Reprinted

April 13, 2001





ENGROSSED

SENATE BILL No. 333

_____


DIGEST OF SB 333 (Updated April 12, 2001 12:48 AM - DI 44)


Citations Affected: IC 4-4; IC 5-13; IC 6-3.1; noncode.

Synopsis: State and local finance. Authorizes the Indiana development finance authority (IDFA) to make loans and loan guaranties and to issue bonds for certain industrial development projects. Authorizes the board for depositories to buy bonds issued by IDFA for certain purposes or to make loans or loan guaranties to IDFA under certain conditions. Provides a credit against a taxpayer's state tax liability for certain qualified capital investments made in Shelby County. Provides that the amount of the credit is equal to 14% of the amount of the qualified investment. Requires the department of commerce to certify the investments as being eligible for the credit. Provides that if a taxpayer receives a credit and does not make the qualified investment for which the credit was granted within the time required, the department of commerce may require the taxpayer to repay the additional amount of state tax liability that would have been paid by the taxpayer if the credit had not been granted, plus interest. Provides a five year credit against state tax liability for a percentage of property taxes paid by rerefined lubrication oil facilities. Requires the department of commerce to determine if the taxpayer is entitled to the credit.

Effective: January 1, 2001 (retroactive); upon passage.





Jackman, Mrvan, Alting, Clark
(HOUSE SPONSORS _ CRAWFORD, HERNDON)




    January 16, 2001, read first time and referred to Committee on Energy and Economic Development.
    February 13, 2001, amended, reported favorably _ Do Pass; reassigned to Committee on Finance.
    March 1, 2001, amended, reported favorably _ Do Pass.
    March 5, 2001, read second time, amended, ordered engrossed.
    March 6, 2001, engrossed. Read third time, passed. Yeas 50, nays 0.

HOUSE ACTION

    March 12, 2001, read first time and referred to Committee on Ways and Means.
    April 5, 2001, amended, reported _ Do Pass.
    April 9, 2001, read second time, ordered engrossed.
    April 10, 2001, engrossed.
    April 11, 2001, read third time, recommitted to Committee of One, amended; passed. Yeas 72, nays 24.







Reprinted

April 13, 2001

First Regular Session 112th General Assembly (2001)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2000 General Assembly.


ENGROSSED

SENATE BILL No. 333



    A BILL FOR AN ACT to amend the Indiana Code concerning taxation.

Be it enacted by the General Assembly of the State of Indiana:

    SECTION 1. IC 4-4-11-16.7 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 16.7. (a) The following funds shall be deposited in the business development loan fund established under section 16.5 of this chapter:
        (1) Proceeds of bonds sold to or loans made to the authority by the board for depositories under IC 5-13-12-12.
        (2) Any fees received by the authority in connection with the making of loans and loan guaranties under this section.
Deposits made under this subsection are in addition to other amounts deposited in the fund under section 16.5(a) of this chapter.
    (b) In addition to its powers under section 16.5 of this chapter, and subject to subsection (d), the authority may make a loan or loan guaranty from the business development loan fund to a business located in Indiana if the authority makes a written finding that the loan or loan guaranty would accomplish the purposes of this chapter by enabling the business to carry out an industrial

