Senate Bill No. 344
(By Senator Blatnik)
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[Introduced February 15, 1994; referred to the Committee
on Finance.]
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A BILL to amend chapter eight of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article thirty-three-a,
relating to taxation; the "Tax Increment Financing Act";
legislative findings and policy; definitions; powers and
authorities; creation of tax increment districts and
approval of project plans; determination of tax increment
and tax increment base; allocation of positive tax
increments; termination of tax increment districts;
financing of project costs; promulgation of rules;
comprehensive reports; and severability.
Be it enacted by the Legislature of West Virginia:
That chapter eight of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article thirty-three-a,
to read as follows:
ARTICLE 33A. TAX INCREMENT FINANCING ACT.
§8-33A-1. Short title.
This article shall be known and may be cited as the "Tax
Increment Financing Act."
§8-33A-2. Legislative findings and policy.
(a) Legislative findings. -- The Legislature finds and
declares as follows:
(1) The Legislature previously found in the enactment of the
urban renewal authority law in article eighteen, chapter sixteen
of this code that, among other things, there exists in urban
communities in this state areas which have become blighted
because of:
(A) The unsafe, unsanitary, inadequate or overcrowded
condition of the dwellings in the area;
(B) Inadequate planning of the area or excessive land
coverage by the buildings thereon;
(C) The lack of proper light and air and open space;
(D) The defective design and arrangement of the buildings;
(E) Faulty street or lot layout; or
(F) Economically or socially undesirable land uses.
(2) Despite the efforts exerted under the urban renewal
authority law the conditions found in these areas by the
Legislature still exist.
(3) The authorization of tax increment financing will
provide an alternative method for use by authorities in pursuing
redevelopment efforts under the urban renewal authority law and
other applicable laws.
(b) Purpose. -- It is found and declared that, in order to
maintain the public health, safety, morals and welfare of the
people of this state generally, and to increase their commerce,
welfare and prosperity, and in order to further remedy the
conditions found to exist in this state as declared in the urban
renewal authority law, it is essential to provide new employment
opportunities to prevent, arrest and alleviate blighted, decayed
and substandard areas in municipalities, to increase the tax base
and to improve the general economy of this state. It is the
purpose of this article to provide an additional and alternative
means to finance public facilities and residential, commercial
and industrial development and revitalization, all to the public
benefit and good, in the manner provided in this article.
§8-33A-3. Definitions.
The following words and phrases when used in this article
have the meanings given to them in this section unless the
context clearly indicates otherwise:
(a) "Authority" means a slum clearance and redevelopment
authority or a redevelopment authority authorized under the
provisions of article eighteen, chapter sixteen of this code.
(b) "Finance officer" means the legally authorized agent of
a municipality or board of education responsible by law for
receipt and disbursement of the revenues of the municipality or
school district.
(c) "Governing body" means the legislative body of a
municipality authorized by law to levy taxes. The term includesthe county board of education of a school district authorized by
law to levy taxes.
(d) "Industrial or commercial development project" means a
project approved pursuant to the industrial and commercial
development bond act in article two-c, chapter thirteen of this
code.
(e) "Issuing authority" means the urban renewal authority,
municipal authority or redevelopment authority that issues tax
increment bonds or notes in accordance with section nine of this
article.
(f) "Municipal authority" means a municipal authority
organized pursuant to the provisions of chapter eight of this
code.
(g) "Municipality" means a municipal corporation as defined
in section two, article one, chapter eight of this code.
(h) "Project" means the undertakings and activities of an
authority in a tax increment district for the elimination and
prevention of the development or spread of blight, which may
include property acquisition, clearance, redevelopment,
rehabilitation or conservation in a tax increment district, or a
combination or part thereof in accordance with a project plan.
