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H.B. 397

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INCREMENTAL TAX FINANCING FOR

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AFFORDABLE HOUSING

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1997 GENERAL SESSION

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STATE OF UTAH

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Sponsor: Gene Davis

6    AN ACT RELATING TO SPECIAL DISTRICTS; PROVIDING THAT A PERCENTAGE OF
7    INCREMENT TAX FINANCING FUNDS UNDER REDEVELOPMENT PLANS ADOPTED
8    IN THE FUTURE BE USED TO PROVIDE AFFORDABLE HOUSING; AND MAKING
9    TECHNICAL CHANGES.
10    This act affects sections of Utah Code Annotated 1953 as follows:
11    AMENDS:
12         9-4-704, as last amended by Chapter 265, Laws of Utah 1994
13         17A-2-1247.5, as last amended by Chapters 80 and 249, Laws of Utah 1996
14         17A-2-1263, as enacted by Chapter 50, Laws of Utah 1993
15    ENACTS:
16         17A-2-1264, Utah Code Annotated 1953
17    Be it enacted by the Legislature of the state of Utah:
18        Section 1. Section 9-4-704 is amended to read:
19         9-4-704. Distribution of fund moneys.
20        (1) The executive director shall:
21        (a) make grants and loans from the fund for any of the activities authorized by Section
22    9-4-705, as recommended by the board;
23        (b) establish the criteria by which loans and grants will be made; and
24        (c) determine the order in which projects will be funded.
25        (2) The executive director shall distribute any federal moneys contained in the fund
26    according to the procedures, conditions, and restrictions placed upon the use of those moneys by
27    the federal government.


1        (3) (a) The executive director shall distribute any funds received pursuant to Section
2    17A-2-1264 to pay the costs of providing affordable housing within the community that created
3    the redevelopment agency under Title 17A, Chapter 2, Part 12, Utah Neighborhood Development
4    Act.
5        (b) As used in Subsection (3)(a), "affordable housing" shall have the meaning as defined
6    in Subsection 17A-2-1264(1), and "community" shall have the meaning as defined in Subsection
7    17A-2-1202(5).
8        [(3)] (4) The executive director shall distribute all other moneys from the fund according
9    to the following requirements:
10        (a) Not less than 30% of all fund moneys shall be distributed to rural areas of the state.
11        (b) At least 50% of the moneys in the fund shall be distributed as loans to be repaid to the
12    fund by the entity receiving them.
13        (i) (A) Of the fund moneys distributed as loans, at least 50% shall be distributed to benefit
14    persons whose annual income is at or below 50% of the median family income for the state.
15        (B) The remaining loan moneys shall be distributed to benefit persons whose annual
16    income is at or below 80% of the median family income for the state.
17        (ii) The executive director or his designee shall lend moneys in accordance with
18    Subsection [(3)] (4) at a rate based upon the borrower's ability to pay.
19        (c) Any fund moneys not distributed as loans shall be distributed as grants.
20        (i) Ninety-five percent of the fund moneys distributed as grants shall be distributed to
21    benefit persons whose annual income is at or below 50% of the median family income for the state.
22        (ii) The remaining 5% of the fund moneys may be used by the executive director to obtain
23    federal matching funds or for other uses consistent with the intent of this part, including the
24    payment of reasonable loan processing fees, but may not be used to offset department or board
25    administrative expenses.
26        [(4)] (5) The executive director may enact rules to establish procedures for the grant and
27    loan process by following the procedures and requirements of Title 63, Chapter 46a, Utah
28    Administrative Rulemaking Act.
29        Section 2. Section 17A-2-1247.5 is amended to read:
30         17A-2-1247.5. Tax increment financing -- Project area budget approval.
31        (1) This section applies to projects for which a preliminary plan has been prepared after

