1.1.................... moves to amend H.F. No. 2690 as follows:
1.2Delete everything after the enacting clause and insert:


1.5    Section 1. Minnesota Statutes 2010, section 289A.10, is amended by adding a
1.6subdivision to read:
1.7    Subd. 1a. Recapture tax return required. If a disposition or cessation as provided
1.8by section 291.03, subdivision 11, paragraph (a), has occurred, the qualified heir, as
1.9defined under section 291.03, subdivision 8, paragraph (c), or personal representative of
1.10the decedent's estate must submit a recapture tax return to the commissioner.
1.11EFFECTIVE DATE.This section is effective for estates of decedents dying after
1.12June 30, 2011.

1.13    Sec. 2. Minnesota Statutes 2010, section 289A.12, is amended by adding a subdivision
1.14to read:
1.15    Subd. 18. Returns by qualified heirs. Within 24 months and within 36 months
1.16after a decedent's death, a qualified heir, as defined under section 291.03, subdivision 8,
1.17paragraph (c), must file a return with the commissioner relating to the qualified property
1.18received from the decedent.
1.19EFFECTIVE DATE.This section is effective for estates of decedents dying after
1.20June 30, 2011.

1.21    Sec. 3. Minnesota Statutes 2010, section 289A.18, is amended by adding a subdivision
1.22to read:
2.1    Subd. 3a. Recapture tax return. A recapture tax return is due within six months
2.2after the date of the disposition or cessation as provided by section 291.03, subdivision
2.311, paragraph (a).
2.4EFFECTIVE DATE.This section is effective for estates of decedents dying after
2.5June 30, 2011.

2.6    Sec. 4. Minnesota Statutes 2010, section 289A.20, subdivision 3, is amended to read:
2.7    Subd. 3. Estate tax. Taxes imposed by chapter 291 section 291.03, subdivision 1,
2.8take effect at and upon the death of the person whose estate is subject to taxation and are
2.9due and payable on or before the expiration of nine months from that death.
2.10EFFECTIVE DATE.This section is effective for estates of decedents dying after
2.11June 30, 2011.

2.12    Sec. 5. Minnesota Statutes 2010, section 289A.20, is amended by adding a subdivision
2.13to read:
2.14    Subd. 3a. Recapture tax. Taxes imposed by section 291.03, subdivision 11,
2.15paragraph (b), are due and payable on or before the expiration of six months from the date
2.16of disposition or cessation as provided by section 291.03, subdivision 11, paragraph (a).
2.17EFFECTIVE DATE.This section is effective for estates of decedents dying after
2.18June 30, 2011.

2.19    Sec. 6. Minnesota Statutes 2011 Supplement, section 291.03, subdivision 8, is
2.20amended to read:
2.21    Subd. 8. Definitions. (a) For purposes of this section, the following terms have the
2.22meanings given in this subdivision.
2.23(b) "Family member" means a family member as defined in section 2032A(e)(2) of
2.24the Internal Revenue Code or a trust whose present beneficiaries are all family members as
2.25defined in section 2032A(e)(2) of the Internal Revenue Code.
2.26(c) "Qualified heir" means a family member who acquired qualified property from
2.27upon the death of the decedent and satisfies the requirement under subdivision 9, clause
2.28(6) (8), or subdivision 10, clause (4) (5), for the property.
2.29(d) "Qualified property" means qualified small businesss property under subdivision
2.309 and qualified farm property under subdivision 10.
3.1EFFECTIVE DATE.This section is effective for estates of decedents dying after
3.2June 30, 2011.

3.3    Sec. 7. Minnesota Statutes 2011 Supplement, section 291.03, subdivision 9, is
3.4amended to read:
3.5    Subd. 9. Qualified small business property. Property satisfying all of the following
3.6requirements is qualified small business property:
3.7(1) The value of the property was included in the federal adjusted taxable estate.
3.8(2) The property consists of the assets of a trade or business or shares of stock or
3.9other ownership interests in a corporation or other entity engaged in a trade or business.
3.10The decedent or the decedent's spouse must have materially participated in the trade or
3.11business within the meaning of section 469 of the Internal Revenue Code during the
3.12taxable year that ended before the date of the decedent's death. Shares of stock in a
3.13corporation or an ownership interest in another type of entity do not qualify under this
3.14subdivision if the shares or ownership interests are traded on a public stock exchange at
3.15any time during the three-year period ending on the decedent's date of death. For purposes
3.16of this subdivision, an ownership interest includes the interest the decedent is deemed to
3.17own under sections 2036, 2037, and 2038 of the Internal Revenue Code.
3.18(3) During the decedent's taxable year that ended before the decedent's death, the
3.19trade or business must not have been a passive activity within the meaning of section
3.20469(c) of the Internal Revenue Code and the decedent or the decedent's spouse must have
3.21materially participated in the trade or business within the meaning of section 469(h) of the
3.22Internal Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and
3.23any other provision provided by Treasury Department regulation that substitutes material
3.24participation in prior taxable years for material participation in the taxable year that ended
3.25before the decedent's death.
3.26(3) (4) The gross annual sales of the trade or business were $10,000,000 or less for
3.27the last taxable year that ended before the date of the death of the decedent.
3.28(4) (5) The property does not consist of cash or, cash equivalents, publicly traded
3.29securities, or assets not used in the operation of the trade or business. For property
3.30consisting of shares of stock or other ownership interests in an entity, the amount value of
3.31cash or, cash equivalents, publicly traded securities, or assets not used in the operation of
3.32the trade or business held by the corporation or other entity must be deducted from the
3.33value of the property qualifying under this subdivision in proportion to the decedent's
3.34share of ownership of the entity on the date of death.
4.1(6) The property does not consist of agricultural land as defined by section 500.24,
4.2subdivision 2, paragraph (g). For property consisting of shares of stock or other ownership
4.3interests in an entity, the value of agricultural land held by the corporation or other entity
4.4must be deducted from the value of the property qualifying under this subdivision in
4.5proportion to the decedent's share of ownership of the entity on the date of death.
4.6(5) (7) The decedent continuously owned the property, including property the
4.7decedent is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue
4.8Code, for the three-year period ending on the date of death of the decedent. In the case of
4.9a sole proprietor, if the property replaced similar property within the three-year period,
4.10the replacement property will be treated as having been owned for the three-year period
4.11ending on the date of death of the decedent.
4.12(6) A family member continuously uses the property in the operation of the trade or
4.13business for three years following the date of death of the decedent.
4.14(8) For three years following the date of death of the decedent, the trade or business
4.15is not a passive activity within the meaning of section 469(c) of the Internal Revenue
4.16Code and a family member materially participates in the operation of the trade or business
4.17within the meaning of section 469(h) of the Internal Revenue Code, excluding section
4.18469(h)(3) of the Internal Revenue Code and any other provision provided by Treasury
4.19Department regulation that substitutes material participation in prior taxable years for
4.20material participation in the three years following the date of death of the decedent.
4.21(7) (9) The estate and the qualified heir elect to treat the property as qualified small
4.22business property and agree, in the form prescribed by the commissioner, to pay the
4.23recapture tax under subdivision 11, if applicable.
4.24EFFECTIVE DATE.This section is effective for estates of decedents dying after
4.25June 30, 2011.

4.26    Sec. 8. Minnesota Statutes 2011 Supplement, section 291.03, subdivision 10, is
4.27amended to read:
4.28    Subd. 10. Qualified farm property. Property satisfying all of the following
4.29requirements is qualified farm property:
4.30(1) The value of the property was included in the federal adjusted taxable estate.
4.31(2) The property consists of agricultural land as defined by section 500.24,
4.32subdivision 2, paragraph (g), and owned by a farm meeting the requirements of person
4.33or entity that is not excluded from owning agricultural land by section 500.24, and was
4.34classified for property tax purposes as the homestead of the decedent or the decedent's
5.1spouse or both under section 273.124, and as class 2a property under section 273.13,
5.2subdivision 23 .
5.3(3) For property taxes payable in the year of decedent's death, the decedent's interest
5.4in the property was classified as the homestead of the decedent or the decedent's spouse or
5.5both under section 273.124, and as class 2a property under section 273.13, subdivision 23.
5.6(4) The decedent continuously owned the property, including property the decedent
5.7is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue Code, for
5.8the three-year period ending on the date of death of the decedent either by ownership of
5.9the agricultural land or pursuant to holding an interest in an entity that is not excluded
5.10from owning agricultural land under section 500.24.
5.11(4) A family member continuously uses the property in the operation of the trade or
5.12business (5) The property is classified for property tax purposes as class 2a property under
5.13section 273.13, subdivision 23, for three years following the date of death of the decedent.
5.14(5) (6) The estate and the qualified heir elect to treat the property as qualified farm
5.15property and agree, in a form prescribed by the commissioner, to pay the recapture tax
5.16under subdivision 11, if applicable.
5.17EFFECTIVE DATE.This section is effective for estates of decedents dying after
5.18June 30, 2011.

5.19    Sec. 9. Minnesota Statutes 2011 Supplement, section 291.03, subdivision 11, is
5.20amended to read:
5.21    Subd. 11. Recapture tax. (a) If, within three years after the decedent's death and
5.22before the death of the qualified heir, the qualified heir disposes of any interest in the
5.23qualified property, other than by a disposition to a family member or qualifying entity,
5.24or a family member ceases to use the qualified property which was acquired or passed
5.25from the decedent satisfy the requirement under subdivision 9, clause (8); or 10, clause
5.26(5), an additional estate tax is imposed on the property. In the case of a sole proprietor, if
5.27the qualified heir replaces qualified small business property excluded under subdivision 9
5.28with similar property, then the qualified heir will not be treated as having disposed of an
5.29interest in the qualified property.
5.30(b) The amount of the additional tax equals the amount of the exclusion claimed with
5.31respect to the qualified interest disposed of by the estate under subdivision 8, paragraph
5.32(d), multiplied by 16 percent.
5.33(c) The additional tax under this subdivision is due on the day which is six months
5.34after the date of the disposition or cessation in paragraph (a).
6.1(c) For purposes of paragraph (a), "qualifying entity" means a corporation or other
6.2entity owned by a family member or family members that is not excluded from owning
6.3agricultural land under section 500.24.
6.4EFFECTIVE DATE.This section is effective for estates of decedents dying after
6.5June 30, 2011.


6.8    Section 1. Minnesota Statutes 2010, section 16C.16, subdivision 7, is amended to read:
6.9    Subd. 7. Economically disadvantaged areas. (a) Except as otherwise provided in
6.10paragraph (b), the commissioner may award up to a six percent preference in the amount
6.11bid on state procurement to small businesses located in an economically disadvantaged
6.12area.
6.13(b) The commissioner may award up to a four percent preference in the amount bid
6.14on state construction to small businesses located in an economically disadvantaged area.
6.15(c) A business is located in an economically disadvantaged area if:
6.16(1) the owner resides in or the business is located in a county in which the median
6.17income for married couples is less than 70 percent of the state median income for married
6.18couples;
6.19(2) the owner resides in or the business is located in an area designated a labor
6.20surplus area by the United States Department of Labor; or
6.21(3) the business is a certified rehabilitation facility or extended employment provider
6.22as described in chapter 268A.
6.23(d) The commissioner may designate one or more areas designated as targeted
6.24neighborhoods under section 469.202 or as border city enterprise zones under section
6.25469.167 469.166 as economically disadvantaged areas for purposes of this subdivision
6.26if the commissioner determines that this designation would further the purposes of this
6.27section. If the owner of a small business resides or is employed in a designated area, the
6.28small business is eligible for any preference provided under this subdivision.
6.29(e) The Department of Revenue shall gather data necessary to make the
6.30determinations required by paragraph (c), clause (1), and shall annually certify counties
6.31that qualify under paragraph (c), clause (1). An area designated a labor surplus area
6.32retains that status for 120 days after certified small businesses in the area are notified of
6.33the termination of the designation by the United States Department of Labor.

6.34    Sec. 2. Minnesota Statutes 2010, section 41A.036, subdivision 2, is amended to read:
7.1    Subd. 2. Small business development loans; preferences. The following eligible
7.2small businesses have preference among all business applicants for small business
7.3development loans:
7.4(1) businesses located in rural areas of the state that are experiencing the most
7.5severe unemployment rates in the state;
7.6(2) businesses that are likely to expand and provide additional permanent
7.7employment in rural areas of the state, or enhance the quality of existing jobs in those
7.8areas;
7.9(3) businesses located in border communities that experience a competitive
7.10disadvantage due to location;
7.11(4) businesses that have been unable to obtain traditional financial assistance due to
7.12a disadvantageous location, minority ownership, or other factors rather than due to the
7.13business having been considered a poor financial risk;
7.14(5) businesses that utilize state resources and reduce state dependence on outside
7.15resources, and that produce products or services consistent with the long-term social and
7.16economic needs of the state; and
7.17(6) businesses located in designated border city enterprise zones, as described in
7.18section 469.168 469.166.

7.19    Sec. 3. Minnesota Statutes 2010, section 117.025, subdivision 10, is amended to read:
7.20    Subd. 10. Public service corporation. "Public service corporation" means a
7.21utility, as defined by section 216E.01, subdivision 10; gas, electric, telephone, or cable
7.22communications company; cooperative association; natural gas pipeline company;
7.23crude oil or petroleum products pipeline company; municipal utility; municipality when
7.24operating its municipally owned utilities; joint venture created pursuant to section 452.25
7.25or 452.26; or municipal power or gas agency. Public service corporation also means a
7.26municipality or public corporation when operating an airport under chapter 360 or 473, a
7.27common carrier, a watershed district, or a drainage authority. Public service corporation
7.28also means an entity operating a regional distribution center within an international
7.29economic development zone designated under section 469.322.

7.30    Sec. 4. Minnesota Statutes 2010, section 270B.14, subdivision 3, is amended to read:
7.31    Subd. 3. Administration of enterprise, job opportunity, and biotechnology
7.32and health sciences industry zone programs. The commissioner may disclose return
7.33information relating to the taxes imposed by chapters 290 and 297A to the Department of
7.34Employment and Economic Development or a municipality receiving an with a border
8.1city enterprise zone designation as defined under section 469.169 469.166, but only as
8.2necessary to administer the funding limitations under section 469.169, subdivision 7, or
8.3to the Department of Employment and Economic Development and appropriate officials
8.4from the local government units in which a qualified business is located but only as
8.5necessary to enforce the job opportunity building zone benefits under section 469.315, or
8.6biotechnology and health sciences industry zone benefits under section 469.336.

8.7    Sec. 5. Minnesota Statutes 2010, section 272.02, subdivision 77, is amended to read:
8.8    Subd. 77. Property of housing and redevelopment authorities. Property of
8.9projects of housing and redevelopment authorities are exempt to the extent permitted by
8.10sections section 469.042, subdivision 1, and 469.043, subdivisions 2 and 5.

8.11    Sec. 6. Minnesota Statutes 2010, section 273.13, subdivision 24, is amended to read:
8.12    Subd. 24. Class 3. (a) Commercial and industrial property and utility real and
8.13personal property is class 3a.
8.14(1) Except as otherwise provided, each parcel of commercial, industrial, or utility
8.15real property has a class rate of 1.5 percent of the first tier of market value, and 2.0 percent
8.16of the remaining market value. In the case of contiguous parcels of property owned by the
8.17same person or entity, only the value equal to the first-tier value of the contiguous parcels
8.18qualifies for the reduced class rate, except that contiguous parcels owned by the same
8.19person or entity shall be eligible for the first-tier value class rate on each separate business
8.20operated by the owner of the property, provided the business is housed in a separate
8.21structure. For the purposes of this subdivision, the first tier means the first $150,000 of
8.22market value. Real property owned in fee by a utility for transmission line right-of-way
8.23shall be classified at the class rate for the higher tier.
8.24For purposes of this subdivision, parcels are considered to be contiguous even if
8.25they are separated from each other by a road, street, waterway, or other similar intervening
8.26type of property. Connections between parcels that consist of power lines or pipelines do
8.27not cause the parcels to be contiguous. Property owners who have contiguous parcels of
8.28property that constitute separate businesses that may qualify for the first-tier class rate shall
8.29notify the assessor by July 1, for treatment beginning in the following taxes payable year.
8.30(2) All personal property that is: (i) part of an electric generation, transmission, or
8.31distribution system; or (ii) part of a pipeline system transporting or distributing water, gas,
8.32crude oil, or petroleum products; and (iii) not described in clause (3), and all railroad
8.33operating property has a class rate as provided under clause (1) for the first tier of market
9.1value and the remaining market value. In the case of multiple parcels in one county that
9.2are owned by one person or entity, only one first tier amount is eligible for the reduced rate.
9.3(3) The entire market value of personal property that is: (i) tools, implements, and
9.4machinery of an electric generation, transmission, or distribution system; (ii) tools,
9.5implements, and machinery of a pipeline system transporting or distributing water, gas,
9.6crude oil, or petroleum products; or (iii) the mains and pipes used in the distribution of
9.7steam or hot or chilled water for heating or cooling buildings, has a class rate as provided
9.8under clause (1) for the remaining market value in excess of the first tier.
9.9(b) Employment property defined in section 469.166, during the period provided
9.10in section 469.170, shall constitute class 3b. The class rates for class 3b property are
9.11determined under paragraph (a).

9.12    Sec. 7. Minnesota Statutes 2010, section 273.1398, subdivision 4, is amended to read:
9.13    Subd. 4. Disparity reduction credit. (a) Beginning with taxes payable in 1989,
9.14class 4a, and class 3a, and class 3b property qualifies for a disparity reduction credit if: (1)
9.15the property is located in a border city that has an enterprise zone designated pursuant to
9.16section 469.168, subdivision 4, as defined in section 469.166; (2) the property is located
9.17in a city with a population greater than 2,500 and less than 35,000 according to the
9.181980 decennial census; (3) the city is adjacent to a city in another state or immediately
9.19adjacent to a city adjacent to a city in another state; and (4) the adjacent city in the
9.20other state has a population of greater than 5,000 and less than 75,000 according to the
9.211980 decennial census.
9.22    (b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a
9.23property to 2.3 percent of the property's market value and (ii) the tax on class 3a and class
9.243b property to 2.3 percent of market value.
9.25    (c) The county auditor shall annually certify the costs of the credits to the
9.26Department of Revenue. The department shall reimburse local governments for the
9.27property taxes forgone as the result of the credits in proportion to their total levies.

9.28    Sec. 8. Minnesota Statutes 2010, section 276A.01, subdivision 3, is amended to read:
9.29    Subd. 3. Commercial-industrial property. "Commercial-industrial property"
9.30means the following categories of property, as defined in section 273.13, excluding that
9.31portion of the property (i) that may, by law, constitute the tax base for a tax increment
9.32pledged pursuant to section 469.042 or 469.162 or sections 469.174 to 469.178,
9.33certification of which was requested prior to May 1, 1996, to the extent and while the tax
9.34increment is so pledged; or (ii) that is exempt from taxation under section 272.02:
10.1    (1) that portion of class 5 property consisting of unmined iron ore and low-grade
10.2iron-bearing formations as defined in section 273.14, tools, implements, and machinery,
10.3except the portion of high voltage transmission lines, the value of which is deducted from
10.4net tax capacity under section 273.425; and
10.5    (2) that portion of class 3 and class 5 property which is either used or zoned for
10.6use for any commercial or industrial purpose, including property that becomes taxable
10.7under section 298.25, except for such property which is, or, in the case of property under
10.8construction, will when completed be used exclusively for residential occupancy and
10.9the provision of services to residential occupants thereof. Property must be considered
10.10as used exclusively for residential occupancy only if each of not less than 80 percent
10.11of its occupied residential units is, or, in the case of property under construction, will
10.12when completed be occupied under an oral or written agreement for occupancy over a
10.13continuous period of not less than 30 days.
10.14    If the classification of property prescribed by section 273.13 is modified by
10.15legislative amendment, the references in this subdivision are to the successor class or
10.16classes of property, or portions thereof, that include the kinds of property designated
10.17in this subdivision.

10.18    Sec. 9. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19b, is
10.19amended to read:
10.20    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
10.21and trusts, there shall be subtracted from federal taxable income:
10.22    (1) net interest income on obligations of any authority, commission, or
10.23instrumentality of the United States to the extent includable in taxable income for federal
10.24income tax purposes but exempt from state income tax under the laws of the United States;
10.25    (2) if included in federal taxable income, the amount of any overpayment of income
10.26tax to Minnesota or to any other state, for any previous taxable year, whether the amount
10.27is received as a refund or as a credit to another taxable year's income tax liability;
10.28    (3) the amount paid to others, less the amount used to claim the credit allowed under
10.29section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
10.30to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
10.31transportation of each qualifying child in attending an elementary or secondary school
10.32situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
10.33resident of this state may legally fulfill the state's compulsory attendance laws, which
10.34is not operated for profit, and which adheres to the provisions of the Civil Rights Act
10.35of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
11.1tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
11.2"textbooks" includes books and other instructional materials and equipment purchased
11.3or leased for use in elementary and secondary schools in teaching only those subjects
11.4legally and commonly taught in public elementary and secondary schools in this state.
11.5Equipment expenses qualifying for deduction includes expenses as defined and limited in
11.6section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
11.7books and materials used in the teaching of religious tenets, doctrines, or worship, the
11.8purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
11.9or materials for, or transportation to, extracurricular activities including sporting events,
11.10musical or dramatic events, speech activities, driver's education, or similar programs. No
11.11deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
11.12the qualifying child's vehicle to provide such transportation for a qualifying child. For
11.13purposes of the subtraction provided by this clause, "qualifying child" has the meaning
11.14given in section 32(c)(3) of the Internal Revenue Code;
11.15    (4) income as provided under section 290.0802;
11.16    (5) to the extent included in federal adjusted gross income, income realized on
11.17disposition of property exempt from tax under section 290.491;
11.18    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
11.19of the Internal Revenue Code in determining federal taxable income by an individual
11.20who does not itemize deductions for federal income tax purposes for the taxable year, an
11.21amount equal to 50 percent of the excess of charitable contributions over $500 allowable
11.22as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
11.23under the provisions of Public Law 109-1 and Public Law 111-126;
11.24    (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
11.25qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
11.26of subnational foreign taxes for the taxable year, but not to exceed the total subnational
11.27foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
11.28"federal foreign tax credit" means the credit allowed under section 27 of the Internal
11.29Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
11.30under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
11.31the extent they exceed the federal foreign tax credit;
11.32    (8) in each of the five tax years immediately following the tax year in which an
11.33addition is required under subdivision 19a, clause (7), or 19c, clause (15) (14), in the case
11.34of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
11.35of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
11.36the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
12.1subdivision 19c, clause (15) (14), in the case of a shareholder of an S corporation, minus
12.2the positive value of any net operating loss under section 172 of the Internal Revenue
12.3Code generated for the tax year of the addition. The resulting delayed depreciation
12.4cannot be less than zero;
12.5    (9) job opportunity building zone income as provided under section 469.316;
12.6    (10) to the extent included in federal taxable income, the amount of compensation
12.7paid to members of the Minnesota National Guard or other reserve components of the
12.8United States military for active service, excluding compensation for services performed
12.9under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
12.10service" means (i) state active service as defined in section 190.05, subdivision 5a, clause
12.11(1); or (ii) federally funded state active service as defined in section 190.05, subdivision
12.125b , but "active service" excludes service performed in accordance with section 190.08,
12.13subdivision 3 ;
12.14    (11) to the extent included in federal taxable income, the amount of compensation
12.15paid to Minnesota residents who are members of the armed forces of the United States
12.16or United Nations for active duty performed under United States Code, title 10; or the
12.17authority of the United Nations;
12.18    (12) an amount, not to exceed $10,000, equal to qualified expenses related to a
12.19qualified donor's donation, while living, of one or more of the qualified donor's organs
12.20to another person for human organ transplantation. For purposes of this clause, "organ"
12.21means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
12.22"human organ transplantation" means the medical procedure by which transfer of a human
12.23organ is made from the body of one person to the body of another person; "qualified
12.24expenses" means unreimbursed expenses for both the individual and the qualified donor
12.25for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
12.26may be subtracted under this clause only once; and "qualified donor" means the individual
12.27or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
12.28individual may claim the subtraction in this clause for each instance of organ donation for
12.29transplantation during the taxable year in which the qualified expenses occur;
12.30    (13) in each of the five tax years immediately following the tax year in which an
12.31addition is required under subdivision 19a, clause (8), or 19c, clause (16) (15), in the case
12.32of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
12.33of the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause
12.34(16) (15), in the case of a shareholder of a corporation that is an S corporation, minus the
12.35positive value of any net operating loss under section 172 of the Internal Revenue Code
13.1generated for the tax year of the addition. If the net operating loss exceeds the addition for
13.2the tax year, a subtraction is not allowed under this clause;
13.3    (14) to the extent included in the federal taxable income of a nonresident of
13.4Minnesota, compensation paid to a service member as defined in United States Code, title
13.510, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
13.6Act, Public Law 108-189, section 101(2);
13.7    (15) international economic development zone income as provided under section
13.8469.325;
13.9    (16) to the extent included in federal taxable income, the amount of national service
13.10educational awards received from the National Service Trust under United States Code,
13.11title 42, sections 12601 to 12604, for service in an approved Americorps National Service
13.12program;
13.13(17) (16) to the extent included in federal taxable income, discharge of indebtedness
13.14income resulting from reacquisition of business indebtedness included in federal taxable
13.15income under section 108(i) of the Internal Revenue Code. This subtraction applies only
13.16to the extent that the income was included in net income in a prior year as a result of the
13.17addition under section 290.01, subdivision 19a, clause (16); and
13.18(18) (17) the amount of the net operating loss allowed under section 290.095,
13.19subdivision 11, paragraph (c).

