41-1511

41-1511. Renewable energy tax incentives;
qualification; definitions

A. Tax incentives are allowed for expanding or locating qualified renewable energy
operations in this state, including income tax credits pursuant to sections 43-1083.01
and 43-1164.01 and property tax classification pursuant to section 42-12006, paragraph 9.

B. To be eligible for the tax incentives, a renewable energy business must apply to
the department of commerce, on a form prescribed by the department, for preapproval of
the business as qualifying for the incentives. The application must include:

1. The applicant's name, address, telephone number and federal taxpayer
identification number or numbers.

2. The name, address, telephone number and e-mail address of a contact person for
the applicant.

3. The address of the site where the qualifying renewable energy operation will be
located.

4. A detailed description of the qualifying renewable energy operation and fixed
capital assets.

5. An estimate of the capital investment and number of employment positions at the
qualifying renewable energy operation, including:

(a) A schedule of qualifying investments.

(b) A list of full-time employment positions, the estimated number of employees to
be hired for the positions each year during the first five years of operation and the
annual wages for each position, calculated without employee-related benefits.

6. A nonrefundable processing fee in an amount determined by the department.

7. Other information as required by the department to determine eligibility for the
tax incentives, and the amount of income tax credits, as prescribed by this section.

8. An affirmation, signed by an authorized executive representing the business,
that the applicant:

(a) Agrees to furnish records of expenditures for qualifying investments to the
department of commerce on request.

(b) Will continue in business at the qualifying renewable energy operation for five
full calendar years after postapproval for a tax incentive, other than for reasons beyond
the control of the applicant.

(d) Authorizes the department of revenue to provide tax information to the
department of commerce pursuant to section 42-2003 for the purpose of determining any
inconsistency in information furnished by the applicant.

(e) Agrees to allow site visits and audits to verify the applicant's continuing
qualification and the accuracy of information submitted to the department of commerce.

(f) Consents to the adjustment or recapture of any amount of income tax credit or
property tax incentive due to noncompliance with this section.

9. Letters of good standing from the department of revenue and the county treasurer
of the county in which the project is located stating that the applicant is in good
standing and is not delinquent in the payment of taxes.

C. To be eligible for the tax incentives, the applicant must make new capital
investment in this state after September 30, 2009 in a manufacturing facility or
headquarters facility or any combination of qualifying facilities, as follows:

1. The applicant may qualify for income tax credits pursuant to section 43-1083.01
or 43-1164.01, as applicable, if:

(a) At least fifty-one per cent of the net new full-time employment positions at
the renewable energy operation pay a wage that equals or exceeds one hundred twenty-five
per cent of the median annual wage in this state, as determined by the most recent annual
department of commerce occupational wage and employment estimates.

(b) All net new full-time employment positions include health insurance coverage
for the employees for which the applicant pays at least eighty per cent of the premium or
membership cost.

2. The fixed capital assets shall be classified as class six for the purposes of
property taxation pursuant to section 42-12006, paragraph 9 if the qualifying investment
amounts to at least twenty-five million dollars, if the applicant pays at least eighty
per cent of the health insurance costs or membership costs for all net new employees and
if at least fifty-one per cent of the net new full-time employment positions at the
qualifying renewable energy operation pay a wage that equals:

(a) At least one hundred twenty-five, but less than two hundred, per cent of the
median annual wage in this state, as determined by the most recent annual department of
commerce occupational wage and employment estimates, the property may be classified as
class six for ten tax years.

(b) At least two hundred per cent of the median annual wage in this state, as
determined by the most recent annual department of commerce occupational wage and
employment estimates, the property may be classified as class six for fifteen tax years.

D. Final eligibility for the tax incentives is subject to any additional
requirements prescribed by sections 42-12006, 43-1083.01 and 43-1164.01, as applicable.

E. An applicant may separately apply and qualify with respect to investments for:

1. Renewable energy operations in separate locations.

2. Separate expansions of a renewable energy operation.

F. To determine the amount of income tax credit to be preapproved to a qualifying
applicant, the department shall use one of the following computations:

1. Ten per cent of the amount the applicant has projected in total qualifying
investment in renewable energy operation meeting the following minimum employment
requirements:

(a) For renewable energy manufacturing operations, at least one and one-half new
full-time employment positions projected by the applicant for each five hundred thousand
dollar increment of capital investment.

(b) For renewable energy business headquarters, at least one new full-time
employment position projected by the applicant for each two hundred thousand dollar
increment of capital investment.

2. For other qualifying renewable energy investment, ten per cent of the amount
computed as follows:

(a) Five hundred thousand dollars for each one and one-half new full-time
employment positions projected by the applicant in new renewable energy manufacturing
operations.

