COMMITTEE SUBSTITUTE
FOR
H. B. 2309
(By Mr. Speaker, (Mr. Thompson) and Delegate Armstead)
[By Request of the Executive]
(Originating in the Committee on Finance)
[February 23, 2007]
A BILL to amend and reenact §5B-2E-3, §5B-2E-4, §5B-2E-5, §5B-2E-6,
§5B-2E-7, §5B-2E-8, §5B-2E-9 and §5B-2E-11 of the Code of West
Virginia, 1931, as amended; and to amend said code by adding
thereto a new section, designated §5B-2E-7a, all relating to
tourism development act tax credits; providing definitions;
making certain entities ineligible for the credit; modifying
total amount of tourism development project tax credit
available on or near reclaimed surface mining operation;
setting certain deadlines; modifying total amount of tourism
development project tax credit available during calendar
years; creating a tourism development expansion project
credit; implementing a one million five hundred thousand
dollar tax credit maximum availability for tourism development
expansion projects; authorizing the promulgation of rules to
establish a tourism development expansion project application
process; and establishing a termination date for action on
applications for tourism development projects and validity of such projects not previously approved.
Be it enacted by the Legislature of West Virginia:
That §5B-2E-3, §5B-2E-4, §5B-2E-5, §5B-2E-6, §5B-2E-7,
§5B-2E-8, §5B-2E-9 and §5B-2E-11 of the Code of West Virginia,
1931, as amended, be amended and reenacted; and that said code be
amended by adding thereto a new section, designated §5B-2E-7a, all
to read as follows:
ARTICLE 2E. WEST VIRGINIA TOURISM DEVELOPMENT ACT.
§5B-2E-3. Definitions.
As used in this article, unless the context clearly indicates
otherwise:
(1) "Agreement" means a tourism development agreement entered
into, pursuant to section six of this article, between the
development office and an approved company with respect to a
tourism development project.
(2) "Approved company" means any eligible company approved by
the development office pursuant to section five of this article
seeking to undertake a
tourism development project.
(3) "Approved costs" means:
(a)
Included costs:
(i) Obligations incurred for labor and to vendors,
contractors, subcontractors, builders, suppliers, delivery persons
and material persons in connection with the acquisition,
construction, equipping
or installation
or expansion of a
tourism
development project;
(ii) The costs of acquiring real property or rights in real
property and any costs incidental thereto;
(iii) 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,
or installation
or expansion
of a
tourism development project which is not paid by the vendor,
supplier, delivery person, contractor or otherwise provided;
(iv) All costs of architectural and engineering services,
including, but not limited to: Estimates, plans and
specifications, preliminary investigations and supervision of
construction, installation, as well as for the performance of all
the duties required by or consequent to the acquisition,
construction, equipping
or installation
or expansion of a
tourism
development project;
(v) All costs required to be paid under the terms of any
contract for the acquisition, construction, equipping
or
installation
or expansion of a
tourism development project;
(vi) All costs required for the installation of utilities,
including, but not limited to: Water, sewer, sewer treatment, gas,
electricity, communications 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; and
(vii) All other costs comparable with those described in this
subdivision;
(b)
Excluded costs. -- The term "approved costs" does not
include any portion of the cost required to be paid for the
acquisition, construction, equipping
and or installation
or
expansion of a
tourism development project that is financed with
governmental incentives, grants or bonds or for which the eligible
taxpayer elects to qualify for other tax credits, including, but
not limited to, those provided by article thirteen-q, chapter
eleven of this code.
(4) "Base tax revenue amount" means the average monthly amount
of consumer sales and service tax collected by an approved company,
based on the twelve-month period ending immediately prior to the
opening of a new tourism development project for business
or a
tourism development expansion project, as certified by the State
Tax Commissioner.
(5) "Development office" means the West Virginia Development
Office as provided in article two of this chapter.
(6) "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.
(7) "Eligible company" means any corporation, limited
liability company, partnership, limited liability partnership, sole
proprietorship, business trust, joint venture or any other entity
operating or intending to operate a
tourism development project,
whether owned or leased, within the state that meets the standards required by the development office. An eligible company may
operate or intend to operate directly or indirectly through a
lessee.
(8) "Ineligible company" means any West Virginia pari-mutuel
racing facility licensed to operate multiple video lottery machines
as authorized by article twenty-two-a, chapter twenty-nine of this
code or any limited lottery retailer holding a valid license issued
under article seven, chapter sixty of this code.
(8) (9) "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 development project, or a major
convention facility and which provides a variety of entertainment
and leisure options that contain at least one major theme
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
shall occupy a minimum of sixty percent of total gross area, as
defined in the application, available for lease and other retail
stores shall occupy no more than forty percent of the total gross
area available for lease.
(9) (10) "Final approval" means the action taken by the
executive director of the development office qualifying the eligible company to receive the tax credits provided in this
article.
(10) (11) "Preliminary approval" means the action taken by the
executive director of the development office conditioning final
approval.
(12) "Project" means a tourism development project and/or a
tourism development expansion project administered in accordance
with the provisions of this article.
(11) (13) "State agency" means any state administrative body,
agency, department, division, board, commission or institution
exercising any function of the state that is not a municipal
corporation or political subdivision.
(12) (14) "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
development project or
tourism attraction does not include any of
the following:
(A) Lodging facility, unless:
(i) The facility constitutes a portion of a
tourism
development project and represents less than fifty percent of the
total approved cost of the
tourism development project, or the
facility is to be located on recreational property owned or leased
by the state or federal government and the facility has received
prior approval from the appropriate state or federal agency;
(ii) The facility involves the restoration or rehabilitation of a structure that is listed individually in the national register
of historic places or is located in a national register historic
district and certified by the state historic preservation officer
as contributing to the historic significance of the district and
the rehabilitation or restoration project has been approved in
advance by the state historic preservation officer; or
(iii) The facility involves the construction, reconstruction,
restoration, rehabilitation or upgrade of a full-service lodging
facility or the reconstruction, restoration, rehabilitation or
upgrade of an existing structure into a full-service lodging
facility having not less than five hundred guest rooms, with
construction, reconstruction, restoration, rehabilitation or
upgrade costs exceeding ten million dollars;
(B) A facility that is primarily devoted to the retail sale of
goods, other than an entertainment destination center, a West
Virginia crafts and products center or a
tourism development
project where the sale of goods is a secondary and subordinate
component of the project; and
(C) A recreational facility that does 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
new
tourism development project or existing attraction.
(13)(15) "Tourism development 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, installation or expansion 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, but
does not include a project that will be substantially owned,
managed or controlled by an eligible company with an existing
project located within a ten mile radius, or by a person or persons
related by a family relationship, including spouses, parents,
children or siblings, to an owner of an eligible company with an
existing project located within a ten mile radius.
(16) "Tourism development expansion project" means the
acquisition, including the acquisition of real estate by a
leasehold interest with a minimum term of ten years; the
construction and installation of improvements to facilities
necessary or desirable for the expansion of an existing 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 extension to the boundaries of 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.
(14) (17) "Tourism development project tax credit" means the
tourism development project tax credit allowed by section seven of
this article.
(18) "Tourism development expansion project tax credit" means
the tourism development expansion project tax credit allowed by
section seven-a of this article.
§5B-2E-4. Additional powers and duties of the development office.
The development office has the following powers and duties, in
addition to those set forth in this case, necessary to carry out
the purposes of this article including, but not limited to:
(1) Make preliminary and final approvals of all applications
for tourism development projects and enter into agreements
pertaining to tourism development projects with approved companies;
(2) Employ fiscal consultants, attorneys, appraisers and other
agents as the executive director of the development office finds
necessary or convenient for the preparation and administration of
agreements and documents necessary or incidental to any tourism
development project; and
(3) Impose and collect fees and charges in connection with any
transaction.
§5B-2E-5. Project application; evaluation standards; consulting
services; preliminary and final approval of projects.
(a) Each eligible company that seeks to qualify a tourism
development project for the tourism development project tax credit provided by section seven of this article, or for the tourism
development expansion project tax credit provided by section seven-
a of this article, as applicable, must file a written application
for approval of the project with the development office.
(b) With respect to each eligible company making an
application to the development office for the a tourism development
project tax credit or a tourism development expansion project tax
credit, the development office shall make inquiries and request
documentation, including a completed application, from the
applicant that shall include: A description and location of the
project; capital and other anticipated expenditures for the project
and the sources of funding therefor; the anticipated employment and
wages to be paid at the project; business plans that indicate the
average number of days in a year in which the project will be in
operation and open to the public; and the anticipated revenues and
expenses generated by the project. The executive director of the
development office shall act to grant or not to grant any
preliminary approval of an application within forty-five days
following its receipt or receipt of additional information
requested by the development office, whichever is later.
(c) Based upon a review of the application and additional
documentation provided by the eligible company, if the executive
director of the development office determines that the applicant
and the tourism development project may reasonably satisfy the
criteria for final approval set forth in subsection (d) of this
section, then the executive director of the development office may grant a preliminary approval of the applicant and the tourism
development project.
(d) After preliminary approval by the executive director of
the development office, the development office shall engage the
services of a competent consulting firm or firms to analyze the
data made available by the applicant and to collect and analyze
additional information necessary to determine that, in the
independent judgment of the consultant, the tourism development
project:
(1) Likely will attract at least twenty-five percent of its
visitors from outside of this state;
(2) Will have approved costs in excess of one million dollars;
(3) Will have a significant and positive economic impact on
the state considering, among other factors, the extent to which the
tourism development project will compete directly with or
complement existing tourism attractions in the state and the amount
by which increased tax revenues from the tourism development
project will exceed the credit given to the approved company;
(4) Will produce sufficient revenues and public demand to be
operating and open to the public for a minimum of one hundred days
per year; and
(5) Will provide additional employment opportunities in the
state.
(e) The applicant shall pay to the development office, prior
to the engagement of the services of a competent consulting firm or
firms pursuant to the provisions of subsection (d) of this section, for the cost of the consulting report or reports and shall
cooperate with the consulting firm or firms to provide all of the
data that the consultant considers necessary or convenient to make
its determination under subsection (d) of this section.
(f) The executive director of the development office, within
thirty sixty days following receipt of the consultant's final,
written report or reports, shall review, in light of the
consultant's report or reports, the reasonableness of the project's
budget and timetable for completion and, in addition to the
criteria for final approval set forth in subsection (d) of this
section, the following criteria:
(1) The quality of the proposed tourism development project
and how it addresses economic problems in the area in which the
tourism development project will be located;
(2) Whether there is substantial and credible evidence that
the tourism development project is likely to be started and
completed in a timely fashion;
(3) Whether the tourism development project will, directly or
indirectly, improve the opportunities in the area where the tourism
development project will be located for the successful
establishment or expansion of other industrial or commercial
businesses;
(4) Whether the tourism development project will, directly or
indirectly, assist in the creation of additional employment
opportunities in the area where the tourism development project
will be located;
(5) Whether the project helps to diversify the local economy;
(6) Whether the project is consistent with the goals of this
article;
(7) Whether the project is economically and fiscally sound
using recognized business standards of finance and accounting; and
(8) The ability of the eligible company to carry out the
tourism development project.
(g) The development office may establish other criteria for
consideration when approving the applications.
(h) The executive director of the development office may give
its final approval to the applicant's application for a tourism
development project and may grant to the applicant the status of an
approved company. Provided, That the total amount of tourism
development project tax credits for all approved companies may not
exceed one million five hundred thousand dollars each calendar year
The executive director of the development office shall act to
approve or not approve any application within sixty days following
the receipt of the consultant's final, written report or reports or
the receipt of any additional information requested by the
development office, whichever is later. The decision by the
executive director of the development office is final.
§5B-2E-6. Agreement between development office and approved
company.
The development office, upon final approval of an application
by the executive director, may enter into an agreement with any
approved company with respect to its tourism development project. The terms and provisions of each agreement shall include, but not
be limited to:
(1) The amount of approved costs of the project that qualify
for the a sales tax credit, as provided in section seven or section
seven-a of this article, as applicable. 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 the
development office by an independent certified public accountant
acceptable to the development office; and
(2) A date certain by which the approved company shall have
completed and opened the tourism development project to the public.
Any approved company that has received final approval may request
and the development office may grant an extension or change,
however, in no event shall the extension exceed three years from
the date of final approval to the completion date specified in the
agreement with the approved company.
§5B-2E-7. Amount of credit allowed for tourism development
project; approved projects.
(a) Approved companies are allowed a credit against the West
Virginia consumers sales and service tax imposed by article
fifteen, chapter eleven of this code and collected by the approved
company on sales generated by or arising from the operations of the
tourism development project: Provided, That if the consumers sales
and service tax collected by the approved company is not solely
attributable to sales resulting from the operation of the new
tourism development project, the credit shall only be applied against that portion of the consumers sales and service tax
collected in excess of the base tax revenue amount. The amount of
this credit is determined and applied as provided in this article.
(b) The maximum amount of credit allowable in this article is
equal to twenty-five percent of the approved company's approved
costs as provided in the agreement: Provided, That, if the tourism
development project site is located within the permit area or an
adjacent area of a surface mining operation, as these terms are
defined in section three, article three, chapter twenty-two of this
code, from which all coal has been or will be extracted prior to
the commencement of the tourism development project, the maximum
amount of credit allowable is equal to fifty thirty-five percent of
the approved company's approved costs as provided in the agreement.
(c) The amount of credit allowable must be taken over a
ten-year period, at the rate of one tenth of the amount thereof per
taxable year, beginning with the taxable year in which the project
is opened to the public, unless the approved company elects to
delay the beginning of the ten-year period until the next
succeeding taxable year. This election shall be made in the first
consumers sales and service tax return filed by the approved
company following the date the project is opened to the public.
Once made, the election cannot be revoked.
(d) The amount determined under subsection (b) of this section
is allowed as a credit against the consumers sales and service tax
collected by the approved company on sales from the operation of
the tourism development project. The amount determined under said subsection may be used as a credit against taxes required to be
remitted on the approved company's monthly consumers sales and
service tax returns that are filed pursuant to section sixteen,
article fifteen, chapter eleven of this code. The approved company
shall claim the credit by reducing the amount of consumers sales
and service tax required to be remitted with its monthly consumers
sales and service tax returns by the amount of its aggregate annual
credit allowance until such time as the full current year annual
credit allowance has been claimed. Once the total credit claimed
for the tax year equals the approved company's aggregate annual
credit allowance no further reductions to its monthly consumers
sales and service tax returns will be permitted.
(e) If any credit remains after application of subsection (d)
of this section, the amount of credit is carried forward to each
ensuing tax year until used or until the expiration of the third
taxable year subsequent to the end of the initial ten-year credit
application period. If any unused credit remains after the
thirteenth year, that amount is forfeited. No carryback to a prior
taxable year is allowed for the amount of any unused portion of any
annual credit allowance.
§5B-2E-7a. Amount of credit allowed for tourism development
expansion project; approved projects.
(a) Approved companies are allowed a credit against the West
Virginia consumers sales and service tax imposed by article
fifteen, chapter eleven of this code and collected by the approved
company on sales generated by or arising from the operations of the tourism development expansion project: Provided, That the tourism
development expansion project tax credit allowed under this section
is separate and distinct from any credit allowed for a tourism
development project in accordance with the provisions of section
seven of this article: Provided, however, That if the consumers
sales and service tax collected by the approved company is not
solely attributable to sales resulting from the operation of the
tourism development expansion project, the credit shall only be
applied against that portion of the consumers sales and service tax
collected in excess of the base tax revenue amount. The amount of
this credit is determined and applied as provided in this article.
(b) The maximum amount of credit allowable in this article is
equal to twenty-five percent of the approved company's approved
costs as provided in the agreement: Provided, That, if the tourism
development expansion project site is located within the permit
area or an adjacent area of a surface mining operation, as these
terms are defined in section three, article three, chapter
twenty-two of this code, from which all coal has been or will be
extracted prior to the commencement of the tourism development
project, the maximum amount of credit allowable is equal to
thirty-five percent of the approved company's approved costs as
provided in the agreement.
(c) The amount of credit allowable must be taken over a
ten-year period, at the rate of one tenth of the amount thereof per
taxable year, beginning with the taxable year in which the project
is opened to the public, unless the approved company elects to delay the beginning of the ten-year period until the next
succeeding taxable year. This election shall be made in the first
consumers sales and service tax return filed by the approved
company following the date the project is opened to the public.
Once made, the election cannot be revoked.
