2017 -- S 0921

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LC002714

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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 TOWNS AND CITIES -- INDUSTRIAL FACILITIES CORPORATION

     Introduced By: Senators Gallo, Conley, Goodwin, Lynch Prata, and Lombardi

     Date Introduced: May 30, 2017

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 45-37.1-9 and 45-37.1-9.1 of the General Laws in Chapter 45-37.1

entitled "Industrial Facilities Corporation" are hereby amended to read as follows:

     45-37.1-9. Exemption from taxation.

     (a) The exercise of the powers granted by this chapter will be in all respects for the

benefit of the people of this state, for the increase of their commerce, welfare and prosperity, and

for the improvement of their health and living conditions, and will constitute the performance of

an essential government function, and the corporation is not required to pay any taxes or

assessments upon or in respect of a project, or any property or moneys of the corporation, levied

by any municipality or political subdivision of the state, nor is the corporation required to pay

state taxes of any kind, and the corporation, its projects, property, and moneys, and any bonds and

notes issued under the provisions of this chapter, their transfer and the income from them,

including any profit made on their sale, are at all times free from taxation of every kind by the

state and by the municipalities and all other political subdivisions of the state, and the corporation

is not required to pay any transfer tax of any kind on account of instruments recorded by or on its

behalf or in connection with the financing of any of its projects; provided, that any person,

partnership, corporation, or concern leasing a project from the corporation shall pay to the city,

town, school district, or other political subdivision or special district having taxing powers, in

which the project is located, a payment in lieu of taxes which equals the taxes on real and

personal property which the lessee would have been required to pay, had it been the owner of the

property during the period for which the payment is made, and under no circumstances are the

corporation or its projects, properties, money, bonds, or notes obligated, liable, or subject to a lien

of any kind for their enforcement, collection, or payment; and provided, further, that in the case

of any person, partnership, corporation, or concern leasing a project from the corporation any

such person, partnership, corporation or concern so leased leasing shall be exempt from payment

of state sales tax applicable to materials used in construction, reconstruction or rehabilitation of

such a facility or project or to the acquisition of furniture, fixtures and equipment, excepting

automobiles, trucks, and other motor vehicles and only to the extent that the costs of such

materials, furniture, fixtures and equipment do not exceed the amount financed through the

corporation.

     (b) If and to the extent the proceedings under which the bonds or notes authorized to be

issued under the provisions of this chapter so provide, the corporation may agree to cooperate

with the lessee of a project in connection with any administrative or judicial proceedings for

determining the validity or amount of payments, and may agree to appoint or designate and

reserve the right in and for the lessee to take all action which the corporation may lawfully take in

respect of those payments and all matters relating to them, provided, that the lessee bears and pay

all costs and expenses of the corporation thereby incurred at the request of the lessee or by reason

of any action taken by the lessee in behalf of the corporation. Any lessee of a project, which has

paid the amounts in lieu of taxes required by the first sentence of this section, is not required to

pay any taxes for which a payment in lieu thereof has been made to the state or to any city, town,

school district, or other political subdivision or special district having taxing powers,

notwithstanding any other statute to the contrary.

     45-37.1-9.1. Procedure.

     (a) An exemption from payment of state sales tax shall only apply to projects approved

prior to July 1, 2011 after June 30, 2017, and shall be applicable to materials used in construction

of a facility or to furniture, fixtures and equipment (excepting automobiles, trucks, and other

motor vehicles) only to the extent that the costs of such materials do not exceed the amount

financed through the corporation as required in § 45-37.1-9. shall be deemed to have been

authorized thirty (30) days from the date of the completion by the corporation of an economic

analysis that shall include:

     (1) A full description of the project to which the tax exemption is related; and

     (2) The corporation's analysis of the impact of the proposed project will or may have on

the state. The analysis shall be supported by such appropriate data and documentation and shall

consider, but not be limited to, the following factors:

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     (i) The impact on the industry or industries in which the completed project will be

involved;

     (ii) State fiscal matters, including the state budget (revenues and expenses);

     (iii) The financial exposure of the taxpayers of the state under the plans for the proposed

project and negative foreseeable contingencies that may arise therefrom;

     (iv) The approximate number of jobs projected to be created, construction and

nonconstruction;

     (v) Identification of geographic sources of the staffing for identified jobs;

     (vi) The projected duration of the identified construction jobs;

     (vii) The approximate wage rates for the identified jobs;

     (viii) The types of fringe benefits to be provided with the identified jobs, including

healthcare insurance and any retirement benefits;

     (ix) The projected fiscal impact on increased personal income taxes to the state of Rhode

Island; and

     (x) The description of any plan or process intended to stimulate hiring from the host

community, training of employees or potential employees and outreach to minority job applicants

and minority businesses.

     (b) For purposes of the exemption from taxes and assessments for any project of the

corporation held by a lessee of the corporation under section 9 of this chapter §45-37.1-9 and

subsection (a) of this section, any such project shall be subject to the following additional

requirements:

     (1) The total sales tax exemption benefit to the lessee will be implemented through a

reimbursement process as determined by the division of taxation rather than an up-front purchase

exemption; .

