AB77 - Revises provisions governing tax abatements for certain businesses. (BDR 32-282)

A.B. 77 - *AB77* ASSEMBLY BILL NO. 77–COMMITTEE ON REVENUE (ON BEHALF OF THE OFFICE OF ECONOMIC DEVELOPMENT IN THE OFFICE OF THE GOVERNOR) PREFILED NOVEMBER 20, 2024 ____________ Referred to Committee on Revenue SUMMARY—Revises provisions governing tax abatements for certain businesses. (BDR 32-282) FISCAL NOTE: Effect on Local Government: No. Effect on the State: No. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to taxation; revising criteria governing the approval of an application for certain partial abatements of taxes; authorizing the Office of Economic Development to deny an application for certain partial abatements of taxes if the Office determines that the denial of an application is in the best interests of the State; authorizing businesses that recycle certain materials or produce certain fuels from recycled materials to apply to the Office for a partial abatement of certain taxes on real property; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law authorizes a person who intends to locate or expand a business in 1 this State to apply to the Office of Economic Development for a partial abatement 2 of certain property taxes, business taxes and sales and use taxes. The Office is 3 required to approve an application for such a partial abatement if the Office 4 determines that the business applying for the partial abatement satisfies certain 5 criteria. (NRS 360.750) Section 2 of this bill revises one of the eligibility criteria 6 by requiring a business that is anticipated to have at least 500 full-time employees 7 on the payroll of the business within a certain period, rather than 50 such 8 employees, to comply with the requirement to have a policy for paid family and 9 medical leave for employees. Section 2 also removes a prohibition on the approval 10 of a partial abatement for an applicant who intends to expand a business and who 11 has already received a partial abatement for expanding that business, thereby 12 – 2 – - *AB77* authorizing a business to obtain a partial abatement for multiple expansions of a 13 business. (NRS 360.750) 14 Another eligibility criteria for a business to qualify for a partial abatement is 15 that the business offers primary jobs, which are jobs at a business location in this 16 State where at least half of the revenue generated at that business location is 17 derived from exports to locations outside of this State. (NRS 360.750; NAC 18 231.363) Section 2 revises this determination by authorizing the approval of a 19 partial abatement for a business that: (1) offers import substitution jobs, which are 20 generally defined as jobs at a business location in this State where certain goods or 21 services are manufactured, produced or sold in this State and reduce the amount of 22 such goods or services imported into this State from outside this State; or (2) is a 23 provider of specialty health care or a provider of health care in a rural area, except 24 that the amount of the partial abatement is greater for such providers who are 25 providers of services under Medicaid. Sections 1, 5 and 6 of this bill similarly 26 expand the eligibility criteria for certain partial abatements of taxes to authorize a 27 business to obtain such a partial abatement by offering import substitution jobs. 28 Sections 7, 8 and 9 of this bill revise reporting requirements relating to businesses 29 awarded partial abatements of taxes to include, in addition to information on 30 primary jobs, information on the number of import substitution jobs, jobs with a 31 provider of specialty health care and jobs with a provider of health care in a rural 32 area. Section 10 of this bill expands eligibility for certain grants from the Office for 33 workforce training programs to include programs providing training for import 34 substitution jobs and jobs in specialty health care or health care in a rural area. 35 Sections 2, 3 and 4 of this bill authorize the Office to deny an application for a 36 partial abatement for a new or expanding business if the Office determines that 37 denying the application is in the best interests of the State. 