1     
NEW CONVENTION FACILITIES DEVELOPMENT

2     
INCENTIVE ACT AMENDMENTS

3     
2015 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Brad R. Wilson

6     
Senate Sponsor: J. Stuart Adams

7     

8     LONG TITLE
9     General Description:
10          This bill addresses provisions relating to incentives for the development of new
11     convention facilities.
12     Highlighted Provisions:
13          This bill:
14          ▸     modifies the incentive for the development of new convention facilities from an
15     income tax credit to payments of sales and use tax money from a restricted special
16     revenue fund;
17          ▸     provides for new tax revenue from a qualified hotel to be placed into a restricted
18     special revenue fund;
19          ▸     establishes a restricted special revenue fund and provides for its funding;
20          ▸     modifies duties of the independent review committee;
21          ▸     modifies provisions relating to the submission of a claim for a convention incentive
22     and the processing of a claim;
23          ▸     modifies provisions relating to incremental property tax revenue; and
24          ▸     modifies provisions relating to the authorized use of a convention incentive.
25     Money Appropriated in this Bill:
26          None
27     Other Special Clauses:
28          This bill provides a special effective date.
29     Utah Code Sections Affected:
30     AMENDS:
31          63M-1-3402, as enacted by Laws of Utah 2014, Chapter 429
32          63M-1-3403, as enacted by Laws of Utah 2014, Chapter 429
33          63M-1-3404, as enacted by Laws of Utah 2014, Chapter 429
34          63M-1-3405, as enacted by Laws of Utah 2014, Chapter 429
35          63M-1-3407, as enacted by Laws of Utah 2014, Chapter 429
36          63M-1-3408, as enacted by Laws of Utah 2014, Chapter 429
37          63M-1-3409, as enacted by Laws of Utah 2014, Chapter 429
38          63M-1-3410, as enacted by Laws of Utah 2014, Chapter 429
39          63M-1-3411, as enacted by Laws of Utah 2014, Chapter 429
40          63M-1-3412, as enacted by Laws of Utah 2014, Chapter 429
41          63M-1-3413, as enacted by Laws of Utah 2014, Chapter 429
42     ENACTS:
43          63M-1-3403.5, Utah Code Annotated 1953
44     REPEALS:
45          59-7-616, as enacted by Laws of Utah 2014, Chapter 429
46          59-10-1110, as enacted by Laws of Utah 2014, Chapter 429
47          63M-1-3406, as enacted by Laws of Utah 2014, Chapter 429
48     

49     Be it enacted by the Legislature of the state of Utah:
50          Section 1. Section 63M-1-3402 is amended to read:
51          63M-1-3402. Definitions.
52          As used in this part:
53          (1) "Agreement" means an agreement described in Section 63M-1-3403.
54          (2) "Base taxable value" means the value of hotel property before the construction on a
55     qualified hotel begins, as that value is established by the county in which the hotel property is
56     located, using a reasonable valuation method that may include the value of the hotel property
57     on the county assessment rolls the year before the year during which construction on the
58     qualified hotel begins.
59          (3) "Certified claim" means a claim that the office has approved and certified as
60     provided in Section 63M-1-3405.
61          (4) "Claim" means a written document submitted by a qualified hotel owner or host
62     local government to request a convention incentive.
63          (5) "Claimant" means the qualified hotel owner or host local government that submits a
64     claim under Subsection 63M-1-3405(1)(a) for a convention incentive.
65          [(2)] (6) "Commission" means the Utah State Tax Commission.
66          [(3)] (7) "Community development and renewal agency" [has the same meaning as]
67     means the same as that term is defined in Section 17C-1-102.
68          (8) "Construction revenue" means revenue generated from state taxes and local taxes
69     imposed on transactions occurring during the eligibility period as a result of the construction of
70     the hotel property, including purchases made by a qualified hotel owner and its subcontractors.
71          (9) "Convention incentive" means an incentive for the development of a qualified
72     hotel, in the form of payment from the incentive fund as provided in this part, as authorized in
73     an agreement.
74          [(4)] (10) "Eligibility period" means:
75          (a) the period that:
76          (i) begins the date construction of a qualified hotel begins; and
77          (ii) ends:
78          (A) for purposes of the state portion, 20 years after the date of initial occupancy of that
79     qualified hotel; or
80          (B) for purposes of the local portion and incremental property tax revenue, 25 years
81     after the date of initial occupancy of that hotel; or
82          (b) as provided in an agreement between the office and a qualified hotel owner or host
83     local government, a period that:
84          (i) begins no earlier than the date construction of a qualified hotel begins; and
85          (ii) is shorter than the period described in Subsection [(4)] (10)(a).
86          [(5)] (11) "Endorsement letter" means a letter:
87          (a) from the county in which a qualified hotel is located or is proposed to be located;
88          (b) signed by the county executive; and
89          (c) expressing the county's endorsement of a developer of a qualified hotel as meeting
90     all the county's criteria for receiving the county's endorsement.
91          [(6)] (12) "Host agency" means the community development and renewal agency of the
92     host local government.
93          [(7)] (13) "Host local government" means:
94          (a) a county that enters into an agreement with the office for the construction of a
95     qualified hotel within the unincorporated area of the county; or
96          (b) a city or town that enters into an agreement with the office for the construction of a
97     qualified hotel within the boundary of the city or town.
98          [(8)] (14) "Hotel property" means a qualified hotel and any property that is included in
99     the same development as the qualified hotel, including convention, exhibit, and meeting space,
100     retail shops, restaurants, parking, and other ancillary facilities and amenities.
101          (15) "Incentive fund" means the Convention Incentive Fund created in Section
102     63M-1-3403.5.
103          [(9)] (16) "Incremental property tax revenue" means the amount of property tax
104     revenue generated from hotel property that equals the difference between:
105          (a) the amount of property tax revenue generated in any tax year by all taxing entities
106     from hotel property, using the current assessed value of the hotel property; and
107          (b) the amount of property tax revenue that would be generated that tax year by all
108     taxing entities from hotel property, using [a] the hotel property's base taxable value [of the
109     hotel property as established by the county in which the hotel property is located].
110          [(10)] (17) "Local portion" means[: (a)] the portion of new tax revenue that is [not the
111     state portion; and] generated by local taxes.
112          [(b) incremental property tax revenue.]
113          (18) "Local taxes" means a tax imposed under:
114          (a) Section 59-12-204;
115          (b) Section 59-12-301;
116          (c) Sections 59-12-352 and 59-12-353;
117          (d) Subsection 59-12-603(1)(a)(i)(A);
118          (e) Subsection 59-12-603(1)(a)(i)(B);
119          (f) Subsection 59-12-603(1)(a)(ii);
120          (g) Subsection 59-12-603(1)(a)(iii); or
121          (h) Section 59-12-1102.
122          [(11)] (19) "New tax revenue" means[:] construction revenue, offsite revenue, and
123     onsite revenue.
124          [(a) all new revenue generated from a tax under Title 59, Chapter 12, Sales and Use
125     Tax Act, on transactions occurring during the eligibility period as a result of the construction of
126     the hotel property, including purchases made by a qualified hotel owner and its subcontractors;]
127          [(b) all new revenue generated from a tax under Title 59, Chapter 12, Sales and Use
128     Tax Act, on transactions occurring on hotel property during the eligibility period; and]
129          [(c) all new] (20) "Offsite revenue" means revenue generated from [a tax under Title
130     59, Chapter 12, Sales and Use Tax Act,] state taxes and local taxes imposed on transactions by
131     a third-party seller occurring other than on hotel property during the eligibility period, if:
132          [(i)] (a) the transaction is subject to a tax under Title 59, Chapter 12, Sales and Use
133     Tax Act; and
134          [(ii)] (b) the third-party seller voluntarily consents to the disclosure of information to
135     the office, as provided in Subsection 63M-1-3405[(1)](2)(b)(i)(E).
136          (21) "Onsite revenue" means revenue generated from state taxes and local taxes
137     imposed on transactions occurring on hotel property during the eligibility period.
138          [(12)] (22) "Public infrastructure" means:
139          (a) water, sewer, storm drainage, electrical, telecommunications, and other similar
140     systems and lines;
141          (b) streets, roads, curbs, gutters, sidewalks, walkways, parking facilities, and public
142     transportation facilities; and
143          (c) other buildings, facilities, infrastructure, and improvements that benefit the public.
144          [(13)] (23) "Qualified hotel" means a full-service hotel development constructed in the
145     state on or after July 1, 2014 that:
146          (a) requires a significant capital investment;
147          (b) includes at least 85 square feet of convention, exhibit, and meeting space per guest
148     room; and
149          (c) is located within 1,000 feet of a convention center that contains at least 500,000
150     square feet of convention, exhibit, and meeting space.
151          [(14)] (24) "Qualified hotel owner" means a person who owns a qualified hotel.
152          [(15)] (25) "Review committee" means the independent review committee established
153     under Section 63M-1-3404.
154          [(16)] (26) "Significant capital investment" means an amount of at least $200,000,000.
