ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 139
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
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[Passed March 13, 2004; in effect ninety days from passage.]
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AN ACT to amend the code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §5B-2E-1, §5B-2E-2,
§5B-2E-3, §5B-2E-4, §5B-2E-5, §5B-2E-6, §5B-2E-7, §5B-2E-8,
§5B-2E-9, §5B-2E-10 and §5B-2E-11; and to amend said code by
adding thereto a new section, designated §11-15-34, all
relating to the West Virginia tourism development act;
establishing a tourism development project tax credit;
specifying short titles; specifying legislative findings and
purpose; defining terms; specifying additional powers and
duties of the development office; specifying activity that
qualifies for the credit; requiring filing of application for
tax credit as condition precedent to claiming tax credit;
specifying procedures for evaluation and approval of project;
providing for hiring of consultants; specifying criteria for evaluating projects; specifying determination of amount of
allowable tax credits; providing maximum amount of credit;
specifying application of tax credits against sales tax
collected; termination of applications after a certain date;
providing for forfeiture of unused tax credits; providing for
a recapture credit under certain circumstances; and specifying
information required to be annually submitted to the state
development office.
Be it enacted by the Legislature of West Virginia:
That the code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §5B-2E-1, §5B-2E-2,
§5B-2E-3, §5B-2E-4, §5B-2E-5, §5B-2E-6, §5B-2E-7, §5B-2E-8, §5B-2E-
9, §5B-2E-10 and §5B-2E-11; and that said code be amended by adding
thereto a new section, designated §11-15-34, all to read as
follows:
CHAPTER 5B. ECONOMIC DEVELOPMENT ACT OF 1985.
ARTICLE 2E. WEST VIRGINIA TOURISM DEVELOPMENT ACT.
§5B-2E-1. West Virginia Tourism Development Act.
This article shall be referred to as the "West Virginia
Tourism Development Act".
§5B-2E-2. Legislative findings.
The Legislature finds and declares that the general welfare
and material well-being of the citizens of the state depend, in
large measure, upon the development of tourism development projects
in the state and that it is in the best interest of the state to induce the creation of new, or the expansion of existing, tourism
development projects within the state in order to advance the
public purposes of relieving unemployment by preserving and
creating jobs and by preserving and creating new and greater
sources of revenues for the support of public services provided by
the state; and that the inducement for the creation or expansion of
tourism development projects should be in the form of a tax credit
to be applied to consumers sales and service taxes collected on the
gross receipts generated directly from the operations of the new or
expanded tourism development projects, in lieu of tax credits on
income that are largely deferred for a number of years after start
up of a major tourism development project; and all of which new or
expanded tourism developments are of paramount importance to the
state and its economy and for the state's contribution to the
national economy.
§5B-2E-3. Definitions.
As used in this article, unless the context clearly indicates
otherwise:
(1) "Agreement" means a tourism development agreement entered
into, pursuant to section six of this article, between the
development office and an approved company with respect to a
tourism development project.
(2) "Approved company" means any eligible company approved by
the development office pursuant to section five of this article
seeking to undertake a tourism development project.
(3) "Approved costs" means:
(A) Included costs:
(i) Obligations incurred for labor and to vendors,
contractors, subcontractors, builders, suppliers, delivery persons
and material persons in connection with the acquisition,
construction, equipping, installation or expansion of a tourism
development project;
(ii) The costs of acquiring real property or rights in real
property and any costs incidental thereto;
(iii) The cost of contract bonds and of insurance of all kinds
that may be required or necessary during the course of the
acquisition, construction, equipping, installation or expansion of
a tourism development project which is not paid by the vendor,
supplier, delivery person, contractor or otherwise provided;
(iv) All costs of architectural and engineering services,
including, but not limited to: Estimates, plans and
specifications, preliminary investigations and supervision of
construction, installation, as well as for the performance of all
the duties required by or consequent to the acquisition,
construction, equipping, installation or expansion of a tourism
development project;
(v) All costs required to be paid under the terms of any
contract for the acquisition, construction, equipping, installation
or expansion of a tourism development project;
(vi) All costs required for the installation of utilities,
including, but not limited to: Water, sewer, sewer treatment, gas,
electricity, communications and off-site construction of utility extensions to the boundaries of the real estate on which the
facilities are located, all of which are to be used to improve the
economic situation of the approved company in a manner that allows
the approved company to attract persons; and
(vii) All other costs comparable with those described in this
subdivision;
(B)
Excluded costs. -- The term "approved costs" does not
include any portion of the cost required to be paid for the
acquisition, construction, equipping and installation or expansion
of a tourism development project that is financed with governmental
incentives, grants or bonds or for which the eligible taxpayer
elects to qualify for other tax credits, including, but not limited
to, those provided by article thirteen-q, chapter eleven of this
code.
