Bill Text For HB1138 - Engrossed

 1|ENGROSSED HOUSE                                                        |
  |BILL NO. 1138                        By: Fetgatter and Lawson of the   |
 2|                                                               House   |
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 3|                                         and                           |
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 4|                                         Hall of the Senate            |
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 5|                                                                       |
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 6|                                                                       |
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 7|       An Act relating to public finance; amending 62 O.S.             |
  |       2011, Sections 861 and 863, which relate to the Local           |
 8|       Development Act; modifying maximum duration of                  |
  |       increment districts; prescribing procedure for                  |
 9|       approval of exemption by governing body; providing              |
  |       for extension of maturity date of certain                       |
10|       obligations; providing for codification; and                    |
  |       providing an effective date.                                    |
11|                                                                       |
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12|                                                                       |
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13|BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:                  |
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14|    SECTION 1.     AMENDATORY     62 O.S. 2011, Section 861, is        |
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15|amended to read as follows:                                            |
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16|    Section 861.  A.  A project plan may contain a provision that      |
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17|the increments from certain local taxes or fees may be used to         |
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18|finance project costs in areas qualified under the Local Development   |
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19|Act.  The increment from local taxes or fees levied from and after     |
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20|the effective date of the approval of such plan shall be apportioned   |
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21|in the following manner for a period not to exceed twenty-five (25)    |
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22|fiscal years thereafter or the period required for payment of          |
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23|project costs, whichever is less, or the period as extended pursuant   |
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24|to the provisions of Section 3 of this act; provided, however, that    |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 1
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 1|for any increment district established after November 1, 1992, such    |
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 2|time period shall be tolled for a period of time equal to the          |
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 3|pendency of any litigation directly or indirectly challenging the      |
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 4|increment district or apportionment or disbursement:                   |
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 5|    1.  That portion of the ad valorem taxes which are produced by     |
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 6|the levy at the rate fixed each year by or for each such ad valorem    |
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 7|taxing entity upon the base assessed value of the increment district   |
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 8|determined pursuant to Section 862 of this title and as to an area     |
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 9|later added to the increment district, the effective date of the       |
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10|addition to the increment district, shall be paid to each taxing       |
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11|entity and all or any portion of local sales taxes, other local        |
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12|taxes or local fees collected each year which are not subject to       |
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13|apportionment shall be paid or retained as otherwise provided by       |
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14|law; and                                                               |
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15|    2.  All or any portion of:                                         |
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16|         a.    ad valorem taxes, in excess of such amount specified    |
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17|              in paragraph 1 of this subsection,                       |
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18|         b.    the increment of local sales taxes, other local taxes   |
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19|              or local fees, or a combination thereof, paid to or      |
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20|              for the benefit of the city, town, or county approving   |
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21|              the plan, and                                            |
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22|         c.    with its consent, evidenced by agreement in writing,    |
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23|              the increment of local sales tax, other local taxes or   |
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24|                                                                       |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 2
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 1|              local fees, or combination thereof, payable to any       |
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 2|              other local public taxing entity,                        |
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 3|shall be apportioned to, and when collected, shall be paid into an     |
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 4|apportionment fund established for the project pursuant to the         |
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 5|project plan.  Such revenues shall be used for the payment of the      |
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 6|project costs and for the payment of the principal of, the interest    |
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 7|on, and any premiums due in connection with the bonds of, loans,       |
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 8|notes, or advances of money to, or indebtedness incurred to finance    |
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 9|project costs, whether funded, refunded, assumed, or otherwise, for    |
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10|financing, in whole or in part, eligible project costs.  For the       |
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11|purposes of this section, "local sales tax" means amounts payable to   |
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12|or for the benefit of a local governmental entity calculated as a      |
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13|percentage of gross sales whether imposed by ordinance, resolution,    |
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14|covenant, or agreement.  Nothing shall prohibit the increments from    |
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15|being used to directly pay eligible project costs.  When all           |
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16|eligible project costs and such bonds, loans, advances of money or     |
