2020 -- H 8048

========

LC005454

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

____________

A N   A C T

RELATING TO TAXATION – SALES AND USE TAXES – LIABILITY AND

COMPUTATION

     Introduced By: Representatives Tobon, Barros, Alzate, Giraldo, and Messier

     Date Introduced: June 18, 2020

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-18-36.1 of the General Laws in Chapter 44-18 entitled "Sales and

Use Taxes - Liability and Computation" is hereby amended to read as follows:

     44-18-36.1. Hotel tax.

     (a) There is imposed a hotel tax of five percent (5%) upon the total consideration charged

for occupancy of any space furnished by any hotel, travel packages, or room reseller or reseller as

defined in § 44-18-7.3(b) in this state. A house, condominium, or other resident dwelling shall be

exempt from the five percent (5%) hotel tax under this subsection if the house, condominium, or

other resident dwelling is rented in its entirety. The hotel tax is in addition to any sales tax imposed.

This hotel tax is administered and collected by the division of taxation and unless provided to the

contrary in this chapter, all the administration, collection, and other provisions of chapters 18 and

19 of this title apply. Nothing in this chapter shall be construed to limit the powers of the convention

authority of the city of Providence established pursuant to the provisions of chapter 84 of the public

laws of 1980, except that distribution of hotel tax receipts shall be made pursuant to chapter 63.1

of title 42 rather than chapter 84 of the public laws of 1980.

     (b) There is hereby levied and imposed, upon the total consideration charged for occupancy

of any space furnished by any hotel in this state, in addition to all other taxes and fees now imposed

by law, a local hotel tax at a rate of one percent (1%). The local hotel tax shall be administered and

collected in accordance with subsection (a).

     (c) All sums received by the division of taxation from the local hotel tax, penalties or

forfeitures, interest, costs of suit and fines shall be distributed at least quarterly, credited and paid

by the state treasurer to the city or town where the space for occupancy that is furnished by the

hotel is located. Unless provided to the contrary in this chapter, all of the administration, collection,

and other provisions of chapters 18 and 19 of this title shall apply.

     (d) Notwithstanding the provisions of subsection (a) of this section, the city of Newport

shall have the authority to collect from hotels located in the city of Newport the tax imposed by

subsection (a) of this section.

     (1) Within ten (10) days of collection of the tax, the city of Newport shall distribute the tax

as provided in § 42-63.1-3. No later than the first day of March and the first day of September in

each year in which the tax is collected, the city of Newport shall submit to the division of taxation

a report of the tax collected and distributed during the six (6) month period ending thirty (30) days

prior to the reporting date.

     (2) The city of Newport shall have the same authority as the division of taxation to recover

delinquent hotel taxes pursuant to chapter 44-19, and the amount of any hotel tax, penalty and

interest imposed by the city of Newport until collected constitutes a lien on the real property of the

taxpayer.

     (e) For fiscal year 2020, there is hereby appropriated, out of money in the treasury not

otherwise appropriated for the fiscal year 2020-2021, funds required to be allocated and disbursed

by the department of revenue pursuant to § 42-63.1-3 and this section of the general laws relating

to distribution of hotel taxes, which amounts do not include taxes allocated and appropriated to the

downtown Pawtucket redevelopment economic activity taxes fund pursuant to § 45-33.4-4 of the

general laws, as amended on or before June 30, 2020, for the purposes of financing projects.

     SECTION 2. Sections 45-33.4-1 and 45-33.4-4 of the General Laws in Chapter 45-33.4

entitled "City of Pawtucket Downtown Redevelopment Project" are hereby amended to read as

follows:

     45-33.4-1. Definitions.

     For purposes of this chapter, the following terms shall have the meanings ascribed to them

herein:

     (1) "Agency" means the Pawtucket redevelopment agency, established in accordance with

chapter 31 of this title.

     (2) "Arts district" means the economic development zone designated as the arts and

entertainment district in the downtown area of the city described in § 44-30-1.1.

