CHAPTER 157 HOUSE BILL No. 2929 An  Act relating to Kansas economic development; concerning Kansas technology enter-
prise corporation; participation in Kansas enterprise zones and activities; expenditures
from Kansas economic initiatives fund; concerning Kansas investments in major projects
and comprehensive training; amending K.S.A. 1999 Supp. 74-50,103, 74-50,104, 74-
50,106, 74-50,111, 74-50,115, 74-50,131, 74-50,151, 74-8101 and 79-32,160a and re-
pealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 1999 Supp. 74-8101 is hereby amended to read as
follows: 74-8101. (a) There is hereby created a body politic and corporate
to be known as the Kansas technology enterprise corporation. The Kansas
technology enterprise corporation is hereby constituted a public instru-
mentality and the exercise of the authority and powers conferred by this
act shall be deemed and held to be the performance of an essential gov-
ernmental function.

      (b) The corporation shall be governed by a board of 20 directors who
shall be residents of this state. The board shall consist of (1) the governor
or, at the discretion of the governor, the secretary of the department of
commerce and housing, (2) the secretary of the state board of agriculture,
(3) four directors who are members of the legislature appointed as pro-
vided in subsection (d)(1), (4) four directors who are appointed by leg-
islative officers as provided in subsection (d)(2), and (5) ten directors
appointed by the governor subject to senate confirmation as provided in
K.S.A. 75-4315b, and amendments thereto. Except as provided by K.S.A.
1999 Supp. 46-2601, and amendments thereto, no person whose appoint-
ment is subject to confirmation by the senate, shall exercise any power,
duty or function as a member of the board until confirmed by the senate.

      (c)  (1) All 10 of the directors appointed by the governor shall be
persons recognized for outstanding knowledge and leadership in their
fields. Six of the directors shall be persons from the private sector and
four of the directors shall be four shall be persons from the public sector.
The four appointees from the public sector shall consist of one or more of
the following: Senior administrators at Kansas educational institutions
governed by the board of regents or engineers or scientists who have
extensive experience in managing basic or applied scientific and techno-
logical research at Kansas educational institutions. Of the six directors
appointed from the private sector:

      (A) Four directors shall be persons who represent industries of the
Kansas economy including small enterprises which include, but are not
limited to:

      (i) Resource-based industries of agriculture, oil and gas;

      (ii) advanced technology industries of aviation, manufacturing, in-
formation and design; and

      (iii) emerging industries of telecommunications, computer software,
information services and research services; and

      (B) two directors shall be persons who represent the private financial
sector of whom one shall have experience in the area of high-risk venture
investments, and the other shall have commercial banking experience in
an industry of special technological importance to the Kansas economy.

      (2) In making appointments to the board, the governor shall give
consideration to the qualifications of the persons who served as commis-
sioners of the Kansas advanced technology commission and shall give
consideration to appropriate geographical representation.

      (3) Of the members first appointed to the board, two directors shall
be appointed for a term of one year, two directors shall be appointed for
terms of two years, three directors shall be appointed for terms of three
years and three directors shall be appointed for terms of four years. Ex-
cept as provided by paragraph (4), successors to such directors shall be
appointed for terms of four years. Each director shall hold office for the
term of appointment and until the successor has been appointed and
confirmed. In the event of a vacancy, the vacancy shall be filled by the
governor in the manner provided for original appointments for the re-
mainder of the unexpired portion of the term.

      (4) The terms of directors appointed pursuant to this subsection who
are serving on the board on the effective date of this act shall expire on
January 15, of the year in which such member's term would have expired
under the provisions of this section prior to amendment by this act.
Thereafter, directors shall be appointed for terms of four years and until
their successors are appointed and confirmed.

      (d)  (1) Four directors shall be members of the legislature as follows:
The speaker of the house, the house minority leader, the president of the
senate, and the senate minority leader, or legislators who are appointed
to represent them and who will provide continuity by virtue of their mem-
bership on the standing committee on commerce of the senate, the stand-
ing committee on economic development of the house of representatives
or the joint committee on economic development. Legislative officers
designated in this subsection shall serve by virtue of office. Legislators
appointed under this subsection shall serve from the dates of their ap-
pointment until the first day of the regular legislative session in odd-
numbered years and are eligible for reappointment.

      (2)  (A) Four directors shall be appointed by legislative officers as
follows: (1) One shall be appointed by the speaker of the house, (2) one
shall be appointed by the house minority leader, (3) one shall be ap-
pointed by the president of the senate, and (4) one shall be appointed by
the senate minority leader. The members so appointed shall be persons
who are recognized for outstanding knowledge and leadership in their
fields, who are from the private sector and who represent industries of
the Kansas economy including small enterprises which include, but are
not limited to:

      (i) Resource-based industries of agriculture, oil and gas;

      (ii) advanced technology industries of aviation, manufacturing, in-
formation and design; and

      (iii) emerging industries of telecommunications, computer software,
information services and research services.

