Senate Bill 2901

AN ACT TO AMEND SECTION 37-7-485, MISSISSIPPI CODE OF 1972, TO PROVIDE AN INCOME TAX CREDIT FOR THE COST OF REHABILITATION, RESTORATION, CONSTRUCTION, DEVELOPMENT OR REDEVELOPMENT OF SURPLUS SCHOOL BUILDINGS AND CERTAIN OTHER PROPERTY OR FACILITIES CURRENTLY OWNED BY, OR ON BEHALF OF OR FOR THE BENEFIT OF, A POLITICAL SUBDIVISION, MUNICIPALITY, COUNTY, OR ANY JUNIOR OR COMMUNITY COLLEGE FOR USE AS HOUSING, ASSISTED LIVING, RETAIL MANUFACTURING, DISTRIBUTION, WHOLESALING OR ANY OTHER BUSINESS THAT WILL CREATE AT LEAST FIVE NEW JOBS AND CAUSE THE PROPERTY TO BE ADDED TO THE AD VALOREM TAX ROLLS AS ELIGIBLE PROPERTY; TO AUTHORIZE SUCH CREDITS TO BE TRANSFERRED OR SOLD; TO PROVIDE AN INCOME TAX CREDIT TO BE USED AS A SUBSIDY FOR THE RENT OF PUBLIC SCHOOLTEACHERS WHO ARE TENANTS IN SUCH PROPERTY; TO AUTHORIZE THE DEPARTMENT OF REVENUE TO ESTABLISH FEES FOR SERVICES UNDER THIS REDEVELOPMENT PROGRAM AND TO ESTABLISH A SPECIAL FUND THEREFOR; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 37-7-485, Mississippi Code of 1972, is amended as follows:

37-7-485. (1) This section shall be referred to as the "School Property Development Act of 2005." It is the intent of the Legislature that this section shall provide school boards with an alternative optional method of disposal of surplus school property that may generate greater returns to the district than a public disposal sale, or to promote or stimulate economic development within the school district or to promote, stabilize or enhance property and tax values within the school district.

(2) The school board of any school district shall be authorized and empowered, in its discretion, to sell, convey or exchange a partial interest, undivided interest or any other interest in real property (other than sixteenth section public school trust land), in whole or in part, for a nonoperational interest in any proposed development of the property, including ownership of shares of a domestic corporation or a membership interest in a limited liability company or a limited partnership interest, any of which is organized for the operation of any project, development or activity that, in the discretion of the school board, will have the potential for fostering economic development activities, increasing property values, increasing student development or enhancing public safety. The school board may contract with any other governmental entity, university or community college, corporation, person or other legal entity for the development, design, construction, financing, ownership or operation of any project, development or activity and may issue notes, leases, bonds or other written obligations to finance such activities. The school board may pledge any revenues or taxes it is to receive from such sale, conveyance or exchange, including any shares of a corporation or membership interest in a limited liability company or limited partnership interest under this subsection or under Sections 37-7-471 through 37-7-483, to secure the repayment of any notes, leases (excluding leases of sixteenth section public school trust land), bonds or other written obligations of the district issued under any provision of state law. Any such pledge of revenues or other monies shall be valid and binding from the date the pledge is made; such revenues or other monies so pledged and thereafter received by the school district shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the school district irrespective of whether such parties have notice thereof. Neither the resolutions, contracts or any other instrument by which a pledge is created need be recorded. Any debt secured in whole or in part by a pledge of such revenues or other monies shall not be subject to or included in any debt limitation imposed on the issuance of such debt. This subsection (2) shall not be construed to apply to sixteenth section public school trust land.

(3) The school board shall use sound business practices when executing exchanges as provided in this section. The school board may utilize the services of the Mississippi Development Authority, the local planning and development district or the Board of Trustees of State Institutions of Higher Learning when executing exchanges as provided in this section. The local school board shall require, in any project exceeding Two Hundred Thousand Dollars ($200,000.00) that the party with whom the school board is contracting shall provide the following information, at a minimum:

(a) A two-year business plan (which shall include pro forma balance sheets, income statements and monthly cash flow statements);

(b) Financial statements and tax returns for the three (3) years immediately prior to the date the contract is formed;

(d) Data supporting the expertise of the entity's principals;

(e) A cost benefit analysis of the project performed by the Mississippi Development Authority, a state institution of higher learning or other entity selected by the local school board; and

(f) Any other information required by the local school board.

This subsection (3) shall not be construed to apply to sixteenth section public school trust land.

(4) The local school board shall make public record any final and signed contract created under this section.

(5) No person involved in any economic development project entered into by a school board under the provisions of this section shall be related by consanguinity or affinity within the third degree to any member of the school board or the superintendent or any assistant superintendent of the school district, nor shall any such person have an interest in any business or have an economic relationship with any member of the school board or the superintendent or any assistant superintendent of the school district.

(6) No person, or any agent, subsidiary or parent corporation or firm owned in whole or in part by the person shall be eligible to bid or otherwise participate in the construction, contracting, or subcontracting on any project or part thereof for which the person has been hired to perform construction program management services. Any contract for public construction that violates this provision shall be void and against the public policy of the state. For purposes of this subsection, the term "construction program management services" means a set of management and technical services rendered by a person or firm to a public sector building owner during the predesign, design, construction, or post-construction phases of new construction, demolition, alteration, repair, or renovation projects. These services include any one or more of the following: project planning, budgeting, scheduling, coordination, design management, construction administration, or facility occupancy actions, but shall not include any component of the actual construction work. The term does not include the services performed by the general contractor who is engaged to perform the construction work, or services customarily performed by licensed architects or registered engineers.

(7) This section shall be supplemental and additional to any powers conferred by other laws on school districts. However, this section shall not grant any authority to a school board to issue debt in any amount that is not otherwise expressly provided for by law, and shall not grant any authority to impose, levy or collect any tax that is not otherwise expressly provided for by law.

(8) If a school board exercises its option to enter into a development agreement or other contract under this section or to transfer any property or interest therein to a third party for purposes of future development, the following conditions shall apply:

(a) The board shall have the express authority to retain a deed of trust or such other security interest in the property in an amount equal at least to the value of the property at the time of such transfer, less any consideration paid by the developer or other parties;

(b) The liability of the school board and the school district under any such development agreement shall be limited to the value of any retained property interest in the development agreement or the property that is the subject of the development agreement. Neither the school board nor the district shall be liable to any party nor shall it indemnify or hold harmless any party for any liabilities, obligations, losses, damages, penalties, settlements, claims, actions, suits, proceedings or judgments of any kind and nature, costs, expenses, or attorney's fees incurred by such party or parties for any act or action arising out of, or in connection with any development agreement entered into by the school board, other than the value of the retained ownership interest in the property that was conveyed under such development agreement.

(9) Before entering into any transaction as provided in this section, the school board members shall certify that they are in compliance with Section 25-4-25 regarding filings of statements of economic interest with the Mississippi Ethics Commission and that they will receive no direct or indirect pecuniary benefit as a result of the transaction or be in violation of the provisions of Section 25-4-105 regarding the improper use of official position.

(10) [Deleted]

(11) Any property developed by a school district under this section shall be deemed to be for "school purposes" or for "educational purposes."

(12) (a) As used in this subsection:

(i) "Eligible property" means a school building, other school facility or other real property that has been declared as surplus property by a school district under Section 37-7-451 et seq., 37-7-471 et seq., 37-7-485 et seq. or any other sections of the Mississippi Code of 1972. Eligible property shall also mean any former school or other building or facility currently owned by, or on behalf of or for the benefit of, a political subdivision, municipality, county or agency or redevelopment authority of any political subdivision, municipality or county or any junior or community college.

(ii) "Eligible project" means the rehabilitation, restoration, construction, development or redevelopment of eligible property for use as housing, assisted living, retail, manufacturing, distribution, wholesaling or any other business operation that will create at least five (5) new jobs and cause the eligible property to be added to the ad valorem tax roll as taxable property for purposes of local ad valorem taxes.

(iii) "Eligible costs" means all costs and expenses incurred by a taxpayer in completing an eligible project.

(b) Any taxpayer owning, leasing or otherwise having an interest in all or a portion of eligible property and incurring eligible costs in connection with an eligible project shall be entitled to a credit against Mississippi income taxes in an amount equal to twenty-five percent (25%) of the total costs and expenses of the eligible project incurred after January 1, 2015. Where the rehabilitation, restoration, construction, development or redevelopment of the eligible property occurs in phases, each phase that has a separate basis for tax purposes shall be considered as a separate eligible project.

(c) (i) If the amount of the tax credit established by this subsection exceeds the total state income tax liability for the year in which the developed property is placed in service, the amount that exceeds the total Mississippi income tax liability may be carried forward for the ten (10) succeeding tax years.

