83R3007 SMH-F
By: Murphy H.B. No. 2467
A BILL TO BE ENTITLED
AN ACT
relating to the Texas Economic Development Act; authorizing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 313.002, 313.004, and 313.007, Tax
Code, are amended to read as follows:
Sec. 313.002. FINDINGS. The legislature finds that:
(1) many states have enacted aggressive economic
development laws designed to attract large employers, create jobs,
and strengthen their economies;
(2) given Texas' relatively high property taxes, it is
difficult for the state to compete for new capital projects without
some kind of temporary limit on ad valorem taxes imposed on new
capital investments [the State of Texas has slipped in its national
ranking each year between 1993 and 2000 in terms of attracting major
new manufacturing facilities to this state];
(3) a significant portion of the Texas economy
continues to be based in [the] manufacturing and other
capital-intensive industries [industry], and their [the] continued
growth and overall health [of the manufacturing sector] serves the
Texas economy well;
(4) without a vibrant, strong manufacturing sector,
other sectors of the economy, especially the state's service
sector, will also suffer adverse consequences; and
(5) the current property tax system of this state does
not favor capital-intensive businesses such as manufacturers.
Sec. 313.004. LEGISLATIVE INTENT. It is the intent of the
legislature in enacting this chapter that:
(1) economic development decisions should occur at the
local level and be consistent with identifiable statewide economic
development goals;
(2) this chapter should not be construed or
interpreted to allow:
(A) property owners to pool investments to create
sufficiently large investments to qualify for an ad valorem tax
benefit or financial benefit provided by this chapter;
(B) an applicant for an ad valorem tax benefit or
financial benefit provided by this chapter to assert that jobs will
be eliminated if certain investments are not made if the assertion
is not true; or
(C) an entity not subject to the franchise tax
imposed by Chapter 171 because of its form of business [a sole
proprietorship, partnership, or limited liability partnership] to
receive an ad valorem tax benefit or financial benefit provided by
this chapter; and
(3) in implementing this chapter, school districts
should:
(A) strictly interpret the criteria and
selection guidelines provided by this chapter; and
(B) approve only those applications for an ad
valorem tax benefit or financial benefit provided by this chapter
that:
(i) enhance the local community;
(ii) improve the local public education
system;
(iii) create high-paying jobs; and
(iv) advance the economic development goals
of this state as identified by the Texas Strategic Economic
Development Planning Commission or its successor.
Sec. 313.007. EXPIRATION. Subchapters B and [,] C[, and D]
expire December 31, 2024 [2014].
SECTION 2. Section 313.021, Tax Code, is amended by
amending Subdivisions (1) and (3) and adding Subdivisions (6) and
(7) to read as follows:
(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);
(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), (D), or (E); or
(G) a building or a permanent, nonremovable
component of a building that, as part of a discrete project that
increases the value of the building or component, is renovated,
expanded, or otherwise improved during the applicable qualifying
time period that begins on or after January 1, 2014, and that houses
tangible personal property described by Paragraph (A), (B), (C),
(D), or (E).
(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
that complies with the Patient Protection and Affordable Care Act
(Pub. L. No. 111-148) as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. No. 111-152) [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:
(i) the county average weekly wage for
manufacturing jobs in the county where the job is located; or
(ii) the county average weekly wage for all
jobs in the county where the job is located, if the property owner
creates more than 1,000 jobs in that county.
(6) "Strategic investment area" means an area the
comptroller determines under Section 313.051 is:
(A) a county within this state with above average
unemployment and below average per capita income;
(B) an area within this state that is a federally
designated urban enterprise community or an urban enhanced
enterprise community; or
(C) a defense economic readjustment zone
designated under Chapter 2310, Government Code.
(7) "Texas priority project" means a project on which
the applicant has committed to expend or allocate a qualified
investment of more than $1 billion and that the governor has
certified in a letter provided to the applicant is in the best
interest of the economy.
