UtahS.B. 392026 General SessionSenateWALLET

Investment Zones Amendments

Sponsored By: Wayne A. Harper (Republican)

Signed by Governor

CountiesEconomic DevelopmentLand UseHousingWorkforce ServicesMunicipalitiesPolitical Subdivisions (Local Issues)Governor's Office of Economic OpportunityGrant Programs and Incentives

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Bill Overview

Analyzed Economic Effects

42 provisions identified: 14 benefits, 7 costs, 21 mixed.

Night roadwork exemptions include resident safeguards

Beginning May 6, 2026, commuter rail construction and state highway work on roads normally posted at least 55 mph are exempt from local noise rules. Other state highway and transit projects can qualify after 48 hours’ written notice to affected front-row homes. The transportation department must review community benefits and use noise-reduction practices in consultation with local authorities. Nighttime construction runs from 10 p.m. to 7 a.m.; required local permits still apply unless exempted. Related permitted activities run from 7 p.m. to 7 a.m. and exclude blasting and crushing. Local authorities must issue those related permits when the work is necessary for permitted nighttime construction and nuisance can be reasonably reduced. Permit holders must apply noise-reduction practices when authorities request adjustments for unreasonable disturbances. The department must provide local appeal and permit-enforcement procedures and take corrective action after written notice of unmet exemption conditions.

Search and rescue assistance receives funding

Utah dedicates $200,000 in the General Fund solely to the Search and Rescue Financial Assistance Program. This provision does not specify individual eligibility or payment amounts.

Sensitive wildlife protection receives state funding

Utah allocates $2.45 million to the Division of Wildlife Resources for specified sensitive-species protection measures. The division can also fund local governments carrying out those measures. Local grant awards cannot exceed the amount authorized by the Legislature in an appropriations act.

Emergency food agencies receive state funding

The Tax Commission must deposit $533,750 into the Qualified Emergency Food Agencies Fund. The money supports qualified agencies under the fund’s governing law. This provision does not specify household eligibility or an assistance amount per family.

Active transportation projects receive dedicated money

Utah makes a one-time $45 million deposit into the Active Transportation Investment Fund. The money supports active transportation projects. This provision does not name the funded projects or provide direct household payments.

Convention funding comes with planning goals

The law directs specified state sales-tax revenue into the Utah Convention Incentive Fund. Beginning May 6, 2026, capital city convention zone proposals must explain how they support redevelopment, jobs, walking, tourism, and public event space. They must also address convention center modernization and infrastructure directly serving the center.

Water systems and rights receive funding

Utah deposits $7.175 million for water studies, required dam safety improvements, and protection of interstate water allocations. The wastewater loan program receives $3.5875 million for wastewater projects. The drinking water loan program receives $3.5875 million for public water collection, treatment, storage, distribution, and water-source development. The Division of Water Rights receives $175,000 for legal and technical staff handling water-rights cases.

Sales-tax revenue supports Utah Medicaid funding

For fiscal years beginning on or after July 1, 2019, Utah directs specified sales-tax revenue to the Medicaid ACA Fund. The transfer equals revenue collected at a 0.15% rate on the covered transactions. This is a funding allocation, not a stated new tax increase or change to household Medicaid eligibility or benefits.

Universities can designate limited development areas

Beginning May 6, 2026, an eligible Utah university can designate one development area before January 1, 2035. It must contain contiguous university land owned on January 1, 2025, and cover no more than 75 acres. The Utah Board of Higher Education must approve it. Trustees must give at least seven days’ notice and hold a public hearing. Repeat designations and overlap with specified reinvestment areas existing on January 1, 2025, are barred.

University development money gets new safeguards

Beginning May 6, 2026, universities must place all development and lease receipts from designated areas in separate development funds. Money can support area development, university buildings and upkeep, or another university-related purpose. Trustees cannot participate when their or a family member’s ownership, affiliation, job, or officer role creates a covered conflict. This applies when the trustee reasonably believes a private entity will participate in or directly gain from development. The board must require written conflict disclosure before approving a development agreement.

Construction sales taxes support convention development

A qualifying development area inside a capital city convention zone can receive 50% of specified 4.7% state sales-tax growth from construction materials. Materials must be delivered to a registered zone outlet and intended for permanent attachment to property inside the zone. Sellers must register that delivery outlet with the Tax Commission and report the sales to it. Those sales cannot be reported on a simplified electronic return.

Convention zone spending gets enforcement safeguards

Beginning May 6, 2026, a taxing entity can petition to stop convention zone property-tax growth collections; the committee can also act. At a public meeting, the committee must find clear and convincing evidence that a substantial share has not been or will not be used for authorized purposes. It must also find no debt secured by chapter funds or no binding financial obligations secured by the chapter. Districts managing the property-tax growth can go to court to enforce zone proposals and agreements. The Governor’s economic opportunity office can adjust zone boundaries to match county parcel-boundary changes.

Housing zone sales taxes support transit

Beginning May 6, 2026, Utah directs 15% of specified housing-and-transit zone sales-tax growth to the Transit Transportation Investment Fund. This uses growth in revenue from the 4.7% state sales tax, not a new 15% tax rate. Transfers occur at least annually, starting on a calendar-quarter boundary one year after the sales-tax boundary is established. A separate allocation rule assigns 15% of specified 4.7% state sales-tax revenue from qualifying development-zone sales.

Point development receives taxes for bonds

Utah sends the Point of the Mountain State Land Authority 50% of specified 4.7% state sales-tax revenue from its state land. Statutory exceptions apply to that revenue share. Payments begin in the next calendar quarter starting at least 90 days after the authority submits a certified accurate map. Added land also requires a certified map. Payments stop at a calendar-quarter start at least 90 days after written notice that the secured bonds are fully paid.

Universities receive 80% of qualifying lease taxes

Beginning May 6, 2026, county treasurers must collect privilege tax from lessees of property in development areas covered by development agreements. They must send 80% of that tax revenue to the eligible university. This directs money to universities, not payments to households. The provision does not state the total revenue.

Wildlife funds cannot support species listings

The wildlife division cannot use the designated state funding stream to help list species as threatened or endangered. The ban covers assistance to the U.S. Fish and Wildlife Service or anyone else under the Endangered Species Act. It does not restrict other funding sources.

Sports teams face funding repayment rules

Beginning May 6, 2026, stadium project applicants must apply in writing and certify a franchise agreement and qualifying team operation. Applications must identify the stadium’s location and footprint, disclose specified public funds, and provide related project details. Participant funding benefits cannot exceed the dollar maximum expressly stated in the participation agreement. Agreements must bar direct subsidies, though the rule does not ban all other authorized project funding. If the team leaves or stops using the qualified stadium as its exclusive home, covered funding ends and all covered amounts must be repaid.

Cities pay first-home zone study costs

Beginning May 6, 2026, a city proposing a first home investment zone must pay for independent financial analyses. The Governor’s Office of Economic Opportunity commissions the gap and pro-forma analyses. It can accept up to $20,000 from the city as a dedicated credit for gap-analysis costs. The $20,000 limit is not stated as a cap on all analysis costs.

Transit housing plans face approval checks

Beginning May 6, 2026, municipalities or public transit counties proposing housing and transit zones must have land-use authority there. They must submit development, infrastructure, financing, revenue, and transportation plans, and study possible parking impacts. The housing and transit zone committee must approve the proposal. A station not yet operating must appear in phase one of applicable adopted long-range plans and be expected soon.

Administrative charges reduce zone tax funding

Beginning May 6, 2026, the State Tax Commission can retain administrative charges from housing-and-transit and convention center zone sales taxes. These charges follow the state’s tax-administration rules, which allow up to 1.5% or a lower applicable percentage. Charges leave less revenue for zone transfers and projects. They come from collected tax revenue, not a separate household fee.

Businesses leasing university property face new tax

Beginning May 6, 2026, the law subjects qualifying use of leased university property to Utah’s privilege tax. It covers eligible university property leased to a private person within a development area covered by a development agreement. The lessee or other user must pay when using the property for a for-profit business. Tax starts January 1 of the year after the agreement is signed. This provision does not state the tax amount.

Convention tax revenue covers collection costs

Beginning May 6, 2026, qualifying convention zone taxes, including capital-city zone taxes, are subject to the Tax Commission’s administrative charge. The commission can retain up to 1.5% of revenue. It must use a lower percentage when that covers its administration costs. The charge comes from qualifying revenue, leaving less for distribution; it does not set a new household tax rate.

