First Substitute S.B. 57

Representative Ben C. Ferry proposes the following substitute bill:

1 FUNDING FOR BUSINESS DEVELOPMENT
2 IN DISADVANTAGED RURAL COMMUNITIES
3 2005 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Peter C. Knudson
6 Mike Dmitrich 7
8 LONG TITLE
9 General Description:
10 This bill amends the Business Development chapter relating to business development in
11 disadvantaged rural communities and provides an appropriation.
12 Highlighted Provisions:
13 This bill:
14 . creates the Business Development for Disadvantaged Rural Communities Act;
15 . provides definitions;
16 . creates the Business Development for Disadvantaged Rural Communities Restricted
17 Account including providing:
18 . for funding for the restricted account;
19 . that the restricted account shall earn interest and that the interest shall be
20 deposited into the restricted account; and
21 . the purposes for which revenues deposited into the restricted account may be
22 expended;
23 . authorizes the Board of Business and Economic Development to award one or more
24 grants or loans to a county of the third through sixth class to assist the county in
25 paying certain expenses relating to economic development in a disadvantaged rural

26 community;
27 . provides a limit on the total amount of grants and loans that the Board of Business
28 and Economic Development may award relating to one project;
29 . provides procedures for a county to submit a proposal to the Board of Business and
30 Economic Development before being awarded a grant or loan;
31 . provides procedures for the Board of Business and Economic Development to
32 award a grant or loan;
33 . provides that a county that is awarded a grant or loan shall enter into a written
34 agreement with the Executive Director of the Department of Community and
35 Economic Development and specifies the provisions of the agreement;
36 . addresses the failure of a county to meet or the violation of a provision of the
37 agreement;
38 . grants rulemaking authority to the Department of Community and Economic
39 Development;
40 . requires the Board of Business and Economic Development to make an annual
41 report to the Workforce Services and Community and Economic Development
42 Interim Committee;
43 . exempts the Business Development for Disadvantaged Rural Communities
44 Restricted Account from being subject to certain administrative duties by the
45 Division of Finance; and
46 . makes technical changes.
47 Monies Appropriated in this Bill:
48 This bill appropriates $250,000 for fiscal year 2005-06 only to the Business
49 Development for Disadvantaged Rural Communities Restricted Account.
50 Other Special Clauses:
51 This bill takes effect on July 1, 2005.
52 Utah Code Sections Affected:
53 AMENDS:
54 63-65-4, as last amended by Chapter 313, Laws of Utah 2003
55 ENACTS:
56 9-2-2101, Utah Code Annotated 1953

57 9-2-2102, Utah Code Annotated 1953
58 9-2-2103, Utah Code Annotated 1953
59 9-2-2104, Utah Code Annotated 1953
60 9-2-2105, Utah Code Annotated 1953
61 9-2-2106, Utah Code Annotated 1953
62
63 Be it enacted by the Legislature of the state of Utah:
64 Section 1. Section 9-2-2101 is enacted to read:
65 Part 21. Business Development for Disadvantaged Rural Communities Act
66 9-2-2101. Title.
67 This part is known as the "Business Development for Disadvantaged Rural
68 Communities Act."
69 Section 2. Section 9-2-2102 is enacted to read:
70 9-2-2102. Definitions.
71 As used in this part:
72 (1) "Board" means the Board of Business and Economic Development created by
73 Section 9-2-202 .
74 (2) "Business incubator expense" means an expense relating to funding a program that
75 is:
76 (a) designed to provide business support services and resources to one or more
77 business entities within a project area during the business entities' early stages of development;
78 and
79 (b) determined to be a business incubator by the board.
80 (3) "Business rehabilitation expense" means an expense relating to the renovation or
81 rehabilitation of an existing building within a project area as determined by the board.
82 (4) "Debt service" means the payment of debt service on a bond issued to pay a:
83 (a) business rehabilitation expense relating to a project; or
84 (b) public infrastructure expense relating to a project.
85 (5) "Eligible county" means a county of the third, fourth, fifth, or sixth class.
86 (6) "Eligible expense" means an expense:
87 (a) incurred by an eligible county;