     (2) The sales tax benefits granted pursuant to section 9 of this chapter shall: (i) only apply

to projects approved prior to July 1, 2011 after June 30, 2017, (ii) only apply to materials used in

the construction, reconstruction or rehabilitation of the project and to the acquisition of furniture,

fixtures and equipment, except automobiles, trucks or other motor vehicles, and (iii) may not

apply to any single project in an amount in excess of ten million dollars ($10,000,000) for

materials, furniture, fixtures, and equipment. or materials that otherwise are depreciable and have

a useful life of one year or more, for the project for a period not to exceed six (6) months after

receipt of a certificate of occupancy for any given phase of the project for which sales tax benefits

are utilized; and (ii) not exceed an amount equal to the income tax revenue received by the state

from the new full-time jobs with benefits excluding project construction jobs, generated by the

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project within a period of three (3) years from after the receipt of a certificate of occupancy for

any given phase of the project. For purposes of this section, "full-time jobs with benefits" means

jobs that require working a minimum of thirty (30) hours per week within the state, with a median

wage that exceeds by five percent (5%) the median annual wage for the preceding year for full-

time jobs in Rhode Island, as certified by the department of labor and training, with a benefit

package that is typical of companies within the lessee's industry.

     (3) The corporation shall transmit the analysis required under section 9 of this chapter to

the house and senate fiscal committee chairs, the department of labor and training and the

division of taxation promptly upon completion. Annually thereafter, the department of labor and

training shall certify to the house and senate fiscal committee chairs, the house and senate fiscal

advisors, the corporation and the division of taxation the actual number of new full-time jobs with

benefits created by the project, in addition to construction jobs, and whether such new jobs are on

target to meet or exceed the estimated number of new jobs indentified in the analysis above. This

certification shall no longer be required when the total amount of new income tax revenue

received by the state exceeds the amount of the sales tax exemption benefit granted above. In

order for a project to be exempt from payment of sales tax, the corporation shall specifically

designate by resolution in writing for each project, the portion or dollar amount of the project, if

any, exempt from state sales tax as provided in §45-37.1-9, but in no event shall a project amount

exceed ten million dollars ($10,000,000) per project.

     (4) The department of labor and training shall certify to the house and senate fiscal

committee chairs and the division of taxation that jobs created by the project are "new jobs" in the

state of Rhode Island, meaning that the employees of the project are in addition to, and without a

reduction of, those employees of the lessee currently employed in Rhode Island, are not relocated

from another facility of the lessee's in Rhode Island or are employees assumed by the lessee as

the result of a merger or acquisition of a company already located in Rhode Island. Additionally,

the corporation, with the assistance of the lessee, the department of labor and training, the

department of human services and the division of taxation shall provide annually an analysis of

whether any of the employees of the project qualify for RIte Care or RIte Share benefits and the

impact such benefits or assistance may have on the state budget. By September 1, 2018, and by

the same day of each year thereafter, the corporation shall report the name and address of each

business for which the corporation approved a project for the previous fiscal year to the division

of taxation together with the dollar amount designated by the corporation in subsection (b)(3) of

this section.

     (5) Notwithstanding any other provision of law, the division of taxation, the department

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of labor and training and the department of human services are authorized to present, review and

discuss lessee specific tax or employment information or data with the corporation, the house and

senate fiscal committee chairs, and/or the house and senate fiscal advisors for the purpose of

verification and compliance with this resolution; and No borrower having a project approved for

exemption from payment of sales tax as provided in this chapter shall be eligible to avail itself of

any incentives offered by the state and administered by the Rhode Island commerce corporation

established pursuant to chapter 64 of title 42 for a period of three (3) years following the date the

project was approved by the corporation.

     (6) The corporation and the project lessee shall agree that, if any time prior to the state

recouping the amount of the sales tax exemption through new income tax collections from the

project, not including construction job income taxes, the lessee will be unable to continue the

project, or otherwise defaults on its obligations to the corporation, the lessee shall be liable to the

state for all the sales tax benefits granted to the project plus interest, as determined in RIGL 44-1-

7, calculated from the date the lessee received the sales tax benefits. The sales tax exemption shall

only apply to projects approved prior to July 1, 2011.

     SECTION 2. This act shall take effect on July 1, 2017.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES -- INDUSTRIAL FACILITIES CORPORATION

***

     This act would exempt projects governed by the "Rhode Island industrial facilities

corporation act" and approved after June 30, 2017, from the payment of sales tax applicable to

materials, furniture, fixtures and equipment used in the construction, reconstruction or

rehabilitation of the project; provided, however, in no event may a project amount exceed the sum

of ten million dollars ($10,000,000) per project. This act would further provide that no project

approved for exemption from the payment of sales tax would be eligible for any incentives

offered by the state, and administered by the commerce corporation, for a period of three (3)

years following the project's approval date.

     This act would take effect on July 1, 2017.

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