§ 40-63-07 — Renaissance fund organization - Exemption from taxation

North Dakota § 40-63-07

• Jurisdiction: North Dakota
• Title 40: Municipal Government
• Ch. 40-63: Renaissance Zones

Text

1. Each city with a designated renaissance zone may establish a renaissance fund
organization, if the detailed plan for such an organization is clearly established in the
development plan and approved with the plan, or is submitted at a later date to the
department of commerce division of community services for approval after the
designation of a renaissance zone.
2. The purpose of a renaissance fund organization is solely to raise funds to be used to
finance zone projects and other projects located in designated renaissance zones. A
renaissance fund organization may provide financing to projects undertaken by
individuals, partnerships, limited partnerships, limited liability companies, trusts,
corporations, nonprofit organizations, and public entities. The financing may include
any combination of equity investments, loans, guarantees, and commitments for
financing. The amount of financing is not limited by this chapter.
3. A renaissance fund organization is exempt from any tax imposed by chapter 57-38. An
exemption under this section may be passed through to any shareholder, partner, and

owner if the renaissance fund organization is a passthrough entity for tax purposes. A
corporation entitled to the exemption provided by this subsection shall file required
returns and report income to the tax commissioner as required by the provisions of
chapter 57-38 as if the exemption did not exist. If an employer, this subsection does
not exempt a renaissance fund organization from complying with the income tax
withholding laws.
4. A credit against state tax liability as determined under section 57-38-30 or 57-38-30.3
is allowed for investments in a renaissance fund organization. The amount of the credit
is fifty percent of the amount invested in the renaissance fund organization during the
taxable year. Any amount of credit which exceeds a taxpayer's tax liability for the
taxable year may be carried forward for up to five taxable years after the taxable year
in which the investment was made.
5. The total amount of credits allowed under this section may not exceed, in the
aggregate, ten million five hundred thousand dollars for investments in renaissance
fund organizations. A renaissance fund organization that has received investments that
qualify for the credits under this subsection shall use those investments to finance
projects within a renaissance zone. If the total amount of credits allowed under this
section have been claimed, the renaissance fund organization allowance must
terminate and additional credits may not be made available for investments in a
renaissance fund organization.
6. Income to a renaissance fund organization derived from the sale or refinancing of zone
properties financed wholly or in part by the organization may be disbursed as annual
dividends equal to the income, minus ten percent, derived from all sources and
proportional to the investment. In the event of a loss to the fund resulting in a
temporary diminishment of the fund below the original principal amount, no annual
dividend may be paid until the fund is restored.
7. Income to a renaissance fund organization derived from interest or the temporary
investment of its funds in certificates of deposit, bonds, treasury bills, or securities may
be used for administration.
8. If an investment in a renaissance fund organization which is the basis for a credit
under this section is redeemed by the investor within ten years of the date it is
purchased, the credit provided by this section for the investment must be disallowed,
and any credit previously claimed and allowed with respect to the investment must be
paid to the tax commissioner with the appropriate return of the taxpayer covering the
period in which the redemption occurred. When payments are made to the tax
commissioner under this section, the amount collected must be handled in the same
manner as if no credit had been allowed.
9. A renaissance fund organization shall secure an annual audit of its financial records,
prepared by an independent certified public accounting firm in accordance with
generally accepted auditing standards. The audit report must include a statement of
the percentage of annual investments received by the organization which have been
invested by the organization in investments permitted under this chapter, including the
use of investments, distinguishing between organization investments made in
renaissance zones and outside renaissance zones. A renaissance fund organization
shall file a copy of each audit of its financial records under this subsection with the
governing body of the city in which it was established, the department of commerce
division of community services, and the tax commissioner. The department of
commerce division of community services shall provide an annual report to the budget
section of the legislative management showing the conclusions of audit reports filed
under this subsection.
10. Renaissance fund organization officers and employees may be actively involved in the
enterprises in which the renaissance fund organization invests but the renaissance
fund organization may not invest in any enterprise if any one renaissance fund
organization officer or employee owns more than forty-nine percent of the ownership
interest in the enterprise. A renaissance fund organization may not invest in an
enterprise if renaissance fund organization officers and employees collectively own

more than forty-nine percent of the ownership interests, either through direct
ownership or through ownership of interest in a passthrough entity.