S.B. 76

1

RURAL ECONOMIC MAPPING AND PARTNERSHIP
2 2014 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Stuart C. Reid
5 House Sponsor: ____________
6
7 LONG TITLE
8 General Description:
9 This bill modifies provisions related to economic development in rural counties and the
10 duties of the Office of Rural Development.
11 Highlighted Provisions:
12 This bill:
13 . defines terms;
14 . modifies programs that provide economic development assistance related to rural
15 counties, including:
16 . enterprise zones;
17 . the Industrial Assistance Account; and
18 . the Rural Fast Track Program;
19 . modifies the duties of the Office of Rural Development by requiring that it assist
20 participating rural counties in creating a written strategic plan that maps economic
21 development targets and strategies for the county; and
22 . makes technical changes.
23 Money Appropriated in this Bill:
24 None
25 Other Special Clauses:
26 None
27 Utah Code Sections Affected:

28 AMENDS:
29 63M-1-404 , as last amended by Laws of Utah 2013, Chapter 358
30 63M-1-406 , as last amended by Laws of Utah 2011, Chapter 84
31 63M-1-903 , as last amended by Laws of Utah 2012, Chapters 18 and 208
32 63M-1-904 , as last amended by Laws of Utah 2012, Chapters 18 and 246
33 63M-1-906 , as last amended by Laws of Utah 2012, Chapter 208
34 63M-1-910 , as last amended by Laws of Utah 2013, Chapter 310
35 63M-1-1601 , as renumbered and amended by Laws of Utah 2008, Chapter 382
36 ENACTS:
37 63M-1-1607 , Utah Code Annotated 1953
38
39 Be it enacted by the Legislature of the state of Utah:
40 Section 1. Section 63M-1-404 is amended to read:
41 63M-1-404. Criteria for designation of enterprise zones -- Application.
42 (1) A county applicant seeking designation as an enterprise zone shall file an
43 application with the office that, in addition to complying with the other requirements of this
44 part:
45 (a) verifies that the county has a population of not more than [50,000] 75,000; and
46 (b) provides clear evidence of the need for development in the county.
47 (2) A municipal applicant seeking designation as an enterprise zone shall file an
48 application with the office that provides clear evidence of the need for development in the
49 municipality, and, in addition to complying with other requirements of this part:
50 (a) verifies that the municipality is within a county that has:
51 (i) created a strategic plan with the assistance of the Office of Rural Development as
52 described in Section 63M-1-1607 ; and
53 (ii) a population of not more than 75,000; or
54 [(a)] (b) verifies that the municipality:
55 (i) has a population [that does not exceed] of not more than 15,000; and
56 [(b) verifies that the municipality] (ii) is within a county that has a population of not
57 more than 50,000[; and].
58 [(c) provides clear evidence of the need for development in the municipality.]

59 (3) An application filed under Subsection (1) or (2) shall be in a form and in
60 accordance with procedures approved by the office, and shall include the following
61 information:
62 (a) a plan developed by the county applicant or municipal applicant that identifies local
63 contributions meeting the requirements of Section 63M-1-405 ;
64 (b) the county applicant or municipal applicant has a development plan that outlines:
65 (i) the types of investment and development within the zone that the county applicant
66 or municipal applicant expects to take place if the incentives specified in this part are provided;
67 (ii) the specific investment or development reasonably expected to take place;
68 (iii) any commitments obtained from businesses;
69 (iv) the projected number of jobs that will be created and the anticipated wage level of
70 those jobs;
71 (v) any proposed emphasis on the type of jobs created, including any affirmative action
72 plans; and
73 (vi) a copy of the county applicant's or municipal applicant's economic development
74 plan to demonstrate coordination between the zone and overall county or municipal goals;
75 (c) the county applicant's or municipal applicant's proposed means of assessing the
76 effectiveness of the development plan or other programs within the zone once they have been
77 implemented within the zone;
78 (d) any additional information required by the office; and
79 (e) any additional information the county applicant or municipal applicant considers
80 relevant to its designation as an enterprise zone.
81 Section 2. Section 63M-1-406 is amended to read:
82 63M-1-406. Eligibility review.
83 (1) The office shall:
84 (a) review and evaluate the applications submitted under Section 63M-1-404 ; and
85 (b) determine whether each county applicant or municipal applicant is eligible for
86 designation as an enterprise zone.
87 (2) (a) The office shall designate enterprise zones.
88 (b) The office shall consider and evaluate an application using the following criteria:
89 (i) the pervasiveness of poverty, unemployment, and general distress in the proposed

