2018 -- H 7556

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LC004408

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

____________

A N   A C T

RELATING TO TOWNS AND CITIES

     Introduced By: Representatives Barros, Ruggiero, Tobon, Messier, and Johnston

     Date Introduced: February 09, 2018

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 45-32-1 of the General Laws in Chapter 45-32 entitled

"Redevelopment Projects" is hereby amended to read as follows:

     45-32-1. Compliance prerequisite to further proceedings.

     A community must comply with the requirements of §§ 45-32-2 -- 45-32-3 before

proceeding further under chapters 31 -- 33 of this title.

     SECTION 2. The title of Chapter 45-33.2 of the General Laws entitled "Tax Increment

Financing" is hereby amended to read as follows:

CHAPTER 45-33.2

Tax Increment Financing

CHAPTER 45-33.2

MUNICIPAL TAX INCREMENT FINANCING ACT

     SECTION 3. Sections 45-33.2-1, 45-33.2-3, 45-33.2-5, 45-33.2-6, 45-33.2-12 and 45-

33.2-21 of the General Laws in Chapter 45-33.2 entitled "Tax Increment Financing" are hereby

amended to read as follows:

     45-33.2-1. Short title.

     This chapter may be referred to and cited as the "Tax Increment Financing Act".

"Municipal Tax Increment Financing Act."

     45-33.2-3. Definitions.

     As used §§45-33.2-3 through 45-33.2-21 in this chapter, excepting §45-33.2-3.1, or as

otherwise specified with respect to other sections, unless a different meaning clearly appears from

the context, the following words have the following meanings:

     (1) "Base date" means the last assessment date next preceding the adoption of the project

plan.

     (2) "Project" means the undertaking of one or more of the following activities in

accordance with a project plan:

     (i) The acquisition of land and improvements on it, if any, within the project area, and the

assembly and clearance of the land so acquired,

     (ii) The development, redevelopment, revitalization, or conservation of the project area

through the construction or rehabilitation of buildings or other improvements or through

acquisition by gift, purchase, or eminent domain of land and any improvements of the area, and

demolition, removal, or rehabilitation of those improvements, whenever these activities are

necessary to provide land for and the development of needed municipal and other public facilities

or industrial or commercial development or revitalization, or to eliminate unhealthful, unsanitary,

or unsafe conditions or lessen density, mitigate or eliminate traffic congestion, reduce traffic

hazards, eliminate obsolete or other uses detrimental to the public welfare or otherwise remove or

prevent the spread of blight or deterioration,

     (iii) The provision of grants, loans, security or other assistance from project revenues or

other revenues and other funds in connection with: (A) home and neighborhood improvement

programs,; (B) programs to acquire, renovate or transfer abandoned or fully or partially vacated

houses; and (C) programs to acquire land, demolish buildings and other structures and clear and

rehabilitate sites for the purpose of reducing building density or promoting new housing

construction, or

     (iv) The provision of grants, loans, security or other assistance from project revenues or

other revenues and other funds to combat poverty, improve municipal and neighborhood living

conditions and enhance educational and employment opportunities, including, without limiting

the generality of the foregoing, by means of job training and retraining programs, literacy

programs, apprenticeship programs, programs to provide post-secondary school educational

grants or other assistance to students meeting eligibility criteria established in the project plan,

programs to improve the performance of public schools, pilot projects to provide special or

enhanced municipal services and commercial and industrial revitalization and development.

     (v) A project may involve a combination of the previously mentioned activities. A project

may include the provision of financial and other assistance in the relocation of persons and

organizations displaced thereby, and the planning and construction, reconstruction, or

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rehabilitation of public facilities.

     (3) "Project area" except as set forth in this subdivision, means all or any portion of a

"redevelopment area," as that term is defined in § 45-31-8(15), in which the project is to be

carried out; provided, that the following projects are not required to be in a "redevelopment area":

(i) the acquisition and clearance of land and the construction on it of a municipal or other public

facility under the definition of "project," paragraphs (2)(i)or (2)(ii); or (ii) a project described in

paragraphs (2)(iii) or (2)(iv) of the definition of "project.". The project area may consist of one or

more parcels or lots of land, whether or not contiguous, or one or more buildings or structures,

whether or not adjacent, on one or more parcels of land. The project area may, but need not, be

within the tax increment area. All or any portion of a project area may be amended as provided in

§ 45-33.2-4. A project for which a designated beneficiary class or classes is established on the

basis of income and/or some other generally applicable criteria in the project plan may have, but

is not required to have, a project area.

     (4) (i) "Project plan" means a plan, which, except as set forth in this subdivision, is part

of a "redevelopment plan," as that term is defined in § 45-31-8(16), adopted by a city or town in

the manner provided in § 45-33.2-4, for a project, provided, that a project plan for the following

projects is not required to be a part of a "redevelopment plan": (A) the acquisition and clearance

of land and the construction on it of a municipal or other public facility under paragraphs (2)(i) or

(2)(ii) of the definition of "project"; or (B) a project under subdivision (2). The project plan shall

present an estimate of project costs and the amounts and sources of funds to be used to defray

those costs and shall include provisions for tax increment funding and/or financing of project

costs in whole or in part. The tax increment financing provisions of the project plan shall state the

estimated amount of indebtedness to be incurred pursuant to this chapter, an estimate of the tax

increment to be generated as a result of the project, the method of calculating the tax increment,

together with any provisions for adjustment of the method of calculation, and shall designate the

board or officer of the city or town responsible for calculating the tax increment. Funds may be

provided to carry out the plan from any lawful source, including the direct use of all or any

portion of the tax increment therefore or the issuance of bonds under this chapter, but may not be

provided by the issuance of general obligation bonds for any purpose for which general obligation

bonds could not be issued in the absence of this chapter. The plan may include any other

provisions that may be deemed necessary in order to carry out the tax increment funding and/or

financing of the project. The project plan shall not be inconsistent with the comprehensive plan

for the city or town as is then applicable, shall be sufficiently complete to indicate the nature of

any designated beneficiary class, as described in this subdivision, the location and boundaries of

