Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1553

STATE OF MINNESOTA

 

Journal of the House

 

NINETIETH SESSION - 2017

 

_____________________

 

THIRTY-FOURTH DAY

 

Saint Paul, Minnesota, Monday, March 27, 2017

 

 

The House of Representatives convened at 11:00 a.m. and was called to order by Tony Albright, Speaker pro tempore.

 

Prayer was offered by Dr. Randall Berg, Calvary Christian Church, Hastings, Minnesota.

 

The members of the House gave the pledge of allegiance to the flag of the United States of America.

 

The roll was called and the following members were present:

 


Albright

Anderson, P.

Anderson, S.

Applebaum

Bahr, C.

Baker

Barr, R.

Becker-Finn

Bennett

Bernardy

Bliss

Bly

Carlson, L.

Christensen

Cornish

Daniels

Davids

Davnie

Dean, M.

Dehn, R.

Dettmer

Drazkowski

Ecklund

Erickson

Fabian

Fenton

Fischer

Flanagan

Franke

Franson

Freiberg

Garofalo

Green

Grossell

Gruenhagen

Gunther

Haley

Halverson

Hamilton

Hansen

Hausman

Heintzeman

Hertaus

Hilstrom

Hoppe

Hornstein

Hortman

Howe

Jessup

Johnson, B.

Johnson, C.

Johnson, S.

Jurgens

Kiel

Knoblach

Koegel

Koznick

Kunesh-Podein

Layman

Lee

Liebling

Lien

Lillie

Loeffler

Lohmer

Loon

Loonan

Lucero

Lueck

Mahoney

Marquart

Masin

Maye Quade

McDonald

Metsa

Miller

Moran

Murphy, E.

Murphy, M.

Nash

Nelson

Neu

Newberger

Nornes

Olson

O'Neill

Pelowski

Peppin

Petersburg

Peterson

Pierson

Poston

Pryor

Pugh

Quam

Rarick

Runbeck

Sandstede

Sauke

Schomacker

Schultz

Slocum

Smith

Sundin

Theis

Torkelson

Uglem

Urdahl

Vogel

Wagenius

Ward

West

Whelan

Wills

Youakim


 

A quorum was present.

 

Allen; Anselmo; Backer; Carlson, A.; Clark; Considine; Daudt; Kresha; Lesch; Mariani; O'Driscoll; Omar; Pinto; Poppe; Rosenthal; Scott; Swedzinski; Thissen and Zerwas were excused.

 

The Chief Clerk proceeded to read the Journal of the preceding day. There being no objection, further reading of the Journal was dispensed with and the Journal was approved as corrected by the Chief Clerk.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1554

REPORTS OF STANDING COMMITTEES AND DIVISIONS

 

 

Davids from the Committee on Taxes to which was referred:

 

H. F. No. 4, A bill for an act relating to taxation; providing a school building bond agricultural property tax credit; modifying the state general levy; providing income tax subtractions for Social Security benefits and contributions to section 529 college savings plans; providing income tax credits for section 529 college savings plans and student loan payments; appropriating money; amending Minnesota Statutes 2016, sections 127A.45, subdivisions 10, 13; 273.1392; 273.1393; 275.025, subdivisions 1, 2, 4; 275.065, subdivision 3; 275.07, subdivision 2; 275.08, subdivision 1b; 276.04, subdivision 2; 290.0132, by adding subdivisions; 290.091, subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 273; 290.

 

Reported the same back with the following amendments:

 

Delete everything after the enacting clause and insert:

 

"ARTICLE 1

INDIVIDUAL INCOME, CORPORATE, FRANCHISE, AND ESTATE TAXES

 

Section 1. Minnesota Statutes 2016, section 13.4967, is amended by adding a subdivision to read:

 

Subd. 9. Minnesota housing credit. Data related to Minnesota housing tax credit certifications and allocations are classified in section 462A.39.

 

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

 

Sec. 2. [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS.

 

Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given.

 

(b) "Agricultural assets" means agricultural land, livestock, facilities, buildings, and machinery used for farming in Minnesota.

 

(c) "Beginning farmer" means a resident of Minnesota who:

 

(1) is seeking entry, or has entered within the last ten years, into farming;

 

(2) intends to farm land located within the state borders of Minnesota;

 

(3) is not and whose spouse is not a family member of the owner of the agricultural assets from whom the beginning farmer is seeking to purchase or rent agricultural assets;

 

(4) is not and whose spouse is not a family member of a partner, member, shareholder, or trustee of the owner of agricultural assets from whom the beginning farmer is seeking to purchase or rent agricultural assets; and

 

(5) meets the following eligibility requirements as determined by the authority:

 

(i) has a net worth that does not exceed the limit provided under section 41B.03, subdivision 3, paragraph (a), clause (2);


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1555

(ii) provides the majority of the day-to-day physical labor and management of the farm;

 

(iii) has, by the judgment of the authority, adequate farming experience or demonstrates knowledge in the type of farming for which the beginning farmer seeks assistance from the authority;

 

(iv) demonstrates to the authority a profit potential by submitting projected earnings statements;

 

(v) asserts to the satisfaction of the authority that farming will be a significant source of income for the beginning farmer;

 

(vi) participates in a financial management program approved by the authority or the commissioner of agriculture; and

 

(vii) has other qualifications as specified by the authority.

 

(d) "Family member" means a family member within the meaning of the Internal Revenue Code, section 267(c)(4).

 

(e) "Farm product" means plants and animals useful to humans and includes, but is not limited to, forage and sod crops, oilseeds, grain and feed crops, dairy and dairy products, poultry and poultry products, livestock, fruits, and vegetables.

 

(f) "Farming" means the active use, management, and operation of real and personal property for the production of a farm product.

 

(g) "Owner of agricultural assets" means an individual, trust, or pass-through entity that is the owner in fee of agricultural land or has legal title to any other agricultural asset. Owner of agricultural assets does not mean an equipment dealer, livestock dealer defined in section 17A.03, subdivision 7, or comparable entity that is engaged in the business of selling agricultural assets for profit and that is not engaged in farming as its primary business activity.

 

(h) "Share rent agreement" means a rental agreement in which the principal consideration given to the owner of agricultural assets is a predetermined portion of the production of farm products produced from the rented agricultural assets and which provides for sharing production costs or risk of loss, or both.

 

Subd. 2. Tax credit for owners of agricultural assets. (a) An owner of agricultural assets may take a credit against the tax due under chapter 290 for the sale or rental of agricultural assets to a beginning farmer. An owner of agricultural assets may take a credit equal to:

 

(1) five percent of the sale price of the agricultural asset;

 

(2) ten percent of the gross rental income in each of the first, second, and third years of a rental agreement; or

 

(3) 15 percent of the cash equivalent of the gross rental income in each of the first, second, and third years of a share rent agreement.

 

(b) A qualifying rental agreement includes cash rent of agricultural assets or a share rent agreement. The agricultural asset must be rented at prevailing community rates as determined by the authority. The credit may be claimed only after approval and certification by the authority.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1556

(c) An owner of agricultural assets or beginning farmer may terminate a rental agreement, including a share rent agreement, for reasonable cause upon approval of the authority. If a rental agreement is terminated without the fault of the owner of agricultural assets, the tax credits shall not be retroactively disallowed. If an agreement is terminated with fault by the owner of agricultural assets, any prior tax credits claimed under this subdivision by the owner of agricultural assets shall be disallowed and must be repaid to the commissioner of revenue.

 

(d) The credit is limited to the liability for tax as computed under chapter 290 for the taxable year. If the amount of the credit determined under this section for any taxable year exceeds this limitation, the excess is a beginning farmer incentive credit carryover according to section 290.06, subdivision 37.

 

Subd. 3. Beginning farmer management tax credit. (a) A beginning farmer may take a credit against the tax due under chapter 290 for participating in a financial management program approved by the authority. The credit is equal to 100 percent of the cost of participating in the program. The credit is available for up to three years while the farmer is in the program. The authority shall maintain a list of approved financial management programs and establish a procedure for approving equivalent programs that are not on the list.

 

(b) The credit is limited to the liability for tax as computed under chapter 290 for the taxable year. If the amount of the credit determined under this section for any taxable year exceeds this limitation, the excess is a beginning farmer management credit carryover according to section 290.06, subdivision 38.

 

Subd. 4. Authority duties. The authority shall:

 

(1) approve and certify beginning farmers as eligible for the program under this section;

 

(2) approve and certify owners of agricultural assets as eligible for the tax credit under subdivision 2;

 

(3) provide necessary and reasonable assistance and support to beginning farmers for qualification and participation in financial management programs approved by the authority; and

 

(4) refer beginning farmers to agencies and organizations that may provide additional pertinent information and assistance.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 3. Minnesota Statutes 2016, section 289A.10, subdivision 1, is amended to read:

 

Subdivision 1. Return required. In the case of a decedent who has an interest in property with a situs in Minnesota, the personal representative must submit a Minnesota estate tax return to the commissioner, on a form prescribed by the commissioner, if:

 

(1) a federal estate tax return is required to be filed; or.

 

(2) the sum of the federal gross estate and federal adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue Code, made within three years of the date of the decedent's death exceeds $1,200,000 for estates of decedents dying in 2014; $1,400,000 for estates of decedents dying in 2015; $1,600,000 for estates of decedents dying in 2016; $1,800,000 for estates of decedents dying in 2017; and $2,000,000 for estates of decedents dying in 2018 and thereafter.

 

The return must contain a computation of the Minnesota estate tax due. The return must be signed by the personal representative.

 

EFFECTIVE DATE. This section is effective retroactively for estates of decedents dying after December 31, 2016.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1557

Sec. 4. Minnesota Statutes 2016, section 290.01, subdivision 7, is amended to read:

 

Subd. 7. Resident. (a) The term "resident" means any individual domiciled in Minnesota, except that an individual is not a "resident" for the period of time that the individual is a "qualified individual" as defined in section 911(d)(1) of the Internal Revenue Code, if the qualified individual notifies the county within three months of moving out of the country that homestead status be revoked for the Minnesota residence of the qualified individual, and the property is not classified as a homestead while the individual remains a qualified individual.

 

(b) "Resident" also means any individual domiciled outside the state who maintains a place of abode in the state and spends in the aggregate more than one-half of the tax year in Minnesota, unless:

 

(1) the individual or the spouse of the individual is in the armed forces of the United States; or

 

(2) the individual is covered under the reciprocity provisions in section 290.081.

 

For purposes of this subdivision, presence within the state for any part of a calendar day constitutes a day spent in the state. A day does not qualify as a Minnesota day if the taxpayer traveled from a place outside of Minnesota primarily for and essential to obtaining medical care, as defined in Internal Revenue Code, section 213(d)(1)(A), in Minnesota for the taxpayer, spouse, or a dependent of the taxpayer and the travel expense is allowed under section 213(d)(1)(B) of the Internal Revenue Code, and is claimed by the taxpayer as a deductible expense. Individuals shall keep adequate records to substantiate the days spent outside the state.

 

The term "abode" means a dwelling maintained by an individual, whether or not owned by the individual and whether or not occupied by the individual, and includes a dwelling place owned or leased by the individual's spouse.

 

(c) In determining where an individual is domiciled, neither the commissioner nor any court shall consider:

 

(1) charitable contributions made by an the individual within or without the state in determining if the individual is domiciled in Minnesota.;

 

(2) the location of the individual's attorney, certified public accountant, or financial adviser; or

 

(3) the place of business of a financial institution at which the individual applies for any new type of credit or at which the individual opens or maintains any type of account.

 

(d) For purposes of this subdivision, the following terms have the meanings given them:

 

(1) "financial adviser" means:

 

(i) an individual or business entity engaged in business as a certified financial planner, registered investment adviser, licensed insurance producer or agent, or registered securities broker-dealer representative; or

 

(ii) a financial institution providing services related to trust or estate administration, investment management, or financial planning; and

 

(2) "financial institution" means a financial institution as defined in section 47.015, subdivision 1; a state or nationally chartered credit union; or a registered broker-dealer under the Securities and Exchange Act of 1934.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016, except the amendment to paragraph (b) is effective for taxable years beginning after December 31, 2017.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1558

Sec. 5. Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision to read:

 

Subd. 14. Equity and opportunity donations to qualified foundations. The amount of the deduction under section 170 of the Internal Revenue Code that represents contributions to a qualified foundation under section 290.0693 is an addition.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 6. Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision to read:

 

Subd. 15. First-time home buyer savings account. The amount for a first-time home buyer savings account required by section 462D.06, subdivision 2, is an addition.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 7. Minnesota Statutes 2016, section 290.0132, subdivision 4, is amended to read:

 

Subd. 4. Education expenses. (a) Subject to the limits in paragraph (b), the following amounts paid to others for each qualifying child are a subtraction: education-related expenses, as defined in section 290.0674, subdivision 1, less any amount used to claim the credit under section 290.0674, are a subtraction.

 

(1) education-related expenses; plus

 

(2) tuition and fees paid to attend a school described in section 290.0674, subdivision 1, clause (4), that are not included in education-related expenses; less

 

(3) any amount used to claim the credit under section 290.0674.

 

(b) The maximum subtraction allowed under this subdivision is:

 

(1) $1,625 for each qualifying child in a prekindergarten educational program or in kindergarten through grade 6; and

 

(2) $2,500 for each qualifying child in grades 7 through 12.

 

(c) The definitions in section 290.0674, subdivision 1, apply to this subdivision.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 8. Minnesota Statutes 2016, section 290.0132, subdivision 14, is amended to read:

 

Subd. 14. Section 179 expensing. In each of the five taxable years immediately following the taxable year in which an addition is required under section 290.0131, subdivision 10, or 290.0133, subdivision 12, for a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the addition made by the taxpayer under section 290.0131, subdivision 10, or 290.0133, subdivision 12, for a shareholder of a corporation that is an S corporation, minus the positive value of any net operating loss under section 172 of the Internal Revenue Code generated for the taxable year of the addition, is a subtraction. If the net operating loss exceeds the addition for the taxable year, a subtraction is not allowed under this subdivision. The current year section 179 allowance under section 290.0804, subdivision 1, is a subtraction.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1559

Sec. 9. Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision to read:

 

Subd. 23. Contributions to 529 plan. (a) The amount equal to the contributions made during the taxable year to one or more accounts in plans qualifying under section 529 of the Internal Revenue Code, reduced by any withdrawals from accounts during the taxable year, is a subtraction.

 

(b) The subtraction under this subdivision does not include amounts rolled over from other college savings plan accounts.

 

(c) The subtraction under this subdivision must not exceed $3,000 for married couples filing joint returns and $1,500 for all other filers, and is limited to individuals who do not claim the credit under section 290.0684.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 10. Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision to read:

 

Subd. 24. Social Security benefits. The amount of Social Security benefits, as provided in section 290.0803, is a subtraction.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 11. Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision to read:

 

Subd. 25. Discharge of indebtedness; education loans. (a) The amount equal to the discharge of indebtedness of the taxpayer is a subtraction if:

 

(1) the indebtedness discharged is a qualified education loan;

 

(2) the taxpayer incurred the indebtedness to pay for qualified higher education expenses related to attending a graduate degree program; and

 

(3) the indebtedness was discharged under section 136A.1791, or following the taxpayer's completion of an income-driven repayment plan.

 

(b) For the purposes of this subdivision, "qualified education loan" and "qualified higher education expenses" have the meanings given in section 221 of the Internal Revenue Code.

 

(c) For purposes of this subdivision, "income-driven repayment plan" means a payment plan established by the United States Department of Education that sets monthly student loan payments based on income and family size under United States Code, title 20, section 1087e, or similar authority and specifically includes, but is not limited to:

 

(1) the income-based repayment plan under United States Code, title 20, section 1098e;

 

(2) the income contingent repayment plan established under United States Code, title 20, section 1087e, subsection (e); and

 

(3) the PAYE program or REPAYE program established by the Department of Education under administrative regulations.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1560

Sec. 12. Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision to read:

 

Subd. 26. Carryover section 179 allowance. The carryover section 179 allowance under section 290.0804, subdivision 2, is a subtraction.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 13. Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision to read:

 

Subd. 27. First-time home buyer savings account. (a) The amount for contributions to and earnings on a first‑time home buyer savings account allowed by section 462D.06, subdivision 1, is a subtraction.

 

(b) The subtraction allowed under this subdivision for a taxable year is limited to $7,500, or $15,000 for married joint filers. For a taxpayer whose adjusted gross income, as defined in section 62 of the Internal Revenue Code, for the taxable year exceeds $125,000, or $250,000 for married joint filers, the maximum subtraction is reduced $1 for each $4 of adjusted gross income in excess of that threshold.

 

(c) The adjusted gross income thresholds under paragraph (b) are annually adjusted for inflation. Effective for taxable year 2018, the commissioner shall adjust the dollar amount of the income thresholds at which the maximum credit begins to be reduced under paragraph (b) by the percentage determined under section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) the word "2016" is substituted for the word "1992." For 2018, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each subsequent year, from the 12 months ending on August 31, 2016, to the 12 months ending on August 31 of the year preceding the taxable year. The determination of the commissioner under this subdivision is not a "rule" and is not subject to the Administrative Procedure Act in chapter 14. The threshold amount as adjusted must be rounded to the nearest $100 amount. If the amount ends in $50, the amount is rounded up to the nearest $100 amount.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 14. Minnesota Statutes 2016, section 290.0133, is amended by adding a subdivision to read:

 

Subd. 15. Equity and opportunity donations to qualified foundations. The amount of the deduction under section 170 of the Internal Revenue Code that represents contributions to a qualified foundation under section 290.0693 is an addition.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 15. [290.016] CONFORMITY TO FEDERAL TAX EXTENDERS BY ADMINISTRATIVE ACTION.

 

Subdivision 1. Legislative purpose. (a) The legislature intends this section to provide an ongoing mechanism for conforming the Minnesota individual income and corporate franchise taxes and the property tax refund and homestead credit refund programs to federal tax legislation enacted after the legislature has adjourned that extends existing provisions of federal law, if the provisions affect a taxable year that ends before the legislature is scheduled to reconvene in regular session. Congress has regularly enacted changes of that type that affect computation of Minnesota tax through its links to federal law. The federal changes consist mainly of extending provisions that reduce revenues and are scheduled to expire. Because Minnesota law is linked to federal law as of a specific date, taxpayers and the Department of Revenue must assume that Minnesota law does not include the effect of these federal changes even though the legislature regularly adopts most of the federal provisions retroactively in the next legislative session. This situation undermines compliance and administration of Minnesota taxes, causing delay, uncertainty, and added costs. This section provides an administrative mechanism to conform to most of these federal changes. The legislature's intent is to conform to the federal tax extenders, including minor modifications of them, and to set aside the necessary state budget resources to do so.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1561

(b) By expressing its intent regarding specific federal provisions and indicating how to treat each federal extender provision, the legislature is exercising its legislative power and is not delegating to Congress or the commissioner the authority to determine Minnesota tax law. The legislature believes that this section is consistent with the Minnesota Supreme Court's ruling in the case of Wallace v. Commissioner of Taxation, 289 Minn. 220 (1971).

 

Subd. 2. Federal tax conformity account established; transfer. (a) A federal tax conformity account is established in the general fund. Money in the account is available for transfer to the general fund to offset the reduction in general fund revenues resulting from conforming Minnesota tax law to federal law under this section.

 

(b) $35,000,000 is transferred from the general fund to the federal tax conformity account, effective July 1, 2017.

 

(c) Each year, within ten days after receiving notice of the amount from the commissioner, the commissioner of management and budget shall transfer from the account to the general fund the amount the commissioner determines is required under subdivision 4.

 

Subd. 3. Eligible federal tax preferences. For purposes of this section and section 290.01, the term "eligible federal tax preferences" means any of the following items that are not in effect under the Internal Revenue Code for future taxable years beginning after December 31, 2016:

 

(1) discharge of qualified principal residence indebtedness under section 108(a)(1)(E) of the Internal Revenue Code;

 

(2) mortgage insurance premiums treated as qualified residence interest under section 163(h)(3)(E) of the Internal Revenue Code;

 

(3) qualified tuition and related expenses under section 222 of the Internal Revenue Code;

 

(4) reversion of the ten percent adjusted gross income threshold used in determining the itemized deductions of the expenses of medical care under section 213 of the Internal Revenue Code to 7.5 percent, without regard to whether the reversion applies to all individuals or is limited to individuals who have attained the age of 65;

 

(5) classification of certain race horses as three-year property under section 168(e)(3)(A)(i) and (ii) of the Internal Revenue Code;

 

(6) the seven-year recovery period for motorsports entertainment complexes under section 168(i)(15) of the Internal Revenue Code;

 

(7) the accelerated depreciation for business property on an Indian reservation under section 168(j) of the Internal Revenue Code;

 

(8) the election to expense mine safety equipment under section 179E of the Internal Revenue Code;

 

(9) the special expensing rules for certain film and television productions under section 181 of the Internal Revenue Code;

 

(10) the special allowance for second-generation biofuel plant property under section 168(l) of the Internal Revenue Code;

 

(11) the energy efficient commercial buildings deduction under section 179D of the Internal Revenue Code;

 

(12) the five-year recovery period for property described in section 168(e)(3)(B)(vi)(I) of the Internal Revenue Code and qualifying for an energy credit under section 48(a)(3)(A) of the Internal Revenue Code; and

 

(13) the amount of the additional section 179 allowance in an empowerment zone under section 1397A of the Internal Revenue Code.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1562

Subd. 4. Designation of qualifying federal conformity items. (a) If, after final adjournment of a regular session of the legislature, Congress enacts a law that extends one or more of the eligible federal tax preferences to taxable years beginning during the calendar year in which the legislature adjourned, the commissioner shall prepare a list of qualifying federal conformity items and publish it on the Department of Revenue's Web site within 30 days following enactment of the law. In preparing the list, the commissioner shall estimate the change in revenue resulting from allowing the eligible federal tax preferences, including the effect of subdivision 6, for the current and succeeding fiscal year only. The commissioner shall not include an item on the list of qualifying federal conformity items if the commissioner estimates that its inclusion would reduce general fund revenues for the current and succeeding fiscal year by more than the balance in the federal tax conformity account.

 

(b) The commissioner shall consider the provisions of subdivision 6 as the first item to include on the list of qualifying conformity items. The commissioner shall apply the following priorities in determining which additional items to include:

 

(1) the effect of all eligible federal tax preferences on computation of federal adjusted gross income under this chapter and household income under chapter 290A, is the first priority;

 

(2) the effect of the federal law on computation of Minnesota tax credits is the second priority;

 

(3) the items in subdivision 3, clauses (5) to (13), in that order, are the third priority; and

 

(4) the items in subdivision 3, clauses (1) to (4), in that order, are the last priority.

 

(c) In determining whether to include an eligible federal tax preference on the list of qualifying federal conformity items, the commissioner may include items in which nonmaterial changes were made in the federal law extending allowance of the eligible federal tax preferences, compared to the provision that was in effect for the prior federal taxable year. For purposes of this determination, nonmaterial changes are limited to changes that are estimated to increase or decrease Minnesota tax revenues by no more than $1,000,000 for the affected eligible federal tax preference item for the taxable year.

 

(d) Within ten days after the commissioner's final determination of qualifying federal conformity items under this subdivision, the commissioner shall notify the commissioner of management and budget, in writing, of the amounts of the federal tax conformity account transfers under subdivision 2.

 

Subd. 5. Provisions in effect. (a) For purposes of determining tax and credits under this chapter, including the taxes under sections 290.091 and 290.0921, and household income under chapter 290A, qualifying federal conformity items and bonus depreciation rules under subdivision 6 apply for the designated taxable year and the provisions of this chapter apply as if the definition of the Internal Revenue Code under section 290.01, subdivision 31, included the amendments to the qualifying federal conformity items.

 

(b) The commissioner shall administer the taxes under this chapter and refunds under chapter 290A as if Minnesota had conformed to the federal definitions of net income, adjusted gross income, and tax credits that affect computation of Minnesota tax or refunds resulting from extension of the qualifying federal conformity items.

 

(c) For purposes of this subdivision and subdivision 6, "designated taxable year" means a taxable year that begins during a calendar year in which an eligible federal tax preference is enacted after the legislature adjourned its regular session and is effective for taxable years beginning during that calendar year.

 

Subd. 6. Bonus depreciation; 80 percent rule applies. If, following final adjournment of a regular session of the legislature, Congress enacts a law that extends application of the depreciation special allowances under section 168(k) of the Internal Revenue Code to taxable years beginning during the same calendar year, the allowance must


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1563

be determined using the rules under sections 290.0131, subdivision 9, and 290.0133, subdivision 11, for the designated taxable year; and the rules under sections 290.0132, subdivision 9, and 290.0134, subdivision 13, for the five tax years immediately following the designated taxable year.

 

Subd. 7. Forms preparation. If the provisions of subdivisions 3 and 4 apply to a taxable year, the commissioner shall prepare forms and instructions that reflect the qualifying federal conformity items and bonus depreciation rules under subdivision 6, if applicable, for the taxable year consistent with the provisions of this section.

 

Subd. 8. Draft legislation. For a taxable year for which the commissioner publishes a list of qualifying federal conformity items under this section, the commissioner shall provide the chairs and ranking minority members of the legislative committees with jurisdiction over taxes with draft legislation that would conform Minnesota Statutes to the qualifying federal conformity items and any other conformity items that the commissioner recommends be adopted, including application to taxable years beyond those to which this section applies. The draft legislation is intended to make the statutes consistent with application of the designated qualifying federal conformity items under this section for the convenience of members of the public. Failure to pass the draft legislation does not affect computation of Minnesota tax liability for the affected taxable years under this section.

 

Subd. 9. Administrative Procedure Act. Designation of qualifying federal conformity items or any other action of the commissioner under this section is not a rule and is not subject to the Administrative Procedure Act under chapter 14, including section 14.386.

 

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

 

Sec. 16. Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to read:

 

Subd. 2g. First-time home buyer savings account. In addition to the tax computed under subdivision 2c, an additional amount of tax applies equal to the additional tax computed for the taxable year for the account holder of a first-time home buyer account under section 462D.06, subdivision 3.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 17. Minnesota Statutes 2016, section 290.06, subdivision 22, is amended to read:

 

Subd. 22. Credit for taxes paid to another state. (a) A taxpayer who is liable for taxes based on net income to another state, as provided in paragraphs (b) through (f), upon income allocated or apportioned to Minnesota, is entitled to a credit for the tax paid to another state if the tax is actually paid in the taxable year or a subsequent taxable year. A taxpayer who is a resident of this state pursuant to section 290.01, subdivision 7, paragraph (b), and who is subject to income tax as a resident in the state of the individual's domicile is not allowed this credit unless the state of domicile does not allow a similar credit.

 

(b) For an individual, estate, or trust, the credit is determined by multiplying the tax payable under this chapter by the ratio derived by dividing the income subject to tax in the other state that is also subject to tax in Minnesota while a resident of Minnesota by the taxpayer's federal adjusted gross income, as defined in section 62 of the Internal Revenue Code, modified by the addition required by section 290.0131, subdivision 2, and the subtraction allowed by section 290.0132, subdivision 2, to the extent the income is allocated or assigned to Minnesota under sections 290.081 and 290.17.

 

(c) If the taxpayer is an athletic team that apportions all of its income under section 290.17, subdivision 5, the credit is determined by multiplying the tax payable under this chapter by the ratio derived from dividing the total net income subject to tax in the other state by the taxpayer's Minnesota taxable income.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1564

(d) (1) The credit determined under paragraph (b) or (c) shall not exceed the amount of tax so paid to the other state on the gross income earned within the other state subject to tax under this chapter, nor shall; and

 

(2) the allowance of the credit does not reduce the taxes paid under this chapter to an amount less than what would be assessed if such income amount was the gross income earned within the other state were excluded from taxable net income.

 

(e) In the case of the tax assessed on a lump-sum distribution under section 290.032, the credit allowed under paragraph (a) is the tax assessed by the other state on the lump-sum distribution that is also subject to tax under section 290.032, and shall not exceed the tax assessed under section 290.032. To the extent the total lump-sum distribution defined in section 290.032, subdivision 1, includes lump-sum distributions received in prior years or is all or in part an annuity contract, the reduction to the tax on the lump-sum distribution allowed under section 290.032, subdivision 2, includes tax paid to another state that is properly apportioned to that distribution.

 

(f) If a Minnesota resident reported an item of income to Minnesota and is assessed tax in such other state on that same income after the Minnesota statute of limitations has expired, the taxpayer shall receive a credit for that year under paragraph (a), notwithstanding any statute of limitations to the contrary. The claim for the credit must be submitted within one year from the date the taxes were paid to the other state. The taxpayer must submit sufficient proof to show entitlement to a credit.

 

(g) For the purposes of this subdivision, a resident shareholder of a corporation treated as an "S" corporation under section 290.9725, must be considered to have paid a tax imposed on the shareholder in an amount equal to the shareholder's pro rata share of any net income tax paid by the S corporation to another state. For the purposes of the preceding sentence, the term "net income tax" means any tax imposed on or measured by a corporation's net income.

 

(h) For the purposes of this subdivision, a resident partner of an entity taxed as a partnership under the Internal Revenue Code must be considered to have paid a tax imposed on the partner in an amount equal to the partner's pro rata share of any net income tax paid by the partnership to another state. For purposes of the preceding sentence, the term "net income" tax means any tax imposed on or measured by a partnership's net income.

 

(i) For the purposes of this subdivision, "another state":

 

(1) includes:

 

(i) the District of Columbia; and

 

(ii) a province or territory of Canada; but

 

(2) excludes Puerto Rico and the several territories organized by Congress.

 

(j) The limitations on the credit in paragraphs (b), (c), and (d), are imposed on a state by state basis.

 

(k) For a tax imposed by a province or territory of Canada, the tax for purposes of this subdivision is the excess of the tax over the amount of the foreign tax credit allowed under section 27 of the Internal Revenue Code. In determining the amount of the foreign tax credit allowed, the net income taxes imposed by Canada on the income are deducted first. Any remaining amount of the allowable foreign tax credit reduces the provincial or territorial tax that qualifies for the credit under this subdivision.

 

(l) If the amount of the credit which a qualifying individual is eligible to receive under this section for tax paid to a qualifying state, disregarding the limitation in paragraph (d), clause (2), exceeds the tax due under this chapter, the commissioner shall refund the excess to the individual. An amount sufficient to pay the refunds required by this section is appropriated to the commissioner from the general fund.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1565

For purposes of this paragraph, "qualifying individual" means a Minnesota resident under section 290.01, subdivision 7, paragraph (a), who received compensation during the taxable year for the performance of personal or professional services within a qualifying state, and "qualifying state" means a state with which an agreement under section 290.081 is not in effect for the taxable year but was in effect for a taxable year beginning before January 1, 2010.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 18. Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to read:

 

Subd. 37. Beginning farmer incentive credit. (a) A beginning farmer incentive credit is allowed against the tax due under this chapter for the sale or rental of agricultural assets to a beginning farmer according to section 41B.0391, subdivision 2.

 

(b) The credit may be claimed only after approval and certification by the Rural Finance Authority according to section 41B.0391.

 

(c) The credit is limited to the liability for tax, as computed under this chapter, for the taxable year. If the amount of the credit determined under this subdivision for any taxable year exceeds this limitation, the excess is a beginning farmer incentive credit carryover to each of the 15 succeeding taxable years. The entire amount of the excess unused credit for the taxable year is carried first to the earliest of the taxable years to which the credit may be carried and then to each successive year to which the credit may be carried. The amount of the unused credit which may be added under this paragraph must not exceed the taxpayer's liability for tax, less the beginning farmer incentive credit for the taxable year.

 

(d) Credits allowed to a partnership, a limited liability company taxed as a partnership, an S corporation, or multiple owners of property are passed through to the partners, members, shareholders, or owners, respectively, pro rata to each based on the partner's, member's, shareholder's, or owner's share of the entity's assets or as specially allocated in the organizational documents or any other executed agreement, as of the last day of the taxable year.

 

(e) For a nonresident or part-year resident, the credit under this section must be allocated using the percentage calculated in section 290.06, subdivision 2c, paragraph (e).

 

(f) Notwithstanding the approval and certification by the Rural Finance Authority under section 41B.0391, the commissioner may utilize any audit and examination powers under chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the credit and to assess for the amount of any improperly claimed credit.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 19. Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to read:

 

Subd. 38. Beginning farmer management credit. (a) A taxpayer who is a beginning farmer may take a credit against the tax due under this chapter for participation in a financial management program according to section 41B.0391, subdivision 3.

 

(b) The credit may be claimed only after approval and certification by the Rural Finance Authority according to section 41B.0391.

 

(c) The credit is limited to the liability for tax, as computed under this chapter, for the taxable year. If the amount of the credit determined under this subdivision for any taxable year exceeds this limitation, the excess is a beginning farmer management credit carryover to each of the three succeeding taxable years. The entire amount of the excess unused credit for the taxable year is carried first to the earliest of the taxable years to which the credit


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1566

may be carried and then to each successive year to which the credit may be carried. The amount of the unused credit which may be added under this paragraph must not exceed the taxpayer's liability for tax, less the beginning farmer management credit for the taxable year.

 

(d) For a part-year resident, the credit under this section must be allocated using the percentage calculated in section 290.06, subdivision 2c, paragraph (e).

 

(e) Notwithstanding the approval and certification by the Rural Finance Authority under section 41B.0391, the commissioner may utilize any audit and examination powers under chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the credit and to assess for the amount of any improperly claimed credit.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 20. Minnesota Statutes 2016, section 290.067, subdivision 1, is amended to read:

 

Subdivision 1. Amount of credit. (a) A taxpayer may take as a credit against the tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the dependent care credit for which the taxpayer is eligible pursuant to the provisions of section 21 of the Internal Revenue Code subject to the limitations provided in subdivision 2 except that in determining whether the child qualified as a dependent, income received as a Minnesota family investment program grant or allowance to or on behalf of the child must not be taken into account in determining whether the child received more than half of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of the Internal Revenue Code do not apply.

 

(b) If a child who has not attained the age of six years at the close of the taxable year is cared for at a licensed family day care home operated by the child's parent, the taxpayer is deemed to have paid employment-related expenses. If the child is 16 months old or younger at the close of the taxable year, the amount of expenses deemed to have been paid equals the maximum limit for one qualified individual under section 21(c) and (d) of the Internal Revenue Code. If the child is older than 16 months of age but has not attained the age of six years at the close of the taxable year, the amount of expenses deemed to have been paid equals the amount the licensee would charge for the care of a child of the same age for the same number of hours of care.

 

(c) If a married couple:

 

(1) has a child who has not attained the age of one year at the close of the taxable year;

 

(2) files a joint tax return for the taxable year; and

 

(3) does not participate in a dependent care assistance program as defined in section 129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of (i) the combined earned income of the couple or (ii) the amount of the maximum limit for one qualified individual under section 21(c) and (d) of the Internal Revenue Code will be deemed to be the employment related expense paid for that child. The earned income limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed amount. These deemed amounts apply regardless of whether any employment-related expenses have been paid.

