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