Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 356 Second Substitute (2021GS)

Sponsor

Rep. Albrecht, C.

Final action

Governor Signed 3/22/2021

Outcome

Became law — signed by Gov. Spencer J. Cox

Summary

What it does

• This bill:
• defines terms, including modifying the definitions of "new commercial project," "high paying job," and "significant capital investment," related to new commercial projects located in rural areas of the state;
• modifies provisions related to the authorization of tax credits by the Governor's Office of Economic Development for new commercial projects located in rural areas of the state;
• modifies the types of new commercial projects that may qualify for tax credits authorized by the Governor's Office of Economic Development; and
• makes technical changes.

Every vote on this bill

Bill text

RURAL ECONOMIC DEVELOPMENT TAX INCREMENT
FINANCING
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Carl R. Albrecht
Senate Sponsor: 
Derrin R. Owens
LONG TITLE
General Description:
This bill modifies provisions related to economic development tax increment financing.
Highlighted Provisions:
This bill:
▸ defines terms, including modifying the definitions of "new commercial project,"
"high paying job," and "significant capital investment," related to new commercial
projects located in rural areas of the state;
▸ modifies provisions related to the authorization of tax credits by the Governor's
Office of Economic Development for new commercial projects located in rural
areas of the state;
▸ modifies the types of new commercial projects that may qualify for tax credits
authorized by the Governor's Office of Economic Development; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
63N-1-102
, as last amended by Laws of Utah 2019, Chapter 465
63N-2-103
, as last amended by Laws of Utah 2019, Chapters 399, 465, 498 and last
amended by Coordination Clause, Laws of Utah 2019, Chapter 465
63N-2-104
, as last amended by Laws of Utah 2018, Chapter 281
63N-2-105
, as last amended by Laws of Utah 2016, Chapter 350
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
63N-1-102
 is amended to read:
63N-1-102.
Definitions.
As used in this title:
(1) "Baseline jobs" means the number of full-time employee positions that existed
within a business entity in the state before the date on which a project related to the business
entity is approved by the office or by the board.
(2) "Baseline state revenue" means the amount of state tax revenue collected from a
business entity or the employees of a business entity during the year before the date on which a
project related to the business entity is approved by the office or by the board.
(3) "Board" means the Board of Business and Economic Development created in
Section 
63N-1-401
.
(4) "Council" means the Governor's Economic Development Coordinating Council
created in Section 
63N-1-501
.
(5) "Executive director" means the executive director of the office.
(6) "Full-time employee" means an employment position that is filled by an employee
who works at least 30 hours per week and:
(a) may include an employment position filled by more than one employee, if each
employee who works less than 30 hours per week is provided benefits comparable to a
full-time employee; and
(b) may not include an employment position that is shifted from one jurisdiction in the
state to another jurisdiction in the state.
(7) "High paying job" means a newly created full-time employee position where the
aggregate average annual gross wage of the employment position, not including health care or
other paid or unpaid benefits, is
:
(a)
 at least 110% of the average wage of the county in which the employment position
exists[
.
]
; or
(b) for an employment position related to a project described in Chapter 2, Part 1,
Economic Development Tax Increment Financing, and that is located within the boundary of a
county of the third, fourth, fifth, or sixth class, or located within a municipality in a county of
the second class and where the municipality has a population of 10,000 or less:
(i) at least 100% of the average wage of the county in which the employment position
exists; or
(ii) an amount determined by rule made by the office in accordance with Title 63G,
Chapter 3, Utah Administrative Rulemaking Act, if the office determines the project is in a
county experiencing economic distress.
(8) 
(a)
 "Incremental job" means a full-time employment position in the state that:
[
(a)
] 
(i)
 did not exist within a business entity in the state before the beginning of a
project related to the business entity; and
[
(b)
] 
(ii)
 is created in addition to the number of baseline jobs that existed within a
business entity.
(b) "Incremental job" includes a full-time employment position where the employee is
hired:
(i) directly by a business entity; or
(ii) by a professional employer organization, as defined in Section 31A-40-102, on
behalf of a business entity.
