Bill Text: AZ HB2177 | 2017 | Fifty-third Legislature 1st Regular | Introduced
Bill Title: Municipalities; development; reimbursement zones
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-02-02 - House GOV Committee action: Do Pass Amended, voting: (7-1-0-0-0-0) [HB2177 Detail]
Download: Arizona-2017-HB2177-Introduced.html
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REFERENCE TITLE: municipalities; development; reimbursement zones |
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State of Arizona House of Representatives Fifty-third Legislature First Regular Session 2017
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HB 2177 |
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Introduced by Representative Coleman
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AN ACT
Repealing section 9-500.11, Arizona Revised Statutes, as amended by Laws 2005, chapter 105, section 2; Amending section 9-500.11, Arizona Revised Statutes, as amended by Laws 2005, chapter 200, section 1; relating to cities and towns.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Repeal
Section 9-500.11, Arizona Revised Statutes, as amended by Laws 2005, chapter 105, section 2, is repealed.
Sec. 2. Section 9-500.11, Arizona Revised Statutes, as amended by Laws 2005, chapter 200, section 1, is amended to read:
9-500.11. Expenditures for economic development; economic reimbursement authority; requirements; definitions
A. In addition to any other powers granted to a city or town, the governing body of a city or town may appropriate and spend public monies for and in connection with economic development activities.
B. To fund economic development activities under this section, a city or town subject to the requirements of section 9‑500.06 shall not impose a new fee or tax on a single specific industry or type of business.
C. Notwithstanding section 19‑142, subsection B, a decision by the governing body involving an expenditure pursuant to this section shall not be enacted as an emergency measure and that decision is not effective for at least thirty days after final approval of the expenditure.
D. Before entering into a retail development tax incentive agreement, a city or town shall make a finding by a simple majority vote of the governing body without the use of consent calendar that includes both of the following:
1. That the proposed tax incentive is anticipated to raise more revenue than the amount of the incentive within the duration of the agreement.
2. That in the absence of a tax incentive, the retail business facility or similar retail business facility would not locate in the city or town in the same time, place or manner.
E. A city or town located in or within twenty‑five miles of the exterior boundary of a metropolitan statistical area having a population of more than two million persons shall make a finding pursuant to subsection D of this section, by a two-thirds vote of the governing body.
F. A city or town shall not enter into a retail development tax incentive agreement if the proposed tax incentive raises less revenue than the amount of the incentive.
G. A city or town shall present a status report of the revenues and expenses associated with the tax incentive every two years for the duration of the agreement in a public meeting.
H. The finding made pursuant to subsection D, paragraph 1 of this section shall be verified by an independent third party before the city or town enters into the retail development tax incentive agreement.
I. The adoption of the retail development tax incentive agreement shall be approved by a simple majority vote of the governing body without the use of consent calendar. For a city or town located in or within twenty‑five miles of the exterior boundary of a metropolitan statistical area having a population of more than two million persons, the adoption of a retail development tax incentive agreement shall be approved by an affirmative vote of at least two-thirds of the governing body without the use of consent calendar.
J. A person or business entity receiving the retail development tax incentive agreement shall not finance the independent third party verification of the findings or have input into the selection of the independent third party verifying the findings.
K. A city or town shall adopt a notice of intent to enter into a retail development tax incentive agreement at least fourteen days before approving a retail development tax incentive agreement.
L. Subsection D of this section does not apply to tax incentives given to a business entity in an area that is designated by a city or town as a redevelopment project as defined in section 36-1471.
M. Any city or town may establish an authority with the consent of the other member entities, through which economic development activities can be reimbursed pursuant to this section. The authority may spend tax revenue assessed on behalf of the member entities for the purpose of economic development in a manner that is consistent with the reimbursement zone plan. The governing body of the city or town that establishes the authority shall serve as the authority board.
N. A city or town, on behalf of any person, may submit a written request to a member entity for the formation of a committee. The written request must include a copy of the proposed reimbursement zone plan. The reimbursement zone plan shall:
1. Be in writing.
2. After the effective date of the reimbursement zone plan, guide and control the reimbursable economic development activities within the defined reimbursement zone for a specified period of time, not to exceed twenty years.
3. Include all of the following:
(a) A statement explaining the public purpose necessitating the formation of an authority.
(b) A description of the boundaries of the reimbursement zone. The boundaries of the reimbursement zone may not be the greater of five square miles or one percent of the area of the city or town.
(c) A development strategy for the reimbursement zone, including a description of desired land uses and the reimbursable improvements.
(d) The reimbursement zone plan end date. The reimbursement zone plan end date may not extend beyond the maximum plan period. The maximum plan period may not be extended by modifying the reimbursement zone plan.
