Bill Text: MN HF2278 | 2013-2014 | 88th Legislature | Introduced

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Bill Title: Income and franchise taxes, property taxes, sales and use taxes, other taxes and tax provisions technical and clarifying changes made.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2014-02-25 - Introduction and first reading, referred to Taxes [HF2278 Detail]

Download: Minnesota-2013-HF2278-Introduced.html

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A bill for an act

relating to taxation; making technical and clarifying changes to income and
franchise taxes, property taxes, sales and use taxes, and other taxes and tax
provisions;amending Minnesota Statutes 2012, sections 126C.01, subdivision
3; 168.013, subdivision 5; 270.12, subdivision 4; 270.87; 270.91; 270C.34,
subdivision 2; 272.029, subdivision 4a; 273.01; 273.11, subdivisions 12, 19;
273.1102, subdivision 3; 273.124, subdivisions 3, 8; 273.13, subdivisions 22, 24,
25a, 31; 273.1383, subdivision 1; 273.1386, subdivision 1; 273.33, subdivision
2; 273.37, subdivision 2; 273.3711; 275.08, subdivision 1a; 276A.06, subdivision
9; 282.241, subdivision 2; 296A.01, subdivision 16; 469.1763, subdivision 6;
469.177, subdivisions 1, 11; 469.1792, subdivision 1; 469.1794, subdivisions 3,
6; 469.1814, subdivision 6; 473F.08, subdivision 8a; 473H.10, subdivision 3;
Minnesota Statutes 2013 Supplement, sections 272.03, subdivision 15; 273.117;
273.124, subdivision 3a; 273.13, subdivisions 21b, 23, 25; 273.1398, subdivision
3; 290.01, subdivision 19d; 290.0921, subdivision 3; 290.191, subdivision 5;
290C.03; 403.162, subdivision 5; 423A.02, subdivision 3; 477A.12, subdivision
1; 477A.14, subdivision 1; Laws 2013, chapter 143, article 8, section 3;
repealing Minnesota Statutes 2012, sections 273.13, subdivision 21a; 290C.02,
subdivisions 5, 9; 290C.06; Minnesota Rules, parts 8130.8900, subpart 3;
8130.9500, subparts 1, 1a, 2, 3, 4, 5.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

INCOME AND FRANCHISE TAXES

    Section 1. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 19d,
is amended to read:
    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
corporations, there shall be subtracted from federal taxable income after the increases
provided in subdivision 19c:
    (1) the amount of foreign dividend gross-up added to gross income for federal
income tax purposes under section 78 of the Internal Revenue Code;
    (2) the amount of salary expense not allowed for federal income tax purposes due to
claiming the work opportunity credit under section 51 of the Internal Revenue Code;
    (3) any dividend (not including any distribution in liquidation) paid within the
taxable year by a national or state bank to the United States, or to any instrumentality of
the United States exempt from federal income taxes, on the preferred stock of the bank
owned by the United States or the instrumentality;
    (4) amounts disallowed for intangible drilling costs due to differences between
this chapter and the Internal Revenue Code in taxable years beginning before January
1, 1987, as follows:
    (i) to the extent the disallowed costs are represented by physical property, an amount
equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7 , subject to the modifications contained in subdivision 19e; and
    (ii) to the extent the disallowed costs are not represented by physical property, an
amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
290.09, subdivision 8;
    (5) (4) the deduction for capital losses pursuant to sections 1211 and 1212 of the
Internal Revenue Code, except that:
    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
capital loss carrybacks shall not be allowed;
    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
allowed;
    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
capital loss carryback to each of the three taxable years preceding the loss year, subject to
the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
a capital loss carryover to each of the five taxable years succeeding the loss year to the
extent such loss was not used in a prior taxable year and subject to the provisions of
Minnesota Statutes 1986, section 290.16, shall be allowed;
    (6) (5) an amount for interest and expenses relating to income not taxable for federal
income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
291 of the Internal Revenue Code in computing federal taxable income;
    (7) (6) in the case of mines, oil and gas wells, other natural deposits, and timber for
which percentage depletion was disallowed pursuant to subdivision 19c, clause (8), a
reasonable allowance for depletion based on actual cost. In the case of leases the deduction
must be apportioned between the lessor and lessee in accordance with rules prescribed
by the commissioner. In the case of property held in trust, the allowable deduction must
be apportioned between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
of the trust's income allocable to each;
    (8) (7) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
1986, section 290.09, subdivision 7;
    (9) (8) amounts included in federal taxable income that are due to refunds of
income, excise, or franchise taxes based on net income or related minimum taxes paid
by the corporation to Minnesota, another state, a political subdivision of another state,
the District of Columbia, or a foreign country or possession of the United States to the
extent that the taxes were added to federal taxable income under subdivision 19c, clause
(1), in a prior taxable year;
    (10) (9) income or gains from the business of mining as defined in section 290.05,
subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
    (11) (10) the amount of disability access expenditures in the taxable year which are not
allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
    (12) (11) the amount of qualified research expenses not allowed for federal income
tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
that the amount exceeds the amount of the credit allowed under section 290.068;
    (13) (12) the amount of salary expenses not allowed for federal income tax purposes
due to claiming the Indian employment credit under section 45A(a) of the Internal
Revenue Code;
    (14) (13) any decrease in subpart F income, as defined in section 952(a) of the
Internal Revenue Code, for the taxable year when subpart F income is calculated without
regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
    (15) (14) in each of the five tax years immediately following the tax year in which
an addition is required under subdivision 19c, clause (12), an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19c, clause (12). The
resulting delayed depreciation cannot be less than zero;
    (16) (15) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (13), an amount equal to one-fifth of the
amount of the addition;
(17) (16) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under subdivision 19c, clause (16); and
(18) (17) the amount of expenses not allowed for federal income tax purposes due
to claiming the railroad track maintenance credit under section 45G(a) of the Internal
Revenue Code.
EFFECTIVE DATE.This section is effective for taxable years beginning after
December 31, 2013.

    Sec. 2. Minnesota Statutes 2013 Supplement, section 290.0921, subdivision 3, is
amended to read:
    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
income" is Minnesota net income as defined in section 290.01, subdivision 19, and
includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
Minnesota tax return, the minimum tax must be computed on a separate company basis.
If a corporation is part of a tax group filing a unitary return, the minimum tax must be
computed on a unitary basis. The following adjustments must be made.
(1) For purposes of the depreciation adjustments under section 56(a)(1) and
56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
income tax purposes, including any modification made in a taxable year under section
290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
paragraph (c).
For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
allowance in the first taxable year after December 31, 2000.
(2) The portion of the depreciation deduction allowed for federal income tax
purposes under section 168(k) of the Internal Revenue Code that is required as an
addition under section 290.01, subdivision 19c, clause (12), is disallowed in determining
alternative minimum taxable income.
(3) The subtraction for depreciation allowed under section 290.01, subdivision
19d , clause (15) (14), is allowed as a depreciation deduction in determining alternative
minimum taxable income.
(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
of the Internal Revenue Code does not apply.
(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
Revenue Code does not apply.
(6) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
Code does not apply.
(7) The tax preference for intangible drilling costs under section 57(a)(2) of the
Internal Revenue Code must be calculated without regard to subparagraph (E) and the
subtraction under section 290.01, subdivision 19d, clause (4).
(8) (7) The tax preference for tax exempt interest under section 57(a)(5) of the
Internal Revenue Code does not apply.
(9) (8) The tax preference for charitable contributions of appreciated property under
section 57(a)(6) of the Internal Revenue Code does not apply.
(10) (9) For purposes of calculating the tax preference for accelerated depreciation
or amortization on certain property placed in service before January 1, 1987, under section
57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
deduction allowed under section 290.01, subdivision 19e.
For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, not previously deducted is a
depreciation or amortization allowance in the first taxable year after December 31, 2004.
(11) (10) For purposes of calculating the adjustment for adjusted current earnings
in section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
minimum taxable income as defined in this subdivision, determined without regard to the
adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
(12) (11) For purposes of determining the amount of adjusted current earnings
under section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under
section 56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign
dividend gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), or
(ii) the amount of refunds of income, excise, or franchise taxes subtracted as provided in
section 290.01, subdivision 19d, clause (9) (8).
(13) (12) Alternative minimum taxable income excludes the income from operating
in a job opportunity building zone as provided under section 469.317.
(14) (13) Alternative minimum taxable income excludes the income from operating
in a biotechnology and health sciences industry zone as provided under section 469.337.
Items of tax preference must not be reduced below zero as a result of the
modifications in this subdivision.
EFFECTIVE DATE.This section is effective for taxable years beginning after
December 31, 2013.