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any project area and of the tax increment area, and land acquisition, demolition, removal and

rehabilitation of structures and development, redevelopment, and general public improvements

that are proposed to be carried out within the project area, and to the extent applicable the plan

shall indicate the proposed method for relocation of persons or organizations that may be

displaced as a result of carrying out the project.

     (ii) Once adopted by the legislative body of a city or town, a project plan may be

amended to add additional projects, to increase the estimated amount of indebtedness to be

incurred pursuant to this chapter or to amend all or any portion of a project area or the designation

of a beneficiary class relating to any project contained in the project plan, in the manner provided

in § 45-33.2-4. Each project contained in a project plan shall either have a project area designated

in the project plan or there shall be established in the project plan a designated beneficiary class

or classes (from whose members the actual beneficiaries shall be chosen) on the basis of income

(with provision for revision of income limits due to inflation and other external economic factors)

or some other generally applicable criteria; provided, that a project may have both a project area

and a designated beneficiary class or classes.

     (5) "Project revenues" means any receipts of a city or town with respect to a project or the

tax increment area or tax increment district, as defined in § 45-33.2-3.1(9), relating to it

including, without limiting the generality of the foregoing, tax increments, repayments of loans

including loans made under § 45-33.2-5(13), investment earnings, proceeds of insurance, or

disposition of property, and proceeds of borrowing under this chapter.

     (6) "Tax increment", for the purposes of §§ 45-33.2-3 through 45-33.2-21, means the tax

levied on the real and personal property situated in or otherwise assignable for the purposes of

property taxation to a tax increment area, to the extent that the tax is attributable to an excess of

the aggregate taxable valuation of the property over its aggregate taxable valuation as of the base

date. The portion of the tax levy attributable to the increased valuation after the base date shall be

calculated using the same classification factors as were used as of the base date, or without

classification factors if property was not classified for tax purposes as of the base date. In

calculating the tax increment there shall be excluded from the tax the portion levied for the

purpose of paying the principal of or interest on bonds, notes, and other evidences of

indebtedness which are general obligations of the city or town. Prior to the actual use of any

portion of a tax increment to support or secure a project or portion of one, unused tax increment

may be deposited upon receipt into the general fund of the city or town, to be used in accordance

with generally applicable law. Once the city or town has used any portion of the tax increment to

support or secure one or more projects or portions of them, only the excess of tax increment may

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be deposited into the general fund of the city or town, to be used in accordance with generally

applicable law, after satisfaction of: (i) the payment of the principal of or interest on any special

obligation bonds issued under the provisions of § 45-33.2-6, as principal and interest shall then be

due and owing; (ii) any requirement to fund any reserve or other account or satisfy any other

financial requirement which must be satisfied in connection with the issuance of bonds or any

other indebtedness or obligation incurred in connection with any project or portion of one; and

(iii) any payments made to directly fund any project or portion of one as provided in the project

plan therefor.

     (7) "Tax increment area" means a tax increment area designated in a project plan adopted

pursuant to § 45-33.2-4. The tax increment area may consist of one or more parcels or lots of

land, whether or not contiguous, on one or more buildings or structures, whether or not adjacent,

or on one or more parcels of land; provided, that upon adoption of the project plan the aggregate

taxable valuation of the property within all tax increment areas within the city or town does not

exceed twenty-five percent (25%) of the taxable valuation of all property subject to taxation

within the city or town.

     45-33.2-5. Authorization to undertake projects -- Powers.

     Cities and towns are authorized to undertake projects pursuant to duly adopted project

plans and tax increment district master plans, as defined in § 45-33.2-3.1(11). In addition to

powers granted under this section or by any other law, for the purposes of carrying out a project

as authorized by this chapter, a city or town has the following powers:

     (1) To incur indebtedness, and pledge tax increments, and other project revenues and

other revenues for repayment of indebtedness;

     (2) To designate a board or officer of the city or town to be responsible for administering

the project plan or tax increment district master plan;

     (3) To make and enter into all contracts and agreements necessary in order to carry out

the project;

     (4) To receive from the federal government or the state, loans or grants for or in aid of a

project, and to receive contributions from any other source to defray project costs;

     (5) To purchase or otherwise acquire property or interests in property therein within or

without a project area or tax increment district as the city or town may deem necessary in order to

carry out the project;

     (6) To make relocation payments to persons, businesses, or organizations that may be

displaced as a result of carrying out the project;

     (7) To clear and improve property acquired by it pursuant to the project plan or tax

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increment district master plan, and construct public facilities on it, or contract for the

construction, development, redevelopment, rehabilitation, remodeling, alteration, or repair of the

property;

     (8) To cause parks, playgrounds, or schools or water, sewer, or drainage facilities, or any

other public improvements which it otherwise is authorized to undertake, to be laid out,

constructed, or furnished in connection with the project;

     (9) To lay out and construct, alter, relocate, change the grade of, make specific repairs

upon or discontinue public ways, and construct sidewalks in or adjacent to the project area or tax

increment district;

