1.1 A bill for an act
1.2 relating to taxation; property; removing classification rate and establishing property
1.3 tax exemption for certain property owned and operated by congressionally chartered
1.4 veterans service organizations; amending Minnesota Statutes 2024, sections 272.02,
1.5 by adding a subdivision; 273.13, subdivision 25.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2024, section 272.02, is amended by adding a subdivision
1.8to read:
1.9 Subd. 106.Congressionally chartered veterans service organizations.Property
1.10qualifying for classification under section 273.13, subdivision 25, paragraph (d), clause (3),
1.11that is owned and operated by a congressionally chartered veterans service organization is
1.12exempt. The commissioner of veterans affairs must annually provide a list of congressionally
1.13chartered veterans service organizations to the commissioner of revenue by January 1.
1.14 EFFECTIVE DATE.This section is effective beginning with assessment year 2026.
1.15 Sec. 2. Minnesota Statutes 2024, section 273.13, subdivision 25, is amended to read:
1.16 Subd. 25.Class 4.(a) Class 4a is residential real estate containing four or more units
1.17and used or held for use by the owner or by the tenants or lessees of the owner as a residence
1.18for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a
1.19also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt
1.20under section 272.02, and contiguous property used for hospital purposes, without regard
1.21to whether the property has been platted or subdivided. The market value of class 4a property
1.22has a classification rate of 1.25 percent.
1Sec. 2.
25-00612 as introduced11/20/24 REVISOR MS/HL
SENATE
STATE OF MINNESOTA
S.F. No. 725NINETY-FOURTH SESSION
(SENATE AUTHORS: NELSON, Lang and Weber)
OFFICIAL STATUSD-PGDATE
Introduction and first reading01/27/2025
Referred to Taxes 2.1 (b) Class 4b includes:
2.2 (1) residential real estate containing less than four units, including property rented as a
2.3short-term rental property for more than 14 days in the preceding year, that does not qualify
2.4as class 4bb, other than seasonal residential recreational property;
2.5 (2) manufactured homes not classified under any other provision;
2.6 (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm
2.7classified under subdivision 23, paragraph (b) containing two or three units; and
2.8 (4) unimproved property that is classified residential as determined under subdivision
2.933.
2.10 For the purposes of this paragraph, "short-term rental property" means nonhomestead
2.11residential real estate rented for periods of less than 30 consecutive days.
2.12 The market value of class 4b property has a classification rate of 1.25 percent.
2.13 (c) Class 4bb includes:
2.14 (1) nonhomestead residential real estate containing one unit, other than seasonal
2.15residential recreational property;
2.16 (2) a single family dwelling, garage, and surrounding one acre of property on a
2.17nonhomestead farm classified under subdivision 23, paragraph (b); and
2.18 (3) a condominium-type storage unit having an individual property identification number
2.19that is not used for a commercial purpose.
2.20 Class 4bb property has the same classification rates as class 1a property under subdivision
2.2122.
2.22 Property that has been classified as seasonal residential recreational property at any time
2.23during which it has been owned by the current owner or spouse of the current owner does
2.24not qualify for class 4bb.
2.25 (d) Class 4c property includes:
2.26 (1) except as provided in subdivision 22, paragraph (c), real and personal property
2.27devoted to commercial temporary and seasonal residential occupancy for recreation purposes,
2.28for not more than 250 days in the year preceding the year of assessment. For purposes of
2.29this clause, property is devoted to a commercial purpose on a specific day if any portion of
2.30the property is used for residential occupancy, and a fee is charged for residential occupancy.
2.31Class 4c property under this clause must contain three or more rental units. A "rental unit"
2Sec. 2.