13.20    Sec. 10. Minnesota Statutes 2010, section 290.01, subdivision 29, is amended to read:
13.21    Subd. 29. Taxable income. The term "taxable income" means:
13.22(1) for individuals, estates, and trusts, the same as taxable net income;
13.23(2) for corporations, the taxable net income less
13.24(i) the net operating loss deduction under section 290.095;
13.25(ii) the dividends received deduction under section 290.21, subdivision 4;
13.26(iii) the exemption for operating in a job opportunity building zone under section
13.27469.317 ; and
13.28(iv) the exemption for operating in a biotechnology and health sciences industry
13.29zone under section 469.337; and
13.30(v) the exemption for operating in an international economic development zone
13.31under section 469.326.

13.32    Sec. 11. Minnesota Statutes 2011 Supplement, section 290.06, subdivision 2c, is
13.33amended to read:
14.1    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
14.2taxes imposed by this chapter upon married individuals filing joint returns and surviving
14.3spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
14.4applying to their taxable net income the following schedule of rates:
14.5    (1) On the first $25,680, 5.35 percent;
14.6    (2) On all over $25,680, but not over $102,030, 7.05 percent;
14.7    (3) On all over $102,030, 7.85 percent.
14.8    Married individuals filing separate returns, estates, and trusts must compute their
14.9income tax by applying the above rates to their taxable income, except that the income
14.10brackets will be one-half of the above amounts.
14.11    (b) The income taxes imposed by this chapter upon unmarried individuals must be
14.12computed by applying to taxable net income the following schedule of rates:
14.13    (1) On the first $17,570, 5.35 percent;
14.14    (2) On all over $17,570, but not over $57,710, 7.05 percent;
14.15    (3) On all over $57,710, 7.85 percent.
14.16    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
14.17as a head of household as defined in section 2(b) of the Internal Revenue Code must be
14.18computed by applying to taxable net income the following schedule of rates:
14.19    (1) On the first $21,630, 5.35 percent;
14.20    (2) On all over $21,630, but not over $86,910, 7.05 percent;
14.21    (3) On all over $86,910, 7.85 percent.
14.22    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
14.23tax of any individual taxpayer whose taxable net income for the taxable year is less than
14.24an amount determined by the commissioner must be computed in accordance with tables
14.25prepared and issued by the commissioner of revenue based on income brackets of not
14.26more than $100. The amount of tax for each bracket shall be computed at the rates set
14.27forth in this subdivision, provided that the commissioner may disregard a fractional part of
14.28a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
14.29    (e) An individual who is not a Minnesota resident for the entire year must compute
14.30the individual's Minnesota income tax as provided in this subdivision. After the
14.31application of the nonrefundable credits provided in this chapter, the tax liability must
14.32then be multiplied by a fraction in which:
14.33    (1) the numerator is the individual's Minnesota source federal adjusted gross income
14.34as defined in section 62 of the Internal Revenue Code and increased by the additions
14.35required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
14.36(13), and (16) to (18), and reduced by the Minnesota assignable portion of the subtraction
15.1for United States government interest under section 290.01, subdivision 19b, clause (1),
15.2and the subtractions under section 290.01, subdivision 19b, clauses (8), (9), (13), (14),
15.3(15), (17), (16), and (18) (17), after applying the allocation and assignability provisions of
15.4section 290.081, clause (a), or 290.17; and
15.5    (2) the denominator is the individual's federal adjusted gross income as defined in
15.6section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
15.7section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to
15.8(18), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1),
15.9(8), (9), (13), (14), (15), (17) (16), and (18) (17).

15.10    Sec. 12. Minnesota Statutes 2010, section 290.067, subdivision 1, is amended to read:
15.11    Subdivision 1. Amount of credit. (a) A taxpayer may take as a credit against the
15.12tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the
15.13dependent care credit for which the taxpayer is eligible pursuant to the provisions of
15.14section 21 of the Internal Revenue Code subject to the limitations provided in subdivision
15.152 except that in determining whether the child qualified as a dependent, income received
15.16as a Minnesota family investment program grant or allowance to or on behalf of the child
15.17must not be taken into account in determining whether the child received more than half
15.18of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of
15.19the Internal Revenue Code do not apply.
15.20(b) If a child who has not attained the age of six years at the close of the taxable year
15.21is cared for at a licensed family day care home operated by the child's parent, the taxpayer
15.22is deemed to have paid employment-related expenses. If the child is 16 months old or
15.23younger at the close of the taxable year, the amount of expenses deemed to have been paid
15.24equals the maximum limit for one qualified individual under section 21(c) and (d) of the
15.25Internal Revenue Code. If the child is older than 16 months of age but has not attained the
15.26age of six years at the close of the taxable year, the amount of expenses deemed to have
15.27been paid equals the amount the licensee would charge for the care of a child of the same
15.28age for the same number of hours of care.
15.29(c) If a married couple:
15.30(1) has a child who has not attained the age of one year at the close of the taxable
15.31year;
15.32(2) files a joint tax return for the taxable year; and
15.33(3) does not participate in a dependent care assistance program as defined in section
15.34129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid
15.35for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of
16.1(i) the combined earned income of the couple or (ii) the amount of the maximum limit for
16.2one qualified individual under section 21(c) and (d) of the Internal Revenue Code will
16.3be deemed to be the employment related expense paid for that child. The earned income
16.4limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed
16.5amount. These deemed amounts apply regardless of whether any employment-related
16.6expenses have been paid.
16.7(d) If the taxpayer is not required and does not file a federal individual income tax
16.8return for the tax year, no credit is allowed for any amount paid to any person unless:
16.9(1) the name, address, and taxpayer identification number of the person are included
16.10on the return claiming the credit; or
16.11(2) if the person is an organization described in section 501(c)(3) of the Internal
16.12Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code,
16.13the name and address of the person are included on the return claiming the credit.
16.14In the case of a failure to provide the information required under the preceding sentence,
16.15the preceding sentence does not apply if it is shown that the taxpayer exercised due
16.16diligence in attempting to provide the information required.
16.17In the case of a nonresident, part-year resident, or a person who has earned income
16.18not subject to tax under this chapter including earned income excluded pursuant to section
16.19290.01, subdivision 19b , clause (9) or (15), the credit determined under section 21 of the
16.20Internal Revenue Code must be allocated based on the ratio by which the earned income
16.21of the claimant and the claimant's spouse from Minnesota sources bears to the total earned
16.22income of the claimant and the claimant's spouse.
16.23For residents of Minnesota, the subtractions for military pay under section 290.01,
16.24subdivision 19b , clauses (10) and (11), are not considered "earned income not subject to
16.25tax under this chapter."
16.26For residents of Minnesota, the exclusion of combat pay under section 112 of the
16.27Internal Revenue Code is not considered "earned income not subject to tax under this
16.28chapter."

16.29    Sec. 13. Minnesota Statutes 2011 Supplement, section 290.0671, subdivision 1,
16.30is amended to read:
16.31    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
16.32imposed by this chapter equal to a percentage of earned income. To receive a credit, a
16.33taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
16.34(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
16.35the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
17.1income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
17.2case is the credit less than zero.
17.3(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
17.4$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
17.5$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
17.6whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
17.7(d) For individuals with two or more qualifying children, the credit equals ten
17.8percent of the first $9,720 of earned income and 20 percent of earned income over
17.9$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income
17.10or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is
17.11the credit less than zero.
17.12(e) For a nonresident or part-year resident, the credit must be allocated based on the
17.13percentage calculated under section 290.06, subdivision 2c, paragraph (e).
17.14(f) For a person who was a resident for the entire tax year and has earned income
17.15not subject to tax under this chapter, including income excluded under section 290.01,
17.16subdivision 19b , clause (9) or (15), the credit must be allocated based on the ratio of
17.17federal adjusted gross income reduced by the earned income not subject to tax under
17.18this chapter over federal adjusted gross income. For purposes of this paragraph, the
17.19subtractions for military pay under section 290.01, subdivision 19b, clauses (10) and (11),
17.20are not considered "earned income not subject to tax under this chapter."
17.21For the purposes of this paragraph, the exclusion of combat pay under section 112
17.22of the Internal Revenue Code is not considered "earned income not subject to tax under
17.23this chapter."
17.24(g) For tax years beginning after December 31, 2007, and before December 31,
17.252010, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
17.26paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
17.27$3,000 for married taxpayers filing joint returns. For tax years beginning after December
17.2831, 2008, the commissioner shall annually adjust the $3,000 by the percentage determined
17.29pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
17.30section 1(f)(3)(B), the word "2007" shall be substituted for the word "1992." For 2009,
17.31the commissioner shall then determine the percent change from the 12 months ending on
17.32August 31, 2007, to the 12 months ending on August 31, 2008, and in each subsequent
17.33year, from the 12 months ending on August 31, 2007, to the 12 months ending on August
17.3431 of the year preceding the taxable year. The earned income thresholds as adjusted
17.35for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount
18.1is rounded up to the nearest $10. The determination of the commissioner under this
18.2subdivision is not a rule under the Administrative Procedure Act.
18.3(h) For tax years beginning after December 31, 2010, and before January 1, 2012,
18.4the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
18.5(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000
18.6for married taxpayers filing joint returns. For tax years beginning after December 31,
18.72010, and before January 1, 2012, the commissioner shall annually adjust the $5,000
18.8by the percentage determined pursuant to the provisions of section 1(f) of the Internal
18.9Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for
18.10the word "1992." For 2011, the commissioner shall then determine the percent change
18.11from the 12 months ending on August 31, 2008, to the 12 months ending on August
18.1231, 2010. The earned income thresholds as adjusted for inflation must be rounded to
18.13the nearest $10. If the amount ends in $5, the amount is rounded up to the nearest $10.
18.14The determination of the commissioner under this subdivision is not a rule under the
18.15Administrative Procedure Act.
18.16(i) The commissioner shall construct tables showing the amount of the credit at
18.17various income levels and make them available to taxpayers. The tables shall follow
18.18the schedule contained in this subdivision, except that the commissioner may graduate
18.19the transition between income brackets.