 

(d) If the taxpayer is not required and does not file a federal individual income tax return for the tax year, no credit is allowed for any amount paid to any person unless:

 

(1) the name, address, and taxpayer identification number of the person are included on the return claiming the credit; or


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1567

(2) if the person is an organization described in section 501(c)(3) of the Internal Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name and address of the person are included on the return claiming the credit.

 

In the case of a failure to provide the information required under the preceding sentence, the preceding sentence does not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information required.

 

(e) In the case of a nonresident, part-year resident, or a person who has earned income not subject to tax under this chapter including earned income excluded pursuant to section 290.0132, subdivision 10, the credit determined under section 21 of the Internal Revenue Code must be allocated based on the ratio by which the earned income of the claimant and the claimant's spouse from Minnesota sources bears to the total earned income of the claimant and the claimant's spouse.

 

(f) For residents of Minnesota, the subtractions for military pay under section 290.0132, subdivisions 11 and 12, are not considered "earned income not subject to tax under this chapter."

 

(g) For residents of Minnesota, the exclusion of combat pay under section 112 of the Internal Revenue Code is not considered "earned income not subject to tax under this chapter."

 

(h) For taxpayers with federal adjusted gross income in excess of $50,000, the credit is equal to the lesser of the credit otherwise calculated under this subdivision, or the amount equal to $600 minus five percent of federal adjusted gross income in excess of $50,000 for taxpayers with one qualified individual, or $1,200 minus five percent of federal adjusted gross income in excess of $50,000 for taxpayers with two or more qualified individuals, but in no case is the credit less than zero.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 21. Minnesota Statutes 2016, section 290.067, subdivision 2b, is amended to read:

 

Subd. 2b. Inflation adjustment. The commissioner shall adjust the dollar amount of the income threshold at which the maximum credit begins to be reduced under subdivision 2 1 by the percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) the word "1999" "2016" shall be substituted for the word "1992." For 2001 2018, the commissioner shall then determine the percent change from the 12 months ending on August 31, 1999 2016, to the 12 months ending on August 31, 2000 2017, and in each subsequent year, from the 12 months ending on August 31, 1999 2016, to the 12 months ending on August 31 of the year preceding the taxable year. The determination of the commissioner pursuant to this subdivision must not be considered a "rule" and is not subject to the Administrative Procedure Act contained in chapter 14. The threshold amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 22. Minnesota Statutes 2016, section 290.0674, subdivision 1, is amended to read:

 

Subdivision 1. Credit allowed. An individual is allowed a credit against the tax imposed by this chapter in an amount equal to 75 percent of the amount paid for education-related expenses for a qualifying child in a prekindergarten educational program or in kindergarten through grade 12. For purposes of this section, "education‑related expenses" means:


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1568

(1) fees or tuition for instruction by an instructor under section 120A.22, subdivision 10, clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers Association, and who is not a lineal ancestor or sibling of the dependent for instruction outside the regular school day or school year, including tutoring, driver's education offered as part of school curriculum, regardless of whether it is taken from a public or private entity or summer camps, in grade or age appropriate curricula that supplement curricula and instruction available during the regular school year, that assists a dependent to improve knowledge of core curriculum areas or to expand knowledge and skills under the required academic standards under section 120B.021, subdivision 1, and the elective standard under section 120B.022, subdivision 1, clause (2), and that do not include the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship;

 

(2) expenses for textbooks, including books and other instructional materials and equipment purchased or leased for use in elementary and secondary schools in teaching only those subjects legally and commonly taught in public elementary and secondary schools in this state. "Textbooks" does not include instructional books and materials used in the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship, nor does it include books or materials for extracurricular activities including sporting events, musical or dramatic events, speech activities, driver's education, or similar programs;

 

(3) a maximum expense of $200 per family for personal computer hardware, excluding single purpose processors, and educational software that assists a dependent to improve knowledge of core curriculum areas or to expand knowledge and skills under the required academic standards under section 120B.021, subdivision 1, and the elective standard under section 120B.022, subdivision 1, clause (2), purchased for use in the taxpayer's home and not used in a trade or business regardless of whether the computer is required by the dependent's school; and

 

(4) the amount paid to others for tuition and transportation of a qualifying child attending an elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory attendance laws, which is not operated for profit, and which adheres to the provisions of the Civil Rights Act of 1964 and chapter 363A. Amounts under this clause exclude any expense the taxpayer incurred in using the taxpayer's or the qualifying child's vehicle.; and

 

(5) fees charged for enrollment in a prekindergarten educational program, to the extent not used to claim the credit under section 290.067.

 

For purposes of this section, "qualifying child" has the meaning given in section 32(c)(3) of the Internal Revenue Code, but is limited to children who have attained at least the age of three during the taxable year.

 

For purposes of this section, "prekindergarten educational program" means:

 

(1) prekindergarten programs established by a school district under chapter 124D;

 

(2) preschools, nursery schools, and early childhood development programs licensed by the Department of Human Services and accredited by the National Association for the Education of Young Children or National Early Childhood Program Accreditation;

 

(3) Montessori programs affiliated with or accredited by the American Montessori Society or American Montessori International; and

 

(4) child care programs provided by family day care providers holding a current early childhood development credential approved by the commissioner of human services.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1569

Sec. 23. Minnesota Statutes 2016, section 290.0674, subdivision 2, is amended to read:

 

Subd. 2. Limitations. (a) For claimants with income not greater than $33,500 $42,000, the maximum credit allowed for a family is $1,000 $1,500 multiplied by the number of qualifying children in a prekindergarten educational program or in kindergarten through grade 12 in the family. The maximum credit for families with one qualifying child in kindergarten through grade 12 is reduced by $1 for each $4 $10 of household income over $33,500, and the maximum credit for families with two or more qualifying children in kindergarten through grade 12 is reduced by $2 for each $4 of household income over $33,500 $42,000, but in no case is the credit less than zero.

 

For purposes of this section "income" has the meaning given in section 290.067, subdivision 2a. In the case of a married claimant, a credit is not allowed unless a joint income tax return is filed.

 

(b) For a nonresident or part-year resident, the credit determined under subdivision 1 and the maximum credit amount in paragraph (a) must be allocated using the percentage calculated in section 290.06, subdivision 2c, paragraph (e).

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 24. Minnesota Statutes 2016, section 290.0674, is amended by adding a subdivision to read:

 

Subd. 6. Inflation adjustment. The income threshold at which the maximum credit begins to be reduced in subdivision 2 must be adjusted for inflation. The commissioner shall adjust the income threshold by the percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2016" shall be substituted for the word "1992." For 2018, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each subsequent year, from the 12 months ending August 31, 2016, to the 12 months ending on August 31 of the year preceding the taxable year. The income threshold as adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest $10 amount. The determination of the commissioner under this subdivision is not a rule under the Administrative Procedure Act.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 25. Minnesota Statutes 2016, section 290.068, subdivision 1, is amended to read:

 

Subdivision 1. Credit allowed. A corporation, partners in a partnership, or shareholders in a corporation treated as an "S" corporation under section 290.9725 are allowed a credit against the tax computed under this chapter for the taxable year equal to:

 

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

 

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

 

(2) the base amount; and

 

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

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 26. Minnesota Statutes 2016, section 290.068, subdivision 2, is amended to read:

 

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

 

(a) "Qualified research expenses" means (i) qualified research expenses and basic research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except it does not include expenses incurred for qualified research or basic research conducted outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1570

Revenue Code; and (ii) contributions to a nonprofit corporation established and operated pursuant to the provisions of chapter 317A for the purpose of promoting the establishment and expansion of business in this state, provided the contributions are invested by the nonprofit corporation for the purpose of providing funds for small, technologically innovative enterprises in Minnesota during the early stages of their development.

 

(b) "Qualified research" means qualified research as defined in section 41(d) of the Internal Revenue Code, except that the term does not include qualified research conducted outside the state of Minnesota.

 

(c) "Base amount" means base amount as defined in section 41(c) of the Internal Revenue Code, except that the average annual gross receipts must be calculated using Minnesota sales or receipts under section 290.191 and the definitions contained in clauses (a) and (b) shall apply.

 

(d) "Liability for tax" means the liability for tax under this chapter, other than the tax under section 290.0922, reduced by the sum of the nonrefundable credits allowed under this chapter, but excluding any carryover credit under subdivision 3.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 27. Minnesota Statutes 2016, section 290.068, subdivision 3, is amended to read:

 

Subd. 3. Limitation; carryover. (a) Except as provided in subdivision 6a, the credit for a taxable year beginning before January 1, 2010, and after December 31, 2012, shall not exceed the liability for tax. For a person subject to tax under section 290.06, subdivision 1, "liability for tax" for purposes of this section means the sum of the tax imposed under section 290.06, subdivisions 1 and 2c, for the taxable year reduced by the sum of the nonrefundable credits allowed under this chapter, includes the liability for tax on all of the entities required to be included on the combined report of the unitary business. If the amount of the credit allowed exceeds the liability for tax of the taxpayer, but is allowed as a result of the liability for tax of other members of the unitary group for the taxable year, the taxpayer must allocate the excess as a research credit to another member of the unitary group.

 

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

 

(c) If the amount of the credit determined under this section for any taxable year exceeds the limitation under paragraph (a) or (b), including amounts allowed as a refund under subdivision 6a, or allocated to other members of the unitary group, the excess shall be a research credit carryover to each of the 15 succeeding taxable years. The entire amount of the excess unused credit for the taxable year shall be carried first to the earliest of the taxable years to which the credit may be carried and then to each successive year to which the credit may be carried. The amount of the unused credit which may be added under this clause shall not exceed the taxpayer's liability for tax less the research credit for the taxable year.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 28. Minnesota Statutes 2016, section 290.068, subdivision 6a, is amended to read:

 

Subd. 6a. Credit to be refundable. (a) If the amount of credit allowed in this section for qualified research expenses incurred in taxable years beginning after December 31, 2009, and before January 1, 2013, exceeds the taxpayer's tax liability under this chapter, the commissioner shall refund the excess amount. The credit allowed for qualified research expenses incurred in taxable years beginning after December 31, 2009, and before January 1, 2013, must be used before any research credit earned under subdivision 3.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1571

(b) The provisions of this paragraph apply to taxable years beginning after December 31, 2016. A taxpayer is allowed a refund equal to the least of the following:

 

(1) $100,000;

 

(2) the sum of the maximum refundable limits allocated to the taxpayer as a shareholder of an S corporation and as a partner of a partnership under paragraph (c) for the taxable year; or

 

(3) the excess of the amount of the credit allowed under this section for qualified research expenses incurred in the taxable year over the taxpayer's liability for tax, including after satisfying the tax liabilities of any other member of the unitary group under subdivision 3, paragraph (a).

 

(c) For an S corporation or partnership, a maximum refundable limit of $100,000 applies at the entity level. The S corporation or partnership must allocate its maximum refundable limit to each of its shareholders or members for the taxable year. The allocation may be made in any manner provided in the organizational documents or any other executed agreement as of the last day of the taxable year. If no provision is made in those documents or by agreement, the allocation must be made in the same manner provided in subdivision 4 for allocation of the credit. Within 60 days after the close of the taxable year, the S corporation or partnership must report to each shareholder or partner the allocated share of the maximum refundable limit for each shareholder or partner. The commissioner may require reporting, including the time and manner for reporting, of the allocated amounts to the commissioner.

 

(d) The excess of the amount allowed as a refund under this subdivision to the taxpayer is a carryover under subdivision 3.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 29. [290.0682] STUDENT LOAN CREDIT.

 

Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given.

 

(b) "Adjusted gross income" means federal adjusted gross income as defined in section 62 of the Internal Revenue Code.

 

(c) "Earned income" has the meaning given in section 32(c) of the Internal Revenue Code.

 

(d) "Eligible individual" means a resident individual with one or more qualified education loans related to an undergraduate or graduate degree program at a postsecondary educational institution.

 

(e) "Eligible loan payments" means the amount the eligible individual paid during the taxable year in principal and interest on qualified education loans.

 

(f) "Postsecondary educational institution" means a public or nonprofit postsecondary institution eligible for state student aid under section 136A.103 or, if the institution is not located in this state, a public or nonprofit postsecondary institution participating in the federal Pell Grant program under title IV of the Higher Education Act of 1965, Public Law 89-329, as amended.

 

(g) "Qualified education loan" has the meaning given in section 221 of the Internal Revenue Code, but is limited to indebtedness incurred on behalf of the eligible individual.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1572

Subd. 2. Credit allowed. (a) An eligible individual is allowed a credit against the tax due under this chapter.

 

(b) The credit for an eligible individual equals the least of:

 

(1) eligible loan payments minus ten percent of an amount equal to adjusted gross income in excess of $10,000, but in no case less than zero;

 

(2) the earned income for the taxable year of the eligible individual, if any;

 

(3) the sum of:

 

(i) the interest portion of eligible loan payments made during the taxable year; and

 

(ii) ten percent of the original loan amount of all qualified education loans of the eligible individual; or

 

(4) $750.

 

(c) For a part-year resident, the credit must be allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph (e).

 

(d) In the case of a married couple, each spouse is eligible for the credit in this section.

 

Subd. 3. Credit refundable. If the amount of credit that an individual is eligible to receive under this section exceeds the individual's tax liability under this chapter, the commissioner shall refund the excess to the individual.

 

Subd. 4. Appropriation. An amount sufficient to pay the refunds required by this section is appropriated to the commissioner from the general fund.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 30. [290.0683] MINNESOTA HOUSING TAX CREDIT.

 

Subdivision 1. Definitions. For purposes of this section:

 

(1) "entity" means a partnership, limited liability company taxed as a partnership, S corporation, or property with multiple owners;

 

(2) "entity member" means a partner, member, shareholder, or owner;

 

(3) "taxpayer" means a taxpayer as defined in section 290.01, subdivision 6, or a taxpayer as defined in section 297I.01, subdivision 16; and

 

(4) terms defined in section 462A.39 have the meanings given in that section.

 

Subd. 2. Credit allowed. (a) A taxpayer is allowed a credit against the taxes imposed under this chapter and chapter 297I. The credit equals the amount allocated to the taxpayer and indicated on the eligibility statement issued to the taxpayer under section 462A.39, subdivision 3. The taxpayer may claim the amount allocated in the year in which the credit is allocated and in each of the five following taxable years.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1573

(b) A taxpayer eligible for the credit must submit to the commissioner a copy of the eligibility statement issued by the agency or suballocator with respect to the qualified Minnesota project, a copy of the project owner's tax return that must be filed as required under chapter 289A, and any other information required by the commissioner.

 

(c) Credits granted to an entity are passed through to the entity members based on each entity member's share of the entity's assets or as specially allocated in the organizational documents as of the last day of the taxable year in which the eligibility statement was issued. If a Minnesota housing tax credit is allowed to an entity with multiple tiers of ownership, the credit is passed through to entity members pro rata or as specially allocated in the organizational documents as of the last day of the taxable year in which the eligibility statement was issued at each ownership tier.

 

Subd. 3. Limitations; carryover. (a) A credit allowed under this section may not exceed liability for tax under this chapter and chapter 297I.

 

(b) If the amount of the credit under this section exceeds the limitation under paragraph (a), the excess is a credit carryover to each of the 11 succeeding taxable years. The entire amount of the excess unused credit for the taxable year must be carried first to the earliest of the taxable years to which the credit may be carried and then to each successive year to which the credit may be carried.

 

(c) Credits under this subdivision apply against liability after any net operating loss carryover incorporated in the calculation of federal taxable income.

 

Subd. 4. Audit powers. Notwithstanding the eligibility statement issued by the agency or a suballocator under section 462A.38, the commissioner may utilize any audit and examination powers under chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the credit and to assess for the amount of any improperly claimed credit and that the owner is in compliance with the compliance agreement.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 31. [290.0684] SECTION 529 COLLEGE SAVINGS PLAN CREDIT.

 

Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given to them.

 

(b) "Federal adjusted gross income" has the meaning given under section 62(a) of the Internal Revenue Code.

 

(c) "Qualified higher education expenses" has the meaning given in section 529 of the Internal Revenue Code.

 

Subd. 2. Credit allowed. (a) A credit is allowed to a resident individual against the tax imposed by this chapter. The credit is not allowed to an individual who is eligible to be claimed as a dependent, as defined in sections 151 and 152 of the Internal Revenue Code.

 

(b) The amount of the credit allowed equals 50 percent of the amount contributed in a taxable year to one or more accounts in plans qualifying under section 529 of the Internal Revenue Code, reduced by any withdrawals from accounts made during the taxable year. The maximum credit is $500, subject to the phaseout in paragraphs (c) and (d). In no case is the credit less than zero.

 

(c) For individual filers, the maximum credit is reduced by two percent of adjusted gross income in excess of $75,000.

 

(d) For married couples filing a joint return, the maximum credit is phased out as follows:


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1574

(1) for married couples with adjusted gross income in excess of $75,000, but not more than $100,000, the maximum credit is reduced by one percent of adjusted gross income in excess of $75,000;

 

(2) for married couples with adjusted gross income in excess of $100,000, but not more than $135,000, the maximum credit is $250; and

 

(3) for married couples with adjusted gross income in excess of $135,000, the maximum credit is $250, reduced by one percent of adjusted gross income in excess of $135,000.

 

(e) The income thresholds in paragraphs (c) and (d) used to calculate the maximum credit must be adjusted for inflation. The commissioner shall adjust the income thresholds by the percentage determined under the provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) the word "2016" is substituted for the word "1992." For 2018, the commissioner shall then determine the percent change from the 12 months ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each subsequent year, from the 12 months ending on August 31, 2016, to the 12 months ending on August 31 of the year preceding the taxable year. The income thresholds as adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount is rounded up to the nearest $10 amount. The determination of the commissioner under this subdivision is not subject to chapter 14, including section 14.386.

 

Subd. 3. Credit refundable. If the amount of credit that an individual is eligible to receive under this section exceeds the individual's tax liability under this chapter, the commissioner shall refund the excess to the individual.

 

Subd. 4. Allocation. For a part-year resident, the credit must be allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph (e).

 

Subd. 5. Revocation. If an individual makes a withdrawal of contributions for a purpose other than to pay for qualified higher education expenses, then:

 

(1) contributions used to claim the credit are considered to be the first contributions withdrawn; and

 

(2) any credit allowed for the contributions is revoked and must be repaid by the individual in the taxable year in which the withdrawal is made.

 

Subd. 6. Appropriation. An amount sufficient to pay the refunds required by this section is appropriated to the commissioner from the general fund.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 32. Minnesota Statutes 2016, section 290.0685, subdivision 1, is amended to read:

 

Subdivision 1. Credit allowed. (a) An eligible individual is allowed a credit against the tax imposed by this chapter equal to $2,000 for each birth for which a certificate of birth resulting in stillbirth has been issued under section 144.2151. The credit under this section is allowed only in the taxable year in which the stillbirth occurred and if the child would have been a dependent of the taxpayer as defined in section 152 of the Internal Revenue Code.

 

(b) For a nonresident or part-year resident, the credit must be allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph (e).

 

(c) For purposes of this section, "eligible individual" means:


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1575

(1) the individual who gave birth to the child and who is also listed as a parent on the certificate of birth resulting in stillbirth; or

 

(2) if no individual meets the requirements of clause (1), then the first parent listed on the certificate of birth resulting in stillbirth.

 

EFFECTIVE DATE. This section is effective retroactively for taxable years beginning after December 31, 2015.

 

Sec. 33. [290.0686] CREDIT FOR ATTAINING MASTER'S DEGREE IN TEACHER'S LICENSURE FIELD.

 

Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given them.

 

(b) "Master's degree program" means a graduate-level program at an accredited university leading to a master of arts or science degree in a core content area directly related to a qualified teacher's licensure field. The master's degree program may not include pedagogy or a pedagogy component. To be eligible under this credit, a licensed elementary school teacher must pursue and complete a master's degree program in a core content area in which the teacher provides direct classroom instruction.

 

(c) "Qualified teacher" means a person who:

 

(1) holds a teaching license issued by the licensing division in the Department of Education on behalf of the Minnesota Board of Teaching both when the teacher begins the master's degree program and when the teacher completes the master's degree program;

 

(2) began a master's degree program after June 30, 2017; and

 

(3) completes the master's degree program during the taxable year.

 

(d) "Core content area" means the academic subject of reading, English or language arts, mathematics, science, foreign languages, civics and government, economics, arts, history, or geography.

 

Subd. 2. Credit allowed. (a) An individual who is a qualified teacher is allowed a credit against the tax imposed under this chapter. The credit equals the lesser of $2,500 or the amount the individual paid for tuition, fees, books, and instructional materials necessary to completing the master's degree program and for which the individual did not receive reimbursement from an employer or scholarship.

 

(b) For a nonresident or a part-year resident, the credit under this subdivision must be allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph (e).

 

(c) A qualified teacher may claim the credit in this section only one time for each master's degree program completed in a core content area.

 

Subd. 3. Credit refundable. (a) If the amount of the credit for which an individual is eligible exceeds the individual's liability for tax under this chapter, the commissioner shall refund the excess to the individual.

 

(b) The amount necessary to pay the refunds required by this section is appropriated to the commissioner from the general fund.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1576

Sec. 34. [290.0687] EMPLOYEE CREDIT FOR CERTAIN EMPLOYER-PROVIDED FITNESS FACILITY EXPENSES.

 

Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax imposed by this chapter for employer-provided fitness facility expenses. The credit equals $2.50 for each qualifying month, and the maximum credit is $30. In the case of a married couple filing a joint return, each spouse is eligible for the credit in this section. The credit may not exceed the liability for tax under this chapter.

 

(b) The credit is allowed to an individual whose employer either:

 

(1) pays a portion of any fees, dues, or membership expenses on behalf of the employee to a fitness facility; or

 

(2) reimburses the employee for direct payment of fees, dues, or membership expenses made by the employee to a fitness facility.

 

(c) For purposes of this section, "qualifying month" means a month in which an individual uses the fitness facility for the preservation, maintenance, encouragement, or development of physical fitness on at least eight days.

 

(d) For purposes of this section, "fitness facility" means a facility located in the state that:

 

(1) provides instruction in a program of physical exercise; offers facilities for the preservation, maintenance, encouragement, or development of physical fitness; or is the site of such a program of a state or local government;

 

(2) is not a private club owned and operated by its members;

 

(3) does not offer hunting, sailing, horseback riding, or outdoor golf facilities;

 

(4) does not have an overall function and purpose that makes the fitness facility incidental;

 

(5) is compliant with antidiscrimination laws under chapter 363A and applicable federal antidiscrimination laws; and

 

(6) is located off the employer's premises.

 

(e) The commissioner shall prescribe the form and manner in which eligibility for the credit is determined.

 

Subd. 2. Limitation. The credit under this section applies only if the employer's payment of fees, dues, or membership expenses to a fitness facility is available on substantially the same terms to each member of a group of employees defined under a reasonable classification by the employer, but no classification may include only highly compensated employees, as defined under section 414(q) of the Internal Revenue Code, or any other group that includes only executives, directors, or other managerial employees.

 

Subd. 3. Nonresidents and part-year residents. For a nonresident or part-year resident, the credit must be allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph (e).

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2017.

 

Sec. 35. [290.0693] EQUITY AND OPPORTUNITY IN EDUCATION TAX CREDIT.

 

Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given.

 

(b) "Eligible student" means a student who:


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1577

(1) resides in Minnesota;

 

(2) is a member of a household that has total annual income during the year prior to initial receipt of a qualified scholarship, without consideration of the benefits under this program that does not exceed an amount equal to two times the income standard used to qualify for a reduced-price meal under the National School Lunch Program; and

 

(3) meets one of the following criteria:

 

(i) attended a school, as defined in section 120A.22, subdivision 4, in the semester preceding initial receipt of a qualified scholarship;

 

(ii) is younger than age seven and not enrolled in kindergarten or first grade in the semester preceding initial receipt of a qualified scholarship;

 

(iii) previously received a qualified scholarship under this section; or

 

(iv) lived in Minnesota for less than a year prior to initial receipt of a qualified scholarship.

 

(c) "Equity and opportunity in education donation" means a donation to a qualified foundation that awards qualified scholarships or makes qualified grants or to a qualified public school foundation.

 

(d) "Household" means household as used to determine eligibility under the National School Lunch Program.

 

(e) "National School Lunch Program" means the program in United States Code, title 42, section 1758.

 

(f) "Qualified charter school" means a charter elementary or secondary school in Minnesota at which at least 30 percent of students qualify for a free or reduced-price meal under the National School Lunch Program.

 

(g) "Qualified foundation" means a nonprofit organization granted an exemption from the federal income tax under section 501(c)(3) of the Internal Revenue Code that has been approved as a qualified foundation by the commissioner of revenue under subdivision 5.

 

(h) "Qualified grant" means a grant from a qualified foundation to a qualified charter school for use in support of the school's mission of educating students in academics, arts, or athletics, including transportation.

 

(i) "Qualified public school foundation" means a qualified foundation formed for the primary purpose of supporting one or more public schools or school districts in Minnesota at which at least 30 percent of students qualify for a free or reduced-price meal under the National School Lunch Program.

 

(j) "Qualified scholarship" means a payment from a qualified foundation to or on behalf of the parent or guardian of an eligible student for payment of tuition for enrollment in grades kindergarten through 12 at a qualified school. A qualified scholarship must not exceed an amount greater than 70 percent of the state average general education revenue under section 126C.10, subdivision 1, per pupil unit.

 

(k) "Qualified school" means a school operated in Minnesota that is a nonpublic elementary or secondary school in Minnesota wherein a resident may legally fulfill the state's compulsory attendance laws that is not operated for profit, and that adheres to the provisions of United States Code, title 42, section 1981, and chapter 363A.

 

(l) "Total annual income" means the income measure used to determine eligibility under the National School Lunch Program.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1578

Subd. 2. Credit allowed. (a) An individual or corporate taxpayer who has been issued a credit certificate under subdivision 3 is allowed a credit against the tax due under this chapter equal to 70 percent of the amount of the equity and opportunity donation made during the taxable year to the qualified foundation, including a qualified public school foundation, designated on the taxpayer's credit certificate. No credit is allowed if the taxpayer designates a specific child as the beneficiary of the contribution. No credit is allowed to a taxpayer for an equity and opportunity in education donation made before the taxpayer was issued a credit certificate as provided in subdivision 3.

 

(b) The maximum annual credit allowed is:

 

(1) $21,000 for married joint filers for a one-year donation of $30,000;

 

(2) $10,500 for other individual filers for a one-year donation of $15,000; and

 

(3) $105,000 for corporate filers for a one-year donation of $150,000.

 

(c) A taxpayer must provide a copy of the receipt provided by the qualified foundation when claiming the credit for the donation if requested by the commissioner.

 

(d) The credit is limited to the liability for tax under this chapter, including the tax imposed by sections 290.0921 and 290.0922.

 

(e) If the amount of the credit under this subdivision for any taxable year exceeds the limitations under paragraph (d), the excess is a credit carryover to each of the five succeeding taxable years. The entire amount of the excess unused credit for the taxable year must be carried first to the earliest of the taxable years to which the credit may be carried. The amount of the unused credit that may be added under this paragraph may not exceed the taxpayer's liability for tax, less the credit for the taxable year. No credit may be carried to a taxable year more than five years after the taxable year in which the credit was earned.

 

Subd. 3. Application for credit certificate. (a) The commissioner must make applications for tax credits for 2018 available on the department's Web site by January 1, 2018. Applications for subsequent years must be made available by January 1 of the taxable year.

 

(b) A taxpayer must apply to the commissioner for an equity and opportunity in education tax credit certificate. The application must be in the form and manner specified by the commissioner. The application must designate the qualified foundation to which the taxpayer intends to make a donation, and if the donation is for the purpose of awarding qualified scholarships, awarding qualified grants, or to a qualified public school foundation. The commissioner must begin accepting applications for a taxable year on January 1. The commissioner must issue tax credit certificates under this section on a first-come, first-served basis until the maximum statewide credit amounts have been reached. The certificates must list the qualified foundation, or the qualified public school foundation, the taxpayer designated on the application, and if the donation is to be used for awarding qualified scholarships, awarding qualified grants, or making expenditures in support of one or more public schools or school districts.

 

(c) The maximum statewide credit amount for tax credits for donations to qualified foundations for the purpose of awarding qualified scholarships is $27,000,000 for taxable years beginning after December 31, 2017, and before January 1, 2019, and $13,500,000 per taxable year for taxable years beginning after December 31, 2018.

 

(d) The maximum statewide credit amount for donations to qualified foundations for the purpose of awarding qualified grants and for donations to qualified public school foundations is $3,000,000 for taxable years beginning after December 31, 2017, and before January 1, 2019, and $1,500,000 per taxable year for taxable years beginning after December 31, 2018.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1579

(e) Any portion of a taxable year's credits for which a tax credit certificate is not issued does not cancel and may be carried forward to subsequent taxable years.

 

(f) The commissioner must not issue a tax credit certificate for an amount greater than the limits in subdivision 2.

 

(g) The commissioner must not issue a credit certificate for an application that designates a qualified foundation that the commissioner has barred from participation as provided in subdivision 5.

 

Subd. 4. Responsibilities of qualified foundations. (a) An entity that is eligible to be a qualified foundation must apply to the commissioner by September 15 of the year preceding the year in which it will first receive donations that qualify for a credit under this section. The application must be in the form and manner prescribed by the commissioner. The application must:

 

(1) demonstrate to the commissioner that the entity is exempt from the federal income tax as an organization described in section 501(c)(3) of the Internal Revenue Code;

 

(2) demonstrate the entity's financial accountability by submitting its most recent audited financial statement prepared by a certified public accountant firm licensed under chapter 326A using the Statements on Auditing Standards issued by the Audit Standards Board of the American Institute of Certified Public Accountants; and

 

(3) specify if the entity intends to award qualified scholarships, award qualified grants, or if the entity is a qualified public school foundation. An entity may award both qualified scholarships and qualified grants.

 

(b) A qualified foundation must provide to taxpayers who make donations or commitments to donate a receipt or verification on a form approved by the commissioner.

 

(c) A qualified foundation that awards qualified scholarships must:

 

(1) award qualified scholarships to eligible students;

 

(2) not restrict the availability of scholarships to students of one qualified school;

 

(3) not charge a fee of any kind for a child to be considered for a scholarship; and

 

(4) require a qualified school receiving payment of tuition through a scholarship funded by contributions qualifying for the tax credit under this section to sign an agreement that it will not use different admissions standards for a student with a qualified scholarship.

 

(d) A qualified foundation that awards qualified scholarships must, in each year it awards qualified scholarships to eligible students to enroll in a qualified school, obtain from the qualified school documentation that the school:

 

(i) complies with all health and safety laws or codes that apply to nonpublic schools;

 

(ii) holds a valid occupancy permit if required by its municipality;

 

(iii) certifies that it adheres to the provisions of chapter 363A and United States Code, title 42, section 1981; and

 

(iv) provides academic accountability to parents of students in the program by regularly reporting to the parents on the student's progress.

 

A qualified foundation must make the documentation available to the commissioner on request.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1580

(e) A qualified foundation must, by June 1 of each year following a year in which it receives donations, provide the following information to the commissioner:

 

(1) financial information that demonstrates the financial viability of the qualified foundation, if it is to receive donations of $150,000 or more during the year;

 

(2) documentation that it has conducted criminal background checks on all of its employees and board members and has excluded from employment or governance any individuals who might reasonably pose a risk to the appropriate use of contributed funds;

 

(3) consistent with paragraph (f), document that it has used amounts received as donations to provide qualified scholarships, to make qualified grants, or to make expenditures in support of one or more public schools or school districts, as specified on the tax credit certificates issued for the donations, within one calendar year of the calendar year in which it received the donation;

 

(4) if the qualified foundation awards qualified scholarships, a list of qualified schools that enrolled eligible students to whom the qualified foundation awarded qualified scholarships;

 

(5) if the qualified foundation makes qualified grants, a list of qualified charter schools to which the qualified foundation made qualified grants;

 

(6) if the qualified foundation is a qualified public school foundation, a list of expenditures made in support of the mission of one or more public schools or school districts of educating students in academics, arts, or athletics, including transportation; and

 

(7) the following information prepared by a certified public accountant regarding donations received in the previous calendar year:

 

(i) the total number and total dollar amount of donations received from taxpayers;

 

(ii) the dollar amount of donations used for administrative expenses, as allowed by paragraph (f);

 

(iii) if the qualified foundation awarded qualified scholarships, the total number and dollar amount of qualified scholarships awarded;

 

(iv) if the qualified foundation made qualified grants, the total number and dollar amount of qualified grants made; and

 

(v) if the qualified foundation is a qualified public school foundation, the total number and dollar amount of expenditures made in support of the mission of one or more public schools or school districts of educating students in academics, arts, or athletics, including transportation.

 

(f) The foundation may use up to five percent of the amounts received as donations for reasonable administrative expenses, including but not limited to fund-raising, scholarship tracking, and reporting requirements.

 

Subd. 5. Responsibilities of commissioner. (a) The commissioner must make applications for an entity to be approved as a qualified foundation for a taxable year available on the department's Web site by August 1 of the year preceding the taxable year. The commissioner must approve an application that provides the documentation required in subdivision 4, paragraph (a), clauses (1) to (3), within 60 days of receiving the application. The commissioner must notify a foundation that provides incomplete documentation and the foundation may resubmit its application within 30 days.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1581

(b) By November 15 of each year, the commissioner must post on the department's Web site the names and addresses of qualified foundations for the next taxable year. For each qualified foundation, the list must indicate if the foundation intends to award qualified scholarships, award qualified grants, or is a qualified public school foundation. The commissioner must regularly update the names and addresses of any qualified foundations that have been barred from participating in the program.

 

(c) The commissioner must prescribe a standardized format for a receipt to be issued by a qualified foundation to a taxpayer to indicate the amount of a donation received and of a commitment to make a donation.

 

(d) The commissioner must prescribe a standardized format for qualified foundations to report the information required under subdivision 4, paragraph (e).

 

(e) The commissioner may conduct either a financial review or audit of a qualified foundation upon finding evidence of fraud or intentional misreporting. If the commissioner determines that the qualified foundation committed fraud or intentionally misreported information, the qualified foundation is barred from further program participation.

 

(f) If a qualified foundation fails to submit the documentation required under subdivision 4, paragraph (e), by June 1, the commissioner must notify the qualified foundation by July 1. A qualified foundation that fails to submit the required information by August 1 is barred from participation for the next taxable year.

 

(g) If a qualified foundation fails to comply with the requirements of subdivision 4, paragraph (e), the commissioner must by September 1 notify the qualified foundation that it has until November 1 to document that it has remedied its noncompliance. A qualified foundation that fails to document that it has remedied its noncompliance by November 1 is barred from participation for the next taxable year.

 

(h) A qualified foundation barred under paragraph (f) or (g) may become eligible to participate by submitting the required information in future years.

 

(i) Determinations of the commissioner under this subdivision are not considered rules and are not subject to the Administrative Procedures Act in chapter 14.

