Bill Text For SB0500 - Committee Substitute

 1|                          STATE OF OKLAHOMA                            |
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 2|             1st Session of the 58th Legislature (2021)                |
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 3|COMMITTEE SUBSTITUTE                                                   |
  |FOR ENGROSSED                                                          |
 4|SENATE BILL NO. 500                  By: Boren of the Senate           |
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 5|                                         and                           |
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 6|                                         Lowe (Dick) of the House      |
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 8|                                                                       |
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 9|                        COMMITTEE SUBSTITUTE                           |
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10|       An Act relating to development incentives; amending             |
  |       62 O.S. 2011, Sections 860 and 861, which relate to             |
11|       the Local Development Act; requiring the                        |
  |       municipalities and counties to publish annual report            |
12|       on tax increment and incentive financing districts;             |
  |       specifying content of report; and providing an                  |
13|       effective date.                                                 |
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14|                                                                       |
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15|                                                                       |
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16|BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:                  |
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17|    SECTION 1.     AMENDATORY     62 O.S. 2011, Section 860, is        |
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18|amended to read as follows:                                            |
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19|    Section 860.  A.  A project plan may contain a provision that      |
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20|certain local taxes may be subject to incentives or may be exempted    |
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21|in reinvestment areas, historic preservation areas or enterprise       |
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22|areas.                                                                 |
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23|    B.  The governing body may grant incentives or exemptions from     |
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24|local taxation only on the new investment made.  No ad valorem tax     |
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   Req. No. 8103                                                   Page 1
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 1|incentives or exemptions may be granted on the value of property       |
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 2|which has been assessed or which is subject to assessment prior to     |
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 3|the adoption of the project plan.  No ad valorem tax incentives or     |
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 4|exemptions authorized in this section may be granted for retail        |
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 5|establishments.  If a retail establishment is located in property      |
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 6|which otherwise qualifies for an incentive or exemption pursuant to    |
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 7|this section, the incentive or exemption shall not be allowed for      |
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 8|that portion of the property used for such retail establishment.  As   |
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 9|used in this subsection, "retail establishment" shall not include an   |
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10|establishment that provides lodging, including but not limited to a    |
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11|hotel, apartment hotel, public rooming house or motel.  No ad          |
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12|valorem tax incentives or exemptions authorized in this section may    |
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13|be granted if the property is located in an increment district or as   |
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14|long as the property is subject to the ad valorem tax exemption for    |
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15|new or expanding manufacturing facilities as authorized by Section     |
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16|6B of Article X of the Oklahoma Constitution.  In the event of         |
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17|disposition by lease or sublease to a lessee not entitled to an ad     |
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18|valorem tax exemption, the improvements placed thereon shall not be    |
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19|entitled to an ad valorem tax exemption provided for in Section 850    |
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20|et seq. of this title.  The incentives or exemptions, which may be     |
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21|full or partial, may be granted for a period not to exceed five (5)    |
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22|years; however, in enterprise zones incentives or exemptions may be    |
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23|granted for a period not to exceed six (6) years.                      |
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   Req. No. 8103                                                   Page 2
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 1|    C.  No incentives or exemptions may be granted to any business     |
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 2|or firm that is relocating from within the state and is subject to     |
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 3|or in the process of recruitment by two or more governmental           |
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 4|entities within the state unless the governmental entity in which      |
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 5|the business or firm does not locate adopts a resolution giving        |
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 6|their approval to the granting of incentives or exemptions to the      |
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 7|business or firm locating in the competing governmental entity.  No    |
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 8|incentives or exemptions may be granted to an out-of-state business    |
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 9|or firm that is subject to or in the process of recruitment by two     |
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10|or more governmental entities within the state except as otherwise     |
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11|provided for in this subsection.  The prohibition against incentives   |
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12|or exemptions to a business or firm relocating within the state may    |
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13|be waived upon application by the governing body to, and approval      |
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14|of, the Director of the Oklahoma Department of Commerce.  In order     |
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15|for the Director to approve the waiver, the Director must find that    |
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16|the incentives or exemptions are necessary and sufficient to attract   |
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17|the business or firm and that the benefits generated by the business   |
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18|location outweigh the costs of the business location.                  |
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19|    D.  A project plan may contain a provision that ad valorem taxes   |
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20|may be exempted in a commercial historic preservation area that is     |