     (10) To cause private ways, sidewalks, ways for vehicular travel, playgrounds, or water,

sewer, or drainage facilities and similar improvements to be constructed within the project area or

tax increment district for the particular use of the project area or tax increment district of those

dwelling or working in it;

     (11) To adopt ordinances, or repeal or modify ordinances, or establish exceptions to

existing ordinances regulating the design, construction, and use of buildings;

     (12) To sell, mortgage, lease as lessor, transfer, or dispose of any property or interest in

property acquired by it pursuant to the project plan or tax increment district master plan for

development, redevelopment, or rehabilitation in accordance with the plan;

     (13) To grant or loan any project revenues or other revenues, including the proceeds of

any issue of bonds or notes issued pursuant to this chapter to an individual or any private

enterprise, nonprofit organization or governmental or quasi-governmental entity in order to

finance the cost of any portion of a project authorized under this chapter, including, without

limiting the generality of the preceding, the cost of acquiring land for, and constructing or

rehabilitating and equipping industrial or commercial development facilities industrial,

commercial, residential, retail and mixed use, transit-oriented development, downtown

development or any combination thereof, within the project area in accordance with the plan or

within a tax increment district in accordance with a tax increment district master plan, or to loan

bond or note proceeds in order to refinance any loans;

     (14) To invest project revenues or other revenues as provided in § 45-33.2-12; and

     (15) To do all things reasonably necessary or convenient to carry out the powers granted

in this chapter.

     45-33.2-6. Issuance of special obligation bonds.

     (a) A city or town may, in compliance with any applicable provisions of the general laws

(except as provided in this section) borrow money by the issue of special obligation bonds for the

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purpose of carrying out a project pursuant to a duly adopted project plan or tax increment district

master plan, as defined in § 45-33.2-3.1(11). Without limiting the generality of the preceding, the

bonds may be issued for project costs which may include interest prior to and during the carrying

out of a project and for a reasonable time thereafter, reserves that may be required by any

agreement securing the bonds, and all other expenses including reimbursements of expenses

previously paid from any other source, incidental to planning, carrying out, and financing the

project. Bonds issued under this section shall be payable solely from:

     (1) Project project revenues;

     (2) A pledge of and lien upon any or all of the income, proceeds, revenues and property

of the project within the tax increment area, project area or tax increment district, including the

proceeds of grants, loans, advances or contributions from the federal government, the state or

other source; and

     (3) Any combination of the sources in subsections (a)(1) and (a)(2) of this section, and

shall not be deemed to be a pledge of faith and credit of the city or town. Every bond issued under

this section shall recite on its face that it is a special obligation bond payable solely from project

revenues or other revenues pledged for its repayment.

     (b) The bonds of each issue shall be dated and may be made redeemable before maturity

with or without premium. Subject to the authorizing vote, the officers authorized to sell the bonds

shall determine the date or dates of the bonds, their denomination or denominations, the place or

places of payment of the principal and interest, which may be at any bank or trust company

within or without the state, their interest rate or rates, including variable rates, prices, maturity or

maturities not to exceed thirty (30) years, redemption privileges, if any, and the form and other

details of the bonds, including interest coupons to be attached to them. The bonds shall be signed

by the city or town treasurer, countersigned by the mayor of a city or by the president of the town

council of a town, either manually or by facsimile, and shall bear the seal of the city or town or a

facsimile of the seal. Any coupons attached thereto shall bear the facsimile signature of the city or

town treasurer.

     (c) In case any officer whose signature or a facsimile of whose signature appears on any

bonds, coupons, or notes issued under this chapter ceases to be an officer before their delivery,

the signature or the facsimile shall nevertheless be valid and sufficient for all purposes the same

as if the officer had remained in office until the delivery.

     (d) The bonds may be issued in coupon or registered form, or both, and provision may be

made for the registration of any coupon bonds as to principal alone and also as to principal and

interest, for the reconversion into coupon bonds or bonds registered as to both principal and

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interest, and for the interchange of registered and coupon bonds. Subject to the authorizing vote,

the officers authorized to sell the bonds may sell the bonds in a manner, either at public or private

sale, and for a price, as they may determine will best effect the purposes of this chapter.

     (e) Prior to the preparation of definitive bonds, the city or town may issue interim receipts

or temporary bonds, with or without coupons, exchangeable for definitive bonds when those

bonds have been executed and are available for delivery. Provision may be made for the

replacement of any bonds which have become mutilated or have been destroyed or lost.

     (f) Notwithstanding any provisions of any municipal charter or general or special law to

the contrary, bonds issued under this section may provide for annual or more frequent

installments of principal in equal, diminishing, or increasing amounts, with the first installment of

principal to be due at any time within five (5) years from the date of the issuance of the bonds.

     (g) While any bonds issued hereunder remain outstanding, the existence of the tax

increment district and the powers and duties of a city or town with respect to such tax increment

district shall not be diminished or impaired in any way that will affect adversely the interests and

rights of the holders of the bonds. Any bonds issued by a city or town pursuant to this section

shall contain on their face a statement to the effect that neither the state nor the city or town shall

be obliged to pay the principal of or the interest thereon, and that neither the full faith and credit

or taxing power of the state or the city or town is pledged to the payment of the bonds. All bonds

issued under this section are deemed to be negotiable instruments under the laws of this state.

     (h) As used in this section, "bonds" means any bonds, including refunding bonds, notes,

interim certificates, debentures or other obligations.

     45-33.2-12. Investment of funds.

