By Matthew Young, WV Press News Sharing
CHARLESTON, W.Va. — The West Virginia House of Delegates’ Committee on Small Business Entrepreneurship and Economic Development met on Wednesday, with the majority of the discussion centered around House Bill 4502.
The bill, sponsored by House Speaker Roger Hanshaw, R-Clay, calls for the establishment of the “Build WV Act,” which would serve as an amendment to the Official Code of West Virginia – 1931. Initially requested by Gov. Jim Justice and co-sponsored by Del. Doug Skaff, Jr., D-Kanawha, HB 4502 was filed for introduction on Feb. 2.
HB 4502 deals primarily with tax procedures as they apply to Build WV-certified construction contractors. The bill seeks to exempt these contractors from sales and service tax, as well as use tax. In addition, according to the bill, it would establish “a property value tax credit; providing that the property value adjustment tax credit entitlement is retained by eligible taxpayers.”
As further explained in section one of the bill: “…reasonably priced residential housing for graduate, post-graduate and professional job holders, technical workers, and entrepreneurs for targeted businesses in key geographical regions of this state is an essential component of West Virginia’s comprehensive economic development.”
If passed, HB 4502 would increase legislative authority, as well as that of the Department of Economic Development and local municipalities in relation to tax procedure and administration, and penalties.
Committee Chair Del. Ben Queen, R-Harrison, called the meeting to order, and minutes from the Feb. 2 meeting were unanimously approved. HB 4502, being the only new business on the committee’s agenda, was then discussed, with an overview of the bill and breakdown of the finer points provided.
Key points, as explained by committee general counsel, include:
- The Build WV Act is designed to promote the building/rehabilitation of residential housing while providing economic-value to the community in which the project has been certified.
- 12 districts, selected by a panel of three cabinet secretaries, will be certified as Build WV Districts, with individual projects meeting the criteria to be certified within each district.
- Single-company projects, as well as multi-party projects are eligible to apply for certification.
- Basic requirements for certification include a $3 million minimum approved project-cost and/or six-unit minimum project size, and realistic potential of positive economic impact on the state. The aggregate sum for all projects not to exceed $150 million within the fiscal year.
- Tax incentives for certified construction contractors include the purchase of building materials and professional services. However, exemptions do not apply to the purchase of vehicles or fuel.
- Incentives for taxpayer-property owners, referred to within the bill as “property value tax credit”, is calculated by multiplying the approved project cost by 60%, then multiplying that number by the state tax-average class 3 property tax-rate of the tax-year in which construction is completed, and then multiplying by a factor of 10.
- Property value tax credit will be applied annually in the amount of 1/10 thereof for 10 years, and may be applied against corporate taxable income.
- Refundable credit to a single taxpayer is not to exceed $100,000. Credit is non-transferrable, and any unused portion will be forfeited.
- Individual municipalities have the option of creating an exemption of the Business and Occupation Tax for certified projects within a Build WV District.
Ineligible projects include timeshares, projects currently or formerly in receipt of the “rehabilitated building tax credit”, and projects being used primarily as a business, or other non-residential purpose. Any credit taken inadvertently or improperly will be immediately recaptured by the Department of Economic Development.
James Bailey, deputy secretary of and general counsel for the Department of Commerce, answered questions from several committee members, including Minority Chair Del. Kayla Young, D-Kanawha. Young inquired about the possible opportunities the bill would present to smaller developers.
“Smaller developers have every opportunity,” Bailey said. “Again, the $3 million is one aspect. The six units or more is the other that I think a smaller developer could very easily meet. If we’re talking about building $100,000 townhouses, theoretically, if each house has a $100,000 cost, then the cost of the project may end up only being $600,000.”
Committee Vice-Chair Del. John Mandt, Jr, R-Cabell, moved to amend the bill; specifically line four of page 18. Mandt moved for the usage of the name “Department of Environmental Protection” to be stricken, and replaced with the name “Department of Economic Development.” HB 4502 was then passed as amended by the committee, and will now be referred to the House Finance Committee.
As there was no further business before the committee, the meeting was adjourned on a motion by Del. Mandt.