18.20    Sec. 14. Minnesota Statutes 2011 Supplement, section 290.091, subdivision 2, is
18.21amended to read:
18.22    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
18.23terms have the meanings given:
18.24    (a) "Alternative minimum taxable income" means the sum of the following for
18.25the taxable year:
18.26    (1) the taxpayer's federal alternative minimum taxable income as defined in section
18.2755(b)(2) of the Internal Revenue Code;
18.28    (2) the taxpayer's itemized deductions allowed in computing federal alternative
18.29minimum taxable income, but excluding:
18.30    (i) the charitable contribution deduction under section 170 of the Internal Revenue
18.31Code;
18.32    (ii) the medical expense deduction;
18.33    (iii) the casualty, theft, and disaster loss deduction; and
18.34    (iv) the impairment-related work expenses of a disabled person;
19.1    (3) for depletion allowances computed under section 613A(c) of the Internal
19.2Revenue Code, with respect to each property (as defined in section 614 of the Internal
19.3Revenue Code), to the extent not included in federal alternative minimum taxable income,
19.4the excess of the deduction for depletion allowable under section 611 of the Internal
19.5Revenue Code for the taxable year over the adjusted basis of the property at the end of the
19.6taxable year (determined without regard to the depletion deduction for the taxable year);
19.7    (4) to the extent not included in federal alternative minimum taxable income, the
19.8amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
19.9Internal Revenue Code determined without regard to subparagraph (E);
19.10    (5) to the extent not included in federal alternative minimum taxable income, the
19.11amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
19.12    (6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
19.13to (9), (12), (13), and (16) to (18);
19.14    less the sum of the amounts determined under the following:
19.15    (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
19.16    (2) an overpayment of state income tax as provided by section 290.01, subdivision
19.1719b , clause (2), to the extent included in federal alternative minimum taxable income;
19.18    (3) the amount of investment interest paid or accrued within the taxable year on
19.19indebtedness to the extent that the amount does not exceed net investment income, as
19.20defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
19.21amounts deducted in computing federal adjusted gross income;
19.22    (4) amounts subtracted from federal taxable income as provided by section 290.01,
19.23subdivision 19b , clauses (6), (8) to (15) (14), and (17) (16); and
19.24(5) the amount of the net operating loss allowed under section 290.095, subdivision
19.2511, paragraph (c).
19.26    In the case of an estate or trust, alternative minimum taxable income must be
19.27computed as provided in section 59(c) of the Internal Revenue Code.
19.28    (b) "Investment interest" means investment interest as defined in section 163(d)(3)
19.29of the Internal Revenue Code.
19.30    (c) "Net minimum tax" means the minimum tax imposed by this section.
19.31    (d) "Regular tax" means the tax that would be imposed under this chapter (without
19.32regard to this section and section 290.032), reduced by the sum of the nonrefundable
19.33credits allowed under this chapter.
19.34    (e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
19.35income after subtracting the exemption amount determined under subdivision 3.

20.1    Sec. 15. Minnesota Statutes 2010, section 290.0921, subdivision 3, is amended to read:
20.2    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
20.3income" is Minnesota net income as defined in section 290.01, subdivision 19, and
20.4includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
20.5(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
20.6Minnesota tax return, the minimum tax must be computed on a separate company basis.
20.7If a corporation is part of a tax group filing a unitary return, the minimum tax must be
20.8computed on a unitary basis. The following adjustments must be made.
20.9(1) For purposes of the depreciation adjustments under section 56(a)(1) and
20.1056(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
20.11service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
20.12income tax purposes, including any modification made in a taxable year under section
20.13290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
20.14paragraph (c).
20.15For taxable years beginning after December 31, 2000, the amount of any remaining
20.16modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
20.17section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
20.18allowance in the first taxable year after December 31, 2000.
20.19(2) The portion of the depreciation deduction allowed for federal income tax
20.20purposes under section 168(k) of the Internal Revenue Code that is required as an
20.21addition under section 290.01, subdivision 19c, clause (15), is disallowed in determining
20.22alternative minimum taxable income.
20.23(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d,
20.24clause (17), is allowed as a depreciation deduction in determining alternative minimum
20.25taxable income.
20.26(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
20.27of the Internal Revenue Code does not apply.
20.28(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
20.29Revenue Code does not apply.
20.30(6) The special rule for dividends from section 936 companies under section
20.3156(g)(4)(C)(iii) does not apply.
20.32(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
20.33Code does not apply.
20.34(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
20.35Internal Revenue Code must be calculated without regard to subparagraph (E) and the
20.36subtraction under section 290.01, subdivision 19d, clause (4).
21.1(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
21.2Revenue Code does not apply.
21.3(10) The tax preference for charitable contributions of appreciated property under
21.4section 57(a)(6) of the Internal Revenue Code does not apply.
21.5(11) For purposes of calculating the tax preference for accelerated depreciation or
21.6amortization on certain property placed in service before January 1, 1987, under section
21.757(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
21.8deduction allowed under section 290.01, subdivision 19e.
21.9For taxable years beginning after December 31, 2000, the amount of any remaining
21.10modification made under section 290.01, subdivision 19e, not previously deducted is a
21.11depreciation or amortization allowance in the first taxable year after December 31, 2004.
21.12(12) For purposes of calculating the adjustment for adjusted current earnings in
21.13section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
21.14income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
21.15minimum taxable income as defined in this subdivision, determined without regard to the
21.16adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
21.17(13) For purposes of determining the amount of adjusted current earnings under
21.18section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
21.1956(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
21.20gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the
21.21amount of refunds of income, excise, or franchise taxes subtracted as provided in section
21.22290.01, subdivision 19d , clause (9), or (iii) the amount of royalties, fees or other like
21.23income subtracted as provided in section 290.01, subdivision 19d, clause (10).
21.24(14) Alternative minimum taxable income excludes the income from operating in a
21.25job opportunity building zone as provided under section 469.317.
21.26(15) Alternative minimum taxable income excludes the income from operating in a
21.27biotechnology and health sciences industry zone as provided under section 469.337.
21.28(16) Alternative minimum taxable income excludes the income from operating in an
21.29international economic development zone as provided under section 469.326.
21.30Items of tax preference must not be reduced below zero as a result of the
21.31modifications in this subdivision.

21.32    Sec. 16. Minnesota Statutes 2011 Supplement, section 290.0922, subdivision 2,
21.33is amended to read:
21.34    Subd. 2. Exemptions. The following entities are exempt from the tax imposed
21.35by this section:
22.1(1) corporations exempt from tax under section 290.05;
22.2(2) real estate investment trusts;
22.3(3) regulated investment companies or a fund thereof; and
22.4(4) entities having a valid election in effect under section 860D(b) of the Internal
22.5Revenue Code;
22.6(5) town and farmers' mutual insurance companies;
22.7(6) cooperatives organized under chapter 308A or 308B that provide housing
22.8exclusively to persons age 55 and over and are classified as homesteads under section
22.9273.124, subdivision 3 ; and
22.10(7) a qualified business as defined under section 469.310, subdivision 11, if for the
22.11taxable year all of its property is located in a job opportunity building zone designated
22.12under section 469.314 and all of its payroll is a job opportunity building zone payroll
22.13under section 469.310; and.
22.14(8) an entity, if for the taxable year all of its property is located in an international
22.15economic development zone designated under section 469.322, and all of its payroll is
22.16international economic development zone payroll under section 469.321. The exemption
22.17under this clause applies to taxable years beginning during the duration of the international
22.18economic development zone.
22.19Entities not specifically exempted by this subdivision are subject to tax under this
22.20section, notwithstanding section 290.05.

22.21    Sec. 17. Minnesota Statutes 2011 Supplement, section 290.0922, subdivision 3,
22.22is amended to read:
22.23    Subd. 3. Definitions. (a) "Minnesota sales or receipts" means the total sales
22.24apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts
22.25attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the
22.26total sales or receipts apportioned or attributed to Minnesota pursuant to any other
22.27apportionment formula applicable to the taxpayer.
22.28(b) "Minnesota property" means total Minnesota tangible property as provided in
22.29section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota,
22.30but does not include: (1) the property of a qualified business as defined under section
22.31469.310, subdivision 11 , that is located in a job opportunity building zone designated under
22.32section 469.314, and (2) property of a qualified business located in a biotechnology and
22.33health sciences industry zone designated under section 469.334, or (3) for taxable years
22.34beginning during the duration of the zone, property of a qualified business located in the
22.35international economic development zone designated under section 469.322. Intangible
23.1property shall not be included in Minnesota property for purposes of this section.
23.2Taxpayers who do not utilize tangible property to apportion income shall nevertheless
23.3include Minnesota property for purposes of this section. On a return for a short taxable
23.4year, the amount of Minnesota property owned, as determined under section 290.191,
23.5shall be included in Minnesota property based on a fraction in which the numerator is the
23.6number of days in the short taxable year and the denominator is 365.
23.7(c) "Minnesota payrolls" means total Minnesota payrolls as provided in section
23.8290.191, subdivision 12 , but does not include: (1) the job opportunity building zone
23.9payroll under section 469.310, subdivision 8, of a qualified business as defined under
23.10section 469.310, subdivision 11, and (2) biotechnology and health sciences industry zone
23.11payrolls under section 469.330, subdivision 8, or (3) for taxable years beginning during
23.12the duration of the zone, international economic development zone payrolls under section
23.13469.321, subdivision 9. Taxpayers who do not utilize payrolls to apportion income shall
23.14nevertheless include Minnesota payrolls for purposes of this section.

23.15    Sec. 18. Minnesota Statutes 2011 Supplement, section 297A.75, subdivision 1, is
23.16amended to read:
23.17    Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
23.18following exempt items must be imposed and collected as if the sale were taxable and the
23.19rate under section 297A.62, subdivision 1, applied. The exempt items include:
23.20    (1) capital equipment exempt under section 297A.68, subdivision 5;
23.21    (2) building materials for an agricultural processing facility exempt under section
23.22297A.71, subdivision 13 ;
23.23    (3) building materials for mineral production facilities exempt under section
23.24297A.71, subdivision 14 ;
23.25    (4) building materials for correctional facilities under section 297A.71, subdivision
23.263 ;
23.27    (5) building materials used in a residence for disabled veterans exempt under section
23.28297A.71, subdivision 11 ;
23.29    (6) elevators and building materials exempt under section 297A.71, subdivision 12;
23.30    (7) building materials for the Long Lake Conservation Center exempt under section
23.31297A.71, subdivision 17 ;
23.32    (8) materials and supplies for qualified low-income housing under section 297A.71,
23.33subdivision 23 ;
23.34    (9) materials, supplies, and equipment for municipal electric utility facilities under
23.35section 297A.71, subdivision 35;
24.1    (10) equipment and materials used for the generation, transmission, and distribution
24.2of electrical energy and an aerial camera package exempt under section 297A.68,
24.3subdivision 37;
24.4    (11) tangible personal property and taxable services and construction materials,
24.5supplies, and equipment exempt under section 297A.68, subdivision 41;
24.6    (12) commuter rail vehicle and repair parts under section 297A.70, subdivision
24.73, clause (11);
24.8    (13) (12) materials, supplies, and equipment for construction or improvement of
24.9projects and facilities under section 297A.71, subdivision 40;
24.10(14) (13) materials, supplies, and equipment for construction or improvement of a
24.11meat processing facility exempt under section 297A.71, subdivision 41;
24.12(15) (14) materials, supplies, and equipment for construction, improvement, or
24.13expansion of an aerospace defense manufacturing facility exempt under section 297A.71,
24.14subdivision 42; and
24.15(16) (15) enterprise information technology equipment and computer software for
24.16use in a qualified data center exempt under section 297A.68, subdivision 42.