    Sec. 3. Minnesota Statutes 2013 Supplement, section 290.191, subdivision 5, is
amended to read:
    Subd. 5. Determination of sales factor. For purposes of this section, the following
rules apply in determining the sales factor.
    (a) The sales factor includes all sales, gross earnings, or receipts received in the
ordinary course of the business, except that the following types of income are not included
in the sales factor:
    (1) interest;
    (2) dividends;
    (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
    (4) sales of property used in the trade or business, except sales of leased property of
a type which is regularly sold as well as leased; and
    (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
Code or sales of stock.
    (b) Sales of tangible personal property are made within this state if the property is
received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
of the property.
    (c) Tangible personal property delivered to a common or contract carrier or foreign
vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
regardless of f.o.b. point or other conditions of the sale.
    (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
licensed by a state or political subdivision to resell this property only within the state of
ultimate destination, the sale is made in that state.
    (e) Sales made by or through a corporation that is qualified as a domestic
international sales corporation under section 992 of the Internal Revenue Code are not
considered to have been made within this state.
    (f) Sales, rents, royalties, and other income in connection with real property is
attributed to the state in which the property is located.
    (g) Receipts from the lease or rental of tangible personal property, including finance
leases and true leases, must be attributed to this state if the property is located in this
state and to other states if the property is not located in this state. Receipts from the
lease or rental of moving property including, but not limited to, motor vehicles, rolling
stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
factor to the extent that the property is used in this state. The extent of the use of moving
property is determined as follows:
    (1) A motor vehicle is used wholly in the state in which it is registered.
    (2) The extent that rolling stock is used in this state is determined by multiplying
the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
which is the miles traveled within this state by the leased or rented rolling stock and the
denominator of which is the total miles traveled by the leased or rented rolling stock.
    (3) The extent that an aircraft is used in this state is determined by multiplying the
receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
the number of landings of the aircraft in this state and the denominator of which is the
total number of landings of the aircraft.
    (4) The extent that a vessel, mobile equipment, or other mobile property is used in
the state is determined by multiplying the receipts from the lease or rental of the property
by a fraction, the numerator of which is the number of days during the taxable year the
property was in this state and the denominator of which is the total days in the taxable year.
    (h) Royalties and other income received for the use of or for the privilege of using
intangible property, including patents, know-how, formulas, designs, processes, patterns,
copyrights, trade names, service names, franchises, licenses, contracts, customer lists, or
similar items, must be attributed to the state in which the property is used by the purchaser.
If the property is used in more than one state, the royalties or other income must be
apportioned to this state pro rata according to the portion of use in this state. If the portion
of use in this state cannot be determined, the royalties or other income must be excluded
from both the numerator and the denominator. Intangible property is used in this state if
the purchaser uses the intangible property or the rights therein in the regular course of its
business operations in this state, regardless of the location of the purchaser's customers.
    (i) Sales of intangible property are made within the state in which the property is
used by the purchaser. If the property is used in more than one state, the sales must be
apportioned to this state pro rata according to the portion of use in this state. If the
portion of use in this state cannot be determined, the sale must be excluded from both the
numerator and the denominator of the sales factor. Intangible property is used in this
state if the purchaser used the intangible property in the regular course of its business
operations in this state.
    (j) Receipts from the performance of services must be attributed to the state where
the services are received. For the purposes of this section, receipts from the performance
of services provided to a corporation, partnership, or trust may only be attributed to a state
where it has a fixed place of doing business. If the state where the services are received is
not readily determinable or is a state where the corporation, partnership, or trust receiving
the service does not have a fixed place of doing business, the services shall be deemed
to be received at the location of the office of the customer from which the services were
ordered in the regular course of the customer's trade or business. If the ordering office
cannot be determined, the services shall be deemed to be received at the office of the
customer to which the services are billed.
    (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
from management, distribution, or administrative services performed by a corporation
or trust for a fund of a corporation or trust regulated under United States Code, title 15,
sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
the fund resides. Under this paragraph, receipts for services attributed to shareholders are
determined on the basis of the ratio of: (1) the average of the outstanding shares in the
fund owned by shareholders residing within Minnesota at the beginning and end of each
year; and (2) the average of the total number of outstanding shares in the fund at the
beginning and end of each year. Residence of the shareholder, in the case of an individual,
is determined by the mailing address furnished by the shareholder to the fund. Residence
of the shareholder, when the shares are held by an insurance company as a depositor for
the insurance company policyholders, is the mailing address of the policyholders. In
the case of an insurance company holding the shares as a depositor for the insurance
company policyholders, if the mailing address of the policyholders cannot be determined
by the taxpayer, the receipts must be excluded from both the numerator and denominator.
Residence of other shareholders is the mailing address of the shareholder.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 2

PROPERTY TAXES

    Section 1. Minnesota Statutes 2012, section 126C.01, subdivision 3, is amended to read:
    Subd. 3. Referendum market value. "Referendum market value" means the
market value of all taxable property, excluding property classified as class 2, 4c(4), or
4c(12) under section 273.13. The portion of class 2a property consisting of the house,
garage, and surrounding one acre of land of an agricultural homestead is included in
referendum market value. For the purposes of this subdivision, in the case of class 1a,
1b, or 2a property, "market value" means the value prior to the exclusion under section
273.13, subdivision 35 . Any class of property, or any portion of a class of property, that is
included in the definition of referendum market value and that has a class classification
rate of less than one percent under section 273.13 shall have a referendum market value
equal to its market value times its class classification rate, multiplied by 100.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 2. Minnesota Statutes 2012, section 168.013, subdivision 5, is amended to read:
    Subd. 5. Certain vehicles subject to personal property tax. Motor vehicles not
subject to taxation as provided in section 168.012, but subject to taxation as personal
property within the state under section 273.36 or 273.37, subdivision 1, have a class
classification rate as provided in section 273.13, subdivision 24, provided, that if the
person against whom any tax has been levied on the ad valorem basis because of any
motor vehicle shall, during the calendar year for which such tax is levied, be also taxed
under the provisions of this chapter, then and in that event, upon proper showing, the
commissioner of revenue shall grant to the person against whom said ad valorem tax was
levied, such reduction or abatement of net tax capacity or taxes as was occasioned by the
so-called ad valorem tax imposed, and provided further that, if said ad valorem tax upon
any motor vehicle has been assessed against a dealer in new and unused motor vehicles,
and the tax imposed by this chapter for the required period is thereafter paid by the owner,
then and in that event, upon proper showing, the commissioner of revenue, upon the
application of said dealer, shall grant to such dealer against whom said ad valorem tax was
levied such reduction or abatement of net tax capacity or taxes as was occasioned by the
so-called ad valorem tax imposed. If such motor vehicle be registered and taxed under this
chapter for a fractional part of the calendar year only, then such ad valorem tax shall be
reduced in the percentage which such fractional part of the years bears to a full year.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 3. Minnesota Statutes 2012, section 270.12, subdivision 4, is amended to read:
    Subd. 4. Public utility property. For purposes of equalization only, public utility
personal property shall be treated as a separate class of property notwithstanding the fact
that its class classification rate is the same as commercial-industrial property.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 4. Minnesota Statutes 2012, section 270.87, is amended to read:
270.87 CERTIFICATION TO COUNTY ASSESSORS.
After making an annual determination of the equalized fair market value of the
operating property of each company in each of the respective counties, and in the taxing
districts therein, the commissioner shall certify the equalized fair market value to the
county assessor on or before June 30. The equalized fair market value of the operating
property of the railroad company in the county and the taxing districts therein is the value
on which taxes must be levied and collected in the same manner as on the commercial and
industrial property of such county and the taxing districts therein. If the commissioner
determines that the equalized fair market value certified on or before June 30 is in error,
the commissioner may issue a corrected certification on or before August 31. The
commissioner may correct errors that are merely clerical in nature until December 31.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. Minnesota Statutes 2012, section 270.91, is amended to read:
270.91 CONTAMINATION TAX.
    Subdivision 1. Imposition. A tax is annually imposed on the contamination value of
taxable real property in this state.
    Subd. 2. Initial tax rates. Unless the rates under subdivision 3 or 4 apply, the
tax imposed under this section equals 100 percent of the class classification rate for the
property under section 273.13, multiplied by the contamination value of the property.
    Subd. 3. Tax rates, nonresponsible party. If neither the owner nor the operator of
the taxable real property, in the assessment year, is a responsible person under chapter
115B or a responsible party under chapter 18D for the presence of contaminants on the
property, unless subdivision 4 applies, the tax imposed under this section equals 25
percent of the class classification rate for the property under section 273.13, multiplied
by the contamination value of the property. A determination under section 115B.177 or
other similar determination by the commissioner of the Pollution Control Agency or by
the commissioner of agriculture for a release of agricultural chemicals is dispositive of
whether the owner or operator is not a responsible person under chapter 18D or 115B for
purposes of this section. To qualify under this subdivision, the property owner must
provide the assessor with a copy of the determination by July 1 of the assessment year.
    Subd. 4. Tax rates after plan approval. (a) The tax imposed under this subdivision
applies for the first assessment year that begins after one of the following occurs:
(1) a response action plan for the property has been approved by the commissioner
of the Pollution Control Agency or by the commissioner of agriculture for an agricultural
chemical release or incident subject to chapter 18D and work under the plan has begun; or
(2) the contaminants are asbestos and the property owner has in place an abatement
plan for enclosure, removal, or encapsulation of the asbestos. To qualify under this clause,
the property owner must (i) have entered into a binding contract with a licensed contractor
for completion of the work, or (ii) have obtained a license from the commissioner of health
and begun the work. An abatement plan must provide for completion of the work within a
reasonable time period, as determined by the assessors.
(b) To qualify under paragraph (a), the property owner must provide the assessor
with a copy of: (1) the approved response action plan; or (2) a copy of the asbestos
abatement plan and contract for completion of the work or the owner's license to perform
the work. The property owner also must file with the assessor an affidavit indicating when
work under the response action plan or asbestos abatement plan began.
(c) The tax imposed under this subdivision equals 50 percent of the class
classification rate for the property under section 273.13, multiplied by the contamination
value of the property, unless paragraph (d) applies.
(d) The tax imposed under this subdivision equals 12.5 percent of the class
classification rate for the property under section 273.13, multiplied by the contamination
value of the property, if one of the following conditions is satisfied:
(1) the contaminants are subject to chapter 115B and neither the owner nor the
operator of the taxable real property in the assessment year is a responsible person under
chapter 115B;
(2) the contaminants are subject to chapter 18D and neither the owner nor the operator
of the taxable real property in the assessment year is a responsible party under chapter 18D.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 6. Minnesota Statutes 2012, section 272.029, subdivision 4a, is amended to read:
    Subd. 4a. Correction of errors. If the commissioner of revenue determines that
the amount of production tax has been erroneously calculated, the commissioner may
correct the error. The commissioner must notify the owner of the wind energy conversion
system of the correction and the amount of tax due to each county and must certify the
correction to the county auditor of each county in which the system is located on or before
April 1 of the current year. The commissioner may correct errors that are merely clerical
in nature until December 31.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 7. Minnesota Statutes 2013 Supplement, section 272.03, subdivision 15, is
amended to read:
    Subd. 15. Taxable market value. "Taxable market value" means estimated market
value for the parcel as reduced by market value exclusions, deferments of value, or other
adjustments required by law, that reduce market value before the application of class
classification rates.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 8. Minnesota Statutes 2012, section 273.01, is amended to read:
273.01 LISTING AND ASSESSMENT, TIME.
All real property subject to taxation shall be listed and at least one-fifth of the parcels
listed shall be appraised each year with reference to their value on January 2 preceding the
assessment so that each parcel shall be reappraised at maximum intervals of five years. All
real property becoming taxable in any year shall be listed with reference to its value on
January 2 of that year. Except as provided in this section and section 274.01, subdivision
1 , all real property assessments shall be completed two weeks prior to the date scheduled
for the local board of review or equalization. No changes in valuation or classification
which are intended to correct errors in judgment by the county assessor may be made by
the county assessor after the board of review or the county board of equalization has
adjourned; however, corrections of errors for real or personal property that are merely
clerical in nature or changes that extend homestead treatment to property are permitted
after adjournment until the tax extension date for that assessment year. Any changes made
by the assessor after adjournment must be fully documented and maintained in a file in the
assessor's office and shall be available for review by any person. A copy of any changes
made during this period shall be sent to the county board no later than December 31 of
the assessment year. In the event a valuation and classification is not placed on any real
property by the dates scheduled for the local board of review or equalization the valuation
and classification determined in the preceding assessment shall be continued in effect and
the provisions of section 273.13 shall, in such case, not be applicable, except with respect
to real estate which has been constructed since the previous assessment. Real property
containing iron ore, the fee to which is owned by the state of Minnesota, shall, if leased by
the state after January 2 in any year, be subject to assessment for that year on the value of
any iron ore removed under said lease prior to January 2 of the following year. Personal
property subject to taxation shall be listed and assessed annually with reference to its value
on January 2; and, if acquired on that day, shall be listed by or for the person acquiring it.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2012, section 273.11, subdivision 12, is amended to read:
    Subd. 12. Community land trusts. (a) A community land trust, as defined under
chapter 462A, is (i) a community-based nonprofit corporation organized under chapter
317A, which qualifies for tax exempt status under 501(c)(3), or (ii) a "city" as defined in
section 462C.02, subdivision 6, which has received funding from the Minnesota housing
finance agency for purposes of the community land trust program. The Minnesota Housing
Finance Agency shall set the criteria for community land trusts.
(b) All occupants of a community land trust building must have a family income of
less than 80 percent of the greater of (1) the state median income, or (2) the area or county
median income, as most recently determined by the Department of Housing and Urban
Development. Before the community land trust can rent or sell a unit to an applicant, the
community land trust shall verify to the satisfaction of the administering agency or the city
that the family income of each person or family applying for a unit in the community land
trust building is within the income criteria provided in this paragraph. The administering
agency or the city shall verify to the satisfaction of the county assessor that the occupant
meets the income criteria under this paragraph. The property tax benefits under paragraph
(c) shall be granted only to property owned or rented by persons or families within the
qualifying income limits. The family income criteria and verification is only necessary at
the time of initial occupancy in the property.
(c) A unit which is owned by the occupant and used as a homestead by the occupant
qualifies for homestead treatment as class 1a under section 273.13, subdivision 22. A unit
which is rented by the occupant and used as a homestead by the occupant shall be class
4a or 4b property, under section 273.13, subdivision 25, whichever is applicable. Any
remaining portion of the property not used for residential purposes shall be classified by
the assessor in the appropriate class based upon the use of that portion of the property
owned by the community land trust. The land upon which the building is located shall
be assessed at the same class classification rate as the units within the building, provided
that if the building contains some units assessed as class 1a and some units assessed as
class 4a or 4b, the market value of the land will be assessed in the same proportions as
the value of the building.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 10. Minnesota Statutes 2012, section 273.11, subdivision 19, is amended to read:
    Subd. 19. Valuation exclusion for improvements to certain business property.
Property classified under Minnesota Statutes, section 273.13, subdivision 24, which is
eligible for the preferred class classification rate on the market value up to $150,000, shall
qualify for a valuation exclusion for assessment purposes, provided all of the following
conditions are met:
(1) the building must be at least 50 years old at the time of the improvement or
damaged by the 1997 floods;
(2) the building must be located in a city or town with a population of 10,000 or
less that is located outside the seven-county metropolitan area, as defined in section
473.121, subdivision 2 ;
(3) the total estimated market value of the land and buildings must be $100,000 or
less prior to the improvement and prior to the damage caused by the 1997 floods;
(4) the current year's estimated market value of the property must be equal to or less
than the property's estimated market value in each of the two previous years' assessments;
(5) a building permit must have been issued prior to the commencement of the
improvement, or if the building is located in a city or town which does not have a building
permit process, the property owner must notify the assessor prior to the commencement of
the improvement;
(6) the property, including its improvements, has received no public assistance,
grants or financing except, that in the case of property damaged by the 1997 floods, the
property is eligible to the extent that the flood losses are not reimbursed by insurance or
any public assistance, grants, or financing;
(7) the property is not receiving a property tax abatement under section 469.1813; and
(8) the improvements are made after the effective date of Laws 1997, chapter 231,
and prior to January 1, 1999.
The assessor shall estimate the market value of the building in the assessment year
immediately following the year that (1) the building permit was taken out, or (2) the
taxpayer notified the assessor that an improvement was to be made. If the estimated
market value of the building has increased over the prior year's assessment, the assessor
shall note the amount of the increase on the property's record, and that amount shall be
subtracted from the value of the property in each year for five years after the improvement
has been made, at which time an amount equal to 20 percent of the excluded value shall be
added back in each of the five subsequent assessment years.
For any property, there can be no more than two improvements qualifying for
exclusion under this subdivision. The maximum amount of value that can be excluded
from any property under this subdivision is $50,000.
The assessor shall require an application, including documentation of the age of the
building from the owner, if unknown by the assessor. Applications must be received prior
to July 1 of any year in order to be effective for taxes payable in the following year.
For purposes of this subdivision, "population" has the same meaning given in
Minnesota Statutes, section 477A.011, subdivision 3.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 11. Minnesota Statutes 2012, section 273.1102, subdivision 3, is amended to read:
    Subd. 3. 1988 adjustment. School district levy limitations or authorities expressed
in terms of mills and adjusted assessed value in any special law that is not codified
in Minnesota Statutes shall be converted by the Department of Education to equalized
gross local tax rates for taxes payable in 1989 and 1990 and to equalized net local tax
rates for taxes payable in 1991 and thereafter. For purposes of this calculation, the 1987
adjusted assessed values of the district shall be converted to "adjusted gross tax capacities"
by multiplying the equalized market values by class of property by the gross class
classification rates provided in section 273.13. Each county assessor and the city assessors
of Minneapolis, Duluth, and St. Cloud shall furnish the commissioner of revenue the 1987
market value for taxes payable in 1988 for any new classes of property established in
Laws 1988, chapter 719, article 5. The commissioner shall use those values, and estimate
values where needed, in developing the 1987 tax capacity for each school district under
this section. The requirements of section 124.2131, subdivisions 1, paragraph (c), 2, and
3, shall remain in effect.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 12. Minnesota Statutes 2013 Supplement, section 273.117, is amended to read:
273.117 CONSERVATION PROPERTY TAX VALUATION.
    The value of real property which is subject to a conservation restriction or easement
shall not be reduced by the assessor if:
    (a) the restriction or easement is for a conservation purpose as defined in section
84.64, subdivision 2, and is recorded on the property; and
    (b) the property is being used in accordance with the terms of the conservation
restriction or easement.
This section does not apply to (1) conservation restrictions or easements covering
riparian buffers along lakes, rivers, and streams that are used for water quantity or quality
control; or (2) easements in a county that has adopted, by referendum, a program to protect
farmland and natural areas since 1999; or (3) conservation restrictions or easements
entered into prior to May 23, 2013.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 13. Minnesota Statutes 2012, section 273.124, subdivision 3, is amended to read:
    Subd. 3. Cooperatives and charitable corporations; homestead and other
property. (a) When property 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 building on the property, or a unit within a building
on the property, the corporation or association may claim homestead treatment for each
dwelling, or for each unit in the case of a building containing several dwelling units, or for
the part of the value of the building occupied by a shareholder. Each building or unit must
be designated by legal description or number. The net tax capacity of each building or
unit that qualifies for assessment as a homestead under this subdivision must include not
more than one-half acre of land, if platted, nor more than 80 acres if unplatted. The net
tax capacity of the property is the sum of the net tax capacities of each of the respective
buildings or units comprising the property, including the net tax capacity of each unit's
or building's proportionate share of the land and any common buildings. To qualify for
the treatment provided by this subdivision, the corporation or association must be wholly
owned by persons having a right to occupy a building or unit owned by the corporation
or association. A charitable corporation organized under the laws of Minnesota and not
otherwise exempt thereunder with no outstanding stock qualifies for homestead treatment
with respect to member residents of the dwelling units who have purchased and hold
residential participation warrants entitling them to occupy the units.
(b) To the extent provided in paragraph (a), a cooperative or corporation organized
under chapter 308A or 308B may obtain separate assessment and valuation, and separate
property tax statements for each residential homestead, residential nonhomestead, or for
each seasonal residential recreational building or unit not used for commercial purposes.
The appropriate class classification rates under section 273.13 shall be applicable as if
each building or unit were a separate tax parcel; provided, however, that the tax parcel
which exists at the time the cooperative or corporation makes application under this
subdivision shall be a single parcel for purposes of property taxes or the enforcement and
collection thereof, other than as provided in paragraph (a) or this paragraph.
(c) A member of a corporation or association may initially obtain the separate
assessment and valuation and separate property tax statements, as provided in paragraph
(b), by applying to the assessor by June 30 of the assessment year.
(d) When a building, or dwelling units within a building, no longer qualify under
paragraph (a) or (b), the current owner must notify the assessor within 30 days. Failure to
notify the assessor within 30 days shall result in the loss of benefits under paragraph (a) or
(b) for taxes payable in the year that the failure is discovered. For these purposes, "benefits
under paragraph (a) or (b)" means the difference in the net tax capacity of the building or
units which no longer qualify as computed under paragraph (a) or (b) and as computed
under the otherwise applicable law, times the local tax rate applicable to the building for
that taxes payable year. Upon discovery of a failure to notify, the assessor shall inform the
auditor of the difference in net tax capacity for the building or buildings in which units no
longer qualify, and the auditor shall calculate the benefits under paragraph (a) or (b). Such
amount, plus a penalty equal to 100 percent of that amount, shall then be demanded of the
building's owner. The property owner may appeal the county's determination by serving
copies of a petition for review with county officials as provided in section 278.01 and
filing a proof of service as provided in section 278.01 with the Minnesota Tax Court within
60 days of the date of the notice from the county. The appeal shall be governed by the Tax
Court procedures provided in chapter 271, for cases relating to the tax laws as defined in
section 271.01, subdivision 5; disregarding sections 273.125, subdivision 5, and 278.03,
but including section 278.05, subdivision 2. If the amount of the benefits under paragraph
(a) or (b) and penalty are not paid within 60 days, and if no appeal has been filed, the
county auditor shall certify the amount of the benefit and penalty to the succeeding year's
tax list to be collected as part of the property taxes on the affected property.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 14. Minnesota Statutes 2013 Supplement, 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.
    (d) "Homestead treatment" under this subdivision means the class classification rate
provided for class 4c property classified under section 273.13, subdivision 25, paragraph
(d), clause (5), item (ii). 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 assessment year 2014.

