88
th Legislative Session _ 2013
Committee: House State Affairs
Wednesday, February 13, 2013
P - Present
E - Excused
A - Absent
Roll Call
P Conzet
P Gibson
P Gosch
P Hansen
P Hunhoff (Bernie)
P Killer
P Munsterman
P Novstrup (David)
P Parsley
P Verchio
P Wink
P Cronin, Vice-Chair
P Lust, Chair
OTHERS PRESENT: See Original Minutes
The meeting was called to order by Representative Lust.
MOTION: TO APPROVE THE MINUTES OF WEDNESDAY, FEBRUARY 13, 2013 7:45
AM
Moved by: Hansen
Second by: Verchio
Action: Prevailed by voice vote.
HB 1161: establish and provide certain incentives for projects that create new jobs
or promote economic activity.
Presented by: Representative Scott Munsterman (Handout: 1)
Representative Dick Werner
Proponents: Julie Johnson, Absolutely Aberdeen
David Owen, SD Chamber of Commerce and Industry
MOTION: AMEND HB 1161
1161fe
On the printed bill, delete everything after the enacting clause and insert:
" Section 1. Terms used in this Act mean:
(1) "Applicant," any municipality, economic development corporation, county, or other
political subdivision of the state that applies for funding under the program;
(2) "Award," funds provided to an applicant by GOED under the program;
(3) "Commissioner," the commissioner of the Governor's Office of Economic Development;
(4) "Construction date," the first date excavation, demolition, or construction begins for a
project;
(5) "Equipment," any new equipment that is installed or placed in a new or expanded facility;
(6) "GOED," the Governor's Office of Economic Development;
(7) "New or expanded facility," a new building or structure, or the expansion of an existing
building or structure;
(8) "Person," any individual, firm, copartnership, joint venture, association, cooperative,
nonprofit development corporation, limited liability company, limited liability
partnership, corporation, estate, trust, business trust, receiver, or any group or combination
acting as a unit;
(9) "Program," the rural economic development partnership program established in section
20 of this Act;
(10) "Project," either the construction of a new or expanded facility or equipment installed or
placed at a single site, or both;
(11) "Project cost," the amount paid in money, credits, property, or other money's worth for a
project.
Section 2. For the purposes of sections 1 to 19, inclusive, of this Act, the term, new or expanded
facility, does not include any building or structure:
(1) Used predominantly for residential housing; or
(2) Used predominantly to provide nonprofit health care services.
Section 3. For the purposes of sections 1 to 19, inclusive, of this Act, to qualify for a grant from
the business incentive grant fund, the project shall meet the following criteria:
(1) A business plan is submitted to the local development corporation which shows that
additional jobs will be created or retained and economic activity will occur if the project
is constructed;
(2) The local development corporation has reviewed the business plan for the project and has
made a determination of the economic impact including job growth which is scored
pursuant to section 16 of this Act;
(3) The municipality has adopted a resolution to approve the municipal sales and use tax
incentives provided by sections 1 to 19, inclusive, of this Act and to authorize the
Department of Revenue to deposit such tax revenue in the business incentive grant fund
for the purpose of granting funds to a person that has entered into an agreement pursuant
to section 6 of this Act. A copy of the municipal resolution shall be submitted to the
Department of Revenue;
(4) A copy of the municipal resolution is submitted with the grant application to the Board
of Economic Development; and
(5) The county or municipality has adopted a formula to reduce property taxation for the
project for five years under the discretionary formula pursuant to § 10-6-35.2 or has
approved a tax incremental district pursuant to chapter 11-9 for the area where the project
will be located.
Section 4. As provided in sections 1 to 19, inclusive, of this Act, any person that has entered into
an agreement pursuant to section 6 of this Act may apply for a grant from the business incentive
grant fund that is two times the amount of the municipal sales and use tax imposed and paid by such
person for the project under the provisions of chapter 10-52. However, if the project costs exceeds
twenty million dollars, the grant may be for an amount not to exceed all of the state and municipal
sales and use tax collected pursuant to chapters 10-45, 10-46, and 10-52.
