OK
Oklahoma Senate Bill SB609

Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB609 Compare Versions

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327
4-An Act
5-ENROLLED SENATE
6-BILL NO. 609 By: Coleman, Hall and Kirt of
28+STATE OF OKLAHOMA
29+
30+1st Session of the 58th Legislature (2021)
31+
32+CONFERENCE COMMITTEE SUBSTITUTE
33+FOR ENGROSSED
34+SENATE BILL 609 By: Coleman, Hall and Kirt of
735 the Senate
836
937 and
1038
1139 Hilbert of the House
1240
1341
42+
43+
44+CONFERENCE COMMITTEE SUBSTITUTE
1445
1546 An Act relating to incentives and exemptions;
1647 amending 62 O.S. 2011, Sections 856, 860 and 866,
1748 which relate to the Local Development Act; providing
1849 exception to required content of project plans;
1950 modifying provisions related to duration of certain
2051 districts based on certain industry description;
2152 modifying requirements for certain written agreement;
2253 amending 68 O.S. 2011, Section 2902, as last amended
2354 by Section 1, Chapter 258, O.S.L. 2019 (68 O.S. Supp.
2455 2020, Section 2902), which relates to exemption for
2556 manufacturing facilities; modifying definitions;
2657 modifying eligibility for exemption based on certain
2758 industry description; providing exception for ce rtain
2859 personal property; adjusting certain investment
2960 requirement to inflation index; requiring the
3061 Oklahoma Tax Commission to publish certain
3162 adjustments; adjusting wage threshold; requiring
3263 wages exceed certain Quality Jobs Program Act
3364 requirements; authorizing the Oklahoma Tax Commission
3465 to request verification; removing exceptions for
3566 failure to meet certain payro ll requirements;
3667 modifying certain classification; providing
3768 application for personal property exemption for
3869 certain industries that have been granted certain
3970 real property exemption; providing waiver of certain
4071 payroll requirement; requiring the Commissio n use
4172 certain approach when performing assessment; and
4273 providing an effective date .
4374
4475
45-
46-SUBJECT: Industry tax
47-
48-ENR. S. B. NO. 609 Page 2
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49100
50101 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
51102 SECTION 1. AMENDATORY 62 O.S. 2011, Se ction 856, is
52103 amended to read as follows:
53-
54104 Section 856. A. The governing body shall designate and adopt
55105 the proposed boundaries of any district and the proposed boundaries
56106 of any project area. Except as otherwise provided in this
57107 subsection, any district s created by a city or town shall be
58108 confined to that territory within the corporate limits of such city
59109 or town and any districts created by a county shall be confined to
60110 that territory within the unincorporated areas of the county. Any
61111 city, town or county may by agreement jointly create a distric t with
62112 another entity.
63-
64113 B. Upon the adoption and approval of the project plan, the
65114 governing body shall adopt an ordinance or r esolution, whichever is
66115 applicable, which:
67-
68116 1. Describes the boundaries of districts and project areas
69117 sufficiently definite to i dentify with ordinary and reasonable
70118 certainty the territory included in them;
71-
72119 2. Creates the district as of a date provided i n it or defers
73120 determination of such date, provided such date must be no more than
74121 ten (10) years after the date of approval of t he project plan;
75-
76122 3. Assigns a name to the district for identification purposes.
77123 The first district created shall be known as either an Incentive
78124 District or Increment District Number One, City, Town or County of
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79151 __________, whichever is applicable. Each subsequently created
80152 district shall be appropriately named and shall be assigned the next
81153 consecutive number; and
82-
83154 4. Contains findings that:
84-
85155 a. the project area or district meets at least one of the
86156 following criteria:
87-
88157 (1) is a reinvestment area,
89-
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91-ENR. S. B. NO. 609 Page 3
92158 (2) is a historic preservation area,
93-
94159 (3) is an enterprise area, or
95-
96160 (4) is a combination of the areas specified in
97161 divisions (1), (2) a nd (3) of this subparagraph,
98-
99162 b. the improvement of the area is likely to enhance the
100163 value of other real property in the area and to
101164 promote the general public interest. It shall not be
102165 necessary to identify the specific parcels meeting the
103166 criteria,
104-
105167 c. the guidelines specified in paragraphs 1 and 2 of
106168 Section 852 of this title shall be followed,
107-
108169 d. the aggregate net assessed value of the taxable
109170 property in all districts as determined pursuant to
110171 Section 862 of this title within the city or town
111172 shall not exceed twenty-five percent (25%) of the
112173 total net assessed value of taxable propert y within
113174 the city or town for cities or towns having a
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114201 population of fifty thousand (50,000) or more or shall
115202 not exceed thirty-five percent (35%) of the total net
116203 assessed value of taxable property within the city or
117204 town for cities or towns having a popu lation of less
118205 than fifty thousand (50,000),
119-
120206 e. for projects approved by a county, the aggregate net
121207 assessed value of the taxable property in all
122208 districts as determined p ursuant to Section 862 of
123209 this title within the county shall not exceed fifteen
124210 percent (15%) of the total net assessed value of the
125211 taxable property within the county,
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127212 f. the aggregate net assessed value of the taxable
128213 property in all districts as determi ned pursuant to
129214 Section 862 of this title within the city, the town or
130215 the county shall not exceed twenty -five percent (25%)
131216 of the total net assessed value of any affected school
132217 district located within the city, town or county, and
133-
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135-ENR. S. B. NO. 609 Page 4
136218 g. the land area of this district and all other districts
137219 within the city, the town or the county shall no t
138220 exceed twenty-five percent (25%) of the tot al land
139221 area of the city, the town or the county.
140-
141222 For districts that are wholly or partially comprised or become
142223 comprised of industries operating under NAICS code 518210, the
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143250 provisions of subparagraphs d through g of this paragraph shall not
144251 apply.
145-
146252 C. It is the intention of the Legisla ture in adopting the Local
147253 Development Act that no long-term contractual obligation be created
148254 by the mere adoption of an ordinance or resolution establishing an
149255 increment district. Notwithstanding any provisio n contained in an
150256 ordinance, resolution or pr oject plan, an ordinance or resolution
151257 establishing an increment district shall constitute a legislative
152258 act and may be repealed, modified or amended at any time during the
153259 term of the increment district, by sub sequent action of the
154260 governing body except as otherwise authorized pursuant to Sect ions
155261 854 and 863 of this title ; provided, however, that no such ordinance
156262 shall be repealed, modified or amended during the time that any
157263 bonds payable from incremental rev enues are outstanding without the
158264 consent of the bondholders, if such bonds are issu ed pursuant to the
159265 provisions of Article X, Section 35 of the Oklahoma Constitution
160266 following its amendment by State Question No. 693.
161-
162267 D. However, nothing in the Local Dev elopment Act shall restrict
163268 the ability of:
164-
165269 1. Any city, town or county to:
166-
167270 a. issue debt in accordance with the applicable
168271 provisions of Article X of the Oklahoma Constitution,
169272 and any statutes enacted in connection therewith, and
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171299 b. use incremental reve nues derived from an increment
172300 district to pay principal, interest or premium
173301 associated with such indebtedness; or
174-
175302 2. Any public entity, other than a city, town or county, to:
176-
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178-ENR. S. B. NO. 609 Page 5
179303 a. issue tax apportionment bonds or notes in accordance
180304 with Section 863 of th is title or to issue other types
181305 of revenue bonds or notes in accordance with other
182306 applicable provisions of Oklahoma law, and
183-
184307 b. use incremental revenues derived from an increment
185308 district to pay principal, interest or premium
186309 associated with such indebte dness.
187-
188310 SECTION 2. AMENDATORY 62 O.S. 2011, Section 860, is
189311 amended to read as follows:
190-
191312 Section 860. A. A project plan may contain a provision that
192313 certain local taxes may be subject to incentives or may be exempted
193314 in reinvestment areas, historic preservation areas or ente rprise
194315 areas.
195-
196316 B. The governing body may grant incentives or exemptions from
197317 local taxation only on the new investment made. No ad valorem tax
198318 incentives or exemptions may be granted on the value of property
199319 which has been assessed or which is subject to assessment prior to
200320 the adoption of the project plan. No ad valorem tax incentives or
201321 exemptions authorized in this section may be granted for retail
202322 establishments. If a retail establishment is located in pro perty
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203349 which otherwise qualifies for an incent ive or exemption pursuant to
204350 this section, the incentive or exemption shall not be allowed for
205351 that portion of the property used for such retail establishment. As
206352 used in this subsection, “retail establishment ” shall not include an
207353 establishment that prov ides lodging, including but not limited to a
208354 hotel, apartment hotel, public rooming house or motel. No ad
209355 valorem tax incentives or exemptions authorized in this section may
210356 be granted if the property is locate d in an increment district or as
211357 long as the property is subject to th e ad valorem tax exemption for
212358 new or expanding manufacturing facilities as authorized by Section
213359 6B of Article X of the Oklahoma Constitution. In the event of
214360 disposition by lease or s ublease to a lessee not entitled to an ad
215361 valorem tax exemption, the i mprovements placed thereon shall not be
216362 entitled to an ad valorem tax exemption provided for in Section 850
217363 et seq. of this title. The Except as otherwise provided by this
218364 subsection, the incentives or exemptions, which may be ful l or
219365 partial, may be granted for a period not to exceed five (5) years ;
220366 however, in enterprise zones incentives or exemptions may be granted
221-
222-ENR. S. B. NO. 609 Page 6
223367 for a period not to exceed six (6) years . With respect to an
224368 establishment, the business of which is described by U.S. Industry
225369 Number 518210 of the North American Industry Classification System
226370 (NAICS) Manual, 2017 revision, such incen tives or exemptions may be
227371 granted for a period not to exceed twenty -five (25) years.
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228397
229398 C. No incentives or exemptions may be granted t o any business
230399 or firm that is relocating from within the state and is subject to
231400 or in the process of recruitment by two or more governmental
232401 entities within the state unless the governmental entity in which
233402 the business or firm does not locate adopts a r esolution giving
234403 their approval to the granting of incentives or exemptions to the
235404 business or firm loc ating in the competing governmental entity. No
236405 incentives or exemptions may be granted to an out -of-state business
237406 or firm that is subject to or in the process of recruitment by two
238407 or more governmental entities within the state except as otherwise
239408 provided for in this subsection. The prohibition against incentives
240409 or exemptions to a business or firm relocating within the state may
241410 be waived upon applica tion by the governing body to, and approval
242411 of, the Director of the Oklahoma Department of Commerce. I n order
243412 for the Director to approve the waiver, the Director must find that
244413 the incentives or exemptions are necessary and sufficient to attract
245414 the business or firm and that the benefits generated by the business
246415 location outweigh the costs of the busines s location.
247-
248416 D. A project plan may contain a provision that ad valorem taxes
249417 may be exempted in a commercial historic preservation area that is
250418 adjacent to and serves designated historical residential areas for
251419 neighborhood commercial preservation purposes in order for the
252420 neighborhood to retain its basic character and scale. No ad valorem
253421 tax exemption may be g ranted on the value of property which has be en
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254448 assessed or which is subject to assessment prior to the adoption of
255449 the project plan. No ad valorem tax exemption shall be granted
256450 pursuant to the provisions of this subsection for single -family
257451 residences. The governing body may grant the exemption o nly on the
258452 increase in value of the property. The exemptions may be granted
259453 for a specific period of t ime as determined by a written agreement
260454 between the property owners of the area and the governing body and
261455 may be renewed. Uses of the property eligibl e for this exemption
262456 may include but not be limited to commercial, office or multifamily
263457 residential use.
