2016 -- S 2352

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LC004428

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO TOWNS AND CITIES -- TAX INCREMENT FINANCING

     Introduced By: Senator John A. Pagliarini

     Date Introduced: February 10, 2016

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 45-33.2 of the General Laws entitled "Tax Increment Financing" is

hereby repealed in its entirety.

CHAPTER 45-33.2

Tax Increment Financing

     45-33.2-1. Short title. -- This chapter may be referred to and cited as the "Tax Increment

Financing Act".

     45-33.2-2. Legislative findings. -- It is found and declared that for the public health,

safety, morals, and welfare of the people of the state generally, the increase of their commerce,

welfare, and prosperity and the improvement of their housing, employment and educational

opportunities and general living conditions, as well as in order to remedy the conditions found to

exist in the state as declared in § 45-31-3, it is essential to provide new employment opportunities

to prevent, arrest, and alleviate blighted, decayed, and substandard areas in cities and towns, to

increase the supply of housing available to homeowners and to tenants at low rentals, to increase

the tax base, to encourage the development of undeveloped land in the town of West Greenwich,

and to improve the general economy of the state; and that it is the purpose of this chapter to

provide an additional and alternative means to cities and towns to fund and/or finance municipal

and other public facilities and residential, commercial and industrial development and

revitalization, home ownership; and programs to combat poverty, improve municipal and

neighborhood living conditions and provide improved employment and educational opportunities,

all to the public benefit and good, in the manner provided in this chapter.

     45-33.2-3. Definitions. -- As used in this chapter, unless a different meaning clearly

appears from the context, the following words have the following meanings:

      (1) "Base date" means the last assessment date next preceding the adoption of the project

plan.

      (2) "Project" means the undertaking of one or more of the following activities in

accordance with a project plan:

      (i) The acquisition of land and improvements on it, if any, within the project area, and

the assembly and clearance of the land so acquired,

      (ii) The development, redevelopment, revitalization, or conservation of the project area

through the construction or rehabilitation of buildings or other improvements or through

acquisition by gift, purchase, or eminent domain of land and any improvements of the area, and

demolition, removal, or rehabilitation of those improvements, whenever these activities are

necessary to provide land for and the development of needed municipal and other public facilities

or industrial or commercial development or revitalization, or to eliminate unhealthful, unsanitary,

or unsafe conditions or lessen density, mitigate or eliminate traffic congestion, reduce traffic

hazards, eliminate obsolete or other uses detrimental to the public welfare or otherwise remove or

prevent the spread of blight or deterioration,

      (iii) The provision of grants, loans, security or other assistance from project revenues and

other funds in connection with (A) home and neighborhood improvement programs, (B)

programs to acquire, renovate or transfer abandoned or fully or partially vacated houses and (C)

programs to acquire land, demolish buildings and other structures and clear and rehabilitate sites

for the purpose of reducing building density or promoting new housing construction, or

      (iv) The provision of grants, loans, security or other assistance from project revenues and

other funds to combat poverty, improve municipal and neighborhood living conditions and

enhance educational and employment opportunities, including, without limiting the generality of

the foregoing, by means of job training and retraining programs, literacy programs,

apprenticeship programs, programs to provide post-secondary school educational grants or other

assistance to students meeting eligibility criteria established in the project plan, programs to

improve the performance of public schools, pilot projects to provide special or enhanced

municipal services and commercial and industrial revitalization and development.

      (v) A project may involve a combination of the previously mentioned activities. A

project may include the provision of financial and other assistance in the relocation of persons

and organizations displaced thereby, and the planning and construction, reconstruction, or

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rehabilitation of public facilities.

      (3) "Project area" except as set forth in this subdivision, means all or any portion of a

"redevelopment area," as that term is defined in § 45-31-8(15), in which the project is to be

carried out; provided, that the following projects are not required to be in a "redevelopment area":

(i) the acquisition and clearance of land and the construction on it of a municipal or other public

facility under the definition of "project," paragraphs (2)(i)or (2)(ii); or (ii) a project described in

paragraphs (2)(iii) or (2)(iv) of the definition of "project.". The project area may consist of one or

more parcels or lots of land, whether or not contiguous, or one or more buildings or structures,

whether or not adjacent, on one or more parcels of land. The project area may, but need not, be

within the tax increment area. All or any portion of a project area may be amended as provided in

§ 45-33.2-4. A project for which a designated beneficiary class or classes is established on the

basis of income and/or some other generally applicable criteria in the project plan may have, but

is not required to have, a project area.