If a project is located outside the incorporated limits of a municipality, the Board of Economic
Development, created pursuant to chapter 1-16G, may waive the requirement that the municipal sales
tax revenue be deposited in the business incentive grant fund if the other provisions of sections 1 to
19, inclusive, of this Act have been met. If such requirement is waived, any person that has entered
into an agreement pursuant to section 6 of this Act may apply for a grant from the business incentive
grant fund that is equal to one-half of the state sales and use tax collected pursuant to chapters 10-45
and 10-46 for the project costs. However, if the project costs exceeds twenty million dollars, the
grant may be for an amount not to exceed all of the state sales and use tax collected pursuant to
chapters 10-45 and 10-46 for the project costs.
Section 5. The grant pursuant to section 4 of this Act pertains only to project costs incurred and
paid after July 1, 2013, within thirty-six months from the construction date. No grant may be made
unless:
(1) A resolution has been adopted by the municipality where the project is located agreeing
to deposit all of the sales and use taxes imposed on the project by the municipality
pursuant to chapter 10-52 into the business incentive grant fund; and
(2) The person applying for the grant enters an agreement as provided in section 6 of this Act.
Section 6. Any person desiring to receive a grant pursuant to sections 1 to 19, inclusive, of this
Act shall apply to the Board of Economic Development for a grant from business incentive grant
fund prior to or within ninety days after the construction date.
If the municipality has adopted a resolution to approve the municipal sales and use tax being
deposited in the business incentive grant fund pursuant to section 3 of this Act, an application and
business plan shall be submitted to the Board of Economic Development. The board shall review the
application and business plan and determine whether the grant from the business incentive grant fund
shall be approved or disapproved. The application shall be submitted on a form prescribed by the
board. A separate application shall be made and submitted for each project.
If the application is approved, the board shall enter into an agreement entitling the applicant to
submit claims as provided by sections 7 and 8 of this Act. Such claims are not assignable or
transferable except as collateral or security pursuant to chapter 57A-9. However, the commissioner
may permit the assignment or transfer of an agreement and if the initial permit holder entity
reorganizes into a new entity, if the new entity and the initial entity share common ownership and
the reorganization was completed solely for a legitimate business purpose. The new entity shall file
with the GOED an amended application for the grant.
Section 7. Any claim for a grant shall be submitted on forms prescribed by the commissioner and
shall be supported by such documentation as the commissioner may require. The commissioner may
deny any claim where the claimant has failed to provide information or documentation requested or
considered necessary by the commissioner to determine the validity of the claim.
Section 8. Any person who has entered into an agreement pursuant to sections 1 to 19, inclusive,
of this Act shall submit a claim for a grant to the GOED no more frequently than on or before the
last day of each month and no less frequently than on or before the last day of each month following
each calendar quarter. The commissioner shall determine and pay the amount of the grant within
ninety days of receipt of the claim. However, no claim may be paid until on or after the construction
date. No interest may be paid on the grant amount. The commissioner shall pay the grant by
electronic funds transfer.
Section 9. No claim for a grant pursuant to sections 1 to 19, inclusive, of this Act may be
considered by the GOED if the claim for the grant is received twelve months after the thirty-six
month time period set by section 5 of this Act. Moreover, any such claim is barred from any future
grant eligibility.
Section 10. No document or record in support of any claim for grant may be considered by the
GOED if the document or record in support of any claim for a grant is received twelve months after
the thirty-six month time period of section 5 of this Act. Moreover, any such document or record is
barred from any future consideration.
However, if the GOED requests any additional document or record from the project owner after
a review of the claim for a grant, and the request is made after the applicable time period provided
by this section has expired, the project owner has sixty days to provide the requested document or
record. No document or record received after this sixty-day period may be considered by the GOED.
Moreover, any such document or record is barred from any future consideration.
Section 11. If any claim has been fraudulently presented or supported as to any item in the claim,
or if the claimant fails to meet all the conditions of sections 1 to 19, inclusive, of this Act, then the
claim may be rejected in its entirety and all sums previously granted to the claimant shall constitute
a debt to the state and a lien in favor of the state upon all property and rights to property whether real
or personal belonging to the claimant and may be recovered in an action of debt.