    Sec. 15. Minnesota Statutes 2012, section 273.124, subdivision 8, is amended to read:
    Subd. 8. Homestead owned by or leased to family farm corporation, joint farm
venture, limited liability company, or partnership. (a) Each family farm corporation;
each joint family farm venture; and each limited liability company or partnership which
operates a family farm; is entitled to class 1b under section 273.13, subdivision 22,
paragraph (b), or class 2a assessment for one homestead occupied by a shareholder,
member, or partner thereof who is residing on the land, and actively engaged in farming of
the land owned by the family farm corporation, joint family farm venture, limited liability
company, or partnership. Homestead treatment applies even if legal title to the property is
in the name of the family farm corporation, joint family farm venture, limited liability
company, or partnership, and not in the name of the person residing on it.
"Family farm corporation," "family farm," and "partnership operating a family
farm" have the meanings given in section 500.24, except that the number of allowable
shareholders, members, or partners under this subdivision shall not exceed 12. "Limited
liability company" has the meaning contained in sections 322B.03, subdivision 28, and
500.24, subdivision 2 , paragraphs (l) and (m). "Joint family farm venture" means a
cooperative agreement among two or more farm enterprises authorized to operate a family
farm under section 500.24.
(b) In addition to property specified in paragraph (a), any other residences owned
by family farm corporations, joint family farm ventures, limited liability companies,
or partnerships described in paragraph (a) which are located on agricultural land and
occupied as homesteads by its shareholders, members, or partners who are actively
engaged in farming on behalf of that corporation, joint farm venture, limited liability
company, or partnership must also be assessed as class 2a property or as class 1b property
under section 273.13.
(c) Agricultural property that is owned by a member, partner, or shareholder of a
family farm corporation or joint family farm venture, limited liability company operating
a family farm, or by a partnership operating a family farm and leased to the family farm
corporation, limited liability company, partnership, or joint farm venture, as defined in
paragraph (a), is eligible for classification as class 1b or class 2a under section 273.13, if
the owner is actually residing on the property, and is actually engaged in farming the land
on behalf of that corporation, joint farm venture, limited liability company, or partnership.
This paragraph applies without regard to any legal possession rights of the family farm
corporation, joint family farm venture, limited liability company, or partnership under
the lease.
(d) Nonhomestead agricultural property that is owned by a family farm corporation,
joint farm venture, limited liability company, or partnership; and located not farther than
four townships or cities, or combination thereof, from agricultural land that is owned, and
used for the purposes of a homestead by an individual who is a shareholder, member, or
partner of the corporation, venture, company, or partnership; is entitled to receive the
first tier homestead class classification rate on any remaining market value in the first
homestead class tier that is in excess of the market value of the shareholder's, member's,
or partner's class 2 agricultural homestead property, if the owner, or someone acting on
the owner's behalf notifies the county assessor by July 1 that the property may be eligible
under this paragraph for the current assessment year, for taxes payable in the following
year. As used in this paragraph, "agricultural property" means property classified as 2a
under section 273.13, along with any contiguous property classified as 2b under section
273.13 , if the contiguous 2a and 2b properties are under the same ownership.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 16. Minnesota Statutes 2013 Supplement, section 273.13, subdivision 21b,
is amended to read:
    Subd. 21b. Net tax capacity. "Net tax capacity" means the product of the
appropriate net class classification rates in this section and taxable market values.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 17. Minnesota Statutes 2012, 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 class classification
rate of one percent of its market value; and the market value of class 1a property that
exceeds $500,000 has a class 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 class classification rate of .45 percent of its market value. The
remaining market value of class 1b property has a class 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, 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 even if the title to the homestead is held by the corporation, partnership, or limited
liability company. 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 class 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 class rates as class 1a property
under paragraph (a) a classification rate of one percent on the first $500,000 of market
value and a classification rate of 1.25 percent on the market value that exceeds $500,000.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 18. Minnesota Statutes 2013 Supplement, 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 class 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
net class classification rate of 0.5 percent of market value. The remaining property over
the first tier has a class 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 net class 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 net class 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 class 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.
    "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 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.
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:
    (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 class 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 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 class 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.
    (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 2014.

    Sec. 19. Minnesota Statutes 2012, section 273.13, subdivision 24, is amended to read:
    Subd. 24. Class 3. Commercial and industrial property and utility real and personal
property is class 3a.
(1) Except as otherwise provided, each parcel of commercial, industrial, or utility
real property has a class classification rate of 1.5 percent of the first tier of market value,
and 2.0 percent of the remaining market value. In the case of contiguous parcels of
property owned by the same person or entity, only the value equal to the first-tier value
of the contiguous parcels qualifies for the reduced class classification rate, except that
contiguous parcels owned by the same person or entity shall be eligible for the first-tier
value class classification rate on each separate business operated by the owner of the
property, provided the business is housed in a separate structure. For the purposes of
this subdivision, the first tier means the first $150,000 of market value. Real property
owned in fee by a utility for transmission line right-of-way shall be classified at the class
classification rate for the higher tier.
For purposes of this subdivision, parcels are considered to be contiguous even if
they are separated from each other by a road, street, waterway, or other similar intervening
type of property. Connections between parcels that consist of power lines or pipelines
do not cause the parcels to be contiguous. Property owners who have contiguous parcels
of property that constitute separate businesses that may qualify for the first-tier class
classification rate shall notify the assessor by July 1, for treatment beginning in the
following taxes payable year.
(2) All personal property that is: (i) part of an electric generation, transmission, or
distribution system; or (ii) part of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; and (iii) not described in clause (3), and all railroad
operating property has a class classification rate as provided under clause (1) for the first
tier of market value and the remaining market value. In the case of multiple parcels in
one county that are owned by one person or entity, only one first tier amount is eligible
for the reduced rate.
(3) The entire market value of personal property that is: (i) tools, implements, and
machinery of an electric generation, transmission, or distribution system; (ii) tools,
implements, and machinery of a pipeline system transporting or distributing water, gas,
crude oil, or petroleum products; or (iii) the mains and pipes used in the distribution of
steam or hot or chilled water for heating or cooling buildings, has a class classification rate
as provided under clause (1) for the remaining market value in excess of the first tier.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 20. Minnesota Statutes 2013 Supplement, 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 class 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 class classification rate of 1.25 percent.
    (c) Class 4bb includes nonhomestead residential real estate containing one unit,
other than seasonal residential recreational property, and a single family dwelling, garage,
and surrounding one acre of property on a nonhomestead farm classified under subdivision
23, paragraph (b).
    Class 4bb property has the same class rates as class 1a property under subdivision 22
a classification rate of one percent on the first $500,000 of market value and a classification
rate of 1.25 percent on the market value that exceeds $500,000.
    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 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.
    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.
    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: (A) is located on a lake
as defined under section 103G.005, subdivision 15, paragraph (a), clause (3); and (B)
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 subitem (B). 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 class 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 class rates as class 4bb property a classification rate of one percent
on the first $500,000 of market value and a classification rate of 1.25 percent on the market
value that exceeds $500,000, (ii) manufactured home parks assessed under clause (5), item
(i), have the same class rate as class 4b property a classification rate of 1.25 percent, and
the market value of manufactured home parks assessed under clause (5), item (ii), has the
same class rate as class 4d property have 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 class 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 class 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 class classification rate of one
percent, (v) the market value of property described in clauses (2), (6), and (10) has a class
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 class classification rate of 1.25 percent.
    (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 class classification rate
of 0.75 percent. The remaining value of class 4d property has a class 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 assessment year 2014.