development project that will do any of the following:
        (1) Improve the technological capacity or productivity of the business.
        (2) Enhance the protection of Indiana's environment.
        (3) Permit the business to expand facilities, establish new facilities, or make site improvements or infrastructure improvements.
    (c) In addition to its powers under section 16.5 of this chapter, and subject to subsection (d), the authority may make a loan or loan guaranty from the business development loan fund to a business located outside Indiana affecting a leading Indiana business, if:
        (1) the authority makes a written finding that the loan or loan guaranty would accomplish the purposes of this chapter by enabling the business to carry out an industrial development project that will:
            (A) improve the technological capacity or productivity of the leading Indiana business;
            (B) enhance the protection of Indiana's environment;
            (C) permit the leading Indiana business to expand facilities, establish new facilities, or make site or infrastructure improvements; or
            (D) permit a leading Indiana business to preserve or retain jobs, prevent economic insecurity resulting from unemployment or environmental pollution, or otherwise preserve the health, safety, morals, and general welfare of the state or the area of the state where the leading Indiana business is headquartered; and
        (2) the general assembly has provided for the making of the loan or loan guaranty by specifically authorizing the making of the loan or loan guaranty in the appropriation act and the loan or loan guarantee is approved by the budget agency after review by the budget committee.
    (d) With respect to any loan or loan guaranty made under this section, a loan or loan guaranty agreement with the authority must contain the following terms:
        (1) If a loan is made, a requirement that the loan proceeds be used for specified purposes consistent with and in furtherance of the purposes of the authority under this chapter, or if a loan guaranty is made, a requirement that the proceeds of the loan guaranteed be used for specified purposes consistent with and in furtherance of the purposes of the authority under this

chapter.
        (2) The term of the loan or loan guaranty, which must not be later than ten (10) years from the date of the loan or loan guaranty.
        (3) If a loan is made, the repayment schedule for the loan.
        (4) If a loan is made, the interest rate or rates of the loan, which may include variations in the rate, but that may not be less than the amount necessary to cover all costs and expenses of the authority in making the loan.
        (5) Any other terms and provisions that the authority requires, including, subject to subsection (h), collateral or security requirements for the loan or loan guaranty.
    (e) Notwithstanding any other law, including IC 5-13-12, the authority may borrow money from the board for depositories from time to time, and issue its bonds as evidence of the loans, for the purposes of funding the business development loan fund and making loans to businesses under this section. Bonds sold to the board for depositories and loans received from the board for depositories shall be on the terms and subject to the provisions agreed to by the authority and the board for depositories in bond purchase agreements or loan agreements, which must include provisions stating that any bond issued by the authority or any loan received by the authority under this subsection shall not constitute a debt, liability, or obligation of the state, or a pledge or lending of credit of the faith and credit of the state, but shall be payable solely as provided in the bond purchase agreement or loan agreement, including the repayment proceeds of loans made by the authority from the business development loan fund. This subsection is all the authority the authority needs to issue bonds to, and receive loans from, the board for depositories, and to enter into bond purchase agreements and loan agreements. However, the authority may not issue bonds under this subsection unless the general assembly has provided for the issuance of the bonds by specifically authorizing the issuance of the bonds in the appropriation act, and the issuance of the bonds is approved by the budget agency after review by the budget committee.
    (f) As used in this section, "leading Indiana business" means a business that:
        (1) is headquartered in a county having a population of more than sixty thousand (60,000) but less than sixty-four thousand (64,000);
        (2) is a Fortune 500 company, as of April 16, 2001, when

ranked by measures of revenues, profits, assets, stockholders' equity, market value, profit and total return to investors;
        (3) pays wages at levels that are not less than two hundred percent (200%) of the county average wage, calculated by the Indiana department of commerce, paid in the county in which the business is headquartered; and
        (4) is a global business participating in international markets.
    (g) As used in this section, "loan" includes any financing lease of personal property owned by the authority to a business described in this section.
    (h) The authority must be collateralized or secured on the same basis as a lender providing commercial or other conventional financing for the industrial development project or a related project being undertaken in connection with the industrial development project, provided that, if in the authority's judgment it is necessary or desirable to assure better commercial or conventional financing terms and thereby better assure the success of the industrial development project or related project, the authority is authorized to accept a junior and subordinate collateral or security position. However, the authority's collateral or security position must be senior and prior to the collateral or security interest of another state participating in the industrial development project or related project. As used in this section, "another state" includes any authority, board, commission, or instrumentality of the other state and a political subdivision or other governmental or quasi-governmental unit of the other state. This subsection does not apply if the authority owns personal property and leases it to a business described in this section, under subsection (g).
    (i) The aggregate principal amount of bonds, loans, and loan guaranties the authority may make under this section is limited to thirty-five million dollars ($35,000,000).
    (j) In addition to its other powers under this section, the authority may make a loan guaranty as contemplated by this section jointly with the board for depositories and, in addition to using moneys in the business development loan fund, the authority may use not more than two million dollars ($2,000,000) of moneys in the industrial development guaranty fund to fund the joint loan guaranty.
    (k) In addition to its other powers under section 15 of this chapter, the authority may:
        (1) sell and guarantee leases and loans; and


        (2) accept gifts, grants, or loans from, and enter into contracts or other transactions with, the United States, any state, any federal or state agency, municipality, person, private organization, or other source, whether located within or outside the state.
    (l) In addition to the authority's public purposes stated in sections 2 and 15 of this chapter, assistance provided under this section to an industrial development project located outside the state is consistent with the authority's public purposes so long as the project significantly affects jobs in the state or certain areas of the state. The authority may enter into any agreements or contracts as necessary to carry out this section, including but not limited to contracts with another state or with an instrumentality or political subdivision of that state.
    (m) This section is in addition to, and not in limitation of, the authority's other powers heretofore or hereafter existing under this chapter to borrow money, issue bonds, make contracts, guaranties, and loans, including leases, and use moneys in the business development loan fund or guaranty fund. The issuance of bonds and the making of loans and loan guaranties under this section need not comply with the requirements of any other state laws applicable thereto. No proceedings, notice, or approval shall be required for the issuance of any bonds or the making of any loans or loan guaranties or any instrument or the security therefor, except as specifically provided in this chapter. All industrial development projects for which funds are advanced, loaned, or otherwise provided by the authority under this section must be in compliance with any land use, zoning, subdivision, and other laws of this or any other state applicable to the land upon which the industrial development project is located or is to be constructed, but a failure to comply with these laws does not invalidate any bonds issued or loan or loan guaranty to finance an industrial development project.
    (n) The general assembly finds that unique circumstances resulting from the globalization of the state's economy, the state's geographic location as the crossroads of America, and changes in federal environmental regulation create the need for the financing of leading Indiana businesses as provided in this section.
    (o) This section expires July 1, 2002.

    SECTION 2. IC 5-13-12-12 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 12. (a) In addition to the authority given to

the board for depositories in this chapter, and notwithstanding any other law, including sections 7 and 8 of this chapter, the board may buy bonds issued by the Indiana development finance authority or make loans to the Indiana development finance authority to fund the business development loan fund and to finance industrial development projects in accordance with IC 4-4-11. The term of bonds or loans shall not exceed ten (10) years. The board may not buy any bond or make any loan under this section unless:
        (1) the authority finds and certifies to the board for depositories that the related industrial development project is in furtherance of the purposes of the Indiana development finance authority and complies with IC 4-4-11; and
        (2) the general assembly has provided for the purchase of the bonds or the making of the loan by specifically authorizing the purchase of bonds or the making of the loan in the appropriation act and the purchase or loan is approved by the budget agency after review by the budget committee.
Bonds purchased by the board for depositories shall be on the terms and subject to the provisions agreed to by the board for depositories and the Indiana development finance authority in bond purchase agreements. Loans made by the board for depositories shall be on the terms and subject to the provisions agreed to by the board for depositories and the Indiana development finance authority in loan agreements. This section is all the authority the board for depositories needs to buy bonds issued by the Indiana development finance authority, to make loans to the Indiana development finance authority, and to enter into bond purchase agreements and loan agreements.
    (b) In addition to the authority given to the board for depositories in this chapter, and notwithstanding any other law, including sections 7 and 8 of this chapter, the board may guaranty bonds issued by the Indiana development finance authority and loans and loan guaranties made by the Indiana development finance authority for industrial development projects in accordance with IC 4-4-11. In addition, the board for depositories may make a loan guaranty jointly with the Indiana development finance authority as provided by IC 4-4-11-16.7. The term of loan guaranties shall not exceed ten (10) years. The board may not make any loan guaranty under this section unless:
        (1) the authority finds and certifies to the board for depositories that the related industrial development project is in furtherance of the purposes of the Indiana development

