1.1 	A bill for an act
1.2 	relating to property taxation; providing that cities make annual payments to 
1.3 	towns following annexations under certain conditions;proposing coding for new 
1.4 	law in Minnesota Statutes, chapter 275.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. [275.072] CITY ANNEXATION PAYMENTS.
1.7 		Subdivision 1.Payments to towns. Cities that annex property under the conditions 
1.8 	described in subdivision 2 must make annual payments to the town from which the 
1.9 	property was annexed beginning in the year following the year in which the annexation 
1.10 	becomes effective.  Each  payment is equal to:
1.11 	(1) the amount by which (i) the tax capacity of the commercial-industrial portion of 
1.12 	the annexed area for the current taxes payable year exceeds (ii) the tax capacity of the 
1.13 	commercial-industrial portion of the annexed area for the taxes payable year in which the 
1.14 	annexation became effective, multiplied by
1.15 	(2) the city's tax rate for the current taxes payable year. 
1.16 	The payments must be made prior to November 15 of each year. The "tax capacity of the 
1.17 	commercial-industrial portion of the annexed area for the taxes payable year in which the 
1.18 	annexation became effective" must be adjusted as necessary for class rate changes enacted 
1.19 	after the effective date of the annexation.
1.20 		Subd. 2.Annexation conditions. A city acquiring land through annexation 
1.21 	under section 414.031 or 414.033 is liable to make payments under subdivision 1 to the 
1.22 	town from which the land was annexed, provided that the following conditions were in 
1.23 	existence on the effective date of the annexation:
2.1 	(1) the town is an urban town located in the metropolitan area defined in section 
2.2 	473.121; and
2.3 	(2) at the time the petition was filed (i) the town was providing urban services, 
2.4 	including sewer and water, whether directly or through contract or joint powers agreement 
2.5 	with another municipality or town, to the area being annexed, or (ii) the town's adopted 
2.6 	comprehensive plan included a plan to provide urban services, including sewer and water, 
2.7 	whether directly or through contract or joint powers agreement with another municipality 
2.8 	or town, to the area to be annexed.

2.9 	EFFECTIVE DATE. This section is effective for annexations ordered or approved 
2.10 	after June 1, 2006.