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H0321...............................................by REVENUE AND TAXATION
PROPERTY TAX - EXEMPTION - Adds to and amends existing law to provide that
a board of county commissioners may declare that all or a portion of the
market value of investment in new plant and building facilities meeting
certain tax incentive criteria shall be exempt from taxation; to define
terms; to provide application procedures to the board of county
commissioners; to provide that the Legislature declares the exemption is
necessary and just; and to provide an exception to the three percent
property tax growth cap for certain property tax exemptions.
03/14 House intro - 1st rdg - to printing
03/15 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature First Regular Session - 2007
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 321
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO PROPERTY EXEMPT FROM TAXATION; AMENDING CHAPTER 6, TITLE 63, IDAHO
3 CODE, BY THE ADDITION OF A NEW SECTION 63-602KK, IDAHO CODE, TO PROVIDE
4 THAT A BOARD OF COUNTY COMMISSIONERS MAY DECLARE THAT ALL OR A PORTION OF
5 THE MARKET VALUE OF INVESTMENT IN NEW PLANT AND BUILDING FACILITIES MEET-
6 ING CERTAIN TAX INCENTIVE CRITERIA, SHALL BE EXEMPT FROM TAXATION, TO
7 DEFINE TERMS, TO PROVIDE APPLICATION PROCEDURES TO THE BOARD OF COUNTY
8 COMMISSIONERS AND TO PROVIDE THAT THE LEGISLATURE DECLARES THE EXEMPTION
9 IS NECESSARY AND JUST; AMENDING SECTION 63-802, IDAHO CODE, TO PROVIDE AN
10 EXCEPTION TO THREE PERCENT PROPERTY TAX BUDGET LIMITATION GROWTH CAP FOR
11 CERTAIN PROPERTY TAX EXEMPTIONS; AND PROVIDING AN EFFECTIVE DATE.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Chapter 6, Title 63, Idaho Code, be, and the same is
14 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
15 ignated as Section 63-602KK, Idaho Code, and to read as follows:
16 63-602KK. PROPERTY EXEMPT FROM TAXATION -- CERTAIN BUSINESS PROPERTY. (1)
17 During tax year 2008, and each year thereafter, a board of county commission-
18 ers may declare that all or a portion of the market value of investment in new
19 plant and building facilities meeting tax incentive criteria as defined in
20 subsection (2) of this section shall be exempt from property taxation.
21 (2) As used in this section:
22 (a) "Commission" means the Idaho state tax commission.
23 (b) "Idaho income tax act" means chapter 30, title 63, Idaho Code.
24 (c) "New plant and building facilities" means manufacturing facility or
25 facilities, including related parking facilities, food service facilities,
26 business office facilities and other building facilities directly related
27 to the manufacturing business.
28 (d) "Investment in new plant" means investment in new plant and building
29 facilities that are:
30 (i) Qualified investments; or
31 (ii) Buildings or structural components of buildings.
32 (e) "Project period" means the period of time beginning at the earlier of
33 a physical change to the project site or the first employment of new
34 employees or contractors located in Idaho who are related to the activi-
35 ties at the project site, but no earlier than January 1, 2008.
36 (f) "Project site" means an area or areas at which new plant and building
37 facilities are located and at which the tax incentive criteria have been
38 or will be met and which are either:
39 (i) A single geographic area located in this state at which the new
40 plant and building facilities owned or leased by the taxpayer are
41 located; or
42 (ii) One (1) or more geographic areas located in this state if
43 eighty percent (80%) or more of the investment required by subsection
2
1 (2)(h)(i) of this section is made at one (1) of the areas.
2 The project site must be identified and described to the county commis-
3 sioners by a taxpayer subject to tax under the Idaho income tax act, in
4 the form and manner prescribed by the commission.