(i) "Project costs" means any expenditures made or estimated
to be made or monetary obligations incurred or estimated to be
incurred which are listed in a project plan as costs of public
works or improvements or residential, commercial or industrial
development or revitalization within a tax increment district,plus any costs incidental thereto. Project costs include, but
are not limited to:
(1) Capital costs, including the actual costs of the
construction of public works or improvements, or residential,
commercial or industrial development or revitalization, new
buildings, structures and fixtures; the demolition, alteration,
remodeling, repair or reconstruction of existing buildings,
structures and fixtures; the acquisition, upgrade or
rehabilitation of machinery and equipment; and the acquisition,
clearing and grading of land. Capital costs also include the
actual cost of the construction, rehabilitation or repair of
publicly owned infrastructure improvements located outside the
boundaries of a tax increment district which are of direct
benefit to a project.
(2) Financing costs, including all costs of issuance of tax
increment bonds or notes, reserve funds for tax increment bonds
or notes, all interest paid to holders of evidences of
indebtedness issued to pay for project costs, and any premium
paid over the principal amount thereof because of the redemption
of such obligations prior to maturity.
(3) Real property assembly costs, meaning any deficit
incurred resulting from the sale or lease as lessor by the
authority of real property within a tax increment district for
consideration which is less than its cost to the authority.
(4) Professional service costs, including those costs
incurred for architectural, planning, engineering and legaladvice and services.
(5) Administrative costs, including reasonable charges for
the time spent by employees of a municipality or an authority in
connection with the implementation of a project plan.
(6) Relocation costs.
(7) Organizational costs, including the costs of conducting
environmental impact and other studies and the costs of informing
the public with respect to the creation of tax increment
districts and the implementation of project plans.
(8) Costs which are found to be necessary or convenient to
the creation of tax increment districts or the implementation of
project plans or for the reimbursement of prior expenditures made
for any of the costs under this definition.
(j) "Project plan" means the properly approved plan for the
development, or redevelopment of a tax increment district
including all properly approved amendments to the plan.
(k) "Redevelopment area" means any area, whether improved or
unimproved, which a planning commission may find to be blighted
because of the existence of the conditions enumerated in urban
renewal authority law, so as to require redevelopment under the
provisions of the urban renewal authority law or this article.
(l) "Redevelopment authority" means an authority created
pursuant to the urban renewal authority law.
(m) "School district" means county boards of education.
(n) "Tax increment" means generally, the incremental tax
revenues, determined with reference to the tax increment base,resulting from the increase in property values or from the
increase in commercial activity as a result of a project. More
specifically, the term includes the following:
(1) The incremental tax revenues resulting from an increase
in the total market value of taxable real property situated in a
tax increment district and an increase in the business use and
occupancy of such taxable real property. This paragraph applies
only to ad valorem taxes on real property and tax imposed by the
governing body in the use and occupancy of real property.
(2) The payment in lieu of taxes assigned to or agreed to be
paid by governmental entities or nonprofit organizations with
property situated or otherwise assignable to a tax increment
district. Whether all or only a portion of this payment is to be
considered part of the tax increment shall be determined at the
time the tax increment district is created.
(3) The incremental tax revenues resulting from an increase
in total taxable sales and rentals of tangible personal property
and in the rendition of taxable services by vendors located in a
tax increment district. This paragraph applies only to a sales
tax levied by a governing body.
(4) The incremental tax revenues resulting from an increase
in total gross receipts or gross or net profits or income
realized by persons or entities from business conducted in a tax
increment district.
(o) "Tax increment base" means one or more of the following,
as appropriate:
(1) The aggregate market value of all taxable real property
located within a tax increment district on the date the district
is created.
(2) In a district where the governing body has levied a tax
on the business use and occupancy of real estate, the average
aggregate market value of real property located within the
district and used or occupied for business purposes during the
last available twelve month period preceding the date of creation
of the district.
(3) In a district where the governing body has levied a
sales tax, the total amount of taxable sales, rentals and
services subject to the sales tax of the state and occurring
within the district during the last calendar year or the last
available twelve month period preceding the date of creation of
the district.
