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First Substitute S.B. 186

Senator Howard A. Stephenson proposes to substitute the following bill:


             1     
REDEVELOPMENT AGENCY TAX INCREMENT CHANGES

             2     
2000 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Howard A. Stephenson

             5      AN ACT RELATING TO SPECIAL DISTRICTS; MODIFYING THE REQUIREMENTS FOR
             6      ADOPTION OF CERTAIN PROJECT AREA BUDGETS AND FOR AMENDMENTS TO
             7      CERTAIN PROJECT AREA BUDGETS; AND MAKING TECHNICAL CHANGES.
             8      This act affects sections of Utah Code Annotated 1953 as follows:
             9      AMENDS:
             10          17A-2-1247.5, as last amended by Chapters 21 and 194, Laws of Utah 1999
             11          17A-2-1264, as enacted by Chapter 279, Laws of Utah 1998
             12      Be it enacted by the Legislature of the state of Utah:
             13          Section 1. Section 17A-2-1247.5 is amended to read:
             14           17A-2-1247.5. Tax increment financing -- Project area budget approval -- Payment
             15      of additional tax increment.
             16          (1) This section applies to projects for which a preliminary plan has been adopted on or
             17      after July 1, 1993.
             18          (2) (a) A taxing agency committee shall be created for each redevelopment or economic
             19      development project. The committee membership shall be selected as follows:
             20          (i) two representatives appointed by the school district in the project area;
             21          (ii) two representatives appointed by resolution of the county commission or county
             22      council for the county in which the project area is located;
             23          (iii) two representatives appointed by resolution of the city or town's legislative body in
             24      which the project area is located if the project is located within a city or town;
             25          (iv) a representative approved by the State School Board; and


             26          (v) one representative who shall represent all of the remaining governing bodies of the
             27      other local taxing agencies that levy taxes upon the property within the proposed project area. The
             28      representative shall be selected by resolution of each of the governing bodies of those taxing
             29      agencies within 30 days after the notice provided in Subsection 17A-2-1256 (3).
             30          (b) If the project is located within a city or town, a quorum of a taxing agency committee
             31      consists of five members. If the project is not located within a city or town, a quorum consists of
             32      four members.
             33          (c) A taxing agency committee formed in accordance with this section has the authority
             34      to:
             35          (i) represent all taxing entities in a project area and cast votes that will be binding on the
             36      governing boards of all taxing entities in a project area;
             37          (ii) negotiate with the agency concerning the redevelopment plan;
             38          (iii) approve or disapprove project area budgets under Subsection (3); and
             39          (iv) approve an exception to the limits on the value and size of project areas imposed by
             40      Section 17A-2-1210 , or the time and amount of tax increment financing under this section.
             41          [(3) (a)(i) If the project area budget does not allocate 20% of the tax increment for housing
             42      as provided in Subsection 17A-2-1264 (2)(a):]
             43          [(A) an] (3) (a) (i) An agency may not collect any tax increment for a project area until
             44      after the agency obtains the majority consent of a quorum of the taxing agency committee for the
             45      project area budget[; and] if:
             46          [(B) a project area budget adopted under Subsection (3)(a)(i)(A) may be amended if the
             47      agency obtains the majority consent of a quorum of the taxing agency committee.]
             48          (A) the project area budget was adopted from July 1, 1993 to June 30, 1998 or after May
             49      1, 2000; or
             50          (B) the project area budget:
             51          (I) was adopted from July 1, 1998 to May 1, 2000; and
             52          (II) does not allocate 20% of the tax increment for housing as provided in Subsection
             53      17A-2-1264 (2)(a).
             54          (ii) [If the] For a project area budget adopted from July 1, 1998 to May 1, 2000 that
             55      allocates 20% of the tax increment for housing as provided in Subsection 17A-2-1264 (2)(a)[: (A)]
             56      and for the portion of the project area budget that has been contractually committed to a project,


             57      bonds, debt coverage on bonds, or other indebtedness before July 1, 2000, an agency may [not]
             58      collect tax increment from all or part of a project area [until after] if:
             59          [(I)] (A) the Olene Walker Housing Trust Fund Board, established under Title 9, Chapter
             60      4, Part 7, Olene Walker Housing Trust Fund, has certified the project area budget as complying
             61      with the requirements of Section 17A-2-1264 ; and
             62          [(II)] (B) the agency's governing body has approved and adopted the project area budget
             63      by a two-thirds vote[; and].
             64          [(B) a project area budget adopted under Subsection (3)(a)(ii)(A) may be amended if:]
             65          [(I) the Olene Walker Housing Trust Fund Board, established under Title 9, Chapter 4, Part
             66      7, Olene Walker Housing Trust Fund, certifies the amendment as complying with the requirements
             67      of Section 17A-2-1264 ; and]
             68          [(II) the agency's governing body approves and adopts the amendment by a two-thirds
             69      vote.]
             70          (iii) (A) For a project area budget adopted from July 1, 1998 to May 1, 2000 and for the
             71      portion of the project area budget that has not been contractually committed to a project, bonds,
             72      debt coverage on bonds, or other indebtedness by July 1, 2000, an agency may collect tax
             73      increment from all or part of a project area if it obtains the majority consent of a quorum of the
             74      taxing agency committee before October 1, 2000.
             75          (B) The agency shall comply with Subsection 17A-2-1264 (2)(b) before the taxing agency
             76      committee may give its consent under Subsection (3)(a)(iii)(A).
             77          (b) With the majority consent of a quorum of the taxing agency committee, an agency may
             78      amend a project area budget that was adopted under Subsection (3)(a).
             79          [(b)] (c) (i)Within 30 days after the approval and adoption of a project area budget, each
             80      agency shall file a copy of the budget with the county auditor, the State Tax Commission, the state
             81      auditor, and each property taxing entity affected by the agency's collection of tax increment under
             82      the project area budget.
             83          (ii) Each agency whose project area budget allocates 20% or more of tax increment for
             84      housing as provided in Subsection 17A-2-1264 (2)(a) shall file a copy of the budget with the Olene
             85      Walker Housing Trust Fund established under Title 9, Chapter 4, Part 7, Olene Walker Housing
             86      Trust Fund.
             87          [(c)] (d) (i) [Beginning] Except the portion of the project area budget under Subsection


             88      (3)(a)(iii)(A) and beginning on January 1, 1997, before [an amendment to] a project area budget
             89      or amendment to a project area budget is approved, the agency shall advertise and hold one public
             90      hearing on the proposed change in the project area budget.
             91          (ii) The public hearing under Subsection (3)[(c)](d)(i) shall be conducted according to the
             92      procedures and requirements of Subsection 17A-2-1222 (2), except that if the amended budget
             93      allocates a greater proportion of tax increment to a project area than was allocated to the project
             94      area under the previous budget, the advertisement shall state the percentage allocated under the
             95      previous budget and the percentage allocated under the amended budget.
             96          [(d)] (e) If an amendment under Subsection (3)(b) is not approved, the agency shall
             97      continue to operate under the previously approved, unamended project area budget.
             98          (4) (a) An agency may collect tax increment from all or a part of a project area. The tax
             99      increment shall be paid to the agency in the same manner and at the same time as payments of
             100      taxes to other taxing agencies to pay the principal of and interest on loans, moneys advanced to,
             101      or indebtedness, whether funded, refunded, assumed, or otherwise, to finance or refinance, in
             102      whole or in part, the redevelopment or economic development project and the housing projects and
             103      programs under Sections 17A-2-1263 and 17A-2-1264 .
             104          (b) (i) An agency may elect to be paid:
             105          (A) if 20% of the project area budget is not allocated for housing as provided in Subsection
             106      17A-2-1264 (2)(a):
             107          (I) 100% of annual tax increment for 12 years; or
             108          (II) 75% of annual tax increment for 20 years; or
             109          (B) if 20% of the project area budget is allocated for housing as provided in Subsection
             110      17A-2-1264 (2)(a):
             111          (I) 100% of annual tax increment for 15 years; or
             112          (II) 75% of annual tax increment for 24 years.
             113          (ii) Tax increment paid to an agency under this Subsection (4)(b) shall be paid for the
             114      applicable length of time beginning the first tax year the agency accepts tax increment from a
             115      project area.
             116          (c) An agency may receive a greater percentage of tax increment or receive tax increment
             117      for a longer period of time than that specified in Subsection (4)(b) if the agency obtains the
             118      majority consent of the taxing agency committee.


