in lieu of taxes - Notice to competitors - Limitations.
1.After negotiation with a potential project operator, a municipality may grant a partial or
complete exemption from ad valorem taxation on all buildings, structures, fixtures, and
improvements used in or necessary to the operation of a project for a period not
exceeding five years from the date of commencement of project operations. A
municipality may also grant a partial or complete exemption from ad valorem taxation
on buildings, structures, fixtures, and improvements used in or necessary to the
operation of a project that produces or manufactures a product from agricultural
commodities for all or part of the sixth year through the tenth year from the date of
commencement of project operations. Before a municipality may grant a p
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in lieu of taxes - Notice to competitors - Limitations.
1. After negotiation with a potential project operator, a municipality may grant a partial or
complete exemption from ad valorem taxation on all buildings, structures, fixtures, and
improvements used in or necessary to the operation of a project for a period not
exceeding five years from the date of commencement of project operations. A
municipality may also grant a partial or complete exemption from ad valorem taxation
on buildings, structures, fixtures, and improvements used in or necessary to the
operation of a project that produces or manufactures a product from agricultural
commodities for all or part of the sixth year through the tenth year from the date of
commencement of project operations. Before a municipality may grant a partial or
complete exemption from ad valorem taxation under this section:
a. The governing body of the municipality must have received the certification of the
department of commerce division of economic development and finance that the
project is a primary sector business, as defined in subsection 3 of section
40-57.1-02; or
b. The city council or commission, if the project is proposed to be located within the
boundaries of a city of fewer than forty thousand population, or the board of
county commissioners, of a county of fewer than forty thousand population and if
the project is proposed to be located in the county but outside the corporate limits
of any city, may grant a partial or complete exemption from ad valorem taxation
for a project operating in the retail sector if that governing body has obtained the
approval of exemption of property under this subdivision from a majority of the
qualified electors of the city or county voting on the question at a city or county
election held in conjunction with a statewide general election and if that governing
body has established by resolution or ordinance the criteria that will be applied by
the governing body to determine whether it is appropriate to grant a partial or
complete exemption from ad valorem taxation under this section for a project
operating in the retail sector. The ballot for elector approval of exemption of
property under this subdivision must present the question at the election for a yes
or no vote on the question:
Shall the governing body of [name of county or city] be empowered to grant
property tax exemptions upon application of new or expanding retail sector
businesses?
Only a governing body of a city or county that meets the requirements of this
subdivision may grant a partial or complete exemption from ad valorem taxation
under this section for a project operating in the retail sector. Criteria established
by the governing body under this subdivision, at a minimum, must be intended to
require:
(1) Evaluation of the potential positive or adverse consequences for existing
retail sector businesses in the municipality from granting the exemption;
(2) Evaluation of the short-term and long-term effects for other property
taxpayers in the municipality from granting the exemption;
(3) A written agreement with the project operator, including performance
requirements for which the exemption may be terminated by the governing
body of the municipality if those requirements are not met; and
(4) Evaluation of whether the project operator would locate the project within
the municipality without the exemption.
2. In addition to, or in lieu of, a property tax exemption granted under this section, a
municipality may establish an amount due as payments in lieu of ad valorem taxes on
buildings, structures, fixtures, and improvements used in the operation of a project.
The governing body of the municipality shall designate the amount of the payments for
each year and the beginning year and the concluding year for payments in lieu of
taxes, but the option to make payments in lieu of taxes under this section may not
extend beyond the twentieth year from the date of commencement of project
operations. To establish the amount of payments in lieu of taxes, the governing body of
the municipality may use actual or estimated levels of assessment and taxation or may
establish payment amounts based on other factors. The governing body of the
municipality may designate different amounts of payments in lieu of taxes in different
years to recognize future project expansion plans or other considerations.