155          [(17)] (27) "State portion" means the portion of new tax revenue that is [attributable to
156     a tax imposed under Subsection 59-12-103(2)(a)(i)(A)] generated by state taxes.
157          [(18) "Tax credit" means a tax credit under Section 59-7-616 or 59-10-1110.]
158          [(19) "Tax credit applicant" means a qualified hotel owner or host local government
159     that:]
160          [(a) has entered into an agreement with the office; and]
161          [(b) pursuant to that agreement, submits an application for the issuance of a tax credit
162     certificate.]
163          [(20) "Tax credit certificate" means a certificate issued by the office that includes:]
164          [(a) the name of the tax credit recipient;]
165          [(b) the tax credit recipient's taxpayer identification number;]
166          [(c) the amount of the tax credit authorized under this part for a taxable year; and]
167          [(d) other information as determined by the office.]
168          [(21) "Tax credit recipient" means a tax credit applicant that has been issued a tax
169     credit certificate.]
170          (28) "State taxes" means a tax imposed under Subsection 59-12-103(2)(a)(i), (2)(b)(i),
171     (2)(c)(i), or (2)(d)(i)(A).
172          [(22)] (29) "Third-party seller" means a person who is a seller in a transaction:
173          (a) occurring other than on hotel property;
174          (b) that is:
175          (i) the sale, rental, or lease of a room or of convention or exhibit space or other
176     facilities on hotel property; or
177          (ii) the sale of tangible personal property or a service that is part of a bundled
178     transaction, as defined in Section 59-12-102, with a sale, rental, or lease described in
179     Subsection [(22)] (29)(b)(i); and
180          (c) that is subject to a tax under Title 59, Chapter 12, Sales and Use Tax Act.
181          Section 2. Section 63M-1-3403 is amended to read:
182          63M-1-3403. Agreement for development of new convention hotel -- Convention
183     incentive authorized -- Agreement requirements.
184          (1) The office, with the board's advice, may enter into an agreement with a qualified
185     hotel owner or a host local government:
186          (a) for the development of a qualified hotel; and
187          (b) to authorize a [tax credit] convention incentive:
188          (i) to the qualified hotel owner or host local government, but not both;
189          (ii) for a period not to exceed the eligibility period;
190          (iii) in the amount of new tax revenue, subject to Subsection (2) and notwithstanding
191     any other restriction provided by law;
192          [(iii)] (iv) if:
193          (A) the county in which the qualified hotel is proposed to be located has issued an
194     endorsement letter endorsing the qualified hotel owner; and
195          (B) all applicable requirements of this part and the agreement are met; and
196          [(iv)] (v) that is reduced by $1,900,000 per year during the first two years of the
197     eligibility period, as described in Subsection (2)(c).
198          (2) An agreement under Subsection (1) shall:
199          (a) specify the requirements for [a tax credit recipient] the qualified hotel owner or host
200     local government to qualify for a [tax credit] convention incentive;
201          (b) require compliance with the terms of the endorsement letter issued by the county in
202     which the qualified hotel is proposed to be located;
203          (c) require the amount of [a tax credit listed in a tax credit certificate issued during]
204     certified claims for the first two years of the eligibility period to be reduced by $1,900,000 per
205     year;
206          (d) with respect to the state portion of [any tax credit that the tax credit recipient may
207     receive during the eligibility period] the convention incentive:
208          (i) specify the maximum dollar amount that the [tax credit recipient] qualified hotel
209     owner or host local government may receive, subject to a maximum of:
210          (A) for any [taxable] calendar year, the amount of the state portion [of new tax
211     revenue] in that [taxable] calendar year; and
212          (B) $75,000,000 in the aggregate for [any tax credit recipient] the qualified hotel owner
213     or host local government during an eligibility period, calculated as though the two $1,900,000
214     reductions of the tax credit amount under Subsection (1)(b)(iv) had not occurred; and
215          (ii) specify the maximum percentage of the state portion [of new tax revenue] that may
216     be used in calculating [a tax credit that a tax credit recipient] the portion of the convention
217     incentive that the qualified hotel owner or host local government may receive during the
218     eligibility period for each [taxable] calendar year and in the aggregate;
219          (e) establish a shorter period of time than the period described in Subsection
220     63M-1-3402(5)(a) during which the [tax credit recipient may claim a tax credit] qualified hotel
221     owner or host local government may claim the convention incentive or that the host agency
222     may be paid incremental property tax revenue, if the office and qualified hotel owner or host
223     local government agree to a shorter period of time;
224          (f) require the [tax credit recipient] qualified hotel owner to retain books and records
225     supporting a claim for [a tax credit] the convention incentive as required by Section 59-1-1406;
226          (g) allow the transfer of the agreement to a third party if the third party assumes all
227     liabilities and responsibilities in the agreement;
228          (h) limit the expenditure of funds received under [a tax credit] the convention incentive
229     as provided in Section 63M-1-3412; and
230          (i) require the [tax credit recipient] qualified hotel owner or host local government to
231     submit to any audit and to provide any audit level attestation or other level of review the office
232     considers appropriate for verification of any [tax credit or claimed tax credit] claim.
