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SENATE PROPOSAL OF AMENDMENT 2007-2008

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H.888

An act relating to miscellaneous tax amendments

The Senate proposes to the House to amend the bill as follows:

     First:  By striking out Sec. 3 and inserting in lieu thereof a new Sec. 3 to read as follows:

Sec. 3.  32 V.S.A. § 3757(e)(3) is amended to read:

(3)  of any transfer of ownership.  A transfer of ownership, alone, will not affect eligibility of the parcel, and no new maps will be required solely because of a transfer, but failure to provide maps, a new application, or transfer information to the division of property valuation and review within 30 days of a request being sent by certified mail by the director will result in removal of the parcel from the program.

     Second:  By striking out Secs. 19 and 20  [property tax adjustment information is public]

     Third:  By striking out Sec. 25 [refund appeal is deemed denied if not granted within six months]

     Fourth:  By striking out Sec. 26 [W&M review of three tax credits in 2012]

     Fifth:  By striking out Sec. 29 [JFO study of tax expenditures to repeal]

     Sixth:  By striking out Sec. 36 [Essex CLA]

     Seventh:  By striking out Sec. 37 and inserting in lieu thereof a new Sec. 37 to read as follows:

Sec. 37.  RATIFICATION OF ENROLLED VERSION OF H.521 IN ACT
               NO. 81 OF 2007

The enrolled version of No. 81 of the Acts of 2007, as published by the Secretary of State in the publication entitled “Acts and Resolves Passed by the General Assembly of the State of Vermont, sixty-ninth biennial session, 2007,” is hereby expressly ratified as the correct version of Act No. 81 of the Acts of 2007.  This ratification shall not constitute a re-enactment of Act No. 81 and shall have no effect upon the effective dates in that act.

     Eighth:  By striking out Sec. 42 [late-filed property tax adjustment claim]

     Ninth:   By renumbering Sec. 43 as Sec. 113

     Tenth:  By adding Secs. 43 and 44 to read as follows:

* * * Disclosure of Tax Return Information * * *

Sec. 43.  32 V.S.A. § 3102(d) is amended to read:

(d)  The commissioner shall disclose a return or return information:

* * *

(5)  to the attorney general, if such return or return information relates to chapter 205 of this Title or subchapters 1A and 1B of chapter 19 of Title 33, for purposes of investigating potential violations of and enforcing Chapter 40 of Title 7, subchapter 2A of chapter 173 of Title 20; and subchapters 1A and 1B of chapter 19 of Title 33.


Sec. 44.  32 V.S.A. § 3102(e) is amended to read:

(e)  The commissioner may, in his or her discretion and subject to such conditions and requirements as he or she may provide, including any confidentiality requirements of the Internal Revenue Service, disclose a return or return information:

* * *

(14)  to the office of the state treasurer, only in the form of mailing labels, with only the last address known to the department of taxes of any person identified to the department by the treasurer by name and social security number, for the treasurer’s use in notifying owners of unclaimed property.

     Eleventh:  By adding Sec. 45 to read as follows:

Sec. 45.  32 V.S.A. § 3802(17) is added to read:

§ 3802.  PROPERTY TAX

The following property shall be exempt from taxation:

* * *

(17)  Real and personal property operated as a skating rink, owned and operated on a nonprofit basis but not necessarily by the same entity and which, in the most recent calendar year, provided facilities to local public schools for a sport officially recognized by the Vermont Principals’ Association.  Property exempt under this subdivision shall not require a vote under subdivision 3832(7) of this title.

     Twelfth:  By adding Sec. 46 to read as follows:

Sec. 46.  24 V.S.A. § 138(a) is amended to read:

(a)  Local option taxes are authorized under this section for the purpose of affording municipalities an alternative method of raising municipal revenues to facilitate the transition and reduce the dislocations in those municipalities that may be caused by reforms to the method of financing public education under the Equal Educational Opportunity Act of 1997.  Accordingly:

(1)  the local option taxes authorized under this section may be imposed by a municipality only during calendar years 1999 through 2008;

(2)  a municipality opting to impose a local option tax may do so prior to July 1, 1998 to be effective beginning January 1, 1999, and anytime after December 1, 1998 a.  A local option tax adopted under this section shall be effective beginning on the next tax quarter following 30 days’ notice to the department of taxes of the imposition; and all authority to opt to impose a local option tax under this section shall terminate September 1, 2007, and all authority to impose a local option tax shall terminate on December 31, 2008; and

(3)  a local option tax may only be adopted by a municipality in which:

(A)  the education property tax rate in 1997 was less than $1.10 per $100.00 of equalized education property value; or

(B)  the equalized grand list value of personal property, business machinery, inventory, and equipment is at least ten percent of the equalized education grand list as reported in the 1998 Annual Report of the Division of Property Valuation and Review; or

(C)  the combined education tax rate of the municipality will increase by 20 percent or more in fiscal year 1999 or in fiscal year 2000 over the rate of the combined education property tax in the previous fiscal year.

     Thirteenth:  By adding Secs. 47 through 49 to read as follows:

Sec. 47.  32 V.S.A. § 5930b(g) is added to read:

(g)  Employment growth incentive for environmental technology business.

(1)  For purposes of this subsection, an “environmental technology business” means a business that is subject to income taxation in Vermont and whose current or prospective economic activity in Vermont for which incentives are sought under this section is certified by the secretary of commerce and community development to be primarily research, design, engineering, development, or manufacturing activity related to any one or more of the following:

(A)  Waste management, including waste collection, treatment, disposal, reduction, recycling, and remediation.

(B)  Natural resource protection and management including water and wastewater purification and treatment, air pollution control and prevention or remediation, soil and groundwater protection or remediation, and hazardous waste control or remediation.

(C)  Energy efficiency or conservation.

(D)  Clean energy, including solar, wind, wave, hydro, geothermal, hydrogen, fuel cells, waste-to-energy, or biomass.

(2)  Any application for a Vermont employment growth incentive under this section for an environmental technology business shall be considered and administered pursuant to all provisions of this section, except that:

(A)  the “incentive ratio” pursuant to subdivision (a)(11) of this section shall be set at 90 percent; and

(B)  the “payroll threshold” pursuant to subdivision (a)(17) of this section shall be deemed to be 20 percent of the expected average industry payroll growth as determined by the cost-benefit model.

Sec. 48.  32 V.S.A. § 5930b(a)(9) and (23) are amended to read:

(9)  “Full-time job” means a permanent position filled by an employee who works at least 37 35 hours each week.

(23)  “Vermont gross wages and salaries” means Medicare wages as reported on Federal Tax Form W2 to the extent those wages are Vermont wages, excluding income from nonstatutory stock options.

* * * Repeal 2011 Limitation on

Sales Tax Exemption for Aircraft Parts * * *

Sec. 49.  REPEAL

     Secs. 7a and 7b of No. 81 of the Acts of 2007 (sales tax exemption for aircraft parts limited to commercial aircraft only, beginning July 1, 2011) are repealed.

     Fourteenth:  By adding Sec. 50 to read as follows:

Sec. 50.  TAX CREDIT FOR HISTORIC BUILDING REHABILITATION

     An owner awarded a tax credit under the provisions of section 5930n of Title 32 for a historic rehabilitation project who transfers the rehabilitated building to an entity which is tax-exempt under Internal Revenue Code section 501(c)(3) shall not be liable for the recapture penalty under section 5930n(f)(4)(A) of Title 32, but instead shall be subject to the recapture penalty under section 5930ff(2) of Title 32.

     Fifteenth:  By adding Sec. 51 to read as follows:

Sec. 51.  24 V.S.A. § 5204 is amended to read:

§ 5204.  PAYMENT OF FEES

(a)  An impact fee or obligation for offsite mitigation shall be a lien upon all property and improvements within land development for which the fee is assessed in the same manner and to the same effect as taxes are a lien upon real estate under section 5061 of Title 32.

(b)  A municipality may require payment of an impact fee or accept offsite mitigation before issuance of a zoning or subdivision permit.

(c)  A municipality may accept fees on installment at a reasonable rate of interest.

(d)  A municipality may require a letter of credit to guarantee future payment of an impact fee or offsite mitigation.

(e)  Notwithstanding the provisions of 16 V.S.A. § 4029(b), a municipality may require that a fee certified as a school impact fee by the general counsel of the department of education shall be paid directly to the school district.

     Sixteenth:  By adding Sec. 52 to read as follows:

Sec. 52.  32 V.S.A. § 6071(b) is amended to read:

(b)  In any case in which it is determined that a claim is or was excessive, the commissioner may impose a ten percent penalty on such excess and if the claim has been paid or credited against property tax or income tax otherwise payable, the credit shall be reduced or canceled, and the proper portion of any amount paid shall be similarly recovered by assessment as income taxes are assessed and such assessment shall bear interest at the rate per annum established from time to time by the commissioner pursuant to section 3108 of this title from the date of payment or, in the case of adjustment of a property tax bill under section 6066a of this title, from December 1 of the year in which the claim is filed until refunded or paid.