Capital-city project spending gains debt option

Beginning May 6, 2026, capital-city convention zone budgets are limited to a convention center, publicly owned entertainment venue, parking, and related infrastructure. Funds must serve the zone’s legal purposes and be used within or benefit the zone. Outside spending must meet statutory goals, and the public infrastructure district board must find a direct zone benefit. Zone funds can also cover district debt, including issuance costs, repayment, and interest.

Capital-city zones face size and location rules

Beginning May 6, 2026, capital-city convention zones must lie inside the eligible city and use connected parcels. They are limited to 50 acres unless the city approves more. They do not count toward the county limit of eight housing and transit zones. The supplied provisions conflict on one location rule: one removes the existing-convention-center and bordering-block requirement, while another retains it.

Convention projects gain eligibility and deadlines

Beginning May 6, 2026, more capital-city projects qualify as convention center revitalization projects. They must meet the law’s objectives and be in a first-class city within a first-class county. The Governor’s Office of Economic Opportunity must propose a convention center zone within 60 days after the relevant city petitions. Its proposal must address modernization, jobs, tourism, walkability, and public outdoor event space.

Stadium project spending faces local limits

Beginning May 6, 2026, designated project-area tax funds must be spent within and directly benefit the project area. Allowed uses include stadium infrastructure, roads, traffic fixes, public safety, land purchases, commercial or housing development, and parking. Local-government costs to create or administer the area cannot exceed 1% of the designated tax revenue collected.

Unused state funds shift to water

Unused funding for wildlife activities and grants, and for water-rights adjudication staff, lapses at each fiscal year-end. Half returns to the Water Resources Conservation and Development Fund. One-quarter goes to wastewater loans, and one-quarter goes to drinking-water loans.

Homeownership zones reset tax baseline timing

Beginning May 6, 2026, each triggered homeownership-zone property-tax collection period gets its own base year. That base year is the calendar year before collection begins. This sets the baseline for dividing tax revenue between the zone and local taxing entities, not a household tax rate.

Housing zones face funding checks and costs

Beginning May 6, 2026, housing-and-transit zone proposals require an independent financial-gap study arranged by the Governor’s economic opportunity office. The proposing municipality or public transit county pays; the office can accept up to $20,000 toward study costs. Approved proposals must find that spending outside the zone directly benefits the zone. The agency managing property-tax growth can go to court to enforce the proposal and funding agreements.

Housing zones fund projects within caps

Beginning May 6, 2026, housing and transit zone funds can cover housing, parking, development, construction, land purchases, and gap analyses. Administration is capped at 2% of total zone funds; child-care construction or expansion is capped at 1%. Funds generally must serve the zone, and outside spending needs a direct-benefit finding in the approved proposal. Participant payments need authorized-use agreements, and administering agencies need an interlocal agreement before receiving funds. Funds can also cover specified agency-bond costs and guarantee public infrastructure district bonds.

Overlapping housing zones capture tax growth

Beginning May 6, 2026, special sharing rules apply where housing and transit zones overlap inactive-industrial-site community reinvestment areas. When the existing area captures less than 80%, the housing zone can capture the difference up to 80%. This also applies when a taxing entity does not participate. If the existing plan expires first, the housing zone can capture that plan’s allocated increment for its remaining term. The base year is updated under the law’s specified rule.

Transit zones get clear boundary rules

Beginning May 6, 2026, station areas extend one-half mile for rail and one-fourth mile for fixed-guideway bus-only service. Distances start at the platform’s center, and parcels crossed by the boundary are included. Housing and transit zone proposals must set one connected sales-tax boundary containing the whole zone. Local officials must consult the Tax Commission and follow tax-collection boundaries as closely as practical. Each proposal gets one base year and collection period, with the base year set prospectively 90 days after required notice.

Capital city convention zone captures taxes

Beginning May 6, 2026, capital city convention zone proposals can capture 100% of property-tax growth and one specified sales-tax component for 30 years. They can also capture 50% of the other specified sales-tax component, tied to the 4.7% state tax. Proposals must identify base years and start dates; all parcels share one 30-year period, starting no earlier than January 1 of the named collection year. Counties send committee-approved property-tax growth to the district as zone funds, not taxing-entity or municipal revenue. The 50% state sales-tax transfers occur at least annually after the boundary is established. They start on a calendar-quarter boundary after the proposal’s stated year, no earlier than January 1, 2026.

