81R32081 JD-F
By: Heflin, Swinford, Strama H.B. No. 3676
Substitute the following for H.B. No. 3676:
By: Otto C.S.H.B. No. 3676
A BILL TO BE ENTITLED
AN ACT
relating to the Texas Economic Development Act.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 313.007, Tax Code, is amended to read as
follows:
Sec. 313.007. EXPIRATION. Subchapters B, C, and D expire
December 31, 2015 [2011].
SECTION 2. Section 313.021, Tax Code, is amended to read as
follows:
Sec. 313.021. DEFINITIONS. In this subchapter:
(1) "Qualified investment" means:
(A) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is described as Section 1245 property by Section
1245(a), Internal Revenue Code of 1986;
(B) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with the manufacturing,
processing, or fabrication in a cleanroom environment of a
semiconductor product, without regard to whether the property is
actually located in the cleanroom environment, including:
(i) integrated systems, fixtures, and
piping;
(ii) all property necessary or adapted to
reduce contamination or to control airflow, temperature, humidity,
chemical purity, or other environmental conditions or
manufacturing tolerances; and
(iii) production equipment and machinery,
moveable cleanroom partitions, and cleanroom lighting;
(C) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with the operation of a
nuclear electric power generation facility, including:
(i) property, including pressure vessels,
pumps, turbines, generators, and condensers, used to produce
nuclear electric power; and
(ii) property and systems necessary to
control radioactive contamination;
(D) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with operating an
integrated gasification combined cycle electric generation
facility, including:
(i) property used to produce electric power
by means of a combined combustion turbine and steam turbine
application using synthetic gas or another product produced by the
gasification of coal or another carbon-based feedstock; or
(ii) property used in handling materials to
be used as feedstock for gasification or used in the gasification
process to produce synthetic gas or another carbon-based feedstock
for use in the production of electric power in the manner described
by Subparagraph (i); [or]
(E) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2010, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with operating an advanced
clean energy project, as defined by Section 382.003, Health and
Safety Code; or
(F) a building or a permanent, nonremovable
component of a building that is built or constructed during the
applicable qualifying time period that begins on or after January
1, 2002, and that houses tangible personal property described by
Paragraph (A), (B), (C), [or] (D), or (E).
(2) "Qualified property" means:
(A) land:
(i) that is located in an area designated as
a reinvestment zone under Chapter 311 or 312 or as an enterprise
zone under Chapter 2303, Government Code;
(ii) on which a person proposes to
construct a new building or erect or affix a new improvement that
does not exist before the date the person [owner] applies for a
limitation on appraised value under this subchapter;
(iii) that is not subject to a tax abatement
agreement entered into by a school district under Chapter 312; and
(iv) on which, in connection with the new
building or new improvement described by Subparagraph (ii), the
owner or lessee of, or the holder of another possessory interest in,
the land proposes to:
(a) make a qualified investment in an
amount equal to at least the minimum amount required by Section
313.023; and
(b) create at least 25 new jobs;
(B) the new building or other new improvement
described by Paragraph (A)(ii); and
(C) tangible personal property that:
(i) is not subject to a tax abatement
agreement entered into by a school district under Chapter 312; and
(ii) except for new equipment described in
Section 151.318(q) or (q-1), is first placed in service in the new
building or in or on the new improvement described by Paragraph
(A)(ii), or on the land on which that new building or new
improvement is located, if the personal property is ancillary and
necessary to the business conducted in that new building or in or on
that new improvement.
(3) "Qualifying job" means a permanent full-time job
that:
(A) requires at least 1,600 hours of work a year;
(B) is not transferred from one area in this
state to another area in this state;
(C) is not created to replace a previous
employee;
(D) is covered by a group health benefit plan[,
as defined by Section 481.151, Government Code,] for which the
business offers to pay at least 80 percent of the premiums or other
charges assessed for employee-only coverage under the plan,
regardless of whether an employee may voluntarily waive the
coverage; and
(E) pays at least 110 percent of the county
average weekly wage for manufacturing jobs in the county where the
job is located.
