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H.B. 112

             1     

REDEVELOPMENT AGENCY FINANCING

             2     
REQUIREMENTS

             3     
2000 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Richard L. Walsh

             6      AN ACT RELATING TO SPECIAL DISTRICTS; MODIFYING DEFINITIONS RELATING TO
             7      TAX INCREMENT; LIMITING TAX INCREMENT TO THE EXCESS TAXES GENERATED
             8      BY THE COUNTY OR MUNICIPALITY THAT CREATED THE REDEVELOPMENT
             9      AGENCY; AND MAKING TECHNICAL CHANGES.
             10      This act affects sections of Utah Code Annotated 1953 as follows:
             11      AMENDS:
             12          17A-2-1202, as last amended by Chapter 320, Laws of Utah 1995
             13          17A-2-1247.5, as last amended by Chapters 21 and 194, Laws of Utah 1999
             14      Be it enacted by the Legislature of the state of Utah:
             15          Section 1. Section 17A-2-1202 is amended to read:
             16           17A-2-1202. Definitions.
             17          As used in this part:
             18          (1) "Agency" means the legislative body of a community when designated by the
             19      legislative body itself to act as a redevelopment agency.
             20          (2) (a) "Base tax amount" means that portion of taxes that would be produced by the rate
             21      upon which the tax is levied each year [by or for all taxing agencies] upon the total sum of the
             22      taxable value of the taxable property in a redevelopment project area by or for:
             23          (i) for a redevelopment plan adopted before May 1, 2000, all taxing agencies; or
             24          (ii) for a redevelopment plan adopted on or after May 1, 2000, the community that created
             25      the agency.
             26          (b) For purposes of Subsection (2)(b), the taxable value of the taxable property in a
             27      redevelopment project area shall be as shown upon the assessment roll used in connection with the


             28      taxation of the property by the applicable taxing agencies, last equalized before the effective date
             29      of the:
             30          [(a)] (i) ordinance approving the plan for projects for which a preliminary plan has been
             31      prepared prior to April 1, 1993, and for which all of the following have occurred prior to July 1,
             32      1993: the agency blight study has been completed, and a hearing under Section 17A-2-1221 has
             33      in good faith been commenced by the agency; or
             34          [(b)] (ii) the first approved project area budget for projects for which a preliminary plan
             35      has been prepared after April 1, 1993, and for which any of the following have occurred after July
             36      1, 1993: the completion of the agency blight study, and the good faith commencement of the
             37      hearing by the agency under Section 17A-2-1221 ; and
             38          [(c)] (iii) as adjusted by Sections 17A-2-1250.5 , 17A-2-1251 , 17A-2-1252 , and
             39      17A-2-1253 .
             40          (3) "Blighted area" or "blight" means:
             41          (a) for projects for which a preliminary plan has been prepared prior to April 1, 1993, and
             42      for which all of the following have occurred prior to July 1, 1993: the agency blight study has been
             43      completed, and a hearing under Section 17A-2-1221 has in good faith been commenced by the
             44      agency, an area used or intended to be used for residential, commercial, industrial, or other
             45      purposes or any combination of such uses which is characterized by two or more of the following
             46      factors:
             47          (i) defective design and character of physical construction;
             48          (ii) faulty interior arrangement and exterior spacing;
             49          (iii) high density of population and overcrowding;
             50          (iv) inadequate provision for ventilation, light, sanitation, open spaces, and recreation
             51      facilities;
             52          (v) age, obsolescence, deterioration, dilapidation, mixed character, or shifting of uses;
             53          (vi) economic dislocation, deterioration, or disuse, resulting from faulty planning;
             54          (vii) subdividing and sale of lots of irregular form and shape and inadequate size for proper
             55      usefulness and development;
             56          (viii) laying out of lots in disregard of the contours and other physical characteristics of
             57      the ground and surrounding conditions;
             58          (ix) existence of inadequate streets, open spaces, and utilities; and


