DAR File No. 40462

Governor, Economic Development

Rule R357-1

Rural Fast Track Program

Notice of Proposed Rule

(Repeal and Reenact)

DAR File No.: 40462
Filed: 06/01/2016 03:47:47 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The reason for the change is because the program has undergone several changes and improvements. This repeal and reenactment reflects those changes.

Summary of the rule or change:

The rule now provides for: 1) new and more clear definitions that the old rule did not contain; 2) content of the application; 3) the application and approval procedure; 4) the containing and verifying of employees when receiving grants for job creation; 5) general requirements and criteria for grants, loans, and other financial assistance pursuant to Subsection 63N-3-104(5); and 6) the verification process and requirements of applicant in that process. The old rule did not contain any of these new additions and contained simply language repeated from statute.

State statutory or constitutional authorization for this rule:

• Section 63N-3-104

Anticipated cost or savings to:

the state budget:

There are no anticipated costs or savings to the state because this rule impacts funds granted to the agency in a restricted account. There could be unexpected savings to that account due to a more precise qualification criteria.

local governments:

There are no cost or savings to a local government because they cannot apply for this grant program.

small businesses:

Small businesses that are seeking to participate in this program may incur nominal costs associated with application and compliance requirements. Otherwise, there are no costs or savings to small businesses generally.

persons other than small businesses, businesses, or local governmental entities:

There are no other persons affected by this rule because only small businesses in rural Utah can participate in the grant program.

Compliance costs for affected persons:

The cost are only nominal costs associated with application and compliance requirements.

Comments by the department head on the fiscal impact the rule may have on businesses:

There are no fiscal impacts except for nominal costs associated with application and compliance requirements.

Val Hale, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Governor
Economic Development
60 E SOUTH TEMPLE 3RD FLR
SALT LAKE CITY, UT 84111

Direct questions regarding this rule to:

• Jeffrey Van Hulten at the above address, by phone at 801-538-8694, by FAX at 801-538-8888, or by Internet E-mail at jeffreyvan@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/15/2016

This rule may become effective on:

07/22/2016

Authorized by:

Val Hale, Executive Director

R357. Governor, Economic Development.

[R357-1. Rural Fast Track Program.

R357-1-1. Authority.

(1) Subsection 63N-3-104 permits the administrator to make rules governing the following aspects of the Rural Fast Track Program:

(a) the content of the application form;

(b) who qualifies as an employee; and

(c) the verification procedure.

 

R357-1-2. Application Form.

(1) An application shall:

(a) be required that details company information including company name, federal tax ID, mailing and street address, telephone number, company capabilities, project description, submission requirements, and other information that is deemed necessary by the Governor's Office of Economic Development.

(b) include financial statements demonstrating profitability and must accompany the application.

 

R357-1-3. Employees.

(1) The company must have at least 2 employees who are paid a salary. Each new incremental job added must be paid a salary. GOED will verify and use the county average annual wage based on the most recently published data from the United States Census Bureau.

(a) GOED will verify and use the county population of 30,000 or less based on the most recently published data from the United States Census Bureau.

(2) An application can be made based on job (FTE) creation in a rural community.

(a) Definition of FTE: "FTE" means an individual full time employee of Applicant's Utah Business that is a Utah Resident and employed at least 30 hours per week (excluding lunch) during each week.

(b) When counting FTEs, if an FTE has its employment with Applicant terminated for any reason before completion of the applicable RFT Disbursement Period, another person otherwise meeting the requirements described above may be promptly hired full time to fill the terminated FTE's position and complete the year of qualifying full-time employment. In such case, Applicant and the Administrator would count the combined contribution of these two (2) full time employees as one (1) FTE. A replacement will need to be hired within 60 days for the position to remain qualifying for FTE purposes during a given RFT disbursement period.

 

R357-1-4. Economic Opportunity.

(1) An application can be made based upon a unique Economic Opportunity in a rural community.

(a) Definition of Rural Fast Track Economic Opportunity: "Economic opportunity" means a unique business situation or community circumstance which lends itself to the furtherance of the economic interests of the state and the local community by providing a catalyst or stimulus to the growth or retention, or both, of commerce and industry in the state.

 

R357-1-5. Verification.

(1) Procedure for verifying FTE and disbursing funds on post performance basis:

(a) Request Letter

(i) Claim for credits earned and request for disbursement of funds on company letterhead.

(ii) The request should summarize the number of jobs claimed multiplied against the incentive dollars per employee and the total dollar amount requested.

