1.1 A bill for an act
1.2 relating to taxation; property; modifying classification of community land trust
1.3 property; amending Minnesota Statutes 2022, sections 273.11, subdivision 12;
1.4 273.13, subdivision 25.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2022, section 273.11, subdivision 12, is amended to read:
1.7 Subd. 12.Community land trusts.(a) A community land trust, as defined under chapter
1.8462A, is (i) a community-based nonprofit corporation organized under chapter 317A, which
1.9qualifies for tax exempt status under 501(c)(3), or (ii) a "city" as defined in section 462C.02,
1.10subdivision 6, which has received funding from the Minnesota housing finance agency for
1.11purposes of the community land trust program. The Minnesota Housing Finance Agency
1.12shall set the criteria for community land trusts.
1.13 (b) Before the community land trust can rent or sell a unit to an applicant, the community
1.14land trust shall verify to the satisfaction of the administering agency or the city that the
1.15family income of each person or family applying for a unit in the community land trust
1.16building is within the income criteria provided in section 462A.30, subdivision 9. The
1.17administering agency or the city shall verify to the satisfaction of the county assessor that
1.18the occupant meets the income criteria under section 462A.30, subdivision 9. The property
1.19tax benefits under paragraph (c) shall be granted only to property owned or rented by persons
1.20or families within the qualifying income limits. The family income criteria and verification
1.21is only necessary at the time of initial occupancy in the property.
1.22 (c) A unit which is owned by the occupant and used as a homestead by the occupant
1.23qualifies for homestead treatment as class 1a under section 273.13, subdivision 22, or class
1Section 1.
23-00153 as introduced10/25/22 REVISOR MS/LN
SENATE
STATE OF MINNESOTA
S.F. No. 696NINETY-THIRD SESSION
(SENATE AUTHORS: DIBBLE, Nelson and Rest)
OFFICIAL STATUSD-PGDATE
Introduction and first reading01/25/2023
Referred to Taxes 2.14d if the requirements of section 273.13, subdivision 25, paragraph (e), clause (2), are met.
2.2A unit which is rented by the occupant and used as a homestead by the occupant shall be
2.3class 4a or 4b property, under section 273.13, subdivision 25, whichever is applicable. Any
2.4remaining portion of the property not used for residential purposes shall be classified by
2.5the assessor in the appropriate class based upon the use of that portion of the property owned
2.6by the community land trust. The land upon which the building is located shall be assessed
2.7at the same classification rate as the units within the building, provided that if the building
2.8contains some units assessed as class 1a or class 4d and some units assessed as class 4a or
2.94b, the market value of the land will be assessed in the same proportions as the value of the
2.10building.
2.11 EFFECTIVE DATE.This section is effective beginning with assessment year 2024
2.12and thereafter.
2.13 Sec. 2. Minnesota Statutes 2022, section 273.13, subdivision 25, is amended to read:
2.14 Subd. 25.Class 4.(a) Class 4a is residential real estate containing four or more units
2.15and used or held for use by the owner or by the tenants or lessees of the owner as a residence
2.16for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a
2.17also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt
2.18under section 272.02, and contiguous property used for hospital purposes, without regard
2.19to whether the property has been platted or subdivided. The market value of class 4a property
2.20has a classification rate of 1.25 percent.
2.21 (b) Class 4b includes:
2.22 (1) residential real estate containing less than four units, including property rented as a
2.23short-term rental property for more than 14 days in the preceding year, that does not qualify
2.24as class 4bb, other than seasonal residential recreational property;
2.25 (2) manufactured homes not classified under any other provision;
2.26 (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm
2.27classified under subdivision 23, paragraph (b) containing two or three units; and
2.28 (4) unimproved property that is classified residential as determined under subdivision
2.2933.
2.30 For the purposes of this paragraph, "short-term rental property" means nonhomestead
2.31residential real estate rented for periods of less than 30 consecutive days.
2.32 The market value of class 4b property has a classification rate of 1.25 percent.
2Sec. 2.
23-00153 as introduced10/25/22 REVISOR MS/LN 3.1 (c) Class 4bb includes:
3.2 (1) nonhomestead residential real estate containing one unit, other than seasonal
3.3residential recreational property;
3.4 (2) a single family dwelling, garage, and surrounding one acre of property on a
3.5nonhomestead farm classified under subdivision 23, paragraph (b); and
3.6 (3) a condominium-type storage unit having an individual property identification number
3.7that is not used for a commercial purpose.
3.8 Class 4bb property has the same classification rates as class 1a property under subdivision
3.922.
3.10 Property that has been classified as seasonal residential recreational property at any time
3.11during which it has been owned by the current owner or spouse of the current owner does
3.12not qualify for class 4bb.
