§ 159-107. Determination of incremental valuation; use of taxes levied on incremental valuation; duration of the district. - North Carolina Statutes

§ 159‑107. Determination of incremental valuation; use of taxes levied on incrementalvaluation; duration of the district.

(a)        Base Valuation inthe Development Financing District. – After the Local Government Commission hasentered its order approving a unit of local government's application forproject development financing debt instruments, the unit shall immediatelynotify the tax assessor of the county in which the development financingdistrict is located of the existence of the development financing district.Upon receiving this notice, the tax assessor shall determine the base valuationof the district, which is the assessed value of all taxable property located inthe district on the January 1 immediately preceding the effective date of thedistrict. If the unit or an agency of the unit acquired property within thedistrict within one year before the effective date of the district, the taxassessor shall presume, subject to rebuttal, that the property was acquired incontemplation of the district, and the tax assessor shall include the value ofthe property so acquired in determining the base valuation of the district. Theunit may rebut this presumption by showing that the property was acquiredprimarily for a purpose other than to reduce the incremental tax base. Afterdetermining the base valuation of the development financing district, the taxassessor shall certify the valuation to: (i) the issuing unit; (ii) the countyin which the district is located if the issuing unit is not the county; and (iii)any special district, as defined in G.S. 159‑7, within which thedevelopment financing district is located.

(b)        Adjustments to theBase Valuation. – During the lifetime of the development financing district,the base valuation shall be adjusted as follows:

(1)        If the unit amendsits development financing plan, pursuant to G.S. 160A‑515.1 or G.S. 158‑7.3,to remove property from the development financing district, on the succeedingJanuary 1, that property shall be removed from the district and the basevaluation reduced accordingly.

(2)        If the unit amendsits development financing plan, pursuant to G.S. 160A‑515.1 or G.S. 158‑7.3,to expand the district, the new property shall be added to the districtimmediately. The base valuation of the district shall be increased by theassessed value of the taxable property situated in the added territory on theJanuary 1 immediately preceding the effective date of the district.

(3)        Repealed by SessionLaws 2007‑395, s. 2, effective August 20, 2007.

Each time the base valuationis adjusted, the tax assessor shall immediately certify the new base valuationto: (i) the issuing unit; (ii) the county if the issuing unit is not thecounty; and (iii) any special district, as defined in G.S. 159‑7, withinwhich the development financing district is located.

(c)        Revenue IncrementFund. – When a unit of local government has established a development financingdistrict, and the project development financing debt instruments for thatdistrict have been approved by the Commission, the unit shall establish aseparate fund to account for the proceeds paid to the unit from taxes levied onthe incremental valuation of the district. The unit shall also place in thisfund any moneys received pursuant to an agreement entered into under G.S. 159‑108.

(d)        Levy of PropertyTaxes Within the District. – Each year the development financing district is inexistence, the tax assessor shall determine the current assessed value oftaxable property located in the district. The assessor shall also compute thedifference between this current value and the base valuation of the district.If the current value exceeds the base value, the difference is the incrementalvaluation of the district. In each year the district is in existence, thecounty, and if the district is within a city or a special district as definedby G.S. 159‑7, the city or the special district shall levy taxes againstproperty in the district in the same manner as taxes are levied against otherproperty in the county, city, or special district. The proceeds from ad valoremtaxes levied on property in the development financing district shall bedistributed as follows:

(1)        In any year in whichthere is no incremental valuation of the district, all the proceeds of thetaxes shall be retained by the county, city, or special district, as if therewere no development financing district in existence.

(2)        In any year in whichthere is an incremental valuation of the district, the amount of tax due fromeach taxpayer on property in the district shall be distributed as provided inthis subdivision. The net proceeds of the following taxes shall be paid to thegovernment levying the tax: (i) taxes separately stated and levied solely toservice and repay debt secured by a pledge of the faith and credit of the unit;(ii) nonschool taxes levied pursuant to a vote of the people; (iii) taxeslevied for a municipal or county service district; and (iv) taxes levied by ataxing unit in a development financing district established by a differenttaxing unit and for which there is no increment agreement between the twounits. All remaining taxes on property in the district shall be multiplied by afraction, the numerator of which is the base valuation for the district and thedenominator of which is the current valuation for the district. The amountshown as the product of this multiplication shall, when paid by the taxpayer,be retained by the county, city, or special district, as if there were nodevelopment financing district in existence. The net proceeds of the remainingamount shall, when paid by the taxpayer, be turned over to the finance officerof each issuing unit, who shall place this amount in the special revenueincrement fund required by subsection (c) of this section. As used in thissection, "net proceeds" means gross proceeds less refunds, releases,and any collection fee paid by the levying government to the collectinggovernment.

(e)        IncrementAgreements. – Effect of Annexation on District Established by a County. – If acity annexes land in a development financing district established by a countypursuant to G.S. 158‑7.3, the proceeds of all taxes levied by the city onproperty within the district shall be paid to the city unless the city entersinto an agreement with the county pursuant to this subsection, and the annexedland in the county's district that subsequently becomes a part of the city doesnot count against the city's five‑percent (5%) limit under G.S. 158‑7.3or G.S. 160A‑515.1 unless the city and the county enter into an agreementpursuant to this section. The city and the county may enter into an incrementagreement under which the city agrees that city taxes on part or all of theincremental valuation in the district shall be paid into the revenue incrementfund for the district. An increment agreement may be entered into when thedistrict is established or at any time after the district is established. Theincrement agreement may extend for the duration of the district or for ashorter time agreed to by the parties.

(f)         Use of Moneys inthe Revenue Increment Fund. – If the development financing district includesproperty conveyed or leased by the unit of local government to a private partyin consideration of increased tax revenue expected to be generated byimprovements constructed on the property pursuant to G.S. 158‑7.1, anamount equal to the tax revenue taken into account in arriving at theconsideration, less the increased tax revenue realized since the constructionof the improvement, shall be transferred from the Revenue Increment Fund to thecounty, city, or special district as if there were no development financingdistrict in existence. Any money in excess of this amount in the Fund may beused for any of the following purposes, without priority other than prioritiesimposed by the order authorizing the project development financing debtinstruments:

(1)        To finance capitalexpenditures (including the funding of capital reserves) by the issuing unit inthe development financing district pursuant to the development financing plan.

(2)        To meet principaland interest requirements on project development financing debt instruments anddebt instrument anticipation notes issued for the district.

(3)        To repay theappropriate fund of the issuing unit for any moneys actually expended on debtservice on project development financing debt instruments pursuant to a pledgemade pursuant to G.S. 159‑111(b).

(4)        To establish andmaintain debt service reserves for future principal and interest requirementson project development financing debt instruments and debt instrumentanticipation notes issued for the district.

(5)        To meet any otherrequirements imposed by the order authorizing the project development financingdebt instruments.

If in any year there is anymoney remaining in the Revenue Increment Fund after these purposes have beensatisfied, it shall be paid to the general fund of the county and, ifapplicable, of the city and any special district as defined by G.S. 159‑7,in proportion to their rates of ad valorem tax on taxable property located inthe development financing district.

(g)        Duration ofDistrict. – A development financing district shall terminate at the earlier of(i) the end of the thirtieth year after the effective date of the district or(ii) the date all project development financing debt instruments issued for thedistrict have been fully retired or sufficient funds have been set aside,pursuant to the order authorizing the debt instruments, to meet all futureprincipal and interest requirements on the instruments. (2003‑403, s. 2; 2005‑238,s. 5; 2007‑395, s. 2.)