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1 STATE OF OKLAHOMA
1
2 2nd Session of the 60th Legislature (2026)
2
3 SENATE BILL 1848 By: Sacchieri
3
4
4
5
5
6 AS INTRODUCED
6
7 An Act relating to incentives; amending 62 O.S. 2021,
7 Sections 860, as amended by Section 1, Chapter 145,
8 O.S.L. 2023, and 861 (62 O.S. Supp. 2025, Section
8 860), which relate to the Local Development Act;
9 prohibiting certain establishments from receiving
9 incentives or exemptions; prohibiting certain
10 districts from including the property of certain
10 establishments; amending 68 O.S. 2021, Section 2902,
11 as last amended by Section 1, Chapter 411, O.S.L.
11 2025 (68 O.S. Supp. 2025, Section 2902), which
12 relates to the exemption from ad valorem tax for
12 manufacturing facilities; limiting authorization for
13 exemption for certain facilities to certain period;
13 updating statutory language; updating statutory
14 references; and providing an effective date.
14
15
15
16
16
17 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
17
18 SECTION 1. AMENDATORY 62 O.S. 2021, Section 860, as
18
19 amended by Section 1, Chapter 145, O.S.L. 2023 (62 O.S. Supp. 2025,
19
20 Section 860), is amended to read as follows:
20
21 Section 860. A. A project plan may contain a provision that
21
22 certain local taxes may be subject to incentives or may be exempted
22
23 in reinvestment areas, historic preservation areas, or enterprise
23
24 areas.
24
Req. No. 2891 Page 1
1 B. The governing body may grant incentives or exemptions from
1
2 local taxation only on the new investment made. No ad valorem tax
2
3 incentives or exemptions may be granted on the value of property
3
4 which has been assessed or which is subject to assessment prior to
4
5 the adoption of the project plan. No ad valorem tax incentives or
5
6 exemptions authorized in this section may be granted for retail
6
7 establishments or an establishment, the business of which is
7
8 described by National Industry Numbers 518210 and 221114 through
8
9 221117 of the North American Industry Classification System (NAICS)
9
10 Manual, latest revision. If a retail establishment or an
10
11 establishment, the business of which is described by National
11
12 Industry Numbers 518210 and 221114 through 221117 of the NAICS
12
13 Manual, latest revision, is located in property which otherwise
13
14 qualifies for an incentive or exemption pursuant to this section,
14
15 the incentive or exemption shall not be allowed for that portion of
15
16 the property used for such retail establishment or an establishment,
16
17 the business of which is described by National Industry Numbers
17
18 518210 and 221114 and 221115 of the NAICS Manual, latest revision.
18
19 As used in this subsection, "retail establishment" shall not include
19
20 an establishment that provides lodging including, but not limited
20
21 to, a hotel, apartment hotel, public rooming house, or motel. No ad
21
22 valorem tax incentives or exemptions authorized in this section may
22
23 be granted if the property is located in an increment district or as
23
24 long as the property is subject to the ad valorem tax exemption for
24
Req. No. 2891 Page 2
1 new or expanding manufacturing facilities as authorized by Section
1
2 6B of Article X of the Oklahoma Constitution. In the event of
2
3 disposition by lease or sublease to a lessee not entitled to an ad
3
4 valorem tax exemption, the improvements placed thereon shall not be
4
5 entitled to an ad valorem tax exemption provided for in Section 850
5
6 et seq. of this title. Except as otherwise provided by this
6
7 subsection, the incentives, or exemptions, which may be full or
7
8 partial, may be granted for a period not to exceed five (5) years.
8
9 With respect to an establishment, the business of which is described
9
10 by U.S. Industry Number 518210 of the North American Industry
10
11 Classification System (NAICS) Manual, 2017 revision, such incentives
11
12 or exemptions may be granted for a period not to exceed twenty-five
12
13 (25) years.
13
14 C. No incentives or exemptions may be granted to any business
14
15 or firm that is relocating from within the state and is subject to
15
16 or in the process of recruitment by two or more governmental
16
17 entities within the state unless the governmental entity in which
17
18 the business or firm does not locate adopts a resolution giving
18
19 their its approval to the granting of incentives or exemptions to
19
20 the business or firm locating in the competing governmental entity.
20
21 No incentives or exemptions may be granted to an out-of-state
21
22 business or firm that is subject to or in the process of recruitment
22
23 by two or more governmental entities within the state except as
23
24 otherwise provided for in this subsection. The prohibition against
24
Req. No. 2891 Page 3
1 incentives or exemptions to a business or firm relocating within the
1
2 state may be waived upon application by the governing body to, and
2
3 approval of, the Director Chief Executive Officer of the Oklahoma
3
4 Department of Commerce. In order for the Director Chief Executive
4
5 Officer to approve the waiver, the Director Chief Executive Officer
5
6 must find that the incentives or exemptions are necessary and
6
7 sufficient to attract the business or firm and that the benefits
7
8 generated by the business location outweigh the costs of the
8
9 business location.
