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S.B. 242 Enrolled

             1     

ECONOMIC DEVELOPMENT INCENTIVES FOR

             2     
ALTERNATIVE ENERGY PROJECTS

             3     
2010 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Kevin T. Van Tassell

             6     
House Sponsor: John G. Mathis

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies provisions of the Renewable Energy Development Act dealing with
             11      economic development incentives for alternative energy projects.
             12      Highlighted Provisions:
             13          This bill:
             14          .    changes the name of the Renewable Energy Development Act to the Alternative
             15      Energy Development Act;
             16          .    provides definitions for alternative energy, alternative energy development zones,
             17      and alternative energy project;
             18          .    provides the Governor's Office of Economic Development with criteria for
             19      determining a qualifying tax credit under the act; and
             20          .    makes certain conforming and technical changes.
             21      Monies Appropriated in this Bill:
             22          None
             23      Other Special Clauses:
             24          None
             25      Utah Code Sections Affected:
             26      AMENDS:
             27          63M-1-2801, as enacted by Laws of Utah 2009, Chapter 198
             28          63M-1-2802, as enacted by Laws of Utah 2009, Chapter 198
             29          63M-1-2803, as enacted by Laws of Utah 2009, Chapter 198


             30          63M-1-2804, as enacted by Laws of Utah 2009, Chapter 198
             31          63M-1-2805, as enacted by Laws of Utah 2009, Chapter 198
             32          63M-1-2806, as enacted by Laws of Utah 2009, Chapter 198
             33     
             34      Be it enacted by the Legislature of the state of Utah:
             35          Section 1. Section 63M-1-2801 is amended to read:
             36     
Part 28. Alternative Energy Development Act

             37           63M-1-2801. Title.
             38          This part is known as the "[Renewable] Alternative Energy Development Act."
             39          Section 2. Section 63M-1-2802 is amended to read:
             40           63M-1-2802. Findings.
             41          (1) The Legislature finds that:
             42          (a) to foster and develop the [renewable] alternative energy industry in Utah, including
             43      generation and manufacturing, will promote the interest of Utah's citizens in encouraging the
             44      growth of the state's economy;
             45          (b) Utah loses prospective high paying jobs, new economic growth, and corresponding
             46      incremental new state and local revenues to competing states due to a wide variety of
             47      competing [renewable] energy incentives offered by those states; and
             48          (c) [renewable] alternative energy initiatives and interests of state and local officials
             49      should be aligned and united in [renewable] alternative energy generation and related
             50      manufacturing.
             51          (2) This part is enacted to:
             52          (a) increase generation of [renewable] alternative energy and create high paying jobs
             53      in the [renewable] alternative energy industry, thereby growing the state's economy and
             54      corresponding state and local revenues by providing tax credits to attract new [renewable]
             55      alternative energy projects and assist in the expansion of existing [renewable] alternative
             56      energy projects located within [renewable] alternative energy development zones in the state;
             57      and


             58          (b) provide a cooperative and unified working relationship between state and local
             59      [renewable] alternative energy development efforts.
             60          Section 3. Section 63M-1-2803 is amended to read:
             61           63M-1-2803. Definitions.
             62          As used in this part:
             63          (1) (a) "Alternative energy"means:
             64          (i) renewable energy that is derived from solar, wind, geothermal, biomass, or
             65      hydroelectric sources; and
             66          (ii) petroleum coke, shale oil, nuclear fuel, tar sands, or oil-impregnated diatomaceous
             67      earth.
             68          (b) "Alternative energy" does not mean conventional natural gas or petroleum.
             69          (2) "Alternative energy development zone" means an alternative energy development
             70      zone created under Section 63M-1-2804 .
             71          (3) "Alternative energy project" means a development opportunity that involves:
             72          (a) utility-scale alternative energy generation;
             73          (b) the extraction of alternative fuels; or
             74          (c) manufacturing of equipment used directly in alternative energy generation.
             75          [(1)] (4) "Business entity" means a person that:
             76          (a) conducts business in Utah; and
             77          (b) enters into an agreement with the office that qualifies the person to receive a tax
             78      credit under Section 59-7-614.2 or 59-10-1107 .
             79          [(2)] (5) "High paying jobs" means the annual wages of employment positions in a
             80      business entity that compare favorably against the average wage of a community in which the
             81      employment positions will exist.
             82          [(3)] (6) "New incremental jobs" means employment positions that are:
             83          (a) not shifted from one jurisdiction in the state to another jurisdiction in the state; and
             84          (b) created in addition to the baseline count of employment positions that existed
             85      within the business entity before the new commercial project.


