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S.B. 12

             1     

INDUSTRIAL ASSISTANCE FUND

             2     
AMENDMENTS

             3     
2003 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Beverly Ann Evans

             6      This act modifies the qualifications for applicants to receive financial assistance from the
             7      Industrial Assistance Fund, including applicant companies creating an economic
             8      impediment. This act provides for grants to be made from the fund, requires agreements
             9      with specific terms and conditions between the administrator of the fund and successful
             10      applicants, and makes certain technical changes.
             11      This act affects sections of Utah Code Annotated 1953 as follows:
             12      AMENDS:
             13          9-2-1202, as last amended by Chapter 242, Laws of Utah 2000
             14          9-2-1203, as last amended by Chapter 95, Laws of Utah 2000
             15          9-2-1204, as last amended by Chapter 242, Laws of Utah 2000
             16          9-2-1205, as last amended by Chapter 242, Laws of Utah 2000
             17          9-2-1205.5, as enacted by Chapter 242, Laws of Utah 2000
             18          9-2-1207, as last amended by Chapter 242, Laws of Utah 2000
             19      ENACTS:
             20          9-2-1205.1, Utah Code Annotated 1953
             21      Be it enacted by the Legislature of the state of Utah:
             22          Section 1. Section 9-2-1202 is amended to read:
             23           9-2-1202. Definitions.
             24          As used in this part:
             25          (1) "Administrator" means the executive director of the Department of Community and
             26      Economic Development or the executive director's designee.
             27          (2) "Board" means the Board of Business and Economic Development.




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             28
         (3) "Company creating an economic impediment" means a company that discourages
             29      economic development within a reasonable radius of its location because of:
             30          (a) odors;
             31          (b) noise;
             32          (c) pollution;
             33          (d) health hazards; or
             34          (e) other activities similar to those described in Subsections (3)(a) through (d).
             35          (4) "Economically disadvantaged rural area" means a geographic area designated by the
             36      board under Section 9-2-1207 .
             37          (5) "Fund" means the restricted account known as the Industrial Assistance Fund
             38      created in Section 9-2-1203 .
             39          (6) "Replacement company" means a company locating its business or part of its
             40      business in a location vacated by a company creating an economic impediment.
             41          (7) "Targeted industry" means an industry or group of industries targeted by the board,
             42      under Section 9-2-1207 , for economic development in the state.
             43          Section 2. Section 9-2-1203 is amended to read:
             44           9-2-1203. Industrial Assistance Fund created.
             45          (1) There is created within the General Fund a restricted account known as the
             46      Industrial Assistance Fund of which up to 50% shall be used in economically disadvantaged
             47      rural areas.
             48          (2) The fund shall be administered by the administrator under the policy direction of
             49      the board. [Interest accrued from investment of monies in the fund shall remain in the fund.]
             50          (3) The administrator may hire appropriate support staff.
             51          (4) The cost of administering the fund shall be paid from monies in the fund.
             52          (5) Interest accrued from investment of monies in the fund shall remain in the fund.
             53          Section 3. Section 9-2-1204 is amended to read:
             54           9-2-1204. Loans, grants, and assistance -- Repayment -- Earned credits.
             55          (1) (a) A company that qualifies under Section 9-2-1205 may receive loans, grants, or
             56      other financial assistance from the fund for expenses related to establishment, relocation, or
             57      development of industry in Utah.
             58          (b) A company creating an economic impediment that qualifies under Section



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             59
     9-2-1205.5 may in accordance with this part receive loans, grants, or other financial assistance
             60      from the fund for the expenses of the company creating an economic impediment related to:
             61          (i) relocation to a rural area in Utah of the company creating an economic impediment;
             62      and
             63          (ii) the siting of a replacement company.
             64          (2) (a) Subject to Subsection (2)(b), the administrator [shall have the] has authority to
             65      determine the structure, amount, and nature of any loan, grant, or other financial assistance
             66      from the fund.
             67          (b) [The form of financial assistance determined] Loans made under Subsection (2)(a)
             68      shall be structured so the intended repayment or return to the state, including cash or credit,
             69      equals at least the amount of the assistance together with an annual interest [rate of 10%]
             70      charge as negotiated by the administrator.
             71          (c) Payments resulting from grants awarded from the fund shall be made only after the
             72      administrator has determined that the company has satisfied the conditions upon which the
             73      payment or earned credit was based.
             74          (3) (a) (i) Except as provided in Subsection (3)(b), the administrator may provide for a
             75      system of earned credits that may be used to support grant payments or in lieu of cash
             76      repayment of a fund loan obligation.
             77          (ii) The value of the credits described in Subsection (3)(a)(i) shall be based on factors
             78      determined by the administrator, including:
             79          (A) the number of Utah jobs created;
             80          (B) the increased economic activity in Utah; and
             81          (C) other events and activities that occur as a result of the fund [loan] assistance.
             82          (b) (i) The administrator shall provide for a system of credits to be used to support
             83      grant payments or in lieu of cash repayment of a fund loan [that is issued] when loans are made
             84      to a company creating an economic impediment.
             85          (ii) The value of the credits described in Subsection (3)(b)(i) shall be based on factors
             86      determined by the administrator, including:
             87          (A) the number of Utah jobs created;
             88          (B) the increased economic activity in Utah; and
             89          (C) other events and activities that occur as a result of the fund [loan] assistance.



