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SENATE FLOOR VERSION
February 19, 2021
COMMITTEE SUBSTITUTE
FOR
SENATE BILL NO. 500 By: Boren
An Act relating to development incentives; amending
62 O.S. 2011, Section 861, which relates to the Lo cal
Development Act; requiring collaborat ion with certain
Departments; requiring the Oklahoma Tax Commission to
publish annual report on tax increment
apportionments; 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 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
the effective date of the approval of such plan shall be apporti oned
in the following manner for a perio d 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
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increment district established after November 1, 1992, such time
period shall be tolled for a p eriod of time equal to the pendency of
any litigation directly or indirectly challenging the inc rement
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 t he 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 o f 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 pro vided by
law; and
2. All or any portion of:
a. ad valorem taxes, in excess of su ch 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
for the benefit of the city, town, or county approv ing
the plan, and
c. with its consent, ev idenced by agreement in writing,
the increment of local sales tax, other local taxes or
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local fees, or combination thereof, payable to any
other local public taxing entity,
shall be apportioned to, and when collecte d, 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 int erest
on, and any premiums due in connec tion with the bonds of, loans,
notes, or advances of money to, or indebtedness incurred to finan ce
project costs, whether funded, refunded, assumed, or otherwise, for
financing, in whole or in part, eligible project costs. For the
purposes of this section , “local sales tax” means amounts payable to
or for the benefit of a local governmental entity c alculated as a
percentage of gross sales whether imposed by ordinance, resolution,
covenant, or agreement. Nothing shal l 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, ha ve been paid and the governing body
adopts an ordinance or resolution dissolving the tax apportionment
financing, all ad valorem taxes u pon the taxable property within the
boundary of such district shall be paid into the funds of the
respective taxing enti ties.
B. If a project plan contains a p rovision for apportionment as
provided in subsection A of this section, and notwithstanding any
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other provision of law to the contrary, the governing body shall
direct in the resolution or ordinance approving the pla n which
portion of the increments, inclu ding whether any or all, to be paid
into the apportionment fund shall constitute a part of the g eneral
fund to be appropriated annually by the governing body, and which
portion, including whether any or all, shall co nstitute funds of a
public entity author ized 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 pr ovisions
of Section 863 of this title, th e 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 subsec tion E of this section, for any
year in which taxes or fees are apportioned in th e manner specified
in paragraph 2 of subsection A of th is section, any increase in
assessed valuation of taxable real property or taxable personal
property within the boundari es of such district in excess of the
base assessed value shall not be considered by any taxing entity in
computing any debt limitation o r 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 o f property within the boundaries
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of an increment distri ct, the portions of valuations for assessment
pursuant to paragraphs 1 and 2 of subsection A of this section shall
be proportionately adjusted in accordance wit h 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 owne rs
of such property from paying a unifor m 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, witho ut 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 pub lic 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 n ot-for-profit
corporation or public or private trust, it shall continue to be
assessed and subject to ad valorem taxes o r an in lieu ad valorem
payment by the user thereof until termination of the incr ement
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district unless and only to the extent of the por tion 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 exemp tion 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 o f ad
valorem assessment and payments, no twithstanding any statutory
provisions to the contrary.
H. The Oklahoma Tax Commission shall, in collaboration with the
State Department of Education , State Board of Career and Technology
Education and the Oklahoma Department of Commerce, create and
publish a report by March 31 of each year docu menting the amount of
increments of local taxes and fees apportioned pursuant to the
provisions of this section in the previous calendar year. The
report shall include an estimate of the economic impact and an
estimate of the amount funds benefiting publi c schools were
decreased as a result of the apportionments provided pursuant to the
provisions of this section.
SECTION 2. This act shall become effective Nov ember 1, 2021.
COMMITTEE REPORT BY: COMMITTEE ON FINANCE
February 19, 2021 - DO PASS AS AMENDED