     Seventeenth:  By adding Sec. 53 to read as follows:

Sec. 53.  Sec. 5 of No. 213 of the Acts of 1892, as amended by No. 357 of the Acts of 1906, is amended to read:

     Sec. 5.  Said corporation shall have power to purchase and receive for the charitable purposes herein indicated, by gift, bequest, devise or otherwise, real and personal property, and the same to hold, for such purposes only, and to sell and convey the same or any part thereof when expedient in the judgment of the Directors.  No more than fifty thousand dollars in Up to $500,000.00 of the value of the property of said corporation which is used directly as a nonprofit elder residential care home shall be exempt from municipal and education property taxation, and such property, to be so exempt from taxation, shall be located in said Brattleboro.

     Eighteenth:  By adding Secs. 54 through 57 to read as follows:

* * *Health Care Provider Provisions* * *

Sec. 54.  33 V.S.A. § 1953(a)(1) is amended to read:

(1)  Beginning July 1, 2005 January 1, 2008, each hospital’s annual assessment, except for hospitals assessed under subdivision (2) of this subsection, shall be 6.0 5.5 percent of its net patient revenues (less chronic, skilled, and swing bed revenues) for the hospital’s fiscal year as determined annually by the director from the hospital’s financial reports and other data filed with the department of banking, insurance, securities, and health care administration.  The annual assessment shall be based on data from a hospital’s third most recent full fiscal year.

Sec. 55.  33 V.S.A. § 1955(a) is amended to read:

(a)  Each Beginning January 1, 2008, each ICF/MR’s annual assessment shall be six 5.5 percent of the ICF/MR’s total annual direct and indirect expenses for the most recently settled ICF/MR audit.

Sec. 56.  33 V.S.A. § 1952(f) is added to read:

(f)  If a health care provider fails to pay its assessments under this subchapter according to the schedule or a variation thereof adopted by the director, the director may deduct these assessments arrears and any late‑payment penalties from Medicaid payments otherwise due to the provider.  The deduction of these assessment arrears may be made in one or more installments on a schedule to be determined by the director.

Sec. 57.  33 V.S.A. § 1954(d) is amended to read:

     (d)  Any nursing home that fails to make a payment to the office on or before the specified schedule, or under any schedule of delayed payments established by the director, shall be assessed not more than $1,000.00.  The director may waive this late-payment assessment provided for in this subsection for good cause shown by the nursing home.  The director may reduce Medicaid claim payments to satisfy all past due provider taxes assessed.

     Nineteenth:  By adding Sec. 58 to read as follows:

Sec. 58.  27 V.S.A. § 1248a is added to read:

§ 1248a.  ELECTRIC UTILITY COOPERATIVES

     (a)  Electric utility cooperatives organized under or otherwise subject to 30 V.S.A. chapter 81 shall report capital credits which have been retired and declared payable by the cooperative’s board of directors, but which have not been claimed by the owner in accordance with the provisions of this chapter.   Electric utility cooperatives shall not pay or deliver the unclaimed capital credits to the treasurer.  For purposes of this section, capital credits shall mean those credits to a capital account of a member of an electric utility cooperative which the cooperative is obliged to pay after operating costs and expenses have been paid.

     (b)  The treasurer shall provide notice of unclaimed capital credit properties reported by electric utilities in accordance with the provisions of section 1249 of this title.  In the event of a claim for a capital credit property, the treasurer shall refer the claimant to the appropriate electric utility cooperative who shall evaluate the claim and upon provision of satisfactory proof of ownership shall pay the claimant.

     (c)  The electric utility cooperative shall notify the treasurer of the resolution of all claims for unclaimed property.

     Twentieth:  By adding Secs. 59 and 60 to read as follows:

Sec. 59.  30 V.S.A. § 209(d)(7) is amended to read:

(7)  Net revenues above costs associated with payments from the New England Independent System Operator (ISO‑NE) for capacity savings resulting from the activities of the energy efficiency utility designated under subdivision (2) of this subsection shall be deposited into the electric efficiency fund established by this section and be used by the entity appointed under subdivision (2) of this subsection to deliver fossil fuel energy efficiency services to Vermont heating and process-fuel consumers on a whole-buildings basis to help meet the state’s building efficiency goals established by section 581 of this title.

Sec. 60.  30 V.S.A. § 209(e)(15) is amended to read

(15)  Ensure that the energy efficiency programs implemented under this section are designed to make continuous and proportional progress toward attaining the overall state building efficiency goals established by 10 V.S.A. § 581, by promoting all forms of energy end‑use efficiency and comprehensive sustainable building design. The funds made available under subdivision (d)(2) of this section may be used by the efficiency entity appointed under that subdivision to deliver fossil fuel energy efficiency services to Vermont heating and process-fuel consumers on a whole-building basis.

     Twenty-first:  By adding Secs. 61 through 70 to read as follows:

Sec. 61.  24 V.S.A. § 1891 is amended to read:

§ 1891.  DEFINITIONS

When used in this subchapter:

* * *

(6)  “Related costs” means expenses, exclusive of the actual cost of constructing and financing improvements, as defined in subdivision 1751(3) of this title, that are directly related to creation of the tax increment financing district and reimbursement of sums previously advanced by the municipality for those purposes, and attaining necessary to attain the purposes and goals for which the tax increment financing district was created, as approved by the Vermont economic progress council, including administration fees charged by a coordinating agency, finance costs, professional services, and organizational costs such as studies and public notification, but excluding imputed administrative costsAs used in this subdivision, related costs are “improvements” as defined in subdivision 1751(3) of this title.

(7)  “Financing” means any type of indebtedness incurred or financial vehicles used by a municipality to pay for improvements in a tax increment financing district.

Sec. 62.  24 V.S.A. § 1893 is amended to read:

§ 1893.  PURPOSE

The purpose of tax increment financing districts is to provide revenues for improvements, located wholly or partly within that serve the district and related costs, which will stimulate development or redevelopment within the district, provide for employment opportunities, improve and broaden the tax base, or and enhance the general economic vitality of the municipality, the region, or and the state.

Sec. 63.  24 V.S.A. § 1894 is amended to read:

§ 1894.  POWER AND LIFE OF DISTRICT

(a)  A municipality may incur indebtedness against revenues of the tax increment financing districts for a period of up to 20 years following the creation of the district.  The 20-year borrowing period of the district shall commence at 12:01 a.m. on April 1 of the year so voted. Any indebtedness incurred during the borrowing period may be retired over any period authorized by the legislative body of the municipality under section 1898 of this title; provided, however, that the education tax increment may not be retained in excess of 20 years beginning on the date of initial indebtedness.  The district shall continue until the date and hour the indebtedness is retired.

(b)  Notwithstanding subsection (a) of this section, any district created to use education tax increment financing  A municipality that has created a tax increment financing district approved under 32 V.S.A. § 5404a(f) may:

(1)  Incur indebtedness for improvements for the district for a period of up to 20 years, provided that the first indebtedness is incurred within five years following approval of the district pursuant to 32 V.S.A. § 5404a(f) and such that the 20 years for incurring indebtedness begins at the time of initial indebtedness.  Prior to requesting municipal approval to secure financing, the municipality shall provide the council with the proposed financing for approval to assure its consistency with the plan approved pursuant to 32 V.S.A. § 5404a(h).  The council shall also assure the viability and reasonableness of any proposed financing other than bonding and least‑cost financing.  A municipality that has not incurred indebtedness within five years following the creation of the district, shall request reapproval from the Vermont economic progress council in order to utilize education tax increment financing following that period.

(2)  The education tax increment may be retained for a 20‑year period,  provided that the 20‑year period commences within five years following approval of the district pursuant to 32 V.S.A. § 5404a(f).  The retention period shall commence at 12:01 a.m. on April 1 of the year following the municipality’s notice to the tax department and the Vermont economic progress council.  If a municipality fails to incur debt within the five‑year period but retains the education tax increment, the municipality shall repay the increment in accordance with section 1900 of this title.