             59          (x) existence of lots or other areas which are subject to being submerged by water.
             60          (b) For projects for which a preliminary plan has been prepared after April 1, 1993, and
             61      for which any of the following have occurred after July 1, 1993: the completion of the agency
             62      blight study, and the good faith commencement of the hearing by the agency under Section
             63      17A-2-1221 , when a finding of blight is required, an area with buildings or improvements, used
             64      or intended to be used for residential, commercial, industrial, or other urban purposes or any
             65      combination of these uses, which:
             66          (i) contains buildings and improvements, not including out-buildings, on at least 50% of
             67      the number of parcels and the area of those parcels is at least 50% of the project area; and
             68          (ii) is unfit or unsafe to occupy or may be conducive to ill health, transmission of disease,
             69      infant mortality, juvenile delinquency, or crime because of any three or more of the following
             70      factors:
             71          (A) defective character of physical construction;
             72          (B) high density of population and overcrowding;
             73          (C) inadequate provision for ventilation, light, sanitation, and open spaces;
             74          (D) mixed character and shifting of uses which results in obsolescence, deterioration, or
             75      dilapidation;
             76          (E) economic deterioration or continued disuse;
             77          (F) lots of irregular form and shape and inadequate size for proper usefulness and
             78      development, or laying out of lots in disregard of the contours and other physical characteristics
             79      of the ground and surrounding conditions;
             80          (G) existence of inadequate streets, open spaces, and utilities;
             81          (H) existence of lots or other areas which are subject to being submerged by water; and
             82          (I) existence of any hazardous or solid waste defined as any substance defined, regulated,
             83      or listed as "hazardous substances," "hazardous materials," "hazardous wastes," "toxic waste,"
             84      "pollutant," "contaminant," or "toxic substances," or identified as hazardous to human health or
             85      the environment under state or federal law or regulation.
             86          (c) For purposes of Subsection (3)(b), if a developer involved in the project area
             87      redevelopment or economic development causes any of the factors of blight listed in Subsection
             88      (b)(ii), the developer-caused blight may not be used as one of the three required elements of blight.
             89      Notwithstanding the provisions of this section, any blight caused by owners or tenants who may


             90      become developers under the provisions of Section 17A-2-1214 shall not be subject to this
             91      Subsection (3)(c).
             92          (4) "Bond" means any bonds, notes, interim certificates, debentures, or other obligations
             93      issued by an agency.
             94          (5) "Community" means a city, county, town, or any combination of these.
             95          (6) "Economic development" means the planning or replanning, design or redesign,
             96      development or redevelopment, construction or reconstruction, rehabilitation, business relocation
             97      or any combination of these, within all or part of a project area and the provision of office,
             98      industrial, manufacturing, warehousing, distribution, parking, public or other facilities, or
             99      improvements as may benefit the state or the community in order for a public or private employer
             100      to create additional jobs within the state.
             101          (7) "Federal government" means the United States or any of its agencies or
             102      instrumentalities.
             103          (8) "Legislative body" means the city council, city commission, county legislative body,
             104      or other legislative body of the community.
             105          (9) "Planning commission" means a city, town, or county planning commission established
             106      pursuant to law or charter.
             107          (10) "Project area" or "redevelopment project area" means an area of a community within
             108      a designated redevelopment survey area, the redevelopment of which is necessary to eliminate
             109      blight or provide economic development and which is selected by the redevelopment agency
             110      pursuant to this part.
             111          (11) "Project area budget" means, for projects for which a preliminary plan has been
             112      prepared after April 1, 1993, and for which any of the following have occurred after July 1, 1993:
             113      the completion of the agency blight study, and the good faith commencement of the hearing by the
             114      agency under Section 17A-2-1221 , a multiyear budget for the redevelopment plan prepared by the
             115      redevelopment agency showing:
             116          (a) the base year taxable value of the project area;
             117          (b) the projected tax increment of the project area, including the amount of any tax
             118      increment shared with other taxing districts which shall include:
             119          (i) the tax increment expected to be used to implement the redevelopment plan including
             120      the estimated amount of tax increment to be used for land acquisition, public, and infrastructure