     (3) "Ballpark district" means the ballpark district of the downtown Pawtucket

LC005454 - Page 2 of 9

redevelopment project area or tax increment master plan, including the ballpark known as McCoy

Stadium, and related facilities and its immediately adjacent parcels within the redevelopment area

approved by the agency in accordance with the procedures set forth in chapters 31, 32, 33, and 33.2

of this title.

     (4) "Bonds" means revenue bonds issued by the Pawtucket redevelopment agency or the

city in accordance with the provisions of chapters 31, 32, 33, and 33.2 of this title in order to finance

a project, which bonds may be issued on a tax-exempt or taxable basis, on a fixed-rate basis or

variable-rate basis, or any combination thereof, and may be issued in one or more sub-series and

supported with letters or lines of credit, liquidity facilities, insurance or other support arrangements

including, but not limited to, interest rate "caps," "floors," "collars," that the agency or city, as

issuer, determines to be necessary or desirable for the purpose of generating savings or managing

interest rates in connection with, or subsequent to, or incidental to the issuance, carrying, or

securing of the bonds.

     (5) "City" means the city of Pawtucket, Rhode Island.

     (6) "City economic activity taxes" means city incremental tangible asset taxes, local hotel

taxes assessed and collected pursuant to § 44-18-36.1(b), food and beverage tax revenues, and non-

real property assessments from activities in the arts district, the growth center district, and the

ballpark district, as set forth in the economic activity taxes agreement negotiated by the governor

and the state director of the department of revenue, as described in § 45-33.4-4.

     (7) "City tax increment revenues" means revenues generated under chapter 33.2 of this title

that are expected to include incremental real estate property taxes, personal property taxes, special

assessments on real property, and betterment fees generated in the arts district, the growth center

district, and the ballpark district.

     (8) "Economic activity taxes agreement" means the agreement by and among the agency,

the city, and the state described in § 45-33.4-4.

     (9) "Growth center district" means the growth center district described in a redevelopment

plan or in a tax increment district master plan approved by the agency in accordance with the

procedures set forth in chapters 31, 32, 33, and 33.2 of title 45, which shall have boundaries as

follows: The area beginning at the point of intersection of Lonsdale Avenue and the Central

Falls/Pawtucket line, continuing south on Lonsdale Avenue until Beecher Street, then heading east,

then south, then east on Beecher Street to Coleman Street, then turning south onto Coleman Street

to Carpenter Street, then heading east onto Carpenter Street to Conant Street, then turning south

onto Conant Street, continuing to Main Street, then turning northeast onto Main Street to Church

Street, then turning east onto Church Street to Pine Street, then turning south onto Pine Street to

LC005454 - Page 3 of 9

South Union Street, then turning east onto South Union Street to Park Place West, then turning

south onto Park Place West to George St, continuing south onto George Street to Division Street,

then turning east onto Division Street to Taft Street, then turning south onto Taft Street to Max

Read Field, turning east at Max Read Field and crossing the Seekonk River, then turning south

along Seekonk River boundary to the intersection of Berry Spring Street and School Street,

continuing northerly onto School Street to Bowers Street, turning east onto Bowers Street to

Prospect Street, then turning north onto Prospect Street to Interstate 95, turning northeast onto

Interstate 95 to Walcott Street, turning west onto Walcott Street to Broadway, turning northerly

onto Broadway to edge of Interstate 95, continuing north along the western edge of Interstate 95 to

Pawtucket/Attleboro city line, then turning west at the city line to the Blackstone River, then south

along the city boundary on the Blackstone River, continuing westerly along the city line to the point

where the city line intersects with Lonsdale Avenue.

     (10) “Incremental hotel taxes” mean the full amount of any taxes assessed and collected

pursuant to § 44-18-36.1(a) and (b) on any new hotels constructed or opened in the ballpark district,

arts district, and the growth center district after the base date which shall be allocated and

appropriated in accordance with this chapter and not in accordance with § 42-63.1-3. Taxes

assessed and collected on the one hotel in existence in the city on the base date are to be distributed

by the department of revenue in accordance with the provisions of § 42-63.1-3.

