased; 
310.32     (iii) the contract must not provide for allocation of 
310.33  future taxes; and 
310.34     (iv) for each qualifying contract the contractor must give 
310.35  the seller documentation of the contract on which an exemption 
310.36  is to be claimed. 
311.1      (2) For a construction bid: 
311.2      (i) the goods or services sold must be used pursuant to an 
311.3   obligation of a bid or bids; 
311.4      (ii) the bid or bids must be submitted and accepted before 
311.5   the date the goods or services became subject to the sales 
311.6   tax or the tax rate was increased; 
311.7      (iii) the bid or bids must not be able to be withdrawn, 
311.8   modified, or changed without forfeiting a bond; and 
311.9      (iv) for each qualifying bid, the contractor must give the 
311.10  seller documentation of the bid on which an exemption is to be 
311.11  claimed. 
311.12     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
311.13  following final enactment. 
311.14     Sec. 10.  [REPEALER.] 
311.15     Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200, 
311.16  subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5 
311.17  and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1 
311.18  and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200; 
311.19  8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 
311.20  5; and 8130.8800, subpart 4, are repealed. 
311.21     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
311.22  following final enactment. 
311.23                             ARTICLE 12
311.24                           SPECIAL TAXES
311.25              DEPARTMENT OF REVENUE TECHNICAL CHANGES
311.26     Section 1.  Minnesota Statutes 2002, section 287.04, is 
311.27  amended to read: 
311.28     287.04 [EXEMPTIONS.] 
311.29     The tax imposed by section 287.035 does not apply to:  
311.30     (a) A decree of marriage dissolution or an instrument made 
311.31  pursuant to it.  
311.32     (b) A mortgage given to correct a misdescription of the 
311.33  mortgaged property. 
311.34     (c) A mortgage or other instrument that adds additional 
311.35  security for the same debt for which mortgage registry tax has 
311.36  been paid.  
312.1      (d) A contract for the conveyance of any interest in real 
312.2   property, including a contract for deed. 
312.3      (e) A mortgage secured by real property subject to the 
312.4   minerals production tax of sections 298.24 to 298.28. 
312.5      (f) The principal amount of a mortgage loan made under a 
312.6   low and moderate income or other affordable housing program, if 
312.7   the mortgagee is a federal, state, or local government agency. 
312.8      (g) Mortgages granted by fraternal benefit societies 
312.9   subject to section 64B.24. 
312.10     (h) A mortgage amendment or extension, as defined in 
312.11  section 287.01. 
312.12     (i) An agricultural mortgage if the proceeds of the loan 
312.13  secured by the mortgage are used to acquire or improve real 
312.14  property classified under section 273.13, subdivision 23, 
312.15  paragraph (a), or (b), clause (1), (2), or (3). 
312.16     (j) A mortgage on an armory building as set forth in 
312.17  section 193.147. 
312.18     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
312.19  following final enactment. 
312.20     Sec. 2.  Minnesota Statutes 2002, section 295.50, 
312.21  subdivision 4, is amended to read: 
312.22     Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
312.23  provider" means: 
312.24     (1) a person whose health care occupation is regulated or 
312.25  required to be regulated by the state of Minnesota furnishing 
312.26  any or all of the following goods or services directly to a 
312.27  patient or consumer:  medical, surgical, optical, visual, 
312.28  dental, hearing, nursing services, drugs, laboratory, diagnostic 
312.29  or therapeutic services; 
312.30     (2) a person who provides goods and services not listed in 
312.31  clause (1) that qualify for reimbursement under the medical 
312.32  assistance program provided under chapter 256B; 
312.33     (3) a staff model health plan company; 
312.34     (4) an ambulance service required to be licensed; or 
312.35     (5) a person who sells or repairs hearing aids and related 
312.36  equipment or prescription eyewear. 
313.1      (b) Health care provider does not include: 
313.2      (1) hospitals; medical supplies distributors, except as 
313.3   specified under paragraph (a), clause (5); nursing homes 
313.4   licensed under chapter 144A or licensed in any other 
313.5   jurisdiction; pharmacies; surgical centers; bus and taxicab 
313.6   transportation, or any other providers of transportation 
313.7   services other than ambulance services required to be licensed; 
313.8   supervised living facilities for persons with mental retardation 
313.9   or related conditions, licensed under Minnesota Rules, parts 
313.10  4665.0100 to 4665.9900; ~~residential care homes licensed under~~ 
313.11  ~~chapter 144B~~ housing with services establishments required to be 
313.12  registered under chapter 144D; board and lodging establishments 
313.13  providing only custodial services that are licensed under 
313.14  chapter 157 and registered under section 157.17 to provide 
313.15  supportive services or health supervision services; adult foster 
313.16  homes as defined in Minnesota Rules, part 9555.5105; day 
313.17  training and habilitation services for adults with mental 
313.18  retardation and related conditions as defined in section 252.41, 
313.19  subdivision 3; boarding care homes, as defined in Minnesota 
313.20  Rules, part 4655.0100; and adult day care centers as defined in 
313.21  Minnesota Rules, part 9555.9600; 
313.22     (2) home health agencies as defined in Minnesota Rules, 
313.23  part 9505.0175, subpart 15; a person providing personal care 
313.24  services and supervision of personal care services as defined in 
313.25  Minnesota Rules, part 9505.0335; a person providing private duty 
313.26  nursing services as defined in Minnesota Rules, part 9505.0360; 
313.27  and home care providers required to be licensed under chapter 
313.28  144A; 
313.29     (3) a person who employs health care providers solely for 
313.30  the purpose of providing patient services to its employees; and 
313.31     (4) an educational institution that employs health care 
313.32  providers solely for the purpose of providing patient services 
313.33  to its students if the institution does not receive fee for 
313.34  service payments or payments for extended coverage. 
313.35     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
313.36  following final enactment. 
314.1      Sec. 3.  Minnesota Statutes 2002, section 296A.22, is 
314.2   amended by adding a subdivision to read: 
314.3      Subd. 9.  [ABATEMENT OF PENALTY.] (a) The commissioner may 
314.4   by written order abate any penalty imposed under this section, 
314.5   if in the commissioner's opinion there is reasonable cause to do 
314.6   so. 
314.7      (b) A request for abatement of penalty must be filed with 
314.8   the commissioner within 60 days of the date the notice stating 
314.9   that a penalty has been imposed was mailed to the taxpayer's 
314.10  last known address. 
314.11     (c) If the commissioner issues an order denying a request 
314.12  for abatement of penalty, the taxpayer may file an 
314.13  administrative appeal as provided in section 296A.25 or appeal 
314.14  to the Tax Court as provided in section 271.06.  If the 
314.15  commissioner does not issue an order on the abatement request 
314.16  within 60 days from the date the request is received, the 
314.17  taxpayer may appeal to the Tax Court as provided in section 
314.18  271.06. 
314.19     <h>[EFFECTIVE DATE.]</h> This section is effective for penalties 
314.20  imposed on or after the day following final enactment. 
314.21     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
314.22  297F.08, subdivision 12, is amended to read: 
314.23     Subd. 12.  [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 
314.24  person may not transport or cause to be transported from this 
314.25  state cigarettes for sale in another state without first 
314.26  affixing to the cigarettes the stamp required by the state in 
314.27  which the cigarettes are to be sold or paying any other excise 
314.28  tax on the cigarettes imposed by the state in which the 
314.29  cigarettes are to be sold. 
314.30     (b) A person may not affix to cigarettes the stamp required 
314.31  by another state or pay any other excise tax on the cigarettes 
314.32  imposed by another state if the other state prohibits stamps 
314.33  from being affixed to the cigarettes, prohibits the payment of 
314.34  any other excise tax on the cigarettes, or prohibits the sale of 
314.35  the cigarettes. 
314.36     (c) Not later than 15 days after the end of each calendar 
315.1   quarter, a person who transports or causes to be transported 
315.2   from this state cigarettes for sale in another state shall 
315.3   submit to the commissioner a report identifying the quantity and 
315.4   style of each brand of the cigarettes transported or caused to 
315.5   be transported in the preceding calendar quarter, and the name 
315.6   and address of each recipient of the cigarettes.  This reporting 
315.7   requirement only relates to cigarettes manufactured by companies 
315.8   that are not original or subsequent participating manufacturers 
315.9   in the Master Settlement Agreement with other states. 
315.10     (d) For purposes of this section, "person" has the meaning 
315.11  given in section 297F.01, subdivision 12.  Person does not 
315.12  include any common or contract carrier, or public warehouse that 
315.13  is not owned, in whole or in part, directly or indirectly by 
315.14  such person, and does not include a manufacturer that ~~has~~ 
315.15  ~~entered into~~ is an original or subsequent participating 
315.16  manufacturer in the Master Settlement Agreement with other 
315.17  states. 
315.18     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
315.19  following final enactment. 
315.20     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
315.21  297F.09, subdivision 1, is amended to read: 
315.22     Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
315.23  or before the 18th day of each calendar month, a distributor 
315.24  with a place of business in this state shall file a return with 
315.25  the commissioner showing the quantity of cigarettes manufactured 
315.26  or brought in from outside the state or purchased during the 
315.27  preceding calendar month and the quantity of cigarettes sold or 
315.28  otherwise disposed of in this state and outside this state 
315.29  during that month.  A licensed distributor outside this state 
315.30  shall in like manner file a return showing the quantity of 
315.31  cigarettes shipped or transported into this state during the 
315.32  preceding calendar month.  Returns must be made in the form and 
315.33  manner prescribed by the commissioner and must contain any other 
315.34  information required by the commissioner.  The return must be 
315.35  accompanied by a remittance for the full unpaid tax liability 
315.36  shown by it.  ~~The return for the May liability and 85 percent of~~ 
316.1   ~~the estimated June liability is due on the date payment of the~~ 
316.2   ~~tax is due.~~  For distributors subject to the accelerated tax 
316.3   payment requirements in subdivision 10, the return for the May 
316.4   liability is due two business days before June 30th of the year 
316.5   and the return for the June liability is due on or before August 
316.6   18th of the year. 
