1.1                          A bill for an act 
  1.2             relating to taxation; providing property tax 
  1.3             classification reform; providing for state aids to 
  1.4             local government; proposing a separate property tax 
  1.5             refund for farm homesteads; increasing the maximum 
  1.6             property tax refund amounts; providing for property 
  1.7             tax deferral for senior citizens; appropriating money; 
  1.8             amending Minnesota Statutes 1996, sections 124A.23, 
  1.9             subdivision 1; 270B.12, by adding a subdivision; 
  1.10            273.13, subdivisions 23, 24, 25, and by adding a 
  1.11            subdivision; 273.1398, subdivisions 1a and 8; 275.065, 
  1.12            subdivision 3; 276.04, subdivision 2; 290A.03, 
  1.13            subdivisions 6, 13, and by adding a subdivision; 
  1.14            290A.04, subdivisions 1, 2, 2a, 6, and by adding a 
  1.15            subdivision; 477A.011, subdivision 34, and by adding 
  1.16            subdivisions; 477A.013, subdivisions 1, 8, and 9; 
  1.17            477A.03, subdivision 2; proposing coding for new law 
  1.18            as Minnesota Statutes, chapter 290B; repealing 
  1.19            Minnesota Statutes 1996, sections 273.13, subdivision 
  1.20            32; and 477A.011, subdivisions 35, 36, and 37; Laws 
  1.21            1995, chapter 264, article 4, as amended. 
  1.22  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.23                             ARTICLE 1
  1.24                 PROPERTY TAX CLASSIFICATION REFORM 
  1.25     Section 1.  Minnesota Statutes 1996, section 273.13, is 
  1.26  amended by adding a subdivision to read: 
  1.27     Subd. 22a.  [RESIDENTIAL NONHOMESTEAD.] Class 1d includes: 
  1.28     (1) residential real estate containing less than four 
  1.29  units; 
  1.30     (2) seasonal recreational residential property not used for 
  1.31  commercial purposes; 
  1.32     (3) manufactured homes not classified under any other 
  1.33  provision; and 
  2.1      (4) a dwelling, garage, and surrounding one acre of 
  2.2   property on a nonhomestead farm classified under subdivision 23, 
  2.3   paragraph (b). 
  2.4      Class 1d property has the same class rates as class 1a 
  2.5   property under subdivision 22. 
  2.6      Sec. 2.  Minnesota Statutes 1996, section 273.13, 
  2.7   subdivision 23, is amended to read: 
  2.8      Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
  2.9   land including any improvements that is homesteaded.  The market 
  2.10  value of the house and garage and immediately surrounding one 
  2.11  acre of land has the same class rates as class 1a property under 
  2.12  subdivision 22.  The value of the remaining land including 
  2.13  improvements up to $115,000 has a net class rate of .45 percent 
  2.14  of market value and a gross class rate of 1.75 percent of market 
  2.15  value.  The remaining value of class 2a property over $115,000 
  2.16  of market value that does not exceed 320 acres has a net class 
  2.17  rate of one percent of market value, and a gross class rate of 
  2.18  2.25 percent of market value.  The remaining property over the 
  2.19  $115,000 market value in excess of 320 acres has a class rate of 
  2.20  1.5 1.25 percent of market value, and a gross class rate of 2.25 
  2.21  percent of market value.  
  2.22     (b) Class 2b property is (1) real estate, rural in 
  2.23  character and used exclusively for growing trees for timber, 
  2.24  lumber, and wood and wood products; (2) real estate that is not 
  2.25  improved with a structure and is used exclusively for growing 
  2.26  trees for timber, lumber, and wood and wood products, if the 
  2.27  owner has participated or is participating in a cost-sharing 
  2.28  program for afforestation, reforestation, or timber stand 
  2.29  improvement on that particular property, administered or 
  2.30  coordinated by the commissioner of natural resources; (3) real 
  2.31  estate that is nonhomestead agricultural land; or (4) a landing 
  2.32  area or public access area of a privately owned public use 
  2.33  airport.  Class 2b property has a net class rate of 1.5 1.25 
  2.34  percent of market value, and a gross class rate of 2.25 percent 
  2.35  of market value.  
  2.36     (c) Agricultural land as used in this section means 
  3.1   contiguous acreage of ten acres or more, primarily used during 
  3.2   the preceding year for agricultural purposes.  Agricultural use 
  3.3   may include pasture, timber, waste, unusable wild land, and land 
  3.4   included in state or federal farm or conservation programs.  
  3.5   "Agricultural purposes" as used in this section means the 
  3.6   raising or cultivation of agricultural products.  Land enrolled 
  3.7   in the Reinvest in Minnesota program under sections 103F.505 to 
  3.8   103F.531 or the federal Conservation Reserve Program as 
  3.9   contained in Public Law Number 99-198, and consisting of a 
  3.10  minimum of ten contiguous acres, shall be classified as 
  3.11  agricultural.  Agricultural classification for property shall be 
  3.12  determined with respect to the use of the whole parcel, and not 
  3.13  based upon the market value of any residential structures on the 
  3.14  parcel or contiguous parcels under the same ownership. 
  3.15     (d) Real estate of less than ten acres used principally for 
  3.16  raising or cultivating agricultural products, shall be 
  3.17  considered as agricultural land, if it is not used primarily for 
  3.18  residential purposes.  
  3.19     (e) The term "agricultural products" as used in this 
  3.20  subdivision includes:  
  3.21     (1) livestock, dairy animals, dairy products, poultry and 
  3.22  poultry products, fur-bearing animals, horticultural and nursery 
  3.23  stock described in sections 18.44 to 18.61, fruit of all kinds, 
  3.24  vegetables, forage, grains, bees, and apiary products by the 
  3.25  owner; 
  3.26     (2) fish bred for sale and consumption if the fish breeding 
  3.27  occurs on land zoned for agricultural use; 
  3.28     (3) the commercial boarding of horses if the boarding is 
  3.29  done in conjunction with raising or cultivating agricultural 
  3.30  products as defined in clause (1); 
  3.31     (4) property which is owned and operated by nonprofit 
  3.32  organizations used for equestrian activities, excluding racing; 
  3.33  and 
  3.34     (5) game birds and waterfowl bred and raised for use on a 
  3.35  shooting preserve licensed under section 97A.115.  
  3.36     (f) If a parcel used for agricultural purposes is also used 
  4.1   for commercial or industrial purposes, including but not limited 
  4.2   to:  
  4.3      (1) wholesale and retail sales; 
  4.4      (2) processing of raw agricultural products or other goods; 
  4.5      (3) warehousing or storage of processed goods; and 
  4.6      (4) office facilities for the support of the activities 
  4.7   enumerated in clauses (1), (2), and (3), 
  4.8   the assessor shall classify the part of the parcel used for 
  4.9   agricultural purposes as class 1b, 2a, or 2b, whichever is 
  4.10  appropriate, and the remainder in the class appropriate to its 
  4.11  use.  The grading, sorting, and packaging of raw agricultural 
  4.12  products for first sale is considered an agricultural purpose.  
  4.13  A greenhouse or other building where horticultural or nursery 
  4.14  products are grown that is also used for the conduct of retail 
  4.15  sales must be classified as agricultural if it is primarily used 
  4.16  for the growing of horticultural or nursery products from seed, 
  4.17  cuttings, or roots and occasionally as a showroom for the retail 
  4.18  sale of those products.  Use of a greenhouse or building only 
  4.19  for the display of already grown horticultural or nursery 
  4.20  products does not qualify as an agricultural purpose.  
  4.21     The assessor shall determine and list separately on the 
  4.22  records the market value of the homestead dwelling and the one 
  4.23  acre of land on which that dwelling is located.  If any farm 
  4.24  buildings or structures are located on this homesteaded acre of 
  4.25  land, their market value shall not be included in this separate 
  4.26  determination.  
  4.27     (g) To qualify for classification under paragraph (b), 
  4.28  clause (4), a privately owned public use airport must be 
  4.29  licensed as a public airport under section 360.018.  For 
  4.30  purposes of paragraph (b), clause (4), "landing area" means that 
  4.31  part of a privately owned public use airport properly cleared, 
  4.32  regularly maintained, and made available to the public for use 
  4.33  by aircraft and includes runways, taxiways, aprons, and sites 
  4.34  upon which are situated landing or navigational aids.  A landing 
  4.35  area also includes land underlying both the primary surface and 
  4.36  the approach surfaces that comply with all of the following:  
  5.1      (i) the land is properly cleared and regularly maintained 
  5.2   for the primary purposes of the landing, taking off, and taxiing 
  5.3   of aircraft; but that portion of the land that contains 
  5.4   facilities for servicing, repair, or maintenance of aircraft is 
  5.5   not included as a landing area; 
  5.6      (ii) the land is part of the airport property; and 
  5.7      (iii) the land is not used for commercial or residential 
  5.8   purposes. 
  5.9   The land contained in a landing area under paragraph (b), clause 
  5.10  (4), must be described and certified by the commissioner of 
  5.11  transportation.  The certification is effective until it is 
  5.12  modified, or until the airport or landing area no longer meets 
  5.13  the requirements of paragraph (b), clause (4).  For purposes of 
  5.14  paragraph (b), clause (4), "public access area" means property 
  5.15  used as an aircraft parking ramp, apron, or storage hangar, or 
  5.16  an arrival and departure building in connection with the airport.
  5.17     Sec. 3.  Minnesota Statutes 1996, section 273.13, 
  5.18  subdivision 24, is amended to read: 
  5.19     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
  5.20  property and utility real and personal Business property, except 
  5.21  class 5 property as identified in subdivision 31, clause (1), is 
  5.22  class 3a and consists of commercial property, industrial 
  5.23  property, railroad operating property, and utility real and 
  5.24  personal property.  
  5.25     It Commercial property has a class rate of three two 
  5.26  percent of the first $100,000 of market value for taxes payable 
  5.27  in 1993 and thereafter, and 5.06 4.6 percent of the market value 
  5.28  over $100,000.  Commercial property includes all business 
  5.29  property that is not industrial, utility, or railroad operating 
  5.30  property. 
  5.31     Industrial property has a class rate of two percent of the 
  5.32  first $100,000 of market value and 3.3 percent of the market 
  5.33  value over $100,000.  For purposes of this subdivision, 
  5.34  "industrial property" means property used in manufacturing, 
  5.35  milling, converting, producing, processing, or fabricating 
  5.36  tangible property.  In the case of property which is used 
  6.1   partially for commercial and partially for industrial purposes, 
  6.2   each portion of the property's market value must be separately 
  6.3   assigned a class rate consistent with its use, provided that not 
  6.4   more than $100,000 of the commercial property's market value may 
  6.5   receive the preferential two percent rate.  
  6.6      Railroad operating property has the same class rate as 
  6.7   industrial property. 
  6.8      Utility real and personal property has a class rate of two 
  6.9   percent on the first $100,000 of market value and 4.6 percent of 
  6.10  the market value over $100,000. 
  6.11     In the case of state-assessed commercial, industrial, 
  6.12  and or utility property owned by one person or entity, only one 
  6.13  parcel has a reduced class rate on the first $100,000 of market 
  6.14  value.  In the case of other commercial, industrial, and or 
  6.15  utility property owned by one person or entity, only one parcel 
  6.16  in each county city or town has a reduced class rate on the 
  6.17  first $100,000 of market value, except that: 
  6.18     (1) if the market value of the parcel is less than 
  6.19  $100,000, and additional parcels are owned by the same person or 
  6.20  entity in the same city or town within that county, the reduced 
  6.21  class rate shall be applied up to a combined total market value 
  6.22  of $100,000 for all parcels owned by the same person or entity 
  6.23  in the same city or town within the county; 
  6.24     (2) in the case of grain, fertilizer, and feed elevator 
  6.25  facilities, as defined in section 18C.305, subdivision 1, or 
  6.26  232.21, subdivision 8, the limitation to one parcel per owner 
  6.27  per county city or town for the reduced class rate shall not 
  6.28  apply, but there shall be a limit of $100,000 of preferential 
  6.29  value per site of contiguous parcels owned by the same person or 
  6.30  entity.  Only the value of the elevator portion of each parcel 
  6.31  shall qualify for treatment under this clause.  For purposes of 
  6.32  this subdivision, contiguous parcels include parcels separated 
  6.33  only by a railroad or public road right-of-way; and 
  6.34     (3) in the case of property owned by a nonprofit charitable 
  6.35  organization that qualifies for tax exemption under section 
  6.36  501(c)(3) of the Internal Revenue Code of 1986, as amended 
  7.1   through December 31, 1993, if the property is used as a business 
  7.2   incubator, the limitation to one parcel per owner per county 
  7.3   city or town for the reduced class rate shall not apply, 
  7.4   provided that the reduced rate applies only to the first 
  7.5   $100,000 of value per parcel owned by the organization.  As used 
  7.6   in this clause, a "business incubator" is a facility used for 
  7.7   the development of nonretail businesses, offering access to 
  7.8   equipment, space, services, and advice to the tenant businesses, 
  7.9   for the purpose of encouraging economic development, 
  7.10  diversification, and job creation in the area served by the 
  7.11  organization. 
  7.12     To receive the reduced class rate on additional parcels 
  7.13  under clause (1), (2), or (3), the taxpayer must notify the 
  7.14  county assessor that the taxpayer owns more than one parcel that 
  7.15  qualifies under clause (1), (2), or (3). 