 

EFFECTIVE DATE. This section is effective the day following final enactment for donations made and credits allowed in taxable years beginning after December 31, 2017.

 

Sec. 36. [290.0803] SOCIAL SECURITY SUBTRACTION.

 

(a) An individual is allowed a subtraction from federal taxable income equal to Social Security benefits to the extent included in federal taxable income. The subtraction under this section is reduced by the amount of provisional income over a threshold amount, but in no case is the subtraction less than zero. For married couples filing joint returns and surviving spouses the threshold is $72,000. For all other filers the threshold is $56,000.

 

(b) For purposes of this section, "provisional income" means modified adjusted gross income, as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of the amount of Social Security benefits received during the taxable year.

 

(c) Notwithstanding the thresholds provided in paragraph (a), for taxable years beginning after December 31, 2016, and before January 1, 2019, the threshold for married couples filing joint returns and surviving spouses is $61,000 and the threshold for all other filers is $46,500.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1582

Sec. 37. [290.0804] SECTION 179 SUBTRACTION.

 

Subdivision 1. Current year section 179 allowance. (a) In each of the five taxable years immediately following the taxable year in which an addition is required under section 290.0131, subdivision 10, or its predecessor provisions, the current year allowance equals one-fifth of the addition made by the taxpayer under section 290.0131, subdivision 10.

 

(b) For a shareholder of an S corporation, the current year allowance is reduced by the positive value of any net operating loss under section 172 of the Internal Revenue Code generated for the taxable year of the addition and, if the net operating loss exceeds the addition for the taxable year, the current year allowance is zero.

 

(c) A taxpayer is allowed a current year section 179 allowance subtraction from federal taxable income under section 290.0132, subdivision 14, as determined under this subdivision.

 

Subd. 2. Carryover section 179 allowance. (a) For purposes of this subdivision, the current year allowance under subdivision 1 is the last modification allowed under section 290.0132 in determining net income. If the amount allowed under subdivision 1 exceeds net income computed without regard to the current year allowance, then the excess is a carryover allowance in each of the ten succeeding taxable years. The entire amount of the carryover allowance is carried first to the earliest taxable year to which the carryover may be carried, and then to each succeeding year to which the carryover may be carried.

 

(b) If applying paragraph (a) to a taxable year beginning after December 31, 2013, and before January 1, 2017, would result in a carryover allowance in that year, the taxpayer may use the resulting amount as a carryover allowance starting in a taxable year beginning after December 31, 2016, and the first year of the ten-year period under paragraph (a) is taxable year 2017.

(c) A taxpayer is allowed a carryover section 179 allowance subtraction under section 290.0132, subdivision 26, as determined under this subdivision.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 38. Minnesota Statutes 2016, section 290.091, subdivision 2, is amended to read:

 

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

 

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

 

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

 

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

 

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

 

(ii) the medical expense deduction;

 

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

 

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


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1583

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

 

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

 

(5) to the extent not included in federal alternative minimum taxable income, the amount of interest income as provided by section 290.0131, subdivision 2; and

 

(6) the amount of addition required by section 290.0131, subdivisions 9 to 11;

 

less the sum of the amounts determined under the following:

 

(1) interest income as defined in section 290.0132, subdivision 2;

 

(2) an overpayment of state income tax as provided by section 290.0132, subdivision 3, to the extent included in federal alternative minimum taxable income;

 

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

(4) amounts subtracted from federal taxable income as provided by section 290.0132, subdivisions 7, 9 to 15, 17, and 21, and 24 to 27; and

 

(5) the amount of the net operating loss allowed under section 290.095, subdivision 11, paragraph (c).

 

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

 

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

 

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

 

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

 

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income after subtracting the exemption amount determined under subdivision 3.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.

 

Sec. 39. Minnesota Statutes 2016, section 291.005, subdivision 1, as amended by Laws 2017, chapter 1, section 8, is amended to read:

 

Subdivision 1. Scope. Unless the context otherwise clearly requires, the following terms used in this chapter shall have the following meanings:

 

(1) "Commissioner" means the commissioner of revenue or any person to whom the commissioner has delegated functions under this chapter.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1584

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued and otherwise determined for federal estate tax purposes under the Internal Revenue Code, increased by the value of any property in which the decedent had a qualifying income interest for life and for which an election was made under section 291.03, subdivision 1d, for Minnesota estate tax purposes, but was not made for federal estate tax purposes.

 

(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended through December 16, 2016.

 

(4) "Minnesota gross estate" means the federal gross estate of a decedent after (a) excluding therefrom any property included in the estate which has its situs outside Minnesota, and (b) including any property omitted from the federal gross estate which is includable in the estate, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

 

(5) "Nonresident decedent" means an individual whose domicile at the time of death was not in Minnesota.

 

(6) "Personal representative" means the executor, administrator or other person appointed by the court to administer and dispose of the property of the decedent. If there is no executor, administrator or other person appointed, qualified, and acting within this state, then any person in actual or constructive possession of any property having a situs in this state which is included in the federal gross estate of the decedent shall be deemed to be a personal representative to the extent of the property and the Minnesota estate tax due with respect to the property.

 

(7) "Resident decedent" means an individual whose domicile at the time of death was in Minnesota. The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply to determinations of domicile under this chapter.

 

(8) "Situs of property" means, with respect to:

 

(i) real property, the state or country in which it is located;

 

(ii) tangible personal property, the state or country in which it was normally kept or located at the time of the decedent's death or for a gift of tangible personal property within three years of death, the state or country in which it was normally kept or located when the gift was executed;

 

(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue Code, owned by a nonresident decedent and that is normally kept or located in this state because it is on loan to an organization, qualifying as exempt from taxation under section 501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and

 

(iv) intangible personal property, the state or country in which the decedent was domiciled at death or for a gift of intangible personal property within three years of death, the state or country in which the decedent was domiciled when the gift was executed.

 

For a nonresident decedent with an ownership interest in a pass-through entity with assets that include real or tangible personal property, situs of the real or tangible personal property, including qualified works of art, is determined as if the pass-through entity does not exist and the real or tangible personal property is personally owned by the decedent. If the pass-through entity is owned by a person or persons in addition to the decedent, ownership of the property is attributed to the decedent in proportion to the decedent's capital ownership share of the pass-through entity.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1585

(9) "Pass-through entity" includes the following:

 

(i) an entity electing S corporation status under section 1362 of the Internal Revenue Code;

 

(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;

 

(iii) a single-member limited liability company or similar entity, regardless of whether it is taxed as an association or is disregarded for federal income tax purposes under Code of Federal Regulations, title 26, section 301.7701-3; or

 

(iv) a trust to the extent the property is includible in the decedent's federal gross estate; but excludes

 

(v) an entity whose ownership interest securities are traded on an exchange regulated by the Securities and Exchange Commission as a national securities exchange under section 6 of the Securities Exchange Act, United States Code, title 15, section 78f.

 

EFFECTIVE DATE. This section is effective retroactively for estates of decedents dying after December 31, 2016.

 

Sec. 40. Minnesota Statutes 2016, section 291.016, subdivision 3, is amended to read:

 

Subd. 3. Subtraction. The value of qualified small business property under section 291.03, subdivision 9, and the value of qualified farm property under section 291.03, subdivision 10, or the result of $5,000,000 minus the amount for the year of death listed in clauses (1) to (5), whichever is less, decedent's applicable federal exclusion amount under section 2010(c)(2) of the Internal Revenue Code may be subtracted in computing the Minnesota taxable estate but must not reduce the Minnesota taxable estate to less than zero:.

 

(1) $1,200,000 for estates of decedents dying in 2014;

 

(2) $1,400,000 for estates of decedents dying in 2015;

 

(3) $1,600,000 for estates of decedents dying in 2016;

 

(4) $1,800,000 for estates of decedents dying in 2017; and

 

(5) $2,000,000 for estates of decedents dying in 2018 and thereafter.

 

EFFECTIVE DATE. This section is effective retroactively for estates of decedents dying after December 31, 2016.

 

Sec. 41. Minnesota Statutes 2016, section 291.03, subdivision 1, is amended to read:

 

Subdivision 1. Tax amount. The tax imposed must be computed by applying to the Minnesota taxable estate the following schedule of rates and then the resulting amount multiplied by a fraction, not greater than one, the numerator of which is the value of the Minnesota gross estate plus the value of gifts under section 291.016, subdivision 2, clause (3), with a Minnesota situs, and the denominator of which is the federal gross estate plus the value of gifts under section 291.016, subdivision 2, clause (3):

 

(a) For estates of decedents dying in 2014:

 

Amount of Minnesota Taxable Estate

Rate of Tax

 

Not over $1,200,000

None

Over $1,200,000 but not over $1,400,000

nine percent of the excess over $1,200,000


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1586

Over $1,400,000 but not over $3,600,000

$18,000 plus ten percent of the excess over $1,400,000

Over $3,600,000 but not over $4,100,000

$238,000 plus 10.4 percent of the excess over $3,600,000

Over $4,100,000 but not over $5,100,000

$290,000 plus 11.2 percent of the excess over $4,100,000

Over $5,100,000 but not over $6,100,000

$402,000 plus 12 percent of the excess over $5,100,000

Over $6,100,000 but not over $7,100,000

$522,000 plus 12.8 percent of the excess over $6,100,000

Over $7,100,000 but not over $8,100,000

$650,000 plus 13.6 percent of the excess over $7,100,000

Over $8,100,000 but not over $9,100,000

$786,000 plus 14.4 percent of the excess over $8,100,000

Over $9,100,000 but not over $10,100,000

$930,000 plus 15.2 percent of the excess over $9,100,000

Over $10,100,000

$1,082,000 plus 16 percent of the excess over $10,100,000

 

(b) For estates of decedents dying in 2015:

 

Amount of Minnesota Taxable Estate

Rate of Tax

 

Not over $1,400,000

None

Over $1,400,000 but not over $3,600,000

ten percent of the excess over $1,400,000

Over $3,600,000 but not over $6,100,000

$220,000 plus 12 percent of the excess over $3,600,000

Over $6,100,000 but not over $7,100,000

$520,000 plus 12.8 percent of the excess over $6,100,000

Over $7,100,000 but not over $8,100,000

$648,000 plus 13.6 percent of the excess over $7,100,000

Over $8,100,000 but not over $9,100,000

$784,000 plus 14.4 percent of the excess over $8,100,000

Over $9,100,000 but not over $10,100,000

$928,000 plus 15.2 percent of the excess over $9,100,000

Over $10,100,000

$1,080,000 plus 16 percent of the excess over $10,100,000

 

(c) For estates of decedents dying in 2016:

 

Amount of Minnesota Taxable Estate

Rate of Tax

 

Not over $1,600,000

None

Over $1,600,000 but not over $2,600,000

ten percent of the excess over $1,600,000

Over $2,600,000 but not over $6,100,000

$100,000 plus 12 percent of the excess over $2,600,000

Over $6,100,000 but not over $7,100,000

$520,000 plus 12.8 percent of the excess over $6,100,000

Over $7,100,000 but not over $8,100,000

$648,000 plus 13.6 percent of the excess over $7,100,000

Over $8,100,000 but not over $9,100,000

$784,000 plus 14.4 percent of the excess over $8,100,000

Over $9,100,000 but not over $10,100,000

$928,000 plus 15.2 percent of the excess over $9,100,000

Over $10,100,000

$1,080,000 plus 16 percent of the excess over $10,100,000


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1587

(d) For estates of decedents dying in 2017 and thereafter:

 

Amount of Minnesota Taxable Estate

Rate of Tax

 

Not over $1,800,000

None

Over $1,800,000 but not over $2,100,000

ten percent of the excess over $1,800,000

Over $2,100,000 but not over $5,100,000

$30,000 plus 12 percent of the excess over $2,100,000

Over $5,100,000 but not over $7,100,000

$390,000 plus 12.8 percent of the excess over $5,100,000

Over $7,100,000 but not over $8,100,000

$646,000 plus 13.6 percent of the excess over $7,100,000

Over $8,100,000 but not over $9,100,000

$782,000 plus 14.4 percent of the excess over $8,100,000

Over $9,100,000 but not over $10,100,000

$926,000 plus 15.2 percent of the excess over $9,100,000

Over $10,100,000

$1,078,000 plus 16 percent of the excess over $10,100,000

 

(e) For estates of decedents dying in 2018 and thereafter:

 

Amount of Minnesota Taxable Estate

Rate of Tax

 

Not over $2,000,000 $7,100,000

None 13 percent

Over $2,000,000 but not over $2,600,000

ten percent of the excess over $2,000,000

Over $2,600,000 but not over $7,100,000

$60,000 plus 13 percent of the excess over $2,600,000

Over $7,100,000 but not over $8,100,000

$645,000 $923,000 plus 13.6 percent of the excess over $7,100,000

Over $8,100,000 but not over $9,100,000

$781,000 $1,059,000 plus 14.4 percent of the excess over $8,100,000

Over $9,100,000 but not over $10,100,000

$925,000 $1,203,000 plus 15.2 percent of the excess over $9,100,000

Over $10,100,000

$1,077,000 $1,355,000 plus 16 percent of the excess over $10,100,000

 

EFFECTIVE DATE. This section is effective retroactively for estates of decedents dying after December 31, 2016.

 

Sec. 42. Minnesota Statutes 2016, section 297I.20, is amended by adding a subdivision to read:

 

Subd. 4. Minnesota housing tax credit. An insurance company may claim a credit against the premiums tax imposed under this chapter equal to the amount indicated on the eligibility statement issued to the company under section 462A.39, subdivision 3. If the amount of the credit exceeds the liability for tax under this chapter, the excess is a credit carryover to each of the 11 succeeding taxable years. The entire amount of the excess unused credit for the taxable year must be carried first to the earliest of the taxable years to which the credit may be carried and then to each successive year to which the credit may be carried. This credit does not affect the calculation of police and fire aid under section 69.021.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1588

Sec. 43. [462A.39] MINNESOTA HOUSING TAX CREDIT.

 

Subdivision 1. Definitions. (a) For purposes of this section, the following terms have the meanings given unless the context clearly requires otherwise.

 

(b) "Compliance agreement" means an agreement:

 

(1) between the owner of a qualified Minnesota project and the agency or suballocator;

 

(2) that is recorded as an affordable housing restriction on the real property on which the qualified Minnesota project is located; and

 

(3) that requires the project to be operated under the requirements of this section for the compliance period.

 

The agreement may be subordinated to the lien of a bank or other institutional lender providing financing to the qualified Minnesota project upon the request of the bank or lender.

 

(c) "Compliance period" means the 15-year period beginning with the first taxable year a credit is allowed under this section.

 

(d) "Eligibility statement" means a statement issued by the agency or suballocator to the owner certifying that a project is a qualified Minnesota project and documenting allocation of the Minnesota housing tax credit. The eligibility statement must specify the annual amount of the credit allocated to the project for the taxable year and for the five following taxable years and be in a form prescribed by the commissioner of the agency, in consultation with the commissioner of revenue.

 

(e) "Federal low-income housing tax credit" means the federal tax credit provided in section 42 of the Internal Revenue Code.

 

(f) "Greater Minnesota" means the area of Minnesota located outside of the metropolitan area as defined in section 473.121, subdivision 2.

 

(g) "Internal Revenue Code" has the meaning given in section 290.01, subdivision 31.

 

(h) "Minnesota credit period" means the six taxable years beginning in the taxable year in which a credit is allocated under subdivision 2.

 

(i) "Owner" means the owner of a qualified Minnesota project.

 

(j) "Qualified Minnesota project" means a low-income housing project that is:

 

(1) located in Minnesota;

 

(2) financed with tax-exempt bonds pursuant to section 42(i)(2) of the Internal Revenue Code;

 

(3) determined by the agency to be eligible for a federal low-income housing tax credit without regard to whether or not a federal low-income housing credit is allocated to the project; and

 

(4) a project for which the owner has entered into a compliance agreement with the agency or the suballocator that is enforceable by state and local agencies.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1589

(k) "Suballocator" means an allocating agency, other than the agency, of low-income federal housing credits and credits under this section as provided in section 462A.222.

 

(l) "Taxpayer" has the meaning given in section 290.0683, subdivision 1.

 

(m) Terms not otherwise defined in this subdivision have the meanings given in section 42 of the Internal Revenue Code.

 

Subd. 2. Minnesota housing tax credit; allocation. (a) The agency and all suballocators may annually allocate credits during a four-year period beginning January 1, 2017, and ending December 31, 2020. The amount of credits that may be allocated each year is the sum of:

 

(1) $7,000,000; and

 

(2) any unused tax credits, if any, for the preceding calendar years.

 

(b) The agency shall allocate credits only to qualified Minnesota projects that the agency determines:

 

(1) are eligible for the federal low-income housing tax credit; and

 

(2) are not financially feasible without the credit.

 

(c) The agency must allocate 50 percent of the total amount allocated to qualified Minnesota projects in greater Minnesota.

 

(d) The agency may not allocate more than one credit to any one qualified Minnesota project.

 

(e) The allocation to any one qualified Minnesota project equals one-sixth of the total federal low-income housing tax credit allowable over the ten-year federal credit period, without regard to whether the project was allowed a federal low-income housing tax credit.

 

Subd. 3. Credit allowed. When the agency or a suballocator allocates a credit amount to the owner of a project, the agency or suballocator must issue an eligibility statement to the owner. The owner may claim the amount allocated in each year of the Minnesota credit period.

 

Subd. 4. Credit duration. Except for unused credits carried forward under section 290.0683, the agency may allocate a credit and issue an eligibility statement to a taxpayer for a Minnesota housing tax credit for a project one time, with the credit allowed in each year of the Minnesota credit period.

 

Subd. 5. Recapture; repayment. (a) If within the Minnesota credit period the agency or suballocator finds that a qualified project issued an eligibility statement is not meeting the terms of the compliance agreement, the owner must repay the following percentage of the credit awarded to the project by the agency or the suballocator:

 

Year of the compliance period:

Percentage of credit required to be repaid:

 

First

100 percent

 

 

Second

83 percent

 

 

Third

66 percent

 

 

Fourth

49 percent

 

 

Fifth

32 percent

 

 

Sixth and later

16 percent

 


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1590

(b) No holder of the credit other than the owner is responsible for repayment of the credit.

 

(c) Amounts repaid under this subdivision are credited to the general fund.

 

Subd. 6. Data privacy. Data related to Minnesota housing tax credits are nonpublic data, or private data on individuals, as defined in section 13.02, subdivision 9 or 12, except that for each eligibility statement issued under subdivision 3 the location of the qualified Minnesota housing project is public.

 

Subd. 7. Report. (a) By January 15 of each year following a year in which the agency allocates a credit under this section, the agency shall submit a written report to the chairs and ranking minority members of the legislative committees with jurisdiction over housing and taxes, in compliance with sections 3.195 and 3.197, on the success and efficiency of the Minnesota housing tax credit program.

 

(b) The report must:

 

(1) specify the number of qualified Minnesota projects that were allocated tax credits in the year and the total number of housing units supported in each project;

 

(2) provide descriptive information about each qualified Minnesota housing project that was allocated credits, including:

 

(i) the geographic location of the project; and

 

(ii) demographic information about residents intended to be served by the project, including household type, income levels, and rents or set-asides; and

 

(3) provide housing market and demographic information that demonstrates how the qualified Minnesota projects that were allocated tax credits address the need for affordable housing in the communities they serve as well as information about any remaining disparities in affordability of housing in those communities.

 

EFFECTIVE DATE. This section is effective the day following final enactment with credit allocations allowed for taxable years beginning after December 31, 2016.

 

Sec. 44. [462D.01] CITATION.

 

This chapter may be cited as the "First-Time Home Buyer Savings Account Act."

 

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

 

Sec. 45. [462D.02] DEFINITIONS.

 

Subdivision 1. Definitions. For purposes of this chapter, the following terms have the meanings given.

 

Subd. 2. Account holder. "Account holder" means an individual who establishes, individually or jointly with one or more other individuals, a first-time home buyer savings account.

 

Subd. 3. Allowable closing costs. "Allowable closing costs" means a disbursement listed on a settlement statement for the purchase of a single-family residence in Minnesota by a qualified beneficiary.

 

Subd. 4. Commissioner. "Commissioner" means the commissioner of revenue.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1591

Subd. 5. Eligible costs. "Eligible costs" means the down payment and allowable closing costs for the purchase of a single-family residence in Minnesota by a qualified beneficiary. Eligible costs include paying for the cost of construction of or financing the construction of a single-family residence.

 

Subd. 6. Financial institution. "Financial institution" means a bank, bank and trust, trust company with banking powers, savings bank, savings association, or credit union, organized under the laws of this state, any other state, or the United States; an industrial loan and thrift under chapter 53 or the laws of another state and authorized to accept deposits; or a money market mutual fund registered under the federal Investment Company Act of 1940 and regulated under rule 2a-7, promulgated by the Securities and Exchange Commission under that act.

 

Subd. 7. First-time home buyer. "First-time home buyer" means an individual, and if married, the individual's spouse, who has no present ownership interest in a principal residence during the three-year period ending on the earlier of:

 

(1) the date of the purchase of the single-family residence funded, in part, with proceeds from the first-time home buyer savings account; or

 

(2) the close of the taxable year for which a subtraction is claimed under sections 290.0132 and 462D.06.

 

Subd. 8. First-time home buyer savings account. "First-time home buyer savings account" or "account" means an account with a financial institution that an account holder designates as a first-time home buyer savings account, as provided in section 462D.03, to pay or reimburse eligible costs for the purchase of a single-family residence by a qualified beneficiary.

 

Subd. 9. Internal Revenue Code. "Internal Revenue Code" has the meaning given in section 290.01.

 

Subd. 10. Principal residence. "Principal residence" has the meaning given in section 121 of the Internal Revenue Code.

 

Subd. 11. Qualified beneficiary. "Qualified beneficiary" means a first-time home buyer who is a Minnesota resident and is designated as the qualified beneficiary of a first-time home buyer savings account by the account holder.

 

Subd. 12. Single-family residence. "Single-family residence" means a single-family residence located in this state and owned and occupied by or to be occupied by a qualified beneficiary as the qualified beneficiary's principal residence, which may include a manufactured home, trailer, mobile home, condominium unit, townhome, or cooperative.

 

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

 

Sec. 46. [462D.03] ESTABLISHMENT OF ACCOUNTS.

 

Subdivision 1. Accounts established. An individual may open an account with a financial institution and designate the account as a first-time home buyer savings account to be used to pay or reimburse the designated qualified beneficiary's eligible costs.

 

Subd. 2. Designation of qualified beneficiary. (a) The account holder must designate a first-time home buyer as the qualified beneficiary of the account by April 15 of the year following the taxable year in which the account was established. The account holder may be the qualified beneficiary. The account holder may change the designated qualified beneficiary at any time, but no more than one qualified beneficiary may be designated for an account at any one time. For purposes of the one beneficiary restriction, a married couple qualifies as one beneficiary. Changing the designated qualified beneficiary of an account does not affect computation of the ten-year period under section 462D.06, subdivision 2.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1592

(b) The commissioner shall establish a process for account holders to notify the state that permits recording of the account, the account holder or holders, any transfers under section 462D.04, subdivision 2, and the designated qualified beneficiary for each account. This may be done upon filing the account holder's income tax return or in any other way the commissioner determines to be appropriate.

 

Subd. 3. Joint account holders. An individual may jointly own a first-time home buyer account with another person if the joint account holders file a married joint income tax return.

 

Subd. 4. Multiple accounts. (a) An individual may be the account holder of more than one first-time home buyer savings account, but must not hold or own multiple accounts that designate the same qualified beneficiary.

 

(b) An individual may be designated as the qualified beneficiary on more than one first-time home buyer savings account.

 

Subd. 5. Contributions. Only cash may be contributed to a first-time home buyer savings account. Individuals other than the account holder may contribute to an account. No limitation applies to the amount of contributions that may be made to or retained in a first-time home buyer savings account.

 

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

 

Sec. 47. [462D.04] ACCOUNT HOLDER RESPONSIBILITIES.

 

Subdivision 1. Expenses; reporting. The account holder must:

 

(1) not use funds in a first-time home buyer savings account to pay expenses of administering the account, except that a service fee may be deducted from the account by the financial institution in which the account is held; and

 

(2) submit to the commissioner, in the form and manner required by the commissioner:

 

(i) detailed information regarding the first-time home buyer savings account, including a list of transactions for the account during the taxable year and the Form 1099 issued by the financial institution for the account for the taxable year; and

 

(ii) upon withdrawal of funds from the account, a detailed account of the eligible costs for which the account funds were expended and a statement of the amount of funds remaining in the account, if any.

 

Subd. 2. Transfers. An account holder may withdraw funds, in whole or part, from a first-time home buyer savings account and deposit the funds in another first-time home buyer savings account held by a different financial institution or the same financial institution.

 

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

 

Sec. 48. [462D.05] FINANCIAL INSTITUTIONS.

 

(a) A financial institution is not required to take any action to ensure compliance with this chapter, including to:

 

(1) designate an account, designate qualified beneficiaries, or modify the financial institution's account contracts or systems in any way;

 

(2) track the use of money withdrawn from a first-time home buyer savings account;


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1593

(3) allocate funds in a first-time home buyer savings account among joint account holders or multiple qualified beneficiaries; or

 

(4) report any information to the commissioner or any other government that is not otherwise required by law.

 

(b) A financial institution is not responsible or liable for:

 

(1) determining or ensuring that an account satisfies the requirements of this chapter or that its funds are used for eligible costs; or

 

(2) reporting or remitting taxes or penalties related to the use of a first-time home buyer savings account.

 

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

 

Sec. 49. [462D.06] SUBTRACTION; ADDITION; ADDITIONAL TAX.

 

Subdivision 1. Subtraction. (a) An account holder is allowed a subtraction from federal taxable income equal to the sum of:

 

(1) the amount the individual contributed to a first-time home buyer savings account during the taxable year not to exceed $5,000, or $10,000 for a married couple filing a joint return; and

 

(2) interest or dividends earned on the first-time home buyer savings account during the taxable year.

 

(b) The subtraction under paragraph (a) is allowed each year in which a contribution is made for the ten taxable years including and following the taxable year in which the account was established. The total subtraction for all taxable years and for all first-time home buyer accounts established by the individual for a qualified beneficiary is limited to $50,000. No person other than the account holder who deposits funds in a first-time home buyer savings account is allowed a subtraction under this section.

 

Subd. 2. Addition. (a) An account holder must add to federal taxable income the sum of the following amounts:

 

(1) any amount withdrawn from a first-time home buyer savings account during the taxable year and used neither to pay eligible costs nor for a transfer permitted under section 462D.04, subdivision 2; and

 

(2) any amount remaining in the first-time home buyer savings account at the close of the tenth taxable year after the taxable year in which the account was established.

 

(b) For an account that received a transfer under section 462D.04, subdivision 2, the ten-year period under paragraph (a), clause (2), ends at the close of the earliest taxable year that applies to either account under that clause.

 

Subd. 3. Additional tax. The account holder is liable for an additional tax equal to ten percent of the addition under subdivision 2 for the taxable year. This amount must be added to the amount due under section 290.06. The tax under this subdivision does not apply to:

 

(1) a withdrawal because of the account holder's or designated qualified beneficiary's death or disability; and

 

(2) a disbursement of assets of the account under federal bankruptcy law.

 

EFFECTIVE DATE. This section is effective for taxable years beginning after December 31, 2016.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1594

Sec. 50. RECAPTURE TAX; EMINENT DOMAIN.

 

The tax under Minnesota Statutes, section 291.03, subdivision 11, does not apply to acquisition of title or possession of the qualified property by a federal, state, or local government unit, or any other entity with the power of eminent domain for a public purpose, as defined in Minnesota Statutes, section 117.025, subdivision 11, within the three-year holding period.

 

EFFECTIVE DATE. This section is effective retroactively for estates of decedents dying after June 30, 2011, and before January 1, 2017.

 

Sec. 51. REPEALER.

 

(a) Minnesota Statutes 2016, sections 289A.10, subdivision 1a; 289A.12, subdivision 18; 289A.18, subdivision 3a; 289A.20, subdivision 3a; and 291.03, subdivisions 8, 9, 10, and 11, are repealed.

 

(b) Minnesota Statutes 2016, section 290.067, subdivision 2, is repealed.

 

EFFECTIVE DATE. Paragraph (a) is effective retroactively for estates of decedents dying after December 31, 2016. Paragraph (b) is effective for taxable years beginning after December 31, 2016.

 

ARTICLE 2

PROPERTY TAX

 

Section 1. Minnesota Statutes 2016, section 40A.18, subdivision 2, is amended to read:

 

Subd. 2. Allowed commercial and industrial operations. (a) Commercial and industrial operations are not allowed on land within an agricultural preserve except:

 

(1) small on-farm commercial or industrial operations normally associated with and important to farming in the agricultural preserve area;

 

(2) storage use of existing farm buildings that does not disrupt the integrity of the agricultural preserve; and

 

(3) small commercial use of existing farm buildings for trades not disruptive to the integrity of the agricultural preserve such as a carpentry shop, small scale mechanics shop, and similar activities that a farm operator might conduct.; and

 

(4) wireless communication installments and related equipment and structure capable of providing technology potentially beneficial to farming activities.

 

(b) For purposes of paragraph (a), clauses (2) and (3), "existing" in clauses (2) and (3) means existing on August 1, 1989.

 

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

 

Sec. 2. [103C.333] COUNTY LEVY AUTHORITY.

 

Notwithstanding any other law to the contrary, a county levying a tax under section 103C.331 shall not include any taxes levied under those authorities in the levy certified under section 275.07, subdivision 1, paragraph (a). A county levying under section 103C.331 shall separately certify that amount, and the auditor shall extend that levy as a special taxing district levy under sections 275.066 and 275.07, subdivision 1, paragraph (b).

 

EFFECTIVE DATE. This section is effective for certifications made in 2017 and thereafter.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1595

Sec. 3. Minnesota Statutes 2016, section 272.02, subdivision 23, is amended to read:

 

Subd. 23. Secondary liquid agricultural chemical containment facilities. Secondary containment tanks, cache basins, and that portion of the structure needed for the containment facility used to confine agricultural chemicals as defined in section 18D.01, subdivision 3, as required by the commissioner of agriculture under chapter 18B or 18C, berms used by a reseller to contain agricultural chemical spills from primary storage containers and prevent runoff or leaching of liquid agricultural chemicals as defined in section 18D.01, subdivision 3, are exempt. For purposes of this subdivision, "reseller" means a person licensed by the commissioner of agriculture under section 18B.316 or 18C.415.

 

EFFECTIVE DATE. This section is effective beginning with taxes payable in 2016 provided that nothing in this section shall cause property that was classified as exempt property for taxes payable in 2016 to lose its exempt status for taxes payable in that year.

 

Sec. 4. Minnesota Statutes 2016, section 272.02, subdivision 86, is amended to read:

 

Subd. 86. Apprenticeship training facilities. All or a portion of a building used exclusively for a state‑approved apprenticeship program through the Department of Labor and Industry is exempt if:

 

(1) it is owned by a nonprofit organization or a nonprofit trust, and operated by a nonprofit organization or a nonprofit trust;

 

(2) the program participants receive no compensation; and

 

(3) it is located:

 

(i) in the Minneapolis and St. Paul standard metropolitan statistical area as determined by the 2000 federal census;

 

(ii) in a city outside the Minneapolis and St. Paul standard metropolitan statistical area that has a population of 7,400 or greater according to the most recent federal census; or

 

(iii) in a township that has a population greater than 2,000 1,400 but less than 3,000 determined by the 2000 federal census and the building was previously used by a school and was exempt for taxes payable in 2010.

 

Use of the property for advanced skills training of incumbent workers does not disqualify the property for the exemption under this subdivision. This exemption includes up to five acres of the land on which the building is located and associated parking areas on that land, except that if the building meets the requirements of clause (3), item (iii), then the exemption includes up to ten acres of land on which the building is located and associated parking areas on that land. If a parking area associated with the facility is used for the purposes of the facility and for other purposes, a portion of the parking area shall be exempt in proportion to the square footage of the facility used for purposes of apprenticeship training.

 

Sec. 5. Minnesota Statutes 2016, section 272.02, is amended by adding a subdivision to read:

 

Subd. 100. Electric generation facility; personal property. (a) Notwithstanding subdivision 9, clause (a), attached machinery and other personal property that is part of an electric generation facility with more than 35 megawatts and less than 40 megawatts of installed capacity and that meets the requirements of this subdivision is exempt from taxation and payments in lieu of taxation. The facility must:

 

(1) be designed to utilize natural gas as a primary fuel;


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1596

(2) be owned and operated by a municipal power agency as defined in section 453.52, subdivision 8;

 

(3) be located within 800 feet of an existing natural gas pipeline;

 

(4) satisfy a resource deficiency identified in an approved integrated resource plan filed under section 216B.2422;

 

(5) be located outside the metropolitan area as defined under section 473.121, subdivision 2; and

 

(6) have received, by resolution, the approval of the governing bodies of the city and county in which it is located for the exemption of personal property provided by this subdivision.

 

(b) Construction of the facility must have been commenced after January 1, 2015, and before January 1, 2017. Property eligible for this exemption does not include electric transmission lines and interconnections or gas pipelines and interconnections appurtenant to the property or the facility.

 

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

 

Sec. 6. Minnesota Statutes 2016, section 272.0213, is amended to read:

 

272.0213 LEASED SEASONAL-RECREATIONAL LAND.

 

(a) A county board may elect, by resolution, to Qualified lands, as defined in this section, are exempt from taxation, including the tax under section 273.19, qualified lands. "Qualified lands" for purposes of this section means property land that:

 

(1) is owned by a county, city, town, or the state; and

 

(2) is rented by the entity for noncommercial seasonal-recreational or, noncommercial seasonal-recreational residential use; and, or class 1c commercial seasonal-recreational residential use.

 

(3) was rented for the purposes specified in clause (2) and was exempt from taxation for property taxes payable in 2008.

 

(b) Lands owned by the federal government and rented for noncommercial seasonal-recreational or, noncommercial seasonal-recreational residential, or class 1c commercial seasonal-recreational residential use are exempt from taxation, including the tax under section 273.19.

 

EFFECTIVE DATE. This section is effective beginning with taxes payable in 2018.

 

Sec. 7. Minnesota Statutes 2016, section 272.029, subdivision 2, is amended to read:

 

Subd. 2. Definitions. (a) For the purposes of this section, the term:

 

(1) "wind energy conversion system" has the meaning given in section 216C.06, subdivision 19, and also includes a substation that is used and owned by one or more wind energy conversion facilities;

 

(2) "large scale wind energy conversion system" means a wind energy conversion system of more than 12 megawatts, as measured by the nameplate capacity of the system or as combined with other systems as provided in paragraph (b);


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1597

(3) "medium scale wind energy conversion system" means a wind energy conversion system of over two and not more than 12 megawatts, as measured by the nameplate capacity of the system or as combined with other systems as provided in paragraph (b); and

 

(4) "small scale wind energy conversion system" means a wind energy conversion system of two megawatts and under, as measured by the nameplate capacity of the system or as combined with other systems as provided in paragraph (b).