     (10)(11) "Project" means any project as defined in § 45-33.2-3 or any capital project as

defined in § 45-33.2-3.1 within the ballpark district, arts district, or growth center district and shall

include "project costs" as described in § 45-33.2-28, which definition shall apply irrespective of

whether the project is described in a redevelopment plan or in a tax increment district master plan.

     (11)(12) "Redevelopment plan" means a redevelopment plan as defined in § 45-31-8.

     (12)(13) "State" means the state of Rhode Island and Providence Plantations.

     (13)(14) "State economic activity taxes" means incremental tax revenues realized in the

arts district, the growth center district, and the ballpark district assessed and collected under

chapters 11, 18 (including, but not limited to, all hotel taxes collected pursuant to § 44-18-36.1(a)

on any new hotels constructed or opened in the ballpark district, arts district, and the growth center

district after the base date), 19, and 30 of title 44 as set forth in the economic activity taxes

agreement negotiated by the governor and the state director of the department of revenue; provided,

however, that state economic activity taxes shall not include existing tax revenues unless: 1) The

project is to facilitate an expansion of an existing business that will otherwise be unable to increase

the number of full-time employees in the state; or 2) The commerce corporation certifies in writing

that a defined amount of revenues from the districts collected and assessed under chapters 18

LC005454 - Page 4 of 9

(including, but not limited to, all hotel taxes collected pursuant to § 44-18-36.1(a) on any new hotels

constructed or opened in the ballpark district, arts district, and the growth center district after the

base date), 19, and 30 of title 44 are necessary to finance or complete a given project; 3) The public

investments made under this chapter for a project can be demonstrated to have a likely appreciable

positive impact on the revenues of an existing business within the district; or 4) The project is

necessary to retain a businesses that is at substantial risk of relocating to a viable location out-of-

state as verified by the Rhode Island commerce corporation. The commerce corporation shall

establish, by regulation, the documentation that shall be required to verify compliance under this

subsection. In order to assist the commerce corporation in verifying compliance, the affected

business's chief executive officer, or equivalent officer, shall attest under oath:

     (i) With respect to any portion of a project that is financing municipal or public facilities,

that the project is needed and that the financing of the project is in the public interest; or

     (ii) With respect to any portion of the project providing financing for industrial or

commercial development purposes, that unemployment or the threat of unemployment exists in the

city 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 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.

     (14)(15) "Tax increment district master plan" means a tax increment district master plan as

defined in § 45-33.2-3.1.

     45-33.4-4. Authorization of economic activity taxes agreement.

     (a) The state, acting by and through the department of revenue, is authorized to enter into

an economic activity taxes agreement with the agency and the city for the purposes of financing

projects, bonding costs, including capitalized interest, debt service reserves, and costs of issuance.

Such economic activity taxes agreement may include such covenants and undertakings of the state

as the state director of the department of revenue and the governor deem reasonable, including,

without limitation, provisions enabling the payment of amounts under the economic activity taxes

agreement from legally available funds which have been appropriated by the general assembly to

the downtown Pawtucket redevelopment economic activity taxes fund described in subsection (b)

of this section for each fiscal year during which any bonds are outstanding.

     (b) Such economic activity taxes agreement and the pledge and assignment of the state

LC005454 - Page 5 of 9

economic activity taxes shall be subject to the provisions of this chapter rather than the provisions

of chapter 64.21 of title 42. Upon the execution of an economic activity taxes agreement, such

economic activity taxes shall be segregated by the state division of taxation from all other tax

revenues of the state and deposited on a monthly basis into a restricted account known as the

"downtown Pawtucket redevelopment economic activity taxes fund." However, in the event an

economic activity taxes agreement has not been signed by June 30, 2020, incremental tax revenues

realized in the arts district, the growth center district, and the ballpark district assessed and collected

under chapters 18 and 19 of title 44, including, without limitation, hotel taxes on any new hotels

constructed or opened in the ballpark district, arts district, and the growth center district after the

base date, shall be segregated by the state division of taxation and deposited into the downtown

Pawtucket redevelopment economic activity taxes fund. Monies deposited in the downtown