Sec. 64.  24 V.S.A. § 1896 is amended to read:

§ 1896.  TAX INCREMENTS

(a)  In each subsequent year, the listers or assessor shall include no more than the original taxable value of such the real property in the assessed valuation upon which the listers or assessor computes the rates of all taxes levied by the municipality, the school district, and every other taxing district in which the tax increment financing district is situated; but the listers or assessor shall extend all rates so determined against the entire assessed valuation of such real property for that year.  In each year for which the assessed valuation exceeds the original taxable value, the municipality treasurer shall hold apart, rather than remit to the taxing districts, that proportion of all taxes paid that year on the real property in the district which such the excess valuation bears to the total assessed valuation.  The amount so held apart each year is referred to in this act as the “tax increment” for that year.  So much of the tax increments received with respect to the district and pledged and appropriated under section 1897 of this title for the payment of debt service on bonds issued for financing for improvements and related costs shall be segregated by the municipality in a special account on its official books and records until all capital indebtedness of the district has been fully paid.  The final payment shall be reported to the lister or assessor, who shall thereafter include the entire assessed valuation of the district in the assessed valuations upon which tax rates are computed and extended and taxes are remitted to all taxing districts.

(b)  Adjustment upon reappraisal.  In the event of a reappraisal of 20 percent or more of all parcels in the municipality, the value of the original taxable property in the district shall be changed by a multiplier, the denominator of which is the municipality’s education property grand list for the property within the district in the year prior to the reappraisal or partial reappraisal and the numerator of which shall be the municipality’s reappraised or partially reappraised education property grand list for the property within the district.  The state education property tax revenues for the district in the first year following a townwide reappraisal or partial town‑wide reappraisal shall not be less than the dollar amount of the state education property tax revenues in the prior year.

Sec. 65.  24 V.S.A. § 1897 is amended to read:

§ 1897.  TAX INCREMENT FINANCING

(a)  The legislative body may pledge and appropriate any part or all of the tax increments received from properties contained within the tax increment financing district for the payment of the principal of and interest on bonds issued for financing of improvements contained wholly or partly within the district and for related costs in the same proportion by which the infrastructure or related costs directly serve the district at the time of approval of the project financing by the council, and in the case of infrastructure essential to the development of the district that does not reasonably lend itself to a proportionality formula, the council shall apply a rough proportionality and rational nexus test; provided, that if any tax increment utilization is approved pursuant to 32 V.S.A. § 5404a(g) 32 V.S.A. § 5404a(f), no more than 75 percent of the state property tax increment and no less than 75 percent of the municipal tax increment may be used to service this debt.  Bonds shall only be issued if the legal voters of the municipality, by a majority vote of all voters present and voting on the question at a special or annual municipal meeting duly warned for the purpose, shall give authority to the legislative body to pledge the credit of the municipality for these purposes.  Notwithstanding any provision of any municipal charter, the legal voters of a municipality, by a single vote, shall authorize the legislative body to pledge the credit of the municipality up to a specified maximum dollar amount for all debt obligations to be financed with state property tax increment pursuant to approval by the Vermont economic progress council and subject to the provisions of this section and 32 V.S.A. § 5404a.

(b)  A municipality’s pledge of credit for the purpose of issuing a bond financing improvements under this subchapter and 32 V.S.A. § 5404a shall include notice that if the tax increment received by the municipality from any property tax source is insufficient to pay the principal and interest on the debt in any year, for whatever reason, including a decrease in property value or repeal of a state property tax source, unless determined otherwise at the time of such repeal, the municipality shall remain liable for full payment of the bond principal and interest for the term of indebtedness. 

Sec. 66.  24 V.S.A. § 1898(e) is amended to read:

(e)  Prior to the resolution or ordinance of the local governing body authorizing the bonds issued financing under this section, the legislative body of the municipality shall hold one or more public hearings, after public notice, on a financial plan for the proposed improvements and related costs to be funded, including a statement of costs and sources of revenue, the estimates of assessed values within the district, the portion of those assessed values to be applied to the proposed improvements, the resulting tax increments in each year of the financial plan, the amount of bonded indebtedness or other financing to be incurred, other sources of financing and anticipated revenues, and the duration of the financial plan.  A municipality that has approved the creation of a district under this chapter may designate a coordinating agency to administer the district to ensure compliance with this chapter and any other statutory or other requirements.

Sec. 67.  24 V.S.A. § 1900 is amended to read:

§ 1900. DISTRIBUTION

     In addition to all other provisions of this chapter, with respect to any tax increment financing district, any of the municipal and education tax increment increments received in any tax year that exceed the amounts pledged for the payment on principal and interest on the bonds issued for improvements and related costs in the district shall be distributed to the city, town, or village budget in proportion that each budget bears to the combined total of the budgets unless otherwise negotiated by the city, town, or village. Any state education tax increment received in any tax year that exceeds the amount pledged for the payment on principal and interest on the bonds issued for improvements and related costs in the district shall not be remitted to the municipality but shall , an equal portion of each increment may be used only for prepayment of principal and interest on the bonds issued, placed in escrow for bond payment, or otherwise used for defeasance of the bonds; and any remaining portion of the excess municipal tax increment shall be distributed to the city, town, or village budget, in proportion that each budget bears to the combined total of the budgets unless otherwise negotiated by the city, town, or village; and any remaining portion of the excess education tax increment shall be distributed to the education fund.

Sec. 68.  32 V.S.A. § 5404a(f) and (h) are amended and (j) is added to read:

(f)  A municipality that establishes a tax increment financing district under subchapter 5 of chapter 53 of Title 24 shall collect all property taxes on properties contained within the district and apply up to 75 percent of the tax increment as defined in 24 V.S.A. § 1896 to repayment of debt issued to finance financing of the improvements and related costs for up to 20 years pursuant to 24 V.S.A. § 1894, if approved by the Vermont economic progress council pursuant to this section.

(h)  Criteria for approval.  To approve utilization of incremental revenues pursuant to subsection (f) of this section, the Vermont economic progress council shall do all the following:

(1)  Review each application to determine that the new real property development would not have occurred or would have occurred in a significantly different and less desirable manner but for the proposed utilization of the incremental tax revenues.  A district created in a designated growth center under 24 V.S.A. § 2793c shall be deemed to have complied with this subdivision.  The review shall take into account:

* * *

(C)  The amount of additional revenue expected to be generated as a result of the proposed development; the percentage of that revenue that shall be paid to the education fund; the percentage that shall be paid to the municipality; and the percentage of the revenue paid to the municipality that shall be used to pay the municipal tax increment bonds financing incurred for development of the tax increment financing district.

(2)  Process requirements.  Determine that each application meets all of the following four requirements:

* * *

(B)  The municipality has developed a tax increment financing district plan, including: a project description; a development financing plan; a pro forma projection of expected costs and a list of previously advanced related costs to be reimbursed; a projection of revenues; a statement and demonstration that the project would not proceed without the allocation of a tax increment; a projection of types and amount of expected financing; evidence that the municipality is actively seeking or has obtained other sources of funding and investment; and a development schedule that includes a list, a cost estimate, and a schedule for public improvements and projected private development to occur as a result of the improvements.

* * *

(3)  Location criteria.  Determine that each application meets one of the following criteria:

(A)  The development or redevelopment is compact, high density, and located in or near existing industrial areas.

(B)  The majority of land in the proposed district is within an approved growth center, designated downtown, designated village center, or new town center.

(C)  The development will occur in an area that is economically distressed, which for the purposes of this subdivision means that the area has experienced patterns of increasing unemployment, a drop in average wages, or a decline in real property values.

(4)  Project criteria.  Determine that the proposed development within a tax incentive increment financing district will accomplish at least three of the following five criteria:

* * *

(C)  The project will affect the mitigation remediation and redevelopment of a brownfield located within the district.  For the purposes of this section, “brownfield” means an area in which a hazardous substance, pollutant, or contaminant is or may be present, and that situation is likely to complicate the expansion, development, redevelopment, or reuse of the property.

* * *

(j)  The state auditor of accounts shall review and audit all active tax increment financing districts every three years.

Sec. 69.  24 V.S.A. § 1901 is added to read:

§ 1901.  INFORMATION REPORTING

     Every municipality with an active tax increment financing district shall:

(1)  On or before December 1 of each year, report to the Vermont economic progress council (VEPC) and the tax department all information described in subsection 5404a(i) of Title 32, in the form prescribed by VEPC.

(2)  Report its tax increment financing actual investment, bond repayments, escrow status, and “related cost” accounting to the Vermont economic progress council according to the municipal audit cycle prescribed in section 1681 of this Title.

Sec. 70.  Sec. 2i of No. 184 of the Acts of the 2005 Adj. Sess. (2006) is amended to read:

Sec. 2i.  TAX INCREMENT FINANCING DISTRICTS; CAP

Notwithstanding any other provision of law, the Vermont economic progress council may not approve the use of education tax increment financing for more than ten tax increment financing districts and no more than one newly created tax increment financing district in any municipality within the period of five state fiscal years beginning July 1, 2006 2008.  Thereafter, no tax increment financing districts may be approved without further authorization by the General Assembly general assembly.