9
10 D. A project plan may contain a provision that ad valorem taxes
10
11 may be exempted in a commercial historic preservation area that is
11
12 adjacent to and serves designated historical residential areas for
12
13 neighborhood commercial preservation purposes in order for the
13
14 neighborhood to retain its basic character and scale. No ad valorem
14
15 tax exemption may be granted on the value of property which has been
15
16 assessed or which is subject to assessment prior to the adoption of
16
17 the project plan. No ad valorem tax exemption shall be granted
17
18 pursuant to the provisions of this subsection for single-family
18
19 residences. The governing body may grant the exemption only on the
19
20 increase in value of the property. The exemptions may be granted
20
21 for a specific period of time as determined by a written agreement
21
22 between the property owners of the area and the governing body and
22
23 may be renewed. Uses of the property eligible for this exemption
23
24
24
Req. No. 2891 Page 4
1 may include, but not be limited to, commercial, office, or
1
2 multifamily residential use.
2
3 E. For increment districts in operation for nine (9) months or
3
4 more, on or before the ninetieth day following the end of each
4
5 fiscal year, the governing body of a city, town, or county shall
5
6 submit a report to the Oklahoma Department of Commerce. The
6
7 Department shall provide a copy of the report to any member of the
7
8 public upon request. The disclosure report shall include the
8
9 following information:
9
10 1. The amount and source of revenue captured and apportioned
10
11 pursuant to the project plan;
11
12 2. The amount and purpose of expenditures;
12
13 3. The amount of principal and interest due on outstanding
13
14 bonded indebtedness;
14
15 4. The tax increment base and current captured appraised value
15
16 or the other local tax or fee collections retained by the area;
16
17 5. The captured appraised value or the other local tax or fee
17
18 collections shared by the city, town, or county and other taxing
18
19 entities, the total amount of tax increments received, and any
19
20 additional information necessary to demonstrate compliance with the
20
21 plan adopted by the city, town, or county;
21
22 6. The name of the person who is currently in charge of the
22
23 implementation of the plan; and
23
24
24
Req. No. 2891 Page 5
1 7. The names of the persons who have disclosed an interest as
1
2 required pursuant to Section 857 of this title and the interest
2
3 disclosed.
3
4 F. For those incentive districts in operation for nine (9)
4
5 months or more, on or before the ninetieth day following the end of
5
6 each fiscal year, the governing body of a city, town, or county
6
7 shall submit a report to the Oklahoma Department of Commerce. The
7
8 Department shall provide a copy of the report to any member of the
8
9 public upon request. The disclosure report shall include the
9
10 following information:
10
11 1. The parties receiving incentives or exemptions;
11
12 2. A general description of the property and the improvements
12
13 to be made;
13
14 3. The portion and fair market value of the property to be
14
15 exempted or that portion of the local taxes to be subject to
15
16 incentives or to be exempted;
16
17 4. The duration of the incentives or exemptions;
17
18 5. Any additional information necessary to demonstrate
18
19 compliance with the tax incentives or exemptions;
19
20 6. The name of the person who is currently in charge of the
20
21 implementation of the plan; and
21
22 7. The names of the persons who have disclosed an interest as
22
23 required pursuant to Section 857 of this title and the interest
23
24 disclosed.
24
Req. No. 2891 Page 6
1 SECTION 2. AMENDATORY 62 O.S. 2021, Section 861, is
1
2 amended to read as follows:
2
3 Section 861. A. A project plan may contain a provision that
3
4 the increments from certain local taxes or fees may be used to
4
5 finance project costs in areas qualified under the Local Development
5
6 Act. The increment from local taxes or fees levied from and after
6
7 the effective date of the approval of such plan shall be apportioned
7
8 in the following manner for a period not to exceed twenty-five (25)
8
9 fiscal years thereafter or the period required for payment of
9
10 project costs, whichever is less; provided, however, that for any
10
11 increment district established after November 1, 1992, such time
11
12 period shall be tolled for a period of time equal to the pendency of
12
13 any litigation directly or indirectly challenging the increment
13
14 district or apportionment or disbursement:
14
15 1. That portion of the ad valorem taxes which are produced by
15
16 the levy at the rate fixed each year by or for each such ad valorem
16
17 taxing entity upon the base assessed value of the increment district
17
18 determined pursuant to Section 862 of this title and as to an area
18
19 later added to the increment district, the effective date of the
19
20 addition to the increment district, shall be paid to each taxing
20
21 entity and all or any portion of local sales taxes, other local
21
22 taxes or local fees collected each year which are not subject to
22
23 apportionment shall be paid or retained as otherwise provided by
23
24 law; and
24
Req. No. 2891 Page 7
1 2. All or any portion of:
1
2 a. ad valorem taxes, in excess of such amount specified
2
3 in paragraph 1 of this subsection,
3
4 b. the increment of local sales taxes, other local taxes
4
5 or local fees, or a combination thereof, paid to or
5
6 for the benefit of the city, town, or county approving
6
7 the plan, and
7
8 c. with its consent, evidenced by agreement in writing,
8
9 the increment of local sales tax, other local taxes or
9
10 local fees, or combination thereof, payable to any
10
11 other local public taxing entity,
11
12 shall be apportioned to, and when collected, shall be paid into an
12
13 apportionment fund established for the project pursuant to the
13
14 project plan. Such revenues shall be used for the payment of the
14
15 project costs and for the payment of the principal of, the interest
15
16 on, and any premiums due in connection with the bonds of, loans,
16
17 notes, or advances of money to, or indebtedness incurred to finance
17
18 project costs, whether funded, refunded, assumed, or otherwise, for
18
19 financing, in whole or in part, eligible project costs. For the
19
20 purposes of this section, "local sales tax" means amounts payable to
20
21 or for the benefit of a local governmental entity calculated as a
21
22 percentage of gross sales whether imposed by ordinance, resolution,
22
23 covenant, or agreement. Nothing shall prohibit the increments from
23
24 being used to directly pay eligible project costs. When all
24
Req. No. 2891 Page 8
1 eligible project costs and such bonds, loans, advances of money or
1
2 indebtedness, if any, including interest thereon and any premiums
2
3 due in connection with them, have been paid and the governing body
3
4 adopts an ordinance or resolution dissolving the tax apportionment
4
5 financing, all ad valorem taxes upon the taxable property within the
5
6 boundary of such district shall be paid into the funds of the
6
7 respective taxing entities.