24.17    Sec. 19. Minnesota Statutes 2010, section 469.015, subdivision 4, is amended to read:
24.18    Subd. 4. Exceptions. (a) An authority need not require competitive bidding in the
24.19following circumstances:
24.20(1) in the case of a contract for the acquisition of a low-rent housing project:
24.21(i) for which financial assistance is provided by the federal government;
24.22(ii) which does not require any direct loan or grant of money from the municipality
24.23as a condition of the federal financial assistance; and
24.24(iii) for which the contract provides for the construction of the project upon land that
24.25is either owned by the authority for redevelopment purposes or not owned by the authority
24.26at the time of the contract but the contract provides for the conveyance or lease to the
24.27authority of the project or improvements upon completion of construction;
24.28(2) with respect to a structured parking facility:
24.29(i) constructed in conjunction with, and directly above or below, a development; and
24.30(ii) financed with the proceeds of tax increment or parking ramp general obligation
24.31or revenue bonds; and
24.32(3) until August 1, 2009, with respect to a facility built for the purpose of facilitating
24.33the operation of public transit or encouraging its use:
24.34(i) constructed in conjunction with, and directly above or below, a development; and
25.1(ii) financed with the proceeds of parking ramp general obligation or revenue bonds
25.2or with at least 60 percent of the construction cost being financed with funding provided
25.3by the federal government; and
25.4(4) in the case of any building in which at least 75 percent of the usable square
25.5footage constitutes a housing development project if:
25.6(i) the project is financed with the proceeds of bonds issued under section 469.034 or
25.7from nongovernmental sources;
25.8(ii) the project is either located on land that is owned or is being acquired by the
25.9authority only for development purposes, or is not owned by the authority at the time the
25.10contract is entered into but the contract provides for conveyance or lease to the authority
25.11of the project or improvements upon completion of construction; and
25.12(iii) the authority finds and determines that elimination of the public bidding
25.13requirements is necessary in order for the housing development project to be economical
25.14and feasible.
25.15(b) An authority need not require a performance bond for the following projects:
25.16(1) a contract described in paragraph (a), clause (1);
25.17(2) a construction change order for a housing project in which 30 percent of the
25.18construction has been completed;
25.19(3) a construction contract for a single-family housing project in which the authority
25.20acts as the general construction contractor; or
25.21(4) a services or materials contract for a housing project.
25.22For purposes of this paragraph, "services or materials contract" does not include
25.23construction contracts.

25.24    Sec. 20. Minnesota Statutes 2010, section 469.033, subdivision 7, is amended to read:
25.25    Subd. 7. Inactive authorities; transfer of funds; dissolution. The authority may
25.26transfer to the city in and for which it was created all property, assets, cash or other
25.27funds held or used by the authority which were derived from the special benefit tax
25.28for redevelopment levied pursuant to subdivision 6 prior to March 6, 1953, whenever
25.29collected. Upon any such transfer, an authority shall not thereafter levy the tax or exercise
25.30the redevelopment powers of sections 469.001 to 469.047. All cash or other funds
25.31transferred to the city shall be used exclusively for permanent improvements in the city
25.32or the retirement of debts or bonds incurred for permanent improvements in the city.
25.33An authority which transfers its property, assets, cash, or other funds derived from the
25.34special benefit tax for redevelopment and which has not entered into a contract with
25.35the federal government with respect to any low-rent public housing project prior to
26.1March 6, 1953, shall be dissolved as herein provided in this subdivision. After a public
26.2hearing after ten days' published notice thereof in a newspaper of general circulation in
26.3the city, the governing body of a city in and for which an authority has been created
26.4may dissolve the authority if the authority has not entered into any contract with the
26.5federal government or any agency or instrumentality thereof for a loan or a grant with
26.6respect to any urban redevelopment or low-rent public housing project that remains in
26.7effect. The resolution or ordinance dissolving the authority shall be published in the
26.8same manner in which ordinances are published in the city and the authority shall be
26.9dissolved when the resolution or ordinance becomes finally effective. The clerk of the
26.10governing body of the municipality shall furnish to the commissioner of employment and
26.11economic development a certified copy of the resolution or ordinance of the governing
26.12body dissolving the authority. All property, records, assets, cash, or other funds held or
26.13used by an authority shall be transferred to and become the property of the municipality
26.14and cash or other funds shall be used as herein provided. Upon dissolution of an authority,
26.15all rights of an authority against any person, firm, or corporation shall accrue to and
26.16be enforced by the municipality.

26.17    Sec. 21. Minnesota Statutes 2010, section 469.166, subdivision 3, is amended to read:
26.18    Subd. 3. Border city enterprise zone. "Border city enterprise zone" means an area
26.19in the state designated as such an enterprise zone by the commissioner in the cities of
26.20Breckenridge, Dilworth, East Grand Forks, Moorhead, or Ortonville.

26.21    Sec. 22. Minnesota Statutes 2010, section 469.166, subdivision 5, is amended to read:
26.22    Subd. 5. Municipality. "Municipality" means a city, or a county for an area located
26.23outside the boundaries of a city. If an area lies in two or more cities or in both incorporated
26.24and unincorporated areas, "municipality" shall include an entity formed pursuant to
26.25section 471.59 by the governing bodies of the cities with jurisdiction over the incorporated
26.26area and the counties with jurisdiction over the unincorporated area.

26.27    Sec. 23. Minnesota Statutes 2010, section 469.166, subdivision 6, is amended to read:
26.28    Subd. 6. Governing body. "Governing body" means the county board in the case
26.29of a county, the city council or other body designated by its the charter in the case of a
26.30of the city, or the tribal or federal agency recognized as the governing body of an Indian
26.31reservation by the United States Secretary of the Interior.

26.32    Sec. 24. Minnesota Statutes 2010, section 469.167, subdivision 2, is amended to read:
27.1    Subd. 2. Duration. The designation of an area as an a border city enterprise zone
27.2shall be effective for seven years after the date of designation, except that enterprise zones
27.3in border cities eligible to receive allocations for tax reductions under section 469.169,
27.4subdivisions 7 and 8 , and under section 469.171, subdivision 6a or 6b, shall be is effective
27.5until terminated by resolution adopted by the city in which the border city enterprise
27.6zone is located.

27.7    Sec. 25. Minnesota Statutes 2010, section 469.171, subdivision 1, is amended to read:
27.8    Subdivision 1. Authorized types. (a) The following types of tax reductions may
27.9be approved by the commissioner for businesses located in an a border city enterprise
27.10zone, after the governing body of the border city has designated an area or areas, each
27.11consisting of at least 100 acres, of the city not in excess of a total of 400 acres in which the
27.12tax reductions may be provided:
27.13(1) an exemption from the general sales tax imposed by chapter 297A for purchases
27.14of construction materials or equipment for use in the zone if the purchase was made
27.15after the date of application for the zone;
27.16(2) a credit against the income tax of an employer for additional workers employed
27.17in the zone, other than workers employed in construction, up to a maximum of $3,000
27.18per employee per year;
27.19(3) an income tax credit for a percentage of the cost of debt financing to construct
27.20new or expanded facilities in the zone; and
27.21(4) a state paid property tax credit for a portion of the property taxes paid by a new
27.22commercial or industrial facility or the additional property taxes paid by an expansion of
27.23an existing commercial or industrial facility in the zone.
27.24(b) An application for a tax reduction under this subdivision may not be approved
27.25unless the governing body finds that the construction or improvement of the facility is
27.26not likely to have the effect of transferring existing employment from a location outside
27.27of the municipality but within the state.

27.28    Sec. 26. Minnesota Statutes 2010, section 469.171, subdivision 4, is amended to read:
27.29    Subd. 4. Restriction. The tax reductions provided by this section shall not
27.30apply to (1) a facility the primary purpose of which is one of the following: retail food
27.31and beverage services, automobile sales or service, or the provision of recreation or
27.32entertainment, or a private or commercial golf course, country club, massage parlor, tennis
27.33club, skating facility including roller skating, skateboard, and ice skating, racquet sports
27.34facility, including any handball or racquetball court, hot tub facility, suntan facility, or
28.1racetrack; (2) property of a public utility; (3) property used in the operation of a financial
28.2institution; (4) property owned by a fraternal or veterans' organization; or (5) property of a
28.3business operating under a franchise agreement that requires the business to be located in
28.4the state; except that, in an enterprise zone designated under section 469.168, subdivision
28.54, paragraph (c) , that is not in a city of the first class, tax reductions may be provided to
28.6a retail food or beverage facility or an automobile sales or service facility, or a business
28.7operating under a franchise agreement that requires the business to be located in this state
28.8except for such a franchised retail food or beverage facility.

28.9    Sec. 27. Minnesota Statutes 2010, section 469.171, subdivision 6a, is amended to read:
28.10    Subd. 6a. Additional border city allocations. In addition to tax reductions
28.11authorized in section 469.169, subdivisions 7 and 8, The commissioner may allocate
28.12$2,000,000 for tax reductions pursuant to subdivision 9 to border city enterprise zones
28.13designated under section 469.168, subdivision 4, paragraph (c), except for zones located
28.14in cities of the first class. This money shall be allocated among the zones on a per
28.15capita basis. Limits on the maximum allocation to a zone imposed by section 469.169,
28.16subdivision 7 , do not apply to allocations made under this subdivision. Tax reductions
28.17authorized by this subdivision may not be allocated to any property which is:
28.18(1) a facility the primary purpose of which is one of the following: the provision
28.19of recreation or entertainment, or a private or commercial golf course, country club,
28.20massage parlor, tennis club, skating facility including roller skating, skateboard, and
28.21ice skating, racquet sports facility, including any handball or racquetball court, hot tub
28.22facility, suntan facility, or racetrack;
28.23(2) property of a public utility;
28.24(3) property used in the operation of a financial institution;
28.25(4) property owned by a fraternal or veterans' organization;
28.26(5) property of a retail food or beverage service business operating under a franchise
28.27agreement that requires the business to be located in the state.

28.28    Sec. 28. Minnesota Statutes 2010, section 469.171, subdivision 7, is amended to read:
28.29    Subd. 7. Duration. Each tax reduction provided to a business pursuant to this
28.30subdivision shall terminate not longer than five years after the effective date of the tax
28.31reduction for the business unless the business is located in a border city enterprise zone
28.32designated under section 469.168, subdivision 4, paragraph (c), that is not a city of the
28.33first class. Each tax reduction provided to a business that is located in a border city
28.34enterprise zone designated under section 469.168, subdivision 4, paragraph (c), that is not
29.1located in a city of the first class, may be provided until the allocations provided under
29.2subdivision 6a, and under section 469.169, subdivisions 7 and 8, have been expended.
29.3Subject to the limitation in this subdivision, the tax reductions may be provided after
29.4expiration of the zone's designation.

29.5    Sec. 29. Minnesota Statutes 2010, section 469.171, subdivision 9, is amended to read:
29.6    Subd. 9. Recapture. Any business that (1) receives tax reductions authorized by
29.7subdivisions 1 to 8, classification as employment property pursuant to section 469.170, or
29.8an alternative local contribution under section 469.169, subdivision 5; and (2) ceases to
29.9operate its facility located within the border city enterprise zone shall repay the amount of
29.10the tax reduction or local contribution received during the two years immediately before
29.11it ceased to operate in the zone.
29.12The repayment must be paid to the state to the extent it represents a tax reduction
29.13under subdivisions 1 to 8 and to the municipality to the extent it represents a property tax
29.14reduction or other local contribution. Any amount repaid to the state must be credited
29.15to the amount certified as available for tax reductions in the zone pursuant to section
29.16469.169, subdivision 7 the city's allocation. Any amount repaid to the municipality must
29.17be used by the municipality for economic development purposes. The commissioner of
29.18revenue may seek repayment of tax credits from a business ceasing to operate within an
29.19enterprise zone by utilizing any remedies available for the collection of tax.

29.20    Sec. 30. Minnesota Statutes 2010, section 469.171, subdivision 11, is amended to read:
29.21    Subd. 11. Limitations; last eight months of duration. This subdivision applies
29.22only to state tax reductions first authorized by the municipality to be provided to a business
29.23within eight months of the expiration of the border city enterprise zone's designation.
29.24Before agreeing with a business to provide tax reductions, the municipality must
29.25submit the proposed tax reductions to the commissioner for approval. The commissioner
29.26shall review and analyze the proposal in light of, at least: (1) the proposed investment that
29.27the business will make in the zone, (2) the number and quality of new jobs that will be
29.28created in the zone, (3) the overall positive impact on economic activity in the zone, and
29.29(4) the extent to which the impacts in clauses (1) to (3) are dependent upon providing the
29.30state tax reductions to the business. The commissioner shall disapprove the proposal if the
29.31commissioner determines the public benefits of increased investment and employment
29.32resulting from the tax reductions is disproportionately small relative to the cost of the
29.33state tax reductions. If the commissioner disapproves of the proposal, the tax reductions
29.34are not allowed to the business.
30.1If the municipality submits the proposal to the commissioner before expiration
30.2of the zone designation, the authority to grant the tax reductions continues until the
30.3commissioner acts on the proposal.