 

(b) For systems installed and contracted for after January 1, 2002, the total size of a wind energy conversion system under this subdivision shall be determined according to this paragraph. Unless the systems are interconnected with different distribution systems, the nameplate capacity of one wind energy conversion system shall be combined with the nameplate capacity of any other wind energy conversion system that is:

 

(1) located within five miles of the wind energy conversion system;

 

(2) constructed within the same calendar year as the wind energy conversion system; and

 

(3) under common ownership.

 

In the case of a dispute, the commissioner of commerce shall determine the total size of the system, and shall draw all reasonable inferences in favor of combining the systems.

 

(c) In making a determination under paragraph (b), the commissioner of commerce may determine that two wind energy conversion systems are under common ownership when the underlying ownership structure contains similar the same persons or entities, even if the ownership shares differ between the two systems. Wind energy conversion systems are not under common ownership solely because the same person or entity provided equity financing for the systems. Wind energy conversion systems that were determined by the commissioner of commerce to be eligible for a renewable energy production incentive under section 216C.41 are not under common ownership unless a change in the qualifying owner was made to an owner of another wind energy conversion system subsequent to the determination by the commissioner of commerce.

 

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

 

Sec. 8. Minnesota Statutes 2016, section 272.162, is amended to read:

 

272.162 RESTRICTIONS ON TRANSFERS OF SPECIFIC PARTS.

 

Subdivision 1. Conditions restricting transfer. When a deed or other instrument conveying a parcel of land is presented to the county auditor for transfer or division under sections 272.12, 272.16, and 272.161, the auditor shall not transfer or divide the land or its net tax capacity in the official records and shall not certify the instrument as provided in section 272.12, if:

 

(a) The land conveyed is less than a whole parcel of land as charged in the tax lists;

 

(b) The part conveyed appears within the area of application of municipal or county subdivision regulations adopted and filed under section 394.35 or section 462.36, subdivision 1; and

 

(c) The part conveyed is part of or constitutes a subdivision as defined in section 462.352, subdivision 12.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1598

Subd. 2. Conditions allowing transfer. (a) Notwithstanding the provisions of subdivision 1, the county auditor may transfer or divide the land and its net tax capacity and may certify the instrument if the instrument contains a certification by the clerk of the municipality or designated county planning official:

 

(a) (1) that the municipality's or county's subdivision regulations do not apply;

 

(b) (2) that the subdivision has been approved by the governing body of the municipality or county; or

 

(c) (3) that the restrictions on the division of taxes and filing and recording have been waived by resolution of the governing body of the municipality or county in the particular case because compliance would create an unnecessary hardship and failure to comply would not interfere with the purpose of the regulations.

 

(b) If any of the conditions for certification by the municipality or county as provided in this subdivision exist and the municipality or county does not certify that they exist within 24 hours after the instrument of conveyance has been presented to the clerk of the municipality or designated county planning official, the provisions of subdivision 1 do not apply.

 

(c) If an unexecuted instrument is presented to the municipality or county and any of the conditions for certification by the municipality or county as provided in this subdivision exist, the unexecuted instrument must be certified by the clerk of the municipality or the designated county planning official.

 

Subd. 3. Applicability of restrictions. (a) This section does not apply to the exceptions set forth in section 272.12.

 

(b) This section applies only to land within municipalities or counties which choose to be governed by its provisions. A municipality or county may choose to have this section apply to the property within its boundaries by filing a certified copy of a resolution of its governing body making that choice with the auditor and recorder of the county in which it is located.

 

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

 

Sec. 9. Minnesota Statutes 2016, section 273.124, subdivision 3a, is amended to read:

 

Subd. 3a. Manufactured home park cooperative. (a) When a manufactured home park is owned by a corporation or association organized under chapter 308A or 308B, and each person who owns a share or shares in the corporation or association is entitled to occupy a lot within the park, the corporation or association may claim homestead treatment for the park. Each lot must be designated by legal description or number, and each lot is limited to not more than one-half acre of land.

 

(b) The manufactured home park shall be entitled to homestead treatment if all of the following criteria are met:

 

(1) the occupant or the cooperative corporation or association is paying the ad valorem property taxes and any special assessments levied against the land and structure either directly, or indirectly through dues to the corporation or association; and

 

(2) the corporation or association organized under chapter 308A or 308B is wholly owned by persons having a right to occupy a lot owned by the corporation or association.

 

(c) A charitable corporation, organized under the laws of Minnesota with no outstanding stock, and granted a ruling by the Internal Revenue Service for 501(c)(3) tax-exempt status, qualifies for homestead treatment with respect to a manufactured home park if its members hold residential participation warrants entitling them to occupy a lot in the manufactured home park.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1599

(d) "Homestead treatment" under this subdivision means the classification rate provided for class 4c property classified under section 273.13, subdivision 25, paragraph (d), clause (5), item (ii)., and the homestead market value exclusion under section 273.13, subdivision 35, does not apply and the property taxes assessed against the park shall not be included in the determination of taxes payable for rent paid under section 290A.03.

 

EFFECTIVE DATE. This section is effective beginning with claims for taxes payable in 2018.

 

Sec. 10. Minnesota Statutes 2016, section 273.124, subdivision 14, is amended to read:

 

Subd. 14. Agricultural homesteads; special provisions. (a) Real estate of less than ten acres that is the homestead of its owner must be classified as class 2a under section 273.13, subdivision 23, paragraph (a), if:

 

(1) the parcel on which the house is located is contiguous on at least two sides to (i) agricultural land, (ii) land owned or administered by the United States Fish and Wildlife Service, or (iii) land administered by the Department of Natural Resources on which in lieu taxes are paid under sections 477A.11 to 477A.14;

 

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least 20 acres;

 

(3) the noncontiguous land is located not farther than four townships or cities, or a combination of townships or cities from the homestead; and

 

(4) the agricultural use value of the noncontiguous land and farm buildings is equal to at least 50 percent of the market value of the house, garage, and one acre of land.

 

Homesteads initially classified as class 2a under the provisions of this paragraph shall remain classified as class 2a, irrespective of subsequent changes in the use of adjoining properties, as long as the homestead remains under the same ownership, the owner owns a noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use value qualifies under clause (4). Homestead classification under this paragraph is limited to property that qualified under this paragraph for the 1998 assessment.

 

(b)(i) Agricultural property shall be classified as the owner's homestead, to the same extent as other agricultural homestead property, if all of the following criteria are met:

 

(1) the agricultural property consists of at least 40 acres including undivided government lots and correctional 40's;

 

(2) the owner, the owner's spouse, or a grandchild, child, sibling, or parent of the owner or of the owner's spouse, is actively farming the agricultural property, either on the person's own behalf as an individual or on behalf of a partnership operating a family farm, family farm corporation, joint family farm venture, or limited liability company of which the person is a partner, shareholder, or member;

 

(3) both the owner of the agricultural property and the person who is actively farming the agricultural property under clause (2), are Minnesota residents;

 

(4) neither the owner nor the spouse of the owner claims another agricultural homestead in Minnesota; and

 

(5) neither the owner nor the person actively farming the agricultural property lives farther than four townships or cities, or a combination of four townships or cities, from the agricultural property, except that if the owner or the owner's spouse is required to live in employer-provided housing, the owner or owner's spouse, whichever is actively farming the agricultural property, may live more than four townships or cities, or combination of four townships or cities from the agricultural property.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1600

The relationship under this paragraph may be either by blood or marriage.

 

(ii) Agricultural property held by a trustee under a trust is eligible for agricultural homestead classification under this paragraph if the qualifications in clause (i) are met, except that "owner" means the grantor of the trust.

 

(iii) Property containing the residence of an owner who owns qualified property under clause (i) shall be classified as part of the owner's agricultural homestead, if that property is also used for noncommercial storage or drying of agricultural crops.

 

(iv) (iii) As used in this paragraph, "agricultural property" means class 2a property and any class 2b property that is contiguous to and under the same ownership as the class 2a property.

 

(c) Noncontiguous land shall be included as part of a homestead under section 273.13, subdivision 23, paragraph (a), only if the homestead is classified as class 2a and the detached land is located in the same township or city, or not farther than four townships or cities or combination thereof from the homestead. Any taxpayer of these noncontiguous lands must notify the county assessor that the noncontiguous land is part of the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer must also notify the assessor of the other county.

 

(d) Agricultural land used for purposes of a homestead and actively farmed by a person holding a vested remainder interest in it must be classified as a homestead under section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a, any other dwellings on the land used for purposes of a homestead by persons holding vested remainder interests who are actively engaged in farming the property, and up to one acre of the land surrounding each homestead and reasonably necessary for the use of the dwelling as a home, must also be assessed class 2a.

 

(e) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain classified as agricultural homesteads for subsequent assessments if:

 

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of the April 1997 floods;

 

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, or Wilkin;

 

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 1997 assessment year and continue to be used for agricultural purposes;

 

(4) the dwelling occupied by the owner is located in Minnesota and is within 30 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

 

(5) the owner notifies the county assessor that the relocation was due to the 1997 floods, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in dwelling. Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

 

(f) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain classified agricultural homesteads for subsequent assessments if:

 

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of damage caused by a March 29, 1998, tornado;

 

(2) the property is located in the county of Blue Earth, Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice;


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1601

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 1998 assessment year;

 

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

 

(5) the owner notifies the county assessor that the relocation was due to a March 29, 1998, tornado, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the owner must notify the assessor by December 1, 1998. Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

 

(g) Agricultural property of a family farm corporation, joint family farm venture, family farm limited liability company, or partnership operating a family farm as described under subdivision 8 shall be classified homestead, to the same extent as other agricultural homestead property, if all of the following criteria are met:

 

(1) the property consists of at least 40 acres including undivided government lots and correctional 40's;

 

(2) a shareholder, member, or partner of that entity is actively farming the agricultural property;

 

(3) that shareholder, member, or partner who is actively farming the agricultural property is a Minnesota resident;

 

(4) neither that shareholder, member, or partner, nor the spouse of that shareholder, member, or partner claims another agricultural homestead in Minnesota; and

 

(5) that shareholder, member, or partner does not live farther than four townships or cities, or a combination of four townships or cities, from the agricultural property.

 

Homestead treatment applies under this paragraph for property leased to a family farm corporation, joint farm venture, limited liability company, or partnership operating a family farm if legal title to the property is in the name of an individual who is a member, shareholder, or partner in the entity.

 

(h) To be eligible for the special agricultural homestead under this subdivision, an initial full application must be submitted to the county assessor where the property is located. Owners and the persons who are actively farming the property shall be required to complete only a one-page abbreviated version of the application in each subsequent year provided that none of the following items have changed since the initial application:

 

(1) the day-to-day operation, administration, and financial risks remain the same;

 

(2) the owners and the persons actively farming the property continue to live within the four townships or city criteria and are Minnesota residents;

 

(3) the same operator of the agricultural property is listed with the Farm Service Agency;

 

(4) a Schedule F or equivalent income tax form was filed for the most recent year;

 

(5) the property's acreage is unchanged; and

 

(6) none of the property's acres have been enrolled in a federal or state farm program since the initial application.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1602

The owners and any persons who are actively farming the property must include the appropriate Social Security numbers, and sign and date the application. If any of the specified information has changed since the full application was filed, the owner must notify the assessor, and must complete a new application to determine if the property continues to qualify for the special agricultural homestead. The commissioner of revenue shall prepare a standard reapplication form for use by the assessors.

 

(i) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain classified agricultural homesteads for subsequent assessments if:

 

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of damage caused by the August 2007 floods;

 

(2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted, Steele, Wabasha, or Winona;

 

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 2007 assessment year;

 

(4) the dwelling occupied by the owner is located in this state and is within 50 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

 

(5) the owner notifies the county assessor that the relocation was due to the August 2007 floods, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the owner must notify the assessor by December 1, 2008. Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

 

(j) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 2008 assessment shall remain classified as agricultural homesteads for subsequent assessments if:

 

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of the March 2009 floods;

 

(2) the property is located in the county of Marshall;

 

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 2008 assessment year and continue to be used for agricultural purposes;

 

(4) the dwelling occupied by the owner is located in Minnesota and is within 50 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

 

(5) the owner notifies the county assessor that the relocation was due to the 2009 floods, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in dwelling. Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

 

EFFECTIVE DATE. This section is effective beginning for property taxes payable in 2018.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1603

Sec. 11. Minnesota Statutes 2016, section 273.124, subdivision 21, is amended to read:

 

Subd. 21. Trust property; homestead. Real or personal property, including agricultural property, held by a trustee under a trust is eligible for classification as homestead property if the property satisfies the requirements of paragraph (a), (b), (c), or (d), or (e).

 

(a) The grantor or surviving spouse of the grantor of the trust occupies and uses the property as a homestead.

 

(b) A relative or surviving relative of the grantor who meets the requirements of subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1, paragraph (d), in the case of agricultural property, occupies and uses the property as a homestead.

 

(c) A family farm corporation, joint farm venture, limited liability company, or partnership operating a family farm in which the grantor or the grantor's surviving spouse is a shareholder, member, or partner rents the property; and, either (1) a shareholder, member, or partner of the corporation, joint farm venture, limited liability company, or partnership occupies and uses the property as a homestead; or (2) the property is at least 40 acres, including undivided government lots and correctional 40's, and a shareholder, member, or partner of the tenant-entity is actively farming the property on behalf of the corporation, joint farm venture, limited liability company, or partnership.

 

(d) A person who has received homestead classification for property taxes payable in 2000 on the basis of an unqualified legal right under the terms of the trust agreement to occupy the property as that person's homestead and who continues to use the property as a homestead; or, a person who received the homestead classification for taxes payable in 2005 under paragraph (c) who does not qualify under paragraph (c) for taxes payable in 2006 or thereafter but who continues to qualify under paragraph (c) as it existed for taxes payable in 2005.

 

(e) The qualifications under subdivision 14, paragraph (b), clause (i), are met. For purposes of this paragraph, "owner" means the grantor of the trust or the surviving spouse of the grantor.

 

(f) For purposes of this subdivision, the following terms have the meanings given them:

 

(1) "agricultural property" means the house, garage, other farm buildings and structures, and agricultural land;

 

(2) "agricultural land" has the meaning given in section 273.13, subdivision 23, except that the phrases "owned by same person" or "under the same ownership" as used in that subdivision mean and include contiguous tax parcels owned by:

 

(i) an individual and a trust of which the individual, the individual's spouse, or the individual's deceased spouse is the grantor; or

 

(ii) different trusts of which the grantors of each trust are any combination of an individual, the individual's spouse, or the individual's deceased spouse; and

 

For purposes of this subdivision, (3) "grantor" is defined as means the person creating or establishing a testamentary, inter Vivos, revocable or irrevocable trust by written instrument or through the exercise of a power of appointment.

 

(g) Noncontiguous land is included as part of a homestead under this subdivision, only if the homestead is classified as class 2a, as defined in section 273.13, subdivision 23, and the detached land is located in the same township or city, or not farther than four townships or cities or combination thereof from the homestead. Any


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1604

taxpayer of these noncontiguous lands must notify the county assessor that the noncontiguous land is part of the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer must also notify the assessor of the other county.

 

EFFECTIVE DATE. This section is effective beginning for property taxes payable in 2018.

 

Sec. 12. Minnesota Statutes 2016, section 273.125, subdivision 8, is amended to read:

 

Subd. 8. Manufactured homes; sectional structures. (a) In this section, "manufactured home" means a structure transportable in one or more sections, which is built on a permanent chassis, and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and contains the plumbing, heating, air conditioning, and electrical systems in it. Manufactured home includes any accessory structure that is an addition or supplement to the manufactured home and, when installed, becomes a part of the manufactured home.

 

(b) Except as provided in paragraph (c), a manufactured home that meets each of the following criteria must be valued and assessed as an improvement to real property, the appropriate real property classification applies, and the valuation is subject to review and the taxes payable in the manner provided for real property:

 

(1) the owner of the unit holds title to the land on which it is situated;

 

(2) the unit is affixed to the land by a permanent foundation or is installed at its location in accordance with the Manufactured Home Building Code in sections 327.31 to 327.34, and rules adopted under those sections, or is affixed to the land like other real property in the taxing district; and

 

(3) the unit is connected to public utilities, has a well and septic tank system, or is serviced by water and sewer facilities comparable to other real property in the taxing district.

 

(c) A manufactured home that meets each of the following criteria must be assessed at the rate provided by the appropriate real property classification but must be treated as personal property, and the valuation is subject to review and the taxes payable in the manner provided in this section:

 

(1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit is located in a manufactured home park but is not the homestead of the park owner;

 

(2) the unit is affixed to the land by a permanent foundation or is installed at its location in accordance with the Manufactured Home Building Code contained in sections 327.31 to 327.34, and the rules adopted under those sections, or is affixed to the land like other real property in the taxing district; and

 

(3) the unit is connected to public utilities, has a well and septic tank system, or is serviced by water and sewer facilities comparable to other real property in the taxing district.

 

(d) Sectional structures must be valued and assessed as an improvement to real property if the owner of the structure holds title to the land on which it is located or is a qualifying lessee of the land under section 273.19. In this paragraph "sectional structure" means a building or structural unit that has been in whole or substantial part manufactured or constructed at an off-site location to be wholly or partially assembled on site alone or with other units and attached to a permanent foundation.

 

(e) The commissioner of revenue may adopt rules under the Administrative Procedure Act to establish additional criteria for the classification of manufactured homes and sectional structures under this subdivision.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1605

(f) A storage shed, deck, or similar improvement constructed on property that is leased or rented as a site for a manufactured home, sectional structure, park trailer, or travel trailer is taxable as provided in this section. In the case of property that is leased or rented as a site for a travel trailer, a storage shed, deck, or similar improvement on the site that is considered personal property under this paragraph is taxable only if its total estimated market value is over $1,000 $10,000. The property is taxable as personal property to the lessee of the site if it is not owned by the owner of the site. The property is taxable as real estate if it is owned by the owner of the site. As a condition of permitting the owner of the manufactured home, sectional structure, park trailer, or travel trailer to construct improvements on the leased or rented site, the owner of the site must obtain the permanent home address of the lessee or user of the site. The site owner must provide the name and address to the assessor upon request.

 

Sec. 13. Minnesota Statutes 2016, section 273.13, subdivision 22, is amended to read:

 

Subd. 22. Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b) and (c), real estate which is residential and used for homestead purposes is class 1a. In the case of a duplex or triplex in which one of the units is used for homestead purposes, the entire property is deemed to be used for homestead purposes. The market value of class 1a property must be determined based upon the value of the house, garage, and land.

 

The first $500,000 of market value of class 1a property has a net classification rate of one percent of its market value; and the market value of class 1a property that exceeds $500,000 has a classification rate of 1.25 percent of its market value.

 

(b) Class 1b property includes homestead real estate or homestead manufactured homes used for the purposes of a homestead by:

 

(1) any person who is blind as defined in section 256D.35, or the blind person and the blind person's spouse;

 

(2) any person who is permanently and totally disabled or by the disabled person and the disabled person's spouse; or

 

(3) the surviving spouse of a permanently and totally disabled veteran homesteading a property classified under this paragraph for taxes payable in 2008.

 

Property is classified and assessed under clause (2) only if the government agency or income-providing source certifies, upon the request of the homestead occupant, that the homestead occupant satisfies the disability requirements of this paragraph, and that the property is not eligible for the valuation exclusion under subdivision 34.

 

Property is classified and assessed under paragraph (b) only if the commissioner of revenue or the county assessor certifies that the homestead occupant satisfies the requirements of this paragraph.

 

Permanently and totally disabled for the purpose of this subdivision means a condition which is permanent in nature and totally incapacitates the person from working at an occupation which brings the person an income. The first $50,000 market value of class 1b property has a net classification rate of .45 percent of its market value. The remaining market value of class 1b property has a classification rate using the rates for class 1a or class 2a property, whichever is appropriate, of similar market value.

 

(c) Class 1c property is commercial use real and personal property that abuts public water as defined in section 103G.005, subdivision 15, or abuts a state trail administered by the Department of Natural Resources, and is devoted to temporary and seasonal residential occupancy for recreational purposes but not devoted to commercial purposes for more than 250 days in the year preceding the year of assessment, and that includes a portion used as a homestead by the owner, which includes a dwelling occupied as a homestead by a shareholder of a corporation that owns the resort, a partner in a partnership that owns the resort, or a member of a limited liability company that owns the resort


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1606

even if, whether the title to the homestead is held by the corporation, partnership, or limited liability company, or by a shareholder of a corporation who owns the resort, a partner in a partnership who owns the resort, or a member of a limited liability company who owns the resort. For purposes of this paragraph, property is devoted to a commercial purpose on a specific day if any portion of the property, excluding the portion used exclusively as a homestead, is used for residential occupancy and a fee is charged for residential occupancy. Class 1c property must contain three or more rental units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site equipped with water and electrical hookups for recreational vehicles. Class 1c property must provide recreational activities such as the rental of ice fishing houses, boats and motors, snowmobiles, downhill or cross‑country ski equipment; provide marina services, launch services, or guide services; or sell bait and fishing tackle. Any unit in which the right to use the property is transferred to an individual or entity by deeded interest, or the sale of shares or stock, no longer qualifies for class 1c even though it may remain available for rent. A camping pad offered for rent by a property that otherwise qualifies for class 1c is also class 1c, regardless of the term of the rental agreement, as long as the use of the camping pad does not exceed 250 days. If the same owner owns two separate parcels that are located in the same township, and one of those properties is classified as a class 1c property and the other would be eligible to be classified as a class 1c property if it was used as the homestead of the owner, both properties will be assessed as a single class 1c property; for purposes of this sentence, properties are deemed to be owned by the same owner if each of them is owned by a limited liability company, and both limited liability companies have the same membership. The portion of the property used as a homestead is class 1a property under paragraph (a). The remainder of the property is classified as follows: the first $600,000 of market value is tier I, the next $1,700,000 of market value is tier II, and any remaining market value is tier III. The classification rates for class 1c are: tier I, 0.50 percent; tier II, 1.0 percent; and tier III, 1.25 percent. Owners of real and personal property devoted to temporary and seasonal residential occupancy for recreation purposes in which all or a portion of the property was devoted to commercial purposes for not more than 250 days in the year preceding the year of assessment desiring classification as class 1c, must submit a declaration to the assessor designating the cabins or units occupied for 250 days or less in the year preceding the year of assessment by January 15 of the assessment year. Those cabins or units and a proportionate share of the land on which they are located must be designated as class 1c as otherwise provided. The remainder of the cabins or units and a proportionate share of the land on which they are located must be designated as class 3a commercial. The owner of property desiring designation as class 1c property must provide guest registers or other records demonstrating that the units for which class 1c designation is sought were not occupied for more than 250 days in the year preceding the assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility operated on a commercial basis not directly related to temporary and seasonal residential occupancy for recreation purposes does not qualify for class 1c.

 

(d) Class 1d property includes structures that meet all of the following criteria:

 

(1) the structure is located on property that is classified as agricultural property under section 273.13, subdivision 23;

 

(2) the structure is occupied exclusively by seasonal farm workers during the time when they work on that farm, and the occupants are not charged rent for the privilege of occupying the property, provided that use of the structure for storage of farm equipment and produce does not disqualify the property from classification under this paragraph;

 

(3) the structure meets all applicable health and safety requirements for the appropriate season; and

 

(4) the structure is not salable as residential property because it does not comply with local ordinances relating to location in relation to streets or roads.

 

The market value of class 1d property has the same classification rates as class 1a property under paragraph (a).

 

EFFECTIVE DATE. This section is effective beginning with taxes payable in 2018.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1607

Sec. 14. Minnesota Statutes 2016, section 273.13, subdivision 23, is amended to read:

 

Subd. 23. Class 2. (a) An agricultural homestead consists of class 2a agricultural land that is homesteaded, along with any class 2b rural vacant land that is contiguous to the class 2a land under the same ownership. The market value of the house and garage and immediately surrounding one acre of land has the same classification rates as class 1a or 1b property under subdivision 22. The value of the remaining land including improvements up to the first tier valuation limit of agricultural homestead property has a classification rate of 0.5 percent of market value. The remaining property over the first tier has a classification rate of one percent of market value. For purposes of this subdivision, the "first tier valuation limit of agricultural homestead property" and "first tier" means the limit certified under section 273.11, subdivision 23.

 

(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that are agricultural land and buildings. Class 2a property has a classification rate of one percent of market value, unless it is part of an agricultural homestead under paragraph (a). Class 2a property must also include any property that would otherwise be classified as 2b, but is interspersed with class 2a property, including but not limited to sloughs, wooded wind shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement, and other similar land that is impractical for the assessor to value separately from the rest of the property or that is unlikely to be able to be sold separately from the rest of the property.

 

An assessor may classify the part of a parcel described in this subdivision that is used for agricultural purposes as class 2a and the remainder in the class appropriate to its use.

 

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof, that are unplatted real estate, rural in character and not used for agricultural purposes, including land used for growing trees for timber, lumber, and wood and wood products, that is not improved with a structure. The presence of a minor, ancillary nonresidential structure as defined by the commissioner of revenue does not disqualify the property from classification under this paragraph. Any parcel of 20 acres or more improved with a structure that is not a minor, ancillary nonresidential structure must be split-classified, and ten acres must be assigned to the split parcel containing the structure. Class 2b property has a classification rate of one percent of market value unless it is part of an agricultural homestead under paragraph (a), or qualifies as class 2c under paragraph (d).

 

(d) Class 2c managed forest land consists of no less than 20 and no more than 1,920 acres statewide per taxpayer that is being managed under a forest management plan that meets the requirements of chapter 290C, but is not enrolled in the sustainable forest resource management incentive program. It has a classification rate of .65 percent, provided that the owner of the property must apply to the assessor in order for the property to initially qualify for the reduced rate and provide the information required by the assessor to verify that the property qualifies for the reduced rate. If the assessor receives the application and information before May 1 in an assessment year, the property qualifies beginning with that assessment year. If the assessor receives the application and information after April 30 in an assessment year, the property may not qualify until the next assessment year. The commissioner of natural resources must concur that the land is qualified. The commissioner of natural resources shall annually provide county assessors verification information on a timely basis. The presence of a minor, ancillary nonresidential structure as defined by the commissioner of revenue does not disqualify the property from classification under this paragraph.

 

(e) Agricultural land as used in this section means:

 

(1) contiguous acreage of ten acres or more, used during the preceding year for agricultural purposes; or

 

(2) contiguous acreage used during the preceding year for an intensive livestock or poultry confinement operation, provided that land used only for pasturing or grazing does not qualify under this clause.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1608

"Agricultural purposes" as used in this section means the raising, cultivation, drying, or storage of agricultural products for sale, or the storage of machinery or equipment used in support of agricultural production by the same farm entity. For a property to be classified as agricultural based only on the drying or storage of agricultural products, the products being dried or stored must have been produced by the same farm entity as the entity operating the drying or storage facility. "Agricultural purposes" also includes enrollment in the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public Law 99-198 or a similar local, state, or federal conservation program if the property was classified as agricultural (i) under this subdivision for taxes payable in 2003 because of its enrollment in a qualifying program and the land remains enrolled or (ii) in the year prior to its enrollment. For purposes of this section, a local conservation program means a program administered by a town, statutory or home rule charter city, or county, including a watershed district, water management organization, or soil and water conservation district, in which landowners voluntarily enroll land and receive incentive payments in exchange for use or other restrictions placed on the land. Agricultural classification shall not be based upon the market value of any residential structures on the parcel or contiguous parcels under the same ownership.

 

"Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion of, a set of contiguous tax parcels under that section that are owned by the same person.

 

(f) Agricultural land under this section also includes:

 

(1) contiguous acreage that is less than ten acres in size and exclusively used in the preceding year for raising or cultivating agricultural products; or

 

(2) contiguous acreage that contains a residence and is less than 11 acres in size, if the contiguous acreage exclusive of the house, garage, and surrounding one acre of land was used in the preceding year for one or more of the following three uses:

 

(i) for an intensive grain drying or storage operation, or for intensive machinery or equipment storage activities used to support agricultural activities on other parcels of property operated by the same farming entity;

 

(ii) as a nursery, provided that only those acres used intensively to produce nursery stock are considered agricultural land; or

 

(iii) for intensive market farming; for purposes of this paragraph, "market farming" means the cultivation of one or more fruits or vegetables or production of animal or other agricultural products for sale to local markets by the farmer or an organization with which the farmer is affiliated.

 

"Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as described in section 272.193, or all of a set of contiguous tax parcels under that section that are owned by the same person.

 

(g) Land shall be classified as agricultural even if all or a portion of the agricultural use of that property is the leasing to, or use by another person for agricultural purposes.

 

Classification under this subdivision is not determinative for qualifying under section 273.111.

 

(h) The property classification under this section supersedes, for property tax purposes only, any locally administered agricultural policies or land use restrictions that define minimum or maximum farm acreage.

 

(i) The term "agricultural products" as used in this subdivision includes production for sale of:


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1609

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, bees, and apiary products by the owner;

 

(2) fish bred for sale and consumption if the fish breeding occurs on land zoned for agricultural use;

 

(3) the commercial boarding of horses, which may include related horse training and riding instruction, if the boarding is done on property that is also used for raising pasture to graze horses or raising or cultivating other agricultural products as defined in clause (1);

 

(4) property which is owned and operated by nonprofit organizations used for equestrian activities, excluding racing;

 

(5) game birds and waterfowl bred and raised (i) on a game farm licensed under section 97A.105, provided that the annual licensing report to the Department of Natural Resources, which must be submitted annually by March 30 to the assessor, indicates that at least 500 birds were raised or used for breeding stock on the property during the preceding year and that the owner provides a copy of the owner's most recent schedule F; or (ii) for use on a shooting preserve licensed under section 97A.115;

 

(6) insects primarily bred to be used as food for animals;

 

(7) trees, grown for sale as a crop, including short rotation woody crops, and not sold for timber, lumber, wood, or wood products; and

 

(8) maple syrup taken from trees grown by a person licensed by the Minnesota Department of Agriculture under chapter 28A as a food processor.

 

(j) If a parcel used for agricultural purposes is also used for commercial or industrial purposes, including but not limited to:

 

(1) wholesale and retail sales;

 

(2) processing of raw agricultural products or other goods;

 

(3) warehousing or storage of processed goods; and

 

(4) office facilities for the support of the activities enumerated in clauses (1), (2), and (3),

 

the assessor shall classify the part of the parcel used for agricultural purposes as class 1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its use. The grading, sorting, and packaging of raw agricultural products for first sale is considered an agricultural purpose. A greenhouse or other building where horticultural or nursery products are grown that is also used for the conduct of retail sales must be classified as agricultural if it is primarily used for the growing of horticultural or nursery products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of those products. Use of a greenhouse or building only for the display of already grown horticultural or nursery products does not qualify as an agricultural purpose.

 

(k) The assessor shall determine and list separately on the records the market value of the homestead dwelling and the one acre of land on which that dwelling is located. If any farm buildings or structures are located on this homesteaded acre of land, their market value shall not be included in this separate determination.

 

(l) Class 2d airport landing area consists of a landing area or public access area of a privately owned public use airport. It has a classification rate of one percent of market value. To qualify for classification under this paragraph, a privately owned public use airport must be licensed as a public airport under section 360.018. For purposes of this


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1610

paragraph, "landing area" means that part of a privately owned public use airport properly cleared, regularly maintained, and made available to the public for use by aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing or navigational aids. A landing area also includes land underlying both the primary surface and the approach surfaces that comply with all of the following:

 

(i) the land is properly cleared and regularly maintained for the primary purposes of the landing, taking off, and taxiing of aircraft; but that portion of the land that contains facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

 

(ii) the land is part of the airport property; and

 

(iii) the land is not used for commercial or residential purposes.

 

The land contained in a landing area under this paragraph must be described and certified by the commissioner of transportation. The certification is effective until it is modified, or until the airport or landing area no longer meets the requirements of this paragraph. For purposes of this paragraph, "public access area" means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival and departure building in connection with the airport.

 

(m) Class 2e consists of land with a commercial aggregate deposit that is not actively being mined and is not otherwise classified as class 2a or 2b, provided that the land is not located in a county that has elected to opt-out of the aggregate preservation program as provided in section 273.1115, subdivision 6. It has a classification rate of one percent of market value. To qualify for classification under this paragraph, the property must be at least ten contiguous acres in size and the owner of the property must record with the county recorder of the county in which the property is located an affidavit containing:

 

(1) a legal description of the property;

 

(2) a disclosure that the property contains a commercial aggregate deposit that is not actively being mined but is present on the entire parcel enrolled;

 

(3) documentation that the conditional use under the county or local zoning ordinance of this property is for mining; and

 

(4) documentation that a permit has been issued by the local unit of government or the mining activity is allowed under local ordinance. The disclosure must include a statement from a registered professional geologist, engineer, or soil scientist delineating the deposit and certifying that it is a commercial aggregate deposit.

 

For purposes of this section and section 273.1115, "commercial aggregate deposit" means a deposit that will yield crushed stone or sand and gravel that is suitable for use as a construction aggregate; and "actively mined" means the removal of top soil and overburden in preparation for excavation or excavation of a commercial deposit.

 

(n) When any portion of the property under this subdivision or subdivision 22 begins to be actively mined, the owner must file a supplemental affidavit within 60 days from the day any aggregate is removed stating the number of acres of the property that is actively being mined. The acres actively being mined must be (1) valued and classified under subdivision 24 in the next subsequent assessment year, and (2) removed from the aggregate resource preservation property tax program under section 273.1115, if the land was enrolled in that program. Copies of the original affidavit and all supplemental affidavits must be filed with the county assessor, the local zoning administrator, and the Department of Natural Resources, Division of Land and Minerals. A supplemental affidavit must be filed each time a subsequent portion of the property is actively mined, provided that the minimum acreage change is five acres, even if the actual mining activity constitutes less than five acres.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1611

(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are not rules and are exempt from the rulemaking provisions of chapter 14, and the provisions in section 14.386 concerning exempt rules do not apply.

 

EFFECTIVE DATE. This section is effective beginning with assessment year 2018.

 

Sec. 15. Minnesota Statutes 2016, section 273.13, subdivision 25, is amended to read:

 

Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more units and used or held for use by the owner or by the tenants or lessees of the owner as a residence for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt under section 272.02, and contiguous property used for hospital purposes, without regard to whether the property has been platted or subdivided. The market value of class 4a property has a classification rate of 1.25 percent.

 

(b) Class 4b includes:

 

(1) residential real estate containing less than four units that does not qualify as class 4bb, other than seasonal residential recreational property;

 

(2) manufactured homes not classified under any other provision;

 

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm classified under subdivision 23, paragraph (b) containing two or three units; and

 

(4) unimproved property that is classified residential as determined under subdivision 33.

 

The market value of class 4b property has a classification rate of 1.25 percent.

 

(c) Class 4bb includes:

 

(1) nonhomestead residential real estate containing one unit, other than seasonal residential recreational property, and a single family dwelling, garage,;

 

(2) single-family dwellings including garages and the surrounding one acre of property on a nonhomestead farm farms classified under subdivision 23, paragraph (b); and

 

(3) condominium-type storage units having individual legal descriptions that are not used for commercial purposes.

