Bill Summary – FastDemocracy

This bill revises the "Border Region Retail Tourism Development District Act" (BRRTDDA) and the Regional Retail Tourism Development District Act (RRTDDA), as described below.
     Currently, the BRRTDDA defines "cost" as:
     (1)  All costs of an economic development project in a district incurred by the municipality or industrial development corporation during the investment period, including, but not limited to, the cost of developing the district, as well as acquisition, design, construction, renovation, improvement, demolition, and relocation of any improvements;
     (2)  The cost of labor, materials, and equipment;
     (3)  The cost of all lands, property rights, easements and franchises required;
     (4)  Financing charges, interest, and debt service prior to, during, or after construction;
     (5)  The cost of issuing bonds in connection with any financing, cost of plans and specifications, services and estimates of costs and of revenue;
     (6)  The cost of direct or indirect assistance, including funds for location assistance;
     (7)  The cost of site preparation, engineering, accounting, and legal services;
     (8)  All expenses necessary or incident to determining the feasibility or practicability of such acquisitions or constructions; and
     (9)  Salaries, overhead, and other costs of the municipality or industrial development corporation allocated to the project, including new development or subsequent phases of the project to be completed within the 35-year period established in the BRRTDDA, and administrative, legal, and engineering expenses and such other expenses as may be necessary or incident to such acquisition, design, construction, renovation, demolition, relocation, or the financing thereof, including any such costs incurred by a municipality or industrial development corporation relating to the development of an extraordinary retail or tourism facility within two years prior to the municipality's designation of the proposed border region retail tourism development district for such project.
     This bill changes present law by specifying that the costs are limited to those identified in (1) – (9).  This bill also adds that "cost" does not include:
     (1)  Management fees, overhead expenses, or other costs with respect to the operation or management of any property after the property has been approved for occupancy;
     (2)  Commissions, fees, or other costs paid to or received from an affiliated entity that otherwise receives an incentive under the BRRTDDA.  For purposes of this provision, "affiliated" means that one entity has a direct or indirect ownership interest in the other entity, or the two entities share one or more common owners; or
     (3)  Fees or other costs paid to terminate an existing lease for a business located outside the district that is relocating to a new facility located in the district.
     With regard to (6), this bill defines "direct or indirect assistance" to mean discounts on rent that:
     (1)  Are provided to a tenant pursuant to a lease agreement that was executed before July 1, 2022;
     (2)  Accrue annually based on the amount of rent discounted during the year; and
     (3)  Subject to approval by the commissioner of revenue, equal to the difference between the actual rent paid and the fair market value of rent at the time the lease was executed.
     Also, this bill specifies that "direct or indirect assistance" does not include discounts on rent that accrue on or after July 1, 2027, or after the termination of the original lease, whichever occurs first.
     This amendment makes a similar change to that described above concerning costs, by specifying that the purposes for which financial assistance may be directed to an extraordinary retail or tourism facility and other retail or tourism facilities developed to accompany the extraordinary retail or tourism facility in a border region retail tourism development district by a municipality or an industrial development corporation under the present law definition of "economic development project" is an exclusive list.  This bill also removes authorization to fund location assistance as part of a project.
     This bill makes changes and additions to the RRTDDA that are substantially the same as those described above for the BRRTDDA.
     This bill takes effect upon becoming a law, and applies to all costs submitted for reimbursement on or after July 1, 2011.
     ON MARCH 30, 2023, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 221, AS AMENDED.
     AMENDMENT #1 rewrites this bill to provide that, with respect to a summary of costs that is submitted by the chief financial officer of the municipality on behalf of a developer that has incurred costs relative to an economic development project within either a border region retail tourism development district or a regional retail tourism development district in excess of $3,000,000, the costs must be compiled and certified by an independent certified public accountant licensed in this state prior to submission to the commissioner of revenue.  This amendment clarifies that "cost" does not include expenses for travel, advertising, meals, entertainment, and insurance; motor vehicle expenses; meeting expenses; office expenses; developer salaries; or taxes. 
     ON APRIL 16, 2024, THE HOUSE SUBSTITUTED SENATE BILL 316 FOR HOUSE BILL 776, ADOPTED AMENDMENT #1, AND PASSED SENATE BILL 316, AS AMENDED.