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17|indebtedness, if any, including interest thereon and any premiums      |
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18|due in connection with them, have been paid and the governing body     |
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19|adopts an ordinance or resolution dissolving the tax apportionment     |
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20|financing, all ad valorem taxes upon the taxable property within the   |
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21|boundary of such district shall be paid into the funds of the          |
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22|respective taxing entities.                                            |
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23|    B.  If a project plan contains a provision for apportionment as    |
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24|provided in subsection A of this section, and notwithstanding any      |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 3
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 1|other provision of law to the contrary, the governing body shall       |
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 2|direct in the resolution or ordinance approving the plan which         |
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 3|portion of the increments, including whether any or all, to be paid    |
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 4|into the apportionment fund shall constitute a part of the general     |
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 5|fund to be appropriated annually by the governing body, and which      |
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 6|portion, including whether any or all, shall constitute funds of a     |
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 7|public entity authorized to issue tax apportionment bonds or notes     |
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 8|or to incur project costs.                                             |
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 9|    C.  To the extent that collections exceed project costs and the    |
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10|provisions for payment of principal and interest along with            |
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11|sufficient reserves on any bonds issued pursuant to the provisions     |
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12|of Section 863 of this title, the excess shall be paid into the        |
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13|funds of the respective taxing entities unless the taxing entity       |
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14|agrees to some other use of such collections.                          |
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15|    D.  Except as provided in subsection E of this section, for any    |
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16|year in which taxes or fees are apportioned in the manner specified    |
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17|in paragraph 2 of subsection A of this section, any increase in        |
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18|assessed valuation of taxable real property or taxable personal        |
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19|property within the boundaries of such district in excess of the       |
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20|base assessed value shall not be considered by any taxing entity in    |
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21|computing any debt limitation or for any other purpose except for      |
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22|the levy of taxes and in determining the amount to be apportioned.     |
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23|    E.  In the event there is a change in the assessment ratio for     |
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24|ad valorem tax property valuations of property within the boundaries   |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 4
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 1|of an increment district, the portions of valuations for assessment    |
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 2|pursuant to paragraphs 1 and 2 of subsection A of this section shall   |
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 3|be proportionately adjusted in accordance with such reassessment.      |
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 4|    F.  Nothing in this section shall be construed as relieving        |
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 5|property in such project area from being assessed as provided in the   |
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 6|Ad Valorem Tax Code of the Oklahoma Statutes, or as relieving owners   |
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 7|of such property from paying a uniform rate of taxes, as required by   |
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 8|Section 5 of Article X of the Oklahoma Constitution.                   |
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 9|    G.  Subject to constitutional exemptions, if property in an        |
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10|increment district is owned by a public entity and is leased to or     |
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11|operated for a private use, including, without limitation, use by a    |
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12|not-for-profit corporation or trust, the portion of the property so    |
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13|leased or operated shall be assessed by the county assessor as if      |
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14|such portion of the property were taxable, and, during the term of     |
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15|the increment district, the public entity owning such property shall   |
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16|pay or require the user thereof to pay ad valorem taxes or an in       |
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17|lieu ad valorem tax payment in an amount not less than the amount      |
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18|that would have resulted if taxes had otherwise been levied on such    |
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19|portion of the property.  If property subject to ad valorem tax in     |
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20|an increment district is acquired by a private not-for-profit          |
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21|corporation or public or private trust, it shall continue to be        |
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22|assessed and subject to ad valorem taxes or an in lieu ad valorem      |
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23|payment by the user thereof until termination of the increment         |
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24|                                                                       |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 5
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 1|district unless and only to the extent of the portion of the           |
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 2|property and the use thereof that is:                                  |
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 3|    1.  Acquired to implement the project plan;                        |
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 4|    2.  Converted to a new tax-exempt use by a tax-exempt user; or     |
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 5|    3.  Entitled to claim a constitutional exemption notwithstanding   |
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 6|statutory provisions.                                                  |
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 7|During the period of an increment district, such nonexempt uses and    |
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 8|interests are severable for purposes of ad valorem and in lieu of ad   |
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 9|valorem assessment and payments, notwithstanding any statutory         |