    Sec. 21. Minnesota Statutes 2012, section 273.13, subdivision 25a, is amended to read:
    Subd. 25a. Elderly assisted living facility property. "Elderly assisted living
facility property" means residential real estate containing more than one unit held for
use by the tenants or lessees as a residence for periods of 30 days or more, along with
community rooms, lounges, activity rooms, and related facilities, designed to meet the
housing, health, and financial security needs of the elderly. The real estate may be owned
by an individual, partnership, limited partnership, for-profit corporation or nonprofit
corporation exempt from federal income taxation under United States Code, title 26,
section 501(c)(3) or related sections.
An admission or initiation fee may be required of tenants. Monthly charges may
include charges for the residential unit, meals, housekeeping, utilities, social programs, a
health care alert system, or any combination of them. On-site health care may be provided
by in-house staff or an outside health care provider.
The assessor shall classify elderly assisted living facility property, depending upon
the property's ownership, occupancy, and use. The applicable class classification rates
shall apply based on its classification, if taxable.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 22. Minnesota Statutes 2012, section 273.13, subdivision 31, is amended to read:
    Subd. 31. Class 5. Class 5 property includes:
(1) unmined iron ore and low-grade iron-bearing formations as defined in section
273.14 ; and
(2) all other property not otherwise classified.
Class 5 property has a class classification rate of 2.0 percent of market value.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 23. Minnesota Statutes 2012, section 273.1383, subdivision 1, is amended to read:
    Subdivision 1. Flood net tax capacity loss. In assessment years 1998, 1999,
and 2000, the county assessor of each county listed in section 273.124, subdivision 14,
paragraph (d), clause (2), shall compute a hypothetical county net tax capacity based upon
market values for the current assessment year and the class classification rates that were in
effect for assessment year 1997. The amount, if any, by which the assessment year 1997
total taxable net tax capacity exceeds the hypothetical taxable net tax capacity shall be
known as the county's "flood net tax capacity loss" for the current assessment year. The
county assessor of each county whose flood net tax capacity loss for the current year exceeds
five percent of its assessment year 1997 total taxable net tax capacity shall certify its flood
net tax capacity loss to the commissioner of revenue by August 1 of the assessment year.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 24. Minnesota Statutes 2012, section 273.1386, subdivision 1, is amended to read:
    Subdivision 1. Flood net tax capacity loss. The county assessor of each qualified
county shall compute a hypothetical city taxable net tax capacity for each city in the
county based upon market values for assessment year 2003 and the class classification
rates that were in effect for assessment year 2002. The amount, if any, by which the
assessment year 2002 total taxable net tax capacity of the city exceeds the hypothetical
taxable net tax capacity of the city is the city's "flood net tax capacity loss." A county
assessor of a qualified county that contains a city that has a flood net tax capacity loss that
exceeds five percent of its assessment year 2002 total taxable net tax capacity shall certify
the city's flood net tax capacity loss to the commissioner of revenue by August 1, 2003.
As used in this section, a "qualified county" is a county located within the area
included in DR-1419.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 25. Minnesota Statutes 2013 Supplement, section 273.1398, subdivision 3,
is amended to read:
    Subd. 3. Disparity reduction aid. The amount of disparity aid certified for each
taxing district within each unique taxing jurisdiction for taxes payable in the prior year
shall be multiplied by the ratio of (1) the jurisdiction's tax capacity using the class
classification rates for taxes payable in the year for which aid is being computed, to (2) its
tax capacity using the class classification rates for taxes payable in the year prior to that
for which aid is being computed, both based upon taxable market values for taxes payable
in the year prior to that for which aid is being computed. If the commissioner determines
that insufficient information is available to reasonably and timely calculate the numerator
in this ratio for the first taxes payable year that a class classification rate change or new
class classification rate is effective, the commissioner shall omit the effects of that class
classification rate change or new class classification rate when calculating this ratio for
aid payable in that taxes payable year. For aid payable in the year following a year for
which such omission was made, the commissioner shall use in the denominator for the
class that was changed or created, the tax capacity for taxes payable two years prior to that
in which the aid is payable, based on taxable market values for taxes payable in the year
prior to that for which aid is being computed.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 26. Minnesota Statutes 2012, section 273.33, subdivision 2, is amended to read:
    Subd. 2. Listing and assessment by commissioner. The personal property,
consisting of the pipeline system of mains, pipes, and equipment attached thereto, of
pipeline companies and others engaged in the operations or business of transporting natural
gas, gasoline, crude oil, or other petroleum products by pipelines, shall be listed with and
assessed by the commissioner of revenue and the values provided to the city or county
assessor by order. This subdivision shall not apply to the assessment of the products
transported through the pipelines nor to the lines of local commercial gas companies
engaged primarily in the business of distributing gas to consumers at retail nor to pipelines
used by the owner thereof to supply natural gas or other petroleum products exclusively
for such owner's own consumption and not for resale to others. If more than 85 percent
of the natural gas or other petroleum products actually transported over the pipeline is
used for the owner's own consumption and not for resale to others, then this subdivision
shall not apply; provided, however, that in that event, the pipeline shall be assessed in
proportion to the percentage of gas actually transported over such pipeline that is not used
for the owner's own consumption. On or before August 1, the commissioner shall certify
to the auditor of each county, the amount of such personal property assessment against
each company in each district in which such property is located. If the commissioner
determines that the amount of personal property assessment certified on or before August
1 is in error, the commissioner may issue a corrected certification on or before October 1.
The commissioner may correct errors that are merely clerical in nature until December 31.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 27. Minnesota Statutes 2012, section 273.37, subdivision 2, is amended to read:
    Subd. 2. Listing and assessment by commissioner. Transmission lines of less
than 69 kv, transmission lines of 69 kv and above located in an unorganized township,
and distribution lines, and equipment attached thereto, having a fixed situs outside the
corporate limits of cities except distribution lines taxed as provided in sections 273.40
and 273.41, shall be listed with and assessed by the commissioner of revenue in the
county where situated and the values provided to the city or county assessor by order.
The commissioner shall assess such property at the percentage of market value fixed by
law; and, on or before August 1, shall certify to the auditor of each county in which
such property is located the amount of the assessment made against each company and
person owning such property. If the commissioner determines that the amount of the
assessment certified on or before August 1 is in error, the commissioner may issue a
corrected certification on or before October 1. The commissioner may correct errors that
are merely clerical in nature until December 31.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 28. Minnesota Statutes 2012, section 273.3711, is amended to read:
273.3711 RECOMMENDED AND ORDERED VALUES.
    For purposes of sections 273.33, 273.35, 273.36, 273.37, 273.371, and 273.372,
all values not required to be listed and assessed by the commissioner of revenue are
recommended values. If the commissioner provides recommended values, the values must
be certified to the auditor of each county in which the property is located on or before
August 1. If the commissioner determines that the certified recommended value is in
error the commissioner may issue a corrected certification on or before October 1. The
commissioner may correct errors that are merely clerical in nature until December 31.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 29. Minnesota Statutes 2012, section 275.08, subdivision 1a, is amended to read:
    Subd. 1a. Computation of tax capacity. For taxes payable in 1989, the county
auditor shall compute the gross tax capacity for each parcel according to the class
classification rates specified in section 273.13. The gross tax capacity will be the
appropriate class classification rate multiplied by the parcel's market value. For taxes
payable in 1990 and subsequent years, the county auditor shall compute the net tax
capacity for each parcel according to the class classification rates specified in section
273.13 . The net tax capacity will be the appropriate class classification rate multiplied by
the parcel's market value.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 30. Minnesota Statutes 2012, section 276A.06, subdivision 9, is amended to read:
    Subd. 9. Fiscal disparities adjustment. In any year in which the highest class
classification rate for class 3a property changes from the rate in the previous year, the
following adjustments shall be made to the procedures described in sections 276A.04 to
276A.06 :
(1) An initial contribution tax capacity shall be determined for each municipality
based on the previous year's class classification rates.
(2) Each jurisdiction's distribution tax capacity shall be determined based upon the
areawide tax base determined by summing the tax capacities computed under clause (1)
for all municipalities and apportioning the resulting sum pursuant to section 276A.05,
subdivision 5 .
(3) Each jurisdiction's distribution levy shall be determined by applying the
procedures described in subdivision 3, clause (a), to the distribution tax capacity
determined pursuant to clause (2).
(4) Each municipality's final contribution tax capacity shall be determined equal
to its initial contribution tax capacity multiplied by the ratio of the new highest class
classification rate for class 3a property to the previous year's highest class classification
rate for class 3a property.
(5) For the purposes of computing education aids and any other state aids requiring
the addition of the fiscal disparities distribution tax capacity to the local tax capacity,
each municipality's final distribution tax capacity shall be determined equal to its initial
distribution tax capacity multiplied by the ratio of the new highest class classification rate
for class 3a property to the previous year's highest class classification rate for class 3a
property.
(6) The areawide tax rate shall be determined by dividing the sum of the amounts
determined in clause (3) by the sum of the values determined in clause (4).
(7) The final contribution tax capacity determined in clause (4) shall also be used to
determine the portion of each commercial-industrial property's tax capacity subject to the
areawide tax rate pursuant to subdivision 7.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 31. Minnesota Statutes 2012, section 282.241, subdivision 2, is amended to read:
    Subd. 2. Alternative computation of repurchase amount. A county board may
by resolution establish an alternative method of computing the repurchase amount under
this subdivision for property homesteaded at the time of forfeiture that has been in
forfeited status for more than ten years. Equivalent taxes, penalties, interest, and costs
for each year the property was in forfeiture status must be computed using the simple
average of the assessor's estimated market value at forfeiture and the assessor's current
estimated market value multiplied by the class classification rates under current law and
applying the current tax, penalty, and interest rates. Those amounts, plus any unpaid
special assessments reinstated and included in the purchase price under section 282.251,
including the penalties and interest that accrued or would have accrued on the special
assessments, computed under current rates, are the repurchase price. The county assessor
shall determine the current market value and classification of the property.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 32. Minnesota Statutes 2013 Supplement, section 290C.03, is amended to read:
290C.03 ELIGIBILITY REQUIREMENTS.
(a) Land may be enrolled in the sustainable forest incentive program under this
chapter if all of the following conditions are met:
(1) the land consists of at least 20 contiguous acres and at least 50 percent of the
land must meet the definition of forest land in section 88.01, subdivision 7, during the
enrollment;
(2) a forest management plan for the land must be prepared by an approved plan
writer and implemented during the period in which the land is enrolled;
(3) timber harvesting and forest management guidelines must be used in conjunction
with any timber harvesting or forest management activities conducted on the land during
the period in which the land is enrolled;
(4) the land must be enrolled for a minimum of eight years;
(5) there are no delinquent property taxes on the land; and
(6) claimants enrolling more than 1,920 acres in the sustainable forest incentive
program must allow year-round, nonmotorized access to fish and wildlife resources and
motorized access on established and maintained roads and trails, unless the road or trail is
temporarily closed for safety, natural resource, or road damage reasons on enrolled land
except within one-fourth mile of a permanent dwelling or during periods of high fire
hazard as determined by the commissioner of natural resources.; and
(7) the land is not classified as class 2c managed forest land.
(b) Claimants required to allow access under paragraph (a), clause (6), do not by
that action:
(1) extend any assurance that the land is safe for any purpose;
(2) confer upon the person the legal status of an invitee or licensee to whom a duty
of care is owed; or
(3) assume responsibility for or incur liability for any injury to the person or property
caused by an act or omission of the person.
EFFECTIVE DATE.This section is effective for certifications and applications
due in 2014 and thereafter.

