Senate Bill No. 392
(By Senator White, Browning, Laird, Foster, Chafin, Kessler and
Stollings)
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[Introduced January 29, 2010; referred to the Committee on
Economic Development; and then to the Committee on Finance.]
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A BILL to amend and reenact §5B-2E-5 of the Code of West Virginia,
1931, as amended; and to amend said code by adding thereto two
new sections, designated §5B-2E-7b and §5B-2E-7c, all relating
generally to the West Virginia Tourism Development Act; and
adding a small scale tourism development component and an
ancillary project component.
Be it enacted by the Legislature of West Virginia:
That §5B-2E-5 of the Code of West Virginia, 1931, as amended,
be amended and reenacted; and that said code be amended by adding
thereto two new sections, designated §5B-2E-7b and §5B-2E-7c, all
to read as follows:
ARTICLE 2E. WEST VIRGINIA TOURISM DEVELOPMENT ACT.
§5B-2E-5. Project application; evaluation standards; consulting
services; preliminary and final approval of projects.
(a) Each eligible company that seeks to qualify a project for
the tourism development project tax credit provided by section
seven of this article,
or for the tourism development expansion
project tax credit provided by section seven-a of this article,
the
small scale tourism development project tax credit provided by
section seven-b of this article or the ancillary tourism facilities
development project tax credit provided by section seven-c of this
article, as applicable,
must shall 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 a tourism development
project tax credit,
or a tourism development expansion project tax
credit,
a small scale tourism development project tax credit or an
ancillary tourism facilities 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. The Executive Director of the development office
shall act to grant or not to grant any preliminary approval of an
application within forty-five days following its receipt or receipt of additional information requested by the Development Office,
whichever is later.
(c) Based upon a review of the application and additional
documentation provided by the eligible company, if the Executive
Director of the Development Office determines that the applicant
and the project may reasonably satisfy the criteria for final
approval set forth in subsection (d) of this section, then the
Executive Director of the Development Office may grant a
preliminary approval of the applicant and the project.
(d) After preliminary approval by the Executive 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 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
$2.5 million, except that a small scale tourism development project
must have approved costs in excess of $250,000 but not in excess of
$2.5 million and that an ancillary tourism facilities development
project must have approved costs in excess of $100,000 but not in
excess of $1 million;
(3) Will have a significant and positive economic impact on
the state considering, among other factors, the extent to which the project will compete directly with or complement existing tourism
attractions in the state and the amount by which increased tax
revenues from the 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
for credit under section seven or seven-a of
this article 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.
An applicant
for credit under section seven-b of this article shall pay to the
development office fee a of $1,000 per application. An applicant
for credit under section seven-c of this article shall pay to the
Development Office a fee of $500 per application. The fee shall be
used by that office to reimburse costs of the small business
development center, a division of the development office, to review
the application and make a recommendation to the Executive Director
of the Development Office under subsection (d) of this section.
(f) The Executive Director of the Development Office, within
sixty days following receipt of the consultant's final, written
report or reports, shall review, in light of the consultant's
report or reports, 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 project and how it addresses
economic problems in the area in which the project will be located;
(2) Whether there is substantial and credible evidence that
the project is likely to be started and completed in a timely
fashion;
(3) Whether the project will, directly or indirectly, improve
the opportunities in the area where the project will be located for
the successful establishment or expansion of other industrial or
commercial businesses;
(4) Whether the project will, directly or indirectly, assist
in the creation of additional employment opportunities in the area
where the 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 project.
(g) The development office may establish other criteria for
consideration when approving the applications.
(h) The Executive Director of the Development Office may give
its final approval to the applicant's application for a project and
may grant to the applicant the status of an approved company. The
Executive Director of the Development Office shall act to approve
or not approve any application within sixty days following the
receipt of the consultant's final, written report or reports or the
receipt of any additional information requested by the Development
Office, whichever is later. The decision by the Executive Director
of the Development Office is final.
§5B-2E-7b. Amount of credit allowed for small scale tourism
development project; approved projects.
(a) As used in this article, "small scale tourism development
project" means a tourism development project as defined in section
three of this article where the cost of the project will exceed
$250,000 but will not exceed $2.5 million, except that a small scale
tourism development project may include the construction,
reconstruction or rehabilitation or expansion of a lodging facility
where the project, as specifically set forth and defined in the
application, consists of no more than thirty guest rooms,
notwithstanding any other provision in this article to the contrary.
(b) 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 small scale
tourism development project. A project that qualifies for the
credit allowed by this section may not claim any credit under
section seven or seven-a of this article. The amount of this credit
is determined and applied as provided in this article.