3. Before a governing body may grant a partial or complete exemption from ad valorem
taxation or the option to make payments in lieu of ad valorem taxes under this chapter,
the governing body shall consult with the department of commerce. If the department
of commerce determines that the total project costs are estimated to exceed one
billion dollars, the department of commerce shall conduct a public hearing and notice
of that hearing must be provided to each affected taxing district and any existing
business within the municipality for which the potential project would be a competitor.
4. By November first of each year, the municipality that granted the option to make
payments in lieu of taxes shall certify to the county auditor the amount of payments
in lieu of taxes due under this section in the following year. After receiving the
statement from the municipality, the county auditor shall certify the payments in lieu of
taxes to the county treasurer for collection at the time when, and in the manner in
which, ad valorem taxes must be certified. Upon receipt by the county treasurer of the
amount of payments in lieu of taxes under this section, the county treasurer shall
apportion and distribute that amount to taxing districts on the basis on which the
general real estate tax levy is apportioned and distributed. The municipality may enter
into a written agreement with the local school district and any other local taxing
districts that wish to enter the agreement for an alternate method of apportionment and
distribution. If such an agreement is entered into, the county treasurer shall apportion
and distribute the money according to the written agreement. All provisions of law
relating to enforcement, administration, collection, penalties, and delinquency
proceedings for ad valorem taxes apply to payments in lieu of taxes under this section.
However, the discount for early payment of taxes under section 57-20-09 does not
apply to payments in lieu of taxes under this section. The buildings, structures, fixtures,
and improvements comprising a project for which payments in lieu of taxes are
allowed under this section must be excluded from the valuation of property in the
taxing district for purposes of determining the mill rate for the taxing district.
5. Negotiations with potential project operators for tax exemption or payments in lieu of
taxes must be carried on by the city council or commission if the project is proposed to
be located within the boundaries of a city, and by the board of county commissioners if
the project is proposed to be located outside the corporate limits of any city. A partial
exemption must be stated as a percentage of the total ad valorem taxes assessed
against the property. Unless the governing body of the municipality determines that
there is no existing business within the municipality for which the potential project
would be a competitor, the potential project operator shall publish two notices to
competitors, the form of which must be prescribed by the tax commissioner, of the
application for tax exemption or payments in lieu of taxes in the official newspaper of
the municipality at least one week apart. The publications must be completed not less
than fifteen nor more than thirty days before the governing body of the municipality is
to consider the application. The municipality shall determine whether the granting of
the exemption or payments in lieu of taxes, or both, is in the best interest of the
municipality, and if it so determines, shall give its approval.
6. By motion approved by the governing body of the municipality before the beginning of
a taxable year for which a property tax exemption or the option to make payments
in lieu of taxes under this section previously has been approved by the governing
body, a property tax exemption may be revoked or reduced and payments in lieu of
taxes may be revoked or increased for that taxable year for reasons specified in a
negotiated agreement or if the governing body finds that:
a. Information provided by the project operator during the negotiation and
deliberation of a property tax exemption or the option to make payments in lieu of
taxes has proven to be inaccurate or untrue;
b. Use of the property by the project operator does not comply with the reasonable
expectations of the governing body at the time the property tax exemption or the
option to make payments in lieu of taxes was approved;
c. The property has been improved to a substantially greater extent than the
governing body reasonably anticipated at the time the property tax exemption or
the option to make payments in lieu of taxes was approved; or
d. There has been a change of ownership of the property since the property tax
exemption or the option to make payments in lieu of taxes was approved.
7. During the negotiation and deliberation of a property tax exemption or the option to
make payments in lieu of taxes under this chapter, a municipality shall include, as
nonvoting ex officio members of its governing body, a representative appointed by the
school board of each school district affected by the proposed action and a
representative appointed by the board of township supervisors of each township
affected by the proposed action. Before granting a property tax incentive on any parcel
of property that is anticipated to receive a property tax incentive for more than five
years, the governing body of a city must comply with the requirements in section
40-05-24.
8. A city or county may not supersede or expand the provisions of this section under
home rule authority.