    Sec. 33. Minnesota Statutes 2013 Supplement, section 423A.02, subdivision 3, is
amended to read:
    Subd. 3. Reallocation of amortization state aid. (a) Seventy percent of the
difference between $5,720,000 and the current year amortization aid distributed under
subdivision 1 that is not distributed for any reason to a municipality must be distributed
by the commissioner of revenue according to this paragraph. The commissioner shall
distribute 50 percent of the amounts derived under this paragraph to the Teachers
Retirement Association, ten percent to the Duluth Teachers Retirement Fund Association,
and 40 percent to the St. Paul Teachers Retirement Fund Association to fund the unfunded
actuarial accrued liabilities of the respective funds. These payments must be made on July
15 each fiscal year. If the St. Paul Teachers Retirement Fund Association or the Duluth
Teachers Retirement Fund Association becomes fully funded, the association's eligibility
for its portion of this aid ceases. Amounts remaining in the undistributed balance account
at the end of the biennium if aid eligibility ceases cancel to the general fund.
    (b) In order to receive amortization aid under paragraph (a), before June 30 annually
Independent School District No. 625, St. Paul, must make an additional contribution of
$800,000 each year to the St. Paul Teachers Retirement Fund Association.
    (c) Thirty percent of the difference between $5,720,000 and the current year
amortization aid under subdivision 1a 1 that is not distributed for any reason to a
municipality must be distributed under section 69.021, subdivision 7, paragraph (d), as
additional funding to support a minimum fire state aid amount for volunteer firefighter
relief associations.
EFFECTIVE DATE.This section is effective retroactively from June 1, 2013.