             121      improvements, and loans, grants, or tax incentives to private and public entities; and
             122          (ii) the total principal amount of bonds expected to be issued by the redevelopment agency
             123      to finance the project;
             124          (c) the tax increment expected to be used to cover the cost of administering the project area
             125      plan;
             126          (d) a legal description for the portion of the project area from which tax increment will be
             127      collected pursuant to Section 17A-2-1247.5 , if the area from which tax increment is to be collected
             128      is less than the entire project area; and
             129          (e) for properties to be sold, the expected total cost of the property to the agency and the
             130      expected sales price to be paid by the purchaser.
             131          (12) "Public body" means the state, or any city, county, district, authority, or any other
             132      subdivision or public body of the state, their agencies, instrumentalities, or political subdivisions.
             133          (13) (a) "Redevelopment" means the planning, development, replanning, redesign,
             134      clearance, reconstruction, or rehabilitation, or any combination of these, of all or part of a project
             135      area, and the provision of residential, commercial, industrial, public, or other structures or spaces
             136      that are appropriate or necessary to eliminate blight in the interest of the general welfare, including
             137      recreational and other facilities incidental or appurtenant to them.
             138          (b) "Redevelopment" includes:
             139          (i) the alteration, improvement, modernization, reconstruction, or rehabilitation, or any
             140      combination of these, of existing structures in a project area;
             141          (ii) provision for open space types of use, such as streets and other public grounds and
             142      space around buildings, and public or private buildings, structures and improvements, and
             143      improvements of public or private recreation areas and other public grounds; and
             144          (iii) the replanning or redesign or original development of undeveloped areas as to which
             145      either of the following conditions exist:
             146          (A) the areas are stagnant or improperly utilized because of defective or inadequate street
             147      layout, faulty lot layout in relation to size, shape, accessibility, or usefulness, or for other causes;
             148      or
             149          (B) the areas require replanning and land assembly for reclamation or development in the
             150      interest of the general welfare.
             151          (14) "Redevelopment plan" means a plan developed by the agency and adopted by


             152      ordinance of the governing body of a community to guide and control redevelopment and
             153      economic development undertakings in a specific project area.
             154          (15) "Redevelopment survey area" or "survey area" means an area of a community
             155      designated by resolution of the legislative body or the governing body of the agency for study by
             156      the agency to determine if blight exists if redevelopment is planned, and if a redevelopment or
             157      economic development project or projects within the area are feasible.
             158          (16) "Taxes" include all levies on an ad valorem basis upon land, real property, personal
             159      property, or any other property, tangible or intangible.
             160          (17) "Taxing agencies" mean the public entities, including the state, any city, county, city
             161      and county, any school district, special district, or other public corporation, which levy property
             162      taxes within the project area.
             163          (18) "Tax increment" means:
             164          (a) for a redevelopment plan adopted before May 1, 2000, that portion of the levied taxes
             165      each year in excess of the base tax amount which excess amount is to be paid into a special fund
             166      of an agency; or
             167          (b) for a redevelopment plan adopted on or after May 1, 2000, that portion of the taxes
             168      levied each year by the community that created the agency, in excess of the base tax amount, which
             169      excess amount is to be paid into a special fund of an agency.
             170          Section 2. Section 17A-2-1247.5 is amended to read:
             171           17A-2-1247.5. Tax increment financing -- Project area budget approval -- Payment
             172      of additional tax increment.
             173          (1) This section applies to projects for which a preliminary plan has been adopted on or
             174      after July 1, 1993.
             175          (2) (a) A taxing agency committee shall be created for each redevelopment or economic
             176      development project the redevelopment plan for which was adopted before May 1, 2000. The
             177      committee membership shall be selected as follows:
             178          (i) two representatives appointed by the school district in the project area;
             179          (ii) two representatives appointed by resolution of the county commission or county
             180      council for the county in which the project area is located;
             181          (iii) two representatives appointed by resolution of the city or town's legislative body in
             182      which the project area is located if the project is located within a city or town;


