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7 LONG TITLE
8 General Description:
9 This bill amends provisions related to tax credit incentives for economic development.
10 Highlighted Provisions:
11 This bill:
12 ▸ defines terms; and
13 ▸ provides that the Governor's Office of Economic Development may consider the
14 following when awarding economic development tax credits:
15 • certain working parent benefits;
16 • hiring practices favorable to veterans; and
17 • the strategic benefit to the state.
18 Money Appropriated in this Bill:
19 None
20 Other Special Clauses:
21 None
22 Utah Code Sections Affected:
23 AMENDS:
24 63N-2-103, as last amended by Laws of Utah 2015, Chapter 344 and renumbered and
25 amended by Laws of Utah 2015, Chapter 283 and last amended by Coordination
26 Clause, Laws of Utah 2015, Chapter 344
27 63N-2-104, as last amended by Laws of Utah 2015, Chapter 344 and renumbered and
28 amended by Laws of Utah 2015, Chapter 283
29
30 Be it enacted by the Legislature of the state of Utah:
31 Section 1. Section 63N-2-103 is amended to read:
32 63N-2-103. Definitions.
33 As used in this part:
34 (1) "Business entity" means a person that enters into an agreement with the office to
35 initiate a new commercial project in Utah that will qualify the person to receive a tax credit
36 under Section 59-7-614.2 or 59-10-1107.
37 (2) "Community development and renewal agency" has the same meaning as that term
38 is defined in Section 17C-1-102.
39 (3) "Development zone" means an economic development zone created under Section
40 63N-2-104.
41 (4) "High paying jobs" means:
42 (a) with respect to a business entity, the aggregate average annual gross wages, not
43 including healthcare or other paid or unpaid benefits, of newly created full-time employment
44 positions in a business entity that are at least 110% of the average wage of a community in
45 which the employment positions will exist;
46 (b) with respect to a county, the aggregate average annual gross wages, not including
47 healthcare or other paid or unpaid benefits, of newly created full-time employment positions in
48 a new commercial project within the county that are at least 110% of the average wage of the
49 county in which the employment positions will exist; or
50 (c) with respect to a city or town, the aggregate average annual gross wages, not
51 including healthcare or other paid or unpaid benefits of newly created full-time employment
52 positions in a new commercial project within the city or town that are at least 110% of the
53 average wages of the city or town in which the employment positions will exist.
54 (5) "Local government entity" means a county, city, or town that enters into an
55 agreement with the office to have a new commercial project that:
56 (a) is initiated within the county's, city's, or town's boundaries; and
57 (b) qualifies the county, city, or town to receive a tax credit under Section 59-7-614.2.
58 (6) (a) "New commercial project" means an economic development opportunity that
59 involves new or expanded industrial, manufacturing, distribution, or business services in Utah.
60 (b) "New commercial project" does not include retail business.
61 (7) (a) "New incremental jobs" means full-time employment positions that are filled by
62 employees who work at least 30 hours per week and that are:
63 (i) with respect to a business entity, created in addition to the baseline count of
64 employment positions that existed within the business entity before the new commercial
65 project;
66 (ii) with respect to a county, created as a result of a new commercial project with
67 respect to which the county or a community development and renewal agency seeks to claim a
68 tax credit under Section 59-7-614.2; or
69 (iii) with respect to a city or town, created as a result of a new commercial project with
70 respect to which the city, town, or a community development and renewal agency seeks to
71 claim a tax credit under Section 59-7-614.2.
72 (b) "New incremental jobs" may include full-time equivalent positions that are filled by
73 more than one employee, if each employee who works less than 30 hours per week is provided
74 benefits comparable to a full-time employee.
75 (c) "New incremental jobs" does not include jobs that are shifted from one jurisdiction
76 in the state to another jurisdiction in the state.