7
8 B. If a project plan contains a provision for apportionment as
8
9 provided in subsection A of this section, and notwithstanding any
9
10 other provision of law to the contrary, the governing body shall
10
11 direct in the resolution or ordinance approving the plan which
11
12 portion of the increments, including whether any or all, to be paid
12
13 into the apportionment fund shall constitute a part of the general
13
14 fund to be appropriated annually by the governing body, and which
14
15 portion, including whether any or all, shall constitute funds of a
15
16 public entity authorized to issue tax apportionment bonds or notes
16
17 or to incur project costs.
17
18 C. To the extent that collections exceed project costs and the
18
19 provisions for payment of principal and interest along with
19
20 sufficient reserves on any bonds issued pursuant to the provisions
20
21 of Section 863 of this title, the excess shall be paid into the
21
22 funds of the respective taxing entities unless the taxing entity
22
23 agrees to some other use of such collections.
23
24
24
Req. No. 2891 Page 9
1 D. Except as provided in subsection E of this section, for any
1
2 year in which taxes or fees are apportioned in the manner specified
2
3 in paragraph 2 of subsection A of this section, any increase in
3
4 assessed valuation of taxable real property or taxable personal
4
5 property within the boundaries of such district in excess of the
5
6 base assessed value shall not be considered by any taxing entity in
6
7 computing any debt limitation or for any other purpose except for
7
8 the levy of taxes and in determining the amount to be apportioned.
8
9 E. In the event there is a change in the assessment ratio for
9
10 ad valorem tax property valuations of property within the boundaries
10
11 of an increment district, the portions of valuations for assessment
11
12 pursuant to paragraphs 1 and 2 of subsection A of this section shall
12
13 be proportionately adjusted in accordance with such reassessment.
13
14 F. Nothing in this section shall be construed as relieving
14
15 property in such project area from being assessed as provided in the
15
16 Ad Valorem Tax Code of the Oklahoma Statutes, or as relieving owners
16
17 of such property from paying a uniform rate of taxes, as required by
17
18 Section 5 of Article X of the Oklahoma Constitution.
18
19 G. Subject to constitutional exemptions, if property in an
19
20 increment district is owned by a public entity and is leased to or
20
21 operated for a private use, including, without limitation, use by a
21
22 not-for-profit corporation or trust, the portion of the property so
22
23 leased or operated shall be assessed by the county assessor as if
23
24 such portion of the property were taxable, and, during the term of
24
Req. No. 2891 Page 10
1 the increment district, the public entity owning such property shall
1
2 pay or require the user thereof to pay ad valorem taxes or an in
2
3 lieu ad valorem tax payment in an amount not less than the amount
3
4 that would have resulted if taxes had otherwise been levied on such
4
5 portion of the property. If property subject to ad valorem tax in
5
6 an increment district is acquired by a private not-for-profit
6
7 corporation or public or private trust, it shall continue to be
7
8 assessed and subject to ad valorem taxes or an in lieu ad valorem
8
9 payment by the user thereof until termination of the increment
9
10 district unless and only to the extent of the portion of the
10
11 property and the use thereof that is:
11
12 1. Acquired to implement the project plan;
12
13 2. Converted to a new tax-exempt use by a tax-exempt user; or
13
14 3. Entitled to claim a constitutional exemption notwithstanding
14
15 statutory provisions.
15
16 During the period of an increment district, such nonexempt uses and
16
17 interests are severable for purposes of ad valorem and in lieu of ad
17
18 valorem assessment and payments, notwithstanding any statutory
18
19 provisions to the contrary.
19
20 H. Increment districts authorized pursuant to this section
20
21 shall not include the property of an establishment, the business of
21
22 which is described by National Industry Numbers 518210 and 221114
22
23 through 221117 of the North American Industry Classification System
23
24 (NAICS) Manual, latest revision.
24
Req. No. 2891 Page 11
1 SECTION 3. AMENDATORY 68 O.S. 2021, Section 2902, as
1
2 last amended by Section 1, Chapter 411, O.S.L. 2025 (68 O.S. Supp.
