Date Requested:February 09, 2011
Time Requested:11:47 AM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2172 Introduced HB2760
CBD Subject: MUNICIPAL ECON. OPPORTUNITY DEVELOPMENT DIST. ACT
FUND(S)
General Revenue Fund, Economic Opportunity Development District Fund
Sources of Revenue
General Fund,Other Fund see above
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The stated purpose of this bill is to revise the Municipal Economic Opportunity Development District Act generally. The bill enlarges the types of municipal corporations that may use sales tax increment financing to finance certain economic development projects to any Class I, Class II and Class III city and any Class IV town or village. The bill includes mining operations in the definition of remediation and includes remediation of former coal mining sites as a permissible development expenditure for a project. The bill changes the standard by which the maximum amounts of reserves that may be established in the financing of a project are measured. The bill recommends that the development office consider whether the economic development that a project enables is large enough to require that it contain mixed use development consisting of a housing component with at least ten percent of housing units in the district allocated for affordable housing when determining whether there is a pressing need for the project. The bill defines “affordable housing.” The bill allows the development office to reduce the minimum amount of local sales tax revenues that would be deposited into the state’s general revenue fund in certain circumstances. The bill provides that the maximum repayment schedule of all notes, bonds or other instruments issued to fund projects is thirty years.
    
    According to our interpretation, this bill extends the potential creation of Municipal Economic Opportunity Development Districts to Class III cities and Class IV towns or villages. The State Tax Department does not possess the necessary information to determine how many new Districts would be created upon passage of this bill. However, since no project may be approved unless the amount of all proposed development expenditures must result in capital investment of more than $50 million, the number of qualifying projects may be small. The Consumers Sales and Service Tax and Use Tax currently collected within a District would be re-designated as a Special District Excise Tax for deposit into a special fund, for funding the development. The General Revenue Fund would retain sales tax proceeds from base year activity plus up to 20 percent of sales tax related to the increments. Remaining incremental sales tax collections would be available for the development projects. The additional increment portion retained by the General Revenue Fund would help compensate the State for any displaced retail trade activities associated with the creation of the special district. Therefore, any potential revenue impact on the State General Revenue Fund should be minimal.
    
    Additional administrative costs associated with passage of this bill would likely be incurred by the State Tax Department, the Development Office, and the State Treasurer’s Office. However, absent information on the number and size of any new Municipal Economic Opportunity Development Districts that would be created, the additional administrative costs cannot be accurately determined.
    
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    According to our interpretation, this bill extends the potential creation of Municipal Economic Opportunity Development Districts to Class III cities and Class IV towns or villages. The State Tax Department does not possess the necessary information to determine how many new Districts would be created upon passage of this bill. However, since no project may be approved unless the amount of all proposed development expenditures must result in capital investment of more than $50 million, the number of qualifying projects may be small. The Consumers Sales and Service Tax and Use Tax currently collected within a District would be re-designated as a Special District Excise Tax for deposit into a special fund, for funding the development. The General Revenue Fund would retain sales tax proceeds from base year activity plus up to 20 percent of sales tax related to the increments. Remaining incremental sales tax collections would be available for the development projects. The additional increment portion retained by the General Revenue Fund would help compensate the State for any displaced retail trade activities associated with the creation of the special district. Therefore, any potential revenue impact on the State General Revenue Fund should be minimal.
    
    Additional administrative costs associated with passage of this bill would likely be incurred by the State Tax Department, the Development Office, and the State Treasure’s Office. However, absent information on the number and size of any new Municipal Economic Opportunity Development Districts that would be created, the additional administrative costs cannot be accurately determined.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov