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First Substitute H.B. 17
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6 Cosponsors:Paul RayChristine F. Watkins 7
8 LONG TITLE
9 General Description:
10 This bill modifies provisions of the Enterprise Zone Act related to the definitions of
11 business entity and new full-time employee position, the criteria for designation of an
12 enterprise zone, business entities qualifying for tax incentives, state tax credits
13 applicable in an enterprise zone, annual reports, and technology-based service contracts
14 within enterprise zones.
15 Highlighted Provisions:
16 This bill:
17 . modifies the definition of business entity and defines new full-time employee
18 position as used in the Enterprise Zone Act;
19 . modifies the criteria used for the designation of an enterprise zone;
20 . modifies the eligibility review procedure of applications for designation as an
21 enterprise zone;
22 . modifies provisions related to business entities qualifying for tax incentives under
23 the Enterprise Zone Act;
24 . modifies provisions related to tax credits which may be claimed for new full-time
25 employee positions;
26 . provides that a business entity may not claim a tax credit under the Enterprise Zone
27 Act if it is primarily engaged in a retail trade;
28 . modifies annual enterprise zone reporting provisions; and
29 . provides a repealer.
30 Money Appropriated in this Bill:
31 None
32 Other Special Clauses:
33 This bill takes effect on January 1, 2012.
34 Utah Code Sections Affected:
35 AMENDS:
36 63M-1-402, as renumbered and amended by Laws of Utah 2008, Chapter 382
37 63M-1-403, as renumbered and amended by Laws of Utah 2008, Chapter 382
38 63M-1-404, as renumbered and amended by Laws of Utah 2008, Chapter 382
39 63M-1-406, as renumbered and amended by Laws of Utah 2008, Chapter 382
40 63M-1-412, as renumbered and amended by Laws of Utah 2008, Chapter 382
41 63M-1-413, as renumbered and amended by Laws of Utah 2008, Chapter 382
42 63M-1-414, as renumbered and amended by Laws of Utah 2008, Chapter 382
43 REPEALS:
44 63M-1-416, as renumbered and amended by Laws of Utah 2008, Chapter 382
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46 Be it enacted by the Legislature of the state of Utah:
47 Section 1. Section 63M-1-402 is amended to read:
48 63M-1-402. Definitions.
49 As used in this part:
50 (1) "Business entity" means an entity, sole proprietorship, or individual:
51 (a) including a claimant, estate, or trust; and
52 (b) under which or by whom business is conducted or transacted.
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56 Reporting of Tax Liability [
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58 (3) "County applicant" means the governing authority of a county that meets the
59 requirements for designation as an enterprise zone under Section 63M-1-404 .
60 (4) "Estate" means a nonresident estate or a resident estate that has state taxable
61 income under Title 59, Chapter 10, Part 2, Trusts and Estates.
62 (5) "Municipal applicant" means the governing authority of a city or town that meets
63 the requirements for designation as an enterprise zone under Section 63M-1-404 .
64 (6) "New full-time employee position" means a position that has been newly created
65 and then filled by an employee working at least 30 hours per week:
66 (a) for a period of not less than six consecutive months; and
67 (b) where the period ends in the tax year for which the credit is claimed.
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70 (a) claim:
71 (i) as provided by statute; and
72 (ii) in an amount that does not exceed the [
73 entity's tax liability for a taxable year under:
74 (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
75 (B) Title 59, Chapter 10, Individual Income Tax Act; and
76 (b) carry forward or carry back:
77 (i) if allowed by statute; and
78 (ii) to the extent that the amount of the tax credit exceeds the [
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80 (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
81 (B) Title 59, Chapter 10, Individual Income Tax Act.
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83 described in Section 63M-1-413 .
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85 income under Title 59, Chapter 10, Part 2, Trusts and Estates.
86 Section 2. Section 63M-1-403 is amended to read:
87 63M-1-403. Powers of the office.