30.4    Sec. 31. Minnesota Statutes 2010, section 469.172, is amended to read:
30.5469.172 DEVELOPMENT AND REDEVELOPMENT POWERS.
30.6Notwithstanding any contrary provision of law or charter, any city of the first or
30.7second class that contains an a border city enterprise zone or that has been designated as
30.8an enterprise zone may, in addition to its other powers, exercise the powers granted to
30.9a governmental subdivision by sections 469.001 to 469.047, 469.048 to 469.068, and
30.10469.109 to 469.113. Section 469.059, subdivision 15, shall apply applies to the city in
30.11the exercise of the powers granted pursuant to this section. It may exercise the powers
30.12assigned to redevelopment agencies pursuant to sections 469.152 to 469.165, without
30.13limitation to further the purposes of sections 469.001 to 469.047, 469.048 to 469.068, and
30.14469.109 to 469.134. It may exercise the powers set forth in sections 469.001 to 469.047,
30.15469.048 to 469.068, and 469.109 to 469.164 without limitation to further the purposes
30.16and policies set forth in sections 469.152 to 469.165. It may exercise the powers granted
30.17by this subdivision and any other development or redevelopment powers authorized by
30.18other laws, including sections 469.124 to 469.134 and 469.152 to 469.165, independently
30.19or in conjunction with each other as though all the powers had been granted to a single
30.20entity. Any project undertaken to accomplish the purposes of sections 469.001 to 469.047
30.21that qualifies as single-family housing under section 462C.02, subdivision 4, shall be is
30.22subject to the provisions of chapter 462C.
30.23Upon expiration of the designation of the enterprise zone, the powers granted by
30.24this subdivision may be exercised only with respect to any project, program, or activity
30.25commenced or established prior to that date. The powers granted by this subdivision may
30.26only be exercised within the zone.

30.27    Sec. 32. Minnesota Statutes 2010, section 469.173, subdivision 5, is amended to read:
30.28    Subd. 5. Information sharing. Pursuant to section 270B.14, subdivision 3,
30.29the commissioner of revenue may share information with the commissioner or with a
30.30municipality receiving an enterprise zone designation, insofar as necessary to administer
30.31the funding limitations provided by section 469.169, subdivision 7.

30.32    Sec. 33. Minnesota Statutes 2010, section 469.173, subdivision 6, is amended to read:
31.1    Subd. 6. Zone boundary realignment. The commissioner may approve specific
31.2applications by a municipality to amend the boundaries of a border city enterprise zone
31.3or of an area or areas designated pursuant to section 469.171, subdivision 5, at any time.
31.4Boundaries of a zone may not be amended to create noncontiguous subdivisions. If the
31.5commissioner approves the amended boundaries, the change is effective on the date of
31.6approval. Notwithstanding the area limitation under section 469.168, subdivision 3, the
31.7commissioner may approve a specific application to amend the boundaries of an enterprise
31.8zone which is located within five municipalities and was designated in 1984, to increase
31.9its area to not more than 800 acres, and may approve an additional specific application to
31.10amend the boundaries of that enterprise zone to include a sixth municipality or to further
31.11increase its area to include all or part of the territory of a town that surrounds one of
31.12the five municipalities, or both.
31.13Notwithstanding the area limitation under section 469.168, subdivision 3, the
31.14commissioner may approve a specific application to amend the boundaries of an enterprise
31.15zone that is located within four municipalities to include a fifth municipality. The addition
31.16of the fifth municipality may only be approved after the existing municipalities, by
31.17adoption of a resolution by each municipality's governing board, agree to the addition
31.18of the fifth municipality.

31.19    Sec. 34. Minnesota Statutes 2010, section 469.174, subdivision 20, is amended to read:
31.20    Subd. 20. Internal Revenue Code. "Internal Revenue Code" means the Internal
31.21Revenue Code of 1986, as amended through December 31, 1993.

31.22    Sec. 35. Minnesota Statutes 2010, section 469.174, subdivision 25, is amended to read:
31.23    Subd. 25. Increment. "Increment," "tax increment," "tax increment revenues,"
31.24"revenues derived from tax increment," and other similar terms for a district include:
31.25(1) taxes paid by the captured net tax capacity, but excluding any excess taxes, as
31.26computed under section 469.177;
31.27(2) the proceeds from the sale or lease of property, tangible or intangible, to the
31.28extent the property was purchased by the authority with tax increments;
31.29(3) principal and interest received on loans or other advances made by the authority
31.30with tax increments;
31.31(4) interest or other investment earnings on or from tax increments; and
31.32(5) repayments or return of tax increments made to the authority under agreements
31.33for districts for which the request for certification was made after August 1, 1993; and
31.34(6) the market value homestead credit paid to the authority under section 273.1384.

32.1    Sec. 36. Minnesota Statutes 2010, section 469.176, subdivision 7, is amended to read:
32.2    Subd. 7. Parcels not includable in districts. (a) The authority may request
32.3inclusion in a tax increment financing district and the county auditor may certify the
32.4original tax capacity of a parcel or a part of a parcel that qualified under the provisions of
32.5section 273.111 or, 273.112, 273.114, or chapter 473H for taxes payable in any of the five
32.6calendar years before the filing of the request for certification only for:
32.7    (1) a district in which 85 percent or more of the planned buildings and facilities
32.8(determined on the basis of square footage) are a qualified manufacturing facility or a
32.9qualified distribution facility or a combination of both; or
32.10    (2) a housing district.
32.11    (b)(1) A distribution facility means buildings and other improvements to real
32.12property that are used to conduct activities in at least each of the following categories:
32.13    (i) to store or warehouse tangible personal property;
32.14    (ii) to take orders for shipment, mailing, or delivery;
32.15    (iii) to prepare personal property for shipment, mailing, or delivery; and
32.16    (iv) to ship, mail, or deliver property.
32.17    (2) A manufacturing facility includes space used for manufacturing or producing
32.18tangible personal property, including processing resulting in the change in condition of the
32.19property, and space necessary for and related to the manufacturing activities.
32.20    (3) To be a qualified facility, the owner or operator of a manufacturing or distribution
32.21facility must agree to pay and pay 90 percent or more of the employees of the facility at
32.22a rate equal to or greater than 160 percent of the federal minimum wage for individuals
32.23over the age of 20.

32.24    Sec. 37. Minnesota Statutes 2010, section 469.1763, subdivision 6, is amended to read:
32.25    Subd. 6. Pooling permitted for deficits. (a) This subdivision applies only to
32.26districts for which the request for certification was made before August 1, 2001, and
32.27without regard to whether the request for certification was made prior to August 1, 1979.
32.28(b) The municipality for the district may transfer available increments from another
32.29tax increment financing district located in the municipality, if the transfer is necessary to
32.30eliminate a deficit in the district to which the increments are transferred. The municipality
32.31may transfer increments as provided by this subdivision without regard to whether the
32.32transfer or expenditure is authorized by the tax increment financing plan for the district
32.33from which the transfer is made. A deficit in the district for purposes of this subdivision
32.34means the lesser of the following two amounts:
33.1(1)(i) the amount due during the calendar year to pay preexisting obligations of
33.2the district; minus
33.3(ii) the total increments collected or to be collected from properties located within
33.4the district that are available for the calendar year including amounts collected in prior
33.5years that are currently available; plus
33.6(iii) total increments from properties located in other districts in the municipality
33.7including amounts collected in prior years that are available to be used to meet the district's
33.8obligations under this section, excluding this subdivision, or other provisions of law (but
33.9excluding a special tax under section 469.1791 and the grant program under Laws 1997,
33.10chapter 231, article 1, section 19, or Laws 2001, First Special Session chapter 5); or
33.11(2) the reduction in increments collected from properties located in the district for
33.12the calendar year as a result of the changes in class rates in Laws 1997, chapter 231, article
33.131; Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, and Laws 2001, First
33.14Special Session chapter 5, or the elimination of the general education tax levy under
33.15Laws 2001, First Special Session chapter 5.
33.16The authority may compute the deficit amount under clause (1) only (without regard
33.17to the limit under clause (2)) if the authority makes an irrevocable commitment, by
33.18resolution, to use increments from the district to which increments are to be transferred and
33.19any transferred increments are only used to pay preexisting obligations and administrative
33.20expenses for the district that are required to be paid under section 469.176, subdivision
33.214h , paragraph (a).
33.22(c) A preexisting obligation means:
33.23(1) bonds issued and sold before August 1, 2001, or bonds issued pursuant to a
33.24binding contract requiring the issuance of bonds entered into before July 1, 2001, and
33.25bonds issued to refund such bonds or to reimburse expenditures made in conjunction with
33.26a signed contractual agreement entered into before August 1, 2001, to the extent that the
33.27bonds are secured by a pledge of increments from the tax increment financing district; and
33.28(2) binding contracts entered into before August 1, 2001, to the extent that the
33.29contracts require payments secured by a pledge of increments from the tax increment
33.30financing district.
33.31(d) The municipality may require a development authority, other than a seaway port
33.32authority, to transfer available increments including amounts collected in prior years that
33.33are currently available for any of its tax increment financing districts in the municipality to
33.34make up an insufficiency in another district in the municipality, regardless of whether the
33.35district was established by the development authority or another development authority.
34.1This authority applies notwithstanding any law to the contrary, but applies only to a
34.2development authority that:
34.3(1) was established by the municipality; or
34.4(2) the governing body of which is appointed, in whole or part, by the municipality
34.5or an officer of the municipality or which consists, in whole or part, of members of
34.6the governing body of the municipality. The municipality may use this authority only
34.7after it has first used all available increments of the receiving development authority to
34.8eliminate the insufficiency and exercised any permitted action under section 469.1792,
34.9subdivision 3 , for preexisting districts of the receiving development authority to eliminate
34.10the insufficiency.
34.11(e) The authority under this subdivision to spend tax increments outside of the area
34.12of the district from which the tax increments were collected:
34.13(1) is an exception to the restrictions under section 469.176, subdivisions 4b, 4c,
34.144d, 4e, 4i, and 4j ; the expenditure limits under section 469.176, subdivision 1c; and the
34.15other provisions of this section; and the percentage restrictions under subdivision 2 must
34.16be calculated after deducting increments spent under this subdivision from the total
34.17increments for the district; and
34.18(2) applies notwithstanding the provisions of the Tax Increment Financing Act in
34.19effect for districts for which the request for certification was made before June 30, 1982,
34.20or any other law to the contrary.
34.21(f) If a preexisting obligation requires the development authority to pay an amount
34.22that is limited to the increment from the district or a specific development within the
34.23district and if the obligation requires paying a higher amount to the extent that increments
34.24are available, the municipality may determine that the amount due under the preexisting
34.25obligation equals the higher amount and may authorize the transfer of increments
34.26under this subdivision to pay up to the higher amount. The existence of a guarantee of
34.27obligations by the individual or entity that would receive the payment under this paragraph
34.28is disregarded in the determination of eligibility to pool under this subdivision. The
34.29authority to transfer increments under this paragraph may only be used to the extent
34.30that the payment of all other preexisting obligations in the municipality due during the
34.31calendar year have been satisfied.
34.32(g) For transfers of increments made in calendar year 2005 and later, the reduction in
34.33increments as a result of the elimination of the general education tax levy for purposes of
34.34paragraph (b), clause (2), for a taxes payable year equals the general education tax rate
34.35for the school district under Minnesota Statutes 2000, section 273.1382, subdivision 1,
35.1for taxes payable in 2001, multiplied by the captured tax capacity of the district for the
35.2current taxes payable year.

35.3    Sec. 38. Minnesota Statutes 2010, section 469.1764, subdivision 1, is amended to read:
35.4    Subdivision 1. Scope; application. (a) This section applies to a tax increment
35.5financing district or area added to a district, if the request for certification of the district or
35.6the area added to the district was made after July 31, 1979, and before July 1, 1982.
35.7(b) This section, section 469.1763, subdivision 6, and any special law applying to
35.8the district are the exclusive authority to spend tax increments on activities located outside
35.9of the geographic area of a tax increment financing district that is subject to this section.
35.10(c) This section does not apply to increments from a district that is subject to the
35.11provisions of this section, if:
35.12(1) the district was decertified before the enactment of this section and all increments
35.13spent on activities located outside of the geographic area of the district were repaid and
35.14distributed as excess increments under section 469.176, subdivision 2; or
35.15(2) the use of increments on activities located outside of the geographic area of
35.16the district consists solely of payment of debt service on bonds under section 469.129,
35.17subdivision 2 , before its repeal, and any bonds issued to refund bonds issued under that
35.18subdivision.

