HB34

ENROLLED, An Act,

To create the Alabama Renewal Act; to add Articles 18 and 19 to Chapter 18, Title 40, of the Code of Alabama 1975, commencing with Sections 40-18-400 and 40-18-410, respectively; to create new programs for the growth of business and industry in Alabama; to create tax credits for increased use of the state's port facilities; to create the Growing Alabama Act tax credit to address economic development needs in Alabama; to cap the credits; to provide for the carryforward of certain earned but unused credits; to provide methods for claiming certain credits; to provide for proof that credits are due to be granted; to provide for the promulgation of forms; and to provide rulemaking authority.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. This act shall be known and may be cited as the Alabama Renewal Act.

Section 2. A new Article 18 of Chapter 18 of Title 40 is added to the Code of Alabama 1975, to read as follows:

Article 18.

§40-18-400.

For the purposes of this article, the following words and phrases shall have the following meanings:

(1) BASE CARGO VOLUME. The greater of the following:

a. One hundred five percent of the cargo volume of a port facility user in the immediate prior year 12-month period immediately preceding the application.

b. Ten TEUs, for cargo measured by TEU, or 75 net tons, for cargo measured by net ton.

(2) CARGO VOLUME. The total amount of noncontainerized general cargo or containers, measured in TEUs, in net tons, or in kilograms, transported by way of a waterborne ship, air cargo aircraft, or railroad through a port facility; provided that such cargo shall be owned by the port facility user at the time the port facility is used.

(3) COMMISSION. The Renewal of Alabama Commission created by Section 40-18-402.

(4) COMPANY. Anyone or anything which has the powers to conduct the activities required to claim the port credit.

(5) INLAND PORTS. Physical sites located away from traditional land, air, and coastal borders with the vision to facilitate and process international and domestic trade through strategic investment in multi-modal transportation assets and by promoting value-added services as goods move through the supply chain.

(5) (6) PORT FACILITY. Any publicly owned facility located within this state's ports of entry, including inland ports, through which cargo is transported by way of a waterborne ship, air cargo aircraft, or railroad, to or from destinations inside or outside this state and which handles cargo owned by third parties in addition to cargo owned by the port facility's owner.

(6) (7) PORT CREDIT. The credit provided for in Section 40-18-403.

(7) (8) PORT FACILITY USER. A company engaged in manufacturing, warehousing, or distribution which uses a port facility.

(8) (9) TEU. A "20-foot equivalent unit" volumetric measure based on the size of a container 20 feet long by eight feet wide by eight feet, six inches high.

§40-18-401.

(a) The port credit provided for in Section 40-18-403 is created by this article and is allowed upon strict compliance with the provisions herein.

(b) Prior to the allowance of the port credit, an application shall be filed with the commission, on a form promulgated by the commission.

(1) The application shall be filed by the port facility user desiring to claim the credit.

(2) The commission shall establish deadlines for applications. Such applications shall solicit whatever information the commission deems important to its determination of whether granting a port credit will create new, high paying jobs in the state, bring substantial capital to the state, increase the usage of a port facility, promote the development of clusters of businesses in the state, or promote the economic development efforts of the state.

(3) Upon review of the applications, the commission may approve such applications as shall result in port credits being awarded so as not to exceed twelve million dollars ($12,000,000) for the life of the program, and shall not exceed five million dollars ($5,000,000) in a fiscal year.

(4) The commission shall charge application fees to offset the costs of administration of this article.

(c) Prior to claiming a port credit, the company shall submit to the Department of Commerce a certification containing information adequate to prove that the company is entitled to the credit. Following such examination as it deems necessary, the Department of Commerce may certify the information and deliver the same to the Department of Revenue. Thereafter, the Department of Revenue shall allow the tax credit.

(d)(1) Nothing in this article shall be construed to constitute a guarantee or assumption by the state of any debt of any company nor to authorize the credit of the state to be given, pledged, or loaned to any company.

(2) Nothing in this article shall be construed to make available to any company any right to the benefits conferred by this article absent strict compliance with this article.

(3) Nothing in this article shall be construed to change or lessen the requirements for claiming jobs act incentives under the Alabama Jobs Act, Section 40-18-370, et seq. Companies claiming the jobs act incentives must strictly comply with the Alabama Jobs Act.

(4) All filings made by a private party with the commission or any department of state government shall be made using forms adopted by the commission or department. Any such filing shall be treated as a tax return, subject to penalties imposed by the Department of Revenue.

(5) Nothing in this article shall be construed to limit the powers otherwise existing for the Department of Revenue to audit and assess any company claiming a port credit.

§40-18-402.

(a) There is hereby created the Renewal of Alabama Commission.

