R357-3. Economic Development Tax Increment Financing Rule, R357. Governor, Economic Development, Utah Administrative Code

Utah Administrative Code (Current through November 1, 2019)

R357. Governor, Economic Development

R357-3. Economic Development Tax Increment Financing Rule

R357-3-101. Title

Latest version.

This rule is known as the "Economic Development Tax Increment Financing Rule."

R357-3-102. Definitions

Latest version.

In addition to the definitions in Title 63N, Chapter 2, Section 103 as defined or used in this rule:

(1) "Board" means the Board of Business and Economic Development created in Section 63N-1-401.

(2) "Direct investment within the geographic boundaries ", as used in Subsection 63N-2-104(2)(b)(ii), means that the applicant for the tax credit will invest in a new commercial project in the economic development zones.

(3) "Executive Director" means the Executive Director of GOED.

(4) "GOED" means The Governor's Office of Economic Development.

(5) "Retail Business", as used in Subsection 63N-2-103(6)(b), means the physical location from which the general public may directly purchase merchandise or direct services and does not include distribution centers, the corporate functions associated with retailing, or other activities associated with retailing that may be accomplished from any physical location or that are not dependent on proximity to end consumers for retail sales.

R357-3-103. Authority

Latest version.

This rule is adopted by the office under the authority of Subsection 63N-2-104(2).

R357-3-104. Application Content

Latest version.

(1) In order to determine a company's eligibility for an Economic Development Tax Increment Financing Incentive the company may be required to supply additional information to GOED, which may include:

(a) balance sheets;

(b) income statements;

(d) tax filings;

(e) market analyses;

(f) competing states' incentive offers;

(g) corporate structure;

(h) workforce data;

(i) forecasted new state revenue associated with the new commercial project;

(j) forecasted incremental job creation associated with the new commercial project;

(k) forecasted wages associated with the new commercial project;

(l) other information as determined by GOED.

(2) If a company fails to provide any requested information GOED may deny the application.

(3) Information provided by the business entity is subject to the Government Records Access and Management Act. The business entity has the option, at its sole discretion and responsibility, to designate what information provided is private or protected subject to Section 63G-2-302 and/or Section 63G-2-305.

R357-3-105. Factors to Be Considered in Authorizing an Economic Development Tax Credit Award

Latest version.

(1) The amount and duration of a tax credit award shall be determined on a case-by-case basis. The factors that will be considered include but are not limited to:

(a) forecasted new state revenue associated with the new commercial project;

(b) forecasted new incremental jobs associated with the new commercial project;

(d) the demonstrated support of the local community for the project;

(e) the competitive nature of the project, to what extent other states have available incentives for the new commercial project, and the competitiveness of the other incentives;

(f) whether the company is projecting positive long term growth;

(g) the overall benefit to the State from the new commercial project;

(h) the uniqueness of the economic opportunity;

(i) how the tax credit would mitigate the loss or potential loss of new state and local revenues in the State, high paying jobs, new economic growth, or that address the factors set forth in UCA 63N-2-102 and 104.

(j) whether the company's industry has been determined by the GOED Board as a Target Industry, as defined in Subsection 63N-3-102 (9);

(k) the economic environment, including the unemployment rate and the underemployment rate, at the time of the new commercial project or company applies;

(l) the location of the new commercial project;

(m) comparison to previously incented projects in size, scope, and industry; and

(n) other factors as reasonably determined by the Administrator.

R357-3-106. Economic Development Tax Credit Process

Latest version.

(1) All annual tax credits shall be based on actual incremental taxes paid by the business entity or withheld on behalf of employees of a new commercial project.

(2) GOED shall propose a tax credit structure based on the factors set forth in this rule in a combination GOED deems the most effective and beneficial in weighing the benefits of the State, local community, and company.

(a) GOED shall propose the tax credit terms and structure to the Board prior to making a final offer to the business entity.

(3) If the Executive Director approves an Economic Development Tax Credit, GOED shall provide a tax credit offer letter to a business entity that includes:

(a) the proposed terms of the Economic Development Tax Credit, including the maximum amount of aggregate annual tax credits and the time period over which the Tax Credits may be claimed;

(b) a statement that the company must demonstrate sufficient growth and supply; and

(4) If the applicant intends to accept the incentive offer, it shall counter-execute the tax credit offer letter.

(5) If the Executive Director denies an application for an Economic Development Tax Credit, GOED shall provide a letter to the business entity that includes:

(a) notice of the application denial;

(b) reason for denial; and

(c) notice that the business entity can reapply for a tax credit if changes to the proposed new commercial project are made.

(6) GOED will establish a baseline with the company that consists of the count of full-time employees and state revenue reflective of presence in the state prior to board approval date. Basline must be established prior to awarding a tax credit.

(7) A company with an active contract, who desires a tax credit, must provide an annual report for the incentive year in the format and method as directed by GOED, with a level of accuracy comparable with information GOED obtains from the Department of Workforces Services and the Tax Commission, that at a minimum must contain:

(a) a list of all individuals in Utah that received compensation at the company and/or project with their position, start date, termination date, hours paid, wages paid, benefits paid and employer withholding taxes paid or an aggregate list that provides qualification and legislative reporting required for 63N-2-106, as determined GOED.

(b) the requested amount of tax revenue to be rebated from withholding, sales and use, vendor paid sales tax and income tax verified as paid, remitted and receipted to the state.

R357-3-107. Modification of the Tax Credit Offer or Contract

Latest version.

(1) GOED may modify, or a business entity may request to modify, the terms of a tax credit offer or contract as set forth below:

(a) Substantive Modifications: under extraordinary circumstances, a business entity may request to modify the terms of the tax credit agreement if:

(i) there is a substantial change to new commercial project plan; and

(ii) modifying the terms of the tax credit would benefit the State.

(b) Nonsubstantive Modifications: GOED and the business entity may make nonsubstantive modifications to the tax credit contract to:

(i) correct clerical errors made in the initial application, the offer, the contract, or the tax credit;

(ii) make technical changes that do not alter the tax incentive amount or violate any state or federal law; or

(iii) adjust the timeline of no more than 24 months.

(2) Substantive modifications require Board consultation prior to the Executive Director's approval or denial.

(3) All requests and modifications shall be documented and maintained by the GOED.