  7.16     (b) Employment property defined in section 469.166, during 
  7.17  the period provided in section 469.170, shall constitute class 
  7.18  3b and has a class rate of 2.3 percent of the first $50,000 of 
  7.19  market value and 3.6 percent of the remainder, except that for 
  7.20  employment property located in a border city enterprise zone 
  7.21  designated pursuant to section 469.168, subdivision 4, paragraph 
  7.22  (c), the class rate of the first $100,000 of market value and 
  7.23  the class rate of the remainder is determined under paragraph 
  7.24  (a), unless the governing body of the city designated as an 
  7.25  enterprise zone determines that a specific parcel shall be 
  7.26  assessed pursuant to the first clause of this sentence.  The 
  7.27  governing body may provide for assessment under the first clause 
  7.28  of the preceding sentence only for property which is located in 
  7.29  an area which has been designated by the governing body for the 
  7.30  receipt of tax reductions authorized by section 469.171, 
  7.31  subdivision 1. 
  7.32     (b) Employment property defined in section 469.166, during 
  7.33  the period provided in section 469.170, and employment property 
  7.34  defined in section 469.168, subdivision 4, paragraph (c), shall 
  7.35  constitute class 3b and has a class rate of two percent of the 
  7.36  first $100,000 of market value and 3.3 percent of the remainder. 
  8.1      (c) Structures which are (i) located on property classified 
  8.2   as class 3a, (ii) constructed under an initial building permit 
  8.3   issued after January 2, 1996, (iii) located in a transit zone as 
  8.4   defined under section 473.3915, subdivision 3, (iv) located 
  8.5   within the boundaries of a school district, and (v) not 
  8.6   primarily used for retail or transient lodging purposes, shall 
  8.7   have a class rate of four percent on that portion of the market 
  8.8   value in excess of $100,000 and any market value under $100,000 
  8.9   that does not qualify for the three percent class rate under 
  8.10  paragraph (a).  As used in item (v), a structure is primarily 
  8.11  used for retail or transient lodging purposes if over 50 percent 
  8.12  of its square footage is used for those purposes.  The four 
  8.13  percent rate shall also apply to improvements to existing 
  8.14  structures that meet the requirements of items (i) to (v) if the 
  8.15  improvements are constructed under an initial building permit 
  8.16  issued after January 2, 1996, even if the remainder of the 
  8.17  structure was constructed prior to January 2, 1996.  For the 
  8.18  purposes of this paragraph, a structure shall be considered to 
  8.19  be located in a transit zone if any portion of the structure 
  8.20  lies within the zone.  If any property once eligible for 
  8.21  treatment under this paragraph ceases to remain eligible due to 
  8.22  revisions in transit zone boundaries, the property shall 
  8.23  continue to receive treatment under this paragraph for a period 
  8.24  of three years. 
  8.25     Sec. 4.  Minnesota Statutes 1996, section 273.13, 
  8.26  subdivision 25, is amended to read: 
  8.27     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
  8.28  estate containing four or more units and used or held for use by 
  8.29  the owner or by the tenants or lessees of the owner as a 
  8.30  residence for rental periods of 30 days or more.  Class 4a also 
  8.31  includes hospitals licensed under sections 144.50 to 144.56, 
  8.32  other than hospitals exempt under section 272.02, and contiguous 
  8.33  property used for hospital purposes, without regard to whether 
  8.34  the property has been platted or subdivided.  Class 4a property 
  8.35  in a city with a population of 5,000 or less, that is (1) 
  8.36  located outside of the metropolitan area, as defined in section 
  9.1   473.121, subdivision 2, or outside any county contiguous to the 
  9.2   metropolitan area, and (2) whose city boundary is at least 15 
  9.3   miles from the boundary of any city with a population greater 
  9.4   than 5,000 has a class rate of 2.3 percent of market value for 
  9.5   taxes payable in 1996 and thereafter.  All other class 4a 
  9.6   property has a class rate of 3.4 percent of market value for 
  9.7   taxes payable in 1996 and thereafter.  For purposes of this 
  9.8   paragraph, population has the same meaning given in section 
  9.9   477A.011, subdivision 3. 
  9.10     (b) Class 4b includes: 
  9.11     (1) residential real estate containing less than four 
  9.12  units, other than seasonal residential, and recreational; 
  9.13     (2) manufactured homes not classified under any other 
  9.14  provision; 
  9.15     (3) a dwelling, garage, and surrounding one acre of 
  9.16  property on a nonhomestead farm classified under subdivision 23, 
  9.17  paragraph (b).  
  9.18     Class 4b property has a class rate of 2.8 percent of market 
  9.19  value for taxes payable in 1992, 2.5 percent of market value for 
  9.20  taxes payable in 1993, and 2.3 percent of market value for taxes 
  9.21  payable in 1994 and thereafter. 
  9.22     (c) (b) Class 4c property includes: 
  9.23     (1) a structure that is:  
  9.24     (i) situated on real property that is used for housing for 
  9.25  the elderly or for low- and moderate-income families as defined 
  9.26  in Title II, as amended through December 31, 1990, of the 
  9.27  National Housing Act or the Minnesota housing finance agency law 
  9.28  of 1971, as amended, or rules promulgated by the agency and 
  9.29  financed by a direct federal loan or federally insured loan made 
  9.30  pursuant to Title II of the Act; or 
  9.31     (ii) situated on real property that is used for housing the 
  9.32  elderly or for low- and moderate-income families as defined by 
  9.33  the Minnesota housing finance agency law of 1971, as amended, or 
  9.34  rules adopted by the agency pursuant thereto and financed by a 
  9.35  loan made by the Minnesota housing finance agency pursuant to 
  9.36  the provisions of the act.  
 10.1      This clause applies only to property of a nonprofit or 
 10.2   limited dividend entity.  Property is classified as class 4c 
 10.3   under this clause for 15 years from the date of the completion 
 10.4   of the original construction or substantial rehabilitation, or 
 10.5   for the original term of the loan.  
 10.6      (2) a structure that is: 
 10.7      (i) situated upon real property that is used for housing 
 10.8   lower income families or elderly or handicapped persons, as 
 10.9   defined in section 8 of the United States Housing Act of 1937, 
 10.10  as amended; and 
 10.11     (ii) owned by an entity which has entered into a housing 
 10.12  assistance payments contract under section 8 which provides 
 10.13  assistance for 100 percent of the dwelling units in the 
 10.14  structure, other than dwelling units intended for management or 
 10.15  maintenance personnel.  Property is classified as class 4c under 
 10.16  this clause for the term of the housing assistance payments 
 10.17  contract, including all renewals, or for the term of its 
 10.18  permanent financing, whichever is shorter; and 
 10.19     (3) a qualified low-income building as defined in section 
 10.20  42(c)(2) of the Internal Revenue Code of 1986, as amended 
 10.21  through December 31, 1990, that (i) receives a low-income 
 10.22  housing credit under section 42 of the Internal Revenue Code of 
 10.23  1986, as amended through December 31, 1990; or (ii) meets the 
 10.24  requirements of that section and receives public financing, 
 10.25  except financing provided under sections 469.174 to 469.179, 
 10.26  which contains terms restricting the rents; or (iii) meets the 
 10.27  requirements of section 273.1317.  Classification pursuant to 
 10.28  this clause is limited to a term of 15 years.  The public 
 10.29  financing received must be from at least one of the following 
 10.30  sources:  government issued bonds exempt from taxes under 
 10.31  section 103 of the Internal Revenue Code of 1986, as amended 
 10.32  through December 31, 1993, the proceeds of which are used for 
 10.33  the acquisition or rehabilitation of the building; programs 
 10.34  under section 221(d)(3), 202, or 236, of Title II of the 
 10.35  National Housing Act; rental housing program funds under Section 
 10.36  8 of the United States Housing Act of 1937 or the market rate 
 11.1   family graduated payment mortgage program funds administered by 
 11.2   the Minnesota housing finance agency that are used for the 
 11.3   acquisition or rehabilitation of the building; public financing 
 11.4   provided by a local government used for the acquisition or 
 11.5   rehabilitation of the building, including grants or loans from 
 11.6   federal community development block grants, HOME block grants, 
 11.7   or residential rental bonds issued under chapter 474A; or other 
 11.8   rental housing program funds provided by the Minnesota housing 
 11.9   finance agency for the acquisition or rehabilitation of the 
 11.10  building. 
 11.11     For all properties described in clauses (1), (2), and (3) 
 11.12  and in paragraph (d) (c), the market value determined by the 
 11.13  assessor must be based on the normal approach to value using 
 11.14  normal unrestricted rents unless the owner of the property 
 11.15  elects to have the property assessed under Laws 1991, chapter 
 11.16  291, article 1, section 55.  If the owner of the property elects 
 11.17  to have the market value determined on the basis of the actual 
 11.18  restricted rents, as provided in Laws 1991, chapter 291, article 
 11.19  1, section 55, the property will be assessed at the rate 
 11.20  provided for class 1d or class 4a or class 4b property, as 
 11.21  appropriate.  Properties described in clauses (1)(ii), (3), and 
 11.22  (4) may apply to the assessor for valuation under Laws 1991, 
 11.23  chapter 291, article 1, section 55.  The land on which these 
 11.24  structures are situated has the class rate given in paragraph 
 11.25  (b) subdivision 22a if the structure contains fewer than four 
 11.26  units, and the class rate given in paragraph (a) if the 
 11.27  structure contains four or more units.  This clause applies only 
 11.28  to the property of a nonprofit or limited dividend entity.  
 11.29     (4) a parcel of land, not to exceed one acre, and its 
 11.30  improvements or a parcel of unimproved land, not to exceed one 
 11.31  acre, if it is owned by a neighborhood real estate trust and at 
 11.32  least 60 percent of the dwelling units, if any, on all land 
 11.33  owned by the trust are leased to or occupied by lower income 
 11.34  families or individuals.  This clause does not apply to any 
 11.35  portion of the land or improvements used for nonresidential 
 11.36  purposes.  For purposes of this clause, a lower income family is 
 12.1   a family with an income that does not exceed 65 percent of the 
 12.2   median family income for the area, and a lower income individual 
 12.3   is an individual whose income does not exceed 65 percent of the 
 12.4   median individual income for the area, as determined by the 
 12.5   United States Secretary of Housing and Urban Development.  For 
 12.6   purposes of this clause, "neighborhood real estate trust" means 
 12.7   an entity which is certified by the governing body of the 
 12.8   municipality in which it is located to have the following 
 12.9   characteristics: 
 12.10     (a) it is a nonprofit corporation organized under chapter 
 12.11  317A; 
 12.12     (b) it has as its principal purpose providing housing for 
 12.13  lower income families in a specific geographic community 
 12.14  designated in its articles or bylaws; 
 12.15     (c) it limits membership with voting rights to residents of 
 12.16  the designated community; and 
 12.17     (d) it has a board of directors consisting of at least 
 12.18  seven directors, 60 percent of whom are members with voting 
 12.19  rights and, to the extent feasible, 25 percent of whom are 
 12.20  elected by resident members of buildings owned by the trust; and 
 12.21     (5) except as provided in subdivision 22, paragraph (c), 
 12.22  real property devoted to temporary and seasonal residential 
 12.23  occupancy for recreation purposes, including real property 
 12.24  devoted to temporary and seasonal residential occupancy for 
 12.25  recreation purposes and not devoted to commercial purposes for 
 12.26  more than 250 days in the year preceding the year of 
 12.27  assessment.  For purposes of this clause, property is devoted to 
 12.28  a commercial purpose on a specific day if any portion of the 
 12.29  property is used for residential occupancy, and a fee is charged 
 12.30  for residential occupancy.  Class 4c also includes commercial 
 12.31  use real property used exclusively for recreational purposes in 
 12.32  conjunction with class 4c property devoted to temporary and 
 12.33  seasonal residential occupancy for recreational purposes, up to 
 12.34  a total of two acres, provided the property is not devoted to 
 12.35  commercial recreational use for more than 250 days in the year 
 12.36  preceding the year of assessment and is located within two miles 
 13.1   of the class 4c property with which it is used.  Class 4c 
 13.2   property classified in this clause also includes the remainder 
 13.3   of class 1c resorts.  Owners of real property devoted to 
 13.4   temporary and seasonal residential occupancy for recreation 
 13.5   purposes and all or a portion of which was devoted to commercial 
 13.6   purposes for not more than 250 days in the year preceding the 
 13.7   year of assessment desiring classification as class 1c or 4c, 
 13.8   must submit a declaration to the assessor designating the cabins 
 13.9   or units occupied for 250 days or less in the year preceding the 
 13.10  year of assessment by January 15 of the assessment year.  Those 
 13.11  cabins or units and a proportionate share of the land on which 
 13.12  they are located will be designated class 1c or 4c as otherwise 
 13.13  provided.  The remainder of the cabins or units and a 
 13.14  proportionate share of the land on which they are located will 
 13.15  be designated as class 3a.  The first $100,000 of the market 
 13.16  value of the remainder of the cabins or units and a 
 13.17  proportionate share of the land on which they are located shall 
 13.18  have a the same class rate of three percent as the first 
 13.19  $100,000 of market value of commercial property under 
 13.20  subdivision 24, paragraph (a).  The owner of property desiring 
 13.21  designation as class 1c or 4c property must provide guest 
 13.22  registers or other records demonstrating that the units for 
 13.23  which class 1c or 4c designation is sought were not occupied for 
 13.24  more than 250 days in the year preceding the assessment if so 
 13.25  requested.  The portion of a property operated as a (1) 
 13.26  restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
 13.27  facility operated on a commercial basis not directly related to 
 13.28  temporary and seasonal residential occupancy for recreation 
 13.29  purposes shall not qualify for class 1c or 4c; 
 13.30     (6) real property up to a maximum of one acre of land owned 
 13.31  by a nonprofit community service oriented organization; provided 
 13.32  that the property is not used for a revenue-producing activity 
 13.33  for more than six days in the calendar year preceding the year 
 13.34  of assessment and the property is not used for residential 
 13.35  purposes on either a temporary or permanent basis.  For purposes 
 13.36  of this clause, a "nonprofit community service oriented 
 14.1   organization" means any corporation, society, association, 
 14.2   foundation, or institution organized and operated exclusively 
 14.3   for charitable, religious, fraternal, civic, or educational 
 14.4   purposes, and which is exempt from federal income taxation 
 14.5   pursuant to section 501(c)(3), (10), or (19) of the Internal 
 14.6   Revenue Code of 1986, as amended through December 31, 1990.  For 
 14.7   purposes of this clause, "revenue-producing activities" shall 
 14.8   include but not be limited to property or that portion of the 
 14.9   property that is used as an on-sale intoxicating liquor or 3.2 
 14.10  percent malt liquor establishment licensed under chapter 340A, a 
 14.11  restaurant open to the public, bowling alley, a retail store, 
 14.12  gambling conducted by organizations licensed under chapter 349, 
 14.13  an insurance business, or office or other space leased or rented 
 14.14  to a lessee who conducts a for-profit enterprise on the 
 14.15  premises.  Any portion of the property which is used for 
 14.16  revenue-producing activities for more than six days in the 
 14.17  calendar year preceding the year of assessment shall be assessed 
 14.18  as class 3a.  The use of the property for social events open 
 14.19  exclusively to members and their guests for periods of less than 
 14.20  24 hours, when an admission is not charged nor any revenues are 
 14.21  received by the organization shall not be considered a 
 14.22  revenue-producing activity; 
 14.23     (7) post-secondary student housing of not more than one 
 14.24  acre of land that is owned by a nonprofit corporation organized 
 14.25  under chapter 317A and is used exclusively by a student 
 14.26  cooperative, sorority, or fraternity for on-campus housing or 
 14.27  housing located within two miles of the border of a college 
 14.28  campus; and 
 14.29     (8) manufactured home parks as defined in section 327.14, 
 14.30  subdivision 3. 
