SB364 - Revises provisions relating to economic development. (BDR 32-799)

EXEMPT (Reprinted with amendments adopted on April 21, 2025) FIRST REPRINT S.B. 364 - *SB364_R1* SENATE BILL NO. 364–SENATOR CRUZ-CRAWFORD MARCH 17, 2025 ____________ Referred to Committee on Revenue and Economic Development SUMMARY—Revises provisions relating to economic development. (BDR 32-799) FISCAL NOTE: Effect on Local Government: May have Fiscal Impact. Effect on the State: Yes. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to taxation; authorizing certain qualified businesses in this State to apply to the Office of Economic Development for a partial abatement from certain taxes imposed in connection with the development of railroad tracks, railroad spurs and other railroad-related infrastructure; prescribing certain requirements and conditions relating to the partial abatement; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law authorizes the Office of Economic Development to grant a partial 1 abatement of property taxes, business taxes or sales and use taxes to a business that 2 locates or expands in this State and meets certain qualifications for the partial 3 abatement. (NRS 274.310, 274.320, 274.330, 360.750, 360.753, 360.754, 4 701A.210) Section 1 of this bill authorizes the owner of a business or a person who 5 intends to locate or expand a business in this State to apply to the Office for a 6 partial abatement of property taxes or local sales and use taxes, or an abatement of 7 modified business taxes, imposed with respect to the construction, operation, 8 manufacture, reconstruction, maintaining, repairing or laying of railroad tracks, 9 railroad spurs and other physical infrastructure in this State necessary to provide 10 rail service. Section 1 requires the Office to approve a partial abatement for a 11 period of not more than 10 years if the Office makes certain determinations 12 regarding the applicant, including that the applicant: (1) has entered into an 13 agreement with the Office addressing certain matters; (2) will provide certain 14 wages and other benefits to the applicant’s employees; (3) will increase the number 15 of full-time employees employed by the applicant in this State; and (4) will make 16 certain new capital investments or maintain and possess tangible personal property 17 in this State which exceeds a specified value. 18 – 2 – - *SB364_R1* Section 2 of this bill requires the Department of Taxation to, during certain 19 investigations of a person claiming an abatement of taxes pursuant to section 1, 20 investigate whether the person meets the requirements for eligibility for the 21 abatement. Section 3 of this bill requires the agreement between a business granted 22 an abatement pursuant to section 1 and the Office to include an agreement: (1) to 23 allow the Department of Taxation to audit the business in order to assess whether 24 the business is in full compliance of the requirements for the abatement; and (2) to 25 the public disclosure of an audit report, under certain conditions. 26 Section 4 of this bill requires that the Office take any action on an application 27 for a partial abatement of taxes pursuant to section 1 at a public meeting conducted 28 for that purpose after providing notice of the public meeting not less than 30 days 29 before the meeting. Section 5 of this bill requires the Office to issue a document to 30 a business whose application for a partial abatement of sales and use taxes has been 31 approved that: (1) can be presented to retailers who are responsible for collecting 32 sales and use taxes; and (2) clearly states the rate of sales and use tax that the 33 business is required to pay to the retailer. 34 Existing law requires the Office to biennially prepare and submit to the 35 Legislature a report containing certain information relating to the abatements from 36 taxation that the Office has approved. (NRS 231.0685) Section 7 of this bill 37 requires that information relating to partial abatements approved by the Office 38 pursuant to section 1 be included in such reports. 39 Existing law enacts the Nevada New Markets Jobs Act, which entitles certain 40 businesses to receive credit against certain taxes in exchange for investing in a 41 qualified community development entity, which in turn must make certain capital 42 or equity investments in, or loans to, qualified active low-income community 43 businesses. (Chapter 231A of NRS) Existing law provides that a business that has 44 received certain abatements from taxation from the Office is not a “qualified active 45 low-income community business” for purposes of the Nevada New Markets Jobs 46 Act, unless the business has waived the abatement and meets certain other 47 qualifications. (NRS 231A.155, 231A.170) Sections 8 and 9 of this bill provide 48 that a business that has received a partial tax abatement pursuant to section 1 is not 49 a qualified active low-income community business, unless the business waives the 50 abatement and meets certain other qualifications. 