(4) In a district where the governing body has levied a
mercantile license tax, business privilege tax, net profits tax
or similar tax for the privilege of engaging in business within
the district, the total amount of taxable gross receipts, net
income or net profits, as the case may be, realized by taxpayers
at locations within the district during their last taxable period
which ended before the date of creation of the district.
(p) "Tax increment district" or "district" means a
contiguous geographic area within a redevelopment area defined
and created by resolution or ordinance of the governing body of
the municipality creating the district in accordance with sectionsix of this article.
(q) "Tax increment fund" or "fund" means a fund into which
are paid all tax increments and into which are deposited all
revenues from the sale of tax increment finance bonds or notes,
revenues from the sale of any property acquired as part of a
project plan or revenues to be used in the district, and from
which money is disbursed to pay project costs for the district or
to satisfy claims of holders of tax increment bonds or notes
issued for the district.
(r) "Taxable property" means the term includes only taxable
property located within a tax increment district.
§8-33A-4. Powers of authorities.
In addition to all other powers conferred by law, an
authority may exercise any powers necessary and convenient to
carry out the purposes of this article, including the power to:
(1) Propose tax increment districts and the boundaries
thereof.
(2) Cause project plans to be prepared and to implement the
provisions and effectuate the purposes of the plans.
(3) Issue tax increment bonds and notes.
(4) Deposit moneys into the tax increment fund of any tax
increment district.
(5) Enter into any contracts or agreements, including
agreements with bondholders, as determined to be necessary or
convenient to implement the provisions and effectuate the
purposes of project plans. The contracts or agreements mayinclude conditions, restrictions or covenants which either run
with the land or otherwise regulate the use of the land.
§8-33A-5. Creation of tax increment districts and approval of
project plans.
(a) General rule. -- A tax increment shall be created in the
following manner:
(1) The authority shall make a formal presentation to the
governing bodies of all municipalities and school districts which
levy property taxes within the area in which the proposed tax
increment district will be located. The presentation shall
include a description of the proposed boundaries of the district,
the tentative plans for the development or redevelopment of the
district, and an estimate of the general impact of the proposed
district on property values and tax revenues.
(2) Each affected municipality and school district shall
designate a representative to meet with the authority to discuss
the project plan and the tax increment financing, and shall
notify the authority of its designated representative. The
authority shall meet with the designated representative to
discuss the creation of the district, the boundaries of the
district, development within the district, the tax increment that
the municipality and school district would contribute to the tax
increment fund, the exclusion of particular parcels of property
from the district, tax collection for the district and any other
matter relevant to the proposed tax increment district.
(3) The authority shall recommend the boundaries of a taxincrement district to be created and shall submit the
recommendation to the governing body of the municipality which
will create the district.
(4) The authority shall prepare a project plan for each tax
increment district and submit the plan to the governing body of
the municipality which will create the district and to the
governing body of any other municipality or school district that
levies property taxes within the boundaries of the proposed
district. The plan shall include the following:
(A) A statement listing the kind, number and location of all
proposed public works or improvements and/or all residential,
commercial or industrial development and revitalization
improvements.
(B) An economic feasibility study of the project and the
fiscal effects on the municipal tax base.
(C) A detailed list of estimated project costs.
(D) A description of the methods of financing all estimated
project costs and the time when related costs or monetary
obligations are to be incurred.
(E) A map showing existing uses and conditions of real
property in the district.
(F) A map showing proposed improvements and uses therein.
(G) Proposed changes of any zoning ordinance, master plan,
map building code or ordinance.
(H) A list of estimated nonproject costs.
(I) A statement of a proposed method for the relocation offamilies, persons and businesses to be temporarily or permanently
displaced from housing or commercial facilities in the project
area by implementation of the plan.
(5) The governing body of the municipality which will create
the tax increment district shall hold at least one public hearing
at which interested parties are afforded a reasonable opportunity
to express their views on the concept of tax increment financing,
on the proposed creation of a tax increment district and its
proposed boundaries, on the proposed adoption of a project plan
for the district and the benefits to the municipality. Notice of
the hearing shall be published in accordance with the terms of
the open governmental proceedings provisions of article nine-a,
chapter six of this code, and that notice shall be provided by
first class mail, postage prepaid, to the governing body of any
municipality or school district that levies property taxes within
the boundaries of a proposed tax increment district. This notice
shall be provided not less than thirty days before the date of
the hearing.