233          (3) Notwithstanding any other provision of law, a county or city in which a qualified
234     hotel is located may contribute property to the qualified hotel owner or host local government
235     without consideration, to be used as provided in Subsection 63M-1-3408(3)(a).
236          Section 3. Section 63M-1-3403.5 is enacted to read:
237          63M-1-3403.5. Convention Incentive Fund.
238          (1) There is created an expendable special revenue fund known as the Convention
239     Incentive Fund.
240          (2) (a) The incentive fund shall be funded by new tax revenue, as provided in
241     Subsection (3).
242          (b) No legislative appropriation is required to fund the incentive fund.
243          (c) All interest generated from the investment of money in the incentive fund shall be
244     deposited into the incentive fund.
245          (3) (a) During the portion of the eligibility period specified by the office under
246     Subsection 63M-1-3405(7)(a), the commission shall cause new tax revenue to be deposited
247     into the incentive fund as provided in this Subsection (3).
248          (b) To the extent the commission is able to identify sellers involved in transactions
249     generating state taxes or local taxes before the payment of those taxes, the commission shall
250     deposit new tax revenue directly into the incentive fund, notwithstanding Subsection
251     59-12-103(3) and before the allocations required by Section 59-12-204, Subsection
252     59-12-205(2), Section 59-12-401, Section 59-12-603, and Section 59-12-1102.
253          (c) The commission shall, within 30 days after the office provides the information
254     required under Subsection 63M-1-3405(7)(b):
255          (i) except as provided in Subsection (3)(d), withhold from distribution to counties,
256     cities, and towns the local portion of new tax revenue not deposited into the incentive fund
257     under Subsection (3)(b) and transfer that local portion to the incentive fund; and
258          (ii) transfer to the incentive fund any state portion of new tax revenue not deposited
259     into the incentive fund under Subsection (3)(b).
260          (d) The commission may equalize over a 12-month period the withholding required
261     under Subsection (3)(c)(i) for a county, city, or town that requests equalization.     
262          (4) One year after the end of the eligibility period, the commission shall transfer any
263     money remaining in the incentive fund to the Stay Another Day and Bounce Back Fund created
264     in Section 63M-1-3411, except to the extent the money is needed to pay an unpaid certified
265     claim.
266          (5) Except as otherwise provided in this chapter, an agreement with or approval by a
267     local government entity is not required for the use of the state portion or local portion to fund a
268     convention incentive.
269          (6) Distributions of money from the incentive fund shall be in accordance with Section
270     63M-1-3405.
271          Section 4. Section 63M-1-3404 is amended to read:
272          63M-1-3404. Independent review committee.
273          (1) In accordance with rules adopted by the office under Section [63M-1-3408]
274     63M-1-3409, the board shall establish a separate, independent review committee to[:] provide
275     recommendations to the office regarding the terms and conditions of an agreement and to
276     consult with the office as provided in this part or in rule.
277          [(a) review each initial tax credit application submitted under this part for compliance
278     with the requirements of this part and the agreement; and]
279          [(b) consult with the office, as provided in this part.]
280          (2) The review committee shall consist of:
281          (a) one member appointed by the director to represent the office;
282          (b) two members appointed by the mayor or chief executive of the county in which the
283     qualified hotel is located or proposed to be located;
284          (c) two members appointed by:
285          (i) the mayor of the municipality in which the qualified hotel is located or proposed to
286     be located, if the qualified hotel is located or proposed to be located within the boundary of a
287     municipality; or
288          (ii) the mayor or chief executive of the county in which the qualified hotel is located or
289     proposed to be located, in addition to the two members appointed under Subsection (2)(b), if
290     the qualified hotel is located or proposed to be located outside the boundary of a municipality;
291          (d) an individual representing the hotel industry, appointed by the Utah Hotel and
292     Lodging Association;
293          (e) an individual representing the commercial development and construction industry,
294     appointed by the president or chief executive officer of the local chamber of commerce;
295          (f) an individual representing the convention and meeting planners industry, appointed
296     by the president or chief executive officer of the local convention and visitors bureau; and
297          (g) one member appointed by the board.
