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H.B. 176

             1     

UTAH INDUSTRIAL FACILITIES AND DEVELOPMENT

             2     
ACT AMENDMENTS

             3     
2013 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Derek E. Brown

             6     
Senate Sponsor: Kevin T. Van Tassell

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Utah Industrial Facilities and Development Act by adding energy
             11      related upgrades to qualified projects for economic growth.
             12      Highlighted Provisions:
             13          This bill:
             14          .    defines terms;
             15          .    provides that an energy efficiency upgrade project and renewable energy system
             16      project are included as projects under the Utah Industrial Facilities and
             17      Development Act;
             18          .    allows bond proceeds to be used to pay for or to reimburse a user as well as a lender
             19      for the costs of a project; and
             20          .    makes technical changes.
             21      Money Appropriated in this Bill:
             22          None
             23      Other Special Clauses:
             24          None
             25      Utah Code Sections Affected:
             26      AMENDS:
             27          11-17-2, as last amended by Laws of Utah 2010, Chapter 378


             28          11-17-3, as last amended by Laws of Utah 2008, Chapter 360
             29     
             30      Be it enacted by the Legislature of the state of Utah:
             31          Section 1. Section 11-17-2 is amended to read:
             32           11-17-2. Definitions.
             33          As used in this chapter:
             34          (1) "Bonds" means bonds, notes, or other evidences of indebtedness.
             35          (2) "Energy efficiency upgrade" means an improvement that is permanently affixed to
             36      real property and that is designed to reduce energy consumption, including:
             37          (a) insulation in:
             38          (i) a wall, ceiling, roof, floor, or foundation; or
             39          (ii) a heating or cooling distribution system;
             40          (b) an insulated window or door, including:
             41          (i) a storm window or door;
             42          (ii) a multiglazed window or door;
             43          (iii) a heat-absorbing window or door;
             44          (iv) a heat-reflective glazed and coated window or door;
             45          (v) additional window or door glazing;
             46          (vi) a window or door with reduced glass area; or
             47          (vii) other window or door modifications that reduce energy loss;
             48          (c) an automatic energy control system;
             49          (d) in a building or a central plant, a heating, ventilation, or air conditioning and
             50      distribution system;
             51          (e) caulking or weatherstripping;
             52          (f) a light fixture that does not increase the overall illumination of a building unless an
             53      increase is necessary to conform with the applicable building code;
             54          (g) an energy recovery system;
             55          (h) a daylighting system;
             56          (i) measures to reduce the consumption of water, through conservation or more
             57      efficient use of water, including:
             58          (i) installation of a low-flow toilet or showerhead;


             59          (ii) installation of a timer or timing system for a hot water heater; or
             60          (iii) installation of a rain catchment system; or
             61          (j) any other modified, installed, or remodeled fixture that is approved as a utility
             62      cost-savings measure by the governing body.
             63          [(2)] (3) "Finance" or "financing" includes the issuing of bonds by a municipality,
             64      county, or state university for the purpose of using a portion, or all or substantially all of the
             65      proceeds to pay for or to reimburse the user [or its], lender, or the user or lender's designee for
             66      the costs of the acquisition of facilities of a project, or to create funds for the project itself
             67      where appropriate, whether these costs are incurred by the municipality, the county, the state
             68      university, the user, or a designee of the user. If title to or in these facilities at all times remains
             69      in the user, the bonds of the municipality or county shall be secured by a pledge of one or more
             70      notes, debentures, bonds, other secured or unsecured debt obligations of the user or lender, or
             71      [such] the sinking fund or other arrangement as in the judgment of the governing body is
             72      appropriate for the purpose of assuring repayment of the bond obligations to investors in
             73      accordance with their terms.
             74          [(3)] (4) "Governing body" means:
             75          (a) for a county, city, or town, the legislative body of the county, city, or town;
             76          (b) for the military installation development authority created in Section 63H-1-201 ,
             77      the authority board, as defined in Section 63H-1-102 ;
             78          (c) for the University of Utah and Utah State University, the board or body having the
             79      control and supervision of the University of Utah and Utah State University; and
             80          (d) for a nonprofit corporation or foundation created by and operating under the
             81      auspices of a state university, the board of directors or board of trustees of that corporation or
             82      foundation.
             83          [(4)] (5) (a) "Industrial park" means land, including all necessary rights, appurtenances,
             84      easements, and franchises relating to it, acquired and developed by [any] a municipality,
             85      county, or state university for the establishment and location of a series of sites for plants and
             86      other buildings for industrial, distribution, and wholesale use. [There may be included as part
             87      of]
             88          (b) "Industrial park" includes the development of the land for [any] an industrial park
             89      under this chapter or the acquisition and provision of water, sewerage, drainage, street, road,