             183          (iv) a representative approved by the State School Board; and
             184          (v) one representative who shall represent all of the remaining governing bodies of the
             185      other local taxing agencies that levy taxes upon the property within the proposed project area. The
             186      representative shall be selected by resolution of each of the governing bodies of those taxing
             187      agencies within 30 days after the notice provided in Subsection 17A-2-1256 (3).
             188          (b) If the project is located within a city or town, a quorum of a taxing agency committee
             189      consists of five members. If the project is not located within a city or town, a quorum consists of
             190      four members.
             191          (c) A taxing agency committee formed in accordance with this section has the authority
             192      to:
             193          (i) represent all taxing entities in a project area and cast votes that will be binding on the
             194      governing boards of all taxing entities in a project area;
             195          (ii) negotiate with the agency concerning the redevelopment plan;
             196          (iii) approve or disapprove project area budgets under Subsection (3); and
             197          (iv) approve an exception to the limits on the value and size of project areas imposed by
             198      Section 17A-2-1210 , or the time and amount of tax increment financing under this section.
             199          (3) (a)(i) If the project area budget for a redevelopment plan adopted before May 1, 2000,
             200      does not allocate 20% of the tax increment for housing as provided in Subsection
             201      17A-2-1264 (2)(a):
             202          (A) an agency may not collect any tax increment for a project area until after the agency
             203      obtains the majority consent of a quorum of the taxing agency committee for the project area
             204      budget; and
             205          (B) a project area budget adopted under Subsection (3)(a)(i)(A) may be amended if the
             206      agency obtains the majority consent of a quorum of the taxing agency committee.
             207          (ii) If the project area budget for a redevelopment plan adopted before May 1, 2000
             208      allocates 20% of the tax increment for housing as provided in Subsection 17A-2-1264 (2)(a):
             209          (A) an agency may not collect tax increment from all or part of a project area until after:
             210          (I) the Olene Walker Housing Trust Fund Board, established under Title 9, Chapter 4, Part
             211      7, Olene Walker Housing Trust Fund, has certified the project area budget as complying with the
             212      requirements of Section 17A-2-1264 ; and
             213          (II) the agency's governing body has approved and adopted the project area budget by a


             214      two-thirds vote; and
             215          (B) a project area budget adopted under Subsection (3)(a)(ii)(A) may be amended if:
             216          (I) the Olene Walker Housing Trust Fund Board, established under Title 9, Chapter 4, Part
             217      7, Olene Walker Housing Trust Fund, certifies the amendment as complying with the requirements
             218      of Section 17A-2-1264 ; and
             219          (II) the agency's governing body approves and adopts the amendment by a two-thirds vote.
             220          (b)Within 30 days after the approval and adoption of a project area budget, each agency
             221      shall file a copy of the budget with the county auditor, the State Tax Commission, the state auditor,
             222      and each property taxing entity affected by the agency's collection of tax increment under the
             223      project area budget.
             224          (c) (i) Beginning on January 1, 1997, before an amendment to a project area budget is
             225      approved, the agency shall advertise and hold one public hearing on the proposed change in the
             226      project area budget.
             227          (ii) The public hearing under Subsection (3)(c)(i) shall be conducted according to the
             228      procedures and requirements of Subsection 17A-2-1222 (2), except that if the amended budget
             229      allocates a greater proportion of tax increment to a project area than was allocated to the project
             230      area under the previous budget, the advertisement shall state the percentage allocated under the
             231      previous budget and the percentage allocated under the amended budget.
             232          (d) If an amendment is not approved, the agency shall continue to operate under the
             233      previously approved, unamended project area budget.
             234          (4) (a) An agency may collect tax increment from all or a part of a project area. The tax
             235      increment shall be paid to the agency in the same manner and at the same time as payments of
             236      taxes to other taxing agencies to pay the principal of and interest on loans, moneys advanced to,
             237      or indebtedness, whether funded, refunded, assumed, or otherwise, to finance or refinance, in
             238      whole or in part, the redevelopment or economic development project and the housing projects and
             239      programs under Sections 17A-2-1263 and 17A-2-1264 .
             240          (b) (i) An agency may elect to be paid:
             241          (A) if 20% of the project area budget is not allocated for housing as provided in Subsection
             242      17A-2-1264 (2)(a):
             243          (I) 100% of annual tax increment for 12 years; or
             244          (II) 75% of annual tax increment for 20 years; or