298          (3) (a) A member serves an indeterminate term and may be removed from the review
299     committee by the appointing authority at any time.
300          (b) A vacancy may be filled in the same manner as an appointment under Subsection
301     (2).
302          (4) A member of the review committee may not be paid for serving on the review
303     committee and may not receive per diem or expense reimbursement.
304          (5) The office shall provide any necessary staff support to the review committee.
305          Section 5. Section 63M-1-3405 is amended to read:
306          63M-1-3405. Submission of written claim for convention incentive -- Disclosure
307     of tax returns and other information -- Determination of claim.
308          [(1) For each taxable year for which a tax credit applicant seeks the issuance of a tax
309     credit certificate, the tax credit applicant shall submit to the office:]
310          [(a) a written application for a tax credit certificate;]
311          (1) The office may not pay any money from the incentive fund to a qualified hotel
312     owner or host local government unless:
313          (a) the qualified hotel owner or host local government submits a claim and other
314     required documentation, as provided in this section; and
315          (b) the office approves and certifies the claim, as provided in this section.
316          (2) A qualified hotel owner or host local government that desires to qualify for a
317     convention incentive shall submit to the office:
318          (a) a written claim for a convention incentive;
319          (b) (i) for [an application] a claim submitted by a qualified hotel owner:
320          (A) a certification by the individual signing the [application] claim that the individual
321     is duly authorized to sign the [application] claim on behalf of the qualified hotel owner;
322          (B) documentation of the new tax revenue previously generated [during the preceding
323     year], itemized by construction revenue, offsite revenue, onsite revenue, type of sales or use
324     tax, and the location of the transaction generating the new tax revenue as determined under
325     Sections 59-12-211, 59-12-211.1, 59-12-212, 59-12-213, 59-12-214, and 59-12-215;
326          (C) the identity of sellers collecting onsite revenue and the date the sellers will begin
327     collecting onsite revenue;
328          [(C)] (D) a document in which the qualified hotel owner expressly directs and
329     authorizes the commission to disclose to the office the qualified hotel owner's tax returns and
330     other information that would otherwise be subject to confidentiality under Section 59-1-403 or
331     Section 6103, Internal Revenue Code;
332          [(D)] (E) a document in which the qualified hotel's direct vendors, lessees, or
333     subcontractors, as applicable, expressly direct and authorize the commission to disclose to the
334     office the tax returns and other information of those vendors, lessees, or subcontractors that
335     would otherwise be subject to confidentiality under Section 59-1-403 or Section 6103, Internal
336     Revenue Code;
337          [(E)] (F) a document in which a third-party seller expressly and voluntarily directs and
338     authorizes the commission to disclose to the office the third-party seller's tax returns and other
339     information that would otherwise be subject to confidentiality under Section 59-1-403 or
340     Section 6103, Internal Revenue Code; [and]
341          [(F)] (G) documentation verifying that the qualified hotel owner is in compliance with
342     the terms of the agreement; and
343          (H) any other documentation that the agreement or office requires; and
344          (ii) for an application submitted by a host local government, documentation of the new
345     tax revenue generated during the preceding year;
346          (c) if the host local government intends to assign the [tax credit sought in the tax credit
347     application] convention incentive to a community development and renewal agency[: (i) the
348     taxpayer identification number of the community development and renewal agency; and (ii)], a
349     document signed by the governing body members of the community development and renewal
350     agency that expressly directs and authorizes the commission to disclose to the office the
351     agency's tax returns and other information that would otherwise be subject to confidentiality
352     under Section 59-1-403 or Section 6103, Internal Revenue Code; and
353          (d) [a statement provided by] an audit level attestation, or other level of review
354     approved by the office, from an independent certified public accountant, [at the tax credit
355     applicant's expense] hired by the claimant, attesting to the accuracy [of the documentation of
356     new tax revenue] and validity of the amount of the state portion and the local portion being
357     claimed by the claimant.
358          [(2)] (3) (a) The office shall submit to the commission the documents described in
359     Subsections [(1)] (2)(b)(i)(C), (D), and (E) and [(1)] (2)(c)[(ii)] authorizing disclosure of the
360     tax returns and other information.
361          (b) Upon receipt of the documents described in Subsection [(2)] (3)(a), the commission
362     shall provide to the office the tax returns and other information described in those documents.