             119          (5) (a) The redevelopment plan shall provide that the portion of the taxes, if any, due to
             120      an increase in the tax rate by a taxing agency after the date the project area budget is approved by
             121      the taxing agency committee may not be allocated to and when collected paid into a special fund
             122      of the redevelopment agency according to the provisions of Subsection (4) unless the taxing
             123      agency committee approves the inclusion of the increase in the tax rate at the time the project area
             124      budget is approved. If approval of the inclusion of the increase in the tax rate is not obtained, the
             125      portion of the taxes attributable to the increase in the rate shall be distributed by the county to the
             126      taxing agency imposing the tax rate increase in the same manner as other property taxes.
             127          (b) The amount of the tax rate to be used in determining tax increment shall be increased
             128      or decreased by the amount of an increase or decrease as a result of:
             129          (i) a statute enacted by the Legislature, a judicial decision, or an order from the State Tax
             130      Commission to a county to adjust or factor its assessment rate under Subsection 59-2-704 (2);
             131          (ii) a change in exemption provided in Utah Constitution Article XIII, Section 2, or Section
             132      59-2-103 ;
             133          (iii) an increase or decrease in the percentage of fair market value, as defined under
             134      Section 59-2-102 ; or
             135          (iv) a decrease in the certified tax rate under Subsection 59-2-924 (2)(c) or (2)(d)(i).
             136          (c) (i) Notwithstanding the increase or decrease resulting from Subsection (5)(b), the
             137      amount of money allocated to, and when collected paid to the agency each year for payment of
             138      bonds or other indebtedness may not be less than would have been allocated to and when collected
             139      paid to the agency each year if there had been no increase or decrease under Subsection (5)(b).
             140          (ii) For a decrease resulting from Subsection (5)(b)(iv), the taxable value for the base year
             141      under Subsection 17A-2-1202 (2) or 17A-2-1247 (2)(a), as the case may be, shall be reduced for any
             142      year to the extent necessary, including below zero, to provide an agency with approximately the
             143      same amount of money the agency would have received without a reduction in the county's
             144      certified tax rate if:
             145          (A) in that year there is a decrease in the certified tax rate under Subsection 59-2-924 (2)(c)
             146      or (2)(d)(i);
             147          (B) the amount of the decrease is more than 20% of the county's certified tax rate of the
             148      previous year; and
             149          (C) the decrease results in a reduction of the amount to be paid to the agency under Section


