Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 31 (2016GS)

Sponsor

Rep. Sandall, S.

Final action

Governor Signed 3/1/2016

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• defines terms;
• modifies the population requirements for a county or a municipality to qualify for designation as an enterprise zone;
• modifies the requirements to receive an enterprise zone tax credit, including requirements related to obtaining a tax credit certificate from the Governor's Office of Economic Development (GOED);
• grants certain rulemaking authority to GOED related to enterprise zone tax credit certificates;
• modifies GOED's reporting requirements related to enterprise zone tax credits; and
• makes technical changes.

Every vote on this bill

Bill text

ENTERPRISE ZONE AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Scott D. Sandall
Senate Sponsor:
 Ralph Okerlund
LONG TITLE
Committee Note:
The Economic Development and Workforce Services Interim Committee recommended
this bill.
General Description:
This bill amends provisions related to the Enterprise Zone Act.
Highlighted Provisions:
This bill:
▸ defines terms;
▸ modifies the population requirements for a county or a municipality to qualify for
designation as an enterprise zone;
▸ modifies the requirements to receive an enterprise zone tax credit, including
requirements related to obtaining a tax credit certificate from the Governor's Office
of Economic Development (GOED);
▸ grants certain rulemaking authority to GOED related to enterprise zone tax credit
certificates;
▸ modifies GOED's reporting requirements related to enterprise zone tax credits; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
This bill provides retrospective operation.
Utah Code Sections Affected:
AMENDS:
63N-2-202
, as renumbered and amended by Laws of Utah 2015, Chapter 283
63N-2-203
, as renumbered and amended by Laws of Utah 2015, Chapter 283
63N-2-204
, as renumbered and amended by Laws of Utah 2015, Chapter 283
63N-2-210
, as renumbered and amended by Laws of Utah 2015, Chapter 283
63N-2-211
, as renumbered and amended by Laws of Utah 2015, Chapter 283
63N-2-213
, as renumbered and amended by Laws of Utah 2015, Chapter 283
ENACTS:
59-7-614.10
, Utah Code Annotated 1953
59-10-1036
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
59-7-614.10
 is enacted to read:
 59-7-614.10.
Nonrefundable enterprise zone tax credit.
(1) As used in this section:
(a) "Business entity" means a corporation that meets the definition of "business entity"
as that term is defined in Section 
63N-2-202
.
(b) "Office" means the Governor's Office of Economic Development created in Section
63N-1-201
.
(2) Subject to the provisions of this section, a business entity may claim a
nonrefundable enterprise zone tax credit as described in Section 
63N-2-213
.
(3) The enterprise zone tax credit under this section is the amount listed as the tax
credit amount on the tax credit certificate that the office issues to the business entity for the
taxable year.
(4) A business entity may carry forward a tax credit under this section for a period that
does not exceed the next three taxable years, if the amount of the tax credit exceeds the
business entity's tax liability under this chapter for that taxable year.
(5) A business entity may not claim or carry forward a tax credit available under this
part for a taxable year during which the business entity has claimed the targeted business
income tax credit available under Section 
63N-2-305
.
(6) (a) On or before October 1, 2018, and every five years after October 1, 2018, the
Revenue and Taxation Interim Committee shall study the tax credit allowed by this section and
make recommendations to the Legislative Management Committee concerning whether the tax
credit should be continued, modified, or repealed.
(b) For purposes of the study required by this Subsection (6), the office shall provide
by electronic means the following information for each calendar year to the Revenue and
Taxation Interim Committee:
(i) the amount of tax credits provided in each development zone;
(ii) the number of new full-time employee positions reported to obtain tax credits in
each development zone;
(iii) the amount of tax credits awarded for rehabilitating a building in each
development zone;
(iv) the amount of tax credits awarded for investing in a plant, equipment, or other
depreciable property in each development zone;
(v) the information related to the tax credit contained in the office's latest report to the
Legislature under Section 
63N-1-301
; and
(vi) other information as requested by the Revenue and Taxation Interim Committee.
(c) The Revenue and Taxation Interim Committee shall ensure that its
recommendations under Subsection (6)(a) include an evaluation of:
(i) the cost of the tax credit to the state;
(ii) the purpose and effectiveness of the tax credit; and
(iii) the extent to which the state benefits from the tax credit.
Section 2. Section 
59-10-1036
 is enacted to read:
 59-10-1036.
Nonrefundable enterprise zone tax credit.
(1) As used in this section:
(a) "Business entity" means a claimant, estate, or trust that meets the definition of
"business entity" as that term is defined in Section 
63N-2-202
.
(b) "Office" means the Governor's Office of Economic Development created in Section
63N-1-201
.
(2) Subject to the provisions of this section, a business entity may claim a
nonrefundable enterprise zone tax credit as described in Section 
63N-2-213
.