(4) "Qualifying time period" means:
(A) the period that begins on the date that a
person's application for a limitation on appraised value under this
subchapter is approved by the governing body of the school district
and ends on December 31 of the second tax year that begins after
that date [first two tax years that begin on or after the date a
person's application for a limitation on appraised value under this
subchapter is approved], except as provided by Paragraph (B) or (C)
of this subdivision or Section 313.027(h); [or]
(B) in connection with a nuclear electric power
generation facility, the first seven tax years that begin on or
after the third anniversary of the date the school district
approves the property owner's application for a limitation on
appraised value under this subchapter, unless a shorter time period
is agreed to by the governing body of the school district and the
property owner; or
(C) in connection with an advanced clean energy
project, as defined by Section 382.003, Health and Safety Code, the
first five tax years that begin on or after the third anniversary of
the date the school district approves the property owner's
application for a limitation on appraised value under this
subchapter, unless a shorter time period is agreed to by the
governing body of the school district and the property owner.
(5) "County average weekly wage for manufacturing
jobs" means the average weekly wage in a county for manufacturing
jobs during the most recent four quarterly periods for which data
are available at the time a person submits an application for a
limitation on appraised value under this subchapter, as computed by
the Texas Workforce Commission.
SECTION 3. Section 313.024(e), Tax Code, is amended by
amending Subdivision (1) and adding Subdivision (5) to read as
follows:
(1) "Manufacturing" means an establishment primarily
engaged in activities described in sectors 31-33 of the 2007 North
American Industry Classification System [and "research and
development" have the meanings assigned by Section 171.751].
(5) "Research and development" means an establishment
primarily engaged in activities described in category 541710 of the
2002 North American Industry Classification System.
SECTION 4. Section 313.025, Tax Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (d-1), (h),
and (i) to read as follows:
(a) The owner or lessee of, or the holder of another
possessory interest in, any qualified property described by Section
313.021(2)(A), (B), or (C) may apply to the governing body of the
school district in which the property is located for a limitation on
the appraised value for school district maintenance and operations
ad valorem tax purposes of the person's qualified property. An
application must be made on the form prescribed by the comptroller
and include the information required by the comptroller, and it
must be accompanied by:
(1) the application fee established by the governing
body of the school district;
(2) information sufficient to show that the real and
personal property identified in the application as qualified
property meets the applicable criteria established by Section
313.021(2); and
(3) information relating to each applicable criterion
listed in Section 313.026.
(a-1) Within seven days of the receipt of each document, the
school district shall submit to the comptroller a copy of the
application and the agreement between the applicant and the school
district. If an economic analysis of the proposed project is
submitted to the school district, the district shall submit a copy
of the analysis to the comptroller. In addition, the school
district shall submit to the comptroller any subsequent revision of
or amendment to any of those documents within seven days of its
receipt. The comptroller shall publish each document received from
the school district under this subsection on the comptroller's
Internet website. If the school district maintains a generally
accessible Internet website, the district shall provide on its
website a link to the location of those documents posted on the
comptroller's website in compliance with this subsection. This
subsection does not require the comptroller to post information
that is confidential under Section 313.028.
(d-1) The governing body of a school district may approve an
application that the comptroller has recommended should be
disapproved only if:
(1) the governing body holds a public hearing the sole
purpose of which is to consider the application and the
comptroller's recommendation; and
(2) at a subsequent meeting of the governing body held
after the date of the public hearing, at least two-thirds of the
members of the governing body vote to approve the application.
(h) After receiving a copy of the application, the
comptroller shall determine whether the property meets the
requirements of Section 313.024 for eligibility for a limitation on
appraised value under this subchapter. The comptroller shall
notify the governing body of the school district of the
comptroller's determination and provide the applicant an
opportunity for a hearing before the determination becomes final.
A hearing under this subsection is a contested case hearing and
shall be conducted by the State Office of Administrative Hearings
in the manner provided by Section 2003.101, Government Code. The
applicant has the burden of proof on each issue in the hearing. The
applicant may seek judicial review of the comptroller's
determination in a Travis County district court under the
substantial evidence rule as provided by Subchapter G, Chapter
2001, Government Code.
(i) If the comptroller's determination under Subsection (h)
that the property does not meet the requirements of Section 313.024
for eligibility for a limitation on appraised value under this
subchapter becomes final, the comptroller is not required to
provide an economic impact evaluation of the application or to
submit a recommendation to the school district as to whether the
application should be approved or disapproved, and the governing
body of the school district may not grant the application.