      (4) (i) "Project plan" means a plan, which, except as set forth in this subdivision, is part

of a "redevelopment plan," as that term is defined in § 45-31-8(16), adopted by a city or town in

the manner provided in § 45-33.2-4, for a project, provided, that a project plan for the following

projects is not required to be a part of a "redevelopment plan": (A) the acquisition and clearance

of land and the construction on it of a municipal or other public facility under paragraphs (2)(i) or

(2)(ii) of the definition of "project"; or (B) a project under subdivision (2). The project plan shall

present an estimate of project costs and the amounts and sources of funds to be used to defray

those costs and shall include provisions for tax increment funding and/or financing of project

costs in whole or in part. The tax increment financing provisions of the project plan shall state the

estimated amount of indebtedness to be incurred pursuant to this chapter, an estimate of the tax

increment to be generated as a result of the project, the method of calculating the tax increment,

together with any provisions for adjustment of the method of calculation, and shall designate the

board or officer of the city or town responsible for calculating the tax increment. Funds may be

provided to carry out the plan from any lawful source, including the direct use of all or any

portion of the tax increment therefore or the issuance of bonds under this chapter, but may not be

provided by the issuance of general obligation bonds for any purpose for which general obligation

bonds could not be issued in the absence of this chapter. The plan may include any other

provisions that may be deemed necessary in order to carry out the tax increment funding and/or

financing of the project. The project plan shall not be inconsistent with the comprehensive plan

for the city or town as is then applicable, shall be sufficiently complete to indicate the nature of

any designated beneficiary class, as described in this subdivision, the location and boundaries of

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any project area and of the tax increment area, and land acquisition, demolition, removal and

rehabilitation of structures and development, redevelopment, and general public improvements

that are proposed to be carried out within the project area, and to the extent applicable the plan

shall indicate the proposed method for relocation of persons or organizations that may be

displaced as a result of carrying out the project.

      (ii) Once adopted by the legislative body of a city or town, a project plan may be

amended to add additional projects, to increase the estimated amount of indebtedness to be

incurred pursuant to this chapter or to amend all or any portion of a project area or the designation

of a beneficiary class relating to any project contained in the project plan, in the manner provided

in § 45-33.2-4. Each project contained in a project plan shall either have a project area designated

in the project plan or there shall be established in the project plan a designated beneficiary class

or classes (from whose members the actual beneficiaries shall be chosen) on the basis of income

(with provision for revision of income limits due to inflation and other external economic factors)

or some other generally applicable criteria; provided, that a project may have both a project area

and a designated beneficiary class or classes.

      (5) "Project revenues" means any receipts of a city or town with respect to a project or

the tax increment area relating to it including, without limiting the generality of the foregoing, tax

increments, repayments of loans including loans made under § 45-33.2-5(13), investment

earnings, proceeds of insurance, or disposition of property, and proceeds of borrowing under this

chapter.

      (6) "Tax increment" means the tax levied on the real and personal property situated in or

otherwise assignable for the purposes of property taxation to a tax increment area, to the extent

that the tax is attributable to an excess of the aggregate taxable valuation of the property over its

aggregate taxable valuation as of the base date. The portion of the tax levy attributable to the

increased valuation after the base date shall be calculated using the same classification factors as

were used as of the base date, or without classification factors if property was not classified for

tax purposes as of the base date. In calculating the tax increment there shall be excluded from the

tax the portion levied for the purpose of paying the principal of or interest on bonds, notes, and

other evidences of indebtedness which are general obligations of the city or town. Prior to the

actual use of any portion of a tax increment to support or secure a project or portion of one,

unused tax increment may be deposited upon receipt into the general fund of the city or town, to

be used in accordance with generally applicable law. Once the city or town has used any portion

of the tax increment to support or secure one or more projects or portions of them, only the excess

of tax increment may be deposited into the general fund of the city or town, to be used in

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accordance with generally applicable law, after satisfaction of: (i) the payment of the principal of

or interest on any special obligation bonds issued under the provisions of § 45-33.2-6, as principal

and interest shall then be due and owing; (ii) any requirement to fund any reserve or other

account or satisfy any other financial requirement which must be satisfied in connection with the

issuance of bonds or any other indebtedness or obligation incurred in connection with any project

or portion of one; and (iii) any payments made to directly fund any project or portion of one as

provided in the project plan therefor.

