ON APRIL 11, 2024, THE HOUSE ADOPTED AMENDMENTS #1 AND #2 AND PASSED HOUSE BILL 2426, AS AMENDED.
AMENDMENT #1 rewrites the bill to, instead, make the changes described below to the County Powers Relief Act.
DEVELOPMENT TAX
Present law provides that engaging in the act of residential development within a county, except as excluded by the County Powers Relief Act, is declared to be a privilege upon which a county, by resolution or ordinance of its governing body, may levy a tax, subject to the conditions and limitations contained in that Act. The resolution or ordinance must be adopted by a two-thirds vote of the entire membership of the county legislative body at two consecutive, regularly scheduled meetings.
This amendment revises the present by providing that above privilege tax applies to act of development within a county, instead of limiting the tax to residential development. The amendment also adds to the present law by requiring the resolution or ordinance adopted at the first meeting to be identical to the resolution or ordinance voted upon at the second meeting.
CRITERIA FOR LEVYING TAX
Present law prohibits a governing body from levying a tax pursuant to the County Powers Relief Act, unless the county meets one or more of the following criteria: (i) the county experienced a growth rate of 20 percent or more in total population from the 1990 federal census to the 2000 federal census, or the county experiences growth of 20 percent or more between any subsequent federal decennial censuses; or (ii) the county experienced a 9 percent or more increase in population over the period from the year 2000 to 2004, or over a subsequent four-year period, according to United States census bureau population estimates. This amendment deletes these provisions and, instead, does the following:
(1) Prohibits a governing body from levying a tax pursuant to the County Powers Relief Act, unless the county experienced (i) a 20 percent or more increase in population from the 2010 federal census to the 2020 federal census, or the county experiences growth of 20 percent or more between any subsequent federal decennial censuses; or (ii) a 9 percent or more increase in population over the immediately preceding consecutive four-year period, according to a special census conducted pursuant to (3) below;
(2) Prior to adopting a resolution or ordinance to levy this tax, requires the governing body to file a statement with the comptroller of the treasury that provides the population growth for the county that qualifies the county to levy the tax. The comptroller must verify the accuracy of the statement provided and notify the county whether it meets the requirements of the County Powers Relief Act;
(3) Authorizes a county to, at the county's expense, conduct a special census for purposes of qualifying to levy the tax under the County Powers Relief Act;
(4) To continue to levy this tax, requires a county to verify qualification with the comptroller every four years, using federal census data estimates, if basing qualification on a 9 percent growth rate under (1)(ii) above, or at the end of the final year of every ten-year census period, if basing qualification on federal census data under(1)(i) above.
TAX BASED ON FLOOR AREA
Present law authorizes, for the exercise of the privilege of development, a county to levy a tax based on the floor area of residential development. A county initially levying a tax may levy the tax at a rate not to exceed $1 per square foot on residential property. This amendment revises the present law and, instead, authorizes a county to levy a tax based on the floor area of new development. A county initially levying a tax may levy the tax at a rate not to exceed $1.50 per square foot on residential and commercial property.
COLLECTION OF TAX
Present law requires any tax levied pursuant to the County Powers Relief Act must be collected in the following manner:
(1) At the time of application for a building permit for residential development, the municipal or county official issuing the permit must compute the estimated tax liability for the county school facilities privilege tax, based upon the proposed square footage of the facility to be built and the current rate of the county's school facilities privilege tax. As a condition of receiving the permit, the applicant must sign a form indicating that the applicant recognizes the liability for the tax. The official must keep one copy of the form for the official's records and must provide a copy to the applicant. If the permit is issued by a municipal building official, the official must also forward a copy of the form within 30 days of the issuance of the building permit to the county official or employee who has been designated by the county legislative body to collect the tax. As an alternative, the county and any municipality within the county may provide by interlocal agreement for the municipal building official to be designated as a collector of the tax and provide for a commission to be paid to the municipality for such services;
(2) The tax must not be due until the earlier of one year from the date of issuance of the building permit or 30 days after the first transfer of title to the property being developed after the building permit is issued. If, after one year from issuance of the building permit, the building or structure is not complete or title has not been transferred, the permit holder may, in lieu of paying the tax, request an extension for one year. The permit holder may request a maximum of two extensions. Extensions must not be denied, if the permit holder makes a showing to the official responsible for collecting the tax that the building or structure is not complete;
(3) Notwithstanding (2) above, a governing body may pass a resolution or ordinance requiring 50 percent of the tax to be paid at the time of application for a building permit and the remaining 50 percent of the tax to be paid prior to the issuance of a certificate of occupancy;
(4) Once it becomes due, the tax must be paid to the official or officials designated by the county governing body to collect the tax. At the time of payment, the official must review the tax liability to determine whether the square footage of the completed building or structure corresponds to the initial estimated square footage in the building permit. The tax must be computed using the actual square footage of the completed building or structure, but the rate of the tax must be based upon the rate applicable at the time the permit was issued;
(5) The revenue from the tax must be paid over to the county trustee within 30 days for deposit.