             245          (B) if 20% of the project area budget is allocated for housing as provided in Subsection
             246      17A-2-1264 (2)(a):
             247          (I) 100% of annual tax increment for 15 years; or
             248          (II) 75% of annual tax increment for 24 years.
             249          (ii) Tax increment paid to an agency under this Subsection (4)(b) shall be paid for the
             250      applicable length of time beginning the first tax year the agency accepts tax increment from a
             251      project area.
             252          (c) An agency may receive a greater percentage of tax increment or receive tax increment
             253      for a longer period of time than that specified in Subsection (4)(b) if the agency obtains:
             254          (i) for a redevelopment plan adopted before May 1, 2000, the majority consent of the
             255      taxing agency committee; or
             256          (ii) for a redevelopment plan adopted on or after May 1, 2000, the consent of the
             257      legislative body of the community that created the agency.
             258          (5) (a) (i) The redevelopment plan shall provide that the portion of the taxes, if any, due
             259      to an increase in the tax rate by a taxing agency after the date the project area budget is approved
             260      [by the taxing agency committee] may not be allocated to and when collected paid into a special
             261      fund of the redevelopment agency according to the provisions of Subsection (4) unless [the taxing
             262      agency committee approves], at the time the project area budget is approved, the inclusion of the
             263      increase in the tax rate [at the time the project area budget] is approved by:
             264          (A) for a redevelopment plan adopted before May 1, 2000, the taxing agency committee;
             265      or
             266          (B) for a redevelopment plan adopted on or after May 1, 2000, the legislative body of the
             267      community that created the agency.
             268          (ii) If approval of the inclusion of the increase in the tax rate is not obtained, the portion
             269      of the taxes attributable to the increase in the rate shall be distributed by the county to the taxing
             270      agency imposing the tax rate increase in the same manner as other property taxes.
             271          (b) The amount of the tax rate to be used in determining tax increment shall be increased
             272      or decreased by the amount of an increase or decrease as a result of:
             273          (i) a statute enacted by the Legislature, a judicial decision, or an order from the State Tax
             274      Commission to a county to adjust or factor its assessment rate under Subsection 59-2-704 (2);
             275          (ii) a change in exemption provided in Utah Constitution Article XIII, Section 2, or Section