finance authority and complies with IC 4-4-11; and
        (2) the general assembly has provided for the guaranty by specifically authorizing the guaranty in the appropriation act and the guaranty is approved by the budget agency after review by the budget committee.
Loan guaranties made by the board for depositories shall be on the terms and subject to the provisions agreed to by the board for depositories and the Indiana development finance authority in loan guaranty agreements. This section is all the authority the board for depositories needs to make loan guaranties and to enter into guaranty agreements.
    (c) The principal amount of bonds, loans, and loan guaranties the board for depositories may buy or make under this section is limited to thirty-five million dollars ($35,000,000). A bond purchase agreement, a loan agreement, or a loan guaranty agreement made under this section does not constitute a debt, liability, or obligation of the state, or a pledge or lending of the faith and credit of the state, but shall be paid or provided for in the bond purchase agreement, loan agreement, or loan guaranty agreement and from the public deposit insurance fund as a special fund, and all such agreements shall contain therein a statement to the effect that the agreements are not obligations of the state of Indiana, or of any political subdivision thereof, but are payable solely as provided for in the agreements and from the public deposit insurance fund as a special fund.
    (d) This section expires July 1, 2002.

    SECTION 3. IC 6-3.1-13.5 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2001 (RETROACTIVE)]:
     Chapter 13.5. Capital Investment Tax Credit
    Sec. 1. As used in this chapter, "department" refers to the department of commerce.
    Sec. 2. As used in this chapter, "pass through entity" means a:
        (1) corporation that is exempt from the adjusted gross income tax under IC 6-3-2-2.8(2);
        (2) partnership;
        (3) trust;
        (4) limited liability company; or
        (5) limited liability partnership.
    Sec. 3. As used in this chapter, "qualified investment" means the amount of the taxpayer's expenditures for:
        (1) the purchase of new manufacturing or production

equipment;
        (2) the purchase of new computers and related equipment;
        (3) costs associated with the modernization of existing manufacturing facilities;
        (4) onsite infrastructure improvements;
        (5) the construction of new manufacturing facilities;
        (6) costs associated with retooling existing machinery and equipment; and
        (7) costs associated with the construction of special purpose buildings and foundations for use in the computer, software, biological sciences, or telecommunications industry;
that are certified by the department under section 10 of this chapter as being eligible for the credit under this chapter, if the equipment, machinery, facilities improvements, facilities, buildings, or foundations are installed or used in a county having a population of more than forty thousand (40,000) but less than forty-one thousand (41,000).
    Sec. 4. As used in this chapter, "state tax liability" means a taxpayer's total tax liability that is incurred under:
        (1) IC 6-2.1 (the gross income tax);
        (2) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
        (3) IC 6-3-8 (the supplemental net income tax);
        (4) IC 6-5-10 (the bank tax);
        (5) IC 6-5-11 (the savings and loan association tax);
        (6) IC 27-1-18-2 (the insurance premiums tax); and
        (7) IC 6-5.5 (the financial institutions tax);
as computed after the application of the credits that under IC 6-3.1-1-2 are to be applied before the credit provided by this chapter.
    Sec. 5. As used in this chapter, "taxpayer" means a person, corporation, partnership, or other entity that has any state tax liability.
    Sec. 6. (a) Subject to the provisions of this chapter, a taxpayer is entitled to a credit against the taxpayer's state tax liability for a taxable year if the taxpayer makes a qualified investment in that year.
    (b) The amount of the credit to which a taxpayer is entitled is the qualified investment made by the taxpayer during the taxable year multiplied by fourteen percent (14%).
    Sec. 7. A taxpayer may claim the credit under this chapter only if:
        (1) the average wage paid by the taxpayer to its Indiana

employees within the county in which the qualifying investment is made exceeds the average wage paid in that county; or
        (2) the taxpayer certifies to the department and provides proof as determined by the department that, as a result of the qualifying investment, the average wage paid by the taxpayer to its Indiana employees within the county in which the qualifying investment is made will exceed the average wage paid in that county.
    Sec. 8. (a) If a pass through entity does not have state income tax liability against which the tax credit provided by this chapter may be applied, a shareholder or partner of the pass through entity is entitled to a tax credit equal to:
        (1) the tax credit determined for the pass through entity for the taxable year; multiplied by
        (2) the percentage of the pass through entity's distributive income to which the shareholder or partner is entitled.
    (b) The credit provided under subsection (a) is in addition to a tax credit to which a shareholder or partner of a pass through entity is otherwise entitled under this chapter.
    Sec. 9. (a) The total value of a tax credit under this chapter shall be divided equally over seven (7) years, beginning with the year in which the credit is granted. If the amount of credit provided under this chapter for a taxpayer in a taxable year exceeds the taxpayer's state tax liability for that taxable year, the taxpayer may carry the excess over to not more than three (3) subsequent taxable years. The amount of the credit carryover from a taxable year shall be reduced to the extent that the carryover is used by the taxpayer to obtain a credit under this chapter for any subsequent taxable year.
    (b) A taxpayer is not entitled to a carryback or refund of any unused credit.
    Sec. 10. (a) To be entitled to a credit under this chapter, a taxpayer must request the department of commerce to determine whether an expenditure is a qualified investment.
    (b) To make a request under subsection (a), a taxpayer must file with the department a notice of intent to claim the credit under this chapter. A taxpayer must file the notice with the department not later than February 15 of the calendar year following the calendar year in which the expenditure is made.
    (c) After receiving a notice of intent to claim the credit, the department shall review the notice and determine whether the expenditure is a qualified investment and whether the taxpayer is

entitled to claim the credit. The department shall, before April 1 of the calendar year in which the notice is received, send to the taxpayer and to the department of state revenue a letter:
        (1) certifying that the taxpayer is entitled to claim the credit under this chapter for the expenditure; or
        (2) stating the reason why the taxpayer is not entitled to claim the credit.
    Sec. 11. To receive the credit provided by this section, a taxpayer must claim the credit on the taxpayer's annual state tax return or returns in the manner prescribed by the department of state revenue. A taxpayer claiming a credit under this chapter shall submit to the department of state revenue a copy of the certification letter provided under section 10 of this chapter. The taxpayer shall submit to the department of state revenue all information that the department of state revenue determines is necessary for the calculation of the credit provided by this chapter and for the determination of whether an expenditure was for a qualified investment.
    Sec. 12. (a) If a taxpayer receives a credit under this chapter, the equipment, machinery, facilities improvements, facilities, buildings, or foundations for which the credit was granted must be fully installed or completed not more than five (5) years after the department issues a letter under section 10 of this chapter certifying that the taxpayer is entitled to claim the credit.
    (b) If a taxpayer receives a credit under this chapter and does not make the qualified investment (or a portion of the qualified investment) for which the credit was granted within the time required by subsection (a), the department may require the taxpayer to repay the following:
        (1) The additional amount of state tax liability that would have been paid by the taxpayer if the credit had not been granted for the qualified investment (or portion of the qualified investment) that was not made by the taxpayer within the time required by subsection (a).
        (2) Interest at a rate established under IC 6-8.1-10-1(c) on the additional amount of state tax liability referred to in subdivision (1).
    Sec. 13. The department and the department of state revenue shall adopt rules to carry out this chapter.

    SECTION 4. IC 6-3.1-22 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2001 (RETROACTIVE)]:


     Chapter 22. Rerefined Lubrication Oil Facility Credit
    Sec. 1. As used in this chapter, "pass through entity" means:
        (1) a corporation that is exempt from the adjusted gross income tax under IC 6-3-2-2.8(2);
        (2) a partnership;
        (3) a limited liability company; or
        (4) a limited liability partnership.
    Sec. 2. As used in this chapter, "rerefined lubrication oil" means base oil:
        (1) manufactured from at least ninety-five percent (95%) used oil; and
        (2) that is not more than two percent (2%) previously unused oil;
created by a refining process that effectively removes physical and chemical impurities and spent and unspent additives to the extent that the base oil is capable of meeting industry standards for engine oil (as defined by API 1509).
    Sec. 3. As used in this chapter, "state tax liability" means a taxpayer's total tax liability that is incurred under:
        (1) IC 6-2.1 (the gross income tax);
        (2) IC 6-2.5 (state gross retail and use tax);
        (3) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
        (4) IC 6-3-8 (the supplemental corporate net income tax);
        (5) IC 6-5-10 (the bank tax);
        (6) IC 6-5-11 (the savings and loan association tax);
        (7) IC 6-5.5 (the financial institutions tax); and
        (8) IC 27-1-18-2 (the insurance premiums tax);
as computed after the application of the credits that under IC 6-3.1-1-2 are to be applied before the credit provided by this chapter.
    Sec. 4. As used in this chapter, "taxpayer" means an individual or entity that has any state tax liability.
    Sec. 5. Subject to section 9 of this chapter, a person is entitled to a credit against the person's state tax liability in a taxable year for a percentage of the ad valorem property taxes, excluding interest and penalties, paid by the taxpayer in the taxable year for the following:
        (1) Real property on which a facility that processes rerefined lubrication oil is located.
        (2) Personal property used in the processing of rerefined lubrication oil, including personal property used in the transportation of rerefined lubrication oil to and from the

processing facility.
    Sec. 6. (a) The amount of the credit to which a taxpayer is entitled under this chapter equals the product of:
        (1) the percentage prescribed in subsection (b); multiplied by
        (2) the amount of the ad valorem property taxes, excluding interest and penalties, paid by the taxpayer in the taxable year on the tangible property described in section 5 of this chapter.
    (b) The percentage of the credit referred to in subsection (a)(1) is as follows:
    YEAR    PERCENTAGE
        OF THE CREDIT
    2001    100%
    2002    80%
    2003    60%
    2004    40%
    2005    20%
    Sec. 7. If a pass through entity is entitled to a credit under section 5 of this chapter but does not have state tax liability against which the tax credit may be applied, a shareholder, partner, or member of the pass through entity is entitled to a tax credit equal to:
        (1) the tax credit determined for the pass through entity for the taxable year; multiplied by
        (2) the percentage of the pass through entity's distributive income to which the shareholder, partner, or member is entitled.
    Sec. 8. A taxpayer is entitled to carry forward, for a period not to exceed two (2) years, any unused credit under section 6 or 7 of this chapter.
    Sec. 9. To be entitled to a credit under this chapter, a taxpayer must request the department of commerce to determine if the taxpayer is entitled to the credit under this chapter. A taxpayer must make the request to the department of commerce in the manner and on forms prescribed by the department of commerce.
    Sec. 10. This chapter expires January 1, 2006.

    SECTION 5. [EFFECTIVE JANUARY 1, 2001 (RETROACTIVE)] A taxpayer is not entitled to carry forward an used credit under IC 6-3.1-22, as added by this act, to a taxable year beginning after December 31, 2007.
    SECTION 6. [EFFECTIVE JANUARY 1, 2001 (RETROACTIVE)] IC 6-3.1-22, as added by this act, applies to taxable years beginning after December 31, 2000.


    SECTION 7. [EFFECTIVE JANUARY 1, 2001 (RETROACTIVE)] IC 6-3.1-13.5, as added by this act, applies only to taxable years beginning after December 31, 2000.
    SECTION 8. [EFFECTIVE UPON PASSAGE] (a) Notwithstanding the expiration of IC 4-4-11-16.7, as added by this act, on July 1, 2002, any bonds issued and any loans or loan guaranties made by the Indiana development finance authority under that section before July 1, 2002, remain valid and binding obligations of the Indiana development finance authority after June 30, 2002, as if that section had not expired.
    (b) Notwithstanding the expiration of IC 5-13-12-12, as added by this act, on July 1, 2002, any loans or loan guaranties made by the Indiana development finance authority under that section before July 1, 2002, remain valid and binding obligations of the Indiana development finance authority after June 30, 2002, as if that section had not expired.

    SECTION 9. An emergency is declared for this act.