88 (b) relating to a project; and
89 (c) that is:
90 (i) a business incubator expense;
91 (ii) debt service; or
92 (iii) a public infrastructure expense.
93 (7) "Project" means an economic development project:
94 (a) as determined by the board; and
95 (b) for which an eligible county applies to the board in accordance with this part for a
96 loan or grant to assist the eligible county in paying an eligible expense.
97 (8) "Project area" means the geographic area within which a project is implemented by
98 an eligible county.
99 (9) "Public infrastructure expense" means an expense relating to a publicly owned
100 improvement located within a project area if:
101 (a) the expense is:
102 (i) incurred for:
103 (A) construction;
104 (B) demolition;
105 (C) design;
106 (D) engineering;
107 (E) an environmental impact study;
108 (F) environmental remediation; or
109 (G) rehabilitation; or
110 (ii) similar to an expense described in Subsection (9)(a)(i) as determined by the board;
111 and
112 (b) the publicly owned improvement is:
113 (i) not a building as determined by the board; and
114 (ii) necessary to support a project as determined by the board.
115 (10) "Publicly owned improvement" means an improvement to real property if:
116 (a) the real property is owned by:
117 (i) the United States;
118 (ii) the state; or

119 (iii) a political subdivision:
120 (A) as defined in Section 17B-2-101 ; and
121 (B) of the state; and
122 (b) the improvement relates to:
123 (i) a sewage system including a system for collection, transport, storage, treatment,
124 dispersal, effluent use, or discharge;
125 (ii) a drainage or flood control system, including a system for collection, transport,
126 diversion, storage, detention, retention, dispersal, use, or discharge;
127 (iii) a water system including a system for production, collection, storage, treatment,
128 transport, delivery, connection, or dispersal;
129 (iv) a highway, street, or road system for vehicular use for travel, ingress, or egress;
130 (v) a rail transportation system;
131 (vi) a system for pedestrian use for travel, ingress, or egress;
132 (vii) a public utility system including a system for electricity, gas, or
133 telecommunications; or
134 (viii) a system or device that is similar to a system or device described in Subsections
135 (10)(b)(i) through (vii) as determined by the board.
136 (11) "Restricted account" means the Business Development for Disadvantaged Rural
137 Communities Restricted Account created by Section 9-2-2103 .
138 Section 3. Section 9-2-2103 is enacted to read:
139 9-2-2103. Creation of Business Development for Disadvantaged Rural
140 Communities Restricted Account -- Interest -- Costs of administering the restricted
141 account.
142 (1) There is created within the General Fund the Business Development for
143 Disadvantaged Rural Communities Restricted Account.
144 (2) The restricted account shall be funded by:
145 (a) monies appropriated to the account by the Legislature;
146 (b) monies received by the department as:
147 (i) repayment of a loan that the board grants to an eligible county under this part; and
148 (ii) interest on a loan described in Subsection (2)(b)(i); and
149 (c) the interest described in Subsection (3).