(c) 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 small
scale 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 thirty-five percent
of the approved company's approved costs as provided in the
agreement.
(d) 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.
(e) The amount determined under subsection (c) 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
small scale 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.
(f) If any credit remains after application of subsection (e)
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.
(g) The total amount of small scale tourism development project
tax credits for all approved companies pursuant to this section may
not exceed $1.5 million each calendar year.
(h) The company approved to claim the small scale tourism
development project credit allowed by this section shall be subject
to the forfeiture of unused tax credit provisions and the recapture
tax provision of section eight of this article. Additionally, the
approved company shall be required to submit to the development
office the information required by section eight of this article and
shall be allowed to transfer the credit allowed by this section to
a successor business subject to the rules provided in section eight
of this article.
§5B-2E-7c. Amount of credit allowed for ancillary tourism
facilities development project; approved projects.
(a) The following words and terms used in this section shall
have the meanings ascribed in this section:
(1)"Ancillary tourism facilities development project" means the
acquisition, including the acquisition of real estate by a leasehold
interest with a minimum of ten years, construction, expansion and/or
equipping of a new or existing facility located at or near an
existing tourism attraction that exists for the sole purpose of
providing recreational, entertainment or lodging for use by
tourists, as specifically set forth and defined in the application,
where the cost of the project will exceed $100,000 but will not
exceed $1 million:
Provided, That an ancillary tourism facilities development project does not include the construction,
reconstruction, rehabilitation or expansion of a lodging facility
with more than thirty guest rooms, notwithstanding any other
provision in this article to the contrary. All ancillary tourism
facilities development projects shall be in accordance with the
applicable county ancillary tourism facilities development plan.
(2) "County ancillary tourism facilities development plan"
means a comprehensive ancillary tourism facilities development plan
developed by the local economic development organization designated
as the lead entity for economic development by the county commission
of the county in which the ancillary tourism facilities development
project will be located, as revised, amended or supplemented, from
time to time, by the local development organization. Any such plan
or plans shall be based on studies of governmental, social,
economic, environmental and physical conditions and trends and shall
aim at the coordinated development of ancillary tourism facilities
in the county in order to promote the general health, welfare,
convenience and prosperity of its people through the encouragement
and development of tourism facilities that support existing tourism
attractions by attracting individuals who are not residents of the
state into a geographical area in which travel was not planned or
will extend the stay of travelers who are not residents of the state
in an area in which travel has been planned. The plan or plans, or
parts thereof, shall be prepared by persons appropriately qualified
under state statutes dealing with the applicable profession or occupation. The plan or plans shall be submitted for review and
approval by the Secretary of Commerce prior to adoption by the local
economic development organization designated as the lead entity for
economic development activities by the county commission of the
county in which the ancillary tourism facilities development project
will be located.
(b) In addition to the requirements set forth in section five
of this article, an ancillary tourism facilities development project
shall demonstrate in its application the ability to either attract
individuals who are not residents of the state into a geographical
area in which travel was not planned or will extend the stay of
travelers who are not residents of the state in an area in which
travel has been planned.
(c) 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
ancillary tourism facilities development project. A project that
qualifies for the credit allowed by this section may not claim any
credit under section seven, seven-a or seven-b of this article. The
amount of this credit is determined and applied as provided in this
article.
(d) 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 ancillary tourism facilities 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 thirty-
five percent of the approved company's approved costs as provided
in the agreement:
Provided, however, That if the ancillary tourism
facilities development project involves the restoration or
rehabilitation of a structure that is listed individually in the
National Register of Historic Places or is 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,
the maximum amount of credit allowable is equal to fifty percent of
the approved company's approved costs as provided in the agreement.
(e) 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.
(f) The amount determined under subsection (d) 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
ancillary tourism facilities 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.
(g) If any credit remains after application of subsection (f)
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.
(h) The total amount of ancillary tourism facilities
development project tax credits for all approved companies pursuant
to this section may not exceed $500,000 each calendar year.
(i) The company approved to claim the ancillary tourism
facilities development project tax credit allowed by this section
shall be subject to the forfeiture of unused tax credit provisions
and the recapture tax provision of section eight of this article.
Additionally, the approved company shall be required to submit to
the Development Office the information required by section eight of
this article and shall be allowed to transfer the credit allowed by
this section to a successor business subject to the rules provided
in section eight of this article.
NOTE: The purpose of this bill is to add a small scale tourism
development component and an ancillary tourism facilities
development component to the West Virginia Tourism Development Act.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added
5B-2E-7b and 5B-2e-7c are new; therefore, strike-throughs and
underscoring have been omitted.