     Subject to any agreement securing bonds or notes issued under this chapter, the proceeds

of the bonds or notes, pledged tax increments, and other project revenues may be deposited or

invested in:

     (1) Obligations of the state or the United States,

     (2) Obligations of the principal and interest of which are guaranteed by the state or the

United States,

     (3) Obligations of agencies and instrumentalities of the state or the United States; or

     (4) Certificates of deposits of, and repurchase agreements, so called, issued with respect

to obligations of the United States by, banks and trust companies organized under the laws of the

state or doing business in the state.; or

     (5) As may be provided in any other applicable law of the state or resolution of a city or

town council or pursuant to an investment policy of the city or town.

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     45-33.2-21. Tax limitations.

     (a) Except as provided below, a tax increment shall be included in the calculation of the

maximum tax a city or town may levy pursuant to the provisions of § 44-5-2 of the general laws.

     (b) To the extent that inclusion of a tax increment in a tax levy causes a municipality to

exceed the maximum tax a city or town may levy pursuant to the provisions of § 44-5-2 of the

general laws, such excess shall be excluded from such calculation for a period not to exceed

twenty-five (25) years if:

     (1) Such such excess tax increment is allocable to: (i) the payment of the principal of or

interest on any special obligation bonds issued under the provisions of § 45-33.2-6, to fund a

project as described in subdivisions 45-33.2-3(2)(i), (ii) or (iii) under this chapter; (ii) any

requirement to fund any reserve or other account or satisfy any other financial requirement which

must be satisfied in connection with the issuance of such bonds or any other indebtedness or

obligation incurred in connection with any such project or portion of one; or (iii) any payments

made to directly fund any project described in subdivisions 45-33.2-3(2)(i), (ii) or (iii); and.

     (2) The project is determined by the division of property valuation in the department of

revenue to be: (i) within or contiguous to the tax increment area; or (ii) substantially related to the

improvements giving rise to the tax increment; or (iii) reasonably necessary to assure the private

investment required to generate the tax increment.

     (c) The tax assessor in each city and town shall include calculations reflecting any tax

increment excluded from the tax cap provisions of § 44-5-2 of the general laws when submitting

the municipality's adopted tax levy and rate to the division of property valuation in accordance

with § 44-5-2 of the general laws.

     (d) The division of property valuation in the department of revenue may issue such

regulations as may be required to implement and enforce the provisions of this section.

     SECTION 4. Chapter 45-33.2 of the General Laws entitled "Tax Increment Financing" is

hereby amended by adding thereto the following sections:

     45-33.2-3.1. Additional definitions.

     As used in §§ 45-33.2-22 through 45-33.2-29, or as otherwise specified, unless the

context otherwise requires:

     (1) "Captured assessed value" means the amount, as a percentage or stated sum, of

increased assessed value that is utilized from year to year to finance project costs pursuant to a

tax increment district master plan.

     (2) "Current assessed value" means the assessed value of all taxable real property within

a tax increment district as of December 31 of each year that the tax increment district remains in

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effect.

     (3) "Downtown" means a central business district or other commercial neighborhood area

of a community that serves as a center of socioeconomic interaction in the community,

characterized by a cohesive core of commercial and mixed-use buildings, often interspersed with

civic, religious and residential buildings and public spaces, that are typically arranged along a

main street and intersecting side streets and served by public infrastructure.

     (4) "Increased assessed value" means the valuation amount by which the current assessed

value of a tax increment district exceeds the original assessed value of the tax increment district.

If the current assessed value is equal to or less than the original assessed value, there is no

increased assessed value.

     (5) "Maintenance and operation" means all activities necessary to maintain facilities after

they have been developed and all activities necessary to operate such facilities, including, but not

limited to, informational, promotional and educational programs and safety and surveillance

activities.

     (6) "Original assessed value" means the assessed value of all taxable real property within

a tax increment district as of December 31 of the tax year preceding the year in which the tax

increment district was established by a city or town council.

     (7) "Project costs" means any expenditures or monetary obligations incurred or expected

to be incurred that are authorized by § 45-33.2-28 and included in a tax increment district master

plan.

     (8) "Tax increment" means real property taxes assessed by a city or town upon the

increased assessed value of property in the tax increment district.

     (9) "Tax increment district" means that area wholly within the corporate limits of a

municipality that has been established and designated as such pursuant to § 45-33.2-23 and that is

to be developed under a tax increment district master plan.

     (10) "Tax increment district financial plan" means a statement of the project costs and

sources of revenue required to accomplish the tax increment district master plan.

     (11) "Tax increment district master plan" means a statement of means and objectives

prepared by a city or town relating to a tax increment district designed to provide new

employment opportunities, retain existing employment, provide housing opportunities, improve

or broaden the tax base or construct or improve the physical facilities and structures through the

development of industrial, commercial, residential, retail and mixed use, transit-oriented

development, downtown development or any combination thereof, as described in § 45-33.2-26.

     (12) "Tax year" means the period of time beginning on July 1 and ending on the

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succeeding June 30 or such other twelve (12) month period adopted as the tax year of a city or

town.

     (13) "Transit" means transportation systems in which people are conveyed by means

other than their own vehicles, including, but not limited to, bus systems, street cars, ferries, light

rail and other rail systems.

     (14) "Transit facility" means a place providing access to transit services, including, but

not limited to, bus stops, bus stations, interchanges on a highway used by one or more transit

providers, ferry landings, train stations, shuttle terminals and bus rapid transit stops.