25-00612 as introduced11/20/24 REVISOR MS/HL 3.1is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site
3.2equipped with water and electrical hookups for recreational vehicles. A camping pad offered
3.3for rent by a property that otherwise qualifies for class 4c under this clause is also class 4c
3.4under this clause regardless of the term of the rental agreement, as long as the use of the
3.5camping pad does not exceed 250 days. In order for a property to be classified under this
3.6clause, either (i) the business located on the property must provide recreational activities,
3.7at least 40 percent of the annual gross lodging receipts related to the property must be from
3.8business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid
3.9bookings by lodging guests during the year must be for periods of at least two consecutive
3.10nights; or (B) at least 20 percent of the annual gross receipts must be from charges for
3.11providing recreational activities, or (ii) the business must contain 20 or fewer rental units,
3.12and must be located in a township or a city with a population of 2,500 or less located outside
3.13the metropolitan area, as defined under section 473.121, subdivision 2, that contains a portion
3.14of a state trail administered by the Department of Natural Resources. For purposes of item
3.15(i)(A), a paid booking of five or more nights shall be counted as two bookings. Class 4c
3.16property also includes commercial use real property used exclusively for recreational
3.17purposes in conjunction with other class 4c property classified under this clause and devoted
3.18to temporary and seasonal residential occupancy for recreational purposes, up to a total of
3.19two acres, provided the property is not devoted to commercial recreational use for more
3.20than 250 days in the year preceding the year of assessment and is located within two miles
3.21of the class 4c property with which it is used. In order for a property to qualify for
3.22classification under this clause, the owner must submit a declaration to the assessor
3.23designating the cabins or units occupied for 250 days or less in the year preceding the year
3.24of assessment by January 15 of the assessment year. Those cabins or units and a proportionate
3.25share of the land on which they are located must be designated class 4c under this clause
3.26as otherwise provided. The remainder of the cabins or units and a proportionate share of
3.27the land on which they are located will be designated as class 3a. The owner of property
3.28desiring designation as class 4c property under this clause must provide guest registers or
3.29other records demonstrating that the units for which class 4c designation is sought were not
3.30occupied for more than 250 days in the year preceding the assessment if so requested. The
3.31portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center
3.32or meeting room, and (5) other nonresidential facility operated on a commercial basis not
3.33directly related to temporary and seasonal residential occupancy for recreation purposes
3.34does not qualify for class 4c. For the purposes of this paragraph, "recreational activities"
3.35means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country
3Sec. 2.
25-00612 as introduced11/20/24 REVISOR MS/HL 4.1ski equipment; providing marina services, launch services, or guide services; or selling bait
4.2and fishing tackle;
4.3 (2) qualified property used as a golf course if:
4.4 (i) it is open to the public on a daily fee basis. It may charge membership fees or dues,
4.5but a membership fee may not be required in order to use the property for golfing, and its
4.6green fees for golfing must be comparable to green fees typically charged by municipal
4.7courses; and
4.8 (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
4.9 A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with
4.10the golf course is classified as class 3a property;
4.11 (3) real property up to a maximum of three acres of land owned and used by a nonprofit
4.12community service oriented organization and not used for residential purposes on either a
4.13temporary or permanent basis, provided that:
4.14 (i) the property is not used for a revenue-producing activity for more than six days in
4.15the calendar year preceding the year of assessment; or
4.16 (ii) the organization makes annual charitable contributions and donations at least equal
4.17to the property's previous year's property taxes and the property is allowed to be used for
4.18public and community meetings or events for no charge, as appropriate to the size of the
4.19facility.
4.20 For purposes of this clause:
4.21 (A) "charitable contributions and donations" has the same meaning as lawful gambling
4.22purposes under section 349.12, subdivision 25, excluding those purposes relating to the
4.23payment of taxes, assessments, fees, auditing costs, and utility payments;
4.24 (B) "property taxes" excludes the state general tax;
4.25 (C) a "nonprofit community service oriented organization" means any corporation,
4.26society, association, foundation, or institution organized and operated exclusively for
4.27charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
4.28federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
4.29Revenue Code; and
4.30 (D) "revenue-producing activities" shall include but not be limited to property or that
4.31portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
4.32liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
4Sec. 2.
25-00612 as introduced11/20/24 REVISOR MS/HL 5.1alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
5.2insurance business, or office or other space leased or rented to a lessee who conducts a
5.3for-profit enterprise on the premises.