Construction sales taxes support eligible zones

Qualified development zones in eligible basic special districts receive 50% of the specified tax revenue from qualifying construction-material sales. Materials must go through a registered delivery outlet inside the zone and be intended for permanent attachment to property there. Sellers must report sales to that outlet and cannot use a simplified electronic return. For Schedule J sales, the applicable share instead goes to the jurisdiction that otherwise receives it. Where applicable, the qualified zone also includes the public infrastructure district created by the basic special district.

Convention zones gain funding with limits

Beginning May 6, 2026, convention zone proposals can capture 100% of specified property and sales tax growth for 30 years. Each proposal must state start dates and base years, with one sales-tax collection period and base year per zone. All parcels share the same 30-year period, starting no earlier than January 1 of the identified collection year. Proposals can direct revenue to a municipality or public infrastructure district, including in a capital city. The law removes a separate capital-city authority to capture an additional 50% of a specified sales-tax increment.

Convention zones receive redirected local taxes

Beginning May 6, 2026, convention center zones outside the capital city receive approved property-tax growth for authorized zone purposes. Districts can pay debt issuance, repayment, and interest costs; these transfers shift revenue away from other taxing entities. The law also transfers 100% of specified sales-tax growth, including all applicable local sales-tax growth, to the named municipality or district. Local transfers occur at least annually and start on a calendar-quarter boundary after the 90-day notice wait and the proposal’s stated year. Transfers cannot start before January 1, 2026, and require an established sales-tax boundary.

Event areas gain funding and revenue duties

Beginning May 6, 2026, major sporting event venue zones send 50% of sales-tax growth to the entity creating the zone. Transfers start on the first day of a calendar quarter after the sales-tax boundary is established. Only transactions inside the statutory boundary count. After final approval of a project-area application, the local government must impose taxes or other revenue sources for that area. The provision does not state a household tax rate or charge.

Fairpark gains taxes and recreation revenue

Beginning October 1, 2024, specified state sales-tax revenue from the Fairpark district sales-tax area goes to the district. Its qualifying development zone allocation includes all revenue from the specified 4.7% state sales tax. The Outdoor Adventure Infrastructure Restricted Account keeps an amount equal to its fiscal year 2025 deposit. Revenue above that baseline is split equally between the outdoor account and Fairpark, giving each 50% of the growth.

Overlapping convention zones share tax growth

Beginning May 6, 2026, convention zones, including capital-city zones, can capture property-tax growth left by an overlapping community reinvestment area. For each taxing entity, the available share equals 100% minus the existing project area’s capture percentage. This allows capture of the full increment from an entity not participating in the existing area. If that area expires first, the convention zone can collect its allocated increment for its remaining term using that area’s base year.

Some zone sales revenue goes statewide

The law sends specified revenue from qualified development-zone sales to the General Fund instead of the zone or authority. The shares are 15% for housing and transit zones and 50% for Point of the Mountain state land. For Fairpark, the rule covers the specified revenue from the 4.7% tax. It also sends the applicable share from capital-city convention zones to the General Fund. Sales must occur inside the qualified zone and appear on Schedule J or a similar designated form.

Zone tax collections face stronger safeguards

Beginning May 6, 2026, housing-and-transit and convention zones cannot collect property-tax growth above their proposal’s projections or limits. A participating taxing entity can petition the housing and transit zone committee to suspend or end collection; the committee can also initiate review. At a public meeting, clear and convincing evidence must show substantial funds have not been or will not be used for authorized purposes. Neither the zone nor its related public infrastructure district can have debt or binding financial obligations secured by chapter funds.

Zone values enter property-tax calculations

Beginning May 6, 2026, certified property-tax-rate rules address base and added taxable value for housing-and-transit and convention zones. The covered convention zones include capital-city zones. Capital-city convention zones also enter property-tax definitions for project areas, new growth, and tax increment. These rules do not establish a uniform increase or decrease in household property-tax bills.

Sponsors & Cosponsors

Sponsor

Wayne A. Harper
Republican • Senate

Cosponsors

Stephen L. Whyte
Republican • House

Roll Call Votes

All Roll Calls

Yes: 103 • No: 27

House vote • 2/19/2026

House/ passed 3rd reading

Yes: 46 • No: 22

House vote • 2/17/2026

House Comm - Favorable Recommendation

Yes: 6 • No: 1

Senate vote • 2/6/2026

Senate/ passed 3rd reading

Yes: 23 • No: 2

Senate vote • 2/5/2026

Senate/ floor amendment

Yes: 0 • No: 0