      (7) "Tax increment area" means a tax increment area designated in a project plan adopted

pursuant to § 45-33.2-4. The tax increment area may consist of one or more parcels or lots of

land, whether or not contiguous, on one or more buildings or structures, whether or not adjacent,

or on one or more parcels of land; provided, that upon adoption of the project plan the aggregate

taxable valuation of the property within all tax increment areas within the city or town does not

exceed twenty-five percent (25%) of the taxable valuation of all property subject to taxation

within the city or town.

     45-33.2-4. Adoption of project plan. -- The legislative body of any city or town may

adopt a project plan if a finding is made to the effect that:

      (1) With respect to any portion of the project: (i) providing municipal or other public

facilities or land therefor, under the definition of "project" under § 45-33.2-3(2)(i) or (ii); or (ii)

constituting a project under § 45-33.2-3(2), that the facilities, programs and other assistance are

needed and that the financing of that portion of the project in accordance with the plan is in the

public interest; or

      (2) With respect to any portion of the project providing land for housing for persons or

families of low income, that there is not within the city or town an adequate supply of low rent

housing for persons or families of low income generally, or for veterans, or for persons who are

elderly or disabled, as the case may be, available for rents they can afford to pay, that the rents

which those persons or families can afford to pay would not warrant private enterprise providing

housing for them, and that the financing of that portion of the project in accordance with the plan

is in the public interest; or

      (3) With respect to any portion of the project providing financing under § 45-33.2-5(13),

but only to the extent not described in subdivision (1), that unemployment or the threat of

unemployment exists in the city or town or that security against future unemployment is required,

that the project is needed, that it will provide employment or security against loss of employment,

including the approximate number of new jobs that should be created or preserved, construction

and nonconstruction, their approximate wage rates, what types of fringe benefits such as

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healthcare or retirement benefits there will be, and the projected increase in personal income

taxes to the state of Rhode Island, all having a reasonable relationship to the probable cost of

acquiring, establishing, improving, or rehabilitating the facilities in which the employment is to

be provided or maintained, and that the financing of that portion of the project in accordance with

the plan is in the public interest; or

      (4) With respect to any portion of the project providing land for industrial or commercial

development or revitalization, but only to the extent not described in subdivision (1):

      (i) That the requirements of subdivision (3) are satisfied; or

      (ii) That the requirements of subdivision (5) are satisfied; or

      (5) With respect to any other portion of the project:

      (i) That it is located in a "blighted and substandard area" as that term is defined in § 45-

31-8(3), or that the project is needed to arrest blight or decay in the city or town and to prevent

the area from becoming a blighted and substandard area;

      (ii) That the project area would not by private enterprise alone, and without either

governmental subsidy or the exercise of governmental powers, be developed or revitalized in a

manner so as to prevent, arrest, or alleviate the spread of blight or decay;

      (iii) That the plan will afford maximum opportunity to privately financed development

or revitalization consistent with the sound needs of the city or town as a whole;

      (iv) That the financing of that portion of the project in accordance with the plan is in the

public interest; and

      (v) Approximately how many new jobs, construction and nonconstruction, the plan will

create, their approximate wage rates, whether the expected new jobs will provide fringe benefits

such as healthcare and retirement benefits, and the projected impact of personal income taxes to

the state of Rhode Island.

      (6) No project shall be undertaken pursuant to this chapter until a project plan has been

adopted as provided in this section.

      (7) A city or town may amend a project plan by submitting the full project plan, as

amended, to its legislative body, which must then make a finding with respect to the amended

project plan which is identical to the required finding for the original adoption of the project plan;

provided, that no amendment is violative of or inconsistent with any prior security arrangement

entered into pursuant to the original project plan.

     45-33.2-5. Authorization to undertake projects -- Powers. -- Cities and towns are

authorized to undertake projects pursuant to duly adopted project plans. In addition to powers

granted under this section or by any other law, for the purposes of carrying out a project as

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authorized by this chapter, a city or town has the following powers:

      (1) To incur indebtedness, and pledge tax increments and other project revenues for

repayment of indebtedness;

      (2) To designate a board or officer of the city or town to be responsible for administering

the project plan;

      (3) To make and enter into all contracts and agreements necessary in order to carry out

the project;

      (4) To receive from the federal government or the state, loans or grants for or in aid of a

project, and to receive contributions from any other source to defray project costs;

      (5) To purchase or otherwise acquire property or interests in property therein within or

without a project area as the city or town may deem necessary in order to carry out the project;

      (6) To make relocation payments to persons, businesses, or organizations that may be

displaced as a result of carrying out the project;

      (7) To clear and improve property acquired by it pursuant to the project plan, and

construct public facilities on it, or contract for the construction, development, redevelopment,

rehabilitation, remodeling, alteration, or repair of the property;

      (8) To cause parks, playgrounds, or schools or water, sewer, or drainage facilities, or any

other public improvements which it otherwise is authorized to undertake, to be laid out,

constructed, or furnished in connection with the project;

      (9) To lay out and construct, alter, relocate, change the grade of, make specific repairs

upon or discontinue public ways, and construct sidewalks in or adjacent to the project area;

      (10) To cause private ways, sidewalks, ways for vehicular travel, playgrounds, or water,

sewer, or drainage facilities and similar improvements to be constructed within the project area

for the particular use of the project area of those dwelling or working in it;

      (11) To adopt ordinances, or repeal or modify ordinances, or establish exceptions to

existing ordinances regulating the design, construction, and use of buildings;

      (12) To sell, mortgage, lease as lessor, transfer, or dispose of any property or interest in

property acquired by it pursuant to the project plan for development, redevelopment, or

rehabilitation in accordance with the plan;

      (13) To grant or loan any project revenues, including the proceeds of any issue of bonds

or notes issued pursuant to this chapter to an individual or any private enterprise, nonprofit

organization or governmental or quasi-governmental entity in order to finance the cost of any

portion of a project authorized under this chapter, including, without limiting the generality of the

preceding, the cost of acquiring land for, and constructing or rehabilitating and equipping

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industrial or commercial development facilities, within the project area in accordance with the

plan, or to loan bond or note proceeds in order to refinance any loans;

      (14) To invest project revenues as provided in § 45-33.2-12; and

      (15) To do all things reasonably necessary or convenient to carry out the powers granted

in this chapter.

     45-33.2-6. Issuance of special obligation bonds. -- (a) A city or town may, in

compliance with any applicable provisions of the general laws (except as provided in this section)

borrow money by the issue of special obligation bonds for the purpose of carrying out a project

pursuant to a duly adopted project plan. Without limiting the generality of the preceding, the

bonds may be issued for project costs which may include interest prior to and during the carrying

out of a project and for a reasonable time thereafter, reserves that may be required by any

agreement securing the bonds, and all other expenses including reimbursements of expenses

previously paid from any other source, incidental to planning, carrying out, and financing the

project. Bonds issued under this section shall be payable solely from project revenues and shall

not be deemed to be a pledge of faith and credit of the city or town. Every bond issued under this

section shall recite on its face that it is a special obligation bond payable solely from project

revenues pledged for its repayment.

      (b) The bonds of each issue shall be dated and may be made redeemable before maturity

with or without premium. Subject to the authorizing vote, the officers authorized to sell the bonds

shall determine the date or dates of the bonds, their denomination or denominations, the place or

places of payment of the principal and interest, which may be at any bank or trust company

within or without the state, their interest rate or rates, maturity or maturities, redemption

privileges, if any, and the form and other details of the bonds, including interest coupons to be

attached to them. The bonds shall be signed by the city or town treasurer, countersigned by the

mayor of a city or by the president of the town council of a town, either manually or by facsimile,

and shall bear the seal of the city or town or a facsimile of the seal. Any coupons attached thereto

shall bear the facsimile signature of the city or town treasurer.