150 (3) (a) The restricted account shall earn interest.
151 (b) The interest described in Subsection (3)(a) shall be deposited into the account.
152 (4) Upon appropriation by the Legislature, the monies and interest deposited into the
153 restricted account in accordance with this section may be expended:
154 (a) by the board to award grants or loans to eligible counties as provided in this part;
155 and
156 (b) to cover the costs of administering this part:
157 (i) in an amount not to exceed $5,000 in any fiscal year; and
158 (ii) including the costs of providing staff support to administer this part.
159 (5) (a) Except as provided in Subsection (5)(b), the monies and interest deposited into
160 the restricted account in accordance with this section are nonlapsing.
161 (b) Notwithstanding Subsection (5)(a), the Division of Finance shall deposit any
162 monies and interest in the restricted account on July 1, 2015 into the General Fund.
163 Section 4. Section 9-2-2104 is enacted to read:
164 9-2-2104. Board authority to award a grant or loan to an eligible county --
165 Interest on a loan -- Eligible county proposal process -- Process for awarding a grant or
166 loan -- Department rulemaking authority.
167 (1) (a) Subject to the provisions of this section, beginning on July 1, 2005, through
168 June 30, 2015, the board may make an award to an eligible county:
169 (i) of one or more of the following to assist in paying an eligible expense relating to a
170 project:
171 (A) a grant; or
172 (B) a loan; and
173 (ii) from amounts or interest deposited into the restricted account in accordance with
174 Section 9-2-2103 to the extent that there is a balance in the restricted account sufficient to
175 cover the amount of the award.
176 (b) The total amount of grants and loans that the board may award in accordance with
177 this section relating to one project is $75,000.
178 (c) If the board awards a loan to an eligible county in accordance with this section, the
179 loan shall be subject to interest as provided by administrative rule made in accordance with
180 Subsection (6).

181 (2) (a) Before the board may award an eligible county a grant or loan in accordance
182 with this section, the eligible county shall submit a written proposal to the board in accordance
183 with Subsection (2)(b).
184 (b) The proposal described in Subsection (2)(a) shall:
185 (i) describe the project area;
186 (ii) describe the characteristics of the project including a description of how the project
187 will be implemented;
188 (iii) provide an economic development plan for the project including a description of
189 any eligible expenses that will be incurred as part of implementing the project;
190 (iv) describe the characteristics of the community within which the project area is
191 located;
192 (v) establish that the community within which the project area is located is a
193 disadvantaged community on the basis of one or more of the following factors:
194 (A) median income per capita within the community;
195 (B) median property tax revenues generated within the community;
196 (C) median sales and use tax revenues generated within the community;
197 (D) unemployment rates within the community; or
198 (E) any other factor established by the department by administrative rule made in
199 accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act;
200 (vi) demonstrate that there is a need for the project in the community within which the
201 project area is located;
202 (vii) describe the short-term and long-term benefits of the project to the community
203 within which the project area is located;
204 (viii) demonstrate that there is a need for assistance in paying eligible expenses relating
205 to the project;
206 (ix) indicate the amount of any revenues that will be pledged to match any funds the
207 board may award as a loan or grant under this section; and
208 (x) indicate whether there is support for the implementation of the project from:
209 (A) the community within which the project area is located; and
210 (B) any cities or towns within which the project area is located.
211 (3) At the request of the board, representatives from an eligible county shall appear

212 before the board to:
213 (a) present a proposal submitted in accordance with Subsection (2)(b); and
214 (b) respond to any questions or issues raised by the board relating to eligibility to
215 receive a grant or loan under this section.
216 (4) The board shall:
217 (a) consider a proposal submitted to the board in accordance with Subsection (2);
218 (b) make written findings as to whether the proposal described in Subsection (4)(a)
219 meets the requirements of Subsection (2)(b);
220 (c) make written findings as to whether to award the eligible county that submitted the
221 proposal described in Subsection (4)(a) one or more grants or loans:
222 (i) on the basis of the factors established in Subsection (5);
223 (ii) in consultation with the executive director; and
224 (iii) in accordance with the procedures established:
225 (A) by administrative rule in accordance with Subsection (6); and
226 (B) for prioritizing which projects may be awarded a grant or loan by the board under
227 this section;
228 (d) if the board determines to award an eligible county a grant or loan in accordance
229 with this section, make written findings in consultation with the executive director specifying
230 the:
231 (i) amount of the grant or loan;
232 (ii) time period for distributing the grant or loan;
233 (iii) terms and conditions that the eligible county shall meet to receive the grant or
234 loan;
235 (iv) structure of the grant or loan; and
236 (v) eligible expenses for which the eligible county may expend the grant or loan;
237 (e) if the board determines to award an eligible county a loan in accordance with this
238 section, make written findings stating:
239 (i) the method of calculating interest applicable to the loan; and
240 (ii) procedures for:
241 (A) applying interest to the loan; and
242 (B) paying interest on the loan; and