316.7      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
316.8   following final enactment. 
316.9      Sec. 6.  Minnesota Statutes 2003 Supplement, section 
316.10  297F.09, subdivision 2, is amended to read: 
316.11     Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
316.12  On or before the 18th day of each calendar month, a distributor 
316.13  with a place of business in this state shall file a return with 
316.14  the commissioner showing the quantity and wholesale sales price 
316.15  of each tobacco product: 
316.16     (1) brought, or caused to be brought, into this state for 
316.17  sale; and 
316.18     (2) made, manufactured, or fabricated in this state for 
316.19  sale in this state, during the preceding calendar month.  
316.20  Every licensed distributor outside this state shall in like 
316.21  manner file a return showing the quantity and wholesale sales 
316.22  price of each tobacco product shipped or transported to 
316.23  retailers in this state to be sold by those retailers, during 
316.24  the preceding calendar month.  Returns must be made in the form 
316.25  and manner prescribed by the commissioner and must contain any 
316.26  other information required by the commissioner.  The return must 
316.27  be accompanied by a remittance for the full tax liability 
316.28  shown.  ~~The return for the May liability and 85 percent of the~~ 
316.29  ~~estimated June liability is due on the date payment of the tax~~ 
316.30  ~~is due.~~  For distributors subject to the accelerated tax payment 
316.31  requirements in subdivision 10, the return for the May liability 
316.32  is due two business days before June 30th of the year and the 
316.33  return for the June liability is due on or before August 18th of 
316.34  the year. 
316.35     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
316.36  following final enactment. 
317.1      Sec. 7.  Minnesota Statutes 2002, section 297I.01, is 
317.2   amended by adding a subdivision to read: 
317.3      Subd. 13a.  [REINSURANCE.] "Reinsurance" is insurance 
317.4   whereby an insurance company, for a consideration, agrees to 
317.5   indemnify another insurance company against all or part of the 
317.6   loss which the latter may sustain under the policy or policies 
317.7   which it has issued. 
317.8      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
317.9   following final enactment. 
317.10     Sec. 8.  Minnesota Statutes 2002, section 297I.05, 
317.11  subdivision 5, is amended to read: 
317.12     Subd. 5.  [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 
317.13  HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 
317.14  SERVICE NETWORKS.] (a) Health maintenance organizations, 
317.15  community integrated service networks, and nonprofit health care 
317.16  service plan corporations are exempt from the tax imposed under 
317.17  this section for premiums received in calendar years 2001 to 
317.18  2003. 
317.19     (b) For calendar years after 2003, a tax is imposed on 
317.20  health maintenance organizations, community integrated service 
317.21  networks, and nonprofit health care service plan corporations.  
317.22  The rate of tax is equal to one percent of gross premiums less 
317.23  return premiums on all direct business received by the 
317.24  organization, network, or corporation or its agents in 
317.25  Minnesota, in cash or otherwise, in the calendar year. 
317.26     (c) In approving the premium rates as required in sections 
317.27  62L.08, subdivision 8, and 62A.65, subdivision 3, the 
317.28  commissioners of health and commerce shall ensure that any 
317.29  exemption from tax as described in paragraph (a) is reflected in 
317.30  the premium rate. 
317.31     (d) The commissioner shall deposit all revenues, including 
317.32  penalties and interest, collected under this chapter from health 
317.33  maintenance organizations, community integrated service 
317.34  networks, and nonprofit health service plan corporations in the 
317.35  health care access fund.  Refunds of overpayments of tax imposed 
317.36  by this subdivision must be paid from the health care access 
318.1   fund.  There is annually appropriated from the health care 
318.2   access fund to the commissioner the amount necessary to make any 
318.3   refunds of the tax imposed under this subdivision. 
318.4      <h>[EFFECTIVE DATE.]</h> This section is effective January 1, 2004.
318.5      Sec. 9.  [REPEALER.] 
318.6      Minnesota Statutes 2002, section 297E.12, subdivision 10, 
318.7   is repealed effective the day following final enactment. 
318.8                              ARTICLE 13
318.9                       PROPERTY TAXES AND AIDS
318.10             DEPARTMENT OF REVENUE TECHNICAL PROVISIONS
318.11     Section 1.  Minnesota Statutes 2003 Supplement, section 
318.12  168A.05, subdivision 1a, is amended to read: 
318.13     Subd. 1a.  [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 
318.14  PAYMENT.] In the case of a manufactured home as defined in 
318.15  section 327.31, subdivision 6, the department shall not issue a 
318.16  certificate of title unless the application under section 
318.17  168A.04 is accompanied with a statement from the county auditor 
318.18  or county treasurer where the manufactured home is presently 
318.19  located, stating that all manufactured home personal property 
318.20  taxes levied on the unit in the name of the current owner at the 
318.21  time of transfer have been paid.  For this purpose, manufactured 
318.22  home personal property taxes are treated as levied on January 1 
318.23  of the payable year. 
318.24     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
318.25  following final enactment. 
318.26     Sec. 2.  Minnesota Statutes 2002, section 270B.12, 
318.27  subdivision 9, is amended to read: 
318.28     Subd. 9.  [COUNTY ASSESSORS; HOMESTEAD APPLICATION, 
318.29  DETERMINATION, AND INCOME TAX STATUS.] (a) If, as a result of an 
318.30  audit, the commissioner determines that a person is a Minnesota 
318.31  nonresident or part-year resident for income tax purposes, the 
318.32  commissioner may disclose the person's name, address, and Social 
318.33  Security number to the assessor of any political subdivision in 
318.34  the state, when there is reason to believe that the person may 
318.35  have claimed or received homestead property tax benefits for a 
318.36  corresponding assessment year in regard to property apparently 
319.1   located in the assessor's jurisdiction. 
319.2      (b) To the extent permitted by section 273.124, subdivision 
319.3   1, paragraph (a), the Department of Revenue may verify to a 
319.4   county assessor whether an individual who is requesting or 
319.5   receiving a homestead classification has filed a Minnesota 
319.6   income tax return as a resident for the most recent taxable year 
319.7   for which the information is available. 
319.8      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
319.9   following final enactment. 
319.10     Sec. 3.  Minnesota Statutes 2002, section 272.01, 
319.11  subdivision 2, is amended to read: 
319.12     Subd. 2.  (a) When any real or personal property which is 
319.13  exempt from ad valorem taxes, and taxes in lieu thereof, is 
319.14  leased, loaned, or otherwise made available and used by a 
319.15  private individual, association, or corporation in connection 
319.16  with a business conducted for profit, there shall be imposed a 
319.17  tax, for the privilege of so using or possessing such real or 
319.18  personal property, in the same amount and to the same extent as 
319.19  though the lessee or user was the owner of such property. 
319.20     (b) The tax imposed by this subdivision shall not apply to: 
319.21     (1) property leased or used as a concession in or relative 
319.22  to the use in whole or part of a public park, market, 
319.23  fairgrounds, port authority, economic development authority 
319.24  established under chapter 469, municipal auditorium, municipal 
319.25  parking facility, municipal museum, or municipal stadium; 
319.26     (2) property of an airport owned by a city, town, county, 
319.27  or group thereof which is:  
319.28     (i) leased to or used by any person or entity including a 
319.29  fixed base operator; and 
319.30     (ii) used as a hangar for the storage or repair of aircraft 
319.31  or to provide aviation goods, services, or facilities to the 
319.32  airport or general public; 
319.33  the exception from taxation provided in this clause does not 
319.34  apply to: 
319.35     (i) property located at an airport owned or operated by the 
319.36  Metropolitan Airports Commission or by a city of over 50,000 
320.1   population according to the most recent federal census or such a 
320.2   city's airport authority; 
320.3      (ii) hangars leased by a private individual, association, 
320.4   or corporation in connection with a business conducted for 
320.5   profit other than an aviation-related business; or 
320.6      (iii) facilities leased by a private individual, 
320.7   association, or corporation in connection with a business for 
320.8   profit, that consists of a major jet engine repair facility 
320.9   financed, in whole or part, with the proceeds of state bonds and 
320.10  located in a tax increment financing district; 
320.11     (3) property constituting or used as a public pedestrian 
320.12  ramp or concourse in connection with a public airport; ~~or~~ 
320.13     (4) property constituting or used as a passenger check-in 
320.14  area or ticket sale counter, boarding area, or luggage claim 
320.15  area in connection with a public airport but not the airports 
320.16  owned or operated by the Metropolitan Airports Commission or 
320.17  cities of over 50,000 population or an airport authority 
320.18  therein.  Real estate owned by a municipality in connection with 
320.19  the operation of a public airport and leased or used for 
320.20  agricultural purposes is not exempt; 
320.21     (5) property leased, loaned, or otherwise made available to 
320.22  a private individual, corporation, or association under a 
320.23  cooperative farming agreement made pursuant to section 97A.135; 
320.24  or 
320.25     (6) property leased, loaned, or otherwise made available to 
320.26  a private individual, corporation, or association under section 
320.27  272.68, subdivision 4. 
320.28     (c) Taxes imposed by this subdivision are payable as in the 
320.29  case of personal property taxes and shall be assessed to the 
320.30  lessees or users of real or personal property in the same manner 
320.31  as taxes assessed to owners of real or personal property, except 
320.32  that such taxes shall not become a lien against the property.  
320.33  When due, the taxes shall constitute a debt due from the lessee 
320.34  or user to the state, township, city, county, and school 
320.35  district for which the taxes were assessed and shall be 
320.36  collected in the same manner as personal property taxes.  If 
321.1   property subject to the tax imposed by this subdivision is 
321.2   leased or used jointly by two or more persons, each lessee or 
321.3   user shall be jointly and severally liable for payment of the 
321.4   tax. 