35.19    Sec. 39. Minnesota Statutes 2010, section 469.177, subdivision 1, is amended to read:
35.20    Subdivision 1. Original net tax capacity. (a) Upon or after adoption of a tax
35.21increment financing plan, the auditor of any county in which the district is situated shall,
35.22upon request of the authority, certify the original net tax capacity of the tax increment
35.23financing district and that portion of the district overlying any subdistrict as described in
35.24the tax increment financing plan and shall certify in each year thereafter the amount by
35.25which the original net tax capacity has increased or decreased as a result of a change in tax
35.26exempt status of property within the district and any subdistrict, reduction or enlargement
35.27of the district or changes pursuant to subdivision 4. The auditor shall certify the amount
35.28within 30 days after receipt of the request and sufficient information to identify the parcels
35.29included in the district. The certification relates to the taxes payable year as provided in
35.30subdivision 6.
35.31    (b) If the classification under section 273.13 of property located in a district changes
35.32to a classification that has a different assessment ratio, the original net tax capacity of that
35.33property must be redetermined at the time when its use is changed as if the property had
35.34originally been classified in the same class in which it is classified after its use is changed.
36.1    (c) The amount to be added to the original net tax capacity of the district as a result
36.2of previously tax exempt real property within the district becoming taxable equals the net
36.3tax capacity of the real property as most recently assessed pursuant to section 273.18 or, if
36.4that assessment was made more than one year prior to the date of title transfer rendering
36.5the property taxable, the net tax capacity assessed by the assessor at the time of the
36.6transfer. If improvements are made to tax exempt property after the municipality approves
36.7the district and before the parcel becomes taxable, the assessor shall, at the request of
36.8the authority, separately assess the estimated market value of the improvements. If the
36.9property becomes taxable, the county auditor shall add to original net tax capacity, the net
36.10tax capacity of the parcel, excluding the separately assessed improvements. If substantial
36.11taxable improvements were made to a parcel after certification of the district and if the
36.12property later becomes tax exempt, in whole or part, as a result of the authority acquiring
36.13the property through foreclosure or exercise of remedies under a lease or other revenue
36.14agreement or as a result of tax forfeiture, the amount to be added to the original net tax
36.15capacity of the district as a result of the property again becoming taxable is the amount
36.16of the parcel's value that was included in original net tax capacity when the parcel was
36.17first certified. The amount to be added to the original net tax capacity of the district as a
36.18result of enlargements equals the net tax capacity of the added real property as most
36.19recently certified by the commissioner of revenue as of the date of modification of the tax
36.20increment financing plan pursuant to section 469.175, subdivision 4.
36.21    (d) If the net tax capacity of a property increases because the property no longer
36.22qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the
36.23Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan
36.24Agricultural Preserves Act, chapter 473H, the Rural Preserve Property Tax Program under
36.25section 273.114, or because platted, unimproved property is improved or market value is
36.26increased after approval of the plat under section 273.11, subdivision 14, 14a, or 14b, the
36.27increase in net tax capacity must be added to the original net tax capacity.
36.28    (e) The amount to be subtracted from the original net tax capacity of the district
36.29as a result of previously taxable real property within the district becoming tax exempt,
36.30or a reduction in the geographic area of the district, shall be the amount of original net
36.31tax capacity initially attributed to the property becoming tax exempt or being removed
36.32from the district. If the net tax capacity of property located within the tax increment
36.33financing district is reduced by reason of a court-ordered abatement, stipulation agreement,
36.34voluntary abatement made by the assessor or auditor or by order of the commissioner of
36.35revenue, the reduction shall be applied to the original net tax capacity of the district when
36.36the property upon which the abatement is made has not been improved since the date of
37.1certification of the district and to the captured net tax capacity of the district in each year
37.2thereafter when the abatement relates to improvements made after the date of certification.
37.3The county auditor may specify reasonable form and content of the request for certification
37.4of the authority and any modification thereof pursuant to section 469.175, subdivision 4.
37.5    (f) If a parcel of property contained a substandard building or improvements
37.6described in section 469.174, subdivision 10, paragraph (e), that were demolished or
37.7removed and if the authority elects to treat the parcel as occupied by a substandard
37.8building under section 469.174, subdivision 10, paragraph (b), or by improvements under
37.9section 469.174, subdivision 10, paragraph (e), the auditor shall certify the original net tax
37.10capacity of the parcel using the greater of (1) the current net tax capacity of the parcel, or
37.11(2) the estimated market value of the parcel for the year in which the building or other
37.12improvements were demolished or removed, but applying the class rates for the current
37.13year.
37.14    (g) For a redevelopment district qualifying under section 469.174, subdivision 10,
37.15paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of
37.16the land as the original tax capacity for any parcel in the district that contains a building
37.17that suffered substantial damage as a result of the disaster or emergency.

37.18    Sec. 40. Minnesota Statutes 2010, section 469.1793, is amended to read:
37.19469.1793 DEVELOPER OBLIGATIONS CONTINUED.
37.20If a developer or other private entity agreed to make payments to the authority or
37.21municipality to reimburse the municipality for the state aid offset under Minnesota Statutes
37.222000, section 273.1399, the obligation continues in effect, notwithstanding the repeal of
37.23section 273.1399. Payments received by the development authority are increments for
37.24purposes of the state grant program under section 469.1799.

37.25    Sec. 41. Minnesota Statutes 2010, section 469.1813, subdivision 6b, is amended to
37.26read:
37.27    Subd. 6b. Extended duration limit. (a) Notwithstanding the provisions of
37.28subdivision 6, a political subdivision may grant an abatement for a period of up to 20
37.29years, if the abatement is for a qualified business.
37.30(b) To be a qualified business for purposes of this subdivision, at least 50 percent of
37.31the payroll of the operations of the business that qualify for the abatement must be for
37.32employees engaged in one of the following lines of business or any combination of them:
37.33(1) manufacturing;
37.34(2) agricultural processing;
38.1(3) mining;
38.2(4) research and development;
38.3(5) warehousing; or
38.4(6) qualified high technology.
38.5Alternatively, a qualified business also includes a taxpayer whose real and personal
38.6property is subject to valuation under Minnesota Rules, chapter 8100.
38.7(c)(1) "Manufacturing" means the material staging and production of tangible
38.8personal property by procedures commonly regarded as manufacturing, processing,
38.9fabrication, or assembling which changes some existing material into new shapes, new
38.10qualities, or new combinations.
38.11(2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code
38.12of 1986.
38.13(3) "Agricultural processing" means transforming, packaging, sorting, or grading
38.14livestock or livestock products, agricultural commodities, or plants or plant products into
38.15goods that are used for intermediate or final consumption including goods for nonfood use.
38.16(4) "Research and development" means qualified research as defined in section
38.1741(d) of the Internal Revenue Code of 1986.
38.18(5) "Qualified high technology" means one or more of the following activities:
38.19(i) advanced computing, which is any technology used in the design and development
38.20of any of the following:
38.21(A) computer hardware and software;
38.22(B) data communications; and
38.23(C) information technologies;
38.24(ii) advanced materials, which are materials with engineered properties created
38.25through the development of specialized process and synthesis technology;
38.26(iii) biotechnology, which is any technology that uses living organisms, cells,
38.27macromolecules, microorganisms, or substances from living organisms to make or modify
38.28a product, improve plants or animals, or develop microorganisms for useful purposes;
38.29(iv) electronic device technology, which is any technology that involves
38.30microelectronics, semiconductors, electronic equipment, and instrumentation, radio
38.31frequency, microwave, and millimeter electronics, and optical and optic-electrical devices,
38.32or data and digital communications and imaging devices;
38.33(v) engineering or laboratory testing related to the development of a product;
38.34(vi) technology that assists in the assessment or prevention of threats or damage to
38.35human health or the environment, including, but not limited to, environmental cleanup
38.36technology, pollution prevention technology, or development of alternative energy sources;
39.1(vii) medical device technology, which is any technology that involves medical
39.2equipment or products other than a pharmaceutical product that has therapeutic or
39.3diagnostic value and is regulated; or
39.4(viii) advanced vehicles technology which is any technology that involves electric
39.5vehicles, hybrid vehicles, or alternative fuel vehicles, or components used in the
39.6construction of electric vehicles, hybrid vehicles, or alternative fuel vehicles. An electric
39.7vehicle is a road vehicle that draws propulsion energy only from an onboard source of
39.8electrical energy. A hybrid vehicle is a road vehicle that can draw propulsion energy from
39.9both a consumable fuel and a rechargeable energy storage system.
39.10(d) The authority to grant new abatements under this subdivision expires on July 1,
39.112004, except that the authority to grant new abatements for real and personal property
39.12subject to valuation under Minnesota Rules, chapter 8100, does not expire.

39.13    Sec. 42. Minnesota Statutes 2010, section 473F.02, subdivision 3, is amended to read:
39.14    Subd. 3. Commercial-industrial property. "Commercial-industrial property"
39.15means the following categories of property, as defined in section 273.13, excluding that
39.16portion of such property (1) which may, by law, constitute the tax base for a tax increment
39.17pledged under section 469.042 or 469.162, certification of which was requested prior to
39.18August 1, 1979, to the extent and while such tax increment is so pledged; or (2) which is
39.19exempt from taxation under section 272.02:
39.20(a) That portion of class 3 property defined in Minnesota Statutes 1971, section
39.21273.13 , consisting of stocks of merchandise and furniture and fixtures used therewith;
39.22manufacturers' materials and manufactured articles; and tools, implements and machinery,
39.23whether fixtures or otherwise.
39.24(b) That portion of class 4 property defined in Minnesota Statutes 1971, section
39.25273.13 , which is either used or zoned for use for any commercial or industrial purpose,
39.26except for such property which is, or, in the case of property under construction, will when
39.27completed be used exclusively for residential occupancy and the provision of services
39.28to residential occupants thereof. Property shall be considered as used exclusively for
39.29residential occupancy only if each of not less than 80 percent of its occupied residential
39.30units is, or, in the case of property under construction, will when completed be occupied
39.31under an oral or written agreement for occupancy over a continuous period of not less
39.32than 30 days.
39.33If the classification of property prescribed by section 273.13 is modified by
39.34legislative amendment, the references in this subdivision shall be to such successor class
40.1or classes of property, or portions thereof, as embrace the kinds of property designated
40.2in this subdivision.

40.3    Sec. 43. REPEALER.
40.4Minnesota Statutes 2010, sections 272.02, subdivision 83; 290.06, subdivisions
40.524 and 32; 297A.68, subdivision 41; 469.042, subdivisions 2, 3, and 4; 469.043;
40.6469.059, subdivision 13; 469.129; 469.134; 469.162, subdivision 2; 469.1651; 469.166,
40.7subdivisions 7, 8, 9, 10, 11, and 12; 469.167, subdivisions 1 and 3; 469.168; 469.169,
40.8subdivisions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, and 13; 469.170, subdivisions 1, 2, 3, 4, 5, 5a,
40.95b, 5c, 5d, 5e, 6, 7, and 8; 469.171, subdivisions 2, 5, 6a, and 6b; 469.173, subdivisions 1
40.10and 3; 469.1765; 469.1791; 469.1799, subdivision 2; 469.301, subdivisions 1, 2, 3, 4, and
40.115; 469.302; 469.303; 469.304; 469.321; 469.3215; 469.322; 469.323; 469.324; 469.325;
40.12469.326; 469.327; 469.328; 469.329; and 473.680, are repealed.

40.13    Sec. 44. EFFECTIVE DATE.
40.14This act is effective August 1, 2012, and the tax increment financing provisions
40.15apply to all districts, regardless of when the request for certification was made.


40.18    Section 1. Minnesota Statutes 2010, section 216C.436, subdivision 7, is amended to
40.19read:
40.20    Subd. 7. Repayment. An implementing entity that finances an energy improvement
40.21under this section must:
40.22(1) secure payment with a lien against the benefited qualifying real property; and
40.23(2) collect repayments as a special assessment as provided for in section 429.101
40.24or by charter, provided that special assessments may be made payable in up to 20 equal
40.25annual installments.
40.26If the implementing entity is an authority, the local government that authorized
40.27the authority to act as implementing entity shall impose and collect special assessments
40.28necessary to pay debt service on bonds issued by the implementing entity under
40.29subdivision 8, and shall transfer all collections of the assessments upon receipt to the
40.30authority.

