H. B. 2563


(By Delegates Kiss and Browning)

[Introduced February 20, 1995; referred to the

Committee on Finance.]





A BILL to amend chapter seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article eleven-b; and to amend and reenact section eleven, article nine-a, chapter eighteen of said code, all relating to the tax increment financing act; legislative findings and purpose; definitions; tax increment financing procedures; copies of tax increment financing ordinance provided to assessor, sheriff and director of finance; issuance of obligations for project costs; terminating tax increment financing; security for obligations issued; severability and clarifying the term assessed value.

Be it enacted by the Legislature of West Virginia:
That chapter seven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article eleven-b; and to amend and reenact section eleven, article nine-a, chapter eighteen to read as follows:
CHAPTER 7. COUNTY COMMISSIONS AND OFFICERS.

ARTICLE 11B. WEST VIRGINIA TAX INCREMENT FINANCING ACT.
§7-11B-1. Short title.
This article may be known and cited as "The Tax Increment Financing Act."
§7-11B-2. Findings and legislative purpose.
It is hereby found and declared that public improvements and publicly promoted private improvements, in any development area which result in the increase in the value of property located in the development area, result in increased employment within the development area or serve a public purpose of each taxing district possessing the authority to impose ad valorem taxes from such taxes in the development area. The increment in revenues from the taxes derived by each taxing district from the development area is found and declared to be one of the benefits derived by each taxing unit from any economic development project.
§7-11B-3. Definitions.
As used in this article, the term or phrase:
(a) "Agency" means a county or municipal development agency established by section one, article twelve, chapter seven of this code.
(b) "Base assessed value" means the taxable assessed value of real property within a development project area as shown upon the land book records of the assessor on the first day of July of the year preceding the effective date of the ordinance creating the development project area.
(c) "Current assessed value" means the annual taxable assessed value of real property in a development project area as recorded on the land book records of the assessor.
(d) "Development project area" means an area to be developed by one or more agencies as a tax increment financing project, which may include one or more counties, municipalities or combination thereof, and which area may not exist for more than thirty years from the date that the project area is designated.
(e) "Person" means any individual, corporation, firm, partnership, joint venture, private association, trust or other private entity.
(f) "Project," "development project" or "tax increment financing development project" means any capital project undertaken in a development project area in accordance with a tax increment financing plan: Provided, That the term shall include only those improvements which are permanent and immovable. "Project" does not include performance of any governmental service by a county or municipal government, or any property to be sold or to be affixed to or consumed in the production of property for sale, or any housing facility to be rented or used as a permanent residence. The term "project" also does not include any structure or improvement which will cause a decline in the assessed value on adjacent property or which will cause depletion of any contiguous mineral interest which results in a decrease of the property tax collections attributable to the mineral interest if the decrease is equal to or greater than twenty-five percent of the increased property tax collections attributable to the improvement or structure.
(g) "Tax increment" means the amount of tax attributable to the amount by which the current assessed value of real property exceeds the base assessed value, less the portion of tax allocated to the state.
(h) "Taxing unit" means a municipal corporation, a county commission or a county board of education.
§7-11B-4. Tax increment financing procedures.
(a) Upon receipt of an agency's proposed development project area and tax increment financing plan, or when there is no such agency upon its own initiative, the county commission of any county may adopt tax increment financing by passing an ordinance designating a development project area and providing that ad valorem property taxes on real property in the development project area shall be assessed, collected and allocated by the taxing units in the following manner for so long as any obligations secured by the tax increment financing fund, hereinafter authorized, are outstanding and unpaid:
(1) The assessor shall record in the land book both the base assessed value and the current assessed value and the current assessed value of the real property in the development project area.
(2) Ad valorem taxes upon real property which are attributable to the lower of the base assessed value or current assessed value of real estate located in a development project area shall be allocated to the taxing unit in the same manner as applicable in the year preceding adoption of the tax increment financing ordinance.
(3) Ad valorem taxes upon real property which are attributable to the increased value between the current assessed value of any parcel of real estate and the base assessed value of the real estate shall be allocated and paid into a special fund entitled the "Tax Increment Financing Fund" to pay the principal and interest on obligations issued to finance the development project costs. Any taxing unit having a project or any portion thereof within its borders shall allocate its tax increment to the fund.
(4) In no event shall tax increment financing apply to any levies other than the regular levies provided for in article eight, chapter eleven of this code. Excess levies will continue to be calculated at an appraised value of one hundred percent of market value and assessed at sixty percent of market value.
(b) Before adopting a tax increment financing ordinance, the county commission in every county in which the development project is located shall hold a public hearing on the need for tax increment financing in the county. Notice of the public hearing shall be published once each week for three successive weeks immediately preceding the public hearing as a Class III legal advertisement in accordance with section two, article three, chapter fifty-nine of this code. The notice shall include the time, place and purpose of the public hearing, define tax increment, financing, indicate the proposed boundaries of the development project area and proposed obligations to be issued to finance the development project area costs. All parties who appear at the hearing shall be afforded an opportunity to express their views on the proposal to undertake and finance the project.
(c) Proceeds from obligations issued under this article may be used only to pay for costs of projects to foster economic development, including infrastructure and other public improvements prerequisite to private improvements, when the projects and improvements would not reasonably be expected to occur without tax increment financing. There shall be a finding by any taxing unit which incurs debt or expends funds from a tax increment financing fund that a development project is not reasonably expected to occur without the use of tax increment financing. The acquisition of the project site and legal and other expenses related thereto may be included as a cost of the development project.
(d) Prior to the implementation of any tax increment financing ordinance all taxing units contributing to the tax increment financing fund shall enter into intergovernmental agreement in accordance with the provisions of article twenty-two, chapter eight of this code.
§7-11B-5. Copies of tax increment financing ordinance to
assessor, sheriff and director of finance.