321.5      (d) The tax on real property of the state or any of its 
321.6   political subdivisions that is leased by a private individual, 
321.7   association, or corporation and becomes taxable under this 
321.8   subdivision or other provision of law must be assessed and 
321.9   collected as a personal property assessment.  The taxes do not 
321.10  become a lien against the real property. 
321.11     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
321.12  following final enactment. 
321.13     Sec. 4.  Minnesota Statutes 2002, section 272.02, 
321.14  subdivision 1a, is amended to read: 
321.15     Subd. 1a.  [LIMITATIONS ON EXEMPTIONS.] The exemptions 
321.16  granted by subdivision 1 are subject to the limits contained in 
321.17  the other subdivisions of this section, section 272.025, ~~or~~ 
321.18  ~~273.13, subdivision 25, paragraph (c), clause (1) or (2), or~~ 
321.19  ~~paragraph (d), clause (2)~~ and all other provisions of applicable 
321.20  law.  
321.21     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
321.22  following final enactment. 
321.23     Sec. 5.  Minnesota Statutes 2002, section 272.02, 
321.24  subdivision 7, is amended to read: 
321.25     Subd. 7.  [INSTITUTIONS OF PUBLIC CHARITY.] Institutions of 
321.26  purely public charity are exempt ~~except parcels of property~~ 
321.27  ~~containing structures and the structures described in section~~ 
321.28  ~~273.13, subdivision 25, paragraph (e), other than those that~~ 
321.29  ~~qualify for exemption under subdivision 26~~.  In determining 
321.30  whether rental housing property qualifies for exemption under 
321.31  this subdivision, the following are not gifts or donations to 
321.32  the owner of the rental housing: 
321.33     (1) rent assistance provided by the government to or on 
321.34  behalf of tenants, and 
321.35     (2) financing assistance or tax credits provided by the 
321.36  government to the owner on condition that specific units or a 
322.1   specific quantity of units be set aside for persons or families 
322.2   with certain income characteristics. 
322.3      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
322.4   payable in 2004 and thereafter. 
322.5      Sec. 6.  Minnesota Statutes 2002, section 272.02, is 
322.6   amended by adding a subdivision to read: 
322.7      Subd. 68.  [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR 
322.8   NET PROCEEDS TAX.] (a) Except for mineral interests taxed under 
322.9   section 273.165, and except for lands taxed under section 
322.10  298.26, real and personal property described in section 298.25 
322.11  is exempt to the extent the tax on taconite and iron sulphides 
322.12  under section 298.24 is described in section 298.25 as being in 
322.13  lieu of other taxes on such property.  This exemption applies 
322.14  for taxes payable in each year that the tax under section 298.24 
322.15  is payable with respect to such property. 
322.16     (b) Except for mineral interests taxed under section 
322.17  273.165, deposits of mineral, metal, or energy resources the 
322.18  mining of which is subject to taxation under section 298.015 are 
322.19  exempt.  This exemption applies for taxes payable in each year 
322.20  that the tax under section 298.015 is payable with respect to 
322.21  such property. 
322.22     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
322.23  following final enactment. 
322.24     Sec. 7.  Minnesota Statutes 2002, section 272.02, is 
322.25  amended by adding a subdivision to read: 
322.26     Subd. 69.  [RELIGIOUS CORPORATIONS.] Personal and real 
322.27  property that a religious corporation, formed under section 
322.28  317A.909, necessarily uses for a religious purpose is exempt to 
322.29  the extent provided in section 317A.909, subdivision 3. 
322.30     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
322.31  following final enactment. 
322.32     Sec. 8.  Minnesota Statutes 2002, section 272.02, is 
322.33  amended by adding a subdivision to read: 
322.34     Subd. 70.  [CHILDREN'S HOMES.] Personal and real property 
322.35  owned by a corporation formed under section 317A.907 is exempt 
322.36  to the extent provided in section 317A.907, subdivision 7. 
323.1      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
323.2   following final enactment. 
323.3      Sec. 9.  Minnesota Statutes 2002, section 272.02, is 
323.4   amended by adding a subdivision to read: 
323.5      Subd. 71.  [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL 
323.6   HOUSING AUTHORITY PROPERTY.] Property owned by a housing and 
323.7   redevelopment authority described in chapter 469, or by a 
323.8   designated housing authority described in section 469.040, 
323.9   subdivision 5, is exempt to the extent provided in chapter 469. 
323.10     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
323.11  following final enactment. 
323.12     Sec. 10.  Minnesota Statutes 2002, section 273.124, 
323.13  subdivision 8, is amended to read: 
323.14     Subd. 8.  [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 
323.15  CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 
323.16  PARTNERSHIP.] (a) Each family farm corporation~~, each~~; each joint 
323.17  family farm venture~~,~~; and each limited liability company~~, and~~ 
323.18  ~~each~~ or partnership ~~operating~~ which operates a family farm; is 
323.19  entitled to class 1b under section 273.13, subdivision 22, 
323.20  paragraph (b), or class 2a assessment for one homestead occupied 
323.21  by a shareholder, member, or partner thereof who is residing on 
323.22  the land, and actively engaged in farming of the land owned by 
323.23  the family farm corporation, joint family farm venture, limited 
323.24  liability company, or partnership ~~operating a family farm~~.  
323.25  Homestead treatment applies even if legal title to the property 
323.26  is in the name of the family farm corporation, joint family farm 
323.27  venture, limited liability company, or partnership ~~operating the~~ 
323.28  ~~family farm~~, and not in the name of the person residing on it. 
323.29     "Family farm corporation," "family farm," and "partnership 
323.30  operating a family farm" have the meanings given in section 
323.31  500.24, except that the number of allowable shareholders, 
323.32  members, or partners under this subdivision shall not exceed 
323.33  12.  "Limited liability company" has the meaning contained in 
323.34  sections 322B.03, subdivision 28, and 500.24, subdivision 2, 
323.35  paragraphs (l) and (m).  "Joint family farm venture" means a 
323.36  cooperative agreement among two or more farm enterprises 
324.1   authorized to operate a family farm under section 500.24. 
324.2      (b) In addition to property specified in paragraph (a), any 
324.3   other residences owned by family farm corporations, joint family 
324.4   farm ventures, limited liability companies, or partnerships 
324.5   ~~operating a family farm~~ described in paragraph (a) which are 
324.6   located on agricultural land and occupied as homesteads by its 
324.7   shareholders, members, or partners who are actively engaged in 
324.8   farming on behalf of that corporation, joint farm venture, 
324.9   limited liability company, or partnership must also be assessed 
324.10  as class 2a property or as class 1b property under section 
324.11  273.13. 
324.12     (c) Agricultural property that is owned by a member, 
324.13  partner, or shareholder of a family farm corporation or joint 
324.14  family farm venture, limited liability company operating a 
324.15  family farm, or by a partnership operating a family farm and 
324.16  leased to the family farm corporation, limited liability 
324.17  company, ~~or~~ partnership ~~operating a family farm~~, or joint farm 
324.18  venture, as defined in paragraph (a), is eligible for 
324.19  classification as class 1b or class 2a under section 273.13, if 
324.20  the owner is actually residing on the property, and is actually 
324.21  engaged in farming the land on behalf of that corporation, joint 
324.22  farm venture, limited liability company, or partnership.  This 
324.23  paragraph applies without regard to any legal possession rights 
324.24  of the family farm corporation, joint family farm venture, 
324.25  limited liability company, or partnership ~~operating a family~~ 
324.26  ~~farm~~ under the lease. 
324.27     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
324.28  following final enactment. 
324.29     Sec. 11.  Minnesota Statutes 2002, section 273.19, 
324.30  subdivision 1a, is amended to read: 
324.31     Subd. 1a.  For purposes of this section, a lease includes 
324.32  any agreement, except a cooperative farming agreement pursuant 
324.33  to section 97A.135, subdivision 3, or a lease executed pursuant 
324.34  to section 272.68, subdivision 4, permitting a nonexempt person 
324.35  or entity to use the property, regardless of whether the 
324.36  agreement is characterized as a lease.  A lease has a "term of 
325.1   at least one year" if the term is for a period of less than one 
325.2   year and the lease permits the parties to renew the lease 
325.3   without requiring that similar terms for leasing the property 
325.4   will be offered to other applicants or bidders through a 
325.5   competitive bidding or other form of offer to potential lessees 
325.6   or users. 
325.7      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
325.8   following final enactment. 
325.9      Sec. 12.  Minnesota Statutes 2003 Supplement, section 
325.10  274.014, subdivision 3, is amended to read: 
325.11     Subd. 3.  [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] Any 
325.12  city or town that does not provide proof to the county assessor 
325.13  by December 1, 2006, and each year thereafter, that it is in 
325.14  compliance with the requirements of subdivision 2, and that it 
325.15  had a quorum at each meeting of the board of appeal and 
325.16  equalization in the ~~prior~~ current year, is deemed to have 
325.17  transferred its board of appeal and equalization powers to the 
325.18  county under section 274.01, subdivision 3, for the following 
325.19  year's assessment. 
325.20     The county shall notify the taxpayers when the board of 
325.21  appeal and equalization for a city or town has been transferred 
325.22  to the county under this subdivision and, prior to the meeting 
325.23  time of the county board of equalization, the county shall make 
325.24  available to those taxpayers a procedure for a review of the 
325.25  assessments, including, but not limited to, open book meetings.  
325.26  This alternate review process shall take place in April and May. 
325.27     A local board whose powers are transferred to the county 
325.28  under this subdivision may be reinstated by resolution of the 
325.29  governing body of the city or town and upon proof of compliance 
325.30  with the requirements of subdivision 2.  The resolution and 
325.31  proofs must be provided to the county assessor by December 1 in 
325.32  order to be effective for the following year's assessment. 
325.33     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
325.34  following final enactment. 
