Chapter 287

2003 -- S 0905 SUBSTITUTE A

Enacted 07/17/03

AN ACT

RELATING TO TAXATION -- SALES AND USE TAXES -- LIABILITY AND

COMPUTATION

Introduced By: Senators Alves, and Raptakis

Date Introduced: February 27, 2003

It is enacted by the General Assembly as follows:

SECTION 1. Section 44-18-30C of the General Laws in Chapter 44-18 entitled "Sales

and Use Taxes - Liability and Computation" is hereby amended to read as follows:

44-18-30C. Exemption from or stabilization of sales and use taxes for municipal

economic development zones -- West Warwick. -- (a) Findings. - The General Assembly makes

the following findings of fact:

(1) Various sections of several towns in the state, including, but not limited to, the town

of West Warwick, are deteriorated, blighted areas which have created very difficult challenges to

economic development;

(2) Several areas of the state are in a distressed financial condition as defined by section

45-13-12(b)(1) through (4) and cannot finance economic development projects on its own without

the participation of private enterprise;

(3) The general assembly has found that it is nearly impossible for private enterprise

alone to meet these challenges;

(4) In certain sections of financially distressed communities, the serious challenges of

economic development and/or redevelopment have not been met by private enterprise alone and

the impact is being felt throughout the community;

(5) Legislation enacted to encourage redevelopment of the deteriorated, blighted areas

through the formation of local redevelopment agencies has had very limited success;

(6) Various states, such as New Jersey, Pennsylvania and Michigan have had a great deal

of success in generating economic development by exercising the authority to exempt and/or

stabilize taxes;

(7) The state of Rhode Island has generated economic growth by redirecting and/or

exempting certain commercial and retail activity from the imposition of sales, use and income

taxes with recent examples being the Providence Place Mall, the Arts Districts in the cities of

Providence, Pawtucket and Westerly, and financial services and acquaculture industries;

(8) Most recently, municipalities in our state have had great success in attracting large

commercial development, including financial services, manufacturing, and major energy

facilities, due in large part to the authority to exempt and/or stabilize property, tangible and/or

inventory taxes;

(9) Attracting large non-residential developments or encouraging expansion of existing

commercial entities can be extremely important to municipalities, where the quality of public

education is largely dependent on the local tax base, thereby expanding the commercial tax base

and reducing reliance upon the residential tax base;

(10) The ability to attract this development and increase the non-residential tax base, in

turn, improves municipalities' ability to finance school systems, municipal services and

infrastructure, thereby improving the quality of life;

(11) In addition to increasing the local non-residential tax base, this development creates

construction jobs, permanent jobs, and spurs additional investment by private enterprises; and

(12) Providing authority to offer tax exemptions from, or to stabilize, the imposition of

sales and use taxes will attract and assist in expanding, revitalizing and redeveloping the tax base

in our municipalities, thereby providing long-term economic benefits and development.

(b) Exemption or stabilization of sales and use taxes imposed on sales from businesses

located in a municipal economic development zone. - (1) In order to attract new construction and

development in a municipal economic development zone (MED) as provided in this section, upon

the designation of such a zone as set forth in subsection (c) of this section, all businesses

engaging in qualifying sales and located in new construction in a MED zone (a MED zone

business) shall be exempt from the requirement to charge and collect fifty percent (50%) of the

current sales and use tax pursuant to sections 44-18-18 and 44-18-20 for a period of ten (10)

years. Sales and use taxes collected in a MED zone shall be returned to the same MED zone in

accordance with the provisions of this section. The ten (10) year exemption period for all MED

zone businesses shall begin to run from the latest to occur of: (1) the date that is three (3) years

from the effective date of ~~this legislation [June 12, 2002]~~ the January session 2003 amendments

or (2) the date that is two (2) years from the date upon which the city or town council designates

the MED zone for its municipality; or (3) the date the first MED zone business obtains a

certification of exemption as set forth in subdivision (c)(6) of this section.

(2) For purposes of this statute, "qualifying sales" for a MED zone business shall not

include gambling activities, or the retail sales of motor vehicles, furniture, home furnishings

including mattresses and oriental rugs, tobacco products, or packaged alcoholic beverages.

(3) Furthermore, "qualifying sales" shall be sales at which the point of sale is located

within the same MED zone and point of delivery is located within the same MED zone.

of a financially distressed community may designate in accordance with the provisions of this

section one MED zone in the municipality, provided that the municipality is: (i) a financially

distressed community as defined by section 45-13-12(b), using the criteria set forth in section 45-

13-12(b)(1) through (4); (ii) has a population less than fifty thousand (50,000) persons; and (iii)

the MED zone shall be a parcel of or contiguous parcels of land consisting in total of not less than

ten (10) acres, but not more than thirty (30) acres in the area served by adequate utilities and

transportation facilities.

(2) The city or town council of any financially distressed city or town, as set forth in

subdivision (1) of this subsection, in creating a MED zone, shall have the power and authority of

a redevelopment agency, as provided in sections 45-32-1 -- 45-32-50, to undertake the

redevelopment of a MED zone.

(3) The city or town council, in designating a MED zone, shall after public notice,

hearing and vote as provided by section 45-32-4, comply with the plan requirements of section

45-32-8 and shall be responsible for carrying on the plan. The city or town council in

implementing the MED zone plan shall have the power of eminent domain as set forth in section

45-32-24, and the provisions of sections 45-32-25 -- 45-32-41 shall apply to all such

condemnations.

(4) All sales and use taxes collected within a MED zone shall be reimbursed to the

municipality in which the MED zone is located or within one (1) mile of the MED zone

boundaries to mitigate MED zone impacts and may only be expended by the municipality to

implement the capital improvement component of the MED zone plan.

(5) The following area or portions of them of the town of West Warwick may be

designated as the town's municipal economic development zone by the town council of the town

of West Warwick after public notice, hearing and vote as provided in section 45-32-4:

The area bounded generally by ~~Legion Way~~ the East Coast Bike Path in the east,

Archambault and Gardner Avenue in the north, Payan Street to Curson Street, Curson Street to

McNiff, McNiff to Barnes Street, Barnes Street to Nowicki Street to East Street, East Street to

Blanchard Street, Blanchard Street to West Street in the west, West Street to Washington Street,

Washington Street to Nolan Street, Nolan Street to the East Coast Bike Path in the south,

~~McNiff, East and Blanchard Streets in the west, and Washington Street south of Nolan and West~~

~~Streets in the south,~~ all as more particularly described on the West Warwick municipal economic

development zone map on file with the town clerk.

(6) The tax administrator shall issue a certification of exemption to the MED zone

business at the time the business applies for its permit to make sales at retail and provides the tax

administrator with a MED zone business certificate issued by the town clerk stating that the

business is located in new construction in the MED zone. The duration of the certificate shall be

determined in accordance with subdivision (b)(1) of this section.

(7) No business shall be permitted to become a MED zone business or to receive a

certificate of exemption pursuant to subdivision (6) of this subsection by relocating from any area

within the state of Rhode Island but outside the MED zone to new construction within the MED

zone, unless the relocation results in the creation of new permanent employment positions that

increase the total employment of the business by not less than fifty percent (50%) of its average

total employment for the two (2) year period immediately preceding the year in which it applies

for its certificate of exemption. Any business that expands its operations by adding a new location

within the MED zone and then ceases to operate any of its locations within the state of Rhode

Island that existed prior to the establishment of the MED zone location shall immediately have its

certificate of exemption for the MED zone location revoked.

SECTION 2. This act shall take effect upon passage.

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LC02576/SUB A

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