With the passage of HB 1386, cities of all sizes will be allowed to enact the Targeted Urban Areas (TUA) property tax exemption to help promote living-wage jobs.
The TUA property tax exemption is a 10-year local property tax exemption for new industrial or manufacturing facilities within a designated city area. A key eligibility requirement for the TUA is that the facility create a certain number of jobs paying
a specific wage. After contracting with a city, the tax exemption is provided on the value of eligible improvements and applies only to the city portion of the collected property tax. Counties, by resolution, may also exempt eligible improvements
from county property taxes.
As passed by the Legislature, HB 1386 makes the TUA tax exemption available to all cities no matter their size or location and extends the deadline for companies to apply for tax exemption to December 31, 2030.
Additionally, the bill updates the criteria and requirements of the TUA tax to include:
- Requiring business to provide a family living base wage of $23 per hour and to offer health care benefits. Previously, the TUA required that employers provide a base wage of $18 per hour and did not require that they offer health care benefits.
- Allowing eligibility for the exemption to facilities classified as Division E: Transportation by the US Department of Labor. Cities maintain the ability to exclude or limit such facilities from the tax exemption.
- Requiring cities to give priority to applicants that:
- Provide prevailing wage jobs.
- Procure from and contract with women-, minority-, or veteran-owned businesses.
- Procure from and contract with businesses that have a history of compliance with wage and hour regulations.
- Use apprenticeships from state-registered apprenticeship programs.
- Give preferred hiring to workers living in the vicinity of the project.
- Maintain labor standards for workers employed at the facility.
HB 1386 now heads to the Governor’s desk for his signature.