(e) Each member entity's proportional share of the estimated base tax value of the reimbursement zone.
(f) Each member entity's proportional share of the estimated base tax value of the reimbursement zone at the end of the reimbursement zone plan end date if a reimbursement zone plan is not adopted.
(g) Each member entity's proportional share of the projected aggregate tax increment expected to be generated within the reimbursement zone during the reimbursement zone plan period.
(h) Each member entity's proportional share of the projected aggregate tax increment expected to be generated during the reimbursement zone plan period.
(i) The percentage of each member entity's tax increment to be used to reimburse completed reimbursable improvements.
(j) Verification by an independent third party of the findings required by subdivisions (e) and (f) of this paragraph.
4. Terminate on the earliest of the following:
(a) The end date of the reimbursement zone plan.
(b) The end date of the maximum plan period.
(c) The date of reimbursement of all reimbursable improvements identified in the reimbursement zone plan.
(d) The date of adoption by the authority of a resolution terminating the reimbursement zone plan if no reimbursable improvements have been approved or preapproved by the authority.
O. The authority shall notify all member entities of the termination of the reimbursement zone plan within fourteen days after the reimbursement zone plan terminates.
P. A written request to form a committee must be heard by the member entity within sixty days after receiving the written request to form the committee. To approve a request to form a committee and establish the committee, each member entity must adopt a resolution that:
1. Authorizes the formation of an authority under this section and authorizes the remittance of the member entity's tax increment to the authority on the authority's approval of the reimbursement zone plan.
2. Adopts the proposed reimbursement zone.
3. Establishes a reimbursement Zone plan end date.
4. Authorizes the formation of a committee.
5. Appoints one member from the member entity's governing body to serve on the committee.
Q. The committee shall:
1. Meet within sixty days after the date on which all member entities have adopted the resolution to establish the committee.
2. Review the proposed reimbursement zone plan to ensure conformity with the requirements of this section, including whether any of the reimbursable improvements identified in the reimbursement zone plan will:
(a) Encourage commerce, industry or manufacturing to bring or keep operations in this state or the city or town.
(b) Increase employment in this state.
(c) Preserve and enhance the tax base of this state.
3. Modify the proposed reimbursement zone plan, at the discretion of the committee.
4. If unanimously approved, refer the reimbursement zone plan to the authority.
R. The committee member that is also a member of the authority will serve as chairperson of the committee.
S. The authority shall provide administrative support to the committee.
T. For the purposes of title 38, chapter 3, article 3.1, the committee is considered a subcommittee of the authority.
U. If a committee refers a reimbursement zone plan to the authority, the authority may approve the reimbursement zone plan only after a public hearing conducted pursuant to title 38, chapter 3, article 3.1. Before the public hearing, the authority shall post a copy of the reimbursement zone plan on the authority's website for at least thirty days. The authority must approve the reimbursement zone plan by resolution and shall include a name or other identifying designation for the reimbursement zone. The authority may approve the reimbursement zone plan only if the authority makes the following findings:
1. The reimbursable improvements identified in the reimbursement zone plan would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future.
2. The reimbursement zone plan will increase employment in the city or town or enhance the assessed value of the reimbursement zone.
3. The reimbursement zone plan conforms to the general plan and any applicable specific plans of the city or town.
V. The authority shall follow the same procedure prescribed by subsection U of this section to modify a reimbursement zone plan.
W. Tax increment monies received pursuant to this section must be placed in a separate fund and accounted for separately for each reimbursement zone using generally accepted accounting principles and may be used only for the purposes authorized by this section. Interest earned on monies in each separate fund shall be credited to that fund.
X. The authority shall spend or remit to the applicable member entity within three years after the reimbursement zone plan end date any unspent monies remaining when the reimbursement zone plan terminates.
Y. Tax increments may be used to pay for the actual administrative expenses incurred by the authority in administering the reimbursement zone plan and may be reimbursed at reasonable intervals after approval by the authority.
Z. This section does not allow the authority to borrow, bond or otherwise incur debt and no portion of any tax increment may be used to pay debt service.
AA. Except for reimbursable improvements that constitute utility infrastructure, a tax increment may not be used for reimbursable improvements geographically located outside of the reimbursement zone.
BB. The amount of any reimbursement made pursuant to this section may not exceed the actual costs of construction plus the actual costs of financing the construction of approved reimbursable improvements.
CC. Improvements are eligible for reimbursement if:
1. Reimbursement was preapproved by the authority in a public meeting.
2. A building permit was issued after the reimbursement zone plan was approved.
3. The certificate of occupancy or acceptance for the authorized improvement is issued on or before the termination of the reimbursement zone plan.
4. A reimbursement request is submitted to the authority within twelve months after the termination of the reimbursement zone plan.
