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Engrossed Version Senate Bill 570 History

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Key: Green = existing Code. Red = new code to be enacted


ENGROSSED

COMMITTEE SUBSTITUTE

FOR

SENATE BILL NO. 570
(By Senators Rowe, Bailey, Jenkins, White and Fanning)
____________
[Originating in the Committee on Economic Development;

reported February 26, 2003.]

____________
A BILL to amend chapter five-b of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article two-e; and to amend article fifteen, chapter eleven of said code by adding thereto a new section, designated section thirty-four, all relating to the West Virginia tourism destination economic development act; prescribing additional duties for the state development office; setting forth additional powers of the state development office; defining certain terms related to tourism destination development; setting forth legislative findings; providing for evaluation standards; providing for certain procedures in processing tourism destination development project applications; providing for consultation services related to project applications; providing the state development office and the council for community and economic development with authority to approve tourism destination development projects; creating a tourism destination development advisory board; providing for an effective and termination date; and providing tourism destination development project refund of the state sales tax.

Be it enacted by the Legislature of West Virginia:
That chapter five-b of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article two-e; and that article fifteen, chapter eleven of said code be amended by adding thereto a new section, designated section thirty-four, all to read as follows:
CHAPTER 5B ECONOMIC DEVELOPMENT ACT OF 1985.

ARTICLE 2E. WEST VIRGINIA TOURISM DESTINATION ECONOMIC DEVELOPMENT ACT.

§5B-2E-1. West Virginia tourism destination economic development act.

This article shall be referred to as the "West Virginia Tourism Destination Economic Development Act".
§5B-2E-2. Additional powers and duties of state development office.

(a) The West Virginia development office has the following additional powers and duties in addition to those set forth in this chapter.
(b) The state development office has the powers necessary to carry out the purposes of this section and the tourism destination economic development loan program including, but not limited to, the power to:
(1) Make preliminary approvals of all applications for tourism destination development projects and condition all agreements pertaining to tourism destination economic development program;
(2) Employ fiscal consultants, attorneys, appraisers and other agents on behalf of the development office whom the director finds necessary or convenient for the preparation and administration of agreements and documents necessary or incidental to any tourism destination 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-3. Definitions.
As used in this article, unless the context clearly indicates otherwise:
(a) "Advisory board" means the tourism destination development advisory board as provided in article two of this chapter;
(b) "Agreement" means a tourism destination development agreement entered into, pursuant to section nineteen of this article, on behalf of the development office and an approved company on or before on the thirtieth day of June, two thousand four, with respect to a tourism destination development project;
(c) "Approved company" means any eligible company approved by the development office pursuant to section five of this article seeking to undertake a tourism destination development project;
(d) "Approved costs" means:
(1) Obligations incurred for labor and to vendors, contractors, subcontractors, builders, suppliers, delivery persons and material persons in connection with the acquisition, construction, equipping and installation of a tourism attraction project;
(2) The costs of acquiring real property or rights in real property and any costs incidental thereto;
(3) 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 and installation of a tourism attraction project which is not paid by the vendor, supplier, delivery person, contractor or otherwise provided;
(4) All costs of architectural and engineering services, including, but not limited to: Estimates, plans and specifications, preliminary investigations and supervision of construction and installation, as well as for the performance of all the duties required by or consequent to the acquisition, construction, equipping and installation of a tourism destination development project;
(5) All costs required to be paid under the terms of any contract for the acquisition, construction, equipping and installation of a tourism destination development project;
(6) All costs required for the installation of utilities, including, but not limited to: Water, sewer, sewer treatment, gas, electricity and communications and including off-site construction of the facilities paid for by the approved company; and
(7) All other costs comparable with those described in this subsection;
(e) "Council" means the council for community and economic development as provided in article two of this chapter;
(f) "Development office" means the West Virginia development office as provided in article two of this chapter;
(g) "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;
(h) "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 destination 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;
(i) "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 destination development, an approved tourism destination development project or a major convention facility and which provides a variety of entertainment and leisure options that contain at least one major themed restaurant and at least three additional entertainment venues, including 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;
(j) "Final approval" means the action taken by the council authorizing the eligible company to receive inducements under the provisions of this article;
(k) "Inducements" means the West Virginia sales tax refund as prescribed in section thirty-four, article fifteen, chapter eleven of this code;
(l) "Preliminary approval" means the action taken by the development office conditioning final approval by the council;
(m)"State agency" means any state administrative body, agency, department, division or any board, commission, institution or division exercising any function of the state that is not an independent municipal corporation or political subdivision;
(n) "Tourism destination development project" means a cultural or historical site, a recreation area or facility, or entertainment facility, an area of natural phenomenon or scenic beauty, a West Virginia crafts and products center or an entertainment destination center; and 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 destination development; the construction and installation of improvements to facilities, construction and installation of a tourism destination development, including, but not limited to, surveys; installation of utilities, which may include water, sewer, sewage treatment, gas, electricity, site development costs 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 shall allow the approved company to attract persons.
§5B-2E-4. 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 destinations 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 destination developments within the state in order to advance the public purposes of relieving unemployment by preserving and creating jobs which would not exist if not for the inducements to be offered by the development office to approved companies 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 of the creation or expansion of tourism destination developments should be in the form of immediate tax relief from gross receipt sales taxes on initial receipts of the project, in lieu of tax credits on income which is largely deferred for a number of years after start up of a major project; and all of which new and expanded tourism destination developments are of paramount importance to the state and its economy and for the state's contribution to the national economy.
§5B-2E-5. Evaluation standards; tourism attraction project applications; consulting services; advisory board recommendations.

