ENTITLED An Act to clarify provisions pertaining to tax increment finance districts.

Be it enacted by the Legislature of the State of South Dakota:

Section 1. That   11-9-1 be AMENDED:

11-9-1. Terms used in this chapter mean:

(1) "Department," the Department of Revenue;

(2) "District," a tax increment financing district;

(3) "Governing body," the board of trustees, the board of commissioners, the board of county commissioners, or the common council of a municipality;

(4) "Grant," the transfer of money or property to a transferee for a governmental purpose that is not a related party to or an agent of the political subdivision;

(5) "Planning commission," a planning commission created under chapters 11-2 or 11-6, a planning committee of a governing body of a political subdivision that does not have a planning commission, or the governing body of a political subdivision that does not have a planning commission or planning committee;

(6) "Political subdivision," a municipality, as defined in   11-6-1, or county of this state;

(7) "Project plan," the properly approved plan for the development or redevelopment of a tax increment financing district including all properly approved amendments to the plan;

(8) "Tax increment financing district," a contiguous geographic area within a political subdivision defined and created by resolution of the governing body;

(9) "Taxable property," all real and personal taxable property located in a tax increment financing district;

(10) "Tax increment valuation," the total value of the tax increment financing district minus the tax increment base as determined pursuant to   11-9-19.

Section 2. That   11-9-2 be AMENDED:

11-9-2. A political subdivision may:

(1) Create one or more districts and define each district's boundaries;

(2) Prepare project plans, approve the plans, and implement the provisions and purposes of the plans, including the acquisition by purchase or condemnation of real and personal property within the district and the sale, lease, or other disposition of property to private individuals, partnerships, corporations, or other entities at a price less than the cost of the acquisition and of any site improvements undertaken by the political subdivision pursuant to a project plan;

(3) Issue tax increment financing bonds;

(4) Deposit moneys into the special fund of any district; and

(5) Enter into any contract or agreement, including an agreement with bondholders, determined by the governing body to be necessary or convenient to implement the provisions and effectuate the purposes of a project plan. A contract or agreement may include conditions, restrictions, or covenants that run with the land or otherwise regulate the use of land or that establish a minimum market value for the land and completed improvements to be constructed by a specific date, which date may not be later than the date of termination of the district pursuant to   11-9-46. Any contract or agreement that provides for the payment of a specific sum of money at a specific future date must be made pursuant to the provisions of chapter 6-8B.

Section 3. That   11-9-3 be AMENDED:

11-9-3. The planning commission shall hold a hearing at which interested parties are afforded a reasonable opportunity to express views on the proposed creation of a district and the district's proposed boundaries. The planning commission shall publish notice of the hearing at least once, not fewer than ten nor more than thirty days before the date of the hearing, in a legal newspaper having a general circulation in the redevelopment area of the political subdivision. Before publication of the notice, the planning commission shall send a copy of the notice to the chief executive officer of each local governmental entity having the power to levy taxes on property located within the proposed district and to the school board of any school district that has property located within the proposed district by first class mail.

Section 4. That   11-9-5 be AMENDED:

11-9-5. To establish a district, the governing body must adopt a resolution that:

(1) Describes the boundaries of a district with sufficient definiteness to identify with ordinary and reasonable certainty the territory included. The boundaries may not split a whole unit of property that is being used for a single purpose;

(2) Creates the district on a given date;

(3) Includes a finding that the assessed value of the taxable property in the district plus the tax increment base of all other existing districts does not exceed ten percent of the total assessed value of all taxable property in the political subdivision; and

(4) Assigns a name to the district for identification purposes. The first district created in each political subdivision must be known as "Tax Increment Financing District Number One, City (or Town, or County) of __________." Each subsequently created district must be assigned the next consecutive number.

Section 5. That   11-9-10 be AMENDED:

11-9-10. For the purposes of this chapter, the term "blighted area" means an area that substantially impairs or arrests the sound growth of the political subdivision, inhibits housing development, constitutes an economic or social liability, or is a danger in its present condition and use to the health, safety, morals, or welfare of the public because of:

(1) The presence of a substantial number of substandard, slum, deteriorated, or deteriorating structures;

(2) A predominance of defective or inadequate street layouts;

(3) Faulty lot layout in relation to size, adequacy, accessibility, or usefulness;

(4) Insanitary or unsafe conditions;

(5) The deterioration of site or other improvements;

(6) A diversity of ownership, tax, or special assessment delinquency exceeding the fair value of the land;

(7) Defective or unusual conditions of title;

(8) The existence of conditions which endanger life or property by fire and other causes; or

(9) A predominance of open space with obsolete platting, diversity of ownership, or deterioration of structures or site improvements.

Section 6. That   11-9-14 be AMENDED:

11-9-14. For the purposes of this chapter, the term "project costs" are any expenditures made or estimated to be made, or monetary obligations incurred or estimated to be incurred, by a political subdivision that are listed in a project plan as grants or costs of public works or improvements within a district, plus any incidental costs diminished by any income, special assessments, or other revenues, other than tax increments, received, or reasonably expected to be received, by the political subdivision in connection with the implementation of the plan.

Section 7. That   11-9-15 be AMENDED:

11-9-15. For the purposes of this chapter, the term "project costs" means:

(1) Capital costs, including the actual costs of the construction of public works or improvements, buildings, structures, and permanent fixtures; the demolition, alteration, remodeling, repair, or reconstruction of existing buildings, structures, and permanent fixtures; the acquisition of equipment; the clearing, over-excavation, and grading of land, including use of engineered fill and soil compaction; and the amount of interest payable on tax increment bonds issued pursuant to this chapter until the positive tax increments to be received from the district, as estimated by the project plan, are sufficient to pay the principal of and interest on the tax increment bonds when due;

(2) Financing costs, including all interest paid to holders of evidences of indebtedness issued to pay for project costs, any premium paid over the principal amount thereof because of the redemption of obligations prior to maturity, and a reserve for the payment of principal and interest on obligations in an amount determined by the governing body to be reasonably required for the marketability of obligations;

(3) Real property assembly costs, including the actual cost of the acquisition by a political subdivision of real or personal property within a district, less any proceeds to be received by the political subdivision from the sale, lease, or other disposition of property pursuant to a project plan;

(4) Professional service costs, including those costs incurred for architectural, planning, engineering, and legal advice and services;

(5) Imputed administrative costs, including reasonable charges for the time spent by a municipal or county employee in connection with the implementation of a project plan;

(6) Relocation costs;

(7) Organizational costs, including the costs of conducting environmental impact and other studies and the costs of informing the public of the creation of a district and the implementation of project plans; and

(8) Payments and grants made, at the discretion of the governing body, that are found to be necessary or convenient to the creation of a district, the implement