             90      sidewalk, curb, gutter, street lighting, electrical distribution, railroad, or docking facilities, or
             91      any combination of them, but only to the extent that these facilities are incidental to the use of
             92      the land as an industrial park.
             93          (6) "Lender" means a trust company, savings bank, savings and loan association, bank,
             94      credit union, or any other lending institution that lends, loans, or leases proceeds of a financing
             95      to the user or a user's designee.
             96          [(5)] (7) "Mortgage" means a mortgage, trust deed, or other security device.
             97          [(6)] (8) "Municipality" means any incorporated city or town in the state, including
             98      cities or towns operating under home rule charters.
             99          [(7)] (9) "Pollution" means any form of environmental pollution including water
             100      pollution, air pollution, pollution caused by solid waste disposal, thermal pollution, radiation
             101      contamination, or noise pollution.
             102          [(8)] (10) (a) "Project" means:
             103          [(a)] (i) [any] an industrial park, land, interest in land, building, structure, facility,
             104      system, fixture, improvement, appurtenance, machinery, equipment, or any combination of
             105      them, whether or not in existence or under construction:
             106          [(i)] (A) that is suitable for industrial, manufacturing, warehousing, research, business,
             107      and professional office building facilities, commercial, shopping services, food, lodging, low
             108      income rental housing, recreational, or any other business purposes;
             109          [(ii)] (B) that is suitable to provide services to the general public;
             110          [(iii)] (C) that is suitable for use by any corporation, person, or entity engaged in health
             111      care services, including hospitals, nursing homes, extended care facilities, facilities for the care
             112      of persons with a physical or mental disability, and administrative and support facilities; or
             113          [(iv)] (D) that is suitable for use by a state university for the purpose of aiding in the
             114      accomplishment of its authorized academic, scientific, engineering, technical, and economic
             115      development functions[, but "project" does not include any property, real, personal, or mixed,
             116      for the purpose of the construction, reconstruction, improvement, or maintenance of a public
             117      utility as defined in Section 54-2-1 , and except as provided in Subsection (8)(b)];
             118          [(b)] (ii) any land, interest in land, building, structure, facility, system, fixture,
             119      improvement, appurtenance, machinery, equipment, or any combination of them, used by any
             120      individual, partnership, firm, company, corporation, public utility, association, trust, estate,


             121      political subdivision, state agency, or any other legal entity, or its legal representative, agent, or
             122      assigns, for the reduction, abatement, or prevention of pollution, including the removal or
             123      treatment of any substance in process material, if that material would cause pollution if used
             124      without the removal or treatment;
             125          (iii) an energy efficiency upgrade;
             126          (iv) a renewable energy system;
             127          [(c)] (v) facilities, machinery, or equipment, the manufacturing and financing of which
             128      will maintain or enlarge domestic or foreign markets for Utah industrial products; or
             129          [(d)] (vi) any economic development or new venture investment fund to be raised other
             130      than from:
             131          [(i)] (A) municipal or county general fund money;
             132          [(ii)] (B) money raised under the taxing power of any county or municipality; or
             133          [(iii)] (C) money raised against the general credit of any county or municipality.
             134          (b) "Project" does not include any property, real, personal, or mixed, for the purpose of
             135      the construction, reconstruction, improvement, or maintenance of a public utility as defined in
             136      Section 54-2-1 .
             137          (11) "Renewable energy system" means a product, system, device, or interacting group
             138      of devices that is permanently affixed to real property and that produces energy from renewable
             139      resources, including:
             140          (a) a photovoltaic system;
             141          (b) a solar thermal system;
             142          (c) a wind system;
             143          (d) a geothermal system, including:
             144          (i) a direct-use system; or
             145          (ii) a ground source heat pump system;
             146          (e) a micro-hydro system; or
             147          (f) another renewable energy system approved by the governing body.
             148          [(9)] (12) "State university" means the University of Utah and Utah State University
             149      and includes any nonprofit corporation or foundation created by and operating under their
             150      authority.
             151          [(10)] (13) "User" means the person, whether natural or corporate, who will occupy,


