Brief ⁽¹⁾

HB 2972 would adopt the Harnessing Opportunity, Performance and Excellence Act. The stated purpose of this act would be to promote and encourage the improvement of the quality of life in challenged neighborhoods by allowing local resources to be invested in implementing a locally developed and supported neighborhood revitalization plan. The main components of the act are tax credits and urban revitalization grants.

Tax Credits

Under the act, qualified businesses contributing to a neighborhood revitalization organization would be allowed a tax credit of not more than 50 percent of the total amount contributed to a qualified neighborhood revitalization board during a given tax year. This credit could be carried over for two years after which time it would be refundable. The total amount of these tax credits would be limited to $5,000,000 per fiscal year. Tax credits would begin in tax year 2002.

Urban Revitalization Grants

The act would create an Urban Revitalization Fund which would provide funding subject to appropriations to assist in the implementation of neighborhood revitalization plans.

The Secretary of Commerce and Housing would be authorized to approve grants for this purpose beginning in FY 2001.

Moneys for the Urban Revitalization Fund would come from a demand transfer from the State General Fund (SGF). This demand transfer would be equal to the moneys attributable to state sales tax, state income tax, and state property tax from the challenged neighborhood subject to a revitalization plan. This amount would be capped at not less than $2,000,000, nor more than $3,000,000, and the SGF would subsequently be replenished by a transfer of equal amount from the Economic Development Initiatives Fund (EDIF). Funding for these grants would expire after FY 2005.

Bill Overview

The bill would:

• Amend the definition of income for corporations, financial institutions, and insurance companies to include the amount of the charitable contribution qualifying for the tax credit in order to prevent a double benefit to those claiming the credit.



• Define the terms "business firm," "challenged neighborhood," and "neighborhood revitalization organization."



• Set out information to be provided in Urban Revitalization Grant applications.



• Places conditions on neighborhood revitalization organizations wishing to qualify for the grants.

• Set out the specifics of the grant program.



• Grants are awarded to one board per fiscal year.



• Each grant is capped at $2,000,000 to $3,000,000 per year.



• Grant funding received must be used for the purposes specified in the neighborhood revitalization plan.





• Prohibit the condemnation of existing occupied residential property as a part of a neighborhood revitalization plan.



• Require an assessment of the extent to which goals identified in the neighborhood revitalization plan application have been met based on quantifiable criteria to be undertaken by each neighborhood revitalization organization which has received a grant. This assessment must be submitted to the Kansas Department of Commerce and Housing (KDOCH) within three months after intended actions identified for implementation in the plan have been undertaken.



• Require KDOCH to include a status report of activities undertaken under the provisions of this act in its annual report to the Joint Committee on Economic Development.



• Provide guidelines for spending grant proceeds.



• Require the Secretary of KDOCH to adopt rules and regulations necessary to implement the program.

Background

The House Committee held a hearing on HB 2972 at which time the bill's primary sponsor, Representative Phill Kline, testified in favor of the bill. A representative from the League of Kansas Municipalities offered proposed amendments that would enable that organization to support the bill. Proposed amendments were also offered by a representative of Homestead Affordable Housing, Inc.

The House Committee made several amendments to the bill. These included technical amendments as well as amendments to:

• Substitute the term "challenged neighborhood" for "blighted area" throughout the bill.



• Require KDOCH to provide grants to neighborhood revitalization organizations for the planning and implementation of neighborhood revitalization plans, thereby requiring the implementation of the program. Previous language in the bill had been permissive only.



• Provide guidelines for the election of officers of neighborhood revitalization organizations.



• Prohibit the condemnation of occupied residential housing as a part of the neighborhood revitalization plan.



• Amend the definition of corporate income to include the amount of the charitable contribution qualifying for the tax credit in order to prevent a double benefit to those claiming the credit. This provision was unintentionally omitted from the original version of the bill.



• Reduce from three to one the amount of grants which could be awarded each year.



• Increase the cap on EDIF moneys transferred to fund the grant program from $2,000,000 per year to a range from $2,000,000 to $3,000,000.

The Department of Revenue reports that passage of HB 2972 would result in a reduction in SGF revenues of $5,000,000 per fiscal year beginning in FY 2002. There would also be an additional reduction in EDIF funds of up to $3,000,000 per year. Finally, the Department is currently revising the administrative impact portion of the fiscal note to accurately reflect the estimated impact of implementing these provisions.

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