     (15) "Transit-oriented development" means the development of residential, commercial

and employment centers within one-half (1/2) mile or walking distance of a transit facility,

including rail and bus rapid transit and services that meet transit supportive standards for land

uses, built environment densities and walkable environments, in order to facilitate and encourage

the use of those services. Transit-oriented development includes, but is not limited to, transit

vehicles such as buses, ferries, vans, rail conveyances and related equipment; bus shelters and

other transit-related structures; benches, signs and other transit-related infrastructure; bicycle lane

construction and other bicycle-related improvements; pedestrian improvements such as

crosswalks, crosswalk signals and warning systems and crosswalk curb treatments; and the

industrial, commercial, residential, retail and mixed-use portions of transit-oriented development

projects.

     45-33.2-22. Alternate tax increment provisions.

     Section 45-33.2-3.1 and §§ 45-33.2-22 through 45-33.2-29 are intended to modernize the

laws of the state governing tax increment financing to facilitate economic development in the

state. Section 45-33.2-3.1 and §§ 45-33.2-22 through 45-33.2-29 shall be construed to provide a

complete, additional, and alternative method for performing the things authorized by this chapter,

and shall be regarded as supplemental and in addition to the powers conferred by other laws,

including §§ 45-33.2-2 through 45-33.2-21. Cities and towns which have created tax increments

in accordance with §§ 45-33.2-2 through 45-33.2-21 may elect to use the provisions of § 45-33.2-

3.1 and §§ 45-33.2-22 through 45-33.2-29 by adopting an ordinance of the city or town council:

     (1) Declaring the intention to be bound by § 45-33.2-3.1 and §§ 45-33.2-22 through 45-

33.2-29; and

     (2) Approving such amendments to the city or town redevelopment plan and project plan

as may be required to proceed in accordance with § 45-33.2-3.1 and §§ 45-33.2-22 through 45-

33.2-29. Effective July 1, 2018, a tax increment may be established which is not in a project area,

as defined in § 45-33.2-3 or adopted pursuant to a project plan, as defined in § 45-33.2-3.

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     45-33.2-23. Establishment of tax increment district -- Powers within tax increment

district.

     (a) A city or town council may establish a tax increment district located wholly within the

boundaries of such city or town in accordance with the requirements of § 45-33.2-3.1 and §§ 45-

33.2-22 through 45-33.2-29. Establishment of a tax increment district is effective upon approval

by a city or town council and upon adoption of a tax increment district master plan pursuant to §

45-33.2-26.

     (b) Within tax increment districts and consistent with the tax increment district master

plan, a city or town, in addition to powers granted to it under the constitution, the general laws,

any special act, § 45-33.2-5 and §§ 45-33.2-22 through 45-33.2-29 shall have the following

powers with respect to tax increment districts:

     (1) To acquire, construct, reconstruct, improve, preserve, alter, extend, operate or

maintain property or promote development intended to meet the objectives of the tax increment

district master plan. A city or town may acquire property, land or easements through negotiation

or by other means authorized for municipalities under the general laws. The provisions of any

charter, other laws or ordinances, general, special, or local, or of any rule or regulation of the state

or any city or town, restricting or regulating in any manner the power of any city or town to lease

(as lessee or lessor) or sell property, real, personal, or mixed, shall not apply to leases and sales

made pursuant to this chapter. Any city or town, notwithstanding any contrary provision of any

charter, other laws or ordinances, general, special or local, or of any rule or regulations of the

state or the city or town, is authorized and empowered to lease, lend, pledge, grant, or convey

terms and conditions that the chief executive officer, if any, or where no chief executive officer

exists, the city or town council, may deem reasonable and fair and without the necessity for any

advertisement, order of court, or other action or formality, any real property or personal property

which may be necessary or convenient to effectuation of a project, including public roads and

other real property already devoted to public use;

     (2) To execute and deliver contracts, agreements and other documents relating to the

development, operation and maintenance of the tax increment district, including, but not limited

to, contracts providing for liquidity facilities such as letters of credit, or providing for credit

enhancement, which contracts, agreements and other documents may have a term not to exceed

twenty-five (25) years;

     (3) To issue bonds and other obligations of the city or town in accordance with the

provisions set forth in § 45-33.2-6;

     (4) Acting through its city or town council, to enter into written agreements with a

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taxpayer stabilizing or otherwise fixing the assessment of real estate within a tax increment

district, provided:

     (i) The term of such agreement shall not exceed twenty-five (25) years from the date of

the agreement; and

     (ii) The assessment agreed on for the real estate plus future improvements shall not be

less than the assessment of the real estate as of the last regular assessment date without such

future improvements. Any such agreement shall be recorded in the land records in the city or

town. Recording of the agreement constitutes notice of the agreement to a subsequent purchaser

or encumbrancer of the property or any part of it, whether voluntary or involuntary, and is

binding upon a subsequent purchaser or encumbrancer. If a city or town claims that the taxpayer

is not complying with the terms of such agreement, the city or town may bring an action in the

superior court for the county in which the city or town is located to force compliance with such

agreement;

     (5) Accept grants, advances, loans or other financial assistance from the federal

government, the state, private entities or any other source, and do any and all things necessary or

desirable to secure such financial aid;

     (6) Upon such terms as a city or town determines, furnish service or facilities, provide

property, lend, grant or contribute funds, including tax increment, and take any other action of a

character that it is authorized to perform for other purposes.