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1    April 1, 1993, and for which any of the following have occurred after July 1, 1993: the completion
2    of the agency blight study, and the good faith commencement of the hearing by the agency under
3    Section 17A-2-1221.
4        (2) (a) A taxing agency committee shall be created for each redevelopment or economic
5    development project. The committee membership shall be selected as follows:
6        (i) two representatives appointed by the school district in the project area;
7        (ii) two representatives appointed by resolution of the county commission or county
8    council for the county in which the project area is located;
9        (iii) two representatives appointed by resolution of the city or town's legislative body in
10    which the project area is located if the project is located within a city or town;
11        (iv) a representative approved by the State School Board; and
12        (v) one representative who shall represent all of the remaining governing bodies of the
13    other local taxing agencies that levy taxes upon the property within the proposed project area. The
14    representative shall be selected by resolution of each of the governing bodies of those taxing
15    agencies within 30 days after the notice provided in Subsection 17A-2-1256(3).
16        (b) If the project is located within a city or town, a quorum of a taxing agency committee
17    consists of five members. If the project is not located within a city or town, a quorum consists of
18    four members.
19        (c) A taxing agency committee formed in accordance with this section has the authority
20    to:
21        (i) represent all taxing entities in a project area and cast votes that will be binding on the
22    governing boards of all taxing entities in a project area;
23        (ii) negotiate with the agency concerning the redevelopment plan;
24        (iii) approve or disapprove project area budgets; and
25        (iv) approve an exception to the limits on the value and size of project areas imposed by
26    Section 17A-2-1210, or the time and amount of tax increment financing under this section.
27        (3) (a) An agency must obtain the majority consent of a quorum of the taxing agency
28    committee for the project area budget before an agency may collect any tax increment for a project
29    area.
30        (b) Except as provided in Subsection (3)(c), the project area budget may be amended at
31    the request of the agency by obtaining the majority consent of a quorum of the taxing agency

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1    committee.
2        (c) (i) Beginning on January 1, 1997, before a taxing agency committee approves an
3    amendment to a project area budget, the agency shall advertise and hold one public hearing on the
4    proposed change in the project area budget.
5        (ii) The public hearing under Subsection (3)(c)(i) shall be conducted according to the
6    procedures and requirements of Subsection 17A-2-1222(2), except that if the amended budget
7    allocates a greater proportion of tax increment to a project area than was allocated to the project
8    area under the previous budget, the advertisement shall state the percentage allocated under the
9    previous budget and the percentage allocated under the amended budget.
10        (d) If an amendment is proposed and the taxing agency committee does not consent to the
11    amendment, the agency will continue to operate under the previously approved, unamended project
12    area budget.
13        (4) (a) An agency may collect tax increment from all or a part of a project area. [The]
14    Except as provided in Section 17A-2-1264, the tax increment shall be paid to the agency in the
15    same manner and at the same time as payments of taxes to other taxing agencies to pay the
16    principal of and interest on loans, moneys advanced to, or indebtedness, whether funded, refunded,
17    assumed, or otherwise, to finance or refinance, in whole or in part, the redevelopment or economic
18    development project according to the limits established by majority consent of the taxing agency
19    committee.
20        (b) The agency may elect one of the following alternatives for tax increment collection:
21        (i) 100% of annual tax increment remaining after application of Section 17A-2-1264 to
22    be paid to the agency for a period of [twelve] 12 years commencing from the first tax year an
23    agency accepts tax increment from a project area; or
24        (ii) 75% of annual tax increment remaining after application of Section 17A-2-1264 to be
25    paid to the agency for a period of [twenty] 20 years commencing from the first tax year an agency
26    accepts tax increment from a project area.
27        (c) [An] Subject to Section 17A-2-1264, an agency may receive a greater percentage of
28    tax increment or receive tax increment for a longer period of time than that specified in this
29    [subsection] Subsection (4) if the agency obtains the majority consent of the taxing agency
30    committee.
31        (5) (a) The redevelopment plan shall [contain a provision that provides] provide that the

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1    portion of the taxes, if any, due to an increase in the tax rate by a taxing agency after the date the
2    project area budget is approved by the taxing agency committee may not be allocated to and when
3    collected paid into a special fund of the redevelopment agency according to the provisions of
4    Subsection (4) unless the taxing agency committee approves the inclusion of the increase in the
5    tax rate at the time the project area budget is approved. If approval of the inclusion of the increase
6    in the tax rate is not obtained, the portion of the taxes attributable to the increase in the rate shall
7    be distributed by the county to the taxing agency imposing the tax rate increase in the same manner
8    as other property taxes.
9        (b) [In each year in which there are increases or decreases in the tax rate of a taxing agency
10    as described in Subsection (5)(a) as a result of (i) statutes enacted by the Legislature, a judicial
11    decision, or an order from the State Tax Commission to a county to adjust or factor its assessment
12    rate pursuant to Subsection 59-2-704(2), (ii) changes in exemptions provided in Utah Constitution
13    Article XIII, Section 2, or Section 59-2-103, and (iii) any increase or decrease in the percentage
14    of fair market value, as defined under Section 59-2-102, the] The amount of the tax rate to be used
15    in determining tax increment shall be increased or decreased by the amount of [the increases] an
16    increase or [decreases] decrease as a result of [the applicable action described in (i), (ii), or (iii)]:
17        (i) a statute enacted by the Legislature, a judicial decision, or an order from the State Tax
18    Commission to a county to adjust or factor its assessment rate under Subsection 59-2-704(2);
19        (ii) a change in exemption provided in Utah Constitution Article XIII, Section 2, or
20    Section 59-2-103; or
21        (iii) an increase or decrease in the percentage of fair market value, as defined under
22    Section 59-2-102.
23        (c) Notwithstanding the increase or decrease resulting from Subsection (5)(b), the amount
24    of money allocated to, and when collected paid to the agency each year for payment of bonds or
25    other indebtedness may not be less than would have been allocated to and when collected paid to
26    the agency each year if there had been no increase or decrease under Subsection (5)(b).
27        (6) (a) For redevelopment plans first adopted before May 4, 1993, beginning January 1,
28    1994, all of the taxes levied and collected upon the taxable property in the redevelopment project
29    under Section 59-2-906.1 which are not pledged to support bond indebtedness and other
30    contractual obligations are exempt from the provisions of Subsection (4).
31        (b) For redevelopment plans first adopted after May 3, 1993, beginning January 1, 1994,