      (B) Of the directors first appointed by legislative officers under this
subsection (d)(2), the directors appointed by the speaker of the house
and the president of the senate shall be appointed to a term of four years
and the directors appointed by the house minority leader and the senate
minority leader shall be appointed to a term of two years. Successors to
such directors shall be appointed for terms of four years. Each director
shall hold office for the term of appointment and until the successor has
been appointed. In the event of a vacancy, the vacancy shall be filled by
the legislative officer who appointed the director who created the vacancy
in the manner provided for the original appointment for the remainder
of the unexpired portion of the term.

      (e) Members of the board of directors, in their dealings with enter-
prises that may receive financing through the corporation, shall declare
any potential conflict of interest and abstain from voting prior to taking
any actions relating to that transaction.

      (f) The board of directors shall conduct a national search and select
a corporate president who meets a national standard of experience, ability
and initiative for similar positions. The corporate president shall not be
a member of the board.

      (g) The board of directors shall hold all board meetings within the
state of Kansas.

      (h) Members of the board of directors are entitled to compensation
and expenses as provided in K.S.A. 75-3223, and amendments thereto.

      (i) The board shall annually elect from the private sector member-
ship one member as chairperson and one member as vice-chairperson.

      (j) The board of directors shall meet at least once during each cal-
endar quarter, and at such other times as may be provided in the rules
of the corporation, upon call by the president, the chairperson or upon
written request of a majority of the directors.

      (k) A majority of the board of directors shall be necessary to transact
corporation business, and all actions of the directors shall be by a majority
vote of the full number of corporate directors.

      (l) The directors shall establish an executive committee composed
of the chairperson, vice-chairperson and three additional members cho-
sen by the chairperson from among the remaining directors. The execu-
tive committee, in intervals between board meetings, may transact any
board business that has been delegated to the executive committee. A
majority of the executive committee shall be necessary to transact busi-
ness and all actions of the executive committee shall be by a majority vote
of the committee.

      (m) No member of the board of directors is eligible to serve more
than two terms of office.

      (n) A member appointed to the board of directors by the governor
may be removed by the governor for cause, stated in writing, after a
hearing thereon.

      Sec.  2. K.S.A. 1999 Supp. 74-50,103 is hereby amended to read as
follows: 74-50,103. As used in the IMPACT act unless the context clearly
requires otherwise:

      (a) ``Act'' means the Kansas investments in major projects and com-
prehensive training act.

      (b) ``Agreement'' means the agreement among an employer, an ed-
ucational institution and the secretary of commerce and housing con-
cerning a SKILL project or a combined SKILL project and major project
investment and the agreement between an employer and the secretary of
commerce and housing concerning a major project investment.

      (c) ``Bond'' means a public purpose bond issued for IMPACT pro-
jects by the Kansas development finance authority.

      (d) ``Date of commencement of the project'' means the date of the
agreement.

      (e) ``Educational institution'' means a community college, as defined
by K.S.A. 71-701, and amendments thereto, an area vocational school or
area vocational-technical school, as defined by K.S.A. 72-4412, and
amendments thereto, a university, as defined by K.S.A. 72-6501, and
amendments thereto, or a state educational institution, as defined by
K.S.A. 76-711, and amendments thereto.

      (f) ``Employee'' means a person employed in a new or retained job.

      (g) ``Employer'' means a Kansas basic enterprise providing new jobs
or retaining existing jobs in conjunction with a project.

      (h) ``IMPACT program'' or ``program'' means the major project in-
vestments and SKILL projects undertaken by the department of com-
merce and housing in accordance with the provisions of this act for a new
or expanding Kansas basic enterprise.

      (h) (i) ``IMPACT project'' or ``project'' means a SKILL project, major
project investment or a combination of the two.

      (i) (j) ``Kansas basic enterprise'' means any enterprise:

      (1) Which is located or principally based in Kansas; and

      (2) which can provide demonstrable evidence that:

      (A) It is primarily engaged in any one or more of the Kansas basic
industries; or

      (B) it is primarily engaged in the development or production of goods
or the provision of services for out-of-state sale; or

      (C) it is primarily engaged in the production of goods or the provision
of services which will attract out-of-state buyers or consumers into the
state; or

      (D) it is primarily engaged in the production of raw materials, in-
gredients, or components for other enterprises which export the majority
of their products from the state; or

      (E) it is a national or regional enterprise which is primarily engaged
in interstate commerce or an affiliated management company of such an
enterprise; or

      (F) it is primarily engaged in the production of goods or the provision
of services which will supplant goods or services which would be imported
into the state; or

      (G) it is the corporate or regional headquarters of a multistate en-
terprise which is primarily engaged in out-of-state industrial activities.

      (j) (k) ``Kansas basic industry'' means:

      (1) Agriculture;

      (2) mining;

      (3) manufacturing;

      (4) interstate transportation;

      (5) wholesale trade which is primarily multistate in activity or which
has a major import supplanting effect within the state;

      (6) financial services which are provided primarily for interstate or
international transactions;

      (7) business services which are provided primarily in out-of-state
markets;

      (8) research and development of new products, processes, or tech-
nologies; or

      (9) tourism activities which are primarily engaged in for the purpose
of attracting out-of-state tourists.

      (k) (l) ``Major project investment'' or ``investment'' means financial
assistance to an employer to defray business costs including, but not lim-
ited to, relocation expenses, building and equipment purchases, labor
recruitment and job retention.

      (m) ``New job'' means a job in a new or expanding Kansas basic
enterprise not including jobs of recalled workers, or existing jobs that are
vacant or other jobs that formerly existed in the Kansas basic enterprise
in Kansas.

      (l) (n) ``Primarily engaged'' means engagement in an activity by an
enterprise to the extent that not less than 51% of the gross income of the
enterprise is derived from such engagement.

      (m) ``New job'' means a job in a new or expanding Kansas basic
enterprise not including jobs of recalled workers, or existing jobs that are
vacant or other jobs that formerly existed in the Kansas basic enterprise
in Kansas.

      (n) ``IMPACT program'' or ``program'' means the major project in-
vestments and SKILL projects undertaken by the department of com-
merce and housing in accordance with the provisions of this act for a new
or expanding Kansas basic enterprise.

      (o) ``Program costs'' means all necessary and incidental costs of pro-
viding program services, except that program costs shall not include: (1)
Any wages paid to persons receiving education or training under a project,
(2) any costs for purchase or lease of training equipment that exceed 50%
of total program costs for the project, and (3) any costs for administrative
expenses of educational institutions that exceed 10% of total program
costs for the project.

      (p) ``Program services'' means:

      (1) New jobs training, including training development costs, except
that the actual training period for any new job shall not exceed 36 months
from the date the job is first filled by an employee;

      (2) adult basic education and job-related instruction;

      (3) vocational and skill-assessment services and testing;

      (4) training equipment for education institutions;

      (5) material and supplies;

      (6) administrative expenses of educational institutions for new jobs
training programs;

      (7) subcontracted services with other educational institutions, private
colleges or universities or other federal, state or local agencies; and

      (8) contracted or professional service;

      (9) major project investments.

      (q) ``Retained job'' means an existing job which will be lost without
participation by the employer under the provisions of the IMPACT pro-
gram.

      (q) (r) ``SKILL project'' means a training arrangement which is the
subject of an agreement entered into between the educational institution
and an employer to provide program services.

      Sec.  3. K.S.A. 1999 Supp. 74-50,104 is hereby amended to read as
follows: 74-50,104. (a) The secretary of commerce and housing shall ad-
minister the provisions of this act and the IMPACT program established
thereunder. The secretary of commerce and housing shall encourage
Kansas basic enterprises with similar training needs to cooperate in es-
tablishing SKILL projects. The secretary of commerce and housing shall
coordinate the SKILL program with other job training programs admin-
istered by the department of commerce and housing. The secretary of
commerce and housing shall provide opportunities for coordination and
cooperation of SKILL projects with other job training activities in Kansas.

      (b) The secretary of commerce and housing shall adopt rules and
regulations as follows: (1) Prescribing review standards and priorities for
approval of proposed agreements under this act, including appropriate
incentives for cooperation among projects, in order to maximize the num-
ber of new jobs created with respect to individual Kansas basic enter-
prises, which will remain in Kansas, and (2) prescribing limits on program
costs and on project and program size in relation to the number of new
jobs created or the wages of new jobs created. No agreement shall be
approved which provides for program costs of a project under the agree-
ment of more than 90% of the amount equal to the estimated rate of
withholding tax applied to the estimated amount of gross wages of all the
new jobs under the project over a ten-year period.

      (c) Notice of the approval of a project or program under the IMPACT
act shall be provided to the chairpersons of the senate committee on com-
merce and the committee on economic development of the house of rep-
resentatives.

      (c) (d) The secretary of commerce and housing may adopt such other
rules and regulations as may be required for the implementation and
administration of this act.

      Sec.  4. K.S.A. 1999 Supp. 74-50,106 is hereby amended to read as
follows: 74-50,106. (a) The secretary of commerce and housing shall re-
view applications for proposed agreements submitted by employers in
accordance with the standards and guidelines prescribed by this act and
by rules and regulations adopted under K.S.A. 74-50,104, and amend-
ments thereto. Each application for approval of a proposed agreement
shall be accompanied by information about the number and wages of the
new or retained jobs created by the employer, documentation of existing
training activities of the employer and such other information as may be
required by the secretary of commerce and housing.

