In May 2009 Governor Pawlenty signed a bill into law that defines a "charity" for property tax exemption purposes. The new definition modified and codified the factors to provide clarity and consistency in the definition of charity and established a review board that continues the work today.
This new law was adopted in response to a 2007 Minnesota Supreme Court decision that narrowed the definition of charity that developed in case law throughout the previous 35 years, since the North Star
decision. North Star
outlined six factors to be considered by assessors in determining whether an organization was an institution of purely public charity. Under North Star, no one factor was determinative over the others and not all had to be satisfied. The December 2007 Under the Rainbow Childcare Center v. Goodhue County
decision declared that the third factor must be met in order for an organization to qualify as an institution of purely public charity.
Over the next two years, the Minnesota Council of Nonprofits convened nonprofit property owners, attorneys and advocates to review law, outline possibilities, draft language and proposals. In ongoing meetings with the Minnesota Department of Revenue, MCN negotiated a conclusion that allowed a codified definition of a charitable organization qualifying for the exemption.
The statute, Minnesota Statutes section 272.02, subdivision 7
, modified and codified the North Star factors to provide clarity and consistency in the definition of charity. The new law requires that an organization satisfy all six factors. If an organization fails to satisfy factors 2, 3, or 5, the organization may provide a "reasonable justification" for its failure of those factors. An assessor must heed the justification and may accordingly grant exemption. The new law states: