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taxes from consumers but only remitting a <br />fraction of the taxes collected to local and <br />state governments. OTCs are seeking <br />federal legislation to relieve them from their <br />obligations and deprive state and local <br />governments of virtually all hotel taxes. The <br />Center on Budget and Policy Priorities <br />estimates the minimum annual revenue loss <br />to local and state governments under the <br />OTC's proposal will exceed $1 billion and <br />increase to $8.5 billion annually if hotels <br />adopt the OTC's business model. The 2011 <br />Legislature made clarifications under Minn. <br />Stat. § 297A.61 and 297A.66 that defines <br />"accommodations intermediary" and <br />requires them to collect the sales tax on the <br />total charge to the customer, but there are <br />still questions on the application of the new <br />law. <br />Response: The League of Minnesota <br />Cities opposes legislation that grants <br />OTCs a tax exemption that terminates <br />existing or bars future obligations to pay <br />hotel taxes to state and local governments, <br />or otherwise restricts legal actions by <br />states and localities. <br />FF-11. Taxation of Electric <br />Generation Personal Property <br />Issue: Investor -owned utilities (IOUs) have <br />a longstanding relationship with Minnesota <br />cities. IOUs site baseload power plants in <br />host communities, and in exchange pay <br />personal property tax on attached generation <br />machinery to the cities, counties and school <br />districts hosting the plants. These plants <br />bring jobs to our communities, but they also <br />create nuisances such as air pollution, <br />nuclear waste, noise, vibration, and coal <br />train traffic. They also create security risks <br />and take up land that could be used for <br />other, less disruptive commercial and <br />industrial development. Cities believe <br />personal property taxes paid by IOUs are a <br />fair compensation for the environmental and <br />economic costs of hosting baseload power <br />plants. <br />IOUs argue that personal property tax relief <br />is important to pass along to their <br />shareholders and ratepayers. However, only <br />a few IOU shareholders and ratepayers <br />actually live in the communities hosting <br />baseload power plants. Further, almost all <br />new power plants receive personal property <br />tax exemptions from the Legislature, while <br />host communities with existing, non-exempt <br />baseload plants will continue to have them <br />for decades to come. <br />Response: Personal property taxes on <br />attached electric generation machinery <br />are a fair way to spread the <br />environmental and economic costs of <br />electric generation power plants among <br />all IOU shareholders and ratepayers. The <br />League of Minnesota Cities supports the <br />continuation of personal property taxes <br />paid by IOUs to host communities for <br />existing and new facilities. As the <br />Department of Revenue analyzes methods <br />of utility taxation in its Study of Electric <br />Energy Producing Systems (Session Law <br />2014, Chapter 308), the League supports <br />the inclusion of these environmental and <br />economic costs in assessing the <br />appropriate property taxes paid to host <br />cities by electric generation facilities. <br />FF-12. Taxation of Municipal Bond <br />Interest <br />Issue: The federal and state laws that grant a <br />tax exemption to bondholders for municipal <br />bond interest lowers borrowing costs for <br />cities and reduces property tax levies. <br />Response: Congress and the state should <br />maintain the tax exemption for municipal <br />bond interest income. <br />League of Minnesota Cities <br />2015 City Policies Page 99 <br />