(b) Two hundred thousand dollars for each new full-time employment position
projected by the applicant at a new renewable energy business headquarters.

G. Beginning with income tax credits allocated for 2010, an approved income tax
credit:

1. Must be claimed on a timely filed original income tax return, including
extensions.

2. Must be claimed in five equal installments as provided in section 43-1083.01 or
43-1164.01.

H. The department shall establish a process for qualifying and preapproving
applicants for the tax incentives. The department shall not preapprove an applicant as
qualifying for tax incentives under this section after December 31, 2014. Preapproval is
based on:

1. Priority placement established by the date that the applicant files its initial
application with the department.

2. The availability of income tax credit capacity under the dollar limit prescribed
by subsection J of this section.

I. Within thirty days after receiving a complete and correct application, the
department shall review the application to determine whether the applicant satisfies all
of the criteria prescribed by this section and either preapprove the project as
qualifying for the purposes of the tax incentives or provide reasons for its denial. The
department of commerce shall send copies of the preapproval to the department of revenue
and the applicable county assessor.

J. The department shall not preapprove income tax credits exceeding seventy million
dollars in any calendar year, except as provided by this subsection and subsection K of
this section. A preapproved amount applies against the dollar limit for the year in
which the application was submitted regardless of whether the initial preapproval period
extends into the following year or years. If, at the end of any year, an unused balance
occurs under the dollar limit prescribed by this subsection:

1. The balance shall be allocated to renewable energy businesses that successfully
appeal the denial of approval under this section. Any amount of income tax credits due to
successful appeals that are not paid from an unused balance at the end of any year shall
be paid against the dollar limit in the following year.

2. Any remaining unused balance shall be reallocated for the purposes of this
section in the following year.

K. The department shall reallocate the amount of income tax credits that are
voluntarily relinquished under subsection L of this section, that lapse under subsection
M of this section or that lapse under subsection P of this section. The reallocation
shall be to other renewable energy businesses that applied in the original credit year
based on priority placement. Once reallocated, the amount of the credit applies against
the dollar limit of the original credit year regardless of the year in which the
reallocation occurs.

L. A taxpayer may voluntarily relinquish unused credit amounts.

M. Preapproval under this section lapses, the application is void and the amount of
the preapproved income tax credits does not apply against the dollar limit prescribed by
subsection J of this section if, within twelve months after preapproval, the renewable
energy business fails to provide to the department documentation of its expenditure of
two hundred fifty thousand dollars in qualifying investment or, if the period over which
the qualifying investment will be made exceeds twelve months, documentation of additional
expenditures as required in this subsection for each twelve month period.

N. Beginning in 2010, after October 31 of each year, if the department has
preapproved the maximum calendar year income tax credit amount pursuant to subsection J
of this section, the department may accept initial applications for the next calendar
year, but the preapproval of any application pursuant to this subsection shall not be
effective before the first business day of the following calendar year.

O. Before an applicant applies for postapproval under subsection P of this section,
the applicant must enter into a written managed review agreement with the director that
establishes the requirements of a managed review to be conducted under this subsection at
the applicant's expense. The managed review must be conducted by a certified public
accountant who is selected by the applicant, who is licensed in this state and who is
approved by the director. The certified public accountant and the firm the certified
public accountant is affiliated with shall not regularly perform services for the
applicant or its affiliates. The managed review shall include an analysis of the
applicant's invoices, checks, accounting records and other documents and information to
verify its base investment and other requirements prescribed by section 42-12006,
43-1083.01 or 43-1164.01 to confirm the amount of credit or property tax incentive. The
certified public accountant shall furnish written findings of the managed review to the
director. The director shall review the findings and may examine records and perform
other reviews that the director considers necessary to verify that the managed review
substantially conforms to the terms of the managed review agreement. The director shall
accept or reject the findings of the managed review. If the director rejects all or part
of the managed review, the director shall provide written reasons for the rejection.

P. When the renewable energy operation begins operations, a renewable energy
business that was preapproved for income tax credits under this section shall apply to
the department in writing for postapproval of the credits and submit documentation
certifying the total amount and dates of the qualifying investments and identifying the
fixed capital assets associated with the renewable energy operation incurred from and
after September 30, 2009 through the date of application for postapproval. From and
after December 31, 2009, the department shall provide postapproval to a renewable energy
business that it has met the eligibility requirements of this section and shall notify
the department of revenue that the renewable energy business may claim the tax credits
pursuant to section 43-1083.01 or 43-1164.01. If the amount of qualifying investment
actually spent is less than the amount preapproved for income tax credits, the
preapproved amount not incurred lapses and does not apply against the dollar limit
prescribed by subsection J of this section for that year. The department shall not allow
a credit under section 43-1083.01 or 43-1164.01 that exceeds the amount of the
postapproval for the project under this subsection. For the purposes of this subsection,
"begins operations" means:

1. A headquarters facility opens for public business.

2. A manufacturing facility begins producing commercial quantities of usable
products.

Q. The department of commerce may rescind the business' postapproval if the
business no longer meets the terms and conditions required for qualifying for the tax
incentives. The department may give special consideration, or allow temporary exemption
from recapture of tax benefits, in the case of extraordinary hardship due to factors
beyond the control of the qualifying business.

R. If the department of commerce rescinds an applicant's preapproval or
postapproval under subsection Q of this section, it shall notify the department of
revenue and the county assessor of the action and the conditions of noncompliance. If
the department of revenue obtains information indicating a possible failure to qualify
and comply, it shall provide that information to the department of commerce. The
department of revenue may require the business to file appropriate amended tax returns
reflecting any recapture of income tax credits under section 43-1083.01 or 43-1164.01.

S. Preapproval and postapproval of a business for the purposes of tax incentives
under this section do not constitute or imply compliance with any other provision of law
or any regulatory rule, order, procedure, permit or other measure required by law. To
maintain qualification for tax incentives under this section, a business must separately
comply with all environmental, employment and other regulatory measures.

T. For five years after postapproval for tax incentives under this section, in any
action involving the liquidation of the business assets or relocation out of state this
state claims the position of a secured creditor of the business in the amount of income
tax credits and property tax incentives the business received pursuant to section
42-12006, 43-1083.01 or 43-1164.01.

U. Any information gathered from a renewable energy business for the purposes of
this section is considered to be confidential taxpayer information and shall be disclosed
only as provided in section 42-2003, subsection B, paragraph 12, except that the
department shall publish the following information in its annual report:

1. The name of each renewable energy business and the amount of income tax credits
preapproved for each qualifying investment.

2. The amount of credits postapproved with respect to each qualifying investment.

V. The department shall:

1. Keep annual records of the information provided on applications for renewable
energy businesses. These records shall reflect a percentage comparison of the annual
amount of monies exempted or credited to qualifying renewable energy businesses to the
estimated amount of monies spent in this state in the form of qualifying investments.

2. Maintain annual data on growth in this state of renewable energy businesses and
industry employment and wages.

3. Not later than April 30 of each year, prepare and publish a report summarizing
the information collected pursuant to this subsection. The department shall make copies
of the annual report available to the public on request.

W. The department of commerce shall adopt rules and prescribe forms and procedures
as necessary for the purposes of this section. The department of commerce and the
department of revenue shall collaborate in adopting rules as necessary to avoid
duplication and inconsistencies while accomplishing the intent and purposes of this
section.

X. For the purposes of this section:

1. "Capital investment" means an expenditure to acquire, lease or improve property
that is used in operating a business, including land, buildings, machinery and fixtures.

2. "Headquarters" means a principal central administrative office where primary
headquarters related functions and services are performed, including financial,
personnel, administrative, legal, planning and similar business functions.

3. "Manufacturing" means fabricating, producing or manufacturing raw or prepared
materials into usable products, imparting new forms, qualities, properties and
combinations. Manufacturing does not include generating electricity for off-site
consumption.

4. "Primarily engaged" means that more than fifty per cent of a company's business
activity at a particular facility directly involves renewable energy operations, measured
by revenues received, expenses incurred, square footage or the number of individuals
employed.

5. "Qualifying investment" means investment in land, buildings, machinery and
fixtures for expansion of an existing renewable energy operation or establishment of a
new renewable energy operation in this state after September 30, 2009. Qualifying
investment does not include relocating an existing renewable energy operation in this
state to another location in this state without additional capital investment of at least
two hundred fifty thousand dollars.

6. "Qualifying renewable energy operation" means the facility where a qualifying
investment was made.

7. "Renewable energy" means usable energy, including electricity, fuels, gas and
heat, produced through the conversion of energy provided by sunlight, water, wind,
geothermal, heat, biomass, biogas, landfill gas or other nonfossil renewable resource.

8. "Renewable energy business" means a person primarily engaged in the business of
renewable energy manufacturing operations or renewable energy headquarters operations.

9. "Renewable energy operations" are limited to manufacturers of, and headquarters
for, systems and components that are used or useful in manufacturing renewable energy
equipment for the generation, storage, testing and research and development, transmission
or distribution of electricity from renewable resources, including specialized crates
necessary to package the renewable energy equipment manufactured at the qualifying
renewable energy operation.

10. "Renewable energy resource" means a resource that is replaced by natural and
assisted processes at a rate that is comparable to or faster than the rate of natural
depletion and consumption by humans.