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Minnesota Council of Nonprofits tax exemption bill

DRAFT – 12/9/08

1.1 A bill for an act

1.2 relating to property taxes; providing clarification for eligibility for property tax

1.3 exemption for public charity institutions; amending Minnesota Statutes 2006,

1.4 section 272.02, subdivision 7.

1.5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 Section 1. Minnesota Statutes 2006, section 272.02, subdivision 7, is amended to read:

1.7 Subd. 7. Institutions of public charity. (a) Institutions of purely public charity are

1.8 exempt. In determining whether the owner of real property is exempt as an institution of

1.9 purely public charity, the assessing authority shall consider the following factors:

1.10 (1) whether the stated purpose of the undertaking is to be helpful to others without

1.11 immediate expectation of material reward;

1.12 (2) whether the institution of public charity involved is supported by donations, gifts or

1.13 government payments for services to the public that alleviate burdens or responsibilities

1.14 that would otherwise be borne by the government in whole or in part;

1.15 (3) whether some of the recipients of the charity receive benefits or services at reduced

1.16 or no cost, or whether the organization provides services to the public that alleviate

1.17 burdens or responsibilities that would otherwise be borne by the government;

1.18 (4) whether the income received from the gifts, donations, government payments and

1.19 charges to users produces a profit to the charitable institution;

1.20 (5) whether the beneficiaries of the charity are restricted or unrestricted and, if

1.21 restricted, whether the class of persons to whom the charity is made available is one

1.22 having a reasonable relationship to the charitable objectives;

1.23 (6) whether dividends, in form or substance, or assets upon dissolutions are available

1.24 to private interests.

1.25 There is a presumption that all six factors will be satisfied for a charitable organization

1.26 to qualify as an institution of purely public charity under this Section. This presumption

1.27 can be rebutted by an organization with reasonable justification for missing factors.

1.28 Assessors shall consider the reasonable justification for missing factors and may

1.29 conclude that an organization is a purely public charity under this Section without

1.30 meeting all six factors. There is a presumption that once an exemption is granted, it will

1.31 remain in effect unless there is a material change in facts.

2.1 (b) In determining whether rental housing property qualifies for exemption under

2.2 this subdivision, the following are not gifts or donations to the owner of the rental housing:

2.3 (1) rent assistance provided by the government to or on behalf of tenants; and

2.4 (2) financing assistance or tax credits provided by the government to the owner on

2.5 condition that specific units or a specific quantity of units be set aside for persons or

2.6 families with certain income characteristics.

2.7 EFFECTIVE DATE. This section is effective for taxes payable in 2010 and

2.8 thereafter.

2.9 Sec. 2. PURPOSE.

2.10 The purpose of section 1 is neither to contract or expand the definition of

2.11 “institutions of purely public charity” but to provide clear standards that can be applied

2.12 uniformly to determine eligibility for exemption from property taxation in consideration

2.13 of North Star Research Institute v. County of Hennepin, 306 Minn. 1, 236 N.W.2d 754,

2.14 (1975); Under the Rainbow Childcare Center v. County of Goodhue, 741 N.W.2d 880

2.15 (Minn. 2007); Afton Historical Society Press v. County of Washington, 742 N.W.2d 434

2.16 (Minn. 2007).

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