      (c) In case any officer whose signature or a facsimile of whose signature appears on any

bonds, coupons, or notes issued under this chapter ceases to be an officer before their delivery,

the signature or the facsimile shall nevertheless be valid and sufficient for all purposes the same

as if the officer had remained in office until the delivery.

      (d) The bonds may be issued in coupon or registered form, or both, and provision may be

made for the registration of any coupon bonds as to principal alone and also as to principal and

interest, for the reconversion into coupon bonds or bonds registered as to both principal and

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interest, and for the interchange of registered and coupon bonds. Subject to the authorizing vote,

the officers authorized to sell the bonds may sell the bonds in a manner, either at public or private

sale, and for a price, as they may determine will best effect the purposes of this chapter.

      (e) Prior to the preparation of definitive bonds, the city or town may issue interim

receipts or temporary bonds, with or without coupons, exchangeable for definitive bonds when

those bonds have been executed and are available for delivery. Provision may be made for the

replacement of any bonds which have become mutilated or have been destroyed or lost.

      (f) Notwithstanding any provisions of any municipal charter or general or special law to

the contrary, bonds issued under this section may provide for annual or more frequent

installments of principal in equal, diminishing, or increasing amounts, with the first installment of

principal to be due at any time within five (5) years from the date of the issuance of the bonds.

     45-33.2-7. Security for bonds -- Trust agreements. -- (a) In the discretion of the

officers authorized to sell the bonds, but subject to the provisions of the vote authorizing the

bonds, bonds issued under this chapter may be secured by one or more trust agreements between

the city or town and a corporate trustee or trustees, which may be any trust company or bank

having the powers of a trust company within or without the state. A trust agreement under this

section shall be in a form and executed in a manner that may be determined by the officers. A

trust agreement may pledge or assign project revenues, in whole or in part. It may contain

provisions for protecting and enforcing the rights, security, and remedies of the bondholders as

may be reasonable and proper and not in violation of law, including without limiting the

generality of the preceding, provisions defining defaults and providing for remedies in the event

of defaults, which may include the acceleration of maturities, and covenants stating duties of, and

limitations on, the city or town in relation to carrying out and otherwise administering the project

or projects, the custody, safeguarding, investment and application of project revenues, the issue of

additional bonds under this chapter, the determination of tax increments, the fixing of fees and

charges, if any, in relation to the project or projects, the collection of project revenues, the use of

any surplus bond proceeds, the establishment of reserves, and the replacement of bonds or

coupons which become mutilated or are destroyed or lost. Subject to the provisions of this

chapter, moneys subject to the trust agreement shall be held, invested, and applied as provided in

the trust agreement; provided, that moneys not deposited in trust with a corporate trustee shall be

in the custody of the city or town treasurer.

      (b) It is lawful for any bank or trust company to act as a depository or trustee of the

proceeds of bonds or of other moneys under any trust agreement and to furnish indemnifying

bonds or to pledge securities that may be required by the trust agreement. The trust agreement or

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resolution may establish the rights and remedies of the bondholders and the trustee, and may

restrict the individual right of action by bondholders. All expenses incurred in carrying out the

provisions of the trust agreement or resolution may be treated as current operating expenses.

     45-33.2-8. Pledge of project revenues validated. -- (a) Notwithstanding any provision

of any other law, including the Uniform Commercial Code, §§ 6A-1-101 -- 6A-9-507:

      (1) Any pledge under this chapter is valid and binding, and deemed continuously

perfected from the time it is made;

      (2) No filing need be made under the Uniform Commercial Code or otherwise;

      (3) Unless otherwise provided in the financing instruments, a pledge of project revenues

is deemed to include a pledge of any accounts or general intangibles from which revenues are

derived, whether existing at the time of the pledge or thereafter coming into existence, and

whether held at the time of the pledge or thereafter acquired by the city or town, and the proceeds

of the accounts or general intangibles; and

      (4) The pledge of project revenues, accounts, and general intangibles is subject to the

lien of the pledge without delivery or segregation, and the lien of the pledge is valid and binding

against all parties having claims of contract or tort or otherwise against the city or town.

      (b) A pledge of project revenues under this chapter constitutes a sufficient appropriation

for the purposes of any provision for appropriation, and the revenues may be applied as required

by the pledge without further appropriation.

