H.B. 17 Enrolled

1

ENTERPRISE ZONE AMENDMENTS
2 2011 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Kraig Powell
5 Senate Sponsor: Kevin T. Van Tassell
6 Cosponsors:
7 Paul RayChristine F. Watkins 8
9 LONG TITLE
10 General Description:
11 This bill modifies provisions of the Enterprise Zone Act related to the definitions of
12 business entity and new full-time employee position, the criteria for designation of an
13 enterprise zone, business entities qualifying for tax incentives, state tax credits
14 applicable in an enterprise zone, annual reports, and technology-based service contracts
15 within enterprise zones.
16 Highlighted Provisions:
17 This bill:
18 . modifies the definition of business entity and defines new full-time employee
19 position as used in the Enterprise Zone Act;
20 . modifies the criteria used for the designation of an enterprise zone;
21 . modifies the eligibility review procedure of applications for designation as an
22 enterprise zone;
23 . modifies provisions related to business entities qualifying for tax incentives under
24 the Enterprise Zone Act;
25 . modifies provisions related to tax credits which may be claimed for new full-time
26 employee positions;
27 . provides that a business entity may not claim a tax credit under the Enterprise Zone
28 Act if it is primarily engaged in a retail trade;

29 . modifies annual enterprise zone reporting provisions; and
30 . provides a repealer.
31 Money Appropriated in this Bill:
32 None
33 Other Special Clauses:
34 This bill takes effect on January 1, 2012.
35 Utah Code Sections Affected:
36 AMENDS:
37 63M-1-402, as renumbered and amended by Laws of Utah 2008, Chapter 382
38 63M-1-403, as renumbered and amended by Laws of Utah 2008, Chapter 382
39 63M-1-404, as renumbered and amended by Laws of Utah 2008, Chapter 382
40 63M-1-406, as renumbered and amended by Laws of Utah 2008, Chapter 382
41 63M-1-412, as renumbered and amended by Laws of Utah 2008, Chapter 382
42 63M-1-413, as renumbered and amended by Laws of Utah 2008, Chapter 382
43 63M-1-414, as renumbered and amended by Laws of Utah 2008, Chapter 382
44 REPEALS:
45 63M-1-416, as renumbered and amended by Laws of Utah 2008, Chapter 382
46
47 Be it enacted by the Legislature of the state of Utah:
48 Section 1. Section 63M-1-402 is amended to read:
49 63M-1-402. Definitions.
50 As used in this part:
51 (1) "Business entity" means an entity, sole proprietorship, or individual:
52 (a) including a claimant, estate, or trust; and
53 (b) under which or by whom business is conducted or transacted.
54 (2) [(a)] "Claimant" means a resident or nonresident person that has:
55 [(i)] (a) Utah taxable income as defined in Section 59-7-101 ; or
56 [(ii)] (b) state taxable income under Title 59, Chapter 10, Part 1, Determination and

57 Reporting of Tax Liability [or] and Information.
58 [(b) "Claimant" does not include an estate or trust.]
59 (3) "County applicant" means the governing authority of a county that meets the
60 requirements for designation as an enterprise zone under Section 63M-1-404 .
61 (4) "Estate" means a nonresident estate or a resident estate that has state taxable
62 income under Title 59, Chapter 10, Part 2, Trusts and Estates.
63 (5) "Municipal applicant" means the governing authority of a city or town that meets
64 the requirements for designation as an enterprise zone under Section 63M-1-404 .
65 (6) "New full-time employee position" means a position that has been newly created
66 and then filled by an employee working at least 30 hours per week:
67 (a) for a period of not less than six consecutive months; and
68 (b) where the period ends in the tax year for which the credit is claimed.
69 [(6)] (7) "Nonrefundable tax credit" or "tax credit" means a tax credit that a [claimant,
70 estate, or trust] business entity may:
71 (a) claim:
72 (i) as provided by statute; and
73 (ii) in an amount that does not exceed the [claimant's, estate's, or trust's] business
74 entity's tax liability for a taxable year under:
75 (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
76 (B) Title 59, Chapter 10, Individual Income Tax Act; and
77 (b) carry forward or carry back:
78 (i) if allowed by statute; and
79 (ii) to the extent that the amount of the tax credit exceeds the [claimant's, estate's, or
80 trust's] business entity's tax liability for a taxable year under:
81 (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
82 (B) Title 59, Chapter 10, Individual Income Tax Act.
83 [(7)] (8) "Tax incentives" or "tax benefits" means the nonrefundable tax credits
84 described in Section 63M-1-413 .