243 (f) provide the written findings required by Subsections (4)(b) through (e) to the
244 eligible county.
245 (5) For purposes of Subsection (4)(c), the board shall consider the following factors in
246 determining whether to award an eligible county one or more grants or loans authorized by this
247 part:
248 (a) whether the project is likely to result in economic development in the community
249 within which the project area is located;
250 (b) whether the community within which the project area is located is a disadvantaged
251 community on the basis of one or more of the following factors:
252 (i) median income per capita within the community;
253 (ii) median property tax revenues generated within the community;
254 (iii) median sales and use tax revenues generated within the community;
255 (iv) unemployment rates within the community; or
256 (v) any other factor established by the department by administrative rule made in
257 accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act;
258 (c) whether there is a need for the project in the community within which the project
259 area is located;
260 (d) whether the project is likely to produce short-term and long-term benefits to the
261 community within which the project area is located;
262 (e) whether the project would be successfully implemented without the board awarding
263 a grant or a loan to the eligible county;
264 (f) whether any revenues will be pledged to match any funds the board may award as a
265 grant or loan under this section;
266 (g) whether there is support for the implementation of the project from:
267 (i) the community within which the project area is located; and
268 (ii) any cities or towns within which the project area is located; and
269 (h) any other factor as determined by the board.
270 (6) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
271 department shall by rule establish:
272 (a) procedures for prioritizing which projects may be awarded a grant or loan by the
273 board under this section; and

274 (b) for loans awarded in accordance with this section:
275 (i) the method of calculating interest applicable to the loans; and
276 (ii) procedures for:
277 (A) applying interest to the loans; and
278 (B) paying interest on the loans.
279 Section 5. Section 9-2-2105 is enacted to read:
280 9-2-2105. Agreement between the executive director and an eligible county --
281 Failure to meet or violation of a term or condition of an agreement.
282 (1) Before an eligible county that has been awarded a grant or loan in accordance with
283 Section 9-2-2104 may receive the grant or loan, the eligible county shall enter into a written
284 agreement with the executive director.
285 (2) The written agreement described in Subsection (1):
286 (a) shall:
287 (i) specify the amount of the grant or loan;
288 (ii) specify the time period for distributing the grant or loan;
289 (iii) specify the terms and conditions that the eligible county shall meet to receive the
290 grant or loan;
291 (iv) specify the structure of the grant or loan;
292 (v) specify the eligible expenses for which the eligible county may expend the grant or
293 loan;
294 (vi) if the eligible county has been awarded a loan:
295 (A) specify the repayment schedule for the loan;
296 (B) specify the method of calculating interest applicable to the loan; and
297 (C) specify procedures for:
298 (I) applying interest to the loan; and
299 (II) paying interest on the loan; and
300 (vii) subject to Subsection (3), contain provisions governing the failure to meet or the
301 violation of a term or condition of the agreement; and
302 (b) may contain any other provision as determined by the executive director.
303 (3) (a) Except as provided in Subsection (3)(b), and subject to Subsection (3)(c), if an
304 eligible county fails to meet or violates any provision of the agreement described in Subsection

