Brief (1)
SB 521 would amend the Kansas Enterprise Zone Act to specify the conditions under which an owner of a leased building would be eligible for a sales tax exemption when constructing, reconstructing, remodeling, or enlarging the building. The bill clarifies that the exemption applies to only the portion of a building which will be leased by a qualified business for a period of five years or more. The owner would not receive an exemption for any portion of the building that will not be occupied by a qualified business. The bill also prescribes two methods under which a portion of the building and the corresponding construction costs would be apportioned for calculation of the sales tax exemption. The owner of the building may elect the calculation formula.
SB 521 would also amend current law governing the Kansas Development Finance Authority (KDFA) to remove the authority of that agency to issue bonds or to form a subsidiary corporation for the purpose of issuing bonds or otherwise assisting in the financing of a project of statewide as well as local importance. The project to which the law indirectly refers is the theme park proposed by the Oz Entertainment Company to be located at the Sunflower Army Ammunition Plant site.
Background
SB 521 was requested by the Kansas Department of Commerce and Housing in response to concerns raised by the business community that the language in existing law is unclear. The Kansas Enterprise Zone Act currently authorizes sales tax exemptions for manufacturing, nonmanufacturing, and retail businesses that meet certain job creation requirements. To qualify for exemptions, retail businesses also must be located in communities having a population of 2,500 or less. In addition, if a whole building or a portion of a building is leased to a qualified business, the owner of the leased building would be eligible for the sales tax exemption.
The Senate Committee amended the bill to: incorporate technical changes proposed by the Department of Revenue; and clarify that the building owner would elect the calculation formula used to determine the sales tax exemption.
The House Committee of the Whole amended the bill to include the provisions removing the authority of the KDFA to participate in the financing of the theme park proposed by the Oz Entertainment Company.
The Division of the Budget's fiscal note reports that, according to the Department of Revenue, passage of the bill would not affect state revenues.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html