(iii) Company tax ID number

(iv) Address and addressee for where the check is to be sent

(b) Support Document

(i) Summarizes the claim for credits earned by outlining the types of jobs and number of jobs that meet the minimum earnings threshold and is usually produced in spreadsheet form.

(ii) A base year document is created at the time of incentive approval and is used as a template for this summary document and will be sent to the company by the Administrator. Document will include requested information about the new jobs listed and compared against the base number of employees in the company at the time of the application.

(iii) Department of Workforce Services filing of quarterly unemployment insurance forms covering the disbursement period.

(c) Letter of Compliance

(i) A letter verifying the accuracy of the information supplied to claim the incentive. Completed and signed by company officer.]

R357-1. Rural Fast Track Program.

R357-1-1. Authority.

(1) Subsection 63N-3-104 permits the administrator to make rules governing the following aspects of the Rural Fast Track Program:

(a) The content of the application form;

(b) Who qualifies as an employee; and

(c) The verification procedure.

 

R357-1-2. Definitions.

(1) "Administrator" means the Director of the Governor's Office of Economic Development or the Director's designee.

(2) "Office" means the Utah Governor's Office of Economic Development (GOED).

(3) "Baseline employment number" means the same as the term is used in part R357-1-5(4)(a) of this section.

(4) "Full Time Employee" (FTE) means an employee who works at least 30 hours per week at the location of the Rural Fast Track project.

(5) "In business" means the business was legally formed, and is measured from the date upon which a business or company was formed or created as shown on articles of incorporation, certificate of existence, state registration, or other similar, legally sufficient document.

(6) "Leisure and Hospitality" has the same meaning as the definition in the North American Industry Classification System (NAICS) Codes.

(7) "New incremental job" means a Full Time Employee position created in addition to the baseline employment number.

(8) "Production agriculture" means the act of cultivating land and rearing crops and livestock.

(9) "Professional services" means services that are provided by a certified member of a professional body, e.g. accounting, legal, or medical.

(10) "Profitability" means a positive net income as demonstrated on tax returns for the most recent two years for which tax returns are available.

(a) If net income shown on tax returns is less than $1, the applicant company may still demonstrate profitability by providing receipts to ORD that show capital improvements made in company infrastructure for the corresponding tax years.

(b) Qualifying capital investment receipts plus net income must be greater than $1 to demonstrate profitability. Accelerated depreciation may not be used in this calculation.

(11) "Resort community" means a municipality in which the transient room capacity as defined in Utah Code Section 59-12-405 is greater than or equal to 66% of the municipality's permanent census population.

(12) "Retail" means a business or person that sells goods to an end-user or consumer.

(13) "Small company" means the same as the definition for small business as set forth by the United States Small Business Administration's Table of Small Business Size Standards Match to North American Industry Classification System (NAICS) codes.

(14) "Specialized vehicle" means a vehicle which is used exclusively for business purposes, and has been modified or specialized through the addition of equipment, and other permanently attached tools, and performs specific and specialized functions.

(15) "Unique project" means a project that adds a new product, service, or process distinct and separate from any project for which the applicant company has previously received funding under this program.

(16) "Value-added agriculture" is a process which results in a change in the physical state or form of an agricultural product in a manner that enhances its value and expands the customer base of the product, e.g. milling wheat into flour or making strawberries into jam.

 

R357-1-3. Content of the Application.

(1) An application shall include the following information:

(a) Company name;

(b) Federal tax ID number;

(c) Primary North American Industry Classification System (NAICS) Code for the applicant's business;

(d) Mailing and street address;

(e) Telephone number;

(f) Date that company was created;

(g) The following additional information shall be provided in a form prescribed by the Office:

(i) The number of full time employees employed by the applicant for the prior two calendar years; and

(ii) Wages paid to all of the applicant's employees for the prior two calendar years.

(iii) Articles of incorporation, certificate of existence, state registration, or other document showing the date the business was legally formed;

(iv) Applicant Company must demonstrate profitability for the previous 2 years, through the submission of Applicant's State and Federal tax returns for the previous two tax cycles;

(v) If net income from tax returns is less than $1:

(vi) Receipts for capital improvements during tax years for which Applicant provided tax returns;

(vii) Letter of Support from local Economic Development Director (EDD) or elected official over economic development in the county, tribe, or city where the business is located;

(viii) A report issued by the Department of Workforce Services documenting the number of employees at the company and the total wages paid to employees of the company for the past 2 calendar years; and

(ix) If an applicant is seeking a grant pursuant to Utah Code Section 63N-3-104(5)(d), the applicant shall submit a detailed project description that demonstrates what the project is, how the project will benefit the company and how many new full-time employees applicant will hire as a result of the project.