363          [(3)] (4) If the office determines that the tax returns and other information [is] are
364     inadequate to [validate the issuance of a tax credit certificate] enable the office to approve and
365     certify a claim, the office shall inform the [tax credit applicant] claimant that the tax returns
366     and other information were inadequate and request the tax credit applicant to submit additional
367     documentation to validate the [issuance of a tax credit certificate] claim.
368          [(4)] (5) If the office determines that the returns and other information, including any
369     additional documentation provided under Subsection [(3),] (4), comply with applicable
370     requirements and provide reasonable justification [for the issuance of a tax credit certificate] to
371     approve and certify the claim, the office shall:
372          (a) approve and certify the claim;
373          [(a)] (b) determine the amount of the [tax credit to be listed on the tax credit
374     certificate;] certified claim; and
375          [(b) issue a tax credit certificate to the tax credit applicant for the amount of that tax
376     credit; and]
377          [(c) provide a copy of the tax credit certificate to the commission.]
378          (c) disburse money from the incentive fund to pay the certified claim as provided in
379     Subsection (6).
380          (6) The office shall pay claims from available money in the incentive fund at least
381     annually.
382          (7) For each certified claim, the office shall provide the commission:
383          (a) for onsite revenue:
384          (i) the identity of sellers operating upon the hotel property;
385          (ii) the date that the commission is to begin depositing or transferring onsite revenue
386     under Section 63M-1-3403.5 for each seller operating upon the hotel property;
387          (iii) the date that the commission is to stop depositing or transferring onsite revenue to
388     the incentive fund under Section 63M-1-3403.5 for each seller operating upon the hotel
389     property; and
390          (iv) the type of sales or use tax subject to the commission's deposit or transfer to the
391     incentive fund under Section 63M-1-3403.5;
392          (b) for construction revenue and offsite revenue:
393          (i) the amount of new tax revenue authorized under the agreement constituting
394     construction revenue or offsite revenue;
395          (ii) the location of the transactions generating the construction revenue and offsite
396     revenue, as determined under Sections 59-12-211, 59-12-211.1, 59-12-212, 59-12-213,
397     59-12-214, and 59-12-215; and
398          (iii) the type of sales or use tax that constitutes the construction revenue of offsite
399     revenue described in Subsection (7)(b)(ii); and
400          (c) any other information the commission requires.
401          Section 6. Section 63M-1-3407 is amended to read:
402          63M-1-3407. Assigning convention incentive.
403          (1) A host local government that enters into an agreement with the office may, by
404     resolution, assign a [tax credit] convention incentive to a community development and renewal
405     agency, in accordance with rules adopted by the office.
406          (2) A host local government that adopts a resolution assigning a [tax credit] convention
407     incentive under Subsection (1) shall provide a copy of the resolution to the office [and the
408     commission].
409          Section 7. Section 63M-1-3408 is amended to read:
410          63M-1-3408. Payment of incremental property tax revenue.
411          (1) As used in this section:
412          (a) "Displaced tax increment" means the amount of tax increment that a county would
413     have paid to the host agency, except for Subsection (2)(b), from tax increment revenue
414     generated from the project area in which the hotel property is located.
415          (b) "Secured obligations" means bonds or other obligations of a host agency for the
416     payment of which the host agency has, before March 13, 2015, pledged tax increment
417     generated from the project area in which the hotel property is located.
418          (c) "Tax increment" means the same as that term is defined in Section 17C-1-102.
419          (d) "Tax increment shortfall" means the amount of displaced tax increment a host
420     agency needs to receive, in addition to any other tax increment the host agency receives from
421     the project area in which the hotel property is located, to provide the host agency sufficient tax
422     increment funds to be able to pay the debt service on its secured obligations.
423          [(1)] (2) (a) In accordance with rules adopted by the office[, a host agency shall be
424     paid] and subject to Subsection (5), a county in which a qualified hotel is located shall retain
425     incremental property tax revenue during the eligibility period.
426          (b) The amount of incremental property tax revenue that a county retains under
427     Subsection (2)(a) for a taxable year reduces by that amount any tax increment that the county
428     would otherwise have paid to the host agency for that year, subject to Subsection (5).
429          (c) For any taxable year in which a reduction of tax increment occurs as provided in
430     Subsection (2)(b), the county shall provide the host agency a notice that:
431          (i) states the amount of displaced tax increment for that year;
432          (ii) states the number of years remaining in the eligibility period;
433          (iii) provides a detailed accounting of how the displaced tax increment was used; and
434          (iv) explains how the displaced tax increment will be used in the following taxable
435     year.