325.35     Sec. 13.  Minnesota Statutes 2002, section 274.14, is 
325.36  amended to read: 
326.1      274.14 [LENGTH OF SESSION; RECORD.] 
326.2      ~~The county board of equalization or the special board of~~ 
326.3   ~~equalization appointed by it shall meet during the last ten~~ 
326.4   ~~meeting days in June.  For this purpose, "meeting days" are~~ 
326.5   ~~defined as any day of the week excluding Saturday and Sunday.~~  
326.6   The board may meet on any ten consecutive meeting days in June, 
326.7   after the second Friday in June~~, if~~.  The actual meeting dates 
326.8   ~~are~~ must be contained on the valuation notices mailed to each 
326.9   property owner in the county ~~under~~ as provided in section 
326.10  273.121.  For this purpose, "meeting days" is defined as any day 
326.11  of the week excluding Saturday and Sunday.  No action taken by 
326.12  the county board of review after June 30 is valid, except for 
326.13  corrections permitted in sections 273.01 and 274.01.  The county 
326.14  auditor shall keep an accurate record of the proceedings and 
326.15  orders of the board.  The record must be published like other 
326.16  proceedings of county commissioners.  A copy of the published 
326.17  record must be sent to the commissioner of revenue, with the 
326.18  abstract of assessment required by section 274.16.  
326.19     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
326.20  following final enactment. 
326.21     Sec. 14.  Minnesota Statutes 2002, section 275.065, 
326.22  subdivision 1a, is amended to read: 
326.23     Subd. 1a.  [OVERLAPPING JURISDICTIONS.] In the case of a 
326.24  taxing authority lying in two or more counties, the home county 
326.25  auditor shall certify the proposed levy and the proposed local 
326.26  tax rate to the other county auditor by ~~September 20~~ October 5.  
326.27  The home county auditor must estimate the levy or rate in 
326.28  preparing the notices required in subdivision 3, if the other 
326.29  county has not certified the appropriate information.  If 
326.30  requested by the home county auditor, the other county auditor 
326.31  must furnish an estimate to the home county auditor. 
326.32     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
326.33  following final enactment. 
326.34     Sec. 15.  Minnesota Statutes 2002, section 275.07, 
326.35  subdivision 1, is amended to read: 
326.36     Subdivision 1.  [CERTIFICATION OF LEVY.] (a) Except as 
327.1   provided under paragraph (b), the taxes voted by cities, 
327.2   counties, school districts, and special districts shall be 
327.3   certified by the proper authorities to the county auditor on or 
327.4   before five working days after December 20 in each year.  A town 
327.5   must certify the levy adopted by the town board to the county 
327.6   auditor by September 15 each year.  If the town board modifies 
327.7   the levy at a special town meeting after September 15, the town 
327.8   board must recertify its levy to the county auditor on or before 
327.9   five working days after December 20.  ~~The taxes certified shall~~ 
327.10  ~~not be reduced by the county auditor by the aid received under~~ 
327.11  ~~section 273.1398, subdivision 2, but shall be reduced by the~~ 
327.12  ~~county auditor by the aid received under section 273.1398,~~ 
327.13  ~~subdivision 3.~~  If a city, town, county, school district, or 
327.14  special district fails to certify its levy by that date, its 
327.15  levy shall be the amount levied by it for the preceding year. 
327.16     (b)(i) The taxes voted by counties under sections 103B.241, 
327.17  103B.245, and 103B.251 shall be separately certified by the 
327.18  county to the county auditor on or before five working days 
327.19  after December 20 in each year.  The taxes certified shall not 
327.20  be reduced by the county auditor by the aid received under 
327.21  section 273.1398, subdivisions 2 and 3.  If a county fails to 
327.22  certify its levy by that date, its levy shall be the amount 
327.23  levied by it for the preceding year.  
327.24     (ii) For purposes of the proposed property tax notice under 
327.25  section 275.065 and the property tax statement under section 
327.26  276.04, for the first year in which the county implements the 
327.27  provisions of this paragraph, the county auditor shall reduce 
327.28  the county's levy for the preceding year to reflect any amount 
327.29  levied for water management purposes under clause (i) included 
327.30  in the county's levy. 
327.31     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
327.32  following final enactment. 
327.33     Sec. 16.  Minnesota Statutes 2002, section 275.07, 
327.34  subdivision 4, is amended to read: 
327.35     Subd. 4.  [REPORT TO COMMISSIONER.] (a) On or before 
327.36  October 8 of each year, the county auditor shall report to the 
328.1   commissioner of revenue the proposed levy certified by local 
328.2   units of government under section 275.065, subdivision 1.  If 
328.3   any taxing authorities have notified the county auditor that 
328.4   they are in the process of negotiating an agreement for sharing, 
328.5   merging, or consolidating services but that when the proposed 
328.6   levy was certified under section 275.065, subdivision 1c, the 
328.7   agreement was not yet finalized, the county auditor shall supply 
328.8   that information to the commissioner when filing the report 
328.9   under this section and shall recertify the affected levies as 
328.10  soon as practical after October 10. 
328.11     (b) On or before January 15 of each year, the county 
328.12  auditor shall report to the commissioner of revenue the final 
328.13  levy certified by local units of government under subdivision 1. 
328.14     (c) The levies must be reported in the manner prescribed by 
328.15  the commissioner.  ~~The reports must show a total levy and the~~ 
328.16  ~~amount of each special levy.~~ 
328.17     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
328.18  following final enactment. 
328.19     Sec. 17.  Minnesota Statutes 2003 Supplement, section 
328.20  276.112, is amended to read: 
328.21     276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.] 
328.22     On or before January 25 each year, for the period ending 
328.23  December 31 of the prior year, and on or before two business 
328.24  days before June ~~29~~ 30 each year, for the period ending on the 
328.25  most recent settlement day determined in section 276.09, and on 
328.26  or before December 2 each year, for the period ending November 
328.27  20, the county treasurer must make full settlement with the 
328.28  county auditor according to sections 276.09, 276.10, and 276.111 
328.29  for all receipts of state property taxes levied under section 
328.30  275.025, and must transmit those receipts to the commissioner of 
328.31  revenue by electronic means. 
328.32     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
328.33  following final enactment. 
328.34     Sec. 18.  Minnesota Statutes 2002, section 282.016, is 
328.35  amended to read: 
328.36     282.016 [PROHIBITED PURCHASERS.] 
329.1      ~~No~~ (a) A county auditor, county treasurer, court 
329.2   administrator of the district court, ~~or~~ county assessor ~~or~~, 
329.3   supervisor of assessments, ~~or~~ deputy or clerk or an employee of 
329.4   such officer, ~~and no~~ a commissioner for tax-forfeited lands or 
329.5   an assistant to such commissioner ~~may~~, must not become a 
329.6   purchaser, either personally or as an agent or attorney for 
329.7   another person, of the properties offered for sale under the 
329.8   provisions of this chapter~~, either personally, or as agent or~~ 
329.9   ~~attorney for any other person, except that~~ in the county for 
329.10  which the person performs duties. 
329.11     (b) Notwithstanding paragraph (a), such officer, deputy, 
329.12  ~~court administrator~~ clerk, or employee or commissioner for 
329.13  tax-forfeited lands or assistant to such commissioner may (1) 
329.14  purchase lands owned by that official at the time the state 
329.15  became the absolute owner thereof or (2) bid upon and purchase 
329.16  forfeited property offered for sale under the alternate sale 
329.17  procedure described in section 282.01, subdivision 7a. 
329.18     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
329.19  following final enactment. 
329.20     Sec. 19.  Minnesota Statutes 2002, section 282.21, is 
329.21  amended to read: 
329.22     282.21 [FORM OF CONVEYANCE.] 
329.23     When any sale has been made under sections 282.14 to 
329.24  282.22, upon payment in full of the purchase price, appropriate 
329.25  conveyance in fee in such form as may be prescribed by the 
329.26  attorney general shall be issued by the commissioner of finance 
329.27  to the purchaser or the purchaser's assigns and this conveyance 
329.28  shall have the force and effect of a patent from the state.  
329.29     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
329.30  following final enactment. 
329.31     Sec. 20.  Minnesota Statutes 2002, section 282.224, is 
329.32  amended to read: 
329.33     282.224 [FORM OF CONVEYANCE.] 
329.34     When any sale has been made under sections 282.221 to 
329.35  282.226, upon payment in full of the purchase price, appropriate 
329.36  conveyance in fee, in such form as may be prescribed by the 
330.1   attorney general, shall be issued by the commissioner of natural 
330.2   resources to the purchaser or the purchaser's assignee, and the 
330.3   conveyance shall have the force and effect of a patent from the 
330.4   state.  
330.5      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
330.6   following final enactment. 
330.7      Sec. 21.  Minnesota Statutes 2002, section 282.301, is 
330.8   amended to read: 
330.9      282.301 [RECEIPTS FOR PAYMENTS.] 
330.10     When any sale has been made under sections 282.012 and 
330.11  282.241 to 282.324, the purchaser shall receive from the county 
330.12  auditor at the time of repurchase a receipt, in such form as may 
330.13  be prescribed by the attorney general.  When the purchase price 
330.14  of a parcel of land shall be paid in full, the following facts 
330.15  shall be certified by the county auditor to the commissioner of 
330.16  revenue of the state of Minnesota:  the description of land, the 
330.17  date of sale, the name of the purchaser or the purchaser's 
330.18  assignee, and the date when the final installment of the 
330.19  purchase price was paid.  Upon payment in full of the purchase 
330.20  price, the purchaser or the assignee shall receive a quitclaim 
330.21  deed from the state, to be executed by the commissioner of 
330.22  revenue.  The deed must be sent to the county auditor who shall 
330.23  have it recorded before it is forwarded to the purchaser.  