SECTION 3. Sections 313.024(a) and (b), Tax Code, are
amended to read as follows:
(a) This subchapter and Subchapter [Subchapters] C [and D]
apply only to property owned by an entity to which Chapter 171
applies.
(b) To be eligible for a limitation on appraised value under
this subchapter, the entity must use the property for [in
connection with]:
(1) manufacturing;
(2) research and development;
(3) a clean coal project, as defined by Section 5.001,
Water Code;
(4) an advanced clean energy project, as defined by
Section 382.003, Health and Safety Code;
(5) renewable energy electric generation;
(6) electric power generation using integrated
gasification combined cycle technology;
(7) nuclear electric power generation; [or]
(8) a data [computer] center; or
(9) a Texas priority project [primarily used in
connection with one or more activities described by Subdivisions
(1) through (7) conducted by the entity].
SECTION 4. Section 313.024(e)(6), Tax Code, is amended to
read as follows:
(6) "Data [Computer] center" means an establishment
primarily engaged in:
(A) data processing, hosting, and related
services described by industry code 518210 of the North American
Industry Classification System;
(B) an Internet activity described by industry
code 519130 of the North American Industry Classification System;
or
(C) computer software publishing and
reproduction described by industry code 511210 of the North
American Industry Classification System [providing electronic data
processing and information storage].
SECTION 5. Section 313.025(b-1), Tax Code, is amended to
read as follows:
(b-1) The comptroller shall indicate on one copy of the
application the date the comptroller received the application and
deliver that copy to the Texas Education Agency. The Texas
Education Agency shall determine the effect that the applicant's
proposal will have on the number or size of the school district's
instructional facilities, as required to be included in the
economic impact evaluation by Section 313.026(a)(11)
[313.026(a)(9)], and submit a written report containing the
agency's determination to the comptroller. The governing body of
the school district shall provide any requested information to the
Texas Education Agency. Not later than the 45th day after the date
the application indicates that the comptroller received the
application, the Texas Education Agency shall make the required
determination and submit the agency's written report to the
comptroller. A third person contracted by the comptroller to
conduct an economic impact evaluation of an application is not
required to make a determination that the Texas Education Agency is
required to make and report to the comptroller under this
subsection.
SECTION 6. Section 313.026, Tax Code, is amended to read as
follows:
Sec. 313.026. ECONOMIC IMPACT EVALUATION. (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) a description of the general nature of the
applicant's investment;
(5) [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)] the amount [relative level] of the applicant's
intended investment [per qualifying job to be created by the
applicant];
(6) [(7)] the number of qualifying construction and
operations jobs to be created by the applicant;
(7) [(8)] the wages, salaries, and benefits to be
offered by the applicant to qualifying job holders;
(8) [(9)] the ability of the applicant to locate or
relocate in another state or another region of this state;
(9) [(10)] the fiscal impact the project will have on
this state and individual local units of government, including:
(A) tax and other revenue gains, direct and
otherwise [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; and
(B) economic effects of the project, including
the impact on jobs and income, direct and otherwise, during the
qualifying time period, the limitation period, and a period of time
after the limitation period considered appropriate by the
comptroller;
(10) [(11)] the economic condition of the region of
the state at the time the person's application is being considered;
(11) [(12) 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;
[(13)] 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;
(12) [(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;
and
(13) the other states, if any, in which the applicant
is considering locating the project [(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 Subsection (a) [Subsections (a)(5)-(20)] 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 7. Section 313.0265(b), Tax Code, is amended to
read as follows:
(b) The comptroller shall designate the following as
substantive:
(1) each application requesting a limitation on
appraised value; and
(2) the economic impact evaluation made in connection
with the application[; and
[(3) each application requesting school tax credits
under Section 313.103].