40.31    Sec. 2. Minnesota Statutes 2010, section 216C.436, subdivision 8, is amended to read:
41.1    Subd. 8. Bond issuance; repayment. (a) An implementing entity may issue
41.2revenue bonds as provided in chapter 475 for the purposes of this section, provided that
41.3the revenue bonds must not be payable more than 20 years from the date of issuance.
41.4(b) The bonds must be payable as to both principal and interest solely from the
41.5revenues from the assessments established in subdivision 7.
41.6(c) No holder of bonds issued under this subdivision may compel any exercise of the
41.7taxing power of the implementing entity that issued the bonds to pay principal or interest
41.8on the bonds, and if the implementing entity is an authority, no holder of the bonds may
41.9compel any exercise of the taxing power of the local government. Bonds issued under
41.10this subdivision are not a debt or obligation of the issuer or any local government that
41.11issued them, nor is the payment of the bonds enforceable out of any money other than the
41.12revenue pledged to the payment of the bonds.

41.13    Sec. 3. Minnesota Statutes 2010, section 373.40, subdivision 1, is amended to read:
41.14    Subdivision 1. Definitions. For purposes of this section, the following terms have
41.15the meanings given.
41.16(a) "Bonds" means an obligation as defined under section 475.51.
41.17(b) "Capital improvement" means acquisition or betterment of public lands,
41.18buildings, or other improvements within the county for the purpose of a county courthouse,
41.19administrative building, health or social service facility, correctional facility, jail, law
41.20enforcement center, hospital, morgue, library, park, qualified indoor ice arena, roads
41.21and bridges, public works facilities, fairgrounds buildings, and records and data storage
41.22facilities and the acquisition of development rights in the form of conservation easements
41.23under chapter 84C. An improvement must have an expected useful life of five years or
41.24more to qualify. "Capital improvement" does not include a recreation or sports facility
41.25building (such as, but not limited to, a gymnasium, ice arena, racquet sports facility,
41.26swimming pool, exercise room or health spa), unless the building is part of an outdoor
41.27park facility and is incidental to the primary purpose of outdoor recreation.
41.28(c) "Metropolitan county" means a county located in the seven-county metropolitan
41.29area as defined in section 473.121 or a county with a population of 90,000 or more.
41.30(d) "Population" means the population established by the most recent of the
41.31following (determined as of the date the resolution authorizing the bonds was adopted):
41.32(1) the federal decennial census,
41.33(2) a special census conducted under contract by the United States Bureau of the
41.34Census, or
42.1(3) a population estimate made either by the Metropolitan Council or by the state
42.2demographer under section 4A.02.
42.3(e) "Qualified indoor ice arena" means a facility that meets the requirements of
42.4section 373.43.
42.5(f) "Tax capacity" means total taxable market value, but does not include captured
42.6market value.

42.7    Sec. 4. Minnesota Statutes 2010, section 373.40, subdivision 2, is amended to read:
42.8    Subd. 2. Application of election requirement. (a) Bonds issued by a county
42.9to finance capital improvements under an approved capital improvement plan are not
42.10subject to the election requirements of section 375.18 or 475.58. The bonds must be
42.11approved by vote of at least three-fifths of the members of the county board. In the case
42.12of a metropolitan county, the bonds must be approved by vote of at least two-thirds of
42.13the members of the county board.
42.14(b) Before issuance of bonds qualifying under this section, the county must publish
42.15a notice of its intention to issue the bonds and the date and time of a hearing to obtain
42.16public comment on the matter. The notice must be published in the official newspaper
42.17of the county or in a newspaper of general circulation in the county. The notice must be
42.18published at least 14 ten, but not more than 28, days before the date of the hearing.
42.19(c) A county may issue the bonds only upon obtaining the approval of a majority of
42.20the voters voting on the question of issuing the obligations, if a petition requesting a vote
42.21on the issuance is signed by voters equal to five percent of the votes cast in the county in
42.22the last county general election and is filed with the county auditor within 30 days after
42.23the public hearing. The commissioner of revenue shall prepare a suggested form of the
42.24question to be presented at the election. If the county elects not to submit the question to
42.25the voters, the county shall not propose the issuance of bonds under this section for the
42.26same purpose and in the same amount for a period of 365 days from the date of receipt
42.27of the petition. If the question of issuing the bonds is submitted and not approved by the
42.28voters, the provisions of section 475.58, subdivision 1a, apply.

42.29    Sec. 5. Minnesota Statutes 2010, section 373.40, subdivision 4, is amended to read:
42.30    Subd. 4. Limitations on amount. A county may not issue bonds under this section
42.31if the maximum amount of principal and interest to become due in any year on all the
42.32outstanding bonds issued pursuant to this section (including the bonds to be issued) will
42.33equal or exceed 0.12 percent of taxable market value of property in the county. Calculation
42.34of the limit must be made using the taxable market value for the taxes payable year in
43.1which the obligations are issued and sold, provided that, for purposes of determining
43.2the principal and interest due in any year, the county may deduct the amount of interest
43.3expected to be paid or reimbursed to the county by the federal government in that year on
43.4any outstanding bonds or the bonds to be issued. This section does not limit the authority
43.5to issue bonds under any other special or general law.

43.6    Sec. 6. Minnesota Statutes 2010, section 474A.02, subdivision 23a, is amended to read:
43.7    Subd. 23a. Qualified bonds. "Qualified bonds" means the specific type or types
43.8of obligations that are subject to the annual volume cap. Qualified bonds include the
43.9following types of obligations as defined in federal tax law:
43.10(a) "public facility bonds" means "exempt facility bonds" as defined in federal
43.11tax law, except for residential rental project bonds, which are those obligations issued
43.12to finance airports, docks and wharves, mass commuting facilities, facilities for the
43.13furnishing of water, sewage facilities, solid waste disposal facilities, facilities for the
43.14local furnishing of electric energy or gas, local district heating or cooling facilities, and
43.15qualified hazardous waste facilities. New bonds and other obligations are ineligible to
43.16receive state allocations or entitlement authority for public facility projects under this
43.17section if they have been issued:
43.18(1) for the purpose of refinancing, refunding, or otherwise defeasing existing debt;
43.19and
43.20(2) more than one calendar year prior to the date of application;
43.21(b) "residential rental project bonds" which are those obligations issued to finance
43.22qualified residential rental projects;
43.23(c) "mortgage bonds";
43.24(d) "small issue bonds" issued to finance manufacturing projects and the acquisition
43.25or improvement of agricultural real or personal property under sections 41C.01 to 41C.13;
43.26(e) "student loan bonds" issued by or on behalf of the Minnesota Office of Higher
43.27Education;
43.28(f) "redevelopment bonds";
43.29(g) "governmental bonds" with a nonqualified amount in excess of $15,000,000 as
43.30set forth in section 141(b)5 of federal tax law; and
43.31(h) "enterprise zone facility bonds" issued to finance facilities located within
43.32empowerment zones or enterprise communities, as authorized under Public Law 103-66,
43.33section 13301 section 1394 of the Internal Revenue Code.

43.34    Sec. 7. Minnesota Statutes 2010, section 475.521, subdivision 2, is amended to read:
44.1    Subd. 2. Election requirement. (a) Bonds issued by a municipality to finance
44.2capital improvements under an approved capital improvements plan are not subject to the
44.3election requirements of section 475.58. The bonds must be approved by an affirmative
44.4vote of three-fifths of the members of a five-member governing body. In the case of a
44.5governing body having more or less than five members, the bonds must be approved by a
44.6vote of at least two-thirds of the members of the governing body.
44.7(b) Before the issuance of bonds qualifying under this section, the municipality must
44.8publish a notice of its intention to issue the bonds and the date and time of the hearing
44.9to obtain public comment on the matter. The notice must be published in the official
44.10newspaper of the municipality or in a newspaper of general circulation in the municipality.
44.11Additionally, the notice may be posted on the official Web site, if any, of the municipality.
44.12The notice must be published at least 14 ten but not more than 28 days before the date
44.13of the hearing.
44.14(c) A municipality may issue the bonds only after obtaining the approval of a
44.15majority of the voters voting on the question of issuing the obligations, if a petition
44.16requesting a vote on the issuance is signed by voters equal to five percent of the votes cast
44.17in the municipality in the last municipal general election and is filed with the clerk within
44.1830 days after the public hearing. The commissioner of revenue shall prepare a suggested
44.19form of the question to be presented at the election. If the municipality elects not to submit
44.20the question to the voters, the municipality shall not propose the issuance of bonds under
44.21this section for the same purpose and in the same amount for a period of 365 days from the
44.22date of receipt of the petition. If the question of issuing the bonds is submitted and not
44.23approved by the voters, the provisions of section 475.58, subdivision 1a, apply.

44.24    Sec. 8. Minnesota Statutes 2010, section 475.521, subdivision 4, is amended to read:
44.25    Subd. 4. Limitations on amount. A municipality may not issue bonds under
44.26this section if the maximum amount of principal and interest to become due in any
44.27year on all the outstanding bonds issued under this section, including the bonds to be
44.28issued, will equal or exceed 0.16 percent of the taxable market value of property in the
44.29municipality. Calculation of the limit must be made using the taxable market value for
44.30the taxes payable year in which the obligations are issued and sold, provided that, for
44.31purposes of determining the principle and interest due in any year, the municipality may
44.32deduct the amount of interest expected to be paid or reimbursed to the municipality by the
44.33federal government in that year on any outstanding bonds or the bonds to be issued. In
44.34the case of a municipality with a population of 2,500 or more, the bonds are subject to
44.35the net debt limits under section 475.53. In the case of a shared facility in which more
45.1than one municipality participates, upon compliance by each participating municipality
45.2with the requirements of subdivision 2, the limitations in this subdivision and the net debt
45.3represented by the bonds shall be allocated to each participating municipality in proportion
45.4to its required financial contribution to the financing of the shared facility, as set forth in
45.5the joint powers agreement relating to the shared facility. This section does not limit the
45.6authority to issue bonds under any other special or general law.

45.7    Sec. 9. Minnesota Statutes 2010, section 475.58, subdivision 3b, is amended to read:
45.8    Subd. 3b. Street reconstruction. (a) A municipality may, without regard to
45.9the election requirement under subdivision 1, issue and sell obligations for street
45.10reconstruction, if the following conditions are met:
45.11    (1) the streets are reconstructed under a street reconstruction plan that describes the
45.12street reconstruction to be financed, the estimated costs, and any planned reconstruction
45.13of other streets in the municipality over the next five years, and the plan and issuance of
45.14the obligations has been approved by a vote of all of the members of the governing body
45.15present at the meeting following a public hearing for which notice has been published in
45.16the official newspaper at least ten days but not more than 28 days prior to the hearing; and
45.17    (2) if a petition requesting a vote on the issuance is signed by voters equal to
45.18five percent of the votes cast in the last municipal general election and is filed with the
45.19municipal clerk within 30 days of the public hearing, the municipality may issue the bonds
45.20only after obtaining the approval of a majority of the voters voting on the question of the
45.21issuance of the obligations. If the municipality elects not to submit the question to the
45.22voters, the municipality shall not propose the issuance of bonds under this section for the
45.23same purpose and in the same amount for a period of 365 days from the date of receipt
45.24of the petition. If the question of issuing the bonds is submitted and not approved by the
45.25voters, the provisions of subdivision 1a, apply.
45.26    (b) Obligations issued under this subdivision are subject to the debt limit of the
45.27municipality and are not excluded from net debt under section 475.51, subdivision 4.
45.28    (c) For purposes of this subdivision, street reconstruction includes utility
45.29replacement and relocation and other activities incidental to the street reconstruction, turn
45.30lanes and other improvements having a substantial public safety function, realignments,
45.31other modifications to intersect with state and county roads, and the local share of state
45.32and county road projects.
45.33    (d) Except in the case of turn lanes, safety improvements, realignments, intersection
45.34modifications, and the local share of state and county road projects, street reconstruction
46.1does not include the portion of project cost allocable to widening a street or adding curbs
46.2and gutters where none previously existed."
46.3Amend the title accordingly