 14.31     Except as otherwise provided in clause (5), class 4c 
 14.32  property has a class rate of 2.3 percent of market value, except 
 14.33  that (i) for each parcel of seasonal residential recreational 
 14.34  property not used for commercial purposes under clause (5) the 
 14.35  first $72,000 of market value on each parcel has a class rate of 
 14.36  1.75 percent for taxes payable in 1997 and 1.5 percent for taxes 
 15.1   payable in 1998 and thereafter, and the market value of each 
 15.2   parcel that exceeds $72,000 has a class rate of 2.5 percent, and 
 15.3   (ii) manufactured home parks assessed under clause (8) have a 
 15.4   class rate of two percent for taxes payable in 1996, and 
 15.5   thereafter. 
 15.6      (d) (c) Class 4d property includes: 
 15.7      (1) a structure that is: 
 15.8      (i) situated on real property that is used for housing for 
 15.9   the elderly or for low and moderate income families as defined 
 15.10  by the Farmers Home Administration; 
 15.11     (ii) located in a municipality of less than 10,000 
 15.12  population; and 
 15.13     (iii) financed by a direct loan or insured loan from the 
 15.14  Farmers Home Administration.  Property is classified under this 
 15.15  clause for 15 years from the date of the completion of the 
 15.16  original construction or for the original term of the loan.  
 15.17     The class rates in paragraph (c) (b), clauses (1), (2), and 
 15.18  (3) and this clause apply to the properties described in them, 
 15.19  only in proportion to occupancy of the structure by elderly or 
 15.20  handicapped persons or low and moderate income families as 
 15.21  defined in the applicable laws unless construction of the 
 15.22  structure had been commenced prior to January 1, 1984; or the 
 15.23  project had been approved by the governing body of the 
 15.24  municipality in which it is located prior to June 30, 1983; or 
 15.25  financing of the project had been approved by a federal or state 
 15.26  agency prior to June 30, 1983.  For those properties, 4c or 4d 
 15.27  classification is available only for those units meeting the 
 15.28  requirements of section 273.1318. 
 15.29     Classification under this clause is only available to 
 15.30  property of a nonprofit or limited dividend entity. 
 15.31     In the case of a structure financed or refinanced under any 
 15.32  federal or state mortgage insurance or direct loan program 
 15.33  exclusively for housing for the elderly or for housing for the 
 15.34  handicapped, a unit shall be considered occupied so long as it 
 15.35  is actually occupied by an elderly or handicapped person or, if 
 15.36  vacant, is held for rental to an elderly or handicapped person. 
 16.1      (2) For taxes payable in 1992, 1993, and 1994, only, 
 16.2   buildings and appurtenances, together with the land upon which 
 16.3   they are located, leased by the occupant under the community 
 16.4   lending model lease-purchase mortgage loan program administered 
 16.5   by the Federal National Mortgage Association, provided the 
 16.6   occupant's income is no greater than 60 percent of the county or 
 16.7   area median income, adjusted for family size and the building 
 16.8   consists of existing single family or duplex housing.  The lease 
 16.9   agreement must provide for a portion of the lease payment to be 
 16.10  escrowed as a nonrefundable down payment on the housing.  To 
 16.11  qualify under this clause, the taxpayer must apply to the county 
 16.12  assessor by May 30 of each year.  The application must be 
 16.13  accompanied by an affidavit or other proof required by the 
 16.14  assessor to determine qualification under this clause. 
 16.15     (3) Qualifying buildings and appurtenances, together with 
 16.16  the land upon which they are located, leased for a period of up 
 16.17  to five years by the occupant under a lease-purchase program 
 16.18  administered by the Minnesota housing finance agency or a 
 16.19  housing and redevelopment authority authorized under sections 
 16.20  469.001 to 469.047, provided the occupant's income is no greater 
 16.21  than 80 percent of the county or area median income, adjusted 
 16.22  for family size, and the building consists of two or less 
 16.23  dwelling units.  The lease agreement must provide for a portion 
 16.24  of the lease payment to be escrowed as a nonrefundable down 
 16.25  payment on the housing.  The administering agency shall verify 
 16.26  the occupants income eligibility and certify to the county 
 16.27  assessor that the occupant meets the income criteria under this 
 16.28  paragraph.  To qualify under this clause, the taxpayer must 
 16.29  apply to the county assessor by May 30 of each year.  For 
 16.30  purposes of this section, "qualifying buildings and 
 16.31  appurtenances" shall be defined as one or two unit residential 
 16.32  buildings which are unoccupied and have been abandoned and 
 16.33  boarded for at least six months. 
 16.34     Class 4d property has a class rate of two percent of market 
 16.35  value except that property classified under clause (3), shall 
 16.36  have the same class rate as class 1a property. 
 17.1      (e) (d) Residential rental property that would otherwise be 
 17.2   assessed as class 4 property under subdivision 22a, clauses (1) 
 17.3   and (4); paragraph (a); paragraph (b), clauses (1) and (3); 
 17.4   paragraph (c) (b), clause (1), (2), (3), or (4), is assessed at 
 17.5   the class rate applicable to it under Minnesota Statutes 1988, 
 17.6   section 273.13, if it is found to be a substandard building 
 17.7   under section 273.1316.  Residential rental property that would 
 17.8   otherwise be assessed as class 4 property under 
 17.9   paragraph (d) (c) is assessed at 2.3 percent of market value if 
 17.10  it is found to be a substandard building under section 273.1316. 
 17.11     (f) (e) Class 4e property consists of the residential 
 17.12  portion of any structure located within a city that was 
 17.13  converted from nonresidential use to residential use, provided 
 17.14  that: 
 17.15     (1) the structure had formerly been used as a warehouse; 
 17.16     (2) the structure was originally constructed prior to 1940; 
 17.17     (3) the conversion was done after December 31, 1995, but 
 17.18  before January 1, 2003; and 
 17.19     (4) the conversion involved an investment of at least 
 17.20  $25,000 per residential unit. 
 17.21     Class 4e property has a class rate of 2.3 percent, provided 
 17.22  that a structure is eligible for class 4e classification only in 
 17.23  the 12 assessment years immediately following the conversion. 
 17.24     Sec. 5.  [TIF GRANTS; APPROPRIATIONS.] 
 17.25     (a) The commissioner of revenue shall pay grants to 
 17.26  municipalities for deficits in tax increment financing districts 
 17.27  caused by the changes in class rates under this article.  
 17.28  Municipalities must submit applications for the grants in a form 
 17.29  prescribed by the commissioner by no later than March 1 for 
 17.30  taxes payable during the calendar year.  The maximum grant 
 17.31  equals the lesser of: 
 17.32     (1) the reduction in the tax increment financing district's 
 17.33  revenues derived from increment resulting from the class rate 
 17.34  reductions under this article; and 
 17.35     (2) the municipality's total available tax increments, 
 17.36  including those from previous years, less the amount due during 
 18.1   the calendar year to pay bonds issued and sold before and 
 18.2   binding contracts entered into before the day following final 
 18.3   enactment of this act. 
 18.4      If the total applications for grants exceed the amount 
 18.5   available under the appropriation, the commissioner shall 
 18.6   proportionately reduce the grant for each municipality.  These 
 18.7   grants are available for calendar years 1998, 1999, and 2000. 
 18.8      (b) $20,000,000 is appropriated to the commissioner of 
 18.9   revenue for purposes of this section.  This appropriation does 
 18.10  not cancel until June 30, 2001. 
 18.11     Sec. 6.  [ASSESSORS' REPORTS.] 
 18.12     By July 1, 1997, each county assessor and the city 
 18.13  assessors of Duluth, Minneapolis, and St. Cloud shall report 
 18.14  separately to the commissioner of revenue for the 1996 
 18.15  assessment year the market values by city and town of: 
 18.16     (1) industrial property as defined in section 2, split 
 18.17  between the value receiving a class rate of three percent and 
 18.18  the value receiving a class rate of 4.6 percent; 
 18.19     (2) commercial property as defined in section 2, split 
 18.20  between the value receiving a class rate of three percent and 
 18.21  the value receiving a class rate of 4.6 percent; and 
 18.22     (3) residential nonhomestead property under Minnesota 
 18.23  Statutes 1996, section 273.13, subdivision 25, paragraph (b), 
 18.24  clause (1), up to $72,000 market value and over $72,000 market 
 18.25  value. 
 18.26     The commissioner of revenue shall prescribe the form of the 
 18.27  report.  The commissioner shall review the reports and may make 
 18.28  any changes the commissioner determines necessary or return the 
 18.29  report to the assessor for corrections. 
 18.30     Sec. 7.  [NET TAX CAPACITY ADJUSTMENTS.] 
 18.31     Using the information reported under section 6, the 
 18.32  commissioner of revenue shall: 
 18.33     (1) reduce the 1971 base value for each municipality under 
 18.34  Minnesota Statutes, chapter 473F, by the same proportion as the 
 18.35  overall reduction in commercial-industrial net tax capacity for 
 18.36  assessment year 1996 resulting from the changes made in this 
 19.1   article; 
 19.2      (2) reduce the 1995 base value for each municipality under 
 19.3   Minnesota Statutes, chapter 276A, by the same proportion as the 
 19.4   overall reduction in commercial-industrial net tax capacity for 
 19.5   assessment year 1996 resulting from the changes made in this 
 19.6   article; and 
 19.7      (3) adjust the net tax capacities for each school district 
 19.8   under Minnesota Statutes, section 124.2131, subdivision 1, to 
 19.9   reflect the class rates contained in this article. 
 19.10     By August 1, 1997, the commissioner of revenue shall 
 19.11  certify to the administrative auditor under chapters 276A and 
 19.12  473F and each affected county assessor the revised base values 
 19.13  determined under clauses (1) and (2). 
 19.14     Sec. 8.  [REPEALER.] 
 19.15     Minnesota Statutes 1996, section 273.13, subdivision 32, is 
 19.16  repealed. 
 19.17     Sec. 9.  [EFFECTIVE DATE.] 
 19.18     Sections 1 to 4 and 8 are effective for taxes payable in 
 19.19  1998 and subsequent years. 
 19.20                             ARTICLE 2
 19.21                             STATE AIDS
 19.22     Section 1.  Minnesota Statutes 1996, section 124A.23, 
 19.23  subdivision 1, is amended to read: 
 19.24     Subdivision 1.  [GENERAL EDUCATION TAX RATE.] The 
 19.25  commissioner shall establish the general education tax rate by 
 19.26  July 1 of each year for levies payable in the following year.  
 19.27  The general education tax capacity rate shall be a rate, rounded 
 19.28  up to the nearest tenth of a percent, that, when applied to the 
 19.29  adjusted net tax capacity for all districts, raises the amount 
 19.30  specified in this subdivision.  The general education tax rate 
 19.31  shall be the rate that raises $1,054,000,000 for fiscal year 
 19.32  1996 and $1,359,000,000 for fiscal year years 1997 and 1998 and 
 19.33  $1,258,000,000 for fiscal year 1999 and later fiscal years.  The 
 19.34  general education tax rate may not be changed due to changes or 
 19.35  corrections made to a district's adjusted net tax capacity after 
 19.36  the tax rate has been established.  
 20.1      Sec. 2.  Minnesota Statutes 1996, section 273.1398, 
 20.2   subdivision 1a, is amended to read: 
 20.3      Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
 20.4   1997, the tax base differential is 0.25 percent of the 
 20.5   assessment year 1995 taxable market value of class 4c 
 20.6   noncommercial seasonal recreational residential property up to 
 20.7   $72,000.  
