North Dakota Application for Property Tax Exemption for New or Expanding Businesses

Application for Property Tax Exemption for New or Expanding Businesses
Application for Property Tax Incentives for New or Expanding Businesses
Application For Property Tax Incentives For
New or Expanding Businesses
N.D.C.C. Chapter 40-57.1
Project Operator’s Application To __________________
City or County

File with the City Auditor for a project located within a city; County Auditor for locations outside of city limits.
A representative of each affected school district and township is included as a
non-voting member in the negotiations and deliberation of this application.

This application is a public record

Identification Of Project Operator
1.

Name of project operator of new or expanding business _______________________________________________

2.

Address of project ___________________________________________________________________________
City ___________________________________ County _______________________________

3.

Mailing address of project operator _____________________________________________________________
City ___________________________ State ______ Zip __________________

4.

Type of ownership of project
Partnership
Corporation

Subchapter S corporation
Cooperative

Individual proprietorship
Limited liability company

5.

Federal Identification No. or Social Security No. ___________________________________________________

6.

North Dakota Sales and Use Tax Permit No. ______________________________________________________

7.

If a corporation, specify the state and date of incorporation __________________________________________

8.

Name and title of individual to contact __________________________________________________________
Mailing address _____________________________________________________________________________
City, State, Zip ____________________________________________________ Phone No. ________________

Project Operator’s Application For Tax Incentives
9.

Indicate the tax incentives applied for and terms. Be specific.
Property Tax Exemption

Payments In Lieu of Taxes

_______ Number of years

_______ Beginning year

_______ Ending year

_______ Percent of exemption

_______ Amount of annual payments (attach schedule
if payments will vary)

10. Which of the following would better describe the project for which this application is being made:
New business project

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(Rev. 2/14)

Expansion of a existing business project

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Description of Project Property
11. Legal description of project real property

12. Will the project property be owned or leased by the project operator?

Owned

Leased

If the answer to 12 is leased, will the benefit of any incentive granted accrue to the project operator?
Yes
No
If the property will be leased, attach a copy of the lease or other agreement establishing the project operator’s
benefits.
13. Will the project be located in a new structure or an existing facility?

New construction

Existing facility

If existing facility, when was it constructed? ______________________________________________________
If new construction, complete the following:
a. Estimated date of commencement of construction of the project covered by this application ______________
b. Description of project to be constructed including size, type and quality of construction

c. Projected number of construction employees during the project construction ___________________________
14. Approximate date of commencement of this project’s operations ______________________________________

15. Estimated market value of the property used for
this project:

16. Estimate taxable valuation of the property eligible
for exemption by multiplying the market values by
5 percent:

a. Land ......................................... $ ____________

a. Land (not eligible) .....................

b. Existing buildings and
structures for which an exemption is claimed.......................... $ ____________

b. Eligible existing buildings and
structures .................................... $ ____________
c. Newly constructed buildings
and structures when
completed ................................... $ ____________

c. Newly constructed buildings
and structures when
completed ................................ $ ____________

d. Total taxable valuation of
property eligible for exemption
(Add lines b and c) ..................... $ ____________

d. Total ......................................... $ ____________

e. Enter the consolidated mill rate
for the appropriate taxing
district ........................................

e. Machinery and equipment ....... $ ____________

____________

f. Annual amount of the tax
exemption (Line d multiplied
by line e) .................................... $ ____________

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Description of Project Business
Note: “project” means a newly established business or the expansion portion of an existing business. Do not
include any established part of an existing business.
17. Type of business to be engaged in:

Ag processing
Wholesaling

Manufacturing
Warehousing

Retailing
Services

18. Describe in detail the activities to be engaged in by the project operator, including a description of any products to
be manufactured, produced, assembled or stored (attach additional sheets if necessary).

19. Indicate the type of machinery and equipment that will be installed

20. For the project only, indicate the projected annual revenue, expense, and net income (before tax) from either the
new business or the expansion itself for each year of the requested exemption.
New/Expansion
Project only
Year (12 mo. periods)
Year 1

New/Expansion
Project only
Year 2

New/Expansion
Project only
Year 3

New/Expansion New/Expansion
Project only
Project only
Year 4
Year 5

Annual revenue

__________

__________

__________

__________

__________

Annual expense

__________

__________

__________

__________

__________

Net income

__________

__________

__________

__________

__________

21. Projected annual average number of persons to be employed by the project itself at the project location for each
year for the first five years and the estimated annual payroll.