2
3 2025, Section 2902), is amended to read as follows:
3
4 Section 2902. A. Except as otherwise provided by subsection H
4
5 of Section 3658 of this title pursuant to which the exemption
5
6 authorized by this section may not be claimed, a qualifying
6
7 manufacturing concern, as defined by Section 6B of Article X of the
7
8 Oklahoma Constitution, and as further defined herein, shall be
8
9 exempt from the levy of any ad valorem taxes upon new, expanded, or
9
10 acquired manufacturing facilities including facilities engaged in
10
11 research and development, for a period of five (5) years. The
11
12 provisions of Section 6B of Article X of the Oklahoma Constitution
12
13 requiring an existing facility to have been unoccupied for a period
13
14 of twelve (12) months prior to acquisition shall be construed as a
14
15 qualification for a facility to initially receive an exemption, and
15
16 shall not be deemed to be a qualification for that facility to
16
17 continue to receive an exemption in each of the four (4) years
17
18 following the initial year for which the exemption was granted.
18
19 Such facilities are hereby classified for the purposes of taxation
19
20 as provided in Section 22 of Article X of the Oklahoma Constitution.
20
21 B. For purposes of this section, the following definitions
21
22 shall apply:
22
23 1. "Manufacturing facilities" means facilities engaged in the
23
24 mechanical or chemical transformation of materials or substances
24
Req. No. 2891 Page 12
1 into new products and except as provided by paragraph 6 of
1
2 subsection C of this section shall include:
2
3 a. establishments which have received a manufacturer
3
4 exemption permit pursuant to the provisions of Section
4
5 1359.2 of this title,
5
6 b. facilities including repair and replacement parts,
6
7 primarily engaged in aircraft repair, building and
7
8 rebuilding whether or not on a factory basis,
8
9 c. establishments primarily engaged in computer services
9
10 and data processing as defined under Industrial Group
10
11 Numbers 5112 and 5415, and U.S. Industry Number
11
12 Numbers 334611 and 519130 of the NAICS North American
12
13 Industry Classification System (NAICS) Manual, latest
13
14 revision, and which derive at least fifty percent
14
15 (50%) of their annual gross revenues from the sale of
15
16 a product or service to an out-of-state buyer or
16
17 consumer, and as defined under Industrial Group Number
17
18 5182 of the NAICS Manual, latest revision, which
18
19 derive at least eighty percent (80%) of their annual
19
20 gross revenues from the sale of a product or service
20
21 to an out-of-state buyer or consumer. Eligibility as
21
22 a manufacturing facility pursuant to this subparagraph
22
23 shall be established, subject to review by the
23
24 Oklahoma Tax Commission, by annually filing an
24
Req. No. 2891 Page 13
1 affidavit with the Tax Commission stating that the
1
2 facility so qualifies and such other information as
2
3 required by the Tax Commission. For purposes of
3
4 determining whether annual gross revenues are derived
4
5 from sales to out-of-state buyers, all sales to the
5
6 federal government shall be considered to be to an
6
7 out-of-state buyer,
7
8 d. facilities that the investment cost of the
8
9 construction, acquisition or expansion is Five Hundred
9
10 Thousand Dollars ($500,000.00) or more with respect to
10
11 assets placed into service during calendar year 2022.
11
12 For subsequent calendar years, the investment required
12
13 shall be increased annually by a percentage equal to
13
14 the previous year's increase in the Consumer Price
14
15 Index-All Index for All Urban Consumers ("CPI-U")
15
16 (CPI-U) and such adjusted amount shall be the required
16
17 investment cost in order to qualify for the exemption
17
18 authorized by this section. The Oklahoma Department
18
19 of Commerce shall determine the amount of the
19
20 increase, if any, on January 1 of each year. The
20
21 Oklahoma Tax Commission shall publish on its website
21
22 at least annually the adjusted dollar amount in order
22
23 to qualify for the exemption authorized by this
23
24 section and shall include the adjusted dollar amount
24
Req. No. 2891 Page 14
1 in any of its relevant forms or publications with
1
2 respect to the exemption. Provided, "investment cost"
2
3 shall not include the cost of direct replacement,
3
4 refurbishment, repair or maintenance of existing
4
5 machinery or equipment, except that investment cost
5
6 shall include capital expenditures for direct
6
7 replacement, refurbishment, repair or maintenance of
7
8 existing machinery or equipment that qualifies for
8
9 depreciation and/or amortization pursuant to the
9
10 Internal Revenue Code of 1986, as amended, and such
10
11 expenditures shall be eligible as a part of an
11
12 expansion that otherwise qualifies under this section,
12
13 e. establishments primarily engaged in distribution as
13
14 defined under Industry Numbers 49311, 49312, 49313 and
14
15 49319 and Industry Sector Number 42 of the NAICS
15
16 Manual, latest revision, and which meet the following
16
17 qualifications:
17
18 (1) construction with an initial capital investment
18
19 of at least Five Million Dollars ($5,000,000.00),
19
20 (2) employment of at least one hundred (100) full-
20
21 time-equivalent employees, as certified by the
21
22 Oklahoma Employment Security Commission,
22
23 (3) payment of wages or salaries to its employees at
23
24 a wage which equals or exceeds the average wage
24
Req. No. 2891 Page 15
1 requirements in the Oklahoma Quality Jobs Program
1
2 Act for the year in which the real property was
2
3 placed into service, and
3
4 (4) commencement of construction on or after November
4
5 1, 2007, with construction to be completed within
5
6 three (3) years from the date of the commencement
6
7 of construction,
7
8 f. facilities engaged in the manufacturing, compounding,
8
9 processing or fabrication of materials into articles
9
10 of tangible personal property according to the special
10
11 order of a customer (custom order manufacturing) by
11
12 manufacturers classified as operating in North
12
13 American Industry Classification System (NAICS) NAICS
13
14 Sectors 32 and 33, but does not include such custom
14
15 order manufacturing by manufacturers classified in
15
16 other NAICS code sectors, and
16
17 g. with respect to any entity making an application for
17
18 the exemption authorized by this section on or after
18
19 January 1, 2023, the establishment making application
19
20 for exempt treatment of real or personal property
20
21 acquired or improved beginning January 1, 2022, and
21
22 for any calendar year thereafter, the entity shall be
22
23 required to pay new direct jobs, as defined by Section
23
24 3603 of this title for purposes of the Oklahoma
24
Req. No. 2891 Page 16
1 Quality Jobs Program Act, an average annualized wage
1
2 which equals or exceeds the average wage requirement
2
3 in the Oklahoma Quality Jobs Program Act for the year
3
4 in which the real or personal property was placed into
4
5 service. The Oklahoma Tax Commission may request
5
6 verification from the Oklahoma Department of Commerce
6
7 that an establishment seeking an exemption for real or
7
8 personal property pays an average annualized wage that
8
9 equals or exceeds the average wage requirement in
9
10 effect for the year in which the real or personal
10
11 property was placed into service. For purposes of
11
12 this subparagraph, it shall not be necessary for the
12
13 establishment to qualify for incentive payments
13
14 pursuant to the Oklahoma Quality Jobs Program Act, but
14
15 the establishment shall be subject to the wage
15
16 requirements of the Oklahoma Quality Jobs Program Act
16
17 with respect to new direct jobs in order to qualify
17
18 for the exempt treatment authorized by this section.
18
19 Eligibility as a manufacturing facility pursuant to this
19
20 subparagraph shall be established, subject to review by the Tax
20
21 Commission, by annually filing an affidavit with the Tax Commission
21
22 stating that the facility so qualifies and containing such other
22
23 information as required by the Tax Commission.
23
24
24
Req. No. 2891 Page 17
1 Provided, eating and drinking places, as well as other retail
1
2 establishments, shall not qualify as manufacturing facilities for
2
3 purposes of this section, nor shall centrally assessed properties.
3
4 Eligibility as a manufacturing facility pursuant to this
4
5 subparagraph shall be established, subject to review by the Tax
5
6 Commission, by annually filing an application with the Tax
6
7 Commission stating that the facility so qualifies and containing
7
8 such other information as required by the Tax Commission;
8
9 2. "Facility" and "facilities", except as otherwise provided by
9
10 this section, means and includes the land, buildings, structures and
10
11 improvements used directly and exclusively in the manufacturing
11
12 process. Effective January 1, 2022, and for each calendar year
12
13 thereafter, for establishments which have received a manufacturer
13
14 exemption permit pursuant to the provisions of Section 1359.2 of
14
15 this title, or facilities engaged in manufacturing activities
15
16 defined or classified in the NAICS Manual under National Industry
16
17 Nos. Numbers 311111 through 339999, inclusive, but for no other
17
18 establishments, facility and facilities means and includes the land,
18
19 buildings, structures, improvements, machinery, fixtures, equipment
19
20 and other personal property used directly and exclusively in the
20
21 manufacturing process; and
21
22 3. "Research and development" means activities directly related
22
23 to and conducted for the purpose of discovering, enhancing,
23
24
24
Req. No. 2891 Page 18
1 increasing or improving future or existing products or processes or
1
2 productivity.
2
3 C. The following provisions shall apply:
3
4 1. A manufacturing concern shall be entitled to the exemption
4
5 herein provided for each new manufacturing facility constructed,
5
6 each existing manufacturing facility acquired and the expansion of
6
7 existing manufacturing facilities on the same site, as such terms
7
8 are defined by Section 6B of Article X of the Oklahoma Constitution
8
9 and by this section;
9
10 2. No manufacturing concern shall receive more than one five-
10
11 year exemption for any one manufacturing facility unless the
11
12 expansion which qualifies the manufacturing facility for an
12
13 additional five-year exemption meets the requirements of paragraph 4
13
14 of this subsection and the employment level established for any
14
15 previous exemption is maintained;
15
16 3. Any exemption as to the expansion of an existing
16
17 manufacturing facility shall be limited to the increase in ad
17
18 valorem taxes directly attributable to the expansion;
18
19 4. All initial applications for any exemption for a new,
19
20 acquired or expanded manufacturing facility shall be granted only
20
21 if:
21
22 a. there is a net increase in annualized base payroll
22
23 over the initial payroll of at least Two Hundred Fifty
23
24 Thousand Dollars ($250,000.00) if the facility is
24
Req. No. 2891 Page 19
1 located in a county with a population of fewer than
1
2 seventy-five thousand (75,000), according to the most
2
3 recent Federal Decennial Census, while maintaining or
3
4 increasing base payroll in subsequent years, or at
4
5 least One Million Dollars ($1,000,000.00) if the
5
6 facility is located in a county with a population of
6
7 seventy-five thousand (75,000) or more, according to
7
8 the most recent Federal Decennial Census, while
8
9 maintaining or increasing base payroll in subsequent
9
10 years; provided, the payroll requirement of this
10
11 subparagraph shall be waived for claims for exemptions
11
12 including claims previously denied or on appeal on
12
13 March 3, 2010, for all initial applications for
13
14 exemption filed on or after January 1, 2004, and on or
14
15 before March 31, 2009, and all subsequent annual
15
16 exemption applications filed related to the initial
16
17 application for exemption, for an applicant, if the
17
18 facility has been located in Oklahoma for at least
18
19 fifteen (15) years engaged in marine engine
19
20 manufacturing as defined under U.S. Industry Number
20
21 333618 of the NAICS Manual, latest revision, and has
21
22 maintained an average employment of five hundred (500)
22
23 or more full-time-equivalent employees over a ten-year
23
24 period. Any applicant that qualifies for the payroll
24
Req. No. 2891 Page 20
1 requirement waiver as outlined in the previous
1
2 sentence and subsequently closes its Oklahoma
2
3 manufacturing plant prior to January 1, 2012, may be
3
4 disqualified for exemption and subject to recapture.