77 (8) "New state revenues" means:
78 (a) with respect to a business entity:
79 (i) incremental new state sales and use tax revenues that a business entity pays under
80 Title 59, Chapter 12, Sales and Use Tax Act, as a result of a new commercial project in a
81 development zone;
82 (ii) incremental new state tax revenues that a business entity pays as a result of a new
83 commercial project in a development zone under:
84 (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
85 (B) Title 59, Chapter 10, Part 1, Determination and Reporting of Tax Liability and
86 Information;
87 (C) Title 59, Chapter 10, Part 2, Trusts and Estates;
88 (D) Title 59, Chapter 10, Part 4, Withholding of Tax; or
89 (E) a combination of Subsections (8)(a)(ii)(A) through (D);
90 (iii) incremental new state tax revenues paid as individual income taxes under Title 59,
91 Chapter 10, Part 1, Determination and Reporting of Tax Liability and Information, by
92 employees of a new or expanded industrial, manufacturing, distribution, or business service
93 within a new commercial project as evidenced by payroll records that indicate the amount of
94 employee income taxes withheld and transmitted to the State Tax Commission by the new or
95 expanded industrial, manufacturing, distribution, or business service within the new
96 commercial project; or
97 (iv) a combination of Subsections (8)(a)(i) through (iii); or
98 (b) with respect to a local government entity:
99 (i) incremental new state sales and use tax revenues that are collected under Title 59,
100 Chapter 12, Sales and Use Tax Act, as a result of a new commercial project in a development
101 zone;
102 (ii) incremental new state tax revenues that are collected as a result of a new
103 commercial project in a development zone under:
104 (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
105 (B) Title 59, Chapter 10, Part 1, Determination and Reporting of Tax Liability and
106 Information;
107 (C) Title 59, Chapter 10, Part 2, Trusts and Estates;
108 (D) Title 59, Chapter 10, Part 4, Withholding of Tax; or
109 (E) a combination of Subsections (8)(b)(ii)(A) through (D);
110 (iii) incremental new state tax revenues paid as individual income taxes under Title 59,
111 Chapter 10, Part 1, Determination and Reporting of Tax Liability and Information, by
112 employees of a new or expanded industrial, manufacturing, distribution, or business service
113 within a new commercial project as evidenced by payroll records that indicate the amount of
114 employee income taxes withheld and transmitted to the State Tax Commission by the new or
115 expanded industrial, manufacturing, distribution, or business service within the new
116 commercial project; or
117 (iv) a combination of Subsections (8)(b)(i) through (iii).
118 (9) "Significant capital investment" means an amount of at least $10,000,000 to
119 purchase capital or fixed assets, which may include real property, personal property, and other
120 fixtures related to a new commercial project:
121 (a) that represents an expansion of existing operations in the state; or
122 (b) that maintains or increases the business entity's existing work force in the state.
123 (10) "Tax credit" means an economic development tax credit created by Section
124 59-7-614.2 or 59-10-1107.
125 (11) "Tax credit amount" means the amount the office lists as a tax credit on a tax
126 credit certificate for a taxable year.
127 (12) "Tax credit certificate" means a certificate issued by the office that:
128 (a) lists the name of the business entity, local government entity, or community
129 development and renewal agency to which the office authorizes a tax credit;
130 (b) lists the business entity's, local government entity's, or community development and
131 renewal agency's taxpayer identification number;
132 (c) lists the amount of tax credit that the office authorizes the business entity, local
133 government entity, or community development and renewal agency for the taxable year; and
134 (d) may include other information as determined by the office.
135 (13) (a) "Working parent benefits" means non-wage compensation in addition to
136 normal wages that are provided to an employee who is the parent of one or more dependent
137 children.
138 (b) "Working parent benefits" may include:
139 (i) parental leave;
140 (ii) on-site child care or a child-care subsidy;
141 (iii) a flexible work schedule;
142 (iv) adoption benefits;
143 (v) support for a parent of a child with special needs;
144 (vi) paid sick leave; and
145 (vii) paid family care leave.
146 Section 2. Section 63N-2-104 is amended to read:
147 63N-2-104. Creation of economic development zones -- Tax credits -- Assignment
148 of tax credit.
149 (1) The office, with advice from the board, may create an economic development zone
150 in the state if the following requirements are satisfied:
151 (a) the area is zoned commercial, industrial, manufacturing, business park, research
152 park, or other appropriate business related use in a community-approved master plan;
153 (b) the request to create a development zone has first been approved by an appropriate
154 local government entity; and
155 (c) local incentives have been or will be committed to be provided within the area.
156 (2) (a) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
157 the office shall make rules establishing the requirements for a business entity or local
158 government entity to qualify for a tax credit for a new commercial project in a development
159 zone under this part.