 

Class 4bb property has the same classification rates as class 1a property under subdivision 22.

 

Property that has been classified as seasonal residential recreational property at any time during which it has been owned by the current owner or spouse of the current owner does not qualify for class 4bb.

 

(d) Class 4c property includes:

 

(1) except as provided in subdivision 22, paragraph (c), real and personal property devoted to commercial temporary and seasonal residential occupancy for recreation purposes, for not more than 250 days in the year preceding the year of assessment. For purposes of this clause, property is devoted to a commercial purpose on a specific day if any portion of the property is used for residential occupancy, and a fee is charged for residential


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1612

occupancy. Class 4c property under this clause must contain three or more rental units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site equipped with water and electrical hookups for recreational vehicles. A camping pad offered for rent by a property that otherwise qualifies for class 4c under this clause is also class 4c under this clause regardless of the term of the rental agreement, as long as the use of the camping pad does not exceed 250 days. In order for a property to be classified under this clause, either (i) the business located on the property must provide recreational activities, at least 40 percent of the annual gross lodging receipts related to the property must be from business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid bookings by lodging guests during the year must be for periods of at least two consecutive nights; or (B) at least 20 percent of the annual gross receipts must be from charges for providing recreational activities, or (ii) the business must contain 20 or fewer rental units, and must be located in a township or a city with a population of 2,500 or less located outside the metropolitan area, as defined under section 473.121, subdivision 2, that contains a portion of a state trail administered by the Department of Natural Resources. For purposes of item (i)(A), a paid booking of five or more nights shall be counted as two bookings. Class 4c property also includes commercial use real property used exclusively for recreational purposes in conjunction with other class 4c property classified under this clause and devoted to temporary and seasonal residential occupancy for recreational purposes, up to a total of two acres, provided the property is not devoted to commercial recreational use for more than 250 days in the year preceding the year of assessment and is located within two miles of the class 4c property with which it is used. In order for a property to qualify for classification under this clause, the owner must submit a declaration to the assessor designating the cabins or units occupied for 250 days or less in the year preceding the year of assessment by January 15 of the assessment year. Those cabins or units and a proportionate share of the land on which they are located must be designated class 4c under this clause as otherwise provided. The remainder of the cabins or units and a proportionate share of the land on which they are located will be designated as class 3a. The owner of property desiring designation as class 4c property under this clause must provide guest registers or other records demonstrating that the units for which class 4c designation is sought were not occupied for more than 250 days in the year preceding the assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility operated on a commercial basis not directly related to temporary and seasonal residential occupancy for recreation purposes does not qualify for class 4c. For the purposes of this paragraph, "recreational activities" means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment; providing marina services, launch services, or guide services; or selling bait and fishing tackle;

 

(2) qualified property used as a golf course if:

 

(i) it is open to the public on a daily fee basis. It may charge membership fees or dues, but a membership fee may not be required in order to use the property for golfing, and its green fees for golfing must be comparable to green fees typically charged by municipal courses; and

 

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

 

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with the golf course is classified as class 3a property;

 

(3) real property up to a maximum of three acres of land owned and used by a nonprofit community service oriented organization and not used for residential purposes on either a temporary or permanent basis, provided that:

 

(i) the property is not used for a revenue-producing activity for more than six days in the calendar year preceding the year of assessment; or

 

(ii) the organization makes annual charitable contributions and donations at least equal to the property's previous year's property taxes and the property is allowed to be used for public and community meetings or events for no charge, as appropriate to the size of the facility.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1613

For purposes of this clause:

 

(A) "charitable contributions and donations" has the same meaning as lawful gambling purposes under section 349.12, subdivision 25, excluding those purposes relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;

 

(B) "property taxes" excludes the state general tax;

 

(C) a "nonprofit community service oriented organization" means any corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, fraternal, civic, or educational purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal Revenue Code; and

 

(D) "revenue-producing activities" shall include but not be limited to property or that portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling alley, a retail store, gambling conducted by organizations licensed under chapter 349, an insurance business, or office or other space leased or rented to a lessee who conducts a for-profit enterprise on the premises.

 

Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The use of the property for social events open exclusively to members and their guests for periods of less than 24 hours, when an admission is not charged nor any revenues are received by the organization shall not be considered a revenue-producing activity.

 

The organization shall maintain records of its charitable contributions and donations and of public meetings and events held on the property and make them available upon request any time to the assessor to ensure eligibility. An organization meeting the requirement under item (ii) must file an application by May 1 with the assessor for eligibility for the current year's assessment. The commissioner shall prescribe a uniform application form and instructions;

 

(4) postsecondary student housing of not more than one acre of land that is owned by a nonprofit corporation organized under chapter 317A and is used exclusively by a student cooperative, sorority, or fraternity for on-campus housing or housing located within two miles of the border of a college campus;

 

(5)(i) manufactured home parks as defined in section 327.14, subdivision 3, excluding manufactured home parks described in section 273.124, subdivision 3a, and (ii) manufactured home parks as defined in section 327.14, subdivision 3, that are described in section 273.124, subdivision 3a;

 

(6) real property that is actively and exclusively devoted to indoor fitness, health, social, recreational, and related uses, is owned and operated by a not-for-profit corporation, and is located within the metropolitan area as defined in section 473.121, subdivision 2;

 

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt under section 272.01, subdivision 2, and the land on which it is located, provided that:

 

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan Airports Commission, or group thereof; and

 

(ii) the land lease, or any ordinance or signed agreement restricting the use of the leased premise, prohibits commercial activity performed at the hangar.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1614

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be filed by the new owner with the assessor of the county where the property is located within 60 days of the sale;

 

(8) a privately owned noncommercial aircraft storage hangar not exempt under section 272.01, subdivision 2, and the land on which it is located, provided that:

 

(i) the land abuts a public airport; and

 

(ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement restricting the use of the premises, prohibiting commercial use or activity performed at the hangar; and

 

(9) residential real estate, a portion of which is used by the owner for homestead purposes, and that is also a place of lodging, if all of the following criteria are met:

 

(i) rooms are provided for rent to transient guests that generally stay for periods of 14 or fewer days;

 

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated in the basic room rate;

 

(iii) meals are not provided to the general public except for special events on fewer than seven days in the calendar year preceding the year of the assessment; and

 

(iv) the owner is the operator of the property.

 

The market value subject to the 4c classification under this clause is limited to five rental units. Any rental units on the property in excess of five, must be valued and assessed as class 3a. The portion of the property used for purposes of a homestead by the owner must be classified as class 1a property under subdivision 22;

 

(10) real property up to a maximum of three acres and operated as a restaurant as defined under section 157.15, subdivision 12, provided it: (i) is located on a lake as defined under section 103G.005, subdivision 15, paragraph (a), clause (3); and (ii) is either devoted to commercial purposes for not more than 250 consecutive days, or receives at least 60 percent of its annual gross receipts from business conducted during four consecutive months. Gross receipts from the sale of alcoholic beverages must be included in determining the property's qualification under item (ii). The property's primary business must be as a restaurant and not as a bar. Gross receipts from gift shop sales located on the premises must be excluded. Owners of real property desiring 4c classification under this clause must submit an annual declaration to the assessor by February 1 of the current assessment year, based on the property's relevant information for the preceding assessment year;

 

(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public and devoted to recreational use for marina services. The marina owner must annually provide evidence to the assessor that it provides services, including lake or river access to the public by means of an access ramp or other facility that is either located on the property of the marina or at a publicly owned site that abuts the property of the marina. No more than 800 feet of lakeshore may be included in this classification. Buildings used in conjunction with a marina for marina services, including but not limited to buildings used to provide food and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle, are classified as class 3a property; and

 

(12) real and personal property devoted to noncommercial temporary and seasonal residential occupancy for recreation purposes.

 

Class 4c property has a classification rate of 1.5 percent of market value, except that (i) each parcel of noncommercial seasonal residential recreational property under clause (12) has the same classification rates as class 4bb property, (ii) manufactured home parks assessed under clause (5), item (i), have the same classification rate as


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1615

class 4b property, and the market value of manufactured home parks assessed under clause (5), item (ii), has a classification rate of 0.75 percent if more than 50 percent of the lots in the park are occupied by shareholders in the cooperative corporation or association and a classification rate of one percent if 50 percent or less of the lots are so occupied, (iii) commercial-use seasonal residential recreational property and marina recreational land as described in clause (11), has a classification rate of one percent for the first $500,000 of market value, and 1.25 percent for the remaining market value, (iv) the market value of property described in clause (4) has a classification rate of one percent, (v) the market value of property described in clauses (2), (6), and (10) has a classification rate of 1.25 percent, and (vi) that portion of the market value of property in clause (9) qualifying for class 4c property has a classification rate of 1.25 percent, and (vii) property qualifying for classification under clause (3) that is owned or operated by a congressionally chartered veterans organization has a classification rate of one percent. The commissioner of veterans affairs must provide a list of congressionally chartered veterans organizations to the commissioner of revenue by June 30, 2017, and by January 1, 2018, and each year thereafter.

 

(e) Class 4d property is qualifying low-income rental housing certified to the assessor by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion of the units in the building qualify as low-income rental housing units as certified under section 273.128, subdivision 3, only the proportion of qualifying units to the total number of units in the building qualify for class 4d. The remaining portion of the building shall be classified by the assessor based upon its use. Class 4d also includes the same proportion of land as the qualifying low-income rental housing units are to the total units in the building. For all properties qualifying as class 4d, the market value determined by the assessor must be based on the normal approach to value using normal unrestricted rents.

 

(f) The first tier of market value of class 4d property has a classification rate of 0.75 percent. The remaining value of class 4d property has a classification rate of 0.25 percent. For the purposes of this paragraph, the "first tier of market value of class 4d property" means the market value of each housing unit up to the first tier limit. For the purposes of this paragraph, all class 4d property value must be assigned to individual housing units. The first tier limit is $100,000 for assessment year 2014. For subsequent years, the limit is adjusted each year by the average statewide change in estimated market value of property classified as class 4a and 4d under this section for the previous assessment year, excluding valuation change due to new construction, rounded to the nearest $1,000, provided, however, that the limit may never be less than $100,000. Beginning with assessment year 2015, the commissioner of revenue must certify the limit for each assessment year by November 1 of the previous year.

 

EFFECTIVE DATE. This section is effective beginning with taxes assessed in 2017 and payable in 2018.

 

Sec. 16. Minnesota Statutes 2016, section 273.13, subdivision 34, is amended to read:

 

Subd. 34. Homestead of disabled veteran or family caregiver. (a) All or a portion of the market value of property owned by a veteran and serving as the veteran's homestead under this section is excluded in determining the property's taxable market value if the veteran has a service-connected disability of 70 percent or more as certified by the United States Department of Veterans Affairs. To qualify for exclusion under this subdivision, the veteran must have been honorably discharged from the United States armed forces, as indicated by United States Government Form DD214 or other official military discharge papers.

 

(b)(1) For a disability rating of 70 percent or more, $150,000 of market value is excluded, except as provided in clause (2); and

 

(2) for a total (100 percent) and permanent disability, $300,000 of market value is excluded.

 

(c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b), clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the spouse holds the legal or beneficial title to the homestead and permanently resides there, the exclusion shall carry over to the benefit of the veteran's spouse for the current taxes payable year and for eight additional taxes payable years or until such time as the spouse remarries, or sells,


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1616

transfers, or otherwise disposes of the property, whichever comes first. Qualification under this paragraph requires an annual application under paragraph (h), and a spouse must notify the assessor if there is a change in the spouse's marital status, ownership of the property, or use of the property as a permanent residence.

 

(d) If the spouse of a member of any branch or unit of the United States armed forces who dies due to a service‑connected cause while serving honorably in active service, as indicated on United States Government Form DD1300 or DD2064, holds the legal or beneficial title to a homestead and permanently resides there, the spouse is entitled to the benefit described in paragraph (b), clause (2), for eight taxes payable years, or until such time as the spouse remarries or sells, transfers, or otherwise disposes of the property, whichever comes first.

 

(e) If a veteran meets the disability criteria of paragraph (a) but does not own property classified as homestead in the state of Minnesota, then the homestead of the veteran's primary family caregiver, if any, is eligible for the exclusion that the veteran would otherwise qualify for under paragraph (b).

 

(f) In the case of an agricultural homestead, only the portion of the property consisting of the house and garage and immediately surrounding one acre of land qualifies for the valuation exclusion under this subdivision.

 

(g) A property qualifying for a valuation exclusion under this subdivision is not eligible for the market value exclusion under subdivision 35, or classification under subdivision 22, paragraph (b).

 

(h) To qualify for a valuation exclusion under this subdivision a property owner must apply to the assessor by July 1 of each assessment year, except that an annual reapplication is not required once a property has been accepted for a valuation exclusion under paragraph (a) and qualifies for the benefit described in paragraph (b), clause (2), and the property continues to qualify until there is a change in ownership of the first assessment year for which the exclusion is sought. For an application received after July 1 of any calendar year, the exclusion shall become effective for the following assessment year. Except as provided in paragraph (c), the owner of a property that has been accepted for a valuation exclusion must notify the assessor if there is a change in ownership of the property or in the use of the property as a homestead.

 

(i) A first-time application by a qualifying spouse for the market value exclusion under paragraph (d) must be made any time within two years of the death of the service member.

 

(j) For purposes of this subdivision:

 

(1) "active service" has the meaning given in section 190.05;

 

(2) "own" means that the person's name is present as an owner on the property deed;

 

(3) "primary family caregiver" means a person who is approved by the secretary of the United States Department of Veterans Affairs for assistance as the primary provider of personal care services for an eligible veteran under the Program of Comprehensive Assistance for Family Caregivers, codified as United States Code, title 38, section 1720G; and

 

(4) "veteran" has the meaning given the term in section 197.447.

 

(k) If a veteran dying after December 31, 2011, did not apply for or receive the exclusion under paragraph (b), clause (2), before dying, the veteran's spouse is entitled to the benefit under paragraph (b), clause (2), for eight taxes payable years or until the spouse remarries or sells, transfers, or otherwise disposes of the property if:

 

(1) the spouse files a first-time application within two years of the death of the service member or by June 1, 2019, whichever is later;


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1617

(2) upon the death of the veteran, the spouse holds the legal or beneficial title to the homestead and permanently resides there;

 

(3) the veteran met the honorable discharge requirements of paragraph (a); and

 

(4) the United States Department of Veterans Affairs certifies that:

 

(i) the veteran met the total (100 percent) and permanent disability requirement under paragraph (b), clause (2); or

 

(ii) the spouse has been awarded dependency and indemnity compensation.

 

(l) The purpose of this provision of law providing a level of homestead property tax relief for gravely disabled veterans, their primary family caregivers, and their surviving spouses is to help ease the burdens of war for those among our state's citizens who bear those burdens most heavily.

 

(m) By July 1, the county veterans service officer must certify the disability rating of each veteran receiving the benefit under paragraph (b) to the assessor.

 

EFFECTIVE DATE. This section is effective beginning with taxes payable in 2018.

 

Sec. 17. [274.132] PROPERTY OVERVALUED.

 

Subdivision 1. Valuation appeals. Notwithstanding any other law to the contrary, when the value of a property is reduced by a local, special, or county board of appeal and equalization, the state board of equalization, an order from the Minnesota Tax Court, or an abatement to correct an error in valuation, a property owner may appeal the valuation of the property for the taxes payable year immediately preceding the year for which the value is reduced, provided that the valuation of the property for the immediately preceding taxes payable year was not previously appealed. An appeal under this subdivision may only be taken to the Minnesota Tax Court.

 

Subd. 2. Credit for overpayment of tax. (a) The county auditor shall credit any refund determined by the Minnesota Tax Court under subdivision 1 against the succeeding year's tax payable on the property according to the following schedule:

 

(1) if the refund is less than 25 percent of the total tax payable on the property for the current year, it shall be credited to the tax payable on the property in the succeeding taxes payable year; or

 

(2) if the refund is 25 percent or more of the total tax payable on the property for the current year, beginning in the succeeding taxes payable year, it shall be credited to the tax payable on the property at a rate of 25 percent of the property taxes due per year until credited in full.

 

(b) The credit under this subdivision shall reduce the tax payable to each jurisdiction in proportion to the total tax payable on the property.

 

EFFECTIVE DATE. This section is effective for appeals, orders, and abatements in 2018 and thereafter.

 

Sec. 18. Minnesota Statutes 2016, section 275.025, subdivision 1, is amended to read:

 

Subdivision 1. Levy amount. The state general levy is levied against commercial-industrial property and seasonal residential recreational property, as defined in this section. The state general levy base amount is $592,000,000 for commercial-industrial property is $713,050,000 for taxes payable in 2002 2018 and thereafter. For taxes payable in subsequent years, the levy base amount is increased each year by multiplying the levy base


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1618

amount for the prior year by the sum of one plus the rate of increase, if any, in the implicit price deflator for government consumption expenditures and gross investment for state and local governments prepared by the Bureau of Economic Analysts of the United States Department of Commerce for the 12-month period ending March 31 of the year prior to the year the taxes are payable. The state general levy for seasonal-recreational property is $43,130,000 for taxes payable in 2018 and thereafter. The tax under this section is not treated as a local tax rate under section 469.177 and is not the levy of a governmental unit under chapters 276A and 473F.

 

The commissioner shall increase or decrease the preliminary or final rate for a year as necessary to account for errors and tax base changes that affected a preliminary or final rate for either of the two preceding years. Adjustments are allowed to the extent that the necessary information is available to the commissioner at the time the rates for a year must be certified, and for the following reasons:

 

(1) an erroneous report of taxable value by a local official;

 

(2) an erroneous calculation by the commissioner; and

 

(3) an increase or decrease in taxable value for commercial-industrial or seasonal residential recreational property reported on the abstracts of tax lists submitted under section 275.29 that was not reported on the abstracts of assessment submitted under section 270C.89 for the same year.

 

The commissioner may, but need not, make adjustments if the total difference in the tax levied for the year would be less than $100,000.

 

EFFECTIVE DATE. This section is effective for taxes payable in 2018 and thereafter.

 

Sec. 19. Minnesota Statutes 2016, section 275.025, subdivision 2, is amended to read:

 

Subd. 2. Commercial-industrial tax capacity. For the purposes of this section, "commercial-industrial tax capacity" means the tax capacity of all taxable property classified as class 3 or class 5(1) under section 273.13, except for excluding:

 

(1) the tax capacity attributable to the first $200,000 of market value of each parcel of commercial-industrial property as defined under section 273.13, subdivision 24, clauses (1) and (2);

 

(2) electric generation attached machinery under class 3; and

 

(3) property described in section 473.625.

 

County commercial-industrial tax capacity amounts are not adjusted for the captured net tax capacity of a tax increment financing district under section 469.177, subdivision 2, the net tax capacity of transmission lines deducted from a local government's total net tax capacity under section 273.425, or fiscal disparities contribution and distribution net tax capacities under chapter 276A or 473F. For purposes of this subdivision, the procedures for determining eligibility for tier 1 under section 273.13, subdivision 24, clauses (1) and (2), shall apply in determining the portion of a property eligible to be considered within the first $200,000 of market value.

 

EFFECTIVE DATE. This section is effective for taxes payable in 2018 and thereafter.

 

Sec. 20. Minnesota Statutes 2016, section 275.025, subdivision 4, is amended to read:

 

Subd. 4. Apportionment and levy of state general tax. Ninety-five percent of The state general tax must be levied by applying a uniform rate to all commercial-industrial tax capacity and five percent of the state general tax must be levied by applying a uniform rate to all seasonal residential recreational tax capacity. On or before October 1


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1619

each year, the commissioner of revenue shall certify the preliminary state general levy rates to each county auditor that must be used to prepare the notices of proposed property taxes for taxes payable in the following year. By January 1 of each year, the commissioner shall certify the final state general levy rate rates to each county auditor that shall be used in spreading taxes.

 

EFFECTIVE DATE. This section is effective for taxes payable in 2018 and thereafter.

 

Sec. 21. Minnesota Statutes 2016, section 275.025, is amended by adding a subdivision to read:

 

Subd. 5. Underserved municipalities distribution. (a) Any municipality that:

 

(1) lies wholly or partially within the metropolitan area as defined under section 473.121, subdivision 2, but outside the transit taxing district as defined under section 473.446, subdivision 2; and

 

(2) has a net fiscal disparities contribution equal to or greater than eight percent of its total taxable net tax capacity,

 

is eligible for a distribution from the proceeds of the state general levy imposed on taxpayers within the municipality.

 

(b) The distribution is equal to (1) the municipality's net tax capacity tax rate, times (2) the municipality's net fiscal disparities contribution in excess of eight percent of its total taxable net tax capacity; provided, however, that the distribution may not exceed the tax under this section imposed on taxpayers within the municipality.

 

(c) The distribution under this subdivision must be paid to the qualifying municipality at the same time taxes are settled under sections 276.09 to 276.111.

 

(d) For purposes of this subdivision, the following terms have the meanings given.

 

(1) "Municipality" means a home rule or statutory city, or a town, except that in the case of a city that lies only partially within the metropolitan area, municipality means the portion of the city lying within the metropolitan area.

 

(2) "Net fiscal disparities contribution" means a municipality's fiscal disparities contribution tax capacity minus its distribution net tax capacity.

 

(3) "Total taxable net tax capacity" means the total net tax capacity of all properties in the municipality under section 273.13 minus (i) the net fiscal disparities contribution, and (ii) the municipality's tax increment captured net tax capacity.

 

EFFECTIVE DATE. This section is effective for taxes payable in 2018 and thereafter.

 

Sec. 22. Minnesota Statutes 2016, section 275.066, is amended to read:

 

275.066 SPECIAL TAXING DISTRICTS; DEFINITION.

 

For the purposes of property taxation and property tax state aids, the term "special taxing districts" includes the following entities:

 

(1) watershed districts under chapter 103D;

 

(2) sanitary districts under sections 442A.01 to 442A.29;


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1620

(3) regional sanitary sewer districts under sections 115.61 to 115.67;

 

(4) regional public library districts under section 134.201;

 

(5) park districts under chapter 398;

 

(6) regional railroad authorities under chapter 398A;

 

(7) hospital districts under sections 447.31 to 447.38;

 

(8) St. Cloud Metropolitan Transit Commission under sections 458A.01 to 458A.15;

 

(9) Duluth Transit Authority under sections 458A.21 to 458A.37;

 

(10) regional development commissions under sections 462.381 to 462.398;

 

(11) housing and redevelopment authorities under sections 469.001 to 469.047;

 

(12) port authorities under sections 469.048 to 469.068;

 

(13) economic development authorities under sections 469.090 to 469.1081;

 

(14) Metropolitan Council under sections 473.123 to 473.549;

 

(15) Metropolitan Airports Commission under sections 473.601 to 473.679;

 

(16) Metropolitan Mosquito Control Commission under sections 473.701 to 473.716;

 

(17) Morrison County Rural Development Financing Authority under Laws 1982, chapter 437, section 1;

 

(18) Croft Historical Park District under Laws 1984, chapter 502, article 13, section 6;

 

(19) East Lake County Medical Clinic District under Laws 1989, chapter 211, sections 1 to 6;

 

(20) Floodwood Area Ambulance District under Laws 1993, chapter 375, article 5, section 39;

 

(21) Middle Mississippi River Watershed Management Organization under sections 103B.211 and 103B.241;

 

(22) emergency medical services special taxing districts under section 144F.01;

 

(23) a county levying under the authority of section 103B.241, 103B.245, or 103B.251, or 103C.331;

 

(24) Southern St. Louis County Special Taxing District; Chris Jensen Nursing Home under Laws 2003, First Special Session chapter 21, article 4, section 12;

 

(25) an airport authority created under section 360.0426; and

 

(26) any other political subdivision of the state of Minnesota, excluding counties, school districts, cities, and towns, that has the power to adopt and certify a property tax levy to the county auditor, as determined by the commissioner of revenue.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1621

Sec. 23. Minnesota Statutes 2016, section 276.017, subdivision 3, is amended to read:

 

Subd. 3. United States Postal Service postmark Proof of timely payment. The postmark or registration mark of the United States Postal Service qualifies as proof of timely mailing for this section. If the payment is sent by United States registered mail, the date of registration is the postmark date. If the payment is sent by United States certified mail, the date of the United States Postal Service postmark on the receipt given to the person presenting the payment for delivery is the date of mailing. Mailing, or the time of mailing, may also be established by a delivery service's records or other available evidence except that. The postmark of a private postage meter or internet stamp may not be used as proof of a timely mailing made under this section.

 

Sec. 24. Minnesota Statutes 2016, section 279.01, subdivision 1, is amended to read:

 

Subdivision 1. Due dates; penalties. Except as provided in subdivisions 3 to 5, on May 16 or 21 days after the postmark date on the envelope containing the property tax statement, whichever is later, a penalty accrues and thereafter is charged upon all unpaid taxes on real estate on the current lists in the hands of the county treasurer. The (a) When the taxes against any tract or lot exceed $100, one-half of the amount of tax due must be paid prior to May 16, and the remaining one-half must be paid prior to the following October 16. If either tax amount is unpaid as of its due date, a penalty is imposed at a rate of two percent on homestead property until May 31 and four percent on nonhomestead property. If complete payment has not been made by the first day of the month following either due date, an additional penalty of two percent on June 1. The penalty on nonhomestead property is at a rate of four percent until May 31 homestead property and eight four percent on June 1. This penalty does not accrue until June 1 of each year, or 21 days after the postmark date on the envelope containing the property tax statements, whichever is later, on commercial use real property used for seasonal residential recreational purposes and classified as class 1c or 4c, and on other commercial use real property classified as class 3a, provided that over 60 percent of the gross income earned by the enterprise on the class 3a property is earned during the months of May, June, July, and August. In order for the first half of the tax due on class 3a property to be paid after May 15 and before June 1, or 21 days after the postmark date on the envelope containing the property tax statement, whichever is later, without penalty, the owner of the property must attach an affidavit to the payment attesting to compliance with the income provision of this subdivision nonhomestead property is imposed. Thereafter, for both homestead and nonhomestead property, on the first day of each subsequent month beginning July 1, up to and including October 1 following through December, an additional penalty of one percent for each month accrues and is charged on all such unpaid taxes provided that if the due date was extended beyond May 15 as the result of any delay in mailing property tax statements no additional penalty shall accrue if the tax is paid by the extended due date. If the tax is not paid by the extended due date, then all penalties that would have accrued if the due date had been May 15 shall be charged. When the taxes against any tract or lot exceed $100, one-half thereof may be paid prior to May 16 or 21 days after the postmark date on the envelope containing the property tax statement, whichever is later; and, if so paid, no penalty attaches; the remaining one-half may be paid at any time prior to October 16 following, without penalty; but, if not so paid, then a penalty of two percent accrues thereon for homestead property and a penalty of four percent on nonhomestead property. Thereafter, for homestead property, on the first day of November an additional penalty of four percent accrues and on the first day of December following, an additional penalty of two percent accrues and is charged on all such unpaid taxes. Thereafter, for nonhomestead property, on the first day of November and December following, an additional penalty of four percent for each month accrues and is charged on all such unpaid taxes. If one-half of such taxes are not paid prior to May 16 or 21 days after the postmark date on the envelope containing the property tax statement, whichever is later, the same may be paid at any time prior to October 16, with accrued penalties to the date of payment added, and thereupon no penalty attaches to the remaining one-half until October 16 following the penalty must not exceed eight percent in the case of homestead property, or 12 percent in the case of nonhomestead property.

 

(b) If the property tax statement was not postmarked prior to April 25, the first half payment due date in paragraph (a) shall be 21 days from the postmark date of the property tax statement, and all penalties referenced in paragraph (a) shall be determined with regard to the later due date.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1622

(c) In the case of a tract or lot with taxes of $100 or less, the due date and penalties as specified in paragraph (a) or (b) for the first half payment shall apply to the entire amount of the tax due.

 

(d) For commercial use real property used for seasonal residential recreational purposes and classified as class 1c or 4c, and on other commercial use real property classified as class 3a, provided that over 60 percent of the gross income earned by the enterprise on the class 3a property is earned during the months of May, June, July, and August, the first half payment is due prior to June 1. For a class 3a property to qualify for the later due date, the owner of the property must attach an affidavit to the payment attesting to compliance with the income requirements of this paragraph.

 

(e) This section applies to payment of personal property taxes assessed against improvements to leased property, except as provided by section 277.01, subdivision 3.

 

(f) A county may provide by resolution that in the case of a property owner that has multiple tracts or parcels with aggregate taxes exceeding $100, payments may be made in installments as provided in this subdivision.

 

(g) The county treasurer may accept payments of more or less than the exact amount of a tax installment due. Payments must be applied first to the oldest installment that is due but which has not been fully paid. If the accepted payment is less than the amount due, payments must be applied first to the penalty accrued for the year or the installment being paid. Acceptance of partial payment of tax does not constitute a waiver of the minimum payment required as a condition for filing an appeal under section 278.03 or any other law, nor does it affect the order of payment of delinquent taxes under section 280.39.

 

EFFECTIVE DATE. This section is effective beginning with taxes payable in 2018.

 

Sec. 25. Minnesota Statutes 2016, section 279.01, subdivision 2, is amended to read:

 

Subd. 2. Abatement of penalty. (a) The county board may, with the concurrence of the county treasurer, delegate to the county treasurer the power to abate the penalty provided for late payment of taxes in the current year. Notwithstanding section 270C.86, if any county board so elects, the county treasurer may abate the penalty on finding that the imposition of the penalty would be unjust and unreasonable.

 

(b) The county treasurer shall abate the penalty provided for late payment of taxes in the current year if the property tax payment is delivered by mail to the county treasurer and the envelope containing the payment is postmarked by the United States Postal Service within one business day of the due date prescribed under this section, but only if the property owner requesting the abatement has not previously received an abatement of penalty for late payment of tax under this paragraph.

 

EFFECTIVE DATE. This section is effective for property taxes payable in 2018 and thereafter.

 

Sec. 26. Minnesota Statutes 2016, section 279.01, subdivision 3, is amended to read:

 

Subd. 3. Agricultural property. (a) In the case of class 1b agricultural homestead, class 2a agricultural homestead property, and class 2a agricultural nonhomestead property, and class 2b rural vacant land, no penalties shall attach to the second one-half property tax payment as provided in this section if paid by November 15. Thereafter for class 1b agricultural homestead and class 2a homestead property, on November 16 following, a penalty of six percent shall accrue and be charged on all such unpaid taxes and on December 1 following, an additional two percent shall be charged on all such unpaid taxes. Thereafter for class 2a agricultural nonhomestead property, on November 16 following, a penalty of eight percent shall accrue and be charged on all such unpaid taxes and on December 1 following, an additional four percent shall be charged on all such unpaid taxes, penalties shall attach as provided in subdivision 1.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1623

If the owner of class 1b agricultural homestead or class 2a agricultural property receives a consolidated property tax statement that shows only an aggregate of the taxes and special assessments due on that property and on other property not classified as class 1b agricultural homestead or class 2a agricultural property, the aggregate tax and special assessments shown due on the property by the consolidated statement will be due on November 15.

 

(b) Notwithstanding paragraph (a), for taxes payable in 2010 and 2011, for any class 2b property that was subject to a second-half due date of November 15 for taxes payable in 2009, the county shall not impose, or if imposed, shall abate penalty amounts in excess of those that would apply as if the second-half due date were November 15.

 

EFFECTIVE DATE. (a) Except as provided in paragraph (b), this section is effective beginning with taxes payable in 2018.

 

(b) For property in the northern forest region, the provisions in this section applicable to class 2b rural vacant land are effective beginning with taxes payable in 2019.

 

Sec. 27. Minnesota Statutes 2016, section 279.37, is amended by adding a subdivision to read:

 

Subd. 1b. Conditions. The county auditor may offer on a voluntary basis financial literacy counseling as part of entering into a confession of judgment. The county auditor may fund the financial literacy counseling using the fee in subdivision 8. The counseling shall not be at taxpayer expense.

 

Sec. 28. Minnesota Statutes 2016, section 281.17, is amended to read:

 

281.17 PERIOD FOR OF REDEMPTION.

 

(a) Except for properties described in paragraphs (b) and (c), or properties for which the period of redemption has been limited under sections 281.173 and 281.174, the following periods for period of redemption apply.

 

The period of redemption for all lands sold to the state at a tax judgment sale shall be three years from the date of sale to the state of Minnesota.

 

The period of redemption for homesteaded lands as defined in section 273.13, subdivision 22, located in a targeted neighborhood as defined in Laws 1987, chapter 386, article 6, section 4, and sold to the state at a tax judgment sale is three years from the date of sale.

 

(b) The period of redemption for all lands located in a targeted neighborhood community as defined in Laws 1987, chapter 386, article 6, section 4 section 469.201, subdivision 10, except homesteaded lands as defined in section 273.13, subdivision 22, is one year from the date of sale.

 

(c) The period of redemption for all real property constituting a mixed municipal solid waste disposal facility that is a qualified facility under section 115B.39, subdivision 1, is one year from the date of the sale to the state of Minnesota.

 

(d) In determining the period of redemption, the county must use the property's classification and homestead classification for the assessment year on which the tax judgment is based. Any change in the property's classification or homestead classification after the assessment year on which the tax judgment is based does not affect the period of redemption.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1624

Sec. 29. Minnesota Statutes 2016, section 281.173, subdivision 2, is amended to read:

 

Subd. 2. Summons and complaint. Any city, county, housing and redevelopment authority, port authority, or economic development authority, in which the premises are located may commence an action in district court to reduce the period otherwise allowed for redemption under this chapter. The action must be commenced by the filing of a complaint, naming as defendants the record fee owners or the owner's personal representative, or the owner's heirs as determined by a court of competent jurisdiction, contract for deed purchasers, mortgagees, assigns of any of the above, the taxpayers as shown on the records of the county auditor, the Internal Revenue Service of the United States and the Revenue Department of the state of Minnesota if tax liens against the owners or contract for deed purchasers have been recorded or filed; and any other person the plaintiff determines should be made a party. The action shall be filed in district court for the county in which the premises are located. The complaint must identify the premises by legal description. The complaint must allege (1) that the premises are abandoned, (2) that the tax judgment sale pursuant to section 280.01 has been made, and (3) notice of expiration of the time for redemption has not been given.

 

The complaint must request an order reducing the redemption period to five weeks. When the complaint has been filed, the court shall issue a summons commanding the person or persons named in the complaint to appear before the court on a day and at a place stated in the summons. The appearance date shall be not less than 15 nor more than 25 days from the date of the issuing of the summons. A copy of the filed complaint must be attached to the summons.