4
5 For an applicant engaged in paperboard manufacturing
5
6 as defined under U.S. Industry Number 322130 of the
6
7 NAICS Manual, latest revision, union master payouts
7
8 paid by the buyer of the facility to specified
8
9 individuals employed by the facility at the time of
9
10 purchase, as specified under the purchase agreement,
10
11 shall be excluded from payroll for purposes of this
11
12 section.
12
13 In order to provide certainty with respect to
13
14 investments in manufacturing facilities pertaining to
14
15 all initial applications for exemption filed on or
15
16 after January 1, 2016, the following definitions shall
16
17 apply:
17
18 (1) "base payroll" shall mean total payroll adjusted
18
19 for any nonrecurring bonuses, exercise of stock
19
20 option or stock rights and other nonrecurring,
20
21 extraordinary items included in total payroll,
21
22 and
22
23
23
24
24
Req. No. 2891 Page 21
1 (2) "initial payroll" shall mean base payroll for the
1
2 year immediately preceding the initial
2
3 construction, acquisition or expansion.
3
4 The Tax Commission shall verify payroll
4
5 information through the Oklahoma Employment
5
6 Security Commission by using reports from the
6
7 Oklahoma Employment Security Commission for the
7
8 calendar year immediately preceding the year for
8
9 which initial application is made for base-line
9
10 baseline payroll, which must be maintained or
10
11 increased for each subsequent year; provided, a
11
12 manufacturing facility shall have the option of
12
13 excluding from its payroll, for purposes of this
13
14 section:
14
15 i. payments to sole proprietors, members
15
16 of a partnership, members of a limited
16
17 liability company who own at least ten
17
18 percent (10%) of the capital of the
18
19 limited liability company or
19
20 stockholder-employees of a corporation
20
21 who own at least ten percent (10%) of
21
22 the stock in the corporation, and
22
23 ii. any nonrecurring bonuses, exercise of
23
24 stock option or stock rights or other
24
Req. No. 2891 Page 22
1 nonrecurring, extraordinary items
1
2 included in total payroll numbers as
2
3 reported by the Oklahoma Employment
3
4 Security Commission. A manufacturing
4
5 facility electing either option shall
5
6 indicate such election upon its
6
7 application for an exemption under this
7
8 section. Any manufacturing facility
8
9 electing either option shall submit
9
10 such information as the Tax Commission
10
11 may require in order to verify payroll
11
12 information. Payroll information
12
13 submitted pursuant to the provisions of
13
14 this paragraph shall be submitted to
14
15 the Tax Commission and shall be subject
15
16 to the provisions of Section 205 of
16
17 this title, and
17
18 b. the facility offers, or will offer within one hundred
18
19 eighty (180) days of the date of employment, a basic
19
20 health benefits plan to the full-time-equivalent
20
21 employees of the facility, which is determined by the
21
22 Oklahoma Department of Commerce to consist of the
22
23 elements specified in subparagraph b of paragraph 1 of
23
24
24
Req. No. 2891 Page 23
1 subsection A of Section 3603 of this title or elements
1
2 substantially equivalent thereto.