SECTION 5. Sections 313.026(a) and (b), Tax Code, are
amended to read as follows:
(a) The economic impact evaluation of the application must
include the following:
(1) the recommendations of the comptroller;
(2) the name of the school district;
(3) the name of the applicant;
(4) the general nature of the applicant's investment;
(5) [(2)] the relationship between the applicant's
industry and the types of qualifying jobs to be created by the
applicant to the long-term economic growth plans of this state as
described in the strategic plan for economic development submitted
by the Texas Strategic Economic Development Planning Commission
under Section 481.033, Government Code, as that section existed
before February 1, 1999;
(6) [(3)] the relative level of the applicant's
investment per qualifying job to be created by the applicant;
(7) the number of qualifying jobs to be created by the
applicant;
(8) [(4)] the wages, salaries, and benefits to be
offered by the applicant to qualifying job holders;
(9) [(5)] the ability of the applicant to locate or
relocate in another state or another region of this state;
(10) [(6)] the impact the project [added
infrastructure] will have on this state and individual local units
of government [the region], including:
(A) tax and other revenue gains, direct or
indirect, that would be realized during the qualifying time period,
the limitation period, and a period of time after the limitation
period considered appropriate by the comptroller [by the school
district]; and
(B) [subsequent] economic effects of the
project, including the impact on jobs and income, during the
qualifying time period, the limitation period, and a period of time
after the limitation period considered appropriate by the
comptroller [on the local and regional tax bases];
(11) [(7)] the economic condition of the region of the
state at the time the person's application is being considered;
(12) [(8)] the number of new facilities built or
expanded in the region during the two years preceding the date of
the application that were eligible to apply for a limitation on
appraised value under this subchapter; [and]
(13) [(9)] the effect of the applicant's proposal, if
approved, on the number or size of the school district's
instructional facilities, as defined by Section 46.001, Education
Code;
(14) the projected market value of the qualified
property of the applicant as determined by the comptroller;
(15) the proposed limitation on appraised value for
the qualified property of the applicant;
(16) the projected dollar amount of the taxes that
would be imposed on the qualified property, for each year of the
agreement, if the property does not receive a limitation on
appraised value with assumptions of the projected appreciation or
depreciation of the investment and projected tax rates clearly
stated;
(17) the projected dollar amount of the taxes that
would be imposed on the qualified property, for each tax year of the
agreement, if the property receives a limitation on appraised value
with assumptions of the projected appreciation or depreciation of
the investment clearly stated;
(18) the projected effect on the Foundation School
Program of payments to the district for each year of the agreement;
(19) the projected future tax credits if the applicant
also applies for school tax credits under Section 313.103; and
(20) the total amount of taxes projected to be lost or
gained by the district over the life of the agreement computed by
subtracting the projected taxes stated in Subdivision (17) from the
projected taxes stated in Subdivision (16).
(b) The comptroller's recommendations shall be based on the
criteria listed in Subsections (a)(5)-(20) [(a)(2)-(9)] and on any
other information available to the comptroller, including
information provided by the governing body of the school district
under Section 313.025(b).
SECTION 6. Subchapter B, Chapter 313, Tax Code, is amended
by adding Section 313.0265 to read as follows:
Sec. 313.0265. DISCLOSURE OF APPRAISED VALUE LIMITATION
INFORMATION. (a) The comptroller shall post on the comptroller's
Internet website each document or item of information the
comptroller designates as substantive before the 15th day after the
date the document or item of information was received or created.
Each document or item of information must continue to be posted
until the appraised value limitation expires.
(b) The comptroller shall designate the following as
substantive:
(1) each application requesting a limitation on
appraised value;
(2) the economic impact evaluation made in connection
with the application; and
(3) each application requesting school tax credits
under Section 313.103.
(c) If a school district maintains a generally accessible
Internet website, the district shall maintain a link on its
Internet website to the area of the comptroller's Internet website
where information on each of the district's agreements to limit
appraised value is maintained.
SECTION 7. Section 313.027, Tax Code, is amended by
amending Subsection (f) and adding Subsections (h) and (i) to read
as follows:
(f) In addition, the agreement:
(1) must incorporate each relevant provision of this
subchapter and, to the extent necessary, include provisions for the
protection of future school district revenues through the
adjustment of the minimum valuations, the payment of revenue
offsets, and other mechanisms agreed to by the property owner and
the school district;
(2) may provide that the property owner will protect
the school district in the event the district incurs extraordinary
education-related expenses related to the project that are not
directly funded in state aid formulas, including expenses for the
purchase of portable classrooms and the hiring of additional
personnel to accommodate a temporary increase in student enrollment
attributable to the project;
(3) must require the property owner to maintain a
viable presence in the school district for at least three years
after the date the limitation on appraised value of the owner's
property expires;
(4) [(3)] must provide for the termination of the
agreement, the recapture of ad valorem tax revenue lost as a result
of the agreement if the owner of the property fails to comply with
the terms of the agreement, and payment of a penalty or interest, or
both, on that recaptured ad valorem tax revenue;
(5) [(4)] may specify any conditions the occurrence of
which will require the district and the property owner to
renegotiate all or any part of the agreement; and
(6) [(5)] must specify the ad valorem tax years
covered by the agreement.
