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H.B. 316






Sponsor: Brad L. Dee

             6      This act provides incentives for economic development by creating aerospace and
             7      aviation development zones for new commercial development. The act provides partial
             8      rebates of new taxes generated as an incentive for the creation of new jobs and economic
             9      development for qualified new projects that locate in the development zones, with the
             10      incentives financed out of the new state revenues generated by the projects.
             11      This act affects sections of Utah Code Annotated 1953 as follows:
             12      ENACTS:
             13          9-2-2001, Utah Code Annotated 1953
             14          9-2-2002, Utah Code Annotated 1953
             15          9-2-2003, Utah Code Annotated 1953
             16          9-2-2004, Utah Code Annotated 1953
             17          9-2-2005, Utah Code Annotated 1953
             18          9-2-2006, Utah Code Annotated 1953
             19          9-2-2007, Utah Code Annotated 1953
             20          9-2-2008, Utah Code Annotated 1953
             21          9-2-2009, Utah Code Annotated 1953
             22      Be it enacted by the Legislature of the state of Utah:
             23          Section 1. Section 9-2-2001 is enacted to read:
Part 20. Aerospace and Aviation Development Zone

             25          9-2-2001. Purpose.
             26          (1) The Legislature finds that:
             27          (a) the fostering and development of industry in Utah is a state public purpose

             28      necessary to assure the welfare of its citizens, the growth of its economy, and adequate
             29      employment for its citizens; and
             30          (b) Utah loses prospective high paying jobs, economic impacts, and corresponding
             31      incremental new state revenues to competing states due to a wide variety of competing
             32      economic development incentives offered by those states.
             33          (2) This part is enacted to address the loss of new economic growth in Utah and the
             34      corresponding loss of incremental new state revenues by providing tax increment financial
             35      incentives to attract new commercial projects in development zones located on or contiguous to
             36      municipal airports in the state.
             37          Section 2. Section 9-2-2002 is enacted to read:
             38          9-2-2002. Definitions.
             39          As used in this part:
             40          (1) "Department" means the Department of Community and Economic Development
             41      acting through its executive director.
             42          (2) "Development zone" means the Aerospace and Aviation Development Zone created
             43      under Section 9-2-2003 .
             44          (3) "Indirect state revenues" means the imputed use of a generally accepted indirect
             45      economic multiplier as defined by a fiscal impact model approved by the Governor's Office of
             46      Planning and Budget to quantify by estimate the indirect state tax revenues that are in addition
             47      to direct state tax revenues.
             48          (4) "New state revenues" means incremental new state tax revenues that are generated
             49      as a result of new economic commercial projects in a development zone, to include the state's
             50      portion of sales taxes, and company and employee income taxes derived from the projects,
             51      together with indirect state revenues generated by the projects, but not to include any portion of
             52      sales taxes earmarked for local governments or other taxing jurisdictions eligible for sales tax
             53      revenues.
             54          (5) "Partial rebates" means returning a portion of the new state revenues generated by
             55      new commercial projects to companies or individuals that have created new economic growth
             56      within a development zone.
             57          Section 3. Section 9-2-2003 is enacted to read:
             58          9-2-2003. Creation of development zones.

             59          The department, with approval by the board, may create an Aerospace and Aviation
             60      Development Zone at or around any municipal airport in the state that satisfies the following
             61      requirements:
             62          (1) the airport shall have an instrumental landing system;
             63          (2) the airport shall have a manned air traffic control tower; and
             64          (3) the airport shall have land available for commercial development on, or contiguous
             65      to, the airport.
             66          Section 4. Section 9-2-2004 is enacted to read:
             67          9-2-2004. Development incentives.
             68          (1) The department, with the approval of the board, may enter into agreements
             69      providing for partial rebates of new state revenues generated by new commercial projects to
             70      companies or individuals that create new economic growth within the development zone.
             71          (2) In no event may the partial rebates be in excess of 50% of the new state revenues.
             72          (3) Partial rebates are subject to any other limitations adopted by board rule made in
             73      accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             74          Section 5. Section 9-2-2005 is enacted to read:
             75          9-2-2005. Qualifications for credits and rebates.
             76          The board shall set standards to qualify for partial rebates under this part, subject to the
             77      following:
             78          (1) no partial rebates may be paid prior to verification, by the department, of the new
             79      state revenues upon which the tax rebate is based;
             80          (2) partial rebates can only be paid on projects that are within the development zone;
             81          (3) partial rebates can only be paid on projects that bring new, incremental jobs to the
             82      state;
             83          (4) qualifying projects must involve direct investment within the geographic
             84      boundaries of the development zone;
             85          (5) only aerospace and aviation industry projects, as defined by board rule made in
             86      accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, are eligible for
             87      partial rebates; and
             88          (6) in order to claim payments representing partial rebates of new state revenues, a
             89      person must:

             90          (a) enter into a board-approved agreement with the department and affirm by
             91      contractual agreement to keep supporting records for at least four years after final payment of
             92      partial rebates under this part;
             93          (b) submit to audits for verification of the amounts claimed; and
             94          (c) comply with other conditions as are required by the department.
             95          Section 6. Section 9-2-2006 is enacted to read:
             96          9-2-2006. Payment procedure.
             97          Any payment of partial rebates of new state revenues shall be made in accordance with
             98      procedures adopted by the department and approved by the board, to include the following:
             99          (1) within 90 days of the end of each calendar year, any company or individual that has
             100      entered into an agreement with the department under this part shall provide the department
             101      with documentation of the new state revenues it claims to have generated during that calendar
             102      year, the documentation to include the types of taxes and corresponding amounts of taxes paid
             103      directly to the Utah State Tax Commission, and sales taxes paid to Utah vendors and suppliers
             104      that are indirectly paid to the Utah State Tax Commission;
             105          (2) the department shall audit or review the documentation, make a determination of
             106      the amount of partial rebates earned under the agreement, and forward a board-approved
             107      request for payment of that amount to the Division of Finance, together with information
             108      regarding the name and address of the payee and any other information reasonably requested by
             109      the division; and
             110          (3) the Division of Finance may pay a partial rebate from the Economic Incentive
             111      Restricted Account created in Section 9-2-2009 upon receipt of documentation and the
             112      board-approved request from the department under Subsection (2).
             113          Section 7. Section 9-2-2007 is enacted to read:
             114          9-2-2007. Department's authority.
             115          (1) The department, with approval of the board and within the limitations of this part,
             116      may determine:
             117          (a) the structure and amount of any partial rebates offered under this part;
             118          (b) the economic impacts and job creation necessary to qualify for the incentive; and
             119          (c) the other terms and conditions of any agreement entered into under this part.
             120          (2) In reviewing claims for partial rebates of new state revenues, the department may

             121      accept:
             122          (a) as the amount of employee income taxes paid, the amount of employee income
             123      taxes withheld and transmitted to the Utah State Tax Commission as evidenced by payroll
             124      records rather than adjusting for the difference between taxes withheld and taxes actually paid
             125      through filing by employees' annual income tax statements; and
             126          (b) as the amount of company income taxes paid, the amount of corporate franchise
             127      and income taxes estimated and transmitted to the Utah State Tax Commission as evidenced by
             128      payroll records rather than adjusting for the difference between estimated taxes paid quarterly
             129      and taxes actually paid through the filing of the corporation's annual income tax statement.
             130          (3) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             131      board may make, amend, and revoke rules regarding the development zone and tax credits and
             132      partial rebates offered within it, provided the rules are consistent with state and federal law.
             133          Section 8. Section 9-2-2008 is enacted to read:
             134          9-2-2008. Coordination with Industrial Assistance Fund.
             135          Projects that qualify for partial rebates of new state revenues under this part and enter
             136      into agreements with the department under this part are ineligible to qualify for additional
             137      financial assistance from the Industrial Assistance Fund under Section 9-2-1204 .
             138          Section 9. Section 9-2-2009 is enacted to read:
             139          9-2-2009. Establishment of the Economic Incentive Restricted Account.
             140          (1) There is created a restricted account in the General Fund known as the Economic
             141      Incentive Restricted Account.
             142          (2) The account shall be used to make payments as required under Section 9-2-2006 .
             143          (3) (a) The Division of Finance shall transfer from the General Fund the amount
             144      estimated by the department from new state revenues needed to make the partial rebates as
             145      allowed in Section 9-2-2006 .
             146          (b) The amount transferred into the account shall be reduced by any unencumbered
             147      balances in the account.
             148          (4) Not withstanding Subsections 51-5-3 (23)(b) and 63-38-9 (4)(c), after receiving a
             149      request for payment, in accordance with Subsection 9-2-2006 (2), the Division of Finance shall
             150      pay the partial rebates as allowed in Section 9-2-2006 , from the account.
             151          (5) (a) Prior to the beginning of each fiscal year, the department shall notify the

             152      Governor's Office of Planning and Budget, the Office of Legislative Fiscal Analyst, and the
             153      Division of Finance of:
             154          (i) the estimated amount of new state revenues created from economic growth in the
             155      development zones, the estimate detailed by the amounts from:
             156          (A) sales tax;
             157          (B) income tax; and
             158          (C) corporate franchise and income tax; and
             159          (ii) the estimated amount partial rebates projected to be paid in the upcoming fiscal
             160      year, the estimates detailed by the amounts from:
             161          (A) sales tax;
             162          (B) income tax; and
             163          (C) corporate franchise and income tax.
             164          (b) The department shall update the estimates required by Subsections (5)(a)(i) and (ii)
             165      within 30 days of the signing of each new agreement entered into under this part.

Legislative Review Note
    as of 2-24-03 9:49 AM

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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