(6) In order to create a district and adopt a project plan,
the governing body of the municipality which will create the tax
increment district shall adopt, not earlier than three weeks
after the public hearing described in paragraph (5) has been
held, a resolution or ordinance which:
(A) Describes the boundaries of a tax increment district
with sufficient definiteness to identify with ordinary and
reasonable certainty the territory included. The governing bodyshall take care that the boundaries include only those whole
units of property assessed for general property tax purposes.
(B) Creates the district as of a given date. A tax
increment district may exist for a period not to exceed twenty
years, unless an amendment is made to the project plan under
paragraph (5).
(C) Assigns a name to the district for identification
purposes.
(D) Contains findings that, among other things:
(i) The district is a contiguous geographic area within a
redevelopment area.
(ii) The improvement of the area is likely to enhance
significantly the value of substantially all of the other real
property in the district. It is not necessary to identify the
specific parcels meeting this criterion.
(iii) The aggregate value of equalized taxable property of
the district, plus all existing tax increment districts, does not
exceed ten percent of the total value of equalized taxable
property within the municipality.
(iv) The area comprising the district as a whole has not
been subject to adequate growth and development through
investment by private enterprise or would not reasonably be
anticipated to be adequately developed or further developed
without the adoption of the plan.
(v) A feasible method exists for the compensation of
individuals, families and small businesses that will be displacedby the project and for their relocation to decent, safe and
sanitary dwelling accommodations within their means, without
undue hardship to such individuals, families and businesses.
(vi) The project plan conforms to the municipal or county
master plan, if any.
(vii) The project plan will afford maximum opportunity,
consistent with the sound needs of the community as a whole, for
the rehabilitation or redevelopment of the tax increment district
by private enterprise.
(viii) The district is a blighted area containing
characteristics of blight as described in the urban renewal
authority law and the project to be undertaken is necessary to
eliminate such conditions of blight.
(7) The governing body of a municipality or school district
that levies property taxes within the boundaries of a proposed
tax increment district shall, by ordinance or resolution, agree
to participate or opt not to participate in whole or in part in
the tax increment district. The ordinance or resolution shall be
adopted and a copy thereof delivered to the governing body of the
municipality which will create the district on or before the date
on which the public hearing described in paragraph (5) is held.
(8) The governing body of the municipality creating the tax
increment district may at any time, subject to the provisions of
subsection (c), section six of this article, adopt an amendment
to a project plan which shall be subject to approval in the same
manner as the original project plan.
(b) Class I municipalities. -- In Class I municipalities, a
tax increment district shall be permitted only in a certified
redevelopment area created pursuant to the urban renewal
authority law.
§8-33A-6. Determination of tax increment and tax increment base.
(a) Tax increment base. -- Upon the creation of a tax
increment district or the adoption of any amendment to a project
plan subject to subsection (c) of this section, the tax increment
base of the district shall be determined.
(b) Determination of base. -- Upon application in writing by
the finance office of the municipality which created the
district, the assessor for that municipality shall determine,
according to its best judgment from all sources available to it,
the full aggregate market value of the taxable property in the
district as of the date on which the district was created. The
finance officer of the municipality may determine the sales tax
base or any other tax increment base contemplated hereby in any
manner which is reasonable and prudent and meets sound business
practice.
(c) Amendment of plan. -- If the original project plan for
any district is amended and the amendment includes additional
project costs for which tax increments may be received by the
municipality, to the extent reimbursement of previously incurred
costs and debt has been made as described in subsection (a),
section seven of this article. The tax increment base for the
district shall be redetermined pursuant to subsection (b) of thissection, within ninety days following the effective date of the
amendment. The tax increment base, as redetermined under this
subsection, is effective for the purposes of this article only if
it exceeds the original tax increment base.
