2017 -- H 5995

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LC002246

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT - RHODE ISLAND TAX

INCREMENT FINANCING

     Introduced By: Representatives Craven, and Casimiro

     Date Introduced: March 23, 2017

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 42-64.21-3 and 42-64.21-6 of the General Laws in Chapter 42-

64.21 entitled "Rhode Island Tax Increment Financing" are hereby amended to read as follows:

     42-64.21-3. Definitions.

     As used in this chapter:

     (1) "Applicant" means a developer proposing to enter into a tax increment financing

agreement under this chapter.

     (2) "Commerce corporation" means the Rhode Island commerce corporation established

pursuant to general laws § 42-64-1 et seq.

     (3) "Developer" means a person, firm, corporation, partnership, association, political

subdivision, or other entity that proposes to divide, divides, or causes to be divided real property

into a subdivision or proposes to build, or builds a building or buildings or otherwise improves

land or existing structures, which division, building, or improvement qualifies for benefits under

this chapter. In the case of a political subdivision, the terms "improves land" and/or

"improvement" shall include public infrastructure such as sewers and pumping stations.

     (4) "Hope Community" means a municipality for which the five (5) year average

percentage of families with income below the federal poverty level exceeds the state five (5) year

average percentage, both most recently reported by the U.S. Department of Commerce, Bureau of

the Census.

     (5) "Eligible revenue" means the incremental revenues set forth in § 42-64.21-5 of this

chapter.

     (6) "Incremental" means (i) net new revenue to the State of Rhode Island as defined by

the commerce corporation, in consultation with the department of revenue as established in

Chapter 42-142 of the general laws, or (ii) existing revenue at substantial risk of loss to the State

of Rhode Island as defined by the commerce corporation in consultation with the department of

revenue.

     (7) "Project area" means land or lands under common ownership or control as certified by

the commerce corporation, or in the case of a political subdivision, the project area agreed upon

by such developer and the commerce corporation which need not be under common ownership or

control but shall be within the boundaries of such political subdivision.

     (8) "Project financing gap" means:

     (i) The part of the total project cost that remains to be financed after all other sources of

capital have been accounted for, including, but not limited to, developer-contributed capital, and

in the case of a political subdivision, capital shall mean planned or actual assessments for public

infrastructure whether or not such infrastructure is existing at the time of the TIF agreement,

which shall be defined through rules and regulations promulgated by the commerce corporation;

or

     (ii) The amount of funds that the state may invest in a project to gain a competitive

advantage over a viable and comparable location in another state by means described in this

chapter.

     (9) "Qualified development project" means a specific construction project or

improvement, including lands, buildings, improvements, real and personal property or any

interest therein, including lands under water, riparian rights, space rights and air rights, acquired,

owned, leased, developed or redeveloped, constructed, reconstructed, rehabilitated or improved,

or in the case of a political subdivision, public infrastructure, undertaken by a developer, owner or

tenant, or both, within a specific geographic area, meeting the requirements of this chapter, as set

forth in an application made to the commerce corporation.

     (10) "Qualifying TIF area" shall mean an area containing a qualified development project

identified by the commerce corporation as a priority because of its potential to generate, preserve

or otherwise enhance jobs or its potential to produce, preserve or otherwise enhance housing

units. The commerce corporation shall take into account the following factors in determining

whether a qualified development project is a priority:

     (i) Generation or preservation of manufacturing jobs;

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     (ii) Promotion of targeted industries;

     (iii) Location in a port or airport district, and any property connected or to be connected

to the wastewater treatment facility operated by the Quonset development corporation shall be

eligible to be included in a port district;

     (iv) Location in an industrial or research park;

     (v) Location in a transit oriented development area;

     (vi) Location in a hope community;

     (vii) Location in an area designated by a municipality as a redevelopment area under §

45-32-4 of the general laws; and

     (viii) Location in an area located within land approved for closure under any federal

commission on base realignment and closure action.

     (11) "Revenue increment base" means the amounts of all eligible revenues from sources

within the qualifying TIF area in the calendar year preceding the year in which the TIF agreement

is executed, as certified by the division of taxation.

     (12) "TIF agreement" means an agreement between the commerce corporation and a

developer, under which, in exchange for the benefits of the funding derived from qualification

under this chapter, the developer agrees to perform any work or undertaking necessary for a

qualified development project, including the clearance, development or redevelopment,

construction, or rehabilitation of any structure or improvement of commercial, industrial, or

residential property; public infrastructure; preexisting municipally-owned stadium of 10,000 seats

or greater; or utilities within a qualifying TIF area. In the case of a political subdivision, all or any

part of such public infrastructure may have been completed prior to the time of the TIF

agreement.

     (13) "TIF payment" means reimbursement of all or a portion of the project financing gap

of a qualified development project from the division of taxation as provided under this chapter.

     (14) "Targeted industry" means any advanced, promising or otherwise prioritized

industry identified in the economic development vision and policy promulgated pursuant General

Laws § 42-64.17-1 or, until such time as any such economic development vision and policy is

promulgated, as identified by the commerce corporation.

     (15) "Transit oriented development area" means an area in proximity to transit

infrastructure that will be further defined by regulation of the commerce corporation in

consultation with the Rhode Island department of transportation.

     42-64.21-6. Agreements permitted.

     (a) The commerce corporation is authorized to enter into a TIF agreement with a

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developer for any qualified development project located within a qualifying TIF area. The TIF

agreement between the commerce corporation and the developer shall contain a provision

acknowledging that the benefits of said agreement, with the exception of 42-64.21-5(d) of this

chapter, are subject to such annual appropriation.

     (b) The decision whether or not to enter into a TIF agreement is solely within the

discretion of the commerce corporation. However, to enter into an agreement with the commerce

corporation as authorized in this chapter, applicants shall apply:

     (1) To the commerce corporation for approval of the proposed project. Such approval

shall require:

     (i) That the applicant has submitted a completed application as developed by the

commerce corporation;

     (ii) That the chief executive officer of the commerce corporation provide written

confirmation to the commerce corporation board that (A) the commerce corporation has reviewed

the application and any determination regarding the potential impact on the project's ability to

promote the retention and expansion of existing jobs, stimulate the creation of new jobs,

including good-paying jobs, attract new business and industry to the state, and stimulate growth

in real estate developments and/or businesses that are prepared to make meaningful investment

and foster job creation in the state; and (B) the length of the TIF agreement and the percentage of

incremental revenues to be allocated under the TIF agreement.

     (iii) That the secretary of commerce provide written confirmation to the commerce

corporation board that the recommendation of the commerce corporation is consistent with the

purposes of this chapter.

     (c) A developer that has entered into a TIF agreement with the commerce corporation

pursuant to this section may, upon notice to and consent of the corporation, pledge and assign as

security for any loan, any or all of its right, title and interest in and to the TIF agreement and in

the TIF payments due thereunder, and the right to receive same, along with the rights and

remedies provided to the developer under such agreement. Any such assignment shall be an

absolute assignment for all purposes, including the federal bankruptcy code. Without limiting the

generality of the foregoing, and notwithstanding the provisions of any general or special law or

municipal charter to the contrary, any municipality entering into or entered in a TIF agreement

with the commerce corporation may, upon notice to the corporation, pledge and assign as security

for any loan from the Rhode Island infrastructure bank to the municipality, any or all of the

municipality's right, title, and interest in and to the TIF agreement and in the TIF payments due

thereunder, and the right to receive same, along with the rights and remedies provided to the

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municipality under such agreement.

     (d) Any pledge of TIF payments made by the developer shall be valid and binding from

the time when the pledge is made and filed in the records of the commerce corporation. The TIF

agreement and payments so pledged and thereafter received by the developer shall immediately

be subject to the lien of the pledge without any physical delivery thereof or further act, and the

lien of any pledge shall be valid and binding as against all parties having claims of any kind in

tort, contract, or otherwise against the developer irrespective of whether the parties have notice

thereof.

     (e) The commerce corporation shall be entitled to impose an application fee and impose

other charges upon developers associated with the review of a project and the administration of

the program.

     (f) Maximum agreement amount. In no event shall the amount of the reimbursements

under a TIF agreement exceed 30 percent of the total cost of the project and provided further, that

the commerce corporation may exempt public infrastructure, a preexisting municipally-owned

stadium of 10,000 seats or greater, or utilities from said 30 percent cap.

     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 STATE AFFAIRS AND GOVERNMENT - RHODE ISLAND TAX

INCREMENT FINANCING

***

     This act would allow infrastructure of a political subdivision to qualify for tax increment

financing agreements. This act would also permit a municipality entering into a TIF agreement

with the commerce corporation to pledge and assign the municipality's interest in the TIF

agreement as security for any loan from the Rhode Island infrastructure bank to the municipality.

     This act would take effect upon passage.

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