2
3 For purposes of this section, calculation of the amount of
3
4 increased base payroll shall be measured from the start of initial
4
5 construction or expansion to the completion of such construction or
5
6 expansion or for three (3) years from the start of initial
6
7 construction or expansion, whichever occurs first. The amount of
7
8 increased base payroll shall include payroll for full-time-
8
9 equivalent employees in this state who are employed by an entity
9
10 other than the facility which has previously or is currently
10
11 qualified to receive an exemption pursuant to the provisions of this
11
12 section and who are leased or otherwise provided to the facility, if
12
13 such employment did not exist in this state prior to the start of
13
14 initial construction or expansion of the facility. The
14
15 manufacturing concern shall submit an affidavit to the Tax
15
16 Commission, signed by an officer, stating that the construction,
16
17 acquisition or expansion of the facility will result in a net
17
18 increase in the annualized base payroll as required by this
18
19 paragraph and that full-time-equivalent employees of the facility
19
20 are or will be offered a basic health benefits plan as required by
20
21 this paragraph. If, after the completion of such construction or
21
22 expansion or after three (3) years from the start of initial
22
23 construction or expansion, whichever occurs first, the construction,
23
24 acquisition or expansion has not resulted in a net increase in the
24
Req. No. 2891 Page 24
1 amount of annualized base payroll, if required, or any other
1
2 qualification specified in this paragraph has not been met, the
2
3 manufacturing concern shall pay an amount equal to the amount of any
3
4 exemption granted including penalties and interest thereon, to the
4
5 Tax Commission for deposit to the Ad Valorem Reimbursement Fund;
5
6 5. Except as otherwise provided by this paragraph, any new,
6
7 acquired or expanded computer data processing, data preparation or
7
8 information processing services provider classified in U.S. Industry
8
9 Number 518210 of the North American Industrial Classification System
9
10 (NAICS) NAICS Manual, 2017 revision, may apply for exemptions under
10
11 this section for each year in which new, acquired, or expanded
11
12 capital improvements to the facility are made for assets placed in
12
13 service not later than December 31, 2021, if:
13
14 a. there is a net increase in annualized payroll of the
14
15 applicant at any facility or facilities of the
15
16 applicant in this state of at least Two Hundred Fifty
16
17 Thousand Dollars ($250,000.00), which is attributable
17
18 to the capital improvements, or a net increase of
18
19 Seven Million Dollars ($7,000,000.00) or more in
19
20 capital improvements, while maintaining or increasing
20
21 payroll at the facility or facilities in this state
21
22 which are included in the application, and
22
23 b. the facility offers, or will offer within one hundred
23
24 eighty (180) days of the date of employment of new
24
Req. No. 2891 Page 25
1 employees attributable to the capital improvements, a
1
2 basic health benefits plan to the full-time-equivalent
2
3 employees of the facility, which is determined by the
3
4 Oklahoma Department of Commerce to consist of the
4
5 elements specified in subparagraph b of paragraph 1 of
5
6 subsection A of Section 3603 of this title or elements
6
7 substantially equivalent thereto.
7
8 An establishment described by this paragraph, the primary
8
9 business activity of which is described by National Industry No.
9
10 Number 518210 of the North American Industry Classification System
10
11 (NAICS) NAICS Manual, 2017 revision, that has applied for and been
11
12 granted an exemption for personal property at any time within five
12
13 (5) years prior to November 1, 2021, may apply for exemptions for
13
14 items of eligible personal property to be located within
14
15 improvements to real property and such real property and
15
16 improvements having been exempt from ad valorem taxation prior to
16
17 November 1, 2021, pursuant to the provisions of this section if such
17
18 personal property is placed in service not later than December 31,
18
19 2036 2026. No additional personal property of such establishment
19
20 placed in service after such date shall qualify for the exempt
20
21 treatment otherwise authorized pursuant to this paragraph;
21
22 6. Effective January 1, 2017, an entity engaged in electric
22
23 power generation by means of wind, as described by the North
23
24 American Industry Classification System, No. 221119, shall not be
24
Req. No. 2891 Page 26
1 defined as a qualifying manufacturing concern for purposes of the
1
2 exemption otherwise authorized pursuant to Section 6B of Article X
2
3 of the Oklahoma Constitution or qualify as a manufacturing facility
3
4 as defined in this section. No initial application for exemption
4
5 shall be filed by or accepted from an entity engaged in electric
5
6 power generation by means of wind on or after January 1, 2018;
6
7 7. An entity or applicant engaged in an industry as defined
7
8 under U.S. Industry Number 324110 of the NAICS Manual, latest
8
9 revision, which has applied for or been granted an exemption for a
9
10 time period which began on or after calendar year 2012 and before
10
11 calendar year 2016 but which did not meet the payroll requirements
11
12 of subparagraph a of paragraph 4 of this subsection because of
12
13 nonrecurring bonuses, exercise of stock option or stock rights or
13
14 other nonrecurring, extraordinary items included in total payroll in
14
15 the previous year, shall be allowed an exemption, beginning with
15
16 calendar year 2016, for the number of years including the calendar
16
17 year for which the exemption was denied, remaining in the entity's
17
18 five-year exemption period, provided such entity attains or
18
19 increases payroll at or above the initial or base payroll
19
20 established for the exemption;
20
21 8. A facility engaged in manufacturing defined under U.S.