85 [(8)] (9) "Trust" means a nonresident trust or a resident trust that has state taxable
86 income under Title 59, Chapter 10, Part 2, Trusts and Estates.
87 Section 2. Section 63M-1-403 is amended to read:
88 63M-1-403. Powers of the office.
89 The office shall:
90 (1) monitor the implementation and operation of this part and conduct a continuing
91 evaluation of the progress made in the enterprise zones;
92 (2) evaluate an application for designation as an enterprise zone from a county
93 applicant or a municipal applicant [to be designated an enterprise zone] and determine if the
94 applicant qualifies for that designation;
95 (3) provide technical assistance to county applicants and municipal applicants in
96 developing applications for designation as enterprise zones;
97 (4) assist county applicants and municipal applicants designated as enterprise zones in
98 obtaining assistance from the federal government and agencies of the state;
99 (5) assist a qualified business entity in obtaining the benefits of an incentive or
100 inducement program authorized by this part; and
101 (6) prepare an annual evaluation based, in part, on data provided by the State Tax
102 Commission that:
103 (a) [evaluating] evaluates the effectiveness of the program and any suggestions for
104 legislation; and
105 (b) [that] is available upon request to the governor and to the Revenue and Taxation
106 Interim [Committee] and the Workforce Services and Economic Development Interim
107 Committees of the Legislature by November 1 of each year.
108 Section 3. Section 63M-1-404 is amended to read:
109 63M-1-404. Criteria for designation of enterprise zones -- Application.
110 (1) A county applicant seeking designation as an enterprise zone shall file an
111 application with the office that, in addition to complying with the other requirements of this
112 part:

113 [(a) verifies that the entire county is not located in a metropolitan statistical area that is
114 entirely located within Utah, except that this requirement does not apply to a third, fourth, fifth,
115 or sixth class county as classified under Section 17-50-501 ;]
116 [(b)] (a) verifies that the county has a population of not more than 50,000 [or less]; and
117 [(c)] (b) provides clear evidence of the need for development in the county.
118 (2) A municipal applicant seeking designation as an enterprise zone shall file an
119 application with the office that, in addition to complying with other requirements of this part:
120 (a) verifies that the municipality is a city of the fifth class or a town;
121 (b) verifies that the municipality is within a county that has a population of not more
122 than 50,000 [or less]; and
123 (c) provides clear evidence of the need for development in the municipality.
124 (3) An application filed under Subsection (1) or (2) shall be in a form and in
125 accordance with procedures approved by the office, and shall include the following
126 information:
127 (a) a plan developed by the county applicant or municipal applicant that identifies local
128 contributions meeting the requirements of Section 63M-1-405 ;
129 (b) the county applicant or municipal applicant has a development plan that outlines:
130 (i) the types of investment and development within the zone that the county applicant
131 or municipal applicant expects to take place if the incentives specified in this part are provided;
132 (ii) the specific investment or development reasonably expected to take place;
133 (iii) any commitments obtained from businesses;
134 (iv) the projected number of jobs that will be created and the anticipated wage level of
135 those jobs;
136 (v) any proposed emphasis on the type of jobs created, including any affirmative action
137 plans; and
138 (vi) a copy of the county applicant's or municipal applicant's economic development
139 plan to demonstrate coordination between the zone and overall county or municipal goals;
140 (c) the county applicant's or municipal applicant's proposed means of assessing the

141 effectiveness of the development plan or other programs [to be implemented] within the zone
142 once they have been implemented within the zone;
143 (d) any additional information required by the office; and
144 (e) any additional information the county applicant or municipal applicant considers
145 relevant to its designation as an enterprise zone.
146 Section 4. Section 63M-1-406 is amended to read:
147 63M-1-406. Eligibility review.
148 (1) [(a)] The office shall:
149 (a) review and evaluate the applications submitted under Section 63M-1-404 ; and
150 [shall]
151 (b) determine whether each county applicant or municipal applicant is eligible for
152 designation as an enterprise zone.
153 [(b) In determining whether a county applicant or municipal applicant is eligible, if
154 unemployment, income, population, or other necessary data are not available for the county
155 applicant or municipal applicant from the federal departments of labor or commerce or a state
156 agency, the office may rely upon other data submitted by the applicant, if the office determines
157 that it is statistically reliable or accurate.]
158 (2) (a) The office shall designate enterprise zones.
159 (b) The office shall consider and evaluate an application using the following criteria:
160 (i) the pervasiveness of poverty, unemployment, and general distress in the proposed
161 zone;
162 (ii) the extent of chronic abandonment, deterioration, or reduction in value of
163 commercial, industrial, or residential structures in the proposed zone, and the extent of property
164 tax arrearages in the proposed zone;
165 (iii) the potential for new investment and economic development in the proposed zone;
166 (iv) the county applicant's or municipal applicant's proposed use of other state and
167 federal development funds or programs to increase the probability of new investment and
168 development occurring;