     (c) The tax increment district may be dissolved at any time, and the boundaries of such

district may be changed at any time, by a vote of a city or town council, except that the tax

increment district may not be dissolved nor may the boundaries of the tax increment district be

changed so long as any bonds or other indebtedness authorized and issued under §§ 45-33.2-22

through 45-33.2-29, inclusive, or any other obligations authorized and incurred under §§45-33.2-

22 through 45-33.2-29, inclusive, remain outstanding. The tax increment district shall terminate

without further action of a city or town council forty (40) years after the date it is established, if

no such bonds or other indebtedness remain outstanding.

     45-33.2-24. Reserved.

     45-33.2-25. Planning commission advisory opinion -- Conditions for tax increment

district.

     Prior to the establishment of a tax increment district and approval of a tax increment

district master plan for such tax increment district, a city or town council shall:

     (1) Consider whether the proposed tax increment district and tax increment district master

plan will contribute to the economic growth or well-being of the city or town or to the betterment

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of the health, welfare or safety of the inhabitants of the city or town;

     (2) Transmit the tax increment district master plan to the planning commission of the city

or town, if any, requesting a study of the tax increment district master plan and a written advisory

opinion. The planning commission shall, within ninety (90) days, or such additional period

approved by the city or town council, provide a written advisory opinion to the city or town

council. Such written advisory opinion shall include a determination on whether the plan is

consistent with the comprehensive plan of the city or town adopted under § 45-22.2-8;

     (3) Hold at least one public hearing on the proposal to establish a tax increment district.

Notice of the hearing shall be published at least ten (10) days prior to the hearing in a newspaper

having general circulation within the city or town and shall include:

     (i) The date, time and place of such hearing; and

     (ii) The boundaries of the proposed tax increment district by legal description; and

     (4) Determine whether the proposed tax increment district meets the following

conditions:

     (i) A portion of the real property within a tax increment district shall meet at least one of

the following criteria:

     (A) Be a substandard, insanitary, deteriorated, deteriorating or blighted area;

     (B) Be in need of rehabilitation, redevelopment or conservation work; or

     (C) Be suitable for industrial, commercial, residential, mixed-use or retail uses,

downtown development or transit-oriented development; and

     (ii) The original assessed value of a proposed tax increment district plus the original

assessed value of all existing tax increment districts within a city or town may not exceed twenty-

five percent (25%) of the total value of taxable property within the city or town as of December

31 of the year immediately preceding the establishment of the tax increment district. Excluded

from the calculation in this subdivision is any tax increment district established on or after the

effective date of § 45-33.2-3.1 and §§ 45-33.2-22 through 45-33.2-29 that consists entirely of

contiguous property owned by a single taxpayer. For the purpose of this subsection, "contiguous

property" includes a parcel or parcels of land divided by a road, power line, railroad line or right-

of-way. A city or town may not establish a tax increment district if the conditions in this

subsection are not met.

     45-33.2-26. Adoption of tax increment district master plan.

     (a) In connection with the establishment of a tax increment district, a city or town council

shall adopt a tax increment district master plan for each tax increment district and a statement of

the percentage or stated sum of increased assessed value to be designated as captured assessed

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value in accordance with such plan. The tax increment district master plan shall be adopted at the

same time that the tax increment district is established, as part of the tax increment district

adoption proceedings set forth in §§ 45-33.2-22 through 45-33.2-29.

     (b) The tax increment district master plan shall include:

     (1) The boundaries of the tax increment district by legal description;

     (2) A list of the tax identification numbers for all lots or parcels within the tax increment

district;

     (3) A description of the present condition and uses of all land and buildings within the tax

increment district;

     (4) A description of the public facilities, improvements or programs within the tax

increment district anticipated to be added and financed in whole or in part;

     (5) A description of the industrial, commercial, residential, mixed-use or retail

improvements, downtown development or transit-oriented development within the tax increment

district anticipated to be financed in whole or in part;

     (6) A tax increment district financial plan in accordance with subsection (c) of this

section;

     (7) A plan for the proposed maintenance and operation of the tax increment district after

the planned capital improvements are completed; and

     (8) The maximum duration of the tax increment district, which may not exceed a total of

forty (40) tax years beginning with the tax year in which the tax increment district is established.

     (c) The tax increment district financial plan for a tax increment district master plan shall

include:

     (1) Cost estimates for the public improvements and developments anticipated in the tax

increment district master plan;

     (2) The maximum amount of indebtedness to be incurred to implement the tax increment

district master plan;

     (3) Sources of anticipated revenues;

     (4) A description of the terms and conditions of any agreements, including any

anticipated assessment agreements, contracts or other obligations related to the tax increment

district master plan;

     (5) Estimates of increased assessed values of the tax increment district; and

     (6) The portion of the increased assessed values to be applied to the tax increment district

master plan as captured assessed values and resulting tax increments in each year of the plan.

     (d) The tax increment district master plan may be amended from time to time by a city or

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town council. The city or town council shall review the tax increment district master plan at least

once every ten (10) years after the initial approval of the tax increment district and the tax

increment district master plan in order for the tax increment district and the tax increment district

master plan to remain in effect; provided, however, that so long as any bonds or other

indebtedness or obligations authorized and incurred under §§ 45-33.2-22 through 45-33.2-29

remain outstanding, the tax increment master plan shall remain in effect. With respect to any tax

increment district master plan that includes development that is funded in whole or in part by

federal funds, the provisions of this subsection shall not apply to the extent that such provisions

are prohibited by federal law.

     45-33.2-27. Designation of tax increment revenues.

     (a) In the tax increment district master plan, a city or town may designate all or part of

the tax increment revenues generated from the increased assessed value of a tax increment district

for the purpose of financing all or part of the tax increment district master plan. The amount of

tax increment revenues to be designated is determined by designating the captured assessed value,

subject to any assessment agreements.