(b) The commission shall be comprised of all of the following persons:

(1) The Finance Director, or his or her designee;

(2) The Secretary of Commerce, or his or her designee;

(3) The Chair of the House Ways and Means Education Committee, or its successor committee, if any, or his or her designee;

(4) The Chair of the Senate Finance and Taxation Education Committee, or its successor committee, if any, or his or her designee;

(5) Three persons appointed by the Governor, at least one of whom shall be a resident of an area of the state the source of whose primary power supply is the Tennessee Valley Authority or its lawfully authorized distributor;

(6) One person appointed by the Speaker of the House, who shall be an employee, board member, or trustee of an Alabama public community college or four-year institution of higher education; and

(7) One person appointed by the President Pro Tempore of the Senate, who shall be an employee or a board member of an Alabama public school system providing K-12 education.

(c) All persons appointed to the commission shall have one or more of the following qualifications:

(1) Members must be knowledgeable in the management of money and finance;

(2) Members must have experience in international trade; or

(3) Members must have experience as chief executive officers, chief financial officers, or other executive level management roles in businesses in this state which employ Alabama residents.

(4) The commission shall be inclusive and reflect the gender, racial, geographic, urban and rural, and economic diversity of the state.

(4) All appointing authorities shall coordinate their appointments so that diversity of gender, race, and geographical areas are reflective of the makeup of the state.

(d) No person appointed to the commission shall serve a term longer than four years. Persons may serve consecutive subsequent four-year terms.

(e) The Secretary of Commerce, or his or her designee, shall be the chair of the commission and shall preside over all meetings of the commission. The commission may elect such other officers as it may find necessary or desirable; provided that the commission shall have a board secretary to keep minutes of its proceedings. No officer of the commission other than the chair need be a member of the commission.

(f) No member of the commission shall vote or participate in any matter in which the member or a family member of the member has any financial gain or interest.

(g) Members of the commission shall serve without compensation.

(h) The commission shall meet at the call of the chair or any majority of members thereof; provided that the commission shall meet at least two times annually.

(i) The commission shall adopt its own rules of procedure for the transaction of its business, and a majority of the members present shall constitute a quorum for the purpose of transacting or performing authorized duties. Meetings of the commission are subject to Chapter 25A of Title 36. In order to balance the privacy needs of companies with openness to the public, the commission may use code names in its deliberations about various applicants and in the minutes of its proceedings.

(j) The Department of Commerce shall provide administrative and staffing support for the commission. The Department of Revenue shall disclose to the commission whatever information it may possess which would allow the commission to fulfill this article; provided, however, that such information shall only be disclosed and discussed in a closed session. The Department of Revenue may require members of the commission to execute confidentiality agreements before the disclosure of information.

(k) The commission shall make an annual report on the use of funds pursuant to this article. Such report shall be made to the chair of the House Ways and Means Education Committee, the chair of the Senate Finance and Taxation Education Committee, and the members of the Joint Legislative Advisory Committee on Economic Incentives established by Section 40-18-379, at the times and in the manner requested by the committee. Any publicly available version of the report may redact information which the Department of Commerce believes would place the state at a competitive disadvantage.

(l) The commission and the Department of Commerce and Department of Revenue are authorized to adopt rules as necessary to implement and administer the act.

(m) Members of the commission shall be public officials for purposes of the ethics laws in Chapter 25 of Title 36.

§40-18-403.

(a) If approved by the commission, a port credit is allowed, in an amount equal to fifty dollars ($50) per TEU, three dollars ($3) per net ton, or four cents ($0.04) per kilogram for air freight, multiplied by the following:

(1) The port user's cargo volume in the year 12-month period for which the commission has granted approval for the port user to claim the port credit, minus

(2) The port user's base cargo volume.

(b) The commission shall decrease the amount of the port credit to ensure that the anticipated revenues for the port facility and state will exceed the amount of the port credit sought. The port credit may be conditioned on whatever requirements the commission shall impose. The port credits shall only be available to the extent that a port facility user ships more than 105 percent of its cargo volume from the prior year 12-month period immediately preceding the port facility user's application. Moreover, the port credit shall only be available to the extent a port facility user ships more than 10 TEUs, for cargo measured by TEU, more than 75 net tons, for cargo measured by net ton, or more than fifteen thousand (15,000) kilograms for air cargo measured by kilograms.

(c) The following methods may be used to realize the port credit:

(1) The port credit may offset the tax levied by Chapter 18, but not below zero. The port credit may also offset the estimated payments of the tax levied by Chapter 18, but not below zero; provided that, in no event shall the port credits be allowed to reduce any estimated payment of the tax levied by Chapter 18 before October 1, 2016. In any one year, if the port credit exceeds the amount of tax liability, the port user may carry forward the unused port credit. No carryforward shall be allowed for more than five years. Rules similar to those used for Section 40-18-15.2 shall be applied.