(3) The enterprise zone tax credit under this section is the amount listed as the tax
credit amount on the tax credit certificate that the office issues to the business entity for the
taxable year.
(4) A business entity may carry forward a tax credit under this section for a period that
does not exceed the next three taxable years, if the amount of the tax credit exceeds the
business entity's tax liability under this chapter for that taxable year.
(5) A business entity may not claim or carry forward a tax credit available under this
part for a taxable year during which the business entity has claimed the targeted business
income tax credit available under Section 
63N-2-305
.
(6) (a) On or before October 1, 2018, and every five years after October 1, 2018, the
Revenue and Taxation Interim Committee shall study the tax credit allowed by this section and
make recommendations to the Legislative Management Committee concerning whether the tax
credit should be continued, modified, or repealed.
(b) For purposes of the study required by this Subsection (6), the office shall provide
by electronic means the following information for each calendar year to the Revenue and
Taxation Interim Committee:
(i) the amount of tax credits provided in each development zone;
(ii) the number of new full-time employee positions reported to obtain tax credits in
each development zone;
(iii) the amount of tax credits awarded for rehabilitating a building in each
development zone;
(iv) the amount of tax credits awarded for investing in a plant, equipment, or other
depreciable property in each development zone;
(v) the information related to the tax credit contained in the office's latest report to the
Legislature under Section 
63N-1-301
; and
(vi) other information as requested by the Revenue and Taxation Interim Committee.
(c) The Revenue and Taxation Interim Committee shall ensure that its
recommendations under Subsection (6)(a) include an evaluation of:
(i) the cost of the tax credit to the state;
(ii) the purpose and effectiveness of the tax credit; and
(iii) the extent to which the state benefits from the tax credit.
Section 3. Section 
63N-2-202
 is amended to read:
63N-2-202.
Definitions.
As used in this part:
(1) "Business entity" means an entity, sole proprietorship, or individual:
(a) including a claimant, estate, or trust; and
(b) under which or by whom business is conducted or transacted.
(2) "Claimant" means a resident or nonresident person that has:
(a) Utah taxable income as defined in Section 
59-7-101
; or
(b) state taxable income under Title 59, Chapter 10, Part 1, Determination and
Reporting of Tax Liability and Information.
(3) "County applicant" means the governing authority of a county that meets the
requirements for designation as an enterprise zone under Section 
63N-2-204
.
(4) "Estate" means a nonresident estate or a resident estate that has state taxable
income under Title 59, Chapter 10, Part 2, Trusts and Estates.
(5) "Municipal applicant" means the governing authority of a city or town that meets
the requirements for designation as an enterprise zone under Section 
63N-2-204
.
(6) "New full-time employee position" means a position that has been newly created 
in
addition to the highest baseline count of employment positions that existed within the business
entity during the previous three taxable years
 and [
then
] 
is
 filled by an employee working at
least 30 hours per week:
(a) for a period of [
not less than
] 
at least
 six consecutive months; and
(b) where the period ends in the tax year for which the credit is claimed.
(7) "Nonrefundable tax credit" or "tax credit" means a tax credit that a business entity
may:
(a) claim:
(i) as provided by statute; and
(ii) in an amount that does not exceed the business entity's tax liability for a taxable
year under:
(A) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
(B) Title 59, Chapter 10, Individual Income Tax Act; and
(b) carry forward or carry back:
(i) if allowed by statute; and
(ii) to the extent that the amount of the tax credit exceeds the business entity's tax
liability for a taxable year under:
(A) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
(B) Title 59, Chapter 10, Individual Income Tax Act.
(8) "Tax incentives" or "tax benefits" means the nonrefundable tax credits described in
Section 
63N-2-213
.
(9) "Trust" means a nonresident trust or a resident trust that has state taxable income
under Title 59, Chapter 10, Part 2, Trusts and Estates.
Section 4. Section 
63N-2-203
 is amended to read:
63N-2-203.
Powers of the office.
The office shall:
(1) monitor the implementation and operation of this part and conduct a continuing
evaluation of the progress made in the enterprise zones;
(2) evaluate an application for designation as an enterprise zone from a county
applicant or a municipal applicant and determine if the applicant qualifies for that designation;
(3) provide technical assistance to county applicants and municipal applicants in
developing applications for designation as enterprise zones;
(4) assist county applicants and municipal applicants designated as enterprise zones in
obtaining assistance from the federal government and agencies of the state;
(5) assist a qualified business entity in obtaining the benefits of an incentive or
inducement program authorized by this part; and
(6) as part of the annual written report described in Section [
63N-2-301
] 
63N-1-301
,
prepare an annual evaluation [
based, in part, on data provided by the State Tax Commission
that evaluates the
] 