 20.8      (b) For aids payable in 1998, the tax base differential is 
 20.9   0.25 percent the sum of the following percentages of the 
 20.10  assessment year 1996 taxable market value of the following 
 20.11  classes of property, excluding that portion of any property's 
 20.12  value which is captured value of a tax increment financing 
 20.13  district as defined in section 469.177, subdivision 2: 
 20.14     (i) 0.75 percent of class 4c 1d noncommercial seasonal 
 20.15  recreational residential property up to $72,000., 
 20.16     (ii) 0.5 percent of class 1d noncommercial seasonal 
 20.17  recreational residential property over $72,000, 
 20.18     (iii) 1.3 percent of class 1d residential nonhomestead 
 20.19  property up to $72,000, 
 20.20     (iv) 0.3 percent of class 1d residential nonhomestead 
 20.21  property over $72,000, 
 20.22     (v) 0.25 percent of class 2a and 2b agricultural property 
 20.23  which has a class rate of 1.5 percent for taxes payable in 1997, 
 20.24     (vi) one percent of all class 3a 
 20.25  commercial/industrial/public utility property up to $100,000 
 20.26  value which has a class rate of three percent for taxes payable 
 20.27  in 1997, 
 20.28     (vii) 1.3 percent of all class 3a industrial property as 
 20.29  defined in section 273.13, subdivision 24, paragraph (a), which 
 20.30  has a class rate of 4.6 percent for taxes payable in 1997, 
 20.31     (viii) 0.3 percent of all class 3b enterprise zone property 
 20.32  up to $50,000 in value, 
 20.33     (ix) 0.3 percent of all class 3b enterprise zone property 
 20.34  over $50,000 in value, 
 20.35     (x) one percent of all class 3b border city enterprise zone 
 20.36  property up to $100,000 value which has a class rate of three 
 21.1   percent for taxes payable in 1997, and 
 21.2      (xi) 1.3 percent of all class 3b border city enterprise 
 21.3   zone property which has a class rate of 4.6 percent for taxes 
 21.4   payable in 1997. 
 21.5      For properties lying within the area defined in section 
 21.6   473F.02, subdivision 2, the value of properties in clauses (vi) 
 21.7   to (xi) must be reduced by the ratio determined under section 
 21.8   473F.08, subdivision 6.  
 21.9      For properties lying within the area defined in section 
 21.10  276A.01, subdivision 2, the value of properties in clauses (vi) 
 21.11  to (xi) must be reduced by the ratio determined under section 
 21.12  276A.06, subdivision 7. 
 21.13     Sec. 3.  Minnesota Statutes 1996, section 273.1398, 
 21.14  subdivision 8, is amended to read: 
 21.15     Subd. 8.  [APPROPRIATION.] An amount sufficient to pay the 
 21.16  aids and credits provided under this section for school 
 21.17  districts, intermediate school districts, or any group of school 
 21.18  districts levying as a single taxing entity, is annually 
 21.19  appropriated from the general fund to the commissioner of 
 21.20  children, families, and learning.  An amount sufficient to pay 
 21.21  the aids and credits provided under this section for counties, 
 21.22  cities, towns, and special taxing districts is annually 
 21.23  appropriated from the general fund to the commissioner of 
 21.24  revenue.  A jurisdiction's aid amount may be increased or 
 21.25  decreased based on any prior year adjustments for homestead 
 21.26  credit or other property tax credit or aid programs. 
 21.27     Sec. 4.  Minnesota Statutes 1996, section 477A.011, is 
 21.28  amended by adding a subdivision to read: 
 21.29     Subd. 3b.  [SPRAWL POPULATION.] For a city with a 
 21.30  population of 5,000 or more which is located outside of the 
 21.31  metropolitan area, "sprawl population" is the total population 
 21.32  of all municipalities and unorganized townships that have a 
 21.33  geographic center closer to the geographic center of the city 
 21.34  than to the geographic center of any other city with a 
 21.35  population of 5,000 or more.  For a city with a population less 
 21.36  than 5,000, or a city located in the metropolitan area, the 
 22.1   sprawl population is zero. 
 22.2      Sec. 5.  Minnesota Statutes 1996, section 477A.011, is 
 22.3   amended by adding a subdivision to read: 
 22.4      Subd. 3c.  [ADJUSTED POPULATION.] "Adjusted population" is 
 22.5   the sum of a city's population plus five percent of the city's 
 22.6   sprawl population. 
 22.7      Sec. 6.  Minnesota Statutes 1996, section 477A.011, is 
 22.8   amended by adding a subdivision to read: 
 22.9      Subd. 20a.  [NET TAX CAPACITY PER CAPITA.] "Net tax 
 22.10  capacity per capita" is equal to a city's net tax capacity 
 22.11  divided by the city's population. 
 22.12     Sec. 7.  Minnesota Statutes 1996, section 477A.011, is 
 22.13  amended by adding a subdivision to read: 
 22.14     Subd. 32a.  [POVERTY PERCENTAGE.] "Poverty percentage" for 
 22.15  a city is 100 times the ratio of the number of households below 
 22.16  the poverty line to the total number of households in the city 
 22.17  according to the most recent federal census. 
 22.18     Sec. 8.  Minnesota Statutes 1996, section 477A.011, is 
 22.19  amended by adding a subdivision to read: 
 22.20     Subd. 33a.  [CITY DECLINE FACTOR.] "City decline factor" is 
 22.21  the product of the city's (1) pre-1940 housing percentage, (2) 
 22.22  commercial industrial percentage, and (3) population decline 
 22.23  percentage. 
 22.24     Sec. 9.  Minnesota Statutes 1996, section 477A.011, 
 22.25  subdivision 34, is amended to read: 
 22.26     Subd. 34.  [CITY REVENUE NEED PER CAPITA.] (a) For a city 
 22.27  with a population equal to or greater than 2,500, "city revenue 
 22.28  need per capita" is the sum of (1) 3.462312 6.110762 times the 
 22.29  pre-1940 housing percentage; plus (2) 2.093826 5.744915 times 
 22.30  the commercial industrial percentage; plus (3) 6.862552 0.024686 
 22.31  times the population city decline percentage factor; plus 
 22.32  (4) .00026 9.784552 times the city population; plus (5) 152.0141 
 22.33  poverty percentage. 
 22.34     (b) For a city with a population less than 2,500, "city 
 22.35  revenue need per capita" is the sum of (1) 1.795919 times the 
 22.36  pre-1940 housing percentage; plus (2) 1.562138 times the 
 23.1   commercial industrial percentage; plus (3) 4.177568 times the 
 23.2   population decline percentage; plus (4) 1.04013 times the 
 23.3   transformed population; minus (5) 107.475. 
 23.4      (c) The City revenue need per capita cannot be less than 
 23.5   zero. 
 23.6      (d) For calendar year 1995 and subsequent years, the city 
 23.7   revenue need per capita for a city with a population less than 
 23.8   2,500, as determined in paragraphs (a) to (b) and (c), is 
 23.9   multiplied by the ratio of the annual implicit price deflator 
 23.10  for state and local government purchases, as prepared by the 
 23.11  United States Department of Commerce, for the most recently 
 23.12  available year to the 1993 implicit price deflator for state and 
 23.13  local government purchases. 
 23.14     (e) For calendar year 1999 and subsequent years, the city 
 23.15  revenue need per capita for a city with a population of 2,500 or 
 23.16  more, as determined in paragraphs (a) and (c), is multiplied by 
 23.17  the ratio of the annual implicit price deflator for state and 
 23.18  local government purchases, as prepared by the United States 
 23.19  Department of Commerce, for the most recent available year to 
 23.20  the 1996 implicit price deflator for state and local government 
 23.21  purchases. 
 23.22     Sec. 10.  Minnesota Statutes 1996, section 477A.011, is 
 23.23  amended by adding a subdivision to read: 
 23.24     Subd. 38.  [NEED ADJUSTMENT FACTOR.] The "need adjustment 
 23.25  factor" for a city equals the square root of the ratio of (1) 
 23.26  735 less the city's net tax capacity per capita, to (2) 100.  If 
 23.27  the city's net tax capacity per capita is greater than 735, its 
 23.28  need adjustment factor is zero. 
 23.29     Sec. 11.  Minnesota Statutes 1996, section 477A.011, is 
 23.30  amended by adding a subdivision to read: 
 23.31     Subd. 39.  [ACRES.] The "number of acres in a town" are the 
 23.32  number of acres of land in the town, according to the most 
 23.33  recent federal census, adjusted for any annexations and 
 23.34  detachments as provided in section 477A.014, subdivision 1. 
 23.35     Sec. 12.  Minnesota Statutes 1996, section 477A.011, is 
 23.36  amended by adding a subdivision to read: 
 24.1      Subd. 40.  [AGRICULTURAL NET TAX CAPACITY.] The 
 24.2   "agricultural net tax capacity" for a town is equal to the net 
 24.3   tax capacity for all property in the town that is classified as 
 24.4   2a or 2b under section 273.13, subdivision 23, except that 
 24.5   property classified as 2b under section 273.13, subdivision 23, 
 24.6   paragraph (b), clause (4), does not qualify as agricultural 
 24.7   property for purposes of this subdivision. 
 24.8      Sec. 13.  Minnesota Statutes 1996, section 477A.013, 
 24.9   subdivision 1, is amended to read: 
 24.10     Subdivision 1.  [TOWNS.] In 1994 each town that had levied 
 24.11  for taxes payable in the prior year a local tax rate of at least 
 24.12  .008 shall receive a distribution equal to the amount it 
 24.13  received in 1993 under this section before any nonpermanent 
 24.14  reductions made under section 477A.0132.  In 1995 each town that 
 24.15  had levied for taxes payable in 1993 a local tax rate of at 
 24.16  least .008 shall receive a distribution equal to 102 percent of 
 24.17  the amount it received in 1994 under this section before any 
 24.18  increases or reductions under sections 16A.711, subdivision 5, 
 24.19  and 477A.0132.  In 1996 and subsequent years each town that had 
 24.20  levied for taxes payable in 1993 a local tax rate of at least 
 24.21  .008 shall receive a distribution equal to the amount it 
 24.22  received in the previous year under this section, adjusted for 
 24.23  inflation as provided under section 477A.03, subdivision 3.  In 
 24.24  calendar year 1998 and subsequent years, the amount of aid that 
 24.25  a town receives is equal to (1) the aid factor multiplied by the 
 24.26  number of acres in the town, less (2) 0.10 multiplied by the 
 24.27  difference between the town's net tax capacity and its 
 24.28  agricultural net tax capacity.  In 1998 the aid factor is $1.  
 24.29  In 1999 and subsequent years the aid factor is the aid factor 
 24.30  from the previous year adjusted for inflation as provided under 
 24.31  section 477A.03, subdivision 3.  If the town's agricultural net 
 24.32  tax capacity is less than 40 percent of its total net tax 
 24.33  capacity the amount of aid it receives is zero.  No town may 
 24.34  have an aid amount less than zero. 
 24.35     Sec. 14.  Minnesota Statutes 1996, section 477A.013, 
 24.36  subdivision 8, is amended to read: 
 25.1      Subd. 8.  [CITY FORMULA AID.] In calendar year 1994 1998 
 25.2   and subsequent years, the formula aid for a city is equal to the 
 25.3   need increase percentage multiplied by the difference between 
 25.4   (1) the city's revenue need multiplied by its population, and 
 25.5   (2) the city's net tax capacity multiplied by the tax effort 
 25.6   rate the product of (1) a scaling factor, (2) the city's 
 25.7   adjusted population, and (3) the sum of (i) 80, (ii) 0.7 
 25.8   multiplied by the city's revenue need per capita, (iii) -0.2 
 25.9   multiplied by the city's net tax capacity per capita, and (iv) 
 25.10  the city's revenue need per capita multiplied by its need 
 25.11  adjustment factor.  No city may have a formula aid amount less 
 25.12  than zero.  The need increase percentage scaling factor must be 
 25.13  the same for all cities.  
 25.14     Notwithstanding the prior sentence, in 1995 only, the need 
 25.15  increase percentage for a city shall be twice the need increase 
 25.16  percentage applicable to other cities if:  
 25.17     (1) the city, in 1992 or 1993, transferred an amount from 
 25.18  governmental funds to their sewer and water fund, and 
 25.19     (2) the amount transferred exceeded their net levy for 
 25.20  taxes payable in the year in which the transfer occurred. 
 25.21     The applicable need increase percentage or percentages 
 25.22  scaling factor must be calculated by the department of revenue 
 25.23  so that the total of the aid under subdivision 9 equals the 
 25.24  total amount available for aid under section 477A.03.  
 25.25     Sec. 15.  Minnesota Statutes 1996, section 477A.013, 
 25.26  subdivision 9, is amended to read: 
 25.27     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
 25.28  1994 1998 and thereafter, each city shall receive an aid 
 25.29  distribution equal to the sum of (1) the city formula aid under 
 25.30  subdivision 8, and (2) its city aid base its city formula aid 
 25.31  subject to the limit in paragraph (b). 
 25.32     (b) The percentage increase for a first class city in 
 25.33  calendar year 1995 and thereafter shall not exceed the 
 25.34  percentage increase in the sum of the aid to all cities under 
 25.35  this section in the current calendar year compared to the sum of 
 25.36  the aid to all cities in the previous year. 
 26.1      (c) The total aid for any city, except a first class city, 
 26.2   shall not exceed the sum of (1) ten 25 percent of the city's net 
 26.3   levy for the year prior to the aid distribution plus (2) its 
 26.4   total aid in the previous year before any increases or decreases 
 26.5   under sections 16A.711, subdivision 5, and section 477A.0132. 
 26.6      (d) Notwithstanding paragraph (c), in 1995 only, for cities 
 26.7   which in 1992 or 1993 transferred an amount from governmental 
 26.8   funds to their sewer and water fund in an amount greater than 
 26.9   their net levy for taxes payable in the year in which the 
 26.10  transfer occurred, the total aid shall not exceed the sum of (1) 
 26.11  20 percent of the city's net levy for the year prior to the aid 
 26.12  distribution plus (2) its total aid in the previous year before 
 26.13  any increases or decreases under sections 16A.711, subdivision 
 26.14  5, and 477A.0132. 