(a) The development office shall propose by legislative rule in accordance with article three, chapter twenty-nine-a of this code, standards for the making of applications for inducements to eligible companies and their tourism destination development projects.
(b) The development office shall ensure that standards established pursuant to subsection (a) of this section and subsection (a), section eighteen of this article do not conflict.
(c) With respect to each eligible company making an application to the development office for inducements, and with respect to the tourism destination development project described in the application, the development office shall make inquiries and request materials of the applicant which shall include marketing plans for the project that target individuals who are not residents of the state; a description and location of the project; capital and other anticipated expenditures for the project which indicate that the total cost of the project shall exceed five million dollars and the anticipated sources of funding therefor; the anticipated employment and wages to be paid at the project; business plans which 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.
(d) If the tourism destination development project is an entertainment destination center, the sales tax refund shall be dedicated to a public infrastructure purpose that shall relate to the tourism destination development project and shall be approved by the development office. The applicant shall submit the public infrastructure purpose with its application.
(e) Based upon a review of these materials, if the development office determines that the eligible company and the tourism destination development project may reasonably satisfy the criteria for final approval in subsection (f) of this section, then the development office may consider a preliminary approval of the eligible company and the tourism destination development project: Provided, That the development office shall not grant preliminary approval of a tourism destination development project which is to receive for its construction any substantial tax or other financial incentives payable out of state funds for the project, other than the sales tax refunds provided for in section thirty four, article fifteen, chapter eleven of this code.
(f) 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 eligible company and to collect and analyze additional information necessary to determine that, in the independent judgment of the consultant, the tourism destination development project:
(1) Likely will attract at least twenty-five percent of its visitors from persons who are not residents of the state;
(2) Will have costs in excess of five million dollars;
(3) Will have a significant and positive economic impact on the state considering among other factors, the extent to which the tourism destination development project will compete directly with or compliment existing tourism attractions in the state and the amount by which increased tax revenues from the tourism destination 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 not adversely affect existing employment in the state.
(g) The eligible company shall pay for the cost of the consulting report or reports and shall cooperate with the consulting firm or firms to provide all of the data which the consultant considers necessary or convenient to make its determination under subsection (d) of this section.
(h) After a review of relevant materials, the consulting report or reports, and completion of other inquiries, the advisory board shall decide whether to recommend to the council to grant final approval of the tourism destination development project.
§5B-2E-6. Preliminary and final approval of companies and projects; meetings of development office.