5.4 Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The
5.5use of the property for social events open exclusively to members and their guests for periods
5.6of less than 24 hours, when an admission is not charged nor any revenues are received by
5.7the organization shall not be considered a revenue-producing activity.
5.8 The organization shall maintain records of its charitable contributions and donations
5.9and of public meetings and events held on the property and make them available upon
5.10request any time to the assessor to ensure eligibility. An organization meeting the requirement
5.11under item (ii) must file an application by May 1 with the assessor for eligibility for the
5.12current year's assessment. The commissioner shall prescribe a uniform application form
5.13and instructions;
5.14 (4) postsecondary student housing of not more than one acre of land that is owned by a
5.15nonprofit corporation organized under chapter 317A and is used exclusively by a student
5.16cooperative, sorority, or fraternity for on-campus housing or housing located within two
5.17miles of the border of a college campus;
5.18 (5)(i) manufactured home parks as defined in section 327.14, subdivision 3, excluding
5.19manufactured home parks described in items (ii) and (iii), (ii) manufactured home parks as
5.20defined in section 327.14, subdivision 3, that are described in section 273.124, subdivision
5.213a, and (iii) class I manufactured home parks as defined in section 327C.015, subdivision
5.222;
5.23 (6) real property that is actively and exclusively devoted to indoor fitness, health, social,
5.24recreational, and related uses, is owned and operated by a not-for-profit corporation, and is
5.25located within the metropolitan area as defined in section 473.121, subdivision 2;
5.26 (7) a leased or privately owned noncommercial aircraft storage hangar not exempt under
5.27section 272.01, subdivision 2, and the land on which it is located, provided that:
5.28 (i) the land is on an airport owned or operated by a city, town, county, Metropolitan
5.29Airports Commission, or group thereof; and
5.30 (ii) the land lease, or any ordinance or signed agreement restricting the use of the leased
5.31premise, prohibits commercial activity performed at the hangar.
5Sec. 2.
25-00612 as introduced11/20/24 REVISOR MS/HL 6.1 If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be
6.2filed by the new owner with the assessor of the county where the property is located within
6.360 days of the sale;
6.4 (8) a privately owned noncommercial aircraft storage hangar not exempt under section
6.5272.01, subdivision 2, and the land on which it is located, provided that:
6.6 (i) the land abuts a public airport; and
6.7 (ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement
6.8restricting the use of the premises, prohibiting commercial use or activity performed at the
6.9hangar; and
6.10 (9) residential real estate, a portion of which is used by the owner for homestead purposes,
6.11and that is also a place of lodging, if all of the following criteria are met:
6.12 (i) rooms are provided for rent to transient guests that generally stay for periods of 14
6.13or fewer days;
6.14 (ii) meals are provided to persons who rent rooms, the cost of which is incorporated in
6.15the basic room rate;
6.16 (iii) meals are not provided to the general public except for special events on fewer than
6.17seven days in the calendar year preceding the year of the assessment; and
6.18 (iv) the owner is the operator of the property.
6.19 The market value subject to the 4c classification under this clause is limited to five rental
6.20units. Any rental units on the property in excess of five, must be valued and assessed as
6.21class 3a. The portion of the property used for purposes of a homestead by the owner must
6.22be classified as class 1a property under subdivision 22;
6.23 (10) real property up to a maximum of three acres and operated as a restaurant as defined
6.24under section 157.15, subdivision 12, provided it: (i) is located on a lake as defined under
6.25section 103G.005, subdivision 15, paragraph (a), clause (3); and (ii) is either devoted to
6.26commercial purposes for not more than 250 consecutive days, or receives at least 60 percent
6.27of its annual gross receipts from business conducted during four consecutive months. Gross
6.28receipts from the sale of alcoholic beverages must be included in determining the property's
6.29qualification under item (ii). The property's primary business must be as a restaurant and
6.30not as a bar. Gross receipts from gift shop sales located on the premises must be excluded.
6.31Owners of real property desiring 4c classification under this clause must submit an annual
6.32declaration to the assessor by February 1 of the current assessment year, based on the
6.33property's relevant information for the preceding assessment year;
6Sec. 2.
25-00612 as introduced11/20/24 REVISOR MS/HL 7.1 (11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as
7.2a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public
7.3and devoted to recreational use for marina services. The marina owner must annually provide
7.4evidence to the assessor that it provides services, including lake or river access to the public
7.5by means of an access ramp or other facility that is either located on the property of the
7.6marina or at a publicly owned site that abuts the property of the marina. No more than 800
7.7feet of lakeshore may be included in this classification. Buildings used in conjunction with
7.8a marina for marina services, including but not limited to buildings used to provide food
7.9and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle, are classified
7.10as class 3a property; and
7.11 (12) real and personal property devoted to noncommercial temporary and seasonal
7.12residential occupancy for recreation purposes.
7.13 Class 4c property has a classification rate of 1.5 percent of market value, except that:
7.14(i) each parcel of noncommercial seasonal residential recreational property under clause
7.15(12) has the same classification rates as class 4bb property,; (ii) manufactured home parks
7.16assessed under clause (5), item (i), have the same classification rate as class 4b property,
7.17the market value of manufactured home parks assessed under clause (5), item (ii), have a
7.18classification rate of 0.75 percent if more than 50 percent of the lots in the park are occupied
7.19by shareholders in the cooperative corporation or association and a classification rate of
7.20one percent if 50 percent or less of the lots are so occupied, and class I manufactured home
7.21parks as defined in section 327C.015, subdivision 2, have a classification rate of 1.0 percent,;
7.22(iii) commercial-use seasonal residential recreational property and marina recreational land
7.23as described in clause (11), has a classification rate of one percent for the first $500,000 of
7.24market value, and 1.25 percent for the remaining market value,; (iv) the market value of
7.25property described in clause (4) has a classification rate of one percent,; (v) the market value
7.26of property described in clauses (2), (6), and (10) has a classification rate of 1.25 percent,;
7.27and (vi) that portion of the market value of property in clause (9) qualifying for class 4c
7.28property has a classification rate of 1.25 percent, and (vii) property qualifying for
7.29classification under clause (3) that is owned or operated by a congressionally chartered
7.30veterans organization has a classification rate of one percent. The commissioner of veterans
7.31affairs must provide a list of congressionally chartered veterans organizations to the
7.32commissioner of revenue by June 30, 2017, and by January 1, 2018, and each year thereafter.
7.33 (e) Class 4d property includes:
7.34 (1) qualifying low-income rental housing certified to the assessor by the Housing Finance
7.35Agency under section 273.128, subdivision 3. If only a portion of the units in the building
7Sec. 2.
25-00612 as introduced11/20/24 REVISOR MS/HL 8.1qualify as low-income rental housing units as certified under section 273.128, subdivision
8.23, only the proportion of qualifying units to the total number of units in the building qualify
8.3for class 4d(1). The remaining portion of the building shall be classified by the assessor
8.4based upon its use. Class 4d(1) also includes the same proportion of land as the qualifying
8.5low-income rental housing units are to the total units in the building. For all properties
8.6qualifying as class 4d(1), the market value determined by the assessor must be based on the
8.7normal approach to value using normal unrestricted rents; and
8.8 (2) a unit that is owned by the occupant and used as a homestead by the occupant, and
8.9otherwise meets all the requirements for community land trust property under section 273.11,
8.10subdivision 12, provided that by December 31 of each assessment year, the community land
8.11trust certifies to the assessor that (i) the community land trust owns the real property on
8.12which the unit is located, and (ii) the unit owner is a member in good standing of the
8.13community land trust. For all units qualifying as class 4d(2), the market value determined
8.14by the assessor must be based on the normal approach to value without regard to any
8.15restrictions that apply because the unit is a community land trust property.
8.16 (f) Class 4d(1) property has a classification rate of 0.25 percent. Class 4d(2) property
8.17has a classification rate of 0.75 percent.
8.18 EFFECTIVE DATE.This section is effective beginning with assessment year 2026.
8Sec. 2.
25-00612 as introduced11/20/24 REVISOR MS/HL