Title 44
Taxation

Chapter 18
Sales and Use Taxes — Liability and Computation

§ 44-18-30C. Exemption from or stabilization of sales and use taxes for municipal economic development zones — West Warwick.

(a) Findings. The general assembly makes the following findings of fact:

(1) Various sections of several towns in the state, including, but not limited to, the town of West Warwick, are deteriorated, blighted areas which have created very difficult challenges to economic development;

(2) Several areas of the state are in a distressed financial condition as defined by § 45-13-12(b) and cannot finance economic development projects on its own without the participation of private enterprise;

(3) The general assembly has found that it is nearly impossible for private enterprise alone to meet these challenges;

(4) In certain sections of financially distressed communities, the serious challenges of economic development and/or redevelopment have not been met by private enterprise alone and the impact is being felt throughout the community;

(5) Legislation enacted to encourage redevelopment of the deteriorated, blighted areas through the formation of local redevelopment agencies has had very limited success;

(6) Various states, such as New Jersey, Pennsylvania and Michigan have had a great deal of success in generating economic development by exercising the authority to exempt and/or stabilize taxes;

(7) The state of Rhode Island has generated economic growth by redirecting and/or exempting certain commercial and retail activity from the imposition of sales, use and income taxes with recent examples being the Providence Place Mall, the Arts Districts in the cities of Providence, Pawtucket and Westerly, and financial services and acquaculture industries;

(8) Most recently, municipalities in our state have had great success in attracting large commercial development, including financial services, manufacturing, and major energy facilities, due in large part to the authority to exempt and/or stabilize property, tangible and/or inventory taxes;

(9) Attracting large non-residential developments or encouraging expansion of existing commercial entities can be extremely important to municipalities, where the quality of public education is largely dependent on the local tax base, thereby expanding the commercial tax base and reducing reliance upon the residential tax base;

(10) The ability to attract this development and increase the non-residential tax base, in turn, improves municipalities’ ability to finance school systems, municipal services and infrastructure, thereby improving the quality of life;

(11) In addition to increasing the local non-residential tax base, this development creates construction jobs, permanent jobs, and spurs additional investment by private enterprises; and

(12) Providing authority to offer tax exemptions from, or to stabilize, the imposition of sales and use taxes will attract and assist in expanding, revitalizing and redeveloping the tax base in our municipalities, thereby providing long-term economic benefits and development.

(b) Exemption or stabilization of sales and use taxes imposed on sales from businesses located in a municipal economic development zone.(1) In order to attract new construction and development in a municipal economic development zone (MED) as provided in this section, upon the designation of such a zone as set forth in subsection (c) of this section, all businesses engaging in qualifying sales and located in new construction in a MED zone (a MED zone business) shall be exempt from the requirement to charge and collect fifty percent (50%) of the current sales and use tax pursuant to §§ 44-18-18 and 44-18-20 for a period of ten (10) years. Sales and use taxes collected in a MED zone shall be returned to the same MED zone in accordance with the provisions of this section. The ten (10) year exemption period for all MED zone businesses shall begin to run from the latest to occur of: (i) the date that is three (3) years from the effective date of the January session 2003 amendments [July 17, 2003]; or (ii) the date that is two (2) years from the date upon which the city or town council designates the MED zone for its municipality; or (iii) the date the first MED zone business obtains a certification of exemption as set forth in subdivision (c)(6) of this section.

(2) For purposes of this section, “qualifying sales” for a MED zone business shall not include gambling activities, or the retail sales of motor vehicles, furniture, home furnishings including mattresses and oriental rugs, tobacco products, or packaged alcoholic beverages.

(3) “Qualifying sales” shall be sales at which the point of sale is located within the same MED zone and point of delivery is located within the same MED zone.

(c) Creation of the municipal economic development zone.(1) The city or town council of a financially distressed community may designate in accordance with the provisions of this section one MED zone in the municipality, provided that the municipality is:

(i) A financially distressed community as defined by § 45-13-12(b), using the criteria set forth in § 45-13-12(b)(1) through (4);

(ii) Has a population less than fifty thousand (50,000) persons; and

(iii) The MED zone shall be a parcel of or contiguous parcels of land consisting in total of not less than ten (10) acres, but not more than thirty (30) acres in the area served by adequate utilities and transportation facilities.

(2) The city or town council of any financially distressed city or town, as set forth in subdivision (1) of this subsection, in creating a MED zone, shall have the power and authority of a redevelopment agency, as provided in chapter 32 of title 45, to undertake the redevelopment of a MED zone.

(3) The city or town council, in designating a MED zone, shall after public notice, hearing and vote as provided by § 45-32-4, comply with the plan requirements of § 45-32-8 and shall be responsible for carrying on the plan. The city or town council in implementing the MED zone plan shall have the power of eminent domain as set forth in § 45-32-24, and the provisions of §§ 45-32-25 — 45-32-41 shall apply to all such condemnations.

(4) All sales and use taxes collected within a MED zone shall be reimbursed to the municipality in which the MED zone is located, and may be expended by the municipality to implement the capital improvement component of the MED zone plan for MED zone property or for property located within one mile of the MED zone or for such other capital improvements as the municipality may determine are required to mitigate MED zone impacts.

(5) West Warwick. The following area or portions of them of the town of West Warwick may be designated as the town’s municipal economic development zone by the town council of the town of West Warwick after public notice, hearing and vote as provided in § 45-32-4:

The area bounded generally by the East Coast Bike Path in the east, Archambault and Gardner Avenue in the north, Payan Street to Curson Street, Curson Street to McNiff, McNiff to Barnes Street, Barnes Street to Nowicki Street to East Street, East Street to Blanchard Street, Blanchard Street to West Street in the west, West Street to Washington Street, Washington Street to Nolan Street, Nolan Street to the East Coast Bike Path in the south, all as more particularly described on the West Warwick municipal economic development zone map on file with the town clerk.

(6) The tax administrator shall issue a certification of exemption to the MED zone business at the time the business applies for its permit to make sales at retail and provides the tax administrator with a MED zone business certificate issued by the town clerk stating that the business is located in new construction in the MED zone. The duration of the certificate shall be determined in accordance with subdivision (b)(1) of this section.

(7) No business shall be permitted to become a MED zone business or to receive a certificate of exemption pursuant to subdivision (6) of this subsection by relocating from any area within the state of Rhode Island but outside the MED zone to new construction within the MED zone, unless the relocation results in the creation of new permanent employment positions that increase the total employment of the business by not less than fifty percent (50%) of its average total employment for the two (2) year period immediately preceding the year in which it applies for its certificate of exemption. Any business that expands its operations by adding a new location within the MED zone and then ceases to operate any of its locations within the state of Rhode Island that existed prior to the establishment of the MED zone location shall immediately have its certificate of exemption for the MED zone location revoked.