 

Sec. 30. Minnesota Statutes 2016, section 281.174, subdivision 3, is amended to read:

 

Subd. 3. Summons and complaint. Any city, county, housing and redevelopment authority, port authority, or economic development authority in which the property is located may commence an action in district court to reduce the period otherwise allowed for redemption under this chapter from the date of the requested order. The action must be commenced by the filing of a complaint, naming as defendants the record fee owners or the owner's personal representative, or the owner's heirs as determined by a court of competent jurisdiction, contract for deed purchasers, mortgagees, assigns of any of the above, the taxpayers as shown on the records of the county auditor, the Internal Revenue Service of the United States and the revenue department of the state of Minnesota if tax liens against the owners or contract for deed purchasers have been recorded or filed, and any other person the plaintiff determines should be made a party. The action shall be filed in district court for the county in which the property is located. The complaint must identify the property by legal description. The complaint must allege (1) that the property is vacant, (2) that the tax judgment sale under section 280.01 has been made, and (3) notice of expiration of the time for redemption has not been given.

 

The complaint must request an order reducing the redemption period to five weeks. When the complaint has been filed, the court shall issue a summons commanding the person or persons named in the complaint to appear before the court on a day and at a place stated in the summons. The appearance date shall be not less than 15 nor more than 25 days from the date of the issuing of the summons, except that, when the United States of America is a party, the date shall be set in accordance with applicable federal law. A copy of the filed complaint must be attached to the summons.

 

Sec. 31. [281.231] MAINTENANCE; EXPENDITURE OF PUBLIC FUNDS.

 

If the county auditor provides notice as required by section 281.23, the state, agency, political subdivision, or other entity that becomes the fee owner or manager of a property as a result of forfeiture due to nonpayment of real property taxes is not required to expend public funds to maintain any servitude, agreement, easement, or other encumbrance affecting the property. The fee owner or manager of a property may, at its discretion, spend public funds necessary for the maintenance, security, or management of the property.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1625

Sec. 32. [281.70] LIMITED RIGHT OF ENTRY.

 

Subdivision 1. Limited right of entry. If premises described in a real estate tax judgment sale are vacant or unoccupied, the county auditor or a person acting on behalf of the county auditor may, but is not obligated to, enter the premises to protect the premises from waste or trespass until the county auditor is notified that the premises are occupied. An affidavit of the sheriff, the county auditor, or a person acting on behalf of the county auditor describing the premises and stating that the premises are vacant and unoccupied is prima facie evidence of the facts stated in the affidavit. If the affidavit contains a legal description of the premises, the affidavit may be recorded in the office of the county recorder or the registrar of titles in the county where the premises are located.

 

Subd. 2. Authorized actions. (a) The county auditor may take one or more of the following actions to protect the premises from waste or trespass:

 

(1) install or change locks on doors and windows;

 

(2) board windows; and

 

(3) other actions to prevent or minimize damage to the premises from the elements, vandalism, trespass, or other illegal activities.

 

(b) If the county auditor installs or changes locks on premises under paragraph (a), the county auditor must promptly deliver a key to the premises to the taxpayer or any person lawfully claiming through the taxpayer upon request.

 

Subd. 3. Costs. Costs incurred by the county auditor in protecting the premises from waste or trespass under this section may be added to the delinquent taxes due. The costs may bear interest to the extent provided, and interest may be added to the delinquent taxes due.

 

Subd. 4. Scope. The actions authorized under this section are in addition to, and do not limit or replace, any other rights or remedies available to the county auditor under Minnesota law.

 

Sec. 33. Minnesota Statutes 2016, section 282.01, subdivision 4, is amended to read:

 

Subd. 4. Sale:; method,; requirements,; effects. (a) The sale authorized under subdivision 3 must be conducted by the county auditor at the county seat of the county in which the parcels lie, except that in St. Louis and Koochiching Counties, the sale may be conducted in any county facility within the county. The sale must not be for less than the appraised value except as provided in subdivision 7a. The parcels must be sold for cash only, unless the county board of the county has adopted a resolution providing for their sale on terms, in which event the resolution controls with respect to the sale. When the sale is made on terms other than for cash only (1) a payment of at least ten percent of the purchase price must be made at the time of purchase, and the balance must be paid in no more than ten equal annual installments, or (2) the payments must be made in accordance with county board policy, but in no event may the board require more than 12 installments annually, and the contract term must not be for more than ten years. Standing timber or timber products must not be removed from these lands until an amount equal to the appraised value of all standing timber or timber products on the lands at the time of purchase has been paid by the purchaser. If a parcel of land bearing standing timber or timber products is sold at public auction for more than the appraised value, the amount bid in excess of the appraised value must be allocated between the land and the timber in proportion to their respective appraised values. In that case, standing timber or timber products must not be removed from the land until the amount of the excess bid allocated to timber or timber products has been paid in addition to the appraised value of the land. The purchaser is entitled to immediate possession, subject to the provisions of any existing valid lease made in behalf of the state.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1626

(b) For sales occurring on or after July 1, 1982, the unpaid balance of the purchase price is subject to interest at the rate determined pursuant to section 549.09. The unpaid balance of the purchase price for sales occurring after December 31, 1990, is subject to interest at the rate determined in section 279.03, subdivision 1a. The interest rate is subject to change each year on the unpaid balance in the manner provided for rate changes in section 549.09 or 279.03, subdivision 1a, whichever, is applicable. Interest on the unpaid contract balance on sales occurring before July 1, 1982, is payable at the rate applicable to the sale at the time that the sale occurred.

 

(c) Notwithstanding subdivision 7, a county board may by resolution provide for the listing and sale of individual parcels by other means, including through a real estate broker. However, if the buyer under this paragraph could have repurchased a parcel of property under section 282.012 or 282.241, that buyer may not purchase that same parcel of property at the sale under this subdivision for a purchase price less than the sum of all taxes, assessments, penalties, interest, and costs due at the time of forfeiture computed under section 282.251, and any special assessments for improvements certified as of the date of sale. This subdivision shall be liberally construed to encourage the sale and utilization of tax-forfeited land in order to eliminate nuisances and dangerous conditions and to increase compliance with land use ordinances.

 

Sec. 34. Minnesota Statutes 2016, section 282.01, subdivision 6, is amended to read:

 

Subd. 6. Duties of commissioner after sale. (a) When any sale has been made by the county auditor under sections 282.01 to 282.13, the auditor shall immediately certify to the commissioner of revenue such information relating to such sale, on such forms as the commissioner of revenue may prescribe as will enable the commissioner of revenue to prepare an appropriate deed if the sale is for cash, or keep necessary records if the sale is on terms; and not later than October 31 of each year the county auditor shall submit to the commissioner of revenue a statement of all instances wherein any payment of principal, interest, or current taxes on lands held under certificate, due or to be paid during the preceding calendar years, are still outstanding at the time such certificate is made. When such statement shows that a purchaser or the purchaser's assignee is in default, the commissioner of revenue may instruct the county board of the county in which the land is located to cancel said certificate of sale in the manner provided by subdivision 5, provided that upon recommendation of the county board, and where the circumstances are such that the commissioner of revenue after investigation is satisfied that the purchaser has made every effort reasonable to make payment of both the annual installment and said taxes, and that there has been no willful neglect on the part of the purchaser in meeting these obligations, then the commissioner of revenue may extend the time for the payment for such period as the commissioner may deem warranted, not to exceed one year. On payment in full of the purchase price, appropriate conveyance in fee, in such form as may be prescribed by the attorney general, shall be issued by the commissioner of revenue, which conveyance must be recorded by the county and shall have the force and effect of a patent from the state subject to easements and restrictions of record at the date of the tax judgment sale, including, but without limitation, permits for telephone and electric power lines either by underground cable or conduit or otherwise, sewer and water lines, highways, railroads, and pipe lines for gas, liquids, or solids in suspension.

 

(b) The commissioner of revenue shall issue an appropriate conveyance in fee upon the receipt of a loan commitment or approval from the county auditor. For purposes of this paragraph, "loan commitment" or "loan approval" means a written commitment or approval to make a mortgage loan from a lender approved to make mortgage loans in Minnesota. The conveyance shall be issued to the county auditor where the land is located. Upon receipt of the conveyance, the county auditor shall hold the conveyance until such time as the conveyance is requested from a title company licensed to do business in Minnesota. If a request for the conveyance is not made within 45 days of the date the conveyance is issued by the commissioner of revenue, the county auditor shall return the conveyance to the commissioner. The title company making the request for the conveyance shall certify to the county auditor that the conveyance is necessary to close the purchase of the subject property within five days of the request. If the conveyance is delivered to the title company and the closing does not occur within five days of the request, the title company shall immediately return the conveyance to the county auditor, and upon receipt, the county auditor shall return the deed to the commissioner of revenue. The commissioner of revenue shall destroy all deeds returned by the county auditor pursuant to this subdivision.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1627

Sec. 35. Minnesota Statutes 2016, section 282.01, is amended by adding a subdivision to read:

 

Subd. 13. Online auction. A county board, or a county auditor if the auditor has been delegated such authority under section 282.135, may sell tax-forfeited lands through an online auction. When an online auction is used to sell tax-forfeited lands, the county auditor shall post a physical notice of the online auction and shall publish a notice of the online auction on its Web site not less than ten days before the online auction begins, in addition to any other notice required.

 

EFFECTIVE DATE. This section is effective for sales of tax-forfeited property that occur on or after August 1, 2017.

 

Sec. 36. Minnesota Statutes 2016, section 282.016, is amended to read:

 

282.016 PROHIBITED PURCHASERS.

 

(a) A county auditor, county treasurer, county attorney, court administrator of the district court, county assessor, supervisor of assessments, deputy or clerk or an employee of such officer, a commissioner for tax-forfeited lands or an assistant to such commissioner, must not become a purchaser, either personally or as an agent or attorney for another person, of the properties offered for sale under the provisions of this chapter in the county for which the person performs duties. A person prohibited from purchasing property under this section must not directly or indirectly have another person purchase it on behalf of the prohibited purchaser for the prohibited purchaser's benefit or gain.

 

(b) Notwithstanding paragraph (a), such officer, deputy, clerk, or employee or commissioner for tax-forfeited lands or assistant to such commissioner may (1) purchase lands owned by that official at the time the state became the absolute owner thereof or (2) bid upon and purchase forfeited property offered for sale under the alternate sale procedure described in section 282.01, subdivision 7a.

 

(c) In addition to the persons identified in paragraph (a), a county auditor may prohibit other persons and entities from becoming a purchaser, either personally or as an agent or attorney for another person or entity, of the properties offered for sale under this chapter in the following circumstances: (1) the person or entity owns another property within the county for which there are delinquent taxes owing; (2) the person or entity has held a rental license in the county and the license has been revoked within the last five years; (3) the person or entity has been the vendee of a contract for purchase of a property offered for sale under this chapter, which contract has been canceled within the last five years; or (4) the person or entity owns another property within the county for which there is an unresolved housing code violation, including an unpaid charge or fine.

 

(d) A person prohibited from purchasing property under this section must not directly or indirectly have another person purchase it on behalf of the prohibited purchaser for the prohibited purchaser's benefit or gain.

 

Sec. 37. Minnesota Statutes 2016, section 282.018, subdivision 1, is amended to read:

 

Subdivision 1. Land on or adjacent to public waters. (a) All land which is the property of the state as a result of forfeiture to the state for nonpayment of taxes, regardless of whether the land is held in trust for taxing districts, and which borders on or is adjacent to meandered lakes and other public waters and watercourses, and the live timber growing or being thereon, is hereby withdrawn from sale except as hereinafter provided. The authority having jurisdiction over the timber on any such lands may sell the timber as otherwise provided by law for cutting and removal under such conditions as the authority may prescribe in accordance with approved, sustained yield forestry practices. The authority having jurisdiction over the timber shall reserve such timber and impose such conditions as the authority deems necessary for the protection of watersheds, wildlife habitat, shorelines, and scenic features. Within the area in Cook, Lake, and St. Louis counties described in the Act of Congress approved July 10, 1930 (46 Stat. 1020), the timber on tax-forfeited lands shall be subject to like restrictions as are now imposed by that act on federal lands.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1628

(b) Of all tax-forfeited land bordering on or adjacent to meandered lakes and other public waters and watercourses and so withdrawn from sale, a strip two rods in width, the ordinary high-water mark being the waterside boundary thereof, and the land side boundary thereof being a line drawn parallel to the ordinary high‑water mark and two rods distant landward therefrom, hereby is reserved for public travel thereon, and whatever the conformation of the shore line or conditions require, the authority having jurisdiction over such lands shall reserve a wider strip for such purposes.

 

(c) Any tract or parcel of land which has 150 feet or less of waterfront may be sold by the authority having jurisdiction over the land, in the manner otherwise provided by law for the sale of such lands, if the authority determines that it is in the public interest to do so. If the authority having jurisdiction over the land is not the commissioner of natural resources, the land may not be offered for sale without the prior approval of the commissioner of natural resources.

 

(d) Where the authority having jurisdiction over lands withdrawn from sale under this section is not the commissioner of natural resources, the authority may submit proposals for disposition of the lands to the commissioner. The commissioner of natural resources shall evaluate the lands and their public benefits and make recommendations on the proposed dispositions to the committees of the legislature with jurisdiction over natural resources. The commissioner shall include any recommendations of the commissioner for disposition of lands withdrawn from sale under this section over which the commissioner has jurisdiction. The commissioner's recommendations may include a public sale, sale to a private party, acquisition by the Department of Natural Resources for public purposes, or a cooperative management agreement with, or transfer to, another unit of government.

 

(e) Notwithstanding this subdivision, a county may sell property governed by this section upon written authorization from the commissioner of natural resources. Prior to the sale or conveyance of lands under this subdivision, the county board must give notice of its intent to meet for that purpose as provided in section 282.01, subdivision 1.

 

Sec. 38. Minnesota Statutes 2016, section 282.02, is amended to read:

 

282.02 LIST OF LANDS FOR SALE; NOTICE; ONLINE AUCTIONS PERMITTED.

 

(a) Immediately after classification and appraisal of the land, and after approval by the commissioner of natural resources when required pursuant to section 282.01, subdivision 3, the county board shall provide and file with the county auditor a list of parcels of land to be offered for sale. This list shall contain a description of the parcels of land and the appraised value thereof. The auditor shall publish a notice of the intended public sale of such parcels of land and a copy of the resolution of the county board fixing the terms of the sale, if other than for cash only, by publication once a week for two weeks in the official newspaper of the county, the last publication to be not less than ten days previous to the commencement of the sale.

 

(b) The notice shall include the parcel's description and appraised value. The notice shall also indicate the amount of any special assessments which may be the subject of a reassessment or new assessment or which may result in the imposition of a fee or charge pursuant to sections 429.071, subdivision 4, 435.23, and 444.076. The county auditor shall also mail notice to the owners of land adjoining the parcel to be sold. For purposes of this section, "owner" means the taxpayer as listed in the records of the county auditor.

 

(c) If the county board of St. Louis or Koochiching Counties determines that the sale shall take place in a county facility other than the courthouse, the notice shall specify the facility and its location. If the county board determines that the sale shall take place as an online auction under section 282.01, subdivision 13, the notice shall specify the auction Web site and the date of the auction.

 

EFFECTIVE DATE. This section is effective for sales of tax-forfeited property that occur on or after August 1, 2017.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1629

Sec. 39. Minnesota Statutes 2016, section 282.241, subdivision 1, is amended to read:

 

Subdivision 1. Repurchase requirements. The owner at the time of forfeiture, or the owner's heirs, devisees, or representatives, or any person to whom the right to pay taxes was given by statute, mortgage, or other agreement, may repurchase any parcel of land claimed by the state to be forfeited to the state for taxes unless before the time repurchase is made the parcel is sold under installment payments, or otherwise, by the state as provided by law, or is under mineral prospecting permit or lease, or proceedings have been commenced by the state or any of its political subdivisions or by the United States to condemn the parcel of land. The parcel of land may be repurchased for the sum of all delinquent taxes and assessments computed under section 282.251, together with penalties, interest, and costs, that accrued or would have accrued if the parcel of land had not forfeited to the state. Except for property which was homesteaded on the date of forfeiture, repurchase is permitted during one year six months only from the date of forfeiture, and in any case only after the adoption of a resolution by the board of county commissioners determining that by repurchase undue hardship or injustice resulting from the forfeiture will be corrected, or that permitting the repurchase will promote the use of the lands that will best serve the public interest. If the county board has good cause to believe that a repurchase installment payment plan for a particular parcel is unnecessary and not in the public interest, the county board may require as a condition of repurchase that the entire repurchase price be paid at the time of repurchase. A repurchase is subject to any easement, lease, or other encumbrance granted by the state before the repurchase, and if the land is located within a restricted area established by any county under Laws 1939, chapter 340, the repurchase must not be permitted unless the resolution approving the repurchase is adopted by the unanimous vote of the board of county commissioners.

 

The person seeking to repurchase under this section shall pay all maintenance costs incurred by the county auditor during the time the property was tax-forfeited.

 

EFFECTIVE DATE. This section is effective January 1, 2018.

 

Sec. 40. Minnesota Statutes 2016, section 282.322, is amended to read:

 

282.322 FORFEITED LANDS LIST.

 

The county board of any county may file a list of forfeited lands with the county auditor, if the board is of the opinion that such lands may be acquired by the state or any municipal subdivision thereof of the state for public purposes. Upon the filing of such the list of forfeited lands, the county auditor shall withhold said lands from repurchase. If no proceeding shall be is started to acquire such lands by the state or some municipal subdivision thereof of the state within one year after the filing of such the list of forfeited lands, the county board shall withdraw said the list and thereafter, if the property was classified as nonhomestead at the time of forfeiture, the owner shall have one year not more than six months in which to repurchase.

 

EFFECTIVE DATE. This section is effective January 1, 2018.

 

Sec. 41. Minnesota Statutes 2016, section 290A.03, subdivision 13, is amended to read:

 

Subd. 13. Property taxes payable. "Property taxes payable" means the property tax exclusive of special assessments, penalties, and interest payable on a claimant's homestead after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2, and any other state paid property tax credits in any calendar year, and after any refund claimed and allowable under section 290A.04, subdivision 2h, that is first payable in the year that the property tax is payable. In the case of a claimant who makes ground lease payments, "property taxes payable" includes the amount of the payments directly attributable to the property taxes assessed against the parcel on which the house is located. No apportionment or reduction of the "property taxes payable" shall be required for the use of a portion of the claimant's homestead for a business purpose if the claimant does not deduct any business depreciation expenses for the use of a portion of the homestead in the determination of federal adjusted gross


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1630

income. For homesteads which are manufactured homes as defined in section 273.125, subdivision 8, and for homesteads which are including manufactured homes located in a manufactured home community owned by a cooperative organized under chapter 308A or 308B, and park trailers taxed as manufactured homes under section 168.012, subdivision 9, "property taxes payable" shall also include 17 percent of the gross rent paid in the preceding year for the site on which the homestead is located. When a homestead is owned by two or more persons as joint tenants or tenants in common, such tenants shall determine between them which tenant may claim the property taxes payable on the homestead. If they are unable to agree, the matter shall be referred to the commissioner of revenue whose decision shall be final. Property taxes are considered payable in the year prescribed by law for payment of the taxes.

 

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

 

EFFECTIVE DATE. This section is effective beginning with claims for taxes payable in 2018.

 

Sec. 42. Minnesota Statutes 2016, section 473H.09, is amended to read:

 

473H.09 EARLY TERMINATION.

 

Subdivision 1. Public emergency. Termination of an agricultural preserve earlier than a date derived through application of section 473H.08 may be permitted only in the event of a public emergency upon petition from the owner or authority to the governor. The determination of a public emergency shall be by the governor through executive order pursuant to sections 4.035 and 12.01 to 12.46. The executive order shall identify the preserve, the reasons requiring the action and the date of termination.

 

Subd. 2. Death of owner. (a) Within 365 days of the death of an owner, an owner's spouse, or other qualifying person, the surviving owner may elect to terminate the agricultural preserve and the covenant allowing the land to be enrolled as an agricultural preserve by notifying the authority on a form provided by the commissioner of agriculture. Termination of a covenant under this subdivision must be executed and acknowledged in the manner required by law to execute and acknowledge a deed.

 

(b) For purposes of this subdivision, the following definitions apply:

 

(1) "qualifying person" includes a partner, shareholder, trustee for a trust that the decedent was the settlor or a beneficiary of, or member of an entity permitted to own agricultural land and engage in farming under section 500.24 that owned the agricultural preserve; and

 

(2) "surviving owner" includes the executor of the estate of the decedent, trustee for a trust that the decedent was the settlor or a beneficiary of, or an entity permitted to own farm land under section 500.24 of which the decedent was a partner, shareholder, or member.

 

(c) When an agricultural preserve is terminated under this subdivision, the property is subject to additional taxes in an amount equal to 50 percent of the taxes actually levied against the property for the current taxes payable year. The additional taxes are extended against the property on the tax list for taxes payable in the current year. The additional taxes must be distributed among the jurisdictions levying taxes on the property in proportion to the current year's taxes.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1631

Sec. 43. Minnesota Statutes 2016, section 473H.17, subdivision 1a, is amended to read:

 

Subd. 1a. Allowed commercial and industrial operations. (a) Commercial and industrial operations are not allowed on land within an agricultural preserve except:

 

(1) small on-farm commercial or industrial operations normally associated with and important to farming in the agricultural preserve area;

 

(2) storage use of existing farm buildings that does not disrupt the integrity of the agricultural preserve; and

 

(3) small commercial use of existing farm buildings for trades not disruptive to the integrity of the agricultural preserve such as a carpentry shop, small scale mechanics shop, and similar activities that a farm operator might conduct.; and

 

(4) wireless communication installments and related equipment and structure capable of providing technology potentially beneficial to farming activities.

 

(b) For purposes of paragraph (a), clauses (2) and (3), "existing" in paragraph (a), clauses (2) and (3), means existing on August 1, 1987.

 

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

 

Sec. 44. Minnesota Statutes 2016, section 504B.285, subdivision 1, is amended to read:

 

Subdivision 1. Grounds. (a) The person entitled to the premises may recover possession by eviction when:

 

(1) any person holds over real property:

 

(i) after a sale of the property on an execution or judgment; or

 

(ii) after the expiration of the time for redemption on foreclosure of a mortgage, or after termination of contract to convey the property; or

 

(iii) after the expiration of the time for redemption on a real estate tax judgment sale;

 

(2) any person holds over real property after termination of the time for which it is demised or leased to that person or to the persons under whom that person holds possession, contrary to the conditions or covenants of the lease or agreement under which that person holds, or after any rent becomes due according to the terms of such lease or agreement; or

 

(3) any tenant at will holds over after the termination of the tenancy by notice to quit.

 

(b) A landlord may not commence an eviction action against a tenant or authorized occupant solely on the basis that the tenant or authorized occupant has been the victim of any of the acts listed in section 504B.206, subdivision 1, paragraph (a). Nothing in this paragraph should be construed to prohibit an eviction action based on a breach of the lease.

 

Sec. 45. Minnesota Statutes 2016, section 504B.365, subdivision 3, is amended to read:

 

Subd. 3. Removal and storage of property. (a) If the defendant's personal property is to be stored in a place other than the premises, the officer shall remove all personal property of the defendant at the expense of the plaintiff.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1632

(b) The defendant must make immediate payment for all expenses of removing personal property from the premises. If the defendant fails or refuses to do so, the plaintiff has a lien on all the personal property for the reasonable costs and expenses incurred in removing, caring for, storing, and transporting it to a suitable storage place.

 

(c) The plaintiff may enforce the lien by detaining the personal property until paid. If no payment has been made for 60 days after the execution of the order to vacate, the plaintiff may dispose of the property or hold a public sale as provided in sections 514.18 to 514.22.

 

(d) If the defendant's personal property is to be stored on the premises, the officer shall enter the premises, breaking in if necessary, and the plaintiff may remove the defendant's personal property. Section 504B.271 applies to personal property removed under this paragraph. The plaintiff must prepare an inventory and mail a copy of the inventory to the defendant's last known address or, if the defendant has provided a different address, to the address provided. The inventory must be prepared, signed, and dated in the presence of the officer and must include the following:

 

(1) a list of the items of personal property and a description of their condition;

 

(2) the date, the signature of the plaintiff or the plaintiff's agent, and the name and telephone number of a person authorized to release the personal property; and

 

(3) the name and badge number of the officer.

 

(e) The officer must retain a copy of the inventory.

 

(f) The plaintiff is responsible for the proper removal, storage, and care of the defendant's personal property and is liable for damages for loss of or injury to it caused by the plaintiff's failure to exercise the same care that a reasonably careful person would exercise under similar circumstances.

 

(g) The plaintiff shall notify the defendant of the date and approximate time the officer is scheduled to remove the defendant, family, and personal property from the premises. The notice must be sent by first class mail. In addition, the plaintiff must make a good faith effort to notify the defendant by telephone. The notice must be mailed as soon as the information regarding the date and approximate time the officer is scheduled to enforce the order is known to the plaintiff, except that the scheduling of the officer to enforce the order need not be delayed because of the notice requirement. The notice must inform the defendant that the defendant and the defendant's personal property will be removed from the premises if the defendant has not vacated the premises by the time specified in the notice.

 

Sec. 46. Laws 1996, chapter 471, article 3, section 51, is amended to read:

 

Sec. 51. RECREATION LEVY FOR SAWYER BY CARLTON COUNTY.

 

Subdivision 1. Levy authorized. Notwithstanding other law to the contrary, the Carlton county board of commissioners may levy in and for the unorganized township of Sawyer an amount up to $1,500 annually for recreational purposes, beginning with taxes payable in 1997 and ending with taxes payable in 2006.

 

Subd. 2. Effective date. This section is effective June 1, 1996, without local approval.

 

EFFECTIVE DATE. This section applies to taxes payable in 2018 and thereafter, and is effective the day after the Carlton County Board of Commissioners and its chief clerical officer timely complete their compliance with section 645.021, subdivisions 2 and 3.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1633

Sec. 47. SOCCER STADIUM PROPERTY TAX EXEMPTION; SPECIAL ASSESSMENT.

 

Any real or personal property acquired, owned, leased, controlled, used, or occupied by the city of St. Paul for the primary purpose of providing a stadium for a Major League Soccer team is declared to be acquired, owned, leased, controlled, used, and occupied for public, governmental, and municipal purposes, and is exempt from ad valorem taxation by the state or any political subdivision of the state, provided that the properties are subject to special assessments levied by a political subdivision for a local improvement in amounts proportionate to and not exceeding the special benefit received by the properties from the improvement. In determining the special benefit received by the properties, no possible use of any of the properties in any manner different from their intended use for providing a Major League Soccer stadium at the time may be considered. Notwithstanding Minnesota Statutes, section 272.01, subdivision 2, or 273.19, real or personal property subject to a lease or use agreement between the city and another person for uses related to the purposes of the operation of the stadium and related parking facilities is exempt from taxation regardless of the length of the lease or use agreement. This section, insofar as it provides an exemption or special treatment, does not apply to any real property that is leased for residential, business, or commercial development or other purposes different from those necessary to the provision and operation of the stadium.

 

EFFECTIVE DATE. This section is effective upon approval by the St. Paul City Council and compliance with Minnesota Statutes, section 645.021.

 

Sec. 48. LEGISLATIVE PROPERTY TAX REFORM WORKING GROUP.

 

Subdivision 1. Membership. (a) The Legislative Property Tax Reform Working Group is created and consists of the following members:

 

(1) two representatives appointed by the chair of the tax committee of the house of representatives;

 

(2) two representatives appointed by the minority leader of the tax committee of the house of representatives;

 

(3) two senators appointed by the chair of the senate tax committee; and

 

(4) two senators appointed by the minority leader of the senate tax committee.

 

(b) Any vacancy shall be filled by appointment of the appointing authority for the vacating member.

 

(c) Members shall be appointed by July 1, 2017.

 

Subd. 2. Duties. The working group must perform the duties described in section 48.

 

Subd. 3. First meeting; chair. The first appointee of the chair of the house of representatives tax committee must convene the initial meeting of the working group by July 21, 2017. The members of the working group must elect a chair and vice-chair from the members of the working group at the first meeting.

 

Subd. 4. Staff. Legislative staff of the house of representatives and senate shall provide administrative and research support. The working group may request the assistance of staff from the Department of Revenue and Department of Education as necessary to facilitate its work.

 

Subd. 5. Report. The working group must submit a report by February 15, 2018, to the chairs and ranking minority members of the committees in the senate and house of representatives with primary jurisdiction over taxes, presenting two or more alternatives for reform of Minnesota's property tax system.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1634

Subd. 6. Sunset. The working group shall sunset the day following the submission of the report under subdivision 5.

 

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

 

Sec. 49. PROPOSALS FOR REFORM OF MINNESOTA'S PROPERTY TAX SYSTEM.

 

The Legislative Property Tax Reform Working Group must develop proposals to restructure Minnesota's property tax system for legislative consideration. The proposals must provide for a system that reduces the complexity and cost of Minnesota's property tax system to increase transparency and understanding for taxpayers and assessors while minimizing the number of properties that experience severe tax changes. The proposals must include, but are not limited to, a reduction in the number of classifications and tiers in the current property tax system. The proposals may include a transition period of up to five years before the final system elements are fully operational. At least one proposal must be developed where the highest estimated net state cost does not exceed $250,000,000 in the first year that the proposal is fully phased in. At least one proposal must be developed where the highest estimated net state cost does not exceed $500,000,000 in the first year that the proposal is fully phased in. Each proposal should estimate the administrative cost savings to county governments and to the state government.

 

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

 

Sec. 50. REPEALER.

 

Minnesota Statutes 2016, sections 270C.9901; and 281.22, are repealed.

 

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

 

ARTICLE 3

TAXPAYER EMPOWERMENT

 

Section 1. Minnesota Statutes 2016, section 123B.63, subdivision 3, is amended to read:

 

Subd. 3. Capital project levy referendum. (a) A district may levy the local tax rate approved by a majority of the electors voting on the question to provide funds for an approved project. The election must take place no more than five years before the estimated date of commencement of the project. The referendum must may be held on a date set called by the board and, except as provided in paragraph (g), must be held on the first Tuesday after the first Monday in November in either an even-numbered or odd-numbered year. A district must meet the requirements of section 123B.71 for projects funded under this section. If a review and comment is required under section 123B.71, subdivision 8, a referendum for a project not receiving a positive review and comment by the commissioner must be approved by at least 60 percent of the voters at the election.

 

(b) The A referendum may be called by the school board and under this subdivision may be held:

 

(1) separately, before an election for the issuance of obligations for the project under chapter 475; or

 

(2) in conjunction with an election for the issuance of obligations for the project under chapter 475; or

 

(3) notwithstanding section 475.59, as a conjunctive question authorizing both the capital project levy and the issuance of obligations for the project under chapter 475. Any obligations authorized for a project may be issued within five years of the date of the election.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1635

(c) The ballot must provide a general description of the proposed project, state the estimated total cost of the project, state whether the project has received a positive or negative review and comment from the commissioner, state the maximum amount of the capital project levy as a percentage of net tax capacity, state the amount that will be raised by that local tax rate in the first year it is to be levied, and state the maximum number of years that the levy authorization will apply.

 

The ballot must contain a textual portion with the information required in this section and a question stating substantially the following:

 

"Shall the capital project levy proposed by the board of .......... School District No. .......... be approved?"

 

If approved, the amount provided by the approved local tax rate applied to the net tax capacity for the year preceding the year the levy is certified may be certified for the number of years, not to exceed ten, approved.

 

(d) If the district proposes a new capital project to begin at the time the existing capital project expires and at the same maximum tax rate, the general description on the ballot may state that the capital project levy is being renewed and that the tax rate is not being increased from the previous year's rate. An election to renew authority under this paragraph may be called at any time that is otherwise authorized by this subdivision. The ballot notice required under section 275.60 may be modified to read:

 

"BY VOTING YES ON THIS BALLOT QUESTION, YOU ARE VOTING TO RENEW AN EXISTING CAPITAL PROJECTS REFERENDUM THAT IS SCHEDULED TO EXPIRE."

 

(e) In the event a conjunctive question proposes to authorize both the capital project levy and the issuance of obligations for the project, appropriate language authorizing the issuance of obligations must also be included in the question.

 

(f) The district must notify the commissioner of the results of the referendum.

 

(g) Notwithstanding paragraph (a), a referendum to levy the amount needed to finance a district's response to a disaster or emergency may be held on a date set by the board. "Disaster" means a situation that creates an actual or imminent serious threat to the health and safety of persons, or a situation that has resulted or is likely to result in catastrophic loss to property or the environment. "Emergency" means an unforeseen combination of circumstances that calls for immediate action to prevent a disaster, identified in the referendum, from developing or occurring.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 2. Minnesota Statutes 2016, section 126C.17, subdivision 9, is amended to read:

 

Subd. 9. Referendum revenue. (a) The revenue authorized by section 126C.10, subdivision 1, may be increased in the amount approved by the voters of the district at a referendum called for the purpose. The referendum may be called by the board. The referendum must be conducted one or two calendar years before the increased levy authority, if approved, first becomes payable. Only one election to approve an increase may be held in a calendar year. Unless the referendum is conducted by mail under subdivision 11, paragraph (a), the referendum must be held on the first Tuesday after the first Monday in November. The ballot must state the maximum amount of the increased revenue per adjusted pupil unit. The ballot may state a schedule, determined by the board, of increased revenue per adjusted pupil unit that differs from year to year over the number of years for which the increased revenue is authorized or may state that the amount shall increase annually by the rate of inflation. The ballot must state the cumulative amount per pupil of any local optional revenue, board-approved referendum authority, and previous voter-approved referendum authority, if any, that the board expects to certify for the next


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1636

school year. For this purpose, the rate of inflation shall be the annual inflationary increase calculated under subdivision 2, paragraph (b). The ballot may state that existing referendum levy authority is expiring. In this case, the ballot may also compare the proposed levy authority to the existing expiring levy authority, and express the proposed increase as the amount, if any, over the expiring referendum levy authority. The ballot must designate the specific number of years, not to exceed ten, for which the referendum authorization applies. The ballot, including a ballot on the question to revoke or reduce the increased revenue amount under paragraph (c), must abbreviate the term "per adjusted pupil unit" as "per pupil." The notice required under section 275.60 may be modified to read, in cases of renewing existing levies at the same amount per pupil as in the previous year:

 

"BY VOTING "YES" ON THIS BALLOT QUESTION, YOU ARE VOTING TO EXTEND AN EXISTING PROPERTY TAX REFERENDUM THAT IS SCHEDULED TO EXPIRE."

 

The ballot may contain a textual portion with the information required in this subdivision and a question stating substantially the following:

 

"Shall the increase in the revenue proposed by (petition to) the board of ........., School District No. .., be approved?"

 

If approved, an amount equal to the approved revenue per adjusted pupil unit times the adjusted pupil units for the school year beginning in the year after the levy is certified shall be authorized for certification for the number of years approved, if applicable, or until revoked or reduced by the voters of the district at a subsequent referendum.