     Twenty-second:  By adding Secs. 71 and 72 to read as follows:

Sec. 71.  Sec. 2j of No. 184 of the Acts of the 2005 Adjourned session (2006) is amended to read:

Sec. 2j.  EXISTING TAX INCREMENT FINANCING DISTRICTS;
              MILTON

     Notwithstanding the limitations under 32 V.S.A. § 5404a, the town of Milton may extend for an additional ten years beyond the initial ten years approved for the two existing tax increment financing districts identified and known as the Husky campus and the Catamount Industrial Park, and collect all state and local property taxes on properties contained wholly or partly within the tax increment financing districts beyond the original taxable value of those properties at the time of the initial approval of the tax increment financing districts and apply no more than 75 percent of the increase in the value and liability assessed under 32 V.S.A. § 5402 state property tax increment, and an equal percent of the municipal tax increment, on new real property improvements to repayment of debt issued to finance improvements within the tax increment financing district and for related costs, upon application by the Town of Milton.

Sec. 72.  Sec. 18(b) of No. 184 of the Acts of the 2005 Adjourned Session (2006) is amended to read:

Sec. 18.  EFFECTIVE DATES

(b)  Those provisions of Sec. 2h adding 32 V.S.A. § 5404a(h)(3)(D) [location criteria] are repealed effective July 1, 2008 2009.

     Twenty-third:  By adding Secs. 73 and 74 to read as follows:

Sec. 73.  FY2008 COMMON LEVEL OF APPRAISAL IN WINOOSKI

     The fiscal year 2008 education property tax liability for the City of Winooski shall be recalculated using a common level of appraisal factor of 1.0952; and any resulting overpayment of education property taxes from the City of Winooski to the education fund in fiscal year 2008 shall be credited to the City of Winooski against its fiscal year 2009 education property tax liability.

Sec. 74.  Sec. 38(3) of No. 159 of the Acts of the 1999 Adjourned Session (2000) is amended to read:

(3)  The excess valuation of property within a tax increment financing district organized and created pursuant to Sec. 37 of this act, to the extent that taxes generated on the excess property valuation are pledged and appropriated for debt service on bonds issued under section 1897 of Title 24 or the funding of reserves under subdivision (2) of this section, shall not be included within the education property tax grand list provided for in section 5404 of Title 32 as taxable property, nor shall the excess valuation of the property be subject to the education property tax imposed under section 5402 of Title 32 until bonds issued under section 1897 of Title 24 are released, discharged, paid, defeased, or fully reserved; provided, however, that 5 2.5 percent of the education taxes imposed annually on the excess valuation of the residential property within the district shall be paid to the education fund.  The tax rate assessed on the excess value of property within the district shall be the same rate assessed on property outside the district. Until the bonds are paid in full or have been fully redeemed or defeased through fully funded reserves and accounts, 100 percent of the municipal taxes assessed against the excess valuation of property within the district shall be pledged and appropriated solely for debt service on the bonds.  For purposes of this act, “excess valuation” means the difference between the current grand list value and the grand list value at commencement of the development.

     Twenty-fourth:  By adding Sec. 75 to read as follows:

Sec. 75.  RETROACTIVE APPROVAL OF BURLINGTON TIF
               FINANCING   

Municipalities that expanded tax increment financing districts under subchapter 5 of chapter 53 of Title 24 by June 30, 1997, as authorized by No. 60 of the Acts of 1997, shall have authority to apply those state and local property taxes assessed on properties within the tax increment financing district to repayment of certificates of participation and HUD section 108 financing issued to finance public improvements within the tax increment financing district. This authority is retroactive to June 30, 1997, and is applicable to certificates of participation and HUD section 108 financing instruments issued after April 1, 1996, and on or before  March 31, 2006.  State education property taxes may be used in accordance with this provision for a period of no more than 20 years from the date the debt was incurred. Refinancing such debt shall not extend the twenty-year period for any portion of the debt.

     Twenty-fifth:  By adding Secs. 76 through 80 to read as follows:

Sec. 76.  24 V.S.A. § 1897(a) is amended to read:

(a)  The legislative body may pledge and appropriate in equal proportion any part or all of the state and municipal tax increments received from properties contained within the tax increment financing district for the payment of the principal of and interest on bonds issued for improvements contained wholly or partly within the district and for related costs; provided, that if any tax increment utilization is approved pursuant to 32 V.S.A. § 5404a(g)(f), no more than 75 percent of the state property tax increment and no less than 75 an equal percent of the municipal tax increment may be used to service this debt.  Bonds shall only be issued if the legal voters of the municipality, by a majority vote of all voters present and voting on the question at a special or annual municipal meeting duly warned for the purpose, shall give authority to the legislative body to pledge the credit of the municipality for these purposes.

Sec. 77.  24 V.S.A. § 1900 is amended to read:

§ 1900.  DISTRIBUTION

     In addition to all other provisions of this chapter, with respect to any tax increment financing district, any  of the municipal and education tax increment received in any tax year that exceed the amounts pledged for the payment on principal and interest on the bonds issued for improvements and related costs in the district shall be distributed to the city, town, or village budget in proportion that each budget bears to the combined total of the budgets unless otherwise negotiated by the city, town, or village. Any state education tax increment received in any tax year that exceeds the amount pledged for the payment on principal and interest on the bonds issued for improvements and related costs in the district shall not be remitted to the municipality but shall , an equal portion of each increment may be used only for prepayment of principal and interest on the bonds issued, placed in escrow for bond payment, or otherwise used for defeasance of the bonds; and any remaining portion of the excess municipal tax increment shall be distributed to the city, town, or village budget, in proportion that each budget bears to the combined total of the budgets unless otherwise negotiated by the city, town, or village; and any remaining portion of the excess education tax increment shall be distributed to the education fund.

Sec. 78.  REPEAL

32 V.S.A. § 5404a(e) (allocations) is repealed.

Sec. 79.  32 V.S.A. § 5404a(g) is amended to read:

(g)  Any allocation approved pursuant to subsection (e) of this section or utilization of tax increment approved under subsection (f) of this section shall be in addition to any other payments to the municipality under chapter 133 of Title 16.  Allocations and tax Tax increment utilizations approved pursuant to subsections (e) and subsection (f) of this section shall affect the education property tax grand list and the municipal grand list of the municipality under this chapter beginning April 1 of the year following approval and shall remain available to the municipality for the full period authorized or 20 years following the date of initial indebtedness, whichever is earlier, and shall be restricted only to the extent that the real property development giving rise to the increased value to the grand list fails to occur within the authorized period.

Sec. 80.  32 V.S.A. § 5404a(h)(2) is amended to read:

(2)  Process requirements. Determine that each application meets all of the following four requirements:

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(B)  The municipality has developed a tax increment financing district plan, including: a project description; a development financing plan; a pro forma projection of expected costs; a list of previously advanced related costs to be reimbursed; a projection of revenues; a statement and demonstration that the project would not proceed without the allocation of a tax increment; a projection of the amount of expected indebtedness; evidence that the municipality is actively seeking or has obtained other sources of funding and investment; and a development schedule that includes a list, a cost estimate, and a schedule for public improvements and projected private development to occur as a result of the improvements.

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     Twenty-sixth:  By adding Sec. 81 to read as follows:

Sec. 81.  ENERGY STAR APPLIANCES

     Notwithstanding the provisions of chapter 233 of Title 32 and section 138 of Title 24, no sales and use tax or local option sales tax shall be imposed or collected on sales from July 14, 2008, through July 20, 2008, to individuals for personal use, of Energy Star appliances with a purchase price of $2,000.00 or less.

     Twenty-seventh:  By adding Secs. 82 through 112 to read as follows:

Sec. 82.  11 V.S.A. § 3001 is amended to read:

§ 3001.  DEFINITIONS

As used in this chapter:

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(15)  “Operating agreement” means the agreement in writing any form of description of membership rights and obligations under section 3003 of this title, stored or depicted in any tangible or electronic medium, which is agreed to by the members, including amendments to the agreement.

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(19)  “Signed” includes any symbol or electronic schema that may be prescribed by the secretary of state that is executed or adopted by a person with the present intention to authenticate a record.

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(23)  “Document” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.    

(24)  “Writing” means written communications, including letters, faxes, e-mails, or other electronic formats that may be prescribed by the secretary of state.

(25)  “Delivery” means surface mail or methods of electronic transmission the secretary of state may prescribe.

(26)  “Meeting” means any structured communications conducted by participants in person or through the use of electronic or telecommunications medium permitting simultaneous or sequentially structured communications for the purpose of reaching a collective agreement.

Sec. 83.  11 V.S.A. § 3026(f) is added to read:

(f)  An original copy may consist of an electronic communication received by the secretary of state’s office, endorsement may consist of an attached electronic record, and the delivery of a duplicate may be done electronically.