169 (v) the extent to which the projected development in the zone will provide employment
170 to residents of the county and particularly individuals who are unemployed or who are
171 economically disadvantaged;
172 (vi) the degree to which the county applicant's or municipal applicant's application
173 promotes innovative solutions to economic development problems and demonstrates local
174 initiative; and
175 (vii) other relevant factors that the office specifies in its recommendation.
176 Section 5. Section 63M-1-412 is amended to read:
177 63M-1-412. Business entities qualifying for tax incentives.
178 [The] (1) Except as otherwise provided in Subsection (2), the tax incentives described
179 in this part are available only to a business entity for which at least 51% of the employees
180 employed at facilities of the business entity located in the enterprise zone are individuals who,
181 at the time of employment, reside in:
182 (a) the county in which the enterprise zone is located[.]; or
183 (b) an enterprise zone that is immediately adjacent and contiguous to the county in
184 which the enterprise zone is located.
185 (2) Subsection (1) does not apply to a business entity that has no employees.
186 Section 6. Section 63M-1-413 is amended to read:
187 63M-1-413. State tax credits.
188 (1) Subject to the limitations of Subsections (2) through (4), the following
189 nonrefundable tax credits against a tax under Title 59, Chapter 7, Corporate Franchise and
190 Income Taxes, or Title 59, Chapter 10, Individual Income Tax Act, are applicable in an
191 enterprise zone:
192 (a) a tax credit of $750 may be claimed by a business entity for each new full-time
193 employee position [filled for not less than six months during a given tax year] created within
194 the enterprise zone;
195 (b) an additional $500 tax credit may be claimed if the new full-time employee position
196 created within the enterprise zone pays at least 125% of:

197 (i) the county average monthly nonagricultural payroll wage for the respective industry
198 as determined by the Department of Workforce Services; or
199 (ii) if the county average monthly nonagricultural payroll wage is not available for the
200 respective industry, the total average monthly nonagricultural payroll wage in the respective
201 county where the enterprise zone is located;
202 (c) an additional tax credit of $750 may be claimed if the new full-time employee
203 position created within the enterprise zone is in a business entity that adds value to agricultural
204 commodities through manufacturing or processing;
205 (d) an additional tax credit of $200 may be claimed for two consecutive years for each
206 new full-time employee position created within the enterprise zone that is filled by an
207 employee who is insured under an employer-sponsored health insurance program if the
208 employer pays at least 50% of the premium cost for [two consecutive years] the year for which
209 the credit is claimed;
210 (e) a tax credit of 50% of the value of a cash contribution to a private nonprofit
211 corporation, except that the credit claimed may not exceed $100,000:
212 (i) that is exempt from federal income taxation under Section 501(c)(3), Internal
213 Revenue Code;
214 (ii) whose primary purpose is community and economic development; and
215 (iii) that has been accredited by the board of directors of the Utah Rural Development
216 Council;
217 (f) a tax credit of 25% of the first $200,000 spent on rehabilitating a building in the
218 enterprise zone that has been vacant for two years or more; and
219 (g) an annual investment tax credit of 10% of the first $250,000 in investment, and 5%
220 of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable
221 property.
222 (2) (a) Subject to the limitations of Subsection (2)(b), a business entity claiming [a] tax
223 [credit] credits under Subsections (1)(a) through (d) may claim the tax [credit] credits for up to
224 30 full-time employee positions [or less in each of its] per taxable [years] year.

