No. 38860 (New Rule): Rule R357-2. Targeted Business Tax Credit

(New Rule)

DAR File No.: 38860
Filed: 09/11/2014 09:09:02 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The rule is written to outline the process and formula utilized for qualifying and allocating applicants' requests for the Targeted Business Tax Credit.

Summary of the rule or change:

This rule provides additional definitions including "new capital project," "project," and "substantial new employment". This rule also outlines the application procedure and how the targeted business tax credit is allocated to qualifying applicants.

State statutory or constitutional authorization for this rule:

• Section 63M-1-502

Anticipated cost or savings to:

the state budget:

This program is already being administered and does not create any new procedures or processes that would create a larger cost or savings to the state. Thus, there is no cost or savings to the state.

local governments:

This program does not allow for local governments to be participants in the program. Thus, this rule will not affect local governments.

small businesses:

This rule will affect small businesses by streamlining and providing clearer guidance on how they can participate and utilize this program to receive a tax credit. There will be no other anticipated affect to small business.

persons other than small businesses, businesses, or local governmental entities:

No other persons will be affected beyond being able to better understand how to possibly participate in the program and how the allocation of tax credit is determined.

Compliance costs for affected persons:

There are no fees or costs outside of nominal administrative cost to submit applications.

Comments by the department head on the fiscal impact the rule may have on businesses:

There will be no fiscal impact on businesses because of this rule.

Val Hale, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Governor
Economic Development
60 E SOUTH TEMPLE 3RD FLR
SALT LAKE CITY, UT 84111

Direct questions regarding this rule to:

• Michael Sullivan at the above address, by phone at 801-538-8811, by FAX at 801-538-8888, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/31/2014

This rule may become effective on:

11/08/2014

Authorized by:

Val Hale, Executive Director

RULE TEXT

R357. Governor, Economic Development.

R357-2. Targeted Business Tax Credit.

R357-2-1. Purpose.

The purpose of this rule is to define what constitutes substantial new employment, new capital development, a project, and to establish a general formula for determining the allocated cap amount for each business applicant.

 

R357-2-2. Authority.

UCA 63M-1-502 requires the office make rules establishing the manner by which the allocation cap amount is determined and what constitutes substantial new employment, new capital development, and a project.

 

R357-2-3. Definitions.

(1) As used in this Rule;

(a) "Available Tax Credit" means the unencumbered amount of the annual $300,000 tax credit provided for in 63M-1-504(2).

(b) "Executive Committee" means the Executive Committee of the Governor's Rural Partnership Board provided for in UCA 63C-10-102(5)

(c) "Full Time Equivalent Employee" means an individual full time employee of the business applicant's Utah Business that is a Utah Resident and employed at least 30 hours per week (excluding lunch) during each week.

(d) "New Capital Development" means any new

(i) facility with construction costs of $100,000 or more, which includes additions to existing facilities and the enclosure of space that was not previously fully enclosed;

(ii) remodeling, site, or utility project with costs of $100,000 or more; or

(iii) purchase of real property.

(e) "Project" means the plan as described in the application submitted to The Office of Rural Development by the business applicant including the projects objectives, projections, and scope.

(f) "Substantial New Employment" means new full time equivalent employees the Business Applicant will add in the following three tax year(s) as specified in the application and where substantial is measured and determined by the Executive Committee of the Governor's Rural Partnership Board in relation to:

(i) The economic impact on the community in which the project will occur, including:

(A) salary and wages of the new full time equivalent employees in comparison to the county average wage;

(B) whether or not health and other benefits will be provided to all the new full time equivalent employees in addition to the salary and wages;

(C) the business applicant's declared number of projected new full time equivalent employees in comparison to the overall county employment numbers provided by the Department of Work Force Services;

(D) the amount of new full time equivalent employees in comparison to the business applicant's current number of full time equivalent employees; and

(E) any other factors that the Executive Committee considers as substantial new employment.

(2) For all other relevant terms not defined in this rule, the definitions set forth in UCA 63M-1-501 shall apply.

 

R357-2-4. Application Procedure.

Applications will be reviewed in January and February of each calendar year, and all applications should be submitted by January 31. The Office of Rural Development may consider applications submitted between January 31 and June 1 of the calendar year if approved by a majority vote of the Executive Committee of the Governor's Rural Partnership Board. No applications will be considered between June 1 and December 31st of the calendar year.

 

R357-2-5. Formula for Allocation Cap Amount for Each Business Applicant.

(1) Each business applicant's application will be reviewed, scored, and ranked by the Executive Committee, as follows:

(a) A weighted score will be given to each application in the following subcategories:

(i) project;

(ii) projected new capital development; and

(iii) projected substantial new employment

(2) The scoring criteria will be provided to business applicants via the targeted business tax credit application.

(3) The Executive Committee shall award a targeted business income tax credits to the top ranking projects in descending order, based on the available tax credit and until the cap is reached as set forth in UCM 63M-1-504(2).

(4) Awards shall be given over a three year period.

(5) Awards may be allocated as follows:

(a) $50,000 tax credit for one year of the award, and $25,000 tax credit for two of the three years; or

(b) The Executive Committee may elect to award available tax credit in a proportionate amount based upon the scores of each application during the solicitation period; or

(c) The Executive Committee may elect to award available tax credits in an equal amount to each business applicant during the solicitation period

(2) No business applicant shall receive an award that is in excess of the available tax credit.

 

KEY: rural business, tax credits

Date of Enactment or Last Substantive Amendment: 2014

Authorizing and Implemented or Interpreted Law: 63M-1-502

 

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