      (c) For the purposes of this section the word "pledge" is construed to include the grant of

a security interest under the Uniform Commercial Code.

     45-33.2-9. Temporary anticipation notes. -- In anticipation of the issue of bonds under

this chapter, and subject to any provisions of the vote authorizing the bonds, the officers

authorized to sell the bonds may, without further authorization, issue temporary notes. The notes

may be secured as in the case of bonds and, except as otherwise provided in this section, the

provisions of other sections of this chapter referring to bonds are also deemed to refer to the

notes. The notes need not bear the seal of the city or town or a facsimile of the seal. The notes are

payable within three (3) years from their respective dates, but the principal of and interest on

notes issued for a shorter period may be refunded from time to time by the issue of other notes

maturing within three (3) years from the original date of issue of the indebtedness being refunded.

     45-33.2-10. Refunding bonds. -- A city or town may, subject to any applicable

provisions of § 45-12-5.2, issue refunding bonds for the purpose of paying any of its bonds issued

under this chapter at maturity or upon acceleration or redemption. The refunding bonds may be

issued at a time prior to the maturity or redemption of the refunded bonds as the city or town

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deems to be in the public interest. The refunding bonds may be issued in sufficient amounts to

pay or provide the principal of the bonds being refunded, together with any redemption premium,

any interest accrued or to accrue to the date of payment of the bonds, the expenses of issue of the

refunding bonds, the expenses of redeeming the bonds being refunded, and the reserves for debt

service or other purposes from the proceeds of the refunding bonds, as may be required by any

agreement securing bonds. The issue of refunding bonds, the maturities and other details thereof,

the security therefor, the rights of holders thereof, and the rights, duties, and obligations of the

city or town with respect thereto shall be governed by the provisions of this chapter relating to the

issue of bonds other than refunding bonds insofar as those provisions may be applicable.

     45-33.2-11. Credit of municipality not pledged. -- The bonds and notes issued under

this chapter are payable solely from project revenues. These bonds and notes shall not at any time

be included in the debt of the city or town for the purpose of ascertaining its legal borrowing

capacity.

     45-33.2-12. Investment of funds. -- Subject to any agreement securing bonds or notes

issued under this chapter, the proceeds of the bonds or notes, pledged tax increments, and other

project revenues may be deposited or invested in:

      (1) Obligations of the state or the United States,

      (2) Obligations of the principal and interest of which are guaranteed by the state or the

United States,

      (3) Obligations of agencies and instrumentalities of the state or the United States or

      (4) Certificates of deposits of, and repurchase agreements, so called, issued with respect

to obligations of the United States by, banks and trust companies organized under the laws of the

state or doing business in the state.

     45-33.2-13. Trust funds. -- All project revenues received pursuant to the provisions of

this chapter which have been pledged as security, including, without limiting the generality of the

preceding, security for the repayment of bonds issued pursuant to § 45-33.2-6, are deemed to be

trust funds to be held and applied solely as provided in this chapter. Project revenues received

pursuant to the provisions of this chapter which have not been pledged as security may be used in

any manner consistent with the project plan, as well as, with respect to the tax increment portion

of the plan, § 45-33.2-3(6).

     45-33.2-14. Remedies of bondholders and noteholders. -- Any holder of bonds or notes

issued under this chapter, or of any of the coupons appertaining to those bonds and notes, and the

trustee under any trust agreement securing the bonds or notes, except to the extent the rights

herein given may be restricted by any agreement securing the bonds or notes, may bring suit upon

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the bonds, notes, or coupons and may, either at law or in equity, by suit, action, mandamus, or

other proceedings, protect and enforce any and all rights under the laws of the state or granted

under this chapter or under any agreement, and may enforce or compel the performance of all

duties required by this chapter or by an agreement to be performed by the city or town or by any

city or town officer.

     45-33.2-15. Bonds and notes as legal instruments. -- Bonds and notes issued under the

provisions of this chapter are securities in which all public officers and public bodies of the state

and its political subdivisions, all insurance companies, trust companies in their commercial

departments, savings banks, cooperative banks, banking associations, investment companies,

executors, administrators, trustees, and other fiduciaries may properly and legally invest funds,

including capital in their control or belonging to them. These bonds are securities which may

properly and legally be deposited with and received by any state or municipal officer or any

agency or political subdivision of the state for any purpose for which the deposit of bonds or

obligations of the state is now or may be authorized by law.