(9) "New state revenue" means the state revenue collected from a business entity or a
business entity's employees during a calendar year minus the baseline state revenue calculation.
(10) "Office" or "GOED" means the Governor's Office of Economic Development.
(11) "State revenue" means state tax liability paid by a business entity or a business
entity's employees under any combination of the following provisions:
(a) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
(b) Title 59, Chapter 10, Part 1, Determination and Reporting of Tax Liability and
Information;
(c) Title 59, Chapter 10, Part 2, Trusts and Estates;
(d) Title 59, Chapter 10, Part 4, Withholding of Tax; and
(e) Title 59, Chapter 12, Sales and Use Tax Act.
Section 2. Section 
63N-2-103
 is amended to read:
63N-2-103.
Definitions.
As used in this part:
(1) "Authority" means:
(a) the Utah Inland Port Authority, created in Section 
11-58-201
; or
(b) the Military Installation Development Authority, created in Section 
63H-1-201
.
(2) "Authority project area" means a project area of:
(a) the Utah Inland Port Authority, created in Section 
11-58-201
; or
(b) the Military Installation Development Authority, created in Section 
63H-1-201
.
(3) 
(a)
 "Business entity" means a person that enters into an agreement with the office to
initiate a new commercial project in Utah that will qualify the person to receive a tax credit
under Section 
59-7-614.2
 or 
59-10-1107
.
(b) With respect to a tax credit authorized by the office in accordance with Subsection
63N-2-104
(3)(c)(ii), "business entity" includes a nonprofit entity.
(4) "Community reinvestment agency" has the same meaning as that term is defined in
Section 
17C-1-102
.
(5) "Development zone" means an economic development zone created under Section
63N-2-104
.
(6) "Local government entity" means a county, city, town, or authority that enters into
an agreement with the office to have a new commercial project that:
(a) is [
initiated
] 
located
 within:
(i) the boundary of the county, city, or town; or
(ii) an authority project area; and
(b) qualifies the county, city, town, or authority to receive a tax credit under Section
59-7-614.2
.
(7) (a) "New commercial project" means an economic development opportunity that
involves new or expanded industrial, manufacturing, distribution, or business services in Utah.
(b) "New commercial project" includes an economic development opportunity that
involves new or expanded agricultural or mining business services in Utah if the new
commercial project is located within a:
(i) county of the third, fourth, fifth, or sixth class; or
(ii) municipality that has a population of 10,000 or less and the municipality is in a
county of the second class.
[
(b)
] 
(c)
 "New commercial project" does not include retail business.
[
(8) "Significant capital investment" means an amount of at least $10,000,000 to
purchase capital or fixed assets, which may include real property, personal property, and other
fixtures related to a new commercial project:
]
[
(a) that represents an expansion of existing operations in the state; or
]
[
(b) that maintains or increases the business entity's existing work force in the state.
]
(8) "Significant capital investment" means an investment in capital or fixed assets in
the following amounts, which may include real property, personal property, and other fixtures
related to a new commercial project that represents an expansion of existing operations in the
state or that increases the business entity's existing workforce in the state:
(a) except as described in Subsection (8)(b), an amount of at least $10,000,000 for a
new commercial project located within the boundary of a county of the first or second class;
(b) an amount of at least $500,000 for a new commercial project located within the
boundary of a county of the third or fourth class, or located within a municipality in a county of
the second class and where the municipality has a population of 10,000 or less;
(c) an amount of at least $250,000 for a new commercial project located within the
boundary of a county of the fifth or sixth class; or
(d) an amount determined by rule made by the office in accordance with Title 63G,
Chapter 3, Utah Administrative Rulemaking Act.
(9) "Tax credit" means an economic development tax credit created by Section
59-7-614.2
 or 
59-10-1107
.
(10) "Tax credit amount" means the amount the office lists as a tax credit on a tax
credit certificate for a taxable year.
(11) "Tax credit certificate" means a certificate issued by the office that:
(a) lists the name of the business entity, local government entity, or community
development and renewal agency to which the office authorizes a tax credit;
(b) lists the business entity's, local government entity's, or community development and
renewal agency's taxpayer identification number;
(c) lists the amount of tax credit that the office authorizes the business entity, local
government entity, or community development and renewal agency for the taxable year; and