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21|adjacent to and serves designated historical residential areas for     |
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22|neighborhood commercial preservation purposes in order for the         |
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23|neighborhood to retain its basic character and scale.  No ad valorem   |
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24|tax exemption may be granted on the value of property which has been   |
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   Req. No. 8103                                                   Page 3
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 1|assessed or which is subject to assessment prior to the adoption of    |
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 2|the project plan.  No ad valorem tax exemption shall be granted        |
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 3|pursuant to the provisions of this subsection for single-family        |
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 4|residences.  The governing body may grant the exemption only on the    |
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 5|increase in value of the property.  The exemptions may be granted      |
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 6|for a specific period of time as determined by a written agreement     |
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 7|between the property owners of the area and the governing body and     |
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 8|may be renewed.  Uses of the property eligible for this exemption      |
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 9|may include but not be limited to commercial, office or multifamily    |
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10|residential use.                                                       |
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11|    E.  The governing body of a city, town or county of this state     |
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12|shall prepare a disclosure report for any tax incentives financing     |
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13|district established by the governing body if the district has been    |
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14|in operation for at least twelve (12) months.  Beginning January 1,    |
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15|2022, and for each year thereafter, the disclosure report shall be     |
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16|published by June 30 of each year on the website of the city, town     |
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17|or county if such a website exists.  Copies of the report shall be     |
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18|made available to any requesting member of the public.  The            |
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19|disclosure report shall include the following information for the      |
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20|prior fiscal year preceding the fiscal year the report is due:         |
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21|    1.  The amount and source of revenue captured and apportioned      |
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22|pursuant to the project plan;                                          |
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23|    2.  The amount and purpose of expenditures;                        |
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24|                                                                       |
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   Req. No. 8103                                                   Page 4
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 1|    3.  The amount of principal and interest due on outstanding        |
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 2|bonded indebtedness;                                                   |
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 3|    4.  The tax incentive base and current captured appraised value    |
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 4|or the other local tax or fee collections retained by the district;    |
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 5|    5.  The captured appraised value or the other local tax or fee     |
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 6|collections shared by the city, town or county and other taxing        |
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 7|entities, the total amount of tax incentives received and any          |
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 8|additional information necessary to demonstrate compliance with the    |
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 9|plan adopted by the city, town or county;                              |
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10|    6.  The parties receiving incentives or exemptions;                |
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11|    7.  A general description of the property and the improvements     |
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12|to be made;                                                            |
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13|    8.  The portion and fair market value of the property to be        |
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14|exempted or that portion of the local taxes to be subject to           |
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15|incentives or to be exempted;                                          |
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16|    9.  The duration of the incentives or exemptions; and              |
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17|    10.  Any additional information necessary to demonstrate           |
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18|compliance with the tax incentives or exemptions.                      |
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19|    SECTION 2.     AMENDATORY     62 O.S. 2011, Section 861, is        |
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20|amended to read as follows:                                            |
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21|    Section 861.  A.  A project plan may contain a provision that      |
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22|the increments from certain local taxes or fees may be used to         |
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23|finance project costs in areas qualified under the Local Development   |
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24|Act.  The increment from local taxes or fees levied from and after     |
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   Req. No. 8103                                                   Page 5
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 1|the effective date of the approval of such plan shall be apportioned   |
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 2|in the following manner for a period not to exceed twenty-five (25)    |
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 3|fiscal years thereafter or the period required for payment of          |
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 4|project costs, whichever is less; provided, however, that for any      |
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 5|increment district established after November 1, 1992, such time       |
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 6|period shall be tolled for a period of time equal to the pendency of   |
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 7|any litigation directly or indirectly challenging the increment        |
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 8|district or apportionment or disbursement:                             |
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 9|    1.  That portion of the ad valorem taxes which are produced by     |
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10|the levy at the rate fixed each year by or for each such ad valorem    |
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11|taxing entity upon the base assessed value of the increment district   |
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12|determined pursuant to Section 862 of this title and as to an area     |
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13|later added to the increment district, the effective date of the       |