 26.15     (c) Notwithstanding paragraphs (a) and (b), if a city with 
 26.16  a population of 2,500 or more has a reduction in its net tax 
 26.17  capacity of 20 percent or more in an assessment year compared to 
 26.18  the previous year, the following limits and minimums shall apply:
 26.19     (1) for aid distributed in the year immediately following 
 26.20  the assessment year of the net tax capacity loss, the aid may 
 26.21  not increase by more than an amount equal to the product of (i) 
 26.22  17 percent plus a percent equal to the percent loss in net tax 
 26.23  capacity and (ii) the city's net levy for the year prior to the 
 26.24  aid distribution; 
 26.25     (2) for aid distributed in the five years following the 
 26.26  assessment year of the net tax capacity loss, the aid may not be 
 26.27  less than an amount equal to the following: 
 26.28     (i) for the first year, the amount of the net tax capacity 
 26.29  loss multiplied by the city tax rate from the previous year; 
 26.30     (ii) for the second year, 80 percent of the minimum amount 
 26.31  guaranteed in the first year; 
 26.32     (iii) for the third year, 60 percent of the minimum amount 
 26.33  guaranteed in the first year; 
 26.34     (iv) for the fourth year, 40 percent of the minimum amount 
 26.35  guaranteed in the first year; 
 26.36     (v) for the fifth year, 20 percent of the minimum amount 
 27.1   guaranteed in the first year. 
 27.2      A city must notify the commissioner of revenue by July 1 of 
 27.3   the year prior to the first year it would qualify for provisions 
 27.4   under this paragraph in order to be eligible for aid adjustments 
 27.5   under this paragraph.  The city must also furnish the 
 27.6   commissioner with any information needed to administer the 
 27.7   provisions of this paragraph. 
 27.8      Sec. 16.  Minnesota Statutes 1996, section 477A.03, 
 27.9   subdivision 2, is amended to read: 
 27.10     Subd. 2.  [ANNUAL APPROPRIATION.] A sum sufficient to 
 27.11  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 27.12  annually appropriated from the general fund to the commissioner 
 27.13  of revenue.  For aids payable in 1996 1998 and thereafter, the 
 27.14  total aids paid under sections 477A.013, subdivision 9, 
 27.15  477A.0121 and 477A.0122 are the amounts certified to be paid in 
 27.16  the previous year, adjusted for inflation as provided under 
 27.17  subdivision 3.  Aid payments to counties cities under section 
 27.18  477A.0121 477A.013, subdivision 9, are limited to $20,265,000 in 
 27.19  1996 $449,344,394 in 1998.  Aid payments to counties under 
 27.20  section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
 27.21  payable in 1998 1999 and thereafter, the total aids paid under 
 27.22  section 477A.0121 477A.013, subdivision 9, are the amounts 
 27.23  certified to be paid in the previous year, adjusted for 
 27.24  inflation as provided under subdivision 3. 
 27.25     Sec. 17.  [AID REDUCTIONS.] 
 27.26     Calendar year 1998 homestead and agricultural credit aid 
 27.27  under Minnesota Statutes, section 273.1398, subdivision 2, to 
 27.28  each county, city, and school district shall be permanently 
 27.29  reduced by an amount equal to one percent of the jurisdiction's 
 27.30  1996 adjusted net tax capacity.  For the purposes of this 
 27.31  section, a jurisdiction's "adjusted net tax capacity" is 
 27.32  determined under the methodology specified for school districts 
 27.33  in Minnesota Statutes, section 124.2131.  The reduction shall be 
 27.34  made after all adjustments under Minnesota Statutes, section 
 27.35  273.1398, subdivision 2, have been made. 
 27.36     Sec. 18.  [REPEALER.] 
 28.1      Minnesota Statutes 1996, section 477A.011, subdivisions 35, 
 28.2   36, and 37, are repealed. 
 28.3      Sec. 19.  [EFFECTIVE DATE.] 
 28.4      This article is effective for aids payable in 1998 and 
 28.5   thereafter. 
 28.6                              ARTICLE 3 
 28.7                         PROPERTY TAX REFUND 
 28.8      Section 1.  Minnesota Statutes 1996, section 290A.03, 
 28.9   subdivision 6, is amended to read: 
 28.10     Subd. 6.  [HOMESTEAD.] "Homestead" means: 
 28.11     the dwelling occupied as the claimant's principal residence 
 28.12  and so much of the land surrounding it, not exceeding ten acres, 
 28.13  as is reasonably necessary for use of the dwelling as a home and 
 28.14  any other property used for purposes of a homestead as defined 
 28.15  in section 273.13, subdivision 22, except for agricultural land 
 28.16  assessed as part of a homestead pursuant to section 273.13, 
 28.17  subdivision 23, "homestead" is limited to 320 acres or, where 
 28.18  the farm homestead is rented, one acre a farm homestead under 
 28.19  subdivision 6a.  The homestead may be owned or rented and may be 
 28.20  a part of a multidwelling or multipurpose building and the land 
 28.21  on which it is built.  
 28.22     A manufactured home, as defined in section 273.125, 
 28.23  subdivision 8, or a park trailer taxed as a manufactured home 
 28.24  under section 168.012, subdivision 9, assessed as personal 
 28.25  property may be a dwelling for purposes of this subdivision. 
 28.26     Sec. 2.  Minnesota Statutes 1996, section 290A.03, is 
 28.27  amended by adding a subdivision to read: 
 28.28     Subd. 6a.  [FARM HOMESTEAD.] "Farm homestead" means the 
 28.29  house occupied as the claimant's principal residence, garage, 
 28.30  and up to 320 acres of the agricultural land assessed as part of 
 28.31  the homestead under section 273.13, subdivision 23, paragraph 
 28.32  (a), including any other improvements located on the land. 
 28.33     Sec. 3.  Minnesota Statutes 1996, section 290A.03, 
 28.34  subdivision 13, is amended to read: 
 28.35     Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
 28.36  payable" means the property tax exclusive of special 
 29.1   assessments, penalties, and interest payable on a claimant's 
 29.2   homestead or farm homestead before reductions made under section 
 29.3   273.13 but after deductions made under sections 273.135, 
 29.4   273.1391, 273.42, subdivision 2, and any other state paid 
 29.5   property tax credits in any calendar year.  In the case of a 
 29.6   claimant who makes ground lease payments, "property taxes 
 29.7   payable" includes the amount of the payments directly 
 29.8   attributable to the property taxes assessed against the parcel 
 29.9   on which the house is located.  No apportionment or reduction of 
 29.10  the "property taxes payable" shall be required for the use of a 
 29.11  portion of the claimant's homestead or farm homestead for a 
 29.12  business purpose if the claimant does not deduct any business 
 29.13  depreciation expenses for the use of a portion of the 
 29.14  homestead or farm homestead in the determination of federal 
 29.15  adjusted gross income.  For homesteads which are manufactured 
 29.16  homes as defined in section 273.125, subdivision 8, and for 
 29.17  homesteads which are park trailers taxed as manufactured homes 
 29.18  under section 168.012, subdivision 9, "property taxes payable" 
 29.19  shall also include the amount of the gross rent paid in the 
 29.20  preceding year for the site on which the homestead is located, 
 29.21  which is attributable to the net tax paid on the site.  The 
 29.22  amount attributable to property taxes shall be determined by 
 29.23  multiplying the net tax on the parcel by a fraction, the 
 29.24  numerator of which is the gross rent paid for the calendar year 
 29.25  for the site and the denominator of which is the gross rent paid 
 29.26  for the calendar year for the parcel.  When a homestead or farm 
 29.27  homestead is owned by two or more persons as joint tenants or 
 29.28  tenants in common, such tenants shall determine between them 
 29.29  which tenant may claim the property taxes payable on the 
 29.30  homestead or farm homestead.  If they are unable to agree, the 
 29.31  matter shall be referred to the commissioner of revenue whose 
 29.32  decision shall be final.  Property taxes are considered payable 
 29.33  in the year prescribed by law for payment of the taxes. 
 29.34     In the case of a claim relating to "property taxes 
 29.35  payable," the claimant must have owned and occupied the 
 29.36  homestead or farm homestead on January 2 of the year in which 
 30.1   the tax is payable and (i) the property must have been 
 30.2   classified as homestead property pursuant to section 273.13, 
 30.3   subdivision 22 or 23, on or before December 15 of the assessment 
 30.4   year to which the "property taxes payable" relate; or (ii) the 
 30.5   claimant must provide documentation from the local assessor that 
 30.6   application for homestead classification has been made on or 
 30.7   before December 15 of the year in which the "property taxes 
 30.8   payable" were payable and that the assessor has approved the 
 30.9   application. 
 30.10     Sec. 4.  Minnesota Statutes 1996, section 290A.04, 
 30.11  subdivision 1, is amended to read: 
 30.12     Subdivision 1.  A refund shall be allowed each claimant in 
 30.13  the amount that property taxes payable or rent constituting 
 30.14  property taxes exceed the percentage of the household income of 
 30.15  the claimant specified in subdivision 2 or, 2a, or 2j in the 
 30.16  year for which the taxes were levied or in the year in which the 
 30.17  rent was paid as specified in subdivision 2 or, 2a, or 2j.  If 
 30.18  the amount of property taxes payable or rent constituting 
 30.19  property taxes is equal to or less than the percentage of the 
 30.20  household income of the claimant specified in subdivision 2 or, 
 30.21  2a, or 2j in the year for which the taxes were levied or in the 
 30.22  year in which the rent was paid, the claimant shall not be 
 30.23  eligible for a state refund pursuant to this section.  
 30.24     Sec. 5.  Minnesota Statutes 1996, section 290A.04, 
 30.25  subdivision 2, is amended to read: 
 30.26     Subd. 2.  [HOMEOWNERS.] A claimant whose property taxes 
 30.27  payable on a homestead as defined in section 290A.03, 
 30.28  subdivision 6, are in excess of the percentage of the household 
 30.29  income stated below shall pay an amount equal to the percent of 
 30.30  income shown for the appropriate household income level along 
 30.31  with the percent to be paid by the claimant of the remaining 
 30.32  amount of property taxes payable.  The state refund equals the 
 30.33  amount of property taxes payable that remain, up to the state 
 30.34  refund amount shown below.  
 30.35                        Percent           Percent    Maximum
 30.36  Household Income     of Income          Paid by     State
 30.37                                          Claimant    Refund
 31.1       $0 to 1,029     1.2 percent        18 percent   $440
 31.2    1,030 to 2,059     1.3 percent        18 percent   $440
 31.3    2,060 to 3,099     1.4 percent        20 percent   $440
 31.4    3,100 to 4,129     1.6 percent        20 percent   $440
 31.5    4,130 to 5,159     1.7 percent        20 percent   $440
 31.6    5,160 to 7,229     1.9 percent        25 percent   $440
 31.7    7,230 to 8,259     2.1 percent        25 percent   $440
 31.8    8,260 to 9,289     2.2 percent        25 percent   $440
 31.9    9,290 to 10,319    2.3 percent        30 percent   $440
 31.10  10,320 to 11,349    2.4 percent        30 percent   $440
 31.11  11,350 to 12,389    2.5 percent        30 percent   $440
 31.12  12,390 to 14,449    2.6 percent        30 percent   $440
 31.13  14,450 to 15,479    2.8 percent        35 percent   $440
 31.14  15,480 to 16,509    3.0 percent        35 percent   $440
 31.15  16,510 to 17,549    3.2 percent        40 percent   $440
 31.16  17,550 to 21,669    3.3 percent        40 percent   $440
 31.17  21,670 to 24,769    3.4 percent        45 percent   $440
 31.18  24,770 to 30,959    3.5 percent        45 percent   $440
 31.19  30,960 to 36,119    3.5 percent        45 percent   $440
 31.20  36,120 to 41,279    3.7 percent        50 percent   $440
 31.21  41,280 to 58,829    4.0 percent        50 percent   $440
 31.22  58,830 to 59,859    4.0 percent        50 percent   $310
 31.23  59,860 to 60,889    4.0 percent        50 percent   $210
 31.24  60,890 to 61,929    4.0 percent        50 percent   $100 
 31.25      $0 to 1,059     1.2 percent        18 percent   $850
 31.26   1,060 to 2,119     1.3 percent        18 percent   $850
 31.27   2,120 to 3,188     1.4 percent        20 percent   $850
 31.28   3,189 to 4,247     1.6 percent        20 percent   $850
 31.29   4,248 to 5,307     1.7 percent        20 percent   $850
 31.30   5,308 to 7,435     1.9 percent        25 percent   $850
 31.31   7,436 to 8,495     2.0 percent        25 percent   $850
 31.32   8,496 to 9,554     2.1 percent        25 percent   $850
 31.33   9,555 to 10,613    2.1 percent        30 percent   $850
 31.34  10,614 to 11,673    2.2 percent        30 percent   $850
 31.35  11,674 to 12,742    2.2 percent        30 percent   $850
 31.36  12,743 to 14,861    2.3 percent        30 percent   $850
 31.37  14,862 to 15,920    2.4 percent        35 percent   $850
 31.38  15,921 to 16,979    2.6 percent        35 percent   $850
 31.39  16,980 to 18,049    2.8 percent        40 percent   $850
 31.40  18,050 to 22,286    3.0 percent        40 percent   $850
 31.41  22,287 to 25,474    3.2 percent        45 percent   $850
 31.42  25,475 to 31,840    3.3 percent        45 percent   $850
 31.43  31,841 to 37,147    3.5 percent        45 percent   $850
 31.44  37,148 to 42,453    3.7 percent        50 percent   $850
 31.45  42,454 to 60,502    4.0 percent        50 percent   $850
 31.46  60,503 to 61,561    4.0 percent        50 percent   $600
 31.47  61,562 to 62,621    4.0 percent        50 percent   $300
 31.48  62,622 to 63,689    4.0 percent        50 percent   $100 
 31.49     The payment made to a claimant shall be the amount of the 
 31.50  state refund calculated under this subdivision.  No payment is 
 31.51  allowed if the claimant's household income is $61,930 $63,690 or 
 31.52  more. 
