House Bill 1004-Fourth Edition

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2005

H 4

HOUSE BILL 1004

Committee Substitute Favorable 4/26/05

Senate Finance Committee Substitute Adopted 7/12/05
Fourth Edition Engrossed 7/13/05

Short Title: Extend JDIG and Bill Lee Act.		(Public)
Sponsors:
Referred to:

March 31, 2005

A BILL TO BE ENTITLED

AN ACT to extend the William S. Lee Quality Jobs and Business Expansion Act and the Job Development Investment Grant PROGRAM TO ALTER THE MANNER IN WHICH ENTERPRISE TIERS are designated; and to amend the health insurance requirements for the job development investment grant program.

The General Assembly of North Carolina enacts:

SECTION 1. G.S. 105‑129.2A reads as rewritten:

"§ 105‑129.2A. Sunset; studies.

(a) Sunset. – This Article is repealed effective for business activities that occur on or after January 1, ~~2006.~~2008.

(a1) Sunset for Interstate Air Couriers. – Notwithstanding subsection (a) of this section, in the case of an interstate air courier that enters into a real estate lease on or before January 1, 2006, with an airport authority that provides for the lease of at least 100 acres of real property with a lease term in excess of 15 years, this Article is repealed effective for business activities that occur on or after January 1, 2010.

(a2) Sunset for Eligible Major Industries. – Notwithstanding subsection (a) of this section, in the case of a taxpayer that qualifies as an eligible major industry on or before January 1, 2006, this Article is repealed effective for business activities that occur on or after January 1, 2010.

(a3) Sunset for Certain Taxpayers Located in Development Zones. – Notwithstanding subsection (a) of this section, in the case of a taxpayer that satisfies all of the conditions of this subsection, this Article is repealed effective for business activities that occur on or after January 1, 2010.

(1) Before January 1, 2006, the taxpayer signs a letter of commitment with the Department of Commerce describing a proposed new or expanding project and specifying the amount to be invested in real property and machinery and equipment, the number of new jobs to be created, and a proposed timetable for making the investment and creating the jobs.

(2) Before January 1, 2006, the Secretary of Commerce makes a written determination that the taxpayer is expected to purchase, lease, or construct and place in service in an eligible business at a location within a development zone within a three‑year period at least ten million dollars ($10,000,000) of real property and machinery and equipment and that the taxpayer will create at least 300 new jobs at the location within a three‑year period beginning when the property is first placed in service in an eligible business.

(3) Before January 1, 2006, the taxpayer places at least four million dollars ($4,000,000) of real property and machinery and equipment in service at the location and creates at least 20 new jobs at the location.

(b) Equity Study. – The Department of Commerce shall study the effect of the tax incentives provided in this Article on tax equity. This study shall include the following:

(1) Reexamining the formula in G.S. 105‑129.3(b) used to define enterprise tiers, to include consideration of alternative measures for more equitable treatment of counties in similar economic circumstances.

(2) Considering whether the assignment of tiers and the applicable thresholds are equitable for smaller counties, for example those under 50,000 in population.

(3) Compiling any available data on whether expanding North Carolina businesses receive fewer benefits than out‑of‑State businesses that locate to North Carolina.

(c) Impact Study. – The Department of Commerce shall study the effectiveness of the tax incentives provided in this Article. This study shall include:

(1) Study of the distribution of tax incentives across new and expanding industries.

(2) Examination of data on economic recruitment for the period from 1994 through the most recent year for which data are available by county, by industry type, by size of investment, and by number of jobs, and other relevant information to determine the pattern of business locations and expansions before and after the enactment of the William S. Lee Act incentives.

(3) Measuring the direct costs and benefits of the tax incentives.

(4) Compiling available information on the current use of incentives by other states and whether that use is increasing or declining.

(d) Report. – The Department of Commerce shall report the results of these studies and its recommendations to the General Assembly biennially with the first report due by April 1, 2001."

SECTION 2. G.S. 105‑129.4(d) reads as rewritten:

"(d) Forfeiture. – A taxpayer forfeits a credit allowed under this Article if the taxpayer was not eligible for the credit for the calendar year in which the taxpayer engaged in the activity for which the credit was claimed. In addition, a taxpayer forfeits a large investment enhancement of a tax credit if the taxpayer fails to timely make the required level of investment under subsection (b1) of this section. If an eligible major industry fails to timely make the required level of investment under G.S. 105‑129.2(8a), the taxpayer forfeits all credits allowed under this Article that it would not otherwise have been eligible for if it were not an eligible major industry. If a taxpayer that is subject to the later repeal date of this Article under G.S. 105‑129.2A(a3) fails to timely make the required level of investment or to timely create the required number of new jobs, the taxpayer forfeits all credits allowed under this Article that it would not otherwise have been eligible for if it were not subject to the later repeal date under G.S. 105‑129.2A(a3). A taxpayer forfeits the credit for substantial investment in other property allowed under G.S. 105‑129.12A if the taxpayer fails to timely create the number of required new jobs or to timely make the required level of investment under subsection (b5) of this section. A taxpayer forfeits the technology commercialization credit allowed under G.S. 105‑129.9A if the taxpayer fails to make the level of investment required by subsection (e) of that section within the required period or if the taxpayer fails to meet the terms of its licensing agreement with a research university. If a taxpayer claimed a twenty percent (20%) technology commercialization credit under G.S. 105‑129.9A(d) and fails to make the level of investment required under that subsection within the required period, but does make the level of investment required under subsection (e) of that section within the required period, the taxpayer forfeits one‑fourth of the twenty percent (20%) credit.

A taxpayer that forfeits a credit under this Article is liable for all past taxes avoided as a result of the credit plus interest at the rate established under G.S. 105‑241.1(i), computed from the date the taxes would have been due if the credit had not been allowed. The past taxes and interest are due 30 days after the date the credit is forfeited; a taxpayer that fails to pay the past taxes and interest by the due date is subject to the penalties provided in G.S. 105‑236. If a taxpayer forfeits the credit for creating jobs, the technology commercialization credit, or the credit for investing in machinery and equipment, the taxpayer also forfeits any credit for worker training claimed for the jobs for which the credit for creating jobs was claimed or the jobs at the location with respect to which the technology commercialization credit or the credit for investing in machinery and equipment was claimed."

SECTION 3. G.S. 143B‑437.62 reads as rewritten:

"§ 143B‑437.62. Expiration.

The authority of the Committee to enter into new agreements expires January 1, ~~2006.~~2008."

SECTION 4. G.S. 105‑129.3 is amended by adding a new subsection to read:

"(f) Exceptions for Certain Counties with High Unemployment. – Notwithstanding the provisions of this section, a county whose rank in a ranking of counties by average rate of unemployment for the preceding 12 months, from highest to lowest, is one of the 10 highest in the State is designated an enterprise tier one area."

SECTION 5. G.S. 143B-437.53(c) reads as rewritten:

"(c) Health Insurance. – A business is eligible for a grant under this Part only if the business provides health insurance for all of the applicable full‑time employees of the project with respect to which the grant is made. For the purposes of this subsection, an applicable full-time employee is one who earns from the business less than one hundred fifty thousand dollars ($150,000) in taxable compensation on an annualized basis or three and one‑half times the annualized average state wage for all insured private employers in the State employing between 250 and 1,000 employees, whichever is greater. For the purposes of this subsection, a business provides health insurance if it pays at least fifty percent (50%) of the premiums for health care coverage that equals or exceeds the minimum provisions of the basic health care plan of coverage recommended by the Small Employer Carrier Committee pursuant to G.S. 58‑50‑125.

Each year that a business receives a grant under this Part, the business must provide with the submission required under G.S. 143B‑437.58 a certification that the business continues to provide health insurance, as required by this subsection, for all applicable full‑time employees of the project with respect to which the grant is made. If the business ceases to provide the required health ~~insurance to all full‑time employees of the project with respect to which a grant is made,~~insurance, the Committee shall amend or terminate the agreement as provided in G.S. 143B‑437.59."

SECTION 6. This act is effective when it becomes law. Section 4 of this act applies to designations made on or after that date.