HB 4523 Text

H. B. 4523

(By Delegate Webb)

[Introduced February 18, 2002; referred to the

Committee on Government Organization then Finance.]

A BILL to amend chapter five-b of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article two-b, relating to creating the West Virginia tourism development act to induce the creation or expansion of tourism attraction projects; and it provides a tourism attraction project credit against sales tax.

Be it enacted by the Legislature of West Virginia:

That chapter five-b of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article two-b, to read as follows:

ARTICLE 2B. TOURISM DEVELOPMENT ACT.

§5B-2B-1. Legislative findings.

The Legislature finds and declares that the general welfare and material well-being of the citizens of the state of West Virginia depend in large measure upon the development of tourism 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 attractions within the state in order to advance the public purposes of relieving unemployment by preserving and creating jobs that would not exist if not for the inducements to be offered by the authority to approved companies, and by preserving and creating sources of tax revenues for the support of public services provided by the state; and that the authority prescribed by the provisions of this article, and the purposes to be accomplished under the provisions of this article, are proper governmental and public purposes for which public moneys may be expended; and that the inducement of the creation or expansion of tourism attraction projects is of paramount importance mandating that the provisions of this article be liberally construed and applied in order to advance public purposes.
§5B-2B-2. Definitions.

As used in this article, unless the context clearly indicates otherwise:

(a) "Agreement" means a tourism attraction agreement entered into, pursuant to section five of this article, on behalf of the authority and an approved company on or before the thirtieth day of June, two thousand two, with respect to a tourism attraction project;

(b) "Approved company" means any eligible company approved by the tourism commission and the authority pursuant to the provisions of section four of this article that is seeking to undertake a tourism attraction project;

(1) Obligations incurred for labor and to vendors, contractors, subcontractors, builders, suppliers, deliverymen, and material men in connection with the acquisition, construction, equipping and installation of a tourism attraction project;

(2) The costs of acquiring real property or rights in real property and any costs incidental thereto;

(3) 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 and installation of a tourism attraction project which is not paid by the vendor, supplier, deliveryman, contractor or otherwise provided;

(4) All costs of architectural and engineering services, including, but not limited to: Estimates, plans and specifications, preliminary investigations, and supervision of construction and installation, as well as for the performance of all the duties required by or consequent to the acquisition, construction, equipping and installation of a tourism attraction project;

(5) All costs required to be paid under the terms of any contract for the acquisition, construction, equipping and installation of a tourism attraction project;

(6) All costs required for the installation of utilities, including but not limited to: Water, sewer, sewer treatment, gas, electricity and communications, and including off-site construction of the facilities paid for by the approved company; and

(7) All other costs comparable with those described in this subsection;

(d) "Authority" means the West Virginia tourism development finance authority created by this article;

(e) "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;

(f) "Eligible company" means any corporation, limited liability company, partnership, registered limited liability partnership, sole proprietorship, business trust, or any other entity operating or intending to operate a tourism attraction project, whether owned or leased, within the state that meets the standards promulgated by the tourism commission pursuant to provisions of section nine, article two of this chapter. An eligible company may operate or intend to operate directly or indirectly through a lessee;

(g) "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 attraction project, or a major convention facility, and which provides a variety of entertainment and leisure options that contain at least one major themed 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 must occupy a minimum of sixty percent of total gross area available for lease, and other retail stores must occupy no more than forty percent of the total gross area available for lease;

(h) "Final approval" means the action taken by the authority authorizing the eligible company to receive inducements under the provisions of section nine of this article;

(i) "Inducements" means the West Virginia sales tax refund as prescribed in section four of this article;

(j) "Preliminary approval" means the action taken by the authority conditioning final approval by the authority upon satisfaction by the eligible company of the requirements of section four of this article;

(k) "State agency" means any state administrative body, agency, department, division, or any board, commission, institution or division exercising any function of the state that is not an independent municipal corporation, county or other political subdivision;

(l) "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 attraction may not include any of the following:

(1) Lodging facilities, unless the facilities constitute a portion of a tourism attraction project and represent less than fifty percent of the total approved cost of the tourism attraction 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; or 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 director of the West Virginia historic preservation section of the division of culture and history as contributing to the historic significance of the district, and the rehabilitation or restoration project has been approved in advance by the historic preservation section;

(2) 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 attraction where the sale of goods is a secondary and subordinate component of the attraction; and

(3) 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 tourism attraction project; and

(m) "Tourism attraction project" or "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, and installation 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.

§5B-2B-3. Tourism development finance authority created -- members -- terms - conflicts of interest -- powers.

(a) The tourism development finance authority is created within the tourism commission of the West Virginia development office. The authority shall consist of seven members appointed by the governor. The members of the authority shall serve without compensation but are entitled to reimbursement for their necessary expenses incurred in performing their duties. Of the members initially appointed to the authority, two members shall be appointed for terms of one year, three members shall be appointed for terms of two years, and two members shall be appointed for terms of three years. Thereafter, the members of the authority shall be appointed for terms of four years.