Year
No. of Employees

Estimated payroll

Company-wide
(before project)

New/
Expansion
Project
only
Year 1

New/
Expansion
Project
only
Year 2

New/
Expansion
Project
only
Year 3

New/
Expansion
Project
only
Year 4

New/
Expansion
Project
only
Year 5

(1)

________

________

________

________

________

________

(2)

________

________

________

________

________

________

(1)

________

________

________

________

________

________

(2)

________

________

________

________

________

________

(1) - full time
(2) - part time

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Previous Business Activity
22. Is the project operator succeeding someone else in this or a similar business?

Yes

No

23. Has the project operator conducted this business at this or any other location either in or outside of the state?
Yes

No

24. Has the project operator or any officers of the project received any prior property tax incentives?

Yes

No

If the answer to 22, 23, or 24 is yes, give details including locations, dates, and name of former business (attach
additional sheets if necessary).

Business Competition
25. Is any similar business being conducted by other operators in the municipality?

Yes

No

If YES, give name and location of competing business or businesses

Property Tax Liability Disclosure Statement
26. Does the project operator own real property in North Dakota which has delinquent property tax levied
against it?
Yes
No
27. Does the project operator own a greater than 50% interest in a business that has delinquent property tax levied
against any of its North Dakota real property?
Yes
No
If the answer to 26 or 27 is Yes, list and explain

Use Only When Reapplying
28. The project operator is reapplying for property tax incentives for the following reason(s):


To present additional facts or circumstances which were not presented at the time of the original application



To request continuation of the present property tax incentives because the project has:
moved to a new location
had a change in project operation or additional capital investment of more than twenty percent
had a change in project operators
To request an additional annual exemption for the year of ______ on structures owned by a governmental
entity and leased to the project operator. (See N.D.C.C. § 40-57.1-04.1)

Notice to Competitors of Hearing
Prior to the hearing, the applicant must present to the governing body of the county or city a copy of the affidavit of publication giving notice to competitors unless the municipality has otherwise determined there are no competitors.
I, _______________________________________, do hereby certify that the answers to the above questions and all of the
information contained in this application, including attachments hereto, are true and correct to the best of my knowledge
and belief and that no relevant fact pertaining to the ownership or operation of the project has been omitted.
________________________________________

___________________________________

___________

Signature

Title

Date

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PRIVACY ACT NOTIFICATION
In compliance with the Privacy Act of 1974, disclosure of a social security number or Federal Employer Identification Number (FEIN)
on this form is required under N.D.C.C. §§ 40-57.1-03, 40-57.1-07, and 57-01-15, and will be used for tax reporting, identification,
and administration of North Dakota tax laws. Disclosure is mandatory. Failure to provide the social security number or FEIN may
delay or prevent the processing of this form.

Certification of Governing Body (To be completed by the Auditor of the City or County)
The municipality shall, after granting any property tax incentives, certify the findings to the
State Tax Commissioner and Director of Tax Equalization by submitting a copy of the project operator’s application
with the attachments. The governing body, on the _____ day of _________________, 20____, granted the following:
Property Tax Exemption

Payments in lieu of taxes

______ Number of years

______ Beginning year

______ Ending year

______ Percent of exemption

______ Amount of annual payments (Attach schedule if payments
will vary)
____________________________
Auditor

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Notice To Competitors Of Hearing On Application
For Property Tax Incentives

Notice is hereby given that the ____________________________________________________________
(City or county governing body)

of _____________________________________, North Dakota, will meet at _______________________
(City or county)

(Time)

on __________________at __________________________ to consider the application of
(Date)

(Location)

(Project operator name and address)

for property tax relief on the project which the applicant will use in the operation of
_____________________________________________________________________________________
(Type of business)

at ___________________________________________________________________________________
(Address)

_____________________________________________________________________________________
(Legal description)

Any competitor of that applicant may appear and be heard by the ________________________________
(City or county governing body)

at the time and place designated herein. A competitor may provide written comments to the governing
body before the scheduled hearing.