DD. The authority shall establish procedures for the preparation, submission, review and approval of reimbursement requests within the reimbursement zone. Procedures established pursuant to this subsection shall include preapproval as a condition precedent to final reimbursement.
EE. Reimbursements shall be paid by the authority in the order in which final reimbursements are approved by the authority, subject to fund availability.
FF. The authority shall contract with an independent certified public accountant to conduct an annual audit of the financial transactions relating to each reimbursement zone. The audit must determine whether the financial transactions and records are consistent with law and generally accepted accounting principles and procedures. The authority shall post a copy of each audit on the authority's website and distribute a copy of each audit to each member entity. Costs of the audit may be reimbursed to the authority as an administrative expense.
GG. Within sixty days after the authority approves the reimbursement zone plan, the authority shall notify the county assessor and certify the following:
1. The base tax value.
2. The original applicable tax rate of each member entity as of the date the authority adopts the reimbursement zone plan.
3. The percentage of the tax increment approved in the reimbursement zone plan.
HH. The county assessor shall remit to the authority all tax increments collected for the reimbursement zone as authorized by the reimbursement zone plan beginning on the effective date of the reimbursement zone plan and ending two years after the reimbursement zone plan terminates, unless otherwise notified by the authority to cease remittance.
II. During the reimbursement zone plan period, the assessed value of real property within the reimbursement zone on the date on which the authority adopts the reimbursement zone plan is the assessed value of real property for the purposes of title 15, chapter 9.
JJ. If a parcel of land located in the reimbursement zone has delinquent property taxes when the reimbursement zone terminates, the payment of the parcel's delinquent taxes must be remitted in a manner that is consistent with subsection HH of this section.
M. KK For the purposes of this section:
1. "Authority" means an economic development reimbursement authority.
2. "Base tax value" means, as to each member entity, the assessed value of the real property within the reimbursement zone as shown on the assessment roll last equalized before the date on which the authority adopts the reimbursement zone plan multiplied by the applicable primary property tax of each member entity.
3. "Committee" means the economic development reimbursement authority committee.
1. 4. "Economic development activities" means any project, assistance, undertaking, program or study, whether within or outside the boundaries of the city or town, including acquisition, improvement, redevelopment, leasing or conveyance of improved or unimproved real or personal property or other activity, that the governing body of the city or town has found and determined will assist in the creation or retention of jobs or will otherwise improve or enhance the economic welfare of the inhabitants of the city or town.
2. 5. "Expenditure" includes any waiver, exemption, deduction, credit, rebate, discount, deferral or other abatement or reduction of the normal municipal tax liability that otherwise applies to similar existing business entities and properties in that city or town, however denominated, computed or applied, and that is generally understood as an inducement to locate a business facility or other operation in the city or town.
6. "Maximum plan period" means twenty years.
7. "Member entity" means the city or town, county and school district in which any portion of the reimbursement zone is geographically located. Any other political subdivision of this state in which the reimbursement zone is geographically located, excluding a special planning district formed under title 48, may be a member entity at the request of the city or town creating the authority.
3. 8. "Metropolitan statistical area" means a geographical area consisting of cities, towns and other populated areas defined for federal statistical and census purposes by the United States office of management and budget with technical assistance from the United States bureau of the census.
9. "reimbursable improvement":
(a) Means:
(i) Infrastructure, facilities or other capital improvements related to economic development activities.
(ii) Utility infrastructure, whether inside or outside of the reimbursement zone, if connection of the utility to the property within the reimbursement zone has a substantial nexus between the provision of the utility and another reimbursable improvement.
(b) Does not include residential projects.
10. "Reimbursement zone plan" means the development plan for the reimbursement zone as described in subsection N, paragraph 3, subdivision (b) of this section.
4. 11. "Retail" means the sale of tangible personal property, except the sale of tangible personal property to a person who is engaged in the business of selling such property.
5. 12. "Retail development activities" means those economic development activities that involve the acquisition, improvement, leasing or conveyance of improved or unimproved real or personal property or other activity to facilitate the sale of goods at retail, including the sale of automobiles, or to facilitate other activities, including theater and restaurant development, that generate revenues that are subject to municipal transaction privilege taxation.
6. 13. "Retail development tax incentive agreement" means an agreement between a city or town and a person engaged in or planning to engage in retail development activities within that city or town in which the city or town agrees to pay, refund, credit, rebate or otherwise provide to that person all or a portion of the sales, use or transaction privilege taxes payable to that city or town in connection with the construction, development or operation of the retail development activities.
14. "Tax increment" means the difference between the base tax value and the amount of primary property tax revenues generated each tax year by each member entity for property located within the reimbursement zone consistent with the reimbursement zone plan.