 31.53     Sec. 6.  Minnesota Statutes 1996, section 290A.04, 
 31.54  subdivision 2a, is amended to read: 
 31.55     Subd. 2a.  [RENTERS.] A claimant whose rent constituting 
 31.56  property taxes exceeds the percentage of the household income 
 31.57  stated below must pay an amount equal to the percent of income 
 31.58  shown for the appropriate household income level along with the 
 31.59  percent to be paid by the claimant of the remaining amount of 
 32.1   rent constituting property taxes.  The state refund equals the 
 32.2   amount of rent constituting property taxes that remain, up to 
 32.3   the maximum state refund amount shown below.  
 32.4                         Percent           Percent      Maximum
 32.5   Household Income     of Income          Paid by        State
 32.6                                           Claimant      Refund
 32.7   $     0 to 3,099     1.0 percent         5 percent    $1,030  
 32.8     3,100 to 4,129     1.0 percent        10 percent    $1,030  
 32.9     4,130 to 5,159     1.1 percent        10 percent    $1,030  
 32.10    5,160 to 7,229     1.2 percent        10 percent    $1,030
 32.11    7,230 to 9,289     1.3 percent        15 percent    $1,030    
 32.12    9,290 to 10,319    1.4 percent        15 percent    $1,030
 32.13   10,320 to 11,349    1.4 percent        20 percent    $1,030
 32.14   11,350 to 13,419    1.5 percent        20 percent    $1,030
 32.15   13,420 to 14,449    1.6 percent        20 percent    $1,030
 32.16   14,450 to 15,479    1.7 percent        25 percent    $1,030
 32.17   15,480 to 17,549    1.8 percent        25 percent    $1,030 
 32.18   17,550 to 18,579    1.9 percent        30 percent    $1,030 
 32.19   18,580 to 19,609    2.0 percent        30 percent    $1,030  
 32.20   19,610 to 20,639    2.2 percent        30 percent    $1,030
 32.21   20,640 to 21,669    2.4 percent        30 percent    $1,030
 32.22   21,670 to 22,709    2.6 percent        35 percent    $1,030
 32.23   22,710 to 23,739    2.7 percent        35 percent    $1,030
 32.24   23,740 to 24,769    2.8 percent        35 percent    $1,030
 32.25   24,770 to 25,799    2.9 percent        40 percent    $1,030 
 32.26   25,800 to 26,839    3.0 percent        40 percent    $1,030  
 32.27   26,840 to 27,869    3.1 percent        40 percent    $1,030  
 32.28   27,870 to 28,899    3.2 percent        40 percent    $1,030
 32.29   28,900 to 29,929    3.3 percent        45 percent    $  930
 32.30   29,930 to 30,959    3.4 percent        45 percent    $  830
 32.31   30,960 to 31,999    3.5 percent        45 percent    $  720
 32.32   32,000 to 33,029    3.5 percent        50 percent    $  620
 32.33   33,030 to 34,059    3.5 percent        50 percent    $  520  
 32.34   34,060 to 35,089    3.5 percent        50 percent    $  310  
 32.35   35,090 to 36,119    3.5 percent        50 percent    $  100
 32.36       $0 to 3,189     1.0 percent         5 percent    $2,000  
 32.37    3,190 to 4,249     1.0 percent        10 percent    $2,000  
 32.38    4,250 to 6,369     1.1 percent        10 percent    $2,000  
 32.39    6,370 to 7,439     1.2 percent        10 percent    $2,000
 32.40    7,440 to 9,549     1.3 percent        10 percent    $2,000    
 32.41    9,550 to 10,609    1.4 percent        10 percent    $2,000
 32.42   10,610 to 11,669    1.4 percent        10 percent    $2,000
 32.43   11,670 to 13,799    1.5 percent        10 percent    $2,000
 32.44   13,800 to 14,859    1.6 percent        10 percent    $2,000
 32.45   14,860 to 15,919    1.7 percent        10 percent    $2,000
 32.46   15,920 to 18,049    1.8 percent        10 percent    $2,000 
 32.47   18,050 to 19,109    1.9 percent        10 percent    $2,000 
 32.48   19,110 to 20,169    2.0 percent        10 percent    $2,000  
 32.49   20,170 to 21,229    2.2 percent        15 percent    $2,000
 32.50   21,230 to 22,289    2.4 percent        15 percent    $2,000
 32.51   22,290 to 23,359    2.6 percent        15 percent    $2,000
 32.52   23,360 to 24,419    2.7 percent        15 percent    $2,000
 32.53   24,420 to 25,469    2.8 percent        15 percent    $2,000
 32.54   25,470 to 26,529    2.9 percent        20 percent    $2,000 
 32.55   25,530 to 27,599    3.0 percent        20 percent    $2,000  
 32.56   27,600 to 28,659    3.1 percent        20 percent    $2,000  
 32.57   28,660 to 29,719    3.2 percent        20 percent    $2,000
 32.58   27,720 to 30,779    3.3 percent        25 percent    $1,920
 32.59   30,780 to 31,839    3.4 percent        25 percent    $1,700
 32.60   31,840 to 32,909    3.5 percent        25 percent    $1,480
 32.61   32,910 to 33,969    3.5 percent        30 percent    $1,280
 32.62   33,970 to 35,029    3.5 percent        30 percent    $1,080  
 32.63   35,030 to 37,149    3.5 percent        30 percent    $  640  
 32.64   36,090 to 39,999    3.5 percent        30 percent    $  200
 32.65     The payment made to a claimant is the amount of the state 
 32.66  refund calculated under this subdivision.  No payment is allowed 
 33.1   if the claimant's household income is $36,120 $40,000 or more. 
 33.2      Sec. 7.  Minnesota Statutes 1996, section 290A.04, is 
 33.3   amended by adding a subdivision to read: 
 33.4      Subd. 2j.  [FARM HOMESTEADS.] A claimant whose property 
 33.5   taxes payable on a farm homestead as defined in section 290A.03, 
 33.6   subdivision 6a, are in excess of the percentage of the household 
 33.7   income stated in this subdivision shall pay an amount equal to 
 33.8   the percent of income shown for the appropriate household income 
 33.9   level along with the percent to be paid by the claimant of the 
 33.10  remaining amount of property taxes payable.  The state refund 
 33.11  equals the amount of property taxes payable that remain, up to 
 33.12  the state refund amount shown in this subdivision. 
 33.13  Household Income      Percent           Percent    Maximum
 33.14                       of Income          Paid by     State
 33.15                                          Claimant    Refund
 33.16      $0 to 1,059     1.2 percent        18 percent   $500
 33.17   1,060 to 2,119     1.3 percent        18 percent   $500
 33.18   2,120 to 3,188     1.4 percent        20 percent   $500
 33.19   3,189 to 4,247     1.6 percent        20 percent   $500
 33.20   4,248 to 5,307     1.7 percent        20 percent   $500
 33.21   5,308 to 7,435     1.9 percent        25 percent   $500
 33.22   7,436 to 8,495     2.0 percent        25 percent   $500
 33.23   8,496 to 9,554     2.1 percent        25 percent   $500
 33.24   9,555 to 10,613    2.1 percent        30 percent   $500
 33.25  10,614 to 11,673    2.2 percent        30 percent   $500
 33.26  11,674 to 12,742    2.2 percent        30 percent   $500
 33.27  12,743 to 14,861    2.3 percent        30 percent   $500
 33.28  14,862 to 15,920    2.4 percent        35 percent   $500
 33.29  15,921 to 16,979    2.6 percent        35 percent   $500
 33.30  16,980 to 18,049    2.8 percent        40 percent   $500
 33.31  18,050 to 22,286    3.0 percent        40 percent   $500
 33.32  22,287 to 25,474    3.2 percent        45 percent   $500
 33.33  25,475 to 31,840    3.3 percent        45 percent   $500
 33.34  31,841 to 37,147    3.5 percent        45 percent   $500
 33.35  37,148 to 42,453    3.7 percent        50 percent   $500
 33.36  42,454 to 60,502    4.0 percent        50 percent   $500
 33.37  60,503 to 61,561    4.0 percent        50 percent   $400
 33.38  61,562 to 62,621    4.0 percent        50 percent   $300
 33.39  62,622 to 63,689    4.0 percent        50 percent   $100
 33.40     The payment made to a claimant shall be the amount of the 
 33.41  state refund calculated under this subdivision.  No payment is 
 33.42  allowed if the claimant's household income is $63,690 or more. 
 33.43     Sec. 8.  Minnesota Statutes 1996, section 290A.04, 
 33.44  subdivision 6, is amended to read: 
 33.45     Subd. 6.  [INFLATION ADJUSTMENT.] Beginning for property 
 33.46  tax refunds payable in calendar year 1996 1999, the commissioner 
 33.47  shall annually adjust the dollar amounts of the income 
 33.48  thresholds and the maximum refunds under subdivisions 2 and, 2a, 
 33.49  and 2j for inflation.  The commissioner shall make the inflation 
 34.1   adjustments in accordance with section 290.06, subdivision 2d, 
 34.2   except that for purposes of this subdivision the percentage 
 34.3   increase shall be determined from the year ending on August 31, 
 34.4   1994 1997, to the year ending on August 31 of the year preceding 
 34.5   that in which the refund is payable.  The commissioner shall use 
 34.6   the appropriate percentage increase to annually adjust the 
 34.7   income thresholds and maximum refunds under subdivisions 2 and, 
 34.8   2a, and 2j for inflation without regard to whether or not the 
 34.9   income tax brackets are adjusted for inflation in that year.  
 34.10  The commissioner shall round the thresholds and the maximum 
 34.11  amounts, as adjusted to the nearest $10 amount.  If the amount 
 34.12  ends in $5, the commissioner shall round it up to the next $10 
 34.13  amount.  
 34.14     The commissioner shall annually announce the adjusted 
 34.15  refund schedule at the same time provided under section 290.06.  
 34.16  The determination of the commissioner under this subdivision is 
 34.17  not a rule under the administrative procedure act. 
 34.18     Sec. 9.  [REPEALER.] 
 34.19     Laws 1995, chapter 264, article 4, as amended by Laws 1996, 
 34.20  chapter 471, article 3, is repealed.  Notwithstanding Minnesota 
 34.21  Statutes 1996, section 645.34, the sections of statutes amended 
 34.22  by the repealed Laws 1995, chapter 264, article 4, as amended by 
 34.23  Laws 1996, chapter 471, article 3, remain in effect as if not so 
 34.24  amended. 
 34.25     Sec. 10.  [EFFECTIVE DATE.] 
 34.26     Sections 1 to 8 are effective for refunds claimed for 
 34.27  property taxes payable in 1998 and thereafter.  Section 9 is 
 34.28  effective the day following final enactment. 
 34.29                             ARTICLE 4
 34.30               SENIOR CITIZENS PROPERTY TAX DEFERRAL 
 34.31     Section 1.  Minnesota Statutes 1996, section 270B.12, is 
 34.32  amended by adding a subdivision to read: 
 34.33     Subd. 12.  [PROPERTY TAX DEFERRAL.] The commissioner may 
 34.34  disclose to a county auditor and treasurer, and to their 
 34.35  designated agents or employees, the annual deferral amounts and 
 34.36  the cumulative deferral and interest as determined by the 
 35.1   commissioner under chapter 290B for each parcel of homestead 
 35.2   property in the county that is enrolled in the senior citizen 
 35.3   property tax deferral program under chapter 290B. 
 35.4      Sec. 2.  Minnesota Statutes 1996, section 275.065, 
 35.5   subdivision 3, is amended to read: 
 35.6      Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
 35.7   county auditor shall prepare and the county treasurer shall 
 35.8   deliver after November 10 and on or before November 24 each 
 35.9   year, by first class mail to each taxpayer at the address listed 
 35.10  on the county's current year's assessment roll, a notice of 
 35.11  proposed property taxes and, in the case of a town, final 
 35.12  property taxes.  
 35.13     (b) The commissioner of revenue shall prescribe the form of 
 35.14  the notice. 
 35.15     (c) The notice must inform taxpayers that it contains the 
 35.16  amount of property taxes each taxing authority other than a town 
 35.17  proposes to collect for taxes payable the following year and, 
 35.18  for a town, the amount of its final levy.  It must clearly state 
 35.19  that each taxing authority, including regional library districts 
 35.20  established under section 134.201, and including the 
 35.21  metropolitan taxing districts as defined in paragraph (i), but 
 35.22  excluding all other special taxing districts and towns, will 
 35.23  hold a public meeting to receive public testimony on the 
 35.24  proposed budget and proposed or final property tax levy, or, in 
 35.25  case of a school district, on the current budget and proposed 
 35.26  property tax levy.  It must clearly state the time and place of 
 35.27  each taxing authority's meeting and an address where comments 
 35.28  will be received by mail.  
 35.29     (d) The notice must state for each parcel: 
 35.30     (1) the market value of the property as determined under 
 35.31  section 273.11, and used for computing property taxes payable in 
 35.32  the following year and for taxes payable in the current year; 
 35.33  and, in the case of residential property, whether the property 
 35.34  is classified as homestead or nonhomestead.  The notice must 
 35.35  clearly inform taxpayers of the years to which the market values 
 35.36  apply and that the values are final values; 
 36.1      (2) by county, city or town, school district excess 
 36.2   referenda levy, remaining school district levy, regional library 
 36.3   district, if in existence, the total of the metropolitan special 
 36.4   taxing districts as defined in paragraph (i) and the sum of the 
 36.5   remaining special taxing districts, and as a total of the taxing 
 36.6   authorities, including all special taxing districts, the 
 36.7   proposed or, for a town, final net tax on the property for taxes 
 36.8   payable the following year and the actual tax for taxes payable 
 36.9   the current year.  If a school district has certified under 
 36.10  section 124A.03, subdivision 2, that a referendum will be held 
 36.11  in the school district at the November general election, the 
 36.12  county auditor must note next to the school district's proposed 
 36.13  amount that a referendum is pending and that, if approved by the 
 36.14  voters, the tax amount may be higher than shown on the notice.  