This notice is given by the above-named applicant pursuant to the provisions of North Dakota Century
Code § 40-57.1-03

North Dakota Office of State Tax Commissioner

Guideline - Property Tax: Incentives for New or
Expanding Businesses
December 2017

North Dakota Century Code ch. 40-57.1 provides incentives in the form of property tax exemptions, payments in lieu of
taxes, or a combination of both to a qualifying business. The incentives are granted at the discretion of the city or county
in which the property is located.
Before a municipality may grant a property tax exemption under N.D.C.C. § 40-57.1-03, the project must be certified as a
primary sector business by the Commerce Department.
A city or county with fewer than 40,000 population may grant an exemption to a project operating in the retail sector if the
governing body has obtained approval from a majority of the qualified electors voting on the question at a city or county
election held in conjunction with a statewide general election and if that governing body has established by resolution
or ordinance the criteria that will be applied by the governing body to determine whether it is appropriate to grant an
exemption for a project operating in the retail sector. Minimum criteria are specified in N.D.C.C. § 40-57.1-03(1). A city
or county may not supersede or expand the provisions of this section under home rule authority.
* Before a city grants a property tax incentive on a parcel that is anticipated to receive a property tax incentive for more
than five years, the governing body of the city is required to send a letter, by certified mail, to the chairman of each county
commission and the president of each school district affected by the tax incentive. The letter must provide terms of the
proposed property tax incentive.
* Within 30 days of receipt of the notice, each affected county and school district must notify the city, in writing, whether it
elects to participate in granting the tax incentive on the county or school district portion of the property tax. If no letter is
received, the city must treat each county or school district as participating in the property tax incentive.

Definitions

	 1.	 Commencement of construction means the building or erecting of any im­provements other than site prepara­tion or
excavation.
	 2.	 Commencement of project operation means “the date the plant actually goes into its planned operations. To use the
example..., if a manufac­turing plant actually begins manu­facturing of its products in December, 1970, that would be
the date of commencement of project operations. The Act does not purport to autho­rize granting of tax exemptions
for the time of construction of plants.” 1969 N.D. Op. Att’y Gen. 415.
	 3.	 Local Development Corporation means a profit or nonprofit corporation incorporated in this state for the purpose of
furthering the economic development of a specified communi­ty or area.

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Incentives for New or
Expanding Businesses Guideline

	 4.	 Municipality means a city or a coun­ty.
	 5.	 Primary sector means a business that adds value to a product, process, or service that results in the creation of
new wealth. New wealth means revenues to a North Dakota business generated by sales of products or services to
customers outside North Dakota, or revenues to a North Dakota business from sales in North Dakota, if the product
or service was previously unavailable or of limited availability.
	 6.	 Project means any new revenue-pro­ducing business or an expansion to an existing business.
	 7.	 Project operator means the individ­ual, partner­ship, limited liability company (LLC), corpora­tion, or as­sociation that
owns or operates the project.
	 8.	 Statewide general election, as provided in N.D.C.C. § 16.1-13-01, means the general election held on the first
Tuesday after the first Monday in November of each even-numbered year.
	 9.	 Structure means any property where a business is conducted. The struc­ture might be an entire 	
occupied by one busi­ness, or indi­vidual quarters within a larger building.

building, if

What Qualifies

	10.	 New and existing buildings, struc­tures, and improvements owned or leased by a qualifying project may receive prop­
erty tax incentives.
	11.	 New buildings, structures, and im­provements constructed and owned by a local development corporation may
receive a partial or complete exemp­tion from ad valorem taxation while unoccupied. Once occu­pied, the exemp­tion
continues until the next assessment date following the first occupancy. A qualifying project that locates in a building
owned by a local develop­ment corporation qualifies for the proper­ty tax incentives, provided appli­cation is made and
granted prior to occu­pancy.

Allowable Incentives

	12.	 A qualifying project may receive a complete or partial exemption from ad valorem taxation on structures used in or
necessary to the opera­tion of a project for up to five years following the commencement of project operations.
	13.	 The exemption period begins with the assess­ment date immediately follow­ing the date of commencement of pro­ject
opera­tions.
	14.	 Projects that produce or manufac­ture a product from agricultural commodities may receive a complete or partial
proper­ty tax exemption on structures for up to ten years.
	15.	 A project located in a structure leased from a governmental entity and which received a five-year property tax
exemption qualifies for additional exemptions for up to five years. For the additional exemptions, the municipality
grants the exemption one year at a time upon annual application.
	16.	 Payments in lieu of taxes may be used in place of, or in combination with, property tax exemptions for quali­fying
projects. The munic­ipality and project operator nego­tiate the amount of annual payments, when the payments begin,
and the ending date, which may be no later than twenty years from the date pro­ject operations began.