160 (b) The office shall ensure that the requirements described in Subsection (2)(a) include
161 the following:
162 (i) the new commercial project is within the development zone;
163 (ii) the new commercial project includes direct investment within the geographic
164 boundaries of the development zone;
165 (iii) the new commercial project brings new incremental jobs to Utah;
166 (iv) the new commercial project includes the creation of high paying jobs in the state,
167 significant capital investment in the state, or significant purchases from vendors and providers
168 in the state, or a combination of these three economic factors;
169 (v) the new commercial project generates new state revenues; and
170 (vi) a business entity, a local government entity, or a community development and
171 renewal agency to which a local government entity assigns a tax credit under this section meets
172 the requirements of Section 63N-2-105.
173 (c) In determining the maximum potential amount and duration of a tax credit offered
174 to a business entity or local government entity under this part, the office may consider, along
175 with other discretionary criteria, whether the new commercial project will provide:
176 (i) working parent benefits to employees;
177 (ii) hiring practices favorable to veterans; or
178 (iii) a strategic benefit to the state.
179 (3) (a) The office, after consultation with the board, may enter into a written agreement
180 with a business entity or local government entity authorizing a tax credit to the business entity
181 or local government entity if the business entity or local government entity meets the
182 requirements described in this section.
183 (b) (i) With respect to a new commercial project, the office may authorize a tax credit
184 to a business entity or a local government entity, but not both.
185 (ii) In determining whether to authorize a tax credit with respect to a new commercial
186 project to a business entity or a local government entity, the office shall authorize the tax credit
187 in a manner that the office determines will result in providing the most effective incentive for
188 the new commercial project.
189 (c) (i) Except as provided in Subsection (3)(c)(ii), the office may not authorize or
190 commit to authorize a tax credit that exceeds:
191 (A) 50% of the new state revenues from the new commercial project in any given year;
192 or
193 (B) 30% of the new state revenues from the new commercial project over the lesser of
194 the life of a new commercial project or 20 years.
195 (ii) If the eligible business entity makes capital expenditures in the state of
196 $1,500,000,000 or more associated with a new commercial project, the office may:
197 (A) authorize or commit to authorize a tax credit not exceeding 60% of new state
198 revenues over the lesser of the life of the project or 20 years, if the other requirements of this
199 part are met;
200 (B) establish the year that state revenues and incremental jobs baseline data are
201 measured for purposes of an incentive under this Subsection (3)(c)(ii); and
202 (C) offer an incentive under this Subsection (3)(c)(ii) or modify an existing incentive
203 previously granted under Subsection (3)(c)(i) that is based on the baseline measurements
204 described in Subsection (3)(c)(ii)(B), except that the incentive may not authorize or commit to
205 authorize a tax credit of more than 60% of new state revenues in any one year.
206 (d) (i) A local government entity may by resolution assign a tax credit authorized by
207 the office to a community development and renewal agency.
208 (ii) The local government entity shall provide a copy of the resolution described in
209 Subsection (3)(d)(i) to the office.
210 (iii) If a local government entity assigns a tax credit to a community development and
211 renewal agency, the written agreement described in Subsection (3)(a) shall:
212 (A) be between the office, the local government entity, and the community
213 development and renewal agency;
214 (B) establish the obligations of the local government entity and the community
215 development and renewal agency; and
216 (C) establish the extent to which any of the local government entity's obligations are
217 transferred to the community development and renewal agency.
218 (iv) If a local government entity assigns a tax credit to a community development and
219 renewal agency:
220 (A) the community development and renewal agency shall retain records as described
221 in Subsection (4)(d); and
222 (B) a tax credit certificate issued in accordance with Section 63N-2-106 shall list the
223 community development and renewal agency as the named applicant.
224 (4) The office shall ensure that the written agreement described in Subsection (3):
225 (a) specifies the requirements that the business entity or local government entity shall
226 meet to qualify for a tax credit under this part;
227 (b) specifies the maximum amount of tax credit that the business entity or local
228 government entity may be authorized for a taxable year and over the life of the new commercial
229 project;
230 (c) establishes the length of time the business entity or local government entity may
231 claim a tax credit;
232 (d) requires the business entity or local government entity to retain records supporting a
233 claim for a tax credit for at least four years after the business entity or local government entity
234 claims a tax credit under this part; and
235 (e) requires the business entity or local government entity to submit to audits for
236 verification of the tax credit claimed.
Legislative Review Note
Office of Legislative Research and General Counsel