(d) may include other information as determined by the office.
Section 3. Section 
63N-2-104
 is amended to read:
63N-2-104.
Creation of economic development zones -- Tax credits -- Assignment
of tax credit.
(1) The office, with advice from the board, may create an economic development zone
in the state if the following requirements are satisfied:
(a) the area is zoned 
agricultural,
 commercial, industrial, manufacturing, business park,
research park, or other appropriate business related use in a community-approved master plan;
(b) the request to create a development zone has first been approved by an appropriate
local government entity; and
(c) local incentives have been or will be committed to be provided within the area.
(2) (a) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
the office shall make rules establishing the requirements for a business entity or local
government entity to qualify for a tax credit for a new commercial project in a development
zone under this part.
(b) The office shall ensure that the requirements described in Subsection (2)(a) include
the following:
(i) the new commercial project is within the development zone;
(ii) the new commercial project includes direct investment within the geographic
boundaries of the development zone;
(iii) the new commercial project brings new incremental jobs to Utah;
(iv) the new commercial project includes the creation of high paying jobs in the state,
significant capital investment in the state, or significant purchases from vendors, contractors, or
service providers in the state, or a combination of these three economic factors;
(v) the new commercial project generates new state revenues; and
(vi) a business entity, a local government entity, or a community reinvestment agency
to which a local government entity assigns a tax credit under this section meets the
requirements of Section 
63N-2-105
.
(3) (a) The office, after consultation with the board, may enter into a written agreement
with a business entity or local government entity authorizing a tax credit to the business entity
or local government entity if the business entity or local government entity meets the
requirements described in this section.
(b) (i) With respect to a new commercial project, the office may authorize a tax credit
to a business entity or a local government entity, but not both.
(ii) In determining whether to authorize a tax credit with respect to a new commercial
project to a business entity or a local government entity, the office shall authorize the tax credit
in a manner that the office determines will result in providing the most effective incentive for
the new commercial project.
(c) (i) Except as provided in Subsection [
(3)(c)(ii),
] 
(3)(c)(ii)(A), for a new commercial
project that is located within the boundary of a county of the first or second class,
 the office
may not authorize or commit to authorize a tax credit that exceeds:
(A) 50% of the new state revenues from the new commercial project in any given year;
or
(B) 30% of the new state revenues from the new commercial project over the lesser of
the life of a new commercial project or 20 years.
(ii) If the office authorizes or commits to authorize a tax credit for a new commercial
project located within the boundary of:
(A) a municipality with a population of 10,000 or less located within a county of the
second class and that is experiencing economic hardship as determined by the office, the office
shall authorize a tax credit of up to 50% of new state revenues from the new commercial
project over the lesser of the life of the new commercial project or 20 years;
(B) a county of the third class, the office shall authorize a tax credit of up to 50% of
new state revenues from the new commercial project over the lesser of the life of the new
commercial project or 20 years; and
(C) a county of the fourth, fifth, or sixth class, the office shall authorize a tax credit of
50% of new state revenues from the new commercial project over the lesser of the life of the
new commercial project or 20 years.
(iii) Notwithstanding any other provisions of this section, the office may not authorize
a tax credit under this section for a new commercial project:
(A) to a business entity that has claimed a High Cost Infrastructure Development Tax
Credit described in Section 
63M-4-603
 related to the same new commercial project; or
(B) in an amount more than the amount of the capital investment in the new
commercial project.
[
(ii) If the eligible business entity makes capital expenditures in the state of
$1,500,000,000 or more associated with a new commercial project, the office may:
]
[
(A) authorize or commit to authorize a tax credit not exceeding 60% of new state
revenues over the lesser of the life of the project or 20 years, if the other requirements of this
part are met;
]
[
(B) establish the year that state revenues and incremental jobs baseline data are