             86          [(4)] (7) "New state revenues" means:
             87          (a) incremental new state sales and use tax revenues generated as a result of [a
             88      renewable] an alternative energy project in [a renewable] an alternative energy development
             89      zone that a business entity pays under Title 59, Chapter 12, Sales and Use Tax Act;
             90          (b) incremental new state tax revenues that a business entity pays as a result of [a
             91      renewable] an alternative energy project in [a renewable] an alternative energy development
             92      zone under:
             93          (i) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
             94          (ii) Title 59, Chapter 10, Part 1, Determination and Reporting of Tax Liability and
             95      Information;
             96          (iii) Title 59, Chapter 10, Part 2, Trusts and Estates;
             97          (iv) Title 59, Chapter 10, Part 4, Withholding of Tax; or
             98          (v) a combination of Subsections [(4)] (7)(b)(i) through [(4)] (7)(b)(iv);
             99          (c) incremental new state tax revenues generated as individual income taxes under
             100      Title 59, Chapter 10, Part 1, Determination and Reporting of Tax Liability and Information,
             101      paid by employees of the new commercial project as evidenced by payroll records from the
             102      business entity; or
             103          (d) a combination of Subsections [(4)] (7)(a) through [(4)] (7)(c).
             104          [(5)] (8) "Office" means the Governor's Office of Economic Development.
             105          [(6) "Renewable energy" means the energy generation as defined in Subsection
             106      10-19-102 (11) and includes generation powered by nuclear fuel.]
             107          [(7) "Renewable energy development zone" means a renewable energy development
             108      zone created under Section 63M-1-2804 .]
             109          [(8) "Renewable energy project" means a development opportunity that involves
             110      renewable energy generation or manufacturing of equipment used directly in renewable energy
             111      generation of increased energy efficiency.]
             112          (9) "Tax credit" means an economic development tax credit created by Section
             113      59-7-614.2 or 59-10-1107 .


             114          (10) "Tax credit amount" means the amount the office lists as a tax credit on a tax
             115      credit certificate for a taxable year.
             116          (11) "Tax credit certificate" means a certificate issued by the office that:
             117          (a) lists the name of the applicant;
             118          (b) lists the applicant's taxpayer identification number;
             119          (c) lists the amount of the tax credit that the office awards the applicant for a taxable
             120      year; and
             121          (d) may include other information as determined by the office.
             122          Section 4. Section 63M-1-2804 is amended to read:
             123           63M-1-2804. Creation of alternative energy development zones -- Tax credits.
             124          (1) The office, with advice from the board, may create [a renewable] an alternative
             125      energy development zone in the state that satisfies the following requirements:
             126          (a) the area is zoned commercial, industrial, manufacturing, business park, research
             127      park, or other appropriate use in a community approved master plan;
             128          (b) the request to create [a renewable] an alternative energy development zone has
             129      been forwarded to the office after first being approved by an appropriate local government
             130      entity; and
             131          (c) the local government entity has committed or will commit to provide incentives,
             132      which may include an abatement of some or all of the property taxes for up to 30 years for [a
             133      renewable] an alternative energy project qualified under this part.
             134          (2) (a) By following the procedures and requirements of Title 63G, Chapter 4,
             135      Administrative Procedures Act, the office shall set standards that a business entity must meet
             136      to qualify for a tax credit under this part.
             137          (b) The office shall ensure that those standards include the following requirements:
             138          (i) the [renewable] alternative energy project must be within [a renewable] an
             139      alternative energy development zone;
             140          (ii) the [renewable] alternative energy project includes direct investment within the
             141      geographic boundaries of the [renewable] alternative energy development zone;