      (b) The secretary of commerce and housing may pool the funding
requirements of projects which are the subject of proposed agreements
to determine the funding requirements of the SKILL projects under con-
sideration to facilitate the issuance of bonds by the Kansas development
finance authority.

      (c) The secretary of commerce and housing is hereby authorized to
expend funds raised pursuant to this act on major project investments.
The secretary shall adopt guidelines consistent with this act concerning
firm eligibility for major project investments and shall otherwise admin-
ister the major project investment portion of the IMPACT act.

      (d) In order for an employer to be eligible for a major project in-
vestment, the employer must:

      (1) Annually make an investment in training and education of the
employer's employees that exceeds 2% of the employer's total annual
payroll costs; or

      (2) agree that a portion of any funds available under the agreement
be spent directly on employee education and training.

      (e) An employer not creating new jobs shall not be eligible for par-
ticipation in an IMPACT program unless the employer meets the following
criteria: (1) Maintains a minimum of 1,000 retained jobs; (2) makes a
capital investment of at least $250,000,000; and (3) the secretary of com-
merce and housing finds that the program or project will be a major factor
in the Kansas basic enterprise remaining in Kansas.

      (e) (f) Prior to obtaining financing from the Kansas development
finance authority for any project, group of projects or major project in-
vestment for one or more employers, the secretary of commerce and
housing shall present each such project to the governor's council on work
force training and investment for review and approval. No agreement
shall be approved by the secretary of commerce and housing unless each
project under the agreement has been reviewed and finally approved by
the governor's council on work force training and investment.

      Sec.  5. K.S.A. 1999 Supp. 74-50,111 is hereby amended to read as
follows: 74-50,111. The secretary of commerce and housing shall annually
report on activities under the IMPACT act, pursuant to K.S.A. 1999 Supp.
74-5049, and amendments thereto. Each report shall contain information
regarding the number and characteristics of the new jobs created or jobs
retained in Kansas for which SKILL projects or major project investments
have been financed under this act, including a report on any such new or
retained jobs which do not continue to exist and the circumstances and
effect of any such discontinuances.

      Sec.  6. K.S.A. 1999 Supp. 74-50,115 is hereby amended to read as
follows: 74-50,115. (a) A manufacturing business may be eligible for a
sales tax exemption under the provisions of subsection (cc) of K.S.A. 79-
3606, and amendments thereto, if the manufacturing business complies
with the following requirements:

      (1) A manufacturing business shall provide documented evidence of
job expansion involving the employment of at least two additional full-
time employees; and

      (2) a manufacturing business located within the state of Kansas that
has documented evidence of job expansion as provided in paragraph (1),
which relocates in another city or county within the state of Kansas must
receive approval from the secretary prior to qualifying for the sales tax
exemption in subsection (cc) of K.S.A. 79-3606, and amendments thereto,
except that approval by the secretary shall not be required if the manu-
facturing business relocates within the same city.

      (b) A nonmanufacturing business may be eligible for a sales tax ex-
emption under the provisions of subsection (cc) of K.S.A. 79-3606, and
amendments thereto, if the nonmanufacturing business complies with the
following requirements:

      (1) A nonmanufacturing business shall provide documented evi-
dence of job expansion involving the employment of at least five addi-
tional full-time employees; and

      (2) a nonmanufacturing business located within the state of Kansas
that has documented evidence of job expansion as provided in paragraph
(1), which relocates in another city or county within the state of Kansas
must receive approval from the secretary prior to qualifying for the sales
tax exemption in subsection (cc) of K.S.A. 79-3606, and amendments
thereto, except that approval by the secretary shall not be required if the
nonmanufacturing business relocates within the same city.

      (c) A retail business may qualify for the sales tax exemption under
subsection (cc) of K.S.A. 79-3606, and amendments thereto, if the retail
business complies with the following requirements:

      (1) A retail business shall provide documented evidence of job ex-
pansion involving the employment of at least two additional full-time em-
ployees; and

      (2) such retail business locates or expands to a city having a popu-
lation of 2,500 or less, as determined by the latest United States federal
census.

      (d) Any person constructing, reconstructing, remodeling or enlarging
a facility which will be leased in whole or in part for a period of five years
or more to a business that would be eligible for a sales tax exemption
hereunder if such business had constructed, reconstructed, enlarged or
remodeled such facility or portion thereof itself shall be entitled to the
sales tax exemption under the provisions of subsection (cc) of K.S.A. 79-
3606, and amendments thereto. When such person leases less than the
total facility to an eligible business, a project exemption certificate may
be granted on: (1) The total cost of constructing, reconstructing, remod-
eling or enlarging, the facility multiplied by a fraction given by dividing
the number of leased square feet eligible for the sales tax exemption by
the total square feet being constructed, reconstructed, remodeled or en-
larged; or (2) the actual cost of constructing, reconstructing, remodeling
or enlarging that portion of the facility to be occupied by the eligible
business, as the person may elect.