     (b) On or after the establishment of a tax increment district and the adoption of a tax

increment district master plan, the assessor of a city or town in which it is located shall certify the

original assessed value of the taxable real property within the boundaries of the tax increment

district. Each year after the establishment of a tax increment district, the municipal assessor shall

certify the amount of:

     (1) The current assessed value;

     (2) The amount by which the current assessed value has increased or decreased from the

original assessed value, subject to any assessment agreements; and

     (3) The amount of the captured assessed value. Nothing in this subsection allows for

unequal apportionment or assessment of the taxes to be paid on real property in a city or town.

Subject to any assessment agreements, an owner of real property within the tax increment district

shall pay real property taxes apportioned equally with property taxes paid elsewhere in the city or

town.

     (c) If a city or town has designated captured assessed value under § 45-33.2-26(a):

     (1) The city or town shall establish a tax increment district master plan fund that consists

of:

     (i) A project cost account that is pledged to and charged with the payment of project costs

that are outlined in the tax increment district financial plan, including the reimbursement of

project cost expenditures incurred by a public body, including the city or town, a developer, any

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property owner or any other third-party entity, and are paid in a manner other than as described in

subsection (c)(1)(ii) of this section; and

     (ii) In instances of indebtedness issued by a city or town in accordance with § 44-33.2-6

to finance or refinance project costs, a development sinking fund account that is pledged to and

charged with the:

     (A) Payment of the interest and principal as the interest and principal fall due, including

any redemption premium;

     (B) Payment of the costs of providing or reimbursing any provider of any guarantee,

letter of credit, policy of bond insurance or other credit enhancement device used to secure

payment of debt service on any such indebtedness; and

     (C) Funding any required reserve fund;

     (2) The city or town shall annually set aside all tax increment revenues on captured

assessed values and deposit all such revenues to the appropriate tax increment district master plan

fund account established under subsection (c)(1) of this section in the following order of priority:

     (i) To the development sinking fund account, an amount sufficient, together with

estimated future revenues to be deposited to the account and earnings on the amount, to satisfy all

annual debt service on the indebtedness issued in accordance with § 45-33.2-6 and the tax

increment district financial plan; and

     (ii) To the project cost account, all such remaining tax increment revenues on captured

assessed values;

     (3) The city or town shall make transfers between tax increment district master plan fund

accounts established under subsection (c)(1) of this section, provided the transfers do not result in

a balance in either account that is insufficient to cover the annual obligations of that account;

     (4) A city or town may, at any time during the term of the tax increment district, by vote

of the city or town council, return to the municipal general fund any tax increment revenues

remaining in either account established under subsection (c)(1) of this section in excess of those

estimated to be required to satisfy the obligations of the account after taking into account any

transfer made under subsection (c)(3) of this section; and

     (5) Any account or fund established pursuant to subsection (c)(1) of this section shall be

audited annually by an independent auditor who is a public accountant licensed to practice in this

state and who meets the independence standards included in generally accepted government

auditing standards. A report of such audit shall be open to public inspection.

     45-33.2-28. Project costs.

     Costs authorized for payment from a tax increment district master plan fund established

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pursuant to § 45-33.2-27 are limited to:

     (1) Costs of improvements made within the tax increment district, including, but not

limited to:

     (i) Capital costs, including, but not limited to:

     (A) The acquisition or construction of land, improvements, infrastructure, public ways,

parks, buildings, structures, railings, street furniture, signs, landscaping, plantings, benches, trash

receptacles, curbs, sidewalks, turnouts, recreational facilities, structured parking, transportation

improvements, pedestrian improvements and other related improvements, fixtures and equipment

for public use;

     (B) The acquisition or construction of land, improvements, infrastructure, buildings,

structures, including facades and signage, fixtures and equipment for industrial, commercial,

residential, mixed-use or retail use or transit-oriented development;

     (C) The demolition, alteration, remodeling, repair or reconstruction of existing buildings,

structures and fixtures;

     (D) Environmental remediation;

     (E) Site preparation and finishing work; and

     (F) All fees and expenses associated with the capital cost of such improvements,

including, but not limited to, licensing and permitting expenses and planning, engineering,

architectural, testing, legal and accounting expenses;

     (ii) Financing costs, including, but not limited to, closing costs, issuance costs, reserve

funds and capitalized interest;

     (iii) Real property assembly costs;

     (iv) Costs of technical and marketing assistance programs;

     (v) Professional service costs, including, but not limited to, licensing, architectural,

planning, engineering, development and legal expenses;

     (vi) Maintenance and operation costs;

     (vii) Administrative costs, including, but not limited to, reasonable charges for the time

spent by municipal employees, other agencies or third-party entities in connection with the

implementation of a tax increment district master plan; and

     (viii) Organizational costs relating to the planning and the establishment of the tax

increment district, including, but not limited to, the costs of conducting environmental impact and

other studies and the costs of informing the public about the creation of tax increment districts

and the implementation of the tax increment district master plan;

     (2) Costs of improvements that are made outside the tax increment district but are directly

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related to or are made necessary by the establishment or operation of the tax increment district,

including, but not limited to:

     (i) That portion of the costs reasonably related to the construction, alteration or expansion

of any facilities not located within the tax increment district that are required due to

improvements or activities within the tax increment district, including, but not limited to,

roadways, traffic signalization, easements, sewage treatment plants, water treatment plants or

other environmental protection devices, storm or sanitary sewer lines, water lines, electrical lines,

improvements to fire stations, and street signs;

     (ii) Costs of public safety and public school improvements made necessary by the

establishment of the tax increment district; and

     (iii) Costs of funding to mitigate any adverse impact of the tax increment district upon the

city or town and its constituents; and

     (3) Costs related to economic development, environmental improvements or employment

training associated with the tax increment district, including, but not limited to:

     (i) Economic development programs or events related to the tax increment district;

     (ii) Environmental improvement projects developed by the city or town related to the tax

increment district;

     (iii) The establishment of permanent economic development revolving loan funds,

investment funds and grants; and

     (iv) Services and equipment necessary for employment skills development and training,

including scholarships to in-state educational institutions for jobs created or retained in the tax

increment district.