 36.15  For the purposes of this subdivision, "school district excess 
 36.16  referenda levy" means school district taxes for operating 
 36.17  purposes approved at referendums, including those taxes based on 
 36.18  net tax capacity as well as those based on market value.  
 36.19  "School district excess referenda levy" does not include school 
 36.20  district taxes for capital expenditures approved at referendums 
 36.21  or school district taxes to pay for the debt service on bonds 
 36.22  approved at referenda.  In the case of the city of Minneapolis, 
 36.23  the levy for the Minneapolis library board and the levy for 
 36.24  Minneapolis park and recreation shall be listed separately from 
 36.25  the remaining amount of the city's levy.  In the case of a 
 36.26  parcel where tax increment or the fiscal disparities areawide 
 36.27  tax under chapter 276A or 473F applies, the proposed tax levy on 
 36.28  the captured value or the proposed tax levy on the tax capacity 
 36.29  subject to the areawide tax must each be stated separately and 
 36.30  not included in the sum of the special taxing districts; and 
 36.31     (3) the increase or decrease in the amounts in clause (2) 
 36.32  from taxes payable in the current year to proposed or, for a 
 36.33  town, final taxes payable the following year, expressed as a 
 36.34  dollar amount and as a percentage. 
 36.35     For purposes of this section, the amount of the tax on 
 36.36  homesteads qualifying under the senior citizens' property tax 
 37.1   deferral program under chapter 290B is the total amount of 
 37.2   property tax before subtraction of the deferred property tax 
 37.3   amount. 
 37.4      (e) The notice must clearly state that the proposed or 
 37.5   final taxes do not include the following: 
 37.6      (1) special assessments; 
 37.7      (2) levies approved by the voters after the date the 
 37.8   proposed taxes are certified, including bond referenda, school 
 37.9   district levy referenda, and levy limit increase referenda; 
 37.10     (3) amounts necessary to pay cleanup or other costs due to 
 37.11  a natural disaster occurring after the date the proposed taxes 
 37.12  are certified; 
 37.13     (4) amounts necessary to pay tort judgments against the 
 37.14  taxing authority that become final after the date the proposed 
 37.15  taxes are certified; and 
 37.16     (5) the contamination tax imposed on properties which 
 37.17  received market value reductions for contamination. 
 37.18     (f) Except as provided in subdivision 7, failure of the 
 37.19  county auditor to prepare or the county treasurer to deliver the 
 37.20  notice as required in this section does not invalidate the 
 37.21  proposed or final tax levy or the taxes payable pursuant to the 
 37.22  tax levy. 
 37.23     (g) If the notice the taxpayer receives under this section 
 37.24  lists the property as nonhomestead and the homeowner provides 
 37.25  satisfactory documentation to the county assessor that the 
 37.26  property is owned and used as the owner's homestead, the 
 37.27  assessor shall reclassify the property to homestead for taxes 
 37.28  payable in the following year. 
 37.29     (h) In the case of class 4 residential property used as a 
 37.30  residence for lease or rental periods of 30 days or more, the 
 37.31  taxpayer must either: 
 37.32     (1) mail or deliver a copy of the notice of proposed 
 37.33  property taxes to each tenant, renter, or lessee; or 
 37.34     (2) post a copy of the notice in a conspicuous place on the 
 37.35  premises of the property.  
 37.36     The notice must be mailed or posted by the taxpayer by 
 38.1   November 27 or within three days of receipt of the notice, 
 38.2   whichever is later.  A taxpayer may notify the county treasurer 
 38.3   of the address of the taxpayer, agent, caretaker, or manager of 
 38.4   the premises to which the notice must be mailed in order to 
 38.5   fulfill the requirements of this paragraph. 
 38.6      (i) For purposes of this subdivision, subdivisions 5a and 
 38.7   6, "metropolitan special taxing districts" means the following 
 38.8   taxing districts in the seven-county metropolitan area that levy 
 38.9   a property tax for any of the specified purposes listed below: 
 38.10     (1) metropolitan council under section 473.132, 473.167, 
 38.11  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
 38.12     (2) metropolitan airports commission under section 473.667, 
 38.13  473.671, or 473.672; and 
 38.14     (3) metropolitan mosquito control commission under section 
 38.15  473.711. 
 38.16     For purposes of this section, any levies made by the 
 38.17  regional rail authorities in the county of Anoka, Carver, 
 38.18  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
 38.19  398A shall be included with the appropriate county's levy and 
 38.20  shall be discussed at that county's public hearing. 
 38.21     (j) For taxes levied in 1996, payable in 1997 only, in the 
 38.22  case of a statutory or home rule charter city or town that 
 38.23  exercises the local levy option provided in section 473.388, 
 38.24  subdivision 7, the notice of its proposed taxes may include a 
 38.25  statement of the amount by which its proposed tax increase for 
 38.26  taxes payable in 1997 is attributable to its exercise of that 
 38.27  option, together with a statement that the levy of the 
 38.28  metropolitan council was decreased by a similar amount because 
 38.29  of the exercise of that option. 
 38.30     Sec. 3.  Minnesota Statutes 1996, section 276.04, 
 38.31  subdivision 2, is amended to read: 
 38.32     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
 38.33  shall provide for the printing of the tax statements.  The 
 38.34  commissioner of revenue shall prescribe the form of the property 
 38.35  tax statement and its contents.  The statement must contain a 
 38.36  tabulated statement of the dollar amount due to each taxing 
 39.1   authority from the parcel of real property for which a 
 39.2   particular tax statement is prepared.  The dollar amounts due 
 39.3   the county, township or municipality, the total of the 
 39.4   metropolitan special taxing districts as defined in section 
 39.5   275.065, subdivision 3, paragraph (i), school district excess 
 39.6   referenda levy, remaining school district levy, and the total of 
 39.7   other voter approved referenda levies based on market value 
 39.8   under section 275.61 must be separately stated.  The amounts due 
 39.9   all other special taxing districts, if any, may be 
 39.10  aggregated.  The amount of the tax on homesteads qualifying 
 39.11  under the senior citizens' property tax deferral program under 
 39.12  chapter 290B is the total amount of property tax before 
 39.13  subtraction of the deferred property tax amount.  For the 
 39.14  purposes of this subdivision, "school district excess referenda 
 39.15  levy" means school district taxes for operating purposes 
 39.16  approved at referenda, including those taxes based on net tax 
 39.17  capacity as well as those based on market value.  "School 
 39.18  district excess referenda levy" does not include school district 
 39.19  taxes for capital expenditures approved at referendums or school 
 39.20  district taxes to pay for the debt service on bonds approved at 
 39.21  referenda.  The amount of the tax on contamination value imposed 
 39.22  under sections 270.91 to 270.98, if any, must also be separately 
 39.23  stated.  The dollar amounts, including the dollar amount of any 
 39.24  special assessments, may be rounded to the nearest even whole 
 39.25  dollar.  For purposes of this section whole odd-numbered dollars 
 39.26  may be adjusted to the next higher even-numbered dollar.  The 
 39.27  amount of market value excluded under section 273.11, 
 39.28  subdivision 16, if any, must also be listed on the tax 
 39.29  statement.  The statement shall include the following sentence, 
 39.30  printed in upper case letters in boldface print:  "THE STATE OF 
 39.31  MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES.  THE STATE 
 39.32  OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND 
 39.33  REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."  
 39.34     (b) The property tax statements for manufactured homes and 
 39.35  sectional structures taxed as personal property shall contain 
 39.36  the same information that is required on the tax statements for 
 40.1   real property.  
 40.2      (c) Real and personal property tax statements must contain 
 40.3   the following information in the order given in this paragraph.  
 40.4   The information must contain the current year tax information in 
 40.5   the right column with the corresponding information for the 
 40.6   previous year in a column on the left: 
 40.7      (1) the property's estimated market value under section 
 40.8   273.11, subdivision 1; 
 40.9      (2) the property's taxable market value after reductions 
 40.10  under section 273.11, subdivisions 1a and 16; 
 40.11     (3) the property's gross tax, calculated by multiplying the 
 40.12  property's gross tax capacity times the total local tax rate and 
 40.13  adding to the result the sum of the aids enumerated in clause 
 40.14  (4); 
 40.15     (4) a total of the following aids: 
 40.16     (i) education aids payable under chapters 124 and 124A; 
 40.17     (ii) local government aids for cities, towns, and counties 
 40.18  under chapter 477A; and 
 40.19     (iii) disparity reduction aid under section 273.1398; 
 40.20     (5) for homestead residential and agricultural properties, 
 40.21  the homestead and agricultural credit aid apportioned to the 
 40.22  property.  This amount is obtained by multiplying the total 
 40.23  local tax rate by the difference between the property's gross 
 40.24  and net tax capacities under section 273.13.  This amount must 
 40.25  be separately stated and identified as "homestead and 
 40.26  agricultural credit."  For purposes of comparison with the 
 40.27  previous year's amount for the statement for taxes payable in 
 40.28  1990, the statement must show the homestead credit for taxes 
 40.29  payable in 1989 under section 273.13, and the agricultural 
 40.30  credit under section 273.132 for taxes payable in 1989; 
 40.31     (6) any credits received under sections 273.119; 273.123; 
 40.32  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
 40.33  473H.10, except that the amount of credit received under section 
 40.34  273.135 must be separately stated and identified as "taconite 
 40.35  tax relief"; and 
 40.36     (7) any deferred property tax amount under the senior 
 41.1   citizens' property tax deferral program under chapter 290B, as 
 41.2   well as the total deferred amount plus accrued interest; and 
 41.3      (8) the net tax payable in the manner required in paragraph 
 41.4   (a). 
 41.5      (d) If the county uses envelopes for mailing property tax 
 41.6   statements and if the county agrees, a taxing district may 
 41.7   include a notice with the property tax statement notifying 
 41.8   taxpayers when the taxing district will begin its budget 
 41.9   deliberations for the current year, and encouraging taxpayers to 
 41.10  attend the hearings.  If the county allows notices to be 
 41.11  included in the envelope containing the property tax statement, 
 41.12  and if more than one taxing district relative to a given 
 41.13  property decides to include a notice with the tax statement, the 
 41.14  county treasurer or auditor must coordinate the process and may 
 41.15  combine the information on a single announcement.  
 41.16     The commissioner of revenue shall certify to the county 
 41.17  auditor the actual or estimated aids enumerated in clauses (3) 
 41.18  and (4) that local governments will receive in the following 
 41.19  year.  In the case of a county containing a city of the first 
 41.20  class, for taxes levied in 1991, and for all counties for taxes 
 41.21  levied in 1992 and thereafter, the commissioner must certify 
 41.22  this amount by September 1.  
 41.23     Sec. 4.  [290B.02] [CITATION.] 
 41.24     This program shall be named the "senior citizens' property 
 41.25  tax deferral program." 
 41.26     Sec. 5.  [290B.03] [DEFERRAL OF PROPERTY TAXES.] 
 41.27     Subdivision 1.  [PROGRAM QUALIFICATIONS.] If the net tax 
 41.28  payable on class 1 property as defined in section 273.13, 
 41.29  subdivision 22, and that part of class 2a property as defined in 
 41.30  section 273.13, subdivision 23, consisting of the house, garage, 
 41.31  and surrounding one acre of land, is greater than its net tax 
 41.32  payable for the base year, the amount of the increase may be 
 41.33  deferred under this section, if all of the following conditions 
 41.34  are met: 
 41.35     (1) the property must be owned and occupied as a homestead 
 41.36  by a person 68 years of age or older.  In the case of a married 
 42.1   couple, only one of the spouses has to be at least 68 years old 
 42.2   at the time the first property tax deferral is granted, 
 42.3   regardless of whether the property is titled in the name of one 
 42.4   spouse or both spouses, or titled in another way that permits 
 42.5   the property to have homestead status; 
 42.6      (2) the homestead must have been owned and occupied as the 
 42.7   homestead of at least one of the qualifying homeowners for at 
 42.8   least ten years prior to the year the initial application is 
 42.9   filed; 
 42.10     (3) there are no delinquent property taxes, penalties, or 
 42.11  interest on the homesteaded property; 
 42.12     (4) there are no delinquent special assessments on the 
 42.13  homesteaded property; 
 42.14     (5) there are no state or federal tax liens or judgment 
 42.15  liens on the homesteaded property; 
 42.16     (6) there are no mortgages or other liens on the property 
 42.17  that secure future advances, except for those subject to credit 
 42.18  limits that result in compliance with clause (7); and 
 42.19     (7) the total unpaid balances of debts secured by mortgages 
 42.20  and other liens on the property, including unpaid special 
 42.21  assessments, but not including property taxes payable during the 
 42.22  year does not exceed 75 percent of the assessor's estimated 
 42.23  market value for the year. 
 42.24     Subd. 2.  [QUALIFYING HOMESTEAD; DEFINED.] Qualifying 
 42.25  homestead property is defined as the dwelling occupied as the 
 42.26  homeowner's principal residence and so much of the land 
 42.27  surrounding it, not exceeding one acre, as is reasonably 
 42.28  necessary for use of the dwelling as a home and any other 
 42.29  property used for purposes of a homestead as defined in section 
 42.30  273.13, subdivisions 22 and 23.  The homestead may be part of a 
 42.31  multidwelling building and the land on which it is built. 