      (e) A business may qualify for a sales tax exemption under subsection
(cc) of K.S.A. 79-3606, and amendments thereto, without regard to any
of the foregoing requirements of this section if it is certified as a qualified
firm by the secretary of commerce and housing pursuant to K.S.A. 1999
Supp. 74-50,131, and amendments thereto, and is entitled to the corporate
tax credit established in K.S.A. 1999 Supp. 74-50,132, and amendments
thereto, or has received written approval for participation and has partic-
ipated, during the tax year in which the exemption is claimed, in training
assistance by the department of commerce and housing under the Kansas
industrial training, Kansas industrial retraining or state of Kansas invest-
ments in lifelong learning program.

      (f) The secretary may adopt rules and regulations to implement and
administer the provisions of this section.

      Sec.  7. K.S.A. 1999 Supp. 74-50,151 is hereby amended to read as
follows: 74-50,151. (a) There is hereby created in the state treasury the
Kansas economic opportunity initiatives fund. Subject to acts of the leg-
islature applicable thereto, the moneys in the Kansas economic oppor-
tunity initiatives fund shall be used only for the purposes prescribed by
this section.

      (b) All expenditures made pursuant to this act shall be made in ac-
cordance with appropriations acts upon warrants of the director of ac-
counts and reports issued pursuant to vouchers approved by the governor
or the governor's designee. The governor may approve a warrant upon
certification, by the secretary of commerce and housing, that an economic
emergency or unique opportunity exists which warrant funding for a stra-
tegic economic intervention by such state agency or agencies to address
expenses involved in securing economic benefits or avoiding or remedying
economic losses related to:

      (1) A major expansion of an existing Kansas commercial enterprise;

      (2) the potential location in Kansas of the operations of a major
employer;

      (3) the award of a significant federal or private sector grant which
has a financial matching requirement;

      (4) the departure from Kansas or the substantial reduction of the
operations of a major employer; and

      (5) the closure or the substantial reduction of a major federal or state
institution or facility.

      (c) An intervention strategy may include financial assistance in the
form of grants, loans or both. The department of commerce and housing
shall adopt written guidelines concerning the terms and conditions of any
such loans. However, all repaid funds shall be credited to the Kansas
economic opportunity initiatives fund. No intervention strategy approved
pursuant to this act shall facilitate the moving of an existing Kansas firm
to another location within the state unless such restriction is waived by
the secretary of commerce and housing. Every intervention strategy ap-
proved pursuant to this act shall identify the intended outcomes to be
realized by the strategy for which funding is sought.

      (d) The department of commerce and housing and Kansas, Inc. shall
make joint findings concerning the costs and benefits, on both a local and
statewide basis, of projects proposed pursuant to this act. Prior to allo-
cation of any funds pursuant to this act, the governor shall review the
cost-benefit findings performed on each project.

      (e) The director of the budget and the director of the legislative
research department shall consult periodically and review the balance
credited to and the estimated receipts to be credited to the state economic
development initiatives fund during the fiscal year. During any period
when the legislature is not in session, upon a finding by the director of
the budget in consultation with the director of the legislative research
department that the total of the unencumbered balance and estimated
receipts to be credited to the state economic development initiatives fund
during a fiscal year are insufficient to fund the budgeted expenditures
and transfers from the state economic development initiatives fund for
the fiscal year in accordance with the provisions of appropriation acts, the
director of the budget shall make a certification of such finding to the
governor. Upon approval by the governor, the director of accounts and
reports shall transfer the amount of moneys from the Kansas economic
opportunity initiatives fund to the state economic development initiatives
fund that is required, in accordance with a certification by the director
of the budget under this subsection, to fund the budgeted expenditures
and transfers from the state economic development initiatives fund for
the fiscal year in accordance with the provisions of appropriation acts, as
specified by the director of the budget pursuant to such certification.

      (f) On or before the 10th day of each month, the director of accounts
and reports shall transfer from the state general fund to the state eco-
nomic development initiatives fund interest earnings based on:

      (1) The average daily balance of moneys in the Kansas economic
opportunity initiatives fund for the preceding month; and

      (2)  the net earnings rate for the pooled money investment portfolio
for the preceding month.

      (g) A five member panel consisting of the secretary of commerce
and housing, the president of Kansas, Inc., the president of the Kansas
technology enterprise corporation, the private sector chairperson of the
board of Kansas, Inc. and the private sector chairperson of the Kansas
technology enterprise corporation shall review annually the propriety of
projects funded under this section. The panel shall report its findings in
writing to the governor, the economic development committee of the house
of representatives, the senate commerce committee and the joint commit-
tee on economic development.

