Section 40-18-190

Definitions.

(a) The following terms shall have the following meanings, respectively, when used in this article unless the context clearly requires otherwise:

(1) BASE WAGE REQUIREMENT.

a. For qualifying projects in which an investing company files a written statement of intent (Form INT) with the department on or before May 21, 2009, "base wage requirement" means either an average hourly wage of not less than eight dollars ($8) per hour or an average total compensation of not less than ten dollars ($10) per hour, including benefits.

b. For qualifying projects that are not located in a favored geographic area and for which an investing company files a written statement of intent (Form INT) with the department after May 21, 2009, "base wage requirement" means an average hourly wage, inclusive of all employees in Alabama, of not less than the lesser of fifteen dollars ($15) per hour (indexed annually in accordance with the manner provided in Section 25-5-68) or the average hourly wage of the county where the qualifying project is located (as reported annually by the Department of Labor), both excluding benefits.

c. For qualifying projects that are located in a favored geographic area and for which an investing company files a written statement of intent (Form INT) with the Department after May 21, 2009, "base wage requirement" means an average hourly wage, inclusive of all employees in Alabama, of not less than the lesser of twelve dollars ($12) per hour (indexed annually in accordance with the manner provided in Section 25-5-68) or the average hourly wage of the county where the qualifying project is located (as reported annually by the Department of Labor), both excluding benefits.

d. Notwithstanding the foregoing, wages of direct processors of agriculture food products shall be subject to the local labor market. In the event that reliable local labor market statistics are not available, the department shall, by regulation or ruling, establish a source of wage information that best represents the average hourly wage rate in Alabama for direct processors of agriculture food products.

(2) CAPITAL COSTS. All costs and expenses incurred by one or more investing companies in connection with the acquisition, construction, installation and equipping of a qualifying project during the period commencing with the date on which such acquisition, construction, installation and equipping commences and ending on the date on which the qualifying project is placed in service, including, without limitation all of the following:

a. The costs of acquiring, constructing, installing, equipping, and financing a qualifying project, including all obligations incurred for labor and to contractors, subcontractors, builders, and materialmen.

b. The costs of acquiring land or rights in land and any cost incidental thereto, including recording fees.

c. The costs of contract bonds and of insurance of all kinds that may be required or necessary during the acquisition, construction, or installation of a qualifying project.

d. The costs of architectural and engineering services, including test borings, surveys, estimates, plans and specifications, preliminary investigations, environmental mitigation and supervision of construction, as well as for the performance of all the duties required by or consequent upon the acquisition, construction, and installation of a qualifying project.

e. The costs associated with installation of fixtures and equipment; surveys, including archaeological and environmental surveys; site tests and inspections; subsurface site work; excavation; removal of structures, roadways, cemeteries, and other surface obstructions; filling, grading, paving and provisions for drainage, storm water retention, installation of utilities, including water, sewer, sewage treatment, gas, electricity, communications, and similar facilities; off-site construction of utility extensions to the boundaries of the property.

f. All other costs of a nature comparable to those described, including, without limitation, all project costs which are required to be capitalized for federal income tax purposes pursuant to 26 U.S.C. § 263A.

g. Costs otherwise defined as capital costs that are incurred by the investing company where the investing company is the lessee under a lease that: (1) has a term of not less than five years, and (2) is characterized as a capital lease for federal income tax purposes; provided, that if the project is a headquarters facility, the lease may be characterized as an operating lease for federal income tax purposes in which event capital costs shall include the net present value of the payments made by the investing company under the lease computed using the applicable federal rate for the month in which the qualifying project is placed in service and for the term most closely approximating the term of the lease. Capital costs shall not include property owned or leased by the investing company or a related party before the commencement of the acquisition, construction, installation or equipping of the qualifying project unless such property was physically located outside the state for a period of at least one year prior to the date on which the qualifying project was placed in service.

h. Costs either paid or incurred by (i) a public industrial development board or authority, city, or county, or other public corporation or political subdivision (a "public entity") for the benefit of a qualifying project where such costs are treated as costs paid by an investing company with respect to the qualifying project for federal income tax purposes (such costs shall not include amounts contributed by a public entity to a qualifying project as a capital contribution or gift except to the extent that an investing company has cost basis in the contribution or gift for federal income tax purposes); or (ii) a related party to an investing company to the extent such costs are included in or taken into account in determining the investing company's federal income tax basis in the qualifying project, whether or not incurred by an investing company.

(3) CAPITAL CREDIT. An annual amount equal to up to five percent of the capital costs of the qualifying project, such amount to be credited or allowed in accordance with Section 40-18-194 and Section 40-18-195 hereof and other provisions of law, against the state income tax or financial institution excise tax, as provided in Section 40-18-194, liability generated by or arising out of the qualifying project in each of the 20 years commencing with the year during which the qualifying project is placed in service and continuing for 19 consecutive years thereafter.