Sec. 84.  11 V.S.A. § 3058(c) is amended to read:

(c)  A company may maintain its records in other than written form if such form is capable of conversion into written form within a reasonable time or into an electronic form that may be prescribed by the secretary of state.

Sec. 85.  11A V.S.A. § 1.20 is amended to read:

§ 1.20.  FILING REQUIREMENTS

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(d)  The document must be typewritten or printed or, if electronically transmitted, it must be in a format that can be retrieved or reproduced in typewritten or printed form or in an electronic format prescribed by the secretary of state.

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(h)  If the secretary of state has prescribed a mandatory form or electronic format for the document under section 1.21 of this title, the document must be in or on the prescribed form.

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(j)(1)  Any of the terms of a plan or filed documents may be made dependent on facts ascertainable outside the plan or filed documents as follows:

(A)  The manner in which the facts operate on the terms of the plan or filed document must be clearly and expressly set forth in the plan or filed document.

(B)  The facts may include without limitation actions or events within the control of, or determinations made by, a part to the plan or filing the filed document or a representative of a party to the plan or filing the filed document. 

(2)  As used in this section:

(A)  “Filed document” means a document filed with the secretary of state under any provision of this title, except chapter 15 or section 16.22 of this title.

(B)  “Plan” means a plan of merger or share exchange.

Sec. 86.  11A V.S.A. § 1.21(a) is amended to read:

(a)  The secretary of state may prescribe the form or electronic format of and furnish on request forms or specifications for formats for:

(1)  articles of incorporation. such form shall note the information required under subsection 2.02(a) of this title, together with a summary of such information or provisions as are permitted by this title;

(2)  an application for a certificate of good standing;

(3)  a foreign corporation’s application for a certificate of authority to transact business in this state;

(4)  a foreign corporation’s application for a certificate of withdrawal; and

(5)  the annual report.

Sec. 87.  11A V.S.A. § 1.23(a) is amended to read:

§ 1.23.  EFFECTIVE TIME AND DATE OF DOCUMENT

(a)  Except as provided in subsection (b) of this section, section subsection 1.24(c) of this title, and section 2.03 of this title, a document accepted for filing is effective at the time of filing on the date it is filed, as evidenced by the secretary of state’s date and time endorsement on the original document:

(1)  at the date and time of filing, as evidenced by such means as the secretary of state may use for the purpose of recording the date and time of filing; or

(2)  at the time specified in the document as its effective time on the date it is filed.

Sec. 88.  11A V.S.A § 1.24(a) is amended to read:

(a)  A domestic or foreign corporation may correct a document filed by the secretary of state if the document:

(1)  is incomplete;

(2)  contains an incorrect statement; or

(3)  was defectively executed, attested, sealed, verified, or acknowledged; or

(4)  the electronic transmission of which was defective.

Sec. 89.  11A V.S.A. § 1.25(b) is amended to read:

(b)  The secretary of state files a document by stamping or otherwise endorsing recording it as “Filed” together with his or her name and official title and on the date and time of receipt, on both the original and the document copy document and on the record of the receipt for the filing fee.  After filing a document, except as provided in sections 5.03 and 15.10 of this title, the secretary of state shall deliver a copy of the document copy, with the and filing fee receipt (or acknowledgement of receipt if no fee is required) attached, to the domestic or foreign corporation or its representative.

Sec. 90.  11A V.S.A. § 1.27 is amended to read:

§ 1.27.  EVIDENTIARY EFFECT OF COPY OF FILED DOCUMENT

(a)  A certificate attached to a copy of a document filed by the secretary of state, bearing his or her signature (which may be in facsimile) and the seal of this state, is conclusive evidence that the original document is on file with the secretary of state.

(b)  A certificate by the secretary of state that a diligent search has failed to locate documents claimed to be filed with the secretary of state shall be taken and received in all courts, public offices, and official bodies as prima facie evidence of the absence of those documents in the files of the secretary of state.

(c)  The secretary of state’s filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the state to cancel or revoke the incorporation or involuntarily dissolve the corporation

A certificate from the secretary of state delivered with a copy of a document filed by the secretary of state is conclusive evidence that the document is on file with the secretary of state.

Sec. 91.  11A V.S.A. § 1.40 is amended to read:

§ 1.40.  DEFINITIONS

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(5)  “Deliver” includes mail or “delivery” means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery, and electronic transmission.

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(25)  “Electronic transmission” or “electronically transmitted” means a process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient.

(26)  “Meeting” means any structured communications conducted by participants in person or through the use of electronic or telecommunications medium permitting simultaneous or sequentially structured communications for the purpose of reaching a collective agreement.

(27)  “Sign” or “signature” includes any manual, facsimile, conformed, or electronic signature.

Sec. 92.  11A V.S.A. § 141(b) and (c) are amended to read:

(b)  Notice may be communicated in person; by telephone, voice mail, telegraph, teletype, facsimile, or other form of wire or, wireless, or electronic communication; or by mail or private carrier or other method of delivery.  If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published; or by radio, television, or other form of public broadcast communication.

(c)  Notice to shareholders.  Written notice by a domestic or foreign corporation to its shareholder, if in a comprehensible form, is effective when: 

(1)  mailed first class postpaid and correctly addressed to the shareholder’s address as shown in the corporation’s current record of shareholders; or 

(2)  electronically transmitted to the shareholder in a manner authorized by the shareholder.

Sec. 93.  11A V.S.A. § 6.01 is amended to read:

§ 6.01.  AUTHORIZED SHARES

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(d)  The description of the designations, preferences, limitations, and relative rights of share classes in subsection (c) of this section is not exhaustive  Terms of shares may be made dependent upon facts objectively ascertainable outside the articles of incorporation in accordance with subsection 1.20(k) of this title.

(e)  Any of the terms of shares may vary among holders of the same class or series so long as such variations are expressly set forth in the articles of incorporation.

(f)  The description of the designations, preferences, limitations, and relative rights of share classes in subsection (c) of this section is not exhaustive.

Sec. 94.  11A V.S.A. § 6.21 is amended to read:

§ 6.21.  ISSUANCE OF SHARES

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(b)  The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services performed, or other securities of the corporation.  Future services shall not constitute payment or part payment for shares of a corporation.

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(e)  The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the note is paid, or the benefits are received.  If the services are not performed, the note is not paid, or the benefits are not received, the shares escrowed or restricted and the distributions credited may be cancelled in whole or part. 

Sec. 95.  11A V.S.A. § 6.24 is amended to read:

§ 6.24.  SHARE OPTIONS

A corporation may issue rights, options, or warrants for the purchase of shares of the corporation.  The board of directors shall determine the terms upon which the rights, options, or warrants are issued, their form and content, and the consideration for which the shares are to be issued.  The provisions of sections 8.60 through 8.63 of this title apply in accordance with their terms in the case of transactions involving the issuance of rights, options, or warrants for the purchase of shares to directors.  Any transactions involving the issuance of options for the purchase of shares to directors, as such, shall be subject to the approval of the shareholders.

(a)  A corporation may issue rights, options, or warrants for the purchase of shares or other securities of the corporation.  The board of directors shall determine:

(1)  the terms upon which the rights, options, or warrants are issued; and

(2)  the terms, including the consideration for which the shares or other securities are to be issued. 

(b)  The authorization by the board of directors for the corporation to issue such rights, options, or warrants constitutes authorization of the issuance of the shares or other securities for which the rights, options, or warrants are exercisable. 

(c)  The terms and conditions of such rights, options, or warrants, including those outstanding on the effective date of this section, may include, without limitation, restrictions or conditions that: 

(1)  preclude or limit the exercise, transfer, or receipt of such rights, options, or warrants by any person or persons owning or offering to acquire a specified number or percentage of the outstanding shares or other securities of the corporation or by any transferee or transferees of any such person or persons; or

(2)  invalidate or void such rights, options, or warrants held by any such person or persons or any such transferee or transferees.

Sec. 96.  11A V.S.A. § 7.01 is amended to read:

§ 7.01.  ANNUAL MEETING

(a)  A corporation shall hold a meeting of shareholders annually at a time stated in or fixed in accordance with the bylaws.

(b)  Annual shareholders’ meetings shall be held in this state, unless permitted in the bylaws of the corporation to be held out of this state.  Annual meetings shall be held at the place stated in or fixed in accordance with the bylaws.  If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office.  An annual meeting may be conducted by means of any telecommunications mechanism, including video-conference telecommunication.