(4) "Base tax revenue amount" means the average monthly amount
of consumer sales and service tax collected by an approved company,
based on the twelve-month period ending immediately prior to the
opening of a new tourism development project for business, as
certified by the state tax commissioner.
(5) "Council" means the council for community and economic
development as provided in article two of this chapter.
(6) "Development office" means the West Virginia development
office as provided in article two of this chapter.
(7) "Crafts and products center" means a facility primarily
devoted to the display, promotion and sale of West Virginia
products and at which a minimum of eighty percent of the sales occurring at the facility are of West Virginia arts, crafts or
agricultural products.
(8) "Eligible company" means any corporation, limited
liability company, partnership, limited liability partnership, sole
proprietorship, business trust, joint venture or any other entity
operating or intending to operate a tourism development project,
whether owned or leased, within the state that meets the standards
required by the council. An eligible company may operate or intend
to operate directly or indirectly through a lessee.
(9) "Entertainment destination center" means a facility
containing a minimum of two hundred thousand square feet of
building space adjacent or complementary to an existing tourism
attraction, an approved tourism development project or a major
convention facility and which provides a variety of entertainment
and leisure options that contain at least one major theme
restaurant and at least three additional entertainment venues,
including, but not limited to, live entertainment, multiplex
theaters, large-format theaters, motion simulators, family
entertainment centers, concert halls, virtual reality or other
interactive games, museums, exhibitions or other cultural and
leisure time activities. Entertainment and food and drink options
shall occupy a minimum of sixty percent of total gross area, as
defined in the application, available for lease and other retail
stores shall occupy no more than forty percent of the total gross
area available for lease.
(10) "Final approval" means the action taken by the council qualifying the eligible company to receive the tax credits provided
in this article.
(11) "Preliminary approval" means the action taken by the
development office conditioning final approval by the council.
(12) "State agency" means any state administrative body,
agency, department, division, board, commission or institution
exercising any function of the state that is not a municipal
corporation or political subdivision.
(13) "Tourism attraction" means a cultural or historical site,
a recreation or entertainment facility, an area of natural
phenomenon or scenic beauty, a West Virginia crafts and products
center or an entertainment destination center. A tourism
development project or attraction shall not include any of the
following:
(A) Lodging facilities, unless:
(i) The facilities constitute a portion of a tourism
development project and represent less than fifty percent of the
total approved cost of the tourism development project, or the
facilities are to be located on recreational property owned or
leased by the state or federal government and the facilities have
received prior approval from the appropriate state or federal
agency.
(ii) The facilities involve the restoration or rehabilitation
of a structure that is listed individually in the national register
of historic places or are located in a national register historic
district and certified by the state historic preservation officer as contributing to the historic significance of the district, and
the rehabilitation or restoration project has been approved in
advance by the state historic preservation officer; or
(iii) The facilities involve the construction, reconstruction,
restoration, rehabilitation or upgrade of a full-service lodging
facility or the reconstruction, restoration, rehabilitation or
upgrade of an existing structure into a full-service lodging
facility having not less than five hundred guest rooms, with
construction, reconstruction, restoration, rehabilitation or
upgrade costs exceeding ten million dollars;
(B) Facilities that are primarily devoted to the retail sale
of goods, other than an entertainment destination center, a West
Virginia crafts and products center or a tourism development
project where the sale of goods is a secondary and subordinate
component of the project; and
(C) Recreational facilities that do not serve as a likely
destination where individuals who are not residents of the state
would remain overnight in commercial lodging at or near the new
tourism development project or existing attraction.