Section 12. Any person aggrieved by the denial in whole or in part of a grant claimed under
sections 1 to 19, inclusive, of this Act, may within thirty days after service of the notice of such
denial by the commissioner, demand and is entitled to a hearing, upon notice, before the
commissioner. The hearing shall be conducted pursuant to chapter 1-26.
Section 13. Any amount granted pursuant to sections 1 to 19, inclusive, of this Act for a project
that is not completed within the time frames prescribed in sections 1 to 19, inclusive, of this Act,
including any extensions granted by the commissioner, shall be returned to the state without interest.
Any granted amounts not returned pursuant to this section and all sums previously granted to the
claimant constitute a debt to the state and a lien in favor of the state upon all property and rights to
property whether real or personal belonging to the claimant and may be recovered in an action of
debt.
Section 14. Any person aggrieved by a decision of the commissioner under sections 1 to 19,
inclusive, of this Act may, within thirty days of receipt of written notice of the commissioner's
decision, make written application to the commissioner for a hearing to be conducted pursuant to
chapter 1-26. Hearings are to be conducted and appeals taken pursuant to the provisions of chapters
1-26 and 1-26D. A copy of the hearing examiner's proposed decision, findings of fact, and
conclusions of law shall be served on all parties when furnished to the commissioner. If the
commissioner, pursuant to chapter 1-26D, accepts the final decision of the hearing examiner, no
appeal from a final decision of the commissioner upon any additional tax to be paid may be taken
unless any amount ordered paid by the commissioner is paid or a bond filed to insure payment of the
amount. However, if the final decision of the commissioner, pursuant to chapter 1-26D, rejects or
modifies the decision of the hearing examiner regarding the amount due, an appeal may be taken
without payment of the amount ordered to be paid and without filing of a bond. If the commissioner's
decision is affirmed by the circuit court, no appeal may be taken unless any amount ordered to be
paid by the commissioner is paid or a bond is filed to insure payment of such amount.
Section 15. The name of any person or entity that receives a grant pursuant to sections 1 to 19,
inclusive, of this Act and the amount of any such grant or credit is public information and shall be
available and open to public inspection as provided in § 1-27-1.
Section 16. The local economic development corporation shall determine the economic impact
of the new or expanded facility by using the following factors:
(1) Project impact factors;
(a) Economic impact of primary jobs created or retained;
(b) Net economic effect of increasing or stabilizing the economy on the community,
area, and state;
(c) Competitive effect on existing businesses;
(d) Support of the public entities of the community and area;
(e) The amount of the owner's equity contributed to the project;
(f) The effect of the project on the environment, health, and safety of the people in the
community, area, and state;
(g) Compatibility with economic development plans of the area and state;
(h) Type of business;
(i) Payroll, pay structure, and employee benefit structure; and
(j) Number of jobs created or retained; and
(2) Business feasibility factors:
(a) The potential success of the business and the potential for creating quality jobs and
the growth of those jobs;
(b) The character, experience, management record, and background of the business
management;
(c) The economic feasibility of the project;
(d) The financial status of the project, business plan, and applicant;
(e) The satisfaction of engineering, legal, and environmental regulations; and
(f) The availability of necessary public utilities.
Section 17. There is hereby created in the state treasury the business incentive grant fund. The
Board of Economic Development may award grants from the fund for projects that create or retain
jobs and economic benefits to the state and provide matching funds for rural economic development
partnership program created by sections 20 to 23, inclusive, of this Act. The board may accept and
expend for the purposes of this Act any funds obtained from appropriations or any other source if
such acceptance and expenditure is approved in accordance with § 4-8B-10. Interest earned on
money in the fund shall be deposited into the fund. Expenditures from this fund shall be appropriated
through the normal budgeting process.
Section 18. If a grant is approved by the Board of Economic Development pursuant to sections
1 to 19, inclusive, of this Act, the Department of Revenue shall deposit fifty percent of the sales and
use taxes imposed by chapters 10-45 and 10-46 on the project into the business incentive grant fund.