90 zone;
91 (ii) the extent of chronic abandonment, deterioration, or reduction in value of
92 commercial, industrial, or residential structures in the proposed zone, and the extent of property
93 tax arrearages in the proposed zone;
94 (iii) the potential for new investment and economic development in the proposed zone;
95 (iv) whether the proposed zone is in a county where the county has created a strategic
96 plan with the assistance of the Office of Rural Development as described in Section
97 63M-1-1607 and the extent to which planned investment and economic development in the
98 proposed zone meets the economic development targets and strategies of the plan;
99 [(iv)] (v) the county applicant's or municipal applicant's proposed use of other state and
100 federal development funds or programs to increase the probability of new investment and
101 development occurring;
102 [(v)] (vi) the extent to which the projected development in the zone will provide
103 employment to residents of the county and particularly individuals who are unemployed or who
104 are economically disadvantaged;
105 [(vi)] (vii) the degree to which the county applicant's or municipal applicant's
106 application promotes innovative solutions to economic development problems and
107 demonstrates local initiative; and
108 [(vii)] (viii) other relevant factors that the office specifies in its recommendation.
109 Section 3. Section 63M-1-903 is amended to read:
110 63M-1-903. Industrial Assistance Account created -- Uses -- Administrator duties
111 -- Costs.
112 (1) There is created a restricted account within the General Fund known as the
113 "Industrial Assistance Account" of which:
114 (a) up to 50% may be used in economically disadvantaged rural areas located in any
115 county that has created a strategic plan with the assistance of the Office of Rural Development
116 as described in Section 63M-1-1607 ;
117 (b) up to 25% may be used to take timely advantage of economic opportunities as they
118 arise;
119 (c) up to 4% may be used to promote business and economic development in rural
120 areas of the state with the Business Expansion and Retention Initiative; and

121 (d) up to $3,000,000 one-time shall be used for the purpose of incubating technology
122 solutions related to economic and workforce development.
123 (2) The administrator shall administer:
124 (a) the restricted account created under Subsection (1), under the policy direction of the
125 board; and
126 (b) the Business Expansion and Retention Initiative for the rural areas of the state.
127 (3) The administrator may hire appropriate support staff to perform the duties required
128 under this section.
129 (4) The cost of administering the restricted account shall be paid from money in the
130 restricted account.
131 (5) Interest accrued from investment of money in the restricted account shall remain in
132 the restricted account.
133 Section 4. Section 63M-1-904 is amended to read:
134 63M-1-904. Rural Fast Track Program -- Creation -- Funding -- Qualifications
135 for program participation -- Awards -- Reports.
136 (1) (a) There is created the Rural Fast Track Program.
137 (b) The program is a funded component of the economically disadvantaged rural areas
138 designation in Subsection 63M-1-903 (1)(a).
139 (2) The purpose of the program is to provide an efficient way for small companies in
140 rural areas of the state and companies expanding to rural areas of the state to receive incentives
141 for creating high paying jobs in those areas of the state.
142 (3) (a) Twenty percent of the unencumbered amount in the Industrial Assistance
143 Account created in Subsection 63M-1-903 (1) at the beginning of each fiscal year shall be used
144 to fund the program.
145 (b) The 20% referred to in Subsection (3)(a) is not in addition to but is a part of the up
146 to 50% designation for economically disadvantaged rural areas referred to in Subsection
147 63M-1-903 (1)(a).
148 (c) If any of the 20% allocation referred to in Subsection (3)(a) has not been used in the
149 program by the end of the third quarter of each fiscal year, that money may be used for any
150 other loan, grant, or assistance program offered through the Industrial Assistance Account
151 during the fiscal year.