SECTION 8. Sections 313.027(a), (h), and (i), Tax Code, are
amended to read as follows:
(a) If the person's application is approved by the governing
body of the school district, for each of the first 10 [eight] tax
years that begin after the applicable qualifying time period, the
appraised value for school district maintenance and operations ad
valorem tax purposes of the person's qualified property as
described in the agreement between the person and the district
entered into under this section in the school district may not
exceed the lesser of:
(1) the market value of the property; or
(2) subject to Subsection (b), the amount agreed to by
the governing body of the school district.
(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. The agreement may not provide for the
deferral of the date on which the qualifying time period is to
commence to a date later than January 1 of the fourth tax year
beginning after the date the application is approved. 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 if in conjunction with the agreement any payments or
other benefits are to be provided by or on behalf of the person in
recognition or anticipation of, or in consideration for, the
district entering into the agreement, other than payments or
benefits authorized under Subsection (f)(1) or (2) [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 beginning
with the period described by Section 313.021(4) and ending with the
period described by Section 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 9. Section 313.0275, Tax Code, is amended by adding
Subsection (d) to read as follows:
(d) In the event of a casualty loss that prevents a person
from complying with Subsection (a), the person may request and the
comptroller may grant a waiver of the penalty imposed under
Subsection (b).
SECTION 10. Section 313.031, Tax Code, is amended by
amending Subsection (a) and adding Subsection (a-1) to read as
follows:
(a) The comptroller shall:
(1) adopt rules and forms necessary for the
implementation and administration of this chapter, including rules
for determining whether a property owner's property qualifies as a
qualified investment under Section 313.021(1); and
(2) provide without charge one copy of the rules and
forms to any school district and to any person who states that the
person intends to apply for a limitation on appraised value under
this subchapter [or a tax credit under Subchapter D].
(a-1) The comptroller by official action may establish
reasonable nonrefundable fees to be paid by property owners who
apply to a school district for a limitation on the value of the
person's property under this subchapter. The amount of a fee must
be reasonable and may not exceed the estimated cost to the
comptroller of preparing the report required by Section 313.032.
SECTION 11. Section 313.032, Tax Code, is amended by
amending Subsections (a) and (c) and adding Subsection (b-1) to
read as follows:
(a) Before the beginning of each regular session of the
legislature, the comptroller shall submit to the lieutenant
governor, the speaker of the house of representatives, and each
other member of the legislature a report on the agreements entered
into under this chapter that includes:
(1) an assessment of the following with regard to the
agreements entered into under this chapter, considered in the
aggregate:
(A) the total number of jobs created, direct and
otherwise, in this state;
(B) the total effect on personal income, direct
and otherwise, in this state;
(C) the effect, direct and otherwise, on the
total amount of investment in this state;
(D) the effect, direct and otherwise, on the
total taxable value of property on the tax rolls in this state,
including property for which the limitation period has expired;
(E) the total value of property not on the tax
rolls in this state as a result of agreements entered into under
this chapter; and
(F) the total fiscal effect, direct and
otherwise, on the state and local governments; and
(2) an assessment of [assessing] the progress of each
agreement made under this chapter that states[. The report must be
based on data certified to the comptroller by each recipient of a
limitation on appraised value under this subchapter and state] for
each agreement:
(A) [(1)] the number of new [qualifying] jobs
each recipient of a limitation on appraised value committed to
create;
(B) [(2)] the number of new [qualifying] jobs
each recipient created;
(C) [(3)] the total amount of wages [median wage]
of the new jobs each recipient created;
(D) [(4)] the amount of the qualified investment
each recipient committed to spend or allocate for each project;
(E) [(5)] the amount of the [qualified]
investment each recipient spent or allocated for each project;
(F) [(6)] the market value of the [qualified]
property of each recipient as determined by the applicable chief
appraiser, including property that is no longer eligible for a
limitation on appraised value under the agreement;
(G) [(7)] the limitation on appraised value for
the qualified property of each recipient; and
(H) [(8) the dollar amount of the taxes that
would have been imposed on the qualified property if the property
had not received a limitation on appraised value;
[(9)] the dollar amount of the taxes imposed on the
qualified property[;
[(10) the number of new jobs created by each recipient
in each sector of the North American Industry Classification
System; and
[(11) of the number of new jobs each recipient
created, the number of jobs created that provide health benefits
for employees].
(b-1) In preparing the portion of the report described by
Subsection (a)(1), the comptroller may use standard economic
estimation techniques, including economic multipliers.
(c) The portion of the report described by Subsection (a)(2)
must be based on data certified to the comptroller by each recipient
of a limitation on appraised value under this chapter. The
comptroller may require a recipient to submit, on a form the
comptroller provides, information required to complete the portion
of the report described by that subdivision.
SECTION 12. Section 313.051, Tax Code, is amended by
amending Subsection (a) and adding Subsections (a-2), (a-3), and
(a-4) to read as follows:
(a) This subchapter applies only to a school district that
has territory in:
(1) an area that qualifies [qualified] as a strategic
investment area [under Subchapter O, Chapter 171, immediately
before that subchapter expired]; or
(2) a county:
(A) that has a population of less than 50,000;
and
(B) in which, [from 1990 to 2000,] according to
the most recent federal decennial census as compared to the
preceding census, the population:
(i) remained the same;
(ii) decreased; or
(iii) increased, but at a rate of not more
than three percent per annum.
(a-2) Not later than September 1 of each year, the
comptroller shall determine areas that qualify as a strategic
investment area using the most recently completed full calendar
year data available on that date and, not later than October 1,
shall publish a list and map of the designated areas.
(a-3) A determination under Subsection (a-2) is effective
for the following tax year for purposes of this subchapter.
(a-4) Notwithstanding Subsection (a)(1), a person who
enters into an agreement with a school district to which Subsection
(a)(1) applied at the time the person and the school district
entered into the agreement is eligible to receive a limitation on
appraised value under this subchapter in accordance with the terms
of the agreement regardless of whether the district ceases to be
described by Subsection (a)(1) after the date the person and the
district entered into the agreement.
SECTION 13. The heading to Subchapter E, Chapter 313, Tax
Code, is amended to read as follows:
SUBCHAPTER E. AVAILABILITY OF TAX CREDIT AFTER PROGRAM EXPIRES OR
IS REPEALED
SECTION 14. Section 313.171(b), Tax Code, is amended to
read as follows:
(b) The repeal [expiration] of Subchapter D does not affect
a property owner's entitlement to a tax credit granted under
Subchapter D if the property owner qualified for the tax credit
before the repeal [expiration] of Subchapter D.
SECTION 15. Section 42.2515(a), Education Code, is amended
to read as follows:
(a) For each school year, a school district, including a
school district that is otherwise ineligible for state aid under
this chapter, is entitled to state aid in an amount equal to the
amount of all tax credits credited against ad valorem taxes of the
district in that year under former Subchapter D, Chapter 313, Tax
Code.
SECTION 16. Section 42.302(e), Education Code, is amended
to read as follows:
(e) For purposes of this section, school district taxes for
which credit is granted under former Subchapter D, Chapter 313, Tax
Code, are considered taxes collected by the school district as if
the taxes were paid when the credit for the taxes was granted.
SECTION 17. The following provisions of the Tax Code are
repealed:
(1) Sections 313.008 and 313.009; and
(2) Subchapter D, Chapter 313.
SECTION 18. Chapter 313, Tax Code, as amended by this Act,
applies only to an application filed under that chapter on or after
the effective date of this Act. An application filed under that
chapter before the effective date of this Act is governed by the law
in effect on the date the application was filed, and the former law
is continued in effect for that purpose.
SECTION 19. The comptroller shall make the initial
determination under Section 313.051(a-2), Tax Code, as added by
this Act, not later than September 1, 2014, and shall publish the
initial list and map required by that subsection not later than
October 1, 2014.
SECTION 20. This Act takes effect September 1, 2013.