 

(b) The board must prepare and deliver by first class mail at least 15 days but no more than 30 days before the day of the referendum to each taxpayer a notice of the referendum and the proposed revenue increase. The board need not mail more than one notice to any taxpayer. For the purpose of giving mailed notice under this subdivision, owners must be those shown to be owners on the records of the county auditor or, in any county where tax statements are mailed by the county treasurer, on the records of the county treasurer. Every property owner whose name does not appear on the records of the county auditor or the county treasurer is deemed to have waived this mailed notice unless the owner has requested in writing that the county auditor or county treasurer, as the case may be, include the name on the records for this purpose. The notice must project the anticipated amount of tax increase in annual dollars for typical residential homesteads, agricultural homesteads, apartments, and commercial-industrial property within the school district.

 

The notice must state the cumulative and individual amounts per pupil of any local optional revenue, board‑approved referendum authority, and voter-approved referendum authority, if any, that the board expects to certify for the next school year.

 

The notice for a referendum may state that an existing referendum levy is expiring and project the anticipated amount of increase over the existing referendum levy in the first year, if any, in annual dollars for typical residential homesteads, agricultural homesteads, apartments, and commercial-industrial property within the district.

 

The notice must include the following statement: "Passage of this referendum will result in an increase in your property taxes." However, in cases of renewing existing levies, the notice may include the following statement: "Passage of this referendum extends an existing operating referendum at the same amount per pupil as in the previous year."

 

(c) A referendum on the question of revoking or reducing the increased revenue amount authorized pursuant to paragraph (a) may be called by the board. A referendum to revoke or reduce the revenue amount must state the amount per adjusted pupil unit by which the authority is to be reduced. Revenue authority approved by the voters of the district pursuant to paragraph (a) must be available to the school district at least once before it is subject to a referendum on its revocation or reduction for subsequent years. Only one revocation or reduction referendum may be held to revoke or reduce referendum revenue for any specific year and for years thereafter.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1637

(d) The approval of 50 percent plus one of those voting on the question is required to pass a referendum authorized by this subdivision.

 

(e) At least 15 days before the day of the referendum, the district must submit a copy of the notice required under paragraph (b) to the commissioner and to the county auditor of each county in which the district is located. Within 15 days after the results of the referendum have been certified by the board, or in the case of a recount, the certification of the results of the recount by the canvassing board, the district must notify the commissioner of the results of the referendum.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 3. Minnesota Statutes 2016, section 205.10, subdivision 1, is amended to read:

 

Subdivision 1. Questions. Special elections may be held in a city or town on a question on which the voters are authorized by law or charter to pass judgment. A special election on a question may only be held by a city on the first Tuesday after the first Monday in November in either an even-numbered or odd-numbered year. A special election on a question held by a town may be held on the same day as the annual town meeting or on the first Tuesday after the first Monday in November in either an even-numbered or odd-numbered year. A special election may be ordered by the governing body of the municipality on its own motion or, on a question that has not been submitted to the voters in an election within the previous six months, upon a petition signed by a number of voters equal to 20 percent of the votes cast at the last municipal general election. A question is carried only with the majority in its favor required by law or charter. The election officials for a special election shall be the same as for the most recent municipal general election unless changed according to law. Otherwise special elections shall be conducted and the returns made in the manner provided for the municipal general election.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 4. Minnesota Statutes 2016, section 205A.05, subdivision 1, is amended to read:

 

Subdivision 1. Questions. (a) Special elections must be held for a school district on a question on which the voters are authorized by law to pass judgment. The special election on a question may only be held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year. The school board may on its own motion call a special election to vote on any matter requiring approval of the voters of a district. Upon petition filed with the school board of 50 or more voters of the school district or five percent of the number of voters voting at the preceding school district general election, whichever is greater, the school board shall by resolution call a special election to vote on any matter requiring approval of the voters of a district. A question is carried only with the majority in its favor required by law. The election officials for a special election are the same as for the most recent school district general election unless changed according to law. Otherwise, special elections must be conducted and the returns made in the manner provided for the school district general election.

 

(b) A special election may not be held:

 

(1) during the 56 days before and the 56 days after a regularly scheduled primary or general election conducted wholly or partially within the school district;

 

(2) on the date of a regularly scheduled town election or annual meeting in March conducted wholly or partially within the school district; or


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1638

(3) during the 30 days before or the 30 days after a regularly scheduled town election in March conducted wholly or partially within the school district.

 

(c) Notwithstanding any other law to the contrary, the time period in which a special election must be conducted under any other law may be extended by the school board to conform with the requirements of this subdivision.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 5. Minnesota Statutes 2016, section 216B.46, is amended to read:

 

216B.46 MUNICIPAL ACQUISITION PROCEDURES; NOTICE; ELECTION.

 

Any municipality which desires to acquire the property of a public utility as authorized under the provisions of section 216B.45 may determine to do so by resolution of the governing body of the municipality taken after a public hearing of which at least 30 days' published notice shall be given as determined by the governing body. The determination shall become effective when ratified by a majority of the qualified electors voting on the question at a special election to be held for that purpose, not less than 60 nor more than 120 days after the resolution of the governing body of the municipality on the first Tuesday after the first Monday in November in either an even‑numbered or odd-numbered year.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 6. Minnesota Statutes 2016, section 237.19, is amended to read:

 

237.19 MUNICIPAL TELECOMMUNICATIONS SERVICES.

 

Any municipality shall have the right to own and operate a telephone exchange within its own borders, subject to the provisions of this chapter. It may construct such plant, or purchase an existing plant by agreement with the owner, or where it cannot agree with the owner on price, it may acquire an existing plant by condemnation, as hereinafter provided, but in no case shall a municipality construct or purchase such a plant or proceed to acquire an existing plant by condemnation until such action by it is authorized by a majority of the electors voting upon the proposition at a general an election or a special election called for that purpose held on the first Tuesday after the first Monday in November in either an even-numbered or odd-numbered year, and if the proposal is to construct a new exchange where an exchange already exists, it shall not be authorized to do so unless 65 percent of those voting thereon vote in favor of the undertaking. A municipality that owns and operates a telephone exchange may enter into a joint venture as a partner or shareholder with a telecommunications organization to provide telecommunications services within its service area.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 7. Minnesota Statutes 2016, section 275.065, subdivision 3, is amended to read:

 

Subd. 3. Notice of proposed property taxes. (a) The county auditor shall prepare and the county treasurer shall deliver after November 10 and on or before November 24 each year, by first class mail to each taxpayer at the address listed on the county's current year's assessment roll, a notice of proposed property taxes. Upon written request by the taxpayer, the treasurer may send the notice in electronic form or by electronic mail instead of on paper or by ordinary mail.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1639

(b) The commissioner of revenue shall prescribe the form of the notice.

 

(c) The notice must inform taxpayers that it contains the amount of property taxes each taxing authority proposes to collect for taxes payable the following year. In the case of a town, or in the case of the state general tax, the final tax amount will be its proposed tax. The notice must clearly state for each city that has a population over 500, county, school district, regional library authority established under section 134.201, and metropolitan taxing districts as defined in paragraph (i), the time and place of a meeting for each taxing authority in which the budget and levy will be discussed and public input allowed, prior to the final budget and levy determination. The taxing authorities must provide the county auditor with the information to be included in the notice on or before the time it certifies its proposed levy under subdivision 1. The public must be allowed to speak at that meeting, which must occur after November 24 and must not be held before 6:00 p.m. It must provide a telephone number for the taxing authority that taxpayers may call if they have questions related to the notice and an address where comments will be received by mail, except that no notice required under this section shall be interpreted as requiring the printing of a personal telephone number or address as the contact information for a taxing authority. If a taxing authority does not maintain public offices where telephone calls can be received by the authority, the authority may inform the county of the lack of a public telephone number and the county shall not list a telephone number for that taxing authority.

 

(d) The notice must state for each parcel:

 

(1) the market value of the property as determined under section 273.11, and used for computing property taxes payable in the following year and for taxes payable in the current year as each appears in the records of the county assessor on November 1 of the current year; and, in the case of residential property, whether the property is classified as homestead or nonhomestead. The notice must clearly inform taxpayers of the years to which the market values apply and that the values are final values;

 

(2) the items listed below, shown separately by county, city or town, and state general tax, agricultural homestead credit under section 273.1384, voter approved school levy, other local school levy, and the sum of the special taxing districts, and as a total of all taxing authorities:

 

(i) the actual tax for taxes payable in the current year; and

 

(ii) the proposed tax amount.

 

If the county levy under clause (2) includes an amount for a lake improvement district as defined under sections 103B.501 to 103B.581, the amount attributable for that purpose must be separately stated from the remaining county levy amount.

 

In the case of a town or the state general tax, the final tax shall also be its proposed tax unless the town changes its levy at a special town meeting under section 365.52. If a school district has certified under section 126C.17, subdivision 9, that a referendum will be held in the school district at the November general election, the county auditor must note next to the school district's proposed amount that a referendum is pending and that, if approved by the voters, the tax amount may be higher than shown on the notice. In the case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be listed separately from the remaining amount of the city's levy. In the case of the city of St. Paul, the levy for the St. Paul Library Agency must be listed separately from the remaining amount of the city's levy. In the case of Ramsey County, any amount levied under section 134.07 may be listed separately from the remaining amount of the county's levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax under chapter 276A or 473F applies, the proposed tax levy on the captured value or the proposed tax levy on the tax capacity subject to the areawide tax must each be stated separately and not included in the sum of the special taxing districts; and


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1640

(3) the increase or decrease between the total taxes payable in the current year and the total proposed taxes, expressed as a percentage.; and

 

(4) a statement at the top of the notice stating the following: if a county's or city's proposed levy for next year is greater than its actual levy for the current year, the voters may have the right to petition for a referendum on next year's levy certification, according to Minnesota Statutes, section 275.80, provided that the final levy that the local government certifies in December of this year is also greater than its levy for the current year.

 

For purposes of this section, the amount of the tax on homesteads qualifying under the senior citizens' property tax deferral program under chapter 290B is the total amount of property tax before subtraction of the deferred property tax amount.

 

(e) The notice must clearly state that the proposed or final taxes do not include the following:

 

(1) special assessments;

 

(2) levies approved by the voters after the date the proposed taxes are certified, including bond referenda and school district levy referenda;

 

(3) a levy limit increase approved by the voters by the first Tuesday after the first Monday in November of the levy year as provided under section 275.73;

 

(4) amounts necessary to pay cleanup or other costs due to a natural disaster occurring after the date the proposed taxes are certified;

 

(5) amounts necessary to pay tort judgments against the taxing authority that become final after the date the proposed taxes are certified; and

 

(6) the contamination tax imposed on properties which received market value reductions for contamination.

 

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or the county treasurer to deliver the notice as required in this section does not invalidate the proposed or final tax levy or the taxes payable pursuant to the tax levy.

 

(g) If the notice the taxpayer receives under this section lists the property as nonhomestead, and satisfactory documentation is provided to the county assessor by the applicable deadline, and the property qualifies for the homestead classification in that assessment year, the assessor shall reclassify the property to homestead for taxes payable in the following year.

 

(h) In the case of class 4 residential property used as a residence for lease or rental periods of 30 days or more, the taxpayer must either:

 

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant, renter, or lessee; or

 

(2) post a copy of the notice in a conspicuous place on the premises of the property.

 

The notice must be mailed or posted by the taxpayer by November 27 or within three days of receipt of the notice, whichever is later. A taxpayer may notify the county treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to which the notice must be mailed in order to fulfill the requirements of this paragraph.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1641

(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing districts" means the following taxing districts in the seven-county metropolitan area that levy a property tax for any of the specified purposes listed below:

 

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834;

 

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672; and

 

(3) Metropolitan Mosquito Control Commission under section 473.711.

 

For purposes of this section, any levies made by the regional rail authorities in the county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A shall be included with the appropriate county's levy.

 

(j) The governing body of a county, city, or school district may, with the consent of the county board, include supplemental information with the statement of proposed property taxes about the impact of state aid increases or decreases on property tax increases or decreases and on the level of services provided in the affected jurisdiction. This supplemental information may include information for the following year, the current year, and for as many consecutive preceding years as deemed appropriate by the governing body of the county, city, or school district. It may include only information regarding:

 

(1) the impact of inflation as measured by the implicit price deflator for state and local government purchases;

 

(2) population growth and decline;

 

(3) state or federal government action; and

 

(4) other financial factors that affect the level of property taxation and local services that the governing body of the county, city, or school district may deem appropriate to include.

 

The information may be presented using tables, written narrative, and graphic representations and may contain instruction toward further sources of information or opportunity for comment.

 

EFFECTIVE DATE. This section is effective for taxes payable in 2018 and thereafter.

 

Sec. 8. Minnesota Statutes 2016, section 275.07, subdivision 1, is amended to read:

 

Subdivision 1. Certification of levy. (a) Except as provided under paragraph (b), the taxes voted by cities, counties, school districts, and special districts shall be certified by the proper authorities to the county auditor on or before five working days after December 20 in each year. A town must certify the levy adopted by the town board to the county auditor by September 15 each year. If the town board modifies the levy at a special town meeting after September 15, the town board must recertify its levy to the county auditor on or before five working days after December 20. If a city or county levy is subject to a referendum under section 275.80 and the referendum was approved by the voters, the maximum levy certified under this section is the proposed levy certified under section 275.065. If the referendum was not approved, the maximum amount of levy that a city or county may approve under this section is the maximum alternative levy allowed in section 275.80, subdivision 2. The city or county may choose to certify a levy less than the allowed maximum amount. If a city, town, county, school district, or special district fails to certify its levy by that date, its levy shall be the amount levied by it for the preceding year.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1642

(b)(i) The taxes voted by counties under sections 103B.241, 103B.245, and 103B.251 shall be separately certified by the county to the county auditor on or before five working days after December 20 in each year. The taxes certified shall not be reduced by the county auditor by the aid received under section 273.1398, subdivision 3. If a county fails to certify its levy by that date, its levy shall be the amount levied by it for the preceding year.

 

(ii) For purposes of the proposed property tax notice under section 275.065 and the property tax statement under section 276.04, for the first year in which the county implements the provisions of this paragraph, the county auditor shall reduce the county's levy for the preceding year to reflect any amount levied for water management purposes under clause (i) included in the county's levy.

 

EFFECTIVE DATE. This section is effective for taxes payable in 2018 and thereafter.

 

Sec. 9. Minnesota Statutes 2016, section 275.60, is amended to read:

 

275.60 LEVY OR BOND REFERENDUM; BALLOT NOTICE.

 

(a) Notwithstanding any general or special law or any charter provisions, but subject to section 126C.17, subdivision 9, any question submitted to the voters by any local governmental subdivision at a general or special an election after June 8, 1995 June 30, 2017, authorizing a property tax levy or tax rate increase, including the issuance of debt obligations payable in whole or in part from property taxes, must include on the ballot the following notice in boldface type:

 

"BY VOTING "YES" ON THIS BALLOT QUESTION, YOU ARE VOTING FOR A PROPERTY TAX INCREASE."

 

(b) For purposes of this section and section 275.61, "local governmental subdivision" includes counties, home rule and statutory cities, towns, school districts, and all special taxing districts. This statement is in addition to any general or special laws or any charter provisions that govern the contents of a ballot question and, in the case of a question on the issuance of debt obligations, may be supplemented by a description of revenues pledged to payment of the obligations that are intended as the primary source of payment.

 

(c) An election under this section must be held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year. This paragraph does not apply to an election on levying a tax or issuing debt obligations to finance the local government's response to a disaster or emergency. An election for these purposes may be held on a date set by the governing body. "Disaster" means a situation that creates an actual or imminent serious threat to the health and safety of persons, or a situation that has resulted or is likely to result in catastrophic loss to property or the environment. "Emergency" means an unforeseen combination of circumstances that calls for immediate action to prevent a disaster, identified in the referendum, from developing or occurring.

 

(c) (d) This section does not apply to a school district bond election if the debt service payments are to be made entirely from transfers of revenue from the capital fund to the debt service fund.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 10. [275.80] LEVY INCREASE; REVERSE REFERENDUM AUTHORIZED.

 

Subdivision 1. Citation. This section shall be known as the "Property Tax Payers' Empowerment Act."


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1643

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

 

(b) "General levy" means the total levy certified under section 275.07 by the local governmental unit, excluding any levy that was approved by the voters at a general or special election.

 

(c) "Local governmental unit" means a county or a statutory or home rule charter city with a population of 500 or greater.

 

(d) "Maximum alternative levy" for taxes levied in a current year by a local governmental unit means the sum of (1) its nondebt levy certified two years previous to the current year, and (2) the amount of its proposed levy for the current year levied for the purposes listed in section 275.70, subdivision 5, clauses (1) to (5).

 

(e) "Nondebt levy" means the total levy certified under section 275.07 by the local governmental unit, minus any amount levied for the purposes listed in section 275.70, subdivision 5, clauses (1) to (5).

 

Subd. 3. Levy increase; reverse referendum authority. If the certified general levy exceeds the general levy in the previous year, the voters may petition for a referendum on the levy to be certified for the following year. The county auditor must publish information on the right to petition for a referendum as provided in section 276.04, subdivisions 1 and 2. If by June 30, a petition signed by the voters equal in number to ten percent of the votes cast in the last general election requesting a vote on the levy is filed with the county auditor, a question on the levy to be certified for the current year must be placed on the ballot at either the general election or at a special election held on the first Tuesday after the first Monday in November of the current calendar year.

 

Subd. 4. Prohibition against new debt before the election. Notwithstanding any other provision of law, ordinance, or local charter provision, a county or city must not issue any new debt or obligation from the time the petition for referendum is filed with the county auditor under subdivision 3 until the day after the referendum required under this section is held, except as allowed in this subdivision. Refunding bonds and bonds that have already received voter approval are exempt from the prohibition in this subdivision. For purposes of this subdivision, "obligation" has the meaning given in section 475.51, subdivision 3.

 

Subd. 5. Ballot question; consequence of vote. (a) The question submitted to the voters as required under subdivision 3 shall take the following form:

 

"The governing body of ....... has imposed the following property tax levy in the last two years and is proposing the following maximum levy increase for the coming year:

 

(previous payable year)

(current payable year)

(coming payable year)

Total levy

Total levy

Maximum proposed levy

$.......

$.......

$.......

 

Shall the governing body of ....... be allowed to impose the maximum proposed levy listed above?

 

 

Yes ..

 

 

No ...

 

 

If the majority of votes cast are "no," its maximum allowed property tax levy for the coming year will be reduced to its maximum alternative levy of ......."

 

(b) If a city is subject to this provision, it will provide the county auditor with information on its proposed levy by September 30 necessary to calculate the maximum alternative levy under subdivision 2.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1644

(c) If the majority of votes cast on this question are in the affirmative, the levy certified by the local governmental unit under section 275.07 must be less than or equal to its proposed levy under section 275.065. If the question does not receive sufficient affirmative votes, the levy amount that the local governmental unit certifies under section 275.07 in the current year must be less than or equal to its maximum alternative levy as defined in subdivision 2.

 

EFFECTIVE DATE. This section is effective for taxes payable in 2018 and thereafter.

 

Sec. 11. Minnesota Statutes 2016, section 276.04, subdivision 1, is amended to read:

 

Subdivision 1. Auditor to publish rates. On receiving the tax lists from the county auditor, the county treasurer shall, if directed by the county board, give three weeks' published notice in a newspaper specifying the rates of taxation for all general purposes and the amounts raised for each specific purpose. If a city or county is subject to a petition of the voters due to a general levy increase as provided in section 275.80, the published notice must also include the general levy for the current year and the previous year for that city or county along with the following statement:

 

"Because the governing body of ....... increased its nonvoter-approved levy in the current year, the voters in that jurisdiction have the right to petition for a referendum under Minnesota Statutes, section 275.80, on that jurisdiction's levy amount. To invoke the referendum, a petition signed by voters equal to ten percent of the votes cast in the last general election must be filed with the county auditor by June 30 of the current year."

 

EFFECTIVE DATE. This section is effective for taxes payable in 2018 and thereafter.

 

Sec. 12. Minnesota Statutes 2016, section 276.04, subdivision 2, is amended to read:

 

Subd. 2. Contents of tax statements. (a) The treasurer shall provide for the printing of the tax statements. The commissioner of revenue shall prescribe the form of the property tax statement and its contents. The tax statement must not state or imply that property tax credits are paid by the state of Minnesota. The statement must contain a tabulated statement of the dollar amount due to each taxing authority and the amount of the state tax from the parcel of real property for which a particular tax statement is prepared. The dollar amounts attributable to the county, the state tax, the voter approved school tax, the other local school tax, the township or municipality, and the total of the metropolitan special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must be separately stated. The amounts due all other special taxing districts, if any, may be aggregated except that any levies made by the regional rail authorities in the county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A shall be listed on a separate line directly under the appropriate county's levy. If the county levy under this paragraph includes an amount for a lake improvement district as defined under sections 103B.501 to 103B.581, the amount attributable for that purpose must be separately stated from the remaining county levy amount. In the case of Ramsey County, if the county levy under this paragraph includes an amount for public library service under section 134.07, the amount attributable for that purpose may be separated from the remaining county levy amount. The amount of the tax on homesteads qualifying under the senior citizens' property tax deferral program under chapter 290B is the total amount of property tax before subtraction of the deferred property tax amount. The amount of the tax on contamination value imposed under sections 270.91 to 270.98, if any, must also be separately stated. The dollar amounts, including the dollar amount of any special assessments, may be rounded to the nearest even whole dollar. For purposes of this section whole odd-numbered dollars may be adjusted to the next higher even‑numbered dollar. The amount of market value excluded under section 273.11, subdivision 16, if any, must also be listed on the tax statement.

 

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


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1645

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

 

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

 

(2) the property's homestead market value exclusion under section 273.13, subdivision 35;

 

(3) the property's taxable market value under section 272.03, subdivision 15;

 

(4) the property's gross tax, before credits;

 

(5) for homestead agricultural properties, the credit under section 273.1384;

 

(6) any credits received under sections 273.119; 273.1234 or 273.1235; 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received under section 273.135 must be separately stated and identified as "taconite tax relief"; and

 

(7) the net tax payable in the manner required in paragraph (a).

 

(d) If a city or county is subject to a petition of the voters due to a general levy increase as provided in section 275.80, the tax statement must also include the general levy for the current year and the previous year for that city or county along with the following statement:

 

"Because the governing body of .......increased its nonvoter-approved levy in the current year, the voters in that jurisdiction have the right to petition for a referendum on that jurisdiction's levy amount under Minnesota Statutes, section 275.80. To invoke the referendum, a petition signed by voters equal to ten percent of the votes cast in the last general election on this issue must be filed with the county auditor by June 30 of the current year."

 

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

 

EFFECTIVE DATE. This section is effective for taxes payable in 2018 and thereafter.

 

Sec. 13. Minnesota Statutes 2016, section 412.221, subdivision 2, is amended to read:

 

Subd. 2. Contracts. The council shall have power to make such contracts as may be deemed necessary or desirable to make effective any power possessed by the council. The city may purchase personal property through a conditional sales contract and real property through a contract for deed under which contracts the seller is confined to the remedy of recovery of the property in case of nonpayment of all or part of the purchase price, which shall be payable over a period of not to exceed five years. When the contract price of property to be purchased by contract for deed or conditional sales contract exceeds 0.24177 percent of the estimated market value of the city, the city may not enter into such a contract for at least ten days after publication in the official newspaper of a council resolution determining to purchase property by such a contract; and, if before the end of that time a petition asking for an election on the proposition signed by voters equal to ten percent of the number of voters at the last regular city


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1646

election is filed with the clerk, the city may not enter into such a contract until the proposition has been approved by a majority of the votes cast on the question at a regular or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 14. Minnesota Statutes 2016, section 412.301, is amended to read:

 

412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.

 

(a) The council may issue certificates of indebtedness or capital notes subject to the city debt limits to purchase capital equipment.

 

(b) For purposes of this section, "capital equipment" means:

 

(1) public safety equipment, ambulance and other medical equipment, road construction and maintenance equipment, and other capital equipment; and

 

(2) computer hardware and software, whether bundled with machinery or equipment or unbundled, together with application development services and training related to the use of the computer hardware or software.

 

(c) The equipment or software must have an expected useful life at least as long as the terms of the certificates or notes.

 

(d) Such certificates or notes shall be payable in not more than ten years and shall be issued on such terms and in such manner as the council may determine.

 

(e) If the amount of the certificates or notes to be issued to finance any such purchase exceeds 0.25 percent of the estimated market value of taxable property in the city, they shall not be issued for at least ten days after publication in the official newspaper of a council resolution determining to issue them; and if before the end of that time, a petition asking for an election on the proposition signed by voters equal to ten percent of the number of voters at the last regular municipal election is filed with the clerk, such certificates or notes shall not be issued until the proposition of their issuance has been approved by a majority of the votes cast on the question at a regular or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd‑numbered year.

 

(f) A tax levy shall be made for the payment of the principal and interest on such certificates or notes, in accordance with section 475.61, as in the case of bonds.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 15. Minnesota Statutes 2016, section 426.19, subdivision 2, is amended to read:

 

Subd. 2. Referendum in certain cases. Before the pledge of any such revenues to the payment of any such bonds, warrants or certificates of indebtedness, except bonds, warrants or certificates of indebtedness to construct, reconstruct, enlarge or equip a municipal liquor store shall be made, the governing body shall submit to the voters of the city the question of whether such revenues shall be so pledged and such pledge shall not be binding on the city until it shall have been approved by a majority of the voters voting on the question at either a general an election or


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1647

special election called for that purpose held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year. No election shall be required for pledge of such revenues for payment of bonds, warrants or certificates of indebtedness to construct, reconstruct, enlarge or equip a municipal liquor store.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 16. Minnesota Statutes 2016, section 447.045, subdivision 2, is amended to read:

 

Subd. 2. Statutory city; on-sale and off-sale store. If the voters of a statutory city operating an on-sale and off-sale municipal liquor store, at a general or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year, vote in favor of contributing from its liquor dispensary fund toward the construction of a community hospital, the city council may appropriate not more than $60,000 from the fund to any incorporated nonprofit hospital association to build a community hospital in the statutory city. The hospital must be governed by a board including two or more members of the statutory city council and be open to all residents of the statutory city on equal terms. This appropriation must not exceed one-half the total cost of construction of the hospital. The council must not appropriate the money unless the average net earnings of the on-sale and off-sale municipal liquor store have been at least $10,000 for the last five completed fiscal years before the date of the appropriation.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 17. Minnesota Statutes 2016, section 447.045, subdivision 3, is amended to read:

 

Subd. 3. Statutory city; off-sale or on- and off-sale store. (a) If a statutory city operates an off-sale, or an on- and off-sale municipal liquor store it may provide for a vote at a general or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year on the question of contributing from the city liquor dispensary fund to build, maintain, and operate a community hospital. If the vote is in favor, the city council may appropriate money from the fund to an incorporated hospital association for a period of four years. The appropriation must be from the net profits or proceeds of the municipal liquor store. It must not exceed $4,000 a year for hospital construction and maintenance or $1,000 a year for operation. The hospital must be open to all residents of the community on equal terms.

 

(b) The council must not appropriate the money unless the average net earnings of the off-sale, or on- and off-sale municipal liquor store have been at least $8,000 for the last two completed years before the date of the appropriation.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 18. Minnesota Statutes 2016, section 447.045, subdivision 4, is amended to read:

 

Subd. 4. Fourth class city operating store. If a city of the fourth class operates a municipal liquor store, it may provide for a vote at a general or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year on the question of contributing from the profit in the city liquor dispensary fund to build, equip, and maintain a community hospital within the city limits. If the vote is in favor, the city council may appropriate not more than $200,000 from profits in the fund for the purpose. The hospital must be open to all residents of the city on equal terms.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1648

The city may issue certificates of indebtedness in anticipation of and payable only from profits from the operation of municipal liquor stores.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 19. Minnesota Statutes 2016, section 447.045, subdivision 6, is amended to read:

 

Subd. 6. Statutory city; fourth class. If a fourth class statutory city operates a municipal liquor store, it may provide for a vote at a general or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year on the question of contributing from the city liquor dispensary fund not more than $15,000 a year for five years to build and maintain a community hospital. If the vote is in favor the council may appropriate the money from the fund to an incorporated community hospital association in the city.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 20. Minnesota Statutes 2016, section 447.045, subdivision 7, is amended to read:

 

Subd. 7. Statutory city; any store. If a statutory city operates a municipal liquor store, it may provide for a vote at a general or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year on the question of contributing from the statutory city liquor dispensary fund toward the acquisition, construction, improvement, maintenance, and operation of a community hospital. If the vote is in favor, the council may appropriate money from time to time out of the net profits or proceeds of the municipal liquor store to an incorporated nonprofit hospital association in the statutory city. The hospital association must be governed by a board of directors elected by donors of $50 or more, who each have one vote. The hospital must be open to all residents of the community on equal terms.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 21. Minnesota Statutes 2016, section 452.11, is amended to read:

 

452.11 SUBMISSION TO VOTERS.

 

No city of the first class shall acquire or construct any public utility under the terms of sections 452.08 to 452.13 unless the proposition to acquire or construct same has first been submitted to the qualified electors of the city at a general city election or at a special election called for that purpose, held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year and has been approved by a majority vote of all electors voting upon the proposition.

 

The question of issuing public utility certificates as provided in section 452.09 may, at the option of the council, be submitted at the same election as the question of the acquisition or construction of the public utility.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1649

Sec. 22. Minnesota Statutes 2016, section 455.24, is amended to read:

 

455.24 SUBMISSION TO VOTERS.

 

Before incurring any expense under the powers conferred by section 455.23, the approval of the voters of the city shall first be had at a general or special an election held therein on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year. If a majority of the voters of the city participating at the election shall vote in favor of the construction of the system of poles, wires and cables herein authorized to be made, the council shall proceed with the construction.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 23. Minnesota Statutes 2016, section 455.29, is amended to read:

 

455.29 MUNICIPALITIES MAY EXTEND ELECTRIC SERVICE.

 

Except as otherwise restricted by chapter 216B, the governing body, or the commission or board charged with the operation of the public utilities, if one exists therein, of any municipality in the state owning and operating an electric light and power plant for the purpose of the manufacture and sale of electrical power or for the purchase and redistribution of electrical power, may, upon a two-thirds vote of the governing body, or the commission or board, in addition to all other powers now possessed by such municipality, sell electricity to customers, singly or collectively, outside of such municipality, within the state but not to exceed a distance of 30 miles from the corporate limits of the municipality. Before any municipality shall have the power to extend its lines and sell electricity outside of the municipality as provided by sections 455.29 and 455.30, the governing body shall first submit to the voters of the municipality, at a general or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year, the general principle of going outside the municipality and fixing the maximum amount of contemplated expenditures reasonably expected to be made for any and all extensions then or thereafter contemplated. Three weeks' published notice shall be given of such election as required by law, and if a majority of those voting upon the proposition favors the same, then the municipality shall thereafter be considered as having chosen to enter the general business of extending its electric light and power facilities beyond the corporate limits of the municipality. It shall not be necessary to submit to a vote of the people the question of any specific enlargement, extension, or improvement of any outside lines; provided the voters of the municipality have generally elected to exercise the privileges afforded by sections 455.29 and 455.30, and, provided, that each and any specific extension, enlargement, or improvement project is within the limit of the maximum expenditure authorized at the election. In cities operating under a home rule charter, where a vote of the people is not now required in order to extend electric light and power lines, no election shall be required under the provisions of any act. At any election held to determine the attitude of the voters upon this principle, the question shall be simply stated upon the ballot provided therefor, and shall be substantially in the following form: "Shall the city of ..................... undertake the general proposition of extending its electric light and power lines beyond the limits of the municipality, and limit the maximum expenditures for any and all future extensions to the sum of $ ....................?" For this purpose every municipality is authorized and empowered to extend the lines, wires, and fixtures of its plant to such customers and may issue certificates of indebtedness therefor in an amount not to exceed the actual cost of the extensions and for a term not to exceed the reasonable life of the extensions. These certificates of indebtedness shall in no case be made a charge against the municipality, but shall be payable and paid out of current revenues of the plant other than taxes.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1650

Sec. 24. Minnesota Statutes 2016, section 459.06, subdivision 1, is amended to read:

 

Subdivision 1. Accept donations. Any county, city, or town may by resolution of its governing body accept donations of land that the governing body deems to be better adapted for the production of timber and wood than for any other purpose, for a forest, and may manage it on forestry principles. The donor of not less than 100 acres of any such land shall be entitled to have the land perpetually bear the donor's name. The governing body of any city or town, when funds are available or have been levied therefor, may, when authorized by a majority vote by ballot of the voters voting at any general or special city election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year or the annual town meeting where the question is properly submitted, purchase or obtain by condemnation proceedings, and preferably at the sources of streams, any tract of land for a forest which is better adapted for the production of timber and wood than for any other purpose, and which is conveniently located for the purpose, and manage it on forestry principles. The city or town may annually levy a tax on all taxable property within its boundaries to procure and maintain such forests.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 25. Minnesota Statutes 2016, section 469.053, subdivision 5, is amended to read:

 

Subd. 5. Reverse referendum. A city may increase its levy for port authority purposes under subdivision 4 only as provided in this subdivision. Its city council must first pass a resolution stating the proposed amount of levy increase. The city must then publish the resolution together with a notice of public hearing on the resolution for two successive weeks in its official newspaper or, if none exists, in a newspaper of general circulation in the city. The hearing must be held two to four weeks after the first publication. After the hearing, the city council may decide to take no action or may adopt a resolution authorizing the proposed increase or a lesser increase. A resolution authorizing an increase must be published in the city's official newspaper or, if none exists, in a newspaper of general circulation in the city. The resolution is not effective if a petition requesting a referendum on the resolution is filed with the city clerk within 30 days of publication of the resolution. The petition must be signed by voters equaling five percent of the votes cast in the city in the last general election. The resolution is effective if approved by a majority of those voting on the question. The commissioner of revenue shall prepare a suggested form of referendum question. The referendum must be held at a special or general an election before October 1 of the year for which the levy increase is proposed conducted on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year. If approved by the voters, the levy increase may take effect no sooner than the next calendar year.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 26. Minnesota Statutes 2016, section 469.107, subdivision 2, is amended to read:

 

Subd. 2. Reverse referendum. A city may increase its levy for economic development authority purposes under subdivision 1 in the following way. Its city council must first pass a resolution stating the proposed amount of levy increase. The city must then publish the resolution together with a notice of public hearing on the resolution for two successive weeks in its official newspaper or if none exists in a newspaper of general circulation in the city. The hearing must be held two to four weeks after the first publication. After the hearing, the city council may decide to take no action or may adopt a resolution authorizing the proposed increase or a lesser increase. A resolution authorizing an increase must be published in the city's official newspaper or if none exists in a newspaper of general circulation in the city. The resolution is not effective if a petition requesting a referendum on the resolution is filed with the city clerk within 30 days of publication of the resolution. The petition must be signed by voters equaling five percent of the votes cast in the city in the last general election. The election referendum must


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1651

be held at a general or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year. Notice of the election must be given in the manner required by law. The notice must state the purpose and amount of the levy.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 27. Minnesota Statutes 2016, section 469.190, subdivision 1, is amended to read:

 

Subdivision 1. Authorization. Notwithstanding section 477A.016 or any other law, a statutory or home rule charter city may by ordinance, and a town may by the affirmative vote of the electors at the annual town meeting, or at a special town meeting, impose a tax of up to three percent on the gross receipts from the furnishing for consideration of lodging at a hotel, motel, rooming house, tourist court, or resort, other than the renting or leasing of it for a continuous period of 30 days or more. A statutory or home rule charter city may by ordinance impose the tax authorized under this subdivision on the camping site receipts of a municipal campground.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 28. Minnesota Statutes 2016, section 469.190, subdivision 5, is amended to read:

 

Subd. 5. Reverse referendum. If the county board passes a resolution under subdivision 4 to impose the tax, the resolution must be published for two successive weeks in a newspaper of general circulation within the unorganized territory, together with a notice fixing a date for a public hearing on the proposed tax.