The county commission shall transmit to the assessor, sheriff and director of finance a copy of the tax increment financing ordinance; a description of all real property located within the development project area which shall include each parcel or parcels contained within the development area; a map indicating the boundaries of the development project area; and a description of the manner of collecting and allocating property taxes pursuant to this article.
§7-11B-6. Issuance of obligations for project costs.
(a) Any county which adopts tax increment financing, or any municipality in such county in which all or any portion of a project area will be located, may issue obligations secured by the tax increment financing fund to finance the development project costs only if approved by three fifths of the voters when the bond creates a debt of the taxing unit, or by a simple majority when the bond does not create such a debt. There shall be an affirmative vote of the voters in all taxing units in which a development project is located: Provided, That no election is required in a municipality in which a project development area is located if the municipality is within a county holding an election unless a debt of the municipality will be created. All obligations issued pursuant to this section shall be subject to the requirements and limitations of article one or two-c, chapter thirteen, or article twelve, chapter seven, or any other relevant statutory provisions of this code. The ordinance authorizing the issuance of obligations may pledge all or any part of the funds deposited in the tax increment financing fund for the payment of the development project costs and any obligations to be issued to finance them. The funds may include net revenues resulting from any revenue bonds issued for a project undertaken pursuant to this article.
(b) Any revenues in the tax increment financing fund which are not used for the payment of project costs or pledged as security for the obligations issued shall be deemed "surplus funds" and at the end of the tax year shall be paid into the general funds of the taxing units in proportion to their respective contributions to the fund.
§7-11B-7. Terminating tax increment financing.
(a) Upon the retirement of all obligations secured by the tax increment financing fund, the county commission shall pass an ordinance to dissolve the tax increment financing fund and to terminate the existence of a development project area. When the fund is dissolved, any and all obligations shall be paid into the general fund of the county and municipalities in proportion to their respective contributions to the fund.
(b) Upon dissolving the tax increment financing fund, real property shall be assessed and taxes collected and allocated in the same manner as applicable in the year preceding the adoption of the tax increment financing ordinance.
§7-11B-8. Security for repayment of obligations for project
costs.


Where title to a development project, development project area or part of a development project area is owned by a person, the person shall deliver to the taxing unit a promissory note payable to the taxing unit in the amount and on the same terms as the obligations for the project costs which note shall be secured by a deed of trust on the development project area and other security as the taxing unit may require.
§7-11B-9. Severability.
If any provision of this article or the application thereof to any person or circumstance is held unconstitutional or otherwise invalid, such unconstitutionality or invalidity shall not affect, impair or invalidate other provisions or applications of the article and to this end the provisions of this article are declared to be severable.
CHAPTER 18. EDUCATION.

ARTICLE 9A. PUBLIC SCHOOL SUPPORT.
§18-9A-11. Computation of local share; appraisal and assessment
of property.


(a) For the fiscal year beginning on the first day of July, one thousand nine hundred ninety-three, and thereafter, on the basis of each county's certificates of valuation as to all classes of property as determined and published by the assessors pursuant to section six, article three, chapter eleven of this code for the next ensuing fiscal year in reliance upon the assessed values annually developed by each county assessor pursuant to the provisions of article one-c and article three, chapter eleven of this code, the state board shall for each county compute by application of the levies for general current expense purposes, as defined in section two of this article, the amount of revenue which such levies would produce if levied upon one hundred percent of the assessed value of each of the several classes of property contained in the report or revised report of such value, made to it by the tax commissioner as follows:
(1) The state board shall first take ninety-five percent of the amount ascertained by applying these rates to the total assessed public utility valuation in each classification of property in the county.
(2) The state board shall then apply these rates to the assessed taxable value of other property in each classification in the county as determined by the tax commissioner and shall deduct therefrom five percent as an allowance for the usual losses in collections due to discounts, exonerations, delinquencies and the like. All of the amount so determined shall be added to the ninety-five percent of public utility taxes computed as provided above, and this total shall be further reduced by the amount due each county assessor's office pursuant to the provisions of section eight, article one-c, chapter eleven of this code, and this amount shall be the local share of the particular county.
As to any estimations or preliminary computations of local share that may be required prior to the report to the Legislature by the tax commissioner, the state board of education shall use the most recent projections or estimations that may be available from the tax department for such purpose.
(b) Whenever in any year a county assessor or a county commission shall fail or refuse to comply with the provisions of this section in setting the valuations of property for assessment purposes in any class or classes of property in the county, the state tax commissioner shall review the valuations for assessment purposes made by the county assessor and the county commission and shall direct the county assessor and the county commission to make such corrections in the valuations as may be necessary so that they shall comply with the requirements of chapter eleven of this code and this section, and the tax commissioner shall enter the county and fix the assessments at the required ratios. Refusal of the assessor or the county commission to make such corrections shall constitute ground for removal from office.
(c) For the purposes of any computation made in accordance with the provisions of this section, in any taxing unit in which tax increment financing is in effect pursuant to the provisions of article eleven-b, chapter seven of this code, the assessed value of the development project area shall be the base assessed value as defined in section two, article eleven-b, chapter seven of this code.



NOTE: The purpose of the bill is to allow counties to fund public improvements through the method of tax increment financing.


Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

Article 11B is new; therefore strike-throughs and underscoring have been omitted.