State Coordination of Regional and Local Economic Development Projects Amendments

New exception in Section 11-41-202(2)(d): A municipality that levies the municipal energy tax may now provide up to 80% of that revenue as an incentive to a large load data center, paralleling the existing exception for counties using the county energy excise tax.

New Section 17D-4-203(2)(e)(iii): Public infrastructure districts for advanced manufacturing, critical mineral extraction, or energy projects on state-owned or development authority-owned land may levy a property tax at a rate sufficient to cover debt service plus administrative costs, issue unlimited general obligation bonds authorized by election, and levy an energy tax of up to 4% of the delivered value of taxable energy generated in the district as bond security.

New Section 11-58-707: Subsidiary districts of the Utah Inland Port Authority may issue bonds to support advanced manufacturing or energy development projects within a project area, with a property tax levy capped at a rate that generates no more than required for annual debt service plus administrative costs, subject to a maximum of .02 per dollar.

Section 17B-2a-1302: Infrastructure financing districts created to facilitate a regionally significant development zone may now issue negotiable bonds 'in accordance with Title 11, Chapter 14, Local Government Bonding Act' rather than simply being authorized to issue them, adding a specific statutory framework for the bonding process.

Section 17D-4-401 (dissolution) was substantially rewritten: the board must now adopt a resolution to dissolve once all debts are paid and obligations satisfied, file a notice of impending boundary action with the lieutenant governor within 30 days, may use remaining assets to pay dissolution costs, and must distribute any remaining assets first proportionately to real property owners who bore a financial burden, then to the entity that received the transferred infrastructure.

New Section 17D-4-303 establishes that public infrastructure district property tax levies may not exceed .015 per dollar of taxable value (with exceptions for the new advanced manufacturing/energy provisions, Section 11-58-707, and Section 63H-1-202(10)), requires the board to record a notice with the county recorder within 30 days of incorporation, and specifies that the district cannot levy tax until the notice is recorded.

Chapter 11-41 was restructured into two parts: Part 1 is now titled 'Prohibition on Retail Facility Incentive Payments Act' and Part 2 is 'Prohibition on Tax Increment Incentives for Large Load Data Centers Act.' Definitions in Section 11-41-102 now apply to 'this part' rather than 'this chapter.'

A coordination clause was added to coordinate this bill with H.B. 475 (Development Planning and Coordination Amendments), which brings in provisions classifying certain economic development records (including nondisclosure agreements) as protected records, modifying confidentiality claim processes, requiring the risk manager to establish liability limits for disclosure of protected records, and requiring the Political Subdivisions Interim Committee to create a working group.

New definition of 'Public infrastructure and improvements' added to Section 17C-6-101 (Regionally Significant Development Zones Act), covering infrastructure that benefits the public or zone, is publicly owned, utility-owned, publicly maintained, or privately owned but provides substantial benefit to the zone.

New prohibition (effective May 6, 2026) prevents political subdivisions from providing tax increment-funded incentives to large load customers (such as data centers), with exceptions for incentives within regionally significant development zones and grandfathering of existing agreements that cannot be extended or increased.

Removed the provision allowing zone agencies to allocate funding to mitigate impacts on local services (solid waste disposal, law enforcement, road repair and upgrades).

The standalone Section 17-78-1201 (county energy tax for transactions within a zone's sales and use tax boundary) was removed and replaced by the broader County Energy Excise Tax Act in Title 59, Chapter 35.

New County Energy Excise Tax Act (Title 59, Chapter 35) allows counties to levy up to a 6% excise tax on the delivered value of energy to high-impact consumers (large load customers or qualifying data centers) in unincorporated areas. The State Tax Commission administers collection, with 10% deposited into the State Reinvestment Restricted Account and 90% distributed to the levying county.

The State Reinvestment Restricted Account now has defined authorized uses: income tax relief, generational water infrastructure, Great Salt Lake watershed preservation, regionally significant transit development, and energy resource development. Locally-sourced funds cannot be used outside the generating area unless for those specific purposes.

Regionally significant development zones can no longer capture local sales and use tax increment as a revenue source. Zone revenue is now limited to property tax increment or personal property tax, plus any county energy excise tax revenue provided by the county.

The administrative cost cap for agencies managing regionally significant development zones increased from 2% to 3% of total annual zone revenue.

Revenue sharing agreements for the Utah Inland Port Authority changed from mandatory ('shall negotiate') to optional ('may negotiate'), giving the authority discretion over whether to enter such agreements with private developers.

Annexation into a public infrastructure district now requires: board resolution approval, authorization in the governing document or creation resolution, a petition with 100% surface property owner signatures, approval from the affected county or municipality if the area is outside the creating entity's boundaries, and contiguity to the existing district.

Public infrastructure district dissolution was streamlined from following the general special district dissolution process to a specific process: board adopts resolution within 30 days of meeting requirements, notifies the lieutenant governor, and files documents with county recorders upon issuance of a certificate of dissolution.

Added a 50% cap on the percentage of profits the Utah Inland Port Authority can require from private sector activities in remediation project areas to be deposited into the State Reinvestment Restricted Account.

New provision requires community reinvestment agencies to consult with the county treasurer before providing tax increment funding to private participants under participation agreements, to check for property tax delinquency, privilege tax delinquency, or political subdivision liens. If delinquent, the county treasurer may direct payment to resolve the delinquency.

The date by which project areas must contribute 1-5% of tax differential revenue to the reinvestment account changed from July 1, 2026 to September 30, 2026, and the coordinating entity was expanded from 'municipality' to 'county or municipality.'

Prohibits political subdivisions from providing incentives to large load data centers beginning May 6, 2027, unless the project is located in a regionally significant development zone or funded by specific regional authority funds.

Creates the State Reinvestment Restricted Account and directs the Utah Inland Port Authority and State Tax Commission to deposit specific revenues into it for uses like water infrastructure and transit development.

Creates an optional County Energy Excise Tax under Section 59-35-201, allowing counties to levy this tax to fund economic development incentives.

Establishes a strict cutoff date of January 1, 2028, after which no new housing and transit reinvestment zones, first home investment zones, convention center reinvestment zones, or home ownership promotion zones may be created.

Requires sellers to disclose the expected annual cost of a public infrastructure district's tax rate when conveying residential real property within those district boundaries.

Updates definitions in multiple sections to include new zone types like 'regionally significant development zones' and clarifies calculations for 'certified tax rates' across various development zones.

Changed the prohibition on tax increment incentives to apply specifically to 'large load data centers' instead of all 'large load customers', and added 'qualifying data center' as a defined term.

Added 'convention center reinvestment zone' to the list of zone types that cannot be created after January 1, 2028.

Updated the sunset date for creating housing and transit reinvestment zones, first home investment zones, home ownership promotion zones, and major sporting event venue zones to January 1, 2028.

Added a definition for 'Regional economic development authority' and clarified that these authorities can provide incentives to data centers under specific conditions.

Modified the Utah Inland Port Authority's ability to share funds, adding a specific provision for sharing general differential funds with taxing entities.

Removed the requirement for an agency to study revenue generation options if the zone includes a 'high-impact consumer,' changing it to require a study only if the zone includes a 'large load data center'.

Updated the definition of 'qualifying tax, fee, or charge' in the State Tax Commission section to include 'Energy Project Assessment' under Title 79, Chapter 6, Part 14.

Added 'Large load data center' as a specific definition in the Regionally Significant Development Zones Act.