(14) "Tourism development project" means the acquisition,
including the acquisition of real estate by a leasehold interest
with a minimum term of ten years, construction and equipping of a
tourism attraction; the construction and installation of
improvements to facilities necessary or desirable for the
acquisition, construction, installation or expansion of a tourism
attraction, including, but not limited to, surveys, installation of utilities, which may include water, sewer, sewage treatment, gas,
electricity, communications and similar facilities; and off-site
construction of utility extensions to the boundaries of the real
estate on which the facilities are located, all of which are to be
used to improve the economic situation of the approved company in
a manner that allows the approved company to attract persons.
(15) "Tourism development project tax credit" means the
tourism development project tax credit allowed by section seven of
this article.
§5B-2E-4. Additional powers and duties of the development office.
The development office has the following powers and duties, in
addition to those set forth in this case, necessary to carry out
the purposes of this article including, but not limited to:
(1) Make preliminary approvals of all applications for tourism
development projects and enter into agreements pertaining to
tourism development projects with approved companies;
(2) Employ fiscal consultants, attorneys, appraisers and other
agents as the executive director of the development office finds
necessary or convenient for the preparation and administration of
agreements and documents necessary or incidental to any tourism
development project; and
(3) Impose and collect fees and charges in connection with any
transaction.
§5B-2E-5. Tourism development project application; evaluation
standards; consulting services; preliminary and final approval of projects; limitation of amount
annual tourism development project tax credit.
(a) Each eligible company that seeks to qualify a tourism
development project for the tax credit provided by this article
must file a written application for approval of the project with
the development office.
(b) With respect to each eligible company making an
application to the development office for the tourism development
project tax credit, the development office shall make inquiries and
request documentation, including a completed application, from the
applicant that shall include: A description and location of the
project; capital and other anticipated expenditures for the project
and the sources of funding therefor; the anticipated employment and
wages to be paid at the project; business plans that indicate the
average number of days in a year in which the project will be in
operation and open to the public; and the anticipated revenues and
expenses generated by the project.
(c) Based upon a review of the application and additional
documentation provided by the eligible company, if the director of
the development office determines that the applicant and the
tourism development project may reasonably satisfy the criteria for
final approval set forth in subsection (d) of this section, then
the director of the development office may grant a preliminary
approval of the applicant and the tourism development project.
(d) After preliminary approval by the director of the
development office, the development office shall engage the services of a competent consulting firm or firms to analyze the
data made available by the applicant and to collect and analyze
additional information necessary to determine that, in the
independent judgment of the consultant, the tourism development
project:
(1) Likely will attract at least twenty-five percent of its
visitors from outside of this state;
(2) Will have approved costs in excess of one million dollars;
(3) Will have a significant and positive economic impact on
the state considering, among other factors, the extent to which the
tourism development project will compete directly with or
complement existing tourism attractions in the state and the amount
by which increased tax revenues from the tourism development
project will exceed the credit given to the approved company;
(4) Will produce sufficient revenues and public demand to be
operating and open to the public for a minimum of one hundred days
per year; and
(5) Will provide additional employment opportunities in the
state.
(e) The applicant shall pay to the development office, prior
to the engagement of the services of a competent consulting firm or
firms pursuant to the provisions of subsection (d) of this section,
for the cost of the consulting report or reports and shall
cooperate with the consulting firm or firms to provide all of the
data that the consultant considers necessary or convenient to make
its determination under subsection (d) of this section.
(f) The director of the development office, within thirty days
following receipt of the consultant's report or reports, shall
decide whether to recommend the tourism development project to the
council for final approval. If the director of the development
office recommends the tourism development project to the council,
he or she shall submit the project application, the consulting
report or reports and other information regarding the project to
the council.