      Sec.  8. K.S.A. 1999 Supp. 74-50,131 is hereby amended to read as
follows: 74-50,131. Commencing after December 31, 1999: (a) As used in
this act: ``Qualified firm'' means a for-profit business establishment, sub-
ject to state income, sales or property taxes, identified under the manu-
facturing standard industrial classification (SIC) codes as in effect July 1,
1993, major groups 20 through 39, major groups 40 through 51, and major
groups 60 through 89,; identified under the North American industry
classification system (NAICS) as in effect on October 1, 2000, or is iden-
tified as a corporate or regional headquarters or back-office operation of
a national or multi-nation multi-national corporation regardless of SIC
code or NAICS designation. The secretary of commerce and housing shall
determine eligibility when a difference exists between a firm's SIC code
and NAICS designation. A business establishment may be assigned a stan-
dard industrial classification code or NAICS designation according to the
primary business activity at a single physical location in the state.

      (b) In the case of firms in major groups 40 through 51, and major
groups 60 through 89, or the appropriate NAICS designation the business
establishment must also demonstrate the following:

      (1) More than one-half 1/2 of its gross revenues are a result of sales
to commercial or governmental customers outside the state of Kansas; or

      (2) more than one-half 1/2 of its gross revenues are a result of sales
to Kansas manufacturing firms within major groups 20 through 39 or the
appropriate NAICS designation; or

      (3) more than one-half 1/2 of its gross revenues are a result of a
combination of sales described in (1) and (2).

      (c) For purposes of determining whether one of the average wage
options described in subsection (d) below is satisfied, business establish-
ments located within a metropolitan county, as defined in K.S.A. 1999
Supp. 74-50,114, and amendments thereto, will be compared only to other
businesses within that metropolitan county, and business establishments
located outside of a metropolitan county will be compared to businesses
within an aggregation of counties representing the business establish-
ment's region of the state, which regional aggregation will exclude met-
ropolitan counties. Such aggregation shall be determined by the depart-
ment of commerce and housing.

      (d) Additionally, a business establishment having met the criteria as
established in subsection (a) or (b), and using the comparison method
described in subsection (c), must meet one of the following criteria:

      (1) The establishment with 500 or fewer full-time equivalent em-
ployees will provide an average wage that is above the average wage paid
by all firms with 500 or fewer full-time equivalent employees which share
the same two-digit standard industrial classification code or appropriate
NAICS designation.

      (2) The establishment with 500 or fewer full-time equivalent em-
ployees is the sole firm within its two-digit standard industrial classifica-
tion code or appropriate NAICS designation which has 500 or fewer full-
time equivalent employees.

      (3) The establishment with more than 500 full-time equivalent em-
ployees will provide an average wage that is above the average wage paid
by firms with more than 500 full-time equivalent employees which share
the same two-digit standard industrial classification code or appropriate
NAICS designation.

      (4) The establishment with more than 500 full-time equivalent em-
ployees is the sole firm within its two-digit standard industrial classifica-
tion code or appropriate NAICS designation which has 500 or more full-
time equivalent employees, in which event it shall either provide an
average wage that is above the average wage paid by all firms with 500
or fewer full-time equivalent employees which share the same two-digit
standard industrial classification code or appropriate NAICS designation,
or be the sole firm within its two-digit standard industrial classification
code or appropriate NAICS designation.

      (e) As an alternative to the requirements of subsections (c) and (d),
a firm having met the requirements of subsections (a) or (b), may qualify,
if excluding taxable disbursements to company owners, the business es-
tablishment's annual average wage must be greater than or equal to 1.5
times the aggregate average wage paid by industries covered by the em-
ployment security law based on data maintained by the secretary of hu-
man resources.

      (f) For the purposes of this section, the number of full-time equiv-
alent employees shall be determined by adding dividing the number of
hours worked by part-time employees during the pertinent measurement
interval by an amount equal to the corresponding multiple of a 40-hour
work week and adding the quotient to the number of full-time employees
to the number of hours worked by part-time employees divided by 40.

      (g) The secretary of commerce and housing shall certify annually to
the secretary of revenue that a firm meets the criteria for a qualified firm
and that the firm is eligible for the benefits and assistance provided under
this act. The secretary of commerce and housing is hereby authorized to
obtain any and all information necessary to determine such eligibility.
Information obtained under this section shall not be subject to disclosure
pursuant to K.S.A. 45-215 et seq., and amendments thereto, but shall upon
request be made available to the legislative post audit division. The sec-
retary of commerce and housing shall publish rules and regulations for
the implementation of this act. Such rules and regulations shall include,
but not be limited to:

      (1) A definition of ``training and education'' for purposes of K.S.A.
1999 Supp. 74-50,132, and amendments thereto.

