Session of 1999
         
SENATE BILL No. 308
         
By Committee on Commerce
          
2-12
          
  9             AN  ACT concerning community development; creating tax credits for
10             private contributions to the financing thereof.
11      
12       Be it enacted by the Legislature of the State of Kansas:
13             Section  1. As used in this act:
14             (a) "Contribution" means the transfer of money, real estate or mar-
15       ketable securities to the Kansas infrastructure development board. The
16       value of a contribution of real estate shall be equal to the value of the
17       real estate as established by the lower of two independent appraisals con-
18       ducted at the expense of the contributor. The value of a real estate con-
19       tribution shall be decreased by any transactional costs associated with
20       transferring or liquidating the real property. The value of a contribution
21       of marketable securities shall be an amount equal to the cash value of the
22       securities at the time the securities are liquidated, decreased by any trans-
23       actional costs associated with transferring or liquidating the securities.
24       The board shall liquidate a contribution of marketable securities as
25       quickly as may be reasonable and shall not be liable for market value
26       fluctuations;
27             (b) "infrastructure development agency" means any municipality as
28       defined in K.S.A. 10-1101, and amendments thereto, a bi-state develop-
29       ment agency or any other governmental, quasi-governmental or quasi-
30       public entity created by state law or resolution and adopted by an infra-
31       structure development agency as herein described; and
32             (c) "qualified infrastructure project" means the purchase, construc-
33       tion, extension and improvement of real estate, buildings, structures or
34       facilities, whether presently existing or not, used or to be used for high-
35       ways, roads, bridges, water supply and distributions systems, mass trans-
36       portation facilities and equipment, telecommunications facilities, sewers
37       and sewage treatment systems, airports, railroads, reservoirs, dams and
38       waterways, acquisition of blighted real estate and any improvements
39       thereon, demolition of existing structures and preparation of sites in an-
40       ticipation of future development, public facilities and other improvements
41       provided by any infrastructure development agency, the fixtures, equip-
42       ment and machinery necessary to carry out such projects, any demolition
43       or relocation expenses associated with the project and any capital used to

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  1       promote or facilitate such projects.
  2             Sec.  2. (a) There is hereby established the Kansas infrastructure de-
  3       velopment board, hereinafter referred to as the board, consisting of nine
  4       members. Not more than five members shall be members of the same
  5       political party. The governor, subject to confirmation by the senate, shall
  6       appoint all board members and specify one member as chair. The initial
  7       nine members shall be appointed to a term of four years, except that four
  8       members of the first board shall be appointed to a term of two years. The
  9       governor shall designate the term of office of each member of the first
10       board. Two of the members appointed to two-year terms must be mem-
11       bers of different political parties. Upon expiration of a member's term of
12       office, the governor shall appoint a qualified successor. All such successors
13       shall serve a four-year term. Each member shall serve until a successor
14       is appointed. Whenever a vacancy occurs in the membership of the board
15       prior to the expiration of term of office, the governor shall appoint a
16       successor. No member of the board shall be an elective or appointed
17       official of state or local government. The board shall have at least two
18       members from each congressional district.
19             (b) The board shall organize annually at the first meeting subsequent
20       to June 30. Other meetings shall be as the board designates. Seven mem-
21       bers of the board shall constitute a quorum.
22             (c) Subject to appropriations, each member of the board shall receive
23       compensation, subsistence allowances, mileage and expenses pursuant to
24       K.S.A. 75-3223, and amendments thereto.
25             Sec.  3. (a) There is hereby established in the state treasury the Kan-
26       sas infrastructure development fund. Expenditures from the fund may be
27       made for the purposes specified in this act. All such expenditures shall
28       be made upon warrants of the director of accounts and reports issued
29       pursuant to vouchers approved by the chair of the Kansas infrastructure
30       development board or the chair's designee. All moneys credited to such
31       fund shall be administered and managed by the board and used for the
32       operations of the board in the performance of powers, duties and func-
33       tions prescribed by law including authorized grants.
34             (b) The board is authorized to accept funds from any lawful source,
35       including any private person, corporation, association, the federal gov-
36       ernment, or any instrumentality thereof, or from any subdivision govern-
37       ment of this state for the purpose of creating, improving or maintaining
38       the public infrastructure of the state through grants to infrastructure de-
39       velopment agencies as specified in this act.
40             Sec.  4. (a) There shall be allowed as a credit against the tax liability
41       imposed by the Kansas income tax act on the Kansas taxable income of a
42       taxpayer, against the tax liability imposed by K.S.A. 40-252, and amend-
43       ments thereto, on insurance companies, against the tax liability imposed