(g) The council shall review all applications properly
submitted to the council for conformance to statutory and
regulatory requirements, the reasonableness of the project's budget
and timetable for completion, and, in addition to the criteria for
final approval set forth in subsection (d) of this section, the
following criteria:
(1) The quality of the proposed tourism development project
and how it addresses economic problems in the area in which the
tourism development project will be located;
(2) Whether there is substantial and credible evidence that
the tourism development project is likely to be started and
completed in a timely fashion;
(3) Whether the tourism development project will, directly or
indirectly, improve the opportunities in the area where the tourism
development project will be located for the successful
establishment or expansion of other industrial or commercial
businesses;
(4) Whether the tourism development project will, directly or indirectly, assist in the creation of additional employment
opportunities in the area where the tourism development project
will be located;
(5) Whether the project helps to diversify the local economy;
(6) Whether the project is consistent with the goals of this
article;
(7) Whether the project is economically and fiscally sound
using recognized business standards of finance and accounting; and
(8) The ability of the eligible company to carry out the
tourism development project.
(h) The council may establish other criteria for consideration
when approving the applications.
(i) The council may give its final approval to the applicant's
application for a tourism development project and may grant to the
applicant the status of an approved company:
Provided, That the
total amount of tourism development project tax credits for all
approved companies may not exceed one million five hundred thousand
dollars each calendar year. The council shall act to approve or
not approve any application within thirty days following the
receipt of the application or the receipt of any additional
information requested by the council, whichever is later. The
decision by the development office and the council is final.
§5B-2E-6. Agreement between development office and approved
company.
The development office, upon grant of the council's final
approval, may enter into an agreement with any approved company with respect to its tourism development project. The terms and
provisions of each agreement shall include, but not be limited to:
(1) The amount of approved costs of the project that qualify
for the sales tax credit, provided for in section seven of this
article. Within three months of the completion date, the approved
company shall document the actual cost of the project through a
certification of the costs to the development office by an
independent certified public accountant acceptable to the
development office; and
(2) A date certain by which the approved company shall have
completed and opened the tourism development project to the public.
Any approved company that has received final approval may request
and the development office may grant an extension or change,
however, in no event shall the extension exceed three years from
the date of final approval to the completion date specified in the
agreement with the approved company.
§5B-2E-7. Amount of credit allowed; approved projects.
(a) Approved companies are allowed a credit against the West
Virginia consumers sales and service tax imposed by article
fifteen, chapter eleven of this code and collected by the approved
company on sales generated by or arising from the operations of the
tourism development project:
Provided, That if the consumers sales
and service tax collected by the approved company is not solely
attributable to sales resulting from the operation of the new
tourism development project, the credit shall only be applied
against that portion of the consumers sales and service tax collected in excess of the base tax revenue amount. The amount of
this credit is determined and applied as provided in this article.
(b) The maximum amount of credit allowable in this article is
equal to twenty-five percent of the approved company's approved
costs as provided in the agreement:
Provided, That, if the tourism
development project site is located within the permit area or an
adjacent area of a surface mining operation, as these terms are
defined in section three, article three, chapter twenty-two of this
code, from which all coal has been or will be extracted prior to
the commencement of the tourism development project, the maximum
amount of credit allowable is equal to fifty percent of the
approved company's approved costs as provided in the agreement.
(c) The amount of credit allowable must be taken over a
ten-year period, at the rate of one tenth of the amount thereof per
taxable year, beginning with the taxable year in which the project
is opened to the public, unless the approved company elects to
delay the beginning of the ten-year period until the next
succeeding taxable year. This election shall be made in the first
consumers sales and service tax return filed by the approved
company following the date the project is opened to the public.
Once made, the election cannot be revoked.
(d) The amount determined under subsection (b) of this section
is allowed as a credit against the consumers sales and service tax
collected by the approved company on sales from the operation of
the tourism development project. The amount determined under said
subsection may be used as a credit against taxes required to be remitted on the approved company's monthly consumers sales and
service tax returns that are filed pursuant to section sixteen,
article fifteen, chapter eleven of this code. The approved company
shall claim the credit by reducing the amount of consumers sales
and service tax required to be remitted with its monthly consumers
sales and service tax returns by the amount of its aggregate annual
credit allowance until such time as the full current year annual
credit allowance has been claimed. Once the total credit claimed
for the tax year equals the approved company's aggregate annual
credit allowance no further reductions to its monthly consumers
sales and service tax returns will be permitted.