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10|provisions to the contrary.                                            |
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11|    SECTION 2.     AMENDATORY     62 O.S. 2011, Section 863, is        |
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12|amended to read as follows:                                            |
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13|    Section 863.  A.  With the approval of the governing body, a       |
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14|public entity, other than a city, town or county, may issue tax        |
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15|apportionment bonds or notes, other bonds or notes, or both, the       |
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16|proceeds of which may be used to pay project costs pursuant to the     |
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17|plan notwithstanding any other statutory provision to the contrary.    |
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18|Subject to the approval of the governing body, such public entity      |
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19|may issue refunding bonds or notes for the payment or retirement of    |
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20|bonds or notes previously issued by the public entity to pay project   |
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21|costs pursuant to the plan.                                            |
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22|    B.  The public entity issuing tax apportionment bonds or notes     |
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23|may, as authorized by the governing body pursuant to Section 6C of     |
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24|Article X of the Constitution of the State of Oklahoma, irrevocably    |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 6
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 1|pledge all or part of the apportioned increments and other revenue     |
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 2|for payment of the tax apportionment bonds or notes.  The part of      |
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 3|the apportioned increments pledged in payment may be used only for     |
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 4|the payment of the bonds or notes or interest on the bonds or notes    |
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 5|until the bonds or notes have been fully paid.  A holder of the        |
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 6|bonds or notes or of coupons issued on the bonds has a lien to the     |
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 7|extent authorized by the pledge against the apportionment fund and     |
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 8|the future increments for payment of the bonds or notes and interest   |
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 9|on the bonds or notes and may protect or enforce the lien at law or    |
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10|in equity.                                                             |
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11|    C.  The issuing public entity may provide in the contract with     |
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12|the owners or holders of tax apportionment bonds that they will pay    |
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13|into the apportionment fund all or any part of the revenue produced    |
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14|or received from the operation or sale of a facility acquired,         |
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15|improved, or constructed pursuant to a project plan, to be used to     |
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16|pay principal and interest on the bonds.  If the public entity         |
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17|agrees, the owners or holders of these bonds may have a lien or        |
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18|mortgage on a facility acquired, improved, or constructed with the     |
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19|proceeds of the bonds.                                                 |
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20|    D.  Tax apportionment bonds may be issued to mature in a period    |
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21|not to exceed twenty-five (25) years in one or more series except as   |
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22|extended pursuant to the provisions of Section 3 of this act;          |
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23|provided, however, that for any increment district established after   |
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24|November 1, 1992, such time period shall be tolled for a period of     |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 7
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 1|time equal to the pendency of any litigation directly or indirectly    |
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 2|challenging the increment district or apportionment or disbursement.   |
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 3|The trust indenture, ordinance, or resolution approved, issued in      |
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 4|connection with such bond or note, shall provide:                      |
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 5|    1.  The date that the bond or note bears;                          |
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 6|    2.  That the bond or note is payable on demand or at a specified   |
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 7|time;                                                                  |
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 8|    3.  The interest rate that the bond or note bears;                 |
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 9|    4.  The denomination of the bond or note;                          |
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10|    5.  Whether the bond or note is in coupon or registered form;      |
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11|    6.  The conversion or registration privileges of the bond or       |
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12|note;                                                                  |
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13|    7.  The manner of execution of the bond or note;                   |
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14|    8.  The medium of payment in which and the place or places at      |
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15|which the bond or note is payable;                                     |
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16|    9.  The terms of redemption, with or without premium, to which     |
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17|the bond or note is subject;                                           |
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18|    10.  The manner in which the bond or note is secured; and          |
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19|    11.  Any other characteristic of the bond or note.                 |
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20|    E.  A bond or note issued pursuant to the provisions of the        |
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21|Local Development Act is fully negotiable.  In a suit, action, or      |
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22|other proceeding involving the validity or enforceability of a bond    |
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23|or note issued pursuant to the provisions of the Local Development     |
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24|Act or the security of a bond or note issued pursuant to the           |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 8
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 1|provisions of the Local Development Act, if the bond or note recites   |
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 2|in substance that it was issued by the public entity pursuant to the   |