(a) The development office shall propose, by legislative rule in accordance with article three, chapter twenty-nine-a of this code standards for preliminary approval and final approval of eligible companies and their projects.
(b) The development office shall consult with the advisory board provided in section seven of this article to ensure that standards established by legislative rule are not in conflict with other related standards.
(c) The development office may, by resolution, give its preliminary approval by designating an eligible company as a preliminarily approved company and preliminarily authorizing the undertaking of the tourism destination development project.
(d) After the development office's preliminary approval, the development office shall hold at least one public hearing to solicit public comments regarding the designation of an eligible company as a preliminarily approved company and the preliminary authorization for the undertaking of a tourism destination development project. Notice of the public hearing shall be by Class II legal advertisement.
(e) The council shall review the report or reports of the consulting firm or firms prepared in accordance with subsection (f), section five of this article all comments, both written and oral, received at the public hearing required by this section, and other information that has been made available to the development office in order to assist the development office in determining whether the tourism destination development project will further the purposes of this article.
(f) The criteria for final approval of eligible companies and tourism destination development project projects shall include, but not limited to, the criteria set forth in subsection (f), section five of this article.
(g) The development office shall submit the consulting report or reports and other such information regarding the tourism destination development project to the council. After a review of said materials, the council may give its final approval to the eligible company's application for a tourism destination development project and may grant to the eligible company the status of an approved company. The council shall approve no more than five tourism destination development projects per year to receive funding under this act. The decision by the development office shall be final and no appeal shall be granted.
(h) All meetings of the development office shall be open to the public.
§5B-2E-7. Agreement between development and approved company.

(a) The development office, upon grant of the council's final approval, may enter into with any approved company an agreement with respect to its tourism destination 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 may be funded by a sales tax refund as provided in subsection (c) of this section. Such costs shall not exceed twenty-five percent of the total project cost;
(2) A date certain by which the approved company shall have completed the tourism attraction project. Upon request from any approved company which has received final approval prior to or after the fifteenth day of July, two thousand four, the development office shall grant an extension or change, which in no event shall exceed three years from the date of final approval, to the completion date as specified in the agreement of an approved company. 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 be provided by an independent certified public accountant acceptable to the authority; and
(3) The following provisions:
(A) The term shall be ten years from the later of:
(i) The date of the final approval of the project; or
(ii) The completion date specified in the agreement, if this completion date is within three years of the date of the final approval of the project;
(4) Assurances that the project will not receive for its construction any substantial tax or other financial incentives payable out of state funds for the project, other than the sales tax refund provided for in section thirty-four, article fifteen, chapter eleven of this code.
(B) Within forty-five days after the end of each fiscal year of the approved company, during the term of the agreement, the approved company shall supply the development office with such reports and certifications as the development office may request 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 may be made available, the development office shall then certify to the department of tax and revenue that the approved company is in compliance with this section; and
(C) The approved company shall not receive a sales tax refund as described by section thirty-four, article fifteen, chapter eleven of this code with respect to any fiscal year if:
(i) In any year following the fourth year of the agreement, the tourism destination development project fails to attract at least twenty-five percent of its visitors from among persons who are not residents of the state; or
(ii) In any year following the first year of the agreement, the tourism destination development project is not operating and open to the public for at least one hundred days.
(b) The agreement shall not be transferable or assignable by the approved company without the written consent of the development office.
(c) In consideration of the execution of the agreement as defined in section fifteen of this article and notwithstanding any provision of law to the contrary, the approved company, excluding its lessees, may be granted a sales tax refund from the West Virginia sales tax imposed by article fifteen, chapter eleven of this code on the sales generated by or arising at the tourism attraction.
§5B-2E-8. West Virginia advisory board for tourism destination development created; members; terms; conflicts of interest; duties.