3.13 (d) Class 4c property includes:
3.14 (1) except as provided in subdivision 22, paragraph (c), real and personal property
3.15devoted to commercial temporary and seasonal residential occupancy for recreation purposes,
3.16for not more than 250 days in the year preceding the year of assessment. For purposes of
3.17this clause, property is devoted to a commercial purpose on a specific day if any portion of
3.18the property is used for residential occupancy, and a fee is charged for residential occupancy.
3.19Class 4c property under this clause must contain three or more rental units. A "rental unit"
3.20is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site
3.21equipped with water and electrical hookups for recreational vehicles. A camping pad offered
3.22for rent by a property that otherwise qualifies for class 4c under this clause is also class 4c
3.23under this clause regardless of the term of the rental agreement, as long as the use of the
3.24camping pad does not exceed 250 days. In order for a property to be classified under this
3.25clause, either (i) the business located on the property must provide recreational activities,
3.26at least 40 percent of the annual gross lodging receipts related to the property must be from
3.27business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid
3.28bookings by lodging guests during the year must be for periods of at least two consecutive
3.29nights; or (B) at least 20 percent of the annual gross receipts must be from charges for
3.30providing recreational activities, or (ii) the business must contain 20 or fewer rental units,
3.31and must be located in a township or a city with a population of 2,500 or less located outside
3.32the metropolitan area, as defined under section 473.121, subdivision 2, that contains a portion
3.33of a state trail administered by the Department of Natural Resources. For purposes of item
3.34(i)(A), a paid booking of five or more nights shall be counted as two bookings. Class 4c
3Sec. 2.
23-00153 as introduced10/25/22 REVISOR MS/LN 4.1property also includes commercial use real property used exclusively for recreational
4.2purposes in conjunction with other class 4c property classified under this clause and devoted
4.3to temporary and seasonal residential occupancy for recreational purposes, up to a total of
4.4two acres, provided the property is not devoted to commercial recreational use for more
4.5than 250 days in the year preceding the year of assessment and is located within two miles
4.6of the class 4c property with which it is used. In order for a property to qualify for
4.7classification under this clause, the owner must submit a declaration to the assessor
4.8designating the cabins or units occupied for 250 days or less in the year preceding the year
4.9of assessment by January 15 of the assessment year. Those cabins or units and a proportionate
4.10share of the land on which they are located must be designated class 4c under this clause
4.11as otherwise provided. The remainder of the cabins or units and a proportionate share of
4.12the land on which they are located will be designated as class 3a. The owner of property
4.13desiring designation as class 4c property under this clause must provide guest registers or
4.14other records demonstrating that the units for which class 4c designation is sought were not
4.15occupied for more than 250 days in the year preceding the assessment if so requested. The
4.16portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center
4.17or meeting room, and (5) other nonresidential facility operated on a commercial basis not
4.18directly related to temporary and seasonal residential occupancy for recreation purposes
4.19does not qualify for class 4c. For the purposes of this paragraph, "recreational activities"
4.20means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country
4.21ski equipment; providing marina services, launch services, or guide services; or selling bait
4.22and fishing tackle;
4.23 (2) qualified property used as a golf course if:
4.24 (i) it is open to the public on a daily fee basis. It may charge membership fees or dues,
4.25but a membership fee may not be required in order to use the property for golfing, and its
4.26green fees for golfing must be comparable to green fees typically charged by municipal
4.27courses; and
4.28 (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
4.29 A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with
4.30the golf course is classified as class 3a property;
4.31 (3) real property up to a maximum of three acres of land owned and used by a nonprofit
4.32community service oriented organization and not used for residential purposes on either a
4.33temporary or permanent basis, provided that:
4Sec. 2.
23-00153 as introduced10/25/22 REVISOR MS/LN 5.1 (i) the property is not used for a revenue-producing activity for more than six days in
5.2the calendar year preceding the year of assessment; or
5.3 (ii) the organization makes annual charitable contributions and donations at least equal
5.4to the property's previous year's property taxes and the property is allowed to be used for
5.5public and community meetings or events for no charge, as appropriate to the size of the
5.6facility.
5.7 For purposes of this clause:
5.8 (A) "charitable contributions and donations" has the same meaning as lawful gambling
5.9purposes under section 349.12, subdivision 25, excluding those purposes relating to the
5.10payment of taxes, assessments, fees, auditing costs, and utility payments;
5.11 (B) "property taxes" excludes the state general tax;
5.12 (C) a "nonprofit community service oriented organization" means any corporation,
5.13society, association, foundation, or institution organized and operated exclusively for
5.14charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
5.15federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
5.16Revenue Code; and
5.17 (D) "revenue-producing activities" shall include but not be limited to property or that
5.18portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
5.19liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
5.20alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
5.21insurance business, or office or other space leased or rented to a lessee who conducts a
5.22for-profit enterprise on the premises.
