S.F. 1636 eliminates the personal property tax on electric generation systems, institutes a new method of valuing personal property on electric generation systems, and authorizes transition aid. In addition, facility-specific statutory exemptions from personal property tax are repealed, as are the sliding scale exclusion, the wind energy production tax, and the solar energy production tax.

Section 1. County apportionment deduction. Deletes a cross-reference to the wind energy production tax relating to a required deduction of the appropriation amount from the general education aid amount earned by the district.

Section 2. Wind energy; property tax. Updates a cross-reference to the new statute imposing a tax on wind energy conversion facilities relating to the authority of the owner of the facility to petition the Public Utilities Commission to include in any power purchase agreement between the owner of the facility and public utility the amount of taxes paid.

Section 3. Commission approval. Removes a cross-reference to the sliding scale market value exclusion relating to the Public Utility Commission’s authority to approve an electric service agreement between a public utility and customer.

Section 4. Definitions. Specifies that the definition of “high-efficiency distributed generation” means a distributed energy facility that has a minimum efficiency of 40 percent, as calculated under Minnesota Statutes, section 272.0211, subdivision 1.

Section 5. Mandate. Deletes a cross-reference to a facility-specific property tax exemption.

Section 6. Property tax laws. Removes a cross-reference to the wind energy production tax from the definition of ‘property tax laws.’

Section 7. Personal property; exemptions. Eliminates the personal property tax on personal property that is part of an electric generating system.

Section 8. Personal property used for pollution control. Provides that the real or personal property of an electric generation system is not eligible for the pollution control exemption.

Section 9. Statement of exemption. Eliminates a cross-reference to the personal property pollution control exemption.

Section 10. Electric generation machinery; valuation. Establishes a new method of valuing the personal property of all electric generation systems used for the purpose of generating electricity. Definitions are provided for each type of generating system, and corresponding generation and capacity rates are set. An adjustment mechanism for the generation and capacity rates is provided. 

The commissioner of revenue shall annually calculate the electric generation tax base. The tax base of personal property of an electric generation system is equal to the sum of: (1) its nameplate capacity multiplied by its generation capacity rate; (2) the average of its electric energy production according to the commissioner of revenue for the immediately preceding five years, multiplied by its generation rate; and (3) its spent fuel tax base. Electric generation systems with a capacity of one megawatt or less is exempt from the tax imposed.

Additional language is provided to determine the size of wind energy conversion systems and solar energy generating systems and to require annual reports of all generating systems with the commissioner of revenue.

Effective for assessment year 2015, taxes payable in 2016, and thereafter.

Section 11. Class 3. Strikes reference to personal property of an electric generation system from the definition of class 3 properties.

Section 12 and 13. Levy limits. Eliminates a cross-reference to the wind energy production tax from the definition of levy aid base and property tax levy limit if levy limits are in effect. Levy limits are not currently in effect.

Section 14. Tax incentives available in zones. Eliminates a cross-reference to the wind energy production tax as an eligible exemption for qualified business/property located in a Job Opportunity Building Zone (JOBZ).

Section 15. Electric generation property transition aid. Authorizes transition aid to local units of government (town, city, county or school district). For aids payable in 2016 and thereafter, transition aid equals: (1) the net tax capacity of all personal property of an electric generating system as determined for assessment year 2015 multiplied by the 2015 local tax rate; plus (2) the amount, if any, received in 2015 from the wind energy production tax and solar energy production tax; minus (3) the net tax capacity in the current year of all electric generating systems as determined under the new method of valuation, multiplied by the current local tax rate. Once a local unit becomes ineligible for aid, it may not subsequently become eligible. An amount sufficient to pay the aid is annually appropriated from the general fund.

Section 16. Repealer. Repeals certain facility-specific statutory exemptions from personal property tax and repeals the sliding scale exclusion, the wind energy production tax, and the solar energy production tax.

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