However, if the project costs exceeds twenty million dollars, the Department of Revenue shall
deposit all of the sales and use taxes imposed by chapters 10-45 and 10-46 on the project into the
business incentive grant fund.
Section 19. The Board of Economic Development shall promulgate rules pursuant to chapter 1-26 concerning the following:
(1) Establish application procedures for a business incentive grant;
(2) The submission of a business plan;
(3) Establish criteria to determine which applicant may receive a grant;
(4) Establish criteria for the terms and conditions upon which a grant may be made, including
performance criteria and matching requirements plan; and
(5) Determine the procedures for distributing the grant funds to the applicant.
Section 20. The rural economic development partnership program is hereby established within
the Governor's Office of Economic Development. Under the program, any municipality, economic
development corporation, county, or other political subdivision of the state may apply to GOED for
funds on a matching basis as provided in sections 20 to 23, inclusive, of this Act.
Section 21. GOED may award funds under the program for new full time staff, or elevate
existing part-time staff to full-time, equipment, and training needs for the purpose of developing or
expanding housing, community, and economic development programs. Areas of emphasis under the
program include creating employment opportunities, higher wages, better-quality jobs, greater access
to resources, repopulation, stronger economies, access to replicable best practice methods,
continuous housing development, business growth, and job creation and retention.
Section 22. Funds awarded under the program shall be provided on a matching basis over a
five-year period for each award so that fifty percent of the first year's project cost is paid by GOED,
forty percent of the second year's project cost is paid by GOED, thirty percent of the third year's
project cost is paid by GOED, twenty percent of the fourth year's project cost is paid by GOED, and
ten percent of the fifth year's project cost is paid by GOED. In each year the remaining portion of the
project cost for that year shall be paid by the applicant. GOED awards and matching funds paid by
the applicant shall be structured so that the project cost for each of the five years is as nearly equal
as practicable.
Section 23. GOED shall promulgate rules pursuant to chapter 1-26 to provide for the
implementation and administration of the rural economic development partnership program. The
rules shall include:
(1) Application requirements, procedures, and forms;
(2) Award procedures;
(3) Eligible uses of award funds;
(4) Eligibility requirements for applicants;
(5) Responsibilities of applicants and award recipients;
(6) Procedures for rescinding and repayment of awards if the applicant's or recipient's
responsibilities are not met;
(7) Reporting requirements; and
(8) Other items necessary for the administration of the program."
Moved by: Wink
Second by: Verchio
Action: Prevailed by voice vote.
MOTION: DO PASS HB 1161 AS AMENDED
Moved by: Novstrup (David)
Second by: Conzet
Action: Prevailed by roll call vote. (13-0-0-0)
Voting Yes: Conzet, Gibson, Gosch, Hansen, Hunhoff (Bernie), Killer, Munsterman, Novstrup
(David), Parsley, Verchio, Wink, Cronin, Lust
MOTION: AMEND TITLE OF HB 1161
1161ftb
On page 1, line 2, of the printed bill, after "activity" insert "and to establish the rural economic
development partnership program".
Moved by: Hansen
Second by: Wink
Action: Prevailed by voice vote.
HB 1196: establish the rural economic development partnership program and to
make an appropriation therefor.
Presented by: Representative Dick Werner
MOTION: TO TABLE HB 1196
Moved by: Novstrup (David)
Second by: Hansen
Action: Prevailed by roll call vote. (13-0-0-0)
Voting Yes: Conzet, Gibson, Gosch, Hansen, Hunhoff (Bernie), Killer, Munsterman, Novstrup
(David), Parsley, Verchio, Wink, Cronin, Lust
HB 1250: honor veterans as certain persons who performed service in reserve
components.
Presented by: Steve Harding, Department of Military and Veterans' Affairs
Proponents: Representative Stace Nelson
MOTION: DO PASS HB 1250
Moved by: Gosch
Second by: Novstrup (David)
Action: Prevailed by roll call vote. (13-0-0-0)
Voting Yes: Conzet, Gibson, Gosch, Hansen, Hunhoff (Bernie), Killer, Munsterman, Novstrup
(David), Parsley, Verchio, Wink, Cronin, Lust
HB 1136: affect medical services.