88 The office shall:
89 (1) monitor the implementation and operation of this part and conduct a continuing
90 evaluation of the progress made in the enterprise zones;
91 (2) evaluate an application for designation as an enterprise zone from a county
92 applicant or a municipal applicant [
93 applicant qualifies for that designation;
94 (3) provide technical assistance to county applicants and municipal applicants in
95 developing applications for designation as enterprise zones;
96 (4) assist county applicants and municipal applicants designated as enterprise zones in
97 obtaining assistance from the federal government and agencies of the state;
98 (5) assist a qualified business entity in obtaining the benefits of an incentive or
99 inducement program authorized by this part; and
100 (6) prepare an annual evaluation based, in part, on data provided by the State Tax
101 Commission that:
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103 legislation; and
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105 Interim [
106 Committees of the Legislature by November 1 of each year.
107 Section 3. Section 63M-1-404 is amended to read:
108 63M-1-404. Criteria for designation of enterprise zones -- Application.
109 (1) A county applicant seeking designation as an enterprise zone shall file an
110 application with the office that, in addition to complying with the other requirements of this
111 part:
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117 (2) A municipal applicant seeking designation as an enterprise zone shall file an
118 application with the office that, in addition to complying with other requirements of this part:
119 (a) verifies that the municipality is a city of the fifth class or a town;
120 (b) verifies that the municipality is within a county that has a population of not more
121 than 50,000 [
122 (c) provides clear evidence of the need for development in the municipality.
123 (3) An application filed under Subsection (1) or (2) shall be in a form and in
124 accordance with procedures approved by the office, and shall include the following
125 information:
126 (a) a plan developed by the county applicant or municipal applicant that identifies local
127 contributions meeting the requirements of Section 63M-1-405 ;
128 (b) the county applicant or municipal applicant has a development plan that outlines:
129 (i) the types of investment and development within the zone that the county applicant
130 or municipal applicant expects to take place if the incentives specified in this part are provided;
131 (ii) the specific investment or development reasonably expected to take place;
132 (iii) any commitments obtained from businesses;
133 (iv) the projected number of jobs that will be created and the anticipated wage level of
134 those jobs;
135 (v) any proposed emphasis on the type of jobs created, including any affirmative action
136 plans; and
137 (vi) a copy of the county applicant's or municipal applicant's economic development
138 plan to demonstrate coordination between the zone and overall county or municipal goals;
139 (c) the county applicant's or municipal applicant's proposed means of assessing the
140 effectiveness of the development plan or other programs [
141 once they have been implemented within the zone;
142 (d) any additional information required by the office; and
143 (e) any additional information the county applicant or municipal applicant considers
144 relevant to its designation as an enterprise zone.
145 Section 4. Section 63M-1-406 is amended to read:
146 63M-1-406. Eligibility review.
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148 (a) review and evaluate the applications submitted under Section 63M-1-404 ; and
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150 (b) determine whether each county applicant or municipal applicant is eligible for
151 designation as an enterprise zone.
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157 (2) (a) The office shall designate enterprise zones.
158 (b) The office shall consider and evaluate an application using the following criteria:
159 (i) the pervasiveness of poverty, unemployment, and general distress in the proposed
160 zone;
161 (ii) the extent of chronic abandonment, deterioration, or reduction in value of
162 commercial, industrial, or residential structures in the proposed zone, and the extent of property
163 tax arrearages in the proposed zone;
164 (iii) the potential for new investment and economic development in the proposed zone;
165 (iv) the county applicant's or municipal applicant's proposed use of other state and
166 federal development funds or programs to increase the probability of new investment and
167 development occurring;
168 (v) the extent to which the projected development in the zone will provide employment
169 to residents of the county and particularly individuals who are unemployed or who are
170 economically disadvantaged;
171 (vi) the degree to which the county applicant's or municipal applicant's application
172 promotes innovative solutions to economic development problems and demonstrates local
173 initiative; and
174 (vii) other relevant factors that the office specifies in its recommendation.
175 Section 5. Section 63M-1-412 is amended to read:
176 63M-1-412. Business entities qualifying for tax incentives.