     AMENDMENT #1 rewrites the bill to, instead, make changes to the "Border Region Retail Tourism Development District Act" and the "Regional Retail Tourism Development District Act," as follows:
BORDER REGION RETAIL TOURISM DEVELOPMENT DISTRICT ACT
     (1)  With respect to a summary of costs that is submitted by the chief financial officer of the municipality on behalf of a developer that has incurred total project costs relative to an economic development project within the district in excess of $3 million, requires the costs to be compiled and certified by an independent certified public accountant licensed in this state prior to submission to the commissioner of revenue ("commissioner");
     (2)  Requires tax revenue distributed to the municipality pursuant to the act to be for the exclusive use of the municipality or the industrial development corporation formally designated by the municipality for payment of the cost of the economic development project, including principal and interest on indebtedness, including refunding indebtedness of the municipality or industrial development corporation related to the development of the project. The apportionment and payment must be made by the department of revenue to the municipality within 90 days of the end of each fiscal year for which the municipality is entitled to receive an allocation and payment pursuant to the act. If the commissioner determines that any cost included in a certification of a municipality submitted is not a qualifying cost, requires the commissioner to give notice of the determination to the municipality within one 120 days of the end of each fiscal year for which the municipality is entitled to receive an allocation and payment pursuant to the act, and if the notice is not provided within this one-hundred-twenty-day period, then the cost must be approved, is nonreviewable for reversal by any tribunal, and it is conclusive that the cost thereafter is reimbursable under the act.  With respect to any cost included in a certification of a municipality that has been submitted prior to June 30, 2024, the commissioner must give notice of any determination to the municipality as to the qualification of such cost within 120 days of June 30, 2024, or within 120 days after receiving a summary of costs that is compiled and certified by an independent certified public accountant, whichever is later, and if the notice is not provided within the applicable timeframe, then the cost must be approved, is nonreviewable for reversal by any tribunal, and it is conclusive that the cost is reimbursable under the act;
     (3)  Requires the act to only apply to border region retail tourism development districts for which a certified copy of the ordinance, along with the request for certification, has been filed with the commissioner before January 1, 2012.  It is the legislative intent that modifications made to the act on or after July 1, 2024, do not apply to a project or extraordinary retail or tourism facility initiated prior to July 1, 2024;
     (4)  Establishes that for purposes of the act, "cost" does not include (i) expenses for travel, meals, entertainment, motor vehicle expenses, meeting expenses, office expenses, developer salaries, or taxes; or (ii) commissions, fees, or other costs paid to or received from an affiliated entity that otherwise receives an incentive under this act.  For purposes of this (4), "affiliated" means that one entity has a direct or indirect ownership interest in the other entity, or the two entities share one or more common owners;
     (5)  Establishes that for purposes of the act, "direct or indirect assistance" or "direct or indirect financial assistance" includes, with respect to all costs submitted for reimbursement on or after July 1, 2011, the following:
     (A)  Location assistance to a tenant for purposes of incentivizing a tenant to locate a project within a border region retail tourism development district; and
     (B)  Discounts on rent that (i) are provided to a tenant pursuant to a lease agreement that was executed before the expiration of the investment period; (ii) accrue annually based on the amount of rent discounted during each respective year; (iii) equal the difference between the actual rent paid and the fair market value of rent at the time the lease was executed using generally accepted valuation practices; and (iv) accrue through the 35-year period established in state law, or the termination of the original lease, whichever occurs first;
REGIONAL RETAIL TOURISM DEVELOPMENT DISTRICT ACT
     (6)  Establishes that for purposes of the act, "cost" does not include (i) expenses for travel, meals, entertainment, motor vehicle expenses, meeting expenses, office expenses, developer salaries, or taxes; or (ii) commissions, fees, or other costs paid to or received from an affiliated entity that otherwise receives an incentive under the act.  For purposes of this (6), "affiliated" means that one entity has a direct or indirect ownership interest in the other entity, or the two entities share one or more common owners;
     (7)  Establishes that "direct or indirect assistance" or "direct or indirect financial assistance" includes, with respect to all costs submitted for reimbursement on or after July 1, 2019, the following:
     (A)  Location assistance to a tenant for purposes of incentivizing a tenant to locate a project within a border region retail tourism development district; and
     (B)  Discounts on rent that (i) are provided to a tenant pursuant to a lease agreement that was executed before the expiration of the investment period; (ii) accrue annually based on the amount of rent discounted during each respective year; (iii) equal the difference between the actual rent paid and the fair market value of rent at the time the lease was executed using generally accepted valuation practices; and (iv) accrue through the thirty-five-year period established under state law or the termination of the original lease, whichever occurs first; and
     (8)  With respect to a summary of costs that is submitted by the chief financial officer of the municipality on behalf of a developer that has incurred costs relative to an economic development project within the district in excess of $3 million, requires that the costs be compiled and certified by an independent certified public accountant licensed in this state prior to submission to the commissioner.
Statutes affected: 
Introduced: 7-40-103(5), 7-40-103, 7-40-103(6), 7-41-103(4), 7-41-103, 7-41-103(5)