(h) The agreement between the governing body of the school
district and the applicant may provide for a deferral of the date on
which the qualifying time period for the project is to commence or,
subsequent to the date the agreement is entered into, be amended to
provide for such a deferral. This subsection may not be construed
to permit a qualifying time period that has commenced to continue
for more than the number of years applicable to the project under
Section 313.021(4).
(i) A person and the school district may not enter into an
agreement under which the person agrees to provide supplemental
payments to a school district in an amount that exceeds an amount
equal to $100 per student per year in average daily attendance, as
defined by Section 42.005, Education Code, or for a period that
exceeds the period described by Section 313.021(4) or 313.104(2)(B)
of this code. This limit does not apply to amounts described by
Subsection (f)(1) or (2) of this section.
SECTION 8. Subchapter B, Chapter 313, Tax Code, is amended
by adding Section 313.0275 to read as follows:
Sec. 313.0275. RECAPTURE OF AD VALOREM TAX REVENUE LOST.
(a) Notwithstanding any other provision of this chapter to the
contrary, a person with whom a school district enters into an
agreement under this subchapter must make the minimum amount of
qualified investment during the qualifying time period and create
the required number of qualifying jobs during each year of the
agreement.
(b) If in any tax year a property owner fails to comply with
Subsection (a), the property owner is liable to this state for a
penalty equal to the amount computed by subtracting from the market
value of the property for that tax year the value of the property as
limited by the agreement and multiplying the difference by the
maintenance and operations tax rate of the school district for that
tax year.
(c) A penalty imposed under Subsection (b) becomes
delinquent if not paid on or before February 1 of the following tax
year. Section 33.01 applies to the delinquent penalty in the manner
that section applies to delinquent taxes.
SECTION 9. Section 313.028, Tax Code, is amended to read as
follows:
Sec. 313.028. CERTAIN BUSINESS INFORMATION CONFIDENTIAL.
Information provided to a school district in connection with an
application for a limitation on appraised value under this
subchapter that describes the specific processes or business
activities to be conducted or the specific tangible personal
property to be located on real property covered by the application
shall be segregated in the application from other information in
the application and is confidential and not subject to public
disclosure unless the governing body of the school district
approves the application. Other information in the custody of a
school district or the comptroller in connection with the
application, including information related to the economic impact
of a project or the essential elements of eligibility under this
chapter, such as the nature and amount of the projected investment,
employment, wages, and benefits, may not be considered confidential
business information if the governing body of the school district
agrees to consider the application. Information in the custody
of a school district or the comptroller if the governing body
approves the application is not confidential under this section.
SECTION 10. Section 313.051(a), Tax Code, is amended to
read as follows:
(a) This subchapter applies only to a school district that
has territory in:
(1) an area that qualified as a strategic investment
area under Subchapter O, Chapter 171, immediately before that
subchapter expired [, as defined by Section 171.721]; or
(2) a county:
(A) that has a population of less than 50,000;
and
(B) [that is not partially or wholly located in a
metropolitan statistical area; and
[(C)] in which, from 1990 to 2000, according to
the federal decennial census, the population:
(i) remained the same;
(ii) decreased; or
(iii) increased, but at a rate of not more
than three percent per annum.
SECTION 11. Section 313.103, Tax Code, is amended to read as
follows:
Sec. 313.103. APPLICATION. (a) An application for a tax
credit under this subchapter must be made to the governing body of
the school district to which the ad valorem taxes were paid. The
application must be:
(1) made on the form prescribed for that purpose by the
comptroller and verified by the applicant;
(2) accompanied by:
(A) a tax receipt from the collector of taxes for
the school district showing full payment of school district ad
valorem taxes on the qualified property for the applicable
qualifying time period; and
(B) any other document or information that the
comptroller or the governing body considers necessary for a
determination of the applicant's eligibility for the credit or the
amount of the credit; and
(3) filed before September 1 of the year immediately
following the applicable qualifying time period.