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1    all of the taxes levied and collected upon the taxable property in the redevelopment project under
2    Section 59-2-906.1 are exempt from the provisions of Subsection (4).
3        Section 3. Section 17A-2-1263 is amended to read:
4         17A-2-1263. Housing funds in agencies under redevelopment plans adopted before
5     July 1, 1996.
6        (1) Tax increment paid to an agency under a redevelopment plan adopted before July 1,
7    1997, under Section 17A-2-1247 or 17A-2-1247.5 from one project area may be used to pay all
8    or part of the value of the land for and the cost of installation, construction, and rehabilitation of
9    any building, facility, structure, or other housing improvement, including infrastructure
10    improvements related to housing located in one or more project areas.
11        (2) Notwithstanding any provisions of this part, a maximum of 20% of tax increment
12    under Sections 17A-2-1247 and 17A-2-1247.5, under a redevelopment plan adopted before July
13    1, 1997, may be used by an agency outside of project areas for the purpose of replacing housing
14    units lost by redevelopment and economic development, or increasing, improving, and preserving
15    the community's supply of affordable housing generally.
16        (3) The funds allocated under this section shall be held by the agency in a separate account
17    of the special fund of the redevelopment agency designated as the housing fund until used. The
18    housing fund, together with any interest earned by the fund, and any payments or repayments made
19    to the agency for loans, advances, or grants of any kind from the fund shall accrue to and be
20    deposited in the housing fund to be used to increase, improve, and preserve the supply of housing
21    within project areas and affordable housing within the boundaries of the community or used to
22    effectuate any purposes of redevelopment or economic development in the project area from which
23    the funds originated.
24        (4) Expenditures or obligations incurred by the agency under this section shall constitute
25    an indebtedness incurred by an agency.
26        (5) An agency may lend, grant, or contribute funds from the housing fund to a person,
27    public body, housing authority, private entity or business, or nonprofit corporation for housing
28    purposes as defined in this section.
29        (6) For purposes of this section, "affordable housing" means housing to be owned or
30    occupied by persons and families of low or moderate income as determined by resolution of the
31    agency.

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1        Section 4. Section 17A-2-1264 is enacted to read:
2         17A-2-1264. Affordable housing funds under redevelopment plans adopted on or
3     after July 1, 1996.
4        (1) As used in this section:
5        (a) "Affordable housing" means housing to be owned or occupied by a family whose
6    annual income is at or below 50% of the median annual income for the county in which the
7    housing is located.
8        (b) "Annual income" shall have the meaning as defined under regulations of the U.S.
9    Department of Housing and Urban Development, 24 CFR, Part 813.
10        (c) "Family" shall have the meaning as defined under regulations of the U.S. Department
11    of Housing and Urban Development, 24 CFR, Part 813.
12        (2) Notwithstanding any provisions of this part, 20% of all tax increment funds under
13    Section 17A-2-1247.5 payable to each redevelopment agency under a redevelopment plan adopted
14    on or after July 1, 1997, shall be used pursuant to Subsection (3) to pay the costs of providing
15    affordable housing within the community that created the agency.
16        (3) At the community's option, the 20% of tax increment funds shall be paid to either:
17        (a) the community for use by the community's legislative body in providing affordable
18    housing within the community; or
19        (b) the Olene Walker Housing Trust Fund established in Title 9, Chapter 4, Part 7 to be
20    spent in providing affordable housing within the community.




Legislative Review Note
    as of 2-10-97 1:18 PM


A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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