Presented by: Representative Justin Cronin
MOTION: DO PASS HB 1136
Moved by: Hansen
Second by: Munsterman
Action: Prevailed by roll call vote. (13-0-0-0)
Voting Yes: Conzet, Gibson, Gosch, Hansen, Hunhoff (Bernie), Killer, Munsterman, Novstrup
(David), Parsley, Verchio, Wink, Cronin, Lust
HB 1137: impact education in South Dakota.
Presented by: Representative Justin Cronin
MOTION: DO PASS HB 1137
Moved by: Verchio
Second by: Conzet
Action: Prevailed by roll call vote. (13-0-0-0)
Voting Yes: Conzet, Gibson, Gosch, Hansen, Hunhoff (Bernie), Killer, Munsterman, Novstrup
(David), Parsley, Verchio, Wink, Cronin, Lust
HB 1212: increase the expense allowances of legislators.
Presented by: Representative David Novstrup (Handout: 2)
Opponents: Jerry Apa, Self, Lead
MOTION: AMEND HB 1212
1212fb
On page 1, line 10, of the printed bill, delete everything after "Expenses" and insert "of one
hundred ten dollars per day for each day of a regular".
On page 1, line 14, after "services" insert ", at an amount fixed for the per diem allowance that
is authorized by the United States Internal Revenue Service to be excluded from the gross income
without itemization as of October first each year".
Moved by: Conzet
Second by: Hansen
Action: Prevailed by voice vote.
MOTION: DO PASS HB 1212 AS AMENDED
Moved by: Conzet
Second by: Munsterman
Action: Prevailed by roll call vote. (10-3-0-0)
Voting Yes: Conzet, Gibson, Gosch, Hunhoff (Bernie), Killer, Munsterman, Novstrup (David),
Parsley, Cronin, Lust
Voting No: Hansen, Verchio, Wink
HB 1214: provide medical care for certain unborn children.
Presented by: Representative Bernie Hunhoff
Proponents: Representative Stace Nelson
Deb Fischer Clemens, Avera Health
Representative Manny Steele
Travis Benson, Catholic Diocese of Sioux Falls
Scott Zieske, Regional Health
Mark Chase, SD Family Policy Council
MOTION: AMEND HB 1214
1214ja
On page 1 of the printed bill, delete lines 3 to 5, inclusive.
Moved by: Gosch
Second by: Conzet
Action: Prevailed by voice vote.
MOTION: DO PASS HB 1214 AS AMENDED
Moved by: Gosch
Second by: Munsterman
Action: Prevailed by roll call vote. (13-0-0-0)
Voting Yes: Conzet, Gibson, Gosch, Hansen, Hunhoff (Bernie), Killer, Munsterman, Novstrup
(David), Parsley, Verchio, Wink, Cronin, Lust
HB 1222: provide that any federal law that attempts to ban firearms, to limit the size
of firearm magazines, or to impose other limitations on firearms is unenforceable in
South Dakota, to provide a penalty, and to declare an emergency.
Presented by: Representative Stace Nelson
Proponents: Eldon Stahl, Self, Mitchell, SD
Opponents: Matt Konenkamp, Governor's Office
Charlie McGuigan, Office of Attorney General
MOTION: DEFER HB 1222 TO THE 41
ST LEGISLATIVE DAY
Moved by: Novstrup (David)
Second by: Parsley
Action: Prevailed by roll call vote. (12-1-0-0)
Voting Yes: Conzet, Gibson, Gosch, Hansen, Hunhoff (Bernie), Killer, Munsterman, Novstrup
(David), Parsley, Wink, Cronin, Lust
Voting No: Verchio
MOTION: ADJOURN
Moved by: Verchio
Second by: Gibson
Action: Prevailed by voice vote.
Joshua Klumb
____________________________
Committee Secretary
David Lust, Chair
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