(b) Rebuttable presumption. -- It is a rebuttable
presumption that any property within a tax increment district
acquired or leased as lessee by the authority within one year
immediately preceding the date of the creation of the district
was so acquired or leased in contemplation of the creation of the
district. The presumption may be rebutted by the authority with
proof that the property was leased or acquired primarily for a
purpose other than to reduce the tax increment base. If the
presumption is not rebutted, in determining the tax increment
base of the district,but for no other purpose, the taxable status
of the property shall be determined as though such lease or
acquisition had not occurred.
(e) Identification. -- The assessor for the municipality
which created the district shall identify upon the assessment
roll, returned and examined in accordance with law, those parcels
of property which are within each existing tax increment
district, specifying the name of each district. A similar
notation shall also appear on the tax roll made by the finance
officer for the municipality creating the district and by the
finance officer for any municipality or school district that
participates in a tax increment district.
§8-33A-7. Allocation of positive tax increments.
(a) Allocation of positive tax increments. -- Positive tax
increments of a tax increment district shall be allocated to the
issuing authority for each year from the date when the district
is created until that time, after the completion of all
improvements specified in the plan or amendments thereto, when
the issuing authority has received aggregate tax increments of
the district in an amount equal to the aggregate of all
expenditures made or monetary obligations incurred for project
costs for the district, including the payment of tax increment
bonds or notes.
(b) Collection and payment of tax increments. --
Notwithstanding any other provision of law, the finance officer
for the municipality which created the district and the finance
officer for any municipality or school district which
participates in a tax increment district shall, on the next
settlement date provided by law, pay over to the issuing
authority, out of all such taxes which have been collected, that
portion which represents the tax increment allocable to the
issuing authority.
(c) Deposit of tax increments. -- All tax increments
received by the issuing authority shall be deposited into the tax
increment fund for the district. Each finance officer may also
transmit, for deposit into the fund, additional moneys pursuant
to an appropriation by the governing body the officer represents
or from any other source. Moneys shall be paid out of the fund
by the issuing authority in accordance with subsection (h),section nine of this article. To the extent that any moneys
remain in the fund after all foregoing costs have been paid or
satisfied, the remaining moneys shall be distributed on an equal
basis to all municipalities and school districts which
participated in the tax increment district.
§8-33A-8. Termination of tax increment districts.
The existence of a tax increment district shall terminate
when either of the following occurs:
(1) Positive tax increments are no longer allocable to a
district under section seven-a of this article;
(2) The governing body of the municipality which created the
district, by resolution, dissolves the district. The district
may not be dissolved as long as tax, increment bonds or notes for
the district remain outstanding.
§8-33A-9. Financing of project costs.
(a) Payment of costs. -- Payment of project costs may be
made by any of the following methods or combination thereof:
(1) Payment out of the municipality's general funds;
(2) Payment out of the proceeds of the sale of tax increment
bonds or notes;
(3) Payment as otherwise permitted by law.
(b) Tax increment bonds and notes. --
(1) For the purpose of paving project costs or of refunding
bonds or notes issued under this section, an authority may issue
tax increment bonds or notes payable from positive tax
increments.
(2) A redevelopment authority may enter into an agreement
with an industrial and commercial development authority or a
municipal authority whereby the redevelopment authority appoints
or authorizes the industrial and commercial development authority
or the municipal authority to act as the agent of the
redevelopment authority in the issuance of tax increment bonds
and notes. If such an agreement is entered into, the industrial
and commercial development authority or municipal authority shall
have the power to issue tax increment bonds and notes in
accordance with the provisions of this section. Nothing
contained in this paragraph shall be construed to limit the
powers otherwise granted to an industrial and commercial
development authority by this article.
(c) Resolution. -- Tax increment bonds or notes shall be
authorized by resolution of the issuing authority. The
resolution shall state the name of the tax increment district,
the amount of bonds or notes authorized and the interest rate or
rates to be borne by the bonds or notes. The resolution may
prescribe the terms, form and content of the bonds or notes and
other matters as the authority deems useful.