(4) DATA PROCESSING CENTER. An establishment engaged in the provision of complete processing and specialized reports from data, the provision of automated data processing and data entry services, the provision of an infrastructure for hosting or data processing services, the provision of specialized hosting activities, the provision of application service provisioning, the provision of general time-share mainframe facilities, or some combination of the foregoing, without regard to whether any other activities are conducted at the establishment.

(5) DEPARTMENT. The Alabama Department of Revenue.

(6) FAVORED GEOGRAPHIC AREA. Either of the following:

a. Any area designated or created as an enterprise zone by law or that is governed by the Alabama Enterprise Zone Act.

b.1. Any Alabama county which is considered to be less developed. A county is considered to be less developed if it has been found to be less developed by the Alabama Department of Labor using the most current data available from the United States Departments of Labor or Commerce, the United States Bureau of the Census, or any other federal or state agency, and which finding shall be made immediately upon passage of Act 2001-965 and not later than January 1 of each year thereafter.

2. A county shall be found to be less developed if it is ranked as the forty-fifth through sixty-seventh county, inclusive, using the following factors:

(i) Percent change in population over the most recent five-year period.

(ii) Personal per capita income in the last calendar year for which data are available.

(iii) The average percent employed over the last 12 months for which data are available.

3. The factors used in ranking counties will be weighted in the following manner:

(i) Percent change in population (25 percent).

(ii) Personal per capita income (25 percent).

(iii) Average percent employed (50 percent).

(7) HEADQUARTERS FACILITIES.

a. For qualifying projects in which an investing company files a written statement of intent (Form INT) with the department on or before May 21, 2009, "headquarters facilities" means a facility which will serve as the national, regional or state headquarters for an investing company that conducts significant business operations outside the state and will serve as the principal office of the principal operating officer of the qualifying project. For purposes of this Article 7, the term "principal operating officer" is defined as the person with chief responsibility for the daily business operations of the qualifying project.

b. For qualifying projects in which an investing company files a written statement of intent (Form INT) with the department after May 21, 2009, "headquarters facilities" means any trade or business described in the 2007 North American Industry Classification System, promulgated by the Executive Office of the President of the United States, Office of Management and Budget, National Industry 551114.

(8) INDUSTRIAL, WAREHOUSING, OR RESEARCH ACTIVITY. Any trade or business described in the 2007 North American Industry Classification System, promulgated by the Executive Office of the President of the United States, Office of Management and Budget, Sectors 31 (other than National Industry 311811), 32, and 33; Subsectors 423, 424, 511, and 927; Industry Groups 2121, 5417, 5415, and 5182 (without regard to the premise that data processing and related services be performed in conjunction with a third-party); Industries 11331 and 48691; and National Industries 115111, 517110, 541380, and 561422 (other than establishments that originate telephone calls) and includes such trades and businesses as may be hereafter reclassified in any subsequent publication of the North American Industry Classification System or other industry classification system developed in conjunction with the United States Department of Commerce, or any process or treatment facility which recycles, reclaims, or converts materials, which include solids, liquids, or gases, to a reusable product.

(9) INVESTING COMPANY. Any corporation, partnership, limited liability company, proprietorship, trust or other business entity, regardless of form, making a qualified investment.

(10) NEW EMPLOYEES. Those persons who have not been previously employed at the site on which the qualifying project is or will be located or by an investing company or companies in the state; will be employed full-time at the qualifying project; and will be subject to the personal income tax imposed by Section 40-18-2, upon commencement of employment at the qualifying project.

(11) PROJECT. Any land, building or other improvement, and all real and personal properties deemed necessary or useful in connection therewith, whether or not previously in existence, located or to be located in the state.

(12) QUALIFYING INVESTMENT. The undertaking by one or more investing companies of a qualifying project.

(13) QUALIFYING PROJECT. A project to be sponsored or undertaken by one or more investing companies meeting any one of the following requirements:

a. A project the capital costs of which are not less than two million dollars ($2,000,000), and at which the predominant trade or business activity conducted will constitute industrial, warehousing, or research activity.

b. A small business addition the capital costs of which are not less than one million dollars ($1,000,000), and at which the predominant trade or business activity conducted will constitute industrial, warehousing, or research activity.

c. A headquarters facility the capital costs of which are not less than two million dollars ($2,000,000) at which the predominant trade or business activity conducted will not be the production of electricity.

d. A project located in a favored geographic area the capital costs of which are not less than five hundred thousand dollars ($500,000), and at which the predominant trade or business activity conducted will constitute industrial, warehousing, or research activity.

e. A project owned by a utility described in Section 37-4-1(7)a., or owned by an investing company which is itself owned by a utility, the capital costs of which are not less than the following:

1. One hundred million dollars ($100,000,000), if the predominant trade or business activity conducted will be the production of electricity from alternative energy resources.

