An Act
ENROLLED SENATE
BILL NO. 500 By: Boren of the Senate
and
Lowe (Dick) of the House
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.
SUBJECT: Tax incentive finance district
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 be subject to incentives or may be exempted
in reinvestment areas, historic preservation areas or enterprise
areas.
B. The governing body may grant incentives or exemp tions from
local taxation only on the new investment made. No ad valorem tax
incentives or exemptions may be granted on the value of pro perty
which has been assessed or which is subject to assessment prior to
the adoption of the project plan. No ad valor em tax incentives or
exemptions authorized in this section may be granted for retail
establishments. If a retail establishment is locate d in property
ENR. S. B. NO. 500 Page 2
which otherwise qualifies for an incentive or exemption pursuant to
this section, the incentive or exempt ion shall not be allowed for
that portion of the property used for such retail establishment. As
used in this subsection, "retail establ ishment" shall not include an
establishment that provides lodging, including but not limited to a
hotel, apartment hote l, public rooming house or motel. No ad
valorem tax incentives or exemptions authorized in this section may
be granted if the property i s 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 exem ptions may be
granted for a period not to exceed six (6) years.
C. No incentives or exemptions 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 does 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 entit y. 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 b y two
or more governmental entities within the state except as otherwise
provided for in this subsection. The prohibiti on against incentives
or exemptions to a business or firm relocating within the state may
be waived upon application by the governing bo dy to, and approval
of, the Director of the Oklahoma Department of Commerce. In order
for the Director to approve the w aiver, the Director must find that
the incentives or exemptions are necessary and sufficient to attract
the business or firm and that th e benefits generated by the business
location outweigh the costs of the business location.
D. A project plan may contai n a provision that ad valorem taxes
may be exempted in a commercial historic preservation area that is
adjacent to and serves designate d historical residential areas for
neighborhood commercial preservation purposes in order for the
ENR. S. B. NO. 500 Page 3
neighborhood to retain its basic character and scale. No ad valorem
tax exemption 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 exemption shall be granted
pursuant to the provisions of this subsection for single -family
residences. The governing body may 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 financing
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 ther eafter, the disclosu re report shall be
published on or before sixty (60) business days, excluding
recognized federal holidays, followi ng the end of each fiscal 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:
1. The parties receiving incentives or exemptions;
2. A general description of the property and the improvements
to be made;
3. 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;
4. The duration of t he incentives or exemptions;
5. Any additional information necessary to demonstrate
compliance with the tax incentives or exemptions;
6. The name of the person who is currently in charge of the
implementation of the plan; and
ENR. S. B. NO. 500 Page 4
7. The names of the persons who have discl osed an interest as
required pursuant to Section 857 of this title and the interest
disclosed.
SECTION 2. AMENDATORY 62 O.S. 2011, Section 861, is
amended to read as follows:
Section 861. A. A project plan may contain a provisio n that
the increments from certain local taxes or fees may be used to
finance project costs in areas qualified under the Loca l Development
Act. The increment from local taxes or fees levied from and after
the effective date of the approval of such plan sh all be apportioned
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 Nove mber 1, 1992, such time
period shall be tolled for a period of time equal to the pendency of
any litigation directly or indir ectly challenging the increment
district or apportionment or disbursement:
1. That portion of the ad valorem taxes which are produ ced 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 ef fective 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 provided 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
for the benefit of the city, town, or county approving
the plan, and
ENR. S. B. NO. 500 Page 5
c. with its consent, evidenced by agreement in w riting,
the increment of local sales tax, other local taxes or
local fees, or combination thereof, payable to any
other local public tax ing entity,
shall be apportioned to, and when collected, shall be paid into an
apportionment fund established for the p roject pursuant to the
project plan. Such revenues shall be used for the payment of the
project costs and for the payment of the princip al of, the interest
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, eli gible project costs. For the
purposes of this section, "local sales tax" means amounts payable to
or for the benefit o f 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, have 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
boundary of such district shall be paid into the funds of the
respective taxing entities.
B. If a project plan contains a provision for apportionment as
provided in subsection A of this s ection, and notwithstanding any
other provision of law to the contrary, the governing body shall
direct in the resolution or ordinance app roving 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 constitute 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
ENR. S. B. NO. 500 Page 6
funds of the respective taxing entities unless the taxing entity
agrees to some other use of such collections.
D. Except as provided in subsection 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 boundaries of such district in excess of the
base assessed value shall not be considered by any taxing entity in
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 th e boundaries
of an increment district, the portions of valuations for assessment
pursuant to paragraphs 1 and 2 of subsection A of this secti on shall
be proportionately adjusted in accordance with such reassessment.
F. Nothing in this section shall be co nstrued 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 owners
of such property from paying a uniform rate of taxes, as required by
Section 5 of Article X of th e Oklahoma Constitution.
G. Subject to constitutional exemptions, if property in an
increment district is owned by a public entity and is lea sed 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, a nd, during the term of
the increment district, the public entity owning such property shall
pay or require the us er 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
corporation or public or private trust, it shall continue to be
assessed and subject to ad v alorem 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:
ENR. S. B. NO. 500 Page 7
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 notwithsta nding
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 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 disclosu re report shall be
published on or before sixty (60) business days, excluding
recognized federal holidays, following the end of each fiscal 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:
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 apprai sed value
or the other local tax or fee collections retained by the area;
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;
ENR. S. B. NO. 500 Page 8
6. The name of the person who is c urrently in charge of the
implementation of the plan; and
7. The names of the persons who have discl osed an interest as
required pursuant to Section 857 of this title and the interest
disclosed.
SECTION 3. This act shall become effective November 1, 2021.
ENR. S. B. NO. 500 Page 9
Passed the Senate the 29th day of April, 2021.
Presiding Officer of the Sena te
Passed the House of Representatives the 21st day of April, 2021.
Presiding Officer of the House
of Representatives
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this _______ _____________
day of _________________ __, 20_______, at _______ o'clock _______ M.
By: _______________________________ __
Approved by the Governor of the State of Oklahoma this _____ ____
day of _________________ __, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this _______ ___
day of __________________, 20 _______, at _______ o'clock _______ M.
By: _______________________________ __