(b) The governor shall appoint one member as chairperson of the tourism development finance authority. The members of the authority may elect other officers they consider necessary.

(c) No member of the authority may either directly or indirectly be a party to, or be in any manner interested in, any contract or agreement with the authority for any matter, cause, or thing that creates any liability or indebtedness against the authority.

(d) The tourism development finance authority has the powers necessary to carry out the purposes of this section, including, but not limited to, the power to:

(1) Employ fiscal consultants, attorneys, appraisers, and other agents on behalf of the authority whom the authority considers necessary or convenient for the preparation and administration of agreements and documents necessary or incidental to any project. The fees for the services provided by persons employed on behalf of the authority shall be paid by the beneficiary of a loan under this program directly to the person providing consultation, advisory, legal, or other services;

(2) Impose and collect fees and charges in connection with any transaction and provide for reasonable penalties for delinquent payment of fees and charges; and

(3) To coordinate economic development loan programs of this state with any approved company in order to meet the purposes of this article.

§5B-2B-4. Preliminary and final approval of companies and projects -- meetings of authority.

(a) The authority shall establish standards for preliminary approval and final approval of eligible companies and their projects and propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine of this code.

(b) The authority shall consult with the tourism commission when establishing standards to ensure that standards established pursuant to this article and subsection (a) of this section do not conflict.

(c) At the written request of the tourism commission, the authority may, by resolution, give its preliminary approval by designating an eligible company as a preliminarily approved company and preliminarily authorizing the undertaking of the tourism attraction project.

(d) After the adoption of the authority's preliminary approval, an agent designated by the tourism commission shall hold at least one public hearing to solicit public comments regarding the designation of an eligible company as a preliminarily approved company and the preliminary authorization for the undertaking of a tourism attraction project. Notice of the public hearing shall be given in accordance with provisions of article three, chapter fifty-nine of this code.

(e) The authority shall review the report of the consultant prepared pursuant to the provisions of section three of this article, the recommendation of the tourism commission, the report prepared by the agent documenting all comments, both written and oral, received at the public hearing required by subsection (d) of this section, and other information that has been made available to the authority in order to assist the authority in determining whether the tourism attraction project will further the purposes of this article.

(f) The criteria for final approval of eligible companies and tourism attraction projects includes, but is not limited to, the criteria set forth in section five of this article.

(g) After a review of the consultant's report, the recommendation of the tourism commission and other information made available to the authority, the authority, by resolution, may give its final approval to the eligible company's application for a tourism attraction project and may grant to the eligible company the status of an approved company. The decision reached by the authority is final and no appeal may be granted.

(h) All meetings of the authority shall be held in accordance with provisions of article nine-a, chapter six of this code (Open Governmental Proceedings). The authority may, pursuant to the provisions of section four, article nine-a, chapter six of this code, hold closed sessions of its meetings to discuss matters exempt from the open meetings law and pertaining to an eligible company.

(i) When submitting a written request to the authority for consideration of preliminary approval of the eligible company and its tourism attraction project, the tourism commission shall base the request upon the information in the application and any written or oral communications with the eligible company.

(j) The tourism commission shall provide its recommendation based upon:

(1) The eligible company's satisfaction of the statutory requirements of this article;

(2) The findings of the consultant's report required by this article; and

(3) The application submitted to the tourism commission and written and oral communications with the eligible company.
§5B-2B-5. Agreement between authority and approved company.

(a) The authority, upon adoption of its final approval, may enter into with any approved company an agreement with respect to its tourism attraction project. The terms and provisions of each agreement shall include, but not be limited to:

(1) The amount of approved costs, which shall be determined by negotiations between the authority and the approved company;

(2) A date certain by which the approved company shall have completed the tourism attraction project. Upon request from any approved company that has received final approval prior to or after the fifteenth day of July, two thousand three, the authority shall grant an extension or change, which in no event may exceed three years from the date of final approval, to the completion date as specified in the agreement of an approved company. 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 be provided by an independent certified public accountant acceptable to the authority; and

(3) The following provisions:

(A) The term shall be ten years from the later of:

(B) The date of the final approval of the project; or

(C) The completion date specified in the agreement, if this completion date is within three years of the date of the final approval of the project;

(b) Within forty-five days after the end of each fiscal year of the approved company, during the term of the agreement, the approved company shall supply the authority with reports and certifications the authority may request demonstrating to the satisfaction of the authority that the approved company is in compliance with the provisions of this article. Based upon a review of these materials and other documents that may be made available, the authority shall then certify to the tax commissioner that the approved company is in compliance with this section; and

(c) The approved company may not receive a sales tax refund as prescribed by section six of this article with respect to any fiscal year if:

(1) In any year following the fourth year of the agreement, the tourism attraction project fails to attract at least twenty-five percent of its visitors from among persons who are not residents of the state; or

(2) In any year following the first year of the agreement, the tourism attraction project is not operating and open to the public for at least one hundred days.