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14|addition to the increment district, shall be paid to each taxing       |
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15|entity and all or any portion of local sales taxes, other local        |
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16|taxes or local fees collected each year which are not subject to       |
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17|apportionment shall be paid or retained as otherwise provided by       |
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18|law; and                                                               |
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19|    2.  All or any portion of:                                         |
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20|         a.    ad valorem taxes, in excess of such amount specified    |
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21|              in paragraph 1 of this subsection,                       |
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22|         b.    the increment of local sales taxes, other local taxes   |
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23|              or local fees, or a combination thereof, paid to or      |
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   Req. No. 8103                                                   Page 6
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 1|              for the benefit of the city, town, or county approving   |
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 2|              the plan, and                                            |
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 3|         c.    with its consent, evidenced by agreement in writing,    |
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 4|              the increment of local sales tax, other local taxes or   |
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 5|              local fees, or combination thereof, payable to any       |
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 6|              other local public taxing entity,                        |
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 7|shall be apportioned to, and when collected, shall be paid into an     |
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 8|apportionment fund established for the project pursuant to the         |
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 9|project plan.  Such revenues shall be used for the payment of the      |
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10|project costs and for the payment of the principal of, the interest    |
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11|on, and any premiums due in connection with the bonds of, loans,       |
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12|notes, or advances of money to, or indebtedness incurred to finance    |
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13|project costs, whether funded, refunded, assumed, or otherwise, for    |
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14|financing, in whole or in part, eligible project costs.  For the       |
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15|purposes of this section, "local sales tax" means amounts payable to   |
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16|or for the benefit of a local governmental entity calculated as a      |
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17|percentage of gross sales whether imposed by ordinance, resolution,    |
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18|covenant, or agreement.  Nothing shall prohibit the increments from    |
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19|being used to directly pay eligible project costs.  When all           |
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20|eligible project costs and such bonds, loans, advances of money or     |
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21|indebtedness, if any, including interest thereon and any premiums      |
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22|due in connection with them, have been paid and the governing body     |
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23|adopts an ordinance or resolution dissolving the tax apportionment     |
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24|financing, all ad valorem taxes upon the taxable property within the   |
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   Req. No. 8103                                                   Page 7
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 1|boundary of such district shall be paid into the funds of the          |
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 2|respective taxing entities.                                            |
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 3|    B.  If a project plan contains a provision for apportionment as    |
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 4|provided in subsection A of this section, and notwithstanding any      |
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 5|other provision of law to the contrary, the governing body shall       |
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 6|direct in the resolution or ordinance approving the plan which         |
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 7|portion of the increments, including whether any or all, to be paid    |
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 8|into the apportionment fund shall constitute a part of the general     |
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 9|fund to be appropriated annually by the governing body, and which      |
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10|portion, including whether any or all, shall constitute funds of a     |
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11|public entity authorized to issue tax apportionment bonds or notes     |
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12|or to incur project costs.                                             |
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13|    C.  To the extent that collections exceed project costs and the    |
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14|provisions for payment of principal and interest along with            |
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15|sufficient reserves on any bonds issued pursuant to the provisions     |
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16|of Section 863 of this title, the excess shall be paid into the        |
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17|funds of the respective taxing entities unless the taxing entity       |
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18|agrees to some other use of such collections.                          |
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19|    D.  Except as provided in subsection E of this section, for any    |
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20|year in which taxes or fees are apportioned in the manner specified    |
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21|in paragraph 2 of subsection A of this section, any increase in        |
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22|assessed valuation of taxable real property or taxable personal        |
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23|property within the boundaries of such district in excess of the       |
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24|base assessed value shall not be considered by any taxing entity in    |
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   Req. No. 8103                                                   Page 8
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 1|computing any debt limitation or for any other purpose except for      |
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 2|the levy of taxes and in determining the amount to be apportioned.     |
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 3|    E.  In the event there is a change in the assessment ratio for     |
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 4|ad valorem tax property valuations of property within the boundaries   |
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 5|of an increment district, the portions of valuations for assessment    |
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 6|pursuant to paragraphs 1 and 2 of subsection A of this section shall   |
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 7|be proportionately adjusted in accordance with such reassessment.      |
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 8|    F.  Nothing in this section shall be construed as relieving        |
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 9|property in such project area from being assessed as provided in the   |
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10|Ad Valorem Tax Code of the Oklahoma Statutes, or as relieving owners   |
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11|of such property from paying a uniform rate of taxes, as required by   |
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12|Section 5 of Article X of the Oklahoma Constitution.                   |
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13|    G.  Subject to constitutional exemptions, if property in an        |
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14|increment district is owned by a public entity and is leased to or     |
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15|operated for a private use, including, without limitation, use by a    |
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16|not-for-profit corporation or trust, the portion of the property so    |
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17|leased or operated shall be assessed by the county assessor as if      |
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18|such portion of the property were taxable, and, during the term of     |
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19|the increment district, the public entity owning such property shall   |
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20|pay or require the user thereof to pay ad valorem taxes or an in       |
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21|lieu ad valorem tax payment in an amount not less than the amount      |
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22|that would have resulted if taxes had otherwise been levied on such    |
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23|portion of the property.  If property subject to ad valorem tax in     |
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24|an increment district is acquired by a private not-for-profit          |
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   Req. No. 8103                                                   Page 9
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 1|corporation or public or private trust, it shall continue to be        |
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 2|assessed and subject to ad valorem taxes or an in lieu ad valorem      |
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 3|payment by the user thereof until termination of the increment         |
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 4|district unless and only to the extent of the portion of the           |
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 5|property and the use thereof that is:                                  |
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 6|    1.  Acquired to implement the project plan;                        |
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 7|    2.  Converted to a new tax-exempt use by a tax-exempt user; or     |
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 8|    3.  Entitled to claim a constitutional exemption notwithstanding   |
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 9|statutory provisions.                                                  |
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10|During the period of an increment district, such nonexempt uses and    |
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11|interests are severable for purposes of ad valorem and in lieu of ad   |
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12|valorem assessment and payments, notwithstanding any statutory         |
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13|provisions to the contrary.                                            |
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14|    H.  The governing body of a city, town or county of this state     |
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15|shall prepare a disclosure report for any tax increment financing      |
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16|district established by the governing body if the district has been    |
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17|in operation for at least twelve (12) months.  Beginning January 1,    |
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18|2022, and for each year thereafter, the disclosure report shall be     |
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19|published by June 30 of each year on the website of the city, town     |
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20|or county if such a website exists.  Copies of the report shall be     |
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21|made available to any requesting member of the public.  The            |
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22|disclosure report shall include the following information for the      |
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23|prior fiscal year preceding the fiscal year the report is due:         |
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24|                                                                       |
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   Req. No. 8103                                                   Page 10
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 1|     1.  The amount and source of revenue captured and apportioned     |
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 2|pursuant to the project plan;                                          |
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 3|     2.  The amount and purpose of expenditures;                       |
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 4|     3.  The amount of principal and interest due on outstanding       |
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 5|bonded indebtedness;                                                   |
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 6|     4.  The tax increment base and current captured appraised value   |
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 7|or the other local tax or fee collections retained by the district;    |
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 8|     5.  The captured appraised value or the other local tax or fee    |
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 9|collections shared by the city, town or county and other taxing        |
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10|entities, the total amount of tax increments received and any          |
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11|additional information necessary to demonstrate compliance with the    |
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12|plan adopted by the city, town or county;                              |
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13|     6.  The parties receiving incentives or exemptions;               |
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14|     7.  A general description of the property and the improvements    |
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15|to be made;                                                            |
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16|     8.  The portion and fair market value of the property to be       |
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17|exempted or that portion of the local taxes to be subject to           |
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18|increments or to be exempted;                                          |
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19|     9.  The duration of the increments or exemptions; and             |
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20|     10.  Any additional information necessary to demonstrate          |
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21|compliance with the tax increments or exemptions.                      |
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22|    SECTION 3.  This act shall become effective November 1, 2021.      |
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23|                                                                       |
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24|    58-1-8103      LRB    04/08/21                                     |
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   Req. No. 8103                                                   Page 11
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   Req. No. 8103                                                   Page 12
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