(d) Amount and term. -- Tax increment bonds or notes may not
be issued in an amount exceeding the aggregate project costs.
The bonds or notes shall mature over a period not exceeding
twenty years from the date of issue. The principal and interest
on the bonds and notes may be payable at any time and at any
place. The bonds or notes may be payable to bearer or may beregistered as to the principal or principal and interest. The
bonds or notes may be in any denominations. The bonds or notes
may be sold at public or private sale.
(e) Exempt from taxation. -- The tax increment bonds issued
hereunder and the income therefrom shall at all times be free
from taxation for state or local purposes under any law of this
state. The interest on the bonds or notes may or may not be
excluded from gross income for purposes of federal income
taxation.
(f) Liability; presumption. -- Neither the members of an
issuing authority nor any person executing the bonds shall be
liable personally on any such bonds by reason of the issuance
thereof. Any bond reciting in substance that it has been issued
to accomplish the public purposes of this article shall be
conclusively deemed, in any suit, action or proceeding involving
the validity or enforceability of such bond or security therefor,
to have been issued for such purpose.
(g) Negotiable instruments. -- The tax increment bonds
issued in this article are hereby declared to have all the
qualities of negotiable instruments under the law merchant and
the negotiable instruments law of this state.
(h) Payment of bonds and notes. -- Tax increment bonds or
notes are payable in whole or in part from the tax increment
fund. To the extent that bonds or notes are payable in whole,
each bond or note shall contain recitals as are necessary to show
that it is only so payable and that it does not constitute anindebtedness of any municipality or school district or a charge
against the general taxing power thereof. The issuing authority
shall irrevocably pledge all or a part of the tax increment fund
to the payment of the bonds or notes. The fund or designated
part thereof may thereafter be used only for the payment of the
bonds or notes and interest until they have been fully paid, and
a holder of the bonds or notes or of any coupons appertaining
thereto shall have a lien against the fund for payment of the
bonds or notes and interest, and may either at law or in equity
protect and enforce the lien. Notwithstanding the foregoing, a
municipality or school district may guarantee the payment of tax
increment bonds or notes. In such instance, appropriate notation
of such shall be reflected in the recitals of each bond or note.
(i) Security of bonds or notes. -- To increase the security
and marketability of tax increment bonds or notes, the issuing
authority may:
(1) Create a lien for the benefit of the bondholders upon
any public improvements or public works financed thereby or the
revenues therefrom;
(2) Make covenants and do any and all acts not inconsistent
with law as may be necessary or convenient or desirable in order
to additionally secure bonds or notes or tend to make the bonds
or notes more marketable according to the best judgment of the
authority or the governing body of the municipality which created
the district.
(j) Additional payment method. -- For the purpose of payingproject costs, the governing body of the municipality may also
allow payments to be made in full at the time such costs accrue,
thus allowing the project to be all or partially funded on a pay-
as-you-go basis.
(k) Applicability of other laws. --
Tax increment bonds and notes issued under this article are
subject to the provisions of section thirty-three, article one,
chapter thirteen, exempting bonds from taxation by the state of
by any political subdivision thereof.
§8-33A-10. Rules.
The state tax commissioner may, in the manner provided by
law, promulgate the rules necessary to carry out this article.
Rules so promulgated shall not apply to districts created prior
to the effective date of such rules.
§8-33A-11. Comprehensive report.
The commerce, labor and environmental resources department,
in cooperation with other state agencies and local governments,
shall make a comprehensive report to the governor and the
Legislature every two years commencing on the first day of
January, one thousand nine hundred ninety-five, as to the social,
economic, and financial effects and impact of tax increment
financing projects.
NOTE: The purpose of this bill is to provide for tax
increment districts to provide an alternative method to pursue
redevelopment efforts under the slum clearance and redevelopment
law and other applicable laws.
Article 33A is new; therefore, strike-throughs and
underscoring have been omitted.