305 (2), the board shall impose one or more of the following penalties:
306 (i) require the eligible county to repay all or a portion of the amount of any grant or
307 loan the eligible county received in an amount determined by the board;
308 (ii) provide that an eligible county may not receive any amounts of a grant or loan that
309 the eligible county has been awarded in accordance with Section 9-2-2104 but has not received;
310 or
311 (iii) provide that an eligible county may not be awarded a grant or loan under this part
312 for a time period determined by the board.
313 (b) Notwithstanding Subsection (3)(a), the board may waive, reduce, or compromise a
314 penalty described in Subsection (3)(a) if an eligible county demonstrates that reasonable cause
315 exists for the eligible county failing to meet or violating a provision of the agreement described
316 in Subsection (2).
317 (c) (i) If the board imposes a penalty in accordance with this Subsection (3) on an
318 eligible county, the board shall provide written notice of the penalty to the eligible county
319 within ten calendar days after the day on which the board determines to impose the penalty.
320 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
321 the department may make rules providing the form of the written notice described in
322 Subsection (3)(c)(i).
323 Section 6. Section 9-2-2106 is enacted to read:
324 9-2-2106. Report to Workforce Services and Community and Economic
325 Development Interim Committee.
326 The board shall annually report to the Workforce Services and Community and
327 Economic Development Interim Committee on or before the November interim meeting:
328 (1) the total amount of grants and loans the board awarded to eligible counties under
329 this part during the fiscal year that ended on the June 30 immediately preceding the November
330 interim meeting;
331 (2) a description of the projects with respect to which the board awarded a grant or loan
332 under this part;
333 (3) the total amount of outstanding debt service that is being repaid by a grant or loan
334 awarded under this part;
335 (4) on whether the grants and loans awarded under this part have resulted in economic

336 development within project areas;
337 (5) on whether the board recommends:
338 (a) that the grants and loans authorized by this part should be continued; or
339 (b) any modifications to this part; and
340 (6) on any other issue relating to this part as determined by the Workforce Services and
341 Community and Economic Development Interim Committee.
342 Section 7. Section 63-65-4 is amended to read:
343 63-65-4. Custodial officer -- Powers and duties.
344 (1) (a) There is created within the Division of Finance an officer responsible for the
345 care, custody, safekeeping, collection, and accounting of all bonds, notes, contracts, trust
346 documents, and other evidences of indebtedness [owned or administered by]:
347 [(a)] (i) owned or administered by the state or any of its agencies; and
348 [(b)] (ii) except as provided in Subsection (1)(b), relating to revolving loan funds
349 [except the:].
350 (b) Notwithstanding Subsection (1)(a), the officer described in Subsection (1)(a) is not
351 responsible for the care, custody, safekeeping, collection, and accounting of a bond, note,
352 contract, trust document, or other evidence of indebtedness relating to the:
353 (i) Agriculture Resource Development Fund, created in Section 4-18-6 ;
354 (ii) Utah Rural Rehabilitation Fund, created in Section 4-19-4 ;
355 (iii) Petroleum Storage Tank Loan Fund, created in Section 19-6-405.3 ; [and]
356 (iv) Olene Walker Housing Loan Fund, created in Section 9-4-702 [.]; and
357 (v) Business Development for Disadvantaged Rural Communities Restricted Account,
358 created in Section 9-2-2103 .
359 (2) (a) Each authorizing agency shall deliver to this officer for [his] the officer's care,
360 custody, safekeeping, collection, and accounting all bonds, notes, contracts, trust documents,
361 and other evidences of indebtedness [owned or administered by]:
362 (i) owned or administered by the state or any of its agencies; and
363 (ii) except as provided in Subsection (1)(b), relating to revolving loan funds.
364 (b) This officer shall:
365 (i) establish systems, programs, and facilities for the care, custody, safekeeping,
366 collection, and accounting for the bonds, notes, contracts, trust documents, and other evidences

367 of indebtedness submitted to [him] the officer under this Subsection (2); and
368 (ii) shall make available updated reports to each authorizing agency as to the status of
369 loans under their authority.
370 (3) The officer described in Section 63-65-3 shall deliver to [this] the officer described
371 in Subsection (1)(a) for [his] the care, custody, safekeeping, collection, and accounting by the
372 officer described in Subsection (1)(a) of all bonds, notes, contracts, trust documents, and other
373 evidences of indebtedness closed as provided in Subsection 63-65-3 (2)(b).
374 Section 8. Appropriation.
375 There is appropriated $250,000 from the General Fund for fiscal year 2005-06 only to
376 the Business Development for Disadvantaged Rural Communities Restricted Account.
377 Section 9. Effective date.
378 This bill takes effect on July 1, 2005.