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Property and Local Tax Division

TENTH MEETING

2011-2012 Regular Session - March 11, 2011

STATE OF MINNESOTA TENTH MEETING
HOUSE OF REPRESENTATIVES EIGHTY-SEVENTH SESSION

PROPERTY AND LOCAL TAX DIVISION

MINUTES

Representative Runbeck, Chair of the Property and Local Tax Division Committee, called the meeting to order at 10:06 A.M. on March 11, 2011, in Room 10 of the State Office Building.

The Committee Legislative Assistant noted the roll.

Members present:

RUNBECK, Linda, Chair
CRAWFORD, Roger, Vice Chair
BARRETT, Bob
DETTMER, Bob
DITTRICH, Denise
KOENEN, Lyle
LEMIEUR, Mike
LENCZEWSKI, Ann
LOEFFLER, Diane
MAHONEY, Tim
MARQUART, Paul
MCDONALD, Joe
PETERSEN, Branden
WARDLOW, Doug

Members excused:
BENSON, John
DAUDT, Kurt

A quorum was present.

Representative Dettmer moved the minutes dated March 2, 2011.
THE MOTION PREVAILED. THE MINUTES WERE ADOPTED.
Chair Runbeck moved HF841.
HF 841 (Buesgens) State general tax reduced, corporate franchise tax reduced and repealed, business income subtraction provided, and capital equipment exemption at the time of purchase allowed and application expanded.
Representative Buesgens presented HF841.
Chair Runbeck laid over HF841 for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF616.
HF 616 (Gunther) Teacher and school administrator cultural competency training required for those seeking to renew their professional license.
Representative Gunther presented HF616.
Testifiers:
Larry Johnston, Southern Minnesota Municipal Power Agency

Chair Runbeck laid over HF616 for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF896.
HF 896 (Fritz) Medford; local sales and use tax authorized.
Representative Fritz presented HF896.
Testifiers:
Danny Thomas, Mayor, City of Medford
Loren Lodge, City Administrator, City of Medford
Chair Runbeck laid over HF896 for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF909.
Chair Runbeck rescinded the motion to move HF 909.
Chair Runbeck moved HF910.
HF 910 (Murphy, M.) Hermantown; current local sales tax rate modified.
Testifiers:
Wayne Boucherm, Mayor, City of Hermantown
John Mulder, Administrator, City of Hermantown
Representative Murphy present HF 910.
Chair Runbeck laid over HF910 for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF909.
HF909 (Murphy, M.) Department of Revenue required to report on zip code use in collecting local sales taxes.
Testifiers:
Wayne Boucherm, Mayor, City of Hermantown
John Mulder, Administrator, City of Hermantown
Chair Runbeck laid over HF909 for possible inclusion the Property and Local Tax Division report.
Chair Runbeck moved HF825.
HF825 (Marquart) Local governments prohibited from expending resource to promote a local sales tax.
Representative Marquart presented HF825.
Testifiers:
Gary Carlson, Director of Intergovernmental Relations, League of Minnesota Cities

Chair Runbeck laid over HF825 for possible inclusion in the Property and Local Tax Division report.
Representative Marquart moved HF156.
HF156 (Ward) School district referendum market value tax base altered.
Representative Marquart presented HF156.
Testifiers:
Steve Lund, Director of Business Services, Brainard Public Schools
Sam Walseth, Lobbyist, MN Rural Education Association
Jeff Forester, Executive Director Minnesota Seasonal and Recreational Property Owners Coalition

Chair Runbeck laid over HF156 for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF317.

HF317 (Lenczewski) County levies excluded in computing tax increment and making conforming changes.
Testifers:
Heidi Nelson, Deputy City Administrator, City of Ramsey
Colin McGlure, City of Ramsey

Chair Runbeck laid over HF317 for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF861.
HF861 (Runbeck) County levies excluded in computing tax increment and making conforming changes.
Testifiers:
Michael Grochella, City of Lino Lakes
Stephen Bubul, Attorney, Kennedy and Graven

Chair Runbeck laid over HF861 for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF776.
HF776 (Loon) Spending tax increment deadlines extended under certain conditions.
Representative Loon presented HF776.
Testifiers:
Kevin McHenry, Government Relations Specialist, Metro Cities
Mark Nevinsky, Community Development Director, City of Coon Rapids
Blake Huffman, City Councilman. Shoreview, Minnesota
Bob Schrier, Executive Director of Economic Development, Brooklyn Park, Minnesota
Todd Schultz, Community Development Director, City of Sauk Rapids, Minnesota
Nancy Hoffman, Economic Development Director, Benton County, EDOM