(ii) Not-for-profit entities, including, but not limited to, nonprofit corporations organized under Section 79-11-101 et seq. are not eligible for the credit authorized by this subsection. Credits granted to a partnership, a limited liability company taxed as a partnership or multiple owners of property shall be passed through to the partners, members or owners on a pro rata basis or pursuant to an executed agreement among the partners, members or owners documenting an alternative distribution method. Partners, members or other owners of a pass-through entity and a limited liability company taxed as a partnership are eligible to elect a refund of excess credit in lieu of a carryforward of the credit at the entity level on a form prescribed by the Department of Revenue.

(d) To claim the credit authorized pursuant to this subsection, the taxpayer shall apply to the Department of Revenue which shall determine the amount of eligible costs. The department shall issue a certificate evidencing the eligible credit if the taxpayer is found to be eligible for the tax credit. The taxpayer shall attach the certificate to all income tax returns on which the credit is claimed.

(e) (i) A Person or entity who is awarded tax credits under paragraphs (a) through (d) of this subsection may elect to sell its unused tax credits to one or more other individuals or entities. The tax credits may be transferred or sold by a taxpayer or any subsequent transferee an unlimited number of times. The transfer or sale of the credit does not extend the carryforward period of the credit.

(ii) Transferors and transferees shall submit to the Department of Revenue in writing a notification of any transfer or sale of tax credits within ten (10) business days after the transfer or sale of the tax credits. A "transfer," for purposes of the fee means an assignment, disposition, transfer, or allocation of tax credits. The notification shall include the transferor's tax credit balance prior to transfer, any credit identification number assigned by the Department of Revenue, the remaining balance after transfer, all federal and Mississippi taxpayer identification numbers for both transferor and transferee, the date of transfer, the amount transferred, and any other information required by the Department of Revenue. Failure to comply with this notification provision shall result in the disallowance of the tax credit until the parties are in full compliance.

(f) In addition to any other tax credit which may be available, any owner of an eligible project, all or a portion of which consists of housing for public schoolteachers, shall be entitled to a credit against Mississippi income taxes in an amount equal to Two Thousand Five Hundred Dollars ($2,500.00) per year for each tenant that is a public schoolteacher as a subsidy for such teacher's rent under the following conditions:

(i) The entire credit must be used to subsidize the rent of each public schoolteacher who is a tenant in the eligible project for whom a credit was claimed;

(ii) The tax credit is to be claimed in arrears, based on the number of months in a tax year in which a public schoolteacher was a tenant in the eligible project;

(iii) If a public schoolteacher for whom a tax credit is claimed was a tenant for less than a full year, or if a person ceases to be a public schoolteacher during any year, the credit will be prorated accordingly for the months during which the public schoolteacher was a tenant in the eligible project or during which the person was employed as a public schoolteacher;

(iv) No more than one (1) tax credit may be claimed for any unit in which a public schoolteacher is a tenant, regardless of whether more than one (1) teacher lives in the unit;

(v) The credit must be claimed annually when the taxpayer files its Mississippi income tax return on a form prepared by the Department of Revenue on which form the taxpayer must certify:

1. The number of units in which a public schoolteacher is a tenant;

2. The number of months during the year in which each teacher was a tenant in the eligible project;

3. That all tenants in the eligible project are charged at the same rent rate; and

4. That all tax credits received under this subsection have been or will be used to subsidize the rent of public schoolteachers who are tenants in the eligible project;

(vi) The certification filed by the taxpayer with the Department of Revenue must be accompanied by a certification by the appropriate school district that a teacher for whom a tax credit is claimed is duly employed by that district;

(vii) The right to claim the tax credit for public school tenants will expire at the end of the tenth tax year following the date in which the eligible project is placed in service; and

(viii) If the amount allowable as a credit for public schoolteacher tenants exceeds the tax imposed on the taxpayer in any year, the amount of such excess is not refundable, but may be carried forward for the ten (10) succeeding tax years.

(g) (i) The Department of Revenue shall establish fees to be charged for the services performed by the department under this subsection and shall publish the fee schedule. The fees contained in the schedule shall be in amounts reasonably calculated to recover the costs incurred by the department for the administration of this subsection. Any taxpayer desiring to participate in the tax credits authorized by this subsection shall pay the appropriate fee as contained in the fee schedule to the department, which shall be used by the department, without appropriation, to offset the administrative costs of the department associated with its duties under this subsection.

(ii) There is hereby created within the State Treasury a special fund into which shall be deposited all the fees collected by the department pursuant to this subsection. Money deposited into the fund shall not lapse at the end of any fiscal year and investment earnings on the proceeds in such special fund shall be deposited into such fund. Money from the fund shall be disbursed upon warrants issued by the State Fiscal Officer upon requisitions signed by the executive director of the department to assist the department in carrying out its duties under this subsection.

SECTION 2. This act shall take effect and be in force from and after its passage.