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REFERENCE TITLE: development subsidies; recapture; rescission |
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State of Arizona Senate Fifty-sixth Legislature Second Regular Session 2024
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SB 1703 |
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Introduced by Senator Gonzales: Representative Hernandez L
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An Act
amending title 41, Arizona Revised Statutes, by adding chapter 20; relating to economic development.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 41, Arizona Revised Statutes, is amended by adding chapter 20, to read:
CHAPTER 20
DEVELOPMENT SUBSIDIES
ARTICLE 1. RECAPTURE AND RESCISSION
41-2351. Definitions
In this chapter, unless the context otherwise requires:
1. "Corporate parent" means any person, association, corporation, joint venture, partnership or other entity that owns or controls fifty percent or more of a recipient corporation.
2. "Date of subsidy" means:
(a) The date that a granting body provides the initial monetary value of a development subsidy to a recipient corporation.
(b) if the subsidy is for the installation of new equipment, the date the corporation puts the equipment into service.
(c) If the subsidy is for improvements to property, the date the improvements are finished or the date the corporation occupies the property, whichever is earlier.
3. "Development subsidy" means any expenditure of public monies with a value of at least $25,000 for the purpose of stimulating economic development within this State or any tax reduction that benefits one hundred or fewer individuals or organizations, including bonds, grants, loans, loan guarantees, tax increment financing, fee waivers, land price subsidies, matching monies, tax abatements, tax exemptions and tax credits.
4. "Duration of the subsidy" means as many years as a subsidy benefits a recipient corporation, such as the number of years a tax credit may be claimed or carried forward, the number of years a loan is for or the number of years a property tax reduction applies.
5. "Granting body" means any agency, board, political subdivision of this state, public office, public-private partnership, public benefit corporation or authority of this State or a local government unit that provides a development subsidy.
6. "Job" means a job in which an individual is employed by a recipient corporation for at least thirty-two hours per week.
7. "Local government unit" means an agency, board, political subdivision of this state, commission, office, public benefit corporation, or public authority of a political subdivision of this State.
8. "Project site" means the site of a project for which any development subsidy is provided, as specified by street address, name of locality and zip code.
9. "Recipient corporation" means any person, association, corporation, joint venture, partnership or other entity that receives a development subsidy.
10. "State" means an agency, board, commission, office, public benefit corporation or public benefit authority of this state.
41-2352. Development subsidies; review; recapture or rescission
A. A granting body that awards a development subsidy shall do either of the following:
1. Cross-check job creation and other performance data that is submitted by corporate recipients against information sources such as unemployment insurance records.
2. Conduct periodic audits of recipient corporation submissions using outside auditors.
B. Any development subsidy award must provide for a clear purpose to this state, including expected number of jobs created, wage and benefit achievements, local capital investments, expected economic return on the development subsidy provided, anticipated duration of the development subsidy and expected termination date for the development subsidy.
C. A recipient corporation is subject to development subsidy recapture or rescission if any of the following applies:
1. the recipient corporation fails to achieve its job creation, wage and health care benefits obligations for the project site within two years after the date of subsidy.
2. The recipient corporation fails to maintain its wage and health care benefits achievements for the duration of the subsidy or five years, whichever is longer.
3. The corporate parent of the recipient corporation fails to maintain, for the duration of the subsidy or for five years, whichever is longer, at least ninety percent of its employment in this state, with the basis of December 31 of the year the development subsidy was granted.
D. For each year the recipient corporation falls short of its obligations for job creation, wages and health care benefits, the value of the development subsidy shall be reduced on a prorated basis by the same share of jobs that were not created or that failed to meet wage and health care benefits obligations. If the development subsidy has already accrued to the recipient corporation, this state shall recapture the subsidy reduction.
E. If a recipient corporation falls short on its job creation obligations by at least twenty-five percent for three consecutive years, the pro rata recapture shall apply for the third year in default and the development subsidy shall be rescinded effective January 1 of the following year.
F. For each year the corporate parent fails to maintain at least ninety percent of its base employment level in this state, the development subsidy shall be reduced at twice the rate of the corporate parent's job loss from one hundred percent of its basis of December 31 of the year the subsidy was granted. If the development subsidy has already accrued to the recipient corporation, this state shall recapture the subsidy reduction.
G. If the corporate parent fails to maintain at least ninety percent of its base employment level in this state for three CONSECUTIVE years, the pro rata recapture shall apply for the third year in default and the subsidy shall be rescinded effective January 1 of the following year.
41-2353. Private action; enforcement; records; applicability
A. If a granting body fails to enforce this chapter, any individual who paid personal income taxes to this state in the calendar year before the year in dispute, or any organization representing the taxpayers, is entitled to bring a civil action in the superior court to compel enforcement under this chapter. The court shall award reasonable attorney fees and costs to the prevailing taxpayer or organization.
B. The granting body shall publish on its website summary statistics about its enforcement activities and lists of recipient companies involved in those activities. All records required to be prepared or maintained under this chapter, including applications, performance reports, recapture proceedings and other records-related documents, are subject to disclosure under title 39, chapter 1, article 2. This section does not apply to any tax records containing information of a personal and confidential nature.
Sec. 2. Severability
If a provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act that can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.