Chair Runbeck laid over HF776 for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF445.
HF445 (Davids) Pooled tax increments for development of market rate housing authorized.
Representative Loeffler moved the H0445A2 amendment.
THE MOTION PREVAILED. THE AMENDMENT WAS ADOPTED.
Representative Loeffler presented HF445, as amended.
Testifiers:
Patricia Nauman, Executive Director, Metro Cities
Bob Schreier, Executive Director of Economic Development, City of Brooklyn Park, Minnesota
Chair Runbeck laid over HF445, as amended, for possible inclusion the Property and Local Tax Division report.
Chair Runbeck moved HF869.
HF869 (Nelson) Transit improvement area provisions modified.
Representative Nelson presented HF869.
Testifiers:
Patricia Nauman, Executive Director, Metro Cities
Bruce Nordquist, Community Development Director, City of Apply Valley, Minnesota
Jim Erkel, Land Use and Transportation Program Director, Minnesota Center for Environmental Advocacy
Chair Runbeck moved the following oral amendment:
At line 4.23, add a new Section5:
Section 5. Minnesota Statues 2010, Section 469.351, subdivision 4, is amended to read:
Subd. 4 Transit improvement area loans. (a) The commissioner may make loans to eligible organizations to be used for eligible costs under paragraph (b). A loan must be used for a designated transit improvement area, under the following terms:
The eligible organization must guarantee repayment of 100 percent of the loan;
A loan must be for a term of ten years, unless repayment is from a tax increment financing district or other state or federal funds, at an interest rate of two percent;
The eligible organization must make annual interest-only payments during the ten-year of the loan;
The eligible organization must made annual interest-only payments during the ten-year term.
A loan may not exceed $2,000,000;
The commissioner must disburse the loan on a cash-needs basis, based on costs incurred by the eligible organization, as well as reporting and other requirements outlined in subdivision 5;
The eligible organization must maintain the funds in accounts that allow the funds to be readily available for business investments;
The eligible organization and the commissioner may agree on contract specifications that are consistent with payback from a tax increment financing district or from any other state and federal funds that may be forthcoming; and
The eligible organization that received a loan must report annually, in a format prescribed by the commissioner, on the nature and mount of the business investments in the transit improvement area, including an account of each financing transaction involving loans received under this section, the types and amounts of financing from sources other than the transit improvement area loan, the number of jobs created, and the amount of private sector and non-state investment leveraged.
(b) Loans under this section must be used to supplement and not replace funding from existing sources or programs. Loans must not be used for the construction cost of transit station transit systems; or the operating costs of public transit or transportation, including, but not limited to, the costs of maintaining, staffing, or operating transit stations. Loans from the bond proceeds fund must be spend to acquire and to better publicly owned land and building and other public improvements of a capital nature. Loans from the general fund can be used for the following eligible expenditures according to an approved transit area improvement plan:
1. clearing land;
2. relation costs;
3. corrections for soil, including removing or remediation of hazardous substances;
4. construction or installation of walkways, bridges or tunnels for pedestrians, bikeways, parking facilities, and signage
5. improvements to streetscapes;
6. construction of public infrastructure to support construction of new affordable housing, senior housing, or housing for disabled persons;
7. construction of public infrastructure to support job creation in the area, especially small business development;
8. developing green spaces and parks; and
9. programs identified in an applicant's planning documents relating to the transit project for which the transit improvement area has been designated; and
10. (9) administrative expenses of the local authority.
C. All loan repayments under this section must be made to the appropriate account under section 469.35 for reinvestment in transit improvement areas.
Chair Runbeck withdrew the previous motion.
Chair Runbeck laid over HF869 for possible inclusion in the Property and Local Tax Division report.
Representative LeMieur moved HF274.
HF274 (Davids) Qualified farm and business property tax exemption provided.
Representative LeMieur moved the H0274A1 amendment.
THE MOTION PREVAILED. THE AMENDMENT WAS ADOPTED.
Representative LeMieur presented HF274, as amended.
Testifiers:
Mike Hicky, Minnesota State Director, National Federation of Independent Business
Thom Petersen, Director of Government Relations, Minnesota Farmer’s Union
Chair Runbeck laid over HF274 for possible inclusion in the Property and Local Tax Division report.
The committee recessed at 1:00 P.M.
The committee reconvened at 1:51 P.M.
Chair Runbeck moved HF758.
HF758 (Shimanski) Sales tax on purchases by political subdivisions eliminated.
Representative Shimanski moved the following oral amendment:
Line 2.35 after the word means insert "home in charter"
THE MOTION PREVAILED. THE AMDENDMENT WAS ADOPTED.
Representative Shimanski presented HF758, as amended.
Testifiers:
Jennifer O’Rourke, Intergovernmental Relations Representative, League of Minnesota Cities
Kent Sulem, Minnesota Association of Townships
Barry Tilley, Minnesota County Board of Commissioners

