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H.B. 11

             1     

ECONOMIC DEVELOPMENT INCENTIVES

             2     
2005 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Brad L. Dee

             5      David N. Cox
             6      Steven R. MascaroKaren W. Morgan
LaWanna Lou ShurtliffPeggy Wallace              7     
             8      LONG TITLE
             9      General Description:
             10          This bill creates new provisions related to business development within the Department
             11      of Community and Economic Development by establishing an Economic Development
             12      Incentives Act.
             13      Highlighted Provisions:
             14          This bill:
             15          .    provides tax incremental financial incentives to attract new commercial projects in
             16      economic development zones;
             17          .    provides definitions related to the creation of economic development zones and tax
             18      incentives for establishing new commercial projects in those zones;
             19          .    provides requirements for the establishment of economic development zones;
             20          .    allows the Department of Community and Economic Development to enter into
             21      agreements providing for partial rebates of new state revenues generated by new
             22      commercial projects within an economic development zone;
             23          .    provides qualification criteria for partial rebates and establishes payment
             24      procedures;
             25          .    provides that projects qualifying for partial rebates under the Economic
             26      Development Incentives Act are ineligible for additional financial assistance from
             27      the Industrial Assistance Fund; and


             28          .    provides for a report to the Legislature's Workforce Services and Community and
             29      Economic Development Interim Committee on the success of the program and its
             30      economic impact on the state.
             31      Monies Appropriated in this Bill:
             32          None
             33      Other Special Clauses:
             34          None
             35      Utah Code Sections Affected:
             36      AMENDS:
             37          9-2-2009, as enacted by Chapter 247, Laws of Utah 2003
             38      ENACTS:
             39          9-2-2201, Utah Code Annotated 1953
             40          9-2-2202, Utah Code Annotated 1953
             41          9-2-2203, Utah Code Annotated 1953
             42          9-2-2204, Utah Code Annotated 1953
             43          9-2-2205, Utah Code Annotated 1953
             44          9-2-2206, Utah Code Annotated 1953
             45          9-2-2207, Utah Code Annotated 1953
             46     
             47      Be it enacted by the Legislature of the state of Utah:
             48          Section 1. Section 9-2-2009 is amended to read:
             49           9-2-2009. Establishment of the Economic Incentive Restricted Account.
             50          (1) There is created a restricted account in the General Fund known as the Economic
             51      Incentive Restricted Account.
             52          (2) The account shall be used to make payments as required under [Section] Sections
             53      9-2-2006 and 9-2-2205 .
             54          (3) (a) The Division of Finance shall transfer from the General Fund the amount
             55      estimated by the department from new state revenues needed to make the partial rebates as
             56      allowed in [Section] Sections 9-2-2006 and 9-2-2205 .
             57          (b) The amount transferred into the account shall be reduced by any unencumbered
             58      balances in the account.


             59          (4) Not withstanding Subsections 51-5-3 (23)(b) and 63-38-9 (4)(c), after receiving a
             60      request for payment, in accordance with Subsection 9-2-2006 (2) or 9-2-2205 (2), the Division
             61      of Finance shall pay the partial rebates as allowed in Section 9-2-2006 or 9-2-2205 , from the
             62      account.
             63          (5) (a) Prior to the beginning of each fiscal year, the department shall notify the
             64      Governor's Office of Planning and Budget, the Office of Legislative Fiscal Analyst, and the
             65      Division of Finance of:
             66          (i) the estimated amount of new state revenues created from economic growth in the
             67      development zones, the estimate detailed by the amounts from:
             68          (A) sales tax;
             69          (B) income tax; and
             70          (C) corporate franchise and income tax; and
             71          (ii) the estimated amount partial rebates projected to be paid in the upcoming fiscal
             72      year, the estimates detailed by the amounts from:
             73          (A) sales tax;
             74          (B) income tax; and
             75          (C) corporate franchise and income tax.
             76          (b) The department shall update the estimates required by Subsections (5)(a)(i) and (ii)
             77      within 30 days of the signing of each new agreement entered into under this part or Title 9,
             78      Chapter 2, Part 22, Economic Development Incentives Act.
             79          Section 2. Section 9-2-2201 is enacted to read:
             80     
Part 22. Economic Development Incentives Act

             81          9-2-2201. Title.
             82          This part is known as the "Economic Development Incentives Act."
             83          Section 3. Section 9-2-2202 is enacted to read:
             84          9-2-2202. Findings.
             85          (1) The Legislature finds that:
             86          (a) to foster and develop industry in Utah is a public purpose necessary to assure
             87      adequate employment for, and the welfare of, Utah's citizens and the growth of the state's
             88      economy;
             89          (b) Utah loses prospective high paying jobs, economic impacts, and corresponding


             90      incremental new state and local revenues to competing states because of a wide variety of
             91      competing economic incentives offered by those states; and
             92          (c) economic development initiatives and interests of state and local economic
             93      development officials should be aligned and united in the creation of higher paying jobs that
             94      will lift the wage levels of the communities in which those jobs will be created.
             95          (2) This part is enacted to:
             96          (a) address the loss of new economic growth in Utah and the corresponding loss of
             97      incremental new state and local revenues by providing tax incremental financial incentives to
             98      attract new commercial projects in economic development zones in the state; and
             99          (b) provide a cooperative and unified working relationship between state and local
             100      economic development efforts.
             101          Section 4. Section 9-2-2203 is enacted to read:
             102          9-2-2203. Definitions.
             103          As used in this part:
             104          (1) "Department" means the Department of Community and Economic Development.
             105          (2) "Development zone" means an economic development zone created under Section
             106      9-2-2204
             107          (3) "High paying jobs" means the annual wages of employment positions that compare
             108      favorably against the median wage of a community in which the jobs will exist.
             109          (4) "Indirect revenues" means the imputed use of a generally accepted indirect
             110      economic multiplier as defined by a fiscal impact model approved by the Governor's Office of
             111      Planning and Budget to quantify by estimate the indirect tax revenues that are in addition to
             112      direct tax revenues.
             113          (5) "Local incentives" means financial and other assistance provided by local taxing
             114      authorities within a development zone, which may include:
             115          (a) partial rebates of new local revenues; and
             116          (b) other sources of funds under authority of state law or local ordinances, or both state
             117      law and local ordinances.
             118          (6) "New incremental jobs" means jobs that are:
             119          (a) not shifted from one jurisdiction in the state to another jurisdiction in the state; and
             120          (b) created in addition to the baseline count of jobs already in existence within a