5.23 Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The
5.24use of the property for social events open exclusively to members and their guests for periods
5.25of less than 24 hours, when an admission is not charged nor any revenues are received by
5.26the organization shall not be considered a revenue-producing activity.
5.27 The organization shall maintain records of its charitable contributions and donations
5.28and of public meetings and events held on the property and make them available upon
5.29request any time to the assessor to ensure eligibility. An organization meeting the requirement
5.30under item (ii) must file an application by May 1 with the assessor for eligibility for the
5.31current year's assessment. The commissioner shall prescribe a uniform application form
5.32and instructions;
5Sec. 2.
23-00153 as introduced10/25/22 REVISOR MS/LN 6.1 (4) postsecondary student housing of not more than one acre of land that is owned by a
6.2nonprofit corporation organized under chapter 317A and is used exclusively by a student
6.3cooperative, sorority, or fraternity for on-campus housing or housing located within two
6.4miles of the border of a college campus;
6.5 (5)(i) manufactured home parks as defined in section 327.14, subdivision 3, excluding
6.6manufactured home parks described in items (ii) and (iii), (ii) manufactured home parks as
6.7defined in section 327.14, subdivision 3, that are described in section 273.124, subdivision
6.83a, and (iii) class I manufactured home parks as defined in section 327C.015, subdivision
6.92;
6.10 (6) real property that is actively and exclusively devoted to indoor fitness, health, social,
6.11recreational, and related uses, is owned and operated by a not-for-profit corporation, and is
6.12located within the metropolitan area as defined in section 473.121, subdivision 2;
6.13 (7) a leased or privately owned noncommercial aircraft storage hangar not exempt under
6.14section 272.01, subdivision 2, and the land on which it is located, provided that:
6.15 (i) the land is on an airport owned or operated by a city, town, county, Metropolitan
6.16Airports Commission, or group thereof; and
6.17 (ii) the land lease, or any ordinance or signed agreement restricting the use of the leased
6.18premise, prohibits commercial activity performed at the hangar.
6.19 If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be
6.20filed by the new owner with the assessor of the county where the property is located within
6.2160 days of the sale;
6.22 (8) a privately owned noncommercial aircraft storage hangar not exempt under section
6.23272.01, subdivision 2, and the land on which it is located, provided that:
6.24 (i) the land abuts a public airport; and
6.25 (ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement
6.26restricting the use of the premises, prohibiting commercial use or activity performed at the
6.27hangar; and
6.28 (9) residential real estate, a portion of which is used by the owner for homestead purposes,
6.29and that is also a place of lodging, if all of the following criteria are met:
6.30 (i) rooms are provided for rent to transient guests that generally stay for periods of 14
6.31or fewer days;
6Sec. 2.
23-00153 as introduced10/25/22 REVISOR MS/LN 7.1 (ii) meals are provided to persons who rent rooms, the cost of which is incorporated in
7.2the basic room rate;
7.3 (iii) meals are not provided to the general public except for special events on fewer than
7.4seven days in the calendar year preceding the year of the assessment; and
7.5 (iv) the owner is the operator of the property.
7.6 The market value subject to the 4c classification under this clause is limited to five rental
7.7units. Any rental units on the property in excess of five, must be valued and assessed as
7.8class 3a. The portion of the property used for purposes of a homestead by the owner must
7.9be classified as class 1a property under subdivision 22;
7.10 (10) real property up to a maximum of three acres and operated as a restaurant as defined
7.11under section 157.15, subdivision 12, provided it: (i) is located on a lake as defined under
7.12section 103G.005, subdivision 15, paragraph (a), clause (3); and (ii) is either devoted to
7.13commercial purposes for not more than 250 consecutive days, or receives at least 60 percent
7.14of its annual gross receipts from business conducted during four consecutive months. Gross
7.15receipts from the sale of alcoholic beverages must be included in determining the property's
7.16qualification under item (ii). The property's primary business must be as a restaurant and
7.17not as a bar. Gross receipts from gift shop sales located on the premises must be excluded.