(2) A company may assign and convey a port credit to another company if substantially all of the assets of the company are assigned and conveyed in the same transaction. Proof of such transfer shall be submitted to the Department of Revenue.

(d) To the extent that the port credit is utilized by the port user or by a transferee company, no deduction for the related expenses shall be allowed.

(e) For any company which enters into an economic development project agreement with the state, the project agreement may provide for an allocation to the company of any port credits which have not been allocated pursuant to this article. Allocations made pursuant to this subsection shall meet all of the following requirements:

(1) Allocations shall be made by the Governor and approved by the commission;

(2) Allocations for a project shall not exceed three million dollars ($3,000,000);

(3) Allocations shall be granted only to a new warehouse or distribution facility which commits to investing at least twenty million dollars ($20,000,000) at a single site and to creating 75 net new jobs in Alabama;

(4) Port credits may not be used until the Department of Commerce has received satisfactory proof that the capital investment and job creation requirements have been satisfied;

(5) Any port credit granted by this procedure shall not be granted for more than a 3-year period; and

(6) Allocations shall not exceed one hundred dollars ($100) per TEU, three dollars ($3) per net ton, or four cents ($0.04) per kilogram for air freight.

(7) Anticipated revenues for the state shall exceed the Port Credit granted, and the project agreement shall provide for recapture of all or part of the Port Credit should the company default on its obligations in the project agreement.

Section 3. A new Article 19 of Chapter 18 of Title 40, is added to the Code of Alabama 1975, to read as follows:

Article 19.

§40-18-410.

For the purposes of this article, the following words and phrases shall have the following meanings:

(1) GROWING ALABAMA CREDIT. The credit provided for in Section 40-18-413(a).

(2) INDUSTRY OR BUSINESS. An entity which would conduct at a site an activity that is primarily described in Section 40-18-372(1).

(3) LOCAL ECONOMIC DEVELOPMENT ORGANIZATIONS. Organizations which are determined by the Department of Commerce to meet both of the following criteria:

a. The organization is an Alabama entity not operating for a profit, including, but not limited to, a municipality or county, an industrial board or authority, a chamber of commerce, or some other foundation or Alabama nonprofit corporation charged with improving a community or region of the state; and

b. The organization has a record of supporting or otherwise participating in economic development activities in some part of Alabama.

(4) RENEWAL OF ALABAMA COMMISSION. The Renewal of Alabama Commission created by Section 40-18-402.

(5) SITE. Real property owned by a local economic development organization and intended for use by an industry or business.

§40-18-411.

(a) A local economic development organization which owns a site may apply to the Department of Commerce for funding to solve an inadequacy involving the site. The application by the local economic development organization shall include one or both of the following:

(1) If there is a pending expression of interest about the site from an industry or business, a list of the site preparation or public infrastructure work needed to make the site acceptable to the industry or business; or

(2) If the site has been offered to one or more industries or businesses but the offer did not result in the industry or business locating on the site, a list of the site preparation or public infrastructure work which, if it had been completed, would have made the site acceptable to the industries or businesses.

(b) For any site preparation or public infrastructure work listed in an application to the Department of Commerce, the application shall include firm quotes for the completion of such work, following compliance with the procedures set forth by the Department of Economic and Community Affairs, as if the organization were disbursing state funds received from such department.

(c) The application shall include an estimate of the number of jobs, wages, and capital investment which would have been undertaken by the industries or businesses referred to in subsection (a).

(d) The application shall include proof that the local economic development organization has in full force and effect a conflict of interest policy consistent with that found in the instructions to Form 1023 issued by the Internal Revenue Service.

(e) The application shall include a notarized affirmation by an officer of the local economic development organization that the submission of the application did not violate the conflict of interest policy referred to in subsection (d).

§40-18-412.

(a) Following a review, if the Department of Commerce should approve the application, it shall forward the application to the Renewal of Alabama Commission.

(b) The Renewal of Alabama Commission shall consider the application and shall approve it if it deems it worthy of approval. Meetings of the commission are subject to Chapter 25A of Title 36; provided, however, that the commission may meet by telephone or some other telecommunications device so long as members of the public are allowed the opportunity to listen to or otherwise observe the commission’s deliberations.

(c) The approval of an application by the commission shall specify the amount of money which the local economic development organization is allowed to receive so that it can complete the site preparation or public infrastructure work specified in the application.

(d) Following approval by the commission, the Department of Commerce shall enter into an agreement with the local economic development organization, and the agreement shall do all of the following:

(1) Require the local economic development organization to use funding received as a result of this law only for the purposes approved by the commission as expressed in the agreement.

(2) Require the local economic development organization to make periodic reports, not more often than annually, to the Department of Commerce and the commission, as required by the commission, on the disposition of the funds, the marketing of the site, and the ultimate use of the site until such time as it makes a final report.

(3) Require the local economic development organization to provide a review of its financial accounts as directed by the Renewal Commission.

(d) (e) For any approved applications, the Department of Commerce shall notify the Department of Revenue of the information specified in subsection (c).

§40-18-413.

(a) A taxpayer is allowed a Growing Alabama Credit to be applied against the tax levied by Chapter 18. In no event shall the Growing Alabama Credit cause a taxpayer’s income tax liability to be reduced by more than 50 percent. Unused credits may be carried forward for no more than five years.

(b) Growing Alabama Credits shall be granted to taxpayers using an online system administered by the Department of Revenue. The online system shall allow taxpayers to agree to make a cash contribution to a local economic development organization which was approved by the Renewal of Alabama Commission, as provided in Section 40-18-412. The online system shall ensure that credits are not granted for contributions to a local economic development organization in excess of the amounts approved by the Renewal of Alabama Commission, as provided in Section 40-18-412.

(c) In no event shall Growing Alabama Credits be allowed in excess of five million dollars ($5,000,000) for fiscal year 2016. In no event shall Growing Alabama Credits be allowed in excess of ten million dollars ($10,000,000) per year for fiscal years 2017, 2018, 2019, and 2020.

(d) The Renewal of Alabama Commission shall reserve at least 25 percent of the amounts specified in subsection (c) for projects in targeted counties described in Section 40-18-376.1.

(e) To the extent that a Growing Alabama Credit is used by a taxpayer, the taxpayer shall not be allowed any deduction which would have otherwise been allowed for the taxpayer's contribution. Credits may only be claimed by the donating individual or corporate entity and may not be assigned or transferred to any other taxpayer. A taxpayer may not claim a credit for a donation made by any other entity, including an entity taxed under subchapter S or subchapter K of which the taxpayer is an owner, shareholder, partner, or member.

§40-18-414.

(a) Upon receipt of funding provided by the tax credit process in Section 40-18-413, the local economic development organization shall proceed with the site preparation or public infrastructure work that was specified in the application required by Section 40-18-411.

(b) The local economic development organization shall report to the Department of Commerce upon the completion of the site preparation or public infrastructure work, upon the transfer of the site to an industry or business, and at other times as may be required or requested by the Department of Commerce.

(c) The Department of Commerce shall make an annual report on the use of funds pursuant to this article to the chair of the House Ways and Means Education Committee, the chair of the Senate Finance and Taxation Education Committee, and the members of the Joint Legislative Advisory Committee on Economic Incentives established by Section 40-18-379, at the times, and in the manner, requested by the committee. Beginning with the report for fiscal year 2019, the report shall include a study of the economic impacts from the expenditures made in prior years.

§40-18-415.

(a) All filings and applications made with any department of the state government shall be made using forms promulgated by such department. Any such filing shall be treated as a tax return, subject to penalties imposed by the Department of Revenue.

(b) Nothing in this article shall be construed to constitute a guarantee or assumption by the state of any debt of any company nor to authorize the credit of the state to be given, pledged, or loaned to any company.

(c) Nothing in this article shall be construed to make available to any taxpayer any right to the benefits conferred by this article absent strict compliance with this article.

(d) Nothing in this article shall be construed to limit the powers otherwise existing for the Department of Revenue to audit and assess a taxpayer claiming the Growing Alabama Credit.

(e) Nothing in this article shall be construed to change or lessen the requirements for claiming jobs act incentives under the Alabama Jobs Act in Article 16 of this chapter. Companies claiming the jobs act incentives must strictly comply with Article 16 of this chapter.

(f) The Department of Commerce and Department of Revenue are authorized to adopt rules as necessary to implement and administer this article.

§40-18-416.

This article shall be repealed following the close of fiscal year 2020, but the repeal shall not cause a reduction or suspension of any credits awarded for fiscal year 2020 or for prior years during which the Growing Alabama Credit was in effect.

Section 4. If a court of competent jurisdiction adjudges invalid or unconstitutional any clause, sentence, paragraph, section, or part of this act, such judgment or decree shall not affect, impair, invalidate, or nullify the remainder of this act, but the effect of the decision shall be confined to the clause, sentence, paragraph, section, or part of this act adjudged to be invalid or unconstitutional.

Section 5. All laws or parts of laws which conflict with this act are repealed.

Section 6. This act shall become effective 90 days following its passage and approval by the Governor, or its otherwise becoming a law.

Taxation

Economic Development

Revenue Department

Ports

Code Added