SF4723

Purpose

Create a targeted property tax exemption for certain electric generation facility personal property. Specifically, it exempts from taxation (and from payments in lieu of taxation, PILOT) the personal property attached to a qualifying electric generation facility, under defined conditions.

Main Provisions

• Establishes a new exemption for electric generation facility personal property (not including transmission lines or gas pipelines appurtenant to the facility) that meet all specified criteria.
• The exemption applies to attached machinery and other personal property that is part of a facility with a nominal installed capacity greater than 40 megawatts and less than 50 megawatts.
• The facility must be designed to use natural gas as its primary fuel.
• The facility must be owned and operated by a municipal power agency (as defined in section 453.52, subdivision 8).
• The facility must be located within 1,000 feet of an existing natural gas pipeline.
• The facility must satisfy a resource deficiency identified in an integrated resource plan filed under section 216B.2422.
• The facility must be located outside Minnesota’s metropolitan area (per the definition in section 473.121, subdivision 1).
• Construction of the facility must have started after January 1, 2027 and before January 1, 2030.
• The facility must receive approval by resolution of the city and county governing bodies where it is located to obtain the exemption.
• The exemption applies to property taxes and to PILOT payments.

Eligibility Criteria (Key Conditions)

• Facility capacity: more than 40 MW and less than 50 MW (nominal installed capacity).
• Fuel: natural gas as the primary fuel.
• Ownership/operation: municipal power agency.
• Location proximity: within 1,000 feet of an existing natural gas pipeline.
• Planning/need: identified resource deficiency in an integrated resource plan filed under section 216B.2422.
• Geographic placement: outside the metropolitan area as defined in section 473.121, subdivision 1.
• Timing: construction commenced after January 1, 2027 and before January 1, 2030.
• Local approval: a resolution by the city and county governing bodies approving the exemption.
• Exclusions: does not include electric transmission lines and interconnections or gas pipelines and interconnections appurtenant to the facility.

Significance and Policy Objective

• Targets tax relief to support the development of a specific, near-term natural gas–fueled electric generation facility owned by a municipal power agency, with local government buy-in and alignment to a stated resource plan.
• Encourages siting outside the metropolitan area and near a natural gas pipeline, while tying eligibility to a defined capacity range and a demonstrated need in an integrated resource plan.

Significant Changes to Existing Law

• Adds a new subdivision (Subd. 109) to Minnesota Statutes, section 272.02, creating a dedicated property tax exemption for electric generation facility personal property that meets the outlined criteria.
• Establishes a construction window (2027–2030) and a local-approval requirement, and explicitly excludes lines and appurtenant infrastructure from eligibility.

Implementation Notes

• The exemption applies only to personal property directly part of the qualifying electric generation facility; it explicitly excludes transmission lines and gas pipelines and interconnections.
• The provision requires local government resolutions approving the exemption, adding a political process element to eligibility.

Relevant Terms electric generation facility personal property; exemption from taxation; payments in lieu of taxation (PILOT); attached machinery; nominal installed capacity; more than 40 megawatts and less than 50 megawatts; natural gas as primary fuel; municipal power agency; 1,000 feet; existing natural gas pipeline; resource deficiency; integrated resource plan; section 216B.2422; outside the metropolitan area; metropolitan area (section 473.121, subdivision 1); construction commenced after January 1, 2027; construction commenced before January 1, 2030; city and county governing bodies; approval by resolution; transmission lines; interconnections; gas pipelines and interconnections.