    Sec. 34. Minnesota Statutes 2012, section 469.1763, subdivision 6, is amended to read:
    Subd. 6. Pooling permitted for deficits. (a) This subdivision applies only to
districts for which the request for certification was made before August 1, 2001, and
without regard to whether the request for certification was made prior to August 1, 1979.
(b) The municipality for the district may transfer available increments from another
tax increment financing district located in the municipality, if the transfer is necessary to
eliminate a deficit in the district to which the increments are transferred. The municipality
may transfer increments as provided by this subdivision without regard to whether the
transfer or expenditure is authorized by the tax increment financing plan for the district
from which the transfer is made. A deficit in the district for purposes of this subdivision
means the lesser of the following two amounts:
(1)(i) the amount due during the calendar year to pay preexisting obligations of
the district; minus
(ii) the total increments collected or to be collected from properties located within
the district that are available for the calendar year including amounts collected in prior
years that are currently available; plus
(iii) total increments from properties located in other districts in the municipality
including amounts collected in prior years that are available to be used to meet the district's
obligations under this section, excluding this subdivision, or other provisions of law; or
(2) the reduction in increments collected from properties located in the district for
the calendar year as a result of the changes in class classification rates in Laws 1997,
chapter 231, article 1; Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, and
Laws 2001, First Special Session chapter 5, or the elimination of the general education
tax levy under Laws 2001, First Special Session chapter 5.
The authority may compute the deficit amount under clause (1) only (without regard
to the limit under clause (2)) if the authority makes an irrevocable commitment, by
resolution, to use increments from the district to which increments are to be transferred and
any transferred increments are only used to pay preexisting obligations and administrative
expenses for the district that are required to be paid under section 469.176, subdivision
4h , paragraph (a).
(c) A preexisting obligation means:
(1) bonds issued and sold before August 1, 2001, or bonds issued pursuant to a
binding contract requiring the issuance of bonds entered into before July 1, 2001, and
bonds issued to refund such bonds or to reimburse expenditures made in conjunction with
a signed contractual agreement entered into before August 1, 2001, to the extent that the
bonds are secured by a pledge of increments from the tax increment financing district; and
(2) binding contracts entered into before August 1, 2001, to the extent that the
contracts require payments secured by a pledge of increments from the tax increment
financing district.
(d) The municipality may require a development authority, other than a seaway port
authority, to transfer available increments including amounts collected in prior years that
are currently available for any of its tax increment financing districts in the municipality to
make up an insufficiency in another district in the municipality, regardless of whether the
district was established by the development authority or another development authority.
This authority applies notwithstanding any law to the contrary, but applies only to a
development authority that:
(1) was established by the municipality; or
(2) the governing body of which is appointed, in whole or part, by the municipality
or an officer of the municipality or which consists, in whole or part, of members of
the governing body of the municipality. The municipality may use this authority only
after it has first used all available increments of the receiving development authority to
eliminate the insufficiency and exercised any permitted action under section 469.1792,
subdivision 3 , for preexisting districts of the receiving development authority to eliminate
the insufficiency.
(e) The authority under this subdivision to spend tax increments outside of the area
of the district from which the tax increments were collected:
(1) is an exception to the restrictions under section 469.176, subdivisions 4b, 4c,
4d, 4e, 4i, and 4j ; the expenditure limits under section 469.176, subdivision 1c; and the
other provisions of this section; and the percentage restrictions under subdivision 2 must
be calculated after deducting increments spent under this subdivision from the total
increments for the district; and
(2) applies notwithstanding the provisions of the Tax Increment Financing Act in
effect for districts for which the request for certification was made before June 30, 1982,
or any other law to the contrary.
(f) If a preexisting obligation requires the development authority to pay an amount
that is limited to the increment from the district or a specific development within the
district and if the obligation requires paying a higher amount to the extent that increments
are available, the municipality may determine that the amount due under the preexisting
obligation equals the higher amount and may authorize the transfer of increments under this
subdivision to pay up to the higher amount. The existence of a guarantee of obligations by
the individual or entity that would receive the payment under this paragraph is disregarded
in the determination of eligibility to pool under this subdivision. The authority to transfer
increments under this paragraph may only be used to the extent that the payment of all other
preexisting obligations in the municipality due during the calendar year have been satisfied.
(g) For transfers of increments made in calendar year 2005 and later, the reduction in
increments as a result of the elimination of the general education tax levy for purposes of
paragraph (b), clause (2), for a taxes payable year equals the general education tax rate
for the school district under Minnesota Statutes 2000, section 273.1382, subdivision 1,
for taxes payable in 2001, multiplied by the captured tax capacity of the district for the
current taxes payable year.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 35. Minnesota Statutes 2012, section 469.177, subdivision 1, is amended to read:
    Subdivision 1. Original net tax capacity. (a) Upon or after adoption of a tax
increment financing plan, the auditor of any county in which the district is situated shall,
upon request of the authority, certify the original net tax capacity of the tax increment
financing district and that portion of the district overlying any subdistrict as described in the
tax increment financing plan and shall certify in each year thereafter the amount by which
the original net tax capacity has increased or decreased as a result of a change in tax exempt
status of property within the district and any subdistrict, reduction or enlargement of the
district or changes pursuant to subdivision 4. The auditor shall certify the amount within 30
days after receipt of the request and sufficient information to identify the parcels included in
the district. The certification relates to the taxes payable year as provided in subdivision 6.
    (b) If the classification under section 273.13 of property located in a district changes
to a classification that has a different assessment ratio, the original net tax capacity of that
property must be redetermined at the time when its use is changed as if the property had
originally been classified in the same class in which it is classified after its use is changed.
    (c) The amount to be added to the original net tax capacity of the district as a result
of previously tax exempt real property within the district becoming taxable equals the net
tax capacity of the real property as most recently assessed pursuant to section 273.18 or, if
that assessment was made more than one year prior to the date of title transfer rendering
the property taxable, the net tax capacity assessed by the assessor at the time of the
transfer. If improvements are made to tax exempt property after the municipality approves
the district and before the parcel becomes taxable, the assessor shall, at the request of
the authority, separately assess the estimated market value of the improvements. If the
property becomes taxable, the county auditor shall add to original net tax capacity, the net
tax capacity of the parcel, excluding the separately assessed improvements. If substantial
taxable improvements were made to a parcel after certification of the district and if the
property later becomes tax exempt, in whole or part, as a result of the authority acquiring
the property through foreclosure or exercise of remedies under a lease or other revenue
agreement or as a result of tax forfeiture, the amount to be added to the original net tax
capacity of the district as a result of the property again becoming taxable is the amount
of the parcel's value that was included in original net tax capacity when the parcel was
first certified. The amount to be added to the original net tax capacity of the district as a
result of enlargements equals the net tax capacity of the added real property as most
recently certified by the commissioner of revenue as of the date of modification of the tax
increment financing plan pursuant to section 469.175, subdivision 4.
    (d) If the net tax capacity of a property increases because the property no longer
qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the
Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan
Agricultural Preserves Act, chapter 473H, the Rural Preserve Property Tax Program
under section 273.114, or because platted, unimproved property is improved or market
value is increased after approval of the plat under section 273.11, subdivision 14a or 14b,
the increase in net tax capacity must be added to the original net tax capacity. If the
net tax capacity of a property increases because the property no longer qualifies for the
homestead market value exclusion under section 273.13, subdivision 35, the increase in
net tax capacity must be added to original net tax capacity if the original construction of
the affected home was completed before the date the assessor certified the original net
tax capacity of the district.
    (e) The amount to be subtracted from the original net tax capacity of the district as a
result of previously taxable real property within the district becoming tax exempt or
qualifying in whole or part for an exclusion from taxable market value, or a reduction in
the geographic area of the district, shall be the amount of original net tax capacity initially
attributed to the property becoming tax exempt, being excluded from taxable market
value, or being removed from the district. If the net tax capacity of property located within
the tax increment financing district is reduced by reason of a court-ordered abatement,
stipulation agreement, voluntary abatement made by the assessor or auditor or by order
of the commissioner of revenue, the reduction shall be applied to the original net tax
capacity of the district when the property upon which the abatement is made has not been
improved since the date of certification of the district and to the captured net tax capacity
of the district in each year thereafter when the abatement relates to improvements made
after the date of certification. The county auditor may specify reasonable form and content
of the request for certification of the authority and any modification thereof pursuant to
section 469.175, subdivision 4.
    (f) If a parcel of property contained a substandard building or improvements described
in section 469.174, subdivision 10, paragraph (e), that were demolished or removed and if
the authority elects to treat the parcel as occupied by a substandard building under section
469.174, subdivision 10 , paragraph (b), or by improvements under section 469.174,
subdivision 10 , paragraph (e), the auditor shall certify the original net tax capacity of the
parcel using the greater of (1) the current net tax capacity of the parcel, or (2) the estimated
market value of the parcel for the year in which the building or other improvements were
demolished or removed, but applying the class classification rates for the current year.
    (g) For a redevelopment district qualifying under section 469.174, subdivision 10,
paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of
the land as the original tax capacity for any parcel in the district that contains a building
that suffered substantial damage as a result of the disaster or emergency.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 36. Minnesota Statutes 2012, section 469.177, subdivision 11, is amended to read:
    Subd. 11. Deduction for enforcement costs; appropriation. (a) The county
treasurer shall deduct an amount equal to 0.25 percent of any increment distributed
to an authority or municipality. The county treasurer shall pay the amount deducted to
the commissioner of management and budget for deposit in an account in the special
revenue fund.
(b) The amounts deducted and paid under paragraph (a) are appropriated to the state
auditor for the cost of (1) the financial reporting of tax increment financing information
and (2) the cost of examining and auditing of authorities' use of tax increment financing
as provided under section 469.1771, subdivision 1. Notwithstanding section 16A.28 or
any other law to the contrary, this appropriation does not cancel and remains available
until spent.
(c) For taxes payable in 2002 and thereafter, the commissioner of revenue shall
increase the percent in paragraph (a) to a percent equal to the product of the percent in
paragraph (a) and the amount that the statewide tax increment levy for taxes payable in
2002 would have been without the class classification rate changes in Laws 2001, First
Special Session chapter 5, and the elimination of the general education levy in Laws
2001, First Special Session chapter 5, divided by the statewide tax increment levy for
taxes payable in 2002.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 37. Minnesota Statutes 2012, section 469.1792, subdivision 1, is amended to read:
    Subdivision 1. Scope. This section applies only to an authority with a preexisting
district for which:
(1) the increments from the district were insufficient to pay preexisting obligations
as a result of the class classification rate changes or the elimination of the state-determined
general education property tax levy under this act, or both; or
(2)(i) the development authority has a binding contract, entered into before August
1, 2001, with a person requiring the authority to pay to the person an amount that may not
exceed the increment from the district or a specific development within the district; and
(ii) the authority is unable to pay the full amount under the contract from the pledged
increments or other increments from the district that would have been due if the class
classification rate changes or elimination of the state-determined general education property
tax levy or both had not been made under Laws 2001, First Special Session chapter 5.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 38. Minnesota Statutes 2012, section 469.1794, subdivision 3, is amended to read:
    Subd. 3. Preconditions. Before an authority may extend the duration of district
under this section, the following conditions must be met with regard to the district:
(1) the original local tax rate under section 469.177, subdivision 1a, does not apply
under an election made under section 469.1792, subdivision 3, or under other operation of
law;
(2) for a district in the metropolitan area or taconite tax relief area, the fiscal
disparities contribution is computed under section 469.177, subdivision 3, paragraph (a);
(3) the municipality has transferred any available increments in other districts to
pay qualified obligations of the district or other districts in the municipality under section
469.1763, subdivision 6 ; and
(4) the authority finds that, taking into account all of the increments that are available
to pay qualifying obligations for the district, the increments from the district will be
insufficient to pay the amount of qualifying obligations and that the insufficiency is a result
of (i) the changes in the class classification rates and (ii) elimination of the state-determined
general education property tax levy under Laws 2001, First Special Session chapter 5.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 39. Minnesota Statutes 2012, section 469.1794, subdivision 6, is amended to read:
    Subd. 6. Commissioner authority. (a) If the municipality determines that the
extension permitted under subdivision 5 will not provide sufficient revenue to pay in full
the amount of qualifying obligations, the municipality may apply to the commissioner
of revenue for an additional duration extension. The commissioner may authorize an
extension of the duration of the district of up to two years after determining that:
(1) the insufficiency of revenues to pay the qualifying obligations, which will be
offset by the additional extension of the duration limit, result from (i) the changes in the
class classification rates and (ii) elimination of the state-determined general education
property tax levy under Laws 2001, First Special Session chapter 5;
(2) the municipality has or is transferring all available increments from other
preexisting districts and after August 1, 2001, has not entered into new obligations or
authorized new spending that reduced the amount of those increments that are available
for transfer to pay qualifying obligations; and
(3) increases in increments over the term of the district are unlikely to eliminate the
insufficiency.
(b) The commissioner may:
(1) establish the form of and time for applications under this subdivision; and
(2) require the municipality to provide the information that the commissioner
determines is necessary or useful in evaluating the application.
(c) This subdivision does not apply to a district if the authority has made an election
under subdivision 5, paragraph (c).
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 40. Minnesota Statutes 2012, section 469.1814, subdivision 6, is amended to read:
    Subd. 6. Levy to offset tax changes. (a) This subdivision applies only to
abatements pledged to pay preexisting obligations.
(b) For purposes of this subdivision, "preexisting obligation" means a bond or
binding contract that:
(1) was issued or approved before August 1, 2001;
(2) is secured by abatements approved before August 1, 2001; and
(3) is not a general obligation.
(c) If a political subdivision granted an abatement pledged to pay a preexisting
obligation and if the changes in the property tax class classification rates enacted in
calendar year 2001 reduce the abatement by an amount sufficient to prevent payment
in full of the preexisting obligation, the political subdivision may add to its levy under
section 469.1815 an amount sufficient to provide an abatement equal to the least of:
(1) the amount of the abatement using the political subdivision's tax rate for the
current year and the class classification rates for property taxes payable in 2001;
(2) the amount required to pay the amount due on the preexisting obligation for
the year from the political subdivision; or
(3) the maximum dollar amount of the political subdivision's abatement, if any,
under the abatement resolution.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 41. Minnesota Statutes 2012, section 473F.08, subdivision 8a, is amended to read:
    Subd. 8a. Fiscal disparities adjustment. In any year in which the highest class
classification rate for class 3a property changes from the rate in the previous year, the
following adjustments shall be made to the procedures described in sections 473F.06 to
473F.08 .
(1) An initial contribution tax capacity shall be determined for each municipality
based on the previous year's class classification rates.
(2) Each jurisdiction's distribution tax capacity shall be determined based upon the
areawide tax base determined by summing the tax capacities computed under clause (1)
for all municipalities and apportioning the resulting sum pursuant to section 473F.07,
subdivision 5 .
(3) Each jurisdiction's distribution levy shall be determined by applying the
procedures described in subdivision 3, clause (a), to the distribution tax capacity
determined pursuant to clause (2).
(4) Each municipality's final contribution tax capacity shall be determined equal
to its initial contribution tax capacity multiplied by the ratio of the new highest class
classification rate for class 3a property to the previous year's highest class classification
rate for class 3a property.
(5) For the purposes of computing education aids and any other state aids requiring
the addition of the fiscal disparities distribution tax capacity to the local tax capacity,
each municipality's final distribution tax capacity shall be determined equal to its initial
distribution tax capacity multiplied by the ratio of the new highest class classification rate
for class 3a property to the previous year's highest class classification rate for class 3a
property.
(6) The areawide tax rate shall be determined by dividing the sum of the amounts
determined in clause (3) by the sum of the values determined in clause (4).
(7) The final contribution tax capacity determined in clause (4) shall also be used to
determined the portion of each commercial/industrial property's tax capacity subject to the
areawide tax rate pursuant to subdivision 6.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 42. Minnesota Statutes 2012, section 473H.10, subdivision 3, is amended to read:
    Subd. 3. Computation of tax; state reimbursement. (a) After having determined
the market value of all land valued according to subdivision 2, the assessor shall compute
the net tax capacity of those properties by applying the appropriate class classification
rates. When computing the rate of tax pursuant to section 275.08, the county auditor shall
include the net tax capacity of land as provided in this paragraph.
(b) The county auditor shall compute the tax on lands valued according to
subdivision 2 and nonresidential buildings by multiplying the net tax capacity times the
total local tax rate for all purposes as provided in paragraph (a).
(c) The county auditor shall then compute the tax on lands valued according to
subdivision 2 and nonresidential buildings by multiplying the net tax capacity times the
total local tax rate for all purposes as provided in paragraph (a), subtracting $1.50 per acre
of land in the preserve.
(d) The county auditor shall then compute the maximum ad valorem property tax on
lands valued according to subdivision 2 and nonresidential buildings by multiplying the
net tax capacity times 105 percent of the previous year's statewide average local tax rate
levied on property located within townships for all purposes.
(e) The tax due and payable by the owner of preserve land valued according to
subdivision 2 and nonresidential buildings will be the amount determined in paragraph (c)
or (d), whichever is less. The state shall reimburse the taxing jurisdictions for the amount
of the difference between the net tax determined under this paragraph and the gross tax in
paragraph (b). Residential buildings shall continue to be valued and classified according
to the provisions of sections 273.11 and 273.13, as they would be in the absence of this
section, and the tax on those buildings shall not be subject to the limitation contained in
this paragraph.
The county may transfer money from the county conservation account created in
section 40A.152 to the county revenue fund to reimburse the fund for the tax lost as a
result of this subdivision or to pay taxing jurisdictions within the county for the tax lost.
The county auditor shall certify to the commissioner of revenue on or before June 1 the
total amount of tax lost to the county and taxing jurisdictions located within the county
as a result of this subdivision and the extent that the tax lost exceeds funds available in
the county conservation account. Payment shall be made by the state on December 26 to
each of the affected taxing jurisdictions, other than school districts, in the same proportion
that the ad valorem tax is distributed if the county conservation account is insufficient to
make the reimbursement. There is annually appropriated from the Minnesota conservation
fund under section 40A.151 to the commissioner of revenue an amount sufficient to make
the reimbursement provided in this subdivision. If the amount available in the Minnesota
conservation fund is insufficient, the balance that is needed is appropriated from the
general fund.
EFFECTIVE DATE.This section is effective beginning with assessment year 2014.