330.24  Failure to make any payment herein required shall constitute 
330.25  default and upon such default and cancellation in accord with 
330.26  section 282.40, the right, title and interest of the purchaser 
330.27  or the purchaser's heirs, representatives, or assigns in such 
330.28  parcel shall terminate.  
330.29     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
330.30  following final enactment. 
330.31     Sec. 22.  Minnesota Statutes 2003 Supplement, section 
330.32  477A.03, subdivision 2b, is amended to read: 
330.33     Subd. 2b.  [COUNTIES.] (a) For aids payable in calendar 
330.34  year 2005 and thereafter, the total aids paid to counties under 
330.35  section 477A.0124, subdivision 3, are limited to $100,500,000.  
330.36  Each calendar year, $500,000 shall be retained by the 
331.1   commissioner of revenue to make reimbursements to the 
331.2   commissioner of finance for payments made under section 611.27.  
331.3   For calendar year 2004, ~~the amount shall be~~ $500,000 is 
331.4   appropriated from the general fund for this purpose in addition 
331.5   to the payments authorized under section 477A.0124, subdivision 
331.6   1.  For calendar year 2005 and subsequent years, the amount 
331.7   shall be deducted from the appropriation ~~under this paragraph~~ 
331.8   for section 477A.0124, subdivision 1.  The reimbursements shall 
331.9   be to defray the additional costs associated with court-ordered 
331.10  counsel under section 611.27.  Any retained amounts not used for 
331.11  reimbursement in a year shall be included in the next 
331.12  distribution of county need aid that is certified to the county 
331.13  auditors for the purpose of property tax reduction for the next 
331.14  taxes payable year. 
331.15     (b) For aids payable in 2005 and thereafter, the total aids 
331.16  under section 477A.0124, subdivision 4, are limited to 
331.17  $105,000,000.  The commissioner of finance shall bill the 
331.18  commissioner of revenue for the cost of preparation of local 
331.19  impact notes as required by section 3.987, not to exceed 
331.20  $207,000 in fiscal year 2004 and thereafter.  The commissioner 
331.21  of education shall bill the commissioner of revenue for the cost 
331.22  of preparation of local impact notes for school districts as 
331.23  required by section 3.987, not to exceed $7,000 in fiscal year 
331.24  2004 and thereafter.  For aids payable in 2004, $214,000 is 
331.25  appropriated from the general fund for this purpose.  For aids 
331.26  payable in 2005 and thereafter, the commissioner of revenue 
331.27  shall deduct the amounts billed under this paragraph from the 
331.28  appropriation under this ~~paragraph~~ section for section 
331.29  477A.0124, subdivision 4.  The amounts deducted are appropriated 
331.30  to the commissioner of finance and the commissioner of education 
331.31  for the preparation of local impact notes. 
331.32     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
331.33  payable in 2004 and thereafter. 
331.34     Sec. 23.  Laws 2003, First Special Session chapter 21, 
331.35  article 6, section 9, is amended to read: 
331.36     Sec. 9.  [DEFINITIONS.] 
332.1      (a) For purposes of sections 9 to 15, the following terms 
332.2   have the meanings given them in this section. 
332.3      (b) The 2003 and 2004 "levy plus aid revenue base" for a 
332.4   county is the sum of that county's certified property tax levy 
332.5   for taxes payable in 2003, plus the sum of the amounts the 
332.6   county was certified to receive in the designated calendar year 
332.7   as: 
332.8      (1) homestead and agricultural credit aid under Minnesota 
332.9   Statutes, section 273.1398, subdivision 2, plus any additional 
332.10  aid under section 16, minus the amount calculated under section 
332.11  273.1398, subdivision 4a, paragraph (b), for counties in 
332.12  judicial districts one, three, six, and ten, and 25 percent of 
332.13  the amount calculated under section 273.1398, subdivision 4a, 
332.14  paragraph (b), for counties in judicial districts two and four; 
332.15     (2) the amount of county manufactured home homestead and 
332.16  agricultural credit aid computed for the county for payment in 
332.17  2003 under section 273.166; 
332.18     (3) criminal justice aid under Minnesota Statutes, section 
332.19  477A.0121; 
332.20     (4) family preservation aid under Minnesota Statutes, 
332.21  section 477A.0122; 
332.22     (5) taconite aids under Minnesota Statutes, sections 298.28 
332.23  and 298.282, including any aid which was required to be placed 
332.24  in a special fund for expenditure in the next succeeding year; 
332.25  and 
332.26     (6) county program aid under section 477A.0124, exclusive 
332.27  of the attached machinery aid component. 
332.28     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
332.29  payable in 2004. 
332.30     Sec. 24.  [REPEALER.] 
332.31     Minnesota Statutes 2002, sections 273.19, subdivision 5; 
332.32  274.05; 275.15; and 283.07, are repealed effective the day 
332.33  following final enactment. 
332.34                             ARTICLE 14
332.35                           MISCELLANEOUS
332.36              DEPARTMENT OF REVENUE TECHNICAL CHANGES
333.1      Section 1.  Minnesota Statutes 2002, section 270.65, is 
333.2   amended to read: 
333.3      270.65 [DATE OF ASSESSMENT; DEFINITION.] 
333.4      For purposes of taxes administered by the commissioner, the 
333.5   term "date of assessment" means the date a liability reported on 
333.6   a return was entered into the records of the commissioner or the 
333.7   date a return should have been filed, whichever is later; or, in 
333.8   the case of taxes determined by the commissioner, "date of 
333.9   assessment" means the date of the order assessing taxes or date 
333.10  of the return made by the commissioner; or, in the case of an 
333.11  amended return filed by the taxpayer, the assessment date is the 
333.12  date additional liability reported on the return, if any, was 
333.13  entered into the records of the commissioner; or, in the case of 
333.14  a consent agreement signed by the taxpayer under section 270.67, 
333.15  subdivision 3, the assessment date is the notice date shown on 
333.16  the agreement; or, in the case of a check from a taxpayer that 
333.17  is dishonored and results in an erroneous refund being given to 
333.18  the taxpayer, remittance of the check is deemed to be an 
333.19  assessment and the "date of assessment" is the date the check 
333.20  was received by the commissioner. 
333.21     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
333.22  following final enactment. 
333.23     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
333.24  289A.19, subdivision 4, is amended to read: 
333.25     Subd. 4.  [ESTATE TAX RETURNS.] ~~When in the commissioner's~~ 
333.26  ~~judgment good cause exists, the commissioner may extend the time~~ 
333.27  ~~for filing an estate tax return for not more than six months.~~  
333.28  When an extension to file the federal estate tax return has been 
333.29  granted under section 6081 of the Internal Revenue Code, the 
333.30  time for filing the estate tax return is extended for that 
333.31  period.  If the estate requests an extension to file an estate 
333.32  tax return within the time provided in section 289A.18, 
333.33  subdivision 3, the commissioner shall extend the time for filing 
333.34  the estate tax return for six months. 
333.35     <h>[EFFECTIVE DATE.]</h> This section is effective for estates of 
333.36  decedents dying after December 31, 2003. 
334.1      Sec. 3.  Minnesota Statutes 2002, section 289A.37, 
334.2   subdivision 5, is amended to read: 
334.3      Subd. 5.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
334.4   sent postage prepaid by United States mail to the taxpayer at 
334.5   the taxpayer's last known address, or sent by electronic mail to 
334.6   the taxpayer's last known electronic mailing address as provided 
334.7   for in section 325L.08, is sufficient even if the taxpayer is 
334.8   deceased or is under a legal disability, or, in the case of a 
334.9   corporation, has terminated its existence, unless the department 
334.10  has been provided with a new address by a party authorized to 
334.11  receive notices of assessment. 
334.12     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
334.13  following final enactment. 
334.14     Sec. 4.  Minnesota Statutes 2002, section 289A.60, 
334.15  subdivision 6, is amended to read: 
334.16     Subd. 6.  [PENALTY FOR FAILURE TO FILE, FALSE OR FRAUDULENT 
334.17  RETURN, EVASION.] If a person, with intent to evade or defeat a 
334.18  tax or payment of tax, fails to file a return, files a false or 
334.19  fraudulent return, or attempts in any other manner to evade or 
334.20  defeat a tax or payment of tax, there is imposed on the person a 
334.21  penalty equal to 50 percent of the tax, less amounts paid by the 
334.22  person on the basis of the false or fraudulent return, if any, 
334.23  due for the period to which the return related.  
334.24     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
334.25  following final enactment. 