 

The hearing must be held not less than two weeks nor more than four weeks after the first publication of the notice. After the public hearing, the county board may determine to take no further action, or may adopt a resolution authorizing the tax as originally proposed or approving a lesser rate of tax. The resolution must be published in a newspaper of general circulation within the unorganized territory. The voters of the unorganized territory may request a referendum on the proposed tax by filing a petition with the county auditor within 30 days after the resolution is published. The petition must be signed by voters who reside in the unorganized territory. The number of signatures must equal at least five percent of the number of persons voting in the unorganized territory in the last general election. If such a petition is timely filed, the resolution is not effective until it has been submitted to the voters residing in the unorganized territory at a general or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year and a majority of votes cast on the question of approving the resolution are in the affirmative. The commissioner of revenue shall prepare a suggested form of question to be presented at the referendum.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 29. Minnesota Statutes 2016, section 471.57, subdivision 3, is amended to read:

 

Subd. 3. May use fund for other purposes upon vote. The council of any municipality which has established a public works reserve fund by an ordinance designating the specific improvement or type of capital improvement for which the fund may be used may submit to the voters of the municipality at any regular or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year the question of using the fund for some other purpose. If a majority of the votes cast on the question are in favor of such diversion from the original purpose of the fund, it may be used for any purpose so approved by the voters.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1652

Sec. 30. Minnesota Statutes 2016, section 471.571, subdivision 3, is amended to read:

 

Subd. 3. Expenditure from fund, limitation. No expenditure for any one project in excess of 60 percent of one year's levy or $25,000, whichever is greater, may be made from such permanent improvement or replacement fund in any year without first obtaining the approval of a majority of the voters voting at a general or special municipal election held on the first Tuesday after the first Monday in November of either an even-numbered or odd‑numbered year at which the question of making such expenditure has been submitted. In submitting any proposal to the voters for approval, the amount proposed to be spent and the purpose thereof shall be stated in the proposal submitted. The proceeds of such levies may be pledged for the payment of any bonds issued pursuant to law for any purposes authorized hereby and annual payments upon such bonds or interest may be made without additional authorization.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 31. Minnesota Statutes 2016, section 471.572, subdivision 2, is amended to read:

 

Subd. 2. Tax levy. The governing body of a city may establish, by a two-thirds vote of all its members, by ordinance or resolution a reserve fund and may annually levy a property tax for the support of the fund. The proceeds of taxes levied for its support must be paid into the reserve fund. Any other revenue from a source not required by law to be paid into another fund for purposes other than those provided for the use of the reserve fund may be paid into the fund. Before a tax is levied under this section, the city must publish in the official newspaper of the city an initial resolution authorizing the tax levy. If within ten days after the publication a petition is filed with the city clerk requesting an election on the tax levy signed by a number of qualified voters greater than ten percent of the number who voted in the city at the last general election, the tax may not be levied until the levy has been approved by a majority of the votes cast on it at a regular or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 32. Minnesota Statutes 2016, section 471.572, subdivision 4, is amended to read:

 

Subd. 4. Use of fund for a specific purpose. If the city has established a reserve fund, it may submit to the voters at a regular or special an election held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year the question of whether use of the fund should be restricted to a specific improvement or type of capital improvement. If a majority of the votes cast on the question are in favor of the limitation on the use of the reserve fund, it may be used only for the purpose approved by the voters.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 33. Minnesota Statutes 2016, section 475.59, is amended to read:

 

475.59 MANNER OF SUBMISSION; NOTICE.

 

Subdivision 1. Generally; notice. When the governing body of a municipality resolves to issue bonds for any purpose requiring the approval of the electors, it shall provide for submission of the proposition of their issuance at a general or special election or town or school district meeting. Notice of such election or meeting shall be given in the manner required by law and shall state the maximum amount and the purpose of the proposed issue. In any school district, the school board or board of education may, according to its judgment and discretion, submit as a


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1653

single ballot question or as two or more separate questions in the notice of election and ballots the proposition of their issuance for any one or more of the following, stated conjunctively or in the alternative: acquisition or enlargement of sites, acquisition, betterment, erection, furnishing, equipping of one or more new schoolhouses, remodeling, repairing, improving, adding to, betterment, furnishing, equipping of one or more existing schoolhouses. In any city, town, or county, the governing body may, according to its judgment and discretion, submit as a single ballot question or as two or more separate questions in the notice of election and ballots the proposition of their issuance, stated conjunctively or in the alternative, for the acquisition, construction, or improvement of any facilities at one or more locations.

 

Subd. 2. Election date. An election to approve issuance of bonds under this section held by a municipality other than a town must be held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year. An election under this section held by a town may be held on the same day as the annual town meeting or on the first Tuesday after the first Monday in November of either an even-numbered or odd‑numbered year.

 

Subd. 3. Special laws. If a referendum on the issuance of bonds or other debt obligations authorized in a special law is required, it must be held on a date as provided in subdivision 2, notwithstanding any provision in the special law authorizing the referendum to be held at any other time.

 

Subd. 4. Exception for disaster or emergency. Subdivisions 2 and 3, and any other law requiring an election to approve issuance of bonds or other debt obligations to be held on the first Tuesday after the first Monday in November of either an even-numbered or odd-numbered year, do not apply to issuance of bonds or other debt obligations to finance the municipality's response to an emergency or disaster. "Disaster" means a situation that creates an actual or imminent serious threat to the health and safety of persons, or a situation that has resulted or is likely to result in catastrophic loss to property or the environment. "Emergency" means an unforeseen combination of circumstances that calls for immediate action to prevent a disaster, identified in the referendum, from developing or occurring.

 

EFFECTIVE DATE. This section is effective August 1, 2017, and applies to any referendum authorized on or after that date.

 

Sec. 34. REPEALER.

 

Minnesota Statutes 2016, section 205.10, subdivision 3, is repealed.

 

EFFECTIVE DATE. This section is effective August 1, 2017.

 

ARTICLE 4

SALES AND USE TAXES

 

Section 1. [88.068] VOLUNTEER FIRE ASSISTANCE GRANT ACCOUNT.

 

A volunteer fire assistance grant account is established in the special revenue fund. Sales taxes allocated under section 297A.94, for making grants under section 88.067, must be deposited in the special revenue fund and credited to the volunteer fire assistance grant account. Money in the account, including interest, is appropriated to the commissioner for making grants under that section.

 

EFFECTIVE DATE. This section is effective beginning with deposits made in fiscal year 2018.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1654

Sec. 2. Minnesota Statutes 2016, section 128C.24, is amended to read:

 

128C.24 LEAGUE FUNDS TRANSFER.

 

Beginning July 1, 2007, the Minnesota State High School League shall annually determine the sales tax savings attributable to section 297A.70, subdivision 11 11a, and annually transfer that amount to a nonprofit charitable foundation created for the purpose of promoting high school extracurricular activities. The funds must be used by the foundation to make grants to fund, assist, recognize, or promote high school students' participation in extracurricular activities. The first priority for funding will be grants for scholarships to individuals to offset athletic fees. The foundation must equitably award grants based on considerations of gender balance, school size, and geographic location, to the extent feasible.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 3. Minnesota Statutes 2016, section 297A.66, subdivision 1, is amended to read:

 

Subdivision 1. Definitions. (a) To the extent allowed by the United States Constitution and the laws of the United States, "retailer maintaining a place of business in this state," or a similar term, means a retailer:

 

(1) having or maintaining within this state, directly or by a subsidiary or an affiliate, an office, place of distribution, sales, storage, or sample room or place, warehouse, or other place of business, including the employment of a resident of this state who works from a home office in this state; or

 

(2) having a representative, including, but not limited to, an affiliate, agent, salesperson, canvasser, or marketplace provider, solicitor, or other third party operating in this state under the authority of the retailer or its subsidiary, for any purpose, including the repairing, selling, delivering, installing, facilitating sales, processing sales, or soliciting of orders for the retailer's goods or services, or the leasing of tangible personal property located in this state, whether the place of business or agent, representative, affiliate, salesperson, canvasser, or solicitor is located in the state permanently or temporarily, or whether or not the retailer, subsidiary, or affiliate is authorized to do business in this state. A retailer is represented by a marketplace provider in this state if the retailer makes sales in this state facilitated by a marketplace provider that maintains a place of business in this state.

 

(b) "Destination of a sale" means the location to which the retailer makes delivery of the property sold, or causes the property to be delivered, to the purchaser of the property, or to the agent or designee of the purchaser. The delivery may be made by any means, including the United States Postal Service or a for-hire carrier.

 

(c) "Marketplace provider" means any person who facilitates a retail sale by a retailer by:

 

(1) listing or advertising for sale by the retailer in any forum, tangible personal property, services, or digital goods that are subject to tax under this chapter; and

 

(2) either directly or indirectly through agreements or arrangements with third parties collecting payment from the customer and transmitting that payment to the retailer regardless of whether the marketplace provider receives compensation or other consideration in exchange for its services.

 

(d) "Total taxable retail sales" means the gross receipts from the sale of all tangible goods, services, and digital goods subject to sales and use tax under this chapter.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1655

Sec. 4. Minnesota Statutes 2016, section 297A.66, subdivision 2, is amended to read:

 

Subd. 2. Retailer maintaining place of business in this state. (a) Except as provided in paragraph (b), a retailer maintaining a place of business in this state who makes retail sales in Minnesota or to a destination in Minnesota shall collect sales and use taxes and remit them to the commissioner under section 297A.77.

 

(b) A retailer with total taxable retail sales to customers in this state of less than $10,000 in the 12-month period ending on the last day of the most recently completed calendar quarter is not required to collect and remit sales tax if it is determined to be a retailer maintaining a place of business in the state solely because it made sales through one or more marketplace providers. The provisions of this paragraph do not apply to a retailer that is or was registered to collect sales and use tax in this state.

 

Sec. 5. Minnesota Statutes 2016, section 297A.66, subdivision 4, is amended to read:

 

Subd. 4. Affiliated entities. (a) An entity is an "affiliate" of the retailer for purposes of subdivision 1, paragraph (a), if the entity:

 

(1) the entity uses its facilities or employees in this state to advertise, promote, or facilitate the establishment or maintenance of a market for sales of items by the retailer to purchasers in this state or for the provision of services to the retailer's purchasers in this state, such as accepting returns of purchases for the retailer, providing assistance in resolving customer complaints of the retailer, or providing other services; and

 

(2) the retailer and the entity are related parties. has the same or a similar business name to the retailer and sells, from a location or locations in this state, tangible personal property, digital goods, or services, taxable under this chapter, that are similar to that sold by the retailer;

 

(3) maintains an office, distribution facility, salesroom, warehouse, storage place, or other similar place of business in this state to facilitate the delivery of tangible personal property, digital goods, or services sold by the retailer to its customers in this state;

 

(4) maintains a place of business in this state and uses trademarks, service marks, or trade names in this state that are the same or substantially similar to those used by the retailer, and that use is done with the express or implied consent of the holder of the marks or names;

 

(5) delivers, installs, or assembles tangible personal property in this state, or performs maintenance or repair services on tangible personal property in this state, for tangible personal property sold by the retailer;

 

(6) facilitates the delivery of tangible personal property to customers of the retailer by allowing the customers to pick up tangible personal property sold by the retailer at a place of business the entity maintains in this state; or

 

(7) shares management, business systems, business practices, or employees with the retailer, or engages in intercompany transactions with the retailer related to the activities that establish or maintain the market in this state of the retailer.

 

(b) Two entities are related parties under this section if one of the entities meets at least one of the following tests with respect to the other entity:

 

(1) one or both entities is a corporation, and one entity and any party related to that entity in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of section 318 of the Internal Revenue Code owns directly, indirectly, beneficially, or constructively at least 50 percent of the value of the corporation's outstanding stock;


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1656

(2) one or both entities is a partnership, estate, or trust and any partner or beneficiary, and the partnership, estate, or trust and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50 percent of the profits, capital, stock, or value of the other entity or both entities; or

 

(3) an individual stockholder and the members of the stockholder's family (as defined in section 318 of the Internal Revenue Code) owns directly, indirectly, beneficially, or constructively, in the aggregate, at least 50 percent of the value of both entities' outstanding stock.;

 

(4) the entities are related within the meaning of subsections (b) and (c) of section 267 or 707(b)(1) of the Internal Revenue Code; or

 

(5) the entities have one or more ownership relationships and the relationships were designed with a principal purpose of avoiding the application of this section.

 

(c) An entity is an affiliate under the provisions of this subdivision if the requirements of paragraphs (a) and (b) are met during any part of the 12-month period ending on the first day of the month before the month in which the sale was made.

 

Sec. 6. Minnesota Statutes 2016, section 297A.66, is amended by adding a subdivision to read:

 

Subd. 4b. Collection and remittance requirements for marketplace providers and marketplace retailers. (a) A marketplace provider shall collect sales and use taxes and remit them to the commissioner under section 297A.77 for all facilitated sales for a retailer, and is subject to audit on the retail sales it facilitates unless either:

 

(1) the retailer provides a copy of the retailer's registration to collect sales and use tax in this state to the marketplace provider before the marketplace provider facilitates a sale; or

 

(2) upon inquiry by the marketplace provider or its agent, the commissioner discloses that the retailer is registered to collect sales and use taxes in this state.

 

(b) Nothing in this subdivision shall be construed to interfere with the ability of a marketplace provider and a retailer to enter into an agreement regarding fulfillment of the requirements of this chapter.

 

(c) A marketplace provider is not liable under this subdivision for failure to file and collect and remit sales and use taxes if the marketplace provider demonstrates that the error was due to incorrect or insufficient information given to the marketplace provider by the retailer. This paragraph does not apply if the marketplace provider and the marketplace retailer are related as defined in subdivision 4, paragraph (b).

 

Sec. 7. Minnesota Statutes 2016, section 297A.67, subdivision 13a, is amended to read:

 

Subd. 13a. Instructional materials. (a) Instructional materials, other than textbooks, that are prescribed for use in conjunction with a course of study in a postsecondary school, college, university, or private career school to students who are regularly enrolled at such institutions are exempt. For purposes of this subdivision, "instructional materials" means materials required to be used directly in the completion of the course of study, including, but not limited to,:

 

(1) interactive CDs, tapes, digital audio works, digital audiovisual works, and computer software.;

 

(2) charts and models used in the course of study; and

 

(3) specialty pens, pencils, inks, paint, paper, and other art supplies for art classes.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1657

(b) Notwithstanding paragraph (c), if the course of study is necessary to obtaining a degree or certification for a trade or career, any equipment, tools, and supplies required during the course of study that are generally used directly in the practice of the career or trade are also exempt.

 

(c) Instructional materials do not include general reference works or other items incidental to the instructional process such as pens, pencils, paper, folders, or computers that are of general use outside of the course of study.

 

(d) For purposes of this subdivision, "school" and "private career school" have the meanings given in subdivision 13.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 8. Minnesota Statutes 2016, section 297A.67, is amended by adding a subdivision to read:

 

Subd. 34. Certain herbicides. Purchases of herbicides authorized for use pursuant to an invasive aquatic plant management permit as defined under section 103G.615 are exempt if purchased by a lakeshore property owner, an association of lakeshore property owners organized under chapter 317A, or by a contractor hired by a lakeshore owner or association to provide invasive aquatic plant management under the permit. For purposes of this subdivision, "herbicides" means all herbicides that meet the following requirements:

 

(1) are labeled for use in water;

 

(2) are registered for use in this state by the Minnesota Department of Agriculture under section 18B.26; and

 

(3) are listed as one of the herbicides proposed for use on the invasive aquatic plant management permit.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 9. Minnesota Statutes 2016, section 297A.68, subdivision 5, is amended to read:

 

Subd. 5. Capital equipment. (a) Capital equipment is exempt.

 

"Capital equipment" means machinery and equipment purchased or leased, and used in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining, or refining tangible personal property to be sold ultimately at retail if the machinery and equipment are essential to the integrated production process of manufacturing, fabricating, mining, or refining. Capital equipment also includes machinery and equipment used primarily to electronically transmit results retrieved by a customer of an online computerized data retrieval system.

 

(b) Capital equipment includes, but is not limited to:

 

(1) machinery and equipment used to operate, control, or regulate the production equipment;

 

(2) machinery and equipment used for research and development, design, quality control, and testing activities;

 

(3) environmental control devices that are used to maintain conditions such as temperature, humidity, light, or air pressure when those conditions are essential to and are part of the production process;

 

(4) materials and supplies used to construct and install machinery or equipment;

 

(5) repair and replacement parts, including accessories, whether purchased as spare parts, repair parts, or as upgrades or modifications to machinery or equipment;


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1658

(6) materials used for foundations that support machinery or equipment;

 

(7) materials used to construct and install special purpose buildings used in the production process;

 

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed as part of the delivery process regardless if mounted on a chassis, repair parts for ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and

 

(9) machinery or equipment used for research, development, design, or production of computer software.

 

(c) Capital equipment does not include the following:

 

(1) motor vehicles taxed under chapter 297B;

 

(2) machinery or equipment used to receive or store raw materials;

 

(3) building materials, except for materials included in paragraph (b), clauses (6) and (7);

 

(4) machinery or equipment used for nonproduction purposes, including, but not limited to, the following: plant security, fire prevention, first aid, and hospital stations; support operations or administration; pollution control; and plant cleaning, disposal of scrap and waste, plant communications, space heating, cooling, lighting, or safety;

 

(5) farm machinery and aquaculture production equipment as defined by section 297A.61, subdivisions 12 and 13;

 

(6) machinery or equipment purchased and installed by a contractor as part of an improvement to real property;

 

(7) machinery and equipment used by restaurants in the furnishing, preparing, or serving of prepared foods as defined in section 297A.61, subdivision 31;

 

(8) machinery and equipment used to furnish the services listed in section 297A.61, subdivision 3, paragraph (g), clause (6), items (i) to (vi) and (viii);

 

(9) machinery or equipment used in the transportation, transmission, or distribution of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines, tanks, mains, or other means of transporting those products. This clause does not apply to machinery or equipment used to blend petroleum or biodiesel fuel as defined in section 239.77; or

 

(10) any other item that is not essential to the integrated process of manufacturing, fabricating, mining, or refining.

 

(d) For purposes of this subdivision:

 

(1) "Equipment" means independent devices or tools separate from machinery but essential to an integrated production process, including computers and computer software, used in operating, controlling, or regulating machinery and equipment; and any subunit or assembly comprising a component of any machinery or accessory or attachment parts of machinery, such as tools, dies, jigs, patterns, and molds.

 

(2) "Fabricating" means to make, build, create, produce, or assemble components or property to work in a new or different manner.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1659

(3) "Integrated production process" means a process or series of operations through which tangible personal property is manufactured, fabricated, mined, or refined. For purposes of this clause, (i) manufacturing begins with the removal of raw materials from inventory and ends when the last process prior to loading for shipment has been completed; (ii) fabricating begins with the removal from storage or inventory of the property to be assembled, processed, altered, or modified and ends with the creation or production of the new or changed product; (iii) mining begins with the removal of overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and ends when the last process before stockpiling is completed; and (iv) refining begins with the removal from inventory or storage of a natural resource and ends with the conversion of the item to its completed form.

 

(4) "Machinery" means mechanical, electronic, or electrical devices, including computers and computer software, that are purchased or constructed to be used for the activities set forth in paragraph (a), beginning with the removal of raw materials from inventory through completion of the product, including packaging of the product.

 

(5) "Machinery and equipment used for pollution control" means machinery and equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity described in paragraph (a).

 

(6) "Manufacturing" means an operation or series of operations where raw materials are changed in form, composition, or condition by machinery and equipment and which results in the production of a new article of tangible personal property. For purposes of this subdivision, "manufacturing" includes the generation of electricity or steam to be sold at retail.

 

(7) "Mining" means the extraction of minerals, ores, stone, or peat.

 

(8) "Online data retrieval system" means a system whose cumulation of information is equally available and accessible to all its customers.

 

(9) "Primarily" means machinery and equipment used 50 percent or more of the time in an activity described in paragraph (a).

 

(10) "Refining" means the process of converting a natural resource to an intermediate or finished product, including the treatment of water to be sold at retail.

 

(11) This subdivision does not apply to telecommunications equipment as provided in subdivision 35a, and does not apply to wire, cable, fiber, poles, or conduit for telecommunications services.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 10. Minnesota Statutes 2016, section 297A.68, subdivision 9, is amended to read:

 

Subd. 9. Super Bowl admissions and related events. (a) The granting of the privilege of admission to a world championship football game sponsored by the National Football League is and to related events sponsored by the National Football League or its affiliates, or the Minnesota Super Bowl Host Committee, are exempt.

 

(b) The sale of nonresidential parking by the National Football League for attendance at a world championship football game sponsored by the National Football League and for related events sponsored by the National Football League or its affiliates, or the Minnesota Super Bowl Host Committee, is exempt. Purchases of nonresidential parking services by the Super Bowl Host Committee are purchases made exempt for resale.

 

(c) For the purposes of this subdivision:


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1660

(1) "related events sponsored by the National Football League or its affiliates" includes but is not limited to preparatory advance visits, NFL Experience, NFL Tailgate, NFL On Location, and NFL House; and

 

(2) "affiliates" does not include National Football League teams.

 

EFFECTIVE DATE. The amendments to this section are effective for sales and purchases made after June 30, 2016, and before March 1, 2018.

 

Sec. 11. Minnesota Statutes 2016, section 297A.68, subdivision 35a, is amended to read:

 

Subd. 35a. Telecommunications or pay television services machinery and equipment. (a) Telecommunications or pay television services machinery and equipment purchased or leased for use directly by a telecommunications or pay television services provider primarily in the provision of telecommunications or pay television services that are ultimately to be sold at retail are exempt, regardless of whether purchased by the owner, a contractor, or a subcontractor.

 

(b) For purposes of this subdivision, "telecommunications or pay television machinery and equipment" includes, but is not limited to:

 

(1) machinery, equipment, and fixtures utilized in receiving, initiating, amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring telecommunications or pay television services, such as computers, transformers, amplifiers, routers, bridges, repeaters, multiplexers, and other items performing comparable functions;

 

(2) machinery, equipment, and fixtures used in the transportation of telecommunications or pay television services, such as radio transmitters and receivers, satellite equipment, microwave equipment, and other transporting media, but not including wire, cable, fiber, poles, or conduit;

 

(3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or enable the machinery in clauses (1) and (2) to accomplish its intended function, such as auxiliary power supply, test equipment, towers, heating, ventilating, and air conditioning equipment necessary to the operation of the telecommunications or pay television equipment; and software necessary to the operation of the telecommunications or pay television equipment; and

 

(4) repair and replacement parts, including accessories, whether purchased as spare parts, repair parts, or as upgrades or modifications to qualified machinery or equipment.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 12. Minnesota Statutes 2016, section 297A.70, subdivision 4, is amended to read:

 

Subd. 4. Sales to nonprofit groups. (a) All sales, except those listed in paragraph (b), to the following "nonprofit organizations" are exempt:

 

(1) a corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, or educational purposes if the item purchased is used in the performance of charitable, religious, or educational functions; and

 

(2) any senior citizen group or association of groups that:

 

(i) in general limits membership to persons who are either age 55 or older, or physically disabled;


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1661

(ii) is organized and operated exclusively for pleasure, recreation, and other nonprofit purposes, not including housing, no part of the net earnings of which inures to the benefit of any private shareholders; and

 

(iii) is an exempt organization under section 501(c) of the Internal Revenue Code.; and

 

(3) an organization that qualifies for an exemption for memberships under subdivision 12 if the item is purchased and used in the performance of the organization's mission.

 

For purposes of this subdivision, charitable purpose includes the maintenance of a cemetery owned by a religious organization.

 

(b) This exemption does not apply to the following sales:

 

(1) building, construction, or reconstruction materials purchased by a contractor or a subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed maximum price covering both labor and materials for use in the construction, alteration, or repair of a building or facility;

 

(2) construction materials purchased by tax-exempt entities or their contractors to be used in constructing buildings or facilities that will not be used principally by the tax-exempt entities;

 

(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause (2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section 297A.67, subdivision 2, except wine purchased by an established religious organization for sacramental purposes or as allowed under subdivision 9a; and

 

(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except as provided in paragraph (c).

 

(c) This exemption applies to the leasing of a motor vehicle as defined in section 297B.01, subdivision 11, only if the vehicle is:

 

(1) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a passenger automobile, as defined in section 168.002, if the automobile is designed and used for carrying more than nine persons including the driver; and

 

(2) intended to be used primarily to transport tangible personal property or individuals, other than employees, to whom the organization provides service in performing its charitable, religious, or educational purpose.

 

(d) A limited liability company also qualifies for exemption under this subdivision if (1) it consists of a sole member that would qualify for the exemption, and (2) the items purchased qualify for the exemption.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 13. Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision to read:

 

Subd. 11a. Minnesota State High School League tickets and admissions. Tickets and admissions to games, events, and activities sponsored by the Minnesota State High School League under chapter 128C are exempt.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1662

Sec. 14. Minnesota Statutes 2016, section 297A.70, subdivision 12, is amended to read:

 

Subd. 12. YMCA, YWCA, and JCC, and similar memberships. (a) The sale of memberships, meaning both onetime initiation fees and periodic membership dues, to an association incorporated under section 315.44 or an organization defined under section 315.51, or a nonprofit organization offering similar services are exempt. However, all separate charges made for the privilege of having access to and the use of the association's sports and athletic facilities are taxable.

 

(b) For purposes of this subdivision, a "nonprofit organization offering similar services" means an organization described in section 501(c)(3) of the Internal Revenue Code, whose mission is to support youth and families through a variety of activities, including membership allowing access to athletic facilities, and who provide free or reduced-price memberships to seniors or low-income persons or families.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 15. Minnesota Statutes 2016, section 297A.70, subdivision 14, is amended to read:

 

Subd. 14. Fund-raising events sponsored by nonprofit groups. (a) Sales of tangible personal property or services at, and admission charges for fund-raising events sponsored by, a nonprofit organization are exempt if:

 

(1) all gross receipts are recorded as such, in accordance with generally accepted accounting practices, on the books of the nonprofit organization; and

 

(2) the entire proceeds, less the necessary expenses for the event, will be used solely and exclusively for charitable, religious, or educational purposes. Exempt sales include the sale of prepared food, candy, and soft drinks at the fund-raising event.

 

(b) This exemption is limited in the following manner:

 

(1) it does not apply to admission charges for events involving bingo or other gambling activities or to charges for use of amusement devices involving bingo or other gambling activities;

 

(2) all gross receipts are taxable if the profits are not used solely and exclusively for charitable, religious, or educational purposes;

 

(3) it does not apply unless the organization keeps a separate accounting record, including receipts and disbursements from each fund-raising event that documents all deductions from gross receipts with receipts and other records;

 

(4) it does not apply to any sale made by or in the name of a nonprofit corporation as the active or passive agent of a person that is not a nonprofit corporation;

 

(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;

 

(6) it does not apply to fund-raising events conducted on premises leased for more than five ten days but less than 30 days; and

 

(7) it does not apply if the risk of the event is not borne by the nonprofit organization and the benefit to the nonprofit organization is less than the total amount of the state and local tax revenues forgone by this exemption.


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1663

(c) For purposes of this subdivision, a "nonprofit organization" means any unit of government, corporation, society, association, foundation, or institution organized and operated for charitable, religious, educational, civic, fraternal, and senior citizens' or veterans' purposes, no part of the net earnings of which inures to the benefit of a private individual.

 

(d) For purposes of this subdivision, "fund-raising events" means activities of limited duration, not regularly carried out in the normal course of business, that attract patrons for community, social, and entertainment purposes, such as auctions, bake sales, ice cream socials, block parties, carnivals, competitions, concerts, concession stands, craft sales, bazaars, dinners, dances, door-to-door sales of merchandise, fairs, fashion shows, festivals, galas, special event workshops, sporting activities such as marathons and tournaments, and similar events. Fund-raising events do not include the operation of a regular place of business in which services are provided or sales are made during regular hours such as bookstores, thrift stores, gift shops, restaurants, ongoing Internet sales, regularly scheduled classes, or other activities carried out in the normal course of business.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 16. Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision to read:

 

Subd. 20. City celebrations. (a) Sales of tangible personal property or services and admissions charges to a city-designated annual city celebration designed to promote community spirit and cooperation are exempt. Exempt sales include the sale of prepared food, candy, soft drinks, malt liquor and wine as defined in section 340A.101, subdivisions 16, 19, and 27, at the event. The governing board of a statutory or home rule charter city with a population of less than 30,000 may designate one event in each calendar year as the annual city celebration that qualifies for the exemption under this subdivision. For a celebration to qualify, it must meet the following requirements:

 

(1) the event must be held on consecutive days, not to exceed ten days in total;

 

(2) the event must be run either by the city or by a nonprofit organization designated by the city;

 

(3) all gross receipts of the event are recorded as such, in accordance with generally accepted accounting practice on the books of the city or the designated nonprofit organization; and

 

(4) the entire proceeds, less the necessary expenses, will be distributed to one or more of the following for charitable, educational, civic, or governmental purposes:

 

(i) the city's general fund;

 

(ii) a nonprofit 501(c)(3) organization to promote its primary mission; or

 

(iii) a nonprofit 501(c)(4) organization to promote its primary mission, however, no revenues from this event may be used by the organization for lobbying or political activities.

 

(b) This exemption is limited in the following manner:

 

(1) it does not apply to admission charges for events involving bingo or other gambling activities or to charges for use of amusement devices involving bingo or other gambling activities;

 

(2) all gross receipts are taxable if the profits are not used solely and exclusively for charitable, educational, civic, or governmental purposes; and


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1664

(3) it does not apply unless the city or designated nonprofit organization keeps a separate accounting record, including receipts and disbursements for all events included in the celebration that documents all deductions from gross receipts with receipts and other records.

 

(c) For purposes of this subdivision, "nonprofit organization" means any unit of government, corporation, society, association, foundation, or institution organized and operated for charitable, religious, educational, civic, fraternal, and senior citizens' or veterans' purposes, no part of the net earnings of which inures to the benefit of a private individual.

 

(d) For purposes of this subdivision, "city celebration" means any of the following activities or combination of activities of limited duration, not regularly carried out in the normal course of business, that attract patrons for community, social, and entertainment purposes, such as parades, auctions, bake sales, ice cream socials, block parties, carnivals, competitions, concerts, concession stands, craft sales, bazaars, dinners, dances, fairs, fashion shows, festivals, galas, special event workshops, sporting activities such as marathons and tournaments, and similar events. A city celebration does not include the operation of a regular place of business in which services are provided or sales are made during regular hours such as bookstores, thrift stores, gift shops, restaurants, ongoing Internet sales, or regularly scheduled activities carried out in the normal course of business.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 17. Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision to read:

 

Subd. 21. Ice arenas and rinks. Sales to organizations that exist primarily for the purpose of operating ice arenas or rinks that are part of the Duluth Heritage Sports Center and are used for youth and high school programs are exempt if the organization is a private, nonprofit corporation exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 18. Minnesota Statutes 2016, section 297A.71, subdivision 44, is amended to read:

 

Subd. 44. Building materials, capital projects. (a) Materials and supplies used or consumed in and equipment incorporated into the construction or improvement of a capital project funded partially or wholly under section 297A.9905 are exempt, provided that the project has a total construction cost of at least $40,000,000 within a 24‑month period.

 

(b) Materials and supplies used or consumed in and equipment incorporated into the construction, remodeling, expansion, or improvement of an ice arena or other buildings or facilities owned and operated by the city of Plymouth are exempt. For purposes of this paragraph, "facilities" include municipal streets and facilities associated with streets including but not limited to lighting, curbs and gutters, and sidewalks. The total amount of refund on all building materials, supplies, and equipment that the city may apply for under this paragraph is $2,500,000.

 

(c) The tax on purchases exempt under this provision must be imposed and collected as if the rate under section 297A.62, subdivision 1, applied and then refunded in the manner provided in section 297A.75.

 

EFFECTIVE DATE. This section is effective retroactively for sales and purchases made after January 1, 2013.

 

Sec. 19. Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to read:

 

Subd. 49. Construction materials purchased by contractors; exemption for certain entities. (a) Building, construction, or reconstruction materials, supplies, and equipment purchased by a contractor, subcontractor, or builder and used or consumed in or incorporated into buildings or facilities used principally by the following entities are exempt:


Journal of the House - 34th Day - Monday, March 27, 2017 - Top of Page 1665

(1) school districts, as defined under section 297A.70, subdivision 2, paragraph (c);

 

(2) local governments, as defined under section 297A.70, subdivision 2, paragraph (d);

 

(3) hospitals and nursing homes owned and operated by political subdivisions of the state, as defined under section 297A.70, subdivision 2, paragraph (a), clause (3);

 

(4) public libraries; library systems; multicounty, multitype library systems, as defined in section 134.001; and county law libraries under chapter 134A;

 

(5) nonprofit groups, as defined under section 297A.70, subdivision 4;

 

(6) hospitals, outpatient surgical centers, and critical access dental providers, as defined under section 297A.70, subdivision 7; and

 

(7) nursing homes and boarding care homes, as defined under section 297A.70, subdivision 18.

 

(b) Materials, supplies, and equipment used in the construction, reconstruction, repair, maintenance, or improvement of public infrastructure of any kind including, but not limited to, roads, bridges, culverts, drinking water facilities, and wastewater facilities purchased by a contractor or subcontractor of the following entities are exempt:

 

(1) school districts, as defined under section 297A.70, subdivision 2, paragraph (c); or

 

(2) local governments, as defined under section 297A.70, subdivision 2, paragraph (d).

 

(c) The tax on purchases exempt under this subdivision must be imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and then refunded in the manner provided in section 297A.75.

 

EFFECTIVE DATE. This section is effective for sales and purchases made after June 30, 2017.

 

Sec. 20. Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to read:

 

Subd. 50. Properties destroyed by fire. Building materials and supplies used in, and equipment incorporated into, the construction or replacement of real property that is located in Madelia affected by the fire on February 3, 2016, are exempt. The tax must be imposed and collected as if the rate under section 297A.62, subdivision 1, applied and then refunded in the manner provided in section 297A.75.

 

EFFECTIVE DATE. This section is effective retroactively for sales and purchases made after December 31, 2015, and before July 1, 2018.

 

Sec. 21. Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision to read: