*Updated 4/22/ See Disclaimer on Front Cover*

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1 MINNESOTA REVENUE Any correspondence posted within this file is deemed to be accurate and a true representation of the answer as of the date the original document was issued. The Department of Revenue will make every attempt to ensure letters that are no longer accurate due to law or policy changes are removed in a timely manner. If you find a document that you believe is no longer accurate due to a change in law or policy, please direct your concerns to us at proptax.questions@state.mn.us and we will attempt to resolve the situation. Please understand that all answers are based on the specific question asked. If any of the facts of the situation change, our opinion will be subject to change as well.

2 Green Acres Bulletins

3 MINNESOTA REVENUE Memo Date: June 30, 2011 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section Green Acres and the primary use test We have recently received several inquiries as to whether the Department of Revenue would issue additional guidance on determining if a property qualifies for Green Acres based on its primary use as agricultural property. The department issued guidance on September 24, 2009 which has not since changed. As part of that guidance, we stated that all counties should establish a guide (based on the criteria we had included) that would be used to make consistent decisions. We further stated that the criteria should be consistent within adjoining counties or with counties having similar markets and land uses. Finally, we stated, This uniformity should be coordinated through the department and Regional Reps. The Information and Education Section has not created any additional guidance since that time. In large part, we have not issued additional guidance because we believe that the criteria developed within counties and regions should be able to be flexible to account for differences in land types, agricultural markets, and any other topographical or economic considerations that may vary throughout the state. An additional resource (beyond the September 24, 2009 memo) that may be helpful is the Property Tax Administrator s Manual, which is available online. Because of specific requests we have received, we do feel that it is prudent to address some general items. The following criteria should not be used, as it is inconsistent with statutory guidelines for application of the Green Acres program as provided in Minnesota Statutes, Section : minimum acreage not specifically identified in section (e.g. requiring a minimum of 20 acres of agricultural land, or requiring a minimum of a 40-acre parcel); however, comparing the number of acres used agriculturally to total acres is allowable as per the 2009 bulletin ownership requirements that are either more expansive or more restrictive than those ownership scenarios allowed by section local zoning allowances (as opposed to zoning restrictions), if the actual use of the property remains agricultural whether the property is for sale We urge you to continue your work within your county, your region, and with your Regional Representative to continue developing guidance and criteria to be used to determine whether a property is primarily devoted to agricultural use. If you have any questions, please do not hesitate to contact our division via at proptax.questions@state.mn.us.

4 Memo Date: January 13, 2010 To: From: Subject: All Assessors Andrea Fish, State Program Administrator Information and Education Section, Property Tax Division Refund of Green Acres payment of deferred taxes Minnesota Statutes, section , subdivision 9, paragraph (b) requires counties to repay taxes which were collected from property owners who voluntarily withdrew from the Green Acres tax deferral program after 2008 law changes. These taxpayers would have informed assessors of their decision to withdraw from the program and had paid back deferred taxes with respect to the last three years enrollment. The purpose of this memo is to outline which taxpayers are eligible for repayment of these taxes, and to outline the process for this repayment. M.S , subdivision 9, paragraph (b) provides: Real property that has been valued and assessed under this section prior to May 29, 2008, and that ceases to qualify under this section after May 28, 2008, and is withdrawn from the program before May 1, 2010, is not subject to additional taxes under this subdivision or subdivision 3, paragraph (c). If additional taxes have been paid under this subdivision with respect to property described in this paragraph prior to April 3, 2009, the county must repay the property owner in the manner prescribed by the commissioner of revenue. This paragraph clearly describes land that is withdrawn from the program prior to May 1, In other words, property that was voluntarily withdrawn from the program after May 28, 2008 (but before May 1, 2010) additional taxes are not due. In some cases, property owners repaid deferred taxes upon withdrawal. As you are aware, property owners now have until May 1, 2010 to withdraw class 2b acres from the Green Acres program without payment of taxes deferred on those acres. However, property owners who paid those deferred taxes upon withdrawal are eligible in many cases for repayment. The following types of property transfers are also eligible for repayment of the deferred taxes they paid, due to additional change in language (M.S , subd. 11a): Transfer of the property from the owner(s) to a child or children of the owner(s) A transfer resulting from the divorce or marriage of a property owner

5 A transfer into a trust property where the same owner(s) maintained the same beneficial interest both before and after the transfer into a trust. Sales between unrelated parties, transfers to owners other than children, or any type of property sale or transfer not specifically provided for in statute (M.S , subd. 11a) will not be eligible for repayment of the deferred taxes which were due upon withdrawal from the program. The language above is also very clear that it regards only property that ceases to qualify for Green Acres deferral. This is specifically regarding lands that we reclassified from the previous 2a agricultural homestead classification to class 2b rural vacant land after 2008 legislation. Any class 2a lands that were sold or withdrawn and for which additional taxes were due upon sale or withdrawal, no repayment of those deferred taxes is due. Repayment is only for class 2b rural vacant land acres which could not qualify for Green Acres after the 2008 legislation. If 2b lands were withdrawn from Green Acres after May 28, 2008, those lands are not eligible to re-enroll in the program until The lands may be transferred into the Rural Preserves program beginning in 2011, but there is no provision in law which would allow these class 2b acres to be re-enrolled in Green Acres for any reason. Summary Under these specific conditions, a refund of payment of deferred taxes will be due to the property owner: The acres are classified 2b rural vacant land. The acres had been enrolled in Green Acres as of January 2, The property owner repaid taxes deferred on those class 2b acres. The acres were withdrawn due to one of the following reasons and the property owner paid back deferred taxes: 1. Voluntary withdrawal by taxpayer request; 2. Transfer or sale of the class 2b acres to a child of the property owner; 3. Removal of class 2b acres due to death of an owner of the property where a surviving owner continued to meet all other Green Acres requirements; 4. Removal of the class 2b acres due to divorce or marriage of an owner of the property; 5. Removal of the class 2b acres due to organization into or reorganization of a family farm cooperative under M.S (if all owners had the same beneficial interest both before and after the organization or reorganization); or 6. Removal of the class 2b acres because of transfer of the property into a trust (if all owners had the same beneficial interest both before and after the placement of the property into the trust). The changes in ownership above reflect those listed in Minnesota Statutes, section , subdivision 11a. If class 2b property was withdrawn from Green Acres under one of those ownership transfer scenarios, the 2b acres may not be re-enrolled in Green

6 Acres. The acres may be eligible for enrollment in the Rural Preserve Property Tax Program beginning with the 2011 assessment (for taxes payable in 2012). Under these specific conditions, the collection of deferred taxes was warranted and no refund is due: The acres are classified 2a agricultural land. The acres were withdrawn from Green Acres due to a sale (other than a sale of the property to children). The acres were withdrawn due to a transfer of ownership on the property (other than a transfer outlined in section , subdivision 11a, which for Green Acres purposes are not considered a transfer of ownership requiring a payback of deferred taxes). The acres were removed from Green Acres due to a change in use (and resultant change in classification). If you have any questions, please direct them to proptax.questions@state.mn.us.

7 Fish, Andrea (MDOR) From: Sent: To: Subject: Attachments: Fish, Andrea (MDOR) Monday, December 14, :34 AM *MDOR_Proptax Information Green Acres letters to taxpayers Green Acres Withrawal Form doc Attached is a letter form for your use which we encourage you send to property owners in your county who are currently enrolled in Green Acres. This form was created in response to requests from assessors regarding the need for a clear and identifiable record of how property owners wanted their enrolled lands to be treated going forward. We want to acknowledge all of the helpful suggestions that we received from assessors in developing this form. We believe that the end product is greatly improved through these suggestions. Although we are providing this form in an unprotected Microsoft Word format to assist with mail merge functions, it is imperative that none of the language be changed. This is necessary for statewide consistency. If you have any questions, please direct them to proptax.questions@state.mn.us. 1

8 COUNTY OF OFFICE OF COUNTY ASSESSOR Name, COUNTY ASSESSOR PHONE: Address FAX: WEBSITE: Date: Re Parcels:,,,,,,,, Dear Property Owner: The 2009 Legislature made changes to the Minnesota Agricultural Property Tax Law (Green Acres). Enclosed with this letter is the Notification for Property Enrolled in Green Acres. The form explains the changes and the options you have as the owner of property that has been receiving the benefits of this law. Please read this information carefully. The parcels that you are currently receiving the Green Acres benefit on are listed on this letter. Please refer to them when you are completing the response form on the back of this letter that must be returned to our office. If we do not receive a response to this letter from you we will assume you do not want to make any changes to the Green Acres status on the above listed parcels. If you have any questions regarding this please contact our office. Sincerely, Name:, County Assessor Revised 11/09

9 Notification for Property Enrolled in Green Acres Provided by the Minnesota Agricultural Property Tax Law, (M.S ) Complete this form regarding your ongoing enrollment in the Green Acres program. Property classified as 2b rural vacant land may be withdrawn prior to May 1, 2010 without a payback of deferred taxes. If class 2b acres are withdrawn after this date, a payback of up to three years deferred taxes will be due, unless the acres are immediately enrolled in the Rural Preserve Property Tax Program. Any class 2a agricultural land that is withdrawn will be required to pay back up to three years deferred taxes. Contact your county assessor for more details concerning the classification of your property and the potential payback of deferred taxes and special assessments. Property Information Name of property owner(s) Daytime phone number Property is owned by: Private individual Family farm entity Authorized farm entity under section Corporation owning a nursery Other Please specify: Mailing address City State Zip THE RESPONSES BELOW PERTAIN TO THE PARCEL ID NUMBER(S) LISTED ON THE FRONT SIDE OF THIS LETTER. I DO NOT wish to make changes to any of my enrolled acres. I choose for all my class 2a agricultural and class 2b rural vacant land acres to remain in the Green Acres program after May 1, I understand that for the 2013 assessment my class 2b rural vacant land acres will be withdrawn and three years deferred taxes will be due, unless the class 2b acres are enrolled in the Rural Preserve Property Tax Program. Notification of Decision I wish to remove all my class 2a agricultural and class 2b rural vacant land acres from the Green Acres program. I understand that there will be no payback on the class 2b acres if withdrawn prior to May 1, 2010, and that there WILL BE up to a three year payback on my class 2a acres. I also understand that the deferral will be removed for the 2010 assessment, taxes payable in I wish to remove all my class 2b rural vacant land acres from the parcels listed on the front of this form from Green Acres. I understand that there will be no payback on the deferred taxes on these acres if removed prior to May 1, I also understand that the deferral will be removed for the 2010 assessment, taxes payable in All class 2a acres will remain enrolled in Green Acres. I wish to remove PART of my class 2a agricultural or class 2b rural vacant land acres from the program. Attached is a copy of the Farm Service Agency (FSA) aerial photo with the acres I wish to remove highlighted. (If you are unable to receive a map from the FSA contact your county assessor for help.) Sign Here By signing below, I certify that I have reviewed my options under the Green Acres program. I also certify that I am the owner of the property or an authorized shareholder, member or partner of the entity that owns the property listed on the front of this form. Print name of owner Signature of owner Date Revised 11/09

10 Memo Date: September 28, 2009 To: From: Subject: All County Assessors Information and Education Section Property tax Division Green Acres Law Change - Information for Taxpayers The purpose of this memo is to highlight new taxpayer options under legislative changes made to the Green Acres program in It will also give talking points for all assessors and staff when working with Green Acres property owners. Letters of Intent Last year, due to the 2008 law changes to the Green Acres program, the Department of Revenue drafted suggested letters to taxpayers which were meant to be of assistance to those taxpayers in informing you of their intent to withdraw from the Green Acres program. The purpose of those letters was to give taxpayers the opportunity to prepare for withdrawal of their lands from the program without requiring any action while awaiting potential legislation in As you are all aware, the legislature revisited Green Acres this year and has changed provisions for grandfathering and/or withdrawing 2b acres from the program. Last year, we informed you that the expressed intent of some taxpayers to withdraw was nonbinding. Subsequent to these 2009 law changes, the intents expressed by taxpayers last year are no longer applicable, and taxpayers now have an opportunity to reassess their options under new law. Taxpayer Options Under 2009 Green Acres Law Property owners currently enrolled in Green Acres will be able to grandfather their class 2b acres until the 2013 assessment. Taxpayers also have several other options available to them: Option 1. Enroll their 2b acres into the new Rural Preserve property tax program. Current Green Acres enrollees are able to transition their qualifying 2b rural vacant lands into the program by 2013 without having to pay deferred taxes on those lands. Farmers may enroll in this program beginning with the 2011 assessment. For farmers who have at least ten contiguous 2b acres enrolled in Green Acres, it is imperative that they grandfather those acres in Green Acres if they are planning on enrolling in the Rural Preserve Program. That way, they can transition into the program beginning in 2011 without facing any payback of deferred taxes. Option 2. They can enroll their 2b lands in the 2c Managed Forest Land Classification that was established in The 2c classification has a class rate of.65%. 2b lands under a forest management plan may be enrolled in SFIA as well (but not while simultaneously being enrolled as 2c). Property owners wishing to enroll their 2b acres

11 into the 2c classification or the SFIA program may withdraw from Green Acres prior to May 1, 2010 without being required to pay back deferred taxes. Option 3. Remove their 2b land from Green Acres by May 1, 2010 without having to pay back deferred taxes. Taxpayers should consult with assessors to better understand the pros and cons of this option as it applies to their individual circumstances. Option 4. They can do nothing. If they choose this option their 2b lands will be valued at full market value for the 2013 assessment and they will be required to pay the difference in tax between the Green Acres value and market value for three prior years. Of these three options, option 4 is clearly the least desirable. Options 1, 2, and 3 provide taxpayers with choices that do not require payback of deferred taxes. We anticipate that after property owners have had a chance to review their options, they likely will do one of two things. If they do not intend to enroll their 2b lands in the Rural Preserve Program, we would expect that they would remove their lands from Green Acres prior to the May 1, 2010 deadline, thereby avoiding any payback on 2b lands. Or, if they intend to enroll their 2b lands in the Rural Preserve Program, we anticipate they would simply leave their 2b lands in Green Acres and take the necessary steps to transition them to the Rural Preserve Program. We have drafted a sample letter for you to use to explain these options to taxpayers. We have included form fields for you to provide your office s contact information. This sample letter is included with this memo. If you have any questions, please contact our division at proptax.questions@state.mn.us.

12 Dear Property Owner: The 2008 Tax Bill made several major changes to the Minnesota Agricultural Property Tax Law, commonly known as Green Acres. Many of those changes were met with confusion and concern by taxpayers. In response, the legislature made further clarifying changes to the Green Acres law. These changes were signed into law on April 3, The purpose of this letter is to explain the law changes so that you will be able to make an informed decision on how best to alter your Green Acres tax deferment to fit your specific situation for the long-term. Please read this letter carefully, and if you have further questions, contact your county assessor for additional information. The 2009 Legislative Highlights The 2009 Legislature made clarifying changes to the Green Acres law (which was amended in 2008). The changes also resulted in the creation of a new program, the Rural Preserve Property Tax program. The primary changes include: Potential to grandfather class 2b (rural vacant land) acres until as late as the 2013 assessment Further potential to transfer class 2b acres to children until the 2013 assessment with no payback of deferred taxes during that time Granting property owners a free withdrawal of class 2b acres by May 1, 2010 Creation of the Rural Preserve Property Tax program, which provides a tax benefit similar to Green Acres for the class 2b acres that are part of an agricultural homestead. This program will first be available for the 2011 assessment. 2b acres may be grandfathered until enrollment in this program and no deferred taxes will be due (if transitioned by the 2013 assessment). Assessment & Classification There were no further changes to the classification changes made in Applications filed for Green Acres deferrals going forward are subject to the following rules: Agricultural (class 2a) acres will remain eligible for Green Acres. These acres are tilled, grazed, mowed for hay, or used for other agricultural purposes. You may leave these acres in the program as is. Nothing has changed for acres that are used for agricultural production. Rural Vacant Land (class 2b) acres will be valued at their full estimated market value and will not be eligible for the reduced, agricultural valuation and tax deferral provided by Green Acres. These class 2b acres include sloughs, wetlands, heavy woods, or land too rocky to be tilled or pastured. Some small portions of lands not used for agricultural purposes which are interspersed with class 2a lands may be included in class 2a and Green Acres tax deferral. Contact your assessor for additional, property-specific information. Making an Informed Decision In order to make an informed decision, you must first know how your lands are being classified. Assessors are now required to classify what was once known generally as agricultural land as either class 2a or class 2b. Your assessor will be able to help you distinguish how your land is classified. Class 2a land is land used to produce an agricultural product for sale (e.g. tilled, pastured, hayed, etc.). Class 2b land is rural vacant land that does not qualify as agricultural land (e.g. areas of trees, etc.). The attached page represents the two directions we anticipate property owners may wish to pursue. You may wish to discontinue enrollment in Green Acres for all or parts of your property, or continue enrollment in Green Acres and/or another property tax program. Again, your assessor will be able to help determine the best route depending on your specific situation and plans for your property. You will have until 2013 to make final changes to your class 2b acres before they are removed from Green Acres. If you do not envision transitioning those acres into the Rural Preserve Program prior to 2013, you may remove them by May 1, 2010 without payback and leave them unencumbered or put them into a new program without payback of Green Acres deferred taxes.

13 Options Option 1. Withdraw Some or All of Your Green Acres-Enrolled Lands. You may remove class 2b land from Green Acres by May 1, 2010 without having to pay back deferred taxes. Any 2a lands withdrawn from the program will require a pay back of deferred taxes. Your assessor will be able to help you better understand the pros and cons of this option as it applies to your individual circumstances. You may withdraw class 2b lands and enroll them in the 2c Managed Forest Land Classification or in the Sustainable Forest Incentive Act (SFIA) program. The 2c classification has a class rate of.65% and requires a forest management plan. 2b lands under a forest management plan may also be enrolled in SFIA as well (but not while simultaneously being enrolled as 2c). Property owners wishing to enroll their 2b acres into the 2c classification or the SFIA program should withdraw from Green Acres prior to May 1, 2010 to avoid a payback of deferred taxes. Additional information about these programs is available from your county assessor. Option 2. Make No Immediate Changes to Your Green Acres Enrollment Status You can make no change to their property now and enroll your 2b acres into the new Rural Preserve property tax program. Current Green Acres enrollees are able to transition their qualifying 2b rural vacant lands into the program by 2013 without having to pay deferred taxes on those lands. Property owners must have ten acres of class 2b lands to qualify for the Rural Preserve program. Enrollment in this program begins with the 2011 assessment. If you believe that you will enroll your property in Rural Preserve, it will most likely benefit you to keep your 2b lands grandfathered in Green Acres until enrollment into Rural Preserve, so that you do not need to pay back deferred taxes. You can do nothing. If you choose this option, your 2b lands will be valued at full market value for the 2013 assessment and you will be required to pay the difference in tax between the Green Acres value and market value for three prior years at that time. Payback Provisions This legislation also changed the number of payback years when parcels, or portions of parcels, no longer qualify for Green Acres. The seven-year payback of deferred taxes on class 2b acres has been repealed. Class 2b rural vacant land acres may be withdrawn prior to May 1, 2010 and no payback is required. The 2b acres may be transferred to a son or daughter prior to 2013 and no payback is required. All 2b acres will be removed for the 2013 assessment. If they have not been enrolled in to the Rural Preserve property tax program by May 1, 2013, deferred taxes equal to the average deferred taxes for the last three years enrollment in Green Acres will be due. If you withdrew your class 2b lands in response to 2008 law changes, the deferred taxes which you had paid will be refunded to you. If you have any questions in the meantime, please contact your assessor: County Assessor's Office Address 1 Address 2 City, State, Zip Phone Web Address

14 MINNESOTA REVENUE BULLETIN Date: September 24, 2009 To: From: Re: County Assessors Property Tax Division Applying the Primarily Devoted to Agricultural Use Requirements for Green Acres Eligibility The following is a guide for assessors to use in applying the primarily devoted to agricultural use requirement for Green Acres eligibility. It should help assessors apply some best practices that lead to consistency and uniformity in the county and the region. Regional Reps will be able to help in making determinations of primary use and to ensure regional consistency. The classification of property is the first step in determining the eligibility of property for Green Acres. Please review and understand the directives related to classification of agricultural and rural vacant lands, as well as direction on what is considered impractical to separate to better understand these considerations. While the decision on the classification of a property will greatly impact Green Acres eligibility, it must be made first and without regard to Green Acres implications. The agricultural classification has specific statutory requirements, while the Green Acres program has other separate specific eligibility requirements. A property can correctly be classified as agricultural without being eligible for Green Acres. The classification (or splitclassification) of the property should not be used as a default mechanism for denying Green Acres. The primarily devoted to criteria is not applicable for determining agricultural classification, however, it is applicable for determining Green Acres eligibility. It is no longer found in the classification statute (273.13), rather it is now located in the Green Acres statute ( ). To be eligible for Green Acres, the assessor needs to clearly inform the property owner that in addition to the minimum requirement of 10 acres of 2a lands, the law also requires the assessor to make a subjective decision: Is the property primarily devoted to agricultural use? Using Primarily Devoted to Agricultural Use to Determine Green Acres Eligibility After determining the classification of the property, verifying that the homestead or ownership requirements are met, and applying the minimum requirement of 10 acres of class 2a land for Green Acres, if the property has not yet been disqualified, assessors must make a subjective decision if it is primarily devoted to agricultural use. This decision should be based on a list of objective factors that are always considered before the decision is finalized. Here is a list of factors that an assessor may consider, along with other criteria that may be appropriate in the assessor s county. In making this determination, assessors should put the most weight on physical criteria. In determining if a property is primarily devoted to agricultural use, the potential exists that in some instances, a reasonable justification may warrant not satisfying one or more of these 1

15 criteria. A preponderance of the factors and criteria below is necessary to determine if a property is primarily devoted to agricultural use. 1. PHYSICAL The number of acres used agriculturally compared to total acres Number of acres used for residential purposes compared to those used agriculturally Visible indication of participation in actual farming activity Presence of physical structures for livestock, equipment, storage, etc. used to support agricultural activity Surrounding uses (i.e. farming versus development), zoning restrictions, etc. Historical use, current use Local market is highly susceptible to real estate speculation Current market trends for property The number and type of animals raised as agricultural products in comparison to the overall use of the property Length of time animals raised as agricultural products are physically located on the property each year Use of the property by the lessee, if rented 2. VALUATION Although consideration of value is not appropriate for determining class, it still may be considered in determining primarily devoted to for Green Acres eligibility. Criteria to consider could be: Value as a residential site compared to the agricultural value Ag value compared to overall value of property Residential value compared to overall value of the property Ag value compared to other use value (e.g. commercial) 3. INCOME Although income is no longer a required factor for determining Green Acres eligibility, assessors may want to include income in the list of criteria that could be considered when trying to address the primarily devoted to test. Suggested income criteria would be: The income from the class 2a acres divided by the total acres Income (Schedule F) of agricultural products (crops, livestock, etc.) The income from rented acres - Number of acres rented agriculturally - Number of acres rented for other use - Actual rent compared to market rents in the area - Rental income from agricultural use - Rental income from other use (i.e. commercial storage, house rental, etc.) Owner s knowledge of farm markets Owner s agricultural income compared to owner s total income and/or other incomeproducing uses of the land Significant agricultural income compared to value of homestead 2

16 4. OCCUPATION OR FARMING INTENT OF OWNER While occupation of the owner should not be a primary factor, it may be useful as secondary or supplemental information that could be used by assessors in considering the primarily devoted to test. Owner s stated occupation as a farmer (on tax returns, etc.) Owner s knowledge of farming activity number of acres, rotation cycles, etc. Other occupation(s) supported on the property Provide benefit to owners who are actually farming or participating in an agricultural activity (as defined in statute) Demonstrate some degree of long-term commitment (for example, the 2b lands enrolled are in Rural Preserve program) Informing Property Owner of Determination After reviewing the property owner s Green Acres application, inspecting the parcel, and applying the suggested criteria, the assessor must make a determination whether to approve or deny the application. If denied, the assessor must clearly and concisely inform the property owner of the reason for denial. If the denial is based on the primarily devoted to determination, the assessor should provide the property owner with a Primary Use Determination form which would identify the use of the property and the criteria used by the assessor to support his/her decision. For example, the form would include: A statement that For the purposes of determining Green Acres eligibility, the assessor has determined the property s primary use to be [i.e. residential, residential / agricultural split classification, commercial, etc.]. The form should indicate the number of acres attributed to each use (i.e. X acres of residential use, Y acres of 2a agricultural use, Z acres of commercial use, etc.) Along with this statement, the form should provide the evidence and criteria the assessor used in making the determination. The form should also list appeal options if the property owner disagrees with the determination. Appealing the Primary Use Determination. If the property owner disagrees with the assessor s classification or split-classification, the owner can appeal to the local and/or county boards and to Minnesota Tax Court for a final determination. If the property owner disagrees with the assessor s primary use determination (and resulting Green Acres eligibility decision), the owner can appeal to Minnesota Tax Court. Other Discussion This statutory provision related to primarily devoted to agricultural use is subjective, as are the guidelines presented above. It allows for flexibility to some degree, counties can tailor a primarily devoted to agricultural use policy that aligns with their markets and land uses. Similarly, the provision also requires assessor judgment. As a result, counties will need to establish a guide, based on the above uniform set of criteria developed by the department, which can be used by assessors to make consistent decisions and justify their application of this provision to landowners. The criteria and rationalization used should also be consistent with adjoining counties or with counties having similar markets and land uses. This uniformity should be coordinated through the department and Regional Reps. 3

17 Counties should take a cautious approach in making classification and Green Acres determinations until they attend a regional Green Acres seminar and can formulate a county policy for making the more subjective decisions that are required by the statutes. Regional Reps should be able to help counties on these tasks and answer any questions. Please review and understand the directives related to the classification of agricultural and rural vacant lands and what is considered impractical to separate to better understand these considerations and how they affect what is eligible for Green Acres. If you have any questions, please direct them to proptax.questions@state.mn.us. 4

18 MEMO Date: June 2, 2009 To: From: Subject: All Assessors Stephanie L. Nyhus, SAMA Principal Appraiser Ownership entities that may qualify for Green Acres As many of you are aware, changes were recently made to the Minnesota Agricultural Property Tax Law, commonly known as Green Acres. This memo is intended to address only the changes made to the provisions surrounding the ownership entities that may qualify for Green Acres. Under the previous law, ownership entities had to be authorized under Minnesota Statutes, section in order to qualify for Green Acres. However, Minnesota Laws 2009, Chapter 12, Article 2, section 1 amends Minnesota Statutes , subdivision 3, paragraph (b) which now states: (b) Valuation of real estate under this section is limited to parcels owned by individuals except for: (1) a family farm entity or authorized farm entity regulated under section ; (2) an entity, not regulated under section , in which the majority of the members, partners, or shareholders are related and at least one of the members, partners, or shareholders either resides on the land or actively operates the land; and (3) corporations that derive 80 percent or more of their gross receipts from the wholesale or retail sale of horticultural or nursery stock. The terms in this paragraph have the meanings given in section , where applicable. Beginning with the 2009 assessment, clause (2) above now allows entities that are not subject to regulation under section to qualify for Green Acres if the majority of the members, partners, or shareholders are related, and at least one of the members, partners, or shareholders lives on the land or actively operates the land, and the property meets all other qualifications for the program. If you have any questions or concerns, please direct them to proptax.questions@state.mn.us.

19 Memo Date: May 27, 2009 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section, Property Tax Division Green Acres Transfers In February 2009, we provided clarification on what types of transfer requires a Green Acres payback and which do not. Since that time, new legislation has codified that the following ownership transfer scenarios do not constitute a change in ownership for Green Acres purposes, and therefore do not require a withdrawal of class 2b lands or payback of deferred taxes. These transfers are the same type as were included in the February memo, with the addition of transfer of property into a trust. We recommend destroying the February 2009 memo and retaining this one for future reference. Again, the following types of transfers DO NOT constitute a change in ownership for purposes of Green Acres, none of these types of transfers cause Green Acres withdrawal or payback: death of a property owner when a surviving owner retains ownership thereafter; divorce of a married couple when one of the spouses retains ownership thereafter; marriage of a single property owner when that owner retains ownership thereafter (in whole or in part); organization into or reorganization of a farm entity ownership (under M.S ) situation when all owners maintain the same exact beneficial interest both before and after said organizational changes; and placement of a property into a trust, provided that the individual owners of the property are the grantors of the trust and that they maintain the same beneficial interest both before and after the placement of the property in the trust. If you have any questions, please contact our division at proptax.questions@state.mn.us.

20 Memo Date: April 9, 2009 To: From: Subject: All County Assessors John F. Hagen, Assistant Director Property tax Division Memo #2 - New Green Acres Law On Friday April 3, Governor Pawlenty signed a new Green Acres bill into law. We are optimistic that this new law will resolve many of the major taxpayer criticisms that resulted from the 2008 Green Acres law changes. This memo is intended to give you a brief overview of some of the changes so that you will be able to respond to questions that may result from news or articles surrounding this new law. More specific instructions and information will be coming out in the next few weeks. Highlights of the 2009 Green Acres Law The 7-year payback requirement contained in the 2008 law has been repealed. The maximum payback on any acres (2a or 2b) is now three years deferred taxes. All property owners currently enrolled in Green Acres will have until May 1, 2010 to withdraw some or all of their 2b acres without any payback. Many farmers who withdrew lands in response to last year s changes, or who transferred property to a son or daughter, will be refunded the deferred taxes they paid. Property owners currently enrolled in Green Acres who do not remove their 2b lands before May 1, 2010 will be able to grandfather these 2b lands until the 2013 assessment. At that time they will have one of three options available to them: Option 1. The establishment of a new Rural Preserve program will give property owners an opportunity to enroll their 2b lands which are part of an agricultural homestead. This program requires a minimum 10-year land covenant and defers taxes in a manner similar to the Green Acres program. Current Green Acres enrollees are able to transition their qualifying 2b vacant lands into the program by 2013 without having to pay deferred taxes on those lands. Farmers may enroll in this program beginning with the 2011 assessment. For farmers who have 2b acres enrolled in Green Acres, it is imperative that they keep those acres in Green Acres if they are planning on enrolling in the Rural Preserve Program. That way, they can transition into the program beginning in 2011 without facing any payback of deferred taxes. More information concerning the new Rural Preserve Program is contained in an attached document. Option 2. They can enroll their lands in the 2c Managed Forest Land Classification that was established in Enrollment would require 20 or more 2b acres and an up-todate forest management plan. The 2c classification has a class rate of.65%. 2b lands

21 under a forest management plan may be enrolled in SFIA as well (but not while simultaneously being enrolled as 2c). Option 3. They can do nothing. If they choose this option their lands will be valued at full market value for the 2013 assessment and they will be required to pay the difference in tax between the Green Acres value and market value for three prior years. Of these three options, option 3 is clearly the least desirable. We anticipate that after property owners have had a chance to review their options, they likely will do one of two things. If they do not intend to enroll their 2b lands in the Rural Preserve Program, we would expect that they would remove their lands from Green Acres prior to the May 1, 2010 deadline, thereby avoiding any payback on 2b lands. Or, if they intend to enroll their 2b lands in the Rural Preserve Program, we anticipate they would simply leave their 2b lands in Green Acres and take the necessary steps to transition them to the Rural Preserve Program. The legislature has also clarified that the following types of transfers do not constitute a change in ownership for Green Acres purposes. These transfers would not require withdrawal and payback of 2b acres. These are the same types of transfers discussed in a recent memo, with the addition of placement of a property into a trust. Death of a property owner when a surviving spouse is the legal or beneficial title holder of the property; Divorce of a married couple after which one of the spouses continues to occupy and farm the property; Marriage of a single property owner when that person continues to own and farm the property in whole or in part; Organization into, or reorganization of, a family farm entity under section if all the owners maintain the same beneficial interest both before and after the organizational changes; and Placement of the property into a trust, provided that the individual owners of the property are the grantors of the trust and maintain the same beneficial interest both before and after placing the property under a trust. Finally, more direction was added to assist in making determinations of what class 2b land is impractical to separate from the surrounding agricultural land, and therefore eligible for 2a classification. It was clarified that beginning with the 2010 assessment, 2a property must also include any property that would otherwise be classified as 2b but is interspersed with class 2a property including but not limited to sloughs, wooded wind shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement, and other similar land that is impractical for the assessor to value separately from the rest of the property or that is unlikely to be sold separately from the rest of the property. Additional instruction on proper implementation of this language will be forthcoming in the near future.

22 Preliminary Taxpayer Information New Law Gives Green Acres Landowners More Time April 9, 2009 Agricultural landowners who participate in the Green Acres program have more time and more options to decide on tax treatment of class 2b rural vacant land acres. The law retains the 2b classification introduced last year for rural vacant land which is not used for agricultural production, including woodlands, sloughs, and other types of land that are unsuitable for farming. Small tracts that are interspersed with agricultural land such as fence lines and wind breaks are still considered 2a agricultural land and are eligible for Green Acres. In addition, land that was used for agricultural production but is now enrolled in other non-perpetual preservation initiatives such as the Conservation Reserve Program or Reinvest in Minnesota will now be eligible for Green Acres as long as it meets other program requirements. Landowners now have until May 1, 2010 to withdraw any 2b lands from Green Acres with no payback on deferred tax. Or, current enrollees can leave their 2b lands in the existing Green Acres program until January of 2013 at which time they will be subject to a 3 year payback if they do not enroll the 2b lands in the Rural Preserve program. The updated law loosens the restrictions on the sale or transfer of rural vacant land that no longer qualifies for Green Acres. The changes reduce any associated tax payback to no more than three years. The seven year payback provision that had applied in certain cases has been repealed. Property owners who withdrew class 2b lands from Green Acres in response to the 2008 law changes may be eligible for a refund of the paybacks made to counties. Payback provisions There is a three-year tax payback due on any 2b vacant land that: is voluntarily withdrawn from Green Acres after May 1, 2010, and not enrolled in Rural Preserve; remains in Green Acres on Jan. 2, 2013, at which time it will be automatically removed from the program; and is sold or transferred to someone other than a child, or subdivided for development. Rural Preserve Program Class 2b lands currently enrolled in Green Acres will be eligible to enroll in a new Rural Preserve program that offers similar tax benefits if landowners agree to manage their property in accordance with a conservation plan for at least 10 years. Rural Preserve will be open to most 2b vacant land or other qualifying parcels that are at least 10 acres in size and part of an agricultural homestead. Farmers may enroll in Rural Preserve starting in Again, current Green Acres enrollees may transition their qualifying 2b vacant land into the program by 2013 without having to pay deferred taxes. County assessors will soon provide current Green Acres enrollees with additional information about program changes and new or existing programs that may apply to 2b land. Landowners with questions after receiving this information may contact their county assessor s office to discuss their options. Within the next few weeks the Department of Revenue will also post informational materials on its website,

23 MINNESOTA REVENUE MEMO Date: April 24, 2008 To: From: Subject: County Assessors GORDON FOLKMAN, Director Property Tax Division Green acres update Less than four weeks are left of the legislative session and we are making some progress on putting together a green acres/agricultural definitions bill but we have a significant distance to go. Because of the time restraints, we are not 100 percent confident that we will get a legislative resolution. We will continue to work with legislators, legislative staff, the Green Acres Committee, and the MAAO legislative committee in the remaining weeks of the session. Right now, the Senate and House proposals have one thing in common both separate productive agricultural land from non-productive land and allow green acres benefits to only the productive land. This is a significant difference from current law and will require assessors to reexamine their property records and perhaps change how agricultural acres are listed. As we see it now, assessors should begin to sort all of their agricultural acres into three buckets Bucket 1 will contain all tillable acres; Bucket 2 will contain all non-tillable acres (pasture, meadow and woods); and Bucket 3 will contain all acres that are waste (slough, water, rocks and bluffs). This three-bucket separation is substantially the same as the breakdown we outlined in the Green Acres Bulletin #1, as revised following our green acres tour earlier this year. The attached diagram shows the three bucket sort. Please note that the non-tillable bucket would include both pasture actively being grazed and pasture capable of being grazed; meadow actively being mowed and meadow capable of being mowed; and wooded acres whether the acres could or could not be used productively. These buckets will work with either the revised GAB #1 or the House and Senate versions. But if the House or Senate version is adopted, you may need to further refine the non-tillable bucket into acres actually being used productively (livestock grazing on the land or hay being mowed) and acres NOT being used productively. The diagram shows how the legislative proposals would separate the middle bucket. Many of you have asked what you need to be doing right now to get ready for the 2009 assessment. With or without a 2008 tax bill, you should be doing three things. 1. Review your property records. This should be your top priority right now. We have heard from you that you have several different approaches to grading your agricultural lands. Some of you use CERs; some of you use high land/low land; some of you have other methods. In our judgment, whether we proceed with implementation of the Green Acres Bulletin #1 or a hoped for legislative solution, all assessors must be able to separate their agricultural acres into the three buckets (tillable, non-tillable and waste) with some consistency statewide. You need to start that process right now if you have not already done so. If you need guidance, contact your regional representative now. Please use the attached diagram for a guide on how to start sorting the acres. (Continued )

24 County Assessors Green acres update April 24, 2008 Page 2 2. Review the indicated green acres values that we sent to you last December for the 2008 assessment. After you have categorized your property, you need to begin comparing the indicated green acres values to your current or recent agricultural sales data. Do the sales data indicate that the estimated market values exceed the indicated green acres values by 10 percent (guideline indicator) or more? You need to do this analysis on a countywide basis and by areas within the county and by land types (tillable, non-tillable and waste). If the sales data indicate that your estimated market values are greater than 110 percent of the indicated green acres values, you should be considering implementation of green acres in your county. If you already have green acres, does your analysis show any need for adjustments? If you need guidance, contact your regional representative now. We will not know for several weeks exactly which version of green acres will be implemented, but this analysis will be necessary whether we have new legislation or not. 3. Communication Plan. If your analysis indicates a need to implement green acres in all or a part of your county, or if you need to adjust an existing green acres program, start drafting a communication plan. How will you notify property owners that green acres will be available for the 2009 assessment or that the green acres program will be changing for 2009? How will you communicate with your township, city and county officials? If you have questions, contact your regional representative now. Again, until the end of the session we will not know the exact message that needs to be communicated, but we do know that we will have changes to implement and communicate. I cannot stress vigorously enough that you must start now to get ready for You cannot wait until early June to see what the legislature enacts (or doesn t enact). Absent legislative action, the Department will proceed with implementation of the Green Acres Bulletin #1. This is a good time to review the Bulletin, especially pages 22, 23 and 24. Either way, 2009 will present interesting challenges and opportunities for all of us and we need to start now. If you need guidance, contact your regional representative now. Cc Senator Rod Skoe Representative Randy Demmer Representative Lyle Koenen

25 MINNESOTA REVENUE E- MEMO Date: October 4, 2007 From: Stephanie Nyhus Information and Education Section Subject: Green Acres Bulletin #1 Attached are Green Acres Bulletin #1, a decision tree and a map of indicated agricultural values for both tillable and non-tillable property. As you know, this is intended to be the first in a series of bulletins. Please understand that this will be the starting point for future discussions on this topic. We fully anticipate that there will be questions and concerns as you go through all of this information. The second bulletin is already in the planning stages and will be developed over the coming months. In the meantime, please direct any questions and/or comments to us at proptax.questions@state.mn.us.

26 BULLETIN To: All City and County Assessors From: Property Tax Division Date: October, 2007 Re: Green Acres Bulletin #1 Introduction:...Page 1 Background:...Page 6 Green acres agricultural valuation methodology:...page 9 Split Classification:...Page 12 Agricultural production:...page 15 Green acres requirements:...page 17 Green acres process:...page 22 County plans:...page 23 Glossary:...Page 25 Attachment 1: Decision tree...page 27 Attachment 2: Statewide factors...page 28 1

27 Green Acres Bulletin #1 Introduction In 1967 the Minnesota legislature created a new property tax program named the Minnesota Agricultural Property Tax Law that we now fondly call the Minnesota Green Acres (GA) Law. Legislators were attempting to find a method for valuing agricultural property for its agricultural use only while protecting its value from other nonagricultural influences. At the time, development appeared to be swallowing up agricultural property in the seven county metropolitan area, driving up the values used for property tax purposes. Qualifying agricultural property would be enrolled in the GA program and valued using sales data for agricultural property outside the metropolitan area to eliminate the development influences. During the last forty years, development pressures have spread much further than just the metropolitan area and are not the only non-agricultural influence on agricultural prices. Changes in the economic markets have made real estate, wherever located, a great investment choice. Buyers are seeking the recreational potential of agricultural land. The economic structure of farming itself has been altered in ways that are not subject to easy measurement. As a result, at the present time, over fifty counties use GA in all or a portion of their jurisdictions. After almost 40 years of experience with GA, in 2005 the legislature directed the Commissioner of Revenue to review the GA law and report back to the legislature in 2006 with an analysis of existing practices and recommendations for achieving higher quality and uniform assessments and consistency of property classifications. The Commissioner s 2006 report included a recommendation that the Department of Revenue develop guidelines to assist assessors. The Commissioner asked assessors to work with the Department to examine current GA practices and recommend a statewide GA program that reflects the best practices in GA administration. This bulletin includes guidelines, examples and best practices to assist Minnesota assessors in implementing and managing the requirements of section During their investigation, the GA Committee identified significant barriers in achieving consistency and uniformity in administering GA laws. The most significant barrier is the lack of good agricultural sales that have little or no non-agricultural influences. Without good sales data, assessors cannot determine the appropriate GA value to apply in their counties. In fact, there is a significant difference of opinion as to what constitutes a good agricultural sale. Layered on top of the lack of data is a significant difference in interpretation of laws regarding classification of agricultural property. The GA Committee members found differences among themselves and even more differences when they looked statewide. The GA Committee had to tackle both the lack of data and lack of consistent administration based on differing classification practices in order to finalize this bulletin. 2

28 The GA Committee and the Department are aware that the decisions made by the Committee and incorporated in this bulletin will result in changes in green acres processes in many counties. Some counties will now have the tools to make green acres available to property owners. Some counties will review their green acres applications and conclude that certain properties currently in the green acres program really do not qualify. Some counties will have properties that will now qualify AND have properties now in the program that are not qualified. In some counties these swings may be dramatic. The GA Committee is also aware that assessors are concerned with potential shifts in tax burdens as properties are entered into the program or removed. Technically, assessors should not concern themselves with shifts that result from interpretations of the tax laws but, of course, they are concerned. Assessors are property tax professionals and they both understand and are concerned with changes. At the property tax system s frontline, assessors are the first to hear the complaints, first to answer the questions and first to see the consequences of decisions made on high, both intended and unintended. Many assessors will be concerned that the decisions reflected in the bulletin do not square with their understanding of the green acres law or the 1997 amendments to the law. According to the 1997 House Research Bill Summary, the law change provides for how the assessor should classify property when the property is used for both residential and agricultural uses. It allows the assessor to split classify, if the property has both uses and gives the limits upon which it should be done. At the same time, the Department of Revenue summary of 1997 property tax laws contained the statement that: Section 20 establishes the rules and regulations for an assessor to classify property that is used for both residential and agricultural purposes. It allows the assessor to split the classification and gives the limitations for doing so. Looking back on this language ten years later, we are having difficulty finding either the legislative authority or the need for split classifying property. The Committee members were surprised by the differences in practices even amongst themselves and then the state as a whole. After our discussions, it was plain to see that inconsistencies and lack of uniformity were bound to occur and needed to be addressed. Many of the decisions the Committee made were not unanimous but, in the end, they were decisions that the Committee felt best reflected the law as it exists. The Committee and the Department anticipate vigorous discussions about the application of the green acres law as it exists now and how this bulletin will change it. This bulletin will be effective for the 2009 assessment so we (assessors, the Department, property owners and legislators) will have adequate time for the discussion. Of all the guidelines recommended in the bulletin, the GA Committee feels that these six issues are especially ripe for discussion: 3

29 1. Green acres agricultural valuation methodology. Will legislators and assessors accept the methodology for establishing the agricultural values for each county based on the data from the five base counties? And will they accept the values for productive non-tillable and nonproductive non-tillable acres? (Green Acres Bulletin #1, page 8.) 2. Split classification. May assessors consider splitting the classification of a parcel between residential and agricultural uses and, if so, under what circumstances? Several assessors believe that the 1997 law changes authorized split classes but if that was the legislative intent, the Committee did not see that intent in the law as written. If the residential portion should be split, what is considered to be a residential use? The Committee believes that defining residential will be as problematic as defining agricultural. (GA Bulletin #1, page 11.) 3. Parcels less than ten acres. Under what circumstances should small parcels be considered agricultural? The Committee found that the agricultural use must be exclusive and intensive in order to qualify. Just being a small version of a big farm did not qualify. But if a parcel is eight acres and every inch is planted in corn, what is the appropriate class? If it is not agricultural, what is it? But if eight acres of corn qualifies, what about five acres? What about two acres? What about a big garden in the backyard? (GA Bulletin #1, page 14.) 4. Primarily devoted to agriculture. What does primarily devoted to agricultural use actually mean? The Committee found that a property may be properly classified as agricultural but not qualify for green acres based on the primarily devoted to agricultural use test. On the other hand, many assessors believe that if a property qualifies as agricultural and meets the ownership and income criteria, it qualifies, per se, for green acres. (GA Bulletin #1, page 17.) 5. Green acres income threshold. Almost everyone agreed that the income tests are woefully inadequate. Assessors all over the state report that the income claimed on the green acres application equaled the statutory minimum even though market rents in that area were several times higher. But assessors are fearful of becoming income tax auditors and dealing with federal income tax forms. (GA Bulletin #1, page 19.) 6. Payback provisions. Many Committee members and assessors throughout the state feel the three year payback should be reviewed. The payback for open space deferment is seven years and we could see no reason for the difference. There are surely other provisions that need clarification. The Green Acres Committee and the Department look forward to the discussion and debate. Maybe the easiest part of the task is done. Over the next months, the Department and the GA Committee will be briefing legislators and legislative staff on the Bulletin, the implications of its implementation and the need for legislative resolution of the issues raised through this process. The Legislative Auditor will also be issuing a report which will certainly be raising additional questions and issues that we and the legislature need to address. The Department and the GA Committee believe we have a window of opportunity to engage legislators in a thorough review of the GA process before the 2008 legislative session begins. 4

30 Assessor input into development of this bulletin was extremely valuable and continuing involvement is essential. The Department wants the GA Committee to continue its role of advising the Department on further bulletins. In addition, the Department wants to coordinate the legislative discussions with the MAAO Executive, Agriculture and Legislative Committees. The legislative charge to improve the consistency and uniformity of assessment practices was addressed to all of the players in the property tax system so we need all players at the table to discuss issues and seek resolutions. The GA Committee will begin to develop Bulletin #2. We know that many unique policy and administrative issues will be raised by assessors as they review Bulletin #1 and those issues will be addressed in Bulletin #2. We already are working on the application process and will tackle questions such as whether all parcels owned by a person or entity must be included in the GA application or can a person or entity pick and chose the parcels to include. We know that the GA forms need to be updated and we know that we need better reports in order to answer legislative questions and better evaluate the program. The Department field representatives will meet with their regions to develop a better understanding of Bulletin #1 and a process for preparing the county GA plans. Many issues and needs will surely arise from these meetings and can be addressed in Bulletin #2. 5

31 Background In 1967 the Minnesota legislature created a new property tax program named the Minnesota Agricultural Property Tax Law that was quickly nicknamed the Minnesota Green Acres (GA) Law. The new law has been codified as Minnesota Statutes, section , and contains a statement of public policy that reads: The present general system of ad valorem property taxation in the state of Minnesota does not provide an equitable basis for the taxation of certain agricultural real property and has resulted in inadequate taxes on some lands and excessive taxes on others. Therefore, it is hereby declared to be the public policy of this state that the public interest would best be served by equalizing tax burdens upon agricultural property within this state through appropriate taxing measures. Minnesota Statutes, section , subdivision 2. After almost 40 years of experience with GA, in 2005 the legislature directed the Commissioner of Revenue to review the GA law and report back to the legislature in 2006 with an analysis of existing practices and recommendations for achieving higher quality and uniform assessments and consistency of property classifications. The Commissioner s 2006 report included a recommendation that the Department of Revenue develop guidelines to assist assessors. This bulletin includes guidelines, examples and best practices to assist Minnesota assessors in implementing and managing the requirements of section It is generally agreed that the GA law was enacted by the legislature in response to nonagricultural pressures on the values of agricultural properties in the seven-county metropolitan area. The prices for land easily developable into housing or commercial activities were increasing, causing values for property tax purposes to increase as well. Remembering back 40 years, urban sprawl was a major point of discussion. In the metropolitan area, residential and commercial developments were pushing further and further out from the core downtown areas and stressing the ability of existing infrastructure such as sewer and water systems to deal with new residents and business activities. In the same year the legislature adopted the GA law, they established the Metropolitan Council in order to coordinate the planning and development of the metropolitan area comprising the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington. Minnesota Laws 1967, chapter 896, section 1. Regardless of the original intent of the GA law, there is general agreement that most, if not all, agricultural property in Minnesota is now subject to non-agricultural influences forcing the market price of an acre of agricultural land to increase beyond its value as a farm acre. The current pressures may come from different sources than in 1967 but the results are the same. Market prices for farm land exceed the agricultural value of the land. Currently, over 50 counties in Minnesota use GA. Many other county assessors believe that GA should be implemented in at least some areas of their counties. For assessors, the most significant barrier to implementing GA is determining the actual agricultural value of farmland in their counties. 6

32 By law, assessors must determine the highest and best use of property and then estimate the value of property based on the results of that determination. If the highest and best use of tillable agricultural property is residential or commercial development, recreational purposes or lakeshore development, the assessor must value the property as if it were to be converted to the highest and best use. In cases where the highest and best use of the property is for something other than agriculture, the assessor places a value on that property that exceeds the agricultural value resulting in higher property taxes. The GA law requires assessors to look at qualifying agricultural property in two ways. First, the assessor must value the property according to its highest and best use. Then the assessor must determine the agricultural value of the property. If the agricultural value is significantly below the highest and best use value, the assessor must use the agricultural value for tax purposes. Because many assessors believe most of the sales of agricultural property have non-agricultural influences, they have very few or no true agricultural sales to determine the agricultural value. The Department of Revenue formed a Green Acres Committee (GA Committee) composed of assessors and Department staff to tackle the issue of establishing agricultural land values throughout the state. Current GA law specifies that the assessor should determine the agricultural value by using agricultural sales outside of the sevencounty metropolitan region. However, the GA Committee found that it is becoming increasingly difficult to identify true agricultural sales anywhere in Minnesota. While it may be difficult to prove or disprove the statement there are no true agricultural sales in Minnesota, it is very apparent that the number of true agricultural sales is rapidly diminishing. This limited number of agricultural-to-agricultural sales in many parts of the state contributes to a lack of uniformity in assessment practices. GA Committee members discussed the changes they have witnessed in the market for tillable and non-tillable agricultural properties in recent years. Since September 11, 2001, real estate, wherever located, is a popular investment as investors avoid the uncertain financial markets for stocks and bonds. While in the past investors favored commercial property, assessors are seeing purchases of agricultural property that will be used for recreation purposes only. The increasing prices for agricultural properties make farm acres prime targets for investors, especially if the land can be used recreationally during the investment period. Assessors in the metropolitan are continuing to see agricultural property purchased as an investment, but they are not seeing the recreational influences reported elsewhere in the state. While the GA Committee agreed that agricultural values are being influenced by factors not closely related to farming, the members also agreed that the non-agricultural influences are difficult to define and impossible to quantify with the data currently available. The Committee concluded that a thorough analysis of all sales of agricultural property by assessors and the Department is necessary to help us better understand and track the changing real estate markets. 7

33 Some assessors question the importance of non-agricultural influences on the sales prices of agricultural properties. If farmers are willing to pay the asking prices, these assessors would argue that farmer-to-farmer sales are true farm sales. The GA Committee responds that a farmer competes in the market for land to expand the farm operation along with investors and buyers seeking recreational land. The farmer may be willing to compete in this market because the farmer has land previously obtained at much lower cost and can average the cost across all the farmer s acreage. This does not negate the fact that the last acre acquired cannot cash flow on its own the production on that acre cannot justify its price absent other cheaper acres acquired earlier. The ethanol factor is difficult to quantify and characterize at this time. Is ethanol an agricultural influence or a commercial influence? Obviously there is an ethanol factor but can it sustain itself or will it be minimized as other sources of materials for producing energy are developed? The GA Committee recognizes the importance of monitoring all market influences over time. The GA Committee recognized that estimating agricultural value for non-tillable agricultural land is more challenging than estimating the agricultural value for tillable land. Challenged with the task of determining a method of estimating agricultural value that falls within current law and Department of Revenue guidelines, the Committee explored numerous proposals. Ultimately the committee developed its own methodology to arrive at agricultural values. 8

34 Green acres agricultural valuation methodology The initial concept was to establish a base area of the state which has the least nonagricultural influences on its farm land sales today. The one area of the state the Committee could unanimously agree on is the southwest corner of Minnesota consisting of Lyon, Murray, Nobles, Pipestone and Rock Counties. Once the base area was established, the Committee located the most recent period in time ( ) when the non-agricultural influences on farm land sales were either minimal or non-existent throughout the state, with the exception of the seven-county metropolitan area. The median sales prices of farmland sales for each county during that time frame were compared to the median sales price per acre for the base counties to establish a ratio or factor. This factor could then be applied to the current median sales price per acre in the base counties to establish a current indicator of agricultural value for each county. This process was applied to both sales of tillable land, sales with 75% or more of the acreage reported as tillable, and sales of non-tillable land, sales with less than 75% of the acreage reported as tillable. This process proved very promising for tillable lands and, with a little rounding or blending of the factors, should provide a fair, uniform and, most importantly, equalized method of arriving at the value of tillable agricultural land throughout the state. The results of the process on non-tillable land were less conclusive, possibly due to the lack of detail available regarding the type or quality of non-tillable lands that were analyzed. The relationship between tillable and non-tillable was then reviewed as an alternative method of establishing non-tillable values. Various methods of calculating the non-tillable to tillable relationship yielded statewide averages of non-tillable sales prices per acre at approximately 55 63% of tillable sales prices. In an effort to differentiate between the more agricultural non-tillable land (i.e. pasture and lightly wooded lands) and the less agriculturally-productive land (i.e. heavily wooded land, steep hillside and wasteland), the committee decided that using 50% of tillable value for the more useful non-tillable land and using 25% of tillable for the less useful and unusable land provided a reasonable and equitable method of arriving at non-tillable value. While not perfect by any means, these methods of establishing agricultural values provide a uniform basis for valuation while retaining ties to deriving agricultural values from the market. The end result is a projection of what the current agricultural value of land would be in the absence of the current non-agricultural market influences. 9

35 The GA Committee chose to name the three categories of agricultural properties tillable, productive non-tillable, and nonproductive non-tillable. The name of the first category tillable is obvious but the Committee chose the other two names because they are not terms the assessors normally use to categorize non-tillable lands. The Committee found that throughout the state, assessors use different terms to describe land that can be used for grazing animals or cutting hay. The Committee chose to call this land productive non-tillable land the land is not suitable for tilling but can be used productively for other agricultural purposes. The Committee also found that throughout the state, assessors have different terms to describe land that is less productive or has no production value. The Committee calls this land nonproductive, non-tillable the land will never be tilled and in most years cannot be used for grazing or for cutting hay. For assessors, in most cases it will be simple to convert most of their agricultural properties into these three categories but there will be questionable properties. Remember, assessors will be using these three categories solely for the purpose of assigning indicated GA values to their agricultural properties. For establishing the estimated market values, assessors may use the methodology that works best for them. For determining the low value or indicated GA value, assessors must use the three categories. The GA Committee has included a glossary as part of this Bulletin providing greater definitions for these categories. The Committee expects that the regional meetings will set aside time for assessors to discuss and refine these categories to make them fit the properties in each region. Conclusions The GA Committee concluded that Minnesota Statutes, section , the Green Acres Law, was intended to equalize the value of agricultural values throughout the state based on some measure of the land s productivity, rather than its development potential. By focusing on properties with significant agricultural activities, assessors can do a more consistent job of equalizing values. The Committee reached their conclusion after reviewing the statute itself and the series of Tax Court and Supreme Court decisions interpreting the GA law. It is important to remember that in administering GA, sections and , subdivision 23, must be read together but administered separately. Not all property that is classed as 2a or 2b is eligible for GA but GA may never be considered if the property is not classified as agricultural property pursuant to section , subdivision 23. Based on the best data available to the Department of Revenue and to Minnesota assessors, the method for establishing agricultural values for tillable properties in Minnesota developed by the GA Committee produces values that reflect true agricultural values in this state. The method produces values for productive non-tillable and nonproductive non-tillable land that adequately reflect the true agricultural value of nontillable land in this state. Assessors must use the values as the basis for setting agricultural values for qualifying green acres properties in their counties. 10

36 In any county or portion of a county where the estimated market values of tillable, productive non-tillable or nonproductive non-tillable farm lands exceed the agricultural values indicated by the GA Committee methodology by 10% or more, the assessor must complete an analysis and County Plan as outlined later in this Bulletin. The GA Committee strongly recommends, and the Department concurs, that assessors, the Department, the field representatives, and MAAO continue to study the markets for agricultural property and continually assess the relationship between the base counties and the rest of the Minnesota counties, the relationship between tillable and non-tillable agricultural property and the relationship between regions of the state. The GA Committee is satisfied that the proposed methodology reflects the current relationships but understands that the relationships can, and probably will, change over time and the methodology must change if the markets change. The Committee further encourages the Department to establish stronger working relationships with the Minnesota Department of Agriculture, the University of Minnesota, the Farm Service Agency and other partners to better understand the changing economics of the farm sector. 11

37 Split Classification In 1997, sections and , subdivision 23, were amended by the legislature. Before the amendments were enacted, section , subdivision 23, required the assessor to determine whether the primary use of the property was residential or agricultural. If the primary use was agricultural, the assessor classified the property as agricultural. If the primary use was something other than agricultural, perhaps residential, the assessor could not classify the property as agricultural even if there was an agricultural activity on the property. Often this determination is easy to make. For example, a 160 acre parcel has 120 acres or more tilled for production of corn and soy beans, three acres devoted to the residential unit and assorted farm buildings with the remaining acres mostly wet or heavily wooded. Even if the value of the residential unit and farm buildings are significant, the decision to class the 160 acres as agricultural appears easy. But right across the road, a 40 acre parcel includes a residence with ten acres mowed for hay by a neighbor and no other agricultural production occurring. Prior to 1997, many assessors would determine that the primary use of the 40 acres was residential because the agricultural activity was so minimal. If the primary use of the property was residential, the property could not be classified as agricultural even if there was some agricultural production occurring on the property. Other assessors determined the primary use of the parcel was agricultural because of its size (40 acres), its zoning (local ordinances allow only one building site per 40 acres, for example) and the limited residential use (only two to five acres of the entire parcel). The differing classification decisions made by assessors across the state resulted in a lack of uniformity in values and taxes from county to county. The 1997 amendments removed the primary test from section , the classification section, and placed it in section , the GA law. The amended section , subdivision 23 requires the assessor to exclude the house, garage and one acre (HGA) before determining if the agricultural class is appropriate and further states that the determination is not to be based on the value of the residential structures. The legislature was concerned that assessors were refusing to allow an agricultural class on a parcel of property that contained both land being used for agricultural production and a large, expensive residential structure. Legislators heard reports that assessors were comparing the value of the residential structure to the value of the land being used in the agricultural activity and if the value of the residential component was larger than the value of the agricultural component, no agricultural class would be allowed. But the 1997 amendments only caused additional confusion for assessors. In the 40 acre example, should the assessor split just the ten acres or should any waste, timber or wetlands be included with the ten acres to be classed as agricultural? If the parcel was 160 acres but only 15 acres were used for agricultural production, was the assessor supposed to split off the HGA and class the remaining 159 acres as agricultural? Or class just the 15 acres as agricultural? What class would the assessor use for the remaining144 acres (assuming that the HGA were classed as residential)? Could split class properties be eligible for GA? Many assessors refused to consider GA for split class properties while several did grant GA. The Department of Revenue bulletin in 1997 indicated that 12

38 assessors should consider using the split classification only on small acreages, not exceeding 40 acres. Currently some assessors are splitting the classification of parcels of any size while some feel limited by the Department s 40 acre directive. Some allow GA, some do not. Some may be influenced by the value of the residential portion of the parcel as compared to the agricultural value and if the value of the residence is greater than the agricultural portion, some assessors split the classes and deny GA. Because many in the assessing profession have operated on the I ll know it when I see it approach, wide disparities exist in the classification of agricultural properties and using split classes has compounded the inconsistencies. The GA Committee concludes that the split class issue must be addressed and guidelines provided to assessors if uniformity and consistency are to be achieved statewide. The GA Committee finds no compelling reason to split the residential portion from the agricultural portion of a parcel that has sufficient agricultural activities to meet the requirements of section , subdivision 23. If a parcel (excluding the HGA) contains 10 or more contiguous acres and at least ten acres were used for agricultural purposes in the preceding year OR if the parcel (excluding the HGA) is less than 10 acres but is exclusively and intensively being used for raising or cultivating agricultural products, the parcel should be classified as agricultural whether or not a portion is also being used for residential purposes. The GA Committee recommends, and the Department endorses, the following directions to Minnesota assessors for classifying parcels: 1. If a parcel of property (excluding the HGA) contains ten or more contiguous acres and at least ten acres were used during the preceding year for agricultural purposes, the parcel should be classified as agricultural land and should include any contiguous pasture, timber, waste, unusable wild land and RIM or CRP acres. 2. If a parcel of property (excluding the HGA) is less than ten acres but is exclusively and intensively used for raising or cultivating agricultural products, the parcel should be classified as agricultural land. 3. If a parcel of land that is classified as agricultural contains a residential unit or units, the homestead rules in section should be applied to determine if a residence qualifies as a homestead. If a residence qualifies as a homestead, the agricultural land and the home are class 2a (agricultural homestead). If the agricultural land does not qualify for homestead benefits, the appropriate class is 2b (non-homestead agricultural). HGA for the homestead residential unit shall be reported separately on the reports filed with the DOR. The value of the HGA is subject to the market value referendum levy. 4. If the parcel is class 2a and contains the homestead of the owner, the Property Tax Refund qualifying tax is the tax levied on the HGA. 13

39 5. If the agricultural parcel contains residential units that do not qualify as homesteads, the residential units including HGA shall be split from the agricultural parcel and classed as 1d (residences for seasonal farm workers), 4a (four or more units), 4b (less than four units) or 4bb (single unit). 6. If there is a commercial or industrial use of a portion of the parcel, the portion used for commercial or industrial purposes should be split and classified as class 3a (commercial/industrial). 7. If there is a seasonal residential recreational (SRR) use of a portion of the parcel, the portion used as SRR should be split and classified as class 4c. The GA Committee encourages assessors to review their split class parcels before the 2008 assessment. If changes are needed, the 2008 assessment is a good time to do it before implementation of the County Plan for GA in

40 Agricultural production The GA Committee devoted a significant amount of time to discussions of what constitutes agricultural production in order to qualify for agricultural classification under section , subdivision 23. Property cannot qualify for GA unless it is agricultural property so defining agricultural production became another task of the Committee. The GA Committee came to two major conclusions. Conclusion 1: If a parcel (excluding the house, garage and one acre) is 10 or more contiguous acres AND ten or more acres were used in the preceding year for agricultural purposes, the parcel qualifies as an agricultural parcel and should be classifies as 2a (agricultural homestead) or 2b (non-homestead agricultural) property. Many assessors will believe that we are simply stating the obvious but the Committee was surprised by the various interpretations being applied throughout the state. There are two components to this first conclusion; the parcel must contain 10 contiguous acres AND there must be at least 10 acres in production. If a parcel is 10.5 acres with a house, the assessor must exclude the HGA leaving a parcel that is less than 10 acres. This parcel cannot qualify for agricultural classification under this conclusion. To be classified as agricultural, it must qualify under conclusion 2. The acres in production must total at least ten but do not need to be contiguous. Acres that are enrolled in RIM or CRP can be included in reaching the 10 acre threshold if the acres were classed as agriculture before being enrolled in RIM or CRP. Conclusion 2: If a parcel (excluding the HGA) is less than 10 acres, it can qualify for the agricultural classification only if the parcel is exclusively and intensively used for raising or cultivating agricultural products. The GA Committee looked for definitions of the terms exclusively and intensively by first looking at the dictionary definitions. In the American Heritage Dictionary, exclusive means not divided or shared; sole. Committee members agreed that most people would understand this meaning of exclusive and, therefore, recommends that assessors look closely at these smaller parcels and, after excluding the HGA, if there is a use that is different from the agricultural production, the parcel should not be classed as agricultural. For example, if the residential use spills over from the HGA in the form of barns, paddocks and riding circles for pleasure horses or swimming pool or extra utility buildings for antique cars, the use is not exclusive. If there is no residential use of the entire parcel but there is any other non-agricultural use, the parcel cannot qualify as agricultural property. The same dictionary gave us a definition of intensive as relating to a method especially of land cultivation that aims to increase the productivity of a fixed area by means of an increase in the capital and labor. The same definition included a note that states: Intensive is often used interchangeably with intense. However, it has the special meaning of concentrated (the opposite of extensive). Thus, one speaks of intense heat but intensive study. This definition is consistent with the Department s historic 15

41 interpretation that intensive production applies to hog or poultry production facilities and truck farms but not to row crops, apple orchards, Christmas tree farms and honey production. Intensive agriculture does not equate with miniature or smaller agricultural production. For example, five acres of corn is just smaller, not more intensive. Enrollment in RIM or CRP cannot qualify as intensive agriculture. The GA Committee finds that intensive agriculture requires high inputs of capital and labor and requires much closer attention to the end product meaning almost daily presence. The Committee endorses the Department s historic interpretation of what constitutes intensive agricultural production. In order to qualify for classification under Condition 2, the parcel must be less than 10 acres and the agricultural production must be both exclusive and intensive. 16

42 Green acres requirements An assessor must make a series of decisions before concluding that a parcel of property qualifies for GA or that it does not qualify. The GA Committee recommends the following sequence of decisions summarized on the Decision Tree. (Attachment 1.) Decision #1 In order to qualify for GA, the property must be classified as agricultural property either class 2a or 2b. If the property is not agricultural first, the property cannot be given the GA deferment. Assessors must make the classification decision first but classification as agricultural property is not the only requirement to qualify for GA. Section , subdivision 23, provides for agricultural classification if a parcel, excluding the HGA, contains ten or more contiguous acres and 10 or more acres were used during the preceding year for agricultural purposes. If a parcel (excluding the HGA) contains less than ten acres, the agricultural use must be exclusive and intensive in order to be classified as agricultural. (See the Agricultural production portion of this bulletin.) Decision #2 In order to qualify for GA, the property must be ten or more contiguous acres (including roads, site acres, wetlands or acres with no defined use) OR the property must contain a nursery or greenhouse. (Remember, a parcel that is10 or more contiguous acres must have ten acres in production to qualify as agricultural property.) A property (excluding the HGA) of less than ten acres that has been classified as agricultural because of its exclusive and intensive use for agricultural purposes, does not qualify for GA unless it contains a nursery or greenhouse. Examples: 1. A parcel (excluding the HGA) of only nine acres may qualify for the agricultural class because the property is used exclusively and intensively to produce agricultural products but does NOT qualify for GA because it is not ten acres and does not include a nursery or greenhouse. 2. A parcel (excluding the HGA) of only nine acres that qualifies for agricultural classification because the exclusive and intensive use involves a greenhouse or nursery DOES qualify for GA. 3. A 20 acre parcel with nine acres in production does not qualify for agricultural classification because it does not include 10 acres used in the preceding year for agricultural purposes and would not qualify for GA. 17

43 Decision #3 In order to qualify for GA, the property must be primarily devoted to agricultural use. The first and second decisions are based strictly on the facts. The third decision is based solely on the assessor s judgment. The GA statutes do not provide guidance in deciding whether a property is primarily devoted to agricultural use. Section , subdivision 23, states that agricultural land means ten or more contiguous acres used for agricultural purposes. It further states that agricultural purposes means the raising or cultivating of agricultural products and then gives a list of agricultural products. Section , subdivision 23, and section provide no clues for assessors as to how to determine if a property that includes agricultural activity is primarily devoted to such use. The GA Committee first pulled out a dictionary and looked up the word primarily. The American Heritage Dictionary defines primarily as at first; originally; chiefly; principally. The Committee further looked at the definition of primary and found the word defined as being or standing first in a list or being first or best in degree, quality or importance. The Committee reviewed Tax Court and Minnesota Supreme Court cases in which the Courts defined the primary use test. All of these cases relate to the pre-1997 law when the primary use test was contained in section , subdivision 23. The 1997 amendments simply moved the language to the GA requirements section so the Committee concluded that the court cases are applicable to this decision-making process. In Barron v. Hennepin County, the Minnesota Supreme Court stated: The primary use test incorporated in Minn. Stat , subd. 23(c) implies an examination of the specific nature of the property and the use or multiple uses to which that property has been put, together with a subjective balancing of those relative uses.while 19 out of the 20 acres of the parcel are used for agricultural purposes, the crops have produced almost insignificant income when compared with the valuation of the homestead situated on the remaining acre. Barron v. Hennepin County, 488 N.W.2d 293 (Minn. 1992). In the Barron case, the Supreme Court overruled the Tax Court, denied the agricultural classification, and highlighted the subjective nature of the decision that an assessor must make. Following the Barron case, several Tax Court decisions denied the agricultural classification and GA treatment. In at least two of the Tax Court decisions, the Tax Court appears to have used a valuation standard suggesting that if the value of the residential portion of the parcel was in excess of the value of the agricultural portion, especially if the income received from the agricultural use was minimal, the primary use of the parcel could not be agricultural. The GA Committee strongly cautions assessors against overzealous application of such a valuation standard. Valuation alone should not be the 18

44 basis of an assessor s primary use determination. The GA Committee further cautions against applying a bias in favor of owners who are more engaged in the agricultural operations. The occupation of the owner should not be a controlling factor. The GA Committee reminds assessors that valuation of the residential portion of the property and the occupation of the owner can NOT be considered as part of the determination of the classification of the property. The classification law no longer contains the primary use test and assessors cannot use it for classification purposes. Assessors must make the classification decision first and independently of the GA decision. A parcel that is appropriately classified as agricultural by the assessor may ultimately fail the primarily devoted to agricultural use test for GA purposes but that does not change the classification decision. The GA Committee suggests that assessors keep in mind that section , subdivision 12, recommends a broad construction of the GA law. Even though the Committee is mindful of the legislative directive for a broad interpretation of the GA law, the Committee recommends a minimum acreage factor that assessors should apply to every application. If a parcel (excluding the HGA) is less than 80 acres, at least 50% of the acres must be in agricultural production. If a parcel is 80 acres or more, at least 40 acres must be in agricultural production. After applying the minimum acreage requirement and if the property has not been disqualified, assessors must make a subjective decision but should have a list of objective factors that are always considered before the decision is finalized. Here is a list of factors that an assessor may consider, along with other factors that may be appropriate in the assessor s county: 1. The number of productive acres compared to total acres 2. The income from the productive acres divided by the total acres 3. The number of acres enrolled in a farm program a. The type of program: RIM, CRP, CREP, other b. The duration of enrollment in the program c. Who is actually receiving the program payments 4. The number and type of animals raised for sale on the property a. How long are the animals on the property each year b. Income earned in the past year from sale of animals 5. The income from rented acres a. Number of rented acres b. Actual rent compared to market rents in the area c. Use of the property by the lessee This is not an extensive or exhaustive list and is only suggested. The GA Committee stresses that each assessor must have a list of factors to be applied uniformly to every GA application in order to avoid even the appearance of discrimination. As part of its GA County Plan, each county must include a list of factors that will be used for every GA application. 19

45 Decision #4 The assessor must look at the ownership of the property. There are four ways to qualify for GA. 1. If the property is the homestead of the owner, or the surviving spouse, child or sibling of the owner or is property that is farmed with property that contains the homestead, the property may qualify for GA. The rules for homesteads in section apply. There are no additional homestead rules in the GA law. 2. If the property has been in possession of the applicant, the applicant s spouse, parent or sibling (or any combination) for at least seven years prior to submitting the application or is property that is farmed with property that meets this seven year criteria and the qualifying property is within four townships or cities (or any combination) from the subject property, the property may qualify for GA. 3. If the property is the homestead of a shareholder in a family farm corporation (see section ) even if the title to the property may be in the name of the family farm corporation, the property may qualify for GA. 4. If the property is in the possession of a nursery or greenhouse or an entity owned by a proprietor, partnership or corporation which also owns the nursery or greenhouse operations on the property, the property may qualify for GA. Generally, to qualify for GA, the owner of the property must be an individual or noncorporate entity except for family farm corporations (section ) or corporations that derive 80% or more of their gross receipts from the wholesale or retail sale of horticultural or nursery stock. In the case of fractional interests in a property that otherwise qualifies for GA, if any one of the owners qualifies, the whole property qualifies but all owners must acknowledge, in writing, the rights and responsibilities of GA owners. The GA Bulletin #2 will cover the application process and will provide a suggested procedure for GA parcels with multiple owners. Decision #5 The assessor must now examine the income generated from the agricultural activity on the property. The agricultural activity must generate at least one-third of the total family income OR total production income must be equal to or greater than $ plus $10.00 per tillable acre. If the owner is required to file a federal income tax return, farm income is reported on Schedule F (for actual farm related income and expenses) or Schedule E (for rental income and expenses). In some cases the owner will not be required to file a federal income tax return because the owner s total income is below the filing threshold. 20

46 Scenario 1: The owner of the agricultural property is the person farming the land. The owner will include farm income and expenses on the Schedule F. The filing date for the federal return is April 15 of each year. Before making the final GA decision, the assessor must review the current Schedule F. If the owner does not provide the Schedule F in a timely manner, the assessor must deny GA. The GA Committee recommends August 15 as the absolute deadline for receiving the Schedule F for the preceding year. Scenario 2: The owner of the property leases the use of the land to others who farm the land. The rental income and expenses are reported on a Schedule E that is attached to the owner s federal income tax return. The filing dates are the same as above. The assessor must review the Schedule E before making the GA decision. The recommendations are the same as above. In the case of rental income, the lessee must be using the property for agricultural purposes and the assessor may require an affidavit from the lessee to confirm the nature and extent of the agricultural activities. Scenario 3: The owner s income is below the federal filing requirements so no federal income tax return or schedules are prepared. In order to ascertain whether the income limits are met, the assessor must require the necessary evidence to document that the agricultural activity on the property generated the necessary income. Such evidence may include notarized statements from the owner and tenant, if applicable. Scenario 4: If the applicant has filed a Request for Extension with the Internal Revenue Service, the assessor should ask for a copy of the previous year s federal tax return, a letter of explanation as to why the extension was requested and a date when the assessor will receive the current return. The assessor should hold the GA application until the current tax return is received. The GA Committee cautions assessors against any practices that may appear to be discriminatory. Assessors should require appropriate evidence from every applicant, whether or not the applicant is personally known to the assessor. Assessors are reminded that federal tax data is either private data on individuals or protected nonpublic data on entities and must be protected. The Department of Revenue will prepare language for a proposed law that: 1. clarifies the private or protected nonpublic status of tax data, 2. clarifies that assessors may exchange tax data with the Department, and 3. clarifies that assessors can ask the Commissioner to confirm that the Schedule F or E has actually been filed with the applicant s income tax return. 21

47 Green Acres process The Minnesota map included in the index to this report as Attachment 2 shows the factor for each county. This factor, shown as a percentage, indicates the relationship between the median sales price of tillable agricultural land in the base counties and the median sales price of tillable agricultural land in the specific county as developed by the GA Committee. For example, the factor for Stearns County is 70%. Based on the sales data reviewed by the GA Committee for the agricultural sales in 1990 through 1996, the median price of an acre of tillable agricultural land in Stearns County was 70% of the median sales price of agricultural land in the base counties. This process holds the relationship constant over the years because the GA Committee found no evidence to indicate that the relationship has changed to any significant degree. By December 15, 2007, the Commissioner shall furnish to each county the indicated Green Acres value (indicated GA value) for the base counties. This indicated GA value is based on sales of tillable agricultural land in the base counties for the period of October 1, 2006, through September 30, This indicated GA value will be used for the January 2008 assessment. The Commissioner will update the indicated GA value by December 15 of each subsequent year to be used for the following assessment year. Upon receiving the indicated GA value for the base counties, the county assessor will use the specific factor for that assessor s county to calculate the indicated GA values for the tillable, productive non-tillable, and nonproductive non-tillable values in that county for the following assessment year. With the indicated GA values in hand, the assessor must compare the indicated GA values to the actual countywide information that the assessor has accumulated for determining the estimated market values for tillable, productive non-tillable, and nonproductive non-tillable acres in that county. Based on the sales of deeded acres in that county and any other market-driven data, the assessor must compare the indicated GA values to the market-derived estimated market values of all agricultural land in the county. If the estimated market values of agricultural land in all or any part of the county exceed 110% of the indicated GA values, the assessor must consider using the GA program. This process would be fairly simple if all the agricultural land in a given county was homogeneous and dozens of the current sales were arm s length transactions that showed consistent sales prices. The GA Committee understands that the assessor s world is never that neat or tidy. In fact, many counties have differing soil conditions either from west to east or from north to south. The influences from lake properties, developing regional centers or recreational uses result in widely divergent sales prices, all reflecting the multiple market conditions in that county. The issue for assessors is how to apply a countywide indicated GA value to the actual conditions that are present in that county. Developing a process to implement GA, if necessary, is the next step. 22

48 County plans Currently, over half of Minnesota counties have GA in place in all or a portion of their counties. Even these counties may have to change their processes to apply the standards that the GA Committee is providing in this Bulletin. For the counties that have little or no experience with GA, the transition to GA feels like an insurmountable task. While acknowledging the work effort that will be required, the GA Committee and the Department are recommending the following transition process. Each county now knows its factor. By December 15, the Commissioner will certify the indicated GA value for the base counties to be used as a basis of the January 2, 2008, assessment. Between December 15, 2007, and June 1, 2008, each assessor must develop a plan to implement this bulletin for the January 2, 2009, assessment. It is possible that a county will ultimately conclude that the differences between the indicated GA values for that county and the actual estimated market values are not significant enough to implement GA in any part of that county. An assessor cannot reach this conclusion without an analysis of the sales data in that county and discussions with surrounding counties. If the analysis and discussions convince the assessor that GA is not appropriate for the 2009 assessment, the assessor must provide the county analysis to the Department s field representative for that area by May 1, 2008, for final approval. For most counties, an analysis of the data will show that GA is appropriate for agricultural land in some areas of the county. It may not be readily obvious how to translate the countywide indicated GA values into specific areas of the county. For example, the eastern portion of the county is predominately agricultural but has fewer nonagricultural influences impacting the values. The estimated market values of the agricultural land in this area are higher because of the higher productivity of the soil, not because of other influences. Meanwhile in another part of the county with poorer soil conditions, nonagricultural influences (lakeshore or water, development, recreational uses) appear to be causing sales prices for agricultural lands that are higher than an agricultural activity could support. GA may be more appropriate in that area of the county having poorer soil conditions while GA may not be appropriate for the better quality agricultural property. The GA Committee encourages discussions between neighboring counties and among counties within a region along with the field representatives from the Department. The goal of the GA Committee and the Department is to have GA fully implemented consistently statewide as soon as possible but in a thoughtful, defensible manner. The Department and assessors will have fifteen months before the January 2009 assessment to prepare for implementation (or changes in existing GA programs). For some counties that might be the implementation of phase one of GA because it will be physically impossible to complete the process in one year. For every county, the conditions will change over time and the process will need to be reviewed annually and adjusted when necessary. The main goal is to do it right and make sure that property owners know the process and its requirements. 23

49 To that end, every county assessor must prepare a GA implementation plan that will be submitted to the Commissioner before June 1, The GA implementation plan must include the following: 1. An analysis of the differences between the county s indicated GA values and the current estimated market values; 2. A county map showing any areas where the estimated market values are 110% or more of the indicated GA values; 3. A work plan showing the areas that need GA implementation and a proposed schedule for implementation; 4. A communications strategy for advising local officials and property owners of the availability of GA; and 5. A list of resources that the county will need to accomplish implementation of the plan. Over 50 counties have already implemented GA in all or parts of their counties. But even these counties must review their current GA policies and procedure in light of this Bulletin. The County Plan for these counties will include an analysis of their current policies and procedures and a transition plan, if applicable. While the assessors are putting their plans together, the GA Committee and the Department will prepare planning kits for counties. Many counties have experience with successful implementation so the GA Committee wants to use the best practices already available and fashion tools that will simplify the processes. The GA Committee recommends that the GA forms be reviewed and revised by the Department before June 1, The revised forms should be available to assessors at the beginning of the implementation period beginning June 1, The analysis portion of this transition will be difficult for an individual assessor but will also be difficult for assessors as a group either neighbor to neighbor or by region. GA is a statewide program and it is important that assessors make this work statewide and that will require a great deal of cooperation. The GA Committee encourages every county to give special attention to agricultural areas bordering or adjacent to rivers and lakes or near developing areas of their counties because these areas will tend to have the greatest non-agricultural influences on their market values. There will be public confusion and negative reaction to implementation of GA even though it is not a new program. As assessors, field representatives and the Department all realize, successful implementation will require enormous coordination. This GA bulletin is the first, to be followed by a bulletin describing the application process and then a communications best practices bulletin. Finally, the Department will prepare and distribute a bulletin describing the tax calculations for a GA property and the payback mechanisms. 24

50 Glossary Tillable agricultural land means land capable of being cultivated productively for the annual growing of agricultural products. Productive non-tillable agricultural land means: 1. Non-tillable land where grass or other vegetation eaten as food by grazing animals grows that is set aside for use by domestic grazing animals as part of a farm or ranch. Fencing is usually required to restrict animal movement. This is often called pasture land and may include stands of trees if used for grazing by domestic animals; or 2. Non-tillable land serving as a habitat of rolling or flat terrain where grasses are predominate and typically contain a significant variety of annual, biennial and perennial plants. This is often called meadow land and is grass land from which hay could be cut, distinguished from tillable land where alfalfa has been sown; or 3. Non-tillable land having stands of trees, including integral open space which supports an understory of grasses or vegetation suitable for grazing by domestic animals. Nonproductive non-tillable agricultural land means: 1. Non-tillable land with stands of trees, including integral open space, and including felled areas that are waiting to be restocked. This is often called woodlands and may support an understory of shrubs but due to the density of trees, shrubs or undergrowth, the steepness of slope, or the lack of access, this land is not suitable for grazing, or 2. Non-tillable land that cannot be used economically and is not potentially suitable for agricultural use or production. This is often called wasteland and is typically too wet, too rocky, too steep or too sandy to be tilled or to produce grazing vegetation, making it unsuitable for growing crops or grazing domestic animals. "Nursery" means a place where nursery stock is grown, propagated, collected, or distributed, including, but not limited to, private property or property owned, leased, or managed by any agency of the United States, Minnesota or its political subdivisions, or any other state or its political subdivisions where nursery stock is fumigated, treated, packed, or stored. (Minnesota Statutes, section 18H.02, subdivision 17.) "Nursery stock" means a plant intended for planting or propagation, including, but not limited to, trees, shrubs, vines, perennials, biennials, grafts, cuttings, and buds that may be sold for propagation, whether cultivated or wild, and all viable parts of these plants. Nursery stock does not include: (1) field and forage crops; (2) the seeds of grasses, cereal grains, vegetable crops, and flowers; (3) vegetable plants, bulbs, or tubers; 25

51 (4) cut flowers, unless stems or other portions are intended for propagation; (5) annuals; or (6) Christmas trees. (Minnesota Statutes, section 18H.02, subdivision 20.) 26

52 Green Acres Bulletin #1, Attachment 1 Green Acres Decision Tree Parcel 10 or more contiguous acres Nursery / Greenhouse Less than 10 acres Yes 10 or more acres in Ag. Yes Qualifying as Class 1b, 2a or 2b. Yes Exclusively & intensively used for ag No Not Ag No Green Acres Yes No Not Ag No Green Acres Yes Yes Ag No GA (must have 10 acres No Not Ag No Green Acres Primarily devoted to agricultural use No Ag Class No Green Acres Yes Ownership Homestead 7 years FFC Nursery or greenhouse Y N Y N Y N Y N No Ag Class No Green Acres Yes Income 1/3 total family income Y N $ $10.00/till acre Y N No Ag Class No Green Acres Yes Green Acres!

53 MINNESOTA REVENUE April 7, 2006 POLICIES FOR REGIONAL REP S RECOMMENDATIONS 2006 BOARD OF EQUALIZATION 1. All classes of property - including timber and resorts - must have sales ratios between percent. 2. Six (6) sales constitute a valid ratio. 3. The total of local effort and state board ordered changes will be reviewed on a case by case basis. 4. In cases of a complete re-assessment, the regional rep should consider what was done, and the effect of the re-assessment, in making his recommendation. Re-assessments alone will not be reason for a no change recommendation. 5. Stratified changes are to be based on clear evidence that they best serve equalization. Do not stratify to avoid making a more comprehensive recommendation. Stratify to promote equalization. 6. Geographic changes are to be based on clear evidence that they best serve equalization. Do not recommend a geographic change to avoid making a more comprehensive recommendation. Recommendations are to promote equalization. Geographic changes should be documented with maps and written narrative. The change recommendation should include the boundaries to be observed, i.e. all residential property south of Highway 2 in Pine Township. 7. Coefficients of dispersion will be reviewed and the reps will consider them in their recommendations. 8. County land values may be equalized in instances where the difference in value between counties exceeds 10 percent. 9. For counties using green acres, recommendations can, and should, consider both the market and ag (green acres) values. 10. Townships and cities having six or more agricultural sales with ratios below 90 percent or above 105 percent are candidates for equalization recommendations even though the county ratio may be within the acceptable range.

54 11. County land data is to be completed according to the instructions shown in the ag border instructions. 12. Timber equalization should follow the process used for equalization of ag land. Recommendations can be made for the entire county, or for selected townships within the county. Any township having six (6) or more sales is a candidate for equalization even though the county ratio may be within the acceptable range. 13. Timberland and ag land change recommendations should consider both countywide ratios and valid township ratios. 14. Commercial change recommendations will be based on verification data as supplied to the regional rep. 15. Recommendations for equalization for residential/srr and commercial property in small sample jurisdictions will be based on the three strikes criteria. 16. Recommendations are to be written up on change order sheets in county, city, township order. If the county or an individual city or township has recommendations for more than one property type, the recommendations should be written in the following order: Residential, non-commercial seasonal recreational residential, agricultural, timber, apartment, commercial, industrial, resort. 17. All recommendations must be reviewed with the county assessor prior to review with the supervisor. The county assessor must sign off on the recommendation sheet indicating that they have seen the recommendations. If this is handled by phone, the sign off may be handled via fax. 18. Any county assessor who disagrees with the rep s equalization recommendations must submit the reason(s) for this disagreement to the Property Tax Division Director - in writing - at least one week prior to the State Board meetings, with copies to the Regional Representative and the Property Tax Division Assessment Admn. Assistant Director. 19. Reps will review all of their recommendations with the supervisor prior to the State Board date.

55 Special Ag. Homestead Applications

56 MEMO Date: June 20, 2012 To: From: Subject: All County Assessors Information and Education Section Special Agricultural Homestead Applications Attached are the Special Ag Homestead Forms to be used for future assessment years. Due to the number of complaints in the past few years, they are only being sent in Word format this year. This will allow counties to enter the county name prior to printing the documents. However, this must not be construed to allow for individual counties to make other changes to the forms. Additionally, all references to the assessment year or crop year have been removed from the forms in an effort to reduce annual administrative costs for the department. Attached are six sets of forms: 1. CR-SAH and CR-RSAH Application and Re-Application for Special Ag Homestead 2. CR-LAE and CR-RLAE Application and Re-Application for Special Ag Homestead on Property Leased to an Authorized Entity 3. CR-OAEO and CR-ROAEO Application and Re-Application for Special Ag Homestead on Property Owned by an Authorized Entity and Occupied by a Qualified Person 4. CR-OAE and CR-ROAE Application and Re-Application for Special Ag Homestead on Property Owned by an Authorized Entity 5. CR-SAHT and CR-RSAHT Application and Re-Application for Special Ag Homestead on Property Held Under a Trust 6. CR-TLAE and CR-RTLAE Application and Re-Application for Special Ag Homestead for Property Held Under a Trust and Leased to an Authorized Entity Special ag homestead forms must be completed every year and are based on the CURRENT (2012) crop year. Re-applications may only be used when nothing has changed from the original application. All copies of all re-applications must be made back-to-back in order to meet the requirements for a one-page re-application as specified in M.S , subdivision 14, paragraph (h). If any part of the homestead has changed such as adding property, subtracting property, change of ownership, or change of active farmer, a new full application must be completed. It is incumbent upon assessors to issue the correct application or re-application to taxpayers and make all necessary verifications before granting a Special Ag Homestead. The list of qualifying relatives for forms CR-SAH and CR-SAHT were modified to reflect 2011 legislation passed into law. Qualifying relatives include a child, grandchild, sibling, or parent of the owner (or grantor) or spouse of the owner (or grantor). If you have any questions on these forms, please direct them to us at proptax.questions@state.mn.us. Property Tax Division Tel: (651) Mail Station 3340 Fax: (651) North Robert Street Saint Paul, Minnesota An equal opportunity employer

57 CR SAH For Office Use Only Application for Special Agricultural Homestead County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 14, Paragraph (b) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. If the property is owned by an authorized entity (family farm corporation, joint family farm venture, family farm limited liability company, or a partnership which is operating a family farm), then fill out the Application for Special Agricultural Homestead Property Owned by an Authorized Entity and not this form. The person actively farming the property must fill out and sign section A. The owner of the property must fill out sections B and C on the back of this form and sign the application. If the owner of the property is also the person actively farming it, then they must fill out all three sections and sign both sides of the application. This form must be completed, signed and filed by December 15 of the current assessment year with each county in which a Special Agricultural Homestead classification is requested. You must apply every year for this classification. A Farmer of the Property Last Name of Farmer First Name of Farmer M.I. Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) Please answer the following questions and attach the requested forms. 1. I am either the owner/ spouse of the owner; or child, grandchild, parent, or sibling of the owner/spouse of owner. 2. I am actively farming the agricultural property listed in section C. a. I participate in the day-to-day labor and decision making on the farm. b. I contribute administration and management to the farming operation. c. I assume all or a portion of the financial risks and participate in any profits or losses. 3. I am a Minnesota resident. 4. I live within four townships or cities from the agricultural property listed in section C. 5. I filed a Schedule F with my federal income tax return for the most recent tax year. Please attach a copy of your Schedule F form to this application* 6. The Farm Service Agency (FSA) lists me as an operator. My FSA number is in County. My FSA number is in County. Please attach a copy of your 156 EZ form to this application By signing below, I certify that the above information is correct. Signature of Farmer Signature Date YES NO MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * An affidavit from your tax preparer or attorney verifying that you have filed a Schedule F form can be substituted for the form. Revised: 06/12

58 B Owner of the Property Last Name of Property Owner First Name of Property Owner M.I. Social Security Number Spouse s Last Name Spouse s First Name M.I. Spouse s Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) Please answer the following questions. 1. I own the agricultural property listed in section C below. 2. I am a Minnesota resident. 3. I do not claim another agricultural homestead in Minnesota and neither does my spouse. 4. I live within four townships or cities from the agricultural property listed in section C. If you answered NO to question #4 and you or your spouse are actively farming the property but are required to live in employerprovided housing, which is more than four townships or cities away from the property, then you may still be eligible. You must provide an affidavit and proof from the employer indicating that such a housing arrangement is a requirement of employment. C The Property YES NO Please enter the following information for the agricultural property that you own and for which you are requesting a Special Agricultural Homestead. Parcel Identification Number (located on tax statement) Number of Acres List all uses of land County Located Enrolled in CRP, CREP or RIM*? (indicate which one & number of acres in program) List any additional parcels on a separate piece of paper and attach it to this application. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature I certify that I own the property listed in section C and all the information in sections B and C is correct. Signature Date Signature of Spouse Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

59 CR RSAH For Office Use Only Re-Application for Special Agricultural Homestead County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 14, Paragraph (b) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. This re-application form may ONLY be completed for property that received a Special Agricultural Homestead last year and for which nothing has changed. If the property is owned by an authorized entity (family farm corporation, joint family farm venture, family farm limited liability company, or a partnership which is operating a family farm, then fill out the Re-Application for Special Agricultural Homestead Property Owned by an Authorized Entity and not this form. Persons who are actively farming the agricultural property must fill out and sign section A below. Owners of the agricultural property must fill out and sign section B on the back of this form. If the person who is actively farming the property is also the property owner, then they must fill out and sign both sides of the application. This form must be completed, signed and filed by December 15 of the current assessment year in each county where a Special Agricultural Homestead is requested. You must apply every year for the Special Agricultural Homestead classification. A Farmer of the Property Last Name First Name M.I. Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) By signing below, I certify that I am the same person actively farming as last year and the following are true: I still: participate in the day-to-day labor and decision making on the farm; contribute to administration and management of the farming operation; and assume all or a portion of the financial risks and participating in any profits or losses. I am either the owner, spouse of the owner; or child, grandchild, parent, or sibling of the owner/spouse of the owner. I still live within four townships or cities of the agricultural property. I am a Minnesota resident. I filed a Schedule F with my federal income tax return. (You may be required to provide this form.*) I am listed as the operator of the agricultural property by the Farm Service Agency (FSA). My FSA number is in County. My FSA number is in County. Please attach a copy of your 156 EZ form to this application Signature Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * An affidavit from your tax preparer or attorney verifying that you have filed a Schedule F form can be substituted for the form. Revised: 06/12

60 B Owner of the Property Last Name of Property Owner First Name of Property Owner M.I. Social Security Number Spouse s Last Name Spouse s First Name Spouse M.I. Spouse s Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) By signing below, I certify that the following are true: I am a Minnesota resident. I own agricultural property that received the Special Agricultural Homestead last year. I am requesting the Special Agricultural Homestead classification for the exact same property that received the classification last year and: there have been no ownership changes since last year; and the property has not been enrolled in or removed from Reinvest in Minnesota (RIM), Conservation Reserve Enhancement Program (CREP) or Conservation Reserve Program (CRP) since last year; and the agricultural property is at least 40 acres in size, an undivided government lot, or a correctional 40. Neither my spouse nor I claim another agricultural homestead in Minnesota. I still live within four townships or cities of the property that received the Special Agricultural Homestead last year. If there is new or additional agricultural property that you own for which you would like a Special Agricultural Homestead, please fill out the form Application for Special Agricultural Homestead. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature Signature of Property Owner Date Signature of Spouse Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13)

61 CR LAE For Office Use Only Application for Special Agricultural Homestead Property Leased to an Authorized Entity County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 14, Paragraph (g) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. This form is to be used to apply for homestead on agricultural property that is leased to an authorized entity (family farm corporation, joint family farm venture, family farm limited liability company, or a partnership which is operating a family farm) and farmed by a qualified person (member, shareholder or partner) of that entity. The qualified person actively farming the property must fill out and sign section A. The owner of the property must fill out and sign sections B and C. An authorized representative of the entity that is leasing the property must fill out and sign section D. Please attach copy of lease. This form must be completed, signed, and filed by December 15 of the current assessment with each county in which a Special Agricultural Homestead classification is requested. You must apply every year for this classification. A Farmer of the Property Last Name of Farmer First Name of Farmer M.I. Social Security Number Last Name of Spouse First Name of Spouse M.I. Social Security Number of Spouse Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) Please answer the following questions and attach the requested forms. YES 1. I am a member, shareholder or partner of the entity listed in section D. 2. I am actively farming the agricultural property listed in section C. a. I participate in the day-to-day labor and decision making on the farm. b. I contribute administration and management to the farming operation. c. I assume all or a portion of the financial risks and participate in any profits or losses. 3. I am a Minnesota resident. 4. I live within four townships or cities from the agricultural property listed in section C. 5. Neither my spouse nor I claim another agricultural homestead in Minnesota. 6. I filed a Schedule F (or its equivalent) with my federal income tax return for the most recent tax year.* Please attach a copy of your Schedule F or an equivalent form to this application** 7. The Farm Service Agency (FSA) lists me as an operator. My FSA number is in County. NO My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature By signing below, I certify that the above information is correct. Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised 06/12

62 B Owner of the Property Last Name of Owner First Name of Owner M.I. Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) Please answer the following questions. YES NO 1. I am the owner of the property listed in Section C and I am a shareholder, member or partner of the entity listed in Section D. 2. I am a Minnesota resident. 3. I do not claim another agricultural homestead in Minnesota and neither does my spouse. 4. I live within four townships or cities from the agricultural property listed in section C. If you answered NO to question #4 and you or your spouse are actively farming the property but are required to live in employer-provided housing, which is more than four townships or cities away from the property, then you may still be eligible. You must provide an affidavit and proof from the employer indicating that such a housing arrangement is a requirement of employment. C Property Please enter the following information for agricultural property that you own and lease to the entity listed in section D and for which a Special Agricultural Homestead is requested. Parcel Identification Number (located on tax statement) Number of Acres List all uses of land County Located Enrolled in CRP, CREP or RIM*? (indicate which one and number of acres) List any additional parcels on a separate piece of paper and attach it to this application. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature I certify that I own the property listed in section C and all the information in sections B & C is correct. Signature of Owner Date * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

63 D The Entity Leasing the Property Name of Entity Name of Authorized Representative Daytime Phone ( ) Mailing Address - Street Mailing Address - City/Town State Zip Code Circle One family farm corporation joint family farm venture family farm limited liability company partnership which is operating a family farm List all shareholders, members or partners of the above entity: Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership List any additional shareholders, members or partners on a separate piece of paper and attach it to this application. Signature By signing below, I am certifying that I am an authorized representative of the entity listed above and that the entity leases the land listed in section B and that the farmer listed in section A is a shareholder, member, or partner in the entity listed in section D. Signature of Authorized Representative Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

64 CR RLAE For Office Use Only Re-Application for Special Agricultural Homestead Property Leased to an Authorized Entity County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 14, Paragraph (g) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. This re-application form may ONLY be used for property that is leased to an authorized entity and received a special ag homestead last year, and for which nothing has changed from the initial application. The person actively farming the property must fill out and sign section A. The owner of the property must fill out and sign section B. An authorized representative of the entity that is leasing the property must fill out and sign section C. This form must be completed, signed and filed by December 15 of the current assessment year with each county in which a Special Agricultural Homestead classification is requested. You must apply every year for this classification. A Farmer of the Property Last Name of Farmer First Name of Farmer M.I. Social Security Number Last Name of Spouse First Name of Spouse M.I. Social Security Number of Spouse Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) By signing below, I certify that I am the same person farming the property as last year and the following is true: I still am: participating in the day-to-day labor and decision making on the farm; contributing to administration and management of the farming operation; and assuming all or a portion of the financial risks and participating in any profits or losses. I am either a shareholder, member or partner of the entity listed in section C. I still live within four townships or cities of the agricultural property. I am a Minnesota resident. Neither my spouse, nor I claim another agricultural homestead in Minnesota. I filed a Schedule F (or its equivalent)* with my federal income tax return. (You may be required to provide this form.**) I am still listed as the owner/operator of the agricultural property by the Farm Service Agency (FSA). My FSA number is in County. My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised 06/12

65 B Owner of the Property Last Name of Owner First Name of Owner M.I. Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone Evening Phone ( ) ( ) By signing below, I certify that the following are true: I am a Minnesota resident. I still own agricultural property that received the Special Agricultural Homestead last year and I am still a shareholder, member, or partner of the entity listed in section C. Neither my spouse nor I claim another agricultural homestead. I still live within four townships or cities of the property that received the Special Agricultural Homestead last year. The property is at least 40 acres in size, an undivided government lot, or a correctional 40. Signature of Owner Signature Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County C Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. The Entity Leasing the Property Name of Entity Name of Authorized Representative Daytime Phone ( ) Mailing Address - Street Mailing Address - City/Town State Zip Code Circle One family farm corporation joint family farm venture family farm limited liability company partnership which is operating a family farm By signing below, I am certifying that I am an authorized representative of the entity listed above and that the following are true: We continue to lease the exact same agricultural property that received the Special Agricultural Homestead last year; and No shareholders, members, or partners in the qualifying entity listed in section C have changed in the past year. If there is new or additional agricultural property that you own and lease to the same authorized entity listed above, for which you would like a Special Agricultural Homestead, please fill out the form Application for Special Agricultural Homestead Property Leased to a Qualifying Entity. Signature Signature of Authorized Representative Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

66 CR OAEO For Office Use Only Application for Special Agricultural Homestead Property Owned by an Authorized Entity and Occupied by a Qualified Person County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 8, Paragraphs (a) and (b) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. This form is to be used to apply for homestead on agricultural property that is owned by an authorized entity (family farm corporation, joint family farm venture, family farm limited liability company, or a partnership which is operating a family farm) and occupied and farmed by a qualified person (member, shareholder or partner) of that authorized entity. The qualified person who occupies and farms the property must fill out and sign section A. A representative of the authorized entity that owns the property must fill out sections B and C on the back of this form and sign the application. This form must be completed, signed and filed by December 15 of the current assessment year with each county in which a Special Agricultural Homestead classification is requested. You must apply every year for this classification. A Occupant and Farmer of the Property Last Name of Occupant and Farmer First Name of Occupant and Farmer M.I. Social Security Number Last Name of Spouse First Name of Spouse M.I. Social Security Number of Spouse Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) Please answer the following questions and attach the requested forms. YES 1. I am a member, shareholder or partner of the entity listed in section B. 2. I occupy and am actively engaged in farming (I participate in the labor on a regular and substantial basis) the agricultural property listed in section C. 3. I am a Minnesota resident. 4. Neither my spouse nor I claim another agricultural homestead in Minnesota. 5. I filed a Schedule F (or its equivalent) with my federal income tax return for the most recent tax year.* Please attach a copy of your Schedule F*or an equivalent form to this application** 6. The Farm Service Agency (FSA) lists me as an operator. My FSA number is in County. NO My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature By signing below, I certify that the above information is correct. Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised: 06/12

67 B Authorized Entity Name of Entity Name of Authorized Representative Daytime Phone ( ) Mailing Address - Street Mailing Address - City/Town State Zip Code Circle One family farm corporation joint family farm venture family farm limited liability company partnership which operates a family farm List all shareholders, members or partners of the above entity: Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership C List any additional shareholders, members or partners on a separate piece of paper and attach it to this application. The Property Please enter the following information for the agricultural property that is owned by the authorized entity listed in section B and occupied and farmed by the qualified person listed in section A and for which a Special Agricultural Homestead is requested. Parcel Identification Number (located on tax statement) Number of Acres List all uses of land County Located Enrolled in CRP, CREP or RIM*? (indicate which one) List any additional parcels on a separate piece of paper and attach it to this application. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature By signing below, I am certifying that I am an authorized representative of the entity listed in section B and that the entity owns the land listed in section C. Signature of Authorized Representative Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

68 CR ROAEO For Office Use Only Re-Application for Special Agricultural Homestead Property Owned by an Authorized Entity and Occupied by a Qualified Person County A Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 8, Paragraphs (a) and (b) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. This re-application form may ONLY be completed for property that received a Special Agricultural Homestead last year and for which nothing has changed from the initial application. The person who occupies and farms the agricultural property must fill out and sign section A below. A representative of the authorized entity (family farm corporation, joint family farm venture, family farm limited liability company, or a partnership which is operating a family farm) that owns the agricultural property must fill out and sign section B on the other side of this application. This form must be completed, signed and filed by December 15 of the current assessment year in each county where a Special Agricultural Homestead is requested. You must apply every year for the Special Agricultural Homestead classification. Occupant/Farmer of the Property Last Name of Occupant/Farmer First Name of Occupant/Farmer M.I. Social Security Number Last Name of Spouse First Name of Spouse M.I. Social Security Number of Spouse Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) By signing below, I certify that I am the same person farming the property as last year and the following are true: I still occupy and am actively engaged in farming the agricultural property listed on the original application; I am either a shareholder, member or partner of the entity listed in section B. I am a Minnesota resident. Neither my spouse, nor I claim another agricultural homestead in Minnesota. I filed a Schedule F (or its equivalent)* with my federal income tax return. (You may be required to provide this form.**) I am listed as the owner/operator of the agricultural property by the Farm Service Agency (FSA). My FSA number is in County. My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised: 06/12

69 B Authorized Entity Name of Entity Name of Authorized Representative Daytime Phone ( ) Mailing Address - Street Mailing Address - City/Town State Zip Code Circle One family farm corporation joint family farm venture family farm limited liability company partnership which is operating a family farm By signing below, I certify on behalf of the entity that the following are true: The above authorized entity owns agricultural property that received the Special Agricultural Homestead last year. The authorized entity is requesting the Special Agricultural Homestead classification for the exact same property that received the classification last year and: there have been no ownership changes since last year; the property has not been enrolled in or removed from Reinvest in Minnesota (RIM), Conservation Reserve Enhancement Program (CREP) or Conservation Reserve Program (CRP) since last year; and No shareholders, members, or partners in the authorized entity have changed in the past year. If there is new or additional agricultural property that the entity owns and for which a Special Agricultural Homestead is requested, then the form Application for Special Agricultural Homestead Property Owned by an Authorized Entity and Occupied by a Qualified Person must be completed. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature Signature of Authorized Representative Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13)

70 CR OAE For Office Use Only Application for Special Agricultural Homestead Property Owned by an Authorized Entity County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 14, Paragraph (g) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. This form is to be used to apply for homestead on agricultural property that is owned by an authorized entity (family farm corporation, joint family farm venture, family farm limited liability company, or a partnership which is operating a family farm) and farmed by a qualified person (member, shareholder or partner) of that authorized entity. The qualified person who is actively farming the property must fill out and sign section A. A representative of the authorized entity that owns the property must fill out sections B and C on the back of this form and sign the application. This form must be completed, signed and filed by December 15 of the current assessment year with each county in which a Special Agricultural Homestead classification is requested. You must apply every year for this classification. A Farmer of the Property Last Name of Farmer First Name of Farmer M.I. Social Security Number Last Name of Spouse First Name of Spouse M.I. Social Security Number of Spouse Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) Please answer the following questions and attach the requested forms. YES 1. I am a member, shareholder or partner of the entity listed in section B. 2. I am actively farming the agricultural property listed in section C. a. I participate in the day-to-day labor and decision making on the farm. b. I contribute administration and management to the farming operation. c. I assume all or a portion of the financial risks and participate in any profits or losses. 3. I am a Minnesota resident. 4. I live within four townships or cities from the agricultural property listed in section C. 5. Neither my spouse nor I claim another agricultural homestead in Minnesota. 6. I filed a Schedule F (or its equivalent) with my federal income tax return for the most recent tax year.* Please attach a copy of your Schedule F or an equivalent form to this application** 7. The Farm Service Agency (FSA) lists me as an operator. My FSA number is in County. NO My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature By signing below, I certify that the above information is correct. Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised: 06/12

71 B Authorized Entity Name of Entity Name of Authorized Representative Daytime Phone ( ) Mailing Address - Street Mailing Address - City/Town State Zip Code Circle One family farm corporation joint family farm venture family farm limited liability company partnership which operates a family farm List all shareholders, members or partners of the above entity: Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership Last Name First Name M.I. Social Security Number % Ownership C List any additional shareholders, members or partners on a separate piece of paper and attach it to this application. The Property Please enter the following information for the agricultural property for which a Special Agricultural Homestead is requested. Parcel Identification Number (located on tax statement) Number of Acres List all uses of land County Located Enrolled in CRP, CREP or RIM*? (indicate which one and number of acres) List any additional parcels on a separate piece of paper and attach it to this application. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature By signing below, I am certifying that I am an authorized representative of the entity listed in section B and that the entity owns the land listed in section C. Signature of Authorized Representative Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

72 CR ROAE A For Office Use Only Re-Application for Special Agricultural Homestead Property Owned by an Authorized Entity County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 14, Paragraph (g) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. This re-application form may ONLY be completed for property that received a Special Agricultural Homestead last year and for which nothing has changed from the initial application. The person who is actively farming the agricultural property must fill out and sign section A. A representative of the authorized entity (family farm corporation, joint family farm venture, family farm limited liability company, or a partnership which is operating a family farm) that owns the agricultural property must fill out and sign section B on the other side of this application. This form must be completed, signed and filed by December 15 of the current assessment year in each county where a Special Agricultural Homestead is requested. You must apply every year for the Special Agricultural Homestead classification. Farmer of the Property Last Name of Farmer First Name of Farmer M.I. Social Security Number Last Name of Spouse First Name of Spouse M.I. Social Security Number of Spouse Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) By signing below, I certify that I am the same person farming the property as last year and the following are true: I still am: participating in the day-to-day labor and decision making on the farm; contributing to administration and management of the farming operation; and assuming all or a portion of the financial risks and participating in any profits or losses. I am either a shareholder, member or partner of the entity listed in section B. I still live within four townships or cities of the agricultural property. I am a Minnesota resident. Neither my spouse, nor I claim another agricultural homestead in Minnesota. I filed a Schedule F (or its equivalent)* with my federal income tax return. (You may be required to provide this form.**) I am listed as the owner/operator of the agricultural property by the Farm Service Agency (FSA). My FSA number is in County. My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised: 06/12

73 B Authorized Entity Name of Entity Name of Authorized Representative Daytime Phone ( ) Mailing Address - Street Mailing Address - City/Town State Zip Code Circle One family farm corporation joint family farm venture family farm limited liability company partnership which is operating a family farm By signing below, I certify on behalf of the entity that the following are true: The above authorized entity owns agricultural property that received the Special Agricultural Homestead last year. The authorized entity is requesting the Special Agricultural Homestead classification for the exact same property that received the classification last year and: there have been no ownership changes since last year; the property has not been enrolled in or removed from Reinvest in Minnesota (RIM), Conservation Reserve Enhancement Program (CREP) or Conservation Reserve Program (CRP) since last year; and the agricultural property is at least 40 acres in size, an undivided government lot, or a correctional 40. No shareholders, members, or partners in the authorized entity have changed in the past year. If there is new or additional agricultural property that the entity owns and for which a Special Agricultural Homestead is requested, then the form Application for Special Agricultural Homestead Property Owned by an Authorized Entity must be completed. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature Signature of Authorized Representative Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13)

74 CR SAHT For Office Use Only Application for Special Agricultural Homestead Property Held under a Trust County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 14, Paragraph (b), Clause (ii) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. The person actively farming the property must fill out and sign section A. The grantor of the trust under which the property is held must fill out sections B and C on the back of this form and sign the application. If the grantor is also the person actively farming, then they must fill out all three sections and sign both sides of the application. A copy of the trust that identifies the grantor of the trust under which the property is held must be attached to this application. This form must be completed, signed and filed by December 15 of the current assessment year with each county in which a Special Agricultural Homestead classification is requested. You must apply every year for this classification. A Farmer of the Property Last Name of Farmer First Name of Farmer M.I. Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) Please answer the following questions and attach the requested forms. 1. I am either the grantor of the trust, spouse of the grantor, or child, grandchild, parent, or sibling of the grantor or the grantor s spouse. 2. I am actively farming the agricultural property listed in section C. a. I participate in the day-to-day labor and decision making on the farm. b. I contribute administration and management to the farming operation. c. I assume all or a portion of the financial risks and participate in any profits or losses. 3. I am a Minnesota resident. 4. I live within four townships or cities from the agricultural property listed in section C. 5. I filed a Schedule F (or its equivalent) with my federal income tax return for the most recent tax year.* Please attach a copy of your Schedule F or an equivalent form to this application** 6. The Farm Service Agency (FSA) lists me as an operator. YES NO My FSA number is in County. My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature By signing below, I certify that the above information is correct. Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised: 06/12

75 B Grantor of the Trust Last Name of Grantor First Name of Grantor M.I. Social Security Number Spouse s Last Name Spouse s First Name M.I. Spouse s Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) Please answer the following questions. YES NO 1. I am the grantor of the trust under which the agricultural property listed in section C below is held. 2. I am a Minnesota resident. 3. I do not claim another agricultural homestead in Minnesota and neither does my spouse. 4. I live within four townships or cities from the agricultural property listed in section C. If you answered NO to question #4 and you or your spouse are actively farming the property but are required to live in employerprovided housing, which is more than four townships or cities away from the property, then you may still be eligible. You must provide an affidavit and proof from the employer indicating that such a housing arrangement is a requirement of employment. C C The Property Please enter the following information for the agricultural property for which you are requesting a Special Agricultural Homestead that is held under a trust and for which you are the grantor. Parcel Identification Number (located on tax statement) Number of Acres List all uses of land County Located Enrolled in CRP, CREP or RIM*? (indicate which one and number of acres) List any additional parcels on a separate piece of paper and attach it to this application. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature I certify that I am the grantor of the property listed in section C that is held under a trust and all the information in sections B and C is correct. I have also attached a copy of the trust that identifies me as the grantor. Signature Date Signature of Spouse Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

76 CR RSAHT A For Office Use Only Re-Application for Special Agricultural Homestead Property Held under a Trust County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 14, Paragraph (b) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. This re-application form may ONLY be used for property that received a Special Ag Homestead last year and for which nothing has changed. The person actively farming the property must fill out and sign section A. The grantor of the trust under which the property is held must fill out section B on the back of this form and sign the application. If the grantor is also the person actively farming, then they must fill out all sections and sign both sides of the application. This form must be completed, signed and filed by December 15 of the current assessment year with each county in which a Special Agricultural Homestead classification is requested. You must apply every year for this classification. Farmer of the Property Last Name of Farmer First Name of Farmer M.I. Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) By signing below, I certify that I am the same person actively farming as last year and the following are true: I am either the grantor of the trust, spouse of the grantor, or child, grandchild, parent, or sibling of the grantor or grantor s spouse. I am still: participating in the day-to-day labor and decision making on the farm; contributing to administration and management of the farming operation; and assuming all or a portion of the financial risks and participating in any profits or losses. I still live within four townships or cities of the agricultural property. I am a Minnesota resident. I filed a Schedule F (or its equivalent)* with my federal income tax return. (You may be required to provide this form.**) I am listed as the operator of the agricultural property by the Farm Service Agency (FSA). My FSA number is in County. My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature By signing below, I certify that the above information is correct. Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised: 06/12

77 B Grantor of the Trust Last Name of Grantor First Name of Grantor M.I. Social Security Number Spouse s Last Name Spouse s First Name M.I. Spouse s Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) By signing below, I certify that the following are true: I am a Minnesota resident. I am the grantor of the trust under which agricultural property received the Special Agricultural Homestead last year. I am requesting the Special Agricultural Homestead classification for the exact same property that received the classification last year; and: there have been no ownership changes since last year; and the property has not been enrolled in or removed from Reinvest in Minnesota (RIM), Conservation Reserve Enhancement Program (CREP) or Conservation Reserve Program (CRP) since last year; and the agricultural property is at least 40 acres in size, an undivided government lot, or a correctional 40. Neither my spouse nor I claim another agricultural homestead in Minnesota. I still live within four townships or cities of the property that received the Special Agricultural Homestead last year. If there is new or additional agricultural property that you own for which you would like a Special Agricultural Homestead, please fill out the form Application for Special Agricultural Homestead for Property Held Under a Trust. IF OWNERSHIIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature Signature Date Signature of Spouse Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

78 CR TLAE For Office Use Only Application for Special Agricultural Homestead Property Held under a Trust and Leased to an Authorized Entity County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 21, Clause (3) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. The person actively farming the property must fill out and sign section A. The grantor of the trust under which the property is held must fill out sections B and C on the back of this form pertaining to and sign the application. If the grantor is also the person actively farming, then they must fill out all three sections and sign both sides of the application. An authorized representative of the entity that is leasing the property must fill out the information in section D. A copy of the trust that identifies the grantor of the trust under which the property is held must be attached to this application. A copy of the lease between the authorized entity and the trust must also be attached to the application. This form must be completed, signed and filed by December 15 of the current assessment year with each county in which a Special Agricultural Homestead classification is requested. You must apply every year for this classification. A Farmer of the Property Last Name of Farmer First Name of Farmer M.I. Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone Please answer the following questions and attach the requested forms. ( ) Evening Phone ( ) 1. I am a qualified person (shareholder, member, partner) of the authorized entity identified in section D that is leasing the property. 2. I am actively farming the agricultural property listed in section C. a. I participate in the day-to-day labor and decision making on the farm; and b. I contribute administration and management to the farming operation; and c. I assume all or a portion of the financial risks and participate in any profits or losses; and d. I live within four townships or cities from the agricultural property listed in section C. 3. I am a Minnesota resident. 4. I filed a Schedule F (or its equivalent) with my federal income tax return for the most recent tax year.* 5. I do not claim another ag homestead in Minnesota and neither does my spouse. Please attach a copy of your Schedule F or an equivalent form to this application** 6. The Farm Service Agency (FSA) lists me as an operator. YES NO My FSA number is in County. My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature By signing below, I certify that the above information is correct and that I do not claim another agricultural homestead. Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised: 06/12

79 B Grantor of the Trust Last Name of Grantor First Name of Grantor M.I. Social Security Number Spouse s Last Name Spouse s First Name M.I. Spouse s Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) Please answer the following questions. YES NO 1. I am the grantor of the trust under which the agricultural property listed in section C below is held. 2. I am a Minnesota resident. 3. I do not claim another agricultural homestead in Minnesota and neither does my spouse. 4. I live within four townships or cities from the agricultural property listed in section C. 5. I am a qualified person (shareholder, member, partner) of the authorized entity listed in section D. If you answered NO to question #4 and you or your spouse are actively farming the property but are required to live in employerprovided housing, which is more than four townships or cities away from the property, then you may still be eligible. You must provide an affidavit and proof from the employer indicating that such a housing arrangement is a requirement of employment. C The Property Please enter the following information for the agricultural property for which you are requesting a Special Agricultural Homestead that is held under a trust and for which you are the grantor. Parcel Identification Number (located on tax statement) Number of Acres List all uses of land County Located Enrolled in CRP, CREP or RIM*? (indicate which one and number of acres) List any additional parcels on a separate piece of paper and attach it to this application. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature I certify that I am the grantor of the trust for the property listed in section C that is held under a trust and all the information in sections B and C is correct. I have also attached a copy of the trust that identifies me as the grantor. Signature Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

80 D The Entity Leasing the Property Name of Entity Name of Authorized Representative Daytime Phone ( ) Mailing Address - Street Mailing Address - City/Town State Zip Code Circle One family farm corporation joint family farm venture family farm limited liability company partnership which operates a family farm Signature By signing below, I am certifying that I am an authorized representative of the entity listed above and that the entity leases the land listed in section C and I certify that the farmer listed in section A is a qualified person (shareholder, member, or partner) in the entity listed above. Signature of Authorized Representative Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13)

81 CR RTLAE For Office Use Only Re-Application for Special Agricultural Homestead Property Held under a Trust and Leased to an Authorized Entity County Homestead on Non-Contiguous Farmland - Minnesota Statutes , Subdivision 21, Clause (3) Some of the information contained on this application is private data. Minnesota Statutes , subdivision 13 authorizes the collection of Social Security Numbers for use on homestead applications. Other information collected on this form is necessary to verify eligibility for the Special Agricultural Homestead provision. Some or all of the information contained on this form may be shared with the County Assessor, the County Attorney, the Commissioner of Revenue, and other federal, state, or local taxing authorities for the purpose of verifying your eligibility for this program or your other tax obligations. You can refuse to provide the information on this form. However, such refusal will cause you to be disqualified from this program. This re-application form may ONLY be completed for property that received a Special Agricultural Homestead last year and for which nothing has changed. The person actively farming the property must fill out and sign section A. The grantor of the trust must fill out and sign section B. An authorized representative of the entity that is leasing the property must fill out and sign section C. This form must be completed, signed and filed by December 15 of the current assessment year with each county in which a Special Agricultural Homestead classification is requested. You must apply every year for this classification. A Farmer of the Property Last Name of Farmer First Name of Farmer M.I. Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) By signing below, I certify that I am the same person actively farming as last year and the following are true: I am still actively farming the same agricultural property as listed on the full application: I participate in the day-to-day labor and decision making on the farm; I contribute to administration and management of the farming operation; I assume all or a portion of the financial risks and participating in any profits or losses; and I live within four townships or cities from the agricultural property listed on the full application. I am still a qualified person (shareholder, member, or partner) of the authorized entity listed in section C that is leasing the property. I am a Minnesota resident. I filed a Schedule F with my federal income tax return. (You may be required to provide this form.*) I do not claim another agricultural homestead and neither does my spouse. I am listed as the operator of the agricultural property by the Farm Service Agency (FSA). My FSA number is in County. My FSA number is in County. Please attach a copy of your 156 EZ form from the FSA to this application Signature By signing below, I certify that the above information is correct and that I do not claim another agricultural homestead. Signature of Farmer Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * If you did not file a Schedule F, then Form 1065 for partnerships, Form 1120 for corporations or Form 1120S for S corporations can be substituted. **An affidavit from your tax preparer or attorney verifying that you have filed a form can be substituted for the form. Revised: 06/12

82 B Grantor of the Trust Last Name of Grantor First Name of Grantor M.I. Social Security Number Spouse s Last Name Spouse s First Name M.I. Spouse s Social Security Number Mailing Address - Street Mailing Address - City/Town State Zip Code County of Residence City/Town of Residence Daytime Phone ( ) Evening Phone ( ) By signing below, I certify that the following are true: I am a Minnesota resident. I am the grantor of the trust under which agricultural property received the Special Agricultural Homestead last year. I am requesting the Special Agricultural Homestead classification for the exact same property that received the classification last year; and: there have been no ownership changes since last year; and the property has not been enrolled in or removed from Reinvest in Minnesota (RIM), Conservation Reserve Enhancement Program (CREP) or Conservation Reserve Program (CRP) since last year; and the agricultural property is at least 40 acres in size, an undivided government lot, or a correctional 40. Neither my spouse nor I claim another agricultural homestead in Minnesota. I still live within four townships or cities of the property that received the Special Agricultural Homestead last year. IF OWNERSHIP, OCCUPANCY, OR ACTIVE FARMER STATUS CHANGES If this property is sold, or if occupancy or active farmer status changes, or if you change your marital status, state law requires you to notify the County Assessor within 30 days. If you fail to notify the County Assessor within 30 days, the property can be assessed the tax that is due on the property based on its correct property class plus a penalty equal to the same amount. Signature I certify that I am the grantor of the trust for the property listed on the full application that is held under a trust and all the information in sections A and B is correct. Signature of Grantor Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) C The Entity Leasing the Property Name of Entity Name of Authorized Representative Daytime Phone ( ) Mailing Address - Street Mailing Address - City/Town State Zip Code Circle One family farm corporation joint family farm venture family farm limited liability company partnership which operates a family farm By signing below, I am certifying that I am an authorized representative of the entity listed above and that the entity leases the agricultural land listed on the full application. I also certify that the farmer listed in section A is a qualified person (shareholder, member, or partner) in the entity listed above. Signature of Authorized Representative Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) * CRP = Conservation Reserve Program CREP = Conservation Reserve Enhancement Program RIM = Reinvest in Minnesota

83 Valuation Notices

84 MEMO Date: To: From: Subject: September 20, 2012 All County and City Assessors Kelsey Jorissen, State Program Administrator Information and Education Section 2013 Notices of Valuation and Classification; ; 2013 County Board of Appeal and Equalization Dates PLEASE READ CAREFULLY AS ITEMS MAY HAVE CHANGED OR MAY REQUIRE EXTRA ATTENTION FOR COMPLIANCE! This year s notice has a very different look on thee front than previous years notices. The notices were updated this year with input from counties, computer consortia, and graphic designers. It is our intention that other property tax notices (i.e. the Truth in Taxation Notice and the Tax Statement) will soon have a similar look to them. We hope that this will help taxpayers to understand where in the process they are, and what actions they may be need to take. Section 1: Assessor and Taxpayer Addresses and Property Informationn Section This section may contain pre printed or computer generatedd text. Counties will have some latitude as to what needs to be listed in this section. However, it must contain the name of the county (or city if a city of the first class), the address, and phone number. E mail and website information is helpful but not required (the website is required in Section 5). This also includes the mailing address of the taxpayer. The exact location of the address section on the notice may be shifted so it appears through the window of an envelope or to better meet mailing requirements. This section may include the legal description of the property, its physical address, or both. The Parcel I.D number must be included.

85 Section 2: Title Section This information may contain pre printed or computer generated text, as you will have to enter the assessment year and the taxes payable year (2013 for manufactured homes assessed as personal property or 2014 for all real property). Other than the tax payable year,, the wording must be exactly as shown on the department s example. This section is mainly used as an educational tool to show taxpayers where they are currently in the property tax process. This section is new from previous years, as is part of an overall effort to make our notices more taxpayer friendlyy and informative. This section contains the classification (use the primary classification if more than one classification code is present), the estimated market value, the homestead exclusion amount, and the taxable market value for the property. Section 3: Property Classification and Valuation Section Property Classification: This section must containn the property classification for assessment years 2012 and Abbreviations may be difficult for the general public to understand. Pleasee refrain from using abbreviations if the entire classification can be printed in the space provided. If there is not enough space, be cognizant of using abbreviations in a way that makes them as clear and understandable as possible. The Taxes Payable Year information will continue to be used for addedd clarity to the property owner, and you must make note of the taxes payable year that is applicable to the property type. Because of laws enacted in 2011, if the property s classification has changed between the 2012 and 2013 assessments, a notice must be prominently listed on the document. We have made this a bolded check box. This box must be checked if the property s classification has changed between the assessment years shown on the notice.

86 Property Valuation: This section can be entirely computer generated, and you need only list the categories that contain values. All deferred and excluded values are shown as subtractions from the EMV. The value of new improvements has been moved to the bottom of this section (as it is included in the EMV already). The following fields are shown in the example: Estimated Market Value: List the EMV for assessment years 2012 and Green Acres Value Deferral: List the value deferred under Green Acres for assessment years 2012 and By showing the amount deferred, it is easier for the property owner to follow the logic between an EMV and the TMV by subtracting all deferrals, exclusions, etc. Rural Preserve Value Deferral: List the value deferred under Rural Preserve for assessment years 2012 and By showing the amount deferred, it is easier for the property owner to follow the logic between an EMV and a TMV by subtracting all deferrals, exclusions, etc. Aggregate Resource Value Deferral: This line is optional, as counties may opt out of this deferral program. You do not need to provide space for this information. Plat Vacant Land: List the amount of value being deferred for assessment years 2012 and This Old House Exclusion: List the amount of the exclusion for assessment years 2012 and [Note: Value that has been deferred from taxation for 10 years under this program will be returning to the assessment rolls. The returning value should not trigger a special property tax refund. Furthermore, it should not be reported as new construction as it was already reported as new construction in the year in which improvements were added. No changes are required on the valuation notice for returning value as the exclusion amount will reflect a reduced exclusion amount.] Disabled Veterans Exclusion: List the amount of excluded market value for assessment years 2012 and (Note: Since the application deadline is not until July 1, and there is an annual reapplication requirement for veterans who are not permanently and totally disabled, primary family caregivers, and surviving spouses, the exclusion amounts for those required to reapply annually should default back to $0 until a new application for the current assessment is received and approved.) Homestead Market Value Exclusion: The homestead market value exclusion must be shown for both the 2012 and 2013 assessment years. Taxable Market Value: The resultant value after all subtractions is shown on this line. New Improvements Included in 2013 Estimated Market Value [not included in list, but shown on notice to the bottom of the list]: Show the value of any new improvements or improvements not assessed in JOBZ: This is noted as JOBZ Value Exempted. List the amount of market value exempted from taxation for assessment years 2012 and 2013 due to location of a qualifying business in a Job Opportunity Building Zone.

87 Section 4: Boards of Appeal and Equalization/ Open Book Meeting(s) This section may be altered to identify which appeal option is available in that individual jurisdiction. It must specify the type of meeting (e.g. LBAE or Open Book) and it must include the date, time, and location of the meetings. Additional informationn may be added for clarification or further information concerning the jurisdiction s appeal process. If you request that taxpayers make an appointment to attend the Local Board of Appeal and Equalization or Open Book meeting, the Notices of Valuation and Classification must be mailed at least 10 days prior to the deadline for making those appointments. For example, if a jurisdiction will hold their LBAE meeting on April 20, 2013 but requests that taxpayers call for an appointment by April 18, 2013, the notices must be mailed by April 8, Appointments cannot be required, but may be requested byy the local jurisdiction. Walk in appointments must still be accepted. You must also fill in the information for County Boards of Appeal and Equalization, including the date, time, and location of the meeting. You may also include additional information such as a phone number to call for an appointmen or a note stating that appearancee must first be made at the Local Board of Appeal and Equalization before appealing to the county board. If appointments are required for the CBAE, a specific note must be made on the notice.

88 Message Area This section may contain pre printed or computer generatedd text. You may include a special message to the taxpayer regarding the valuation notice or the assessment in this section. Minnesota Statutes, section requires that you note where the information on the property is available, the times when the information may be viewed byy the public, and the county's website address. If, for County Board of Appeal and Equalization meetings (CBAEs) you require appointments for appeals, you must make appointments available until at least 7:00 p.m. or on a Saturday, and you must make note of this to be compliant with the meeting time requirements of M.S ! Definitions (Back of Form) For 2013 notices, the definition for referendum market valuee has been removed. Otherwise, the back of the form is very similar to last year s notice. General Information Regarding Instructions This year s notices may be sent in one of the following ways: : 8.5 x 11 letter, pressure sealed and sent as a self mailer 8.5 x 11 letter inserted into an envelope Electronically (via fax, , etc. per taxpayerr request) it is our recommendation that you send them a PDF file version of their notice so that it may not be altered. The date that the notice is sent electronically shall be considered its postmark date, and the same deadlines apply. Following these instructions will improve the likelihood that your form will meet requirements set forth by Minnesota Statutes and the Minnesota Department of Revenue. The back of the notices cannot be changed from the one prescribed by the Department of Revenue, except for minor formatting allowances (i.e. county information) as is noted within this memorandum. Additional Reminders and Notes: Font size on Notices of Valuation and Classification cannot be smaller than 10 point font. Pleasee make sure that the convening date for the County Board of Appeal and Equalization is allowed by statute. The County Board of Appeal and Equalization may meet on any meeting day in June after the second Friday in June. The board may meet for up to ten meeting days. This means that for 2013, the board may convene on any day after Friday, June 14 (including Saturday, June 15 if the county recognizes Saturday as a businesss day; but not including Sunday,

89 June 16 as Sunday is not a business day). In addition, Minnesota Statutes, section , specifies that for counties that conduct either regular board of review meetings or open book meetings, at least one of the meeting days must include a meeting that does not end before 7:00 p.m. For counties that require taxpayer appointments for the board of review, appointments must include some available times that extend until at least 7:00 p.m. The county may have a Saturday meeting in lieu of, or in addition to, the extended meeting times under this paragraph. Therefore, for County Board of Appeal and Equalization meetings convened in 2013, the board must also hold at least one meeting that does not recess or adjourn prior to 7 p.m. If the board does not offer a meeting until 7 p.m., the board must meet on a Saturday. For county boards that require appointments, appointments must be allowed as late as 7:00 p.m. or on a Saturday and the requirement for appointments must be clearly stated on the notice. As in prior years, the department will be monitoring all counties and cities of the first class to ensure compliance with all requirements. If you have additional questions or concerns regarding these instructions, please direct them to proptax.questions@state.mn.us.

90 Spruce County Jane Smith, Auditor-Treasurer th Street East, Box 78 Spruceville, MN (555) Property ID Number: R1 Property Description: Lot 5, Block 13 of the Spruceville Estates Addition to the City of Spruceville. TAXPAYER(S): John and Mary Johnson 123 Pine Road South Spruceville, MN Values for Taxes Payable in Your Property s Classification(s) and Values The assessor has determined your property s classification(s) to be Residential Homestead 1a Taxes Payable in 2013 Taxes Payable in 2014 (2012 Assessment) (2013 Assessment) 2014 Property tax notices are delivered on the following schedule: Valuation and Classification Notice Step See Details Estimated Market Value: $150,000 Below. The time to appeal or question your CLASSIFICATION or VALUATION is NOW! Residential Homestead 1a If this box is checked, your classification has changed from last year s assessment. The assessor has estimated your property s market value to be: Estimated Market Value (EMV) $158,000 $150,000 Several factors can reduce the amount that is subject to tax: Green Acres Value Deferral Rural Preserve Value Deferral Aggregate Resource Deferral Platted Vacant Land Exclusion This Old House Exclusion Disabled Veterans Exclusion Mold Damage Exclusion Homestead Market Value Exlcusion $23,000 $23,800 Taxable Market Value (TMV) $135,000 $126,200 The following values (if any) are reflected in your estimated and taxable market values JOBZ Value Exempted New Improvement Value The classification(s) of your p operty affect the rate at which your value is taxed. VALUATION NOTICE 1 Class: Residential Homestead Homestead Exclusion: $23,800 Taxable Market Value: $126,200 It will be too late when proposed taxes are sent. How to Respond If you believe your valuation and property class are correct, it is not necessary to contact your assessor or attend any listed meetings. If the property information is not correct, you disagree with the values, or have other questions about this notice, please contact your assessor first to discuss any questions or concerns. Often your issues can be resolved at this level. If your questions or concerns are not resolved, more formal appeal options are available. Please read the back of this notice for important information about the formal appeal process. The following meetings are available to discuss or appeal your value and classification: Local Board of Appeal and Equalization/Open Book County Board of Appeal and Equalization Meeting Step 2 Step 3 Proposed Taxes Notice 2013 Tax: 2014 Proposed: Change: Property Tax Statement Taxes Due May 15: Taxes Due October 15: Total Taxes Due in 2014: Coming November 2013 Coming March a.m. April 21, 2013 Spruceville Town Hall 123 Main Street, Spruceville 5 p.m. June 17, 2013 Spruce County Courthouse th Street East, Spruceville

91 Appealing the Value or Classification of Your Property Informal Appeal Options - Contact Your Assessor If you have questions or disagree with the classification or estimated market value for your property for the 2013 assessment, please contact your assessor s office first to discuss your concerns. Ofte your issues can be resolved at this level. Contact information for your assessor s office is on the other side of this notice Some jurisdictions choose to hold open book meetings to allow property owners to discuss their concerns with the assessor. If this is an option available to you, the meeting time(s) and location(s) will be indicated on the other side of this notice. Formal Appeal Options If your questions or concerns are not resolved after meeting with your assessor, you have two formal appeal options: Option 1 - The Boards of Appeal and Equalization You may appear before the Boards of Appeal and Equalization in person, through a letter, or through a representative authorized by you. The meeting times and locations are on the other side of this notice. You must have presented your case to the Local Board of Appeal and Equalization BEFORE appealing to the County Board of Appeal and Equalization. Step 1 - Local Board of Appeal and Equalization If you believe your value or classification is incorrect, you may bring your case to the Local Board of Appeal and Equalization. Please contact your assessor s office for more information. If your city or township no longer has a Local Board of Appeal and Equalization (as indicated on the other side of this notice) you may appeal directly to the County Board of Appeal and Equalization. Step 2 - County Board of Appeal and Equalization If the Local Board of Appeal and Equalization did not resolve your concerns, you may bring your case to the County Board of Appeal and Equalization. Please contact the county assessor s office to get on the agenda or for more information. Option 2 - Minnesota Tax Court Depending on the type of appeal, you may take your case to either the Small Claims Division or the Regular Division of Tax Court. You have until April 30 of the year in which taxes are payable to file an appeal with the Small Claims Division or the Regular Division of Tax Court for your valuation and classification For more information, contact the Minnesota Tax Court: Phone: or On the web: Definitions Disabled Veterans Exclusion - Qualifying disabled veterans may be eligible for a valuation excusion on their homestead property. Estimated Market Value - This value is what the assessor estimates your property would likely sell for on the open market. Green Acres - Applies to class 2a agricultural property that is facing increasing values due to pressures not related to the agricultural value of the land. This value is determined by looking at what comparable agricultural land is selling for in areas where there is no development pressure. The taxes on the higher value are deferred until the property is sold, transferred, withdrawn, or no longer qualifies for the program. Homestead Market Value Exclusion - Applies to residential homesteads and to the house, garage, and one acre of land for agricultural homesteads. The exclusion is a maximum of $30,400 at $76,000 of market value, and then decreases by nine percent for value over $76,000. The exclusion phases out for properties valued at $413,800 or more. JOBZ - Qualifying businesses within a Job Oportunity Business Zone may be eligible for a partial property tax exemption. New Improvements - This is the assessor s estimate of the value of new or previously unassessed improvements you have made to your property. Plat Deferment - For land that has been recently platted (divided into individual lots) but not yet improved with a structure, the increased market value due to platting is phased in over time. If construction begins, or if the lot is sold before expiration of the phase-in period, the lot will be assessed at full market value in the next assessment. Rural Preserve - Applies to class 2b rural vacant land that is part of a farm homestead or that had previously been enrolled in Green Acres, if it is contiguous to agricultural land enrolled in Green Acres. This value may not exceed the Green Acres value for tilled lands. The taxes on the higher value are deferred so long as the property qualifies Taxable Market Value - This is the value that your property taxes are actually based on, after all reductions. This Old House Exclusion - This program expired with the 2003 assessment. However, property may still be receiving the value exclusion through the 2013 assessement. Qualifying properties with improvements that increased the estimated market value by $5,000 or more were eligible to have some of the value deferred for a maximum of 10 years. After this time the deferred value is phased in. For more information *Updated on appeals, 4/22/2014 check out the - Department See Disclaimer of Revenue on website: Front Cover*

92 Spruce County Jane Smith, Auditor-Treasurer th Street East, Box 78 Spruceville, MN (555) Property ID Number: R1 Property Description: Lot 5, Block 13 of the Spruceville Estates Addition to the City of Spruceville. TAXPAYER(S): John and Mary Johnson 123 Pine Road South Spruceville, MN Values for Taxes Payable in Your Property s Classification(s) and Values The assessor has determined your property s classification(s) to be Residential Homestead 1a Taxes Payable in 2013 Taxes Payable in 2014 (2012 Assessment) (2013 Assessment) 2014 Property tax notices are delivered on the following schedule: Valuation and Classification Notice Step See Details Estimated Market Value: $150,000 Below. The time to appeal or question your CLASSIFICATION or VALUATION is NOW! Residential Homestead 1a If this box is checked, your classification has changed from last year s assessment. The assessor has estimated your property s market value to be: Estimated Market Value (EMV) $158,000 $150,000 Several factors can reduce the amount that is subject to tax: Green Acres Value Deferral Rural Preserve Value Deferral Aggregate Resource Deferral Platted Vacant Land Exclusion This Old House Exclusion Disabled Veterans Exclusion Mold Damage Exclusion Homestead Market Value Exlcusion $23,000 $23,800 Taxable Market Value (TMV) $135,000 $126,200 The following values (if any) are reflected in your estimated and taxable market values JOBZ Value Exempted New Improvement Value The classification(s) of your p operty affect the rate at which your value is taxed. VALUATION NOTICE 1 Class: Residential Homestead Homestead Exclusion: $23,800 Taxable Market Value: $126,200 It will be too late when proposed taxes are sent. How to Respond If you believe your valuation and property class are correct, it is not necessary to contact your assessor or attend any listed meetings. If the property information is not correct, you disagree with the values, or have other questions about this notice, please contact your assessor first to discuss any questions or concerns. Often your issues can be resolved at this level. If your questions or concerns are not resolved, more formal appeal options are available. Please read the back of this notice for important information about the formal appeal process. The following meetings are available to discuss or appeal your value and classification: Local Board of Appeal and Equalization/Open Book County Board of Appeal and Equalization Meeting Step 2 Step 3 Proposed Taxes Notice 2013 Tax: 2014 Proposed: Change: Property Tax Statement Taxes Due May 15: Taxes Due October 15: Total Taxes Due in 2014: Coming November 2013 Coming March a.m. April 21, 2013 Spruceville Town Hall 123 Main Street, Spruceville 5 p.m. June 17, 2013 Spruce County Courthouse th Street East, Spruceville

93 Appealing the Value or Classification of Your Property Informal Appeal Options - Contact Your Assessor If you have questions or disagree with the classification or estimated market value for your property for the 2013 assessment, please contact your assessor s office first to discuss your concerns. Ofte your issues can be resolved at this level. Contact information for your assessor s office is on the other side of this notice Some jurisdictions choose to hold open book meetings to allow property owners to discuss their concerns with the assessor. If this is an option available to you, the meeting time(s) and location(s) will be indicated on the other side of this notice. Formal Appeal Options If your questions or concerns are not resolved after meeting with your assessor, you have two formal appeal options: Option 1 - The Boards of Appeal and Equalization You may appear before the Boards of Appeal and Equalization in person, through a letter, or through a representative authorized by you. The meeting times and locations are on the other side of this notice. You must have presented your case to the Local Board of Appeal and Equalization BEFORE appealing to the County Board of Appeal and Equalization. Step 1 - Local Board of Appeal and Equalization If you believe your value or classification is incorrect, you may bring your case to the Local Board of Appeal and Equalization. Please contact your assessor s office for more information. If your city or township no longer has a Local Board of Appeal and Equalization (as indicated on the other side of this notice) you may appeal directly to the County Board of Appeal and Equalization. Step 2 - County Board of Appeal and Equalization If the Local Board of Appeal and Equalization did not resolve your concerns, you may bring your case to the County Board of Appeal and Equalization. Please contact the county assessor s office to get on the agenda or for more information. Option 2 - Minnesota Tax Court Depending on the type of appeal, you may take your case to either the Small Claims Division or the Regular Division of Tax Court. You have until April 30 of the year in which taxes are payable to file an appeal with the Small Claims Division or the Regular Division of Tax Court for your valuation and classification For more information, contact the Minnesota Tax Court: Phone: or On the web: Definitions Disabled Veterans Exclusion - Qualifying disabled veterans may be eligible for a valuation excusion on their homestead property. Estimated Market Value - This value is what the assessor estimates your property would likely sell for on the open market. Green Acres - Applies to class 2a agricultural property that is facing increasing values due to pressures not related to the agricultural value of the land. This value is determined by looking at what comparable agricultural land is selling for in areas where there is no development pressure. The taxes on the higher value are deferred until the property is sold, transferred, withdrawn, or no longer qualifies for the program. Homestead Market Value Exclusion - Applies to residential homesteads and to the house, garage, and one acre of land for agricultural homesteads. The exclusion is a maximum of $30,400 at $76,000 of market value, and then decreases by nine percent for value over $76,000. The exclusion phases out for properties valued at $413,800 or more. JOBZ - Qualifying businesses within a Job Oportunity Business Zone may be eligible for a partial property tax exemption. New Improvements - This is the assessor s estimate of the value of new or previously unassessed improvements you have made to your property. Plat Deferment - For land that has been recently platted (divided into individual lots) but not yet improved with a structure, the increased market value due to platting is phased in over time. If construction begins, or if the lot is sold before expiration of the phase-in period, the lot will be assessed at full market value in the next assessment. Rural Preserve - Applies to class 2b rural vacant land that is part of a farm homestead or that had previously been enrolled in Green Acres, if it is contiguous to agricultural land enrolled in Green Acres. This value may not exceed the Green Acres value for tilled lands. The taxes on the higher value are deferred so long as the property qualifies Taxable Market Value - This is the value that your property taxes are actually based on, after all reductions. This Old House Exclusion - This program expired with the 2003 assessment. However, property may still be receiving the value exclusion through the 2013 assessement. Qualifying properties with improvements that increased the estimated market value by $5,000 or more were eligible to have some of the value deferred for a maximum of 10 years. After this time the deferred value is phased in. For more information *Updated on appeals, 4/22/2014 check out the - Department See Disclaimer of Revenue on website: Front Cover*

94 Memo Date: April 22, 2014 To: From: Subject: All County Assessors and Staff Andrea Fish, Supervisor Information & Education Section Reporting of Green Acres and Rural Preserve Values It has come to our attention that some counties are reporting Green Acres/Rural Preserve (GA/RP) values in excess of their market values. This should never be the case. If the Green Acres or Rural Preserve value exceeds the estimated market value (EMV), the default value must be the EMV. Counties should never report GA/RP values in excess of EMV. This includes all purposes of reporting, including abstracts, taxpayer notices, website information, etc. For abstracts, in particular, GA/RP values in excess of EMV should never be reported, and negative values should never be reported for deferral. Please share this directive with your county s computer consortium if your system needs reprogramming to prevent errors. If we receive problematic data, we will have to have counties resubmit their reports. When we receive incorrect Green Acres/Rural Preserves data, it requires us to delay reports as we attempt to correct those errors. Thank you for your assistance. Please contact either the Information and Education section (proptax.questions@state.mn.us) or the Data Analysis section (dataanalysis.mdor@state.mn.us) if you have questions. Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

95 MEMO Date: April 17, 2014 To: From: Subject: All Assessors Emily Hagen, State Program Administrator Information and Education Section Property Tax Division Application/Reapplication for Property Tax Exemption It is required that all ownership entities seeking exemption must file an initial application with the county assessor, and each entity should include enough information to help the assessor to grant or deny the exemption. Initial applications for exemption are due to the assessor in the district where the property is located on or before February 1 of the assessment year in which the exemption is first sought. For most exempt properties, owners or authorized representatives must reapply for exemption every three years. No matter what year the owner or authorized entity originally filed for exemption, reapplications for property tax exemption must be filed in 2016, 2019, 2022, etc. If you did not send reapplications in 2013, you must get new applications on file as soon as possible to comply with statutory requirements, and also collect reapplications in 2016! Reapplication on a three-year rotating basis does not apply to the following properties only: churches or houses of worship property used solely for education purposes by academies, colleges, universities, or seminaries of learning property owned by the State of Minnesota or any of its political subdivisions exempt personal property domestic abuse shelters hydroelectric or hydromechanical power plant on a site owned by the federal, state, or local government state lands leased from the DNR as public campsites transitional housing facilities wind energy conversion systems agricultural chemical containment facilities photovoltaic devices exempt ice arenas owned by a nonprofit corporation for use by youth and high school skating programs exempt baseball parks owned by a nonprofit corporation for use by amateur baseball players Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

96 Churches, houses of worship, and properties used solely for educational purposes by academies, colleges, universities, or seminaries of learning are required to file for an exemption once but only once (i.e. they are required to initially file a statement by February 1, but not after that approval). Only properties owned by the state or a political subdivision of the state are not required to file a statement, but the assessor may ask for information necessary to grant an exemption. Owners or authorized entities claiming an exemption on personal property used for pollution control must reapply for exempt status with the Department of Revenue on or before February 15 of each year for which the taxpayer claims exemption to be eligible for taxes payable the following year. The assessor can request (in writing) that the taxpayer make available all records relating to ownership and/or use of the property that the assessor believes is needed to verify that the property meets requirements for exemption. If a property owner fails to file an exempt application or knowingly violates any of the filing requirements, the property may not receive exemption. The assessor should retain the most recent application for as long as the exemption is granted, along with its supporting documents and notation of why or why not exemption was granted. Please note that only the County Assessor may approve applications for exemption, not city assessors (except for cities of the first class that have a City Assessor who operates as the County Assessor in those jurisdictions). The County Assessor must sign all initial applications that are approved for exemption. In the case of sickness, absence, or other disability, or for good cause, the assessor or the Commissioner of Revenue may extend the time for filing the exempt application for a period not to exceed 60 days. The most recent versions of exempt applications were sent to you in November If you did not save those versions, you must contact proptax.questions@state.mn.us for the forms. Examples of common exemption applications are listed below. PT63 Application for Exemption of Tax on Property Used for Pollution Control Application for Property Tax Exemption Institution of Purely Public Charity Application for Property Tax Exemption Application for Property Tax Exemption for Nursing Homes and Boarding Care Homes Information on the application/reapplication requirements can also be found in the Property Tax Administrator s Manual, Module 5 Exemptions, available on the Department of Revenue website at as well as Minnesota Statute If you have any further questions, please contact our division at proptax.questions@state.mn.us. Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

97 Date: February 7, 2014 To: From: All Assessors John F. Hagen, Director Property Tax Division Subject: Valuation of lands subject to conservation easements (new instructions) On November 15, 2013, the Property Tax Division issued a memo telling assessors how to administer the recent law changes for the valuation of lands subject to conservation easements. Regrettably, that memo contained some incorrect information. Consequently, I am asking you to disregard our previous memo and instead follow the instructions below. It is important to remember these new provisions apply only when you assess lands that entered into a conservation easement after May 23, Current Law Ordinarily, assessors are expected to consider all things that affect market value when completing their assessment. However, Minnesota Statute now specifies that assessors must not reduce the value of property because of a conservation easement, except for: Conservation restrictions or easements that cover riparian buffers along lakes, rivers, and streams that are used for water quantity or quality control. Easements in a county that has adopted, by referendum, a program to protect farmland and natural areas since (Dakota County is the only one to do so.) New Instructions The first exception, for value reductions in the case of riparian buffers, may cause some confusion that is best addressed on a case-by-case basis. We recommend you use the following guidelines: For water quality or quantity control easements along a lake, river, stream, or in some cases a ditch, you may reduce the value of the property if the market indicates a reduction. All acres encumbered by the easement may be eligible for a value reduction. On rare occasions, an easement may not specifically identify water quality or quantity control as its purpose. If the covered lands are close enough to a body of water that it appears likely the easement was granted for water quality or quantity control, you should contact the entity holding the easement to determine its purpose. Review the easement to determine which entity to contact the Board of Water and Soil Resources (BWSR), Department of Natural Resources (DNR), or a private non-profit organization. If you have any questions or concerns about this issue please call me at , me at john.hagen@state.mn.us, or proptax.questions@state.mn.us.

98 MEMO Date: February 4, 2014 To: From: Subject: All Assessors Jon Klockziem, Property Tax Division Sale Verification Questionnaire Enclosed is a sale verification questionnaire that can be used as a guide when conducting and documenting sale verifications each year. Real estate sales form the backbone of the valuations for property tax, and it is critical that assessors examine and confirm the details of sales in order for assessments to be accurate. This guide can be used as a basis in forming a sale verification process that ensures sale data is consistent, documented, and reproducible. We encourage you to add additional questions or create your own form to help you analyze the market values for a property type. Going forward, your property tax compliance officers may ask for the sale verification documentation of a particular sale or sales. Sale verification should be done on all agricultural, commercial, industrial, and apartment sales. Additionally, at a minimum, residential and seasonal residential recreational sale outliers need to be verified. You should verify sales as soon as possible after receiving them. This will guarantee you can discuss all sales with the regional representatives in a timely manner and speed up any edits on the final sales listing. The Department of Revenue will continue to focus on sale verification as we transition from paper certificates of real estate value to all electronic certificates. With the ability to share sales data statewide, it will be critical that the sales data can be relied upon by all assessors utilizing this data. We are working towards incorporating sale verification into the electronic certificate of real estate value as a future enhancement. In the interim, sale verifications for those property types listed above should be kept on file for at least two years. If you have additional questions please contact your property tax compliance officer, give me a call at , or questions to proptax.questions@state.mn.us. Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

99 Sales Verification Questionnaire Parcel Identification Number(s) Auditor ID (CRV) Verified By ecrv # Date contacted Verified with: Buyer Seller Name Confirm Purchase Information: Date of Sale Purchase Price Terms: Cash CFD New Financing Personal Property Value These are additional questions for the county to ask after they have used the information on the CRV s and other sources at their disposal to determine if a sale remains in the study or not. PLEASE ANSWER THE FOLLOWING QUESTIONS: 1) How was the property marketed (auction, real estate agent, displayed For Sale by Owner sign, internet, etc.) and length of time on the market? What was the property s original listing price? Any price reductions? If the property was not listed by a real estate agent use tests 1, 2, & 3 Test 1: Was the sale exposed to the open market, announced or promoted through realtor listings, auction, newspapers, publications, brochures, craigslist, or for sale by owner? Yes or No (if no, go to test 2) Test 2: Was an appraisal done prior to the sale to establish the sale price or used as a starting point for negotiations? Yes or No If no, how did you arrive at a purchase price? (if no, go to test 3) Test 3: Did the sale involve a willing and informed Buyer and Seller under no duress to buy or sell and is the sale typical of the market? Yes or No If you answered yes to any of these three tests, the sale is most likely open market. 2) Was there an appraisal made on the property in the last three years? Would you be willing to share the property value indicated in the appraisal and purpose of the appraisal? 3) Was the seller/buyer a friend or relative? Have you had any other prior business relationship with the seller/buyer? 4) How much time elapsed between the date of the purchase agreement and the closing date? 5) Are there circumstances known to you which would have caused the seller to sell (or the buyer to buy) at a price below or above the fair market price? (i.e. short sale, pre foreclosure, relative sale, cancellation of a previous sale, an estate sale) 6) Any recent changes to the property that affected the sales price? Condition of property? Improvements Needed Recent Remodel? Were funds of repairs (replace flooring, roofing, siding, windows, remodeling, etc.) included in the purchase price? What was the value/cost of these items?

100 7) Was the property rented or leased at the time of sale? (How long and for how much? Did this impact the sale price? Did this include an option to buy? If so, was the option to buy simply the first right of refusal or was a price established at the beginning of the lease?) 8) Is there a leaseback agreement between buyer/seller? (How long and for how much? Did this impact the sale price?) 9) What influenced you to buy this particular property rather than another? Did you consider any other properties before deciding to purchase this one? Would you be willing to share that information? 10) Have there been any changes in the property since you bought (sold) it? Are you planning any future changes to the property? 11) Would you please confirm the planned use of the property: Residential Seasonal Rec Agricultural Commercial/Industrial Other: Note to the person verifying the sale: Please see additional questions for income producing properties and agricultural sales. Sale good for study? Yes or No Comments: Reject#

101 Additional income producing properties and agricultural sales questions: 1) If this was an income producing property was a 1031 exchange involved? If yes, answer the following: a. Were there other similar properties for sale at the same time? b. Did the 1031 influence the purchase price? c. Was there an extension for the 1031? 2) If this was an income producing property were there additional sources of income to the business such as Bar/Restaurant/Billboards etc.? 3) What is the gross potential income at the time of sale? 4) What is the vacancy and credit loss at the time of sale? 5) What are the operating expenses at the time of sale? 6) What is the net operating income at the time of sale? 7) Are there any tenants on long term leases? When are these leases set to renew? Additional Agricultural Questions: (If it was an auction sale and the county has a copy of the auction advertising/flyer please attach) 1. Was there a buyer s premium? If so what was the amount? Did the sale price include the buyer s premium? 2. Did the sale price hinge upon leasing or buying other land? If yes what were the terms? 3. Has there been tiling done on the parcel? a. If not, will you be tiling the land and what will the approximate cost be? 4. How many acres are irrigated? 5. Are any acres enrolled in a conservation easement program? (common examples CRP, RIM, CREP) If yes, what program and how many acres in each program? Was it new enrollment or re enrolled? What year does the current enrollment expire?

102 Additional Questions for Apartments: 1. Did the sale price include an existing business? If Yes, What is the value of the business and how was it determined? 2. Was the purchase price based on the properties net operating income? Existing Revenue Existing Expenses NET INCOME Cap Rate (mult) 3. Rental Income: Unit Size (sq. ft.) Type of unit # units Monthly Rent 4. Indicated Vacancy at time of sale: 5. Who are you major competitors: Additional Questions for Hotel/Motel: 1. Did the sale price include an existing franchise/business? a. If Yes, What is the value of the business and how was it determined? b. What franchise was purchased? 2. Was the purchase price based on the properties net operating income? a. Existing Revenue b. Existing Expenses c. NET INCOME d. Cap Rate (mult) 3. Number of rooms available: 4. Room Types: a. Number of Single b. Number of Double c. Number of Queen d. Number of King e. Number of Suites 5. Prior Year Average Daily Rate 6. Year to date Average Daily Rate 7. Forecast Year End Average Daily Rate 8. Total number of Occupied Room Nights 9. Who are you major competitors:

103 Fish, Andrea (MDOR) From: Sent: To: Subject: Follow Up Flag: Due By: Flag Status: *MDOR_Proptax Information Wednesday, January 29, :17 PM *MDOR_PropTax Division Notice Regarding Senior Citizens' Property Tax Deferral Law Change Follow up Thursday, January 30, :45 PM Flagged To: County Assessors, County Auditors, County Treasurers: Liens Will Now be Signed Electronically for Senior Citizen Property Tax Deferral Program Starting January 29, 2014 the Department of Revenue will electronically sign all liens filed under the Senior Citizen Property Tax Deferral program. (View a fact sheet about the program.) Due to a recent law change, a notarized copy with an original signature is no longer required to execute and record liens filed under this program. (View the statute, M.S. 290B.04, subd. 2.) If you receive a lien from the department with an electronic/facsimile signature, please record the document as you normally would. If you have any questions, contact Tax Operations at or Sandy.Moen@state.mn.us. Information & Education Section Property Tax Division fax Website: This message and any attachments are solely for the intended recipient and may contain nonpublic/private data. If you are not the intended recipient, any disclosure, copying, use, or distribution of the information included in this message and any attachments is prohibited. If you have received this communication in error, please notify me by reply and immediately and permanently delete this message and any attachments. Thank you. CAO, CAuO, CTO 1

104 Memo Date: January 17, 2014 To: From: County Assessors Data and Analysis Unit Subject: Time Trend Appeals Process In the past, all time trends sent out with preliminaries were considered final. Over the past year, the sales ratio process has undergone significant revisions and updates. After careful consideration, the PTCOs and the Data Analysis Unit have agreed to a new process for time trend appeals that we believe will allow us to ensure that the time trends used to calculate final ratios represent the most accurate, up-to-date information. For this reason, once edits of the sales listing are complete, we will recalculate time trends, sales listings and sales ratios with the edited and complete data sets. This final run will include the results of the appeals process. Please review the timeline below Time Adjustment Appeal Procedure 1. a. The county assessor must notify the Department of Revenue s regional representative and the Data and Analysis Unit of their disagreement via . Please contact the Data Analysis Unit at DataAnalysis.MDOR@state.mn.us, and cc the PTCO officer on all correspondence. The county assessor must list the specific cities and townships to be covered by the appeal and provide a brief summary explaining their reasons for believing a time trend appeal is necessary. The county assessor must also submit a T-Calc spreadsheet for each of the specific regions and property type combinations covered by the appeal, including all sales before trimming for extremes. The deadline for this information is January 24, The county must be prepared with all edits to the sales listing by January 24 th so that the PTCO officer is able to edit the data as necessary. b. The Data and Analysis Unit will compare the county s T-Calc results with the Department s results and provide an initial analysis explaining any discrepancies between the sales used by the county and the sales used in the 21 month study. This initial feedback will be given to the PTCO and the county as quickly as possible. 1

105 2. If the disagreement is not resolved by the comparison, the county assessor can also provide additional supporting documentation to the regional representative for review. The deadline for supporting documentation is January 29, If the county s supporting documentation includes sales that occurred in October to December of the current year, they must submit those sales via flat file to the Department of Revenue, and the PTCO must ensure that all sales in the region and of the property type under appeal have been submitted and that no sales have been withheld. If you do submit sales that occurred between October, 2013 and December, 2013, please recall that these sales are part of the 2014 sales ratio study, so the assessment year should be 14. Additionally, please name the sales files according to our naming convention: ##-CRV-AY##-## [County Number-CRV-AY(2014)-Batch Number] Example: 01-CRV-AY14-01 Example: 11-CRV-AY The PTCOs will edit all sales data by February 7 th, The Data & Analysis Unit will conduct an internal analysis to provide to a panel for review. The regional rep and the Data and Analysis Unit will participate in the review. As part of the internal analysis for the review, the Data and Analysis Unit will complete a detailed summary of the regional trend. The Unit will analyze various things that may impact the trend including but not limited to: extreme ratios within the data set, the process for limiting extremes from the data set, the trend when the sales are truncated to a 12 month study period, the trend from the previous year s 21 month data set, any non-linear trends within the region, seasonal impacts on sales in the region, and the trend after considering sales that occurred in October, November and December of the study year that meet the conditions listed in Item A DOR panel will review all available information and recommend whether or not to make or modify a time adjustment. If the appeal results in a time adjustment, the adjustment factors will be applied to the appropriate sales ratio study uses. 5. Time trends will be finalized and issued to the counties when the panel has made its determination. Counties will also receive a final preliminary sales listing and ratio print. 2

106 We hope to improve the timeline of this process going forward, so that edits are made in late summer or early fall and time trends can be finalized much earlier. We appreciate your help in this effort. 3

107 MEMO Date: January 2014 To: From: Subject: All County and City Assessors JESSI GLANCEY Information and Education Section Boards of Appeal and Equalization Training (Both Local and County Boards) The Department of Revenue will be announcing the 2014 catch up Board of Appeal and Equalization (BAE) courses very soon. These courses will be held at multiple locations throughout the state during the last two weeks of March. The purpose of the catch up courses has not changed; they are solely provided to allow an already-certified Board of Appeal & Equalization to retain certification due to the loss of its trained BAE member due to loss of election, resignation, etc. Please watch for this additional information and share it with your impacted local jurisdictions. In addition to the catch up courses the department will provide qualified instructors for up to 45 courses throughout the state annually. These courses may be held any time between June and November 30. (Note, we plan to continue our relationship with the Minnesota Association of Townships in offering additional courses.) The 45 courses will be allocated to up to five training opportunities in each MAAO Region per year. This requires the region members to work together to select locations, dates, and times for these trainings with their Property Tax Compliance Officers (PTCO). Look for additional information regarding this planning to come from your PTCO. You will be asked to select your five locations as a region sometime prior to May 1. Your PTCO will submit these trainings to Jessi Glancey by May 1. When listing their annual regional course offerings, each region will indicate a host county for each offering. This county will assume registration and other logistical responsibilities and utilize the electronic registration form. This spreadsheet will be sent to the host counties once the region s schedule for course offerings has been set. The other logistical responsibilities that the host county will assume will be explained in additional instructions it will receive once the course has been confirmed. It is very important to note that pre-registration is required for all courses. We will continue to provide training certificates to attendees at the course. As such, registration will be required so that certificates can be printed prior to the date of training. Persons who arrive at the training without pre-registering will need to complete an on-site registration and pay a $20 late registration fee to cover the additional administrative expense of processing a late registration and mailing a certificate. Please note while board members may become aware of the on-site registration option, counties should use caution when describing this option as it does not guarantee a space at a course. If you have any questions or concerns, please share them with your PTCO.

108 MEMO Date: January 14, 2014 To: From: Subject: All Assessors Lloyd McCormick, Property Tax Compliance Officer Supervisor Property Tax Division Green Acres Base Value for the 2014 Assessment 2014 Green Acres Values The 2014 assessment Green Acres base value for tillable lands is $9,400. The attached table shows the factor and appropriate average tillable class 2a Green Acres (agricultural) value for each county. The attached table also shows the factor and appropriate average non-tillable class 2a Green Acres (agricultural) value for each county Rural Preserve Values We also recommend using the 2014 Green Acres values for tillable and non-tillable acreage enrolled in Rural Preserve Methodology and Factors Consistent with 2013 Minnesota Statutes, section , subdivision 4, requires the Commissioner of Revenue to assign values for each county to use to determine agricultural value for all acreage enrolled in Green Acres. Legislation permits the department to consider and make reasonable adjustments based on county or regional market data, including agricultural production, commodity prices, production expenses, rent, and investment return. Last year, the department recalculated Green Acres factors for both tillable and non-tillable land values because of changes observed in the agricultural market. In doing so, the department considered and made reasonable adjustments for agricultural production, commodity prices, production expenses, rent, and investment return, as well as adjustments to reflect time trends. The non-tillable land factor is also the result of analysis of sales information, discussions with a representative sample of assessors, consideration of changing agricultural economies, county and regional data, and the varying and diverse make up of land types and uses in the state; as well as changes in agricultural production techniques and business decisions that are affecting farmers differently based on their location. This year, the department used the same factors as last year. The base value methodology has been in place since the 2008 assessment and has proven to provide a suitable indicator of the agricultural value of tillable lands when determined by applying each county s tillable-land factor to the base value. While the methodology did not change, the tillable factors were recalculated in 2013 to better represent current agricultural economies and markets. The tillable factors for 2014 remain the same as in However, the old (2008) methodology of using 50% of the tillable value as an indicator of non-tillable value proved to be a less reliable indicator of non-tillable values due to changes in the agricultural market and shifts that occurred in the value relationship between tillable lands and non-tillable lands. In 2011 we determined that it was no longer appropriate to use a single statewide factor for non-tillable lands. At that time the department developed and implemented a methodology for valuing non-tillable lands that resulted in a compressed range of factors to better

109 represent the varying relationships between tillable and non-tillable lands throughout the state. While the 2011 methodology did not change last year, most of the non-tillable factors did change due to the new 2013 tillable factors. The non-tillable factors for 2014 remain the same as in The department will continue to analyze farmland sales as part of our commitment to continued improvement in future years for valuing tillable and non-tillable agricultural lands. Questions or Concerns If you believe the attached tables do not represent agricultural land values based on measurable agricultural data available in your county or region, please contact your Property Tax Compliance Officer (PTCO) by February 15, The compliance officer will review your data and make adjustments if necessary. If you have questions regarding how or when to apply Green Acres values for 2014, again, please contact your PTCO. Your PTCO can also assist you in applying the value appropriately across your assessment districts by considering and recognizing agricultural market and soil data.

110 County factors and average values for 2014 agricultural tillable and non tillable values; to be used for Green Acres and recommended for Rural Preserve. County Tillable Factor Tillable Non Tillable Factor Non Tillable Aitkin 14% $1,320 90% $1,190 Anoka 41% $3,850 60% $2,310 Becker 36% $3,380 65% $2,200 Beltrami 12% $1,130 90% $1,020 Benton 41% $3,850 60% $2,310 Big Stone 61% $5,730 55% $3,150 Blue Earth 100% $9,400 40% $3,760 Brown 107% $10,060 40% $4,020 Carlton 14% $1,320 90% $1,190 Carver 80% $7,520 50% $3,760 Cass 18% $1,690 90% $1,520 Chippewa 85% $7,990 45% $3,600 Chisago 36% $3,380 65% $2,200 Clay 43% $4,040 60% $2,420 Clearwater 12% $1,130 90% $1,020 Cook 10% $940 90% $850 Cottonwood 107% $10,060 40% $4,020 Crow Wing 20% $1,880 90% $1,690 Dakota 95% $8,930 45% $4,020 Dodge 80% $7,520 50% $3,760 Douglas 42% $3,950 60% $2,370 Faribault 95% $8,930 45% $4,020 Fillmore 75% $7,050 50% $3,530 Freeborn 90% $8,460 45% $3,810 Goodhue 95% $8,930 45% $4,020 Grant 54% $5,080 55% $2,790 Hennepin 82% $7,710 50% $3,860 Houston 70% $6,580 50% $3,290 Hubbard 22% $2,070 85% $1,760 Isanti 36% $3,380 65% $2,200 Itasca 12% $1,130 90% $1,020 Jackson 107% $10,060 40% $4,020 Kanabec 20% $1,880 90% $1,690 Kandiyohi 67% $6,300 55% $3,470 Kittson 22% $2,070 85% $1,760 Koochiching 10% $940 90% $850 Lac qui Parle 70% $6,580 50% $3,290 Lake 12% $1,130 90% $1,020 Lake of the Woods 10% $940 90% $850 Green Acres Base Value for 2014 Assessment: $9,400

111 County factors and average values for 2014 agricultural tillable and non tillable values; to be used for Green Acres and recommended for Rural Preserve. County Tillable Factor Tillable Non Tillable Factor Non Tillable Le Sueur 80% $7,520 50% $3,760 Lincoln 70% $6,580 50% $3,290 Lyon Base Base Base Base McLeod 85% $7,990 45% $3,600 Mahnomen 32% $3,010 70% $2,110 Marshall 32% $3,010 70% $2,110 Martin 115% $10,810 40% $4,320 Meeker 62% $5,830 55% $3,210 Mille Lacs 25% $2,350 80% $1,880 Morrison 41% $3,850 60% $2,310 Mower 90% $8,460 45% $3,810 Murray Base Base Base Base Nicollet 100% $9,400 40% $3,760 Nobles Base Base Base Base Norman 40% $3,760 60% $2,260 Olmsted 75% $7,050 50% $3,530 Ottertail 34% $3,200 65% $2,080 Pennington 18% $1,690 90% $1,520 Pine 25% $2,350 80% $1,880 Pipestone Base Base Base Base Polk 32% $3,010 70% $2,110 Pope 51% $4,790 55% $2,630 Ramsey 90% $8,460 45% $3,810 Red Lake 18% $1,690 90% $1,520 Redwood 107% $10,060 40% $4,020 Renville 107% $10,060 40% $4,020 Rice 80% $7,520 50% $3,760 Rock Base Base Base Base Roseau 12% $1,130 90% $1,020 St Louis 12% $1,130 90% $1,020 Scott 75% $7,050 50% $3,530 Sherburne 41% $3,850 60% $2,310 Sibley 90% $8,460 45% $3,810 Stearns 51% $4,790 55% $2,630 Steele 85% $7,990 45% $3,600 Stevens 64% $6,020 55% $3,310 Swift 66% $6,200 55% $3,410 Todd 31% $2,910 70% $2,040 Traverse 56% $5,260 55% $2,890 Green Acres Base Value for 2014 Assessment: $9,400

112 County factors and average values for 2014 agricultural tillable and non tillable values; to be used for Green Acres and recommended for Rural Preserve. County Tillable Factor Tillable Non Tillable Factor Non Tillable Wabasha 60% $5,640 55% $3,100 Wadena 22% $2,070 85% $1,760 Waseca 90% $8,460 45% $3,810 Washington 75% $7,050 50% $3,530 Watonwan 107% $10,060 40% $4,020 Wilkin 43% $4,040 60% $2,420 Winona 70% $6,580 40% $2,630 Wright 62% $5,830 45% $2,620 Yellow Medicine 80% $7,520 50% $3,760 Green Acres Base Value for 2014 Assessment: $9,400

113 Fish, Andrea (MDOR) From: Sent: To: Subject: Fish, Andrea (MDOR) Tuesday, December 31, :48 PM *MDOR_PropTax Division Disaster Response Guide is Online! Greetings and Happy New Year from the Property Tax Division. We are excited to announce that the Assessors Disaster Response Guide is now available on the Department of Revenue website. The guide recently underwent needed updating for new contact information, etc., but most of the guide remains the same. However, in order to help your office in the event of an actual disaster, we wanted to make sure that all information was in one location and could be regularly updated as needed. Therefore, the paper copy of the guide (which is now outdated) may be discarded and the new guide used in its place. All packets of the guide and all related forms are available at the following link: You can also find the guide by searching disaster response on the Revenue webpage. If you have any questions about disaster response, please contact the Information and Education section or your county s Property Tax Compliance Officer. Thank you! Andrea Fish Supervisor, Information & Education Section Property Tax Division fax Website: This message and any attachments are solely for the intended recipient and may contain nonpublic/private data. If you are not the intended recipient, any disclosure, copying, use, or distribution of the information included in this message and any attachments is prohibited. If you have received this communication in error, please notify me by reply and immediately and permanently delete this message and any attachments. Thank you. CAO 1

114 Memo Date: November 22, 2013 To: From: Subject: All Assessors Andrea Fish, Supervisor Information & Education Section, Property Tax Division Taxation of billboard sites and cell antenna/tower sites We are aware that there is ongoing confusion regarding the taxation of billboard and cell antenna/tower sites. The purpose of this memo is to clarify our guidelines for assessment practices. We expect these guidelines to be implemented for the 2014 assessment. For purposes of this memo, a site may include land, but may also include a rooftop, steeple, wall, water tower, etc. 1. Billboard structures, cell antenna/tower structures, and other communication tower structures are exempt a) Billboards, along with the supporting framework and superstructure are exempt from ad valorem property tax as business equipment. b) Cell antennae/towers and communication towers are also exempt as equipment. 2. Billboard and cell/communication antenna/tower sites are taxable The site that billboards, cell antennae/towers, and other communication antennae/towers are located on are taxable. A sub-record may be created for the site, but the site is still taxable real estate. If the owner of the site is an exempt entity (e.g. the state of Minnesota), then the land is taxable in personam to the lessee of the site. 3. Classification of billboard and cell antenna/tower sites a) Because classification is based on the actual use of a property, our opinion is the appropriate classification for billboard sites should be 3a commercial property. b) For cell and other communication antennae/towers, the site should be classified as 3a commercial property. 4. Valuation of billboard and cell/communication sites a) For billboards, valuation should reflect the highest and best use of the site, consider market rents, and the location of the billboard site. For example, a billboard in a low traffic area may only be able to command minimal rents and the use may be only incidental. It may be appropriate to value that site no differently from the surrounding sites. However, a Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

115 billboard located on a heavy-traffic highway area may generate significant income for the site that should be recognized when valuing the property. b) For cell and communication antenna/tower sites, the value should be based on the income approach and reflect a capitalization of the annual market rent payments the site would command. When valuing the billboard or cell/communication sites, we recommend using a gross income multiplier (GIM). Annual market income is multiplied by the GIM to establish a value for those site rights. A GIM is usually established by identifying and verifying sales of similar properties, establishing the annual gross income, and dividing the sale price by the gross income to determine the GIM. You will need to gather and verify all necessary data for your county. Income data, applicable multipliers, and sale prices will vary depending on the location of the billboard or cellular antenna and the details of the lease so verification of income data is very important. This market is dominated by regional and national players and any sale data may include multiple properties. As with other income producing properties, the income used in any valuation model should be market rent. It is possible that a value could be derived from a supportable rate such as dollars per traffic count or through direct capitalization if expenses are verified and cap rates can be derived. However, for uniformity, we are recommending the use of a GIM. 5. Creating a separate parcel identification (PID) for a billboard or cell/communication site If an easement is recorded for site use rights for billboards or antenna sites, a separate PID for that easement s legal description may be created. This is only for cases in which the easement is for someone other than the property owner. The PID is treated as real property, and the taxes are the responsibility of the easement holder; delinquency or forfeiture proceedings would result if that easement owner did not pay his or her taxes on that legally described site right. The easement PID could forfeit if taxes were unpaid (and the holder of the underlying land title would have first rights to repurchase the easement right). The property taxes assessed to the easement are in rem (against the easement) rather than in personam (against the owner of easement rights). If you have any questions, please speak with your county s Property Tax Compliance Officer, or the Information & Education Section at proptax.questions@state.mn.us. Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

116 Memo Date: August 13, 2013 To: From: Subject: All City & County Assessors Andrea Fish, Supervisor Information and Education Section Conservation easement assessments It has come to our attention that there is confusion regarding implementation of a new law regarding the assessment of conservation easements. Laws 2013, Chapter 143, article 4, section 17 amended Minnesota Statutes, section Under this new law, the value of real property subject to a conservation restriction or easement must not be reduced by the assessor if the restriction is for a conservation purpose and the property is being used in accordance with the restriction. Furthermore, this section does not apply to restrictions or easements covering riparian buffers along lakes, rivers and streams that are used for water quality, or to easements granted by a county that has adopted a program by referendum to protect farmland and natural areas since 1999 [this second part is targeted to Dakota County]. We are working on providing a definition for riparian buffers, and will release that definition along with assessment guidelines as soon as possible. As stated in our Law Summary, this provision will be effective only for conservation easements entered into after May 23, Because of this, it will first be effective for the 2014 assessment (taxes payable 2015). It does not change the assessment of properties for the January 2, 2013 assessment for taxes payable in If you have any questions, please contact our section via proptax.questions@state.mn.us. Thank you. Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

117 August 13, 2013 TO: FROM: SUBJECT: County Auditors/Treasurers and Assessors Minnesota Department of Revenue, Property Tax Division Property Tax Delinquency and Forfeiture Clarifications The Minnesota Department of Revenue presented at the 2013 MCCC and MACATFO summer conferences on property tax delinquency and forfeiture. Many complex questions were asked during these sessions. This memo provides answers to questions that required further research or clarification postconference. Does the Sheriff s Affidavit of Service for the Notice of Expiration of Redemption need to go to the recorder? The proof of service needs to first be given to the county auditor (Minn. Stat , subd. 6). From that point, it is the auditor s responsibility to file the certificate of forfeiture with the county recorder. When does the sixty-day grace period for the expiration of the time of redemption begin? The sixty-day grace period begins after proof of all four forms of notice (posting, publishing, mailing, and personal service) have been filed in the county auditor s office. (Minn. Stat , subd. 7). Notice by personal service causes the most confusion. If personal service is the last of the form of notice completed, the sixty-day grace period begins when proof of service is received by the county auditor, not when notice is personally served on the individual. How many times can a one-year lease on tax-forfeited property be renewed? A one-year lease on tax-forfeited property cannot be renewed, with the exception that a county may enter into a management contract for the land when necessary (Minn. Stat , subd. 1a). Upon expiration of the one-year lease, a county may enter into the standard temporary lease with increased county board oversight and lasting up to ten years. The temporary lease can be renewed for another period of up to ten years, as long as the county board still views the use of the land as temporary. A relative of a county employee buys a tax-forfeited property at a tax-forfeited land sale. The county was unaware that the purchaser was a relative until after the transaction was completed. What actions should the county take in this situation? There is no prohibition against relatives purchasing land at a tax-forfeited land sale, unless the relative is buying the property for a prohibited person (see Minn. Stat for information on prohibited purchasers). If a relative is buying land for a prohibited person, the sale would not be authorized, lawful, or valid. The person would not end up as the owner of the property and must be given a refund of the purchase price, barring any unusual circumstances. The county can treat the property as still in a forfeited status, and as not having been sold at the auction. The county could offer the property again at the next sale with full disclosure. Alternatively, the county

118 could institute a judicial proceeding to get the title to the property cleared up, and, if necessary, eject this purchaser from occupancy. Can county employees buy a tax-forfeited property over the counter? No. The prohibited purchasers listed in Minn. Stat are prohibited from purchasing tax-forfeited land under any provision in Chapter 282 of the Minnesota Statutes, unless they fit one of two exceptions. The first exception is that a prohibited purchaser can purchase lands owned by him or her at the time the property forfeited. The second exception is that a prohibited purchaser can bid on and purchase nonconforming forfeited property offered at a nonpublic sale that he or she has been invited to bid in (see Minn. Stat , subd. 7a). How are income tax liens treated on tax-forfeited land? The treatment of federal income tax liens on tax-forfeited property largely hinges on notice to the Internal Revenue Service of the expiration of the period of redemption. If the Internal Revenue Service (IRS) received a copy of the Notice of Expiration of Redemption by Registered or Certified mail at least twenty-five days before the expiration of the redemption period and failed to respond within 120 days from the expiration of the redemption period, the federal income tax lien will no longer remain on the property. If the county did not notify the IRS regarding the Notice of Expiration of Redemption, the income tax lien is not canceled. In this situation, the county has three options: 1. Send the Notice of Expiration of Redemption to the income tax entities. If no responses are received within 120 days, the property can be sold without a lien attached. 2. Set the appraised value of the parcel high enough to cover the amount of the income tax lien. When the property is sold and the lien is paid off, a state deed can be issued clear of the lien. 3. Sell the property subject to the lien and let the buyer be responsible for the lien. In the case of liens filed by the Minnesota Department of Revenue, the county auditor must notify the Department of Revenue of the notice of expiration of redemption when there is equity in a property with delinquent taxes and the property is not homesteaded. When delinquent property does not meet these conditions, the county may elect to notify the Department of Revenue of the notice of expiration. Notices sent to the Minnesota Department of Revenue are received and reviewed by the Seizure Program. Each case is noted in Department of Revenue records. In most cases, since there are no statutes giving the Department a right of redemption as a junior creditor, the notices are discarded and the property is not redeemed. A bidder arrives at a tax-forfeited land sale as a straw buyer (an individual operating under the guise of purchasing the land for personal use, but is truthfully purchasing the land with the intent to convey the property to a prohibited purchaser or a former owner for less than the delinquent tax amount). How should the county handle this bidder? The bidder and the individual to whom the land will ultimately be conveyed (hereinafter the individual ) are engaged in a scheme to violate the law, namely, withholding money from the tax-forfeited land sale fund. If an overt act in furtherance of the conspiracy is taken, both the bidder and the individual may be guilty of conspiracy to commit theft. If the bidder and the individual go through with the conspiracy, they both may be guilty of theft. Whether the crime is a misdemeanor, gross misdemeanor, or felony depends on the amount of money wrongfully diverted from the tax sale fund. The county must not knowingly allow the bidder to purchase the property for an improper price. The only way the county may sell tax-forfeited land is by following the provisions of Chapter 282 of the Minnesota Statutes. This sale would not be a valid sale under statute. If the county completed the sale to the bidder

119 knowing what was happening, the county and the involved county officials could find themselves guilty of malfeasance--or theft--on account of knowingly accepting inadequate funds. Who signs the easement on a forfeited property? The county auditor. The county board determines the price, terms, and period of utility or road easements. The county board may also cancel a utility or road easement by board resolution. Private easements are conveyed by the county board, unless the board has delegated such authority to the county auditor (see Minn. Stat , ). What does a county or city do with tax-forfeited private roads? If the tax-forfeited private road has not been conveyed or sold to a third party, it is the county s responsibility to maintain the private road. The level of maintenance is up to the discretion of the county board. A city and county both want to acquire a parcel of tax-forfeited land. The Delinquent Tax and Tax Forfeiture Manual ( Red Book ) mentions first priority for a city desiring to acquire taxforfeited land when a county has elected to use the old classification process. Does this first priority give the city preference over the county to acquire the land? No. Minn. Stat , subd. 1, para. (g), (h), and (i) do not give a city or town a right to acquire forfeited property within its boundaries. The only rights or entitlements a city or town has are that (1) it can require the county board to refrain from selling or leasing the property to anyone else for up to six months; and (2) it can submit requests to the county board that the board approve a conveyance of the property to it. The phrases first priority and first option in the Red Book refer to an opportunity that the city or town has to request county board approval for conveyance of tax-forfeited land to the city or town, along with a period of time within which the property is withheld from sale or lease, so they (and others) have time to prepare and submit their request. When a city and county both want to acquire a parcel of tax-forfeited land, the county board decides which application to approve. All information conveyed in this memo will be reflected in the next round of updates to the Red Book. If you have any questions on this memo, please contact us at PropTax.Admin@state.mn.us. This should be used for all future questions on property tax delinquency and forfeiture so we can consolidate the messages for staff availability and training purposes.

120 Memo Date: Friday, August 2, 2013 To: From: County Auditors, Treasurers, and Assessors Kristie Strum, Chelsea Griffin Auditor/Treasurer Services Unit, Property Tax Division Subject: Federal Active Service Property Tax Grace Period The 2013 tax bill included a provision granting a four-month grace period for complying with property tax due dates for homestead property owned by a qualifying individual who is on federal active service. No late fees or penalties may be assessed during the grace period. A qualifying taxpayer will not be deemed delinquent if payment is made by the end of the grace period. The taxpayer must provide proof that they were on active federal service on the date the payment was originally due. (Minn. Stat , as amended by Laws 2013, ch. 143, art. 4, secs. 19 and 20; Minn. Stat , as amended by Laws 2013, ch. 143, art. 4, sec. 21. Effective July 1, 2013.) Federal active service means military active service or other duty under United States Code, title 10. (Minn. Stat , subd. 5c.) County staff should make it clear this grace period applies only to homestead property. It does not apply to, for example, nonhomestead, seasonal recreational residential, or commercial properties an individual on federal active service may own. A taxpayer making a payment under this provision must accompany the payment with a signed copy of the taxpayer s orders or form DD214 showing the dates of active service. The document must clearly indicate the taxpayer was on active service on the date the payment was due. Property Tax Due Dates and Penalties The modified payment due date under the grace period for the first half of property taxes (or full payment if less than $100) for homestead property is September 15. The modified payment due date for the second half is February 15 of the following year. A modified unpaid taxes penalty schedule that applies to qualifying individuals for taxes payable in 2014 is on page four. The general penalty schedule for homestead property is also included for comparison. Delinquency Homestead property owned by a qualifying individual is not to be deemed delinquent and no late fees or penalties can be applied if the taxes are paid by the modified due dates. The delinquency schedule is pushed back along with the due dates and unpaid taxes penalty schedule. This means that in taxes payable year 2014, property owned by a qualifying individual would not be deemed delinquent until the first business day in January Interest applied when property becomes delinquent would also not start until this time. The law does not require advance notification to a county from a qualifying individual. Such an individual need only provide the necessary paperwork described above when making the payment. It is possible a county will commence delinquency proceedings on a property unaware the taxpayer qualifies for the modified due dates. When a qualifying individual makes a payment and provides the proper

121 documentation, the county must cancel or adjust any penalties according to the modified schedule on page four. Because a county treasurer will be preparing the delinquent tax list before the second-half taxes are due under the grace period, a county may wish to include a statement when its list is published noting that individuals who may qualify for the modified due dates may be included on the list and assuring any such individual that if payment is made, along with the proper documents, or if the proper documents are submitted without a payment during the grace period, the delinquency proceedings for that year will be cancelled. Full payment after the grace period may include late fees and penalties. If the taxes remain unpaid, they will be included on the delinquent tax list in the next year, and the property will be subject to forfeiture. Questions and Hypothetical Situations How does this provision affect the November 15 due date for agricultural homestead second-half taxes? The grace period for a qualifying individual who owns property that qualifies for the November 15 deadline would have until March 15 of the following year to pay their taxes. This is included in the tables on page four. Does this provision apply to property owned by an LLC, partnership, trust, family farm corporation, or other similar type of entity where a member of the entity may qualify? It does not apply. This provision describes a particular type of individual, not a general person as it is used elsewhere in statute to include various types of taxpayers, including entities like an LLC. The law requires the taxpayer to provide certain paperwork, service orders or form DD214, which an LLC or other non-human entity would not be able to provide. A member of one of these entities might qualify individually, but that does not extend to the entity as the taxpayer. Does property qualifying for homestead under the relative homestead provisions qualify for the modified due dates? If a qualifying individual is the owner of the relative homestead, yes, the modified due dates would apply. If a service member is the relative living on the property but does not own it, the modified due dates do not apply. A property is classified as nonhomestead residential for tax payable in February 1, 2014, a member of the National Guard purchases the property. On March 1, 2014, the new owner moves in and applies for the homestead classification. On April 1, 2014, the new owner reports to active duty. Does this property qualify for the modified due date for taxes payable in 2014 if he/she is still on active duty status on the applicable due dates? Yes. For the purposes of this provision, as long as homestead application has been made during the calendar year, the modified payment dates apply the same calendar year. The law isn t clear on whether the property needs to be considered homestead for the assessment year or taxes payable year, so as long as there is at least homestead application made during that calendar year, it is considered homestead property for the modified payment due dates. A property is classified as nonhomestead residential for tax payable in April 1, 2014, a member of the National Guard who is on active service purchases the property and applies for homestead classification. Does this property qualify for the modified due dates for taxes payable in 2014 if he/she is still on active duty status on the applicable due dates?

122 Yes. The reasoning is the same as above. As long as homestead application has been made during the calendar year, the modified payments dates apply the same calendar year. A property is owned by a member of the National Guard and is classified as an actively farming agricultural homestead for taxes payable in On December 1, 2013, the owner reports for active duty and is on active duty status for the applicable due dates for taxes payable in For the 2014 assessment, taxes payable in 2015, the property will not qualify as an actively farming agricultural homestead. Does the property qualify for the modified due dates for taxes payable in 2014? Yes. As long as the property is homestead for the taxes payable or the assessment in that calendar year, the modified payment due dates apply. If you have any questions on this memo, please contact us at PropTax.Admin@state.mn.us. This should be used for all future questions on property tax delinquency and forfeiture so we can consolidate the messages for staff availability and training purposes.

123 General Taxpayer Penalties Taxes Payable 2014 Property Type Jan 2 Dec 1 Nov 16 Nov 1 Oct 16 Oct 1 Sep 1 Aug 1 July 1 June 1 May 16 Homestead 1st half 2% 4% 5% 6% 7% 8% 8% 8% 8% 8% 10% 2nd half 2% 6% 6% 8% 10% Both unpaid 5% 7% 7% 8% 10% Agricultural homestead (only where 2nd half is due November 15 under Minn. Stat , subd. 3) 1st half 2% 4% 5% 6% 7% 8% 8% 8% 8% 8% 10% 2nd half 6% 8% 10% Both unpaid 7% 8% 10% Active Service Member Taxpayer Penalties if Grace Period Applies Taxes Payable 2014 Property Type May 1 Apr 1 Mar 16 Mar 1 Feb 16 Feb 1 Jan 1 Dec 1 Nov 1 Oct 1 Sep 16 Aug 1 July 1 June 1 May 16 Homestead 1st half 2% 4% 5% 6% 7% 8% 8% 8% 8% 8% 10% 2nd half 2% 6% 6% 8% 10% Both unpaid 5% 7% 7% 8% 10% Agricultural homestead (only where 2nd half is due November 15 under Minn. Stat , subd. 3) 1st half 2% 4% 5% 6% 7% 8% 8% 8% 8% 8% 10% 2nd half 6% 8% 10% Both unpaid 7% 8% 10%

124 Memo Date: July 31, 2013 To: From: Subject: All Assessors Andrea Fish, Supervisor Information and Education Section Local Boards of Appeal and Equalization Trained Member Clarification The purpose of this memo is to clarify our interpretation of Local Board of Appeal and Equalization (LBAE) trained member requirements under Minnesota Statute , subdivisions 2 and 3. Subdivision 3(a) states in part: A city or town that does not comply with these requirements is deemed to have transferred its board of appeal and equalization powers to the county beginning with the following year's assessment and continuing unless the powers are reinstated under paragraph (c) [emphasis added]. In previous year, our understanding of M.S , subdivision 3 was that the jurisdiction would lose their board automatically for a minimum of 2 years. Based on an updated interpretation of the statute, we would like to clarify the provisions of subdivision 3, paragraph (a). When subdivision 3, paragraph (a) refers to the following year s assessment, the law is referring to the assessment year that follows the December 1 training certification deadline. For example, on December 1, 2012 a board must certify that it has a trained member. If a jurisdiction does not have a trained member on December 1, they lose their board for the 2013 appeal season. The jurisdiction would be able to certify a trained member on December 1, 2013 to be able to hold a regular LBAE for the 2014 appeal season. Therefore, the jurisdiction loses its board for a minimum of one year, and may be reinstated as long as the jurisdiction can certify a trained member by December 1 of the same year that they lost their board. However, if the jurisdiction had certified a trained member by December 1 and the board is scheduled to have a LBAE meeting, but the trained member is not present and/or there is not a quorum, then the meeting will be switched to an open book meeting for 2013 and the jurisdiction will additionally lose their board for the the following year s assessment. Example: A board proves compliance on December 1, The LBAE meeting is scheduled for a date in At the meeting, the trained member and/or a quorum is not present. The meeting must switch to open book for 2013 and the jurisdiction loses their board for the following year (2014) as well. This means the jurisdiction has lost its eligibility for a minimum of two years. In summary, a board that does not certify a trained member on December 1 loses the LBAE for a minimum of one assessment year. However, for a board that meets but does not have a trained member or quorum, the board is lost for two years (the year that the board switches to open book as well as the following year ). This clarification goes into effect immediately. If a jurisdiction lost the LBAE in 2013 due to not having a trained member and proving compliance on December 1, 2012, the jurisdiction can send someone to training this year in order to prove compliance on December 1, 2013 and hold their meeting in If you have any questions or concerns regarding this clarification please contact Jessi Glancey by jessi.glancey@state.mn.us or by phone

125 MEMO Date: June 5, 2013 To: From: Subject: All County Assessors Information & Education Section Property Tax Division Market Value Exclusion on Homesteads of Disabled Veterans 2013 Reapplication The Minnesota Department of Veterans Affairs has notified us that, as has occurred in previous years, letters of notification of veterans disability status that are provided by the United States Department of Veterans Affairs have been delayed in some cases this year. These letters are used by veterans and County Assessors Offices to determine the appropriate eligibility rating for purposes of the market value exclusion for disabled veterans. Because the letters are delayed, we have been asked by the state s Department of Veteran s Affairs to request that you allow extra time for the documentation to be submitted for applications. We ask that you continue to accept applications by the July 1 application deadline with or without supporting documents. The paper application without documentation will therefore be filed by the statutory deadline. By August 15, the veteran must supply you with either: 1. the federal Department of Veterans Affairs notification letter, or 2. other documentation of qualifying service-connected disability status (e.g. through the County Veteran s Service Officer). We strongly recommend that veterans work with their CVSOs directly in order to get all application and documentation information in by the July 1 deadline. As we do not know when the federal Department of Veterans Affairs letters will be sent, it is a good idea for veterans to gather the information locally as soon as possible prior to the application deadline. If you have any questions regarding how to proceed for the 2013 assessment year, please contact the Information and Education Section of the Property Tax Division via proptax.questions@state.mn.us. Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

126 MEMO Date: April 8, 2013 To: All Assessors From: Property Tax Division Information and Education Section Subject: Class 4c(1) Resort Property - Time period for gathering receipts. The department has identified a classification issue that needs to be clarified in order to increase the uniformity of application of the 4c(1) seasonal residential recreational-commercial resort classification for the entire state. At the heart of the matter is whether some seasonal residential recreational-commercial resorts should be treated differently because their peak season occurs during winter months. It has come to our attention that it is extremely difficult for a resort such as a ski resort, to gather 40% of the annual gross lodging receipts over a consecutive 90-day period if the normal and logical period for gathering those receipts is truncated on January 2 nd due to strict adherence to a calendar year. Recognizing this, we recommend using a consistent measurement, such as a specific date prior to the assessment date of January 2 nd that is in line with the typical business model. In doing so, we would not invalidate the assessment date and would also ensure that the 250-day requirement is satisfied. For example: Starting measurement Nov 1, 2011 Ending measurement Oct 31, 2012 All income and lodging data used for the 2013 assessment. We do not believe it was the intent of the legislature, when writing the language for Minnesota Statute , subdivision 25, to exclude resorts that rely on winter activities or other activities that fall outside of the normal summer recreation timeline. The legislation allows a benefit for a seasonal income stream on any qualifying seasonal property, regardless of the particular season. If you have any questions related to this policy, please contact your county s Property Tax Compliance Officer or the Information and Education Section via proptax.questions@state.mn.us. Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

127 Date: March 7, 2013 To: From: Subject: All Assessors Information and Education Section Property Tax Division Exemption: Containment facilities for agricultural chemicals This memo is intended to clarify Minnesota Statute subd. 23. In order to answer questions surrounding this subdivision in the exempt statutes and further promote uniformity of practice, we are providing the following memo. It is important to note that this is not a departure from the guidelines issued since 1992, but rather a reinforcement and refinement of already outlined recommendations. Subd. 23. Agricultural containment facilities. Containment tanks, cache basins, and that portion of the structure needed for the containment facility used to confine agricultural chemicals as defined in section 18D.01, subdivision 3, as required by the commissioner of agriculture under chapter 18B or 18C, are exempt. Without distorting the natural context of the subdivision, it is necessary to parse out the different aspects of this subdivision. They are: Physical items Containment tanks Cache basins That portion of the structure needed for the containment facility The physical items must be part of a facility used to confine agricultural chemicals Agricultural chemicals are: Pesticides (MS 18D.01, subd. 3) Fertilizers (MS 18D.01,subd. 3) The physical items are part of a containment facility required under MS 18B or 18C 18B-Pesticide control statute 18C-Fertilizer, Soil Amendment, and Plant Amendment statute As you would suspect, the call for clarity surrounds the third bullet of the physical items listed above (portion of the structure needed for the containment facility) and results in this question being asked most frequently: Does the exemption include roofs and walls? Neither a storage nor a loading area for agricultural chemicals is required by law or rule to have a permanent roof, if the structure has a large enough cache basin, and other safeguards are used. However, a building s design may include a roof for any number of containment-related functional and economic reasons. For

128 example, a roof may allow the cache basin to be smaller (MR ). It may be employed primarily to decrease corrosion and weathering of primary containers, or fixtures and equipment necessary to manage spills and prevent releases (MR ). A roof may eliminate the need for a security fence around the facility (MR , Subp. 5; ). Therefore, if a containment facility includes a confinement structure, and that structure has a roof, the roof sheltering the chemicals is included in the exemption. Under Minnesota Law, the phrase in the exemption statute, portion of the structure needed for the containment facility, encompasses both portions of the structure that are absolutely necessary to the facility, and those portions reasonably necessary for the facility. For the same reasons, a wall or portion of a wall of a storage or loading area is exempt, even if the wall or portion of the wall is not part of a dike or cache basin. However, as with most exemptions, if there are significant and substantial portions of the structure primarily devoted to another, non-exempt use such as office space, storage facilities, garage space, or any other use not specific to the containment facility, those portions are taxable unless some other provision applies. For purposes of this subdivision the exemption does not apply to any portion of the land. Any facility storing an agricultural chemical which does not have a containment system as required by the commissioner of agriculture is not just in violation of MS 18B and MS 18C, but then that facility is also fully taxable.

129 MEMO Date: January 8, 2013 To: From: RE: County Assessors County Auditors County Treasurers Auditor/Treasurer Services Property Tax Division Agricultural Homestead Market Value Credit We have been asked to clarify policy regarding how the agricultural homestead market value credit should be applied across linked parcels. The agricultural homestead market value credit should be first allocated to the base parcel. Any excess credit is to be applied to the local net tax capacity-based tax of the next linked parcel (which should be the next parcel in nearest proximity to the base parcel). This procedure applies to homestead parcel linkages that cross county lines as well as for parcel linkages within a county. The following explanation is adapted from the Property Tax Administrator s Manual, Module 6 ( pages 18 and 19. Agricultural Homestead Market Value Credit Agricultural homestead market value credits only apply to class 2a land, ag buildings, and any contiguous 2b land under the exact same ownership, or to agricultural property which qualifies under one of the special agricultural homestead provisions. The credit applies to homesteads rather than to units or parcels. Therefore, the credit will extend to linked parcels and must be computed on the whole homestead rather than as separate credits for each individual parcel. The credit is equal to.3 percent of the first $115,000 of the property s TMV. The maximum credit is limited to $345 for each homestead. The credit is reduced by.05 percent of the TMV in excess of $115,000, subject to a maximum reduction of $115. This means that the maximum credit of $345 is achieved for agricultural homesteads with a TMV of $115,000. This credit decreases as the market value increases to $345,000. For any agricultural homestead valued at $345,000 or above, the credit is $230. If property is a fractional homestead, the credit should first be computed as though the entire property is homesteaded. The credit should then be pro-rated based on the homestead recipient s Page 1 of 2

130 percentage of ownership (or one-half if only one spouse occupies the property). This prevents a fractional homestead from receiving more credit than a full homestead due to the phase-out calculation. Primary Statutory Reference: , subd. 2 Example: Agricultural Credit on Linked Parcels Primary Linked Parcel 2 nd Linked Parcel 3 rd Linked Parcel 4 th Linked Parcel Total: All parcels TMV $80,000 $15,000 $15,000 $15,000 $125,000 $ $45.00 $45.00 $15.00 $ Parcel Initial Credit (line 1 x 0.3%; $345 max) Credit phase-out (TMV over $115,000 cumulative x 0.05%, $115 max) Parcel final credit (lesser of initial credit or unused final total credit) $0 $0 $0 $5.00 $5.00 $240.00* $45.00** $45.00*** $10.00**** $ More information on the credit can also be found in the Auditor/Treasurer Manual, Chapter 6.06 ( pages If you have any questions or concerns regarding this memo, please direct them to us at proptax.questions@state.mn.us. Page 2 of 2

131 Date: January 3, 2013 To: From: RE: All County Assessors State Assessed Property Section Property Tax Division State Assessed Property Values on Valuation Notices At the Utility Forum held this past October, a question was asked regarding state-assessed values and whether they should appear on the current year valuation notices. Our answer is no, stateassessed values from the previous year should not appear on the value notices issued by the counties for the current year. It is our opinion that any state-assessed structure and machinery values for operating property should be zeroed out at the beginning of each assessment for the following reasons: 1. Providing the previous year s state-assessed values on the current year s valuation notice is incorrect and misleading. For example, by providing the current estimated market values located in your computer system for the 2013 assessment, you are providing the 2013 locally-assessed values for land and any other non-operating property and the 2012 state-assessed values for operating property. This is due to the fact that 2013 stateassessed values are not completed until May-June. Further, providing the state-assessed values on those notices is confusing for the companies because it comingles the both the state and local assessments. The state notifies each company of its Minnesota apportionable market value each year. When the county also notifies them of a value, a portion of which is state-assessed, the taxpayer is unclear of the value placed on their non-operating property such as their land. This is misleading. If the taxpayer chooses to appeal the value or classification of their nonoperating property, it will ultimately make for additional work for assessors if they request these values be separated. 2. Providing incorrect state-assessed values each year causes incorrect numbers to be reported on the Spring Mini abstracts. It also causes over-reporting the growth of C/I values on the Fall Mini. Page 1 of 2

132 3. Separating such values and classifications is necessary due to preferred commercial and state general tax implications. For example, all property classified as machinery receives a class rate of 2%; however, property which is identified as electric generation machinery is exempt from the state general tax. In addition, all transmission line right-of-way receives a class rate of 2% and is subject to the state general tax. Finally, all state and locally-assessed property receiving class 3a is eligible for one preferred commercial classification rate per owner, per county (unless the property constitutes separate, competing businesses) up to a maximum of $150,000. Below is a summary of the table: Class Rate Table Class Rate State Rate 3a Commercial/Industrial Electric Generating Public Utility Machinery All Other Public Utility Machinery Transmission Line Right-of-Way First $150,000 Over $150, % 2.00% 2.00% 2.00% 2.00% 1.50% 2.00% N/A 2.00% 2.00% Zeroing out the state-assessed values for each new assessment will: Provide taxpayers the opportunity to review and appeal only the locally-assessed values at the local level which is much more transparent; Provide taxpayers an opportunity to use the locally-assessed values to estimate their property taxes when paired with the state-assessed values they receive later in the year. This is something they are not able to do right now due to the comingling of the state and locally-assessed property on the valuation notices. Remove incorrect figures from abstracts (keeping in mind that all state-assessed figures will be removed from the Spring and Fall Minis altogether). This should be done if possible for the 2013 assessment and will be required for the 2014 assessment. We also expect that a comment be inserted into the free form area of the valuation notice indicating that the value includes only locally-assessed property. Companies will not be able to compare valuations between 2012, 2013, or 2014 during this transition. Companies should be contacting the appropriate county assessor for questions regarding locally-assessed property and the state-assessed property section for questions regarding state-assessed property. If you have any questions or concerns regarding this memo, please direct them to us at sa.property@state.mn.us. Page 2 of 2

133 BULLETIN Date: December 31, 2012 To: From: Subject: County Assessors; Nonprofit Organizations Information and Education Section, Property Tax Division Review Board for Determining Property Tax Exemption of Institutions of Purely Public Charity As many of you are likely aware, the Minnesota Association of Assessing Officers, Minnesota Council of Nonprofits, and the Minnesota Department of Revenue formed an advisory board which would review exemption eligibility for properties owned by institutions of purely public charity. This board was developed in response to 2009 legislation. The review board has held eight meetings to date to consider applications for property tax exemption. At its most recent meeting, the board determined that there have been many points of consideration that would be beneficial to share with the assessment community and nonprofit community alike. The purpose of this bulletin is to share with you some of the items that have been discussed regularly. Our hope is that this will be a helpful document when having discussions regarding specific properties applications for exemption. We will also briefly describe some of the decisions that the board has made, as well as describe the general process of the review process. Statutory Guidelines for Exemption Minnesota Statutes, section , subdivision 7 outlines the requirements for property tax exemption as an institution of purely public charity. There are six basic requirements for property tax exemption in this subdivision. Also, taxation is the rule and exemption is the exception. With virtually any type of exempt property, the qualifying parcel must be owned by an exempt institution, used for exempt purposes, and ownership of the property must be reasonably necessary to further the mission of the exempt organization. This three-prong test is used when making these determinations. Beyond the six statutory requirements for property tax exemption outlined in M.S , subdivision 7, the organization seeking exemption must also be exempt from federal income taxes under section 501(c)(3). We have advised assessors that if an organization is able to verify that the organization is exempt from federal income taxes as a 501(c)(3) organization, it can be reasonably assumed that the property meets requirements 1, 4, and 6. The review board then typically reviews whether the property meets requirements 2, 3, and 5. Page 1 of 6 Requirement 2: The institution must be supported by material donations, gifts, or government grants for services to the public in whole or in part; or there may be a reasonable justification for failing to meet this requirement. Requirement 3: A material number of the recipients of the charity must receive benefits or services at reduced or no cost, or the organization must provide services to the public that alleviate burdens or responsibilities that would otherwise be borne by the government (both requirements do not need to be met); or there may be a reasonable justification for failing to meet this requirement.

134 Requirement 5: The beneficiaries of the charity are unrestricted, or, if restricted, the class of persons to whom the charity is made available is one having a reasonable relationship to the charitable objectives. General Agreements and Common Discussions Membership fees that provide the member with market value goods or services are generally not considered donations. In other words, a membership fee which provides a return of something of material value is not considered a donation, but is more similar to a fee-for-service. However, in some cases, the membership fee is greater than the value of goods or services received for membership. The amount of that membership fee that exceeds the amount of goods or services received may be considered a donation (organizations are able to lay out for members which portion of their fee/donation is considered an exempt donation the portion of the fee that exceeds the return). For example, a non-profit radio station may host a membership drive as fundraising. Members of the public radio station may receive some goods or services for being a member, but in general the membership fee/donation exceeds the value of those goods or services. The portion of the fee/donation that exceeds the goods or services received would be considered a donation for purposes of property tax exemption determinations. The use of the property must fulfill the organization s mission. This is part of the umbrella requirement that for any property tax exemption, property must be owned by a qualifying organization, used for that organization s purposes, and ownership of the property must be reasonably necessary to fulfill the organization s mission. Bare land owned by an organization, for example, may not be exempted unless there is a clear use of the property that fulfills the mission of the organization (e.g., bare land that is used for camping by a youth camping organization). If the property use changes to a mission-based use, exemption eligibility may be reconsidered. In the case of the lease, how does the tenant use the property? Does the tenant s use coincide with the mission of the owner organization? The board has not developed a bright-line test on how tenant/owner relationships must coincide for property tax purposes. We do know that if a nonprofit leases a portion of its property to a for-profit organization, the leased portion is taxable. However, if a nonprofit leases a portion of its property to another nonprofit, the lease is not necessarily taxable, but the review board would ask for much more information about the tenant s use of the property, the lease fee, etc. In general, the lessee organization needs to meet the same statutory standards for property tax exemption on its own merits in order to qualify. We would also recommend that assessors get as much additional information as possible for their own purposes, as well. Who is benefiting from the property? While there are no requirements for who benefits? there have been discussions regarding cases where it has been unclear whether anyone benefits, whether anyone other than members benefit, and whether a good or service is provided that anyone needs. In general, the expectation is that qualifying organizations would primarily benefit the public, with incidental private benefit not disqualifying a property from exemption. However, a property that primarily benefits private interests with only incidental public interests would be questionable in terms of qualifying for property tax exemption. This is another instance where it is helpful to both the assessor and the review board if the organization is able to clearly outline who is benefitting from the good or service provided. [Please note that this is only in cases of properties seeking to qualify under clause 3 that do not alleviate burdens or responsibilities that would otherwise be borne by the government.] Page 2 of 6

135 Opinions of the Board Group homes: Group homes do not qualify for the exemption provided for nursing homes under Minnesota Statutes, section , subdivision 90. Group homes must qualify for exemption based on the requirements for institutions of purely public charity. The board has found group homes to be taxable and exempt based on the specific facts of each scenario. In particular, the necessity of ownership requirement was particularly helpful in determining exemption eligibility for certain homes. At its first meeting, the review board discussed two group home organizations. Each of these facilities was either an intermediate care facility, primarily engaged in providing active health or rehabilitation services to persons with developmental or physical disabilities; or, was a waivered facility for such persons, meaning that the residents of the facility were receiving services from the facility that, but for the provision of those services at this facility, the resident would likely have to be housed in a more expensive intermediate care facility, nursing home, or hospital. Therefore, the necessity of ownership test was part of the discussion related to these properties. The board agreed that it appeared that the group homes met all of the statutory requirements except requirement 2 (that the organization is supported by material donations, gifts, or government grants). Some members felt that the group homes met this requirement because of the grants they received. Others disagreed and stated that the grants did not meet the definition of government grants for property tax exemption purposes. However, those that disagreed did believe that the organization had reasonable justification for failing to meet this second statutory requirement. Therefore, while members disagreed on whether the homes qualified based on the second requirement, the board s overall opinion was that the group homes were exempt as described. At another meeting, the review board did not recommend exemption for an assisted living group home because it appeared to fail to meet the third requirement: whether a material number of the recipients of the charity receive benefits or services at reduced or no cost, or whether the organization provides services to the public that alleviate burdens or responsibilities that would otherwise be borne by the government. Based on the information provided, it was not clear that a charity was provided to the public generally at reduced or no cost, or that the burdens of government were alleviated by home. While the assisted living facility did not qualify for the statutory exemption provided to nursing homes, it also did not meet the required standards of an institution of purely public charity in the board s opinion. Rather, its operations resembled senior housing arrangements, which are taxable. Because of the nature of the operation, the necessity of ownership test was also not clearly met. The board s consensus was that the third requirement was not met, nor was reasonable justification for failure to meet this requirement provided. Lake Association: A 501(c)(3) lake association that was organized for water quality preservation was determined not eligible for exemption by the review board. In the case of the specific lake association, the board did not find that the second or third statutory requirements were clearly met, nor was there reasonable justification for failure to meet the requirements. As part of the review process, the board determined that it was unclear whether there were donations beyond membership fees. The advisory review board was of the opinion that the membership fees used by the organization for support did not qualify as donations for purposes of property tax exemption. The board s consensus was that the second requirement was not met, nor was reasonable justification for failure to meet this requirement provided. Page 3 of 6

136 As for the third requirement, based on the information provided, it was not clear that a charity was provided to the public generally, nor that the burdens of government were alleviated by the lake association. The stated purpose of maintaining property values for homeowners was not considered providing a charity. The other uses of the property that were described as charitable were not clearly attributable to the association, or did not clearly show a benefit to the public generally. It was not established that the organization alleviated burdens that would otherwise be necessarily borne by the government. The board s consensus was that the third requirement was not met, nor was reasonable justification for failure to meet this requirement provided. Daycare Center: The board reviewed application for exemption by a daycare center. Based on the information provided, it was not clear that a charity was provided to the public generally at reduced or no cost, or that the burdens of government were alleviated by the daycare center. While the organization offered a crisis nursery, it was unused. The daycare center offered a minimal rate discount but did not offer scholarships to families who were unable to pay for the services. Some areas of the property were leased or made available to others for low cost, but this activity was not considered a charity provided by the daycare in furtherance of its mission. A food program offered by a local organization was considered a charity provided, but not by the center itself. Additionally, providing reduced rates to the center s employees was not considered a charity. The board s consensus was that the third requirement was not met, nor was reasonable justification for failure to meet this requirement provided. Lake Recreation Center/Campground: The board reviewed a campground for recovering alcoholics, their family and friends owned by a 501(c)(3) organization. The review board did not find that this property qualified for exemption based on not clearly meeting the second or third statutory requirements, and failing to provide reasonable justification. The organization s funding was primarily from membership donations, volunteer hours, suggested donations for camping, and donations of supplies. It was unclear whether the level of donations beyond members donations and user fees rose to the level necessary to qualify for exemption as an institution of purely public charity. The members donations certainly helped to maintain the property that they used, but whether these donations constituted a donation in terms of providing something for the public benefit was not clearly established. Based on the information provided, the public s donations to the organization were minimal, and often times more closely represented fees for services provided (e.g., for use of the campground facility). The board s consensus was that the second requirement was not clearly met, nor was reasonable justification for failure to meet this requirement provided. As for the third requirement, based on the information provided, it was not clear that a charity was provided to the public generally, nor that the burdens of government were alleviated by the recreational center/campground. The primary beneficiaries of the property appeared to be the members of the organization, and not the public generally. Because it was unclear whether a material number of people benefited from a charity being provided by the organization, it was difficult to establish that this requirement was met. A charitable benefit or service that is provided to the public was not outlined sufficiently for the review board s purposes. It was not established that the organization alleviated burdens that would otherwise be necessarily borne by the government. The board s consensus was that the third requirement was not met, nor was reasonable justification for failure to meet this requirement provided. Page 4 of 6

137 Review Board Process First and foremost, it is the assessor s duty to determine eligibility for property tax exemption. The assessor must consider all documentation provided by an applicant, including any documentation relating to a reasonable justification for failing to meet statutory requirements 2, 3, or 5. The assessor must request any information he or she deems necessary before making this determination. If an applicant applies for exemption as an institution of purely public charity but does not meet the six requirements and the assessor does not find that reasonable justification applies, there are two options for appeal: an appeal to an advisory review board, which will provide advice to the assessor and/or the organization; or an appeal to Minnesota Tax Court, which may grant or deny property tax exemption. Exemption determinations are made only by assessors, the Tax Court, or the Minnesota Supreme Court. Exemptions may not be granted by the Department of Revenue, by local boards of appeal and equalization, by county boards of appeal and equalization, or by any other local or county board. The institution or the assessor may request through the Department of Revenue that the eligibility for exemption be reviewed by the advisory board comprised of members of the Minnesota Council of Nonprofits, the Department of Revenue, and the Minnesota Association of Assessing Officers. This review board assesses which factors the institution meets, and will determine if any of the factors are not met, and for which reasonable justification for the failure has not been given. The review board may also determine whether the facts of the organization would be considered sufficient to either meet the statutory requirements or qualify for reasonable justification. The review board issues a written response to the assessor and the institution, outlining its advisory opinion as to whether or not the organization meets the requirements for property tax exemption. This opinion is non-binding, as the review board is not able to formally grant or deny exemption. The review board does not hear appeals which have not first been reviewed by the assessor. The review board will also not hear appeals which are presented to Minnesota Tax Court prior to or at the same time as being presented to the review board. Either the assessor or the applicant may request that the board review the application for exemption as an institution of purely public charity. The party seeking review should contact the Department of Revenue Property Tax Division via written request. The mailing address for requests is: Review Board Institutions of Purely Public Charity c/o Property Tax Division Mail Station N. Robert Street Saint Paul MN The written review requests must be accompanied with all documentation appropriate to the organization s application. This includes, but is not limited to: The application for exemption; All supporting documents requested by the assessor or provided by the applicant; The Federal Form 990 and/or other income and expense statements for the three previous years; The IRS 501(c)(3) determination letter or substitute; The Articles of Incorporation; A detailed description of the organization s function, outlining why the organization believes it qualifies for property tax exemption; The assessor s letter of denial, explaining the reasoning for the assessor s decision (if any); Aerial photos of the property and/or a building diagram/site plan, if available. Page 5 of 6

138 We ask that the applicant (assessor or organization) please not staple the documents prior to sending, and please avoid the use of post-its or other attached notes. The documents are electronically scanned for distribution and staples, paper clips, and post-its will have to be removed prior to scanning. Using staples in particular damages the documents and makes scanning difficult. The Department of Revenue organizes the meetings and disseminates all of the documentation for the institution(s) to be reviewed. The board generally meets every two to three months to discuss and review requests. In 2012, meetings have been held in January, May, August, and October. The board is made up members from three organizations: the Department of Revenue, the Minnesota Association of Assessing Officers, and the Minnesota Council of Nonprofits. Each group has one vote for purposes of determining exemption eligibility. The groups may bring along one or two additional field experts (e.g. an attorney) if necessary to provide input or further information to the review board. The assessor and the applicant are not asked to appear in person before the board. The board reviews the organization s documents and determines whether the organization meets the six statutory requirements for exemption. The board has a history of determining that if an organization is exempt by the Internal Revenue Service as a 501(c)(3) nonprofit, then the organization meets statutory requirements 1, 4, and 6. The board then focuses on requirements 2, 3, and 5. The organization may be determined to meet or not meet any of those requirements, or the organization may be determined to not meet one of those requirements but have reasonable justification for failure to do so. The board also determines whether the property meets the traditional understanding that ownership, use, and necessity of ownership are the three key elements in determining exemption. Absence of any of the three elements would likely disqualify a property from exemption unless specifically allowed by law. For example, a property may be owned by an exempt institution, but if it is not used for that institution s stated mission and purposes, exemption would be denied. An informal opinion is issued by the board within 60 days of a meeting. Again, this opinion is not binding on the assessor. Minnesota Tax Court (or Supreme Court) is the only authority eligible to make exemption determinations which must be acted upon by the assessor. However, the opinions of the board are to be carefully considered by the assessor when making a determination whether to follow the board s advice regarding acceptance or denial for exemption as an institution of purely public charity. The review board is neither required nor funded by legislation. Board members serve voluntarily and are not reimbursed by the state for travel or other expenses. Property Tax Division staff schedule and organize the meetings, share organizations documentation, record the final decision of the review board, and communicate the board s decision with the institution(s) seeking a review. Additional Information Additional information related to determining exemptions for institutions of purely public charity may be found in the Property Tax Administrator s Manual, Module 5 Exempt Property. The manual is available on the Department of Revenue website and via the following link: Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

139 MEMO DATE: November 13, 2012 TO: FROM: SUBJECT: All County Assessors Andrea Fish, Supervisor Information and Education Section, Property Tax Division Transfer of 2b properties from Green Acres to Rural Preserve The Property Tax Compliance Officers of the Property Tax Division have shared your concerns about withdrawing class 2b lands that had been grandfathered into Green Acres for the 2013 assessment, and when to collect deferred taxes. Minnesota Statutes, section , subdivision 3a provides that class 2b lands that had been grandfathered into Green Acres after 2008 law changes must be removed for the 2013 assessment. That same subdivision also provides that When property assessed under this subdivision is removed from the program and is enrolled in the rural preserve property tax law program under section , the property is not subject to the additional taxes required under this subdivision or subdivision 9. As you are all aware, properties may be enrolled in Rural Preserve by May 1 of any given assessment year. This has raised the question of when deferred tax paybacks would be due for class 2b properties that have been grandfathered into Green Acres. After many internal discussions, we have determined that the appropriate action is to remove the lands from Green Acres by January 2, 2013 but to not collect paybacks until after the May 1 application deadline for Rural Preserve has expired. This option will serve two purposes. First, property owners will be notified through the Notices of Valuation and Classification that they are no longer receiving deferral under Green Acres, and are not receiving any deferral under Rural Preserve. Second, it will provide property owners with time to file applications for Rural Preserve by the application deadline without being required to pay back those deferred taxes. If a property owner has class 2b lands removed from Green Acres for the 2013 assessment, but does not apply for Rural Preserve by May 1, 2013, deferred taxes should be collected at that time. If you have any questions related to this policy, please contact your county s Property Tax Compliance Officer or the Information and Education Section via proptax.questions@state.mn.us. CC: All County Auditors and County Treasurers Property Tax Division Tel: North Robert Street Fax: Mail Station 3340 TTY: Call 711 for Minnesota Relay St. Paul, MN An equal opportunity employer

140 MEMO Date: October 3, 2012 To: From: Subject: County Assessors Drew Imes, State Program Administrator Information and Education Section County Assessor Reappointment Minnesota Statutes declares that the terms of office as County Assessor shall begin on January 1 of every fourth year after January 1, 2013 will begin a new term of office for county assessors statewide. Statute also requires the Commissioner of Revenue to approve the appointment and the reappointment of all county assessors. Therefore, the department is distributing the attached form (Request of Information for County Assessor Reappointment) to be completed and returned to the Department of Revenue by every county assessor who has been reappointed to the position by the County Board. This form must be completed and returned to the department before December 1, 2012 in order for a county assessor reappointee to be approved by the Commissioner of Revenue and meet the requirements stated in law. If your appointment is confirmed, the department will send you a certificate approving your appointment and the language for an Oath of Office that must, per Minnesota Statute , be taken before your County Board. Thank you for your compliance in this matter.

141 Request of Information for County Assessor Reappointment You must attach to this form a copy of the County Board minutes approving the resolution to appoint you as the County Assessor Personal Information Name: Last First Middle initial Date Address Social Security Number City State Zip Code County Business Phone Address What is your current level of assessment licensure? SAMA AMA License # If you are an AMA, please provide the date of first appointment as County Assessor: County of Employment Your Title General Information Outside Activities: Please check the appropriate boxes. If you are currently performing or have performed any of these outside activities in the past four years, you must inform us. At least one box must be checked. If you have performed Fee Appraiser and/or Real Estate Sales activities, please list all jurisdictions where these activities were performed. Property Management Property Tax Consultant Property Tax Representative Fee Appraiser Insurance Sales Real Estate Sales I do not perform any of these outside activities Jurisdiction of Fee Appraisals or Real Estate Sales Have you been convicted of a felony in the past 5 years? No Yes If yes, explain: Have you filed all your required Minnesota Income Tax Returns? No Yes Do you owe any taxes to the State of Minnesota? No Yes You must attach a copy of the County Board minutes approving the resolution to appoint you as the County Assessor. By signing below, I certify that this form is correct and complete to the best of my knowledge and belief. Signature of applicant Date See Reverse for Use of Information.

142 Use of information This information request is not required by law to be filed. However, in order to be considered for appointment or reappointment as a county assessor, you must file this form. M. S requires the Commissioner of Revenue to approve the appointment of all county assessors. The Department of Revenue uses this information in order to determine whether to approve your appointment. All information on this form is necessary to identify you and determine if you qualify for appointment as a county assessor. If you do not provide all the required information, approval of your appointment will be delayed while we investigate whether the omission was intentional. If all the information is not provided, the appointment will not be approved, and if we later receive all of the required information, any delay that occurred might affect the date by which your appointment becomes effective. Your Social Security Number is private information and cannot be disclosed. Your Social Security Number will be used by the department to verify that you have filed and paid your taxes. The Department of Revenue can use this information for tax administration purposes. All other information on the form, including your address, is public. Please return this form and attachments to the Department of Revenue, Property Tax Division: Property Tax Division Mail Station 3340 Saint Paul, MN FAX: (651) If you would prefer to scan in a signed copy of the completed form and return it to the department via , please send it to the following address: drew.imes@state.mn.us

143 Memo MINNESOTA REVENUE Date: September 6, 2012 To: From: Subject: County Assessors, Auditors, and Treasurers in affected counties Property Tax Division, Department of Revenue 2012 First Special Session Disaster Relief The following is a summary of the 2012 First Special Session legislation to provide relief for counties affected by the June 19-21, 2012 severe storms and flash flooding in northeastern Minnesota and the June 14-18, 2012 windstorms and flooding in western and south-central parts of the state. This bill was signed on August 24, The purpose of these sections is to provide property tax relief for those most severely impacted by the disasters and to provide reimbursement to local governments for loss of property tax revenues. These provisions are similar to language that was carried in previous flood legislation. Section 24: Flood loss; city replacement aid This section will provide flood loss aid for cities that were the most severely impacted by the floods. The flood loss aid will be available to cities if the decrease in net tax capacity resulting from flood damage is greater than 5% of its 2012 assessment year total taxable net tax capacity. Assessors must certify the flood net tax capacity for qualifying cities to the Department of Revenue by August 1, (A form for this certification will be forthcoming.) The aid amount would be equal to the flood net tax capacity loss multiplied by the city s average local tax rate for payable year The payment will be made to the cities in July of Section 25: Disaster area; waiving property tax penalties for business and damaged properties This section waives penalties on the second-half property taxes for qualifying properties if not paid by October 15, 2012 but paid by December 28, If the second half of the payable 2012 taxes is paid after December 28, 2012, then all penalties that would have occurred since the due date must be charged on the amount of unpaid tax. To qualify, the property taxpayer must have paid first-half taxes by May 15, Penalties shall not accrue in the following situations: 1) Commercial (class 3a and 3b) properties located in a county that includes an area that would qualify as a disaster or emergency area under M.S if the designation were to be based solely on the damages to properties resulting from the floods and irrespective of Executive Council approval. Minnesota Statutes, section defines qualifying local units of government as those in a federal disaster area or in a local emergency under M.S where the average damage for buildings that are damaged is at least $5,000 and either at least 25 taxable buildings were damaged or the total dollar amount of damage exceeds 1% of the total taxable market value. The waiving of penalty would be allowed for commercial properties within qualifying counties if the taxpayer was unable to make the payment due to circumstances related to the flooding and if they were current on the first half of the payable property taxes. These commercial properties do not have a requirement for actual physical damage to the property but should have loss of economic base and commercial activity related to the flood disaster. A business must attach a statement to

144 the second-half payment that all the requirements for this provision are met. Counties may verify the accuracy of these statements as necessary. 2) All properties that are 50% or more damaged or destroyed by the floods (which may also be eligible for an abatement of some or all of their current year payable property taxes based on the current law disaster relief provisions found in M.S to M.S ). Section 26: Agricultural homesteads extended This section would allow farmers to maintain agricultural homestead status on properties that they do not physically occupy, provided the residence has been vacated due to the disasters as described above. This is similar to agricultural homestead provisions we have allowed in previous years. This allows the property to maintain homestead for an additional two assessment years (2013 and 2014), if the owner relocates within the state and within 50 miles of the agricultural land. Affected owners must notify the county assessor that the relocation was due to the floods, and the owner must furnish the assessor any information deemed necessary by the assessor in verifying the change in homestead dwelling. For taxes payable in 2014, the owner must notify the assessor by December 1, Further notifications to the assessor are not required if the property continues to meet all the requirements in this provision. Section 27: Abatement and credit applications waived This section waives the application requirements for the property owner for purposes of receiving the property tax abatements and credits outlined in Minnesota Statutes, sections through This change will eliminate the current law step of requiring the property owner to apply to the assessor or the county board for the abatement or credit. Instead, the county assessor will determine if the property has met the 50% of more damage criteria that will trigger the abatement (the current year s property tax) and the credit (the next year s tax). (Note, however, that homesteads in a disaster or emergency area do not have a 50% damage requirement and do not have an application requirement under current law for their credits and the assessor will determine their credits as usual.) The county assessor would notify the taxpayers or owners of the affected parcels by December 14, As a reminder, for those taxpayers that have been impacted by the flood but do not qualify for the extended due date under the above provisions, other authority resides in statute for abating penalty: 1) M.S provides that the county board may grant a reduction or abatement of estimated market valuation or taxes and of any costs, penalties, or interest on them as the board deems just and equitable and order the refund in whole or part of any taxes, costs, penalties, or interest which have been erroneously or unjustly paid. 2) M.S , subd. 1 provides that, if any county board so elects, the county treasurer may abate the penalty on finding that the imposition of the penalty would be unjust and unreasonable. Summary of current law provisions: Current law provides for property tax relief for destroyed properties in M.S through M.S Three specific forms of relief are provided as follows: 1) Abatement for taxes payable in the year of the disaster (M.S ) 2) Homestead disaster credit for taxes payable in the year following the disaster (M.S ) 3) Local options disaster credits for taxes payable the year following the disaster (M.S )

145 The amount of the abatement and the credit will vary depending on if the property is within a disaster or emergency area. If the property is in a disaster area or emergency area, the abatement and the credit is the difference between the net tax on the market value prior to damage and the market value after the damage. This amount will be reimbursed to the local government by the state. If the property is not in a disaster or emergency area the abatement and the credit is determined as a reduction in valuation with a pro rata calculation of the number of months in the assessment year that the structure was not usable. For abatements and credits of properties outside the disaster or emergency area, the state does not reimburse the local governments. The determination of a disaster or emergency area is found in M.S and requires the Executive Council to approve applications from local governments for abatements and credits if they meet certain criteria. The Executive Council consists of the governor, lieutenant governor, secretary of state, state auditor, and attorney general. The determination of the geographic boundaries of the disaster area by the Executive Council will impact the amount of the abatement and credit that the taxpayer is eligible to receive and if the local governments are reimbursed for the loss of the tax revenue. If you have any questions about this disaster relief legislation, please do not hesitate to contact us via proptax.questions@state.mn.us.

146 BULLETIN Date: To: From: Subject: July 30, 2012 All Assessors Informationn and Education Section, Property Tax Division Trust properties and homestead determinations It has come to our attention that there have been many questions regarding trust homesteads, and because of confusion there may be some inconsistency in assessment practices. We have determined that the time is appropriate to issue a bulletin regarding trustt homestead application, with particular emphasis on linking agricultural homesteads. We will cover many frequently asked questions, as well as various scenarios that we have encountered. You may also find information related to trust homesteads in the Property Tax Administrator s Manual, which is available online at History and different types of trusts Trust homesteads granted under Minnesota Statutes, sectionn , subdivision 21 were established in by Laws 2000, Chapter 490, article 5, section 7. Trust held properties were eligible for homestead under subdivision 1 prior to that time, however clarifications made in 2000 through the creation of subdivision 21 clarified some items that have become very important for property tax purposes. The type of trust that is created is not of primary concern under current law. The property may be a testamentary, inter vivos, revocable, or irrevocable trust and no matter what type of trust, the grantor or individuals of specific relation to the grantorr may be eligible for homestead. We have been asked questionss related to revocable and irrevocable trusts for homestead purposes, but the determination is always based on the grantor of the trust and the facts of the homestead situation not the type of trust that is in question. It is for these reasons that we have statedd that trust homesteads also apply to life estates and transfer upon death deeds. Prior to the clarifications in homestead statute, determinations were based in part on whether the trust was revocable, irrevocable, or other. However, those determinations no longer need to be made. Grantor is defined as the person creating or establishing a testamentary, inter vivos, or revocable or irrevocable trust by written instrument or through the exercise of a power of appointment. The grantor of the trust is treated as the owner for homestead purposes. The property may only receive a property tax refund if it is occupied by the grantor or the grantor s spouse (not qualifying relatives) and for agricultural homesteads, it is only available on the house, garage, and first acre of land. The homestead is granted in the name of the qualifying occupant the grantor, grantor s surviving spouse, or qualifying relative thatt occupies the property. While grantors are treated as individual owners for trust property purposes, youu must keep in mind that trusts are not individuals they are entities. This is why different trusts (i.e., different entities) may not be linked in any circumstances. Information and Education Section, Property Tax Division Bulletin: Trust properties and homestead determinations

147 FAQs Can transfer on death deeds qualify for homestead? The legislation allowing for this type of transfer was enacted during the 2008 session and will be found in Minnesota Statutes, section , subdivision 87. You have asked how this type of deed should be treated concerning ownership (e.g. homestead) and if you should treat them like life estates. It is our opinionn that transfer on death deeds are to be treated similarly to life estate property. Basically, the grantor would retain enough ownership interestt to qualify for homestead treatment, but the grantee would not (unless the grantee is a qualifying relativee of the grantor, in which case the property could receivee a relative homestead). Please remember that all other homestead requirements (occupancy, Minnesota residency, etc.) must still be satisfied. Owner occupied, trust held homesteads Real property held by a trustee under a trust is eligible for classification ass homestead property if the grantor or surviving spouse of the grantor of the trust occupies and uses the property as a homestead. [See M.S , subd. 21, paragraph (a).] This is treated inn the same manner as an owner occupied homestead. Note thatt for trust held properties, the propertyy must be occupied by the grantor to receive homestead. If the grantor has passed away but the trust is not dissolved, the surviving spouse of the grantor may occupy the property and continue to receivee homestead treatment. (Once the trust is dissolved, ownership changes and homestead determinations are based on the ownership and occupancy facts at that time.) FAQs A property was owned under a trust by a husband and wife. The wife was the grantor of the trust. She passed away, and her husband continues to reside on the farm. The husband has since remarried. Is he still eligible for homestead ass the surviving spouse of the grantor? Yes. Regardless of having remarried, he is still considered the surviving spouse of the grantor of the trust for homestead purposes. Per Minnesota Statutes, section , subdivision 21, the property may be homestead. Relative trust held homesteads Trust held property can receive relative homestead if occupied by a qualifying relative of the grantor (creator) of the trust. If a relative or surviving relative of the grantor occupies and usess the property as a homestead, the property may be eligible for homestead treatment. A qualifying relative for residential property held under a trust is a parent, stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew, or niece of the grantor of the trust. For agricultural property held by a trust, a qualifying relative is a grandchild, child, sibling, or parent of the grantor of the trust (see M.S , subdivision 1, paragraphs c and d for lists of qualifying relatives). These properties are treated as relative homestead properties. Please note that thesee may be relatives of the grantor or surviving relatives of the grantor in the casee where the grantor has passed away but the property is still held under the trust. If the property is occupied by an individual who is a qualifyingg relative for residential property but not for agricultural property (e.g. a niece of the grantor of the trust), the relative should be given a residential relative homestead on the HGA, but no homestead on the agricultural land. Information and Education Section, Property Tax Division Bulletin: Trust properties and homestead determinations

148 FAQs A property is owned by a trust. The grantor of the trust is deceased, but the daughter has applied for relative homestead. Can homestead be applied if the grantor/relative is deceased? The daughter who is occupying the property would qualify for a relative homestead because she is a qualifying relative of the grantor of the trust, even if that grantor is deceased as stated in Minnesota Statute , subdivision 21. In order to be eligible for the homestead classification, the person occupying a property held by a trust must either be the grantor of the trust or a qualifying relative of the grantor of the trust. Are the rules different if the trustt is created byy court order? For the case in question the property was in the past been held in trust and occupied by the grantor of that trust. It was receiving the homestead classification. The occupant died. The daughter of the deceased is now occupying the property. The daughter is an adult and has a guardian. The court ordered the creation of a special needs trust for the benefit of the daughter. The trustt created by the deceased parent is transferring title of the property y to the special needs trust. Is the property eligible for homestead based on the occupancy by the daughter who is also beneficiary of the trust? Minnesota Statutes, section , subdivision 21, outlines the provisions for which property held under a trust may be eligible for homestead treatment: Real or personal property held by a trustee under a trust is eligible for classification as homestead property if the property satisfies the requirementss of paragraph (a), (b), (c), or (d). (a) The grantor or surviving spouse of the grantorr of the trust occupies and uses the property as a homestead. (b) A relative or surviving relative of the grantor who meets the requirements of subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1, paragraph (d), in the case of agricultural property, occupies and uses the property as a homestead. In the scenario you have outlined, a qualifying surviving relative occupies the property and uses it for purposess of a homestead. The law does not state that trustss created by a court order should be treated differently, therefore, based on thee informationn you have provided, the property is eligible for homestead. An agricultural property was put into a trust in 1996, with the grantor retaining life estate. The grantor occupied the property, and it was an agricultural homestead. Additionally, there was a second residence on the property that was occupied by the grantor s son and daughter in law. That second residence was receiving a residential relativee homestead. Some years ago, the grantor s residence was considered unlivable, and the grantor moved into a nursing home property. Subsequently, the agricultural land was reclassified as an agricultural relative homestead based on the continued occupancy of the grantor s son. The grantor of the trust has passed away. Can homestead continue? The owner of the property is deceased and therefore not technically a Minnesota resident. You are correct that for agricultural relative homesteads, the owner must be a Minnesota resident. Your concern in this case is that, technically, the owner is not a Minnesota resident, as he is deceased. However, language in Minnesota Statutes, section , subdivision 21, Information and Education Section, Property Tax Division Bulletin: Trust properties and homestead determinations

149 paragraph (b) allows for agricultural relative homesteads on trust held who meets the requirements of properties if the property is occupied by A relative or surviving relative of the grantor subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1, paragraph (d), in the case of agricultural property, occupies and uses the property as a homestead [emphasis added]. In other words, although the grantor of the trust has passed away, a qualifying surviving relativee occupies the property. Therefore, the property may still qualify for an agricultural relative homestead. You also asked if the trust is considered null and void when the grantor passes away. The answer, of course, depends. When the conditions of the trust are satisfied or if it is dissolved, the estate would be disposed of according to the trust. At that time, the property would transfer ownership depending on the beneficiary or beneficiaries of the estate. However, it appears that the trust currently still owns the property and therefore that ownership governs the applicability of homesteads. A farmer put all of his property into a trust. His sonn and daughter receive an actively farming special agricultural homestead on the agricultural land and the property has a residential relative homestead on the house, garage, and one acre where his grandson lives. The farmer is now deceased. Can we continue to grant both thee son/daughter actively farming special agricultural homestead and the residential relative homestead until the property ownership changes? In our opinion, the death of the grantor of the trust does not change the homesteads on this property. The son/daughter and the grandson remainn qualifying relatives of the grantor of the trust. Therefore, the actively farming special agricultural homestead and the residential relative homestead may continue until such time as the property s ownership changes (e.g., when the trust is dissolved). A farmer owns two parcels in a revocable living trust. The base parcel is 160 acres with house, garage, and one acre, and 159 acres of agricultural land and the other parcel is 40 acres of agricultural land. He has received homestead on both parcels.. The farmer has since died, and his son now farms the property. Can the son gett actively farming special agricultural homestead on the agricultural land? Yes, the son is a qualifying relative of the grantor of the trust, and can therefore receive an actively farming special agricultural homestead on the land that iss being farmed. Linking trust held properties We are often asked Can properties owned by different entities be linked together for homestead purposes because they are part of the same farm? The answer is: ABSOLUTELY NOT! It is NOT appropriate to link properties where the ownership entities differ such as in the case of partnership owned parcels linked to corporate owned parcels. This includes properties held by trusts that do not have the exact same ownership/grantors. As you know, there are very limited and specific exceptions too this rule: 1. The homestead of a base parcel owned and occupiedd by an individual may be linked to a parcel of property that the owner owns with other individuals; 2. The homestead of a base parcel owned and occupiedd by an individual may be linked to a parcel of property that is owned by a trust and the individual owners of the base parcel are the grantors of the trust held property (and vice versa); and Information and Education Section, Property Tax Division Bulletin: Trust properties and homestead determinations

150 3. In the case of married couples, properties that are held solely in the name of one spouse may be linked to parcels that are held solely by the other spouse and parcels that are titled in both names. This does not apply to any entities of which the husband and/or wife are both members. It only applies to parcels owned by natural people. Trust held properties may be linked to other properties owned by the same individual grantor if the properties are owned in the individual s name. Mr. A s Trust can be linked to Mr. A s individually owned property for homestead purposes. Mr. A s Trust cannot be linked to properties owned by any other trust held property that is not the exact same as Mr. A s trust, nor to other individuals properties. An individually owned parcel may be linked to a trust held parcel if the owners of the individuallyand Lena own and occupy their own farm. They, Ole and Lena as grantors, have placed four other parcels of owned parcel are the grantors of the trust that holds anotherr parcel. For example, Ole agricultural property into a revocable trust for their children. In this case, they may extend their homestead on the base parcel to the other four, trust held parcels since they are the individual (and only) grantors of the trust that holds the other parcels. One point of regular confusion is that in the case of married couples, properties that are solely held in the name of one spouse may be linked to parcels that are solely held by the other spouse, and/or parcels that are titled in both names. This does not apply to parcels held by an entity including trusts of which the husband and/or wife are members. It only applies to parcels owned by natural people. Properties owned by separate trusts may not be linked to each other, even if the grantors of the separate trusts are married. Mr. A s Trust cannot be linked to property owned by Mrs. A s trust. If Mr. A and Mrs. A are joint grantors of a single trust, all property under that exact same ownership ( Mr. and Mrs. A Trust ) may be linked, but may not be linked to trusts with differing ownership/ /different grantors. Minnesota Statutes, section , subdivision 14, paragraph (c), allowss non contiguous agricultural property to be linked to the base agricultural homestead. It states that: Noncontiguous land shall be included as part of a[n agricultural]homestead under section , subdivision 23, paragraph (a), only if the homestead is classified as class 2a and the detached land is located in the same township or city, or not farther than four townships or cities or combination thereof from the homestead. Any taxpayer of these noncontiguous lands must notify the county assessor that the noncontiguous land iss part of the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer must also notify the assessor of the other county. In order for agricultural properties to be linked under this provision, the properties must first be owned by the exact same ownership entity. It is not appropriate to link properties where the ownership entities differ such as individually owned parcels to corporate or partnership owned parcels. FAQs A farm property was transferred from individual ownership to a trust. The grantors of the trust are parents and the trustees are their two children. The grantors live in another county (away from the trust property) and the trustees each own individual properties that are contiguous to the trust property. The trust land is farmed by a non relative. Can the trust property can be linked to qualifying relatives for homestead treatment? Information and Education Section, Property Tax Division Bulletin: Trust properties and homestead determinations

151 Only the grantors of a trustt can link an individually owned parcel to another parcel held by the trust. The trustees cannot be linked to the trust property and cannot receive homestead on it. In this particular case, because the property is farmedd by a non relative, the property is not eligible for homestead benefits. Actively farming special agricultural homesteads and trust held property In most cases, we refer to M.S , subdivision 21 whenn determining trust homesteads. However, actively farming special agricultural homestead determinatio ons are often made under M.S , subdivision 14. Trust held property was eligible for actively farming special agricultural homestead by Laws 2001, First Special Session, Chapter 5, article 3, section 31. This 2001 law change allowed real property held by a trustee under a trust to be eligible for homestead by substituting grantor for owner in the definitions of agricultural homestead requirements in the case of trusts (in other words, for cases of special agricultural homesteads, the grantor is considered thee owner when making active farming determinations). Special agricultural homestead determinations for property held by a trust were further clarified in 2005 to include grandchildren n as qualifyingg relatives of the grantor and to clarify who (in relation to the grantor) must be actively farming the property. It was specified thatt for homesteads of property held under a trust and rented to an authorized entity, the property must be the homestead of or actively farmed by the grantor, spouse of the grantor, or child of the grantor who must also be a shareholder, member, or partner of the entity that is leasing the property. For active farming purposes, it is important to note that trusts are subject to Minnesota Statutes, section , which requires certain entities that own farm land to register with the Department of Agriculture. There are a few situations in which special agricultural homesteads may be granted to trust held property. Situation 1 Agricultural property that is held under a trust that is not occupied but is actively farmed by the grantor of the trust, the spouse of the grantor, or a grandchild, child, sibling or parent of the owner/grantorr or spouse/grantor may also qualify for special agricultural homestead under M.S , subd. 14, paragraph (b) clause (ii): The agricultural property must be at least 40 acres inn size. The property can be actively farmed on behalf of an authorized entity of whichh the active farmer is a qualified person. Both the grantor of the trust and the active farmer must be Minnesota residents. Neither the grantor nor the grantor s spouse can claim another agricultural homestead in Minnesota. Neither the grantor nor the active farmer can live farther than 4 cities/townships or a combination thereof from the agricultural property ( unless the grantor or the grantor s spouse is required to live in employer provided housing). Situation 2 If a grantor or grantor s surviving spouse is a member, shareholder, or partner of a family farm corporation, joint farm venture, limited liability company, or partnership of which the operating a family farm and the property is leased by the trust to that entity, the property may qualify for homestead if a Information and Education Section, Property Tax Division Bulletin: Trust properties and homestead determinations

152 shareholder, member or partner of the corporation, joint farm venture, limited liability company or partnership occupies and uses the property as a homestead. [M.S , subdivision 21, paragraph (c).] This provision is not technically active farming because the property is occupied and used as a homestead, but is similar to those determination ns because off the leasing of the property to an authorized entity. Please note thatt this applies to cases where the grantor is a member of a qualifying entity or cases where the grantor has passed away and the surviving spouse is a member of a qualified entity (i.e., the trust is not dissolvedd and still owns the property but the grantor has passed away). Situation 3 If a grantor or grantor s surviving spouse is a member, shareholder, or partner of a family farm corporation, joint farm venture, limited liability company, or partnership of which the operating a family farm and the property is leased by the trust to that entity, the property may qualify for homestead if the property is at least 40 acres (including undividedd governmentt lots and correctional 40's) and a shareholder, member, or partner of the tenant entity is actively farming the property on behalf of the corporation, joint farm venture, limited liability company, or partnership. Please note that this applies to cases where the grantor is a member of a qualifying entity or cases where the grantor has passed away and the surviving spouse is a memberr of a qualified entity (i.e., the trust is not dissolved and still owns the property but the grantor has passed away). [M.S , subdivision 21, paragraph (c).] FAQs An individual currently receives an agricultural homestead on property thatt he owns. He is also farming another property on behalf of a trust inn which he is one of several beneficiaries. The grantor of the trust property is deceased. Can we link his fractional ownership in the trust property to his primary homestead? If we cannot, could he then qualify for a special agricultural homestead? Trusts are considered to be separate entities. As a rule, homesteads cannot be extended between two parcels under different ownership entities. For instance, in this situation, you could not extend homestead between the parcel owned and occupied by an individual and another parcel in the name of a trust. The only exception to this rule is in the case of a trust where the owner of one parcel is the grantor of the trust that owns another parcel. Since the person in question in this situation is not the grantor of the property held in trust, it is our opinion that he cannot qualify for homestead this way. Additionally, this person cannot qualify for a special agricultural homestead since he is already claiming another agricultural homestead in Minnesota. A property s title is held by the Lillian Doe Trust and the Gerald Doe Trust (Lillian and Gerald are husband and wife). The property is currently receiving a special agricultural homestead. Gerald Doe has passed away and one half of the property will remain in the Gerald Doe Trust, with Lillian Doe being the beneficiary of the Gerald Doe Trust. Lillian Doe is currently receiving a separate residential homestead. Her son is actively farming the land. This property may be eligible for a full special agricultural homestead. Using the Department of Revenue s agricultural homestead flow chart, the property may qualify for special agricultural homestead on trust held property if it is actively farmed by a child of the grantor or grantor s spouse. The child of the grantor of both trusts is currently actively farming the property. It must be at least 40 acres in size, and neither the grantor nor the grantor s spouse (in either case, Information and Education Section, Property Tax Division Bulletin: Trust properties and homestead determinations

153 Lillian Doe) may receive another agricultural homestead. Based on the information you have provided, she is not receiving another agricultural homestead. Neither the grantor (Lillian Doe) nor the actively farming relative may live further thann four cities or townships from the agricultural property. This case is unique becausee the property as a wholee is owned by two different trusts. This is analogous (although imperfectly) to a property owned by two un related relative of both individual owners. This is not a situation of linking separate properties. This single property as a whole is granted homestead treatment. A property s title is held by the Theodore Doe Trust and the Suzette Doe Trust (Theodore and Suzette are husband and wife). Theodore has passed away. Suzette Doe records a individuals. The individual who actively farming the property is a qualifying disclaimer through Districtt Court and renounces, declines, and refuses to accept any and all rights or interests to the Theodore Doe Trust. Suzette Doe lives in another county (County A) and is receiving a cross county agricultural homestead. Assuming that Suzette s individually owned parcel in County A is receiving a 100 percent agricultural homestead, it is our opinion that the parcel owned by both the Theodore Doe Trust and the Suzette Doe Trust may receive a 50 percent agricultural homestead. As the grantorr of the Suzette Doe Trust, she is eligible to link her individual owned homestead to the portion of the property held by the Suzette Doe Trust. However, Suzette is not able to link her individual as owned agricultural homestead to the portion of the property held by the Theodore Doe Trust, that portion of the property is under different ownership. Please note: If Suzette has assumed ownership of the portion of the property held by the Theodore Doe Trust, she may be able to receive agricultural homestead on that portion. In other words, the base parcel, which is individually owned may include property for which Suzette Doe is the individual grantor of a trust. She is grantor of the trust that owns one half of the property, and may only be linked to property with the same individual ownership, which may only link her homestead to property owned by the Suzette Doe trust. Her property is not eligible to be linked to properties owned by the Theodore Doe Trust (a different entity). A husband and wife each create their own separatee trusts. The base parcel is in the wife s trust and she receives agricultural homestead on this parcel which extends to other agricultural parcels held in her trust. The husband has passed away. If the wife is the beneficiary of the husband s trust, can she continuee to receive homestead on the parcels owned by the husband s trust? Property owned by different entities (i.e. trusts) cannot be linked together for homestead purposes. Therefore, the property owned by the husband s trust cannot be linked to the wife s trust for homestead purposes. This is true whether both grantors of the trust are alive or if one of the grantors is deceased. The wife has appropriately received homestead on the property that she occupies and that is owned by the trust for which shee is the grantor. This trust homestead property may not be linked to other trusts (i.e. trustss that do not have the same grantor). If the trust is dissolved and ownership of those parcels is granted to either the surviving spouse as an individual, or to the surviving spouse s trust, then shee may be eligible to link under that Information and Education Section, Property Tax Division Bulletin: Trust properties and homestead determinations

154 ownership change. As long as her husband s trust continues to own the property, linking is not appropriate. Miscellaneous FAQs Who signs the application? 1. The grantor of the trust completes the application if the property is held under a trust; AND the property is physically occupied by the grantor or surviving spouse of the grantor; AND neither the grantor nor his/her spouse claims another agricultural homestead in Minnesota. This is an owner (grantor) occupied agricultural homestead. 2. The qualifying relative completes an application if the property iss held under a trust; AND the property is occupied by a qualifying relative of the grantor (child, sibling, grandchild, or parent) or of the grantor s spouse ( child, sibling, or grandchild); AND neither the owner, owner s spouse, nor qualifying relative or qualifying relative s spouse claims another agricultural homestead in Minnesota; AND there are no other agricultural relative homesteads for this family in Minnesota. In any case, the individual seeking homestead treatment (thee grantor, the relative, the active farmer, etc.) must sign the application and meet all necessary requirements. There is a family trust where the mother owns 18 percent of the trust and lives on the farm. The remaining 82 percent of the trust is owned by the four children who are all grantors. One of the children lives with the mother and farms the land. The other three siblings do not live within four townships. Does the entire property owned by the trust qualify for homestead, or is the homestead fractionalized? In the scenario outlined above, the property would be fully homesteaded.. As the grantor of the trust, the mother is eligible to receive homestead on her 18 percent interest in the trust held property. The daughter who lives on the farm also receives owner occupiedd homestead based on her portion of ownership in the trust. The remaining interest in the trust held property iss considered relative homestead as the occupants are qualifying relatives of the other grantors of the trust. As a result, the property would be fully homesteaded. Exception: Trust Property Homestead Homestead may also be granted in the case of a person who has received homestead classification for property taxes payable in 2000 on the basis of an unqualifiedd legal right under the terms of the trust agreement to occupy the property as that person s homestead, and who continues to use the property as a homestead, or a person who received the homestead classification for taxes payable in 2005 but who does not qualify for taxes payable in 2006 or thereafter, but who continues to qualify as it existed for taxes payable in (This has very limited applicabilityy and can no longer be established it had to have received homestead under this provision for the 2004 assessment for taxes payable in 2005.) Going forward We will continue to work on clarifying our manual, flow chart, and applications to make sure that these trust homestead provisions are easy to implement. If at any time you notice errors or inconsistencies in our guidance or have questions about trust homesteads, please contact us via proptax.questions@state.mn.us. Thank you. Information and Education Section, Property Tax Division Bulletin: Trust properties and homestead determinations

155 MINNESOTA REVENUE Date: March 8, 2012 To: From: Re: All County Assessors and Data Processing Personnel Lloyd McCormick, Appraisal Supervisor Property Tax Division 2012 County and Township Average Land Values Reporting Once again for 2012, we are not requiring counties to submit electronic flat files of data download for the reporting of county and township average land values. This may be revisited in future years, and it does not eliminate the requirement for providing the County and Township Average Land Values reports to your Property Tax Compliance Officer (PTCO). You may use the same report style (Excel, Word, PDF, JPEG, etc.) that you have used in the past to report this data. The county/township data is to be submitted via and hard copy to your PTCO. Section data is to be available to your PTCO upon request and only needs to be reported when requested. If your county uses computer-generated land values (i.e. land calc.), please provide a summary report, by county and by township, showing the following, if you have this breakdown available for the 2012 assessment: For lands classified as 2a: 1. Total number of acres of each type of land (tilled, meadow, pasture, woods and waste that are impractical to separate, etc.); 2. Total estimated market value for each type of land; and 3. Average value per acre for each type of land. For lands classified as 2b: 1. Total number of acres of each type of land (wild lands, uncut meadow, unused pasture, vacant land, woods, waste, land previously in a conservation program, previously tilled now idle, etc.); 2. Total estimated market value for each type of land; and 3. Average value per acre for each type of land. If your county uses Green Acres, your detailed report should include the above information and an additional report showing the following: 1. Total estimated market values (the high values) for all agricultural properties; and 2. Total values using only the Green Acres values (the low values) for the parcels receiving the Green Acres deferment. If any counties are not using computer-generated values, it would be greatly appreciated if you would be able to provide this information. If your county uses the Agricultural Preserves program, those acres and values should be excluded from this reporting. Please submit this information to your Property Tax Compliance Officer by April 9, Should you have any questions regarding these reports please contact your regional representative directly.

156 Reporting Requirements Summary Report by Township For Counties NOT USING Green Acres 1. List Township/Jurisdiction; 2. List each type of land and classification (tilled, meadow, pastured, woods, waste, native prairie, wetlands, roads, building sites, and other); For example: 2a tilled, 2a meadow, 2a woods, 2b woods, etc. 3. List total number of acres for each type of land; 4. List total Estimated Market Value for each type of land; 5. Show the average value per acre for each type of land; and 6. Show the average value of the House and Garage per site. Note: All counties are expected to have the capability to provide the above information on a section-by-section basis in a hard copy format if there appears to be a border issue. Reporting Requirements Summary Report by Township For Counties USING Green Acres 1. List Township/Jurisdiction; 2. List each type of land and classification (tilled, meadow, pastured, woods, waste, native prairie, wetlands, roads, building sites, and other); For example: 2a tilled, 2a meadow, 2a woods, 2b woods, etc. 3. For line (a) List total number of acres for each type of land and For line (b) List the number of acres of each type of land that is receiving Green Acres deferment; 4. For line (a) List total Estimated Market Value (high value) for each type of land and For line (b) List the Green Acres value (low value) for each type of land receiving Green Acres deferment; 5. For line (a) Show the average value per acre for each type of land (line (3a) divided by line (4a)) and For line (b) Show the average value Green Acre value per acre for each type of land that is receiving Green Acres deferment (line (3b) divided by line (4b)); and 6. Show the average value of the House and Garage per site. Note: All counties are expected to have the capability to provide the above information on a section-by-section basis in a hard copy format if there appears to be a border issue.

157 Reporting Requirements Township Averages - For Counties NOT USING Green Acres 1. Average value per acre of tilled land. Use the estimated market value and total number of tilled acres. Formula: (Total EMV of tilled land) / (Total # of tilled acres) = Average value per acre of tilled land 2. Average value per deeded acre of land. Use the estimated market value and total number of deeded acres of 2a classified land. (See note below.) Exclude values and acres for the following: building sites, exempted wetlands (EWL), and exempted native prairies (ENP). Formulas: Total EMV of land classified as 2a Total # of deeded acres classified as 2a -- Total EMV of building sites -- Total # of acres for building sites -- Total EMV of EWL -- Total # of acres for EWL -- Total EMV of ENP -- Total # of acres for ENP = Total value = Total acres Total EMV of land classified as 2b Total # of deeded acres classified as 2b -- Total EMV of building sites -- Total # of acres for building sites -- Total EMV of EWL -- Total # of acres for EWL -- Total EMV of ENP -- Total # of acres for ENP = Total value = Total acres Total value / Total acres = Average value per deeded acre of land Total value / Total acres = Average value per deeded acre of land 3. Average value per site and total number of sites acres. Use the estimated market value and total number of site acres. Formula: (Total EMV of the building sites) / (Total # of building site acres) = Average value per acre of building sites The above information should be provided in an electronic file and in a hard copy or map form. All counties are expected to have the capability to provide the above information on a section-by-section basis in a hard copy format if there appears to be a border issue. If you have any additional information that you feel is pertinent and meaningful, please include it. Note: Deeded Acres includes roads, ditches, waste, and other 2a and 2b classified lands. Building Site Values and Acres: For these reports, values and acres that were exempted under wetlands and native prairie legislation will be subtracted from the total number of deeded acres. Building Site for purposes of this report is that portion of a 2a agricultural property s land that is improved with structures (house, garage, farm buildings, and other structures) and the associated improvements to the land, such as water and sanitation systems, where the value per acre is significantly different than that placed upon other similar land types on the farm. The building site is the one acre site value assigned for the House, Garage, and one Acre (HGA) building site. o This would also be the case in a situation where the building site may be greater than one acre in size, but the building site value is assigned to the one acre HGA and the remaining site acres are valued using a tilled or other agricultural land value that is used on the farm. As such, only the one acre building site would be considered as the building site and the remaining site acres would be considered as part of the agricultural land. o In a case where the building site is greater than one acre in size and all of the site acres are valued at an amount that is significantly different than the agricultural value used on the farm, then all of the site acres would be considered as a building site.

158 Reporting Requirements Township Averages - For Counties USING Green Acres (Note: Agricultural Preserve values and acreage are to be excluded from these calculations.) 1. Average value per acre of tilled land. Formula (a) uses the estimated market value (high value) and total number of tilled acres. Then formula (b) is for parcels that are receiving Green Acres deferment. Use only the Green Acres (low value) and actual number of tilled acres for those parcels. Formula (a): (Total EMV of tilled land) / (Total # of tilled acres) = Average value per acre of tilled land (high values) Formula (b): (Total GA value of tilled land) / (Total # of tilled acres for those parcels) = Average value per acre of tilled land (low value) 2. Average value per deeded acre of land. Formula (a) uses the estimated market value (high value) and total number of deeded acres of 2a classified land. (See note on previous page.) Then formula (b) is for parcels that are receiving Green Acres deferment. Use only the Green Acres (low value) and the actual number of acres of 2a classified land for those parcels. (See note on previous page.) For both formulas, exclude values and/or acres for the following: building sites, exempted wetlands (EWL), and exempted native prairies (ENP). Formulas for (a): Tot. EMV (high value) of land classified as 2a Tot. # of deeded acres classified as 2a -- Total EMV of building sites -- Total # of acres for building sites -- Total EMV of EWL -- Total # of acres for EWL -- Total EMV of ENP -- Total # of acres for ENP = Total value = Total acres Total value / Total acres = Ave. value (high value) per deeded acre of land Formulas for (b): Tot. GA (low) value for Green Acres parcels Tot. # of deeded GA acres classified as 2a -- Total EMV of building sites -- Total # of acres for building sites (values for EWL and ENP are already -- Total # of acres for EWL exempted so they don t need to be subtracted) -- Total # of acres for ENP = Total value = Total acres Total value / Total acres = Ave. GA (low) value per deeded acre of land 3. Average value per site and total number of sites acres. Use the estimated market value and total number of site acres. Tot. EMV (high value) of land classified as 2b Tot. # of deeded acres classified as 2b -- Total EMV of building sites -- Total # of acres for building sites -- Total EMV of EWL -- Total # of acres for EWL -- Total EMV of ENP -- Total # of acres for ENP = Total value = Total acres Formula: (Total EMV of the building sites) / (Total # of building site acres) = Average value per acre of building sites Total value / Total acres = Ave. value (high value) per deeded acre of land Tot. GA (low) value of land classified as 2b Tot. # of deeded GA acres classified as 2b -- Total EMV of building sites -- Total # of acres for building sites -- Total EMV of EWL -- Total # of acres for EWL -- Total EMV of ENP -- Total # of acres for ENP = Total value = Total acres Total value / Total acres = Ave. GA (low) value per deeded acre of land The above information should be provided in an electronic file and in a hard copy or map form. All counties are expected to have the capability to provide the above information on a section-by-section basis in a hard copy format if there appears to be a border issue. If you have any additional information that you feel is pertinent and meaningful, please include it.

159 MEMO Date: February 9, 2012 To: From: Subject: All Assessors Drew Imes, State Program Administrator Information and Education Section ecrv Form Use Counties (Counties that have not moved into full production utilizing ecrvs) This memo is meant to clarify that all counties that are not FULL USE counties must make a paper copy of the ecrv and mail it to the Department of Revenue Individual Income Tax division. Upon receiving a paper ecrv form, FORM USE counties should proceed with their current paper process. This includes creating a copy of the paper ecrv and mailing it to the Department of Revenue Individual Income Tax division along with the pink carbon copies of the regular CRV forms. MAILING ADDRESS: Individual Income Tax CRV 600 North Robert St. St. Paul, MN Please note that this is required for FORM USE counties, even though Social Security Numbers and Taxpayer IDs are no longer available, printed, or written on the ecrv form. Counties that are or become FULL USE counties and accept and process ecrvs entirely on-line do not need to provide copies back to the Department of Revenue Individual Income Tax division. The Individual Income Tax division will also be able to access the ecrvs on-line.

160 BULLETIN Date: February 9, 2012 To: From: Subject: All City and County Assessors Information and Education Section, Property Tax Division Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers Introduction In 2011, the Minnesota Legislature made changes to a program enacted in 2008 and codified in Minnesota Statutes, section , subdivision 34 that was designed as a market value exclusion for honorably discharged veterans with service connected disabilities. As part of the 2011 changes, new qualifying individuals were made eligible for the program, and a previously existing provision that extended the benefits to surviving spouses of totally and permanently disabled veterans was amended. This bulletin serves to outline many of these changes. This bulletin replaces previous correspondence on the disabled veterans market value exclusion. The changes will be incorporated in the Property Tax Administrator s Manual, Module 2 Valuation, which is available online at This program provides two different levels of market value exclusion: the market value exclusion is up to $150,000 on homestead property for veterans with 70 percent to 100 percent service connected disability (or the homestead of their qualifying primary family caregivers); the market value exclusion is up to $300,000 on homestead property of: o veterans with total (100 percent or individual unemployability) and permanent serviceconnected disability (or the homestead of their primary family caregivers), o surviving spouses of permanently and totally disabled veterans who qualified for the exclusion but pass away, and o surviving spouses of service members who die while serving honorably in active service. Qualifications Veterans To qualify, a veteran must have been honorably discharged from the United States armed forces and must be certified by the United States Department of Veterans Affairs (VA) as having a service connected disability of 70 percent or more. The Department of Veterans Affairs has also made available to qualifying veterans letters confirming both honorable discharge and disability status. These forms or letters must be supplied with the completed application to county assessors. Veterans may supply the annual federal VA letter denoting service connected disability 1 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

161 and honorable discharge status that will meet the requirements for program enrollment. Only if this letter is not available, a United States Government Form DD214 or use other documentation to verify discharge status and service connected disability will be required. Examples of qualifying letters, as well as notes that may help assessors to read the letters are shown in Appendix A. If one of these qualifying letters is supplied with an application, no further documentation is necessary (including a DD214). Veterans with 70 percent or More Disability Veterans with 70 percent or more service connected disability must reapply annually to the assessor for the $150,000 market value exclusion. Applications are due July 1 of each assessment year to be eligible for taxes payable the following year. For example, if a qualifying veteran applies by July 1, 2012 and is approved for the exclusion, it would affect taxes payable in Please note that 70 percent or more includes veterans with 100 percent disability that is not considered permanent. Please see additional information below concerning veterans with less than 100 percent disability that are permanently disabled. For veterans with 70 percent or more disability, there is no extension of the exclusion to a surviving spouse upon the death of the veteran. Veterans with Total (100 percent) and Permanent Disability Veterans with 100 percent permanent service connected disability need only apply once to the assessor for the $300,000 market value exclusion. Applications are due July 1 of a given assessment year to be eligible for taxes payable the following year. For example, if a qualifying veteran applies by July 1, 2012 and is approved for the exclusion, it would affect taxes payable in 2013 and thereafter. The property will continue to qualify for the market value exclusion until there is a change in ownership or use of the property. For veterans with total (100 percent or individual unemployability) and permanent disability only, a surviving spouse who holds the legal or beneficial title to the homestead and permanently resides there, may continue to receive this exclusion for five additional taxes payable years after the year of the veteran s death or until the spouse remarries, or sells, transfers or otherwise disposes of the property, whichever comes first. Individual Unemployability The VA does certify some veterans with individual unemployability. These veterans are considered totally (100 percent) disabled by the VA. If a veteran supplies documentation from the V.A. that they are certified with individual unemployability, that veteran is to be treated as 100 percent disabled. This disability is considered 100 percent, but it may or may not be permanent. Individual unemployability, not considered permanent: Veterans with individual unemployability that are not considered permanently disabled will be eligible for the $150,000 market value exclusion (100 percent disabled, not permanent). Individual unemployability, permanent: Veterans with individual unemployability status who are considered to be permanently disabled will be eligible for the $300,000 market value exclusion (100 percent permanently disabled). 2 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

162 On annual letters that veterans receive from the federal Department of Veterans Affairs, this may be noted as stating that the veteran is entitled to a higher level of disability due to being unemployable or that the veteran is considered to be totally and permanently disabled even though the combined service rating may not be 100 percent. A note on individual unemployability and retirement age veterans: The United States Code of Federal Regulations (CFR), title 38 states that age may not be considered when making determinations of individual unemployability. Individual unemployability is determined based solely on service connected disabilities and the potential for the veteran to find gainful employment considering those service connected disabilities. Age, as well as disabilities which are not serviceconnected, are not considered when making I/U determinations. [See 38 CFR 3.341, 38 CFR4.16, and 38 CFR 4.19.] A veteran may be younger or older than Social Security retirement age, but may still be eligible for individual unemployability due to the service connected disabilities which preclude the veteran (regardless of age) from gainful employment. For more information on Individual Unemployability, see Appendix B. No Futures Many veterans with less than 100 percent disability might still be considered permanently disabled. For example, a veteran with 70 percent disability with no future exams is considered permanently disabled. Such veterans are not eligible for the $300,000 market value exclusion and do need to reapply annually for the $150,000 exclusion. However, if upon initial application a veteran supplies a letter from the VA verifying disability status with no futures, or that their disability is considered permanent, that veteran does not need to supply a new letter annually. We recommend that the county assessor retain a copy of the original no futures letter for future reference. A veteran who is 70 percent or more disabled with no futures need only supply the application (form CR DVHE70) annually, and the assessor shall use the original letter for verification of service connected disability status. Surviving Spouses of Permanently and Totally Disabled Veterans If a property qualifies for exclusion based on ownership and occupancy of a permanently and totally (100 percent) disabled veteran and the veteran passes away, a surviving spouse (if any) is eligible to continue the exclusion for the taxes payable year of the veteran s death (based on the prior assessment year under the veteran s exclusion), and five additional taxes payable years after the year of the veteran s death. The benefit would end after the five additional taxes payable years, or until such time as the spouse remarries, or sells, transfers, or otherwise disposes of the property whichever comes first. For example, if a permanently and totally disabled veteran who qualified for the exclusion passes away in 2012, the surviving spouse would continue to receive the exclusion for taxes payable in 2012 (based on the 2011 assessment as the veteran s exclusion), as well as for taxes payable in 2013, 2014, 2015, 2016, and 2017 (based on the 2012 assessment [the year of the veteran s death], and assessment years 2013, 2014, 2015, and 2016). This is assuming that the surviving spouse does not remarry, nor sell, transfer, or otherwise dispose of the property. 3 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

163 There is no carryover to a surviving spouse of a veteran who qualified as 70 percent or more disabled, but not as permanently and totally disabled. Surviving Spouses of Service Members Who Die in Action Surviving spouses of service members of any branch of the armed forces who die due to a serviceconnected cause while serving honorably in active duty as indicated on United States Government Form DD1300 or DD2064 are also eligible for this market value exclusion program. The surviving spouse must be the legal or beneficial title holder to the homestead residence, and must permanently reside there. The benefit for these surviving spouses is a maximum exclusion of $300,000 for five taxes payable years, or until such time as the surviving spouse remarries, or sells, transfers, or otherwise disposes of the property, whichever comes first. A first time application for exclusion under this provision may be made at any time within two years of the death of the service member. For example, if a service member died in action in 2010, the surviving spouse may apply for exclusion by July 1, 2012 to qualify for taxes payable in Applications for surviving spouses must be submitted annually by July 1 to be eligible for taxes payable in the following year. To apply, applications must be accompanied by either the DD1300 or DD2064 form. You may also ask applicants to provide Dependent Indemnity Compensation (DIC) or other benefits status letters as part of the annual application. Examples of the DD1300, DD2064, and Dependent Indemnity Compensation (DIC) award letters are shown in Appendix C. While the example of the DD2064 is difficult to read, you may verify authenticity of a DD2064 with your County Veteran s Service Officer in the case of a questionable document. Primary Family Caregivers Primary Family Caregivers of qualifying disabled veterans are also eligible for the exclusion. For a Primary Family Caregiver to qualify, the eligible veteran would not own homestead property in Minnesota, but the veteran s primary family caregiver would be eligible for the same benefit as the veteran (i.e., a maximum of $150,000 or $300,000 exclusion, depending on the veteran s disability rating). A primary family caregiver is defined as a person who is approved by the United States Department of Veterans Affairs for assistance as the primary provider of personal care services for an eligible veteran under the Program of Comprehensive Assistance for Family Caregivers (codified as US Code, title 38, section 1720G). To apply, primary family caregivers must apply annually by July 1 to be eligible for taxes payable in the following year. Applications must include necessary information to verify qualifications for both the veteran and the primary family caregiver. For the veteran, this will include the same documentation that is supplied for veterans with 70 percent or more or permanent and total serviceconnected disability. In other words, the annual federal VA letters that indicate service connected disability and honorable discharge will be sufficient. Only if this letter is not available, the DD214 and/or other official military discharge papers and proof of service connected disability status will be required. The primary family caregiver will need to provide a VA Caregiver Support Approval Letter as part of the annual application. An example of such a letter is shown in Appendix D. 4 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

164 Basic Provisions of the Disabled Veterans, Surviving Spouses, and Primary Family Caregivers Exclusion Assessors will continue to annually estimate the market value of qualifying properties just like other similar properties. This valuation exclusion will be deducted from the estimated market value after other exclusions for Plat Law, Mold Damage, etc. to arrive at the taxable market value. (The homestead market value exclusion is not applied to properties receiving the disabled veterans market value exclusion.) Application for this valuation exclusion is not a substitute for the homestead application. The property must qualify for homestead before being granted valuation exclusion under this program. For agricultural property, only the house, garage, and immediately surrounding one acre of land qualify for the valuation exclusion. Excess land and buildings are not eligible for the valuation exclusion. Neither residential nor agricultural (HGA) homestead properties are eligible to receive the homestead market value exclusion provided under Minnesota Statutes, section , subdivision 35. Excess agricultural land and buildings will continue to receive the agricultural homestead credit provided in section , subdivision 2. Property qualifying for this valuation exclusion is not eligible to be classified as a blind/disabled homestead under section , subdivision 22, paragraph (b). Relative homesteads do not qualify for this program. A property must be both owned and occupied by a qualifying individual before being eligible for the market value exclusion. Fractional homesteads will receive a fractional benefit. Please see the examples later in this document. Neither the Department of Revenue nor County Assessors are responsible for determining the disability status of veterans. Applicants requiring information concerning their discharge or disability status must work with their County Veterans Service Office or the Department of Veterans Affairs to receive this information from the VA. The Department of Veterans Affairs has provides qualifying veterans with uniform letters confirming both honorable discharge and disability status. These forms or letters must be supplied with the completed application to county assessors. Veterans may supply the annual federal VA letter denoting serviceconnected disability and honorable discharge status that will meet the requirements for program enrollment. Only if this letter is not available, a United States Government Form DD214 or use other documentation to verify discharge status and service connected disability will be required. Veterans qualifying for the $150,000 exclusion must complete Form CR DVHE70 (Market Value Exclusion on Homestead Property of Disabled Veterans with 70 Percent or More Disability) and provide it to their county assessor. This application is due by July 1 of each 5 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

165 year to be eligible for the exclusion for that assessment year. This application is shown in Appendix E. Veterans qualifying for the $300,000 exclusion need to complete form CR DVHE100 (Market Value Exclusion on Homestead of Disabled Veterans with Total and Permanent Disability) and provide it to their county assessor by July 1 to be eligible for that assessment year. Veterans qualifying for the $300,000 exclusion do not need to reapply annually. This application is shown in Appendix F. Surviving spouses of veterans who had previously received the exclusion as permanently and totally disabled veterans, and surviving spouses of service members killed in action need to complete form CR DVHESS and provide it to the county assessor by July 1 to be eligible for that assessment year. These applications are due annually. This application is shown in Appendix G. Primary family caregivers must complete form CR DVPFC and provide it to the county assessor by July 1 to be eligible for that assessment year. These applications are due annually. Applications must be accompanied by documentation from the VA outlining the veteran s discharge and service connected disability as with the other veterans applications, as well as verification of status as the veteran s Primary Family Caregiver under the Program of Comprehensive Assistance for Family Caregivers. This application is shown in Appendix H. This is not a property tax exemption and it is not a tax forgiveness program. Rather, it lowers property tax liability by subtracting the amount of the exclusion from the assessor s estimated market value to arrive at a lower taxable market value. Special assessments or other taxes that are not ad valorem property taxes will not be affected by this value exclusion. Changes After the Assessment Date Moving to a New Property Occasionally, qualifying veterans will move to a new property after the homestead has been granted an exclusion from property tax. In the majority of cases, the exclusion would be removed from the current home that is being sold immediately and the exclusion would move with the qualifying veteran to the new property, assuming the new property is homesteaded. The following is a hypothetical timeline of the assessment year which may be of assistance in such cases. July 1: This is the application deadline for the exclusion. Qualifying veterans who own and occupy a property as a homestead will receive the exclusion if they apply by this date, and the exclusion will be retroactive to the January 2 assessment date. July 2 December 1: If a veteran has already qualified for the current assessment year but moves to a new property, the exclusion may also move with the veteran for the same assessment year, provided he/she qualifies for a mid year homestead by owning and occupying the new property by December 1 and makes application by December 15. If the mid year homestead is granted, the exclusion may be applied to the property for the same assessment year for taxes payable the following year. 6 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

166 December 2 December 31: If a qualifying veteran moves from or sells his/her property, the exclusion is removed from the property for the current assessment year for taxes payable in the following year. The veteran may apply for the exclusion at his or her new property by July 1 of the next assessment year. It is important to note that once taxes have been extended against a property, the exclusion cannot be removed. For example, if a veteran qualified throughout the 2011 assessment but sells the home in February 2012 and the taxes payable in 2012 have already been calculated, the taxes payable for 2012 would still reflect the 2011 assessment with the exclusion, regardless of the fact that the qualifying veteran no longer owns the property. The veteran would be eligible to apply on the new property for the 2012 assessment (for taxes payable in 2013) by July 1; but the taxes on the new property for pay 2012 would not receive the exclusion. Backdating/Change in Benefits Once a veteran has applied and qualified for the exclusion, if the veteran s status changes to a higher level, there is no backdating the exclusion. The exclusion is granted based on the veteran s homestead and disability on the application date for the assessment year, and may not be changed until the following assessment year to reflect any changes in disability status. This is also the case for veterans who initially qualify after the application deadline (i.e. if they receive 70 percent or greater disability status after July 1 of the assessment year, whether the VA disability itself is backdated or not). Market Value Hierarchy The following chart demonstrates the market value hierarchy for a veteran with a 70% disability rating. A similar process would be followed for a veteran with a 100% and permanent disability rating except the exclusion amount on line 11 would be $300,000. The chart shows how the taxable market value is arrived at for qualifying properties. Remember that properties receiving the disabled veterans market value exclusion are not eligible for the homestead market value exclusion described in M.S , subdivision 35. Hierarchy of Market Value Components AY Market Value Irrespective of Contaminants 2. Contamination Value 3. Estimated Market Value (EMV) [1 2] 4. Green Acres Deferment 5. Rural Preserves Deferment 6. Open Space Deferment 7. Aggregate Resource Preservation Deferment 8. Platted Vacant Land Exclusion 9. This Old House Exclusion 10. This Old Business Exclusion 11. Disabled Veterans Exclusion 12. Mold Damage Reduction 13. Lead Hazard Reduction 14. Referendum Market Value [ ] 15. Homestead Market Value Exclusion [NOT APPLIED TO PROPERTIES RECEIVING VETS EXCLUSION] 16. Taxable Market Value (TMV) [14 15] 7 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

167 Examples of tax calculations for fractional homesteads: In order to calculate the benefit for fractional homesteads, you must take into account the estimated market value (EMV) and the number of homesteading owners. 1. Determine the percentage of ownership for each homesteading person. 2. Multiply the EMV by the percentage of ownership to determine each owner s share of estimated market value. 3. Determine each qualifying veteran s exclusion eligibility (either $150,000 or $300,000 exclusion levels). 4. Multiply the veteran s exclusion level by their percentage of ownership. 5. Determine the exclusion amount. This will be the lesser of their eligibility limit or their share of EMV. In other words, if a qualifying veteran is eligible for $150,000 exclusion, but step 4 results in a value of $200,000, the exclusion would not exceed $150, Calculate the remaining taxable market value (TMV). This is done by subtracting the exclusions of all eligible persons from the EMV. Example 1 Two unrelated qualifying veterans at the same exclusion level. Two unrelated disabled veterans, George and Washington, own a home with an EMV of $400,000. George has a 70% service connected disability rating, Washington is at 80%. As such, both George and Washington qualify for the $150,000 exclusion level. Each owner s benefits are applied to each owner s share of the homestead (50% for each), where the maximum exclusion is apportioned by each owner s ownership percentage instead of allowing additional benefits per homestead. 1. Determine ownership % (100% / # of owners) George 100% / 2= 50% Washington 100% / 2= 50% 2. Determine share of EMV (Total EMV x owner % from step 1) George $400,000 x 50%= $200,000 Washington $400,000 x 50%= $200, Determine eligible exclusion (based on disability rating) George 70% disability= $150,000 Washington 80% disability= $150, Determine exclusion limit (eligible exclusion from step 3 x owner % from step 1) George $150,000 x 50%= $75,000 Washington $150,000 x 50%= $75, Determine exclusion amount (lesser of EMV from step 2 or exclusion limit per owner from step 4) George $75,000 < $200,000= $75,000 Washington $75,000 < $200,000= $75, Calculate TMV (EMV exclusion amount from step 5) George $200,000 $75,000= $125,000 Washington $200,000 $75,000= $125,000 Total Taxable Market Value Remaining $250,000 (total amount excluded = $150,000) 8 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

168 Example 2 Four unrelated persons, two veterans at different exclusion levels. Harry, Ron, Hermione, and Ginny all jointly own and occupy a residential property. The estimated market value of this property is $160,000. Harry is a qualifying veteran with 90% service connected disability. Hermione has individual unemployability, which is permanent. 1. Determine ownership % (100% / # of owners) Harry 100% / 4= 25% Ron 100% / 4= 25% Hermione 100% / 4= 25% Ginny 100% / 4= 25% 2. Determine share of EMV (total EMV x owner % from step 1) Harry $160,000 x 25%= $40,000 Ron $160,000 x 25%= $40,000 Hermione $160,000 x 25%= $40,000 Ginny $160,000 x 25%= $40, Determine eligible exclusion (based on disability rating) Harry 90% disability= $150,000 Ron n/a $0 Hermione I.U. permanent= $300,000 Ginny n/a $0 4. Determine exclusion limit (eligible exclusion from step 3 x owner % from step 1) Harry $150,000 x 25%= $37,500 Ron n/a $0 Hermione $300,000 x 25%= $75,000 Ginny n/a $0 5. Determine exclusion amount (lesser of EMV from step 2 or exclusion limit per owner from step 4) Harry $37,500 < $40,000= $37,500 Ron n/a $0 Hermione $75,000 > $40,000= $40,000 Ginny n/a $0 6. Calculate TMV (EMV exclusion amount from step 5) Harry $40,000 $37,500= $2,500 Ron $40,000 $0= $40,000 Hermione $40,000 $40,000= $0 Ginny $40,000 $0= $40,000 Total Taxable Market Value Remaining $82,500 (total amount excluded = $77,500) **Please note that Minnesota Statutes, section , subdivision 34, states that a property qualifying for exclusion under this subdivision is not eligible for the market value exclusion under subdivision 35 [emphasis added]. This means a property receiving the disabled veterans valuation exclusion is not eligible for the regular homestead value exclusion. In the cases of fractional ownership, despite only one of the owners being eligible for exclusion, the entire property is ineligible for homestead market value exclusion.** 9 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

169 The Role of the Assessor Receive and process applications from qualifying disabled veterans, surviving spouses, and primary family caregivers. The applications may include a letter from the U.S. Department of Veterans Affairs attesting to service connected disability and discharge, or both a DD214 (or other official military discharge papers) and an up to date service connected disability rate sheet. Applications for veterans qualifying for up to $150,000 exclusion are due by July 1 annually to be eligible for that same assessment year. Veterans qualifying for the $300,000 exclusion limit need to apply by July 1 of a given year to be eligible for that assessment year, and they do not need to reapply after approval. Appendices E, F, G, and H are applications. Continue to estimate market value for the properties in question. This valuation exclusion will be deducted after calculating any other deferred valuations or exclusions to arrive at the taxable market value. Additionally, tax statements, value notices, and Truth in Taxation notices will continue to be sent. Exercise caution when questioning disability ratings. Although as an assessor you may only be aware of a small disability such as a knee injury, you would not be able to ascertain other circumstances such as post traumatic stress disorder, Agent Orange contamination, head trauma, back trauma, etc. Moreover, it is not important for you to be able to ascertain these extenuating circumstances. Disability ratings are very personal and private. Discussing these disabilities or questioning them with third parties opens the door for lawsuits and administrative repercussions. Frequently Asked Questions 1. What is the qualifying eligibility for a surviving spouse of a permanently and totally disabled veteran that passed away before enrolling his/her property? Surviving spouses are not eligible to apply for initial market value exclusion on their own. Veterans with total (100 percent) and permanent service connected disability must apply and qualify on their own before surviving spouses are eligible to carry over that benefit. In other words, a spouse cannot initially qualify; only a veteran can. There is no retroactive application of this benefit to households where the qualifying disabled veteran has already passed away. [For service members who are killed in action, the surviving spouse is immediately eligible to qualify under the provisions of M.S , subd. 34, paragraph (d).] 2. What do we do if application documentation is unclear, or we are unsure of its authenticity? If you are presented with information that you feel is unclear, you may request additional information. The onus is on the taxpayer to provide additional information if it is reasonable and requested by the assessor to verify the information required for the market value exclusion. Any information pertaining to disability status must come from the Veteran s Administration and not elsewhere. It is not up to county assessors, the Department of Revenue, or County Veterans Service Officers to determine a veteran s service connected disability. 10 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

170 3. Will the qualifying veterans be responsible to pay special assessments? Yes. This value exclusion reduces or eliminates all or a portion of the value on a veteran s homestead property. The exclusion has no effect on special assessments. Special assessments have no relationship to value, they are a lien against property imposed by a public authority to pay costs of public improvements such as sidewalks, streets, sewer, etc. 4. What if the veteran has transferred ownership in his/her property to a son or daughter but retained a life estate? If a qualifying veteran is the grantor of the life estate and continues to occupy the property as his/ her homestead and primary place of residence, that veteran would be eligible for this exclusion. 5. How does the exclusion work for manufactured homes assessed as personal property? The exclusion would apply for the same taxes payable year as the application is made. 6. If a property is owned by the spouse of a qualifying disabled veteran, but does not list that veteran as an owner on the deed, does the property qualify? In order for a property to qualify for market value exclusion, it must be owned and occupied by a qualifying disabled veteran. That said, the veteran s name must be listed as an owner on the deed of the property before the property is eligible for market value exclusion (except in the cases of property owned by a Primary Family Caregiver). 7. Do relative homesteads qualify? No. Relative homesteads do not qualify for this program. A property must be both owned and occupied by a qualifying disabled veteran before being eligible for the market value exclusion (except in the cases of properties owned by a Primary Family Caregiver). 8. Does the disabled veterans exclusion apply to linked parcels on a residential homestead? The law does not preclude linked residential parcels that are homesteaded from being included in the exclusion; it does not limit the exclusion to the base parcel only. Therefore, in our opinion, linked residential parcels that are part of the homestead may receive the market value exclusion. The law does limit the benefit on agricultural homesteads to the house, garage and one acre. 9. How would the exclusion apply to multiple qualifying veterans who own the same property, assuming they are not married? In a scenario where more than one qualifying disabled veteran owns and occupies a property as a homestead, ownership of the home would be divided among all owner occupants. For each qualifying disabled veteran, the exclusion amount would also reflect the percentage in ownership. This is illustrated in the calculation example in a previous section. 10. If two qualifying spouses own and occupy a home, how should the exclusion be applied? Spouses are treated as one entity for property tax purposes. If two 70 percent disabled qualifying spouses owned and occupied a property as homestead, the benefit would be $150,000. If two 100 percent permanently disabled qualifying spouses owned the property, the exclusion would be $300,000. If one spouse is 100 percent permanently disabled, and the other 70 percent disabled, the 11 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

171 exclusion amount would be $300,000 (which is the same as if the permanently and totally disabled veteran were married to someone with no qualifying disability). 11. Do properties qualifying for market value exclusion also qualify for class 1b blind/disabled homestead (under Minnesota Statutes, section , subdivision 22)? No. Properties that qualify for the market value exclusion for homesteads of disabled veterans do not additionally qualify for class 1b blind/disabled homestead. 12. How should duplex properties be treated? Minnesota Statutes, section , subdivision 22, states in part, In the case of a duplex or triplex in which one of the units is used for homestead purposes, the entire property is deemed to be used for homestead purposes. Therefore, if the disabled veteran meets all other qualifications for the market value exclusion for homesteads of disabled veterans, the value of the entire duplex property would be excluded. 13. In the case of married veterans who do not occupy a property with the spouse (and receive 50 percent homestead), how is the exclusion applied? The exclusion is only applicable to the property that the veteran owns and occupies. The benefit is based on the qualifying veteran s percentage of homestead interest in the property he or she occupies. If the veteran is receiving partial (50 percent) homestead on this property, the eligibility would be for 50 percent of the maximum exclusion benefit toward the value of the home that the veteran owns and occupies. For example, a permanently and totally disabled veteran would be eligible for a $150,000 market value exclusion on the property he occupies (50 percent of the maximum $300,000 eligibility, based on 50 percent homestead). Fractional interest scenarios are described in a previous section. A property owned by the veteran and the veteran s spouse, but only occupied by the spouse, would not qualify for exclusion. The property not occupied by the veteran would not be eligible for any carry over provisions, either. A property must be owned, occupied, and used as a homestead by a qualifying veteran to be eligible for exclusion. The spouse is not eligible for benefit on his or her own. 14. A qualifying veteran and his spouse own a home but are living in an assisted living apartment. Can their home qualify? Traditionally, we have not denied homestead benefits to persons requiring assisted living. If the qualifying veteran is an owner of the home, no one else occupies the home or claims homestead on it, and the property is not rented to anyone else, it may still be eligible for market value exclusion. 15. If a qualifying veteran is living in a nursing home, and his wife occupies their home alone, would the property qualify? If the home is still owned by the veteran (or the veteran and the veteran s spouse), we see no reason to disqualify the home from exclusion. Traditionally, we have not denied homestead treatment to persons requiring nursing home care. As stated above, the property may be eligible for homestead treatment (and therefore the market value exclusion) so long as the qualifying veteran is still an owner of the home, no one other than the owner s spouse occupies the home, the home is not rented by anyone else, and no one else except the veteran and his/her spouse claims homestead on 12 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

172 it. If, logically, the qualifying veteran would claim homestead on this property if he/she were not requiring nursing home care, it would follow that market value exclusion also be given. 16. Can a property qualifying for the value exclusion also receive the property tax refund? While the homestead market value exclusion (M.S , subd. 35) is prohibited in statute, there is nothing precluding a qualifying veteran from applying for a property tax refund. Of course, eligibility requirements will vary from situation to situation. There has been some misunderstanding among qualifying disabled veterans in terms of what this benefit offers. It might be helpful to explain the different terminology of property tax law when assisting qualifying veterans. Here are some specific examples of commonly misused words when explaining this benefit. Class: This is not a new property tax classification. It applies to residential and agricultural homestead classes. For agricultural homesteads, the value exclusion applies the house, garage, and first acre of the property. Credit: This program is not a credit or refund. It is a market value exclusion in relation to taxable market value of a homestead property. Exemption: This is not a property tax exemption. Again, it is an exclusion of market value (up to a certain amount) from property taxes. It is very possible for a qualifying disabled veteran to continue to pay some property taxes. Properties valued at amounts higher than the available exclusion amount may still be subject to taxes on the remaining market value or special assessments. 13 Market Value Exclusion on Homesteads of Disabled Veterans, Surviving Spouses, and Primary Family Caregivers

173 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES [Starting here, Are you considered to be totally and permanently disabled due to your service-connected disabilities ifand ONLY if- this is marked YES the veteran qualifies for the $300,000 exclusion. If this says NO or NOT INDICATED, move to the next question up regarding unemployability.] VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 100 Are you entitled to a higher level of disability due to being unemployable: NOT INDICATED Are you considered to be totally and permanently disabled due to your service-connected disabilities: YES Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, Veterans Service Center Manager

174 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 100 Are you entitled to a higher level of disability due to being unemployable: YES Are you considered to be totally and permanently disabled due to your service-connected disabilities: YES Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, [If YES is noted for Are you entitled to a higher level of disability due to being unemployable then this veteran is to be treated as 100 percent disabled, regardless of combined service-connected evaluation. Only if this says NOT INDICATED or NO does the disability combined rating need to be 70, 80, 90, or 100.] Veterans Service Center Manager

175 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 70 Are you entitled to a higher level of disability due to being unemployable: NOT INDICATED Are you considered to be totally and permanently disabled due to your service-connected disabilities: NOT INDICATED Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, Veterans Service Center Manager [***This veteran is eligible for the $150,000 exclusion. The combined service-connected evaluation is 70 percent, and the veteran does not have individual unemployability. ]

176 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 60 Are you entitled to a higher level of disability due to being unemployable: YES Are you considered to be totally and permanently disabled due to your service-connected disabilities: YES Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or feerelated benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, Veterans Service Center Manager ***Even though the combined evaluation is 60, the first question we regard ( Are you considered totally and permanently disabled ) says YES, and this veteran is eligible for the maximum exclusion.

177 MINNESOTA REVENUE Determining Disabled Veteran s Market Value Exclusion Based on the NEW Veteran s Affairs Letters Rev. 7/ Are you considered to be totally and permanently disabled due to your service-connected disabilities: Determining eligibility based on the new VA letters should be easier for counties. It may work best to start from the bottom and read your way up the VA Benefits Information section of the letter: Yes No or Not Indicated No further information is necessary! This individual is eligible for the maximum $300,000 exclusion and does not need to reapply. See notes. 2 Are you entitled to a higher level of disability due to being unemployable: 3 Yes No or Not Indicated Your combined service-connected evaluation is: No further information is necessary! This individual is eligible for the maximum $150,000 exclusion and must reapply annually. See notes. Notes: If the last question reads anything lower than 70, but the second question (Are you entitled to a higher level of disability ) is YES, the veteran is still eligible for the maximum $150,000 exclusion as a 100-percent disabled veteran. All other eligibility provisions (homestead, ownership, honorable discharge, service-connected disability, etc.) must be met. The County Veteran s Service Officer should be able to help answer any questions regarding unusual circumstances. 70, 80, 90, or 100 No further information is necessary! This individual is eligible for the maximum $150,000 exclusion and must reapply annually. See notes. Less than 70 No further information is necessary! This individual is not eligible. See notes.

178 Department of Veterans Affairs What Is Individual Unemployability? Individual Unemployability Fact Sheet Individual Unemployability is a part of VA s disability compensation program that allows VA to pay certain veterans compensation at the 100% rate, even though VA has not rated their service-connected disabilities at the total level. What Is the Eligibility Criteria for Individual Unemployability? A veteran must be unable to maintain substantially gainful employment as a result of his/her serviceconnected disabilities. Additionally, a veteran must have: One service-connected disability ratable at 60 percent or more, OR Two or more service-connected disabilities, at least one disability ratable at 40 percent or more with a combined rating of 70 percent or more. How Do I Apply? Submit VA Form , Veteran s Application for Increased Compensation Based on Unemployability Send application to your nearest VA Regional Office. To find the closest regional office to you, go to The application can be downloaded at or call and request the form be mailed to you. Can I Work? Veterans who are in receipt of Individual Unemployability benefits may work as long as it is not considered substantially gainful employment. The employment must be considered marginal employment. Substantially gainful employment is defined as employment at which non-disabled individuals earn their livelihood with earnings comparable to the particular occupation in the community where the veteran resides. Marginal employment is generally deemed to exist when a veteran's earned income does not exceed the amount established by the U.S. Census Bureau as the poverty level for the veteran only. For more information on the U.S. Census Bureau's poverty thresholds, see What If I Don t Meet the Percentage Criteria? Special consideration will be given for veterans when the following criteria is met: The veteran is considered unemployable due to a service-connected disability(ies) but fails to meet the minimum percentage standards, OR There is evidence of exceptional or unusual circumstances to impairment of earning capacity due to disabilities (for example, interference with employment or frequent periods of hospitalization) Note: Veterans may have to complete an employment questionnaire once a year in order for VA to determine continued eligibility to Individual Unemployability. For More Information, Call Toll-Free or Visit Our Web Site at Compensation and Pension Service October 2008

179 CFR Ch. I ( Edition) erowe on DSK5CLS3C1PROD with CFR the termination or reduction for which payments are not otherwise precluded, the rating will contain a notation reading Evidence insufficient to evaluate from lllll to llllll. CROSS REFERENCE: Failure to report for Department of Veterans Affairs examination. See [29 FR 3623, Mar. 21, 1964] [Reserved] Total and permanent total ratings and unemployability. (a) Total disability ratings (1) General. Total disability will be considered to exist when there is present any impairment of mind or body which is sufficient to render it impossible for the average person to follow a substantially gainful occupation. Total disability may or may not be permanent. Total ratings will not be assigned, generally, for temporary exacerbations or acute infectious diseases except where specifically prescribed by the schedule. (2) Schedule for rating disabilities. Total ratings are authorized for any disability or combination of disabilities for which the Schedule for Rating Disabilities prescribes a 100 percent evaluation or, with less disability, where the requirements of paragraph 16, page 5 of the rating schedule are present or where, in pension cases, the requirements of paragraph 17, page 5 of the schedule are met. (3) Ratings of total disability on history. In the case of disabilities which have undergone some recent improvement, a rating of total disability may be made, provided: (i) That the disability must in the past have been of sufficient severity to warrant a total disability rating; (ii) That it must have required extended, continuous, or intermittent hospitalization, or have produced total industrial incapacity for at least 1 year, or be subject to recurring, severe, frequent, or prolonged exacerbations; and (iii) That it must be the opinion of the rating agency that despite the recent improvement of the physical condition, the veteran will be unable to effect an adjustment into a substantially gainful occupation. Due consideration will be given to the frequency and duration of totally incapacitating exacerbations since incurrence of the original disease or injury, and to periods of hospitalization for treatment in determining whether the average person could have reestablished himself or herself in a substantially gainful occupation. (b) Permanent total disability. Permanence of total disability will be taken to exist when such impairment is reasonably certain to continue throughout the life of the disabled person. The permanent loss or loss of use of both hands, or of both feet, or of one hand and one foot, or of the sight of both eyes, or becoming permanently helpless or bedridden constitutes permanent total disability. Diseases and injuries of long standing which are actually totally incapacitating will be regarded as permanently and totally disabling when the probability of permanent improvement under treatment is remote. Permanent total disability ratings may not be granted as a result of any incapacity from acute infectious disease, accident, or injury, unless there is present one of the recognized combinations or permanent loss of use of extremities or sight, or the person is in the strict sense permanently helpless or bedridden, or when it is reasonably certain that a subsidence of the acute or temporary symptoms will be followed by irreducible totality of disability by way of residuals. The age of the disabled person may be considered in determining permanence. (c) Insurance ratings. A rating of permanent and total disability for insurance purposes will have no effect on ratings for compensation or pension. [26 FR 1585, Feb. 24, 1961, as amended at 46 FR 47541, Sept. 29, 1981] Total disability ratings for compensation purposes. (a) General. Subject to the limitation in paragraph (b) of this section, totaldisability compensation ratings may be assigned under the provisions of However, if the total rating is based on a disability or combination of disabilities for which the Schedule for Rating Disabilities provides an evaluation of less than 100 percent, it must be determined that the service-connected disabilities are sufficient to produce VerDate Mar<15> :26 Aug 11, 2010 Jkt PO Frm Fmt 8010 Sfmt 8010 Y:\SGML\ XXX

180 erowe on DSK5CLS3C1PROD with CFR Department of Veterans Affairs unemployability without regard to advancing age. (Authority: 38 U.S.C. 1155) (b) Incarcerated veterans. A total rating for compensation purposes based on individual unemployability which would first become effective while a veteran is incarcerated in a Federal, State or local penal institution for conviction of a felony, shall not be assigned during such period of incarceration. However, where a rating for individual unemployability exists prior to incarceration for a felony and routine review is required, the case will be reconsidered to determine if continued eligibility for such rating exists. (Authority: 38 U.S.C. 5313(c)) (c) Program for vocational rehabilitation. Each time a veteran is rated totally disabled on the basis of individual unemployability during the period beginning after January 31, 1985, the Vocational Rehabilitation and Employment Service will be notified so that an evaluation may be offered to determine whether the achievement of a vocational goal by the veteran is reasonably feasible. (Authority: 38 U.S.C. 1163) [46 FR 47541, Sept. 29, 1981, as amended at 50 FR 52774, Dec. 26, 1985; 55 FR 17271, Apr. 24, 1990l; 58 FR 32445, June 10, 1993; 68 FR 34542, June 10, 2003] Permanent and total disability ratings for pension purposes. (a) General. Permanent total disability ratings for pension purposes are authorized for disabling conditions not the result of the veteran s own willful misconduct whether or not they are service connected. (Authority: 38 U.S.C. 1502(a)) (b) Criteria. In addition to the criteria for determining total disability and permanency of total disability contained in 3.340, the following special considerations apply in pension cases: (1) Permanent total disability pension ratings will be authorized for congenital, developmental, hereditary or familial conditions, provided the other requirements for entitlement are met. 253 (2) The permanence of total disability will be established as of the earliest date consistent with the evidence in the case. Active pulmonary tuberculosis not otherwise established as permanently and totally disabling will be presumed so after 6 months hospitalization without improvement. The same principle may be applied with other types of disabilities requiring hospitalization for indefinite periods. The need for hospitalization for periods shorter or longer than 6 months may be a proper basis for determining permanence. Where, in application of this principle, it is necessary to employ a waiting period to determine permanence of totality of disability and a report received at the end of such period shows the veteran s condition is unimproved, permanence may be established as of the date of entrance into the hospital. Similarly, when active pulmonary tuberculosis is improved after 6 months hospitalization but still diagnosed as active after 12 months hospitalization permanence will also be established as of the date of entrance into the hospital. In other cases the rating will be effective the date the evidence establishes permanence. (3) Special consideration must be given the question of permanence in the case of veterans under 40 years of age. For such veterans, permanence of total disability requires a finding that the end result of treatment and adjustment to residual handicaps (rehabilitation) will be permanent disability of the required degree precluding more than marginal employment. Severe diseases and injuries, including multiple fractures or the amputation of a single extremity, should not be taken to establish permanent and total disability until it is shown that the veteran after treatment and convalescence, has been unable to secure or follow employment because of the disability and through no fault of the veteran. (4) The following shall not be considered as evidence of employability: (i) Employment as a member-employer or similar employment obtained only in competition with disabled persons. (ii) Participation in, or the receipt of a distribution of funds as a result of VerDate Mar<15> :26 Aug 11, 2010 Jkt PO Frm Fmt 8010 Sfmt 8010 Y:\SGML\ XXX

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183 DEPARTMENT OF VETERANS AFFAIRS Medical and Regional Office Center 2101 Elm Street Fargo NO NAME STREET ADDRESS CITY, STATE ZIP In Reply Refer To: 437/211 CSS Deal' Sir/Madam: This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to survivors of disabled Veterans to lise in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain hollsing entitlements, free or reduced state park anllualmemberships, or any other program or entitlement in which verification of V A benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information The clailllnumber shown on our records is: You are a survivor of the Veteran. lviilitary Information The character(s) of discharge and service date(s) of the veteran include: (There may be additional periods of service not listed above) VA Benefits Information You are in receipt of: Your current monthly award amount is: $1, The Veteran died on active duty: NO The Veteran died as a result of a service-connected disability: YES Was the Veteran considered permanently and totally disabled at the time of death: YES You should contact your state or local office of veterans' affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans' affairs are available at

184 DEPARTMENT OF VETERANS AFFAIRS Regional Office Bishop HeDl'Y Whipple Federal Building 1 Federal Dl'ive St. Paul, MN Mmddyyyy MR ZZZZ Z ZZZZZZ 1234 ZZZZ ZZZZZ, MN [n Repiy Refer To: ZZZZ,ZZZZZ 335/271 To Whom It May Concern: DlC- This is to certify that records ofu. S. Depal1ment of Veterans Affairs (VA) show that ZLZZ zzz LZZZ is in receipt of ~ljility eel11pensalien in the amount of monthly. These payments are made in accordance with the public laws administered by the VA. Sincerely yours, K. L. ANDERSON Veterans Service Center Manager zzzll23456

185 APPROVAL LETTER Date Dear Caregiver Name (Primary Family Caregiver), Thank you for participating in the Program of Comprehensive Assistance for Family Caregivers and supporting our Nation s Veterans. This letter is to inform you that you have been designated and approved as the Primary Family Caregiver for Veteran's name, and as an approved Primary Family Caregiver, you have agreed to or have demonstrated the following eligibility criteria: You are at least 18 years of age. You are a family member such as a parent, spouse, child, stepfamily member or extended family member, or you are living with the Veteran full time, but are not a family member of the Veteran. There are no reports of abuse or neglect of the Veteran that have been documented in the Veteran s electronic health record. You have demonstrated the ability to communicate and understand details of the treatment plan and any specific instructions related to the care of the Veteran. You have demonstrated the ability to provide personal care services, to include such things as assistance with activities of daily living, (i.e., bathing, eating, dressing, toileting) required by the Veteran and/or providing supervision to prevent the Veteran from harm to self or others. You have demonstrated the ability to follow a treatment plan listing the specific care needs of the Veteran without direct supervision. You have demonstrated the ability to carry out core competencies as well as additional care requirements as prescribed by the Veteran s care team. COMPREHENSIVE BENEFITS FOR PRIMARY FAMILY CAREGIVERS As the approved Primary Family Caregiver, you are eligible for the following services: Stipend Allowance is nontaxable, as your Caregiver Support Coordinator will review the monthly payment schedule with you and provide a fact sheet for your review. We encourage you to complete the Electronic Transfer Application (Form 3881), as this will expedite your monthly payments. Health Care Coverage will be provided through the Health Administration Center (HAC) in our Denver Office and additional instructions will be sent by the HAC regarding the health plan and covered benefits.

186 Travel Reimbursement is 41.5 cents a mile, to include tolls; Lodging Subsidy and Per Diem will be provided, and reimbursement for the actual cost up to 50 percent of the federal government employee per diem rate for meals and/or lodging will also be provided. All nonemergency travel reimbursement, lodging and subsidy must be preapproved. If you have questions concerning travel reimbursement, lodging subsidy or per diem, please contact our local travel department at in Room 1S-119 at the Minneapolis VA Medical Center between the hours of 8:00am and 4:00pm Monday through Friday. Respite care will be provided of not less than 30 days annually, including 24-hour per-day care, if medically appropriate, and during times when you are required to fulfill mandatory education and training sessions. Mental Health Services. At your request. These services are to ensure you have adequate support to alleviate stress, burnout and other potential psychological complications resulting from your caregiving responsibilities. The range of approved services includes individual and group therapy and peer support groups. The following services are excluded: medication, other medical procedures related to mental health treatment or inpatient psychiatric care. Your Caregiver Support Coordinator will ensure what you are referred to an appropriate community mental health provider, if you do not have a health plan or CHAMPVA. Education and Training is continuous, and you will be given the opportunity to complete training in a classroom or by self-study through books, DVD or online. The health care team and the Caregiver Support Coordinator will be available to answer questions and provide additional assistance and training, if needed. Identification Card. We have provided an identification card (ID) for your use when accessing caregiver s services. Please cut out the ID card that is displayed below and keep it with you at all times. You will be required to show this card upon demand along with a valid picture ID, such as, but not limited to, a driver s license or state ID. We are excited that you have made this important decision and will be here to support you and Veteran's name so that you can be successful at home. If you have questions regarding the information contained in this letter or about other matters, please feel free to contact your Caregiver Support Coordinator, [Name] [Phone Number], between the hours of 7:30am and 4:00pm Monday through Friday. Your Caregiver Support Coordinator is here to assist you, when needed. Again, welcome to the Program of Comprehensive Assistance for Family Caregivers and thank you for supporting our Nation s Veterans. Yours sincerely, Minneapolis VAMC [Name of Support Coordinator], LICSW Caregiver Support Coordinator Caregiver's Name PRIMARY CAREGIVER Coordinator:

187 FACT SHEET Caregiver Support Program Interim Rule Implementation of the Program of Comprehensive Assistance for Family Caregivers Family Caregivers provide crucial support in caring for our Nation s Veterans by allowing them to stay in the homes and communities they defended, surrounded by the loved ones they fought for. Caregivers in a home environment can enhance the health and well-being of Veterans under VA care. Additional VA services are now available to those Family Caregivers who share VA s daily charge to serve those who have borne the battle. VA will accept applications from seriously injured post 9-11 Veterans and their Family Caregivers for the new Program of Comprehensive Assistance for Family Caregivers, starting May 9 th, For those eligible to enroll in the program, training will begin in early June Many Veterans and caregivers, members of congress, Veteran Service Organizations and community partners helped make this legislation possible. We at VA appreciate all the support for the Family Caregiver as the regulation that will define this program is implemented. IMPORTANT ELIGIBILITY NEWS: Veterans eligible for this program are those who sustained a serious injury including traumatic brain injury, psychological trauma or other mental disorder incurred or aggravated in the line of duty, on or after September 11, Veterans eligible for this program must also be in need of personal care services because of an inability to perform one or more activities of daily living and/or need supervision or protection based on symptoms or residuals of neurological impairment or injury. To be eligible for the Program of Comprehensive Assistance for Family Caregivers, Veterans must first be enrolled for VA health services, if not enrolled previously. Starting May 9, 2011, Veterans may download a copy of the Caregiver program application (VA CG 10-10) at The application enables Veterans to designate one primary Family Caregiver and up to two secondary Family Caregivers if desired. Caregiver Support Coordinators are available at every VA medical center to assist Veterans and their Family Caregivers with the application process. Additional application assistance can be found by via phone at VETS (8387).

188 If the Veteran is not currently enrolled, both the VA Form EZ for VA health services and the application for the Caregiver Program (VA Form CG) will need to be completed. The application must be completed and signed by both the Veteran or their legal representative and the primary Family Caregiver. The application can be hand carried to a local VA Medical Center (VAMC) for walk-in processing, or if expedited processing is preferred, it may be mailed to: Family Caregivers Program Health Eligibility Center 2957 Clairmont Road NE Suite 200 Atlanta, GA Within three business days of receipt of the initial application, the Caregiver Support Coordinator at the Veteran s preferred VA Medical Center will contact the Veteran and primary Family Caregiver to arrange for the Family Caregiver to complete the application and schedule required training. A clinical team from VA will coordinate arrangements with the Veteran to complete a clinical eligibility assessment. This will include evaluating what assistance the Veteran needs with activities of daily living such as eating, bathing, grooming, and/or need for supervision or protection. Training is completed by the primary Family Caregiver once it is determined the Veteran meets clinical eligibility criteria. Training can be completed in one of three ways: Attending the Family Caregiver classroom training conducted at a local VA medical center or community location; completing the training online on a security protected website; or by self-study using a workbook and DVD that will be mailed to the Family Caregiver. Once the Family Caregiver training is completed, a VA clinician will visit the Veteran s home. The purpose of this visit is to make sure that the Family Caregiver and Veteran have everything they need to be safe and successful in the home setting. After the home visit is completed, the Family Caregiver will begin receiving a monthly stipend based on the Veteran s level need and required assistance. The Family Caregiver may also receive health insurance benefits through CHAMPVA if the Family Caregiver does not have existing health insurance. The stipend and health insurance benefits will be retroactive to the date of initial application. There are over two dozen services specific to Caregivers of Veterans of all eras that are currently being offered by VA. Contact your local VAMC Caregiver Support Coordinator or the Caregiver Support Line at for information on these and other caregiver resources and services.

189 CR-DVHE70 Market Value Exclusion on Homestead Property of Disabled Veterans with 70 Percent or More Disability Provides for market value exclusion for homesteads of disabled veterans. Applications are due by July 1. Read instructions before completing. Please note that there is a separate application for veterans with total (100 percent) and permanent disability. First name and middle initial Last name Social Security number Type or Print Check all that apply Spouse s first name and middle initial Last name Social Security number Address (cannot be a P.O. Box number) Date of birth City State Zip Code County Property ID number (from property tax statement): Check one: Is this property your homestead? Yes No Check all boxes that apply. You must have a U.S. Government Form DD214 or other official military discharge papers, and must be certified by the U.S. Department of Veterans Affairs (VA) as having a service-connected disability of 70 percent or more. Check if: I have been certified by the United States VA as having a service-connected disability of 70 percent or more. Check one: I have attached the appropriate documentation certifying that I have been honorably discharged and verifying my disability status. Yes No Sign below: By signing below, I certify that the above information is true and correct to the best of my knowledge. For office use only to be completed by the county assessor. Denied for assessment year: Name of applicant Application is Approved Assessor s Signature and Date Sign Here Making false statements on this application is against the law Minnesota Statutes, section , states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Signature of applicant Signature of spouse Date Daytime phone Please mail completed application and required attachments to your county assessor.

190 Applying for the disabled veterans homestead market value exclusion Form CR-DVHE70 Who is eligible? You may be eligible for a market value exclusion of up to $150,000 on homestead property if you are a United States military veteran with a service-connected disability of 70 percent or more. You may be eligible for a market value exclusion of up to $300,000 on homestead property if you are a United States military veteran with total (100 percent) and permanent service-connected disability. If you are 100 percent and permanently disabled, you must complete form CR-DVHE100 (Market Value Exclusion on Homestead Property of Veterans with Total and Permanent Disability). You must be able to verify honorable discharge from the United States armed forces as indicated by U.S. Government Form DD214 or other official military discharge papers. You must also be certified by the United States Department of Veterans Affairs (VA) as having service-connected disability. Homestead Property This application is not a substitute for a homestead application. You must apply for and be granted homestead on a qualifying property prior to applying for this market value exclusion. How to apply Complete the entire application fully and legibly. Attach all proper documentation. Mail the application and the required documentation to your county assessor by July 1 of the current year to be eligible for exclusion in the next payable tax year. Any veteran qualifying for the $150,000 exclusion must reapply by July 1 of each year to continue to be eligible for the exclusion. If you are married and you own your home jointly, both you and your spouse must sign the form. Required attachments Please attach official military discharge papers (United States Government Form DD214 or other) to verify that you have been honorably discharged from the United States Armed Forces. Please also attach any forms that verify your service-connected disability status as certified by the United States Veterans Affairs department. It is acceptable to supply one letter provided by the VA containing all of the above information. Use of information The information on this form is required by Minnesota Statutes, section to properly identify you and determine if you qualify for the market value exclusion. Your Social Security number is required. If you do not provide the required information, your application may be delayed or denied. Penalties Making false statements on this application is against the law. Minnesota Statutes, section , states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Additional resources Your county s Veterans Service Office and Assessor s Office should be able to assist you with properly filling out this form. A fact sheet may be found on the Department of Revenue s website at

191 CR-DVHE100 Market Value Exclusion on Homestead of Disabled Veterans with Total and Permanent Disability Provides for market value exclusion for homesteads of disabled veterans Applications are due by July 1. Read instructions before completing. Please note that there is a separate application for veterans who are 70 percent or more disabled (but are not totally and permanently disabled). First name and middle initial Last name Social Security number Type or Print Spouse s first name and middle initial Last name Social Security number Address (cannot be a P.O. Box number) Date of birth City State Zip Code County Property ID number (from property tax statement): Check one: Is this property your homestead? Yes No Name of applicant Application is Check all that apply Sign Here Check all boxes that apply. You must have a U.S. Government Form DD214 or other official military discharge papers, and must be certified by the U.S. Department of Veterans Affairs (VA) as having a permanent service-connected disability of 100 percent. Check if: I have been certified by the United States VA as having permanent and total service-connected disability. Check one: I have attached the appropriate documentation certifying that I have been honorably discharged and verifying my disability status. Yes No Sign below: By signing below, I certify that the above information is true and correct to the best of my knowledge. Making false statements on this application is against the law Minnesota Statutes, section , states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. For office use only to be completed by the county assessor. Denied for assessment year: Approved Assessor s Signature and Date Signature of applicant Signature of spouse Date Daytime phone Please mail completed application and required attachments to your county assessor.

192 Applying for the disabled veterans homestead market value exclusion Form CR-DVHE100 Who is eligible? You may be eligible for a market value exclusion of up to $300,000 if you are a United States military veteran with total (100 percent) and permanent service-connected disability. If you are not totally and permanently disabled but have disability of 70 percent or more, then you may qualify for a $150,000 market value exclusion. If this is the case, please complete form CR- DVHE70 (Homestead of Disabled Veterans with 70 Percent or More Disability). You must be able to verify honorable discharge from the United States armed forces as indicated by U.S. Government Form DD214 or other official military discharge papers. You must also be certified by the United States Department of Veterans Affairs (VA) as having service-connected disability. Homestead Property This application is not a substitute for a homestead application. You must apply for and be granted homestead on a qualifying property prior to applying for this market value exclusion. How to apply Complete the entire application fully and legibly. Attach all proper documentation. Mail the application and the required documentation to your county assessor by July 1 of the current year to be eligible for exclusion in the next payable tax year. For veterans with total (100 percent) and permanent disability, there is no need to reapply after you have been accepted. If you are married and you own your home jointly, both you and your spouse must sign the form. Required attachments Please attach official military discharge papers (United States Government Form DD214 or other) to verify that you have been honorably discharged from the United States Armed Forces. Please also attach any forms that verify your service-connected disability status as certified by the United States Veterans Affairs department. It is acceptable to supply one letter provided by the VA containing all of the above information. Use of information The information on this form is required by Minnesota Statutes, section to properly identify you and determine if you qualify for the market value exclusion. Your Social Security number is required. If you do not provide the required information, your application may be delayed or denied. Penalties Making false statements on this application is against the law. Minnesota Statutes, section , states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Additional resources Your county s Veterans Service Office and Assessor s Office should be able to assist you with properly filling out this form. A fact sheet may be found on the Department of Revenue s website at

193 CR-DVHESS Homestead Market Value Exclusion for Surviving Spouses of Totally and Permanently Disabled Veterans or Service Members Who Have Died While Serving Honorably in Active Service Applications are due annually by July 1. Read instructions before completing. First name and middle initial Last name Social Security number Property Owner Deceased Veteran s first name and middle initial Last name Social Security number Address (cannot be a P.O. Box number) Date of birth City State Zip Code County Property ID number (from property tax statement): Check one: Is this property your homestead? Yes No Check one: Do you hold the legal or beneficial title to the homestead property? Yes No Name of applicant Application is Applicant Information Check all boxes that apply. Surviving Spouses of Permanently and Totally Disabled Veterans: I am the surviving spouse of a veteran who was receiving the Market Value Exclusion for Permanently and Totally Disabled Veterans on this property. I have attached verification of my benefits as a surviving spouse of a totally and permanently disabled veteran. Yes No This homestead property received the exclusion under the veteran s name prior to this application. Yes No Surviving Spouses of Service Members Who Have Died While Serving in Active Duty: I am the surviving spouse of a service member of a branch of the United States Armed Forces that passed away due to a service-connected cause while serving honorably in active duty. I have attached U.S. Government Form DD1300 or DD2064. Yes No For office use only to be completed by the county assessor. Denied for assessment year: Approved Annual reapplication information: I certify that, since the property s original exclusion, I have not remarried, nor sold, transferred, or otherwise disposed of this property, and I continue to homestead this property. Sign below: By signing below, I certify that the above information is true and correct to the best of my knowledge. Sign Here Making false statements on this application is against the law Minnesota Statutes, section , states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Signature of applicant Date Daytime phone Please mail completed application and required attachments to your county assessor.

194 CR-DVHESS Applying for the homestead market value exclusion for property of a surviving spouse of a permanently and totally disabled veteran or a service member who died while serving in active duty Form CR-DVHESS Who is eligible? You may be eligible for a market value exclusion of up to $300,000 for up to five taxes payable years if you are the surviving spouse of a United States military veteran with total (100 percent or individual unemployability) and permanent service-connected disability and your property had previously received the disabled veteran market value exclusion under the veteran s qualifications. You may need to verify through the County Assessor that your property previously received this exclusion under the qualifying veteran s name and disability status. You may also be eligible for a market value exclusion of up to $300,000 if you are the surviving spouse of a member of the United States Armed Forces who died due to a service connected cause while serving honorably in active duty, as indicated on U.S. Government Form DD1300 or DD2064. You must be able to verify that you are a surviving spouse of a permanently and totally disabled veteran or a service member who died while serving in active duty. Homestead Property This application is not a substitute for a homestead application. You must apply for and be granted homestead on a qualifying property prior to applying for this market value exclusion. How to apply Complete the entire application fully and legibly. Attach all proper documentation. Mail the application and the required documentation to your county assessor by July 1 of the current year to be eligible for exclusion in the next payable tax year. You must reapply annually by July 1 to continue to receive this exclusion for a maximum of five taxes payable years. You will continue to receive the benefit for five taxes payable years after the year of the veteran s death or until such time as you remarry, or sell, transfer, or otherwise dispose of your property whichever comes first. Required attachments Please attach all required documentation to verify that you qualify for this exclusion. Use of information The information on this form is required by Minnesota Statutes, section to properly identify you and determine if you qualify for this market value exclusion. Your Social Security number is required. If you do not provide the required information, your application may be delayed or denied. Your County Assessor may also ask for additional verification of qualifications. Penalties Making false statements on this application is against the law. Minnesota Statutes, section , states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Additional resources Your county s Veterans Service Office and Assessor s Office should be able to assist you with properly filling out this form. A fact sheet may be found on the Department of Revenue s website at

195 CR-DVPFC Market Value Exclusion on Homestead of Disabled Veteran s Primary Family Caregiver Applications are due by July 1. Please read all instructions before completing. First name and middle initial Last name Social Security number Spouse s first name and middle initial Last name Social Security number Address (cannot be a P.O. Box number) Date of birth Name of applicant Property Owner Veteran Info City State Zip Code County Property ID number (from property tax statement): Check one: Is this property your homestead? Yes No Check one: I am approved by the secretary of the United States Department of Veterans Affairs for assistance as the primary provider of personal care services for the veteran listed on this application who is an eligible veteran under the Program of Comprehensive Assistance for Family Caregivers, codified as United States Code, title 38, section 1720G. Yes No Veteran s First Name Last name Social Security Number Address Date of Birth City State Zip Code County Check all boxes that apply. The veteran must have a U.S. Government Form DD214 or other official military discharge papers, and must be certified by the U.S. Department of Veterans Affairs (VA) as having a service-connected disability of 70 percent or more. Check if: The veteran has been certified by the United States VA as having service-connected disability of 70 percent or more. I have attached documentation supporting this statement. The veteran has been certified by the United States VA as having a permanent service-connected disability of 100 percent. I have attached documentation supporting this statement. I have attached the appropriate documentation certifying that the veteran has been honorably discharged. Yes No For office use only to be completed by the county assessor. Denied for assessment year: Application is Approved I have attached the VA Caregiver Support Approval Letter verifying that I am the veteran s Primary Family Caregiver. Yes No Sign below: By signing below, I certify that the above information is true and correct to the best of my knowledge. Sign Here Making false statements on this application is against the law Minnesota Statutes, section , states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Signature of applicant Signature of spouse Date Daytime phone Please mail completed application and required attachments to your county assessor.

196 CR-DVPFC Applying for the homestead market value exclusion for primary family caregivers of disabled veterans. Form CR-DVPFC Who is eligible? You may be eligible for a market value exclusion of up to: $150,000 if you are the primary family caregiver of a United States military veteran with a serviceconnected disability of 70 percent or more, or $300,000 if you are the primary family caregiver of a United States military veteran with a permanent and total (100 percent) service-connected disability. You must be able to verify honorable discharge status of the veteran from the United States armed forces as indicated by U.S. Government Form DD214 or other official military discharge papers. You must also be able to verify that the veteran is certified by the United States Department of Veterans Affairs as having service-connected disability. Homestead Property This application is not a substitute for a homestead application. You must apply for and be granted homestead on a qualifying property prior to applying for this market value exclusion. How to apply Complete the entire application fully and legibly. Attach all proper documentation. Mail the application and the required documentation to your county assessor by July 1 of the current year to be eligible for exclusion in the next payable tax year. Applications and documentation must be submitted annually in order to continue receiving the exclusion. If you are married and you own your home jointly, both you and your spouse must sign the form. Required attachments Please attach official military discharge papers (United States Government Form DD214 or other) to verify that the veteran has been honorably discharged from the United States Armed Forces. Please also attach any forms that verify the veteran s service-connected disability status as certified by the United States Department of Veterans Affairs, along with documentation that you are the veteran s primary family caregiver in the form of a letter from the VA Caregiver Support. Use of information The information on this form is required by Minnesota Statutes, section to properly identify you and determine if you qualify for the market value exclusion. Your Social Security number, as well as the Social Security number of the disabled veteran, is required. If you do not provide the required information, your application may be delayed or denied. Penalties Making false statements on this application is against the law. Minnesota Statutes, section , states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Additional resources Your county s Veterans Service Office and Assessor s Office should be able to assist you with properly filling out this form. A fact sheet may be found on the Department of Revenue s website at

197 Memo MINNESOTA REVENUE Date: February 8, 2012 To: From: Subject: All County and City Assessors Andrea Fish, State Program Administrator Information and Education Section Classification of storage unit properties Recently, the Department of Revenue has been asked by many individuals for our opinion on the proper classification of storage units that are sold similarly to condominium property and available for private use. These are condominium-like facilities that are comprised of separate individual storage units. Each unit has its own legal description and is individually-owned. A recent informal survey of assessors has made us aware that there are inconsistent assessment practices related to these properties. It is our opinion that these units must be classified based on ownership and use as all property is to be classified by law. For units that are owned by individuals and used for personal storage, we recommended a residential classification. For units that are owned by businesses and used for commercial purposes, the proper classification would be commercial. In some instances, the unit may be used in conjunction with the owner s homestead property and located in the immediate proximity of the homestead. In those cases, if the owner makes application, the homestead may be extended to the unit. It is our expectation that compliance with Minnesota property tax laws will be achieved, and we will continue to work with all counties via our division s Property Tax Compliance Officers to ensure equal and fair assessment practices. If you have any questions, please contact the property tax division via at proptax.questions@state.mn.us.

198 MEMO Date: January 9, 2012 To: From: All Assessors Drew Imes, Senior State Program Administrator Information and Education Section Property Tax Division Subject: Property Tax Abatements Not Subject to Minnesota Statute It has recently come to our attention that some clarification would be helpful regarding the department s policy on abatements that are outside of the county s power to grant. (The county may grant abatements for the current assessment year plus two previous assessment years.) This memo is to inform you that the department does have administrative policies and procedures for granting abatements in very limited circumstances under Minnesota Statute 270C.86 for abatements that exceed the time limit of those granted by counties. For instance, the Department of Revenue will consider granting abatements in situations involving errors made by government officials or when there is no other method to rectify unjustly or erroneously applied property taxes. If your office believes that there is a situation that warrants the department s involvement concerning an abatement, please contact the Property Tax Division. The department has a written policy and an updated abatement form that we can provide to the county if it is determined that the abatement request is appropriate. Information concerning the department s abatement policy for abatements granted under Minnesota Statute 270C.86 will be added to the Property Tax Administrator s Manual and the Auditor/Treasurer Manual in future updates.

199 MINNESOTA REVENUE MEMO Date: November 16, 2011 To: From: All County Assessors John F. Hagen, Director Property Tax Division Subject: Sales Ratio Methodology for 2012 As you all know, the Department of Revenue has been working with the Minnesota Association of Assessing Officers for several years to change the method of calculating sales ratios for the State Board of Equalization. We are making this change to eliminate the lag in the state board measures so that your assessments will better match the market. This change will make state board ratios more similar to Tax Court ratios and will make our practices more in line with IAAO standards. This memo is intended to describe how the transition to the new methodology will work for the 2012 State Board of Equalization. We have always been aware that the best time to implement a change like this would be when all markets are reasonably flat, and that it would be more difficult for highly inflationary markets. Unfortunately, there will probably never be a time when all markets are flat. We have acknowledged all along that a transition period might be necessary for inflationary markets. In an effort to mitigate the impact of this change in methodology, we are implementing the following procedures for the State Board of Equalization in We will be implementing the new methodology for the 2012 assessment and state board of equalization. For areas where the amount of local effort increase needed to achieve an acceptable ratio under the new methodology is equal to or less than 20%, our expectation is that you will attain an acceptable ratio under the new methodology. State Board of Equalization orders may be issued to achieve an acceptable ratio under the new methodology. For areas where the local effort increase needed to attain an acceptable ratio under the new methodology exceeds 20%, we will expect the amount of local effort to be the greater of: 1. 20%; or 2. Halfway between the amount between the amount of local effort required to reach 90% under the old methodology, and the amount of local effort required to reach 90% under the new methodology. [E.g., under the new methodology, if the amount of local effort required to reach 90% is 42%, and the amount required under the old methodology is 12%, the amount of local effort required would be 27%.] Continued

200 Page 2 of 2 Sales Ratio Methodology for 2012 State Board of Equalization orders may be issued to achieve a combined local and State Board of Equalization effort that meets this threshold. To assist you in setting your preliminary values, we will be sending out the following information: Time adjustments: Countywide or local for residential and cabin properties, Multi-county region for agricultural, commercial, and apartment properties; Sales (including forward-adjusted sales prices); Ratios using both the old methodology and the new methodology (using 2011 values); Local effort required for a 90% median ratio under the old and new methodologies. For the purposes of these procedures, local effort means the percent increase or decrease that would make the new median ratio at least 90%, assuming increases and/or decreases were uniform for all parcels in a property class. Remember that your time adjustment can be appealed if you can demonstrate that it does not match your market. Contact your Property Tax Compliance Officer for more help with an appeal. Property Tax Division *Updated 4/22/ See Disclaimer on Minnesota Front Cover* Department of Revenue

201 Memo Date: November 7, 2011 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section Homestead Notice Minnesota Statute , subdivision 9 requires: "The county assessor shall publish in a newspaper of general circulation within the county no later than December 1 of each year a notice informing the public of the requirement to file an application for homestead by December 15." For those of you who have not already completed this requirement, we would recommend the following text. *IMPORTANT PROPERTY TAX HOMESTEAD NOTICE* * This will affect the amount of property tax you pay in 2012, and it may affect your eligibility for a property tax refund. Please contact your county assessor to file a homestead application on or before December 15, 2011, if one of the following applies: You purchased a property in the past year and you, or a qualifying relative, occupy the property for homestead purposes on December 1, 2011; or You, or a qualifying relative occupy a property for homestead purposes on December 1, 2011, and the property was previously classified as non-homestead. A qualifying relative for homestead purposes depends on the type of property. For residential property, a qualifying relative can be a parent, stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew, or niece of the owner. This relationship may be by blood or marriage. For agricultural property, a qualifying relative can be a child, grandchild, sibling, or parent of the owner or of the spouse of the owner. Once you have been granted the homestead classification, no further applications are necessary unless they are specifically requested by the county assessor. You must also contact the assessor by December 15, 2011 if you are the property owner, or a qualifying relative of the property owner, and the use of the property has changed during the past year. If you should sell, move, or for any reason no longer qualify for the homestead classification, you are required to notify the county assessor within 30 days of the change in homestead status. Failure to notify the county assessor within this 30-day period is punishable by recalculation of tax as non-homestead, in addition to a penalty equal to 100 percent of the homestead benefits. <Spruce County Assessor s Office> (XXX) Mail Station 3340 Fax: (651) St. Paul, MN *Updated 4/22/ See Disclaimer on Front proptax.questions@state.mn.us Cover*

202 MINNESOTA REVENUE Memo Date: August 19, 2011 To: From: Subject: All County Assessor Offices Andrea Fish, State Program Administrator Information and Education Section, Property Tax Division Surviving spouses of permanently and totally disabled veterans Minnesota Laws 2011, First Special Session Chapter 7, Article 5, section 8 extended the exclusion carryover timeline for surviving spouses of permanently and totally disabled veterans (or veterans with permanent individual unemployability) from two additional taxes payable years after the year of the veteran s death to five additional taxes payable years. Minnesota Statutes, section , subdivision 34, paragraph (c) is amended to read: If a disabled veteran qualifying for a valuation exclusion under paragraph (b), clause (2) [permanently and totally disabled veteran], predeceases the veteran's spouse, and if upon the death of the veteran the spouse holds the legal or beneficial title to the homestead and permanently resides there, the exclusion shall carry over to the benefit of the veteran's spouse for the current taxes payable year and for five additional taxes payable years or until such time as the spouse remarries, or sells, transfers, or otherwise disposes of the property, whichever comes first. Qualification under this paragraph requires an annual application under paragraph (h). In previous years, if a property had received the exclusion as the homestead of a veteran with a permanent and total (100 percent) service-connected disability, the exclusion would have carried over to the benefit of the surviving spouse without reapplication. Because there are still some uncertainties about what sort of documentation would need to be provided with an application for these affected surviving spouses, we recommend that the benefit of the exclusion be extended so long as the property had previously qualified as the veteran s. We do anticipate that most qualifying surviving spouses would be able to furnish a status of benefits letter from the United States Department of Veterans Affairs, which would look similar to letters received by veterans themselves. For the 2011 assessment year, qualifying surviving spouses of permanently and totally disabled veterans who had previously received the exclusion are allowed to apply until as late as September 15. The attached application reflects this deadline. In all future years, annual applications will be due by July 1 to be eligible for that assessment year. We have attached an application that these surviving spouses may use for the 2011 assessment year applications only. This application will be updated for 2012 and thereafter. Please remember that changes also allow that if a property had initially received the exclusion for the 2008 assessment year, and the qualifying veteran passed away that year, the surviving spouse would have been eligible to receive the exclusion for the 2008 and 2009 assessment years (taxes payable in 2009 and 2010) under previous statute. These surviving spouses did not receive the exclusion for the 2010 assessment for taxes payable in However, the effective date of the 2011 law language provides:

203 A qualifier under paragraph (c) [surviving spouses of permanently and totally disabled veterans] that would have been eligible for a market value exclusion under this section for taxes payable in 2011, if the change under this section had been effective for that year, shall be eligible to receive the benefit of the exclusion for the remaining number of total taxes payable years provided under paragraph (c). This means that surviving spouses who received the benefit for taxes payable in 2009 and 2010 should also receive the benefit for taxes payable in 2012, 2013, and 2014 five total payable years. This assumes the surviving spouse has not remarried, nor has sold, transferred, or otherwise disposed of the property. If a permanently and totally disabled veteran passes away in 2012, the surviving spouse would receive the benefit for taxes payable in 2012 (based on the 2011 assessment as the veteran s exclusion), as well as for taxes payable in 2013, 2014, 2015, 2016, and 2017 (based on assessment years 2012 [the year of the veteran s death], 2013, 2014, 2015, and 2016). For veterans with less than 100 percent disability, or 100 percent disability that is not considered permanent, the exclusion does not carry over to the benefit of a surviving spouse. This exclusion is also not applicable to surviving spouses in cases where the qualifying veteran did not initially apply for and receive the exclusion on the homestead property. If you have any questions about these changes, please contact the Information and Education Section via proptax.questions@state.mn.us.

204 MEMO Date: August 11, 2011 To: From: Subject: All County Assessors, Auditors, and County Board Chairpersons John Hagen, Property Tax Division Director Minnesota Department of Revenue Appointment of County Assessors The Property Tax Division is updating the county assessor appointment approval process. Your part in this process is to inform the department of any changes concerning the position of the county assessor in your county. When making changes, including appointing a new county assessor, please have that appointee notify the division by contacting Drew Imes, State Program Administrator, at drew.imes@state.mn.us or This notification will initiate the department s appointment approval process, which is required before any county assessor appointment can be finalized. As a reminder, Minnesota Statutes, Section lists the requirements for county assessors. We are asking for your help to ensure these statutory requirements are met when a new county assessor is appointed. Please be aware that any new county assessor appointee must be an Accredited Minnesota Assessor (AMA) at the time of appointment by the county board. If the county assessor appointee is not an AMA at the time of appointment, the department will not approve the appointment. Also, please be aware that the new county assessor appointee must complete a Request of Information for County Assessor Appointee form and file it with the department, along with a signed copy of the board minutes appointing the person as the county assessor. Approval of the appointment will not be granted unless proper application to the commissioner is made, all requirements are met, and the appointee participates in a meeting held in St. Paul at the Minnesota Department of Revenue. During the meeting in St. Paul, the assessor will meet with the director of the Property Tax Division, the Property Tax Compliance Officer Supervisor, the Property Tax Compliance Officer assigned to your county, and other key Department of Revenue staff. Discussion items during the meeting will focus on the assessment in your county and any possible concerns or suggestions for improving the quality of the assessment. It is the Department of Revenue s duty to ensure that the taxpayers of the State of Minnesota receive the best possible service when it comes to the administration of the property tax system. County assessors are at the forefront of this service. Therefore, it is vital that the each county in the state, along with the Department of Revenue, work together to make certain that each county assessor is professionally qualified, competent, and prepared to administer the property tax system in his/her county. Thank you for your help in this matter. If you would like more information concerning the appointment of county assessors, please contact Drew Imes at drew.imes@state.mn.us or

205 Memo MINNESOTA REVENUE Date: June 30, 2011 To: From: Subject: All County Assessors Andrea Fish, Information and Education Section Property Tax Division Refund of deferred taxes paid upon withdrawal from Green Acres Laws 2011, Chapter 13, section 5 added an uncodified provision outlining the treatment of properties which were removed from Green Acres at the owner s request. Property owners who withdrew class 2a land from Green Acres at any time since May 21, 2008 may apply for enrollment in Green Acres until as late as August 1, 2011 to be eligible for enrollment in the 2011 assessment year and going forward. Additionally, property owners who withdrew properly-enrolled class 2b lands from Green Acres at any time since May 21, 2008, may enroll those acres into Rural Preserve as late as August 1, 2011 and be treated as if those acres were enrolled in Green Acres immediately prior to enrollment in Rural Preserve. If a property owner withdrew class 2a acres after May 21, 2008, or withdrew class 2b acres after August 16, 2010, and paid deferred taxes, those taxes should be repaid to the property owner if they reenroll in Green Acres or enroll in Rural Preserve as outlined above. Only those acres enrolled in either program are eligible for refund of the deferred taxes paid. Additional taxes paid while the property has been assessed at its highest and best use value (if any) are not refunded to the taxpayer. The Commissioner of Revenue was charged with prescribing the manner in which these deferred taxes should be repaid. We recommend that County Auditors treat any qualifying refunds in the same manner in which tax court judgments are handled. The Auditor shall draw a warrant upon the County Treasurer for the payment of these refunds. The County Auditor may (with the consent of the property owner) issue a certificate stating the amount of the refund due, which may be used to apply to current or future taxes due for the taxing district(s). In the event the auditor shall issue a warrant for refund or certificates, the amount is to be charged to all taxing districts in proportion to the amount of their respective taxes included in the levy, and the auditors must deduct the same in the subsequent distribution of any tax proceeds to the taxing districts. Upon receiving any such certificate in payment of other taxes, the amount shall be distributed to the taxing districts in proportion to the amount of their respective taxes included in the levy. If you have any questions, please contact our division via at proptax.questions@state.mn.us.

206 MINNESOTA REVENUE Memo Date: June 2, 2011 To: From: Subject: County Veterans Service Officers Andrea Fish, State Program Administrator Property Tax Division, Minnesota Department of Revenue Property Taxes Market Value Exclusion for Homesteads of Disabled Veterans It has come to our attention that there has been a delay through the United States Department of Veterans Affairs in issuing the annual Summary of Benefit letters. This delay will affect the ability of many Minnesota veterans to provide all necessary documentation for the property tax program which provides a market value exclusion for homesteads of disabled veterans. Because of this unanticipated delay, we have recommended that County Assessors allow applications for exclusion until as late as September 1, 2011 for the 2011 assessment year (for taxes payable in 2012). This timeline is identical to that granted during the program s initial year. Veterans may choose to apply for the program by the July 1 statutory deadline, provided that the necessary documentation of disability is provided to the assessor by no later than September 1. Assessors may also work with the veterans in your community if applications are received after July 1 to determine if the late application is related to this delay. While a number of qualifying veterans are permanently disabled and are not required to provide annual documentation of disability, there will be several veterans who depend upon this documentation to prove that the qualifications for market value exclusion are met. The Department of Revenue appreciates the work that you do on behalf of Minnesota s veterans. Your assistance and helpfulness with implementing this program has been, and continues to be, a great benefit to our state. Thank you.

207 Date: April 20, 2011 To: From: Subject: All Assessors Information and Education Section Property Tax Division Taxation of Airplane Hangars Over the past year or so, the division has issued several letters advising assessors that municipally-owned airplane hangars leased to private individuals for the storage of airplanes were taxable. Our advice in those specific questions was in error. The purpose of this letter is to clarify the property tax status of leased airplane hangars. This letter should replace all previous correspondence related to the property tax status of leased airplane hangars. As you are likely well aware, Minnesota Statutes, section , subdivision 1 states in part that All real and personal property in this state, is taxable, except such other property as is by law exempt from taxation. One such exemption is provided for certain airplane hangars and the land on which they sit. Minnesota Statutes, section , subdivision 1, provides this exemption. It essentially makes hangars in airports owned by cities, towns, counties, or groups thereof exempt if they are leased to or used by private entities for personal aircraft storage or repair or as part of an aviation-related business. The subdivision, however, goes on to provide an exception to the exemption, thus making certain hangars taxable. It states that all leased hangars located at an airport owned or operated by the Metropolitan Airports Commission (MAC) or in a city of over 50,000 in population are TAXABLE. The same subdivision also has a provision that makes hangars leased by a private entity to be used in connection with a non-aviation related commercial business TAXABLE regardless of location. For example, storage of carpets and rugs for an imported-rug business would be a non-aviation related use of a hangar for a commercial business in which the leased hangar would be taxable. In summary, general rules for the tax status of municipally-owned airplane hangars are as follows: A municipally-owned hangar (and the land it sits upon) that is leased to a private individual for the storage or repair of a personal-use aircraft or as part of an aviation-related business is EXEMPT provided it is located in a city of 50,000 or less people and the airport is not owned or operated by the Metropolitan Airports Commission. A municipally-owned hangar (and the land it sits upon) that is leased to a private entity to be used in connection with a commercial business which is not aviation-related is TAXABLE, regardless of location or size of city. In cases of a taxable hangar, if the term of the lease is less than one year, there is a potential for exemption, however these situations require more review and lease terms which result in an automatic renewal would not have a potential for exemption. We have provided a comprehensive chart on the next page which displays all the various scenarios we can envision along with the appropriate property tax status and property classification. If you have any questions, please direct them to proptax.questions@state.mn.us.

208 Assumptions: Who Owns the Hangar? Government Entity MINNESOTA REVENUE Property Tax Status of Airplane Hangars Hangar located on city-owned airport Hangar is leased for PERSONAL-USE aircraft for a term of at least 1 year If the lease term is less than 1 year, there is a potential for exemption, however lease terms which automatically renew are taxable. What is the Population of the City? 50,000 or less How is the Hangar Used? Leased to or used by private entity for storage or repair of personal-use aircraft Is the LAND Taxable or Exempt? Is the HANGAR Taxable or Exempt? What is the Classification? Exempt Exempt NA Government Entity Government Entity Government Entity 50,000 or less 50,000 or less More than 50,000 or owned by MAC Leased to or used by private entity as part of an aviation-related business Leased to or used by private entity for storage or repair of commercialuse aircraft or for a business purpose which is not aviation-related (E.g. Corporate planes) Leased to or used by private entity for storage or repair of personal-use aircraft Exempt Exempt NA Taxable as personal property Taxable as personal property Taxable as personal property Taxable as personal property Class 3a Commercial Class 4c(7) Government Entity More than 50,000 or owned by MAC Leased to or used by private entity as part of an aviation-related business Taxable as personal property Taxable as personal property Class 3a Commercial Government Entity More than 50,000 or owned by MAC Leased to or used by private entity for storage or repair of commercialuse aircraft and business use which is not aviation-related Taxable as personal property Taxable as personal property Class 3a Commercial Private Entity 50,000 or less Used by private entity for storage or repair of personal use aircraft Exempt Taxable as personal property Class 4c(7) Private Entity 50,000 or less Used by private entity for part of an aviation-related business Exempt Taxable as personal property Class 3a Commercial Private Entity 50,000 or less Used for storage or repair of commercial-use aircraft, and business use which is not aviation-related Taxable as personal property Taxable as personal property Class 3a Commercial Private Entity More than 50,000 or owned by MAC Used by private entity for storage or repair of personal-use aircraft Taxable as personal property Taxable as personal property Class 4c(7) Private Entity More than 50,000 or owned by MAC Used by private entity as part of an aviation-related business Taxable as personal property Taxable as personal property Class 3a Commercial Private Entity More than 50,000 or owned by MAC Used for storage or repair of commercial-use aircraft, and business use which is not aviation-related Taxable as personal property Taxable as personal property Class 3a Commercial 04/2011

209 MINNESOTA REVENUE BULLETIN Date: April 20, 2011 (this version replaces ALL previous versions) To: All Assessors From: Information and Education Section, Property Tax Division Subject: The Rural Preserve Property Tax Program (M.S ) BACKGROUND The Rural Preserve Property Tax Program was enacted by the Minnesota Legislature in The program was a response to concerns raised by property owners and farmers regarding changes that had been made to the Green Acres program in Many farm properties in Minnesota include land that is not actually farmed. In some instances, the choice to not farm a portion of the land is based on a property owner s decision to use it for other purposes (e.g. recreational uses). However, other farmers choose not to farm portions of their property to maintain natural wildlife or to preserve green lands for future generations. These farmers had appealed to the legislature that, due to changes made in 2008 to Green Acres law, they would have to plow down trees and convert the property to agricultural uses in order to be able to afford property taxes (if there was no longer a deferral under the Green Acres program). The Rural Preserve program was enacted to provide similar tax benefits as the Green Acres program to property owners who own qualifying class 2b rural vacant land. Reports on the Green Acres program prior to 2008 law changes found that statewide, 38% of enrolled acres were not tilled land *. Due to the inconsistencies in the implementation of the Green Acres program and the resultant tax shift caused by extending Green Acres to non-agricultural lands, significant legislative changes were made to Green Acres in 2008 and One of the legislative changes was the creation of the Rural Preserve program. With Rural Preserve, we cannot urge enough that you be consistent with both statutory language and intent in order to ensure statewide uniformity and consistency. In order to be proactive in our endeavor for statewide consistency, we are pleased to provide you with this bulletin regarding the Rural Preserve program, the benefits of the program, eligibility requirements, and other information that will be important for assessors offices to know in advance of the first 2011 applications. * ( Green Acres and Agricultural Land Preservation Programs, Office of the Legislative Auditor, State of Minnesota, 2008) 1

210 PROGRAM ELIGIBILITY Who is eligible for the Rural Preserve Property Tax Program? Minnesota Statutes, section , subdivision 2 provides: Class 2b property that had been properly enrolled under section for taxes payable in 2008, or that is part of an agricultural homestead under section , subdivision 23, paragraph (a), at least a portion of which is enrolled under section , is entitled to valuation and tax deferment under this section if: (1) the property is contiguous to class 2a property enrolled under section under the same ownership; (2) there are no delinquent property taxes on the land; and (3) the property is not also enrolled for valuation and deferment under section or , or chapter 290C or 473H. We will focus more on the land requirements in the next section. However, the property owner requirements fall into two groups: 1. Property owners who had been properly enrolled in Green Acres for taxes payable in 2008 (i.e. under 2006 statutory requirements, whether the property is currently homesteaded or not); or 2. Owners of agricultural homestead property, at least part of which is enrolled in Green Acres. If a property owner meets the qualifications for this program because of previous enrollment in Green Acres for taxes payable in 2008, for any sale/transfer/etc. that results in new ownership, the new owner would need to meet the agricultural homestead and contiguous Green Acres property enrollment requirements to qualify for continued valuation/deferral. The property would not have been assessed under Green Acres for taxes payable in 2008 for that owner, so that provision would not apply. For 2b acres currently in Green Acres, this is a one time landing area for those acres. Going forward, all new applicants and all new owners of enrolled land would need to meet the agricultural homestead and contiguous Green Acres property enrollment requirements. For farm property owners who are not currently enrolled in Green Acres but have an agricultural homestead, the owners would need to apply for both programs. It is possible that there is no deferral provided under Green Acres for some property owners if the highest and best use value does not exceed the Green Acres indicated value. However, the property must meet the requirements for, and be enrolled in, Green Acres (e.g. the property is primarily devoted to agricultural use) - whether or not there is a valuation benefit to Green Acres enrollment - to be eligible for Rural Preserve enrollment. What are the land requirements? Class 2b property that had been enrolled in Green Acres for taxes payable in 2008 and that is contiguous to class 2a property enrolled in Green Acres OR class 2b property that is a contiguous part of an agricultural homestead, at least a part of which is currently enrolled in Green Acres, may qualify. For property qualifying due to prior enrollment in Green Acres, this means property that had been properly enrolled in Green Acres for the 2007 assessment year, taxes payable in

211 There is no minimum eligible acreage size for enrollment in Rural Preserve. The property as a whole must be primarily devoted to agricultural use, and must meet the Green Acres requirements. Any class 2b acreage that is contiguous to the class 2a land under the same ownership that is enrolled in Green Acres qualifies for Rural Preserve enrollment, regardless of size. In most cases, a farm property enrolled in Green Acres will not have small (i.e., less than ten acres in size) tracts of class 2b land due to those tracts being considered impractical to separate from the contiguous class 2a lands. However, in cases where those acres are classified as 2b, they are eligible for enrollment in Rural Preserve so that the entire contiguous land mass is eligible for valuation deferral (either Green Acres or Rural Preserve). Qualifying class 2b acres do not need to be directly contiguous to each other, so long as they are on the same contiguous land mass under same ownership. For example, if a property owner has 13 qualifying acres on the eastern edge of the qualifying class 2a farm property, and another 4 acres on the western edge, all 17 acres are eligible for enrollment in the program due to contiguity to the class 2a property. What are the limitations? Acres may not be enrolled in this program while concurrently enrolled in: Green Acres Open Space Sustainable Forest Incentive Act Metropolitan Agricultural Preserves Because eligible acres are only class 2b land, the property would be ineligible for concurrent classification as class 2c (Managed Forest Land). If a property owner enrolled in class 2c with a qualifying Forest Management plan, she/he may be eligible for Rural Preserve if the land is reclassified as 2b and is either: part of an agricultural homestead currently enrolled in Green Acres or had been properly enrolled in Green Acres by that same owner for taxes payable in 2008 and prior to enrollment in the Managed Forest Land class. As stated above, there must be no delinquent taxes on the land at the time of application. Transition for properties from Green Acres For properties properly enrolled in Green Acres as of the 2008 assessment, the transition into Rural Preserve will likely happen in one of two ways. For most property owners in Green Acres who choose to enroll their class 2b acres into Rural Preserve, we expect that they would keep those 2b acres enrolled in Green Acres until their applications for Rural Preserve enrollment are completed. When they are eligible and apply for the Rural Preserve program beginning in 2011, they can immediately transition those acres from Green Acres to Rural Preserve without paying back deferred taxes on their 2b lands under Green Acres statute. Farmers choosing this option must enroll their 2b acres prior to May 1, 2013 to avoid the payback of taxes deferred under Green Acres. In other words, a farmer with 2b acres in Green Acres would have to pay back deferred taxes if the farmer has not enrolled those acres into Rural Preserve by May 1, If the farmer enrolls the 2b acres into Rural Preserve for the 2014 assessment year or any later year, they do not receive a refund of the deferred taxes that they had paid back. 3

212 There was a possibility for farmers to withdraw class 2b lands prior to August 16, 2010 to avoid a payback of deferred taxes as well. In this case, those property owners may enroll in Rural Preserve by August 1, 2011 to be eligible for continued enrollment even though they were not enrolled in Green Acres immediately prior to enrollment in Rural Preserve. In this case, the property does not need to be part of an agricultural homestead provided the 2b lands are contiguous to class 2a property enrolled in Green Acres under the same ownership. When can property owners apply? The program will be first available for the 2011 assessment year. The first application due date will be August 1, 2011 for taxes payable For new applications in 2012 and thereafter, the due date is May 1. The application does not need to be filed annually after initial acceptance, but assessors may request additional information to verify that a property owner continues to meet program requirements. PROGRAM BENEFITS What are the benefits of the program? Similar to Green Acres, a tax amount is deferred for the duration of enrollment in the program. The assessor is to determine two values for the land: One without regard to non-agricultural influences which must not exceed the 2a tilled value for that county as determined by the Commissioner of Revenue, and Another value based on the highest and best use of the property which takes into account any non-agricultural influences such as development pressure or demand for seasonal or recreational use. The actual taxes will be based on the Rural Preserve value (the value without regard to nonagricultural influences) and the difference between the taxes based on the Rural Preserve value and the taxes based on a highest and best use value are deferred for the duration of the program. Special assessments may also be deferred as long as property is enrolled in the program. When a property no longer qualifies, all deferred special assessments plus interest (in equal installments over the time remaining until the last maturity date of the bonds issued) along with three years deferred taxes (current year s deferred amount and two prior years) must be paid. As with Green Acres, the deferred taxes are a lien on the property, and when due are assessed to the same extent and for the same duration as other taxes imposed on the property in this state. The tax shall be annually extended by the county auditor and when payable shall be collected and distributed in the manner provided by law for the collection and distribution of other property taxes. How is the Rural Preserve value determined? Minnesota Statutes, section , subdivision 3 provides: Notwithstanding sections , subdivision 8, and [both sections refer to market value], the value of any real estate that qualifies under subdivision 2 must, upon timely application by the owner in the manner provided in subdivision 5, not exceed the value prescribed by the commissioner of revenue for class 2a tillable property in that county. The house and garage, if any, and the immediately surrounding one acre of land and a minor, ancillary nonresidential structure, if any, shall be valued according to their appropriate value. In determining the value for ad 4

213 valorem tax purposes, the assessor shall not consider the presence of commercial, industrial, residential, or seasonal recreational land use influences that may affect the value of real estate subject to this section. For purposes of valuation for the Rural Preserve program, the Department of Revenue strongly recommends using the following: 1. For class 2b lands, use the value your county uses for valuing non-tilled class 2a lands for Green Acres. 2. For unusable waste, wild land, swamp land, etc. enrolled in Rural Preserve, use 50% of the non-tilled class 2a land value your county uses for Green Acres. For example, if the county has estimated the value of woods at $2500 per acre because of recreational or other non-agricultural value influences, and the value for Rural Preserve (based on the Green Acres valuation memo) is $2200, the deferral is based on the $300 difference. If a county has estimated the value of a swamp at $1800 per acre because of recreational or other non-agricultural market value influences, and the value for Rural Preserve is $2200 (based on the Green Acres valuation memo), then the recommended Rural Preserve value for the unusable swamp land is $1100 per acre (50% of $2200), and the deferral is based on the $700 difference in value. If the estimated market value (EMV) of the land the property owner wishes to enroll in Rural Preserve is less than the recommended value for the Rural Preserve Program, the property may still be enrolled, but there are no deferred taxes. The Rural Preserve deferral is only applicable in cases where the EMV exceeds the indicated Rural Preserve value for any given property. For example, if a county has valued a swamp at $900 per acre due to lack of non-agricultural market influences, and the recommended value for Rural Preserve is $2200 (based on the Green Acres valuation memo) and 50% of that value is $1100, there is no deferral because the swamp EMV is lower than the Rural Preserve value. APPLICATION What is the application process? The process for applying for the Rural Preserve Property Tax program is very similar to that of applying for Green Acres tax deferral. Property owners seeking to enroll lands into the Rural Preserve program should first contact their assessor s office for an explanation of the program. You have been provided with fact sheets which may be of help in this part of the process. Assessors should work with property owners to determine program eligibility (Green Acres application has been made and is on file and/or agricultural homestead requirements are met, no delinquent taxes, etc.). The property owner must complete the Rural Preserve program application along with Green Acres or agricultural homestead applications if needed prior to being eligible for enrollment. Applications must also include the most recent available aerial photograph or satellite image of the property provided by the Farm Service Agency of the United States Department of Agriculture or the county may use an aerial photograph or satellite image from its own GIS system. The property owner may request the image from the FSA, or if the county has more recent imagery available or if the farmer is unable to get an image from the FSA, the county s image may be used. The image should clearly delineate the acres which the property owner 5

214 would like to enroll in Rural Preserve. Any acreage that the owner would not like to include for any reason (such as the intent to develop the land), should be marked as well. Applications for deferral under Rural Preserve are due by May 1 of the year prior to the year in which taxes are payable (for assessment year 2011 only, applications are due by August 1, 2011). A completed and signed application must be returned to the assessor. The assessor should contact the property owner of the approval or denial. As with similar special programs, if the assessor denies the application, the property owner may appeal to Minnesota Tax Court. Local and county boards of appeal and equalization are not able to grant special programs to property owners. PROGRAM COMPLIANCE What do we need to know about compliance issues? As previously stated, the requirements for Rural Preserve valuation and deferral are listed in Minnesota Statutes, section , subdivision 2: Class 2b property that had been properly enrolled under section for taxes payable in 2008, or that is part of an agricultural homestead under section , subdivision 23, paragraph (a), at least a portion of which is enrolled under section , is entitled to valuation and tax deferment under this section if: (1) the property is contiguous to class 2a property enrolled under section under the same ownership; (2) there are no delinquent property taxes on the land; and (3) the property is not also enrolled for valuation and deferment under section or , or chapter 290C or 473H. Deferred taxes and special assessments are due as soon as the property no longer qualifies under the requirements of subdivision 2 shown above. If a property is enrolled under the agricultural homestead and Green Acres requirements and then becomes non-homestead or no longer qualifies for Green Acres, that property no longer qualifies for continued deferral under the Rural Preserve program. If the contiguous class 2a property is no longer farmed, or if the classification of the land enrolled in Rural Preserve changes to anything other than class 2b rural vacant land property, the property no longer qualifies and the taxes deferred under Rural Preserve for the current year and the previous two years are due along with any deferred special assessments. If property enrolled in Rural Preserve is sold or transferred, what are the consequences (if any)? The new owner would need to meet the requirements of , subdivision 2 to qualify for continued valuation and deferral under this program. As with Green Acres, we recommend that the new owner be granted 30 days to apply for the program. For all new owners, etc., The assessor may require proof by affidavit or otherwise that the property qualifies under subdivision 2 (M.S , subd. 5). If a new owner is able to make application and meets the requirements of subdivision 2, the benefits may continue for the same assessment year. If the new owner does not qualify, there is no valuation/deferral benefit, and deferred taxes and special assessments must be paid. 6

215 ADDITIONAL TAXES The statutes governing deferred taxes and special assessments read as follows under M.S : Subd. 6. Additional taxes. When real property which is being, or has been valued and assessed under this section no longer qualifies under subdivision 2, the portion no longer qualifying shall be subject to additional taxes in the amount equal to the difference between the taxes determined in accordance with subdivision 3 and the amount determined under subdivision 4, provided that the amount determined under subdivision 4 shall not be greater than it would have been had the actual bona fide sale price of the real property at an arm's-length transaction been used in lieu of the market value determined under subdivision 4. The additional taxes shall be extended against the property on the tax list for the current year, provided that no interest or penalties shall be levied on the additional taxes if timely paid and that the additional taxes shall only be levied with respect to the current year plus two prior years that the property has been valued and assessed under this section. Subd. 8. Special local assessments. The payment of special local assessments levied after June 1, 2011, for improvements made to any real property described in subdivision 1 together with the interest thereon shall, on timely application as provided in subdivision 6, be deferred as long as the property meets the conditions contained in this section. If special assessments against the property have been deferred pursuant to this subdivision, the governmental unit shall file with the county recorder in the county in which the property is located a certificate containing the legal description of the affected property and of the amount deferred. When the property no longer qualifies under subdivision 1, all deferred special assessments plus interest shall be payable in equal installments spread over the time remaining until the last maturity date of the bonds issued to finance the improvement for which the assessments were levied. If the bonds have matured, the deferred special assessments plus interest shall be payable within 90 days. The provisions of section , subdivision 2, apply to the collection of these installments. A penalty shall not be levied on these special assessments if timely paid. This subdivision does not apply to special assessments levied at any time by a county or district court under chapter 116A or by a watershed district under chapter 103D. Three years deferred taxes (current year s deferred amount and two prior years) and deferred special assessments are therefore due when the property owner requests removal from the program, or if the property becomes: a. any classification other than 2b rural vacant land; b. non-homestead (does not apply to properties qualifying for Rural Preserve due to enrollment in Green Acres for taxes payable in 2008); or c. no longer contiguous to Green Acres property under the same ownership Remember, if a property owner meets the qualifications for this program because of previous enrollment in Green Acres for taxes payable in 2008, any sale/transfer/etc. that puts the property into new ownership will require the new owner to meet all requirements, including the agricultural homestead and contiguous Green Acres enrolled property requirements, to qualify 7

216 for continued valuation/deferral. The property would not have been assessed under Green Acres for taxes payable in 2008 to that owner, so that provision would not apply. For those class 2b acres moving from Green Acres, this is a one time landing area. Going forward, all new applicants and all new owners of enrolled land would need to meet all requirements, including the agricultural homestead and Green Acres requirements. If you have any questions about administering the Rural Preserve program, please contact the Information and Education Section of the Property Tax Division via at proptax.questions@state.mn.us. 8

217 MEMO To: From: All City and County Assessors Drew Imes, State Program Administrator Property Tax Division Date: April 18, 2011 Re: Homestead Absence Due to Prison INTRODUCTION Minnesota Statute, section , Homestead Determination; Special Rules, governs how homesteads are determined in Minnesota. There has been uncertainty in recent years as to how to determine when to remove a homestead based on the occupancy of the owner when the owner is absent because of incarceration. What follows is the current Minnesota Department of Revenue position on this issue, which is based upon the interaction of court precedent, the mid-year homestead statutory language, and administrative feasibility. i DIRECTIVE Prison terms of less than two years (less than 24 months): If the property owner is sentenced to a term of less than two years, and the assessor has determined the owner intends to return, homestead status will not be affected. Prison terms of two years or more (24 months or more): If the property owner is sentenced to a term of two years or more, or the assessor has determined the owner does not intend to return, remove the homestead on the January 2 that follows incarceration. PERSONAL CIRCUMSTANCE ALLOWANCE If the spouse, or spouse and minor children that constitute the incarcerated person s family, continue to occupy the property as a homestead, the homestead should continue as a personal circumstance allowance under Minnesota Statute, section , subdivision 1, paragraph (e). i This directive is based on various court cases and the applicable statutes. See the Minnesota Supreme Court case Dill v. Hennepin, Minnesota Tax Court 1985, File No. TC (affirmed 381 N.W.2d 443) (holding that an absence for more than nine years due to incarceration justified removal of a homestead); Blaisdell v. County of Hennepin, Minnesota Tax Court 1991, File No. TC-12226, (holding that an absence due to incarceration for less than one year does not justify removal of a homestead). See also, Attorney General Opinion 213, February 9, 1949, (holding that an absence of more than four years may be too long and a homestead should be removed); See also Minnesota Statute , Homestead Determination; Special Rules.

218 MEMO Date: October 20, 2010 To: All Assessors From: Information and Education Section Property Tax Division, Minnesota Department of Revenue Subject: Public Access Marinas Minnesota Statute , subd. 25: Class 4c(11) UPDATED APPLICATION INCLUDED. The department has received some feedback from assessors concerning the administration of the 4c(11) classification since the time we issued the original 4c(11) application on September 11, As a result, the department concluded that there needs to be some clarification about what constitutes public access for the purposes of the 4c(11) classification and how the classification should be applied to marina property. The statute talks about public access in two ways: (1) that the marina itself must be accessible to the public and; (2) that an eligible marina must provide lake or river access to the public. Statutory language added in 2010 clarifies that the marina must provide lake or river access to the public by means of an access ramp or other facility (such as a boat-crane). The new language also allows a marina to receive the 4c(11) classification if the marina-owned property directly abuts a publicly-owned access site to a lake or river. To clarify, the following uses/services do not constitute public water-access if these are the only uses/services the marina offers: 1. Leased boat slips: Boat slips that are leased to individuals for their own personal use do not constitute public access. When a person leases a boat slip that person becomes a member of the marina and is granted access to the lake/river which is not made available to someone who does not or cannot lease a boat slip. 2. Boat rentals: Providing boat rentals does not constitute public access. 3. Fishing: Allowing fishing from docks/shore does not constitute public access. 4. Temporary docking: Some resorts and restaurants allow boaters access from the water to temporarily dock their boats in order to dine at the resort/restaurant. This does not constitute public access. The above services are provided by many marinas but do not constitute public water-access. According to law, providing public access to a lake or river means that a marina provides boat launch services, via a ramp or crane, to any person who wishes to launch a boat. A property cannot receive the 4c(11) if it does not provide launch services via a public access ramp/crane (or directly abuts a publicly-owned access site to a lake or river). Please Note: A reasonable, nonrestrictive fee may be charge for launch services. The fee is charged to launch the boat and provide upkeep of the launch/landing area; the fee does not make the person a member of a club or other group with access to services unavailable to members of the general public.* If the marina does, in fact, allow public access via a ramp or crane, the 4c(11) classification may be applied to up to 800 feet of lakeshore and up to 6 acres of property that are used for marina purposes, which would include property used for leased boat slips, boat rentals, etc. The marina must provide public access via a ramp or crane (or directly abut a publicly-owned access site to a lake or river) before the 4c(11) class can be applied to any property used for leased boat slips, boat rentals, etc. The class cannot be applied to property that is not being used for marina purposes, such as vacant land, woods, cabins, etc. For example, 3 acres of woods with no discernable use, but adjacent to the marina, should not receive class 4c(11). Also, please note that the 4c(11) classification is only applicable to land and cannot be applied to any structures.

219 EXAMPLE 1: A ten-acre parcel contains a marina with public access, resort property, and five acres of woods that are vacant. The portion of the property used for marina purposes takes up 3 acres. Only the land used for marina purposes can receive the 4c(11) classification.

220 EXAMPLE 2: Two separate 3-acre parcels are owned by different entities. Parcel A contains a marina that has a public access boat ramp. Parcel B contains a marina that is used for privately leased boat slips and does not offer public access. Parcel A would qualify for class 4c(11) on up to 6 acres of land that is used for marina purposes. Parcel B would not qualify for class 4c(11) because it does not offer public access

221 EXAMPLE 3: The parcel contains a marina with public access and leased boat slips, a resort with rentable cabins, and some rural vacant land. Because the marina offers public access, the 4c(11) classification can be applied to up to 6 acres of land being used for marina purposes, which would include the area and lakeshore used for leased boat slips.

222 EXAMPLE 4: This marina could receive the 4c(11) classification because the property directly abuts publicly owned land that contains a public access boat ramp. The 4c(11) classification can be applied to up to 6 acres of land being used for marina purposes, which would include the area and lakeshore used for leased boat slips.

223 MINNESOTA REVENUE BULLETIN Date: January 3, 2011 To: From: County Assessors Information and Education Section Property Tax Division Subject: Manufactured Homes This bulletin is intended to assist assessors in correctly assessing manufactured homes, park trailers, travel trailers and manufactured home parks in Minnesota. The bulletin includes examples that describe scenarios assessors face and provides guidance on how to resolve the valuation and classification issues. This bulletin is updated from a previous version released in June Definitions 1. Manufactured home. "Manufactured home" means a structure, transportable in one or more sections, which in the traveling mode, is eight body feet or more in width or 40 body feet or more in length, or, when erected on site, is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air conditioning, and electrical systems contained therein; except that the term includes any structure which meets all the requirements and with respect to which the manufacturer voluntarily files a certification required by the secretary and complies with the standards established under this chapter. Minnesota Statutes, section , subdivision Manufactured home park. "Manufactured home park" means any site, lot, field or tract of land upon which two or more occupied manufactured homes are located, either free of charge or for compensation, and includes any building, structure, tent, vehicle or enclosure used or intended for use as part of the equipment of the manufactured home park. Minnesota Statutes, section , subdivision Park trailer. "Park trailer" means a trailer that: (1) exceeds 8-1/2 feet in width in travel mode but is no larger than 400 square feet when the collapsible components are fully extended or at maximum horizontal width; and (2) is used as temporary living quarters. "Park trailer" does not include a manufactured home. Minnesota Statutes, section , subdivision Travel trailer. "Travel trailer" means a trailer, mounted on wheels, that: (1) is designed to provide temporary living quarters during recreation, camping, or travel; (2) does not require a special highway movement permit based on its size or weight when towed by a motor vehicle; and (3) complies with sections , subdivision 2, and , subdivision 2. Minnesota Statutes, section , subdivision 36. Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 1

224 It is important to note that these definitions are found in the statutes regulating motor vehicles and places of lodging. While these definitions are helpful to describe the properties we see, the definitions are not determinative of their tax status. Taxation Through the years, the taxability of manufactured homes has presented assessors with problems in any number of ways. By definition, manufactured homes and park trailers are movable. Some are more readily movable than others. Travel trailers are always movable (by definition a travel trailer is mounted on wheels and subject to motor vehicle registration taxes). However, they may be subject to ad valorem taxes under certain conditions. Assessors may have problems finding these properties and, once located, determining if the property is taxable or exempt. First, it is helpful to look at the motor vehicle registration and license fee laws. Manufactured homes and park trailers. Manufactured homes and park trailers shall not be taxed as motor vehicles using the public streets and highways and shall be exempt from the motor vehicle tax provisions of this chapter. Except as provided in section , manufactured homes and park trailers shall be taxed as personal property. The provisions of Minnesota Statutes 1957, section or any other act providing for tax exemption shall be inapplicable to manufactured homes and park trailers, except such manufactured homes as are held by a licensed dealer and exempted as inventory. Travel trailers not conspicuously displaying current registration plates on the property tax assessment date shall be taxed as manufactured homes if occupied as human dwelling places. Minnesota Statutes, section , subdivision 9. It is important to know that it is generally unlawful in Minnesota to operate a vehicle on the roads and highways if the vehicle is more than 8.5 feet wide. School buses and other specialized vehicles may be wider but they have special registration plates. But, in general, if you want to move a vehicle or structure in excess of 8.5 feet, you must apply for and receive a special moving permit. For manufactured homes and park trailers as defined in sections and , motor vehicle taxes are not imposed. (Remember, by definition they are wider than 8.5 feet.) They are taxed as provided in the tax sections of the law. If they are moved, a special permit must be obtained. Travel trailers are subject to the annual motor vehicle taxes. (Remember, by definition they are 8.5 feet or less in width.) But if an assessor comes across a travel trailer that does not have CURRENT registration plates CONSPICUOUSLY displayed AND it is occupied as a human dwelling place, the assessor must include the travel trailer on the tax rolls. It is very important to note that motor vehicle registrars throughout the state have the same issues as assessors in trying to categorize these structures. People will come to the registrar to license a travel trailer but, in reality, the structure is a park trailer. The registrar issues a license based on the information provided. Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 2

225 It is also important to note that the industry uses terms in ways that are not consistent with the statutory terms. For example, the term park trailer under Minnesota law means a structure more than 8.5 feet in width but if you browse the web, you will see that structures/vehicles called park trailers come in various sizes, some smaller than 8.5 feet in width. For our purposes, a vehicle called a park trailer but 8.5 feet or less in width is a travel trailer and would be subject to motor vehicle registration fees UNLESS it does not display current registration plates and it is being occupied as a dwelling unit. Then, it is subject to property taxes. A vehicle 8.5 feet or less is considered a travel trailer but assessors come across vehicles that appear to be travel trailers but are more than 45 feet in length. For our purposes, a vehicle 8.5 feet or less in width is a travel trailer no matter its length and would be subject to motor vehicle registration fees UNLESS it does not display current registration plates and it is being occupied as a dwelling unit. It may be illegal to drive this vehicle on the roads, but it is just a travel trailer to us. Assessors must list all manufactured homes and park trailers on the tax rolls except those manufactured homes and park trailers held by a licensed dealer as inventory. In the course of an assessment, if an assessor finds a travel trailer without current license plates and it is being used as a human dwelling place on the assessment date, the assessor includes that property on the tax rolls as well. Now we turn to the tax laws. Minnesota Statutes, section , contains the taxing procedures for manufactured homes. Subdivision 8 instructs assessors on how to value and tax manufactured homes. But note that subdivision 8 has a broader definition of the term manufactured home. For taxing purposes, manufactured home means a structure transportable in one or more sections, which is built on a permanent chassis, and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and contains the plumbing, heating, air conditioning, and electrical systems in it. Manufactured home includes any accessory structure that is an addition or supplement to the manufactured home and, when installed, becomes a part of the manufactured home. This general definition of the term manufactured home includes manufactured homes as defined in section , park trailers as defined in section and travel trailers that do not display current license plates and are occupied as a human dwelling place. All of these manufactured homes are taxable. For the rest of this bulletin, the term manufactured home means any manufactured home, park trailer or taxable travel trailer. Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 3

226 Real v. personal property tax The general rule used to decide if the tax is a real property assessment rather than a personal property assessment is: if the owner of the manufactured home owns the site on which the manufactured home is located and the manufactured home is permanently attached to the real estate, the land and manufactured home should be valued and assessed as real property. The total value is included in the tax base for calculating taxes; the notice provisions and appeal rights are the same as for any real property; and the payment dates and interest and penalty provisions are the same. A manufactured home that meets each of the following criteria must be valued and assessed as an improvement to real property, the appropriate real property classification applies, and the valuation is subject to review and the taxes payable in the manner provided for real property: (1) the owner of the unit holds title to the land on which it is situated; (2) the unit is affixed to the land by a permanent foundation or is installed at its location in accordance with the Manufactured Home Building Code in sections to , and rules adopted under those sections, or is affixed to the land like other real property in the taxing district; and (3) the unit is connected to public utilities, has a well and septic tank system, or is serviced by water and sewer facilities comparable to other real property in the taxing district. Minnesota Statutes, section , subdivision 8, clause (b). Because anything is possible with property that is movable, a situation could occur where the owner of the land owns the manufactured home but the manufactured home is not permanently affixed to the land or does not meet all three criteria. In that case, the assessor should treat the manufactured home as personal property. The land and any other improvements would be listed as real property and the manufactured home would be listed as personal property. If the owner of the manufactured home does not own the underlying land, the manufactured home is valued and included on the tax rolls as personal property. The value is not included in the tax base for calculating taxes. The billing, collection and appeal period is quite different from the real property processes. The value of the property is determined as of January 2 of the assessment year. The tax is calculated and a bill sent by July 15 of the same year. The taxes are due by August 31 of the same year unless the tax exceeds $50, in which case one-half of the tax is due by August 31 and the second half is due by November 15. Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 4

227 A manufactured home that meets each of the following criteria must be assessed at the rate provided by the appropriate real property classification but must be treated as personal property, and the valuation is subject to review and the taxes payable in the manner provided in this section: (1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit is located in a manufactured home park but is not the homestead of the park owner; (2) the unit is affixed to the land by a permanent foundation or is installed at its location in accordance with the Manufactured Home Building Code contained in sections to , and the rules adopted under those sections, or is affixed to the land like other real property in the taxing district; and (3) the unit is connected to public utilities, has a well and septic tank system, or is serviced by water and sewer facilities comparable to other real property in the taxing district. Minnesota Statutes, section , subdivision 8, clause (c). Ancillary structures A manufactured home permanently affixed to land owned by the owner of the manufactured home is taxable as real property and the taxable value includes the value of all ancillary structures such as sheds, decks or similar structures. A manufactured home located on leased land is taxable to the manufactured home owner as a personal property tax and the value for tax purposes includes any ancillary structures such as sheds, decks or similar structures. There are numerous campgrounds, often located on rivers or lakes, which rent or lease sites for travel trailers on a seasonal basis. In most instances, the travel trailers are moved at the end of the season. The travel trailers are currently licensed and are not taxable as either real or personal property even if they are not moved at the end of the season. If the owner of the travel trailer is allowed to erect a shed, deck or other similar structure on the leased property and the value of the shed, deck or similar structure exceeds $1,000, the structure is subject to a personal property tax if the structure is not owned by the owner of the site. The tax bill is sent to the travel trailer owner. The travel trailer is not taxed but the ancillary structure is subject to a personal property tax. Owners of sites leased for manufactured homes or travel trailers must obtain the permanent address of the lessee making the improvements and provide the address to the assessor upon the assessor s request. Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 5

228 General Rules 1. Manufactured homes, except manufactured homes in the inventory of a licensed dealer and not connected to utilities, are taxable. 2. Park trailers that are wider than 8.5 feet and connected to utilities, except park trailers in the inventory of a licensed dealer and not connected to utilities, are taxable. 3. If a manufactured home or park trailer that is more than 8.5 feet in width is displaying current registration plates, the manufactured home or park trailer is subject to property tax. By law, the manufactured home or park trailer should not be licensed and the owner should apply to the motor vehicle registrar for a refund. 4. A travel trailer (and a park trailer 8.5 feet or less in width) is subject to motor vehicle registration fees. 5. A travel trailer (and a park trailer 8.5 feet or less in width) that is not displaying current registration plates on the property tax assessment date is subject to property tax if it is occupied as a human dwelling place. 6. If the owner of the land is the owner of the manufactured home (including park trailers and taxable travel trailers) and the manufactured home is on a permanent foundation and it is connected to utilities, has a well or septic system or is serviced by municipal water and sewer, the land and manufactured home is subject to property tax as real property. 7. If the owner of the land also owns the manufactured home but the manufactured home is not permanently affixed to the land, the land is taxed as real property and the manufactured home is taxed as personal property. 8. A manufactured home on leased property is always taxed as personal property. Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 6

229 TIPS 1. In Minnesota, a vehicle over 8.5 feet needs a special permit to be on the roads and highways. If you are looking at a vehicle or structure that is wider than 8.5 feet, it is probably taxable whether it has a current registration plate or not. You should start from the premise that the structure is taxable. The owner would need to provide proof that it is not taxable. Current registration alone does NOT prove that the structure is not taxable. 2. The terms we use for taxation do NOT have universal definitions. For example, a park trailer is defined in our law as a structure that is wider than 8.5 feet. But there are structures that people refer to as park trailers that are either exactly 8.5 feet or less than 8.5 feet in width. We would refer to a structure that is 8.5 feet in width or less as a travel trailer. If it is more than 8.5 feet, it s taxable; if it is 8.5 feet or less in width, you have to decide whether it is currently registered and if it is being used as a dwelling unit. If it does not have CURRENT registration plates displayed and it is used as a dwelling unit, it s taxable. 3. Many campgrounds, usually on a lake or river, are used seasonally. Campers, trailers, mobile homes and other recreational vehicles are parked there permanently for the season but are moved from the site when the season ends. These vehicles are probably not wider than 8.5 feet; they are probably displaying current registration plates; and they are probably not taxable. These vehicles probably meet the definition of travel trailers. Any ancillary structure that is constructed on the campground by the owner of the travel trailer is taxable if you determine that the ancillary structure has a value over $1,000. The travel trailer may NOT be taxable but the ancillary structure may be taxable. 4. We have been asked about park trailers that have a current registration plate and have been moved over the road in the past year. Remember general rule #2 a park trailer (by definition over 8.5 feet wide) is subject to tax. To be moved it requires a special permit, not a license. If it was improperly licensed, the owner may ask for a refund of the license fee. The law providing that park trailers used on a highway during the past year would be exempt from property tax was repealed in 1995 as part of the same legislation establishing that park trailers are subject to property tax. Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 7

230 Manufactured Home Park Cooperatives updated in 2010 Manufactured home park cooperatives are growing in popularity in Minnesota in recent years, however there are still very few. Lessees of manufactured home park sites often have little control over management of the park and have no control over the owner s decision to sell or close the park. If a park closes or is sold, the lessee probably has the legal right to move the manufactured home but many parks will not accept manufactured homes over a certain age or in less than very good condition. In addition, it is expensive to move the manufactured home. Lessees may lose significant dollars when decisions are made about their futures but they have no voice in those decisions. Many of these issues have led to the growth in popularity of manufactured home park cooperatives. Manufactured home park cooperatives allow lessees to create an association that buys the park itself, manages the park and guarantees every member of the association a site upon which to locate a manufactured home. Manufactured home park cooperatives preserve affordable housing and promote investment and property upkeep. The cooperatives are a benefit to owners/shareholders with vested interest in the property. There are four manufactured home park cooperatives in Minnesota as of this writing, with two additional ones in the process of forming. Minnesota s first cooperative was in Goodhue County and the second was in Anoka County. Prior to enactment of new language in 2010, the homestead treatment of land and buildings of manufactured home park cooperatives was difficult to interpret and administer. The updated classification keeps the value of the land distinct from the value of the individual homes occupied by members/others. However, the value of the land is not included with the owner s home tax for purposes of PTR. There will not be individual tax statements for the land under this provision, because the land will continue to be assessed to the cooperative association. Formation of a manufactured home park cooperative can have property tax implications. Manufactured home parks are included in class 4c(5) in our classification system but have three different class rates depending on the cirucmstances. Legislation enacted in 2010 affects both homestead treatment for and classification for manufactured home park cooperatives. Homesteads; Minnesota Statutes, section , subdivision 3a: (a) When a manufactured home park is owned by a corporation or association organized under chapter 308A or 308B, and each person who owns a share or shares in the corporation or association is entitled to occupy a lot within the park, the corporation or association may claim homestead treatment for the park. Each lot must be designated by legal description or number, and each lot is limited to not more than one-half acre of land. (b) The manufactured home park shall be entitled to homestead treatment if all of the following criteria are met: (1) the occupant or the cooperative corporation or association is paying the ad valorem property taxes and any special assessments levied against the land and structure either directly, or indirectly through dues to the corporation or association; and Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 8

231 (2) the corporation or association organized under chapter 308A or 308B is wholly owned by persons having a right to occupy a lot owned by the corporation or association. (c) A charitable corporation, organized under the laws of Minnesota with no outstanding stock, and granted a ruling by the Internal Revenue Service for 501(c)(3) tax-exempt status, qualifies for homestead treatment with respect to a manufactured home park if its members hold residential participation warrants entitling them to occupy a lot in the manufactured home park. (d) "Homestead treatment" under this subdivision means the class rate provided for class 4c property classified under section , subdivision 25, paragraph (d), clause (5), item (ii). The homestead market value credit under section does not apply and the property taxes assessed against the park shall not be included in the determination of taxes payable for rent paid under section 290A.03. The language affecting homestead treatment for manufactured home parks provides that an entire manufactured home park may qualify for homestead treatment, except that homestead treatment in this context only means the class rates established (by article 1, section 15) under M.S , subd. 25, paragraph (d). (Homestead treatment does not include homestead market value credit, or taxes payable for rent paid under 290A.03.) Previously the interpretation of this statute was a matter of dispute when it was first applied for taxes payable in Classification of a manufactured home park vs. classification of a manufactured home park cooperative M.S , subdivision 24: (i) manufactured home parks as defined in section , subdivision 3, excluding manufactured home parks described in section , subdivision 3a, and (ii) manufactured home parks as defined in section , subdivision 3, that are described in section , subdivision 3a; (ii) manufactured home parks assessed under clause (5), item (i), have the same class rate as class 4b property, and the market value of manufactured home parks assessed under clause (5), item (ii), has the same class rate as class 4d property if more than 50 percent of the lots in the park are occupied by shareholders in the cooperative corporation or association and a class rate of one percent if 50 percent or less of the lots are so occupied A manufactured home park cooperative is valued the same as any other manufactured home park but the classification may be different. In order to determine which sites are occupied by shareholders, the assessor must work with the representatives of the cooperative association. The assessor needs to see how many sites are shareholder-occupied in order to determine the appropriate classification. The class rates for manufactured home parks are distinguished in class 4c(5) between manufactured home park cooperatives - class 4c(5)(ii) - and the more common manufactured home parks - class 4c(5)(i) - that are not cooperatives. The cooperatives have the same class rate as class 4d property (0.75%) if more than 50 percent of the lots are occupied by shareholders, and a class rate of 1.00% if 50 percent or less are occupied by shareholders. Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 9

232 In summary, manufactured home parks are distinguished between those that are - or are not - owned by manufactured home park cooperatives under Minnesota Statutes, section , subd. 3a. The cooperatives have the same class rate as class 4d property (currently, 0.75%) if more than 50 percent of the lots are occupied by shareholders, and a class rate of 1.00% if 50 percent or less of the lots are occupied by shareholders. Property Tax Division Minnesota Department *Updated of Revenue 4/22/ See Disclaimer on Front Cover* 10

233 Date: December 29, 2010 To: From: All Assessors Stephanie Nyhus, SAMA Principal Appraiser Subject: Corporate Farm Law (Minnesota Statutes, section ) Recently, there has been a bit of confusion amongst assessors regarding which types of entities must be registered with the Minnesota Department of Agriculture (MDA) in order to receive homestead treatment on qualifying land pursuant to Minnesota Statutes, section Minnesota Statutes, section , subdivision 3 states in part that: No corporation, limited liability company, pension or investment fund, trust, or limited partnership shall engage in farming; nor shall any corporation, limited liability company, pension or investment fund, trust, or limited partnership, directly or indirectly, own, acquire, or otherwise obtain any interest, in agricultural land The subdivision also goes on to list several exceptions to this rule to allow some entities to own and farm agricultural land subject to this law. Essentially, section can be summarized as follows: Entities subject to law Corporations (S-corps, C-corps, etc.) Limited Liability Companies (LLCs) Limited Partnerships (LPs) Limited Liability Limited Partnerships (LLLPs) Trusts Entities NOT subject to law Individual owners (sole proprietorships) General Partnerships Limited Liability Partnerships (LLPs) Once an entity that is subject to the law meets the requirements of , that entity is issued a letter of approval and is required to annually verify eligibility information with the MDA. The entity s name will also appear on MDA s database of approved entities. The database can be searched at: In other words, any entity, other than those listed on the right (individuals, general partnerships, and LLPs) must be listed on the website in order to be eligible for agricultural homestead. If the entity is subject to the law and they are not listed on the website, they must contact MDA to get registered. Any questions regarding corporate farm eligibility should be directed to Doug Spanier with MDA at douglas.spanier@state.mn.us. Once an entity meets the requirements of , or if the entity is not required to meet the requirements as in the case of the entities listed in the right hand column above (individuals, general partnerships, and LLPs), the requirements of section must still be met for a property to be granted an agricultural homestead. Any questions on homestead eligibility should be directed to the property tax division at proptax.questions@state.mn.us. If you have any questions or concerns, please direct them to our address above. Property Tax Division Tel: (651) Mail Station 3340 Fax: (651) North Robert Street Saint Paul, Minnesota *Updated /22/ See Disclaimer on Front An Cover* equal opportunity employer

234 Memo MINNESOTA REVENUE Date: October 20, 2010 To: From: Subject: Assessors in affected counties Property Tax Division, Department of Revenue 2010 Second Special Session Disaster Relief The following is a summary of 2010 Second Special Session legislation to provide flood relief for counties affected by the September 2010 floods. This bill was signed on October 18. The purpose of these sections of is to provide property tax relief for those most severely impacted by the flood and to provide reimbursement to local governments for loss of property tax revenues. These provisions are similar to language that was carried in previous flood legislation. Section 18: Flood loss; city replacement aid This section will provide flood loss aid for cities that were the most severely impacted by the floods. The flood loss aid will be available to cities if the decrease in net tax capacity resulting from flood damage is greater than 5% of its 2010 assessment year total taxable net tax capacity. Assessors must certify the flood net tax capacity for qualifying cities to the Department of Revenue by August 1, (A form for this certification will be forthcoming.) The aid amount would be equal to the flood net tax capacity loss multiplied by the city s average local tax rate for payable year The payment will be made to the cities in July of The estimated cost of this provision is $50,000 for FY 2013 for the 3 cities that are estimated to qualify (Hammond, Zumbro Falls, and Truman). Section 19: Disaster area; waiving property tax penalties for business and damaged properties This section waives penalties on the second-half property taxes for qualifying properties if not paid by October 15, 2010 but paid by December 30, The reason for waiving penalties is due to the close timing of the flood, as second-half payments were due October 15 for most properties. To qualify, the property taxpayer must have paid first-half taxes by May 16, Penalties shall not accrue in the following situations: 1) Commercial (class 3a and 3b) properties located in a county that includes an area that would qualify as a disaster or emergency area under M.S if the designation were to be based solely on the damages to properties resulting from the floods and irrespective of Executive Council approval. Minnesota Statutes, section defines qualifying local units of government as those in a federal disaster area or in a local emergency under M.S where the average damage for buildings that are damaged is at least $5,000 and either at least 25 taxable buildings were damaged or the total dollar amount of damage exceeds 1% of the total taxable market value. The waiving of penalty would be allowed for commercial properties within qualifying counties if the taxpayer was unable to make the payment due to circumstances related to the flooding and if they were current on the first half of the payable property taxes. These commercial properties do not have a requirement for actual physical damage to the property but should have loss of economic base and commercial activity related to the flood disaster. A business must attach a statement to the second-half payment that all the requirements for this provision are met.

235 2) All properties that are 50% or more damaged or destroyed by the floods (which may also be eligible for an abatement of some or all of their current year payable property taxes based on the current law disaster relief provisions found in M.S to M.S ). Section 20: Agricultural homesteads extended This section would allow farmers to maintain agricultural homestead status on properties that they do not physically occupy, provided the residence has been vacated due to the floods of September 22 through 24, This is similar to agricultural homestead provisions we have allowed in previous years. This allows the property to maintain homestead for an additional two assessment years (2011 and 2012), if the owner relocates within the state and within 50 miles of the agricultural land. Section 21: Abatement and credit applications waived This section waives the application requirements for the property owner for purposes of receiving the property tax abatements and credits outlined in Minnesota Statutes, sections through This change will eliminate the current law step of requiring the property owner to apply to the assessor or the county board for the abatement or credit. Instead, the county assessor will determine if the property has met the 50% of more damage criteria that will trigger the abatement (the current year s property tax) and the credit (the next year s tax). (Note, however, that homesteads in a disaster or emergency area do not have a 50% damage requirement and do not have an application requirement under current law for their credits and the assessor will determine their credits as usual.) The county assessor would notify the taxpayers or owners of the affected parcels by December 30, Summary of current law provisions: Current law provides for property tax relief for destroyed properties in M.S through M.S Three specific forms of relief are provided as follows: 1) Abatement for taxes payable in the year of the disaster (M.S ) 2) Homestead disaster credit for taxes payable in the year following the disaster (M.S ) 3) Local options disaster credits for taxes payable the year following the disaster (M.S ) The amount of the abatement and the credit will vary depending on if the property is within a disaster or emergency area. If the property is in a disaster area or emergency area, the abatement and the credit is the difference between the net tax on the market value prior to damage and the market value after the damage. This amount will be reimbursed to the local government by the state. If the property is not in a disaster or emergency area the abatement and the credit is determined as a reduction in valuation with a pro rata calculation of the number of months in the assessment year that the structure was not usable. For abatements and credits of properties outside the disaster or emergency area, the state does not reimburse the local governments. The determination of a disaster or emergency area is found in M.S and requires the Executive Council to approve applications from local governments for abatements and credits if they meet certain criteria. The Executive Council consists of the governor, lieutenant governor, secretary of state, state auditor, and attorney general. The determination of the geographic boundaries of the disaster area by the Executive Council will impact the amount of the abatement and credit that the taxpayer is eligible to receive and if the local governments are reimbursed for the loss of the tax revenue. If you have any questions about this disaster relief legislation, please do not hesitate to contact us via proptax.questions@state.mn.us.

236 MEMO Date: October 20, 2010 To: From: Subject: County Auditors and Treasurers for counties included in the FEMA Disaster Declaration FEMA-1941-DR Jason Nord, Property Tax Division Disaster and Destroyed Property On Monday, in a Special Session, legislation was adopted to address property owners affected by the September floods. This legislation (which also requires each assessor to reassess the properties in their jurisdiction located in an area that would potentially qualify as a disaster or emergency area by November 1 1 ) provides that a penalty does not accrue on the second half of payable 2010 property taxes 2 in the following situations: 1. Class 3a and 3b properties located in a county that includes a disaster or emergency area 3. (Please stay in communication with your assessor regarding your county s status as a disaster or emergency area.) This extension affects all 3a and 3b properties within qualifying counties if the taxpayer was unable to make the payment due to circumstances related to the September 2010 floods. Taxpayers are required to attach a statement to their payment that: 1) they were unable to make the payment due to circumstances related to the floods; and 2) they paid their first half 2010 taxes by May 16. Counties may verify the accuracy of these statements as necessary. Properties do not have a requirement for actual physical damage but should have loss of economic base and commercial activity related to the flood disaster; or 2. All properties that are 50% or more damaged or destroyed by the floods. (These properties may also be eligible for an abatement of some or all of the second half payment based on disaster relief provisions found in M.S to M.S ) Property owners meeting the above criteria may pay their second half property taxes without penalty prior to December 30. If the second half of the payable 2010 property taxes is paid after December 30, 2010, then all penalties that would have occurred since the due date must be charged on the amount of unpaid tax. 1 Laws of Minnesota 2010, 2 nd Special Session, Chapter 1, Article 1, Section 21, Paragraph (a) 2 Laws of Minnesota 2010, 2 nd Special Session, Chapter 1, Article 1, Section 19 3 A penalty should not accrue for Class 3a or 3b property that is located in a county that includes an area that would qualify to be designated as a disaster or emergency area under M.S if the designation were to be based solely on the damages to properties resulting from the floods and irrespective of executive council approval. M.S defines a disaster or emergency area as an area approved by the Executive Council where: (i) the average damage for the buildings that are damaged is at least $5,000, and (ii) either at least 25 taxable buildings were damaged, or the total dollar amount of damage to all taxable buildings equals or exceeds one percent of the total taxable market value of buildings for the applicant as reported on the Abstract of Assessment for 2009.

237 As a reminder, for those taxpayers that have been impacted by the flood but do not qualify for the extended due date under the above provisions, other authority resides in statute for abating penalty: 1. M.S provides that the county board may grant a reduction or abatement of estimated market valuation or taxes and of any costs, penalties, or interest on them as the board deems just and equitable and order the refund in whole or part of any taxes, costs, penalties, or interest which have been erroneously or unjustly paid. 2. M.S , subd. 1 provides that, if any county board so elects, the county treasurer may abate the penalty on finding that the imposition of the penalty would be unjust and unreasonable. If you have any additional questions, please contact Nissa Herberg at (651) or Nissa.herberg@state.mn.us. You can also find information on our website, including the application for reimbursement of the Local Option Disaster Abatement, at:

238 MINNESOTA REVENUE Memo Date: June 15, 2010 To: From: Property Subject: All City and County Assessors Andrea Fish, Information and Education Section Tax Division Amended Minnesota Statute, section regarding assessors powers and duties In the Minnesota Tax Court case The Shoppes of Woodbury Village v. County of Washington (2009), it was determined that an assessor s appraisal was not admissible to Tax Court as evidence. The Court relied on Minnesota Statutes, section , subdivision 5, which as designed to prohibit a licensed assessor from making fee appraisals in that assessor s jurisdiction. The intention of M.S , subd. 5 was originally to prevent moonlighting by an assessor in that assessor s jurisdiction. Many assessors expressed concerns that this decision could hamper their ability to testify in court in defense of their own assessed values. If assessors were to be prohibited from defending their values in Tax Court, counties may have been required to hire outside appraisers for each Tax Court appeal, which could be very costly to counties. Because of these potential consequences from the Shoppes of Woodbury decision, language was sought that would clarify that assessor testimony is admissible in a Tax Court or other court case. This language was signed into law on May 15, 2010 (Minnesota Laws 2010, chapter 354). This language, while being permissive in terms of assessors duties, does not preclude the court from determining which testimony it will hear and consider valid; however it clarifies that the moonlighting prohibition under M.S , subd. 5 does not preclude assessors from being expert witnesses. The following sections of Minnesota Statutes were updated effective the day following final enactment, for testimony offered and opinions or reports prepared in cases or proceedings that have not been finally resolved: Section , subdivision 8 ( powers and duties of assessor): A new paragraph has been added to the powers and duties of assessors, which reads: To perform appraisals of property, review the original assessment and determine the accuracy of the original assessment, prepare an appraisal or appraisal report, and testify before any court or other body as an expert or otherwise on behalf of the assessor s jurisdiction with respect to properties in that jurisdiction.

239 Section , subdivision 7 ( division of duties between local and county assessor ): A county assessor may direct a local assessor to perform the duties enumerated in subdivision 8, paragraph 16 (see above). Section 82B.035, subdivision 2: Nothing in the appraiser licensing statute is construed to prohibit assessors performing their duties enumerated in section , subdivision 7 or 8 (see above). Section , subdivision 5 ( prohibited activity ): This moonlighting prohibition is not to be construed to prohibit an individual from performing duties enumerated in section , subdivision 7 or 8 (see above). This new language also clarifies that assessors may also be expert witnesses on behalf of an other body such as a local or county board of appeal and equalization when the assessor s value has been appealed. If you have any questions regarding this newly-enacted provision, please contact us via at proptax.questions@state.mn.us.

240 Memo MINNESOTA REVENUE Date: June 15, 2010 To: From: Subject: All Assessors Andrea Fish, State Program Administrator Information and Education Section Newly-enacted property tax exemption for leased federal lands Minnesota Statutes, section has been amended by Minnesota Laws 2010, chapter 389, Article 1, section 4. This provision, originally enacted in 2008, allowed for counties that had been improperly exempting government-owned lands, leased to private individuals for recreational purposes, to continue to exempt those lands by county board resolution. The amended language requires that lands owned by the federal government and rented for noncommercial seasonal recreational use are exempt from taxation, including taxes imposed under section , without any necessary resolution by the county board, and without the requirement that the lands must have been exempted for taxes payable in This is effective beginning with taxes payable Property owned by cities, towns, counties, or the state may only be exempted if they were exempted for taxes payable in 2008 and if the county board elects to exempt them (the provisions for those exemptions have not changed). Based on a 2008 survey of all counties (with 59 respondents), there are 11 counties with federally-owned lands leased to private individuals. This represents slightly over 500 parcels, and approximately $35 million in estimated market value that is now eligible for exemption. It is important to reiterate that property tax exemptions under M.S are for land only. Any structures are still taxable as personal property tax to the lessee of the property. If you have any questions about this new language, please contact our division via at proptax.questions@state.mn.us.

241 Date: June 15, 2010 To: From: Re: All Assessors Stephanie Nyhus, Principal Appraiser Information and Education Section Administrative Guidelines for Classifying Property Used for Horse Breeding and Boarding Activities As part of the Assessment and Classification Practices Report on Property Used for Horse Breeding and Horse Boarding Activities that was issued in January 2010, the department agreed to issue administrative guidelines to all assessors based on the recommendations set forth within that report as well as any 2010 statutory changes in order to allow for a more uniform and equalized assessment of properties used for horse boarding and breeding activities. Below are those guidelines, which are based on Minnesota Statutes, section , subdivision 23, paragraph (i)(3) as amended during the 2010 legislative session. Guidelines for Classifying Property Used For Horse Breeding and Boarding Activities 1. To be considered class 2a agricultural land, at least 10 contiguous acres must be used for agricultural production (not including the rare exceptions for exclusive or intensive use). 2. An agricultural product must be produced FOR SALE. Use of a product for one s own use or for use by a neighbor, relative, etc. is not considered to be for sale. 3. Ten acres or more of pasture used to provide feed for horses that are being used by the owners for their own personal/recreational use DOES NOT qualify the property for the agricultural classification there is not an agricultural product being produced for sale. 4. Ten acres or more of pasture being used to provide feed as part of a commercial boarding operation on the same property DOES qualify the property for the agricultural classification. In addition, horse training and riding instruction related to the commercial boarding may also be included in the agricultural classification if the boarding is done on property that is also used for raising pasture to graze horses or raising or cultivating other agricultural products specified in section , subdivision 23, paragraph (i), clause (1). It is the expectation that the training and riding instruction related to the commercial boarding is that which is provided to those individuals who are boarding their horses onsite. If the training and riding instruction are provided to the general public (e.g. those who do not board their horses onsite) that portion of the property would be classified as commercial. 5. Land used to produce horses bred or raised for sale should qualify toward the 10-acre requirement for the agricultural classification. However, breeding/selling 1-2 horses is not likely enough to qualify a property for the agricultural class (neither is selling 1-2 cows, 1-2 sheep, etc.) Assessors must use good professional judgment to differentiate between hobby (continued)

242 Page 2 June 15, 2010 and business enterprises. Assessors may want to ask for additional information such as receipts of sale, Schedule F, etc. to help make this determination. 6. Ten acres or more of pasture being used to feed horses that are being bred/raised for sale DOES qualify for the agricultural classification since there is a product being sold (the horses). The assessor must determine if there is significant production taking place (enough animal units being sold each year) to warrant the agricultural classification. 7. Horses used for personal or recreational use DO NOT enable a property to qualify for the agricultural classification. (There are no agricultural products being produced for sale in this situation.) 8. If a property is used for both breeding horses for sale and commercial boarding, the assessor would classify the entire property as agricultural, assuming there is no other use of the property (e.g. rural vacant land which would be classified as class 2b or a tack shop or event center which would both be classified as class 3a commercial, etc.). 9. Any commercial use of the property such as tack shops, riding lessons for the general public, horse rental (e.g trail rides, hay rides, or other service typically sold by the hour), conference centers, event centers, etc. must be classified as 3a commercial property. If you have any questions or concerns, please direct them to proptax.questions@state.mn.us. Property Tax Division Tel: (651) Mail Station 3340 Fax: (651) North Robert Street Saint Paul, Minnesota An equal opportunity employer

243 Date: June 15, 2010 To: From: Re: All Assessors Stephanie Nyhus, Principal Appraiser Information and Education Section Agricultural Homestead Value Linkage Minnesota Laws 2010, Chapter 389, Article 1, section 11 amends Minnesota Statutes, section , subdivision 8, by adding paragraph (d) which reads as follows: (d) Agricultural property that (1) is owned by a family farm corporation, joint farm venture, limited liability company, or partnership and (2) is contiguous to a class 2a homestead under section , subdivision 23, or if noncontiguous, is located in the same township or city, or not farther than four townships or cities, or combination thereof from a class 2a homestead, and the class 2a homestead is owned by one of the shareholders, members, or partners; is entitled to receive the first tier homestead class rate up to the first tier maximum market value on any remaining market value not received on the shareholder's, member's, or partner's homestead class 2a property. The owner must notify the county assessor by July 1 that a portion of the market value under this subdivision may be eligible for homestead classification for the current assessment year, for taxes payable in the following year. EFFECTIVE DATE. This section is effective for assessment year 2010 and thereafter, for taxes payable in 2011 and thereafter. In the past, the Department has maintained that it is inappropriate to link, for homestead purposes, agricultural properties held by an individual to other agricultural properties owned by authorized entities of which the individual person is a shareholder, member, or partner in that authorized entity. We have said that to be linked, the properties must be owned by the same entity unless linking for separate spousal interest, grantor to trust held property, or individual ownership to joint ownership with other individuals. This is still true. However, with this law change, there is now one specific situation which allows parcels owned by different entities to be linked to the shareholder s, member s or partner s homestead class 2a property in order to utilize any remaining first tier homestead class rate. This means that beginning with the 2010 assessment, agricultural property owned by a family farm corporation, joint farm venture, limited liability company, or partnership may be linked to an individual s agricultural homestead up to the amount remaining on the first tier of market value. This does not mean that they qualify for the other benefits of homestead. The linked parcel should not receive agricultural homestead market value credit, nor should the fact that it is linked qualify the property for Green Acres benefits. Any market value that exceeds the first tier continues to receive the non-homestead class rate. This provision is also not limited to the ownership percentage the individual has in the entityheld land. Owners must notify the county assessor by July 1 that they have property that may qualify for linkage for taxes payable the next year. Once the 10 contiguous acres of 2a property threshold is met for these additional parcels, the land qualifies for linkage for the reduced class rate, as well as any contiguous class 2b property on the same parcel and under the same ownership. For example, Ole and Lena own, occupy, and homestead their own farm. In addition, they own and farm additional farm land with Sven and Uma, which is owned under the name Norsk Family Farms, Inc. The family farm corporation has been approved to own and farm land under section Beginning with the 2010 assessment, Ole and Lena can now extend their first-tier homestead class rate to the corporately-held land up to the first tier value limit. This new provision has no effect on linking entity-owned land to other entity-owned land (e.g. partnership land to corporation land, trust-held land to corporation land, etc.). That is still not allowed under law. Since taxpayers must notify you of their eligibility by July 1for the current assessment year, we recommend you notify taxpayers about this potential to extend the agricultural homestead class rate. You may want to consider a news release to local papers or announce this new benefit in other ways to ensure all eligible taxpayers are aware of it. We recognize this new legislation will cause issues for you with administration and programming. The department will be working with the computer consortiums in the near future to discuss these issues. In the meantime, we urge you to develop a good record-keeping system and monitor qualifying properties on an ongoing basis for changes. In future years, the first tier of (continued)

244 Page 2 June 15, 2010 market value may either expand or contract, property ownership may change, or owners may apply on new or different properties. One significant issue is the fact that taxpayers must notify you of the properties they wish to link to their individual homesteads by July 1,but special ag homestead applications are not due to be returned until December 15. Taxpayers will not need to notify you annually if there are no changes to their ownership interests, but they will need to notify you by July 1 to link new properties. Another issue is that multiple individuals may link their base homesteads to entity-held land in order to maximize the number of first-tier benefits they receive. We anticipate limited use of the value linkage, so we hope these issues are manageable. Keep in mind property owners must have an individual ag homestead first, then have excess value left in the first tier of market value to extend to the other property. In an effort to assist you with record-keeping, we have developed a form we recommend you use to help in tracking this homestead linkage. We have also provided a specific example of how the value linkage may work. If you have questions or concerns, please direct them to proptax.questions@state.mn.us. Ag Homestead Value Linkage Example: Farmers A, B, and C each own and occupy their own farms. Together they also own land and farm land as ABC Family Farm Corporation which is within 4 cities or townships of all individually owned parcels. ABC Family Farm Corp. is authorized to own and farm land under section Parcel #1 Owned by: A Occupied by: A Value = $545,000 Parcel #2 Owned by: B Occupied by: B Value = $625,000 Parcel #4 Owned by: ABC FFC Occupied by: No One Value = $1,225,000 Parcel #3 Owned by: C Occupied by: C Value = $365, Start with each individually-owned ag homestead parcel. 2. Link all the individually-owned parcels to the chain first. 3. Calculate the total value of these parcels. 4. If the amount is less than the first tier value maximum ($1,140,000 for the 2010 assessment), then additional entityowned parcels may receive the remaining value. Individual Owner Individually-Owned Homestead Parcel(s) Values + Remaining Firsttier Homestead Value (to carry over to entityowned property) = Maximum First Tier Value Amount (for current assmt) Owner A (Parcel 1) $545,000 $595,000 $1,140,000 Owner B (Parcel 2) $625,000 $515,000 $1,140,000 Owner C (Parcel 3)* $365,000 $775,000 $1,140,000 Total Value Available to Carry Over to Entity-Owned Property (Parcel #4) $1,885,000 * Since Parcel 4 is only valued at $1,225,000 and there is $1,885,000 of total value available to carry over, the entire parcel is at the ag homestead class rate. Owner C has an additional $660,000 of value that could potentially be carried over to another qualifying entity-owned property. If the total value available to carry over is less than the value of the entity-owned parcel, the remaining value should be classified as agricultural non-homestead. Property Tax Division Tel: (651) Mail Station 3340 Fax:(651) North Robert Street Saint Paul, Minnesota An equal opportunity employer

245 CR LINKAGE-10 A For Office Use Only Notification of Agricultural Homestead Value Tier Linkage County Homestead Classification Rate on Agricultural Land Owned by a Farming Entity Minnesota Statutes , Subdivision 8, Paragraph (d) Individual Owner-Occupied Property Information Last Name First Name M.I. Property Address - Street City Zip Parcel Identification Number (PID) of homestead base parcel Daytime Telephone Number B Farming Entity-Owned Parcel Information In part B, please provide the Parcel Identification Number (you can get this number from your property tax statement) for the parcel or parcels which you wish to link to your individual owner-occupied base parcel(s) for classification rate purposes. Parcel I.D. Property Owner Parcel I.D. Property Owner Please attach another form if you need more space. Please answer the following questions: YES NO 1. I certify that I am a member, shareholder, or partner of the entity that owns the property listed above. 2. I certify that I am a Minnesota resident. 3. I certify that I live within four cities and townships of any property listed above in part B. 4. I certify that I will notify the assessor when my ownership interest in any of the above parcels change. Signature By signing below, I certify that the above information is correct. Signature of Owner Date MAKING FALSE STATEMENTS ON THIS APPLICATION IS AGAINST THE LAW Anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. (Minnesota Statutes ) The property owner may be required to pay all tax that is due on the property based on its correct property class, plus a penalty equal to the same amount. (Minnesota Statutes , subdivision 13) Assessment Year Assessment Year Assessment Year Assessment Year For Optional County Office Use Only Total Value of Individual-Owned Unused First Tier Homestead Ag Homestead Parcel (s): Value to be linked: Total Value of Individual-Owned Unused First Tier Homestead Ag Homestead Parcel (s): Value to be linked: Total Value of Individual-Owned Unused First Tier Homestead Ag Homestead Parcel (s): Value to be linked: Total Value of Individual-Owned Unused First Tier Homestead Ag Homestead Parcel (s): Value to be linked: Revised: 06/10

246 Date: July 29, 2010 To: From: Re: All Assessors Stephanie L. Nyhus, Principal Appraiser Information and Education Section Clarifications Regarding Ag Homestead Value Linkage We have received several questions regarding our recently-released Agricultural Homestead Value Linkage memo as well as the Assessment Abstract instructions. Hopefully, this memo will help clarify some of the confusion surrounding those issues as well as allow you to understand our rationale behind our decisions. 1. This linkage represents a linkage for classification rate purposes only. It does not refer to the more commonly understood linkages that convey the other homestead benefits such as agricultural homestead market value credits or allow the property to qualify for any subsequent Green Acres benefits. Rationale: This provision only conveys class rate benefits. It does not confer any other homestead benefits. Therefore, in programming terms, the new law does NOT address multi-parcel homestead linkages. Instead, it has effectively created a new classification that is tied to the first tier homestead value limit (please see the 2010 Assessment Abstract Instructions for additional explanation). Because programming for this situation may be impossible or ill-advised, it may best be addressed via manual maintenance, at least until the provision has matured in practice. 2. The agricultural homestead value linkage does not extend to agricultural relative homesteads or to special agricultural homestead situations. Rationale: Minnesota Statutes, section , subdivision 8, paragraph (d) specifies Agricultural property that (1) is owned by a family farm corporation, joint farm venture, limited liability company, or partnership and (2) is contiguous to a class 2a homestead under section , subdivision 23, or if noncontiguous, is located in the same township or city, or not farther than four townships or cities, or combination thereof from a class 2a homestead, and the class 2a homestead is owned by one of the shareholders, members, or partners (emphasis added); is entitled to receive the first tier homestead class rate up to the first tier maximum market value on any remaining market value not received on the shareholder's, member's, or partner's homestead class 2a property. The owner must notify the county assessor by July 1 that a portion of the market value under this subdivision may be eligible for homestead classification for the current assessment year, for taxes payable in the following year. Agricultural relative homesteads are granted in the name of the relative who is occupying the property, they are not granted in the name of the owner of the property. In addition, since special agricultural homesteads are based on farming activity during the current crop year, they are not finalized until the December 15 application deadline, which is after the deadline by which taxpayers must notify assessors that they qualify under this provision. If you have any questions, please direct them to proptax.questions@state.mn.us. Property Tax Division Tel: (651) Mail Station 3340 Fax: (651) North Robert Street Saint Paul, Minnesota *Updated /22/ See Disclaimer on Front An Cover* equal opportunity employer

247 Memo MINNESOTA REVENUE Date: May 5, 2010 To: From: Subject: All Assessors Information and Education Section Property Tax Division New law regarding exemption eligibility of property used by charter schools In April and November of 2009, the Department of Revenue Property Tax Division issued two memos regarding the property tax exempt status of properties used by charter schools. This memo is intended to replace those previous memos, and is updated to reflect Minnesota Laws 2010, Chapter 216, which was signed into law by Governor Pawlenty on April 1, Minnesota Statutes, section , subdivision 3 exempts all public schools from property tax. However, charter schools, while being public schools, rarely own the property where the charter school is located. Rather, they will often lease the property from another entity. The space may be leased from a private entity, a public or private non-profit entity, a school district, or a unit of government. Minnesota Statutes, section , subdivision 42 outlines the requirements for a property leased to a school district or a charter school to be granted property tax exemption. Property owned by an exempt entity leased to a charter school If the owner of the property is not the charter school operating at the property, the owner must satisfy the new requirements for exemption under Minnesota Statutes, section , subdivision 42, paragraph (b) to qualify for property tax exemption. Under this new paragraph, property owned by a not-for-profit entity other than the charter school may qualify for exemption if the statutory requirements are met. M.S , subdivision 42, paragraph (b) reads: (b) Property that is leased or rented to a charter school formed and operated under section 124D.10 is exempt from taxation if it meets all of the following requirements: (1) the lease is for a period of at least 12 consecutive months; (2) the property is owned by (i) a nonprofit corporation or association exempt from federal income tax under section 501(c)(2) or (3) of the Internal Revenue Code; (ii) a public school district, college, or university; (iii) a private academy, college, university, or seminary of learning; (iv) a church; or (v) the state or a political subdivision of the state; (3) the charter school must use the property to provide (i) direct instruction in any grade from kindergarten through grade 12; (ii) special education for disabled children; or (iii) administrative services directly related to the educational program at that site; and (4) except for lease provisions that allow for the shared use of the property by (i) the charter school and another public or private school; (ii) the charter school and a 1

248 church; or (iii) the charter school and the state or a political subdivision of the state, the lease must provide that the charter school has the exclusive right to use the property during the lease period. Under paragraph (b), property leased to a charter school formed and operated under Minnesota Statutes, section 124D.10, but owned by one of the following entities may also be exempt from property taxes: 1. an organization exempt under Internal Revenue Code 501(c)(2) or (3); 2. a public school district, public college, or public university; 3. a private academy, a private college, a private university, or a private seminary of learning (for which Minnesota Tax Court and Supreme Court have held that the educational institution must have a curriculum that parallels that of a public education system); 4. a church; OR 5. the state or a political subdivision of the state (e.g. county, city, etc.) The charter school must use the property to provide direct K-12 education, special education for disabled children, or administrative services directly related to the educational program at that site. Provisions that allow the property to be used for adult basic education, community education programs, and preschool and early childhood family education do not apply to these exemptions for property leased to charter schools. The charter school may share its space with another public or private school, a church, or the state or political subdivision of the state. Other than that shared space, the lease must provide the charter school with the exclusive right to use the property during the lease period. This paragraph is effective for the 2010 assessment year, for taxes payable in Property owned by a private, for-profit entity leased to a school district Under this recent legislation, no changes were made to M.S , subdivision 42, paragraph (a). This paragraph now reads: (a) Property that is leased or rented to a school district is exempt from taxation if it meets the following requirements: (1) the lease must be for a period of at least 12 consecutive months; (2) the terms of the lease must require the school district to pay a nominal consideration for use of the building; (3) the school district must use the property to provide direct instruction in any grade from kindergarten through grade 12; special education for disabled children; adult basic education as described in section 124D.52; preschool and early childhood family education; or community education programs, including provision of administrative services directly related to the educational program at that site; and (4) the lease must provide that the school district has the exclusive use of the property during the lease period. 2

249 Under paragraph (a), eligibility for exemption for property leased to a school district has not changed since our April 2009 memo. The Department of Revenue has interpreted nominal on various occasions to mean something less than the cost to break even, or something that is small in comparison to what might properly be expected. For example, in terms of leases to charter schools, we have never seen a lease to a charter school that met our definition of being rented for a nominal fee based on this definition. In every case we examined, the lease was at- or exceeding- market rate. We maintain this definition of a nominal fee for properties leased to school districts. As always, the lease to the school district must be for a period of at least twelve consecutive months, and the school must provide direct education in any grade K-12 and/or special education for disabled children. The property may also be used to provide adult basic education as described in Minnesota Statutes, section 124D.52, preschool and early childhood family education or community education programs, and provide administrative services directly related to the educational program at that site. The lease must provide the school district exclusive use of the property during the lease period. If you have any questions regarding this memo, please do not hesitate to contact our division via at proptax.questions@state.mn.us. 3

250 MEMO Date: April 19, 2010 To: From: Subject: All Assessors Information and Education Section Property Tax Division, Minnesota Department of Revenue Can Local/County Boards of Appeal and Equalization grant Green Acres? Some counties have asked if Local/County Boards of Appeal and Equalization can hear appeals concerning Green Acres. The department s opinion is that local/county boards cannot make decisions that would grant eligibility for the Green Acres program or any other special programs or classifications that necessitate a property owner to file an application and meet specific requirements (e.g. Market Value Exclusion for Homesteads of Disabled Veterans, 2c Managed Forest Land, Special Homestead for the Blind/Disabled, etc.). A property must meet specific statutory requirements in order to qualify for the Green Acres program. Application must be made so that the assessor is able to use his or her professional training and experience to determine if a property meets these requirements. Assessors are well trained on how to determine if a property is primarily devoted to agricultural purposes, which is a requirement that must be met to qualify for Green Acres. Determining the primary use of a property is a judgment best made by the assessor because they have been educated and trained on how to make such decisions. In addition, Minnesota Statutes specifically states that local/county boards only have the authority to make changes to the valuation and classification of a property. Statute does not say that local/county boards are able to grant special programs to properties which have specific requirements that are required to be met. In sum, it is our opinion that local/county boards cannot grant special programs for the following reasons: a) Special programs require specific applications and paperwork requirements; b) There are specific deadlines for application for special programs; c) Special programs cannot be granted by boards, only valuation and classification can be appealed; Green Acres is not a classification; d) If the land qualifies and application is made on time, the county assessor will grant the program; e) If one taxpayer is given Green Acres at a board appeal but all other taxpayers statewide must adhere to application deadline and other requirements, that is unfair; and f) Assessor s professional judgment, training, and experience determining the primary use of properties is necessary to make these determinations and boards are not trained to make those decisions. This opinion is stated in our assessors manual, our Board of Appeal and Equalization instructions, numerous letters, training, and the primarily devoted to bulletin. If you have any questions concerning this memo please contact the Property Tax Division at proptax.questions@state.mn.us.

251 BULLETIN Date: March 1, 2010 To: All City and County Assessors From: Property Tax Division Subject: Property Tax Exemptions for Institutions of Purely Public Charity This bulletin is prepared in accordance with Minnesota Laws 2009, Chapter 88, Article 2, section 53. BACKGROUND Minnesota Statutes, section , subdivision 1, holds that All real and personal property in this state, and all personal property of persons residing therein, including the property of corporations, banks, banking companies, and bankers, is taxable, except Indian lands and such other property as is by law exempt from taxation. In other words, all property is taxable except for that which, by law, is exempt. A number of court cases have stated this requirement even more succinctly by consistently holding that taxation is the rule and exemption is the exception. For each property which is granted exemption, the tax burden associated with that property is shifted to others. When a charitable institution seeks property tax exemption, it must meet requirements outlined in Minnesota Statutes. Minnesota Statutes, section , subdivision 7 in 2008 provided that institutions of purely public charity may be exempt from property taxes if certain requirements were met. Namely, Institutions of purely public charity are exempt. In determining whether rental housing property qualifies for exemption under this subdivision, the following are not gifts or donations to the owner of the rental housing: (1) rent assistance provided by the government to or on behalf of tenants; and (2) financing assistance or tax credits provided by the government to the owner on condition that specific units or a specific quantity of units be set aside for persons or families with certain income characteristics. As with virtually any other entity seeking exemption from property taxes, three key items are that the property must be owned by an institution of purely public charity, used by the institution for charitable purposes, and must be reasonably necessary to the organization as a means to accomplish its charitable purposes. This is, in fact, a key concept for most property types seeking exemptions. Ownership and use are required, and an organization seeking property tax exemption must find the property reasonably necessary to accomplish its exempt purposes. 1

252 COURT CASES AS PRECEDENT Under 2008 practice, most of the requirements for an institution of purely public charity to qualify for property tax exemption were provided by court decisions rather than statute. First and foremost, the definition of what constitutes a charity had been considered in many court cases. For many years, the courts basically used a two-step analysis in determining exemption: that the organization does something which benefits people, and that the organization does this in a way that does not produce material profits for private interests. These criteria were greatly expanded under the guidelines set forth in the 1975 North Star Research Institute v. County of Hennepin case (306 Minn. 1, 6, 236 N. W. 2d 754, 757). These six guidelines have been extensively used in determining tax exempt eligibility of institutions of purely public charity. The North Star case held the following six guidelines as useful in deciding tax-exempt claims: 1. whether the stated purpose of the undertaking is to be helpful to others without immediate expectation of material reward; 2. whether the entity involved is supported by donations and gifts in whole or in part; 3. whether the recipients of the charity are required to pay for the assistance received in whole or in part; 4. whether the income received from gifts, donations, and charges to users produces a profit to the charitable institution; 5. whether the beneficiaries of the charity are restricted or unrestricted, and if restricted, whether the class of persons to whom the charity is made available is one having a reasonable relationship to the charitable objectives; and 6. whether dividends, in form or substance, or assets upon dissolution are available to private interests. Not all six guidelines needed to be met, and none of the six guidelines carried more weight than any other (Mayo Foundation v. Commissioner of Revenue, 1976, 236 N.W.2d 767). For institutions seeking property tax exemption, there was unpredictability in terms of whether the criteria would be met in a way which would qualify that property for exemption. Many counties noted the application of the North Star factors when determining property tax exemption eligibility in a 2008 survey, yet the unpredictability of criteria used in granting exemptions was very clear in those same survey results. In Junior Achievement of Minneapolis, Inc. v. State, 1965 (271 Minn. 385, 390, 135 N.W.2d 881, 885), the Minnesota Supreme Court interpreted lessening the burden of government as a factor to consider for an institution of purely public charity to qualify for property tax exemption. This case, which predated the North Star decision, first articulated lessening the burden of government requirement, which has since been understood to be a subfactor of the fifth factor of the North Star case. Another court case used as precedent was Assembly Homes, Inc. v. Yellow Medicine County, 1966 (273 Minn. 197, 140 N.W.2d 336). In its decision, the Court decided that a nursing home was exempt from property taxes as an institution of purely public charity. At issue in this case was whether the institution served as a charitable organization while charging rates to its clientele that were similar to the rates charged elsewhere in the State of Minnesota by non-exempt nursing homes. Some of the payments received by Assembly Homes, Inc. were made by county welfare boards and federal institutions such as the U.S. Veterans Administration. The court decided that the exemption was allowable because there were some free services provided. 2

253 In 2007, the Minnesota Supreme Court refined their definition of property tax-exempt qualifying institutions in two cases: Under the Rainbow Child Care Center, Inc. v. County of Goodhue and Afton Historical Society Press v. County of Washington. At issue in the Afton case was whether the organization was eligible for exemption from property taxes while maintaining for-profit book sales. Profits of the sales of some books were used to further the organization s charitable mission of providing reading materials and books to others for free or at below-cost. Minnesota Tax Court found the Afton Historical Society Press not exempt because they failed to meet factors 1, 4, and 6 of the North Star case. However, the Supreme Court disagreed and granted exemption. The Supreme Court found that the organization should be allowed to carry on its for-profit book sales, as long as those book sales were subordinate to the overall charitable activities of the organization. Also in 2007, the Minnesota Supreme Court decided in Under the Rainbow Child Care Center, Inc. v. County of Goodhue that where a daycare center did not offer its services for free or at a reduced rate compared to the local market, it did not satisfy North Star factor three, and that the institution (Under the Rainbow Child Care Center) did not qualify for property tax exemption. In the past, numerous court cases have cited the North Star factors as a whole while providing that not all six factors needed to be met and that no one factor was more determinative of eligibility for exemption. The Supreme Court for the first time held in Under the Rainbow that because North Star factor 3 is a core characteristic of an institution of public charity, we now clarify that the third factor must be satisfied if an organization is to be deemed an institution of purely public charity [emphasis added]. The required expectation was that to be considered an institution of purely public charity for property taxation purposes, an institution must offer free or reduced rates for its goods or services. Among other issues, this was problematic for assessors if there was no definable local market to compare to, or when rates were pre-set by government entities. Many nonprofit groups in the state felt that the Under the Rainbow decision could drastically change the ability of some organizations to be exempted from property taxes. The Department of Revenue did not feel that the decision represented a change. A memorandum to all county assessors following the decision stated that For many years, we have held that for an entity to qualify as an institution of purely public charity there must be some sort of gift or charity. The department did not interpret the court s decision as a change from what had been standard assessment practices LEGISLATION AND SURVEY In a response to 2008 legislation requiring a survey of assessment practices and providing a moratorium for granting exemptions to charitable institutions, the Department of Revenue invited various members of Minnesota nonprofit organizations to discuss their concerns about potential changes in exempt status for many institutions. Many charitable organizations felt at risk of losing their tax-exempt status if the third North Star factor was not met based upon the court s interpretation of necessary charitable activities. For example, organizations such as Meals on Wheels felt threatened based on the fact that there were no similar organizations with which to judge a market rate. It soon became clear that discussions would not be enough to address these concerns, and that clarifying legislation was likely needed. The 2008 survey found that assessment practices widely varied. In response, nonprofit organizations and the department discussed in the spring of 2008 how it might be possible to introduce a bill to Legislature which would seek to clarify eligibility and to provide a more uniform standard by which property tax exemption eligibility would be determined. The potential for inconsistency was discussed, which would hinder equalization in the tax process. With the legislative session nearing an 3

254 end, it was determined that the best course would be to seek a moratorium on assessment practices with regards to institutions of purely public charity. This moratorium was granted in Minnesota Laws, Chapter 366, Article 6, Section 49, along with the directive to survey county assessors practices. The moratorium has allowed the assessment and nonprofit communities to discuss concerns over how to prevent changes to the landscape of exempt charitable organizations LEGISLATION After conducting a survey of all counties practices regarding property tax exemptions for institutions of purely public charity, the Department of Revenue met with members of Minnesota charitable organizations and members of the assessment community, including: Minnesota Council of Nonprofits Care Providers of Minnesota Aging Services of Minnesota (formerly Minnesota Health & Housing Alliance) Minnesota Association of Assessing Officers Minnesota House of Representatives staff Minnesota Senate staff Minnesota Department of Revenue Property Tax Division Minnesota Department of Revenue Appeals and Legal Services Division Multiple meetings were held at which the groups discussed both the survey results and what actions were needed in response to the findings. The survey found that the following types of organizations were commonly exempted for property tax purposes: Nursing homes Daycare centers Group homes Youth activity centers (Boy Scouts, Girl Scouts, youth camps, etc.) Animal shelters (Humane Society) Nature and history preservation sites (museums, Nature Conservancy land, etc.) Sobriety-based organizations (AA, Alano, rehabilitation, etc.) Senior citizen centers Organizations devoted to the training of disabled persons YMCA buildings Crisis pregnancy centers Salvation Army locations American Red Cross sites Food shelf/food bank locations Land owned by Habitat for Humanity (after homes are built on the land, the property becomes taxable) Transitional housing facilities Housing and services for persons with physical and/or mental disabilities Art and cultural institutions The groups also developed potential legislative language, which was brought before the Minnesota House of Representatives and the Minnesota Senate. This language was intended to neither expand nor contract the historical guidelines for granting property tax exemptions, but to make the language clearer and more predictable for assessors and charitable institutions alike, and to provide for greater consistency in exemptions statewide. The resulting language was signed into law in Minnesota Laws 4

255 2009, Chapter 88, Article 2, section 4. This language amended Minnesota Statutes, section , subdivision 7 to read: Subd. 7. Institutions of public charity. (a) Institutions of purely public charity that are exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code are exempt if they meet the requirements of this subdivision. In determining whether real property is exempt under this subdivision, the following factors must be considered: (1) whether the stated purpose of the undertaking is to be helpful to others without immediate expectation of material reward; (2) whether the institution of public charity is supported by material donations, gifts, or government grants for services to the public in whole or in part; (3) whether a material number of the recipients of the charity receive benefits or services at reduced or no cost, or whether the organization provides services to the public that alleviate burdens or responsibilities that would otherwise be borne by the government; (4) whether the income received, including material gifts and donations, produces a profit to the charitable institution that is not distributed to private interests; (5) whether the beneficiaries of the charity are restricted or unrestricted, and, if restricted, whether the class of persons to whom the charity is made available is one having a reasonable relationship to the charitable objectives; and (6) whether dividends, in form or substance, or assets upon dissolution, are not available to private interests. A charitable organization must satisfy the factors in clauses (1) to (6) for its property to be exempt under this subdivision, unless there is a reasonable justification for failing to meet the factors in clause (2), (3), or (5), and the organization provides to the assessor the factual basis for that justification. If there is reasonable justification for failing to meet the factors in clause (2), (3), or (5), an organization is a purely public charity under this subdivision without meeting those factors. After an exemption is properly granted under this subdivision, it will remain in effect unless there is a material change in facts. (b) For purposes of this subdivision, a grant is a written instrument or electronic document defining a legal relationship between a granting agency and a grantee when the principal purpose of the relationship is to transfer cash or something of value to the grantee to support a public purpose authorized by law in a general manner instead of acquiring by professional or technical contract, purchase, lease, or barter property or services for the direct benefit or use of the granting agency. (c) In determining whether rental housing property qualifies for exemption under this subdivision, the following are not gifts or donations to the owner of the rental housing: (1) rent assistance provided by the government to or on behalf of tenants; and (2) financing assistance or tax credits provided by the government to the owner on condition that specific units or a specific quantity of units be set aside for persons or families with certain income characteristics. EFFECTIVE DATE. This section is effective for taxes payable in 2010 and thereafter. It is not expected that this clarifying language will greatly change the number or type of exempt properties in any county. While a few properties may lose exemption based on new information an assessor gathers, other properties may gain exemption based on clarification of some guidelines. However, these changes are expected to be rare. The purpose of this bulletin is to outline these law 5

256 changes with respect to court precedent and to provide guidance to assessors in determining the applicability of exemption for institutions of purely public charity. REQUIREMENTS As stated above, taxation is the rule and exemption is the exception. Also, as with virtually any type of exempt property, the qualifying parcel must be owned by an exempt institution, used for exempt purposes, and the ownership must be reasonably necessary to further the mission of the exempt organization. This three-prong test must be kept in mind at all times when making these determinations. Although the State of Minnesota has not adopted a statutory definition of a charity for property tax exemption purposes, it may be helpful to know that the United States Internal Revenue Service (IRS) outlines requirements for a charitable organization eligible for federal income tax exemption under section 501(c)(3) of the Internal Revenue Code. According to the IRS website (available at the requirements include that, The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. The IRS further defines exempt purposes as: [C]haritable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency. The 2009 legislation requires that for an institution of purely public charity to meet requirements for exemption, it must first be exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code. Any institution of purely public charity which is not a 501(c)(3) organization is ineligible for property tax exemption. However, being granted 501(c)(3) status by the IRS does not automatically qualify an organization for Minnesota property tax exemption. Apart from the requirement of 501(c)(3) tax-exempt status, the six North Star factors, as previously noted, were modified and then codified in law in A qualifying organization must meet all six requirements, unless there is a reasonable justification for failing to meet requirement 2, 3, or 5. Assessors may request additional information from the applicants in order to prove that reasonable justification for failing to meet a requirement is met. As always, the onus is on the taxpayer to prove eligibility for exemption. When reading the examples under requirements 2, 3, and 5, keep in mind that in the real world, it is unlikely that the exact same circumstances would be found among different institutions. For all of the examples therefore, it must be noted that determinations of failure to meet these requirements will be based on the unique facts of each individual case. In practice, if an assessor determines that a requirement has not been met, the institution has the burden of proving to the assessor that it either (1) meets the requirement or (2) that the institution has a reasonable justification for failing the requirement. The assessor may request additional information. 6

257 Requirement 1: The stated purpose of the undertaking of the organization is to be helpful to others without immediate expectation of material reward. - This factor MUST be met. - This requirement is also necessary to receive 501(c)(3) exempt status from the IRS. - Assessors may assume, given a 501(c)(3) determination letter, that this factor is met. Assessors may also refer to the organization s Articles of Incorporation if necessary. Requirement 2: The institution must be supported by material donations, gifts, or government grants for services to the public in whole or in part. - Assessors may first refer to the Federal Form 990 and/or other income and expense statements to determine if this requirement is met. - A government grant is defined for property tax exemption purposes under M.S , subd. 7 as: a written instrument or electronic document defining a legal relationship between a granting agency and a grantee when the principal purpose of the relationship is to transfer cash or something of value to the grantee to support a public purpose authorized by law in a general manner instead of acquiring by professional or technical contract, purchase, lease, or barter property or services for the direct benefit or use of the granting agency. For instance, one example of an institution of purely public charity which would receive government grants would be a clinic receiving federal funds under section 330 of the Federal Public Health Code. Another example would be the Minnesota Pollution Control Agency providing grants for proposals for water quality management planning. The appropriation for grants to volunteer tax preparers by the State of Minnesota is another example of a government grant. - Reasonable Justification may be given for not meeting this requirement. - EXAMPLES. An arts and culture center which operates as a 501(c)(3) nonprofit has a mission to support literary arts through educational opportunities, training, and showcasing local artists work. The organization receives community foundation support, individual gifts and donations, and government grants for its literacy program. The organization is supported by material donations, gifts, and government grants. This organization satisfies this requirement. A 501(c)(3) non-profit conserves land for the public benefit. For properties donated to the non-profit, the donation of the land may qualify as a gift for purposes of this second requirement if the land is given freely or sold at materially below market value for to the non-profit organization. If the value of the gift (the land) is material, the organization would satisfy requirement 2. 7

258 A 501(c)(3) non-profit works with homeless populations to provide job training. By design, the organization conducts an annual fund drive every other year. It utilizes funds raised at its bi-annual drive through the next two years in advancement of its charitable mission. The funds raised through the drive were material. Although the organization has not participated in fund-raising for one year, the donations received through its bi-annual drive are material and this second requirement is met. A 501(c)(3) was organized two years ago under a significant endowment. During the last year, dividends and interest from the original endowment were sufficient enough to run the operation. Because of the endowment, the organization did not devote time to fundraising last year, as it was able to perform its exempt activities through the dividend and interest income. In other words, the endowment is considered the fundraiser for this organization. In the prior to the assessment year, the organization fails this factor. However, the organization is able to articulate the use of the endowment instead of other active fundraising for its financial support. The organization is able to prove to the assessor that it has reasonable justification for not receiving donations, gifts, or government grants in the previous year and the property may qualify for exemption. A non-profit printing press publishes some materials for retail sale for a profit, some materials are sold below cost, and some materials are donated. The organization has raised some funds through donations and gifts; however the printing press also uses the commercial sale of some of its books to offset the cost of making and distributing the educational materials which are available in a charitable manner. The organization is able to prove to the assessor that it is supported by material gifts and donations and that its revenue-generating activities are secondary and incidental to its charitable activities. The organization may be eligible for property tax exemption. A 501(c)(3) organization provides training and materials to disadvantaged persons so that they can create gift items (e.g. bird houses, dolls, candles, etc.) for sale. The items are created by participants of the organization and sold at the organization s property. The participants are low income, and many are disabled or elderly. The organization receives very little donations, but does receive small government grants. The organization uses the income received from the sales of these gift items to pay the participants and also to purchase more materials to continue with its mission. The assessor determines that the organization does not meet the requirements under clause 2. The organization feels that they have reasonable justification for not clearly meeting this requirement due to the nature of its mission, given their needy clientele the gainful employment provided to people who were otherwise not readily employable. The organization does give up some profits, and the support it receives is used for the furtherance of the organization s mission. In other words, the organization has provided evidence of a reasonable justification for failing to meet this requirement and may be eligible for property tax exemption. A children s theater is organized as a 501(c)(3) nonprofit and its mission is to provide meaningful educational and cultural theater experiences for young people. The theater s sole source of revenue is from ticket sales, which are $30 per ticket. The theater does not attempt to fundraise and never applied for grants or other public financial support. Similar theater companies have received material donations; however 8

259 this organization does not try to raise funds in this manner. The organization does not meet the second requirement, nor does it have reasonable justification for failing to meet it; therefore it does not qualify for property tax exemption. - The test of reasonable justification only applies if the factor is not met. A non-profit may first work to demonstrate that it does, in fact, meet the requirement. If it cannot do that, it must demonstrate a reasonable justification for failure to do so. Each case of reasonable justification is to be looked at based on the unique facts of each individual situation. The onus is on the property owner to prove reasonable justification for failing to meet any requirement based on the nature of the organization. For example, if an organization chooses not to fundraise, while other organizations of the same type actively fundraise and receive donations and gifts, there is no reasonable justification for the organization to not fundraise. It was the choice of the organization not to engage in fundraising activities; it is not the nature of the organization or any other reasonable factor which precluded it from doing so. Requirement 3: A material number of the recipients of the charity must receive benefits or services at reduced or no cost, or the organization must provide services to the public that alleviate burdens or responsibilities that would otherwise be borne by the government. - Reasonable justification may be given for not meeting this requirement. - An organization must either provide its goods or services at reduced or no cost to a material number of the recipients or must provide services that alleviate burdens or responsibilities that would otherwise be borne by the government to satisfy this factor. It does not need to meet both requirements. - EXAMPLES. A 501(c)(3) nonprofit childcare center cares for ten children from eight families. The organization makes free or reduced-cost childcare services available through a slidingscale fee program. At any point, a material number children may utilize this program. Because the organization offers services at reduced or no cost to a material number of recipients, the organization satisfies this requirement. A 501(c)(3) nonprofit youth diversion program provides court-ordered placement and services for youths as an alternative to a government-provided detention program. Because this organization alleviates the burden of government by providing alternative placement, this requirement is met. A 501(c)(3) group home provides daily living supports for brain trauma patients, but does not provide its services for free or at a reduced cost. The institution accepts government payments at the rates set by government. Although the group home does not have proof of providing services for free or at a reduced cost in this case, based on the actual charitable activities of the organization and the recipients of the charity, the assessor determines that the organization has reasonable justification for failing to clearly meet the third requirement and may be eligible for property tax exemption. A 501(c)(3) group home provides daily living supports for persons with developmental disabilities, but is unable to prove that those supports and services are provided for free or at reduced cost. The organization accepts government payments at the rates set by 9

260 government. Although the group home does not have proof of providing services for free or at a reduced cost in this case, based on the actual charitable activities of the organization and the recipients of the charity, the assessor determines that the organization has a reasonable justification for failing to meet the third requirement and may be eligible for property tax exemption. A 501(c)(3) nonprofit theater trust has a mission to engage the community in a diverse array of live performances and educational experiences so as to enrich lives, inspire an affinity for our historic theaters, and to contribute to the economic vitality of the community. The theater trust owns several theater properties. The trust receives monetary support from the local municipality to rehabilitate and maintain the historic theaters. The theater trust also provides material community education services at reduced or no cost that are in accordance with its stated mission. However, the theater trust gives away relatively few tickets for free or at a reduced cost. The theater trust engages community members in several other ways for free or at a reduced cost. Although the organization does generate revenue on ticket sales the organization provides its services for reduced or no cost to a material number of persons. Therefore, this third requirement is met. A 501(c)(3) childcare facility does not provide reduced rates for its families who are unable to pay and are referred to social services, and the same rate is charged whether the recipients of the childcare are paying directly or are using social assistance. The childcare center does not provide a sliding-scale fee setup (so that some recipients could receive rates below market rate), nor does the center provide vouchers or scholarships for those unable to pay market rates. Failure to provide payment assistance in any way to private individuals receiving the service is a failure to meet this requirement, and may make an institution ineligible for property tax exemption. The organization is given the opportunity to provide evidence of a reasonable justification for failing to meet the requirement, but cannot. The facility does not qualify for property tax exemption. A 501(c)(3) group home for the elderly that does not receive government grants (and the rates they charge are not mandated by government reimbursement rates) does not have a practice of reducing rates for clients unable to pay the full amount. The group home would not meet this factor. Because the group home does not provided services for free or at reduced cost, and because the group home does not have reasonable justification for not meeting this requirement, the group home would not qualify for exemption. - Each case of reasonable justification is to be looked at based on the unique facts of each individual situation. The onus is on the taxpayer to prove reasonable justification for failing to meet any requirement based on the nature of the organization. Organizations that could- but choose not to- provide goods or services for free or at reduced cost do not have reasonable justification for failure to do so. 10

261 Requirement 4: That the income received, including material gifts and donations, must not produce a profit to the institution which is distributed to private interests. - This factor MUST be met. - To be eligible for 501(c)(3) exemption, the Internal Revenue Code requires that The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. As such, a 501(c)(3) organization applying for property tax exemption may be assumed to have met this requirement. - This is not to say that the organization must operate at a loss or at zero profit. Rather, the profits may be redistributed back into the organization for the organization s purposes. Requirement 5: That the beneficiaries of the charity must be unrestricted. If the beneficiaries are restricted, the class of persons to whom the charity is made available must be one having a reasonable relationship to the charitable objectives. - Reasonable justification may be given for not meeting this requirement. - EXAMPLES A 501(c)(3) nonprofit works worldwide to preserve ecologically important wildlife habitat for nature and for people. Part of the organization s Minnesota-based operations include preserving a large tract of prairie in Northern Minnesota which has been identified as ecologically fragile, home to several endangered species, and critical to the health of the local watershed. In addition to preserving and maintaining this prairie land, the organization makes the land available for education, research, and low-impact recreational activities. The beneficiaries of the organization s conservation practices are unrestricted as the general public benefits from this preservation and the general public is awarded the opportunity to use the lands. This requirement is met, and the organization may be eligible for property tax exemption. A property is owned by a 501(c)(3) organization whose mission is to provide cultural and educational opportunities for inner-city Native American youth. The beneficiaries of this organization s charity are restricted to inner-city Native American youth. However, in this specific case, the restriction is found to be directly related to the organization s genuine charitable mission. The class of persons to whom the charity is made available is one having a reasonable relationship to the charitable objectives and this requirement is met. A 501(c)(3) organization s mission is to provide camping opportunities to disadvantaged youth and to promote wildlife preservation. The organization has fenced off access to its land and is awaiting future sale or development; however, the organization has not had any youth groups camp on this land. The organization s owners allow access to a neighbor and that neighbor s small group of friends or to private hunting parties each year. The beneficiaries of this wildlife area are restricted, but not in a manner which furthers the organization s charitable cause. This property would not meet this factor and therefore would not qualify for exemption. 11

262 - In our opinion, the only case where it is acceptable to restrict the beneficiaries of a charity is when the class of persons to whom the charity is made available [is] one having a reasonable relationship to the charitable objectives. This is the only case of a reasonable justification for restricting the beneficiaries of a charity. Requirement 6: That dividends, in form or in substance, or assets upon dissolution are not available to private interests. - This requirement MUST be met. - An organization must also meet this requirement to be a 501(c)(3) tax exempt organization under the Internal Revenue Code. The IRS website ( states: [I]f an organization dissolves, its assets must be distributed for an exempt purpose, to the federal government, or to a state or local government for a public purpose. To establish that an organization's assets will be permanently dedicated to an exempt purpose, its organizing documents should contain a provision insuring their distribution for an exempt purpose in the event of dissolution. If a specific organization is designated to receive the organization's assets upon dissolution, the organizing document must state that the named organization must be a section 501(c)(3) organization when the assets are distributed. Because only 501(c)(3) organizations are eligible for exemption as institutions of purely public charity, a 501(c)(3) organization applying for property tax exemption will have met the sixth requirement. APPLICATION PROCESS Attached to this bulletin is the updated application for property tax exemption for institutions of purely public charity. All six requirements should be met, unless the organization is able to provide reasonable justification for failing to meet the second, third, or fifth requirement. If a charitable organization is able to provide evidence of reasonable justification, the assessor should review that documentation before making a determination. If the assessor feels that there is insufficient evidence of reasonable justification, the assessor may allow additional time to produce such evidence. We recommend that the assessor allow for up to 60 days to receive the additional information. If the assessor denies the original application, or denies an application based on the additional information provided, the assessor should respond in writing, clearly outlining the assessor s determination for denying exemption. The letter informing the applicant of denial should also include information regarding the taxpayer s opportunities for appeals. This includes both the formal Tax Court appeal and the advisory review board appeal discussed later in this bulletin. Applicants are to fill out each section of the application. For the sections pertaining to requirements 2, 3, and 5, there is space for the organization to provide additional information. This is because these factors may not be met in the traditional sense, but there may be reasonable justification for the organization failing to have met them, if the justification provided is reasonable in terms of the charitable goals of the institution. Applications must be provided to the assessor s office with the determination letter from the IRS granting status as a 501(c)(3) organization, income and expense statements (such as Federal Form 990), and the Articles of Incorporation. If the applicants do not meet requirements 2, 3, or 5, they may 12

263 also wish to provide additional documentation outlining why these requirements are not met (or if such documentation is not provided, it may be helpful for the assessor to request this information). There is also space on the application for the organization to outline uses of the property which are not directly related to the charitable mission of the organization. If there is a substantial use present that is not part of the organization s charity, the exemption is provided pro rata. For example, if there is a substantial residential use of an otherwise exempt building, but the residential portion is not part of the exempt mission of the institution, that residential portion is not exempt from taxation. APPEAL OPTIONS First and foremost, it is the assessor s duty to determine eligibility for property tax exemption. The assessor must consider all documentation provided by an applicant, including any documentation relating to a reasonable justification for failing to meet requirements 2, 3, or 5 above. The assessor must request any information he or she deems necessary before making this determination. If an applicant applies for exemption as an institution of purely public charity but does not meet the six requirements and the assessor does not find that reasonable justification applies, there are two options for appeal: an appeal to an advisory review board, which will provide advice to the assessor and/or the organization; or an appeal to Minnesota Tax Court, which may grant or deny property tax exemption. Exemption determinations are made only by assessors, the Tax Court, or the Minnesota Supreme Court. Exemptions may not be granted by the Department of Revenue, by local boards of appeal and equalization, by county boards of appeal and equalization, or by any other local or county board. Option 1: Advisory Review Board The institution or assessor may request through the Department of Revenue that the eligibility for exemption be reviewed by an advisory board comprised of members of the Minnesota Council of Nonprofits, the Department of Revenue, and the Minnesota Association of Assessing Officers. This review board will assess which factors the institution meets, and will determine if any of the factors are not met, and for which reasonable justification for the failure has not been given. The review board may also determine whether the facts of the organization would be considered sufficient to either meet the statutory requirements or qualify for reasonable justification. The review board will issue a written response to the assessor and the institution, outlining its advisory opinion as to whether or not the organization meets the requirements for property tax exemption. This opinion is non-binding, as the review board is not able to formally grant or deny exemption. The review board will not hear appeals which have not first been reviewed by the assessor. The review board will also not hear appeals which are presented to Minnesota Tax Court prior to or at the same time as being presented to the review board. Either the assessor or the applicant may request that the board review the application for exemption as an institution of purely public charity. The party seeking review should contact the Department of Revenue Property Tax Division via written request: Department of Revenue Property Tax Division, Information and Education Section Mail Station 3340 Saint Paul, MN

264 The written review requests must be accompanied with all documentation appropriate to the organization s application. This includes, but is not limited to: The application for exemption; All supporting documents requested by the assessor or provided by the applicant; The Federal Form 990 and/or other income and expense statements; The IRS 501(c)(3) determination letter or substitute; The Articles of Incorporation; A detailed description of the organization s function, outlining why the organization believes it qualifies for property tax exemption; The assessor s letter of denial, explaining the reasoning for the assessor s decision (if any). Based on each request for review, the Department of Revenue will determine which cases will be heard before the board. The board will meet quarterly (in February, May, August, and November of each year) to discuss and review requests. The board will be made up of three primary members, each with one vote. The three board members will be one each from the Department of Revenue, the Minnesota Association of Assessing Officers, and the Minnesota Council of Nonprofits. Each point person for these groups will be able to assign an alternate in case of inability to attend a meeting, and each person may bring along one or two additional field experts (e.g. an attorney) if necessary to provide input or further information to the review board. The assessor and the applicant will not typically be asked to appear in person before the board. An informal opinion will be issued by the board within 60 days of a meeting. Again, this opinion is not binding on the assessor. Minnesota Tax Court (or Supreme Court) is the only authority eligible to make exemption determinations which must be acted upon by the assessor. However, the opinions of the board should be carefully considered by the assessor when making a determination whether to follow the board s advice regarding acceptance or denial for exemption as an institution of purely public charity. Option 2: Minnesota Tax Court The applicant may appeal its tax exempt status to Minnesota Tax Court. The deadline for appealing to Tax Court is April 30 of the year in which taxes become payable. The deadline is statutory and is not subject to change even if the property owner has applied for an informal appeal to the review board. The decision of the Tax Court is official for property tax purposes. Tax Court appeal information can be found online at NURSING HOMES As part of clarifying property tax exemption requirements for institutions of purely public charity, it was determined that nursing homes be granted a separate exemption under law. Under Minnesota Statutes, section , subdivision 90: A nursing home licensed under section 144A.02 or a boarding care home certified as a nursing facility under title 19 of the Social Security Act that is exempt from federal income 14

265 taxation pursuant to section 501(c)(3) of the Internal Revenue Code is exempt from property taxation if the nursing home or boarding care home either: (1) is certified to participate in the medical assistance program under title 19 of the Social Security Act; or (2) certifies to the commissioner of revenue that it does not discharge residents due to the inability to pay. Title 19 of the Social Security Act concerns Medicare and Medicaid. Based on previous Department of Revenue surveys, we believe that most nursing homes meet the requirements for exemption. This exemption is applicable for the 2009 assessment, for taxes payable in If you have any questions regarding this bulletin, please direct them to 15

266 Institution of Purely Public Charity Application for Property Tax Exemption Please read the back of this form before completing. If you are not applying for exemption as an institution of purely public charity, please fill out the Application for Property Tax Exemption form. Owner(s) of the property Property Information Property Uses Charitable Organization Information Form is to be completed by all applicants. Please provide the following information for the organization that owns the property on which exemption is being claimed. Name of organization Name of representative or owner Title Date of application Mailing address of organization City State Zip County Are you claiming exemption as an institution of purely public charity? Yes No If no, please file for exemption using the Application for Property Tax Exemption form. Date property acquired by organization Is the above organization exempt from federal income tax under section 501(c)(3)? Yes No Please include with this application your Articles of Incorporation and your Federal Form 990 Property address of property for which exemption is sought City State Zip County Legal Description of the property (attach additional paper if needed) Parcel ID number What is the principal use of the above-described property? Additional uses of the above-described property (please give percentage of use): Are these uses directly related to the mission of the organization? Yes No How is the property used to achieve or further the organization s mission? Is the stated purpose of your undertaking to be helpful to others without expectation of material reward? Yes Please list the amounts of donations, gifts, or government grants you received last year: Donations: $ Gifts (monetary value): $ Government grants: $ No If you do not receive any donations, gifts, or government grants, please describe how this organization is supported in the space below: Do you provide your goods or services for reduced or no cost? Yes No If yes, please provide an example: If any of the recipients pay market value for your services, please explain: Are any of the organization s profits (including donations, gifts, or income) distributed to private interests? Yes No Are the beneficiaries of the charity restricted to any group of persons? Yes No If yes, please explain the reason for restriction: Upon dissolution, are dividends or assets made available to private interests? Yes No For office use only to be completed by the county assessor. Name of organization Exemption is Approved Assessor s signature Date Denied for assessment year: Sign here Signature of owner or authorized representative. By signing below, I certify that the above information is true and correct to the best of my knowledge, and I am the owner of the property or authorized representative of the organization that owns the property for which exemption is being claimed. Making false statements on this application is against the law. Minnesota Statute states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Applicant s signature Daytime phone Please see the back of this form for required documentation that must be attached to your application. Revised 09/09

267 Institution of purely public charity: Applying for exemption from property tax Filing for exemption An institution claiming exemption from property taxes as an institution of purely public charity must file an application for exemption with the assessor in the district where the property is located on or before February 1 of the assessment year. This application must be filed every third year. No matter what year the taxpayer initially files for exemption, applications will again be due in 2010, 2013, 2016, etc. You may attach any additional information you feel is necessary to complete this application, including descriptions of the charitable activities of your organization. If you are filing for property tax exemption as something other than an institution of purely public charity, please inquire at your assessor s office for the appropriate application form. What type of property qualifies for exemption? Minnesota Statute , subdivision 7 describes the qualifications necessary for an institution of purely public charity to be eligible for property tax exemption. The organization must be a 501(c)(3) organization under the Internal Revenue Code and provide a charity to the public. The filing requirements for applications for exemption can be found in Minnesota Statute No property will be exempt from taxation under Minnesota Statute if the taxpayer claiming the exemption knowingly violates any of the provisions of this section. Required Documentation The following documentation must be included with your application for exemption as a purely public charity. IRS letter granting exempt status as a 501(c)(3) corporation, or an explanation of why the letter is not available. Articles of Incorporation for the facility (and the parent corporation if applicable). Financial statements or other documents showing the most recent three years of donations for the facility, the total income and total expenses. (Federal Form 990 with schedules or certified financial statements show this information. Sworn statements from the donors may be used to show donations.) Assessor may request additional information Upon written request by the assessor, taxpayers must make available to the assessor all necessary books and records relating to the ownership or use of property which can help verify whether or not the property qualifies for exemption. The assessor may also ask for any information which would clarify explanations provided under Charitable Organization Information. The assessor will provide you with a reasonable amount of time to provide this additional information. You will be notified in writing of your approval or denial for property tax exemption. If you disagree with the assessor s determination, you may request an advisory opinion from the Minnesota Department of Revenue, or you may appeal the assessor s decision to Minnesota Tax Court. Sale or purchase of exempt property Property which is exempt from property tax on January 2 and, due to sale or other reason, loses its exemption prior to July 1 of that year, will be placed on the current assessment rolls for that year. Property which is subject to property tax on January 2 that is acquired by a government entity, institution of purely public charity, church or educational institution before July 1 of the year is exempt for that assessment year if the property is to be used for an exempt purpose. How we use information Some of the information contained on this form may be shared with the county assessor, the county attorney, the Commissioner of Revenue or other federal, state or local taxing authorities to verify your eligibility for exemption. You do not have to provide this information. However, refusal will disqualify you from consideration for exemption. Penalties Making false statements on this application is against the law. Minnesota Statute states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Revised 09/09

268 Memo Date: January 29, 2010 To: From: All Assessors John F. Hagen, Assistant Director Property Tax Division Subject: Code of Conduct and Disclosure Form It has been nearly 5 years since legislation was passed in 2005 requiring the Commissioner of Revenue in conjunction with the MAAO and the State Board of Assessors to develop a code of conduct and ethics for Minnesota assessors to ensure public confidence in property assessment. The legislation also required that: The code must include language that promotes fairness and uniformity and recommends assessment practices that do not promote the perception of a conflict of interest. Judging by the number of questions we have received concerning conflicts of interest, it appears that a brief reminder on this portion of the Code of Conduct might be appropriate. The Code of Conduct that was adopted by the State Board of Assessors, effective March 1, 2006, is binding on all licensed Minnesota assessors. It contains 6 canons; the second canon deals with conflicts of interest: 2. Conflicts of Interest a. Appearance of impropriety Avoid the appearance of impropriety even if no impropriety exists or is intended. b. Prohibited assignments Accept no assignment in which you are related to the owner as spouse, parent, son or daughter by blood or marriage or in which you have a financial or other interest in the property. c. Unwarranted privileges Do not use your official position to secure privileges for yourself, your family, business associates, or any other person wherein you benefit directly or indirectly.

269 Disclosure Forms As a result of the 2005 legislation and the creation of the State Board of Assessors Code of Conduct, a disclosure form was developed to identify and prevent potential conflicts of interest situations from occurring. All licensed assessors must complete a disclosure form when they first begin their employment. The form must be updated whenever personal or professional circumstances necessitate a change in what the assessor is required to disclose. The form does not need to be completed annually. However, it is vital that the form be completed by any new employees who are responsible for valuing and classifying property. In addition, a new form is required to be completed if an assessor begins to assess a new jurisdiction or changes jurisdictions. The following is text copied from the original 2006 letter (which was sent with the original disclosure form) and remains applicable today: All assessors, including the county assessor, are required to complete the attached Assessor Disclosure Form. The county assessor is to provide this form to all assessors in the county, including all local assessors. The form is to be returned to the county assessor and kept on file in the county assessor s office. This form also must be made available to the Department of Revenue upon request. This form need not be filed annually, but it is incumbent upon every assessor to keep this form current. If an assessor, their spouse, parent or child acquires a financial or other interest in additional property or no longer has a financial or other interest in a property, a new form is to be completed and filed in the county assessor s office. Please find the Assessor s Disclosure Form attached to this message.

270 Assessor Disclosure Informat ation Disclosure Local Assessor/Appraiser Name Name of Jurisdiction You Assess (Please complete a SEPARATE form for each JURISDICTION where you assess property) Assessor Disclosure Form The Code of Conduct and Ethics for Licensed Minnesota Assessors prohibits assessors from accepting appraisal assignments in which the assessor is related to the owner as a spouse, parent, or child, by blood or by marriage, or in which the assessor has a financial or other interest in the property. Please complete the information below for all property you cannot assess due to the prohibited assignments provision in the Code of Conduct and Ethics. This form must be completed by all assessors (including all new employees responsible for valuing or classifying property) and must be kept on file in the office of the County Assessor for each county in which you assess property. In addition, if an assessor begins to assess a new jurisdiction or changes jurisdictions a new form must be completed. Upon request, this form must be made available to the Department of Revenue. Please list all properties you are prohibited from assessing in this jurisdiction: PID City or Township Reason for prohibition Date Form Completed: For County Assessor Use Only Person Assigned to Comments Complete Assessment Signature By signing below, I hereby certify that the above list is an accurate representation of the properties that I am prohibited from assessing under the Code of Conduct and Ethics in this county and I have made arrangements with the county assessor to ensure that all properties are properly assessed. Signature of assessor/appraiser Date By signing below, I acknowledge I am in receipt of the list of properties that the abovementioned assessor/appraiser cannot appraise under the Code of Conduct and Ethics and that I have made arrangements to have these properties properly assessed. Signature of County Assessor Date

271 MEMO Date: January 29, 2010 To: From: Subject: All Assessors Drew Imes, State Program Administrator Information and Education Section Exemption for Nursing Homes and Boarding Care Homes During the 2009 legislative session, a specific exemption for nursing homes and boarding care homes was created. The need for a specific application form for these properties did not occur to us until we recently received a request from a county assessor asking us to develop one. Statute does not require the department to make a form. However, after receiving this request, we quickly recognized the importance of creating such a form. Ideally, the form would have been distributed at an earlier date so that it could be used in a more timely manner. We apologize for any inconvenience this may have created for you. Minnesota Statute , subdivision 90, passed into law during the 2009 legislative session, provides for property tax exemption to a nursing home licensed under section 144A.02 or a boarding care home certified as a nursing facility under title 19 of the Social Security Act. The facility must be owned by a 501(c)(3) organization and must meet one of the following requirements: The facility is certified to participate in the medical assistance program under title 19 of the Social Security Act; or The facility certifies that it does not discharge residents due to the inability to pay. Please provide the attached form for use by future applicants of this exemption.

272 Application for Property Tax Exemption for Nursing Homes and Boarding Care Homes To qualify for exemption, the nursing home must be licensed under section 144A.02 or the boarding care home must be certified as a nursing facility under title 19 of the Social Security Act. The facility must also meet other statutory requirements Please read the back of this form before completing. Owner(s) of the property Property info Certifications This section is to be completed by all applicants. Please provide the following information for the organization that owns the property on which exemption is being claimed. Name of organization Name of representative or owner Title Date of application Mailing address of organization City State Zip County Date property acquired by organization This section is to be completed by all applicants. Please fill out the following information about the property on which exemption is being claimed. Parcel ID number(s) County This section is to be completed by all applicants. Please check the appropriate boxes below. I certify that the above organization is exempt from federal income tax under section 501(c)(3). Yes No You must be able to certify one of the following as being true in order to qualify for the exemption: I certify that this facility is certified to participate in the in the medical assistance program under title 19 of the Social Security Act. Yes No I certify that this facility does not discharge residents due to the inability to pay. Yes No Please include with this application a designation from the IRS proving status as a 501(c)(3) organization. Also include with this application a copy of the facility s discharge policy or proof that the facility is certified to participate in the medical assistance program under title 19 of the Social Security Act. Signature of owner or authorized representative. By signing below, I certify that the above information is true and correct to the best of my knowledge, and I am the owner of the property or authorized representative of the organization that owns the property for which exemption is being claimed. Making false statements on this application is against the law. Minnesota Statute states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. For office use only to be completed by the county assessor. Denied Name of organization Exemption is Approved Assessor s Signature Date Sign here Applicant s signature Daytime phone Please return completed application to your county assessor by February 1. Revised 01/10

273 Applying for exemption from property tax Filing for exemption Minnesota Statutes , subdivision 90 provides a property tax exemption to qualifying nursing homes and boarding care homes. The facility must be exempt from federal income taxation pursuant to section 501(c)(3) of the Internal Revenue Code, and must meet one of the following requirements: The facility is certified to participate in the medical assistance program under title 19 of the Social Security Act; or The facility certifies that it does not discharge residents due to the inability to pay. Applications are due February 1of the assessment year. This application must be re-filed every third year. No matter what year the taxpayer initially files for exemption, applications will again be due in 2013, 2016, 2019, etc. In cases of sickness, absence, disability or for other good cause, the assessor may extend the deadline for filing the statement of exemption for a period not to exceed 60 days. Required Documentation You must provide the following documentation with this application: A designation from the IRS proving status as a 501(c)(3) organization; and either a copy of the facility s discharge policy showing that residents are not discharged due to the inability to pay; or proof that the facility is certified to participate in the medical assistance program under title 19 of the Social Security Act. No property will be exempt from taxation under Minnesota Statute if the taxpayer claiming the exemption knowingly violates any of the provisions of this section. Assessor may request additional information Upon written request by the assessor, taxpayers must make available to the assessor all necessary books and records relating to the ownership or use of property which can help verify whether or not the property qualifies for exemption. Sale or purchase of exempt property Property which is exempt from property tax on January 2 and, due to sale or other reason, loses its exemption prior to July 1 of that year, will be placed on the current assessment rolls for that year. The valuation will be determined with respect to its value on January 2 of such year. The classification will be based on the use to which the property was put by the purchaser, or in the event the purchaser has not utilized the property by July 1, the intended use of the property, as determined by the county assessor, based upon all relevant facts. How we use information Some of the information contained on this form may be shared with the county attorney, the Commissioner of Revenue, or other federal, state, or local taxing authorities to verify your eligibility for exemption. You do not have to give this information. However, refusal will disqualify you from consideration for exemption. Penalties Making false statements on this application is against the law. Minnesota Statute states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Additional resources Your county assessor s office should be able to assist you with properly filling out this form. Revised 01/10

274 MEMORANDUM Date: January 21, 2010 To: From: County Assessors Information & Education and Sales Ratio Sections, Property Tax Division Subject: Proper Use of Sales Study Rejection Codes 15 and 21 As counties are underway in the next sales ratio study period, the Information and Education Section and the Sales Ratio Section would like to provide some additional clarifying information on the proper use of two commonly confused rejection codes on the Certificate of Real Estate Value (CRV): R15 Forced Sale; Legal Action; Foreclosure; Short Sale, and R21 Bank Sale (including HUD sales), and Lending institution sales not exposed to the market Proper Use of Reject Code 15 If a sale is an actual foreclosure sale (a Sheriff s Sale), a documented short sale (between individuals but subject to bank approval or to prevent a pending foreclosure process), or a transfer of the property back to the mortgagor (the bank will be listed as the buyer) to prevent a foreclosure, the sale should be excluded from the study with the reject code 15. This reject code is also used for any sale resulting from other legal proceedings (divorce settlement required sale of the property, bankruptcy-forced sale, etc.). Proper Use of Reject Code 21 If a sale actually lists the bank or a lending institution (or mortgage company) as the seller, the sale should be excluded from the study with the reject code 21. There are several other entities that function as banks. When the following are listed as the seller, the sale should be excluded from the study with reject code 21: US Department of Housing and Urban Development (HUD or Secretary of HUD, etc.), Veteran s Affairs Administration (VA or Secretary of VA, etc.) Fannie Mae (FNMA, etc.) The use of reject code 21 for these sales should supersede using any other reject code that may be apparent based on how the CRV is completed. For example, frequently CRVs listing HUD as the seller will have the Property condemned or foreclosed upon and Buyer or seller is unit of government boxes checked on the CRV. Even though these are indicated on the CRV, the sale should be excluded from the study with reject code 21. Rationale for Use of Reject Codes In normal markets, limited numbers of bank sales and foreclosure sales made for any analysis of those types of sales unnecessary. Without a need to specifically study them, the proper use of reject code 15 versus reject code 21 was somewhat irrelevant. In the current market with everincreasing bank sales and properties in the foreclosure process, the department has a need to study these specific types of sales, so the proper use of reject codes for these sales has become necessary. By correctly utilizing these codes throughout the state, the department is able to fully

275 analyze the prevalence of only the bank sales, for example, as opposed to all other sales involving legal proceedings. Other Considerations It cannot be emphasized enough that these are general guidelines regarding the proper use of the sales study rejection codes 15 and 21. There may be other circumstances to be considered. For example, if you are in a jurisdiction where a large percentage of all sales are bank or foreclosure sales, they may need to be considered for inclusion in the sales ratio study. Additionally, sales may need additional verification to ensure there was no physical change to the property that may necessitate exclusion of the sale as reject code 07, or any other possible reasons to exclude the sale. For More Information For more detailed information on the sales ratio study process, criteria for including or excluding sales, and for a listing of the sales ratio reject codes, please visit the department s website at: ml To review additional information regarding the foreclosure process and how it impacts the inclusion or exclusion of sales, please review Joint Advisory: The current residential real estate foreclosure situation and how it relates to sales verification, sales ratio studies, and the assessment process. This advisory, a collaborative effort between the department and MAAO, is available on the MAAO website. For questions regarding specific sale inclusion or exclusion in the sales ratio study, please consult your Regional Representative.

276 Memo Date: December 9, 2009 To: From: Subject: All Assessors Drew Imes, Information and Education Section Property Tax Division Supplemental Security Income (SSI) and the 1b Classification Many assessors have recently asked if people receiving Supplemental Security Income (SSI) from the Social Security Administration (SSA) can receive the class 1b homestead. In our opinion, people receiving Supplemental Security Income may be eligible for the class 1b homestead. The SSA administers two programs designed to provide benefits to disabled individuals. These programs are (1) Social Security Disability Insurance and (2) Supplemental Security Income. To qualify for Supplemental Security Income an individual must be age 65 years or older, blind, or have a disability that meets Social Security s definition of a disability. The SSA s definition of a disability is strict and in our opinion meets the statutory requirements of being totally and permanently disabled. The SSA s definition of being blind also meets the requirements for class 1b, although an eye doctor s report or letter giving detail of the person s sight must be included in the application for class 1b. It is important that the documentation that you receive clearly states that a person is receiving SSI due to a disability or blindness. If you cannot determine if a person is receiving SSI due to a disability or blindness, it is appropriate to request that the applicant to provide you with further documentation until you are satisfied that the person meets the statutory requirements of class 1b. The onus is on the applicant to prove that they meet the necessary requirements. If the applicant cannot do so, denial of the classification is appropriate. If you have any questions or concerns please direct them to proptax.questions@state.mn.us.

277 Memo Date: October 29, 2009 To: From: Subject: All City and County Assessors John Hagen, Assistant Director Property Tax Division Homestead with fraudulent or incorrect Social Security numbers A recent Department of Revenue audit of Property Tax Refund returns uncovered a number of fraudulent or incorrect Social Security numbers that were being used to claim homestead and file for the property tax refund. Currently, the department is in the process of contacting these property owners and recommending they take one of two actions. Provide you, the assessor, with their correct Social Security number(s). You should ask that they provide a statement from the Social Security Administration as proof of their valid SSN. Notify you that homestead should be removed from the affected property. In 2010, the department will be providing addresses of affected properties to assessors. If homestead has not been removed or correct Social Security identification obtained, we will be asking you to reclassify the properties to non-homestead for the 2009 assessment and collect non-homestead taxes for payable 2010, pursuant to the requirements in Minnesota Statutes, section If you have any questions, please contact proptax.questions@state.mn.us.

278 Memo Date: October 22, 2009 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section Administrative plats and the 2b rural vacant land classification Minnesota Statutes, section , subdivision 23, paragraph (c) reads: Class 2b rural vacant land consists of parcels of property, or portions thereof, that are unplatted real estate, rural in character and not used for agricultural purposes, including land used for growing trees for timber, lumber, and wood and wood products, that is not improved with a structure... Several counties have asked if administrative plats, required by some counties when any portion of the land is sold/transferred/split, would preclude land that would otherwise qualify for class 2b property, from receiving class 2b because it has been platted into an outlot, etc. These plats do not result in typical subdivisions. Rather, they are simply the county s administrative requirement. We have concluded that simply being required by the local governmental unit to plat a property (see example) would not automatically preclude the property from being class 2b property so long as the remaining lot is 20 acres in size or more. The assessor would continue to look at the other factors (e.g. rural in character, use of the surrounding land, etc.) to determine the best classification for the property. If the remaining lot is less than 20 acres, the property should be classified according to its most probable highest and best use. We are confident that it was not the legislative intent to penalize those property owners in counties where property owners are required to administratively plat their properties upon splits. However, if a property owner plats the property into a subdivision, the property could no longer qualify as class 2b. Parcel A 80 Acres Parcel C 70 Acres Lot 1 Lot 2 10 acres Example: Parcel A consists of 80 acres of wooded property. The assessor has classified all 80 acres of the property as class 2b rural vacant land. The owner of parcel A has decided to give 10 acres to his son to build a new house. The owner retains the remaining 70 acres. However, as a condition of the split, the county requires the owner to plat the remaining 70 acres. The legal description for the 70 acres will now read Lot 1. In this case, because the property is still rural in character, continues to be used in the same manner, and the remaining property is not being platted into a subdivision, we would recommend that the property be classified as class 2b. Lot 2, of course, would be classified as residential property. If you have any questions, please do not hesitate to contact our division at proptax.questions@state.mn.us.

279 MINNESOTA REVENUE BULLETIN Date: September 24, 2009 To: County Assessors From: Property Tax Division Re: Classifying Agricultural and Rural Vacant Lands The following is a guide for assessors to use in the classification of class 2a agricultural and class 2b rural vacant lands. It should help assessors apply some best practices that will lead to consistency and uniformity in the counties and the regions. Regional Reps will be able to help in determining the classification of lands and to help ensure regional consistency. These best practices guidelines do not include direction for land that is impractical to separate and do not provide direction for the exclusive or intensive provisions in statute. These issues are discussed within separate bulletins. Implications of Classification on Other Programs While the decision on the classification of a property will greatly impact Green Acres eligibility, the classification of a property must be made first and without regard to Green Acres implications. The agricultural classification, for example, has specific requirements while the Green Acres program has other specific and separate eligibility requirements. A property can correctly be classified as agricultural without being eligible for Green Acres. The classification (or split-classification) of the property should not be used as a default mechanism for denying Green Acres. The primarily devoted to agricultural use criteria was removed from the classification statute during the 1997 legislative session. However, it is applicable for determining Green Acres eligibility. More information is provided in the primarily devoted to bulletin. Classification Basics The classification of agricultural and rural vacant land should be based on a visual inspection of the property and the number of acres used for agricultural purposes as defined by statute. A number of factors should be considered by the assessor when visually inspecting the property to determine eligibility for agricultural classification; they are outlined in more detail later in this document. In the most subjective cases, the assessor should document the rationale for the classification in case it becomes necessary to defend the decision. Minnesota Statute , subdivision 23 provides a number of requirements that must be met in order for a property to be classified as class 2a agricultural land: 1. At least 10 contiguous acres must be used to produce agricultural products in the preceding year (or be qualifying land enrolled in an eligible conservation program); 2. the agricultural products are defined by statute; and 3. the agricultural product must be produced for sale. 1

280 Making Subjective Classification Decisions Assessors may be required to make some subjective decisions to determine if the statutory requirements are met before classifying a property as class 2a agricultural land, but the decision should be based on a list of objective factors that are always considered before the decision is finalized. The following is a list of factors that an assessor may consider. It should also be noted that these factors are based on the preceding year s use of the land. Additionally, the land must be classified as class 2a if all or a portion of the agricultural use of that property is the leasing to, or use by, another person for agricultural purposes. 1. AT LEAST 10 CONTIGUOUS ACRES BEING USED TO PRODUCE AGRICULTURAL PRODUCTS FOR SALE Statute clearly requires that there be at least 10 contiguous acres being used to produce an agricultural product for sale in order to be class 2a agricultural land. Contiguous is defined by the dictionary provided by law.com as connected or next to, usually meaning adjoining pieces of real estate. This does not mean a property should be classified as agricultural when there is a total of 10 acres if the acres are broken up in small plots. In some rare circumstances, reasonable justification may warrant classifying smaller land masses as class 2a agricultural land if the agricultural land on the parcel totals at least 10 acres. To justify the classification in these cases, the assessor must use common sense and professional judgment in considering the following list of criteria: Overall size (number of acres) Number of acres used agriculturally in relation to overall acres Crop being raised and sold on the agricultural acres Composition of agriculturally used acres (contiguous or noncontiguous) - Sizes of the noncontiguous portions used agriculturally or nonproductively - The locations of the agriculturally used acreage (distance, accessibility, etc.) - Whether the configuration of the agriculturally used acreage lend themselves to agricultural production - The use of the land separating the noncontiguous agriculturally-used acreage Parcel lines or separate legal descriptions do not break up the contiguity of land masses used for agricultural purposes as long as the parcels are in the same ownership. Lands that will be deemed impractical to separate (i.e. ditches, waterways, etc.) also do not break up the contiguity of the land mass. 2. PROPERTY IS PRODUCING AN AGRICULTURAL PRODUCT AS DEFINED BY STATUTE The following are the agricultural products as defined in Minnesota Statutes , subdivision 23, paragraph (i): livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, bees, and apiary products by the owner or the commercial boarding of horses if the boarding is done in conjunction with raising or cultivating agricultural products as listed in statute; fish bred for sale and consumption if the fish breeding occurs on land zoned for agricultural use; property which is owned and operated by nonprofit organizations used for equestrian activities, excluding racing; 2

281 game birds and waterfowl bred and raised for use on a shooting preserve; insects primarily bred to be used as food for animals; trees, grown for sale as a crop, including short rotation woody crops, and not sold for timber, lumber, wood, or wood products; and maple syrup taken from trees grown by a person licensed by the Minnesota Department of Agriculture as a food processor. The land must be being used to produce one of these products in order to potentially qualify as class 2a productive agricultural land. 3. AGRICULTURAL PRODUCT IS PRODUCED FOR THE PURPOSE OF SALE The agricultural product produced on the land must be produced for the purpose of sale. Although income should not be the sole determining factor, the assessor may want to consider the following criteria: Income (Schedule F) of agricultural products (crops, livestock, etc.) How the agricultural products were sold (food plots for wildlife do not qualify) Income earned in the past year from sale of animals The income from the productive acres divided by the total acres Rental income from agricultural lease If there is a land mass of at least 10 contiguous acres being used in the preceding year to produce an agricultural product for sale, it is classified as 2a land. This determination will be made based on the above criteria and factors. Once this determination is made, any land deemed impractical to separate and any other smaller land masses of class 2a land on the same parcel may be classified as 2a land as well. Additionally, once this determination is made, the property becomes eligible for an agricultural homestead (if homestead requirements are met). Split-Classifying Agricultural Property The first step in classifying property is to identify the acreage that is used for productive agricultural purposes as defined in statute and therefore classified as 2a land. Then assessors should identify the acreage that is used for a different and separate use. If there is no separate use, then the property is classified as class 2a for the productive lands and class 2b for the nonproductive lands, and there is a potential for an agricultural homestead. If there is an identifiable separate use, then the property is split-classified. In our opinion, there are five split-classification options, each dependent on the number of acres in agricultural production (therefore class 2a land). The options each have homestead eligibility implications. 1. If there are at least 10 contiguous acres used for agricultural purposes, those acres are classified as 2a land. The remainder of the land is classified according to its identifiable separate use(s) potentially class 2b rural vacant lands, class 3a commercial, etc. The class 2a and 2b portions of the property may be eligible for homestead. The following options (2 through 5) apply if there are less than 10 contiguous acres used for agricultural purposes (this does not apply to the intensive or exclusive provisions in statute or the rare circumstances laid out in this bulletin). If there are less than 10 contiguous acres in agricultural production, no acres will be classified as 2a land and the property is not eligible for agricultural homestead on its own. 3

282 2. If the parcel is less than 20 acres in size, unplatted, rural in character, and is not improved with a structure (unless the structure is minor and ancillary 1 ), the entire property is classified as 2b rural vacant land. The property on its own is not eligible for any type of homestead. (It could be linked to an agricultural homestead if the parcel is contiguous to class 2a land under the same ownership.) 3. If the parcel is less than 20 acres in size, and is improved with a structure (other than a minor or ancillary structure), the property is classified according to the use of the structure. If the structure is a residence, the property may be eligible for a residential homestead. 4. If the parcel is 20 or more acres in size, and is unplatted, rural in character, and not improved with a structure (unless the structure is minor and ancillary), the entire property is classified as 2b rural vacant land. The property on its own is not eligible for any type of homestead. (It could be linked to an agricultural homestead if the parcel is contiguous to class 2a land under the same ownership.) 5. If the parcel is 20 or more acres in size, and is improved with a structure (other than a minor or ancillary structure), the structure and the immediately surrounding 10 acres are classified according to the use of the structure. If the structure is a residence, that portion of the property may be eligible for a residential homestead. The remainder of the property is classified as 2b rural vacant land and on its own is not eligible for any type of homestead. If, in (2) through (5) above, classification as 2b is not applicable because of enrollment in class 2c Managed Forest Land or some other program, or because another classification is appropriate based on the use of the land, that classification should be used in place of class 2b. There may also be instances where three or more different uses of the parcel are identified (for example, a house, 2b land, and commercial use). In these cases, the parcel may have multiple classifications. What this illustrates is that when there are less than 10 contiguous acres used for agricultural purposes, none of the land is classified as 2a (unless it is one of the rare circumstances laid out in this bulletin). The rationale for saying that no land can be classified as class 2a unless there is first at least 10 contiguous acres in production (note: does not apply to the intensive or exclusive provisions in statute or the rare circumstances laid out in this bulletin) is because Minnesota Statutes, section , subdivision 23 is very clear that class 2a agricultural land is contiguous acreage of ten acres or more used during the preceding year for agricultural purposes These are very specific size requirements for classification as class 2a. In addition, there are very specific performance requirements (the production of an agricultural product for sale) that are tied to the 2a class. These became significantly more important when the legislature created the 2b class for rural vacant lands, ultimately split-classifying every parcel not solely used for agricultural production, or that had lands that were not impractical to separate. 1 The department has defined minor, ancillary structures as sheds or other primitive structures, the aggregate size of which are less than 300 square feet that add minimal value and are not used residentially; provided that the occasional overnight use for hunting or other outdoor activities shall not preclude a structure from being considered a minor, ancillary structure. 4

283 We understand that this will likely result in instances where you will have a parcel with less than 10 tilled acres that are not eligible for 2a classification. We have recommended these parcels be classified according to a statutorily-allowable classification which will likely be class 2b. The statute for class 2b does prohibit land being used for agricultural purposes, but it is our opinion that since there are not at least 10 acres in production, these lands are not used for agricultural purposes. Since the lands are not being used as statutorily-defined for agricultural purposes, class 2a is not appropriate. Class 2b may be appropriate if there are no structures. If there is a structure, then the classification would be based on the use of the structure. For example, a parcel with 8 acres and a house would likely all be classified as residential. The following page has some illustrative examples of potential split-classifications when the rural vacant land (class 2b) classification is applicable. Other Discussion Counties should take a cautious approach in making classification determinations until they attend a regional Green Acres seminar and can formulate a county policy for making the more subjective decisions that are required by the classification statutes. Regional Reps should be able to help counties on these tasks and answer any questions. Whatever policies are implemented should be utilized consistently and the rationale for these decisions should be documented. Please remember these best practices guidelines do not include direction for land that is impractical to separate and do not provide direction for the exclusive or intensive provisions in statute. If you have any questions, please direct them to proptax.questions@state.mn.us. 5

284 Classification Determination Examples: Note: these are simplified examples for illustrative purposes only. They assume the only uses are class 2b rural vacant land or residential when there is a structure on the property. They also assume these parcels are not contiguous to any other parcels under the same ownership. Changing any of these parameters will likely change the results (as described in the bulletin). The 10 acres would be eligible for a residential homestead. Example 1 A 160 acre unimproved parcel with 16 acres being tilled, and 144 acres of woods. This property would be classified as follows: Since the parcel has at least 10 contiguous acres used for agricultural purposes, you must classify the land according to its use. The 16 acres would be classified as 2a productive land and the 144 acres of woods would be classified as 2b rural vacant land. The parcel, on its own, would not be eligible for any homestead. Example 2 A 14 acre unimproved parcel with 5 acres being tilled, and 9 acres of slough. This property would be classified as follows: Since the parcel is less than 20 acres, is not improved with any non-minor structures, and does not have at least 10 contiguous acres used for agricultural purposes, you must classify the entire property as 2b rural vacant land. The parcel, on its own, would not be eligible for any homestead. Example 3 A 14 acre parcel with a residence, 5 acres being tilled, and 8 acres of marsh. This property would be classified as follows: Since the parcel is less than 20 acres, is improved with a non-minor structure, and does not have at least 10 acres used for agricultural purposes, you must classify the entire property according to the use of the structure. The parcel would be eligible for a homestead. Example 4 A 40 acre unimproved parcel with 8 acres being tilled, and 32 acres of woods. This property would be classified as follows: Since the parcel is over 20 acres, is not improved with any non-minor structures, and does not have at least 10 contiguous acres in used for agricultural purposes, you must classify the entire property as 2b rural vacant land. The parcel, on its own, would not be eligible for any homestead. Example 5 A 40 acre parcel with a residence, 5 acres being tilled, and 34 acres of marsh. This property would be classified as follows: Since the parcel is over 20 acres, contains a non-minor structure, and does not have at least 10 contiguous acres used for agricultural production, you must classify the immediately surrounding 10 acres according to the use of the structure. The remaining acres are classified as 2b rural vacant land. 6

285 MINNESOTA REVENUE BULLETIN Date: September 24, 2009 To: From: Subject: County Assessors Property Tax Division Determining Impractical to Separate Lands Property Tax Division staff met with members of MAAO s Agricultural Committee to discuss the 2009 legislative changes made to Minnesota Statutes, Section , subdivision 23. This statute refers to what should be considered impractical to separate in regards to 2a productive lands versus 2b rural vacant lands. The statute, with the legislative changes, is as follows: (b) Class 2a agricultural land consists of parcels of property, or portions thereof, that are agricultural land and buildings. Class 2a property has a net class rate of one percent of market value, unless it is part of an agricultural homestead under paragraph (a). Class 2a property may contain must also include any property that would otherwise be classified as 2b, but is interspersed with class 2a property, including but not limited to sloughs, wooded wind shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement, and other similar land that is impractical for the assessor to value separately from the rest of the property or that is unlikely to be able to be sold separately from the rest of the property. The purpose of the meeting was to establish a framework and to provide direction to assessors statewide in determining what lands are to be considered impractical to separate from the surrounding agricultural land (and therefore be classified class 2a). The information that follows should lay out a framework for assessors to apply in the decision-making process for determining 2a and 2b classifications. The factors and the decision-making process should be consistent for the county and the region. Regional Reps will be able to assist in this consistency and to answer any questions. These factors and considerations will also be discussed in detail in the regional Green Acres Seminars that will be held in late September and early October. The best approach to take now is a cautious one. Assessors may want to hold off making any major changes to existing separations of 2a and 2b lands and hold off working on any new separations until you attend those seminars and formulate your policies for your county and region. Interpreting the Legislative Changes The first change removes the assessor s option of not qualifying any lands as impractical to separate as the statute now states class 2a property must also include any property that would otherwise be classified as 2b, but is interspersed with class 2a property. Interspersed is commonly defined as being placed at intervals among other things; the word is synonymous with strewn or sprinkled. Therefore, small tracts of land not used for agricultural purposes that are scattered throughout the entire parcel such as sloughs, wooded wind shelters, grass setback acres abutting ditches, grass setback acres abutting public waters, ravines, rock piles, waterways, ridges, pivot points, terraces, ditches, sink/pot holes, and fence lines are generally considered interspersed and should be classed as 2a land. 1

286 Keep in mind that the term interspersed implies that in most cases the amount of interspersed acres will be a small amount in relation to the total acreage for that parcel. The legislative changes also added to the list of examples of what should be considered impractical to separate by including land subject to a setback requirement. This is understood to be any land prohibited by local requirements/ordinances from being used for agricultural purposes (i.e. setbacks from feedlots, wind turbines, or water frontage, etc.). This land should generally be considered impractical to separate and should be classed as 2a land because the setback prohibits agricultural use. This does not make any changes to the lakeshore water frontage/buffer policy that the department described at the Green Acres meetings in In fact, this policy is consistent with the new language regarding setback requirements and can be applied to classification decisions. At that time, we said: In most cases according to the DNR, in shore land districts, agricultural areas adjacent to lakes, rivers, and streams a buffer strip of permanent vegetation that is at least 50 wide is required. In the real world, these buffer strips will vary in width based on the topography and pre-existing natural vegetation. To compensate for this and avoid penalizing farms that demonstrate good conservation practices we have developed the following policy regarding lands abutting lakeshore, rivers and streams. If 50% or more of a contiguous land mass which lies within 400 of the Ordinary High Water Line is in agricultural production, the entire land mass within the 400 will be considered 2a and eligible for consideration for GA. If less than 50% of that land is in agricultural production, only the land actually in production shall be classed as 2a. The nonproductive land should be classified as 2b and therefore ineligible for green acres. If local zoning or shore land ordinances require a lot depth greater than 400 for development, the land area used to calculate the percentage of land in agricultural production shall be extended from the 400 mark to that local depth standard. The 400 delineation should be used in situations where the state or local requirement is less than 400 to provide as much consistency as possible. This policy will allow for substantial irregularities in the shape of the buffer strip yet require the strip to average out to 200 or less to qualify as 2a. The final legislative change was to direct assessors that land that is unlikely to be able to be sold separately from the rest of the property should be considered impractical to separate. This language should be given considerably less weight in the determination. A literal reading of this language, arguably, could possibly prevent the vast majority of rural vacant lands from being separated as 2b land because of lack of market evidence. This was not the intent of the legislation. Instances when this factor should be used in the determination of impractical to separate are outlined later in this document. Impractical to Separate General Rule of Thumb The new Rural Preserve Program s size requirements are the initial criteria in determining what is practical or impractical to separate. Please note that the criteria for qualifying for the Rural Preserve Program have not yet been fully established as this is an ongoing process with the Board of Water and Soil Resources. The department will be distributing these criteria in the near future. 2

287 The statute is clear, however, on a 10 acre minimum. The general rule of thumb is contiguous class 2b land masses that are 10 acres or more in size should be considered practical to separate, while contiguous class 2b land masses less than 10 acres should be considered impractical to separate. There can and will likely be exceptions to this rule; questions to review in making exceptions to this rule are outlined below. The rationale in using the 10 acre rule is that in the case of a parcel with at least 10 class 2a agricultural acres currently enrolled in Green Acres, its class 2b lands will no longer be eligible for Green Acres. The legislature created the Rural Preserve Program for these lands to provide a continued tax benefit. Since assessors must remove these lands, by using the 10 acre rule to determine what lands are practical to separate (and therefore will become class 2b), taxpayers at least have an option for these lands. Hopefully having an alternative will diffuse or minimize any future complaints to the legislature, provide for a seamless conversion from Green Acres to Rural Preserve, and follow the legislature s intent. Applying the 10 Acre Rule Assessors should be able to easily apply the 10 acre rule in the majority of situations. The contiguous acreage of the non-productive land that has been (or is being) identified is first considered. This is land that is not tilled, actively grazed, or mowed for hay. If this land mass is 10 acres or more, you would separate it from the class 2a land and classify it as class 2b. It would not be eligible for Green Acres. If the owner applies and meets the other requirements, the 2b lands may be eligible for the Rural Preserve Program. If this land mass is less than 10 acres, you would not separate it from the productive land since it would be considered impractical to separate, and it would be classified as class 2a. It would remain eligible for Green Acres (if all other requirements were met). Exceptions to the 10 Acre Rule As previously stated, the 10 acre rule should work in the majority of situations. However, rarely can one rule fit all circumstances, and that is definitely the case when determining the classification of land in Minnesota. The state and its lands are too diverse. To account for this diversity and allow for professional judgment and common sense of assessors, the following factors have been drafted. These factors should be considered by assessors if they are justifying a case where the 10 acre rule has not been applied. Counties should create a policy as to how they will use these factors and how they will document the decisions and rationale in applying the factors. This policy should be consistent for the county and similar to what is being done in the region. Again, the Regional Reps will be able to help with these policies. Regional Reps will work with counties and regions to establish regional policies for how these factors will be applied in various parts of the state. These factors should help to achieve consistency because assessors will be working from the same set of considerations to determine what is impractical to separate. These factors will help assessors statewide make uniform and consistent determinations in what 2b lands should be separated from 2a lands in accordance with the specific circumstances and conditions in their part of the state. No single factor is determinative on its own, as they all should be considered to some degree. The fourth factor ( sold separately ) should be given less weight than the other three. The factors allow for assessors to respond to the specifics in their areas. Factors for Separating Class 2b Lands. Remember, contiguous land masses that are 10 acres or more but not used for agricultural purposes, and that therefore could qualify for the Rural Preserve Program will typically be considered practical to separate and classed as 2b lands. Obviously, there 3

288 will be some exceptions to the 10 acre rule in determining whether acreage should be separated out as 2b land or remain with the productive 2a lands. The Rural Preserve Program 10 acre rule should not be a hard rule. In these instances, the following group of questions and factors should be considered and utilized in the determination of what is practical or impractical to separate: i) How is interspersed a factor? (1) Size (acreage)/predominance of the class 2b land in the overall parcel (2) Characteristics (shape, edges, contours, topography) of the 2a and 2b land (3) Location of 2b land in relation to parcel, to class 2a land, to other class 2b land ii) How are alternate uses to the land a factor? (1) Converting the lands to agricultural use (a) Is it easy/feasible to till the land? (b) Is it possible, or impossible? (c) For what reason is any land that could be farmed not being farmed (i.e. is it physically impossible to get machinery there, etc.)? (d) Are there economic, legal, or zoning considerations preventing farming the land? iii) How are setback requirements a factor? (1) Are there setback requirement that prevent farming the land? (a) What is the size of setback or amount of land required to be set aside? iv) How is likely to be able to be sold separately a factor? Remember this factor is given less weight than the others. It should not be the only factor used in making determinations. (1) Local market considerations (a) Has this land sold separately in the past; is it accessible if sold; is it usable if sold? (b) Instead of selling, are hunting rights to this type of land typically leased? (2) Does the size, shape, or location of this land result in an unusual land mass for sale or to split? Examples of Exceptions to the 10 Acre Rule. Remember, there will not be a lot of exceptions to the 10 acre rule, but there may be some instances. The 10 acre rule is the starting point for the determination of what is impractical to separate. Any exception to the 10 acre rule needs to be justified by considering the above factors and should be consistently applied. All exceptions should be documented with the reasoning for not applying the 10 acre rule. The following are illustrative examples of potential exceptions to the 10 acre rule and how to use the factors above in making that determination. There is no way all instances can be illustrated in examples. Assessors must use the above factors in making determinations. Example where less than 10 acres may be considered practical to separate. A tract of land with a 3 acre wooded area (not used agriculturally) borders tilled land. Other similar wooded land has been split off as residential sites in the past. The 3 acres is less than the 10 acre rule, but it is feasible and legal to split off for residential development, the characteristics of this land (it is a contiguous mass and shaped/located for a residential site), and there is also a history of 4

289 this type of sale. The 3 acres should be separated and classed according to use, but are not considered class 2a. Example where more than 10 acres may be considered impractical to separate. An 80 acre parcel of mostly tilled lands includes a strip of land running next to a waterway. This land cannot be tilled because of setback requirements and the topography of the land. It totals 14 acres, which exceeds the 10 acre rule, but it should be considered impractical to separate because of the setback requirements and the fact that the topography of this land makes it not possible to be used for agricultural purposes. The 14 acres should be classified as 2a land. Example where not being interspersed may be considered practical to separate. A 25 acre parcel has 10 acres being tilled and 15 acres not being used for agricultural production. Some of these 15 acres are in contiguous land masses that are larger in size, and others are in one or two acre groupings. Because these 15 acres are not a small amount in relation to the total acreage for that parcel, they should not be considered interspersed. The 15 acres should be classified as class 2b land. Example where being interspersed may be considered impractical to separate. An 80 acre parcel has 65 acres being tilled and 15 acres not being used for agricultural production. Some of these 15 acres are in contiguous land masses (all less than 10 acres), but others are in one or two acre groupings. Because these 15 acres are scattered and are a small amount in relation to the total acreage for that parcel they should be considered interspersed, and because they do not meet the Rural Preserve Program acreage requirements of a minimum of 10 acres in a contiguous land mass, the 15 acres should be classified as class 2a land. Example where acres of certain types of nonproductive land may be considered impractical to separate while other types may be considered practical to separate. A 40 acre parcel has a10 acre area of woods not used productively in one corner, a 9 acre ravine that cannot be used productively due to its slope running through the center, and 21 acres being pastured. Even though the total non-productive acres on this parcel are more than 10, it is not all necessarily considered practical to separate. The 10 acre woods which are feasible to be split and are in a land mass that is conducive to other uses should be considered practical to separate and be classified according to use (likely class 2b). The 9 acre ravine on the other hand cannot be farmed because of topography and is specifically listed in the statute. It should be considered impractical to separate and classified as 2a land (if the ravine was more than 10 acres, the assessor would need to work through the factors to see if it should be an exception to the practical to separate rule). Other Discussion Counties should take a cautious approach in making any changes to 2a and 2b determinations until they attend a regional Green Acres seminar and can formulate a county policy for exceptions to the 10 acre rule that is also consistent with regional practices. Regional Reps should be able to help counties on these tasks and answer any questions. Whatever policies are implemented should be utilized consistently and the rationale to any exceptions to the 10 acre rule should be documented. There is certain land listed in the statute (sloughs, wooded wind shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement) and other similar land (like waterways, ridges, pivot points, terraces, sink/pot holes, and fence lines) that is not physically possible to farm or that is an integral part of the farm. When these lands are interspersed with class 2a land, they would 5

290 not be included in the acreage counts when using the 10 acre rule. It would be impractical to separate and be classified as 2a land. Other land that the owner may be choosing to not use agriculturally, but that is not an integral part of the farm, or that is not interspersed would be counted in the 10 acre rule and classification would need to be determined using the above criteria. An example of this would be food plots left for wildlife. This is a choice the owner makes, and the land would be considered practical to separate and not considered class 2a land. Green Acres eligibility should not be created due to lands being considered impractical to separate and therefore being classified as 2a land. Parcels cannot be eligible for Green Acres if they do not have at least 10 acres used for agricultural purposes to produce an agricultural product for sale. The department will be working with counties to utilize their CAMA program values and land use breakdowns for equalization, sales ratio, and cross county purposes in the future. We strongly advise counties to establish a mechanism for identifying (in CAMA) lands that would normally be class 2b but are being classed 2a due to being impractical to separate. Utilizing this CAMA data will greatly improve analysis, and it will hopefully eventually minimize the use of mini abstracts. If you have any questions, please direct them to proptax.questions@state.mn.us. 6

291 MINNESOTA REVENUE MEMO Date: September 24, 2009 To: From: Subject: All Assessors Property Tax Division, Minnesota Department of Revenue Information and Education Section Class 1b Blind/Disabled Homestead Classification How does the age of an applicant affect eligibility? This memo is meant to address a number of questions we have been receiving concerning the age of applicants applying for class 1b blind/disabled homesteads. The question that has been brought forward the most is whether or not a retired person can receive the classification. The answer to this question depends on a number of factors. 1. A person who is legally blind can qualify for class 1b no matter their age. (The person must be an adult and the person s name must be on the title to the property, or the person must be receiving a relative homestead.) 2. It is important to remember that statute clearly states that a qualifying disability is one that totally incapacitates the person from working at an occupation which brings the person an income. Therefore, disabled persons of any age who are employed in any manner do not qualify for class 1b. 3. For applicants with documentation from the Social Security Administration (SSA): It is our understanding that only people that were designated by the SSA as disabled before they were eligible to retire can qualify for class 1b. This is due to the fact that the SSA will not designate persons of retirement age or older as disabled. If a person is able to provide you with documentation proving that they are considered permanently and totally disabled and had previously received disability payments from the SSA, the person would likely be eligible for the 1b class. Persons who have become disabled after retirement age, and therefore never received disability payments from the SSA, are not eligible to receive the 1b classification. 4. For applicants with documentation from another qualifying agency (e.g. police pension, Railroad Retirement Board, etc.): Other agencies that provide disability benefits to disabled persons may have different standards and requirements than the Social Security Administration. For example, one of these agencies may provide disability benefits to disabled individuals after retirement or retirement age. If this is the case, the person may be eligible to apply for class 1b.

292 BULLETIN To: From: All County Assessors Property Tax Division Date: July 1, 2009 Re: Class 2e Commercial Aggregate Deposit and The Aggregate Resource Preservation Property Tax Program Introduction Minnesota Laws 2008, Chapter 366, created a new classification of property, Commercial Aggregate Deposit (class 2e) and a new property tax program, the Aggregate Resource Preservation Property Tax Program. Property classified as 1a, 1b, 2a, 2b, or 2e may be eligible for valuation deferment under the Aggregate Resource Preservation Property Tax Law. This bulletin is intended to outline this new property classification, along with the tax implications of such classification and the Aggregate Resource Preservation Property Tax Law. County Opt-Out Provisions Every county has the option to opt-out of the Aggregate Resource Preservation program, and in so doing will also have chosen to opt out of the 2e classification provision (more information is detailed on the following pages). At any time before June 1, 2010 a county board may terminate the Aggregate Resource Preservation Property Tax Law within the county by resolution following notice and public hearing. The county has 60 days from receipt of the first application for enrollment under this section to notify the applicant and any subsequent applicants of the county s intent to begin the process of termination of this program in the county. The county must act on the termination within six months. Upon termination by a vote of the county board, all applications received prior to and during notification of intent to terminate shall be deemed void. If the county board does not act on the termination within six months of notification, all applications for deferment shall be deemed eligible for consideration. Following the initial 60-day grace period, a termination applies prospectively and does not affect property already enrolled in the program prior to the termination date. A county may reauthorize application of the program by resolution of the county board revoking the termination. For counties which have opted-out of the Aggregate Resource Preservation Property Tax Program, those counties have also opted out of the 2e classification.

293 2e classification What is the 2e classification? Minnesota Statutes, section , subdivision 23, paragraph (l) outlines the requirements for class 2e commercial aggregate deposit property. The land must not be actively mined and not otherwise classified as class 2a or 2b. The property must be at least ten contiguous acres in size at the time of application. In addition, the property owner must record an affidavit with the county recorder containing the following information: 1. A legal description of the property; 2. A disclosure that the property contains a commercial aggregate deposit that is not actively being mind but is present on the entire parcel enrolled; 3. Documentation that the conditional use under county or local zoning ordinance for this property is for mining; and 4. Documentation that a permit has been issued by the local unit of government or the mining activity is allowed under local ordinance. The disclosure must include a statement from a registered professional geologist, engineer, or soil scientist delineating the deposit and certifying that it is a commercial aggregate deposit. The term commercial aggregate deposit means a deposit that will yield crushed stone, sand, and/or gravel that is suitable for use as a construction aggregate. The deposit must not be actively mined for 2e classification. The term actively mined means the removal of top soil and overburden in preparation for excavation or excavation of a commercial deposit. Classification Rate Ordinarily, property that is being actively mined for commercial aggregate would be classified as class 3a commercial property which has a classification rate of 1.5 percent on the first $150,000 of value, and any additional value having a classification rate of 2 percent. However, the class rate of 2e property is 1.00%. Property Being Actively Mined When any portion of property classified as class 2e begins to be mined, the owner of the property must file a supplemental affidavit within 60 days from the day any aggregate is removed indicating the number of acres of the property that are being mined. The acres being mined must be valued and classified as class 3a commercial property for the following assessment year and must be removed from the Aggregate Resource Preservation Property Tax Program if it is enrolled in that program. Copies of the original affidavit and all supplemental affidavits must be filed with the county assessor, the local zoning administrator, and the DNR- Division of Land and Minerals. A supplemental affidavit must be filed each time a subsequent portion of the property is actively mined provided that the minimum acreage change is five acres, even if the actual mining activity is taking place on less than five acres. Aggregate Resource Preservation Program Class 2e Updated July 2009

294 Aggregate Resource Preservation Property Tax Law Introduction The Aggregate Resource Preservation Property Tax Program provides a valuation deferment for qualifying property owners whose land contains a commercial aggregate deposit but that deposit is not being actively mined. This program is available in the counties whose county boards have not opted out of the program. Any county may choose to opt out of the program by following the provisions outlined on page 1 of this bulletin. Benefits of Aggregate Resource Preservation Property Tax Program Minnesota Statutes, section outlines the program benefits for aggregate resource preservation. The land is to be valued as if it were agricultural property, using a per-acre valuation equal to the current assessment year s average per-acre valuation of agricultural land within the county. The assessor cannot consider any additional value resulting from potential alternative and future uses of the property. The buildings located on the land are to be valued in the normal manner. Requirements To qualify for the program, the property must: be classified as 1a, 1b, 2a, 2b, or 2e; be at least ten contiguous acres at the time of application; not have delinquent taxes; and be subject to a restrictive covenant. Property owner to file application A property owner wishing to apply for the Aggregate Resource Preservation program must file an application with the county assessor where the property is located. The application is due by May 1 of the assessment year in which the property owner seeks qualification to be applied to the next taxes payable year. For the 2009 assessment year only, the application date is extended to September 1, 2009 (for taxes payable 2010). Reapplication is not necessary, provided the property owner continues to meet the requirements outlined above. The application must contain: 1. The legal description of the area; 2. The name and address of the owner; 3. A copy of the affidavit (described above) which is required for 2e classification; and 4. A statement of proof from the property owner that the land contains a restrictive covenant* limiting its use for the property s surface to that which exists on the date of the application and limiting its future use to the preparation and removal of the commercial aggregate deposit under its surface. *The restrictive covenant must be binding on the owner or the owner s successor or assignee, and run with the land. The Department of Revenue has developed an application for the Aggregate Resource Preservation Program, which is attached to this bulletin. Aggregate Resource Preservation Program Class 2e Updated July 2009

295 Cancellation of covenant The restrictive covenant outlined above may be cancelled in one of the following two ways: 1. The covenant may be cancelled by the owner beginning with the next subsequent assessment year provided that the additional taxes are paid by the owner at the time of cancellation. If the covenant is cancelled by the owner, additional taxes must be paid at the time of cancellation. 2. The city or town in which the property is located may cancel the covenant beginning with the next assessment year if the city council or town board a. Changes the conditional use of the property; b. Revokes the mining permit; or c. Changes the zoning to disallow mining. If the city or town cancels the covenant, additional taxes are not imposed on the property. Actively mined If any portion of the property becomes actively mined, the property owner must file an additional affidavit within 60 days. The 60-day time limit begins on the day any aggregate is removed. The affidavit must state the number of acres of the property that is being actively mined. A supplemental affidavit must be filed each time a subsequent portion of the property is actively mined, provided that the minimum acreage change is five acres, even if actual mining activity constitutes less than five acres. The acres that are being actively mined must be valued and classified as class 3a commercial for the next subsequent assessment year. The acres must also be removed from the aggregate resources preservation program. Additional taxes are not due if the land has been properly withdrawn by affidavit as described above. However, if land is not properly withdrawn before being actively mined, additional taxes are due as outlined below. Upon removal, copies of the original affidavit and all supplemental affidavits must be filed with the county assessor, the local zoning administrator, and the Department of Natural Resources, Division of Land and Minerals. Additional taxes due upon withdrawal from program Calculating deferred taxes due is similar to the calculation used in Green Acres. When property which has been valued under the Aggregate Resource Preservation Property Tax Program no longer qualifies, the portion of the land in the program is subject to additional taxes. The additional tax amount is determined by: 1. computing the difference between the current year s taxes as determined by valuation as agricultural land and an amount determined by the assessor based on the property s current year s estimated market value of like real estate at its highest and best use; and 2. multiplying the difference determined above by the number of years the land was enrolled in the aggregate resource preservation program. Aggregate Resource Preservation Program Class 2e Updated July 2009

296 Formula: Tax calculated on estimated market value (less) Tax calculated on agricultural land value Equals: Difference in tax Difference in tax X Number of years enrolled Equals: Amount of deferred tax due The current year s estimated market value as determined by the assessor cannot exceed the market value that would result if the property was sold in an arms-length transaction, and most not be greater than it would have been had the actual bona fide sale price of the property been used in lieu of that market value. The deferred taxes due must be extended against the property on the tax list for the current year, except that interest or penalties must not be levied on these additional taxes if timely paid. The additional taxes must not be imposed on that portion of the property which has been actively mined or has been properly removed from the program based on the supplemental affidavits filed by the property owner (described above). The additional taxes imposed are considered a lien upon the property assessed to the same extent and for the same duration as other taxes imposed on the property. When collected, they must be distributed in the manner provided by law for collection and distribution of other property taxes. Continuation upon sale If the property sells, additional taxes must not be extended if the property continues to qualify for the program and the new owner files application with the county assessor for continued deferment within 30 days after the sale. If you have any questions about the 2e classification or the Aggregate Resource Preservation Property Tax Law, please contact our division at proptax.questions@state.mn.us. Aggregate Resource Preservation Program Class 2e Updated July 2009

297 Aggregate Resource Preservation Program 16 Property Tax Fact Sheet 16 Fact Sheet The Aggregate Resource Preservation Program, as outlined in Minnesota Statutes, section , provides a valuation deferral for qualifying property owners with land that is known to contain a commercial aggregate deposit but is not being actively mined. County Options Participation in this program by Minnesota counties is optional. Each county has the option to opt-out of the Aggregate Resource Preservation program at any time before June 1, If a county has opted out of this program, they have also opted out of the 2e classification. Please check with your county assessor to determine if your county offers this program and classification before making application. Who qualifies? Property owners may apply for valuation deferment under this program if: a property is classified as class 1a, 1b, 2a, 2b or 2e; the property consists of at least 10 contiguous acres; there are no delinquent taxes on the property; and there is a restrictive covenant which limits the use of the property s surface to the current use on the date of application and limits its future use to the preparation and removal of the commercial aggregate deposit under its surface. How to apply for valuation deferment Application must be made to the county assessor by May 1 to be eligible for the current assessment year (for taxes payable next year). For 2009 only, the application date has been extended to September 1, The application is available at the county assessor s office. A copy of the restrictive covenant filed with the county recorder must be included with the application. The application must also identify the legal description of the area, the name and address of the property owner, and a statement of proof that the land contains a restrictive covenant limiting the use of the property s surface and limiting its future use to the preparation and removal of the commercial aggregate deposit under its surface. What are the benefits? Enrollment in the Aggregate Resource Preservation program provides a valuation deferment. Land enrolled in the program is valued as if it were agricultural land as well as its estimated market value which is based on the potential commercial yield of the aggregate located on the property. Taxes are calculated on both values but are paid on the lower (agricultural) value. The difference in taxes is deferred until the property is no longer enrolled in the program. Withdrawal from the program Withdrawal from the program may occur in the following ways: 1. A property owner may withdraw from the program by filing a supplemental covenant with the county recorder. The property owner must pay additional taxes at the time of cancellation. 2. A city or town may withdraw the program as well, and in this case no additional taxes are due. 3. A property may be disqualified if it becomes actively mined and has not been properly withdrawn from the program. In this case, the amount of deferred taxes for the current year, multiplied by the number of years the property was enrolled in the program, may be due by the property owner. If the enrolled property sells, the program may still be in effect so long as the property continues to qualify based on its use and that the new owner files an application with the county assessor within 30 days of the property s sale. Property Tax Division Mail Station 3340 St. Paul, MN Revised 09/09 This fact sheet is intended to help you become more familiar with Minnesota tax laws and your rights and responsibilities under the laws. Nothing in this fact sheet supersedes, alters, or otherwise changes any provisions of the tax law, administrative rules, court decisions, or revenue notices. Alternative formats available upon request. Minnesota Revenue 1

298 Application for Aggregate Resource Preservation Program Provides a valuation deferral for qualifying property owners with land that is known to contain a commercial aggregate deposit but is not being actively mined. (Minnesota Statutes ) CR-ARPP 09 Please read the back of this form before completing. This application must be signed, dated and returned to the county assessor s office (along with all attachments) by May 1 to be eligible for deferral for taxes payable in the following year. (For 2009 only, the application date has been extended to September 1.) This section to be completed by all applicants. Please fill out the following information for the owner or authorized representative of the entity that owns the property. Name of owner(s) Mailing Address Owner(s) of the Property City State Zip Legal description of all parcels being enrolled: To qualify for the Aggregate Resource Preservation Program all of the following must apply for all parcels being enrolled: 1. The property is at least 10 contiguous acres in size. Yes No 2. There are no delinquent taxes due on all property being enrolled. Yes No 3. The property is classified as one of the following property classifications: 1a, 1b, 2a, 2b, or 2e. Yes No 4. The property contains a commercial aggregate deposit that is not actively being mined but is present on the entire parcel or parcels being enrolled. Yes No 5. The property contains a restrictive covenant limiting its use for the property s surface to that which exists on the date of this application and limiting its future use to the preparation and removal of the commercial aggregate deposit. Yes No 6. The conditional use under county or local zoning ordinance of the parcel or parcels being enrolled is for mining. Yes No Important If your property is classified as class 2e, you must attach to this application: (1) the affidavit you recorded with the county recorder s office in order to receive the 2e classification; and (2) a copy of your restrictive covenant. If your property is not currently classified as class 2e, you must attach to this application: (1) documentation that a permit has been issued to you by your local unit of government allowing mining activity or that the mining activity is allowed under local ordinance; (2) a statement from a registered professional geologist, engineer, or soil scientist delineating the deposit and certifying it as a commercial aggregate deposit; and (3) a copy of your restrictive covenant. Sign Here By signing below, I certify that the above information is true and correct to the best of my knowledge, and I am an owner of the property or an authorized member, partner, or shareholder of the entity that owns the property for which the Aggregate Resource Preservation Program is being claimed. Signature Making false statements on this application is against the law. Minnesota Statute, Section states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Daytime phone ( ) Date For Assessor Use This section is for assessor use only. Application is: approved denied. If denied, note main reason: Assessor s signature Date Revised 07/09

299 Information: Aggregate Resource Preservation Program CR-ARPP 09 Participation in this program by Minnesota counties is optional. Each county has the option to opt-out of the Aggregate Resource Preservation program at any time before June 1, If a county has opted out of this program, they have also opted out of the 2e classification. Please check with your county assessor to determine if your county offers this program and classification before making application. Who qualifies? Property owners may apply for valuation deferment under this program if: a property is classified as class 1a, 1b, 2a, 2b or 2e; the property consists of at least 10 contiguous acres; there are no delinquent taxes on the property; and there is a restrictive covenant which limits the use of the property s surface to the current use on the date of application and limits its future use to the preparation and removal of the commercial aggregate deposit under its surface. How to apply for valuation deferment Application must be made to the county assessor by May 1 to be eligible for the current assessment year (for taxes payable next year). For 2009 only, the application date has been extended to September 1, The application is available at the county assessor s office. A copy of the restrictive covenant filed with the county recorder must be included with the application. The application must also identify the legal description of the area, the name and address of the property owner, and a statement of proof that the land contains a restrictive covenant limiting the use of the property s surface and limiting its future use to the preparation and removal of the commercial aggregate deposit under its surface. What are the benefits? Enrollment in the Aggregate Resource Preservation program provides a valuation deferment. Land enrolled in the program is valued as if it were agricultural land as well as its estimated market value which is based on the potential commercial yield of the aggregate located on the property. Taxes are calculated on both values but are paid on the lower (agricultural) value. The difference in taxes is deferred until the property is no longer enrolled in the program. Withdrawal from the program Withdrawal from the program may occur in the following ways: 1. A property owner may withdraw from the program by filing a supplemental covenant with the county recorder. The property owner must pay additional taxes at the time of cancellation. 2. A city or town may withdraw the program as well, and in this case no additional taxes are due. 3. A property may be disqualified if it becomes actively mined and has not been properly withdrawn from the program. In this case, the amount of deferred taxes for the current year, multiplied by the number of years the property was enrolled in the program, may be due by the property owner. If the enrolled property sells, the program may still be in effect so long as the property continues to qualify based on its use and that the new owner files an application with the county assessor within 30 days of the property s sale. Revised 07/09

300 Memo Date: June 26, 2009 To: From: Subject: All City & County Assessors Andrea Fish, State Program Administrator Information and Education Section Plat phase-in amounts in a declining market Several assessors have inquired if the plat law phase-in amount should be recalculated if the estimated market value (EMV) decreases during the phase-in period. Based upon our research, the Property Tax Division can find no instance where we have ever advised a county to recalculate the original phase-in amount as determined in the year of initial platting. The phase-in amount is determined in the year of initial platting and does not change, regardless of fluctuations to the estimated market value during the three- or seven-year phase-in. The same initial phase-in amount is added to the taxable market value (TMV) each year during the phase in, whether the EMV increases or decreases from one assessment year to the other. In a declining market, this may result in a plat being phased in over a shorter time period than the original three or seven years. For example, consider that an agricultural piece of land in a non-metro county was subdivided into 100 lots in The total EMV of the agricultural land is $100,000 (or $1,000 per lot). For the 2006 assessment year, the assessor has valued each platted lot at $50,000. The value is phased in over a seven year period. Calculate the amount to be phased in each year: $50,000 - $1,000 = $49,000 / 7 = $7,000 (EMV as (2005 assessed EMV (total amount to be (phase-in (phase-in platted land) before platting) phased in) period) amount) TMV TMV TMV TMV TMV TMV TMV TMV $1,000 $8,000 $15,000 $22,000 $29,000 $36,000 $43,000 $50, assessment = $1,000 (initial EMV before platting) 2006 assessment = $8,000 ($1,000 plus $7,000 annual phase in) 2007 assessment = $15,000 ($8,000 plus $7,000 annual phase in) 2008 assessment = $22,000 ($15,000 plus $7,000 annual phase in) 2009 assessment = $29,000 ($22,000 plus $7,000 annual phase in) 2010 assessment = $36,000 ($29,000 plus $7,000 annual phase in) 2011 assessment = $43,000 ($36,000 plus $7,000 annual phase in) 2012 assessment = $50,000 (full value) In a declining market, it is possible that the taxable market value will be equal to the estimated market value before the expiration of the phase-in period. In the example above, if the EMV of a lot decreases from $50,000 to $43,000 for the 2011 assessment, the phase-in is complete and the TMV will equal the EMV. These values assume that the lot has not been sold or constructed upon at any time during the phase-in period. If you have any further questions, please do not hesitate to contact our division at proptax.questions@state.mn.us.

301 Memo Date: June 25, 2009 To: From: Subject: All City and County Assessors Andrea Fish, State Program Administrator Information and Education Section New 4c(11) marina classification and clarification of 4c(3)(ii) requirements Minnesota Laws 2009, Chapter 88, Article 1, section 18, outlines a new classification for property tax purposes. The new class 4c(11) is for marina properties. Minnesota Statutes, section , subdivision 25 is amended to include the following: (11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public and devoted to recreational use for marina services. The marina owner must annually provide evidence to the assessor that it provides services, including lake or river access to the public. No more than 800 feet of lakeshore may be included in this classification. Buildings used in conjunction with a marina for marina services, including but not limited to buildings used to provide food and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle are classified as class 3a property. commercial-use seasonal residential recreational property and marina recreational land as described in clause (11), has a class rate of one percent for the first $500,000 of market value, and 1.25 percent for the remaining market value This law is effective for the 2009 assessment year, for taxes payable On September 9, 2008 we sent a memo stating that 501(c)(8) organizations should be allowed to qualify for the 4c(3)(ii) classification. Minnesota Laws 2009, Chapter 88, Article 10, section 7 has codified this. For the 4c(3)(ii) classification, law now requires that a qualifying non-profit community service organization must be exempt from federal income tax under sections 501(c)(3), (8), (10), or (19) of the Internal Revenue Code. This provision is effective immediately. If you have any questions, please contact our division at proptax.questions@state.mn.us.

302 Application for Class 4c(3)(ii) Non-Profit Community Service Organizations Provides for special classification of qualifying non-profit community service organizations To qualify for the special classification, the law requires that the organization must make annual charitable contributions and donations in an amount that is at least equal to the previous year property taxes (excluding state general tax) and that the organization must allow the facility to be used for public and community meetings or events at no charge as appropriate to the size of the facility. Applications are due by May 1. Read instructions before completing. Name of organization Type or Print Check all that apply Sign Here Person submitting application Name: Title: Address of organization (cannot be a P.O. Box number) Phone number City State Zip Code County Property ID number or plat and parcel number (from property tax statement) Check all boxes that apply. You must attach a copy of the previous year s property tax statement. You must also attach copies of your Form LG1010 Schedule C/D as documentation of the organization s charitable donations. (See instructions) I certify that this property is not used for residential purposes on either a temporary or permanent basis. Yes No I certify that the organization listed above is exempt from federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal Revenue Code of 1986 as amended. Yes No I certify that the organization allows the facility to be used for public and community meetings or events at no charge. Yes No Since some organizations operate on a fiscal year basis that does not coincide with the calendar year, please list the amount of charitable contributions for the last year below. Please attach documentation of these donations (Form LG1010). $ total donations for period from most recent 12-month record-keeping period (may be either fiscal year or calendar year.) Please specify Month Year to Month Year. Please list the total amount of your property taxes (excluding special assessments) from line 13 of your Property Tax Statement (less) the total amount of the state general tax from line 9 of your Property Tax Statement Equals: Net property tax excluding special assessments and state general tax: $ $( ) $ Signature of owner or authorized representative: By signing below, I certify that the information on this form is true and correct to the best of my knowledge, and I am the owner of the property or authorized representative of the organization that owns the property for which classification as 4c(3)(ii) is being claimed. Making false statements on this application is against the law Minnesota Statute states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Signature of applicant Title Date Daytime phone For office use only to be completed by the county assessor Denied Name of organization Application is: Approved Assessor s Signature Date Please return completed application and required attachments to your county assessor.

303 CR-NCSO Instructions for Application Who is eligible Property may qualify for class 4c(3)(ii) and the corresponding class rate if it is owned by a nonprofit community service oriented organization, is not used for residential purposes on either a temporary or permanent basis, and: The organization makes annual charitable contributions and donations at least equal to the property s previous year s property taxes (excluding the state general tax) and the property is allowed to be used for public and community meetings or events free of charge. A nonprofit community service oriented organization is any corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, fraternal, civic, or educational purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal Revenue Code of 1986, as amended through December 31, How to apply Complete the entire application fully and legibly. Mail the application and required attachments to your county assessor by May 1. Applications must be completed annually. Required attachments You must attach to the application a copy of the property s previous year s property tax statement. You must also provide documentation of that same year s charitable contributions and donations by attaching a Form LG1010 Schedule C/D to the application. At a minimum, you must provide copies of the Form LG1010 s that are used to demonstrate that the organization s charitable contribution amount is equal to the property s previous year s property tax. For example, if it took three months for the charitable contribution amount to equal the previous year s property tax, only those three Form LG1010 s would need to be attached to the application. Please note: Not all expenditures on the Form LG1010 qualify as charitable contributions. Assessor may request additional information The county assessor may request, at any time, for an organization to provide a copy of an IRS letter granting exempt status as a 501 (c)(3), (8), (10), or (19) corporation (or an explanation of why the letter is not available), and records of its charitable contributions and donations and of public meetings and events held on the property to ensure eligibility. What are charitable contributions and donations? Charitable contributions and donations has the same meaning as lawful gambling purposes under section , subdivision 25, excluding those purposes relating to the payment of taxes, assessments, fees, auditing costs, and utility payments. On a form LG1010, charitable contributions are defined as expenditures coded A-1 to A-7, A-10, A- 11, A-13, A-14, A-15, and A-19. Only expenditures with these codes qualify as charitable contributions when the county assessor determines if an organization has made charitable contributions in an amount equal to the previous year s property tax. Use of information Some of the information contained on this form may be shared with the county assessor, county attorney, the Commissioner of Revenue or other federal, state, or local taxing authorities to verify your eligibility. You do not have to give this information. However, refusal will disqualify you from consideration for the classification. Penalties Making false statements on this application is against the law. Minnesota Statute states that anyone giving false information in order to avoid or reduce their tax obligations is subject to a fine of up to $3,000 and/or up to one year in prison. Information and assistance If you need additional information or assistance, contact your county assessor. Additional information is also available online at

304 Memo Date: June 11, 2009 To: From: Subject: All County Assessors ANDREA FISH, State Program Administrator Information and Education Section Plat Law - metro and non-metro counties, 2009 Law Update In 2008, legislation was passed which revised treatment of plats which had sold, transferred, or been constructed upon prior to the end of the phase-in schedule. Subsequent to those changes, we sent a memo in January of 2009 advising that these changes were retroactive to the date of initial platting. Minnesota Statutes, section , subdivisions 14a and 14b were amended yet again during the 2009 legislative session, changing the effective date of the 2008 law changes. Minnesota Laws 2009, Chapter 88, Article 2, sections 41 and 42 have changed the effective dates so that the changes are only applicable to land platted after May 18, The resulting instruction is: for plats filed after May 18, 2008, whenever a lot sells, transfers, or is built upon, the lot will go to full market value for the next assessment; and for plats filed before May 18, 2008, the old rules still apply. Any lot that sells or is transferred may continue on the phase-in until it is built upon or until the end of the phase-in period, whichever comes first. Because this law change is retroactive, any lots which were platted before May 18, 2008 and were removed from plat phase-in because of sale or transfer must be returned back to the phasein value for this assessment year. We recommend you destroy the January 2009 memo regarding plat law so as to avoid confusion. If you have any questions concerning this provision, please contact our division at proptax.questions@state.mn.us.

305 Memo Date: May 19, 2009 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section Disabled Veterans Homestead Market Value Exclusion The United States Department of Veterans Affairs is in the process of mailing all disabled veterans formatted letters pertaining to their disability. These letters can be used for applications for the disabled veterans homestead market value exclusion. If a veteran presents you with an application and one of these letters, no further information is necessary. These letters provide all applicable information for program eligibility. If a veteran would like to apply but has not received this letter in a timely manner prior to the July 1 application deadline, the veteran may still proceed with other necessary information (a V.A. disability rating sheet and official military discharge papers such as form DD214). Again, this information is only required if the formatted letter is not received prior to the application deadline. We strongly recommend that veterans work with their County Veterans Service Officer if assistance in obtaining this paperwork is needed. The following pages contain examples of these formatted letters. Applicable information is highlighted. The highlighted information is: The date that the letter was issued (to verify that information is up-to-date) The veteran s name and address The status of discharge (should be Honorable ) Benefits information combined rating percentage whether the veteran has individual unemployability (treated as 100 percent disabled for purposes of this program) whether the veteran is permanently and totally disabled (the maximum $300,000 exclusion benefit would apply) The veteran may also choose to supply a letter with all unnecessary information blacked out for purposes of privacy. This is acceptable, provided that all required information is still readable. We have also included an example of such a letter with this memo. You may also work with your County Veterans Service Officer if needed. However, please be very clear that no further information is necessary if you receive one of the following formatted letters with

306 an application. To reiterate, the application may be processed with either of the following additional documentation types (if you receive one, you DO NOT need to ask for the other): 1. A letter similar to one of the examples in this memo; or 2. Official discharge paper (may be U.S. Government form DD214 or other official military discharge papers) and an official United States of Veterans Affairs rating determination sheet. If you have any questions, please do not hesitate to contact our division at proptax.questions@state.mn.us.

307 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 100 Are you entitled to a higher level of disability due to being unemployable: YES Are you considered to be totally and permanently disabled due to your service-connected disabilities: YES Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, [If YES is noted for Are you entitled to a higher level of disability due to being unemployable then this veteran is to be treated as 100 percent disabled, regardless of combined service-connected evaluation. If the disability is permanent, they are eligible for the $300,000 exclusion.] Veterans Service Center Manager

308 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 100 Are you entitled to a higher level of disability due to being unemployable: NOT INDICATED Are you considered to be totally and permanently disabled due to your service-connected disabilities: YES Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, [ Are you considered to be totally and permanently disabled due to your service-conencted disabilities - if this is marked YES the veteran qualifies for the $300,000 exclusion.] Veterans Service Center Manager

309 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES This may also say general, under honorable conditions, or general under honorable conditions. Each of those are also interpreted to mean honorable. VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 70 Are you entitled to a higher level of disability due to being unemployable: NOT INDICATED Are you considered to be totally and permanently disabled due to your service-connected disabilities: NOT INDICATED Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, Veterans Service Center Manager [***This veteran is eligible for the $150,000 exclusion. The combined service-connected evaluation is 70 percent, and the veteran does not have individual unemployability. ]

310 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 80 Are you entitled to a higher level of disability due to being unemployable: NOT INDICATED Are you considered to be totally and permanently disabled due to your service-connected disabilities: NOT INDICATED Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or feerelated benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, Veterans Service Center Manager [***This veteran is eligible for the $150,000 exclusion. The combined service-connected evaluation is 80 percent, and the veteran does not have individual unemployability. ]

311 Memo Date: July 10, 2009 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section Disabled Veterans Homestead Market Value Exclusion Recently, we became aware of some difficulty with the new letters the Veteran's Affairs office were supplying. It was (and still is) our understanding at Revenue that those letters should be making it easier for assessors to administer the program. The letters from the VA should provide all the information necessary for you to determine eligibility for either the $150,000 or $300,000 exclusions. After receiving multiple requests for clarification, we present this memo with the intent of providing a new way of reading these VA letters to determine exclusion eligibility. Surprisingly, the easiest way to read the letters is to read them bottom-up starting with the last rating question. If the answer to the question "Are you considered to be totally and permanently " is YES, the person is eligible for the $300,000 exclusion and does not need to annually reapply. No further information is necessary concerning the level of disability. You do not need to cross-check with the combined service evaluation. Veterans are eligible for the $300,000 exclusion if and only if this says YES. If the answer is NOT INDICATED, go to the next question. If the answer to the question, "Are you entitled to a higher level of disability " is YES, the person is eligible for the $150,000 exclusion and needs to reapply annually. You do not need to cross-reference the combined evaluation percentage, as this veteran is considered 100 percent disabled for our purposes. If the answer is NOT INDICATED, go to the next question. If the line "Your combined service-connected evaluation is:" shows a number between 70 and 100, the person is eligible for the $150,000 exclusion and needs to annually reapply. If the number is less than 70 and the other two questions are "NOT INDICATED", the person is not eligible for any exclusion. In other words, reading from the bottom up, if the first two questions (totally and permanently disabled or higher level of disability) are "NOT INDICATED" or "NO," this final question must say at least 70 for the veteran to qualify.

312 The following pages are examples of this bottom-up technique. The final example shows a veteran with a 60 percent combined rating who is totally and permanently disabled and eligible for the maximum exclusion. There is also a flow chart outlining these steps. As always, if you have questions please do not hesitate to contact our division at proptax.questions@state.mn.us.

313 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES [Starting here, Are you considered to be totally and permanently disabled due to your service-connected disabilities ifand ONLY if- this is marked YES the veteran qualifies for the $300,000 exclusion. If this says NO or NOT INDICATED, move to the next question up regarding unemployability.] VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 100 Are you entitled to a higher level of disability due to being unemployable: NOT INDICATED Are you considered to be totally and permanently disabled due to your service-connected disabilities: YES Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, Veterans Service Center Manager

314 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 100 Are you entitled to a higher level of disability due to being unemployable: YES Are you considered to be totally and permanently disabled due to your service-connected disabilities: YES Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, [If YES is noted for Are you entitled to a higher level of disability due to being unemployable then this veteran is to be treated as 100 percent disabled, regardless of combined service-connected evaluation. Only if this says NOT INDICATED or NO does the disability combined rating need to be 70, 80, 90, or 100.] Veterans Service Center Manager

315 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 70 Are you entitled to a higher level of disability due to being unemployable: NOT INDICATED Are you considered to be totally and permanently disabled due to your service-connected disabilities: NOT INDICATED Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or fee-related benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, Veterans Service Center Manager [***This veteran is eligible for the $150,000 exclusion. The combined service-connected evaluation is 70 percent, and the veteran does not have individual unemployability. ]

316 DATE: MARCH 31, 2009 JOE E VETERAN 1 MAIN STREET BROWNSVILLE, PENNSYLVANIA VETERANS NAME: JOE E VETERAN This letter is a summary of benefits you currently receive from the Department of Veterans Affairs (VA). We are providing this letter to disabled veterans to use in applying for benefits such as state or local property or vehicle tax relief, civil service preference, to obtain housing entitlements, free or reduced state park annual memberships, or any other program or entitlement in which verification of VA benefits is required. Please safeguard this important document. This letter is considered an official record of your VA entitlement. Our records contain the following information: Personal Claim Information: Your VA claim number is: You are the veteran Military Information: Your character(s) of discharge and service date(s) include: HONORABLE, 27 APR 71 2 MAY 74 (You may have additional periods of service not listed above) Are you a former prisoner of war: YES VA Benefits Information: Service-connected disability: YES Your combined service-connected evaluation is: 60 Are you entitled to a higher level of disability due to being unemployable: YES Are you considered to be totally and permanently disabled due to your service-connected disabilities: YES Are you service-connected for loss of or loss of use of a limb, or are you totally blind in or missing at least one eye: YES Have you received a Specially Adapted Housing (SAH) and /or Special Home Adaptation (SHA) grant: YES Are you in receipt of non-service-connected pension: NO You should contact your state or local office of veterans affairs for information on any tax, license, or feerelated benefits for which you may be eligible. State offices of veterans affairs are available at If you have any questions about this letter or need additional verification of VA benefits, please call us at If you use a Telecommunications Device for the Deaf (TDD), the number is You may also visit our website at Sincerely yours, Veterans Service Center Manager ***Even though the combined evaluation is 60, the first question we regard ( Are you considered totally and permanently disabled ) says YES, and this veteran is eligible for the maximum exclusion.

317 MINNESOTA REVENUE Determining Disabled Veteran s Market Value Exclusion Based on the NEW Veteran s Affairs Letters Rev. 7/ Are you considered to be totally and permanently disabled due to your service-connected disabilities: Determining eligibility based on the new VA letters should be easier for counties. It may work best to start from the bottom and read your way up the VA Benefits Information section of the letter: Yes No or Not Indicated No further information is necessary! This individual is eligible for the maximum $300,000 exclusion and does not need to reapply. See notes. 2 Are you entitled to a higher level of disability due to being unemployable: 3 Yes No or Not Indicated Your combined service-connected evaluation is: No further information is necessary! This individual is eligible for the maximum $150,000 exclusion and must reapply annually. See notes. Notes: If the last question reads anything lower than 70, but the second question (Are you entitled to a higher level of disability ) is YES, the veteran is still eligible for the maximum $150,000 exclusion as a 100-percent disabled veteran. All other eligibility provisions (homestead, ownership, honorable discharge, service-connected disability, etc.) must be met. The County Veteran s Service Officer should be able to help answer any questions regarding unusual circumstances. 70, 80, 90, or 100 No further information is necessary! This individual is eligible for the maximum $150,000 exclusion and must reapply annually. See notes. Less than 70 No further information is necessary! This individual is not eligible. See notes.

318 MINNESOTA REVENUE MEMO Date: March 9, 2009 To: From: Subject: All County Assessors MICHAEL STALBERGER Information and Education Section New Procedures for Local Boards of Appeal and Equalization Training The Department of Revenue feels some changes will help improve the efficiency in how the Local Board of Appeal and Equalization (LBAE) course is offered. We feel these changes will reduce the confusion some attendees and counties have reported relating to the LBAE training process while still allowing for enough flexibility for the counties (and the regional reps who provide the training) to meet the individual needs of the LBAEs. The first procedural change will be a limit on the number of offerings of LBAE courses for which the department will provide instructors. The department will provide qualified instructors for up to 45 courses throughout the state annually. This will be allocated to up to five training opportunities in each MAAO Region per year. This change will require the region members to work together to select locations, dates, and times for these trainings with their regional reps. Look for additional information regarding this planning to come from your regional rep. You will be asked to select your five locations as a region sometime prior to May 1. This will allow the reps to plan accordingly, allow for all trainings to be posted timely to the department s website, and will ensure there are a variety of offerings statewide throughout the year. A second procedural change will be that pre-registration is to be required for all courses. In the past, there has been some confusion over the number of attendees and whether or not that merited a training offering. By requiring registration, both the counties and the department can get a better handle on the LBAEs being served, and it will ultimately help with record-keeping and administration. Going forward, training certificates will be given to attendees at the course. As such, registration will be required so that certificates can be printed prior to the date of training. Persons who arrive at the training without pre-registering will not be issued a certificate and will consequently have to register for, and attend, a different training session to become certified. When listing their annual regional course offerings, each region will indicate a host county for each offering. This county will assume registration and other logistical responsibilities and utilize the newly designed registration forms. This spreadsheet will be sent to the host counties once the region s schedule for course offerings has been set. The form will have fields similar to those below, and by gathering this information prior to attendance, onsite sign-in and course certification record-keeping will be greatly improved. Continued

319 The other logistical responsibilities that the host county will assume include reserving the room and making sure it is ready for the training offering, communicating registration information to the regional rep conducting the training, ing the final registration spreadsheet to the department prior to the training, and having a staff member available during the training offering, as well as other tasks. The following guidelines and expectations have been established to further explain the LBAE training process for counties and regions: By May of each year, each MAAO region, working in conjunction with their regional rep, will have set a tentative schedule for that year s LBAE offerings within their region (up to a maximum of five training offerings). o This schedule will provide for dates and locations for each course. o The training offerings will be scheduled between June 1 and November 30 at times that are compatible for the county, facilities, regional rep, and LBAE members. o This schedule will list the host county (the county sponsoring the course) and a contact person (name, number, ) for attendees to contact for registration. o This information will be shared with LBAEs within that region so they are aware of the opportunities and whether or not they need certification. o This information will be shared with the department so that the dates can be consolidated into one comprehensive training list. The host county will finalize arrangements for the facility (reservations, etc.) and will provide administrative support (answer questions and handle registrations) as the training date nears. o The registration will be recorded on the spreadsheet created by the department. o All course offerings will require registration. Attendees who do not register will not receive training certification. o The facility will have adequate room for the intended audience (meaning the host county can establish a course maximum in conjunction with the regional rep), as well as power source, projector screen or wall, etc. o The county contact will be available and able to answer questions regarding the training that LBAE members may have. The host county will provide (by ) a current list of registrants to the department seven business days prior to the course. o This current list will be a filled-in copy of the registration spreadsheet that the department created listing all who have registered to date. o The department (appraisal supervisor and regional rep) will determine if the course should be held (based on offering timing, location, number of registrations, etc.) and will respond within one business day to the host county. If the course is cancelled, the county will notify all registrants and make an effort to generally publicize the cancellation of the course. It is not likely that a course will be cancelled, but it may be necessary in rare circumstances. Continued

320 The host county will have at least one representative available at the start and end of the course, to help with questions, set up issues, and other logistic/administrative issues. The department will provide the instructor, course materials, and projector for the course. o The instructor will provide a printed sign-in sheet of all registered participants for final certification purposes and will take possession of this sheet at the close of the training. o The instructor will provide certificates for registered persons at the close of the training. o The instructor will provide evaluation sheets and will take possession of these sheets at the close of the training. Additionally, the department will coordinate additional catch up courses in March (a total of two additional courses in even years and four additional courses in odd years or as necessary) at various locations throughout the state. Tentatively, Mankato, Maple Grove, St. Cloud, and Bemidji have been selected as locations for these trainings due to the facilities available and their geographic locations. The purpose of the catch up courses has not changed; they are solely provided to allow an alreadycertified LBAE to retain certification due to the loss of its trained LBAE member due to loss of election, resignation, etc. These offerings will be arranged and sponsored by the department. The department may ask for volunteer host counties for these meetings to help make room reservations and handle some logistics for the meeting. These new procedures have been implemented starting with the catch up courses offered by the department during the Spring of Each MAAO region will be expected to implement this process by having their region s dates for the 2009 offerings established by May If you have any questions or concerns, please share them with your regional rep. They will help answer them or consolidate them and bring them to the attention of the rest of the department.

321 Memo Date: February 6, 2009 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section Wind tower valuation and classification It has come to our attention that some clarification might be needed on the classification and valuation of wind tower sites pursuant to Minnesota Statutes, section , subdivision 22. This subdivision states the following: All real and personal property of a wind energy conversion system as defined in section , subdivision 2, is exempt from property tax except that the land on which the property is located remains taxable. If approved by the county where the property is located, the value of the land on which the wind energy conversion system is located shall be valued in the same manner as similar land that has not been improved with a wind energy conversion system. The land shall be classified based on the most probable use of the property if it were not improved with a wind energy conversion system. The full stop before the last sentence provides that only the valuation methodology is up to county discretion. The classification must be based on the most probable use of the property if it were not improved with the wind energy conversion system. For example, a wind tower site in the middle of a field of corn would properly be classified as agricultural, but it may be valued as commercial or other type of property at the county s discretion. Only the valuation methodology is allowed some discretion by the county. If you have any questions or concerns, please contact our division at proptax.questions@state.mn.us.

322 BULLETIN Date: September 29, 2008 To: From: Subject: All Assessors Property Tax Division Special Homestead Classification: Class 1b Blind/Disabled Homesteads Introduction Minnesota Statutes , subdivision 2, declares that counties will become responsible for the filing and administration of class 1b blind/disabled homestead property after October 1, After October 1, 2008, property owners seeking classification and assessment of the owner s homestead as class 1b property will file an application (prescribed by the Department of Revenue) to the county assessor, not the state. This bulletin is meant to facilitate that transition. It will describe the 1b classification, explain the application process and how it should be administered, provide answers to frequently asked questions, provide examples of tax calculations, and provide the appropriate form for property owners to use when applying for the 1b classification. This manual takes into account recent legislative changes to class 1b, which removed the language concerning paraplegic veterans, created new spousal provisions, and changed the amount of the benefit. What is Class 1b property? Minnesota Statutes, section , subdivision 22, paragraph (b) provides a reduced class rate for homestead property of any person who qualifies as blind or as permanently and totally disabled. The class 1b blind/disabled homestead is different than other homesteads or classifications because the qualification is specific to a person (and the person s disabling condition), rather than being predicated on the use of the property. As a result, the class 1b homestead follows the blind/disabled individual from one property to another. Class 1b is not an exemption from property taxes; it is a reduction in taxes. Administration Process Timeline: October 2, 2007 October 1, 2008: Class 1b homestead applications (Forms PE12 and PE13, Special Homestead Classification) are due by October 1 st for taxes payable the following year. Applications received from October 2, 2007 through October 1, 2008 will be processed as usual by the Department of Revenue. Any applications received after October 1 st will become the responsibility of the county. 1

323 After October 1, 2008 Applicants should be notified of their eligibility after the county receives the application. Approved applications will be for assessment year 2009, taxes payable If the application is approved and the taxpayer is accepted into the program, the taxpayer does not need to apply again unless there is a change in eligibility. There is no annual application. Who qualifies for class 1b: Minnesota Statutes, section , subdivision 22, paragraph (b) states: Class 1b property includes homestead real estate or homestead manufactured homes used for purposes of a homestead by (1) any person who is blind as defined in section 256D.35, or the blind person and the blind person s spouse; (2) any person who is permanently and totally disabled or by the disabled person and the disabled person s spouse; or (3) the surviving spouse of a permanently and totally disabled veteran homesteading a property classified under this paragraph for taxes payable in 2008 [2007 assessment]. Property is classified and assessed under clause (2) only if the government agency or income-providing source certifies, upon the request of the homestead occupant, that the homestead occupant satisfies the disability requirements of this paragraph, and that the property is not eligible for the valuation exclusion under subdivision 34 [market value exclusion on homestead property of disabled veterans] Please note: The grandfather provision for surviving spouses provided in clause (3), is only applicable to surviving spouses who were receiving the 1b class for taxes payable in Surviving spouses of paraplegic veterans who did not qualify for this provision (class 1b) for taxes payable in 2008 cannot receive the 1b classification. The onset of a person s disability or blindness must have occurred on or before June 30 of the year they are filing for the special homestead classification. If the onset of the disability or blindness occurs after June 30, an applicant will not be approved until the next year. Blind: Blind, as determined in Minnesota Statutes, section 256D.35, means the condition of a person whose central visual acuity does not exceed 20/200 in the better eye with correcting lenses, or, if visual acuity is greater than 20/200, the condition is accompanied by limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees. When applying for class 1b an eye doctor s report or letter giving detail of the person s sight must be included. A statement by the individual is not sufficient. Disabled: For the purposes of 1b classification, permanently and totally disabled describes a condition which is permanent in nature and totally incapacitates a person from working at an occupation which brings the person an income. An individual who is permanently and totally disabled must be receiving payments because of their disability. Payments from a qualifying agency are used as evidence of a disability when determining whether or not a person is eligible for a disabled homestead. However, only providing evidence of a payment is not sufficient. A letter from a qualifying agency stating that an individual is permanently and totally disabled and 2

324 is eligible to receive disability payments is required. The following sources are qualifying agencies and commonly pay disability payments (any documentation received must specify that the person is permanently and totally disabled): Social Security Administration Veterans Administration Public or private pension plans Welfare Supplemental Security Income Workers Compensation Insurance program If you receive information attesting to disability from the Veterans Administration, please verify whether the disability is service-connected. If the disability is service-connected, the veteran may qualify for the Disabled Veterans Homestead (Market Value Exclusion program). If the disability is not service-connected, but the veteran is still permanently and totally disabled, the class 1b benefits should be applicable. Please Note: Applicants receiving the Disabled Veterans Value Exclusion are not eligible for the 1b classification. There are no longer income tests and requirements, but to be eligible a person must have a disability income and must be able to provide proof of such income before class 1b (disabled) homestead is granted. Please remember that any Social Security Numbers, and income and medical information received from class 1b applicants are private data and should be treated as such. Surviving Spouses of paraplegic veterans: Before law changes in 2008, paraplegic veterans were eligible for the class 1b homestead if they were homesteading specially modified housing units. If a veteran qualifying under this scenario predeceased his/her spouse, and the spouse was the owner and homesteader of the modified property, the spouse would continue to receive the reduced classification until there was a change in ownership. When the Disabled Veterans Market Value Exclusion was signed into law, the class 1b homestead for paraplegic veterans was removed from the law. However, the law does provide for the continuation of 1b classification for the surviving spouses of paraplegic veterans who were qualifying for the 1b homestead for taxes payable in In other words, if a surviving spouse of a paraplegic veteran had been receiving class 1b blind/disabled homestead for taxes payable in 2008, he/she shall continue the 1b homestead classification so long as he/she owns, occupies, and homesteads the speciallymodified housing unit. Surviving spouses of paraplegic veterans who did not qualify for this provision (class 1b) for taxes payable in 2008 cannot receive the 1b classification. How does it work? If, after applying, the county assessor certifies that the class 1b homestead applicant satisfies the necessary requirements, the applicant will receive a reduction in taxes as follows: First $50,000 market value has a net class rate of.45 percent of its market value. The remaining market value has a class rate using the rates for residential or agricultural homestead property (whichever is appropriate). When the 1b classification is granted to a qualifying person, there is no need for reapplication so long as the qualifying person continues to homestead the property. If the qualifying person 3

325 moves to a new location, he/she must notify the county assessor of the change and the class 1b status will move with the person to a new homestead. Upon death, the 1b classification expires as of the next assessment and does not extend to a surviving spouse or relative. The county assessor must be notified within 30 days if a property qualifying for a special homestead is sold or if there is a change in occupancy, or there is a change in status or condition of the occupant that would no longer warrant the special homestead. If a property owner fails to notify the assessor of such a change within 30 days the property owner will be subject to the penalties provided in Minnesota Statutes , subdivision 13 (fraudulent homestead penalties). The property will also lose its current class 1b classification. In terms of persons qualifying under the provision of being blind or disabled, the qualifying person may own and occupy the home with a spouse and receive a full benefit. For joint ownership with someone other than a spouse, fractional benefits will apply to reflect the fractional ownership. Relative Homestead: To qualify as class 1b (blind or disabled) on a relative homestead, the qualifying relative occupying the home must be the qualifying blind/disabled person. If a blind/disabled person owns a home and a non-blind/disabled relative is the one that occupies the home, it does not qualify for a class 1b homestead. Class 1b cannot be granted to blind/disabled minor children living with their parents. The homestead is granted to the parents based on their ownership and occupancy of the property. It is not appropriate to grant the reduced class rate for class 1b based on the blindness/disability status of a minor child who lives with them. Class 1b Blind/ Disabled Homestead Examples Situation One: A property is receiving a special homestead (blind/disabled) on January 2, On June 1, 2008, new owners purchase the property and file for a full conventional homestead. The assessor should remove the special homestead and grant a full conventional homestead for assessment year Situation Two: A property is receiving a regular residential homestead on January 2, On June 1, 2009, a blind/disabled person purchases the property and files for a special homestead. The assessor should grant the special homestead (class 1b) for assessment year Situation Three: A person is receiving the 1b class on their home. The person decides to sell his home and buy a new home a few miles away. The property owner must notify the county assessor of the change and the 1b class should be removed from the original property and extended to the newly acquired property. Situation Four: A person receiving the 1b class passes away mid-year. The 1b class should be left on the property for that assessment year and be removed the next assessment year. However, if the property were sold in the interim (between the death and the next assessment date) the 1b class should be removed from the property. Situation five: A person owns a property and the property is occupied by a blind/disabled relative. The owner does not occupy the property. This property is eligible for the 1b 4

326 classification. The blind/disabled person occupies the property as a homestead and is a qualifying relative. Frequently Asked Questions 1.) If a property owner receiving the 1b class dies, do the homestead benefits extend to the surviving (non-blind/disabled) spouse? If not, when does the classification change? Answer: No. The 1b class expires with the death of the qualifying property owner. The classification should be removed for the following assessment. For example, if a qualifying individual dies after January 2 nd, 2008, the property should lose the 1b class for the 2009 assessment for taxes payable ) What is the benefit received by a disabled person who owns a home with a spouse? Does it differ from a blind person who owns a home with a spouse? Answer: For either blind or disabled persons who own and occupy a home jointly with their spouses, the full benefit amount is retained. They are still eligible for a reduced class rate on the first $50,000 of the home s taxable market value. 3.) A person is receiving a class 1b homestead on her home and she owns another home that is occupied by a relative. Is the second home eligible for the class 1b homestead as well? Answer: No. In order to qualify as class 1b on a relative homestead the relative living in the home must be the person who qualifies as blind/disabled. If a non-blind/disabled person owns a home which is occupied by a blind/disabled relative, the home occupied by the qualifying blind/disabled person is eligible for a class 1b relative homestead. 4.) A person is certified as being blind in September of 2009 and files for a class 1b special homestead (blind) with the county assessor before October 1 st, Should the person be approved for taxes payable the next year? Answer: No. In order to be approved for taxes payable the next year, the onset of blindness must have been on or before June 30 of the current year (the year they file for the special homestead). The application would be held for approval until the 2010 assessment (taxes payable 2011). See next page for an example of tax calculations on class 1b property. 5

327 Example of Tax Calculations on Class 1b Property Example: A person qualifying for class 1b residential homestead is the sole owner of a residential homestead valued at $200,000. Calculate the Taxes payable in 2008 assuming a net tax capacity tax rate of %. Estimated Market Value = $200,000 Taxable Market Value = $200,000 Apply 1b class rate of 0.45% to the first $50,000. $50,000 X 0.45% = $ The remainder of the value is calculated according to the class rate applied to residential homesteads (1a). The first $500,000 of 1a property has a tax rate of 1.00%. $150,000 X 1.00% = $ Add the two results to determine the net tax capacity. $ $ = $ This results in a net tax capacity of $ Multiply the net tax capacity with the net tax capacity tax rate to calculate taxes payable in 2008 (net tax capacity tax). $ X % = $ Applications The Department of Revenue is providing the attached applications that should be used by all counties when administering classification of 1b blind/disabled homesteads. The applications can be customized to fit your county s needs (logo, address, etc.) but the general format should not be altered. The application should look and function the same from county to county. Similar to in the past, by November 1 the department will send each individual county a list of names of the people qualifying for the 1b blind/disabled homestead for assessment year We will also be copying/scanning the applications of these people and providing them to each county within the next few months for use for the 2009 assessment, taxes payable These applications serve as a source of reference and will enable you to effectively administer the 1b class and respond to any questions that may arise in the future. After October 1, any applications or requests for the 1b classification received by the department will be forwarded to the appropriate county. 6

328 If you have any questions or comments regarding the 1b classification, please submit them in writing to or you may call: Drew Imes State Program Administrator Property Tax Division Phone: HIPAA Health Insurance Portability and Accountability Act: Privacy Rule A question has arisen concerning certain privacy rules contained within the federal Health Information Portability and Accountability Act (HIPAA) and how these privacy rules may interact with the Disabled Veteran s Market Value Exclusion and the Blind/Disabled Special Homestead. The main concern was that the HIPAA privacy rules would not allow assessors to make any reference to a person s disability status on the person s tax statements and other tax records that might be viewed by the public. This would have necessitated keeping two separate sets of records; one set for the assessor s office only, and one set that would have any reference to the taxpayer s physical condition removed, which would be viewable to the public. For your office to be subject to the HIPAA regulations, it would need to have been declared a covered entity under the HIPPA privacy rules. After discussions with legal professionals and other state agencies, the department has determined that assessors offices are most likely not covered entities under the HIPPA privacy rules. Therefore property tax information relating to the blind/disabled classification and disabled veteran s exclusion is public information. However, each county has a privacy officer or data practices specialist who will know what departments in that specific county have been declared to be covered entities and therefore subject to HIPAA regulations. You should check with your county s specialist to determine if your office is regulated by HIPAA privacy rules. In the unlikely event that your office is a covered entity and subject to HIPAA regulations, you may be limited as to what information you can make public. If this is the case, you may contact the department in order to determine the best way to move forward. 7

329 MINNESOTA REVENUE MEMO Date: September 15, 2008 To: From: Subject: All Assessors Drew Imes, State Program Administrator Information and Education Section HIPAA Privacy Rules A question has arisen concerning certain privacy rules contained within the federal Health Information Portability and Accountability Act (HIPAA) and how these privacy rules may interact with the Disabled Veteran s Market Value Exclusion and the Blind/Disabled Special Homestead. The main concern was that the HIPAA privacy rules would not allow assessors to make any reference to a person s disability status on the person s tax statements and other tax records that might be viewed by the public. This would have necessitated keeping two separate sets of records; one set for the assessor s office only, and one set that would have any reference to the taxpayer s physical condition removed, which would be viewable to the public. For your office to be subject to the HIPAA regulations, it would need to have been declared a covered entity under the HIPPA privacy rules. After discussions with legal professionals and other state agencies, the department has determined that assessors offices are most likely not covered entities under the HIPPA privacy rules. Therefore property tax information relating to the blind/disabled classification and disabled veteran s exclusion is public information. However, each county has a privacy officer or data practices specialist who will know what departments in that specific county have been declared to be covered entities and therefore subject to HIPAA regulations. You should check with your county s specialist to determine if your office is regulated by HIPAA privacy rules. In the unlikely event that your office is a covered entity and subject to HIPAA regulations, you may be limited as to what information you can make public. If this is the case, you may contact the department in order to determine the best way to move forward. If you have any questions or comments concerning this information, please direct them to proptax.question@state.mn.us.

330 Memo Date: September 10, 2008 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section Clarification of class 1b blind/disabled properties On July 16, 2008, the Department of Revenue issued a memo concerning class 1b blind/disabled homestead on properties owned solely by a sighted or non-disabled spouse. That memo advised that the qualifying blind/disabled person must be listed as an owner on the deed in order for the 1b classification to be accepted. Since that time, it has come to our attention that there are multiple properties in the state which had been granted the 1b classification prior to that memo, but which were owned solely in the nonqualifying spouse s name. While ownership is a necessity for all future applications, we see no reason to disenfranchise property owners who have already been granted the 1b classification on property occupied by a blind/disabled person, but which is owned solely by that blind/disabled person s spouse. We recommend that any property previously classified as 1b prior to the July 16 memo under such a scenario not lose that classification, but that all future applications must meet the necessary requirements. If you have any questions you may direct them to our division at proptax.questions@state.mn.us.

331 MINNESOTA REVENUE MEMO Date: August 20, 2008 To: From: Subject: All County Assessors Information and Education Section Property Tax Division Monosloped Roofs This memorandum will provide clarification for Minnesota Laws 2008, Chapter 154, Article 2, Section 5 which exempts certain monosloped roofs. There has been some concern from assessors that the language of the legislation could inadvertently extend a property tax exemption to various farming structures, including barns and loafing sheds. The following information and recommendations should help assessors in administering this exemption starting retroactively with the 2008 assessment. H.F Language The following is the pertinent language relating to the property tax exemption of monosloped roofs. Sec. 5. Minnesota Statutes 2006, section , is amended by adding a subdivision to read: Subd. 87. Monosloped roofs for feedlots and manure storage areas. A monosloped, single-pitched roof installed over a feedlot or manure storage area to prevent runoff is exempt. EFFECTIVE DATE. This section is effective for assessment year 2008 for property taxes payable in 2009, and thereafter. A literal reading of this language appears to be rather specific in extending the exemption. There are construction requirements (monosloped, single-pitched roof), site requirements (over feedlot or manure storage area), and use requirements (prevent runoff). Only the roof itself and any supporting structure will be exempt from property taxation; sidewalls and other improvements will remain taxable. Administration Guidelines In order to qualify for this specific exemption, a construction/site/use test must be met: Construction structure must be a monosloped (single-pitch) roof; Site roof must be over a feedlot or a manure storage area; and Use must actually be in place to prevent runoff. Assessors should adhere to a strict and narrow interpretation of the statute. This coincides with the interpretation for other exemptions. In Minnesota, taxation is the rule and exemption is the exception.

332 Monosloped Roof Construction Characteristics Some of the concern regarding the monosloped roof property tax exemption may relate to a lack of understanding of the characteristics of a monosloped roof. A monosloped roof is more commonly known as a skillion roof in other parts of the country and the world. A skillion roof is defined as a monoslope (single pitched) roof without a ridge or peak, providing the main roof or part of a roof. Monosloped Roof Site Requirements The new language is clear in stating the exemption only applies to roofs over feedlots or manure storage areas. Feedlots are part of livestock operations that confine animals in such a manner that manure accumulates and vegetation cannot be maintained. The Minnesota Pollution Control Agency (MPCA), or some delegated counties, maintain a list of registered feedlots. Any registered feedlot would meet the site requirement test. Other feedlots meeting the traditional definition would also meet the site requirement test. Manure storage areas are where animal manure or process wastewaters are stored or processed. They can be a short-term stockpile in which the manure must be removed and land-applied within one year of the date when the stockpile was formed. Short-term sites do not need a permit if the owner is not the owner of the feedlot. A permanent stockpile allows for storage for over a year. Construction of permanent sites containing manure from 300 to 999 animal units requires a construction short form permit. A NPDES/SDS permit is required if the site contains manure from 1,000 or more animal units. The MPCA or a delegated county pollution control office would have this information. Any permitted storage area would meet the site requirement test. Other storage areas meeting the traditional definition that do not require a permit could also meet the site requirement test. Monosloped Roof Use Requirements The monosloped roof must prevent runoff in order to qualify for exemption. In almost all cases, the main function of any roof is to provide shelter from the elements, so this requirement would almost always be met. Still, the assessor should verify that runoff is being prevented.

333 Other Structures Qualifying for Exemption Other structures could still qualify for exemption under Minnesota Statutes, Section , subdivision 10, which allows the Commissioner of Revenue to exempt personal and real property that is used primarily to control pollution as part of an agricultural operation. For this, there is a more rigorous application process. The property owner must request and apply for exemption to the commissioner and certain conditions must be met. The following is a table comparing the two exemption provisions: subd 10 Pollution Control subd 87 Monosloped Roofs Air, Water, Land Type of Pollution Prevented Water Runoff Any Real or Personal (used primarily for pollution control) Type of Property Any qualifying Monosloped Roof (only the roof and supports) Yes Agricultural Operation Required? Yes No (as long as it is an ag operation) Location Restrictions? Yes (feedlot or manure storage) Yes Application Required? No No State Feedlot Definition Met? Yes Yes Could Require Input from MPCA? Yes Commissioner Who Exempts? County Assessor As Long as Issued Order is in Effect How Long is it Exempt? As Long as Statutory Requirements are Met (a part of the 6 yr exempt review) Summary The legislation exempting monosloped roofs over feedlots and manure storage areas seems clear and concise in its written form. There appears to be some concern in the practical administration of the law, however. The Property Tax Division is prepared to provide direction and guidance to assessors in order to ensure uniform assessment and exemption throughout the state. By adhering to the definition of the monosloped roof design and the actual use and/or MPCA or county registration of the feedlot or manure storage area, the property tax exemption should be properly and uniformly applied.

334 The following points are helpful to keep in mind when assessing monosloped roofs: Assessors should use the literal definition for a monosloped roof. It is a single-pitched roof, also called a skillion roof, and does not have a ridge or peak. Only monosloped roofs over feedlots or manure storage areas are eligible for exemption. Assessors should verify this requirement, either through proof of registration/permit for the feedlot or the manure storage area or through verifying the actual use. Assessors should consult with the county s feedlot official or the MPCA if they have any questions regarding the permitting or actual use of a feedlot or manure storage area. Assessors should consider the purpose of the monosloped roof; it must actually prevent runoff in order to qualify for property tax exemption. Assessors may only exempt the monosloped roof if it meets all requirements of this new legislation. Only the monosloped roof and support structure qualify for the exemption to the extent it meets the three requirements. Sidewalls or other improvements do not qualify for exemption. If you have any further concerns or questions regarding the property tax exemption for monosloped roofs over feedlots or manure storage areas, please contact us at proptax.questions@state.mn.us.

335 Memo Date: July 16, 2008 To: From: Subject: All County Assessors ANDREA FISH, State Program Administrator Information and Education Section Class 4c(10), Seasonal Restaurant on a Lake Class 4c(10), seasonal restaurant on a lake, was enacted effective for this assessment year (2008). The purpose of this memo is to outline this new property type for you so that you are able to accept declarations. Declaration forms are included with this memo. To qualify for 4c(10) classification, a property must have the following characteristics: the restaurant and up to 3 acres of property must be located on a lake; it must not be devoted to commercial purposes for more than 250 days or at least 60 percent of its gross annual receipts (including alcohol sales but excluding gift shop sales) must be from business conducted during four consecutive months; the property owner must submit a declaration annually to the assessor by February 1 to be eligible for the same assessment year, except for 2008 for which the declaration deadline has been extended to September 1; and the declaration information must be based on sales from the previous year (in other words, declarations received by February 1, 2009 will contain sales information from the 2008 calendar year). Seasonal restaurants on a lake that qualify for the 4c(10) classification will not be subject to the state general tax. The class rate for taxes payable in 2009 is 1.25 percent. If you have any questions, please do not hesitate to contact our division at proptax.questions@state.mn.us. Please feel free to use the attached declarations immediately.

336 MINNESOTA REVENUE MEMO Date: July 16, 2008 To: From: Subject: County Assessors Drew Imes, State Program Administrator Information and Education Section The new Class 2c Managed Forest Land Minnesota Laws 2008, chapter 366 (House File 3149), creates a new classification, which has been given the name Class 2c Managed Forest Land, that provides qualifying land with a class rate of 0.65 percent for the 2008 assessment. This classification is made available to unplatted property that is rural in character, not used for agricultural purposes, and not improved with a structure. (A minor ancillary nonresidential structure does not disqualify the property.) A parcel must have at least 20 acres being enrolled in order to qualify for the classification, and total enrolled acreage is limited to 1,920 acres statewide per taxpayer. The property must have a qualifying forest management plan (forest stewardship plan) in place that was developed by an approved forest management plan writer within the last ten years. The forest management plan must meet the same requirements of forest management plans prescribed to property enrolled in the SFIA program (290C), but the actual property cannot be enrolled in the SFIA program. Minor ancillary nonresidential structure and split classification The department has defined minor ancillary nonresidential structures as sheds or other primitive structures, the aggregate size of which are less than 300 square feet that add minimal value and are not used residentially; provided that the occasional overnight use for hunting or other outdoor activities shall not preclude a structure from being considered a minor, ancillary structure. If any structure or group of structures totals 300 or more square feet, or if any structure is used residentially on more than an occasional basis, or if there is an improved building site that provides water, sewer or electrical hook ups for residential purposes, the property must be split classed according to the appropriate use or uses of the property. A property that is improved with a structure that is not a minor ancillary nonresidential structure must be split-classified, with at least 10 acres being assigned to, and centered on, the structure. If a property must be split-classified and the resulting forest land is less than 20 acres, the property is not eligible for the classification. We envision that there will be instances when parcels containing forest land will have more than one use. In these circumstances, the land covered under the forest management plan should split-classified as 2c (if application has been made) and the remaining land should be classified according to its use. For example: A 360 acre parcel containing 200 acres of agricultural land and 160 acres of forest covered under a forest management plan should be split-classified, with 200 acres being classified as agricultural and 160 acres being classified as 2c Managed Forest Land (if application has been made).

337 Class 2c Managed Forest Land July 16, 2008 Page 2 Applications Property owners must complete an application by September 1, 2008 and provide it to the county assessor to verify that the property qualifies for the reduced class rate. Current law does not provide for an application deadline. We will be seeking legislation establishing a May 1 application deadline for future years. A copy of an applicant s forest management plan must be attached to their application. Property owners must follow the guidelines prescribed by the forest management plan if they wish to continue to receive the reduced class rate. The DNR has told us that forest management plans will eventually list the number of acres eligible for 2c classification. However, it will still be up to the assessor to remove 10 acres for any structure or use that does not qualify as a minor ancillary nonresidential structure. The Department of Revenue is providing the counties with the attached application to be distributed to taxpayers interested in the 2c Managed Forest Land classification. In addition, we will continue to provide counties with a list of parcels enrolled in the SFIA program. Assessors must verify that any parcels receiving the reduced classification rate for Class 2c Managed Forest Land are not enrolled in the SFIA program. The commissioner of natural resources (DNR) will provide the county assessor with annual verification information by sending an annual list of names of property owners who have a registered forest management plan in a particular county. In order to continue to qualify for the 2c Managed Forest Land Classification, a property owner s name must be listed on the DNR s annual list of registered forest management plans. If you have any questions or comments concerning this information, please direct them to proptax.question@state.mn.us.

338 MINNESOTA REVENUE MEMO Date: November 7, 2008 To: From: Subject: County Assessors Drew Imes, State Program Administrator Information and Education Section Class 2c Managed Forest Land The department is continuing to try to correctly implement the new law changes contained in both omnibus tax bills. One of the new laws that has required a great deal of interpretation is the 2c Managed Forest Land classification. Recently, we have been asked by several assessors if the acreage amount necessary to meet the 20 acre minimum has to be contained on each parcel (parcel-by-parcel basis), or should the acreage be aggregated over the entire contiguous land mass. Our original inclination was to require each parcel to contain 20 or more acres to qualify. However, upon further reflection, we are recommending that the appropriate method for determining eligible 2c acres should be based on the sum of all eligible acres on contiguous parcels, not on a parcel-by-parcel basis. For example, the 20 acre requirement could be met by adding 5 acres of eligible land from 4 different but contiguous parcels (even if the eligible land is not actually contiguous). Although the qualifying forest land may not be contiguous, it must be covered under the same forest management plan and have the same ownership to qualify for the 2c classification. Here are some of the reasons behind our recommendation: This method more closely resembles what is being done for SFIA. Many forested acres cross over parcel lines but are covered under the same forest management plan. The DNR issues the same forest management plan for noncontiguous pieces of forested land. Statute simply states that 20 acres of land covered under a forest management plan qualifies. The DNR believes that the intent was to include all acres covered under a forest management plan, even if those acres are not contiguous. Therefore, noncontiguous forest land covered under the same forest management plan (must be at least 20 acres total), with the same ownership, and located on contiguous parcels can qualify for the 2c classification. Please see examples on the attached document titled 2c Managed Forest Land Examples for further clarification.

339 MINNESOTA REVENUE Date: November 7, c Managed Forest Land Examples The minimum acreage requirement (20 acres) to qualify for 2c is based on contiguous parcels and the sum of all land covered under the same forest management plan (FMP) located on those contiguous parcels, not a parcel-by-parcel basis. In other words, if there are at least 20 acres of land with the same FMP located on or across contiguous parcels, those acres can qualify for the 2c classification, even if that means that there are 4 contiguous parcels with 5 acres of FMP land on each parcel. When determining eligible acres we would recommend you follow these steps: 1. Determine what parcels are contiguous and under the same ownership. 2. Determine how many acres of FMP land (must be the same FMP) there are on the contiguous parcels 3. If the FMP land adds up to twenty acres, all contiguous parcels and all eligible FMP land located on those parcels can qualify for the 2c classification. Basically, the department is considering land covered under the forest management plan as eligible acres for the 2c classification. However, acres enrolled in SFIA do not qualify. Some other land in the FMP might not qualify, such as open water greater than 3 acres in size or CRP land. The determination of eligible acres should be done on a case by case basis. See examples on following pages 1

340 MINNESOTA REVENUE Assume all examples have the same ownership and same forest management plan. Example 1: Three contiguous parcels covered under the same forest management plan. Parcel 1 Parcel 2 Parcel 3 Total acres 15 acres in plan 6 acres in plan 40 acres in plan 61 acres in plan Solution 1: Parcel 1, 2, and 3 would qualify because together they contain over 20 acres of land covered under a forest management plan, and all three parcels are contiguous. All 61 acres in the plan qualify. 2

341 MINNESOTA REVENUE Example 2: Two contiguous parcels covered under the same forest management plan. Parcel 1 Parcel 2 Total acres 10 acres in plan 10 acres in plan 20 acres in plan Solution 2: Both parcel 1 and 2 qualify for the 2c classification; there are 20 acres of land with an FMP and the parcels are contiguous. All 20 acres in the plan qualify. 3

342 MINNESOTA REVENUE Example 3: Two contiguous parcels covered under the same forest management plan. Parcel 1 Parcel 2 Total acres 40 acres in plan 3 acres in plan 43 acres in plan Solution 3: Both parcel 1 and 2 qualify. There are over 20 acres of FMP land located on contiguous parcels. Even though Parcel 2 only has three acres in the plan it qualifies because it is on a contiguous parcel and has the same forest management plan. 4

343 MINNESOTA REVENUE Example 4: Two contiguous parcels covered under the same forest management plan. Parcel 1 Parcel 2 Total acres 15 acres in plan contains a structure 10 acres in plan 25 acres in plan Solution 4: Both parcel 1 and 2 would not qualify for the 2c classification. 10 acres must be removed and assigned to the structure, leaving only 15 acres eligible for the 2c classification. There must be at least 20 acres eligible for the 2c classification in order to qualify. Zero acres in the forest management plan would qualify. 5

344 MINNESOTA REVENUE Example 5: Four contiguous parcels covered under the same forest management plan. Parcel 1 Parcel 2 Parcel 3 Parcel 4 Total acres 20 acres in plan 10 acres in plan 15 acres in plan 17 acres in plan 62 acres in plan Solution 5: All parcels (1,2,3, and 4) would qualify for the 2c classification. All four parcels are contiguous. The sum of the acres covered under a FMP is at least 20. Even though the FMP land on parcel four is not contiguous to the other FMP land, the parcel is contiguous to the other parcels (and has the same FMP), so it qualifies. All 62 acres in plan qualify. 6

345 MINNESOTA REVENUE Example 6: One parcel with forest management plan Parcel 1 Total acres 20 acres in plan (two noncontiguous 10 acre tracts) 20 acres in plan Solution 6: Parcel 1 would qualify. The parcel contains 20 acres of land with an FMP. The FMP land is not contiguous, but it is on the same parcel (or contiguous parcels) and is at least 20 acres. All 20 acres in the plan qualify. 7

346 MINNESOTA REVENUE Example 7: Four contiguous parcels covered under the same forest management plan. One noncontiguous parcel with same forest management plan. Parcel 1 Parcel 2 Parcel 3 Parcel 4 Parcel 5 Total acres 10 acres in plan 4 acres in plan 15 acres in plan 15 acres in plan 14 acres in plan 58 acres in plan Solution 7: Parcels 1, 2, 3, and 4 would qualify. Parcel 5 would not qualify. Parcel 5 is not contiguous to the other parcels and does not contain 20 acres of FMP land. If parcel 5 had 20 acres of FMP land, it could qualify on its own. 44 acres in the plan qualify. 8

347 Memo Date: July 16, 2008 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section Class 1b blind/disabled homestead Minnesota Laws 2008, chapter 154, article 2, section 11 has changed how we extend the class 1b blind/disabled homestead to properties owned by a disabled person or a disabled person and the disabled person s spouse. New legislation allows for the disabled property owner to receive the full benefit of a reduced class rate on the first $50,000 of the property s value if they own the home with a spouse (prior to the law change, the reduced class rate applied to the first $32,000 of the property s value). Before these new changes, the law required that properties owned by a disabled person and the disabled person s spouse receive a fractional benefit of a reduced class rate on the first $16,000 of the property s value (reflecting half of the $32,000 benefit at that time). For blind persons, the benefit has always been the maximum amount eligible whether owned by the blind person solely or the blind person and the blind person s spouse. It was unclear as to why the law made a distinction between blind and disabled persons in terms applying this classification. Because such a distinction was made, the only interpretation possible was that the 1b homestead classification should be treated differently in terms of blind persons and disabled persons who own a home jointly with a spouse. This distinction led the department to advise, on one or more occasions, that the 1b blind homestead could be extended in cases where the property was owned solely by the blind person s sighted spouse, but which was homesteaded by the qualifying blind person. That opinion was in error. While for homesteading purposes spouses are treated as one unit, this is not the case for application of benefits that depend on the status of the qualifying person. For the application of the 1b blind/disabled homestead, the blind/disabled person must be on the title as an owner of the property in order to qualify. If you have any questions concerning the application of this program, please do not hesitate to contact us at proptax.questions@state.mn.us.

348 MINNESOTA REVENUE MEMO Date: June 30, 2008 To: From: Subject: County Assessors and County Auditors Information and Education Section Property Tax Division 2008 Legislative Changes to the PE20 Form (CRV) and Sales Review Process This memorandum will provide county assessors and county auditors with important information regarding changes related to the PE20 - Certificate of Real Estate Value (CRV) and the sales review process resulting from the recently-concluded legislative session. Since county auditors serve an important function in the CRV process, we are asking county assessors to share this information with them. Introduction The first tax bill of this past legislative session, Chapter 154, included provisions related to the filing, administration, and analysis of CRVs. The changes require those filing a certificate to provide additional information, including any involvement with a 1031 exchange. Certain filers also no longer need to provide their Social Security Number when involved in specific conveyances. Finally, the new legislation describes current practice for assessors, requiring indicated changes to a property s use to be accounted for in the analysis of the sale. These changes will be discussed individually in detail. Legislative Changes Legislative Change: Analysis and Review of Sales (For additional information, see Chapter 154, Article 2, Section 2) This legislation requires the assessor, when completing the assessment sales ratio study, to take into account any change in the purchased property s use when it results in a change of classification. The assessor is directed to consider this change as soon as practicable. It does not apply to changes to homestead or nonhomestead status. In essence, this legislation reiterates current assessor practice. Assessors, during the course of sales review and analysis, should already be considering the impact of property use (classification) changes as indicated on the CRV and verifying that with the actual use of the property on the assessment date. Assessors and the Department of Revenue (DOR) will continue to reject most sales resulting in use changes in the ratio studies. This change was effective the day following final enactment. Continued

349 Legislative Change: CRV Filing Requirements (For additional information, see Chapter 154, Article 2, Section 6) This legislation requires CRV filers to indicate any proposed change in use of the property that may result in a change in the property s classification on the CRV. This information will be utilized by assessors and DOR when verifying sale eligibility for the ratio studies. The legislation also requires the CRV to be changed so filers can indicate if the property acquisition was part of a like-kind exchange under section 1031 of the Internal Revenue Code of 1986 as amended through December 31, These transactions are more commonly known as 1031 Exchanges and are more common for certain property types (commercial and agricultural land). The PE20 Form has been revised to account for this legislative change and is currently being printed. A new checkbox has been added in Question 6: Type of acquisition for filers to indicate the 1031 Exchange. As illustrated below, the box is located next to other information pertinent for the sale, but it is not an automatic rejection reason. These changes are effective for all CRVs filed after June 30, The indication of proposed use changes can adequately be reported on the current forms. However, filers will be expected to indicate the presence of a 1031 Exchange to fulfill this legislative requirement even if the revised forms are not yet available. This will require filers to add text to every CRV, either handwritten or typed, near the Question 6 section similar to this: This sale is part of a 1031 Exchange. This sale is NOT part of a 1031 Exchange. Auditors, during their verification for completeness and accuracy of a CRV submission, must ensure filers provide this information. If it is not present, the filer should be asked to add the appropriate statement. Auditors may wish to notify large-volume filers of CRVs (closing companies, law firms, etc.) of this legislative change in an attempt to be proactive. Assessors, during the course of CRV review and analysis, must also ensure this information is indicated on the CRV in order to comply with the legislation. Information regarding the availability of the revised PE20 Forms has been provided by the division s Sales Ratio Section in a June 25, Software companies that provide electronic versions of the CRV will also need to update their programs; until that is complete, the filer will need to add the required indication. Legislative Change: Social Security Number Requirements (For additional information, see Chapter 154, Article 13, Section 23) This legislation removes the requirement of providing a Social Security Number for every grantor and grantee party to the transaction in certain situations. When a spouse of the owner of record of the property has no ownership in the property and is only signing the Continued

350 conveyance for the purpose of releasing and conveying his/her marital interest, if any, in the real property, that spouse s Social Security Number is not required to be included on the CRV. In order for the auditor to accept a CRV without all grantor and grantee Social Security Numbers, the deed must include a statement substantially similar to the following: [Name] claims no ownership interest in the real property being conveyed and is executing this instrument solely to release and convey a marital interest, if any, in that real property. This legislation is effective for any CRV filed after June 30, It is not expected to see widespread utilization because it is only applicable to specific conveyances of marital interest. In instances where the spouse is an owner of record for the property, his/her Social Security Number must be included. Conclusion These provisions in law affecting the PE20 Certificate of Real Estate Value and the sales review process affect both the filers of the CRVs and the county officials responsible for processing them. With the effective date already passed for the provision requiring assessors to take into account any change in the purchased property s use when it results in a change of classification, assessors should continue current practice that adheres to this legislation. With an effective date of July 1 for the new CRV reporting requirements (including indication of 1031 Exchanges and use changes, and the Social Security number exception), auditors and assessors should work together to ensure this legislation will be enforced. The Department of Revenue is available to answer any additional questions you may have. Please direct them to proptax.questions@state.mn.us. Counties may also contact the Sales Ratio Section for more information regarding the revised PE20 forms.

351 Memo Date: June 25, 2008 To: From: Subject: All County Assessors Andrea Fish, State Program Administrator Information and Education Section Special Homestead Classification for Disabled Persons Earlier this year, you received a letter from the Department of Revenue along with a list of persons in your county who had filed application for special homestead classification (class 1b). Since that time, new legislation has been passed which changes how this classification pertains to homesteads owned by a disabled person and the disabled person s spouse. Previously, if a qualifying disabled person owned the property with his/her spouse, the benefit was diminished by 50 percent. Under new legislation, the benefit is not reduced for properties owned by the disabled person and the disabled person s spouse. In such a scenario, the property owner would be eligible for the full benefit of a reduced class rate of.45% on the first $50,000 of the property s value. The qualifying disabled person must still be listed as an owner of the property. If you have any questions regarding this law change, please do not hesitate to contact Elsie Hendrickson, the class 1b specialist, at elsie.hendrickson@state.mn.us.

352 MEMO Date: June 6, 2008 To: From: Subject: All Assessors Drew Imes, State Program Administrator Information and Education Section Class 4c(3)(ii) - Qualifying non-profit community service organizations This memo and the attached application form are designed to outline administrative procedures for implementing the new Class 4c(3)(ii) classification of property for qualifying non-profit community service organizations. The effective date for these provisions is assessment year 2008, for taxes payable in 2009 and thereafter. Classification Taxable non-profit community service organizations may now be classified a number of different ways depending on how they are used and according to their level of charitable contributions/donations. Class 4c(3)(i) and 4c(3)(ii) provide for classification of up to a maximum of three acres of land and buildings, that is owned and used by a non-profit community service organization, and that is not used for residential purposes on either a temporary or permanent basis. 1. Class 4c(3)(i) Qualifying for this classification is contingent on the condition that the property is NOT used for a revenue-producing activity for more than six days in the calendar year preceding the year of the assessment. a. This classification of property has a classification rate of 1.5 percent. b. These properties DO NOT pay the state general tax. 2. Class 4c(3)(ii) To qualify for this classification, the organization must make annual charitable contributions and donations in an amount that is at least equal to the property s previous year s property taxes paid (excluding state general taxes), and the property is available to be used for public and community meetings or events for no charge, as appropriate to the size of the facility. a. These properties were originally classified as class 3a commercial property due to the fact that their facilities were used for revenue producing activities for more than six days per year. b. To qualify for this classification, the organization must be able to provide proof of charitable donations or contributions at the request of the assessor. c. The organization must also provide proof of public meetings and events held on the property at the request of the assessor. d. This classification of property has a classification rate of 1.5 percent. e. These properties continue to pay the state general tax. However, they will pay at the SRR rate rather than the commercial/industrial rate, pursuant to Minnesota Statutes, section , subdivision 3. 1 Continues

353 Class 3a The potential also exists for all or a portion of a non-profit community service organization to be classified as 3a property. If the property does not meet the required criteria for either class 4c(3)(i) or 4c(3)(ii), the entire property should be classified as 3a. a) Properties classified as class 3a property have a classification rate of 1.5 percent for the first tier of taxable market value up to $150,000, and a classification rate of 2 percent for any taxable market value over $150,000. b) These properties continue to pay the state general tax at the normal commercial/industrial rate. Split-class It is possible, and may often times be the case, that a property of a non-profit community service organization will be split classified. For example, a portion of a building that is not used for revenue producing activities for more than six days will be class 4c(3)(i), and the other portion of the building that is used for revenue producing activities but makes charitable contributions in the amount of the property s previous year s property tax, would be class 4c(3)(ii). According to the law, we have determined that property of a non-profit community service organization can have the following classifications or split-classifications: 4c(3)(i) only 4c(3)(ii) only 3a only 4c(3)(i) and 3a split-class 4c(3)(i) and 4c(3)(ii) split-class The same split-classification ratio applied to the building(s) should be apportioned to any remaining land. Application Deadline For the 2008 assessment only, the application deadline has been extended to September 1, 2008 for taxes payable in In future years, the application deadline is May 1 of the assessment year to be effective for taxes payable in the following year. Attachments Applicants are required to provide documentation of the organization s charitable contributions and donations to qualify for 4c(3)(ii). To do so, they must attach copies of the Gambling Control Board s Form LG1010 Schedule C/D. This form uses A-codes to report an organization s expenditures. For example, if an organization contributed/donated money to a program for education, that expenditure would be coded A-3. On the Form LG1010, an organization s expenditures will be listed and given an A-code. However, according to statute, only certain expenditures qualify as charitable contributions. Therefore, only certain A-code expenditures will qualify towards an organizations total amount of charitable contributions. You will need to look at the Form LG1010 and identify the A-code expenditures that qualify as charitable contributions in order to determine if the organization has contributed/donated an amount equal to their previous year s property taxes. A list of A-code expenditures that qualify towards an organization s charitable contributions, as well as a mock Form LG1010 are attached to this memo to help assist county assessors become accustomed to administering this new classification. Organization s complete Form LG1010 on a monthly basis for the Gambling Control Board and may very well make charitable contributions equal to their previous year s property taxes in the span of a few 2 Continues

354 months, or even a single month. Therefore, applicants are only required to provide the copies of their Form LG1010 that bring them to an amount equal to their previous year s property taxes. For example, if an organization made charitable contributions equal to their previous year s property taxes in the span of three months (January, February, March), they would only need to attach a copy of Form LG1010 for those three months. Form LG1010 has two schedules; C and D. You will only need to look at Schedule C. Schedule D is not relevant for the purposes of this classification. On the mock application and A-code list attached to this memo, the sections highlighted in yellow are of importance to you. Only the A-codes highlighted in yellow qualify as charitable contributions. 3 Continues

355 Definitions For the purposes of classifying properties owned and operated by non-profit community service organizations, there are several definitions you should be aware of. Charitable contributions and donations are defined as having the same meaning as lawful gambling purposes under Minnesota Statutes, section , subdivision 25, excluding those purposes relating to the payment of taxes, assessments, fees, auditing costs, and utility payments. The new class 4c(3)(ii) classification specifically references Minnesota Statutes, section , subdivision 25 but appears to exclude clauses 8, 9, 12, 16, and 18 (thus including clauses 1 to 7, 10, 11, 13 to 15, 17, and 19). See Appendix for the applicable clauses that qualify as lawful purposes of contributions. On a form LG1010, charitable contributions are defined as expenditures coded A-1 to A-7, A-10, A-11, A-13, A-14, A-15, and A-19. Only expenditures with these codes qualify as charitable contributions when the county assessor determines if an organization has made charitable contributions in an amount equal to the previous year s property tax. Property taxes for the purposes of this subdivision, the term does not include the state general tax. Non-profit community service oriented organization any corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, fraternal, civic, or educational purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), (10), or (19) of the Internal Revenue Code, as amended through December 31, Revenue-producing activities includes but are not limited to property or that portion of a property that is used as an on-sale intoxicating liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling alley, a retail store, gambling conducted by organizations licensed under chapter 349, an insurance business, or office or other space leased or rented to a lessee who conducts a for-profit enterprise on the premises. The use of the property for social events open exclusively to members and their guests for periods of less than 24 hours, when an admission is not charged nor any revenues are received by the organization shall not be considered a revenue-producing activity (Minnesota Statutes, section , subdivision 25). 4 Continues

356 Statutory Citations Minnesota Statutes, section , subdivision 25: APPENDIX Lawful purpose. (a) "Lawful purpose" means one or more of the following: (1) any expenditure by or contribution to a 501(c)(3) or festival organization, as defined in subdivision 15a, provided that the organization and expenditure or contribution are in conformity with standards prescribed by the board under section , which standards must apply to both types of organizations in the same manner and to the same extent; (Identified on Form LG1010 as code A-1) (2) a contribution to or expenditure for goods and services for an individual or family suffering from poverty, homelessness, or disability, which is used to relieve the effects of that suffering; (Identified on Form LG1010 as code A-2) (3) a contribution to a program recognized by the Minnesota Department of Human Services for the education, prevention, or treatment of problem gambling; (Identified on Form LG1010 as code A-3) (4) a contribution to or expenditure on a public or private nonprofit educational institution registered with or accredited by this state or any other state; (Identified on Form LG1010 as code A-4) (5) a contribution to an individual, public or private nonprofit educational institution registered with or accredited by this state or any other state, or to a scholarship fund of a nonprofit organization whose primary mission is to award scholarships, for defraying the cost of education to individuals where the funds are awarded through an open and fair selection process; (Identified on Form LG1010 as code A-5) (6) activities by an organization or a government entity which recognize military service to the United States, the state of Minnesota, or a community, subject to rules of the board, provided that the rules must not include mileage reimbursements in the computation of the per diem reimbursement limit and must impose no aggregate annual limit on the amount of reasonable and necessary expenditures made to support: (i) members of a military marching or color guard unit for activities conducted within the state; (ii) members of an organization solely for services performed by the members at funeral services; (iii) members of military marching, color guard, or honor guard units may be reimbursed for participating in color guard, honor guard, or marching unit events within the state or states contiguous to Minnesota at a per participant rate of up to $35 per diem; or (iv) active military personnel and their immediate family members in need of support services; (Identified on Form LG1010 as code A-6) (7) recreational, community, and athletic facilities and activities intended primarily for persons under age 21, provided that such facilities and activities do not discriminate on the basis of gender and the organization complies with section ; (Identified on Form LG1010 as code A-7) 5 Continues

357 (10) a contribution to the United States, this state or any of its political subdivisions, or any agency or instrumentality thereof other than a direct contribution to a law enforcement or prosecutorial agency; (Identified on Form LG1010 as code A-10) (11) a contribution to or expenditure by a nonprofit organization which is a church or body of communicants gathered in common membership for mutual support and edification in piety, worship, or religious observances; (Identified on Form LG1010 as code A-11) (13) a contribution to or expenditure on projects or activities approved by the commissioner of natural resources for: (i) wildlife management projects that benefit the public at large; (ii) grant-in-aid trail maintenance and grooming established under sections and , and other trails open to public use, including purchase or lease of equipment for this purpose; and (iii) supplies and materials for safety training and educational programs coordinated by the Department of Natural Resources, including the Enforcement Division; (Identified on Form LG1010 as code A-13) (14) conducting nutritional programs, food shelves, and congregate dining programs primarily for persons who are age 62 or older or disabled; (Identified on Form LG1010 as code A-14) (15) a contribution to a community arts organization, or an expenditure to sponsor arts programs in the community, including but not limited to visual, literary, performing, or musical arts; (Identified on Form LG1010 as code A-15) (17) expenditure by a licensed veterans organization of up to $5,000 in a calendar year in net costs to the organization for meals and other membership events, limited to members and spouses, held in recognition of military service. No more than $5,000 can be expended in total per calendar year under this clause by all licensed veterans organizations sharing the same veterans post home; (Identified on Form LG1010 as code 17) (19) a contribution or expenditure to honor an individual's humanitarian service as demonstrated through philanthropy or volunteerism to the United States, this state, or local community. (Identified on Form LG1010 as code A-19) 6

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