51 Existing law requires the Office to periodically conduct an analysis of the 52 relative costs and benefits of each incentive for economic development, including 53 any abatement from taxes, approved by the Office and in effect during the 54 immediately preceding 2 fiscal years. (NRS 353.207) Section 10 of this bill 55 requires the Office to perform such an analysis for the partial abatements approved 56 pursuant to section 1. 57 Section 12 of this bill provides that the provisions of sections 5-11 of this bill 58 expire by limitation on June 30, 2045, to comply with the requirement of the 59 Nevada Constitution that the Legislature must provide a specific expiration date for 60 certain tax exemptions. (Nev. Const. Art. 10, § 6) Accordingly, section 6 of this bill 61 exempts section 1 from provisions of law providing that any legislation which 62 requires or authorizes the Office to approve any abatement of taxes expires 10 years 63 after the effective date of such legislation. (NRS 218D.355) 64 – 3 – - *SB364_R1* 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 1. An owner of a business or a person who intends to locate 3 or expand a business in this State may apply to the Office of 4 Economic Development pursuant to this section for a partial 5 abatement of one or more of: 6 (a) The property taxes imposed on personal property used to 7 construct, operate, manufacture, reconstruct, maintain, repair or 8 lay railroad tracks, railroad spurs and other physical 9 infrastructure in this State necessary to provide rail service or 10 qualifying railroad real property; 11 (b) The local sales and use taxes imposed on the purchase of 12 tangible personal property used to construct, operate, 13 manufacture, reconstruct, maintain, repair or lay railroad tracks, 14 railroad spurs and other physical infrastructure in this State 15 necessary to provide rail service; or 16 (c) The taxes imposed by chapter 363B of NRS on the wages 17 paid by an employer to full-time employees who construct, operate, 18 manufacture, reconstruct, maintain, repair or lay railroad tracks, 19 railroad spurs and other physical infrastructure in this State 20 necessary to provide rail service. 21 2. Notwithstanding the provisions of any law to the contrary 22 and except as otherwise provided in subsection 3, the Office of 23 Economic Development shall approve an application for a partial 24 abatement if the Office makes the following determinations: 25 (a) Not later than 1 year after the date on which the 26 application was received by the Office, the applicant has executed 27 an agreement with the Office which: 28 (1) Complies with the requirements of NRS 360.755; 29 (2) States the date on which the partial abatement becomes 30 effective, as agreed to by the applicant and the Office, which must 31 be not earlier than the date on which the Office received the 32 application and not later than 1 year after the date on which the 33 Office approves the application; 34 (3) States that the business will, after the date on which a 35 certificate of eligibility for the partial abatement is issued pursuant 36 to subsection 4, continue in operation in this State for a period 37 specified by the Office, which must be not less than 5 years, and 38 will continue to meet the eligibility requirements set forth in this 39 subsection; and 40 (4) Binds any successor in interest of the applicant for the 41 specified period; 42 – 4 – - *SB364_R1* (b) The business is registered pursuant to the laws of this State 1 or the applicant commits to obtaining a valid business license and 2 all other permits required by the county, city or town in which the 3 business operates; 4 (c) The average hourly wage that will be paid by the business 5 to its employees in this State during the period of partial 6 abatement is not less than 100 percent of the average statewide 7 hourly wage as established by the Employment Security Division 8 of the Department of Employment, Training and Rehabilitation on 9 July 1 of each fiscal year; 10 (d) The business will, by the eighth calendar quarter following 11 the calendar quarter in which the partial abatement becomes 12 effective, offer a health insurance plan for all employees that 13 includes an option for health insurance coverage for dependents 14 of the employees, and the health care benefits the business offers 15 to its employees in this