             150      17A-2-1247 or 17A-2-1247.5 .
             151          (6) (a) For redevelopment plans first adopted before May 4, 1993, beginning January 1,
             152      1994, all of the taxes levied and collected upon the taxable property in the redevelopment project
             153      under Section 59-2-906.1 which are not pledged to support bond indebtedness and other
             154      contractual obligations are exempt from the provisions of Subsection (4).
             155          (b) For redevelopment plans first adopted after May 3, 1993, beginning January 1, 1994,
             156      all of the taxes levied and collected upon the taxable property in the redevelopment project under
             157      Section 59-2-906.1 are exempt from the provisions of Subsection (4).
             158          (7) (a) In addition to the amounts and periods that an agency may elect to be paid tax
             159      increment under Subsection (4)(b), an agency may elect to be paid 100% of annual tax increment
             160      for an additional period, as provided in Subsection (7)(b), beyond those periods provided under
             161      Subsection (4)(b), without the approval of the taxing agency committee, if the tax increment
             162      funding for the additional period is used:
             163          (i) for an agency in a city in which is located all or a portion of an interchange on I-15 or
             164      that would directly benefit from an interchange on I-15, to pay some or all of the cost of the
             165      installation, construction, or reconstruction of:
             166          (A) an interchange on I-15; or
             167          (B) frontage and other roads connecting to the interchange, as determined by the
             168      Department of Transportation created under Section 72-1-201 and the Transportation Commission
             169      created under Section 72-1-301 ; or
             170          (ii) for an agency in a city of the first class, to pay some or all of the cost of the land for
             171      and installation and construction of a recreational facility, as defined in Subsection 59-12-702 (3),
             172      or a cultural facility, including parking and infrastructure improvements related to the recreational
             173      or cultural facility.
             174          (b) The additional period for which an agency may be paid 100% of annual tax increment
             175      under Subsection (7)(a) is an additional:
             176          (i) 13 years, for an agency that initially elected to be paid under Subsection (4)(b)(i)(A)(I);
             177          (ii) five years, for an agency that initially elected to be paid under Subsection
             178      (4)(b)(i)(A)(II);
             179          (iii) ten years, for an agency that initially elected to be paid under Subsection
             180      (4)(b)(i)(B)(I); and


             181          (iv) one year, for an agency that initially elected to be paid under Subsection
             182      (4)(b)(i)(B)(II).
             183          (c) This Subsection (7) applies only to an agency established by a city in which:
             184          (i) for an agency in a city in which is located all or a portion of an interchange on I-15 or
             185      that would directly benefit from an interchange on I-15, the installation, construction, or
             186      reconstruction of an interchange on I-15 or frontage or other roads connecting to the interchange
             187      has begun on or before June 30, 2000; and
             188          (ii) for an agency in a city of the first class, the installation or construction of a recreational
             189      facility, as defined in Subsection 59-12-702 (3), or a cultural facility has begun on or before June
             190      30, 2000.
             191          (d) Notwithstanding any other provision of this Subsection (7), a school district may not
             192      receive less tax increment because of application of the other provisions of this Subsection (7) than
             193      it would have received without those provisions.
             194          Section 2. Section 17A-2-1264 is amended to read:
             195           17A-2-1264. Affordable housing funds under redevelopment plans adopted on or
             196      after July 1, 1998.
             197          (1) As used in this section:
             198          (a) "Affordable housing" has the meaning as defined under Subsection 17A-2-1263 (6).
             199          (b) "Annual income" has the meaning as defined under regulations of the U.S. Department
             200      of Housing and Urban Development, 24 CFR, Part 813, as amended or as superseded by
             201      replacement regulations.
             202          (c) "Board" means the Olene Walker Housing Trust Fund Board, established under Title
             203      9, Chapter 4, Part 7, Olene Walker Housing Trust Fund.
             204          (d) "Fair share ratio" means the ratio derived by:
             205          (i) for a city or town, comparing the percentage of all housing units within the city or town
             206      that are publicly subsidized income targeted housing units to the percentage of all housing units
             207      within the whole county that are publicly subsidized income targeted housing units; or
             208          (ii) for the unincorporated part of a county, comparing the percentage of all housing units
             209      within the unincorporated county that are publicly subsidized income targeted housing units to the
             210      percentage of all housing units within the whole county that are publicly subsidized income
             211      targeted housing units.


             212          (e) "Family" has the meaning as defined under regulations of the U.S. Department of
             213      Housing and Urban Development, 24 CFR, Part 813, as amended or as superseded by replacement
             214      regulations.
             215          (f) "Housing funds" means the funds allocated in the project area budget under Subsection
             216      (2)(a) for the purposes provided in Subsection (3).
             217          (g) "Income targeted housing" means housing to be owned or occupied by a family whose
             218      annual income is at or below 80% of the median annual income for the county in which the
             219      housing is located.
             220          (h) "Unincorporated" means not within a city or town.
             221          (2) (a) A project area budget for a redevelopment plan that is adopted on or after July 1,
             222      1998, may allocate 20% of the tax increment funds payable to the agency over the life of the
             223      redevelopment plan for use as provided in Subsection (3).
             224          (b) [Before] (i) Beginning May 1, 2000, before an agency may adopt a project area budget
             225      that allocates 20% of tax increment funds under Subsection (2)(a), the [board] agency shall [certify
             226      the project area budget to be in compliance with the requirements of this section] prepare and
             227      adopt a housing plan showing the uses for the housing funds and provide a copy of the plan to the
             228      taxing agency committee and board.
             229          (ii) If an agency amends a plan prepared under Subsection (2)(b)(i), the agency shall
             230      provide a copy of the amendment to the taxing agency committee and board.
             231          (c) (i) If an agency fails to provide housing funds in accordance with the [certified] project
             232      area budget and the housing plan, if applicable, the board may bring legal action to compel the
             233      agency to provide the housing funds.
             234          (ii) In an action under Subsection (2)(c)(i), the court:
             235          (A) shall award the board a reasonable attorney's fee, unless the court finds that the action
             236      was frivolous; and
             237          (B) may not award the agency its attorney's fees, unless the court finds that the action was
             238      frivolous.
             239          (3) (a) Each agency shall use all housing funds allocated under Subsection (2)(a) to:
             240          (i) pay part or all of the cost of land or construction of income targeted housing within the
             241      community that created the agency, if practicable in a mixed income development or area;
             242          (ii) pay part or all of the cost of rehabilitation of income targeted housing within the


             243      community that created the agency;
             244          (iii) pay part or all of the cost of land or installation, construction, or rehabilitation of any
             245      building, facility, structure, or other housing improvement, including infrastructure improvements,
             246      related to housing located in a redevelopment project area where blight has been found to exist;
             247          (iv) replace housing units lost as a result of the redevelopment or economic development;
             248          (v) make payments on or establish a reserve fund for bonds:
             249          (A) issued by the agency, the community, or the housing authority that provides income
             250      targeted housing within the community; and
             251          (B) all or part of the proceeds of which are used within the community for the purposes
             252      stated in Subsections (3)(a)(i), (ii), (iii), or (iv); or
             253          (vi) if the community's fair share ratio at the time of the first adoption of the project area
             254      budget is at least 1.1 to 1.0, make payments on bonds:
             255          (A) that were previously issued by the agency, the community, or the housing authority
             256      that provides income targeted housing within the community; and
             257          (B) all or part of the proceeds of which were used within the community for the purposes
             258      stated in Subsections (3)(a)(i), (ii), (iii), or (iv).
             259          (b) As an alternative to the requirements of Subsection (3)(a), an agency may pay all
             260      housing funds to:
             261          (i) the community for use as provided under Subsection (3)(a);
             262          (ii) the housing authority that provides income targeted housing within the community for
             263      use in providing income targeted housing within the community; or
             264          (iii) the Olene Walker Housing Trust Fund, established under Title 9, Chapter 4, Part 7,
             265      Olene Walker Housing Trust Fund, for use in providing income targeted housing within the
             266      community.
             267          (4) The agency or community shall hold the housing funds, together with all interest
             268      earned by the housing funds and all payments or repayments for loans, advances, or grants from
             269      the housing funds, in a separately designated account until the funds are used pursuant to this
             270      section.
             271          (5) In using housing funds under Subsection (3)(a), an agency may lend, grant, or
             272      contribute housing funds to a person, public body, housing authority, private entity or business,
             273      or nonprofit organization for use as provided in Subsection (3)(a).


             274          (6) An agency may:
             275          (a) issue bonds from time to time to finance a housing undertaking under this section,
             276      including the payment of principal and interest upon advances for surveys and plans or preliminary
             277      loans; and
             278          (b) issue refunding bonds for the payment or retirement of bonds under Subsection (6)(a)
             279      previously issued by the agency.
             280          (7) Expenditures or obligations incurred by an agency under this section shall constitute
             281      an indebtedness incurred by the agency.


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