measured for purposes of an incentive under this Subsection (3)(c)(ii); and
]
[
(C) offer an incentive under this Subsection (3)(c)(ii) or modify an existing incentive
previously granted under Subsection (3)(c)(i) that is based on the baseline measurements
described in Subsection (3)(c)(ii)(B), except that the incentive may not authorize or commit to
authorize a tax credit of more than 60% of new state revenues in any one year.
]
(d) (i) A local government entity may by resolution assign a tax credit authorized by
the office to a community reinvestment agency.
(ii) The local government entity shall provide a copy of the resolution described in
Subsection (3)(d)(i) to the office.
(iii) If a local government entity assigns a tax credit to a community reinvestment
agency, the written agreement described in Subsection (3)(a) shall:
(A) be between the office, the local government entity, and the community
reinvestment agency;
(B) establish the obligations of the local government entity and the community
reinvestment agency; and
(C) establish the extent to which any of the local government entity's obligations are
transferred to the community reinvestment agency.
(iv) If a local government entity assigns a tax credit to a community reinvestment
agency:
(A) the community reinvestment agency shall retain records as described in Subsection
(4)(d); and
(B) a tax credit certificate issued in accordance with Section 
63N-2-105
 shall list the
community reinvestment agency as the named applicant.
(4) The office shall ensure that the written agreement described in Subsection (3):
(a) specifies the requirements that the business entity or local government entity shall
meet to qualify for a tax credit under this part;
(b) specifies the maximum amount of tax credit that the business entity or local
government entity may be authorized for a taxable year and over the life of the new commercial
project;
(c) establishes the length of time the business entity or local government entity may
claim a tax credit;
(d) requires the business entity or local government entity to retain records supporting a
claim for a tax credit for at least four years after the business entity or local government entity
claims a tax credit under this part; and
(e) requires the business entity or local government entity to submit to audits for
verification of the tax credit claimed.
Section 4. Section 
63N-2-105
 is amended to read:
63N-2-105.
Qualifications for tax credit -- Procedure.
(1) The office shall certify a business entity's or local government entity's eligibility for
a tax credit as provided in this part.
(2) A business entity or local government entity seeking to receive a tax credit as
provided in this part shall provide the office with:
(a) an application for a tax credit certificate, including a certification, by an officer of
the business entity, of any signature on the application;
(b) (i) for a business entity, documentation of the new state revenues from the business
entity's new commercial project that were paid during the preceding calendar year; or
(ii) for a local government entity, documentation of the new state revenues from the
new commercial project within the area of the local government entity that were paid during
the preceding calendar year;
(c) known or expected detriments to the state or existing businesses in the state;
(d) if a local government entity seeks to assign the tax credit to a community
reinvestment agency as described in Section 
63N-2-104
, a statement providing the name and
taxpayer identification number of the community reinvestment agency to which the local
government entity seeks to assign the tax credit;
(e) (i) with respect to a business entity, a document that expressly directs and
authorizes the State Tax Commission to disclose to the office the business entity's returns and
other information that would otherwise be subject to confidentiality under Section 
59-1-403
 or
Section 6103, Internal Revenue Code;
(ii) with respect to a local government entity that seeks to claim the tax credit:
(A) a document that expressly directs and authorizes the State Tax Commission to
disclose to the office the local government entity's returns and other information that would
otherwise be subject to confidentiality under Section 
59-1-403
 or Section 6103, Internal
Revenue Code; and
(B) if the new state revenues collected as a result of a new commercial project are
attributable in whole or in part to a new or expanded industrial, manufacturing, 
mining,
agricultural,
 distribution, or business service within a new commercial project within the area
of the local government entity, a document signed by an authorized representative of the new
or expanded industrial, manufacturing, 
mining, agricultural,
 distribution, or business service
that:
(I) expressly directs and authorizes the State Tax Commission to disclose to the office
the returns of the new or expanded industrial, manufacturing, distribution, or business service