             152      operate, maintain, and employ the facilities of, or manage and administer a project after the
             153      financing, acquisition, or construction of it, whether as owner, manager, purchaser, lessee, or
             154      otherwise.
             155          Section 2. Section 11-17-3 is amended to read:
             156           11-17-3. Powers of municipalities, counties, and state universities.
             157          (1) [Each] A municipality, county, and state university may:
             158          (a) finance or acquire, whether by construction, purchase, devise, gift, exchange, or
             159      lease, or any one or more of those methods, and construct, reconstruct, improve, maintain,
             160      equip, and furnish or fund one or more projects, [which shall be located] within this state, and
             161      which shall be located within, or partially within, the municipality or county or within the
             162      county within which a state university is located, unless an agreement under [the] Title 11,
             163      Chapter 13, Interlocal Cooperation Act, has been entered into as authorized by Subsection (5),
             164      except that if a governing body finds, by resolution, that the effects of international trade
             165      practices have been or will be adverse to Utah manufacturers of industrial products and,
             166      therefore, it is desirable to finance a project in order to maintain or enlarge domestic or foreign
             167      markets for Utah industrial products, a project may consist of the financing on behalf of a user
             168      of the costs of acquiring industrial products manufactured in, and which are to be exported
             169      from, the state;
             170          (b) finance for, sell, lease, contract the management of, or otherwise dispose of to, any
             171      person, firm, partnership, or corporation, either public or private, including without limitation
             172      any person, firm, partnership, or corporation engaged in business for a profit, any or all of its
             173      projects upon the terms and conditions as the governing body considers advisable and which do
             174      not conflict with this chapter;
             175          (c) issue revenue bonds for the purpose of defraying the cost of financing, acquiring,
             176      constructing, reconstructing, improving, maintaining, equipping, furnishing, or funding any
             177      project and secure the payment of the bonds as provided in this chapter, which revenue bonds
             178      may be issued in one or more series or issues where considered advisable, and each series or
             179      issue may contain different maturity dates, interest rates, priorities on securities available for
             180      guaranteeing payment of them, and other differing terms and conditions considered necessary
             181      and not in conflict with this chapter;
             182          (d) (i) grant options to renew any lease with respect to any project and to buy any


             183      project at a price the governing body considers desirable; and
             184          (ii) sell and convey any real or personal property acquired under Subsection (1)(a) at
             185      public or private sale, and make an order respecting the sale considered conducive to the best
             186      interests of the municipality, county, or state university, the sale or conveyance to be subject to
             187      the terms of any lease but to be free and clear of any other encumbrance;
             188          (e) establish, acquire, develop, maintain, and operate industrial parks; and
             189          (f) offer to the holders of its bonds issued [pursuant to] under this chapter the right,
             190      where its governing body considers it appropriate, to convert the bonds or some portion of the
             191      bond obligation into an equity position in some or all of the assets developed with the proceeds
             192      of the bond offering.
             193          (2) (a) An economic development or new venture investment fund [shall be] is
             194      considered to be located in the municipality or county where its headquarters is located or
             195      where any office of it is located, [as long as] if it is headquartered within the state. [It]
             196          (b) An economic development or new venture investment fund need not make all of its
             197      investments within the state or [such] the county or municipality, [so long as it] if it:
             198          (i) locates within the state, [or such] the county, or the municipality its headquarters
             199      where its actual investment decisions and management functions occur [and agrees to, and
             200      does, limit]; and
             201          (ii) limits the aggregate amount of its investments in companies located outside the
             202      state to an amount which in the aggregate does not exceed the aggregate amount of investments
             203      made by institutions and funds located outside the state in companies headquartered in Utah
             204      which the locally managed fund has sponsored or in which it has invested and which it has
             205      brought to the attention of investors outside the state.
             206          (c) (i) For purposes of enabling an offering of bonds to fund [such] a fund described in
             207      this Subsection (2), a certification of an executive managerial officer of the manager of [said]
             208      the fund of the intention to comply with this provision may be relied upon. [Each]
             209          (ii) A fund shall at least annually certify to the governmental offeror of [such] the
             210      bonds its compliance with this provision.
             211          (3) (a) Before any municipality, county, or state university issues revenue bonds under
             212      this chapter for the purpose of defraying the cost of acquiring, constructing, reconstructing,
             213      improving, maintaining, equipping, or furnishing any industrial park project, the governing