334.26     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
334.27  290.01, subdivision 19a, is amended to read: 
334.28     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
334.29  individuals, estates, and trusts, there shall be added to 
334.30  federal taxable income: 
334.31     (1)(i) interest income on obligations of any state other 
334.32  than Minnesota or a political or governmental subdivision, 
334.33  municipality, or governmental agency or instrumentality of any 
334.34  state other than Minnesota exempt from federal income taxes 
334.35  under the Internal Revenue Code or any other federal statute; 
334.36  and 
335.1      (ii) exempt-interest dividends as defined in section 
335.2   852(b)(5) of the Internal Revenue Code, except the portion of 
335.3   the exempt-interest dividends derived from interest income on 
335.4   obligations of the state of Minnesota or its political or 
335.5   governmental subdivisions, municipalities, governmental agencies 
335.6   or instrumentalities, but only if the portion of the 
335.7   exempt-interest dividends from such Minnesota sources paid to 
335.8   all shareholders represents 95 percent or more of the 
335.9   exempt-interest dividends that are paid by the regulated 
335.10  investment company as defined in section 851(a) of the Internal 
335.11  Revenue Code, or the fund of the regulated investment company as 
335.12  defined in section 851(g) of the Internal Revenue Code, making 
335.13  the payment; and 
335.14     (iii) for the purposes of items (i) and (ii), interest on 
335.15  obligations of an Indian tribal government described in section 
335.16  7871(c) of the Internal Revenue Code shall be treated as 
335.17  interest income on obligations of the state in which the tribe 
335.18  is located; 
335.19     (2) the amount of income taxes paid or accrued within the 
335.20  taxable year under this chapter and ~~income~~ the amount of taxes 
335.21  based on net income paid to any other state or to any province 
335.22  or territory of Canada, to the extent allowed as a deduction 
335.23  under section 63(d) of the Internal Revenue Code, but the 
335.24  addition may not be more than the amount by which the itemized 
335.25  deductions as allowed under section 63(d) of the Internal 
335.26  Revenue Code exceeds the amount of the standard deduction as 
335.27  defined in section 63(c) of the Internal Revenue Code.  For the 
335.28  purpose of this paragraph, the disallowance of itemized 
335.29  deductions under section 68 of the Internal Revenue Code of 
335.30  1986, income tax is the last itemized deduction disallowed; 
335.31     (3) the capital gain amount of a lump sum distribution to 
335.32  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
335.33  Reform Act of 1986, Public Law 99-514, applies; 
335.34     (4) the amount of income taxes paid or accrued within the 
335.35  taxable year under this chapter and ~~income~~ taxes based on net 
335.36  income paid to any other state or any province or territory of 
336.1   Canada, to the extent allowed as a deduction in determining 
336.2   federal adjusted gross income.  For the purpose of this 
336.3   paragraph, income taxes do not include the taxes imposed by 
336.4   sections 290.0922, subdivision 1, paragraph (b), 290.9727, 
336.5   290.9728, and 290.9729; 
336.6      (5) the amount of expense, interest, or taxes disallowed 
336.7   pursuant to section 290.10; 
336.8      (6) the amount of a partner's pro rata share of net income 
336.9   which does not flow through to the partner because the 
336.10  partnership elected to pay the tax on the income under section 
336.11  6242(a)(2) of the Internal Revenue Code; and 
336.12     (7) 80 percent of the depreciation deduction allowed under 
336.13  section 168(k) of the Internal Revenue Code.  For purposes of 
336.14  this clause, if the taxpayer has an activity that in the taxable 
336.15  year generates a deduction for depreciation under section 168(k) 
336.16  and the activity generates a loss for the taxable year that the 
336.17  taxpayer is not allowed to claim for the taxable year, "the 
336.18  depreciation allowed under section 168(k)" for the taxable year 
336.19  is limited to excess of the depreciation claimed by the activity 
336.20  under section 168(k) over the amount of the loss from the 
336.21  activity that is not allowed in the taxable year.  In succeeding 
336.22  taxable years when the losses not allowed in the taxable year 
336.23  are allowed, the depreciation under section 168(k) is allowed. 
336.24     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
336.25  beginning after December 31, 2003. 
336.26     Sec. 6.  Minnesota Statutes 2002, section 290.06, 
336.27  subdivision 22, is amended to read: 
336.28     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
336.29  taxpayer who is liable for taxes based on ~~or measured by~~ net 
336.30  income to another state, as provided in paragraphs (b) through 
336.31  (f), upon income allocated or apportioned to Minnesota, is 
336.32  entitled to a credit for the tax paid to another state if the 
336.33  tax is actually paid in the taxable year or a subsequent taxable 
336.34  year.  A taxpayer who is a resident of this state pursuant to 
336.35  section 290.01, subdivision 7, ~~clause (2)~~ paragraph (b), and who 
336.36  is subject to income tax as a resident in the state of the 
337.1   individual's domicile is not allowed this credit unless the 
337.2   state of domicile does not allow a similar credit. 
337.3      (b) For an individual, estate, or trust, the credit is 
337.4   determined by multiplying the tax payable under this chapter by 
337.5   the ratio derived by dividing the income subject to tax in the 
337.6   other state that is also subject to tax in Minnesota while a 
337.7   resident of Minnesota by the taxpayer's federal adjusted gross 
337.8   income, as defined in section 62 of the Internal Revenue Code, 
337.9   modified by the addition required by section 290.01, subdivision 
337.10  19a, clause (1), and the subtraction allowed by section 290.01, 
337.11  subdivision 19b, clause (1), to the extent the income is 
337.12  allocated or assigned to Minnesota under sections 290.081 and 
337.13  290.17.  
337.14     (c) If the taxpayer is an athletic team that apportions all 
337.15  of its income under section 290.17, subdivision 5, the credit is 
337.16  determined by multiplying the tax payable under this chapter by 
337.17  the ratio derived from dividing the total net income subject to 
337.18  tax in the other state by the taxpayer's Minnesota taxable 
337.19  income. 
337.20     (d) The credit determined under paragraph (b) or (c) shall 
337.21  not exceed the amount of tax so paid to the other state on the 
337.22  gross income earned within the other state subject to tax under 
337.23  this chapter, nor shall the allowance of the credit reduce the 
337.24  taxes paid under this chapter to an amount less than what would 
337.25  be assessed if such income amount was excluded from taxable net 
337.26  income. 
337.27     (e) In the case of the tax assessed on a lump sum 
337.28  distribution under section 290.032, the credit allowed under 
337.29  paragraph (a) is the tax assessed by the other state on the lump 
337.30  sum distribution that is also subject to tax under section 
337.31  290.032, and shall not exceed the tax assessed under section 
337.32  290.032.  To the extent the total lump sum distribution defined 
337.33  in section 290.032, subdivision 1, includes lump sum 
337.34  distributions received in prior years or is all or in part an 
337.35  annuity contract, the reduction to the tax on the lump sum 
337.36  distribution allowed under section 290.032, subdivision 2, 
338.1   includes tax paid to another state that is properly apportioned 
338.2   to that distribution. 
338.3      (f) If a Minnesota resident reported an item of income to 
338.4   Minnesota and is assessed tax in such other state on that same 
338.5   income after the Minnesota statute of limitations has expired, 
338.6   the taxpayer shall receive a credit for that year under 
338.7   paragraph (a), notwithstanding any statute of limitations to the 
338.8   contrary.  The claim for the credit must be submitted within one 
338.9   year from the date the taxes were paid to the other state.  The 
338.10  taxpayer must submit sufficient proof to show entitlement to a 
338.11  credit. 
338.12     (g) For the purposes of this subdivision, a resident 
338.13  shareholder of a corporation treated as an "S" corporation under 
338.14  section 290.9725, must be considered to have paid a tax imposed 
338.15  on the shareholder in an amount equal to the shareholder's pro 
338.16  rata share of any net income tax paid by the S corporation to 
338.17  another state.  For the purposes of the preceding sentence, the 
338.18  term "net income tax" means any tax imposed on or measured by a 
338.19  corporation's net income. 
338.20     (h) For the purposes of this subdivision, a resident 
338.21  partner of an entity taxed as a partnership under the Internal 
338.22  Revenue Code must be considered to have paid a tax imposed on 
338.23  the partner in an amount equal to the partner's pro rata share 
338.24  of any net income tax paid by the partnership to another state.  
338.25  For purposes of the preceding sentence, the term "net income" 
338.26  tax means any tax imposed on or measured by a partnership's net 
338.27  income. 
338.28     (i) For the purposes of this subdivision, "another state": 
338.29     (1) includes: 
338.30     (i) the District of Columbia; and 
338.31     (ii) a province or territory of Canada; but 
338.32     (2) excludes Puerto Rico and the several territories 
338.33  organized by Congress. 
338.34     (j) The limitations on the credit in paragraphs (b), (c), 
338.35  and (d), are imposed on a state by state basis. 
338.36     (k) For a tax imposed by a province or territory of Canada, 
339.1   the tax for purposes of this subdivision is the excess of the 
339.2   tax over the amount of the foreign tax credit allowed under 
339.3   section 27 of the Internal Revenue Code.  In determining the 
339.4   amount of the foreign tax credit allowed, the net income taxes 
339.5   imposed by Canada on the income are deducted first.  Any 
339.6   remaining amount of the allowable foreign tax credit reduces the 
339.7   provincial or territorial tax that qualifies for the credit 
339.8   under this subdivision. 
339.9      <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
339.10  beginning after December 31, 2003. 
339.11     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
339.12  290.0674, subdivision 1, is amended to read: 
339.13     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
339.14  a credit against the tax imposed by this chapter in an amount 
339.15  equal to 75 percent of the amount paid for education-related 
339.16  expenses for a qualifying child in kindergarten through grade 
339.17  12.  For purposes of this section, "education-related expenses" 
339.18  means: 
339.19     (1) fees or tuition for instruction by an instructor under 
339.20  section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 
339.21  (5), or a member of the Minnesota Music Teachers Association, 
339.22  and who is not a lineal ancestor or sibling of the dependent for 
339.23  instruction outside the regular school day or school year, 
339.24  including tutoring, driver's education offered as part of school 
339.25  curriculum, regardless of whether it is taken from a public or 
339.26  private entity or summer camps, in grade or age appropriate 
339.27  curricula that supplement curricula and instruction available 
339.28  during the regular school year, that assists a dependent to 
339.29  improve knowledge of core curriculum areas or to expand 
339.30  knowledge and skills under the ~~graduation rule under section~~ 
339.31  ~~120B.02, paragraph (e), clauses (1) to (7), (9), and (10)~~ 
339.32  required academic standards under section 120B.021, subdivision 
339.33  1, and the elective standard under section 120B.022, subdivision 
339.34  1, clause (3), and that do not include the teaching of religious 
339.35  tenets, doctrines, or worship, the purpose of which is to 
339.36  instill such tenets, doctrines, or worship; 
340.1      (2) expenses for textbooks, including books and other 
340.2   instructional materials and equipment purchased or leased for 
340.3   use in elementary and secondary schools in teaching only those 
340.4   subjects legally and commonly taught in public elementary and 
340.5   secondary schools in this state.  "Textbooks" does not include 
340.6   instructional books and materials used in the teaching of 
340.7   religious tenets, doctrines, or worship, the purpose of which is 
340.8   to instill such tenets, doctrines, or worship, nor does it 
340.9   include books or materials for extracurricular activities 
340.10  including sporting events, musical or dramatic events, speech 
340.11  activities, driver's education, or similar programs; 
340.12     (3) a maximum expense of $200 per family for personal 
340.13  computer hardware, excluding single purpose processors, and 
340.14  educational software that assists a dependent to improve 
340.15  knowledge of core curriculum areas or to expand knowledge and 
340.16  skills under the ~~graduation rule under section 120B.02~~ required 
340.17  academic standards under section 120B.021, subdivision 1, and 
340.18  the elective standard under section 120B.022, subdivision 1, 
340.19  clause (3), purchased for use in the taxpayer's home and not 
340.20  used in a trade or business regardless of whether the computer 
340.21  is required by the dependent's school; and 
340.22     (4) the amount paid to others for transportation of a 
340.23  qualifying child attending an elementary or secondary school 
340.24  situated in Minnesota, North Dakota, South Dakota, Iowa, or 
340.25  Wisconsin, wherein a resident of this state may legally fulfill 
340.26  the state's compulsory attendance laws, which is not operated 
340.27  for profit, and which adheres to the provisions of the Civil 
340.28  Rights Act of 1964 and chapter 363A. 
340.29     For purposes of this section, "qualifying child" has the 
340.30  meaning given in section 32(c)(3) of the Internal Revenue Code. 