State will meet the minimum requirements 16 for health care benefits established by the Office; 17 (e) If the business is: 18 (1) A new business, it will have 10 or more full-time 19 employees in this State on the payroll of the business within 1 year 20 after receiving its certificate of eligibility for a partial abatement; 21 or 22 (2) An existing business, it will increase its number of full- 23 time employees in this State on the payroll of the business by 10 24 percent or six employees, whichever is greater, within 1 year after 25 receiving its certificate of eligibility for a partial abatement; 26 (f) The business meets at least one of the following 27 requirements: 28 (1) The business will make a new capital investment of at 29 least $250,000 in this State within 1 year after receiving its 30 certificate of eligibility for a partial abatement; and 31 (2) The business will maintain and possess in this State 32 tangible personal property having a value of not less than 33 $5,000,000 during the period of partial abatement; and 34 (g) If the application is for the partial abatement of the taxes 35 imposed by the Local School Support Tax Law, the application 36 has been approved by the vote of at least two-thirds of the 37 members of the Board of Economic Development created by 38 NRS 231.033. 39 3. The Office of Economic Development: 40 (a) Shall approve or deny an application submitted pursuant to 41 this section and notify the applicant of its decision not later than 42 100 days after receiving the application. 43 (b) Must not: 44 – 5 – - *SB364_R1* (1) Consider an application for a partial abatement 1 submitted pursuant to this section unless the Office has requested 2 a letter of acknowledgment of the request for the partial abatement 3 from any affected county, school district, city or town and has 4 complied with the requirements of NRS 360.757; or 5 (2) Approve a partial abatement for any applicant for a 6 period of more than 10 years. 7 4. If the Office of Economic Development approves an 8 application for a partial abatement pursuant to this section, the 9 Office shall immediately forward a certificate of eligibility for the 10 partial abatement to: 11 (a) The Department; 12 (b) The Nevada Tax Commission; and 13 (c) If the partial abatement is from property taxes imposed 14 pursuant to chapter 361 of NRS, the appropriate county treasurer. 15 5. An applicant for a partial abatement pursuant to this 16 section or an existing business whose partial abatement is in effect 17 shall, upon the request of the Executive Director of the Office of 18 Economic Development, furnish the Executive Director with 19 copies of all records necessary to verify that the applicant meets 20 the requirements of subsection 2. 21 6. If an applicant for a partial abatement pursuant to this 22 section fails to execute the agreement described in paragraph (a) 23 of subsection 2 within 1 year after the date on which the 24 application was received by the Office, the applicant shall not be 25 approved for a partial abatement pursuant to this section unless 26 the applicant submits a new application. 27 7. If a business whose partial abatement has been approved 28 pursuant to this section and whose partial abatement is in effect 29 ceases: 30 (a) To meet the requirements set forth in subsection 2; or 31 (b) Operation before the time specified in the agreement 32 described in paragraph (a) of subsection 2, 33  the business shall repay to the Department or, if the partial 34 abatement was from property taxes, to the appropriate county 35 treasurer, the amount of the partial abatement that was allowed 36 pursuant to this section before the failure of the business to 37 comply, unless the Nevada Tax Commission determines that the 38 business has substantially complied with the requirements of this 39 section. Except as otherwise provided in NRS 360.232 and 40 360.320, the business shall, in addition to the amount of the 41 partial abatement required to be repaid pursuant to this 42 subsection, pay interest on the amount due at the rate most 43 recently established pursuant to NRS 99.040 for each month, or 44 portion thereof, from the last day of the month following the 45 – 6 – - *SB364_R1* period for which the payment would have been made had the 1 partial abatement not been approved until the date of payment of 2 the tax. 3 8. The Office of Economic Development may adopt such 4 regulations as the Office determines to be necessary to carry out 5 the provisions of this section. 6 9. The Nevada Tax Commission may adopt such regulations 7 as the Commission determines are necessary to carry out the 8 provisio [Text truncated for display. Full text available on LegiScan.]