 42.32     Sec. 6.  [290B.04] [APPLICATION FOR DEFERRAL.] 
 42.33     Subdivision 1.  [INITIAL APPLICATION.] A taxpayer meeting 
 42.34  the program qualifications under section 290B.03 may apply to 
 42.35  the commissioner of revenue for the deferral of taxes.  The 
 42.36  application is due on or before July 1 for deferral of the 
 43.1   following year's property taxes.  A taxpayer may apply in the 
 43.2   year in which the taxpayer becomes 68 years old, provided that 
 43.3   no deferral of property taxes will be made until the calendar 
 43.4   year after the taxpayer becomes 68 years old.  The application 
 43.5   shall be prescribed by the commissioner of revenue and shall 
 43.6   include the following items and any other information which the 
 43.7   commissioner deems necessary: 
 43.8      (1) the name, address, and social security number of the 
 43.9   owner or owners; 
 43.10     (2) a copy of the property tax statement for the current 
 43.11  payable year for the homesteaded property; 
 43.12     (3) the initial year of ownership and occupancy as a 
 43.13  homestead; and 
 43.14     (4) information on any mortgage loans or other amounts 
 43.15  secured by mortgages or other liens against the property, for 
 43.16  which purpose the commissioner may require the applicant to 
 43.17  provide a copy of the mortgage note, the mortgage, or a 
 43.18  statement of the balance owing on the mortgage loan provided by 
 43.19  the mortgage holder.  The commissioner may require the 
 43.20  appropriate documents in connection with obtaining and 
 43.21  confirming information on unpaid amounts secured by other liens. 
 43.22     The application must state that program participation is 
 43.23  voluntary.  The application must also state program 
 43.24  participation includes authorization for the deferred amount for 
 43.25  each year and for the cumulative deferral and interest to appear 
 43.26  on each year's property tax statement as public data. 
 43.27     Subd. 2.  [APPROVAL; RECORDING.] The commissioner shall 
 43.28  approve all initial applications that qualify under this chapter 
 43.29  and shall notify qualifying homeowners on or before December 1.  
 43.30  The commissioner may investigate the facts or require 
 43.31  confirmation in regard to an application.  The commissioner 
 43.32  shall record or file a notice of qualification for deferral, 
 43.33  including the names of the qualifying homeowners and a legal 
 43.34  description of the property, in the office of the county 
 43.35  recorder, or registrar of titles, whichever is applicable, in 
 43.36  the county where the qualifying property is located.  The notice 
 44.1   must state that it serves as a notice of lien and that it 
 44.2   includes deferrals under this section for future years.  The 
 44.3   homeowner shall pay the recording or filing fees. 
 44.4      Subd. 3.  [SUBSEQUENT YEARS.] A taxpayer whose initial 
 44.5   application has been approved under subdivision 2 need not 
 44.6   complete an annual certification to remain enrolled in the 
 44.7   program. 
 44.8      Sec. 7.  [290B.05] [DEFERRED PROPERTY TAX AMOUNT; MAXIMUM.] 
 44.9      Subdivision 1.  [DEFERRED TAX AMOUNT.] The difference 
 44.10  between the net property taxes payable on the qualifying 
 44.11  homestead and the net property taxes payable for the base year 
 44.12  is the "deferred property tax amount" for that taxes payable 
 44.13  year.  The deferred tax amounts must not include any special 
 44.14  assessments levied by any local unit of government.  Any tax 
 44.15  attributable to new improvements made to the property after the 
 44.16  initial application has been approved under section 290B.04, 
 44.17  subdivision 2, must be excluded when determining any subsequent 
 44.18  deferred property tax amounts.  No tax shall be deferred in any 
 44.19  year in which the homeowner does not meet the program 
 44.20  qualifications in section 290B.03. 
 44.21     Subd. 2.  [MAXIMUM DEFERRAL.] The maximum allowable total 
 44.22  deferral is equal to 75 percent of the assessor's estimated 
 44.23  market value for the year, less (1) the balance of any mortgage 
 44.24  loans and other amounts secured by liens against the property at 
 44.25  the time of application, including any unpaid special 
 44.26  assessments but not including property taxes payable during the 
 44.27  year; and (2) any outstanding deferral and interest.  
 44.28     Subd. 3.  [CERTIFICATION BY COMMISSIONER.] On or before 
 44.29  December 1, the commissioner shall certify to the county auditor 
 44.30  of the county in which the qualifying homesteads are located (1) 
 44.31  each qualifying homestead's base tax; (2) each qualifying 
 44.32  homestead's maximum allowable deferral under subdivision 2; and 
 44.33  (3) each qualifying homestead's cumulative deferral and interest 
 44.34  for all years preceding the next taxes payable year. 
 44.35     Subd. 4.  [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 
 44.36  When final property tax amounts for the following year have been 
 45.1   determined, the county auditor shall calculate the "deferred 
 45.2   property tax amount."  The county auditor shall annually, on or 
 45.3   before April 15, certify to the commissioner of revenue the 
 45.4   property tax deferral amounts determined under this subdivision 
 45.5   by property and by owner.  
 45.6      Subd. 5.  [LIMITATION ON TOTAL AMOUNT OF DEFERRED TAXES.] 
 45.7   On or before September 1 of each year, the commissioner shall 
 45.8   request, and each county or city assessor shall provide, the 
 45.9   current year's estimated market value of each property on the 
 45.10  list supplied by the commissioner that may be eligible for 
 45.11  deferral under this section for taxes payable in the following 
 45.12  year.  The total amount of deferred taxes and interest on a 
 45.13  property, when added to (1) the balance owing on any mortgages 
 45.14  on the property at the time of initial application; and (2) 
 45.15  other amounts secured by liens on the property at the time of 
 45.16  the initial application, may not exceed 75 percent of the 
 45.17  assessor's current estimated market value of the property. 
 45.18     Sec. 8.  [290B.06] [PROPERTY TAX REFUNDS.] 
 45.19     For purposes of qualifying for the regular property tax 
 45.20  refund or the special refund for homeowners under chapter 290A, 
 45.21  the qualifying tax is the full amount of taxes, including the 
 45.22  deferred portion of the tax.  Any regular or special property 
 45.23  tax refund awarded based upon those property taxes must be taken 
 45.24  first as a deduction from the amount of the deferred tax for 
 45.25  that year, and second as a deduction against any outstanding 
 45.26  deferral from previous years, rather than as a cash payment to 
 45.27  the homeowner.  The commissioner shall cancel any current year's 
 45.28  deferral or previous years' deferral and interest that is offset 
 45.29  by the property tax refunds. If the total of the regular and the 
 45.30  special property tax refund amounts exceeds the sum of the 
 45.31  deferred tax for the current year and cumulative deferred tax 
 45.32  and interest for previous years, the commissioner shall then 
 45.33  remit the excess amount to the homeowner.  On or before the date 
 45.34  on which the commissioner issues property tax refunds, the 
 45.35  commissioner shall notify program participants of any reduction 
 45.36  in the deferred amount for the current and previous years 
 46.1   resulting from property tax refunds. 
 46.2      Sec. 9.  [290B.07] [LIEN; DEFERRED PORTION.] 
 46.3      Payment by the state to the county treasurer of taxes 
 46.4   deferred under this section is deemed a loan from the state to 
 46.5   the program participant.  The interest is equal to 80 percent of 
 46.6   the interest rate determined under section 270.75, subdivision 
 46.7   5.  The commissioner shall compute the interest and maintain 
 46.8   records of the total deferred amount and interest for each 
 46.9   participant.  Interest shall accrue beginning September 1 of the 
 46.10  payable year for which the taxes are deferred.  The lien created 
 46.11  under section 272.31 continues to secure payment by the 
 46.12  taxpayer, or by the taxpayer's successors or assigns, of the 
 46.13  amount deferred, including interest, with respect to all years 
 46.14  for which amounts are deferred.  The lien for deferred taxes and 
 46.15  interest has the same priority as any other lien under section 
 46.16  272.31, except that liens, including mortgages, recorded or 
 46.17  filed prior to the recording or filing of the notice under 
 46.18  section 290B.04, subdivision 2, have priority over the lien for 
 46.19  deferred taxes and interest.  A seller's interest in a contract 
 46.20  for deed, in which a qualifying homeowner is the purchaser or an 
 46.21  assignee of the purchaser, has priority over deferred taxes and 
 46.22  interest on deferred taxes, regardless of whether the contract 
 46.23  for deed is recorded or filed.  The lien for deferred taxes and 
 46.24  interest for future years has the same priority as the lien for 
 46.25  deferred taxes and interest for the first year, which is always 
 46.26  higher in priority than any mortgages or other liens filed, 
 46.27  recorded, or created after the notice recorded or filed under 
 46.28  section 290B.04, subdivision 2.  The county treasurer or auditor 
 46.29  shall maintain records of the deferred portion and shall list 
 46.30  the amount of deferred taxes for the year and the cumulative 
 46.31  deferral and interest for all previous years as a lien against 
 46.32  the property on the property tax statement.  In any 
 46.33  certification of unpaid taxes for a tax parcel, the county 
 46.34  auditor shall clearly distinguish between taxes payable in the 
 46.35  current year, deferred taxes and interest, and delinquent 
 46.36  taxes.  Payment of the deferred portion becomes due and owing at 
 47.1   the time specified in section 290B.08.  Upon receipt of the 
 47.2   payment, the commissioner shall issue a receipt for it to the 
 47.3   person making the payment upon request and shall notify the 
 47.4   auditor of the county in which the parcel is located, within ten 
 47.5   days, identifying the parcel to which the payment applies.  Upon 
 47.6   receipt by the commissioner of revenue of collected funds in the 
 47.7   amount of the deferral, the state's loan to the program 
 47.8   participant is deemed paid in full. 
 47.9      Sec. 10.  [290B.08] [PARTIAL PAYMENT.] 
 47.10     A homeowner may pay all or part of the deferred taxes to 
 47.11  the commissioner of revenue. 
 47.12     Sec. 11.  [290B.09] [TERMINATION OF DEFERRAL; PAYMENT OF 
 47.13  DEFERRED TAXES.] 
 47.14     Subdivision 1.  [TERMINATION.] (a) The deferral of taxes 
 47.15  granted under this chapter terminates when one of the following 
 47.16  occurs: 
 47.17     (1) the property is sold or transferred; 
 47.18     (2) the death of the qualifying homeowner, except that in 
 47.19  the case of a married couple, both spouses must be deceased; 
 47.20     (3) the property no longer qualifies as a homestead; or 
 47.21     (4) the homeowner notifies the commissioner in writing that 
 47.22  the homeowner desires to terminate participation in the program. 
 47.23     (b) A property is not terminated from the program because 
 47.24  no deferred property tax amount is determined on the homestead 
 47.25  for any given year after the homestead's initial enrollment into 
 47.26  the program. 
 47.27     Subd. 2.  [PAYMENT UPON TERMINATION.] Upon the termination 
 47.28  of the deferral under subdivision 1, the amount of deferred 
 47.29  taxes and interest plus the recording or filing fees under both 
 47.30  section 290B.04, subdivision 2, and this subdivision becomes due 
 47.31  and payable to the commissioner within 90 days of termination of 
 47.32  the deferral.  No additional interest is due on the deferral if 
 47.33  timely paid.  On receipt of payment, the commissioner shall 
 47.34  within ten days notify the auditor of the county in which the 
 47.35  parcel is located, identifying the parcel to which the payment 
 47.36  applies and shall remit the recording or filing fees under 
 48.1   section 290B.04, subdivision 2, and this subdivision to the 
 48.2   auditor.  A notice of termination of deferral, containing the 
 48.3   legal description and the recording or filing data for the 
 48.4   notice of qualification for deferral under section 290B.04, 
 48.5   subdivision 2, shall be prepared and recorded or filed by the 
 48.6   county auditor in the same office in which the notice of 
 48.7   qualification for deferral under section 290B.04, subdivision 2, 
 48.8   was recorded or filed, and the county auditor shall mail a copy 
 48.9   of the notice of termination to the property owner.  The 
 48.10  property owner shall pay the recording or filing fees.  Upon 
 48.11  recording or filing of the notice of termination of deferral, 
 48.12  the notice of qualification for deferral under section 290B.04, 
 48.13  subdivision 2, and the lien created by it are discharged.  If 
 48.14  the deferral is not timely paid, the penalty, interest, lien, 
 48.15  forfeiture, and other rules for the collection of ad valorem 
 48.16  property taxes apply. 
 48.17     Sec. 12.  [290B.10] [STATE REIMBURSEMENT.] 
 48.18     Subdivision 1.  [DETERMINATION; PAYMENT.] The commissioner 
 48.19  of revenue shall determine the deferred amount of property tax 
 48.20  in each county, basing determinations on a review of abstracts 
 48.21  of tax lists submitted by the county auditors under section 
 48.22  275.29.  The commissioner may make changes in the abstracts of 
 48.23  tax lists as deemed necessary.  The commissioner of revenue, 
 48.24  after such review, shall pay the deferred amount of property tax 
 48.25  to each county treasurer on or before August 31.  
 48.26     At least once each year, the commissioner shall report to 
 48.27  the county auditor the total cumulative amount of deferred taxes 
 48.28  and interest that constitute a lien against the property.  
 48.29     The county treasurer shall distribute as part of the 
 48.30  October settlement the funds received as if they had been 
 48.31  collected as a part of the property tax. 
 48.32     Subd. 2.  [APPROPRIATION.] An amount sufficient to pay the 
 48.33  total amount of property tax determined under subdivision 1 is 
 48.34  annually appropriated from the general fund to the commissioner 
 48.35  of revenue. 
 48.36     Sec. 13.  [EFFECTIVE DATE.] 
 49.1      Sections 1 to 12 are effective the day following final 
 49.2   enactment for deferral of property taxes payable in 1999, and 
 49.3   thereafter.