Manufacturing facilities requirement

(a) To qualify for the issuance of an eligibility certificate, in addition to being located in a distressed municipality, a manufacturing facility must: (1) consist of a plant, building, other real property improvement, or part thereof; (2) be (A) constructed or substantially renovated or expanded; or (B) acquired by a business organization which is unrelated to or unaffiliated with the seller after having been idle for at least one year prior to its acquisition, regardless of its previous use, except in the case of a facility located in an enterprise zone designated pursuant to Section 32-70 of the statutes, the idleness requirement shall be as set forth in subsection (d) of Section 32-9p of the statutes as amended; and (3) be used for: (A) the manufacturing, processing or assembly of raw materials, parts or manufacturing products; (B) the significant servicing, overhauling or rebuilding of machinery and equipment for industrial use; (C) the distribution in bulk of manufactured products other than on a retail basis; (D) research and development activities directly related to manufacturing. Research and development activities are considered to be directly related to the manufacturing process when the company has any of the standard industrial classification codes as listed in Section 32-9p-5 (h) (1) of these regulations; or (E) in the case of a facility located in an enterprise zone designated pursuant to Section 32-70 of the statutes, for services satisfying the requirements of Section 32-9p-5 (h) (5) of these regulations. (b) A manufacturing facility may consist of an entire plant, building, structure or other real property improvement or group of buildings or improvements, or may consist of a part, section, wing or floor of a plant, building or structure. In the event the acquisition or construction, substantial renovation or expansion is of a portion of a plant, the part, section, wing or floor so acquired, constructed, renovated or expanded will be designated as the manufacturing facility. The existing plant or structure need not itself house a business activity which would qualify the plant or structure as a manufacturing facility, as long as the activity carried on in the improvement or addition which is designated to be the manufacturing facility is an activity described in Section 32-9p-5 (a) (3) of these regulations. (c) A manufacturing facility which is newly constructed will qualify for an eligibility certificate. An existing plant or building or part of floor thereof which is substantially renovated or an existing plant or building which is expanded will also qualify for an eligibility certificate. Substantial renovation or expansion for this purpose means the making of improvements or additions to the structure of a facility which involve capital expenditures equal to or greater than 50% of the current assessed value of the building, structures or part thereof being renovated or expanded and constituting the manufacturing facility. The improvements may be made for any business reason, but must be of a nature requiring the issuance of a building permit and must in the judgment of the Department be likely to have the direct result of increasing employment or expanding the tax base in the distressed municipality. (d) A manufacturing facility is acquired for the purposes of the statutes if (1) title to the facility is acquired by a new owner through purchase or (2) the facility is leased as provided in Section 32-9p-5 (f) herein to a new occupant or occupants. The purchaser or seller or lessor and lessee of an acquired facility may not be related or affiliated in any manner at all, whether business, familial or otherwise. Thus, the parties may not have any common owner, stockholder, director, officer or employee, nor may the owners or employees of the parties be members of the same family either by blood or marriage. This paragraph is intended to deny the benefits of the statutes to the participants in any acquisition which is not transacted at arms length by the parties. In appropriate instances where a strict application of the provisions of this paragraph would be contrary to the purpose of the statutes and where the purchaser and seller or lessor and lessee are in all practicality unrelated and unaffiliated the Department may deem this requirement to be met. (e) A manufacturing facility will not be deemed to have been acquired unless a substantial portion of its productive capacity is again utilized on a continuous basis after a period of idleness of at least one year. Idle facilities are those which have not been used or occupied at all during the entire one year period. In instances where a facility has been used on a very limited basis, such as temporary usages for maintenance or for product or equipment testing, but nonetheless has been essentially unoccupied and not productive during the one year period, the Department may deem the facility to have been idle if the Department determines that such a finding will further the purposes expressed in the statutes. The uses of an acquired facility prior to the one year period of idleness will not affect the issuance of an eligibility certificate, as long as the use which is made of the facility subsequent to its acquisition is one described in Section 32-9p-5 (a) (3) of these regulations. Notwithstanding any provisions of this subsection, for a facility located in an enterprise zone designated pursuant to Section 32-70 of the statutes, the idleness requirement shall be as follows: for a facility with an average total employment of between 6 and 19 employees for the six months prior to the acquisition of the facility, the idleness requirement shall be six months; and for a facility which has five or fewer employees, the idleness requirement shall be waived provided no more than one eligibility certificate shall be issued for the same facility within a three year period. The Department may waive the requirement of idleness if it determines that absent qualification as a manufacturing facility, there is a high likelihood that the facility will remain idle for one year. Factors that the Department will consider in making this determination include the marketability of the facility, general economic condition of the distressed municipality, the size of the facility, the number of employment positions to be established and the importance of benefits of the statutes in the decision of the manufacturer to acquire the facility. (f) No leasing of a manufacturing facility constitutes an acquisition unless the contract of lease is for an initial minimum term of five years and evidences by its provisions a substantial, long term commitment in the form of a renewable option at the request of the lessee for an aggregate term which shall not be less than ten years, or the right of the lessee to purchase the facility at any time after the initial five-year term, or both. This commitment will be determined based upon an evaluation of all facts and circumstances involved in each case. Factors which would tend to indicate a substantial commitment include the construction of leasehold improvements at the lessee's expense and contractual provisions for a renewal of the lease at the lessee's option and for liquidated damages payable by the lessee upon a breach of the lease. Notwithstanding any provisions of this subsection, for a facility located in an enterprise zone and designated pursuant to Section 32-70 of the statutes that employs an average of 10 or fewer employees over the six month period preceding acquisition, the contract for lease: may be for an initial minimum term of three years with a renewable option at the request of the lessee for an aggregate term which shall not be less than six years or may include the right of the lessee to purchase the facility at any time after the initial three-year term or both; and may include the right for the lessee to relocate to some other space within the same enterprise zone provided the space is under the same ownership or control as the originally leased space or if such space is not under the same control as the originally leased space, permission to relocate is granted by the lessor of the originally leased space, provided that such relocation shall not extend the duration of benefits granted under the original eligibility certificate. (g) An acquisition will be deemed to have occurred when the deed or lease for the facility is executed. The construction, renovation or expansion of a manufacturing facility will be deemed to have occurred when most of the construction time, expenditure of funds and physical improvement involved in the process has been completed. (h) The facility for which an eligibility certificate is issued must be one in which the occupant conducts one of the following five qualified manufacturing or related activities: (1) The manufacture, processing or assembly of raw materials, parts or manufactured products. All activities which are currently classified as manufacturing activities by the Standard Industrial Classification Manual (prepared by the Executive Office of the President, and published and periodically revised by the United States Government Printing Office) will meet this requirement. These activities are given SIC major group numbers 20 through 39, and are generally described as follows: Major Group 20. Food and kindred products Major Group 21. Tobacco manufacturers Major Group 22. Textile mill products Major Group 23. Apparel and other finished products made from fabrics and similar materials Major Group 24. Lumber and wood products, except furniture Major Group 25. Furniture and fixtures Major Group 26. Paper and allied products Major Group 27. Printing, publishing and allied industries Major Group 28. Chemical and allied products Major Group 29. Petroleum refining and related products Major Group 30. Rubber and miscellaneous plastics products Major Group 31. Leather and leather products Major Group 32. Stone, clay, glass, and concrete products Major Group 33. Primary metal products Major Group 34. Fabricated metal products, except machinery and transportation equipment Major Group 35. Machinery, except electrical Major Group 36. Electrical and electronic machinery, equipment, and supplies Major Group 37. Transportation equipment Major Group 38. Measuring, analyzing, and controlling instruments; photographic, medical and optical goods; watches and clocks Major Group 39. Miscellaneous manufacturing industries Any activity not classified as manufacturing by the Manual, such as services and retail trade, will not qualify under this restriction. The use of the manufacturing facility for purposes which are functionally related, ancillary and subordinate to and are required for the primary manufacturing activity carried on at the facility will not disqualify the facility under the program. Examples include a small administrative area for the management of plant operations, or a small area for the testing of products produced by the facility. (2) The significant servicing, overhauling or rebuilding of machinery and equipment for industrial use. This activity is an adjunct to the manufacturing process involving major repairs to industrial machinery and equipment. Machinery and equipment used for production in activities classified as manufacturing by the Standard Industrial Classification Manual is considered industrial machinery and equipment. A facility which services, overhauls or rebuilds industrial stamping presses, lathes or generating equipment will qualify as a manufacturing facility, but one which is involved in the repair of televisions, automobiles or other consumer goods will not. As a further example, facilities which service, overhaul or repair computers will qualify only if the computers are directly used in the industrial or manufacturing process. (3) The warehousing and distribution in bulk of manufactured products on other than a retail basis. This activity is a further adjunct to the manufacturing process involving the bulk distribution of manufactured products prior to their retail sale. Only those facilities for the warehousing and distribution of manufactured products on other than a retail basis which are newly constructed or which represent an expansion of an existing facility qualify as manufacturing facilities. Manufactured products are products which are produced through activities classified as manufacturing by the Standard Industrial Classification Manual. A facility which is a regional center for the distribution in bulk of automobiles, furniture, clothing or glassware to retail outlets will therefore qualify as a manufacturing facility. One which houses warehouse sales directly to the public, performs mail order warehouse sales, or warehouses and distributes to its own retail stores will not qualify, however, since each involves retail sales and sales in small rather than bulk quantities. (4) Research and development directly related to manufacturing as defined in Section 32-9p-5 (a) (3) (D). (5) If located in an enterprise zone designated pursuant to Section 32-70 of the statutes as amended, establishments having the following standard industrialization classifications or operating or auxiliary units of such establishments, provided that the establishments, operating, or auxiliary units do not regularly involve direct business with, or service to, the general public: 0912 Commercial fishing - finfish 0913 Commercial fishing - shellfish 0919 Commercial fishing - miscellaneous marine products 0921 Commercial fishing - fish hatcheries and preserves 4215 Courier services, except by air 4221 Farm product warehousing and storage 4222 Refrigerated warehousing and storage 4226 Special warehousing and storage, not elsewhere classified 4231 Terminal and joint terminal maintenance facilities for motor freight transportation 4412 Deep sea foreign transportation of freight 4424 Deep sea domestic transportation of freight 4432 Freight transportation on the Great Lakes–St. Lawrence Seaway 4449 Water transportation of freight, not elsewhere classified 4491 Marine cargo handling 4492 Towing and tugboat services 4499 Water transportation services, not elsewhere classified 4512 Air transportation, scheduled 4513 Air courier services 4731 Arrangement of transportation of freight and cargo 4741 Rental of railroad cars 4783 Packing and crating 4789 Transportation services, not elsewhere classified 6011 Federal reserve banks 6019 Central reserve depository institutions, not elsewhere classified 6021 National commercial banks 6022 State commercial banks 6029 Commercial banks, not elsewhere classified 6035 Savings institutions, federally charted 6036 Savings institutions, not federally chartered 6061 Credit unions, federally chartered 6062 Credit unions, not federally chartered 6081 Branches and agencies of foreign banks 6082 Foreign trade and international banking institutions 6091 Nondeposit trust facilities 6099 Functions related to depository banking, not elsewhere classified 6111 Federal and federally sponsored credit agencies 6141 Personal credit institutions 6153 Short-term business credit institutions, except agricultural 6159 Miscellaneous business credit institutions 6162 Mortgage bankers and loan correspondents 6163 Loan brokers 6211 Security brokers, dealers, and flotation companies 6221 Commodity contracts brokers and dealers 6231 Security and commodity exchanges 6282 Investment advice 6289 Services allied with the exchange of securities or commodities, not elsewhere classified 6311 Life insurance 6321 Accident and health insurance 6324 Hospital and medical service plans 6331 Fire, marine and casualty insurance 6351 Surety insurance 6361 Title insurance 6371 Pension, health and welfare funds 6399 Insurance carriers, not elsewhere classified 6712 Offices of bank holding companies 6719 Offices of holding companies, not elsewhere classified 6722 Management investment offices–open ended 6726 Unit investment trusts, face amount certificate offices, and closed-end management investment offices 6732 Educational, religious and charitable trusts 6733 Trusts except educational, religious and charitable 6792 Oil royalty traders 6794 Patent owners and lessors 6798 Real estate investment trusts 6799 Investors, not elsewhere classified 7323 Credit reports services 7371 Computer programming services 7372 Prepackaged software 7373 Computer integrated systems design 7374 Computer processing and data preparation and processing services 7375 Information retrieval services 7376 Computer facilities management services 7377 Computer rental and leasing 7378 Computer maintenance and repair 7379 Computer related services, not elsewhere classified 8071 Medical laboratories 8072 Dental laboratories 8731 Commercial physical and biological research 8732 Commercial economic, sociological, and educational research 8733 Noncommercial research organizations 8734 Testing laboratories