             214      body of the state university, county, or municipality shall:
             215          (i) adopt and establish a plan of development for the tracts of land to constitute the
             216      industrial park [and shall,]; and
             217          (ii) by resolution, find:
             218          (A) that the project for the establishment of the industrial park is well conceived and
             219      has a reasonable prospect of success, and that the project will tend to provide proper economic
             220      development of the municipality or county and will encourage industry to locate within or near
             221      the municipality or county; or[,]
             222          (B) in the case of state universities, will further, through industrial research and
             223      development, the instructional progress of the state university.
             224          (b) There may be included as a part of any plan of development for any industrial park:
             225          (i) zoning regulations, including:
             226          (A) restrictions on usage of sites within the boundaries of the industrial park[,];
             227          (B) minimum size of sites[,]; and
             228          (C) parking and loading regulations[,]; and
             229          (ii) methods for the providing and furnishing of police and fire protection and for the
             230      furnishing of other municipal or county services which are considered necessary in order to
             231      provide for the maintenance of the public health and safety.
             232          (c) If any water or sewerage facilities are to be acquired as part of the development of
             233      the land for an industrial park under this chapter, water and sewerage facilities may be acquired
             234      as part of the issue of bonds issued under this chapter, through the issuance of bonds payable
             235      from water and sewer charges [in the manner as is now or as may hereafter be] as provided by
             236      law, in combination with an issue of refunding bonds, in combination with an issue of bonds
             237      upon the consent of the holders of outstanding bonds issued for the same purpose, in
             238      combination with bonds issued for the purposes of financing water and sewer facilities which
             239      will not be a part of an industrial park, or in any combination of the foregoing. [Any]
             240          (d) (i) A municipality, county, or state university establishing an industrial park may
             241      lease any land acquired and developed as part of an industrial park to one or more lessees.
             242          (ii) The lessee may sublease all or a portion of the land so leased from the municipality
             243      or county. [Municipalities, counties, and state universities]
             244          (iii) A municipality, county, or state university may sell or lease land in connection


             245      with the establishment, acquisition, development, maintenance, and operation of an industrial
             246      park project. [Any such]
             247          (iv) A lease or sale of land shall be undertaken only after the adoption by the governing
             248      body of a resolution authorizing the lease or sale of the land for industrial park purposes.
             249          (4) (a) (i) [No] A municipality, county, or state university may not:
             250          (A) operate any project [referred to in] under this section, as a business or in any other
             251      manner, except as the lessor or administrator of it[, nor may it]; or
             252          (B) acquire any [such] project, or any part of it, by condemnation. [This prohibition
             253      does]
             254          (ii) The provisions of Subsection (4)(a)(i) do not apply to projects involving research
             255      conducted, administered, or managed by a state university.
             256          (b) [No] Except for a project described in Subsection 11-17-2 (10)(a)(ii) or (vi), a
             257      municipality, county, or state university may not, under this chapter, acquire or lease projects,
             258      or issue revenue bonds for the purpose of defraying the cost of any project or part of it, used for
             259      the generation, transmission, or distribution of electric energy beyond the project site, or the
             260      production, transmission, or distribution of natural gas[, except for any project defined in
             261      Subsection 11-17-2 (8)(b) or (d)].
             262          (5) (a) [Each] A municipality, county, [and] or state university may enter, either before
             263      or after the bonds have been issued, into interlocal agreements under Title 11, Chapter 13,
             264      Interlocal Cooperation Act, with one or more municipalities, counties, state universities, or
             265      special service districts created [pursuant to] under Title 17D, Chapter 1, Special Service
             266      District Act, in order to accomplish economies of scale or other cost savings and any other
             267      additional purposes to be specified in the interlocal agreement, for the issuance of bonds under
             268      this chapter on behalf of all of the signatories to the interlocal agreement by one of the
             269      municipalities, counties, or state universities which is a signatory to the interlocal agreement
             270      for the financing or acquisition of projects qualifying as a project [under Subsection
             271      11-17-2 (8)].
             272          (b) For all purposes of Section 11-13-207 the signatory to the interlocal agreement
             273      designated as the issuer of the bonds constitutes the administrator of the interlocal agreement.
             274          (6) [Subsection (4) to the contrary notwithstanding] Notwithstanding the provisions of
             275      Subsection (4), the governing body of any state university owning or desiring to own facilities