(e) If any credit remains after application of subsection (d)
of this section, the amount of credit is carried forward to each
ensuing tax year until used or until the expiration of the third
taxable year subsequent to the end of the initial ten-year credit
application period. If any unused credit remains after the
thirteenth year, that amount is forfeited. No carryback to a prior
taxable year is allowed for the amount of any unused portion of any
annual credit allowance.
§5B-2E-8. Forfeiture of unused tax credits; credit recapture;
recapture tax imposed; information required to be
submitted annually to development office; transfer of
tax credits to successors.
(a) The approved company shall forfeit the tourism development
project tax credit allowed by this article with respect to any calendar year and shall pay the recapture tax imposed by subsection
(b) of this section, if:
(1) In any year following the first calendar year the project
is open to the public, the tourism development project fails to
attract at least twenty-five percent of its visitors from among
persons who are not residents of the state;
(2) In any year following the first year the project is open
to the public, the tourism development project is not operating and
open to the public for at least one hundred days; or
(3) The approved company is not in good standing with the
state tax division, the workers' compensation commission or the
bureau of employment programs as of the beginning of each calendar
year.
(b) In addition to the loss of credit allowed under this
article for the calendar year, any approved company or successor
eligible company that forfeits the tourism development project tax
credit under the provisions of subsection (a) of this section,
credit recapture shall apply and the approved company, and
successor eligible companies, shall return to the state all
previously claimed tourism development project tax credit allowed
by this article. An amended return shall be filed with the state
tax commissioner for the prior calendar year, or calendar years,
for which credit recapture is required, along with interest, as
provided in section seventeen, article ten, chapter eleven of this
code: Provided, That the approved company and successor eligible
companies who previously claimed the tourism development project tax credit allowed by this article are jointly and severally liable
for payment of any recapture tax subsequently imposed under this
section.
(c)Within forty-five days after the end of each calendar
year during the term of the agreement, the approved company shall
supply the development office with all reports and certifications
the development office requires demonstrating to the satisfaction
of the development office that the approved company is in
compliance with applicable provisions of law. Based upon a review
of these materials and other documents that are available, the
development office shall then certify to the tax commissioner that
the approved company is in compliance with this section.
(d) The tax credit allowed in this article is transferable,
subject to the written consent of the development office, to an
eligible successor company that continues to operate the approved
tourism development project.
§5B-2E-9. Promulgation of rules.
The council may promulgate rules to implement the tourism
development project application approval process and to describe
the criteria and procedures it has established in connection
therewith. These rules are not subject to the provisions of
chapter twenty-nine-a of this code but shall be filed with the
secretary of state.
§5B-2E-10. Legislative review.
The development office shall report annually to the joint
commission on economic development by the first day of December of each year on the number of applications received from eligible
companies as provided in this article, the status of each
application, the number of projects approved, the status of each
project, the amount of credit allowed and the amount of consumers
sales and service tax generated by each project.
§5B-2E-11. Termination.
The development office may not accept any new application on
or after the first day of January, two thousand seven, and all
applications submitted prior to the first day of January, two
thousand seven, that have not been previously approved or not
approved, shall be deemed not approved and shall be null and void
as of the first day of January, two thousand seven.
CHAPTER 11. TAXATION.
ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.
§11-15-34.
Tourism development project tax credit.
(a) There is allowed as a credit against the consumers sales
and service tax collected and required to be remitted pursuant to
this article from the operation of an approved tourism development
project as defined in section three, article two-e, chapter five-b
of this code, the amount determined under section eight, article
two-e, chapter five-b of this code relating to the tourism
development project tax credit.
(b) The tax commissioner may propose legislative rules in
accordance with article three, chapter twenty-nine-a of this code
designed to require the filing of forms designed by the tax commissioner to reflect the intent of this section and article
two-e, chapter five-b of this code.