(c)  The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation’s bylaws does not affect the validity of any corporate action, and shall result not in a forfeiture or dissolution of the corporation

Annual shareholders’ meetings shall be held in this state, unless permitted in the bylaws of the corporation to be held outside this state.  Annual meetings shall be held at the place stated in or fixed in accordance with the bylaws.  If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office.  An annual meeting may be conducted by means of any electronic or telecommunications mechanism, including video-conference telecommunication.  The failure to hold an annual meeting at the time stated or fixed in accordance with a corporation’s bylaws does not affect the validity of any corporate action.

Sec. 97.  11A V.S.A. § 7.02(c) is amended to read:

(c)  Special shareholders’ meetings shall be held in this state, unless permitted in the bylaws of the corporation to be held out of this state.  Meetings shall be held at the place stated in or fixed in accordance with the bylaws.  If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office.  A special meeting may be conducted by means of any electronic or telecommunications mechanism, including video-conference telecommunication.

Sec. 98.  11A V.S.A. § 7.04(a) is amended to read:

(a)  Unless the articles of incorporation preclude the taking of action required or permitted by this title without a shareholders’ meeting, action required or permitted by this title to be taken at a shareholders’ meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action.  Each action must be evidenced by one or more written consents describing the action taken, signed by all the shareholders entitled to vote on the action, and delivered to the corporation for inclusion in the minutes or filed with the corporate records.  For purposes of this section, consent evidenced by electronic communications or an electronic record is written consent.

Sec. 99.  11A V.S.A. § 7.32 is added to read:

§ 7.32.  SHAREHOLDER AGREEMENTS

(a)  An agreement among the shareholders of a corporation that complies with this section is effective among the shareholders and the corporation even though it is inconsistent with one or more other provisions of this title in that it:

(1)  eliminates the board of directors or restricts the discretion or powers of the board of directors; 

(2)  governs the authorization or making of distributions whether or not in proportion to ownership of shares, subject to the limitations in section 6.40 of this title; 

(3)  establishes who shall be directors or officers of the corporation, or

their terms of office or manner of selection or removal;

(4)  governs, in general or in regard to specific matters, the exercise or division of voting power by or between the shareholders and directors or by or among any of them, including the use of weighted voting rights or director proxies;

(5)  establishes the terms and conditions of any agreement for the transfer or use of property or the provision of services between the corporation and any shareholder, director, officer, or employee of the corporation or among any of them; 

(6)  transfers to one or more shareholders or other persons all or part of the authority to exercise the corporate powers or to manage the business and affairs of the corporation, including the resolution of any issue about which there exists a deadlock among directors or shareholders; 

(7)  requires dissolution of the corporation at the request of one or more of the shareholders or upon the occurrence of a specified event; or 

(8)  otherwise governs the exercise of the corporate powers or the management of the business and affairs of the corporation or the relationship among the shareholders, the directors, and the corporation, or among any of them, and is not contrary to public policy.

(b)  An agreement authorized by this section shall be: 

(1)  set forth:

(A)  in the articles of incorporation or bylaws and approved by all persons who are shareholders at the time of the agreement; or

(B)  in a written agreement that is signed by all persons who are shareholders at the time of the agreement and is made known to the corporation; 

(2)  subject to amendment only by the holders of a majority of each class of the corporation’s issued and outstanding capital stock, with each class voting as a separate group, unless the agreement provides otherwise; and

(3)  valid for 10 years, unless the agreement provides otherwise.

(c)  The existence of an agreement authorized by this section shall be noted conspicuously on the front or back of each certificate for outstanding shares or on the information statement required by subsection 6.26(b) of this title.  If at the time of the agreement the corporation has shares outstanding represented by certificates, the corporation shall recall the outstanding certificates and issue substitute certificates that comply with this subsection.  The failure to note the existence of the agreement on the certificate or information statement shall not affect the validity of the agreement or any action taken pursuant to it.  Any purchaser of shares who, at the time of purchase, did not have knowledge of the existence of the agreement shall be entitled to rescission of the purchase.  A purchaser shall be deemed to have knowledge of the existence of the agreement if its existence is noted on the certificate or information statement for the shares in compliance with this subsection and, if the shares are not represented by a certificate, the information statement is delivered to the purchaser at or prior to the time of the purchase of the shares.  An action to enforce the right of rescission authorized by this subsection must be commenced within the earlier of 90 days after discovery of the existence of the agreement or two years after the time of the purchase of the shares. 

(d)  An agreement authorized by this section shall cease to be effective when the corporation becomes a public corporation.  If the agreement ceases to be effective for any reason, the board of directors may, if the agreement is contained or referred to in the corporation’s articles of incorporation or bylaws, adopt an amendment to the articles of incorporation or bylaws, without shareholder action, to delete the agreement and any references to it. 

(e)  An agreement authorized by this section that limits the discretion or powers of the board of directors shall relieve the directors of, and impose upon the person or persons in whom such discretion or powers are vested, liability for acts or omissions imposed by law on directors to the extent that the discretion or powers of the directors are limited by the agreement. 

(f)  The existence or performance of an agreement authorized by this section shall not be a ground for imposing personal liability on any shareholder for the acts or debts of the corporation, even if the agreement or its performance treats the corporation as if it were a partnership or results in failure to observe the corporate formalities otherwise applicable to the matters governed by the agreement. 

(g)  Incorporators or subscribers for shares may act as shareholders with respect to an agreement authorized by this section if no shares have been issued when the agreement is made.

Sec. 100.  11A V.S.A. § 8.03(a) amended to read:

(a)  A board of directors of a corporation which is not a close corporation dispensing with a board of directors pursuant to section 20.08 of this title must consist of three one or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or bylaws.  If the number of shareholders in any corporation is less than three, the The number of directors may be as few as the number of shareholders increased or decreased from time to time by amendment to, or in the manner provided in, the articles of incorporation or the bylaws.

Sec. 101.  11A V.S.A. § 8.20 is amended to read:

§ 8.20.  MEETINGS

(a)  The board of directors may hold regular or special meetings, as defined in subdivision 1.40(26) of this title, in or out of outside this state.

(b)  The board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication, including an electronic, telecommunications, and video- or audio‑conferencing conference telephone call, by which all directors participating may simultaneously hear communicate with each other during the meeting.  A director participating in a meeting by this means is deemed to be present in person at the meeting.

Sec. 102.  11A V.S.A. § 8.40 is amended to read:

§ 8.40.  REQUIRED OFFICERS

(a)  A corporation has the officers described in its bylaws or appointed by the board of directors in accordance with the bylaws, provided that a corporation shall have a president and a secretary.  Any two or more offices may be held by the same person, except the offices of president and secretary, unless the corporation is a professional corporation organized under chapter 3 or 4 of Title 11.

(b)  A duly appointed The board of directors may elect individuals to fill one or more offices of the corporations.  An officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors.

(c)  The bylaws or the board of directors shall delegate assign to one of the officers responsibility for preparing the minutes of the directors’ and shareholders’ meetings and for authenticating and maintaining the records of the corporation required to be kept under subsections 16.01(a) and 16.10(e) of this title.

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(e)  An individual who holds more than one office may execute, acknowledge or verify in more than one capacity any document required to be executed, acknowledged or verified by the holders of two or more officers.

Sec. 103.  11A V.S.A. § 8.60 is amended to read:

§ 8.60.  DEFINITIONS

For purposes of this subchapter:

(1)  “Conflicting interest” with respect to a corporation means the interest a director of the corporation has respecting a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) if

(A)  whether or not the transaction is brought before the board of directors of the corporation for action, the director knows at the time of commitment that he or she or a related person is a party to the transaction or has a beneficial financial interest in or so closely linked to the transaction and of such financial significance to the director or a related person that the interest would reasonably be expected to exert an influence on the director’s judgment if he or she were called upon to vote on the transaction; or

(B)  the transaction is brought (or is of such character and significance to the corporation that it would in the normal course be brought) before the board of directors of the corporation for action, and the director knows at the time of commitment that any of the following persons is either a party to the transaction or has a beneficial financial interest in or so closely linked to the transaction and of such financial significance to the person that the interest would reasonably be expected to exert an influence on the director’s judgment if he or she were called upon to vote on the transaction:

(i)  an entity (other than the corporation) of which the director is a director, general partner, agent, or employee;

(ii)  a person that controls one or more of the entities specified in subdivision (i) of this subdivision or an entity that is controlled by, or is under common control with, one or more of the entities specified in subdivision (i); or

(iii)  an individual who is a general partner, principal, or employer of the director.

(2)  “Director’s conflicting interest transaction” with respect to a corporation means a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) respecting which a director of the corporation has a conflicting interest.

(3)  “Related person” of a director means (A) the spouse (or a parent or sibling thereof) of the director, or a child, grandchild, sibling, parent (or spouse of any thereof) of the director, or an individual having the same home as the director, or a trust or estate of which an individual specified in this subdivision (A) is a substantial beneficiary; or (B) a trust, estate, incompetent, conservatee, or minor of which the director is a fiduciary.

(4)  “Required disclosure” means disclosure by the director who has a conflicting interest of (A) the existence and nature of his or her conflicting interest, and (B) all facts known to him or her respecting the subject matter of the transaction that an ordinarily prudent person would reasonably believe to be material to a judgment about whether or not to proceed with the transaction.

(5)  “Time of commitment” respecting a transaction means the time when the transaction is consummated or, if made pursuant to contract, the time when the corporation (or its subsidiary or the entity in which it has a controlling interest) becomes contractually obligated so that its unilateral withdrawal from the transaction would entail significant loss, liability, or other damage.

(1)  “Control” including the term “controlled by” means:

(A)  having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing body of an entity whether through the ownership of voting shares or interests, by contract, or otherwise; or

(B)  being subject to a majority of the risk of loss from the entity’s activities or entitled to receive a majority of the entity’s residual returns.

(2)  “Director’s conflicting interest transaction” means a transaction effected or proposed to be effected by the corporation or by an entity controlled by the corporation that at the relevant time the director:

(A)  was a party to; or

(B)  had knowledge of and a material financial interest known to the director; or

(C)  knew that a related person was a party or had a material financial interest. 

(3)  “Fair to the corporation” means, for purposes of subdivision 8.61(b)(3) of this title, that the transaction as a whole was beneficial to the corporation, taking into appropriate account whether it was:

(A)  fair in terms of the director’s dealings with the corporation; and

(B)  comparable to what might have been obtainable in an arm’s length transaction, given the consideration paid or received by the corporation. 

(4)  “Material financial interest” means a financial interest in a transaction that would reasonably be expected to impair the objectivity of the director’s judgment when participating in action on the authorization of the transaction. 

(5)  “Related person” means: 

(A)  the director’s spouse;

(B)  a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, step sibling, half sibling, aunt, uncle, niece, or nephew (or spouse of any thereof) of the director or of the director’s spouse; 

(C)  an individual living in the same home as the director;

(D)  an entity, other than the corporation or an entity controlled by the corporation, controlled by the director or any person specified in this subdivision; 

(E)  a domestic or foreign:

(i)  business or nonprofit corporation (other than the corporation or an entity controlled by the corporation) of which the director is a director;

(ii)  unincorporated entity of which the director is a general partner or a member of the governing body; or

(iii)  individual, trust, or estate for whom or of which the director is a trustee, guardian, personal representative, or like fiduciary; or

(F)  a person that is, or an entity that is controlled by, an employer of the director.

(6)  “Relevant time” means:

(A)  the time at which the directors’ action respecting the transaction is taken in compliance with section 8.62 of this title; or

(B)  if the transaction is not brought before the board of directors of the corporation or its committee for action under section 8.62 of this title, at the time the corporation, or an entity controlled by the corporation, becomes legally obligated to consummate the transaction. 

(7)  “Required disclosure” means disclosure of:

(A)  the existence and nature of the director’s conflicting interest; and

(B)  all facts known to the director respecting the subject matter of the transaction that a director free of such conflicting interest would reasonably believe to be material in deciding whether to proceed with the transaction.

Sec. 104.  11A V.S.A. § 8.61 is amended to read:

§ 8.61.  JUDICIAL ACTION

(a)  A transaction effected or proposed to be effected by a corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) that is not a director’s conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because a director of the corporation, or any person with whom or which he or she has a personal, economic, or other association, has an interest in the transaction.

(b)  A director’s conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because the director, or any person with whom or which he or she has a personal, economic, or other association, has an interest in the transaction, if:

(1)  directors’ action respecting the transaction was at any time taken in compliance with section 8.62 of this subchapter;

(2)  shareholders’ action respecting the transaction was at any time taken in compliance with section 8.63 of this subchapter; or

(3)  the transaction, judged according to the circumstances at the time of commitment, is established to have been fair to the corporation.

(a)  A transaction effected or proposed to be effected by the corporation, or by an entity controlled by the corporation, may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director of the corporation, in a proceeding by a shareholder or by or in the right of the corporation, on the ground that the director has an interest respecting the transaction, if it is not a director’s conflicting interest transaction. 

(b)  A director’s conflicting interest transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director of the corporation, in a proceeding by a shareholder, or by or in the right of the corporation, on the ground that the director has an interest respecting the transaction, if:

(1)  the directors’ action respecting the transaction was taken in compliance with section 8.62 of this title at any time; or 

(2)  the shareholders’ action respecting the transaction was taken in compliance with section 8.63 of this title at any time; or 

(3)  the transaction, judged according to the circumstances at the relevant time, is established to have been fair to the corporation.

Sec. 105.  11A V.S.A. § 8.62 is amended to read:

§ 8.62.  DIRECTORS’ ACTION

(a)  Directors’ action respecting a transaction is effective for purposes of section 8.61(b)(1) of this subchapter if the transaction received the affirmative vote of a majority (but no fewer than two) of those qualified directors on the board of directors or on a duly empowered committee of the board who voted on the transaction after either required disclosure to them (to the extent the information was not known by them) or compliance with subsection (b) of this section; provided that action by a committee is so effective only if:

(1)  all its members are qualified directors; and

(2)  its members are either all the qualified directors on the board or are appointed by the affirmative vote of a majority of the qualified directors on the board.

(b)  If a director has a conflicting interest respecting a transaction, but neither he nor she nor a related person of the director specified in section 8.60(3) of this subchapter is a party to the transaction, and if the director has a duty under law or professional canon, or a duty of confidentiality to another person, respecting information relating to the transaction such that the director may not make the disclosure described in section 8.60(4), then disclosure is sufficient for purposes of subsection (a) of this section if the director (1) discloses to the directors voting on the transaction the existence and nature of his or her conflicting interest and informs them of the character and limitations imposed by that duty before their vote on the transaction, and (2) plays no part, directly or indirectly, in their deliberations or vote.

(c)  A majority (but no fewer than two) of all the qualified directors on the board of directors, or on the committee, constitutes a quorum for purposes of action that complies with this section.  Directors’ action that otherwise complies with this section is not affected by the presence or vote of a director who is not a qualified director.

(d)  For purposes of this section, “qualified director” means, with respect to a director’s conflicting interest transaction, any director who does not have either (1) a conflicting interest respecting the transaction, or (2) a familial, financial, professional, or employment relationship with a second director who does have a conflicting interest respecting the transaction, which relationship would, in the circumstances, reasonably be expected to exert an influence on the first director’s judgment when voting on the transaction.

(a)  Directors’ action respecting a director’s conflicting interest transaction is effective for purposes of subdivision 8.61(b)(1) of this title if the transaction has been authorized by the affirmative vote of a majority, but no fewer than two, of the qualified directors who voted on the transaction after required disclosure by the conflicted director of information not already known by such qualified directors, or after modified disclosure in compliance with subsection (b) of this section, provided that:

(1)  the qualified directors have deliberated and voted outside the

presence of and without the participation by any other director; and

(2)  where the action has been taken by a committee, all members of the committee were qualified directors, and either:

(A)  the committee was composed of all the qualified directors on the board of directors; or

(B)  the members of the committee were appointed by the affirmative vote of a majority of the qualified directors on the board. 

(b)  Notwithstanding subsection (a) of this section, when a transaction is a director’s conflicting interest transaction only because a related person described in subdivisions 8.60(5)(E) and (F) of this title is a party to or has a material financial interest in the transaction, the conflicted director is not obligated to make required disclosure to the extent that the director reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule, provided that the conflicted director discloses to the qualified directors voting on the transaction:

(1)  all information required to be disclosed that is not so violative;

(2)  the existence and nature of the director’s conflicting interest; and

(3)  the nature of the conflicted director’s duty not to disclose the confidential information.

(c)  A majority, but no fewer than two, of all the qualified directors on the board of directors or on the committee constitutes a quorum for purposes of action that complies with this section. 

(d)  Where directors’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation, the bylaws, or a provision of law, independent action to satisfy those authorization requirements must be taken by the board of directors or a committee, in which action directors who are not qualified directors may participate.

Sec. 106.  11A V.S.A. § 8.63 is amended to read:

§ 8.63.  SHAREHOLDERS’ ACTION

(a)  Shareholders’ action respecting a transaction is effective for purposes of section 8.61(b)(2) of this subchapter if a majority of the votes entitled to be cast by the holders of all qualified shares was cast in favor of the transaction after (1) notice to shareholders describing the director’s conflicting interest transaction, (2) provision of the information referred to in subsection (d) of this section, and (3) required disclosure to the shareholders who voted on the transaction (to the extent the information was not known by them).