436          [(b)] (3) Incremental property tax revenue may be used only for:
437          [(i)] (a) the purchase of or payment for, or reimbursement of a previous purchase of or
438     payment for:
439          [(A)] (i) tangible personal property used in the construction of convention, exhibit, or
440     meeting space on hotel property;
441          [(B)] (ii) tangible personal property that, upon the construction of hotel property,
442     becomes affixed to hotel property as real property; or
443          [(C)] (iii) any labor and overhead costs associated with the construction described in
444     Subsections [(1)(b)(i)(A) and (B)] (3)(a)(i) and (ii); and
445          [(ii)] (b) public infrastructure[; and].
446          [(iii) other purposes as approved by the host agency.]
447          [(2) A county that collects property tax on hotel property during the eligibility period
448     shall pay and distribute to the host agency the incremental property tax revenue that the host
449     agency is entitled to collect under Subsection (1), in the manner and at the time provided in
450     Section 59-2-1365.]
451          (4) (a) Incremental property tax:
452          (i) is not tax increment; and
453          (ii) is not subject to:
454          (A) Title 17C, Limited Purpose Local Government Entities -- Community
455     Development and Renewal Agencies Act; or
456          (B) any other law governing tax increment, except as provided in Subsection (4)(c).
457          (b) The payment and use of incremental property tax, as provided in this part, is not
458     subject to the approval of any taxing entity, as defined in Section 17C-1-102.
459          (c) Revenue from an increase in the taxable value of hotel property is considered to be
460     a redevelopment adjustment for purposes of calculating the certified tax rate under Section
461     59-2-924.
462          (5) (a) Subject to Subsection (5)(b), a county may not spend the portion of incremental
463     property tax revenue that is displaced tax increment until after 30 days after the county
464     provides the notice required under Subsection (2)(c).
465          (b) If, within 30 days after the county provides the notice required under Subsection
466     (2)(c), a host agency provides written notice to the county that the host agency will experience
467     a tax increment shortfall, the county shall, unless the host agency agrees otherwise, pay to the
468     host agency displaced tax increment in the amount of the tax increment shortfall.
469          Section 8. Section 63M-1-3409 is amended to read:
470          63M-1-3409. Rulemaking authority -- Requirements for rules.
471          (1) The office shall, in accordance with Title 63G, Chapter 3, Utah Administrative
472     Rulemaking Act, make rules to carry out its responsibilities under this part and to implement
473     the provisions of this part.
474          (2) The rules the office makes under Subsection (1) shall:
475          (a) establish, consistent with this part, the conditions [that a tax credit applicant is]
476     required [to meet to qualify for a tax credit] for a convention incentive;
477          (b) require that a significant capital investment be made in the development of the
478     hotel property;
479          (c) require a [tax credit applicant] claimant to meet all applicable requirements in order
480     to receive a [tax credit certificate] distribution from the incentive fund;
481          (d) require that a qualified hotel owner meet the county's requirements to receive an
482     endorsement letter; and
483          (e) provide for the establishment of an independent review committee, in accordance
484     with the requirements of Section 63M-1-3404.
485          Section 9. Section 63M-1-3410 is amended to read:
486          63M-1-3410. Report by office -- Posting of report.
487          (1) Before November 1 of each year, the office shall submit a written report to the
488     Economic Development and Workforce Services Interim Committee of the Legislature, the
489     Governor's Office of Management and Budget, and the Office of the Legislative Fiscal Analyst
490     describing:
491          (a) the state's success in attracting new conventions and corresponding new state
492     revenue;
493          (b) the estimated amount of [tax credit] convention incentive commitments and the
494     associated calculation made by the office and the period of time over which [tax credits]
495     convention incentives are expected to be paid;
496          (c) the economic impact on the state related to generating new state revenue and
497     providing [tax credits] convention incentives; and
498          (d) the estimated and actual costs and economic benefits of the [tax credit] convention
499     incentive commitments that the office made.
500          (2) The office shall post the annual report under Subsection (1) on its website and on a
501     state website.
502          (3) Upon the commencement of the construction of a qualified hotel, the office shall
503     send a written notice to the Division of Finance:
504          (a) referring to the two annual deposits required under Subsection 59-12-103[(14)](13);
505     and
506          (b) notifying the Division of Finance that construction on the qualified hotel has begun.
507          Section 10. Section 63M-1-3411 is amended to read:
508          63M-1-3411. Stay Another Day and Bounce Back Fund.
509          (1) As used in this section:
510          (a) "Bounce back fund" means the Stay Another Day and Bounce Back Fund, created
511     in Subsection (2).
512          (b) "Tourism board" means the Board of Tourism Development created in Section
513     63M-1-1401.