that provides:
(a) based on data from the State Tax Commission, the total amount of tax credits
claimed under this part;
(b) the total amount awarded in tax credits for each development zone;
(c) the number of new full-time employee positions reported to obtain tax credits in
each development zone;
(d) the amount of tax credits awarded for rehabilitating a building in each development
zone;
(e) the amount of tax credits awarded for investing in a plant, equipment, or other
depreciable property in each development zone; and
(f) recommendations regarding the
 effectiveness of the program and any suggestions
for legislation.
Section 5. Section 
63N-2-204
 is amended to read:
63N-2-204.
Criteria for designation of enterprise zones -- Application.
(1) A county applicant seeking designation as an enterprise zone shall file an
application with the office that, in addition to complying with the other requirements of this
part:
(a) verifies that the county has a population of not more than [
50,000
] 
70,000
; and
(b) provides clear evidence of the need for development in the county.
(2) A municipal applicant seeking designation as an enterprise zone shall file an
application with the office that, in addition to complying with other requirements of this part:
(a) verifies that the municipality has a population that does not exceed [
15,000
]
20,000
;
(b) verifies that the municipality is within a county that has a population of not more
than [
50,000
] 
70,000
; and
(c) provides clear evidence of the need for development in the municipality.
(3) An application filed under Subsection (1) or (2) shall be in a form and in
accordance with procedures approved by the office, and shall include the following
information:
(a) a plan developed by the county applicant or municipal applicant that identifies local
contributions meeting the requirements of Section 
63N-2-205
;
(b) the county applicant or municipal applicant has a development plan that outlines:
(i) the types of investment and development within the zone that the county applicant
or municipal applicant expects to take place if the incentives specified in this part are provided;
(ii) the specific investment or development reasonably expected to take place;
(iii) any commitments obtained from businesses;
(iv) the projected number of jobs that will be created and the anticipated wage level of
those jobs;
(v) any proposed emphasis on the type of jobs created, including any affirmative action
plans; and
(vi) a copy of the county applicant's or municipal applicant's economic development
plan to demonstrate coordination between the zone and overall county or municipal goals;
(c) the county applicant's or municipal applicant's proposed means of assessing the
effectiveness of the development plan or other programs within the zone once they have been
implemented within the zone;
(d) any additional information required by the office; and
(e) any additional information the county applicant or municipal applicant considers
relevant to its designation as an enterprise zone.
Section 6. Section 
63N-2-210
 is amended to read:
63N-2-210.
Revocation of designations.
(1) The office may revoke the designation of an enterprise zone[
,
] if no businesses
utilize the tax incentives during [
any
] 
a
 calendar year.
(2) Prior to that action, the office shall conduct a public hearing to determine reasons
for inactivity and explore possible alternative actions.
Section 7. Section 
63N-2-211
 is amended to read:
63N-2-211.
Disqualifying transfers.
Except in [
counties
] 
a county
 of the first or second class, tax incentives provided by this
part are not available to [
companies
] 
a business entity
 that [
close
] 
closes
 or permanently
[
curtail
] 
curtails
 operations in another part of the state in connection with a transfer of any part
of its business operations to an enterprise zone, if the closure or permanent curtailment is
reasonably expected to diminish employment in that part of the state.
Section 8. Section 
63N-2-213
 is amended to read:
63N-2-213.
State tax credits.
(1) The office shall certify a business entity's eligibility for a tax credit described in this
section.
(2) A business entity seeking to receive a tax credit as provided in this section shall
provide the office with:
(a) an application for a tax credit certificate in a form approved by the office, including
a certification, by an officer of the business entity, of a signature on the application; and
(b) documentation that demonstrates the business entity has met the requirements to
receive the tax credit.
(3) If, after review of an application and documentation provided by a business entity
as described in Subsection (2), the office determines that the application and documentation are
inadequate to provide a reasonable justification for authorizing the tax credit, the office shall:
(a) deny the tax credit; or
(b) inform the business entity that the application or documentation was inadequate
and ask the business entity to submit additional documentation.
(4) If, after review of an application and documentation provided by a business entity
as described in Subsection (2), the office determines that the application and documentation
provide reasonable justification for authorizing a tax credit, the office shall:
(a) determine the amount of the tax credit to be granted to the business entity;
(b) issue a tax credit certificate to the business entity; and
(c) provide a duplicate copy of the tax credit certificate to the State Tax Commission.