(b) An application for a tax credit under this subchapter or
any information provided by the school district to the Texas
Education Agency under Section 42.2515, Education Code, is not
confidential.
SECTION 12. Section 403.302(d), Government Code, is amended
to read as follows:
(d) For the purposes of this section, "taxable value" means
the market value of all taxable property less:
(1) the total dollar amount of any residence homestead
exemptions lawfully granted under Section 11.13(b) or (c), Tax
Code, in the year that is the subject of the study for each school
district;
(2) one-half of the total dollar amount of any
residence homestead exemptions granted under Section 11.13(n), Tax
Code, in the year that is the subject of the study for each school
district;
(3) the total dollar amount of any exemptions granted
before May 31, 1993, within a reinvestment zone under agreements
authorized by Chapter 312, Tax Code;
(4) subject to Subsection (e), the total dollar amount
of any captured appraised value of property that:
(A) is within a reinvestment zone created on or
before May 31, 1999, or is proposed to be included within the
boundaries of a reinvestment zone as the boundaries of the zone and
the proposed portion of tax increment paid into the tax increment
fund by a school district are described in a written notification
provided by the municipality or the board of directors of the zone
to the governing bodies of the other taxing units in the manner
provided by Section 311.003(e), Tax Code, before May 31, 1999, and
within the boundaries of the zone as those boundaries existed on
September 1, 1999, including subsequent improvements to the
property regardless of when made;
(B) generates taxes paid into a tax increment
fund created under Chapter 311, Tax Code, under a reinvestment zone
financing plan approved under Section 311.011(d), Tax Code, on or
before September 1, 1999; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(5) for a school district for which a deduction from
taxable value is made under Subdivision (4), an amount equal to the
taxable value required to generate revenue when taxed at the school
district's current tax rate in an amount that, when added to the
taxes of the district paid into a tax increment fund as described by
Subdivision (4)(B), is equal to the total amount of taxes the
district would have paid into the tax increment fund if the district
levied taxes at the rate the district levied in 2005;
(6) the total dollar amount of any captured appraised
value of property that:
(A) is within a reinvestment zone:
(i) created on or before December 31, 2008,
by a municipality with a population of less than 18,000; and
(ii) the project plan for which includes
the alteration, remodeling, repair, or reconstruction of a
structure that is included on the National Register of Historic
Places and requires that a portion of the tax increment of the zone
be used for the improvement or construction of related facilities
or for affordable housing;
(B) generates school district taxes that are paid
into a tax increment fund created under Chapter 311, Tax Code; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(7) the total dollar amount of any exemptions granted
under Section 11.251 or 11.253, Tax Code;
(8) the difference between the comptroller's estimate
of the market value and the productivity value of land that
qualifies for appraisal on the basis of its productive capacity,
except that the productivity value estimated by the comptroller may
not exceed the fair market value of the land;
(9) the portion of the appraised value of residence
homesteads of individuals who receive a tax limitation under
Section 11.26, Tax Code, on which school district taxes are not
imposed in the year that is the subject of the study, calculated as
if the residence homesteads were appraised at the full value
required by law;
(10) a portion of the market value of property not
otherwise fully taxable by the district at market value because of:
(A) action required by statute or the
constitution of this state that, if the tax rate adopted by the
district is applied to it, produces an amount equal to the
difference between the tax that the district would have imposed on
the property if the property were fully taxable at market value and
the tax that the district is actually authorized to impose on the
property, if this subsection does not otherwise require that
portion to be deducted; or
(B) action taken by the district under Subchapter
B or C, Chapter 313, Tax Code, before the expiration of the
subchapter;
(11) the market value of all tangible personal
property, other than manufactured homes, owned by a family or
individual and not held or used for the production of income;
(12) the appraised value of property the collection of
delinquent taxes on which is deferred under Section 33.06, Tax
Code;
(13) the portion of the appraised value of property
the collection of delinquent taxes on which is deferred under
Section 33.065, Tax Code; and
(14) the amount by which the market value of a
residence homestead to which Section 23.23, Tax Code, applies
exceeds the appraised value of that property as calculated under
that section.
SECTION 13. Section 313.029, Tax Code, is repealed.
SECTION 14. Sections 313.021(1)(A) and (2), 313.024(e), and
313.025(a), Tax Code, as amended by this Act, are intended to
clarify rather than change existing law.
SECTION 15. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2009.