152 (4) [(a)] To qualify for participation in the program a company shall:
153 [(i)] (a) complete and file with the office an application for participation in the program,
154 signed by an officer of the company;
155 [(ii)] (b) be located and conduct its business operations in a county in the state that has:
156 (i) created a strategic plan with the assistance of the Office of Rural Development as
157 described in Section 63M-1-1607 ; or
158 (ii) (A) a population of less than 30,000; and
159 (B) an average household income of less than $60,000 as reflected in the most recently
160 available data collected and reported by the United States Census Bureau;
161 [(iii)] (c) have been in business in the state for at least two years; and
162 [(iv)] (d) have at least two employees.
163 [(b) (i)] (5) (a) The office shall verify an applicant's qualifications under Subsection
164 (4)[(a)].
165 [(ii)] (b) The application must be approved by the administrator in order for a company
166 to receive an incentive or other assistance under this section.
167 (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
168 administrator may make rules governing:
169 (i) the content of the application form referred to in Subsection (4)(a)[(i)];
170 (ii) who qualifies as an employee under Subsection (4)[(a)(iv)](d); and
171 (iii) the verification procedure referred to in Subsection [(4)(b)] (5)(a).
172 [(5)] (6) (a) The administrator shall make incentive cash awards to small companies
173 under this section based on the following criteria:
174 (i) $1,000 for each new incremental job that pays over 110% of the county's average
175 annual wage;
176 (ii) $1,250 for each incremental job that pays over 115% of the county's average annual
177 wage; and
178 (iii) $1,500 for each incremental job that pays over 125% of the county's average
179 annual wage.
180 (b) The administrator shall make a cash award under Subsection [(5)] (6)(a) when a
181 new incremental job has been in place for at least 12 months.
182 (c) The creation of a new incremental job by a company is based on the number of

183 employees at the company during the previous 24 months.
184 (d) (i) A small company may also apply for grants, loans, or other financial assistance
185 under the program to help develop its business in rural Utah and may receive up to $50,000
186 under the program if approved by the administrator.
187 (ii) The board must approve a distribution that exceeds the $50,000 cap under
188 Subsection [(5)] (6)(d)(i).
189 [(6)] (7) The administrator shall make a quarterly report to the board of the awards
190 made by the administrator under this section and submit an annual written report to the
191 Economic Development and Workforce Services Interim Committee before November 1 on the
192 awards and their impact on economic development in the state's rural areas.
193 Section 5. Section 63M-1-906 is amended to read:
194 63M-1-906. Qualification for assistance.
195 (1) (a) Except as provided in Section 63M-1-908 , 63M-1-909 , or 63M-1-909.5 , the
196 administrator shall determine which industries, companies, and individuals qualify to receive
197 money from the Industrial Assistance Account.
198 (b) Except as provided by Subsection (2), to qualify for financial assistance from the
199 restricted account, an applicant shall:
200 [(a)] (i) demonstrate to the satisfaction of the administrator that the applicant will
201 expend funds in Utah with employees, vendors, subcontractors, or other businesses in an
202 amount proportional with money provided from the restricted account at a minimum ratio of 2
203 to 1 per year or other more stringent requirements as established from time to time by the board
204 for a minimum period of five years beginning with the date the loan or grant was approved;
205 [(b)] (ii) demonstrate to the satisfaction of the administrator the applicant's ability to
206 sustain economic activity in the state sufficient to repay, by means of cash or appropriate
207 credits, the loan provided by the restricted account; and
208 [(c)] (iii) satisfy other criteria the administrator considers appropriate.
209 (2) (a) The administrator may exempt an applicant from any of the requirements of
210 Subsection [(1)(a) or (b)] (1)(b) if:
211 (i) the financial assistance is provided to an applicant for the purpose of locating all or
212 any portion of its operations to:
213 (A) a county that has created a strategic plan with the assistance of the Office of Rural

214 Development as described in Section 63M-1-1607 ; or
215 (B) an economically disadvantaged rural area;
216 (ii) the applicant is part of a targeted industry;
217 (iii) the applicant is a quasi-public corporation organized under Title 16, Chapter 6a,
218 Utah Revised Nonprofit Corporation Act, or Title 63E, Chapter 2, Independent Corporations
219 Act, and its operations, as demonstrated to the satisfaction of the administrator, will provide
220 significant economic stimulus to the growth of commerce and industry in the state; or
221 (iv) the applicant is an entity offering an economic opportunity under Section
222 63M-1-909 .
223 (b) The administrator may not exempt the applicant from the requirement under
224 Subsection 63M-1-905 (2)(b) that the loan be structured so that the repayment or return to the
225 state equals at least the amount of the assistance together with an annual interest charge.
226 (3) The administrator shall:
227 (a) for applicants not described in Subsection (2)(a):
228 (i) make findings as to whether or not each applicant has satisfied each of the
229 conditions set forth in Subsection (1); and
230 (ii) monitor the continued compliance by each applicant with each of the conditions set
231 forth in Subsection (1) for five years;
232 (b) for applicants described in Subsection (2)(a), make findings as to whether the
233 economic activities of each applicant has resulted in the creation of new jobs on a per capita
234 basis in the economically disadvantaged rural area or targeted industry in which the applicant is
235 located;
236 (c) monitor the compliance by each applicant with the provisions of any contract or
237 agreement entered into between the applicant and the state as provided in Section 63M-1-907 ;
238 and
239 (d) make funding decisions based upon appropriate findings and compliance.
240 Section 6. Section 63M-1-910 is amended to read:
241 63M-1-910. Annual policy considerations.
242 (1) The board shall determine annually which industries or groups of industries shall be
243 targeted industries as defined in Section 63M-1-902 .
244 (2) In designating an economically disadvantaged rural area, the board shall consider

245 the average agricultural and nonagricultural wage, personal income, unemployment, and
246 employment in the area.
247 (3) In evaluating the economic impact of applications for assistance, the board shall use
248 an econometric cost-benefit model or models adopted by the Governor's Office of Management
249 and Budget.
250 (4) The board may establish:
251 (a) minimum interest rates to be applied to loans granted that reflect a fair social rate of
252 return to the state comparable to prevailing market-based rates such as the prime rate, U.S.
253 Government T-bill rate, or bond coupon rate as paid by the state, adjusted by social indicators
254 such as the rate of unemployment; and
255 (b) minimum applicant expense ratios, as long as they are at least equal to those
256 required under Subsection 63M-1-906 (1)[(a)](b) or 63M-1-908 (1)(b)(i)(A).
257 Section 7. Section 63M-1-1601 is amended to read:
258 63M-1-1601. Title -- Definitions.
259 (1) This part is known as the "Rural Development Act."
260 (2) As used in this part:
261 (a) "Office" means the Governor's Office of Economic Development.
262 (b) "Program" means the Rural Development Program.
263 (c) "Rural county" means a county of the state with a population of no more than
264 75,000.
265 Section 8. Section 63M-1-1607 is enacted to read:
266 63M-1-1607. Strategic mapping for rural counties.
267 (1) The Office of Rural Development shall assist each rural county that chooses to
268 participate in creating a written strategic plan that identifies and maps economic development
269 targets and strategies for the county.
270 (2) The written strategic plan shall:
271 (a) include specific 5 year and 10 year benchmarks for economic development targets
272 and strategies;
273 (b) identify and map specific economic development needs, targets, and strategies for
274 any combination of separate geographic areas or municipalities throughout the county;
275 (c) identify and map one or more key industries or economic clusters for each separate

276 geographic area or municipality throughout the county that, given its location, topography,
277 population, and other relevant factors, are most likely to lead to economic growth, additional
278 long-term jobs, and improved financial vitality of the county and its residents; and
279 (d) be updated at least every two years.
280 (3) The Office of Rural Development shall coordinate or provide professional
281 economic development expertise to each participating rural county in the creation and
282 maintenance of a written strategic plan under this section.
283 (4) In prioritizing economic development incentives and other incentives available to
284 rural counties under this chapter, the Governor's Office of Economic Development and the
285 Office of Rural Development:
286 (a) after July 1, 2015, shall give precedence to projects that are consistent with the
287 written strategic plan of a participating county; and
288 (b) may identify and recruit business entities from urban counties of the state to expand
289 into rural counties based on the needs and targets identified in the written strategic plan.




Legislative Review Note
as of 2-26-14 10:39 AM

Office of Legislative Research and General Counsel