(5) A business entity may not claim a tax credit under this section unless the business
entity has a tax credit certificate issued by the office.
(6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
office shall make rules describing:
(a) the form and content of an application for a tax credit under this section;
(b) the documentation requirements for a business entity to receive a tax credit
certificate under this section; and
(c) administration of the program, including relevant timelines and deadlines.
[
(1)
] 
(7)
 Subject to the limitations of Subsections [
(2)
] 
(8)
 through [
(4)
] 
(10)
, 
and if the
requirements of this part are met,
 the following nonrefundable tax credits against a tax under
Title 59, Chapter 7, Corporate Franchise and Income Taxes, or Title 59, Chapter 10, Individual
Income Tax Act, are applicable in an enterprise zone:
(a) a tax credit of $750 may be claimed by a business entity for each new full-time
employee position created within the enterprise zone;
(b) an additional $500 tax credit may be claimed if the new full-time employee position
created within the enterprise zone pays at least 125% of:
(i) the county average monthly nonagricultural payroll wage for the respective industry
as determined by the Department of Workforce Services; or
(ii) if the county average monthly nonagricultural payroll wage is not available for the
respective industry, the total average monthly nonagricultural payroll wage in the respective
county where the enterprise zone is located;
(c) an additional tax credit of $750 may be claimed if the new full-time employee
position created within the enterprise zone is in a business entity that adds value to agricultural
commodities through manufacturing or processing;
(d) an additional tax credit of $200 may be claimed for two consecutive years for each
new full-time employee position created within the enterprise zone that is filled by an
employee who is insured under an employer-sponsored health insurance program if the
employer pays at least 50% of the premium cost for the year for which the credit is claimed;
[
(e) a tax credit of 50% of the value of a cash contribution to a private nonprofit
corporation, except that the credit claimed may not exceed $100,000:
]
[
(i) that is exempt from federal income taxation under Section 501(c)(3), Internal
Revenue Code;
]
[
(ii) whose primary purpose is community and economic development; and
]
[
(iii) that has been accredited by the Governor's Rural Partnership Board;
]
[
(f)
] 
(e)
 a tax credit of 25% of the first $200,000 spent on rehabilitating a building in
the enterprise zone that has been vacant for two years or more; and
[
(g)
] 
(f)
 an annual investment tax credit of 10% of the first $250,000 in investment,
and 5% of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable
property.
[
(2)
] 
(8)
 (a) Subject to the limitations of Subsection [
(2)
] 
(8)
(b), a business entity
claiming [
tax credits
] 
a tax credit
 under Subsections [
(1)
] 
(7)
(a) through (d) may claim the tax
[
credits for up to
] 
credit for no more than
full-time employee positions [
per
] 
in a
 taxable
year.
(b) A business entity that received a tax credit for one or more new full-time employee
positions under Subsections [
(1)
] 
(7)
(a) through (d) in a prior taxable year may claim a tax
credit for a new full-time employee position in a subsequent taxable year under Subsections
[
(1)
] 
(7)
(a) through (d) if:
(i) the business entity has created a new full-time position within the enterprise zone;
and
(ii) the total number of full-time employee positions at the business entity at any point
during the tax year for which the tax credit is being claimed is greater than the 
highest
 number
of full-time employee positions that existed at the business entity [
at any point during the
taxable year immediately preceding the taxable year for which the credit is being claimed
] 
in
the previous three taxable years
.
(c) Construction jobs are not eligible for the tax credits under Subsections [
(1)
] 
(7)
(a)
through (d).
[
(3)
] 
(9)
 If the amount of a tax credit under this section exceeds a business entity's tax
liability under this chapter for a taxable year, the business entity may carry forward the amount
of the tax credit exceeding the liability for a period that does not exceed the next three taxable
years.
[
(4)
] 
(10)
 Tax credits under Subsections [
(1)
] 
(7)
(a) through [
(g)
] 
(f)
 may not be
claimed by a business entity primarily engaged in retail trade or by a public utilities business.
[
(5)
] 
(11)
 A business entity that has no employees:
(a) may not claim tax credits under Subsections [
(1)
] 
(7)
(a) through (d); and
(b) may claim tax credits under Subsections [
(1)
] 
(7)
(e) through [
(g)
] 
(f)
.
(6) A business entity may not claim or carry forward a tax credit available under this
part for a taxable year during which the business entity has claimed the targeted business
income tax credit available under Section 
63N-2-305
.
Section 9. 
Effective date.
If approved by two-thirds of all the members elected to each house, this bill takes effect
upon approval by the governor, or the day following the constitutional time limit of Utah
Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
the date of veto override.
Section 10. 
Retrospective operation.
This bill has retrospective operation for a taxable year beginning on or after January 1,
2016.
Legislative Review Note
Office of Legislative Research and General Counsel