38 Existing law authorizes the Office to approve a partial abatement from the taxes 39 imposed on real property for a business that: (1) either engages in the primary trade 40 of preparing, fabricating, manufacturing or otherwise processing raw material or an 41 intermediate product using a certain percentage of recycled material or includes as 42 a primary component a facility for the generation of electricity from recycled 43 material; and (2) has as its primary purpose the conservation of energy or the 44 substitution of other sources of energy for fossil sources of energy. (NRS 45 701A.210) Section 11 of this bill authorizes the Office to grant such a partial 46 abatement of property taxes to a business that: (1) includes as a primary component 47 a facility for the production of biofuels, biomass or other primary fuels from 48 recycled material for use in the production of energy; or (2) primarily engages in 49 the recycling or repurposing of materials that were used to produce or store 50 renewable energy, including, without limitation, materials used in solar panels, or 51 waste materials resulting from the extraction of minerals. 52 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 360 of NRS is hereby amended by adding 1 thereto a new section to read as follows: 2 “Import substitution job” has the meaning ascribed to it in 3 NRS 360.750. 4 Sec. 2. NRS 360.750 is hereby amended to read as follows: 5 360.750 1. A person who intends to locate or expand a 6 business in this State may apply to the Office of Economic 7 – 3 – - *AB77* Development pursuant to this section for a partial abatement of one 1 or more of the taxes imposed on the: 2 (a) New business pursuant to chapter 361, 363B or 374 of NRS. 3 (b) Expanded business pursuant to chapter 361 or 363B of NRS 4 or a partial abatement of the local sales and use taxes imposed on 5 the expanded business. As used in this paragraph, “local sales and 6 use taxes” means the taxes imposed on the gross receipts of any 7 retailer from the sale of tangible personal property sold at retail, or 8 stored, used or otherwise consumed, in the political subdivision in 9 which the business is to be located or expanded, except the taxes 10 imposed by the Sales and Use Tax Act and the Local School 11 Support Tax Law. 12 2. The Office of Economic Development shall approve an 13 application for a partial abatement pursuant to this section if the 14 Office makes the following determinations: 15 (a) The business [offers] : 16 (1) Offers primary jobs or import substitution jobs or is a 17 provider of specialty health care or a provider of health care in a 18 rural area; and [is] 19 (2) Is consistent with: 20 [(1)] (I) The State Plan for Economic Development 21 developed by the Executive Director of the Office of Economic 22 Development pursuant to subsection 2 of NRS 231.053; and 23 [(2)] (II) Any guidelines adopted by the Executive Director 24 of the Office to implement the State Plan for Economic 25 Development. 26 (b) Not later than 1 year after the date on which the application 27 was received by the Office, the applicant has executed an agreement 28 with the Office which must: 29 (1) Comply with the requirements of NRS 360.755; 30 (2) State the date on which the abatement becomes effective, 31 as agreed to by the applicant and the Office, which must not be 32 earlier than the date on which the Office received the application 33 and not later than 1 year after the date on which the Office approves 34 the application; 35 (3) State that the business will, after the date on which the 36 abatement becomes effective, continue in operation in this State for 37 a period specified by the Office, which must be at least 5 years, and 38 will continue to meet the eligibility requirements set forth in this 39 subsection; 40 (4) State that the business will [offer] : 41 (I) Offer primary jobs [;] or import substitution jobs; or 42 (II) Be a provider of specialty health care or a provider 43 of health care in a rural area; and 44 – 4 – - *AB77* (5) Bind the successors in interest of the business for the 1 specified period. 2 (c) The business is registered pursuant to the laws of this State 3 or the applicant commits to obtain a valid business license and all 4 other permits required by the county, city or town in which the 5 business operates. 6 (d) Except as otherwise provided in subsection 4, 5 or 6, the 7 average hourly wage that will be paid by the business to its new 8 employees in this State is at least 100 percent of the average 9 statewide hourly wage as established by the Employment Security 10 Division of the Department of Employment, Training and 11 Rehabilitation on July 1 of each fiscal year. 12 (e) The business will, by the eighth calendar quarter following 13 the calendar quarter in which the abatement becomes effective, offer 14 a health insurance plan for all employees that includes an option for 15 health insurance coverage for dependents of the employees, and the 16 health care benefits the business offers to its employees in this State 17 will meet the minimum requirements for health care benefits 18 established by the Office. 