Chair Runbeck laid over HF758, as amended, for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF1004.
HF1004 (Mullery) Charitable contribution requirement reduced for nonprofit community service-organizations to receive 4c classification.
Representative Mullery presented HF1004.
Testifiers:
Milton Schoen, Veteran’s Services, Hennepin County
Roger Fahrenkrug, Member, American Legion

Chair Runbeck laid over HF1004 for possible inclusion the Property and Local Tax Division report.
Chair Runbeck moved HF877.
HF887 (Simon) Valuation exclusion authorized for certain improvements to homestead and commercial-industrial property.
Representative Simon presented HF877.
Testifiers:
Jennifer O’Rourke, League of Minnesota Cities
Bonnie McDonald, Minnesota Preservation Society
Steven Baker, Minnesota Association of Assessing Officers
Andrea Fish, Minnesota Department of Revenue, Property Tax Division

Chair Runbeck laid over HF877 for possible inclusion in the Property and Local Tax Division report.
Representative Loeffler moved HF994
HF994 (Loeffler) All counties allowed to impose a local sales and use tax, and offset provided.
Representative Loeffler moved the H0994A1 amendment.
THE MOTION PREVAILED. THE AMDENMENT WAS ADOPTED.
Representative Loeffler presented HF994, as amended.
Testifiers:
Keith Carlson, Executive Director, Minnesota Inter-County Association
Chair Runbeck laid over HF994 for possible inclusion in the Property and Local Tax Division report.
Representative Lenczewski moved HF336.
HF336 (Lenczewski) Cities allowed to impose local sales and use tax, and aid offset provided.
Representative Lenczewski presented HF336.
Testifiers:
Gary Carlson, Director of Intergovernmental Relations, League on Minnesota Cities
Rep. Peterson moved H0336A1 amendment.
Representative Lenczewski incorporated the H0336A1 amendment into HF336.
Chair Runbeck laid over HF336, as amended, for possible inclusion in the Property and Local Tax Division report.
Representative Lenczewski moved HF502.
HF502 (Lenczewski) Youth sports and library permitted use of revenue modified for other purposes.
Representative Lenczewski presented HF502.
Testifiers:
Dave Lawless, Hennepin County
Chair Runbeck laid over HF502 for possible inclusion in the Property and Local Tax Division report.
Representative Lenczewski moved HF337.
HF337 (Lenczewski) County levies excluded in computing tax increment and making conforming changes.
Representative Lenczewski presented HF337.
Testifiers:
Jennifer O’Rourke, Intergovernmental Relations Representative League of Minnesota Cities
Keith Carlson, Executive Director, Minnesota Inter-County Association
Chair Runbeck moved the H0337A1 amendment.
THE MOTION PREVAILED. THE ADEMDMENT WAS ADOPTED.
Chair Runbeck laid over HF337, as amended, for possible inclusion in the Property and Local Tax Division report.
Representative Lenczewski moved HF289.
HF289 (Lenczewski) Property tax exemptions eliminated, preferences eliminated, foreign royalty subtraction repealed, subsidies taxed, definitions expanded, JOBZ and related industries modified, development zones repealed, tax rates reduced, research credit repealed, foreign operating corporations repealed, and apportionment formula repealed for mail order businesses.
Representative Lenczewski presented HF289.
Chair Runbeck laid over HF289 for possible inclusion in the Property and Local Tax Division report.
Chair Runbeck moved HF996.
HF996 (Runbeck) Tax statements modified.
Testifiers:
Jeff Forester, Executive Director, Minnesota Seasonal and Recreational Property Owners Coalition
Jason Nord, Property Tax Administrator, Minnesota Dept of Revenue
Chair Runbeck moved the H0996DE2 amendment.
THE MOTION PREVAILED. THE AMENDMENT WAS ADOPTED.
Chair Runbeck laid over HF996, as amended, for possible inclusion in the Property and Local Tax Division report.
Representative Dettmer assumed the gavel at 3:26 P.M.
Representative Runbeck moved HF982.
HF982 (Davids) Taxation aid, credit, and payment changes made.
Representative Runbeck presented HF982.
Testifiers:
Pat Dalton, House Research
Steve Hines, House Research
Chair Dettmer laid over HF982 for possible inclusion in the Property and Local Tax Division report.
Representative Runbeck moved HF1007.
HF1007 (Runbeck) Public Employee Retirement Act aids and payments reduced in lieu of property taxes.
Representative Runbeck moved the H1007A1 amendment.
THE MOTION PREVAILED. THE AMENDMENT WAS ADOPTED.
Testifiers:
Keith Carlson, Executive Director, Minnesota Inter-County Association
Kent Sulem, Minnesota Association of Townships
Gary Carlson, Director of Intergovernmental Relations, League on Minnesota Cities
Chair Dettmer laid over HF1007 for possible inclusion in the Property and Local Tax Division report.
Rep Runbeck moved HF1045.
HF 1045 (Runbeck) Reduction aid payment disparity reduced.
Rep. Runbeck presented HF1045.
Testifiers:
Steve Hines, House Research
Keith Carlson, Minnesota Inter-County Association
Chair Dettmer laid over HF1045 for possible inclusion in the Property and Local Tax Division report.
Representative Runbeck moved HF1046.
HF1046 (Runbeck) Homestead credit market value converted to a tax capacity reduction.
Representative Runbeck presented HF1046.
Testifiers:
Steve Hines, House Research
Keith Carlson, Executive Director, Minnesota Inter-County Association
Kent Sulem, Minnesota Association of Townships
Gary Carlson, Director of Intergovernmental Relations, League of Minnesota Cities
Bill Schriber, Municipal Legislative Commission
Patricia Nauman, Executive Director, Metro Cities