             276      59-2-103 ;
             277          (iii) an increase or decrease in the percentage of fair market value, as defined under
             278      Section 59-2-102 ; or
             279          (iv) a decrease in the certified tax rate under Subsection 59-2-924 (2)(c) or (2)(d)(i).
             280          (c) (i) Notwithstanding the increase or decrease resulting from Subsection (5)(b), the
             281      amount of money allocated to, and when collected paid to the agency each year for payment of
             282      bonds or other indebtedness may not be less than would have been allocated to and when collected
             283      paid to the agency each year if there had been no increase or decrease under Subsection (5)(b).
             284          (ii) For a decrease resulting from Subsection (5)(b)(iv), the taxable value for the base year
             285      under Subsection 17A-2-1202 (2) or 17A-2-1247 (2)(a), as the case may be, shall be reduced for any
             286      year to the extent necessary, including below zero, to provide an agency with approximately the
             287      same amount of money the agency would have received without a reduction in the county's
             288      certified tax rate if:
             289          (A) in that year there is a decrease in the certified tax rate under Subsection 59-2-924 (2)(c)
             290      or (2)(d)(i);
             291          (B) the amount of the decrease is more than 20% of the county's certified tax rate of the
             292      previous year; and
             293          (C) the decrease results in a reduction of the amount to be paid to the agency under Section
             294      17A-2-1247 or 17A-2-1247.5 .
             295          (6) (a) For redevelopment plans first adopted before May 4, 1993, beginning January 1,
             296      1994, all of the taxes levied and collected upon the taxable property in the redevelopment project
             297      under Section 59-2-906.1 which are not pledged to support bond indebtedness and other
             298      contractual obligations are exempt from the provisions of Subsection (4).
             299          (b) For redevelopment plans first adopted after May 3, 1993, beginning January 1, 1994,
             300      all of the taxes levied and collected upon the taxable property in the redevelopment project under
             301      Section 59-2-906.1 are exempt from the provisions of Subsection (4).
             302          (7) (a) In addition to the amounts and periods that an agency may elect to be paid tax
             303      increment under Subsection (4)(b), an agency may elect to be paid 100% of annual tax increment
             304      for an additional period, as provided in Subsection (7)(b), beyond those periods provided under
             305      Subsection (4)(b), without the approval of the taxing agency committee or the legislative body of
             306      the community that created the agency, if the tax increment funding for the additional period is


             307      used:
             308          (i) for an agency in a city in which is located all or a portion of an interchange on I-15 or
             309      that would directly benefit from an interchange on I-15, to pay some or all of the cost of the
             310      installation, construction, or reconstruction of:
             311          (A) an interchange on I-15; or
             312          (B) frontage and other roads connecting to the interchange, as determined by the
             313      Department of Transportation created under Section 72-1-201 and the Transportation Commission
             314      created under Section 72-1-301 ; or
             315          (ii) for an agency in a city of the first class, to pay some or all of the cost of the land for
             316      and installation and construction of a recreational facility, as defined in Subsection 59-12-702 (3),
             317      or a cultural facility, including parking and infrastructure improvements related to the recreational
             318      or cultural facility.
             319          (b) The additional period for which an agency may be paid 100% of annual tax increment
             320      under Subsection (7)(a) is an additional:
             321          (i) 13 years, for an agency that initially elected to be paid under Subsection (4)(b)(i)(A)(I);
             322          (ii) five years, for an agency that initially elected to be paid under Subsection
             323      (4)(b)(i)(A)(II);
             324          (iii) ten years, for an agency that initially elected to be paid under Subsection
             325      (4)(b)(i)(B)(I); and
             326          (iv) one year, for an agency that initially elected to be paid under Subsection
             327      (4)(b)(i)(B)(II).
             328          (c) This Subsection (7) applies only to an agency established by a city in which:
             329          (i) for an agency in a city in which is located all or a portion of an interchange on I-15 or
             330      that would directly benefit from an interchange on I-15, the installation, construction, or
             331      reconstruction of an interchange on I-15 or frontage or other roads connecting to the interchange
             332      has begun on or before June 30, 2000; and
             333          (ii) for an agency in a city of the first class, the installation or construction of a recreational
             334      facility, as defined in Subsection 59-12-702 (3), or a cultural facility has begun on or before June
             335      30, 2000.
             336          (d) Notwithstanding any other provision of this Subsection (7), a school district may not
             337      receive less tax increment because of application of the other provisions of this Subsection (7) than


             338      it would have received without those provisions.




Legislative Review Note
    as of 1-20-00 4:03 PM


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

Office of Legislative Research and General Counsel


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