2. Five million dollars ($5,000,000), if the predominant trade or business activity conducted will be the production of electricity from hydropower production.

f. A data processing center the capital costs of which are not less than the following:

1. Two million dollars ($2,000,000), if the data processing center is not located in a favored geographic area.

2. Five hundred thousand dollars ($500,000), if the data processing center is located in a favored geographic area.

g. A research and development facility the capital costs of which are not less than the following:

1. Two million dollars ($2,000,000), if the research and development facility is not located in a favored geographic area.

2. Five hundred thousand dollars ($500,000), if the research and development facility is located in a favored geographic area.

h. A renewable energy facility the capital costs of which are not less than the following:

1. Two million dollars ($2,000,000), if the renewable energy facility is not located in a favored geographic area.

2. Five hundred thousand dollars ($500,000), if the renewable energy facility is located in a favored geographic area.

i. A project involving a warehousing or storage activity falling within Subsector 493 of the 2007 North American Industry Classification System, where the project will provide logistics services related to the distribution of goods and the capital costs of which are not less than the following:

1. Five million dollars ($5,000,000) if facility is not located in a favored geographic area.

2. One million dollars ($1,000,000) if the facility is located in a favored geographic area.

j. A tourism destination attraction the capital costs of which are not less than the following:

1. Twenty million dollars ($20,000,000) if the tourism destination attraction is not located in a favored geographic area.

2. Five million dollars ($5,000,000) if the tourism destination attraction is located in a favored geographic area.

(14) RELATED PARTY. A person or entity that bears a relationship to an investing company described in Section 267(b), (c), or (e) of the Internal Revenue Code of 1986, as amended.

(15) RENEWABLE ENERGY FACILITY. Any plant, property, or facility that either:

a. Produces electricity or natural gas, in whole or in part, from biofuels as such term is defined in Section 2-2-90(c)(2) or from renewable energy resources as such term is defined in Section 40-18-1(30) with the exception that hydropower production shall be excluded from such definition; or

b. Produces biofuel as such term is defined in Section 2-2-90(c)(2).

(16) RESEARCH AND DEVELOPMENT FACILITY. An establishment engaged in conducting original investigations undertaken on a systematic basis to gain new knowledge or applying research findings or other scientific knowledge to create new or significantly improved products or processes, or both.

(17) SMALL BUSINESS ADDITION. Any land, building or other improvement, and all real and personal properties deemed necessary or useful in connection therewith, whether or not previously in existence, to be used as a part of any existing facility of a business located in the state that, prior to the date on which the addition is placed in service, had 100 or fewer full-time employees.

(18) TAX YEAR. The applicable taxable year as the term is defined in Section 40-18-1(36).

(19) TOURISM DESTINATION ATTRACTION. A commercial enterprise which is open to the public not less than 120 days during a calendar year and is designed to attract visitors from inside or outside of the State of Alabama, typically for its inherent cultural value, historical significance, natural or man-made beauty, or entertainment or amusement opportunities. The term shall include, but not be limited to, a cultural or historical site; a botanical garden; a museum; a wildlife park or aquarium open to the public that cares for and displays a collection of animals or fish; an amusement park; a convention hotel and conference center; a water park; or a spectator venue or arena.

A tourism destination attraction shall not include a facility primarily devoted to the retail sale of goods; a shopping center; a restaurant; a movie theater; a bowling alley; a fitness center; a miniature golf course; or a nightclub. Provided, however, that the capital costs of the construction of a tourism destination attraction may include the capital costs associated with the construction of any retail establishment, restaurant or other portion of the tourism destination attraction. The term also does not include any gaming facility or establishment that the Secretary of the Department of Commerce deems to be serving the local community.

(20) 1993 ACT. Act No. 93-851, H. 27 and Act No. 93-852, H. 83 adopted at the 1993 First Special Session of the Legislature of Alabama, as amended by Act No. 94-370, S. 559 adopted at the 1994 Regular Session of the Legislature of Alabama.

(b) The amendments made to this section by Act 2008-275 shall be effective for tax years and periods beginning after December 31, 2011.

(Acts 1995, No. 95-187, p. 250, §1; Acts 1997, No. 97-446, p. 765, §1; Act 2001-965, 3rd Sp. Sess., p. 854, §1; Act 2008-275, p. 402, §10; Act 2009-722, p. 2143, §2; Act 2012-54, p. 76, §1; Act 2012-210, p. 351, §2; Act 2012-436, p. 1215, §2.)