21
22 Industry Number 327310 of the NAICS Manual shall have the payroll
22
23 requirements of paragraph 4 of this subsection waived for tax year
23
24 2021, which is based in part on the 2020 calendar year payroll
24
Req. No. 2891 Page 27
1 reported to the Oklahoma Employment Security Commission, and may
1
2 continue to receive the exemption for the five-year period provided
2
3 in this section only if all other requirements of this section are
3
4 met; and
4
5 9. A facility engaged in manufacturing which otherwise
5
6 qualifies for the exemption or exemptions pursuant to the provisions
6
7 of this section shall have the payroll requirements of paragraph 4
7
8 of this subsection waived for tax year 2021, which is based in part
8
9 on the 2020 calendar year payroll reported to the Oklahoma
9
10 Employment Security Commission, and for tax year 2022, which is
10
11 based in part on the 2021 calendar year payroll reported to the
11
12 Oklahoma Employment Security Commission, and may continue to receive
12
13 the exemption for the five-year period provided in this section only
13
14 if all other requirements of this section are met. Provided, a
14
15 facility engaged in manufacturing as defined under Industrial Group
15
16 Number 3364 of the NAICS Manual, latest revision, which otherwise
16
17 qualifies or qualified to receive the exemption for the five-year
17
18 period provided in this section, including claims previously denied,
18
19 shall have the payroll requirements of paragraph 4 of this
19
20 subsection waived for the five-year exemption period of those
20
21 initial exemption applications filed after January 1, 2020, and
21
22 before March 16, 2021; and
22
23 10. Establishments primarily engaged in computer services and
23
24 data processing as defined under Industrial Group Number 5415 of the
24
Req. No. 2891 Page 28
1 North American Industry Classification System (NAICS) Manual, latest
1
2 revision, may apply for exemptions under this section for each year
2
3 in which new, acquired, or expanded capital improvements to the
3
4 facility are made for assets placed in service not later than
4
5 December 31, 2026.
5
6 D. 1. Except as provided in paragraph 2 of this subsection,
6
7 the five-year period of exemption from ad valorem taxes for any
7
8 qualifying manufacturing facility property shall begin on January 1
8
9 following the initial qualifying use of the property in the
9
10 manufacturing process.
10
11 2. The five-year period of exemption from ad valorem taxes for
11
12 any qualifying manufacturing facility, as specified in subparagraphs
12
13 a and b of this paragraph, which is located within a tax incentive
13
14 district created pursuant to the Local Development Act by a county
14
15 having a population of at least five hundred thousand (500,000),
15
16 according to the most recent Federal Decennial Census, shall begin
16
17 on January 1 following the expiration or termination of the ad
17
18 valorem exemption, abatement, or other incentive provided through
18
19 the tax incentive district. Facilities qualifying pursuant to this
19
20 subsection shall include:
20
21 a. a manufacturing facility as defined in subparagraph c
21
22 of paragraph 1 of subsection B of this section, and
22
23 b. an establishment primarily engaged in distribution as
23
24 defined under Industry Number 49311 of the North
24
Req. No. 2891 Page 29
1 American Industry Classification System for which the
1
2 initial capital investment was at least One Hundred
2
3 Eighty Million Dollars ($180,000,000.00); provided,
3
4 that the qualifying job creation and depreciable
4
5 property investment occurred prior to calendar year
5
6 2017 but not earlier than calendar year 2013.
6
7 E. Any person, firm or corporation claiming the exemption
7
8 herein provided for shall file each year for which exemption is
8
9 claimed, an application therefor with the county assessor of the
9
10 county in which the new, expanded or acquired facility is located.
10
11 The application shall be on a form or forms prescribed by the Tax
11
12 Commission, and shall be filed on or before March 15, except as
12
13 provided in Section 2902.1 of this title, of each year in which the
13
14 facility desires to take the exemption or within thirty (30) days
14
15 from and after receipt by such person, firm or corporation of notice
15
16 of valuation increase, whichever is later. In a case where
16
17 completion of the facility or facilities will occur after January 1
17
18 of a given year, a facility may apply to claim the ad valorem tax
18
19 exemption for that year. If such facility is found to be qualified
19
20 for exemption, the ad valorem tax exemption provided for herein
20
21 shall be granted for that entire year and shall apply to the ad
21
22 valorem valuation as of January 1 of that given year. For
22
23 applicants who qualify under the provisions of subparagraph b of
23
24 paragraph 1 of subsection B of this section, the application shall
24
Req. No. 2891 Page 30
1 include a copy of the affidavit and any other information required
1
2 to be filed with the Tax Commission.
2
3 F. The application shall be examined by the county assessor and
3
4 approved or rejected in the same manner as provided by law for
4
5 approval or rejection of claims for homestead exemptions. The
5
6 taxpayer shall have the same right of review by and appeal from the
6
7 county board of equalization, in the same manner and subject to the
7
8 same requirements as provided by law for review and appeals
8
9 concerning homestead exemption claims. Approved applications shall
9
10 be filed by the county assessor with the Tax Commission no later
10
11 than June 15, except as provided in Section 2902.1 of this title, of
11
12 the year in which the facility desires to take the exemption.
12
13 Incomplete applications and applications filed after June 15 will be
13
14 declared null and void by the Tax Commission. In the event that a
14
15 taxpayer qualified to receive an exemption pursuant to the
15
16 provisions of this section shall make payment of ad valorem taxes in
16
17 excess of the amount due, the county treasurer shall have the
17
18 authority to credit the taxpayer's real or personal property tax
18
19 overpayment against current taxes due. The county treasurer may
19
20 establish a schedule of up to five (5) years of credit to resolve
20
21 the overpayment.
21
22 G. Nothing herein shall in any manner affect, alter or impair
22
23 any law relating to the assessment of property, and all property,
23
24 real or personal, which may be entitled to exemption hereunder shall
24
Req. No. 2891 Page 31
1 be valued and assessed as is other like property and as provided by
1
2 law. The valuation and assessment of property for which an
2
3 exemption is granted hereunder shall be performed by the Tax
3
4 Commission using one or more of the cost, income and expense and
4
5 sales comparison approaches to estimate fair cash value in
5
6 accordance with the Uniform Standards of Professional Appraisal
6
7 Practice.
7
8 H. The Tax Commission shall have the authority and duty to
8
9 prescribe forms and to promulgate rules as may be necessary to carry
9
10 out and administer the terms and provisions of this section.
10
11 SECTION 4. This act shall become effective November 1, 2026.
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Req. No. 2891 Page 32Every fact on this page links to its source, starting with the official bill record.