     45-33.2-16. Bonds and notes as investment securities. -- Notwithstanding any of the

provisions of this chapter or any recitals in any bond or notes issued under this chapter, all bonds

and notes are deemed to be investment securities under the Uniform Commercial Code, §§ 6A-1-

101 -- 6A-9-507.

     45-33.2-17. Exemption from taxation. -- The bonds and notes issued under this chapter,

their transfer and their income, including any profit made on their sale, are at all times free from

taxation within the state.

     45-33.2-18. Annual report. -- No later than September 1 of each year a project plan

pursuant to this chapter is in effect in a city or town, the city or town shall make a report to the

director of the department of economic development. The annual report shall review for the

preceding fiscal year the activities financed by tax increment financing, the taxable valuation of

the city or town, and for each tax increment area within the city or town, the taxable valuation of

the property within the tax increment area, the amount of the tax increment, and the amount used

or set aside for the purposes of the plan. The report shall also include the approximate number of

new jobs created or preserved from the activities financed by tax incremental financing,

construction and nonconstruction, the approximate amount of the wages for the jobs created, what

types of fringe benefits, such as healthcare insurance or retirement benefits were made available

to the new jobs created, the amount of new personal income taxes generated for the state of

Rhode Island, a description of any plan or process intended to stimulate hiring in the municipality

where the project is located, training of employees or potential employees and outreach to

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minority job applicants and minority businesses and any other relevant information requested by

the director.

     45-33.2-19. Provisions supplementary. -- The preceding provisions of this chapter are

deemed to provide an additional and alternative means for the doing of things authorized by it,

and are regarded as supplemental and additional to, and not in derogation of, powers conferred

upon cities and towns by other laws.

     45-33.2-20. Severability. -- The provisions of this chapter are severable, and if any

provision thereof shall be held invalid in any circumstances, invalidity shall not affect any other

provisions or circumstances. This chapter shall be construed in all respects so as to meet all

constitutional requirements. In carrying on the purposes and provisions of this chapter, all steps

shall be taken which are necessary to meet constitutional requirements whether or not those steps

are required by statute.

     45-33.2-21. Tax limitations. -- (a) Except as provided below, a tax increment shall be

included in the calculation of the maximum tax a city or town may levy pursuant to the provisions

of § 44-5-2 of the general laws.

      (b) To the extent that inclusion of a tax increment in a tax levy causes a municipality to

exceed the maximum tax a city or town may levy pursuant to the provisions of § 44-5-2 of the

general laws, such excess shall be excluded from such calculation for a period not to exceed

twenty-five (25) years if:

      (1) Such excess tax increment is allocable to: (i) the payment of the principal of or

interest on any special obligation bonds issued under the provisions of § 45-33.2-6, to fund a

project as described in subdivisions 45-33.2-3(2)(i), (ii) or (iii); (ii) any requirement to fund any

reserve or other account or satisfy any other financial requirement which must be satisfied in

connection with the issuance of such bonds or any other indebtedness or obligation incurred in

connection with any such project or portion of one; or (iii) any payments made to directly fund

any project described in subdivisions 45-33.2-3(2)(i), (ii) or (iii); and

      (2) The project is determined by the division of property valuation in the department of

revenue to be: (i) within or contiguous to the tax increment area; or (ii) substantially related to the

improvements giving rise to the tax increment; or (iii) reasonably necessary to assure the private

investment required to generate the tax increment.

      (c) The tax assessor in each city and town shall include calculations reflecting any tax

increment excluded from the tax cap provisions of § 44-5-2 of the general laws when submitting

the municipality's adopted tax levy and rate to the division of property valuation in accordance

with § 44-5-2 of the general laws.

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      (d) The division of property valuation in the department of revenue may issue such

regulations as may be required to implement and enforce the provisions of this section.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES -- TAX INCREMENT FINANCING

***

     This act would repeal the tax increment financing act.

     This act would take effect upon passage.

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