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 3|Local Development Act, the bond or note is deemed to have been         |
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 4|issued for that purpose, and the recital shall be conclusive of its    |
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 5|validity and the regularity of its issuance.                           |
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 6|    F.  A bank, trust company, savings bank or institution, savings    |
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 7|and loan association, investment company or other person carrying on   |
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 8|a banking or investment business; an insurance company, insurance      |
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 9|association, or other person carrying on an insurance business; or     |
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10|an executor, administrator, curator, trustee, or other fiduciary may   |
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11|invest any sinking funds, money, or other funds belonging to it or     |
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12|in its control in tax apportionment bonds or notes issued under the    |
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13|Local Development Act.  This act does not relieve any person of the    |
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14|duty to exercise reasonable care in selecting securities or of         |
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15|complying with other applicable laws.                                  |
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16|    G.  A tax apportionment bond or note issued pursuant to the        |
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17|provisions of this section is not a debt, liability, or obligation     |
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18|of the city, town or county creating or approving the plan, project    |
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19|or increment district.  The bond or note does not give rise to a       |
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20|charge against the general credit or taxing powers of such city,       |
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21|town or county and is not payable except as provided by the Local      |
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22|Development Act.  Bonds or notes issued pursuant to the provisions     |
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23|of this section are not general obligations of the state and have no   |
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24|claim on the revenues or resources of the state.  A bond or note       |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 9
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 1|issued pursuant to the provisions of this section must state the       |
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 2|restrictions of this subsection on its face.                           |
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 3|    H.  A tax apportionment bond or note issued pursuant to the        |
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 4|provisions of this section may not be included in any computation of   |
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 5|the general obligation debt of the city, town or county creating or    |
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 6|approving the plan, project or increment district.                     |
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 7|    I.  A public entity may not issue bonds or notes, pursuant to      |
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 8|the provisions of this section, providing for repayment of any         |
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 9|portion of the principal from apportioned tax increments in an         |
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10|amount that exceeds the total cost of implementing the project plan    |
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11|for which the bonds or notes are issued except to the extent that      |
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12|bond or notes issues may be sized to include costs of issuance,        |
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13|credit enhancement fees or premiums, and reasonably required           |
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14|reserves or amounts to be repaid from sources other than apportioned   |
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15|tax increments.                                                        |
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16|    J.  All bonds issued pursuant to the provisions of this section    |
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17|shall be reviewed by the Oklahoma State Bond Advisor who will give a   |
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18|recommendation on such bonds to the issuing entity.                    |
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19|    SECTION 3.     NEW LAW     A new section of law to be codified     |
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20|in the Oklahoma Statutes as Section 863.1 of Title 62, unless there    |
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21|is created a duplication in numbering, reads as follows:               |
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22|    If the governing body approves an extension by a majority vote     |
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23|of its members, the duration of a tax increment finance district may   |
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24|exceed twenty-five (25) years, but may not exceed a duration of        |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 10
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 1|twenty-eight (28) years, if the governing body finds that the          |
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 2|economic conditions within the district were adversely affected by     |
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 3|the effect of the COVID-19 virus, either upon the health of persons    |
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 4|residing or doing business within the district, or that effects of     |
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 5|the virus on persons and business activity outside the district had    |
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 6|a sufficiently adverse impact to provide an extension of the           |
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 7|duration of the district and any obligations issued in connection      |
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 8|with the increment district for a maximum additional three (3)         |
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 9|years.                                                                 |
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10|    SECTION 4.  This act shall become effective November 1, 2021.      |
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11|    Passed the House of Representatives the 11th day of March, 2021.   |
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12|                                                                       |
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13|                                                                       |
  |                                     Presiding Officer of the House    |
14|                                                 of Representatives    |
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15|                                                                       |
  |    Passed the Senate the ___ day of __________, 2021.                 |
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17|                                                                       |
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18|                                    Presiding Officer of the Senate    |
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arsid5583972 ENGR. H. B. NO. 1138                                  Page 11
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