An Act
ENROLLED SENATE
BILL NO. 609 By: Coleman, Hall and Kirt of
the Senate
and
Hilbert of the House
An Act relating to incentives and exemptions;
amending 62 O.S. 2011, Sections 856, 860 and 866,
which relate to the Local Development Act; providing
exception to required content of project plans;
modifying provisions related to duration of certain
districts based on certain industry description;
modifying requirements for certain written agreement;
amending 68 O.S. 2011, Section 2902, as last amended
by Section 1, Chapter 258, O.S.L. 2019 (68 O.S. Supp.
2020, Section 2902), which relates to exemption for
manufacturing facilities; modifying definitions;
modifying eligibility for exemption based on certain
industry description; providing exception for ce rtain
personal property; adjusting certain investment
requirement to inflation index; requiring the
Oklahoma Tax Commission to publish certain
adjustments; adjusting wage threshold; requiring
wages exceed certain Quality Jobs Program Act
requirements; authorizing the Oklahoma Tax Commission
to request verification; removing exceptions for
failure to meet certain payro ll requirements;
modifying certain classification; providing
application for personal property exemption for
certain industries that have been g ranted certain
real property exemption; providing waiver of certain
payroll requirement; requiring the Commissio n use
certain approach when performing assessment; and
providing an effective date .
SUBJECT: Industry tax
ENR. S. B. NO. 609 Page 2
BE IT ENACTED BY THE PEOP LE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 62 O.S. 2011, Se ction 856, is
amended to read as follows:
Section 856. A. The governing body shall designate and adopt
the proposed boundaries of any district and the proposed boundaries
of any project area. Except as otherwise provided in this
subsection, any district s created by a city or town shall be
confined to that territory within the corporate limits of such city
or town and any districts created by a county shall be co nfined to
that territory within the unincorporated areas of the county. Any
city, town or county may by agreement jointly create a distric t with
another entity.
B. Upon the adoption and approval of the project plan, the
governing body shall adopt an ord inance or resolution, whichever is
applicable, which:
1. Describes the boundaries of districts and project areas
sufficiently definite to i dentify with ordinary and reasonable
certainty the territory included in them;
2. Creates the district as of a da te provided in it or defers
determination of such date, provided such date must be no more than
ten (10) years after the date of approval of t he project plan;
3. Assigns a name to the district for identification purposes.
The first district created shal l be known as either an Incentive
District or Increment District Number One, City, Town or County of
__________, whichever is applicable. Each subsequently created
district shall be appropriately named and shall be assigned the next
consecutive number; an d
4. Contains findings that:
a. the project area or district meets at least one of the
following criteria:
(1) is a reinvestment area,
ENR. S. B. NO. 609 Page 3
(2) is a historic preservation area,
(3) is an enterprise area, or
(4) is a combination of the areas specified in
divisions (1), (2) and (3) of this subparagraph,
b. the improvement of the area is likely to enhance the
value of other real property in the area and to
promote the general public interest. It shall not be
necessary to identify the specific parcels meeti ng the
criteria,
c. the guidelines specified in paragraphs 1 and 2 of
Section 852 of this title shall be followed,
d. the aggregate net assessed value of the taxable
property in all districts as determined pursuant to
Section 862 of this title within the city or town
shall not exceed twenty-five percent (25%) of the
total net assessed value of taxable propert y within
the city or town for cities or towns having a
population of fifty thousand (50,000) or more or shall
not exceed thirty-five percent (35%) of the total net
assessed value of taxable property within the city or
town for cities or towns having a popu lation of less
than fifty thousand (50,000),
e. for projects approved by a county, the aggregate net
assessed value of the taxable property in all
districts as determined pursuant to Section 862 of
this title within the county shall not exceed fifteen
percent (15%) of the total net assessed value of the
taxable property within the county,
f. the aggregate net assessed value of the taxable
property in all districts as determined pursuant to
Section 862 of this title within the city, the town or
the county shall not exceed twenty -five percent (25%)
of the total net assessed value of any affected school
district located within the city, town or county, a nd
ENR. S. B. NO. 609 Page 4
g. the land area of this district and all other districts
within the city, the town or the county shall no t
exceed twenty-five percent (25%) of the tot al land
area of the city, the town or the county.
For districts that are wholly or partially comprised or become
comprised of industries operating under NAICS code 518210, the
provisions of subparagraphs d through g of this paragraph shall not
apply.