Chair Dettmer laid over HF1046 for possible inclusion in the Property and Local Tax Division report.
The meeting adjourned at 4:32 P.M.



____________________________________
REP. LINDA RUNBECK, CHAIR



____________________________________
Anna Fournier
Committee Legislative Assistant
More Info On This Meeting..
Bills Added:
  • HF336 (Lenczewski) - Cities allowed to impose local sales and use tax, and aid offset provided.
  • HF445 (Davids) - Pooled tax increments for development of market rate housing authorized.
  • HF274 (Davids) - Qualified farm and business properties tax exemption provided.
  • HF502 (Lenczewski) - Youth sports and library permitted use of revenue modified for other purposes.
  • HF337 (Lenczewski) - County levies excluded in computing tax increment and making conforming changes.
  • HF649 (Davids) - Cities allowed local sales tax imposition if criteria are met.
  • HF289 (Lenczewski) - Airport property tax exemptions eliminated, foreign source income preferences eliminated, foreign royalty subtraction repealed, subsidies taxed, definitions expanded, JOBZ and related industries modified, development zones repealed, tax rates reduced, research credit repealed, foreign operating corporations repealed, and mail order business apportionment formula repealed.
  • HF156 (Ward) - School district referendum market value tax base altered.
  • HF290 (Lenczewski) - Individual income, corporate franchise, and property tax refund conformed to federal law provisions; corporate franchise tax rate reduced; foreign source income preferences eliminated; and foreign royalty subtraction and foreign operating corporations repealed.
  • HF909 (Murphy) - Department of Revenue required to report on zip code use in collecting local sales taxes.
  • HF910 (Murphy) - Hermantown; current local sales tax rate modified.
  • HF896 (Fritz) - Medford; local sales and use tax authorized.
  • HF841 (Buesgens) - State general tax reduced, corporate franchise tax reduced and repealed, business income subtraction provided, and capital equipment exemption at the time of purchase allowed and application expanded.
  • HF861 (Runbeck) - Lino Lakes; tax increment financing district extension allowed.
  • HF877 (Simon) - Valuation exclusion authorized for certain improvements to homestead and commercial-industrial property.
  • HF869 (Nelson) - Transit improvement area provisions modified.
  • HF317 (Abeler) - City of Ramsey; tax increment district special rules provided.
  • HF616 (Gunther) - Personal property of an electric generation facility exemption provided.
  • HF776 (Loon) - Spending tax increment deadlines extended under certain conditions.
  • HF825 (Marquart) - Local governments prohibited from expending resource to promote a local sales tax.
  • HF758 (Shimanski) - Sales tax on purchases by political subdivisions eliminated.

HF982 (Davids) Taxation aid, credit, and payment changes made.
HF994 (Loeffler) Allowing all counties to impose a local sales and use tax; providing for an aid offset
HF996 (Runbeck) Tax statements modified.
HF1004 (Mullery) Reducing the charitable contribution requirement for certain nonprofit community service-oriented organizations to receive 4c classification
HF1007 (Runbeck) Public Employee Retirement Act aids and payments reduced in lieu of property taxes.
HF1045 (Runbeck) Reduction aid payment disparity reduced.
HF1046 (Runbeck) Homestead credit market value converted to a tax capacity reduction