(x) Any other information as requested by Office of Rural Development (ORD), or the Governor's Rural Partnership Board (GRPB), or the Office.

 

R357-1-4. Application and Approval Procedure.

(1) Pre-Application

(a) All companies must fill out and submit a pre-application that shall be reviewed, and approved by GOED staff, before proceeding to a full application.

a. The Pre-Application process will be used to determine eligibility and sufficiency of documentation.

(2) Full Application

(a) If applicant is approved to proceed to a full application, full applications shall undergo a comprehensive internal review by ORD and may be sent to the Governor's Rural Partnership Board (GRPB) executive committee for endorsement.

(b) Applications may also be reviewed and endorsed by the Governor's Office of Economic Development (GOED) Board.

(c) All applications must have final approval from the administrator.

(3) Company may not commence performance on the contract until the Rural Fast Track contract agreement is completely executed without prior written permission from the administrator.

 

R357-1-5. Employees.

(1) When counting FTEs, if an FTE has its employment with Applicant terminated for any reason before completion of the applicable Rural Fast Track Disbursement Period, another employee otherwise meeting the requirements described above may be promptly hired to fill the terminated FTE's position and complete the year of qualifying full-time employment. In such case, applicant and the office would count the combined contribution of these two (2) full time employees as one (1) FTE.

(a) A replacement employee must be hired within 60 days of the first employee's termination date for the position to remain qualifying for FTE purposes during a given Rural Fast Track Disbursement Period.

(2) At the time of application, the ORD Business Analyst shall establish the company's baseline employment number.

(a) The baseline employment number is the highest total number of Full Time Employees at any time during the previous 24 month period.

(3) A new incremental job may be filled by an existing employee if a new employee fills the position vacated by the current employee.

(4) Applicant Company must demonstrate at least one new incremental job above the baseline through documentation provided by the Department of Workforce Services.

 

R357-1-6. Grants, Loans, and Other Financial Assistance Pursuant to Utah Code Section 63N-3-104(5).

(1) Applications for grants, loans, and other financial assistance may be approved up to $50,000 if the applicant passes the verification and approval process described below.

(2) All financial assistance granted pursuant to this section shall be awarded as post-performance reimbursements.

(3) Awards will be made on a dollar for dollar matching basis up to $50,000 with the applicant providing matching funds;

(a) Awards will not be made for equipment or other qualifying items that are replacing existing items, but replacement costs may be considered as part of the total project cost;

(b) Applications for specialized vehicles may be approved on a dollar for dollar matching basis up to $25,000 with the applicant providing matching funds.

(4) Payment under this part shall be made only after qualifying expenditures are verified and a site visit is completed by ORD staff.

(5) Any subsequent applications by a company having received a Rural Fast Track award may only be considered for another grant if the second application is for a unique project and at least 18 months have passed after the most recent award was granted.

(6) ORD staff may require additional information during the grant process.

(7) Items that are not eligible for grants, loans, or other financial assistance under 63N-3-104(5) include the following:

(a) Laptop or desktop computers and other standard office equipment;

(b) Non-specialized vehicles;

(c) Bare ground;

(d) Retail, except in eligible L&H counties or resort communities; and

(e) Other items as identified by GOED, ORD, or GRPB on a case by case basis.

(f) The above ineligible items may be approved in exceptional circumstances with the written approval of the administrator.

 

R357-1-7. Verification.

(1) Following completion of the applicant project the ORD may conduct a site visit to the applicant company location. During that site visit ORD shall visually inspect the physical property to determine the completion of the project.

(2) Applicant shall provide to ORD documentation of all expenses related to applicant project, including, but not limited to receipts, invoices, loan documents, etc.

(3) Applicant shall provide documentation from the Department of Workforce Services demonstrating at least one new incremental job over the baseline job number.

(4) Applicant shall provide documentation detailing the salary paid to the new incremental job.

 

KEY: economic opportunity, job creation, rural economic development, Rural Fast Track Program

Date of Enactment or Last Substantive Amendment: [December 28, 2007]2016

Notice of Continuation: April 13, 2012

Authorizing, and Implemented or Interpreted Law: 63N-3-104