Pawtucket redevelopment economic activity taxes fund may be applied to payment of debt service

on the bonds; to fund debt service reserves; to costs of infrastructure improvements in and around

the ballpark district, arts district, and the growth center district; to fund future debt service on the

bonds; and to fund a redevelopment revolving fund established in accordance with § 45-33-1. If

economic activity taxes remain in such downtown Pawtucket redevelopment economic activity

taxes fund at the end of the state's fiscal year, the monies shall be retained in the fund to be applied

in future fiscal years and shall not be applied to reduce future payments but may be applied to

"super sinker," "turbo," or other redemption of the bonds, such that if the agency receives revenues

in excess of requirements in the bond indenture or trust agreement securing the bonds, the bonds

may be retired. Nothing in this chapter shall prohibit the pooling of revenues for the payment of

the bonds, provided that the economic activity taxes agreement, bond indenture, or trust agreement

shall provide for a reconciliation of contributions of the agency, the city, and the state from time to

time; provided however, that the state hereby pledges to and agrees with any person, firm, or

corporation, or federal agency subscribing to or acquiring any bonds secured by revenues under

this chapter, that the state will not limit or alter the rights vested in the city or the agency or such

bondholders until all bonds at any time issued, together with their interest, are fully met and

discharged. The state does further pledge to and agree with the United States, and any other federal

agency, that in the event that any federal agency constructs or contributes any funds for the

construction, extension, improvement, equipping, furnishing, or enlargement of any project, or any

portion of it, the state will not alter or limit this chapter in any manner that would be inconsistent

with the due performance of any agreements with the federal agency; and the city and the agency

continue to have and may exercise all powers granted by this chapter, so long as the powers are

necessary or desirable for the carrying out of the purposes of this chapter.

LC005454 - Page 6 of 9

     (c) The economic activity taxes agreement shall not constitute indebtedness of the state or

any of its subdivisions, or a debt for which the full faith and credit of the state or any of its

subdivisions is pledged. The state's obligation to make payments of state economic activity taxes

under the state economic activity taxes agreement shall be solely from legally available funds

appropriated by the general assembly.

     (d) The economic activity taxes agreement may be terminated upon agreement of the

parties thereto, provided, however, the economic activity taxes agreement shall not be terminated

so long as any bonds secured by the economic activity taxes remain outstanding.

     (e) By no later than September 30, 2019 August 30, 2020, the state department of revenue

shall establish the baseline, utilizing a base date of June 30, 2020, to be used in the calculation of

state revenues in the state economic activity tax agreement. By that date August 30, 2020, the

department of revenue, in consultation with the state commerce corporation shall develop a

template of an final economic activity tax agreement to be executed between the city, the agency,

and the state at such time that a redevelopment project is submitted for consideration. Upon

submission of a redevelopment project by the city or the agency for financing under this statute,

the state shall complete negotiations and finalize approval of an economic activity agreement within

120 days of the submission of the request for financing.

     (f) Not later than February 1 of each year commencing February 1, 2022, the city, the

agency, and the Rhode Island commerce corporation shall submit a performance review report to

the general assembly which includes, but is not limited to, the following information: sources and

uses of project funds, permanent job and construction job creation numbers, local and state tax

revenue estimates, and project completion schedules.

     (g) For fiscal year 2020, there is hereby appropriated, out of money in the treasury not

otherwise appropriated for the fiscal year 2020-2021, funds required to be disbursed to the

downtown Pawtucket redevelopment economic activity taxes fund pursuant to this section of the

general laws, as amended on or before June 30, 2020, including, but not limited to, tax revenues

certified by the commerce corporation to be included as state economic activity taxes, for the

purposes of financing projects.

LC005454 - Page 7 of 9

     SECTION 3. This act shall take effect upon passage.

========

LC005454

========

LC005454 - Page 8 of 9

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION – SALES AND USE TAXES – LIABILITY AND

COMPUTATION

***

     This act would require the general assembly to appropriate all funds relating to economic

activity taxes and hotel taxes excluding funds allocated and appropriated to the Downtown

Pawtucket Redevelopment economic activities fund for the purposes of financing projects during

fiscal year 2020.

     This act would take effect upon passage.

========

LC005454

========

LC005454 - Page 9 of 9