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Incentives for New or
Expanding Businesses Guideline

17.		 Payments in lieu of taxes are apportioned in the same manner as the general real estate taxes unless a taxing district
enters into a written agreement for an alternate method. Any agreement entered into between the munici­pality
and other taxing districts for an alternate method of apportioning the payments in lieu of taxes may not affect the
apportionment to any taxing district that is not a party to the agree­ment.
	18.	 The tax incentives are valid as long as the property is used for the pur­poses stated in the application. If there is a
change in use or project operator, a new application for the incentives must be filed with and approved by the munici­
pality to receive the remainder of the incen­tives.

Limitations

	19.	 A pro­ject is not eligible for the property tax incentives if the pro­ject received a tax exemp­tion under tax increment
financing.
	20.	 The tax exemption and the payments in lieu of taxes are limited to the new or existing buildings or structures used in
the qualifying project.
	21.	 Tax incentives may not be granted for land.
	22.	 Payments in lieu of taxes are not eligible for the 5% discount for early payment.

Procedures

	23.	 The project operator applies to the governing body of the municipality where the potential project is to be located. If
the project will be within city limits, the project operator applies to the city governing body. If the project is outside
city limits, applica­tion is made to the county commission.
24.		 The municipality forwards the application to the Department of Commerce, Division of Economic Development and
Finance, P.O. Box 2057, Bismarck, ND 58502-2057, for its review and recommendation as to the eligibility of the
project as a primary sector business.
	25.	 Application for the property tax exemption must be made and granted prior to the com­mencement of construction
if the pro­ject locates in a new structure. If the project locates in an existing struc­ture, application must be made and
granted before the structure is occu­pied.
		 For qualifying projects, applications for payments in lieu of property taxes may be made after construction or
occupancy of the structure.
		 A representative appointed by the board of each affected school district and of each affected township is included as a
non-voting member during the negotiation and deliberation of granting tax incentives.
	26.	 The project operator publishes two notices to competitors of hearing on the application. The notices are pub­lished
in the official newspa­per of the city or county at least one week apart. The last notice must be pub­lished at least 15
days, but not more than 30 days, before the city or county considers the application. For exam­ple, notices published
one week apart on May 1 and May 8 would be appropriate for a hearing scheduled any time between May 23 and
June 7. An affidavit of publication is present­ed to the governing body prior to the hearing as proof of publication.
Publication of notices is not required if the municipality determines that project competitors do not exist in the
municipality.
27.		 The city or county holds a public hearing on the application and takes testimony both in favor of and in opposition to
the grant­ing of the tax incentives.
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Incentives for New or
Expanding Businesses Guideline

28.		 After the public hearing, the govern­ing body determines the best interests of the municipality and approves or denies,
in whole or in part, the application for tax incentives.
	29.	 The municipality certifies the tax incentives grant­ed by submitting a copy of the project operator’s application with
the attach­ments to the State Tax Commis­sioner and coun­ty director of tax equalization. The county director of tax
equalization advises the local assessor when the property is taxable or exempt.
	30.	 Political subdivision grantors shall maintain records of business incentives provided to recipients. They shall prepare
an annual political subdivision grantor report to the Department of Commerce before April 1 each year that includes:
	
●	 The name of the business receiving business incentives during that year;
	
●	 The number of jobs expected to be created or retained by each business as a result of the business incentives;
	
●	 The average compensation expected to be provided by the employer for the jobs expected to be created or
retained as a result of the business incentives, including identification of the average benefits and average
earnings to be provided by the employer for these jobs; and
	
●	 The total dollar value of all business incentives provided by the political subdivision during that year.

Additional Conditions
North Dakota Century Code § 40-57.1-03 provides that the governing body of a municipality, before the beginning of
a taxable year for which a property tax exemption or the option to make payments in lieu of taxes has previously been
approved by the governing body, may revoke or reduce an exemption, or revoke or increase payments in lieu of taxes for
that taxable year for reasons specified in a negotiated agreement or if the governing body finds that:
	
	
	
	

a.	 Information provided by the project operator has proven to be inaccurate or untrue;
b.	Use of the property by the project operator does not comply with the reasonable expectations of the governing
body at the time the property tax exemption or the option to make payments in lieu of taxes was approved;
c.	 The property has been improved to a substantially greater extent than the governing body reasonably anticipated at
the time the property tax exemption or the option to make payments in lieu of taxes was approved; or
d.	There has been a change of ownership of the property since the property tax exemption or the option to make
payments in lieu of taxes was approved.

* Indicates significant change since last revised.

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