      (2) Establishment of eligibility requirements and application proce-
dures for expenditures from the high performance incentive fund created
in K.S.A. 1999 Supp. 74-50,133, and amendments thereto.

      (3) Establishment of approval guidelines for private consultants au-
thorized pursuant to K.S.A. 1999 Supp. 74-50,133, and amendments
thereto.

      (4) Establishment of guidelines for prioritizing business assistance
programs pursuant to K.S.A. 1999 Supp. 74-50,133, and amendments
thereto.

      (5) A definition of ``commercial customer'' for the purpose of K.S.A.
1999 Supp. 74-50,133, and amendments thereto.

      (6) A definition of ``headquarters'' for the purpose of K.S.A. 1999
Supp. 74-50,133, and amendments thereto.

      (7) Establishment of guidelines concerning the use and disclosure of
any information obtained to determine the eligibility of a firm for the
assistance and benefits provided for by this act.

      Sec.  9. K.S.A. 1999 Supp. 79-32,160a is hereby amended to read as
follows: 79-32,160a. (a) For taxable years commencing after December
31, 1997 1999, any taxpayer who shall invest in a qualified business facility,
as defined in subsection (b) of K.S.A. 79-32,154, and amendments
thereto, and also meets the definition of a business in subsection (b) of
K.S.A. 74-50,114, and amendments thereto, shall be allowed a credit for
such investment, in an amount determined under subsection (b) or (c),
as the case requires, against the tax imposed by the Kansas income tax
act or where the qualified business facility is the principal place from
which the trade or business of the taxpayer is directed or managed and
the facility has facilitated the creation of at least 20 new full-time posi-
tions, against the premium tax or privilege fees imposed pursuant to
K.S.A. 40-252, and amendments thereto, or as measured by the net in-
come of financial institutions imposed pursuant to chapter 79, article 11
of the Kansas Statutes Annotated, for the taxable year during which com-
mencement of commercial operations, as defined in subsection (f) of
K.S.A. 79-32,154, and amendments thereto, occurs at such qualified busi-
ness facility. In the case of a taxpayer who meets the definition of a man-
ufacturing business in subsection (d) of K.S.A. 74-50,114, and amend-
ments thereto, no credit shall be allowed under this section unless the
number of qualified business facility employees, as determined under
subsection (d) of K.S.A. 79-32,154, and amendments thereto, engaged or
maintained in employment at the qualified business facility as a direct
result of the investment by the taxpayer for the taxable year for which the
credit is claimed equals or exceeds two. In the case of a taxpayer who
meets the definition of a nonmanufacturing business in subsection (f) of
K.S.A. 74-50,114, and amendments thereto, no credit shall be allowed
under this section unless the number of qualified business facility em-
ployees, as determined under subsection (d) of K.S.A. 79-32,154, and
amendments thereto, engaged or maintained in employment at the qual-
ified business facility as a direct result of the investment by the taxpayer
for the taxable year for which the credit is claimed equals or exceeds five.
Where an employee performs services for the taxpayer outside the qual-
ified business facility, the employee shall be considered engaged or main-
tained in employment at the qualified business facility if (1) the em-
ployee's service performed outside the qualified business facility is
incidental to the employee's service inside the qualified business facility,
or (2) the base of operations or, the place from which the service is di-
rected or controlled, is at the qualified business facility.

      (b) The credit allowed by subsection (a) for any taxpayer who invests
in a qualified business facility which is located in a designated nonmetro-
politan region established under K.S.A. 74-50,116, and amendments
thereto, on or after the effective date of this act, shall be a portion of the
income tax imposed by the Kansas income tax act on the taxpayer's Kansas
taxable income, the premium tax or privilege fees imposed pursuant to
K.S.A. 40-252, and amendments thereto, or the privilege tax as measured
by the net income of financial institutions imposed pursuant to chapter
79, article 11 of the Kansas Statutes Annotated, for the taxable year for
which such credit is allowed, but in the case where the qualified business
facility investment was made prior to January 1, 1996, not in excess of
50% of such tax. Such portion shall be an amount equal to the sum of
the following:

      (1) Two thousand five hundred dollars for each qualified business
facility employee determined under K.S.A. 79-32,154, and amendments
thereto; plus

      (2) one thousand dollars for each $100,000, or major fraction thereof,
which shall be deemed to be 51% or more, in qualified business facility
investment, as determined under K.S.A. 79-32,154, and amendments
thereto.