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             90
         (4) (a) [If loan repayments are in cash, the repayments] A cash loan repayment or other
             91      cash recovery from a company receiving assistance under this section, including interest, shall
             92      be deposited[, including any interest,] into the fund.
             93          (b) [If the repayments are in the form of credits as provided in Subsection (3), the] The
             94      administrator and the Division of Finance shall determine the manner of recognizing and
             95      accounting for the earned credits used in lieu of loan repayments or to support grant payments
             96      as provided in Subsection (3).
             97          (5) (a) At the end of each fiscal year, after the transfer of surplus General Fund
             98      revenues has been made to the Budget Reserve Account as provided in Section 63-38-2.5 , any
             99      additional unrestricted, undesignated General Fund balance[, except the first $10,000,000 of
             100      additional unrestricted, undesignated General Fund balance on June 30, 1992,] shall be
             101      earmarked to the Industrial Assistance Fund in an amount equal to any credit that has accrued
             102      under this part.
             103          (b) These credit amounts may not be used for purposes of the fund as provided in this
             104      part until appropriated by the Legislature.
             105          Section 4. Section 9-2-1205 is amended to read:
             106           9-2-1205. Qualification for assistance.
             107          (1) Except as provided in Section 9-2-1205.5 , the administrator shall determine which
             108      industries, companies, and individuals qualify to receive monies from the fund. Except as
             109      provided by Subsection (2), to qualify for financial assistance from the fund, an applicant shall:
             110          (a) demonstrate to the satisfaction of the administrator that the applicant will expend
             111      funds in Utah with employees, vendors [and], subcontractors, or other businesses in an amount
             112      proportional with monies provided from the fund at a minimum ratio of [5.7] 2 to 1 per year or
             113      other more stringent requirements as established from time to time by the board for a minimum
             114      period of five years beginning with the date the loan or grant was approved;
             115          [(b) demonstrate to the satisfaction of the administrator that the applicant will expend
             116      at least $10,000,000 annually in Utah over the base level of an applicant's prior year's
             117      expenditures in the state;]
             118          [(c)] (b) demonstrate to the satisfaction of the administrator the applicant's ability to
             119      sustain economic activity in the state sufficient to repay, by means of cash or appropriate
             120      credits, the [assistance] loan provided by the fund; and



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             121
         [(d)] (c) satisfy other criteria the administrator considers appropriate.
             122          (2) (a) The administrator may exempt an applicant from [either] the requirements of
             123      Subsection (1)(a) or (1)(b)[, or both,] if:
             124          (i) the financial assistance is provided to an applicant for the purpose of locating all or
             125      any portion of its operations to an economically disadvantaged rural area; or
             126          [(ii) the applicant is solely owned by or is a cooperative consisting solely of persons
             127      who reside in an economically disadvantaged rural area; or]
             128          [(iii)] (ii) the applicant is part of a targeted industry.
             129          (b) The administrator may not exempt the applicant from the requirement under
             130      Subsection 9-2-1204 (2)(b) that the loan [or financial assistance] be structured so that the
             131      repayment or return to the state equals at least the amount of the assistance together with an
             132      annual interest [rate of 10%] charge.
             133          (3) The administrator shall:
             134          (a) for applicants not described in Subsection (2)(a)[(ii)]:
             135          (i) make findings as to whether or not each applicant has satisfied each of the
             136      conditions set forth in Subsection (1); and
             137          (ii) monitor the continued compliance by each applicant with each of the conditions set
             138      forth in Subsection (1) for five years;
             139          (b) for applicants described in Subsection (2)(a)[(ii) who are cooperatives], make
             140      findings as to whether the economic activities of each applicant has resulted in [a reduction in
             141      the federal poverty rate] the creation of new jobs on a per capita basis in the economically
             142      disadvantaged rural area or targeted industry in which the applicant is located;
             143          [(c) for applicants described in Subsection (2)(a)(ii) who are not cooperatives, make
             144      findings as to whether the economic activities of each applicant has resulted in the creation of
             145      new jobs on a per capita basis, instead of a set standard, in the economically disadvantaged
             146      rural area in which the applicant is located;]
             147          [(d)] (c) monitor the compliance by each applicant with the provisions of any contract
             148      or agreement entered into between the applicant and the state as provided in Section 9-2-1206 ;
             149      and
             150          [(e)] (d) make funding decisions based upon appropriate findings and compliance.
             151          Section 5. Section 9-2-1205.1 is enacted to read:



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             152
         9-2-1205.1. Agreements.
             153          The administrator shall enter into agreements with each successful applicant that have
             154      specific terms and conditions for each loan or assistance, including:
             155          (1) repayment schedules;
             156          (2) interest rates;
             157          (3) specific economic activity required to qualify for the loan or assistance or for
             158      repayment credits;
             159          (4) collateral or security, if any; and
             160          (5) other terms and conditions considered appropriate by the administrator.
             161          Section 6. Section 9-2-1205.5 is amended to read:
             162           9-2-1205.5. Financial assistance to companies that create economic impediments.
             163          (1) (a) The administrator may provide monies from the fund to a company creating an
             164      economic impediment if that company:
             165          (i) applies to the administrator;
             166          (ii) relocates to a rural area in Utah; and
             167          (iii) meets the qualifications of Subsection (1)(b).
             168          (b) Except as provided by Subsection (2), to qualify for financial assistance from the
             169      fund, a company creating an economic impediment shall:
             170          (i) demonstrate to the satisfaction of the administrator that the company creating an
             171      economic impediment, its replacement company, or in the aggregate the company creating the
             172      economic impediment and its replacement company:
             173          (A) will expend funds in Utah with employees, vendors [and], subcontractors, or other
             174      businesses in an amount proportional with monies provided from the fund at a minimum ratio
             175      of [5.7] 2 to 1 per year or other more stringent requirements as established from time to time by
             176      the board for a minimum period of five years beginning with the date the loan or grant was
             177      approved;
             178          [(B) will expend at least $10,000,000 annually in Utah over the base level of the
             179      company creating the economic impediment's prior year's expenditures in the state; and]
             180          [(C)] (B) can sustain economic activity in the state sufficient to repay, by means of
             181      cash or appropriate credits, the [assistance] loan provided by the fund; and
             182          (ii) satisfy other criteria the administrator considers appropriate.



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CORRECTED Senate Committee Amendments 1-28-2003 rd/jlw

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Senate Committee Amendments 1-28-2003 rd/jlw
             183
         (2) (a) The administrator may exempt a company creating an economic impediment
             184      from the requirements of Subsection (1)(b)(i)(A) [or (1)(b)(i)(B), or both,] if:
             185          (i) the financial assistance is provided to a company creating an economic impediment
             186      for the purpose of locating all or any portion of its operations to an economically disadvantaged
             187      rural area; or
             188          (ii) its replacement company is part of a targeted industry.
             189          (b) The administrator may not exempt a company creating an economic impediment
             190      from the requirement under Subsection 9-2-1204 (2)(b) that the loan [or financial assistance] be
             191      structured so that the repayment or return to the state equals at least the amount of the
             192      assistance together with an annual interest [rate of 10%] charge.
             193          (3) The administrator shall:
             194          (a) make findings as to whether or not a company creating an economic impediment,
             195      its replacement company, or both, have satisfied each of the conditions set forth in Subsection
             196      (1);
             197          (b) monitor the compliance by a company creating an economic impediment, its
             198      replacement company, or both, with:
             199          (i) each of the conditions set forth in Subsection (1); and
             200          (ii) any contract or agreement under Section 9-2-1206 entered into between:
             201          (A) the company creating an economic impediment; and
             202          (B) the state; and
             203          (c) make funding decisions based upon appropriate findings and compliance.
             204          Section 7. Section 9-2-1207 is amended to read:
             205           9-2-1207. S [ Designation of economically disadvantaged rural areas and targeted
             206      industries
] Annual Board Policy Considerations s
.
             207          (1) S [ For purposes of this part, the ] THE s board shall determine annually which industries or
             208      groups of industries shall be targeted industries as defined in Section 9-2-1202 .
             209          (2) In designating an economically disadvantaged rural area S [ : ] , s
             210           S [ (a) ] s the board shall consider the average agricultural and nonagricultural wage, personal
             211      income, unemployment, and employment in the area S [ ; and ] . s
             212           S [ (b) ] (3) IN EVALUATING THE ECONOMIC IMPACT OF APPLICATIONS FOR ASSISTANCE, s
             212a      the board S [ may ] SHALL s use an econometric cost-benefit model or models adopted by the
             213      Governor's Office of Planning and Budget.




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Senate Committee Amendments 1-28-2003 rd/jlw
             214
          S [ (3) ] (4) s The board may establish:
             215          (a) minimum interest rates to be applied to loans granted S THAT REFLECT A FAIR SOCIAL
             215a      RATE OF RETURN TO THE STATE COMPARABLE TO PREVAILING MARKET-BASED RATES SUCH AS
             215b      THE PRIME RATE, U.S. GOVERNMENT T-BILL RATE, OR BOND COUPON RATE PAID BY THE STATE,
             215c      ADJUSTED BY SOCIAL INDICATORS SUCH AS THE RATE OF UNEMPLOYMENT s ; and
             216          (b) minimum applicant expense ratios, as long as they are at least equal to those
             217      required under Subsection 9-2-1205 (1)(a) or 9-2-1205.5 (1)(b)(i)(A).





Legislative Review Note
    as of 11-20-02 4:20 PM


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

Office of Legislative Research and General Counsel

Interim Committee Note
    as of 12-12-02 1:41 PM

The Workforce Services and Community and Economic Development Interim Committee
recommended this bill.


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