7.18Owners of real property desiring 4c classification under this clause must submit an annual
7.19declaration to the assessor by February 1 of the current assessment year, based on the
7.20property's relevant information for the preceding assessment year;
7.21 (11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as
7.22a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public
7.23and devoted to recreational use for marina services. The marina owner must annually provide
7.24evidence to the assessor that it provides services, including lake or river access to the public
7.25by means of an access ramp or other facility that is either located on the property of the
7.26marina or at a publicly owned site that abuts the property of the marina. No more than 800
7.27feet of lakeshore may be included in this classification. Buildings used in conjunction with
7.28a marina for marina services, including but not limited to buildings used to provide food
7.29and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle, are classified
7.30as class 3a property; and
7.31 (12) real and personal property devoted to noncommercial temporary and seasonal
7.32residential occupancy for recreation purposes.
7.33 Class 4c property has a classification rate of 1.5 percent of market value, except that (i)
7.34each parcel of noncommercial seasonal residential recreational property under clause (12)
7Sec. 2.
23-00153 as introduced10/25/22 REVISOR MS/LN 8.1has the same classification rates as class 4bb property, (ii) manufactured home parks assessed
8.2under clause (5), item (i), have the same classification rate as class 4b property, the market
8.3value of manufactured home parks assessed under clause (5), item (ii), have a classification
8.4rate of 0.75 percent if more than 50 percent of the lots in the park are occupied by
8.5shareholders in the cooperative corporation or association and a classification rate of one
8.6percent if 50 percent or less of the lots are so occupied, and class I manufactured home
8.7parks as defined in section 327C.015, subdivision 2, have a classification rate of 1.0 percent,
8.8(iii) commercial-use seasonal residential recreational property and marina recreational land
8.9as described in clause (11), has a classification rate of one percent for the first $500,000 of
8.10market value, and 1.25 percent for the remaining market value, (iv) the market value of
8.11property described in clause (4) has a classification rate of one percent, (v) the market value
8.12of property described in clauses (2), (6), and (10) has a classification rate of 1.25 percent,
8.13(vi) that portion of the market value of property in clause (9) qualifying for class 4c property
8.14has a classification rate of 1.25 percent, and (vii) property qualifying for classification under
8.15clause (3) that is owned or operated by a congressionally chartered veterans organization
8.16has a classification rate of one percent. The commissioner of veterans affairs must provide
8.17a list of congressionally chartered veterans organizations to the commissioner of revenue
8.18by June 30, 2017, and by January 1, 2018, and each year thereafter.
8.19 (e) Class 4d property is includes:
8.20 (1) qualifying low-income rental housing certified to the assessor by the Housing Finance
8.21Agency under section 273.128, subdivision 3. If only a portion of the units in the building
8.22qualify as low-income rental housing units as certified under section 273.128, subdivision
8.233, only the proportion of qualifying units to the total number of units in the building qualify
8.24for class 4d(1). The remaining portion of the building shall be classified by the assessor
8.25based upon its use. Class 4d(1) also includes the same proportion of land as the qualifying
8.26low-income rental housing units are to the total units in the building. For all properties
8.27qualifying as class 4d(1), the market value determined by the assessor must be based on the
8.28normal approach to value using normal unrestricted rents.; and
8.29 (2) a unit that is owned by the occupant and used as a homestead by the occupant, and
8.30otherwise meets all the requirements for community land trust property under section 273.11,
8.31subdivision 12, provided that by December 15 of each assessment year, the community land
8.32trust certifies to the assessor that (i) the community land trust owns the real property on
8.33which the unit is located, and (ii) the unit owner is a member in good standing of the
8.34community land trust. For all units qualifying as class 4d(2), the market value determined
8Sec. 2.
23-00153 as introduced10/25/22 REVISOR MS/LN 9.1by the assessor must be based on the normal approach to value without regard to any
9.2restrictions that apply because the unit is a community land trust property.
9.3 (f) The first tier of market value of class 4d(1) property has a classification rate of 0.75
9.4percent. The remaining value of class 4d(1) property has a classification rate of 0.25 percent.
9.5For the purposes of this paragraph, the "first tier of market value of class 4d(1) property"
9.6means the market value of each housing unit up to the first tier limit. For the purposes of
9.7this paragraph, all class 4d property value must be assigned to individual housing units. The
9.8first tier limit is $100,000 for assessment years 2022 and 2023. For subsequent assessment
9.9years, the limit is adjusted each year by the average statewide change in estimated market
9.10value of property classified as class 4a and 4d under this section for the previous assessment
9.11year, excluding valuation change due to new construction, rounded to the nearest $1,000,
9.12provided, however, that the limit may never be less than $100,000. Beginning with
9.13assessment year 2015, the commissioner of revenue must certify the limit for each assessment
9.14year by November 1 of the previous year. Class 4d(2) property has a classification rate of
9.150.75 percent.
9.16 EFFECTIVE DATE.This section is effective beginning with assessment year 2024
9.17and thereafter.
9Sec. 2.
23-00153 as introduced10/25/22 REVISOR MS/LN