      (c) The credit allowed by subsection (a) for any taxpayer who invests
in a qualified business facility, which is not located in a nonmetropolitan
region established under K.S.A. 74-50,116, and amendments thereto, and
which also meets the definition of business in subsection (b) of K.S.A.
74-50,114, and amendments thereto, on or after the effective date of this
act, shall be a portion of the income tax imposed by the Kansas income
tax act on the taxpayer's Kansas taxable income, the premium tax or priv-
ilege fees imposed pursuant to K.S.A. 40-252, and amendments thereto,
or the privilege tax as measured by the net income of financial institutions
imposed pursuant to chapter 79, article 11 of the Kansas Statutes An-
notated, for the taxable year for which such credit is allowed, but in the
case where the qualified business facility investment was made prior to
January 1, 1996, not in excess of 50% of such tax. Such portion shall be
an amount equal to the sum of the following:

      (1) One thousand five hundred dollars for each qualified business
facility employee as determined under K.S.A. 79-32,154, and amend-
ments thereto; and

      (2) one thousand dollars for each $100,000, or major fraction thereof,
which shall be deemed to be 51% or more, in qualified business facility
investment as determined under K.S.A. 79-32,154, and amendments
thereto.

      (d) The credit allowed by subsection (a) for each qualified business
facility employee and for qualified business facility investment shall be a
one-time credit. If the amount of the credit allowed under subsection (a)
exceeds the tax imposed by the Kansas income tax act on the taxpayer's
Kansas taxable income, the premium tax and privilege fees imposed pur-
suant to K.S.A. 40-252, and amendments thereto, or the privilege tax as
measured by the net income of financial institutions imposed pursuant to
chapter 79, article 11 of the Kansas Statutes Annotated for the taxable
year, or in the case where the qualified business facility investment was
made prior to January 1, 1996, 50% of such tax imposed upon the amount
which exceeds such tax liability or such portion thereof may be carried
over for credit in the same manner in the succeeding taxable years until
the total amount of such credit is used. Except that, before the credit is
allowed, a taxpayer, who meets the definition of a manufacturing business
in subsection (d) of K.S.A. 74-50,114, and amendments thereto, shall
recertify annually that the net increase of a minimum of two qualified
business facility employees has continued to be maintained and a tax-
payer, who meets the definition of a nonmanufacturing business in sub-
section (f) of K.S.A. 74-50,114, and amendments thereto, shall recertify
annually that the net increase of a minimum of five qualified business
employees has continued to be maintained.

      (e) Notwithstanding the foregoing provisions of this section, any tax-
payer qualified and certified under the provisions of K.S.A. 1999 Supp.
74-50,131, and amendments thereto,; which, prior to making a commit-
ment to invest in a qualified Kansas business, has filed a certificate of
intent to invest in a qualified business facility in a form satisfactory to the
secretary of commerce and housing; and that has received written ap-
proval from the secretary of commerce and housing for participation and
has participated, during the tax year for which the exemption is claimed,
in the Kansas industrial training, Kansas industrial retraining or the state
of Kansas investments in lifelong learning program or is eligible for the
tax credit established in K.S.A. 1999 Supp. 74-50,132, and amendments
thereto, shall be entitled to a credit in an amount equal to 10% of that
portion of the qualified business facility investment which exceeds
$50,000 in lieu of the credit provided in subsection (b)(2) or (c)(2) without
regard to the number of qualified business facility employees engaged or
maintained in employment at the qualified business facility. The credit
allowed by this subsection shall be a one-time credit. If the amount
thereof exceeds the tax imposed by the Kansas income tax act on the
taxpayer's Kansas taxable income or the premium tax or privilege fees
imposed pursuant to K.S.A. 40-252, and amendments thereto, or the priv-
ilege tax as measured by net income of financial institutions imposed
pursuant to chapter 79, article 11 of the Kansas Statutes Annotated for
the taxable year, the amount thereof which exceeds such tax liability may
be carried forward for credit in the succeeding taxable year or years until
the total amount of the tax credit is used, except that no such tax credit
shall be carried forward for deduction after the 10th taxable year suc-
ceeding the taxable year in which such credit initially was claimed and no
carry forward shall be allowed for deduction in any succeeding taxable
year unless the taxpayer continued to be qualified and was recertified for
such succeeding taxable year pursuant to K.S.A. 1999 Supp. 74-50,131,
and amendments thereto.

      (f) This section and K.S.A. 79-32,160b, and amendments thereto,
shall be part of and supplemental to the job expansion and investment
credit act of 1976 and acts amendatory thereof and supplemental thereto.

 Sec.  10. K.S.A. 1999 Supp. 74-50,103, 74-50,104, 74-50,106, 74-
50,111, 74-50,115, 74-50,131, 74-50,151, 74-8101 and 79-32,160a are
hereby repealed.

 Sec.  11. This act shall take effect and be in force from and after its
publication in the statute book.

Approved May 15, 2000.
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