SB 0063

CHAPTER 301

SB 63-FN-A-LOCAL - FINAL VERSION

AN ACT relative to establishing community reinvestment and opportunity zones and granting business tax credits for investments in projects in such zones.

SPONSORS: Sen. O'Hearn, Dist 12; Sen. Odell, Dist 8; Sen. Clegg, Dist 14; Sen. Foster, Dist 13; Sen. Gallus, Dist 1; Sen. Peterson, Dist 11; Rep. J. Gilbert, Rock 83; Rep. Rodeschin, Sull 20; Rep. Mears, Coos 3; Rep. E. Smith, Ches 26; Rep. Mercer, Hills 59

This bill establishes procedures for designation of community reinvestment and opportunity ("CROP") zones by the department of resources and economic development and grants the commissioner of resources and economic development rulemaking authority to develop and implement such procedures as are necessary for the establishment of a 4-year CROP zones pilot program. The bill also establishes credits against the business profits tax and the business enterprise tax for investments within CROP zones determined to be eligible by the commissioner of resources and economic development. The bill grants the commissioner of revenue administration the authority to adopt rules relative to the documentation of tax credits claimed.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to establishing community reinvestment and opportunity zones and granting business tax credits for investments in projects in such zones.

Be it Enacted by the Senate and House of Representatives in General Court convened:

301:1 Purpose. The general court finds that establishment of community reinvestment and opportunity ("CROP") zones and tax incentives for CROP zone projects which are available to qualifying new and existing businesses in the state are effective ways to meet certain state economic objectives, such as stimulating economic redevelopment, expanding the industrial base, creating new jobs, reducing sprawl, and increasing tax revenue. Therefore, to further these economic objectives, the general court in this act authorizes the commissioner of resources and economic development to adopt rules relating to the establishment of CROP zones, providing for the designation of CROP zones, eligibility for projects within the CROP zones, tax incentives for such projects, reporting requirements, and other provisions as may be necessary for the establishment and operation of a 4-year CROP zones pilot program.

301:2 New Chapters; CROP Zones. Amend RSA by inserting after chapter 162-M the following new chapter:

162-N:1 Definition. In this chapter, "community reinvestment and opportunity zone" or "CROP zone" means a zone designated by the commissioner of resources and economic development as a CROP zone in accordance with the provisions of this chapter.

I. CROP zone shall mean a zone with a single continuous boundary, comprised of one or more contiguous census tracts or blocks or smaller recognizable physical areas, designated in accordance with the rules adopted under RSA 162-N:8, and certified by the commissioner of resources and economic development as being a brownfields site as defined under RSA 147-F, or having at least one of the following characteristics:

(a) The population of the municipality or municipalities in which the zone is located, according to the most recent federal census, decreased during the preceding 20 years prior to the census.

(b) At least 51 percent of the households in the census tract or tracts in which the zone is located have incomes of less than 80 percent of the median income of households in the state.

(c) At least 20 percent of households in the census tract or tracts in which the zone is located have a median income below the federal poverty level.

(B) Vacant land, or structures previously used for industrial, commercial, or retail purposes but currently not so used due to demolition, age, obsolescence, deterioration, relocation of the former occupant's operations, or cessation of operation resulting from unfavorable economic conditions either generally or in a specific economic sector; and

(2) Certification of the zone as a CROP zone would likely result in the reduction of the rate of vacant or demolished structures or the rate of tax delinquency in the zone.

II. CROP zones shall be designated by the commissioner of resources and economic development only upon petition by the local governing body, as defined by RSA 672:6 and also including town councils. The commissioner of resources and economic development shall certify that the proposed zone meets the criteria required in paragraph I.

III. The commissioner of resources and economic development is authorized to establish an advisory board for each CROP zone established under this chapter.

162-N:3 Eligibility Requirements For Business Tax Credits. No CROP zone credits shall be allowed to any taxpayer unless the taxpayer's project receives written certification from the commissioner of resources and economic development that it will expand the commercial or industrial base of the state, will create new jobs in the state, and will meet at least one of the following criteria:

I. The project is the creation of a facility which is determined to the satisfaction of the commissioner of resources and economic development to entail significant investment in real and/or personal property other than inventory at a location where the business has not previously operated.