(a) The West Virginia advisory board for tourism destination development is hereby created in the state development office.
(b) The advisory board shall have nine voting members including the commissioner of tourism or her or his designee, the secretary of education and the arts or his or her designee, the secretary of transportation or his or her designee and the director of parks and recreation of the division of natural resources or his or her designee. Also, the advisory board would include three private business members of the tourism commission, one from each congressional district, and one member representing county government and one member representing local government, each of whom shall be appointed by the governor, with advice and consent of the West Virginia Senate.
(c) The director of the state development office shall serve as a nonvoting chairperson of the advisory board. State officials shall serve during their respective terms of office and the private business and local government representatives shall serve staggered three year terms.
(d) Of the three members of the tourism commission initially appointed to the advisory board, one member is appointed for a term of one year, one member is appointed for a term of two years and one member is appointed for a term of three years. Thereafter, the members of the advisory board are appointed for staggered terms of three years. Members representing county and municipal governments shall serve staggered three-year terms, with the first county official member to serve for three years and the municipal member first appointed to serve a term of eighteen months.
(e) The members of the advisory board may designate another to represent him or her and all members shall serve without compensation, but are entitled to reimbursement for their necessary expenses incurred in performing their duties.
(f) Of the three members of the tourism commission initially appointed to the advisory board, a member shall be appointed for a term of one year, one member is appointed for a term of two years and one member is appointed for a term of three years. Thereafter, the members of the advisory board are appointed for staggered terms of three years.
No member of the advisory board may either, directly or indirectly, be a party to or be in any manner interested in any contract or agreement with the development office for any matter, cause or thing that creates any liability or indebtedness against the development office.
(g) The advisory board shall advise the development office on policies regarding the following matters:
(1) Making and conditioning loans from the tourism destination development loan program;
(2) Employing fiscal consultants, attorneys, appraisers and other agents on behalf of the development office whom the development office considers necessary or convenient for the preparation and administration of agreements and documents necessary or incidental to any project;
(3) The imposition and collection of fees and charges in connection with transactions and the implementation of reasonable penalties for delinquent payment of fees and charges;
(4) The financial feasibility of proposed projects as well as likely regional economic impacts that may flow from such proposed projects; and
(5) Any other matters upon which the development office seeks advice from the advisory committee concerning its duties and powers provided under this article.
(h) The board shall report to the joint commission on economic development at the January, two thousand four, legislative interim session on the number of applications received by eligible companies as provided in this article, the status of each application, the number of projects approved and the status of each project.
§5B-2E-9. Effective date.
This article is effective from the first day of July, two thousand three, through the first day of July, two thousand four.
CHAPTER 11. TAXATION.

ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.
§11-15-34. Tourism attraction project credit against sales tax.

(a) In consideration of the execution of the agreement as defined in section three, article sixteen-d, chapter seventeen of this code and notwithstanding any provision of law to the contrary, the approved company as defined in said section, excluding its lessees, may be granted a sales tax refund from the West Virginia sales tax imposed by this article on the sales generated by or arising at the tourism attraction project as defined in section three, article sixteen-d, chapter seventeen of this code. The approved company has no obligation to refund or otherwise return any amount of this sales tax refund to the persons from whom the sales tax was collected. The term of the agreement granting the sales tax refund shall be ten years and this time period shall commence on the later of:
(1) The final approval for purposes of the inducements; or
(2) The completion date specified in the agreement.
(b) Any sales tax collected by an approved company on sales transacted after final approval but prior to the commencement of the term of the agreement, including any approved company that has received final approval prior to the fifteenth day of July, two thousand four, shall be refundable as if collected after the commencement of the term and applied to the approved company's first fiscal year's refund after activation of the term and without changing the term.
(c) The total sales tax refund allowed to the approved company over the term of the agreement in subsection (a) of this section shall be equal to the lesser of the total amount of the sales tax liability of the approved company and its lessees or twenty-five percent of the approved costs. The sales tax refund shall accrue over the term of the agreement in an annual amount equal to two and one-half percent of the approved cost. Notwithstanding the foregoing two and one-half percent limitation, any unused inducements as prescribed in subsection (i), section fifteen, article two, chapter five-b of this code from a previous year may be carried forward to any succeeding year during the term of the agreement until the entire twenty-five percent of the approved costs have been received through sales tax refunds. By the first day of October of each year, the tax commissioner certifies to the director of the state development office for the preceding fiscal year for all approved companies for which sales tax returns were filed with respect to a tourism destination development project, the sales tax liability of the approved companies receiving inducements under this section and section three, article sixteen-d, chapter seventeen of this code, and their lessees, and the amount of the sales tax refunds issued pursuant to subsection (a) of this section.
(d) Interest may not be allowed or paid on any refund made under the provisions of this section.
(e) The tax commissioner shall 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 section fifteen, article two, chapter five-b of this code.
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