5 (g) "Qualified investment" shall be defined as in section 63-3029B, Idaho
6 Code.
7 (h) "Tax incentive criteria" means a taxpayer at a project site meeting
8 the requirements of subparagraphs (i), (ii) and (iii) of this paragraph:
9 (i) During the project period, making capital investments in new
10 plant of at least three million dollars ($3,000,000) at the project
11 site;
12 (ii) During a period of time beginning on January 1, 2008, and end-
13 ing at the conclusion of the project period, the project is located
14 in a rural development zone as designated by the United States
15 department of agriculture rural development program;
16 (iii) The taxpayer can demonstrate to the county that significant
17 economic benefits will accrue to the county.
18 (i) "Taxpayer," for purposes of this section, means either:
19 (i) A single taxpayer; or
20 (ii) In the context of a unitary group filing a combined report
21 under section 63-3027(t), Idaho Code, all members of a unitary group
22 includable in a combined report for the tax years in which the
23 credit provided for by this chapter may be claimed. For all other
24 purposes, the terms of section 63-3009, Idaho Code, and section
25 63-3027(t)(1), Idaho Code, apply to the meaning of "taxpayer."
26 (3) A taxpayer must make application for the exemption described in this
27 section as may be provided by the board of county commissioners as long as the
28 property continues to meet the tax incentive criteria enumerated in subsection
29 (2) of this section.
30 (4) The legislature declares that this exemption is necessary and just.
31 SECTION 2. That Section 63-802, Idaho Code, be, and the same is hereby
32 amended to read as follows:
33 63-802. LIMITATION ON BUDGET REQUESTS -- LIMITATION ON TAX CHARGES --
34 EXCEPTIONS. (1) Except as provided in subsection (3) of this section for tax
35 year 1995, and each year thereafter, no taxing district shall certify a budget
36 request for an amount of property tax revenues to finance an annual budget
37 that exceeds the greater of:
38 (a) The dollar amount of property taxes certified for its annual budget
39 for any one (1) of the three (3) tax years preceding the current tax year,
40 whichever is greater, which amount may be increased by a growth factor of
41 not to exceed three percent (3%) plus the amount of revenue that would
42 have been generated by applying the levy of the previous year, not includ-
43 ing any levy described in subsection (4) of this section, to any increase
44 in market value subject to taxation resulting from new construction or
45 change of land use classification as evidenced by the value shown on the
46 new construction roll compiled pursuant to section 63-301A, Idaho Code;
47 and by the value of annexation during the previous calendar year, as cer-
48 tified by the state tax commission for market values of operating property
49 of public utilities and by the county assessor, provided that the amount
50 shall be reduced by the amount of any property tax exemption granted pur-
51 suant to section 63-602KK, Idaho Code, by multiplying the taxing
52 district's levy rate by the market value of the exemption granted pursu-
53 ant to section 63-602KK, Idaho Code; or
3
1 (b) The dollar amount of property taxes certified for its annual budget
2 during the last year in which a levy was made; or
3 (c) The dollar amount of the actual budget request, if the taxing dis-
4 trict is newly created except as may be provided in subsection (1)(h) of
5 this section; or
6 (d) In the case of school districts, the restriction imposed in section
7 33-802, Idaho Code; or
8 (e) In the case of a nonschool district for which less than the maximum
9 allowable increase in the dollar amount of property taxes is certified
10 for annual budget purposes in any one (1) year, such a district may, in
11 any following year, recover the foregone increase by certifying, in addi-
12 tion to any increase otherwise allowed, an amount not to exceed one hun-
13 dred percent (100%) of the increase originally foregone. Said additional
14 amount shall be included in future calculations for increases as allowed;
15 or
16 (f) In the case of cities, if the immediately preceding year's levy sub-
17 ject to the limitation provided by this section, is less than 0.004, the
18 city may increase its budget by an amount not to exceed the difference
19 between 0.004 and actual prior year's levy multiplied by the prior year's
20 market value for assessment purposes. The additional amount must be
21 approved by sixty percent (60%) of the voters voting on the question at an