and other information that would otherwise be subject to confidentiality under Section
59-1-403
 or Section 6103, Internal Revenue Code; and
(II) lists the taxpayer identification number of the new or expanded industrial,
manufacturing, 
mining, agricultural,
 distribution, or business service; or
(iii) with respect to a local government entity that seeks to assign the tax credit to a
community reinvestment agency:
(A) a document signed by the members of the governing body of the community
reinvestment agency that expressly directs and authorizes the State Tax Commission to
disclose to the office the returns of the community reinvestment agency and other information
that would otherwise be subject to confidentiality under Section 
59-1-403
 or Section 6103,
Internal Revenue Code; and
(B) if the new state revenues collected as a result of a new commercial project are
attributable in whole or in part to a new or expanded industrial, manufacturing, 
mining,
agricultural,
 distribution, or business service within a new commercial project within the
community reinvestment agency, a document signed by an authorized representative of the new
or expanded industrial, manufacturing, 
mining, agricultural,
 distribution, or business service
that:
(I) expressly directs and authorizes the State Tax Commission to disclose to the office
the returns of the new or expanded industrial, manufacturing, 
mining, agricultural,
 distribution,
or business service and other information that would otherwise be subject to confidentiality
under Section 
59-1-403
 or Section 6103, Internal Revenue Code; and
(II) lists the taxpayer identification number of the new or expanded industrial,
manufacturing, 
mining, agricultural,
 distribution, or business service; and
(f) for a business entity only, documentation that the business entity has satisfied the
performance benchmarks outlined in the written agreement described in Subsection
63N-2-104
(3)(a), including:
(i) the creation of new incremental jobs that are also high paying jobs;
(ii) significant capital investment;
(iii) significant purchases from Utah vendors and providers; or
(iv) a combination of these benchmarks.
(3) (a) The office shall submit the documents described in Subsection (2)(e) to the
State Tax Commission.
(b) Upon receipt of a document described in Subsection (2)(e), the State Tax
Commission shall provide the office with the returns and other information requested by the
office that the State Tax Commission is directed or authorized to provide to the office in
accordance with Subsection (2)(e).
(4) If, after review of the returns and other information provided by the State Tax
Commission, or after review of the ongoing performance of the business entity or local
government entity, the office determines that the returns and other information are inadequate
to provide a reasonable justification for authorizing or continuing a tax credit, the office shall:
(a) (i) deny the tax credit; or
(ii) terminate the agreement described in Subsection 
63N-2-104
(3)(a) for failure to
meet the performance standards established in the agreement; or
(b) inform the business entity or local government entity that the returns or other
information were inadequate and ask the business entity or local government entity to submit
new documentation.
(5) If after review of the returns and other information provided by the State Tax
Commission, the office determines that the returns and other information provided by the
business entity or local government entity provide reasonable justification for authorizing a tax
credit, the office shall, based upon the returns and other information:
(a) determine the amount of the tax credit to be granted to the business entity, local
government entity, or if the local government entity assigns the tax credit as described in
Section 
63N-2-104
, to the community reinvestment agency to which the local government
entity assigns the tax credit;
(b) issue a tax credit certificate to the business entity, local government entity, or if the
local government entity assigns the tax credit as described in Section 
63N-2-104
, to the
community reinvestment agency to which the local government entity assigns the tax credit;
and
(c) provide a duplicate copy of the tax credit certificate to the State Tax Commission.
(6) A business entity, local government entity, or community reinvestment agency may
not claim a tax credit unless the business entity, local government entity, or community
reinvestment agency has a tax credit certificate issued by the office.
(7) (a) A business entity, local government entity, or community reinvestment agency
may claim a tax credit in the amount listed on the tax credit certificate on its tax return.
(b) A business entity, local government entity, or community reinvestment agency that
claims a tax credit under this section shall retain the tax credit certificate in accordance with
Section 
59-7-614.2
 or 
59-10-1107
.