340.31     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
340.32  beginning after December 31, 2003. 
340.33     Sec. 8.  Minnesota Statutes 2002, section 290.92, 
340.34  subdivision 1, is amended to read: 
340.35     Subdivision 1.  [DEFINITIONS.] (1)  [WAGES.] For purposes 
340.36  of this section, the term "wages" means the same as that term is 
341.1   defined in section 3401(a) and (f) of the Internal Revenue Code. 
341.2      (2)  [PAYROLL PERIOD.] For purposes of this section the 
341.3   term "payroll period" means a period for which a payment of 
341.4   wages is ordinarily made to the employee by the employee's 
341.5   employer, and the term "miscellaneous payroll period" means a 
341.6   payroll period other than a daily, weekly, biweekly, 
341.7   semimonthly, monthly, quarterly, semiannual, or annual payroll 
341.8   period. 
341.9      (3)  [EMPLOYEE.] For purposes of this section the term 
341.10  "employee" means any resident individual performing services for 
341.11  an employer, either within or without, or both within and 
341.12  without the state of Minnesota, and every nonresident individual 
341.13  performing services within the state of Minnesota, the 
341.14  performance of which services constitute, establish, and 
341.15  determine the relationship between the parties as that of 
341.16  employer and employee.  As used in the preceding sentence, the 
341.17  term "employee" includes an officer of a corporation, and an 
341.18  officer, employee, or elected official of the United States, a 
341.19  state, or any political subdivision thereof, or the District of 
341.20  Columbia, or any agency or instrumentality of any one or more of 
341.21  the foregoing. 
341.22     (4)  [EMPLOYER.] For purposes of this section the term 
341.23  "employer" means any person, including individuals, fiduciaries, 
341.24  estates, trusts, partnerships, limited liability companies, and 
341.25  corporations transacting business in or deriving any income from 
341.26  sources within the state of Minnesota for whom an individual 
341.27  performs or performed any service, of whatever nature, as the 
341.28  employee of such person, except that if the person for whom the 
341.29  individual performs or performed the services does not have 
341.30  ~~legal~~ control of the payment of the wages for such services, the 
341.31  term "employer," except for purposes of paragraph (1), means the 
341.32  person having ~~legal~~ control of the payment of such wages.  As 
341.33  used in the preceding sentence, the term "employer" includes any 
341.34  corporation, individual, estate, trust, or organization which is 
341.35  exempt from taxation under section 290.05 and further includes, 
341.36  but is not limited to, officers of corporations who have ~~legal~~ 
342.1   control, either individually or jointly with another or others, 
342.2   of the payment of the wages. 
342.3      (5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 
342.4   purposes of this section, the term "number of withholding 
342.5   exemptions claimed" means the number of withholding exemptions 
342.6   claimed in a withholding exemption certificate in effect under 
342.7   subdivision 5, except that if no such certificate is in effect, 
342.8   the number of withholding exemptions claimed shall be considered 
342.9   to be zero. 
342.10     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
342.11  following final enactment. 
342.12     Sec. 9.  Minnesota Statutes 2002, section 290C.05, is 
342.13  amended to read: 
342.14     290C.05 [ANNUAL CERTIFICATION.] 
342.15     On or before July 1 of each year, beginning with the year 
342.16  after the claimant has received an approved application, the 
342.17  commissioner shall send each claimant enrolled under the 
342.18  sustainable forest incentive program a certification form.  The 
342.19  claimant must sign the certification, attesting that the 
342.20  requirements and conditions for continued enrollment in the 
342.21  program are currently being met, and must return the signed 
342.22  certification form to the commissioner by August 15 of that same 
342.23  year.  ~~Failure to~~ If the claimant does not return an annual 
342.24  certification form by the due date ~~shall result in removal of~~ 
342.25  ~~the lands from the provisions of the sustainable forest~~ 
342.26  ~~incentive program, and the imposition of any applicable removal~~ 
342.27  ~~penalty~~, the provisions in section 290C.11 apply.  ~~The claimant~~ 
342.28  ~~may appeal the removal and any associated penalty according to~~ 
342.29  ~~the procedures and within the time allowed under this chapter.~~ 
342.30     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
342.31  following final enactment. 
342.32     Sec. 10.  [290C.055] [LENGTH OF COVENANT.] 
342.33     The covenant remains in effect for a minimum of eight 
342.34  years.  If land is removed from the program after it has been 
342.35  enrolled for less than four years, the covenant remains in 
342.36  effect for eight years from the date recorded. 
343.1      In the case of land that has been enrolled for more than 
343.2   four years and is removed from the program for any reason, there 
343.3   is a four-year waiting period to end the covenant.  The covenant 
343.4   remains in effect until January 1 of the fifth calendar year 
343.5   that begins after the date that: 
343.6      (1) the commissioner receives notification from the 
343.7   claimant that the claimant wishes to be removed from the program 
343.8   under section 290C.10, or 
343.9      (2) the date that land is removed from the program under 
343.10  section 290C.11. 
343.11     Notwithstanding the other provisions of this section, the 
343.12  covenant is terminated at the same time that land is removed 
343.13  from the program due to acquisition of title or possession for a 
343.14  public purpose under section 290C.10. 
343.15     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
343.16  following final enactment. 
343.17     Sec. 11.  Minnesota Statutes 2002, section 325D.33, 
343.18  subdivision 6, is amended to read: 
343.19     Subd. 6.  [VIOLATIONS.] If the commissioner determines that 
343.20  a distributor is violating any provision of this chapter, the 
343.21  commissioner must give the distributor a written warning 
343.22  explaining the violation and an explanation of what must be done 
343.23  to comply with this chapter.  Within ten days of issuance of the 
343.24  warning, the distributor must notify the commissioner that the 
343.25  distributor has complied with the commissioner's recommendation 
343.26  or request that the commissioner set the issue for a hearing 
343.27  pursuant to chapter 14.  If a hearing is requested, the hearing 
343.28  shall be scheduled within 20 days of the request and the 
343.29  recommendation of the administrative law judge shall be issued 
343.30  within five working days of the close of the hearing.  The 
343.31  commissioner's final determination shall be issued within five 
343.32  working days of the receipt of the administrative law judge's 
343.33  recommendation.  If the commissioner's final determination is 
343.34  adverse to the distributor and the distributor does not comply 
343.35  within ten days of receipt of the commissioner's final 
343.36  determination, the commissioner may order the distributor to 
344.1   immediately cease the stamping of cigarettes.  As soon as 
344.2   practicable after the order, the commissioner must remove the 
344.3   meter and any unapplied cigarette stamps from the premises of 
344.4   the distributor. 
344.5      If within ten days of issuance of the written warning the 
344.6   distributor has not complied with the commissioner's 
344.7   recommendation or requested a hearing, the commissioner may 
344.8   order the distributor to immediately cease the stamping of 
344.9   cigarettes and remove the meter and unapplied stamps from the 
344.10  distributor's premises. 
344.11     ~~If, within any 12-month period, the commissioner has issued~~ 
344.12  ~~three written warnings to any distributor, even if the~~ 
344.13  ~~distributor has complied within ten days, the commissioner shall~~ 
344.14  ~~notify the distributor of the commissioner's intent to revoke~~ 
344.15  ~~the distributor's license for a continuing course of conduct~~ 
344.16  ~~contrary to this chapter.  For purposes of this paragraph, a~~ 
344.17  ~~written warning that was ultimately resolved by removal of the~~ 
344.18  ~~warning by the commissioner is not deemed to be a warning.  The~~ 
344.19  ~~commissioner must notify the distributor of the date and time of~~ 
344.20  ~~a hearing pursuant to chapter 14 at least 20 days before the~~ 
344.21  ~~hearing is held.  The hearing must provide an opportunity for~~ 
344.22  ~~the distributor to show cause why the license should not be~~ 
344.23  ~~revoked.  If the commissioner revokes a distributor's license,~~ 
344.24  ~~the commissioner shall not issue a new license to that~~ 
344.25  ~~distributor for 180 days.~~ 
344.26     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
344.27  following final enactment. 