    Sec. 43. Minnesota Statutes 2013 Supplement, section 477A.12, subdivision 1, is
amended to read:
    Subdivision 1. Types of land; payments. The following amounts are annually
appropriated to the commissioner of natural resources from the general fund for transfer
to the commissioner of revenue. The commissioner of revenue shall pay the transferred
funds to counties as required by sections 477A.11 to 477A.14. The amounts, based on the
acreage as of July 1 of each year prior to the payment year, are:
(1) $5.133 multiplied by the total number of acres of acquired natural resources land
or, at the county's option three-fourths of one percent of the appraised value of all acquired
natural resources land in the county, whichever is greater;
(2) $5.133, multiplied by the total number of acres of transportation wetland or, at
the county's option, three-fourths of one percent of the appraised value of all transportation
wetland in the county, whichever is greater;
(3) $5.133, multiplied by the total number of acres of wildlife management land, or,
at the county's option, three-fourths of one percent of the appraised value of all wildlife
management land in the county, whichever is greater;
(4) 50 percent of the dollar amount as determined under clause (1), multiplied by
the number of acres of military refuge land in the county;
(5) $1.50, multiplied by the number of acres of county-administered other natural
resources land in the county;
(6) $5.133, multiplied by the total number of acres of land utilization project land
in the county;
(7) $1.50, multiplied by the number of acres of commissioner-administered other
natural resources land in the county; and
    (8) without regard to acreage, $300,000 for local assessments under section 84A.55,
subdivision 9 .
EFFECTIVE DATE.This section is effective July 1, 2014.

    Sec. 44. Minnesota Statutes 2013 Supplement, section 477A.14, subdivision 1, is
amended to read:
    Subdivision 1. General distribution. Except as provided in subdivisions 2 and 3,
40 percent of the total payment to the county shall be deposited in the county general
revenue fund to be used to provide property tax levy reduction. The remainder shall be
distributed by the county in the following priority:
(a) (1) 64.2 cents, for each acre of county-administered other natural resources land
shall be deposited in a resource development fund to be created within the county treasury
for use in resource development, forest management, game and fish habitat improvement,
and recreational development and maintenance of county-administered other natural
resources land. Any county receiving less than $5,000 annually for the resource
development fund may elect to deposit that amount in the county general revenue fund;
(b) from the funds remaining, (2) within 30 days of receipt of the payment to
the county, the county treasurer shall pay each organized township ten percent of the
amount received a township with land that qualifies for payment under section 477A.12,
subdivision 1 , clauses (1), (2), and (5) to (7), ten percent of the payment the county
received for such land within that township. Payments for natural resources lands not
located in an organized township shall be deposited in the county general revenue fund.
Payments to counties and townships pursuant to this paragraph shall be used to provide
property tax levy reduction, except that of the payments for natural resources lands not
located in an organized township, the county may allocate the amount determined to be
necessary for maintenance of roads in unorganized townships. Provided that, if the total
payment to the county pursuant to section 477A.12 is not sufficient to fully fund the
distribution provided for in this clause, the amount available shall be distributed to each
township and the county general revenue fund on a pro rata basis; and
(c) (3) any remaining funds shall be deposited in the county general revenue fund.
Provided that, if the distribution to the county general revenue fund exceeds $35,000, the
excess shall be used to provide property tax levy reduction.
EFFECTIVE DATE.This section is effective July 1, 2014.

    Sec. 45. REPEALER.
Minnesota Statutes 2012, sections 273.13, subdivision 21a; 290C.02, subdivisions 5
and 9; and 290C.06, are repealed.
EFFECTIVE DATE.This section is effective the day following final enactment,
except that section 273.13, subdivision 21a, is repealed effective beginning with
assessment year 2014.

ARTICLE 3

SALES AND USE TAXES

    Section 1. Minnesota Statutes 2013 Supplement, section 403.162, subdivision 5,
is amended to read:
    Subd. 5. Fees deposited. (a) The commissioner of revenue shall, based on
the relative proportion of the prepaid wireless E911 fee and the prepaid wireless
telecommunications access Minnesota fee imposed per retail transaction, divide the fees
collected in corresponding proportions. Within 30 days of receipt of the collected fees,
the commissioner shall:
(1) deposit the proportion of the collected fees attributable to the prepaid wireless
E911 fee in the 911 emergency telecommunications service account in the special revenue
fund; and
(2) deposit the proportion of collected fees attributable to the prepaid wireless
telecommunications access Minnesota fee in the telecommunications access fund
established in section 237.52, subdivision 1.
(b) The department commissioner of revenue may deduct and retain deposit in a
special revenue account an amount, not to exceed two percent of collected fees,. Money
in the account is annually appropriated to the commissioner of revenue to reimburse its
direct costs of administering the collection and remittance of prepaid wireless E911 fees
and prepaid wireless telecommunications access Minnesota fees.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2014.

    Sec. 2. Laws 2013, chapter 143, article 8, section 3, the effective date, is amended to
read:
EFFECTIVE DATE.This section is effective for sales and purchases made after
June 30, 2013, except for paragraph (p), which is effective the day following final
enactment.
EFFECTIVE DATE.This section is effective retroactively from the day following
final enactment of Laws 2013, chapter 143, article 8, section 3.

    Sec. 3. REPEALER.
Minnesota Rules, parts 8130.8900, subpart 3; and 8130.9500, subparts 1, 1a, 2,
3, 4, and 5, are repealed.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 4

MISCELLANEOUS

    Section 1. Minnesota Statutes 2012, section 270C.34, subdivision 2, is amended to read:
    Subd. 2. Procedure. (a) A request for abatement of penalty under subdivision 1 or
section 289A.60, subdivision 4, or a request for abatement of interest or additional tax
charge, must be filed with the commissioner within 60 days of the date the notice was
mailed to the taxpayer's last known address, stating that a penalty has been imposed.
(b) If the commissioner issues an order denying a request for abatement of penalty,
interest, or additional tax charge, the taxpayer may file an administrative appeal as
provided in section 270C.35 or appeal to Tax Court as provided in section 271.06.
(c) If the commissioner does not issue an order on the abatement request within
60 days from the date the request is received, the taxpayer may appeal to Tax Court as
provided in section 271.06.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2012, section 296A.01, subdivision 16, is amended to read:
    Subd. 16. Dyed fuel. "Dyed fuel" means diesel motor fuel to which indelible dye
has been added, either before or upon withdrawal at a terminal or refinery rack, and which
may be sold for exempt purposes. The dye may be either dye required to be added per the
EPA or dye that meets other specifications required by the Internal Revenue Service or
the commissioner.
EFFECTIVE DATE.This section is effective the day following final enactment.