19 (f) Except as otherwise provided in this subsection and NRS 20 361.0687, if the business is a new business in a county whose 21 population is 100,000 or more or a city whose population is 60,000 22 or more, the business meets at least one of the following 23 requirements: 24 (1) The business will have 50 or more full-time employees 25 on the payroll of the business by the eighth calendar quarter 26 following the calendar quarter in which the abatement becomes 27 effective who will be employed at the location of the business in 28 that county or city until at least the date which is 5 years after the 29 date on which the abatement becomes effective. 30 (2) Establishing the business will require the business to 31 make, not later than the date which is 2 years after the date on which 32 the abatement becomes effective, a capital investment of at least 33 $1,000,000 in this State in capital assets that will be retained at the 34 location of the business in that county or city until at least the date 35 which is 5 years after the date on which the abatement becomes 36 effective. 37 (g) Except as otherwise provided in NRS 361.0687, if the 38 business is a new business in a county whose population is less than 39 100,000, in an area of a county whose population is 100,000 or more 40 that is located within the geographic boundaries of an area that is 41 designated as rural by the United States Department of Agriculture 42 and at least 20 miles outside of the geographic boundaries of an area 43 designated as urban by the United States Department of Agriculture, 44 – 5 – - *AB77* or in a city whose population is less than 60,000, the business meets 1 at least one of the following requirements: 2 (1) The business will have 10 or more full-time employees 3 on the payroll of the business by the eighth calendar quarter 4 following the calendar quarter in which the abatement becomes 5 effective who will be employed at the location of the business in 6 that county or city until at least the date which is 5 years after the 7 date on which the abatement becomes effective. 8 (2) Establishing the business will require the business to 9 make, not later than the date which is 2 years after the date on which 10 the abatement becomes effective, a capital investment of at least 11 $250,000 in this State in capital assets that will be retained at the 12 location of the business in that county or city until at least the date 13 which is 5 years after the date on which the abatement becomes 14 effective. 15 (h) If the business is an existing business, the business meets at 16 least one of the following requirements: 17 (1) For a business in: 18 (I) Except as otherwise provided in sub-subparagraph (II), 19 a county whose population is 100,000 or more or a city whose 20 population is 60,000 or more, the business will, by the eighth 21 calendar quarter following the calendar quarter in which the 22 abatement becomes effective, increase the number of employees on 23 its payroll in that county or city by 10 percent more than it 24 employed in the fiscal year immediately preceding the fiscal year in 25 which the abatement becomes effective or by twenty-five 26 employees, whichever is greater, who will be employed at the 27 location of the business in that county or city until at least the date 28 which is 5 years after the date on which the abatement becomes 29 effective; or 30 (II) A county whose population is less than 100,000, an 31 area of a county whose population is 100,000 or more that is located 32 within the geographic boundaries of an area that is designated as 33 rural by the United States Department of Agriculture and at least 20 34 miles outside of the geographic boundaries of an area designated as 35 urban by the United States Department of Agriculture, or a city 36 whose population is less than 60,000, the business will, by the 37 eighth calendar quarter following the calendar quarter in which the 38 abatement becomes effective, increase the number of employees on 39 its payroll in that county or city by 10 percent more than it 40 employed in the fiscal year immediately preceding the fiscal year in 41 which the abatement becomes effective or by six employees, 42 whichever is greater, who will be employed at the location of the 43 business in that county or city until at least the date which is 5 years 44 after the date on which the abatement becomes effective. 45 – 6 – - *AB77* (2) The business will expand by making a capital investment 1 in this State, not later than the date which is 2 years after the date on 2 which the abatement becomes effective, in an amount equal to at 3 least 20 percent of the value of the tangible property possessed by 4 the business in the fiscal year immediately preceding the fiscal year 5 in which the abatement becomes effective, and the capital 6 investment will be in c [Text truncated for display. 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