C. It is the intention of the Legisla ture in adopting the Local
Development Act that no long-term contractual obligation be created
by the mere adoption of an ordinance or resolution establishing an
increment district. Notwithstanding any provisio n contained in an
ordinance, resolution or pr oject plan, an ordinance or resolution
establishing an increment d istrict shall constitute a legislative
act and may be repealed, modified or amended at any time during the
term of the increment district, by sub sequent action of the
governing body except as otherwise authorized pursuant to Sect ions
854 and 863 of this ti tle; provided, however, that no such ordinance
shall be repealed, modified or amended during the time that any
bonds payable from incremental rev enues are outstanding without the
consent of the bondholders, if such bonds are issu ed pursuant to the
provisions of Article X, Section 35 of the Oklahoma Constitution
following its amendment by State Question No. 693.
D. However, nothing in the Local Dev elopment Act shall restrict
the ability of:
1. Any city, town or county to:
a. issue debt in accordance wit h the applicable
provisions of Article X of the Oklahoma Constitution,
and any statutes enacted in connection therewith, and
b. use incremental reve nues derived from an increment
district to pay principal, interest or premium
associated with such indebted ness; or
2. Any public entity, other than a city, town or county, to:
ENR. S. B. NO. 609 Page 5
a. issue tax apportionment bonds or notes in accordance
with Section 863 of th is title or to issue other types
of revenue bonds or notes in accordance with other
applicable provisions of Oklahoma law, and
b. use incremental revenues derived from an increment
district to pay principal, interest or premium
associated with such indebte dness.
SECTION 2. 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 ente rprise
areas.
B. The governing body may grant incentive s or exemptions from
local taxation only on the new investment made. No ad valorem tax
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. N o ad valorem tax incentives or
exemptions authorized in this section may be granted for retail
establishments. If a retail establishment is located in pro perty
which otherwise qualifies for an incent ive or exemption pursuant to
this section, the incentive or exemption shall not be allowed for
that portion of the property used for such retail establishment. As
used in this subsection, “retail establishment ” shall not include an
establishment that prov ides 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 locate d in an increment district or as
long as the property is subject to th e 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 s ublease to a lessee not entitled to an ad
valorem tax exemption, the i mprovements placed thereon shal l not be
entitled to an ad valorem tax exemption provided for in Section 850
et seq. of this title. The Except as otherwise provided by this
subsection, the incentives or exemptions, which may be ful l or
partial, may be granted for a period not to exceed five (5) years;
however, in enterprise zones incentives or exemptions may be granted
ENR. S. B. NO. 609 Page 6
for a period not to exceed six (6) years . With respect to an
establishment, the business of which is described by U.S. Industry
Number 518210 of the North American Indust ry Classification System
(NAICS) Manual, 2017 revision, such incen tives or exemptions may be
granted for a period not to exceed twenty -five (25) years.
C. No incentives or exemptions may be granted t o any business
or firm that is relocating from within t he 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 r esolution giving
their approval to the granting of ince ntives or exemptions to the
business or firm loc ating 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 enti ties 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 applica tion by the governing body to, and approval
of, the Director of the Oklahoma Department of Commerce. I n order
for the Director to approve the waiver, the Director must find that
the incentives or exemptions are necessary and sufficient to attract
the business or firm and that the benefits generated by the bus iness
location outweigh the costs of the busines s 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 g ranted on the value of property which has be en
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 o nly on the
increase in value of the property. The exe mptions may be granted
for a specific period of t ime 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 eligibl e for this exemption
may include but not be limited to commercial, office or multifamily
residential use.
ENR. S. B. NO. 609 Page 7
SECTION 3. AMENDATORY 62 O.S. 2011, Section 866, is
amended to read as follows:
Section 866. A. There shall be a written a greement between the
governing body and the property owners who are granted tax
incentives or exemptions pursuant to Section 860 of this title. The
written agreement may include, but shall not be limited to, the
following:
1. List the kind, number, and l ocation A description of all
proposed improvements to the property;
2. Provide access to and authorize inspection of the property
by city, town or county employees to ensure that the improvements or
repairs are made according to the specifications and con ditions of
the agreement;
3. Limit the uses of t he property consistent with the general
purpose of encouraging development or redevelopment of the area
during the period th at the tax incentives or exemptions or the
increment financing are in effect;
4. Provide for recapturing the local tax revenue los t as a
result of the agreement if the owner of the property fails to make
the improvements or repairs as provided by the agre ement; and
5. Include any other requi rement deemed by the governing body
necessary to carry out the agreement.