(b)  For purposes of this section, “qualified shares” mean any shares entitled to vote with respect to the director’s conflicting interest transaction except shares that, to the knowledge, before the vote, of the secretary (or other officer or agent of the corporation authorized to tabulate votes), are beneficially owned (or the voting of which is controlled) by a director who has a conflicting interest respecting the transaction or by a related person of the director, or both.

(c)  A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of action that complies with this section.  Subject to the provisions of subsections (d) and (e) of this section, shareholders’ action that otherwise complies with this section is not affected by the presence of holders, or the voting, of shares that are not qualified shares.

(d)  For purposes of compliance with subsection (a) of this section, a director who has a conflicting interest respecting the transaction shall, before the shareholders’ vote, inform the secretary (or other officer or agent of the corporation authorized to tabulate votes) of the number, and the identity of persons holding or controlling the vote, of all shares that the director knows are beneficially owned (or the voting of which is controlled) by the director or by a related person of the director, or both.

(e)  If a shareholders’ vote does not comply with subsection (a) of this section solely because of a failure of a director to comply with subsection (d), and if the director establishes that his or her failure did not determine and was not intended by him or her to influence the outcome of the vote, the court may, with or without further proceedings respecting section 8.61(b)(3) of this subchapter, take such action respecting the transaction and the director, and give such effect, if any, to the shareholders’ vote, as it considers appropriate in the circumstances.

(a)  Shareholders’ action respecting a director’s conflicting interest transaction is effective for purposes of subdivision 8.61(b)(2) of this title if a majority of the votes cast by the holders of all qualified shares is in favor of the transaction after:

(1)  notice to shareholders describing the action to be taken respecting the transaction;

(2)  provision to the corporation of the information referred to in subsection (b) of this section; and

(3)  communication of the information that is the subject of required disclosure to the shareholders entitled to vote on the transaction, to the extent the information is not known by them.

(b)  A director who has a conflicting interest respecting the transaction shall, before the shareholders’ vote, inform the secretary or other officer or agent of the corporation authorized to tabulate votes, in writing, of the number of shares that the director knows are not qualified shares under subsection (c) of this section and the identity of the holders of those shares.  

(c)  For purposes of this section:

(1)  “Holder” means and “held by” refers to shares held by both a record shareholder, as defined in subdivision 13.01(7) of this title, and a beneficial shareholder, as defined in subdivision 13.01(2) of this title;

(2)  “Qualified shares” means all shares entitled to be voted with respect to the transaction except for shares that the secretary or other officer or agent of the corporation authorized to tabulate votes either knows, or under subsection (b) of this section is notified, are held by:

(A)  a director who has a conflicting interest respecting the transaction; or

(B)  a related person of the director, excluding a person described in subdivision 8.60(5)(F) of this title.

(d)  A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of compliance with this section.  Subject to the provisions of subsection (e) of this section, shareholders’ action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of shares that are not qualified shares. 

(e)  If a shareholders’ vote does not comply with subsection (a) of this section solely because of a director’s failure to comply with subsection (b) of this section, and if the director establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, the court may take such action respecting the transaction and the director, and may give such effect, if any, to the shareholders’ vote, as the court considers appropriate in the circumstances. 

(f)  Where shareholders’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation, the bylaws, or a provision of law, independent action to satisfy those authorization requirements must be taken by the shareholders, in which action shares that are not qualified shares may participate.

Sec. 107.  11A V.S.A. § 12.02(a) is amended to read:

(a)  A corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property (with or without the good will), otherwise than in the usual and regular course of business, on the terms and conditions and for the consideration determined by the corporation’s board of directors, if the board of directors proposes and its shareholders approve the proposed transaction A sale, lease, exchange, or other disposition of assets, other than a disposition described in section 12.01 of this title, requires approval of the corporation’s shareholders if the disposition would leave the corporation without a significant continuing business activity.  If a corporation retains a business activity that represented at least 25 percent of the total assets at the end of the most recently completed fiscal year and 25 percent of either income from continuing operations before taxes or revenues from continuing operations for that fiscal year, in each case of the corporation and its subsidiaries on a consolidated basis, the corporation will conclusively be deemed to have retained a significant continuing business activity.

Sec. 108.  11A V.S.A. § 16.01(d) and (e) are amended to read:

(d)  A corporation shall maintain its records in written form or in another form, including electronic form, capable of conversion into written form within a reasonable time.

(e)  A corporation shall keep a copy of the following records at its principal office (or, if none in this state, then the registered office):

* * *

(5)  all written or electronic communications to shareholders generally within the past three years, including the financial statements furnished for the past three years under section 16.20 of this title;

* * *

* * * E-Business Taxation * * *

Sec. 109.  32 V.S.A. § 5811(26) is added to read:

(26)  “E-business” means a business entity which, during the entire taxable year:

(A) was not a corporation subject to the provisions of subchapter C of chapter 1 of the Internal Revenue Code;

(B)  was not a member of an affiliated group or engaged in a unitary business with one or more members of an affiliated group; did not perform any activities in this state which would constitute doing business for purposes of income taxation, other than activities described in subdivisions (15)(C)(i), fulfillment operations, and (15)(c)(ii), Web page or Internet site maintenance, of this section;

(C) used mainly computer, electronic, and telecommunications technologies in its formation and in the conduct of its business meetings, in its interaction with shareholders, members and partners, and in executing any other formal requirements.

Sec. 110.  32  V.S.A. § 5911 is amended to read:

§ 5911.  TAXATION OF AN S CORPORATION AND ITS
              SHAREHOLDERS

(a)  An S corporation shall not be subject to the tax imposed by section 5832 of this title, except to the extent of income taxable to the corporation under the provisions of the Internal Revenue Code.

(b)  For the purposes of section 5823 of this title, each shareholder’s pro rata share of the S corporation’s income attributable to Vermont and each resident shareholder’s pro rata share of the S corporation’s income not attributable to Vermont shall be taken into account by the shareholder in the manner provided in Section 1366 of the Code.

     (c)  An S corporation and its shareholders shall not be subject to the tax imposed by section 5832 of this title or to the provisions of this subchapter 10A if the S corporation qualifies as, and elects to be taxed as, an E-business for the taxable year.

Sec. 111.  32 V.S.A. § 5921a is added to read:

§ 5921.  E-BUSINESS ELECTION.

     A partnership or limited liability company and its partners or members shall not be subject to the tax imposed by section 5832 of this title or to provisions of this subchapter 10B if the partnership or company qualifies as, and elects to be taxed as, an E-business for the taxable year.

Sec. 112.  32 V.S.A. § 5832a is added to read:

§ 5832a.  E-BUSINESS FRANCHISE TAX

     (a)  There is imposed upon every business entity which qualifies as, and has elected to be taxed as, an E-business, an annual franchise tax equal to the greater of 0.025% of the current value of the tangible and intangible assets of the company or $250.00, but in no case more than $500,000.00.

     (b)  The franchise tax under this section shall be reported and paid in the same manner as the tax under section 5832(2)(B) of this title.

     Twenty-eighth:  [Effective Dates]  In Sec. 113 (renumbered from the original Sec. 43 in the bill as passed the House), by striking out subdivision (6) (effective date for Secs. 19 and 20); and inserting subdivisions (12) through (18) to read as follows:

(12)  Sec. 45 of this act (property tax exemption for skating rinks) shall apply to grand lists for April 1, 2008 and 2009 only.

(13)  Sec. 48 of this act (amendment of VEGI definitions; “full-time job” at 35 hours and “wages” excluding stock options) shall take effect retroactively from January 1, 2007.

(14)  Sec. 52 of this act (interest due on repayment of an excessive property tax adjustment) shall apply to property tax adjustment claims filed in 2008 and after.

(15)  Sec. 53 of this act ($500,000.00 property tax exemption for the Brattleboro Holton Home) shall apply notwithstanding any other provision of law, and shall apply to property taxes for fiscal years 2006 and after.  This provision shall be added to the annotation for 32 V.S.A. § 3802.

          (16)  Sec. 71 of this act (equal percentage of education tax increment and municipal tax increment required to be used by Town of Milton for tax increment financing) shall take effect July 1, 2008. 

          (17)  Sec. 76 of this act (proportional use of education and municipal tax in TIF financing) shall apply to tax increment financing districts approved pursuant to 32 V.S.A. § 5404a.

          (18)  Secs. 109 through 112 of this act (E-business taxation) shall apply to taxable years 2008 and after.

Twenty-ninthBy striking out Sec. 27 [relating to repeal of the property tax exemption for Civil and Spanish American war veterans] in its entirety.

     And by renumbering the sections of the bill and internal references to be numerically and alphabetically correct.



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The Vermont General Assembly
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Montpelier, Vermont


www.leg.state.vt.us