             276      or administer projects [described in Subsection 11-17-2 (8)] may:
             277          (a) become a signatory to the interlocal agreement [provided for in] under Subsection
             278      (5);
             279          (b) enter into a separate security agreement with the issuer of the bonds, as provided in
             280      Section 11-17-5 for the financing or acquisition of a project [under Subsection 11-17-2 (8)] to
             281      be owned by the state university;
             282          (c) enter into agreements to secure the obligations of the state university under a
             283      security agreement entered into under Subsection (6)(b), or to provide liquidity for [such] the
             284      obligations including, without limitation, letter of credit agreements with banking institutions
             285      for letters of credit or for standby letters of credit, reimbursement agreements with financial
             286      institutions, line of credit agreements, standby bond purchase agreements, and to provide for
             287      payment of fees, charges, and other amounts coming due under the agreements entered into
             288      under the authority contained in this Subsection (6)(c);
             289          (d) provide in security agreements entered into under Subsection (6)(b) and in
             290      agreements entered into under Subsection (6)(c) that the obligations of the state university
             291      under an agreement shall be special obligations payable solely from the revenues derived from
             292      the operation or management of the project, owned by the state university and from net profits
             293      from proprietary activities and any other revenues pledged other than appropriations by the
             294      Utah Legislature, and the governing body of the state university shall pledge all or any part of
             295      [such] the revenues to the payment of its obligations under an agreement; and
             296          (e) in order to secure the prompt payment of the obligations of the state university
             297      under a security agreement entered into under Subsection (6)(b) or an agreement entered into
             298      under Subsection (6)(c) and the proper application of the revenues pledged to them, covenant
             299      and provide appropriate provisions in an agreement to the extent [permitted and provided for]
             300      allowed under Section 53B-21-102 .
             301          (7) [Subsection (4) to the contrary notwithstanding] Notwithstanding the provisions of
             302      Subsection (4), the governing body of any municipality, county, or special service district
             303      owning, desiring to own, or administering projects or facilities [described in Subsection
             304      11-17-2 (8)] may:
             305          (a) become a signatory to the interlocal agreement provided [for] in Subsection (5);
             306          (b) enter into a separate security agreement with the issuer of the bonds, as provided in


             307      Section 11-17-5 , for the financing or acquisition of a project [under Subsection 11-17-2 (8)] to
             308      be owned by the municipality, county, or special service district, [as the case may be,] except
             309      that no municipality, county, or special service district may mortgage the facilities [so]
             310      financed or acquired;
             311          (c) enter into agreements to secure the obligations of the municipality, county, or
             312      special service district, as the case may be, under a security agreement entered into under
             313      Subsection (7)(b), or to provide liquidity for [such] the obligations including, without
             314      limitation, letter of credit agreements with banking institutions for letters of credit or for
             315      standby letters of credit, reimbursement agreements with financial institutions, line of credit
             316      agreements, standby bond purchase agreements, and to provide for payment of fees, charges,
             317      and other amounts coming due under the agreements entered into under the authority contained
             318      in this Subsection (7)(c);
             319          (d) provide in security agreements entered into under Subsection (7)(b) and in
             320      agreements entered into under Subsection (7)(c) that the obligations of the municipality,
             321      county, or special service district, as the case may be, under an agreement shall be special
             322      obligations payable solely from the revenues derived from the operation or management of the
             323      project, owned by the municipality, county, or special service district[, as the case may be,] and
             324      the governing body of the municipality, county, or special service district[, as the case may be,]
             325      shall pledge all or any part of [such] the revenues to the payment of its obligations under an
             326      agreement; and
             327          (e) in order to secure the prompt payment of obligations under a security agreement
             328      entered into under Subsection (7)(b) or an agreement entered into under Subsection (7)(c) and
             329      the proper application of the revenues pledged to them, covenant and provide appropriate
             330      provisions in an agreement to the extent permitted and provided for with respect to revenue
             331      obligations under Section 11-14-306 .
             332          (8) In connection with the issuance of bonds under this chapter, a municipality, county,
             333      or state university may:
             334          (a) [may] provide for the repurchase of bonds tendered by their owners and may enter
             335      into an agreement to provide liquidity for [such] the repurchases, including a letter of credit
             336      agreement, line of credit agreement, standby bond purchase agreement, or other type of
             337      liquidity agreement;


             338          (b) [may] enter into remarketing, indexing, tender agent, or other agreements incident
             339      to the financing of the project or the performance of the issuer's obligations relative to the
             340      bonds; and
             341          (c) [may] provide for payment of fees, charges, and other amounts coming due under
             342      the agreements entered into [pursuant to authority contained in] under Subsection (6).




Legislative Review Note
    as of 3-4-13 2:33 PM


Office of Legislative Research and General Counsel


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