264-
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266-ENR. S. B. NO. 609 Page 7
267458 SECTION 3. AMENDATORY 62 O.S. 2011, Section 866, is
268459 amended to read as follows:
269-
270460 Section 866. A. There shall be a written a greement between the
271461 governing body and the property owners who are granted tax
272462 incentives or exemptions pursuant to Section 860 of this title. The
273463 written agreement may include, but shall not be limited to, the
274464 following:
275-
276465 1. List the kind, number, and l ocation A description of all
277466 proposed improvements to the property;
278-
279467 2. Provide access to and authorize inspection of the property
280468 by city, town or county employees to ensure that the improvements or
281469 repairs are made according to the specifications and con ditions of
282470 the agreement;
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284497 3. Limit the uses of the property consistent with the general
285498 purpose of encouraging development or redevelopment of the area
286499 during the period th at the tax incentives or exemptions or the
287500 increment financing are in effect;
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289501 4. Provide for recapturing the local tax revenue lost as a
290502 result of the agreement if the owner of the property fails to make
291503 the improvements or repairs as provided by the agre ement; and
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293504 5. Include any other requi rement deemed by the governing body
294505 necessary to carry out the agreement.
295-
296506 B. There shall be a written agreement between the governing
297507 body and the property owners in historic preservation areas who are
298508 granted ad valorem tax exemptions pursuant to subsect ion D of
299509 Section 860 of this title. The writ ten agreement shall include the
300510 following:
301-
302511 1. List the location of the property;
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304512 2. Provide access to and authorize inspection of the property
305513 by city, town or county empl oyees to ensure that the property is
306514 being maintained according to the specificatio ns and conditions of
307515 the agreement;
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310-ENR. S. B. NO. 609 Page 8
311516 3. Limit the uses of the property consistent with the general
312517 purpose of encouraging neighborhood commercial preservation of the
313518 area during the period that the ad valorem ta x exemptions are in
314519 effect;
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316546 4. Provide for recapturing the ad valorem tax revenue lost as a
317547 result of the agreement if the owner of the property fails to
318548 maintain the property as provided by the agreement;
319-
320549 5. Specify the time frame of the agreement inclu ding whether
321550 renewals can occur, at what time such renewals can occur and under
322551 what conditions renewals can occur;
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324552 6. Specify rehabilitations, preservation efforts and other
325553 specific actions that should be taken by t he property owners on an
326554 individual or collective basis;
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328555 7. Provide for reciprocal actions by public entities to
329556 protect, enhance and improve the commercial historic preservation
330557 area and the surrounding residential areas served by such districts;
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332558 8. Provide review and approval procedures th at may be used when
333559 usage or ownership of the property changes; and
334-
335560 9. Include any other requirement deemed by the governing body
336561 necessary to carry out the agreement.
337-
338562 C. The governing body shall enter into written a greements with
339563 active project particip ants of increment projects. The written
340564 agreement may include, but shall not be limited to, the provisions
341565 specified in paragraphs 1 through 5 of subsection A of this section.
342-
343566 SECTION 4. AMENDATORY 68 O.S. 2011, Section 2902, as
344567 last amended by Section 1, Chapter 258, O.S.L . 2019 (68 O.S. Supp.
345568 2020, Section 2902), is amended to read as follows:
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346594
347595 Section 2902. A. Except as otherwise provided by subsection H
348596 of Section 3658 of this title pursuant to which the exemption
349597 authorized by this section may not be claimed, a qualify ing
350598 manufacturing concern, as defined by Section 6B of Article X of the
351599 Oklahoma Constitution, and as further defined herein, shall be
352600 exempt from the levy of any ad valorem taxes upon new, expanded or
353-
354-ENR. S. B. NO. 609 Page 9
355601 acquired manufacturing facilities, including facilities engaged in
356602 research and development, for a period of five (5) years. The
357603 provisions of Section 6B of Article X of the Oklahoma Constitution
358604 requiring an existing facility to have been unoccupied for a period
359605 of twelve (12) months prior to acquisition sh all be construed as a
360606 qualification for a facility to initially receive an exemption, and
361607 shall not be deemed to be a qualification for that facility to
362608 continue to receive an exemption in each of the four (4) y ears
363609 following the initial year for which the exemption was granted.
364610 Such facilities are hereby classified for the purposes of taxation
365611 as provided in Section 22 of Article X of the Oklahoma Constitution.
366-
367612 B. For purposes of this section, the following de finitions
368613 shall apply:
369-
370614 1. “Manufacturing facilities” means facilities engaged in the
371615 mechanical or chemical transformation of materials or substances
372616 into new products and except as provided by paragraph 8 6 of
373617 subsection C of this section shall include:
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375644 a. establishments which have received a manuf acturer
376645 exemption permit pursuant to the provisions of Section
377646 1359.2 of this title,
378-
379647 b. facilities, including repair and replacement parts,
380648 primarily engaged in aircraft repair, building and
381649 rebuilding whether o r not on a factory basis,
382-
383650 c. establishments primarily engaged in computer services
384651 and data processing as defined under Industrial Group
385652 Numbers 5112 and 5415, and U.S. Industry Number 334611
386653 and 519130 of the NAICS Manual, latest revision, and
387654 which derive at least fifty percent (50%) of their
388655 annual gross revenues from the sale of a product or
389656 service to an out-of-state buyer or consumer, and as
390657 defined under Industrial Group Number 5142 5182 of the
391658 NAICS Manual, latest revision, which derive at least
392659 eighty percent (80%) of their annual gross reven ues
393660 from the sale of a product or service to an out -of-
394661 state buyer or consumer. Eligibility as a
395662 manufacturing facility pursuant to this subparagraph
396663 shall be established, subject to review by the
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398-ENR. S. B. NO. 609 Page 10
399664 Oklahoma Tax Commission, by annually filing an
400665 affidavit with the Tax Commission stating that the
401666 facility so qualifies and such other information as
402667 required by the Tax Commission. For purposes of
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403694 determining whether annual gross revenues are derived
404695 from sales to out-of-state buyers, all sales to the
405696 federal government shall be considered to be an out -
406697 of-state buyer,
407-
408698 d. for which facilities that the investment cost of the
409699 construction, acquisition or expansion of the
410700 manufacturing facility is Two Hundred Fifty Thousa nd
411701 Dollars ($250,000.00) Five Hundred Thousan d Dollars
412702 ($500,000.00) or more with respect to assets placed
413703 into service during calendar year 2022. For
414704 subsequent calendar years, the investment required
415705 shall be increased annually by a percentage equal to
416706 the previous year’s increase in the Consumer Price
417707 Index-All Urban Consumers (“CPI-U”) and such adjusted
418708 amount shall be the required investment cost in order
419709 to qualify for the exemption authorized by this
420710 section. The Oklahoma Department of Commerce sha ll
421711 determine the amount of the increase, if a ny, on
422712 January 1 of each year. The Oklahoma Tax Commission
423713 shall publish on its website at least annually the
424714 adjusted dollar amount in order to qualify for the
425715 exemption authorized by this section and shall in clude
426716 the adjusted dollar amount in any of it s relevant
427717 forms or publications with respect to the exemption .
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428744 Provided, “investment cost” shall not include the cost
429745 of direct replacement, refurbishment, repair or
430746 maintenance of existing machinery or equipm ent, except
431747 that “investment cost” shall include capital
432748 expenditures for direct replacement, refurbishment,
433749 repair or maintenance of existing machinery or
434750 equipment that qualifies for depreciation and/or
435751 amortization pursuant to the Internal Revenue Code of
436752 1986, as amended, and such expenditures sh all be
437753 eligible as a part of an “expansion” that otherwise
438754 qualifies under this section, and
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441-ENR. S. B. NO. 609 Page 11
442755 e. establishments primarily engaged in distribution as
443756 defined under Industry Numbers 49311, 49312, 49313 and
444757 49319 and Industry Sector Number 42 of the NAICS
445758 Manual, latest revision, and which meet the following
446759 qualifications:
447-
448760 (1) construction with an initial capital investment
449761 of at least Five Million Dollars ($5,000,000.00),
450-
451762 (2) employment of at least one hundred (100 ) full-
452763 time-equivalent employees, as certifie d by the
453764 Oklahoma Employment Security Commission,
454-
455765 (3) payment of wages or salaries to its employees at
456766 a wage which equals or exceeds one hundred
457767 seventy-five percent (175%) of the federally
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458794 mandated minimum wag e, as certified by the
459795 Oklahoma Employment Se curity Commission the
460796 average wage requirements in the Oklahoma Quality
461797 Jobs Program Act for the year in which the real
462798 property was placed into service , and
463-
464799 (4) commencement of construction on or after November
465800 1, 2007, with construction to be completed w ithin
466801 three (3) years from the date of the commencement
467802 of construction,
468-
469803 f. facilities engaged in the manufacturing, compounding,
470804 processing or fabrication of materials into articles
471805 of tangible personal propert y according to the special
472806 order of a customer (custom order manufacturing) by
473807 manufacturers classified as operating in North
474808 American Industry Classification System (NAICS)
475809 Sectors 32 and 33, but does not include such custom
476810 order manufacturing by manufac turers classified in
477811 other NAICS code sectors , and
478-
479812 g. with respect to any entity making an application for
480813 the exemption authorized by this sec tion on or after
481814 January 1, 2023, the establishment making application
482815 for exempt treatment of real or personal p roperty
483816 acquired or improved beginning Januar y 1, 2022, and
817+for any calendar year thereafter, the entity shall be
484818
485-ENR. S. B. NO. 609 Page 12
486-for any calendar year thereafter, the entity shall be
819+Req. No. 2169 Page 17 1
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487844 required to pay new direct jobs, as defined by Section
488845 3603 of this title for purposes of the Oklahoma
489846 Quality Jobs Program Act, an average an nualized wage
490847 which equals or exceeds the ave rage wage requirement
491848 in the Oklahoma Quality Jobs Program Act for the year
492849 in which the real or personal property was placed into
493850 service. The Oklahoma Tax Commission may request
494851 verification from the Oklahoma Department of Commerce
495852 that an establishment seeking an exemption for real or
496853 personal property pays an average annualized wage that
497854 equals or exceeds the average wage requirement in
498855 effect for the year in which the real or personal
499856 property was placed in to service. For purposes of
500857 this subparagraph, it shall not be necessary for the
501858 establishment to qualify for incentive payments
502859 pursuant to the Oklahoma Quality Jobs Program Act, but
503860 the establishment shall be subject to the wage
504861 requirements of the Okla homa Quality Jobs Program Act
505862 with respect to new direct jobs in order to qualify
506863 for the exempt treatment authorized by this section .
507-
508864 Eligibility as a manufacturing facility pursuant to this
509865 subparagraph shall be established, subject to review by the Tax
510866 Commission, by annually filing an affidavit w ith the Tax Commission
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511893 stating that the facility so qualifies and containing such other
512894 information as required by the Tax Commission.
513-
514895 Provided, eating and drinking places, as well as other retail
515896 establishments, shall not qualify as manufacturing faciliti es for
516897 purposes of this section, nor shall centrally assessed properties.
517-
518898 Eligibility as a manufacturing facility pursuant to this
519899 subparagraph shall be established, subject to review by the Tax
520900 Commission, by annually filing an application with the Tax
521901 Commission stating that the facility so qualifies and containing
522902 such other information as required by the Tax Commission;
523-
524903 2. “Facility” and “facilities”, except as otherwise provided by
525904 this section, means and includes the land, buildings, structures ,
526905 and improvements used directly and exclusively in the manufacturing
527906 process. Effective January 1, 2022, and for each calendar year
528-
529-ENR. S. B. NO. 609 Page 13
530907 thereafter, for establishments which have received a manufacturer
531908 exemption permit pursuant to the provisions of Section 1359.2 of
532909 this title, or facilities engaged in manufacturing activities
533910 defined or classified in the NAICS Manual under Industry Nos. 311111
534911 through 339999, inclusive, but for no other establishments, facility
535912 and facilities means and includes the land, buildings , structures,
536913 improvements, machinery, fixtures, equipment and other personal
537914 property used directly and exclusively in the manufacturing process;
538915 and
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540942 3. “Research and development ” means activities directly rel ated
541943 to and conducted for the purpose of disc overing, enhancing,
542944 increasing or improving future or existing products or processes or
543945 productivity.
544-
545946 C. The following provisions shall apply:
546-
547947 1. A manufacturing concern shall be entitled to the exemption
548948 herein provided for each new manufacturing facili ty constructed,
549949 each existing manufacturing facility acquired and the expansion of
550950 existing manufacturing facilities on the same site, as such terms
551951 are defined by Section 6B of Article X of the Oklahoma Constit ution
552952 and by this section;
553-
554953 2. Except as otherwise provided in paragraph 5 of this
555954 subsection, no No manufacturing concern shall receive more than one
556955 five-year exemption for any one manufacturing facility unless the
557956 expansion which qualifies the manufactu ring facility for an
558957 additional five-year exemption meets the requirements of paragraph 4
559958 of this subsection and the employment level established for any
560959 previous exemption is maintained;
561-
562960 3. Any exemption as to the expansion of an existing
563961 manufacturing facility shall be limited to the increase in a d
564962 valorem taxes directly attributable to the expansion;
565-
566963 4. Except as provided in paragraphs 5 and 6 of this subsection,
567964 all All initial applications for any exemption for a new, acquired
568965 or expanded manufacturi ng facility shall be granted only if:
569966
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570992 a. there is a net increase in annualized base payroll
571993 over the initial payroll of at least Two Hundred Fifty
572-
573-ENR. S. B. NO. 609 Page 14
574994 Thousand Dollars ($250,000.00) if the facility is
575995 located in a county with a population of fewer than
576996 seventy-five thousand (75,000), according to the mos t
577997 recent Federal Decennial Census, while maintaining or
578998 increasing base payroll in subsequent years, or at
579999 least One Million Dollars ($1,000,000.00) if the
5801000 facility is located in a county with a population of
5811001 seventy-five thousand (75,000) or more, accordi ng to
5821002 the most recent Federal Decennial Census, while
5831003 maintaining or increasing base payroll in subsequent
5841004 years; provided the payroll requirement of this
5851005 subparagraph shall be waived for claims for
5861006 exemptions, including claims previously denied or on
5871007 appeal on March 3, 2010, for all initial applications
5881008 for exemption filed on or after January 1, 2004, and
5891009 on or before March 31, 2009, and all subsequent annual
5901010 exemption applications filed related to the initial
5911011 application for exemption, for an applicant, i f the
5921012 facility has been located in Oklahoma for at least
5931013 fifteen (15) years engaged in marine engine
5941014 manufacturing as defined under U.S. Industry Number
5951015 333618 of the NAICS Manual, latest revision, and has
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5961042 maintained an average employment of five hundred ( 500)
5971043 or more full-time-equivalent employees over a ten -year
5981044 period. Any applicant that qualifies for the payroll
5991045 requirement waiver as outlined in the previous
6001046 sentence and subsequently closes its Oklahoma
6011047 manufacturing plant prior to January 1, 2012, may be
6021048 disqualified for exemption and subject to recapture.
6031049 For an applicant engaged in paperboard manufacturing
6041050 as defined under U.S. Industry Number 322130 of the
6051051 NAICS Manual, latest revision, union master payo uts
6061052 paid by the buyer of the facility to spec ified
6071053 individuals employed by the facility at the time of
6081054 purchase, as specified under the purchase agreement,
6091055 shall be excluded from payroll for purposes of this
6101056 section.
611-
6121057 In order to provide certainty with resp ect to
6131058 investments in manufacturing facilitie s pertaining to
6141059 all initial applications for exemption filed on or
615-
616-ENR. S. B. NO. 609 Page 15
6171060 after January 1, 2016, the following definitions shall
6181061 apply:
619-
6201062 (1) “base payroll” shall mean total payroll adjusted
6211063 for any nonrecurring bonuses, exercise of stock
6221064 option or stock rights and other nonrecurring,
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6231091 extraordinary items included in total payroll,
6241092 and
625-
6261093 (2) “initial payroll” shall mean base payroll for the
6271094 year immediately preceding the initial
6281095 construction, acquisition or expansion.
629-
6301096 The Tax Commission shall verify payroll information
6311097 through the Oklahoma Employment Security Commission by
6321098 using reports from the Oklahoma Employment Security
6331099 Commission for the calendar year immediately preceding
6341100 the year for which initial application is made f or
6351101 base-line payroll, which must be maintaine d or
6361102 increased for each subsequent year; provided, a
6371103 manufacturing facility shall have the option of
6381104 excluding from its payroll, for purposes of this
6391105 section:
640-
6411106 i. payments to sole proprietors, members
6421107 of a partnership, members of a limited
6431108 liability company who own at least ten
6441109 percent (10%) of the capital of the
6451110 limited liability company or
6461111 stockholder-employees of a corporation
6471112 who own at least ten percent (10%) of
6481113 the stock in the corporation, and
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6491139
6501140 ii. any nonrecurring bonuses, exercise of
6511141 stock option or stock rights or other
6521142 nonrecurring, extraordinary items
6531143 included in total payroll numbers as
6541144 reported by the Oklahoma Employment
6551145 Security Commission. A manufacturing
6561146 facility electing either option shall
6571147 indicate such election upon its
6581148 application for an exemption under this
659-
660-ENR. S. B. NO. 609 Page 16
6611149 section. Any manufacturing facility
6621150 electing either option shall submit
6631151 such information as the Tax Commission
6641152 may require in order to verify payroll
6651153 information. Payroll information
6661154 submitted pursuant to the provisions of
6671155 this paragraph shall be submitted to
6681156 the Tax Commission and shall be subject
6691157 to the provisions of Section 205 of
6701158 this title, and
671-
6721159 b. the facility offers, or will offer within one hundred
6731160 eighty (180) days of the date of em ployment, a basic
6741161 health benefits plan to the full-time-equivalent
6751162 employees of the facility, which is determined by the
6761163 Department of Commerce to consist of the elements
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6771190 specified in subparagraph b of paragraph 1 of
6781191 subsection A of Section 3603 of this ti tle or elements
6791192 substantially equivalent ther eto.
680-
6811193 For purposes of this section, calculation of the amount of
6821194 increased base payroll shall be measured from the start of initial
6831195 construction or expansion to the completion of such construction or
6841196 expansion or for three (3) years from the start of initia l
6851197 construction or expansion, whichever occurs first. The amount of
6861198 increased base payroll shall include payroll for full -time-
6871199 equivalent employees in this state who are employed by an entity
6881200 other than the facility which has previously or is currently
6891201 qualified to receive an exemption pursuant to the provisions of this
6901202 section and who are leased or otherwise provided to the facility, if
6911203 such employment did not exist in this state prior to the start of
6921204 initial construction or expansion of the facility. The
6931205 manufacturing concern shall submit an affidavit to the Tax
6941206 Commission, signed by an officer, stating that the construction,
6951207 acquisition or expansion of the facility will result in a net
6961208 increase in the annualiz ed base payroll as required by this
6971209 paragraph and that full-time-equivalent employees of the facility
6981210 are or will be offered a basic health benefits plan as required by
6991211 this paragraph. If, after the completion of such construction or
7001212 expansion or after th ree (3) years from the start of initial
7011213 construction or expansion, whichever occurs first, the construction,
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7021240 acquisition or expansion has not resulted in a net increase in the
703-
704-ENR. S. B. NO. 609 Page 17
7051241 amount of annualized base payroll, if required, or any other
7061242 qualification specified in this paragraph has not been met, the
7071243 manufacturing concern shall pay an amount equal to the amount of any
7081244 exemption granted, including penalties and interest thereon, to the
7091245 Tax Commission for deposit to the Ad Valorem Reimbursement Fund;
710-
7111246 5. If a facility fails to meet the base payroll requi rement of
7121247 subparagraph a of paragraph 4 of this subsection, the payroll
7131248 requirement shall be waived for claims for exemptions, including
7141249 claims previously denied or on appeal on June 1, 2009, for all
7151250 initial applications for exemption filed on or after Jan uary 1,
7161251 2004, and on or before March 31, 2009, and all subsequent annual
7171252 exemption applications filed related to such initial application for
7181253 exemption, for an applicant, if the facility:
719-
7201254 a. has been located for at least five (5) years as of
7211255 March 31, 2009, in a county in Oklahoma with a
7221256 population of six hundred thousand (600,000) or more,
723-
7241257 b. is owned by an applicant that has been engaged in
7251258 manufacturing as defined under U.S. Industry Numbers
7261259 323110, 323111, 323121 and 323122 of the NAICS Manual,
7271260 latest revision,
728-
7291261 c. is owned by an applicant that maintains a workforce of
7301262 at least three hundred (300) employees on June 1,
7311263 2009,
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7331290 d. is owned by an applicant that has filed multiple
7341291 applications for exemption pursuant to this section,
7351292 and
736-
7371293 e. is owned by an applic ant that operates at least one
7381294 facility in this state of at least seven hundred
7391295 thirty thousand (730,000) square feet on June 1, 2009.
740-
7411296 In the event that any applicant obtaining a waiver of the payroll
7421297 requirement pursuant to this paragraph ceases to operat e all of its
7431298 facilities in this state on or before a date that is four (4) years
7441299 after any initial application for an exemption is filed by such
7451300 applicant, all sums of property taxes exempted under this paragrap h
7461301 through a waiver of the payroll requirement that relate to such
747-
748-ENR. S. B. NO. 609 Page 18
7491302 application shall become due and payable as if such sums were
7501303 assessed in the year in which the applicant ceases to operate all of
7511304 its facilities in the state;
752-
7531305 6. Any new, acquired or expan ded automotive final assembly
7541306 manufacturing facility which does not meet the requirements of
7551307 paragraph 4 of this subsection shall be granted an exemption only if
7561308 all other requirements of this section are met and only if the
7571309 investment cost of the construc tion, acquisition or expansion of the
7581310 manufacturing facility is Three Hundred Million Dollars
7591311 ($300,000,000.00) or more and the manufacturing facility retains an
7601312 average employment of one thousand seven hundred fifty (1,750) or
7611313 more full-time-equivalent employees in the year in which the
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7621340 exemption is initially granted and in each of the four (4)
7631341 subsequent years only if an average employment of one thousand seven
7641342 hundred fifty (1,750) or more full -time-equivalent employees is
7651343 maintained in the subsequent ye ar. Any property installed to
7661344 replace property damaged by the tornado or natural disaster that
7671345 occurred May 8, 2003, may continue to receive the exemption provided
7681346 in this paragraph for the full five -year period based on the value
7691347 of the previously qualif ying assets as of January 1, 2003. The
7701348 exemption shall continue in effect as long as all other
7711349 qualifications in this paragraph are met. If the average employment
7721350 of one thousand seven hundred fifty (1,750) or more full -time-
7731351 equivalent employees is reduc ed as a result of temporary layoffs
7741352 because of a tornado or natural disaster on May 8, 2003, then the
7751353 average employment requirement shall be waived for year 2003 of the
7761354 exemption period. Calculation of the number of employees shall be
7771355 made in the same manner as required under Section 2357.4 of this
7781356 title for an investment tax credit. As used in this paragraph,
7791357 “expand” and “expansion” shall mean and include any increase to the
7801358 size or scope of a facility as well as any renovation, restoration,
7811359 replacement or remodeling of a facility which permits t he
7821360 manufacturing of a new or redesigned product;
783-
7841361 7. Any Except as otherwise provided by this paragraph, any new,
7851362 acquired, or expanded computer data processing, data preparation , or
7861363 information processing servi ces provider classified in Industrial
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7871390 Group Number 7374 of the SIC Manual, latest revision, and U.S.
7881391 Industry Number 514210 518210 of the North American Industrial
7891392 Classification System (NAICS) Manual, latest 2017 revision, may
7901393 apply for exemptions under t his section for each year in which new,
791-
792-ENR. S. B. NO. 609 Page 19
7931394 acquired, or expanded capital improvements to the facility are made
7941395 for assets placed in service not later than December 31, 2021, if:
795-
7961396 a. there is a net increase in annualized payroll of the
7971397 applicant at any facility or facilities of the
7981398 applicant in this state of at least Two Hundred Fifty
7991399 Thousand Dollars ($250,000.00), which is attributable
8001400 to the capital improvements, or a net increase of
8011401 Seven Million Dollars ($7,000,000.00) or more in
8021402 capital improvements, while maintaining or increasing
8031403 payroll at the facility or facilities in this state
8041404 which are included in the application, and
805-
8061405 b. the facility offers, or will offer within one hundred
8071406 eighty (180) days of the date of employment of new
8081407 employees attributable to the capital improvements, a
8091408 basic health benefits plan to the full-time-equivalent
8101409 employees of the facility, which is determined by the
8111410 Department of Commerce to consist of the elements
8121411 specified in subparagraph b of paragraph 1 of
8131412 subsection A of Section 3603 of this title or elements
8141413 substantially equivalent thereto.
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8151439
8161440 An establishment described by this paragraph, the primary
8171441 business activity of which is described by Industry No. 518210 of
8181442 the North American Industry Classification System (NAICS) Manual,
8191443 2017 revision, that has applied for and been granted an exemption
8201444 for personal property at any time within five (5) years prior to the
8211445 effective date of this act, may apply for exemptions for items of
8221446 eligible personal property to be located within improve ments to real
8231447 property and such real property and improvements having been exempt
8241448 from ad valorem taxation prior to the effective date of this act
8251449 pursuant to the provisions of this section if such personal property
8261450 is placed in service not later than Dece mber 31, 2036. No
8271451 additional personal proper ty of such establishment placed in service
8281452 after such date shall qualify for the exempt treatment otherwise
8291453 authorized pursuant to this paragraph ;
830-
8311454 8. 6. Effective January 1, 2017, an entity engaged in electric
8321455 power generation by means of wind, as describ ed by the North
8331456 American Industry Classification System, No. 221119, shall not be
8341457 defined as a qualifying manufacturing concern for purposes of the
835-
836-ENR. S. B. NO. 609 Page 20
8371458 exemption otherwise authorized pursuant to Section 6B of Articl e X
8381459 of the Oklahoma Constitution or qualify a s a “manufacturing
8391460 facility” as defined in this section. No initial application for
8401461 exemption shall be filed by or accepted from an entity engaged in
8411462 electric power generation by means of wind on or after Janua ry 1,
8421463 2018; and
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8431489
8441490 9. 7. An entity or applicant engaged in an industry as defined
8451491 under U.S. Industry Number 324110 of the NAICS Manual, latest
8461492 revision, which has applied for or been granted an exemption for a
8471493 time period which began on or after calendar ye ar 2012 and before
8481494 calendar year 2016 but whi ch did not meet the payroll requirements
8491495 of subparagraph a of paragraph 4 of this subsection because of
8501496 nonrecurring bonuses, exercise of stock option or stock rights or
8511497 other nonrecurring, extraordinary items i ncluded in total payroll in
8521498 the previous year, shall be allowed an exemption, beginning with
8531499 calendar year 2016, for the number of years , including the calendar
8541500 year for which the exemption was denied, remaining in the entity ’s
8551501 five-year exemption period, provided such entity attains or
8561502 increases payroll at or above the initial or base payroll
8571503 established for the exemption ; and
858-
8591504 8. A facility engaged in manufacturing defined under U.S.
8601505 Industry Number 327310 of the NAICS Manual shall have the payroll
8611506 requirements of paragraph 4 of this subsection waiv ed for tax year
8621507 2021, which is based in part on the 2020 calendar year payroll
8631508 reported to the Oklahoma Employment Security Commission, and may
8641509 continue to receive the exemption for the five -year period provided
8651510 in this section only if all other requiremen ts of this section are
8661511 met.
867-
8681512 D. 1. Except as provided in paragraph 2 of this subsection,
8691513 the five-year period of exemption from ad valorem taxes for any
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8701540 qualifying manufacturing facility property shall begin on January 1
8711541 following the initial qualifying u se of the property in the
8721542 manufacturing process.
873-
8741543 2. The five-year period of exemption from ad valorem taxes for
8751544 any qualifying manufacturing facility, as specified in subparagraphs
8761545 a and b of this paragraph, wh ich is located within a tax incentive
8771546 district created pursuant to the Local Development Act by a county
8781547 having a population of at least five hundred thousand (500,000),
879-
880-ENR. S. B. NO. 609 Page 21
8811548 according to the most recent Federal Decennial Census, shall begin
8821549 on January 1 following the expiration or termination of the ad
8831550 valorem exemption, abatement, or other incentive provided through
8841551 the tax incentive district. Facilities qualifying pursuant to this
8851552 subsection shall include:
886-
8871553 a. a manufacturing facility as defined in subparagra ph c
8881554 of paragraph 1 of subsection B of this s ection, and
889-
8901555 b. an establishment primarily engaged in distribution as
8911556 defined under Industry Number 49311 of the North
8921557 American Industry Classification System for which the
8931558 initial capital investment was at least One Hundred
8941559 Eighty Million Dollars ($180,000 ,000.00); provided,
8951560 that the qualifying job creation and depreciable
8961561 property investment occurred prior to calendar year
8971562 2017 but not earlier than calendar year 2013.
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8981588
8991589 E. Any person, firm or corporation claiming the exemption
9001590 herein provided for shall file each year for which exemption is
9011591 claimed, an application therefor with the county assessor of the
9021592 county in which the new, expanded or acquired facility is located.
9031593 The application shall be on a form or forms prescribed by the Tax
9041594 Commission, and shall b e filed on or before March 15, except as
9051595 provided in Section 2902.1 of this title, of each year in which the
9061596 facility desires to take the exemption or within thirty (30) days
9071597 from and after receipt by such perso n, firm or corporation of notice
9081598 of valuation increase, whichever is later. In a case where
9091599 completion of the facility or facilities will occur after January 1
9101600 of a given year, a facility may apply to claim the ad valorem tax
9111601 exemption for that year. If such facility is found to be qualified
9121602 for exemption, the ad valorem tax exemption provided for herein
9131603 shall be granted for that entire year and shall apply to the ad
9141604 valorem valuation as of January 1 of that given year. For
9151605 applicants which qualify under the provisions of subparagraph b of
9161606 paragraph 1 of subsection B of this section, the application shall
9171607 include a copy of the affidavit and any other information required
9181608 to be filed with the Tax Commission.
919-
9201609 F. The application shall be examined by the cou nty assessor and
9211610 approved or rejected in the same manner as provided by law for
9221611 approval or rejection of claims for homestead exemptions. The
1612+taxpayer shall have the same right of review by and appeal from the
9231613
924-ENR. S. B. NO. 609 Page 22
925-taxpayer shall have the same right of review by and appeal from the
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9261639 county board of equalization, in the same man ner and subject to the
9271640 same requirements as p rovided by law for review and appeals
9281641 concerning homestead exemption claims. Approved applications shall
9291642 be filed by the county assessor with the Tax Commission no later
9301643 than June 15, except as provided in Sect ion 2902.1 of this title, of
9311644 the year in which the facility desires to take the exemption.
9321645 Incomplete applications and applications filed after June 15 will be
9331646 declared null and void by the Tax Commission. In the event that a
9341647 taxpayer qualified to receiv e an exemption pursuant to the
9351648 provisions of this section shall make payment of ad valorem taxes in
9361649 excess of the amount due, the county treasurer shall have the
9371650 authority to credit the taxpayer ’s real or personal property tax
9381651 overpayment against current t axes due. The county treasurer may
9391652 establish a schedule of up to five (5) years of credit to resolve
9401653 the overpayment.
941-
9421654 G. Nothing herein shall in any manner affect, alter or impair
9431655 any law relating to the assessment of property, and all property,
9441656 real or personal, which may be entitled to exemption hereunder shall
9451657 be valued and assessed as is other like property and as provided by
9461658 law. The valuation and assessment of property for which an
9471659 exemption is granted hereunder shall be performed by the Tax
9481660 Commission using one or more of the cost, income an d expense and
9491661 sales comparison approaches to estimate fair cash value in
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9501688 accordance with the Uniform Standards of Professional Appraisal
9511689 Practice.
952-
9531690 H. The Tax Commission shall have the authority and duty to
9541691 prescribe forms and to promulgate rules as may be necessary to carry
9551692 out and administer the terms and provisions of this section.
956-
9571693 SECTION 5. This act shall become effective November 1, 2021.
9581694
959-
960-ENR. S. B. NO. 609 Page 23
961-Passed the Senate the 19th day of May, 2021.
962-
963-
964-
965- Presiding Officer of the Senate
966-
967-
968-Passed the House of Representatives the 25th day of May, 2021.
969-
970-
971-
972- Presiding Officer of the House
973- of Representatives
974-
975-OFFICE OF THE GOVERNOR
976-Received by the Office of the Governor this _______ _____________
977-day of _________________ __, 20_______, at _______ o'clock _______ M.
978-By: _______________________________ __
979-Approved by the Governor of the State of Oklahoma this _____ ____
980-day of _________________ __, 20_______, at _______ o'clock _______ M.
981-
982- _________________________________
983- Governor of the State of Oklahoma
984-
985-
986-OFFICE OF THE SECRETARY OF STATE
987-Received by the Office of the Secretary of State this _______ ___
988-day of __________________, 20 _______, at _______ o'clock _______ M.
989-By: _______________________________ __
1695+58-1-2169 QD 5/18/2021 3:56:15 PM