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  1       against every national banking association, state bank, savings and loan
  2       association pursuant to K.S.A. 79-1106 to 79-1116, inclusive, and amend-
  3       ments thereto in an amount equal to 50% of an approved contribution to
  4       the Kansas infrastructure development fund in the taxable year in which
  5       such investment is made and the four taxable years following such taxable
  6       year until the total amount of the credit is used. The amount by which
  7       that portion of the credit allowed by this section exceeds a contributor's
  8       or transferee's tax liability in any one taxable year may be carried forward
  9       until the total amount of the credit is used. Any portion of the credit
10       which has not been used by a tax credit holder within five years shall be
11       refunded. If the taxpayer is a corporation having an election in effect
12       under subchapter S of the federal internal revenue code or a partnership,
13       the credit provided by this section shall be claimed by the shareholders
14       of such corporation or the partners of such partnership in the same man-
15       ner as such shareholders or partners account for their proportionate
16       shares of the income or loss of the corporation or partnership.
17             (b) The secretary of revenue shall authorize not more than
18       $10,000,000 in tax credits per year on behalf of the Kansas infrastructure
19       development fund. The credits shall be allocated by the secretary for the
20       contributions in the order that completed applications are approved by
21       the Kansas infrastructure development board. A contributor or a subse-
22       quent transferee may transfer such credit to another for value by notifying
23       the Kansas infrastructure development board of the transfer within 10
24       days of any such transfer in a manner established by the board. Notwith-
25       standing the provisions of subsection (c), the transferee to which the
26       credit has been transferred must claim the credit within 10 years of the
27       taxable year in which the original contribution was made. The board shall
28       forward to the secretary the notice of transfer within 30 days of receipt.
29       Tax credit holders may sell, assign, exchange or convey tax credits if the
30       transfer is for not less than 75% or more than 100% of the face value of
31       the credits. No contributor may claim a credit and transfer a credit in the
32       same taxable year. Any payment received for tax credits is taxable income
33       of the party transferring the credit and any excess between value of the
34       credit and amount paid is taxable income to the transferee. Tax credit
35       shall not apply to any fees or charges paid by applicants or deducted from
36       contributions.
37             (c) The provisions of this section, and amendments thereto, shall be
38       applicable to contributions made in any taxable year commencing after
39       December 31, 1999, and prior to January 1, 2005.
40             Sec.  5. The Kansas infrastructure development board shall carry out
41       the following duties and responsibilities:
42             (a) Administer and manage the infrastructure development fund for
43       the purpose of providing grants to fund qualified infrastructure projects

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  1       through infrastructure development agencies;
  2             (b) evaluate and approve grant proposals from infrastructure devel-
  3       opment agencies in accordance with the criteria established in this act;
  4             (c) cooperate with the secretary of revenue in the approval and ad-
  5       ministration of applications to make contributions to the Kansas infra-
  6       structure development fund. The board may approve or reject any pro-
  7       posed contribution; and
  8             (d) adopt rules and regulations in accordance with K.S.A. 77-415 et
  9       seq., and amendments thereto to effectuate the purposes of this act.
10             Sec.  6. (a) The Kansas infrastructure development board shall ap-
11       prove grant applications to fund qualified infrastructure projects submit-
12       ted by infrastructure development agencies. The board shall only evaluate
13       and approve grants submitted by infrastructure development agencies in
14       a form approved by the board. The grant application process shall be
15       performed in the manner specified by the board. The board may require
16       supporting documentation for any requirements as the board deems
17       necessary.
18             (b) In evaluating and approving grant applications, the board shall
19       consider the following criteria:
20             (1) Whether the grant will result in a clearly definable benefit to the
21       state;
22             (2) whether the definable benefit to the state will be commensurate
23       with or greater than the amount of the tax credits to be issued on behalf
24       of the fund;
25             (3) whether the grant will duplicate other public programs or efforts
26       available to assist in financing the project, although it may augment such
27       efforts if appropriate;
28             (4) whether the grant will have a material impact upon a project's
29       decision to remain, expand, or locate within the state;
30             (5) whether the grant will have a material impact upon the retention
31       or creation of jobs within the state;
32             (6) whether the grant will enhance the tax base of the state;
33             (7) whether the grant and any associated contributions will unduly
34       increase the value of property owned or controlled by an associated con-
35       tributor. Other than tax credits conferred, an associated contributor shall
36       not benefit directly or indirectly from the proposed grant on a greater
37       basis than the general public unless, in the sole discretion of the board,
38       the contributor demonstrates that use of the contribution is based on fair
39       market conditions and is the product of a good faith agreement between
40       the grant applicant and the contributor;
41             (8) whether granting of tax credits on behalf of the fund will impose
42       a financial hardship upon the general revenues of the state;
43             (9) whether granting of tax credits on behalf of the fund will impose

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  1       a financial hardship upon the tax revenues otherwise received by the
  2       locality and its political subdivisions; and
  3             (10) whether the grant will leverage other sources of income to sup-
  4       port the project and whether other local public entities are contributing
  5       toward the costs of the project.
  6             (c) The board may approve all or a part of any grant application. The
  7       board may adopt additional evaluation criteria as necessary.
  8             (d) Members of the board shall be subject to all state governmental
  9       ethics laws as provided in K.S.A. 46-215 et seq., and amendments thereto.
10       No board member shall evaluate or vote on a project which may reason-
11       ably be expected to benefit that board member more than any member
12       of the public.
13        Sec.  7. This act shall take effect and be in force from and after its
14       publication in the statute book.