II. The project will make expenditures to add buildings, machinery, equipment, or other materials, except inventory, to a facility that equal at least 50 percent of the market value of the facility prior to such expenditures, as determined for the purposes of local property taxation.

III. The project will make expenditures to alter or repair a facility that equal at least 50 percent of the market value of the facility prior to such expenditures, as determined for the purposes of local property taxation.

IV. The project will make expenditures to alter or repair a vacant facility equal to at least 20 percent of the market value of the facility prior to such expenditures, as determined for the purposes of local property taxation.

I. The commissioner of resources and economic development shall enter into a written agreement with each taxpayer; such agreement to be certified by the commissioner of resources and economic development under this section. The agreement shall contain provisions as the commissioner of resources and economic development determines to be in the public interest, which shall include but not be limited to:

(d) A precise definition of the location of the CROP zone facility eligible for the credit.

(e) The maximum amount of compensation as defined in RSA 77-E:1, V, that will be allowed as a CROP zone tax credit.

(f) The maximum amount of interest paid, as defined in RSA 77-E:1, XI, that will be allowed as a CROP zone tax credit.

(g) Recapture of tax credits utilized in the event that the agreement is breached.

II. A certified copy of each agreement signed by the commissioner of resources and economic development and the taxpayer shall be provided to the commissioner of revenue administration.

162-N:5 Limit on Total CROP Zone Credits. The commissioner of resources and economic development shall not exceed the following limits for the sum of all CROP zone credit agreements entered into in any fiscal year:

I. For the purpose of determining the CROP zone credit, the amount of compensation shall be the lesser of the following:

(a) The maximum credit amount as stated in the agreement as specified by RSA 162-N:4, I(e);

(b) The increase in the total compensation in this state as determined by subtracting the total compensation in this state in the year prior to the CROP zone agreements from the total compensation in this state the year the credit is used; or

II. For the purpose of determining the CROP zone credit, the amount of interest shall be the lesser of the following:

(a) The maximum credit amount as stated in the agreement as specified by RSA 162-N:4, I(f); or

162-N:7 CROP Zone Tax Credits. CROP zone tax credit shall be determined by adding together the amount determined in RSA 162-N:5, I and RSA 162-N:5, II and multiplying the result by the current tax rate under RSA 77-E. The CROP zone tax credit shall be available to the taxpayer only for tax liabilities arising during the 5 consecutive tax periods following the signing of the agreement. CROP zone tax credits shall be applied against tax due under RSA 77-E. For the purpose of the credit allowed under RSA 77-A:5, X, the CROP zone credit shall be considered taxes paid under RSA 77-E. CROP zone tax credits shall not be transferable.

162-N:8 Rules. The commissioner of revenue administration shall adopt rules, under RSA 541-A, relative to documentation of the credits claimed under this chapter. The commissioner of resources and economic development shall, in consultation with the executive director of the community development finance authority, adopt rules, under RSA 541-A, relative to the administration and implementation of this chapter. The rules adopted by the commissioner of resources and economic development shall include provisions relative to:

II. Criteria for and approval of projects in CROP zones, including jobs per dollar thresholds.

III. Fees which the commissioner of resources and economic development may charge to each applicant to cover the reasonable costs of the state's administration of the applicant's participation in the CROP zone.

162-N:9 Reports. The commissioner of resources and economic development shall furnish a report annually to the governor, the senate president, the speaker of the house, and the fiscal committee which describes the results of the CROP zone program, and shall include any recommendations for further legislation regarding CROP zones.

301:3 New Paragraph; Business Profits Tax; CROP Zone Tax Credit. Amend RSA 77-A:5 by inserting after paragraph XI the following new paragraph:

301:4 New Section; Business Enterprise Tax; CROP Zone Tax Credit. Amend RSA 77-E by inserting after section 3 the following new section:

77-E:3-a Credit. The CROP zone tax credit, as computed in RSA 162-N:7, shall be allowed against the tax due under this chapter.

301:5 Authority to Enter CROP Zone Credit Agreements. The commissioner of resources and economic development shall not enter into a CROP zone credit agreement with any taxpayer after June 30, 2007.