Session Law

Identifying Information:L. 2003 ch. 153
Other Identifying Information:2003 Senate Bill 281
Tax Type:Corporate Income Tax
Brief Description:An Act enacting the economic revitalization and reinvestment act; relating to the secretary of commerce and Kansas development finance authority; authorizing the issuance of bonds for certain economic development purposes; amending K.S.A. 74-8017 and re- pealing the existing section.
Keywords:


Body:

CHAPTER 153

SENATE BILL No. 281


An Act enacting the economic revitalization and reinvestment act; relating to the secretary

of commerce and Kansas development finance authority; authorizing the issuance of

bonds for certain economic development purposes; amending K.S.A. 74-8017 and re-


pealing the existing section.


Be it enacted by the Legislature of the State of Kansas:

New Section 1. (a) The provisions of this section shall be known and

may be cited as the ``economic revitalization and reinvestment act.''

(b) The purpose of the economic revitalization and reinvestment act

is to foster Kansas employment by encouraging product development and

engineering leading to new manufactured products in Kansas.

(c) As used in this act:

(1) ``Base eligibility period'' means the three taxable years immedi-

ately preceding the date of application for benefits under this act.

(2) ``Eligible business'' means a person, corporation, partnership or

other entity doing business in Kansas that satisfies conditions imposed by

the secretary, which may include, among other conditions, that the per-

son, corporation, partnership or other entity:

(A) Paid at least $600,000,000 in average annual gross Kansas com-

pensation, according to reports filed with the secretary of human re-

sources, during the base eligibility period; and

(B) paid at least $50,000 of average annual gross compensation per

Kansas employee during the base eligibility period; and

(C) has invested at least $1,000,000,000 in real and tangible personal

property located within and currently used in the operation of a business

in Kansas; and

(D) is described by north American industrial classification system as

being in the manufacturing sector.

(3) ``Eligible project'' means a research, development, engineering or

manufacturing project (A) undertaken by an eligible business relating to

the development of a new or improved business component or product

and may include, but not be limited to, product development and design,

applied research, manufacturing, improvement, replacement or acquisi-

tion of real or personal property and modernization and retooling of ex-

isting property in Kansas, (B) for which the eligible business proposes to

invest not less than $500,000,000 in Kansas in direct connection with the

eligible project of not less than $500,000,000 in Kansas and (C) for which

the eligible business proposes to employ up to 4,000 full-time employees

in Kansas, as defined in K.S.A. 74-50,114 and amendments thereto.

(4) ``Gross compensation'' means gross wages and benefits paid to or

on behalf of employees receiving wages.

(5) ``Secretary'' means the secretary of commerce and housing.

(d) A person, corporation, partnership or other entity proposing to

undertake an eligible project may apply to the secretary to enter into an

agreement for benefits under this act. The application shall include (1)

evidence that the applicant is an ``eligible business'' as defined in subsec-

tion (c)(2) and (2) a detailed description of the eligible project.

