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.