This amendment revises the present law by providing that the building permit referenced in (1) above is for all development, not sure residential development. This amendment also revises the present law by deleting (2) and (3) above.
If the tax is not paid by a permit holder within 90 days of the due date, present law requires the official responsible for collection of the tax to report this delinquency to the county's delinquent tax attorney. The delinquent tax attorney must bring an action against the permit holder for the full amount of the tax, plus statutory interest and a penalty of 50 percent of the amount of tax owed. The compensation of the delinquent tax attorney for such services must be determined by agreement between the county trustee and the delinquent tax attorney. A permit holder who owes delinquent school facilities taxes is not eligible to receive a building permit for any other project in the county until such time as the delinquency, plus any penalties and interest, are paid in full. This amendment deletes these provisions and, instead, requires the tax to be paid upon completion of the building or structure, but prior to the issuance of the certificate of occupancy.
LEVYING THE TAX
If a county that has exercised its right to levy a tax under the County Powers Relief Act after the effective date of this amendment and in a new qualifying period does not satisfy the criteria for levying the tax, then (i) the county may resume exercising the authority to levy and collect such development taxes under a private act in existence before the effective date of this amendment at the rate in effect at the time the county exercised its right to levy a tax; or (ii) the county may resume exercising the authority to levy and collect a privilege tax under County Powers Relief Act at the rate the privilege tax was levied by the county under that Act on January 1, 2024. A county levying the privilege tax pursuant to this provision must not increase the rate of the tax, unless the county is eligible under this amendment.
AMENDMENT #2 makes the following changes:
(1) Revises the provision in the bill authorizing a county to levy the tax at a rate not to exceed $1.50 per square foot on commercial property by, instead, authorizing a county to levy the tax at a rate not to exceed $1.50 per square foot on up to 150,000 square feet of commercial property; and
(2) Revises the provision in the bill providing that if a county that has exercised its right to levy a tax under the County Powers Relief Act after the effective date of this amendment and in a new qualifying period does not satisfy the criteria for levying the tax, then (i) the county may resume exercising the authority to levy and collect such development taxes under a private act in existence before the effective date of this amendment at the rate in effect at the time the county exercised its right to levy a tax; or (ii) the county may resume exercising the authority to levy and collect a privilege tax under County Powers Relief Act at the rate the privilege tax was levied by the county under that Act on January 1, 2024. A county levying the privilege tax pursuant to this provision must not increase the rate of the tax, unless the county is eligible under this amendment by, instead, providing that if, after the effective date of the bill, a county that has exercised its right to levy a tax under the County Powers Relief Act prior to the effective date of the bill and in a new qualifying period does not satisfy the criteria the criteria for levying the tax, then (i) or (ii) above is authorized.
ON APRIL 17, 2024, THE SENATE SUBSTITUTED HOUSE BILL 2426 FOR SENATE BILL 2261 AND RESET HOUSE BILL 2426.
ON APRIL 22, 2024, THE SENATE FURTHER CONSIDERED AND PASSED HOUSE BILL 2426.

Statutes affected:
Introduced: 67-4-2910(a)(1), 67-4-2910
Amended with HA0685, HA0900 -- 04/11/2024: 67-4-2910(a)(1), 67-4-2910, 67-4-2902, 67-4-2903, 67-4-2904, 67-4-2907, 67-4-2908, 67-4-2913