(e) Upon receipt of an application described in subsection (d), if the

secretary finds that the application is from an eligible business and that

the project constitutes an eligible project, the secretary may enter into

an agreement with the eligible business for benefits under this act. Such

agreement for benefits shall be subject to review and approval of the state

finance council created by K.S.A. 75-3708, and amendments thereto. The

agreement shall commit the secretary to request that the Kansas devel-

opment finance authority issue bonds pursuant to the Kansas develop-

ment finance authority act, K.S.A. 74-8901, et seq. to finance the eligible

project for the benefit of the eligible business in an aggregate principal

amount not to exceed $500,000,000, plus costs of issuance, costs of credit

enhancement, reserve funds and capitalized interest, and shall commit

the eligible business to pay the principal of and interest on such obliga-

tions, except that during the period from the issuance of such bonds

through the maturity of such obligations but not to exceed 20 years rev-

enue realized from withholding upon Kansas wages paid by the eligible

business pursuant to K.S.A. 79-3294 et seq. and amendments thereto,

with respect to the eligible project which is necessary to pay the interest

on such obligations shall be credited to the special economic revitalization

fund created in subsection (h), and shall be transferred by the state trea-

surer to pay interest on such obligations as provided by law. The agree-

ment shall further specifically provide that if the revenue from the with-

holding upon Kansas wages is insufficient to pay interest on the bonds,

the eligible business shall remain obligated to make such payments. The

terms and conditions with respect to the obligations shall be set forth in

the agreement or in the financing documents relating to the issuance of

the bonds. In the event the eligible business terminates, cancels or re-

duces the scope of the eligible project approved by the secretary, the

agreement shall provide that with respect to debt service, the eligible

business shall remain responsible for payment of the entire outstanding

principal as well as any interest still outstanding, and no moneys remain-

ing in the special economic revitalization fund shall be made available for

the purpose of paying the remaining interest portion of the eligible busi-

ness' debt service obligation.

(f) Income tax refunds and balances due resulting from withholding

upon Kansas wages paid by the eligible business pursuant to K.S.A. 79-

3294 et seq. and amendments thereto, with respect to the eligible project,

shall be reconciled on at least an annual basis by a method defined in the

agreement described in subsection (e).

(g) The Kansas development finance authority is hereby authorized

to issue obligations, for the purpose of financing the eligible project pro-

vided in subsection (e), in a principal amount not to exceed the amount

specified in subsection (e). The maximum maturity of bonds issued pur-

suant to this act shall be 20 years, unless the secretary shall find and

determine that a maturity greater than 20 years, but in no event greater

than 30 years, is necessary for economic feasibility of the eligible project

of the eligible business.

(h) The state treasurer shall credit all revenue collected or received

from withholding upon Kansas wages paid by a taxpayer which is an eli-

gible business with respect to an eligible project, as certified by the sec-

retary, to the special economic revitalization fund, which fund is hereby

created in the custody of the state treasurer but shall not be a part of the

state general fund. Distributions from the special economic revitalization

fund shall be used to pay interest on the bonds as authorized pursuant to

this act and shall not be subject to appropriation. On or before the 10th

day of each month, the director of accounts and reports shall transfer

from the state general fund to the special economic revitalization fund

interest earnings based on: (1) The average daily balance of moneys in

the special economic revitalization fund for the preceding month; and (2)

the net earnings rate of the pooled money investment portfolio for the

preceding month. The provisions of this section shall expire when all

interest on obligations issued for the purpose of financing all or a portion

of the costs of an eligible project has been paid. Moneys credited to the

special economic revitalization fund in accordance with the foregoing pro-

visions shall be distributed to or on the order of the Kansas development

finance authority to pay interest on bonds issued to finance an eligible

project. The state treasurer shall make such distributions on such dates

as mutually agreed to by the Kansas development finance authority, the

paying agent for such obligations and the state treasurer. The total of all

distributions under this section shall not exceed an amount determined

to be sufficient to pay the interest on such bonds.

(i) The eligible business shall not be allowed to participate in the

IMPACT act or program pursuant to K.S.A. 74-50,102 et seq. and amend-

ments thereto, with respect to the eligible project. The secretary may

include provisions in the agreement described in subsection (e) to limit

or reduce the amount of eligible credits, including but not limited to those

allowed pursuant to K.S.A. 79-32,160a, 79-32,182b or 79-32,206 and

amendments thereto, on the investment of the proceeds of the bonds

issued under this act. Nothing in this subsection shall be construed to

prohibit the eligible business from receiving credits allowed by law for

any investment not related to bonds issued pursuant to this section.

(j) All hiring and use of the employees described in subsection

(c)(3)(C) by an eligible business in connection with an eligible project,

shall be subject to post audit under the legislative post audit act, and

amendments thereto. All audit expenses incurred shall be charged to and

paid by such eligible business. All moneys received for such audit ex-

penses shall be deposited in the state treasury and credited to the audit

services fund of the division of post audit. The division of post audit is

hereby authorized to conduct the audit work authorized by this section

in accordance with the provisions of the legislative post audit act, and

amendments thereto.