344.28     Sec. 12.  Minnesota Statutes 2003 Supplement, section 
344.29  349.12, subdivision 25, is amended to read: 
344.30     Subd. 25.  [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 
344.31  or more of the following:  
344.32     (1) any expenditure by or contribution to a 501(c)(3) or 
344.33  festival organization, as defined in subdivision 15a, provided 
344.34  that the organization and expenditure or contribution are in 
344.35  conformity with standards prescribed by the board under section 
344.36  349.154, which standards must apply to both types of 
345.1   organizations in the same manner and to the same extent; 
345.2      (2) a contribution to an individual or family suffering 
345.3   from poverty, homelessness, or physical or mental disability, 
345.4   which is used to relieve the effects of that poverty, 
345.5   homelessness, or disability; 
345.6      (3) a contribution to an individual for treatment for 
345.7   delayed posttraumatic stress syndrome or a contribution to a 
345.8   program recognized by the Minnesota Department of Human Services 
345.9   for the education, prevention, or treatment of compulsive 
345.10  gambling; 
345.11     (4) a contribution to or expenditure on a public or private 
345.12  nonprofit educational institution registered with or accredited 
345.13  by this state or any other state; 
345.14     (5) a contribution to a scholarship fund for defraying the 
345.15  cost of education to individuals where the funds are awarded 
345.16  through an open and fair selection process; 
345.17     (6) activities by an organization or a government entity 
345.18  which recognize humanitarian or military service to the United 
345.19  States, the state of Minnesota, or a community, subject to rules 
345.20  of the board, provided that the rules must not include mileage 
345.21  reimbursements in the computation of the per diem reimbursement 
345.22  limit and must impose no aggregate annual limit on the amount of 
345.23  reasonable and necessary expenditures made to support: 
345.24     (i) members of a military marching or color guard unit for 
345.25  activities conducted within the state; 
345.26     (ii) members of an organization solely for services 
345.27  performed by the members at funeral services; or 
345.28     (iii) members of military marching, color guard, or honor 
345.29  guard units may be reimbursed for participating in color guard, 
345.30  honor guard, or marching unit events within the state or states 
345.31  contiguous to Minnesota at a per participant rate of up to $35 
345.32  per diem; 
345.33     (7) recreational, community, and athletic facilities and 
345.34  activities intended primarily for persons under age 21, provided 
345.35  that such facilities and activities do not discriminate on the 
345.36  basis of gender and the organization complies with section 
346.1   349.154; 
346.2      (8) payment of local taxes authorized under this chapter, 
346.3   taxes imposed by the United States on receipts from lawful 
346.4   gambling, the taxes imposed by section 297E.02, subdivisions 1, 
346.5   4, 5, and 6, and the tax imposed on unrelated business income by 
346.6   section 290.05, subdivision 3; 
346.7      (9) payment of real estate taxes and assessments on 
346.8   permitted gambling premises ~~wholly~~ owned by the licensed 
346.9   organization paying the taxes, or wholly leased by a licensed 
346.10  veterans organization under a national charter recognized under 
346.11  section 501(c)(19) of the Internal Revenue Code, not to exceed: 
346.12     (i) for premises used for bingo, the amount that an 
346.13  organization may expend under board rules on rent for bingo; and 
346.14     (ii) $35,000 per year for premises used for other forms of 
346.15  lawful gambling; 
346.16     (10) a contribution to the United States, this state or any 
346.17  of its political subdivisions, or any agency or instrumentality 
346.18  thereof other than a direct contribution to a law enforcement or 
346.19  prosecutorial agency; 
346.20     (11) a contribution to or expenditure by a nonprofit 
346.21  organization which is a church or body of communicants gathered 
346.22  in common membership for mutual support and edification in 
346.23  piety, worship, or religious observances; 
346.24     (12) payment of the reasonable costs of an audit required 
346.25  in section 297E.06, subdivision 4, provided the annual audit is 
346.26  filed in a timely manner with the Department of Revenue; 
346.27     (13) a contribution to or expenditure on a wildlife 
346.28  management project that benefits the public at-large, provided 
346.29  that the state agency with authority over that wildlife 
346.30  management project approves the project before the contribution 
346.31  or expenditure is made; 
346.32     (14) expenditures, approved by the commissioner of natural 
346.33  resources, by an organization for grooming and maintaining 
346.34  snowmobile trails and all-terrain vehicle trails that are (1) 
346.35  grant-in-aid trails established under section 85.019, or (2) 
346.36  other trails open to public use, including purchase or lease of 
347.1   equipment for this purpose; 
347.2      (15) conducting nutritional programs, food shelves, and 
347.3   congregate dining programs primarily for persons who are age 62 
347.4   or older or disabled; 
347.5      (16) a contribution to a community arts organization, or an 
347.6   expenditure to sponsor arts programs in the community, including 
347.7   but not limited to visual, literary, performing, or musical 
347.8   arts; 
347.9      (17) an expenditure by a licensed veterans organization for 
347.10  payment of water, fuel for heating, electricity, and sewer costs 
347.11  for a building wholly owned or wholly leased by and used as the 
347.12  primary headquarters of the licensed veterans organization; 
347.13     (18) expenditure by a licensed veterans organization of up 
347.14  to $5,000 in a calendar year in net costs to the organization 
347.15  for meals and other membership events, limited to members and 
347.16  spouses, held in recognition of military service.  No more than 
347.17  $5,000 can be expended in total per calendar year under this 
347.18  clause by all licensed veterans organizations sharing the same 
347.19  veterans post home; or 
347.20     (19) payment of fees authorized under this chapter imposed 
347.21  by the state of Minnesota to conduct lawful gambling in 
347.22  Minnesota. 
347.23     (b) Notwithstanding paragraph (a), "lawful purpose" does 
347.24  not include: 
347.25     (1) any expenditure made or incurred for the purpose of 
347.26  influencing the nomination or election of a candidate for public 
347.27  office or for the purpose of promoting or defeating a ballot 
347.28  question; 
347.29     (2) any activity intended to influence an election or a 
347.30  governmental decision-making process; 
347.31     (3) the erection, acquisition, improvement, expansion, 
347.32  repair, or maintenance of real property or capital assets owned 
347.33  or leased by an organization, unless the board has first 
347.34  specifically authorized the expenditures after finding that (i) 
347.35  the real property or capital assets will be used exclusively for 
347.36  one or more of the purposes in paragraph (a); (ii) with respect 
348.1   to expenditures for repair or maintenance only, that the 
348.2   property is or will be used extensively as a meeting place or 
348.3   event location by other nonprofit organizations or community or 
348.4   service groups and that no rental fee is charged for the use; 
348.5   (iii) with respect to expenditures, including a mortgage payment 
348.6   or other debt service payment, for erection or acquisition only, 
348.7   that the erection or acquisition is necessary to replace with a 
348.8   comparable building, a building owned by the organization and 
348.9   destroyed or made uninhabitable by fire or natural disaster, 
348.10  provided that the expenditure may be only for that part of the 
348.11  replacement cost not reimbursed by insurance; (iv) with respect 
348.12  to expenditures, including a mortgage payment or other debt 
348.13  service payment, for erection or acquisition only, that the 
348.14  erection or acquisition is necessary to replace with a 
348.15  comparable building a building owned by the organization that 
348.16  was acquired from the organization by eminent domain or sold by 
348.17  the organization to a purchaser that the organization reasonably 
348.18  believed would otherwise have acquired the building by eminent 
348.19  domain, provided that the expenditure may be only for that part 
348.20  of the replacement cost that exceeds the compensation received 
348.21  by the organization for the building being replaced; or (v) with 
348.22  respect to an expenditure to bring an existing building into 
348.23  compliance with the Americans with Disabilities Act under item 
348.24  (ii), an organization has the option to apply the amount of the 
348.25  board-approved expenditure to the erection or acquisition of a 
348.26  replacement building that is in compliance with the Americans 
348.27  with Disabilities Act; 
348.28     (4) an expenditure by an organization which is a 
348.29  contribution to a parent organization, foundation, or affiliate 
348.30  of the contributing organization, if the parent organization, 
348.31  foundation, or affiliate has provided to the contributing 
348.32  organization within one year of the contribution any money, 
348.33  grants, property, or other thing of value; 
348.34     (5) a contribution by a licensed organization to another 
348.35  licensed organization unless the board has specifically 
348.36  authorized the contribution.  The board must authorize such a 
349.1   contribution when requested to do so by the contributing 
349.2   organization unless it makes an affirmative finding that the 
349.3   contribution will not be used by the recipient organization for 
349.4   one or more of the purposes in paragraph (a); or 
349.5      (6) a contribution to a statutory or home rule charter 
349.6   city, county, or town by a licensed organization with the 
349.7   knowledge that the governmental unit intends to use the 
349.8   contribution for a pension or retirement fund. 
349.9      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
349.10  payable in 2004 and thereafter. 
349.11     Sec. 13.  Minnesota Statutes 2002, section 473.843, 
349.12  subdivision 5, is amended to read: 
349.13     Subd. 5.  [PENALTIES; ENFORCEMENT.] The audit, penalty, and 
349.14  enforcement provisions applicable to corporate franchise taxes 
349.15  imposed under chapter 290 apply to the fees imposed under this 
349.16  section.  The commissioner of revenue shall administer the 
349.17  provisions.  
349.18     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
349.19  following final enactment. 
349.20     Sec. 14.  [APPROPRIATION REDUCTION.] 
349.21     Notwithstanding any other law to the contrary, if 
349.22  amendments to this act adopted on April 29, 2004, result in an 
349.23  increase to the deficit for the 2004-2005 biennium as reflected 
349.24  in the February 2004 state general fund budget forecast, the 
349.25  amount of the appropriation under article 3, section 52, is 
349.26  reduced by an amount equal to the increase in the deficit.  If 
349.27  amendments to this act adopted on April 29, 2004, result in an 
349.28  increase to the deficit for the 2006-2007 biennium as reflected 
349.29  in the February 2004 state general fund budget forecast, the 
349.30  distribution under article 2, section 51, is reduced by an 
349.31  amount equal to the increase in the deficit. 
349.32     Sec. 15.  [REPEALER.] 
349.33     Minnesota Rules, parts 8093.2000 and 8093.3000, are 
349.34  repealed. 
349.35     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
349.36  following final enactment.