22 election called for that purpose and held on the date in May or November
23 provided by law, and may be included in the annual budget of the city for
24 purposes of this section; or
25 (g) A taxing district may submit to the electors within the district the
26 question of whether the budget from property tax revenues may be increased
27 beyond the amount authorized in this section, but not beyond the levy
28 authorized by statute. The additional amount must be approved by sixty-six
29 and two-thirds percent (66 2/3%) or more of the voters voting on the ques-
30 tion at an election called for that purpose and held on the May or Novem-
31 ber dates provided by section 34-106, Idaho Code. If approved by the
32 required minimum sixty-six and two-thirds percent (66 2/3%) of the voters
33 voting at the election, the new budget amount shall be the base budget for
34 the purposes of this section; or
35 (h) When a nonschool district consolidates with another nonschool dis-
36 trict or dissolves and a new district performing similar governmental
37 functions as the dissolved district forms with the same boundaries within
38 three (3) years, the maximum amount of a budget of the district from prop-
39 erty tax revenues shall not be greater than the sum of the amounts that
40 would have been authorized by this section for the district itself or for
41 the districts that were consolidated or dissolved and incorporated into a
42 new district; or
43 (i) In the instance or case of cooperative service agencies, the restric-
44 tions imposed in sections 33-315 through 33-318, Idaho Code.
45 (2) In the case of fire districts, during the year immediately following
46 the election of a public utility or public utilities to consent to be provided
47 fire protection pursuant to section 31-1425, Idaho Code, the maximum amount of
48 property tax revenues permitted in subsection (1) of this section may be
49 increased by an amount equal to the current year's taxable value of the con-
50 senting public utility or public utilities multiplied by that portion of the
51 prior year's levy subject to the limitation provided by subsection (1) of this
52 section.
53 (3) No board of county commissioners shall set a levy, nor shall the
54 state tax commission approve a levy for annual budget purposes which exceeds
55 the limitation imposed in subsection (1) of this section, unless authority to
4
1 exceed such limitation has been approved by a majority of the taxing
2 district's electors voting on the question at an election called for that pur-
3 pose and held pursuant to section 34-106, Idaho Code, provided however, that
4 such voter approval shall be for a period of not to exceed two (2) years.
5 (4) The amount of property tax revenues to finance an annual budget does
6 not include revenues from nonproperty tax sources, and does not include reve-
7 nue from levies that are voter approved for bonds, override levies or supple-
8 mental levies, plant facilities reserve fund levies, school emergency fund
9 levies or for levies applicable to newly annexed property or for levies appli-
10 cable to new construction as evidenced by the value of property subject to the
11 occupancy tax pursuant to section 63-317, Idaho Code, for the preceding tax
12 year.
13 SECTION 3. This act shall be in full force and effect on and after Janu-
14 ary 1, 2008.
STATEMENT OF PURPOSE
RS 17171
The purpose of this legislation is to provide an
economic development incentive for new manufacturing
facilities construction and development in designated rural
development areas in the state of Idaho.
The legislation will grant the board of county
commissioners authority to offer property tax abatement, for
a maximum of 5 years, to a taxpayer who spends a minimum of
$3,000,000 for new manufacturing facilities in Rural
Development Zones as designated by the United States
Department of Agriculture, Rural Development. The taxpayer
must demonstrate significant economic benefits that will
accrue to the county from such property development.
The legislation limits a county government from setting
budgets based on the assessed valuation of the property,
until such time as property taxes are actually collected on
the project.
This proposal will allow board of county commissioners
an incentive to help compete more effectively, and on a more
timely basis, with neighboring states to attract new
development to the state and their county.
FISCAL IMPACT
There is no fiscal impact to the general fund.
CONTACT:
Representative Cliff Bayer
332-1000
STATEMENT OF PURPOSE/FISCAL NOTE H 321