SB139 SUB1 eng
Senate Bill No. 139
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
[Originating in the Committee on Finance;
reported February 27, 2004.]
A BILL to amend the code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §5B-2E-1, §5B-2E-2,
§5B-2E-3, §5B-2E-4, §5B-2E-5, §5B-2E-6, §5B-2E-7, §5B-2E-8,
§5B-2E-9, §5B-2E-10 and §5B-2E-11; and to amend said code by
adding thereto a new section, designated §11-15-34, all
relating to the West Virginia tourism development act;
establishing a tourism development project tax credit;
specifying short titles; specifying legislative findings and
purpose; defining terms; specifying additional powers and
duties of the development office; specifying activity that
qualifies for the credit; requiring filing of application for
tax credit as condition precedent to claiming tax credit;
specifying procedures for evaluation and approval of project;
providing for hiring of consultants; specifying criteria for evaluating projects; specifying determination of amount of
allowable tax credits; specifying application of tax credits
against sales tax collected; termination of act; providing for
forfeiture of unused tax credits; and specifying information
required to be annually submitted to the state development
Be it enacted by the Legislature of West Virginia:
That the code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §5B-2E-1, §5B-2E-2,
§5B-2E-3, §5B-2E-4, §5B-2E-5, §5B-2E-6, §5B-2E-7, §5B-2E-8, §5B-2E-
9, §5B-2E-10 and §5B-2E-11; and that said code be amended by adding
thereto a new section, designated §11-15-34, all to read as
CHAPTER 5B. ECONOMIC DEVELOPMENT ACT OF 1985.
ARTICLE 2E. WEST VIRGINIA TOURISM DEVELOPMENT ACT.
§5B-2E-1. West Virginia Tourism Development Act.
This article shall be referred to as the "West Virginia
Tourism Development Act."
§5B-2E-2. Legislative findings.
The Legislature finds and declares that the general welfare
and material well-being of the citizens of the state depend, in
large measure, upon the development of tourism development projects
in the state and that it is in the best interest of the state to
induce the creation of new or the expansion of existing tourism development projects within the state in order to advance the
public purposes of relieving unemployment by preserving and
creating jobs and by preserving and creating new and greater
sources of revenues for the support of public services provided by
the state; and that the inducement for the creation or expansion of
tourism development projects should be in the form of a tax credit
to be applied to consumer sales and service taxes collected on the
gross receipts generated directly from the operations of the new or
expanded tourism development projects, in lieu of tax credits on
income that are largely deferred for a number of years after start
up of a major tourism development project; and all of which new
and/or expanded tourism developments are of paramount importance to
the state and its economy and for the state's contribution to the
As used in this article, unless the context clearly indicates
(a) "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.
(b) "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.
(c) "Approved costs" means:
(1) Included costs:
(A) Obligations incurred for labor and to vendors,
contractors, subcontractors, builders, suppliers, delivery persons
and material persons in connection with the acquisition,
construction, equipping, installation and/or expansion of a tourism
(B) The costs of acquiring real property or rights in real
property and any costs incidental thereto;
(C) 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, installation and/or expansion
of a tourism development project which is not paid by the vendor,
supplier, delivery person, contractor or otherwise provided;
(D) 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, installation and/or expansion of a tourism
(E) All costs required to be paid under the terms of any
contract for the acquisition, construction, equipping, installation
and/or expansion of a tourism development project;
(F) 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
(G) All other costs comparable with those described in this
(2) Excluded costs: -- The term "approved costs" does not
include any portion of the cost required to be paid for the
acquisition, construction, equipping and installation and/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 the tax credit provided by article
thirteen-q, chapter eleven of this code.
(d) "Council" means the council for community and economic
development as provided in article two of this chapter.
(e) "Development office" means the West Virginia development
office as provided in article two of this chapter.
(f) "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.
(g) "Eligible company" means any corporation, limited
liability company, partnership, registered 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 council. An eligible company
may operate or intend to operate directly or indirectly through a
(h) "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
available for lease and other retail stores shall occupy no more
than forty percent of the total gross area available for lease.
(i) "Final approval" means the action taken by the council
qualifying the eligible company to receive the tax credits provided
in this article.
(j) "Preliminary approval" means the action taken by the
development office conditioning final approval by the council.
(k) "State agency" means any state administrative body,
agency, department, division, board, commission or institution
exercising any function of the state that is not an independent
municipal corporation or political subdivision.
(l) "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 attraction shall not include any of the
(1) Lodging facilities, unless:
(A) The facilities constitute a portion of a tourism
development project and represent less than fifty percent of the
total approved cost of the tourism development project, or the
facilities are to be located on recreational property owned or
leased by the state or federal government and the facilities have
received prior approval from the appropriate state or federal
(B) The facilities involve the restoration or rehabilitation of a structure that is listed individually in the National Register
of Historic Places or are 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
(C) The facilities involve 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;
(2) Facilities that are 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
(3) Recreational facilities that do 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.
(m) "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 and/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.
(n) "Tourism development project tax credit" means the tourism
development project tax credit allowed by section seven of this
§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 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 director 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 and provide for reasonable penalties for delinquent
payment of fees and charges.
§5B-2E-5. Tourism development 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 tax credit provided by this article
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 tourism development
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.
(c) Based upon a review of the application and additional documentation provided by the eligible company, if 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 development
office may grant a preliminary approval of the applicant and the
tourism development project.
(d) After preliminary approval by 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
(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) After reviewing and evaluating the project application and
the consultant's report or reports, the development office shall
decide whether to recommend the tourism development project to the
council for final approval.
(g) If the development office recommends the tourism
development project to the council, it shall submit the project
application, the consulting report or reports and other information
regarding the project to the council. After a review of the
materials, the council 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. The
decision by the development office and the council is final and no
appeal shall be granted.
§5B-2E-6. Agreement between development office and approved
The development office, upon grant of the council's final
approval, 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 sales tax credit, provided for in section seven of this
article. 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; 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. 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 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 subsection (b) 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
may 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-8. Forfeiture of unused tax credits; information required
to be submitted annually to development office;
transfer of tax credits to successors.
(a) The approved company shall forfeit the sales tax credit allowed by this article with respect to any calendar year if:
(1) In any year following the fourth calendar year of the
agreement, 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 of the agreement, 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
(b) Within forty-five days after the end of each calendar year
of the approved company, 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 department of tax and revenue that the approved company is in
compliance with this section.
(c) 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 council 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-10. Legislative review.
The development office shall report annually to the joint
commission on economic development by the first day of December of
each year on the number of applications received from eligible
companies as provided in this article, the status of each
application, the number of projects approved and the status of each
The West Virginia development act will terminate and expire on
the first day of January, two thousand seven.
CHAPTER 11. TAXATION.
ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.
§11-15-34. Tourism development project tax credit.
(a) There is allowed as a credit against the consumers sales
and service tax collected and required to be remitted pursuant to this article from the operation of an approved tourism development
project, the amount determined under section eight, article two-e,
chapter five-b of this code relating to the tourism development
project tax credit.
(b) The tax commissioner may propose legislative rules in
accordance with article three, chapter twenty-nine-a of this code
designed to require the filing of forms designed by the tax
commissioner to reflect the intent of this section and article
two-e, chapter five-b of this code.