             142          (iii) the [renewable] alternative energy project brings new incremental jobs to Utah;
             143          (iv) the [renewable] alternative energy project includes significant capital investment,
             144      the creation of high paying jobs, or significant purchases from Utah vendors and providers, or
             145      any combination of these three economic factors;
             146          (v) the [renewable] alternative energy project generates new state revenues; and
             147          (vi) the business entity qualifying for the tax credit meets the requirements of Section
             148      63M-1-2405 .
             149          (3) (a) The office, with advice from the board[,]:
             150          (i) may enter into an agreement with a business entity authorizing a tax credit to a
             151      business entity that meets the standards established under Subsection (2); and
             152          (ii) shall consider economic modeling, including the costs and benefits of the
             153      alternative energy project to state and local governments, in determining the tax credit amount.
             154          (b) The office may not authorize or commit a tax credit to a business entity that
             155      exceeds 100% of the new state revenues generated by the business entity's [renewable]
             156      alternative energy project over the life of [a renewable] an alternative energy project or 20
             157      years, whichever is less.
             158          (4) The office shall ensure that the agreement with the business entity that is described
             159      in Subsection (3):
             160          (a) details the requirements that the business entity must meet to qualify for a tax
             161      credit under this part;
             162          (b) specifies the maximum amount of tax credit that the business entity may earn over
             163      the life of the [renewable] alternative energy project;
             164          (c) establishes the length of time the business entity may claim a tax credit;
             165          (d) requires the business entity to retain records supporting its claim for a tax credit for
             166      at least four years after the business entity claims a tax credit under this part; and
             167          (e) requires the business entity to submit to audits for verification of the tax credit
             168      claimed.
             169          Section 5. Section 63M-1-2805 is amended to read:


             170           63M-1-2805. Qualifications for tax credit -- Procedure.
             171          (1) The office shall certify a business entity's eligibility for a tax credit as provided in
             172      this section.
             173          (2) A business entity seeking to receive a tax credit shall provide the office with:
             174          (a) an application for the tax credit certificate;
             175          (b) documentation of the new state revenues generated from the business entity's
             176      [renewable] alternative energy project that were paid during the preceding calendar year; and
             177          (c) a document that expressly directs and authorizes the State Tax Commission to
             178      disclose to the office the business entity's returns and other information concerning the
             179      business entity that would otherwise be subject to confidentiality under Section 59-1-403 or
             180      Section 6103 of the Internal Revenue Code.
             181          (3) (a) The office shall submit the document referred to in Subsection (2)(c) to the
             182      State Tax Commission.
             183          (b) Upon receipt of the document, the State Tax Commission shall provide the office
             184      with the information requested by the office that the business entity directed or authorized the
             185      State Tax Commission to provide to the office in the document referred to in Subsection
             186      (2)(c).
             187          (4) If after review of the information provided by the business entity and the State Tax
             188      Commission the office determines that the documentation provided by the business entity is
             189      not substantially accurate, the office shall either:
             190          (a) deny the tax credit; or
             191          (b) inform the business entity that the documentation was inadequate and ask the
             192      business entity to submit new documentation.
             193          (5) If after review of the information provided by the entity and the State Tax
             194      Commission the office determines that the documentation provided by the business entity is
             195      substantially accurate, the office shall, based upon the documentation:
             196          (a) determine the amount of the tax credit to be granted to the business entity;
             197          (b) issue a tax credit certificate to the business entity; and


             198          (c) provide a duplicate copy of the tax credit certificate to the State Tax Commission.
             199          (6) A business entity may not claim a tax credit under this part unless the business
             200      entity has a tax credit certificate issued by the office.
             201          (7) A business entity that claims the credit under this section shall retain the tax credit
             202      certificate in accordance with Section 59-7-614.2 or 59-10-1107 .
             203          Section 6. Section 63M-1-2806 is amended to read:
             204           63M-1-2806. Report to the Legislature.
             205          The office shall report annually to the Legislature's Workforce Services and
             206      Community and Economic Development Interim Committee and the Utah Tax Review
             207      Commission describing:
             208          (1) its success in attracting [renewable] alternative energy projects to [renewable]
             209      alternative energy development zones under this part and the corresponding increase in new
             210      increment jobs;
             211          (2) the amount of tax credits promised and the period of time over which the tax
             212      credits will be paid; and
             213          (3) the economic impact on the state related to generating new state revenues and
             214      providing tax credits under this part.


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