(d) The agreement is not transferable or assignable by the approved company without the written consent of the authority.

§5B-2B-6. Tourism attraction project credit against sales tax.

(a) In consideration of the execution of the agreement as defined in section five of this article and notwithstanding any other provision of law to the contrary, the approved company as defined in section two of this article, excluding its lessees, may be granted a sales tax refund from the West Virginia sales tax imposed by the provisions of article fifteen, chapter eleven of this code on the sales generated by or arising at the tourism attraction project as defined in section two of this article.

The approved company has obligation to refund or otherwise return any amount of this sales tax refund to the persons from whom the sales tax was collected. The term of the agreement granting the sales tax refund shall be ten years, and this time period shall commence on the later of:

(1) The final approval for purposes of the inducements; or

(2) The completion date specified in the agreement.

(b) Any sales tax collected by an approved company as defined in section two of this article on sales transacted after final approval but prior to the commencement of the term of the agreement, including any approved company that has received final approval prior to the fifteenth day of July, two thousand three, is refundable as if collected after the commencement of the term and applied to the approved company's first fiscal year's refund after activation of the term and without changing the term.

(c) The total sales tax refund allowed to the approved company over the term of the agreement in subsection (1) of this section shall be equal to the lesser of the total amount of the sales tax liability of the approved company and its lessees or twenty-five percent of the approved costs. The sales tax refund shall accrue over the term of the agreement in an annual amount equal to two and one-half percent of the approved cost: Provided, That notwithstanding the two and one-half percent limitation, any unused inducements from a previous year may be carried forward to any succeeding year during the term of the agreement until the entire twenty-five percent of the approved costs have been received through sales tax refunds. By the first day of October of each year the tax commissioner shall certify to the authority and the tourism commission for the preceding fiscal year for all approved companies for which sales tax returns were filed with respect to a tourism attraction project, the sales tax liability of the approved companies receiving inducements under this section and article fifteen, chapter eleven of this code, and their lessees, and the amount of the sales tax refunds issued pursuant to subsection (1) of this section.

(d) Interest may not be allowed or paid on any refund made under the provisions of this section.

(e) The tax commissioner may propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code and require the filing of forms designed by the tax commissioner to reflect the intent of this section and article.

§5B-2B-7. West Virginia tourism development act sales tax credit program application.

(a) An eligible company wishing to participate in the West Virginia tourism development act sales tax credit program must file three copies of an application with the tourism commission.

(b) The following information and materials shall be submitted as a part of the application:

(1) Eligible company name, address, phone and telefax numbers, contact person and federal employer tax identification number;

(2) Location of tourism attraction project;

(3) Form of organization of eligible company;

(4) Previous participation of eligible company in West Virginia tax incentive programs;

(5) Ownership of eligible company;

(6) Bankruptcy history of eligible company;

(7) Governmental denial, suspension or revocation of licenses of eligible company;

(8) Attorney for eligible company, including address, phone and telefax numbers;

(9) Contact person of bank for eligible company, including address, phone and telefax numbers and contact person;

(10) Accountant for eligible company, including address, phone and telefax numbers;

(11) Tourism attraction project description;

(12) Eligible company ownership or leasing of tourism attraction project;

(13) Estimated tourism attraction project costs;

(14) Proposed sources of financing tourism attraction project;

(15) Contractor for tourism attraction project, including address, phone and telefax numbers and contact person;

(16) The total number of jobs projected upon completion of and within two years after completion of the tourism attraction project;

(17) Five year history of attendance at tourism attraction project for an expansion;

(18) Five year attendance projections for tourism attraction project;

(19) Months of the year during which the tourism attraction project is open;

(20) Marketing plans and media type to be used for the tourism attraction project, including five year proposed advertising budget;

(21) Value of West Virginia tangible property before and after completion of the tourism attraction project;

(22) Ten year estimate of tourism attraction project payroll;

(23) Estimated federal and state income tax liability of eligible company for first three fiscal years of the eligible company after commencement of operations of the tourism attraction project;

(24) If the tourism attraction project is an expansion, federal and state income tax liability of eligible company for the past three fiscal years;

(25) Ten year estimated revenue of eligible company subject to West Virginia sales tax from the tourism attraction project;

(26) Ten year estimated additional revenue the tourism attraction project will generate to the community; and

(27) A completed incentive disclosure statement if required by the tourism commission or authority.

NOTE: The purpose of this bill is to create the West Virginia tourism development act to induce the creation or expansion of tourism attraction projects. It also provides a tourism attraction project credit against sales tax.

This article is new; therefore, strike-throughs and underscoring have been omitted.

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