     45-33.2-29. Benefit assessments.

     (a)(1) Notwithstanding any provision of the general laws, whenever a city or town

constructs, improves, extends, equips, rehabilitates, repairs, acquires or provides a grant for any

public improvements within a tax increment district or finances the cost of such public

improvements, the proportion of such cost or estimated cost of such public improvements and

financing thereof as determined by the city or town may be assessed by the city or town, as a

benefit assessment, in the manner prescribed by such city or town, upon the real property within

the tax increment district that is benefited by such public improvements. A city or town may

provide for the payment of such benefit assessments in annual installments, not exceeding thirty

(30) years, and may forgive such benefit assessments in any given year without causing the

remainder of installments of benefit assessments to be forgiven. Benefit assessments on real

property where buildings or structures are constructed or expanded after the initial benefit

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assessment may be assessed as if the new or expanded buildings or structures on such real

property had existed at the time of the original benefit assessment.

     (2) The benefit assessments shall be adopted and revised by the city or town at least

annually not more than sixty (60) days before the beginning of the fiscal year. If the benefit

assessments are assessed and levied prior to the acquisition or construction of the public

improvements, the amount of the benefit assessments may be adjusted to reflect the actual cost of

such public improvements, including all financing costs, once such public improvements are

complete, if the actual cost is greater than or less than the estimated costs.

     (b) Before estimating and making a benefit assessment under subsection (a) of this

section, a city or town shall hold at least one public hearing on its schedule of benefit assessments

or any revision thereof. Notice of such hearing shall be published at least ten (10) days before

such hearing in a newspaper having general circulation within the city or town. The notice shall

include:

     (1) The date, time and place of hearing;

     (2) The boundaries of the tax increment district by legal description;

     (3) A statement that all interested persons owning real estate or taxable property located

within the tax increment district will be given an opportunity to be heard at the hearing and an

opportunity to file objections to the amount of the assessment;

     (4) The maximum rate of assessments to be extended in any one year; and

     (5) A statement indicating that the proposed list of properties to be assessed and the

estimated assessments against those properties are available at the office of the city or town tax

assessor. The notice may include a maximum number of years the assessments will be levied. Not

later than the date of the publication, the city or town shall make available to any member of the

public, upon request, the proposed schedule of benefit assessments. A city or town may adopt

ordinances apportioning the value of improvements within a tax increment district according to a

formula that reflects actual benefits that accrue to the various properties because of the

development and maintenance.

     (c) A city or town may increase assessments or extend the maximum number of years the

assessments will be levied after notice and public hearing is held pursuant to subsection (b) of this

section.

     (d)(1) Benefit assessments made under this section shall be collected in the same manner

as municipal taxes. Municipalities are granted all the powers and privileges with respect thereto

as provided to municipalities in the general laws for the enforcement and collection of

assessments and tax liens, or as otherwise provided in §§ 45-33.2-22 through 45-33.2-29 of this

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chapter. Benefit assessments shall be due and payable at such times as are fixed by the city or

town, provided the city or town shall give notice of such due date not less than thirty (30) days

prior to such due date by publication in a newspaper of general circulation in the city or town and

by mailing such notice to the owners of the real property assessed at their last-known address. All

revenues from assessments under this section shall be paid into the appropriate tax increment

district master plan fund account established under § 45-33.2-27(c).

     (2) If any property owner fails to pay any assessment or part of an assessment on or

before the date on which such assessment or part of such assessment is due, a city or town has all

the authority and powers to collect the delinquent assessments vested in the city or town by law to

collect delinquent municipal taxes. Benefit assessments, if not paid when due, shall constitute a

lien upon the real property served and a charge against the owners thereof, which lien and charge

shall bear interest at the same rate as delinquent property taxes. Each such lien may be continued,

recorded and released in the manner provided for property tax liens and shall take precedence

over all other liens or encumbrances except a lien for property taxes of the city or town.

     45-33.2-30. Limitation of powers.

     The state pledges to and agrees with any person, firm, or corporation, or federal agency

subscribing to or acquiring the bonds to be issued under this chapter, that the state will not limit

or alter the rights vested in the authority until all bonds at any time issued, together with their

interest, are fully met and discharged. The state does further pledge to and agree with the United

States, and any other federal agency, that in the event that any federal agency constructs or

contributes any funds for the construction, extension, improvement, equipping, furnishing, or

enlargement of any project, or any portion of it, the state will not alter or limit this chapter in any

manner which would be inconsistent with the due performance of any agreements with the federal

agency; and cities and towns continue to have and may exercise all powers granted by this

chapter, so long as the powers are necessary or desirable for the carrying out of the purposes of

this chapter.

     SECTION 5. This act shall take effect on July 1, 2018.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES

***

     This act would amend provisions of the tax increment financing act in order to encourage

municipalities to use tax increment financing to facilitate economic development.

     This act would take effect on July 1, 2018.

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