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178 in this part are available only to a business entity for which at least 51% of the employees
179 employed at facilities of the business entity located in the enterprise zone are individuals who,
180 at the time of employment, reside in:
181 (a) the county in which the enterprise zone is located[
182 (b) an enterprise zone that is immediately adjacent and contiguous to the county in
183 which the enterprise zone is located.
184 (2) Subsection (1) does not apply to a business entity that has no employees.
185 Section 6. Section 63M-1-413 is amended to read:
186 63M-1-413. State tax credits.
187 (1) Subject to the limitations of Subsections (2) through (4), the following
188 nonrefundable tax credits against a tax under Title 59, Chapter 7, Corporate Franchise and
189 Income Taxes, or Title 59, Chapter 10, Individual Income Tax Act, are applicable in an
190 enterprise zone:
191 (a) a tax credit of $750 may be claimed by a business entity for each new full-time
192 employee position [
193 the enterprise zone;
194 (b) an additional $500 tax credit may be claimed if the new full-time employee position
195 created within the enterprise zone pays at least 125% of:
196 (i) the county average monthly nonagricultural payroll wage for the respective industry
197 as determined by the Department of Workforce Services; or
198 (ii) if the county average monthly nonagricultural payroll wage is not available for the
199 respective industry, the total average monthly nonagricultural payroll wage in the respective
200 county where the enterprise zone is located;
201 (c) an additional tax credit of $750 may be claimed if the new full-time employee
202 position created within the enterprise zone is in a business entity that adds value to agricultural
203 commodities through manufacturing or processing;
204 (d) an additional tax credit of $200 may be claimed for two consecutive years for each
205 new full-time employee position created within the enterprise zone that is filled by an
206 employee who is insured under an employer-sponsored health insurance program if the
207 employer pays at least 50% of the premium cost [
208 (e) a tax credit of 50% of the value of a cash contribution to a private nonprofit
209 corporation, except that the credit claimed may not exceed $100,000:
210 (i) that is exempt from federal income taxation under Section 501(c)(3), Internal
211 Revenue Code;
212 (ii) whose primary purpose is community and economic development; and
213 (iii) that has been accredited by the board of directors of the Utah Rural Development
214 Council;
215 (f) a tax credit of 25% of the first $200,000 spent on rehabilitating a building in the
216 enterprise zone that has been vacant for two years or more; and
217 (g) an annual investment tax credit of 10% of the first $250,000 in investment, and 5%
218 of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable
219 property.
220 (2) (a) Subject to the limitations of Subsection (2)(b), a business entity claiming [
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222 30 full-time employee positions [
223 (b) A business entity that received a tax credit for [
224 employee positions under Subsections (1)(a) through (d) in a prior taxable year may claim [
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226 under Subsections (1)(a) through (d) if:
227 (i) the business entity [
228 the enterprise zone; and
229 (ii) the total number of full-time employee positions at the business entity at any point
230 during the tax year for which the tax credit is being claimed is greater than the number of
231 full-time employee positions [
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233 the taxable year for which the credit is being claimed.
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241 through (d).
242 (3) If the amount of a tax credit under this section exceeds a business entity's tax
243 liability under this chapter for a taxable year, the business entity may carry forward the amount
244 of the tax credit exceeding the liability [
245 exceed the next three taxable years.
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268 by a business entity primarily engaged in retail trade or by a public utilities business.
269 (5) A business entity that has no employees:
270 (a) may not claim tax credits under Subsections (1)(a) through (d); and
271 (b) may claim tax credits under Subsections (1)(e) through (g).
272 (6) A business entity may not claim or carry forward a tax credit available under this
273 part for a taxable year during which the business entity has claimed the targeted business
274 income tax credit available under Section 63M-1-504 .
275 Section 7. Section 63M-1-414 is amended to read:
276 63M-1-414. Annual report.
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278 shall annually report to the office regarding the economic activity that has occurred in the zone
279 following the designation.
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291 Section 8. Repealer.
292 This bill repeals:
293 Section 63M-1-416, Technology-based service contracts within enterprise zones.
294 Section 9. Effective date.
295 This bill takes effect on January 1, 2012.
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