(k) Bonds issued under this section shall not be used to provide for

or to increase compensation packages, rewards, bonuses, pensions, en-

hanced retirement, stock options, buyouts or substantial severance pay or

other financial benefits to any chief executive officer, chief financial of-

ficer or any officers of the company.

(l) The agreement described in subsection (e) shall include a provi-

sion requiring the eligible business to agree that (1) the eligible business

shall be subject to post audit under the legislative post audit act, and

amendments thereto, (2) the eligible business shall pay audit expenses

and (3) the eligible business shall not limit access to information required

under the legislative post audit act, and amendments thereto.

(m) No new eligible project shall be approved for financing under

the provisions of this section on or after July 1, 2005.

Sec. 2. K.S.A. 74-8017 is hereby amended to read as follows: 74-

8017. On and after January 1, 2003, it shall be the duty of Kansas, Inc.

to prepare an annual report evaluating the cost effectiveness of the various

income tax credits and sales tax exemptions enacted to encourage eco-

nomic development within this state and submit the same to the standing

committees on taxation and economic development of the house and as-

sessment and taxation and commerce of the senate at the beginning of

each regular session of the legislature. The secretary of revenue, in con-

sultation with the president of Kansas, Inc., shall develop a questionnaire

on the utilization of state income tax credits and sales tax exemptions that

shall be completed by all corporate taxpayers that: (1) Are subject to state

income tax and (2) utilize any of the state income tax credits and exemp-

tions described in subsections (a) through (i) below that shall be submitted

to the department of revenue concurrently with the filing of an annual

corporate income tax return. The secretary shall provide the completed

questionnaires to Kansas, Inc. for use in the preparation of such annual

report. The questionnaire shall require respondents to indicate utilization

of the following credits and exemptions:

(a) Income tax credits authorized under the provisions of the job ex-

pansion and investment credit act of 1976 and acts amendatory thereof

and supplemental thereto;

(b) income tax credits for expenditures in research and development

activities authorized by K.S.A. 79-32,182, and amendments thereto;

(c) income and financial institutions privilege tax credits for cash in-

vestment in stock of Kansas Venture Capital, Inc. authorized by K.S.A.

74-8205 and 74-8206, and amendments thereto;

(d) income tax credits for cash investment in certified Kansas venture

capital companies authorized by K.S.A. 74-8304, and amendments

thereto;

(e) income tax credits for cash investment in certified local seed cap-

ital pools authorized by K.S.A. 74-8401, and amendments thereto;

(f) income tax credits for investment in the training and education of

qualified firms' employees authorized by K.S.A. 74-50,132, and amend-

ments thereto;

(g) sales tax exemptions for property or services purchased for the

purpose of and in conjunction with constructing, reconstructing, enlarg-

ing or remodeling a business, or retail business meeting the requirements

of K.S.A. 74-50,115, and amendments thereto, and machinery and equip-

ment for installation at such business or retail business authorized by

subsection (cc) of K.S.A. 79-3606, and amendments thereto; and

(h) sales tax exemptions for machinery and equipment used directly

and primarily for the purposes of manufacturing, assembling, processing,

finishing, storing, warehousing or distributing articles of tangible personal

property in this state intended for resale by a manufacturing or processing

plant or facility or a storage, warehousing or distribution facility. The

secretary of revenue shall provide the completed questionnaires and cop-

ies of sales tax exemption certificates to Kansas, Inc. for the preparation

of such report.; and

(i) distribution from the special economic revitalization fund pursu-

ant to the provisions of the economic revitalization reinvestment act, sec-

tion 1, and amendments thereto.

Sec. 3. K.S.A. 74-8017 is hereby repealed.

Sec. 4. This act shall take effect and be in force from and after its

publication in the Kansas register.

Approved May 21, 2002.

Published in the Kansas Register May 29, 2002.


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Date Composed: 10/29/2003 Date Modified: 10/29/2003