(d) The amount determined under subsection (b) of this section
is allowed as a credit against the consumers sales and service tax
collected by the approved company on sales from the operation of
the tourism development expansion project. The amount determined
under said subsection may be used as a credit against taxes
required to be remitted on the approved company's monthly consumers
sales and service tax returns that are filed pursuant to section
sixteen, article fifteen, chapter eleven of this code. The
approved company shall claim the credit by reducing the amount of
consumers sales and service tax required to be remitted with its
monthly consumers sales and service tax returns by the amount of
its aggregate annual credit allowance until such time as the full
current year annual credit allowance has been claimed. Once the
total credit claimed for the tax year equals the approved company's
aggregate annual credit allowance no further reductions to its
monthly consumers sales and service tax returns will be permitted.
(e) If any credit remains after application of subsection (d)
of this section, the amount of credit is carried forward to each
ensuing tax year until used or until the expiration of the third
taxable year subsequent to the end of the initial ten-year credit
application period. If any unused credit remains after the thirteenth year, that amount is forfeited. No carryback to a prior
taxable year is allowed for the amount of any unused portion of any
annual credit allowance.
(f) The total amount of tourism development expansion project
tax credits for all approved companies pursuant to this section may
not exceed five million one million five hundred thousand dollars
each calendar year.
§5B-2E-8. Forfeiture of unused tax credits; credit recapture;
recapture tax imposed; information required to be
submitted annually to development office; transfer of
tax credits to successors.
(a) The approved company shall forfeit the tourism development
project tax credit allowed by section seven of this article, or the
tourism development expansion tax credit allowed by section seven-a
of this article, as applicable, with respect to any calendar year
and shall pay the recapture tax imposed by subsection (b) of this
section, if:
(1) In any year following the first calendar year the project
is open to the public, the tourism development project fails to
attract at least twenty-five percent of its visitors from among
persons who are not residents of the state;
(2) In any year following the first year the project is open
to the public, the tourism development project is not operating and
open to the public for at least one hundred days; or
(3) The approved company, is not in good standing with the state Tax Division, the workers' compensation commission or the
Bureau of Employment Programs as of the beginning of each calendar
year as of the beginning of each calendar year, has an outstanding
obligation to a Workers' Compensation Fund, as defined in article
two-c of chapter twenty-three of this code, an outstanding
obligation under the West Virginia Unemployment Compensation Act,
or an outstanding obligation under the West Virginia state tax and
revenue laws.
(b) In addition to the loss of credit allowed under this
article for the calendar year, any approved company or successor
eligible company that forfeits the tourism development project tax
credit or the tourism development expansion project credit under
the provisions of subsection (a) of this section, credit recapture
shall apply and the approved company, and successor eligible
companies, shall return to the state all previously claimed tourism
development project tax credit or tourism development expansion
project credit allowed by this article. An amended return shall be
filed with the State Tax Commissioner for the prior calendar year,
or calendar years, for which credit recapture is required, along
with interest, as provided in section seventeen, article ten,
chapter eleven of this code: Provided, That the approved company
and successor eligible companies who previously claimed the tourism
development project tax credit or the tourism development expansion
project credit allowed by this article are jointly and severally
liable for payment of any recapture tax subsequently imposed under
this section.
(c) Within forty-five days after the end of each calendar year
during the term of the agreement, the approved company shall supply
the development office with all reports and certifications the
development office requires demonstrating to the satisfaction of
the development office that the approved company is in compliance
with applicable provisions of law. Based upon a review of these
materials and other documents that are available, the development
office shall then certify to the Tax Commissioner that the approved
company is in compliance with this section.
(d) The tax credit allowed in this article is transferable,
subject to the written consent of the development office, to an
eligible successor company that continues to operate the approved
tourism development project.
§5B-2E-9. Promulgation of rules.
The executive director of the development office may
promulgate rules to implement the tourism development project
application approval process and to describe the criteria and
procedures it has established in connection therewith. These rules
are not subject to the provisions of chapter twenty-nine-a of this
code but shall be filed with the Secretary of State.
§5B-2E-11. Termination.
The development office may not accept any new project
application after the thirtieth day of June, two thousand seven
thirty-first day of December, two thousand thirteen, and all
applications submitted prior to the first day of July, two thousand
seven January, two thousand thirteen, that have not been previously approved or not approved, shall be deemed not approved and shall be
null and void as of the first day of July, two thousand seven
January, two thousand thirteen.
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