B. There shall be a written agreement between the governing
body and the property owners in historic preservation areas who are
granted ad valorem tax exemptions pursuant to subsect ion D of
Section 860 of this title. The writ ten agreement shall include the
following:
1. List the location of the property;
2. Provide access to and authorize inspection of the property
by city, town or county empl oyees to ensure that the property is
being maintained according to the specificatio ns and conditions of
the agreement;
ENR. S. B. NO. 609 Page 8
3. Limit the uses of the property consistent with the general
purpose of encouraging neighborhood commercial preservation of the
area during the period that the ad valorem ta x exemptions are in
effect;
4. Provide for recapturing the ad valorem tax revenue lost as a
result of the agreement if the owner of the property fails to
maintain the property as provided by the agreement;
5. Specify the time frame of the agreement inclu ding whether
renewals can occur, at what time such renewals can occur and under
what conditions renewals can occur;
6. Specify rehabilitations, preservation efforts and other
specific actions that should be taken by t he property owners on an
individual or collective basis;
7. Provide for reciprocal actions by public entities to
protect, enhance and improve the commercial historic preservation
area and the surrounding residential areas served by such districts;
8. Provide review and approval procedures th at may be used when
usage or ownership of the property changes; and
9. Include any other requirement deemed by the governing body
necessary to carry out the agreement.
C. The governing body shall enter into written a greements with
active project particip ants of increment projects. The written
agreement may include, but shall not be limited to, the provisions
specified in paragraphs 1 through 5 of subsection A of this section.
SECTION 4. AMENDATORY 68 O.S. 2011, Section 2902, as
last amended by Section 1, Chapter 258, O.S.L . 2019 (68 O.S. Supp.
2020, Section 2902), is amended to read as follows:
Section 2902. A. Except as otherwise provided by subsection H
of Section 3658 of this title pursuant to which the exemption
authorized by this section may not be claimed, a qualify ing
manufacturing concern, as defined by Section 6B of Article X of the
Oklahoma Constitution, and as further defined herein, shall be
exempt from the levy of any ad valorem taxes upon new, expanded or
ENR. S. B. NO. 609 Page 9
acquired manufacturing facilities, including facilities engaged in
research and development, for a period of five (5) years. The
provisions of Section 6B of Article X of the Oklahoma Constitution
requiring an existing facility to have been unoccupied for a period
of twelve (12) months prior to acquisition sh all be construed as a
qualification for a facility to initially receive an exemption, and
shall not be deemed to be a qualification for that facility to
continue to receive an exemption in each of the four (4) y ears
following the initial year for which the exemption was granted.
Such facilities are hereby classified for the purposes of taxation
as provided in Section 22 of Article X of the Oklahoma Constitution.
B. For purposes of this section, the following de finitions
shall apply:
1. “Manufacturing facilities” means facilities engaged in the
mechanical or chemical transformation of materials or substances
into new products and except as provided by paragraph 8 6 of
subsection C of this section shall include:
a. establishments which have received a manuf acturer
exemption permit pursuant to the provisions of Section
1359.2 of this title,
b. facilities, including repair and replacement parts,
primarily engaged in aircraft repair, building and
rebuilding whether o r not on a factory basis,
c. establishments primarily engaged in computer services
and data processing as defined under Industrial Group
Numbers 5112 and 5415, and U.S. Industry Number 334611
and 519130 of the NAICS Manual, latest revision, and
which derive at least fifty percent (50%) of their
annual gross revenues from the sale of a product or
service to an out-of-state buyer or consumer, and as
defined under Industrial Group Number 5142 5182 of the
NAICS Manual, latest revision, which derive at least
eighty percent (80%) of their annual gross reven ues
from the sale of a product or service to an out-of-
state buyer or consumer. Eligibility as a
manufacturing facility pursuant to this subparagraph
shall be established, subject to review by the
ENR. S. B. NO. 609 Page 10
Oklahoma Tax Commission, by annually filing an
affidavit with the Tax Commission stating that the
facility so qualifies and such other information as
required by the Tax Commission. For purposes of
determining whether annual gross revenues are derived
from sales to out-of-state buyers, all sales to the
federal government shall be considered to be an out-
of-state buyer,
d. for which facilities that the investment cost of the
construction, acquisition or expansion of the
manufacturing facility is Two Hundred Fifty Thousa nd
Dollars ($250,000.00) Five Hundred Thousan d Dollars
($500,000.00) or more with respect to assets placed
into service during calendar year 2022. For
subsequent calendar years, the investment required
shall be increased annually by a percentage equal to
the previous year’s increase in the Consumer Price
Index-All Urban Consumers (“CPI-U”) and such adjusted
amount shall be the required investment cost in order
to qualify for the exemption authorized by this
section. The Oklahoma Department of Commerce sha ll
determine the amount of the increase, if a ny, on
January 1 of each year. The Oklahoma Tax Commission
shall publish on its website at least annually the
adjusted dollar amount in order to qualify for the
exemption authorized by this section and shall in clude
the adjusted dollar amount in any of it s relevant
forms or publications with respect to the exemption .
Provided, “investment cost” shall not include the cost
of direct replacement, refurbishment, repair or
maintenance of existing machinery or equipm ent, except
that “investment cost” shall include capital
expenditures for direct replacement, refurbishment,
repair or maintenance of existing machinery or
equipment that qualifies for depreciation and/or
amortization pursuant to the Internal Revenue Code of
1986, as amended, and such expenditures sh all be
eligible as a part of an “expansion” that otherwise
qualifies under this section, and
ENR. S. B. NO. 609 Page 11
e. establishments primarily engaged in distribution as
defined under Industry Numbers 49311, 49312, 49313 and
49319 and Industry Sector Number 42 of the NAICS
Manual, latest revision, and which meet the following
qualifications:
(1) construction with an initial capital investment
of at least Five Million Dollars ($5,000,000.00),
(2) employment of at least one hundred (100 ) full-
time-equivalent employees, as certifie d by the
Oklahoma Employment Security Commission,
(3) payment of wages or salaries to its employees at
a wage which equals or exceeds one hundred
seventy-five percent (175%) of the federally
mandated minimum wag e, as certified by the
Oklahoma Employment Se curity Commission the
average wage requirements in the Oklahoma Quality
Jobs Program Act for the year in which the real
property was placed into service , and
(4) commencement of construction on or after November
1, 2007, with construction to be completed w ithin
three (3) years from the date of the commencement
of construction,
f. facilities engaged in the manufacturing, compounding,
processing or fabrication of materials into articles
of tangible personal propert y according to the special
order of a customer (custom order manufacturing) by
manufacturers classified as operating in North
American Industry Classification System (NAICS)
Sectors 32 and 33, but does not include such custom
order manufacturing by manufac turers classified in
other NAICS code sectors , and
g. with respect to any entity making an application for
the exemption authorized by this sec tion on or after
January 1, 2023, the establishment making application
for exempt treatment of real or personal p roperty
acquired or improved beginning Januar y 1, 2022, and
ENR. S. B. NO. 609 Page 12
for any calendar year thereafter, the entity shall be
required to pay new direct jobs, as defined by Section
3603 of this title for purposes of the Oklahoma
Quality Jobs Program Act, an average an nualized wage
which equals or exceeds the ave rage wage requirement
in the Oklahoma Quality Jobs Program Act for the year
in which the real or personal property was placed into
service. The Oklahoma Tax Commission may request
verification from the Oklahoma Department of Commerce
that an establishment seeking an exemption for real or
personal property pays an average annualized wage that
equals or exceeds the average wage requirement in
effect for the year in which the real or personal
property was placed in to service. For purposes of
this subparagraph, it shall not be necessary for the
establishment to qualify for incentive payments
pursuant to the Oklahoma Quality Jobs Program Act, but
the establishment shall be subject to the wage
requirements of the Okla homa Quality Jobs Program Act
with respect to new direct jobs in order to qualify
for the exempt treatment authorized by this section .
Eligibility as a manufacturing facility pursuant to this
subparagraph shall be established, subject to review by the Tax
Commission, by annually filing an affidavit w ith the Tax Commission
stating that the facility so qualifies and containing such other
information as required by the Tax Commission.
Provided, eating and drinking places, as well as other retail
establishments, shall not qualify as manufacturing faciliti es for
purposes of this section, nor shall centrally assessed properties.
Eligibility as a manufacturing facility pursuant to this
subparagraph shall be established, subject to review by the Tax
Commission, by annually filing an application with the Tax
Commission stating that the facility so qualifies and containing
such other information as required by the Tax Commission;
2. “Facility” and “facilities”, except as otherwise provided by
this section, means and includes the land, buildings, structures ,
and improvements used directly and exclusively in the manufacturing
process. Effective January 1, 2022, and for each calendar year
ENR. S. B. NO. 609 Page 13
thereafter, for establishments which have received a manufacturer
exemption permit pursuant to the provisions of Section 1359.2 of
this title, or facilities engaged in manufacturing activities
defined or classified in the NAICS Manual under Industry Nos. 311111
through 339999, inclusive, but for no other establishments, facility
and facilities means and includes the land, buildings , structures,
improvements, machinery, fixtures, equipment and other personal
property used directly and exclusively in the manufacturing process;
and
3. “Research and development ” means activities directly rel ated
to and conducted for the purpose of disc overing, enhancing,
increasing or improving future or existing products or processes or
productivity.
C. The following provisions shall apply:
1. A manufacturing concern shall be entitled to the exemption
herein provided for each new manufacturing facili ty constructed,
each existing manufacturing facility acquired and the expansion of
existing manufacturing facilities on the same site, as such terms
are defined by Section 6B of Article X of the Oklahoma Constit ution
and by this section;
2. Except as otherwise provided in paragraph 5 of this
subsection, no No manufacturing concern shall receive more than one
five-year exemption for any one manufacturing facility unless the
expansion which qualifies the manufactu ring facility for an
additional five-year exemption meets the requirements of paragraph 4
of this subsection and the employment level established for any
previous exemption is maintained;
3. Any exemption as to the expansion of an existing
manufacturing facility shall be limited to the increase in a d
valorem taxes directly attributable to the expansion;
4. Except as provided in paragraphs 5 and 6 of this subsection,
all All initial applications for any exemption for a new, acquired
or expanded manufacturi ng facility shall be granted only if:
a. there is a net increase in annualized base payroll
over the initial payroll of at least Two Hundred Fifty
ENR. S. B. NO. 609 Page 14
Thousand Dollars ($250,000.00) if the facility is
located in a county with a population of fewer than
seventy-five thousand (75,000), according to the mos t
recent Federal Decennial Census, while maintaining or
increasing base payroll in subsequent years, or at
least One Million Dollars ($1,000,000.00) if the
facility is located in a county with a population of
seventy-five thousand (75,000) or more, accordi ng to
the most recent Federal Decennial Census, while
maintaining or increasing base payroll in subsequent
years; provided the payroll requirement of this
subparagraph shall be waived for claims for
exemptions, including claims previously denied or on
appeal on March 3, 2010, for all initial applications
for exemption filed on or after January 1, 2004, and
on or before March 31, 2009, and all subsequent annual
exemption applications filed related to the initial
application for exemption, for an applicant, i f the
facility has been located in Oklahoma for at least
fifteen (15) years engaged in marine engine
manufacturing as defined under U.S. Industry Number
333618 of the NAICS Manual, latest revision, and has
maintained an average employment of five hundred ( 500)
or more full-time-equivalent employees over a ten -year
period. Any applicant that qualifies for the payroll
requirement waiver as outlined in the previous
sentence and subsequently closes its Oklahoma
manufacturing plant prior to January 1, 2012, may be
disqualified for exemption and subject to recapture.
For an applicant engaged in paperboard manufacturing
as defined under U.S. Industry Number 322130 of the
NAICS Manual, latest revision, union master payo uts
paid by the buyer of the facility to spec ified
individuals employed by the facility at the time of
purchase, as specified under the purchase agreement,
shall be excluded from payroll for purposes of this
section.
In order to provide certainty with resp ect to
investments in manufacturing facilitie s pertaining to
all initial applications for exemption filed on or
ENR. S. B. NO. 609 Page 15
after January 1, 2016, the following definitions shall
apply:
(1) “base payroll” shall mean total payroll adjusted
for any nonrecurring bonuses, exercise of stock
option or stock rights and other nonrecurring,
extraordinary items included in total payroll,
and
(2) “initial payroll” shall mean base payroll for the
year immediately preceding the initial
construction, acquisition or expansion.
The Tax Commission shall verify payroll information
through the Oklahoma Employment Security Commission by
using reports from the Oklahoma Employment Security
Commission for the calendar year immediately preceding
the year for which initial application is made f or
base-line payroll, which must be maintaine d or
increased for each subsequent year; provided, a
manufacturing facility shall have the option of
excluding from its payroll, for purposes of this
section:
i. payments to sole proprietors, members
of a partnership, members of a limited
liability company who own at least ten
percent (10%) of the capital of the
limited liability company or
stockholder-employees of a corporation
who own at least ten percent (10%) of
the stock in the corporation, and
ii. any nonrecurring bonuses, exercise of
stock option or stock rights or other
nonrecurring, extraordinary items
included in total payroll numbers as
reported by the Oklahoma Employment
Security Commission. A manufacturing
facility electing either option shall
indicate such election upon its
application for an exemption under this
ENR. S. B. NO. 609 Page 16
section. Any manufacturing facility
electing either option shall submit
such information as the Tax Commission
may require in order to verify payroll
information. Payroll information
submitted pursuant to the provisions of
this paragraph shall be submitted to
the Tax Commission and shall be subject
to the provisions of Section 205 of
this title, and
b. the facility offers, or will offer within one hundred
eighty (180) days of the date of em ployment, a basic
health benefits plan to the full-time-equivalent
employees of the facility, which is determined by the
Department of Commerce to consist of the elements
specified in subparagraph b of paragraph 1 of
subsection A of Section 3603 of this ti tle or elements
substantially equivalent ther eto.
For purposes of this section, calculation of the amount of
increased base payroll shall be measured from the start of initial
construction or expansion to the completion of such construction or
expansion or for three (3) years from the start of initia l
construction or expansion, whichever occurs first. The amount of
increased base payroll shall include payroll for full -time-
equivalent employees in this state who are employed by an entity
other than the facility which has previously or is currently
qualified to receive an exemption pursuant to the provisions of this
section and who are leased or otherwise provided to the facility, if
such employment did not exist in this state prior to the start of
initial construction or expansion of the facility. The
manufacturing concern shall submit an affidavit to the Tax
Commission, signed by an officer, stating that the construction,
acquisition or expansion of the facility will result in a net
increase in the annualiz ed base payroll as required by this
paragraph and that full-time-equivalent employees of the facility
are or will be offered a basic health benefits plan as required by
this paragraph. If, after the completion of such construction or
expansion or after th ree (3) years from the start of initial
construction or expansion, whichever occurs first, the construction,
acquisition or expansion has not resulted in a net increase in the
ENR. S. B. NO. 609 Page 17
amount of annualized base payroll, if required, or any other
qualification specified in this paragraph has not been met, the
manufacturing concern shall pay an amount equal to the amount of any
exemption granted, including penalties and interest thereon, to the
Tax Commission for deposit to the Ad Valorem Reimbursement Fund;
5. If a facility fails to meet the base payroll requi rement of
subparagraph a of paragraph 4 of this subsection, the payroll
requirement shall be waived for claims for exemptions, including
claims previously denied or on appeal on June 1, 2009, for all
initial applications for exemption filed on or after Jan uary 1,
2004, and on or before March 31, 2009, and all subsequent annual
exemption applications filed related to such initial application for
exemption, for an applicant, if the facility:
a. has been located for at least five (5) years as of
March 31, 2009, in a county in Oklahoma with a
population of six hundred thousand (600,000) or more,
b. is owned by an applicant that has been engaged in
manufacturing as defined under U.S. Industry Numbers
323110, 323111, 323121 and 323122 of the NAICS Manual,
latest revision,
c. is owned by an applicant that maintains a workforce of
at least three hundred (300) employees on June 1,
2009,
d. is owned by an applicant that has filed multiple
applications for exemption pursuant to this section,
and
e. is owned by an applicant that operates at least one
facility in this state of at least seven hundred
thirty thousand (730,000) square feet on June 1, 2009.
In the event that any applicant obtaining a waiver of the payroll
requirement pursuant to this paragraph ceases to o perate all of its
facilities in this state on or before a date that is four (4) years
after any initial application for an exemption is filed by such
applicant, all sums of property taxes exempted under this paragrap h
through a waiver of the payroll requir ement that relate to such
ENR. S. B. NO. 609 Page 18
application shall become due and payable as if such sums were
assessed in the year in which the applicant ceases to operate all of
its facilities in the state;
6. Any new, acquired or expan ded automotive final assembly
manufacturing facility which does not meet the requirements of
paragraph 4 of this subsection shall be granted an exemption only if
all other requirements of this section are met and only if the
investment cost of the construc tion, acquisition or expansion of the
manufacturing facility is Three Hundred Million Dollars
($300,000,000.00) or more and the manufacturing facility retains an
average employment of one thousand seven hundred fifty (1,750) or
more full-time-equivalent employees in the year in which the
exemption is initially granted and in each of the four (4)
subsequent years only if an average employment of one thousand seven
hundred fifty (1,750) or more full -time-equivalent employees is
maintained in the subsequent ye ar. Any property installed to
replace property damaged by the tornado or natural disaster that
occurred May 8, 2003, may continue to receive the exemption provided
in this paragraph for the full five -year period based on the value
of the previously qualif ying assets as of January 1, 2003. The
exemption shall continue in effect as long as all other
qualifications in this paragraph are met. If the average employment
of one thousand seven hundred fifty (1,750) or more full -time-
equivalent employees is reduc ed as a result of temporary layoffs
because of a tornado or natural disaster on May 8, 2003, then the
average employment requirement shall be waived for year 2003 of the
exemption period. Calculation of the number of employees shall be
made in the same manner as required under Section 2357.4 o f this
title for an investment tax credit. As used in this paragraph,
“expand” and “expansion” shall mean and include any increase to the
size or scope of a facility as well as any renovation, restoration,
replacement or remodeling of a facility which per mits the
manufacturing of a new or redesigned product;
7. Any Except as otherwise provided by this paragraph, any new,
acquired, or expanded computer data processing, data preparation , or
information processing servi ces provider classified in Industrial
Group Number 7374 of the SIC Manual, latest revision, and U.S.
Industry Number 514210 518210 of the North American Industrial
Classification System (NAICS) Manual, latest 2017 revision, may
apply for exemptions under t his section for each year in which new ,
ENR. S. B. NO. 609 Page 19
acquired, or expanded capital improvements to the facility are made
for assets placed in service not later than December 31, 2021, if:
a. there is a net increase in annualized payroll of the
applicant at any facility or facilities of the
applicant in this state of at least Two Hundred Fifty
Thousand Dollars ($250,000.00), which is attributable
to the capital improvements, or a net increase of
Seven Million Dollars ($7,000,000.00) or more in
capital improvements, while maintaining or increasing
payroll at the facility or facilities in this state
which are included in the application, and
b. the facility offers, or will offer within one hundred
eighty (180) days of the date of employment of new
employees attributable to the capital improvements, a
basic health benefits plan to the full-time-equivalent
employees of the facility, which is determined by the
Department of Commerce to consist of the elements
specified in subparagraph b of paragraph 1 of
subsection A of Section 3603 of this title or elements
substantially equivalent thereto.
An establishment described by this paragraph, the primary
business activity of which is described by Industry No. 518210 of
the North American Industry Classification System (NAICS) Manual,
2017 revision, that has applied for and been granted an exemption
for personal property at any time within five (5) years prior to the
effective date of this act, may apply for exemptions for items of
eligible personal property to be located within improve ments to real
property and such rea l property and improvements having been exempt
from ad valorem taxation prior to the effective date of this act
pursuant to the provisions of this section if such personal property
is placed in service not later than Dece mber 31, 2036. No
additional personal property of such establishment placed in service
after such date shall qualify for the exempt treatment otherwise
authorized pursuant to this paragraph ;
8. 6. Effective January 1, 2017, an entity engaged in electric
power generation by means of wind, as described by the North
American Industry Classification System, No. 221119, shall not be
defined as a qualifying manufacturing concern for purposes of the
ENR. S. B. NO. 609 Page 20
exemption otherwise authorized pursuant to Section 6B of Articl e X
of the Oklahoma Constitution o r qualify as a “manufacturing
facility” as defined in this section. No initial application for
exemption shall be filed by or accepted from an entity engaged in
electric power generation by means of wind on or after Janua ry 1,
2018; and
9. 7. An entity or applicant engaged in an industry as defined
under U.S. Industry Number 324110 of the NAICS Manual, latest
revision, which has applied for or been granted an exemption for a
time period which began on or after calendar ye ar 2012 and before
calendar year 2016 but which did not meet the payroll requirements
of subparagraph a of paragraph 4 of this subsection because of
nonrecurring bonuses, exercise of stock option or stock rights or
other nonrecurring, extraordinary items i ncluded in total payroll in
the previous year, shall be allowed an exemption, beginning with
calendar year 2016, for the number of years , including the calendar
year for which the exemption was denied, remaining in the entity ’s
five-year exemption period, provided such entity attains or
increases payroll at or above the initial or base payroll
established for the exemption ; and
8. A facility engaged in manufacturing defined under U.S.
Industry Number 327310 of the NAICS Manual shall have the payroll
requirements of paragraph 4 of this su bsection waived for tax year
2021, which is based in part on the 2020 calendar year payroll
reported to the Oklahoma Employment Security Commission, and may
continue to receive the exemption for the five -year period provided
in this section only if all oth er requirements of this section are
met.
D. 1. Except as provided in paragraph 2 of this subsection,
the five-year period of exemption from ad valorem taxes for any
qualifying manufacturing facility property shall begin on January 1
following the initial qualifying use of the property in the
manufacturing process.
2. The five-year period of exemption from ad valorem taxes for
any qualifying manufacturing facility, as specified in subparagraphs
a and b of this paragraph, wh ich is located within a tax incentive
district created pursuant to the Local Development Act by a county
having a population of at least five hundred thousand (500,000),
ENR. S. B. NO. 609 Page 21
according to the most recent Federal Decennial Census, shall begin
on January 1 following the expiration or termination of the ad
valorem exemption, abatement, or other incentive provided through
the tax incentive district. Facilities qualifying pursuant to this
subsection shall include:
a. a manufacturing facility as defined in subparagra ph c
of paragraph 1 of subsection B of this section, and
b. an establishment primarily engaged in distribution as
defined under Industry Number 49311 of the North
American Industry Classification System for which the
initial capital investment was at least One Hundred
Eighty Million Dollars ($180,000,000.00); provided,
that the qualifying job creation and depreciable
property investment occurred prior to calendar year
2017 but not earlier than calendar year 2013.
E. Any person, firm or corporation claiming the exemption
herein provided for shall file each year for which exemption is
claimed, an application therefor with the county assessor of the
county in which the new, expanded or acquired facility is located.
The application shall be on a form or forms prescribed by the Tax
Commission, and shall be filed on or before March 15, except as
provided in Section 2902.1 of this title, of each year in which the
facility desires to take the exemption or within thirty (30) days
from and after receipt by such perso n, firm or corporation of notice
of valuation increase, whichever is later. In a case where
completion of the facility or facilities will occur after January 1
of a given year, a facility may apply to claim the ad valorem tax
exemption for that year. If such facility is found to be qualified
for exemption, the ad valorem tax exemption provided for herein
shall be granted for that entire year and shall apply to the ad
valorem valuation as of January 1 of that given year. For
applicants which qualify under the provisions of subparagraph b of
paragraph 1 of subsection B of this section, the application shall
include a copy of the affidavit and any other information required
to be filed with the Tax Commission.
F. The application shall be examined by the cou nty assessor and
approved or rejected in the same manner as provided by law for
approval or rejection of claims for homestead exemptions. The
ENR. S. B. NO. 609 Page 22
taxpayer shall have the same right of review by and appeal from the
county board of equalization, in the same man ner and subject to the
same requirements as provided by law for review and appeals
concerning homestead exemption claims. Approved applications shall
be filed by the county assessor with the Tax Commission no later
than June 15, except as provided in Sect ion 2902.1 of this title, of
the year in which the facility desires to take the exemption.
Incomplete applications and applications filed after June 15 will be
declared null and void by the Tax Commission. In the event that a
taxpayer qualified to receiv e an exemption pursuant to the
provisions of this section shall make payment of ad valorem taxes in
excess of the amount due, the county treasurer shall have the
authority to credit the taxpayer ’s real or personal property tax
overpayment against current t axes due. The county treasurer may
establish a schedule of up to five (5) years of credit to resolve
the overpayment.
G. Nothing herein shall in any manner affect, alter or impair
any law relating to the assessment of property, and all property,
real or personal, which may be entitled to exemption hereunder shall
be valued and assessed as is other like property and as provided by
law. The valuation and assessment of property for which an
exemption is granted hereunder shall be performed by the Tax
Commission using one or more of the cost, income and expense and
sales comparison approaches to estimate fair cash value in
accordance with the Uniform Standards of Professional Appraisal
Practice.
H. The Tax Commission shall have the authority and duty to
prescribe forms and to promulgate rules as may be necessary to carry
out and administer the terms and provisions of this section.
SECTION 5. This act shall become effective November 1, 2021.
ENR. S. B. NO. 609 Page 23
Passed the Senate the 19th day of May, 2021.
Presiding Officer of the Senate
Passed the House of Representatives the 25th day of May, 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: _______________________________ __