225 (b) A business entity that received a tax credit for [its] one or more new full-time
226 employee positions under Subsections (1)(a) through (d) in a prior taxable year may claim [an
227 additional] a tax credit for a new full-time employee position in a subsequent taxable year
228 under Subsections (1)(a) through (d) if:
229 (i) the business entity [creates] has created a new full-time [employee] position within
230 the enterprise zone; and
231 (ii) the total number of full-time employee positions at the business entity at any point
232 during the tax year for which the tax credit is being claimed is greater than the number of
233 full-time employee positions [previously claimed by] that existed at the business entity [under
234 Subsections (1)(a) through (d); and] at any point during the taxable year immediately preceding
235 the taxable year for which the credit is being claimed.
236 [(iii) the total number of tax credits the business entity has claimed for its current
237 taxable year, including the new full-time employee position for which the claimant, estate, or
238 trust that is a business entity is claiming a tax credit, is less than or equal to 30.]
239 [(c) A business entity existing in an enterprise zone on the date of its designation shall
240 calculate the number of full-time positions based on the average number of employees reported
241 to the Department of Workforce Services.]
242 [(d)] (c) Construction jobs are not eligible for the tax credits under Subsections (1)(a)
243 through (d).
244 (3) If the amount of a tax credit under this section exceeds a business entity's tax
245 liability under this chapter for a taxable year, the business entity may carry forward the amount
246 of the tax credit exceeding the liability [may be carried forward] for a period that does not
247 exceed the next three taxable years.
248 [(4) (a) If a business entity is located in a county that met the requirements of
249 Subsections 63M-1-404 (1)(b) and (c) but did not qualify as an enterprise zone prior to January
250 1, 1998, because the county was located in a metropolitan statistical area in more than one
251 state, the business entity:]
252 [(i) shall qualify for tax credits for a taxable year beginning on or after January 1, 1997,

253 but beginning before December 31, 1997;]
254 [(ii) may claim a tax credit as described in Subsection (4)(a) in a taxable year
255 beginning on or after January 1, 1997, but beginning before December 31, 1997; and]
256 [(iii) may qualify for tax credits for any taxable year beginning on or after January 1,
257 1998, if the county is designated as an enterprise zone in accordance with this part.]
258 [(b) If a business entity claims a tax credit under Subsection (4)(a)(ii), the business
259 entity:]
260 [(i) may claim the tax credit by filing for the taxable year beginning on or after January
261 1, 1997, but beginning before December 31, 1997:]
262 [(A) a return under Title 59, Chapter 7, Corporate Franchise and Income Taxes;]
263 [(B) an amended return under Title 59, Chapter 7, Corporate Franchise and Income
264 Taxes;]
265 [(C) a return under Title 59, Chapter 10, Individual Income Tax Act; or]
266 [(D) an amended return under Title 59, Chapter 10, Individual Income Tax Act; and]
267 [(ii) may carry forward the tax credit to a taxable year beginning on or after January 1,
268 1998, in accordance with Subsection (3).]
269 [(5) The tax] (4) Tax credits under Subsections (1)(a) through (g) may not be claimed
270 by a business entity primarily engaged in retail trade or by a public utilities business.
271 (5) A business entity that has no employees:
272 (a) may not claim tax credits under Subsections (1)(a) through (d); and
273 (b) may claim tax credits under Subsections (1)(e) through (g).
274 (6) A business entity may not claim or carry forward a tax credit available under this
275 part for a taxable year during which the business entity has claimed the targeted business
276 income tax credit available under Section 63M-1-504 .
277 Section 7. Section 63M-1-414 is amended to read:
278 63M-1-414. Annual report.
279 [(1)] Each county applicant or municipal applicant designated as an enterprise zone
280 shall annually report to the office regarding the economic activity that has occurred in the zone

281 following the designation.
282 [(2) This information shall include:]
283 [(a) the number of jobs created in the zone;]
284 [(b) the number of economically disadvantaged individuals receiving public job
285 training assistance in the zone;]
286 [(c) the average wage level of the jobs created;]
287 [(d) descriptions of any affirmative action programs undertaken by the county applicant
288 or municipal applicant in connection with the enterprise zone;]
289 [(e) the amount of the county applicant's or municipal applicant's local contribution;
290 and]
291 [(f) the number of businesses qualifying for, or directly benefiting from, the local
292 contribution.]
293 Section 8. Repealer.
294 This bill repeals:
295 Section 63M-1-416, Technology-based service contracts within enterprise zones.
296 Section 9. Effective date.
297 This bill takes effect on January 1, 2012.