             121      company or employed by an individual.
             122          (7) "New local revenues" mean incremental new local tax revenues that are generated
             123      as a result of new economic commercial projects in a development zone, to include the local
             124      government's portion of sales taxes, property taxes, impact fees, and other taxes or fees, or both
             125      taxes and fees, derived from the projects, together with indirect local government revenues
             126      generated by the projects, but not to include any portion of sales taxes earmarked for state
             127      government or other taxing jurisdictions eligible for sales tax revenues.
             128          (8) "New state revenues" means incremental new state tax revenues that are generated
             129      as a result of new economic commercial projects in a developmental zone, to include the state's
             130      portion of sales taxes, and company and employee income taxes derived from the projects,
             131      together with indirect state revenues generated by the projects, but not to include any portion of
             132      sales taxes earmarked for local governments or other taxing jurisdictions eligible for sales tax
             133      revenues.
             134          (9) "Partial rebates" means returning a portion of the new local revenues and new state
             135      revenues generated by new commercial projects to companies or individuals that have created
             136      new economic growth within a development zone.
             137          Section 5. Section 9-2-2204 is enacted to read:
             138          9-2-2204. Creation of economic development zones -- Incentives.
             139          (1) The department, with approval by the board, may create an economic development
             140      zone in the state that satisfies all of the following requirements:
             141          (a) the area is zoned commercial, industrial, manufacturing, business park, research
             142      park, or other appropriate use in a community approved master plan; and
             143          (b) the request to create a development zone has been forwarded to the department
             144      after first being approved by an appropriate local government entity that has committed or will
             145      commit to provide local incentives.
             146          (2) The department, with the approval of the board, may enter into agreements
             147      providing for partial rebates of new state revenues generated by new commercial projects to
             148      companies or individuals that create new economic growth within a development zone under
             149      the same restrictions and limitations as provided in Section 9-2-2004 .
             150          Section 6. Section 9-2-2205 is enacted to read:
             151          9-2-2205. Qualifications for rebates -- Payment procedure.


             152          (1) The board shall set standards to qualify for partial rebates under this part, subject to
             153      the following:
             154          (a) the qualification criteria established in Subsections 9-2-2005 (1), (2), (3), (4) and
             155      (6); and
             156          (b) only projects that include significant capital investment, the creation of high paying
             157      jobs, or significant purchases from Utah vendors and providers, or any combination of these
             158      three economic factors, as defined by board rule made in accordance with Title 63, Chapter
             159      46a, Utah Administrative Rulemaking Act, are eligible for partial rebates.
             160          (2) A payment of partial rebates of new state revenues shall be made in accordance
             161      with procedures adopted by the department and approved by the board, to include the payment
             162      procedures described in Section 9-2-2006 as applied to partial rebates authorized under this
             163      part.
             164          Section 7. Section 9-2-2206 is enacted to read:
             165          9-2-2206. Department's authority -- Report to Legislature.
             166          (1) The department, with approval of the board and within the limitations of this part,
             167      may determine:
             168          (a) the structure and amount of any partial rebates offered under this part;
             169          (b) the economic impacts and job creation necessary to qualify for the incentive; and
             170          (c) the other terms and conditions of an agreement entered into under this part.
             171          (2) In reviewing claims for partial rebates of new state revenues, the department may
             172      accept the same type of information and evidence allowed under Subsections 9-2-2007 (2)(a)
             173      and (b).
             174          (3) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             175      board may make, amend, and revoke rules regarding a development zone and partial rebates
             176      offered within it, provided the rules are consistent with state and federal law.
             177          (4) (a) The department shall make a report to the Legislature's Workforce Services and
             178      Community and Economic Development Interim Committee on:
             179          (i) the success of attracting new commercial projects to development zones under this
             180      part and the corresponding increase in new incremental jobs;
             181          (ii) the period of time over which partial rebates of new state revenues shall be granted
             182      under this part; and


             183          (iii) the economic impact on the state related to generating new state revenues and
             184      rebating a portion of those revenues under this part.
             185          (b) The department shall make the report prior to the 2006 General Session of the
             186      Legislature to enable the committee to determine whether this part should be modified during
             187      the 2006 General Session.
             188          Section 8. Section 9-2-2207 is enacted to read:
             189          9-2-2207. Coordination with the Industrial Assistance Fund.
             190          Projects that qualify for partial rebates of new state revenues under this part and enter
             191      into agreements with the department under this part are ineligible to qualify for additional
             192      financial assistance from the Industrial Assistance Fund under Section 9-2-1204 .




Legislative Review Note
    as of 12-7-04 8:42 AM


Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel


Interim Committee Note
    as of 12-07-04 1:56 PM


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

Mixed Membership Committee Note
    as of 12-07-04 1:56 PM


The Utah Technology Commission recommended this bill.
    Membership:        8 legislators    5 non-legislators
    Legislative Vote:    4 voting for    0 voting against    4 absent


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