514          (2) There is created an expendable special revenue fund known as the Stay Another
515     Day and Bounce Back Fund.
516          (3) The bounce back fund shall:
517          (a) be administered by the tourism board;
518          (b) earn interest; and
519          (c) be funded by:
520          (i) annual payments under Section 17-31-9 from the county in which a qualified hotel
521     is located;
522          (ii) money transferred to the bounce back fund under Section 63M-1-3403.5 or
523     63M-1-3412; and
524          (iii) any money that the Legislature chooses to appropriate to the bounce back fund.
525          (4) Interest earned by the bounce back fund shall be deposited into the bounce back
526     fund.
527          (5) The tourism board may use money in the bounce back fund to pay for a tourism
528     program of advertising, marketing, and branding of the state, taking into consideration the
529     long-term strategic plan, economic trends, and opportunities for tourism development on a
530     statewide basis.
531          Section 11. Section 63M-1-3412 is amended to read:
532          63M-1-3412. Hotel Impact Mitigation Fund.
533          (1) As used in this section:
534          (a) "Affected hotel" means a hotel built in the state before July 1, 2014.
535          (b) "Direct losses" means affected hotels' losses of hotel guest business attributable to
536     the qualified hotel room supply being added to the market in the state.
537          (c) "Mitigation fund" means the Hotel Impact Mitigation Fund, created in Subsection
538     (2).
539          (2) There is created an expendable special revenue fund known as the Hotel Impact
540     Mitigation Fund.
541          (3) The mitigation fund shall:
542          (a) be administered by the board;
543          (b) earn interest; and
544          (c) be funded by:
545          (i) payments required to be deposited into the mitigation fund by the Division of
546     Finance under Subsection 59-12-103[(14)](13);
547          (ii) money required to be deposited into the mitigation fund under Subsection
548     17-31-9(2) by the county in which a qualified hotel is located; and
549          (iii) any money deposited into the mitigation fund under Subsection (6).
550          (4) Interest earned by the mitigation fund shall be deposited into the mitigation fund.
551          (5) (a) In accordance with office rules, the board shall annually pay up to $2,100,000 of
552     money in the mitigation fund:
553          (i) to affected hotels;
554          (ii) for four consecutive years, beginning 12 months after the date of initial occupancy
555     of the qualified hotel occurs; and
556          (iii) to mitigate direct losses.
557          (b) (i) If the amount the board pays under Subsection (5)(a) in any year is less than
558     $2,100,000, the board shall pay to the Stay Another Day and Bounce Back Fund, created in
559     Section 63M-1-3411, the difference between $2,100,000 and the amount paid under Subsection
560     (5)(a).
561          (ii) The board shall make any required payment under Subsection (5)(b)(i) within 90
562     days after the end of the year for which a determination is made of how much the board is
563     required to pay to affected hotels under Subsection (5)(a).
564          (6) A host local government or qualified hotel owner may make payments to the
565     Division of Finance for deposit into the mitigation fund.
566          (7) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
567     office shall, in consultation with the Utah Hotel and Lodging Association and the county in
568     which the qualified hotel is located, make rules establishing procedures and criteria governing
569     payments under Subsection (5)(a) to affected hotels.
570          Section 12. Section 63M-1-3413 is amended to read:
571          63M-1-3413. Authorized expenditures of convention incentive.
572          (1) A [tax credit recipient] qualified hotel owner or host local government may spend
573     money received [as a direct result of] from the state portion of a [tax credit only for the
574     purchase of or payment for, or reimbursement of a previous purchase of or payment for:]
575     convention incentive only for a purpose described in Subsection 63M-1-3408(2)(a).
576          [(a) tangible personal property used in the construction of convention, exhibit, or
577     meeting space on hotel property;]
578          [(b) tangible personal property that, upon the construction of hotel property, becomes
579     affixed to hotel property as real property; or]
580          [(c) any labor and overhead costs associated with the construction described in
581     Subsections (1)(a) and (b).]
582          (2) A [tax credit recipient] qualified hotel owner or host local government may spend
583     money received [as a direct result of] from the local portion of a [tax credit] convention
584     incentive only for:
585          (a) a purpose described in Subsection (1);
586          (b) public infrastructure; and
587          (c) other purposes as [approved by the host agency] specified in the agreement.
588          Section 13. Repealer.
589          This bill repeals:
590          Section 59-7-616, Refundable tax credit for certain business entities.
591          Section 59-10-1110, Refundable tax credit for certain business entities.
592          Section 63M-1-3406, Effect of tax credit certificate -- Retaining tax credit
593     certificate.
594          Section 14. Effective date.
595          This bill takes effect on July 1, 2015.